ARCHIVED -  Public Notice CRTC 1996-27

Public Notice

Ottawa, 23 February 1996

Public Notice CRTC 1996-27

Proposed Amendments to the Radio Regulations, 1986

Changes to Three Areas Related to the Commission's Regulation of Radio: Simulcasting, Ownership, and Canadian Content for Radio Stations Programming High Levels of Instrumental Selections

INTRODUCTION

 In Public Notice CRTC 1995-60 dated 21 April 1995, the Commission requested public comments on two matters related to radio. These concerned the advisability of amending the Radio Regulations, 1986 (the regulations) for the purpose of:

·  allowing additional simulcasting between commonly-owned AM and FM stations operating in the same market; and

·  requiring that any party owning an AM and an FM station in one market obtain the prior approval of the Commission before acquiring any level of ownership in a third station in that market. Currently a party may acquire any percentage less than 30% of the shares in a station without obtaining prior Commission approval.

 In that notice, the Commission also indicated that it proposed to incorporate into the regulations the flexibility with respect to Canadian musical content that is accorded radio stations devoting 35% or more of the musical selections played each week to ins-trumental selections.

 SIMULCASTING

 Under the terms of the regulations, simul-casting by commonly-owned AM and FM stations in the same market is currently limited to the overnight periods (midnight to 6 a.m.) except for certain special events as set out in the regulations.

 In Public Notice CRTC 1995-60, the Commission indicated that it considered that extensive simulcasting is not desirable because it decreases the diversity of pro-gramming available to listeners and does not make efficient use of the limited number of public frequencies that are available. It indicated, however, that some additional flexibility might be beneficial to AM stations facing financial hardship, in that it would allow them to reduce expenditures through the sharing of resources and to concentrate on developing high-quality program-ming for periods of higher listening.

 The Commission therefore called for comments on:

·  the advisability of allowing up to 42 hours of simulcasting during the broadcast week, in addition to the time period between midnight and 6 a.m. when simulcasting is currently permitted, and

·  whether this additional 42 hours of simulcasting should be restricted to periods of lower listening, such as between 6:00 p.m. and midnight, or whether simulcasting should be allowed at any time.

 Submissions from representatives of the private commercial broadcasting industry supported the Commission's proposal to allow up to 42 hours of simulcasting during the broadcast week and considered that there should be no restrictions on the time of day when simulcasting could take place. They noted that such flexibility would allow for simulcasting of newscasts and other special events at any time during the day. Furthermore, they considered that the amount of simulcasting undertaken would be limited since almost all associated AM and FM stations offer different program formats. Much of the programming on one station would therefore be incompatible with that broadcast on the other.

 Four submissions from representatives of community radio stations, a union and an educational institution opposed any relaxa-tion of the current restrictions on simulcast-ing. These parties generally considered that simulcasting would decrease the di-versity of programming available to listen-ers, lessen opportunities for exposure of Canadian talent, and might allow an owner of both an AM and an FM station in one community to compete unfairly with a licensee owning only one station.

 The Commission agrees that simulcasting on a large scale could give rise to the con-cerns expressed by those who consider that additional simulcasting should not be allowed. However, in making its proposal, the Commission considered that allowing no more than 42 hours of simulcasting outside the overnight period would be a reasonable compromise which would allow AM stations in financial difficulty to achieve some efficiencies in operation while still en-suring that a reasonably high level of sepa-rate programming on each station is maintained. The Commission continues to hold this view.

 The Commission also agrees with the posi-tion of private broadcasters that simulcast-ing for extended periods will be relatively rare since most associated AM and FM sta-tions offer different programming formats. Most simulcasting will therefore likely con-sist of newscasts and other information segments, a type of simulcasting that CBC radio stations have been permitted to un-dertake for many years.

 The Commission's Proposed Approach

 In light of the above, the Commission proposes to amend its radio regulations to permit radio broadcasters to simulcast up to 42 hours of programming per broadcast week on commonly owned AM and FM stations in the same market. This simulcasting would be in addition to the midnight to 6 a.m. period when simulcasting is currently permitted. There would be no restrictions on the time periods when such simulcasting may take place. A
proposed text of the amended regulation, as well as a proposed amendment to logging requirements so that simulcast programming can be indicated, is attached.

 OWNERSHIP

 In Public Notice CRTC 1995-60, the Com-mission indicated its intention to maintain its current ownership guideline which generally limits a licensee to owning a maximum of one AM and one FM station in the same language in the same market. Departures from this approach would con-tinue to be permitted only in exceptional circumstances.

 The Commission indicated that it considers that this policy is important to maintain dynamic competition in markets and to ensure that a variety of editorial views is pre-sent in information programming.

 The Commission also noted that, under the current radio regulations, any party, includ-ing one that already owns an AM and an FM station in a market, may acquire any percentage less than 30% of the shares of a station without Commission approval, even if the party already owns two stations in that market. It expressed concern that such an acquisi-tion might conflict with the objectives of the Commission's guidelines on multiple ownership in that it would allow a party already owning an AM and an FM station to have a considerable influence in the operation of a third station operating in the same language in the same market. This might serve to undermine the goals of dynamic competition and the maintenance of distinct editorial views which lie behind the Commission's ownership policy.

 In light of these concerns, the Commission called for comments on the advisability of amending the ownership regulation to specify that prior approval of the Commis-sion would be required for any transaction that, in the case of a party who already owns or controls an AM station and an FM station in a market, would result in that party acquiring any level of ownership in a third station in that market.

 Three submissions representing community radio stations and a union supported the Commission's proposal. They generally considered that the Commission's owner-ship policy, as well as the proposed amendment to the regulations, are necessary to ensure fair competition, especially in Quebec where the number of licensees in the radio industry is more limited.

 Submissions from representatives of private commercial radio stations, on the other hand, expressed opposition to the Commission's proposal. They considered that the proposed change was too severe and might discourage equity investment in radio. It was also noted that, under the current regulations, the Commission already has considerable flexibility in interpreting when a "change of control" takes place and prior approval is required. It was argued that the proposed change was therefore unnecessary. Broadcasters also believe that there has been no evidence that the current regulation, which has been in effect since 1986, has been ineffective.

 After reviewing the submissions, the Commission considers that it would be useful to distinguish between corporations with shares publicly traded on a stock ex-change and corporations that do not have such shares. The Commission considers that it is unlikely that a licensee already operating in a market would want to buy into a competing radio station controlled by a corporation that does not have shares that are publicly traded on a stock exchange unless it wanted to take an ac-tive role in the operation of that station. It therefore considers that prior approval should be required before a licensee already owning an AM or an FM station chooses to buy in at any level to a second AM or FM station in the same market that is con-trolled by a company whose shares are not publicly traded on a stock exchange.

 In the case of companies whose shares are publicly traded on a stock exchange, the Commission recognizes that parties might, through open market trading on a stock exchange, wind up with shares in a competing broadcasting company and thus be technically in non-compliance with a regulation even though they had no inten-tion of taking, and could not take through their share ownership, an active role in the operation of the station. The Commission also notes that most of the publicly traded companies who are radio licensees or parent companies of such licensees are actively engaged in activities other than radio broadcasting. It is therefore possible that a party might wish to buy shares in these publicly traded companies without having any interest in the operations of its radio stations.

 The Commission's Proposed Approach

 In light of these considerations, the Commission proposes to amend the regulations so that prior approval will be necessary for any transaction that would result in a licensee, or an associate of that licensee, acquiring a voting interest in a second AM or a second FM licensee in the same market when the second licensee is not a corporation with shares publicly traded on a stock exchange. A proposed text for the amended regulation is attached. While the proposed text does not refer to stations operating in the same language, the Commission intends to incorporate this in its final draft, subject to comments received pursuant to the present call.

 CANADIAN CONTENT FOR RADIO STATIONS PROGRAMMING HIGH LEVELS OF INSTRUMENTAL SELECTIONS

 Licensees of FM stations make Promise of Performance commitments to one of three categories with respect to the level of instrumental selections they broadcast. These commitments must be adhered to, by condition of licence.

 Current guidelines specify that licensees with an instrumental level of less than 35% should ensure that at least 30% of popular music selections broadcast during each broadcast week are Canadian. For licensees whose instrumental level is between 35% and 50%, the minimum Canadian content level is 20%. Licensees committing to an instrumental level of 50% or more must ensure that at least 15% of the popular musical selections broadcast each week are Canadian. These lower levels of Canadian content are permitted because of the limited supply of Canadian instrumental music and because the Commission wishes to encourage stations to contribute to the diversity of music programming available in their communities by broadcasting a significant level of instrumental selections.

 Applications to change from one level of instrumental selections to another are gen-erally approved, provided that the stations assume a condition of licence requiring them to broadcast the associated level of Canadian popular music and to distribute these Canadian selections rea-sonably throughout the broadcast day.

 The Commission's Proposed Approach

 As indicated in Public Notice CRTC 1995-60, the Commission is issuing for comment a proposed amendment to the regulations that would incorporate the varying levels of Canadian content that apply to instrumental music levels, which are set out above. If this revision is put into effect, interested stations will be able to apply to amend their Promises of Performance so that the levels of instrumental selections they program would be governed solely by the regulations. These stations will then have the flexibility to change their vocal/instrumental ratios without the Commission's approval, provided the levels of Canadian content set out in the regulations are respected. A proposed text for the amended regulation is attached.

 OTHER MATTERS

 The Commission is also taking this opportunity to propose a change in the definition of a "commercial message" as set out in the regulations to make it consistent with that used in other regulations issued by the Commission, and to correct an error in the English version of the definition of "affiliate".

 It is the Commission's view that the proposed change to the definition of a commercial message has no effect on conditions of licence imposed on the radio networks and stations operated by the Canadian Broadcasting Corporation. These conditions prohibit the broadcast of all forms of advertising, including identification of sponsors, except in certain special cir-cumstances identified in these conditions.

 CALL FOR COMMENTS

 Interested parties wishing to comment on any of the proposed amendments must send their submissions to the Secretary General, CRTC, Ottawa, Ontario, K1A 0N2, by 23 April 1996. While receipt of submissions will not be acknowledged, they will be considered by the Commission and will form part of the public record of the proceeding.

 Allan J. Darling
 Secretary General