ARCHIVED -  Decision CRTC 97-137

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Decision
CRTC 97-137

Ottawa, 11 April 1997
Various Locations Across Canada
Reconsideration of Decisions Related to Canadian Talent Development by Commercial Radio Stations
Further to the public process described in Public Notices CRTC 1996-155 and CRTC 1996-155-1 dated 13 December 1996 and 24 January 1997, respectively, the Commission has reconsidered and heard the matters set out in Order-in-Council P.C. 1996-1734 dated 14 November 1996 and Order-in-Council P.C. 1997-39 dated 7 January 1997. Upon reconsideration of these matters pursuant to section 28 of the Broadcasting Act, and for the reasons set out herein, the Commission confirms the decisions related to Canadian talent development by commercial radio stations, as listed in the appendix to this document.
I Background
a) New policy for Canadian talent development
In Public Notice CRTC 1995-196, the Commission announced a new approach to contributions to Canadian talent development by commercial AM and FM radio stations. In the notice, the licensee of each commercial radio station was given an opportunity to apply for relief from its commitments in respect of direct cost contributions to Canadian talent development made as part of its last licence renewal. Instead of these commitments, each licensee would assume a condition of licence requiring it to make payments to eligible third parties involved in Canadian talent development at the level identified for the licensee by the Canadian Association of Broadcasters (CAB) in the CAB Distribution Guidelines for Canadian Talent Development. Underthese guidelines, as announced in Public Notice CRTC 1995-196, eligible third parties include FACTOR, MusicAction, national and provincial music organizations, performing arts groups, schools and scholarship recipients.
The guidelines set out a distribution schedule for Canadian talent development funds based on a market-by-market approach that establishes a common fee for stations in similar-sized markets. The purpose of the CAB’s guidelines is to ensure that commercial radio stations, collectively, allocate a minimum of $1.8 million each year to eligible third parties associated with Canadian talent development. The CAB guidelines, however, apply only to commitments for Canadian talent development made in the context of licence renewals.
In the case of new licences, including situations where stations have moved from the AM to the FM band, licensees are expected under the policy to adhere to their existing Canadian talent development commitments for the duration of their first licence terms. Licensees are also expected to fulfil commitments proposed as benefits in the context of applications for authority to transfer the effective ownership or control of stations.
In Public Notice CRTC 1996-63, the Commission published a list of 402 applications received in response to Public Notice CRTC 1995-196. The Commission also indicated that it had received letters which, taken together, guaranteed that, during the first year, over $1 million would be allocated specifically to FACTOR and MusicAction by stations adhering to the CAB’s guidelines.
b) Implementation of the new policy
On 19 August 1996, the Commission issued its decisions on the 402 applications. These decisions, which were introduced by Public Notice CRTC 1996-114, generally approved the applications to replace current Canadian talent development commitments with conditions of licence requiring adherence to the CAB’s guidelines. Given that the 1995-96 broadcast year was almost complete, however, the Commission decided that the new program for Canadian talent development would begin in 1996-97. The Commission therefore denied the applications for licence amendments by broadcasters whose licences expired in August 1996 and, instead, applied appropriate conditions of licences related to adherence to the CAB’s guidelines in the related licence renewal decisions.
Certain larger broadcasters also made financial commitments over and above the levels established under the CAB’s guidelines to ensure that the minimum target of $1.8 million for Canadian talent development was reached. Decisions for these broadcasters included conditions of licence to ensure that these additional funding commitments to Canadian talent development were fulfilled.
The Commission considered that stations should be able to contribute, not only to FACTOR and MusicAction, but to other third party organizations involved in Canadian talent development. Accordingly, the policy set out in Public Notice CRTC 1995-196 indicated that stations would generally have the flexibility to choose the particular third parties that would receive funding for Canadian talent development.
A number of broadcasters had submitted letters with their applications indicating that they would make payments specifically to FACTOR or MusicAction. Totals of $770,800 and $288,200 had been pledged to FACTOR and MusicAction, respectively, for the first year.
Notwithstanding these commitments, the Commission expressed concern for the ongoing funding of MusicAction. It noted that, while the total amount that was pledged to FACTOR under the CAB’s plan was significantly greater than the amount broadcasters had pledged in their past licence renewal applications, the amount pledged to MusicAction was only slightly greater than the amount provided for under these earlier commitments. Furthermore, the Commission noted that there are fewer stations that are potential contributors to MusicAction than to FACTOR. The Commission therefore imposed conditions of licence requiring licensees who had made specific commitments to MusicAction to continue to provide this funding throughout their entire licence terms. Similar conditions, however, were not found necessary and were therefore not imposed on licensees who had made specific commitments to FACTOR.
c) The Orders-in-Council
Following publication of the Commission’s decisions in August 1996, a petition was filed by the Canadian Independent Record Production Association (CIRPA) requesting that the Governor-in-Council make an order setting aside two of the decisions relating to Canadian talent development.
In the Orders however, the Governor in Council referred back to the Commission for reconsideration and hearing all of the decisions that included a condition of licence related to contributions under the CAB’s guidelines. Specifically, the Orders stated:
The Governor in Council is of the opinion that it is material to the reconsideration and hearing that the Commission fully assess the issue of whether, in the case of commitments by radio station licensees to FACTOR and MusicAction, the CRTC should treat FACTOR and MusicAction equitably regarding guarantees for long-term financing.
II The Reconsideration Process
In Public Notices CRTC 1996 -155 and 1996-155-1, the Commission established a process to respond to the Orders. All interested parties were invited to submit written comments on the matter raised in the Orders; that is, whether FACTOR and MusicAction should be treated equitably regarding guarantees for long-term financing. Licensees affected by the decisions were also informed that they could file written comments on the matter set out above, as well as written replies to any comment received by the Commission during the proceeding.
A total of 17 comments were received. One was filed by the CAB, while 14 were from individual broadcasters. The other two comments were submitted on behalf of the independent recording industry by CIRPA and the Association québécoise de l’industrie du disque, du spectacle et de la vidéo (ADISQ).
The CAB and all of the broadcasters strongly supported the approach taken by the Commission in the original decisions, and urged that they be confirmed. They noted that FACTOR did not request long-term guaranteed funding as MusicAction had, and that FACTOR, which is supported by broadcasters in nine provinces, has a much larger potential base of financial support than MusicAction, which draws its support almost entirely from within Quebec. Broadcasters also noted that, subsequent to CIRPA’s appeal, the Department of Canadian Heritage committed an additional $15 million dollars in funding to FACTOR and MusicAction over the next three years. Broadcasters argued further that both organizations will receive additional revenues from radio stations as a result of commitments made in applications for new licences and in applications to purchase radio stations.
Finally, they stated that it would be desirable that radio stations be given the flexibility to contribute to their choice of third party organizations involved in Canadian talent development, and that different treatment of the French- and English-language segments of the industry is consistent with the policy for Canadian broadcasting set out in the Broadcasting Act.
For its part, CIRPA expressed concern that, in the absence of specific conditions of licence, the commitments made by broadcasters for annual contributions to FACTOR could be reallocated to other organizations at any time. CIRPA argued that the financial commitments to FACTOR should remain in place for the full term of each licence, and should thus be subject to conditions of licence similar to those applied to licensees in respect of their financial commitments to MusicAction.
CIRPA considered that other valuable activities, such as those performed by Canadian Music Week and by associations such as the Songwriters Association of Canada, should also receive direct annual funding from broadcasters throughout their licence terms, in accordance with appropriate conditions of licence.
In its comment, ADISQ suggested that there is no justification for FACTOR to be treated differently than MusicAction with respect to long-term funding. It considered that the Commission should impose conditions of licence on all radio stations requiring that their specific funding commitments, whether to MusicAction or FACTOR, be adhered to for the entire term of their licences.
III The Commission’s Determination
Although the Orders-in-Council referred back some 116 decisions, only one issue was put before the Commission. The Commission was asked to assess fully the issue of whether, in the case of commitments by radio station licensees to FACTOR and MusicAction, the CRTC should treat FACTOR and MusicAction equitably regarding guarantees for long-term financing.
The Commission notes that the issue identified in the Orders is the equitable treatment of FACTOR and MusicAction. Equitable treatment means fair treatment, not necessarily treatment that is equal or the same. The Commission also notes that the possibility of there being different approaches taken with respect to the regulation of the French- and English-language sectors of the broadcasting system is recognized twice in the Broadcasting Act.
Paragraph 3 (1)(c) of the Broadcasting Act states:
English and French language broadcasting, while sharing common aspects, operate under different conditions and may have different requirements.
Paragraph 5 (2)(a) of the Broadcasting Act states:
The Canadian broadcasting system should be regulated and supervised in a flexible manner that is readily adaptable to the different conditions under which broadcasting undertakings that provide English and French language programming operate.
The reason that the Commission approached funding for FACTOR and MusicAction differently was because of the different environments in which the two organizations operate. As was indicated in submissions, MusicAction has a much smaller potential base of financial support than does FACTOR: MusicAction is generally supported by Quebec broadcasters, while broadcasters in the other nine provinces are potential supporters of FACTOR. As well, the amount of money that has been pledged to FACTOR by broadcasters at the outset of the CAB’s plan is significantly greater than the amount that broadcasters had committed to provide to FACTOR in the context of their licence renewals. In contrast, the amount that has been pledged to MusicAction under the CAB’s guidelines is only slightly greater than the amount pledged under the previous commitments of licensees. The Commission therefore continues to believe that MusicAction merits special concern.
Outside Quebec, there are a greater number of third party organizations involved in Canadian talent development to which stations might be interested in making contributions, including provincial and regional organizations. The Commission considers that, given the relative health of FACTOR, these organizations should have an equal chance to receive contributions from radio stations. The Commission notes in this regard that FACTOR has never requested that radio stations be required, through conditions of licence, to provide funding to that organization.
With regard to CIRPA’s recommendation that other organizations be provided direct financial support guaranteed by conditions of licence, the Commission continues to believe that broadcasters should generally have the flexibility to choose which of the organizations associated with Canadian talent development, and qualifying for support under the CAB’s guidelines, should receive such support.
In light of the above, the Commission concludes that the treatment afforded to FACTOR and MusicAction, although different, is equitable and fair, given the different environment and circumstances within which the two organizations operate.
Therefore, following its reconsideration of the subject decisions and of the submissions by interested parties pursuant to the public process announced in Public Notice CRTC 1996-155 and CRTC 1996-155-1, the Commission confirms the decisions listed in the appendix to this document, which were sent back to the Commission for reconsideration and hearing under Order-in-Council P.C. 1996-1734 and Order-in-Council P.C. 1997-39.
Allan J. Darling
Secretary General

Appendix

Decisions Referred Back to the Commission for Reconsideration and Hearing in Order-in-Council P.C. 1996-1734

Decisions Dated 19 August 1996

CRTC 96-418 through CRTC 96-433;
CRTC 96-435.

Decisions Dated 23 August 1996

CRTC 96-451 through CRTC 96-456
CRTC 96-458;
CRTC 96-459;
CRTC 96-461;
CRTC 96-462;
CRTC 96-464;
CRTC 96-466 through 96-468;
CRTC 96-470 through 96-472;
CRTC 96-474 through 96-477

Decisions Dated 26 August 1996

CRTC 96-480 through 96-503;
CRTC 96-505 through 96-512;
CRTC 96-515

Decisions Dated 29 August 1996

CRTC 96-547 through 96-554
CRTC 96-556
CRTC 96-557;
CRTC 96-559 through 96-574;
CRTC 96-579.

Decisions Referred Back to the Commission for Reconsideration and Hearing in Order-in-Council P.C. 1997-39

Decision Dated 10 October 1996

CRTC 96-674.

Decision Dated 17 October 1996

CRTC 96-680.

Decision Dated 25 October 1996

CRTC 96-727.

Decision Dated 1 November 1996

CRTC 96-730 as corrected by CRTC 96-730-1.

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