ARCHIVED -  Public Notice CRTC 1997-42

Public Notice

 Ottawa, 23 April 1997

Public Notice CRTC 1997-42

Revised Policy on the Use of Hits by English-Language FM Radio Stations

I. Background

1.  In Public Notice CRTC 1997-5 (P.N. 1997-5) dated 10 January 1997, the Commission called for comments on a proposal to eliminate its policy that the level of hits broadcast by English-language commercial FM stations be less than 50% of all musical selections broadcast each week. Under this proposal, there would cease to be any limit on the level of hit material that commercial FM stations could broadcast.

2.  The Commission's hit policy was one of several measures implemented in 1975 to ensure that music programming on FM stations complemented, rather than imitated, that presented on AM stations, thereby increasing the diversity of music available on radio, and to help hit-oriented AM stations succeed commercially thus enabling them to meet their obligations and commitments under the Broadcasting Act, the relevant regulations and their licences.

3.  In its January 1997 notice, the Commission outlined the reasons why it considered a review of the hits policy to be warranted. The Commission noted, among other things, that at the time of the policy's introduction, FM radio was in its developmental stage, and AM radio received significantly higher levels of listening and revenues. Since 1975, FM listening and revenues have increased dramatically.

4.  The Commission also noted that the hits policy had effectively precluded the emergence of the Contemporary Hit Radio (CHR) or Top 40 format on FM radio in Canada. Indeed, only a handful of AM stations now operate in this format. The Commission considered that eliminating restrictions on the use of hits would allow the development of CHR and other Top-40 oriented formats on FM and thus increase the choice of radio music available to listeners.

5.  Further, the Commission noted that a controversy had arisen in 1996 with respect to the charts used to define a "hit." For purposes of its policy, a "hit" was defined as any musical selection that reached any one of the Top 40 positions on one or more of a number of specified charts, including:

The Record Retail Singles
The Record Country
RPM 100 Country Tracks
Billboard Hot 100 Singles
Billboard Hot Country

6.  On 1 April 1996, the Canadian music industry publication "The Record" discontinued its "Retail Singles" chart and replaced it with a new chart called "The Hit Parade." The "Hit Parade" chart was compiled based on airplay of selections rather than sales. In Circular No. 422 dated 6 September 1996, the Commission announced that it would use this new chart as one of the sources to determine hits. The Canadian Association of Broadcasters (CAB) responded to this announcement by expressing concern that adoption of the new chart would require radio stations to change their programming significantly unless the Commission were to implement a ten-week delay in applying charts to any particular analysis.

7.  Subsequently, in P.N. 1997-5, the Commission noted that the ten-week delay proposed by the CAB would have effectively redefined a "hit" for the purpose of the policy, in that it would allow FM stations to increase substantially the level of hits (as then defined) that they could broadcast. As such, the proposal would have effectively modified the policy so that it would help only a relatively small number of stations that program past hits exclusively. The proposal by the CAB, as well as the increased use of spoken word programming by many AM stations, led the Commission to question whether the limitation on the use of hits by FM stations remained necessary to help AM stations.

8.  The Commission notes that, in the period since it began this public process, "The Record" has discontinued "The Hit Parade" chart and has replaced it with three charts called "Contemporary Hit Radio", "Contemporary Adult Radio" and "Pop Adult." These charts, as well as the "Country" chart published by "The Record", are now compiled exclusively from information gathered by Broadcast Data Systems (BDS), which electronically monitors the music played by selected radio stations. Therefore, retail sales are not reflected in any of these charts.

II Summary of Submissions

9.  The Commission received a total of 22 submissions in response to P.N. 1997-5. Eighteen of these were from the commercial broadcasting industry, while two represented the interests of campus radio stations, and two more expressed the views of the recording industry.

10.  Two different points of view were put forward by commercial broadcasters, indicating a lack of consensus within this group on the matter. Both views were reflected in the submission made by the CAB.

11.  Ten of the submissions by commercial broadcasters argued for the elimination of all limits on the use of hits by English-language commercial FM stations. The reasons given are summarized below:

·  Elimination of restrictions on the use of hits would allow the CHR format, which has virtually disappeared from AM radio, to appear on the FM band. This would increase listener choice and make radio more appealing to younger listeners.

·  Many AM stations have incorporated higher levels of spoken word into their programming. This reduces the need to protect the music formats of AM stations by limiting the level of hits broadcast by FM stations.

·  Monitoring and controlling the level of hits is a heavy administrative burden for broadcasters.

·  The policy is a disservice to listeners who are unable to hear the most popular music on FM.

12.  The other submissions from commercial broadcasters expressed two concerns that left them unable to support a wholesale elimination of the policy on hits.

13.  L'association canadienne de la radio et de la télévision de langue française (ACRTF), as well as three French-language FM radio licensees, expressed concern that the elimination of the restriction on the use of hits by English-language FM stations would place French-language FM stations at a severe disadvantage in the Montréal and Ottawa/Hull markets, where English and French-language stations compete directly with each other.

14.  They argued that elimination of the hits policy would lead to a decrease in listening to French-language stations, which must ensure, by regulation, that at least 65% of the vocal music selections they play are in French. This automatically limits the level of English-language hits that they can broadcast.

15.  They noted that there is already a significant level of tuning by Francophones to English-language radio in these markets and considered that the level of tuning to English stations would increase further if the hits policy were discontinued.

16.  These parties therefore argued that the existing policy on the use of hits by English-language FM stations should be maintained for the markets of Montréal and Ottawa/Hull, even if the policy were eliminated or amended for other markets.

17.  Three of the six companies operating English-language FM stations in the markets of Montréal, or Ottawa/Hull, or both, acknowledged the concerns of the French-language broadcasters and indicated that they would be willing to continue operating under the existing policy in these markets.

18.  Another concern was raised by four companies operating AM stations with "Oldies" formats. In their view, Oldies is the only viable music-oriented format remaining for AM stations in competitive markets, and that this is directly due to the current restrictions on the use of hits by FM stations. They considered that elimination of the hits policy could have a disastrous effect on AM oldies stations.

19.  These parties therefore suggested that restrictions on the use of hits by English-language FM stations be maintained, but that a hit be redefined so that all releases after 1980 would automatically count as non-hits for the purposes of the Commission's hit to non-hit analysis.

20.  According to these parties, such an approach would bring the following benefits to the broadcasting system:

·  FM stations would be able to maximize the use of hits within their existing formats.

·  The CHR format could be broadcast on FM stations.

·  The Oldies format would be protected on the AM band.

·  Administrative work would be reduced for broadcasters and the Commission since current hits would no longer have to be monitored and dated.

·  Radio format diversity would be maintained.

·  A greater number of AM stations would have the opportunity to survive until digital radio is widely implemented.

21.  Although the Commission intended the focus of this review to be on commercial FM stations, two submissions addressed the issue of the level of hits permitted for campus FM radio stations. Currently campus/community stations must ensure that the level of hits programmed each broadcast week is no more than 15% of all musical selections. For campus/instructional stations, the maximum permitted level is 30%.

22.  The National Campus and Community Radio Association (NCRA) stated that abolishing limits on hits for campus/community stations could lead to a watering down of the distinctive nature of the programming that such stations provide. It further considered that any change should be examined in the context of a comprehensive review of the policy for campus radio. On the other hand, the licensee of CIXX-FM London, a campus/instructional station, considered that limitations on hits for instructional stations should either be removed or "revised upwards".

23.  The submissions by the two organizations representing the recording industry opposed the removal of limitations on the use of hits at the present time. The Canadian Independent Record Production Association (CIRPA) noted that the Commission had indicated in Public Notice CRTC 1995-60, that the policy on hits would be reviewed in 1998. It argued that this date should be respected so that research could be completed on the implications of eliminating the policy. It also noted that representatives of the Commission have indicated that a more general review of the Commission's radio policy is being planned and stated that the policy on hits should be included in this review.

24.  L'Association québéçoise de l'industrie du disque, du spectacle et de la vidéo (ADISQ) also stated that the original 1998 date for the review should be maintained so that research can be completed on the implications of any change. It also considered that the original goals of the hits policy remain valid. It concluded that the policy limiting the use of hits on English-language FM stations should be maintained, at least in the markets of Montréal and Ottawa/Hull.

III The Commission's Determination

25.  As indicated earlier, limitations on the use of hits was one of several measures introduced beginning in 1975 to ensure that music programming on FM radio complemented rather than imitated that presented by AM stations. At that time, the Top 40 or CHR format was very popular on the AM band.

26.  In the time since the FM policy was introduced, the CHR format has virtually disappeared from the AM band in Canada. The Commission is thus concerned that the current limitation on the use of hits is keeping a potentially popular format off FM radio as well. Formats based on contemporary music have the potential not only to increase programming diversity for listeners, but to provide an additional showcase for new Canadian artists.

27.  On the other hand, the Commission acknowledges the concerns of those licensees who operate Oldies AM stations, and accepts that these stations would have difficulty competing with FM stations offering the same format. It also is aware that some AM stations have adopted this format precisely because the restrictions on the use of hits by FM stations has created this programming niche for AM stations, and considers that a sudden change in the regulatory environment would be unfair to such stations.

28.  Further, the Commission notes the particular concerns of those who operate French-language FM stations in the Montréal and Ottawa/Hull markets, where three licensees of English-language FM stations have agreed to continue operating under the existing restrictions, even if the policy were changed for other markets.

29.  With respect to the concerns of the recording industry, the Commission has informally indicated that it would be conducting a wider review of several elements of its radio policy. It is therefore reluctant to take any action at this time that would preclude consideration of its hits policy as part of that review. It has therefore decided that it will not institute a process wherein licensees would be invited to apply to delete commitments set out in their Promises of Performance with respect to a maximum level of hits.

30.  The Commission also notes and agrees with the comments of NCRA that limits on the use of hits by campus stations should not be considered now, but should be considered in the context of an overall evaluation of the policy for campus radio.

31.  In light of the above, the Commission will proceed as follows:

·  All FM stations will continue to be required to meet commitments with respect to the maximum level of hits set out in their Promises of Performance.

·  For campus and community stations, and for the following English-language commercial FM stations operating in the Montréal and Ottawa/Hull markets, the current definition and system for determining compliance with commitments with respect to hits will continue to apply.

 Montréal:
CHOM-FM, CJFM-FM, CFQR-FM

Ottawa/Hull:
CKKL-FM, CJMJ-FM, CHEZ-FM, CFMO-FM, CKBY-FM, CKQB-FM, CHRI-FM.

·  For campus and community stations and for the above-noted commercial FM stations, a "hit" will continue to be defined as a musical selection that has reached one of the top 40 positions on one or more of the following charts:

 Billboard Hot 100 Singles
The Record Country
RPM 100 Country Tracks
Billboard Hot Country

 The Commission notes that the catalogue of past hits also includes selections that have reached one of the Top 40 positions on any of the following charts:

 RPM 100 Singles (until 3 September 1988)

RPM Retail Singles (from 10 September 1988 until 10 February 1990)

 The Record Retail Singles (until 1 April 1996)

·  For campus and community stations and English-language commercial stations in Ottawa/Hull and Montréal, the latest charts used to determine hits will be those contained in publications dated up to and including two Saturdays before the date of broadcast. Canadian selections that enter the Top 40 will continue to be considered as non-hits for one year from the date they first enter the Top 40. In addition, selections performed and aired live, or contained in a live performance recorded primarily for broadcast use will not be counted as hits.

·  For English-language commercial FM stations in markets other than Montréal and Ottawa/Hull, the Commission will, for regulatory purposes, revise the definition of a hit as follows:

 A hit is any selection that, up to and including 31 December 1980, reached one of the Top 40 positions in the charts used by the Commission to determine hits. All other selections will be considered as non-hits for purposes of determining compliance with a station's Promise of Performance.

 This revised definition will be incorporated into the Glossary of Radio Terms.

IV  Programming Canadian Music, Including Music by New Artists

32.  The Commission considers that the revised definition of a hit will make it possible for the CHR format to emerge on the FM band, and that this will offer a potential additional opportunity for Canadian artists to have their music played on radio. During the upcoming review of radio policy, the details of which the Commission will announce in the near future, the Commission intends to explore additional mechanisms that might provide exposure for new Canadian artists and ensure that all Canadian music receives adequate exposure to audiences.

V Implementation

33.  The new definition of a hit for English-language commercial stations other than those serving the Montréal and Ottawa/Hull markets will come into effect on Sunday, 4 May 1997. Licensees will then have the flexibility to adjust their programming in accordance with the policy.

Allan J. Darling
Secretary General

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