INTRODUCTION
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1. In Public Notice CRTC 1997-104 dated 1 August 1997 and entitled A Review of the Commission’s Policies for Commercial Radio, the Commission announced that it would hold a public hearing, beginning on 1 December 1997, to review its policy framework for commercial radio.
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2. The Commission received written submissions from 58 parties in response to its call for comments contained in that public notice. Thirty-two parties appeared during the hearing to elaborate on their comments and suggestions. The Commission thanks all who filed comments for the thoughtfulness and quality of their submissions. They have assisted the Commission greatly in its deliberations.
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3. As indicated in the Commission's 1997 Vision Statement, the Commission manages a delicate balance between achieving various social and cultural objectives and ensuring an economically strong and competitive communications industry. The Commission considers that its policy framework for commercial radio should focus on enhancing the access that Canadians have to Canadian music and other programming reflective of their communities and their country. A strong and competitive radio industry is vital to the achievement of this goal. As radio moves toward digital transmission and increased competition, it is important that it retain the flexibility to respond to these and other challenges if it is to continue to make its important contribution to the goals set out in the Broadcasting Act (the Act).
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4. In the following pages, the Commission sets out its revised policy for conventional commercial radio stations only. As indicated in Public Notice CRTC 1997-105 entitled An Agenda for Review of the Commission's Policies for Radio, the Commission intends to review its approach to the various other types of radio programming undertakings within the next two years.
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Highlights of the Commission’s Revised Policy for Commercial Radio
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5. The Commission’s radio policy reflects the broadcasting policy objectives set out in section 3 of the Act. These objectives may be summarized as follows:
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· Radio programming should be predominantly Canadian;
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· Radio should provide listeners with varied and comprehensive programming from a variety of sources including the Canadian Broadcasting Corporation (CBC), private commercial stations and not-for-profit stations. The presence of different news voices should be encouraged, and listeners should have a diversity of programming from which to choose;
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· Programming should be of high standard and balanced on matters of public concern;
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· Radio should provide service that is relevant to local communities;
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· Programming should reflect Canada’s linguistic duality, and;
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· Programming should reflect Canada’s cultural and racial diversity, including the needs and interests of Aboriginal peoples.
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6. The Commission's revised policy for commercial radio has three major objectives. The first major objective of the Commission is to ensure a strong, well-financed radio industry that is better poised to achieve its obligations under the Act and to meet the challenges of the 21st century. In the Commission's view, increased consolidation of ownership will enable the radio industry to strengthen its overall performance, attract new investment, and compete more effectively with other forms of media. Accordingly, the Commission has revised its policy on common ownership. The Commission is satisfied that the revised policy will provide for a strengthened radio industry, while responding to longstanding concerns regarding diversity of news voices, media cross-ownership and fair competition.
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7. Accordingly, in markets with less than eight commercial stations operating in a given language, a person may be permitted to own or control as many as three stations operating in that language, with a maximum of two stations in any one frequency band. In markets with eight commercial stations or more operating in a given language, a person may be permitted to own or control as many as 2 AM and 2 FM stations in that language.
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8. In assessing an application filed in accordance with the revised common ownership policy, the Commission will consider the impact of the application on the diversity of news voices and the level of competition in the market. In particular, it will take into account the amount of equity the applicant may have in other radio stations operating in the same language in that market, as well as the applicant's holdings in other local media and the existence of any local radio management agreements (LMAs) to which the applicant is a party.
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9. Further, pending completion of a review of its policy regarding LMAs, the Commission will expect the applicant to undertake not to enter into an LMA on a going forward basis without the Commission's approval.
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10. In order to encourage competition and choice for listeners, the Commission has also revoked its Radio Market Policy. The Commission, following its consideration of applications for new market entry, will be prepared to issue licences, depending on the individual merits of the applications, in particular the benefits their approval will bring to the communities concerned and the broadcasting system as a whole.
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11. The second major Commission objective is to ensure pride of place for Canadian artists. The Commission will therefore issue a proposed amendment to the Radio Regulations, 1986 (the regulations) increasing the required level of Canadian content for popular music selections (category 2) broadcast each week to 35%. This will expand the exposure given to Canadian artists and works, and provide increased support to the Canadian music industry as a whole.
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12. The Commission is confident that, as stronger, more effective strategic relationships between the radio and music industries develop, the cooperative initiatives and efforts of these industries to promote and support Canadian music will succeed in bringing about a level of Canadian content that reaches 40% in five years.
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13. As a further means to ensure that Canadian music is exposed during periods of high listening, the Commission will issue a proposed amendment to the regulations requiring that a minimum of 35% of popular music selections broadcast between 6:00 a.m. and 6:00 p.m., Monday through Friday, be Canadian. Only Canadian selections played in their entirety may be included in calculating the percentage of Canadian category 2 musical selections broadcast by a station.
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14. The Commission will also expect licensees that offer high levels of traditional and special interest music (category 3) to increase their commitments to Canadian music in this category at the time of licence renewal. Concert music stations will also be asked to provide specific commitments with respect to the broadcast of works by Canadian composers. In addition, the Commission generally considers that there should be an increase in the level of Canadian music broadcast during ethnic programming periods. This issue will be addressed at the time that the Commission reviews its policy on ethnic broadcasting.
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15. The Commission will maintain the current definition set out in the regulations of a Canadian selection. This definition, commonly referred to as the MAPL system, helps to ensure that Canadian artists and works have access to the airwaves, and helps support a Canadian-based music and recording industry. The Commission considers that the current system has been successful in meeting these goals, and has the added virtue of being relatively simple to administer.
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16. The third major Commission objective is to ensure that a French-language presence in radio broadcasting is maintained. Accordingly, the Commission will retain its requirement that at least 65% of the vocal popular (category 2) music selections broadcast each week by French-language AM and FM stations is in the French language. In order to ensure that French-language selections receive exposure during periods of high listening, the Commission will issue a proposed amendment to the regulations requiring that a minimum of 55% of the popular vocal music selections broadcast between 6:00 a.m. and 6:00 p.m., Monday through Friday, be in the French language.
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17. Furthermore, in order to ensure that French-language selections receive the intended exposure prescribed by the regulations, only those French-language selections played in their entirety may be included in calculating the percentage of category 2 French-language vocal music.
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18. The Commission considers that, beyond the measures described above, increased cooperation between the radio and music industries to promote Canadian music and foster new talent will be essential to ensure a vibrant Canadian music scene and the continued availability of quality recordings for airplay. This will, in turn, contribute to the success and distinctiveness of Canadian radio as it moves into an increasingly competitive environment.
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19. The Commission commends the Canadian Association of Broadcasters (CAB) for making a number of valuable commitments at the hearing designed to promote Canadian music and foster a closer working relationship with the music industry. The Commission strongly supports these initiatives, and expects the CAB to report annually on its activities in this regard, including activities to support and promote both the French- and English-language sectors of the music industry, especially with respect to new Canadian talent.
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20. The Commission has also requested the recording industry to provide the Commission with annual updates of its own initiatives, as well as those undertaken by the recording industry in cooperation with broadcasters, to support and promote Canadian music.
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21. The Commission has revised its benefits policy to ensure support for the development and promotion of Canadian music talent, and to foster cooperation between the radio and music industries. Specifically, the Commission has amended the benefits test for commercial radio to require, as a general rule, a minimum direct financial contribution to Canadian talent development representing 6% of the value of transactions involving transfers of ownership and control. Consistent with the Commission's existing benefits policy, the Commission will not impose benefits requirements in the case of transactions involving unprofitable undertakings.
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22. The contribution will be allocated to: a new Canadian music marketing and promotion fund to support co-operative broadcaster/music industry activities and initiatives; eligible third party organizations directly involved in the development of Canadian musical and other artistic talent, including FACTOR and MusicAction; and other Canadian talent development initiatives.
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23. The Commission notes that the highlights described above are intended for the convenience of the reader only. In the following pages, the Commission addresses in greater detail, these and its other policy determinations with respect to commercial radio. The Commission intends to review its approach to commercial radio in five years, including its revised policy on common ownership, and its policies designed to ensure exposure for Canadian artists and a distinctive French-language presence.
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Ownership Issues
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Common Ownership Policy
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24. In the past, the Commission has viewed its common ownership policy as one of the more effective tools at its disposal to ensure that a diversity of voices exists in a community. Under this policy, the Commission has generally restricted a person to ownership of a maximum of one AM and one FM undertaking operating in the same language and in the same market.
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25. At the hearing, representatives of the music industry and others argued that diversity would best be served by increasing the number of licensees in a market rather than by allowing increased consolidation. Some of these parties also expressed concern that increased common ownership could lead to a reduction in the diversity of news voices in a market and could have a negative impact on smaller, independent radio stations, as well as on community radio stations.
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26. On the other hand, there was general agreement among the CAB and most representatives of the radio industry that the common ownership policy should be relaxed to permit a person to own more than one AM and one FM station in a market. The CAB, on behalf of its member radio stations, explained that the current ownership restrictions make it difficult for radio to compete effectively with other forms of media for advertising revenue, and harm the industry's financial performance. The industry representatives argued that increased consolidation of ownership would allow the radio industry to become more competitive with other forms of media, strengthen its overall performance, and help attract new investment. Other benefits identified by the CAB included increased diversity among formats and increased resources for programming.
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27. Several individual broadcasters offered suggestions at the hearing as to possible ownership models. Most, however, indicated that they would be willing to support a proposal advanced by the CAB that the Commission amend its policy by increasing the permissible level of common ownership of radio undertakings in a given market by an amount that would vary depending on the total number of stations serving that market in a given language. Thus, in markets served by four or fewer radio stations in a given language, as well as in markets served by six stations, a person could be permitted to own as many as two AM and two FM stations operating in that language.
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28. In a market served by five stations in a given language, a person would be restricted to ownership of no more than three stations, provided that this number includes at least one AM and at least one FM station.
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29. The CAB further proposed that, in markets served by seven or more English-language stations, common ownership would be restricted to no more than three AM and two FM stations, while in markets served by seven or more French-language stations, such ownership would be restricted to no more than two AM and three FM stations.
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30. The Commission is convinced that increased consolidation of ownership within the radio industry will enable it to strengthen its overall performance, and attract new investment. This, in turn, will assist the industry to compete more effectively with other forms of media and enhance its contribution to the support of Canadian cultural expression.
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31. In reviewing its common ownership policy and determining which ownership model it should adopt, the Commission also considered a number of factors, including: the impact on diversity of news voices in markets of different sizes; the impact of cross-media ownership; possible impact on diversity of formats; and implications for competition.
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Diversity of News Voices
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32. One of the objectives of the Commission's longstanding policy on common ownership has been to preserve the availability of distinct news voices in a community. The Commission notes that, in recent years, there has been a considerable increase in the number of local, regional and national news sources available in most markets, including new conventional radio and television stations, specialty programming services, community radio stations and regional newspapers, as well as emerging alternative sources of information such as the Internet. In determining a model for a new common ownership policy, the Commission has sought to strike a reasonable and acceptable balance between its concerns for preserving a diversity of news voices in a market, and the benefits of permitting increased consolidation of ownership within the radio industry.
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Cross-ownership and Equity Interests
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33. The Commission is alert to concerns regarding the impact on competition and the diversity of news voices in a market raised by media cross-ownership and the equity interests of a person in a multiple of local radio stations. In particular, ownership or control by one person of radio, television, print and/or distribution undertakings, or equity interests held by that person in a multiple of radio licensees in a given market, might give the person a market dominance that could affect the level of true competition available in the market. This situation would also give rise to concerns such as the potential for gate-keeping with respect to information, and the concentration of the advertising market in one person's hands.
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34. The Commission will therefore assess these concerns when examining an application for a new licence or for authority to transfer the ownership or effective control of an undertaking.
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Diversity of Formats
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35. A number of broadcasters at the hearing stated that an increase in the number of stations a person is permitted to own in a market would lead to an increase in the diversity of formats offered. The Commission agrees that one of the benefits of consolidation could be some increase in the diversity of formats offered in some individual markets. Nevertheless, it does not consider that the extent of any such increase overall would be as great as that forecast by the broadcasting industry. For example, while the Commission accepts the argument that one owner with several stations in a market will likely offer different formats on each of these stations, it is not convinced that this owner would maintain formats that differ from those employed by stations that are owned by other broadcasters in that market.
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Competitive Implications
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36. The radio industry operates in a competitive environment in which some of its competitors in other media have been allowed to consolidate. The Commission acknowledges that increased consolidation of ownership will reduce the number of competitors in some markets. It is the Commission’s view, however, that the CAB’s specific proposal for a revised common ownership policy could lead to an unacceptable reduction in the number of individual broadcasters, particularly in larger markets. In fact, this proposal could lead to a situation where only four markets in Canada would have more than two radio stations owners operating in any one language (Toronto, Vancouver, Edmonton and Winnipeg). The Commission believes that such a reduction in the number of radio broadcasters could also lead to an unacceptable reduction in the diversity of news voices and in competition.
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37. Accordingly, the Commission focused on developing a model that will allow for some measure of consolidation, while taking into account its general concerns for preserving a diversity of news voices and maintaining competition.
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The Commission's Conclusions
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38. Having considered all of the foregoing, the Commission has revised its common ownership policy as follows. In markets with less than eight commercial stations operating in a given language, a person may be permitted to own or control as many as three stations operating in that language, with a maximum of two stations in any one frequency band. In markets with eight commercial stations or more operating in a given language, a person may be permitted to own or control as many as two AM and two FM stations in that language.
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39. For the purpose of the revised common ownership policy, "control" shall mean "effective control" as the latter term is defined in section 11(3) of the regulations.
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40. In addition to other issues that may be raised in the context of a particular application, persons filing applications under the revised common ownership policy will be required to address the impact on diversity of news voices and the level of competition in the market.
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41. In assessing these matters, the Commission will take into account the amount of equity (voting and non-voting) that the applicant may have in other radio stations operating in the same language in the market concerned, as well as its equity holdings in other local media.
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42. In addition, the Commission will issue a proposed amendment to section 11(4)(d) of the regulations to specify that the licensee of a radio station must obtain the Commission's approval prior to acquiring a certain level of equity in another radio station operating in the same language and in the same market. The level of equity that would trigger the filing of such an application would be examined in the context of the public process held to consider this amendment.
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Local Management Agreements
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43. In Public Notice CRTC 1996-138 dated 16 October 1996 and entitled Commission's Approach to Dealing with Local Management Agreements in Canadian Radio Markets, the Commission stated that it will generally accept local management agreements (LMAs) in markets of any size, without requiring prior approval, provided the parties to the agreement respect certain specific criteria.
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44. The Commission's LMA policy was intended to assist radio broadcasters in achieving cost savings and greater marketing parity with other media during periods of financial difficulty. Cost savings are normally realized under LMAs through the integration of several operational components of one radio station, often involving the technical, sales and promotion and general administrative activities, with similar operational components of a radio station operated by another licensee in the same market.
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45. As this policy was enacted at a time when the common ownership policy generally restricted persons to ownership of no more than one AM and one FM undertaking in the same language and in the same market, the Commission considers it appropriate to review its LMA policy. In particular, increased consolidation of ownership in a market involving stations that are party to an LMA could raise questions as to whether this would lead to market dominance by one broadcaster to the undue detriment of others in a market, or effectively create a monopoly in a market that would otherwise be competitive under the revised common ownership policy. In Public Notice CRTC 1998-42 of today's date, the Commission has announced a public process to examine this matter.
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46. Existing LMAs will be taken into account by the Commission in considering applications by persons to acquire ownership or control of more than one AM and one FM station in the same language and in the same market. Moreover, until the review of the LMA policy is completed, a person who applies to acquire ownership or control of more that one AM and on FM station in the same language and in the same market will be expected to undertake not to enter into an LMA, on a going forward basis, without the Commission's prior approval.
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Programming Commitments In Ownership Transactions
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47. As part of this process, parties were asked to comment on whether or not the Commission should expect additional programming commitments from applicants proposing to enter into transactions that would result in them owning more than one AM and one FM station in a market.
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48. General concerns about the impact that consolidation of ownership could have on news programming were raised by several parties. They emphasized the important role that radio plays in the dissemination of local news and information. Some parties expressed the view that local news cover-age has declined in Quebec as a conse-quence of the consolidation of ownership that has occurred in that province in recent years. They were concerned that this trend could continue if ownership requirements were loosened further.
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49. On behalf of the recording industry, the Association québécoise de l'industrie du disque, du spectacle et de la vidéo (ADISQ) argued that the Commission should not introduce a two-tier regulatory system with respect to radio programming. It considered that all stations, not just those coming under the requirements of any new policy on common ownership, have a responsibility to raise the level of Canadian music they play and ensure reasonable distribution of French-language Canadian musical selections.
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50. The Canadian Independent Record Production Association (CIRPA) added that obligations to ensure diversity in the market through the provision of different formats should be expected and enforced by condition of licence. The CBC also raised the possibility of re-regulating formats.
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51. The CAB and several individual owners of commercial radio stations did not consider that programming commitments any greater than those required of other broadcasters should be imposed on applicants proposing a consolidation of radio ownership in a community. It was generally argued that additional requirements would slow the financial recovery of radio.
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The Commission’s Conclusions
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52. The Commission considers that all radio licensees have an obligation to contribute to the cultural objectives set out in the Act, and that this obligation is particularly important in situations where one owner is allowed the privilege of owning several stations in a community. It is not prepared, however, to return toaregime where FM radio formats would be strictly defined and regulated. The Commission essentially abandoned this strategy in 1990 largely because of the difficulties in defining and distinguishing between various types of popular music.
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53. With respect to commitments in other areas, such as levels of news and spoken word, the Commission considers that setting across-the-board requirements would not take into account the particular needs of different communities or the differing resources of licensees.
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54. The Commission has therefore decided to use a case-by-case approach in assessing programming commitments. Applicants seeking to acquire ownership or control of more than one AM and one FM station in a given language and market will be required to outline how their proposed programming will benefit the community and further the objectives of the Act. The Commission will retain the option of requiring adherence, by condition of licence, to particular commitments made by applicants.
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Other CAB Proposals
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55. The CAB presented three other proposals in the context of its proposed changes to the common ownership policy.
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56. The first proposal was that any change to the policy should be reviewed in three years. The Commission expects that it will take more than three years before the effects of the ownership consolidation that will take place under this revised policy are fully known. Therefore, the Commission intends to review its common ownership policy in five years, at the same time as it reviews its overall policy approach to commercial radio broadcasting.
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57. The CAB also made a proposal intended to strengthen the position of small market radio stations. Specifically, it suggested that the Commission refrain from issuing calls for competing applications in situations where the owner of a single station in a small market applies for a second licence (AM or FM), or seeks authority to move its existing AM station to the FM band. It also proposed that the owner of one AM and one FM station in a small market be permitted to apply for a third station in that market without the Commission issuing a call for other applications.
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58. The Commission considers that implementation of this proposal would be inconsistent with its efforts to encourage competition and diversity in the radio industry, as it may unduly favour incumbent radio station owners.
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59. Accordingly, consistent with its objective of encouraging competition and choice, the Commission will assess each application, whether for a licence to carry on a new radio station or to convert an existing AM station to the FM band, on its merits, and will issue a call for competing applications in those circumstances where it determines that a call is warranted.
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60. The third CAB proposal was that the Commission simplify and accelerate the processing of applications for authority to transfer ownership or control, or to acquire the assets, of a radio station. The CAB indicated that the intent of its proposal is to ensure that the delay associated with the Commission's public process does not unduly impede implementation of industry consolidation.
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61. The Commission notes that it has already taken numerous, significant steps to streamline the application process now in place, and will continue to process all applications as expeditiously as possible, taking into account the particular circumstances of each case.
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The Benefits Test
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62. The Commission currently applies the benefits test in its consideration of applications for authority to transfer ownership or control of programming undertakings. Because the Commission does not solicit competing applications, the onus is on the applicant to demonstrate that the application filed is the best possible proposal under the circumstances and that the benefits proposed in the application are commensurate with the size and nature of the transaction.
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63. The Commission assesses the benefits proposed in each application on a case-by-case basis. Although there are no set guidelines or benchmarks concerning what would constitute an acceptable level of tangible benefits in such transactions, the Commission notes that these have generally represented approximately 10% of the value of a transaction.
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64. CIRPA and ADISQ stated that, if the Commission does permit multiple station ownership, the benefits policy should be maintained, and support for Canadian music, including financial contributions to Canadian talent development, should increase.
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65. Broadcasters, on the other hand, generally expressed the view that the Commission should eliminate the benefits test for transactions involving radio undertakings. The CAB argued that the radio industry faces significant economic challenges and that consolidation, itself, will be costly. It also claimed that many benefits to listeners will result from multiple station ownership and the development of a healthy radio industry. Examples given of such benefits were an increase in the number of formats and the capacity for improved news programming.
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66. In its final argument, the CAB submitted a proposal to replace the existing benefits test with a contribution that would flow through to FACTOR, MusicAction and a new Canadian music marketing and promotion fund; and would also be used to assist the transition of stations to digital radio.
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67. This contribution would represent 3% of the value of the total transaction. According to the CAB's proposal, the value of unprofitable stations involved in a transaction would not be included in calculating the required contribution, nor would contributions be required in respect of transactions with a value of less than $7.5 million.
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The Commission's Conclusions
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68. The Commission is of the view that, in the absence of a competitive process to consider applications involving the transfer of ownership and control of radio broadcasting undertakings (which, by definition, make use of frequencies that are scarce public resources), the benefits test will continue to be an appropriate mechanism for ensuring that the public interest is served in the case of transfers of ownership and control.
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69. The Commission considers that the introduction of digital technology, technical upgrades, programming improvements and other benefits, are likely to be implemented, or implemented more quickly, as a result of multiple station ownership and a financially healthy radio industry. Accordingly, the Commission generally considers it reasonable that there be some reduction in the level of tangible benefits associated with ownership transactions. It also finds it reasonable that benefits be directed to the support of the Canadian music industry, including third party organizations such as FACTOR and MusicAction which are involved in the development of Canadian talent.
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70. In consideration of the above, the Commission has decided to modify its benefits policy in respect of all transfers of ownership and control of radio undertakings. Specifically, the Commission has determined that it will henceforth expect that, in the case of such applications, commitments be made to implement clear and unequivocal benefits representing a minimum direct financial contribution to Canadian talent development of 6% of the value of the transaction. Consistent with the Commission's existing benefits policy, and as stipulated in Public Notice CRTC 1993-68 dated 26 May 1993, the Commission will forgo benefits requirements for unprofitable undertakings. The Commission will measure profitability according to the average profit before interest and taxes (PBIT) of the undertaking over the three years preceding the filing date of the application. The Commission will not systematically apply this exemption to stations in the first five years of operation. In cases where an applicant is applying to acquire a group of stations, all or some of which fall below this threshold, the Commission will consider profitability on an aggregate basis.
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71. As also stated in Public Notice CRTC 1993-68, the Commission will continue to expect the purchaser of an undertaking to fulfil any benefits commitments that the current licensee of the undertaking has not fulfilled. The Commission considers that benefits commitments are part of the obligations of a licensee and should be implemented regardless of ownership changes.
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72. The Commission will expect financial contributions to be distributed as follows:
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· 3% to be allocated to a new Canadian music marketing and promotion fund;
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· 2% to be allocated, at the discretion of the purchaser, to FACTOR or MusicAction; and
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· 1% to be allocated, at the discretion of the purchaser, to either of the above initiatives, to other Canadian talent development initiatives, or to other eligible third parties directly involved in the development of Canadian musical and other artistic talent, in accordance with Public Notice CRTC 1995-196, as may be amended from time to time.
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73. The purpose of the Canadian music marketing and promotion fund will be to support co-operative activities by broadcasters and the music industry to market and promote Canadian music, including new talent. The Commission expects the fund to be jointly administered by representatives of the broadcasting and recording industries. Accordingly, the Commission expects the CAB, in co-operation with representatives of the recording industry, to submit a proposal for the Commission's prior approval, detailing how the fund will be administered and operated. The proposal should be submitted no later than 1 September 1998, and should specify how the fund will be allocated to ensure support for both French- and English-language music, including the development of new Canadian talent. The Commission will also require the submission of annual reports on the fund's activities, including details of all disbursements from, and activities supported by, the fund.
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74. The Commission notes that commitments for contributions to Canadian talent development made in the context of applications for authority to transfer ownership or effective control of a radio programming undertaking will remain separate and apart from the annual contributions to Canadian talent development by commercial AM and FM stations made either in accordance with commitments given at the time of previous transfer applications, or pursuant to conditions of licence imposed in accordance with the policy set out in Public Notice CRTC 1995-196, as amended from time to time.
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Radio Market Policy
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75. The Commission set out its Radio Market Policy in Public Notice CRTC 1991-74 dated 23 July 1991. The purpose of this policy was to ensure that the introduction of an additional commercial AM or FM station in a given market would not unduly affect the ability of existing AM and FM stations to discharge their programming responsibilities. The radio market policy established three criteria that the Commission would use to assess the capacity of markets to support additional commercial radio stations. The three criteria represent measurements of group profitability, individual profitability and revenue growth within specific markets. Data concerning these measurements have been published annually by the Commission for use by potential applicants and other interested parties.
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76. At the hearing, the CAB argued that the Radio Market Policy should be maintained. According to the CAB, the criteria of the Radio Market Policy: "... are an information system. They have never prevented anybody from applying for a licence, and indeed, never prevented [ the Commission] from granting a licence." Some representatives of the music industry argued, however, that the Commission should consider issuing more licences, thereby creating a more competitive environment.
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The Commission's Conclusions
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77. The Commission's strategy, as set out in its 1997 Vision statement, is to "rely more on market forces to permit fair and sustainable competition." In the Commission's view, the new common ownership policy should allow existing radio station owners to improve their existing financial situation and their ability to compete effectively with new entrants.
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78. Accordingly, consistent with its desire to encourage competition and choice, the Commission has determined that it will no longer apply the criteria outlined in the Radio Market Policy. The Commission, following its consideration of applications for new market entry, will be prepared to issue licences, depending on the individual merits of the applications, in particular the benefits their approval will bring to the communities concerned and the broadcasting system as a whole.
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79. The Commission does, however, recognize the usefulness of relevant market information to potential applicants for radio licences in making their assessment of the relevant strength of a market. Therefore, the Commission intends to make available to potential applicants and other interested parties, aggregate financial summaries for medium and large markets. This aggregate market information will be made available on an annual basis.
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ISSUES RELATED TO CANADIAN MUSIC
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Promotion of Canadian Music
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80. The Commission’s primary approach to ensuring Canadian content on radio has been to require stations to play specific minimum levels of Canadian music. Broadcasters are also required to make annual contributions toward the development of Canadian talent.
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81. At the public hearing, both the broadcasting industry and the recording industry generally agreed that increased co-operation between the two sectors to promote Canadian music and support new talent is important. Such co-operation could provide increased support to Canadian artists, and help ensure the continued success of the Canadian music industry and increase the supply of Canadian recordings.
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82. The CAB made commitments to move forward with a number of initiatives designed to promote Canadian music and to increase the sales of Canadian recordings. These initiatives are:
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· A new Annual Canadian Radio Music Awards event will be held to celebrate new Canadian artists.
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· A Canadian Radio Music Month will be held annually in the month prior to the Canadian Radio Music Awards. Candidates for the awards will be promoted during radio programming.
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· A Virtual Music Store will be established to help make Canadian music played on commercial radio available for purchase through a central site on the Internet.
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· A Radio Stars program will be established to provide free promotion to new artists and new recordings. Under this plan, music-based stations will broadcast commercial messages on behalf of record companies or Canadian artists at no charge.
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· The CAB will host a conference to launch a new initiative to bring together all sectors involved in the promotion of Canadian music.
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The Commission’s Conclusions
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83. Historically, radio has played an important role in promoting Canadian artists and music. The Commission notes that the radio industry in Quebec has been particularly active in this regard. In that province, artists sometimes co-host radio programs to promote their appearances. Artist interviews are also used to promote both the artist and the station.
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84. The Commission considers the CAB’s commitments to be of great potential significance for the future promotion of Canadian music. It encourages the CAB to continue to explore ways of working with all sectors in the music industry to ensure the industry's continued success. Such efforts to increase the availability of high-quality Canadian recordings will, in turn, contribute to the success and distinctiveness of Canadian radio.
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85. The Commission commends the CAB for these valuable initiatives. It expects the CAB to report annually on its activities in this regard, including its activities to support and promote both the French- and English-language sectors of the music industry, and new Canadian talent in particular.
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Level of Category 2 Music
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86. Currently, section 2.2 of the regulations requires that at least 30% of musical selections (category 2) broadcast each week be Canadian, and that these selections be distributed in a reasonable manner throughout each broadcast day.
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87. This regulation ensures that Canadian artists and Canadian works are heard on radio. It also has played an important role in the development of a Canadian music and recording industry.
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88. In their comments, broadcasters generally agreed that the requirement for Canadian content in category 2 music should be maintained at the existing level, but noted that it is sometimes difficult to fulfil the existing quota without playing some material that is of lower quality, or without keeping some selections on the playlist for longer periods. The CAB contended that no increase in the required level of Canadian content should be implemented until sales of Canadian recordings, as a percentage of total recordings sold, exceed 15%. The CAB further suggested that the requirement for Canadian music would then be set at a level that is two times the retail sales of Canadian music, as a percentage of all record sales in Canada. The percentage would be averaged overa three-year period to remove the impact of year-to-year fluctuations.
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89. On the other hand, several representatives of the recording industry argued that the level should be increased immediately to levels that, they suggested, should range from 35% to 40%. Others recommended further increases, to be introduced over time until a 50% level is achieved. Those advocating increases argued that these are necessary to achieve the objectives of the Act. They also considered that the current level of new releases, plus the extensive catalogue of Canadian recordings that has accumulated since Canadian content requirements were first implemented, is assurance that sufficient material will be available to fulfil a higher requirement.
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90. Music industry representatives generally opposed the CAB’s plan to tie Canadian content levels to record sales. They argued that statistics with respect to record sales are released infrequently, and expressed concern about their reliability. According to these parties, the lack of reliable annual statistics would make it very difficult to implement the CAB’s plan. They also argued that the increased airplay of recordings has a demonstrated positive influence on sales, and that to make an increase in Canadian record sales a prerequisite for any increase in Canadian content would ignore this reality.
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The Commission’s Conclusions
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91. The Commission considers that playing Canadian music is a vital contribution that radio makes toward fulfilling the cultural goals set out in the Act. It also considers that the regulations requiring minimum levels of Canadian music have been important elements in bringing the Canadian music industry to its current level of success.
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92. Moreover, the Commission is convinced that there is an adequate supply of Canadian recordings available to support an increase in the required level of category 2 music on radio stations. It notes that French-language radio stations already provide levels of Canadian music that are generally well in excess of 35%.
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93. The Canadian content requirements set out in the radio regulations, unlike those applied to television broadcasters, do not generally involve large incremental direct expenses since radio stations do not have to pay for the production of the recordings. Therefore, playing Canadianmusic is a contribution to the Act’s objectives that radio can make, even in times of economic difficulty. The Commission also notes that the 1990 increase in the required Canadian content level for most FM stations has had no apparent inhibiting effect on the growth of listening toFM stations.
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94. Based on the foregoing, and taking into account the maturity of the Canadian radio industry, the Commission considers that an immediate increase in the level of Canadian content from 30% to 35% is both manageable and appropriate. It will expand the exposure given to Canadian artists and provide increased support to the Canadian music industry as a whole.
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95. Accordingly, the Commission will issue a proposed amendment to the regulations shortly requiring that at least 35% of category 2 musical selections broadcast by commercial AM and FM stations each broadcast week be Canadian selections.
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96. The Commission notes that some licensees, in exceptional circumstances, are currently subject to conditions of licence allowing for lower minimum Canadian content levels than that generally required by way of regulation. Some others are required to broadcast higher levels than the required minimum. The Commission expects these licensees to continue to operate in accordance with their current commitments.
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97. The Commission is confident that the cooperative initiatives and efforts of the broadcasting and music industries to promote and support Canadian music will succeed in bringing about a level of Canadian content that reaches 40% in five years.
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Distribution of Canadian Category 2 Selections
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98. To ensure that Canadian selections are played during periods of high listening, the regulations require that Canadian selections be reasonably distributed throughout the broadcast day.
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99. In Public Notice CRTC 1990-111 dated 17 December 1990 and entitled An FM Policy for the Nineties, the Commission set out the following criteria for determining if the distribution of Canadian selections is reasonable:
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· at least 25% of the popular music selections (category 2) broadcast between 6:00 a.m. and 7:00 p.m. Monday through Friday must be Canadian;
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· there should be a reasonably even distribution of Canadian selections in the above dayparts and throughout the broadcast week; and
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· there should be a significant presence of Canadian music in high audience periods, these traditionally being the morning and afternoon drive.
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100. The terms "reasonably even" distribution and "significant presence" have never been specifically defined.
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101. Representatives of the broadcasting industry suggested that the current guidelines, including the 25% minimum for weekdays between 6:00 a.m. and 7:00 p.m., are sufficient. They do not believe that special requirements are necessary for the morning and afternoon periods, noting that many stations are enjoying increased listening in the midday period. They also noted that fewer records are generally played in the morning drive period, so that the addition or deletion of even one record could make a major change to Canadian content levels in this period.
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102. Some broadcasters also argued that programming higher levels of Canadian content in the evening could be beneficial, since listening by younger people, who are major buyers of recordings, is often higher at that time.
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103. Representatives of the recording industry, on the other hand, considered that more stringent distribution requirements are necessary. They suggested that the current system allows stations to concentrate higher levels of Canadian selections in the evening and on weekends when listening is often lower. They claimed that this practice lowers the exposure of Canadian selections, with a consequent negative effect on record sales.
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104. They therefore recommended that compliance with Canadian content requirements be measured over shorter periods, for example, every three hours, and hourly in prime morning and afternoon periods.
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The Commission’s Conclusions
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105. The Commission agrees with the recording industry that the current system, which specifies a minimum level of only 25% Canadian content on weekdays between 6:00 a.m. and 7:00 p.m., can lead to lower levels of Canadian content during those periods when most people are listening. The Commission notes in this regard that the music use study it carried out in preparation for the hearing does indicate that some stations program lower levels of Canadian content in peak listening times, especially in the morning drive. On the other hand, it acknowledges the argument made by the radio industry that stations should have some flexibility to adjust their programming. Further, the Commission does not want to implement a system that would have it regulating programming content unduly over short time periods.
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106. The Commission will therefore issue shortly a proposed amendment to the regulations requiring that at least 35% of category 2 musical selections broadcast between 6:00 a.m. and 6:00 p.m., Monday through Friday, be Canadian selections. The Commission considers that this increased level, as well as the reduction of the daytime measurement period from 13 to 12 hours, will increase exposure of Canadian music during hours of higher listening, but will still give licensees considerable flexibility in adjusting their programming.
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107. The Commission notes that, in exceptional cases, licensees are currently subject to conditions of licences allowing for minimum Canadian content levels that are lower than the current or the proposed regulated minimum level. The Commission invites these licensees to apply for a condition of licence that would specify a level of distribution for Canadian content between the hours of 6:00 a.m. and 6:00 p.m., Monday through Friday, that corresponds with their overall category 2 Canadian content requirement.
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108. The Commission further notes that it will issue a proposed amendment to the regulations requiring that category 2 Canadian selections be played in their entirety for the purpose of meeting Canadian content requirements.
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Level of Category 3 Music
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109. Section 2.2 of the regulations requires that at least 10% of the traditional and special interest music selections (category 3) broadcast each week by commercial radio stations be Canadian. The lower requirement for Canadian content in category 3 music was established because of the generally limited availability of Canadian recordings of specialized types of music, such as concert music and jazz.
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110. Of the music industry representativesthat appeared at the public hearing, the Society of Composers, Authors and Music Publishers of Canada (SOCAN) commented extensively on the minimum level of category 3 music that should be required. SOCAN considered that the level of Canadian category 3 music required should be raised from 10% to 25%. Further, it recommended that at least 15% of the concert music broadcast be by Canadian composers.
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111. The CBC, whose networks and stations are required to broadcast a minimum level of 20% category 3 music, opposed raising the level required of commercial stations. The CBC noted that, in order to meet the 20% level, it often records concerts and produces its own recordings for broadcast. The CBC did not consider that those commercial stations whose program formats are based on category 3 music would have the resources to undertake extensive recording activities or the broadcast of live music.
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112. There was very little comment from commercial broadcasters regarding the requirement for category 3 music.
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The Commission’s Conclusions
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113. Most of the category 3 music that is programmed on Canadian radio is broadcast on stations owned and operated by the CBC and on not-for-profit stations. The appropriate level of Canadian music for these stations will be considered during the separate reviews for these sectors proposed by the Commission in Public Notice CRTC 1997-105.
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114. Most commercial radio stations play little, if any, category 3 music. Exceptions include a concert music station serving Toronto/Cobourg, as well as a commercial concert music station that has been licensed for Montréal but is not yet on the air. There are also a few commercial stations in Canada that offer gospel music formats.
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115. Given the limited number of commercial stations involved, the Commission has concluded that it would be best to deal with the issue of Canadian content levels for category 3 music on these stations on a case-by-case basis. At licence renewal time, commercial FM stations operating in the specialty format, as well as AM stations that offer high levels of category 3 music, will generally be expected to propose an increase in the current level of Canadian music they play. They will also be asked to indicate why they consider their proposed levels to be adequate. Concert music stations will also be asked to provide specific commitments with respect to the broadcast of works by Canadian composers. All interested parties will have a chance to comment on the reasonableness of these commitments during the intervention process.
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Music Broadcast During Ethnic Programming Periods
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116. Section 2.2 of the regulations states that, where 7% or more of the music selections broadcast during an ethnic programming period are Canadian selections, this time period will not be considered when determining whether or not a licensee is in compliance with the required levels of Canadian content for category 2 and category 3 music.
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117. Only SOCAN commented on this particular regulation, and recommended that the required level of Canadian content for ethnic programming periods be raised to 12%.
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The Commission’s Conclusions
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118. As noted in the Commission's Vision Action Calendar issued on 17 April 1998, the Commission will hold a public process to review its ethnic broadcasting policy in 1998/99. Although the Commission considers that an increase in Canadian content during ethnic programming periods may well be appropriate, any examination of this issue should take place in the context of that review. All interested parties will then have an opportunity to comment.
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Overnight Canadian Content
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119. The current Canadian content regulations relate only to the broadcast day, that being the time period between 6:00 a.m. to midnight, Sunday to Saturday.
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120. The recording industry considered that Canadian content requirements should be extended to include the overnight period, even though listening during this period is very low. Airplay for Canadian music in the overnight period has assumed greater importance since the development of Broadcast Data Systems (BDS) monitoring technology. This system electronically monitors the programming of radio stations to measure the number of times that individual selections are played. The information is used to assemble charts that appear in music magazines. The recording industry argued that, since the overnight period is included in the BDS monitoring program, it is important that Canadian selections be played during this period if they are to obtain the highest possible placement on the charts.
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121. Commercial broadcasters argued that there is no need to extend the Canadian content regulations to cover the midnight to 6:00 a.m. period. They noted that the Commission’s music use study, which analyzed an overnight programming period for five English-language music stations in Toronto and five French-language music stations in Montréal, found that the Montréal stations achieved an average Canadian content level of 38%, while that for the Toronto stations was 28%.
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The Commission’s Conclusions
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122. The Commission recognizes the importance of airplay for Canadian music selections in terms of their placement on charts assembled using BDS technology. It notes from its monitoring study, however, that some stations play significant levels of Canadian content in the overnight period. In the circumstances, the Commission is reluctant to allocate what would be a substantial increase in resources to monitor radio programming during a time period when listening is very low.
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123. The Commission therefore does not propose to introduce any new regulatory requirement for Canadian content in the overnight period at this time. It does, however, encourage broadcasters to meet the daytime levels of Canadian content required during the overnight hours as well.
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New Canadian Artists
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124. There is currently no specific requirement with respect to playing music by new Canadian artists. Licensees are required, however, to make an annual financial contribution to the development of Canadian talent.
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125. The CAB did not support the establishment of an across-the-board requirement for broadcasting music by new Canadian artists. It noted that it would be difficult to establish a quota that would be fair for stations in all formats. The CAB did, however, outline a strategy for promoting Canadian music, including music by new artists. This strategy is described in an earlier section of this notice.
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126. Some individual licensees of private commercial radio stations suggested that a bonus system for selections by new Canadian artists be established. Under this system, selections by new Canadian artists would be given additional credit toward meeting Canadian content requirements.
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127. Although representatives of the music industry agreed that it is important that there be opportunities for listeners to hear music by new Canadian artists, they generally opposed any bonus system for new Canadian artists that may ultimately result in a lowering of the overall level of Canadian music that stations broadcast.
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128. Two representatives of the francophone music industry considered that one-third of all French-language selections played should be new selections or selections by new artists.
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The Commission’s Conclusions
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129. The Commission agrees with representatives of the broadcasting industry that it would be very difficult to develop an across-the-board requirement for the broadcast of recordings by new Canadian artists that could be fairly applied to all formats. It agrees that a bonus system would eliminate some of these difficulties, but shares the concerns of the music industry that this could decrease the overall level of Canadian music that stations play.
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130. The Commission considers that the promotion and development of new Canadian artists is an area that will benefit greatly from increased co-operation between the music and broadcasting industries. Earlier in this document, the Commission noted that the various commitments by the CAB to promote Canadian music, and benefits contributions resulting from transfers of ownership and control, will provide additional support for new talent.
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131. The Commission reiterates its expectation that the CAB report annually on its activities to promote and support both the French- and English-language sectors of the music industry, especially with respect to new talent.
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132. The Commission considers that it would be appropriate to allow these initiatives to develop, and for it to evaluate their success, before deciding if any new regulatory initiatives with respect to playing the music of new Canadian artists are necessary.
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Canadian Talent Development
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133. In Public Notice CRTC 1995-196, the Commission set out a new approach to contributions to Canadian talent development by commercial AM and FM stations. Under this policy, the licensee of each commercial station was given the opportunity to apply for relief from previous direct cost commitments for Canadian talent development made as part of its last licence renewal, and to amend its licence by adding a condition of licence requiring it to make annual payments to eligible third parties involved in Canadian talent development at the level identified for it in the CAB's Distribution Guidelines for Canadian Talent Development. The licences of most private commercial stations now include this condition.
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134. The purpose of the CAB guidelines is to ensure that Canadian commercial radio stations allocate, in total, a minimum of $1.8 million each year to eligible third parties associated with Canadian talent development. This $1.8 million is over and above commitments made in the context of applications for new licences or in applications involving the transfer of ownership or effective control of radio stations.
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135. The Commission wishes to emphasize the importance it places on Canadian talent development. It notes that compliance with these conditions of licence is required on an annual basis and expects all stations to ensure that these commitments are fulfilled so that eligible third parties receive the funding to which they are entitled.
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Defining a Canadian Selection: the MAPL System
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136. Currently, a musical selection must generally meet at least two of the five criteria set out below in order to qualify as a Canadian selection. This is commonly referred to as the MAPL system.
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· M (music) – the music is composed entirely by a Canadian.
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· A (artist) – the music is, or the lyrics are, performed principally by a Canadian.
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· P (production) – the musical selection consists of a live performance that is recorded wholly in Canada, or performed wholly in Canada and broadcast live in Canada.
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· L (Lyrics) – The lyrics are entirely written by a Canadian.
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· The musical selection was performed live or recorded after 1 September 1991, and a Canadian who has collaborated with a non-Canadian receives at least half of the credit as a composer and lyricist.
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137. There are also three special cases where a musical selection may qualify as Canadian, even if it satisfies fewer than two of the MAPL criteria. An instrumental performance of a musical composition written or composed entirely by a Canadian, a performance of a musical composition that a Canadian has composed for instruments only, and a musical selection that has already qualified as a Canadian selection under previous regulations, are all deemed to be Canadian selections.
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138. Representatives of SOCAN and La Société professionnelle des auteurs et des compositeurs du Québec (SPACQ), as well as some broadcasters and individuals, considered that the existing system should be maintained. They were generally of the view that the current MAPL system provides for balanced consideration of a range of factors and elements that are essential to a strong Canadian music industry.
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139. ADISQ, on the other hand, suggested that a consultative process be established to develop a system that would better balance artistic criteria with the resources necessary to produce a recording. MusicLane Inc. was also concerned about the industrial aspect of recording, and generally recommended that "pre-mastering" by a Canadian company be required if a recording is to qualify under the production criterion.
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140. The Canadian Recording Industry Association (CRIA) considered that the performance of a Canadian artist in a recording should carry extra weight in the MAPL system. The CAB and some individual licensees of commercial radio stations carried this argument further, and proposed that the definition be changed so that the recorded performance of a Canadian artist would qualify as Canadian, even if the recording did not meet any other of the MAPL criteria. The CBC proposed a variation of this proposal, suggesting that the existing requirement that two MAPL criteria be met should be maintained for category 2 selections, but that subcategory 31 (concert music) selections by Canadian artists should automatically qualify as Canadian.
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141. The Alberta Recording Industries Association (ARIA), on the other hand, suggested that the MAPL criteria be made stricter than they currently are by requiring that, in order for a selection to qualify as Canadian, the artists, composers and lyricists must have Canadian residency, and that copyrights must either be owned by a resident Canadian or assigned to a Canadian-owned publishing company.
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The Commission’s Conclusions
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142. The MAPL system and the minimum requirements for Canadian content have two essential objectives:
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· To ensure that Canadian artists and their works have access to Canadian airwaves; and
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· To support a Canadian-based music and recording industry.
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143. The two objectives go hand in hand. If Canadian artists, other than the relatively few who have been signed directly by non-Canadian labels, are to make recordings, Canadian recording facilities have to be available. If works by Canadian composers are to be recorded, there should be an incentive to make use of Canadian compositions.
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144. The Commission continues to view these two goals as critical. The Commission recognizes that allowing a recording to automatically qualify as Canadian if the principal artist is Canadian may ensure some additional access for Canadian artists to radio playlists. The Commission notes, however, that, under such a regime, a recording made outside of Canada of a non-Canadian song would qualify as Canadian, provided the performing artist is Canadian. The Commission is not convinced that such a change would assist in achieving the second objective, namely the support of a Canadian-based recording industry. The Commission also notes that many of the artists who would benefit from such a change have already received considerable international success.
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145. Another goal of the Commission has been to make the system of defining a Canadian selection readily verifiable and easy to administer. The Commission notes in this regard that the proposed addition of new criteria, such as Canadian residency, or any other modification related to production and copyright ownership, would make the system more complicated and difficult to verify.
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146. The Commission will therefore maintain the current MAPL system.
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Role of the Recording Industry
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147. As noted earlier, the CAB has proposed a number of important initiatives to promote and support Canadian music. The recording industry also plays an integral role within the Canadian broadcasting system. Given that this industry has a critical interest in ensuring that the Commission's policies and the broadcasters' initiatives achieve their common objectives, the Commission expects the recording industry to collaborate fully with the broadcasting industry in efforts to support and promote Canadian music.
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148. To this end, the Commission strongly encourages the recording industry, in particular CIRPA, ADISQ and CRIA, to provide the Commission with annual updates concerning their own initiatives, and those they undertake with the broadcasting industry, to support and promote Canadian talent. As part of these annual updates, the Commission requests CIRPA, ADISQ and CRIA to provide it with relevant information that will assist the Commission in evaluating the impact of its policies and the industries' effort to provide increased support to Canadian music. Such information might include data on the release and sales of Canadian recordings, and on industry employment.
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149. The Commission will review its policies related to Canadian music in five years when it again reviews its overall policy approach to commercial radio broadcasting.
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PROGRAMMING THAT REFLECTS CANADA’S LINGUISTIC DUALITY
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Level of French-Language Vocal Music
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150. Currently, in order to ensure that French-language radio stations reflect the needs and interests of their audiences, at least 65% of the vocal popular (category 2) music selections that they broadcast each week must be in the French language, and must be scheduled in a reasonable manner throughout the broadcast day.
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151. The Commission’s requirements are based on two related goals. It wishes to support a francophone recording industry in Canada and to allow francophones to have access to music reflecting their culture. The Commission has always considered it to be the responsibility of French-language broadcasters to continue their efforts to contribute to the development of French-language expression.
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152. Most parties, including representatives of the broadcasting and music industries, agree that the current required level of French-language vocal music is generally appropriate.
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153. Broadcasters, however, argued that there is a shortage of French-language material; as a result, stations make excessive use of many of the same artists and selections, leading, in turn, to an overexposure of some songs and a similarity in sound between stations.
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154. Broadcasters also noted that, in addition to the airplay they provide for French-language selections, they make an important contribution to the promotion of French-Canadian artists through interviews, on-air promotion of events, and other talent development initiatives.
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155. While supporting the maintenance of the 65% requirement, the CAB recommended that the Commission reduce the requirement to 55% in the Montréal and Ottawa-Hull markets. The CAB argued that French-language music stations operating in bilingual markets are losing listeners to English-language stations, and that a reduction in the requirement would help these stations to compete more effectively.
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156. Radiomutuel inc. (Radiomutuel) proposed that the Commission reduce the requirement for French-language vocal music to 55% in Montréal and 51% in Ottawa-Hull. Radiomutuel further recommended that the French-language popular music requirement be lowered for AM stations to allow them to develop formats not generally offered by FM stations. In particular, Radiomutuel indicated that there is an insufficient number of French-language recordings in the contemporary hit radio, country, and oldies/gold formats to achieve the 65% level. It suggested that a reduction in the minimum requirement for AM stations would provide diversity, as well as a window for the exposure of French-language Canadian artists in different genres.
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157. Representatives of the music industry emphasized the importance of the French-language vocal music requirement in providing exposure for French-language talent. ADISQ disagreed with the claim by broadcasters that there is a lack of French-language material, and suggested that broadcasters are often reluctant to try new sounds.
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158. Representatives of the music industry also opposed the granting of any exception to the 65% requirement. With respect to the broadcasters' request that the Commission reduce the level for the Montréal and Ottawa-Hull markets, ADISQ agreed that young people generally prefer to listen to English-language rock music, but added that they generally return to French-language music as they get older. ADISQ also argued that the movement of audiences to English-language stations is not as extensive as broadcasters suggested.
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The Commission’s Conclusions
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159. The Commission recognizes that the inventory of French-language popular music available to French-language broadcasters is smaller than the amount of English-language music available to English-language broadcasters. The Commission notes, however, that after almost 25 years of regulated requirements for French-language vocal music, these broadcasters have a considerable catalogue of current and past French-language selections available to them. It also considers that the maintenance of the 65% French-language popular music content requirement will continue to stimulate the record industry and ensure the continued availability of high quality French-language recordings.
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160. Commitments made by the CAB to promote Canadian music, as well as the increased support for Canadian music derived from benefits contributions, will also help to increase support for the French-language music industry, and foster partnership and cooperation between that industry and broadcasters. As noted earlier, the radio industry in Quebec is already very active in promoting Canadian artists and music. The Commission is satisfied that these initiatives will assist greatly in addressing broadcasters’ concerns regarding the supply of French-language vocal music.
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161. The Commission recognizes that some movement of listening from French-language to English-language stations has occurred in Montréal and Ottawa-Hull, especially among younger listeners. The Commission, however, is not convinced that permitting French-language stations to increase the level of English-language selections will repatriate significant audiences. The Commission also considers that the importance of providing exposure for French-language popular music in francophone communities outweighs the benefits to be derived from any marginal increase in audience. The Commission further notes that other adjustments in programming may be effective in ensuring that listeners’ needs are met.
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162. With respect to French-language AM stations, the Commission is not convinced that the 65% requirement for French-language vocal music is an obstacle to providing diverse formats of music. This is especially the case, given that most of these stations are talk oriented, and the fact that the number of musical selections they broadcast is limited, relative to the available inventory of French-language vocal music selections.
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163. The Commission reiterates the importance of maintaining a French-language presence in radio broadcasting and of providing exposure for francophone artists. Accordingly, the Commission will maintain its requirement for all French-language radio broadcasters that at least 65% of the vocal category 2 music selections that are broadcast each week be in the French language.
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Distribution of French-Language Vocal Music
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164. Section 2.2 of the regulations requires that French-language vocal music selections be scheduled in a reasonable manner throughout each broadcast day. This requirement is intended to ensure that French-language selections are heard during periods of higher listening.
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165. The CAB and other broadcasters considered that French-language stations distribute French-language vocal music in a responsible manner, and that no revision to the current requirement is needed. Broadcasters also argued that, given the high level of French-language vocal music required, the Commission should maintain the flexibility provided by the current scheduling requirement. Télémédia Communications Inc. further suggested that the distribution of French-language vocal selections be calculated on a weekly basis, rather than a daily basis. The CAB also argued that tightening distribution requirements would reduce programming diversity and would result in a more homogeneous sound from station to station.
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166. ADISQ, on the other hand, claimed that broadcasters are not providing sufficient exposure to French-language selections during peak hours. Representatives of the music industry and of community broadcasters recommended that stricter scheduling requirements be imposed to ensure that French-language vocal music is reasonably distributed during all time periods.
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The Commission’s Conclusions
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167. The intent of the regulatory requirement pertaining to the scheduling of French-language music is to ensure that these selections are heard during periods of higher listening. Prior to the public hearing, the Commission conducted an analysis of the programming of French-language vocal music by commercial stations in Montréal and Québec. The analysis indicated that some stations scheduled relatively low levels of French-language music during peak audience times, and made up for the shortfall in the other time periods.
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168. The Commission recognizes the importance of providing broadcasters with flexibility to adjust their programming to meet the needs of their audiences and to compete effectively. On the other hand, it considers that stricter measures are needed to ensure that French-language music is reasonably scheduled throughout the day.
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169. Accordingly, the Commission will issue shortly a proposed amendment to the regulations requiring that a minimum of 55% of the vocal category 2 musical selections broadcast between 6:00 a.m. and 6:00 p.m., Monday through Friday, be in the French language. This, combined with the further requirement set out below, will ensure that French-language music selections are played in their entirety, and are exposed during periods of high listening.
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Shortening of Selections
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170. SPACQ and ADISQ expressed concern that some stations are shortening French-language selections, and recommended that only selections played in their entirety should qualify for credit as a French-language vocal selection or as Canadian content.
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171. Radiomutuel confirmed that selections are, in fact, shortened, and claimed that this practice allows broadcasters to present selections that may not otherwise be broadcast, especially songs by new artists and new selections from established artists.
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The Commission’s Conclusions
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172. The Commission considers that the practice of shortening French-language vocal music selections for the purpose of meeting the content requirements for such music is inconsistent with the objectives of the Act and the regulations.
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173. The Commission notes that the definitions for the radio content categories and sub-categories set out in Public Notice CRTC 1991-19 and in the 1991 Glossary of Radio Terms, define a musical selection as "Music of one minute in length or more, broadcast uninterrupted …".
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174. In addition to the above definition, and in order to eliminate any ambiguity as to the Commission's objectives, the Commission will issue a proposed amendment to the regulations requiring that category 2 Canadian selections and category 2 French-language selections be played in their entirety for the purpose of meeting Canadian content and French-language vocal music requirements. The Commission expects broadcasters to take measures immediately to ensure that such selections are played in their entirety.
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175. With respect to medleys and montages, the Commission reminds licensees that it evaluates these as a single musical selection when calculating compliance with the regulations. Circular No. 343, dated 11 May 1988 and entitled Analysis by the Commission of medleys and montages, describes medleys and montages as "musical selections in which artists or musicians combine excerpts from several songs … within a single performance". In the circular, the Commissions advised licensees that it:
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… regards a montage or medley as having all of the characteristics of a single musical selection, regardless of whether there is verbal material between the excerpts, and accordingly evaluates a medley or montage as a single selection. In determining the main content of such a selection, the Commission uses the duration of the predominant type of material.
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176. The Commission will review its approach to maintaining a French-language presence in radio broadcasting, and specifically its policy on French-language vocal music, when it conducts its next review of its policies for commercial radio in five years. This will enable the Commission to assess the effectiveness of the broadcasting and music industries’ efforts in promoting Canadian music in the French language, as well as the contributions in this area resulting from transfers of ownership or control.
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FOREIGN-PRODUCED PROGRAMMING
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177. There is currently no regulation or policy specifying any minimum amount of Canadian-produced programming that a radio station must broadcast. Canadian content regulations relate only to the level of Canadian musical selections that are broadcast. In recent years, some Canadian radio stations have increased their use of foreign-produced syndicated programming. In light of this development, the Commission asked parties to comment on whether or not it would be appropriate to impose an additional requirement on radio stations that they broadcast a minimum amount of Canadian-produced programming.
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178. A survey of ten markets conducted by the Commission in preparation for the hearing revealed that approximately half of the English-language stations surveyed scheduled some non-Canadian syndicated programming. No non-Canadian programming was found on any French-language station.
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179. While the use of non-Canadian programming was generally not extensive, the survey showed that three AM talk stations were broadcasting more American- produced programming than Canadian-produced programming.
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180. The CAB and some individual commercial broadcasters suggested that regulations limiting the level of foreign-produced programming are unnecessary. They considered that the strength of radio is its local programming, and that most stations with very high levels of non-Canadian programming would ultimately be unsuccessful.
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181. The CAB also argued that, in assessing the predominant use of Canadian creative and other resources in the creation and presentation of programming, the administrative, technical and creative infrastructure should also be taken into account. It contended that these factors, coupled with Canadian music requirements, are sufficient to ensure that radio is predominantly Canadian.
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182. The licensees of two AM stations operating in the talk format pointed out that talk stations are comparatively expensive to operate. They considered that it is important to have the flexibility to supplement Canadian programming with non-Canadian programming in order to allow such stations to successfully launch and maintain their formats. They also considered that imported syndicated programming serves as a low-cost method of filling out the programming schedules of talk stations, especially during periods of lower listening.
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183. Several other parties, including the Friends of Canadian Broadcasting, the CBC, Union des artistes, CIRPA and some individual broadcasters, expressed concern about the increased use of foreign programming, and suggested that regulatory requirements should be considered in light of the Act's objectives.
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The Commission’s Conclusions
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184. The Commission considers that the broadcast of Canadian-produced programming is a key component of the general objective set out in section 3(1)(f) of the Act, that "each broadcasting undertaking shall make maximum use, and in no case less than predominant use, of Canadian creative and other resources in the creation and presentation of programming."
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185. The Commission notes that most stations broadcast very low levels of non-Canadian programming. Accordingly, it is not convinced that a regulation specifying a minimum requirement for Canadian programming would be the best approach.
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186. Accordingly, the Commission will address situations involving stations that broadcast high levels of non-Canadian programming on a case-by-case basis, at the time of licence renewal. Any requirement for a minimum level of Canadian-produced programming will be imposed by way of condition of licence where deemed appropriate.
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187. The Commission also intends to amend the logging requirement set out in the regulations to require that licensees identify all non-Canadian produced programming broadcast. This will facilitate the Commission’s ability to monitor performance in this area.
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LOCAL PROGRAMMING
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188. Section 3(1)(i)(ii) of the Act states that the programming provided by the Canadian broadcasting system should be drawn from local, regional, national and international sources" (emphasis added). The radio industry has historically been the sector of the broadcasting system that has provided the lion’s share of programming addressing local issues and concerns. In many smaller communities, local radio stations are the only daily source of local news, information and emergency messages.
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189. The Commission’s local programming policy for radio is set out in Public Notice CRTC 1993-38 entitled Policies for Local Programming on Commercial Radio Stations and Advertising on Campus Stations. Under this policy, licensees of commercial FM stations in markets served by more than one private commercial radio station are generally required to devote at least one-third of the broadcast week to local programming if they wish to solicit or accept local advertising. This requirement is imposed as a condition of licence.
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190. Local programming is defined as follows:
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Local programming includes programming that originates with the station or is produced separately and exclusively for the station. It does not include programming received from another station and rebroadcast simultaneously or at a later time; nor does it include network or syndicated programming that is five minutes or longer unless it is produced either by the station or in the local community by arrangement with the station.
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In their local programming, licensees must include spoken word material of direct and particular relevance to the community served, such as local news, weather and sports, and the promotion of local events and activities.
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191. Although the one-third guideline does not apply to AM stations, the policy makes provision for AM stations to indicate, at the time of licence renewal, the amount of local programming they propose to broadcast, and to indicate how they will provide information of direct and particular relevance to the communities they serve. The Commission also has the discretion to impose certain requirements by condition of licence where necessary.
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192. In practice, however, questioning of applicants at renewal time about the levels of local programming on their AM stations has generally been directed to those for whom low levels of local programming have been identified as a problem in previous renewal decisions.
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193. The CAB and some individual commercial broadcasters considered that local programming requirements for commercial stations are unnecessary. They suggested that radio is essentially local in nature and will remain responsive to local markets without regulations. They further believed that loosening current restrictions on the number of stations an individual licensee may own in a market will give broadcasting companies more revenue to re-invest in local service.
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194. The CBC, as well as some commercial broadcasters, considered that the current approach is appropriate in that it ensures minimum levels of local programming while allowing flexibility for AM stations.
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195. Two parties associated with the music industry believed that the local programming guideline for FM stations should be applied to AM stations as well. They suggested that this would provide additional opportunities for recordings by local and regional artists to receive airplay.
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The Commission’s Conclusions
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196. In the Commission's view, the local programming guideline for commercial FM stations serves to ensure that a strong local presence is maintained. As noted in the previous section of this document, a few stations are making significant use of acquired programming. The Commission, however, agrees with the CAB that most radio stations will continue to focus on local programming.
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197. A more flexible approach for AM stations was chosen by the Commission to allow syndicated programming formats to develop. Such formats provide a complete music service for stations, while providing opportunities in each hour for the insertion of local information. These services have allowed some financially-troubled AM stations to stay on the air. The Commission is concerned that imposing an overall local programming requirement on AM stations could have a negative impact on some stations that are in financial difficulty, as well as well as on some Canadian networks.
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198. The Commission will therefore maintain its one-third local programming guideline with respect to FM stations in competitive markets. It will also generally maintain its case-by-case approach for AM stations. In the future, all AM stations will be asked to make commitments in their licence renewal applications to a minimum level of local programming, and to describe how they will provide sufficient service to their local communities. Conditions of licence will be imposed in cases where the Commission deems them to be appropriate.
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Weather Warnings
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199. The Canadian Meteorological and Oceanographic Society expressed concern that it is often difficult to ensure that weather warnings are broadcast in a timely manner. It recommended that the CRTC convene a meeting of interested parties from government and the broadcasting industry to document existing standards with respect to broadcasting weather warnings and to make recommendations for improvements.
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200. The CAB, as well as several individual broadcasters, agreed that such a process could be useful and expressed a willingness to participate.
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The Commission’s Conclusions
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201. The Commission agrees that radio plays an important role in assisting members of the public to deal with weather emergencies. It notes that many stations provided outstanding service to their communities during the January 1998 ice storms and other weather emergencies in recent years in different regions of the country.
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202. It is concerned, however, that ensuringthe prompt broadcast of weather warnings may present difficulties for stations that make use of automated systems and satellite programming, especially in the evenings and on weekends. In these cases, there may be limited staff available to attend to such warnings.
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203. The Commission will therefore convene a meeting of interested parties to discuss ways to ensure the prompt broadcast of weather warnings.
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Broadcast Standards
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204. To help ensure that radio programming is of high standard, the regulations prohibit the broadcast of: anything in contravention of the law; any abusive comment that, when taken in context, tends or is likely to expose an individual to hatred or contempt on the basis of race, national or ethnic origin, colour, religion, sex, sexual orientation, age or mental or physical disability; any obscene or profane language; any false or misleading news; any telephone conversation or interview without consent; and any advertisement of alcoholic beverages unless it meets the standards of the applicable code and the regulations.
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205. Radio broadcasters must also adhere, by condition of licence, to theBroadcast Code for Advertising to Children and the Sex-Role Portrayal Code for Television and Radio Programming. Application of the condition of licence pertaining to the sex-role portrayal code may, upon request by a licensee, be suspended so long as it remains a member in good standing of the Canadian Broadcast Standards Council (CBSC). The Commission has also established a policy on open-line programming, which is set out in Public Notice CRTC 1988-213.
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206. The CAB argued that it is not necessary to maintain the regulation that generally prohibits the broadcast of any telephone conversation with a person unless that person’s consent is received prior to the broadcast or unless the person telephoned the station for the purpose of participating in a broadcast. Other parties, however, supported retention of the regulation, and at least one commercial broadcaster indicated that the regulation did not impose an undue burden on broadcasters.
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207. Friends of Canadian Broadcasting expressed concern about the self-regulatory process noting that some broadcasters appear to be broadcasting programming produced outside Canada that contravenes guidelines administered by the CBSC.
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The Commission’s Conclusions
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208. The Commission considers that the policies and regulations described above, despite the minimal constraints they may impose on broadcasters, are necessary to ensure that programming is of high standard and otherwise meets the objectives of the Act. The Commission will therefore maintain the requirements in their current form.
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209. With respect to concerns about foreign-produced programming, the Commission reminds broadcasters that they are responsible for all programming broadcast, whatever the origin.
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210. As indicated in the Commission's April 1998 Vision Action Calendar, it will hold a public review of the self-regulatory process in the winter of 1998/99. Issues related to the standards applicable to both Canadian and non-Canadian syndicated programming will be explored as part of that review.
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OTHER MATTERS
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Role of CBC Radio
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211. Several parties at the hearing noted that CBC radio plays an important role in expanding the diversity of radio programming available to Canadians, as well as in providing a national stage for Canadian artists. Its financial support of Canadian musicians and its commitments to broadcast performances by Canadian artists make the CBC a leader in Canadian talent development. The Commission encourages the Corporation to continue to explore appropriate and effective ways of cooperating with private broadcasters in matters related to Canadian talent development.
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212. The Commission plans to explore the role of CBC radio more fully at the time it next considers the licence renewal of the Corporation’s radio networks.
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Programming that Reflects Canada’s Cultural Diversity
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213. Section 3(d)(iii) of the Act states, in part, that the broadcasting system, through its programming and employment opportunities arising out of its operations, should reflect the multicultural and multiracial nature of Canadian society. The Commission’s Vision statement also emphasizes that programming should reflect the cultural diversity of Canada. The Commission encourages broadcasters to reflect the cultural diversity of Canada in their programming and employment practices, especially with respect to news, music and promotion of Canadian artists.
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Radio and the Internet
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214. Discussion at the hearing concerning the Internet focused primarily on a plan by the CAB to establish a "virtual record store." This initiative, which was discussed earlier in this document in the section dealing with promotion of Canadian music, would enable listeners to order, through the Internet, Canadian recordings they have heard on the radio.
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215. The Commission considers that the Internet can be a positive vehicle for promoting and enhancing the business of radio and the recording industry. As noted in the Commission’s April 1998 Vision Action Calendar, it will hold a public process in the fall of 1998 on new media. Issues related to the Internet will be explored more fully in this process.
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Laura M. Talbot-Allan
Secretary General
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This document is available in alternative format upon request.
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