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Public Notice CRTC 1998-42
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Ottawa, 30 April 1998 |
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Call For Comments on the Continued
Appropriateness of the Commission's Policy Respecting Local Management
Agreements Involving Licensees of Radio Broadcasting Undertakings |
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1. The Commission's common
ownership policy to date has generally restricted ownership by the same
person to no more than one AM and one FM radio station operating in the
same language and in the same market. Today, however, in Public Notice CRTC
1998-41, the Commission has announced its new
policy framework for commercial radio (Commercial Radio Policy 1998). |
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2. Among other things, and for
the reasons set out in that notice, the Commission has revised its common
ownership policy as follows: |
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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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3. In the Commission's view,
these new rules will provide radio broadcasters with the flexibility that
the industry has sought for the purpose of achieving economic viability. In
addition, the Commission believes that the increased consolidation of
ownership that is expected to occur within the radio industry as a
consequence of the new ownership policy, while reducing the number of
competitors in individual markets, will allow this component of the
Canadian broadcasting system to compete more efficiently with other forms
of media. This, in turn, will result in a stronger radio industry with an
enhanced ability to achieve its essential cultural objectives under the
Broadcasting Act. |
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The LMA Policy |
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4. The Commission's policy
respecting local management agreements (LMAs) was announced 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 LMA policy was established by the Commission following its
consideration of comments received in response to Public Notice CRTC
1995-204 dated 30 November 1995. This earlier notice
had called for comments on certain concerns that had been raised in the
context of an LMA between Newcap Inc., licensee of CFDR and CFRQ-FM
Dartmouth and Sun Radio Limited, licensee of CIEZ-FM Halifax. The primary
concern at that time had been that the potential cost savings associated
with the rationalization of the radio operations of these licensees could
give them a competitive advantage over the other radio licensees operating
in the Halifax/Dartmouth market. |
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5. In its LMA policy, the
Commission found it preferable to permit radio licensees operating in the
same market to enter into LMAs with each other, in order to ensure
provision of two or more distinct programming voices, rather than to permit
a situation in which a radio licensee could become the sole provider of a
commercial radio service in a community as a consequence of its only
commercial radio competitor ceasing operations. |
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6. Under the LMA policy, radio
broadcasters are not required to seek Commission approval provided their
agreements do not result in the transfer of effective ownership or control
of a radio broadcasting undertaking. This policy is predicated on adherence
to the requirement that responsibility for the news and programming
functions (including the staff performing these functions), and ownership
of the broadcasting assets of each station, continue to reside with the
station's licensee. |
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7. Since the LMA policy was
adopted, a number of broadcasters have entered into such arrangements. For
example, the Commission has knowledge of agreements now in place between
the licensees of local stations in Winnipeg, Regina, Saskatoon and Halifax.
In Halifax, the management agreement involves three radio broadcasters and
five radio stations. |
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8. The Commission notes that
its LMA policy was intended to assist radio broadcasters in achieving cost
savings and acquire 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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Call for Comments |
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9. In view of the greater
strength that the radio industry is expected to achieve as a result of the
Commission's revised common ownership policy, the Commission considers that
it is now appropriate to examine whether its LMA policy continues to be
justified. The Commission is also concerned that, if the holder of more
than two radio licences in a market is permitted to enter into an LMA with
the licensee of another radio station, this could give an undue competitive
advantage to the parties to such an arrangement over other radio licensees
in that market. |
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10. Accordingly, the Commission
hereby calls for public comments on the acceptability of LMAs in light of
its new common ownership policy. The Commission also welcomes comments on
its approach to management agreements as they affect the operations of
radio programming generally. Without limiting discussion on this matter,
the Commission requests public comment on the following specific questions: |
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a) Should the Commission
require licensees to obtain its approval prior to implementing an LMA? |
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b) Should the holder of more
than two radio licences in a market be required to obtain the Commission's
approval prior to entering into an LMA with the licensee of another radio
station in that market? |
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c) What are the public benefits
associated with permitting the holder of more than two radio licences in a
market to enter into an LMA with the licensee of another radio station in
that market? |
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d) If the Commission permits
the implementation of LMAs in such circumstances, should it impose
restrictions with respect to their scope and application? For example,
should the Commission restrict the operational matters covered by such
arrangements to the sharing of general administrative and technical
expenses only? |
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e) Should there be a limit on
the number of stations or the number of ownership groups involved in an
LMA? If so, what should those limits be? |
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f) Should the Commission limit
the implementation of LMAs to markets served by five commercial stations or
less, or should there be any limitations at all? |
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11. Comments in response to the
matters raised in this notice should be addressed to the Secretary General,
CRTC, Ottawa, Ontario, K1A 0N2, and should be received no later than
Friday, 26 June 1998. While the receipt of submissions will not be
acknowledged, they will be considered by the Commission and will form part
of the public record of the proceeding. |
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Laura M. Talbot-Allan
Secretary General |
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This document is available
in alternative format upon request. |