ARCHIVED -  Public Notice CRTC 1998-42

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Public Notice CRTC 1998-42

  Ottawa, 30 April 1998
  Call For Comments on the Continued Appropriateness of the Commission's Policy Respecting Local Management Agreements Involving Licensees of Radio Broadcasting Undertakings
  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).
  2. Among other things, and for the reasons set out in that notice, 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.
  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.
  The LMA Policy
  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.
  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.
  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.
  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.
  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.
  Call for Comments
  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.
  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:
  a) Should the Commission require licensees to obtain its approval prior to implementing an LMA?
  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?
  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?
  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?
  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?
  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?
  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.
  Laura M. Talbot-Allan
Secretary General
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