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Public Notice CRTC 1999-55
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Ottawa, 31 March 1999
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Call for comments on proposed amendments to the Radio Regulations, 1986 regarding local management agreements
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Summary
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The Commission seeks public input regarding its proposal to institute a regulatory mechanism for the evaluation of local management agreements.
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1. In Public Notice CRTC 1998-42 the Commission invited public comment on the continued appropriateness of its policy regarding Local Management Agreements (LMAs) for licensees of radio broadcasting undertakings. The Commission’s most recent policy respecting LMAs was set out in Public Notice CRTC 1996-138, entitled Commission’s Approach to Dealing with Local Management Agreements in Canadian Radio Markets (the LMA policy).
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2. The Commission received 18 submissions in response to P.N. 1998-42. Six were received from the general public, and twelve from broadcasters. In light of the new common ownership policy, a variety of views were expressed regarding the regulatory approach that the Commission should now take with respect to LMAs. The positions ranged from maintenance of the current LMA policy to the prohibition of such arrangements entirely. There was no consensus within the radio sector on the appropriate approach.
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The nature of LMAs
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3. An LMA is an arrangement under which licensees of two or more radio stations share the technical, administrative and sales operations of those stations, while retaining individual ownership and control.
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4. Until now, a radio station licensee was not required to seek Commission approval to enter into an LMA, provided the agreement did not result in the transfer of ownership or effective control of a radio station. All parties to LMAs were expected to ensure that the terms of such agreements would make clear provision for the maintenance of separate, distinct news and other programming services and management, and for the retention of ownership and effective control of their respective undertakings.
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Why LMAs have been useful tools
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5. LMAs have typically provided economies of scale for radio stations experiencing poor financial performance, while still ensuring compliance with the Commission’s ownership policy with respect to radio at the time. Until the Commission issued Public Notice CRTC 1998-41 (Commercial Radio Policy 1998), its policy restricted radio broadcasters to ownership or control of no more than one AM station and one FM, operating in the same language, in the same market. However, the Commission was concerned that, particularly in small or remote communities, a radio station could acquire a monopoly in the sector, simply by virtue of its only competitor going out of business. It considered that cooperation between radio licensees through an LMA to ensure the continued provision of distinct programming voices would be preferable to such a result.
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A changing environment
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6. In P.N. 1998-41, the Commission announced its new common ownership policy for commercial radio stations. It believes that, while the potential for consolidation of ownership as provided for in that policy may result in fewer competitors in individual markets, the increased economic viability of the industry as a whole will allow radio to compete more effectively with other forms of media. At the same time, the Commission has a concern that the existence of an LMA in a given market could give an undue competitive advantage to the parties to such an arrangement over other radio licensees in that market, or to other potential new entrants.
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7. In view of the on-going changes in the radio industry, the Commission wishes to ensure that it will remain able to fully assess the delicate competitive balance in a given market, especially with a view to ensuring that the radio industry will have the ability to achieve its essential cultural objectives under the Broadcasting Act.
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The Commission’s proposed approach
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8. It is the Commission’s opinion that the new common ownership policy will provide the radio sector with the flexibility to promote economic stability. The Commission also considers that LMAs continue to represent an appropriate tool in certain circumstances. At the same time, with the possibility of multi-station ownership that the policy introduces, the Commission now requires a mechanism to enable it to assess the appropriateness of such multiple ownership in combination with LMAs in a given market.
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9. The Commission wishes to ensure that any new or existing LMA will not have a significant negative impact on the diversity, the dynamics, or the competitive forces in any given market. To this end, the Commission proposes to provide a regulatory mechanism that will allow it to evaluate the consequences of either the introduction or the continuation of any LMA. The Commission proposes to amend the Radio Regulations, 1986 (the regulations) to include a provision whereby the use of LMAs will be approved by condition of licence.
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10. The Commission also proposes to amend the regulations so as to grant existing LMAs a limited transitional period. The proposed amendment would allow a licensee to manage or operate its station pursuant to an LMA that was entered into before 31 March 1999, until the earlier of :
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a) the earliest date at which any licence issued in connection with a station that is operated pursuant to the agreement expires, and
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b) the date on which the current term of the agreement expires, excluding any subsequent renewal.
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11. Any licensee involved in an existing LMA and wishing to maintain such an arrangement will be required to obtain Commission approval for the extension of that agreement by condition of licence, before the end of the transitional period.
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12. To facilitate the administration of the transitional mechanism, the Commission requests that any licensee currently involved in an LMA file with the Commission a fully executed copy of any agreement that governs an LMA, within 30 days of today’s date.
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Call for comments
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13. The Commission invites interested parties to submit comments regarding the proposed amendments to the regulations. The Commission notes that the purpose of this Public Notice is to seek comments on the proposed regulations and not on the issues which were considered in the proceeding announced in P.N. 1998-42. Interested parties may forward submissions by 12 May 1999 to the Secretary General, CRTC, Ottawa, K1A 0N2. Although the Commission is unable to acknowledge in writing the submissions received, it will consider and include them in the public record of this proceeding.
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14. All submissions must be filed in hard copy format. The Commission, however, also encourages parties to file electronic versions of their submissions (email or diskette). Such submissions should be in the HTML format. As an alternate choice, "Microsoft Word" may be used for text and "Microsoft Excel" for spreadsheets. Each paragraph of the document should be numbered. In addition, as an indication that the document has not been damaged during electronic transmission, the line ***End of Document*** should be entered following the last paragraph of each document. The Commission's Internet e-mail address for electronically filed documents is public.broadcasting@crtc.gc.ca
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Secretary General
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This notice is available in alternative format upon request, and may also be viewed at the following Internet site: http://www.crtc.gc.ca
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