ARCHIVED - Broadcasting Decision CRTC 2015-302

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References: Part 1 applications posted on 31 October 2014

Ottawa, 8 July 2015

Cogeco Diffusion inc. and RNC MEDIA Inc.
Gatineau, Quebec

Applications 2014-0774-2, 2014-0773-4 and 2014-0985-5

CKOF-FM and CHLX-FM Gatineau - Local sales agreements

The Commission approves the joint applications by Cogeco Diffusion inc. and RNC MEDIA Inc. to amend their respective licences to add a condition of licence authorizing them to operate their French-language commercial radio stations CKOF-FM and CHLX-FM Gatineau in accordance with a local sales agreement.

Listeners will benefit from the continued presence of the two stations and of their positive impact on the diversity of voices in the bilingual market of Ottawa-Gatineau.

A dissenting opinion by Commissioner Raj Shoan is attached to this decision.

Applications

1. Cogeco Diffusion inc. (Cogeco) and RNC MEDIA Inc. (RNC) filed applications to amend the licences for their respective French-language commercial radio stations, CKOF-FM and CHLX-FM Gatineau, to operate the stations in accordance with a local sales agreement (LSA).
2. Cogeco and RNC indicated that these applications are necessary to improve the financial situation of these two stations. Currently, Cogeco owns one station in the Ottawa-Gatineau market, namely CKOF-FM, while RNC owns CHLX-FM and CFTX-FM in that market. In 2014, CHLX-FM converted to the Rythme FM network.
3. Cogeco and RNC are experienced radio broadcasters. Cogeco and RNC respectively operate 13 and 14 stations in Quebec, including successful stations in the Montréal and Québec markets.

Regulatory framework

4. In the policy on local management agreements (Broadcasting Public Notice 2005-10), the Commission determined that LSAs fall within the definition of a local management agreement (LMA). This definition is set out in the Radio Regulations, 1986 (the Regulations) and reads as follows:
   Arrangement, contract, understanding or agreement between two or more licensees or their associates that relates, directly or indirectly, to any aspect of the management, administration or operation of two or more stations, at least two of which
   
   1. broadcast in the same market; or
   2. broadcast in adjacent markets, with each station’s A.M. 5 mV/m contour, F.M. 0.5 mV/m contour or digital service area, as the case may be, overlapping the A.M. 15 mV/m contour, F.M. 3 mV/m contour or digital service area of the other station.
5. In the 2006 Commercial radio policy (Broadcasting Public Notice 2006-158), the Commission expanded the definition of LMA so that it applies to stations that operate in adjacent markets but whose contours overlap, in light of the possible negative consequences of LMAs over time and the potential impact they might have on the diversity of voices that exists in a given market.
6. In Public Notice 1999-176, the Commission announced an amendment to the Regulations to include a clause whereby the use of a LMA would require prior approval by way of a condition of licence. This amendment was in response to the Commission’s new common ownership policy that allows one owner to hold or control several stations in the same language and frequency band in a given market.^{Footnote 1} The Commission was concerned about the possibility that LMAs would be used to circumvent the rules of the Common Ownership Policy.
7. Since then, the Commission has evaluated LMAs on a case-by-case basis to ensure that they do not have a significant negative impact on the diversity, dynamics or competitive forces in any given market. In Public Notice 1999-176, the Commission set out guiding principles for the approval of LMAs by way of a condition of licence.
   • An LMA must not constitute a change in the effective control of the undertaking. Such a change of control would require the prior approval of the Commission under section 11 of the Regulations:
     • parties to an LMA must ensure that distinct and separate programming and news services are maintained, and that their management remains under the respective responsibility of each licensee. This includes the program director and the news director, as well as any other related staff assigned to programming and/or news activities; and
     • all assets of the undertakings involved in an LMA must remain in the ownership of each respective licensee.
   • The Commission will be generally inclined to approve LMAs that:
     • include unprofitable stations;
     • include a number of stations that does not exceed the number of undertakings that may be commonly owned under the ownership policy; and
     • are limited to a specific term and represent a temporary alternative business model that will allow the broadcasters to improve their performance.
   • The Commission will evaluate LMAs on a case-by-case basis, taking into consideration all the relevant circumstances.
8. Thus, as set out in Broadcasting Public Notice 2005-10, the following elements should be examined when evaluating the appropriateness of an LMA:
   • the profitability of the stations involved;
   • the number of stations owned by the parties in the market concerned;
   • the potential impact on competitors;
   • the potential impact on new entry;
   • the possible reduction in the diversity of editorial voices, in the overall diversity and in the quality of programming; and
   • the potential impact on the ability of radio stations to better compete with other media.

Interventions

9. Four interventions in support of the applications were filed, as well as joint supporting interventions filed by RNC and Cogeco. In addition, one comment and one opposing intervention were filed by Rogers Media Inc. (Rogers) and Bell Media Inc. (Bell), respectively. The public record for this proceeding can be found on the Commission’s website at www.crtc.gc.ca or by using the application numbers provided above.
10. In its intervention, Rogers questioned the current environment in which commercial stations are operated and the challenges they face, particularly in the Ottawa-Gatineau market. Rogers would like certain regulatory restrictions to be removed, such as restrictions regarding LSAs and the policy regarding the broadcast of hits by English-language stations set out in Broadcasting Regulatory Policy 2009-61. Rogers was of the view that if the Commission were to approve the applications by Cogeco and RNC, which would improve their competitive position in the Ottawa-Gatineau market, it should eliminate the restrictions imposed on English-language stations with respect to the broadcast of hits.
11. For its part, Bell opposed the applications by RNC and Cogeco. It indicated that the Commission does not always support LSAs and pointed out that several changes have taken place in the market, which will provide the applicants with solutions based on market forces and will significantly improve the profitability of their stations. It also indicated that the applicants have not filed financial projections that take these changes into account. Bell was of the view that RNC’s proposal does not comply with the Commission’s Common Ownership Policy or the policy on LSAs.

Reply by RNC and Cogeco

12. In their reponse to the statements made by Rogers, RNC and Cogeco pointed out that they support the regulatory measures that aim to enable radio stations to remain competitive in the face of the numerous content options available to consumers. They argued that if the Commission wishes to reconsider the policy on hits in bilingual markets, as requested by Rogers, the review would need to be done in a larger context, encompassing minimum levels of French-language vocal music and Canadian musical selections. They put forth that English-language radio stations have a greater appeal for francophone listeners in the Ottawa-Gatineau market.
13. In reply to Bell’s intervention, RNC and Cogeco indicated that LSAs are not prohibited and are a tool set out in the regulations to help stations experiencing financial difficulties. They argued that their applications meet the criteria and that the unique circumstances found in the bilingual market in Ottawa-Gatineau justifies an LSA. They indicated that their stations are unprofitable, that the LSA does not involve a change in the effective control of the undertakings, that the number of stations involved complies with the criteria for the Common Ownership Policy and that the requested amendment to the stations’ conditions of licence would apply until the end of the stations’ current licence terms.
14. The applicants were of the view that Bell’s strategy to oppose the applications seeks to maintain its dominant position in the francophone market provided by its network stations NRJ and Rouge FM. They indicated that CHLX-FM’s gains in converting to a station under the Rythme FM banner will take time and investment. In their view, the LSA will create conditions to foster sales growth for each station, while helping the stations save on operating costs.

Commission’s analysis and decisions

15. Based on its examination of the applications in light of applicable regulations and policies, the Commission must determine, among other things, whether the applications meet the LSA evaluation criteria set out in Broadcasting Public Notice 2005-10. Thus, in this decision, the Commission must consider the following:
    • the impact on the diversity of voices;
    • the profitability of CKOF-FM and CHLX-FM;
    • the impact on competing stations in the market;
    • the impact on potential new stations;
    • compliance with the Common Ownership Policy as well as effective control of the stations; and
    • the term length for the LSA.

Impact on the diversity of voices

16. The Ottawa-Gatineau market is currently served by 21 commercial stations. Of those stations, 15 are English-language stations, 5 are French-language stations and 1 is a third-language station.
17. When CHLX-FM was granted its initial licence in 2001, the station operated under a specialty format (Classical and jazz). In Broadcasting Decision 2008-221, the Commission approved a change in the station’s music format, which switched to a popular music format with a condition of licence requiring the station to devote 20% of its musical selections to content subcategory 34 (Jazz and blues).
18. Rythme FM’s programming was not offered in the market before CHLX-FM started to broadcast it in August 2014. The applicants indicated in their supplementary brief that [translation]:
    […] RNC MEDIA has concluded that an affiliation with Rythme FM, whose formula has been very successful in other French-language markets, and the addition to CHLX-FM’s programming schedule of programs hosted by stars who are known and loved by the public would not only enrich the programming offered to the francophone radio market in Ottawa-Gatineau, but would also benefit the station’s revitalization.
19. Notwithstanding this affiliation, CHLX-FM’s licence requires that it devote 20% of its musical selections to selections drawn from subcategory 34. In addition, according to the programming schedule on the record of this proceeding, CHLX-FM devotes to local programming 96.5 of the 126 hours of programming broadcast each broadcast week.
20. In terms of the diversity of editorial voices, based on the terms of the proposed LSA, each licensee would remain responsible for managing the other activity sectors unrelated to sales, including programming.
21. In that regard, RNC specified that CHLX-FM would be keeping its programming director, who would participate in weekly telephone conferences with the programming directors from various Rythme FM stations. The director would also be responsible for aligning local and network programming on the radio waves, as well as managing the length of commercial breaks. Further, the programming director is responsible for hiring local hosts, participating in their development and ensuring they are supervised.
22. The applicants stated that denial of these applications would have a major impact on the capacity of the two licensees to resolve the financial situation of their respective stations, which could result in the shutdown of one or both stations. These shutdowns would have a significant negative impact on the diversity of French-language programming in the Ottawa-Gatineau market.
23. In light of the foregoing, the Commission finds that approval of these applications would only have a minimal impact on the diversity of programming and editorial voices in the market.

Profitability of CKOF-FM and CHLX-FM

24. CKOF-FM has posted financial losses since its acquisition by Cogeco in 2010 and has posted significant cumulative losses over the last three years.
25. As for CHLX-FM, the station has been unprofitable for at least five years. While it affiliated with the Rythme FM network on 25 August 2014, its financial results do not yet reflect the impact of this affiliation.
26. RNC and Cogeco stated that they wish to operate CHLX-FM and CKOF-FM, which have both posted losses in recent years, under an LSA to help resolve the two stations’ precarious financial situation. Both licensees stated that it is difficult to compete with Bell to generate advertising revenue given that Bell operates two French-language stations and four English-language stations in the market. They therefore wish to combine their local sales forces, which would enable them to provide advertisers with a combined advertising offer and target the audiences of both stations in a complementary manner, while saving on sales costs. According to the applicants, the two stations would benefit from an increase in revenue and a decrease in their financial losses, but would still not be profitable.
27. In addition, the bilingual market of Ottawa-Gatineau has a unique dynamic with respect to competition, particularly for the French-language stations. In fact, almost 40% of tuning by the francophone audience is to English-language stations. In addition, the French-language stations only generate 20% of the total revenues for the market. These two factors distinguish the Ottawa-Gatineau market from another bilingual market, Montréal, where the tuning transfer of commercial stations by the francophone audience to English-language stations is only 15% and where the French-language stations generate more than 70% of the total market revenues.
28. In light of the above, the Commission finds that the stations in question are not profitable and considers that approving the applications could contribute to improving the stations’ ability to compete in the market and their financial situations.

Impact on competing stations in the market

29. As mentioned above, the Ottawa-Gatineau market is currently served by 15 English-language, 5 French-language and 1 third-language radio stations, held by various licensees. Of these stations, approval of the applications would mainly have an impact on Bell, which is the only other licensee that operates French-language commercial radio stations in the market. None of the licensees exclusively operating English-language stations intervened to oppose the applications.
30. Bell currently operates six radio stations in the Ottawa-Gatineau market, namely two French-language and four English-language stations. This situation gives it a favourable competitive position in the market and allows it to benefit from synergies, which, in return, would mitigate any impact the proposed LSA could have.
31. Finally, the financial projections under an LSA indicate that the additional anticipated revenue for the two stations, should the Commission approve the applications, would be limited and represent a small percentage of the total revenues generated in the French-language market, which were approximately $16 million in 2014.
32. In light of the foregoing, the Commission finds that approval of these applications would not have any undue financial burden on the stations operating in the market and would have a positive impact on the ability of the two stations to improve their financial situation.

Impact on potential new stations

33. Available frequencies on the FM band in the Ottawa-Gatineau market are scarce. Following the 13 May 2008 public hearing for new stations to serve Ottawa-Gatineau, almost all viable frequencies in the region were assigned. However, four frequencies on the AM band remain available: 540 kHz, 920 kHz, 1250 kHz and 1440 kHz.
34. With the exception of a low-power, French-language commercial specialty radio station in Ottawa and a new English-language station in Clarence-Rockland,^{Footnote 2} the Commission has not received any applications for new stations in the Ottawa-Gatineau market in recent years. It would be possible for an applicant to propose a low-power unprotected station, as long as protection requirements for existing stations in the market are met.
35. In light of the above, the Commission finds that approval of these applications would not have a significant impact on the Ottawa-Gatineau market to support the introduction of new radio stations.

Compliance with the Common Ownership Policy and effective control of the stations

36. As set out in 2006 Commercial Radio Policy, the Commission is generally inclined to approve LSAs that include a number of stations that does not exceed the number of undertakings prescribed by the Common Ownership Policy. In the French-language market of Ottawa-Gatineau, the Common Ownership Policy allows for the ownership of three stations operating in the same language, two of which may be on the same frequency band.
37. As mentioned above, Cogeco owns only one station in the Ottawa-Gatineau market, while RNC owns two. In their applications, Cogeco and RNC stated that CFTX-FM, the second station owned by RNC, would be excluded from the LSA and in so doing would be in compliance with the principles established by the Commission regarding common ownership.
38. In its intervention, Bell stated that there is no operational logic or rationale for excluding CFTX-FM from the LSA and that despite this exclusion, the applications would not comply with the Commission’s guiding principles, given that the parties own three FM stations in the market.
39. To that effect, since only two FM stations would be part of the LSA, the principles established by the Commission regarding common ownership would be met. However, although CFTX-FM would be excluded from the LSA and would carry out its local sales activities separately, it would continue to benefit from operational and marketing synergies with its sister station, which would be part of the LSA. Accordingly, the advantages of the LSA, even if the agreement involves only two stations, could benefit all three stations operated by RNC and Cogeco.
40. In Broadcasting Information Bulletin 2010-341, the Commission reiterated that the first objective of the Common Ownership Policy is to ensure a plurality of ownership within the private commercial broadcasting sector, and that Canadians thus have access to a variety of editorial voices. The Commission also stated that a secondary objective of the policy is to maintain a balance of competition between broadcasters in each market.
41. The LSA between RNC and Cogeco is structured in such a way to give the latter solely the responsibility of selling available commercial inventory on the CHLX-FM air waves and website to local clients on behalf of RNC. To fulfil this mandate, Cogeco would only have access to the station’s radio and Internet commercial inventory.
42. According to the applicants, the LSA has been established solely for the purpose of local representation and would have no impact on programming and news activities, which at all times would remain under the responsibility and control of each party for their respective stations. Further, to maintain discretionary authority over the on-air content, RNC would reserve the right to refuse the broadcast of any commercial messages that would not meet its own standards.
43. The Commission is therefore satisfied that, according to the terms of the LSA, the programming and news activities of the stations in question would remain under the licensees’ respective control at all times. In addition, it considers that the LSA would not affect the effective control of the undertakings in any way, as its scope is strictly limited to commercial inventory sales activities.
44. In light of the foregoing, the Commission finds that approval of the LSA would not have a negative impact on the diversity of programming and editorial voices, and that it would not have an undue impact on the balance of competition in the market.

Term length for the LSA

45. As stated above, the Commission is generally inclined to approve LSAs of a limited duration and that are a temporary alternative business model that will enable broadcasters to improve their performance.
46. In this case, the applicants indicated that the amendments to the conditions of licence would be in effect only until the current licences are renewed. However, they confirmed that they would likely request renewal because the expected advantages cannot have a significant impact in such a short time.
47. Moreover, the LSA between the parties was set up so that the terms of the agreement would be in effect for five years, with an automatic renewal clause, unless expressly indicated otherwise by one of the parties. The agreement also states that the absence or removal of the regulatory authorizations required would cause the agreement to be terminated. 
48. The licences for CHLX-FM and CKOF-FM do not expire at the same time, but on 31 August 2015 and 31 August 2016, respectively. The Commission therefore finds it appropriate to impose a condition of licence authorizing the LSA until 31 August 2019. The Commission considers that this is a reasonable period and that it will be sufficient to evaluate the impact of the LSA on the stations’ financial results. The licensees will be required to obtain Commission approval if they wish to extend the validity of the condition of licence after that date.

Conclusion

49. In light of all of the foregoing, and given that the LSA does not represent a change to the effective control of the stations in question, the Commission approves the joint applications by Cogeco Diffusion inc. and RNC MEDIA Inc. to operate the French-language commercial radio programming undertakings CHLX-FM and CKOF-FM Gatineau in accordance with a local sales agreement.
50. Accordingly, the Commission amends the licences for CHLX-FM and CKOF-FM to add the following condition of licence:
    The licensee is authorized to operate its station in accordance with a local sales agreement until 31 August 2019.

Other issues

Intervention by Rogers

51. The issue raised by Rogers in its intervention regarding the broadcast of hits by English-language stations in the Ottawa-Gatineau market is not related to the LSA policy or the applications in question, but rather falls under the issue of amending the Commission’s policy on the broadcast of hits. In the bilingual markets of Montréal and Ottawa-Gatineau, this policy is in place to protect French-language broadcasters and to promote linguistic duality.

Renewal of the licence for CHLX-FM

52. RNC currently has an application under review with the Commission to renew the broadcasting licence for CHLX-FM, which expires 31 August 2015. While the Commission questioned RNC regarding certain instances of apparent non-compliance as part of this proceeding, these will be considered as part of the licence renewal for CHLX-FM.

Secretary General

Related documents

• English-language FM radio station in Clarence-Rockland, Broadcasting Decision CRTC 2013-94, 25 February 2013
• Revised guidelines for the application of the Common Ownership Policy for Radio, Broadcasting Information Bulletin CRTC 2010-341, 4 June 2010
• Policy regarding the broadcast of hits by English-language FM radio stations, Broadcasting Regulatory Policy 2009-61, 11 February 2009
• Commercial Radio Policy 2006, Broadcasting Public Notice CRTC 2006-158, 15 December 2006
• The Commission’s policy on local management agreements (LMAs) - Determinations concerning the appropriateness of various existing and proposed LMAs, including local sales agreements, between licensees of radio stations serving the same market, Broadcasting Public Notice CRTC 2005-10, 31 January 2005
• Local Management Agreements, Public Notice CRTC 1999-176, 1 November 1999
• Commercial Radio Policy 1998, Public Notice CRTC 1998-41, 30 April 1998

*This decision is to be appended to each licence.

Dissenting Opinion of Commissioner Raj Shoan

With due respect to my colleagues, I do not agree that these joint applications justify the introduction of a local sales agreement (LSA) arrangement to the Ottawa-Gatineau market. This decision will have the effect of unjustifiably and unnecessarily distorting the Ottawa-Gatineau radio marketplace and arguably rewards two radio services with subpar programming offerings with a competitive advantage. In my view, the size and scale of Ottawa-Gatineau provides ample opportunity for a French-language radio service to not only survive but thrive. Furthermore, the lack of success of these operators is a reflection of their imperfect efforts to serve this French-language community and is not, in my view, reflective of any existing competitive imbalance in Ottawa-Gatineau as a market. Accordingly, I am of the view that these applications should properly have been denied.

This dissenting opinion is based on the following arguments:

1. The market size of Ottawa-Gatineau is sufficient to support its current number of radio licensees. As such, the issuance of an approval for an LSA is not warranted; and
2. Approval of an LSA violates the spirit of the Commission’s common ownership policy.

Lastly, from a legal perspective, the condition of licence granted to the applicants is overly broad and does not restrict the licensees to an LSA strictly between the two stations in question.

Background

According to the Canada 2011 Census, with a population of 1,236,324 residents, Ottawa-Gatineau is the fourth largest census metropolitan area in Canada. As noted at paragraph 16 of the majority decision, Ottawa-Gatineau is home to 21 commercial radio stations, of which 5 operate in the French language. 53.4% of Ottawa-Gatineau residents speak French only or both English and French.^{Footnote 3} Factoring in fluency, proficiency and general comfort level with the French language, it is likely, in my view, that the Ottawa-Gatineau market for French language services comprises between 300,000 and 500,000 residents. In this marketplace, then, five services have been licensed to serve a potential audience of between 300,000 and 500,000 consumers.

By way of comparison, according to the Canada 2011 Census:

1. The city of Montréal has a population of 1,649,519 of which 886,080^{Footnote 4} speak French most often at home. To serve these approximately 880,000 potential listeners, the Commission has licensed 14 French language commercial radio stations;
2. Quebec City has a population of 516,622 of which almost 95% speak French as their mother tongue. To serve these approximately 500,000 potential listeners, the Commission has licensed nine French-language commercial stations as well as a variety of campus, community and religious radio stations that also operate in the French language; and
3. The city of Sherbrooke has a population of 154,601 of which almost 90% speak French as their mother tongue. To serve these approximately 150,000 potential listeners, the Commission has licensed four French-language commercial stations as well as a variety of campus and community radio stations that also operate in the French language.

While recent public information respecting the profitability of radio stations serving the Ottawa-Gatineau francophone market is limited, the Commission’s published financial summaries for commercial radio stations indicate an aggregate profit before interest and tax (PBIT) margin of 18.2% for these five stations and a compound annual growth rate (CAGR) of 3.2% for the Ottawa-Gatineau francophone market over the five-year period from 2008 to 2012. This CAGR percentage exceeds or matches the growth rate for every other francophone market in Canada with the notable exception of Quebec City (5.3%). In other words, this market is healthy and growing modestly.

Analysis

At paragraph 27 of the majority decision, the Commission argues that there is a “unique dynamic” in the Ottawa-Gatineau market such that approval of an LSA is justified. I disagree.

In my view, a macro analysis of the Ottawa-Gatineau francophone marketplace indicates there is ample opportunity for a French-language radio station to succeed in the present circumstances. Ottawa-Gatineau’s growth rate is higher than most francophone markets and the ratio of licensed services per person is extremely favourable.

In my view, the lack of success of the applicants in this process is not due to any specific competitive impediment in the marketplace; instead, it is purely a function of business decisions that did not resonate with listeners. Rather than distorting the market with regulatory intervention, the appropriate solution was to implement a new market strategy. In the case of CHLX-FM, RNC MEDIA Inc. (RNC) has taken this very approach. As noted above, RNC has applied for a format change and, more recently, re-branded the station under the ‘Rythme FM’ banner. This re-branding has been in place for less than a year. The Ottawa-Gatineau francophone market would have been better served by allowing RNC to continue to experiment with new approaches to increasing listenership instead of allowing Cogeco to appropriate CHLX-FM’s local advertising inventory.

Secondly, in its intervention, Bell Media noted as follows: [TRANSLATION] “RNC owns two FM stations in this market. The exclusion of one of these FM stations from the proposed LSA does not change the fact that it does not comply with the Commission’s common ownership policy and, consequently, with its policy on LMAs.”

I share this concern. The Commission’s common ownership policy prohibits the ownership of three stations operating in the same language on the same frequency band in a given market. While, strictly speaking, the ownership of the stations in question is not changing, an LSA raises serious questions respecting the effective control of an undertaking. In order to alleviate these concerns, as noted in the majority decision, the applicants have provided assurances that RNC’s CFTX-FM is not party to the LSA and will not benefit from the new sales structure arising from it. I have difficulty accepting this argument.

The onus was on the applicants to demonstrate irrefutably that the proposed sales structure will not create an entity whose operations are not in line with the Commission’s common ownership policy. In my view, they have not discharged this burden. The assurances of the applicants aside, there is every incentive to include CFTX-FM advertising inventory in the sales strategy created under the LSA and the Commission has little direct ability to prevent its inclusion after the fact. The likely result of this approval will be, in some fashion, a three FM combination of sales and operations.

Moreover, it appears that my colleagues share my skepticism in spite of their approval of the applications. At paragraph 39 of the majority decision, the Commission acknowledges that CFTX-FM “would continue to benefit from operational and marketing synergies with its sister station, which would be part of the LSA. Accordingly, the advantages of the LSA, even if the agreement involves only two stations, could benefit all three stations operated by RNC and Cogeco.” This was a situation to be assiduously avoided in order to preserve the spirit of the common ownership policy.

Lastly, I have concerns with the language of the approved condition of licence. The condition is as follows: “The licensee is authorized to operate its station in accordance with a LSA until 31 August 2019.”

This condition is inappropriate insofar as it does not limit the licensees in question to an LSA solely between themselves. In fact, there is no restriction at all on the ability of the licensees to create new LSAs with other broadcasters in the marketplace. It is disappointing that the Commission did not insist upon a more suitable condition given the above-noted concerns respecting effective control.

Conclusion

Through this decision, the Commission has opened the door to LSA applications for stations operating in Canada’s top ten markets in terms of size and revenues. In my view, this is the wrong direction for radio regulation in Canada. In an industry that has seen unprecedented consolidation over the past decade, allowing for the increased use of LSAs by radio stations will only further exacerbate at this time the competitive challenges facing radio as a result of said consolidation. In large urban markets, LSAs do not preserve diversity of ownership or programming; they protect services that, in all likelihood, are presently poorly operated or programmed.

In my respectful view, these joint applications should have been denied.

Date modified:

2015-07-08