Convention 2024: Busy Days in Quebec City

Radio review put off

During his speech to delegates at last month’s Canadian Association of Broadcasters annual convention, dubbed “Voice of the Nation, Choice of the Nation”, CRTC chairman Charles Dalfen said the Commission is putting off its commercial radio policy review.

With new radio technology — including digital audio and satellite radio — still evolving, the planned 2024 review of radio policy will be delayed, said Dalfen.

“In addition to conventional radio and a number of initiatives in digital audio broadcasting, we now have satellite radio knocking at the door,” he said. “As you know, Canadian Satellite Radio Inc., or CSRI, recently announced that it had submitted an application to the CRTC. Under this application, CSRI would offer CD-quality sound from space, delivered to paying subscribers across the country.”

CSRI is a proposed partnership between U.S. company XM Satellite Radio and Canadian investors led by Toronto entrepreneur John Bitove, who was spotted at the convention, too.

“The Commission will take the necessary time to consider this application — and any others that may be filed for similar services — and the questions that they raise,” added Dalfen. “What will be the impact of satellite radio on Canadian consumers, on existing licensees, and on the development of digital audio broadcasting in this country?

“We will also want to be satisfied that the proposals have fully taken into account the Broadcasting Act’s objectives with respect to Canadian expression. We have therefore decided to postpone the commercial radio policy review that had been foreseen for next spring, until we have explored the issues related to the new radio technologies,” he continued.

“In making this decision, the Commission has noted the very positive financial picture of the radio industry in the past year. The ownership and Canadian content changes introduced in 1998 clearly have not impeded significant growth in revenues and profits. In our view, taking a year or so to assess new developments in the industry just makes good sense.”

“But there are challenges as well. New technologies bring new vulnerabilities. We have seen the music industry taking a major hit from file sharing and downloading on the Internet. Responding has been difficult, but promising avenues have been opening up… nevertheless, radio may have still have cause for concern. Will easy access to music on the Internet cut into the listener base? A report in the United States found that only 0.2% of radio listening last year was done through the net, but we have no way of knowing how this will develop in the long term.”

Digital must-carry for BDUs

Also in that speech, Dalfen told delegates the Commission will require Canadian cable and satellite companies to carry both the analog and digital signals of local broadcasters.

The Commission issued a public notice outlining a regulatory framework for the distribution of digital TV signals and it appears the CRTC can expect a battle from the Canadian cable industry.

“As under the current rules, the framework will give priority to the carriage of over the air Canadian digital television signals,” says this morning’s press release. “Distribution undertakings will be required to carry both the analog and digital versions of priority services, until at least 85% of their subscribers are capable of receiving digital services, at which point they may apply to the CRTC to stop distributing analog signals.”

“This means that the digital signal of a programming service must be carried even though it may be identical in content to the analog signal, which will often be the case during the transition,” said Dalfen during his speech. “The transition to digital requires substantial investments. Over the air broadcasters must build and operate digital transmission facilities. Mandatory carriage of their signals will enhance their opportunities to recoup those outlays through increased advertising revenues.”

Given that the vast majority of Canadians watch TV through cable or satellite, “for the transition to digital to work, digital services need to be widely distributed so that Canadians can watch them,” said Dalfen. “Giving viewers better access to digital signals, including high definition signals, will help drive the transition to digital.”

Dalfen added that this measure will give consumers “more incentive” to purchase HDTV sets.

Dalfen’s speech did not sit well with Canadian cable operators. “Our issue remains that the CRTC only seems concerned with broadcaster costs,” said Canadian Cable Television Association acting president Michael Hennessy in an e-mail to broadcastermagazine.com a few days later. “We are investing billions yet it is just assumed somehow we will get a return on capacity.

“One of our key concerns remains – a lack of incentives for broadcasters to provide real HDTV. This is critical to driving the transition to digital,” he continued. “So is content. We need real HD channels to make the offer attractive. Hopefully now that the policy is out the CRTC will proceed to Gazette our applications to add HDNET and Discovery HD Theatre.”

The CCTA applied to the Commission in February of this year to add both of those U.S. high definition channels to the CRTC’s list of eligible satellite services but have yet to hear any sort of official response to that application.

The Commission also said that it will soon issue a public call for comments on this proposed framework and then launch an additional two-step follow-up proceeding. That process will establish a licensing framework governing the transition to HD of pay and specialty services and the rules for cable distribution of those services when they switch to HD. The second step will be to set rules for HD carriage of specialties on DTH, whose capacity is constrained by its number of available transponders.

De-regulate small market broadcasters?

“There’s a bright future for small market radio,” Jim Pattison Broadcast Group president Rick Arnish said, “but I can’t say the same for small market television.”

Arnish was speaking during a small market broadcasting session at the CAB annual convention. “I’m not confident small market TV is going to be in business in five to 10 years as we know it today,” he continued, looking down the panel’s other members directly to Marc O’Sullivan, the CRTC’s executive director of broadcasting. “We’re on the precipice of deep, deep trouble.”

For example, Arnish’s station in Kamloops puts out 17.5 hours per week of local programming, but due to falling revenue, “we’re questioning today if we can continue to do that,” he said.

With so much TV choice out there for consumers, added to the fact that the station isn’t carried on DTH and that national advertisers are no longer sending spot advertising revenue to the small TV stations, it all adds up to an uncertain future for small market TV stations.

“The business model for TV has dramatically changed, even over the past three years,” added Arnish. “The ad revenue is going elsewhere.”

Session moderator Stu Morton of the OK Radio Group suggested separate regulatory rules for small broadcasters, a theme which Arnish picked up on quickly.

“We have to take a look at deregulating small market television in this country on a go-forward basis,” said Arnish, who further stated that the levels of required Canadian content seem unsustainable. “I don’t know if that model works in the future of Canadian TV,” he explained.

O’Sullivan, however, threw cold water on that idea, saying while the Commission’s mind isn’t closed to hearing deregulation ideas which might help small TV stations, it is bound by the Broadcasting Act to maintain “predominant” levels of Canadian content.

“Anything that tries to take Canadian content levels below a 50% level would be tough,” said O’Sullivan.

On the small market radio side, one issue that’s bigger than the broadcasting industry is affecting operators there: de-population.

Panel member Dave Maclean cited 10 to 15% dro
ps in the population in the areas he serves with stand alone station CJFX-FM in Antigonish, N.S. with corresponding “declining levels of economic activity,” he said. “The pool is being drained on us as small market operators.”

“Trudeau said the State has no place in the bedrooms of the nations and I tend to agree,” said O’Sullivan, as the Commission has no answer for that issue, which is plaguing rural areas throughout the country and affecting small town businesses of all stripe.

Poll starts Martin lobbying

Canadians depend on their media to be a window on government decisions, according to a Decima Research poll on Canadian attitudes towards media released by the CAB at the convention.

Commissioned jointly by the Canadian Association of Broadcasters and the Canadian Newspaper Association, the poll said that nearly all Canadians (91%) believe that keeping Canadians informed is either an extremely important or important role for the media to play, while 86% say they depend on Canadian media to remain a force that keeps government accountable.

A significant majority (57%) say maintaining a strong domestic media industry in an important agenda item for the new federal government.

“In times of ‘democratic deficit’, Canadians are telling us they need their media to be part of the solution,” said Anne Kothawala, CNA president and CEO. “This is a message to all governments in Canada that they cannot simply pay lip service to openness and transparency. Canadians are saying that closed-door decision-making has to be the exception, not the rule.”

The poll was done “as Canada enters a new era with the transition to a new government in Ottawa,” said the press release, alluding to the impending transition in Prime Minister’s from Jean Chretien to Paul Martin.

The radio and television broadcasters that make up the CAB account for more than 80% of radio tuning by Canadians, and more than 80% of TV tuning to Canadian services. 13 million adult Canadians read Canadian newspapers every week.

“What this tells us is that it is very clear that Canada’s private media companies – whether print, radio or television – are the core of the nation’s media industry, delivering a critical service to mass audiences that feel a strong need to keep themselves informed,” said Glenn O’Farrell, CAB president and CEO.

“The results also point to anxiety among Canadians over the future of Canada’s private media companies,” says the release, adding, “61% of Canadians agree that the volume of U.S. or international media from such sources as the Internet, and satellite services threatens to overwhelm Canadian voices.”

“This is a strong message to the new leadership in Ottawa: Canadians want a strong Canadian media and government should ensure that they don’t put obstacles in the way,” added O’Farrell.

“Results clearly show the value Canadians place on obtaining Canadian perspectives, so much so that 7 in 10 would accept that a greater proportion of tax dollars be used to ensure that Canadian content is available to Canadians for many years to come,” adds the release.

TV executive confesses PVR sin

CHUM Limited president and CEO Jay Switzer humbly confessed a major sin to his broadcaster colleagues during the convention.

He owns a Bell ExpressVu digital video recorder at home and said, “I wish to confess to my peers here… that I was watching another network last week on a Bell ExpressVu PVR. I was watching a show called CSI on another network, CTV, and… I hit the skip-forward button.”

Switzer made the revelation during a panel discussion on day one of the convention. “I said to myself, ‘what the hell are you doing?'” Switzer continued. “Is this any different than allowing your kid to download music. Don’t I have a moral obligation to watch those commercials?”

To this, much laughter erupted, but Switzer wasn’t making mirth.

“It’s a serious ethical question if you’re in the business,” he explained. “I said to myself that if I actually come home and I hit this skip button through all of CTV’s commercials, it’s the wrong thing to do and is a challenge for our industry.”

The PVR challenges “a business model that’s been around for decades,” he adds. “If your fundamentals is building a business on advertising, which has been the backbone of this very successful system, then it is a challenge in the next 24 to 36 months.”

“Don’t do that again,” added Astral media chairman Andre Bureau, another panel member.

“Well,” added Switzer, “it was a repeat episode, so…”

A misguided hand grenade

The CAB audience was a bit taken aback at the frankness of Rogers Cable COO and Canadian Cable Television Association chair Dean MacDonald.

MacDonald revealed some serious second thoughts towards the handling of the application which the CCTA made to add ESPN, HBO, Showtime and others to the eligible satellite list. It’s not that he believes such a move is a bad idea, just that he’d perhaps like a do-over with the actual application and how it was done. As reported by broadcastermagazine.com last month, the Commission rejected the request.

“Frankly, the application was misguided. It was a bit of a hand grenade. There was no plan behind it and you guys have taken a bit of a knee on it,’ MacDonald told the broadcasters.

However he added, the cable industry now wants to work with those Canadian broadcasters to see if there is a way to get them to agree to add the popular U.S. cable brands here. “We feel that our customers are asking us for this stuff and people are going around the system in droves and we obviously want to stem that,” he said.

While saying he doesn’t regret the application since it did get the public talking about the issue, the way it was done made his industry come off like the cable cowboys which they are often portrayed. “We just kind of came out and drew our guns and started firing. I think we need to sit down at table (with the broadcasters) and see if there’s a workable model.

“From our perspective, I think our customers were pretty happy about (the application) and that’s who we speak for,” added MacDonald, who said he was disappointed in the broadcasters’ characterization of the application as a money-grab, as CAB president Glenn O’Farrell was quoted as saying in Broadcaster and other publications.

“The disappointing thing about the comment that it’s a money-grab is that we’re standing up and saying this is what we want to do for our customers, so I guess Glenn’s customers are the corporations he represents. I don’t hear them talking about (consumers).”

Astral tired of growing rate pressure

The chairman of the board of Astral Media took a swipe at Canadian cable and satellite companies during the convention.

André Bureau, on a panel with Bell ExpressVu president Tim McGee and Rogers Cable COO Dean MacDonald and others, was steamed at the pressure pay and specialty owners are feeling to lower their rates from broadcast distribution undertakings (Quebecor Media CEO Pierre Karl Péladeau called it a “free ride” in the October issue of Broadcaster).

“They come to us and they say in order to re-establish some kind of equitable situation in the market, you should reduce your wholesale rate, and we say, why?” asked Bureau. “Our wholesale rates for programming services have not changed for the past 15 years. And whatever it is, it’s passed on to the subscribers by the BDUs.

“Secondly, they have new services — Canadian and foreign services — and they increased their number of subscribers with that and enhanced their revenue,” Bureau continued. “And certainly, don’t forget that every year, they’ve increased their retail price. So, why are they coming to us to ask for reductions in rates in order to improve their benefit margins?”

And Bureau kept on, adding, “I think that it’s about time the Commission imposed a very strict cost separation between the different activities of the BDUs. They should have separate accountability for their programming distribution activities, for their telco activities, and for their Internet activities. A
t the present time, they want us to pay for all of that and I don’t think it’s fair.

“I don’t think it’s even fair for their shareholders. Their shareholders should know what they’re paying for. We should know and the Commission – when it wears its dispute resolution hat – should know where the money is going and what is the contribution of the programming services,” he said.

“And finally, I think that it would be fair for us when we sit down with the BDUs to negotiate our affiliation agreement so that we can use this kind of information. So I think that the cost separation — it’s time to impose it. It’s easy, it’s part of the tools of the Commission has, you don’t need to change the Broadcasting Act to do it,” concluded Bureau.

Both MacDonald and McGee were ready to pounce on these statements but panel moderator and Ottawa Citizen columnist Tony Atherton inexplicably changed the subject.

After the panel however, a perturbed MacDonald was asked to respond to Bureau’s statements about feeling the rate pressure.

“That’s good, I’m glad he feels it,” said MacDonald. ¿

“The reality is that if you look at the financial health of the specialty services in Canada, of all the players in the Canadian marketplace, those guys are the healthiest. Mr. Bureau does not have a dollar of debt on his books.

“The cable industry is investing large capex dollars to continue the growth of the sector, helping facilities-based competition,” continued MacDonald. “In terms of wanting his rates to go down, of course I (want that). When TSN comes out and they have snooker and dog shows and darts on, I’m not really that interested in paying as much for that product.

“These are just market dynamics that are normal. We’re certainly not going to apologize for wanting to reduce rates if we feel the value isn’t there or if we feel our margins are being pressed. That’s just the way people run businesses,” he said.

Plus, the cable business cannot be separated into cost silos as Bureau suggested, explained MacDonald. Sure, networks were upgraded and yes, that allowed Internet access and will one day enable telephony. But, the hundreds of millions spent on network upgrades also allowed Astral’s The Movie Network signal to be digitally secure, enabled several TMN multiplexes, and enabled HD movies.

“All these (expenditures) help go to service Mr. Bureau’s company very well because I’m sure there’ll be tons of product that they want to sell us,” added MacDonald.

“No room” on playlists a poor excuse

The relationship between the music industry and the radio industry is a pretty solid one, but record companies are getting pretty tired of hearing radio station music directors tell them there’s no room on their playlists for new Canadian artists.

During a conference panel session entitled “Notes from the front line, the radio/music partnership”, BMG Music Canada president Lisa Zbitnew was generally appreciative of the efforts of the radio industry and what it does for artists.

She said there always appears to be much agreement in the executive suites of radio companies on how best to co-operate, but sometimes the relationship breaks down upon execution at the station level. “I’m tired of music directors who say ‘well there’s no room,'” for more Canadian music on the Canadian portion of the playlists, she explained. “If I hear that one more time, I’m going to shoot someone.”

Music directors, she added, need to “be supportive and give respectful feedback on Canadian music.”

“It’s a bad excuse and it shouldn’t be happening,” added Standard Radio president and CEO Gary Slaight, another of the panel’s members.

With few Canadian artists on major music magazine covers or appearing on American broadcast television, it’s more difficult to develop Canadian artists so she needs better quality feedback from Canadian radio.

Zbitnew also expressed concern over the recent Bob, Jack and Dave phenomenon (see Broadcaster, October 2024 for a feature on that). Since the format of those stations rely mostly on years-old music, and since they are growing in number, it is “the most difficult time right now,” to find airplay for new artists. “We lost a lot of time on the air to place current music,” she added.