Cancon, talent developments expected to dominate CRTC’s radio policy review

Canadian content levels, talent development payments and spectrum issues are among the myriad concerns that radio broadcasters are expected to raise during this year’s review of the CRTC’s radio policy. Although the CRTC has yet to release its notice outlining the issues it wants to examine, Canada’s radio broadcasters tell Canadian Communications Reports that Canadian content levels and contributions to talent development funds are major issues that need to be revisited. The radio policy review is also likely to touch upon spectrum issues, ownership constraints and competition from subscription satellite radio, Internet streaming, podcasting and peer-to-peer music sharing services. "The two strongest concerns in our book are Canadian content and Canadian talent development," says Alain Strati, VP of business and regulatory affairs at Rogers Broadcasting Ltd. Strati is recommending a broader look at the two issues that goes beyond quantum measurements. He notes that the radio industry would like the CRTC to adopt an approach that is similar to that used for Canadian TV content, particularly drama, which would mean a "bonusing-up" for playing more Canadian music, especially music by emerging Canadian artists. In the TV industry, dramas that are considered more Canadian – for instance, where the director, writer, and main actors of a show are all Canadian – are given extra credits in terms of fulfilling Canadian content requirements. Strati wants that approach adopted in radio, so that a radio station would receive more credit in terms of Canadian content for playing emerging artists rather than established ones, for example. "Should I not get recognition if my station is playing new songs, new artists, or emerging artists? That would bring new Canadian singers and musicians into the Canadian music industry, rather than playing more songs from an established artist," he states. "The radio broadcasters are that, instead of having straight 35% in terms of Canadian content, that an incentive-based structure be introduced, much like the CRTC did with the TV drama policy." Strati notes that the Canadian Association of Broadcasters (CAB) currently has a strategic group in place that is developing initiatives, doing research and discussing with the radio industry and other parties possibilities for adopting this kind of approach. "Certainly, I don’t think that we are going to get a consensus from everybody, but if we can come up with an incentive-based Canadian content mechanism that has a good degree of support on a broad level just broadcasters, that would go a long way in assisting the commission in developing a policy to get there," Strati adds. Consultant Peter Fleming notes this approach has been tried before by radio broadcasters. "The industry has in the past requested that the commission not necessarily lower the Canadian content requirements, but that they bonus, for example, new artists," he says. This time around, he adds, the radio broadcasters are going to "come forward fairly strongly and say we need a new deal in a changing environment," where satellite radio is just taking hold and downloading is becoming more widespread. "The question is, what can you expect from existing radio broadcasters when their competitors may be playing by different rules? How do you have a fair regulatory field? Is it fair that there are people out there that don’t have any regulations attracting ears through the Internet?" questions Fleming. He adds that the expansion of Wi-Fi and similar wireless technologies will enable people to download music from their phones to their cars. "Will the CRTC give concessions? I think it’s possible. They will certainly be asked to look at bonusing and such things to make the whole Cancon thing less of a burden," Fleming notes. " will the CRTC go for that? That’s the million-dollar question." Strati also says the CRTC has to undertake a much broader discussion of the radio industry’s contributions to talent development. He wants the CRTC to take into account the increased copyright payments the radio industry must currently provide. "The copyright payments go to music publishers, record companies, authors and composers. There has been an increase in that tariff, new ones have been introduced and there could be new ones in the pipe," notes Strati. "So when we talk about Canadian talent development in front of the CRTC, it seems that it has to be a conversation focused not just on initiatives that the radio industry is involved in with the commission and Heritage, but also the royalties paid." The CAB appealed the decision by the Copyright Board of Canada last October, which hiked music tariffs for higher profit radio stations for the years 2003 to 2007 after years of no rate increases. The board ruled that music is worth more to radio stations than previously thought, and increased to 4.4% from 3.2% the rate that radio stations pay to the Society of Composers, Authors and Music Publishers of Canada (SOCAN) on revenues above $1.25 million. The rate going to the Neighbouring Rights and Collective of Canada (NRCC) also rose to 0.75% from 0.64% (CCR, Oct. 24/05). During the tariff-setting process, the CAB was unsuccessful in trying to convince the Copyright Board to take into account radio stations’ contributions to talent funds. Strati, however, says the industry must convince the CRTC to take a broader look at the issue. "We’re saying that there should be recognition of the fact that we make significant copyright payments," states Strati. The CRTC set a $1.8-million target for radio broadcasters when it reviewed Canadian talent development initiatives in the late 1990s. "The question is whether that’s an appropriate level now, and are we trying to boost Canadian talent in the right way," says Fleming. Gary Slaight, president and CEO of Standard Broadcasting Corp., estimates that about 11% of revenues generated by his radio stations go to the music industry through royalties and other similar payments. He is also pushing the commission to take an overall view of radio issues. "We’ve had a really good year , but it is a snapshot, and decisions shouldn’t be based on that one year," he states. "We have to look at the things that will be going on over the next five years. New technologies, for example, and what impact they will have on our businesses. The CRTC can’t squeeze us too much, or we won’t be around for long." Another issue likely to be raised by the commission, according to Fleming, is the rollout of digital audio. There aren’t many digital audio sets in the marketplace yet, and this could result in radio broadcasters asking for changes to the way their spectrum is used. "I think a lot of broadcasters think digital audio isn’t necessarily the success they thought it would be," Fleming points out. "The commission had a policy of allowing broadcasters to have a digital frequency for every AM or FM radio station. It was seen as a replacement technology, so broadcasters couldn’t do much with it a little experimentation. The whole question now is, should the commission consider it not as a replacement technology but as an add-on, and then how would radio broadcasters use it? They could use it for data, or they could put up a few new digital radio channels." Regardless of what is done with the digital audio spectrum, Fleming says that in the upcoming radio policy review the regulator is bound to wrestle with how radio should transition to the digital world. Other issues that are likely to be raised are diversity, limits on the number of radio stations that can be owned in one market, and radio marketing agreements between different station groups. Fleming says a concern will be the Quebec radio market, where there is a lack of diversity in formats and few radio station ownership groups. At this point, however, Canada’s public broadcaster plans to essentially be a spectator in the proceedings. "We will be on the periphery," says Michel Tremblay, VP of strategy and business development at the CBC. "Inasmuch as the CRTC examines Canadian content or Canadian development – that is of interest to us – because we are players. But obviously the norm that is set for the private radio station doesn’t apply to the CBC: while…private are at 35%, we are at 50%." "We are going to be watching the proceeding rather than being very active, but it depends on the notice issued by the CRTC and what kinds of issues are raised," Tremblay notes. "Until it is issued, it is difficult to say to what extent we will be involved in the proceeding. Our interest is that the system is working, and everybody is making the best possible contribution." The CBC’s radio concerns and Cancon requirements will be considered this December during the broadcaster’s licence renewals. The CRTC announced in November 2005 that it would review its Commercial Radio Policy, although the Canadian Association of Broadcasters (CAB) had requested a further delay until the effects of the launch of subscription radio could be better evaluated (CCR, Oct. 7/05). The radio review was due to take place in 2003, but was delayed by CRTC chair Charles Dalfen because subscription satellite radio had not been licensed and the rollout of digital radio had not advanced very far. The CRTC is expected to release its policy notice this month, with a written policy to follow, and public hearings being held around May.

Cancon, talent developments expected to dominate CRTC’s radio policy review

Broadcast | January 12, 2006

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