Speech
Notes for an address
by Charles Dalfen
Chairman, Canadian Radio-television
and Telecommunications Commission
to the Ontario Association of Broadcasters Community Awards luncheon
Toronto, Ontario
October 3, 2006
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Thank you, Nancy [Brown-Dacko, OAB President] for that very kind introduction.
And thank you for inviting me. For many years, your Association has been a strong voice for the broadcasters of Ontario. In radio and television, in large markets and small, you’ve spoken up on the issues that affect you. You’ve shared ideas with each other on how to serve your audiences better.
And today I’ve come to join you in celebrating some of your most important work: Your long tradition of community service to the people of your own cities and towns and to the people of Ontario as a whole. The awards that will be presented today honour not only the winners but also the entire broadcasting community of the province.
You’ve helped raise millions of dollars for important causes: food banks, health care, services to children, disaster relief. And you’ve donated millions of dollars worth of air time and help from your staff so that community agencies can get their messages out directly to your listeners and viewers.
You also provide an electronic version of the old Town Crier – when there’s urgent news that everybody needs to know, you’re the ones who bring it. Storm warnings, disasters, emergencies – you’re in the front lines getting the word out.
I’m especially impressed by your voluntary work with the OPP in setting up and managing the Amber Alert system that puts the whole population on the lookout for an abducted child in danger. It’s the kind of immediate, real-time, wide-ranging response that broadcasting is so well-suited to deliver.
As you may know, on that subject, we are currently considering proposals for a nationwide All Channel Alert system. Whatever the result of that process may be, we know that the broadcasters of Ontario, like those across the country, will continue to show their dedication to the service of their communities.
The people of Ontario are a great audience to have. And they welcome more broadcasting. Since the beginning of 2005 the CRTC has approved 22 new radio licences in the province. We’ve announced Public Hearings for seven applications for new radio licences, and we’ve called for applications for a radio undertaking to serve Sudbury.
The industry has had a generally healthy year in Ontario. Radio turned in some especially good numbers. In 2005, commercial radio stations earned total revenues of nearly half a billion dollars. That’s up over $40 million in 2004 – an increase of 8.9%.
Profit before interest and taxes was 120.8 million in 2005, up from 94.6 million in 2004 – an increase of 27.7%. Overall PBIT margin was 24.3% – above the Canadian average of 20.8%.
Conventional private television revenues rose to 933.2 million in 2005 from 914.1 million in 2004, a gain of 2.1%, and PBIT margin remained at 13%. These results are in line with the overall television results, which are similar in 2005 compared to the previous year.
The CRTC is well aware that conventional television has to deal with a changing environment. It has become clear that what worked so well in the past may not necessarily be as effective in the future. While the picture is generally healthy, we have noted that profits have been concentrated in the major urban markets. But even there, over-the-air TV stations are experiencing a decline in audience share. They must navigate through major changes in the way advertising is delivered. And they face substantial costs in the transition to digital.
These trends are being felt all across the country. This is one of the key factors that led the Commission to decide it was time to take a fresh look at the whole regulatory environment for over-the-air television in Canada. Written submissions were filed last week.
We will begin public hearings for the television policy review on November 27, and it is expected that the results of the review will be announced by late spring of next year.
Human inventiveness has produced some amazing changes in technology in recent years, and these have brought major opportunities and challenges to broadcasters and regulators.
More and more Canadians get their TV via cable or satellite rather than an antenna; from a viewer’s perspective the distinction between conventional television on the one hand and specialty services on the other is becoming more blurred.
More Canadians are buying high-definition TV sets and they want more high-definition programming.
Computer screens and handheld devices have also become TV viewing platforms.
The decision as to when a TV program will be seen is continuing to shift from network programmers to viewers, thanks to PVR’s, DVD’s, timeshifting and placeshifting.
Product placement, sponsorship and digital alteration are alternatives to traditional spots for the delivery of advertising.
These changes are only going to gain momentum.
But I’m confident that human inventiveness can also come up with new approaches in broadcasting and regulation that will help us take advantage of technology to achieve our aims.
The CRTC has defined four major objectives for the television policy review.
First, Canadian programming. We want to ensure that over-the-air TV broadcasters contribute in the most effective way they can to the production, acquisition and broadcast of high-quality Canadian shows that attract increasing numbers of viewers. (This is what it really is all about.)
The Broadcasting Act requires that broadcasters and other players in the system “shall contribute in an appropriate manner to the creation and presentation of Canadian programming.” Obviously, what is “appropriate” depends in part on what broadcasters are capable of doing in terms of their costs and revenues.
There are two principal measures that historically have been used to determine how over-the-air broadcasters contribute to Canadian programming. One is an exhibition requirement: You have to meet minimum regulatory requirements for Canadian content, and comply with conditions of licence for priority programming.
The second is a financial measure: What you spend in producing and buying Canadian programs. The CRTC’s policy change in 1999 removed from conventional broadcasters the requirement to spend a stated minimum on Canadian programming. We are revisiting that issue in this proceeding and expect vigorous arguments on both sides.
To help broadcasters to make the maximum feasible contributions to Canadian programming, both we and they need to have the fullest possible understanding of how our rules and policies impact their costs and revenues. The second major objective of our review is therefore to clarify these rules and policies in the light of changing conditions.
Almost all the revenue of conventional licensees comes from advertising, which is taking new forms alongside the traditional spots. In practice, the Commission has counted only those spots against the 12-minute hourly limit even though under current rules the new forms should in most cases be included. As the new forms become more prevalent, this issue grows in importance, and we have invited comments on what should and should not be counted.
We have also invited discussion on whether or not conventional broadcasters should be entitled to collect subscriber fees as well as ad revenue, as specialty services can?
Then there is the consideration of costs – especially the costs to conventional broadcasters entailed by the transition to high definition – the conversion of transmitters, purchase of new production equipment, and the acquisition of HD programming.
Broadcasters have told us that they do not expect that higher ad rates or larger audiences will enable them to recover these costs in the near term.
But I am convinced that broadcasters must move quickly to offer a wider variety of programming in high definition. Canadians are buying the sets, and if they can’t get enough HD on Canadian channels they’ll tune into American channels – and it may be difficult to win them back.
This brings me to the third of our objectives: to examine the most effective means of delivering high definition television to Canadians. Would the public interest best be served if over-the-air broadcasters were required to transmit digital signals? Licensees say that the costs of converting or replacing their analogue networks are prohibitive, and would be a poor investment given that nine out of ten Canadians now receive their TV signal through a BDU rather than an antenna.
So we have invited discussion on the pros and cons of such a requirement, which of course raises such issues as the delivery of local programming to local audiences, priority carriage and simultaneous substitution.
The fourth major objective of our policy review is to examine the current and future economic status of small-market television. This sector of the industry has been impacted by recent changes in the environment, notably the arrival of DTH broadcasting.
We’ll examine the impact of out-of-market tuning and the effect of our measures to help independently-owned small-market broadcasters maintain and improve local programming. Should they be required to air a minimum amount of it? And how can we ensure that small-market stations controlled by large ownership groups continue to fulfil their local programming obligations?
So I expect that our Public Hearings on the TV policy review will be a very lively forum, as the written phase already has been, and that key issues will be addressed from a variety of viewpoints. We expect that a good number of you will be there, and the Commission will be listening carefully to what you have to say.
We have also listened carefully to what you had to say earlier this year during our review of the 1998 Commercial Radio Policy. As in the case of television, radio is concerned about the potential impact of new technologies. Last year we licensed two satellite subscription radio undertakings.
The Internet offers a new world of audio content through podcasting, file-sharing, downloading and streaming – and young listeners in particular have been jumping right in.
How are the industry and the regulator going to deal with this steady increase in listening platforms? In particular, how are we going to address the special needs of Canadian audiences?
The new platforms deliver content that’s mostly in English. So there’s a particular challenge for French-language broadcasters, who have the responsibility of supporting the Canadian francophone recording industry, contributing to the development of French-language expression and offering francophones the music that reflects their culture.
All broadcasters, especially in the larger cities, have to serve the needs and tastes of a more and more diverse population that is multicultural, multilingual and multi-ethnic.
I am happy to see that Aboriginal Canadians are more and more able to hear their own broadcast voices in communities across the country.
Our review is also examining how commercial radio can help Canadian artists and provide a greater variety of musical genres. And how can it provide a healthy amount of locally-produced news and information? How can it make a successful transition to digital and take advantage of the new distribution platforms?
In short, how can we continue to have a strong, well-financed commercial radio sector that helps achieve the objectives of the Broadcasting Act?
As usual, these are complex issues with a wide range of different interests to be balanced, so we are giving them very careful study. Which is another way of saying I am not going to drop any hints about what conclusions may be reached, but I anticipate that our conclusions will be released before the end of the year.
Two thousand and six has been a banner year for reviews and reports. In June, the Government asked the Commission to prepare a report on the changing technological environment that is having, and will have, such a great effect on the Canadian broadcasting industry. This request, which is provided for under Section 15 of the Broadcasting Act, reflects the clear interest of our Minister, the Honourable Beverley Oda, and the government, in these difficult and important issues.
We will be presenting our report to the Government by December 14.
We’ve been impressed by the quality of the submissions which have been made by broadcasters and other stakeholders as contributions to the creation of this report.
And I’d like to thank and congratulate members of the OAB who have taken part in the process.
I’d like to encourage everyone to visit our website and have a look at this material. In addition to its value for our report to the Government, it also provides us with a rich resource that we are consulting as we carry out our television policy review. It also points out areas where the facts are not yet clear. For example, we received a number of different estimates of the time Canadians spend on the Internet. These varied widely, and it’s clear that more research needs to be done.
I’ve said a lot today about new technologies that are changing much of the nature of broadcasting in Canada. Of course, they are having similar effects around the world. But no matter how many millions or billions of people make up the audience, broadcasting remains one of the most intimate of media. We seek it out and receive it in our homes, in our cars, on the street, or wherever we are. We turn it on, or turn it off in an instant according to our mood of the moment.
Despite the proliferation of signals from across the country and from abroad, we still look to it as a medium that reflects our lives and that speaks to us as members of our own community. It’s that spirit of community service that you are honouring here today with these awards. Congratulations to the winners and to all of you.
Thank you very much!
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Date Modified: 2006-10-03
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