Re: Public Notice CRTC : Diversity of Voices Proceeding

Transcription

1 July 18, 2007 Mr. Robert A. Morin Secretary-General CRTC Ottawa, ON K1A 0N2 Dear Mr. Morin: Re: Public Notice CRTC : Diversity of Voices Proceeding 1. is an independent watchdog for Canadian programming in the English-language audiovisual system, supported by 100,000 Canadians. Friends wishes to appear at the September public hearing in order to place before the Commission a listeners and viewers perspective on diversity of voices. 2. Executive Summary: Unregulated services threaten to undermine the goals of the Broadcasting Act. Broadcasting Distribution Undertakings (principally big-cable) have a huge impact on diversity of voices and should therefore be a focus of this review. Up to a tipping point, ownership concentration can contribute to diversity of voices. That tipping point is near in conventional radio and television, and has now arrived in cable distribution, where the system now suffers from the negative impact of excessive concentration. 200/238, 131 Bloor Street West, Toronto ON M5S 1R8

2 CRTC , page 2 3. This hearing is the first significant review of media ownership since the 1970 Davey Commission, and is long overdue. We congratulate the Commission for its leadership in convening this hearing. 4. As outlined in the Order-in-Council submissions, the broadcasting landscape in Canada has recently changed significantly. One of the most substantial challenges facing television media is the growing fragmentation created by the additional choice of many new conventional and specialty services, in addition to a host of alternative media and entertainment options. These include video content delivered over the Internet, portable entertainment devices such as ipods and other MP3 players, PVR/time-shifting, VOD and DVDs. And commercial radio faces new competition from Internet and satellite-delivered audio services. 5. Friends believes that it is imperative that the system not be undermined by unregulated services that do not contribute to the overall goals of the Broadcasting Act. Accordingly, Diversity of Voices should fully consider media available to the public that are not currently regulated by the Commission, especially services that deliver content wirelessly to cell phones, personal digital assistants (PDAs) and any other devices not yet contemplated. 6. Such services draw listening and viewing away from regulated media. While they may technically increase diversity, they contribute very little to financing Canadian programming or to the Canadian broadcasting system overall. Friends draws a parallel between the arrival on the scene of 21 st -century wireless devices and the dawn of the transistor radio the wireless device of the 1950s. We suggest that, in its further review of these areas, the Commission address CanCon contributions in areas within its jurisdiction, such as cell phones, PDAs and similar devices. 7. While the Commission s public notice focuses on conventional radio and television, as well as on specialty channels, Friends recommends that the Commission include broadcasting distribution undertakings (BDUs) in this review because of their very substantial impact on the rest of the audio-visual system. 8. The Commission s decision to change common ownership rules for radio stations has, in many instances, increased the diversity of voices, in larger and smaller markets alike, by introducing more radio choice. Common ownership of previously independent radio

3 CRTC , page 3 stations can consolidate expensive back-office and transmission/master control functions. This, in turn, can make it financially viable to offer more programming options in a given market by creating greater operating efficiencies. As a result, listeners can benefit from an obvious increase in choice, and the efficiencies can allow a greater portion of operating revenues to flow to programming. 9. This illustrates why increased concentration in ownership, in and of itself, may, to a point, not conflict with diversity. On the other hand, while concentrated BDU ownership has no doubt allowed the provision of a more robust cable offering, especially in smaller communities, these benefits may be off-set by a lack of competition, and increased BDU control of which optional carriage services get through the gate, and which do not. 10. The Commission s task is to balance the benefits of concentration and efficiency against the negative effects of excessive concentration. 11. Even assuming the acquisition of Standard by Astral, on-going competition seems reasonably assured by the range of large corporate groups, including Rogers, Corus and CTVgm, which hold the ownership of private English-language radio in Canada, and the advent of satellite radio. The Commission s common ownership policy in conventional radio also ensures sufficient competition within each market, so that advertisers can choose from a wide selection of stations at rates disciplined by competition. 12. The Commission s public notice correctly differentiates between common local ownership and concentration in national ownership. The existing common ownership radio policy seems to be working within the context of the present structure of four major national companies. However, that balance could dramatically change if the existing groups were to consolidate further. The situation could be particularly negative for advertisers in certain markets who must negotiate national purchases with Canadian Broadcast Sales, which is jointly owned by Rogers and Corus, and sells national advertising for both companies. 13. The Commission might wish to consider establishing benchmarks in order to forestall excessive future concentration. Friends suggests that this would arise if one of the existing four major

4 CRTC , page 4 players were to acquire the radio assets of another, thereby reducing the major players to three. 14. In conventional television, the common ownership policy is of greater current concern than in radio. The ownership of private English-language television station groups could recently have fallen effectively into the hands of just two players. The ensuing public policy precedent, had this been allowed to occur, would have made it almost impossible to prevent the eventual domination of a single private-sector conventional owner in French-language television. 15. The Commission has given only exceptional approval to the ownership of two stations in the same language in the same market. After the early rollout of conventional English television in the mid 1950s, the regulatory priority was to create as many opportunities as possible for Canadians to receive indigenous overthe-air (OTA) viewing options. Accordingly, the CRTC allowed the applicants to own both CBC and CTV affiliates in smaller markets, where its assessment was that two independent television stations would not be sustainable in the absence of common ownership. This rationale, for example, lay behind the licensing of stations such as CHFD in Thunder Bay and CITL in Lloydminster as CTV supplementary affiliates The most prominent and oft-cited examples of common ownership policy exceptions are stations that are part of the same major market, 2 but have a distinct community focus and geographic address. Examples include Barrie/Toronto, Hamilton/Toronto and Victoria/Vancouver. CTV recently presented these exceptions as precedents in its attempt to win approval for owning two stations in five of the largest markets in the country. However, the Commission, not bound by precedent, can, and should, evaluate applications for common ownership on a case-by-case basis. 17. It is neither possible, nor desirable, to set in stone a common, onesize-fits-all conventional television ownership policy going forward. Instead, the Commission should retain the right (and the flexibility) to review each application on its merits. As circumstances in 1 CHFD started in 1972 and is owned by Dougall Media which has owned CBC affiliate CKPR since CITL started in 1976 and is now owned by Newcap, which is also the licensee of CBC affiliate CKSA which began operating in As defined by Nielsen and/or BBM

5 CRTC , page 5 various markets differ, the issues require careful individual assessment. 18. The overriding principle guiding the Commission s decisions should be that exceptions to the common ownership policy are granted only when they constitute the best possible outcome for the viewers and listeners in that market. Friends also supports the Commission s historical practice of maintaining industry balance for both market competitors and advertisers. 19. In order to generate the revenues necessary to underwrite Canadian content production both local programming and national series it is critical that the broadcasters control the programming rights and benefit from the advertising revenues derived from top-rated Hollywood programs. This is why Friends advice to the Commission was that CTVgm should not be allowed to sell CHUM s A-Channels. Without the protection afforded by the financial umbrella of CTV, the quality of the A-Channel schedule would diminish, thus reducing the stations overall audience. This could only lead to a downstream negative effect on local news The Canadian broadcasting system is better served by three national English-language private-sector competitors, rather than two, and Friends considers that CHUM s CITY stations will benefit from Rogers considerably greater resources, both financial and promotional. While Rogers is not yet a significant purchaser of conventional English language prime time programming, this will change as a result of the CITY acquisition, as well as Rogers increasing acquisition of video-on-demand (VOD) and pay-per-view (PPV) programming While specialty channels do generate spending on Canadian programming which is, in the aggregate, proportionally higher than conventional stations, next to none of it is local programming. While cornering entire genres 5 may pose a problem for diversity, for the moment, their concentration in general has less impact than ownership of conventional OTA stations. 3 We note that on the same day CHUM announced its sale to CTV, July 12, 2006, it also announced significant cut-backs in local programming. 4 Rogers has recently introduced VOD for conventional television programming such as the popular Survivor show, which it offers the day after it airs on Global. 5 For example, CTV s control of all music, other than BPM.

6 CRTC , page Friends considers the high concentration of ownership in the broadcast distribution undertaking (BDU) sector a substantial threat to diversity of voices, larger even than the spectre of only two private English-language conventional networks. 23. Even though the Commission has allowed the creation of DTH and other alternatives to cable, the reality is that provision of cable remains a territorial monopoly. The other reality is that within English Canada there are only two significant cable companies, and two DTH players, with the second-largest DTH company being controlled by the second-largest cable company. 24. As previously stated, Friends does not object to significant ownership concentration. In fact, we see many resulting benefits arising from the provision of a better service. However, ownership concentration remains a serious problem in gate-keeping and control of smaller providers, as the BDUs are able to circumvent the Commission s linkage rules, intended to ensure that they do not provide themselves with undue preference, because they control packaging and virtually dictate the specialties pass-through fees. 25. Shaw s recent over-reaching behaviour regarding the Canadian Television Fund draws attention to a lapse in public policy which has recently allowed Shaw to play a dominant role in both the territorial cable monopoly and DTH sectors. 26. Cross-ownership of various services has created cross-promotional platforms for the dominant players that companies in other lines of business can only dream of. 27. The ownership interests of Canada s two largest cable companies now extend across the media landscape. Rogers Communications, for example, is now in radio, conventional television, specialty television, cable, wireless, high-speed and home phones, and publishing not to mention subsidiary businesses in each of these categories Shaw is in cable, high-speed internet, home phone, radio, conventional television, and specialty television, both directly and through its affiliation with Corus. Both Rogers and Shaw are quickly becoming competitors for secondary program rights through their pay and video-on-demand operations and, should the 6 Retail stores for cable, video or wireless, for example.

7 CRTC , page 7 acquisition of the CITY TV channels be approved by the Commission, Rogers will become an acquirer of prime time conventional network programming. With the advent of more video content on the web and various wireless devices, Rogers will likely become one of the largest consumers of content. 29. Even though cable operators are not currently allowed to sell their local commercial availabilities, they are able to use them to promote their own related services, in compliance with CRTC policy. Cable, however, has continued to advocate that it also be allowed to sell advertising in its local programming, in addition to the local avails which they enjoy in most US specialty programming services. 30. Companies like Rogers and Shaw are morphing into advertising monoliths: packaging advertising on cable, conventional television, specialty channels, radio, wireless devices, electronic programming guides, and, in the case of Rogers, print and interactive publications reaching many of Canada s largest aggregated audiences. 31. The recent approval of CTVgm s takeover of CHUM s 21 specialty and pay properties, giving it 39% of the specialty market in Canada, may provide that company with the clout to ensure a level playing field with the dominant BDUs. But this also gives CTVgm a preferential position vis-à-vis all the other specialty services, which lack the same negotiating strength, and which may be expected, as a consequence, to suffer at the hands of the BDUs. 32. The traditional approach to concentration of ownership has focused on what level of concentration is dangerous to the greater societal good. The Commission should consider the balance between generating synergies and cost savings through common ownership, and the danger of reaching an inevitable tipping point where diminishing diversity of voices becomes a serious problem for Canadian democracy. 33. At what point does this concentration tip into a negative development for the Canadian audio-visual system? Friends suggests the following as a guide to the Commission s thinking: 34. For commercial English-language radio, the advent of three dominant players in place of the current four would reach the tipping point.

8 CRTC , page For commercial OTA English-language television, the tipping point has almost arrived with three dominant players. 36. For the distributors, we have passed the tipping point and measures are now needed to curtail their dominant position, in the interest of diversity of voices. A meaningful test of diversity is whether or not smaller independent specialty channels are able to survive, as opposed to having to sell out to an entity large enough to secure carriage, with ongoing carriage fees sufficient to enable that service to meet its regulatory obligations. Yours sincerely, Ian Morrison Spokesperson 30 For information: Jim Thompson