Presentation to the CRTC - PN 2014-190 (Let’s Talk TV)

Thanks for the opportunity to appear. FRIENDS¹ switched places with Shaw to accommodate an unforeseen scheduling issue following the sudden death of Paul Robertson. Unfortunately, the Chair of our governing body, Dr. Noreen Golfman, Provost and Vice-President Academic at Memorial University, could not re-arrange her schedule on short notice to join me here today. Peter Miller, author of the Environmental Scan and the Canadian Program Rights Market studies that FRIENDS co-sponsored, is at my side, in case you have any questions about those studies.

Defining a regulatory framework for the future of Canadian television is a broad, complex assignment. In its 1999 TV Policy, the Commission noted: “given the scope, complexity and pace of change, it is difficult to predict the exact nature of those changes and how and when they may have an impact” – prescient words!

In essence, we have four messages.

First: do no harm – or when in doubt, do nothing. You owe it to viewers and listeners to take the time to get it right.

Second: do not look on viewers and listeners only as ‘consumers’.² In the words of Sonia Livingstone, “the promise of media literacy, surely, is that it can… reposition the media user – from passive to active, from recipient to participant, from consumer to citizen”.³

Three: lay out a vision of a dynamic, functioning and contributing broadcasting system – and a regulatory framework to support it. Focus on topics that require immediate attention, such as the plight of local broadcasting in small and medium markets, or the future of important but vulnerable specialty channels such as Treehouse, protecting Canadian content or the importance of the long-term viability of CBC/SRC. Lay out an agenda of focused future proceedings to address priority issues. And report to government, publicly, on the state and stakes of Canadian television.⁴

Four: Any regulatory framework arising from this proceeding should have a sunset of three, possibly five years. Peter’s Miller’s Scan presents convincing evidence that our system has great potential to thrive within that time frame. You should identify exceptions and proceed to address them with care.

We wish to comment on four topics:

First: the role of the national public broadcaster. CBC/SRC is the only non-vertically integrated service with the experience and resources to provide programming of public interest across all platforms from coast to coast to coast in both official, and aboriginal languages. As private broadcasters face increased pressure at the local level, CBC/SRC can leverage its combined resource of radio, TV and digital to provide appropriate local content to fill the gap.

In a sea of foreign and vertically-integrated TV voices, CBC/SRC is a crucial, independent and (potentially) non-commercial voice – valuable for maintaining a distinct country on the northern half of the North American continent – and essential for “predominantly and distinctively Canadian” programming in a variety of genres. In other words, essential for a system that, to quote your Notice “encourages the creation of compelling and diverse Canadian programming”.⁵

But, to do this, CBC/SRC must be empowered to play a much larger role. It is within your powers to do three things to build this capacity:

Substantially reduce the CBC/SRC’s draw on the ad market
Allocate 1%, eventually growing to 2% of BDU revenues to CBC/SRC, and
Direct Netflix and other OTT operators to contribute 5% of their Canadian revenues to support CBC/SRC⁶

We have outlined these proposals in greater detail in our June 27^th submission, including your advising government on the crucial importance of financing CBC/SRC.

Second: The relevance of the New Media Exemption Order. No one can sit here and credibly assert that new media, including Over-the-Top, remain merely complementary and pose no threat to broadcasting licensees’ capacity to meet their obligations. You should revisit the Order to determine what contribution OTT services and other foreign-based TV players should be mandated to make in order to conform to the requirements of the Broadcasting Act.

Third: A word about simultaneous substitution. For 42 years, simulcasting has protected the rights purchased by Canadian broadcasters, while avoiding the ‘blackouts’ that are, from a viewers’ perspective, the scourge of rights protection south of the border. The Armstrong study⁷ indicates that simulcasting boosts system revenue by as much as $458 million – close to 25% of conventional TV revenue.

What’s at stake is production values and, in small and medium-size markets, the risk of station closures. We find the Coalition of Small Market Independent Television Stations’ arguments persuasive – and alarming. That’s why FRIENDS recently commissioned a Nanos Research survey of 500 respondents to gauge public opinion in communities at risk.⁸ Nanos interviewed 100 persons in five new federal ridings, each considered to be a ‘swing’ riding, in St. John’s – Mount Pearl, Ottawa West – Nepean, Hamilton West – Ancaster – Dundas, London West, and Thunder Bay – Rainy River.

The results:

81% consider local news valuable
77% would care if local news were to stop
71% think the CRTC should avoid regulatory changes that would undermine their local TV station
89% think their MP should work to keep local broadcasting strong
79% think local news contributes to making their community stronger.

These data align with the Nanos Research survey of 1,000 Canadians we commissioned with ACTRA and Unifor, which found 95% of Canadians consider local news important.⁹

As you know, the Coalition indicates that its nine members’ 19 stations in 13 markets are even more dependent on simulcasting than larger stations. And the Commission should also be concerned with the viability of the CTV2 Network, once Bell’s regulatory obligation to maintain it expires. The elimination, or even reduction, of simulcasting is a dangerous idea that should not receive serious consideration.

Fourth: Unbundling, or pick-and-pay, was first broached in the October 16^th, 2013 Throne Speech. The following day, Canadian Heritage Minister Shelly Glover commented in the House of Commons: “Canadian families work hard to make ends meet, and every dollar counts… . Our government believes Canadian families should be able to choose the combination of television channels they want, and will require channels to be unbundled, while protecting Canadian jobs”.

On the other hand, you, Mr. Chairman, have recently been quoted as saying, “I’ve never promised that pick-and-pay would be cheaper”.¹⁰ According to Nanos Research, 62% of Canadians agree. They believe major cable and satellite providers, who have advised your Commission that pick-and-pay will not reduce consumer prices. Only 24% believe Minister Glover.¹¹

The Environmental Scan reports on U.S. studies suggesting an impact as high as a 50% loss of channel revenues.¹² Even Mr. Miller’s own more conservative estimate – a 20% reduction in subscription revenues – suggests that pick-and-pay is not the kind of gamble that a prudent CRTC would take with the future of the Canadian broadcasting system.

You have indicated that you would still require some form of basic package. Unless you were to abandon the principle of predominance of Canadian services – which would be illegal – Canadians would still have to pick Canadian channels paired with U.S. channels. And fundamental economic principles dictate that if everyone picked fewer channels, the per-channel cost would rise.

How would unbundling make the system stronger, or create more and better Canadian programming? None of this would further the objectives of the Broadcasting Act. It is essential that your Commission study the options carefully – as it has in the past – to ensure the vitality of our carefully-constructed broadcasting ecosystem. Adopting an ill-conceived, focus-group-generated proposal would do a disservice to all Canadians. And once Canadians experienced the results, they would know whom to blame.

On both the simulcast and pick-and-pay files, you should take care to avoid over-simplification of arguments, and most of all, unintended consequences. The Nanos poll shows that your Commission’s decisions over the years have earned you the trust of almost two-thirds of Canadians¹³ to protect Canadian culture and identity. Please take care to burnish and justify that trust.

Thanks for listening!

– 30 –

For information: Jim Thompson 613-567-9592

¹ FRIENDS of Canadian Broadcasting is an independent watchdog for Canadian programming on radio, television and online, supported by 235,000 Canadian families. FRIENDS is not affiliated with any broadcaster or political party. For details: friends.ca. FRIENDS supporters account for 2,202 of the submissions in response to CRTC PN 2014-190.

² The Broadcasting Act contains only one reference to ‘consumer’: Section 46(1)(k), which describes a product CBC/SRC can sell.

³ Sonia Livingstone, OBE is former head of the Department of Media and Communications at the London School of Economics and former President of the International Communications Association. The passage referenced is the conclusion of her Abstract on “The Changing Nature and Uses of Media Literacy” in Media@LSE Electronic Working Papers, 2003.

⁴ The only occasion in recent memory when the Commission has advised the government regarding “the future of TV” was the 2006 Section 7 report on The Future Environment Facing the Canadian Broadcasting System.

⁵ The Commission’s failure to reference the CBC/SRC in Public Notice 2014-190 was an unfortunate lapse, to say the least.

⁶ Nanos Research, What Canadians Think About TV, August 28, 2014. RDD dual frame random telephone survey, August 16^th to 25^th, 2014, n=1,000, accurate 3.1 percentage points plus or minus, 19 times out of 20. See page 28: 80% of Canadians agree that “foreign companies that broadcast TV programming into Canada over the Internet should be subject to the same rules as Canadian companies that broadcast TV programs by cable, satellite or over the air”. See: http://www.friends.ca/press-release/12384

This poll was commissioned by ACTRA, FRIENDS and Unifor.

⁷ Armstrong Consulting, The Economic Value of Simultaneous Signal Substitution for English-Language Private Television Broadcasters, June 25, 2014.

⁸ Nanos Research, Views on Local News in Five “At Risk” Markets, August 28, 2014. Nanos conducted a random telephone survey using live agents between August 23^rd and 26^th. The dual frame sample included both land-and cell-lines. The results were statistically checked and weighted by age and gender using the latest Census information. The margin of error for a random survey of 500 respondents is +/- 4.4 percentage points, 19 times out of 20. See: http://www.friends.ca/poll/12391

⁹ Nanos Research, What Canadians Think…, op.cit., page 7. The Commission’s own research has reached a similar conclusion.

¹⁰ CBC.ca, Tracy Johnson, September 2^nd/3^rd “Unbundled specialty channels could be more costly depending on choices, Jean-Pierre Blais admits”.

¹¹ Nanos Research, What Canadians Think…, op.cit., page 26.

¹² A number of submissions from south of the border support this position.

¹³ Nanos Research, What Canadians Think…, op.cit., page 15.