Re: Broadcasting Notice of Consultation CRTC-2011-379-6: Final Comments

Mr. John Traversy Secretary-General CRTC
Ottawa, ON K1A 0N2

Friends welcomes the opportunity to file final comments on several subjects where new information was presented by the applicant during the reply phase on November 30, 2012: CBC Television - Balanced Schedule, Programs of National Interest, and Regional Production; CBC Radio 2 and Espace musique - Commercial Messages; and CBC Television - NHL Hockey.

CBC Television - Balanced Schedule

In revised Proposed Conditions of Licence (COL) filed and discussed on November 30, the applicant provides draft text for a so-called "high-level COL on balance" that would require the CBC to "have a balanced schedule incorporating a wide range of programming that informs, enlightens and entertains" and to "file a report to the Commission annually demonstrating that [this] requirement... has been satisfied."
Friends submits that this proposed COL is unenforceable and essentially meaningless, beyond promising to adhere to the requirements of Section 3 (1)(l) of the Broadcasting Act. Unless the COL defines "balance" in objective and quantifiable terms, there will be no means to determine whether or not the condition has been met. An annual report alone will not provide accountability.
While Friends has not been able to locate the full text of the Commission's own draft COL, the portions of it which were discussed during the hearing on November 30 (e.g. in paragraph 19728 of the transcript) appear to suffer from the same lack of specificity and enforceability, using only general terms such as "reasonably balanced", "diverse categories or genres of programming", "a part of them" and "reasonable quantity."
Section 9 of the Broadcasting Act fully empowers the Commission to establish conditions of licence consistent with the applicant's mandate under Section 3 of the Act - conditions which must, beyond recitation of the Act's broad intentions, create regulatory mechanisms designed to ensure that those conditions are fulfilled.
As Friends has argued in all its interventions, despite the desirability of optimal "regulatory flexibility", recent experience (as documented in our October 5 submission) demonstrates that Canadians cannot rely on the applicant to live up to its statutory responsibilities in the absence of unequivocal regulatory requirements. We therefore submit that this COL needs to define clearly the fundamental concept of a "balanced schedule". If necessary, the Commission should undertake further consultations with the Corporation to achieve quantifiable and measurable indicators.

CBC Television - Programs of National Interest (PNI)

Friends commends the applicant for improvements offered during the hearing to its PNI proposals in response to the Commission's urgings. In particular, we welcome the overall increase to nine hours weekly, and the increase to a minimum of two hours each of Documentary and Drama programming.
However, we are concerned to note that the English network did not see fit to follow the lead of the French network by expanding its definition of PNI to include performing arts programming from Categories 8 and 9. These program genres are absolutely essential to the national public broadcaster's overall offering, and are one of the most distinctive and valuable types of programming it can provide to the Canadian system as a whole - and this is true in either official language.
We attach no weight to the applicant's assertions about the unavailability or unpopularity of such programming. And we are confident that the many talented in-house and independent producers with skills and experience in this genre are more than capable of creating attractive shows of this type - as they have done in past decades, when given the opportunity.
Simply including Categories 8 and 9 within the modified definition of PNI is insufficient. The presence of such programming on the schedule can only be assured by a specific quantitative requirement set in the COL.
Friends therefore urges the Commission to consult with the applicant about the addition of a provision to the current proposed COL that "not less than one of the nine hours shall be taken from Categories 8 and 9".

CBC Television - Regional Production

Friends also commends the applicant for other improvements offered at the Commission's behest during the hearing to its overall commitments, including those related to Local Programming and Children's Programming.
However, we were extremely concerned that during questioning in the reply phase, the applicant once again declined to offer any commitments with regard to regional reflection and regional production for network broadcast, despite the strong representations made by Commissioners and many interveners regarding the central importance of regional production, both to the applicant's mandate under the Broadcasting Act and to its role as the national public broadcaster.
In this regard, we note in particular the assertion made on November 30 by Kirstine Stewart (in paragraph 19827 of the transcript) that regional production currently accounts for 68% of the overall CBC Television schedule.
Given this, Friends sees no reason why the applicant should not be prepared to accept a COL that "a weekly average of at least 40% of its network schedule shall consist of programming produced outside of Toronto". We encourage the Commission to consult with the Corporation about such a COL.

CBC Radio 2 - Commercial Messages

As this has been one of the major issues of the licence renewal process, it is not surprising that it was a principal topic on November 30. As you will recall, two issues dominated that discussion: (1) the accuracy of the applicant's revenue projections, and (2) various suggestions to limit the negative impact of commercialization, both on the CBC's services and audiences, and on private broadcasters. Friends wishes to comment briefly on both these matters, but then to refocus on what we consider to be the real issue.
First, with regard to revenue projections, the Corporation's consultant from Strategic Inc. attempted to discount three independent studies, commissioned by Friends and by the CAB, all of which demonstrated that CBC has significantly underestimated the revenue that would derive from introducing commercials. Nothing from the mouth of the Strategic Inc. consultant succeeded in undermining these three independent studies.
On the contrary, the methodological arguments employed by the consultant directly contradict evidence she has given to the Commission in previous proceedings. In addition, there are significant factual errors in the CBC forecast. Commission staff has the expertise to study all this evidence, in order to reach its own conclusions about which position is more credible. We urge Commissioners to request such detailed scrutiny.
Secondly, we turn to various proposals intended to mitigate the effect of the applicant's commercialization proposals, including a staged introduction of the maximum number of commercial minutes, various specifications with regard to distinctiveness of music format, and so forth. Friends respectfully suggests that all such attempts to allow the applicant to compete in the commercial radio arena while forcing it to keep one hand tied behind its back are doomed to be both ineffective and unenforceable.
We doubt that the Commission will have either the inclination or the resources to conduct the micromanagement of both the programming and business activities of the applicant that would be necessary to give teeth to such detailed provisions. Nor would this seem consistent with the approach of "regulatory flexibility" which both the applicant and the Commission have espoused throughout this proceeding.
It has already become abundantly clear, during the course of the hearing, that the apparent limitation of restricting the CBC to "national advertising" is really not much of a constraint at all, apart from eliminating strictly "local/local" retail buys, which are a diminishing and cost-ineffective segment of the overall radio advertising business.
Similarly, staging the introduction of the proposals over four years would simply have the effect of deferring somewhat the full impact of the change on private broadcasters.
With regard to the proposals concerning Canadian music, Category 3 music and emerging Canadian artists, while these may be desirable in and of themselves, Friends doubts they could ever guarantee the distinctiveness of Radio 2.
One need only look to recent experience to confirm this. Within the past few years, the applicant fundamentally and unilaterally altered the nature of its Radio 2 service, explicitly attempting to appeal to a larger and younger audience. What would prevent CBC from attempting to do so again, if and when its revenue projections might lag, or when it decides it can generate even more commercial income with a more popular and profitable format?
Whether the amount at stake is $20M or $30M per annum, or some other number, is ultimately not the key point. While it is certainly true that the applicant is suffering severe and deeply regrettable financial hardship, it still has an annual budget of approximately $1.8B, of which about $1.1B comes from the public purse. There is no reason why it should be permitted to plead poverty as the rationale for what is, at the end of the day, a conscious business decision to sacrifice one particular service unless it can be made to pay its own way.
The CBC's own research, conducted by Strategic Inc. and filed with the Commission during the present hearing at the Commission's request, confirms, on page 8, that "almost one out of two" regular CBC Radio 2 listeners "will tune much less if commercials are aired." Friends' research presented in its written intervention, its November 23 Undertaking and the overwhelming proportion of interventions by individual Canadians opposed to this proposal, all point to the same conclusion: Canadians do not want this to happen.
The real question is: should the applicant be allowed to commercialize its radio services, or not? For all the reasons discussed at length during the hearing, Friends strongly urges the Commission to answer that question with an unequivocal "no".

CBC Television - NHL Hockey

Finally, we wish to correct, for the record, one specific misstatement of fact made by the applicant during its final appearance before the Commission. In paragraph 19552 of the November 30 transcript, Kirstine Stewart is reported as saying: "Contrary to the assertions of the Friends of Canadian Broadcasting, we do not broadcast 1,000 hours of sports programming in prime time."
As you may recall, what I stated in paragraph 10078 of the November 23 transcript was: "But if you take the eight months of the year - a typical year, not a year with a lockout - if you take the eight months of the year when 400 hours of programming, in prime time, are related to professional sports, 90-something percent of it hockey, it is 40 percent a sports channel. There are about 1,000 hours of prime time in eight months of the year."
Unfortunately, this error, or perhaps rather a cavalier treatment of intervenor comments, far from representing an isolated incident, has been typical of the applicant's disdainful attitude, during this proceeding, to facts it considers inconvenient, a tendency which drives many of the CBC's best friends to despair.
It is precisely this lack of transparency, responsiveness and accountability that has caused Friends and several other intervenors to call for a fundamental review of the applicant's governance structure. While we realize that such a review is beyond the Commission's purview - unless it were instructed by the government to undertake it - we urge that your licence renewal decision flag the importance and urgency of governance reform.
We also note that no information has emerged during this Consultation to refute the information Friends submitted in paragraphs 12-37 of our October 5 submission regarding CBC Television's hockey addiction, and its vulnerability to the loss of Hockey Night in Canada rights in 2014. We have drawn to your attention that CBC Television stands to lose one-half of its commercial revenue and approximately one-third of its annual audience, if it were to lose the rights to Hockey Night In Canada. This loss - and specifically the immense cost of 400 hours of replacement programming - would materially affect the applicant's capacity to discharge its mandate and the various commitments proposed in this licence renewal process, and impact all its licensed platforms.
That is why Friends urges the Commission to make the renewal of the English Television network licence contingent on the continued existence of an NHL rights agreement, and that, in the event such an agreement ceased to exist or changed substantially, the CBC be required to come back to your Commission on a timely basis to explain how it plans to modify its programming, in advance of so doing.
Otherwise, Canadians face the prospect at the next licence renewal hearing of a repeat performance of a refrain heard so frequently last month: "We had no choice; we wish we could do more or differently, but we had to act this way for financial reasons."
Friends thanks the Commission for the opportunity to participate in this important public process and we wish you success with your deliberations.

Yours sincerely,

Spokesperson
cc: [email protected]

For information: Jim Thompson 613-567-9592