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Broadcasting Notice of Consultation CRTC 2016-191

Broadcasting Notice of Consultation CRTC 2016-191

June 21st, 2016

FRIENDS opposes CBC’s application to the CRTC to allow ICI Musique and CBC Radio 2 to continue to broadcast national advertising.

Canadian Broadcasting Corporation (CBC) Application to allow ICI Musique and CBC Radio 2 to continue to broadcast national advertising

Danielle May-Cuconato
Secretary General
Ottawa, Ontario
K1A 0N2

Dear Ms. May-Cuconato,

1. FRIENDS of Canadian Broadcasting (FRIENDS) is pleased to provide comments regarding the above referenced proceeding.

2. FRIENDS opposes CBC’s application. When CBC was given permission to air advertising on Espace Musique (now branded ICI Musique) and Radio 2 in 2013, the Corporation faced dire financial circumstances because of a decision by the former government to break its 2011 election promise and reduce CBC’s parliamentary appropriation by 10%. As a result, CBC faced an immediate prospect of severe cuts to radio programming if it did not secure new revenue.

3. Following the recent general election, CBC no longer faces this financial crisis. With increases to its CBC parliamentary appropriation of $75 million in the current fiscal year, and $150 million thereafter, through to 2020, there is no basis to continue the failed experiment of radio advertising. Listeners don’t want it. And given the “miniscule” level of advertising revenue from ICI Musique and Radio 2, advertisers are clearly not that interested either.

4. Hence the circumstances under which CBC was originally granted permission to air advertising on ICI Musique and Radio 2 until 2016 have now fundamentally changed.

Canadians do not want advertising on CBC Radio

5. As noted by the Commission when it approved limited national advertising on Espace Musique (now ICI Musique) and Radio 2, more than 900 interveners, including both individual listeners and commercial and community broadcasters, commented on this specific issue during the 2012 public hearing. The vast majority opposed advertising on the services.1 Reasons included:

  • Advertising would derogate from the distinctive contribution that these CBC services make to the Canadian broadcasting system.
  • CBC programmers and producers would begin to alter their programming to make the networks more attractive to the mass radio audiences that are currently served by commercial stations in order to increase listenership to Radio 2 and Espace Musique. This strategy would maximize the advertising revenues for the services. JAZZ.FM91 submitted that there was nothing in place that would prevent Radio 2 from altering its format to a more commercial style.
  • Advertising would drive listeners away.

6. In its Application, CBC has taken pains to argue that there has been no change to the services’ contribution and distinctiveness. While FRIENDS does not argue that there has been a cause and effect change in the service’s contribution and distinctiveness, we believe this is true only because other factors were in play. In particular, the quantum of radio advertising revenue earned by CBC was many times less substantial than the cuts CBC radio suffered over the same period.2

7. Just because one cannot demonstrate that there has been a change to the distinctiveness and contribution of ICI Musique and Radio 2 since the introduction of advertising does not support the contention that this would not be the case going forward, if advertising were to be maintained, and possibly grow to a more substantial portion of the apparently far-fetched original projections.

8. On the question of whether advertising on the services would drive current listeners away, CBC makes an astounding statement in its application:

No listeners have complained to the Commission regarding advertising on either ICI Musique or Radio 2. The Corporation did receive some complaints directly from listeners when advertising was first introduced.3

9. For some reason, in CBC’s mind, a failure to take a complaint to the CRTC equates with satisfaction.

10. As to the actual number of complaints, CBC’s application states that:

ICI Musique received 11 complaints in 2013 and none thereafter. Radio 2 received 198 complaints in 2013, 317 in 2014, and 68 in 2015.4

11. This totals 594 complaints over three years – a very substantial volume. The fact that listeners may not have been sufficiently upset to take their complaints to the CRTC, or that the introduction “was not disruptive enough to prompt them to change station”,5 does not equate with ‘non-disruptive’.

ICI Musique and Radio 2 do not need and never needed advertising

12. The record of the 2013 Decision that approved advertising on ICI Musique and Radio 2 demonstrates that the primary reason for approval was concern over the impact of the substantial reduction in CBC’s parliamentary appropriation:

231. There is no doubt that the CBC is facing significant financial pressures. It must therefore find ways to offset funding reductions in parliamentary appropriations through increases in advertising revenues, expenditure reductions and gains in efficiency.

232. During the hearing, the Commission discussed additional ways in which the CBC could grow its revenues, but given that the CBC already sells advertising on its other platforms and that sources of revenue are limited, the Commission has come to the conclusion that the only alternative to advertising would be to reduce the quality of service provided by Espace Musique and Radio 2. The Commission is concerned that a complete denial of the CBC’s proposal would mean a reduction in the quality of programming and could jeopardize the long-term sustainability of these networks.6

13. In particular, the Commission expressed concern that failing to approve advertising on ICI Musique and Radio 2, reductions in CBC’s parliamentary appropriation would lead CBC to cut programming.

14. We now know that the amount of radio advertising received by CBC was immaterial to CBC’s overall financial situation. Even more important, however, the cuts to CBC’s parliamentary appropriation have now been more than restored (see paragraph 3, above).

15. CBC is therefore in a position to fund radio Radio 2 and ICI Musique adequately so as to eliminate the risk of dilution of distinctiveness and listener dissatisfaction associated with soliciting radio advertising.

16. CBC has failed to prove the need to continue its failed experiment in radio advertising, but appears unwilling voluntarily to wean itself off the minimal resulting revenues. As the 2013 reasons for initial approval no longer apply, the integrity of the Commission’s licensing process requires that the CRTC rescind CBC’s right to solicit advertising on ICI Musique and Radio 2.

Yours sincerely,

Ian Morrison

cc: CBC

1 Broadcasting Decision 2013-263, para 219. We note that this is five times more than the number of complaints the CRTC received about simulcast of the Superbowl, complaints that were heeded by the Commission.

2 CBC uses the term “miniscule” to describe the advertising revenue of $1.1M in 2014 and $1.4M in 2015 earned in aggregate for the two services. According to the CRTC statistical summaries, CBC cut radio budgets by $8.6M and $12.9M in those years.

3 CBC Application, para 21, emphasis added.

4 Ibid.

5 Ibid, para 25.

6 Broadcasting Decision 2013-263, para 231.

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