Stephen B. Simpson to the 82nd Annual Conference of the Western Association of Broadcasters
June 9, 2016
Stephen B. Simpson, Regional Commissioner for British Columbia and the Yukon
Canadian Radio-television and Telecommunications Commission (CRTC)
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Thank you for inviting me to take part in your conference. And thanks, especially, for putting me first on the list of speakers in this morning’s program. James Cridland would be a tough act to follow.
Congratulations for recognizing the critical importance of James’ message – that sweeping changes are not only coming for traditional media; they’re already here. I’m encouraged to know you’re exploring new pathways to prosperity as radio and TV broadcasters adjust to new opportunities in our technology-driven world.
The Western Association of Broadcasters (WAB) plays a crucial role in educating your members on emerging issues in your industry. So I applaud you, too, for making time for a CRTC report each year.
There are number of things I want to touch on in my remarks this morning.
Let me start with radio. The 2015 financial results for Canadian radio stations show revenues remained stable over the last half decade. Revenue from local and national advertising hit $1.58 billion. And profits, before interest and taxes, increased by almost half a percent, rising to $303.4 million last year.
Those figures are averages, of course. Looking at the breakdown for the Prairies, revenues were down about $1.8 million in 2015 – with a corresponding decline in profitability of 5.8%.
These latest numbers reflect a slow but steady downward trend that has been apparent in recent years. As the 2015 Communication Monitoring Report underlined, that’s partly due to Canadians’ growing use of streaming services.
In 2014, 52% of Canadians streamed music videos on YouTube, 22% streamed AM/FM radio online, 18% streamed personalized online music, and 21% listened to podcasts. There has been an 8% increase in the number of adult subscribers to satellite radio services since 2009.
I’m sure James Cridland will tell you that you can’t put the genie back in the bottle. However, you can build on your sector’s strengths and continue to grow your businesses in new and different ways.
You have a huge advantage in that local stations and program hosts are trusted curators of local content. Listeners tune in not only for music, but also for news, weather, traffic, sports and community events. You also play an important role in relaying alerts in emergency situations, such as during the recent fires and the evacuation of Fort McMurray.
The other big thing going for you is content made by Canadians, which you are experts in cultivating. Canadian-made content offers a prime opportunity to carve out a distinctive brand in a world that’s on the hunt for new music.
Just consider that three of the five nominees in the “Top Artist” category at the recent 2016 Billboard Awards were Canadians.
While these artists are now well-established, we also see the great work that is being accomplished by you in the discovery realm. You are helping to bring new music and artists to audiences by featuring them on air and on your websites and by supporting your local music scenes.
Access to world-leading talent or audiences is not an issue in Canada. Online audio services, however, are changing the rules of the game for traditional broadcasters. They enable users and curators create their own playlists and share them among their friends and social networks.
Wireless service providers are taking note of this shift. For instance, in Quebec, Videotron now offers some cellphone packages that give subscribers access to online streaming music services that don’t count against their data cap. This is what is known as differential pricing.
The Commission has received applications arguing that this gives undue preference to some streaming services at the expense of radio broadcasters and others. Rather than tackle differential pricing on a case-by-case basis, it would be preferable to have a clear and transparent regulatory policy. This would provide greater certainty to consumers, application providers and Internet and wireless service providers.
In mid-May, we announced a public consultation on differential pricing practices for wireline and wireless data plans. We’ll hold a public hearing on the issue starting on October 31st.
Regardless of the outcome, broadcasters need to be adaptable and capitalize on technological advancements. Our job at the CRTC is to create the conditions that enable people like you to introduce innovative programing and business models that ensure your continued success.
We’re also pleased to see that some of you have taken advantage of our flexible approach and started to experiment with HD Radio. This technology enables a radio station to broadcast up to three additional stations of new local content on the same channel as its main signal. HD Radio has the potential to increase the diversity of radio services that Canadians receive.
Our efforts will be enhanced by the results of a review of Canadian content and the legislation governing the broadcasting industry, being undertaken by the Department of Canadian Heritage.
Minister Mélanie Joly is looking toward the future, just as we have been at the CRTC. We’ve conducted major reviews to adapt our policy framework to reflect disruptive technologies and how Canadians are embracing them.
There seems to be good alignment between the questions being raised by the Minister’s review and our work at the CRTC in the last few years. Associations like the WAB can help you to make sure your views are heard during the review.
What’s true for radio applies to TV, too.
Television ad revenues also have fallen sharply – again, in part due to competition from online businesses.
The latest financial results show private television stations in Canada brought in 2.6%, or nearly $50 million, less in revenues last year. That’s primarily because Canadians now have access to hundreds of television channels and countless online options, using almost any device, anywhere, at any time.
These shifting circumstances notwithstanding, the Commission believes profoundly that the Canadian television system should encourage the creation of compelling and diverse Canadian programming.
Canadians think so too, based on what we heard during the Let’s Talk TV conversation when we engaged with 13,000 Canadians. Those views were echoed last fall and at public hearings in January and February, during the CRTC’s review of local and community TV programming.
Canadians told us they particularly value local news for its capacity to connect them with their communities. Local news helps people make sense of what’s going on in the world and enables them to participate in Canada’s political, economic and cultural affairs. These are strong selling points that broadcasters should be capitalizing on.
We’re putting the final touches on our local TV decision and will announce the results soon.
Something else Canadians told us they want more of is choice – which we delivered with the new basic TV packages and flexible packaging options. We are giving Canadians more options and tools to find the value proposition that best meets their needs.
Since March 1st, cable and satellite companies have offered $25 a month basic packages – which prioritize local news and information programs. Consumers can then subscribe to other channels either individually OR in packages of up to 10 channels.
As of December 1st, channels will be offered BOTH individually AND in packages of up to 10 channels.
The CRTC recently launched a proceeding to renew the licences of certain cable companies.
In April, we asked companies to provide information on their basic packages and flexible packaging options – including any additional fees for products or services consumers have to purchase to receive the packages.
We followed up late last month by announcing that we would hold a public hearing in September. The country’s large television service providers, which serve 78% of subscribers, will need to explain how the basic television and flexible packaging options are being implemented across Canada. The onus will be on them to demonstrate how their plans comply with the CRTC’s directive and how they will serve Canadians.
Consumer tastes aren’t the only challenge confronting television broadcasters. Another issue in a world of abundant choice is how to stand out.
We tackled that topic in collaboration with the National Film Board of Canada at a Youth Summit and the Discoverability Summit, both of which were held in Toronto last month.
The Discoverability Summit brought together content creators, academics, policy makers and innovators for thought-provoking discussions about the discoverability of audiovisual content. Several sessions focused on the behaviours of millennials, marketing and advertising, algorithms and viewer engagement.
Among the many interesting and forward-looking speakers, Kevin Slavin of the MIT Media Lab closed the Summit with a presentation on “discoverability from the perspective of machines, humans, and all the rest of nature that’s between them”. Mr. Slavin has built his career by thinking outside of the box. For example, he was one of the early designers of digital games played in the real world using GPS, including one that promoted Discovery Channel’s Shark Week.
His message for attendees was that you need to understand the world – why we care about certain things, who we listen to and how, the conversations we have and how we respond to each other – to build audiences.
While I have tried to give you a flavour of his ideas, believe me when I tell you that I have not done his presentation justice. We will be posting videos and transcripts of all the sessions on the discoverability.ca website in the coming weeks. I encourage you to take the time to watch them.
What’s clear is that Canadians create world-class content that can compete with the best that’s out there. And audiences are hungry for new and compelling shows to watch. So discoverability is about new strategies and approaches to make connections between content and audiences, and between audiences and content, in this age of abundance.
For all the changes taking place in broadcasting, there remains one constant: local audiences’ loyalty to, and dependence on, local radio and television stations.
This leaves me feeling optimistic for your industry. If you maximize your creativity and remain responsive to the needs of your local audiences, I’m confident that the Canadian media landscape will only improve because of your continuous efforts. I wish you every success as you do. Thank you.
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