Stephen B. Simpson to the annual conference of the Western Association of Broadcasters

Banff, Alberta
June 8, 2017

Stephen B. Simpson, Regional Commissioner for British Columbia and the Yukon
Canadian Radio-television and Telecommunications Commission

Check against delivery

Thank you for that kind introduction and for inviting me to participate in the 83rd annual conference of the Western Association of Broadcasters (WAB). The WAB continues to do a great job of organizing a dynamic conference and recognizing the achievements of western broadcasters.

In an industry such as broadcasting, strong and effective associations are essential. We at the CRTC appreciate the role that the WAB plays in representing its members across the Prairies. I want to assure you that the CRTC remains determined to work with groups like the WAB to address the issues facing operators.

This morning, I will provide an update on what the CRTC has been up to recently and describe what’s on the Commission’s agenda for the next year or two. I want to discuss the ever-accelerating pace of technological change and what it means for Canadian broadcasters.

To begin, though, I wanted to acknowledge the fact that 2016 was a challenging year for many of you. While the profitability of radio stations has remained stable at the national level, radio broadcasters in the Prairies reported a significant decrease in total revenues and profitability. This doesn’t come as a complete surprise, given that your local economies were impacted by the oil industry’s volatility and the Fort McMurray fires, among other factors.

Television stations in the Prairies, however, were not affected to the same degree. They reported a moderate decline in total revenues, and while profitability was still negative on average, there was a modest improvement from the previous year.

Next month, the CRTC will publish the financial summaries for 2016, which will give a fuller picture of the health of the broadcasting sector.

Technological change

While financial performance may vary from one year to the next, one constant is technological change.

It is certainly a popular topic among those of us who’ll take the podium today. I appreciated what Gordon Borrell had to say about the future of broadcasting in what he describes as a “very digital marketplace.” And I look forward to Tom Webster’s presentation about the next media disruption.

My career includes stints in broadcasting, advertising, media production and interactive media. This broad background influences my perspective on the industry. Like many of you, when I started out, there was no Internet and the only thing interactive about video was getting up to change the channel on the TV.

Despite all of this technological change, however, the key to success in media remains the same: making a deep and personal connection with audiences.

A new kind of local

I’m convinced that there is a future in a new kind of local. The popularity of the 100-mile diet, craft beers and locally made products are all part of a larger trend. Successful broadcasters can take advantage of this trend by emphasizing and honouring their community roots. Audiences tend to trust the broadcasters who live in the same community as they do.

The challenge is to find a creative, technologically savvy way to connect with local audiences. Golden West has found a unique way to do this in the Prairies. When the company opens or buys a station in a small market, it establishes an Internet site devoted to that community and encourages residents to use the site as a bulletin board or a town hall. This is a creative way to connect with audiences using a modern and complementary medium.

CHEK-TV in Victoria is another local-broadcaster success story. The station rose from the ashes of bankruptcy thanks to broad-based community support less than a decade ago. Last month, CHEK-TV made the bold decision to invest in the latest digital technologies to establish and deepen connections with local audiences. I say bold because many commentators claim that there’s no future in local broadcasting. CHEK-TV takes the opposite view and believes that success lies in delivering news quickly and reliably to air AND to social media platforms.

While delivery methods change, the need to connect remains constant.

This is why local news and information is crucial to local broadcasting. A strong news department is a “must have” rather than “nice to have.” Canadians love their local news. This message was one of the top takeaways from our Let’s Talk TVconsultations. 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 around the corner and around the world. In this era of so-called fake news, the buck stops at local broadcasters.

As you know, the new funding model introduced by the CRTC will help make it easier for television stations to capitalize on this demand. As of September, a percentage of the contributions made by cable companies can go toward the production of local news. Both Rogers and Shaw are making use of the flexibility provided by the new policy. They have announced plans to reallocate funds from their community channels to support the production of local news on local TV stations.

And independent stations – including those in Medicine Hat and Lloydminster – will also have access to more funds to produce high-quality local news programming.

Will a new kind of competition emerge between radio and TV stations for local advertising? Possibly. But in an app-driven world, there are numerous opportunities to monetize content. By working together, you can ensure that great local content continues to attract its rightful share of the advertising pie. In fact, you should all be working together to grow your share.

Differential pricing decision

The CRTC ensures that broadcasters have the regulatory framework and tools they need to succeed. Last month’s ruling on net neutrality is a case in point.

The ruling involves a practice known as differential pricing. A few years ago, Videotron launched a new music service that was offered under certain mobile plans. The service, known as Unlimited Music, provides subscribers with access to certain music streaming services while exempting the data. Canadian radio stations who stream their content online were not included among these services.

The CRTC ruled that this practice violates the principle of net neutrality. Internet service providers should treat all data equally to foster consumer choice, innovation and the free exchange of ideas. Service providers should neither restrict nor favour specific content. Internet service providers can compete on price, quality of service, speed and data. But they must not compete on access to particular content.

The CRTC’s ruling supports a fair marketplace for services, cultural expression and ideas.

Fostering meaningful connections

Music streaming and podcasts are gaining in popularity. According to Netwire, digital music revenues accounted for 63% of recorded music revenues in 2016.

I’m confident that radio will fend off current challengers the same way it fended off previous ones: by creating powerful bonds with listeners. Decades ago, people predicted the demise of radio due to technologies such as 8-track tapes, cassettes and MP3s. Radio, though, built on its inherent advantage: the ability to foster intimate, meaningful connections with local audiences.

Radio stations remain trusted curators of local content. Listeners tune in not only for music, but also for news, weather, traffic, sports and community information. The natural disasters such as the Fort McMurray fires and the recent floods in Quebec, Ontario and southern British Columbia are recent examples. Broadcasting’s ability to react and take a leadership role makes it an important life-line to local communities in times of need.

This leadership role was recognized by the Radio Television Digital News Association. Several western radio and television stations received regional and national awards for their coverage of the Fort McMurray fires, including News Talk 770 and 660 NEWS in Calgary, 650 CKOM in Saskatchewan and Global TV Edmonton.

The continued success of Canadian musicians provides radio with another competitive advantage. No fewer than four Canadians were among the nominees for Top Artist in this year’s Billboard Awards. Broadcasters in this country can leverage the success of Canadian artists to create distinctive brands. Listeners are hungry for new, homegrown music. This demand will shape the offerings of Canadian broadcasters.

In many ways, television and radio broadcasters face a similar challenge: retaining market share in the face of attractive online offerings. Canada’s viewing audience can access a dizzying array of content online anytime using almost any device. The only way to compete successfully is to build and nurture deep connections with audiences. Compelling and diverse Canadian programming helps establish these connections.

Upcoming activities

The CRTC is maintaining a busy agenda in the coming months. We will soon issue a decision regarding the applications we received to serve indigenous communities in Ottawa, Toronto, Calgary, Edmonton and Vancouver. Our decision will address the need these communities have for content that reflects their cultural heritage and that speak to the issues that are of interest to them.

We recently launched the process to renew the licences of certain television service providers. You may recall that last fall, we had renewed the licences for one year only. During the shorter renewal period, we are monitoring whether providers are following the best practices we set out for the small basic service and how other specialty channels are offered. We are inviting Canadians to tell us about their experiences.

The proceeding to renew the licences of independent television stations will also be started in the near future.

This fall, we will also initiate a discussion on the representation of gender diversity in Canadian media, with a particular focus on women in leadership positions. We heard evidence during our proceeding to renew the licences of the large media groups that women continue to be under-represented in senior creative and media roles. This needs to change. So the CRTC is using its convening power to bring the industry together for this important discussion.

Looking a bit further ahead, the CRTC will publish its research findings on ethnic broadcasting in 2017-18, and decide whether the Cultural Diversity Policy needs to be updated. We will also launch a review of the policy related to Indigenous radio to ensure it reflects the current realities.

Conclusion

The CRTC is continually seeking to enable broadcasters like you to innovate your product and implement successful business models to better serve your audiences.

We must all adapt to change—in fact, success demands that you stay ahead of change. You must evolve your business models, and leverage and incorporate technology. I know I am not only person in this room who thinks that radio and television has a bright future in the Prairies. While none of us can predict the future, there’s one thing we can predict accurately: successful broadcasters will be those that connect best with Canadian audiences.

Thank you.

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