Speech by Tom Pentefountas, Vice-Chairman, Broadcasting, Canadian Radio-television and Telecommunications Commission
To the annual conference of the Ontario Association of Broadcasters
November 6, 2012
Check against delivery
Thank you for your warm welcome. I have looked forward to this conference.
It’s always refreshing to spend time with people working on the ground who have the pulse of their communities. I invariably walk away from these encounters with a better understanding of both the challenges and opportunities facing our sector.
I also get the chance to meet some of the outstanding members of the broadcasting community—like Peter and Tony Viner—who have shaped the industry and contributed so much to its success today.
Talk about sibling rivalry! Each, in his own way, has left an indelible mark on Canadian broadcasting. I want to congratulate both brothers for their many triumphs over the years.
I’ve been invited here today to provide an update on new trends and future directions for the CRTC and their implications for people like you.
I have two points to make: first, there are certainly some changes coming. But, second, we are not talking about a dramatic departure from what we, at the CRTC, have always done.
Let me start with what’s new—first, within the CRTC.
The most recent development is the appointment of our new Chairman, Jean-Pierre Blais. We are fortunate to have someone at the helm who previously spent time at the CRTC, serving as the Executive Director of Broadcasting from 1999-2002. He knows the issues well and brings a wealth of experience to the position.
Chairman Blais has introduced some important changes in the short time since taking up his new role. Among them is his renewed focus on consumer interests, as well as those of Canadian citizens and creators. He is intent on putting Canadians at the centre of the work we do. One of his first acts was the creation of the position of Chief Consumer Officer, and the appointment of an experienced public servant—Barbara Motzney—to the post.
This new position sends a clear signal, and is a reminder, that the CRTC’s mandate is to oversee the Canadian communication system in the public interest.
While it may not always have had this high profile, in fact, the Broadcasting Act stipulates, and I quote:
“The Canadian broadcasting system should ... through its programming and employment opportunities serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children.”
A direct reflection of this increased focus is the other big news coming out of the CRTC of late—our decision regarding the BCE-Astral merger. I think there has been enough written and said about the decision itself. But it underlines the importance of acting in the public interest.
The Commission received thousands of letters and e-mails from consumers during the hearings. The comments reinforced that Canadians feel passionately about the programs they listen to and watch.
They made it clear that they want a choice of quality communication services that are affordable and reliable. They also want access to high-quality content on all platforms. Given that the average Canadian family spends more than $2,100 on communication services—the sixth highest expense for most households—it’s only natural that consumers have high expectations of the industry and the CRTC. These expectations must be at the forefront of our decisions.
And that has implications for broadcasters.
For instance, when filing future applications or looking for a change in the condition of a licence, you will need to show us how your plans align with the public interest. You would also need to factor in the consumer perspective if you contemplate reducing choice or access to services.
Another example is Canadian content development, something of direct interest not only to regulators but also to Canadians—and an area where you have a direct impact.
Canadian content is a prime opportunity to demonstrate your sector’s leadership. Radio stations, particularly, play a vital role in supporting Canadian culture and identity. Every time you help to launch the careers of new artists, you contribute to our Canadian identity and instil a feeling of pride in being Canadian.
If that sounds corny, think of how we feel when we see Canadian performers like Shania Twain perform at the Super Bowl, Arcade Fire back up Mick Jagger on Saturday Night Live or Michael Bublé win a Grammy.
Whether you recognize it or not, you are actively advancing the goals of the Broadcasting Act. Not only are you doing the right thing—you’re making money doing it!
We hope to see more of this approach as the Commission works to foster a world-class communications system that benefits all Canadians. This is reflected in our latest Three-Year Plan, for the period 2012-2015.
Traditionally, our activities have been divided between broadcasting and telecommunications. But that no longer makes sense because of the blurring of the lines between the two. The CRTC’s business plan needs to reflect today’s new realities. That’s why we will continue to ensure our activities reflect the changes taking place on the ground.
Our activities are now grouped under the pillars of create, connect and protect.
The create pillar is the one that will likely impact you most. It aims to ensure that Canadians have access to compelling creative content, from a variety of sources, on an array of platforms.
Ultimately, it’s about Canadian content, which is more important than ever before. In fact, it may be critical to your sector’s survival—sooner than we may have thought, not sometime down the road.
We have entered a new age in Canadian broadcasting.
Back in the day, we could operate in a hermetically sealed environment that effectively kept the world at bay. Let me take that back. We used to welcome foreign programming when we could cherry pick the most popular television programs from around the planet. And, let’s be honest, the vast majority have always come from south of the border.
Most television broadcasters produced Canadian content simply to meet regulatory requirements, considering it the cost of doing business. What really mattered was rebroadcasting popular U.S. shows to Canadian audiences. And the regulatory framework afforded them certain protections and advantages, such as simultaneous substitution.
Until recently, broadcasters using this business model in the English market were richly rewarded. But the sun is setting on the era of renting American content for profit—because of the proliferation of new channels, new content and digital media.
We now live in a world where information and entertainment is available to us 24/7, from every corner of the globe, at the click of a mouse or tap of a touch screen. There’s been a universal Gestalt shift—and regulatory protection is not as powerful as it once was.
I don’t pretend to have a crystal ball, but I suspect we are closer to the cliff than many might imagine. That’s why I believe we need to stop seeing Canadian content as a regulatory burden. In reality, it’s an opportunity for economic growth. It’s a chance to carve out more markets and become even more profitable.
I think it’s time to get truly passionate about the creation and successful promotion of Canadian content. I’ve been a broken record on this since day one on the job.
In fact, I’d like to see us replicate in television what we’ve done so effectively with CanCon on radio. And make no mistake, it has worked. A year or so ago, four of the top five best-selling artists internationally were all Canadian—Drake, Justin Bieber, Michael Bublé and Arcade Fire.
We should be doing the same thing on screens, silver or otherwise—whatever the platform. Because, in the new world order, creative content creates economic opportunity.
Because of consolidation in the industry, and the resulting tangible benefits these transactions create, there is also more money than at any time in Canadian history to develop new content.
According to the CRTC’s 2012 Communications Monitoring Report, from January 2007 to December 2011, the tangible benefits resulting from mergers totalled over $722 million. The bulk of it is earmarked for new programming. I cannot imagine we will ever see so much money available to create content again—an opportunity that shouldn’t be squandered.
We should put these funds to work to put Canada on the map as a quality content producer. Content that could be sold to a huge and fast-growing international marketplace. Think “Own the Podium” applied to broadcasting.
If you think I’m dreaming, look at what’s already happening. At this year’s Banff World Media Festival, the international buzz centred around Canadian content because of the quality of our productions and its attractiveness to foreign buyers. Shows like Heartland, Republic of Doyle and Flashpoint are sold in over 100 countries.
The days when Canadian productions looked cheap and were a source of embarrassment are long gone. Canadian programming can now compete on the world stage. It is great content, and it happens to be Canadian!
Last week, in partnership with Telefilm Canada and the Canada Media Fund, we hosted a Symposium on the Creation of Canadian Content in Ottawa—identifying new markets for Canadian products.
Industry leaders understand we are living through a transformational time that calls for new ways of doing business.
There is equally impressive potential when you consider the next category in our Three-Year Plan—connect.
It’s meant to ensure that Canadians can access quality and innovative communication services at affordable prices. This includes services that facilitate access to the communication system by Canadians with disabilities. Broadcasters have long played a role in making the system accessible by offering closed captioning and described video.
We are always looking for ways to improve access, and are investigating different technologies, such as video relay service and the accessibility features of cellphones.
The third pillar in our plan is called protect. It’s about promoting compliance with, and enforcement of, regulations that enhance the interests of Canadians, such as unsolicited communications, and the promotion of public safety.
Holding a broadcasting or distribution licence is a privilege and comes with certain expectations that are in the public interest. One of these is ensuring that Canadians are warned as quickly as possible of severe storms or other catastrophic events that could endanger lives.
The Commission decided it’s in the public interest to allow public authorities to use phone numbers and addresses contained in 911 databases to improve the effectiveness of emergency community notification services.
Pelmorex Communications, which owns the Weather Network and MétéoMédia, will make emergency alerts available to broadcasters across the country. It has installed its system and signed agreements with the appropriate federal and provincial organizations, including Environment Canada.
The system is ready, but we still need to get alert messages to the public. While AMBER alerts have largely been embraced, not all broadcasters and broadcasting distributors are participating in the public alert system. Some seem to forget that children are not only at risk of abduction. As the coverage of Hurricane Sandy has shown, natural disasters can also put them in harm’s way.
We would hope that broadcasters will appreciate and respect that this is a Commission priority.
Other implications for broadcasters
More than enforcing rules, we recognize that a lot of regulations that were effective in the past are now out of date. That’s why we will be examining whether specialty TV channels should be allowed to compete in the popular music genre.
Traditionally, pay and specialty services were not allowed to compete with one another. This was to encourage a diversity of programming genres and to ensure that services contribute to the creation of Canadian programming. The first popular music specialty channel was launched more than 25 years ago. It’s time to ask if this genre is well-established enough to welcome competitors.
In 2013–2014, we will be launching targeted reviews of the commercial radio policy. And I underline—“targeted.” We will start by looking at the French-language market. Once that’s completed, we will move to the English-language market.
We are also planning to conduct reviews of the policies for ethnic radio and television services.
Another element of our Three-Year Plan will be of interest to you—whether more types of radio services could be exempted from licensing requirements. Our intention is to make life easier for smaller players by ensuring our regulation is targeted and does not impose an undue burden on the industry.
What won’t change
This brings me to my final point: for all the changes announced or on the horizon, the work of the CRTC will not fundamentally change.
We will continue to let market forces play out, getting out of the way whenever and wherever we are not needed.
I am not here to tell you how to run your business. As long as you are being good corporate citizens, respect your public duties and operate within the regulatory framework, the CRTC has no business in your day-to-day affairs.
In today’s environment, we need a more enlightened approach to regulation. An approach that takes advantage of innovation from both the business and creative communities. We need to make sure that the players in the broadcasting industry have all the space they need to make the system flourish.
You don’t need to be one of the biggest names in the business to do so. In fact, some of the giants in the industry say the same thing. Take the example of Michael MacMillan, the former executive chairman of Alliance Atlantis and co-founder of Atlantis Films, and current CEO of Blue Ant Media.
He told us at a recent hearing that small companies innovate better than big companies. That’s because big firms worry about cannibalizing one of their existing businesses or upsetting capital markets. At Alliance Atlantis, he would tell his creative team not to bring ideas to the table unless they increase shareholder value by more than $100 million. He was the first to admit that protecting the status quo was the number one goal.
My personal philosophy is that if you’re not moving forward, you’re moving backward.
Peter Viner said something similar in a recent interview about his and his brother’s careers. He said, “We were both very lucky. Lucky to work with the people we did. Lucky to be in the kind of golden era of broadcasting. Now, it’s a commodity business run by accountants. How fun is that?”
Indeed, how fun is that?
Unfortunately, this seems to be the direction we’re going in. Too often, decisions are being made by people without a creative bone in their body. People intent on protecting the status quo. As any hockey fan knows, there is nothing more dangerous than sitting back on a one-goal lead in the third period.
So how do we get this past this inertia and create Canadian content with which we can conquer the world? Because it really is about conquering. It’s about competing and winning on the world stage.
I think the solution lies with people like you here in this room. You represent a sector with incredible creative potential and economic clout. Broadcasting and telecommunications make a tremendous contribution to Canada's gross domestic product. Our country needs you to prosper and continue contributing to this nation’s economic growth.
That's good for your shareholders, of course. But profitability also ensures the health of the whole broadcasting enterprise. It provides the resources that enable broadcasting to support the social, cultural, educational and economic imperatives that are so important to Canadians. And it means there's more money to support Canadian creativity in dramatic, musical, comedic and documentary programming.
So I would encourage you to focus your attention on the creative side of the scale—as opposed to the bean counting side of the ledger—and for a purely self-interested reason. It makes sense for your shareholders.
Creativity equals innovation, which equals unparalleled profitability.
Innovate to keep the industry growing, whether you’re producing the next generation of Prank Patrol, 16 by 9, or Call Me Fitz. There’s room for it all in a diverse media environment.
I am confident that, as we continue to communicate regularly and collaborate closely, we will work through some of the new developments I’ve outlined today. And we’ll come out better for it on the other side.
I have no doubt that today’s broadcast leaders will make a successful transition to the future. I’m sure this important industry will adapt to a rapidly evolving environment and carry on its tradition of impressive profitability.
I wish you every success as you do.
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