Broadcasting Policy Monitoring Report 2001

Introduction

This second edition of the CRTC's Broadcasting Policy Monitoring Report provides a number of performance indicators that the CRTC uses in its on-going assessment of the impact of broadcasting regulations, policies and decisions. We hope that publishing this report will help to foster a more open and better-informed public discussion of broadcasting policy in Canada.

The CRTC released its first Broadcasting Policy Monitoring Report at the annual convention of The Canadian Association of Broadcasters held in Calgary, Alberta in November of 2000. The report was in response to the many new regulatory frameworks and policies that had been implemented by the CRTC in the previous few years. The monitoring report was intended to measure the results and effectiveness of CRTC policies and identify policy areas that may require further review or adjustment.

The 2001 report updates the performance indicators from the first edition and provides new indicators for policies implemented and decisions taken in the past year.

The performance indicators and data provided in this report take into consideration a number of policies and decisions, including the following:

• New Regulatory Framework for Broadcasting Distribution Undertakings - Public Notice CRTC 1997-25
• Commercial Radio Policy - Public Notice CRTC 1998-41
• New Media - Broadcasting Public Notice CRTC 1999-84 and Telecom Public Notice CRTC 99-14
• A Policy Framework for Canadian Television - Public Notice CRTC 1999-97
• Ethnic Broadcasting Policy - Public Notice CRTC 1999-117
• Licensing Framework Policy for New Digital Pay and Specialty Services - Public Notice CRTC 2000-6
• Campus Radio Policy - Public Notice CRTC 2000-12
• Community Radio Policy - Public Notice CRTC 2000-13
• A Policy to Increase the Availability to Cable Subscribers of Specialty Services in the Minority Official Language - Public Notice CRTC 2001-26
• Licence Renewals for the French-language National Television Network TVA and for the French_language Television Programming Undertaking CFTM-TV Montréal - Decision CRTC 2001-385
• Licence Renewals for the Television Stations Controlled by CTV - Decision CRTC 2001-457
• Licence Renewals for the Television Stations Controlled by Global - Decision CRTC 2001-458

The report is sub-divided in four sections: Radio, Television, Broadcasting Distribution and the Internet.

Interested parties wishing to provide comments for improvements or additions to future editions of the report can do so by forwarding them to the attention of the Secretary General, CRTC, Ottawa, K1A 0N2 or electronically at info@crtc.gc.ca.

The Broadcasting Policy Monitoring Report is also available electronically at www.crtc.gc.ca/ENG/publications/reports.htm

Ce document est également disponible en français.

Table of contents

Radio

I. Radio Tuning and relationship with other media
   A. Tuning Trends
   B. Advertising
   C. Digital Radio
II. Ownership
    A. The Top 10 Ownership Groups
    B. "Top 10" by Total Hours Tuned
III. Competitive licensing
IV. Canadian Talent Development (CTD)
   A. Applications for new radio licenses
   B. Transfers of control or ownership (benefits)
   C. Renewal of radio licences
V. Diversity of Formats
VI. Popularity of Formats
VII. Number of Commercial Radio Stations in Canada
VIII. Promotion of a financially sound sector
   A. Financial Performance
        1. Total Revenues - AM and FM
        2. PBIT Margins
        3. Jointly Operated AM Stations
IX. Promoting the airplay of Canadian and French vocal music
X. Campus Radio
XI. Community Radio
XII. Ethnic Radio
XIII. Low Power Radio

Television

I. Advertising Revenue by Media in Canada
II. Audience
   A. Average Weekly Hours Per Viewer
   B. Average Daily Viewing Hours
   C. Viewing Share by Station Group
   D. Viewing Share by Ownership Group
   E. Viewing to Canadian programming
      1. % Viewing to Canadian Programming - 6 a.m. to 2 a.m.
      2. Distribution of Viewing by Program Type
III. Scheduling and Viewing of Canadian Priority Programming
IV. Financial Performance
   A. Total Revenues
      1. Canadian English-language services
      2. Canadian French-language services
   B. Aggregate Profits Before Interest and Taxes (PBIT) Margins (%)
      1. English-language Services
      2. French-language Services
V. Eligible Expenditures on Canadian Programming (CPE)
   A. English-language
   B. French-language
   C. Ethnic specialty services
VI. Canada's Independent Production Companies
VII. Specialty, Pay, PPV, VOD and Digital Services
   A. Specialty, Pay & PPV services Listed by Launch Date
   B. Companies with the most ownership interest in specialty, pay, PPV and category 1 digital services
VIII. Tangible benefits resulting from the transfers of ownership or control of television broadcasting undertakings
IX. Ethnic Television Stations
   A. Over-the-air ethnic television stations
   B. Ethnic Specialty Services

Broadcasting Distribution

I. Promoting Effective Competition
   A. Subscriber Levels of cable and other BDU Delivery Systems
   B. Rate Deregulation of Incumbent BDUs
II. Promoting contributions to Canadian programming and local expression
   A. Contribution to Programming Funds
   B. Total Community Channel Expenses
   C. Number of Systems Maintaining a Community Channel
III. Affordability of Basic Service Rates
IV. Promoting a Financially Strong Sector
   A. Total Revenues
   B. Profit before Interest and Taxes (PBIT) Margins
   C. Return on Investment (R.O.I.)
V. Concentration / Vertical Integration
   A. Top 5 Cable Corporations by Total Basic Subscribers
   B. Pay & specialty services owned by top six Distributors
VI. Promoting Digital Technology
VII. Distribution of Specialty Services in the Official Language of the Minority

Internet

I. Internet Use
   A. Canada and the Internet
   B. Computer Ownership by Canadian Households
   C. Internet Access
   D. The Effect of Internet Use on Broadcast Media
   E. Trends in Internet Advertising
   F. E-commerce

Radio

I. Radio Tuning and relationship with other media

A. Tuning Trends

• The following charts and tables outline the total hours tuned to radio in an average week during the fall surveys of 1995-2000. Chart and table 1 provide the total hours tuned over the entire day, while chart and table 2 include the total hours tuned between 6 a.m. and 6 p.m.
• The intent of tables 1 and 2 is to monitor the on-going use of radio by Canadians.

Table 1: Radio Tuning in an Average Week
Total Hours Tuned ("THT") (000's)
All persons 12+, 5 a.m. to 1 a.m.

* Note: Other is principally tuning to U.S. stations
Source: BBM Fall 1995 to Fall 2000

Table 2: Radio Tuning in an Average Week
6 a.m. to 6 p.m. Total Hours Tuned ("THT")(000's)
All persons 12 +

Source: BBM Fall 1995 to Fall 2000

• The total average weekly hours tuned in fall 2000 declined by 2% from fall 1999 both over the entire day (5 a.m. to 1 a.m.) and the 6 a.m. to 6 p.m. period.
• The following charts, generated from Tables 1 and 2, compare the tuning levels of AM and FM stations in fall 2000, and clearly demonstrate the predominance of FM radio.

Chart 1: Total Hours Tuned in an Average Week,
Fall 2000

Chart 2: Total Hours Tuned in an Average Week,
6 a.m. to 6 p.m., Fall 2000

• In the Fall of 2000, 93.2% of Canadians aged 12 and over listened to the radio for at least 15 minutes in an average week, as compared to 94.9% in 1995. The average hours per week tuned per listener have remained in the 22 hours per week range since 1995. (Source: BBM Radio Databooks)

B. Advertising

Table 3: Advertising revenue by media
($ millions)

Source: Carat Expert, Panorama Publicitaire 2001
Notes: (1) Carat Expert Projections
            (2) Excludes classified ads.
            (3) Includes conventional TV and specialty services

Chart 3: Share of advertising revenue
by media, 2000

Table 4: Share of Advertising Revenue by Media (%)

Source: Carat Expert, Panorama Publicitaire 2001
Notes: (1) Carat Expert Projections
            (2) Excludes classified ads.
            (3) Includes conventional TV and specialty services

• Total commercial radio advertising revenues have increased annually from 1995 to 2000.
• Radio's share of the advertising pie has gradually declined from 1995 to 2000.

C. Digital Radio

• The Commission issued Public Notice CRTC 1995-184 "A policy to govern the introduction of digital radio" on 29 October 1995.
• As of July 2001, 56 licences for transitional digital radio undertakings (DRUs) had been granted. Of these licences, 42 were issued to existing commercial radio stations and 14 to existing CBC stations.
• These 56 stations are located in 4 different markets:
  Montreal: 12, Toronto: 24, Vancouver: 14 and Windsor: 6
• To find out more about digital radio, you can visit the following website at
  http://www.digitalradio.ca 
  
  or for more information on how DAB is performing worldwide at
  
  http://www.magi.com/~moted/dr/ 
  http://www.wohnort.demon.co.uk/DAB/ 

II. Ownership

A. The Top 10 Ownership Groups

• In revising its ownership policy in Public Notice CRTC 1998-41 "Commercial Radio Policy 1998" the Commission focused on developing a model that would allow for some measure of consolidation, while taking into account its general concerns for preserving a diversity of news voices and maintaining competition.
• Tables 5 and 6 monitor ownership consolidation in the radio industry.

Table 5: Ten Largest Radio Operators
Radio Revenue & National Share

Sources: CRTC Internal Report `Ownership August 1999', August 2000 & CRTC Financial Database.

• The revenue increases by the largest operators can be attributed to both general economic expansion and acquisitions.
• Both the number of stations operated by the top 10 radio operators and their national share of revenues continue to rise.

B. "Top 10" by Total Hours Tuned

Table 6: Ten Largest Radio Operators Tuning

Source: CRTC Internal Report 'Ownership August 2000', July 2001
               BBM, Fall 1998 to 2000

• Changes in the total number of hours tuned by group are related primarily to acquisitions.
• The ten largest radio groups attracted 61% of the audience and 73% of radio industry revenues in 2000, significantly higher than the 1999 results of 54% and 63% respectively.

III. Competitive licensing

• In the 1998 commercial radio policy the Commission determined that in order to encourage competition and choice it would no longer apply the criteria outlined in the radio market policy. The elimination of the radio market policy, combined with the revised common ownership policy, has resulted in numerous competitive processes for new FM stations in markets across Canada.
• In Decision CRTC 99-480, 28 October 1999, the Commission outlined the factors that will generally be among those relevant to the evaluation of competitive applications. The decision also noted that the relative weight and significance of the factors will vary depending on the specific circumstances of the market concerned.
• The following table reveals the factors that have contributed to successful competitive commercial applications since the introduction of the 1998 commercial radio policy.

Table 7: Factors contributing to successful applications for
commercial radio licences considered by competitive
processes following PN 1998-41

Source: CRTC Decisions
* Approvals in principle
Notes: CTD - Canadian talent development
             Business Plan includes the proposed format

IV. Canadian Talent Development (CTD)

The Commission reviews radio licensee contributions to CTD in the following circumstances:

A) Applications for new radio stations
B) Transfers of control or ownership (benefits)
C) Renewal of radio licences

A. Applications for new radio licences

• Since the introduction of the new commercial radio policy through to September 2001, the Commission has licensed 29 new radio stations (including 3 native type B stations and one CBC station) through competitive processes in markets across Canada. These stations combined committed to spend more than $16 million on CTD initiatives over a 7-year period.
• In addition, 15 new radio licences were granted without a competitive process. These stations combined committed $236,000 towards CTD initiatives.

B. Transfers of control or ownership (benefits)

• As outlined in the Commercial Radio Policy applicants for the transfer of ownership or control of radio stations must make commitments to benefits that represent a minimum direct financial contribution to Canadian Talent Development of 6% of the value of the transaction. Three percent is to be allocated to the Star Maker/RadioStar music marketing and promotion funds two percent to either FACTOR or MusicAction, and one percent at the discretion of the purchaser.
• Since the adoption of the new Commercial Radio Policy, there have been 53 Commission approved control and/or ownership transactions involving 194 radio stations.
• CTD benefits from these transactions have totalled $51.4 million.

Chart 4: Value of radio transactions
($ millions)

Source: CRTC Decisions and Administrative Approvals, as of July 10, 2001.

Chart 5: Value of transfer benefits
($ millions)

Source: CRTC Decisions and Administrative Approvals, as of July 10, 2001.

Chart 6: Breakdown of transfer benefits

Source: CRTC Decisions and Administrative Approvals, as of July 10, 2001.

C. Renewal of radio licences

• As part of their licence renewal applications, all licensees of private commercial radio stations are asked to make an annual financial commitment to Canadian talent development.
• In Public Notice CRTC 1995-196 "Contributions by radio stations to Canadian talent development _ a new approach," the Commission, in conjunction with the industry, established an approach which would ensure a minimum annual payment of $1.8 million to eligible third parties for CTD.
• The following table indicates the amount of money contributed to CTD initiatives in the context of licence renewals.

Table 8: CTD Annual Contributions - Licence Renewals

Source: CRTC Financial Database, Annual Returns

V. Diversity of Formats

• In the development of the 1998 commercial radio policy the broadcasting industry submitted that an increase in consolidation in markets would lead to an increase in the diversity of formats.
• The following tables (9-12) compare the diversity of radio formats available in a sample of markets from across Canada, 1998-2000.
• Overall, the number of distinct radio formats available in the sample of markets has generally remained at the same level since the introduction of the 1998 policy.

Table 9: Formats of market stations for Vancouver,
Kelowna, Calgary, and Regina

Sources: CRTC Research

Table 10: Formats of market stations for Sudbury, London,
Toronto, and Ottawa-Hull

Sources: CRTC Research

Table 11: Formats of market stations for Montréal, Québec,
Chicoutimi-Jonquière, and Halifax

Sources: CRTC Research

Table 12: Formats of market stations for St. John's

Sources: CRTC Research

VI. Popularity of Formats

Table 13: Total Hours tuned (THT) By Format - All Canada
(`000)

Source: CRTC Research

• Chart 7 illustrates the ten most popular formats in Canada in 2000.

Chart 7: Ten most popular formats in Canada, 2000

VII. Number of Commercial Radio Stations in Canada

Table 14: Number of Commercial Radio Stations in Canada
AM & FM - All Languages

Source: CRTC Financial Database (includes stations that file annual returns as of August 31st of each year).

VIII. Promotion of a financially sound sector

• One of the Commission's objectives in developing the Commercial radio policy in 1998 was to ensure a strong, well-financed radio industry that is able to achieve its obligations under the Act.

A. Financial Performance

1. Total Revenues - AM and FM

Table 15: Radio revenues in Canada
1996-2000

Note: Ethnic stations are included under English Radio.
Source: FDB Financial Summary Reports

Chart 8: Radio Revenues

• Total revenues for English FM radio continue to increase with 7.5% growth in 2000. Revenues for English AM radio stations have remained relatively constant since 1996.
• French FM radio has also reported a steady increase in total annual revenues since 1996, with an average annual growth rate of 6.6%. Revenues for French AM stations continue to decline with a 6% decrease in 2000. In 2000, there were a total of 23 French AM stations, as compared to 39 in 1996.

2. PBIT Margins

Table 16: PBIT Margins - AM and FM
(%)

Note: Ethnic stations are included under English Radio.
Source: FBD Financial Summary Reports 1996-2000

Chart 9: Radio PBIT Margins

3. Jointly Operated AM Stations

• Many AM stations are jointly operated with at least one other FM station in their market. When viewed as a combined entity, these joint operations, both English and French, are profitable.
• Stand-alone English AM stations are also profitable, achieving a PBIT margin of 12% in 2000, as compared to a loss of 4% for all English AM stations combined.

Table 17: Jointly Operated & Stand Alone AM stations

Source: CRTC Financial Database
Note: English Radio includes ethnic stations.

IX. Promoting the airplay of Canadian and French vocal music

Table 18: Fulfilment of Canadian Content and French Vocal
Music Requirements

Note: Radio stations are routinely analyzed for compliance to their regulated Canadian music and French vocal music requirements. The above results are based on a limited sample of stations.
Source: CRTC, evaluation of licence renewal applications during 2000

X. Campus Radio

• As stated in Public Notice CRTC 2000-12 "Campus radio policy," there are two types of campus radio stations, community-based campus and instructional. A community-based campus station's programming is primarily produced by volunteers, who are either students or community members. The primary objective of an instructional campus station is the training of professional broadcasters.
• There are currently (July 2001) 43 campus stations licensed across Canada, 35 community-based and 8 instructional. Twenty-five of these stations submitted financial returns for 2000.
• The majority of campus radio revenues come from sources other than advertising. For example, revenues come from the educational institution they are associated with, grants, the local community, fund-raising, etc.

Table 19: Revenues for Community-Based Campus
Radio Stations

Sources: CRTC Financial Database
                 CRTC Licence Application System

Table 20: Revenues for Instructional Campus Radio Stations

Sources: CRTC Financial Database
                 CRTC Licence Application System

XI. Community Radio

• As stated in Public Notice CRTC 2000-13 "Community radio policy," there are two kinds of community radio stations: Type A and Type B. A community station is a Type A station if, at the time of licensing, no other radio station other than the CBC is operating in the same language in all or part of its market. A community station is a Type B station if, at the time of licensing, there is at least one station, other than the CBC, operating in the same language in all or in part of the same market.
• In addition to advertising revenues, community radio stations receive revenues from fund-raising, grants, and other sources.
• There are currently 33 Type A and 29 Type B community stations. Not all community stations have filed financial returns with the Commission. The partial results are as follows:

Table 21: Revenues for Type A Community Stations
($'000)

Source: CRTC Financial Database

Table 22: Revenues for Type B Community Stations
($'000)

Source: CRTC Financial Database

XII. Ethnic Radio

• The Commission revised its ethnic broadcasting policy in Public Notice CRTC 1999-117. There are 13 licensed ethnic radio stations currently broadcasting in Canada. The following tables outline the languages of programming broadcast by each of these stations. The stations are grouped by the markets they are licensed to serve. The information comes from each individual station's programming schedule, as of August 2001.
• On October 4, 2001 the Commission licensed a new ethnic station in Ottawa (Decision CRTC 2001-625).

Table 23: Ethnic Broadcasting, Vancouver Ethnic Radio

* Of the 31.25 hours of English language programming, 21 hours serve ethnic groups.

Table 24: Ethnic Broadcasting, Edmonton,
Calgary, Winnipeg