Broadcasting
Policy
Monitoring
Report
2003

Radio
Television
Broadcasting Distribution
Social Issues
Internet

For additional copies of the report, please contact:

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Canadian Radio-television and
Telecommunications Commission (CRTC)
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Central Building
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Ottawa, Ontario
Canada
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ISBN # BC9-1/2003E-HTML
             0-662-35591-1

18 December 2003

Introduction

This is the fourth edition of the CRTC's Broadcasting Policy Monitoring Report, the 2003 version continues to measure the evolution of the Canadian broadcasting system. The Broadcasting Policy Monitoring Report was developed to provide an on-going assessment of the impact of CRTC regulations, policies and decisions¹ towards the achievement of the objectives of the Broadcasting Act. As in the past, we hope that this report will help to foster a more open and better-informed public discussion of broadcasting policy in Canada. The Commission invites parties to use the report to enrich their participation in our regulatory policy and licensing proceedings.

The 2003 edition updates the performance indicators and continues the trends outlined in previous reports. In addition, the 2003 report reviews the program signal theft issue and the Commission's role in resolving competitive disputes. A comparison of the viewing to, and scheduling of, both English and French-language Canadian drama/comedy programming across the Canadian broadcasting system between 1993 and 2002 is also provided.

The data and information used as the basis of the CRTC's policy monitoring is drawn from many sources. These sources include (1) information filed by participants in the normal course of the Commission's hearings and public proceedings; (2) information obtained from Statistics Canada; (3) audience measures from the Bureau of Broadcast Measurement (BBM) and Nielsen Media Research; (4) the Annual Financial Returns filed by CRTC licensees; (5) programming information filed as part of licensees' television logs; (6) the Commission's ownership records and radio compliance monitoring results; and (7) publicly available information, such as annual reports from publicly traded companies, CRTC decisions and public notices.

The CRTC is in a unique position to cross-analyze the television logging information and BBM viewing data, thus being able to track the level of viewing to Canadian programming across the Canadian broadcasting system.

The report is sub-divided in six sections: Overview, Radio, Television, Broadcasting Distribution, Social Issues and Internet.

Interested parties are welcome to provide comments for improvements or additions to future editions of the report and 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

Table of contents

I. Overview

A. Diversity of Programming in the Canadian Broadcasting System
B. Diversity of Voices in the Canadian Broadcasting System
C. Advertising Revenue by Media
D. Trends in Television Viewing - Anglophones/Francophones
E. Competitive Disputes

II. Radio

A. Number of Commercial Radio Stations in Canada
B. Radio Tuning
     1. Tuning Trends
     2. Digital Radio
C. Ownership
     1. Revenues of the Top 10 Ownership Groups
     2. "Top 10" by Total Hours Tuned
D. Competitive Licensing
E. Canadian Talent Development (CTD)
     1. Applications for New Radio Licences
     2. Transfers of Control or Ownership (benefits)
     3. Renewal of Radio Licences
F. Diversity of Formats
G. Popularity of Formats
H. Promotion of a Financially Sound Sector
     1. Financial Performance
          a) Total Revenues - AM and FM
          b) Profits Before Interest and Taxes (PBIT) Margins
          c) Jointly Operated AM Stations
I. Promoting the Airplay of Canadian and French Vocal Music
J. Campus Radio
K. Community Radio
L. Ethnic Radio
M. Native Radio
N. Religious Radio
O. Low Power Radio

III. Television

A. Audience
     1. Average Weekly Hours Per Viewer
     2. Average Daily Viewing Hours
     3. Viewing Share by Station Group
     4. Viewing Share by Ownership Group
     5. Viewing to Canadian Programming
          a) % Viewing to Canadian Programming - 6 a.m. to 2 a.m.
          b) Distribution of Viewing by Program Type
B. Canadian Priority Programming
     1. Scheduling of Priority Programs
     2. Drama
C. Financial Performance
     1. Revenues
     2. CBC Conventional Television Advertising Revenues
     3. Aggregate Profits Before Interest and Taxes (PBIT) Margins (%)
D. Eligible Expenditures on Canadian Programming (CPE)
     1. English-Language
     2. French-Language
     3. Ethnic Specialty Services
E. Canada's Independent Production Companies
F. Specialty, Pay, PPV and VOD Services
     1. Financial Results for Pay, PPV and Specialty Analog & Digital Services
G. Companies with Significant Ownership Interests in Specialty, Pay, PPV Analog and Digital Services
H. Ethnic Television Stations
     1. Over-the-air Ethnic Television Stations
          a) Montréal
          b) Toronto
          c) Vancouver
     2. Ethnic Pay & Specialty Services
          a) Analog Ethnic Specialty Services
          b) Category 2 Digital Ethnic Pay & Specialty Services
I. Native Television Services
J. Religious Television Stations
     1. Over-the-air Religious Television Stations
     2. Specialty Religious Services
     3. Foreign Religious Services
K. The National Public Broadcaster
     1. Over-the-air Conventional Television Stations
     2. Specialty Services
L. House of Commons
M. Foreign Satellite Services Authorized in Canada
N. Tangible Benefits Resulting from the Transfers of Ownership or Control of Television Broadcasting Undertakings

IV. Broadcasting Distribution

A. Promoting Effective Competition
     1. Subscriber Levels of Incumbent and Alternative BDU Delivery Systems
     2. Rate Deregulation of Incumbent BDUs
B. Ensuring Contributions to Canadian Programming and Local Expression
     1. Contributions to Programming Funds
     2. Total Community Channel Expenses
     3. Number of Systems Maintaining a Community Channel
C. Affordability of Basic and Non-Basic Service Rates
D. Ensuring a Financially Strong Sector
     1. Total Revenues of Distributors
     2. Profit Before Interest and Taxes (PBIT) Margins
     3. Return on Investment (ROI)
E. Concentration / Vertical Integration
     1. Top 6 Cable Corporations by Total Basic Subscribers
     2. Pay & Specialty Services Owned by Top Five Distributors or Their Affiliates
F. Promoting Digital Technology
G. Distribution of Specialty Services in the Official Language of the Minority
H. Program Signal Theft

V. Social Issues

A. Programming Standards
     1. Complaints
     2. Canadian Broadcast Standards Council
     3. Advertising Standards Canada (ASC)
     4. Cable Television Standards Council (CTSC)
B. Accessibility
     1. Access for Persons Who Are Hearing Impaired
     2. Access for Persons Who Are Visually Impaired
     3. Current Requirements
     4. National Reading Services
C. Cultural Diversity

VI. Internet

A. Internet Use
     1. Computer Ownership by Canadian Households
     2. Internet Access
          a) Internet Access by Location
          b) Internet Access in Canadian Households
          c) Frequency and Duration of Internet Use
          d) Profile of Canadians Without Internet Access
          e) Internet Activities
          f) Type of Internet Access Used at Home
          g) The Canadian Internet Service Provider (ISP) Industry
     3. The Effect of Internet Use on Broadcast Media
     4. Trends in Internet Advertising and E-Commerce

Glossary

I. Overview

A. Diversity of Programming in the Canadian Broadcasting System

Section 3(1)(i) of the Broadcasting Act (the Act) states, in part, that the programming provided by the Canadian broadcasting system should

(i) be varied and comprehensive, providing a balance of information, enlightenment and entertainment for men, women and children of all ages, interests and tastes,
(ii) be drawn from local, regional, national and international sources,
(iii) include educational programs and community programs, [.].

To further the above noted broadcasting policy, the Commission ensures that Canadians have access to a diversity of programming drawn from a variety of sources. The following tables provide a summary of the variety of television and radio services that are available in the Canadian broadcasting system. A table summarising the number and types of Canadian broadcasting distribution undertakings is also provided.

Table 1.1: Canadian Television Services

Excludes rebroadcasters and exempt television services.
*Includes bilingual (English and French) and Native services.
(1) Includes satellite to cable services.
(2) Includes only digital category 1 & 2 and VOD services launched prior to November 3rd, 2003.
Source: CRTC - APP Report 1200 (November 10, 2003) and CBC 2002-03 Annual Report.

Table 1.2: Canadian Radio Services

*Includes bilingual (English and French) and native services.
Excludes rebroadcasters and exempt radio services.
Source: CRTC - APP Report 1200 (November 10, 2003) and CBC 2002-03 Annual Report

Approximately 82% of Canadian households receive the basic service of a Canadian broadcasting distribution undertaking. This table provides a breakdown of the number and types of Canadian broadcasting distribution undertakings.

Table 1.3: Number of Broadcasting Distribution
Undertakings (BDUs)

Notes:
1. Source for cable undertakings is the CCTA's 02-03 annual report. This information is of September 2002 and is based on Mediastats databases.
2. Source for DTH, MDS and STV undertakings is the CRTC APP1200 Report run Nov. 6, 2003.

B. Diversity of Voices in the Canadian Broadcasting System

The Commission's mandate with regard to the diversity of voices in markets across Canada originates notably in sections 3(1)(d)(i), 3(1)(d)(ii) and 3(1)(i)(iv) of the Broadcasting Act.

Section 3(1)(d)(i) states that the Canadian broadcasting system should "serve to safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada".

Section 3(1)(d)(ii) states that the programming provided by the Canadian broadcasting system should "encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity, by displaying Canadian talent in entertainment programming and by offering information and analysis concerning Canada and other countries from a Canadian point of view".

Section 3(1)(i)(iv) states that the programming provided by the Canadian broadcasting system "should provide a reasonable opportunity for the public to be exposed to the expression of differing views on matters of public concern".

The Commission implements the above noted policy in its various policies and decisions. For example, in the Television Policy, the Commission continued its policy which generally permits ownership of no more than one over-the-air television station in one language in a given market. This policy assists in providing a diversity of voices in a given market.

In the Commercial Radio Policy, the Commission sought to strike a reasonable and acceptable balance between its concerns for preserving a diversity of news voices in a market, and the benefits of permitting increased consolidation of ownership within the radio industry.

In the Licence Renewals for the Television Stations Controlled by CTV and Global - Decisions 2001-457 and 2001-458 respectively, and the Licence renewals for the French-language national network TVA and CFTM-TV - Decision 2001-385, the Commission considered that it had a responsibility to ensure that a sufficient diversity of broadcasting news and information voices remains as consolidation continues to take place between broadcasters and related industries.

The following table monitors the evolution of the diversity of ownership and the diversity of programming choices in the 3 largest Canadian cities between 1991, 2001 and 2002. The city of Montréal has been subdivided into two markets, English-language and French-language, based on the broadcast language of the programming service. The table compares the following for each of the markets in each of the years:

• The number of different owners of television services available in the market that broadcast news and public affairs programming along with the total number of such services;
• The number of different owners of radio stations and daily newspapers available in each market along with the total number of radio stations and daily newspapers in the market.

Table 1.4: Comparison of the Diversity of Ownership and Programming
Choices in Montréal, Toronto and Vancouver
1991 - 2001-2002

Notes:
1. BBM Fall sweeps extended market data and CRTC research were used to determine the number of television services providing news and public programming.
2. BBM Fall sweeps central market data were used to determine the number of radio stations available in each market. It was assumed that all radio stations and newspapers available provided news and public affairs programming.
3. Although the number of foreign services is indicated, the number of foreign ownership is not provided.
4. Newspapers include only Canadian daily newspapers published locally. 1991 and 2001 figures have been restated to reflect additional ethnic daily newspapers.
5. Only out of market TV and radio services attracting a minimum of 0.1% audience share have been included.

Between 1991 and 2002, the number of available television and radio services has increased in each of Canada's three largest markets.

Since 1991, a significant increase in the licensing of French and English-language Canadian pay and specialty services has added to the diversity of viewing options of Canadians. In addition, the number of U.S. specialty services available has also increased. Increasing diversity in television ownership is evident in all three markets between 1991 and 2002.

The revised ownership policy in the 1998 Commercial Radio Policy, Public Notice CRTC 1998-41, 30 April 1998, has resulted in a decrease in radio ownership diversity between 2001 and 2002 in the Montréal French-language market and in the Toronto radio market between 1991 and 2002. The number of Canadian radio stations controlled by different ownership available in the Montréal French-language radio market and the Toronto radio market in 2002 were 14 and 25 respectively.

In each of the markets there has been an increase in cross-media ownership between 1991 and 2002. Cross-media ownership is defined as the same owner controlling more than one type of media in the market. Between 1991 and 2002, the number of cross-media owners increased from 1 to 2 in the Montreal English-language market, from 1 to 3 in the Montreal French-language market, from 4 to 6 in the Toronto market, and from 2 to 4 in the Vancouver market.

Not included in the above charts is the on-going development of the Internet and its potential impact on the diversity of voices and information available in markets across Canada. As of March 2003, 68%¹ of Canadians reported having access to the internet.

C. Advertising Revenue by Media

The following table and pie chart outline the trends in advertising revenues by the different media.

Table 1.5: Advertising Revenue by Media
($ millions)

Sources: Carat Expert, Panorama Publicitaire 2001 (1995 -2000); Carat Expert estimates for 2001 and 2002
Notes:
(1) Includes private conventional, CBC/SRC, specialty services, other public, educational, religious and not-for-profit services.
(2) Excludes classified ads.

 Chart 1.1: Share of Advertising Revenue by Media, 2002

The relative levels of advertising revenue earned by the different media have remained generally constant since 1995. For example, television advertising achieved a 35% share of the pie in 1995, as compared to 34.4% in 2002. Radio's levels have remained unchanged at 14.3% in 2002.

D. Trends in Television Viewing - Anglophones/Francophones

The following charts reveal the trends in viewing by Canadian anglophones and francophones to all television services available in Canada, Canadian and foreign, sub-divided by genre for the years 2000 to 2002. The viewing by genre² is further sub-divided between viewing to Canadian and foreign programs. The charts are based on BBM and CRTC research data for a 4-week period in the Fall of each year.

Chart 1.2: Viewing by English-language³ Viewers by Program Type
All Canada - All Services (Canadian and Foreign)
BBM Fall 2000 to 2002, 6 a.m. - 2 a.m.
Average Weekly Hours (000,000)

Excludes viewing to programs where Canadian content and program type could not be identified.

There has been little change to the viewing habits of Canadian anglophones in the past 3 years.

The chart reveals the popularity of drama/comedy programming to anglophone viewers. In each of the years drama/comedy programming is about twice as popular as viewers' second pick programming.

The viewing to Canadian programs by anglophones differs significantly between the genres. Viewing of news and analysis & interpretation programming is predominantly to Canadian programs. In contrast, viewing by anglophones to drama/comedy programming is predominantly to foreign programs. Overall viewing to Canadian programs by anglophones remains unchanged at approximately a third of total viewing.

Viewing to other programming has increased 26% since 2000. Roughly 70% of this increase is due to increased viewing to general entertainment and human interest programming, reflecting the recent popularity of reality style programs. The remaining increase is due to viewing of educational programming.

Chart 1.3: Viewing by French-language⁴ Viewers by Program Type
All Canada - All Services (Canadian and Foreign)
BBM Fall 2000 to 2002, 6 a.m. - 2 a.m.
Average Weekly Hours (000,000)

Excludes viewing to programs where Canadian content and program type could not be identified.

Drama/comedy programming is the most popular genre with francophone viewers, with news and analysis & interpretation programming a close second.

Viewing trends by francophones is predominantly to Canadian programs in all genres, with the exception of drama/comedy programs where the viewing has remained evenly split between Canadian and foreign programs. Overall viewing to Canadian programs by francophones has remained in the 70% range.

E. Competitive Disputes

The Competitive Disputes Team within the Broadcasting Directorate of the CRTC was introduced in 2000 to more effectively process and resolve disputes in the increasingly competitive broadcasting industry.⁵ Disputes can generally be categorized as follows: 1) between broadcasting distributors and the programming services that they carry on access issues and the related terms of carriage; 2) between competing broadcasting distributors over access to buildings and the end-user; and 3) between programmers regarding rights acquisition and markets served.

The Commission employs alternative dispute resolution techniques, such as fact-finding meetings, mediation and staff-opinions to attempt to break deadlocks and assist disputing parties to resolve their differences. When this proves unworkable, the Commission can determine on disputes by way of "final-offer" arbitration. These processes are usually conducted on a confidential basis as the matters in dispute often involve commercially sensitive information.

Alternatively, disputes may arrive at the Commission as allegations of undue preference or disadvantage by a party vis-à-vis the actions of another party. In such situations, the complainant seeks a Commission ruling that the given preference or disadvantage has material and serious consequences that are contrary to the public interest for the complainant and/or the Canadian broadcasting system.

Number of Disputes

Practices and procedures for resolving competitive and access disputes, Public Notice CRTC 2000-65, 12 May 2000, noted that parties would generally be required to attempt to resolve their differences through private, third party mediation, bilateral negotiations or some other means before the Commission would deal with the dispute. The intent of the framework was to use the Commission as a last recourse, if the parties proved unable, despite bona fide efforts, to achieve resolution on their own.

As of 30 September 2003, the Commission had received 83 dispute files. The majority of these, 61, were processed by way of the dispute resolution measures set out in sections 12 to 15 of the Broadcasting Distribution Regulations (the Regulations). Only two of these disputes ultimately required the issuance of a Commission determination following submission of "final offers" by the parties involved. The remaining 22 disputes involved allegations of undue preference or disadvantage under section 9 of the Regulations.

The average number of days to completion for all disputes was 146 days, with sections 12 to 15 disputes taking an average of 136 days to complete and with section 9 allegations an average of 205 days. When items, of all types, could be concluded without a determination by the Commission (17), an average of 67 days to completion was experienced.

Utilization of dispute resolution mechanisms at the Commission is increasing. In calendar years 2001 and 2002, 16 and 37 dispute resolution files were received respectively by the Commission. In the first 6 months of 2003, the Commission has received 29 complaint files.

Types of Disputes

Of the 83 disputes the Commission received between May 12, 2000 and September 30, 2003, 26 involved the negotiation or application of affiliation agreements, in particular the determination of an appropriate wholesale rate, between broadcasting distributors and specialty service providers. Thirteen disputes concerned multiple unit dwellings (MUDs). These involved issues of access to inside wire and/or allegations of breach of winback rules or other perceived unfair marketing practices as well as undue interference with competitive access by broadcasting distributors to MUDs.

More recently, 27 disputes involving a desire for the conduct of audits to substantiate reported subscriber totals or accounting methodology have been received by the Commission. The balance of 17 disputes involved a variety of subject matters including the inability to obtain programming rights (9), channel placement (4) and alleged violations of conditions of licences (4).

II. Radio

A. Number of Commercial Radio Stations in Canada

• The following tables list the number of commercial AM and FM radio stations by province over the past 5 years.

Table 2.1: Number of Commercial Radio Stations in Canada
AM & FM - All Languages

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

Table 2.2: Number of Commercial FM Stations in Canada
- All Languages

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

Table 2.3: Number of Commercial AM Stations in Canada
- All Languages

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

• Between 1998 and 2002, 93 new commercial FM stations were introduced into the system. In comparison, there are 51 fewer commercial AM stations in operation.

Table 2.4: Number of AM to FM Conversions per Calendar Year

Source: CRTC Decisions

B. Radio Tuning

1. Tuning Trends

• The following charts and tables outline the total hours tuned to radio in an average week during the fall surveys of 1997-2002. Chart 2.1 and Table 2.5 provide the total hours tuned over the entire broadcast day while Chart 2.2 and Table 2.6 include the total hours tuned between 6 a.m. and 6 p.m.
• The purpose of Tables 2.5 and 2.6 is to monitor the on-going use of radio by Canadians.

Table 2.5: Radio Tuning in an Average Week, All Persons 12+,
5 a.m. to 1 a.m. Total Hours Tuned ("THT") (000's)

Note: Other is principally over-the-air tuning to U.S. border stations
Source: BBM Fall 1997 to Fall 2002

Table 2.6: Radio Tuning in an Average Week, All Persons 12+,
6 a.m. to 6 p.m. Total Hours Tuned ("THT") (000's)

Source: BBM Fall 1997 to Fall 2002

• The total average weekly hours tuned in Fall 2002 were slightly higher than the totals for Fall 2001, 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 are based on Tables 2.5 and 2.6 and serve to demonstrate the dominance of FM radio in both the English and French language markets.

Chart 2.1: Total Hours Tuned in an Average Week,
5 a.m. to 1 a.m., Fall 2002

Chart 2.2: Total Hours Tuned in an Average Week,
6 a.m. to 6 p.m., Fall 2002