Broadcasting
Policy
Monitoring
Report
2004

Radio
Television
Broadcasting Distribution
Social Issues
Internet

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ISBN # BC9-1/2004E-HTML
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December 2004

Introduction

This is the fifth edition of the CRTC's Broadcasting Policy Monitoring Report which pro-vides an on-going assessment of the impact of CRTC regulations, policies and decisions¹ towards the achievement of the objectives of the Broadcasting Act. The 2004 version continues to measure the performance of the Canadian broadcasting system. 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 2004 edition updates the performance indicators and continues the trends outlined in previous reports. In addition, the 2004 report introduces audience measures in regard to the viewing to Canadian programming using metered data. The Commission took part in a working group in order to add the country of origin and program genre for each program captured by the Bureau of Broadcast Measurement Canada (BBM) and Nielsen Media Research people meter databases from 1 September 2003.

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 BBM and Nielsen Media Research; (4) the Annual Financial Returns filed by licensees of the CRTC; (5) programming information filed as part of licensees' television program 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 report is sub-divided in six sections: Overview, Radio, Television, Broadcasting Distri-bution, 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. Trends in Television Viewing
     D. Competitive Disputes
          1. Number and Complexity of Disputes
          2. Call for Comments on Ensuring Good Commercial Practices in Negotiations

II. Radio

     A. Number of Commercial Radio Stations in Canada
     B. Transitional Digital Radio
     C. Radio Tuning Trends
     D. Ownership
          1. Total Hours Tuned tothe Largest Private Commercial Radio Operators
          2. Revenues of the Top Private Commercial Radio Ownership Groups
     E. Financial Performance - Promoting a Financially Sound Sector
          1. Commercial Radio Revenues
          2. Profits before Interest and Taxes (PBIT) Margins
          3. Number of AM to FM Frequency Conversions
          4. Jointly Operated & Stand-Alone AM Stations
     F. Competitive Licensing
     G. Canadian Talent Development
          1. Applications for New Radio Licences
          2. Transfers of Control or Ownership (benefits)
          3. Renewal of Radio Licences
     H. Diversity of Formats
     I. Popularity of Formats
     J. Promoting the Airplay of Canadian and French Vocal Music
     K. Ethnic Radio
     L. Religious Radio
     M. Native Radio
     N. Community Radio
     O. Campus Radio
     P. Low Power Radio
     Q. Audio Services Delivered by Broadcasting Distribution Undertakings
          1. Specialty Audio Services
          2. Pay Audio Programming Services
     R. Multi-Channel Subscription Radio Services
     S. The National Public Broadcaster
          1. Over-the-Air Radio Stations
          2. Pay Audio Services

III. Television

     A. Audience
          1. Average Weekly Hours Per Viewer
          2. Average Weekly Viewing Hours per Capita
          3. Average Daily Viewing Hours
          4. Viewing Share by Station Group
          5. Viewing Share by Ownership Group
     B. Canadian Priority Programming
          1. Scheduling of Priority Programs
          2. Drama
     C. Financial Performance
          1. English-Language Private Services
          2. French-Language Private Services
          3. CBC Conventional Television Stations
     D. Eligible Expenditures on Canadian Programming (CPE)
          1. English-Language
          2. French-Language
          3. Ethnic Specialty Services
     E. Canada's Independent Production Companies
     F. Tangible Benefits Resulting from the Transfers of Ownership or Control of Television Broadcasting Undertakings
     G. Digital Over-the-Air Television Services
     H. Specialty, Pay, PPV and VOD Services
          1. Financial Results for Pay, PPV and Specialty Analog & Digital Services
          2. Companies with Significant Ownership Interests in Specialty, Pay, PPV and VOD Analog and Digital Services
     I. Ethnic Programming Services
          1. Over-the-air Ethnic Television Stations
               i) Montréal
               ii) Toronto
               iii) Vancouver
          2. Ethnic Pay & Specialty Services
               a) Analog Ethnic Specialty Services
               b) Category 2 Digital Ethnic Pay & Specialty Services
               c) Non-Canadian Third-Language Programming Services Eligible for Distribution in Canada
     J. Native Television Services
     K. Religious Television Stations
          1. Over-the-air Religious Television Stations
          2. Specialty Religious Services
          3. Foreign Religious Services
     L. The National Public Broadcaster
          1. Over-the-air Conventional Television Stations
          2. Specialty Services
     M. Community-Based Television
     N. Non-Canadian Satellite Services Authorized in Canada

IV. Broadcasting Distribution

     A. Promoting Effective Competition
          1. Subscriber Levels of Incumbent and Alternative BDU Delivery Systems
     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 Service Rates
     D. Ensuring a Financially Strong Sector
          1. Revenues
          2. Profit Before Interest and Taxes (PBIT) Margins, Class 1 & 2 Licensees
          3. Return on Investment - Class 1 and Class 2 Licensees
     E. Top Canadian Distributors
     F. Promoting Digital Technology
     G. Signal Theft

V. Social Issues

     A. Official Languages
          1. House of Commons Proceedings
          2. Distribution of Specialty Services in the Official Language of the Minority
          3. 2004-2005 Action Plan: Implementation of Section 41 of the Official Languages Act
     B. Diversity
     C. Accessibility
          1. Access for Persons Who Are Hearing Impaired
          2. Access for Persons Who Are Visually Impaired
          3. National Reading Services
     D. Programming Standards
          1. Complaints
          2. Canadian Broadcast Standards Council (CBSC)
          3. Advertising Standards Canada (ASC)
          4. Cable Television Standards Council (CTSC)

VI. Internet

     A. Computer Ownership by Canadian Households
     B. Internet Access by Canadians
          1. Internet Access by Location
          2. Frequency and Duration of Internet Use
          3. Profile of Canadians Without Internet Access
          4. Internet Activities
          5. Type of Internet Access Used at Home
          6. The Canadian Internet Service Provider (ISP) Industry
     C. The Effect of Internet Use on Broadcast Media
     D. 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:

1. be varied and comprehensive, providing a balance of information, enlightenment and entertainment for men, women and children of all ages, interests and tastes,
2. be drawn from local, regional, national and international sources,
3. 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 summarizing the number and types of Canadian broadcasting distribution undertakings is also provided.

Table 1.1: Canadian Television Services

Excludes rebroadcasters and exempt television services. Also excludes network licences. *Includes bilingual (English and French) and native services. (1) Includes satellite to cable services. (2) Includes only category 1 & 2 services launched prior to October 1, 2004. (3) Number of services licensed. (4) Excludes Class 3 licensees. (5) Carriage of authorized services is at the discretion of the broadcast distribution undertaking.
Sources: CRTC APP System (APP 1205 Report run July 30, 2004) and CRTC Decisions

Table 1.2: Canadian Radio and Audio Services

* Includes bilingual (English and French) and native services.
Excludes rebroadcasters and exempt radio services.
Sources: CRTC APP System (APP 1205 run April 2004) and CRTC Decisions

Table 1.3: Number of Licensed Broadcasting Distribution Undertakings (BDUs)

This table provides a breakdown of the number and types of Canadian BDUs.

Sources: Cable Systems - CCTA's 03-04 annual report. This information is as of September 2003 and is based on Mediastats; DTH, MDS & STV Systems - CRTC APP System (APP 1205 Report run Oct. 14, 2004)

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 from the Canadian broadcasting policy set out in section 3 of the Act, particularly in subsections 3(1)(d)(i), 3(1)(d)(ii) and 3(1)(i)(iv) of the 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 broadcasting 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 1998 Commercial Radio Policy, Public Notice CRTC 1998-41, 30 April 1998 (Com-mercial Radio Policy), the Commission sought to strike an appropriate 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 tables monitor the diversity of ownership and the diversity of programming choices in Canadian cities between 1991, 2002 and 2003. Table 1.4 examines the three largest cities, Montréal, Toronto and Vancouver. The city of Montreal has been subdivided into two markets, English-language and French-language, based on the broadcast language of the programming service. Table 1.5 examines three additional markets: Winnipeg, Quebec City and Halifax. These tables compare 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.

Table 1.4: Comparison of the Diversity of Ownership and Programming Choices in Montréal, Toronto and Vancouver
1991 - 2002 - 2003

Table 1.5: Comparison of the Diversity of Ownership and Programming Choices in Halifax, Québec and Winnipeg
1991 - 2002 - 2003

Notes to Tables 1.4 & 1.5:

1. BBM Fall sweeps extended market data and CRTC research were used to determine the number of television services providing news and public affairs 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 owners is not provided.
4. Newspapers include only Canadian daily newspapers published locally and include third language 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 2003, the number of available television and radio services has increased in each of Canada's three largest markets and in each of the three mid-sized markets examined.

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 of the markets examined between 1991 and 2003.

Since 1991, there has been an increase in radio ownership diversity in all the markets reviewed with the exception of Vancouver, where it has remained stable, and Toronto, where it has decreased. There was a decrease in radio ownership diversity in the Montréal English-language, Toronto, Vancouver and Québec City radio markets between 2002 and 2003.

In each of the markets there has been an increase in cross-media ownership between 1991 and 2003. Cross-media ownership is defined as the same owner controlling more than one type of media in the market. Between 1991 and 2003, 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 8 in the Toronto market, and from 2 to 6 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 2004, 76%¹ of Canadians reported having access to the Internet.

C. Trends in Television Viewing

New Audience Measures based on Meter Technology

The 2004 Broadcasting Policy Monitoring Report introduces new measures of audiences to Canadian programs using meter technology. A move towards increased use of metered television audience measures in this report is consistent with an increased emphasis on the results of television metered audience data by the industry.²

The following tables summarize an analysis of viewing to Canadian and foreign television services that are available in Canada by program genre³ using Nielsen Media Research's metered audience data.⁴ Table 1.6 provides trends in viewing by program genre and indicates the relative popularity of each genre. Table 1.6 also provides viewing results based on the programming provided by all English-language services available in Canada (Canadian and Foreign services) and the programming provided by Canadian English and French-language television services. Table 1.7 provides trends in viewing to Canadian versus foreign programs by program genre.

Important methodological factors to note when comparing the results of diary-based data from previous Broadcasting Policy Monitoring Reports with meter-based data:

• Diary surveys reflect average weekly viewing trends measured over a 4 week period in the fall of each year while meter surveys measure audiences 52 weeks a year.
• Diary surveys record viewing in 15 minute blocks while meters report average minute audiences.
• Diary samples are larger than metered samples and more geographically repre-sentative. Metered samples are concentrated in Canada's top 3 markets (Toronto, Montreal, Vancouver).

Table 1.6: Viewing by Program Genre
1998/99, 2000/01 and 2002/03 Broadcast Years
All Persons 2+, 6 a.m. to 6 a.m.
Nielsen Media Research Metered Data

Table 1.7: Viewing by Program Origin and Genre
1998/99, 2000/01 and 2002/03 Broadcast Years
All Persons 2+, 6 a.m. to 6 a.m.
Nielsen Media Research Metered Data

D. Competitive Disputes

The Broadcasting Directorate's Competitive Disputes Team was created in 2000 to more effectively process and resolve disputes in the increasingly competitive broadcasting industry. The process and procedures used for resolving competitive and access disputes are outlined in Practices and procedures for resolving competitive and access disputes, Public Notice CRTC 2000-65, 12 May 2000 (Public Notice 2000-65).

Disputes can generally be categorized as follows: (1) disputes between broadcasting distributors and the programming services that they distribute over the terms of distribution, including wholesale rates; (2) disputes between competing broadcasting distributors over access to buildings and the end-user; and (3) disputes between programmers regarding programming rights 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 directly resolve their disputes. When these techniques are insufficient, the Commission can determine on disputes by way of "final-offer" arbritration (under section 15 of the Broadcasting Distribution Regulations (BDU Regulations)) or by way of decisions involving allegations of undue preference or disadvantage (eg. under section 9 of the BDU Regulations).

"Final offers" selection processes are typically conducted on a confidential basis both to permit candour on the part of the parties and to take into account that the matters in dispute often involve commercially sensitive information for which the harm which could result from disclosure outweighs the public interest in disclosure.

In disputes that come before the Commission as allegations of undue preference or disadvantage by a party or parties vis-à-vis the actions of another party or parties, the complainant seeks a Commission ruling that the alleged preference or disadvantage has material and serious consequences that are contrary to the public interest for the complainant and/or the Canadian broadcasting system. Files involving such matters are generally immediately placed on a public file.

1. Number and Complexity of Disputes

In Public Notice 2000-65, the Commission noted that parties would be expected to have attempted to resolve their differences through private, third party mediation, bilateral negotiations or some other means before the Commission would be prepared to 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.

During the period of 1 April 2003 to 31 March 2004, the Commission processed 20 new disputes. The majority of these files, whether alleging undue preference or disadvantage or seeking staff assistance/Commission determinations, raised multiple issues and many involved multiple sets of facts. Overall, the complexity of submitted files is rising and most disputes now include "policy" components, both of which are factors that are not conducive to expedited processing by way of alternative dispute resolution techniques.

Table 1.8 compares the last three years' experience in the time taken to resolve disputes⁵. While undue preference files do not show great variance year over year, dispute resolution files under sections 12 to 15 of the BDU Regulations are now generally taking as long as undue preference files to complete.

Of the 20 files processed between 1 April 2003 and 31 March 2004, 10 were undue preference files under section 9 of the BDU Regulations and 10 were sections 12 to 15 of the BDU Regulations. Of these 20 files, 7 involved wholesale rates, 5 related to building access matters and the balance covered a wide range of issues including channel placement and programming rights-related issues. To the end of the period under review, resolution had been achieved in only 5 of the 20 submitted cases with the balance still ongoing. Many of these files have been suspended, at the request of the parties, for various periods of time in order to permit the parties to resume negotiations.

Table 1.8: Fiscal Year Comparisons of the Average Number of
Days to Resolve Disputes

April 1st to March 31st

It should be noted that for disputes pursuant to sections 12 to 15 under the BDU Regulations, the average completion time was increased by several lengthy "final offer" files brought to the Commission for determination. On the other hand, sections 12 to 15 disputes that that did not require a Commission determination were concluded in an average of 64 days.

2. Call for Comments on Ensuring Good Commercial Practices in Negotiations

In Call for comments on possible requirements for the provision of notice to programming services by distributors of their plans to change packages, Broadcasting Public Notice CRTC 2004-64, 25 August 2004, the Commission sought comments from interested parties with respect to the need for and, if so, the measures that may be required to ensure that negotiations between distributors and programmers are conducted in accordance with good commercial practices.

The Commission stated that the commercial arrangements between distributors and programmers should best be determined by negotiations between the parties. However, certain recent disputes led it to believe that the negotiation process between parties was not consistently characterized by good commercial relations. It also expressed its view that good commercial relations were essential to allow parties to fulfil their respective responsibilities under the Act.

Accordingly, comments were sought on the need for, and kinds of, new measures that may be required to reach that goal, as well as comments on how any such measures could best interface with the Commission's existing methods of dealing with disputes.

II. Radio

A. Number of Commercial Radio Stations in Canada

• The following table lists the number of commercial, over-the-air, AM and FM radio stations licensed to operate in Canada. These figures are based on the number of licences on file at 19 April 2004.

Table 2.1: Number of Commercial Radio Stations in Canada

Excludes digital radio
Source: CRTC APP 1205 Report (19 April 2004)

B. Transitional Digital Radio

• The Commission issued A Policy to Govern the Introduction of Digital Radio, Public Notice CRTC 1995-184, on 29 October 1995.
• As of 19 April 2004, 76 licences for transitional digital radio programming undertakings have been granted. Of these licences, 57 have been issued to existing commercial radio programming undertakings, 1 to a stand-alone ethnic radio programming undertaking and 18 to existing CBC stations.

Table 2.2: Markets with Transitional Digital Radio Stations in Canada⁽¹⁾

(1) Numbers of stations approved but not necessarily on air.
(2) Based on BBM Radio Markets
Includes stand-alone ethnic digital radio station located in Toronto
Source: CRTC APP 1205 report (19 April 2004)

C. Radio Tuning Trends

• The purpose of Tables 2.3, 2.4 and 2.5 is to monitor the on-going use of radio by Canadians.

Table 2.3: Per Capita Listening Hours by Age Group
Average Weekly Hours Tuned per Capita
BBM Fall 2003 - All Persons 12+, Monday to Sunday, 5 a.m. to 1 a.m.

Source: BBM Canada 2003-2004 Radio Data Book

• Weekly listening levels by teens in the 12-17 demographic continue to decline, reaching 8.5 hours per capita in 2003.
• The following tables and charts outline the percentage of hours tuned to radio in an average week during the BBM fall surveys of 1997 to 2003. Table 2.4 and Chart 2.1 provide the percentage of hours tuned over the entire broadcast day while Table 2.5 and Chart 2.2 set out the percentage of hours tuned between 6 a.m. and 6 p.m.

Table 2.4: Radio Tuning Share in an Average Week - 5 a.m. to 1 a.m.
BBM Fall - All Persons 12+ - Monday to Sunday

Note: "Other" is principally over-the-air tuning to U.S. border stations.
Source: BBM Fall 1997 to Fall 2003

Table 2.5: Radio Tuning Share in an Average Week - 6 a.m. to 6 p.m.
BBM Fall - All Persons 12+ - Monday to Sunday

Note: "Other" is principally over-the-air tuning to U.S. border stations
Source: BBM Fall 1997 to Fall 2003

• The total average weekly hours tuned to radio, both over the entire broadcast day and between 6 a.m. to 6 p.m., have remained relatively stable since 1997.
• The following pie charts are based on Tables 2.4 and 2.5 and serve to demonstrate the dominance of FM radio in both the English and French-language markets.

Chart 2.1: Average Weekly Tuning Share,
5 a.m. to 1 a.m., BBM Fall 2003

Chart 2.2: Average Weekly Tuning Share,
6 a.m. to 6 p.m., BBM Fall 2003

• According to the 2003-04 BBM Radio Data Book (5 a.m. to 1 a.m., Monday to Sunday):

  - 93.2% of Canadians aged 12 and over listened to the radio for at least 15 minutes per week in Fall 2003, as compared to 94% in 1998.

  - In Fall 2003, the average hours tuned per listener was 21 hours per week - a three-quarter-hour drop from the previous year's 21.7 hours per week.

  - In Fall 2003, the average hours tuned per capita dropped from the 20.2 hours per week range to 19.5 hours per week.

D. Ownership

• In revising its ownership policy in the Commercial Radio Policy, the Commission focussed 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 2.6 through 2.11 monitor ownership consolidation in the radio industry providing revenue and tuning information for the largest radio operators.

1. Total Hours Tuned to the Largest Private Commercial Radio Operators

Table 2.6: Tuning to the Ten Largest Radio Operators⁽¹⁾

(1) Refer to "Notes to Tables 2.6 to 2.11" following Table 2.11.
(2) Listening hours includes tuning to private commercial multilingual and native stations.
(3) Listening hours includes tuning to public and private Canadian and U.S. stations.

Sources: CRTC Internal Report "Ownership August 2003"; BBM Fall 2001 to 2003 surveys, 5am to 1am, all persons 12+; and CRTC Financial Database

• The tuning share of the 10 largest radio groups has risen considerably between 1998 and 2003, from 53% to 64%.

Table 2.7: Tuning to the Two Largest French-Language Radio Operators,
BBM Fall 2002 and 2003 Surveys⁽¹⁾

(1) Refer to "Notes to Tables 2.6 to 2.11" following Table 2.11.
(2) Listening hours include tuning to public and private Canadian French-language stations.

Sources: CRTC Internal Report "Ownership August 2003"; BBM Fall 2002 to 2003 surveys, 5am to 1am, all persons 12+ ; and CRTC Financial Database

• Astral Media Inc. garnered 43% of the hours tuned to French-language radio in 2003 and 59% of French language radio revenues.

Table 2.8: Tuning to the Five Largest English-Language Radio Operators,
BBM Fall 2002 and 2003 Surveys⁽¹⁾

(1) Refer to "Notes to Tables 2.6 to 2.11" following Table 2.11.
(2) Listening hours include tuning to public and private Canadian English-language stations.

Sources: CRTC Internal Report "Ownership August 2003"; BBM Fall 2002 to 2003 surveys, 5am to 1am, all persons 12+; and CRTC Financial Database

2. Revenues of the Top Private Commercial Radio Ownership Groups

Table 2.9: Ten Largest Radio Operators Radio Revenue⁽¹⁾

(1) Refer to "Notes to Tables 2.6 to 2.11" following Table 2.11.
Includes private commercial networks and commercial ethnic radio stations.

Sources: CRTC Internal Report "Ownership August 2003" and CRTC Financial Database

• The number of programming undertakings owned by the top 10 radio operators and their share of national revenue continues to rise, from 148 and 61% respectively in 1998 to 325 and 79% in 2003.

Table 2.10: Radio Revenues of the Two Largest French-Language
Radio Operators⁽¹⁾

(1) Refer to "Notes to Tables 2.6 to 2.11" following Table 2.11.
Includes network radio revenues.

Sources: CRTC Internal Report "Ownership August 2003" and CRTC Financial Database

Table 2.11: Radio Revenues of the Five Largest English-Language
Radio Operators⁽¹⁾

(1) Refer to "Notes to Tables 2.6 to 2.11" below.
Includes private commercial network and ethnic radio station revenues.

Sources: CRTC Internal Report "Ownership August 2003" and CRTC Financial Database

Notes to Tables 2.6 to 2.11:

• A dash (-) indicates that a company was not in the top 10 in a given year.
• The ownership structure reflects the licensees' filing of annual returns at 31 August of each year. Ownership transactions not taking effect until after 31 August are not reflected until the following year. In such cases, the station's entire year's revenue is reflected under the owner as of 31 August.
• 2001 and 2002 results have been restated to reflect current data on file.
• Corus acquired control of Métromédia CMR Broadcasting Inc. in 2001; Sale of CKDO and CKGE-FM to Durham Radio reflected in 2003.
• Standard acquired 4 stations from Craig Broadcasting Systems and 64 stations plus 3 networks from Télémédia in 2002. Of these, Standard sold 13 stations and one network to Rogers and 15 stations to Newcap in 2002. 2003 results include the new CIQK-FM Calgary station.
• Rogers acquired 13 stations and one network from Standard in 2002.
• Astral's results for 2002 and 2003 reflect the transaction that was approved pursuant to Broadcasting Decision CRTC 2002-90, the acquisition of assets from Télémédia; during 2002 and 2003 nine Astral stations were held in trust pending their sale: CKRS, CJRC, CHLN, CHLT, CKSM, CKTS, CKAC, CHRC and CFOM-FM (Acquisition of radio assets in Quebec, Broadcasting Decision CRTC 2003-205, 2 July 2003).
• CHUM acquired CKLY-FM from Centario Communications Inc. in 2001; acquired CKST from Grand Slam Radio Inc in 2003.
• Newcap acquired 15 stations from Standard in 2002; 2003 results include the new CIHT-FM Ottawa station.
• Jim Pattison Industries acquired the radio stations of Monarch Broadcasting Ltd. in 2001; In 2003, the AM station in MacKenzie was replaced with a rebroadcasting transmitter of the Prince George station.
• Elmer Hildebrand (Golden West Broadcasting): 2002 results include new Estevan and Moose Jaw FM stations.

E. Financial Performance - Promoting a Financially Sound Sector

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

1. Commercial Radio Revenues

Table 2.12: Revenues - Commercial Radio - 1999 to 2003

Note: Includes network results; 1999 to 2002 figures have been updated to reflect current aggregate results.
Source: CRTC Financial Database (FDB1 Report run March 2004)

Chart 2.3: Revenues - English-Language Commercial Radio Stations

Note: Includes network results; Excludes ethnic stations;1999 to 2002 figures have been updated to reflect current aggregate results.
Source: CRTC Financial Database (FDB1 Rpt. Run March 2004)

• English-language FM radio revenues increased 9.3% from 2002 to 2003. Revenues have increased by an average of 7.5% per year over the past four years.
• English-language AM radio revenues increased 2.6% from 2002 to 2003. Over the last four years, revenues decreased by an average of 0.8% per year.
• Combined English-language AM and FM radio revenues increased 7.4% from 2002 to 2003. This represents an average annual increase of 4.9% over the past four years.
• The number of English-language radio stations continues to increase annually. Roughly 60% of the new FM stations reporting in 2003 were by licensees converting their AM frequencies to FM frequencies.

Chart 2.4: Revenues - French-Language Commercial
Radio Stations ($000,000)

Note: Includes network results; 1999 to 2002 figures have been updated to reflect current aggregate results.
Source: CRTC Financial Database (FDB1 Rpt. Run March 2004)

• Total revenues for French-language FM radio increased 12% from 2002 to 2003. Revenues have increased by an average of 7.8% per year over the past four years.
• Total revenues for French-language AM radio increased 0.8% from 2002 to 2003. Over the last four years, revenues decreased by an average of 2.1% per year.

• Overall, total revenues for French-language radio increased by 10.4% from 2002 to 2003. This represents an average annual increase of 6.2% over the past four years.
• French-language AM radio continues to see a steady decline in the number of stations, decreasing from 18 in 2002 to 16 in 2003.

Chart 2.5: Revenues - Ethnic Commercial Radio Stations
($000,000)

Note: Includes network results; 1999 to 2002 figures have been updated to reflect current aggregate results.
In previous Broadcasting Policy & Monitoring Reports, the revenues of private commercial ethnic radio stations were combined with total English-language revenues.
Source: CRTC Financial Database (FDB1 Rpt. Run March 2004)

• Ethnic radio stations derive approximately 95% of their advertising revenues from local sources compared to 76% for English and French-language stations.
• Total revenues for ethnic radio increased 4.3% from 2002 to 2003. Revenues have increased by an average of 3.3% per year over the past 4 years.

2. Profits before Interest and Taxes (PBIT) Margins

Table 2.13: Commercial Radio PBIT in Canada 1999 to 2003

Note: Includes network results; 1999 to 2002 figures have been updated to reflect current aggregate results.
Source: CRTC Financial Database (FDB1 Rpt. Run March 2004)

Chart 2.6: PBIT Margins - Commercial AM & FM Radio Stations

Note: Includes network results; 1999 to 2002 figures have been updated to reflect current aggregate results.
Source: CRTC Financial Database (FDB 1 Rpt. Run March 2004)

Chart 2.7: PBIT Margins - Commercial FM Radio Stations

Note: Includes network results; 1999 to 2002 figures have been updated to reflect current aggregate results.
Source: CRTC Financial Database (FDB 1 Rpt. Run March 2004)

Chart 2.8: PBIT Margins - Commercial AM Radio Stations

Note: Includes network results; 1999 to 2002 figures have been updated to reflect current aggregate results.
Source: CRTC Financial Database (FDB 1 Rpt. Run March 2004)

3. Number of AM to FM Frequency Conversions

• The following table shows the number of AM to FM conversions approved by the Commission from 1998 to 2003.

Table 2.14: Number of AM to FM Conversions per Calendar Year

Source: CRTC Decisions (Jan 1 to Dec 31)

4. Jointly Operated & Stand-Alone 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-language and French-language, are profitable.
• Stand-alone English-language AM stations are also profitable, achieving a 14% PBIT margin in 2003, compared to the 1% achieved by all English-language AM stations.

Table 2.15: Jointly Operated & Stand-Alone AM Stations

Excludes native, ethnic & network stations
Source: CRTC Financial Database (run April 2004)

F. Competitive Licensing

• In the Commercial Radio Policy, the Commission determined that in order to encourage competition and choice it would no longer apply the criteria¹ outlined in the Radio Market Policy, Public Notice CRTC 1991-74, 23 July 1991. 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. Decision 99-480 also noted that the relative weight and significance of the factors would vary depending on the specific circumstances of the market concerned.
• The following table reveals the factors that were noted in the Commission's decisions as contributing to the success of competitive applications since the introduction of the Commercial Radio Policy.

Table 2.16: Factors Contributing to Successful Applications for Radio
Licences Considered in Competitive Processes Following the
1998 Commercial Radio Policy

Table 2.16 (Continued)

Source: CRTC Public Notices and Decisions (noted in table)

Legend: Languages: e = English-language, f = French-language, e/n = English & Aboriginal, f/n = French & Aboriginal, O = 3rd languages (other than English, French & Aboriginal) Type: C = Commercial, NC = Non-Commercial, N = Native, CO = Community, CC = Community based Campus, CI = Campus Instructional, MF = Musical format, SpMF = Specialty music format, Flip = Conversion of existing AM radio station to FM frequency, CBC1 = English-language CBC "Radio One" format, CBC2 = English-language CBC "Radio Two" format, SRC1 = French-language CBC "La première chaîne" format, SRC2 = French-language CBC "Espace musique" format.
(1) "Canadian Content" refers to applications that proposed to exceed the minimum regulatory requirement of Canadian content.

G. Canadian Talent Development

The Commission reviews radio licensee contributions to Canadian talent development (CTD) in the following instances:

• Applications for new radio stations
• Transfers of control or ownership (benefits)
• Renewal of radio licences

1. Applications for New Radio Licences

• Since the introduction of the Commercial Radio Policy in 1998, the Commission has licensed 58 new radio stations through competitive processes in markets across Canada through to April 30, 2004. These successful applicants have committed over $41 million to CTD initiatives over their initial licence terms.
• In addition, there were 99 new radio licences or AM to FM flips granted without a competitive process. These licensees committed a combined $900 thousand towards CTD initiatives.

2. 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 that represent a minimum direct financial contribution to CTD of 6% of the value of the transaction. Three percent is to be allocated to the StarMaker/RadioStar music marketing and promotion fund, two percent to either FACTOR or MusicAction and one percent at the discretion of the purchaser to other eligible CTD initiatives.
• Since the adoption of the Commercial Radio Policy to April 30, 2004, the Commission has approved 79 control and/or ownership transactions involving 316 radio stations.
• CTD commitments (benefits) from these transactions have totalled $92.9 million.

Table 2.17: Value of Radio Transactions and Corresponding Transfer Benefits for the period 1 May 1998 to 30 April 2004

*Value determined by the Commission for the purpose of calculating transfer benefits.
Source: CRTC Decisions and Administrative approvals

3. 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 CTD.
• In Contributions by radio stations to Canadian talent development - a new approach, Public Notice CRTC 1995-196, 17 November 1995, the Commission, in conjunction with the industry, established an approach that would ensure a minimum annual payment of $1.8 million to eligible third parties associated with CTD.
• The following table indicates the amount of money contributed to CTD initiatives in the context of licence renewals.

Table 2.18: CTD Annual Contributions - Licence Renewals

Source: CRTC Financial Database and Annual Returns

H. Diversity of Formats

• In the development of the Commercial Radio Policy the broadcasting industry submitted that an increase in consolidation in markets would lead to an increase in the diversity of formats.
• Tables 2.19 to 2.22 compare the diversity of radio formats available in a sample of markets across Canada from 2001 to 2003.
• Note that formats change frequently. The format information used in tables 2.19 to 2.22 is based on the BBM Fall market books for the respective years in conjunction with other reference material.
• Overall, the number of distinct radio formats available in the sample of markets has increased slightly since the introduction of the Commercial Radio Policy.

Table 2.19: Formats of Market Stations for Vancouver,
Kelowna, Calgary and Regina