GATINEAU – CBC/Radio-Canada is hearing static over plans for additional revenue generation on two of its radio properties. Interveners to the corporation’s licence renewal are telling the CRTC that it must deny a proposal from the public broadcaster to have national advertising on Radio 2 and Espace Musique.
In its licence renewal application, CBC says that because it received fewer federal dollars under its Parliamentary appropriation it needs to bolster revenue on the radio side so it can maintain existing levels of service. Several interveners argue that’s simply not true with Corus Entertainment saying it’s “a self-made problem.” Corus and other radio broadcasters point to a Communic@tions Management Inc. (CMI) report as proof.
An analysis of CBC’s financials done by CMI says the corporation shifted money out of radio operations and into TV, creating an artificial shortfall in resources in 2011 compared to 2010. According to the analysis, the CBC moved $19 million out of radio in 2011 into TV.
Opponents of CBC’s proposal argue that allowing the corporation to derive revenue from advertising on both its English and French-language radio services would create a race to the middle. The radio council at the Canadian Association of Broadcasters says the public broadcaster would end up playing more mainstream music in an effort to secure more advertising dollars, rather than the mix of new and niche Radio 2 offers now.
According to advertising projections from the CBC, this new revenue stream would generate $20 million in the second year of a renewed licence and $35 million in the seventh. The CAB wonders what happens if the corporation is unable to meet those revenue projections. “It would mean that these music services would play more commercially-oriented or mainstream music rather than their current focus on new and emerging or niche artists,” says the CAB’s radio council in its October 5 comments.
In addition, advertising on Radio 2 and Espace Musique would create a precedent and could result in the corporation asking for the right to have advertising on its other radio properties Radio 1 and La Première Chaîne, argues the CAB. This “would ultimately reconfigure the balance of public/private services and the diversity in content and format each brings to the Canadian broadcasting system,” reads the submission.
The CBC has not asked to sell ad time on Radio One, the ratings-leader in many markets. CBC Radio 2 and Espace Music generally rate far lower. For example, while Radio One is the ratings leader in Toronto (A2+), Radio 2 is 18th.
Corus Entertainment agrees that Radio 2 as it’s known today would disappear with national advertising and assumes it would simply become like other commercial radio stations. “The addition of advertising will likely result in a service that plays more and more established international artists as opposed to the less established artists currently heard as the need to drive audience ratings increases as a result of having to support the service through national advertising revenues,” argues Corus.
Small radio broadcasters are also concerned that national advertising on Radio 2 and Espace Musique could be detrimental to their businesses. Bayshore Broadcasting fears its small Ontario market radio stations (CBL-FM-3 Orillia, CBL-FM-4 Owen Sound and CBLA-FM-4 Shelburne compete with Radio 2 repeaters) would suffer from a “death of a thousand cuts.”
In its comments, the company says even losing 25 gross rating points (GRPs) would constitute a significant amount of money lost for the small radio broadcaster.
“As a result, Bayshore would receive orders for three or four fewer commercials on each of their stations every week because the client received the extra weekly GRP amount via the CBC’s extensive coverage. Four less advertisements every week x 52 weeks x $40 per advertisement x 8 small market stations with this one client alone,” writes Bayshore.
Attraction radio inc., which operates two French-language FM stations in Sainte-Marie-de-Beauce and Lac Mégantic in Quebec and is in the process of acquiring two radio stations in the Saguenay region from Astral, says allowing national advertising on Espace Musique would have severe negative consequences for radio in the Saguenay region of the province. Lower advertising revenue available to small independent operators would put their operations in peril, Attraction radio says.
Despite opposition from large and small radio station operators, the music community supports CBC’s push for national advertising on Radio 2 and Espace Musique.
ADISQ recognizes that the CBC is in a difficult financial situation following the federal government’s decision to decrease its annual Parliamentary Appropriations. The group worries, however, that allowing the corporation to have national advertising will have negative consequences. Will the CBC have to change its music lineup to please advertisers? Would the corporation find itself competing with the private radio station operators? And will listeners change the station because the amount of advertising is too much? These are important questions that need to be discussed, ADISQ says in its comments.
The Canadian Independent Music Association (CIMA) argues that private sector money is required for CBC to be able to continue to deliver radio services. It supports CBC’s request to have national advertising on those two radio properties.
“While not an ideal solution, it goes some way to resolving CBC’s current financial challenges. In today’s world, the need for private sector financing is a reality and it therefore merits support,” CIMA writes in its comments.
The hearing starts November 19th and is expected to take up to three weeks. CRTC chairman Jean-Pierre Blais told MPs last week he will be running this hearing a little differently than past proceedings.
