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. Financial commitments to projects relating to Canadian talent development are also frequently included as part of the benefits proposed in applications for authority to transfer the ownership or control of existing radio stations or in applications for licences to operate new radio stations. The Commission has considered that all such contributions are important to help ensure that there is a sufficiently large pool of Canadian music and other Canadian creative material available for broadcast.
Over the years, a number of concerns have been raised with respect to the Commission's policy guidelines for Canadian talent development. Radio broadcasters have expressed the view that the level of financial commitment they are asked to make is too high at a time when many radio stations are facing financial difficulties. Concerns have also been raised about the high level of detail that is involved in the Commission's administration of the Canadian talent development process. Currently, each commitment by a radio station licensee is evaluated to ensure that it qualifies as an acceptable Canadian talent development initiative. The overall financial commitment for each radio station is compared with those of otherradio stations with similar revenues in markets of similar size to ensure that the level of the commitment is adequate.
In Public Notice CRTC 1995-61, the Commission concluded that a more streamlined approach to Canadian talent development is necessary, given the diminishing resources of both radio licensees and the Commission. It emphasized, however, that adequate funding should continue to be provided to third-party organizations involved in Canadian talent development, because of the important role these organizations play in increasing the availability of Canadian music, and their reliance on Canadian talent development contributions from radio stations for a significant share of their revenues.
The Commission also stated that commitments for Canadian talent development made in the context of applications for new radio licences or changes in ownership must continue to be fulfilled.
* At licence renewal, licensees of all private commercial radio stations would continue to be expected to make annual direct financial commitments to Canadian talent development sufficient to ensure that FACTOR, MusicAction, and other third-party organizations continue to receive annual funding from radio licensees totalling not less than $1.8 million. These funds would be contributed by individual broadcasters directly to eligible third parties.
* Radio licensees would generally be required to fulfil commitments for Canadian talent development accepted as part of benefits packages proposed in applications to transfer ownership or effective control of undertakings. Similarly, licensees of new radio stations would generally be required to fulfil all Canadian talent development commitments during their initial licence terms.
In addition to its call for comments on the general approach to Canadian talent development, the Commission requested the Canadian Association of Broadcasters (CAB) to submit a proposal for a mechanism that would ensure that at least $1.8 million annually is provided by radio licensees to eligible third parties, including details concerning how such a system would operate and be administered.
A total of 35 comments were received in response to the Commission's call. Commercial broadcasters generally supported the Commission's proposed approach, noting that radio already contributes to Canadian talent by playing Canadian records and by making copyright payments to authors, composers and music publishers. They considered that the $1.8 million target proposed for licence renewal commitments was reasonable, given the current financial difficulties faced by the radio industry, and would ensure continued funding for parties that have come to rely on the direct financial contributions of radio licensees. They also expressed the view that many local Canadian talent development projects would continue without the involvement of the Commission because of their promotional value for the sponsoring stations.
Community broadcasters made references to the contributions made to Canadian talent development by not-for-profit radio stations, and expressed the view that private radio stations must continue to make a contribution as well.
Parties associated with the recording and music industries had a mixed response to the proposed approach. Some considered that the target of $1.8 million was too low and could become a maximum rather than a minimum target. Some proposed that a portion of the money now going to local initiatives should be given to third parties. Certain parties suggested that adherence by a licensee, both to its overall commitment to Canadian talent development, and to its individual financial commitments to particular organizations, should be required by condition of licence. A full review of the financial state of the radio industry was suggested by one party.
The CBC and several other parties argued that air-play for new artists was at least as important as financial contributions for the development of Canadian talent. In this context, one individual suggested that all Canadian radio stations should be required to ensure that at least 15% of musical selections broadcast are by new Canadian artists.
An educational institution suggested that the list of third parties who are eligible for Canadian talent development payments should be expanded to include provincially- administered, post-secondary training programs.
In response to the Commission's request, the CAB presented a proposal entitled CAB Distribution Guidelines for Canadian Talent Development.
Payments made according to this schedule would replace all current, ongoing Canadian talent development commitments made in the context of licence renewals. They would not, however, replace benefit commitments made at the time of an ownership or control transaction or commitments to expenditures during the first term of a new licence.
Licensees would send their contributions directly to eligible third parties; these would include FACTOR, MusicAction, national and provincial music organizations, performing arts groups, schools and scholarship recipients.
Stations would apply to the Commission for a condition of licence requiring them to adhere to the CAB Distribution Guidelines for Canadian Talent Development. The CRTC would require licensees to demonstrate compliance by submitting proof of their contributions to third party organizations as part of their annual returns.
The Commission remains convinced that Canadian talent development initiatives undertaken by radio stations play an important role in fostering the careers of new Canadian artists. Consequently, it will continue to expect licensees to fulfil commitments to Canadian talent development offered as benefits in applications for authority to transfer ownership or control of radio stations or contained in applications for new licences, including those involving a move from the AM to the FM band.
The Commission, however, shares the concerns of the broadcasting industry that the financial and administrative burden of the current system is too heavy, especially given the difficult financial circumstances faced by many radio stations. The Commission also considers that its own workload and diminished resources argue for a more steamlined approach to Canadian talent development. It therefore views as a reasonable approach the establishment of a system that, through the licence renewal process, would ensure a minimum annual payment of $1.8 million to third parties involved with Canadian talent development. Such an approach will ensure that these third parties continue to receive the same level of funding that they currently receive through the licence renewal process, while decreasing the overall financial and administrative burden on radio licensees and the Commission.
In light of concerns expressed by recording industry representatives that the proposed annual contribution of $1.8 million by the radio industry could become a maximum rather than a minimum, the Commission will review this base level in five years to determine whether it remains adequate. With respect to local Canadian talent initiatives, the Commission notes comments by broadcasters that many radio stations will continue to undertake these projects on their own initiative.
The Commission, however, has the following concerns with respect to the plan submitted by the CAB.
The success of the CAB plan depends on the participation of almost all private commercial radio stations, regardless of their profitability, to raise a minimum of $1.8 million annually for third parties involved in Canadian talent development. To participate in the CAB plan, licensees of radio stations must submit applications to the Commission to be relieved of their current Canadian talent development commitments and to amend their licences by adding a condition of licence requiring them to make payments in accordance with the CAB's Canadian talent development distribution guidelines. As well, the plan assumes participation by radio stations who are not CAB members and may not yet be aware of all aspects of the plan.
The Commission, however, notes the CAB's assurances that support for the plan is very high and agrees that, since the majority of radio stations would see their contributions to Canadian talent development decrease under the CAB plan, a high level of participation is likely. The Commission is also reluctant to delay unnecessarily the implementation of a more efficient system for Canadian talent development.
The Commission will therefore proceed as follows: licensees of private commercial radio stations have until 16 February 1996 to apply to the Commission for licence amendments, using the form attached to this notice as Appendix 2. Once the Commission has received the applications, it will process them expeditiously via public notice.
Once the new conditions of licence are in place, the Commission's intention is to require licensees to report, using their annual returns, the amounts directed to specific third parties associated with Canadian talent development. The Commission will generally expect licensees to ensure that at least half of the annual payments made by each are made in the first quarter of each fiscal year, with the remaining amount to be paid before the end of the third quarter.
In its plan, the CAB expressed agreement with the Commission's definition of eligible third parties as including "FACTOR, MusicAction, national and provincial music organizations, performing arts groups, schools and scholarship recipients." The Commission wishes to clarify that, in accordance with its current practice, all money going to third parties must be directly connected to the development of Canadian musical and other artistic talent.
Although it notes the suggestion by one party that provincially-administered post-secondary training programs should qualify as eligible recipients of Canadian talent development funding, the Commission has determined that grants to schools will generally be eligible expenditures for purposes of Canadian talent development only when directed to arts faculties to purchase instruments or undertake performances, or when such grants are used to fund other projects related to the development of musical and artistic talent. Scholarships will qualify as Canadian talent development expenditures only when they support students engaged in music, journalism or other artistic studies. Grants to those organizations offering courses in broadcasting or devoted to the continuing education of radio station staff will not qualify.
The Commission reiterates that the CAB plan will apply only to commitments for Canadian talent development that are made in the context of licence renewals. Licensees will be expected, for the duration of their first licence term, to adhere to existing Canadian talent development commitments made in the context of their applications for new radio licences, including commitments made by licensees who have moved from the AM to the FM band. LIcensees will also be expected to adhere to those commitments proposed as benefits in applications for authority to transfer the ownership or control of radio stations.
The licensee hereby applies for relief from its current direct cost commitments for Canadian talent development made as part of its last licence renewal, and to amend its licence by adding a condition of licence requiring it to make payments to third parties involved in Canadian talent development at the level identified for it in the CAB Distribution Guidelines For Canadian Talent Development, as set out in Public Notice CRTC 1995-196 or as amended from time to time and approved by the Commission, and to report the names of the third parties associated with Canadian talent development, together with the amounts paid to each, on its annual return.
The licensee acknowledges that the payments required under the requested condition of licence are over and above any outstanding commitments to Canadian talent development offered as benefits in an application to acquire ownership or control of the undertaking.