CIMA Appears at CRTC Hearings for MuchMusic and CMT License Renewals

Presentation to: The Canadian Radio-television and Telecommunications Commission

Re: Broadcasting Notice of Public Hearing CRTC 2010-952-1
Applicant Number 2010-1261-6 CTVglobemedia Inc.
Item #2010-1288-0/Item #2010-1272-3 MuchMusic/MuchMoreMusic

Re: Broadcasting Notice of Consultation # 2010-952-1
Item #2010-1350-08 Corus Entertainment Inc.
Item #2010-1349-0 CMT

 

Presented by the Canadian Independent Music Association (CIMA)
Stuart Johnston, President
Shauna de Cartier, Vice Chair
Jim West, Treasurer
April 13, 2011

Thank you very much for the opportunity to address you today.

My name is Stuart Johnston, and I am here representing the national membership of the Canadian Independent Music Association.  Joining me is two of CIMA’s Board members, our Treasurer, Jim West and our Vice Chair, Shauna de Cartier.

CIMA has represented the interests of Canada’s English language music production companies for more than 30 years.

Today, CIMA has over 170 member companies including recording companies, music publishers, managers, agents and other music professionals from across the country.

CIMA is primarily concerned with the continued production and commercialization of English language Canadian music, and the support of the businesses and creative individuals who make Canada’s music production industry unique in the world.

We are here to speak to CTV Limited’s and Corus Entertainment’s group licence renewal applications.

First off, we would like to note for the record, CIMA’s deep appreciation of the important role that broadcasters play in Canada. Our organization and our membership enjoy a healthy working relationship with the broadcast industry, and believe that we have an important, symbiotic relationship that serves to benefit all Canadians.  And we sincerely wish to support those measures which serve to strengthen both of our industries from an economic sustainability point of view.

From that perspective, let me be clear – CIMA is not opposing the broadcasters’ licence renewal applications in general.

Rather, our members have a philosophical difference of opinion as it relates to certain aspects of their applications to alter very important and long-standing conditions of their unique licences.

Video Airplay

Embedded in the CTV application is its second request for its licence relating to its MuchMusic stations to be amended – the same amendment which the CRTC had denied almost five months ago in its decision published on November 25, 2010.

CTV Limited is again requesting to amend its Category A licence so that it can, in part, cut in half the amount of annual funding it contributes to Canada’s independent music sector, through its MuchMusic and MuchMoreMusic English language specialty service stations….through its funding mechanism called MuchFACT.

In addition, both CTV and Corus are requesting permission to reduce their level of commitment to play music videos, both in overall numbers and time of day and replace it with programming of more so-called ‘lifestyle programming’…movies… and other programming choices.

CIMA and its membership would like to express opposition for the reduction of video airplay, and respectfully requests the Commission to rule against these requests at this time.

In effect, these applications – in particular, CTV’s – will serve to diminish the competitiveness and growth potential of Canada’s artists and the companies that support them.

This, in our opinion, not only violates the spirit of the unique licence granted to CTV Limited, but it also contradicts the CRTC’s mandate to ensure that broadcasters and others serve the Canadian public – in part through the promotion, support and development of Canadian culture.

Indeed, Canada’s broadcast act is very clear in its objectives that our broadcasting system must and should provide financial contributions in various forms to this economically and socially important Canadian sector.

In fact, a growing, dynamic cultural sector is central to Canada’s success as a creative, knowledge-based economy.

The Conference Board of Canada estimates that the economic footprint of the arts and culture sector as a whole in Canada was approximately $84.6 billion in 2007….or 7.4 per cent of Canada’s GDP…. and various recent analyses puts the number of jobs in the arts and culture sector anywhere from 500,000 to 1.1 million.

Indeed, a not insignificant contributor to Canada’s economic and social makeup.

We all know that the cultural sector also serves as a magnet for skilled and creative people….which is a desirable and needed goal of the Canadian economy…..given our aging demographic, shrinking workforce and our nation’s shift from a manufacturing to knowledge-based economy.

MuchFACT

As we noted to the Commission last June, CTV’s proposed amendments affect more than just record producers and video production companies.  Artists of all kinds, both musical and cinematographic, as well as their marketing partners, their distribution networks and their fans….. all depend on a supply of high quality video material to enhance their businesses and their access to Canadian artistic works.

That is why we believe MuchFACT is a vital and important service to the industry, our members and to helping sustain and grow Canadian culture. It provides millions of dollars annually to hundreds of applicants, to help our artists and industry representatives produce videos, and to assist in their marketing, promotion and a more robust web presence…..all with the goal to help the sector grow and compete nationally and internationally.

In fact, the mandated contributions that MuchMusic is required to make to MuchFACT are not intended to solely create a library of content that is commensurate with MuchMusic’s obligations to air Canadian videos.

Nor is that funding contribution intended to finance a catalogue of music videos for its exclusive use.

These contributions are intended to provide an archive of music videos that all Canadians can access and view through a number of vehicles…..no matter what the programming requirements or intentions of MuchMusic may be.

Those in the industry can tell you that some music videos are incredibly expensive to produce….over $1 million….while others can be made for less than $10,000.

Unfortunately, the growing reality is that there is an increasing number of acts for whom videos are not produced…….simply because they can’t afford it.

The fact of the matter is, videos are an essential promotional tool in the online sphere because of outlets like YouTube…. and because many websites will embed the content (including radio stations, blogs and music magazines etc.).

And while MuchMusic, for example, is intent on reducing its video play, there are other digital TV offerings dedicated to music, like AUX TV here in Canada.

As an aside, the Commission ruled against AUX TV’s application to increase its video airtime, in Decision 2011-83, rendered on February 10. The Commission determined that granting AUX TV the right to air more videos, quote, “could permit the service to become directly competitive with the Category A service MuchMusic,” end quote.

We fail to see how the Commission could deny  TV’s application, citing in part the uniqueness of the Category A licence, and then two months later be in the position to potentially reduce or amend those very same licence conditions.

The bottom line for us is that MuchMusic enjoys a privileged position with respect to its genre of programming.  For this exclusivity, CTV is asked to contribute funding for the production of videos for the public good, not solely for its programming supply and catalogue.

That is why the funding mechanism is called MuchFACT, as in the Foundation to Assist ‘Canadian Talent’……not ‘MuchMusic programming’.

CTV’s ambition to cut in half its mandated contributions means that over $2 million a year…. or approximately $10 million over a five-year life of a renewed licence ……will no longer be available to Canadian music artists or the independent music industry.

Such a dramatic decline in funding will directly and adversely affect the businesses of many of our member companies, especially those which produce sound recordings.

We are extremely concerned that this application, if granted, will mean that fewer artists will be able to present their works to the Canadian public in video form.

This will be a substantial loss for Canadians, for the artists and for the companies and professionals working in the sector.

Indeed, when one considers the ongoing challenges that our sector continues to face – such as the reality of dramatically declining revenues resulting from illegal downloading….global analysis states that as much as 19 out of 20 digital music downloads are illegal ….dramatically shifting business models….reductions in funding resulting from the Commission’s Decision 2010-499 that diverted much needed funds from FACTOR and MUSICACTION…….then CTV’s proposal to remove an additional and substantial amount of dollars from the sector, in our respectful view, must and should be denied again by the Commission.

Nature Of Service

CTV’s application to amend its licence to create more space for ‘lifestyle programming’……and other format changes… will only serve to duplicate its MTV service…a move that CTV maintained would not happen when it originally acquired CHUM.

Certainly CTV’s proposed licence amendments seem at odds with that previous commitment.

Our concern is multi-faceted – that MuchMusic will quickly evolve into a second MTV…..the station’s much lauded diversity will dramatically diminish….and the public exposure and financial support of our Canadian artists will fall victim to an ever-increasing presence of ‘lifestyle programming’.

It is our opinion that CTV’s amendments to its condition of licence also run contrary to the Commission’s new framework for group-based licensing of television services.

In Broadcasting Regulatory Policy 2010-167, it is the Commission’s views that, quote, “While providing greater flexibility to television services, this new framework will also permit the Commission to ensure continued support for the creation of Canadian programming, particularly in categories that continue to be under-represented in the Canadian broadcasting system,” end quote.

We fail to see how CTV’s proposed amendments meet the spirit and intent of the Commission’s regulatory policy 2010-167.

CIMA was pleased by the Commission’s views as expressed in its decision 2010-875, in which it stated that, quote, “the Commission considers that the proposed amendments to MuchMusic’s nature of service would be significant enough to call into question the integrity of the Category A licensing framework,” end quote………..and further, quote, “the proposed amendments…would have an impact on its nature of service,” end quote.

You had again cited this concern in your aforementioned judgement against AUX TV.

We hope that the Commission again comes to these conclusions when it deliberates on CTV’s latest renewal application.

Conclusion

In conclusion, we would like to reiterate, for the benefit of the Canadian music industry as a whole, that we are respectfully requesting that the Commission deny the two requests to reduce video airplay on CTV’s and Corus Entertainment’s stations…..and that you deny CTV’s proposed amendment to reduce its financial contributions to MuchFACT and keep the rates at 7 per cent and 5 per cent.

 As noted, removing $2 million a year from an already struggling music sector would do irreparable damage to Canadian cultural industries as a whole.

Thank you very much for the opportunity to allow us to express CIMA’s views, and we would be happy to answer any questions you may have.