Secteur radio > DCC > CAB Survey Report

June 2, 2000

Mr. Jean-Pierre Blais
Executive Director
Broadcasting
Canadian Radio-television and
Telecommunications Commission
Ottawa, Ontario
K1A 0B2

Dear Mr. Blais:

Further to your letter dated April 28, 2000, the Canadian Association of Broadcasters (CAB) is pleased to provide the Commission with a copy of its report outlining the key findings from a recent survey it conducted on the value of voluntary Canadian Talent Development (CTD) initiatives undertaken by CAB member radio stations, outside of the $1.8 million CTD plan, during the 1998-99 broadcast year.

As the Commission moves ahead in its review of the 1995 CTD plan, we hope it will find this information helpful in better understanding the significant role private radio plays in supporting CTD within their local communities.

Should you have any questions concerning our survey, please do not hesitate to contact me at (613) 233-4035 ext 352.

Sincerely,

Sylvie Courtemanche
Executive Vice-President, Policy and Regulatory Affairs

Encl.

cc: Tony Lacombe

Private Radio's Voluntary
Canadian Talent Development Contributions
CAB Survey Report

June 2, 2000

Table of Contents

Introduction

Background

CAB Commitment to the Success of the 1995 CTD Plan

CAB Survey Highlights

Table 1 – CAB CTD Survey Results

Types of Voluntary CTD Initiatives Undertaken by Radio Licencees

On-Air Promotions
Talent Contests
CD Compilations Produced by Radio Licencees
Original Programming
Industry Conferences and Sponsorship
Direct Cash Contributions
Projecting the total value of CTD initiatives

Table 2 – Projecting Voluntary CTD Contributions by Non-Respondents

The CTD Plan is only one of Many Radio Initiatives to Promote Canadian Talent

CTD – The Policy is Working

Conclusion

Appendix A – Methodology of CAB Survey

Appendix B – Canadian Talent Development Initiatives Questionnaire (English)

Appendix C – Canadian Talent Development Initiatives Questionnaire (French)

Introduction

The Canadian Association of Broadcasters (CAB) is pleased to have the opportunity, to provide the Commission with its key findings, of a recent survey it conducted on the value of voluntary Canadian Talent Development (CTD) initiatives undertaken by private radio stations, within their communities, during the 1998/1999 broadcast year.   We trust that as the Commission moves forward in its review of the CTD plan, it will find this information helpful in better understanding the important and significant role private radio plays in supporting Canadian talent within their local communities.

The results of the CAB's survey clearly demonstrate that the voluntary CTD contributions significantly exceed the direct CTD contributions of radio broadcasters under the existing or previous CTD policies. Survey results reveal that in the 1998/1999 broadcast year, CAB radio members contributed:

• over $16 million in reported voluntary local CTD initiatives; and
• up to $20 million for reported and projected local CTD initiatives.

This report sets-out a brief historical review of the Commission's CTD policy, events leading up to the industry-wide CAB survey, the key findings and the methodology used for the survey.

Background

Five years ago, in Public Notice 1995-196, the Commission announced a new approach to CTD by changing the level of direct commitments required by commercial radio stations as part of their previous licence renewals. Instead of licence commitments, each licensee, with the exception of those in their first licence term, assumed a condition of licence requiring them to make payments to eligible third parties involved in CTD at a level identified in the CAB Distribution Guidelines for Canadian Talent Development (CAB Guidelines).

The CAB Guidelines introduced a streamlined CTD regime, based on a market-by-market approach, that established a proscribed fee for stations in similar sized markets.  The CAB Guidelines served to ensure that private radio stations collectively, allocated a minimum of $1.8 million each year to eligible third parties associated with CTD. The eligible organizations included FACTOR, MusicAction, national and provincial music organizations, performing arts groups, schools and scholarship recipients.  

Under the previous CTD plan, broadcasters made contributions to CTD through the licence renewal process that amounted to approximately $7 million annually. At that time, $1.8 million of the $7 million contribution requirement consisted of payments to third party organizations such as FACTOR and MusicAction.  The remaining $5.2 million contribution went to local station-initiated projects which included sponsorship of talent contests, production of programming featuring live performances, local recording productions or videos and the sponsorship of concerts.   

CAB Commitment to the Success of the 1995 CTD Plan

The Commission's 1995 CTD program was implemented during the 1996/1997 broadcast year.  Since then, the CAB has worked closely with Commission staff and CAB members to help ensure the successful implementation of the plan.   Specifically, over the past three years, the CAB has undertaken several initiatives to ensure the success of the CTD plan, including:

• undertaking education efforts with CAB members to clarify the requirements of the CTD plan and to provide assistance regarding the eligibility of third party organizations; and
  
  
• ensuring that broadcasters submit the appropriate documentation enabling the Commission to reach its CTD Audit goal.

In addition, as part of the CAB's efforts to monitor the effectiveness of the 1995 CTD plan and, in order to gain an increased understanding of the extent the commitment to CTD by radio broadcasters, the CAB has recently surveyed its membership to assess the value of voluntary CTD contributions and to identify the various types of initiatives made in local communities.  

The CAB believes this information will be helpful to the Commission as it undertakes its review of its existing approach to CTD.  Radio broadcasters are extremely proud of their contribution to CTD and, as an industry, we are excited about the findings of the survey and trust that the Commission will find them equally valuable.

CAB Survey Highlights

Findings from the CAB CTD survey demonstrate that private radio makes a significant and tangible contribution to the development of Canadian talent in Canada. More importantly, this CTD contribution is made in their local communities.

In fact, during the 1998/1999 broadcast year, 267 CAB private radio stations (79%), voluntarily committed more than $16 million toward promoting Canadian talent to listeners in their markets as part of their ongoing efforts to promote and build a stronger Canadian star system in Canada.  It is important to note that these are voluntary commitments undertaken by stations that go above and beyond those required by the Commission as part of radio broadcasters CTD condition of licence (COL) requirements.

The following table summarizes the most frequent types of voluntary promotional initiatives undertaken by radio stations within their markets to promote Canadian talent during 1999.

Table 1

CAB CTD Survey Results
For 1998/1999 Broadcast Year *
(September 1, 1998 to August 31, 1999)
(CAB Member Stations Only
(Based on 267 Respondents)

* Methodology details of the CAB's survey are included as Appendix A.

** Note: Actual value of airtime contributed by radio stations towards the promotion of the Canadian Radio Music Awards/Month during February 1999 was a minimum of $569,415. This figure is based on an analysis and tabulation of responses received from two CAB questionnaires (CTD Survey in Fall of 1999 and a separate survey undertaken by the CAB in February/March 1999).

Types of Voluntary Initiatives undertaken by Radio Licencees

To better discern radio broadcasters' role in promoting Canadian talent, the CAB survey asked stations to report, not only on the monetary value of their voluntary initiatives, but also, to categorize the various types of CTD initiatives. The CAB grouped each CAB member response into 9 separate categories. The following section describes these categories in more detail and includes examples of the type of CTD initiatives undertaken by radio stations in their local markets in more detail.

On-Air Promotions

Airplay is by far the most significant form of support that private radio provides to CTD. Numerous industry studies conducted in the past have demonstrated that one of radio's key strength lies in its ability to sell records through on-air promotion and repetition.   Station operators understand the power of radio, as does the music industry. As a result, it was no surprise to learn that the largest single area of commitment by radio was through its on-air initiatives.  

For the purposes of our analysis, and to inject more precision, the CAB divided on-air activities into four categories:

Talent Contests

Discovering homegrown local talent through talent searches initiated by radio stations, is another example of how they are deeply rooted in their local communities. The CAB survey has found that in the 1998/1999 broadcast year, CAB radio stations committed over $570,000 to undertake talent searches in their respective markets. Examples of initiatives reported in this category include, the sponsorship of national songwriting and music competitions, talent searches and showcasing winners of talent contests. This is a particularly important CTD initiative since it helps to discover Canada's stars of tomorrow.

CD Compilations Produced by Radio Licencees

In some cases, talent searches lead radio stations to produce compilation CDs or to help new artists finance and press new recordings. The CAB survey findings indicate that stations provided more than $400,000 to this particular type of initiative.

Original Programming

Original on-air programming also remains an important initiative undertaken by radio broadcasters to better serve their communities. The CAB's survey indicated that broadcasters committed over $500,000 in this category. Examples of original programming include programming segments produced on a daily or weekly basis, in order to spotlight Canadian artists on-air through shows like Next Generation, Canadian Waves, and Canadian Artist Weekly Spotlight.  

Industry Conferences and Sponsorship

Canadian radio also spends over $150,000 in additional direct support to music industry conferences and event promotion. Some of these include sponsoring music festivals and cultural events within the radio station's community.

Direct Cash Contributions (includes scholarships, Grants and Donations)

Cash contributions represent approximately $60,000 in CTD initiatives. The CAB's survey included only cash contributions that could be directly tied to a valid voluntary CTD contribution. The CAB found that cash contributions are sometimes made as a result of a radio licensee's close links with its community and its desire to provide additional direct assistance. Examples of contributions made by radio stations include staffing events or fees associated with hiring talent or developing promotional materials for events. In some cases, radio stations have incurred costs through sponsoring “free admission” to music events for several thousand Canadians.

Projecting the total value of CTD initiatives

In an effort to project the total voluntary CTD contributions for the CAB's radio sector, based on a 100% member response rate, the CAB conducted an analysis to project an approximate value of voluntary CTD initiatives for the remaining 21% of the CAB member stations who did not respond to the survey. Table 2 below sets-out the average dollar value of CTD contributions made by stations.

Table 2

Projecting Voluntary CTD Contributions by Non Respondents
(CAB Members Stations Only)

CAB Members	Number of Radio Stations	Percentage of Members	Value of CTD Voluntary Initiatives	Average per Station
Responses Received	267	79%	$16,313,520	$62,987
Non- Responses	71	21%	$4,472,077	(same as above)
Total	338	100%	$20,785,597	-

Note: Additional Methodology details are included in Appendix A

By combining the CAB survey findings of $16 million and the projected ($4.5 million) value of the remaining 21% of non-respondents, we can conservatively estimate that the total voluntary efforts toward CTD undertaken by CAB radio members was over $20 million in the 1998/1999 broadcast year. This is an impressive contribution, and one made possible because of radio broadcasters long-standing commitment and support of Canadian music. It's important to note that the estimated total CTD contribution of $20 million excludes the additional contributions made by radio through recent transfers of radio stations.

Private radio industry initiatives to develop Canadian talent began long before any CTD regulatory requirements came into effect. The CAB survey findings demonstrate that radio's long standing commitment to CTD voluntary initiatives continue to flourish within local communities. The CAB believes that there are a number of reasons why radio broadcasters continue to invest in CTD.  The primary one being radio stations are deeply rooted within their communities and, by relating their musical formats to community based projects, such as talent contests, band sponsorships, on-air interviews and promotion of local artists, radio not only responds to community needs, it enhances the nature of its local service.

The CTD Plan is only one of Many Radio Initiatives to Promote Canadian Talent

Since the 1995 CTD plan came into effect, there have been several new initiatives created to promote CTD. For example, the Commission's 1998 Commercial Radio Policy now requires that 6% of the value of profitable transaction be paid as benefits for all radio transfers. This will inject approximately $12 million of new monies to FACTOR and MusicAction over the next 5 to 7 years. Another $18 million of new funds will flow to artists as part of the promotion and marketing initiatives set-out under the Radio Starmaker Fund and its French-Language equivalent.

In addition, Canadian Heritage has committed to extend its increased funding to FACTOR and MusicAction, through an annual contribution of $8.5 for the next three years until March 2003.

Finally, in addition to its SOCAN rights payments, broadcasters must now pay other new direct costs associated with the Neighbouring Rights and Tape Levy Tariffs. All of these contributions demonstrate the significant commitment of radio stations to CTD.

CTD – The Policy is Working

The CAB believes that the Commission's CTD policy is working as evidenced by the fact that radio broadcasters have exceeded the minimum $1.8 million direct contribution for the third year in a row. In addition, the CAB's survey clearly demonstrates that the existing CTD policy is significantly enhanced through radio's voluntary CTD initiatives valued at a minimum of $16 million. Key CTD organizations such as FACTOR and MusicAction now enjoy not only stable, but increased funding over the next several years.

Conclusion

Broadcasters have not only lived up to their CTD commitments they have exceeded these. It is the CAB's view that the CTD policy is an overwhelming success. The CAB continues to believe that the Commission's streamlined approach represents an effective way to meet the cultural policy objectives of the Broadcasting Act while affording broadcasters increased flexibility.

The CAB is pleased to have had the opportunity to contribute its survey results to the Commission.  Should you have any questions concerning our survey, please do not hesitate to contact us.

Appendix A

Methodology of CAB survey

The CAB distributed its questionnaire to all private radio stations, including non-members, on November 1, 1999, to assess the value of a radio station's voluntary CTD initiatives undertaken from September 1998 to August 1999.   The CAB re-issued its survey in March 2000, to non-respondents. (copy attached - Appendix B)

Sample size

The questionnaire was sent to approximately 508 radio stations. For the purposes of tabulating the CTD survey, the CAB based its analysis on an actual sample size representing only CAB members of which there were approximately 368 in 1999. In order to gain a more accurate view of the industry's contribution, the CAB excluded an additional 30 members stations that operate news/talk stations. Rebroadcasters (34) were also excluded from this analysis.

Of the 338 music format radio stations sampled, the CAB received 267 member responses representing a response rate of 79%.

When the CAB initially issued its questionnaire, it was hoped to also provide the Commission with information about non-member voluntary CTD activities as well. Unfortunately only 19 of a possible 140 non-CAB members responded. For the record, these non-members reported that they had voluntarily committed $260,462 on voluntarily CTD initiatives during the 1998/1999 broadcast year.

Tabulation

As completed questionnaires were received by the CAB, they were imputed into the CAB CTD database. The CAB grouped individual station responses into 9 categories (as identified in Table 1) which represent the most frequent types of voluntary CTD initiatives reported in CAB's survey.