CRTC Hearings: Canadian Association of Broadcasters Blames Media Downfall on Platforms

Lobbyist organization, the Canadian Association of Broadcasters, was before the CRTC claiming that platforms don’t contribute to the Canadian system.

Our coverage of the CRTC hearings in the implementation of the Online Streaming Act (formerly Bill C-11) continues. Before we continue, however, we should point out that these hearings took place before the mass layoffs at Bell, making it clear that the outcomes of the Online News Act and Online Streaming Act was going to make no difference on those jobs being “saved”. If anything, looking back at these hearings at this point is showcasing how well comments did or did not age so well.

Unlike the traditional media outlets, we’ve offered coverage from a huge range of stakeholders – even if it isn’t comprehensive. We’ve covered the hearings of Spotify, Paramount, Netflix, Amazon, Apple, Google/YouTube, Bell, Rogers, Corus, Shaftesbury, Digital First Canada, ACTRA, Unifor, FRIENDS, Michael Geist, Tubi, and CBC. While the coverage is second to none, we have decided to carry on with these hearings anyway.

Today, we are covering the hearing that involved the Canadian Association of Broadcasters (CAB). This is well known traditional media lobbying organization. If you want to follow along, the transcript of what was said can be found on the CRTC website. With that, let’s begin.

The lobbyist organization wasted little time in pushing out their wild ideas and conspiracy theories. They jumped into that pretty quickly into their opening statement:

10813 You have heard from Canadian broadcasters there is great urgency to move forward to a modernized regulatory framework that brings online players into the system. Canadian broadcasters have spent the past decade competing directly with unregulated foreign players for audiences, for subscribers, for the rights to content, and, increasingly, for advertisers.

10814 Foreign streamers have had a decade to enter the Canadian marketplace without hindrance, and have benefited greatly from their unfettered access to our country. And in recent years, their impact on essential aspects of the Canadian media business has magnified. Foreign streamers use Canadian revenues to help them play in a global media sandbox. And yes, they do produce programming here in Canada for an abundance of very good reasons that make great business sense for their companies’ bottom lines, but not necessarily in support of Canadian public policy objectives. Their investments in their own business interest existed before the update to the Broadcasting Act and will continue to make sense after this process.

10815 But those foreign service productions don’t create the same benefits as the contributions made by Canadian broadcasters. The entire crux of the update to the Broadcasting Act and this process and the processes to come is that what foreign players are drawing out of Canada is too far out of balance with what they return. Throughout these hearings, you have identified these as gaps: the places where those aspects of the system that Canadians consider essential cannot be sustained by market forces alone.

10816 There is no gap with a more urgent need ‑‑ nor as profound an impact ‑‑ than the support for Canadian news. When Canadians turn to broadcasters for content that reflects their lives and their communities, the news produced by journalists and many other creative contributors in their newsrooms are the most important Canadian stories they seek. Maintaining vital, independent, professional newsrooms in communities across the country is a fundamental commitment of Canada’s broadcasters. In an era of misinformation, it has never been more critical that we continue to support newsrooms that reflect Canadian communities.

10817 While news programming is very resonant with Canadian audiences, as you have heard, it is also difficult to monetize. Broadcasters have lost tens of millions of dollars over the last decade on news, and without urgent support, those newsrooms will be weakened and unsustainable. These gaps cannot and will not resolve themselves. They will not wait until such a time as the foreign streamers feel inclined to contribute. The need, to underline it again, is urgent. That’s why we support a modernized regulatory framework that brings online players into the system, one that ensures they make fair and equitable and commensurate contributions to support important broadcasting goals.

Yeah, these comments REALLY didn’t age well when the Bell layoffs happened weeks later where the company announced a $435 million profit and made those layoffs anyway, claiming that they were expecting higher profits. It really punctuates how wildly fabricated the lobbyist organizations picture of the situation really is. The picture the CAB presented was that those platform meanies are stealing all the money and the news organizations are going broke. They further suggested those poor helpless and defenceless broadcasters can’t do anything about this, claiming that this is a problem that the markets can’t sort out. Therefore, they need truckloads of free money just to stay afloat.

Obviously, that was never the case with the large players turning profits as seen with Bell and, even if they get everything they asked for, those layoffs are happening anyway. It ultimately proved that the layoffs aren’t the result of money problems – at least with the larger players.

Knowing now the events that unfolded since this hearing took place, even the basis for this lobbyist organization was not very solid in the first place. The rest of the arguments that were built on top of it, of course, easily collapses. The argument that the platforms are taking all the money in the market for themselves doesn’t hold water any more. This image of how everyone in the sector is suffering greatly because of this situation becomes laughable as a result. The argument that this is a situation that the market can’t sort out becomes comedy gold. What’s more, the remaining arguments becomes icing on the cake.

Clearly, it was all lies designed to furnish shareholders, CEOs, and hedge fund managers with additional millions of dollars. Nothing about this was about saving journalism in any way.

The organization went on to, unsurprisingly, support the bad policy idea of the initial base contribution which, in short, ransoms the Canadian audience for millions before allowing any player to enter into the Canadian marketplace. Their comments didn’t even stop there:

10819 We agree that an important early step is to establish an initial base contribution to specified funds. We also support the goal of a standardized contribution framework that tailors requirements to specific undertakings or groups, and we look forward to future processes to establish and implement the customized contribution regime.

10820 We will outline our specific proposal in a minute, but first, some key principles that we believe must guide your deliberations.

10821 First is that the old regulatory quid pro quo is broken. We need to acknowledge the magnitude of the change that has occurred in the audio and video marketplace and the profound impact that has had on Canada’s radio and television broadcasters. We have seen momentous changes in the ways consumers access content and massive shifts in the advertising market.

10822 When spectrum was scarce, holding a broadcasting licence was a privilege, and in return, broadcasters made significant commitments to support cultural and public policy goals. Today, we have moved into a world of abundance. There is no shortage of ways to access an almost unfathomable amount of content. And indeed, none of these foreign players were required to apply for the privilege of broadcasting in Canada nor to undertake commitments to access the Canadian market.

10823 So this has put CAB members in direct competition with unregulated global players. But, most pertinent to this hearing, those foreign players are taking billions of dollars of revenue out of the Canadian economy. In such an environment, broadcasters can no longer be the sole supporters of cultural policy goals. We need to reset the regulatory bargain and reprioritize the success of Canadian‑owned and ‑controlled broadcasters as the foundation of our domestic media marketplace.

Probably the only thing that is agreeable in these remarks is that the regulatory system is broken, but the solution proposed by this lobbyist organization would break it even further. As the legacy players would go on to demonstrate since these hearings took place, the legacy media organizations have little interest in making the investments that create jobs in the media sector. Instead, the larger players are far more interested in pumping up dividend payments to shareholders and increasing profit margins. This by leeching revenues from players who have actually spent the time and effort into attracting audiences and contributed to the creation of content people enjoy. In short, this is about propping up the legacy players who would rather carry on with business as usual from an era where the internet was, at best, just starting to take form and shape. Even as audiences tune out from traditional media players, the traditional media players feel entitled to revenues anyway even though they clearly didn’t earn those revenues.

Probably the punchline to that part of the opening remarks was the very next paragraph:

10824 Without viable and successful domestic broadcasting businesses, we will be forced increasingly to rely on the benevolence of foreign global media giants for whom Canada is a market to exploit and not their home. To help broadcasters be viable and successful in this context, they need the flexibility to adjust quickly to changing audiences, changing technologies and to allow them to contribute to the outcomes sought by the Commission in a way that is most appropriate to their unique business models. These priorities ‑‑ viability and flexibility ‑‑ are crucial to the ongoing success of the Canadian broadcasting system.

It’s laughable because what this lobbying organization is pushing for is a system that causes the legacy players to rely on the benevolence of the government for whom simply hands free money to these players, rewarding them for refusing to innovate for the last few decades.

What’s more, nothing was stopping the legacy players from creating online offerings from the very beginning, expanding to the online marketplace. Instead, they chose to simply conclude that the internet is just a passing fad and simply ignored the developments of the digital revolution. Even as Netflix rose in the marketplace, the legacy media types concluded that this was just a flash in the pan and such an organization would just burn out eventually. When that didn’t happen, the media companies, at best, scrambled to hobble together an online offering that offers a vastly inferior product to other platforms out there. They never had to wait on the CRTC to implement any sort of regulation that allowed them to enter into the online marketplace, yet this organization suggests that the CRTC has to make some grand decision.

What I think they really mean by the outcomes from the CRTC that “is most appropriate to their unique business models” is that they want a system where the legacy media companies must be able to freeload off of the platforms, extracting millions of dollars from them. Then, without needing to really compete, they are free to make online offerings or not because they won’t be dependent on making any sales or getting subscriptions. They can just rely on the companies actually innovating to make up the difference. This will allow the legacy large media companies to just kick back, relax, let the money roll in from the government, and they can just light up the dollar bills with a lighter and smoke that money while staring at a nice fire. That is what they are really after. Whenever they want more, they can threaten to lay off a number of employees so they can get even more free money out of the deal.

The organization went on to describe how they expect the CRTC to extract money on behalf of the freeloading media players:

10827 MS. YULL: Good morning.

10828 First, in step one, the CRTC should require large stand‑alone online undertakings to make contributions to specified Canadian funds. By “stand‑alone,” we mean online undertakings that are not affiliated with a Canadian broadcaster, and by “large,” we mean those earning more than 50 million from broadcasting activities in Canada. This would ensure that the largest streamers begin to contribute immediately.

10829 Second, we recommend that the level of contribution depend on their specific activities, as follows. Online undertakings that operate like broadcasting distribution undertakings ‑‑ virtual BDUs or aggregators ‑‑ should be subject to obligations that are similar to those applied to Canadian BDUs: we recommend five per cent. Online undertakings that operate like audiovisual programming undertakings ‑‑ like Netflix, Disney+, or Amazon Prime ‑‑ should be subject to levels of obligation that are similar to those applied to Canadian television undertakings: we recommend 20 per cent. Online audio undertakings such as Spotify or Apple Music should be subject to initial financial contributions similar to Canadian satellite radio and pay audio services: we recommend four per cent.

10830 Third, we recommend that these amounts be the overall financial contribution of stand‑alone online broadcasting undertakings and should apply now. Adjustments based on the other forms of contribution we’ve been hearing about at this hearing can be made in step two.

10831 Fourth, we recommend that the financial contributions of large stand‑alone online undertakings be directed to four funding buckets.

10832 We believe that no less than 30 per cent should be directed to funds that support the production of news and information programming by Canadian radio and television broadcasters.

The lobbyist organization then went on to conclude their remarks by basically saying that they want their money and they want it now:

10837 MR. DESJARDINS: The Commission has the ability now to ensure that funding from stand‑alone online undertakings supports important public policy objectives, including the production of news.

10838 At the same time, we wholeheartedly oppose the comments of the streaming platforms, who seek to delay the application of any contribution requirements. They need to make equitable and meaningful contributions now, helping to support Canada’s newsrooms and creators as radio and television broadcasters have done for decades.

10839 Finally, as you look to rebalance the regulatory framework in this phase, we don’t believe it is appropriate at this time to add any additional obligations to Canadian broadcasters.

Ultimately, it’s really difficult to treat lobbyist organizations seriously. It was hard before the Bell layoffs because their talking points never really added up. Now that the Bell layoffs have occurred, it made it crystal clear that there is little intention of preserving Canadian jobs or contributing to Canadian culture or telling Canadian stories. We’ve long known this is just a scheme to extract millions from those who actually innovated and was able to capitalize on the digital revolution. Legacy players simply want to carry on with business as usual and want free money to do so even as the audience moves on.

Drew Wilson on Twitter: @icecube85 and Facebook.