Cabinet petitions against CBC licence may force Liberals to refocus on the public broadcaster

August 12, 2022

Opponents of the CRTC’s renewal of the CBC’s television licence have petitioned federal cabinet to veto the controversial ruling. The cabinet’s decision is due in early December. 

Appeals of CRTC licensing decisions routinely fail, but this time may be different given the far reaching consequences of the CRTC removing key conditions of licence supporting Canadian programming.

The cumulative message from 18 petitions filed by many of the industry groups that participated in the Commission’s licence proceeding is that the results of its 271-page ruling are a mess.

Despite broad-based support for the Commission ordering the CBC to spend more on programming from equity-seeking groups, the petitioners say the CRTC got it badly wrong on local news; badly wrong on support for independently produced Programs of National Interest (PNI); badly wrong on prime-time broadcasting of Canadian content; and badly wrong on striking the balance between encouraging the CBC’s migration to digital while maintaining a vigorous conventional TV platform. 

And that’s only a partial list. An exhaustive review of licence conditions can be found here.

To give some context to the controversy, it’s important to look to Canada’s national broadcasting policy that Parliament wrote into section 3(1) of the Broadcasting Act. 

That policy makes the CBC the federal flagship of Canadian culture and tells the CRTC what to enforce:

(l) the Canadian Broadcasting Corporation, as the national public broadcaster, should provide radio and television services incorporating a wide range of programming that informs, enlightens and entertains;

(m) the programming provided by the Corporation should

(i) be predominantly and distinctively Canadian,

(ii) reflect Canada and its regions to national and regional audiences, while serving the special needs of those regions,

(iii) actively contribute to the flow and exchange of cultural expression,

(iv) be in English and in French, reflecting the different needs and circumstances of each official language community, including the particular needs and circumstances of English and French linguistic minorities,

(v) strive to be of equivalent quality in English and in French,

(vi) contribute to shared national consciousness and identity,

(vii) be made available throughout Canada by the most appropriate and efficient means and as resources become available for the purpose, and

(viii) reflect the multicultural and multiracial nature of Canada;

By contrast Parliament conveyed to private broadcasters more modest CanCon obligations, balanced against commercial considerations:

(s) private networks and programming undertakings should, to an extent consistent with the financial and other resources available to them,

(i) contribute significantly to the creation and presentation of Canadian programming, and

(ii) be responsive to the evolving demands of the public; 

It’s not surprising then that the CRTC’s obligations to spend on Canadian programming (“CPE”) are far greater for the CBC than private broadcasters: the CBC’s 85% of total programming expenses compares to only 30% of total revenue for the big private networks.

In addition to the CBC’s high level of overall spending on Canadian content —commensurate with its $1.3 billion in federal funding— the CRTC has long imposed genre-specific conditions of licence for priority programming on linear TV: local news, PNI, children’s shows, French and official minority language programming, Canadian feature films, and so on.

Until this recent ruling, the Commission also required the CBC to showcase Canadian content during prime time evening hours (80% of programming compared to 50% for private networks).

Also until this ruling, the Commission obliged the CBC to buy 75% of its Programs of National Interest from independent Canadian producers. As the largest purchaser of independent Canadian programming, the CBC sustains an ecosystem of homegrown producers who create authentic Canadian shows.

The CRTC’s new ruling establishes an overall CPE of 85% for the CBC, now to be shared by both linear and digital video platforms, and eliminates most of the existing licence conditions governing programming for priority genres. The exception is the Commission’s newly created and (mostly) well received spending envelopes for programming from racialized, Indigenous, LGBTQ and disabled Canadians.

The Commission’s reasoning behind this deregulation is at times challenging. 

As pointed out in the petition filed by the Forum for Research and Policy in Communications, this was very much in evidence in the Commission’s rejection of a proposed network-wide spending envelope for local news (first created by the Commission for private networks in 2017) and its subsequent repeal of the licence condition requiring minimum weekly hours of local programming at the CBC’s largest stations.

The Commission explained its rejection of adopting the network-wide spending envelope thus:

433. If the CBC can fulfill its obligations (relating, for example, to regional relevance, balanced news, and hours of local programming) while reducing related news expenditures, it should not be prevented from doing so. Although the imposition of a condition of licence would provide a sustained commitment on the part of the CBC to news and local programming across all platforms, while giving the CBC the flexibility needed to adjust expenditures in response to fluctuations in revenues or expenses, it would not address concerns regarding spending in metropolitan versus non-metropolitan markets, and would not necessarily mean that the CBC is directing spending to local programming that includes news. Further, while much news-related spending can be planned, it must be recognized that a significant portion of the spending is either cyclical (such as election periods) or related to breaking news or long-term events (such as the pandemic). 

434. In light of the above, the Commission finds that it would not be appropriate at this time to impose on the CBC an expenditure requirement relating to news programming.

It appears the Commission rejected a network-wide news spending envelope because it might allow the CBC to cannibalize budgets from some stations to support others.

Not being willing to trust the CBC on this point, the Commission then turned around and expressed such a high degree of trust in the Corporation that it was willing to remove long standing conditions of licence requiring minimum weekly hours of local programming for its seven metropolitan stations in Vancouver, Calgary, Edmonton, Toronto, Ottawa and Montreal despite undisputed evidence placed before it of declining news production:

454. The Commission acknowledges the concerns raised regarding the reduction in local programming broadcast on the CBC’s English-language services. However, even though there was a decline in the number of hours of local programming offered on the CBC’s licensed television services, it has still met and well exceeded its conditions of licence in terms of hours of local programming broadcast. 

455. Furthermore, the Commission is not convinced that if it were to accept the CBC’s modified conditions of licence [regarding the existing minimum hours of local programming], the CBC’s actual performance on its conventional television stations would change dramatically, since the Canadian public still consumes a great deal of content on its licensed services. Further, the Commission notes that the CBC’s production studios are located in metropolitan markets, and that those markets are therefore very likely to be adequately served by the CBC’s local programming…

459. After reviewing the CBC’s proposal, for the reasons set out above, the Commission is confident that the CBC will continue to broadcast local programming that is predominantly news in both the English- and French-language metropolitan markets. Accordingly, the Commission finds that imposing a condition of licence relating to the broadcast of local programming in metropolitan markets is not necessary for the CBC to achieve the above-noted outcome in this regard.

It’s an ambiguous policy conclusion. 

Either the Commission is inviting the CBC to cut local news in large cities to preserve news budgets in smaller markets, or the Commission has a Polyannish confidence that the CBC will not reduce news programming in the metropolitan markets despite having already done so and now having the regulatory freedom to do more.

Either way, the Commission has left the CBC’s metropolitan stations bereft of licence conditions for both spending and exhibition of local news. Private network stations in those six cities retain both. When the private network licences are up for renewal two years from now the private broadcasters will howl for relief. 

That’s not the only knock-on effect of this CBC ruling on the regulation of the private stations.

As the petition filed by the Canadian Association of Broadcasters says, the CRTC’s repeal of the CBC’s obligation to schedule Canadian programming during prime time means it can schedule more lucrative US programming in its head-to-head competition against private networks which are still obliged to schedule Canadian shows for 50% of that window.

By now we should be seeing the pattern. 

As several of the petitioners point out, the Commission’s repeal of many CBC licence conditions will be demanded by competing private broadcasters in 2024. Not surprisingly petitioners bluntly decry the CBC ruling as a “stealth policy hearing” in which significant deregulation of private broadcasting is rendered a fait accompli. 

A similar point about stealth policy change is made by the public interest group Friends in reference to the CBC being permitted to share up to 100% of its CPE obligations over both regulated linear TV and unregulated Internet TV. 

The Commission’s first foray into setting ground rules for combined linear-online TV operations before Bill C-11 has even passed into law creates facts on the ground when the CRTC issues a Notice of Consultation to implement Bill C-11’s regulation of online undertakings. Just as an example, the Commission’s decision to repeal prime time exhibition rules for linear TV will encourage YouTube to argue for watering down any proposals on “discoverability” of online content.

The Commission’s choice of the CBC licence renewal to signal a system-wide deregulatory tack also raises the question of whether it’s in line with what the government has in mind for the public broadcaster in the first place. 

The Prime Minister’s mandate letter to Heritage Minister Pablo Rodriguez following the 2021 election gives explicit instructions:

• Modernize CBC/Radio-Canada, proceeding in a manner that respects the public broadcaster’s independence by:
  • Updating CBC/Radio-Canada’s mandate to ensure that it meets the needs and expectations of Canadian audiences, with unique programming that distinguishes it from private broadcasters;
  • Reaffirming its role as public broadcaster in protecting and promoting the French language and francophone cultures in Quebec and across the country;
  • Increasing the production of national, regional and local news;
  • Strengthening Radio Canada International, so that it can continue to advocate for peace, democracy and universal values on the world stage;
  • Ensuring that Indigenous voices and cultures are present on our screens and radios;
  • Bringing Canada’s television and film productions to the world stage; and
  • Providing additional funding to make it less reliant on private advertising, with a goal of eliminating advertising during news and other public affairs shows.

On the latter point, the Liberal election platform promised $100M annually in additional funding. That funding did not find its way into the Finance Minister’s “restraint budget” in April but the outstanding promise is a culmination of several years of advocacy (including CBC management as recently as 2016) for the CBC to distinguish itself as a public broadcaster by going ad-free, like the better funded BBC.

The silver lining in the CRTC’s ruling on the CBC licence, and the subsequent petition to cabinet, is that it challenges the Minister and his cabinet colleagues to engage in the hands-on review of the CBC contemplated in the PM’s mandate letter. 

Federal cabinet also has the opportunity to think carefully about the intended or unintended consequences of the CBC ruling for the regulation of private domestic broadcasters and also the regulation of online undertakings that the government has fought so hard to introduce in Bill C-11.

This may be a big increase in workload for a Heritage Minister already shepherding three Internet Bills through the House. An alternative proposed by one of the petitioners is for cabinet to veto the CRTC’s ruling (with the exception of the spending envelopes for equity-seeking programming) and instruct the Commission to extend the existing CBC licence until after the Commission has implemented Bill C-11. This would also give Heritage and Finance more time to chart a course for the public broadcaster.

***

This post is already too long. The Commission’s majority and dissenting opinions are 271 pages long covering a long list of repealed licence conditions. The 18 petitions are just as encyclopaedic.

For policy junkies, you can find the petitions hosted on the FRPC’s website.

As a postscript for those of you whose patience is not exhausted yet, at least two more points raised by petitioners are worth mentioning.

PIAC has cited statistics demonstrating the large audience still devoted to linear TV despite years of cord-shaving and cord-nevering. 

That age-skewed audience is characterized by a strong preference for linear television and confirmed resistance to Internet adoption. 

That has real consequences depending on how far the CBC exploits its new freedom to shift resources from linear to digital and especially away from metropolitan local stations: home to nearly 40% of the Canadian population.

Another issue is the CBC’s expansion of its advertorial program Tandem, CBC President Catherine Tait’s doubling down on a commercially competitive public broadcaster. 

Unthinkable only a few years ago when the previous CBC President advocated for an ad-free CBC, Tait is taking the Corporation in the opposite direction over the objections of her own newsrooms and without a mandate from anyone outside her own office. While advertorial and sponsored content is common-place in commercial news organizations, it is not in public broadcasting. 

Most petitioners are asking Cabinet to review the Commission’s decision not to ban Tandem.