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Getting past the gates: the new economics of Canadian broadcasting b y Jim Patrick A thesis submitted to the Faculty of Graduate Studies in partial fulfillment of the requirements for the degree of Master of Arts, Mass Communication Carleton University Ottawa, Ontario © 2006 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Library and Bibliotheque et Archives Canada Archives Canada Published Heritage Direction du Branch Patrimoine de I'edition 395 Wellington Street 395, rue Wellington Ottawa ON K1A 0N4 Ottawa ON K1A 0N4 Canada Canada Your file Votre reference ISBN: 978-0-494-16437-2 Our file Notre reference ISBN: 978-0-494-16437-2 NOTICE: AVIS: The author has granted a non­ L'auteur a accorde une licence non exclusive exclusive license allowing Library permettant a la Bibliotheque et Archives and Archives Canada to reproduce,Canada de reproduire, publier, archiver, publish, archive, preserve, conserve,sauvegarder, conserver, transmettre au public communicate to the public by par telecommunication ou par I'lnternet, preter, telecommunication or on the Internet,distribuer et vendre des theses partout dans loan, distribute and sell theses le monde, a des fins commerciales ou autres, worldwide, for commercial or non­ sur support microforme, papier, electronique commercial purposes, in microform,et/ou autres formats. paper, electronic and/or any other formats. The author retains copyright L'auteur conserve la propriete du droit d'auteur ownership and moral rights in et des droits moraux qui protege cette these. this thesis. Neither the thesis Ni la these ni des extraits substantiels de nor substantial extracts from it celle-ci ne doivent etre imprimes ou autrement may be printed or otherwise reproduits sans son autorisation. reproduced without the author's permission. In compliance with the Canadian Conformement a la loi canadienne Privacy Act some supporting sur la protection de la vie privee, forms may have been removed quelques formulaires secondaires from this thesis. ont ete enleves de cette these. While these forms may be includedBien que ces formulaires in the document page count, aient inclus dans la pagination, their removal does not represent il n'y aura aucun contenu manquant. any loss of content from the thesis. i * i Canada Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Abstract This study tests conventional wisdom about why we regulate broadcasting in Canada. It is generally assumed that because economies of scale benefit American producers, content-based regulation is necessary, because Canadian content is beneficial in ways that American content is not. This assumption makes two unrelated claims: one economic, one cultural. Either could be true without the other being so. It is true that American producers enjoy natural economic advantages over Canadian producers, but that has no bearing on the ‘national character’ of the content. At the same time, it cannot be reasonably claimed that a producer’s birthplace has any automatic bearing on the ‘values’ embodied in his or her work. Our current framework needs to be updated to separate the economic rationale from the cultural, and to reflect the open communications environment developing around it. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Acknowledgements My thanks to Ross Eamon, Michael Dorland, Charlene Elliot, Allan Clarke and Andrew Cardozo, whose classes shaped the approach and subject matter of this thesis. And of course to Paul Attallah, who advised and challenged me every step of the way. My thanks to Jason Bristow and Ken Goldstein, frequent and trusted sounding boards. Also to my friends and colleagues at the Canadian Association of Broadcasters, an endless supply of advice and expertise. My thanks to friends and family for putting up with me while I researched this thesis, and especially to Natalie, who put up with me while I wrote it. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. Table of contents Abstract....................................................................................................................................... ii Acknowledgements.................................................................................................................. iii Table of contents......................................................................................................................iv Introduction................................................................................................................................ 1 PART ONE Chapter one: the theory chapter............................................................................................... 37 Chapter two: economic assumptions.......................................................................................52 Chapter three: cultural assumptions.........................................................................................62 PART TWO Chapter four: the history of policy chapter.............................................................................81 Chapter five: the new economics of broadcasting...............................................................122 Chapter six: Conclusion...........................................................................................................147 Bibliography............................................................................................................................. 164 Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 1 Introduction “ With our relatively small population thinly dispersed over a vast land mass, and with a globally dominant culture and economy located immediately south of the border, we look to broadcasting and telecommunications to help make Canada whole - in both a societal and economic sense. ” Charles Dalfen, Chair, CRTC 20041 We are dealing with an old story rather than a new one ... the talk of a communications revolution and exalted hopes and equally exaggerated fears o f the media, are repetitions so predictable as to suggest undeviating corridors o f thought. James Carey2 Imagine broadcasting in Canada as a wide open plain, dominated by a walled fortress. Broadcast programming is produced on one side of the plain, the audience lives on the other. In the early days of regulated broadcasting, there were very few roads the broadcaster could use to get to the audience, and they all ran straight through the fortress. This made it easy to regulate the traffic between broadcasters and audiences: all goods moving through the policy gates were bought and sold at regulated prices, in regulated packages. Market access, advertising, and the nationality of content and its creators 1 Chair of the CRTC, in a speech to the Canadian Association of Broadcasters annual convention, Ottawa, November 29, 2004. 2 FromCommunication and Culture: Essays on Media and Society. New York: Routledge. Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 2 were all strictly controlled. Because all broadcasting traffic was considered to use a public throughway, tolls were exacted in the form of fees and quotas. Some traffic predated those walls, and simply bypassed them: over the air signals from border stations in the United States have always avoided our various customs and tariffs. Maintenance of the walls was made vastly easier by the invention of cable, which as a closed system, presented obvious places to install gates and tolls. Whenever a new technology has made it easier for programming to bypass our policy space, we have responded by attempting to push the walls outward, capturing as much of the new commerce as possible, directing the traffic along predetermined routes, in accordance with various political priorities. Today, there are plenty of ways to move content from one side of the plain to the other without passing through those gates. Wireless technologies are making it increasingly difficult to limit the transmission of a signal to a particular user, device, timeframe, or location. Broadcasting is moving increasingly to private networks, and away from publicly-owned airwaves, at least in the sense we have always understood them. Programming used to be transmitted in bulk, passing through the fortress and its regulations, to large audiences who generally consumed it all at once, on the same device. Arguably, the household VCR was the first time-shifting device. It allowed any programming to be stored, reused, shared, or rented, thereby removing its distribution and Reproduced with permission of the copyright owner. Further reproduction prohibited without permission. 3 consumption from the standard channels which had previously existed. Audio-visual content was rarely portable however, as it was generally limited to the home, or in the case of radio, to the car stereo. The Sony Walkman was an early example of content beginning to become portable as it moved away from the home and towards the person. Audiences were beginning to be more active in their choices, although the commerce of the commercial communications industry was still largely concentrated on serving a passive consumer. The new commerce of communications is video-on-demand (VOD), digital video recorders (DVRs), pocket satellite radio receivers, and episodes of hit prime-time drama on

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