The View From the Top – Part II

Last month we ran part 1 of the BCAB’s Presidents Panel where six of Canada’s broadcast heavyweights got together to discuss radio, its future and the challenges faced by broadcasters today. Here is the second part of the Presidents Panel.

John Parikhal: “What about copyright? It’s creeping up and taking money out of your pockets. You’re presidents. What can you do about it? What can you do about this constant creep by copyright? Is there anything or is it just a fact of life they’re gonna keep squeezing more money out of you every year.”

Jacques Parisien: “I don’t accept it as a fact of life but there’s not much we can do other than what we’re doing right now. So as a group we’re challenging the decisions in front of the Courts. We have tabled also the suggestion that the CRTC and the Copyright Board should come together because they are so linked and the Commission has a much better understanding of the broadcasting television and radio landscape; the Copyright Board doesn’t. They don’t understand what we’re doing, they don’t understand our needs. It’s a very rigid, legislative Board that has its reason to be and they are there to defend the group interest, but it’s not level right now. If they were to integrate it into the Commission, it would make a lot of sense.”

Rick Arnish: “The industry has to continue doing what it’s doing. With the demise of the CAB, the industry as a whole has gotten together and we have some very good people that are fronting the copyright agenda for the industry in Canada. We have to continue to drive that message home to the Copyright Board even though they may not want to listen to it. We need to get MPs to come visit our plants which a lot of people at this table have done. The ephemeral rights issue that we hoped was going to be addressed with Bill C32 died on the Order Paper with the federal election. We felt at the time it may get passed in our favour, that we in the future won’t have to pay for the ephemeral reproduction rate of downloading the music to our servers. I think one way we can do that is talk to our MPs, get them into our plant, show them what we are doing and drive the message through to the Government, to the Copyright Board, that this is an unfair tax on the broadcast industry.”

John: “What new technology are you using to improve your business?

Chris Pandoff: “We started experimenting with the web as early as the mid 90s and we thought it was a great place to drop promotions without clouding up the airways and that was long before social networking or streaming. Now ten years later, our streaming statistics are breathtaking from the standpoint of the amount of tuning and the uptake every year to streaming across the country and I think one of the things for AM stations, in particular news-talk AM stations, when people arrive to work at 9:00 and want to continue to listen to a panel but can’t because of restrictions on AM, the streaming is really important so they can listen at their desks. I said three things when I convinced our CEO I should have this job which were that we have to develop our talent, we have to understand our market and drive the learning curve into digital space because while we don’t know what the device will be, we just need to understand what content should go on that device and be better at what we do.”

Terry Coles: “I’m more concerned about the core of our business. Yesterday, Valerie did an excellent job of really getting down to the heart of what our business is all about and that’s content. As long as our content is good and we’re improving our content and we’re developing personalities in our business, how people get it is another question. They’re not going to look for you unless you’ve got something to offer of some benefit to them. We’ve got to look for personality in radio, talent who can entertain people and not just play the music. It’s really getting down to what we’re all about and if we look at the psychology of the human person, we don’t listen or watch technology. It’s what that technology may deliver to us. We can’t lose sight of the fact that content is what we’re all about and we have to concentrate on that and develop our people and our talent and make that happen.”

John: “So streaming is exciting and it’s helping and it’s getting it out there. The flip side of streaming for music is of course, the more successful you are, the less successful you are. That is, you have to pay more for stream to run, you have to pay more for copyright for each person. How do you deal with that? How do you deal with the fact that the system is being set up so that the broadcast model is turned on its head when you stream and instead of getting money for getting more listeners, which is what the broadcast model is, you pay more money for getting more listeners?”

Where’s the trade-off on that?”

Chris Pandoff: “Right now, it’s one way. It’s a cost issue. Our streaming cost last year was just under $900,000 for all 37 stations across the country.  The question then is, it’s a quick million dollars to the bottom line but at the risk of what in the future? So right now, it’s kind of necessary space, you need to be there to see what in fact materializes in the technological world. If our listeners want it on that device, we have to deal with providing it to them. “

Chris Gordon: “At some point it becomes more cost effective when enough people are actually streaming service. The vast majority of people coming to a radio website are coming to stream your audio. The vast majority of people coming to a television website are coming to watch videos. That’s only going to continue. As long as we’re there in that space, we’ll be fine. There will be a tipping point. But we do need to add more content while we’re there.”

John: “Do you feel like the royalty rates are fair or are they too high?”

Jacques Parisien: “In our group, yes, technology supports content, but we see it all over the place also. When we bought some of the Standard properties, some of the markets didn’t even have Outlook so we rolled out Outlook, we rolled out Wide Orbit and managing inventory and traffic. Technology is not only a content issue, it’s an operating issue for radio operators and television operators and I think we have to embrace it. It makes more sense to invest in technology. “

John: “I’ve heard about content making content better. What content is really working for you? Where are you putting your focus on content within your organization that’s really going to grow the business and satisfy the customer?“

Rick Arnish: “With local television, we’ve made a real concerted effort and you can see that across the country with lots of small, medium, and large market television stations, to spend a lot of time, money and effort to create great content from a local perspective. Not just talking about TV info and programming but also what we’re doing in the communities we’re licensed to serve. I think our content has improved with technology and the people we employ. We’ve certainly challenged them and empowered our television stations to create great content – you tell us what you need and we’ll give you the tools. Because we’re in small markets, we don’t have the wherewithal to produce dramas and sit-coms but our big lift in local television is all about news and information and I think we’ve done a really good job. Our television stations have done a great job in being local, local, local. The challenge I throw out is I would like to see our local evening newscast be all local. Nothing from a national service. I don’t know that we’ll ever accomplish that, but I think we’d really accomplish something with that. We can now upload our evening newscasts so people can watch when they want.”

Paul Ski: “In the digital world, there’s a lot of chaotic activity, and as a result, more than ever, the brands we have (really strong local brands) as we get more and more competition, these brands become more and more important. Brands within brands, morning shows, go above whatever the station produces at the time. Something we’ve mentioned before – the war on talent is over and talent won. We’re going to go forward and be successful if we have these talented shows and the brands and most of us have that.”

Chris Gordon: “I think it’s an issue of identifying what the future might look like and if you think about a pendulum, I’m sure most people here on the panel are thinking less about how to automate more, voicetrack more, network more, we’re actually struggling with how to retrain, develop and grow more talent, and be live on the radio more. While you haven’t seen it translated in hours per week yet, the thought process is the beginning of that and certainly we’ll see some changes over the next 5 to 10 years.”

John: “There’s a real shortage of people out there training talent. It sounds to me when I hear content, it sounds like talent are a really important part of content.”

Chris Gordon: “We have the experience in the United States to educate us on what can happen if you don’t do that. Which is essentially, where they’re at they’ve not destroyed the industry, but certainly put themselves in a hole to make it a lot more difficult to return. We have the benefit of watching that happen in the downturns and not making the same mistakes.”

Terry Coles: “I think one of the things we have to worry about, we talk about our personalities on the radio and entertaining our audiences, I think we have to concentrate a lot too on commercial production in radio. I think there’s more creativity required. 80% of our business is local business. So we concentrate and we have a department that looks at all of our markets in terms of improving our commercial content, because commercials can also be entertaining and not necessarily an intrusion in the life of the listener. So I think there’s an area there that we can improve and make our stations sound better, be better for the advertiser and we open the door for more creativity.”

John: “What are you doing within your organizations to make commercials better?”

Chris Pandoff: “We just did a fairly major restructuring in our company to eliminate some of the administrative side of the business and put money back into operating. We’re opening a Centre of Excellence, which is production, writing, creativity, not to try and take away those resources from stations, but to try to aggregate the talent inside of our company to produce better creative. Some of it will be station imaging but a large part of it will be client focused and presentation. We have incredible levels of equipment available but we haven’t trained our people well enough to use that or exposed them to enough creativity.”

Terry Coles: “At Vista we have established a department that assists all of our stations in local commercial production. The problem is that because we work in small and medium markets, once you train somebody to be very good, the big boys come and grab them and they’re gone and you have to start over again. That’s not a bad thing because you open up doors for a lot of young people to develop their careers. We have the groundwork there to develop these people and give them the opportunity and through an organized department develop commercial production.”

Question from audience: “How much of the fate of Canadian radio is linked to the fate of US radio, or is it not linked at all? Can we surge ahead while they’re having troubles?”

Jacques Parisien: “I think we are put on notice by the way American radio has behaved in the last decade, and I think all of us at the table and in this room have read all the reports and financial data that really shows us from the States what not to do. And we’ve been very resilient, especially during the 2008/2009 recession in radio, and I think just doing what we’re doing and focusing on doing good content, staying very very local, staying connected to our communities, like most of us do, will allow us to continue that way. When I said at the beginning I’m bullish about radio, I see radio revenues increasing by low, mid digits for a few years, and I think if you look at the Price Waterhouse projections for the media industry, they also see radio increasing by about 5% for the next few years, and that’s if we continue applying the same recipe and keeping the same focus as we have in the last 4 or 5 years, which worked out well for us. Sure we can improve, sure we can do more, sure we can invest more, but certainly we’ve learned a lot from the Americans about what not to do.”

Chris Gordon: “A lot of American big market clusters have gotten some pretty high margins pretty fast, but now they’re finding out that clients don’t really care about a voice tracked radio station from Los Angeles, so we have to continue to invest in content and people to make that difference.”

Rick Arnish:  “I think in Canada we should be thankful that we have the CRTC. We do complain from time to time about different regulations that they have told us that we have to follow, but I think at the end of the day, if we were an unregulated industry, as it is to a degree in the United States, in a Kelowna market, as much as we talk and I agree with Terry and others here that over licensing is a very big concern across the country, we might have in Kelowna, rather than 7 commercial radio stations, we might have a dozen, and that is not good for the industry going forward, because that does cost jobs. We would be automated galore, we would have probably a morning show and everything else would be automated, but I think, because the regulator has looked at it with a fairly open vision, we’ve been allowed in Canada to grow our industry an awful lot better and I think we’re in a stronger state in this country than our American counterparts because of it.”

Jacques Parisien: “I think you’re right and I think we should also take note of what is happening out there with non-regulated content broadcasters, mostly coming from the States. I think Netflix is a big issue for everyone in this room because it is content offered to Canadian consumers who are paying for it without having any Cancon requirements which we all have and without putting back in the Canadian broadcasting system any money like we all do. So there’s a major issue there. The Commission knows. We’re having debates with the Commission as to how to tackle this because we can’t regulate the internet. We all know that. But we have to come to grips with a formula whereas anyone trying to sell to our consumers should make a contribution to the system and should have the same regulation requirements as we have so we have a level playing field.”

Chris Pandoff: “The biggest risk for us with the United States is the adoption of technology. I gather that on the AM band you’re able to do digital transmission on the AM band, and that India with 700 million people has adopted that as a standard. So I think the risk for us in Canada is that if we decide to go a particular way, depends what happens to the 300 million people next door.”

Paul Ski: “I don’t think there’s a great connection these days with US radio. I think as well as looking outside of our industry for best practices, we need to look for worst practices too and make sure we don’t do those and some of those worst practices are those things that have happened in the US. There was a time when all of us used to look to the US for all of the answers for our local markets in terms of formatics and changes we might make in our radio stations and what was new, but quite a few years ago now we all looked at doing research in our own markets, getting feedback from all of the listeners to make sure that whatever we did on our radio stations mirrored or was a reflection of what those listeners wanted and the most successful stations are those that do reflect what is wanted in the local market as opposed to what may be happening in LA or New York.”

Audience Question: “Can you put pressure on BBM to help educate buyers in Canada now that we have diaries in some markets and people meters in others to help us to get out of this downward pressure on our rate we’ve created for ourselves?”

Chris Pandoff: “The short answer is yes we can, but the other part of it is every one of us has a sales person out there presenting the data, so it’s incumbent on the individual companies to provide some of that education. We do compete with each other, and in the case of some situations, where you feel you have an advantage by manipulating the data, that happens. So I think it’s a shared accountability. We certainly can exercise pressure, but remember too, that at BBM all the committees that establish these policies, everybody in this room has a voice on those committees. It’s not like Jim McLeod tells us what we gotta do, although he tries. I know he’s got a point of view and a strong one, but they do consult a great deal at the committee process, and as Jacques pointed out, maybe we need to change some of that process because we do own the industry.”

Audience: As competitors, and with the changes in the CAB over the last few years, how easy do you guys now find it to present a united front when dealing with the CRTC and regulations? The second question was with the new Conservative majority, it might be a bit paranoid, but are you guys concerned that maybe American ownership might come into the market?

Chris Gordon: All of us at the table share two things: Copyright and spectrum management. Beyond that it’s up to the individual companies to establish whatever platforms and anything outside those two areas that there’s not common agreement on.

Rick Arnish: I was very disappointed, as you heard me say earlier, about the demise of the CAB and I think it certainly was a television issue that prompted the demise of the CAB. We don’t have a common voice right now in television; we don’t have a common voice in radio. I understand why the TV guys wanted to leave the CAB but we’ve got a big void here with the Commission struggling at times, in my opinion, to learn more about our industry. It’s great to see the Commissioners here and Commission staff at the BCAB conference. I think everybody on this panel encourages staff and Commissioners to get out to the regions and visit stations, but we don’t have a common voice and I think that’s a real negative for the industry, quite frankly. A lot of us in the radio side of the business have formed a coalition from time to time in the intervention process. We’ve gotten five or six companies together like we do with copyright to have a common voice, but I think the industry has somewhat lost something by not having a national association. There’s big issues out there that I think there could be a more common front on. And who knows? The CAB really isn’t dead. There is a working, active board of directors. Everybody on this panel pays money into the CAB. Who knows? It might be resurrected at some point in time to be a little better than it is today.

John: Would you welcome, or what do you think of the idea of more American ownership of Canadian media?

Terry Coles: I don’t see what the connection is between a Conservative majority and American ownership. There’s an implied relationship there and I don’t think it exists. And I don’t really think that it’ll be permitted. I think majority control will always be in this country when you’re talking about cultural industry.

John: I don’t think they would either. In America, I’m Canadian but I live now in the US, so I work both sides of the border and a lot of other countries. Canada is much healthier in banking and in radio. The reason that it’s healthy in radio is that they’re not playing musical chairs. In the US they’re playing musical chairs and someone is going to end up with no chair. There have been geniuses like Robert Sillerman who’ve pulled the chairs out on people two or three times in roll-ups there and left people with nothing. It seems to be a game they like to play and they all believe they’re not going to be the one without the chair. In Canada, I do find a much more stable responsible industry, and I don’t think it comes from the fact we have a CRTC. I really do think it comes from the fact, and I hate to say it, we just try and be better people, and it really shows in our broadcasting and I’m encouraged by that.

Paul Ski: Just to add, I think we shouldn’t forget that most of the broadcast companies, certainly in Canada, have been family owned. And I think that makes a difference in terms of looking ahead just three months. I mean they’re able to look ahead maybe a year, 2 years, 3 years…

Chris Pandoff: So was Clear Channel. I think we’re slower, steadier getting to where we get and it’s really paid off this time really really well.

Audience Question: (Trina Wood, News 1130 Vancouver): arguably, half the people that we try and reach on a daily basis are women, and also arguably, most of the decision making in a family, as far as finances go, comes from women. I think we’re completely transparent on the ground as far as who our faces are when we are talking to the public – men, women, it doesn’t really matter, but how important do you feel it is for your companies to have women in the top management positions, and how do you think your companies are doing to attract those women?

Jacques Parisien: I thought you were going to ask why is there not a woman at this table? I can talk about our company. We take it very seriously, and if I would have my management group here you would see a few women on it in high levels, and not only service levels. We have general managers that are women in many markets. We have senior regulatory, senior legal VPs, HR, all women. We take it seriously and they keep the pressure on us to keep it that way.

Rick Arnish: That’s a great question. I think about that a lot. I think our company could do a better job in that area. We have a lot of people like Jacques mentioned that are coming up through the ranks, we’re trying to train people, but I think we can do a better job of that now and in the future and that’s something we have to focus on as an industry.

Chris Pandoff: One of the differentiating factors between the two gentlemen are private company vs. a public company. So sometimes a public company has a little bit more pressure on it to be more in tune with the times, if you will. So things like Women in Leadership programs, promoting the best person, which in many cases happens to be female, to the right position is a large part of it and I think you’re seeing a dramatic change with regard to the attitude today vs. even five years ago.

Terry Coles: Our CEO is a woman at Vista – Margo McKayla. We have women in various responsibility positions. I don’t look at should I have a woman or should I have a man in a position. I look at the best talent. Who can do the best job. If more women can do it, they’ll be there. My years at YTV, the majority of my Vice Presidents were women.

Pau Ski: Further to what Chris says, I think it’s getting better than it was, quite frankly. Certainly, as part of the Senior Management team we have at Rogers, women are better represented these days, and I think there are more women coming into the ranks now than there were before, certainly on the programming end of things and the management end of things. Our VP of Programming for the country is female and she’s very very good at what she does. I think it hasn’t been great but I think it’s getting better every day.

Chris Gordon: I would add diversity to that as well, not just women. We have to identify people in our organization that can do great things and develop best practices.

Jay Albright: How can we improve the top line and how can we improve that return on investment?

Jacques Parisien: In Canada in the last few years, we have grown top line. And I think again, as we’ve all mentioned previously, that if we continue doing the good job that we’ve done and even better, and invest more in content and technology and all that, we will continue to grow top line. It will not grow by double digits. No question about that. We will never go back to that. Certainly not in the short term, but I think we have good growth ahead of us if we just continue doing a good job of it.

Paul Ski:  On the revenue side, I think what we have to look at is maybe a retraining of the sales process and sales approach as to how we find solutions for our advertisers and how we present integrated solutions to them and the types of things they really want to hear from us. I think again, if we try to live on what we’ve done in the past, I think we’ll wake up one day and find ourselves beautifully equipped to fail, quite frankly, and compete in a world that doesn’t exist. I think that we have to be smarter on how we allocate our resources and be smart about that. We haven’t had as much resources as we’ve had in the past. We won’t have as much in the future. So, I think the winners will be those that find the best way to allocate the resources they have to work with.

Conclusion: This was an interesting glimpse into the thinking of the leaders of the major broadcasting companies in Canada and we can learn a lot from carefully reading their responses to some of the key questions that all broadcasters in Canada should be concerned about. I was encouraged by the number of CEO’s who said their companies need to invest more in their people and in training. It will be interesting to see if these companies do this or will they push that money to the bottom line.