CBC disappointed by CRTC decision to halt Radio 2 ads

The federal broadcast regulator on Wednesday ruled against the CBC's application for an extension to continue commercial advertising on Radio 2 and ICI Musique.

Regulator not satisfied public broadcaster has maintained investment levels in radio

The CBC's ability to air paid advertising on CBC Radio 2 and ICI Musique should end this month, the CRTC has ruled. (Nathan Denette/Canadian Press)

The federal broadcast regulator on Wednesday ruled against the CBC's application for an extension to continue commercial advertising on Radio 2 and ICI Musique.

The CRTC decided to allow advertising for a three-year period, until the end of August 2016, with the condition ads not exceed more than four minutes in a broadcast hour.

The ruling required that advertising on CBC not have an undue negative impact on advertising markets; that advertising would not be unduly disruptive to listeners; that CBC's level of investment in radio be maintained; and that the variety and diversity of Radio 2 and ICI Musique's services not be diminished.

In its decision Wednesday, the regulator advised that the CBC had satisfied three of the four requirements but that it had failed to maintain the investment in radio, citing a $22 million drop in operating expenses over a two-year period up to the end of the 2014-15 broadcast year. The regulatory body also noted that the ad revenue CBC took in was below projections.

The CBC expressed disappointment in the decision, saying in a statement it demonstrates "a lack of understanding about the reality of public broadcasting."

"Quite simply, the CRTC's decision means CBC/Radio-Canada has fewer resources to invest in the programs and services it provides to Canadians," spokeswoman Alexandra Fortier said.

The CBC depends on a combination of government funding and commercial revenue, Fortier said, and the decision will hamper the broadcaster's ability to pursue its strategic priorities into the next decade.

"By cutting off a source of revenue, the CRTC is simply ensuring there are fewer resources available to do that," she said. "That does not help CBC/Radio-Canada serve Canadians."

CBC in the spring applied for a two-year extension of the current arrangement, arguing that, while the Liberal government pledged in its budget to invest $675 million to the corporation over a five-year period, budget cuts in previous years and the decline in the television ad market, among other factors, made the continuation of stable radio market advertising revenues necessary.

The ruling is to go into effect on Thursday.

"That is simply not in keeping with modern business practices," said Fortier. "We will make the required changes to our programming schedule and wind down this part of our business, however this simply cannot be completed by the end of day today."

Historically, advertising was allowed on CBC radio stations until a 1974 decision by the CRTC.

Earlier this decade, the CBC applied to be allowed unlimited advertising space on those two networks until 2018, but the regulator opted for a three-year period with a cap on how much time ads could fill.

With files from The Canadian Press