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Radio feels heat from iPod generation

OTTAWA, TORONTO -- Conventional radio stations are losing their grip on the iPod generation as younger listeners shift to new technology, such as MP3 players, satellite radio and the emerging world of music-playing cellphones, the industry is warning Ottawa.

In a lengthy document submitted to the federal broadcast regulator yesterday, the industry paints a bleak picture for itself as new technology permeates its market, eroding audiences and eating away at advertising revenue.

Falling listenership among teenagers has become a particular concern for the industry, the Canadian Association of Broadcasters (CAB) said in its submission to a sweeping review of the sector being conducted in Ottawa.

"It is generally agreed that teens have abandoned conventional radio in favour of other audio platforms including peer-to-peer file sharing, music downloading and iPods," says the CAB, which represents Canada's radio companies.

"The key question this raises is whether today's teens can ever be repatriated to conventional radio."

The CAB wants rules governing the industry rewritten to make conventional radio more competitive.

It has asked the CRTC to scrap plans to boost the amount of Canadian content broadcasters are required to play, while loosening restrictions on the number of stations companies can own in a single market. Those, along with a host of other changes, would allow companies to be more profitable in an era of tightening margins, the CAB argues.

The report is one of several sent to the Canadian Radio-television and Telecommunications Commission in advance of yesterday's deadline for submissions. A draft copy of the report was obtained by The Globe and Mail.

Industry data on declining radio audiences are among the most surprising figures contained in the document. Under the group's worst-case scenario, listenership could fall 16.1 per cent over the next 10 years, causing a 14.5-per-cent drop in advertising revenue.

The sector's most optimistic view predicts a 9.6-per-cent drop in listeners during that time, resulting in a 4.8-per-cent decline in revenue.

If the industry saw a decline of that proportion last year, it would have cost $188.5-million in advertising revenue, the CAB said.

Individual broadcasters have also made their own submissions to the CRTC as it reviews the regulations governing the radio industry for the first time in nine years.

David Goldstein, head of government affairs at CHUM Ltd., one of the country's largest radio operators, said the conventional industry is in strong shape, but that it will have serious challenges in the coming years.

"We are facing an unprecedented level of competition." Mr. Goldstein said in an interview, adding that CHUM is very conscious of the industry's technological changes.

He said achieving "regulatory certainty" from the CRTC is more important. Several broadcasters are concerned that rivals, such as satellite radio, are not bound by the same regulations as conventional radio.

The CAB says the fastest erosion of conventional radio listenership is coming in the 12-17 age demographic.

"Private radio -- faced with more competition and fewer listeners -- will be unable to override the decline in overall tuning through [advertising] price increases," the report said.

Pierre Pontbriand, a spokesman for the association, wouldn't comment on the submission, which will not be made public until today at the earliest.

Corus Entertainment Inc., another major radio broadcaster in Canada, has also flagged the emergence of new technology as a concern in its submission to the CRTC.

"The regulated broadcasting system can no longer consider itself immune from the larger changes occurring in our media environment," the Corus documents said. "We are already seeing the impact of this with the introduction of video on MP3 player devices and in satellite radio services."

The CRTC will hold public hearings on the radio industry review starting May 15, with the proceedings expected to last five days. Denis Carmel, a spokesman for the CRTC, said the commission will make its ruling on any changes later in the year.

The Friends of Canadian Broadcasting, a lobby group that supports private broadcasting and Canadian content, warned the commission to beware of broadcasters seeking weaker concentration of ownership rules or reduced obligations to produce local content.

"As Canada's economic relationship with the U.S. draws clear, it becomes more important than ever to strengthen Canadian cultural sovereignty," the lobby group said. "If any changes are desirable, they should move in the direction of strengthening these obligations."

Corus and CHUM have both recommended the CRTC maintain - not increase -- its Canadian content requirements at 35 per cent, with a system that rewards broadcasters that provide air time for emerging Canadian artists.

© The Globe and Mail

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