ARCHIVED -  Transcript of Proceeding

TRANSCRIPT OF PROCEEDINGS BEFORE

THE CANADIAN RADIO-TELEVISION AND

TELECOMMUNICATIONS COMMISSION

SUBJECT:

Licence Renewals for Private Conventional

Television Stations /

HELD AT:

Conference Centre

Outaouais Room

140 Promenade du Portage

Gatineau, Quebec

April 30, 2009

Transcripts

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

Canadian Radio-television and

Telecommunications Commission

Transcript

Licence Renewals for Private Conventional

Television Stations /

BEFORE:

Konrad von Finckenstein   Chairperson

Michel Arpin   Commissioner

Len Katz   Commissioner

Rita Cugini   Commissioner

Candice Molnar   Commissioner

Louise Poirier   Commissioner

ALSO PRESENT:

Lynda Roy   Secretary

Stephen Millington   Legal Counsel

Valérie Dionne

Nanao Kachi   Hearing Manager

HELD AT:

Conference Centre

Outaouais Room

140 Promenade du Portage

Gatineau, Quebec

April 30, 2009

- iv -

TABLE OF CONTENTS

   PAGE / PARA

PRESENTATION BY:

CTV Television Inc.   795 / 4407

Canwest Television Limited Partnership   844 / 4693

   Gatineau, Quebec

--- Upon resuming on Thursday, April 30, 2009 at 0900

4402   THE CHAIRPERSON: Good morning, and welcome back.

4403   Madame la Secrétaire, voulez-vous commencer.

4404   LE SECRÉTAIRE: Merci, Monsieur le Président. Bonjour à tous.

4405   Mr. Chairman, we will now proceed with the second part of the hearing where the applicants will present their applications. We will begin with the presentation by CTV Television Inc. regarding its renewal applications listed in the Notice of Consultation, CRTC 2009-113.

4406   Appearing for CTV is Ivan Fecan. Please introduce your colleagues, and you will then have 15 minutes to make your presentation.

PRESENTATION

4407   MR. FECAN: Merci, thank you very much.

4408   Good morning Mr. Chair, Vice Chairs, members of the Commission and of course, most importantly, Commission staff. My name is Ivan Fecan, and I am President and CEO of CTVglobemedia and CEO of CTV Inc.

4409   To my left, for the record your right, is Paul Sparkes, Executive Vice-President, Corporate Affairs for CTVglobemedia, to his left is David Goldstein, Senior Vice-President, Regulatory Affairs, CTVglobemedia. To my right is John Gossling, Chief Financial Officer, CTVglobemedia, to his right is Dawn Fell, Executive Vice-President, Human Resources and Operations, CTVglobemedia and to Dawn's right is Rick Brace, President, Revenue, Business Planning and Sports for CTV Inc.

4410   Joining us on the back panel this morning, starting on your far left, is Allan Morris, Senior Vice-President, Engineering, Operations and IT, to his left is Clare Brown, Senior Vice-President, Finance, CTV Inc., next to her is Nikki Moffat, Senior Vice-President, Finance, CTVglobemedia, next to Nikki is Richard Gray, Vice-President and General Manager, A Ottawa and Ottawa Radio, Richard is also Head of A News nationally.

4411   Next to Richard is Kevin Goldstein, Vice President, Regulatory Affairs, CTVglobemedia, and on the far right is Stephen Armstrong of Armstrong Consulting Inc.

4412   We would now like to begin our formal presentation.

4413   Licence renewals, in past years, was a time for a licensee to look back at what was accomplished, take pride in the successes, atone for the hopefully minor shortcomings, if any, and elaborate on the plans and dreams that could be accomplished over the next seven-year term.

4414   At the end of the process, if all is right in the world, the regulator feels they have done well for Canadian viewers while obtaining commitments in exchange for the valuable renewal opportunity. In turn, the licensee looks forward to growing the business through providing a valued service to the community and, of course, a profit. How times have changed.

4415   Over the past seven-year term, the conventional television model, which worked so remarkably well for years, began to decline, first with a few cracks in the foundation, then noticeably dropping and now is irretrievably broken. True, this recession has accelerated the process, but it is just plain wrong to believe it is the cause.

4416   And so, at today's hearing, instead of a bright future, instead of opening more stations, we are closing them. Instead of more program commitments, we are offering the status quo as the new incremental. Instead of being worried about not receiving a full seven-year term, we are worried about whether we can afford to re-apply in one year.

4417   No one here signed up for this, but this is where we find ourselves today. Please understand this is not a cash grab or greed from a private broadcaster. This is real. We are not bluffing.

4418   The culture of our company demands that if something is never going to work, we move on with the knowledge that we did our best. We moved on with TQS. We are moving on with Brandon, Windsor and Wingham. And if there is no structural fix for conventional television soon, we will be forced to move on again; first with the A's and then ultimately with the CTV stations.

4419   It is a pretty grim scenario, not only for me who has devoted my life to this business as a dreamer and builder, but for everyone involved in the making of television.

4420   It is not good for viewers either, who have made it very clear that local television matters to them. They are depending on you to put their interests above those of any corporate or lobby group, be it broadcaster, BDU, or union. If the BDUs insist on holding subscribers hostage, perhaps it is time to regulate basic cable rates again.

4421   In the United States, when BDUs kept raising rates and resisted paying for local stations, the government stepped in and protected viewers by re-regulating the basic rate and ensuring that local stations could get a fee for the important service they provide. So I might ask, why everyone here is in Canada so afraid of cable.

4422   As for CTV, our track record for viewers is something in which we take great pride. In fact, during this past seven-year term, we became the overwhelming number one choice of Canadian viewers. In virtually every community we have the privilege of serving, our local news is number one. Our national news is number one. Our personalities are part of our viewer's lives.

4423   In the past seven years, we have developed and commissioned dozens of outstanding Canadian movies such as Mayerthorpe, The Terry Fox Story, Elijah, Crazy Canucks and The Terry Evanshyn Story. We have the good fortune to work with Brent Butt and put Corner Gas on the air, smashing the belief that Canada could never produce a hit sitcom.

4424   We didn't stop there. A few years ago we completely revamped our development process for series drama. We started commissioning and paying full price for pilots and struck gold, not once, not twice, but three times in two years. We picked up three series from this process and all three were sold to the major networks in the U.S. and then around the world; Flashpoint to CBS, The Listener to NBC, and The Bridge to CBS.

4425   Our national talent shows; Canadian Idol and So You Think You Can Dance Canada have been enormously popular. We united the youth of the country with Live8, "Me to We", Degrassi and Live Earth. We celebrate our artists and help build the Canadian star system with the Junos, the Gillers and eTalk.

4426   We are not just leaders in Canada, we actually are considered one of the best in the world at what we do by our international colleagues. And yet, here we are, at a one-year renewal.

4427   We have applied in good faith based on your stated process and have committed our full support to a process that we sincerely hope will, on an urgent and expedited basis, revisit the viability framework for conventional television.

4428   We are ready to get started with a public policy process immediately after the conclusion of this hearing; this should include hard timelines, with a view to having a licensing framework in place in the fall of 2009, so that we can file applications in late 2009 for consideration at a hearing at the end of March 2010.

4429   This may seem like an aggressive timeline, but if decisions are going to be made to save this business, we need an expedited path and investors will require clarity.

4430   There are those who think it is just too late or that the price of saving conventional is too high. Some suggest that our national goals can simply be met by specialty and that local reflection can be achieved through the community channel. We disagree.

4431   This Commission has made diversity of voices a central tenet of its mission. As we outlined, conventional is so much more than the sum of its parts and its future is critical to meeting the Commission's expectation pertaining to the availability of a wide range of voices. Otherwise, it is easy to envision a system where two or three BDUs are able to own and control the system from stem to stern.

4432   The simple fact is that cable community channels aren't a suitable replacement for conventional local television stations as the cornerstone of the Canadian broadcasting system, and here is the reason. They don't do real local news; breaking news, investigative reporting or enterprise journalism because it is too expensive to produce.

4433   And Canadians have voted. In Barrie, for example, when over 32,000 people are tuning in to the 'A' News at suppertime, only 95 -- not 9,500 -- only 95 are watching 'First Local' on Rogers. Community by community, the pattern is the same.

4434   Handing over the function of local reflection to the cable monopoly could very well be the most damaging blow to diversity of voices and democracy this country has ever seen.

4435   Our conventional television sustainability framework includes fee for carriage, mandatory carriage by DTH of all local stations in their home market and the ability to own content. LPIF, if it starts flowing in September and if the quantum is meaningful, could be a part of the small market solution.

4436   As we indicated on Monday, we strongly believe in conventional television's importance to the social fabric of this country and, from where we stand, it is worth fighting for. But that decision is in your hands.

4437   Thank you, and we await your questions.

4438   THE CHAIRPERSON: Thank you very much.

4439   You were undoubtedly here yesterday, or you heard, when CBC was before us and they actually echo what you say, but they take a slightly different approach.

4440   And this is not their words, because this is my interpretation of their words, but they basically suggested there are three problems here and they all get intermixed.

4441   They say that number one is local news and local content, which doesn't pay for itself, but which is vital as an objective in the Broadcasting Act and, therefore, you need to have a subsidy. And they raised or suggested LPIF or an enhanced LPIF would be an answer to it.

4442   Secondly, they said basically there is an issue of signal integrity that you are in the strange position and notwithstanding that you pay for signals and for the rights to show them in Canada, so to speak, that integrity is broken because American stations on the same signal penetrate the Canadian airspace via BDUs.

4443   And thirdly, there is the issue of value for content, that the BDUs distribute your programming, which obviously brings them viewers and subscriptions and that is a content for which they are not paying.

4444   And so these, if I understood them, are the three stools of the problem, so to speak, and each one of them has to be addressed.

4445   Is that sort of your analysis of what ails conventional television?

4446   MR. FECAN: It is as good analysis as any.

4447   THE CHAIRPERSON: Okay. Then assume we fix sort of the financial issue. There is no question that also there is -- you are losing viewers, fragmentation or viewers is considerable and will continue to go on, et cetera.

4448   Other than asking financial aid be mandated by us or made available through our regulatory intervention, what are the measures that you see as an operator of a conventional television station that you will take to sort of structurally adjust your business model or to fit yourself in the new reality where you are competing with dozens of specialty channels which take away an awful lot of -- both viewer eyeballs and your revenue income?

4449   I mean, you can't just continue as you did before, you obviously have to sort of change your concept of conventional. And I would be very interested to know what you see you will be doing.

4450   MR. FECAN: Well, I think actually the structural problem requires new revenue sources. I don't think it is a lot more complicated than that because the viewers value what we do, particularly locally.

4451   So assuming that those were the three stools, as you put it, and assuming that there is some sort of new revenue sources, whatever they might be, I think it is important that you look at every kind of decision that comes in front of you in the next little while and see whether -- assuming you agree that conventional is important and local is important -- I think you need to look at every decision that comes before you.

4452   Decisions like, you know, who can sell ads in American cable channels, who can sell ads in VODs, who can -- because all of these things impinge on the local advertising market that we need to continue surviving. I think if you don't feel that now is the time for repatriating or signal integrity, then I think one looks at more than simultaneous substitution, you look at asimultaneous substitution as well.

4453   You look at any other kind of way of getting value for content. But the major fix really is new revenue sources.

4454   THE CHAIRPERSON: No, I understand that. But you are telling me what we as a regulator should be doing and fair ball. But I was asking what you, as the conventional broadcaster, will do to either regain eyeballs, regain more relevance or least stop the erosion that we have been seeing over the last 10 years or whatever.

4455   MR. FECAN: The main thing we are doing as a broadcaster trying to make our content available, and not just at a point in time, but if you go to our site, our many sites and we get a lot of impressions on our sites, we try and make our news stories available at all kind of different times so that people can watch on demand.

4456   We are trying to drill down to each local station so each local station can do that. We are trying to find any way to use whatever technology exists now to reengage people and bring them back to the television to enrich their viewing experience in any way we can.

4457   And so I think the processes just get stickier with our viewers in any possible way we can think of.

4458   THE CHAIRPERSON: So you see yourself making a concerted push to be available on as many platforms as possible?

4459   MR. FECAN: We see having our content, in some form, available on as many platforms as possible. Anything that makes it a better experience for our viewers, it could be additional information about a particular program or a particular story on our website. It could be video-on-demand if we are able to make a reasonable commercial arrangement with the cable companies, anything to get that feedback loop going.

4460   THE CHAIRPERSON: One more question before I turn you over to the tender mercy of my colleague, Mr. Katz.

4461   Yesterday, obviously one of the issues that you face and everybody else is the digital transition. And we have been struggling with it, we commissioned a report by a private outfit, we asked the industry to come together. The thing that was always missing, and which I understood, was partially a solution would be FreeSat.

4462   Now yesterday, Bell put its model of FreeSat on the table. You are envisioning a hybrid solution where in the major markets you will convert the minor markets.

4463   Is the FreeSat, the way Bell presented it yesterday, not part of the answer? If I understood it correctly, the basic bargain is in return for FreeSat and having your signal reach all the people who reach it over-the-air now through satellite; the government or the consumer would have to pay for the basic installation of a cable system. But you basically have to give up any claim to distant signal compensation. That is the basic bargain that Bell put on the table.

4464   What is your reaction to that?

4465   MR. FECAN: Well, as probably wouldn't be totally surprised, about giving up any value for distant signals, what our reaction might be, but Mr. Brace has studied this and has our analysis of it, if he can give it to you.

4466   MR. BRACE: Thank you, Ivan.

4467   We have studied this to the extent that we have received it kind of when you did, Mr. Chair, so it is still early days.

4468   What I would say is that, as a proposal and an opportunity, we are going to have to evaluate it. We are certainly not writing it off, it is certainly worth exploring and we intend to have those conversations. But there are some things that obviously we need to get answers to before we can come up with a fully-considered opinion.

4469   First of all, what I would say is that our objective is to ensure we have local into local. We have said that many times and that is not new to the Commission, and continues to be our major position going forward.

4470   We also wonder why, you know, as part of the FreeSat discussion that all of a sudden 30 or 40 channels are now available for local stations, whereas they haven't been up to this time, and it is something we will have to Explore with Bell TV when we get the opportunity.

4471   We would also point out that although it is called FreeSat, it is not in fact free. As you just pointed out, the consumer is responsible for the cost of the installation and the cost of the hardware in order to make this work.

4472   In addition to that, seemingly, although they are going to spend a million dollars in bandwidth, it will be the broadcasters that are going to be responsible for the incremental cost, any additional cost of bandwidth that is going to be needed to put this into force. And also the backhaul costs that I think would be associated with it as well.

4473   So there is going to be costs to pretty much every kind of constituent that is involved in this. So in fact, FreeSat may not be the correct name.

4474   The other concern that we have -- and, once again, early days and early studies -- but their intent is that they will cover the cost of the maintenance and the service to the client on an annual basis. However, if I understand it correctly, they are going to deduct that cost from the LPIF, so there is a changeover there.

4475   And then the point you made which, as Ivan stated at the outset, is virtually giving up any kind of opportunity to increase the return that we feel is appropriate for distant signals. And that, for us, is really concerning and something that, you know, we have to consider fully.

4476   And so regardless of the proposal and its vale which needs to be determined, we want to make sure that -- and I will say it the way I started -- is that local gets into local, that is our prime concern. But we do intend to sit down with them, consider this and see if there is an opportunity here.

4477   THE CHAIRPERSON: Well, I mean, the part of that we puzzled and presumably you, is if there is that solution, you obviously have a great saving in not having to build transmitters in small and remote markets, et cetera, and that is a considerable saving.

4478   But what is that compared to the saving that Bell incurs by not having to compensate you for distant signal? That is the basic bargain. And I have no real grips on the value on either one of those.

4479   MR. BRACE: And that is because, as I said, it is early days. That is exactly the discussion we have to have, the understanding we have to formulate; what is the trade-off and what is the relative value?

4480   THE CHAIRPERSON: If you have any information or data that you can share with us on that basis, we would very much appreciate that.

4481   MR. FECAN: But, Mr. Chairman, the kind of equation you set out is not totally complete, because the other alternative is to just put transmitters in the major markets and not put transmitters elsewhere. So if you are comparing one cost to another, there is a third possibility.

4482   THE CHAIRPERSON: Mr. Fecan, there isn't. Let's make it quite clear, we will not countenance a solution whereby 8 per cent of the population gets cut off and doesn't have a signal.

4483   MR. FECAN: That is a public policy issue, sir.

4484   THE CHAIRPERSON: It is not part of reality.

4485   MR. FECAN: It is not part of our reality either.

4486   THE CHAIRPERSON: Well, it is part of my reality, just so we understand each other.

4487   MR. FECAN: But so you understand, when we do transmitters in the eight markets, we are down to about 1 per cent of the public. So if what you are saying is why not spend a few hundred million for 1 per cent of the market, then I think we are not going to agree.

4488   THE CHAIRPERSON: I don't want to spend hundreds of millions for 1 per cent of market, but I do not want to see a situation where Canadians who right now enjoy television signal, will not have one. I don't think from public policy that is an acceptable solution.

4489   MR. FECAN: I agree. But we are looking at it as a business.

4490   THE CHAIRPERSON: Let's find a joint solution.

4491   Mr. Katz, over to you.

4492   COMMISSIONER KATZ: Thank you very much and good morning.

4493   We are going to spend sometime this morning talking about the licence renewal for the term until the broader group renewals are held as well.

4494   I have got a series of questions, and I guess we will all decide at what point in time some of these questions get into an area of confidentiality that needs to be discussed in a separate venue I guess. But until that time, let's march forward.

4495   First of all, I want to start by saying that your application was met with an awful lot of support by Canadians. And I thought I would recognize the fact that an awful lot of Canadians, whether they are small businesses, communities, charities, members of Parliament, municipalities, have all come in favour of us renewing your licence for both CTV and the A Channel. And that is a recognition of the strong support and investment that you have made across Canada as well.

4496   MR. FECAN: Before you go further, I want to thank you for recognizing that.

4497   COMMISSIONER KATZ: Having said that, I want to also start by asking you to confirm exactly what licences are not being renewed. Because we have had various discussions and you have issued various statements with regard to what is and what is not. So before we start with the in-depth discussion, let's get it on the record so that we all start from the same premise. What exactly is not being renewed?

4498   MR. DAVID GOLDSTEIN: The licences that are not being renewed are CKNX-TV Wingham, CHWI-TV Wheatley and CKX-TV Brandon.

4499   We had written to the Commission that we had originally intended to not renew the licences for a series of re-transmitters. We have asked for them to be put back on the table as part of this process so as to not disenfranchise those viewers, at least for this one-year process.

4500   And we are asking that those licences, at least the transmitters in those areas, will stay up for the purposes of the one-year renewal.

4501   COMMISSIONER KATZ: Okay. And those three; Wingham, Wheatley and Brandon, from your perspective, are non-negotiable, decision has been made?

4502   MR. FECAN: Based on the facts available at the time we made the decision and just -- you know, you recognize, I am sure, that when you are operating a unit or a business you never get the luxury of having all the facts. You have to make the decisions with the facts you have available. Based on the facts we had available when we wrote the application, yes, those were the decisions we made.

4503   And I think that decision is probably, no matter what really happens, going to stick with Brandon because there is two things happening with Brandon; there is both the structural issue and everything else, plus the loss of the CBC revenue. So that one is a little different from the others.

4504   I am not sure Wheatley or Wingham really works as a business going forward on any basis. However, as I think we mentioned on Monday, if the LPIF comes soon enough and is of a quantum that makes a difference, that was one that we would reconsider for Windsor.

4505   COMMISSIONER KATZ: Can you file with us, on a confidential basis, how much shortfall from your business perspective is missing to keep Wingham sustainable?

4506   MR. FECAN: Sure.

4507   COMMISSIONER KATZ: Thank you. You have asked for a one-year renewal under same terms and conditions as currently exist. And I just want to understand, from your perspective, what that includes. Because there are conditions of licence, there are expectations and other commitments of some sort, looser or otherwise, that are there.

4508   Are you looking at retaining all the terms, conditions and expectations for that period of time?

4509   MR. DAVID GOLDSTEIN: Yes, as they stand for the current licences, yes.

4510   COMMISSIONER KATZ: Okay. We talked earlier this week about the timeline. And clearly, initially, the idea was to provide a one-year term. I think when you first came in with your initial application you requested a two-year term, but there were conditions associated with that as well. You subsequently rescinded that and you went to this one-year all conditions remaining as they are.

4511   Obviously, the economy is in a state of flux, we don't know when it is going to bottom out. Clearly everybody has said, including yourselves, that we should have some sort of a stable industry or the start of a stability, knowing we have hit the bottom, before we start pitting conditions on anybody for as long as seven years, if not even a shorter period of time as well.

4512   And I guess the question is, if we move from the one-year to 18 months or 24 months, how would the conditions that you would like to see placed on you in that interim remain or change?

4513   MR. DAVID GOLDSTEIN: I guess, you know, we want to enter into this discussion in good faith, but I think we have to put forward the caveat that we reasonably expected under the Commission's public notice to apply for a one-year renewal.

4514   As Ivan had stated, both in Phase I and I believe today, we are not in a position to be able to evaluate anything further than that based on the information we have before us today. And we look forward to the policy process that flows from this with a view to then having some investor certainty and coming back with another application after that period.

4515   COMMISSIONER KATZ: I guess I will ask the question a little differently. If in fact this Commission chose to say that given the economic situation in this country and the rest of the world and the lack of data that we think we would have from which we could make another informed decision for a longer term and decided to push it out for two years, are you prepared to stay with the same statement you made a minute ago, that you are prepared to live with the existing terms and conditions for one year -- for two?

4516   MR. FECAN: No. We filed a one-year licence, that is what you said you wanted to consider as a default position unless somebody made the argument for. I think the Chairman, seven times at the Heritage Committee, said it was a one-year term and we have applied for a one-year term.

4517   The basis of not changing any conditions only works on a one-year basis. If, you know, you're saying that you decide you want to go for longer, then we'd like to have the opportunity to re-think an application and re-submit because the terms would be different.

4518   COMMISSIONER KATZ: Can I ask you to reach something as part of this proceeding before the closing of this proceeding, whatever date --

4519   MR. FECAN: No.

4520   COMMISSIONER KATZ: -- as a follow up?

4521   MR. FECAN: We're not prepared to turn our business around and re-think everything in the matter of a few hours. These are far too important issues.

4522   We gave a lot of thought to our application and, you know, we'd like a good few months to re-think it, if that's how you want to proceed.

4523   Now, I certainly understand that that's how you want to proceed, but you have to give us an opportunity to put an application forward that we can stand behind, and I don't think we can do that in the middle of the night.

4524   COMMISSIONER KATZ: I mean, I can understand there's some work involved in it, but I guess it begs the question. The industry, the economy is still in a state of flux, so if we gave you two months, what would you come back with in terms of creating a new forecast for your business?

4525   It is what it is, we'll get into the detail of your actual forecast later on, but the reality is you've got the information before you, you know where the economy is right now.

4526   Have we hit bottom?

4527   I don't know, maybe you've got better economists than others do.

4528   But, at the end of the day, we're looking at the terms and conditions of your licence and the priority programming, the independent production and those types of things that you've offered to leave the way they are for the next 12 months.

4529   And I guess the question is: If it was going to be beyond 12 months, which of those commitments or conditions of licence would you think are the highest cost items and the ones that would cause you the greatest impact?

4530   MR. FECAN: Vice-Chair, I don't want to repeat myself, but we filed a one-year application and that's what's in front of you. It's a one-year application.

4531   If you want to change the terms you've published and stated many times, then we will look at our options.

4532   THE CHAIRPERSON: Can I just interrupt for one second.

4533   We did in our last Notice say the appropriateness of one year or not, so we did put it on record as an issue. So, you say if we change and think two years are necessary, you want an opportunity to re-think, which is perfectly...

4534   So, let's play out for me for a second the process that you see would be. Assuming at the end of this hearing we say, we've come to the conclusion it needs to be a two-year term rather than one because there are too many balls in the air to make a sensible decision; then what?

4535   MR. FECAN: Well, we would have to determine whether we could accept that application. And, you know, I think in part of the process of that we would, you know, re-do our budgets and re-do our forecasts and take it to our board and just see how -- what could be possible.

4536   I think what really is necessary, if you go a longer term, is you give us an opportunity then to re-file an application on the terms and conditions.

4537   THE CHAIRPERSON: So, we have a hearing for a year and a half rather than -- whatever and at that point in time it will effectively be that.

4538   MR. FECAN: Mr. Chair, I really have problems --

4539   THE CHAIRPERSON: I understand what you're saying.

4540   MR. FECAN: -- if we've got to re-apply in a year.

4541   THE CHAIRPERSON: Okay.

4542   COMMISSIONER KATZ: Thank you.

4543   Some of the things that you filed you filed in confidence, but I want to talk first in generality as to how you allocate your costs I guess.

4544   And there's different levels. You provided information that sort of breaks down your 2008 data as between news, Canadian programming and foreign programming and we also have information that was filed, again confidentially as part of all licensees, with regard to distributing your costs station-by-station as well.

4545   Without getting into the specifics of the dollars and cents, can we get an understanding as to how you actually do that?

4546   MR. DAVID GOLDSTEIN: With all due respect, Mr. Vice-Chair, we'd prefer to have that discussion in the in camera phase. We're prepared to have a fulsome discussion on that, but I think it's more appropriate for the in camera phase of the proceeding.

4547   Sorry, we think it's more appropriate to have that discussion within the in camera phase of this proceeding, and we're happy to have that fulsome discussion.

4548   COMMISSIONER KATZ: Well, I'm running out of questions here, Mr. Chairman.

4549   THE CHAIRPERSON: Okay. Well, let's see whether my colleagues have any other questions before we move into in camera.

4550   Peter?

4551   COMMISSIONER MENZIES: I asked CBC this question the other day too and, I don't know, just to give it the same context.

4552   We don't have any money, we just have ways to get other people's money, okay. So, if you're going to be asking, no matter through what procedures, to get other people's money, then I think they need to know that you've done everything possible internally to make things work before you come to this.

4553   So, sort of for the record I'd kind of like to know what kind of -- what you've been looking at or what you're conceding or what you've done in terms of re-organizing your industrial structure, because all these fees and everything notwithstanding, the Internet's not going to go away, fragmentation of audiences, legal or illegal, isn't going to go away.

4554   We can regulate as much as we want and it still happens, right. So, the world has changed for ever, and I want to know how your organization is adapting to that change internally in order to be able to justify dipping into, you know, other people's resources?

4555   MR. FECAN: Commissioner Menzies, I completely understand and acknowledge that that's, you know, the right position and a very good question.

4556   I'd like our CFO to take a stab at answering that and also perhaps, if it's helpful, Ms Fell who runs our operations and also runs our so-called industrial strategy in the sense that she's head of it --

4557   COMMISSIONER MENZIES: Thank you.

4558   MR. FECAN: -- they can both try and answer.

4559   MR. GOSSLING: I think in terms of some of the specific details and numbers, we'll get into that in camera.

4560   You know, there have been some very public steps we've had to take in terms of reducing employment levels. In local markets we've had to cut out unprofitable businesses that we just talked about.

4561   As well, certainly when the revenue situation isn't what we need it to be, you're talking about costs, and we look at all of our cost structures.

4562   So, whether it's compensation, employment levels, whether it's the cost of programming, the cost of sales, marketing, travel, entertainment, all those things have been cut right back and, in many cases -- and Ms Fell will comment on this -- I think in the local markets, they've been cut right to the bone.

4563   So, we've done everything we can to cut those costs and at this point we still have businesses that are not profitable.

4564   COMMISSIONER MENZIES: Have you done -- I mean, the CBC has, for instance, announced plans to reduce its executive compensation plans in tandem with its layoffs and that sort of stuff, and I'll just give you a list of things because I don't want to make it just about that.

4565   But, I mean, the state of your collective bargaining agreements says, bonuses, hiring freezes, travel and entertainment, organizational reviews, those types of things.

4566   MR. GOSSLING: Yes.

4567   COMMISSIONER MENZIES: Touched on all of those?

4568   MR. GOSSLING: Yeah. I think the important thing to point out on executive compensation because it's such a topical issue these days, you know, as a private broadcaster, plans require us to be successful for that compensation to be earned so, obviously, in this kind of an environment we're not having financial success which means there's not executive compensation that's going to be earned.

4569   COMMISSIONER MENZIES: But you understand it's a significant area of public interest at the moment.

4570   MR. GOSSLING: Definitely.

4571   MS FELL: Commissioner, the executive compensation has been significantly reduced, I've got its budget for this year.

4572   COMMISSIONER MENZIES: Thank you.

4573   THE CHAIRPERSON: Ivan is a $1 a year man; now?

--- Laughter

4574   MR. GOSSLING: It's getting that way.

4575   COMMISSIONER MENZIES: Well, I think people just want to know that if at the end of the day their cable rate goes up or something along the line that they're -- and we're talking about sustainability here -- that they're not just sustaining other people's income at the expense of their own. That's all I'm trying to get to.

4576   MS FELL: That's a fair point. And across the stations we've made significant structural changes, we've done a lot of centralization, we've done everything we can to reduce costs.

4577   We have taken all of the stations down to a single ship and, you know, we really are operating as efficiently as possibly can and, in most stations, there's really -- there's no flex room left at this stage.

4578   MR. FECAN: Mr. Gray is actually on the ground at one of those stations and perhaps he can kind of give you the view from the ground.

4579   COMMISSIONER MENZIES: Sure.

4580   MR. GRAY: Yeah. I'm going to talk a little bit about what we've done both historically at our A station in Ottawa and very recently.

4581   You know, over the course of a number of years we have efforted to operate our operations as efficiently as possible. And, you know, we make heavy utilization of news videographers rather than the standard two-crew reporter plus camera news gathering force.

4582   On top of that, you know, our control rooms now are staffed, as a result of changing technology, like two people rather than, you know, the traditional six or eight.

4583   Those are some of the things that we've done in the past to maximize efficiencies and cut costs.

4584   Most recently we've gone significantly deeper and significantly further. In fact, in Ottawa in early March we cut our staff count from 74 to 34. And a big part of the way that we've been able to achieve that measure of savings, that reduction in staff is by developing connectivities where possible.

4585   You know, myself as the general manager of the television station now also has responsibility for overseeing four radio stations.

4586   Our finance department that used to exist specifically for television now handles television and radio together.

4587   We do similar things with our promotions department, with our human resources department.

4588   We have a joint sales force now that represents us in Ottawa selling local advertising. Our sales team doesn't just sell A now, they sell A and CTV Ottawa.

4589   We've cancelled programs, we've closed facilities, we've cut every conceivable cost to try to make our situation, you know, even slightly better in any way, shape or form.

4590   And I'm sure you would agree that, you know, going from 74 staff on March the 2nd to 34 staff on March the 3rd is a pretty significant measure and a pretty significant statement that we're doing everything we absolutely can.

4591   MR. FECAN: We're also investing in a lot of automation technology to try and just be as efficient as possible.

4592   And one piece of technology that we've developed in the last few years, called Gateway, which allows for virtually to the station's cost, free transfer of news programs. In other words, it's basically a website where every program -- every station across our system posts their -- all of their stories, all of the footage they're doing and any station can take out of that.

4593   So, instead of waiting for a feed once a day where there would be four, five stories from across the country, any station in our system anywhere can pick off a story from anywhere else in our system to try and reflect Canada better or to find the unique angle on something.

4594   And, you know, this is -- it's saved money in a sense because you don't have the one satellite feed and everything for 30 minutes a day, but it's also enormously improved content because people have unfettered access to anything produced in the system.

4595   So, all of those kinds of things, you know, one by one, we're trying to do to become more efficient and actually try in some ways to become better.

4596   COMMISSIONER MENZIES: Okay, thank you for that.

4597   Another question is, I'm just trying to get a fuller sense of where we would go -- and it's a longer conversation at some time -- but at least a summary here of what you see a local television station being?

4598   I mean, I'm still confused, for instance, with Wingham where we have four minutes a day essentially of local news and, I don't know, whatever it is, four minutes a day of local advertising, but just throwing that out there.

4599   How does that -- I mean, my concern is that we start moving a lot of money around to save something that may be essentially unsaveable and it just ends up being something that runs for ever on a fund basis. And you and I and everybody else, we all pretend that that's local television and it's doing four minutes, two minutes a day or something like that.

4600   Or Timmins where -- my understanding is there's no local content in terms of that, so I mean --

4601   MR. FECAN: Well, Timmins is actually --

4602   COMMISSIONER MENZIES: -- shouldn't we be targeting things at areas where --

4603   MR. FECAN: Yeah, Timmins is an excellent example, I'm glad Bell brought it up yesterday.

4604   Timmins used to have local content, then the satellite came along and it wasn't on the satellite and, so, the ratings of that station just started collapsing and we ended up going to a regional content model.

4605   COMMISSIONER MENZIES: Yes.

4606   MR. FECAN: The statement Bell made is a little incorrect though because what Timmins does get throughout the broadcast day is community messages that don't -- that they have no other way of getting.

4607   Whether it's the Kiwanis Club, or whether it's the AIDS Drive at the local hospital, or the Food Bank, they get targeted just for their community, along with advertising, they get that too, that's targeted and they have reporters on the ground in Timmins.

4608   But those reporters feed into a regionalized Northern Ontario newscast much like exists in the Maritimes, but before the satellites came along, they had their own full-up newscast and their own station and their own studio and everything.

4609   COMMISSIONER MENZIES: No, I --

4610   MR. FECAN: And it became impossible to operate.

4611   COMMISSIONER MENZIES: I'm not arguing that there aren't issues there. What I'm trying to get at is, like -- I mean, without getting into all those issues, how would we define a local station. Are we going to define it based on the fact that it offers a community bulletin board on air, or are we going to define it on the basis that it has a local newsroom and it has a locally based newscast and that sort of stuff?

4612   Obviously those other issues need to be dealt with on a long-term basis, there's no question in my mind at least about that, but how do we define it?

4613   I mean, we can't define it -- surely we can't be creating funds of other people's money to support community notice boards; right, because community cable can do that.

4614   MR. FECAN: Yeah, if anybody watches it.

4615   COMMISSIONER MENZIES: Well, if they were the only ones to watch it, I mean, that's a chicken and egg --

4616   MR. FECAN: There obviously has to be something else on besides the messages...

4617   COMMISSIONER MENZIES: But you have to be able to do something --

4618   MR. FECAN: Yeah.

4619   COMMISSIONER MENZIES: -- that only you can do to be of any economic value in those communities.

4620   MR. FECAN: Let me answer the question. But, you know, having a local community announcement in "Corner Gas" or "Desperate Housewives" is a very different kettle of fish from having it in a barker(ph) channel.

4621   But, in principle, I think local stations have to do a minimum amount of local origination. I think we can all say that Wingham is an artifact from a different time and we're not proposing four minutes a day or whatever the math was that you did, be the standard.

4622   I think Richard Gray on Monday laid out, at least in terms of LPIF markets, the kind of hours that we think should be a minimum, and for larger markets it's what we're kind of applying for, which I think is 15 and a half hours, which is currently what we do.

4623   Now, I think -- Richard, if you want to --

4624   MR. GRAY; Yeah. Just to refresh everybody's memory as to what we laid out on Monday and, of course, it was in the context of eligibility to access LPIF funding but, you know, it certainly is very applicable to the question you just asked.

4625   And what we talked about was OTA stations having a tangible presence in their home community, which includes providing seven day a week original local news coverage distinct to the market with the small market requirement being nine and a half hours a week, small markets being those under 300,000 in population, and the medium market requirement being 14 hours a week for those over 300,000.

4626   The other two key criteria, we're employing full-time journalists on the ground in the market rather than, you know, dropping a stringer who works for everybody into a particular place.

4627   You know, we feel that, you know, local news is about having local journalists right there in a community.

4628   On top of that, the final requirement was operating a news bureau or a news gathering office in the market.

4629   COMMISSIONER MENZIES: I understand that. I guess what I'm trying to get to is, there no doubt are a number of markets that you might have where that really isn't -- LPIF or not -- that's really not economically viable in the long run, I mean, and you might be -- no matter what we do, they're not sustainable under those definitions. They might be sustainable as a re-broadcast or local in that sense, you may wish to keep them.

4630   But, I mean, how many of your products are on that fringe or moving into the Wingham/Timmins type of area where there really isn't any significant -- what I would call at least, significant local news?

4631   MR. FECAN: Well, let's -- if you don't mind, let's just put Wingham over here because it is --

4632   COMMISSIONER MENZIES: Well, you guys were the first ones to bring it up, so...

4633   MR. FECAN: No, but we called -- we're talking about closing it.

4634   COMMISSIONER MENZIES: We know.

4635   MR. FECAN: We don't think it's sustainable under any basis, okay. We think Timmins is sustainable under the regional model that has been developed in Northern Ontario and I think the citizens of Timmins would not be very happy if your decision was, well, it's not sustainable, let's get rid of the journalists in Timmins.

4636   You know, it's not what we're advocating certainly. I think a Northern Ontario model is sustainable. It's worked for that kind of regional news model, a bit of an anomaly because it's a small market, it's worked really well for several decades in the Maritimes where we've got bureaus throughout the Maritimes and stations throughout the Maritimes but the mother ship is Halifax. And to some degree we do that in Saskatchewan.

4637   But it's a solution that works, and it is as sustainable as anything else in the system right now.

4638   COMMISSIONER MENZIES: Okay. That's what I was trying to understand --

4639   MR. FECAN: Okay.

4640   COMMISSIONER MENZIES: -- in terms of, people's expectations need to be that in some of these areas, that's what -- those sorts of models are what they're going to get. I mean, there's not going to be a Timmins newsroom -- well, there will be a Timmins newsroom, but not a Timmins newscast in that sense.

4641   So, that I just wanted to make it clear for everybody exactly what we were talking about.

4642   MR. FECAN: It's unlikely that there would be -- there was a Timmins newscast. It's unlikely that there'd be one at this basis, but if it got back on the satellite and if there was enough interest, we'd certainly look at that.

4643   COMMISSIONER MENZIES: Okay.

4644   THE CHAIRPERSON: Len, you have another question?

4645   COMMISSIONER MENZIES: Oh, sorry. No, I'm good.

4646   COMMISSIONER KATZ: I just wanted to follow up with one intervention that came in that I'm sure you're aware of from, the Communications, Energy and Paperworkers Union submitted intervention with regard to a concern they raised with regard local programming at some of your stations.

4647   Are you familiar with this?

4648   MR. DAVID GOLDSTEIN: Yes, we are.

4649   COMMISSIONER KATZ: Can you offer a response to their concern that in some markets there hasn't been enough local programming.

4650   MR. DAVID GOLDSTEIN: Yeah. I will pass this off to the other Mr. Goldstein and Mr. Gray.

4651   MR. KEVIN GOLDSTEIN: Thanks, David.

4652   We had the opportunity to review the CPE intervention. We found a lot of it particularly interesting, as I'm sure others did.

4653   The point that you're referring to I think appears towards the end where they indicate that we're offside our licences because of certain programming changes we made, some of which Richard alluded to earlier today.

4654   We found it particularly interesting that they didn't identify how we were offside our licences, simply the fact that we made certain changes.

4655   We've reviewed it in great detail and are quite comfortable that the changes we made are fully consistent with our commitments.

4656   And, if you like, my colleague Richard Gray can run you through market-by-market to explain how we're getting there.

4657   COMMISSIONER KATZ: Could you, please.

4658   MR. GRAY: Yeah, I'm happy to. Thank you.

4659   In Ottawa we cancelled our 6:00 p.m., 11:00 p.m. and weekend newscasts, reducing programming by 10 hours a week, but expanded our Monday to Friday morning show and added a brand new weekend morning show adding back into our broadcast day seven hours a week.

4660   So, the net change for us in Ottawa was minus three hours a week, but we still very much are on side with respect to meeting our expectations of licence there.

4661   We're producing 24 hours a week of local programming in Ottawa with our expectation of licence being 23 and a half.

4662   In Barrie, we cancelled our Monday to Friday 6:00 a.m. to 9:00 a.m. show, but we replaced that program with news repeats inside of an enhanced screen and we added back in in Barrie a live 11:00 p.m. weekend newscast where as most recently we were doing a tape show.

4663   The net change in terms of hours in Barrie was zero and we're very much on side with respect to meeting our 14-hour a week expectation of licence in Barrie.

4664   In London, again we cancelled our morning show and, similar to Barrie, we replaced that program with news repeats in an enhanced screen.

4665   Again, the net change in London was zero hours.

4666   And in Victoria, we cancelled our Monday to Friday live morning show, but added in something we call CFAX Morning Live, which is a simulcast of the CFAX Morning radio show in that market.

4667   In addition, in Victoria we added into our new program schedule the week of March 3rd when we made all of these changes a brand new weekend 6:00 p.m. to 6:30 p.m. newscast and those newscasts had not existed in that market since I cancelled them in 2004 when I was the general manager.

4668   So, our net change in Victoria was plus one hours a week.

4669   So, in terms of our four major A stations, we reduced our hours only by minus two a week and in every case, in every one of our stations, we not just continue to meet our expectations of licence with respect to local programming hours, we continue to exceed them slightly.

4670   COMMISSIONER KATZ: Okay. Well, thank you for that explanation.

4671   I think Mr. Murdoch will be here next week and I'm sure he'll figure out the math and let us know whether there is an anomaly there or not as well.

4672   MR. GRAY: Well, Mr. Murdoch's problem is probably the associated job cuts.

4673   THE CHAIRPERSON: Well, we'll hear from him.

4674   MR. GRAY: Yeah.

4675   THE CHAIRPERSON: Okay. We'll move now into the confidential phase.

4676   But, first of all, I want to make two things clear. No. 1, Mr. Fecan, you and I were just talking about the hybrid solution, et cetera, and you said, well, that's my commercial reality, that's your public policy -- the two are linked, we are prepared to work with you on a hybrid solution, but only condition that nobody gets cut off.

4677   So, the two, you can't say -- you know, I mean, I can't envision giving you a licence while only 92 percent in the area will receive the signal, so I think it's in our interest to mutually find a solution that accomplishes that.

4678   MR. FECAN: I think it would be helpful if the base line was the people we currently reach, not all of Canada because we don't currently reach all of Canada.

4679   THE CHAIRPERSON: No, no, no, clearly, that's the base line, the base line, whoever --

4680   MR. FECAN: There's a bit of confusion on the two base lines.

4681   THE CHAIRPERSON: No, no, I agree with you on that base line.

4682   Secondly, you know, Mr. Murdoch, I received a letter from him this morning asking us to reconsider our decision to hold the in camera proceedings and quoting my often stated preference for transparency and openness.

4683   And while that has not diminished in one iota, we are talking here with very difficult kinds of situations, we want to make sure we understand what your problems are, we want to understand what you're doing about it, and that kind of discussion really doesn't make sense unless we actually see the numbers and see it station-by-station.

4684   So, we have the authority under the legislation, we've done it before in some expedites, so we'll do it here.

4685   We'll now clear the room of anybody except CRTC personnel or people associated with CTV, we'll turn off the live transmission and we'll deal with this in camera.

4686   Afterwards there will be an abridged version which obviously will require the consent of CTV which states what's going -- so we can disclose, to the extent possible, without causing any financial harm to CTV what we discussed so that we can meet the requirement of transparency as much as possible.

4687   MR. FECAN: Thank you, Mr. Chair.

4688   THE CHAIRPERSON: We'll take a 10-minute break.

--- Upon recessing at 0957, to resume in camera at 1010

--- Upon resuming at 1331

4689   THE CHAIRPERSON: Good afternoon and welcome back. Madame la Secrétaire, allons-y.

4690   THE SECRETARY: Thank you, Mr. Chairman.

4691   We will proceed with the presentation by Canwest Television Limited Partnership regarding its renewal application listed in the Notice of Consultation, CRTC 2009-1013.

4692   Appearing for Canwest is Peter Viner. Please introduce your colleagues and you will have 15 minutes to make your presentation.

PRESENTATION

4693   MR. PETER VINER: Thank you very much.

4694   Good afternoon, Mr. Chair, Vice-Chairs and members of the Commission. I am Peter Viner, President of Canwest Canadian Television Operations.

4695   I would like to start our presentation for the renewal of our local stations by introducing our panel.

4696   Seated to my immediate left; your right, is Charlotte Bell, our head of Regulatory Affairs. Next to her is Chris McGinley, our head of TD Operations. And next to Chris is Andrew Akman, our head of Planning. Next to Andrew is Carol Darling, our head of Engineering.

4697   And to my immediate right is Barbara Williams, our head of Programming.

4698   In the back row, starting from the far left, Troy Reeb is our head of News and next to him is Jonathan Medline, also with our Regulatory team. Next to Jon is Isabella Federigi, Station Manager of CJNT, and next to her is Errol Da-Re, our head of Sales. Next to Errol is Cathy Gardiner, our head of Audience Research. And, finally, next to Cathy is Christine Shipton, our head of Canadian Program Acquisitions.

4699   We are here to present our renewal applications for our local television stations, 10 Global stations from Vancouver to Halifax; five E! stations operating in smaller markets, including our ethnic station serving Montreal, CJNT-TV.

4700   We have come forward with requests for changes to our licence obligations, most of which were discussed on Tuesday. But just to recap we have requested:

4701   Number one, standardization of our requirements for local programming for our full service licences from the current patchwork in our various markets to commitments of five hours per week in markets of less than of one million, and 10 hours per week in larger markets;

4702   Two, removal of the conditions of licence requiring priority programming;

4703   Three, a change in the condition of licence regarding the use of independent production.

4704   We have had a good opportunity to discuss the need for the standard changes and other regulatory tools during our appearance before you on Tuesday. In addition to our requests that apply to all of our stations, we also have some specific requests with regard to CJNT-TV in Montreal, Global Ontario and Global Quebec.

4705   Over the vast term of the licence we have operated these stations in compliance with your regulations, policies and our specific licence obligations.

4706   And more importantly, perhaps, we are proud of our ability to make stations integral parts of the communities they serve with a provision of high quality local newscasts through our contribution to community development, our local programs and our fundraising and other charitable activities.

4707   Chris.

4708   MS McGINLEY: Thanks, Pete.

4709   Our contributions to local expression have been recognized throughout the communities we serve and by our colleagues in the industry. The RTNDA has recognized most of our stations, often over the years for the quality of our news coverage.

4710   For example, in 2008 Global Lethbridge was recognized for the best newscast in the Prairies, while Global Calgary received the Adrienne Clarkson Award for Diversity in 2007 and 2008.

4711   Our stations' reporting has resulted in making a real difference in the communities we serve. For instance, our Global Maritimes station featured a story about a couple both in their nineties who had been living together but were forced because of government bureaucracy to reside in separate nursing homes. As a result of our coverage, the couple was eventually moved back into the same room in this nursing home and the provincial government has now taken steps to improve its assessment of the needs of senior couples living in nursing homes.

4712   Similarly, in Winnipeg, coverage of the acquittals of Thomas Stefano, James Driscoll and Kyle Unger led to a review of the prosecution practices of Crown attorneys at the Manitoba Justice Department. The resulting documentary produced by Global Winnipeg when the 2005 RTNDA Regional Award for Best Investigative Reporting.

4713   We are also very proud of our strong local community presence and the impact it has had on the markets we serve. Our stations have raised millions of dollars for worthwhile local causes and charities.

4714   In Kelowna, CHBC-TV's Good News Bears fundraiser has supported Okanagan food banks for 20 years and raised over $2.8 million.

4715   And in Vancouver, Global BC through its annual telethons for the Variety Club has raised tens of millions of dollars for B.C. children's hospitals.

4716   And for 11 years CHEK News has supported a fundraising initiative for kids with cancer. It's called the Cops for Cancer Tour to Rock. A team of police officers cycle 1,000 kilometres from one end of Vancouver Island to another, bringing island communities together to help the cause.

4717   CHEK has been a partner and helped build the event into one of the most successful cancer fundraisers in the country. It has raised tens of dollars since 1997.

4718   We have raised these kinds of coverage to underline the importance of our stations to their communities.

4719   Barb.

4720   MS WILLIAMS: And we have also met our requirements for priority programming in each of our stations in each year of the term of the licence. We have met these commitments by the provision of high quality and innovative Canadian drama, documentaries and variety programs. And we are proud of our programming achievements.

4721   Our Global Currents series presented a number of documentaries dealing with important Canadian social issues. It won a Gemini award for best documentary series.

4722   Time Bombs, acquired from Productions de la ruelle in Montreal, won a CAB Gold Ribbon award for best documentary.

4723   Stolen Sisters, produced by Fahrenheit Films of Saskatchewan, followed the trial of dozens of missing First Nations women.

4724   And three of the documentaries we have commissioned for this strand will be premiered this week at the Hot Docs International Festival.

4725   We have also acquired innovative drama series, including Durham County, The Guard, The Jane Show, and the multicultural Da Kink in My Hair, to mention but a few.

4726   And we are also very proud of some of the non-priority programming of national interest that we aired. This includes our national newscast of record, anchored by Kevin Newman at 5:30 p.m. everyday.

4727   The support we give to our industry, to the celebration of the Geminis and the Genies and the delightful entertainment we shared by bringing Howie Mandel back home to Canada to host his own Deal or No Deal Canada.

4728   As we noted the other day, we also believe that there are many kinds of programming that can attract Canadian audiences and celebrate Canadian stars, achievements and attractions.

4729   Our acquisition of the Alliance Atlantis channels has allowed us to take some star personalities and programs that have been established there and give them the bigger platform.

4730   And we will continue to devote 60 percent of our broadcast week and 50 percent of the evening hours to strong Canadian programs that will reach the fundamental policy goal of bringing Canadian audiences to Canadian programs on Canadian stations.

4731   The changes we are seeking will give us the flexibility to do this more effectively.

4732   MS BELL: Thanks, Barb.

4733   Now, we would like to turn to the changes we have requested for Global Ontario and Global Quebec.

4734   These licences are anomalies within the system. Global Ontario is the only station in Canada that does not have a home market and this means that it doesn't have access to local revenues.

4735   This regional designation is historical and while it may have made sense in the seventies and eighties, and even maybe the early nineties when other Toronto-based local stations weren't as widespread throughout the province of Ontario, Global Ontario ensured another media voice to residents outside the Toronto market. This is no longer the case. All other local Toronto stations have access to Toronto local revenues while covering the province to re-transmitters throughout the entire province.

4736   Global Ontario cannot access local revenues in Toronto even though -- because we are licensed as an Ontario regional station. A small change designating Global Ontario as a Toronto station will put us on the same footing as CTV, Rogers and Sun TV. We have committed to provide at least 10 hours per week of Toronto-focused local programming.

4737   We have a similar anomaly with CKMI-TV or Global Quebec, licensed to serve Quebec City with re-broadcasters in Montreal and Sherbrooke. The Quebec City CMA has an English-speaking population of 7,420 people using Stats Can's 2006 numbers for language spoken at home.

4738   For the Montreal CMA the number is closer to 600,000. We would note in this regard that in 2006 the Commission denied an application for an English-language radio station in Quebec, stating that the Commission notes that Quebec has a very small Anglophone population and that the advertising pool to support such a station is limited.

4739   We think that it would be much more appropriate to amend the licence to reflect the size of the English-language population it serves and the majority of that audience actually resides in Montreal.

4740   Finally, we have suggested significant changes to the conditions of licence for our ethnic service, CJNT in Montreal. As you know, we have tried everything possible to make the station viable. We face a much different challenge than the OMNI stations with no synergies for ethnic programming and much smaller ethnic communities. We have not been able to attract advertising revenues to support the ethnic programming.

4741   We are hobbled in our non-ethnic programming with restrictions that require a mix of English and French language programming, effectively making us the fourth entrant in French-language television in the market after TVA, Radio Canada, TQS and Télé-Québec.

4742   You are quite aware of the struggles of TQS and we follow them and the opportunity to acquire attractive programming and consequently in our capacity to draw programming. This requirement as well as the requirement for ethnic programming between eight and ten also limits our ability to share programming with other Canwest stations.

4743   As the Commission has often pointed out with regard to ethnic programs, the only viable private conventional model is having foreign English language programming support ethnic programming and this option is not fully available to us.

4744   For these reasons, we have proposed a package of changes to CJNT-TV. First, a reduction of the number of groups and languages to five per week; elimination of the requirement for French-language non-ethnic programming, and the elimination of the requirement for 75 percent ethnic programming in the period between eight and 10 p.m.

4745   There was a typo in the written. It's eight to ten.

4746   It reminds doubtful that these changes will make the station viable, but at least it will give it a better chance to succeed.

4747   We would be pleased to discuss these proposals with you and we thank you for your attention and we are ready for your questions.

4748   THE CHAIRPERSON: Okay, thank you very much.

4749   Let's first of all deal with something. Ms Williams, you said the ultimate -- requirements for priority programming in each of our stations in each year of the terms of our licence.

4750   I have in front of me something called a compliance report of Canwest. I think you filed that. Are you familiar with this document?

4751   MS BELL: I think I may answer.

4752   THE CHAIRPERSON: Okay, whoever wants to answer, it shows that you are indeed compliant most of the time. But since we had a complaint about you, why don't you explain to me the aberrations?

4753   I'm sorry. I have copies for my colleagues here.

--- Pause

4754   THE CHAIRPERSON: As you see, in bold are in St. Johns, New Brunswick you did 59 hours rather than 60 as required -- or 60 percent. Most of them are small as far as here. The only one -- big one I saw was CJNT-TV Montreal.

4755   How do you explain that, Ms Bell?

4756   MS BELL: Sorry, in which year are you referring to, Chairman?

4757   THE CHAIRPERSON: Well, I thought you had this document.

4758   MS BELL: Well, I do, but there are -- we have provided a compliance report for each year of the licence. I apologize.

4759   THE CHAIRPERSON: How about, Madam Secretary, would you give a copy of this document to Ms Bell so we are speaking from the same one?

4760   MS BELL: Thanks. Okay, good.

4761   THE CHAIRPERSON: See my problem? There are no dates. I don't quite -- if you look at the second page, you will see it.

4762   MS BELL: Okay, and for which station, sir?

4763   THE CHAIRPERSON: CJNT-TV Montreal.

4764   MS BELL: Yes, thank you.

4765   THE CHAIRPERSON: And you will see rather than 60 percent you were at 46 in '07-'08 and 58 in '06-'07 and then on the Canadian content rather than having 50 percent you were only at 39.88.

4766   MS BELL: There were issues -- actually, that had nothing to do with priority programming, as Barb was mentioning. I guess that's the first point.

4767   There had been compliance issues there because of a reporting error which we corrected and we made up the hours in the subsequent years of the licence.

4768   THE CHAIRPERSON: And the errors on the next page also? You can see there are several times -- these are not big variations but since there is a formal complaint against you on it I wanted to hear your -- are you telling me again here these have been made up subsequently?

4769   MS BELL: We have always made up every hour if we have missed anything.

4770   The other issue on the subsequent page, for '07-08 for CHEK and for CH these are the Cancon numbers and what has happened is we are waiting for the "C" numbers to arrive. And according to our calculation we would be over the requirement.

4771   There is always a delay in receiving the "C" numbers and unfortunately it can be a long delay and that's why those numbers look the way they do. We would be in fact --

4772   THE CHAIRPERSON: So from this can I conclude that grosso modo you are in compliance and where you have failed you have made it up subsequently?

4773   MS BELL: Absolutely.

4774   THE CHAIRPERSON: Okay. Thank you. Then let's go through your application.

4775   I see that in your formal application you talk about the broadcast centres. And you are very proud of them and you spend a lot of money on them.

4776   Can you tell me what is special about these broadcast centres, how do they function and why is it -- how does it help you? And obviously you are doing it to become more efficient and meet your obligations.

4777   MR. PETER VINER: It is part of our overall effort in those two years to make our company more efficient when it's obvious that advertising revenues were declining.

4778   But Chris McGinley chaired this initiative so I will let her explain it to you.

4779   MS McGINLEY: This project, the digital news project that you were referring to, was developed and implemented to address several converging issues facing the conventional broadcasters; technologies moving to a digital platform and we had to move with it.

4780   Content has to be available on a multiplatform basis to meet the needs of the interactive and mobile demands.

4781   We have been facing continued declining profits in our conventional broadcast operations and sustaining significant financial losses in our small market stations.

4782   So to address these issues, we conducted a very thorough review of the financial results of every one of our stations across the country and we have 14 conventional broadcast stations that produce local news, and we divided them into the two groups as defined in the CRTC; four that are greater than a million and 10 that are less than a million people. And our review included comparing the sales generated from the local programming per station against the costs incurred to produce and broadcast this local programming, which would come up with an operating margin or loss.

4783   It was clear that we incur significant losses on local programming in all our small markets and in our large markets we operate at a loss in two of the four, as it relates to the generation of local programming.

4784   Our ability to continue providing local news in all of the small markets was being questioned with this analysis.

4785   So thanks to our very innovative engineering team, we devised a plan which we refer to as the digital news project to produce and broadcast our local newscast on a digital platform across multiple platforms in a more cost-efficient manner and avoid a costly capital upgrade.

4786   So this was accomplished by turning our large markets; Edmonton, Calgary, Toronto and Vancouver into production centres where the technical and production responsibilities for the small markets now reside. The small market stations now have the ability to focus on their primary goal of gathering, producing and reporting compelling local content in the markets they serve.

4787   So to be clear, the local news teams at the local stations continue to: assign stories locally, write these stories locally, edit these stories locally, vet these stories locally, tell these stories locally and maintain editorial control of the newscasts locally.

4788   What has changed is that the local newsrooms no longer have a new studio and a control room. Instead, the local on-air anchor who is at the local station, reads the newscasts from a small green room with a desk and the rest of the virtual set is digitally inserted by the productions -- from the productions centre. The cameras at the local station are robotic and they are controlled remotely from the production -- controlled remotely by technical staff out of the production centre. The control room now resides at one of the production centres.

4789   So the stories are gathered, written and edited at the local station, sent by a net pipe which is critical in order to do this; a dedicated fibre line linking all the stations to the production centres where the stories are inserted into a digital news system for story lineup which again is determined by the local news director.

4790   Regional, national and international stories are added to the lineup at the production centre at the direction of the local news director.

4791   The ability to provide local breaking news in any of our local markets still exists and we have also invested heavily in the digital archive system which will allow us to store, catalogue and retrieve the locally-televised stories and historical events gathered in all of these Canadian markets.

4792   In a traditional model this digital archived technology would have been beyond the financial reach of a small market station.

4793   So in summary, the digital news project provided us the following advantages:

4794   We have now moved all of the over-the-air stations to a digital platform, thereby replacing absolute and unsupportable analog equipment at 30 percent of the cost.

4795   We more efficiently move original, locally-produced news content throughout Canwest group of stations to support regional and national news at all of our conventional outlets. So we have less reliance on booking fibre or satellite feeds.

4796   And we deliver a big market high-end virtual set and high-end graphics to all our stations. Even ones for the adoption of the standalone state-of-the-art digital facility would be cost prohibitive. And this has significantly improved the overall look of our small market newscasts.

4797   And, finally, we reduced operating costs at a significant level in order to protect and insulate where possible the newsgathering capabilities at a local regional station level.

4798   And I would like to add that last week we were very pleased to be honoured at the annual NAB conference with a Broadcast Engineering Excellence award in the category of New Studio Technology for Networks for this specific project. And it was particularly gratifying as it was voted by our peers in our industry across North America.

4799   We would be happy to provide you with a tour and show you our facilities.

4800   Further, I will just tell you out of the four production centres; for example in Vancouver we do the news for Winnipeg; for Montreal, for Kelowna and Victoria out of the Vancouver production centre. The production is done. In Edmonton it is Red Deer and in the Maritimes, in Calgary it is Lethbridge --

4801   THE CHAIRPERSON: Please --

4802   MS McGINLEY: And we have not quite, sir -- we have not quite finished.

4803   Regina and Saskatoon are slated to be done this summer.

4804   THE CHAIRPERSON: There are four productions and I understand that, but presumably there is one common archive. So any of the stations can access it and pull it down if they need it?

4805   MS McGINLEY: Correct.

4806   THE CHAIRPERSON: Now, the CEP as you know is not pleased with this development and as we will hear from them later on. And they feel that this somehow violates your commitment for local news and a local story. I gather you feel you are compliant?

4807   MS MCGINLEY: We are compliant.

4808   MS BELL: Well, yes, I would say we are meeting all of our load requirements. I guess the point is this has absolutely no impact on the quality of the product.

4809   In fact, it actually does have an impact on the positive side of the quality of the product that we offer and the hours are absolutely not impacted in any way.

4810   THE CHAIRPERSON: But the key -- what I took from your testimony is that the news is locally gathered, edited and produced.

4811   MS MCGINLEY: That is correct.

4812   MR. PETER VINER: The difference, Mr. Chairman, if I can add, is the manufacturer of the news is no longer done locally entirely. That's the only difference.

4813   MR. REEB: If I could just add, Pete, the one thing that I think is key is that we wanted to ensure that the programming would continue to be highly reflective of the local community and that we would maintain the local newsgathering presence.

4814   And in fact, one of our partner suppliers in the digital news product, the Associated Press Television News which provides the software that drives our newscast rundowns is now -- knowing that many broadcasters across -- well, around the world are facing the same sort of cost issues we are now -- are pitching this to many of their clients across the United States for instance, as a potential solution that can keep the newsgathering resources in the community but allow broadcasters to reduce their costs.

4815   And I just want to address the question of, you know, the level of community impact. Our newscast anchor at Global Quebec, Jamie Orchard, has just recently been nominated for a woman of distinction award for continued charity work and the Winnipeg Floods -- Winnipeg was one of our earlier stations to be converted to the digital project.

4816   In fact, our Winnipeg --

4817   THE CHAIRPERSON: Stop right now. I don't judge your quality. Your viewer does that. I want to know whether you complied with your terms of licence.

4818   As I say, obviously this has an impact on your efficiency. I gather there have been some layoffs and that's while the union is unhappy. But the key requirement which we have is local -- gathering local, editing local production and you still have to live up to, if I understand you correctly.

4819   MR. REEB: Yes, and the ability to do news at any time of the day really if need be.

4820   THE CHAIRPERSON: Okay, moving on to those regional licences you have for Quebec and Ontario, you want to reclassify them. Other than giving you better access to local advertising, what is the effect of this reclassification?

4821   MS BELL: I think the other effect is just to make it -- just to simplify it. I think it's simpler for us and probably simpler for you when there are -- for instance, when we had the discussion last year on -- I'm just using fee for carriage. I apologize, but it was one discussion that we had and we weren't sure how we would do it with a regional station.

4822   If there are policies that apply to all local stations and we are treated differently it just makes it simpler.

4823   THE CHAIRPERSON: I remember I asked you if it's regional and local and you said yes.

4824   MS BELL: That's right, because local is part of regional.

4825   THE CHAIRPERSON: Yeah.

4826   MS BELL: Yes.

4827   THE CHAIRPERSON: So the station right now, I understand, is in Paris, Ontario wherever that is. And you want to have that be considered a Toronto station?

4828   MS BELL: A Toronto, local Toronto licence.

4829   THE CHAIRPERSON: But it's rebroadcast in Ottawa, right?

4830   MS BELL: Yes, we have a transmitter in Ottawa. We have --

4831   THE CHAIRPERSON: Yeah, but it would not be an Ottawa station. It's a Toronto regional station -- a Toronto local station rather than Toronto regional station?

4832   MS BELL: Yes, but Ottawa would continue to -- we would still have the same coverage as we have now.

4833   THE CHAIRPERSON: Would it have any effect on the programming?

4834   MS BELL: I am sorry?

4835   THE CHAIRPERSON: Would the reclassification of Ontario to Toronto have an impact on programming?

4836   MS BELL: There is no impact on programming. We would still have -- we would be doing 10 hours of local Toronto news as opposed to a regional newscast, although our regional newscast includes a very large Toronto component.

4837   THE CHAIRPERSON: Yeah, but I mean right now it's a regional station so presumably you have regional broadcasts from Ontario rather than only from Toronto. In future, it will be a Toronto local station if we accede to your wishes.

4838   MS BELL: That's correct.

4839   THE CHAIRPERSON: That's why I'm wondering is there an impact on the program.

4840   MR. REEB: Mr. Chairman, right now, we do maintain a significant amount. We take our mandate as a regional broadcaster quite seriously. We maintain Ontario's only province-wide public affairs program called Focus Ontario. We do expend significant newsgathering resources in other parts of the province including as far north as James Bay.

4841   But to be quite frank, those are things that we think are in the interests of our audience, that our audience responds to, and that even though the bulk of our news coverage is currently focused on the Greater Toronto Area, we would likely continue to do further a-field coverage in Ontario just because we think our audience responds to it even in Toronto.

4842   THE CHAIRPERSON: Okay. Let me put the question the other way. Will the consumers in Ontario who enjoy your station right now see a difference?

4843   MR. REEB: Not substantive; no.

4844   THE CHAIRPERSON: Moving to Montreal, is this actually a Quebec station and you want to convert that into a Montreal station; if I understand that, rather than retransmission from Quebec to Montreal?

4845   MS BELL: That is correct. I mean, in that case, there is definitely economically the inability to draw any local advertising. Even if it's not going to make a huge difference it still makes -- every little bit makes a difference and currently we can't do that. It would be somewhat helpful to us.

4846   THE CHAIRPERSON: Well, the same as I asked you about Ontario, would this not have an effect on the programming? I mean, I spent three days in Quebec on the TQS hearing and my ears are still ringing hearing about la montréalisation du Québec.

4847   This is a Quebec station. You want to move it to Montreal. So I mean you are basically depriving Quebec City or Quebec City area of another voice, aren't you?

4848   MS BELL: No, actually. I don't think the programming would change. I will ask Troy to talk about our news coverage from Quebec City but, in fairness, there are 7,000 people in Quebec City who speak English and the vast majority of Anglophones reside in Montreal. I don't think the programming would change in any substantive way.

4849   Troy, do you want to address --

4850   THE CHAIRPERSON: You mean you have a station right now located in Quebec City which targets programming at Anglophones living in Montreal?

4851   MS BELL: We have transmitters in Montreal and Sherbrooke.

4852   THE CHAIRPERSON: I know you have transmitters.

4853   MS BELL: Yes, absolutely.

4854   THE CHAIRPERSON: But I'm talking about programming. After all --

4855   MS BELL: It's a regional station that was licensed to serve all English-speaking Quebecers. That's how it was licensed.

4856   THE CHAIRPERSON: Oh, that's how it was licensed.

4857   MS BELL: That's right.

4858   MR. REEB: And because of that our programming resources are largely concentrated in Montreal, that is what we focused on terms of the type of programming we provide.

4859   THE CHAIRPERSON: So, the only person who would feel the impact of your English-speaking competition in Montreal who -- are you going to have an extra competitor in the advertising market?

4860   MS BELL: Only in -- I'll ask Errol to expand on the impact it would have. I think it's very minimal impact.

4861   The other thing is, no one intervened against this application. But, Errol, would you like to expand, please.

4862   MR. DA-RE: Sure. In Montreal they've got a pretty high share of tuning with the CTV affiliate there, CFCF Television. I think they're around 22 percent share of the hours tuned in that market, followed by CBC with about 6.4 percent share of hours tuned and CKMI currently right now is about 3.5 to 3.6 percent.

4863   CFCF has had quite a head start and they do quite a very good job in the market on the local front, and we just don't see ourselves attracting that much of a local audience with the two stations ahead of us.

4864   MS BELL: I think the other important thing with the station in Quebec, we've been trying to get up on satellite for a long time and the DTH penetration in English Quebec is quite high and it has had a very negative impact on our ability to gather advertising revenues.

4865   So, we've made this case over and over and over again. I think that every little bit we can do to help the station along, and this is one way of doing that.

4866   And also, again, for the same reason as Ontario, I still think it simplifies the licence. They kind of -- they're outliers within the entire system.

4867   THE CHAIRPERSON: They don't have access to the small market fund right now; do they?

4868   MS BELL: They do not, no.

4869   THE CHAIRPERSON: What's the story in Victoria? You want to move the 10 percent overlap issue and you say you've never broached it, you never came near it.

4870   Does that mean you now intend to broach it and that's why you want it removed?

4871   MS BELL: I think it goes again to the question -- and maybe Barb wants to add something to this -- but I think it goes again to the question of flexibility and probably, you know, the need to just streamline our licences and simplify them as much as possible.

4872   MS WILLIAMS: Yeah, I would echo that. I think what we've been trying to do with all of our stations, as we've tried to figure out ways to support the smaller station and the smaller station group, is we've tried to be as inventive as possible with different things we could try and different things we could do to make the stations more successful, and flexibility ultimately is the key to the opportunity for that innovation.

4873   So, it's not that there's an immediate plan in a back pocket to suddenly have a duplication scheme, but I think we're looking to make sure that we're not hampered by regulation that's in front of us before we even got started.

4874   THE CHAIRPERSON: But 10 percent is a fairly low number. You basically want us to remove it so you could have a hundred percent duplication.

4875   Is there a lot of room between 10 and a hundred?

4876   MS WILLIAMS: There is, but there's a big business case in the middle of that. I'd say to have 100 percent duplication would not be very helpful to the sales team that's really trying to reach into two different markets and sell two different schedules.

4877   I don't think we're looking to that as a solution.

4878   THE CHAIRPERSON: Yes. Well, in that case, why don't you give me some assurance and ask for a lower number?

4879   MS BELL: Can we give that some consideration and we can perhaps --

4880   THE CHAIRPERSON: Why don't you think about that and come back to us.

4881   MS BELL: Absolutely.

4882   THE CHAIRPERSON: Now, you've put the E stations up for sale and I gather you haven't had a taker so far. I'm just trying to understand what is the story here?

4883   I mean, you bought those stations from Craig and Wick and you obviously had the vision of having two chains and I don't know whether that was your plan too.

4884   I remember when Mr. Fecan was before us and was buying the A stations, or City originally wound up with the A stations, his whole idea was, I need a second chain, a second outlet for programming because Hollywood makes me buy more than I want and it either goes on the shelf or it's of quality that I don't want to show on my primary chain and so I need sort of a second chain to offload it.

4885   I assume that was your strategy originally too with buying the E chain; was it?

4886   MR. PETER VINER: Yes, it was in part. We part bought it as part of -- most of it as part of the Wick acquisition.

4887   THE CHAIRPERSON: Yes.

4888   MR. PETER VINER: At the time we bought it in 2000 they were roughly breaking even. And like all optimists, we thought we could do considerably better. That has not proven to be the case.

4889   They have -- they have served as a shelf for package make weight stuff that we're obliged to take from Hollywood, but in the last three or four years their losses have grown to the point where we'd be far better off to shelve packaged material or, better still, cut it out than incur a loss by having the stations.

4890   THE CHAIRPERSON: But why are the losses so much more significant on the E chain than on the local chain that's I guess --

4891   MR. PETER VINER: Because the ratings are significantly less and the revenue reflects the rating circumstances and the ratings are very weak.

4892   And, you know, what's happened now is, you know, significant number of new stations in the markets since we bought them and there's -- in some markets, Victoria for instance and also in Southern Ontario, there's just too much capacity.

4893   THE CHAIRPERSON: Are you beyond the point of no return? Regardless of what the outcome is of this hearing or the hearing next spring, the E chains are gone from you?

4894   MR. PETER VINER: I suspect that's the case. Yes, I think we can find better owners for them. I think if we -- if there is a local programming fund of sufficient size or there's the prospect of fee for carriage, I think it will make it easier for us to sell them to local groups.

4895   THE CHAIRPERSON: But you are not contemplating any scenario where they stay in the ownership of Canwest?

4896   MR. PETER VINER: Not as a network. I think we might look at a couple to reformat to try and find something that makes sense. But, at the moment, we're hoping when we open the envelopes that the solution will be there.

4897   THE CHAIRPERSON: Okay. Then in terms of local programming, you suggest a 5 and 10 variety for your stations.

4898   First of all, how did you come up with those numbers? I appreciate that you want to monetize across the field. I think you range from four hours to 34 right now, some incredible spend right now --

4899   MR. PETER VINER: And that reflects the fact that this network was cobbled together through acquisitions.

4900   THE CHAIRPERSON: Yes.

4901   MR. PETER VINER: And we inherited things and we acquiesced to some things.

4902   Essentially we did it on where we thought we were in the market and we also did some financial modelling.

4903   Do you want to --

4904   MS McGUINLEY: Sure. As I had mentioned actually on Tuesday, our hours are somewhere between nine and 36 hours per week and we have -- after doing this very extensive financial review as part of our digital news project, you know, we do lose money in every one of our small markets.

4905   So, we need to find a model that's sustainable so that we can provide this local programming. Our revenues continue to decline and we need some consistency so we can have hopefully sustainability.

4906   Thanks.

4907   THE CHAIRPERSON: But let's deal with the five hours per week. How does that translate? Is that one hour and no programming on the weekend, or how would this go?

4908   MS McGUINLEY: In order to achieve the sustainability it would be Monday to Friday, an hour a day of local news Monday to Friday, two half hours actually, 6:00 to 6:30 and 11:00 to 11:30 is what we're proposing in that five hours.

4909   THE CHAIRPERSON: And the 10 hours?

4910   MS McGUINLEY: And in the 10 hours, it would be seven days a week with news on the weekend.

4911   But in our 10-hour model our goal is to provide -- 10 is the minimum, our goal is to provide the amount of hours that the markets will -- the viewers and the advertisers want. So, we expect it will be different in the four major markets, but 10 would be the minimum.

4912   But it would be seven days a week with weekend news.

4913   I'm just going to ask if Troy would like to -- anything further?

4914   MR. REEB: Yeah, I think the -- I guess the one thing we are looking for is the flexibility to be able to devise the ideal number of hours for certain markets.

4915   We certainly want to have a standard across the system, but we know that some markets will support more. As we've previously stated, we are making money on our local stations in Vancouver and in Edmonton. Certainly we think we would continue to provide higher levels of coverage in some of the markets.

4916   But we are in a situation where we're losing money in the vast majority of our local markets and all of the smaller markets.

4917   THE CHAIRPERSON: Your proposed conditions of licence just say five hours per week, don't say one hour per week day or five at least in newscast on every week day or something like that.

4918   I understand from you that's your intention?

4919   MR. PETER VINER: Yes, it is. Do you want to add --

4920   MS McGUINLEY: That is our intention, yes. But I did want to add one further thing. The five hours per week in the small markets is the minimum and we, again, are going to respond as in the large markets to the viewer and advertiser demands.

4921   We're looking for a minimum for sustainability.

4922   THE CHAIRPERSON: Since you have told me persistently that local news loses money, I have not great optimism that you're going to do more than the minimum.

4923   MR. PETER VINER: Well, actually that's not true. In some markets it's more efficient once you've set up a model to feed it than to re-invent Canadian -- other forms of Canadian content.

4924   It's probably not going to be doubled or tripled, but...

4925   I mean, the other thing is that we should -- and I think we made this point on Tuesday -- these numbers are predicated on no access to any other source of funds.

4926   THE CHAIRPERSON: I understand.

4927   Now, CTV, as you know, came forward with the model of 9.5 hours for places under 300,000 and 14.5 for 300,000 to one-million, which is considerably more than you're offering.

4928   How do you account for the divergence?

4929   MR. PETER VINER: I think they have a different point of view than we do.

4930   THE CHAIRPERSON: But presumably faces the same economics as you in terms of production of local news.

4931   MR. PETER VINER: That's not quite true. Your economics in terms of news relate to where you are in the market, the position you are, if you're No. 1 or No. 2.

4932   News is quite profitable, or can be quite profitable. We are competitive, or ahead in Alberta and we're ahead in B.C. In the rest of the markets we are, in most cases, No. 3.

4933   And, so, the dynamic of where you are in the market relates to the amount of hours that it makes sense for you to produce.

4934   THE CHAIRPERSON: And assuming we accept your 5/10, the places -- would there be a full-time reporter in each one of these places; would there be a news bureau in each one of these places?

4935   MR. PETER VINER: Yes, there would, but I'll let Troy --

4936   MR. REEB: Yes, at 5 and 10 we would maintain not just one reporter but a local presence and news gathering that would allow us to not only provide newscasts twice a day on weekdays, but also a news gathering presence that should there be substantial events in the overnight hours or on weekends that we would be able to deploy those news gatherers and get those stories on air.

4937   THE CHAIRPERSON: Any reason why you couldn't make that a part of your condition of licence?

4938   MS BELL: Yes. Sorry.

4939   THE CHAIRPERSON: Priority programming. You want to be relieved from priority programming because you want to have greater flexibility, very understandable given the financial state that you're in.

4940   You're fully aware that the artistic community is very unhappy with priority programming to begin with and feeling it does not produce the sufficient amount of Canadian production that it should and that it was a poor substitute for CPE which we had before in 1999 and in every submission that they bring before us have asked us to re-institute CPE.

4941   Now, you want to abandon priority programming. Would you accept CPE instead of that?

4942   MS BELL: Not at this time. As we discussed the other day, we would consider it in the larger context of the next renewal that would look at us corporately, including our specialty services.

4943   But at this time I think what we're saying to you is, we're just trying to get as much flexibility as we possibly can because of the situation.

4944   There's continued decline of conventional, there's continued erosion through the structural issues that we've discussed at length and so far nothing's kicked in yet on distant signals, the Fund's not in, we don't know if you will reconsider fee for carriage or not.

4945   There's a lot of uncertainty, and I have to tell you, and I think we discussed before, the concept of priority programming, before it was called that it was called under represented programming and that tells you, it's under represented because it doesn't garner audiences, therefore, it doesn't garner much revenue either.

4946   So, that's really the reason why we've applied for flexibility. And, as Barb explained, it's not that we're going to stop doing all forms of priority programming, we're just asking for the requirement to be eliminated at this time and it's a short-term renewal.

4947   THE CHAIRPERSON: Yes. Again, with absolutism going forward -- I mean, you may have a problem with priority programming in terms of definition or in terms of the hours, et cetera, but just to say blanketly take it off the air, it's very difficult for us to see the absolute necessity for it.

4948   MR. PETER VINER: Well, you know, I'd like to remind everybody, and I have to remind myself, that when we applied for the current seven-year licence our operating profit was $200-million. This year we'll lose -- if we survive, if we finish strongly we'll lose eight to $10-million.

4949   It seems to me that that's a very different circumstance in terms of what kind of obligations you carry, and I can't change those facts.

4950   THE CHAIRPERSON: Okay. And on independent programming, you're asking us to reduce it from 75 percent to 50 percent.

4951   Can you explain to me how that translates into dollars for you? Translate into dollars for you.

4952   MS WILLIAMS: Yeah, I think that things are -- all of these issues are somewhat connected in that as we face a declining revenue challenge in the conventional world we're looking as much as possible to be re-inventing ourselves and thinking about different ways to make our business more successful ultimately and recapture some of this revenue if we can, other than simply just cutting away at costs.

4953   And one of the big challenges we're all facing is the fragmentation of viewers across all of our channels and all of our other platforms and we're all trying to get our heads around, how do we somehow take advantage of all of this other viewing as opposed to it just being a problem.

4954   So, to the extent that there is opportunity to start to garner other revenue streams from secondary platforms, those can be ways for us to make sure that that big up front investment, which is valuable in so many ways, it's valuable in terms of the big promotion you get from a show first being seen on a large platform so that everybody's aware of it, which is the only reason someone might know that they want to go find it on iTunes or your website or something anyway. There's a huge initial impact to that first broadcast.

4955   But we don't get the revenue out of that first broadcast, although we still have all the cost. But the other revenue potentially comes from those other platforms and those other streams.

4956   So, what we're saying is we need to be able to have, again, more flexibility on some projects some of the time to own the whole darn thing and to be able to experiment now with where we put that show and how we push that show into other places and how do we get an advertiser to buy the whole package all at once rather than an advertiser moving in and out of bits and pieces?

4957   How do we use the leverage that we have to make these shows as successful as possible, not only with the largest audiences, but also with the largest revenue?

4958   So, it's the flexibility to stay in control of the product in an effort to stay in control of the revenue which is the source of the whole problem here we're facing in conventional.

4959   THE CHAIRPERSON: You're not going to produce it yourself, you're still going to buy it, so it's just you're going to own the rights rather than the producer?

4960   MS WILLIAMS: Yeah, it is about controlling rights, it is about controlling a project from the very beginning, it is about staying in control of that project from its very beginning to its very end, and that often comes with, you know, a very significant up front cost which is one is selective about this. It's not something that suddenly we want to one hundred per cent finance, own and control every single project that we're involved in.

4961   But we do believe that there is some value in some projects some of the time in taking a larger stance and we want to be able to do that more than the rules allow us right now.

4962   THE CHAIRPERSON: Yes. My point was, you're not going to move into in-house production?

4963   MS WILLIAMS: No. The contemplation at the moment is not to own a studio.

4964   THE CHAIRPERSON: Yes.

4965   MS WILLIAMS: No, it's not.

4966   THE CHAIRPERSON: Okay. There are lots of questions we want to ask you in the confidential part but my colleague, Rita Cugini, has some ones on CJNT and then I'll go to my other colleagues.

4967   Okay.

4968   COMMISSIONER CUGINI: Thank you, Mr. Chairman.

4969   Vice-Chairman Arpin may also have some questions for you.

4970   But based on the changes that you have applied for on CJNT, my first question -- and excuse me if you interpret this as being provocative, but -- are you a conventional broadcaster with the burden of having to air ethnic programming on CJNT, or are you an ethnic broadcaster with English language programming that subsidizes the ethnic programming?

4971   MS BELL: Sorry. I'm not sure that we're -- we don't only -- we don't only have to air English language programming in the non-ethnic period, if we air any English language programming it has to be divided between English language and French, so...

4972   COMMISSIONER CUGINI: No, but I'm referring to the proposal that you have made --

4973   MS BELL: Yeah.

4974   COMMISSIONER CUGINI: -- to change which would now mean that you would air only English language programming and not ethnic.

4975   MS BELL: As opposed to the French?

4976   COMMISSIONER CUGINI: Right.

4977   MS BELL: Correct.

4978   COMMISSIONER CUGINI: So...

4979   MS BELL: So, I'm sorry...?

4980   COMMISSIONER CUGINI: Are you a conventional broadcaster with the burden of having to air ethnic programming on CJNT.

4981   MS BELL: M'hmm.

4982   COMMISSIONER CUGINI: Or are you a ethnic broadcaster that recognizes that English language programming cross-subsidizes your ethnic programming?

4983   MS BELL: I got your question.

4984   COMMISSIONER CUGINI: It's a question of your commitment.

4985   MS BELL: Yes. I think it's -- well, I think it's the latter. We would still be an ethnic station that would be subsidized by English language programming.

4986   COMMISSIONER CUGINI: And, therefore, the change in your condition of licence regarding prime time, where now you would like for 75 percent of your prime time between 8:00 and 10:00 to be comprised of English language programming; correct?

4987   Have I got that correct?

4988   MS BELL: That's the only, that is --

4989   COMMISSIONER CUGINI: That's a physical change.

4990   MS BELL: Absolutely, but you've seen the losses incurred by the station. It's not economically viable at all and the only way to at least -- and, by the way, by no means do these changes bring it to a level of profitability, we'd still be losing money.

4991   COMMISSIONER CUGINI: And we'll discuss the numbers --

4992   MS BELL: Yes.

4993   COMMISSIONER CUGINI: -- in the in camera session.

4994   MS BELL: Okay.

4995   MR. MEDLINE: But if I can just add to that, the ethnic policy, as we know, is that the non-ethnic will subsidize the ethnic, you know, that's in the Commission's Policy itself.

4996   So, this change between 8:00 and 10:00 p.m., I think, is the one that you're mainly talking about, would allow, to some degree at least, there to be more to subsidize the 60 percent of the schedule that would still remain ethnic.

4997   COMMISSIONER CUGINI: And how does having a limited amount of ethnic programming in prime time serve the ethnic audiences of Montreal?

4998   MS BELL: I'm going to ask Isabella to give you an answer to that.

4999   MS FEDERIGI: We would still be addressing the communities as best as we can. What we're asking is for more flexibility where our program grid would probably be more stable.

5000   Currently the schedule, because we need to follow U.S. programming as much as possible for simulcast opportunities and, therefore, more increased revenue, it makes our ethnic schedule very volatile and unstable and we feel communities are not served properly because of that.

5001   If we have a more stable grid in prime time, then we'll be able to promote our ethnic shows properly and more adequately.

5002   COMMISSIONER CUGINI: But when I look at your proposed programming grid, if you speak a language other than English, you better stay up late or be home on Saturday night. That's my issue, because your third language programming doesn't -- on a Monday to Wednesday doesn't start until 10:00, on Friday it's on at 11:00 and then all night on Saturday.

5003   MS FEDERIGI: We're looking more at a weekend schedule for prime time that's more stable.

5004   Again, we're looking for simulcast opportunities to help the station survive.

5005   COMMISSIONER CUGINI: Okay. Well, like I said, we will get into the economic impact that these changes will make directly in the in camera session.

5006   I'd like to now move to the condition of licence wherein you ask that the number of groups and languages to be served will be reduced to five.

5007   So, just so I have it absolutely correct, which language groups will you be serving with this new schedule?

5008   MS FEDERIGI: In our application we have proposed five groups that represent a larger demographic group against the Stats Can -- 2006 Stats Can country of origin numbers we got and we've decided to go by a threshold of 50,000 people.

5009   And, as you know, the groups -- the ethnic groups in Montreal are way smaller than the ones in Toronto or Vancouver, so we felt this 50,000 threshold made sense for Montreal.

5010   And we then compared those five groups to -- five or six groups compared to retail support and they actually pretty much matched.

5011   COMMISSIONER CUGINI: Yeah, I saw -- and I should have been more specific, I apologize -- I saw the five groups that you listed and let's take Latin American, for example.

5012   Common language, obviously, but will you have programming that targets different --

5013   MS FEDERIGI: Groups.

5014   COMMISSIONER CUGINI: -- groups within that language group --

5015   MS FEDERIGI: That could be possible.

5016   COMMISSIONER CUGINI: -- so people from Argentina, people from Mexico, people from Ecuador?

5017   MS FEDERIGI: That could be possible. However, if you break down that Latin American group per community that it serves, then you break it down and not necessarily all the same -- all these people will be watching.

5018   COMMISSIONER CUGINI: Now, what about Chinese? Will you do programming in both Mandarin and Cantonese?

5019   MS FEDERIGI: Currently that's what we do.

5020   COMMISSIONER CUGINI: That's what you do now. South Asian, how many languages within the South Asian group will you serve, because there are a number of languages within that group as well?

5021   MS FEDERIGI: This is only an indication of groups. Actually we were not planning on doing South Asian, per se. It was only an indication.

5022   COMMISSIONER CUGINI: So, now it's down to four?

5023   MS FEDERIGI: No, if you look at the program grid that we submitted, South Asian is not in there.

5024   COMMISSIONER CUGINI: Okay. And where does Italian soap fit in, because it's on your schedule for the proposed?

5025   MS FEDERIGI: Yes, it is. Well, actually it's to help our sales, it's --

5026   COMMISSIONER CUGINI: I'm sorry, I didn't hear you.

5027   MS FEDERIGI: It's to help our sales and retail support, that's actually our best seller.

5028   COMMISSIONER CUGINI: So, the five language groups -- okay, reduction of the number of groups and languages to five per week is a minimum?

5029   MS FEDERIGI: Yes.

5030   COMMISSIONER CUGINI: And you would accept that as a condition of licence?

5031   MS FEDERIGI: Yes.

5032   COMMISSIONER CUGINI: That it be a minimum. Okay.

5033   And then the last change that you have requested is the elimination of the requirement for French language non-ethnic programming, and that is over the entire schedule; is that correct, not just in prime time?

5034   MS FEDERIGI: That's correct, we'd eliminate French language programming altogether.

5035   COMMISSIONER CUGINI: Okay. And --

5036   MR. MEDLINE: Sorry, to be clear --

5037   MS FEDERIGI: Sorry, non-ethnic.

5038   MR. MEDLINE: That's right.

5039   MS FEDERIGI: Sorry.

5040   COMMISSIONER CUGINI: Non-ethnic, right. Now I get that.

5041   And from a competitive standpoint, and I'm not as familiar with the Montreal market obviously as I am with the Toronto market, there's a predominance of French language services being on basic on Montreal, more than English.

5042   MS BELL: Absolutely, yes.

5043   COMMISSIONER CUGINI: And I read in your application that one of the reasons that you're asking for this elimination is that the viewers are confused, that they don't necessarily come to CJNT to watch French language programming. Is that correct?

5044   MS BELL: That wouldn't be their destination. And the other problem, of course, is acquiring the rights when you -- after all the major networks and there are several in Quebec.

5045   COMMISSIONER CUGINI: And, so, primarily this programming has been second or third window when it comes to CJNT?

5046   MS BELL: That's right.

5047   COMMISSIONER CUGINI: And, therefore, has little value? I shouldn't be saying this, you should be saying this.

5048   MS BELL: That's all right. I'm nodding. It's very good though.

5049   COMMISSIONER CUGINI: All right. Like I said, we'll go into the other details.

5050   Vice-Chairman Arpin, do you have more questions about CJNT?

5051   COMMISSIONER ARPIN: Yes, thank you.

5052   I want to get back to the compliance and particularly use the case of CJNT and what you said, Mrs. Bell.

5053   You said that whenever you have been non-compliant you have compensated the shortcomings in the following year.

5054   Well, when I'm looking at CJNT, I'm talking the year '06-'07 your shortcomings was about two percent and in '07-'08 your shortcomings is 13.5 percent. So, almost 12 -- 11.5 percent bigger than the year before.

5055   How have you compensated?

5056   MS BELL: I've been informed that we make up -- that we've made up all shortfalls within the licence term, not necessarily in the next year. Sometimes we don't know we have a shortfall until much later.

5057   COMMISSIONER ARPIN: In the case --

5058   MS BELL: So, I will verify in that case --

5059   COMMISSIONER ARPIN: Because --

5060   MS BELL: I'll double check. I've been told we have.

5061   COMMISSIONER ARPIN: Obviously in the case of CJNT it appears to be recurrent.

5062   MS BELL: I will have to double check and get back to you.

5063   COMMISSIONER ARPIN: While in the other instances it happens once, but in this case you're lagging behind all the time, and even the hole is getting bigger and bigger.

5064   MS BELL: It's because we weren't aware that there was a problem.

5065   COMMISSIONER ARPIN: I see.

5066   MS BELL: It came to our attention much later. There was an error in reporting, and because when the Commission's logs are -- it takes time for them to double check things, by the time we find out there's a problem, sometimes you can't make it up the year after because -- and, in this case, there was a problem for a period of time and we hadn't been informed that there was.

5067   COMMISSIONER ARPIN: Now, I'm coming back to your last reply to Mrs. Cugini where you want to target your ethnic programming to the main ethnic group by size that you could find in Montreal.

5068   And the first one that you've identified with almost 170,000 people is the black community. Obviously, the black community is made up of Jamaicans, they speak English; they are made up of Haitians, they speak French; and there might be some others from the West Indies Island or whatever, but they all speak English.

5069   So what type of ethnic programming do you think you are going to be catering to them and in which language?

5070   MS FEDERIGI: Currently, sir, we address the black communities in French, Creole for the Haitian community, English for the Caribbean community and French for the French-African community. So the plan is still to go for that.

5071   COMMISSIONER ARPIN: So there will still be French on CTNT --

5072   MS FEDERIGI: Absolutely.

5073   COMMISSIONER ARPIN: -- at the end of the day, but catering towards the --

5074   MS FEDERIGI: An ethnic group.

5075   COMMISSIONER ARPIN: -- the ethnic groups?

5076   I don't think the population coming from Guadeloupe and Martinique is of a significant size, but they would see it as obviously a big size.

5077   Now, also you haven't listed the Italian and the Greek communities, but I know they are very well integrated in the Montreal society, because they have been there for many many years and many generations, but they do still speak Italian and speak Greek at home. And it is not an audience that is of interest?

5078   MS FEDERIGI: As far as I know, Italian and Greek are listed on the application.

5079   COMMISSIONER ARPIN: Well, the list that I have here is black, Arab, Latin-American, Chinese and South-Asian. Now, you said there won't be any South-Asian programming but there is a South-Asian population in Ville Saint-Laurent and around that area which is becoming more and more significant, maybe not the size of the one in Toronto, I will agree.

5080   MR. MEDLINE: Just to clear up any confusion. There might be some confusion here. Italian and Greek were identified, especially the languages, as two of the most important languages for this application. Perhaps there might be some mix-up, but in the schedule itself both Italian and Greek are represented on the sample schedule that was provided.

5081   COMMISSIONER ARPIN: Now, the current number of languages that your condition of licence states is 15 different languages serving 18 different ethnic groups, and you want to reduce it to five distinct languages. How many ethnic groups?

5082   MS FEDERIGI: Five groups.

5083   COMMISSIONER ARPIN: Five groups as well.

5084   MS FEDERIGI: Again, it is a minimum.

5085   COMMISSIONER ARPIN: And where did you get your ethnic programming -- so now you want to reduce your number of local hours from 13.5 hours local programming per week to 5 hours per seek of ethnic programming. So from where did you get your other ethnic programming?

5086   MS FEDERIGI: You mean for local?

5087   COMMISSIONER ARPIN: For CTNT.

5088   MS FEDERIGI: The local programming, the ethnic programming? That's is what I understand, sir.

5089   COMMISSIONER ARPIN: Well, you currently have an amount of local ethnic programming of 13.5 hours a week and you want to reduce it to 5 hours a week.

5090   MS FEDERIGI: Right.

5091   COMMISSIONER ARPIN: So my question is -- the broadcast week is 126 hours.

5092   MS FEDERIGI: Well, we offer repeats. It would be better viewing opportunities for our viewers. We will offer repeats. This is how we would fill the grid. We also have some third-language acquisitions that we plan on continuing, such as the "Italian Soap" and "Arabic Soap."

5093   COMMISSIONER ARPIN: Well, thank you very much. That concludes my questions for this phase.

5094   THE CHAIRPERSON: Peter.

5095   COMMISSIONER MENZIES: I have a couple questions; one which I have asked other people so I have to ask you too, and the other one is just on the topic we are on, CTNT.

5096   If I get it correctly, the aim is to get this licence spruced up and then you can sell it, is that what I understood basically, make it more attractive to a potential buyer?

5097   MR. PETER VINER: That is an option, yes.

5098   MS BELL: Can I just jump in for a second though? This is part of the goal, but we applied for a lot of these changes several years ago. And because of the losses that were continually incurred by the station, we were turned down. So it is not a new idea, because we may be selling the station.

5099   COMMISSIONER MENZIES: Sure. I guess I just share a concern with it, and really nobody here is at fault. When you go back, we licensed this, you know, an ethnic station like this, it didn't make money. You came in, you thought you could make money with it, turned out nope. And now we are sort of taking another run at it, hopefully maybe another owner can take a run at it.

5100   And as it goes along each time, the original purpose becomes somewhat more deluded and it is just kind of that incrementality on it. I mean, do you really think that there is room for -- given the proliferation of specialty channels now that serve ethnic audiences, whether you want to watch India/Pakistan Cricket, West Indies Cricket, I mean, there is more cricket on specialties than you can shake a cricket bat at these days in terms of that. But those were originally opportunities for OTA, and they don't exist anymore.

5101   Do you really think that there is a future for over-the-air ethnic channels like this or are we looking at just trying to transfer this into something else eventually?

5102   MS BELL: I will just start and others may want to jump in.

5103   I guess just to go back to the history, and I don't know if you are aware of it, this service -- by the way, we inherited it as part of the WIC transaction. It had gone bankrupt, basically we saved the station from going black and we gave it the best shot that we could.

5104   And then, as what happened with all other conventional television services, whether they are ethnic or English-language, there has been a lot of licensing. And as you have just mentioned yourself, I mean, a number of ethnic services popped up over that period, which made it even more difficult. It has just struggled from day one. It is very difficult.

5105   And in fact, as we said, the Montreal market, although there are some ethnic populations of a decent size, it is very difficult to support a local ethnic station in that market, because there is not enough commerce there to support it.

5106   So that is sort of where we are going with these changes to a large extent, is to try and at least maximize or give it an uptick in terms of revenue.

5107   Pete, do you want to add anything.

5108   MR. PETER VINER: Yes. I mean, I think it is a fair question. It might well fair better with a different owner, i.e. a Rogers with an OMNI, where they can take advantage of pooled production and pooled acquisition and the synergies they have through Italian soccer, et cetera. Or conceivably, it could be, you know, a group of local producers who have an interest in seeing their production on air and have special roots with the community, it might make sense.

5109   Essentially, in that case, it would be a living, not a business. But, you know, as a standalone business we can't seem to make it go with its current licence.

5110   COMMISSIONER MENZIES: Okay. And my other question is the one that we asked CBC earlier and CTV this morning. In terms of this process and the short-term renewals, you know, part of the purpose is to see if there is some relief that can be offered in the short-term.

5111   And given that, as I put it to them, we don't actually have any money, we just have access to other people's money on your behalf. Those people, whether it ends up being the public or other operators, would probably need some assurance on the record of some of the actions you've taken internally to make your business as efficient as possible.

5112   You have already talked about a few of those. And some of yours, being a public company, are reasonably more high-profile than some of the others. But, for the record, can you detail some of the internal efficiencies that you have done and can you assure that any gains that you get from any, you know, LPIF or other type of assistance won't be going into the ranks of executive bonuses and that sort of stuff, that it will be going to sustain the products that we have talked about?

5113   MR. PETER VINER: Yes. I'll start off, executive bonuses haven't been on our radar for sometime and we don't expect them to be on anytime soon, and that is a matter of public record.

5114   But our efforts to improve these stations fall really into three categories.

5115   The first one is pruning the losers, which were are doing through a sale process. The second one was some of what Chris began to describe, but we will describe in more detail, which resulted in almost a $31 million reduction in costs this year. And the third part, which is as important and which is seldom dwelt on, is our efforts for revenue generation and what we have done in a very creative and innovative way in a falling market.

5116   And the fourth one I am going to ask Barb to talk a little bit about how we have used the Alliance Atlantis acquisition to improve both organizations at lower cost. But at the moment, Chris, do you want to start?

5117   MS McGINLEY: Sure.

5118   MR. PETER VINER: Thank you.

5119   MS McGINLEY: I will just give you some of the highlights of what we have tried to do to improve our operating efficiencies.

5120   We centralized master control for our conventional stations out of Calgary which, by leveraging new technology, we were able to be HD ready and we have reduced operational costs.

5121   We centralized and redesigned our traffic programming and sales process through a new system called S4M, resulting in improved processes and, again, reduced operational costs.

5122   We implemented the digital news room initiative, which I have already discussed. We sold or we shutdown non-core businesses and assets, we sold our mobile production business, we shutdown a certain amount of our commercial production businesses, we sold the local station facility in one market to a third part and then we leased space from our new owner.

5123   We have subleased space wherever possible, where we have excess space, and we continue to review that. In one market we are vacating a space and moving into a Canwest facility that has excess capacity.

5124   We have reduced our payroll, finance and administrative functions at the local station level sort of into regional pods to maximize efficiencies and reduce operating costs. We have drastically reduced or eliminated travel, entertainment, conference attendance, office supplies, BlackBerry usage at all stations and centrally.

5125   The GMs in every small market now have a dual responsibility to maximize operating efficiencies and we have virtually slashed our capital budgets in half.

5126   Just some of the things that we have done to date.

5127   MR. PETER VINER: Thanks, Chris.

5128   Before I ask Errol, I just talk a little bit about our revenue generation. We have also closed two speciality services, Cool TV and X-Treme Sports.

5129   We sold our radio properties. We have made every effort and combed over virtually all of our assets, and if they don't have a chance of breaking even or making money in the future, we have pruned them or we are putting them up for sale.

5130   Errol, do you want to talk a little bit about our revenue initiatives?

5131   MR. DA-RE: Sure. Thanks, Pete.

5132   Well, despite all the doom and gloom that we have been hearing lately, there are some terrific things happening at Canwest and I would like to share a few of them with you.

5133   Over the past year or so, since the integration with Alliance Atlantis, we have made it much easier for our advertisers to do business with Canwest. And from a backend perspective, we have a new innovative and customized traffic system called S4M that allows real-time avails between buyer and our sales executives. By September of this year all of our 18 specialty channels will join our conventional offerings under this system.

5134   It comes with less paperwork for the agencies and faster turnaround time.

5135   COMMISSIONER MENZIES: Okay, I have to be careful that I don't turn it into a primetime CPAC commercial --

5136   MR. DA-RE: Okay.

5137   COMMISSIONER MENZIES: -- on that. But, just within that context, please continue.

5138   MR. DA-RE: Sure. So that is the first part of it. That was more the internal part.

5139   On the external part of it, we have really revamped our sales initiatives with the in-house promotional arm called Marketing Ventures. And part of the offering there is that we have taken it to what we call the Canwest Advantage. And that is really bringing the print, the digital and the broadcast side to our clients for innovative and unique marketing solutions that we can offer them.

5140   And we are finding that, doing it this way, we are very unique versus our competitors and it is working quite well. And I will be much more in-depth in the in-camera session on that.

5141   COMMISSIONER MENZIES: Okay, thank you very much. Those were very well prepared answers. Thanks.

5142   THE CHAIRPERSON: Thank you.

5143   MR. PETER VINER: I am just going to ask if we can, excuse me, Mr. Chairman, just if we could talk a little bit about what we have done with the Alliance Atlantis combination. And I think these things are important, because I think you posed a very interesting question; why would we subsidize something unless we had some sense that it was efficient.

5144   And most often we talk about efficiency seems to be all about cost cutting. In fact, in our organization it is not just about cost cutting, it is about getting the most out of the assets we have and also revenue generation.

5145   Barb, can you briefly summarize?

5146   MS WILLIAMS: Yes, I will.

5147   Just very quickly, I think one of the interesting things about what Errol's group has done has been that a lot of that opportunity to really grow the revenue side has been with the Canadian content. And the salesmen, the programming team, have worked really really closely together to maximize the leverage we have as a combined company to grow the audiences and grow the sales.

5148   Projects Runway Canada which was an important little show for Slice, suddenly could become a huge opportunity both for the advertisers that had an opportunity to be involved and for our viewers by sharing that show across both platforms. So we are looking not only to grow revenue with the advertisers but alongside to grow those audiences. So there is a whole revenue push that has come from the combination and then there is the cost-cutting push. And we have used our leverage as a big volume buyer to push down those foreign costs as much as we could. And we have had some success there.

5149   It is the toughest game in town and, you know, we all know of the challenge we are all facing in keeping Hollywood under control, but we have been able to. When you look at the numbers you are able to see that we were able to bring costs down in a way that Alliance Atlantis on its own as a buyer couldn't do. But when we can come to the table as a combined leveraged buyer we have some opportunity there to keep costs under control.

5150   So it is both about using the combination of those platforms to control costs and to grow audiences and to find opportunities for advertisers. So we are really pushing these synergies in every direction we can. We have an obligation to make it work the best we can.

5151   THE CHAIRPERSON: Okay. Before we go into in camera, let me ask you one last question, which I asked Mr. Fecan this morning also.

5152   We had the CBC yesterday, I don't know whether you listened on the internet. And Mr. Stursberg gave a different analysis of the issues facing conventionals. He said there are basically three problems which are always thrown together and everybody things that fee for carriage is the answer to all three and they may require different answers.

5153   The local news and local programming, which is basically not profitable and needs subsidizing. There is what you call signal integrity. Not just basically that you buy programming for Canada, but you're not just saying it, you've done it, there is the American stations which are distributed on this market and, therefore, can impair the benefits you get from that signal.

5154   And the third one is the lack of compensation for the value of your product which is being distributed by BDUs.

5155   It struck us as a very insightful way of looking at it. I just wanted to have your views on it.

5156   MR. PETER VINER: I think we would accept those as a reasonably insightful view of it. I think I would add one more, and that is the declining revenue, which is following the audience of specialty networks and, to a lesser extent but a growing extent, online. It seems to me that that is a very key one for the CBC and for CTV as well.

5157   THE CHAIRPERSON: Okay, thank you very much.

5158   I think we will take a 10-minute break and we will throw everybody out except you and CRTC personnel when we go into camera. Thank you.

--- Upon recessing at 1448

--- Upon resuming at 1449

5159   THE CHAIRPERSON: Excuse me. Mr. Viner, could I ask you to take your seat again? There was one more question I forgot to ask you, I have been reminded by my staff.

5160   Which was we had yesterday the proposal from Bell TV on what they call FreeSat, which means to address the whole issue of the cost of digital migration.

5161   And the way we understood it and it was explained to us is essentially Bell says you want a hybrid solution, you will only have transmitters in the major centres, you won't have them in the smaller centres. We will give free access to stations which were formerly or they are in smaller centres via satellite, won't cost the consumer anything except the initial acquisition of a dish and a receiver.

5162   But in return for that, because of that, broadcasters, you are asking us for distant signals, negotiations. No, there won't be any, you will stay at 48 cents, the way it is right now under the plan that is administered by the CAB. That essentially was their proposal in a nutshell.

5163   And I would just be interested in having your views or your comments on it either later on in a written form or now your first impression, how are you going to handle it?

5164   MR. PETER VINER: I will give you both.

5165   THE CHAIRPERSON: Good.

5166   MR. PETER VINER: We just got it because, as you know, this is a --

5167   THE CHAIRPERSON: Yes.

5168   MR. PETER VINER: -- last-minute surprise. I don't think it is without merit, I think technically we have some questions and it could well be an answer. Like many of the negotiations with the BDUs, all of a sudden old and unresolved issues are tossed on the table, which I think we made the case on Tuesday, they just simply have too much leverage.

5169   But, again, this may be an opportunity for you to use your offices to arbitrate and ensure that there is somebody in a stripped shirt at the negotiation.

5170   But, you know, I am not sure first blush that we would be willing to trade off something that costs us over $30 million a year in terms of distant signals for what we estimate to be about a 3 per cent loss in our current audience patterns. That isn't to say that we don't care about that 3 per cent, but I am suggesting that doesn't sound at this stage, until we know more about it, to be a very good trade.

5171   THE CHAIRPERSON: Well, let me just repeat to you what I said to Mr. Fecan. From a public policy view it seems to us that we can see, we can't have a result being obtained whereby people who presently receive a signal will be cut-off in the future.

5172   And the hybrid's solution that you and others strive for requires us to give you a licence for what was formerly over-the-air will now be delivered by different means. But those different means have to reach the customers on the same basis as they do right now.

5173   MR. PETER VINER: And we don't disagree with that. I mean, I think though we should look at kind of the macro picture here. We have had our real estate expropriated and then we are told to make-up for it. I think that there is another player here, Industry Canada or whomever, who expects some $4 billion for this real estate, so perhaps they have a role to play as well.

5174   THE CHAIRPERSON: Okay, if you have any further comments or concerns of the proposal, we would really appreciate, thank you.

5175   MR. PETER VINER: We will, thank you.

5176   THE CHAIRPERSON: Okay.

--- Upon recessing at 1452, to resume in camera at 1510

--- Upon resuming at 1656

5177   THE SECRETARY: And for the public record I would like to indicate that an abridged version of the discussion held during this in-camera session will be placed on the public record as soon as it is practically possible.

5178   The hearing is now adjourned and we will resume the public hearing tomorrow morning at 9:00 a.m.

5179   THE CHAIRPERSON: Just in case you wondered, the abridged version, we will run it by you first of all because we want to make sure that there is nothing in there that you can't live with. Thank you.

--- Whereupon the hearing adjourned at 1657, to resume in public on Friday, May 1, 2009 at 0900

   REPORTERS

____________________      ____________________

Johanne Morin         Monique Mahoney

____________________      ____________________

Beverley Dillabough      Madeleine Matte

Date modified:

2009-05-01