ARCHIVED - Transcript, Hearing 7 November 2012

Volume 1, 7 November 2012

TRANSCRIPTION OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION

SUBJECT:

To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2012-475, 2012-475-1 and 2012-475-2, 2012-475-3, 2012-475-4 and 2012-475-5

HELD AT:

Outaouais Room

Conference Centre

140 Promenade du Portage

Gatineau, Quebec

7 November 2012

Transcription

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

Transcription

To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2012-475, 2012-475-1 and 2012-475-2, 2012-475-3, 2012-475-4 and 2012-475-5

BEFORE:

ALSO PRESENT:

HELD AT:

Outaouais Room

Conference Centre

140 Promenade du Portage

Gatineau, Quebec

7 November 2012

- iv -

TABLE OF CONTENTS

PAGE / PARA

APPEARING ITEMS

PHASE I

PRESENTATIONS

APPEARING INDIVIDUALLY

PHASE II

INTERVENTIONS

APPEARING INDIVIDUALLY

PHASE III

REPLY

APPEARING INDIVIDUALLY

PHASE I

PRESENTATIONS

APPEARING INDIVIDUALLY

PHASE II

INTERVENTIONS

No interventions

PHASE III

REPLY

APPEARING INDIVIDUALLY

Gatineau, Quebec

--- Upon commencing on Wednesday, November 7, 2012 at 0900

1   LE PRÉSIDENT : À l'ordre, s'il vous plaît.

2   Bonjour, mesdames et messieurs, et bienvenue à cette audience publique durant laquelle nous examinerons trois demandes de radiodiffusion.

3   We will begin today by considering an Application by Rogers Broadcasting to acquire from Channel Zero the assets of CJNT, an ethnic television station in Montreal, for $10.3 million.

4   Rogers is proposing to convert CJNT to an English-language commercial television station and should this request be approved Rogers is seeking similar licence conditions to those imposed on its Citytv stations.

5   Alternatively, Rogers proposes to keep CJNT as an ethnic service provided that the Commission accepts less restrictive conditions of licence.

6   As with all ownership transactions it is the responsibility of the seller or its representative to prove that a transaction is in the public interest. The Commission has been abundantly clear about this recently. This means that the burden of proof lies with Rogers and Channel Zero. This is not simply a matter of promising to invest a certain amount of money in the Canadian broadcasting system, many other factors must also be taken into consideration, including the impact on the Montreal market and the Commission's various policies.

7   In studying this Application the panel must be persuaded that this transaction would provide benefits to Canadians as well as to the overall Canadian broadcasting system.

8   Now, the panel will also consider an Application for a licence to operate a new over-the-air television station in Montreal that would be called International Channel/Canal International or simply ici.

9   The Applicant has proposed that ici would serve Montreal's ethnic communities and in particular fill the void should the format of CJNT be changed. ici would offer programming in 15 languages to 18 different cultures including Italian, Greek, Arabic, Chinese, Russian and Hindi communities.

10   And finally, the panel will examine an Application by CHMZ-FM Radio Ltd. to acquire the assets of CHMZ-FM Tofino in British Columbia. The station's current licensees are listed as McBride Communications & Media and Umeek Human Resources Development, partners in West Island Radio Enterprises General Partnership.

11   However, there appears to have been a change in ownership without the Commission's prior approval. In addition, it appears that the station may have failed to comply with various sections of the Radio Regulations and its licence conditions related to the filing of annual returns and contribution to Canadian Content Development.

12   So in a nutshell that's what the hearing is about.

13   Je vous présente les membres du comité d'audition.

14   À ma droite :

15   - Tom Pentefountas, vice président de la radiodiffusion;

16   À ma gauche :

17   - madame Suzanne Lamarre, conseillère régionale du Québec;

18   - madame Candice Molnar, conseillère régionale du Manitoba et de la Saskatchewan; et

19   - Marc Patrone, conseiller national; et

20   - évidemment, moi-même, Jean-Pierre Blais, président du CRTC, et je présiderai d'ailleurs l'audience publique d'aujourd'hui et de demain.

21   L'équipe du Conseil qui nous assiste comprend notamment :

22   - François Vézina et Josiane Lord, coordinateurs de l'audience;

23   - Romy Ochmann St-Jean et Joshua Dougherty, qui agiront comme conseillers juridiques; et

24   - Cindy Ventura, secrétaire de l'audience et gestionnaire des audiences publiques.

25   Donc, j'invite maintenant la secrétaire madame Ventura à vous expliquer le déroulement de l'audience.

26   À vous la parole, Madame.

27   LA SECRÉTAIRE : Merci, Monsieur le Président, and good morning.

28   I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.

29   When you are in the hearing room we would ask that you please turn off your smartphones as they are an unwelcome distraction and they cause interference on the internal communication systems used by our translators. We would appreciate your cooperation in this regard throughout the hearing.

30   The hearing will last two days. Please note that tomorrow we will begin at noon. We will advise you of any scheduling changes as they occur.

31   Pendant toute la durée de l'audience vous pourrez consulter les documents qui font partie du dossier public pour cette audience dans la salle d'examen qui se trouve dans la Salle Papineau, située à l'extérieur de la salle d'audience, à votre droite.

32   Le service d'interprétation simultanée est disponible durant l'audience. L'interprétation en français se trouve au canal 2. Vous pouvez vous procurer des récepteurs d'interprétation auprès du commissionnaire à l'entrée du Centre.

33   Nous désirons rappeler aux participants d'allouer un délai raisonnable pour la traduction lors de leur présentation à vive voix, tout en respectant le temps alloué pour leur présentation.

34   Please note that simultaneous interpretation is available during the hearing; the English interpretation is on channel 1. You can obtain an interpretation receiver from the commissionaire at the entrance of the Conference Centre.

35   We would like to remind participants that during their oral presentation they should provide for a reasonable delay for theinterpretation while respecting their allocated presentation time.

36   There is a verbatim transcript of this hearing being taken by the court reporter sitting at the table to my right, which will be posted daily on the Commission's Web site. If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break.

37   Veuillez noter que les documents seront disponibles sur Twitter, le compte du CRTC, à arobase CRTCaudiences au pluriel, en utilisant le mot-clic diaise CRTC.

38   Please note that the Commission will also be tweeting the documents during the hearing at @CRTChearings using the hashtags #CRTC.

39   Just a reminder that pursuant to section 41 of the Rules of Practice and Procedure you must not submit evidence at the hearing unless it supports statements already on the public record. If you wish to introduce new evidence as an exception to this rule, you must ask permission of the Panel of the hearing before you do so.

40   And now, Mr. Chairman, we will begin Phase I of item 1 on the Agenda, which is an Application by Rogers Broadcasting Limited for authorization to acquire from 2209005 Ontario Inc. the assets of CJNT-DT, an ethnic television programming undertaking in Montreal.

41   Please introduce yourselves and you will then have 20 minutes for your presentation. Thank you.

PRESENTATION

42   MR. PELLEY: Thank you.

43   Mr. Chair, Vice-Chair, members of the Commission and Commission staff, good morning. My name is Keith Pelley and I am President of Rogers Media Inc.

44   With me today, starting from my right, are:

45   - Scott Moore, President, Rogers Broadcasting Limited;

46   - from Channel Zero, Cal Millar, President and COO;

47   - Chris Fuoco, Vice President Sales and Marketing; and

48   - Jennifer Chen, Vice President, Programming.

49   To my left:

50   - Susan Wheeler, Vice President, Regulatory; and

51   - beside Susan is Claire Freeland, our Director of Original Programming at Citytv.

52   In the second row are:

53   - Malcolm Dunlop, the EVP of Programming from Citytv; and

54   - Debra McLaughlin of Strategic Inc., who prepared the economic impact analysis of the Montreal market that accompanied our application.

55   We are pleased to appear before you today to request approval for the acquisition of CJNT and for authority to convert it to an English-language station to serve Montreal.

56   When we appeared before you in April for the acquisition of the Saskatchewan Communications Network (SCN) we outlined our goal -- very simple -- to make Citytv into Canada's third national private television network.

57   We thank you for your approval of SCN and are here before you requesting approval for the next step towards accomplishing that objective. Citytv cannot be a television network with national representation without the Montreal market.

58   Approval of this application will allow us to operate CJNT as a Citytv station. We believe our acquisition of CJNT is in the public interest as it will give Montreal viewers another source of local programming and expand their choice in Canadian and foreign programming.

59   We are delighted with the extensive support we have received for this application from over 550 Montrealers, independent producers, community groups, advertisers and other stakeholders and we greatly appreciate the time they have taken to participate in this proceeding.

60   In our remarks this morning we will focus on four issues:

61   1. Rogers' rationale for this transaction;

62   2. How this application serves the local market and reflects the community;

63   3. How this application will bring meaningful and significant benefits to the system, including independent production and Canadian programming; and finally,

64   4. Why Channel Zero decided to sell.

65   As the Commission recognized in our group-based licence decision, Citytv does not have the same national reach and distribution as its competitors CTV and Global.

66   When I first joined Rogers in the fall of 2010, one of my first decisions was to bring Scott Moore here from CBC to run our broadcasting division. We are both former producers, we have both had our own production companies, and we both believe strongly in Canadian programming.

67   We both felt that Citytv's Canadian programming offering was significantly underserved and we set out to launch the first large-scale production in Citytv's 40-year history, and that was "Canada's Got Talent." And wow, it was really a learning experience.

68   We quickly found out that if we wanted to be a real player -- and I mean a real player in conventional television -- we needed national distribution. Without it we could not compete. Our ratings weren't strong enough and we could not generate enough revenue.

69   At that point -- and that's critical because it was at that point -- we made a conscious decision to aggressively pursue national distribution.

70   During "Canada's Got Talent," despite significant and innovative sales efforts, we could not generate enough revenues for a production of that size because we were not in key markets across Canada. In fact, several national advertisers told us they could not invest in CGT because we did not have national distribution, including the very important market of Montreal.

71   As you know, television revenue is split into two buckets: regional and local, and national. With our limited distribution we were only playing in bucket number 1, the local and regional one. Citytv's limited reach had shut us out of the national network advertising buys, the pool of which is close to $1 billion or 50 percent of conventional television revenues.

72   I will give you a tangible example here. L'Oréal Canada, one of the top ten television advertisers, spends $115 million -- it says every year, it's every two and a half years -- they spend $115 million on television, but $82 million of that $115 is reserved exclusively for network. Without a national network those dollars were inaccessible to Citytv.

73   National advertisers are looking for two things: Top 20 programming and reach. That means they will go to national networks first to place their buys. This puts us at a huge disadvantage with our competitors. To offer Canadians a third commercial choice we need to expand and it's very important that we need to expand quickly.

74   Unfortunately, we face a chicken-and-egg problem, because without reach it is very difficult to justify buying even the most popular programming or building the biggest programs like "Bachelor Canada" or "Canada's Got Talent". Take Citytv's popular U.S. series "Two Broke Girls" for example. This is a smash hit for CBS in the U.S., yet despite its popularity with Canadian audiences it had never reached the Top 20 in Canada until this fall. Why? It did not reach enough households.

75   Since acquiring SCN and negotiating affiliate arrangements with Pattison Broadcasting in the Interior of B.C. and Channel Zero in Montreal we have seen a 21 percent increase in tuning to the network in our key selling demographic of Adults 25-54 and for the first time in the history of Citytv we have a Top 20 show and that is "Two Broke Girls".

76   Scott...?

77   MR. MOORE: Thanks, Keith.

78   We believe strongly in Citytv's local, urban-oriented and culturally diverse brand of television and we feel it's a perfect fit for Montreal audiences.

79   Our signature morning show "Breakfast Television" will be the only morning show of its kind in Montreal for Anglophone audiences, offering the latest in local news, weather and traffic. As it does in other Canadian cities, BT will also provide a local lens on Montreal by promoting cultural events, showcasing local businesses and helping community and charitable organizations raise awareness of their activities and fundraising efforts.

80   We wanted to give you a taste of what BT will offer Montreal viewers and so we have prepared a short video.

--- Video presentation

81   MR. MOORE: BT will explore Montreal's creative spark with its English audiences, creating up to 30 new jobs, including homegrown hosts who are young, dynamic, bilingual and committed to exposing the best Montreal has to offer.

82   If our application is approved, we will begin work immediately on building a studio in downtown Montreal where BT will be broadcast 5 days a week from 6:00 a.m. to 9:00 a.m., creating 15 hours of original local programming.

83   In addition to BT, we plan to launch a new half hour local sports program focused on showcasing Montreal's rich and diverse sporting community. Broadcast weekly, "Connected Montreal" will cover the best in professional, amateur, university, CEGEP, and junior league sports in the Greater Montreal area. We believe "Breakfast Television" and "Connected Montreal" will provide new, innovative and dynamic opportunities for local expression and reflection and will offer a distinct choice in local programming for Montreal viewers.

84   From a national perspective, we believe Citytv's expanded distribution will also allow us to build on our current investment in high quality Canadian programming. Last year we created a new programming position to oversee our domestic content. I will ask Claire Freeland to share with you some of the new and innovative Canadian original content that you can expect to see on Citytv in 2013.

85   Claire...?

86   MS FREELAND: Thanks, Scott.

87   Before I joined Rogers Citytv had only had one signature series "Murdoch Mysteries". We entered an aggressive development phase on multiple series, both scripted and unscripted, and within 6 months we were able to green-light two 13 episode original comedies.

88   The first is "Seed", a half-hour comedy shot in Halifax about a likeable bachelor and bartender whose previous foray into sperm donation has resulted in kids, lots of them, that he was unaware of until now.

89   The second series is something quite unique, not only for Citytv but the Canadian production industry itself. "Package Deal" is a rare multi-camera situation comedy shot in front of a live studio audience. It's about three overly close brothers and the woman who threatens to come between them.

90   We are currently shooting "Package Deal" in Vancouver in a studio we have designed and built from the ground up. We have also put out an open invitation to other Canadian content creators to come and experience the show firsthand, in the hope that we can start to establish a multi-camera sitcom model here in Canada.

91   On the reality side, this fall we launched the first Canadian version of the hit series "The Bachelor". The "Bachelor Canada" was filmed in Victoria, British Columbia. It not only featured an entirely Canadian cast, but also profiled some of Canada's most beautiful and iconic locations. From rock climbing in Penticton and walking the beach in Tofino, to lobster fishing in P.E.I.

92   With the success of "Bachelor Canada" and the launch of our upcoming comedies we are so pleased that independent producers are now seeing us as a viable alternative for large-scale, high-quality Canadian national productions.

93   MS WHEELER: Over and above the creation of 15.5 hours of new original local programming a week, directed at and reflective of Montreal's Anglophone minority community, we believe this transaction offers a number of significant tangible and intangible benefits to the local Montreal market and the Canadian broadcasting system.

94   First, our benefits package provides tangible and intangible support for the creation of a new locally-based television service in Montreal to be known as "International Channel/Canal International".

95   As ethnic broadcasters, we believe the ici proposal will offer increased opportunities for ethnocultural groups in Montreal to connect with their communities and raise the level of discourse that is currently offered in the market. To that end, we have offered to provide ici with assistance in a number of different areas, including technical and engineering support and access to OMNI's third-language national programming to help round out their programming schedule. We have also proposed to direct our entire tangible benefits package of $1.03 million to ici to support the creation of third-language and ethnic programming, which we believe will provide critical support for the station in its first licence term.

96   Second, as part of a national network, our independent production partners will now have access to a national platform and exposure to a national audience. We have also agreed that, if approved, we will ensure that a minimum of 3 percent of our national programming budget is spent on independent English-language production in Quebec. We estimate that commitment will amount to approximately $1 million in funding for the 2012-'13 broadcast year, an amount that can only grow over time as Citytv expands nationally.

97   Third, approval of our application will create investment in the local economy and community in the form of a new production studio in downtown Montreal and an additional 20 to 30 jobs associated with our in-house production.

98   Fourth and finally, by allowing Citytv to expand its reach we will repatriate viewing and advertising from U.S. stations, which will enable us to further increase our contributions to Canadian programming. It will also bring Citytv's new and current stable of Canadian programs such as "CityLine" and "Bachelor Canada" to over 300,000 analog television subscribers in Montreal who don't currently have access to the channel as a distant signal.

99   Cal...?

100   MR. MILLAR: Thanks, Susan.

101   Three years ago my colleagues and I made a decision to enter local television. We did this for a couple of reasons.

102   One, we wanted to prevent the closure of one of Canada's oldest television stations CHCH and, two, based on the outcry from the Hamilton community we believed a business model that leveraged our investments in feature films and focused heavily on local programming could work in that market. We are happy and somewhat relieved to say we were right. CHCH has enjoyed tremendous success in Hamilton and is a valued member of the local community.

103   As the Commission is aware, with our purchase of CHCH we also acquired CJNT as a package deal. At the time, we were excited about the possibility of operating a station in such a dynamic and cosmopolitan city as Montreal, but we were less certain about how to make its business model work. We had little experience in ethnic broadcasting and knew we were facing an uphill battle when it came to stabilizing CJNT and putting it on a course towards recovery.

104   Since acquiring the station, we have developed new programming initiatives such as "World Beats", a program focusing on World music; "Cinema Clips" that features award-winning third-language short-films; and just over a year ago we launched "Metro Debut", a daily ethnic show.

105   As well, we have invested approximately half a million dollars in technical upgrades to convert CJNT's transmission facilities to digital in time for the August 31st cutover.

106   Notwithstanding these much needed investments, we have incurred operating losses of just over $1.3 million, not including CJNT's share of acquired programming and service allocations.

107   With these costs included, our overall investment in CJNT to date is just under $4 million.

108   Meanwhile, back in Hamilton, competition is fierce and about to get tougher. Bell Media's approval to operate CKVR in our primary coverage area and the discontinuance of the Local Programming Improvement Fund will add to our financial challenges.

109   The sale of CJNT will allow us, in part, to focus on and protect our investment in CHCH.

110   It is, however, our intention to continue to invest in the Canadian broadcasting system, and as the Commission will now be aware, Channel Zero has filed two new English broadcast language applications.

111   The investment in these applications alone will be significantly greater than the net proceeds of the sale, which we believe reflects our commitment to continue to invest in our own growth.

112   We are very proud of the fact that, had we not acquired and continue to invest in CJNT, the station would have been closed, much like other stations in Brandon and Red Deer.

113   Having said that, we believe that the proposals put forward by Rogers NEC will best serve the interests of Montreal's anglophone and ethnocultural communities.

114   Keith...

115   MR. PELLEY: Thanks, Cal.

116   Mr. Chairman, Vice-Chairman and Members of the Commission, this acquisition represents a key step in implementing our strategy to expand Citytv's reach and establish a third, competitive, private television network in Canada.

117   We believe that competition fuels innovation and creativity, and that Canadians will be the ultimate beneficiaries of a strong and healthy Citytv through greater exposure to popular and premium Canadian and foreign content on the platform and device of their choice.

118   We strongly believe that our application is in the public interest, and will result in the creation of 15.5 hours of new, original, local content on a weekly basis, create up to 30 local job opportunities, and result in significant investments in production infrastructure.

119   It will also give Citytv a national platform from which to showcase our new investments in Canadian programming.

120   I love and I am proud of what Claire said, that independent producers are now seeing us as a viable option.

121   We have made every effort to bring you a comprehensive and well thought out application. It represents the introduction of another strong English voice in the Montreal market, and significant support for the creation of a new independent broadcaster that is deeply rooted in Montreal's unique ethnic community.

122   It is a winning outcome for Montreal audiences, local programming, local ethnic television, independent producers, Citytv, and the Canadian broadcasting system.

123   We thank you for the opportunity to appear before you today, and look forward to answering your questions.

124   THE CHAIRPERSON: Thank you very much, Mr. Pelley and your team. We very much appreciate your presentation, and thank you for taking the time to put together a video. It is always refreshing to see your creativity at work on the screen.

125   You are probably thinking that I will be asking the first set of questions, but that won't be the case. I would ask Commissioner Lamarre to start us off this morning.

126   COMMISSIONER LAMARRE: Thank you, Mr. Chairman.

127   Good morning to everybody.

128   MR. PELLEY: Good morning.

129   COMMISSIONER LAMARRE: Before I get into the fun questions of programming, I would like to get a couple of clarifications on your written presentation from this morning.

130   On page 3 you both say, Mr. Moore and Mr. Pelley, that you both felt Citytv's Canadian program offering was significantly underserved.

131   What do you mean by that?

132   MR. PELLEY: I think what we mean is that Citytv was comfortable in producing Canadian content, but not Canadian content of the scale of something as large as Canada's Got Talent.

133   I remember, when we sat down, we said: We need to do something big.

134   Because, as independent producers, as people who have run our own production company, we understand very well that Canadian content has obviously been seen somewhat as a tax to conventional broadcasters, and we thought that we could make a significant change in that.

135   So that is why we embarked on Canada's Got Talent.

136   And that's why, again, we went out and said: Listen, we don't even have a Canadian content division here at Citytv.

137   So we went out and solicited Claire Freeland, who has made a gargantuan difference in that and in our commitment.

138   So, in a short period of time, we are really proud of what we have been able to do from a Canadian content perspective.

139   MR. MOORE: I would just add that we are both very passionate about Canadian content. That was the reason to bring Claire on.

140   And one of the things that we are particularly proud of -- Claire mentioned our production of Package Deal. Claire brought that to us a few months ago, and I originally said: Do we really want to get into a multi-camera situation comedy?

141   There hasn't been a successful one in Canada since, probably, the King of Kensington.

142   But we read the script, we looked at the material, and we think that we have a winning program and something that we can get behind, and something that we can share across the entire country, not just in one particular market.

143   COMMISSIONER LAMARRE: Okay. That answers the question for me, thank you.

144   On page 11, Mr. Millar, after saying that you invested to migrate to digital transmission, you said, "Notwithstanding these much needed investments, we have incurred operating losses of $1.3 million, not including..." and this is what I need explanation for "...not including CJNT's share of acquired programming and service allocations."

145   What are we talking about here?

146   MR. MILLAR: The actual corporate entity that owns or is the licensee of CJNT, 2209005, was already in a loss position. So rather than strand additional losses for tax purposes, we left them in other corporations within the group of companies known as Channel Zero.

147   So these are costs that we incurred to put programming on CJNT --

148   COMMISSIONER LAMARRE: But yet the losses are not against its balance sheet.

149   MR. MILLAR: Correct.

150   COMMISSIONER LAMARRE: Okay, thank you.

151   Now for the fun questions.

152   Programming: Let's start with "Breakfast Television," which, obviously, is going to be the émission forte that Citytv would have in Montreal.

153   Give me a little bit more detail. Even though the video was entertaining and gave us a picture of it, more specifically, when I look at your brief, you say that you are going to be hosting talent, reporting on events, giving local news, entertainment, weather, traffic, and celebrity interviews.

154   Can you give me more detail, and maybe numbers, just to help you start out?

155   I am leaving this as an open question, but if you could start out by telling me, when you are talking about local news, just how much time out of the three hours you think you will be devoting to news, weather, et cetera.

156   MR. PELLEY: I will let Mr. Moore speak to that, because he is the person who heads up all of the BTs.

157   But, very quickly, anyone who has worked with me, what I talk about in the future of this entire industry is about brands, and Citytv is a brand that is growing feverishly across the country, and our signature brand in City Television is BT, "Breakfast Television." It is now, cash in/cash out, profitable in Toronto. It is not such in some of the other markets, but it is starting to grow significantly.

158   And what it does to the overall makeup of our network is significant.

159   Now, what it does for the community -- I wake up every morning watching BT in Toronto, and you learn so much about what is going on, and you are so proud to be a part of that show.

160   But it is far more than news and weather, it is really a lifestyle show.

161   I will let Scott talk a little bit more about how much news and weather there is, but it is a lifestyle show that showcases the community that it is shot in.

162   MR. MOORE: Morning television is a great opportunity. My first job in television was actually as a technician on Canada AM in 1981.

163   Morning television gives you three hours of a blank slate, where you can reflect the community.

164   You have to get in the headlines in the morning, what you missed overnight, survival information, weather, traffic.

165   And on our BT's, which vary from market to market -- one of the great things about BT's is that we don't take a cookie-cutter Toronto approach and put it into Calgary, into Edmonton, into Vancouver; we tailor it to the market.

166   And Montreal, as you know, Commissioner Lamarre, is an exciting city. It hasn't had a chance to reflect itself in a program like this.

167   I think what you will see is, top and bottom of the hour, 3 to 5 minutes of survival information. There will be restaurant reviews, entertainment reports, talking about some of the key events that are going on.

168   The example used in the video was a fundraising effort, which we can not only help promote, but actually embed ourselves in. What we do in all of our other markets is that we send reporters out to these events to participate in them, to report on them as they are happening, and really be a part of the community.

169   I am not sure that really answers your question, because the beauty of morning television is that it truly is three hours every day that you can do whatever you want to reflect back the community.

170   MR. PELLEY: Today, for example, after the U.S. election, we probably, on BT Montreal, would not have just reported the actual results, we would have gone into the community to get the reaction in different spots of the U.S. election.

171   I think, when you talk about BT, it is all about the people, and I think that news can be defined in so many different ways, and this news is local news and news that really comes from the people first, as opposed to from the broadcaster to the people.

172   COMMISSIONER LAMARRE: I am going to get away from news and talk about the show. You mentioned that if we were to approve the transaction, and approve your favoured option, to transform it into an English broadcasting station, it would create 30 jobs. Just how many of those jobs would be attached to the BT show and how would that, you know, spread out throughout your organization?

173   MR. MOORE: Of the 30 jobs I would expect probably 27 to 28 of them to be dedicated specifically to the production of BT in Montreal. The other two or three would be in sales and help with the production of the sports show.

174   We would hire probably a minimum of three on-air people to host, a weather person and other BTs across the country. We also have a roving reporter. I would expect we would do that.

175   We would have to set up sort of a mini news division. We wouldn't have a full 24-hour newsroom. This is based on the model that we do in Winnipeg, Calgary, Edmonton and Vancouver. We have to be able to send crews out later in the afternoon overnight to get visuals, to get reports on what happened overnight. So that would be part of it.

176   And then there is usually a fair number, six to eight segment producers that book guests that worry about what the individual segments on the show are on a day-to-day basis.

177   I would note that all of these people including the technical people, the director; the camera people would all be based in Montreal.

178   MR. PELLEY: I think it is also important to understand the actual finances of BT. You know, we're going to invest more than $3 million in it and from a pure advertising revenue versus the cost of it, it certainly doesn't come close to breaking even. But we know that there is a big hole in the market for lifestyle programming and at the same time it is what our brand is all about. I can't express that enough.

179   So when we sat down and talked about this acquisition the most important thing was actually taking a brand in something that we have done and created across the country in making that prominent here in Montreal.

180   COMMISSONER LAMARRE: You touched briefly on the fact that you would need to have a mini news division which would be a 24/7 newsroom.

181   At the same time when you have an over-the-air local station like the one you're proposing to add to Montreal it is customary -- I didn't say mandatory but it is customary to usually have on the schedule an evening news show, be it at suppertime or late night.

182   So have you considered that possibility or not?

183   MR. PELLEY: Yeah, we have, and in most Citytv markets evening newscasts we're dominated by competing local broadcasters. That's the reality. We've tried very, very hard in the markets, but outside of Toronto it's been very, very difficult.

184   So we have focused our attention, our dollars on our area of expertise and that is morning lifestyle programming like BT and, hence, the reason why we have not in this particular application considered news as an alternative.

185   MR. MOORE: And I think it is important to look at the market and what the market lacks. In Montreal there are already three local stations that provide English news but none of them provide a morning show. So for us to get into the news game late we'd be banging our head against the wall for a number of years.

186   And if you look at the history of local newscasts across the country usually the legacy station, the CTV station, the Global station tends to dominate those ratings and we could be spending millions of dollars and not attracting an audience, where in the morning time slot we feel there is an audience there that hasn't been served in Montreal and that we would be providing a far better service to viewers in Montreal than by just creating yet another evening newscast that might get very small ratings.

187   MR. PELLEY: I think we would be fourth in the market in news and first in the market in cultural lifestyle community programming. That again was a key part of our decision.

188   COMMISSONER LAMARRE: So would it be fair to state that the choice you've made not to provide in this application or plan for an evening news show is both an editorial and business choice?

189   MR. PELLEY: I think so. I would say definitely it would be both of those.

190   Because if in fact we decided to create another program in Montreal down the road when the service is up and running, we would be more inclined to create an hour daytime show like CityLine which is in Toronto which is an interview show, more than inclined to actually move into what is a very saturated market and that's the news market which we believe is already served.

191   MR. MOORE: And I'd like to share with you a story about one of our first trips to Montreal once we started this process. We met with a number of independent producers and a number of cultural groups.

192   The one phrase that stuck with me in my head, and I've used it several times, is one of the cultural group leaders came up to me and said the only way Anglo Montrealers see themselves on television is if they're involved in a murder or involved in a traffic accident because the only local production in Montreal is hard news. And we feel that the market deficit in Montreal was in lifestyle.

193   It really is about serving the viewer best to have another six p.m. local newscast where people can see themselves if they were involved in a car accident or to have three hours of lifestyle programming that we can truly reflect what's happening in the city, not just on the roadways and crime scenes.

194   COMMISSONER LAMARRE: I'm not sure I totally agree with that characterization, but I get the picture. I get the point.

195   Now, still on local programming specifically targeted to Montreal, because I'm going to have questions about your national and Canadian and foreign programming, but on local programming you're also proposing to come up with -- to produce a 30-minute week sports program.

196   Let me quote what you have here in your brief, in your supplementary brief in paragraph 42. You state that you're going to call it Connected Montreal from what I get. I figure the name means you're not but let's assume it's going to be Connected Montreal. It is going to be "dedicated to covering the best of professional amateur university, CEGEP and junior league sports in the Greater Montreal Area."

197   Now, I can't help but notice that the first word in that list is professional. And then later you do mention that there are no programs on TV that showcase that.

198   So maybe you want to explain to me how you come to the conclusion that there is no professional sports being showcased? Mind you, there is no hockey these days, but let alone that. And then just how much you really want to target it to Montreal and what's not being done today? What is not being seen?

199   MR. MOORE: Sure. Professional would be a part of any sports program that we would do in Montreal. I think you're very well aware of the fact that the Montreal Canadiens dominate the Montreal sport scene, but they are not the only part of the Montreal sports scene. Montreal is one of the great sports markets in Canada.

200   Years ago CFCF Television used to have a half-hour show called Sports Pulse hosted by Ron Reusch. They cancelled it years ago. What that show did, and this is what we would model this after, it did talk about the Montreal Canadiens because that's going to drive viewership. But within the show they were able to profile university athletes. They were able to profile local amateur athletes.

201   Those are the sort of stories that we're very proud of doing in some of our other divisions at Sportsnet. We're very proud of our sports journalism and this would help feed some of that sports journalism.

202   There is obviously some cross-fertilization there. The show would probably get a second run on Sportsnet East so that we would be able to give second viewings and expand the audience.

203   But it's not just about professional sports but you would be crazy to do a sports show in Montreal without talking about the Montreal Canadiens.

204   COMMISSONER LAMARRE: Okay, and then, yeah, and the impact also.

205   Okay. So basically you're telling me you can't really be taken seriously in sports if you don't at least mention it. That gives you the opportunity to then showcase the other level of sports that are around Montreal.

206   Let me ask you this. Since you're looking at what's not being showcased right now, have you given any thoughts also on how you may try and give equitable representation not only between professional and amateur but also between men and women's sports?

207   MR. MOORE: Absolutely. I think if you are a fan of the Olympic coverage from London or from Vancouver that Mr. Pelley was very involved in, you saw that there are some terrific female sports stories and many of them are based in Montreal.

208   Clara Hughes is one of perhaps Canada's sporting treasures. We have actually -- and we met with Dick Pound the other day when I was in Montreal and he suggested that Clara would be a great host for our Montreal morning show. You know, she is a great role model and those stories would be stories that we would tell in the show.

209   Frankly, they are stories that are not currently being told in Montreal and many other markets across the country too, I might add.

210   MR. PELLEY: You can even take an example like you would be hard pressed to find any story on the McGill Redmen of both whether it be the football team or the women's basketball team in terms of the results or the life story, lifestyle stories anywhere in the Montreal market and especially in the English language.

211   COMMISSONER LAMARRE: Okay.

212   Turning back to the national programming you didn't mention CityLine -- sorry, CityLine. So can you give me in a nutshell just how the fact that you would be located in Montreal may add to that national program and how that national program could actually attract viewership in Montreal?

213   MR. MOORE: CityLine has been a staple on Citytv for probably 20 years, well before Keith and I got there. It's Canada's most successful daytime lifestyle program.

214   This year, for the first time ever, we took CityLine across the country. We did -- we produced shows in Calgary, Edmonton and Vancouver. We were, frankly, surprised and thrilled with the reception we got because when you produce a show in Toronto sometimes you think only a Toronto audience is watching. In fact we filled malls all across the country when we went to produce the show there.

215   So being able to expand the distribution in Montreal will do two things -- probably three actually.

216   One is it will increase the audience, which will give us a better opportunity to sell it.

217   Two, it will expand the brand of CityLine and our great host Tracy Moore -- no relation.

218   And it will also give us a chance to get into the Montreal community if we can bring the show to tape there maybe for a few days or for a week as we did out West.

219   COMMISSIONER LAMARRE: Okay. But throughout the yearly schedule, besides the fact that you're taking the show on the road, do you specifically attempt to reflect the different communities that you're located in within the show itself?

220   MR. MOORE: That's not really the purpose of CityLine. That's what I would call more a network show. It is produced out of our network headquarters in Toronto.

221   We do try and have a variety of different guest experts. We have a number of guest experts, even though we don't currently have a station in Montreal, that come from Montreal. But it really is more of a national program.

222   COMMISSIONER LAMARRE: Okay. In your presentation this morning you mentioned something that I underlined. Operating in Montreal an English television station, you're going to be in the interesting position of catering to a community that is in a minority official language group. Part of what you will be doing, you said this morning you will ensure that a minimum of 3 percent of your national programming budget for Canadian content is spent on independent English-language production in Quebec.

223   So two questions. The first one: How did you come up with that 3 percent? And second question: How do you see yourself making sure that you do represent as much as you can the specific aspect of that community, being a minority language community?

224   MR. MOORE: I may ask Susan to comment specifically on the 3 percent.

225   There's sort of two answers to your question, I think. One is what we might do with independent producers in Montreal and the second is how we might reflect the minority language in Montreal.

226   I would answer the second part by saying that's what we think BT is there for.

227   The first part I would answer that independent producers across the country are not always pitching shows to us that just reflect their community.

228   For instance, our comedy "Seed" is actually being produced by a Vancouver production company but being shot in Halifax. We have a Montreal production company that did a quasi-documentary show on the police force in Vancouver.

229   So independent producers tend to come to us with the best ideas that they think will get the best audiences nationally.

230   So we think we would be using those independent dollars more for our PNI and for our national programming and the local reflection of the minority language community would be on BT.

231   I'll let Susan speak to the 3 percent.

232   MS WHEELER: The 3 percent commitment really came in response to an intervention we received from the English-language Arts Network who had asked that we make a firm commitment to English-language producers from Quebec.

233   So we looked at what we were historically spending on Quebec-based producers and committed to maintaining that level and growing it over time in hopes that we would be able to increase our investment in Canadian programming by virtue of our expanded distribution.

234   But I think over and above the actual commitment of 3 percent our presence in Montreal will also have, you know, an intangible benefit in the sense that we will have a local presence there, another door to knock on for producers to be able to pitch their shows and their development ideas.

235   I might ask Claire just to give you a little bit of a sense of the work that we've already done with independent producers in Montreal and how she feels that our presence there will enhance that.

236   MS FREELAND: Susan mentioned the 3 percent is -- we took the average of our last three broadcast years and that's how we arrived at that figure and the intention is to continue doing that.

237   Scott was mentioning our relationship with Galafilm in Montreal. It's a production company that we've done three series with over the last three years, one called "The Beat" we've done two seasons of and, you know, we continue to work with their team on developing more projects.

238   Also, a company called Incendo in Montreal. We licensed a 50-Canadian-Movies-of-the-Week package from them. So that's been a really wonderful source for Canadian content.

239   In terms of how our presence there can increase the opportunities for producers, I don't think there's anything like meeting someone face-to-face and having the opportunity to sit down with writers, producers, other content creators, and hear their ideas in person.

240   So having the station in Montreal will allow myself and other members of my team the opportunity to do that. So we see that as a real opportunity for the local Canadian content creators as well.

241   COMMISSIONER LAMARRE: Okay. So no more need to drive down the 401?

242   MS FREELAND: Yes.

243   COMMISSIONER LAMARRE: Okay. For those producers.

244   Okay. On the national -- well, actually more network programming. Let's talk about the foreign programming.

245   Am I getting this right, all of your foreign programming is actually U.S. programming?

246   MR. PELLEY: All our foreign programming -- Malcolm?

247   MR. DUNLOP: Yes, it is.

248   COMMISSIONER LAMARRE: Yes, that's correct. Okay.

249   Now, adding a third network, and, you know, you're expanding and you're going to be expanding to Montreal and I get your point that some of that U.S. programming is already available via the U.S. channels themselves that are being carried by -- and even over-the-air, you know, if you have an external antenna around Montreal you can actually get that programming. So you will be putting them back on a Canadian broadcaster schedule and hence you can get the advertising money.

250   At the same time, is there a danger that we should concern ourselves about that it may actually increase foreign programming expenses since you're going to become a more important competitor for those shows?

251   MR. PELLEY: No. That, I would say, is not the case. We have already gone down that road.

252   We have already made -- we made the decision when we -- about a year and a half ago our programming expenses from a foreign perspective went up significantly when we started buying shows like "Two Broke Girls" and "New Girl" and "Person of Interest" and "Revolution" and we learned very quickly if we are going to play in that game we need national distribution or we're going to just have to change our strategy, we're not going to be able to do that.

253   And similar to that with the Canadian programming as far as if we don't have that national scale we're not going to be able to create programming like "Seed" and package deals and so forth.

254   But as far as the way that we look at this is we are repatriating the dollars that are currently -- and maybe I'll have Debra and Malcolm speak on it -- that are currently coming in on the over-the-air. So we're actually -- that the U.S. sales forces that are coming in are selling in the Montreal community.

255   And we're repatriating those dollars with a simsub with a Montreal station, which will allow us to not only fund and make City, to be honest with you, financially viable but also to be able to fund those Canadian programs.

256   Maybe I'll just have Debra and Malcolm speak on the importance of that repatriation and how it currently operates right now.

257   MS McLAUGHLIN: When we looked at data for the market we found the number 2 station if you combine the U.S. services was in fact the U.S. services.

258   There's four stations principally that are sold in Montreal. They each have retail teams and they have national sales representation.

259   We have WPTZ which is rep'd by Media Alternatives, we have WFFF and WVNY which Airtime Television Sales sells for, and we have WCAX which has the Group of Seven selling for it.

260   So you have four teams selling. That's national and the Quebec regional sales. And then you have the retail sales teams. So that's a big opportunity.

261   Montreal stands alone in having still a strong U.S. sales presence in their market.

262   If you look at Toronto for example, WUTV used to be a real powerhouse but their sales have dropped considerably since the introduction of CTS and, frankly, just the opportunity to simulcast with enough stations to do it.

263   Similarly, KVOS. KVOS was a real powerhouse, in fact, was the lead station for airtime television sales. It counted for 50 percent of their revenues. Now, it's down from about $20 million to $4 million. Again, that's a result of licensing decisions made by this Commission.

264   COMMISSIONER LAMARRE: Yes, and I can tell you they are very aggressive, they actually also air French advertising on their program. It sort of draws your attention when it switches in an impromptu manner from English to French when you didn't touch the remote.

265   Okay. Now, one housekeeping question.

266   We did talk about an evening news show but I need to ask you the question for the record and considering that you said you're not getting into the game of doing an evening news show, would you accept a condition of licence to hold an evening news show?

267   MR. PELLEY: Well, I think when you look at the finances and you look at $7.4 million in terms of revenue and of which we're spending $3.2 million in Canadian production, which represents -- if you were just looking at the traditional CPE, that would bring in front of you some 43 percent.

268   I think that our commitment to filling the void and filling the hole that is there right now in the marketplace as opposed to getting involved in a saturated news operation area would be something that we would not be prepared to do right now.

269   COMMISSIONER LAMARRE: So the answer is no?

270   MR. PELLEY: The answer would be regretfully we would --

271   COMMISSIONER LAMARRE: You're allowed to say no.

272   MR. PELLEY: Regretfully, no. Politely, no.

--- Laughter

273   COMMISSIONER LAMARRE: Okay. Now, let's move to the second option we have here in front of us.

274   You are applying to acquire CJNT. You are asking us to change it into an English television station, but there's also a second option, is that it would remain an ethnic station.

275   And in this case you have submitted to us some modifications to some conditions of licence that do have an impact on programming, not the least of them being that while you would still commit to producing 14 hours of local television you would like the qualification "original" removed from that commitment.

276   So would you care to comment just how you would see CJNT remaining under Rogers as an ethnic station and just how you would look at the schedule if you were to do that?

277   MR. PELLEY: We -- and I think in talking about Option B, I think it's important to give it some context of how it materialized.

278   We put Option B there because we know that we need the 8:00-10:00 slot to be able to be a real national broadcaster. Option B was something that we put there and we said that's really not where we want to go.

279   COMMISSIONER LAMARRE: I get that.

280   MR. PELLEY: And we thought that the solution of not only coming forward with an English station and converting CJNT into an English station but the significant -- and I don't want to lose sight of that -- the significant commitment that we're making to ici and the thought that we went into that I think is something that I really want to speak about.

281   But we would really need to remove the 8:00-10:00 restriction that is there right now that prohibits us from being able to simulcast. That still would only give us 50 percent of simulcast per annum, some 21 hours, but I think that it would be absolutely critical for us to get those two hours.

282   Malcolm, maybe you can just kind of explain -- and even currently, the current affiliate deal that we have doesn't satisfy those needs. So in fact even if we were going to continue with the affiliate deal in perpetuity, that wouldn't work for us in the long term either because many of the programmings that we need to simulcast to be able to fund the network in many other areas just wouldn't work.

283   But, Malcolm, maybe I could just have you talk a little bit about how important that 8:00-10:00 block is.

284   MR. DUNLOP: Certainly. Thank you, Keith.

285   I've been involved with ethnic television for many years and the original model for OMNI was sort of a simple model. We used to run syndicated shows from 6:00 to 8:00. The ratings used to be great and we used to be able to subsidize our ethnic programming by the 6:00-8:00 programming.

286   What has happened over the years, there has been so much fragmentation over the top, where we would do a 3-rating point, now we're lucky to do a 1-rating point.

287   So the OMNI model is becoming harder and harder to sustain. When you look at a market like Montreal it's very difficult with the size of the ethnic populations that you have.

288   One of the challenges with not being able to broadcast 8:00-10:00 is you don't get the simulcast that you require. We are only allowed to have 75 -- only 25 percent of the 8:00-10:00 can be non-ethnic programming. So you're only really allowed to have 3.5 hours of non-ethnic programming. That doesn't really give you a chance to optimize and monetize the revenue as much as you possibly can.

289   So we believe if Option B is chosen that we do need the flexibility to get out of the 8:00-10:00 time period.

290   MR. PELLEY: I just want to ask Scott to speak just briefly on Option B because he certainly has had an opinion on it for some time from a programming perspective.

291   We felt that we needed to give you that option because we knew that ethnic programming -- although we believe that Option number 1 is a far, far win-win for everybody, the community, the independent sector and so forth, Option B was important to put on the table because it did at least keep the ethnic programming there.

292   But, Scott, I know you have strong feelings on it. Despite the fact that we would accept it, it wouldn't be our plan and I know, Scott, you more than anybody feels strongly about it.

293   MR. MOORE: Yes. In fact, when we first looked at this we thought Plan B would actually have to be Plan A because we felt that that was the only way you would look at this licence.

294   But then we found out that prior to us coming to you with this application ici had already submitted an application for a fully ethnic service and what we think that does for the market is it delineates the two services and allows both services to have strong brands.

295   The problem with Plan B is that the station becomes neither fish nor fowl. It's neither a Citytv, it's not really an OMNI, it's a little bit of both and it doesn't allow us to build a brand.

296   And what we've learned across the country as we've started to build the Citytv brand is that because we're not a legacy station in most markets we weren't really considered as a viable entertainment alternative.

297   I'll give you the example of Vancouver. Our ratings in Vancouver were significantly lower for our popular programming than they were in Toronto. We were trying to figure out why.

298   The reality was that people were going first to CTV because that was the first place they thought of for entertainment programming. And then they would go to Global and if there was nothing else on they might go up the dial to channel 13.

299   What we've done by branding Citytv and branding it as a destination for entertainment programming and being able to promote it off of BT, we've created a brand that now our ratings have more than doubled in Vancouver.

300   And we're seeing the same thing in Calgary because people are really thinking of us as a viable entertainment alternative.

301   And the last point which I think is really, really important is if we're going to service the ethnic viewers properly in Montreal, I don't think it's right to put their programming in off-hours, to work it around simulcast.

302   So if we're going to be truly servicing those viewers, I think having two distinct brands that can truly promote their program offer voraciously and well will serve the viewers in Montreal best.

303   MR. PELLEY: And I think that the Chair said at the beginning that we needed to actually prove our case that this is important for the community.

304   Often when a manager, you know, comes to you with a challenge, the first thing that you want them to come forward with is a solution. You don't want your direct reports to come just with a challenge.

305   So when I say that this was well thought out I believe that we've come with a wonderful solution where we actually are filling a void in the market with "Breakfast Television," adding a tremendous amount in the community, while at the same time the way that we're getting behind ici is tremendous, not only by giving us the social benefit dollars but you can't lose sight of the technical and engineering support that we are giving them, that saves them millions and millions of dollars, as well as the supply agreement that we are planning with ici, which is a deep discounted supply agreement, as well as the expertise. Malcolm Dunlop has been working in ethnic programming for some 25 years.

306   Combine that with what I feel is a very, very innovative proposal that they've put forward. In fact, we're going to be looking at it very, very closely to maybe mirror some at OMNI.

307   But I think on Option A, and that's why we're trying to steer you, as you probably can tell, away from Option B and lead you down the road to Option A, is because we do believe that that satisfies the needs of everyone and that's why we've significantly gotten behind ici on their application.

308   COMMISSIONER LAMARRE: I do get where you're going but we also have to make sure we satisfy ourselves that we have analyzed all possibilities here.

309   So when I look at paragraph 87 of your brief -- and maybe you can help me with what I seem to be reading in here or seeing there a contradiction. Maybe there isn't, so you can sort it out for me.

310   You mention that with Option B if we don't grant you the modification to the COLs and the commitments, you know, you will not be able to operate CJNT as a commercially viable ethnic television station if those conditions continue to apply, nor would you achieve your main goal in acquiring CJNT-TV, which is to extend your reach to Citytv's primetime programming.

311   So let's just look at the first part of it where you say you will not be able to operate CJNT TV as a commercially viable ethnic television station. Yet, you're supporting the application by ici to have an entirely ethnic television station. So how do you reconcile those two statements?

312   MR. PELLEY: I believe it's a completely different model and I think, first and foremost, ici has been 25 years in the production community. The most important thing is they are on the ground here, they are local, and they are acting like a cooperative that each of the individual language producers will be able to shape the programming as their own businesses within their own business structure, which is completely different than the structure that is currently operated by CJNT.

313   And I think that with ici's innovative business model, with the fact that they are on the ground here running, combine that with the monumental support that we are giving them, we believe that it really is a great, great opportunity for the Montreal community to have ethnic programming like they've never had, especially not before, with all due respect to Cal and his team and to CanWest who owned it prior to that.

314   I think the ici proposal in terms of the ethnic programming is far superior and very, very viable based on the way that they have set it up, combined with the support that we are giving them both technically -- both tangible and intangible benefits.

315   MR. MOORE: And I would just reiterate the fish and fowl analogy. It is that by setting up two distinct brands, one that is clearly a Citytv Anglo entertainment brand, people will know where to go to get that programming and ici will provide a clear ethnic brand where people will know where to go to get that programming. We think that is in the best interest of the viewer and it allows both to utilize their strengths, with ici with their unique model, and for us to be able to get our Citytv programming, both Canadian and foreign, across the country and in prime time.

316   COMMISSIONER LAMARRE: Okay.

317   MR. PELLEY: Cal, did you want to add anything on that based on your history with CJNT and your relationship with ici?

318   MR. MILLAR: Yes, I would. Thanks, Keith.

319   Commissioner Lamarre, one of the things that struck us -- and you will recall that we brought this proposal before Rogers entered the picture, we had been approached by ici to consider this as an opportunity and we had tried a number of programming strategies and we had evolved our strategy a little bit over the three years.

320   What struck us probably most powerfully about their proposal is the co-op model, because those, let's say 25 producers that are working with them on shows, are also 25 sales reps who are embedded in the community who already have access to advertisers and know these people with relationships going back many years.

321   I will call it the OMNI model which we were emulating in a sense, operating CJNT as Metro 14, we had but one sales rep and a small national force and it was very difficult to make inroads. So that was probably the most powerful distinguishing feature that a pure play ethnic channel would provide.

322   MR. MOORE: I might just add as a last point that going with Plan B would effectively make the ici model moot. I don't think you would license both an ethnic channel with us and a new ethnic channel, so that would have the net effect of not bringing a new, independent voice into the Montreal community.

323   MR. PELLEY: We are trying pretty hard here, aren't we.

--- Laughter

324   COMMISSIONER LAMARRE: Well, we can do anything, but basically what you are saying is that you don't think it would be a good idea if we were going to go with your option 2 to also at the same time licence ici, okay. And that would be because it would create too much outlet for the programming available?

325   MR. MOORE: Yes. And if you look at the cultural make-up of Montreal, it is a little different than some of the other cities across the country. There are a lot of smaller ethnic groups. I don't think there would be enough demand for two ethnically-centred television stations in Montreal.

326   COMMISSIONER LAMARRE: Okay. It's amazing, from where you are sitting you can read my questions here. Okay.

--- Laughter

327   CONSEILLÈRE LAMARRE : Ce sont toutes mes questions, Monsieur le Président. Merci beaucoup.

328   LE PRÉSIDENT : Merci beaucoup.

329   Mr. Pelley, I don't think you went to McGill.

330   MR. PELLEY: No.

331   THE CHAIRPERSON: No. The women's hockey -- the women's teams at McGill are not called the Redman, they are the Martlets.

332   MR. PELLEY: Ah, yes.

333   THE CHAIRPERSON: The women right now in hockey are number one in the country.

334   MR. PELLEY: And quite honestly that's why, because they -- I don't know that because they don't get any coverage.

335   THE CHAIRPERSON: Exactly.

--- Laughter

336   THE CHAIRPERSON: Very good point. Very good point.

337   Look, I have two sets of questions first, before the rest of the -- my colleagues have other questions. My questions deal with the current control of CJNT prior to the proposed transaction and another set of questions around the integrity of our licensing process. So let's deal with those one at a time.

338   So, as you know, the issue of control is often looked at under two perspectives, one looking at legal control and the second angle is de facto control. I think you would agree with that's the way we normally look at it.

339   MS WHEELER: Yes.

340   THE CHAIRPERSON: And as I understand from the legal control perspective I read your July 20th response to the deficiencies, you are saying the legal control rests with the Board of Directors; correct?

341   MS WHEELER: That's correct.

342   THE CHAIRPERSON: And as I said earlier, we also examine de facto control and over the years the Commission has looked at it a number of times and defined what de facto control is -- should be the test, the test looking at that, and I think most experts would agree that de facto control finds its roots in the Canadian Airlines case of the National Transportation Commission and that's basically how we have taken that within the Commission's -- the CRTC's DNA.

343   Would you agree that's --

344   MS WHEELER: Yes.

345   THE CHAIRPERSON: Okay. And that test normally is defined, and I will quote it here, it's:

"... the ongoing power or ability, whether exercised or not, to determine the strategic decision-making activities of an enterprise. It can also be viewed as the ability to manage and run the day-to-day operations of an enterprise."

346   That is generally the test and I think that would not take you by surprise

347   MS WHEELER: No, that's right.

348   THE CHAIRPERSON: So this brings me into asking you a few questions about the affiliation agreement that was signed in April, the 24th of April 2012. Now, it has been filed in confidence so it makes it a bit tricky for me to ask questions, so I asked our legal counsel to give you a sheet of paper with six points that summarizes some areas of questioning I will be asking without necessarily putting in the public some information that has been redacted and is part of the confidential aspect of that deal.

349   So are you okay with me proceeding that way?

350   MS WHEELER: Yes. Thank you for proceeding in that way. We appreciate it.

351   THE CHAIRPERSON: So you will see there are six points on that document so I bring you to looking at the first and sixth point on that sheet of paper which relates to the financial relationship between the two companies, in particular the nature and quantum of the termination fee.

352   Would you not agree that those clauses, while at first blush might be a bit surprising and not be an indicia of control in the hands of Rogers?

353   MS WHEELER: You are referring to the bullet number 6?

354   THE CHAIRPERSON: The first and sixth points.

355   MS WHEELER: Yes. So we have a bit of a correction on the sixth point.

356   THE CHAIRPERSON: Okay.

357   MS WHEELER: The first figure referenced is accurate, the second figure in terms of terminate the affiliation agreement by January 2012, we are not clear where the Commission arrived at that figure. We don't see that in the agreement.

358   MR. MOORE: I might add that Cal and I actually negotiated this agreement and that was never part of our negotiation, so we are not sure where the Commission came up with that.

359   We viewed the affiliation agreement, there is no lump sum termination fee.

360   THE CHAIRPERSON: Of anywhere close to that number?

361   MR. MOORE: No.

362   MS WHEELER: No.

363   THE CHAIRPERSON: Okay.

364   MR. MILLAR: I would never have approved that.

365   THE CHAIRPERSON: But you would agree that if it had been that, that would have been a considerable sort of Damocles over the relationship and might be questionable in terms of control in fact.

366   Would you not agree with that?

367   MS WHEELER: Yes.

368   THE CHAIRPERSON: Okay. Well, we will try

369   MS WHEELER: Particularly given that short nature of time in terms of the length of the agreement in place.

370   THE CHAIRPERSON: Right. All right, we will try to clarify where that occurred and maybe we will loop back on that a little later on.

371   I bring your attention now to the second and third point there which, if you look at those, really relate to programming obligations. If you look at those in terms of which program, when and where, why wouldn't we conclude that Rogers is already in a sense controlling CJNT's schedule?

372   MS WHEELER: The suggestion that -- I guess I will let Scott elaborate on the rationale behind the negotiation, but the requirement to air programming within a certain period of time really reflects the first bullet and the monthly fee that is payable, but I think you need to read the agreement or that particular provision in conjunction with the other provisions in the agreement, which also allow for the licensee to not air that programming if it puts them out of compliance with their licence or if there are other scheduling requirements that would, you know, impact their ability to air that programming.

373   So given that CJNT or Channel Zero maintains scheduling control and maintain the ability to, you know, provide the local programming and to schedule that programming in compliance with their licence, we wouldn't feel that that is an undue influence, it's purely that we wanted -- as two negotiating parties we wanted to be able to provide -- have some certainty that what we are providing them in terms of a fee will actually return the investment that we hope that it will make in terms of increased advertiser revenue.

374   MR. MILLAR: Mr. Chairman, I would also add, to be very clear, we are the licensee and we maintain control of the day-to-day operations. That's in the local programming on the "Metro Debut" show and also in terms of how we negotiated this. This was a temporary affiliation that was intended to lead to a transaction of purchase and sale and, rightfully, the two parties negotiated certain terms in aggregate, including the branding during the period, but we also equally required that the branding stayed Metro 14 during that period.

375   So when you see the pieces you have to take it in context of that negotiation.

376   And if I could, just in terms of the equal parts of parties in the negotiation, to your point number 6, the one thing that I would also point out that is -- I don't want to say inaccurate, but is not fully explanatory, is that that termination fee is mutual and so it was more a meeting of two equal corporate bodies reaching an agreement.

377   MR. MOORE: I would also point out, Mr. Chairman, that this was based on how affiliation used to work within the CTV Network when I was there. Obviously we would like Channel Zero and CJNT to be showing the U.S. programming in simulcast, so that's why we asked them to run the program when we ask for it.

378   However, much like I used to experience when I was at CTV, the affiliates can occasionally make a decision at the last minute that they are doing something else with their programming time. I remember when I was producing the Olympics for CTV in 1992 that BCTV in Vancouver would famously just cut out of our Olympic coverage to go to their local news.

379   Also, as the CTV affiliates, when they were not all owned stations, BCTV was owned by WIC, as you probably know, they had to brand their station as CTV whenever they were running CTV programming.

380   THE CHAIRPERSON: Right. We haven't formed a view one way or the other, this is just an opportunity for putting your perspective on the table. That's what I'm testing here.

381   Going back to clause 4 -- and I understand your perspective on this, but maybe help me understand a little bit more. If you look at the fourth bullet there -- it's not clause, but it's a summary of elements of the agreement -- one could conclude that a substantial economic interest has been transferred over, and one might -- a third-party observer might conclude that almost an abdication of that part of the schedule.

382   Why wouldn't that be a correct conclusion.

383   MR. PELLEY: I understand. Perhaps I would have Mr. Millar direct how clause 4 was done prior to us entering into this affiliate agreement first.

384   MR. MILLAR: We operate both CHCH and CJNT with local sales reps, but also with third-party national sales representation. Debra McLaughlin referred to Airtime Sales who actually under contract to us sell all of our advertising on a national basis, because they have the relationships that we don't.

385   So we saw the sales representation as actually a transfer. It made no sense for us to somehow sell the same schedule with two different sales groups and it was just an effective way to ensure proper sales during the period.

386   MR. MOORE: And I would point out that part of the reason for this affiliation agreement was so that we can sell national airtime across the country.

387   And I think it's important to put in context the negotiation and why the affiliation agreement was put into place.

388   We were hopeful that we would be able to convince you to approve this transaction and, as Keith mentioned, it was important for us to be competitive to get our programming nationally as quickly as possible. In fact, while this negotiation was relatively quick, it wasn't as quick as we would have liked.

389   We originally wanted to have an affiliation deal in place by the debut of "Canada's Got Talent", then our next horizon was to have it in place for "Bachelor Canada", because those are two fairly expensive Canadian shows that we needed to have distribution in Montreal and to be able to sell national advertising, as Keith pointed out earlier.

390   So that's why we wanted to get this affiliation agreement done quickly and before the sale closed and pending your approval.

391   THE CHAIRPERSON: Okay. So just a couple of more questions.

392   So the same point with point 5 there on the summary. I take it that even though it might look that sales, traffic and collection service for commercials -- which frankly is the day-to-day operations of a licensee, a television licensee, notwithstanding those arrangements you still would argue that that does not indicate control being abdicated?

393   MR. MILLAR: Yes, we would, absolutely. In fact, it was merely a matter of convenience. Once the sales were being managed by Rogers the booking those contracts, the ad contracts, would come in to Rogers to be allocated across the stations per the contract. So that's where the actual traffic function comes in.

394   And at that point, the agencies would be expecting that the contract would come with one invoice.

395   So again, the actual invoicing and collection is something that we have third-partied out to Rogers during that time period for convenience, because otherwise we would be complicating our customers' lives at the very point where we are trying to simplify it.

396   THE CHAIRPERSON: Right. So your view, I guess, Mr. Millar, that since that agreement has been signed today and then until -- if we approve anything here, your view is that you are still in control of that licensee?

397   MR. MILLAR: Absolutely.

398   THE CHAIRPERSON: Okay. Let me turn now to a second issue, and that relates to the integrity of the licensing process.

399   So the purchase of this undertaking has been valued, I will round out, to about $10 million, and yet if you look at the history of this licensee it has been losing a great deal of money and a third-party observer might actually be surprised and actually think that what is being in fact purchased is the potential value of this licence which flows from the amendment in programming you are seeking before us in this application and really not based on the value of the undertaking.

400   Views...?

401   MR. PELLEY: We negotiated this deal with Mr. Millar in a fair process. There is no question that in any negotiation, it depends on what each side is looking for.

402   When you actually break it down, and I look at it from an independent perspective and I look at it from Mr. Millar's side and, sure, from the negotiation we would have liked to have paid less, that would have been something that we would have accepted, but that was not the case with Mr. Millar.

403   And the way that it was expressed to us during the negotiations was, I am an independent producer -- and maybe you can speak after, I'm paraphrasing during the negotiations the conversation that we had -- I am an independent producer and during this time as an independent producer/broadcaster I have invested and took the risk with CJNT back in 2009 when it was to go bankrupt and what independent broadcasters often do is they take risk, and I took a risk with this when nobody else was prepared to take the risk and I have spent a tremendous amount of dollars trying to re-energize and reinvigorate CJNT and it is still losing dollars. It's losing less than it was at that particular time, but I'm not prepared to actually give the service away. I have put some $4 to $5 million into CJNT already in many different ways and I'm certainly not prepared to give the licence away. Part of the -- and again I'm paraphrasing.

404   Am I doing a good job so far? Because this was the conversation that we had over coffee, you know, months and months and months ago, and he said, you know, I'm prepared to continue to run the service, but it has to -- you know, I understand that you want it, I understand that you need it, and I also understand that you need it to be expedited, as Scott said, to be able to capitalize on the U.S. programming and on the Canadian content of big scale programming that you have already agreed to.

405   So part of the reason, as he said, as an independent broadcaster, when you take risk, and that's what I have done, then I have to be able to have some of the upside.

406   So when I look at the integrity of the actual negotiation or what Mr. Millar has done, and as it may seem on paper that he's taking something that he purchased nothing for and now reaping a $10 million benefit, you know, I don't see that being the case from someone that was actually negotiating from him and has been in his position before as an independent broadcaster.

407   He takes the risk every single day of actually paying for his staff, of waking up in understanding that he might not be able to pay the bills, and that's the way that you articulated it to me back, you know, when we started the conversation.

408   I don't know if you want to add anything to that, but that's the kind of way that we look at the way that the transition went down. We had something that -- he had something that we really needed, which was that -- which was a licence, and he had put so much time and money and effort into it that he needed a certain price for that.

409   MR. MILLAR: I would just add, after Keith did such a good job of going over the discussion --

410   MR. PELLEY: He was obviously listening during the negotiation.

411   MR. MILLAR: Apparently. And I thought he wasn't.

--- Laughter

412   MR. PELLEY: It wasn't as smooth negotiation, although I --

413   MR. MILLAR: The added context to that was that we had already started down a path to a plan working with ici and, absent Rogers approach to us, we would have hopefully being here with ici talking about turning CJNT Metro 14 into a pure play English station and allowing them to embark on a new model for ethnic programming in Montreal. Because we had also seen that the current license conditions did not make a viable station. We have worked on it, we kept adjusting strategy.

414   That said, we were still committed to being in Montreal and so part of the value in that transaction was we had to come to terms -- Chris and our other shareholder, Roman Podzyhun had to come to terms with the fact that we would be giving up our opportunity in a vibrant city like Montreal -- Rogers has referred to it as the second largest city in Canada -- and that also formed part of it.

415   So it was just the back-and-forth negotiations and we said no to them a number of times because we just couldn't get to the point where after the investment we had made and the opportunity we would be giving up, and eventually we did.

416   THE CHAIRPERSON: So, in your view, it's not so much of reaping where you haven't sewn, but you would probably have gone towards the step of converting it into an English station, or proposing it to us, and all we are doing in this particular application is, in a sense, collapsing that into a single bundle.

417   Would that --

418   MR. MILLAR: Yes. I think that we had already envisioned going down that road, to approach you for permission to do that and, absent Rogers, that would have been our path and we would have continued in Montreal. So I think you have summarized it.

419   THE CHAIRPERSON: Okay. Just one final question, and we will take a break right after this.

420   I'm sorry...?

421   MS WHEELER: I'm sorry, Mr. Chair, I just wanted to add, in terms of your earlier comment about the integrity of the licensing process, in terms of evaluating our request for an English licence, I think it really needs to be valued not by the purchase price but by the commitments that we are putting forward in our application in terms of the investments that we are making in local programming, in the local economy, new job creations and the benefits that that will have to the system.

422   So I think that's really where the value is in terms of what our proposal is and where -- you know, why the licensing process won't be undermined by granting us that licence.

423   THE CHAIRPERSON: Right. It might be suggested by a third-party observer that this might look, however, like a back-door entry into the Montreal market for you.

424   I understand your views of wanting to create a third private national presence, but there may have been a more front-door approach to that by actually applying for such a licence and maybe it would have resulted in a call, one doesn't know but, in any event, how would you respond to somebody who would raise this as this really looks like a back door entry?

425   MS WHEELER: I will let Keith talk about why we went this way, as opposed to a new licensing approach, and it really, you know, boils down to time.

426   But I guess I would say that there was nothing that precluded our application before you from triggering a call.

427   We filed our economic impact analysis to demonstrate the impact that our proposal would have on the market, and that evidence demonstrates that there would be a minimal impact on the market.

428   And, clearly, there was an intervention phase, as well, where interested parties, had they been interested in applying for an English licence, would have been able to say: This is something we are interested in, and we would like to be able to give it a shot, to submit a competitive application.

429   Given that, given those scenarios, we don't think that there is anything that precludes the Commission from being able to evaluate our application, both for the acquisition and our application for the conversion to an English licence, to be able to determine whether that is in the best interests of the system, even in the absence of competing applications, which we are not sure there would be.

430   MR. PELLEY: I would say two things. First of all, I think, from the comments that some of our competitors have said of late, the thought of moving into the conventional business at this particular time, they might be somewhat surprised, and I think that their belief on the conventional business and its viability compared to ours is completely different.

431   So I totally understand the Commission's comment regarding putting out a licence request, I am just not sure, to be totally honest with you, whether anybody would apply. That's a whole separate -- and that's speculative.

432   From our perspective -- and I think this is critical. Scott mentioned that we tried to get this launched and going during Canada's Got Talent, because prior to Canada's Got Talent we were out in the marketplace and we realized that we couldn't generate the dollars that were needed to sustain such a high scale, high produced program. So speed became very, very important for us.

433   And not understanding where, exactly, without have the crystal ball of knowing where the conventional business is going, we still believe in its viability -- and we believe in its viability now -- we needed to move, and move quickly.

434   And if, in fact, Mr. Millar was not prepared to do an affiliate agreement with us, which didn't satisfy all of our needs, then we wouldn't have even -- we would have gone down a whole different road.

435   But we couldn't wait for the whole -- to go through the licence process, and then vet that, which might have been two years. By then it would have been too late.

436   So speed was really, really critical for us in terms of getting our program into a sense of opportunity in markets like Saskatchewan, the interior of B.C., and Montreal.

437   THE CHAIRPERSON: So, in a sense, not so much a back door entry as a side door entry, and there is nobody ringing the doorbell at the front door in any event.

438   MR. PELLEY: Chris, did you want to make a comment?

439   MR. FUOCO: Sure, certainly. I think the other piece is that the context in the market would have been completely different in that case, and we would be in it facing a new entrant, instead of being here at the table with Rogers and ECE with what we believe is a very holistic, elegant solution to better serve the market.

440   The context would be different in that we would be looking at it, seeing a new competitor coming in, and we would, in fact, ourselves, not wanting to be third or fourth in that market, and having City, actually be one of the first to oppose such an entry into it.

441   To Keith's point about protracting the process and delaying it, it certainly would have.

442   THE CHAIRPERSON: Thank you, that's very clear.

443   Why don't we take a break, it's been a little while and I think we all need a short break. Let's say ten minutes, and we will come back at nine minutes to 1100.

--- Upon recessing at 1040

--- Upon resuming at 1052

444   THE CHAIRPERSON: I would now ask the Vice-Chair to ask you a few questions.

445   COMMISSIONER PENTEFOUNTAS: Thank you so much, Mr. Chair.

446   Let's start with some fun stuff before we get to the ugliness.

447   That reminds me, yesterday I was speaking at the OEB, and I was supposed to speak right after Sylvie Courtemanche, and instead they put this band up, and I said: What are you guys doing with this band, and then you have to have a boring speech? It doesn't work that way, you give the speech and then the band.

448   It's like a French film where they have the smoke before the sex, it doesn't work that way.

--- Laughter

449   COMMISSIONER PENTEFOUNTAS: At any rate, have you thought about who would be running things in Montreal and what degree of presence there will be from people like Keith Pelley and Scott Moore in Montreal?

450   In terms of your commitment to the city, especially if there is going to be a serious lifestyle play, am I going to be running into Keith Pelley on a Saturday afternoon chomping down on a T-Rex poutine at La Banquise, or is that not going to be the case?

451   MR. PELLEY: Well, I love Montreal, so you might run into me there, as well.

452   We will be very, very active, obviously, because of the need to be successful, but it will be run by people who know the Montreal community, with all due respect. We won't be just bringing somebody in from Toronto that knows how to run Breakfast Television.

453   There will be an executive producer that will be hired here, that is from the local community.

454   Is that the question that you were asking?

455   COMMISSIONER PENTEFOUNTAS: Yes, that's the question.

456   MR. PELLEY: And that was the real easy question, so that was --

457   MR. MOORE: I would add to that. First off, I plan on being in Montreal a lot. The only reason we are doing this is so that I can have dinner on St. Laurent more often, so I am looking forward to that.

458   We have already been in contact with an individual in Montreal who we would love to have run the station in Montreal and be the executive producer of BT. In fact, that person was the person who produced the video.

459   We have had discussions around what we would like the show to be. He has some very, very strong ideas as to what he thinks the show should be, and he is a native Montrealer. I think he would be terrific. I have worked with him before.

460   We obviously can't contract with him yet, because we don't have your approval yet, but it would be locally run.

461   And I think it's really important -- and I made this point earlier -- that BT is not a cookie-cutter across the country. Montreal is a unique community. Our show there would be significantly different from anywhere else. It has to reflect the community there. It has to reflect the excitement of that community.

462   COMMISSIONER PENTEFOUNTAS: I see a 3 percent spend on local, and I find that a little light.

463   MR. MOORE: I think you need, again, to look at it in context. What we are suggesting we would spend on local content with BT works out to be 43 percent of the revenue of the station in the first year, and even into the seventh year it would be over 30 percent.

464   What we have said is that the 3 percent is for the independent production community, for programming outside what is local.

465   And we understand why the Commission is concerned about that, but our overall feeling about commissioning independent projects is that we don't want to be too tied to geography. We want to take the best ideas, from the best independent producers across the country.

466   As I said, one of the great examples is that we contract with Gala Films, out of Montreal, to do a show based in Vancouver.

467   So independent production of that nature is not necessarily tied to the local community, it's the BT --

468   COMMISSIONER PENTEFOUNTAS: You are telling me that that is, essentially, a floor, not a ceiling.

469   MR. MOORE: Yes, and consider that we have spent money in Montreal on independent production even before we ever had a station there.

470   MR. PELLEY: The other thing is, if you look at -- even if you catapult ahead to Year 5, I think that our revenues, which we hope are light, are $9 million, and if you take that at a 23 percent CPU, it would be $2.1 million, and we are committing to spend $3.7 million on BT.

471   BT, because it is very remote-based, as well -- it's not a traditional studio show that you just go out and get ENG cameras -- there are live remotes. So it is a very expensive show to produce.

472   COMMISSIONER PENTEFOUNTAS: Since we are talking about spend, have you thought about a BT weekend?

473   MR. PELLEY: I haven't thought about that; have you?

474   MR. MOORE: We thought about it in Toronto, where, frankly, our most successful BT is, and we have done the analysis and, frankly, viewing patterns are such that we don't think we would get much of an audience, and it certainly would not generate the type of revenues that we would need.

475   COMMISSIONER PENTEFOUNTAS: So it's not in the cards for Montreal.

476   MR. MOORE: So, no, it's not in the cards for Montreal.

477   COMMISSIONER PENTEFOUNTAS: What happens when Global, belatedly, gets their morning show up and running, as they committed to do over a year and a half ago now?

478   MR. PELLEY: First of all, I think that our brand and what we do with BT is a premium morning show brand. My understanding -- and maybe Scott or Susan could speak to it -- I believe that theirs is a little bit more news-focused and a lot less lifestyle, with more weather and current affairs, as opposed to into the community, like we traditionally do with BT across the country.

479   MR. MOORE: I would use the example of Vancouver. Global does a morning show in Vancouver. They call it the Morning News, because that is exactly what it is. It is totally studio-based. It is very much like a local newscast.

480   And I might also point out that we have made our commitment out of a real passion for this project. Global is doing their morning show with benefits dollars, we are doing it because we believe in the production.

481   COMMISSIONER PENTEFOUNTAS: Have you guesstimated what kind of revenues you would be repatriating out of Montreal for City?

482   MS McLAUGHLIN: They are a little hard to pin down. What we did was, we looked at clients specifically, Kimberly-Clark, Molson, et cetera, and their spend tends to vary.

483   In terms of the actual percentage of the projections, I don't have that, but I can speak to when I did sell, because I did work for airtime television sales for 15 years, and we were taking millions out of this market.

484   COMMISSIONER PENTEFOUNTAS: You can't sort of do a simple correlation between the number of eyeballs that are watching the American networks in Montreal and how many of those eyeballs you would repatriate through simsub and come up with a figure?

485   MR. MOORE: I might have Malcolm speak to what the ratings are for the U.S. stations in Montreal.

486   MR. DUNLOP: Thanks, Scott.

487   We don't have that figure, but I can give you a good example. Something like Two Broke Girls does an 8 rating point in the marketplace, coming in from Burlington. We know that we can repatriate those dollars and bring them into the local market.

488   MR. PELLEY: But, Mr. Vice-Chair, we will get back to you and try to -- without having a mathematician right here, we will --

489   COMMISSIONER PENTEFOUNTAS: Yes, if you could attach a dollar value to that 8 share --

490   MR. PELLEY: We have not done that yet, but, yes, we could go through that and try to come up with a pretty good --

491   COMMISSIONER PENTEFOUNTAS: I'm surprised. But anyways --

492   MR. MOORE: But I think that our revenue numbers are reflective of our Sales Department's estimates of what we think we would be repatriating and new dollars there.

493   So to break it out individually might be -- I'm not sure how valuable that would be, but we could certainly do it. But the overall revenue number is based on the ratings that we think we would be generating in the market.

494   COMMISSIONER PENTEFOUNTAS: You can understand the Commission's and the broadcasting system's interest in repatriating dollars, right?

495   Okay.

496   THE CHAIRPERSON: When would you be doing this by, because we aren't necessarily doing process after this hearing. So if you can't do it by today --

497   MR. PELLEY: We will do it by the time that we --

498   THE CHAIRPERSON: At the reply phase?

499   MR. PELLEY: That's correct.

500   THE CHAIRPERSON: Okay. Thank you.

501   COMMISSIONER PENTEFOUNTAS: Just to be clear, it's Option A and Option B, because I didn't get it the first eight times?

--- Laughter

502   MR. PELLEY: That's correct.

503   COMMISSIONER PENTEFOUNTAS: I really got a little excited about your 50 MOW. Would I sense any interest to a commitment to broadcast Canadian feature films?

504   I don't want to rehash the way we let you off the hook a year and a half ago, but I see Engelhart back there having a chuckle.

505   MS WHEELER: For the reasons that we gave a year and a half ago, we don't believe that we can make a firm commitment to Canadian feature films.

506   COMMISSIONER PENTEFOUNTAS: Nothing? Zero? Nada?

507   MS WHEELER: However, what we did say a year and a half ago was that that didn't mean we wouldn't continue to commission Canadian feature films, and I think what you heard from Claire today is evidence that we actually are continuing to do that, even in the absence of a hard requirement.

508   So I think our actions to date have demonstrated that, when appropriate and when it makes sense for our station, we certainly will include Canadian feature films as part of our schedule.

509   COMMISSIONER PENTEFOUNTAS: I appreciate your commitment to expenditure, but exposure without expenditure --

510   I think the two go hand-in-hand, and it sure would be sweet to see a commitment.

511   MR. MOORE: One of the really important things that I learned in programming when I was at CBC is that movies of the week, one-offs, simply don't work on television. The reason for it is that you are making a large expenditure for one day, and the amount of promotion and marketing that you have to drive to people for that one night doesn't pay off.

512   Whereas, the expenditure that we are making on Seed and Package Deal, for 13 weeks -- hopefully multiple weeks -- you can have a million dollar marketing campaign around a 13-week series. If you do a million dollars for every night that you are doing a movie of the week, the economics simply don't work.

513   And CBC abandoned that strategy years ago.

514   MR. PELLEY: I am just going to have Claire talk about it, because when you talk about movies of the week, as opposed to series like Seed and Package Deal, from an independent producer's perspective, they would rather do those based on the opportunity that they have, and I know that Seed and Package Deal, in terms of international distribution, are far greater than a pure movie of the week.

515   And we can see that with what is happening with Seed and Package Deal.

516   MS FREELAND: Our objective is to commission renewable, sustainable series that will not only work in our marketplace but can sell internationally, and with programming like Seed, where we are looking at 13 half-hour episodes, and Package Deal, which is also 13 half-hour episodes, we feel quite bullish that the opportunity to sell those programs outside the marketplace is stronger because there are more of them, and the hope is that we will continue to do more, and that they will be renewable series for us.

517   So I think that is a really great opportunity for Canadian producers, and for us, as well, to just build the awareness and the strength of the programming that we are committing to.

518   MR. PELLEY: Both of those series are currently being pitched to U.S. networks, which I think is pretty significant. If we can get an actual hit that appears on a U.S. network, that would speak volumes for the independent community here in Canada, as well as for Claire and her job security.

--- Laughter

519   COMMISSIONER PENTEFOUNTAS: Thanks.

520   Okay, let's get to the ugly -- logs, if we can still call them that.

521   How was it that we had to wait until this week to get something that resembled a log, Mr. Millar?

522   MR. MILLAR: That is, obviously, a source of embarrassment to us. I guess I will go through the detail of how, because it was --

523   This isn't to explain it. We take our responsibility to keep logs, meet our conditions of licence, and provide the logs seriously.

524   However, it wasn't until July that we became aware that the logs that were submitted each month were not as readable as we thought they were.

525   And I will ask Jennifer to comment on that, because she has been more intimately involved, but what we have gone through --

526   COMMISSIONER PENTEFOUNTAS: Just quickly, how did you get to two and a half years and you finally realized that your logs were unreadable, as you say?

527   MR. MILLAR: Sure. We are a smallish company, we have a total of 250 employees across the country, and we encourage people to take initiative. From our standpoint, that meant that the manager in charge of the operations area, who would do the submissions -- and I sign the attestations -- they would submit the logs. There would be an error. They would resubmit them. There would be an error.

528   And they took it on themselves to solve the problem, unbeknownst to us.

529   That doesn't excuse us, but it does, I hope, help you understand why we were somewhat surprised to find out that none of the logs were readable -- they were readable, but there were unknown errors throughout.

530   Jennifer could talk just a little bit about the progress we have made on getting those, and the commitment we have made to staff to finish that, irrespective of the outcome of --

531   COMMISSIONER PENTEFOUNTAS: We are aware of the progress. We have it, whatever progress there was. Are you experiencing more problems with CHEK and CHCH?

532   MR. MILLAR: No, not in terms of the same kind of error, so there are not submissions that have been returned many, many times.

533   COMMISSIONER PENTEFOUNTAS: Were you using some other system in Montreal?

534   MR. MILLAR: Now we are getting to the edge of my expertise, so I will do my best.

535   We work with a third party vendor, but because of the nature of the programming that we have been programming on Metro 14, the way that the software codes it --

536   And you will remember that we are ensuring compliance with multiple languages and communities.

537   The way that the software creates the long line of code wasn't in the same way that the Commission's software on intake was expecting to receive it.

538   Now I am getting into serious trouble. Jennifer, could you bail me out?

539   MS CHEN: Yes. Effectively, what has been happening with our logs, which we have only very recently understood and resolved to fix, is that our playout system plays on CJNT each element on its own. So the playout system that we use is different to that of CHCH, and it plays every element on its own, which has caused many errors.

540   So, as opposed to programming one half-hour episode, what our system does is that it actually plays every element. For example, it would play out the opening credits outside of its half-hour series.

541   I hope that explains it somewhat.

542   COMMISSIONER PENTEFOUNTAS: Not really, but how would you also explain the errors, if I were to tell you that there were a million errors over a three-year period?

543   MS CHEN: Having this elemental playout from the system that we used on CJNT, it spurred on multiple errors for every line of programming.

544   A half-hour show, which would appear in other logs as a half-hour show, on our log appears as 100 lines of programming, and each of those 100 lines would then, in turn, cause errors completely unrelated to the programming.

545   Now, all of this is to say, too, that we have understood that this is indeed the case, because up until very recently we could not even very clearly identify how to resolve those issues. But we are capable of doing that now.

546   COMMISSIONER PENTEFOUNTAS: But until recently you had not even identified that there was an issue.

547   MR. MILLAR: Yes, absolutely --

548   COMMISSIONER PENTEFOUNTAS: Is that gross negligence or gross incompetence?

549   MR. MILLAR: Well, I don't think that it's --

550   COMMISSIONER PENTEFOUNTAS: It's pretty serious stuff, Mr. Millar.

551   MR. MILLAR: Absolutely, it is.

552   The difference is that the logs are to be submitted each month, and we were submitting them each month, but they were coming back, again, as Jen mentioned, with a software error saying: We can't read this one, and that is repeated.

553   So there was a group of 20 different errors, but each one recurring multiple times in a day, a multitude of times each week, over the years. That's where you get the million -- that's where the number comes down --

554   COMMISSIONER PENTEFOUNTAS: Right.

555   MR. MILLAR: So, no, I wouldn't say that it's gross incompetence; it is, through our company, a lack of communication of what was important in terms of getting the logs in and communication back to the logging department within the Commission.

556   Our commitment to getting this resolved has been -- we have put the entire force of the organization into resolving this one, so it was brought to senior management's attention, and we have people working on this -- three or four people working nonstop, nights and weekends, and we have made a commitment to get those cleaned up, regardless of what happens, by February.

557   We didn't choose February lightly, we chose it because, just the sheer number of days over those years, that's the period of time it takes to get it done.

558   COMMISSIONER PENTEFOUNTAS: Okay. COLs -- and I am going to read some of them out to you.

559   COL No. 1:

"CJNT-TV shall devote to the broadcasting of ethnic programs not less than 50 percent of the total number of hours broadcast monthly between 6 p.m. and midnight."

560   Basically, that means that you cannot broadcast less than 50 percent of your programming devoted to ethnic programs.

561   Would you happen to know what the number we arrived at once we got the logs is?

562   MR. MILLAR: We received a report yesterday which, again to be abundantly clear, we programmed this channel. We program it in compliance of conditions licence.

563   That report, I can't explain why we clearly still have some issues in terms of the reading of the logs. But, yes, we saw that that was --

564   COMMISSIONER PENTEFOUNTAS: But that's not a minimal issue. You are supposed to be at 50. You're at 8.56.

565   MR. MILLAR: No, and I would tell you that we clearly have an issue in terms of the reading of the logs because we are not at 8 percent.

566   Now, if I could indulge the Commission, we have a hand-out where we would, if you're prepared to, we would take a minute and show you how I can say to you with a straight face and in all honesty that we know we're in compliance because it's how we build the schedule for each day in each time period.

567   We would take you through that briefly and we would intend that to show you why we can have confidence and you can have confidence that we're in compliance, notwithstanding both the report and the lack of logs in some of those logs.

568   COMMISSIONER PENTEFOUNTAS: Well, let me go through the rest of the COLs and let me look at your schedule.

569   MR. MILLAR: Sure.

570   COMMISSIONER PENTEFOUNTAS: And we'll take a look at that thereafter, if that's okay with you.

571   MR. MILLAR: However you would like to do it.

572   COMMISSIONER PENTEFOUNTAS: COL 1(b):

"CJNT shall devote to their broadcasting ethnic programs not less than 75 percent the total number of hours broadcast annually between 8 p.m. and 10 p.m."

573   No less than 75 percent. Our number comes out at 20.58.

574   COL 2:

"CJNT shall devote to their broadcasting Canadian programs not less than 50 percent of the total number of hours broadcast annually between six a.m. and midnight."

575   We come up at 45.34.

576   And "No less than 40 percent of the total number of hours broadcast between six p.m. and midnight". 44.23, that's fine.

577   Condition No. 3:

"Non-ethnic programs: CNJT shall devote to the broadcasting of non-ethnic programs not more than 40 percent of the total number of hours broadcast annually."

578   Not more than 40 percent. We arrive at 89.60, a considerable gap.

579   3(b):

"Not more than 50 percent of the total number of hours broadcast annually between six p.m. and midnight."

580   We arrive at 91.44.

581   COL 10, the licensee as it regards to the hearing impaired:

"The licensee shall caption 100 percent of English and French-language programs over the broadcast day in compliance with 2007-54."

582   Our result, 14.06.

583   Original local ethnic programming commitment:

"The licensee will broadcast 14 hours of original local ethnic programming each week."

584   Conclusion: Zero.

585   Ethnic programs under TV regs 9.1.1:

"The licensee of an ethnic station shall devote to ethnic programs not less than 60 percent of the total number of hours devoted to broadcasting during the aggregate of the broadcast days in each of the four or five-week periods in the calendar approved by the Commission."

586   Result: 10.4 percent.

587   If I had these kinds of results I'd want to have my logs unreadable and lost myself; the first point.

588   The second point: If we are correct in our assessment, how do we -- it would seem to be awfully hard for the Commission given this kind of crass non-compliance to be seen as rewarding non-compliance with the kind of sweetheart deal that's being put before the Commission this morning. So how do we square that, Mr. Millar?

589   MR. MILLAR: With respect, the problem that we are going to have in this is that we do not believe the report you have is correct. We confirmed to you that we have operated this in compliance. So while the logs themselves have been somewhat unreadable, clearly they continue to be unreadable although they have been clearly submitted.

590   So that's the reason that we have asked you -- I would take you through conditions of licence 1(a), 1(b), 2(a), 2(b), 3(a), 3(b), 9.1.1 and 9.2 and tell you in each of those cases we can show you the process we used and that you will see when the logs are in that we have operated the station in compliance of the conditions of licence rather than reading them out.

591   We don't have the exact count, but the way we have programmed it is we have actually exceeded each of those conditions of licence in the way the programming has been put together.

592   COMMISSIONER PENTEFOUNTAS: Supposing for the sake of argument that you're correct and there is a problem with the logs, can we look at your schedule? I have here Week 7. I don't know if you have a copy of this. If you don't, well, we'll be happy to provide you with one. Week 7, 2012-13, Metro14.

--- Pause

593   COMMISSIONER PENTEFOUNTAS: I'll let you take a look at that, but would you agree with me that this is an accurate representation of your schedule?

--- Pause

594   MS CHEN: Yes.

595   COMMISSIONER PENTEFOUNTAS: Great. So getting back to some of the conditions of licence I just mentioned, we'll just take an average day.

596   Wednesday, the 10th of October, CityLine in the morning, OMNI: Italian Edition, Metro Debut, CityLine, Price is Right -- they must be tired -- The Chew, The Spirit of the Art, Judge Judy.

597   From 2:30 on; General Hospital, Katie, OMNI News, Most Amazing -- is that Race I guess -- Two and a Half Men, Two and a Half Men, How I Met Your Mother, How I Met Your Mother, OMNI News for an hour, Modern Family, The Bachelor Canada, Nation of Champions, Changing Faces, Jimmy Kimmel Live, Two and a Half Men, The Office, and so on and so forth.

598   Now, getting back to some of the numbers mentioned in the condition of licence, just by looking at your schedule would you say you're in compliance?

599   MR. MILLAR: Yes

600   COMMISSIONER PENTEFOUNTAS: Okay. And where is the original ethnic programming in your week's line-up? Do you see any of that?

601   MR. MILLAR: I do. You see it from Monday to Friday in Metro Debut.

602   COMMISSIONER PENTEFOUNTAS: Okay.

603   MR. MILLAR: It's 15 hours a week.

604   COMMISSIONER PENTEFOUNTAS: And are you also seeing 50 percent ethnic programming in your schedule?

605   Obviously between six p.m. and midnight, yeah.

--- Pause

606   MS CHEN: Yes, we do.

607   COMMISSIONER PENTEFOUNTAS: Okay. And are you seeing no less than 75 percent of the schedule between eight p.m. and 10 p.m. consisting of ethnic programming?

608   MS CHEN: Yes.

609   COMMISSIONER PENTEFOUNTAS: Can you tell me where you see that?

610   Monday: How I Met Your Mother 8 o'clock. 8:30, Partners. 9:00 to 9:30, Two Broke Girls. 9:30 to 10:00, Chinatown Canada and Revolution thereafter.

611   MR. MILLAR: So if I could, Commissioner Pentefountas, is that the conditions of licence are calculated weekly and must be met monthly.

612   COMMISSIONER PENTEFOUNTAS: Yeah

613   MR. MILLAR: And so we would confirm to you that we have operated this in compliance with our conditions of licence.

614   COMMISSIONER PENTEFOUNTAS: That's fine.

615   I have no further questions. Thank you.

616   THE CHAIRPERSON: Commissioner Patrone will have some questions for you.

617   COMMISSIONER PATRONE: Thank you, Mr. Chairman.

618   Good morning, appreciate your presentation.

619   As you're aware, we have several different applications before us and several different proposals. Each one of these presents a different possible impact in terms of tangible benefits. So let's take a few minutes now to talk about three different scenarios that are before us.

620   Forgive me if some of it has already been brought up by colleagues so there may be a little bit of repetition here. But in terms of clarity that works for me.

621   So in the event that the CRTC approves both the Citytv Montreal proposal and the east ici proposal, you have agreed to spend $1.6 million over five years towards the production and delivery of local ethnic programming. That is programming aired on ici, is that correct?

622   MR. PELLEY: That's correct.

623   COMMISSIONER PATRONE: Now this presents a little bit of a departure from the normal use of tangible benefits as you're probably aware because applicants normally direct such monies towards production funds, as you well know, specifically used in the production of programming.

624   So the question is, first and foremost, is this the appropriate use of tangible benefits and if so why?

625   MR. PELLEY: Well, I think that -- and it's a great question. We thought that question might come about.

626   We really want to convince you, the Commission, that this is the best model for the community of Montreal and the Canadian broadcasting system. In order to do so we wanted to show you that because CJNT has had such a past that has not been financially successful, the question is how can ici be one that can actually make it work? And we felt that that was going to be an area that we were going to need to convince you on.

627   So, yes, we believe their 25 years of experience in ethnic television -- and you're going to hear from them this afternoon and they are very impressive and they have been in this marketplace. But we felt that we needed to do more to give you the confidence that ici is a viable opportunity to serve the Montreal market in ethnic broadcasting.

628   So that's why we said, listen, we'll take the purchase price, forego our social benefits for our own benefit and turn them over to ici that can direct them to where they would like.

629   And it is another -- it's another -- first of all, a benefit to them and will help their sustainability and another motion for us to show the Commission that we believe that they are viable; that combined with everything else.

630   Like what we're committing to with ici is important because we felt that that was critical, as the Chair said at the beginning of the proceedings, to convince you that this makes sense and is viable. Because I think that is something that I think has come through this morning, is ici's application viable based on the fact that CJNT didn't work under Mr. Millar, didn't work under CanWest?

631   So we're doing everything we possibly can to prove that it is viable and giving the social benefit dollars is just one other example of that.

632   COMMISSIONER PATRONE: I'm glad you went into a little bit of the past because, you know, it's somewhat of a checkered history as far as ethnic programming in Montreal is concerned. I can't help but wonder whether or not when you put forth this proposal whether you were a little concerned that you were throwing money, good money after bad in a form of speaking.

633   Do you really believe that this will work?

634   MR. PELLEY: Ici's model?

635   COMMISSIONER PATRONE: Yes.

636   MR. PELLEY: Yes, we do, and we do because -- for a number of reasons, but not if it was just unilaterally without support from us, to be honest.

637   I think -- and you'll hear from them this afternoon. They certainly have a completely different model than we're even doing at OMNI television. But at the same time the expertise that we're providing them based on the fact that they have never been an independent broadcaster, they have been independent producers before, is significant.

638   Not only the dollars from social benefit but the technical and engineering support that we are going to actually give them, the editorial support and the expertise that Malcolm Dunlop is providing them and he's been in the business for some 25 years, and a deep discounted program supply agreement that we are to provide them as well.

639   And Commissioner, I think it's very -- again, we knew that this was going to be a concern from the Commission.

640   So we are going to do everything we possibly can to convince you and I hope they do as well that their business plan, the fact that they're on the ground, the fact that they've been in the ethnic broadcasting business for 25 years they've been broadcasting and producing ethnic television, combine that with the infrastructure that we're going to help them with, we are not going to -- we're doing everything we possibly can not to -- to let them fail and make them successful.

641   COMMISSIONER PATRONE: And you've in fact sort of answered my question as to why choose ici. As you're aware, there are alternatives out there and which might represent a possible better use of this money. But you obviously considered those other options and this is what you came up with.

642   MR. PELLEY: This is what we came up with, having discussions with -- as Mr. Millar alluded to earlier, he had started the discussions with ici and we thought that, based on their expertise in the local market, if we're actually -- I know it's a little different obviously taking -- because you know from Claire's perspective or Scott's perspective the social benefit dollars would be something that Claire would probably love to have to spend on CJNT in Montreal. There is no question.

643   However, we're taking those dollars away because it's very important for the long term sustainability of ici.

644   Malcolm, did you want to add anything from your area of expertise?

645   MR. DUNLOP: I would. On the OMNI television stations in Toronto we have a commitment of our licence of doing 44 different languages. We utilize 27 independent producers there.

646   What I find amazing about these independent producers, many of them we've had for many years, somehow even if a population is 15,000 they find a way to be able to produce the show.

647   Usually we have a 50-50 split in inventory with them. Somehow even with 50 percent of the revenue they're able to produce these shows and generate on-going positive IBEDA from those shows.

648   So I think the model of these people who really know the community are involved in the community and who go out and sell the community, I think it's a really, really good model.

649   COMMISSIONER PATRONE: Well, thank you, Mr. Dunlop.

650   Do you think given your experience with OMNI that there should be conditions or safeguards, if you will, on how ici would use the funding?

651   Those conditions might include what type of programming, whether it should be directed towards underserved ethnic groups, Quebec production, even French-language production. How do you feel about that type of strings attached approach to this one million dollars that we're referring to here?

652   MS WHEELER: Thank you, Commissioner.

653   Our original proposal was to direct potential benefits towards ici to allow them to use that money to launch their station and to establish their service in the market.

654   But we recognize that the tangible benefits policy is very specific but the money should be directed -- the majority of the funding should be directed to on-screen initiatives. So we have already put a few safeguards around our benefits proposal in the sense that it does need to be directly tied to either third language or ethnic programming.

655   So we feel that that is a sufficient mechanism to ensure that the tangible benefits policy is respected and at the same time that the money is used towards programming that will enhance the ethnocultural communities in Montreal.

656   COMMISSIONER PATRONE: Thank you, Ms Wheeler. Would you have any objections in general to the possibility that the Commission would see fit to add to those conditions?

657   MS WHEELER: I don't think we have any objections if the Commission in its wisdom felt that you needed further assurances.

658   But I guess I would caution the Commission to put too many restrictions on ici's ability to create and produce programming that best serves their communities. I think they are in the best position to determine what kind of programming strategy they should pursue in terms of resonating with their audiences.

659   So I would -- I personally would feel that that would be overly restrictive for a new licensee.

660   COMMISSIONER PATRONE: Fair enough.

661   MR. PELLEY: I think it's important to understand that if that was something that was important to the long term sustainability of ici and the success of it and the Commission deemed that that was the best way for them to be successful then absolutely.

662   Our only objective is for ici to be a viable ethnic broadcaster in Montreal and we're going to do everything we possibly can to make that a reality.

663   COMMISSIONER PATRONE: In the event that the Commission decides not to agree to this particular package, I'm speaking of tangible benefits, which include ici, would you agree to direct those monies towards the Quebec English-language producers or some other fund?

664   MR. PELLEY: We --

665   MS WHEELER: We did provide alternative proposals in our application. So in the event that the ici transaction or the benefits proposal was denied and we are granted an English licence we would self-administer those benefits but they would be reserved exclusively for Quebec-based independent production over seven years.

666   COMMISSIONER PATRONE: Fair enough, thank you.

667   As you are aware, policy requires that incrementality is applied to the tangible benefits expenditures; in other words that those funds are dispersed relative to other expenditures including PNI.

668   Can you talk a little bit about how you see incrementality being applied here? As you're aware, CJNT has not had expenditure requirements in the past. Are you able to address that?

669   MR. PELLEY: Yes. We have not had -- CJNT has not had a CPE and I think what you're maybe alluding to is going forward if we --

670   COMMISSIONER PATRONE: Yes. Absolutely.

671   MR. PELLEY: -- change to an English-language channel would we be subject to a CPE. And you know that our challenge during the group-based framework was the formula that the CRTC used to arrive at the group CPE was heavily skewed to a lot of specialty services, and our asset mix is obviously heavily skewed to over the air.

672   Having said that, when you look at the actual commitment that we're making based on the 7.4 million of revenue and directing 3.2 million into Canadian content that would represent as I think Scott alluded to earlier, a 43 percent CPE.

673   So I think the 15 hours of original local programming, the new jobs and the aggressive nature that we're tackling the Montreal market, because it would have been very easy for us to have come with an application in front of the Commission that said we will give a million, five or a million, one and produce a couple of documentaries and try to convince you that that was the best for the community.

674   We are coming and putting our best foot forward and saying we're not only -- if we're not only -- this is a win-win you know with 15.5 hours of original programming, a new voice for the Anglophone market, 3.2 million to produce but significant support for ici. So I think it's a best of both worlds and I think we're putting our best foot forward.

675   COMMISSIONER PATRONE: Thank you.

676   Would you expect that Rogers OMNI -- and I don't know if this one is for Mr. Dunlop or not -- would be airing ethnic content produced through the expenditures of tangible benefits paid by Rogers to ici?

677   I realize that's one of the several scenarios that are before us but I pose that question to you with a follow-up in mind depending on what you say.

678   MR. MOORE: It's a wonderful question and one that we've actually had conversations in the back with the principals of ici, that the program supply between the two parties doesn't have to be one way, that if there's terrific programming that they are producing either with or without our tangible benefits we would be happy to consider it on OMNI.

679   I think you will meet later this afternoon some of their terrific local ethnic producers who have quite a reputation in Montreal and some of their programming would perhaps be quite viable on OMNI nationally.

680   COMMISSIONER PATRONE: And you anticipate that that programming would be relevant to your different markets?

681   MR. MOORE: I think I'll let Malcolm answer that in a second but I think certainly for linguistic groups there is a certain commonality across the country of what they may be interested in, the news and current affairs that they may be interested in from their home communities. So I think it probably does make some sense.

682   Malcolm, do you want to add to that?

683   MR. DUNLOP: Sure. On the OMNI stations for example in Ontario we air many programs from our OMNIs in Vancouver. It's just something that we do and it seems like with the ethnic communities there's lot of times that there's stories within those shows that resonate with the ethnic communities across Canada.

684   COMMISSIONER PATRONE: Now, would that programming be made available to Rogers at market rates?

685   I think if I heard you correctly, Mr. Moore, you seem to suggest that there would be tradeoffs in terms of availability of content. You also know, of course, that tangible benefits are supposed to be sort of third-party improvements to the overall broadcasting system, not as a direct benefit to you in this case.

686   So I would like some assurances that this isn't kind of a back-door way of --

687   MR. PELLEY: Of funding OMNI.

688   COMMISSIONER PATRONE: -- yes, essentially, so that the tangible benefits would essentially go to producing programming for you.

689   MR. PELLEY: Yes. So that we direct the social benefits to ici and then it airs on OMNI and we don't pay market --

690   COMMISSIONER PATRONE: I see you've thought of this.

691   MR. PELLEY: No, actually it's very creative.

692   How would we reassure?

693   MS WHEELER: We can make a commitment not to pick up any of that programming if that is a concern to the Commission. However, I think in any negotiation we would probably pay market rate for that programming.

694   MR. PELLEY: Or we could make -- we will give you the assurance that you would like if that means that we put in that we have to pay market rate for those particular dollars or we don't pick up that programming.

695   That was never our -- that was never honestly -- that was never our desire, was to actually back-door fund programming.

696   COMMISSIONER PATRONE: You don't want to fund programs relative to purchasing programming --

697   MR. PELLEY: No, no. That was not. This conversation has never happened between us as far as that social benefit dollars we would get it back. This was all about helping ici become viable.

698   COMMISSIONER PATRONE: Yes.

699   MR. PELLEY: And quite honestly, we were trying to actually say to the Commission, listen, we're prepared to forego our social benefit dollars and give it to ici. If that never appears on any of our channels, any of the programming that is used for that, we're totally comfortable with that as well, to just show you how committed we are to ici.

700   COMMISSIONER PATRONE: Yes. But just for the record, I wouldn't want you to think that we would want in any way to undermine ici's business model going forward, and should that model include selling programming to Rogers --

701   MR. PELLEY: Right. Sure.

702   COMMISSIONER PATRONE: -- I don't want there to be the perception that somehow the regulator wants to impede a possible source of revenue that they are probably going to need going forward.

703   All we would suggest as far as this line of questioning is concerned --

704   MR. PELLEY: Right.

705   COMMISSIONER PATRONE: -- that that programming be made available at market rates --

706   MR. PELLEY: That's fine.

707   COMMISSIONER PATRONE: -- and that ici be compensated at a rate --

708   MR. PELLEY: Absolutely.

709   COMMISSIONER PATRONE: -- that's commensurate with what is expected in the marketplace.

710   MR. PELLEY: Yes. So that's a great double win for ici because not only do we give them the money to produce the programming, then they sell it back to us. So that's -- ici, I guarantee you, will accept that.

--- Laughter

711   COMMISSIONER PATRONE: A second scenario that I want to put forth, under Rogers management, you know, could be required to continue operating as an ethnic station in Montreal -- as you know, that is before us -- and yet, ici could be a new ethnic service.

712   Now, I know you suggested that that probably wouldn't happen or shouldn't happen, Mr. Moore, in your response to a question to, I believe, Commissioner Lamarre if I'm remembering correctly, but that in fact could happen. That is a possibility, one of the several scenarios that is before us.

713   Now, you have proposed directing 100 percent of your tangible benefits to the Rogers Independent Ethnic Production Fund spread over seven years, correct? Would ici have access to that fund and under what conditions might that happen?

714   MR. PELLEY: No. If we were to go with Plan B and ici was to launch at the same time, they would be a competitor and we would obviously change our relationship with them.

715   MS WHEELER: It would be a self-directed fund. However, we do recognize that the principals of ici are ethnic producers in Montreal through Mi-Cam and certainly we would be open to any relationships with Mi-Cam in terms of having them produce the ethnic programming for us. But it would be -- the first window would be on our station.

716   COMMISSIONER PATRONE: Okay. I think I heard two different answers to that question.

717   MS WHEELER: No. Under the ethnic model it's self-directed, so it would work similar to how our Citytv fund tangible benefits work in the sense that we commission independent production for airing on Citytv. That's the same way that we commission all of our benefits.

718   COMMISSIONER PATRONE: But I thought I heard Mr. Pelley suggest that it would not be a possibility to --

719   MR. PELLEY: Can you give us just 30 seconds?

720   COMMISSIONER PATRONE: Of course.

--- Pause

721   MR. PELLEY: We would be very competitive to ici and would do everything we possibly can to compete with them just like we do everything we possibly can from City to compete with Global. So we would not help them out in --

722   COMMISSIONER PATRONE: Well, if you're competing with Global, say, in Toronto, I don't expect that CityPulse would ever produce programming or fund programming which they would then expect to see on Global.

723   So I'm going to assume that what you're saying is you do not expect that that programming would be aired on ici, meaning that --

724   MR. PELLEY: That's correct.

725   COMMISSIONER PATRONE: And yet, the fund presumably would be administered independently?

726   MS WHEELER: No. We would be administering -- it's self-administered.

727   COMMISSIONER PATRONE: Would you agree to third-party management of the fund?

728   MS WHEELER: Well, as we've suggested in our application in response to a deficiency question on that along those lines, we feel that we actually have the expertise in terms of self-administering benefits for ethnic programming.

729   We've done so in Toronto, in Calgary, in Edmonton and in Vancouver, and so we would like the opportunity to be able to do the same thing in Montreal, to be able to commission programming that would fit with our OMNI schedule.

730   COMMISSIONER PATRONE: I have no doubt that you have the expertise in managing the fund. However, you also have a stake in how those monies are disbursed for the very reasons that you've discussed, Mr. Pelley, which is you don't want a competitor having access to funds in which under a certain scenario they could use to compete against you.

731   MR. PELLEY: That's correct.

732   MS WHEELER: The Commission has long recognized the value in having tangible benefits be self-administered. It's been done -- it was allowed with our City station, it was allowed in the recent Bell-CTV transaction, it was allowed in the Shaw-Canwest transaction.

733   I think there's inherent value in having the broadcaster who is ultimately going to commit to having an exhibition window for the programming that it's actually licensing as opposed to having an independent administrator that will have additional admin fees associated with that that takes away from the total dollars available to the on-screen programming, and clearly, the challenge of finding a window for it that fits within that broadcaster's schedule.

734   So I think there are certain benefits in having -- allowing us to administer those programs as long as we do -- we have made a commitment that the programs will be done through independent productions, so we feel that there is a win-win there.

735   MR. PELLEY: I really see it as simple as that. If Plan B is approved and you license ici, the social benefit dollars are administered by us and we would do everything we possibly can not to allow them to air that programming.

736   COMMISSIONER PATRONE: You don't want to compete against yourself?

737   MR. PELLEY: That's correct.

738   COMMISSIONER PATRONE: Thank you.

739   Let's talk about scenario number 3 and I promise this is the last one.

740   In the event that the Commission approves Citytv Montreal but ici is rejected -- now, you mentioned that the Rogers Independent Fund would be administered by yourself under your proposal -- can you talk a little bit more about how you expect that those monies would be spent?

741   Would it be English producers -- and I realize that is all part of the tangled web of proposals -- local, you know, French production? Can you provide any more details on that?

742   MR. PELLEY: Assuming that you approve Plan A --

743   COMMISSIONER PATRONE: But reject ici.

744   MR. PELLEY: So Plan A but reject ici?

745   COMMISSIONER PATRONE: Yes.

746   MR. PELLEY: We would be open to a discussion of where the Commission would like those social benefit dollars to be directed to.

747   COMMISSIONER PATRONE: Fair enough. Thank you.

748   I do have one question related to a line of questions posed by my colleague Commissioner Lamarre. It's an annoying one about the evening newscast issue, which I know you have dealt with at some length.

749   But obviously, you know, I'm not unsympathetic to the challenges of going into a market like Montreal or any market in which City would be the new kid on the block. You would be facing all sorts of competition, and, you know, it's no fun getting slaughtered every night at six o'clock. I get that.

750   But as you grow into a network, does it not stand to reason that going forward that the branding of which you spoke at length would include some kind of newscast that really says City, you know, right across the board?

751   Do you not think that that plays -- you know, my first job was at City, and "CityPulse" was the flagship for City in those days. Now, we're going back three decades and it still very much is. But in this case I see that you've made a conscious decision that we're going to be different, we're going to put money into lifestyle type of programming.

752   My question to you is: You know, is that it in terms of -- as you grow into a network presence, can we expect that right across the board there just won't be the kind of six o'clock CityPulse flagship show that one might expect to see, say, in other networks?

753   MR. PELLEY: You might see down the road a completely different type of show though, not a traditional news show, but you might see a current affairs talk show with a panel down the road, which is completely different.

754   I think in this market, not only in Montreal but in the entire industry right now that is not only saturated in television but the way people are consuming media and the way their habits are changing, you have to always look to be cutting edge and I think personally we haven't discussed it other than the fact that we felt that we were going to put all our money into "Breakfast Television" and build that brand.

755   But if you catapult ahead three to four years and now we're a vibrant station here in Montreal, Citytv in terms of BT has become a great brand and a signature show, the next signature show that we would look to create might not be a news show, might be a talk show with panellists, might be more of an Anderson Cooper type show rather than a traditional news show.

756   MR. MOORE: Commissioner Patrone, I think the best way to state this might be that doing local news as a fourth entrant in a market would be an invitation to bankruptcy.

757   And what's truly best for the Canadian system? Is it to produce more of the same, more of what is already being supplied by multiple voices, or is it to produce new and innovative programming that will not only serve the local market but -- you know, we've talked about it but I can't tell you how excited we are about producing a multicamera sitcom. That's just never been tried in Canada before.

758   If we were directing our resources to local news and to see the same traffic accident story that you're seeing on CF and CBC and Global or do you want to see something new and different?

759   We used to talk at CBC all the time about what's the market failure of the system. Is the market failure in producing local news? No, there's lots of it.

760   Is the market failure in producing a lifestyle show that reflects the community? Yes. Is the market failure in producing new scripted comedy? Yes. Those are things that I think truly enrich the broadcast system as opposed to just giving us more of the same.

761   COMMISSIONER PATRONE: Wasn't "The Trouble with Tracy" one of those multicamera -- I'm dating myself big time but I --

762   MR. MOORE: That was a great show.

763   MR. PELLEY: I don't know, but it just came to me that Al Waxman was the "King of Kensington." It's been driving me crazy.

--- Laughter

764   COMMISSIONER PATRONE: I have no doubt that you've crunched the numbers and --

765   MR. MOORE: But, with respect, it's not just about the numbers. Obviously, as I said, it's an invitation to bankruptcy.

766   I was very involved in the decision to get back into local news at CBC and I think frankly it's the right thing for CBC to do. But in the Vancouver market BCTV has been absolutely utterly dominant. Both CBC and CTV have poured hundreds of thousands and millions of dollars into their local news and they're not making a dent.

767   In fact, when Tony Parsons, the local anchor at BCTV retired, we thought it was the most brilliant idea ever at CBC to take him over to CBC and we figured the entire audience would follow him. In fact, they didn't because they're used to watching BCTV.

768   So we can bang our heads against the wall to just produce more of the same or we can be truly innovative.

769   In the history and the spirit of Citytv, if you were there, you saw what Moses did in the early days. He produced programming that nobody else was producing. That's our goal. That's what we want to do and that's the history and heritage of Citytv.

770   COMMISSIONER PATRONE: I just looked at the number of people that you're hiring. You're talking about 30 people and 28 of those are going to be directed towards your morning cast.

771   MR. PELLEY: Right.

772   COMMISSIONER PATRONE: And it just struck me that with that kind of staff, you know, how much more expensive would it be for four or five of those people to do packs for a six o'clock show?

773   You also have, of course, other content to draw on across the country with your other City stations to fill out, you know, an hour cast.

774   So that's why, you know, while I, again, appreciate the challenges of breaking into a market, as you grow your capacity to do this grows, in my opinion.

775   MR. PELLEY: And as -- back to Scott's point, but is -- the fundamental question is, if you were to produce other original programming for Citytv in Montreal, the question really is, would news be the right decision for the community, the right decision for the broadcast system, and what I'm hearing Scott say is it's not.

776   And is something different to actually use those 26 people to create a different type of magazine show that's current affairs, it's a little bit more -- that maybe airs at six o'clock against those news shows, that might be the better decision as we grow.

777   So I think the first question is, is news the right decision, right, regardless of whether we can or cannot do it.

778   In terms of actually breaking into the market -- and I had the real privilege of producing and overseeing -- I was the president of the Olympic Consortium in Vancouver and working with Ivan Fecan.

779   And Ivan said one of the -- I said to him early on when I took the job: What is success for this Olympic project? And he said: One of the things that is critical is driving our news after the Olympics, so we need to be able to have that to be a legacy for it.

780   And I can tell you, during the games there was nothing bigger than CTV News in terms of local Vancouver. We were -- the ratings were over the roof. But I can tell you, the minute that the games ended, they just went whoosh, right here, because habitually everybody went back to their normal course of the way that they live their life and went back to Global. And the legacy wasn't there.

781   So the real question is: Is news the right -- as we grow and as we create a brand in City that is something that is viable, is news the right thing that we should invest the next local dollars in? I think that's the question.

782   COMMISSIONER PATRONE: No, I understand.

783   MR. PELLEY: And I don't know that it is --

784   COMMISSIONER PATRONE: Fair enough.

785   MR. PELLEY: -- worthy of having further discussion.

786   COMMISSIONER PATRONE: I get it. There are opportunity costs associated with doing one thing.

787   MR. PELLEY: Yes.

788   COMMISSIONER PATRONE: Those are dollars that could be spent elsewhere and you've put forth a proposal that is different and that's fair.

789   Thank you very much.

790   Mr. Chairman.

791   THE CHAIRPERSON: Thank you.

792   Just so I know where I'm heading with the hearing, we're going to take a break soon, but Commissioner Molnar will be asking a few questions which you will be able to, I believe, work on during the lunch break.

793   And we won't quite finish Phase I before the lunch break. We'll just come back and continue on that afterwards.

794   Commissioner Molnar.

795   COMMISSIONER MOLNAR: Thank you.

796   And I will be quick and I'll just give this to you and we'll resume after lunch.

797   MR. PELLEY: Okay

798   COMMISSIONER MOLNAR: I'm having a little bit of trouble in looking at the financial impact of your proposals and I'm thinking particularly your request to make this an English-language Citytv station. What is the financial impact of us approving this?

799   And when I look at the financials you've provided and when I see your presentation about providing you an opportunity to participate in national buys and so on, it appears to be from not your status quo. And your status quo today, if I understand it, is you have an affiliation agreement which has you already in the Montreal market to some extent.

800   So what I would like you to do for me if you can -- and this is why I wanted to give you the lunch hour -- is to give me a sense of what is in fact the incremental impact of us approving this request from today.

801   And that is, you know, given that today with your affiliation agreement you're already able to repatriate some viewers and participate in national, what is the financial impact of us approving this on the Montreal market and then as well on your network overall?

802   Because we have been looking really at just the impact on Montreal, but, of course, the impact of this is to provide you greater opportunities across your network.

803   And so if you could give us some sense of that, we'll get back to this after lunch.

804   MR. PELLEY: Right.

805   We can give you -- just to give you some food for thought on that, City television this year will drive $218 million in advertising revenue, in 2012. That's the exact same number that we drove in 2011. Now, in an economy -- so $218 million in advertising revenue in 2011, $218 in 2012, that's absolutely flat.

806   In a market that -- from a conventional perspective advertising dollars has actually gone down. The reason that we've been able to actually maintain the $218 is only based on the fact that we have broader distribution. So that's why we've been able to increase that.

807   Having said that -- and we will come back to you with a tangible number -- City television, and this is something that obviously we're quite concerned of, and what we did is we decided when we --

808   COMMISSIONER MOLNAR: Mr. Pelley, for sure you will have the opportunity after lunch and you can give your discussion.

809   MR. PELLEY: I'll do that then, yes.

810   COMMISSIONER MOLNAR: Thank you.

811   MR. PELLEY: Sure.

812   THE CHAIRPERSON: Just one more piece of lunchtime homework. It's not an easy job for you guys, so I hope you packed a lunch.

813   We had a discussion earlier and we know that there was obviously a meeting of the mind on the $10 million. I didn't see a meeting of the mind on the compliance issue.

814   Now, it's the current licensee's obligation to apply for transfers of ownership, sometimes represented by the would-be purchaser, but the tradition has been that you have to come to the table with clean hands and I think you should take time at the break to figure out how we go forward, on making sure that -- Mr. Millar, you demonstrated to us compliance in the past. So think about that.

815   Come back after lunch. I'm sure you will have -- the creative juices of the lunch will provide some solutions and we will have some other questions for you at that time on other topics.

816   I'm using the clock at the back, 12:04. So why don't we come back at one o'clock just to be able to get through.

817   Okay? So one o'clock. Thanks.

818   MR. PELLEY: Thank you

--- Upon recessing at 1205

--- Upon resuming at 1303

819   THE CHAIRPERSON: Thank you. The music was interesting that this is not a soundtrack we need.

820   So la parole est à la secrétaire, s'il vous plaît.

821   LA SECRÉTAIRE : Merci, Monsieur le Président.

822   During the questioning this morning, a document entitled Metro 14, Week 7, 2012-2013 was handed to the applicant. I would like to enter it into the record as CRTC Exhibit 1.

823   Copies are available in the examination room.

824   Thank you, Mr. Chairman.

825   THE CHAIRPERSON: Thank you.

826   So we started with Commissioner Molnar before the break, so why don't we go back there and see how you have done on your homework.

827   COMMISSIONER MOLNAR: Thank you.

828   Yes, I just wanted to give a little bit of time to you folks. I know that your financial officer is not here and so I thought if you had a little bit of time these questions wouldn't hit you out of the blue.

829   What I would like to do is better understand the real financial impact of your entry into Montreal under your scenario, which is the acquisition and turning it into the Citytv station.

830   MR. PELLEY: Perfect.

831   COMMISSIONER MOLNAR: And looking at the financials that are presented with your supplementary brief it wasn't clear to me what the starting point of that was.

832   I mean, as I understand you have an affiliation agreement today, you are already in the market. I mean some of the arguments that you are making as it regards repatriating viewers, and so on, I mean, how much of that is being addressed today and how much of the financial impact that you are showing is truly incremental to your acquisition?

833   MR. PELLEY: Okay. Let me try to answer that. And I hope you had a great lunch, ours was really quick.

834   So if you look at the financials, if you look at the financials that we put in for Plan A, you will see 7.488 in total revenue made up of 6739 in national revenue and 749,000 in local.

835   Just so that you have some clarity, that national revenue is national advertisers buying local spots in Montreal. Okay, so that's the first part.

836   The local revenue of $749,000 is local mom and pops buying advertising in Montreal.

837   In addition to that -- and I think this is the question that you are asking for, Commissioner Molnar. In addition to that -- and remember I talked prior to the break that our number in 2012 was 218 million, we look at, in addition to that revenue, between 3 and 5 percent for national network sales, which would, if you took 5 percent, would work out to somewhere between $10 million.

838   So if you look at what this transaction gives us as far as revenue, advertising revenue by being an English national network, you are looking at $17 million incremental to what we already have.

839   So let's say, to make it even clearer, so 218 million is the advertising number that we hit in 2012 for City Television. If in fact the conventional market was flat and all we did was add the Montreal station CJNT, then our number would go right away to 235 million, if you believe the 5 percent. I believe more like 3 to 5, but, you know, our salespeople are being aggressive, and they believe 5 percent.

840   Now, what's important to understand, and I think that this is something you can't lose sight of, is when we talked about how important the Montreal market is, City Television this particular year, our Q4 forecast, is slated to $16.3 million. So if you actually put that math together theoretically us getting the incremental 17 million gets City Television to a break even.

841   However, of course, with the incremental $17 million, we will have to spend 23 percent of that on CPE, which works out to another $4 million for Ms Freeland to spend.

842   So I think that answers your question in terms of the actual dollars and what we put in terms of the benefit of having a national network in CJNT in the marketplace.

843   In terms of the repatriation -- and that's why I brought Deborah right beside who can walk us through the formula of how we got to the repatriation, understanding that the repatriation is only of that 7.4 million that is in this financial table. The other 10 million that we get based on the national network buys will be advertising that we will -- some, we will take from specialty and some hopefully will be new dollars in the marketplace with the likes of Target and Norstrom just around the corner entering into Canada.

844   But first of all, before we go, Commissioner Molnar, does that answer your question in terms of the financials?

845   COMMISSIONER MOLNAR: It does answer one of my questions and that question was what is the network lift associated with you being able to put Montreal --

846   MR. PELLEY: Between 3 and 5 percent.

847   You see, where the confusion may lie is in the advertising. In this document here it says national revenue, it's not actual network national, right, there is additional to this, which then obviously -- because when you look at this P&L it doesn't look very good, right, however, make no mistake about it, every other City Television station would look better because we have allocated some of the programming costs into Montreal based on actually reporting them.

848   But when you look at it from a holistic perspective, your uptake in the Montreal station is $17 million, of which 10 is the network buy.

849   COMMISSIONER MOLNAR: Okay, thank you.

850   And, as you pointed out, with that incremental revenue the incremental cost is effectively the 23 percent, because your U.S. programming costs are not changing, and so on. So I think you gave the number 4 million.

851   MR. PELLEY: Yeah, correct.

852   COMMISSIONER MOLNAR: Very good. That's very good. That's very helpful it.

853   MR. PELLEY: Yes. So if you look at it, you say, okay, we're putting $3.2 million in terms of into lifestyle programming into "Breakfast Television", we are going to spend another $4 million through CPE by increasing our revenue, and we are getting City Television to a fighting chance to actually be self-liquidating. That's what this is about.

854   We can't, as you can totally appreciate -- and there has been a plethora of questions around the tenth floor, I call it, at Rogers -- is we can't absorb $16 million losses on conventional television going forward, and hence the reason why in my opening remarks the importance of being able to play in that national network is so critical for our long-term success.

855   COMMISSIONER MOLNAR: Thank you.

856   So essentially, the cost of acquiring this is one years' net incremental revenue, roughly?

857   MR. PELLEY: Theoretically.

858   COMMISSIONER MOLNAR: Roughly. So that's why you don't want to wait two years to get a different licence; is that right?

859   MR. PELLEY: Well, you know, you could look at that, but with this changing industry that we are at, and you even look at how conventional advertising has changed so dramatically over the last five years, we don't know exactly where it's going to go in the next three to five.

860   We believe that we can make City Television a viable third private broadcaster, but waiting a couple of years for an actual license, you know, that $17 million might not be $17 million and now we have had to absorb the losses right now, so you would have to rethink your strategy pretty quickly.

861   COMMISSIONER MOLNAR: Thank you.

862   And just the other half of my question, we are moving to a national network, which essentially Montreal takes you most of the way there to get onto a national network. If that's roughly $13-$15 million a year and puts you to breakeven over your network, how far did you get when you entered the affiliation agreement with Channel Zero today?

863   MR. PELLEY: It's about $6 million. If you took it over the full year -- the year, it would be about -- because it would be significantly less based on the fact that you are restricted programming in prime time.

864   So we evaluated it about $6 million if we were to stay at the affiliation agreement that is currently in place. If an affiliation agreement was to change where the 8:00 to 10:00 spot became freed up, that would obviously change the numbers again.

865   COMMISSIONER MOLNAR: So let me ask you about that scenario, because that's essentially your fallback, right, which is you acquired and it remains ethnic with the 8:00 to 10:00 freed up?

866   MR. PELLEY: Yes. Under that scenario you are looking at about 6 million, that's what you're --

867   COMMISSIONER MOLNAR: Which is essentially the same as your existing affiliation agreement?

868   MR. PELLEY: That's correct. The only difference is the affiliation agreement in the short term would be a far bigger gain than -- because you are not putting the $3 million into "Breakfast Television" and if you are just doing an affiliation agreement, then you are not actually paying Mr. Millar the fee.

869   The challenge is: (a) is how long is the affiliation agreement going to be there; and (b) if you believe in brands, which I believe in, then you need to actually own it.

870   COMMISSIONER MOLNAR: And just to make sure I understand the way it's working today, it is branded as City through the period through -- around that 8:00 to 10:00 slot today?

871   MR. PELLEY: It is.

872   COMMISSIONER MOLNAR: Is that right?

873   So in Montreal you have Channel Zero branded City, you have City Toronto, both in Montreal today?

874   MR. PELLEY: I'm sorry, I apologize, because Mr. Moore was whispering something in my ear.

875   COMMISSIONER MOLNAR: That's okay.

876   So Channel Zero through the 8:00 to 10:00 slot is branded City today under the affiliation agreement that exists?

877   MR. PELLEY: Under the programming that is ours, yes.

878   Correct?

879   UNIDENTIFIED SPEAKER: That's correct.

880   COMMISSIONER MOLNAR: Okay. And in Montreal you also have City Toronto in the market today --

881   MR. PELLEY: Yes.

882   COMMISSIONER MOLNAR: -- because the BDUs are carrying it, right?

883   MR. PELLEY: Yes.

884   MS WHEELER: As a distance signal.

885   MR. PELLEY: By a distance signal, yes.

886   COMMISSIONER MOLNAR: Right. And is there a compensation for distance signals today?

887   MS WHEELER: No.

888   MR. PELLEY: Compensation from the BDUs? Yes, there is.

889   MS WHEELER: It's small.

890   MR. PELLEY: Yes, but there is. There is.

891   UNIDENTIFIED SPEAKER: Minimal.

892   MR. PELLEY: We are negotiating with BDUs as we speak on that exact topic, so what exactly they are. Then we are moving into the full CAB agreement and, you know, we believe that distance signals from the DTH company is outside of the CAB agreement and you have to negotiate them separately and so that's where we are right now in negotiations.

893   COMMISSIONER MOLNAR: So could I just confirm, when you are telling me the impact of the acquisition on your network that is net of any distance signal revenues, and so on, it's a net amount you're telling me?

894   MR. PELLEY: Of 17 million?

895   COMMISSIONER MOLNAR: Right.

896   MR. PELLEY: Yes, yes.

897   COMMISSIONER MOLNAR: Okay.

898   MR. PELLEY: The other is insignificant.

899   COMMISSIONER MOLNAR: Okay.

900   MS WHEELER: Just to clarify, under the current distant signal agreement that's in place right now, that's not reflective of the actual value or the harm that's being done through the cannibalization of those programming rights.

901   So that's why it's still being negotiated, it's not a value that you should take into consideration when looking at the additional revenue attributed to that station -- or the potential for it.

902   MR. MOORE: And, Commissioner, I might just add, if we could get out of distance signals we certainly would. And it impacts our business, especially when we are not in the network business, because an advertiser in Toronto is buying Toronto eyeballs and we have seen that a lot of Alberta eyeballs are watching the Toronto station and we don't get paid for that. So, in a perfect world we would rather be a true network and be able to monetize the entire network eyeballs.

903   MR. PELLEY: I would say it's once or twice a week that a salesperson will complain to us about distance signals.

904   MR. MOORE: Or a day.

905   MR. PELLEY: Now, the second part of the question was the repatriation of the dollars.

906   Is that where you would like us to go to now, or --

907   COMMISSIONER MOLNAR: Sure. I assume it's some part of the 6 million, but go ahead.

908   MR. PELLEY: Yes. It's some part of the --

909   COMMISSIONER MOLNAR: Yes.

910   MR. PELLEY: -- the 7.4, yes.

911   MS McLAUGHLIN: Okay. And that falls to me.

912   And I hope, in part, this answers your question, Commissioner Pentefountas. I was just not sleeping in the back, but didn't have the calculations at my fingertips.

913   So if we look at the 6.739 million, which we have allocated to national spot selective sales, 50 percent of that will be against U.S. patriation. That's in dollars.

914   If we look at actual ratings we are at about 75-80 percent of the ratings because of simulcast. We won't be able to realize the full value of that given the competitiveness of the market.

915   If you look at the .749 for local, 100 percent of that will be against the U.S., but the other repatriation which we have just been touching on is the distance signal.

916   Currently there are audience ratings being taken out of that market that are monetized anywhere in the system and we will be able to do that and that will have 15 percent. When you add that all up, it comes to about 5.1 million of the 7.4 that we have.

917   And as we have just discussed, 6 million are coming out in that current licensing agreement with CJNT, so the real impact is already in the market, and it leaves 2.4 from the 5.1 that has to be dealt with by either taking from other broadcasters in the market or market growth.

918   The market is a very stable market, it's moving forward, we have not seen big drops either because of the recession or big growth, it's just been steady. So there is reason to believe that the growth can't absorb it.

919   But also importantly, in looking at this and discussing this with Rogers I pointed to the incidences where new over-the-air have been licensed in the past, that's, Calgary, Edmonton and Toronto, and if you look at those markets the year after licensing and thereafter, the growth rate in those markets exceed that of the national average and, in particular, of the anticipated growth that you would have just on the basis of inflation.

920   So generally, over-the-air introduction of stations in this form have a stimulus effect on advertising. You have more salespeople in the market, you have more stories in the market, you have more people working it, you have more people creating excitement and, frankly, you have more people -- you have more inventory in the market that is available to people who otherwise wouldn't feel they could advertise on television because it's very often in a sold-out position.

921   So once you get people engaged in television and you let them know they can be there, they come back. There is less of a churn factor on television than there is in a medium such as radio, so you tend to build long-term advertisers when you provide inventory to people who otherwise wouldn't have been there.

922   COMMISSIONER MOLNAR: Just very quickly once again. When I listen to you I have the sense that you are talking from that's the impact of repatriating all of the City viewing and advertising and they are part of the way there today because they have an affiliation agreement.

923   So is what you are telling me for these numbers the impact of them acquiring the station or is that the impact of their full repatriating all the audience.

924   MR. PELLEY: That's the acquiring.

925   COMMISSIONER MOLNAR: Pardon?

926   MR. PELLEY: That's the acquiring.

927   COMMISSIONER MOLNAR: So if you acquire it versus have an affiliation agreement, you are going to repatriate 50 percent of this revenue? Fifty percent is repatriated over and above what you have repatriated today through your affiliation agreement?

928   MR. PELLEY: We are just looking at it on a per annum basis, right, so we are looking at it in the '12-'13. We're not looking at what we have repatriated, we are just looking at it as saying, okay, so if it's 7.4 million in this marketplace for the '12-'13, how much are we repatriating that and how much is taking it from other sources.

929   Right?

930   MS McLAUGHLIN: If I might just add, the numbers that I just shared with you is how we looked at the 7.49 million, okay, so that's the picture and how that breaks out.

931   But in actual fact some repatriation is happening now. Is it to the extent that could happen should they acquire it? No, for a couple of reasons.

932   First of all, you can't drive ratings to that prime time without other shows like "Breakfast TV". The number one way people find out how to watch television in Canada and, frankly, the U.S., is by on-screen promotion of other stations. They don't have access to that right now through the remainder of the schedule of CJNT.

933   So all of the ratings, which have to be repatriated first before you can repatriate the dollars, have not been repatriated, in part, yes, because of simulcasts, but there are other opportunities that need to be realized to maximize that. So they are en route, but they are not there now.

934   So the numbers that I shared with you are the planned numbers based on those revenues. Exactly how much that is, we have to wait and see until the ratings come in this fall to see how much has really happened, because we don't have a full ratings season to look at the numbers to determine how much the simulcast has returned.

935   Does that answer your question?

936   COMMISSIONER MOLNAR: Yes, it's helpful. Thank you.

937   I just have one other question, just to clarify something I heard earlier.

938   If I understand correctly, if the license conditions are not changed on this licence, Rogers, you would walk away from the deal?

939   Is that true?

940   MR. PELLEY: You mean on Plan A or Plan B? You mean, for example --

941   COMMISSIONER MOLNAR: Well, if the terms and --

942   MR. PELLEY: If the licence condition weren't -- yes. Unfortunately, it just wouldn't make sense for us, and it wouldn't follow -- what we are trying to do here is to create a national network that has a chance at financial success. It is not by any means a windfall, but it gives us a fighting chance to make City Television into a viable national network.

943   But if we did not have those conditions --

944   COMMISSIONER MOLNAR: So the value of the current licence is zero to you.

945   MR. PELLEY: At this particular time we would walk away from that. I would not comment on what the value of that licence is.

946   COMMISSIONER MOLNAR: To you.

947   MR. PELLEY: To us?

948   COMMISSIONER MOLNAR: The value is zero.

949   MR. PELLEY: We would choose not to move forward.

950   COMMISSIONER MOLNAR: Thank you, those are my questions.

951   THE CHAIRPERSON: Thank you.

952   I think the Vice-Chair has one or two questions.

953   COMMISSIONER PENTEFOUNTAS: Just briefly. I have a couple of questions, quickly, for the people at Rogers, and a final question to Mr. Millar.

954   At the end of the day, besides the repat dollars, there will be new revenues coming into the system above and beyond what advertising revenue you may have sort of cannibalized from other television broadcasters in Montreal.

955   MR. PELLEY: Correct.

956   COMMISSIONER PENTEFOUNTAS: And that portension is based on the studies and the conclusive evidence you found in Calgary and other markets.

957   MR. PELLEY: Correct.

958   COMMISSIONER PENTEFOUNTAS: Secondly, the $3.2 million spend on BT-MTL, would that be above and beyond your 23 percent commitment to CPE?

959   MR. PELLEY: No, that would be part of our CPE.

960   COMMISSIONER PENTEFOUNTAS: So that would put your CPE for Montreal, specifically, closer to somewhere north of 40 percent.

961   MR. PELLEY: Correct.

962   COMMISSIONER PENTEFOUNTAS: But that would not be an additional incremental spend.

963   MR. PELLEY: Correct.

964   COMMISSIONER PENTEFOUNTAS: Briefly, Mr. Millar, your nature of service for CJNT, would it be correct to say and characterize it as a multilingual ethnic television service?

965   MR. MILLAR: Without looking at the licence directly, that sounds correct.

966   COMMISSIONER PENTEFOUNTAS: Have you looked at your website recently, Metro 14 Montreal?

967   MR. MILLAR: Not in a matter of a few weeks.

968   COMMISSIONER PENTEFOUNTAS: Okay. Nothing has changed in the last few weeks?

969   MR. MILLAR: Not that I'm aware of.

970   COMMISSIONER PENTEFOUNTAS: Is there anything on that website -- I'm sure you would recall -- that would lead you to believe, or lead anyone to believe, that this would be a multilingual ethnic television service?

971   MR. MILLAR: Other than the people who know the brand Metro 14 that we launched several years ago, there wouldn't be anything that explicitly states that.

972   COMMISSIONER PENTEFOUNTAS: Every reference on the website refers to Citytv programming. Would that be correct to say?

973   MR. MILLAR: Absolutely, because what we put on the website is what we hope will draw viewers, and some of those viewers will stay for the ethnic language programming, but you lead with your best foot.

974   COMMISSIONER PENTEFOUNTAS: And would you have a schedule, a daily schedule or a weekly schedule, on your website for Metro 14 Montreal?

975   MR. MILLAR: On the website? Actually, I don't think there is one right now.

976   COMMISSIONER PENTEFOUNTAS: Actually, no.

977   Would you have a schedule on your website for CHCH?

978   MR. MILLAR: Yes, but keep in mind that what we put on our website is what our viewers or visitors to the website -- what we see patterns of them going to.

979   So, in the previous iteration of that website, where we had a schedule, nobody went to it.

980   On CHCH we do, because that is a place that we can track traffic through the website.

981   COMMISSIONER PENTEFOUNTAS: You don't have to even go to it on CHCH, it's on the front page. It's on the home page.

982   MR. MILLAR: No, it's not, there's news on the front page.

983   CONSEILLER PENTEFOUNTAS : Est-ce qu'on a le document de monsieur Millar?

984   Do we have a copy of that, Mr. Chair?

985   THE CHAIRPERSON: I think you were going to answer the question I asked before the break, right?

986   Do you have something?

987   MR. MILLAR: We do. If I could, just to provide the context --

988   I appreciate the question, in terms of how do we come before you and assure you that we have been compliant, as we have stated on the record that we have been, so let me be clear. We have always been fully programming compliant in the licence, from the time we took over this station in September of 2009.

989   We have been compliant since the month of June of this year, in terms of the log submission. But there was clearly a lack of compliance on our part, in terms of the submission for the period of months up until we were -- until I was alerted of it in July.

990   So, if we could, what we would like to do is break this compliance into a number of areas, and the first one, for which you have just received -- do I call it an exhibit?

991   This is a summary of the ethnic content for this broadcast year, in compliance with our ethnic calendar, which has been approved by the Commission, for the months of September through December.

992   Obviously, September and October are actuals, and November and December are projections, but this is how it has been programmed.

993   Without bogging you down, we have given it to you for your consideration, but what this summary shows you is that the channel continues to be programmed in compliance with its condition of licence for ethnic programming, Canadian content, and making allowance for some of those commitments that are weekly and monthly, as they are tracked.

994   Again, if I could break it into pieces, this we would offer as evidence that, right now, we have been compliant with our programming -- this is proof for September, but we have been fully compliant on both submissions, logging and programming since June of this year. But we have always been programming compliant. So there are really two --

995   For the programming compliance, we also provided -- we would advise you, Mr. Chairman, if we could, of an analysis that we did, based on the report we received yesterday at 2 o'clock, and we have copies here.

996   Could we take a few minutes to walk you through the process that we undertake each month -- each week -- to program the schedule?

997   And we would submit that this is the reason that we can tell you, with all of the confidence in the world, that we have been compliant in programming, is because this is how we build a schedule.

998   THE CHAIRPERSON: So you want to add something to the record at this stage, even though we have asked how many times during the deficiency process about non-compliance?

999   Why should we accept it?

1000   MR. MILLAR: I would submit that we would ask you to add it at this time, because yesterday, at 2 p.m., the Commission gave to us a report that does not align with the actual programming that came out. Clearly, the information that we have provided in machine-readable format, while being accepted in submission, is not generating reports that are accurate.

1001   THE CHAIRPERSON: All right. Distribute it, and we will decide at the break whether we accept it.

1002   So we are distributing it sous toute réserve, as they say.

1003   MR. MILLAR: Thank you.

1004   THE CHAIRPERSON: Thanks.

--- Pause

1005   MR. MILLAR: On the first page -- and, again, we selected the broadcast year 2009-2010 specifically because the report we received yesterday at 2 o'clock did not correspond with what we programmed.

1006   We selected a week, as Commission staff did, just randomly.

1007   The first page is the template schedule. This is the template that our Programming and schedulers worked against to know where they would be --

1008   This was the approved-by-management programming template that the schedulers would work against.

1009   On the second and third pages are the conditions that that template was intended to deliver.

1010   We had it broken down, as you did, Commissioner Pentefountas, by condition of licence, and we know, as we program this week after week, that we were exceeding our conditions of licence in each case.

1011   What you see on pages 2 and 3 is just the summary of hours that this schedule would deliver, if programmed in accordance with the template.

1012   Now, there is the odd week where a program changes and so forth, but, again, they would be making adjustments to this, either monthly or annually, depending on what the condition of licence requires.

1013   On the fourth page is the actual week of January 4th to 10th, 2010. So it's from the same year that we got the report yesterday, and this is the actual programming that aired, that was in the logs. We checked it last night to ensure -- and actually put it in a format that you could read from the logs, and verified that it is, in fact, compliant, and we are 100 percent confident that we could do this for every week and every month since 2009, and you would see compliance.

1014   I can't speak to why the data that we are still providing is not working properly. For that we take responsibility and apologize, but it isn't.

1015   And we have spoken to staff.

1016   One of the things I would say is that in the September meeting we addressed this issue. We believe that we could be fully compliant, even in the submission of the logs, if we just delivered the paper logs, but that is not the point, we are trying to get to deliver machine-readable.

1017   You asked us before the break to provide you with some creative ways to assure the Commission that we are compliant, and creative ways to prove it.

1018   We have, really, three options that we can see, but that doesn't mean that's all of them. One is to continue with the commitment we have made to staff that we will get these logs in and machine-readable by the 15th of February. The only problem with that, a little bit, is that it doesn't take into account the fact that yesterday's report didn't jive with the information provided, but that is one.

1019   The second is that, using this report, with some calculations added to the bottom, we could either submit these for every month during the licence term, or we could allow you to randomly choose months of your choosing and treat it as an audit process, and we could provide those more quickly, because this was very time consuming. We have spent -- since we were alerted to the problem in July, we have spent -- I can't even tell you how many hours trying to fix our mistakes.

1020   We have had people distracted from their day-to-day jobs, and working overtime, trying to get these fixed, and we have been beating the living daylights out of our third party software vendor, to try to get them to deliver for us what we thought they were delivering.

1021   We can keep doing that, and we will.

1022   We are not exiting the broadcast system. We are in this for the long run. We have been at this for 12 years. As you know, we have applications in front of you that show our reinvestment and the expansion that we are looking for going forward.

1023   In order to do that, we are not -- you can rely on the fact that we will solve this problem with time, we just need some guidance as to what your preference would be.

1024   THE CHAIRPERSON: We will decide at the break whether we accept this new information and this new line.

1025   But, you know, unfortunately, you are in the hot seat, but this is true for the entire industry, right?

1026   The reason we have conditions of licence is because they reflect a public process. When people come to the table and say, "Yes, we will accept or not accept certain things," we will license or not license certain things under condition of licence.

1027   There are people who expect that if we gave a licence for ethnic services at a certain percentage, or a certain number of hours -- they expect it to be there.

1028   So this is our way. I appreciate the difficulty and your efforts to do it, but, frankly, it's at the heart of the system.

1029   And it's not being bureaucratic from our perspective, it is actually doing what our job is.

1030   We will look at this and get back to you after the break.

1031   COMMISSIONER PENTEFOUNTAS: Just briefly, Mr. Millar, would you be aware of the fact that, prior to July of this year, we have 21 asks documented?

1032   What happened before July? Why wasn't anyone aware of the problem or the situation pre-July?

1033   MR. MILLAR: Just for clarification, Mr. Vice-Chair, 21 asks, they would be --

1034   COMMISSIONER PENTEFOUNTAS: With respect to your logs, with respect to your --

1035   MR. MILLAR: With respect to CJNT?

1036   COMMISSIONER PENTEFOUNTAS: Yes.

1037   MR. MILLAR: I can't address that --

1038   COMMISSIONER PENTEFOUNTAS: You cannot or you can?

1039   MR. MILLAR: I cannot address that directly, on that aspect.

1040   I can reiterate what I said earlier, which is that hindsight is 20/20 vision. We encourage our staff to be problem solvers and to deal with things.

1041   We had a group of people in the Operations Department who believed that they were, in fact, responding and resubmitting logs.

1042   When we were advised in July, you can imagine the words and the expletives that I used, saying, "How did we get in a position like this?"

1043   It doesn't excuse it --

1044   COMMISSIONER PENTEFOUNTAS: Exactly, the buck has to stop with you. You can't tell me that you only found out in July.

1045   At any rate --

1046   MR. MILLAR: But I can only tell you the truth.

1047   COMMISSIONER PENTEFOUNTAS: -- if you can't answer the question, that's fine.

1048   That being said, what are we to do from now until February?

1049   One, you are an experienced broadcaster. Two, you have other asks in the pipeline, and you are telling us to hold off until February.

1050   MR. MILLAR: No, I guess what we are not saying is that you have to hold off. What we are saying is -- to the Chair's comment, the logs are to prove compliance. We would be happy to do any other thing prior to February to prove that compliance, because we know we are compliant, and to assure you of that, but we can't make the fixing up go faster than it is.

1051   So we can submit to an audit process, we can provide a different format report, we can provide the printouts, which we offered to staff, or we can keep working through it until -- whenever it's done. Those are --

1052   COMMISSIONER PENTEFOUNTAS: This is my last question. This summary document, is it based on your schedule or log information?

1053   How do you arrive at this? Where does the data stem from?

1054   MR. MILLAR: That is a tool that is used to generate the program schedule, so it is not based on the logs.

1055   COMMISSIONER PENTEFOUNTAS: And the data found on this document is from...?

1056   MR. MILLAR: From the scheduling --

1057   COMMISSIONER PENTEFOUNTAS: I'm sorry?

1058   MR. MILLAR: It is based --

1059   COMMISSIONER PENTEFOUNTAS: On your schedule.

1060   MR. MILLAR: That is the scheduling, yes.

1061   COMMISSIONER PENTEFOUNTAS: Okay. Thank you, Mr. Millar.

1062   MR. MILLAR: Thank you.

1063   THE CHAIRPERSON: So it's the input, not necessarily what went to screen.

1064   MR. MILLAR: It would be the same, but it's from the -- yes.

1065   THE CHAIRPERSON: But it's the input.

1066   MR. MILLAR: Yes.

1067   THE CHAIRPERSON: Okay. The logs are what actually went on screen.

1068   MR. MILLAR: And the logs -- just so I am abundantly clear, these logs have been submitted, and received, in full compliance of the reception, and a report could be generated by staff. We asked for that yesterday, but it wasn't reasonable, we didn't give them enough time.

1069   THE CHAIRPERSON: Thank you.

1070   Does legal counsel have questions?

1071   MS ST-JEAN: Not at this time.

1072   THE CHAIRPERSON: Hearing Secretary...

1073   THE SECRETARY: Thank you.

1074   I just want to clarify that the first document submitted by Mr. Millar, he referred to it as an exhibit. It is, in fact, an undertaking from the current licensee of CJNT, titled "Ethnic Content Projections, 2012-2013", and copies are available in the Examination Room.

1075   Thank you, Mr. Chairman.

1076   THE CHAIRPERSON: Thank you. That completes Phase I, if I am not mistaken. So, thank you, don't go far, and we will continue with the rest of the phases for this item.

1077   Madam Secretary...

1078   THE SECRETARY: Thank you, Mr. Chairman.

1079   We will now proceed to Phase II for this item, in which intervenors appear in the order set out on the agenda to present their intervention.

1080   For the record, there has been a change in the order of the agenda, and we will begin with Youth Fusion Jeunesse, followed by the Quebec English-language Production Council.

1081   Please note that the following five intervenors are appearing via video conference from our Montreal regional office.

1082   Youth Fusion, you may begin. Please introduce yourself, and you will have five minutes for your presentation. Thank you.

INTERVENTION

1083   MR. LOPEZ: Good afternoon, my name is Gabriel Bran Lopez, and I am the founder and executive director of Youth Fusion.

1084   First of all, thank you for hearing me today.

1085   Youth Fusion is an award-winning charity, non-partisan, that creates partnerships between universities and high schools to counter dropout rates across Quebec. We do so by hiring university students, in all fields, who go and work directly with teachers and students inside the classroom, to change the way kids learn in the school, and all of that to counter dropout rates, which are, in Quebec, quite high.

1086   Our programs range from robotics engineering to communications, multimedia, sustainable development, entrepreneurship, among others.

1087   These programs go beyond mentoring, because the university students that we hire work between 15 and 25 hours per week, from September until June, inside the classroom with the teachers.

1088   In the past four years we have gone from 2 schools to 55 schools across Quebec. We are now across Montreal, in Rimouski, in Sherbrooke, in Abitibi-Témiscamingue, and nine First Nations in James Bay and Hudson Bay.

1089   Rogers Communications has been our partner to implement a program called The Academic Engagement Program, which is now running across Quebec in our schools.

1090   The reason I am telling you about the history of Youth Fusion is because what led to such an expansion in four years, from 2 schools to 55, is the fact that media exposure led us to be known in the communities, among school boards, the schools, principals and teachers, and that is what led to the fact that we are now a credible -- or a more than credible organization, working across Quebec in the high schools.

1091   Today I want to talk about the benefits of having this media exposure for Youth Fusion through the new BT Montreal.

1092   First of all, such an opportunity would give more visibility to our program activities.

1093   Second of all, it would give exposure to our students and their accomplishments, as they develop life competencies in this information-rich, fast-paced society.

1094   It would also enable us to reach out to a more diverse audience in Montreal, and across Quebec, especially in the English community, to be able to promote our message, which is to counter dropout rates.

1095   It would also enable us to reach out to more people, in order to fundraise for our cause.

1096   Finally, it would enable us to promote our other messages beyond the dropout rate message, which are community engagement, social responsibility, social entrepreneurship, and social innovation.

1097   So, through these opportunities, we will be able to put our kids out there and give them a new voice, because we work with both the anglophone and francophone communities, and multicultural communities across Quebec, especially here in Montreal.

1098   Thank you very much.

1099   THE CHAIRPERSON: Thank you very much.

1100   First of all, I would like to apologize, because I know that you were waiting around a little longer for this item to go forward, and I appreciate your patience.

1101   That was very clear.

1102   I believe that Commissioner Patrone will have some questions for you.

1103   COMMISSIONER PATRONE: I have a couple of questions, Mr. Chairman; and thank you for your presentation today, Mr. Lopez.

1104   First off, congratulations on your --what sounds like important work on behalf of students and dropout rates in Quebec. It is clearly an important issue.

1105   How much contact have you had with the media concerning your issue, and how much success have you had pushing this message out through the existing media landscape in your area?

1106   MR. LOPEZ: I have had a lot of success pushing out the message since the beginning of Youth Fusion, both in French and English media outlets.

1107   However, when we started -- I am the founder of Youth Fusion, so when I started Youth Fusion, the messages were more about the innovation inside the classroom, the innovation inside the education system. So what the media talked about were new ways of promoting student success and student perseverance, and that led us to be both on paper -- newspapers, on TV, on the radio -- across Quebec -- English/French -- to really put the issue out there.

1108   However, now that we have almost five years of working in high schools, we feel as though this innovation is not being talked about enough and, through BT Montreal, I feel as though we will be able to not just talk about the innovation and new ways of working with high school students, but we will also be able to talk about where we are at right now, and to put our kids out there, to put our kids as the voice of Youth Fusion.

1109   I can be the guy talking -- and I have been on the media a lot, and I am always the one talking about Youth Fusion, but the media have not been receptive enough to having kids out there, and I feel as though, through BT Montreal, through Breakfast Television programming, we will be able to give a voice to students, so that I am not the guy talking anymore about it, but it's the kids talking about the impact of Youth Fusion in their lives.

1110   COMMISSIONER PATRONE: Well, it sounds like you've had some mixed success as far as having media being receptive. They'll be happy to have you, I suppose, on but your concern that you'd like to see some of your colleagues and some of the youth affected by this on television and presumably other forms of media.

1111   Is that correct, Mr. Lopez?

1112   MR. LOPEZ: Well, it is. I mean, I do work for the kids and beyond everything that we do there they are the reason why we do this.

1113   And so to have them in the spotlight and to have them speak on TV which, by the way, as you know, is very encouraging for a kid who has never been on camera who has never had a microphone, to speak up.

1114   Maybe I didn't mention this, but we work with at risk students who are about to drop out of school, not just any kid in the school. And so these kids who have never been in the limelight who have never had the opportunity to speak up are now -- or to the media -- would be able to not just reach out to their school but to reach out to a wider community, especially if it is -- especially if they come from an Anglophone community or a multicultural community. I think they will be able to speak up for themselves instead of me always speaking up for them.

1115   COMMISSIONER PATRONE: Have you had much contact with Rogers, I mean ahead of time, before appearing before us? How much interaction have you had with them concerning what you would like to see on their programming?

1116   MR. LOPEZ: Well, as mentioned before, while -- no, maybe I didn't say this -- Rogers has been a partner of Youth Fusion for over a year now and through the last year we have developed a very tight relationship because we work in over 20 schools with Rogers or thanks to Rogers.

1117   So I have had the chance to talk about them about what I would like to put out there in the media, not in full content because I don't like to speculate, and I do spend a lot of time in the schools.

1118   But I have shared with them the importance of putting the kids out there and the importance of giving a microphone to a kid to talk about the importance of innovating in the education system.

1119   So if I have said something and it's because I have, it's let put the kids out there, give them a voice because they need to be the ones representing Youth Fusion and the partnership with Rogers.

1120   COMMISSIONER PATRONE: Okay.

1121   MR. LOPEZ: By the way --

1122   COMMISSIONER PATRONE: Well, please --

1123   MR. LOPEZ: Yeah, and what I see through new Montreal TV opportunities is the fact that we're not just going to talk about Youth Fusion because there is so much we can say about Youth Fusion.

1124   The importance or the important message to pass is the fact that we need society to stand up to counter drop-out rates. It cannot be just one sole organization. It needs to be the full society to support students who are at risk.

1125   So I do believe that Rogers is very, very aware of what is happening in the education system and that they are willing to pass on the messages that will sensitize and reach out to a wider audience.

1126   COMMISSIONER PATRONE: Well, thanks again for taking time for this, Mr. Lopez, and I wish you continued success with your program.

1127   Mr. Chairman?

1128   MR. LOPEZ: Thank you very much.

1129   THE CHAIRPERSON: Thank you very much, Mr. Lopez. You're very articulate and very clear and, dare I say, very impressive role model for the people you work with.

1130   Thank you very much.

1131   Madam Secretary, thank you.

1132   THE SECRETARY: Thank you, Mr. Chairman.

1133   We will now proceed with the presentation by Quebec English-language Production Council. Please introduce yourselves and you will then have 10 minutes for your presentation.

1134   Thank you.

1135   THE CHAIRPERSON: Yes, go ahead. We're listening and you're coming in nice and clear. Thank you.

INTERVENTION

1136   MR. COX: My name is Kirwan Cox and I am the Coordinator of the Quebec English-language Production Council.

1137   I would like to thank the Commission for providing us with this videocassette -- sorry -- with this videoconference facility to comment at this hearing.

1138   The QEPC is an association including both producers and unions representing the official language minority production industry in Quebec.

1139   We support this application by Rogers to purchase CJNT because this ethnic station is not financially viable under its current licence. Channel Zero would have applied for an English licence as well. However, we believe having Rogers operate an English-language station in Quebec will be advantageous for the official language minority community, if there is a significant level of local reflection and original independent production.

1140   Rogers is prepared to produce local in-house programming even if that means operating CJNT at a loss over the near term. However, the advantage to Rogers of having Montreal within its national sales strategy seems to outweigh these losses, and Rogers seems prepared to support this station through the red ink as well as the black. We see this purchase bringing stability to this benighted station, and opportunity as well.

1141   What kind of opportunity?

1142   We understand from Rogers that 3 percent of its national independent production expenditures were made in Quebec over the last three years. This compares with 12 percent by CBC, 9 percent by Global and 2 percent by CTV. However, those other networks have stations in Montreal and in the case of CTV a very profitable station.

1143   Rogers has promised to maintain its 3 percent expenditure on independent programming, and plans to increase that amount. To be honest, we don't believe this vague intention is adequate. Surely the history of broadcasting in this country demonstrates that good intentions have no practical meaning unless the CRTC holds the broadcasters to specific and clear objectives.

1144   Therefore, we repeat our request that the purchase of CJNT must be conditional on Rogers increasing its Quebec independent production to a minimum of 6 percent during this licence period.

1145   Now we come to Plan B. Rogers has proposed a Plan B ethnic option if the CRTC doesn't accept its Plan A application for an English station.

1146   We hope the CRTC rejects the idea of a hybrid ethnic/American station. We believe this option undermines the objectives of the Broadcasting Act and the Official Languages Act because there will be little or no original programming in English or ethnic languages. Creating a "station" to simulcast more American programming in the Montreal market surrounded by repeats of ethnic programming does not appear to us to be in the public interest, especially if there is an alternative application that can provide original ethnic programming.

1147   That said, if Rogers receives a Montreal ethnic station licence that allows simulcasting of part of the City schedule, we request that the City network be required to commission 3 percent Quebec independent production, rising to a minimum of 6 percent, over the course of this licence. We would expect that this original official language minority programming would be broadcast in Montreal on CJNT.

1148   We have also requested that a minimum of 40 percent of the $1 million in tangible benefits in this transaction be spent on English-language independent production. However, we want to be sure the Commission understands that our priority is achieving 6 percent of national independent production in Quebec and the tangible benefits are secondary to that.

1149   Finally, we have raised the question of information provided by broadcasters in our intervention because the percentage of independent Quebec production commissioned by Rogers was not publicly available. Rogers was very helpful and provided the requested data, but other broadcasters have been less forthcoming.

1150   We need to know all the independent production that is being commissioned in Quebec and elsewhere by all the broadcast groups. Without this data, we have no way of judging the performance of each broadcaster.

1151   To get to the nub of the issue, we are concerned that the broadcaster regional reports and the PNI reports will not provide all the information that was available from the discontinued independent production reports, such as non-PNI independent production.

1152   We request that the Commission make sure all of the broadcast groups are providing all the production information needed by interveners such as ourselves now and in the future.

1153   Thank you.

1154   THE CHAIRPERSON: Thank you very much, Mr. Cox. It's very clear.

1155   Commissioner Patrone, I believe, has some questions for you.

1156   COMMISSIONER PATRONE: I have a few questions, Mr. Chairman.

1157   And thank you, Mr. Cox, for your presentation today. It was indeed very clear. You have made no bones of the fact that you feel that the regulator has a key role to play.

1158   I think we just lost your -- oh, there you go -- has a key role to play in terms of holding the applicant to account on expenditure measures. Did I hear you correctly, sir?

1159   MR. COX: Absolutely.

1160   COMMISSIONER PATRONE: You spoke a little bit about the 3 percent expenditure and independent programming.

1161   MR. COX: Yes.

1162   COMMISSIONER PATRONE: And that you feel that given the history of broadcasting in this country that good intentions really are not good enough, that in fact there needs to be conditions placed.

1163   MR. COX: Yes, I believe that some people believe that broadcasters need flexibility, that technology and what have you are changing so quickly that one can't hold broadcasters -- I'm not picking on Rogers of course, but in general all broadcasters -- to account.

1164   I don't think that that should be the case. I think there should be minimums. There should be well-known objectives and not just good wishes.

1165   COMMISSIONER PATRONE: How difficult is it currently for your group to find venues for your productions?

1166   MR. COX: I would say that English-language production, independent production in Quebec has been declining steadily for the last 12 years, about 12 years ago, and the vast majority of this is television production of course.

1167   There was $300 million in independent English-language production being produced in Quebec. Last year there was $157 million. So we have declined by half.

1168   As that goes on, then a lot of the times the production is in fact actually being made in Toronto or some other place that should be made in Montreal. I'll use as an example perhaps that we have one member of our group who is producing a series right now in Toronto because -- well, for all kinds of economic reasons and would prefer to be producing that series in Montreal.

1169   So we find that it's very difficult to have enough of a critical mass production in Montreal so that the town stays here, so that the vitality of the official language minority community is able to grow as opposed to suffering as we have over the last 10 years an exodus of talent largely to Toronto and sometimes to Los Angeles.

1170   COMMISSIONER PATRONE: All right.

1171   So you feel that if we move ahead with the City Montreal option that that would give your members one more opportunity to stay in the community in which they currently live, produce content and have a place where that content could be seen and enjoyed.

1172   MR. COX: That's certainly what we would hope.

1173   I would point out that the 3 percent that Rogers is producing in Quebec right now, they are producing or have been producing without a station in Montreal at all. So they are saying if they had a station in Montreal then certainly they think things would be looking up.

1174   We would hope so but we think it should be more than simply good wishes that things will be looking up. We would rather see as a condition of licence that the Commission tell Rogers, okay.

1175   We feel that it's very important that if you're going to have the advantages of an English-language station in Montreal and, I believe I just heard that that advantage is an increment of $17 million a year, that instead of maybe $1.5 million dollars which is probably what 3 percent represents of their current level of Canadian programming, that that might go up to $3 million over the course of the licence.

1176   We don't think that $1.5 million is way too much under the circumstances.

1177   COMMISSIONER PATRONE: You asked us to reject the hybrid option. As you know, there are a number of scenarios that are before the Commission at this time but you don't think that that option serves the Act or the public interest. Is that correct, sir?

1178   MR. COX: Yes. I hate to call it the Frankenstein option but my thought is, you know, you take a leg and you sew it onto an arm and you sew it onto a head and after a while you end up with --

1179   COMMISSIONER PATRONE: Nothing.

1180   MR. COX: -- a Frankenstein. You end up with a lot of pieces but whether you end up with a coherent whole is another matter.

1181   My reading of Rogers' documentation is they're not guaranteeing any original production. They're saying, okay, we have to have that peak viewing 8 to 10 slot for broadcasting American programming for economic reasons and, in order to allow us to have that two-hour slot in the middle of peak viewing time, we will be adding all kinds of ethnic programming around it but we don't guarantee that that ethnic programming is going to be original.

1182   So you have obviously American programming in the 8 to 10 slot which is not original. Then you have ethnic programming around it which is apparently not original either.

1183   And my question is exactly what is this station? It's a platform for the 8 to 10 slot but is it anything else?

1184   And I think it would be better if we had a real English station with obligations to fulfil in terms of original programming and then obviously there is the ici option in order to provide ethnic programming as well. But I'm not discussing ici here.

1185   COMMISSIONER PATRONE: You have peripherally because of course there is the argument that, you know, were the Commission to decide that the ici option was not acceptable then presumably those who enjoy ethnic programming would perhaps you know support the idea that Rogers would perform that function.

1186   So you know is it robbing Peter to pay Paul here as far as ethnic programming as concerned?

1187   Do you see value to the public interest in that respect where the hybrid model could be acceptable going forward if, in the event that the ici proposal was not accepted?

1188   MR. COX: If ici is not acceptable then you have a very difficult job to do, because you have to balance the economic viability of plan B however it is defined versus how much original programming, ethnic programming you can squeeze out of that financial model. And I don't have an answer for that.

1189   But I would see the problem being that the plan B they're offering I don't think is good enough because I don't see the guarantee of original programming.

1190   So if ici is not acceptable and you accept Rogers' point that they have to have that 8 to 10 slot for City programming, okay. Then the question is what ethnic programming are they doing around it, and is what they have offered to you right now acceptable? I would say probably not.

1191   But anything involving original programming would obviously increase the cost to the channel or the station to Rogers and at a certain point where does the tip over point come?

1192   I have no idea where that is but I think you would have to sort of go back to them and say, okay, we don't think ici is acceptable. We don't think the English channel is acceptable and so we want you to take another look at what's in the middle.

1193   The problem -- the other problem you have is that the history of this particular channel or station has been that it is not viable, that the CRTC's design for the channel and licence in the past, it may be great but it doesn't seem to work financially. So you have a hell of a mess.

1194   COMMISSIONER PATRONE: Yes.

1195   MR. COX: If I can put it that way.

1196   COMMISSIONER PATRONE: Do you have any thoughts how funds might be administered in terms of independence, in terms of having Rogers oversee the funds? Do you have any concerns or thoughts about that?

1197   MR. COX: My assumption would be that, well, if it's an ethnic channel then by putting -- by simulcasting American programming in peak viewing time from City, as I've said before, we believe that that -- in that case still City should be guaranteeing 3 percent going up to 6 percent of Quebec independent programming. If it is a completely English channel then the same thing, 3 percent going up to 6 percent.

1198   And the way I would think that you would put it is as a condition of licence to them and whatever your licence is to them to say, okay, whatever your level of independent programming nationally is, Canadian programming, at least 3 percent over the course of the licence will have to be produced in Quebec and going up to 3 percent by the end of the licence.

1199   I'm sure they would be happy to do that.

1200   COMMISSIONER PATRONE: Okay.

1201   Well, thank you for your comments today, Mr. Cox. I very much appreciate your submission and your responses.

1202   Mr. Chairman?

1203   THE CHAIRPERSON: I think the Vice-Chair has a question for you.

1204   COMMISSIONER PENTEFOUNTAS: Thank you so much.

1205   Thank you for your time, Mr. Cox.

1206   The 2 percent spend on the part of Bell, what is the source of that information?

1207   MR. COX: Bell.

1208   COMMISSIONER PENTEFOUNTAS: Bell, and would you be so kind as to -- I know you don't have the staff, but would you be able to deposit that on the record?

1209   MR. COX: Sure. If you were to -- oh, absolutely.

1210   COMMISSIONER PENTEFOUNTAS: And secondly --

1211   MR. COX: I spent a year in trying --

1212   COMMISSIONER PATRONE: Go ahead, sir.

1213   MR. COX: I spent a year trying to get it. Thanks to Sean Carter of your staff, Bell were kind enough to provide it to me and the actual figure was 2.4 percent over 10 years. They wouldn't break it down any less than 10 years so I don't know more precisely.

1214   But I'll ask Mr. Carter to give you that information, to give it to you.

1215   COMMISSIONER PENTEFOUNTAS: Great. And the fact that the production spending in Montreal went from $300 to $157 million as per your earlier statement, would you be able to deposit that as well?

1216   MR. COX: Absolutely.

1217   COMMISSIONER PENTEFOUNTAS: And the source of that?

1218   MR. COX: Is CAVCO.

1219   COMMISSIONER PENTEFOUNTAS: CAVCO, great.

1220   MR. COX: CAVCO, Canadian Audio-Visual Certification Office.

1221   COMMISSIONER PENTEFOUNTAS: Yeah, yeah, perfect. Thank you.

1222   MR. COX: I'll be happy to deposit that.

1223   COMMISSIONER PENTEFOUNTAS: We'll put that on the record. Thank you, sir.

1224   THE CHAIRPERSON: Thank you very much, Mr. Cox.

1225   Although before you go I just -- you know your reference to Frankenstein, as you know in Mary Shelley's original work Frankenstein was the doctor that created the monster and not the monster itself. So I take it you weren't calling us in any particular way depending on which way we go on this at the end.

1226   But thank you very much for your --

1227   MR. COX: I was referring to the monster but in popular parlance I decided rather than saying Frankenstein's monster station, just Frankenstein's station.

1228   THE CHAIRPERSON: I appreciate that. Thank you very much. That's very clear. Thank you.

1229   Madam Secretary...?

1230   MR. COX: Thank you.

1231   THE SECRETARY: Thank you.

1232   We will now proceed with the presentation by Montreal School of Performing Arts. Please introduce yourself and you will have five minutes for your presentation.

INTERVENTION

1233   MS MAULE: Good afternoon and thank you for having me here. My name is Josa Maule.

1234   I'm the founding Director of Montreal School of Performing Arts and this is our 20th year. Unfortunately we're going through some changes that will cause us to close our doors but currently we are -- you know, I am operating as an entertainment coach and a consultant.

1235   Just to give you a little bit of history of Montreal School of Performing Arts and what we've done to contribute to Montreal artists over the 20 years, we have had over 5,000 students who have participated in our workshops.

1236   The respect and recognition in the acting industry has earned us, you know, the opportunities to provide networking for our actors be it through various theatre companies, working with student films and independent productions.

1237   We do remain an instrumental part of the growing Montreal film industry. We have provided our casting services to local directors and producers with all their casting needs. We have cast for local producers, big budget American and international productions and for low budget or mostly no budget student independent films, from lead roles to background actors.

1238   Our students who choose to be working in this industry are working either in front or behind of the camera or in front or behind the stage. Some of our students have been fortunate enough to work in award productions locally, nationally and internationally.

1239   What I am most proud of over the years is that we are part of a driving force for our actors in the English community.

1240   My students refer to me as their acting mama and the independent student film industry at large in Montreal refer to me as the Godmother.

1241   I have provided a consulting service to upcoming students/independent filmmakers such as:

1242   - Kim Nguyen, who is the Director of "War Witch" and won Best Film at the Tribeca Film Festival and currently is on the short list for Oscar Nomination of Best Foreign Film;

1243   - Jephte Bastien, who is the Director of "Gangster Land" and was winner of 2010 -- I could be wrong on the year, sorry -- Jutra for Best Upcoming New Director and also Best Film for the Houston Film Festival;

1244   - Kidnapper film production, "Who's KK Downey," they won for the Best Film in Fantasia Film festival.

1245   Just to go back with Kidnapper film productions, everyone that's part of that production is a producer, director and actor, and it's unfortunate that a majority of them have moved to Toronto due to lack of work. As my colleague was just saying recently, over a span of 10 years, the opportunities in Montreal have gone down and so we tend to lose a lot of our actors, filmmakers and so on to Toronto, Vancouver, Moncton and Ottawa.

1246   Montreal needs a local channel that will reach out to the English community and the various communities at large.

1247   Rogers through Citytv can fill that void in Montreal by providing opportunities for local actors, directors, producers and tech crew at large to help keep our Anglo talent here in Montreal.

1248   I average about three film directors, producers a day. We do everything from -- everything except for adult entertainment. We've provided lookalike actors or lookalike celebrities for charitable events. We have been -- we've worked for student films. We've worked -- I keep on saying student films.

1249   We've done like independent projects that have very little budgets. So they come to us and we try to help them as much as we possibly can because in my line or what I tell my students is that acting -- not everybody is taking acting to become an actor and that everybody who is acting is going to become an actor. It's a journey that you go through and you have to love doing what you love to do.

1250   And generally, I consult a lot of the actors in the city and filmmakers just to make sure that -- like money is not the most important thing, it's right up there with air, but it has to be something you love to do. And the majority of them want to make a living of it, so we end up losing them.

1251   I really do believe that Breakfast Television Montreal can do so much for -- not only for small businesses, promoting small businesses and charitable events but also giving an opportunity for so many talented actors here in Montreal.

1252   A few of my students who are working in this industry have been in Hollywood big box office films. Two or three of them are in a local film here in Montreal, "Being Human," have lead roles in "Being Human." And a few of them are on CBS and ABC sitcoms.

1253   And just to add to Mr. Lopez, I have an African proverb: It takes a village -- and that village is CRTC and Rogers -- to raise a child, and the child is Montreal English Entertainment Industry.

1254   Thank you.

1255   THE CHAIRPERSON: Well, thank you very much for your presentation. It always is great to have people participate in our hearings and I comment you for that.

1256   I believe Commissioner Lamarre may have some questions for you.

1257   CONSEILLÈRE LAMARRE : Merci, Monsieur le Président.

1258   Good afternoon, Madam Maule. Thank you for being with us this afternoon.

1259   I do have a few questions.

1260   Listening to your presentation and reading your intervention I can't help but think that currently in Montreal there's CTV, there's Global, there's CBC, and obviously you're not satisfied with what they're offering the entertainment industry in Montreal currently since you feel that Rogers could fill a void.

1261   So could you expand for me exactly what is that void you would like to see filled and how you think Rogers can address it in a way that the others have not been able to achieve so far?

1262   MS MAULE: Well, I don't know how much of a miracle I'm expecting Rogers to do, but I do know that with CBC they've had numerous cuts and with the cuts the Anglo programming was the first. CTV hardly has any local television shows.

1263   I know that with CJNT I've had four of my students who were hosts for community television shows such as the Greek Channel, the Italian community, Soul Call, which is catering to the English Black community, and the Greek show, which I don't remember the title. And these were all hosted by students and clients of ours. And they don't have that anymore.

1264   CTV does not have it, CBC doesn't have it and Global TV has cut down almost all their English programming.

1265   COMMISSIONER LAMARRE: Okay. So basically you expect Rogers to be hiring the talent that you see in Montreal and also promoting it, and this morning when Rogers was saying that if the transaction was approved they were going to hire 30 people in Montreal, that's where you see them acting on a promise to fill the void?

1266   MS MAULE: Hopefully, yes.

1267   COMMISSIONER LAMARRE: Okay.

1268   MS MAULE: Yes, I do.

1269   COMMISSIONER LAMARRE: Now, at the beginning of your presentation when you talk about the fact that the Montreal School of Performing Arts has been present for more than 20 years, you also said something about -- that you're planning to close your doors and I was hoping you could expand on this.

1270   I'm hoping you're going to tell me it's because you're going to reinvent yourself, like it's going to close so it comes back as something new.

1271   MS MAULE: I am planning on doing that. Over the years -- when we opened up the school we were for profit, which we managed to sustain ourselves for at least 18 years. The last two years, it has been a very big hardship on us financially and so I am trying to reinvent Montreal's School of Performing Arts, restructure it and probably it may go a different route, but unfortunately, the economy has forced me to do this.

1272   COMMISSIONER LAMARRE: Okay. Well, we're going to wish you the best of luck to continue providing performing artists and supporting creators in Montreal for the English community.

1273   Those are all my questions, Monsieur le Président. Thank you.

1274   THE CHAIRPERSON: Yes. Well, thank you very much.

1275   COMMISSIONER LAMARRE: Oh, we lost the video.

1276   THE CHAIRPERSON: The video has frozen up.

1277   Can you still hear us?

1278   Okay, it looks like it's frozen.

--- Technical difficulties

1279   THE CHAIRPERSON: Depending on how long it will take, we might take a break. What's your guess, Madam Secretary?

1280   THE SECRETARY: It could be a couple of minutes.

1281   THE CHAIRPERSON: There we go. Are we back on?

1282   MS MAULE: Hello.

1283   THE CHAIRPERSON: Yes. Can you hear us?

1284   MS MAULE: Yes, I can hear you.

1285   THE CHAIRPERSON: Okay. The connection came down. So I was --

1286   MS MAULE: Did I do that?

1287   THE CHAIRPERSON: I don't think so. Unless you actually want to take credit for it, I think we're good.

1288   So we just wanted to thank -- I think you wanted to say a final few words.

1289   MS MAULE: Well, I was just -- because one of my colleagues that is here from High Rezolution she came to us as a student and as well as an independent production company to utilize our services.

1290   So I thank you for your well wishes. We are hoping to like, you know, reinvent and restructure and try to stay strong. So that's it.

1291   THE CHAIRPERSON: Well, thank you very much for your participation. People like you certainly are important elements to the creative ecosystem and the broadcasting system. So we wish you well and thank you for your participation today. Thank you.

1292   So, Madam Secretary.

1293   MS MAULE: Thank you.

1294   THE SECRETARY: Thank you, Mr. Chairman.

1295   We will now proceed with the presentation by Rezolution Pictures.

1296   Please introduce yourself, after which you have five minutes. Thank you.

1297   MS ROTH: Thank you.

1298   I don't see a blue screen, so -- can you hear me okay?

1299   THE CHAIRPERSON: Yes. We hear you quite well and see you quite well. So go ahead and we'll catch up on the -- so you get to see us at the same time.

INTERVENTION

1300   MS ROTH: Okay.

1301   My name is Lisa Roth. I'm representing Rezolution Pictures in Montreal, an award-winning film, TV and interactive media company that was created in the year 2000. We have been in the forefront of independent Canadian producers who have focused on Aboriginal stories and content from English Quebec -- from the English Quebec perspective, I should say.

1302   I, myself, have been privileged to be part of that creation of the unique and important programming that Rezolution Pictures does for about five years, mostly as a line producer but also as a director, assistant director and a researcher. I've worn a lot of hats.

1303   Rezolution Pictures' productions include comedies, dramas and documentaries. More recently we've discovered that our original storytelling perspective transcends traditional media and have delved into game programming with our sister company Minority Media. However, television and film productions are still our key platforms.

1304   The Rogers Media Fund, in fact, has contributed to our success by supporting our internationally acclaimed documentary "Reel Injun," a tongue-in-cheek look at the stereotypes of Natives in Hollywood films. This film was broadcast around the world. It's still running the circuits of festivals around the world. It won three Geminis in 2010 and it won the Peabody Award in the U.S. So we're very proud of that film and it couldn't have been done without the help from Rogers Media Fund -- well, not the same way in any case.

1305   We're proud to have recently announced a co-venture with APTN and OMNI for the production of a 6-part comedy series called "Mohawk Girls," unofficially described as "Sex-In-the-City-on-the-Rez." It will be broadcast in three languages: in English, in Mohawk and in Mandarin. That goes into production next year along with our many other productions.

1306   That's a little bit about who we are and who I am.

1307   Why we support the application.

1308   For one, Montreal is in itself a unique television market in Canada. It has a rich pool of production personnel and storytelling talent that itself bridges English, French, Aboriginal and ethnic stories in a way that, I think, no other city in Canada is quite adept to do.

1309   Rogers Broadcasting Limited's application to acquire Metro14 and create a Citytv Montreal station is important to us in our industry here because we think, I think and Rezolution Pictures thinks the English market in Montreal is very ready for a new English-language TV station that will provide an additional window for local programming, especially from independent producers like ourselves, obviously.

1310   The presence of another English-language TV station in Montreal will greatly benefit the overall arts community by increasing jobs and adding incentives for local Anglophone talent to hone their skills and stay in Montreal.

1311   This is something that I'm reiterating that Josa Maule was talking about and so was Kirwan Cox already today in our presentation and in fact Josa just mentioned that I worked with her at one point. I used her services for a small production we were working on. Yes, the budgets are low and the industry is small and our people are leaving.

1312   Another example is that I'm currently looking for a researcher for a future documentary film and English-speaking researchers in Montreal are kind of hard to find because they need to get a lot of work to make a living as a researcher. It's all freelance, so they always end up either living part-time in Toronto or moving or writing somewhere else or outright leaving the city.

1313   So for me it's important to support the Montreal production industry to support keeping our English talent here. It's not exactly a brain drain, it's like a tongue drain, as I call it.

1314   Another important aspect or reason to have another English station here is to create local programming reflective of our English-language community itself. It would be a great asset to our culture and our regional identity as English Montrealers.

1315   Rezolution Pictures has worked successfully in the past with Rogers, and Rogers' proposal to attribute additional funding to local producers will indeed offer an exhibition window to small independent producers like us, an additional exhibition window. Even if it's a second broadcast, it would be something that would help us share our stories locally and potentially nationally as well.

1316   I'll give you another on-the-ground production example which I find interesting. I'm currently in the final stages of delivering a master tape of a French version of an English documentary that Rezolution Pictures produced called "Smoke Traders." It's a film about the Mohawk tobacco industry.

1317   It was commissioned in fact by TV Ontario with a second window, a French version for Télé-Québec. Interestingly enough, the film was 100 percent developed in Montreal, about 50 percent shot in a reserve across the river from Montreal, 100 percent post-produced and distributed out of Montreal. Yet, we don't have a local station that will broadcast it in English.

1318   Télé-Québec is interested enough and if you have the right cable package you can watch it -- you could have watched it last week or you probably did perhaps, October 25th on TVO. I didn't get the channel, so I couldn't watch it.

1319   So it makes me think that we have a lot of stories that we're telling and that we're making here in Montreal as English Montrealers that yes, are interesting to other provinces, that's great, but we should be able to have an outlet for them here in our own home.

1320   Canadian productions definitely have limited funds. Despite the generous subsidies from governments, it's still difficult to obtain the production values in our shows that viewers expect. So finding any other windows for financing such as through any other commitments to Canadian programming expenditures that Rogers could provide will only help us create stories that we as Canadians and Montrealers are proud to show, to tell and also to watch.

1321   I'll conclude by saying it's clear that the television industry is determined that the Montreal English community is important and is in need of support. If we had more incentives to produce here, it would give us at least, at the very least, a chance to share our stories locally and at best to share them with the rest of Canada.

1322   In the same way that regions in Canada need extra incentives and support to produce film, TV and other forms of art, Montreal does as an English community. It's a big city but it's not Toronto. And everything could be produced out of Toronto, which wouldn't be the end of the world, but it wouldn't represent our country and our culture.

1323   THE CHAIRPERSON: Okay. Well, that's --

1324   MS ROTH: Montreal itself is voted -- pardon?

1325   THE CHAIRPERSON: I think you've been very clear in your presentation, it's very good. I think we'll go to the questions now by Commissioner Molnar if that's okay.

1326   MS ROTH: Okay.

1327   THE CHAIRPERSON: And by the way, you may not be seeing us but we're seeing you and hearing you loud and clear.

1328   MS ROTH: Okay.

1329   THE CHAIRPERSON: Commissioner.

1330   MS ROTH: You're omniscient nevertheless.

1331   COMMISSIONER MOLNAR: Hello, Ms Roth. My name is Candice Molnar. And I apologize you can't see us.

1332   I do have a couple of questions and I want you to feel confident that we have read your submission and it's very thoughtful and you have made a lot of strong points as it regards the importance of expanding the opportunities for your market and the different players within the English-language market in Montreal.

1333   What I noted is that you appear to have had quite a longstanding partnership with Rogers. You mentioned that you have participated in projects using the Rogers Media Fund and you also mentioned co-ventures with OMNI.

1334   So I wondered -- I mean you reside in Montreal, I wondered where you needed to go to pitch these projects or how that worked. I mean clearly you were successful in accessing these funds. Was that something you needed to leave Montreal to do or were you able to successfully have access to these funds in Montreal?

1335   MS ROTH: We were able to have -- the Rogers Fund was only one -- was for "Reel Injun" only, it was once. And the OMNI co-venture is up and coming. It's new for us. So there were two instances where we worked with Rogers in fact.

1336   Was it easy? I mean as independent producers we need to look at every fund that could be available across Canada for every broadcaster and so, as I mentioned, every little extra bit of funding and financing, even second window, even if it's for a versioning, is going to help us up our production values for our productions.

1337   Does that answer your question? I'm sorry.

1338   COMMISSIONER MOLNAR: I think so and I --

1339   MS ROTH: Is it hard to --

1340   COMMISSIONER MOLNAR: I noted that you had placed as one of your reasons for supporting this that it would provide a local opportunity for independent producers to connect and locally pitch projects to Rogers and I guess I was just wondering to what extent that is, you know, a significant benefit relative to the way you're having to pitch today and go and access the monies.

1341   MS ROTH: Okay. Well, let's face it, we are an independent producer and yes, there is a bit of a schmooze factor here, you know. Any broadcaster that comes in, anybody that wants to -- is going to be spending more money in Quebec, is going to be hiring independent producers to create original programming that reflects what we do and who we are, we're going to support as a producer, you know. There's nothing to hide about saying that, for sure.

1342   Rogers is coming in and offering to spend 3 percent on local productions and actually I would support the upping to 6 percent, for sure. I'm not one of the people who -- my forte is with those numbers of the statistics and broadcasting commitments to Canadian program expenditures but I think how could I not support that as a production company.

1343   And secondly, personally as a Montrealer, how could I not support wanting to see more news, Breakfast Television, things that are happening around me in my city in English that's going on. It's a no-brainer, really.

1344   COMMISSIONER MOLNAR: Thank you. I mean I agree that it makes sense that everybody within the industry is going to support the addition of a new player within the industry.

1345   Are you aware that Rogers has proposed as kind of a backup to its request for an English-language Citytv network that they would acquire the station, make it an OMNI station with a period of Citytv programming in the evenings? If you're aware of that, could you tell me your thoughts on that?

1346   MS ROTH: Well, I think it's an interesting Plan B and from our production perspective and for a city that does a lot of versioning and multilanguage versioning it could be good for the industry to an extent here, for the post-production industry especially but not so much for the original programming industry necessarily, depending on what percentage that they will have to spend on original content for Montreal; I'm not aware of those statistics.

1347   So I would say that personally I would support Plan A and I'm not sure if I would support Plan B, to be honest. I really am coming here to support Plan A, the application for a Citytv station, English.

1348   COMMISSIONER MOLNAR: Thank you very much.

1349   Those are my questions.

1350   THE CHAIRPERSON: Thank you very much, Ms Roth.

1351   MS ROTH: Thank you.

1352   THE CHAIRPERSON: I apologize that we weren't able to do a two-directional video feed, but you understand sometimes these production issues crop up.

--- Laughter

1353   THE CHAIRPERSON: Madam Secretary, the next intervenor, please.

1354   MS ROTH: Thank you, Mr. Chairman.

1355   THE SECRETARY: Thank you, Mr. Chairman.

1356   We will now proceed with the presentation by Griffintown Media.

1357   Please introduce yourself, after which you have five minutes for your presentation.

1358   Thank you.

INTERVENTION

1359   MR. McRAE: Hello, my name is Jim McRae, I am President of Griffintown Media in Montreal.

1360   Thank you to the CRTC and to Mr. Traversy for inviting me here to speak in support of Rogers Broadcasting application for a licence to operate an English-language commercial television station in Montreal.

1361   For my brief presentation regarding the benefits of the Rogers application, I have chosen to focus my thoughts in two areas.

1362   On a personal level, as an Anglo Montrealer, I feel a new station will help bolster the English community's voice in important ways, including broadcasting shared experiences, highlighting local successes or causes and, in general, reporting on matters of particular importance or interest to Montreal Anglophone as well as allophones audiences.

1363   Based on my knowledge of the application, much of this will be achieved through locally produced and focused programming, including a breakfast television shows and a sports show. These shows have been attempted over the years by other broadcasters with various degrees of success.

1364   My understanding is that the proposed station would be branded Citytv Montreal and fashioned after the other successful Citytv stations across the country; so while new to Montreal it would not be a start-up, rather it would be based on a successful broadcasting model.

1365   The very notion of a new TV station serving English-speaking Montrealers is encouraging for the simple reason that it would lead to cultural expansion in a community that has experienced significant contraction in my lifetime. This point can't be overstated. I have always considered Montreal to be one of Canada's leading cities, thanks to its rich history of course, but also due to its envious cultural diversity, which can be attributed, in large part, to the --

--- Technical difficulties

1366   THE CHAIRPERSON: So we lost the connection, we will put it back on.

1367   MR. McRAE: -- their message. A new station that provides --

1368   THE CHAIRPERSON: We had just -- just a second. Just a second. We missed part of your presentation.

1369   I know you are reading from the text --

1370   MR. McRAE: Okay.

1371   THE CHAIRPERSON: -- so we have been following with you, but I do want to give you the chance if you want to go back.

1372   MR. McRAE: Okay, yes.

1373   Could you tell me how far?

1374   THE CHAIRPERSON: I must say, I wasn't tracking exactly, I was reading as you were going.

1375   You were on a business level I think when it broke.

1376   MR. McRAE: Okay. Thank you.

1377   On a business level, a new local television station represents an exciting opportunity for many of my clients. As a graphic design and creative agency, our work includes developing marketing tools for businesses to help sell their respective products and services. One day we can be working on an ad campaign for a local food supplier, another day a video for a hotel. Every day and with every client we are tasked with creating exciting ways to package their message. A new station that provides either commercial airtime that reaches the local market, or features local business successes through community news, events and profiles-type programming, is an exciting way.

1378   Just last week a local publishing colleague contacted me to ask for advice on promoting her new book title. Without getting into the storyline and all the details surrounding the book I would suggest that she and her book would be the perfect candidates for guesting on "Breakfast Television", like the show proposed by the Rogers bid or through the Rogers bid.

1379   Using this example, the direct benefits would include increased sales of her book that benefit the publisher, bookstores, the printer and, not to mention, supporting the work of a Montreal-born-and-raised author.

1380   That's just one small example of the potential economic benefits of a new station, but it struck me as significant, as it relates to the application, because it also has a strong cultural component. A bigger example of the economic benefit is that the new station would attract very talented local journalists, broadcasters, producers and technicians, including many from my alma mater and program -- Concordia University's School of Journalism -- as well as myriad support staff and third-party suppliers necessary to run and manage a local TV station.

1381   In conclusion, I will always support whatever benefits Montreal. It's where I live, raise my family and run my business. A new English-language station is certainly a benefit, especially when I consider the impressive positions of my fellow presenters today, so it therefore has my support. I hope it has yours as well.

1382   Thank you for your time.

1383   THE CHAIRPERSON: Thank you very much, Mr. McRae.

1384   Vice Chair Broadcasting, Mr. Pentefountas, will have some questions for you, I believe.

1385   COMMISSIONER PENTEFOUNTAS: Thank you, Mr. Chairman.

1386   Mr. McRae, can you speak to us briefly about your production house and the kind of work you do?

1387   MR. McRAE: Yes, certainly. We provide a wide range of marketing and communication services and tools that we build for clients, mainly in Montreal but also including clients in Toronto, Boston, Ottawa and some international clients as well, so we could --

1388   COMMISSIONER PENTEFOUNTAS: Go ahead, I'm sorry.

1389   MR. McRAE: Go ahead.

1390   COMMISSIONER PENTEFOUNTAS: Go ahead, I'm sorry.

1391   MR. McRAE: No, no, please.

1392   COMMISSIONER PENTEFOUNTAS: Have you done any work for City in the past?

1393   MR. McRAE: Never.

1394   COMMISSIONER PENTEFOUNTAS: Okay. And have you done any work with people in the production community in Montreal?

1395   MR. McRAE: Yes, indirectly. We produce custom content and sometimes a content is produced using video and other types of broadcasting that we then pass on to television stations in some cases where our client's message is conveyed through reporting and different causes that occur or different news or products that occur in the marketplace.

1396   COMMISSIONER PENTEFOUNTAS: So you are somewhat familiar with the independent production community in Montreal through your work?

1397   MR. McRAE: Somewhat, but -- yes, somewhat, but in some ways we are one so we speak -- so we work for our clients and then we try to get their message out in channels that benefit them. So it's my burden, if we can call it that, to find ways to get the message out.

1398   COMMISSIONER PENTEFOUNTAS: You touched on it briefly, but I will just sort of give you a little free rein here, besides the advantages that a City station may have for the production community in Montreal --

1399   MR. McRAE: Yes.

1400   COMMISSIONER PENTEFOUNTAS: -- and we have heard a lot about that this afternoon -- can you speak to us about some of the other advantages you may have thought of over the last little while?

1401   MR. McRAE: Well, today I heard a lot about the "Breakfast Television" show and it's not because I want to easily contribute in that way, but interestingly enough most of our clients do have a need for reaching a certain segment of the audience that does receive information through breakfast television type programming.

1402   Interesting, I mentioned a hotel in my presentation, they also have a spa component, they have a restaurant component, and it's basically lifestyle product that we sometimes represent and I can see that being a natural fit with the breakfast television type model.

1403   So imagine one of my clients taking part in a breakfast television experience, they could do it through advertising is the budget matched -- if the expenditure matched their budget, but they could also do it through promoting their lifestyle product, which could be featured as content on a breakfast television show to the benefit of the audience, because Montrealers actually take great pride in seeking out non-working activities, including enjoying themselves and getting out there. So food, the food culture; spa, spa culture; get-away hotels, that sort of packaging, it would be ideal for that sort of programming.

1404   COMMISSIONER PENTEFOUNTAS: You make us sound as bad as Greeks and the next thing you know you will be calling us lazy.

1405   MR. McRAE: Yes.

1406   COMMISSIONER PENTEFOUNTAS: Well, thank you very much.

1407   THE CHAIRPERSON: Well, thank you very much, Mr. McRae, for your comments.

1408   We will just take a short 5-minute break before we move to Phase III for the reply, if that's -- so to let everyone set up and get to the next phase. Okay?

1409   So just really five minutes, no more. Thank you.

--- Upon recessing at 1447

--- Upon resuming at 1455

1410   THE CHAIRPERSON: I will give you the floor to introduce Phase III, I guess.

1411   Secretary, please.

1412   THE SECRETARY: Thank you, but before doing so I just wanted to add to the record Exhibit 2, which is CJNT-TV 2009-2010 broadcast year.

1413   Copies will be available in the examination room.

1414   THE CHAIRPERSON: I will also mention we left whether that additional document you had filed would be accepted? The Panel is accepting it, the late filing.

1415   And we are going to take you up on your offer as well to do a hand verification of a month of our choosing. We have chosen September 2012 and you have two weeks to file that with us.

1416   MR. MILLAR: Thank you very much, Mr. Chairman.

1417   THE CHAIRPERSON: Okay. You know, this is -- and I realize you are in the hot seat, but I hope that people are telling other operators in the country that we take this very seriously. Whatever the size of the company is, small or large, we are not going to hesitate to raise this at hearings because it's not just about measuring things that people think aren't important, it is the very conditions of licence that give life to the public interest obligations we have in our decision. So this is not something we are going to be soft about coming forward, okay. So thank you for that.

1418   Madam Secretary...?

1419   THE SECRETARY: Thank you, Mr. Chairman.

1420   We will now proceed to Phase III for this item in which the applicant, Rogers Broadcasting Limited, can reply to all interventions submitted on its application.

1421   Please reintroduce yourselves for the record and you then have 10 minutes for your presentation.

1422   Thank you.

REPLY

1423   MR. PELLEY: Thank you.

1424   Good afternoon, I am Keith Pelley, President of Rogers Media Inc., with the same cast of characters that are around the table.

1425   Thank you. You have allowed us today to demonstrate how important it is to our strategy to become a viable third private national television network.

1426   This has been a tough year, there is no question about it. Advertising market has made it very, very difficult. We are slated to lose $16.3 million with Citytv this year, but we are not ready to throw in the towel.

1427   As former SVP of Strategy at CTV, I believe in the conventional model and I know we believe in the conventional model and believe in premium content.

1428   We are proud of what we have accomplished in the last two years, we want to take Citytv to the next level. We need Montreal, it's as simple as that, and without it our conventional model changes and our strategy must change as well.

1429   We want to continue to produce the series that Claire talked so passionately about, "Seed" and "Package Deal" and don't want to go back to running movies like "Strange Brew" and "Owning Mahowny", although they are classic Canadian films. That's not where we want to go and we hope that's not where the Commission wants us to go.

1430   We hope you will seriously consider what we are now calling the non-Frankenstein model.

1431   If approved our application will result in the creation of 15.5 hours of new, original, innovative local content a week for English Montrealers; 30 to 35 local jobs and a chance to grow over time as we become a more vibrant, viable network. A new television studio in downtown Montreal, support for a new ethnic voice in the community and millions of dollars through CPE for new independent Canadian production.

1432   We believe this is clear evidence that our application will benefit Montreal viewers, its community and the Canadian broadcasting system.

1433   We would also like to thank the intervenors who appeared before you today, the Montreal School of Performing Arts, Rezolution Pictures, Youth Fusion Jeunesse and Griffintown Media for taking time to express their support for Citytv Montreal and the opportunities it will afford to the local community and the production sector.

1434   Quite honestly, we were overwhelmed when how easy it was for the support when we asked for it from over the 500 intervenors that we did have to support this application and you have heard from them directly that there is indeed a need for additional support for independent production in Quebec and for the community lifestyle programming like "Breakfast Television" in the Montreal market.

1435   We hope, through approval of our application, we are given the opportunity to serve that need.

1436   I think it has been a very, very worthwhile conversation this morning, I think you know where we are coming from, where our passion is, what we want to become, this is just another step for us. I don't think anyone outside of the Chair is surprised that we were coming to try to bring Montreal as the next step to becoming a national broadcaster.

1437   That's really, really what we want to become. We want to compete with CTV, we want to compete with Global, not only for U.S. programming, but we want to produce the great Canadian series and in order to do so -- like "Seed", like "Package Deal", like "Bachelor Canada", we need to be able to access that national advertising.

1438   And I think the plan that we have put together, as I said in my earlier remarks, is really, really well thought out because we knew that when we were sitting here and talking to you that this was not going to be something that was going to be easy.

1439   So I think we came with a solution to a challenge and I really hope that you consider it and consider it well thought out.

1440   So thank you for your time today.

1441   THE CHAIRPERSON: Thank you very much. I like brief replies.

1442   Does legal have some questions to ask at this point?

1443   MS ST-JEAN: Yes, I do actually, with regards to two questions.

1444   THE CHAIRPERSON: Go ahead, please.

1445   MS ST-JEAN: The first is with regards to Mr. Cox proposing that expenditures on Quebec independent production be increased from 3 to 6 percent during the licence term, would you be willing to accept this condition of licence?

1446   MS WHEELER: No, not at this time. We are only prepared to accept a commitment of 3 percent of our national programming budget at this time.

1447   MS ST-JEAN: Okay, thank you.

1448   And then the second is just a bit of a housekeeping question and it's with regards to the document that the Chairman referred to earlier today in Phase I and it will be named Exhibit 3 and it will be placed on the public record in an abridged form. This document is before you right now.

1449   Do you accept the abridged form that it is drafted in?

1450   MS WHEELER: Yes, with the exception of the sixth bullet. I would just request the opportunity to provide our explanation or our interpretation of the provisions in the agreement.

1451   MS ST-JEAN: Okay. And just for clarification for the record, you are referring to the affiliation agreement that is filed on the public record --

1452   MS WHEELER: Correct.

1453   MS ST-JEAN: -- and bullet six refers to page 4, Schedule A, Key Terms, and it's the fourth one.

1454   MS WHEELER: Bullet 6 refers to Exhibit 2 in terms of the reference to the terminate the affiliation agreement on January 1, 2013.

1455   MS ST-JEAN: Yes. And that affiliation agreement is placed on the public record --

1456   MS WHEELER: It is.

1457   MS ST-JEAN: -- in an abridged version.

1458   MS WHEELER: Correct.

1459   MS ST-JEAN: Yes, okay.

1460   And you wanted to explain perhaps where there was some confusion in your understanding of the section?

1461   MS WHEELER: Yes. So with respect to section 4 of the affiliation agreement entitled "Term", the first paragraph, that is from June of this year, of 2012, to December of 2012. After that date there is -- the subsequent paragraphs provide an opportunity for the parties to negotiate a further agreement for the prescribed periods of time, however the terms are open to renegotiation on substantially the same terms, but not necessarily the identical terms.

1462   MS ST-JEAN: Okay. Thank you for that clarification.

1463   MS WHEELER: Okay.

1464   MS ST-JEAN: No more questions.

1465   THE CHAIRPERSON: So when you do that renegotiation the number that you saw in the non-abridged version will nowhere be close to be what --

1466   MS WHEELER: No.

1467   THE CHAIRPERSON: --will likely be the agreed amount?

1468   MS WHEELER: That's correct. Correct.

1469   THE CHAIRPERSON: Okay. I understand that. Okay.

1470   I don't think we have any further questions, so thank you very much for your presentation.

1471   MR. PELLEY: Thank you for your time.

1472   THE CHAIRPERSON: We look forward to seeing the additional documents to complete the record.

1473   MR. PELLEY: Thank you.

1474   MR. MOORE: Thank you, Mr. Chairman.

1475   THE CHAIRPERSON: Thank you very much.

1476   Madam Secretary...?

1477   Well, I think what we will do is take a 10-minute break to let the next application set up and then we will deal with the second item.

1478   So we will just take a 10-minute break or come back around -- let's say 20 past, that's more 15 minutes by my watch so we will take that.

1479   Thank you.

--- Upon recessing at 1505

--- Upon resuming at 1519

1480   LE PRÉSIDENT : À l'ordre, s'il vous plaît.

1481   So Madam Secretary, please.

1482   THE SECRETARY: Thank you, Mr. Chairman. We will now proceed with Phase I of Item 2 on the Agenda which is an Application by 4517466 Canada Inc. for a broadcasting licence to operate a multilingual over-the-air ethnic television programming undertaking in Montréal to be known as ici (International Channel/Canal International).

1483   Please introduce yourselves and you will then have 20 minutes for your presentation. Thank you.

PRESENTATION

1484   MR. SAM NOROUZI: Thank you, Madam Secretary.

1485   Good afternoon, Mr. Chairman, Vice-Chairman, Commissioners, ladies and gentlemen of the Commission.

1486   My name is Sam Norouzi and I am the Vice President and General Manager of our proposed new ethnic over-the-air television station called International Channel / Canal International, or ici.

1487   With me today on my right is my father Mohammad Norouzi who has been a passionate producer of programming for the ethno-cultural communities of Montréal from the earliest days of ethnic programming on cable.

1488   To his right is Mr. Henry Ngaka, a representative of our Producers Cooperative and to my left is Jim Macdonald, our broadcast consultant.

1489   The ethno-cultural population of Montréal has, from the beginning of the twentieth century been an intrinsic part of what has made our city world class.

1490   Immigration to Montreal has happened at different times for different reasons, but a quick look at Statistics Canada ethnic origin or mother tongue census numbers would show that Montreal continues to have a very diverse linguistic composition. While the Francophone community still represents the majority of persons living in Montreal, the Anglophone population is not significantly greater than the combined ethnic population.

1491   While each ethno-cultural community is very much part of the Canadian mosaic, being able to communicate in your own language has proven very important to many new and older immigrants alike, which is why multilingual television has become such an important part of the Canadian broadcasting system.

1492   MR. MOHAMMAD NOROUZI: Mr. Chairman, Commissioners, I would like to start by thanking you for the opportunity to appear before you. The journey that brought us here today started some 33 years ago when I first arrived in Canada as a landed immigrant with my wife and two small children. We had nothing more than two suitcases in hand but a world of dreams and aspirations in our hearts.

1493   My adventure in television production first started when one day, some 26 years ago, I was at home watching television. As I was flipping through the channels I came across programming in foreign languages.

1494   I continued to watch this station over several weeks and noticed that there was programming in a great number of languages but nothing in Farsi, the language of my homeland.

1495   My expertise was in the world of aviation as a flight engineer, a long way from television production, but my hope was to provide a voice for the Iranian Community in Montreal.

1496   After acquiring the air time, finding a host for the show and securing production facilities, we aired our first program in Montreal in November 1986 on Television Ethnique du Québec.

1497   In 1988 I started purchasing production equipment in order to be more self-sufficient. I started with a camera and, soon after, editing equipment that I set up in the basement of my house.

1498   At this point not only was I producing my own program but I also started offering production services to my fellow producers who did not have such facilities.

1499   My first client was George Saad of Tele-Egypt. George still to this day reminds me that he preferred working at my house since my wife would cook for him!

--- Laughter

1500   MR. MOHAMMAD NOROUZI: Our small venture continued to grow and in 1991 we moved out of my basement and into a 3,000 square foot studio and editing facility.

1501   We continued to expand over the years, providing production services for many more producers, while continuously updating our equipment.

1502   We were awarded a contract to produce programming for Canal-Savoir, an educational over-the-air channel in Montreal.

1503   In 1997 when CJNT obtained an over-the-air broadcast license, we were contracted to produce some of their local content.

1504   We have since produced commercials that have aired on most major Canadian broadcasters, as well as corporate videos for some of the largest companies in Canada, all the while keeping the voice of the Iranian community alive in our city.

1505   Ethnic programming in Montreal, like ethnic programming across Canada has improved to the point where our productions now rival over-the-air English or French stations. I am proud to say that ici, will be in high definition from the start.

1506   The heart and soul of ethnic programming in Montreal continues to be the individual producers who are a part of the fabric of their communities. They know what is going on and what is of interest to their viewers. They understand the social side, the business side, and everything in between.

1507   We would like to take a moment to give you a brief look at the many faces of ici.

--- Video presentation

1508   M. SAM NOROUZI : Tel que mon père vous a mentionné, notre famille a commencé à produire des émissions pour la communauté iranienne, mais nous n'étions certainement pas les seuls à produire de la programmation à caractère ethnique à Montréal. En effet, dans la plupart des communautés, il y a eu des individus ou des groupes d'individus qui ont manifesté un intérêt à produire des émissions de télévision pour leur communauté.

1509   La Commission est consciente des difficultés que CJNT a rencontrées dès le début et vous vous demandez sans doute de quelle façon ici serait couronnée de succès lorsque CJNT, sous plusieurs propriétaires, ne l'a pas été.

1510   Même si TEQ n'était pas très sophistiquée et les normes de production n'étaient pas équivalentes à celle des chaînes de télévision conventionnelles de l'époque, TEQ a quand même été un succès, tant en termes de sa capacité à fournir des informations pertinentes et instructives dans de nombreuses langues, qu'en ayant un succès sur le plan commercial pour les producteurs qui étaient à la base de TEQ.

1511   Contrairement à l'environnement de la radiodiffusion unilingue d'une station classique, une station à caractère ethnique a la responsabilité et le défi d'attirer un auditoire dans 15 langues et dans chacune de ces langues, nous devons nous assurer que notre programmation soit convaincante, informative et une réflexion de la communauté. Comme je l'ai appris de mon père, ce ne sont pas des compétences qui s'acquièrent du jour au lendemain.

1512   La proposition est de créer une coopérative de producteurs qui offriraient à chacun de ces producteurs une infrastructure globale qui leur permettrait de mieux servir les différentes communautés ethniques de Montréal.

1513   Nous voulons que chacun des producteurs indépendants, qui ont été dès le départ l'épine dorsale de la programmation ethnique à Montréal, aient l'occasion de développer leur propre entreprise au sein de la structure globale et le cadre réglementaire de la nouvelle station que nous vous demandons d'approuver aujourd'hui.

1514   Chaque producteur aura accès à des installations techniques, y compris des studios et installations de postproduction. Mais pour être clair, ça serait ici, en tant que titulaire de la licence, qui serait responsable à 100pour cent du contenu de la programmation.

1515   Each of the producers will own the advertising inventory within their own programming and, therefore, be in a position to generate revenue through the sale of advertising to the community that they know best.

1516   ici will handle the day to day operations of the company, and assume full responsibility for the regulatory, governance, and program content of the new station. This model, while not new, will make it possible for ici and our independent producers to collectively and collaboratively create a new multilingual television station which would not otherwise be individually possible.

1517   ici proposes to offer programming in 15 languages to 18 different cultures and will include Italian, Greek, Arabic, Portuguese, Farsi, Romanian, Chinese, Russian, Hindi, Urdu, Spanish, African, Jewish, Armenian and Creole.

1518   The 2011 census data shows that Montreal is the second largest ethnic market in Canada with a total population reporting a mother tongue other than English or French of 531,000 by comparison to Toronto with 1.1 million.

1519   55 percent of the total ethnic population falls within the top five languages in Montreal, 71 percent within the top 10 and 79 percent within the top 15.

1520   While the size of each of the groups is not as high as it is in Toronto, we believe that the retail support exits in each of the communities to be profitable for both the producers and ici.

1521   We stand before you with Rogers Media with what we believe to be a unique solution for the next stage of development for over-the-air broadcasting in Montreal. Approval of our application will ensure that our ethnic communities will have an even stronger voice, while English-speaking citizens will have access to many new hours of local programming that is part of the Citytv Montreal schedule.

1522   Much like the success that Channel Zero has been able to achieve with local programming at CHCH, the ici proposal is firmly rooted in the local communities which we propose to serve. Local reflection is important and it is what ultimately will generate the support of advertisers within the community.

1523   Often referred to as the father of modern advertising, it was the famous U.S. merchant John Wanamaker who coined the phrase, "Half the money I spend on advertising is wasted. The trouble is I don't know which half."

1524   At a time when Wanamaker was building a successful chain of department stores in Philadelphia I am sure that was the case, but for the businesses within each of our ethnic communities, there is great clarity on what advertising makes the cash register ring. These retailers support their community television programs because it is smart business to support the community that you are doing business with and even smarter to invest in advertising that works.

1525   We are very pleased that one of our producer partners, Mr. Ngaka, has joined us today to provide his input to our presentation from a producer's perspective.

1526   M. NGAKA : En ma qualité de représentant des producteurs, je vous salue chaleureusement et vous remercie de m'accorder la parole.

1527   En effet, je suis originaire de la République Démocratique du Congo, résidant au Canada depuis 1973, où j'ai complété un Baccalauréat et une Maîtrise en sciences politiques dans la concentration relations internationales.

1528   Mon expérience télévisuelle débute avec la TEQ en 1993, par la création d'un magazine télé destiné aux communautés africaines, ainsi qu'à monsieur et madame tout le monde. Parmi ces communautés, nous retrouvons des sénégalais, des guinéens, des centrafricains, des camerounais, des maliens, des congolais des deux Congo, des Ivoiriens, Burkinabé, Angolais, Tchadiens, Malgaches, Seychelles -- bref toute l'Afrique noire, soit plus de 30 pays approximativement.

1529   Ce fut un succès immédiat. Le Magazine Afromonde, que je produis et que j'anime depuis 1993, a misé sur les réalités africaines, souvent absentes des grands médias télévisés. À nos débuts, malgré un petit nombre de commerces, nous avons tout de même pu obtenir un support financier, lequel nous a permis d'évoluer positivement et de réaliser des nombreuses émissions très appréciées du grand public.

1530   Depuis lors, la communauté s'est agrandie et, par le fait même, possède de nos jours des commerces et affaires à la recherche de visibilité.

1531   n fait, notre magazine, télédiffusé jusqu'en 2009 par la télévision CJNT, a permis aux nombreux Africains de Montréal et du reste du Canada d'exister enfin télévisuellement aussi bien dans leurs activités culturelles variées tels que les nombreux festivals africains à Montréal et également en leur donnant enfin la possibilité d'aborder à la télévision locale les questions économiques et sociales touchant l'évolution de leur quotidien ici au Canada.

1532   Lorsque monsieur Norouzi m'a soumis son idée de créer à nouveau une télé multilingue, j'ai embarqué sans hésiter dans ce projet car je connaissais le sérieux de l'homme ainsi que son implication professionnelle reconnue et de longue date au sein des communautés ethniques montréalaises.

1533   D'autre part, je savais également que toute ma communauté attendait et continue d'attendre à ce jour avec impatience cette réalisation puisque tout le monde n'arrête pas de me demander : Quand est-ce que vous débutez vos émissions?

1534   Je vous cite, si vous permettez, pour appuyer mes dires, trois personnalités connues issues des communautés ethniques de Montréal :

1535   - Monsieur Yaovi Yakouba, qui est le Vice président exécutif et trésorier de Force Leadership Africain. Il dit substantiellement ceci :

« La majorité de nos membres et sympathisants connaissent le sérieux et le professionnalisme de monsieur Sam Norouzi. »

1536   - Monsieur Nicholas Pagoris, Président de la Communauté Hellénique du Grand Montréal, qui dit ceci :

« C'est avec enthousiasme que nous appuyons ce projet, avec certitude qu'ICI deviendra la voix de la Communauté Hellénique du grand Montréal. »

1537   - Enfin, monsieur Hamadi Tounsi, Président, Directeur Général de la compagnie Médias Arabe au Canada INC, qui dit ceci :

« Tout au long de ses expériences, Monsieur Norouzi a fait preuve de sérieux, d'honnêteté et d'amour de rendre service à la vie communautaire. »

1538   Pour toutes ces raisons, je vous invite, messieurs, dames, à considérer notre demande et permettre ainsi aux nombreux fidèles téléspectateurs de retrouver à nouveau le sourire.

1539   Je vous remercie.

1540   M. SAM NOROUZI : Merci, Henry.

1541   As I hope we have shown you, ici is not about homeland programming that is abundantly available on cable and satellite for those that want it. It is about local reflection in 15 languages.

1542   We understand that these applications provide you with many choices. In its presentation, Rogers has made it clear that its primary corporate strategy is to develop Citytv into a fourth national network so that it can compete directly with CTV and Global. But they have also told you that if their proposal to change CJNT into an English station is not approved, that they will maintain CJNT as an ethnic station, provided that the conditions of license are changed to allow City's English primetime schedule to air in Montreal.

1543   There is no question that OMNI is the gold standard when it comes to ethnic programming. So you may be thinking that the OMNI option might be the way to go. You know that Rogers is a company that will always do what it says it will do and that you will not have to worry about them running out of money.

1544   On the other hand you have the ici application. Admittedly, we have more heart, and Montreal ethnic programming experience than we have money, but we also have what we believe to be appropriate financing, producer commitments, and the support of Rogers/OMNI and Channel Zero.

1545   In closing Mr. Chairman, Commissioners, we would like to leave you with three thoughts.

1546   First and foremost is that my father and the group of producers that are the ici cooperative have been serving the ethno-cultural communities since the beginning of multilingual television in Montreal. We know the communities and the communities know us.

1547   Second, OMNI is already widely available in the greater Montreal area on both cable and satellite. While City Toronto is also available through BDU's, the City brand was first based on local programming and the 15 and a half hours of new local programming proposed by Rogers, including Montreal's own Breakfast Television show will not happen if Montreal continues to view City TV from Toronto.

1548   Third, is that we have been offered significant support from Rogers which will enhance our programming so Montreal can have the best of both worlds; ici and Citytv.

1549   Thank you very much for the opportunity to share our vision of ici with you today and we look forward to your questions.

1550   THE CHAIRPERSON: Well, thank you very much for your presentation. I know passion can't be put in a bank account but it goes very far in the broadcasting business.

1551   Merci beaucoup pour votre présentation.

1552   Je vais demander au conseiller Patrone de commencer avec quelques questions pour vous.

1553   COMMISSIONER PATRONE: Thank you, Mr. Chairman.

1554   I want to echo the Chairman's comments about the level of passion that you have brought to this application. It's nice to see applicants come forward with real passion about ethnic broadcasting.

1555   I will be asking a number of introductory questions and my colleagues will follow shortly after that with specific areas that they want to deal with concerning your application. And as Rogers noted -- the Norouzi family -- and as you have noted in your oral presentation and your written, you have been at this a long time.

1556   Now, given the history of the Montreal market how do you see the future of ethnic programming in the city? I think it's fair to characterize that the past has been somewhat checkered. There are many challenges involved in doing this type of programming.

1557   Why do you think this application will work?

1558   MR. SAM NOROUZI: Well, thank you very much for that question.

1559   We have -- as mentioned in our presentation we have been involved in ethnic broadcasting from the onset. So we have seen the different stages and we have seen the good times and the bad times.

1560   The reason we are here before you today is not because we are naïve or just want to have a broadcast licence to do ethnic programming. We have actually thought this through. We have put a plan together that we believe will work based on historic facts.

1561   Back in the time when Tech was just a cable access program on Videotron the producers would produce the program and have the -- well, I wouldn't even call it advertising inventory because back then we couldn't have advertisers but sponsors for the programs. I recall during a certain period we couldn't even put a phone number on those sponsorship presentations.

1562   But there was financial success. I mean there was a great number of producers. If I look back there was a program called Tele Italia which was entirely privately funded through advertising or sponsorships and they had a very large studio and I think a staff of some 20 people working. It was entirely funded by private advertisers within the community.

1563   CJNT got licensed with all hopes and dreams of going forward, finally being able to put proper advertising on TV. Everybody was really excited about it, of being able to have national advertisers.

1564   So the model was a little changed when CJNT first got licensed.

1565   Now, given the past history, clearly that model has not worked in Montreal because from the onset CJNT had financial troubles.

1566   What we are proposing here today is to go back essentially in time and give that possibility for those producers who know their communities best to be able to produce the programming and then in turn sell the advertising inventory to that community that they know best.

1567   Speaking to a few of my friends in Montreal who have businesses and are part of the ethnic community when I asked them -- I said, "Well, you guys were supporting your community program which there was Tech. You were giving advertising. What changed? Why did you stop doing that when CJNT got licensed?"

1568   And he said to me -- he said very frankly, "Well, back then we were supporting the community. Now, CJNT is a big broadcaster. They're putting national ads. They don't need us anymore."

1569   So there is a sense that -- I feel there was a disconnect that was created between the communities and their local programming. What we are proposing here today and we're trying to achieve is to reconnect.

1570   Essentially, CJNT when it came on board had one or two salespeople trying to sell to the various communities.

1571   But my experience, I can tell you that I can sell something to a Persian vendor in my own language better than an Anglo or a Francophone can that doesn't understand the culture, doesn't understand the language.

1572   So in essence when -- and this is examples that I've gotten from people who used to advertise on Tech, is this:

1573   There are two reasons for, if you call it, ethnic advertiser or a business that caters to the ethnic community to advertise on television. One is the classic one that every other mainstream business would do, is to get the exposure and make the cash register ring.

1574   The other very important one also is that they do it to support their community. That is what our proposal is here today, is to re-mend those connections and bring everybody back together.

1575   COMMISSIONER PATRONE: Thank you.

1576   You've touched on my next couple of questions, one of which was a reference to the many letters of support that you got from members of the community, the need as you've spoken about to listen to what those stakeholders are telling you, being open to what their needs are as well as addressing failures of the past which, as you pointed out, it was largely a loss of a connection to the very people that you want to be your viewers. They represent the eyeballs that are going to be supporting as well as the ad revenues.

1577   Can you talk a little bit about being receptive, being good listeners and staying connected to the community that you're trying to represent?

1578   MR. SAM NOROUZI: Absolutely.

1579   Just to give you an example, one might argue saying that, well, many of the producers that were a part of our cooperative today have not been on the air for a few years now, but I counter that in saying that a lot of our producers, some of which are sitting back here today, have been involved in the communities either on a community level, through local radio, through community newspapers. So they have stayed in touch with their communities.

1580   And this is the feedback that I get from them. Actually, my Latino producer, Domingo here, constantly during this -- this has been a three year process for us to get here today before you -- comes and sees me and says, "Sam, when is it happening?" He literally has vendors knocking at his door saying, "Listen, we want to advertise. We want to promote our business. We want to promote such and such event. When can we do it?"

1581   And it's quite unique when you have a situation where the vendors are approaching you wanting to advertise because it's a service that these vendors will not be able to advertise on any other station because it just simply doesn't makes sense because it's not the demographic that they are trying to reach.

1582   So, we have had a lot of coming to support from various communities asking us: When is this going to happen, when can we recreate the program we had?

1583   COMMISSIONER PATRONE: Thank you. You haven't been entirely clear about your intention in the event that the Commission were to deny Rogers application.

1584   Could you talk a little bit about what your intentions are, assuming your application was approved, in the event that the Rogers acquisition of CJNT is denied? Have you given much thought to that, to that scenario?

1585   MR. SAM NOROUZI: I just want to clarify. When you say the Rogers application is denied, so does that mean that the current licence holder of --

1586   COMMISSIONER PATRONE: Yes, would remain.

1587   MR. SAM NOROUZI: -- CJNT will continue to do ethnic broadcasting in Montreal?

1588   COMMISSIONER PATRONE: Yes.

1589   MR. SAM NOROUZI: So that you would say that there would be two broadcast ethnic channels in Montreal?

1590   COMMISSIONER PATRONE: And essentially there would be a competitive environment.

1591   MR. SAM NOROUZI: Yes.

1592   COMMISSIONER PATRONE: And yet you do have a relationship with that particular undertaking; do you not?

1593   MR. SAM NOROUZI: Yes. Well, the relationship is in the fact that it is difficult -- it has been difficult for us to, say, to get the financial backing since we don't have a licence yet, so Channel Zero has offered to backstop our financing.

1594   But we're very confident that once our licence is approved, through the community and so on and so forth, we will be able to acquire the appropriate financing for that.

1595   COMMISSIONER PATRONE: Is it a non-compete agreement that you have with that particular undertaking?

1596   MR. SAM NOROUZI: I think you're referring to -- because this process has changed a little. When we first started the process, Channel Zero was applying to change their conditions of licence and become an English language station and we wanted to do the ethnic one.

1597   And I think, if I'm not mistaken, at that time there was a non-compete clause in that --

1598   COMMISSIONER PATRONE: Well, you would know better than I since you presumably were the ones to --

1599   MR. SAM NOROUZI: Yeah.

1600   COMMISSIONER PATRONE: -- engage with Channel Zero.

1601   MR. MACDONALD: Yes, that's correct. Under the terms of the original agreement with Channel Zero, it was contingent on the English being approved for Channel Zero and then -- and ICI being approved as an ethnic station.

1602   If Channel Zero was denied, then the ICI application would be withdrawn.

1603   COMMISSIONER PATRONE: Okay. Well, that answers that question then, you could not --

1604   MR. MACDONALD: Rogers did not ask for the same condition, however, just to be clear.

1605   COMMISSIONER PATRONE: Yes. The question was to you, and just so we understand exactly where you stand, you know, it's a fairly tangled web that we have before us in terms of applications, proposals and benefits possibilities, you know, if this happens then that -- and it's our job as a regulator to try and come up with a decision that improves the broadcasting system in Montreal based on --

1606   MR. MACDONALD: I can assure you, Mr. Patrone, my client is in compliance.

1607   COMMISSIONER PATRONE: Okay. But the question was, what would you do if, and I believe Mr. Norouzi and Mr. Macdonald, they've been pretty clear, that your application would not go forward, or you would not be able to go forward, launch in other words, were another application that we are listening to in this proceeding were to go forward -- were not to go forward, sorry.

1608   MR. SAM NOROUZI: Well, just to clarify, if you were to approve Rogers purchase of CJNT but that they would have to maintain it as an ethnic station and approve us at the same time --

1609   COMMISSIONER PATRONE: That's another complicating factor, you know, were they to move towards the OMNI model, the hybrid model then essentially they would be in a competitive situation with a second ethnic broadcaster.

1610   MR. SAM NOROUZI: Right, correct. Let me just say this about that. Our whole reason for being here is to bring that ethnic voice back on the air in Montreal.

1611   Now, if the Commission judges that the best way to do that is to have two separate ethnic stations, we would humbly and respectfully accept your decision, not necessarily agree with it.

1612   Given the fact that Montreal is a smaller market than Toronto, we believe on our end, if we obtain the licence, we can make it successful and we will make it successful, but to put that added burden of two competing ethnic stations in Montreal, again, and our whole reason for being here is to be able to go forward and bring that ethnic voice, that local ethnic voice back to Montreal and we would humbly and respectfully accept any decision that you would render, but obviously we would prefer the two separate station model.

1613   COMMISSIONER PATRONE: All right. Okay. I want to give my colleagues an opportunity to pick up from where I'm going to leave off.

1614   And so, Mr. Chairman, thank you and thank you very much for your responses to my questions.

1615   THE CHAIRPERSON: Thank you.

1616   Commissioner Lamarre, s'il vous plaît.

1617   CONSEILLÈRE LAMARRE: Merci, Monsieur le Président.

1618   Je vais poser probablement la majorité de mes questions en français, mais soyez bien à l'aise de répondre en français ou en anglais; ce sont les deux seules langues que je parle et que je comprends.

1619   On va parler un petit peu plus de programmation. Dans votre mémoire complémentaire, vous avez détaillé beaucoup le marché de Montréal, le marché ethnique de Montréal. Vous avez expliqué que vous vouliez servir -- et encore dans votre vidéo cet après-midi -- les différentes communautés ethniques, jusqu'à dans 15 langues différentes, mais on n'a pas en main de modèle de grille de programmation qui nous expliquerait dans quelle mesure cette programmation serait disponible, à quel moment de la journée, de la semaine, de la fin de semaine. Est-ce qu'il y aurait des émissions hebdomadaires, journalières ou autres?

1620   Et j'aimerais ça que vous puissiez me donner un petit peu plus de détails à cet égard-là.

1621   M. SAM NOROUZI: Si je ne me trompe pas, on a déjà soumis une grille d'horaire d'une cédule... une portion d'une cédule pour le type de programmation qu'on envisage avoir sur le canal.

1622   CONSEILLÈRE LAMARRE: Attendez que je vérifie comme il faut...

1623   Mais quand même, partez de là et expliquez-moi comment est-ce que vous envisagez la programmation. Par exemple, dans votre demande, vous avez dit que vous êtes prêts à accepter une condition de licence pour quatorze heures de programmation locale par semaine. Par contre, vous n'avez pas précisé si ça serait de la programmation originale ou non. Pouvez-vous nous donner des détails à ce sujet?

1624   M. SAM NOROUZI: Oui, absolument. Ça être de la programmation originale. C'est la raison d'être de notre application.

1625   CONSEILLÈRE LAMARRE: O.K. Donc, ça serait de la programmation originale?

1626   M. SAM NOROUZI: Oui, absolument.

1627   CONSEILLÈRE LAMARRE: Donc, vous n'auriez pas objection à ce qu'au niveau de la condition de licence, on précise que c'est quatorze heures par semaine de programmation originale?

1628   M. SAM NOROUZI: Oui, mais je pense qu'on a spécifié aussi que si on peut faire une moyenne par quart et par mois, pour permettre, si jamais des gens sont en vacances... Vous comprenez que des fois les producteurs, ça leur arrive, même s'ils sont ethniques, de prendre des vacances, alors...

1629   Mais notre but... Je veux juste être clair, je ne suis pas ici pour vous demander une licence pour essayer de faire autre chose que de la programmation ethnique. Mon but premier, c'est vraiment ça. Notre raison d'être, c'est de faire ça.

1630   CONSEILLÈRE LAMARRE: O.K. Maintenant, dites-moi une chose. Dans l'éventualité où on accepterait la proposition de Rogers, c'est-à-dire la transaction, l'achat de CJNT et de faire passer CJNT d'une station ethnique à une station anglophone, il semble y avoir une entente entre vous et Rogers à l'effet que vous pourriez devenir une station affiliée d'Omni, vous pourriez bénéficier d'une partie de la programmation d'Omni. Dans quelle mesure est-ce que ça fait partie de vos plans et jusqu'à quel point vous en dépendriez, de cette programmation-là?

1631   M. SAM NOROUZI: Je veux juste clarifier: il n'y a aucune entente d'affiliation.

1632   CONSEILLÈRE LAMARRE: O.K.

1633   M. SAM NOROUZI: D'accord?

1634   Dans l'éventualité qu'on aurait besoin d'arrondir peut-être une programmation avec la programmation d'Omni, à base nationale, mon premier but c'est de voir...

1635   Premièrement, c'est bien beau que Rogers vous a mentionné ce matin qu'ils allaient nous offrir de la programmation à un taux très favorable. Parfait.

1636   Sauf qu'il faut que j'aie la possibilité de pouvoir rentabiliser ce programme. Il faut que je puisse le vendre, ce programme. Même s'il m'est vendu pour un dollar (à titre d'exemple), si je ne peux pas avoir des commanditaires pour ce programme, ça ne me sert absolument à rien. Alors, comme je vous ai expliqué, notre objectif premier, c'est en premier lieu, d'offrir à tous nos producteurs partenaires la possibilité de faire la programmation locale.

1637   Effectivement, quand nous avons commencé ce processus, il n'y avait pas question de Rogers dans le dossier, fait qu'on s'était pas basé sur la programmation d'Omni qui serait disponible. Alors, on est bien content... on est très heureux que Rogers soit là, maintenant, aujourd'hui. Je pense que ça peut être un grand support pour notre dossier.

1638   Ça va beaucoup nous aider à aller de l'avant avec le support technique et en programmation qu'il pourrait nous donner, mais je veux juste être clair: il n'y a aucune entente d'affiliation. Et si on décide éventuellement d'acquérir de la programmation, ça serait à nous de déterminer à quel moment de la journée qu'on va le diffuser et de quelle façon qu'on va le diffuser.

1639   CONSEILLÈRE LAMARRE: Merci.

1640   C'est bien de travailler avec des dossiers virtuels, mais parfois une feuille de papier c'est beaucoup plus utile. Alors... merci madame Ventura.

1641   Alors, toujours au sujet de la programmation, vous parlez des producteurs partenaires. Dites-moi une chose: comment vous allez faire pour arbitrer, éventuellement, le choix de la grille horaire? Donc, la grille horaire va être la responsabilité de qui, plus particulièrement?

1642   M. SAM NOROUZI: La grille horaire va être la responsabilité d'ici, d'accord? La façon que nous avons mis devant vous cette grille... cette proposition de grille était la suivante: au début avec notre groupe -- on dit en anglais notre « core group »; -- on a offert... on a dit... on a offert la grille tarifaire des heures disponibles et on leur a demandé « Donnez-nous ce que vous voudriez avoir comme temps d'antenne? » D'accord?

1643   Alors, on a pris ces demandes d'achat de temps d'antenne et on s'est dit, bon... Mon premier souci était d'avoir beaucoup « d'overlap » parmi la programmation. Mais je me suis rendu compte qu'il y en avait un certain... mais pas énormément. Et quand il y avait un certain « overlap », on favorisait les plus petites communautés pour leur donner l'accès autant.

1644   Exemple, si une des grandes communautés comme la communauté italienne voulait avoir un bloc d'X heures, mais ça... et qu'un producteur d'une petite communauté voulait avoir une heure dans ce bloc, bien on essaie d'accommoder, parce que notre but, c'est d'avoir le plus de producteurs possible, le plus de voix ethniques possible sur les ondes.

1645   CONSEILLÈRE LAMARRE: En regardant de plus près votre grille horaire, il semble y avoir très peu de cases horaires pour lesquelles la programmation ne vise pas une différente communauté ethnique.

1646   Dans le cas où ça arriverait, où votre grille horaire serait construite de façon à ce qu'il y ait certaines cases horaires pour lesquelles la programmation ne viserait pas la communauté ethnique, auriez-vous objection à ce que le Conseil exige que la programmation à caractère non ethnique soit en français ou préféreriez-vous que ça soit en français ou en anglais comme ça se faisait initialement à CJNT?

1647   M. SAM NOROUZI: Je pense que dans les questions et réponses qu'on avait eues dans la phase... on pense qu'à Montréal la communauté francophone est déjà très bien servie, avec Canal V, TVA... Entre autres, TVA qui a une majorité des parts du marché.

1648   Alors, pour nous, ça ne serait pas idéal -- encore là, si éventuellement on arriverait à un point qu'on verrait des opportunités d'affaires d'avoir de la programmation autre qu'ethnique... c'est pas quelque chose que nous avons envisagé au moment qu'on se parle, mais j'imagine, comme tout autre homme d'affaires, j'aimerais avoir la flexibilité, si dans le futur certaines opportunités se présentaient, on préférerait que ça soit en anglais. Mais encore, j'aimerais juste clarifier qu'on a, pour le moment, aucune intention et aucune... Parce que même si j'étais pour acquérir de la programmation anglophone, j'ai aucune façon de le rentabiliser pour le moment.

1649   COMMISSIONER LAMARRE: O.K.

1650   MR. SAM NOROUZI: Mais juste pour être clair aussi -- je m'excuse -- on va avoir de la programmation en français, mais ça va être de la programmation à caractère ethnique.

1651   CONSEILLÈRE LAMARRE: Oui... oui, je comprends. Oui, oui.

1652   Vous comprendrez que je vous pose des questions parce que de notre côté, il faut qu'on l'envisage du point de vue réglementaire. Par exemple, si on vous impose une condition de licence à l'effet qu'il y ait quatorze heures par semaine de programmation locale originale et qu'il y ait certain pourcentage de programmation ethnique, ça vous laisse une flexibilité. Et dans le cadre de cette flexibilité-là, on va s'assurer qu'il on couvre toutes les possibilités et tous les angles possibles.

1653   Alors, ce sont toutes mes questions, Monsieur le Président. Merci.

1654   Merci beaucoup!

1655   LE PRÉSIDENT: Merci bien!

1656   Je vous passe entre les mains de la conseillère Molnar, maintenant.

1657   Candice?

1658   COMMISSIONER MOLNAR: Good afternoon.

1659   In talking to Commissioner Patrone, you spoke a little bit about your agreement with Channel Zero and I'm not sure that I fully understood your response.

1660   At the time when you made this application there was a different set of circumstances, in that it was a scenario, if I understand, that Channel Zero was applying to turn their ethnic into English and then you made this application for an ethnic at the same time.

1661   MR. SAM NOROUZI: Correct.

1662   COMMISSIONER MOLNAR: And I think I heard something about a non-compete clause and I'm not sure I understand where the non-compete clause came in.

1663   MR. SAM NOROUZI: With the original application with Channel Zero, they put a condition in that if their request to change their licence to an English licence was denied that our request would be removed for an ethnic station, there would be no --

1664   COMMISSIONER MOLNAR: But where was that condition; that's what I'm trying to understand.

1665   I mean, if they make an application to us to change their terms and conditions, where was this condition?

1666   MR. SAM NOROUZI: Jim, do you want to weigh in on this one.

1667   MR. MACDONALD: Thank you, Commissioner Molnar.

1668   Channel Zero -- there were two applications. The Channel Zero application was never actually submitted as it turns out. The ICI application was submitted and it was contingent on the approval of the Channel Zero application to become English, okay.

1669   So, and then the complicating factor, of course, was that --

1670   COMMISSIONER MOLNAR: I'm sorry, I just --

1671   MR. MACDONALD: Sorry.

1672   COMMISSIONER MOLNAR: I'm a little confused and so I'll just stop and get clarification.

1673   It was contingent, you mean when you made the application to us?

1674   MR. MACDONALD: That's correct.

1675   COMMISSIONER MOLNAR: You said, we want approval only if?

1676   MR. MACDONALD: That's correct.

1677   COMMISSIONER MOLNAR: Okay. But I'm reading the application and I don't see that.

1678   MR. MACDONALD: No, because the application was changed after Rogers acquired CJNT -- and subject, of course, to your approval -- and that condition was no longer a precedent.

1679   COMMISSIONER MOLNAR: Okay. So, there was never any condition, there was never any agreement between you and Channel Zero as it regards non-compete?

1680   MR. MACDONALD: Well, I think what's happening is there is perhaps a misunderstanding on the term non-compete.

1681   And if you'll indulge me, I'll just go back a little bit and start over because it's important that this is clear.

1682   Channel Zero had decided that they really needed to try to convert their ethnic licence in Montreal to an English licence and, at the same time, ICI was talking to them about the possibility of fulfilling the ethnic role in Montreal.

1683   Now, Channel Zero asked, or required that if their application was to go English was not approved that any application by ICI would be contingent on that approval. So, in other words, they did not want to end up being denied and have a competitive ethnic service in the market.

1684   Rogers, on the other hand, did not require that and, therefore, the application went forward.

1685   COMMISSIONER MOLNAR: Okay. Fair enough. And so where they required it, they required it of us not of you?

1686   It's okay, it's okay. You never signed an agreement with them?

1687   MR. MACDONALD: Not that I'm -- no.

1688   COMMISSIONER MOLNAR: Okay. So, the other potential area that you may have signed an agreement with Channel Zero, and I'm hopeful you have in this situation, is where you spoke about them providing you financing under the condition that you were not able to acquire financing through your community.

1689   I think, if I understand right, your goal is to acquire financing through your community and your backstop is Channel Zero has offered you a backstop of a million dollars in financing if required.

1690   MR. SAM NOROUZI: That's correct.

1691   COMMISSIONER MOLNAR: Okay. Have you signed an agreement with them that sets out the terms and conditions of that contingency?

1692   MR. SAM NOROUZI: We have not concluded such an agreement as of yet. But we -- if it would please the Commission, when that -- if that agreement would be necessary and when it is concluded, we could submit it to the Commission for approval.

1693   COMMISSIONER MOLNAR: Okay. Let me just put it this way. It is necessary. And, I don't know, when did you put in this application with the Commission? When did you file it?

1694   MR. SAM NOROUZI: I believe, if I'm not mistaken, it was right when the Rogers announced or a little before when Rogers announced their intent to purchase CJNT.

1695   COMMISSIONER MOLNAR: Okay. Assuming it's been some months --

1696   MR. SAM NOROUZI: Yes.

1697   COMMISSIONER MOLNAR: -- in that period, you have not gone further in attempting to acquire your financing or get agreement as it regards this backup financing?

1698   MR. SAM NOROUZI: With regards to Channel Zero, we have not -- we have spoken about it, but as of yet not happened, we have not reached conclusive agreement, we are in discussions.

1699   You have to understand, we are also a very small group and this application has taken a lot -- I understand it's a very important factor. We hope to be able to conclude an agreement shortly and, again, submit it to the CRTC for approval.

1700   COMMISSIONER MOLNAR: Okay. We have, in listening to the application before you, provided Channel Zero with two weeks to undertake to do some work for us and I wonder if the two weeks that we have available, within that two weeks, do you think you can undertake to complete this agreement and file it with us?

1701   MR. SAM NOROUZI: I think that would be possible, yes.

1702   COMMISSIONER MOLNAR: Okay. And just to be clear, I'm going to provide you some of the details that we're interested in. I mean, what we're interested in is having assurance that the financing is available and we're also interested in understanding the potential control that might carry with that million dollars in financing.

1703   So, what we'd like to know is what kind of interest rate would be associated with that, the term related to that, and I assume we're still talking the $1-million; if the amount changes, obviously we'd be interested in that.

1704   MR. SAM NOROUZI: Well, it will still be $1-million.

1705   COMMISSIONER MOLNAR: It's 1-million, yes.

1706   What kind of terms relate to its reimbursement, what kind of rights are granted to Channel Zero as a consequence of that.

1707   I've seen a letter where it's suggested they would have one feet on the board and you folks would have two.

1708   MR. SAM NOROUZI: That's right.

1709   COMMISSIONER MOLNAR: Would have no more than two other directors.

1710   MR. SAM NOROUZI: That's right.

1711   COMMISSIONER MOLNAR: So, whether with that they have any other -- besides this board seat, whether there's any veto rights or other rights associated with that and any other provisions that might affect the control of your undertaking.

1712   MR. SAM NOROUZI: Absolutely, we'll do that.

1713   COMMISSIONER MOLNAR: Okay. And in less than two weeks?

1714   MR. SAM NOROUZI: Yes.

1715   COMMISSIONER MOLNAR: Thank you very much.

1716   I also want to talk a little bit about your projected finances, or financial outcomes here and what you filed as financial projections.

1717   I appreciate everybody said passion is important but, as an accountant, I also think that the numbers are important.

--- Laughter

1718   COMMISSIONER MOLNAR: We love it and we'd love it if it is financially viable.

1719   MR. SAM NOROUZI: Commissioner Molnar, you'd be surprised how far passion goes.

1720   COMMISSIONER MOLNAR: Well, perhaps it could get you an agreement with Channel Zero and now you could convince me that your passion will make this financially viable.

1721   MR. SAM NOROUZI: Absolutely.

1722   COMMISSIONER MOLNAR: And so, that really is my question. When I look at your financial projections, you know, you are from the community, I'm sure you're very well aware of the history of ethnic television.

1723   MR. SAM NOROUZI: Yes.

1724   COMMISSIONER MOLNAR: Its success, lack of success --

1725   MR. SAM NOROUZI: Yes.

1726   COMMISSIONER MOLNAR: -- within your marketplace. You're aware that Rogers essentially said OMNI couldn't make it without special provisions because, you know, the market is such and it's fragmented and, therefore, to be a viable ethnic station for someone like Rogers they need special provisions, and yet I look at your financials and they are very, very optimistic. I would suggest optimistic. Certainly they look very rosy. You are suggesting that you will achieve positive PBITs within two years, significant revenue.

1727   I just want to give you an opportunity to convince me that this is, in fact, achievable.

1728   Knowing the background, knowing that it has not been profitable in the past, knowing that Rogers doesn't believe it is profitable going forward, your levels of profitability are very, very significant and, frankly, quite quick. I mean, by the third year.

1729   So, tell me, why should we believe that this is a viable financial forecast?

1730   MR. SAM NOROUZI: I am actually very glad that you asked that question.

1731   We are absolutely aware of the history, we were involved in it, we have seen what has gone on. So if we were to sit here before you today and say, "Well, yeah, we plan on doing the same thing. We want to do a cross-subsidized model and keep doing the same-old, same-old," then, by definition, that would be the definition of insanity, trying to do the same thing and expecting different results.

1732   But that's not what we are planning to do.

1733   What we are planning to do is to go back to a model that back during the time of TEC worked and generated revenue. The basis of that model working is the producers.

1734   I am not going to have a sales team of one or two, I am going to have a sales team of 18, 20 producers, who individually know their communities and will be able to sell to their communities.

1735   As I mentioned previously, we have -- and this is information that I am getting from my various producers -- we have vendors that are knocking at our door, asking us: When can we advertise on your program?

1736   Just to clarify one other point, a portion of our revenue stream is not contingent -- the station's, ICI's revenue stream is not contingent on selling advertising, because the producers will have the inventory of selling the advertising, and, in turn, purchase airtime to air their programming on ICI.

1737   So that revenue will be coming in regardless.

1738   And, obviously, the producers are not in this just for the fun of it, either. If they have approached us and made commitments, it's because they know that they will be able to sell to their communities. They know that they can make their programs viable.

1739   So, in a sense, we are not doing -- you know, Rogers mentioned that they are asking for special provisions. Yes, because they have the OMNI model. We are not here in front of you proposing the OMNI model, we have a completely different model that we have before you here today, based on our history, going back 25 years, having been involved in communities, having seen what works and what doesn't work.

1740   And at the root of what has not worked is the fact that there is a sense of disconnect that was felt between the communities and their local program, which we fully intend to mend.

1741   I was trying to be very, very conservative when I made these projections, and if you want to look at local airtime sales, they are only based in Years 1 and 2 on a quarter of the available inventory being sold, and that at a very discounted rate.

1742   So I don't think that they are unreasonable or unattainable. In trying to provide these projections, I tried to maximize what our costs would be, and show the bare minimum of what potential revenue could be, in a sense, given the history that CJNT has had in Montreal financially, to show that even though --

1743   Let's say that we don't sell 100 percent of the inventory available. If we sell a quarter of it, we can still be viable.

1744   COMMISSIONER MOLNAR: I understand that it's a different model. Your producers' coop model is a different model.

1745   You said that you projected that a quarter of the airtime was sold. What is the basis for that projection?

1746   Again, I just need some assurance that this is based on some measured logic to get us to these outcomes.

1747   MR. SAM NOROUZI: Right.

1748   COMMISSIONER MOLNAR: And the other one I want to ask about is your programming costs.

1749   MR. SAM NOROUZI: Okay. Obviously, we are not a very large broadcaster that can mandate a private company to do market studies and -- it would be very difficult to do so, anyway, because of the market segment that we are trying to reach.

1750   I can, with complete assurance, tell you that what we based our numbers on, again conservatively, was the feedback that we get from our producer partners of what potential revenues are out there that they can get.

1751   And these people understand -- we have gone forward with this file with complete transparency with our producers. We all understand the risk, we all understand the costs, and everybody is very confident, and the communities are extremely confident and looking forward to this, as a lot of the positive interventions that we received indicate.

1752   MR. MACDONALD: Commissioner Molnar, may I add a couple of comments, because I have kind of some unique history here, in that I was the first Rogers guy that went to CFMT, so I worked with CFMT over those number of years, during the nineties, when the English -- or what we call the OMNI model now -- was really prevalent.

1753   And there is no question, as Malcolm Dunlop said this morning, that that cross-subsidization was absolutely critical. But there is also no question that the fragmentation that has happened -- and you referred to it earlier -- particularly in the English market, has made a significant difference to the effectiveness of that model.

1754   When I was first speaking to Sam and he told me about this, I certainly looked at it with a cockeye, because I also had the opportunity, as the President of WIC Television, to buy CJNT, and in the same belief. Now, we didn't ever operate that, because WIC was purchased by Canwest in the interim.

1755   But I did learn a lot about the difference in the ethnic composition and the way in which ethnic programming worked in Montreal versus Toronto.

1756   So, as I was going through the numbers with Sam, and trying to really get an understanding of where this advertising was coming from -- because, at some point, advertising has to be there. The producers are obviously paying for the programming, so they have to get the advertising. Somewhere along the food chain there has to be the revenue to make it come together.

1757   I had seen that this model had worked at TEC. It wasn't a full-up commercial model at TEC, it was a sponsorship model, as was mentioned earlier, but I started to really believe that this was possible, for those reasons, because the OMNI model could not work here. I really, totally believe that.

1758   When I look at the cross-subsidization of the large groups that are necessary to the small groups, there are not nearly as many, and there are not as many people within each group.

1759   So I just wanted to point that out, because this is much more scaled down, in terms of top-line costs, and the producers -- it really hinges on the producer's ability to generate the advertising within each of their communities, and that is the vulnerability.

1760   I would feel a lot less confident saying that if we weren't talking about producers that had 26 years of experience in those communities.

1761   I hope that is a little bit of help, but I wanted to add it.

1762   COMMISSIONER MOLNAR: I think it confirms that you are all very confident that your producers will be able to secure their advertising. I wish you could give me something to make me confident.

1763   Then, let's look at the other side. Let's assume that the advertising can be achieved at the levels that you have projected. How did you forecast your costs, then?

1764   MR. SAM NOROUZI: Are you referring to programming costs?

1765   COMMISSIONER MOLNAR: Programming is the largest cost, yes.

1766   MR. SAM NOROUZI: Yes. As we explained in our introductory remarks, when CJNT was first licensed, our production company, called Mi-Cam, got a contract to produce some of the content for CJNT, since CJNT did not own their own technical facilities.

1767   Based on our experience in producing programming, and knowing what we charge for certain programming --

1768   Let me just say that we have mastered the tool of efficiency and low-cost production to a T. Just the fact that our production company has stayed in business for all these years -- and we are in a very competitive market in Montreal, where a lot of larger production companies have gone bankrupt -- should be a testament to that.

1769   With full confidence, I can tell you that our programming costs are based on producing programming, an hour program, from as low as $800 to as high as $2,000, for a production, and I am confident that we can do that.

1770   We have been very efficient in doing so.

1771   And one advantage that we also have going forward is, with the advancement of technology, the quality has gone higher, and the cost has gone lower.

1772   I remember, when we first tooled our studios for producing programming for CJNT, we had to buy Betacam SP cameras, which cost us about $60,000 each.

1773   Today I can buy a very high end HD camera, and it is going to cost me $10,000 or $12,000.

1774   So production costs --

1775   COMMISSIONER MOLNAR: So you have measured your production costs how?

1776   MR. SAM NOROUZI: We estimated, historically, what it costs -- what we charge CJNT to produce programming, and that's how we extrapolated these numbers.

1777   COMMISSIONER MOLNAR: Okay. I know that you have a lot of confidence in being able to generate the revenues that you have projected, and you have a lot of confidence that you will be able to contain your costs, based on your history. So assuming that there is not a lot of room to be lowering costs, because you have spoken about how efficient and low-cost you are in your productions, what is your plan if the revenues don't actually occur as you project?

1778   MR. SAM NOROUZI: The plan is this. Since we already own our production facilities, as part of our investment in ICI, as part of the plan going forward, should the revenues not be there, we are simply just going to forgo the production costs of programming until the station is viable.

1779   COMMISSIONER MOLNAR: Could you tell me that again, to make sure I am understanding?

1780   You are going to not be paid for your production costs; is that what you are saying?

1781   MR. SAM NOROUZI: Well, we already own our production facilities so I don't have to outsource another company to produce programming for this station. So if the station is not making money, I'm not going to -- and this is part of our investment in this venture is that we are not going to take money from one entity to put it in the other when it's not necessary. That will be our investment in this. We will assume that cost. Our production company will assume that cost.

1782   COMMISSIONER MOLNAR: And your production company has the financial capacity to assume that cost over an extended period of time?

1783   MR. SAM NOROUZI: I just want to clarify that we are supremely confident that that is not going to be necessary. In the event that it is, we are ready to assume those costs.

1784   COMMISSIONER MOLNAR: Just one more question.

1785   I am hopeful that all your financial projections are dead on and you are going to be profitable in year three. Your contingency, if you are not, is to suck it up in your production company --

1786   MR. SAM NOROUZI: I just want to clarify --

1787   COMMISSIONER MOLNAR: -- you are not looking at a contingency that would see you selling this ethnic broadcasting company to, for example, Rogers?

1788   MR. SAM NOROUZI: Well, let me just clarify one thing. I started in this business, I was 14 years old. My dad came home one day, put a camera on my shoulder and said, "Come on, we have to go out and we have to film a report." Not that I'm advocating hiring 14 year old cameramen, just to be clear. My story is not unique. I have Lisa of the (indiscernible) Montreal that was sitting right here behind me, at 13 years old her father gave her a microphone and said, "Lisa, let's go do an interview."

1789   So we have a track record in ethnic media. We are not off the street here today just to request a licence, oh and if it doesn't work, well, I will sell it to the highest bidder. That's not my goal.

1790   My goal is passionately to make this work, work day and night if necessarily to make this viable.

1791   And I just want to clarify also, when you mentioned production costs, we put some of the production costs in this budget to get a sense of what those costs would be to the Commission, but since the producers are producing their programs a lot of those projection costs are assumed by the producers. So the beauty of this producer co-operative is that we spread out the costs of everything over a number of people instead of having it streamlined on one entity.

1792   And this is why we think this is the essence and the beauty of this model, is it will allow us to be successful because we are spreading out the costs.

1793   COMMISSIONER MOLNAR: I know I promised that was my last question, but just one more.

1794   So because you are spreading out the risks, would you say that the most significant risk would be in the quality of the programming that's provided since those costs are incurred by the various production --

1795   MR. SAM NOROUZI: Absolutely not. Again, I just want to go back.

1796   COMMISSIONER MOLNAR: It's not the quality?

1797   MR. SAM NOROUZI: One thing that I'm adamant about is I will never sacrifice quality of programming.

1798   And again, one of the advantages we have today is that the cost of production equipment has gone down so much that we can produce high quality programming at a lower cost, which was not true 10 or 15 years ago when cameras and professional really high-end broadcasting equipment was out of reach for most people, whereas today it's very feasible to be a produce -- and you see it not only -- don't look at our model, a lot of the high-end broadcasters are using very -- cameras that would be unthinkable in price just a few years ago of them purchasing and producing very high quality material out there right now.

1799   COMMISSIONER MOLNAR: Those are my questions.

1800   THE CHAIRPERSON: Thank you.

1801   The Vice Chair will have some questions for you.

1802   COMMISSIONER PENTEFOUNTAS: Thank you. I won't even tell you what my father had me doing at 14, but -- I don't know, they have a funny sense of child labour laws, these ethnic parents.

1803   Ceci est... vous avez en quelque sorte répondu à ma question. Parce que je pense que vous citez votre père en disant que les compétences ne s'apprennent pas du jour au lendemain. Et j'imagine que vous avez commencé ça très jeune.

1804   Et juste pour être clair, ICI sera géré par vous êtes votre père ou surtout par vous?

1805   M. SAM NOROUZI : En réalité, dans le budget que nous avons soumis dans le cadre d'employés d'ICI, on envisage avoir dix personnes en général.

1806   Et du côté de la gestion qui va être essentiellement mon père et moi, et on va créer des emplois aussi, on va engager du monde pour le support administratif, du côté technique.

1807   CONSEILLER PENTEFOUNTAS : Qui n'implique pas nécessairement les autres participants ou stations, les autres groupes linguistiques qui vont diffuser sur ICI.

1808   M. SAM NOROUZI : Oh! Je veux dire, ça pourrait être... nous sommes une famille, une famille de producteurs.

1809   Alors le premier choix, il y a beaucoup de producteurs parmi nous qui ont des compétences techniques, des compétences administratives. Absolument, ça va être la première place qu'on va regarder.

1810   CONSEILLER PENTEFOUNTAS : J'aimerais votre commentaire sur une idée qui circule que, peut-être le modèle qui a été utilisé est révolu de nos jours.

1811   Il y avait une époque où les communautés, la population immigrante arrivait à Montréal et ailleurs et était très intéressée par ce qui se passait dans leur pays d'origine et dans leur langue natale.

1812   Et qu'il n'y avait pas d'autres sources où ils pouvaient aller la chercher. Alors Tech (ph) était une excellente façon d'aller chercher ça.

1813   Mais de nos jours où d'une façon réglementée ou par voie de contournement, toutes ces communautés-là qui font partie de votre grille horaire, que ce soit les Russes, les Grecs, les Pakistanais... Pakistanaises, pardon, Haïtiennes et autres ont accès à du contenu qui émane directement de leur pays d'origine.

1814   Est-ce qu'il reste de la place pour de la télé ethnoculturelle locale?

1815   M. SAM NOROUZI : La réponse courte, c'est oui. Mais j'aimerais élaborer.

1816   CONSEILLER PENTEFOUNTAS : S'il vous plaît.

1817   M. SAM NOROUZI : Effectivement, il y a beaucoup de sources de programmation, si on peut appeler légales et certaines contournées qui sont disponibles sur le marché présentement.

1818   Mais c'est justement ça. C'est de la programmation qui vient de l'étranger. Ça ne reflète pas la communauté locale. Ça ne reflète... je vais vous dire, à titre d'exemple de moi-même.

1819   Je suis né en Iran. Je suis arrivé au Canada à l'âge de cinq ans.

1820   Et il y a de la programmation iranienne qui est disponible sur satellite à Montréal présentement.

1821   Étant d'origine iranienne, grandit à Montréal, au Québec, au Canada, j'ai une mentalité, une façon de voir les choses différentes d'un Iranien qui a grandi en Iran.

1822   Alors, c'est pas nécessairement cette... moi je vois ça comme des émissions complémentaires. Mais ce n'est pas... ils peuvent pas offrir ce que nous pouvons offrir.

1823   CONSEILLER PENTEFOUNTAS : Vous m'avez pas convaincu qu'il reste un intérêt.

1824   Parce que ce que certaines peuvent noter, c'est que bon, la population d'un certain âge, ils sont comme figés sur la télé issue de leur pays d'origine.

1825   Les plus jeunes comme vous -- je triche, mais je vais m'inclure dans la communauté jeune -- peuvent être plus -- Madame Lamarre, s'il vous plaît! Peuvent être plus engagés dans la culture populaire locale, canadienne ou la culture populaire mondiale issue surtout de nos voisins du Sud.

1826   Alors eux-autres ont moins d'intérêt pour ce qui se passe dans leur communauté.

1827   Et les plus vieux sont vraiment des habitués féroces de ce qui sort de leur pays par voie satellitaire, câble ou autre.

1828   M. SAM NOROUZI : Oui, j'aimerais juste apporter une clarification.

1829   Ce que nous voyons aussi à Montréal, ce que vous dites est peut-être vrai des communautés qui sont plus anciennes à Montréal.

1830   CONSEILLER PENTEFOUNTAS : M'hmm.

1831   M. SAM NOROUZI : Il y a une constante évolution dans le contenu des communautés, dans le mixte des communautés.

1832   Ce qu'on voit dernièrement, si on regarde à Montréal, il commence à y avoir beaucoup, de plus en plus de gens qui arrivent, des premières générations qui arrivent des régions nord-africaines.

1833   CONSEILLER PENTEFOUNTAS : M'hmm.

1834   M. SAM NOROUZI : Il commence à y avoir un mixte d'immigrants qui arrivent, qui étaient différents de ce qui était il y a quelques années.

1835   Alors, à titre d'exemple, ce sont des gens qui, en étant des nouveaux arrivants, vont rechercher ce lien, ce pont qui peut les aider à intégrer à la société locale.

1836   Mais pour répondre à votre question, en ce qui concerne les communautés qui sont plus ancrées, qui sont plus anciennes par exemple les communautés grecques, les communautés italiennes, portugaises. C'est notre défi d'attirer ces jeunes et de les amener dans les...

1837   Je vous dis, j'ai grandi là-dedans. D'accord?

1838   Et mon défi, et le défi de nos producteurs, c'est d'engager ces jeunes, d'être visible dans la communauté, de trouver les points d'intérêt pour les jeunes immigrants, malgré qu'il y en a beaucoup qu'après une certaine... après de nombreuses années qu'ils habitent au Québec, ne se considèrent plus immigrants, se considèrent même intégralement des Québécois et des Québécoises d'origine italienne, grecque et autres.

1839   Mais je vous dis, je vous parle de mon entourage immédiat, si je peux.

1840   Notre défi, ça serait d'engager ces jeunes, de les amener à l'intérieur.

1841   C'est bien sûr que si on fait le même type de programmation qu'il y avait, il y a peut-être 15 ans, uniquement des shows de chaises, que des gens sont assis, qui parlent, discutent de certaines situations politiques dans la mère patrie, ça ne va pas attirer les jeunes à regarder ces émissions-là.

1842   Mon but, c'est la vision dont j'ai parlé avec nos producteurs partenaires. C'est de trouver des moyens d'engager ces jeunes, d'aller faire des reportages, d'être visibles dans la communauté sur des sujets qui vont les intéresser.

1843   Exemple, musique, sport, arts, des choses qui vont amener les jeunes à regarder cette chaîne, vont les impliquer dans cette...

1844   Et en même temps, on trouve que l'aspect positif que ça peut avoir aussi, qu'on trouve dans certaines communautés qui sont plus ancrées, exemple la communauté italienne, il y a beaucoup de nouvelles générations qui commencent à perdre leur langue.

1845   Et vous me corrigerez, c'est vrai aussi pour la communauté grecque.

1846   Mais je peux vous dire, de fait, ma conjointe, elle est Italienne. Et à la maison, avec ses parents, ils parlent en français.

1847   Alors c'est un peu de ramener leur langue, de les habituer à reparler la langue, de conserver la culture aussi en leur offrant des programmations qui sont à leur intérêt, c'est en faisant la programmation qui serait intéressante pour eux de voir.

1848   CONSEILLER PENTEFOUNTAS : Un défi louable. Mais vous avez un défi supplémentaire surtout avec les communautés plus anciennes comme vous dites, parce que -- et nous sommes en grande partie responsables, parce que la programmation dans ces langues-là, de par la télévision canadienne, sont obligées d'offrir de la programmation locale qui va parler des communautés locales.

1849   Est-ce qu'il peut pas aller chercher cette programmation sur ces stations-là?

1850   M. SAM NOROUZI : Pas dans leur langue?

1851   CONSEILLER PENTEFOUNTAS : Dans leur langue? Les Grecs, les Italiens, les autres. Même s'il y a des émissions qui sont issues, et des chaînes qui viennent de leur pays, ils ont l'obligation d'offrir plusieurs heures par semaine du contenu local, des nouvelles et des nouvelles communautaires également.

1852   M. SAM NOROUZI : Je ne pense pas que simplement en offrant des émissions de nouvelles communautaires, ça va être quelque chose qui va attirer nécessairement les jeunes de ces communautés.

1853   Moi, ma vision c'est d'être présent et un participant à la vie communautaire de ces jeunes.

1854   Exemple, s'il y a un tournoi de soccer dans un tournoi de basketball communautaire, d'être présent, d'engager les jeunes à participer, de les montrer à la télé, ça va être des choses qui vont les attirer.

1855   C'est un peu différent que d'avoir de la programmation. Oui, ça parle de leur événement et tout ça, des nouvelles locales. C'est pas ça ma vision.

1856   Ma vision c'est d'être partie intégrale de la communauté, d'être présent dans leurs événements.

1857   CONSEILLER PENTEFOUNTAS : C'est grandement apprécié.

1858   That would have been a great show that we could have filmed, the day when you told your dad you were going to marry an Italian girl. That would have been interesting, but I digress.

1859   Let's talk dollars and cents. I see my Jewish friends in the back there laughing about it. You know Jewish mothers.

1860   Bon, Monsieur Norouzi, listen, I find that the business plan -- and my colleague Commissioner Molnar touched on it with certain depth -- I find the simple $1 million backstop to be lacking. We are going to get into some details, but I don't understand why you don't have any personal skin in the game, to put it bluntly.

1861   MR. SAM NOROUZI: I have a lot of personal skin in the game in terms of it might not be tangible cash right now -- and you may very well be aware getting here before you today is an undertaking in itself and we are putting our production expertise behind this, we are putting our production facilities behind this to make this a viable situation -- a viable venture.

1862   We believe that the $1 million, given our production capabilities, is more than enough to be able to allow us to go forward with this plan.

1863   COMMISSIONER PENTEFOUNTAS: Have you deposited net value statements, as is custom with respect to the owners of broadcasting enterprises?

1864   MR. SAM NOROUZI: No, we have not.

1865   COMMISSIONER PENTEFOUNTAS: Is there a reason why you have not? Mr. MacDonald, go ahead.

1866   MR. MacDONALD: We are not requested to do that.

1867   MR. SAM NOROUZI: We are not requested to do so and I was not aware that I had to do so.

1868   COMMISSIONER PENTEFOUNTAS: If we were to ask that of you, would you be able to provide that in the very short term, Mr. MacDonald?

1869   MR. SAM NOROUZI: I will attempt to do my best to -- you are speaking in terms of the investors --

1870   COMMISSIONER PENTEFOUNTAS: Yes.

1871   MR. SAM NOROUZI: -- and the shareholders --

1872   COMMISSIONER PENTEFOUNTAS: Yes.

1873   MR. SAM NOROUZI: -- of the -- okay.

1874   Well, one clarification also is that we have offered shares also to all of our producers who showed an interest in purchasing shares, however in terms of transparency we did not request them to exchange any money until our licence was approved, just to be completely transparent and not have people give us money beforehand.

1875   COMMISSIONER PENTEFOUNTAS: Let's set the money aside and let's talk about a new value documentation. I think Mr. MacDonald can brief you on what I'm talking about.

1876   MR. SAM NOROUZI: Okay.

1877   COMMISSIONER PENTEFOUNTAS: You don't require any more clarification, Mr. MacDonald? You know where I'm going?

1878   MR. MACDONALD: No, Mr. Vice Chair, I understand.

1879   COMMISSIONER PENTEFOUNTAS: Thank you very much.

1880   Supposing your projections are not fulfilled -- and hopefully that won't be the case and you will be making money from day one, but the experience of the Commission and broadcasting in general is that that's not how it works, where is the back-up plan?

1881   I mean if the $1 million is the backstop and that's the reserve -- c'est le coussin, the little nest egg, where is the operating capital going to come from?

1882   MR. SAM NOROUZI: Well, I haven't said that we are going to make money from day one and our budget shows that.

1883   We are planning and we are optimistic that we will get the necessary financing once the licence -- the backstop is there just as a last resort in case our financing doesn't go through, which we are very confident that we will get the financing, and that $1 million in financing will essentially cover any operational shortfalls in the short term.

1884   COMMISSIONER PENTEFOUNTAS: Monsieur Norouzi, would you have any proof of independent financing as of this day for the ici project?

1885   MR. SAM NOROUZI: As I mentioned, it's difficult for us to have gotten -- we are in negotiations with a few parties, but since we don't have licence yet it was difficult to get --

1886   COMMISSIONER PENTEFOUNTAS: Well, you can make that financing contingent upon having a licence. It's very simple sort of business practice.

1887   MR. SAM NOROUZI: Yes, right. Right. We are in negotiations with a few parties and I can -- as soon as those are completed I could make those available to --

1888   COMMISSIONER PENTEFOUNTAS: You don't think that would have been wise to come to the Commission today with those --

1889   MR. SAM NOROUZI: It would have been --

1890   COMMISSIONER PENTEFOUNTAS: -- with that evidence in hand?

1891   MR. SAM NOROUZI: It would have been wise, unfortunately the process was so that it was not ready at this time and --

1892   COMMISSIONER PENTEFOUNTAS: Would we be in a position, the average person, to denote that there is some kind of hesitation or a coldness towards the project?

1893   MR. SAM NOROUZI: Absolutely not.

1894   COMMISSIONER PENTEFOUNTAS: Otherwise people would be falling over themselves to invest in it.

1895   MR. SAM NOROUZI: First off let me just say that we kept the project at the onset very quiet, only when the project went public did a lot of additional producers come onboard and approach us and show interest. So at this time, where now it is public, we have many more options available to us.

1896   COMMISSIONER PENTEFOUNTAS: But it has been public for quite some time, sir.

1897   MR. SAM NOROUZI: Correct.

1898   COMMISSIONER PENTEFOUNTAS: And we still don't have anything concrete to show the Commission today. I don't see any funding from the shareholders, I don't see a commitment to funding from the shareholders, we don't see anything. We don't see how you are going to get up and running.

1899   MR. SAM NOROUZI: And that's why we have -- and we mentioned, as Commissioner Molnar requested, we will conclude that agreement with Channel Zero and submit it within two weeks, so you have that assurance that --

1900   COMMISSIONER PENTEFOUNTAS: That's $1 million, that's aside.

1901   MR. SAM NOROUZI: That's for operational shortfalls.

1902   COMMISSIONER PENTEFOUNTAS: But there is no funding from ownership towards the launch of the station?

1903   MR. SAM NOROUZI: Well, the funding from ownership, if you look at our investment in it, is the funding for -- and you realize that the biggest cost for a station to launch is its production costs, and we will cover those costs as part of our investment. We have provided office space for this new venture, ici will not have to pay rent, the offices have been furnished.

1904   I realize that it's not cash, but it's certainly value and it's a big expenditure for launch of a new corporation when you have to produce -- buy production equipment, rent office space, buy furniture, these are all stuff that we have provided as part of our investment.

1905   COMMISSIONER PENTEFOUNTAS: I appreciate that. Can you tell us today what percentage of shares will be transferred to producers?

1906   MR. SAM NOROUZI: We offered shares available. The interest that we got back refers to about 5 percent. In the future if other producers would say that we would want to buy additional shares we would make them available.

1907   COMMISSIONER PENTEFOUNTAS: And when did you make this offer, Mr. Norouzi?

1908   MR. SAM NOROUZI: I'm sorry?

1909   COMMISSIONER PENTEFOUNTAS: How long ago did you make this offer to producers?

1910   MR. SAM NOROUZI: We have had meetings with them. We just had the last group of producers that came in was maybe a couple -- three weeks ago.

1911   COMMISSIONER PENTEFOUNTAS: And the first group?

1912   MR. SAM NOROUZI: The first group, the interest that they showed was they would purchase about 5 percent of the company. Now, the next group, you know, they are studying it, they want to see how much -- how many shares that they want. Of course

1913   COMMISSIONER PENTEFOUNTAS: So for that 5 percent do you have a financial commitment to deposit today with the Commission?

1914   MR. SAM NOROUZI: Again, since we did not request that the transaction be done, they have filled out some forms saying how many shares that they want to buy that represents how much money. We could submit that to you, the ones that we have in hand. It's not concrete.

1915   COMMISSIONER PENTEFOUNTAS: What percentage of shares did you put up on the market?

1916   MR. SAM NOROUZI: We just requested our producers to -- we asked them, "How many shares would you want to buy?" and it essentially amounted to about 5 percent, which is shares that are available right now.

1917   COMMISSIONER PENTEFOUNTAS: And how much would you be willing to sell?

1918   MR. SAM NOROUZI: Up to 49 percent. We would keep 51 percent as to keep control.

1919   COMMISSIONER PENTEFOUNTAS: And you have seen an interest for 5 percent?

1920   MR. SAM NOROUZI: So far.

1921   COMMISSIONER PENTEFOUNTAS: With no firm financial commitment towards that 5 percent?

1922   MR. SAM NOROUZI: Well, in terms of financial commitment they have signed agreements in principle to do so.

1923   COMMISSIONER PENTEFOUNTAS: And how would you explain the fact that you would like to sell 49 percent, but you can only get 5 percent interest.

1924   MR. SAM NOROUZI: I didn't say I would like to sell 49 percent, I would say if the request was there I would be willing to consider that and do that.

1925   COMMISSIONER PENTEFOUNTAS: Forty-nine percent is available, is that what you're telling us?

1926   MR. SAM NOROUZI: Actually 44 percent is available because --

1927   COMMISSIONER PENTEFOUNTAS: Forty-four percent is available, okay.

1928   MR. SAM NOROUZI: Forty-four percent because another producer wants --

1929   COMMISSIONER PENTEFOUNTAS: And all you have seen is an interest for 5, with no firm financial commitment towards that 5?

1930   MR. SAM NOROUZI: So far 5 percent, correct. Correct.

1931   But we are not basing our finances on that at all, it's just the reason we offered those shares is so that the producers -- because it's a co-operative they would have a voice and a say in the future of the company.

1932   COMMISSIONER PENTEFOUNTAS: Thank you, sir.

1933   Merci, Monsieur Norouzi.

1934   LE PRÉSIDENT : Je crois que la conseillère Lamarre a quelques questions de suivi.

1935   CONSEILLÈRE LAMARRE : Oui. Merci, Monsieur le Président.

1936   Je veux revenir sur votre grille horaire.

1937   Parmi les émissions que vous prévoyez mettre en onde, est-ce qu'il y en a qui seraient en direct?

1938   M. SAM NOROUZI : Au début non. Mais justement avec l'arrivée de Rogers, les tangles benefits d'un million de dollars qu'ils veulent nous offrir sur cinq ans, ça serait quelque chose qu'on n'aurait pas envisagé, mais qu'on pourrait peut-être faire.

1939   C'est justement sur ces sortes d'extra qu'on voudrait investir avec cet argent pour agrémenter la programmation et la rendre plus accessible à la communauté pour nous aider à avancer plus rapidement et avoir un succès plus rapidement.

1940   Et certainement, vous le savez aussi bien que moi, il y a beaucoup... Montréal est une ville très cosmopolitaine. Il y a énormément de festivités l'été. Beaucoup d'entre ces festivités-là, c'est des festivités dans les communautés ethniques.

1941   Alors exemple, je vous parle -- je vous cite la « Semaine italienne » à Montréal.

1942   Mais j'aimerais beaucoup pouvoir, une ou deux journées, avoir un reporter sur place qui pourrait revenir en direct.

1943   C'est certainement des choses qu'on regarde de pouvoir faire.

1944   CONSEILLÈRE LAMARRE : Et puisque vous lisez dans mes pensées, continuons sur la question des avantages tangibles, si on devait approuver la demande de Rogers, celle qui nous est formulée, outre cette possibilité-là d'ajouter la programmation en direct.

1945   Est-ce qu'il y a d'autres avenues que vous aviez déjà envisagées...

1946   M. SAM NOROUZI : Oui.

1947   CONSEILLÈRE LAMARRE : ... pour l'utilisation de ces fonds-là et comment seraient-ils gérés?

1948   M. SAM NOROUZI : Oui, exactement.

1949   Quand nous avons soumis notre demande, Rogers n'était pas dans l'histoire. Nous ne savions pas qu'on pouvait avoir à ces fonds-là.

1950   Alors nous savons, on n'est pas naïfs. On comprend qu'on a un cheminement devant nous. On a une côte à surmonter, on doit rebâtir le brand, on doit rebâtir l'image de la télévision ethnique à Montréal.

1951   Une des façons qu'on envisageait de faire ça, c'est d'être présents dans les communautés. C'est de faire de plus en plus de reportages.

1952   Mais une des possibilités avec l'argent de Rogers, c'est que ça nous permettre d'en faire plus que ce qu'on envisageait.

1953   Autre chose, peut-être pour les plus petites communautés qui, peut-être, envisageaient, qui n'auraient pas l'infrastructure financière de pouvoir faire beaucoup de reportages à l'extérieur. Peut-être une petite communauté envisageait de faire essentiellement des émissions à partir de studio.

1954   Mais ça, ça va permettre d'agrémenter les plus petites communautés pour pouvoir être aussi visible et aussi avoir une présence dans leur communauté pour voir, exemple, s'ils ont une fête nationale, ou une fête spéciale ou un événement spécial pour pouvoir envoyer une équipe de tournage pour couvrir ces événements-là.

1955   Ça va vraiment nous aider à agrémenter notre capacité de production de pouvoir aller encore, de faire le petit plus qu'on peut peut-être pas se permettre au début, pour nous aider à avoir plus de succès.

1956   CONSEILLÈRE LAMARRE : O.K.

1957   Donc, si je comprends bien, dans l'ensemble de l'infrastructure, les productions que vous avez présentement, il n'y a pas de disponibilité d'équipe de tournage volante extérieure, si je peux utiliser l'expression.

1958   M. SAM NOROUZI : Oui, absolument.

1959   CONSEILLÈRE LAMARRE : Il y en a?

1960   M. SAM NOROUZI : On a des équipes de tournage. On a tout l'équipement nécessaire pour faire des tournages extérieurs.

1961   Mais avec l'argent de Rogers, ça va nous permettre d'en faire beaucoup plus.

1962   CONSEILLÈRE LAMARRE : D'en faire plus.

1963   M. SAM NOROUZI : Ça va nous permettre de faire des événements en direct. Ça va nous permettre d'agrémenter des programmations de communautés plus petites et de faire le petit plus pour ces communautés-là pour qu'eux aussi puissent avoir le succès financier.

1964   CONSEILLÈRE LAMARRE : Donc, pour qu'une communauté, par exemple, qui ne verrait pas l'utilité d'avoir une programmation hebdomadaire, puisse la faire une fois par mois ou une fois par semestre, si les circonstances s'y prêtent.

1965   M. SAM NOROUZI : Absolument.

1966   CONSEILLÈRE LAMARRE : Je vous remercie. Ce sont toutes mes questions, Monsieur le Président.

1967   THE CHAIRPERSON: Thank you.

1968   I might ask a few final questions because the original CTEC licence was given back in '95 and there was a hearing back in May '95 that led to that licensing. I tried to go back on our website at one point to find out if -- because I was at the Commission then, Legal Director, and I can't remember -- I remember it being discussed, but I can't remember if I was the lawyer on the file at the time, but I do recall all the tribulations that followed.

1969   And you can well imagine that the Commission has a duty not to give out recklessly broadcasting licences and you can tell from the questions, particularly on the financing questions, that we need a little bit more comfort.

1970   And you may not be able to do it today, but I think there is a little window, within two weeks -- and I think your consultants, your colleagues can maybe help us -- but, frankly, we need a little bit more assurance that there is a business case.

1971   Now, you are not the first ones to launch a new television service and you can be applauded to have the courage of doing that when a lot of people are saying that over-the-air television has got no future and even much larger organizations than yourselves have lost money in the first year, that's fine. But normally, you know, they have a financing structure that ensures a certain amount of cash flow -- you are business people, you know this, right -- at least at the beginning to get things done.

1972   So I think that's the sort of evidence. Yes, it's contingent on you getting a licence, but at least having a little bit more meat that demonstrates to us that you will have deep enough pockets in a sense to carry your passion, obviously, but to also carry the project until you get going. And fully understand that this is a unique business model, that it is a co-operative-type model where even the way you finance programming is done by your various partners.

1973   So I think we need a little bit more comfort at that level at this stage because, you know, we could have said: Well, in any event, well, give you a licence, you might lose the money but it doesn't affect the system, but we do have potentially $1 million of benefits money that is supposed to benefit the system and if we don't have a comfort that you are going to be able to do something with this, in a sense it's lost to another part of the system.

1974   So that's why I'm trying to get you to -- and I think these are the questions that Commissioner Molnar and Commissioner Pentefountas were trying to get at, we need a little bit more comfort and I think there is a window there for you to get back to us on that to sort of give us that warm fuzzy feeling that, yes, you guys have passion, but you also have a plan, a business plan like good business people would normally have to get this done.

1975   I think that's -- and part of that is, all right, you don't actually have to take the cash right away from potential shareholders, but are they committing today to invest if you get that licence? How will you arrange that $1 million and how it flows into the project and for what purposes, just the financial structure of this project.

1976   I think it's not so much a question as telling you what we would need over the next couple of weeks. I think Mr. MacDonald, who I have known for a number of years, will be able to help you out in that, so his expertise in the broadcasting sector and your expertise as business people and the passion of all the people in the back of the room that are broadcasters and producers as well, want to be as well, could bring that together.

1977   So that's what we are really looking to.

1978   COMMISSIONER PENTEFOUNTAS: Mr. Chairman?

1979   THE CHAIRPERSON: Yes?

1980   COMMISSIONER PENTEFOUNTAS: The net worth, just to add the net worth documentation.

1981   THE CHAIRPERSON: The net worth. The net worth documentation is a means of saying, well, if something goes wrong this is what will carry us through and you have skin in the game.

1982   COMMISSIONER PENTEFOUNTAS: For the production company and the shareholders if possible, Mr. Chairman.

1983   THE CHAIRPERSON: Yes.

1984   MR. SAM NOROUZI: Absolutely.

1985   COMMISSIONER PENTEFOUNTAS: Thank you.

1986   THE CHAIRPERSON: You understand what we are looking for?

1987   MR. SAM NOROUZI: Yes.

1988   THE CHAIRPERSON: Okay. Excellent.

1989   Yes, Commissioner Patrone?

1990   COMMISSIONER PATRONE: Thank you.

1991   My question had to do with synergies with Rogers under your plan. I'm sorry if you discussed this earlier, I don't seem to recall it coming up.

1992   But master control, as you know, that can add a lot to your expenses. Did you have any agreements with Rogers under one of the other scenarios that is before us that could take up -- cover a substantial part of the costs in your undertaking?

1993   MR. SAM NOROUZI: Well, just to be clear, in my initial budget I had budgeted for if we were to set up our own master control.

1994   We have since been discussing with Rogers and they are looking into availability at their lakeshore facility of providing at the onset just to help us get going quicker, providing master control. But we are also looking at other vendors to do that at the onset and we will absolutely go with the better price. So that is something that we are absolutely looking into with Rogers, one, and other vendors as well.

1995   COMMISSIONER PATRONE: Thank you.

1996   THE CHAIRPERSON: In kind contributions of that kind can also be part of your financial structure.

1997   MR. SAM NOROUZI: Yes.

1998   THE CHAIRPERSON: I think that was the hint there, right.

1999   MR. SAM NOROUZI: Yes.

2000   THE CHAIRPERSON: That is a way of showing to us that you will have perhaps less need for cash and that --

2001   MR. SAM NOROUZI: Right.

2002   THE CHAIRPERSON: -- because somebody is supplying that.

2003   MR. SAM NOROUZI: Well, Rogers has indicated that they will.

2004   THE CHAIRPERSON: Okay;. Put that all together and convince us you have a business case to carry this for a few years.

2005   MR. SAM NOROUZI: Very good.

2006   THE CHAIRPERSON: If you lose money in the end, you won't be the first --

2007   MR. SAM NOROUZI: I don't plan to.

2008   THE CHAIRPERSON: -- in the broadcasting business, but at least give us comfort that we wouldn't be recklessly giving out a licence if we did.

2009   MR. SAM NOROUZI: I appreciate that.

2010   THE CHAIRPERSON: Because, you know, we are happy when other people want to make a go of it, but we have to be comforted that there is a business case there that is reasonable.

2011   MR. SAM NOROUZI: Absolutely.

2012   THE CHAIRPERSON: It may be risky, but at least it's reasonable. Okay?

2013   MR. SAM NOROUZI: Thank you, Mr. Chairman.

2014   THE CHAIRPERSON: Normally we would go for reply phase.

2015   Do you want to take a few minutes to regroup or are you ready to go, because we don't have a Phase II. We don't have any intervenors at this point.

2016   Don't feel rushed. If you want to take a few minutes?

REPLY

2017   MR. SAM NOROUZI: Well, it's short and sweet.

2018   We would just like to thank everybody that has intervened in our favour. I would like to thank all of our producer partners that are here today who have supported us and we just want to thank all of your for the opportunity to be here in front of you. Thank you.

2019   THE CHAIRPERSON: Thank you very much for your presence here. I see there is lots of support behind you at the other tables.

2020   Oui, vous aviez quelque chose à ajouter?

2021   M. NGAKA : Excusez-moi. J'avais juste une dernière question si vous permettez.

2022   LE PRÉSIDENT : Oui, je vous en prie.

2023   M. NGAKA : D'après ce que j'ai compris, si nous répondons aux critères que vous venez de mentionner, à certains éléments qui manquaient, si je comprends bien ça veut dire que vous nous accordez cette licence?

--- Laughter

2024   LE PRÉSIDENT : Une bonne tentative! Mais normalement, aux audiences du CRTC, c'est nous qui posons ce genre de questions. Donc, ce que je vous propose, c'est que vous devez compléter votre dossier.

2025   On vous indique qu'il y a peut-être une faiblesse à solidifier dans le dossier sur cet élément-là.

2026   Nous considérerons vos commentaires et par la suite, la Loi nous oblige de consulter nos collègues. Donc, il y a une certaine procédure.

2027   Mais je vous encourage fortement de solidifier votre demande, puis vous avez une fenêtre de deux semaines pour le faire.

2028   M. NGAKA : Merci.

2029   LE PRÉSIDENT : Ça va?

2030   M. NGAKA : Merci.

2031   LE PRÉSIDENT : Est-ce qu'il y a des questions des conseillers juridiques? Non, ça va?

2032   D'accord.

2033   Alors je vous remercie pour la présentation.

2034   M. SAM NOROUZI : Monsieur le Président, merci.

2035   LE PRÉSIDENT : Et bon retour à Montréal.

2036   Alors nous ajournons pour la journée. On reprend à...

2037   LA SECRÉTAIRE: Midi demain.

2038   LE PRÉSIDENT : À midi demain pour la prochaine...

2039   Midi?

2040   LA SECRÉTAIRE: Oui, qui est la demande par CHNZ-FM Radio limited.

2041   LE PRÉSIDENT : D'accord. Alors à midi demain. Merci bien.

--- Whereupon the hearing adjourned at 1659, to resume on Thursday, November 8, 2012 at 1200

REPORTERS

Jean Desaulniers

Monique Mahoney

Karen Paré

Sue Villeneuve

Date modified:

2012-11-07