TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
APPLICATIONS FOR TRANSFER SUBMITTED BY
CANWEST GLOBAL / CORUS / SHAW
DEMANDES DE TRANSFERT DE LA PART DE
CANWEST GLOBAL / CORUS / SHAW
HELD AT: TENUE À:
Plaza 500 Hotel Hôtel Plaza 500
Ballroom Salle de bal
500 - 12th Avenue West 500, 12e avenue ouest
British Columbia (Colombie-Britannique)
25 April 2000 Le 25 avril 2000
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and staff attending the public hearings, and the Table of
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Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Public Hearing / Audience publique
Applications for transfer submitted by
CanWest Global / Corus / Shaw
Demandes de transfert de la part de
CanWest Global / Corus / Shaw
BEFORE / DEVANT:
Françoise Bertrand Chairperson / Présidente
Chairperson of the
Commission /Présidente du Conseil
Andrée Wylie Commissioner / Conseillère
Joan Pennefather Commissioner / Conseillère
Cindy Grauer Commissioner / Conseillère
David Colville Conseiller / Commissioner
ALSO PRESENT / AUSSI PRÉSENTS:
Marguerite Vogel Secretary / Secrétaire
Karen Moore Legal Counsel /
Robert Ramsay Hearing Manager / Gérant de
HELD AT: TENUE À:
Plaza 500 Hotel Hôtel Plaza 500
Ballroom Salle de bal
500 - 12th Avenue West 500, 12e avenue ouest
British Columbia (Colombie-Britannique)
25 April 2000 Le 25 avril 2000
TABLE OF CONTENTS / TABLE DES MATIÈRES
PRESENTATION BY / PRÉSENTATION PAR
CanWest Global Communications Corp. 9
Corus Entertainment 302
Vancouver, B.C. / Vancouver (C.-B.)
--- Upon commencing on Tuesday, April 25, 2000
at 0856 / L'audience commence le mardi
25 avril 2000 à 0856
1 CHAIRPERSON OF THE COMMISSION: We will begin. Bonjour. We will start.
2 Good morning. I'm very pleased to be here at last, shall I say. We have been waiting for this hearing for a long time.
3 Welcome to the Canadian Radio-Television and Telecommunications Commission public hearing to consider an application by three corporations -- namely, CanWest Global Communications Corporation, Corus Entertainment Inc., and Shaw Communications Incorporated -- for the ownership of various broadcasting undertakings of WIC, Western International Communications Limited.
4 Je suis Françoise Bertrand, Présidente du CRTC. Je présiderai cette audience.
5 I would like now to introduce to you my colleagues who will form the Panel with me.
6 On my right is Andrée Wylie, Vice-Chair, Broadcasting; on her right is Cindy Grauer, Regional Commissioner of British Columbia; on my left, David Colville, Vice-Chair, Telecommunications; and on his left, Joan Pennefather.
7 The CRTC staff assisting us at this hearing are: Robert Ramsay, Hearing Manager; Karen Moore, Legal Counsel; and, Marguerite Vogel, Hearing Secretary.
8 Also present from the Broadcasting Directorate are: Jean-Pierre Blais, Executive Director, Broadcasting; Neil Ketchum, Director, English and French Language Radio and Television; and, Lyne Renaud, Senior Corporate Officer.
9 Please feel free to approach them with any procedural questions you might have.
10 As you are no doubt aware, the proposed transactions are important and will have many consequences. Many have said, rightly so, that if accepted they would change significantly the Canadian broadcasting landscape. In summary, here is a quick description of the applications that we have before us.
11 CanWest has applied to gain control of WIC's conventional television broadcasting undertakings, WIC's interest in ROBTv and WIC's remaining VOD asset.
12 Corus has applied to acquire control of all of WIC's radio broadcasting undertakings. Corus has also applied to acquire control of some of WIC's pay and specialty television undertakings, WIC's interest in the Family Channel Inc., and control of one of WIC's video-on-demand undertakings.
13 Shaw has applied to acquire control of Cancom Canadian Satellite Communications Inc.
14 In light of the scope and complexity of the proposed deal, and the extent of the involvement of these companies in the Canadian broadcasting industry, this Panel would like to explore with the parties and the intervenors the impact and the benefits that the proposed deal might have on the broadcasting industry and on the choices available to Canadian consumers of radio and television and also the value, the contribution and the enhancement it represents for the companies that are applying.
15 In looking at these applications, the Commission will also consider whether the proposed transactions will be of benefit from a programming perspective to the markets in question, cette à dire, the Canadian viewer, as well as to the broadcasting system as a whole.
16 With these and other concerns in mind, this Panel would like to address a number of issues including:
17 The level of concentration and consolidation of ownership and whether and how this could benefit the broadcasting system as a whole.
18 The multiple ownerships that could result from the transactions, particularly in Vancouver, Victoria and Ontario, and the market dominance that could result for some of the parties.
19 The diversity of voices in the radio sector resulting from this transaction, both overall and in specific markets such as Calgary, Edmonton and southern Ontario.
20 And issues relating to vertical integration as Corus is affiliated with Shaw, a distributor and a television producer, and is involved in the pay and specialty sector. On this point I note that the Commission specifically requests Shaw to be available during the Corus phase of the hearing to discuss issues that are relevant to Shaw's role as a distributor.
21 Comme je l'ai déja mentionné, cette transaction est complexe et suscite beaucoup d'intérêt. Indeed, the Commission has received more than 1,000 interventions among which 30 of those intervenors will appear at the hearing during the next few days. In order to provide us with a clearer understanding of the proposed transaction and to make sure we get through all the material and presentations in the time allotted, this hearing will be organized as follows:
22 First, we will hear the presentation from CanWest. The Panel will then question CanWest.
23 After the questioning of CanWest is completed, we will then hear from and question Corus.
24 Following Corus, Shaw will then make their presentation and be questioned in turn.
25 Once the presentation and question sessions have been completed for all three, we will then hear the interventions in the same order.
26 First, we will hear all interventions regarding CanWest. CanWest will then give its reply to the interventions.
27 Following the interventions for CanWest, we will hear the interventions regarding Corus, the Corus reply and then, in turn, the interventions relating to Shaw and the Shaw reply.
28 After we have heard all the presentations, we will then begin this process of considering all the information in order to come to a decision. We expect to issue a decision on this transaction this summer.
29 I will now ask Marguerite Vogel, Hearing Secretary, to explain the procedures to be followed during this hearing. To all, I wish you a very good hearing, which I'm sure will be an interesting one.
30 Thank you.
31 MS VOGEL: Thank you, Madam Chairperson.
32 Just a note that the applicants will have a maximum of 20 minutes to make their presentation to the Commission and that includes any video/audio presentation aids. Intervenors will have 10 minutes in which to address the Commission.
33 Now some general administration. The public files associated with this hearing are available in the public examination room, which is Granville B, down the hall and to your left. However, the applications that are being addressed by the Commission in the hearing room will not be available in the public examination room as they will be in this room instead. But any of the other files are open for viewing by the public.
34 Transcripts are being taken of this hearing. It is a verbatim transcript. Should you have any questions about getting copies of the transcript or parts of it, please talk to our court reporter who is sitting to my left. Thanks.
35 We will be pleased to take telephone messages for people concerned with this hearing. Our phone number in the public examination room is of course area code (604) 666-6136. And if you want to have messages left, please do so. Commission staff will be pleased to post them outside the room as they come in.
36 And I believe that completes the administrative details.
37 Madam Chairperson, with your leave, we will call the first applicant, which is CanWest Global. CanWest Global has several applications pertaining to matters described in Public Hearing 2000-1, Notice of Public Hearing.
38 I would ask you to start when you are ready.
39 CHAIRPERSON OF THE COMMISSION: Before you start -- good morning -- maybe we could ask you, because there has been many questions and that could save a lot of time during the hearing, if we could have an update of the situation of the transaction as we speak and then we can go into the presentation.
40 I believe you have been informed of that request from the Commission.
41 MR. ASPER: Madam Chair, I will ask Glenn O'Farrell to respond to that.
42 MR. O'FARRELL: Good morning, Commission.
43 In effect, we have filed with the Commission a narrative describing the transactions that were executed and completed in accordance with the master agreement, and we are happy to advise you that all transactions have been executed as contemplated by the master agreement.
44 With regards to ROBTv, WIC Television has purchased the Cancom interest and we will be in discussion with the Commission to have that interest placed in trust, the current trust that is approved by the Commission, subject to a discussion as to whether or not an amendment is necessary.
45 Lastly, CTEQ. The Board of Directors of CTEQ assigned the company into bankruptcy on April the 11th.
46 MS MOORE: If I could just confirm that you will be in a position to copy the appearing intervenors with the document as well.
47 MR. O'FARRELL: Yes.
48 PRÉSIDENTE DU CONSEIL: Alors, à vous.
PRÉSENTATION / PRESENTATION
49 M. ASPER: Bonjour madame la présidente, membres du Conseil, membres du personnel. Mon nom est Leonard Asper. Il me fait plaisir du comparaître devant vous en ma capacité de président et chef de la direction du CanWest Global Communications Corp.
50 While our new President of Global Television Network, Kevin Shea, to my immediate right, will introduce our panel, I want to acknowledge some very important people that are with us in the audience today.
51 By the way, if you think this took you a long time, if you think you were waiting a long time for this, I have had two children since this transaction started, so --
--- Laughter / Rires
52 MR. ASPER: And they are both out of diapers.
53 But first and foremost, I want to acknowledge my father Israel Asper, the company's founder and the Executive Chairman, who is with us today.
54 Also here is my brother, David Asper, a Member of the Board of CanWest and a Member of the Executive Committee of the Board.
55 Peter Viner is here, the Vice-Chairman and former chief executive officer of CanWest, as well as Jim Sward, the Head of our Canadian Operations for the past seven years.
56 I want to personally and publicly thank Jim as well as Loren Mawhinney for what they did in putting Global on the map of Canadian programming over the last seven years, because in those seven years we won more Gemini awards and had more Gemini nominations for excellence in Canadian programming than Global did over the past 20 years -- or the preceding 20 years before Jim came to the helm of Global. So I want to thank him for that, for bringing us to this point where we are ready to ascend to the national stage.
57 Finally, I would like to welcome Gerry Noble, a Canadian who is coming home after a collective seven years in the South Pacific looking after CanWest operations in that region. Last week Gerry was named the new President and CEO of Global Communications, which is the company in which all of CanWest media operations in Canada reside.
58 I wish to point out that I'm also here on behalf of and as a representative of my family, the controlling shareholders of CanWest, which in turn controls the licensees that are part of this application.
59 We come before you today with an exciting plan. The transaction before you is one of the largest and most significant in the history of our industry. It represents the culmination of more than 25 years of building a company brick by brick and bringing it to the point where it is now ready to ascend to the national stage, and to be in a position to meet the severe threats and challenges that face our industry, including specifically the challenges of maintaining and increasing not only the presence but the prominence of Canadian programming and Canadian stories in our homes.
60 This transaction began in concept more than eight years ago and took many twists and turns -- as you all know -- took steps backward and forward, and it sank and rose phoenix-like many times over the years. As the final act unfolds, let me say that we have appreciated the Commission's patience with all the parties involved as we tried to and finally did sort out the complexities.
61 But the tragedy of this transaction is that when it began in earnest it was a daring, leading-edge idea that was ahead of its time. The length of time it has taken to reach this point has diminished that and now the circumstances are completely different.
62 As a result, if we were here before you today four years or even two years ago, the questions that the Commission would be asking would be very different than they are today. There was no Internet to speak of when this began, no digital cable. There was no satellite. There was not even a third tier of specialty channels. Moreover, there was certainly no possibility of the potential addition of 450 new Canadian specialty channels, and not to mention the certain addition of U.S. channels to the Canadian cable systems and satellite systems which will accompany the new Canadian channels.
63 In addition, during the last year media mergers, both within and outside of Canada, have now clearly become events that affect Canadians directly. Each of the following transactions, AOL Time Warner, CBC/Viacom, Pearson/CLT in Europe, Carlton United News in the United Kingdom, and even "@home", the Rogers giant that includes ATT and Microsoft and their proposed acquisition of Vidéotron, and, finally, Bell Canada's acquisition of CTV, which will be before you for approval in the coming months -- none of these transactions can be ignored in considering the applications before you today.
64 We are believers that it is possible to make our Canadian broadcasting system stronger and in order to face the realities of international consolidation trends approval of our application will do that.
65 But the benefit of the long gestation period of this application, after all of that has been said, is that the extent to which the landscape is being redefined is now becoming clearer and, as a result, CanWest is now able to put before you a comprehensive proposal that is without a doubt in our minds a home run for the Canadian broadcasting system.
66 The conventional television industry is becoming and will continue to be radically revolutionalized by both globalization and technological innovation. Yet we are the foundation for quality Canadian programming and we want to remain so. To accomplish this we must collectively recognize, though, that the 20th century rule book for regulating the television and broadcasting industry needs to be reformed as we look at things through new, old, innovative and visionary eyes that see across the 21st century. We believe this application offers you that opportunity.
67 So the only questions before you are: Should CanWest be strengthened to meet the challenges brought about by fragmentation and the consolidated positions of our domestic competitors and the disappearing borders with the resultant power that foreign companies can exert in Canada without contributing to the Canadian broadcasting system? Should we be allowed to own more television stations in Canada? Should we be allowed to converge as others are converging around us?
68 We believe that the answer to these questions, each and every one of them, is a definitive yes. There are six principal reasons, Commissioners.
69 Number one, the CanWest application is the best possible in the circumstances. Indeed it is the only one possible. No one else stepped forward to solve the WIC situation.
70 Number two, the application is good for all components of the industry as well as the broadcast system as a whole.
71 Number three, we are willing to accept safeguards to create winning conditions for everybody should the CRTC find that necessary.
72 Number four, CanWest's unblemished record and history of good corporate and industry citizenship is such that our commitments are credible, reliable and certain to be delivered upon.
73 Number five, denial of all or part of this application will be harmful to the communities served by the licensees involved who would not benefit from CanWest's ownership and who will once again be thrust into the uncertainties as to their ownership for yet another extended period of time.
74 Finally, number six, Canada needs strong media companies who can invest in Canadian programming and, in order to do so, companies like CanWest need more platforms across which to amortize the cost of that programming and to promote Canadian programming.
75 Therefore, let me be clear that we support growth for all companies in our industry, not just ours, provided that such growth does not at the same time weaken other companies who are essentially the broadcast system. We submit that this application meets that standard in all respects.
76 Commissioners, this transaction is good not only for CanWest, it is good for Canadians and good for the broadcast system.
77 I would now like to turn the microphone over to Kevin Shea to introduce our panel and elaborate upon my comments.
78 MR. SHEA: Madam Chairperson, Members of the Commission, with us today in the front row from the left are: Katie Fullerton, from CanVideo Sales; as well as Glenn O'Farrell, our Legal Counsel; and, Loren Mawhinney, representing the Global Television Network.
79 In the row behind me, from the left, are: Katherine Browne, who is our Financial Analyst for the Global Television Network; Art Reitmeyer, representing WIC; as well as Ken MacDonald, our Vice-President of News; and, Charlotte Bell, Regulatory Affairs, representing the Global Television Network.
80 At the side table, representing our panel of experts, from the left are: Doug Hoover, our Vice-President of Programming; Jack Tomik, our Vice-President of Sales and Marketing; as well as Jim Rusnak, who is the President of our Western Operations. Also is: Ken Goldstein, President of Communications Management; and Craig Gibson, Senior Vice-President and Director for KPMG. And during your questions, these are the real experts that we may call upon.
81 This proposal is all about bringing solutions to the Canadian Broadcasting system. First and foremost, this transaction will bring ownership stability to the WIC stations by providing a vision for the future and clear strategic and programming plans.
82 The strong leadership of CanWest's management team will restore certainty for WIC employees and, more importantly, their communities. After many years of being a relative bystander, CHCH will re-emerge as a strong contributor to the Canadian broadcasting system.
83 We believe that our Canadian system can only be strengthened and improved by financially strong players. We are making a substantial commitment to strengthen the Canadian conventional broadcast sector, both through the completion of the Global Television Network and by revitalizing local stations in other markets to create strong, relevant, independent stations.
84 Glenn O'Farrell.
85 MR. O'FARRELL: Through this application we are seeking approval with respect to four complementary initiatives:
86 Number one, completion of the Global Television Network's national system through our acquisition of WIC's television stations in Calgary, Edmonton and Lethbridge.
87 Number two, continuation of a strong, viable television service in Vancouver/Victoria by bringing CHAN into the Global television network and revitalizing CHEK-TV into a distinctively local television service.
88 Third, revitalization of a strong, distinctive regional voice from the Hamilton market through the acquisition of CHCH-TV Hamilton.
89 And, number four, continuing to provide CBC service in Red Deer and Kelowna.
--- Short pause / Courte pause
90 MR. SHEA: I'm sorry.
91 In our response to interventions, we offered a series of safeguards and a code of conduct that we believed addressed the key competitive and policy issues they raised, but these parties are here still objecting. We indicated that if the Commission felt it was necessary we would be prepared to discuss our offering relating to safeguards.
92 Among the key safeguards are a clear commitment on the eight hours of priority programming, a series of reports to the CRTC on our conduct and certain commitments to the industry at large. We submit that this application is the best available under the circumstances, consistent with the Commission's policy related to the transactions of this nature.
93 In fact, the benefit package proposed in the context of this application far exceeds the Commission's policy in this regard. We have proposed a package of clear, unequivocal and tangible benefits valued at $84.2 million or 12.16 of the value of this transaction. In other words, we have exceeded the benchmark set by the Commission by more than 20 per cent. As a result, the communities in question, the broadcasting systems as a whole, and indeed the public interest would be well served by approval of this application.
94 The approach that we have taken in building our benefits proposal falls into five broad categories. Together they are designed to address our overall strategy for building audiences to Canadian programming and creating an incubation opportunity for new programming concepts for local television in Hamilton and Victoria.
96 MS MAWHINNEY: Thanks, Kevin.
97 The whole philosophical thrust to our benefits package is to build more and better Canadian content and to ensure that this content reaches more Canadian viewers. In an environment characterized by the multiplicity of channels, content remains key. Producers continually advocate that they need more shelf space and incremental financing sources in order to create competitive and marketable programs. Our proposal directly addresses this issue by creating a number of new funds and opportunities for the creation of new Canadian content. In fact, more than one third of our benefits package of $84 million has been set aside to create new production opportunities for Canada's vibrant, independent production sector.
98 For some time we have heard that western producers need dedicated production dollars. We have addressed this issue head on with the creation of the $23 million Western Independent Production Fund that will be available exclusively to producers west of the Ontario border. In addition, we have set aside more than $3 million for new productions in the areas of health, aboriginal programming, and new joint CBC initiatives.
99 While the Commission's new television policy has ensured that a significant portion of our Prime Time schedules will be devoted to Canadian programming, we wanted to address the need for increasing audience to Canadian programs. If we are to remain strong and relevant in the face of fierce and increasing competition for viewership, then we must find innovative ways of increasing viewing to our Canadian schedules. This is why we have set aside $8 million to create a series of initiatives to do just that.
100 These range from dollars dedicated to produce vignettes on successful and entrepreneurial Canadians to promotions to help build our star system to a special $5 million fund that will be administered by the CTF and dedicated solely to fund third-party promotion of Canadian programs appearing on all domestic broadcasting schedules.
101 We have also set aside $1 million to help small and medium-sized producers market their products internationally.
102 Further, we have sought to benefit the public in our new communities in other ways.
104 MR. MacDONALD: Thank you, Loren.
105 One of the fundamental components of our proposal is to restore local service to CHCH-TV in Hamilton and CHEK-TV in Victoria. In the face of increased competition, and in the case of CHCH-TV continuous ownership uncertainty and instability, these stations have all but lost their local focus.
106 Now, throughout this process we have had numerous discussions with residents and key decisionmakers in these communities. The one resounding plea we have heard loud and clear in both markets is that residents want local service restored. In short, they want to see themselves reflected on their home town television station.
107 Through significant investments and new local programming initiatives, CanWest has pledged to give these stations back to these communities and provide service and leadership to viewers in both Hamilton and Victoria. Our resolve is clear. We have made commitments of more than $18 million in the creation of new local programming for Hamilton, Victoria and Kelowna, in addition to more than $2 million in grants and endowments to key local arts groups in B.C., Alberta and Hamilton.
108 We have also put forward a $10 million plan to produce an early evening national newscast originating from Vancouver and a weekend national public affairs program originating from Alberta.
109 Now, both of these initiatives will bring to the entire Global Television Network a comprehensive news and public affairs component with a strong western-based editorial presence providing a true alternative to viewers across Canada, another national voice.
110 MS BELL: Thank you, Ken.
111 As the Commission knows, the growth of Canadian film, television and new media industries has exploded in the last few years. As the media sector continues to grow rapidly, we need, more than ever, qualified young people with the necessary training and skills to meet the demands of these new employment opportunities. This is why we have established a series of academic chairs, research grants and scholarships in Canadian colleges and universities, as well as a number of grants to key industry training centres such as the NSI, the Canadian Film Centre, the Film Circuit and Media Awareness. Together, these initiatives represent investments of more than $7 million.
112 Finally, we believe that the only way to ensure that a country retains its cultural diversity and voice is by investing in national associations whose work is dedicated to that end. This is why we have made a number of significant contributions of more than $3 million to Canada's key national and regional cultural associations. These include the prestigious Banff Television Festival, Concerned Children's Advertisers, and Canadian Women in Communications.
113 With respect to our support for the National Reading Service for the Blind, NBRS, they have approached us with a request to advance the promised $500,000 in its entirety upon approval of our application given their current severe financial situation. Today we are prepared to make that commitment.
114 MR. REITMEYER: Good morning, Madam Chairperson and Members of the Commission. As you are aware, I am the President and CEO of WIC Television Limited. I have been with the WIC group for a number of years and prior to that worked at CanWest.
115 I do not wish to dwell on the past number of years other than to say that for the employees of WIC it has been a period of uncertainty and insecurity. It is our view that the CanWest proposal will change this and bring to our group of stations and management a future of prosperity, hope and certainty.
116 The plans that have been built by CanWest in their application call for an exciting number of initiatives that include direct participation in network programming and real commitments to local revitalization in Hamilton and Victoria. Our stations, our staff and our viewers cannot afford any more uncertainty and we hope for a speedy and positive decision emanating from our discussions this week. They are highly supportive of this transaction and are anxious to join the CanWest team. Another term of uncertainty would be devastating to them personally and to the communities they serve.
117 MR. ASPER: We would like to now draw your attention to a short video presentation.
--- Video presentation / Présentation vidéo
118 MR. ASPER: I'm certain you might have one or two questions. We will now be prepared to answer those.
119 Thank you for your attention.
120 CHAIRPERSON OF THE COMMISSION: Thank you very much for the presentation.
121 I will have the pleasure of starting. I will be asking questions concerning how the world has evolved. You said that if it had been two years ago it would have been a very different question, so we will see what kind of questions you would have seen fit then and that you see more fit today.
122 Then we will talk about, more specifically, the strategy of Global: Where do you see, in this world that is evolving, being capable of drawing on the transactions that you are proposing here?
123 I will then focus my attention on the dual ownership issue, mainly talking about the situation of course of Victoria and Hamilton but also trying to understand how it fits with your national strategy itself.
124 Then I will turn to my colleagues for help. Mrs. Wylie will be talking with you about the national scene in terms of programming and profile, as well as the individual markets. Then Commissioner Grauer will talk about the benefits, the intangible and the tangible ones.
125 Our colleague, Karen Moore, the legal counsel, will, in the case we would need to, go for an hypothesis of a divestiture, what would be the dimensions there. She will cover that with you.
126 So this is the plan of the questioning. I will start. Probably we will then break and then come back with the rest of the questioning.
127 So let's start slowly with the world that evolved so rapidly. I would like to get your understanding.
128 You know, not so long ago we were doing the third national network. We went for the TV Policy, where we felt that the world had changed. I often say when I do now the preparation for the new Strategic Plan at the Commission that we didn't wait for the AOL transaction to tell us that the world was changing. I think the third Network Hearing was a sign of that, the TV Policy, and also of course the New Media Policy. So those are certainly elements for you that are significant.
129 Can you tell us what you see so dramatically different from the last two years and where do you see -- how many groups do you see? You tend to be a preacher of bigger, better. You know, how many bigger do you see in Canada? And can you describe, if you were take us by the hand, what kind of world would you see in the next three years in the broadcasting scene, of course, for Canada?
130 MR. ASPER: Well, starting with your first question, what's different, I think you are right in saying that AOL Time Warner wasn't -- it may be a watershed but it was preceded by several ripples that became waves that finally became the megadeals of AOL Time Warner and CBC and Viacom and others that I have mentioned.
131 Over the last three years media companies have been doing several things. They have been -- number one, any company that was in the exhibition business, the business of owning a channel or two, has been seeking to have as many exhibition platforms as they possibly can over the electronic medium, the television spectrum. They have also been building other, what I would call, horizontally integrated enterprises, enterprises that include not only television, whether it's conventional or specialty, but radio, print, magazines, possibly outdoor advertising.
132 At the same time these companies, particularly companies in the United States, have been -- that would be what I would call horizontally integrating, but they have also been vertically integrating, which is producing and owning and exploiting the rights to their own content, and using those exhibition platforms to exploit that content and promote the content that they own.
133 This really didn't start to accelerate until the capacity on the distribution systems was able to accommodate it.
134 For years there have been some television and radio co-ownership, particularly in the United States, but it really hasn't gotten to the pace where it is today until the cable systems and the distribution systems, and, in some sense, not yet, but to a small extent -- but to a much larger and growing extent, the Internet showed up. The Internet allows an unlimited number of exhibition platforms, if that's what you went with. That's what we call them.
135 So companies are now saying, "Gee, we used to own 50 per cent of the market. We were one of two channels. We used to own 33 per cent of the market. We were one of three channels. Now we are one of 70 channels." And what most companies are trying to do and have done in the past -- the larger companies and the survivors in the last three years -- is to reaggregate those audiences they have lost, the fragmentation, and try to group it back and try to have some remote proximity to the kind of share they used to have before.
136 So turning to Canada, I think there will be about five to ten major media groups in Canada who will have all of these components. And I haven't come to distribution yet, the pipelines, because there are content companies in this world and there are pipeline companies. There are people who deliver the content over some sort of infrastructure, whether it be wireless, cable, satellite, telephony. Those companies; the second part of convergence. There's the convergence of all the different exhibition platforms or advertising platforms and then there's the second part of convergence, which is the joining of those with the distribution. That's where convergence becomes, in our view, potentially something of serious concern because there's the issue of is the distributor controlling what goes into people's homes.
137 We are not in that game yet. CanWest is a content company. We are not a pipeline company. As there become other mergers and alliances and joining of distribution pipeline companies with content companies, CanWest too will have to seek strategic partners and alliances. And I think you will see in the next few years all of the content players joining together and joining with pipeline players, just as, you know, Bell Canada has sought to do with CTV, just as in Europe the largest cable operator in Europe has bought an 11-country network of stations. It's happening all over the world.
138 In Canada, as I say, there will probably be five to ten major companies. There will be an underlayer of several start-up and new and growing companies that will be fostered by these companies, because these larger companies can't possibly do everything in-house. They can't create this walled garden that is an island unto itself. They have to always go outside for -- they have to outsource, whether it's facilities; they have to outsource programming. They may have to outsource sales and marketing. So there will be a second layer of a whole bunch of new companies or companies that exist today that will grow with the growth of the five to ten major companies.
139 CanWest's view is to be -- CanWest's strategy is to be one of those five to ten companies but to also be able to draw on the resources of those other companies that exist, that produce the content that we are going to need for the various platforms we seek to own.
140 I'm not sure what your third question was. Something in regard to three years from now, is that -- are you saying: What does CanWest look like three years from now?
141 Well, it's very simple. We want to be -- we focus more on what I call the horizontal integration side than the vertical integration side for the reasons I have said earlier.
142 I think our strongest position and the position we intend to go to is being a company that has a very large number of exhibition outlets. When I say "exhibition outlets", I mean Global television, I mean Prime TV, I mean medbroadcast.com, which is a health Web site that we bought into, and hopefully, if you grant us approval for the Health Channel, which we have partnered with Medbroadcast to apply for, that, and many other specialty channels just like our competitors have.
143 It means being in the out-of-home, outdoor advertising business, having closed-circuit networks in airports like other companies in Canada already do. It means having magazines. It means maybe starting new magazines that derive from a global program. Oprah Winfrey has a magazine called "O" which is derived from her program. It means taking content we own the rights to, such as FOX has done. FOX has a show called the "X-Files", as we know. They have 30 books that derived from the show.
144 What we have got to try to do is take that horizontally integrated company and take the content that we have within that company and use those platforms to generate more revenue and generate more content for that company.
145 I would also add radio to that. The horizontally integrated media company of the future will have radio, it will have exhibition outlets, it will have print -- and when I say "exhibition" I also mean Internet-based exhibitions -- and it will have some sort of content supply machine in-house, but it will not be exclusive.
146 The content that is created in-house will be distributed over the platforms. It will be sold to other companies who may wish to pay more or maybe have a better use for the content, but it will always be available within the group. But there can never be a walled garden of content that's exclusive because, as we do every year when we sit down to decide our Canadian programming schedule and our foreign programming schedule, we find that Laslo Barnett has the best idea this year and Forefront has the best idea next year, and Salter Street has a good idea. So there is no monopoly on good ideas in one shop.
147 So the purpose of the horizontal integration is to be able to promote the content that we do exhibit and that we do own and generate as much as we possibly can from it. And that's where I think everybody is getting to, whether they are coming at it from different means.
148 Alliance Atlantis was a producer. They sought to own exhibition outlets. They started on the ownership of content end and they have gravitated towards their integration by coming and acquiring and offering very well specialty channels.
149 Radio companies, you know, take Shaw, take Corus, Corus started with radio and now it's trying to acquire specialty channels.
150 So I think there will be a similarity of these five to 10 companies that will be competing in the same space and we'll be in that space we hope.
151 CHAIRPERSON OF THE COMMISSION: Tell me, in that universe some say that broadcasters will not be necessary any more. I'm not saying that's the Commission's view, but some have said in the Internet world there will not be any need for broadcasters any more. What's your view and why do you see, being a conventional broadcaster today, the necessity to reinforce your position? Why do you see that as promising into the evolving world you're describing?
152 MR. ASPER: Well, number one, I think broadcasters will always be the bastion of local programming, of local reflection in people's markets. We will be the only ones who are willing to invest primarily because we are already there and it does not make sense for most players to try to start and take that niche away from broadcasters.
153 I'm heartened by my travels in the United States where I look at -- we look at local -- we spend a lot of time with local broadcasters, and they're investing more money in local programming. They're starting local offshoots. Because of the way the regulation works, they can go to the local cable company and start a local weather network and a local regional news network. They're taking their programming and their local reflection plans and expanding and putting more resources into it, and with great success.
154 I think it's ironic that national players like CBC are pulling out of local. We see that as a very strong niche that we can exploit and we can be a bigger player in, and we can generate more viewership to our local programming. That's why the kind of plans that are before you today are before you today. We see a very valuable service being provided to the local communities as specialty channels proliferate which are only national.
155 So we think there's a very strong role for the Canadian broadcaster. I think the Internet is a factor, but it's a long way away in terms of being able to provide the kind of service that a local broadcaster provides. It will be five to seven years at best before the Internet is even in 50 per cent of people's homes as a broadband tool.
156 And there are still 25 per cent of Canadians who don't have multichannel television. Who provides them that service? Local broadcasters. And there are only three -- sometimes less than three in the case of Hamilton -- there are less than three people who provide that service to them. We think there's a valuable service to be provided.
157 So there's a long-term role for the broadcaster. Whether he is called a broadcaster in five years is another thing. It's a programming service. Internet Web sites are programming services. They're primitive compared to what a broadcaster can provide, but the brand and the local reflection is what we think is going to be our specialty and where we will have our success.
158 CHAIRPERSON OF THE COMMISSION: In your brand, what do you see as driving your brand, then, in that universe?
159 MR. ASPER: The local content. The fact that people can turn on and find out what is going on in their town. We have found always that people come back to: What's going on around me? What's going on within a kilometre of me? I mean, we have something on our Web site now that is a weather service that Gary Maavara dug up that provides weather within half a kilometre of your home. And that's something that has been tried in the U.S. and has been very, very popular. The closer it is to home, the more people want to find out about it.
160 People care more about local news than they do about national news and certainly more than international news. Our research, our experience has been that. That's the niche that other people are abandoning and we find, especially based on our studies of how it's worked in the United States, that's a niche that will remain there forever. It's human nature.
161 CHAIRPERSON OF THE COMMISSION: So what you see in what you seem to think is five to seven years, in that world, that could be more programming services on the Net. When people will come for your brand, it will be for getting the information that is close to their home.
162 MR. ASPER: M'hm. Yes.
163 CHAIRPERSON OF THE COMMISSION: And whatever domain around the news area.
164 MR. ASPER: M'hm.
165 CHAIRPERSON OF THE COMMISSION: That's how you see --
166 MR. ASPER: Not just news but news and information and even coverage of local events, local sports, local theatrical and entertainment events. We have found there has always been an interest in those kinds of things and, to some extent, being there first, developing the local brand, is a very powerful tool because we have come into markets, like New Zealand, where we acquired a bankrupt third network that was not first in people's minds -- number one in mind shares they call it -- and we have, for ten years, not been able to put that station into the number one or two position in the market. To some extent, it's been complicated by the fact that we are competing against a government network, but the fact is it's been number three for 30 years or 20 years and it's very hard to break into people's minds once they have got a certain place they go for their trustworthy news and whatever else they get.
167 So we think that we have got a golden opportunity, particularly in the stations we are seeking to acquire, to become that number one source of information and news in the markets where we seek to acquire these stations. Once you have that brand, it is very difficult for other people to dislodge you. And we think that, when we come back to why we want to grow, it's the ability to put the resources into that kind of programming that will be the engine of those stations.
168 MR. SHEA: If I may, Madam Chair. I think the question was posed of broadcasters being relevant, and I think what Mr. Asper has been trying to articulate is our strategy specific to how to remain relevant as a brand in the years ahead. We see it as twofold.
169 One, to be the strongest in local information so that if we are ever retransmitted on the Net as a full-up station, that people would go there as well as cable, but to have a national overlay of content that is very, very high in entertainment that is, in effect, the national brand of the company, programming that people can't get anywhere else but Global Television Network and Prime Time. That's a challenge I think all of us broadcasters face in this country and the years ahead because, as has been articulated time and time again, we are renters of content. We rent shows for two or three years.
170 We are exposed in the long term with respect to that as certain international networks become more international in their distribution and could, in effect, replicate the kinds of programming that we currently get from them. That's why we have undertaken the strategy with Fireworks, because in the long term we have to be owners of our own content, because it's the only element of our brand that we can ultimately protect.
171 While we see that as our mainstream strategy with respect to Global, we have specific strategies with respect to CH and Victoria, which we will talk about later, but we have also elected other areas of content where we see vacuums at the moment, more Net-related at the moment.
172 With respect to medbroadcast.com, health is the number one reason or among the number one reasons why people go to the Web for information. We invested in a company a year ago called Lifeserve in the United States which is also a Web-based health and lifestyle service because we see a combined strategy of having to be relevant with tomorrow's technology, the Net, while protecting and building our brand for Global for tomorrow.
173 I think one of the answers that crossed my mind with respect to your opening question, and that is what's different about today that may not have been there two or three years ago, one of the most significant differences for me is that our business is no longer predictable. In all fairness, conventional broadcasting, and to some degree specialty broadcasting, was a very predictable business. You bought a schedule, you knew in advance what advertisers were looking for in terms of their demographic needs and you could build a business plan for one or two or three years.
174 Today you can't do that. We are sitting here in April. We have no real sense of what the advertising market next year is going to be like, primarily because there are now so many new technology users in the primary business of advertising that we are seeing new niches of content go at the same advertising pool that is the primary economic driver of our business. And it is no longer predictable. It used to be.
175 MR. ASPER: Let me just summarize when I said we were a content company.
176 The reason we are a content company is because we believe no matter what the distribution mechanism it will find its way to people's homes. If it's good content people will want it and they will find a way to get it and distributors will want to distribute it.
177 When I say "content", I really mean three streams of content: it's the news and information content, whether it's local or national, like public affairs that concern the country as a whole; it's drama/entertainment programming, which was the reason we acquired Fireworks -- and that's the one fear where I said earlier that that's not an exclusive situation because that's -- one can simply not produce all of the programming one needs in one's own shop -- and the third one is, as I have said before, sports information, coverage of sports events. That is something that people -- people have their home teams, they want to see their home team. There are national teams as well, but that's another area we do plan to get into in greater depth.
178 But in the entertainment programming area, it's more of a defensive strategy than an offensive strategy. I think Kevin hit the nail on the head. It's the concern that someday the other players, when there's unlimited channels, the suppliers of our content, the traditional suppliers, will say, "No, CanWest, we are distributing it on our own channel. We own the FOX channel. We own the Alliance channel. Why would we sell to you?"
179 There will be some point in time where the intersection occurs between the price that these players get for selling the territorial rights to Canada and the price they can generate by putting it on their own channels and selling their own advertising. So that's somewhat more of a defensive strategy.
180 But those are the three streams of content: news and information, drama/entertainment and sports. That's what we intend to build.
181 CHAIRPERSON OF THE COMMISSION: As you can imagine, from the Commission's responsibility point of view of the objectives of the Broadcasting Act, that's not bad news because then it will leave probably the best incentive for creation of Canadian content.
182 MR. ASPER: M'hm.
183 CHAIRPERSON OF THE COMMISSION: I would like to know your views about serving -- you know, there has been a lot of discussion of the larger groups, and I don't want to talk about what CBC can do because that's not the matter at all in front of us today, but going into the strategy you're proposing, what do you see as being, in this country, the rights of the people who don't live in the urban centres? Even with your strategy -- you're in certain centres. What happens to the other people in other communities in Canada?
184 What's your view about that? Do you think there should be other players playing that role or do you see that eventually Global, if granted those licences, would expand and serve all -- you know, is it a right for every Canadian to have information closer to home, in all parts of the country?
185 MR. ASPER: Well, I think it's -- I'm not sure of the connotations of a right because I think Canadians should, as a matter of principle, have as much information as they possibly can, especially Canadian information, and dramatic programming as well -- Category 7 programming, to use your categorizations.
186 If Global could, Global would expand, and we have tried to before, to all over Canada. There is probably a million Canadians, half a million Canadians that even if all of this were granted we still wouldn't cover and we would like to cover and we would like to have access to.
187 Now, the Internet and satellite systems to a large extent are resolving that issue to the extent people can afford them. But it's true that there are still a number of people who can't afford service other than what they are getting from over-the-air, from CBC, but if there's ever an opportunity for Global to grow and expand and reach those people, we would seek it.
188 CHAIRPERSON OF THE COMMISSION: But don't you think, in the universe you were drawing, that in five years, seven years from now the over-the-air won't mean that much and that there will be other ways for those citizens to get services?
189 MR. ASPER: I think it's going to be a longer period of time before that happens. I think there's going to be -- in terms of universality, of being able to see all of these services. In the meantime, I think that people can't -- people operating Web sites today, for example, are not spending fives or tens or twenties of millions of dollars programming these Web sites. They're going to the financial markets, they're raising a few million dollars and they're spending it on computers and they're putting very limited information on their service, if that's what you can call it.
190 I think it's a long time before there will be this unlimited plethora of quality, first-class choice in people's homes. I think the conventional broadcaster, for many years to come, will have a role to play in being the main provider for these communities.
191 MR. SHEA: Madam Chairperson, the principal reason today that a consumer elects to take either cable or satellite services is principally for the receipt of conventional television programs. That hasn't changed too much, although our share of audience with respect to where we were 10 or 15 years ago versus where we are today has declined. But we are still the principal reason why people connect to cable.
192 The trick for us in the long term will be to ensure that we still have a similar type of content, the more higher end and more relevant entertainment programming, to ensure that we remain the number one pick for consumers. I think what clearly is going to happen in the next four to five years is that conventional broadcasters are going to have to think long and hard about the method of their own distribution.
193 It's very costly, analog technology, and it's clearly becoming outdated. And we have a significant investment ahead of us with respect to the move to digital. As we all know, there isn't an economic model yet that says the investment in digital will bring about a new stream of revenue, because it's essentially just replicating our signals and services today. No doubt, in the hearings ahead, when we look at the longer term policy aspects of conventional television, I think, Madam Chairperson, that there is going to be a demand by conventional broadcasters shifting to digital to have the right or to have the opportunity to actually have new streams of content in order to see some kind of revenue return.
194 But it also comes back to, when one clearly looks at what's happening with regard to the future of conventional, and the investments ahead of it, that unless we have very strong economic-based companies in this country, we will not be allowed -- we will not be in a position to afford that kind of investment for tomorrow.
195 But one thing is absolutely paramount, and that is we also have to have access on a continuum of the higher end content, whether we make it or buy it. Our emphasis I think will remain much the same as it is today, and that is it's typically in news, both local and national, because we are the best people in that position today to do that -- I say "we" as conventional broadcasters -- and access to entertainment that people cannot get elsewhere. And that's the challenge ahead.
196 CHAIRPERSON OF THE COMMISSION: Well, I guess we can certainly understand that. Some time ago, we granted Global a licence in Quebec. I don't think in our mind, you know, there's much questioning around the Alberta station. Of course the questions arise around the dual ownership in some markets, and it's important that we do understand what's your view but strategy as well.
197 You know, although we can understand that somewhat bigger is better and that you're not seeking a position for only yourself, that you see that there is space for other important players in Canada, yet it is really in that domain that there is a particular question. It would be important to understand why you think that owning those two stations in the extended market in Vancouver and the one in Hamilton versus the regional situation in Ontario is important to make Global a stronger player? How does it bring you to be a stronger player?
198 You know, for some time we thought, especially after the third Network Hearing, that you're ambition and your strategy was to become a national player. Why didn't you stop with strictly the transaction that dealt with the Calgary station? Why do you go and make a case for Hamilton and Victoria? Why is it important? What kind of leverage is it for you?
199 MR. SHEA: Madam Chairperson, this is the question that we have rehearsed for two weeks.
--- Laughter / Rires
200 CHAIRPERSON OF THE COMMISSION: I just thought about it. I'm glad I did.
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201 MR. ASPER: I lost my briefing notes, so --
202 CHAIRPERSON OF THE COMMISSION: It's a good thing I rehearsed it in English too.
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203 MR. SHEA: And it was very well presented.
204 I have about seven or eight people who are now prepared to jump in on the answer to this question and, with your permission, I think this is the way we would like to start.
205 I would like Doug Hoover and Loren Mawhinney to address the issue of branding and ensure that we leave the Commission with the impression that we have a distinct approach as to how to brand Global, now that it will become a national network upon your approval of Alberta, and a distinct approach as to how we plan to program what we call the independents in Hamilton and Victoria. I would like to start there with their vision of how we plan to program those.
206 Then I would like to ask Ken Goldstein to comment on market impact, dominance, the issues that have been raised by many of our learned intervenors with respect to what this would amount to should the Commission, and hopefully it will, approve us.
207 Then I would like Leonard Asper to also comment on why, from a corporate perspective, more shelf space is necessary for our company going forward, and I'll see how we have come at the answers with respect to those and I might supplement with some others.
208 CHAIRPERSON OF THE COMMISSION: Okay. To be clear, I will not be questioning thoroughly all the programming matters. The one I'm interested in is the overlapping, the 10 per cent and what will be different. And the other elements are exactly -- you prepared for the right answer.
209 MR. SHEA: I respect that.
210 MR. HOOVER: Madam Chair, when we speak of the two services, we look at them with the benefits that each provides that is unique from the other. When we speak of Global, we speak of a service that is strong, national, national information, national programming, and one that serves all of Canada with the inclusion of the Alberta stations, of course.
211 Global will position itself to a younger audience than that of the independent stations. Global has tended to be a service that's targeted more through a demographic that we characterize as 18 to 34.
212 By contrast, the independent stations will focus its audience to the older demographic, more akin of a 25 to 54 demographic.
213 The independent stations will focus on localism, local programming, local news, local information, so that there's separation between their targets. Global will continue on its current program strategy of being series program, appointment television, consistent. We have tended to stay away from and will continue to stay away from miniseries or events or theatrical movies. We have no intention to purchase theatrical movies, where the independent stations will tend to provide miniseries, made-for-television movies, event television.
214 Hamilton in its heyday was known as the event television station, and so we would like to take it back to providing that type of service.
215 In terms of the eight hours of priority programming, they will be unique and distinct and different on both services. I would like to have Loren Mawhinney elaborate as to how those two will be targeted to separate and distinct audiences.
216 MS MAWHINNEY: Thanks, Doug.
217 So as Doug says, the eight hours on CHCH and CHEK will be completely discrete and separate from the eight hours that are on the Global Television Network. The independent stations, our programming plans obviously aren't as solidified as they are for the Global Television Network because we knew what we were going to be ordering from the funds for those stations. So for the Global Television Network we have continuation of "Bob and Margaret", we have two new sitcoms because we are trying to get to a younger audience, the 18 to 34 audience, as Doug says.
218 Programs that are set. Across the country we have got a sitcom set in Vancouver called "The Agency" where we have repatriated two of our most successful Canadian writers living in Los Angeles, David Steinberg and Frank VanKeegan, who are going to run this. We are doing 22 half hours with them. Then we are doing another half hour comedy with Salter Street out of Halifax, a very politically incorrect, historical drama called "Blackfly". And we have an hour long police series that's produced by Laslo Barnett in Toronto.
219 So all those are continuing with Global's philosophy of appointment television/series television. The only exception to that is a signature series of documentary specials. So we just did the "Hockey Riots" with Rocket Richard. In May, we are launching a two-hour feature on the Reichmans, and we did another one on the holocaust called "Each of Us has a Name". So those give us programming hits during the season when we can't get covers because we have already launched our series. So it gives us an opportunity to have some -- create more attention and create more publicity for our stations.
220 With the independents, we are looking for family viewing, general family viewing, so we have a series in development with Crescent Entertainment that is a Canadian "Northern Exposure". A small, quirky town shot in Tofino. Something that would also work is a series called "Cliff Hangers" -- 22 hours about troubled youths and they use "Outward Bound" philosophy in order to help get them back into the mainstream.
221 In addition to that, we would run movies and miniseries. So we would have event programs over there that we wouldn't have on the Global Television Network. That would also give us an opportunity to work with smaller producers who tend to produce long forms as opposed to series just because it's such a heavy capital investment to make in those series.
222 MR. SHEA: I would now like to call upon Mr. Goldstein.
223 MR. GOLDSTEIN: Madam Chairperson, Leonard Asper, in his initial response to your question, talked about the need for broadcasters to reaggregate audiences as a result of fragmentation, and to reaggregate those audiences both within the broadcasting system and horizontally to other media by being able to operate across a number of platforms. It is of course partly a matter of reaggregating the audience to achieve a certain size, and it's also a matter of being able to use those multiple platforms to cross-promote to make the sum really greater than the simple -- or the result simply greater than the sum of the parts.
224 So, in that context, the proposal to retain the independent stations in Hamilton and Victoria represents a strategy to acquire another platform within a world where a number of the players around the world, and of course a number of the players in Canada, have also got multiple platforms. Some have multiple platforms based on one conventional and multiple specialty services. Others have more than one conventional and multiple specialty services. And so in this context we see that this is a way of building up a requisite number of platforms in order to compete successfully in this marketplace.
225 We have of course looked at a number of different market share criteria, and we can discuss those in detail if you wish, but the resulting market share relationship from the proposal that is before you would see CTV, as you have approved its going-forward structure, with about a 29 per cent share of revenue through its various platforms, and CanWest, if you approve this proposal, with about a 25 per cent share of revenue across its platforms.
226 So we tend to see this as a question of platforms and a question of how the various pieces can fit.
227 MR. ASPER: I'll try and put this also into context.
228 It comes back to some measure of defensive issues, because if you look at the Canadian dial today, simply the number of channels on the Canadian dial, you have CHUM with nine, you have CTV with six and others that are -- the licences they have that have not yet been launched and may be launched soon.
229 You have Time Warner, an American company, with three. More than CanWest. You have NBC, another American company, with more channels on the dial than CanWest. What they're doing with those channels is they are cross-promoting, cross-promoting, cross-promoting. They are in a much stronger position to create more revenue, more viewers for their programming, than CanWest is today. We are one channel.
230 In 85 per cent of urban Canadian homes and 75 per cent of Canadian homes overall, nobody knows how they get their channels. All they see is CTV, CTV, CTV, CHUM, CHUM, CHUM and then Global. And we are now in a position where we need to survive and to prosper and to be able to make the investments we have to make in the kind of content I was referring to earlier. We need to have the ability to use those platforms. As I said, they extend beyond platforms on the dial. As a corporate strategy it may mean magazines or print or some other form of bolstering, or our integration strategy, but on the dial where a great number of Canadians go each night when they come home, we are at a significant disadvantage to the other players.
231 If you look at Hamilton in particular, or the Toronto-Hamilton marketplace in particular, there are cable channels that before they start their day, January 1, before their year begins, they have more revenue from subscription revenues than Hamilton will get all year from advertising revenues. So they have bigger programming budgets than Hamilton has.
232 That's the kind of world we are facing, and that's why, you know, we think Hamilton alone, never mind other channels we hope to acquire or start up in the future, is something that is simply a step forward for us in catching up to our competitors.
233 CHAIRPERSON OF THE COMMISSION: (Off microphone / sans microphone...) pursue on -- there are three elements of the answer.
234 I will start with you, Mr. Asper. When you talk about the multiplatform, still I hear you say that the conventional broadcaster is there to stay. Although we have seen many specialty channels there, and they have taken certainly an increased place in the market shares and advertising revenues as well, we see that the revenues of the conventional broadcasters are still much more important and significant in this country, so although you can say it's windows, the significance of windows has to be weighted in, and you cannot say two windows equals two windows. It depends which windows they are. And the specialty channels, by the fact, for example, that there is no simultaneous substitution, certainly don't have the same weight as owning two conventional broadcasters.
235 So I can certainly understand your argument about the necessity, and the one of Mr. Goldstein about saying multiple platforms is important, but yet how do you figure out or take into account not the strict number of windows, but rather the importance that represents still today and for some years, given, you know, the future you were drawing for the next few years, the importance of owning conventional broadcasting stations?
236 MR. ASPER: Well, I think it's worth reiterating that while conventional broadcasters have simultaneous substitution they do not have subscription revenues, and that is a big disadvantage. If you look at even TSN, TSN is the number four station in the market from time to time depending on what they're airing. They're ahead of WIC. They're ahead of the WIC stations in some markets, particularly Hamilton in the Ontario market. So they are not only a strong window, they are a window that starts out with probably $100 million of revenue before they open they doors for business January 1. Having had a close association with TSN over the past three years, having some insight as to how their business operates, I can say that that gives them a serious leg up in programming.
237 And the other channels, the comedy networks, the discovery networks, the YTVs of the world are always increasing in subscriber revenues, because as digital satellite systems come on and 500,000 new subscribers became available to them they are getting stronger. We have to look at what they will be in three years.
238 The Comedy Network, for example, has no restrictions on its licence. It can be Global. Why can't it own Seinfeld? It's got subscription revenues coming in the door day one knowing exactly what it can spend on programming. There's no reason why some of these specialty channels, because their so general, can't be out of conventional stations.
239 And the second point I think is worth making is that while conventional revenues are still very strong today they are declining, period. Look at our financial statements. Look at CTV's financial statements. What CTV's got the benefit of is they have got ramping up of specialty channel revenues, so on an overall basis, to my knowledge, they don't break it down, but I can tell you in our shop Global Television's revenues are declining this year in a very weak conventional market which has been weakening over the last several years.
240 Manitoba, Winnipeg, Regina, Saskatoon, Halifax, they make less money collectively than Prime Television. A two-year old specialty channel. They're being subsidized by Global. We have always taken the view that because we do want to be a national entity and we want to ascend to the national stage, as I said, we are willing to take those risks in those smaller markets, but those smaller markets don't make sense to own a conventional station in unless they have a partner, unless they have somebody helping support them who's got enough resources to bring the local investment, investment in local programming.
241 So you do have to look at specialties as not what they are today but what they can be and you have to look at the -- just the graph, the line where conventional revenues are going and where specialty revenues are going. Conventional is going down; specialty is going up.
242 And there may be today a point where specialty revenues as a whole are not as great as conventional revenues, but they are going up 30 per cent a year while conventional is going down 1 or 2 or 3 per cent a year. At some point the intersection will occur where specialty is a much stronger force than conventional.
243 CHAIRPERSON OF THE COMMISSION: So you want to save the world. Conventional broadcasting is going down, but you will save it.
244 MR. ASPER: The Asper Foundation is willing to step forward and save the world.
245 CHAIRPERSON OF THE COMMISSION: I see.
--- Laughter / Rires
246 MR. ASPER: You know, as I said, we are not going to go extinct, but the conventional -- one of the things that's I think coincidental -- or not coincidental this year is that because CTV has so many specialty channels, and if you look at the number of promotions on NewsNet for Ally McBeal and E.R. and their hit programming and all of -- over all of their platforms, how they use that to promote each other, it's no coincidence that they caught us in the ratings this year. We think that had a -- and it's no coincidence that -- even on a much smaller basis.
247 We looked at investing in this medical health Web site called medbroadcast.com. I think I was a minority with some multiple votes in the management group that caused that investment to occur. Nobody wanted to do it because they didn't want to go up against Web MD and Doctor Koop and some of the U.S. medical Web sites who are being promoted on CNN. Because there's a powerful force on Channel 15 in my home, which is a very often watched channel, that's promoting American Web sites, an American health Web site and we have to build Canadian companies that are willing to make those investments in Canadian content. The conventional platform will always be a very major part of our business, but it needs to be bolstered by other platforms.
248 CHAIRPERSON OF THE COMMISSION: But, Mr. Asper, I understand what you're saying, but earlier on in our exchange you told me that you thought that the world or Canada could hold probably five to 10 players, so there's place for variation here. Let's take the lower of that scale, five. Don't you think that one of the important windows, not the only one, and I certainly recognize that bouquet of specialty channels is an interesting possibility of exploiting on the marketing side as well as exhibition side, but the owning of conventional broadcasting stations today and for the next -- let's be modest and just take our crystal ball of three years -- will be certainly important still, and when you kind of go for important markets like Vancouver and Toronto, with two, don't you think that the possibility of even having five major players in this country goes down to four and maybe three?
249 MR. ASPER: No. I mean, when you think of major players, you have to think of companies like Québécor. You have to think of companies like maybe even Powercorp, who has had some broadcasting assets and may come back into the market. Corus. There are probably seven to ten major companies in this market who, as I have said to you, I think should all be allowed to grow. I don't think it will ever come -- I think four will be too small a number.
250 There may be alliances in between intertwining all these companies. I think, because nobody is going to be able to just buy up everything, it's much simpler to try to strike strategic alliances, which is what people are doing today as we speak. There are lots of conversations going on in the industry about: How can we work together? You're in this part of the country, we are in this part of the country; how can we work together? You own these kinds of assets, we own these kinds of assets; how can we do something together?
251 So I don't think it will ever get to be that small a market.
252 And the other thing is what's the purpose -- and one of the stated purposes is that there is supposed to be diversity. That's something often stated. It's right in the Act.
253 There will always be diversity, even within corporate groups, because Prime Television operates quite autonomously from Global Television. It's got a managing director, it's got a sales force, it's got its own team, and they program the way they want to program. They share facilities, they share back office costs. But globaltv.com is another entity within Global, the Global communications group, that operates on its own. It went and hired 25 people. It's set a strategy of being a breaking news site, consistent with our plan on being a major player in news and information, and it does its own thing.
254 So even within these large corporate groups, you can't look at even the Viacoms of the world or the -- you know, with MTV and Nickelodeon, they're located in different places and they operate on their own. So diversity, I think, will always be protected, even as corporate groups become larger.
255 CHAIRPERSON OF THE COMMISSION: But in order for corporate groups to develop, wouldn't you say that owning conventional broadcasting undertakings is still an important part of the development and of growth and of significance, not being the only way of doing it, but being one of the keys in order to be significant?
256 MR. ASPER: Yes. Yes.
257 CHAIRPERSON OF THE COMMISSION: And the diversity that you are saying you're proposing through the programming that was kind of described earlier, certainly diversity can be there, but what about competition and healthy competition and, you know, the kind of emulation that occurs through competition?
258 MR. SHEA: Madam Chairperson, if I may. Just a few things for the record.
259 Specialty services are entitled to substitution. They have not been successful in taking full advantage of it. But I think as we look forward we see more and more specialty services are potentially going to be owned by distributors, the Shaw group, in the case of the CTV-Bell Canada merger, ultimately ExpressVu. You can see that with the prospect of more specialties being owned by distributors the likelihood of them getting full substitution, which is allowed in the regulations, would happen. I just thought I should raise that because they certainly are, from a regulatory perspective, allowed.
260 Secondly, I'm going to ask Ken Goldstein to chime in too in a moment with respect to your last question.
261 We are not seeking -- and I don't mean this to sound in any way tricky, because it is our fundamental belief with our strategy -- we are not seeking licences in Toronto and Vancouver to operate duplicate signals. We are attempting to get an additional licence in Hamilton and Victoria, two very distinct markets, and our programming strategies address real market issues, real market needs.
262 Hamilton tried, for the last ten years, to become a Toronto station and it failed, If it failed under the leadership of WIC, in its day an incredibly run company with incredible resources -- and Mr. Reitmeyer behind me will explain that even under WIC they could not find a programming strategy or have the resources from a programming perspective to make CHCH successful, and in Victoria, they elected it to be purely a retransmitter of Vancouver programming.
263 That's not our strategy. Our strategy is to have distinct services in two very distinct markets, Hamilton and Victoria, not Toronto-Vancouver. And it's a strategy that goes to the heart of what conventional broadcasters do: provide full-up local service and an entertainment menu that entertains and enlightens Canadians.
264 Also, it's our strategy, as a conventional broadcaster, having two independents with your new Television Policy which we are just going to be entering our first year, gives us an opportunity to experiment far more in the likes and types of new Canadian content. We need outlets to experiment. We need outlets to try to see if we can't come up with better and more innovative programming that Canadians will watch. That again, as a conventional broadcaster gives us that opportunity to experiment a bit more, which we all need.
265 But I would now like to call upon Ken Goldstein, because he, I think, with respect to one of your earlier questions and your last question about dominance and conventional versus specialty and where the universe is unfolding I think can be helpful in maybe showing you his crystal ball and where things are going.
266 CHAIRPERSON OF THE COMMISSION: We may be showing him ours too.
--- Laughter / Rires
267 MR. GOLDSTEIN: Before I get to the crystal ball, let me deal with, I think, a very important point.
268 When we are measuring questions of competition and the relative positions of the various groups in a marketplace, we look at a number of criteria. Obviously, one looks at what one might call shelf space. You have in front of you a little chart that's a bunch of stacked little TV sets -- and it took hours to do that, I have to tell you, to get those little names inside each television set -- but when I mention those relationships of the percentage share of the revenue in the television market, across specialties and across conventional, that relationship of the percentage shares basically is the answer to the question, because if you add a conventional service of a certain size and a certain character to the mix and you get a result that still puts CanWest in second place in market share, albeit closer to CTV, that's a different result than if you would have added a different kind of conventional service.
269 So all conventional stations aren't the same, all specialty services aren't the same and we have to look at the total mix.
270 In this particular case, I think we also have to view this against the backdrop of what might be the alternatives. I think that if one were to restrict the growth of CanWest in this case by not looking across the whole group of platforms, one would leave CTV -- a terrific company, well run -- in a dominant position.
271 So the question here is not just kind of an absolute question but it's a question of will we go forward with two strong, competitive private sector players in this television business, each with the tools granted by the Commission to compete, and from that competition get more content and a better system, or will we arbitrarily divide it up and in fact not get the benefit from that competition?
272 I don't think there is a question of dominance here at all.
273 MR. ASPER: Madam Chair, just to sum up in one sentence. If CTV or CHUM would wish to trade their position with ours, with what we are proposing here. Done. I will sign those papers tomorrow.
274 CHAIRPERSON OF THE COMMISSION: Well, they will be intervening and we will see what they say. I doubt -- but, you know, there are two ways of looking at your application.
275 One is to say there's no other way, and you kind of came at it with that kind of argument saying, "Unless we take it, it's the end of the world", and you were talking about it like it's the only strategy and Global is like the player to do it. That's one way. That's one dimension.
276 The other one is, "It's the strategy of Global. This is what we intend to do. It will benefit the company, but it will benefit also the broadcasting system, and this is why we want to do it."
277 You're kind of on the two dimensions in terms of the approach. Very clever. I recognize that.
278 But let's stay on the only one to do it. You know, that the world has changed so much that it's not the same question, given that it's two years after the transactions did occur, but the world hasn't changed to the point that we should split CHEK and CHAN and we should even extend that kind of understanding to Hamilton. So somehow the world changes and it doesn't change.
279 Please tell me why you feel that in Victoria, for example, it hasn't changed although it was a strong group, I think it was a strong group, but certainly the leadership, that was kind of in limbo for awhile during the -- you know, until we heard about the transactions, and the pleasure that we have to be together this morning certainly could be a reason why in four years there is still a station there. That is a plus.
280 You know, there are reasons. It seems to me that there was not the possibility or full possibility to return the situation of Ontv or of CHEK because of the situations there.
281 So tell me why you think the world, although it has changed there, it hasn't changed, that you are to be the saviour and unless you're there it will be -- you know, it's not clear to the reading of the material and the application despite everything you have said, Mr. Goldstein, and everything you have written as well.
282 MR. ASPER: I think that, first and foremost, Hamilton CHCH needs a partner. It needs a partner who is already in the market, in the general market because for 20 years, not 10 years, under the ownership of Selkirk, MacLean Hunter and then finally WIC, this company has teetered between profitability and loss, lack of service to its community. Although it started with high and laudable objectives, which it achieved in its very early years, over the last 20 years it has not achieved those objectives. It has not been the contributor to the Canadian broadcast system that it could and should have been. It's tried every type of strategy, go Ontario, go local, but it has never had the resources and the market promotion power to be able to compete.
283 And it goes back to what I said earlier about our experience in international markets with TV3 in New Zealand and to some extent Network 10 in Australia, which is when you are the number three out of three channels in a market it is virtually impossible, without spending obscene amounts of money, which no business person would do, to get to the next stage. And given the goals of the Canadian broadcast system -- which are what? -- they're diversity, they're about putting Canadian programming on our screens, and diverse Canadian programming on our screens, not repeating what others are doing, if Hamilton were bought by a smaller player who were (a) not required by the Broadcast Act to do the eight hours of priority programming or by the policy, or a player who, in other words, who was also not in the market with any other platforms, it would not be able to compete.
284 If it were bought by a larger player, a behemoth who came in and was ready to throw lots of money at it, it still would not be able to compete. It's been owned by these behemoths that have multiple platforms like MacLean Hunter with its magazines. What it needs is a partner who is in the business, in the business of conventional television or the business of owning other platforms that are in that market that can promote Hamilton.
285 Let me give you an example. They spent almost $2 million last year, over the last 18 months, on a promotion campaign. It did nothing for them. They didn't move in the ratings one little bit and they have programming, U.S. programming, that is top 10 in the U.S., it's among the best programming in the U.S., and it's not even on the map in the Canadian rating system. Why is that? It's a non-factor in the minds of the Hamilton market, other than the local news it does do today, and it's a non-factor in the Ontario market.
286 So even though it is a channel on the dial, it needs a partner who can bring the resources to it that can put a Canadian choice, bring a Canadian choice -- it's on the dials in the Hamilton and the rest of Ontario market -- new programming, diverse programming that they're not seeing right now.
287 CHAIRPERSON OF THE COMMISSION: But you're saying in your presentation Global is, you know, a strong player in the Canadian system, has had strong leadership. You're good business people. Why would it work with you? You know, what will be the ingredients that will make it work and that you would be the only one to make it work, because that's what I hear as well?
288 MR. SHEA: Madam Chair, I think, as you have witnessed in the cable industry, there are now two or three very strong players as a consequence of consolidation. It was intentional I think in two ways, intentional by the entrepreneurs to become bigger, because they needed to, and I believe it was intentional from the regulators' perspective to ensure that we did have, structurally, strong players in order to compete with impending and new technologies.
289 Our argument is quite similar, that over the course of the next couple of years, as the Commission hears a number of future mergers and certain structural changes, that where we have to end up is that there are two or three very strong,national, vital players. Opportunities in our regulated system come two ways, by the luck of licensing -- and we haven't had a lot of luck in terms of specialty -- or they come through acquisition -- and we have had much more luck I guess in acquisition. But structurally, that's the only way we can grow, and, structurally, the only opportunities that are currently in front of us, CanWest, is the full acquisition of WIC, because structurally it will make us stronger. And we believe that it is in the regulators' interest and in the industry's interest to ensure that there are two or three very strong players.
290 Lastly, I would say the reason why we are requesting which in effect would be an exception to a policy, and that is common ownership of stations in a market -- although you have heard that we are arguing they're not necessarily the same market, but we will leave that aside for the moment -- is because we believe that under the circumstances this is the best application in front of you at the moment. We have gone, we believe, a very long way in the types and the nature, and more importantly, the total benefits which exceed your minimum policy.
291 We have advanced a certain number of safeguards, because we respect the fact that this policy, while we would argue might be somewhat outdated, but that's the subject for another hearing -- but we have tried to come at this in a constructive way by putting the package of elements in front of you that would seek to ensure that this exception is allowed.
292 But I will close by saying it's currently the only opportunity that we see in front of us, and what we do see around us is a world consolidating where CanWest is no longer going to be the largest entity in the country, from a broadcasting perspective.
293 CHAIRPERSON OF THE COMMISSION: I understand what you are saying as kind of building upon what Mr. Asper had said, that although there are specificities in that market there is still the strategy of Global and the necessity you have recognized on growing and being a stronger player in Canada. What is not clear is what will it bring and how will you do it? You know, why will it work? What will be the kind of big that will be useful for your strategy and why that kind of big will help you be the kind of player in Ontario and in B.C.?
294 If you don't like the reference of the extended market of Toronto and Vancouver, rightly so. I understand given your application. But, you know, still, you will have a strong presence in those two provinces. How will it work so that it's really a leverage? I guess that always comes back to that notion. You know, in your application and in your brief you talk about leverage, you did talk about leverage today. It's not clear how you will use that leverage. You will bring diversity by the kind of programming, that's one thing, but what kind of leverage does it give you? Is it the advertising force in the markets?
295 MR. ASPER: Well, there are a few areas.
296 Number one, it does give us programming leverage in the acquisition of foreign programming. When I say "leverage", I mean it allows us to at least be on an equal footing with our major competitor. The increases in foreign programming prices I think are well known to the Commission and they have --
297 CHAIRPERSON OF THE COMMISSION: We don't buy American. We buy Canadian.
298 MR. ASPER: Well, they're certainly publicized in our financial statements.
299 This has been going on for many years, and the greatest thing that can happen to the Canadian broadcasting system, as well as its participants, be it CTV or CHUM or Craig or Global, is that we are spending less money by virtue of the supply-demand dynamics in the United States and having more money to put toward Canadian programming in Canada.
300 By simple mathematics, when there go down to be a lesser number of buyers for foreign programming, that's good for Canada by definition, because the prices will not increase at least as much as they have in the past. But the leverage, again, it allows us is the promotional leverage. The ability to take a program that we have bought the rights for, whether it's on Hamilton or on Global, and promote it and create better audiences for that programming.
301 I mean, one of the things we pride ourselves upon over the past few years is that we have spent a lot of money on promotion of Canadian programming and as a result we have typically been -- had four out of the five top Canadian programs. In fact, one of our Canadian programs "Bob and Margaret", frequently made it into the top 15 of all programs. That's quite an accomplishment, and that's because we put significant promotion resources behind it. But in going forward, in the future, as our competitors have more and more platforms, we need to have more and more platforms to promote that programming.
302 Kevin, do you want to add to that?
303 MR. SHEA: One additional thought, Madam Chairperson, is that to some degree the marketplace did decide, because it has brought us here today. In other words, if there were other interested players in the WIC assets, they could have outbid Shaw and ourselves if they were really interested in advancing their own corporate plans and notions, and that hasn't happened. It is the consequence, it is the by-product of how we have ended up here.
304 But I do want to echo what Leonard said, and that is our ability to cross-promote our Canadian and foreign schedules. I think it goes to the heart of that, in many respects, some of the benefits that we have put forward in the area of promotion of content is absolutely fundamental to our future. We are limited at the moment by the nature and the type of channels that we have to do that. It's essentially Global and Prime. So the more outlets in key markets that we have to provide very costly cross-promotion of content is useful to our overall strategy and structure.
305 CHAIRPERSON OF THE COMMISSION: What about the buying -- the acquisition itself, buying a package and using different windows; is that part of your strategy as well?
306 MR. SHEA: Madam Chair, yes it is. We have mentioned in both our safeguards and our application that we would limit the utilization of content to 10 per cent. These channels have to be different in order to be successful. But take the recent example of our documentary that we ran on Global last week. We would want to take advantage of promotion, a very high end programming, Canadian programming, to have a rebroadcast within a week or two for those people who didn't get a chance to see it, but it would be far more event driven.
307 And if we were ever to do a -- ever to use the example that I have just used with respect to a Canadian documentary, I would want to make it very clear that that wouldn't count as part of our eight hours that week, it would be incremental to the eight hours, because we do not plan to duplicate our Canadian programming between stations in either Hamilton or Victoria.
308 CHAIRPERSON OF THE COMMISSION: So the 10 per cent would be for foreign?
309 MR. SHEA: The 10 per cent, in a large part --
310 CHAIRPERSON OF THE COMMISSION: The overlap.
311 MR. SHEA: -- is going to be for Canadian programming, principally daypart, but to take advantage of the promotion of higher end Canadian specials within a week or two of their original broadcast on either station.
312 CHAIRPERSON OF THE COMMISSION: But were you saying that it would be over and above the eight hours, then --
313 MR. SHEA: If we were to use --
314 CHAIRPERSON OF THE COMMISSION: -- when it would be overlapping?
315 MR. SHEA: That's correct. If we were to take a documentary, which is currently our only strategy, and run it on either station that week, it would not count as part of the eight hours on that station. It would be incremental to it.
316 CHAIRPERSON OF THE COMMISSION: But you answered to one dimension of my question. What about the acquisition of foreign programming where you can buy some packages and use some of the material on one window and other material on the other window. Is that part of, you know, what you're contemplating doing?
317 MR. SHEA: From an economic efficiency perspective of joint buying, absolutely, yes. However, it is absolutely essential that these stations be different to attract advertisers. If they're purely a replay of each other, we are not adding any diversity to the market from a consumer or advertising perspective. So programming would be bought jointly but scheduled differently.
318 MR. ASPER: I think just to clarify, it's no different than CFMT today in the Toronto marketplace, which is that they say to us, "We would like to get these programs so, Global, when you're buying for yourself buy for us too." That works to some extent no different than, you know, the program supply agreement we had with WIC, the WIC Alberta stations. We bought for them, for Alberta. They took some of the Global schedule. Not all of it, but they took some of it. And so really we become the agent for some of these stations, which would include CHCH in this and CHEK in this situation.
319 So it's a way to ensure that instead of five or six companies all seeking to buy various territorial rights going down to Los Angeles and buying a bunch of programming and competing with each other, it boils it down to CTV and its group, CHUM and its group, and CanWest and its group. That makes for a more efficient buying market. That's really where there is a significant benefit to CanWest just as there has been to CTV and others buying -- like CHUM buying for Citytv and Space, things like that.
320 CHAIRPERSON OF THE COMMISSION: As a viewer, that means that I will have a signal that will be what I'm used to with Global. I will have Prime and I will have, if I am in Hamilton, another signal, which will be Hamilton. Totally different --
321 MR. ASPER: Yes.
322 CHAIRPERSON OF THE COMMISSION: -- with only 10 per cent overlapping between them.
323 MR. ASPER: Yes. There's no point for us to have a repeat of Global. That would be the worst strategy we could possibly deploy.
324 CHAIRPERSON OF THE COMMISSION: Tell me, talking about local, there's concern about -- you seem very devoted to serving Hamilton today and certainly we can believe that, but certainly you will recognize that there is concern as well that slowly but surely you will be contemplating Toronto more and more, or that you will be contemplated by people in Toronto.
325 What's your view of that and what kind of safeguards are you prepared to provide if the case would be that we would consider granting that station to you?
326 MR. SHEA: Madam Chairperson, over the last number of months, since we have had the opportunity to actually visit some of the WIC properties -- Ken MacDonald behind me is a former Hamiltonian and grew up working at CHCH, but a number of us had a chance to spend time in the market, as well as others in Victoria -- let me be very clear that the message we got from the folks in Hamilton who both work at the station and some of the key community leaders was, "Please give us our station back", that over the course of the last number of years it had moved its focus to Toronto. Our plan with Hamilton is to move the focus west.
327 The entire Niagara escarpment area is horrendously underserved in news and local programming, and there's an opportunity with respect to advertising local revenues to service that community. Hamilton was trying to essentially break into the Toronto market from an advertising perspective, and it didn't work. There are far more opportunities, real opportunities, economic and from a consumer perspective, to shift the station to become a true Niagara escarpment undertaking.
328 With respect to safeguards, we have put together an advisory group. The advisory group has met already. We have undertaken to ensure that the meetings of -- the minutes of their meetings would be sent to the Commission, would be available for public scrutiny on an annualized basis, and we think that that's a rather significant and real safeguard because the community members are going to be monitoring the commitment that we have made to double, in effect, local program. And the programming will be local.
329 Certainly, what we have learned in both the Hamilton and Victoria marketplace is that the population tends to skew a little bit older. In the case of Hamilton, one of the benefits we have put forward is twofold, one with McMaster and one with respect to health programming, because we see an opportunity to reinvent daypart TV, to have a much wider, broader focus on health and lifestyle programming using some of the resident experts in the market to do that.
330 So our commitment is very, very real in terms of returning those stations to a local undertaking. That's where their future is going to be.
331 CHAIRPERSON OF THE COMMISSION: In that perspective, what do you think the impact will be on a player like CHUM, for example?
332 MR. SHEA: With respect to CHCH?
333 CHAIRPERSON OF THE COMMISSION: To your strategy?
334 MR. SHEA: I think the impact on CHUM would be absolutely minimal, if at all. The station currently exists in the market. The station has a programming strategy that is, from a news perspective, more focused on Toronto. I'm sure if we shift the -- once we shift the focus to Hamilton it may improve City's news opportunities. I don't think that that would be too profound, because they do a good job at local programming, but I don't think the impact on City would have any consequences.
335 MR. ASPER: Madam Chair, I think the important thing to remember is we are not applying for a new licence. I think Mr. Shea hit the nail on the head. Everybody is competing against CHCH now. I would think CHUM would be heartened to know that CHUM is now -- that CHCH would not be going after advertising dollars to nearly the extent they would be in the Ontario marketplace. That is a strategy, as I said earlier, that has failed. There just is not room for three mega-regional advertising groups, the CTV group and then the CHUM group and Global -- sorry, a fourth. That's what CHCH was trying to be and that's what failed.
336 What we see in Hamilton is a city of a million two -- twice the size of Winnipeg. Almost the size of Metro Vancouver -- that is a market in its own right. And that's where we intend to focus.
337 CHAIRPERSON OF THE COMMISSION: So you will live solely by the local and national advertising revenues.
338 MR. ASPER: That's correct.
339 CHAIRPERSON OF THE COMMISSION: There's no regional.
340 MR. ASPER: Yes. I don't -- yes, going after that.
341 CHAIRPERSON OF THE COMMISSION: Why in that perspective, then, didn't you return your retransmitter, if that's the case? If you're going to be so devoted to that community -- which is a large community, it's not a small one -- you know, why is it that there still remains the possibility of you being a regional player?
342 MR. ASPER: Madam Chair -- I think, Kevin, you can add in after -- I think that would be the very antithesis of what the Canadian broadcasting system is all about, taking a Canadian service off the cable systems and off the over-the-air reception. We talked earlier about getting Canadians more services. Why in the world would we ever -- I think would the Commission or would any consumer or viewer want to lose a Canadian service which would be replaced by possibly an American service or some other service that isn't providing at least some sort of local, even if it's Hamilton-based, reflection?
343 Kevin, do you want to add?
344 MR. SHEA: I think Leonard said it, Madam Chairperson, and that is that we just didn't think it would be in the interest of the broadcasting system to be advancing that we would be taking Canadian signals away from Ontarians as a result of our shift for it to be more of a local programming, from a news perspective, but Canadians should still have the right to see their Prime Time.
345 I think, too, with the direction that ExpressVu and Star Choice are going, where essentially every Canadian station is now available on satellite, I think this Commission in the months and years ahead is going to be seeing requests from the Canadian cable industry to have the same appetite to add every Canadian service on the cable dial. So we think it's in the interest of the system to have as many Canadian stations carried by cable or satellite as we can.
346 CHAIRPERSON OF THE COMMISSION: I have a few questions concerning the policy itself, and certainly this is not a policy hearing, but given that your proposition, proposal really challenges the policy, and you're saying that in your view that it should not be there any more but you're not saying that you would like to have a change of policy or kind of contemplating more an exception basis, but still for our understanding it might be helpful to understand what you would see as -- if we were to consider a different approach, what could be the proper mechanism by which we would measure excessive domination in markets or in the country going into the future?
347 You know, you're saying on one hand, "Those transactions were there. There's a need for us to become a bigger player. It will benefit the country." Well, that's fine. But, at the same time, you're saying that what might have been considered unduly is not today because the situation is so different with all the other windows. What do you see as being mechanisms that we should be considering in order to make exceptions and eventually a new policy, if we were to go that route?
348 MR. ASPER: Number one, I want it to be clear that today we are seeking from you an exception to the policy. We are not treating this as a policy hearing, because -- and one of the reasons we are seeking an exception is that: (a) we believe it's good for the broadcast system, but (b) we say that there have been exceptions granted in similar circumstances to our main competitors, notably CHUM and CTV, which warrant granting us a similar exception, until the policy can be revisited, if that be the case.
349 But in terms of what mechanisms the Commission should use, I think we have to come back to: What is the purpose of the regulation of the broadcast system, and that is, you can correct me if I'm wrong, of course, but it looks to me from reading it that it is about diversity of choices, prime priority programming choices, but also news and information sources. How many sources do people get their opinions from?
350 The second thing is that there is a very significant jobs-based industrial policy, which is personified in the Canadian certification and Canadian content requirements.
351 The third thing is there is a policy sometimes referred to in the past as "more voices, more choices".
352 Whatever it is, how so ever one defines it, it is about putting more Canadian programming in more homes -- there being more outlets, those outlets carrying more and more Canadian programming, and better Canadian programming.
353 So it's very difficult. I have seen regulatory systems around the world grapple with this issue, but I would step back and look at those three factors, diversity, jobs, content, and just ask yourself each year, as licensees come before you: How are we doing?
354 I think if you look at the system today you'll find that there are more jobs, there are more choices for Canadians in terms of channels, and there is more Canadian content and better Canadian content than there has ever been in the history of Canadian broadcasting. And I submit that the reason that's the case is because the Commission has licensed new players.
355 It has allowed existing players, like our competitors CTV and CHUM, to get bigger. As they get bigger I have always been an advocate of the philosophy that from each, according to their means, should apply. So you should always look at the participants in the industry and say, "You, participant, what are your means and what is your ability to contribute based on the assets you have, based on the resources you have, based on the things we have granted you, based on your audience share", and judge each participant as they come before you for licence renewals or for new applications or new -- for changes of control, and judge that applicant as to whether they are contributing according to their means. Look at the system as a whole and say: Are those three objectives being met? And when they aren't being met, when things start going down, that's when I think it's time for the Commission to step in.
356 CHAIRPERSON OF THE COMMISSION: Well, we are here this morning to kind of have our measuring tape, I guess, and we would like to get from you what's your view.
357 You know, if we are not -- and you're not seeking a change in the policy but rather an exception, what would you say is the major element other than the global strategy of becoming a stronger player in the world that is evolving for Hamilton and for Victoria? Like, an exception has to be different in each case. What would be your exceptional reason for each case?
358 MR. ASPER: I'm going to ask Ken Goldstein to also make a comment here.
359 CHAIRPERSON OF THE COMMISSION: Oh, it's Ken who has the secret, like Caramilk.
--- Laughter / Rires
360 MR. ASPER: No. He is just jumping over the table, so I --
361 MR. GOLDSTEIN: No, there's no secret. I would like to pick up on the original question and then move to the subsequent one, the question of how do we measure these things.
362 First of all, when we are talking about an exception to a policy, we are talking about a policy that was put in place at a time when there basically was only conventional television. So when one then looked at certain kinds of ownership arrangements, the resulting market shares are very large. I mean, if you go back many, many years to the CHAN-CHEK situation, there was CHAN, CHEK and CBC. That was it.
363 We have reached the point now where because of other conventional licensing, because of the specialty licensing, because of the way the industry is involved, all of the thresholds are in a very different place. So then when we approach how do we measure these thresholds, I think there's probably three general areas to look at. One is the question of definition and measurement, and I'll touch on that in a little bit of detail. The other is the question of the outside interactions with the system. And, finally, there is the umbrella under which all of this is sheltered, and that's the CRTC.
364 In the first case, we first have to define the market correctly and we have to look at the whole real market as it functions, which is of course conventional, private, public and specialties. We have to look at audience, which is a measure of how we are doing today, we have to look at revenue, which is a measure of how we are doing today, and we have to look at the structural tools that the Commission has placed into the hands of the various players in the system: the licenses, the conditions on those licenses, the expectations on those licences. That's a picture of today and it's also the potential for tomorrow, as we have heard, particularly around multiple platforms and cross-promotion.
365 There's another very important set of players that should always be in our minds when we are here, and that is, if you will, we are buyers and sellers of the broadcasting business. We buy programming, we sell advertising, we sell subscriptions. In the case of the specialties, they sell subscriptions on a wholesale basis to BDUs. They have a role too in telling you if something is out of line or if something is within a range of thresholds that is normal and reasonable.
366 And I think at this hearing you will not see interventions from the advertising community saying: This is somehow bad from the buyer's point of view. I think you'll see a number of interventions from the production community, saying, as sellers to the broadcasters: This is very good.
367 And finally, when all of that is functioning, the Commission has these licensees coming up for renewal, coming up for group licensing, coming up for all kinds of reasons, and there is the checks and balances of the regulatory system. So I think you have to look at all of those things together, and it ultimately goes to the benefit that flows from the system as long as those criteria are within the appropriate thresholds.
368 CHAIRPERSON OF THE COMMISSION: I understand the benefits to the system as you are describing it. I understand the parameters we should have present in our mind. But when I turn to the situation, the specific situation of CHCH and Victoria, what would be in your mind other than the benefit to Global and the benefit to the broadcasting system as a whole, given the fact that Global becomes a stronger player? What do you see as being unique or the exception in Victoria or in Hamilton that should require a positive answer from the Commission given the three elements we have discussed?
369 MR. ASPER: I think it's as simple as saying that the greatest contribution to the system will come from Global as the owner of these stations. As I said earlier, they have not succeeded under many different owners. This owner is committing and is committing in -- and this potential owner is saying, "Look at our track record of delivering. It's reliable and there is no other player who is going to come forward with an application for these two stations that can put as much into the system, according to its means, as I said earlier, than Global.
370 And I think it's also important that the Commission give a vote to entrepreneurialism, because we took the risk on WIC. We spent five years of our time and resources on it. During that whole time, we tried to talk to CTV about selling them BCTV, CHAN and CHEK and Montreal, if they would join with us, and they didn't. We asked them in that situation also if they would extend the transmitters of CKVU to create parity in the B.C. marketplace between CKVU and BCTV when it was ultimately sold to them as part of that transaction. They didn't come forward to do that transaction with us.
371 Others said to us, "Gee, if you feel like selling Hamilton, or something, give us a call when you spend your five years and all your resources and time and money doing the transaction. We'll just sit in the weeds and wait until you take all the risk and then we'll go lobby the CRTC to force you to divest and we'll buy it."
372 That's not a very good message to send to Canadian companies, that they will invest all their time and resources and that by dint of regulatory action that will be to some extent forced to be a Pyrrhic victory for them in the commercial marketplace. I think it's important to say to Canadian companies, "We will allow you to take the risk. We will allow you to grow. We'll allow you to own these assets. We will put safeguards on you. We will put some parameters around you and your ownership of those assets."
373 And these are what we have offered to the CRTC in this -- you know, if you deem it necessary, but I think it's important to send that message to the Canadian broadcasting industry.
374 MR. O'FARRELL: Madam Chair, if I may add?
375 I think at the root of the common ownership policy is a concern of is there excessive concentration of ownership in a marketplace. Certainly in the case of Vancouver where you have just licensed a station a couple of years ago and have just heard applications for new licences, we think that perpetuating that exception would not raise a concern relating to excessive concentration. Then, as it relates to Hamilton, we think that the level of ownership diversity in the marketplace is such that there would be no concern there either.
376 CHAIRPERSON OF THE COMMISSION: In terms of diversity, then, you don't see any problem.
377 But in terms of the uniqueness of the situation of whether the markets can sustain an independent company, I think Mr. Asper and yourself have just answered that there would be interested parties to take that. What you are saying is, given the entrepreneurship and the risk-taking you have been doing, and you're contribution to the broadcasting system, you feel that it would be appropriate to create the exception in this case to become a stronger player and to bring more contribution.
378 Do I hear you right when I hear that?
379 MR. ASPER: Yes. I think we bring the resources to Hamilton both by our presence in the market and our willingness to take risks that will make Hamilton as big and as successful a contributor to the system as it can possibly be.
380 Another example of that is we just hired 20, 25, 30 people at globaltv.com to start into a -- start a Web site up. How many people are doing that today without hopefully having to go to the financial markets to raise money? We just made a decision and we did it, and we invested and we put our money where our mouth is. When we say we are interested in news and information, and that being a content stream, we do it. I think that's something very tangible that we bring to these assets.
381 CHAIRPERSON OF THE COMMISSION: Before we break for coffee, my last question is this one and I would like your reaction to it. Hearing you and reading your application and the interventions, what is your reaction to the statement of the whole of your application is greater than the sum of the parts of your application? That the meaning to your strategy and to your development and to your growth and to being a strong player, not only today but in three, five years, and in this new world that you were describing that the value of that transaction is much more than strictly what is at the application level. It is very core or significant and meaningful to the future of Global being a player of the future?
382 MR. ASPER: The bigger a company is, the bigger the risks it will take. The bigger the risks it can take. The greater the likelihood that it will invest in new ventures, new things, try new things, experiment and try to find yet other sources of viewers and revenues, you know, it's things we run into overseas, in our activities overseas. We have tried for quite some time to enter the European and British marketplaces. We can never quite -- and as people may know, we made an experiment, conducted an experiment in Chile, and tried a broadcasting entity in Chile. We withdrew from Chile. We have not been as successful as we would like in the European marketplace because there is Time Warner willing to risk what to us is a lot of money, thirty, fifty, $100 million trying new things. They don't work, they try something else.
383 In a smaller context in Canada, the larger companies, what Global hopes to be is a company that can take the kind of risks I talked about with a medbroadcaster, a globaltv.com, or the hopefully dozens of specialty channels, digital specialty channels we wish to launch. It's good for the Canadian system if there are companies of our size and bigger or equal size that are willing to take risks on new programs, new ventures, new opportunities for Canadian viewers to have Canadian content in their homes. I think that's where the spin-off benefit is. It's in millions of dollars of more investment and experimentation of things that will benefit the Canadian viewer.
384 CHAIRPERSON OF THE COMMISSION: But it allows also the enhancement and the growth of your company.
385 MR. ASPER: Yes, it --
386 CHAIRPERSON OF THE COMMISSION: It's not only about -- yes, because you're a risk-taker in that perspective, at the same time it allows the company to become more significant when not only in this country but also elsewhere. So my statement was that, you know, the whole transaction is much more than every detailed transaction that is presented in the application. It is very core to your whole strategy. And when I was saying in the opening remarks that not only your transaction but the ones that we'll hear later this week are kind of significant in changing the landscape of the broadcasting system, that refers to the same notion. What do you think?
387 MR. ASPER: Yes. I can only, I think, reiterate what I said earlier, which is that -- I come back to the Web site idea, which is that, you know, we looked at the budget and we said, "Well, this will cost $3 million this year or $5 million, and we don't know if we're going to get any revenues on it. We may, we may not." But the larger a company is, the more it can take those kinds of negative profit and loss projections and say, "Okay, but we'll try it because someday down the line it is going to work." And that goes to programming. That's where one has to make the investment in programming.
388 Even when "Traders" started, we didn't know if "Traders" was going to be -- you know, it would have had a negative -- it would have lost us money. It did lose us money. But by taking the risk and by pushing it and by promoting it, we got it to a point where "Traders" ultimately became a show that was profitable for CanWest. And that's the kind of risks that I think is good for the system to take and it's the kind of risks that we want to take. But the larger the company, the more risks it can take.
389 CHAIRPERSON OF THE COMMISSION: Well, I guess before we go, just that is one of the parameters we have present in our mind, that the value and the contribution to your company has to be commensurate with the ones to the broadcasting system and that is definitely the kind of, you know, question we will be pursuing over the next few days and in the analysis after the hearing.
390 MR. ASPER: Thank you.
391 CHAIRPERSON OF THE COMMISSION: We will take a break and come back in 10 minutes, 15 minutes.
--- Recess at 1115 / Suspension à 1115
--- Upon resuming at 1140 / Reprise à 1140
392 CHAIRPERSON OF THE COMMISSION: Alors, I would like to give some indications I forgot to mention when we first started.
393 I just want to let you know that we will be completing the hearing by Friday and we will start at eight o'clock tomorrow and Thursday and Friday. If we need to sit longer than 6:30, seven o'clock it will be the Thursday evening where we will be doing that. So it might be helpful for plane reservations.
394 Madam Wylie.
395 COMMISSIONER WYLIE: Thank you.
396 Good morning, ladies and gentlemen. My questions will focus on the programming aspects of your proposal, that is, they will focus on your proposal from the perspective of what will be offered the viewer by the various TV stations that you are seeking to purchase, and some of them will be quite specific. I have learned a new English expression lately, which is: the devil is in the details.
397 Then Commissioner Grauer will examine your proposals from the perspective of the benefits offered. I understand that there may be some overlap between them, but I want to discuss with you whether your proposal will at least maintain or hopefully improve the programming that is already offered by these stations that you're seeking to purchase, particularly in the area of local programming.
398 The Chairman mentioned a while ago the question of whether the whole can be more valuable than it's parts, but there also is some value in looking at the various parts, and you are seeking an exception to the policy for dual ownership in the same market, in the same language, in two circumstances. Perhaps you will also be prepared to accept some special or some exception to our TV policies, for example, as a quid pro quo, for having two stations in the same market or for having a greater whole after this, so that may be, for example, in the area of local programming or local news even though the TV Policy has not generally proposed such conditions of licence or commitment for all stations.
399 So that's the spirit in which I would like to examine what is offered by the stations you are purchasing now and what will be offered to the viewer if your proposals were approved rather than discussing whether they should be approved or not: What if they were approved, what would be the improvement?
400 So first I will look at CHAN, and then CHEK and then CHCH. Then I will have some general questions that will have some overlap effect.
401 If I look at CHAN's licence, in the area of local news they were expected to do 20 hours and 15 minutes a week. If we look at their logs at the moment we find that they are doing 26.5 hours a week of local news. Your application, if we look at the various proposals and at the block schedules that are proposed offers or promises some twenty -- anywhere between 22.5 to 42.5 hours of original news a week.
402 The reason why I say it could be as little as 22.5 and as much as 42.5 is the morning news program and the extent to which -- mostly that program -- the extent to which there is a local news component in it. So I would like to discuss with you how -- whether you have looked at the amount of news characterized as such, or categorized as such, in the morning news program, which is three hours, if I understand, every morning, 6:00 to 9:00, on CHAN, and it contains Category 2, information and analysis, as well as Category 11, human interest. So obviously the 42.5 hours of local news will be reduced to the extent that these two other categories are components of that program.
403 So can someone tell us whether you have tried to make a calculation of the amount of local news that is Category 1 in that program.
404 MR. SHEA: Madam Vice-Chair Wylie, I'm going to ask Ken MacDonald to respond to your question.
405 MR. MacDONALD: Commissioner Wylie, I'm a little puzzled by the question in that the morning show presently on CHAN is primarily local content and moreover the current news programming hours for CHAN are in the neighbourhood of 40 hours at this point. Our position would be that this station is a leader when it comes to local news, and we certainly would support and do everything we could to maintain that reputation and that level of local programming, which is an example for other stations.
406 COMMISSIONER WYLIE: The reason I'm trying to determine just how much there would be is in the event, hypothetically, that we were to request or demand or require that a certain level of local news -- of both -- the local non-news programming is broadcast and also that you have offered to report on how you're doing with your commitments, how would that be calculated. So that's why I'm trying to find out. You haven't calculated the difference between the local news and the local non-news programming?
407 MR. MacDONALD: Yes. I could give you --
408 COMMISSIONER WYLIE: Now, I understand that if I were to be questioning WIC, maybe I would ask them the same question, which is when you say there is this amount of local news, how much of it is there in your morning show? But we are not questioning WIC, we are asking you what you will do once you own the station if you were to be authorized to own it.
409 MR. MacDONALD: We would commit to the same levels, and that morning show right now is all local news and we would retain that.
410 COMMISSIONER WYLIE: But it is not all local news in the sense that there are other categories clocked in in that programming.
411 MR. O'FARRELL: Madam Vice-Chair, maybe I can help. We are not familiar with the logs of BCTV and the manner in which --
412 COMMISSIONER WYLIE: But you're familiar with your own application.
413 MR. O'FARRELL: Yes. Exactly.
414 COMMISSIONER WYLIE: I'm trying to divide in your own --
415 MR. O'FARRELL: And we have defined that morning show as a Category 1 news program.
416 COMMISSIONER WYLIE: But it does include Category 2, and human interest, which would be local non-news.
417 MR. O'FARRELL: And we haven't quantified that.
418 COMMISSIONER WYLIE: You don't have any ballpark figure as well as to what is local and whether you differentiate between B.C. news and local news?
419 MR. O'FARRELL: Perhaps what we could do to satisfy the Commission is over the lunch break take a look at how to break that down and immediately come back after lunch with the response.
420 COMMISSIONER WYLIE: Yes.
421 Now, I'm referring to the WIC station as it exists now simply as the threshold or beginning for discussion with the aim of seeing whether -- if your proposals were approved as filed, what would be the result for the viewer on that broadcast undertaking? Would there be less, would there be more? And if you offer to report and we find that that is an important aspect, then we have to know what we are dealing with.
422 MR. SHEA: Commissioner Wylie, with respect specifically to CHAN, it's quite different from the other two markets, and I know we are headed there, our proposal does not call for any new incremental local news programming in the market. And, Commissioner Wylie, it's principally because when we reviewed the situation with respect to local programming, we didn't quite honestly see how we could improve upon it in Vancouver on CHAN.
423 COMMISSIONER WYLIE: No. I'm looking at whether, as I said at the beginning, at least we will have the same amount maintained. And if that morning program is changed, it could still be -- if you categorize it as Category 1, it could be local programming but not local news.
424 MR. SHEA: Go ahead, Ken.
425 MR. MacDONALD: Commissioner Wylie, I might be able to help.
426 You may be referring, there was a time, up until I guess it was August of 1999 that "Canada AM" was also running in the morning and this morning show was considerably shorter and ran prior to "Canada AM". But what we are saying is that the local show, as it runs now in the block schedule, we would retain that local commitment in its entirety.
427 COMMISSIONER WYLIE: Yes. Because if we were to decide to require commitments, or even at renewal, conditions of licence as a quid pro quo for owning two stations in the market, that would be our exception as a quid pro quo for yours, you may be then having to do 42.5 hours of local news when in fact that won't be the case if that three-hour programming has other categories, because surely you wouldn't call "Canada AM" a local news program throughout.
428 MR. O'FARRELL: Which is why, if you will indulge us, Commissioner, we will do this for you over lunch and we will clarify immediately --
429 COMMISSIONER WYLIE: Okay. And you'll get back to us with some --
430 MR. O'FARRELL: On the breakdown of the categories.
431 COMMISSIONER WYLIE: -- percentage perhaps.
432 MR. O'FARRELL: Certainly.
433 COMMISSIONER WYLIE: -- sufficient so that we have some idea.
434 Do I understand that -- and with regard to differentiating between B.C. and local, do you have any comments considering the number of retransmitters, et cetera, which will become an issue if -- depending on the extent to which CHEK, for example, which is available to a number -- to viewers, as well as CHAN, it would be interesting to know whether there will be a more local local on CHEK and B.C. on CHAN. So do you differentiate between what is B.C. regional/local in news and local?
435 MR. MacDONALD: Yes, Commissioner Wylie. In terms of taking them in the reverse order you have mentioned them, in terms of CHEK in Victoria, that would have a completely -- almost completely local focus in that it would serve -- it would cover the Vancouver Island. It would be an island station.
436 And in terms of CHAN, their programming now, which is B.C.-oriented but which is truly local and more Vancouver in content, with the exception of "Canada Tonight" which will be replaced, we would retain those commitments to local news. It's a heavy local news agenda and it's quite separate and distinct from what we propose for CHEK in Victoria.
437 COMMISSIONER WYLIE: In calculating the hours of local news, did you calculate in their the 2.5 hours which is the global national news?
438 MR. MacDONALD: We did not. We certainly didn't count national news as local content, but it is -- it's not included in CHAN's programming hours per se.
439 COMMISSIONER WYLIE: So you will take that into consideration when you look at the difference between local news and local non-news programming, because presumably the global news is not local to --
440 MR. MacDONALD: No. You're quite correct. This is a national newscast.
441 COMMISSIONER WYLIE: Now, there is a string of course of retransmitters to CHAN and this affiliation of CHAN, as per your application, is planned for September 2001, which will be a year from now. Will that mean that the benefits with regard to programming will start then and run for five years where they are in tandem with monetary or financial benefits because of the transfer?
442 MR. SHEA: That's correct, Commissioner Wylie. The benefits in the case of both CHAN and CHEK, the five-year clock would start on September 1st, 2001.
443 COMMISSIONER WYLIE: Now, one of the things of course that is of interest to us is the fact that with both CHAN and CHEK, which are affiliated to the CTV Network, your proposal is based on the affiliation continuing for another year, at which time your proposals would replace the programming. What will be programmed in lieu of the national programs or in lieu of the programs that will be done starting in 2001 while you're still affiliated, that is, in the non-affiliated part of the -- or non-network part of the broadcast day?
444 How do you propose to -- are you going to switch some programming from CKVU? How are you going to program the station?
445 MR. SHEA: It will essentially be very much status quo, Commissioner Wylie. In other words, there will be no noticeable change in the line up of either CHAN or CHEK for the year ahead. There will be no cross-promotion or any sort of identification of CKVU or Global.
446 Our plan and intention is to work very closely with the CTV Network throughout the course of next year so that we organize a marketing campaign, if you will, to consumers and cable subscribers and satellite viewers in the province of B.C., so that it's a very well understood consumer change out on September 1st of 2001.
447 So BCTV in the interim will look identical to the way it does today. We have recently had discussions with CTV on the manner and type of program organization that will take place over the next year. And to your earlier point, all the changes in local programming and national news would start September 1st of 2001.
448 COMMISSIONER WYLIE: So despite -- without going into the intervention stage, despite the comments in the CTV intervention that continuing the affiliation for a year was not appropriate, you have now some assurances that you can give us that until September 2001 it will be status quo, at least with regards to getting programming from the CTV Network?
449 MR. SHEA: That's correct. We have an agreement in principle with CTV that all will remain intact until September 1st, 2001.
450 COMMISSIONER WYLIE: And of course my question is more in relation to what happens to the screen and to the viewer? Not necessarily the exact details of -- and the arrangements you may make.
451 MR. SHEA: Essentially, Commissioner Wylie, there is no change. Mr. Gardiner will continue to buy and schedule the same type of programming that WIC has had on their stations for the previous number of years, and the major consumer shift happens a year from now.
452 COMMISSIONER WYLIE: You don't seem to have in your application any proposal for local initiatives vis-à-vis the interior, that is, the localities or communities that are served by the retransmitters. Is that correct?
453 MR. SHEA: That's correct. Although we do have certain initiatives in Kelowna with regard to the CBC affiliate that's also part of this application. But you're quite right --
454 COMMISSIONER WYLIE: I meant more the CHAN retransmitters.
455 MR. SHEA: You're quite right in the case of B.C. that the predominant benefits are in the Vancouver area. There's specific benefits which we can talk about in Victoria which are quite different from that being proposed in Victoria. But, Commissioner Wylie, our communication with the CFTPA and with producers in B.C. led us to the conclusion that the most significant and I guess most required needy benefit was in the area of supporting the development of Canadian programming, which is why a significant percentage of the B.C. benefits flow to the production fund.
456 COMMISSIONER WYLIE: With regard to the gathering of news to ensure that the interior is reflected or served in the local aspect of CHAN, which I understand is quite successful, do you know how that is done and what do you propose to do when you are the one programming it?
457 MR. SHEA: Commissioner Wylie, I think Ken MacDonald has a very good sense of the level and type of coverage that the interior of B.C. receives under its current stewardship of WIC.
458 We have also proposed and we fully intend to do a lot more work with respect to this one benefit, but we have proposed a series of benefits that are assigned to co-operate endeavours with the CBC. Clearly, one of our plans over the course of the next couple of months and years ahead is to see if we can't share more northern and remote bureaus, not just in B.C. but certainly in B.C. and Alberta, so that we do get combined wider coverage, and it just makes much more sense in this day and age for us to be working together with other national networks to at least co-operate in terms of operating-efficient operations where the reporters might be different but the camera people and so on might be available to both reporters.
459 We do not appear before you today with a specific plan with regard to that. It's our intention to sit down with the CBC. There are monies ascribed in B.C. for such an undertaking, but I think whatever the level of commitment that WIC currently applies to coverage in the interior of B.C. will, at a minimum, be maintained, and we hope enriched as a consequence of the work we plan to do with the CBC.
460 MR. ASPER: Commissioner Wylie, I think it's also worth pointing out that many of the benefits we have proposed in our application, in general and for the Vancouver area, including support of colleges and universities in the area, educational institutions, our -- sorry -- arts institutions and our B.C. mentoring program with the Canadian Film and Television Production Association, for example, will benefit not just Vancouverites but people from the interior of B.C.
461 COMMISSIONER WYLIE: Mr. Asper, Commissioner Grauer will discuss with that you.
462 What I'm trying to focus on now is that will not necessarily certainly directly improve what's on the screen, mentoring programs. It may indirectly or eventually. I'm trying to look at -- yes, I can see Mr. MacDonald nodding. I nod too.
463 But I'm looking at 2001 in September, and in 2002 in September. What will these stations look like on the screen? What will be there? Will there be less local news, more local news, more perhaps non-news, local programming in exact number of hours, with the possibility that the Commission may think that an exception can have -- as a quid prop quo, an exception on our part, maybe make sure that the same thing will be true when we discuss CHCH, that the stations are different, that they offer, at least for the period when -- I have heard you say local news and some local programming is important, that that's actually what your annual report will tell us if you own both stations. So that's the perspective from which I'm looking at it, the direct result immediately on the screen or in the short term.
464 MR. MacDONALD: Commissioner Wylie, taking your question directly, if I may, CHAN currently, in terms of those interior areas you talked about, they do have freelance arrangements there now. They do take the show on the road out there periodically. And, as Mr. Shea indicated, we would certainly want to continue that. I do understand, though, there is some effort too made not to take away audience from the local stations in those areas. There is some attention paid to that as well.
465 So it's a balancing act, and certainly those commitments that are currently being made by CHAN, we would support and enhance.
466 MR. SHEA: Commissioner Wylie, I guess as an overview -- and it might be helpful, specific to the changes in the B.C. market, because I think your question is fundamentally what's the consumer going to see that's different -- with respect to CHAN, it will become a replication of what we know of Global today. However, it will keep the current level of local programming that CHAN currently produces, which will be significantly more than Global Vancouver currently does, as well as there will be the inclusion of a national newscast emanating out of Vancouver.
467 For the residents of B.C. who are currently not served by Global, which by and large is people living in the northern part, given we will be now transmitting on the grid throughout the province, they will be getting a new and different Global Television Network which they haven't seen before.
468 But the most significant change in the market is really that of CHEK. CHEK and CHAN, by and large, today mirror each other. CHEK will become a local station with a completely different schedule. That we think is a significant benefit to the viewers of both the island and Vancouver because it will finally be different. It will be different in two ways: a completely different program schedule in Prime Time than what one sees today; and, secondly, an enriched and improved local programming undertaking in Victoria, because they have not been served by any dedicated local programming initiatives for some time.
469 So that is sort of a backdrop. I think you'll see as we go down this path that the real improvements with regard to local happen more in Victoria, given the style and nature of content than they do in today's CHAN. It will essentially be replicated from what it is today.
470 COMMISSIONER WYLIE: Yes. We can talk about CHEK now. CHAN will just have been a wherewithal because it's more in the guise of the quid pro quo.
471 MR. SHEA: Precisely.
472 COMMISSIONER WYLIE: Certainly, you would be expected to do no less.
473 And where there will be changes that maybe we will eventually want commitments about, if you were to own both stations, it would be with CHEK where you have proposed the addition of news bureaus, for example, in Port Alberni, Campbell River and Tofino, the addition of a mobile microwave unit and more ENG cameras to allow you to localize CHEK, so to speak. However, there are programs on CHEK now, and just the renaming of them is not really an additional -- or an increment to what's there already.
474 Again, if we look at the licence obligation of CHEK, it's expected to do, according to its licence, 13 hours and 20 minutes per week of original local news, and it is doing less than that, 11 hours and 44 minutes. So instead of calling them to a hearing, maybe we will call you to a renewal and get you to do what you were supposed to do.
475 MR. SHEA: That's our intention.
476 MR. ASPER: Thank God for Global.
477 COMMISSIONER WYLIE: Your proposal is 17 hours of local non-news programming. That is mainly by increasing or expanding the supper hour of news, which would be the "Island Report". Is that correct, Mr. MacDonald?
478 MR. MacDONALD: Yes. There are two elements to the incremental hours, Commissioner Wylie. One is expanding the supper hour to 90 minutes, as you point out, and the other is the addition of a daily talk show, a 30-minute talk show, "Your Say". Monday to Friday, I say --
479 COMMISSIONER WYLIE: The "Island Final". No?
480 MR. MacDONALD: No. I'm sorry. The --
481 COMMISSIONER WYLIE: Oh, no. No. The talk show --
482 MR. MacDONALD: The talk show is called "Your Say". It's a 30-minute program running in the afternoons Monday to Friday, a local information show.
483 COMMISSIONER WYLIE: Something that I find puzzling is that -- Commissioner Grauer may correct this if I didn't understand it properly, but I understand that there will be $3 million allocated to CHEK alone for local endeavours, but an additional $5 million if we were to allow you to own CHAN as well. So there would be $8 million, then, spent on CHEK for local endeavours. What would disappear if you weren't allowed to own CHAN and CHEK but you were allowed to on CHEK?
484 MR. SHEA: The benefits that are ascribed to CHEK would remain intact, obviously.
485 COMMISSIONER WYLIE: But what would happen? What is the $5 million -- what would the $5 million go to, which I gather would be as a benefit for us approving your ownership of CHAN as well, but would be spent on CHEK? Is that correct?
486 MR. SHEA: Commissioner Wylie, I think in our application we indicated that should the Commission wish to alter or change any of the benefits that we would principally reallocate those to the promotion fund, so in the case of CHAN being approved and CHEK not being approved, which I think was your question, the $5 million that was being ascribed to a CHEK benefit, where would it go? In all likelihood, it would go to one of either the Promotion Fund or we would bring forward another acceptable benefit to the Commission.
487 COMMISSIONER WYLIE: Either you didn't understand my question or I didn't understand your answer. But that extra $5 million, would it go to any of the local endeavours that you have proposed as a programming benefit, not a tangible benefit?
488 MR. SHEA: And it could.
489 COMMISSIONER WYLIE: And more than likely -- my question is: If it's only $3 million, will these hours -- suppose we were to decide to commit -- to require a commitment that the local programming be done, would it be done even if you didn't have -- you weren't allowed to own CHAN as well?
490 MR. SHEA: I don't think -- in all fairness, Commissioner Wylie, it would not be to that level. Certainly the $3 million would be maintained. The incremental five is tied to a benefit should both be approved.
491 COMMISSIONER WYLIE: But it's not clear to me, if we were to accept that, your proposal to have 17 hours of local news and then additional hours as well of local non-news programming, whether that $3 million would be enough to meet this commitment.
492 MR. SHEA: No, it would not. Commissioner Wylie, it's --
493 COMMISSIONER WYLIE: Therefore, there would be different programming --
494 MR. SHEA: That's correct
495 COMMISSIONER WYLIE: -- enhancements offered if you only owned CHEK.
496 MR. SHEA: That's correct.
497 COMMISSIONER WYLIE: Have you some details to give us as to how that would occur? Because if we were to decide to ask for a commitment as to these proposals, we would have to know what do we have, as a regulator, if you own CHEK only. And what -- if we allow you to own CHAN and there's another $5 million -- what's the difference in what's on the screen?
498 Commissioner Grauer can discuss the tangible benefit aspect of it, the replacement, whatever. I'm focusing on what is going to be broadcast.
499 MR. SHEA: I understand. And because there are -- there's essentially two benefit allocations, one tied to the combination if they are approved and one that's specific to CHEK. I think what we would have to do, in fairness, Commissioner Wylie, is come back and say: If we are only approved for CHEK, these are the principle hours of programming that we feel would be fundamental in the market and necessary in the market.
500 My hunch is that it would be tied to the evening news -- or the supper hour news would be a priority for us. And perhaps some of the other hours that are committed to as part of the CHAN undertaking would no longer be advanced given it was not approved. But I think we can come back to you and tell you specifically what you would see.
501 COMMISSIONER WYLIE: I'm sure you wouldn't help the next owner to program local. So that's of course -- I'm more interested in you are the one who tied an additional $5 million --
502 MR. SHEA: That's correct.
503 COMMISSIONER WYLIE: -- to us approving CHAN and I'm trying to see to what extent would it enhance CHEK as a counterpoint to having two stations in the same market, because you are telling us that it's good for the broadcasting system to have the two, so we would like to be able to measure.
504 So do you think your hunch can be transferred into numbers over lunch?
505 MR. SHEA: Absolutely.
506 MR. MacDONALD: Commissioner Wylie, if I may be just permitted to correct an omission. When I was giving you the incremental hours for CHEK, I negated to mention the 30-minute sports program "Sportspage", which runs late night Monday to Friday and on the weekend.
507 COMMISSIONER WYLIE: Yes. I was looking a news, at local news, and now we can look at the local non-news programming.
508 And, again, I'm using as the base the licence. And in this case, in the case of CHEK, you'll be doing fine as a base because all it said was that the Commission noted the licensees plan to reflect the local community. So the threshold is big.
509 However, in local non-news, CHEK is currently, from our calculation, doing two hours, ten minutes of original, and six hours, ten minutes of repeat programming. In that case, there would be six hours committed by CanWest, of which 5.5 hours would be original. And that's where you get the programs "Your Say", which you mentioned before, "Sportspage" and -- was there another program? A talk show? "Your Say" is the talk show. Right?
510 MR. MacDONALD: That's right.
511 COMMISSIONER WYLIE: How does that relate to the $3 million and the $5 million as well if CHAN were not -- you were not allowed to own CHAN?
--- Short pause / Courte pause
512 MR. SHEA: Commissioner Wylie, what we did in terms of our bill to this application or planning for the application is that we took the $8 million ascribed to Victoria to CHEK and built a plan around that. We do not have the specific breakout of what the $3 million is attributed to and what the $5 million is attributed to. Over lunch we will do that and give you some indication of what -- on the "What ifs" what would happen to the various programming commitments.
513 COMMISSIONER WYLIE: Now, if the Commission did not approve your application to own both CHAN and CHEK, what would be your commitment vis-à-vis CKVU?
514 MR. SHEA: I think you would hear what the plans of CKVU are --
515 COMMISSIONER WYLIE: No. I meant in terms of would you see, then, yourself as owning CHEK and divesting of CKVU anyway?
516 MR. ASPER: Are you suggesting we would -- you're saying if both CHAN and CHEK were denied?
517 COMMISSIONER WYLIE: No.
518 MR. ASPER: I'm sorry.
519 COMMISSIONER WYLIE: If the Commission allowed you to own CHEK and turn it into a more local Victoria station, would you still -- would your proposal change with regard to your plans with CKVU, unless you have sold it already?
520 MR. ASPER: No. We're keeping everybody at bay.
521 COMMISSIONER WYLIE: Maybe CTV.
522 MR. ASPER: No. We would be coming to you with a -- no. We would be still saying, then, we would wish to keep CKVU.
523 COMMISSIONER WYLIE: Therefore, there would be some programming changes probably. "Sportspage", for example, is on CKVU. How different would it be on CHEK, which is one of your commitments for local non-news programming?
524 MR. SHEA: There would be some very minor changes to Global -- CKVU. So in the case of "Sportspage", which becomes a Victoria commitment, it would not be -- there would be a programming change with respect to Global, but it would not be that significant.
525 COMMISSIONER WYLIE: Well, I'm more interested in what would happen to CHEK. Would you have "Sportspage" on CHEK and on CKVU.
526 MR. SHEA: No, we would not.
527 COMMISSIONER WYLIE: Well, I'm more interested in what would happen to CHEK. Would you have "Sportspage" on CHEK and on CKVU?
528 MR. SHEA: No, we would not.
529 COMMISSIONER WYLIE: Then what would be replacing "Sportspage" as the local enhancement for CHEK?
530 MR. SHEA: CHEK may well become the -- I think in that case, quite honestly, "Sportspage" would stay on CKVU in Vancouver and we would have to reassign the benefit to another local program.
531 COMMISSIONER WYLIE: "Your Say" is a program that would be quite easily amenable to being a Greater Vancouver Area program. What do you intend -- how do you intend to program this so that it can be counted as local non-news programming on CHEK?
532 MR. MacDONALD: I think, Commissioner Wylie, that it's an interactive show, so you would certainly get calls from people in the Vancouver market. However, the topic selection for the program on a daily basis would be based on Victoria issues, island issues, and as such the content would remain true to the focus and intent of the program.
533 COMMISSIONER WYLIE: Because if it were, for example, the Victoria legislature, that would certainly go beyond the island in interest. So your tool will be the topics chosen?
534 MR. MacDONALD: That will be the mandate of the program, yes.
535 MR. ASPER: Commissioner Wylie, while we are -- I know we're discussing programming, but I think it's relevant for the Commission to understand why we are taking the position that the CHAN-CHEK ownership situation be maintained. From our perspective, one of the reasons was that the two stations are so inextricably linked from an operational point of view that it was actually a cost of millions of dollars of separating the two, which in our view would be a detraction from the system that led us to -- that was one of the criteria that led us to the decision to try to maintain that existing ownership situation.
536 COMMISSIONER WYLIE: But, Mr. Asper, you will discuss with counsel later whether -- which is -- I don't know if that's what I'm hearing from you, if we don't allow you to purchase both you don't want any?
537 MR. ASPER: No.
538 COMMISSIONER WYLIE: You don't want either.
539 MR. ASPER: No. It just was a highly preferable situation, from our perspective.
540 COMMISSIONER WYLIE: Yes. Except that I'm trying to look at hypotheses since I only have one vote as to --
--- Laughter / Rires
541 MR. ASPER: Yes. I know the feeling.
--- Laughter / Rires
542 COMMISSIONER WYLIE: -- as to the possibility of you having both stations, having neither and only CKVU, unless you have sold it already, and having only one station, if that's acceptable to you, should it be the choice.
543 I'm trying now -- you should be getting the gist of my questioning --
544 MR. SHEA: Oh, I get it. We're getting the gist.
545 COMMISSIONER WYLIE: What happens if you don't have both and only one? What will be there on the screen? And the tangible benefits don't answer that question necessarily because money given to a foundation or a -- to a university is not going to change, certainly not directly, what will be on the screen in 2001. So perhaps we can have a --
546 And if we do want to -- if we do decide to allow you to own both stations and we accept your proposal to have report cards to show us how you are meeting your commitments, we have to know what these commitments are.
547 MR. SHEA: Commissioner Wylie, you're right. When we built --
548 COMMISSIONER WYLIE: Of course.
--- Laughter / Rires
549 MR. SHEA: There's never a debate there.
550 I guess in fairness to your line of questioning, we built the benefit model and the programming model in this application on the assumption of the approval of both. In terms of only approving CHEK, for example, and/or just approving CHAN, but let's stay with just approving CHEK, obviously our commitment on the benefit side, the absolute dollar amount would stay the same. However, in fairness to the plan, because it becomes a completely different plan, the allocation of those dollars might end up to be quite different.
551 What we can do is give you some indication today. I think that's a bit of a rushed process, but I think we can give some indication today --
552 COMMISSIONER WYLIE: Or maybe by a reply stage, which is when counsel will ask you whether all these commitments can be converted into conditions of licence.
553 MR. SHEA: Okay.
554 COMMISSIONER WYLIE: You obviously had not done it that way, but you have to -- we have to look at this hypothetically as not getting all you want/getting all you want, and what is the result for the viewer, which is of importance to us. I understand the bigger picture as well, but the devil is in the details when the exception is requested on the basis of being able to differentiate the two and adding to the broadcasting system. So we want to know what happens, then, if it's not the whole package.
555 MR. SHEA: Okay. We will undertake to give you, by reply stage, Commissioner Wylie, an undertaking that separates how the various benefits would be reapplied if the scenarios were to change where we were approved for one or the other.
556 COMMISSIONER WYLIE: And as a first step what is it you're prepared to commit to when you compare what is already available to those viewers, because that's the performance of the stations, what these viewers will get if Global owns the stations, one or both of them.
557 MR. SHEA: That's correct.
558 COMMISSIONER WYLIE: Let's go now to CHCH and do a similar exercise.
559 The expectation for local news is 17 hours of original programming for CHCH, and they do now, if we code the AM show totally as news, which would be highly unlikely as we discussed earlier, 29.5 hours of local news, and presumably you would also commit to 29.5 hours of what is called local news, but that includes "Hamilton Sunrise", a phone-in show, regional sports, local public affairs and an hour of regional arts and entertainment programming. So obviously there is local news and local non-news programming to be separated out here. And also to look at the amount of local news in "Hamilton Sunrise" which, as a morning show, probably has the same problem as the "Hamilton Morning Show" in that when you categorize this it's not a problem, but for discussing how much local news is there in that program --
560 MR. MacDONALD: Commissioner Wylie, I can perhaps make it clearer by just breaking out the hours. We are counting, in our estimation, the "Hamilton Morning Show", "Hamilton Sunrise" as local news content. The program you referred to on CHCH in the morning was a service, the Bloomberg Service, with news inserts. This will be a full-up, fully staffed news information, weather, traffic, discussion of issues, interviews and so on. It will be entirely news content and that's an addition of 12 and a half hours of programming to the existing schedule there.
561 In addition, we're proposing to add seven hours of local information programming in the form of the talk show "Talk Back" and the regional public affairs show on the weekend "Full Circle", the one-hour locally focused arts and entertainment program. And I want to stress that program is an information program on local cultural events and entertainment and related stories. I think that pretty wells rounds it out I believe. Oh, no, the half-hour local public affairs show "Full Circle" as well.
562 That's all included in those seven hours of local information programming.
563 COMMISSIONER WYLIE: Of non-news?
564 MR. MacDONALD: It would depend how you would classify the talk show, for example. It will be dealing with news issues clearly on a daily basis and --
565 COMMISSIONER WYLIE: But not news in the sense of being Category 1. If you were to log it, what would you log it as, that programming? As news?
566 MR. MacDONALD: That would be -- oh, I'm sorry. The talk show would be Category 2.
567 COMMISSIONER WYLIE: So that's what I mean, the difference between Category 1 and Category 2, because there's a limit to how many hours of local news one can air on a local station, so there is local programming that is non-news and it can easily be the type of programming that the Commission could be worried about on CHCH not being local local but being regional, possibly even being oriented to Toronto. It would be less difficult to -- or more tempting to do that with those shows. What is your comment?
568 MR. MacDONALD: I was just going to say that the entire programming structure for CHCH is premised on a deep local focus and on our belief quite frankly that there are enough Toronto news crews running around covering Toronto news at this point in time and information programs dealing with Toronto issues. We see the real opportunity here to speak to the 1.2 million viewers down in Hamilton-Niagara who we feel are somewhat disenfranchised and underserved and are thirsting after this kind of programming which will necessarily be locally focused in terms of its content.
569 MR. SHEA: Commissioner Wylie, we would be prepared to accept a condition of licence that locks this programming in so that it is absolutely -- all our incremental benefits programming is absolutely targeted at the Hamilton-Niagara market. And we have absolutely no intention of trying to creep back into Toronto because, in our opinion that's what's failed, or to become more regionally focused because in large part a lot of us suffer with the real understanding of what that definition means.
570 But our commitment is that all these incremental programs and the current programming on CHCH would remain very local in its orientation.
571 COMMISSIONER WYLIE: Now, if I look at your Schedule 10 at pages 68, 69 and 70, where you discuss those non-news local programs, "Sportscope", "On The Program", and there's also an arts program. Correct?
572 MR. MacDONALD: No. "On The Program" is the art --
573 COMMISSIONER WYLIE: "On The Program" is that -- and "Full Circle", which you mentioned earlier. They are all described as regional. No. "Full Circle" is described as a local public affairs program, but then later on you talk about it as:
"...we envision a program that would become a forum for local and regional political and community leaders, their critics and the public at large."
574 I'm reading from page 69, the description of "Full Circle".
575 Then "Sportscope" is described as a program "with a heavy emphasis on regional amateur sports"; and, "On The Program" is described as:
"A weekly review of the regional arts and entertainment scene."
576 What is the definition of "regional" in that context?
577 MR. MacDONALD: Commissioner Wylie, the context that the word "regional" is used, as you read it in the application, we were referring to Hamilton, Halton and Niagara, and I think that's what we were trying to stress there with regional.
578 COMMISSIONER WYLIE: So I could substitute "with a heavy emphasis on Halton" -- I'm not going to be able to --
579 MR. MacDONALD: Hamilton and Niagara.
580 COMMISSIONER WYLIE: Hamilton-Niagara amateur sports.
581 MR. MacDONALD: And you're right, I should have, when we put it together, but that's what we're referring to as regional.
582 COMMISSIONER WYLIE: Very interesting, because surely you knew that we would ask questions about going from regional to local that you didn't specify those three. You see, if you had put them there I would be able to say them today.
--- Laughter / Rires
583 MR. MacDONALD: I should have. Mea culpa.
584 COMMISSIONER WYLIE: So that's your understanding of "regional" for these programs is that will be Halton, Niagara, Hamilton?
585 MR. MacDONALD: Hamilton.
586 COMMISSIONER WYLIE: All those "H"s. You should have put them in there because I could have practised.
--- Laughter / Rires
587 COMMISSIONER WYLIE: That's what you mean by "regional"?
588 MR. MacDONALD: Absolutely.
589 COMMISSIONER WYLIE: Now, when will these programs be launched?
590 MR. MacDONALD: It would be our intention, Commissioner Wylie, to -- obviously all of this programming and it's substantial, 19.5 hours in total, would have to be phased in. It could not all go, you know, the first of September, but it would be our intention to get most if not all of it on the air certainly by January 1.
591 COMMISSIONER WYLIE: Of 2001?
592 MR. MacDONALD: Correct.
593 COMMISSIONER WYLIE: And if I were to ask what about "all" as opposed to "most", when would that be?
594 MR. MacDONALD: We could get it all on the air by then.
595 COMMISSIONER WYLIE: For Jan 1.
596 You also propose, as a local non-news enhancement, the local news documentaries and you say that you will do five within four years. Do you have any plan as to exactly how this will -- will the first one show up in year three, four?
597 MR. MacDONALD: No, we don't have a specific plan for that now. We would anticipate, certainly in the first few months, at the fall of this year, concentrating on getting the local programming on the air first, but we would move very quickly in that first year to set up a regime to see that these documentaries are produced and that that work begins very soon.
598 CHCH actually at one time had a very rich heritage of producing documentaries and it's something that we're eager to see done again.
599 COMMISSIONER WYLIE: When would we be likely to see the first one?
600 MR. SHEA: In the first year.
601 COMMISSIONER WYLIE: And is the intention to have those produced by independent producers?
602 MR. SHEA: Yes, it is.
603 COMMISSIONER WYLIE: How independent?
--- Laughter / Rires
604 MR. SHEA: They won't be done by Fireworks.
605 COMMISSIONER WYLIE: The Chairman mentioned earlier this morning that you're near Toronto. My understanding is CHCH can't solicit advertising in Toronto but it can accept it unsolicited. Correct? And Global, of course, can't sell local advertising in Toronto --
606 MR. SHEA: That's correct.
607 COMMISSIONER WYLIE: -- but CHCH can. Is that your understanding, Mr. O'Farrell? According to the licence, CHCH can accept unsolicited local advertising from Toronto?
608 MR. O'FARRELL: Yes, that would be the case for CHCH.
609 COMMISSIONER WYLIE: And added to that, the fact that you have these transmitters in a number of places in Ontario, as far as I recall, Sault Ste Marie and then -- plus southern Ontario, but as far up as Timmins. Is that the most northern one?
610 MR. SHEA: I believe it is.
611 COMMISSIONER WYLIE: Considering those two, how will you ensure that these programs are local to Hamilton, Niagara, Halton? How about that?
612 MR. SHEA: Commissioner Wylie, it's incidental to the distribution. The local programming which seeks as its revenue base local advertising may not be of significant interest to other regions of the province, but all the other aspects of the Canadian programming on the service will be. So we have no intention to attempt to, in effect, replicate Global because Global and the nature of its licence is to provide more regional coverage. It will remain true to form.
613 COMMISSIONER WYLIE: And maybe not replicate Global regionally but it could be more Toronto-oriented.
614 MR. SHEA: In terms of the local news and local programming, I think we have already put forward, Commissioner Wylie, that we would be prepared to accept a COL. So if that were the case we would be offside.
615 But there is no advantage in having yet another Toronto news station. There is a significant advantage from a consumer perspective and a revenue perspective to have a Hamilton regional newscast, which is Halton and Niagara. That's where we see the real future of providing service to that region.
616 MR. ASPER: If I can just add, from our experience. You know, where Global news has always had trouble competing against other newscasts in Ontario that are primarily local-oriented is that it is a regional newscast and therefore it's specific to nobody.
617 What we are trying to become is a big fish in a defined pond in Hamilton, be a principal player in the market of Hamilton rather than a peanut, a small player, in the larger region of Ontario, which is already a very crowded marketplace. That's the business strategy. And I think as Kevin said, we are committing to you that we will follow that paradigm.
618 MR. SHEA: And I think our advisory board, Commissioner Wylie, that's going to be one of their absolute key concerns is are our commitments to local programming real, and they will report on that.
619 COMMISSIONER WYLIE: At the end of this questioning I will go back to this reporting, so start thinking of when you say "reporting, safeguards, conditions of licence to ensure that Hamilton is really transformed into a local station", what are the specifics that one would report on or what are the conditions of licence that one could request to ensure that this occurs, because I'm not convinced that just because you say, "Well, WIC tried the regional thing and it didn't work", that clever Global couldn't make it work.
620 Given the circumstances, retransmitters through a lot of Ontario, especially the heavily-populated Ontario, the fact that CHCH would give you a possibility of selling local advertising in -- of accepting local advertising in Toronto, just to say that one has tried that and not succeeded, it also has not been a very long time because I was one of the clever Commissioners who allowed Ontv into Ottawa and I'm still young at the Commission.
621 MR. SHEA: But, Commissioner Wylie, I think --
622 COMMISSIONER WYLIE: So, you know, is it because they weren't at it long enough? The circumstances that we look at certainly makes it very tempting to stray from the local, and that is the reason why you're telling us that we should allow you to own both Global regionally and Hamilton globally.
623 MR. SHEA: But I think practically speaking, Commissioner Wylie, people in Toronto are not going to turn to a Hamilton TV station to get local news.
624 COMMISSIONER WYLIE: If it looks like Toronto?
625 MR. SHEA: Well, there's already significant competition in that market that has significant ratings, in that market that has a history of providing a Toronto newscast --
626 COMMISSIONER WYLIE: Well, we were talking about also "Full Circle", "Sportscope", "On The Program", "Talk Back", which are --
627 MR. SHEA: All these programs.
628 COMMISSIONER WYLIE: Local news is perhaps a little easier to distinguish, but these programs can be less local --
629 MR. SHEA: I guess I don't know how to be more --
630 COMMISSIONER WYLIE: -- quite easily.
631 MR. SHEA: -- profoundly specific that our intention is not to creep into Toronto. Our intention is to run out of Toronto the minute we get the opportunity to run CHCH, that its future as a local broadcaster is to serve its local market. And as, you know, Leonard pointed out earlier, it is of a significant size, and that's its direction, that's its future, that's its mandate. We don't see any advantage to trying to pretend you're a Toronto station.
632 COMMISSIONER WYLIE: But obviously your plan is to make the commercial success, the financial success as well, and I'm trying to see how will you stick to --
633 MR. SHEA: The assumption is --
634 COMMISSIONER WYLIE: -- what you're proposing compared to what you may feel works or not.
635 MR. SHEA: The assumption is that by moving to Toronto it becomes a commercial success, and what we're saying is that the last two years have demonstrated that that's not the case, that if you go back 20 years ago when CHCH was a powerhouse -- by the way, we're changing the name from Ontv, which means throughout the province, to CHCH, which means Hamilton -- the success here is that CH was when they were --
636 COMMISSIONER WYLIE: Call it back the noble station.
637 MR. SHEA: -- was when they were a truly local station. You know, that's what our plan is built around.
638 COMMISSIONER WYLIE: Although it was a success in a very different environment.
639 MR. SHEA: It was a success in a different environment, but it's not too similar from most local stations operated by either CTV, ourselves or CHUM. The more successful ones are the ones that are true to serving their local service.
640 COMMISSIONER WYLIE: If that's agreeable to you, Madam Chairperson, we could break for lunch and discuss after lunch more details about the programming overlap or lack thereof between Global and CHCH as well as CHAN and CHEK if you were allowed to own both, the safeguards, et cetera.
641 And for the benefit of intervenors, it would be helpful if you gave us at least some details of the type of questioning we went into earlier about, so that intervenors know where you're going. We're not expecting to the minute, of course, but in terms of what your commitments are with regards to local news, local non-news programming and the difference if you end up owning CHEK and not CHAN.
642 MR. SHEA: And specific to that example, Commissioner Wylie, it's owning CHEK without CHAN, not CHAN without CHEK.
643 COMMISSIONER WYLIE: Well, the benefits are mostly CHEK, right --
644 MR. SHEA: Correct.
645 COMMISSIONER WYLIE: -- because I think I have heard you say that CHAN will be more or less the status quo? We certainly want no less than the status quo on CHAN.
646 MR. SHEA: Understandably.
647 COMMISSIONER WYLIE: And there is the $5 million for CHEK that is tied to the approval of CHAN.
648 MR. SHEA: Correct.
649 COMMISSIONER WYLIE: So I will pass it on to the Chairperson.
650 Thank you.
651 CHAIRPERSON OF THE COMMISSION: We will be back at five past two.
652 Thank you.
--- Recess at 1242 / Suspension à 1242
--- Upon resuming at 1400 / Reprise à 1400
653 LA PRÉSIDENTE: Madame Wylie, si vous voulez poursuivre, s'il vous plaît.
654 COMMISSIONER WYLIE: Welcome back.
655 Apparently Mr. Shea worked all through lunch. So does he want to start?
656 MR. SHEA: Let's hope we get good marks for it.
657 COMMISSIONER WYLIE: I will finish my questioning perhaps and then we can come back to what you actually did during lunch time -- if you wish.
658 The question of the difference between CHCH and CHEK and CHCA, Global -- I will refer to Global as the regional global network in Ontario. There is quite a few places, discussions and questions raised in interventions and in your reply, and again statements made this morning in your opening remarks about the priority programming and the fact that there will be no duplication and in your reply, and again this morning, in the code of conduct you have as the first item:
"That the 8 hours of Canadian priority programming in prime time carried on CHCH and CHEK will have no duplication on the Global Television Network." (As read)
659 Which will include, I guess, CHAN, should you own both stations. Then in response to deficiencies, especially in letter A, you talk about --within any week, no more than 10 per cent program duplication. You also speak about counter-scheduling.
660 I would like to clarify what it is that you are committing to. There is also in your supplementary brief at page 60 the following statement and I quote:
"Between the two services we will telecast over 16 hours of prime time Canadian content for an annual commitment of over 800 hours". (As read)
661 Are we speaking, first of all, of no duplication? The 10 per cent, is that 10 per cent of the priority programming or of the entire schedule?
662 MR. SHEA: The 10 per cent is of the entire schedule, Commissioner Wylie, but does not include any of the 8 hours on either station in Ontario or B.C. So the 10 per cent does not apply to the 8 hours.
663 COMMISSIONER WYLIE: Mr. Asper was still calculating.
664 So no duplication. Now, what does that mean? No duplication on the same day, in the same week, in the entire year? Perhaps the question should be: How many original priority programming hours are you going to have per year? Because I can visualize shifting the programming this way or a month later and using 8 hours on the other station at some time.
665 What exactly does it mean? Maybe I didn't practice that enough, but it is not clear anywhere for me other than the mention of the 800 hours.
666 MR. SHEA: Correct.
667 COMMISSIONER WYLIE: If that were 800 original hours then that would mean that you would have 16 hours never duplicated, not only in the broadcast week, the broadcast day, but ever as a first show.
668 MR. SHEA: Commissioner Wylie, this is a key issue for two issues. One because it speaks to diversity, because obviously if the station was owned by another group the 8 hours would be fundamentally different. So we are well aware of the commitment -- believe me, we are well aware of the commitment -- that we are making with respect to this issue and I am going to try to be absolutely clear. There will be no duplication of the 8 hours on either Global or CH or Global in Vancouver and CHEK -- ever.
669 It is our plan and strategy to ensure there is diversity. So there will be no duplication and the 10 per cent does not apply to the 8 hours obviously because there is no duplication.
670 The 10 per cent duplication -- and we do have some ideas which we can share vis-à-vis what our strategy is there -- is over a broadcast week and our plan there, Commissioner Wylie, is two-fold. One is, the Commission is well aware, Global has had a history in the area of kids and more recently tween programming and there may well be an opportunity for us to schedule tween programming on Global on a Saturday and tween programming on either of Victoria or Hamilton on Sunday.
671 Our strategies are more with day time programming in terms of that 10 per cent duplication, and perhaps some foreign prime time programming. But said another way, 90 per cent of the schedule would be different every week and there is no plan to duplicate the 8 hours.
672 COMMISSIONER WYLIE: But outside of the 8 hours, there could be a second window on one station and vice versa.
673 MR. SHEA: Commissioner Wylie, with respect to Canadian priority programming, as we mentioned earlier in the morning, and it pertains primarily to documentaries or specials, if there were to be duplication because we were trying to take advantage of cross-promotion, it would be incremental to the 8 hours that week. So if it was a documentary that we wanted to re-run, it would count as a ninth hour that week. It would not form in any way, shape or form part of the 8 hours.
674 COMMISSIONER WYLIE: Or maybe not in prime time.
675 MR. SHEA: Or maybe not in prime time. You are quite right.
676 COMMISSIONER WYLIE: But the 10 per cent non-duplication, that would be within the broadcast week?
677 MR. SHEA: That is correct.
678 COMMISSIONER WYLIE: It wouldn't limit you from taking some of that non-priority programming that week and putting it on the other station a month later.
679 MR. SHEA: That is correct.
680 COMMISSIONER WYLIE: As a second window.
681 MR. SHEA: You are quite right and it may mean that some of the 8-hour priority programming might be repeated at an alternate time on the other network to ensure that there is again taking advantage of cross-promotion. But it will always be a different 8-hour lineup in terms of what we count as priority programming.
682 COMMISSIONER WYLIE: But the non-priority programming, with clever scheduling you could use twice.
683 MR. SHEA: Precisely, but it's the limitation of --
684 COMMISSIONER WYLIE: With the two stations.
685 MR. SHEA: But it is a limitation of 10 per cent.
686 COMMISSIONER WYLIE: At any given time, though, your 10 per cent is during a week.
687 MR. SHEA: During a broadcast week.
688 COMMISSIONER WYLIE: But with clever scheduling you could repeat that programming at some other time on the other station.
689 MR. SHEA: That is true.
690 COMMISSIONER WYLIE: If it's relevant.
691 MR. SHEA: If it's relevant, but we see -- the primary opportunity we see in any kind of co-scheduling is more with kids and tween programming.
692 COMMISSIONER WYLIE: And should we decide to turn this into a commitment, would you have any problem if it were instead expressed as the number of original hours of priority programming?
693 MR. SHEA: We haven't addressed that issue yet.
694 COMMISSIONER WYLIE: But that is your intention, isn't it, to have 800 hours of priority programming a year or 16 hours a week?
695 MR. SHEA: It depends on what because the definition of original has different applications.
696 COMMISSIONER WYLIE: Well, I am trying to find out whether if I had blocks and I moved them around could you have 8 hours this week which is different from the 8 hours this week, but three weeks, four hours from here, four hours over there.
697 MR. SHEA: No. It would be original and that undertaking would be original.
698 COMMISSIONER WYLIE: Well, if it were expressed as original, questions then wouldn't arise.
699 MR. SHEA: That's correct.
700 COMMISSIONER WYLIE: If "original" was defined as first rate.
701 MR. SHEA: If you are saying the non-duplication applies to our original hours too, we would say yes.
702 COMMISSIONER WYLIE: Well, I am simply wanting to make clear that when you say, "We will have two stations, but one of the big enhancement or benefit for this privilege will be that there will be 16 hours of Canadian programming which will be as different as if the stations were owned by someone else".
703 MR. SHEA: That's correct.
704 COMMISSIONER WYLIE: Within the TV policy.
705 MR. SHEA: That's correct.
706 COMMISSIONER WYLIE: Which would require an exception to the policy, of course.
707 MR. SHEA: That's correct. One at the time.
708 COMMISSIONER WYLIE: So that clarifies what is intended by that, No. 1.
709 The closest I got to it was when it said the 800 hours. With my faithful calculator -- I don't have my calculator today. I only bring it when it may scare the applicants. I never thought Global would be scared even if I brought my calculator.
710 MR. SHEA: Challenged but never scared.
711 COMMISSIONER WYLIE: In response to CHUM -- again I don't want to get into the intervention phase, but you have made some commitments in your reply in response to CHUM's concerns and there are three of them: That on CHCH and CHEK you would not broadcast non-Canadian feature films.
712 MR. SHEA: That's correct.
713 COMMISSIONER WYLIE: And non-Canadian programs that air on other than the major networks.
714 MR. SHEA: That's correct.
715 COMMISSIONER WYLIE: So that would be NBC, ABC, CBS and FOX and also that you would not broadcast on CHCH and CHEK non or foreign syndicated weekly series program.
716 MR. SHEA: That's correct.
717 COMMISSIONER WYLIE: Now those commitments, would you have a problem if they were transformed into a requirement, either now or at renewal or as a condition for approving your application as filed?
718 MR. SHEA: Commissioner Wylie, we proposed a number of safeguards. A code of ethics in response to intervention that we propose would be self-regulatory undertakings that we would report on if the Commission felt and was persuaded by intervenors that these were necessary.
719 If the Commission feels persuaded to move that these become fixed COLs, on the understanding that we are approved for both CHCH and CHEK because it is fundamentally important to us, Commissioner Wylie -- we have not really addressed this issue -- that many of the programming benefits that we have advanced for the independents are on the assumption that they are both approved because obviously we need the market power and depth of British Columbia and Ontario to achieve the kind of programming efficiencies in prime time that are necessary.
720 So should the Commission feel a) persuaded that these are fundamental to the approval, and secondly, that both CHCH and CHEK are approved, then we would accept them as COLs.
721 COMMISSIONER WYLIE: Currently, I would imagine that CHUM's problem is CHCH. So what if you were allowed to own CHCH and not CHEK, these commitments would not be made? You say that if we were persuaded, you obviously thought that this was a reasonable concern on the part of CHUM to offer some response. So what do you mean by "if both". It could be related to one or the other. I am sure that at the moment CHUM's problem is with the Toronto situation.
722 MR. SHEA: I think you are correct, Commissioner Wylie, to point out that CHUM's principal concern is CHCH. But from a national rights perspective -- and this Commission has heard, I think, this issue many times from other sources -- is that you really need the combination of a couple of markets, or key markets, in order for us to be in an opportunity to order and make the kind of Canadian content we are going to need, and we have tied the two together on the assumption that it becomes much more relevant and potent, both from a market perspective and from the Commission's perspective, when there are two independents linked.
723 I think we would have to revisit ourselves that if it were just CHCH-Hamilton that would be approved in this process, whether we could undertake from a scheduling point of view to honour this level of commitment.
724 COMMISSIONER WYLIE: This No. 5. I am not looking at the whole code.
725 MR. SHEA: I understand that you are fixed on No. 5.
726 COMMISSIONER WYLIE: Some pieces that appear to be -- well, we will hear CHUM in intervention and see if they have any reaction.
727 MR. ASPER: Commissioner Wylie, if I could just add to what Mr. Shea said.
728 I think these are very, very significant offerings from our perspective. They do hamstring Global Television and the combined Global Television to some extent, so we would be very reluctant to -- and they are offered to protect and essentially address the concerns of CHUM and as Kevin said, it is the national rights buying clout. CHUM has said that they would like to be able to know that they are buying foreign movies and the syndicated programs will still be available to them. But the safeguards we have offered do make them available to CHUM, it does protect CHUM in that respect.
729 I think because of the significance of the negative impact they have to Global, we would be very reluctant if there were not an approval of the entire package to agree to those, and we would suggest, in the spirit of the 21st century style of regulation that there be an --
730 COMMISSIONER WYLIE: Twenty-first.
731 MR. ASPER: Did I say 22nd?
732 That the way this is handled is that this Code of Conduct be referred to in a decision. If there is a complaint by the affected party to the Commission that the Code of Conduct is not being upheld, that that would be a matter between the Commission and the licensees that would be addressed at that time rather than to have a condition of licence.
733 COMMISSIONER WYLIE: Yes, but let me specify again, I'm not looking at the entire Code, I am just referring to the fact that you made this offer in the Code, this particular number 5, because not everything maybe be amenable to commitments. Some may be, but this is very specific and measurable, and so on.
734 So I was speaking to number 1 about the hours of priority programming, which I think is a very important commitment, that we be clear on what it is as one of the benefits of -- or at least that the two stations won't end up having only 10 hours of priority programming as between them instead of 16, and this number 5. But we can readdress this at the reply stage after we hear CHUM.
735 But I hear you say that it doesn't have just a Toronto area effect --
736 MR. ASPER: Yes.
737 COMMISSIONER WYLIE: -- it has a national effect therefore the quid pro quo from our part should be national as well.
738 MR. ASPER: Yes.
739 COMMISSIONER WYLIE: Number 5 for two stations.
740 MR. ASPER: Yes.
741 COMMISSIONER WYLIE: Management. One of the areas, of course, that one can test whether there will be diversity, despite the dual ownership, is management.
742 I think you have, in your reply, said that there will be different news teams in CHCH and Global and that each station will have its own news director.
743 MR. SHEA: That's correct.
744 COMMISSIONER WYLIE: The same thing with CHEK and CHAN?
745 MR. SHEA: That's correct.
746 COMMISSIONER WYLIE: Explain to me how separate that will be.
747 MR. SHEA: Totally separate. They will have full editorial control to manage the local newscasts, because that is principally, if not exclusively, the business they are in, and that news director in those markets, not too dissimilar from Global today, would report to the station general manager.
748 COMMISSIONER WYLIE: And what about the gathering of the news?
749 MR. SHEA: The gathering of the news in both cases would be under the total jurisdiction of the news director.
750 COMMISSIONER WYLIE: But done by the same people?
751 MR. SHEA: Done by the people at that station, that's correct. They would have their own news teams.
752 COMMISSIONER WYLIE: So the gathering will be done by different people as well?
753 MR. SHEA: That's correct.
754 COMMISSIONER WYLIE: Not just the editorial decision up the chain?
755 MR. SHEA: They will have their own news -- separate and distinct news department.
756 COMMISSIONER WYLIE: Completely separate.
757 Now, the rest of the programming, the non-news programming, how different will the management be?
758 MR. SHEA: In the case of CH and CHEK, each of those stations will have their own program manager that will be responsible for the scheduling and the acquisition of programming.
759 Where we will have joint acquisition would be in the parent company up top of the foreign programming. But the decisions for Canadian programs will be made and taken by the program manager in each of those stations.
760 COMMISSIONER WYLIE: Will it require some co-ordination to make sure that you don't breach that 10 per cent duplication rule?
761 MR. SHEA: Well, it doesn't apply to the eight hours, because we have already determined that that's distinct.
762 COMMISSIONER WYLIE: No, but for the rest of the programming?
763 MR. SHEA: The answer is yes, it will take some coordination, Commissioner Wylie, between the programming management corporately and the stations. Again, no different from the way we handle Prime or the way I'm sure other multi-station groups organize their programming.
764 The most important thing, Commissioner Wylie, and this became very clear in our discussions and deliberations as we were building our application, is that Canadian independent producers want to ensure that they have a door to knock on in both Hamilton and Victoria.
765 In fact they have gone even further and they have said that now that Global Television Network is truly going to become a national network, and we have -- which is apparent in our benefit plan -- ascribed a number of funds specific to western Canada, that they would also like to see that we have programmers in Alberta, Manitoba, Saskatchewan and B.C. where they can go and pitch their various concepts and ideas for our full schedule of Canadian programming.
766 That is an undertaking that we are prepared to make, and that is that in our markets there will be programmers that would ultimately feed into Loren Mawhinney, but people on the ground that can actually make recommendations to Loren and Doug with respect to their ideas for content.
767 COMMISSIONER WYLIE: Both in your applications and in your Code of Conduct and in the reply you mentioned your willingness to file reports with the Commission. So at number 9 of that Code you talk about:
"CHCH and CHEK will have organized advisory boards and a report of each board will be filed with the CRTC on an annual basis and placed on the public record." (As read)
768 And 10, you will:
"...file an annual report to us clearly outlining your progress on the above safeguards and Codes of Conduct." (As read)
769 Now, if the line of questioning we have been discussing ends up being important for the Commission and we want to know exactly how different these stations are and whether you are -- as having had the privilege of having dual stations you are in fact giving more to the system and to the viewer than they would have otherwise have had -- I am talking about programming enhancement here, not tangible benefits -- what would be in those reports to make it valuable to us and to the public to measure whether we were right as a regulator in allowing you the privilege of dual ownership, if that was what we were to do?
770 MR. SHEA: Well, I think if we went item-by-item and dealt with number 10 and worked back, obviously we would report on an annualized basis about our progress on the distinctiveness of the eight hours of content.
771 COMMISSIONER WYLIE: Both with regard to hours -- yes, for those it would be hours.
772 I'm sorry, go ahead.
773 MR. SHEA: I think obviously we would indicate the reality that we have separate programming and news management at the two stations.
774 We would give a report on how we apply the 10 per cent of duplication, because I think the Commission might be interested in what our strategies are there.
775 We would report on the -- well, number 4 is the commitment we are making which becomes effective September 1 and is effective from that point forward.
776 We would obviously report on number 5 as to how we have lived up to that commitment, and perhaps invite CHUM to comment.
777 We would give an indication of how we have made progress on sublicensing, both foreign and domestic programming to other broadcasters outside of Ontario and B.C.
778 We would have one report on how we and CTV have worked together -- on the assumption they are licensed -- to offset any operating costs on transmitter facilities.
779 We would do a very specific report benefit-by-benefit, Madam Vice-Chair, on our progress with respect to benefits. So we would go market as well as line-by-line on how we achieved our commitments.
780 In the case of both CH and CHEK, what we would ask our advisory board to do on an annual basis would be to file a report with the Commission as to how we have lived up to the programming commitments, specific to local programming commitments, to address your earlier question of have we stayed true to the locality of the nature of content, and other comments that they may wish to reflect to the Commission.
781 We have had a very successful relationship with our advisory board in Quebec. It has worked very well for us in terms of coming up with various programming ideas, reminding us sometimes of areas of the province that we have not served as well as we could have and it has been a useful guideline for us. We have seen two or three new entrants onto the advisory board over the course of three years and we find them very useful.
782 COMMISSIONER WYLIE: And if the Commission were to take that course -- and I think its the Friends of Canadian Broadcasting who suggested we keep your feet to the fire -- would you be prepared to work with the staff to decide what the report should look like to --
783 MR. SHEA: Absolutely.
784 COMMISSIONER WYLIE: -- minimize the work for you and for us while keeping the fire burning?
785 MR. SHEA: We would be more than prepared to work with the staff so that the -- I think the report addressed the type and nature of the concerns that the Commission would want to see reported on and we have absolutely no problem with the report going public.
786 COMMISSIONER WYLIE: And if you were not to meet those commitments, do we put CHCH or CHEK up for sale?
787 MR. ASPER: I think you give us a stern warning and we won't do it again. But, no, I thought --
788 COMMISSIONER WYLIE: I didn't think I looked that scary.
789 MR. SHEA: I think you would have every right to call us to a hearing if we were offside with any conditions of licence or any commitments we have made.
790 MR. ASPER: Commissioner Wylie, I'm sorry, just I think I would just like to point out two very significant things you will see in that report.
791 Number one is, we will show you a grid of Hamilton's schedule today and we will show you a grid of what Hamilton's schedule looks like under Global ownership, and it will show in highlighted colours the increased number of priority programming hours that go on CHCH, more Canadian programming.
792 That is only something that will happen with Global, because no other buyer would be a large station group, in our estimation, that would be required to put the eight hours on CHCH. So under Global ownership the most wonderful thing about that report will be that there will be as much Canadian programming as possible on that station as makes sense, but will be the most that any other player could bring to that station.
793 The second thing I think that we want to show you -- it's not in our safeguards, but we will show you how, through the cross promotion of Global, that Global brought to CHCH, the ratings of that programming has increased.
794 What we are very proud of is that the Canadian programming on Global has gotten the highest ratings of Canadian programming of any broadcaster in the system. That is what Hamilton needs. It needs not only to air the programming, it needs people to watch that programming.
795 If you like, we will even send you that tapes of the promotion before "X Files" that says "Watch this program on CHCH." We will show you how the ratings -- and more people are seeing the Canadian programming, and that is an important part of that report.
796 COMMISSIONER WYLIE: If we get too carried away we are going to have not only regional commissioners but a Global commissioner whose only job will be to watch Global.
--- Laughter / Rires
797 MR. ASPER: Well, if they have Nielsen meters in their homes they can watch Global.
798 COMMISSIONER WYLIE: Alberta. No new programming benefits really offered for the Alberta stations.
799 Again, CHAN will not be launching as a Global station before September 2001, so what will be on the Alberta stations and on network programming? Will it be status quo like CHAN?
800 MR. SHEA: Excuse me, Commissioner Wylie. Again, in our analysis of the Alberta stations, they are perhaps one of the leading companies in terms of local programming. Their ratings for their local programs do quite well.
801 The only new programming initiative in Alberta is a national public affairs program and we would like to see that program initiated sometime early in the first year, most likely January. But that really is the only direct programming increment in the Alberta stations.
802 COMMISSIONER WYLIE: Again, if I did the same exercise as we did this morning for CHAN and CHEK, in some cases, like Calgary, the expectation in their licence for local news is higher -- the performance is higher. I think it's about 11 hours and 30 minutes of original local news and it seems that if you don't get to the exercise of the breakfast show and how much local news is there as Category 1 as opposed to other categories -- twenty-six hours is what they are doing and I think your commitment is 23.5.
803 Again the question would be raised about the breakfast show as to when we remove the non-news in the breakfast show whether we still get the expectation of 11 hours and 30 minutes. Is that a commitment you are prepared to make, that there will be at least nothing less than what the licence --
804 MR. SHEA: Commissioner Wylie, absolutely.
805 COMMISSIONER WYLIE: -- than the licence expects of that station. And in the case of Edmonton, expectation is 16 hours, performance is 29 hours. Again, there is ITV News, the same question is raised.
806 But if we were to look at these schedules and try to break out the amount of actual news, the number of hours, what would you think -- if the baseline was the performance, if it is beyond the expectation rather than the expectation?
807 MR. SHEA: Commissioner Wylie, our intention with respect to CHAN and our intention with respect to the Alberta stations is to see the exact same level and commitment of local programming today under Global stewardship tomorrow.
808 COMMISSIONER WYLIE: So performance, you would be satisfied with performance as a threshold as long as it's not below, which it appears to be in Lethbridge?
809 MR. SHEA: Which it -- and we are aware of the situation in Lethbridge.
810 COMMISSIONER WYLIE: Yes. So Lethbridge, rather than a suspension hearing, would have a renewal or a condition that you abide by what they promised and didn't do?
811 MR. SHEA: Commissioner Wylie, under our ownership we will get Lethbridge back to where it should be.
812 COMMISSIONER WYLIE: Where it is supposed to be.
813 And in the other two cases, to where they are --
814 MR. SHEA: Correct.
815 COMMISSIONER WYLIE: -- by examining this issue of, you know, expectation.
816 That's why I was raising that, when expectation is 11 hours, 30 minutes of original local news and then these breakfast shows are categorized as other categories as well, it is very difficult to measure whether there has actually been performance according to the expectation in the licence.
817 MR. SHEA: Commissioner Wylie, I will say it again that our commitment is to ensure that the level of programming and the assurance that they are meeting their COLs will be met under our ownership.
818 Now, having said that, as this Commission knows, we are all headed towards a group licensing undertaking a year or so from now and I think -- and we look forward to that because I think the opportunity is for the station groups to bring to the Commission their overall programming strategies going forward. We will at that point have had about a year of managing most, if not all, of the undertakings, if we are approved for everything and, Commissioner Wylie, there may well be -- and it is the subject for a future hearing, but we may well be coming forward with a plan that sees a different approach to depart programming nationally that may supplant or change or alter some current local programming mixes in each market. But between now and that hearing we will undertake to ensure that the minimums, the maximums are all kept.
819 COMMISSIONER WYLIE: Mr. Shea, by the time that you come for renewal with your plans you will own these stations, if we authorize you to have them, right?
820 MR. SHEA: That's correct.
821 COMMISSIONER WYLIE: So the exercise here is to see what it is you are prepared to commit to as a special case since you are asking for an exception to the policy, so unless we get commitments today --
822 MR. SHEA: The commitment --
823 COMMISSIONER WYLIE: -- short of returning the stations to --
824 MR. SHEA: The commitment is very clear for today.
825 COMMISSIONER WYLIE: But you understand that there is an asymmetry here --
826 MR. SHEA: Yes.
827 COMMISSIONER WYLIE: -- between the imposition of the eight hours, these applications that are before us and then renewals at which time --
828 MR. SHEA: That's correct.
829 COMMISSIONER WYLIE: -- the Commission may decide that in some cases although the TV Policy says that it's not going to demand or require certain commitments by condition of licence or by requirement, that there may be a need, or at least for us we may find that from a regulatory perspective it is required here as a quid pro quo for the privilege.
830 Now, what are your comments about that idea that since you posit localizing CHEK and CHCH as an advantage or a benefit of -- in return for having the dual ownership that we would require local from you rather than just let you decide the so-called signature of the station?
831 Is that a surprise that we would raise that as a hypothesis?
832 MR. SHEA: It's not a surprise at all. In fact, I think resulting from our discussion earlier today, it may well serve the interest of the Commission, and perhaps more importantly the communities we serve, that you actually itemize the commitments made to pure local programming. So that is not a surprise to us at all.
833 COMMISSIONER WYLIE: In the Edmonton case, there had been some commitments made by CITV to air programs like Newsmakers, Alberta This Week, Native in '90s, which would be non-local -- local non-news programming, and none of these programs are certainly on the block schedule for 1999-2000.
834 Is Global aware of that and do you plan to perhaps provide such programs?
835 MR. SHEA: I'm going to ask Mr. MacDonald and perhaps Mr. Reitmeyer to comment.
836 COMMISSIONER WYLIE: Which would be enhancements beyond local news in Edmonton.
837 MR. MacDONALD: Commissioner Wylie, my understanding is those programs were done at one point in time but they have cycled through and been replaced by other programming and changes to the local programming.
838 COMMISSIONER WYLIE: Is it your intention to do the same, because there are no apparent programming increments of a local nature on the Alberta station.
839 MR. MacDONALD: No. I think Mr. Shea said it best, we would live up to the commitments and obligations that these stations have and we would support and continue to support the robust local programming schedules that they have and all that entails.
840 If I might also just clarify one point for the record, and that is that the morning shows that are being done in both Edmonton and Calgary, as well as the one at CHAN, are logged as Category 1 news programs and in fact are prolonged newscasts, for lack of a better term. They are news programs.
841 COMMISSIONER WYLIE: So you tend to agree with me that there are some portions of these programs that are logged as other categories, information, human interest analysis, et cetera?
842 MR. MacDONALD: But in the case of these morning programs, they are strictly news programs.
843 COMMISSIONER WYLIE: Oh, they are strictly news.
844 MR. MacDONALD: They are rolling news programs. Yes. They are live HITS into rolling newscasts and weather, sports, business. They are news.
845 COMMISSIONER WYLIE: Under the ITV News.
846 MR. MacDONALD: That's correct. The ITV Morning Show and the Calgary Morning Show and, for that matter, the CHAN Morning Show as well are all news programs.
847 COMMISSIONER WYLIE: We would have -- there is three hours of Category 1 news? How long is that Morning Show?
848 MR. MacDONALD: I'm sorry, which one? The Edmonton one?
849 COMMISSIONER WYLIE: Yes.
850 MR. MacDONALD: Six a.m. until nine a.m. Yes, it's three hours.
851 COMMISSIONER WYLIE: Three hours of news?
852 MR. MacDONALD: That's correct.
853 COMMISSIONER WYLIE: Category 1?
854 MR. MacDONALD: That's correct.
855 COMMISSIONER WYLIE: Is Canada AM all news, in your view?
856 MR. MacDONALD: Arguably not. They do a lot of feature interviews, entertainment, that kind of thing, musical groups.
857 COMMISSIONER WYLIE: There is no such thing on these morning shows?
858 MR. MacDONALD: They are almost entirely newscasts from start to finish. They are rolling news, weather, sports, business information as opposed to any long -- as opposed to long form interviews or --
859 COMMISSIONER WYLIE: So it can all be categorized as Category 1?
860 MR. MacDONALD: And that's currently how they are being logged.
861 COMMISSIONER WYLIE: I have just a few general questions to complete this questioning and then perhaps you can tell me what the fruit of your labours at lunch was.
862 Our understanding, if all the applications were approved, would be that everyone would be on the new TV Policy as of September 1, 2000, every station?
863 MR. SHEA: That's correct.
864 COMMISSIONER WYLIE: And the turnover to a Global as opposed to a combination of CTV Network for CHAN and CHEK would be the 1st of September, 2001?
865 MR. SHEA: That's correct, but the eight hour commitment on CHAN/CHEK would start this September.
866 COMMISSIONER WYLIE: But would some of that be provided by the Network?
867 MR. SHEA: By CTV, correct.
868 COMMISSIONER WYLIE: Yes. So everybody would be on eight hours, but it wouldn't be --
869 MR. SHEA: That's correct.
870 COMMISSIONER WYLIE: -- your eight hours until 2001.
871 And CHCH?
872 MR. SHEA: September 1st, 2001.
873 COMMISSIONER WYLIE: So there would be a year before. But would it be --
874 MR. SHEA: I'm sorry. I'm sorry, September 1st, 2000.
875 COMMISSIONER WYLIE: And that would be your responsibility --
876 MR. SHEA: That's correct.
877 COMMISSIONER WYLIE: -- for the eight hours and to ramp up the other programming --
878 MR. SHEA: That's correct.
879 COMMISSIONER WYLIE: -- in the manner that we discussed earlier this morning.
880 Closed captioning. In all of these stations would you adhere to the requirement to caption all the local news and 90 per cent of all programming during the broadcast day by the end of the licence term?
881 MR. SHEA: Yes, we will.
882 COMMISSIONER WYLIE: Adherence to the industry Codes on violence, sex role portrayal and advertising to children?
883 MR. SHEA: Yes, we would.
884 COMMISSIONER WYLIE: You would abide by those as well.
885 Now, perhaps you can clarify at least sufficiently for intervenors to be able to address the question of what it is you are committing to and if there isn't a total approval, especially in the case of CHAN and CHEK.
886 MR. SHEA: Yes.
887 COMMISSIONER WYLIE: We are speaking here of programming, not of tangible benefits, because this is a transfer.
888 MR. SHEA: That's correct.
889 I'm going to have Mr. MacDonald address your question, and that question being: If we were just approved for CHEK what would be the programming benefits in that market?
890 But before Ken MacDonald starts, Commissioner Wylie, there were some references made to certain hours of content on CHAN and CHEK that I believe you read into the record and I think Mr. Reitmeyer would like an opportunity to respond to some of the issues you raised.
891 MR. REITMEYER: Yes, Commissioner Wylie, to clarify the quantity of news on both BCTV or CHAN and CHEK.
892 To go through CHAN, the AM Morning Show, if you count in the hours six A to midnight going through the day, there is the two hours per day in the morning five days per week. And that is hard news. That is not interviews, that is strictly news, business information, weather, traffic updates that run for that entire period. That is all Category 1 news.
893 At noon seven days a week there is a news program for one hour per day. There is an early newscast at five o'clock in the evenings for two-and-a-half five days a week -- for two-and-a-half hours.
894 Canada Tonight that runs from 5:30 to 6:00 five days a week for two-and-a-half hours.
895 The News Hour, which runs seven days a week for one hour. News Hour Final seven days a week for three-and-a-half hours.
896 The Saturday Morning News which runs for three hours, and the Sunday Morning news for two hours, for a total of 37-and-a-half hours.
897 There is an additional two-and-a-half hours from 5:30 a.m. until 6:00 a.m. that runs every day as well that is part of our morning program outside of the hours six A to 12 midnight, for a total of 40 hours per week.
898 On CHEK, the news runs for one hour five days a week at noon for five hours; 5:00 p.m. to 6:00 p.m. seven days a week for seven hours; and 11:00 p.m. five days a week for two-and-a-half hours. Total news on CHEK, 14-and-a-half hours.
899 We would be happy to file that documentation with staff.
900 COMMISSIONER WYLIE: And hopefully your friends from Global agree with your calculation, because that may well be the baseline for what would be expected if the aim is to have at least as much as we used to before.
901 MR. SHEA: That's correct.
902 MR. MacDONALD: If I may, Commissioner Wylie, answer the question with respect to what would happen should the Commission grant us CHEK but not CHAN. We took a long hard look at this.
903 The local programming proposal that we put forward is really intermingled. The bureaus that we propose to set up are there to really help people outside of Victoria on the Island feel a part of the station that is in Victoria and to bring the Island closer together and to supplement the 90 minute newscast which we proposed as well, and also to assist in the gathering of the Island Minutes. So it all interlinks.
904 And the sports program, we felt was important to highlight sports on the Island as well, and that's something we identified as a need as we did our research.
905 So everything pretty much tied together for us. So we would be reticent to chop pieces out of that.
906 So what we would propose that total local news and non-news programming package of $8 million would be down to $3 million. We would revisit and reallocate the benefits proposed for Victoria, and that is the $5.25 million, and move those into -- entirely into local programming.
907 And then we would work very hard and roll up our sleeves very high and sharpen our pencils very sharp to find efficiencies to make this programming work as proposed, but with reduced funding.
908 We are reticent to say that we would cut anything out because we think it is a comprehensive proposal, we think it is something that will service the needs of Islanders and, again, the proposal is crafted in such a way that the pieces really do fit together. That would be our proposal, then, would be to approach it from that standpoint.
909 COMMISSIONER WYLIE: Thank you.
910 Those are all my questions.
911 You will be happy to know that I have now practised and if you were allowed to own CHCH I now can say, instead of "regional" when you come for a renewal, "Hamilton, Niagara, Halton".
912 MR. ASPER: It's encouraging to see that you have been practising.
913 COMMISSIONER WYLIE: Thank you very much.
914 CHAIRPERSON OF THE COMMISSION: We will take 10 minutes and we will pursue with the benefits.
--- Recess at 1448 / Suspension à 1448
--- Upon resuming at 1502 / Reprise à 1502
915 CHAIRPERSON OF THE COMMISSION: Alors, Commissioner Grauer, do you want to pursue with benefits, please?
916 COMMISSIONER GRAUER: Thank you, Madam Chair.
917 Yes, I will get to a specific discussion of the benefits, both tangible and intangible, but first what I would like to do is give you a context from which I am going to approach this.
918 I spent a long weekend going through a lot of interventions and a lot of information and you are looking to assume stewardship of some very important assets in western Canada. I think it will grow your assets by about 30 per cent, if I'm correct, most of which is from western Canada.
919 I don't know if you are familiar with the Heritage Canada study that has been commissioned with respect to western production. What I would like to do is -- I don't know if you have a copy. The Secretary has some extra copies, but what I would like to do is go over some of that.
920 You know, I think that it's very important in terms of the context of what it means to you to be a national broadcaster. I think, Mr. Asper, you said this morning that too who much is given, much is expected and that you would assume a leadership role. So I think that your role with respect to broadcasting licences in western Canada is an important part of that.
921 Maybe what we could do is, you could go over some of the -- do you have a copy of that? Do you want to get a copy from the Secretary?
922 MR. SHEA: I believe we have a copy.
923 COMMISSIONER GRAUER: Okay. Maybe in fact there are some mistakes.
924 Table 1 which is -- I think it's important to have a picture of the overall production levels in western Canada, that while you can see that while projects are constant as a percentage of the overall production, and hours are constant as a percentage of overall production, that budgets have declined significantly in western Canada, in fact almost by 50 per cent, as have CTF and Téléfilm funds, which is 50 per cent.
925 So I guess you can conclude from this that production is constant, but it's fairly low budget production.
926 I think if we then to go Table 3 and you look at private broadcaster financing, it's pretty clear that we have -- well, CanWest Global has gone in 1993-94 from 36 per cent -- no, sorry, west as a percentage, 36 per cent. Zero in '97-98 and 1 per cent '98-99.
927 If we go to Table 4 and we look at drama, are these correct -- I mean, correct me if I'm wrong. If there is some mistake here I'm sure you will correct me with respect to the licence fees, but you were zero in '97-98, zero in '98-99.
928 If we go to British Columbia, which is where you arguably -- one of the most profitable English-language stations, it appears as though you didn't have any broadcast licences for drama for the past four years. Documentaries, marginally better. We went from, I think, $10,000 in '97-98 to 0 in '98 -- I'm sorry, '96-978, zero in '97-98 to $10,000 in '98-99.
929 Now, Alberta, interesting enough, fared considerably better up to '96-97. It falls of the map.
930 So I raise this because there are a lot of very nice words in all of your presentations and proposals and benefits packages, but I'm not really comforted by your record in this market, and particularly with the independent production community.
931 Notwithstanding your commitment to establish a fund, I haven't heard anything about broadcast licences, and particularly in the high budget drama category.
932 You are looking to take over ownership of, I think, 50 per cent of the television stations in British Columbia and 50 per cent of the televisions stations in Alberta, private. So I'm not comforted by your track record and I wonder if perhaps what you could do is maybe tell me a little bit about your plans and whether you are prepared to make any commitments with respect to licences in drama and priority programming, here and in Alberta.
933 And what was the other?
934 Oh, yes. I notice that there has not been any discussion anywhere about a development office in Vancouver or the west. So maybe before we go any further you could help me with some of this?
935 MR. SHEA: Commissioner Grauer, I'm going to make some brief comments and then I will ask Loren Mawhinney to also respond.
936 Commission Grauer, there is no dispute with your record of CanWest with respect to western-based productions. You have our commitment today, and I will have Loren speak in much more detailed terms as to what that means, but you have our commitment that approval of the applications in front of you -- and irrespective of these applications we know we have to improve our record of deriving more dramatic content from western Canada.
937 Before I ask Loren to comment, Commissioner Grauer, I think you are aware of this, but in an earlier life I was once with Atlantis Communications and we tried, over a period of years -- we even established a western office at that point -- to see if we could not derive more product, more Canadian product out of specifically B.C.
938 One of the realities of this country is that there has been a tendency for broadcast companies, given the amount of risk capital one puts towards a program these days, I think you are well aware that most budgets for high-end drama are between $800,000 and $1.2 million, and it is really only production companies that have the size and a track record that one wants to install that type of risk money with.
939 One of the domestic realities is that the typical 10 out of 10 content show producers -- and whether we like to hear this or not -- tend to reside in either Toronto or Montreal. And that is the reality. The more industrial-based producers and small documentary companies, film companies, feature film companies tend to reside more west of the Manitoba border.
940 And I think our entrance in a much more profound way as a consequence of these approvals, and the kind of budgets through the funding mechanisms that we are putting forward, hopefully we will see as a derivative of all of that, companies that begin to take the shape and size to be able to undertake that level of higher end production.
941 So there is a bit of an industrial reality. And that is not an excuse and we are not using that as an excuse.
942 COMMISSIONER GRAUER: Please don't, we could be here all day.
943 MR. SHEA: But I did once spend two years in another life trying to see if we couldn't generate co-production entities in western Canada to be able to achieve a better report card than you just took us through.
944 COMMISSIONER GRAUER: Mr. Shea, I'm not going to get into a discussion with you, but your other life was quite some time ago and I think that most people would agree that the independent production industry and community in British Columbia has matured considerably since then.
945 MR. SHEA: And you're quite right and I don't want to debate that issue, other than to say that they tend to take the form of feature film companies and documentary companies.
946 But having said that, you have our commitment that we want to change our track record as well.
947 So I'm going to ask Loren Mawhinney to jump into this conversation.
948 MS MAWHINNEY: Thanks, Kevin.
949 First of all, I think that -- I haven't had the benefit of analysing this as diligently as you have, but it strikes me that this is a portion of the production activity. In other words, this is a sample of the activity that has gone on through funded sources, Téléfilm and CTF. It does not reflect a whole bunch of activity that takes place without them.
950 So, for instance, Jim Rusnak's team does, I think, about 10 independent productions a year, six of which are docs which don't go through the fund and are therefore not reflected in this chart.
951 So you are not looking at an entire universe if this is all you are commenting on.
952 Secondly, I notice in -- I guess it's Table 2 when it talks about the activity in western Canada, CanWest actually strikes up very well as compared to every other private broadcaster. There was over $2 million a year in funded activity right up until '97-98, and that is because we had 52 hours of production activity occurring in Alberta through two seasons of Destiny Ridge and then two seasons of Jake & The Kid. I think that nobody else had that kind of activity, other than CBC through North of 60.
953 So I guess my summation is, production is cyclical. Once shows are cancelled and then new shows take their places from other areas of the country it shows a big whack in activity, especially through big budget dramas which are $10 million a year of production activity for one series. So it really sways the numbers from year to year.
954 Next year we have two western-based series. The Agency is a 22 part half hour series with budgets in excess of $700,000 per half hour. So this is a very rich show compared to our normal budgets, reflected in the size of the writing department which is about twice the size of a normal writing department, and reflected by the fact that we have writers of the calibre that we do who are coming to work on the show.
955 In addition, we also have a documentary series with David Paperney based on the book by Peter C. Newman. So it came from a western-based individual and his writing, produced by an independent western producer.
956 But I have to say, you know, we didn't licence them because they resided in Vancouver, we licensed both these things because we thought they were wonderful programs and have an opportunity, I hope, to be both culturally interesting and commercially successful.
957 COMMISSIONER GRAUER: Are you planning to open a development office in western Canada?
958 MS MAWHINNEY: Yes. I think we are opening one in Vancouver, one in Edmonton and one in Calgary.
959 COMMISSIONER GRAUER: Okay. You have talked about a half hour sitcom and then the documentary series, but is this half an hour out of -- you are looking to have two stations in Vancouver, so you will have 16 hours of priority programming every week in peak time, and the same in Ontario, so are you telling me half an hour out of the 16 --
960 MS MAWHINNEY: That's half an hour of a Global schedule --
961 COMMISSIONER GRAUER: I understand that.
962 MS MAWHINNEY: -- because we haven't committed to what the actual programs will be on the independents since we did not know whether or not this application would be successful.
963 COMMISSIONER GRAUER: You know, I know that you have talked certainly, and we will get to it, in your proposal for the Western Producers Fund that you don't like quotas.
964 I guess you have your half hour, but what I'm hearing you say is that you -- well, I guess I'll ask you: Are you prepared to make any more commitments over the term, let's say the benefits term -- not that I think this is a benefit, but I think when you are assuming stewardship of these premier western assets, are you prepared to make any more commitment with respect to the high budget dramas out of western Canada?
965 MR. SHEA: Yes, we are.
966 COMMISSIONER GRAUER: Good. What would they be?
--- Laughter / Rires
967 COMMISSIONER GRAUER: As I said to you, Mr. Shea, it's most awkward, but I don't take a lot of comfort in your record and so, you know, I really would like to know what that might be. If you're not ready right now, you know, it might be something that you can come back to us, if this is not something that you have given a lot of thought to.
968 MR. SHEA: Commissioner Grauer, we will come back to you and we will come back with a definitive proposal, and this definitive proposal will take into account both Global Television Network as well as the independent.
969 COMMISSIONER GRAUER: And it is really also the licensees that are important.
970 There is another context for this which is -- I am always very mindful of not wanting to be or appear to be parochial, not wanting to say, "Well, does the west gets its best?".
971 But, Mr. Asper, I know your father is in the room and I was reminded, as I was looking at some of these interventions, of his comments at the TV policy hearing a year and a half ago and he talked about how important it was that Global's programming should reflect Canada and its diversity and the reality of Canada absolutely and there is nobody in this country who feels more strongly about it than I do and it is probably the most critical of the broadcast system for its failings, including ours.
972 We are not good enough and we have to get better. And yes, regional representation in terms of jobs, production and programming relevance and yet he said, "Don't do it in the regulatory sense".
973 What we would like to do is not a legal regulatory ruling, but if we are not carrying out your expectations and meeting these things, for heaven's sakes don't wait until licence renewal to tell us about it.
974 So that is what I am doing and I think that, as I say, the context is really more than just a quota for so many dollars spent in either British Columbia or Alberta, but you will become, if this is approved, the premier broadcaster in western Canada and one of the most important broadcasters in the country and the question is: Do you feel the responsibility of the regions of Canada with all their diversity? I mean also Atlantic Canada and I mean Quebec as well as all parts of western Canada are truly reflected in terms of not just news programming, but also in dramatic programming.
975 So as long as you know where I am coming from, we will look forward to hearing from you.
976 MR. ASPER: If I could just comment on the philosophy underlying our benefits package and our whole approach to the application.
977 I think what we favour as a methodology of getting to where we both want to get to, which is -- and I do support the comments my father made and I think everybody in this room probably does. It's the methodology of how you get there that merits more discussion because what we were trying to do in the application -- and this was done in consultation with the entire production community, most of whom -- in fact, all of whom are supporting this application -- was to try to put western producers in a position where they received the kind of start-up funding, the kind of training and the marketing clout to be able to come to Global, to be able to come to our group and even to other broadcasters with good solid quality priority programming, over and above the documentaries that they do quite well.
978 What they had said was, "We need a leg up" and that is what the whole point behind the Western Independent Producers Fund is, not requiring broadcasters to commission "X" number of hours from Vancouver, "X, Y" number of hours from Alberta. I think that is a false or an inefficient methodology because it will not put the best programming on the screens.
979 What will put the best programming on the screens is giving the people who have the bright creative minds the financing to get those ideas to implementation stage. And the second component of what we are trying to do, is we have said we will open a Vancouver -- we will ensure that there is a door to knock on in Vancouver in addition to the door that there will be to knock on in Edmonton via direct administration of the Fund.
980 So that was the philosophy underlying it rather than a quota for...
981 COMMISSIONER GRAUER: I appreciate that and, you know, I share your view that the most effective way is not for us to issue quotas because then you don't have a real commitment to what you are doing.
982 But my question to you is: This Western Producers Fund, producers can't access it without a broadcaster licence fee. The licence fee comes first.
983 So my question to you is: In taking on stewardship of these assets is whether or not you are prepared to say it's important. And I must say that the production community, certainly in Vancouver, is the second largest in Canada and it's producing quality, high quality programming around the world as have many of the producers in Alberta.
984 So I don't think it's a matter of them needed training so much, and certainly you have had great support from the production community and who wouldn't support this kind of a fund, and all of them want to do business with you.
985 What I am saying is I am perhaps voicing things that they are not prepared to bite the hand that feeds them. Fortunately, you don't feed mine, believe me, and I am saying, you know: Are you prepared as part of being a leader in the Canadian broadcasting system, and in particular with special responsibility to western Canada, to step up the plate and say, "We are going to do this with respect to licensees" and I know, Kevin, Mr. Shay you said that you are going to come --
986 MR. ASPER: I think the answer is a definite yes, and I would also suggest that in the group licensing session -- we will yes, as part of this application, but in the group licensing hearing we will have in a year, I think we should have a discussion with all groups, to ensure that all groups are contributing to the diversity of licensing across the country.
987 COMMISSIONER GRAUER: I agree and if everyone is doing it then we don't have to issue quotas.
988 MR. ASPER: Fair point.
989 COMMISSIONER GRAUER: Okay. Now what I would like to do is go to the benefits and I hope you will bear with me. There was overlap with Commissioner Wylie with respect to programming and I had some trouble myself sorting through what was where.
990 And so what I would like to do is start with the tangible benefits and go over them community by community and perhaps if you could help me by identifying which you consider to be a national benefit and which are benefits directly related to the community. That would be a good start.
991 Vancouver. The Producers Fund. Does that seem to be a national?
992 MS BELL: That's a national.
993 COMMISSIONER GRAUER: National benefit.
994 MS BELL: Yes. Well, national to the west, sorry. You know what I am saying.
995 COMMISSIONER GRAUER: Yes, I do know what you are saying.
996 MS BELL: It's regional.
997 COMMISSIONER GRAUER: So it really doesn't belong to either of our categories.
998 MS BELL: It's in between.
999 COMMISSIONER GRAUER: In between.
1000 MS BELL: Yes.
1001 COMMISSIONER GRAUER: And again I think that one of my concerns here is that -- and I don't mean to minimize the importance to a fund like this to the independent production community, but as you responded in your reply to the Alberta Motion Picture Industry Association who are concerned, as are some of the others, with the fact that there isn't a set amount identified for either B.C. or Alberta.
1002 I think you have said 100 per cent could easily go to one place or another. So perhaps when you come back to us with some proposals you are prepared to make with respect to license, this might help alleviate some of that concern, if there is a commitment that you are going to do certain activities.
1003 MS BELL: All right.
1004 COMMISSIONER GRAUER: Can you confirm to me who the administrator of the Fund will be and what its mandate will be? Could you elaborate on that?
1005 MS BELL: We haven't confirmed who the administrator would be, but there would be a board that would involve five people. There would be a chair, and then a board member from each of the provinces, one for B.C., Alberta, Saskatchewan and Manitoba, but maybe Loren could give you a little bit more detail about the mandate of the board.
1006 MS MAWHINNEY: It's an independent board and as such producers working for CanWest would not have any preferential treatment in going to the board. The board will set up its own guidelines, other than it is to fund Canadian priority programming.
1007 COMMISSIONER GRAUER: Can you elaborate on any of the application criteria, what they might be?
1008 MS MAWHINNEY: The board will look most favourably on applications from western-based production companies with head office based in Alberta, British Columbia, Saskatchewan or Manitoba, utilizing the most western labour, similar to the funds that have been set up, that already exist in Alberta when CTV took over. There are funds existing -- I can't remember the name of them.
1009 But anyway there is preferential treatment for producers that are located in that province utilizing mostly Alberta labour. So we would extrapolate similar guidelines for the western production community.
1010 COMMISSIONER GRAUER: Would there be any restrictions regarding airplay on private or public conventional or specialty services?
1011 MS MAWHINNEY: This is for private broadcasters and educational broadcasters and specialty.
1012 COMMISSIONER GRAUER: Do you have any thoughts on how many programs it might fund on an annual basis?
1013 MS MAWHINNEY: No, but we would assume that the amount per project would be about 15 per cent of the budget of that project, expended at a little over $4 million a year. So there should be a substantial amount of projects, but I didn't want to put an arbitrary cap.
1014 COMMISSIONER GRAUER: Will it allow for the production -- will it fund the production of ongoing drama series or will it be limited to one time only productions?
1015 MS MAWHINNEY: Oh no, ongoing as well as MOWs, long forms.
1016 COMMISSIONER GRAUER: And would the eligible recipient have to have funding from other sources like CTF?
1017 MS MAWHINNEY: Generally, if we are only putting up 15 per cent and --
1018 COMMISSIONER GRAUER: "We" being?
1019 MS MAWHINNEY: The Fund -- and therefore if they are having to raise 75 per cent or 85 per cent elsewhere, there will be other financing sources like the CTF, but one does not preclude the other.
1020 In other words, if they don't and they have foreign sales, for instance, that is a good thing.
1021 COMMISSIONER GRAUER: So you wouldn't require the others to be in first.
1022 MS MAWHINNEY: No.
1023 COMMISSIONER GRAUER: I have all your revised benefits, the old benefits.
1024 Canadians of Excellence PSAs. Is this a national benefit?
1025 MS MAWHINNEY: It's a national benefit.
1026 COMMISSIONER GRAUER: And what will they look like? Will they be mini-dramas? And what I am speaking of, of course, is what is on right now which is the Bronfman Foundation.
1027 MS BELL: That's what it's going to look like. Maybe Loren can supplement that.
1028 MS MAWHINNEY: Yes. That is exactly what we are contemplating, other than there might be some interviews with business leaders, for instance, in that kind of area -- interviews.
1029 COMMISSIONER GRAUER: So they will be contemporary. Will they also highlight historical figures?
1030 MS MAWHINNEY: Yes. We are looking for people that have made a big contribution to Canadian life.
1031 COMMISSIONER GRAUER: The Canadian Women in Communications, I don't have any questions on. Now, on the five banner themes, maybe what I could do -- I know we are going to end up doing a little bit of duplication here, but with respect to the chairs and scholarship which you have identified in different communities, they are presumably local.
1032 MS MAWHINNEY: Yes, they are.
1033 COMMISSIONER GRAUER: The communication studies comes as a wide range of disciplines, and I am wondering if you could give me more detail about the types of programs that would be established, that would be really of direct benefit to the Canadian broadcasting system, including the research aspect of the proposal.
1034 MS BELL: You are talking about the programs in those colleges and universities?
1035 COMMISSIONER GRAUER: Yes.
1036 MS BELL: A lot of training programs either in journalism, film studies, broadcasting programs and, as you probably saw from our application, there is a variety of institutions that we have listed that would be recipients of those funds.
1037 COMMISSIONER GRAUER: Yes.
1038 MS BELL: Actually, we have had discussions with a number of those organizations, but we actually have not decided how the funds would be divided among those different institutions.
1039 COMMISSIONER GRAUER: But with respect to the criteria -- how you will be directing the funds to ensure that they are benefits to the Canadian broadcasting system. I mean what are the criteria you are using to ensure that they would -- that it's not basket weaving, for instance.
1040 MS BELL: Exactly. No, and it's either a communications program or a journalism program, television production, those sorts of programs.
1041 MR. ASPER: If I could just jump in. The criteria in our minds are what is it that are the component parts of what goes into creating content whether that be journalism for news content or acting, writing, editing, et cetera, the things that are going to the creation of dramatic content.
1042 One of the things Canada does a great job in, and then exports, is creating writers and actors. What we would like to do is try to create a program that crates more writers, more good actors and then try to build and using our resources in Canada, broadcast resources to try to keep those writers home.
1043 You know, an interesting point that I think Loren made earlier, is that one of the celebrated Canadian writers, David Steinberg, has been repatriated. He was the writer for Mad About You, a long-time hit on U.S. television and Canadian television. Now he is writing for Global in a program we are doing.
1044 But I think going back to the programs, it's the actors, the writers, the editors that are the foundation of the system. That is the kind of specific training we want to provide.
1045 COMMISSIONER GRAUER: Two hundred and fifty thousand dollars to local art support. Now I am in Vancouver here, and on the benefits, I wanted to know, given that our concern is that these are incremental to what you would ordinarily be doing, what Global Vancouver gave to local arts organizations over the past two or three years.
1046 MR. SHEA: Commissioner Grauer, in terms of actual cash it was in the neighbourhood of about $20 or $30,000. That would not include a variety of editing and other production services that we would have on an ongoing basis.
1047 So this is truly incremental and it's targeted at community theatres, it's targeted at helping various arts groups who we both know in every community in this country are struggling and we do not at this juncture have -- we have not identified precisely where because I think what we want to do is to be able to say, "We have been approved for this process. We now have this funding", and put it where it is most required.
1048 COMMISSIONER GRAUER: I understand that. I guess my question is that you are not now to the Vancouver market. Arguably, as I said earlier, would you agree that CKBU is perhaps one of the most profitable English-language stations in Canada?
1049 MR. SHEA: Among them.
1050 COMMISSIONER GRAUER: Among them. And your contribution to the local arts community is in the neighbourhood of around $10,000 or $20,000 over the past few years?
1051 MR. SHEA: That's not entirely fair.
1052 COMMISSIONER GRAUER: Cash.
1053 MR. SHEA: Yes, but that is specific to Vancouver arts groups. At the corporate level, our contributions in cash are in the hundreds of thousands of dollars -- we can provide you with a list.
1054 COMMISSIONER GRAUER: Is that in Vancouver?
1055 MR. SHEA: Not specific to Vancouver, Commissioner Grauer, but that supports national efforts that have regional divisions and that is typically the way, I think, most of our organizations have funded various elements.
1056 COMMISSIONER GRAUER: You know, believe me, I know that your company is a very big supporter of the arts and certainly you have talked about it in your presentation, you have the Foundation, but what we are really talking about here is Vancouver benefits, and I am -- what I am trying to do, as you know, is to look at what is incremental. You are not new to Vancouver, so why $250,000 with respect to benefits to this, you know? How much would you be doing as being a good corporate citizen, either through your Foundation or any other --
1057 MR. ASPER: If I could just clarify a few things. One is we found, since we know quite well all of the players in the Vancouver market -- I believe the number actually in Vancouver is $35,000. That was --
1058 COMMISSIONER GRAUER: Last year?
1059 MR. ASPER: Last year, and that is part of an allocation. The CanWest Global corporate office has a charitable budget of 1 per cent of pre-tax income. that is allocated for the most part to the corporate offices. All but about $275,000 of it is allocated to the corporate offices that provide on a national basis. For example, and that just goes to markets where we operate television stations. For example, we funded a chair in journalism at the University of Regina out of that budget because the station in Regina could never alone do that. So the allocation for Vancouver, for the B.C. marketplace, that is based on some proportionality to its size in the Canadian marketplace as a whole.
1060 We know for a fact that we are by far the largest cash contributor of all the stations on the Vancouver marketplace of any of the stations that are there. So everything we are proposing is over and above what that budget already -- that is a constant that already exists.
1061 So we are proposing things over and above that, and I think it's important to note that all stations do give millions of dollars of airtime, including ours, under the aegis of the CAB and separately to institutions.
1062 So that is the context of CanWest's charitable operations.
1063 COMMISSIONER GRAUER: No, I understand that and I am glad to know that you -- so what did you say? Around $35,000 last year in Vancouver between the station and your corporate initiatives in Vancouver. Is that what it is?
1064 MR. ASPER: Yes.
1065 COMMISSIONER GRAUER: Thank you.
1066 And I do understand that you are very generous contributors with respect to in kind to local community organizations and telethons and I don't mean to take that away from you. But, you know, it's really a matter of saying that as a company that has done -- any company that does very well on the market, as a market corporate citizenship should they be contributing cash as well to non-profit groups in the community. So it's really a matter of saying is this incremental to an existing contribution and I am certainly satisfied that $35,000 is. And the endowment, I guess, is part of the same.
1067 How would set up an endowment?
1068 MR. ASPER: Which endowment?
1069 COMMISSIONER GRAUER: Sorry. The Vancouver one million dollar arts endowment fund as opposed to the $250,000 in local art support and then one million dollars to an arts endowment fund.
1070 MS BELL: Yes, it is part of, I guess, a similar initiative and we would set up the endowment for a number of different local arts groups.
1071 COMMISSIONER GRAUER: And administer it yourself.
1072 MS BELL: Yes.
1073 COMMISSIONER GRAUER: Can you tell me a bit about this first project production fund, elaborate a bit more on it?
1074 MS BELL: It's a special fund that is being set up for first-time producers in B.C. -- a little bit similar to what has been done at CKVU in terms of local or regional productions, small productions -- with budgets ranging between $20,000 and $30,000 each.
1075 COMMISSIONER GRAUER: Administered by the station.
1076 MS BELL: That's right. And because they are first-time producers the staff or the management of the station would be able to give them some guidance and help in terms of getting their productions together.
1077 COMMISSIONER GRAUER: So would this be something that you would fund and then broadcast on your stations at some point? How would they get other funding? I mean, how would this work with respect to -- would they then possibly go to your Western Producers Fund or is this something quite different?
1078 MS BELL: I am going to ask Loren to address that.
1079 MS MAWHINNEY: Thanks, Charlotte.
1080 What we mean by this is capitalizing on the success that Jim Rusnak's team has had at a local level at UTV where they are funding, in some cases, half the budget or a portion of the budget, but they tend not to be CTF-funded projects and they are small documentaries.
1081 One of the successful ones that we ran nationally, for instance, was an hour-long documentary called Abreast in a Boat and it was a terrific doc. So some of them are local and some of them are good enough to actually get national exposure. So this would be a continuation on that.
1082 MR. ASPER: I think the great benefit we saw out of the system, we did this as part of a Global licence renewal -- I am not sure which one it was it was, Loren --
1083 MS MAWHINNEY: In 1992.
1084 MR. ASPER: In 1992. What we set up was a fund for ten first-time producers and one of those -- I now forget the name of the producer, but he created a show called Ready or Not, a pilot, a half-hour show that was their first try ever and it became a series. It's still on the air today and certainly was shooting originals for seven years. So about these kinds of projects.
1085 There are a lot of good producers out there that just need that first chance and that is why we thought this was an important benefit.
1086 COMMISSIONER GRAUER: Now, the national news initiative. I know in the reply you gave a breakdown of the expenditures of the eight million dollars and what I am really trying to understand here is -- you have identified a number of what would be incremental expenditures to what is there.
1087 What I think we would like to get is, first of all, over what period of time are these expenditures going to be made, the eight million? I know that you have said they are incremental, but will there be any efficiencies that you gain from merging the two operations that would help with this?
1088 How much of this is local? How much of this is national? Wouldn't you, now that you are going to be a national broadcaster, be doing a national newscast in any event? How does the budget work on this and why would this be seen to be a benefit?
1089 MR. MacDONALD: Commissioner Grauer, taking your questions in order.
1090 In terms of the efficiencies, the costs represented by the eight million dollars -- the ten million dollars when you take into account national news and public affairs -- are purely incremental in that they cover the requirements of dedicated news bureaus across the country, a dedicated -- and I underline the word "dedicated" -- national news team, production team and an editorial in Vancouver where the newscast will be anchored from and a small amount of capital associated as well with the development of these bureaus and the establishment of a national news centre in Vancouver.
1091 As for your question: Wouldn't we be doing a national news program anyway? Not necessarily. There is a lot of people that say that you are better off with local news these days. A lot of studies show that local news is growing in strength and population.
1092 But I think what we are saying in this application is that, you know, we have two national newscasts on the air right now. Volumes have been written about the impact that national news has on the public agenda. Some people would say it has too much of an impact on the public agenda -- that is a debate for another day -- but it does have an impact and both of the national newscasts that are on the air now -- and there is only one private -- are based in Toronto. Having worked in news for some 23-odd years, most of it in Toronto and Ottawa, I can tell you that there is a tendency, when making editorial decisions in these important newscasts, to filter those decisions to the prism of: How will this impact on central Canada? And you can zoom that to me in Toronto.
1093 COMMISSIONER GRAUER: You actually don't have to tell me that.
1094 MR. MacDONALD: Well, we have long recognized that, we are western company, western-based company, we have long recognized that. Really what we are proposing here is a new alternative and it comes back to the themes of the application, that is about being an alternative, another voice, another option, another choice.
1095 I think those are more than just words and I think that by launching this national newscast and launching it in Vancouver and producing it in Vancouver, I think that Canadians get a new perspective that they didn't have before. I think that the national agenda, if it's going to be impacted by national news, there is going to be another voice and another perspective and we think that that is important.
1096 Neither the former WIC stations nor Global is currently producing a national newscast. We have programs that have national content in them, but neither the WIC organization nor Global has sufficient infrastructure to mount a national newscast and that is why these dollars are required to create the jobs, build the bureaus and build the structure to produce this alternative newscast.
1097 COMMISSIONER GRAUER: I don't need to be persuaded of the merits of a western-based national news broadcast as a real alternative to what is existing. But it strikes me that your entire strategy for the stations that you have applied to acquire is based on news, you know, whether it's local news or regional news, it's very much a news focus.
1098 So this is what brings me to the question: If we were to deny this as a benefit, would you do a newscast anyway, and if you were going to do it, would you do it in Vancouver, would you do it somewhere else?
1099 MR. SHEA: I don't have a full answer, but I think I have three-quarters of it. We probably would not do it in Vancouver, Commissioner Grauer, because this allocation is there to support building that infrastructure here. Whether we continue with our strategic plan to do a national newscast then out of Toronto, I think is a programming and scheduling decision that we would make at that time.
1100 What we are saying is, upon approval of this application we are making a commitment to do something that no one else has ever done because it's been cost prohibitive and that is to do build a national news centre out of Vancouver. So in all likelihood, we would either not do it, Commissioner Grauer, or may end up doing it from Toronto.
1101 COMMISSIONER GRAUER: So then can you then go over with me. What are the costs that would be incremental to doing it Vancouver as opposed to doing it in Toronto because as I understand it, if you don't have the infrastructure anywhere you are going to have to build an infrastructure.
1102 So the question is: What are the pieces that make it more expensive to do here than there and factoring in that you may be doing a national newscast which is going to resonate with a large percentage of English-Canadian viewers who happen to be west of the Manitoba border and nobody else is programming a national newscast here.
1103 MR. SHEA: I think Mr. MacDonald can give an indication of what those costs are.
1104 MR. MacDONALD: And I just to clarify. It's not that we have no infrastructure for this newscast. We do have some national news gathering infrastructure in Toronto and in central Canada right now. These costs are incremental in that we would have to hire a new production team based in Vancouver. We would incur feed costs, transmission costs that differ from those that we would incur in Toronto in terms of moving material from Ottawa and from other existing Global stations, some of which is currently done on a fixed fibre line, it would have to be satellite transmissions.
1105 Also included in that envelope is some money for a national news bureau in Calgary as well, setting up a dedicated national news bureau in Calgary. It is more expensive to do it out of Vancouver, but it is certainly in our estimation critical and key, if you like the statement we are making in this application and if we think to have that western perspective, that distinct western perspective, is worth whatever additional monies would be involved.
1106 But there is no question, if we were to do this out of Toronto there would be additional money involved as well. I don't want to suggest that the entire eight million is contingent only on doing it in Vancouver, but certainly a sizeable piece of it is.
1107 MR. ASPER: Commissioner Grauer, I think just to sum up. The reason we decided to do a national newscast was because we felt it was an obligation we owed as part of the privilege of having this application approved.
1108 It is not vital to our strategy of the news and information content stream which I discussed earlier because that is much more locally focused, that is much more what the Hamilton and Victoria augmentation of news programming is about and what we are doing in our local markets anyway.
1109 So that is why we see that as a very separate and distinct benefit that we bring to the table. We would not otherwise have been doing that. There no such plans in our shop to do so until this application began to be put together.
1110 COMMISSIONER GRAUER: I am sorry. Does the eight million dollars include the cost of setting up a news bureau in Alberta? Did you already answer that?
1111 MR. MacDONALD: Yes, I did. Yes, there is some cost in there, yes.
1112 COMMISSIONER GRAUER: Will there be synergies with the proposed public affairs show in Alberta?
1113 MR. MacDONALD: There will be some, but there will be a dedicated public affairs producer and host and researcher. But there would be some synergies, yes.
1114 COMMISSIONER GRAUER: And the northern news bureau -- the Yellowknife internship, it is here as a benefit for Vancouver. I understand it is to be managed out of ITV. Why is it as a Vancouver benefit?
1115 MS BELL: Actually, the internship could occur at any one of our stations, so there would be benefits to B.C. or to Alberta. We felt that it was more appropriate to put it out of the ITV studio.
1116 COMMISSIONER GRAUER: No, I understand. What I am wondering is why is it here as a benefit for Vancouver.
1117 MS BELL: Why is it attached to the benefit --
1118 COMMISSIONER GRAUER: The Vancouver list.
1119 MS BELL: I guess when you come at these things and the benefits for each of the markets are allocated based on the value of the transactions, so basically we have allocated things to different markets where it made sense and in some cases if it benefits B.C. and Alberta it either went to one or the other.
1120 COMMISSIONER GRAUER: My last question is: Why -- and I know we touched a bit on this this morning in your discussion with Commissioner Wylie. It is just that I don't understand why the five million dollar local programming initiative for CHEK would be in the CHAN benefit.
1121 MS BELL: I think that if you were going to -- well, if you take a look again at the value of CHEK and again the benefits are based on the evaluation of that property which is, according to KPMG, $42 million, if you are looking at 10 per cent of that, then you are looking at $4.2 million. You couldn't possibly allocate as much money towards local programming benefits if you were basing your benefits package on just that amount.
1122 So we also see that, even though they are severable, they are very much tied together and there is a real benefit to having both of them approved and working together and the strength of CHAN and that is how we allocated that.
1123 COMMISSIONER GRAUER: The reason I am asking is that when I go over these benefits and I try to get a sense of is this a national benefit, a local benefit and looking at all of the market by market how do they break out in terms of the benefits to the community in question vis-à-vis national benefits. It strikes me that with Vancouver there is not much here that is local, strictly local.
1124 MR. ASPER: Commissioner Grauer, I think there was and is a tension in the application between the fact that while it is in its parts an application to acquire several stations, there was a national overlay to this whole thing and because of the way the benefits policy is structured, one has to attach benefits to each of the markets and so there are in each of the markets. And that is one of the reasons, by the way, why we exceeded the 10 per cent which to my knowledge has never been done before in broadcasting in any of these kinds of applications.
1125 But by definition, some of those benefits that are national would have to be slotted in each of the markets and we would be prepared certainly, if the Commission were to decide that there should be a reallocation between certain markets, to put more into Vancouver, for example.
1126 We just saw the real need in the British Columbia marketplace to be in CHEK in the Victoria marketplace and that is why there was a skew.
1127 MR. SHEA: Commissioner Grauer, if I can also add -- and I think it forms part of your opening statement -- that in large part the assets are western-based and in large part the funding and the benefits are to western production companies directly though the Fund and/or through assistance through the CFTPA mentoring program and there is a litany of varied associations that are all western-based.
1128 When you add up the benefits that are tied to the production sector in western Canada, it's in excess of 50 per cent and that is what we heard from the production community, "Please try to make them western focused as opposed to nationally focused" help and assist in a number of way with respect to the independent production community as opposed to more local programming and markets. With due respect, Ms Grauer, they are already very well served in local programming with the exception of Victoria.
1129 COMMISSIONER GRAUER: Probably lots of people in Vancouver would argue with you about it is well served with local programming.
1130 Mr. Asper, to get back to your point. It's not so much a reallocation of benefits from one community to the other -- and as I said I don't want to be seen to be parochial and say, "There isn't enough for this and there isn't for that and how is this allocated". But what it does go to is your statement that overall this takes you to being a major national player and there are a number of big national initiatives that you want to undertake.
1131 So I am saying, should they all be part of a written down benefit? Are there some things, that given the whole is greater than the sum of its parts, that you might be wanting to undertake given the -- and I don't want to use the word "intangible value" because I don't want to use our lingo, but what is it that accrues to your company becoming truly national that you might want to undertake -- not might want to, might be appropriately undertaken as part of that leadership role and not necessarily as part of a specific tangible benefit. So that was why I was asking a number of questions about some of these.
1132 Okay. Next. There is another question with respect in particular to, I guess, the programming initiatives. First, let me talk about the programming initiative because I am going on to CHEK.
1133 How would we measure the incremental spending, perhaps also with the national news -- and I know you did talk about it a bit with Commissioner Wylie this morning, but is it something that on your annual returns there would be a separate line? I mean, how would we be able to see that expenditures hadn't gone down in one category and be offset somewhere else? I mean, do you have ideas for us about what would be the most effective way to measure that?
1134 MR. SHEA: Yes, we do. I would like Katherine Browne to respond to your question.
1135 MS BROWNE: What we propose to do at the first reporting opportunity that we have where these assets will be part of the CanWest group is to report on the current operations separately, as you were referring to in an annual return, and then over and above those expenditures, we would show you the incremental additional programming hours that had been applied to the station and the cost associated with those hours so that they will be completely separate and incremental.
1136 COMMISSIONER GRAUER: Thank you.
1137 Victoria -- I don't think I need to go over the programming initiatives because I think you covered them this morning and if we found a way that we can measure the incremental spending, I don't think we need to talk about that.
1138 With respect to the aboriginal, I think it's the Longhouse program, which I think is listed as a benefit in both Kelowna and Victoria, if I am not mistaken. Where would this be produced? Perhaps you can elaborate on this program.
1139 MS BELL: I guess it's mine. Actually, I think there are a couple of initiatives in terms of aboriginal programming.
1140 One million dollars is going to APTN and that really is the benefit that is attached to Victoria. Longhouse, I believe, would not necessarily be part of that initiative, although it might involve APTN through another separate initiative.
1141 COMMISSIONER GRAUER: It's listed here in your revised list of benefits for Victoria. It says: Aboriginal programs a million dollars (Longhouse).
1142 MS BELL: It is my understanding that that one million dollars is the one million dollars being given to APTN to produce a series of aboriginal programs separately.
1143 MR. MacDONALD: If I may?
1144 MS BELL: Yes.
1145 MR. MacDONALD: Commissioner Grauer, part of the confusion here is that we have also undertaken in Kelowna to produce an aboriginal program and that also is part and parcel of some discussions we are having with CBC which I think we have referred to in the application as well. So there is some confusion in the benefits and I certainly appreciate your confusion on that and I think it's the way it's expressed in there.
1146 COMMISSIONER GRAUER: Thank God!
1147 MR. MacDONALD: But there is a programming commitment to develop a limited series -- aboriginal series and that is one of the many items that we are discussing with the CBC.
1148 COMMISSIONER GRAUER: So there is a million dollars here and then is it part of the same, the million two here in Kelowna? No --
1149 MR. SHEA: Maybe I can help with some clarity on this one.
1150 COMMISSIONER GRAUER: Yes.
1151 MR. SHEA: The million dollars in Victoria is in effect a grant to APTN to produce programming for the APTN Network. It may or may not have a second window on either Global or the independents.
1152 Longhouse was used as an example of the type of programming that APTN may produce with respect to their million dollar funding. The decisions on programming are made by APTN. The million two in Kelowna --
1153 COMMISSIONER GRAUER: Actually you know what? If it's not the same thing --
1154 MR. SHEA: It's not the same thing.
1155 COMMISSIONER GRAUER: Let's deal with Victoria and then when we get to Kelowna we can talk about that.
1156 MR. SHEA: Thank you.
1157 COMMISSIONER GRAUER: So this is a one time only grant, a cheque for a million dollars.
1158 MR. SHEA: It's over five years.
1159 COMMISSIONER GRAUER: It's over five years.
1160 MR. SHEA: Two hundred thousand dollars a year.
1161 COMMISSIONER GRAUER: A year. Thank you.
1162 And I am assuming your endowment, local arts support endowment for Victoria is the same as the Vancouver proposal.
1163 MR. SHEA: That's correct.
1164 COMMISSIONER GRAUER: Kelowna. The joint CBC project. Did you talk about this this morning? No? Thank God!
1165 MS BELL: We have had a number of discussions with representatives from CBC and we certainly haven't arrived at any conclusion about the types of programming that we would be developing, but there are a number of ideas. There were also discussions about sharing news gathering resources and developing documentaries, other types of programming and perhaps even some aboriginal programming with the CBC.
1166 The other initiatives that were listed in the letter that we attached to our response to interventions, which talked about technical upgrades or sharing in that area, would be part of the 1.5 million which was in the bonus benefits package.
1167 COMMISSIONER GRAUER: We will get to that.
1168 MS BELL: Before you get there, I know.
1169 COMMISSIONER GRAUER: We go through this one line at a time.
1170 MS BELL: Okay.
1171 COMMISSIONER GRAUER: When I see the bonus package, I think it's like when I buy a lottery ticket. Will you take whatever it is, 42 or something, for your bonus number. Anyway.
1172 How is the news gathered in Vernon now? I know you have talked about news gathering in Vernon, given the establishment of a news bureau?
1173 MR. MacDONALD: Essentially there is no dedicated bureau so any coverage from down there would either be free lance or assigned. The Vernon Bureau would really be to service the north Okanagan Valley and provide a greater regional input to CHBC.
1174 COMMISSIONER GRAUER: In the new programming -- and again I am not sure if you talked about this with Commissioner Wylie -- how much, if any, would be independently produced?
1175 MR. MacDONALD: In terms of the local programming, that would be station produced and that is part of the incremental, part of the 1.2 million and that is the Okanagan Now program, a half-hour program which would replace the half-hour program currently on CHBC's schedule.
1176 COMMISSIONER GRAUER: Okay. Don't get me into programming. I will really get lost.
1177 And so this is would be measured the same way as we talked about with a new line on the -- Alberta. Do I have a breakdown on the 2 million dollar benefit earmarked for the establishment for your Alberta-based national public affairs program and the new news program in Vancouver?
1178 MR. MacDONALD: Yes. The 2 million for the public affairs unit in Calgary, which would be housed together with the national news bureau -- the new Calgary national news bureau, they would work together -- primarily covers some operating costs for the new program certainly in the budget, but is also for the hiring of staff for that program -- producer, host and researchers, we talked to that before -- and that program would also incorporate some existing resources, including those of the new national newscast, but that spending is purely incremental to operate that program.
1179 COMMISSIONER GRAUER: To the existing news operations that are already there.
1180 MR. MacDONALD: That's correct.
1181 COMMISSIONER GRAUER: Now, could you just go over with me again the International Marketing Fund and the National Screen Institute and how they organically grew and developed?
1182 MS BELL: How the initiative changed you mean?
1183 COMMISSIONER GRAUER: Yes. And what both components be now, where they will be administered and what the criteria will be.
1184 MS BELL: Well, originally we had set aside $500,000 to the NSI and a one million dollar fund for the International Marketing Fund. Those were separate initiatives, but we hadn't really identified anyone to administer the Marketing Fund. We had discussions with NSI, and this is part of one of their workshops, is in fact to provide training to producers in how to go to market and sell their productions, or market their productions. So they would be administering the fund as a result of the fact that it does sit within their programs, or their existing programs.
1185 So what we did is we reduced the amount that was being allocated to NSI down to $250,000 so the whole million dollar allocation has now been collapsed with that $250,000. Therefore, you now have 1.25.
1186 COMMISSIONER GRAUER: So that would be a national benefit? This is for producers across the country, right?
1187 MS BELL: That is correct.
1188 COMMISSIONER GRAUER: The Canadian Film Centre is a national benefit.
1189 MS BELL: Except that it is going to benefit Alberta applicants. In fact, we received a letter in February from the Canadian Film Centre stating that they were going to establish an Alberta CanWest fund and that the recipients would be Albertan. We could file that with the Commission.
1190 COMMISSIONER GRAUER: You did.
1191 MS BELL: We haven't, actually.
1192 COMMISSIONER GRAUER: Oh, you haven't.
1193 MS BELL: It was an omission. We can file it with you.
1194 COMMISSIONER GRAUER: Why Alberta?
1195 MS BELL: Because it was tied to the Alberta benefits package.
1196 COMMISSIONER GRAUER: I see. The national benefit, public affairs program and national news benefits, you would say that is kind of both, right?
1197 MS BELL: Yes.
1198 COMMISSIONER GRAUER: Sorry, I am getting away from my questions here.
1199 We have done the scholarships. I don't have questions. The academy. Can you talk to me about Historica? How this will serve the interest of the Canadian broadcasting system? I know you are planning to air in the Maritimes, but that $500,000 cash donation.
1200 MS BELL: That's correct, to produce, again, a number of vignettes and how will it help the broadcasting system, I guess. It's a cultural learning program and actually I would ask perhaps Loren to supplement my answer there.
1201 MR. SHEA: I can probably help a little bit more. Historica is an organization that came to fruition about a year ago. It received preliminary funding by a number of very committed Canadian corporations, among them Bell Canada.
1202 Commissioner Grauer, it seeks to become a producer of very, very high end vignettes on Canadian history and this is core funding or base funding that they require in order to meet their objective and we have not only committed cash -- because they are in desperate need of cash to reach their own corporate objectives -- but also air time in addition to that.
1203 COMMISSIONER GRAUER: So the $500,000 for Historica will go directly to producers to produce vignettes?
1204 MR. SHEA: That's correct, under the auspices of Historica.
1205 COMMISSIONER GRAUER: So you will give $500,000 to Historica. They will commission independent producers to produce vignettes and then you will give them air time and presumably other broadcasters as well.
1206 MR. SHEA: That's correct.
1207 COMMISSIONER GRAUER: Could you go over with me the Alberta Film Commission benefits, explain that to me?
1208 MS MAWHINNEY: The Alberta Film Commission will be spent prorated over the five years. It's a commission that attracts shootings to Alberta, whether it's content or foreign content -- like the movie Unforgiven is shot in the badlands of Alberta. So it helps publicize those kinds of locations for international and domestic activity.
1209 COMMISSIONER GRAUER: And can you go over the AMPIA with me?
1210 MS MAWHINNEY: AMPIA is $500,000 to be given to them at the rate of $100,000 and what we have suggested to AMPIA's board, but they will have jurisdiction over how they spend the money. What we have suggested to them is that they use it for training and to send people to international festivals as well as domestic festivals so that they understand the marketplace reality that they may not ordinarily get to.
1211 So you could send a producer to NATPI or to MIP or to MIPCOM just to they get a sense of what kind of programming is being offered outside Canada and what works and how they are operating in that context in their marketplace.
1212 COMMISSIONER GRAUER: And the Edmonton Economic Development Office for Arts Funding?
1213 MS BELL: That's a $250,000 grant going to that office for a number of programs that they are working with, a number of organizations, cultural and arts organizations in Edmonton.
1214 So they would be then using those funds towards those initiatives.
1215 COMMISSIONER GRAUER: So if I was to look at the Alberta benefits overall, a large number of them are devoted strictly to the Alberta market, would you say? More than Vancouver benefits.
1216 MS BELL: Strictly to -- it would depend on how the Western Production Fund ends up being --
1217 COMMISSIONER GRAUER: And the national news.
1218 MS BELL: Exactly, yes.
1219 COMMISSIONER GRAUER: We are getting there.
1220 COMMISSIONER GRAUER: Again, this may have been answered this morning. With respect to these wellness documentaries, are they being done by independent producers?
1221 MS BELL: Yes, they are.
1222 COMMISSIONER GRAUER: And the Mohawk College, again you would apply the same criteria in terms of ensuring that these are very much related to --
1223 The Heritage Stabilization Program Endowment. Again, can you detail the type of initiatives, the programs that would benefit the Canadian broadcasting system?
1224 MS BELL: This is a new type of initiative. Actually, I think it's the first of its kind in Ontario and it is the public and private sort of merging for that community. Again, it would be benefitting local arts and cultural groups in that market.
1225 MR. SHEA: Commissioner Grauer, if I may because it's also noted in the Vancouver benefits, the million dollars for a heritage stabilisation arts program.
1226 This is a program that has just been initiated by the federal government to provide local art groups with essentially two elements. One is to provide better management of the arts organizations because so many suffer from being poorly managed and, secondly, as core funding or base funding to invest in tomorrow's starts. There are a series of dance organizations and theatrical organizations in Hamilton. This will be managed by the board of directors that has been set up in Hamilton and our million dollars, over the course of five years as an endowment, in effect, I guess, their initial committed first form of corporate funding and it's typical of most federal plans. They have to get "X" amount or "X" percentage from the private sector in order for them to trigger the federal money.
1227 COMMISSIONER GRAUER: Is this something that you would also see your corporate office or the foundation also participating in that market?
1228 MR. SHEA: Not to this level or extent. No, it would not be I think typical of the CanWest Foundation.
1229 COMMISSIONER GRAUER: It would be or would not be?
1230 MR. SHEA: It would not be.
1231 MR. ASPER: Just to clarify. We do, of course, support many of the arts organizations individually indirectly. This is something that hasn't come before, but our charitable policy specifically is to support the performing arts because many of the actors that are in the Taragon Theatre or the Citadel Theatre in Edmonton or the Manitoba Theatre Centre, and the writers as well, end up on the screen and that is where they get their start and these organizations at that level are the whole core of the Canadian broadcast system.
1232 So we do support that to a large degree from our budget. It's the large majority of our budget. But this is new in the sense that a) we haven't done so in markets where we don't have operations, and b) we may indeed top up what we are doing as part of this application. I wouldn't preclude it.
1233 COMMISSIONER GRAUER: I think I have one more question. Oh, no, I have the bonus package. If you could just tell me about the film circuit, the Toronto Film Festival, elaborate on that.
1234 MS BELL: I think that is just a straight cash donation towards their initiatives. Basically what they do is they make available independent films in communities across Ontario and it is a cash donation.
1235 COMMISSIONER GRAUER: And it's just for the film circuit to be bringing films --
1236 MS BELL: To continue doing its work, that's right.
1237 COMMISSIONER GRAUER: Could you just tell me a bit about the production fund of the City of Hamilton, given that this is funds for the City of Hamilton.
1238 MS BELL: I guess, if you go back to the benefits policy that states that your benefits should be helping the communities where you are applying for stations and the system as a whole, and we went into each of these communities and tried to find, I guess, areas where we could be helpful.
1239 The City of Edmonton is going through a lot of change at this time. They don't have the know-how or the resources in terms of producing audiovisual materials, in terms of marketing the city, and we thought that we could lend a hand in that area, among other initiatives that they would want to undertake because of the changes.
1240 COMMISSIONER GRAUER: And that would be half a million dollars.
1241 Q. That's correct.
1242 COMMISSIONER GRAUER: Would you also be looking to do -- would there be an in-kind part of that that you might do just as part of the station? No.
1243 The bonus package, I don't think I need too much clarification expect the Boys and Girls Club of Canada.
1244 MS BELL: The Boys and Girls Club of Canada is actually involved in a number of different sectors in terms of helping young children develop and one of the fastest growing sectors of that organization right now is actually computer literacy, you know with the Internet, and again they are not partnered with any broadcast entity and we have decided to take them on as an organization and do a number of things with them, but certainly I think that these funds would go a long way towards those initiatives in particular.
1245 COMMISSIONER GRAUER: I think that is it for the tangible benefits. Maybe we could take a short break now. I haven't done intangible, but --
1246 THE CHAIRPERSON OF THE COMMISSION: Okay. So a 10-minute break.
--- Recess at 1627 / Suspension à 1627
--- Upon resuming at 1640 / Reprise à 1640
1247 CHAIRPERSON OF THE COMMISSION: Commissioner Grauer would you pursue with the benefits, please.
1248 COMMISSIONER GRAUER: Yes. I have one more question with respect to Hamilton and it's with respect to the $9 million in local programming plans and I wonder if you could identify for me -- what I want to do is establish what the incremental levels of expenditures for local programming are going to be. So if you could identify the current level of local programming at CHCH, the programming that is to be replaced, but more importantly the type of new programming. For example, in-house production, third-party payments, independent producers.
1249 MR. SHEA: With respect to the dollar incrementality because I think what you are requesting is the base line, Commissioner. I will ask Katherine to respond to that and then Ken MacDonald, I think, can give you a summary, an overview of the types of programs that we envisage.
1250 MS BROWNE: Just to clarify the incrementality of the programming within CHCH, what we have done within the productions was to take in the current level of programming and roll that forward throughout the projection period so everything that is included within the benefits package is in fact incremental over and above the existing program expenditure level.
1251 COMMISSIONER GRAUER: So there are dollars.
1252 MS BROWNE: Dollars, yes.
1253 COMMISSIONER GRAUER: Okay. And so we would measure it the same way we talked about earlier with respect to dollars? Okay, so maybe then we can talk about those hours.
1254 MR. MacDONALD: Commissioner Grauer, this is one of the easier ones to show the incrementality on simply because we are essentially doubling the local programming hours currently on the CHCH schedule with the addition of a morning show, a two and a half hour morning show, the addition of a talk show and the addition of three weekend programs, one thirty-minute public affairs program, locally focused, one sports program, again locally focused with the Hamilton, Halton and Niagara areas that we described earlier, and a one-hour arts and entertainment program, not to be confused with the variety program. This is an arts and entertainment information program focusing on everything from the Shaw Festival, the Hamilton Place shows and theatre Aquarius and various theatre groups in Hamilton, and so on, and because all of this programming is incremental to the existing commitment of 17 hours, there is a considerable need for additional staff.
1255 To give you one example, with the morning program there is currently a non-locally produced morning show at CHCH. So there is a production team that is needed to produce that programming while maintaining commitments to the other existing newscasts at supper hour and 11, and so on.
1256 So a fair portion of that nine million is in ongoing staffing costs, both on the editorial side -- producers, hosts and reporters -- but also on the production side -- crewing and so on, an additional shift for production crewing.
1257 On top of that, there is the Halton regional bureau which will be a fully staffed two-person bureau located in the Halton region to file daily live and taped reports into the newscast. In addition, in terms of the supper hour newscast, currently CHCH at 6:30 is running a Vancouver-produced program called Canada Tonight, which is part of CHAN's local commitment and it is being rebroadcast at 6:30 on CHCH. That program will not be there and the entire hour from 6 to 7 now will become locally focused. So that again will require additional resources in terms of live capability, additional reporting staff and editors, cameras, and so on.
1258 So there is a considerable expense to meet the rather robust commitment of all of a sudden adding what amounts to 19 and a half hours of incremental programming, local programming, to the CHCH schedule.
1259 COMMISSIONER GRAUER: So that's all in-house production.
1260 MR. MacDONALD: That's correct.
1261 COMMISSIONER GRAUER: I just have one other question about the news -- it just occurred to me, actually -- the national news.
1262 The benefits you propose to do the national news. Now, how does a national program like this work if it's produced in Vancouver? Do the other stations buy the program? Like if it's a national news program, is it supplied free or how does it work? How does your bookkeeping work?
1263 MR. SHEA: Perhaps I would asks Katherine Browne to respond to that question.
1264 MS BROWNE: In the case of the national news cast, most likely what we would do -- to be honest with you, I am just thinking this through right now. The current news infrastructure that sustains the current operations, as I stated, we have reflected in the projection, the five-year projection going forward, so existing expenditures would remain in the station as they are today. The national newscast being produced would most like be allocated across the stations on the same basis that we would allocate, for example, national program rights.
1265 COMMISSIONER GRAUER: Right. What I am trying to get at, is if you are doing a national newscast, how much of the ongoing costs of that are in this benefit? Do you know what I am saying? If there are going to be revenues -- arguably I don't want to discuss the merits of whether there are benefits to allowing some start-up costs as part of the benefits, but if there are going to be revenues accruing through ad sales and whatnot across the country, how is that accounted for with respect to being a benefit or not?
1266 Am I making any sense? Do you understand my question?
1267 MS BROWNE: Yes, I understand your question.
1268 With respect to revenues associated with the national newscast, obviously the advertising revenues would accrue to the stations as they would normally, in the same way that advertising revenues associated with national program rights would accrue to the stations only.
1269 COMMISSIONER GRAUER: Thank you. I don't have -- sorry.
1270 MR. SHEA: I was just going to add, Commissioner Grauer, two things. There are no incremental or new revenues with respect to this program because it will either be replacing a current news program in that market, so it's not as though there are going to be specific revenues attributed to this program.
1271 Secondly, the incrementality which we will report on every year, this news benefit in Vancouver will be money spent in Vancouver in order to develop this program, and I think Mr. MacDonald took you through the rationale for the incrementality required to do it.
1272 COMMISSIONER GRAUER: So the incrementality will be in Vancouver and visible in that way.
1273 MR. SHEA: That's correct.
1274 COMMISSIONER GRAUER: Thank you.
1275 I don't have any more questions on the tangible benefits. I think that what I would like to do with respect to the intangible benefits that you have identified is take advantage of, at this point, that we sort of have had an overall look at the tangible benefits and we have had a number of discussions about the merits of this application with respect to your becoming a truly national broadcaster and you identified at the intangible benefits a number of things: Advancing implementation of a new policy; new early national newscasts and public affairs programs; strong local reflection in Hamilton and Victoria; distinctive programming plans; new local identity for CHEK and CHCH, a continued CBC presence and, of course, the 8-hour threshold duplication here.
1276 I wonder if you could just sort of elaborate on those intangibles for me with respect to how again they further the objectives of the new policy and the Broadcasting Act and, again, your strategy for your national network.
1277 MR. SHEA: Commissioner Grauer, I will start and I believe Mr. Asper may also want to comment and perhaps we will do it in two distinct chunks -- the independent separate from Global Television Network becoming a true national network.
1278 I think the most significant intangible benefit with respect to CHCH and CHEK is -- and I believe it is the emphasis we have been trying to make all day, and that is the significance that a strong owner brings to the table in revitalizing these stations, in creating a truly differentiated schedule for these stations. That is more specific in terms of the island residents because the differentiation that will bring to that particular station is far more profound than that of Hamilton.
1279 With regard to Global Television Network, what is not stated here, but clearly one of the benefits of truly becoming a national network, it's very difficult for us at Global in this day and age to get much national coverage of our Canadian programming, of our news anchors because we are not on the national scene. We are not in Alberta, we are not in territories where national undertakings like to report and it's a significant benefit, we believe, to both our company, more importantly to the system, and perhaps more importantly to independent producers who are often times reluctant to see their programs on Global because they don't get the national TV guide coverage, they don't get coverage in a lot of national press and that's significant, and a real benefit, we believe, to the talent that works at Global Television Network and the various programs and productions that air on Global Television Network.
1280 We also think that becoming a third voice in national news gives another camera person, if you will, in scrums when politicians leave their various arenas because they tend now to go directly to CBC or CTV because they know full well that their message will be carried nationally and I have seen it happen with our Ottawa bureau time and time again, whether it's a major budget announcement or a major announcement from a politician, they know full well who has a national audience and who doesn't and that, I think, adds to diversity of choice and a voice for both our political system, but more important the consumers of political issues. And that, again, I would register as a key intangible benefit to the broadcasting system by having a third, strong national player that is producing and conducting itself in a manner in which enables us to carry a national voice. And those two we cite as operators as key missing elements in the Global Television Network of today and it will enhance, we believe, our news coverage rather dramatically and our Canadian programming rather dramatically.
1281 But I would also like Mr. Asper to comment on that.
1282 MR. ASPER: I am drawn again to the words in the Broadcasting Act, particularly Section 3 1-D where it says:
"The Canadian broadcasting system should enrich and strengthen the cultural, political, social and economic fabric of Canada". (As read)
1283 And just to dovetail on what Mr. Shea is saying, it's not only the coverage of national news, it's the fact that there will be a new voice in the public debate. There will be a new set of opinions. There will be a new person there asking questions: Why is this happening? Should it happen? And the other part of that rubric is that that voice will not be in Toronto and that is a very key point. That voice will say -- when interest rates go up, it affects the auto industry-based Ontario province much differently than it affects the export-based lumber industry in British Columbia.
1284 When there are trade quotas put on softwood lumber it affects the Ontario and central Canada -- which we think it Winnipeg, but others don't. It affects that part of the country very differently than it does the western part of the country and it's the combination of another questioning voice out there, another analytical voice and a voice that is coming not from central Canada that we think is a very serious intangible benefit to the system and to the country.
1285 COMMISSIONER GRAUER: Thank you.
1286 Madam Chair.
1287 CHAIRPERSON OF THE COMMISSION: Merci.
1288 Let me talk to the benefit. You know, I was saying when we left the strategic part this morning and the dual ownership thing that sometimes the whole is greater than the sum of the parts.
1289 Some argue -- and you are very well arguing -- that to the broadcasting system it's really in the public interest to get a third national voice, especially in the new production, especially that the source of it will be located more towards the west of the country and that will be a counter balance.
1290 Certainly there is merit in also the kind of branding and signature you have, certainly is value to that. But there is also value to Global, especially thinking of the dual ownership. You know, you are saying that will allow a third voice. Well the fact that you will have dual ownership in British Columbia and Ontario might take away the possibility of a fourth voice, not a fourth group.
1291 As you were saying, we could have more groups, but when you talk about having a voice in the sense of diversity, as we always refer to in this country and other countries, as a matter of fact, it's always about information. So there is still in our mind that question. It will certainly stay with us in the debriefing after the hearing and the analysis.
1292 But let me address the more specific question of benefits and listening to you and the exchange between Commissioner Grauer and you. You know, in this country where we say that we don't have the same possibility as our neighbours of the south, where they have population dollars possibilities and considering entertainment much more as a commerce than culture.
1293 When I see the importance of the benefits here, which is 84 million -- ce n'est pas rien, comme on dit en français -- it's a lot of money, especially when we know how much the funds, although there have been more funds in the last few years, still it's always too short. There is always people at the door. You yourselves were with the project last year. It's just that it couldn't get funded and certainly if you intend to pursue with it, that means it was a good project.
1294 So there is a lack of production money in this country. Some may say because not enough money has been put together by the broadcasters, but also because of the small population we are, certainly. So when I see in your benefits -- and certainly it does follow the general guidelines we have been following, but don't you think that the guidelines should be somewhat different -- and I am not talking about percentage here. I am talking about the direction of those funds.
1295 When you look at programming and compare them to other elements, not to say that those other elements are not interesting, but there is the discussion we will need to have whether it's incremental or not, but there is the direct recognition or observation of saying: Is that all that is going to programs per se?
1296 Commissioner Grauer was referring to every benefit in relationship with each station, whether it was sufficiently kind of nurturing the communities there. But if you look at it as a whole, do we take collectively, if we were to grant your application and go with the benefits, are we collectively responsible in the sense of: Are we nurturing enough talent communities in this country to allow for more significant content and more significant creations and creativity?
1297 MR. ASPER: Well, I think the short answer is -- first of all, there will always be a greater demand and supply for funding for our productions. There are more great creative people in this country, in any country, than there are funds to see all their ideas through to the stage where they are on the screen.
1298 Again to go back to the philosophy of the benefits package, it was to spread it out over as large a number of producers to provide each of them with a component of the funding, or producers with the component of the funding they would need, knowing that there are many other funds across the country, both private funds, the Rogers Fund and many like it, plus the government funds, plus the investments, the private investments that may come with those projects as well.
1299 We wanted to, I guess, take a more of a machine gun approach to producers, in other words providing as many producers as possible with a chance rather than focusing it on specific programs, if you are referring to programs that Global would provide because that is a much more limiting approach in our view because it would benefit a fewer number of producers and as I say we did this in quite a large degree of consultation with the production association and the individual members of it and this is where we came out.
1300 We are open to different philosophies and different approaches. This is the one we selected after some consultations.
1301 Kevin, do you want to add something?
1302 MR. SHEA: I will start by saying, Madam Chairperson, your question could fill a day of discussion and debate because it probably is looking forward.
1303 One of the key questions in that is how, with a new television policy, with the decline in funding, how are we going to meet over the course of the next five to seven years the broad objectives of the Act and the specific objectives of your television policy in light of the reality that the funding is not adequate.
1304 I guess it comes back to a strategic question that -- and perhaps this goes at the core of the way you developed your television policy. It's targeted at essentially three large groups because the reality is only two or three large groups can afford, given the reality of funding in this country, producing 8 hours of high end Canadian content every week.
1305 I don't know if the country has room for five, six or seven others from a funding perspective because the cost of content is getting higher, Canadians are demanding a higher quality of content because they have become used to it now. In the last ten years, the significant change that we have seen in the style and type of Canadian drama, we are all very proud of as a system.
1306 But I think it goes back to some of the fundamental structural issues, that in the long term this Commission is going have to think, I think very strategically, structurally about who and how many can actually undertake the commitments to the system.
1307 CHAIRPERSON OF THE COMMISSION: That is what we are doing, Mr. Shea. That is exactly what we are doing. This morning, when I started, I asked: How many groups -- you know, is there space in this country? You said between five and ten and now you are talking about hardly three and that is the very point. That is an opportunity we have to examine this. You know, there is a policy here, but the policy as a reality when we come to discuss either a renewal of licence or either a transaction and if we cannot talk about the real thing -- and for us, the objectives of the Broadcasting Act is the programs.
1308 MR. SHEA: Precisely.
1309 CHAIRPERSON OF THE COMMISSION: To serve the viewers.
1310 MR. SHEA: Precisely.
1311 CHAIRPERSON OF THE COMMISSION: So I am asking about the benefits you have there, but I am taking it and I am not saying that it is not in conformity with what was the intent of the benefit policy, but given the -- comment dire, donc, l'ampleur --
1312 COMMISSIONER GRAUER: Magnitude.
1313 CHAIRPERSON OF THE COMMISSION: The magnitude of the transaction and the amount of money, I guess it raises more acuity into the question and shouldn't we have a "regard" if we were to consider positively the application in a way where we do try to really make sure that there is enhancement of the broadcasting system and where it will be. It will be in the programs.
1314 MR. ASPER: Can I make one clarification and then one comment?
1315 In terms of the clarification. When I talked about five to ten groups, I didn't mean broadcast groups necessarily. I meant media groups like a Rogers or a Shaw or a Québécor, Alliance Atlantis, people that are in different arenas right now than Global or CTV or CHUM, for example, but who are gradually, as you can see from their applications, trying to come into the content area even though they come at it from the production or distribution initial starting points.
1316 So in terms of the broadcast system, we do believe, especially given the focus on priority programming, there is not room -- I would never say there would be room for five to ten groups in that space.
1317 We think that it is difficult enough as it is with two strong national groups, or three if you include CHUM in that. So I just want to clarify I was talking about larger media groups as a whole, not people in the conventional broadcasting arena.
1318 The second point is, in terms of our philosophy, my understanding of the production industry and how it works is the most difficult part of getting a production to air is to get to the stage, to the point where one is ready with a presentation and having spent some speculated money on a script writer, on some talent to bring that project to a point where it is at a broadcaster's office and there is a decision to go. That is where many people just do not have the funds because there is nobody willing to invest at that point so they are spending their own money or money they may have leftover from some other endeavour.
1319 So we were trying to sprinkle as much as we possibility could, to as many producers as we possibly could through these funds and through things like the Start Minutes and the first projects so that these seeds could be planted which would grow into flowers -- you know, they would be grown, in a sense, in a chamber and they would be grown to a point where they were a flower and they could subsist on their own and be put in the outdoors. And that means getting to the point where the broadcaster says, "Yes, it's a go" because once that happens, then all the machinery kicks in. The broadcaster puts up money, the broadcaster puts up development money, the fund application is made.
1320 CHAIRPERSON OF THE COMMISSION: But you are a broadcaster, Mr. Asper, and you are aspiring to be even a greater one and a bigger one in this country. So why not use your benefits policy incrementally to be that broadcaster that will give existing producers who don't have -- or existing talent that don't have the opportunity of the window.
1321 And I am pushing you because we are trying to understand ourselves even better our own policy in a sense of because of the magnitude of the type of transactions -- and certainly you can appreciate that I am thinking ahead as well here -- it is quite important that we are quite clear in terms of what we are trying to achieve as a whole in this.
1322 MR. ASPER: But, Commissioner, there is not enough airtime on just the Global outlets to get the benefit of having a great of producers out there get programs on the air, and what we were trying to do, as I say, was put money in the hands of 30 or 40 producers, or 50 producers, that could then come to not only Global, but Global and CTV and CHUM and the specialty channels and --
1323 CHAIRPERSON OF THE COMMISSION: I appreciate your generosity and that you are not self-serving in that sense.
1324 MR. SHEA: Madam Chair.
1325 CHAIRPERSON OF THE COMMISSION: But some of the projects are not directed immediately to programs per se and I am not saying that it is not valuable, I am not saying that it is not helpful, but on one hand some could say that is part of the philanthropy type of policy of the a company, another part is certainly directed to the system as a whole, but in a world where content will make the difference, especially yourselves talking about the Internet world that is developing.
1326 I am just wondering why isn't every dollar you are going to be spending not directed to immediate content?
1327 MR. SHEA: Madam Chairperson, if I may because our entire approach to our benefits strategy was not easy. We are the first applicant to go through this process with respect to the new television policy and in order for us to get a fuller and better understanding of what benefits were applicable and not applicable, we had a meeting with CRTC staff to try and ensure that we really understood the direction and what became apparent to us was -- and it is stated in your TV policy -- that any benefits on transactions could not be applied against the 8 hours because that's a floor, or that is a requirement, and perhaps that the benefits -- pardon me, perhaps the policy, over the course of time the Commission may want to revisit.
1328 We are entering into our first period of the 8-hour window of priority programming and we hope we will be entering into markets where it's going to be 16 hours. That is already a significant challenge. We would have loved nothing else but to ascribe the entire benefit package to assist in the development of that full 8 hours, but your own policy does not allow that and that is why we ended up taking the direction that we did or we have because back to the issue of core funding, and with the reality of what we hear, that public funding may well cease, meeting that 8-hour requirement in the future going forward is going to be very, very difficult without guaranteed public funding because we all know the economics don't work.
1329 But we would have appreciated the opportunity for it to be part of the 8-hour commitment so that budgets could be a million three, or a million five, to compete with what is happening now in most markets outside of Canada. But we were stuck by your policy and that's why --
1330 CHAIRPERSON OF THE COMMISSION: Well do 10 hours or do drama which everybody has said, the 10 out of 10, that is the most expensive one, certainly, that would have been incremental as much as the kind of project around news that you are proposing where you will have news, no doubt, and you are going with news in the package as treating it incrementally.
1331 MR. SHEA: I think, Madam Chairperson, that in all fairness I think we have to walk a little bit before we run.
1332 Advancing a schedule that would show 10 or 11 or 12 hours of Canadian content would mean we would lose the economic engine on the other side and we will see better the impact of this policy over the next year, two and three years. But I think it would have been premature. I think it would have been potentially damaging to the system. We are already doubling, in most cases, the number of hours in this policy and I think we have to have a chance to see how the economics of that worked because just adding hours without significant dollars to make the budgets of these programs work we think is premature.
1333 CHAIRPERSON OF THE COMMISSION: Mrs. Wylie, you had a question?
1334 COMMISSIONER WYLIE: Yes. In your supplementary schedule, when you discuss benefits -- in think it's at page 19 -- you say that:
"If a proposed initiative is not an eligible tangible benefit as defined by the Commission policy, the amount corresponding is as such deemed ineligible initiative will be incrementally allocated to the POPs fund". (As read)
1335 You have already indicated a willingness to reassign or reallocate some money if the Commission were not to find it to be an eligible initiative.
1336 Could the Commission not simply find that it's not as appropriate an initiative as it would like to see in the circumstances of this particular case and require reallocation, and if so, if the reallocation was to be to an initiative that would be directly and immediately beneficial to what is seen on the screen, do you have any suggestions as to where that would be instead of simply putting it to the POPs fund?
1337 I am suggesting here, as Madame Bertrand has, that we may find a benefit eligible under the policy, but the eligible policy -- the policy about eligible benefits was hammered out when we didn't have these huge transactions before us where people tried to allocate $84 million and if I look, everything is a laudable attempt to put money in laudable goals, but one can also discuss if it's appropriate when you become a larger broadcaster because you are having a transaction of the importance of this transaction and we will see even more perhaps appropriateness as opposed to eligibility may become a criterion and to say if you have the privilege of owning more and in some cases it is dual ownership, what is in it immediately and tangibly for the screen rather than the broadcasting system. You know, the Boys and Girls Club is fine, but is it appropriate in this context?
1338 Miss Mawhinney is laughing here so maybe she has some great tricks up her sleeve.
1339 MS MAWHINNEY: No, I just know Kevin loves the Boys and Girls Club.
1340 COMMISSIONER WYLIE: Ah, exactly!
--- Laughter / Rires
1341 MR. SHEA: They are a struggling 100-year-old institution.
1342 COMMISSIONER WYLIE: I have made my point. You may not get a promotion for a while.
1343 COMMISSIONER WYLIE: Commissioner Wylie, I was very disheartened when one of the intervenors took a shot at the poor little Boys and Girls Club of Canada. They are 100 years old, they are celebrating their big anniversary in Halifax this year. They are desperate, desperate for funding.
1344 COMMISSIONER WYLIE: Well, Global is welcome to give them some money.
1345 MR. SHEA: The kind of funding that we are ascribing here is directly on the screen because all $250,000 of that goes to support the awareness and those are key elements in the broadcasting system, and if it sounds corny, I apologize, but --
1346 COMMISSIONER WYLIE: Well, I many have chosen the wrong example. There are, for example, endowments. They are all very good projects, but if we were to find that they are eligible but in our view not appropriate for the size of the transaction and instead we want to see more on the screen, more immediately, more directly.
1347 I don't know what legal counsel thinks, but perhaps you can, if not immediately, think of what the reallocation would be instead to the POPs fund for a more immediate result.
1348 This morning I asked you: What will happen to the CHEK initiative, three million and five million tied to CHAN. What would happen if we only allowed you to buy CHEK? And it seemed very complicated.
1349 MR. SHEA: Well, it's complicated because I think --
1350 COMMISSIONER WYLIE: Could you not reallocate some funds that are not directly related to the screen instead and make sure that no matter whether you have CHEK or CHAN, that screen initiative is fulfilled without cutting corners?
1351 So I think that crystallizes what we are thinking of when we look at what is going to be better for the CHEK station and we have these other funds allocated. I counted five million of, you know, very good things -- endowments, scholarships are good things, but they are not going to produce programming.
1352 MR. SHEA: Commissioner Wylie -- and I think Mr. Asper also wants to comment -- I guess if I return back to your policy hearing. While certain aspects of what would be an inappropriate benchmark for benefits was discussed, I don't think there was really any kind of dialogue or discussion as to the type and nature.
1353 COMMISSIONER WYLIE: We didn't know at the time that we would have that result either.
1354 MR. SHEA: Precisely.
1355 COMMISSIONER WYLIE: That is why I am talking about appropriateness in the circumstances of how things are developing.
1356 MR. SHEA: Right.
1357 COMMISSIONER WYLIE: And we are dancing as fast as we can. We just want you to dance along.
--- Laughter / Rires
1358 MR. SHEA: Commissioner Wylie, I'll dance with you any time you want.
--- Laughter / Rires
1359 COMMISSIONER WYLIE: You might be sorry.
1360 MR. SHEA: There is an annual. The Boys and Girls Club is having a ball in July in Halifax.
--- Laughter / Rires
1361 MR. SHEA: And even before this is approved, we have already undertaken to commit some money to them.
1362 COMMISSIONER WYLIE: I will make a very special request of the transcript producers to remove the Boys and Girls example.
1363 But you know what we are talking about.
1364 MR. SHEA: Commissioner Wylie, we know what you are talking about.
1365 COMMISSIONER WYLIE: How do we go from this to the screen?
1366 MR. SHEA: We know precisely what you are talking about. One of your fundamental rules in the benefits is that they have to be incremental to your ongoing expenses and we would say with absolute certainty the proposal we put forward we can demonstrate is, but when you keep coming back to saying perhaps all benefits should be tied to something that ends up on a screen, we then --
1367 COMMISSIONER WYLIE: I didn't say "all", Mr. Shea.
1368 MR. SHEA: No, no, okay, but a portion of.
1369 COMMISSIONER WYLIE: I said, some of it that is not, if we were to reallocate it -- I don't want to get into a discussion about eligibility, appropriateness considering the size of the transaction, we are now having others that will have -- is it appropriate?
1370 MR. SHEA: But I want to stay with your hypothesis that the bulk or a good percentage, we have a different mix, more that goes on the screen. The next question then becomes: Are you going to derive incremental revenue from those initiatives that you are putting on the screen? And that is where we are going to get into some very, I think, elaborate debate as to is it truly incremental?
1371 So we only know the rules that currently exist and we know the type and nature of benefits that have been previously accepted in the system and I think it's probably a very fair discussion to say: Are these appropriate? We would say that in the circumstances that we are currently in, in the system, and where we are at with respect to other precedents, these are appropriate. Would we like to do them differently and put the fundamental elements of this on the screen? We would. We would more than be pleased to do that.
1372 However, then we get into a debate of what are the revenue implications of that and it becomes a spiral debate at that point. And that is, I think, why the Commission itself has said, "With respect to the 8 hours, you cannot tie any economic benefits to that". And yes, it is fair to say we could go to 9, or 10 or 11, but I think that is a fundamental change in direction and a real push that may be a bit beyond us at this point in time.
1373 COMMISSIONER WYLIE: I am sure between now and the end of this hearing you will have thought of other things rather than the 8 hours which would end up as immediate and direct benefits on the screen if some of the benefit is redirected and the amount of redirection may not be such as to produce a 10 point, but it still would at least improve what the viewer sees.
1374 MR. ASPER: Madam Commissioner, we tried to strike a balance. We were working in a bit of a vacuum. There are, as you know, tens of millions of dollars going into programming. We would certainly entertain quite happily, as Mr. Shea said, the idea of putting more into programming and, therefore, reallocating some of the benefits in this package.
1375 If you are willing to give us some time to come up with something more concrete in that respect, we would. I think we would not be as comfortable with a specific type of programming being required. For example, if you were to say, "Do a 9th hour of Canadian drama, 7, 8 and 9 priority programming" that would be quite restricting for us.
1376 So we would certainly -- precisely because of what Mr. Shea referred to, there is at least some revenue for us in that whereas the initiatives that are non-programming are simply money that goes out the door.
1377 That is why, to some extent, we did stay away from it because it created that debate. But we are willing to entertain that kind of a reappropriation and we do think it is appropriate. We agree with you.
1378 COMMISSIONER WYLIE: And we simply want some suggestions as to if there were some reallocation, rather than to the POPs fund, which is what you have proposed, whether you would have some other suggestions that would make a discussion like the one we had this morning a little bit less difficult, where, you know, you start with what is available to the viewer right now, what will be available to the viewer as a result of this transaction.
1379 I understand that there will be 16 hours of Canadian programming, of course that is beneficial, but there are other areas perhaps where there could be improvement as well if we deem some not as appropriate in the circumstances, even though eligible by the letter of a policy which was not drafted for this size of transaction perhaps.
1380 MR. ASPER: We understand very much.
1381 CHAIRPERSON OF THE COMMISSION: Please understand that if you are the first applicant to come after the TV policy was adopted, we are the first panel too. So we are really in a kind of learning curve trying to find the appropriate answer for the existing situation. So we are really looking.
1382 One comment I would like to make. The policy doesn't say that the incremental initiatives have to be without any revenue. It doesn't say that, unless I totally misunderstood.
1383 COMMISSIONER WYLIE: We have had those discussions.
1384 MR. SHEA: In previous hearings, in fairness, Madam Chairperson, we have witnessed questions by the Commission where certain things have been proposed and the Commission says, "But there is incremental revenues for you if you do that". So I think it's fair to say we are the first to go through this.
1385 It would be very helpful to us, though, to get a better understand, and perhaps staff may be able to enlighten us or when we come up later, you might be able to enlighten us.
1386 Are there certain benefits that we proposed that are quite troubling to you?
1387 CHAIRPERSON OF THE COMMISSION: No, we --
1388 MR. SHEA: Because for us to come up with a plan that says this is how we would shift them hypothetically, I am sort of struggling with how I would answer your question.
1389 CHAIRPERSON OF THE COMMISSION: No, we are raising the question in light of the magnitude, in light of the discussion we have had on dual ownership and the value to Global of being that third voice, especially that in some markets you will be the third and the fourth, and that the recognition that in this country there is still a need to support Canadian content and Canadian talent and although those initiatives are interesting, they are not directly all of them transferable immediately into the screen.
1390 So that is really raising the question -- and certainly the kinds of initiatives around promotion. That was something that was presented by many intervenors of the TV policy hearing that we heard many times over.
1391 So it's not to say that it's not an interesting initiative. It's just that should there be more money than what you are proposing here? Those are the questions we are raising. It's not a definite answer. We are just trying to, you know, push your understanding and your own concerns and see if you can come up with other elements there.
1392 Tu voulais dire quelque chose?
1393 COMMISSIONNER GRAUER: No. I was just going to say that it's not that they are troubling benefits. It's not difficult to see when you look at these which are directly related to programming going onto the screen and which could be seen as community initiatives for which there is a longer line between the screen, like the Boys and Girls Club.
1394 MR. ASPER: I was just going to say -- I know I am not the questioner here, but I guess I would ask you, Commissioner, is it better for -- I guess what we are grappling with is: Is it better for the system if one producer has one more hour a week, or is it better if 30 producers have that chance to get to the next stage? And that was the question.
1395 CHAIRPERSON OF THE COMMISSION: That's not the question at all. I think it has to do -- you know, some initiatives talk about minutes. I am not saying that it's not valuable and interesting, but minutes is minutes and it takes many minutes before you get to your hours that really makes a difference out there. Some others are more in education and training. They are very valuable, but are they things you would do and that, you know, are not necessarily immediate onto the screen?
1396 Those are more the questions and it's not about one project, one producer and how many dollars. It's much more the kind of regrouping you can make. You know, you can make the benefits per transaction, per region or per province or per market, or you can say, as staff has done for us, "Well, there is the category of promotion of Canadian television and there is the one of education and training and there is the one of local programming and there is the one of programming".
1397 Is that the best use in terms of optimization of dollars that will be injected in the next few years in the Canadian broadcasting system, given all the challenges you have described in your application and this morning, is that the best use or the optimal use of it?
1398 MR. ASPER: I think it's very clear where we both are coming at it from. We were coming at it more from a producer's point of view. You are actually coming at it more from a consumer's point of view. You are saying, "What goes on the screen" and these are valuable components of the system, and I agree. I am not saying one is right or wrong, I am saying that is just how we have different approaches which, I think, have to be reconciled.
1399 I appreciate that you will give us some time to give it more thought to come back to you with some kind of ideas as to how we can be, as you say, more efficient with our dollars.
1400 CHAIRPERSON OF THE COMMISSION: Well, you know, the responsibility at the end of the day is the public interest, but the public interest has really a heart and it's the viewers and the citizens and that is our concern.
1401 MR. ASPER: Of the 9?
1402 CHAIRPERSON OF THE COMMISSION: Yes.
1403 MR. ASPER: I take your point.
1404 CHAIRPERSON OF THE COMMISSION: We will pursue now with the questions around divestiture that legal counsel, Karen Moore, will do for us.
1405 MS MOORE: Thank you, Madam Chair.
1406 Just before we turn to divestiture, just a couple of follow up questions. With respect to the annual reporting under the code of practices, I am wondering if you would be able to commit to having that filed along with an officer's certificate attesting to the contents of that report and in particular attesting to the non-duplicative nature of the two blocks of 8 hours of priority programming?
1407 MR. ASPER: Yes, we would.
1408 MS MOORE: Thank you.
1409 With respect to the Western Independent Producers' Fund, there was some discussion earlier today that it is going to be administered by a board, but you don't have the concrete details at this time.
1410 I just want to confirm that there will be no board members who have a relationship with Global. It's going to be independent.
1411 MR. ASPER: Yes, that's right.
1412 MS MOORE: Thank you.
1413 With respect to divestiture, I just want to note that, of course, no particular predisposition or any predisposition should be drawn from the scenarios that I am putting to you. These are hypothetical for the record.
1414 You have indicated in your application that you plan to divest to CKVU within 18 months following an approval from the Commission and I would like to know your reactions.
1415 If the Commission were to approve your application, but were to be concerned about you controlling three stations in these overlapping markets in the interim, would you implement an authority that required you either to -- I will give you an a) scenario and a b) scenario -- a) to place CKVU in trust immediately following a decision approving it; or b), to keep CHAN and CHEK in trust pending the divestiture of CKVU? Would you have a preference to one of those scenarios, and if that is the case, why?
1416 MR. ASPER: Our preference would be that like a decision recently rendered by the Commission -- I trust my facts are correct -- that neither get placed in trust. We would accept a lesser period -- lesser than the divestiture period -- during which the assets could all remain out of trust, but my recollection, my understanding is that the CTV interest in NetStar, for example, is not in trust as the ownership of TSN is not in trust.
1417 So even though they are required to divest of one, they still have both of them, and I think there would be every interest and wish and desire, if we were allowed to retain CHAN and CHEK, to realize upon the proceeds of CKVU as soon as possible.
1418 So our preference would be that we would be allowed, like CTV is being allowed with NetStar and TSN, to have of the assets out of trust at the same time. As I say, we would accept a lesser period, less than the 18 months. In other words, if it was not divested by a certain period of time, it would go into trust, but I think that would be our preference.
1419 Out of the two other ones, our preference, I believe, would be to operate CHAN and CHEK immediately and put CKVU in trust, if that were what we had to do.
1420 MS MOORE: So notwithstanding your clear preference to have CHAN and CHEK released from the trust that they are in now and to have CKVU out of trust if it were, notwithstanding that preference, a requirement of the Commission that CKVU, for example, be placed in trust immediately following a decision, your intention would be to implement such an authority?
1421 MR. ASPER: I think if we were required to do so, we would. As I say, I think it would be very onerous on us. The ability to maximize the proceeds from the sale of CKVU, if we were approved for CHAN and CHEK, would be hindered and impaired if it were operated in trust. That typically is what has happened to the WIC assets. While there has been a period of trust, the assets typically deteriorate while they are not being managed by a committed permanent owner.
1422 So that is why we would like some grace period to leave all of the assets out of trust while we commit and try to sell them as quickly as possible. There is a risk of financial damage to CanWest if that were the case.
1423 MS MOORE: And to clarify with the scenario where CKVU would be placed in trust immediately following an authority, it would be the trustee that would be implementing the divestiture in that case -- just to clarify that?
1424 MR. ASPER: Yes.
1425 MS MOORE: Okay. In terms of the preference for having CKVU in trust rather than CHAN and CHEK, why is that your preference?
1426 MR. ASPER: Because I think if we were -- you are saying in the event of an approval for ownership of CHAN and CHEK. I think because we would want to start operating the business we intend to keep as soon as possible. That is where we would want to bring CanWest resources to bear immediately on that asset.
1427 MS MOORE: Thank you.
1428 Should divestiture of CHAN or CHEK be required as a condition of approval, would it be your intention to implement the authority for the remainder of the application?
1429 MR. ASPER: Sorry. Can you repeat the question?
1430 MS MOORE: If CHAN or CHEK were required to be divested of as a condition of the Commission's approval of the remainder of the application, would you intend to implement that authority? Would you go ahead with the rest of it even if you couldn't have CHAN or CHEK?
1431 MR. ASPER: Yes.
1432 MS MOORE: I have a similar question with respect to divestiture of CHCH. If you were required to divest of CHCH, would it be your intention to implement an authority for the remainder of the application?
1433 MR. ASPER: Yes.
1434 MS MOORE: With respect to CFCF in Montreal, it is my understanding that it is currently in trust and that it is your intention to divest of CFCF.
1435 MR. ASPER: Yes.
1436 MS MOORE: Are there any developments in that regard at this time, any updates or you are sill exploring opportunities?
1437 MR. ASPER: I am under some confidentiality provisions, but I can say we have retained an investment banker to sell these stations. They have provided information to interested parties and the interested parties have expressed interest in acquiring the stations.
--- Laughter / Rires
1438 MR. ASPER: Hence the term "interested parties".
--- Laughter / Rires
1439 MR. ASPER: And this is getting very interesting.
1440 Anyway, so the process is well underway and there are buyers that have expressed their interest at a specified price and they are now seeking further information.
1441 MS MOORE: I proposed divestiture scenarios in individual markets. Obviously, another possible scenario is some combination of those. So for example, if some combination of those individual divestiture scenarios were combined, if divestiture of CHAN, CHCH and CFCF were required as a condition of approval of the remainder, would it be your intention to implement an authority for the remainder of the application?
1442 MR. ASPER: I am not sure I quite understand what you mean by "implement an authority".
1443 MS MOORE: It's sort of would you go ahead or would it become pointless to you to have to carry on with the other aspects of the application that you would have received authority for.
1444 MR. ASPER: Yes, we would.
1445 MS MOORE: Thank you.
1446 Just for the record, if we could please have a copy of the video tape presentation that was used in the context of your 20-minute presentation that would be helpful.
1447 MR. ASPER: Yes. Can I just add one more thing though?
1448 I think it's something that hasn't been discussed today, but it does occur to me that if we were not approved for all of this application, I think that one of the reasons we agreed or offered to sell CFCF Montreal, was because of the magnitude of what we fell we were asking for in terms of exceptions to the policy of duopoly and I think it would be well within our scope or certainly our intention to revisit the issue if we were not allowed a duopoly to have CHCH or the CHAN-CHEK combination to then perhaps come to the Commission and seek to maintain CFCF. I don't rule that out.
1449 COMMISSIONER GRAUER: You would be the interested party.
1450 MR. ASPER: Yes, we would be the interested party in that case.
1451 MS MOORE: Thank you. Those are my questions, Madam Chair.
1452 CHAIRPERSON OF THE COMMISSION: Thank you. Vice-Chair Colville has a question for you.
1453 COMMISSIONER COLVILLE: I couldn't escape without getting on the record at least once today.
--- Laughter / Rires
1454 COMMISSIONER COLVILLE: After the discussion that you had just previous to counsel -- this may seem like kind of a minor point and it is relative to that discussion which I think was important given the size of this transaction. I just want to follow up, though, on a response, Mr. Shea, I believe you gave to Commissioner Wylie this morning.
1455 It was in response to an issue regarding the programming benefits, and I believe you said, "The programming benefits assume both CH and CHEK are approved..." and then you went on to say that the issue related to the buying of national program rights and I took it to mean that your view was if you were going to buy national program rights, you wanted to lay them off against both of those stations and I believe from reading your application that you had indicated that you would lay those rights off against other broadcasters across the country in other markets.
1456 I guess the question that came to mind was: Given that you are going to be laying those rights off other broadcasters across the country in any event, why is it contingent, why is this program benefit assume both CH and CHEK are approved because of that national program rights issue? I mean, if you just had CH you could just play those rights up against other broadcasters, presumably someone owning CHEK in Victoria?
1457 MR. SHEA: Fundamentally and practically speaking, Commissioner Colville, I think you are correct. On the assumption that we could get a contributing broadcaster who has an 8-hour requirement in B.C. to order at the time of placing the order for the content, in tandem with us. Typically that is not the way it happens. Typically, it's an individual broadcaster who has ordered the program and it then becomes available for sale by the producer to other markets.
1458 I think what I was trying to do was to demonstrate that it's really us having the opportunity to make the decisions for prime time content on CH and CHEK simultaneously that makes the dual status, if you will, of its content much more enriched. If you are simply having to make the decision on that 8 hours for one market and hoping that the producer can organize the rest of the country, it becomes more difficult to assure that you are going to have a high quality 8-hour schedule of content.
1459 Having the privilege, if you will, to make those decisions. from a business planning perspective, simultaneously is the way we know it can work.
1460 COMMISSIONER COLVILLE: I understand that that would be your preference, and I am not trying to force you to make a case for not having the two stations. It's just that you are going to have that problem in any event in selling off those rights in the rest of the country.
1461 MR. SHEA: It becomes less significant. It becomes less arduous because when you have the combination of the B.C. and Ontario market, you in effect have 80 per cent of the licence fees and in many cases that is all we may have because other broadcasters may already have made their decisions on their own 8 hours and that has happened time and time again in this country where certain shows did not get picked up in other markets.
1462 MR. ASPER: That's what really drove WIC to acquire Hamilton in the first place is because they didn't have a certainty of supply for CHEK and I think it's the difference between knowing one has a lay off to hoping one has a lay off and one knows one is in a position to take the risk on the higher quality and higher cost program.
1463 COMMISSIONER COLVILLE: Thank you.
1464 COMMISSIONER WYLIE: For fear that you leave too depressed --
--- Laughter / Rires
1465 MR. SHEA: We are a little troubled. I will be quite honest.
1466 COMMISSIONER WYLIE: I would like to put it into your own perspective. If I look at your Schedule 10, at page 7 where you talk about the rapid evolution of the system, the importance of timing and the leverage as reasons for us making an exception to the rules -- or to the policy, rather, you talk about a window as short as three to five years to establish brands, do some Internet, new media as well, and at the same time fulfilling programming obligations to audiences.
1467 If the window is this short, what we were trying to discuss was: How do you improve your leverage as a broadcaster as quickly as possible with the benefit or the money you are prepared to put into the system -- and that is what we mean by "more directly". If the window is short, it's all the more important to improve yourself as a broadcaster. That's what we mean by "on the scree" and some of the benefits are perhaps very indirect and certainly won't yield benefits in that short a window.
1468 That's the spirit in which we were discussing this.
1469 MR. ASPER: Well, the way to do it is very simply getting the best programming and having the best promotion strategy and having the largest promotion machine. That's what creates the brand and you get the programming and then you draw the audiences to that programming and try to keep them there. That is really in a nutshell the strategy.
1470 COMMISSIONER WYLIE: And so the redirection of benefits that the Commission may not find appropriate to the promotion side only now, by putting it in the POPs fund. Perhaps you will have some imaginative ideas as to how to put some into the best programming as well. I think Mr. Shea -- at least he is nodding.
1471 MR. ASPER: We certainly understand that --
1472 COMMISSIONER WYLIE: And now you are smiling. That's what we wanted. We don't want you to leave looking so depressed.
--- Laughter / Rires
1473 COMMISSIONER WYLIE: We mean well.
1474 CHAIRPERSON OF THE COMMISSION: Would you care to add anything on the record at this point in time?
1475 MR. ASPER: Yes. I think if one were to read the transcript of today, there are nuggets in different areas of what we have been trying to say when it comes to the core of what we are asking of you today.
1476 You asked it earlier today, you asked the question and this afternoon you asked it again: Why this application is in the best interest of the system and the Canadian public? And you really asked why the Commission should adopt another exemption to the policy which restricts multiple ownership of broadcast stations in a given market?
1477 I guess the answer can be summed up in the following way: We believe that CanWest is one of only three players in the Canadian system who can bring the resources, a commitment, the managerial expertise, the program buying clout and the promotion power to help the stations in Victoria and Hamilton, to make them succeed.
1478 The other two players I am referring to when I talk about the three are CHUM and CTV and they themselves would bring, if not more complicated, certainly the same ownership dilemmas as we do in these markets and, as I say, probably more so. And each of them, I point out, also had the opportunity to be here before you today, and specifically in the case of CTV they chose not to.
1479 We twice during the whole takeover of WIC offered CTV an opportunity, as I said before, to participate. We offered to sell them CHAN and CHEK and CFCF as part of it, and they turned us down. Not only did they do that, they in large part are responsible for us being here before you today asking to maintain a CHAN-CHEK duopoly because they themselves advised WIC that they were going to disaffiliate CHAN-CHEK and we faced the possibility of trying to sell CHAN in particular as a non-CTV affiliate which would have cost our company several hundred million dollars given the overall purchase price for WIC.
1480 So coming back to the three players, we are the ones who took the risk and, as I said, took the chance and came before you today with these assets. Putting these stations in the hands of anyone other than CanWest, or the two others I noted, would mean that these stations would be plagued with a much reduced chance of success.
1481 We believe that we can contribute more than any other player in the system can and we also believe that any other purchaser, any other than these three, would be back before you within a very short period of time seeking relief, seeking redress or seeking some kind of rescue.
1482 They simply could not put the programming on the screen that is essential to success and you have to go back to the history. Other major players have tried -- McLean-Hunter, Selkirk and even WIC. They are all testimony to what I am saying.
1483 The people in these communities and the system as a whole shouldn't be forced to wait any longer. They need a broadcaster who is relevant to them now and it's now time to approve an owner who is willing to step up to the plate and augment the programming and what people see on the screen.
1484 We have a track record and I ask you to consider our efforts in the past. Quebec, Vancouver, CKVU and MITV. If you want to see just an example of even a large player who is not part of the system and who is not part of the markets where there are multiple stations, the Irving family is as large a player as you can get, but they couldn't make MITV work because they didn't bring the additional resources.
1485 We rescued Vancouver, we rescued Quebec, CKMI and we rescued MITV and we made these stations contributors to the system. We increased the programming that they put on the screens for Canadians in their communities and we brought the programming from those stations to other markets in Canada as well.
1486 So we increased local programming in all of these stations as well as took that programming, particularly Quebec programming, and brought it to Canada.
1487 I think very importantly a prime example of where dual station ownership works and has saved and enhanced the small stations is CHUM's ownership of CKVR. CHUM has done a terrific job of CKVR, but CKVR was a CBC affiliate. Look at what it is doing today versus what it was doing five years ago. It is an enhanced station and it's the kind of example that we think will be borne out in a global CHCH ownership.
1488 So we are asking the Commission for two exceptions to the policy. One is a continuation of what has been the case for 40 years and we are asking for this at the same time as offering to put more programming on the screen in that market, more programming than Vancouver Island has ever had and has ever been offered.
1489 In Hamilton, we are asking for an exception, but not one that provides an advantage to CanWest, one that merely acknowledges that there is a disadvantage and that our two main competitors have multiple stations in those markets, conventional stations, and they have a significantly larger number of specialty channels than we have.
1490 CHCH needs the support and the viewers need the quality of service that the people of Barrie or Kitchener get from their stations, having their partners that I referred to earlier, CTV and CHUM.
1491 So in short, approving this application as we have presented it to you will create a second strong private national system. It will also create two new stronger local stations that will serve their viewers with better programs and this will result in the creation of more shared opportunities, shared viewing options, both locally and regionally and nationally for Canadians.
1492 So that is why, Commissioners, I think when you add all of that together, this application is indeed, the whole of it is greater than the sum of its constituent parts.
1493 Thank you.
1494 CHAIRPERSON OF THE COMMISSION: Thank you very much. Mesdames, Messieurs, thank you and have a good night's rest tonight.
1495 We will take five minutes and we will pursue with the presentation from Corus, then we will stop for the evening and start the questioning tomorrow.
--- Recess at 1755 / Pause à 1755
--- Upon resuming at 1810 / Reprise à 1810
1496 CHAIRPERSON OF THE COMMISSION: We are missing Madame Wylie. We have to wait.
1497 You want to dance? She is a great dancer. You have heard that.
1498 Alors I would ask now Madame la Secrétaire to introduce our next applicant.
1499 MS VOGEL: Thank you, Madam Chairperson.
1500 Our next applicant today, or the application is by Corus for authority to acquire all of the issues and outstanding shares of Purchaser Amalco Co., the amalgamated entity of WIC Radio Ltd. and WIC Premium Television Ltd.
1501 Consequently, Corus would acquire control of WIC's radio broadcasting undertaking, control of certain of WIC's pay and speciality television undertakings, WIC's interest in its specialty television undertaking and control of one of WIC's VOD undertakings.
1502 I would invite the panel to proceed whenever they are ready.
PRESENTATION / PRÉSENTATION
1503 MS SHAW: Thank you and good evening. Madam Chair and members of the Commission.
1504 My name is Heather Shaw, Executive Chair of Corus Entertainment. Joining me today on my immediate left is John Cassaday, President and Chief Executive Officer of Corus. Besides John, is Paul Robertson, President of our Television Group. Behind me from left to right are Terry Strain, President of Corus Radio; Kathleen McNair, Vice-President of Regulatory Affairs and Tom Peddie, Senior Vice-President and Chief Financial Officer of our company.
1505 We are delighted to be here today to share with you our enthusiasm at the prospect of assuming stewardship of the radio and pay television assets of WIC, Western International Communications.
1506 Our family is proud of its western Canadian heritage and extremely pleased that with your approval we will maintain a strong western Canadian voice created by the Griffiths and Allard families over the past 35 years.
1507 During the next 20 minutes, and then through the course of your questioning, we will do our very best to give a full view of our worthiness and the appropriateness of our request to secure your approval. In our opening remarks, we will attempt to frame the issues that we believe are most relevant to your deliberations.
1508 First, we will present an overview of the environment in which we compete. Second, we will share with you our thinking on the creation of a structurally separate media company, now known as Corus Entertainment. Third, we will talk to you about our vision for Corus and about our plans for the future direction of the WIC assets. And finally, we will identify why we believe the approval of this application is in the public interest.
1509 Many applicants that have appeared before the Commission over the past two years have pointed to the pace of change and the impact of competitive forces as determining factors in their requests for your approval. We are no different although most recently the pace has been breathtaking.
1510 On the consolidation front, we have seen the mergers of Disney and ABC, CBS and Viacom, and the granddaddy of all deals, the recent Time-Warner/AOL transaction.
1511 The strategic implications of the Time-Warner/AOL merger caused entertainment companies around the world to ask a number of questions, including, how are positioned to compete? Do we have the right asset base, critical mass and vision to succeed? If not, what can we do about it?
1512 The response in Canada was swift. The competing bids by Québécor and Rogers for Vidéotron, the proposed Rogers/Shaw assets slot and the announced BCE purchase of CTV. With respect to technology, new players and new devices are providing infinite choice to consumers and infinite competition for existing players.
1513 For example, high speed Internet access provides streamed video and audio services, delivering new entertainment choices. Wireless technology provides Internet access anywhere, any time. Digitalization of music permits easy downloading to small portable devices. Personal radio recording devices such as TiVo store television programs for easy access and enhanced digital technology provides expanded program offerings, interactivity and increased viewer choice.
1514 So how does Corus fit into this new environment? J.R. Shaw, who founded Shaw Communications almost 30 years ago, concluded several years ago that an opportunity existed to create a great Canadian broadcasting company with a focus on family entertainment.
1515 The decision to create Corus was driven by several factors. First, we believed that highly focused management teams at the helm of separate content and distribution companies could better respond to the opportunities available.
1516 Second, we realized that with separate capital structures both companies could realize their full growth potential independent of each other's ambitions.
1517 And later, as analog capacity limitations became an industry concern, we felt that structural separation could help address these concerns. Since our launch, just eight months ago, we have moved swiftly in the pursuit of these goals. We have put in place a strong management team with extensive industry experience and an independent board. We have assembled the necessary capital resource to stimulate production, exhibition and export of quality Canadian programming and to allow it to compete in an increasingly global entertainment market place. To this end, we have applied for a number of innovative Canadian content services.
1518 We appear before you today as a separate publicly traded company with a shareholder group largely unique to Corus, including the recent addition of Liberty Media, a strong synergistic U.S. investor.
1519 MR. CASSADAY: Corus is a well-funded Canadian content company that knows where it is going. We hold the belief that Canadian programming works.
1520 Our mission is to support the creation and exhibition of Canadian programming. We believe that Canadian stories must be told from different perspective to reflect the country's cultural and regional diversity and to that end we are a strong supporter of Canada's independent producers.
1521 Our vision for the future is to become as important and respected on the international stage in the field of kids and music as Bombardier is today in its fields of excellence.
1522 In keeping with this vision, Corus is dedicated to building on the accomplishments of its existing services, to create and exhibit more Canadian programming of distinction, the kind that appeals not only to Canadians, but to audiences worldwide. Corus views this application as an essential step towards the realization of that vision.
1523 As we meet today in Vancouver, we are surrounded by majestic forests. It is the tall trees that serve as the support mechanism for the entire ecosystem creating the environment for growth and diversity. Canada needs tall trees to safeguard and develop our national identity and our cultural sovereignty.
1524 Tall trees will ensure that Canadian artists and producers continue to have outlets for their expression. Corus is a company capable of being a tall tree for the Canadian broadcasting system.
1525 As CRTC Commissioners, you have the responsibility to look into the future of this rapidly consolidating global market and make a number of very important decisions. You must ask yourselves which Canadian companies have the ownership stability, investment resources and the vision to lead? Then you must decide which structure will most benefit the Canadian broadcasting system in a rapidly changing world.
1526 These decisions that you will make as to the market structure for Canada's broadcasting future will be your legacy.
With your support, Corus will assume a leadership role in making contributions to the Canadian broadcasting system.
1527 Now, we would like to review with you why this transaction is in the public interest. First, approval of this application will ensure that the WIC assets are under the stewardship of a responsible and focused Canadian broadcasting entity, a company that supports the creation and exhibition of world-class Canadian programming. It will resolve the more than two-year uncertainty regarding the future of the WIC assets under consideration.
1528 Second, we will strengthen the WIC services by bringing them under the ownership of a marketing-driven company with the capacity to undertake new investments in an increasingly competitive environment.
1529 Third, Corus will maintain a strong western base with operations in Calgary and Edmonton.
1530 Fourth, there are many benefits to Corus' increased involvement in the children's television area. While Corus will not control Family Channel or Teletoon, we are enthusiastic about ways that we can work together with the other shareholders to create and market more excellent Canadian kids' programming. This can be accomplished with multiple windows to generate maximum licence fees, strong cross-promotion and new media links.
1531 We believe in partnership with all the stakeholders that we could, in fact, pursue exciting new initiatives such as an international kids' channel showcasing the best Canadian programming.
1532 Fifth, we now know that movie services are the major driver in attracting new subscribers to digital. Effective marketing of digital program packages will need to be a highly cooperative venture among the key Canadian stakeholders.
1533 Corus will make a major contribution to the widespread deployment of digital by creating an appealing range of themed movie services and effectively marketing these initiatives.
1534 Corus' efforts to drive digital penetration to higher levels will enable widespread success of new Canadian digital services.
1535 Sixth, we welcome the opportunity to lead Canadian radio to the levels of market growth achieved in the United States from the benefit of consolidated ownership. As the first major broadcaster to consolidate stations in Canada's major markets, we will ensure format diversity and distinct news voices for the radio services.
1536 We will harness technological developments to ensure that radio listeners can benefit from improved sound quality, particularly elevating Canada's current AM licences. We will contribute to the advancement of announcing, reporting, production and management skills by providing the training and mobility possible in a company of our size and with our commitment to radio.
1537 In your notice of public hearing, you asked us to address possible concerns about Corus' ownership of the WIC assets. We do not believe that this transaction raises significant issues for the following reasons, and there are four that we would like to touch upon with you this evening.
1538 First of all, Corus is a structurally separate company with its own board of directors and with separate ownership. Corus is not owned or controlled by a cable television company.
1539 Second, digital technology is eliminating capacity constraints. The general interest pay television services that we are seeking to acquire are distributed in digital format on virtually all Shaw cable systems and there are no analog access issues with respect to Family Channel or Teletoon.
1540 Third, competition is increasing at a rapid rate in the broadcast distribution market. It is estimated that DTH alone will have more than one million subscribers by the end of this year. In western Canada ExpressVu and Star Choice deliver more subscribers to WIC's premium services than do Shaw or Rogers.
1541 Fourth, the Commission has established transparent access rules for the distribution of analog services, put in place regulations and other mechanisms to prevent undue preference or discrimination. New access rules have also been established for the digital environment.
1542 To deny Corus the opportunity as a developing company to assume this leadership role, the opportunity to serve as a tall tree for Canadian broadcasting because of a fear of some future injustice would be most unfair to Corus. To violate your trust would be unconscionable and we as Corus management commit today that we will not ask for or be a party to preferential treatment.
1543 Finally, as you well know, there have been significant changes in the broadcasting environment since 1995 when the Commission announced its convergence policy. In fact, there have been numerous examples of your response to these changes.
1544 In the past two years alone, you have announced new policies for the future direction of Canadian radio and television recognizing the benefits of consolidation. You have also developed an innovative approach to licensing of new digital services and you are one of the first regulatory agencies to establish a framework for new media.
1545 These new policies recognize that we are now operating in a radically different environment, one which is intensely more competitive and in which strong Canadian programming companies are more vital than ever to the health of the Canadian broadcasting system.
1546 Corus is well positioned to be a very effective contributing force in Canadian broadcasting and this application is an important step towards this goal.
1547 MS SHAW: Our application describes a variety of reasons why approval would be a benefit to WIC's radio and premium television interests and to the Canadian broadcasting system.
1548 We have proposed tangible benefits totalling $24.5 million which are summarized in our supplementary brief. They include, $8 million for the Canadian Independent Television and Film Production Community to create a number of Canadian feature-length theatrical productions intended for family audiences as well as teen-directed drama series. More than $1.5 million for child-centred documentary projets based on stories about the culture of Canada's aboriginal peoples and profiling Canadian children at the beginning of the new millennium.
1549 Significant financial support for the Canadian music industry through contributions of $6 million to the Starmaker marketing and promotion fund, $4 million to FACTOR and $1.3 million to be allocated to a variety of musical and cultural organizations in the cities where the WIC radio stations are located, a $700,000 initiative to support campus radio stations across the country. Also a $1.5 million initiative for young film makers to develop their craft and to assist regional producers of children's programming to gain access to world markets. One million dollars to complete the national roll out of a media literacy program geared to children which has been applauded from parents and educators throughout Alberta and $325,000 for a special five-year initiative featuring Canadian children's programming at the Banff Television Festival.
1550 MR. CASSADAY: We hope that we have been able to convey to you this evening a sense of tremendous promise in our application for Canadian broadcasting and the public it serves.
1551 We are thrilled by the opportunity and need only your approval to turn opportunity into reality.
1552 That concludes our presentation and we would be pleased to answer any questions or suspend until tomorrow morning. Whatever you wish.
1553 CHAIRPERSON OF THE COMMISSION: Well, with your permission, we will suspend for tonight and we will pursue tomorrow morning at eight o'clock.
1554 It is going to be Vice-Chair Colville, Commissioner Pennefather and Commissioner Grauer who will be questioning you.
1555 Thank you very much for your patience. Have a pleasant evening and see you tomorrow.
1556 Thank you all.
--- Whereupon the hearing adjourned at 1827 to resume
on Wednesday, April 26, 2000 at 0800 / L'audience
est ajournée à 1827, pour reprendre le mercredi
26 avril 2000 à 0800