ARCHIVED -  Transcript - Vancouver, BC - 2000/04/27

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Plaza 500 Hotel Hôtel Plaza 500

Ballroom Salle de bal

500 - 12th Avenue West 500, 12e avenue ouest

Vancouver Vancouver

British Columbia (Colombie-Britannique)


27 April 2000 Le 27 avril 2000





Volume 3






In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

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

and staff attending the public hearings, and the Table of


However, the aforementioned publication is the recorded

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

either of the official languages, depending on the language

spoken by the participant at the public hearing.





Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès-verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

Canadian Radio-television and

Telecommunications Commission

Conseil de la radiodiffusion et des

télécommunications canadiennes

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





Françoise Bertrand Chairperson / Présidente

Chairperson of the

Commission /Présidente du Conseil

Andrée Wylie Commissioner / Conseillère


Broadcasting /



Joan Pennefather Commissioner / Conseillère

Cindy Grauer Commissioner / Conseillère

David Colville Conseiller / Commissioner




Marguerite Vogel Secretary / Secrétaire

Karen Moore Legal Counsel /

Conseillère juridique

Robert Ramsay Hearing Manager / Gérant de




Plaza 500 Hotel Hôtel Plaza 500

Ballroom Salle de bal

500 - 12th Avenue West 500, 12e avenue ouest

Vancouver Vancouver

British Columbia (Colombie-Britannique)

27 April 2000 Le 27 avril 2000

Volume 3




British Columbia Film 732

Directors Guild of Canada 754

National Broadcast Reading Service 769

Regional Municipality of Hamilton-Wentworth 777

Pyramid Productions Inc. 803

HBW Film Corp. 808

Brenco Media Ltd. 813

Peace Arch Entertainment Group 817

Great North Communications Ltd. 822

Remstar Télévision Internationale R.T.I Inc./

Remstar Diffusion Inc./Placements St-Mathieu Inc. 839



CanWest Global 848


Wayne Plunkett 866

Specialty and Premium Television Association 879

MediaWatch 893

Concerned Children's Advertisers 907

Alberta Motion Picture Industries Association 917

Friends of Canadian Broadcasting 925

Canadian Independent Record Production Association 944

CHUM Limited 958




Forefront Entertainment Group 981

Great North Communications Ltd. 986

Media Group 998

Pacific Music Industry Association

and NewMusic West

and O'Day Productions 1017



Corus Entertainment 1030

Shaw Communications 1047



Glennie Stamnes Strategy 1059

Vancouver, B.C. / Vancouver (C.-B.)

--- Upon resuming on Thursday, April 27, 2000

at 0803 / L'audience reprend le jeudi

27 avril 2000 à 0803

3318 CHAIRPERSON OF THE COMMISSION: Good morning, everyone.

3319 Madame la secrétaire, voulez-vous, s'il vous plaît, présenter notre prochaine intervenant.

3320 MS VOGEL: Thank you, Madam Chairperson.

3321 I would like to invite British Columbia Film to come forward for their presentation, please.

3322 And a reminder to intervenors, there is a limit of ten minutes for your remarks, and I hate gonging people.

3323 Would you push the button on the mic please when you're ready to start.

3324 CHAIRPERSON OF THE COMMISSION: Good morning. Welcome in your city.


3325 MR. EGAN: Good morning, Madam Chair, Commissioners, staff, ladies and gentlemen.

3326 My name is Rob Egan and I'm the President and Chief Executive Officer of British Columbia Film.

3327 Joining me today is Dr. Catherine Murray, Associate Professor at Simon Fraser University's School of Communication, and a member of the Board of British Columbia Film.

3328 We are pleased to appear before you today to expand upon our written comments regarding the transfer of assets of WIC Western International Communications to CanWest Global Communications.

3329 WIC is one of the three largest private-sector broadcasting companies in English Canada, with assets in excess of one billion dollars. By virtue of these proposed transactions, British Columbia stands to lose its only private broadcaster. We are very concerned with the structure of the CanWest application, as it represents a net outflow of benefits from British Columbia to the rest of the Canada.

3330 We agree with the Commission that benefits deriving from these transactions should be assessed on the basis of what will end up on the screen; that there should be an appropriate level of contributions to the production of priority Canadian programming.

3331 As we stated in our written submission, the overriding question that the Commission must ask, in our view, is: What benefits must be attached to these applications that will guarantee that Canadian talent and audiences from across the country are well served?

3332 And, specifically, given the loss of WIC as the only B.C.-based broadcaster in the national system, the Commission must also ask: How do we ensure Canadian and British Columbian viewers will have the opportunity to watch B.C.-based productions on these national networks?

3333 Given Mr. Shea's comments on the first day of this hearing, we felt it important to set the record straight regarding the production capabilities of B.C. producers.

3334 In recent years the structure of the film and television industry in British Columbia has changed dramatically. Whereas in the past, B.C. was known primarily as a location for service production, this is no longer the case.

3335 In 1994, total film and television production in B.C. amounted to just over $400 million, of which $52.5 million, or 13 per cent, was B.C.-owned and controlled production.

3336 In 1999, total film and television production in B.C. amounted to over $1 billion. Of that amount, $298 million or about 28 per cent, was B.C.-owned and controlled production. In other words, not only is the pie growing but that piece of the pie that consists of B.C. production is proportionately larger than it has ever been before.

3337 This growth should demonstrate that B.C. has the talent and skill to produce high quality programming that can and does succeed in the national and international marketplace. It is equally important that broadcasters understand these changes in order to take advantage of the opportunities that this talented production community offers to their audiences.

3338 British Columbia assets involved in this transaction equal $366 million of the $692 million total value or about 53 per cent. The Alberta assets amount to $215 million or 31 per cent of the total. Combined, British Columbia and Alberta assets equal $581 million or 84 per cent of the total WIC television assets. Therefore, 84 per cent of the benefits or roughly $67 million should accrue to the west in this transaction.

3339 In our written submission we argue that too many of the proposed benefits flowed out of B.C. and accrued to national organizations and initiatives. Commissioner Grauer undertook a comprehensive review of the split between national and local benefits as proposed by CanWest, and we were pleased to note the Commission's discussions with CanWest concluded with an undertaking that these allocations would be re-examined.

3340 We feel that it is critical that on transactions of this magnitude there should be an inclusive discussion undertaken with concerned parties regarding any proposed benefit strategies. Given the impact, it is imperative that the major organizations in British Columbia should be consulted in an effective and meaningful way prior to the applications being submitted.

3341 Even at this stage, the benefits package is not clearly articulated and we would ask that the Commission insist upon a consultative process that ensures this huge transaction takes into consideration the views of those people directly impacted by it; and, subsequent to meaningful consultation, there must be established an arm's length and ongoing monitoring of these benefit commitments.

3342 MS MURRAY: We would like to turn now to a discussion of the station-specific benefits.

3343 The Commission has asked two important questions of CanWest regarding its proposed benefits package:

3344 Firstly, what are the incremental benefits to the individual markets concerned; and, secondly, what will appear on TV screens as a result of these proposed transactions?

3345 We would like to examine the proposed benefits packages allocated to B.C. stations, with these questions in mind.

3346 I would like to turn first to BCTV/CHAN Vancouver and a discussion of news and local benefits.

3347 As we outlined in our written submission, there is very little in the proposed BCTV benefits package of $35.4 million that is directly beneficial to Vancouver, in our view. First of all, there are no incremental benefits in terms of new local programming commitments. We find it interesting that in this overall transaction, commitments to not reduce the level of local programming on BCTV and the Alberta stations is in fact considered a benefit somehow.

3348 Additionally, while we would consider that a western-based national newscast would be a benefit to the rest of Canada, we do not think it would necessarily constitute a noticeable incremental benefit to Vancouver viewers, given the quality of news that is already available from BCTV here.

3349 In terms of spending, we note too, only a portion of the $8 million is in fact allocated to Vancouver-based staff.

3350 I would like to turn next to the Western Independent Production Fund.

3351 Also, within the CHAN package is $15.9 million for the Western Independent Producers Fund. As detailed in our written submission, western producers need licence fees, not another equity fund. We are very pleased that the Commission has required CanWest to make a minimum commitment to licensing priority programming, and especially drama, from the west.

3352 This is a much-needed step in the right direction in support of western productions. We hope that the Commission will take up Leonard Asper's suggestion that this should be a requirement at group licensing renewals for all private broadcasters and not only at this application hearing.

3353 We do however note with concern that CanWest stated on the first day of the hearing that this Western Independent Producers Fund would now not give exclusive access to western producers but only quote/unquote "first priority". Does this mean that CanWest assumes there are not enough western producers with licence fees to trigger this fund per year so that producers from outside the west must become eligible? At least so would Mr. Shea's remarks imply.

3354 We certainly recommend that the Commission clarify this with the applicant.

3355 I would like to turn to the discussion of Canadian programming on the screen.

3356 Of the total $35.4 million BCTV package, the only direct programming benefit appears to be a $750,000 First Projects Fund. According to CanWest, this fund will be for small "first-time" producers. We applaud this type of initiative, and we consider it would be a valuable benefit for the smaller producers in Vancouver, as long as it is directed to priority programming and includes a commitment to broadcast by CanWest.

3357 However, CanWest has also stated that this fund would be managed internally by the Vancouver station. As this was a late addition to the CHAN benefits, we can only comment at this point that funds as a part of a benefits package should be arm's-length. We request that the Commission review the particulars more closely with CanWest.

3358 In total, we have estimated that $2.3 million for the national newscast staff and this $0.75 million for the First Projects Fund could be considered as programming benefits produced by B.C. talent and available to B.C. and Canadian viewers.

3359 This represents direct benefits of about 1 per cent of the $295 million asset value of BCTV. This is not acceptable.

3360 Overall, the BCTV benefits package is seriously deficient in benefits to the Vancouver market, for booth Vancouver viewers and Vancouver-based program producers. Further, Commission discussions regarding the reallocation of benefits must include a complete overhaul of the benefits associated with the CHAN purchase.

3361 I would like to turn now to CHEK Victoria.

3362 The Victoria benefits package includes $3 million for new local programming. As well, $5 million from the Vancouver benefits proposal is allocated to CHEK local. This local programming is to include a 90-minute newscast and an afternoon talk show. The balance of the $5.2 million of CHEK benefits accrues to various other organizations and initiatives -- none of which are specific to generating priority programming from Victoria program producers.

3363 We question whether a 90-minute newscast and a day-side talk show are the best ways of developing local content on the Vancouver Island. Additionally, as the Commission has pointed out, there is a possibility that CHEK but not CHAN would be approved. This puts into question the entire Victoria benefits package allocation, in our view. We are now unsure of which benefits are really on the table and which ones are subject to change.

3364 We trust that the Commission will provide an opportunity for us to comment on the final proposed version of these benefits packages as they relate to these transactions.

3365 CHBC Kelowna. The benefits attached to this Kelowna station primarily include local programming initiatives and CBC joint ventures. Once again, no commitments to locally-produced programming in the priority programming categories with a commitment to broadcast by CanWest.

3366 While we welcome innovative joint ventures between public and private partners, we question the true value of allocating $1.2 million to the CBC. How much of this $1.2 million will end up on the screen?

3367 In the letter filed by CanWest as a part of their response to intervenors, the money will be used for engineering, new equipment and infrastructure, with an undetermined amount set for general programming.

3368 MR. EGAN: In our opinion, CanWest's proposed benefits package represents a flow of benefits out of British Columbia, despite the predominance of B.C. assets in this transaction. There is real substance to the loss of a broadcaster the size of WIC in British Columbia.

3369 We are heartened by the Commission's requirements that CanWest commit to a minimum level of licensing of western drama and priority programming, and that CanWest revamp their benefits package. It is not the size of CanWest's proposed benefits package that we have concerns with but rather their proposed allocations undertaken with limited western consultation. The current benefits package in relation to the B.C. stations is inadequately balanced in terms of benefits to producers or viewers in British Columbia. The Commission must work with CanWest to optimize these benefits in terms of Canadian priority programming from western sources on CanWest's stations.

3370 We look forward to having the opportunity to formally review and comment on any proposed changes in the CanWest benefits packages as a result of this hearing, and we would be pleased to answer any questions that you may have.


3372 I would ask Commissioner Grauer to ask the questions.

3373 COMMISSIONER GRAUER: Thank you, Madam Chair.

3374 Do I take it you are not reappearing for Corus, is that correct, or you are coming back?

3375 MR. EGAN: That is correct. We are not reappearing.

3376 COMMISSIONER GRAUER: And you haven't made any comments in here, so --

3377 MR. EGAN: No. We addressed our comments regarding Corus and Shaw in our written application, and those stand on the record.


3379 I'm just going to refer to your presentation here today first.

3380 You have raised a number of issues, as you did in your written presentation, with respect to the benefits package and areas in which it's perhaps in your view not the most appropriate mix. I guess there's two things.

3381 First, with respect to the CHAN benefits and the national news initiative, maybe what I could do is get your comments -- I know that it's BC Film, but both the national news initiative and the national public affairs program out of Calgary, the portion of the expenditures that would be incremental given that they are produced in the west. I don't know if you were here. CTV yesterday also supported the inclusion of incremental expenses because it is more expensive to do that kind of a program in western Canada.

3382 Does doing a national newscast from British Columbia and a public affairs show from Alberta, in your view, benefit the Canadian system as a whole and the goals of the Broadcasting Act and our policies?

3383 MS MURRAY: I think it's going to be a tremendous success story for the Canadian broadcasting system to anchor national news in the west and public affairs in the west, no doubt.

3384 Our quibble is with the exact incremental value and the exact expenditures, which are very difficult to deduce from the application.

3385 COMMISSIONER GRAUER: So would you support, though, the inclusion of incremental costs of doing a program like that in the west as part of a benefits package?

3386 MS MURRAY: Yes.


3388 You have taken a lot of issue with a lot of the benefits package. Do you have any specific ideas for us? I know you said that there wasn't consultation with CanWest prior to this. Have you given thought to what it might look like? What are some of the things they might be doing?

3389 MR. EGAN: You know, we do have a couple of concerns. I mean, we're obviously very supportive of a western fund that would be directed to support western and B.C. producers.

3390 I think one of the -- you know, one of the central approaches of our comments this morning is to once again make the case on behalf of British Columbia producers, and western producers for that matter, with respect to the talent and skill that the creative and production community in this province offers.

3391 You know, we're a provincial funding agency, in effect. These funds are complex. We had taken the view that the licence fees or a top-up fund was perhaps administratively a better option than yet another equity fund. That was certainly a concern that we had. And because we're in the business of dealing with producers with respect to financing plans, which are very complex and draw on a number of different sources, provincial and federal tax credits, provincial and federal funds, private funds, there is an administrative burden that producers have to deal with in financing projects that is pretty daunting. We felt that it was important in the creation of a new fund to try to address that issue as well and try to sort out what might be the best, the easiest way to go with the production community in mind.

3392 So we're not necessarily sold on equity as the best model for the fund, and we do have some concerns about the ongoing administrative responsibilities that producers are faced with. That falls disproportionately on small, medium and large production companies.

3393 COMMISSIONER GRAUER: So the concept of the fund is great, but you would like to see perhaps a little more work put into determining the best shape. Is that fair?

3394 MS MURRAY: Yes, but that's a difficult issue. I think if I were to step back and actually return to the very first question you asked, Ms Grauer, the issue is: The national news and current affairs show anchored in the west, is that a benefit for all of Canada and a benefit for the west? My answer categorically was yes, it's a success.

3395 But what seems to be absent in this application is any kind of really creative vision about what such a change would mean, because news as we understand it as a category, as a genre, in today's cultural life is a much broader, more complex thing. So there are elements in this application which demonstrate a genuinely transformative understanding of what public broadcasting or private broadcasting may be. But I think that what is interesting is an inability to put it together in a mission for producers and systems of governance of new funds.

3396 So, to give you an example, we know that health news is going to be one of the biggest emerging sub-genres of national news going. There is an initiative with McMaster, for example, in the program "In the East", which they talk about. There is no ability to integrate this together with an understanding of what the impacts would be here for western news, western production, and so on.

3397 I think that that gives you a flavour, because news and current affairs programming, entertainment arguably, drama, fiction, all of these are going to blend in new ways in the broadcasting universe of the future. Where do we see any sensitivity to that? I don't know.


--- Pause / Pause

3399 COMMISSIONER GRAUER: Sorry. I just need to -- access.

3400 You talk in your written submission about access and what western producers need is access. I wonder if you could elaborate on that. One of the things I just wanted to get back to you briefly is that I had not picked up that the fund is identified as a "first call" being to western producers. I had not picked up that nuance.

3401 But are you of the view that if the rest of the infrastructure is in place and the fund was adequately structured that there were licence fees that it wouldn't be so much of a problem, or are you -- is that -- meaning, if there's a commitment to licence here, that triggers access to the funds.

3402 You're not maybe satisfied. Is that -- I mean, what's the most important thing in terms of the priorities?

3403 MS MURRAY: Definitely the commitment to the licensing fees. That's the most important.

3404 But I would also argue that we need to be accountable. We need to monitor the performance of that fund. We need to publicly report its impact on putting good programming on the air and attracting viewers, B.C. viewers and Canadian viewers. We have to monitor its impact.

3405 COMMISSIONER GRAUER: Do you have any ideas about how that might --

3406 MS MURRAY: I would suggest that that's a widespread problem for all such funds. Yes, I think that there are plans to develop monitoring capacities on the part of a number of agencies. BC Film might be a partner in such an undertaking, yes.

3407 COMMISSIONER GRAUER: Now, access. Could you just elaborate on --

3408 MR. EGAN: I guess one of the problems that we run into over and over and over again, given our position here in Vancouver and in British Columbia, is the need for producers to have access to decisionmakers and to ensure that there is some autonomy for decisionmaking here in Vancouver. As we see yet another Vancouver-based broadcaster leaving the field and being headquartered elsewhere, it raises that concern once again around responsive decisions and access to people that are actually responsible for making decisions. We're obviously very pleased to see that there would be a development office, you know, located in British Columbia and other western centres as well.

3409 But I think that, you know, there are two things. There is the need for that access on a day-to-day, week-to-week basis, and there is the ability for decisions to be made in those centres quickly so that producers can get on with their business. I think it's a recurring theme that we in the west have to deal with.

3410 COMMISSIONER GRAUER: You know, as you know, we had quite a discussion about licensing western projects and there are some people who would argue that we should make it, you know, a requirement and get into more -- you know, a more detailed regulation of a system of quotas, and those who say don't have quotas.

3411 You, I know, referenced our CBC decision in your written submissions with respect to regional production. It strikes me that the most effective way to achieve the goals that I think we all share is to show the broadcasters that there is a benefit to them of doing this, that, you know, if the playing field is level that there is in fact going to be a benefit to producing across the country.

3412 I just wondered if you could give me your views on that and how we might approach this whole subject.

3413 MR. EGAN: Quotas are a mechanism to achieve an end. If quotas or a requirement or a minimum level is the necessary tool that you use to achieve the end that you have established for yourself, then we would obviously be supportive of that instrument being used.

3414 Quotas can also be used for a period of time and phased out. There are a number of ways that that can be handled administratively.

3415 The important thing, from our point of view, is to keep the goal in mind. From where we sit, the goal is to enhance and develop a very talented community of producers and filmmakers in western Canada and in British Columbia. In order for that to occur, they need to have the opportunity to develop their craft and ensure that their programming appears on both the small and big screen. If quotas are the vehicle that can assist that being done, to assist achieving that objective for some period of time, then so be it. That may be the way we have to go to ensure that that is the result.

3416 COMMISSIONER GRAUER: You mean, if it's not happening it might be a requirement?

3417 MR. EGAN: Yes.

3418 COMMISSIONER GRAUER: If it's happening, we don't need to do it.

3419 MR. EGAN: If it's happening, we don't need to do it. And I think that that's where the industry as a whole comes into play. The broadcasters have a role to play in that, producers have a role to play in that, funders have a role to play in that. Presumably, we are all working towards the same end, which is to ensure that our broadcasters are developing and working with the talent that is available to them to bring programming to the screen that is relevant to Canadian audiences and that Canadian audiences want to watch.

3420 MS MURRAY: I think it's worthwhile just reminding everyone that the Western Producers Study pointed out that the system of national Canadian content quotas hadn't necessarily worked to the advantage of western producers over the last four years, between -- the purpose of the study was 1994 to 1998 I believe. In fact, there had been a retraction of western production to some 32 per cent. And I believe the study also demonstrated CanWest had a very low level of production in the west, under the existing quota system.

3421 So the issue really becomes, I think: Do we need a regional Canadian content quota? I would suggest probably not. But that is why BC Film is adamant that the condition on commitments to licence fees to western producers, and particularly B.C.-based producers, is an absolutely essential instrument to ensure growth of indigenous, B.C. and national product.

3422 COMMISSIONER GRAUER: So to do it as a part -- what I'm really getting at is, then, as a part of this acquisition at the moment --

3423 MS MURRAY: Essential.

--- Pause / Pause

3424 COMMISSIONER GRAUER: I don't think I have any more questions.

3425 I don't know if you have anything that I didn't ask that you would like to answer or elaborate on, but I thank you for coming and I'm glad to have your comments on the record.

3426 MS MURRAY: Thank you.

3427 CHAIRPERSON OF THE COMMISSION: Thank you very much.

3428 MS VOGEL: I would like to call the Directors Guild of Canada next, please.

--- Pause / Pause

3429 CHAIRPERSON OF THE COMMISSION: You won't miss your plane.

3430 Welcome.


3431 MR. GOLUBOFF: Good morning, everyone.

3432 Madam Chair and Commissioners, thank you for providing me and my colleagues with an opportunity to appear today on behalf of the Directors Guild of Canada.

3433 My name is Alan Goluboff, and I am the newly elected President of the Directors Guild of Canada. With me are the Guild's Executive Director, Pamela Brand, and Paul Audley, a consultant to the Guild.

3434 The Directors Guild has over 3,000 members from coast to coast, with seven district councils. Our membership includes not only directors, but individuals involved in all areas of production, design, editing of films and television programs.

3435 Our intervention addresses two separate issues. First, it addresses the question of whether the Guild supports or opposes the proposed acquisitions. Secondly, it provides comments on the benefits package CanWest Global has offered.

3436 I want to speak first to the ownership application before asking Pamela to comment on the benefits package.

3437 The proposed ownership transactions raise a number of general questions regarding ownership policy. The way the Guild has answered those broader questions has determined its position on the individual transactions.

3438 I should first note that CanWest Global itself has proposed that it divest control of CKVU-TV, Vancouver and CFCF in Montreal. There is no reason for the Guild to take a contrary position, and divestiture is consistent with Guild policy, so we support a requirement that CanWest Global divest control of CKVU and CFCF.

3439 The first broader question raised by these applications is whether CanWest Global should be allowed to own a station in every important television market in Canada, establishing under common ownership what it refers to as a third national programming choice for Canadians. If this is accepted it will result in a high level of ownership concentration in conventional television -- a degree of concentration that would not be accepted in the United States under FCC rules.

3440 However, a series of transactions in recent years has already produced a similar result in the case of CTV. So, while it is recent, there is now a precedent for a single owner to have stations in every major market.

3441 Moreover, as indicated in our written brief, the Guild accepts the resulting high level of ownership concentration as reasonable, given the substantially smaller size of the Canadian market. Consistent with this application, the Guild supports the CanWest applications to acquire CITC, Calgary, CITV, Edmonton, CHAN, Vancouver, CIFG, Prince George, CHKL in Kelowna and CHKM in Kamloops.

3442 However, with both CTV and CanWest Global establishing a powerful position -- each owning stations in all major Canadian markets -- renewed importance attaches to setting limits. In the Guild's view limits should be set that apply specifically to conventional television, rather than to conventional television, pay and specialty services combined.

3443 Conventional television requires its own rules because, as the Commission stated in its new television policy announced last june, and I quote:

"It seems clear that conventional television will remain the cornerstone of essential support for the Canadian independent production sector and the core of the Canadian television broadcasting system." (As read)

3444 The policy that should apply to conventional television is a consistent requirement limiting any owner to a single over-the-air station in one language in any market. Consistent with that policy the Guild opposes the CanWest application to acquire both CHCH-TV, Hamilton and CHEK-TV in Victoria. The Guild would take the same position regardless of whether the company involved in the application were CTV, CanWest or any other corporation.

3445 In its response to the Guild's position on CHEK, CanWest has misstated our recommendation, suggesting that what we said was the Commission should approve CanWest's purchase of CHEK-TV as long as CHEK is run as a repeater of CHAN except for its local programming. This is not what our submission says.

3446 The Guild's position stated clearly, in our interventions, that:

"The ... Guild opposes the CanWest application to acquire CHEK-TV, Victoria, and urges the Commission to require that the trustee cause this asset to be divested." (As read)

3447 Only if the Commission declines to require divestiture did we suggest that at a minimum the market power CanWest would exercise by owning two stations in the Vancouver/Victoria market should be limited by requiring that CanWest's two stations offer the same programming, with the exception of local content. The obvious rationale for presenting that "second-best" option is that it reduces the resulting violation of the one station per market policy.

3448 At page 21 of its Response to Interventions, CanWest questions the integrity of the Directors Guild. It does so, as noted already, on the false premise that the Guild is asking the Commission to reduce CHEK to a repeater of CHAN.

3449 However, even the Guild's fallback position reflects a consistent principle of restricting the power a single owner should have in any television market. The Guild believes that its members will suffer, rather than being helped, if there is less competition between national broadcasting groups and if there are fewer buyers for national programming rights. CanWest may legitimately argue that it rejects that principle of one station per market, but it should not pretend that the underlying reasoning of the Guild lacks integrity.

3450 What CanWest is really asking the Commission to do is not just to give it one station in every market but also to give it second stations in the two largest English-language markets. The Commission has the opportunity, by rejecting the CHEK-TV and CHCH-TV applications, to send a clear signal to the television industry that there are limits to the degree of ownership concentration in television broadcasting that is consistent with the public interest and the goal of diversity in the Broadcasting Act.

3451 The one exception to this one-station-per-market rule that the Guild accepts as reasonable concerns stations which function as affiliates of the CBC. The current proposal calls for CanWest to acquire CKRD-TV, Red Deer, CHBC, Kelowna and to run both stations as affiliates of the CBC. The Guild supports these acquisitions by CanWest, as long as they continue to operate as CBC affiliates. If they were ever to be disaffiliated, ownership should be divested to owners who do not have stations in the markets reached by these stations.

3452 Now, Pamela Brand has some comments concerning the benefits package proposed by CanWest.

3453 MS BRAND: Good morning.

3454 While the Guild supports most of the CanWest applications to acquire WIC stations, its support is conditional on a meaningful package of benefits. Our particular concern with the benefits offered is that there be an assurance that, with respect to Canadian programming generally, and priority programming in particular, the benefits should represent expenditures that would not otherwise have been made.

3455 There will be little difficulty in determining that the amounts CanWest proposes are actually spent for the specific initiatives promised. What will not be simple is determining that the spending promised to support Canadian programming has not been offset by reductions in spending on Canadian programming outside the benefits package. If this were the case, the provision of a benefits package would account to little more than a shell game.

3456 What creates a particular problem is the Commission's announcement in its June 11, 1999 policy statement, "Building on Success", that:

"The regulatory requirement for expenditure on Canadian programming will be eliminated effective September 1, 2000." (As read)

3457 In the absence of this Canadian expenditure, or some alternative benchmark, it will not be possible to judge whether real benefits are delivered. For benefits to be real, they must be incremental: adding resources to Canadian programming expenditures rather than spending the same money in a different way.

3458 Notwithstanding this fundamental concern, there is no doubt that the benefits package includes valuable initiatives from the perspective of the Guild's members. CanWest's commitments to the Canadian Film Centre, the National Screen Institute, AMPIA, and other training and development initiatives are certainly welcome. Most importantly, the proposed Western Independent Producers Fund and the Promotion of Programming Fund are thoughtful initiatives that will be helpful so long as the $5.6 million in annual funding these two key programs require is not taken in whole or in part out of CanWest's existing expenditures for priority programming.

3459 The Guild strongly urges the commission to establish some benchmark figures for the five-year benefits period that will make it possible to judge whether real and incremental benefits are provided. This might be accomplished, for example, by looking at the most recent one to three-year period in order to establish the percentage of revenue of the stations CanWest is acquiring that was spent on all Canadian programming and the percentage spent on priority Canadian programs. To be judged as incremental, the promised benefits spending would have to exceed that percentage by the amount promised.

3460 The Guild also assumes that the Commission will not take the benefits into account when it decides on appropriate conditions of licence for the CanWest chain of stations when that licence hearing is held sometime in the next year. Similarly, since the resulting new licence conditions will apply over most of the five-year benefits period, the Guild asks the Commission to ensure that the benefits are additional to any further commitments CanWest may be asked to make as part of the licence renewal process.

3461 Those are our comments. Thank you.

3462 We would be pleased to answer questions.


3464 I would ask Vice-Chair Wylie to ask the questions, please.

3465 COMMISSIONER WYLIE: Good morning, madam and gentlemen.

3466 I must say I was also puzzled by your recommendation as an alternative to not authorizing the ownership of both CHEK and CHAN by CanWest or as -- I guess that's your second choice, would be to require that it be a repeater. I find that a puzzling recommendation as well as some of the parties who have commented on it.

3467 To you the reason seems to be the principle of dual ownership, and that principle is somehow left breached if the two stations broadcast the same material.

3468 MR. GOLUBOFF: I think generally what you're saying is correct and is something that we agree with.

3469 I think that Paul would be able to comment, I think, better on our behalf.

3470 COMMISSIONER WYLIE: Before you do, my second question would be: Wouldn't it be legitimate for the Commission to waive the violation of the principle against the -- and yet allowing two stations to be owned by the same owner against the possible advantage or the arguable advantage of having two stations, programmed differently, owned by the same owner?

3471 I would have thought that the one was better for the viewer than the other since there will be dual ownership in any case. So I am puzzled as well. Perhaps you have some further comments.

3472 MR. GOLUBOFF: I think Paul can give you some clarity on why our position is what it is.

3473 MR. AUDLEY: First of all, the primary position of the Directors Guild is that the station should be divested, and that's the recommendation that is made. The Guild has opposed permitting the takeover of CHEK by CanWest Global.

3474 The fallback position which you asked about would simply mean that instead of programming separately two schedules, both for the same market, they would, in essence, be offering advertisers commercial opportunities on the same set of programs with the exception of local content.

3475 If I'm a broadcaster, I would prefer to have two completely separately programmed entities, both at the national level and locally, rather than to be offering the same set of programs, with the exception of local, on two different services.

3476 But I think the issue here is that assuming -- and this I presume will be related by the Commission to the question of whether it issues one or more additional licences for this market and for applications that you're considering now, but the issue here is if one assumes that CHEK will be programmed separately, should it be programmed by the same company that is programming CHAN, the Guild's position, both at the local level and nationally, is that it's better to have two separate entities making the programming decision than to have one party making decisions for two of the competing services or the allegedly competing services in the market.

3477 COMMISSIONER WYLIE: Your first position is easy to understand. It's the second one that causes a problem because if the Commission doesn't require divestiture it may well be, for example, that the market -- which you seem to be concerned about -- advertisers and the ability of broadcasters to generate revenues would not be possible in the market. Therefore, to put it up for sale in the circumstances, whether there's a result from the last hearing we had, as you pointed out, that would probably be the answer, other than the principle: no two stations for one owner.

3478 But then if the Commission were to decide that that's not possible, then -- should it not look at the possibility of two differently programmed stations? I would have thought that from the perspective of the viewer that's better, and if the broadcaster can do it financially, it would be better for you, for the Guild as well, because there would be, as was discussed yesterday, an extra eight hours of Canadian programming, some local programming. It's difficult to understand, unless it's the principle itself that bothers you, but obviously if you're prepared to have repeaters it's not.

3479 MR. AUDLEY: It is the principle that's a concern. But I think I can assure you that any broadcaster will tell you that if they have to put the same programs on CHAN as they put on CHEK, that will affect their market share in the Vancouver- Victoria lower mainland market and it will affair their ad revenue, and it will reduce their competitive heft and their market dominance in the Vancouver-Victoria market.

3480 COMMISSIONER WYLIE: Yes. Well, I won't pursue it further.

3481 We look at it from the perspective of the viewer, of course, and I would have thought you would look at it from the perspective of the directors having the most outlets possible for different programming.

3482 MR. AUDLEY: But if I can just clarify.

3483 The position is that it should be sold. If it's sold, it will clearly be programmed separately, but you're also looking at the opportunity to have an additional programming choice that's separately programmed by licensing one of the applications or more than one that are already before the Commission.

3484 COMMISSIONER WYLIE: What if we did both. Then at your end you would have three outlets instead of --

3485 MR. AUDLEY: I don't think the Directors Guild has a position on that. If you ask me as a consultant, I would do an analysis of what I thought was bearable in the market without damaging the ability of the individual broadcasters, all of them, to provide high quality Canadian programming that's consistent with the Broadcasting Act, because at some point it's quite clear that what gets compromised at a very high level of competition is Canadian programming.

3486 COMMISSIONER WYLIE: My second question is about the measures that could be established to ensure incrementality, which you have spoken about in your written brief and again this morning. Do you have anything more specific as to how this could be done on an ongoing basis? You seem to be focusing on expenditures.

3487 MS BRAND: Yes. I suppose the annual income tax returns could be taken and examined. That's how we would monitor it -- auditing.

3488 COMMISSIONER WYLIE: So, in your view, the best measure would be expenditures.

3489 Is it your view that the TV Policy was remiss in focusing on the hours of Canadian programming exhibited or are you just saying that in the case of benefits -- in the case of a transfer, expenditures should be brought back into the measures?

3490 MS BRAND: We feel that not just in the case of transfers but generally the expenditure requirement was very beneficial to Canadian programming and the broadcasting system in Canada. We do feel that it has had not such a salutary effect on Canadian programming.

3491 COMMISSIONER WYLIE: Thank you very much for your presentation, madam and gentlemen.

3492 CHAIRPERSON OF THE COMMISSION: Thank you very much.

3493 MS VOGEL: I would like to call Canadian Independent Record Production Association, please.

--- Pause / Pause

3494 MS VOGEL: Madam Chairperson, I don't see anyone from that organization. I'll recall them later.

3495 I would like to invite the National Broadcast Reading Service to come forward, please.



3497 MR. SMITH: Madam Chair and Members of the Commission. Hello. My name is Drake Smith. I work for the National Broadcast Reading Service. Two of our directors, including our vice-president, had planned to be here but unfortunately were called away on short notice. I was asked by Vice-President Alix Nicoll to appear in her stead to show our support for the applications by CanWest Global.

3498 As you know, NBRS holds a licence to operate the satellite-delivered national audio service known as VoicePrint. I am the Vancouver Bureau Chief.

3499 At no time has NBRS received ongoing funding from any sources, private or public.

3500 NBRS has exhausted all sources of funding and is currently operating on a volunteer basis. All paid staff have been laid off but many, like myself, are continuing to work without being paid.

3501 This underscores the importance of the benefit monies which CanWest Global has committed to provide to NBRS for VoicePrint if the Commission approves these applications.

3502 The half million dollars which CanWest has committed to give to VoicePrint will allow NBRS to resume paying the staff and will help to ensure that VoicePrint can continue to serve the broadcasting system.

3503 There are 2.8 million vision impaired in Canada. 500,000 regularly listen to VoicePrint.

3504 We believe it is vitally important that VoicePrint's unique service continue to be available to all Canadians and, in particular, to meet the needs of the vision impaired.

3505 The CanWest grant will help VoicePrint to continue to meet the unique needs of this segment of Canadian society.

3506 The CanWest grant will be a big help to ensure that VoicePrint can continue its operations.

3507 We believe the CanWest benefit is truly in keeping with the spirit and intention of the Commission's benefits test.

3508 While any monies would be gratefully accepted, we are especially grateful that CanWest has decided to provide VoicePrint with the grant as a one-time, lump-sum payment immediately upon approval of these applications.

3509 We thank CanWest for its support and urge the Commission to approve its applications.

3510 We thank the Commission for this opportunity to participate in the process.


3512 I would ask Commissioner Pennefather --

3513 COMMISSIONER PENNEFATHER: Good morning, Mr. Smith. Welcome.

3514 MR. SMITH: Good morning.

3515 COMMISSIONER PENNEFATHER: Your presentation this morning clarifies the lump sum payment. I believe it was still a question at the time of your written intervention. So are you saying that it has been so confirmed in the meantime, that it's going to be a one-time lump sum payment?

3516 MR. SMITH: I believe during the CanWest Global presentation on Tuesday they made that clear. That was my understanding of their presentation.

3517 COMMISSIONER PENNEFATHER: You say in paragraph 11 that:

"...the CanWest benefit is truly in keeping with the spirit and intention of the Commission's benefits test."

3518 Could you elaborate on why you feel that?

3519 MR. SMITH: I would have a tough time elaborating upon that. Unfortunately, I didn't write that line, so -- I only read it.

--- Laughter / Rires

3520 COMMISSIONER PENNEFATHER: Well, what do you think anyway?

--- Laughter / Rires

3521 MR. SMITH: What do I think?


--- Laughter / Rires

3523 MR. SMITH: Well --

3524 COMMISSIONER PENNEFATHER: I don't want to put you on the spot.

3525 MR. SMITH: I think it's --

--- Laughter / Rires

3526 MR. SMITH: You already have.

--- Off microphone / Sans microphone

3527 MR. SMITH: Should I give it a shot?

--- Laughter / Rires

3528 COMMISSIONER PENNEFATHER: I would like you to give it a shot.

3529 MR. SMITH: Okay. I'll give it my best shot.


3531 COMMISSIONER WYLIE: (Off microphone / sans microphone...) a consultant?

--- Laughter / Rires

3532 MR. SMITH: Let's see now -- no. As you'll notice, I left my consultant at home.

--- Laughter / Rires

3533 MR. SMITH: We can't afford consultants.

--- Laughter / Rires

3534 COMMISSIONER PENNEFATHER: Yes. I guess that's the point you're making today.

3535 MR. SMITH: I think it's -- the VoicePrint is a service for blind people, as you know --


3537 MR. SMITH:  -- and there are 2.8 million vision-impaired people across the country, as you also know.

3538 We are delighted to have the offer of assistance from CanWest Global in this proposal. It allows this service, which is a lifeline for blind people, to continue, but we would welcome any donation, large or small, from anyone, CTV --

--- Laughter / Rires

3539 CHAIRPERSON OF THE COMMISSION: (Off microphone / sans microphone...)

3540 MR. SMITH: You name it.

--- Laughter / Rires

3541 MR. SMITH: And they become our friends.

--- Laughter / Rires

--- Off microphone / sans microphone

3542 COMMISSIONER PENNEFATHER: Well, you're welcome.

3543 MR. SMITH: Thank you.

3544 COMMISSIONER PENNEFATHER: You actually have spoken well to the importance of VoicePrint in terms of a service for all Canadians in the broadcast system, reaching all Canadians inclusive of those who are visually impaired.

3545 Just on the matter of funding, could you just clarify for me, you say that you have exhausted all sources of funding. I don't want the details of that funding, but is this the first time that a broadcaster has in fact come forward with funding for VoicePrint or is this a unique contribution or is it part -- has this been done before?

3546 You don't have to name anybody, but I'm just trying to get a sense. Is this a new -- as you say:

"...[we have not] received ongoing funding from any sources, private and public." (As read)

3547 So this is a very new effort on the part of CanWest?

3548 MR. SMITH: Well, this particular situation, again, is not ongoing funding, so this would be a $500,000 injection to enable our organization to resume its operation as staff.

3549 We have about 400 volunteers across the country and the service is largely volunteer- driven. There's a small staff of about I think 20 or 25 people nationwide. So this injection of money into our organization would allow our organization to resume paying staff across the country.

3550 COMMISSIONER PENNEFATHER: Well, thank you very much for being here and for making your point very clearly.

3551 MR. SMITH: Thank you very much.


3553 COMMISSIONER WYLIE: Mr. Smith, if you were an applicant you would get a licence on your sense of humour alone.

--- Laughter / Rires

3554 MR. SMITH: Well, if I may, I'll take your phone number and call you about that later on.

--- Laughter / Rires


3556 MR. SMITH: Thank you.

3557 MS VOGEL: I would like to call the Regional Municipality of Hamilton-Wentworth to come forward now, please.


3559 MR. HAYES: Good morning.

3560 CHAIRPERSON OF THE COMMISSION: You're far from home.

3561 MR. HAYES: We are far from home. Yes, we are. Actually, if this was a production of the "Wizard of Oz" we would be cast as the little munchkins. We're the little people.

--- Laughter / Rires


3562 MR. HAYES: But we really appreciate the opportunity to be here today.

3563 My name is Matt Hayes. I will be speaking on behalf of the employees of Ontv, of which I am one. Next to me, the distinguished gentlemen, Jack Macdonald, former mayor of the City of Hamilton, and next to Jack is Barb Whiteley and Barb will be speaking about the concerns in the community of Victoria.

3564 I'll begin.

3565 I appear before you today feeling a little bit like Oliver Twist, the unwanted orphan asking for just a little bit more. I have been an employee of Ontv or CHCH for almost 20 years, long enough to remember the good old days, but I have to say the last dozen or so years have been a little bit rocky.

3566 During that time, the station has bounced around from owner to owner like an unwanted orphan, each transition creating anxiety for staff while leaving our audience confused and bewildered as we change identity and strategy. Our outgoing owners believed we needed to emphasize Toronto in our news coverage, a move that was suicide for a station based in Hamilton traditionally covering Hamilton, Burlington, Oakville and the Niagara Peninsula. And I have to tell you, as a born and raised Hamilton resident, WIC could have spent $100 million on beefing up resources in Toronto and people in Toronto would not watch a newscast based out of Hamilton. There's no love lost between Toronto and Hamilton.

3567 Meanwhile, the residents of Hamilton started to feel quite alienated. The community responded by tuning us out. As an on-air personality, I get the feedback at the grocery store, at the bank, at the gas station everywhere: What's going on at your station? For me, pride had given way to embarrassment.

3568 Those same people are now expressing hope at what they have heard of the CanWest Global proposal, and so am I. What is so refreshing is that CanWest seems to understand who our audience is and plans to cater to them rather than frustrate them.

3569 The only thing that we can give our audience that they can't get anywhere else is local coverage. That's what the people of Hamilton, Burlington, Niagara, Oakville want and that's what they deserve. The employees of Ontv deserve some stability and to reach their potential.

3570 I work with some of the most talented people in the industry, but right now morale is at an all time low. If I were a real estate agent selling Ontv I would call it a fixer-upper, a handy man's special. Mr. Craig said yesterday that this is not a rescue mission, but I tend to disagree. We need the Midas touch along with the financial resources that a successful broadcaster like CanWest Global will bring.

3571 I know you have concerns about this deal but, speaking for the employees back in Hamilton, we feel we are on a slippery slope. Rejection of this deal will put us once more into limbo as we await an uncertain fate in the hands of lesser broadcasters. We're tired of being orphans. We deserve this deal and so do the people in the community that we serve.

3572 CanWest plans to increase the hours of local programming to allow us to repair our tarnished image in the community, as well as create new and exciting opportunities for our staff. Ontv staff applauded the details of the CanWest Global plan when it was unveiled to us a few months back. There was a sense of relief in knowing we had a chance at a bright future. Right now, this is the only hurdle that stands in our way.

3573 I don't believe there are any other broadcasters out there prepared to put as much into Ontv as CanWest plans at this time. If I was allowed to say just one word here today it would be: Help! Help us to be the best we can be. If you look at what's best for the employees of Ontv and the Hamilton-Niagara-Oakville community, I'm confident that you will vote in favour of the CanWest Global proposal.

3574 And one other footnote to this, and this is just something that I have observed over the last few days, this is the first time I have attended a hearing but historically it's always appeared to me that when a broadcaster comes before the Commission they promise everything, the moon and the stars. They paint a picture of Shangrala and all I ask here today is that you make sure that they stand up to every word, every letter, every promise that they make to you. I think if you make sure that they do everything that they say that they will that Ontv has a chance of being a better station than it was in the good old days.

3575 I would now like to turn things over to a man who never shies away from using the word "Hamilton" in his sentence, Mr. Jack Macdonald.

3576 MR. MACDONALD: Madam Chair and Members of the Commission, I thank you very much.

3577 As a Canadian I'm proud as hell that this kind of thing happens. I haven't attended a long hearing and I find myself thrilled that this happens, that folks who are going to control our airways and use our airways are obliged to make their case.

3578 Additionally, I'm grateful for the learning experience of watching. I'm also amused at a process by which an applicant puts forward his/her case and then all of their opponents get to take nasty pot-shots at them. It's just not a kind of a thing I'm used to seeing.

--- Laughter / Rires

3579 MR. MACDONALD: They're pretty good at the pot-shot stuff. It's an interesting thing to see this -- I don't know where else this happens.

--- Laughter / Rires

3580 MR. MACDONALD: They say nasty things down the hall, but right out in front of the world. It's quite unusual.

3581 You have a letter which I wrote earlier. I have a clear memory of writing a similar letter in about 1953 in support of an application which was headed by Mr. Ken Sobel, a remarkable Hamilton citizen, and supported by the local newspaper and the second radio station. Mr. Sobel controlled CHML, a wonderful radio station. It was a thrilling opportunity. I mean, I'm a guy who at that point I'm dealing with "Howdy Doody" and "Kukla, Fran & Ollie". The family all came into the living room and sat chairs up to eat our dinner watching Kukla, Fran and Ollie. We thought that was a great deal. We were later exposed to such great cultural events as "Uncle Miltie".

--- Laughter / Rires

3582 MR. MACDONALD: We had all that good stuff.

3583 But the original application was for CHCH. Just the thought of having our own television station, our very own station based in Hamilton, concentrating its programming and news coverage on Hamilton, Hamilton people, Hamilton events, produced a great excitement in the city, all over the city: Hey, we're gonna have our own television station; its purpose is to serve us. That's a great notion and has a great impact on the personality of the whole community. It certainly did when the station went on the air, and it was fully rewarded all that expectation.

3584 I remember the electricity, the first signals going on the air. Anybody who had any kind of name around town got to show up at the television station and watch the signal, how it goes. And people all over the area came in just to watch great electricity about our television station.

3585 Now, I should have begun by telling you I'm not here to ask you to do anything except one thing. I don't know a whole hell of a lot about all the detail that's been going on. I know that I'm entitled as a Canadian to my television station, and it hasn't been there for some time. I'm sad to relate that.

3586 My television station gives energy and excitement and enthusiasm to a town. My television station presents me with news. And when it stops doing that on a local basis, it ain't my television station any more. It isn't really anybody's television station when it tries to be everything to everybody and winds up being very little in the home town. I want to see that change.

3587 I don't want to buy a television station, I don't want you to stop these people so that I can buy this television. I don't have that -- I don't want you to force them to hire me or anybody I know, you know.

--- Laughter / Rires

3588 MR. MACDONALD: I don't want to do any of those. I just want you to give me back my television station.

--- Laughter / Rires

3589 MR. MACDONALD: I was a member of the board of control at the time, a hundred years ago when that infant television station went on the air. And later I was privileged to be the mayor of the City of Hamilton. And CH performed an enormous service.

3590 It forced the political leaders to face the people. And it's a whole lot different when you're looking at them through that little circle of glass and know that they can see your every pore. It's a real challenge for a politician, and ought to be, and ought to be there available every day for events within the community, to see ourselves as we are, warts and all, to see the good things happen, to see the growth potential, to understand who we are, who we are as Canadians of course, but who are we as citizens of our local community. I find that very, very wonderful.

3591 This station did some funny things. Now, they're funny in some sense, but they did a program called "Full Circle", and all of us who were -- most of us who were in politics, federal, provincial and local, got around in a circle and we had three or four journalists trying to make us look like fools. And that was the healthiest possible thing, because I could look at a Member of Parliament and say, "You're not doing your job for the city", and that member had an opportunity to face me down and everybody in town who really cared could watch that happen.

3592 That's really great stuff. That's great stuff. It doesn't happen any more. These applicants have said they're going to do it. I believe they're going to do it. And I think that's good.

3593 I also did a program, if you can imagine someone as irreverent as I doing a program in a time frame of a half an hour on a Sunday -- nobody's watching a lot, but you know -- but I could talk with friends and personalities, both local, provincial, federal, but mostly local people. A magistrate, what kind of a guy is he? We don't have magistrates any more in Ontario, but what kind of a person is this? What makes him tick? What makes him function while he is on the bench dealing with the bad guys?

3594 That's the kind of thing that doesn't happen any more in my town, ordinary people as well as extraordinary people being exposed to the whole community. And the guy who works at Stelco can come to feel that he knows that person a lot better than he can in a little program clip. That doesn't happen.

3595 I implore you to approve this application. Give me back my television station. Now, I don't speak for everybody. Jessie and the kids are enthusiastic about what I'm saying and many of my friends, the folks I have talked to over the last few weeks, would be here saying: Please give us back our television station. It's an important part of the game.

3596 But if you don't do that, I'm concerned very much because you would then leave us with an unwilling owner who is unlikely to do the kinds of things which I have outlined as I believe to be important for a community. Or, after some little time, perhaps some vagrant owner will show up and take over and we will be back where we started.

3597 I'm confident that the applicants have the financial capacity -- and I know that because all their opponents came here and said they're going to make bags of money --

--- Laughter / Rires

3598 MR. MACDONALD:  -- so they're not going to have any trouble doing all the things they told you they were going to do.

3599 They have a proved record in the industry of doing good things. Again, I'm told they are so powerful they frighten even big networks, you know. We don't get another opportunity at this. This isn't something we can just go out and pick up at a department store. Here are these people on site, ready to do it, have the capacity, the experience.

3600 Incidentally, they have appointed five extraordinarily capable, fine local citizens to sort of watch them, to see that they do what they said they would do, and to report to your Commission. I think that's pretty good news. I know those five people and I know that if they don't tow the line they will catch it big time. All of that is good.

3601 Please give me back my television station. Thank you.

--- Applause / Applaudissements

3602 MS WHITELEY: Good morning, Madam Chair and Commissioners.

3603 I'm a little bit intimidated by this process. I think I represent the only person in this room who's just an ordinary viewer. There's no personal axe to grind, no professional benefit to be derived. I have no political agenda. I'm not an eloquent speaker and I don't have one of those wonderful voices like I have heard today and yesterday, but I really welcome the opportunity to be here and speak to you.

3604 I guess I heard it yesterday talked about that the heart of the system is the viewer, so that would be me. I have an awesome responsibility. I'm representing the heart and soul of the system: the viewer. So, as I said, bear with me because I'm a little bit nervous. I'm not used to this kind of process. But I felt strongly enough to write a letter and asked to be present and I'm grateful that you gave me this opportunity.

3605 My name is Barbara Whiteley. I have lived in Victoria, Vancouver Island for most of my life. I was raised and educated in Victoria and, in turn, raised my family there. I graduated from the University of Victoria with a Bachelor of Science and started my career as a social worker and counsellor. So you can tell I'm a caring person right off the bat.

3606 I then moved into marketing and for many years had an entrepreneurial bent.

3607 Presently, I am one of three principals in a small software development company. Hopefully, you will be reading about me soon.

3608 I support this application of CanWest Global in general, but I will keep my comments to how this application relates to my community, which is the Vancouver Island community. I would like to address a key issue which, if I understand it correctly, may preclude CanWest from taking over CHEK. This is that CHEK and BCTV stations are considered to be in the same market and that the CRTC has a ruling of one station per language per market.

3609 This brings me to the point that I would like to stress in my presentation, and that is that Vancouver Island is a distinct and unique community from Vancouver, both geographically and culturally, and is seriously underserved in local programming news and sports coverage, and we have been for a very long time.

3610 CanWest Global, in its application to take over CHEK, will revitalize and bring much needed expanded coverage and focus on island events and issues. Vancouver Island residents were disappointed when four years ago CanWest Global was not granted a licence for a new TV station. Instead, yet another Vancouver station was granted that licence because, once again, we're lumped in as one region. And we were the losers. There are a lot of people very disappointed in that.

3611 Island residents showed enthusiastic support at that time for expanded local programming and news coverage specific to our needs that was promised by CanWest. Quite frankly, it is frustrating to be considered an annex to Vancouver, and no insult intended. Vancouver is a wonderful place. It's just a very different type of region than Vancouver Island.

3612 We are distinct politically, and certainly geographically. If you have ever tried to get to or off our island using the B.C. ferries you will understand what I mean. We might as well be our own country because it takes about as long to get to Vancouver -- this was my experience yesterday, I could have been in Toronto faster. So definitely we are distinct geographically; and culturally to some extent, in that we are a little more laid back as island people, and certainly environmentally.

3613 So our issues are different and the kind of coverage that we are looking for is different. We don't want to turn on television and repeatedly watch what's going on in the lower mainland. That's okay, that's part of our information, but we want to know what's going on around our corners.

3614 I submit that we deserve to be recognized as a distinct area, a distinct market and, as such, have our unique programming needs met. CanWest Global is offering us just that opportunity again by revitalizing CHEK and creating a dynamic new commitment to local coverage for all island residents.

3615 I particularly applaud the following new programming. The additional new storefront news bureau for the communities of Port Alberni, Campbell River and Tofino. Unless something extraordinary happens, those communities don't have any coverage on a regular basis. So this will link those communities to each other and link them to us.

3616 The 90-minute island report each evening featuring consumer and investigative issues I think will be interesting and again will help pull us together as an island, give us more information about each other.

3617 I'm interested in the half-hour interactive program called "Your Say". I think that will be fabulous for us. We get to make our comments and speak on local issues, which currently we really don't get to do in a significant way.

3618 "Sportspage". I am the furthest thing from a jock, but I raised two sons and they were involved in sports. Try to get local coverage and see, you know, what the local teams are doing. We have some outstanding athletes on the island and there isn't enough attention. We don't get to see that. So we can keep track of our local athletes and their sports events by this venue.

3619 "Island Minutes", one-minute vignettes featuring outstanding locals, and I know that's part of a package of short segments they're going to do about all Canadians. I think this is wonderful. Finally some positive programming. Something that says good things are happening in news where we're discussing the people who are doing some positive things in our community, and I think that's a very important thing to focus on. I think that generally Vancouver Island people might have a little bit of an inferiority complex compared to Vancouver because our issues aren't addressed as important. So I think that the "Island Minutes" will do something very positive for us.

3620 I'm also excited about the development of a community advisory board made up of members of the local community, which will provide necessary feedback as to how well the station is serving our market. I think that's fabulous. And this will ensure that CHEK is in step with its viewers. We don't have something like this right now.

3621 And offering a million dollars to establish a production fund for First Nations programming. I haven't heard anyone comment on that. I might have missed it, but I haven't heard a comment on that. I think that's timely and progressive, and I applaud that also.

3622 Lastly, something very close to my heart, a contribution in support of the media awareness network that encourages critical thinking about media information and the power of media in the lives of children and young people. I think that represents a huge benefit to our community and society in general. So I'm happy about that.

3623 In summary, I know I speak for many Vancouver Island residents. I can't say how many I speak for. I just know that the people that I know that know I'm here are going, "Way to go. Ask for this for us." When I say that we welcome the benefits we will receive from having CanWest Global at the helm of our local TV station, revitalization and a renewed commitment to CHEK is long overdue.

3624 Vancouver Island is a very fast-growing community and our population actually is becoming quite sophisticated because we attract some very interesting people because of our temperate climate, relaxed lifestyle, and not to mention some of the finest golf courses in Canada. So it even stresses that our problem is -- that we do not have proper coverage and I guess it's even more obvious as people from other places come and retire in Victoria and realize: What is this? I mean, I don't want to slamcheck because I think they have done the best that they can with limited resources and not being affiliated with a much larger organization. But it's time for change and it's time for growth so, respectfully, I would ask that you consider us as a separate area and I hope that we're not cut out of this loop because of the regulation that says not two stations in one market.

3625 So that was my main concern here. Thank you very much. I guess we're open for questions.


3627 I would ask, first, Commissioner Pennefather, and there's Commissioner Grauer who has a comment too.

3628 COMMISSIONER PENNEFATHER: Thank you, Madam Chair.

3629 Good morning, and thank you for coming here to this hearing from points both nearish and far.

3630 You mentioned, Dr. Macdonald, that this process is an important one and an interesting one. I have to say that your presence here today completes that process. It would not be complete without the viewers, and you're voicing the opinions of viewers. So thank you for being here.

3631 MR. MACDONALD: Thank you. I found it fun.

--- Laughter / Rires

3632 COMMISSIONER PENNEFATHER: When I looked at your written comments from all three, Ms Whiteley, Mr. Hayes and Dr. Macdonald, I had wanted to hear more from you on what "local programming" means. I have certainly, in fact, been pleased that you have elaborated on that, what you expect to see on the screen when we use the term "local programming". I wondered if you just wanted to add a little bit to that and then Commissioner Grauer has a question.

3633 MR. MACDONALD: Well, I would like to see a renewal of the kind of programming that Sobel did.

3634 Perhaps I should maybe make a point here because I have heard the notion that we're bulked and we get really steamed when people bulk us with Toronto. Everybody in the country gets a little hate for Toronto, but if you live right under their shadow it's difficult, it's difficult. We're not Toronto.

3635 Ken Sobel understood we weren't Toronto in all concepts, not only in the programming concept to talk to and about Hamilton, Hamilton's institutions, Hamilton's people, but also to make that a market -- and it's a wonderful market. As your records will show, Mr. Sobel made a ton of money and won great awards as one of the outstanding independent, totally independent stations. And he did that in Hamilton -- Hamilton and the Niagara and Oakville area. Outside of Toronto. A separate, healthy, strong market.

3636 I want to see that. I want to see -- and I didn't mention in my remarks, although in my letter I did allude to the commitments made by the applicant to McMaster University and to Mohawk College, where Mohawk College has a school of broadcast journalism. What a perfect fit, that those kids who are going to that -- and I have a son who's a graduate, incidentally, of that school. He decided to go straight after he graduated, but he is a graduate of the School of Broadcast Journalism -- no offence meant.

--- Laughter / Rires

3637 MR. HAYES: None taken.

3638 MR. MACDONALD: So let's see what those kids are doing and what they're able to do and show that to the whole community. There are miracles going on in McMaster University as we speak, and every day, and we in Hamilton don't know enough about those, are not seeing them.

3639 And there is a difference -- and, incidentally, I write for a newspaper and I love newspapers, and newspapers give us information, but television gives us news. And there is a difference. That's a part of our lifestyle now. We take our news from television and our information from newspapers.

3640 So to have that out there, to have somebody like Matt out in the street with a camera and a microphone talking about the Polish alliance having their annual meeting, that's great stuff in Hamilton. It's important stuff. Ain't nobody talking about it now.

3641 MR. HAYES: If I can just add something to that.

3642 Over the last couple of years it became -- at one of the roughest points in our newsroom we were instructed to avoid using the word "Hamilton" in your news stories if at all possible so as not to offend the audience in Toronto. Our station should be a reflection of our community, and it hasn't been for a long time. There was a time when that was the case, but it got to a point where we had to disguise the fact that we were from Hamilton so that hopefully when somebody is flipping around the dial, if they don't hear that dirty word, maybe they will think they're watching somebody else, like a station in Toronto. And I understand the rationale because they are going for that piece of the pie, which is Toronto, and ratings and numbers and revenues, but the thing is that this station is not a Toronto station, and it seems that the current applicant gets that message and wants to take the station in a different direction, a direction that, as Jack has mentioned so eloquently, this station used to be.

3643 COMMISSIONER PENNEFATHER: Thank you. I wasn't clear about that.

3644 MR. MACDONALD: It appears the most significant thing about the application is their choice of returning to the call letters. You have no idea what that means on the street in Hamilton. That message comes clear: Hey, these guys are going to bring us back CHCH. That's Hamilton.

3645 COMMISSIONER GRAUER: I think that, you know, your presentation here today collectively has touched on the essence of the issues that we need to consider when looking at two stations in, quote, "one market". Born and bred in British Columbia, live here still, and went to the University of Victoria. I understand exactly what you're talking about.

3646 What's very intriguing here, though, is that in fact CHEK is owned by BCTV presently as an exception to our current policy, and when we talk about two stations in one market it's an advertising term. It has to do with signals received over the air. You know, I think what's common is that both people in Victoria want to see themselves reflected on their station and not have a station that is trying to generate the revenues in another market, and the same is true of Hamilton, if I have characterized it correctly.

3647 MR. HAYES: Right.

3648 COMMISSIONER GRAUER: The challenge for us is to find the best way to make that happen. As I say, it's -- you know, having you here today, a two-in-one situation, I don't want to ask you a question that you may or may not have thought of, but --

3649 MR. MACDONALD: Go ahead.

3650 COMMISSIONER GRAUER:  -- it is -- do you think -- have you considered and do you think that an independent owner of CHCH can't help but be magnetized by a Toronto market whereas somebody who already has a station in Toronto will, by their very nature, want to create a second market and serve that one?

3651 I think the same is true of Victoria. I mean, this is a question. I mean, is it something that you think it enhances and ensures someone will stay focused as opposed to not?

3652 MS WHITELEY: I think if we're part of a larger picture, alluding to your second comment --

3653 COMMISSIONER GRAUER: Yes. But there's a larger picture. What I'm really saying is, the question is: Two stations in one market, is that integral, in your view, to seeing the local community served?

3654 MR. HAYES: I think the bottom line is whether or not the community is served. Television is a very expensive business. You were just mentioning about how -- would the community be better served by an independent station? No. That independent station is going to automatically try and work some revenue out of the bigger piece of the pie. In our case, it would be Toronto.

3655 We need an owner like CanWest that has the deep enough pockets to make this happen for us.

3656 MR. MACDONALD: I think there are two points and, with respect, I have tried to make the point that Sobel and CH did very nicely, thank you, in this market because they worked this market.

3657 They were not trying to sell a market in Lindsay or Peterborough. They were selling a market in Hamilton-Niagara-Oakville, and that's where they put their focus. And as a result of focusing on selling in that market, they also focused on telling people about what happens in that market -- very natural kind of thing -- your commercial conjecture that the applicant in this case is much more likely to make a strong market out of where the original CH did.

3658 The situation for us is we have -- I have about three times as many television channels as I'll ever need. And my kids are watching some goofy stuff on various places. I don't need all those. I don't need any more. But I do need a television that's mine, a television station that's mine and is talking to me and my kids and my grandchildren. I need that very much.

3659 I hope that's helpful.

3660 COMMISSIONER GRAUER: It's very helpful. Thank you.

3661 COMMISSIONER WYLIE: Gentlemen, I can't resist but saying I'm very impressed by how well you handle your "H's".

--- Laughter / Rires

3662 CHAIRPERSON OF THE COMMISSION: Thank you very much.

3663 MR. HAYES: Thank you.

3664 MR. MACDONALD: Thank you.

3665 MS WHITELEY: Thank you.

3666 MS VOGEL: I would like to call five parties now that have agreed to present as a panel. First, Peace Arch Entertainment Group; second, Pyramid Productions Inc.; HBW Film Corp.; Brenco Media Ltd.; and, Great North Communications Ltd.

3667 Would you come forward, please.

3668 CHAIRPERSON OF THE COMMISSION: Good morning. Welcome. I see you have the right proportions. Two panels have the right proportions: four women, one man.

--- Laughter / Rires

3669 CHAIRPERSON OF THE COMMISSION: You know there are days where there's colour and there are days where there's proportion of panels.

3670 Welcome.


3671 MS McLELLAN DAY: Thank you.

3672 Good morning. First of all, just in polling the panel, this is the first we had heard that we were presenting as a panel, all of us, but nobody seems to have any objections. So that's all right.

3673 Madam Chair and Commissioners, thank you for providing us with this opportunity to speak with you today.

3674 My name is Kirstie McLellan Day. I'm President of Pyramid Productions Inc. I'm based in Calgary. I filed a letter in support of the applications by CanWest to acquire certain television broadcasting assets from WIC.

3675 My independent Calgary-based production company, Pyramid Productions, has produced a daily half-hour television series on the movies and the people who make them, called "The Movie Show", since 1983.

3676 We also produce a weekly half-hour called, "Reel Entertainment" for Superchannel and several one to two-minute movie-themed interstitial programs.

3677 "The Movie Show" runs coast to coast in Canada on the television network formerly known as WIC, and Pyramid Productions has set up syndication through a Los Angeles-based company in 70 countries around the world.

3678 Now, last year WIC Television, decided on a new direction to increase their profits. They revisited our long-standing licensing deal and informed me that either I share half my profits in their licensing fee, SOCAN remuneration and syndication deals in return for a television window, or they would no longer purchase my show and would instead create their own similar product and basically put me out of business. After months of wrangling, I did manage to hold on to my fifteen-year tape library, which they had initially insisted on co-owning.

3679 This is why I am such a huge supporter of the CanWest application. I cannot tell you what enormous relief I felt when I heard CanWest had tendered applications to acquire WIC. CanWest is not interested in this type of strong-arm takeover pertaining to independent production houses. They are instead committed to fostering growth in the western production community In the past they have treated me with the utmost courtesy and respect, and dealing with them has shown me their commitment to the growth of western production companies.

3680 CanWest has committed more than $23 million over five years for western producers in a special fund that will be administered by a third party independent organization. The total benefits package for approval of this transaction is in excess of $84 million with substantial benefits to national and local initiatives.

3681 CanWest has also earmarked $5 million to go to the CTF fund to create a special envelope for promotion of Canadian programming. These funds will be administered by the CTF and will be used to promote Canadian programs on radio, billboards, print, etc.

3682 The benefit in this type of promotion for shows such as mine would be immeasurable. It would increase the profile of independent Canadian productions so that we can compete with Canadian network and American shows on a level playing field. I am gratified that CanWest intends to give us our chance to strive for success.

3683 I'm also delighted that CanWest will establish a $1 million international marketing fund to help small and medium-sized producers like me market their productions abroad at NATPE, for example. I have always done, at my own expense, NATPE marketing, and the idea of having my broadcaster -- Canadian broadcaster roll up their sleeves and pitch in is remarkable.

3684 In addition, CanWest has numerous cash donations going to a number of organizations in the broadcast field, such as the Banff Television, the Canadian Film Centre, the National Screen Institute, just to name a few. The support of these institutions will provide my company with more opportunity to market our shows in Canada.

3685 I would like to explain just a little bit about how this works. In my case, I make a program that requires access to interviews with movie actors. In all of North America the movie studios allow only around 30 of these windows or opportunities. Canada has between two and four windows, that is, two to four journalists whose shows can secure these interviews depending on where their shows play.

3686 For 15 years I made "The Movie Show" and sold it to WIC. I didn't make much on the licence fee. Yesterday one intervenor and the Commission had a chuckle recalling how they used to pay $750 per half hour. Well, WIC pays me $600 per half hour and takes half of it back.

3687 But I sold the show internationally, and in their new direction WIC decided they wanted to increase their bottom line by taking half my profits and their leverage was they could deny me access to my content. No window, no content. No content, no show. No show, no sales overseas.

3688 If the broadcaster insists on siphoning off half the profits, we are not building a strong, independent production community no matter how many funds they invest. Funds in themselves do not build strong independent producers. In fact, in my opinion they build strong dependent producers.

3689 Independent producers should make a go of it through decent licence fees and ad sales. We should do real business in the real world based on the marketplace. But it's not uncommon for us to be paid two to $600 per half hour for national rights. This makes it impossible to achieve production values to move our product overseas or build good ratings in our country -- our own country.

3690 Now, in speaking with CanWest, that doesn't seem to be the way they want to do business. They do seem to be interested in paying decent licence fees and supporting us and helping to promote our shows to Canadian audiences and international buyers.

3691 Thank you.

3692 CHAIRPERSON OF THE COMMISSION: I thought we would be hearing every one of you and then we will come back for questions. Okay?


3693 MS. H. WHITE: Thank you.

3694 I'm Helene White. I'm from Calgary, and how do you do.

3695 I'm the President of HBW Film Corp. I have been a member of the Alberta community in film and television since 1979 when I first joined the industry association as an active member and subsequently became a board member for three and a half years.

3696 It was in 1982 that I incorporated my parent company. Since that time, my company and its subsidiaries has produced programs in association with the following Canadian networks and their affiliates: CTV, CBC, ASN Maritimes, WIC, Access and CanWest.

3697 We achieved our first CBC network licence in 1982 with an international award-winning documentary, and in the years between 1985 and 1990 created, wrote and produced the first and possibly the only Canadian-syndicated television series that came out of Alberta at that time. This series also won international recognition for three years of its production and was the first Alberta program to be exported to the U.S.

3698 This background experience that encompasses approximately 55 hours of independent film and television production, is the basis for my analysis of the Alberta industry needs. It leads me to give the CanWest Global applications referred to in this hearing my full support for the following reasons:

3699 I believe it is vital that we have another national television network in our country, and one that has ownership in networks around the world as CanWest Global has can give even small companies potential access to foreign markets as we build toward a larger, indigenous Canadian production base. This trend toward bigger media companies is Canadawide. Alberta independents must keep up with this pace as more and more product is required to fill the evergrowing market needs around the world.

3700 CanWest Global is a company that has its roots in both central and western Canada and it is positioning itself to play an integral part in this fast-changing scene.

3701 Global plans to give a western focus to a national public affairs program emanating from Calgary and a nightly national news program to be broadcast from Vancouver. How refreshing. This strikes a constructive note for a more unified Canada.

3702 Westerners have become weary of the Toronto bias that permeates other national news programs. Their effect is demeaning to the regions and other Canadian centres. This condition is unacceptable in contemporary Canada. Global has chosen a mandate in news gathering and dissemination of same that will help correct this imbalance in our society.

3703 As a country with a past history of ignoring its heroes, Global's money is targeted to not only support the arts but also to inform the public about the achievements and careers of our artists is very welcome. It is our artists with their music, songs, stories and visual artistry who externalize and explain us to ourselves and to the rest of the world.

3704 Certainly our music industry has been extremely successful internationally. You can see and hear Canadian artists and music videos in Tokyo, Berlin, London and Rio, but they might never have been heard of if they had not been extensively promoted with U.S. dollars. Global is responding to this need in our art community. Hopefully, their recognition of this need will lead others to follow.

3705 The latter point leads me to speak about Historica, a new foundation dedicated to increasing awareness amongst Canadians of their country's history and its peoples through a bilingual program that will utilize television and new media to vignette Canada. Global's financial support of the foundation's goals is another example of their objective of informing Canadians about Canada past and present.

3706 In the same spirit, the Canadian Television Fund will be richer because of Global's great grant of $1 million per year for five years to be solely dedicated to the promotion of Canadian programming. Certainly, the industry has become increasingly aware that we have to do more than make good films and programs. We have to promote them to the Canadian audiences who have had such easy access to well-publicized American programming.

3707 Our own industry organization, AMPIA, in Alberta, will benefit from the grant of $500,000 from Global, money that will help the organization to keep pace with all these changes.

3708 Lastly, I wish to speak about the $23.9 million fund for producers west of Ontario. This will give western production companies an added incentive to continue our pursuit of excellence.

3709 I would like to refer here to a children's dramatic series produced this past year by my company. It is entitled "Caitland's Way". It is a runaway hit in its markets and approximately 85 per cent of our crew and creative personnel were Albertans. This example tells us that we have what it takes in Alberta to be competitive and the Global fund will encourage us to work toward continuing to gain the competitive age equal to or even better than our provincial neighbours. I emphasize competitive because I have long been philosophically opposed against protectionism in the form of geographical or regional envelopes.

3710 We must look outward to our neighbours and refuse to become guided only by the standards of a few. We cannot survive in world markets without enlarging our vision, and this is done through a broader competitive base. I firmly believe that our broadcast industry is growing up as well. They are becoming more and more interested in the end product rather than focusing on the biases of the major centres of production.

3711 In summation on this issue I know that protectionism can lead us toward complacency and mediocrity. It did it to a major network in our country; it can do it to the Alberta industry.

3712 Thank you very much.


3713 MS CHAMBERS: Thank you for the opportunity to appear before you today. My name is Brenda Chambers. I'm an independent producer. I'm based here in Vancouver and I'm also here on behalf of the Aboriginal People's Television Network, which I'm a member of their board and their executives.

3714 I'm here today to support the licence application relating to CanWest Global's application before you.

3715 I have been producing television programs for and about aboriginal people for 17 years. I am former general manager of Northern Native Broadcasting in Yukon. I have created and hosted a variety of programs. And I'm also involved in the creation of Television Northern Canada, the Aboriginal People's Television Network, production funds and regulatory discussions.

3716 I have made numerous appearances before this Commission in defence of Aboriginal broadcasting. The last time I was before you was in support of the APTN application.

3717 I currently operate a production company called Brenco Media. I have produced programming from private broadcasters, aboriginal organizations and the CBC. Currently, I'm involved in developing a series called "Venturing Forth" under my company, Brenco Media.

3718 "Venturing Forth" is the first national television program in Canada that will showcase the business achievements of aboriginal women, men and young people uniquely presenting stories of innovation, entrepreneurship and showcasing international trade and expansion for aboriginal businesses. "Venturing Forth" will act as a bridge between the popular perception and the new reality.

3719 I am very pleased the pilot episode attracted the audience of 158,000 viewers in the first couple of months of APTN, one of the largest audiences for them as well. I will be utilizing aboriginal producers and technicians across the country to produce the 13-part series.

3720 Also through my company I'm involved in working with a variety of aboriginal people across the country to develop programs, strategically plan out their productions and consult on a variety of training initiatives. This past January and February I travelled to northern Saskatchewan, Winnipeg, Nain, Labrador, Montreal, Iqaluit, Yellowknife, White Horse and Inuvik -- in three and a half weeks, I'll tell you -- to provide workshops on the business of television to aboriginal producers.

3721 So I know firsthand that CanWest Global's Aboriginal Production Fund will be of great benefit to aboriginal producers and technicians across this country. I have seen the commitment, the dedication and the struggles of independent producers and aboriginal organizations to tell their stories of their communities with few resources.

3722 The CanWest Global Network shared licence will help ensure that aboriginal stories are told across the country. The opportunity to showcase aboriginal stories not only on APTN but also on the CanWest Global Network will help assist the producers of aboriginal programming in getting their messages out about their communities.

3723 In a summary of their tangible benefits, the CanWest APTN Production Fund -- let me just read it because I think it's even more than the million dollar fund. It says:

"CanWest will allocate $1 million over five years to establish the CanWest APTN Production Fund to create programming targeted to content that creates a closer understanding of our country's native and aboriginal roots. This fund will be co- administered by CanWest and APTN, will be made available to independent and native producers. All qualifying productions will be required to have an aboriginal theme and content. APTN will be the primary broadcaster with CanWest stations taking the second window telecast. The fund will address and attract new regional aboriginal production companies and will begin to address the economic imbalance of ensuring access to the Canadian broadcasting system by this important production community." (As read)

3724 And I can't agree with that more.

3725 APTN was very please to recently learn that CanWest Global intends to install a news bureau in Yellowknife. This is an important develop since northern issues and stories rarely make it to the mainstream southern media outlets. APTN looks forward to collaborating with CanWest Global in the north and areas of shared technical and human resources.

3726 So as an independent producer and someone who is committed to the continued development of an aboriginal production company, I have seen and heard too many empty promises that don't go anywhere. I'm pleased that the CanWest application encourages partnership and the continued growth of an industry that I have worked many years to enhance and promote.

3727 Thank you.


3728 MS M. WHITE: Good morning.

3729 I thought I would start by clarifying that I am not Tim Gamble, President of Peace Arch Entertainment.

--- Laughter / Rires

3730 MS M. WHITE: I am, however, Michele White and I'm Vice-President of Production and Development for Peace Arch. As a last minute sort of surprise replacement, because Tim had to be out of town, I apologize if this presentation isn't quite as polished -- my first venture into the hearing.

3731 But I wanted to start by reviewing our initial statement to the CRTC and then just expand upon that a little for you. I'm here today on behalf of all of us at Peace Arch, including our subsidiary companies, The Eyes Multimedia Productions, Aviator Pictures and Toolshed Productions, in support of the CanWest Global applications presently before the CRTC.

3732 Peace Arch Entertainment Group is one of the leading producers and distributors of Canadian television and film programming in western Canada. We have been in business since 1981 and have been a public company since 1987. Our shares are presently traded on the TSE in Canada and the American Stock Exchange in the United States. Consolidated annual revenues for the fiscal year 1999 were over $50 million.

3733 We are delighted to be given the opportunity to make our views known in support of the Global Television Network as a strong national network. CanWest Global has been a strong industry supporter in all regions of the country in licensing, broadcasting and marketing high quality Canadian dramatic documentary and children's programming. Global's acquisition of WIC's television stations only underlines its commitment to a vibrant and growing broadcasting business as part of its plan to become a premier national network.

3734 We are particularly impressed with Global's commitment of nearly $24 million in new sources of financing for western Canadian producers and the promise of a nightly national newscast out of Vancouver, not to mention the $60 million commitment in additional industry benefits in the event Global's permitted to create a national network. This can only strengthen the Canadian television industry and domestic audiences from coast to coast. We encourage the CRTC to approve Global's applications and to recognize a company which has invested millions in Canadian programming and, as a growing international corporation with a strong national conscience, will continue to do so for many years to come.

3735 In terms of expanding on our initial presentation and why we are excited to be here today to support their acquisitions, the acquisitions they seek, and why we believe their proposed benefit package will in fact result in significant benefits to the industry, I thought I would speak now specifically from my experiences as being a member of the production company and its executive producer behind the half hour comedy currently with the work entitled "The Agency" which recently received a 22-episode production order from CanWest Global.

3736 Our experience is that in Global we have experienced a real sharing of the philosophy we have followed in building Peace Arch to the size we enjoy today, and that is recognizing that it's the -- that the future of our industry is really dependent upon recognizing a critical balance that we must achieve between exception creative material and then supporting the material and recognizing and having a sound understanding of the business side of the industry as well. We have just found an ideally collaborative balance in our dealings with Global. They have been accessible and shown a dedication to innovation, to nurturing Canadian creative talent, a certain degree of risk-taking, and then stepping up with the all important significant financial support.

3737 Both the licence fee and the size of the order that we received I believe are unprecedented for any Canadian half-hour comedy. Peace Arch has also made a significant financial investment in this series and the various federal funding agencies have also show approval of our venture with us and we have received approval so far from all those we have approached. This is truly a fully Canadian production.

3738 We are confident that Global's commitment via the Western Production Fund will be a continued positive influence for all western producers.

3739 I also wanted to comment on an issue that I understand has been raised and that we don't believe there should be specific provincial floors to this fund because they will undoubtedly become envelopes. As a producer, I don't really believe that this creates the right criteria for determining investment priorities. I think we have currently enough artificial filtering devices in the industry via the yearly funding agency deadlines which have been created for various reasons, but wherever possible I think that any new initiatives, I think it's critical that they be geared towards the merits of the project.

3740 Another of the benefits in the CanWest Global package that I find encouraging is the Promotion of Programming Fund. It's just another exciting level of support for local producers because it recognizes the necessity in the industry of not only putting the programming on the air but also making sure that Canadian viewers are aware of the programming and when and where to find it on their local dials.

3741 In summary, Peace Arch supports the CanWest Global applications because we believe they reflect the type of initiatives required at this critical stage of the Canadian television industry's growth.


3742 M. THOMSON: Madame la Présidente, Commissioners, good morning.

3743 It is, as always, a pleasure to be here and I thank you for providing this opportunity to present our views on the matter currently before you, the acquisition of Western International Communications' broadcasting assets by CanWest Global Communications.

3744 When Great North celebrated its tenth anniversary three years ago, we received a letter of congratulations from Izzy Asper, Chairman of CanWest Global. In his letter he said:

"Battlescarred as we both are, I wonder whether we should start measuring our longevity in dog years?

3745 I assumed that Mr. Asper was making reference to the number of times that he and I had both appeared before the CRTC in our attempts to have CanWest Global acquire broadcasting outlets in Great North's home province of Alberta. If so, then "battlescarred" was certainly the right choice of word.

3746 We first appeared before you in 1994 in Calgary to argue that Alberta was ready for a fourth English language service and that CanWest Global was the right broadcaster to provide that service. Unfortunately, the Commission decided not to issue a licence.

3747 We again appeared before you in 1996 in Calgary to argue that a broadcaster with a national reach who could pay network licence fees and offer simultaneous national exhibition and provide nationwide promotion would be the right choice for Alberta's fourth English language service. In the end, the Commission disagreed.

3748 Later in 1996, I supported CanWest Global's appeal to Cabinet to have that CRTC decision revisited. Once again, Mr. Asper and I lost the battle and earned a few more scars.

3749 It is now the year 2000 and an opportunity has again arisen for Canwest Global to acquire broadcasting outlets in Alberta -- this time through the acquisition of the WIC stations  -- and I am here once again to support CanWest's ambitions and for the very same reasons that I supported them before the CRTC in 1994, in 1996 and in the Cabinet Appeal -- because the Canadian production industry and, most importantly, the Canadian television viewer, are all best served by the establishment of strong, national broadcasters who are committed to and can support the creation of high-quality Canadian programming through significant licence fees, simultaneous national exhibition and nationwide promotional campaigns that can attract viewers to Canadian programming. CanWest Global, with the acquisition of WIC's Alberta stations, will finally be in a position to do exactly that.

3750 I should point out that CanWest Global's inability to acquire broadcast outlets in Alberta has never stopped them from working with Alberta producers. Great North's first production, the one-hour drama "Life After Hockey", was licensed by CKND, CanWest's Winnipeg Station, in 1988.

3751 Our first documentary series, " My Partners, My People", was licensed for Ontario by Global Television in 1990, as was our first international co-production, "From Spirit To Spirit" the following year.

3752 Our first drama series, "Destiny Ridge", was licensed by what was then known as the CanWest Global Television System for broadcast almost everywhere in Canada except Alberta in 1994, and two years later the CanWest Global Television System ordered 26 hours of the drama series, "Jake and the Kid" from Great North under the same conditions.

3753 So clearly the lack of Alberta broadcast outlets hasn't stopped CanWest Global from commissioning programming from Alberta producers and from paying top dollar for that programming, but it has prevented them from being able to coordinate national exhibition of these projects and from embarking on nationwide promotional campaigns. This has had a huge and negative impact on the number of Canadians that have been drawn to these programs. I remain convinced that "Jake and the Kid", which was a well-produced series, would still be in production if it could have been broadcast on the same day and at the same time across the country, but CanWest Global, without Alberta stations, was not able to do that.

3754 But what we lost in "Jake and the Kid" we may have gained in the form of this application's very generous benefits package. If I recall correctly, the production fund earmarked for the independent production community included in the benefits package in the 1994 application was one million dollars per year for five years for a total of $5 million. The amount was similar I think in the 1996 application. The benefits package attached to this application you are reviewing this week is a staggering $84,290,000 with $23.9 million of that earmarked for a production fund to be accessed by western-based independent producers

3755 In addition to this production fund, other initiatives included in the benefits package such as the National Promotion of Programming Fund, the International Marketing Fund for Canadian Independent Producers, the Canadian Star Minutes and the generous contributions to the Alberta Film Commission, the Edmonton and Calgary film offices, the Alberta Motion Picture Industries Association and the Banff Television Festival will all have a huge and positive impact on the production industry in Alberta.

3756 With regard to the benefits package, and specifically the $23.9 million production fund for western Canadian producers, I would like to go on record as disagreeing with my colleagues from the Alberta Motion Picture Industries Association or AMPIA who proposed in their written submission that there be established a specific envelope within that fund for Alberta producers.

3757 I had the pleasure of serving on the Board of the Canadian Television Fund for four years and during that time we consistently resisted pressures from organizations like AMPIA to create regional or provincial envelopes. My reason for opposing these requests was simply that an envelope is also a cap. Had provincial envelopes existed in 1997 when we were producing "Jake and the Kid" in Edmonton and Doug MacLeod and Tom Dent-Cox were producing "North of 60" in Calgary, no other producer in Alberta would have had access to Téléfilm of CTF funding. Those two series alone would have exceeded the provincial allocation

3758 So we would greatly prefer to have access to the entire Western Production Fund rather than an envelope. I believe that Alberta producers have the skill, the experience, the talent, the landscape and the connections to compete with producers anywhere in Canada. Provincial envelopes would be a step backwards for our industry.

3759 My other concern with the Western Production Fund is CanWest Global's intention to reserve 70 per cent of the fund for dramatic programming, leaving only 30 per cent for children's, variety, documentaries and new media combined. Documentaries are the lifeblood of regional production because they don't require huge production infrastructures, they are easier to finance because the sell internationally better than drama, and there is more shelf space for them in the Canadian broadcast system. I would guess that 80 per cent of the production done in western Canada is documentary or children's and less than 20 per cent is drama. To have a fund that reverses those numbers would result in seeing part of it hugely oversubscribed and part of it unspent. Neither would be good. Therefore I encourage CanWest Global to revisit these percentages.

3760 I would like to say a word about the issue of diversity or concentration of ownership. Great North does not have a problem with CanWest Global owning two stations in the Vancouver-Victoria area or in southern Ontario. We believe we have entered a new world in Canadian broadcasting. Most television viewers no longer differentiate between conventional broadcasters and specialty channels. We don't see any difference between CanWest Global owning two signals in the same area or Alliance Atlantis Broadcasting or CHUM or CTV owning multiple specialty channels sharing the same delivery system.

3761 My only concern is that CanWest does not use the same programming to meet their eight hours per week priority programming requirement on both their signals in the same market, and they have assured me that they will not.

3762 In conclusion, I thank the Commission for providing this opportunity to comment on this matter, and I urge the Commission to approve CanWest Global's application to acquire WIC's broadcasting assets, especially those stations in Alberta. If CanWest Global can become a new player in Alberta's broadcasting universe, speaking for myself and I'm sure for Mr. Asper, the battle scars accumulated over the years of trying to make that happen will have become worth it.

3763 I would be pleased to answer any questions.


3765 Commissioner Grauer.


3767 What I will do is perhaps ask some questions and any of you who want to jump in can do that, but perhaps I can start with you, Mr. Thomson, just because your presentation is fresh.

3768 As you know, we have had discussions with the Alberta Motion Pictures Association, BC Film and with CanWest Global in their initial presentation with respect to production in western Canada, the nature of these funds and, you know, the whole question of the concerns expressed by AMPIA and BC Film about the allocation of these funds.

3769 I take your point with respect to the limitations of an envelope, and in fact with the whole notion of quota. When the CFTPA was here yesterday there was talk about cycling, and I think that happens. I mean, your point about, you know, ending up with a cap with respect to Alberta productions is true, and things move around. But the issue of private broadcaster financing in western Canada over the past few years has not been a very bright picture. We have a complex structure with respect to funding mechanisms, requirements. Some of these are requirements that are a condition of licence with new applications, as we have in both Alberta and British Columbia recently. We have funds. We have provincial funding programs.

3770 I guess, having said all of that, do you believe that what we see on our screens should reflect Canada in its diversity in its entirety? In other words, when we look at peak time programming, that which is Canadian, is it important to the system, and in meeting the objectives the Act and our policy, that that programming look like Canada, maybe not every year and every season, but that people get a sense of what this country is about? And, if it's important, should we do anything, or are there ways to incent the broadcasters to incorporate that as part of their, you know, underlying commitment to serving the Act?

3771 MR. THOMSON: Obviously I think it's important. I think it's extremely important that the Canadian broadcast system reflect our country from coast to coast, but I just don't believe that imposing quotas, regional quotas are the right way to do that.

3772 I think it is -- we have made a lot of progress in that area. You know, when you look at where this industry was 20 years ago, regional production consisted, to a large degree, of the National Film Board's regional offices in Winnipeg and Vancouver and Edmonton and Halifax. Now we have significant production companies in every region of Canada. You have people like Salter Street in Halifax, a publicly-traded company; Creedo(ph) in Manitoba; Mind's Eye in Saskatchewan; Great North, among other companies in Alberta. And Great North is the largest producer of factual programming in the country, and we have been able to establish that position from a regional base using the existing incentives and policies that are in place right now.

3773 You know Téléfilm has always supported regional production. They have regional criteria in their evaluation process to give extra ranking points to regional production. The CTF has done the same, the Licence Fee Program. They also provide extra money for regional production in terms of regional bonuses. So I think all the incentives are there right now, and I think they have been working. I mean, I think the growth of regional production has been quite spectacular in the last 10 to 15 years. Certainly the growth of our company has been quite spectacular in that period of time.

3774 So I think what's in place right now is working quite well.

3775 I think the other thing that's important to note and maybe doesn't come across in some of the studies we look at, especially the ones commissioned by Téléfilm, is that Téléfilm, with all due respect, becoming an increasingly irrelevant player in the financing of Canadian production. That's not a slight at Téléfilm, it's simply the fact that the appetite for Canadian programming is increasing dramatically as you licence new channels, new specialty channels and Téléfilm's allocation stays the same. So the demand for Canadian programming is going up, Téléfilm's allocation is staying the same. Their ability to participate in that programming is dropping. And my guess, and I'm not sure, but I would think that they probably represent somewhere around 20 per cent, they're involved in about 20 per cent of the production that happens in Canada today.

3776 I know at Great North, Téléfilm was responsible for 2.5 per cent of our production revenue last year. So if we only look at Téléfilm's numbers, we are not looking at the true picture. The bulk of what we did last year had no participation from Téléfilm and no participation from the Canadian Television Fund, and those figures aren't showing up in Téléfilm's report. So when reports say that the spending and -- production in western Canada is dropping, that's only from the point of view of Téléfilm funded projects.

3777 COMMISSIONER GRAUER: There's no question, and I had limited my comments -- what I'm talking about is private, conventional broadcaster licensing fees for the priority programming categories that the Commission has. And really my question is -- you know, I mean, the fact is CanWest's record in British Columbia, in particular over the last three years, is they have produced zero notwithstanding the fact that it's a vibrant production centre here and they have a very profitable station in this market. So that was the nature of my discussion with them.

3778 I'm very encouraged by the licensing of a half-hour sitcom, and what I don't want to do is characterize this as necessarily wanting to go to quotas. It's really saying: What should we be doing as a Commission, if anything? Is it something we should be concerned about. Ideally, we don't have quotas. I mean, you know, regulate if necessary, but not necessarily regulation. My question is your views I guess are that it's fine and we can be silent on the issue of licence fees with respect to -- or licensing productions with respect to this transaction in particular, and their activity in western Canada, because there aren't any commitments other than what they have committed to.

3779 MR. THOMSON: Well, I think the $24 million production fund for western Canada will have a huge impact. I mean, that's a lot more money than is on the table in any other fund in western Canada right now, and I'm sure they're going to want to see that spent. So, you know, that is going to have a trickledown effect on the amount of production done.

3780 Other than that, I just repeat what I said before. I think that the incentives currently in place are pretty good and seem to be working quite well. Particularly in Alberta, you know, a lot of people feel that Alberta is badly served by the incentives. But I don't think so. I think that the 10 per cent Alberta grant that we get, while it's a little less than the tax credits that other provinces have because it's a grant as opposed to a tax credit because we get it within six months -- or six weeks of the completion of productions than waiting for the year and a half if you have a tax credit, you couple that with the cost of living in Alberta and the geography that we have there, I think we have a distinct provincial advantage where we are right now, and I don't see any reason why production in Alberta to grow.

3781 And it has grown phenomenally. I don't know if you have the figures, but almost $200 million dollars worth of production happened in Alberta last year of which about 50 of that was indigenous production. We were solidly the third largest English-language production centre in the country now. I know we had a couple of lean years when the government cancelled ANPDC, but as soon as they replaced that with the Alberta grant program, we have recaptured and increased upon wherever we were back in 1996.

3782 COMMISSIONER GRAUER: I'm aware. Thank you.

3783 Maybe what I could do is -- you know, another question I have, I'll ask it and then maybe we can have each of you give me your two bits.

3784 A couple of you have mentioned the national news program out of Vancouver and the public affairs program out of Alberta. I know that none of you would stand to benefit from any of that. It's something that you comment on with your hat as Canadians. I just wonder if you could -- they propose it as a benefit. There will be incremental costs. I would just appreciate your views on how important you think that is with respect to their benefits proposal.

3785 MS M. WHITE: I just thought I would comment that it ties to me -- for our company and our experience, it ties even to the last question, is that it's something that you can feel in the province. It would be before our eyes and we'll feel that real presence, which I assumed would be the case with this national news broadcast and that that's been our experience in production when you talk about the history of Global here.

3786 I just wanted to add further to Andy's comments that it's truly the accessibility that we experienced as being the key element to us, as a western producer experience, the benefits from Global than -- you know, numbers and quotas can be in place but somehow allude you in terms of what you can actually experience in the production dollars, but the accessibility of Global and standing behind what they say is what we have experienced so far. So I was encouraged by that. And I think that it's something you generally feel in the community immediately as opposed to statistics. It's something that would be in the public's eye and they're much more aware of the network.

3787 COMMISSIONER GRAUER: So you would like to see a national news show anchored out of British Columbia and a public affairs -- I mean, is this an important of the Canadian system, I guess?

3788 MS H. WHITE: I would say so. I'm an eighth generation Canadian. I was born in Alberta. I feel very strongly about my Canadian citizenship. I want to be part of a whole country, and at the same time I want to have my voice heard. I want to hear the views of my neighbours. I want to hear local programming. As the gentlemen from Hamilton says, I like to see something that is local, I like to hear local news.

3789 I also appreciate the whole national view of the Vancouver broadcast which will have a western focus included in it. This is very important to me as an individual.

3790 MS CHAMBERS: Yes. The same with me. I do believe that a western focus is very important. I grew up on the Yukon, and that's west and north, and believe me my whole life we have been looked at as insignificant in this country. I think that more of a western focus with national and public affairs programming coming out of here, there's more ties to be able to produce programming that showcases also northern issues as well.

3791 I think the Yellowknife bureau certainly would be a great link to hear as well. So it's another opportunity to showcase regions that have not been showcased on mainstream networks.

3792 COMMISSIONER GRAUER: I guess I don't have any other questions, unless there's anything else that you would like to add.

3793 Thank you.

3794 CHAIRPERSON OF THE COMMISSION: Thank you very much.

3795 MS VOGEL: Thank you, Madam Chair.

3796 I will ask our hearing manager to call our next intervenor.

3797 M. RAMSAY: Nous invitons maintenant Remstar Télévision Internationale R.T.I. Inc. à se présenter à la table.

3798 Merci.

3799 LA PRÉSIDENTE DU CONSEIL: Bonjour et bienvenue.


3800 M. TRUDEAU: Bonjour, Madame la Présidente, membres du Conseil.

3801 Mon nom est Maurice Trudeau, je suis le directeur des affaires juridiques de Placements St-Mathieu. Je suis accompagné de Me Denis Lajeunesse qui est membre du contentieux.

3802 Nous remercions le Conseil de l'opportunité qui nous est donnée de vous faire valoir notre position dans le dossier CTEQ Télévision. Bien que ce volet ne soit pas le plus important de cette audience, il demeure que CJNT-TV constitue un service canadien qui s'adresse à plus de 600 000 personnes de la grand région de Montréal.

3803 Nous ne reprendrons pas ici tous les aspects de l'intervention écrite qui vous fut soumise, notamment en raison des contraintes de temps, mais nous demeurons disponibles pour répondre à toutes les questions qui vont être soulevées et pour fournir de plus amples informations si besoin en est.

3804 Cependant, et compte tenu de l'évolution rapide des derniers jours du dossier CTEQ, il est important de traiter brièvement de certains aspects d'une telle intervention.

3805 Depuis la décision octroyant la licence en 1975 à CTEQ, le Conseil n'a jamais approuvé de changement de contrôle tant de CTEQ que des deux seules sociétés actionnaires.

3806 Le Conseil à ce jour n'a pas voulu intervenir dans les litiges civils qui opposent les parties et les intervenantes souhaitent que le Conseil maintienne une telle position et fasse de même à l'égard du nouveau litige en matière de faillite.

3807 Malgré l'absence de toute approbation de changement de contrôle de CTEQ de la part du Conseil, la gestion et le contrôle effectif de l'entreprise se concentrera entre les mains de Dame Marie Griffith et de WIC à la totale exclusion de M. Milton Winston, l'autre personne à l'origine de CTEQ et de l'actionnaire 2927551 Canada Inc.

3808 A titre d'exemple, il est à souligner que pour toutes les périodes de temps remontant de la mise en ondes de la station en septembre 97 jusqu'à ce jour, ils n'ont même pas pu bénéficier de l'état financier ni faire valoir leurs droits lors de l'assemblée d'actionnaires.

3809 Dans un tel contexte, il vous est respectueusement soumis que le Conseil doit s'abstenir de toute décision dans ce dossier CTEQ, d'autant plus que l'approbation recherchée par la demande qui vous est soumise vise notamment le transfert d'autres intérêts sans dire lesquels et en laissant supposer que le Conseil les aurait implicitement approuvés par sa décision 99-70 du 25 mars 1999 ce qui ne peut être le cas.

3810 Au surplus, CTEQ n'a jamais autorisé la présente demande, qui s'est construit un autre motif pour lequel le Conseil devrait s'abstenir de rendre toute décision concernant cette station de Montréal.

3811 Par ailleurs, en soirée du 12 avril dernier, tout récemment, les procureurs McCarthy Tétrault ont transmis aux intervenantes une réponse à l'intervention alors que CTEQ Télévision Inc., suite à l'implication récente de CanWest, au cours de cette même journée avait procédé une cession en vertu de la Loi sur la faillite et l'insolvabilité, cession qui fut certainement portée à la connaissance de tels procureurs.

3812 Bien qu'une telle faillite soit vivement contestée par M. Milton Winston et par la société 2927551 Canada, qui se sont portés requérants à une requête pour faire annuler une telle faillite, il est étonnant que la présente demande portant sur CTEQ n'ait pas été retirée, purement et simplement, compte tenu que les biens et le contrôle du CTEQ sont présentement dévolus à un syndic de faillite.

3813 On ne saurait dans un tel contexte prétendre que la présente demande vise à sauver la station ou la reconnaissance de droits d'entrepreneurs, comme cela vous fut soumis lors de la présente audience pour d'autres marchés.

3814 Les autres personnes qui tentent de sauver la station sont M. Milton Winston, la Société 2927551 Canada Inc., et les intervenantes.

3815 Une telle réponse fut accompagnée au surplus d'un communiqué de presse énonçant quant à l'avenir de la station, et je cite:

"CJNT-TV ne cessera pas d'exister du jour au lendemain. Nous sommes conscients qu'il existe un public dans la région de Montréal pour un service de télévision multilingue de qualité..."

3816 De souligner M. O'Farrell.

3817 "Nous sommes confiants que le syndic saura trouver une solution qui soit viable à long terme."

3818 Une telle prétendue solution ne s'est pas fait attendre puisque selon nos informations, un processus de vente des actifs de CTEQ Télévision Inc. est déjà engagé et en cours, les appels d'offres devant être pour le 9 mai prochain.

3819 Au surplus, suivant ce qu'a rapporté un article du journal La Gazette de Montréal, il n'est pas exclu que CanWest Global Communications Inc. tente de se porter acquéreur d'un tel actif. En ce faisant, on se débarrasse d'un litige des autres actionnaires et des créanciers.

3820 A titre d'information, il est à préciser immédiatement qu'un tel processus de vente, que toute vente et toute demande de transfert de licence dans un tel contexte feront l'objet, le cas échéant, de vives contestations tant judiciaires qu'auprès du Conseil.

3821 Il demeure cependant, compte tenu de l'état actuel du dossier, que nous devons nous interroger sur la nature réelle de la présente demande concernant CTEQ qui est devenue sans objet et devrait être en conséquence soit retirée ou refusée purement et simplement.

3822 Par ailleurs, une telle réponse à l'intervention et le communiqué de presse l'accompagnant font état que seule WIC aurait financé les activités courantes de CTEQ sans aucun apport de l'intervenante Placements St-Mathieu.

3823 Une telle affirmation vous est présentée erronément puisque par lettre d'entente du

23 février 1998, copie de laquelle se retrouve à la demande 199900931 déposée le 31décembre 1998 par l'intervenant R.T.I., Placements St-Mathieu a convenu alors de différents engagements, notamment qu'au jour de la clôture de la transaction à intervenir, des dettes totalisant 2,200,000 $ soient payées et de payer au surplus tout déficit d'opération de CTEQ Télévision pendant la période de gestion d'un séquestre judiciaire nommé par un tribunal et/ou d'un gestionnaire intérimaire nommé par le CRTC.

3824 Une telle demande de séquestre judiciaire fut effectivement faite dans les semaines qui ont suivi et fut contestée, notamment par WIC qui s'est alors engagée à continuer à financer l'entreprise.

3825 Les apports financiers de WIC furent en conséquence effectués suite à son engagement à ce faire. Il n'est pas admis dans un tel contexte que de tels apports constituent même des dettes de CTEQ.

3826 En bon gestionnaire, Placements St-Mathieu Inc. ne pouvait injecter des fonds sans que des mécanismes de contrôle et de gestion ne soient en place. WIC a pris une décision différente il y a maintenant plus de deux années et personne ne peut aujourd'hui en mettre le blâme sur Placements St-Mathieu.

3827 Finalement, une telle réponse fait état que le format de la station n'est pas viable et que Placements St-Mathieu n'a pas supporté un changement de programmation. En réplique à une telle proposition, nous désirons souligner qu'elle ne tient pas compte des analyses et études faites pour le Conseil dans le cadre de la demande initiale soumise en 1994 et de l'analyse du marché qu'on retrouve à la décision octroyant la licence; qu'à l'égard du changement de programmation souhaité par WIC en 1998, un grand nombre d'intervenants dont au moins un organisme du Gouvernement du Québec, s'y sont opposés; et que la position de l'intervenante, R.T.I. est à l'effet qu'il fallait régler la question du contrôle avant de modifier la programmation et la licence, ce qui a été d'ailleurs la position du Conseil.

3828 Quant à toutes ces plaintes et reproches, les intervenantes soumettent qu'il est malheureux que les personnes ayant bénéficié du contrôle effectif de la station tentent de mettre sur les épaules de d'autres le poids de leur échec.

3829 En conclusion, les intervenantes vous soumettent respectueusement que dans l'état actuel de ce dossier le Conseil doit s'abstenir de toute nouvelle décision et qu'il est même malheureux qu'une réorganisation interne ait pu être effectuée au bénéfice de 3683303 Canada Inc., une filiale de WIC et alors que ni le conseil d'administration de CTEQ Télévision Inc. ni la société 2927551 Canada Inc., le seul autre actionnaire, n'en furent informés.

3830 Présentement CTEQ Télévision est en faillite et des contestations judiciaires sont déjà engagées et d'autres sont prévisibles.

3831 Dans un tel contexte, WIC Télévision de même que CanWest n'ont aucun intérêt à poursuivre plus à l'avant une telle demande devenue sans objet puisqu'au moment présent, seul le syndic est en possession des droits dans la licence. Une telle situation d'ailleurs, élimine pour l'instant toute préoccupation de concentration dans le marché de Montréal.

3832 En terminant, il est à souligner que les intervenantes de même que la communauté culturelle de la région de Montréal souhaitent que les débats judiciaires puissent se terminer rapidement afin de pouvoir relancer CTEQ au bénéfice de tous les intervenants, dont les producteurs locaux, et au bénéfice de toute les communautés de la grande région de Montréal pour qui la station doit profiter en premier lieu.

3833 Nous vous remercions de nous avoir entendus.

3834 LA PRÉSIDENTE DU CONSEIL: Merci. Je ne crois pas que nous ayons de questions pour vous.

3835 M. TRUDEAU: D'accord.

3836 LA PRÉSIDENTE DU CONSEIL: Merci beaucoup d'avoir pris le temps de venir nous rencontrer. Merci.

3837 MS VOGEL: I would like to call Dean Butler to come forward.

3838 I understand Mr. Butler might be with us later today.

3839 I would like to recall the Canadian Independent Record Production Association.

3840 I don't see anyone responding to that, so those are intervenors, Madam Chairperson.

3841 CHAIRPERSON OF THE COMMISSION: Thank you very much. We will take until 11:00 for a break and then we will go for the reply.

3842 Thank you very much.

--- Upon recessing at 1035 / Suspension à 1035

--- Upon resuming at 1058 / Reprise à 1058

3843 MS VOGEL: I would invite Global to begin their reply to intervenors whenever they are ready. We have a 10-minute limit on the presentation.


3844 MR. ASPER: Madam Chairperson, Members of the Commission, we thank you for the opportunity to respond to the comments of intervenors in this proceeding.

3845 As a point of procedure, if the Commission is intending to rely on any documents that were submitted to it in the process of this proceeding, we would request the opportunity to submit documents of our own in response to this evidence.

3846 First and foremost, we wish to express our appreciation for the many over 1,000 voices of support which were filed with the Commission. And we also wish to pay a special tribute to the numerous appearing intervenors who made the effort to travel to attend this public hearing in support of our proposal. The number, strength and the source of those interventions suggests broad-based support for this application and the programming plans put forward to serve all of the markets.

3847 While this hearing has focused on a number of issues, including the matter of making an exception to the common ownership policy, the fundamental issue that this hearing may well have boiled down to is: How many major players should there be in the Canadian conventional broadcasting system? We maintain that Canada may have room for five to ten large media groups, but only three major conventional players. And, we base this view on not only our experience but three recent studies available on the public record: the CAB's Environmental Scan; the PriceWaterhouseCooper study attached to our application; and, the Communications Management Inc. study on market share, which was attached to our response to interventions. All three are unanimous in their confirmation that the Canadian private conventional broadcasting sector is not only fully mature but is now showing vulnerability and signs of decline.

3848 We believe that the combination of the size of our proposed transfer benefits package, which is well in excess of what is required by Commission policy, together with safeguards we have proposed, fully address the question we discussed with the Commission, that the whole is greater than the sum of its parts. We believe that three major private conventional players, including two strong national private network players of comparable size, will unequivocally strengthen the Canadian broadcasting system, and for those reasons, among many others discussed with you on Tuesday, an exception to the common ownership policy is justified in this instance. And as you know there are numerous other examples of where an exception to the policy was granted. Exceptions could be made justifiably on structural grounds in addition to their being made where there's a rescue operation in place.

3849 We would like to now address the specific comments that were raised by opposing intervenors.

3850 Yesterday, we heard from Craig Broadcasting, and they told you that it was absurd to consider specialty services as being important, and that the number of platforms a broadcaster has is not a good measure. According to Craig, specialty services are "nice but not necessary."

3851 What was particularly troublesome about the Craig Broadcasting intervention was their response to Chairperson Bertrand's question about whether it might be better, in a finite market, to have three strong corporate players.

3852 Craig responded that more than three players would be better, that conventional broadcasters should accept lower margins, and that those broadcasters should then direct their energies to other platforms which they have dismissed as not vital to their survival.

3853 We submit that lower margins are not a prescription for putting more and better Canadian television programs on the screens for Canadian viewers.

3854 We also heard from Craig Broadcasting that true diversity could only come from competition. They left out one very important word. True diversity can only come from true competition. By limiting the Canadian television system to one large integrated player, CTV, and having everyone else well behind, which would be the result of Craig's vision for the system, we would have neither true diversity nor true competition.

3855 Craig Broadcasting echoes CTV's argument that CanWest's proposal would somehow create a second national network for CanWest. Although CTV used a catchy phrase, and Craig Broadcasting expressed it in terms of percentages, the numbers just don't add up. The reality is that CHCH and CHEK together do not add up to enough coverage to create anything approaching a national network.

3856 With the resources of CanWest behind them, the stations in Hamilton and Victoria will be stronger local players than they have been in many years. They can work with other stations across the country to amortize program costs, including the Craig stations. But two stations do not another network make. Even with its B.C., Ontario and Alberta stations WIC tried, but they were never a factor, in the sense of being a national network. But they did, by their presence, help cause the massive increase in foreign programming costs that occurred all throughout the 1990s.

3857 It is interesting to note that Craig Broadcasting is in no way affected by this application inasmuch as it is not an incumbent broadcaster in the Ontario marketplace or the Victoria marketplace. In fact, the common ownership of CHAN and CHEK was an existing factor when they applied for a Victoria licence.

3858 In addition, Craig Broadcasting will benefit by the approval of this application because they will be able to buy programming from us in markets where they operate, as we have offered on several occasions. This provides them with an alternative programming source to CHUM. What more could they ask for?

3859 And again, with respect to Craig's assertions of potential dominance in the Ontario market, we wonder how this would remotely affect them, since they have no stations in that market. I am sure the Commission will be able to independently determine that what transpires in the Ontario advertising market will not affect national spot sales nor local sales for Craig in Alberta and Manitoba where they do have stations.

3860 If Craig Broadcasting does have aspirations for Ontario, it remains open to them to apply for an Ontario license, just as they did for Victoria, or seek to acquire one. Most recently Power Broadcasting sold its station in Peterborough. Corus bought it, not Craig.

3861 As for the Friends of American Basketball and their misrepresentation about Canwest not spending as much as others in the system, enough is enough. It's time to put this myth to rest. The fact is CanWest is spending more on Canadian priority programming than any other broadcaster in the entire Canadian system. Those are the programming categories that the CRTC designated as priority.

3862 TV statistics which the Friends' assertions relies on were prepared by the consultant to CTV for the content hearing in 1997. They are misleading at best because they include news and sports expenditures, in other words, profitable non-priority programming categories. CTV has 25 stations and Global has eight. Of course they are spending more on news. They're putting 25 newscasts together.

3863 The fact is Global has lived up to every commitment it has ever made to the CRTC and has, in many cases, over-performed. We will once again table that information with the Commission and we will also reiterate that the money spent on priority programming by CanWest has yielded the highest audiences.

3864 Yesterday, you heard the representatives of CTV tell you that if this application were to be approved CanWest would become too powerful in relation to CTV. In making that claim, CTV used a definition of the market that was just not relevant.

3865 In the short time we have here it will not be possible to answer all of the points raised by CTV in detail, but two well-written rebuttals of the position CTV took yesterday are already on the public record. The first is the Supplementary Brief filed by CTV in its application to acquire NetStar, and the second is a CTV 1999 Annual Report.

3866 Yesterday, CTV excluded specialty services from the view of the market. According to CTV, specialty services don't figure into ad sales and are only useful for cross-promotion. That's what they said yesterday. But in CTV's annual report the story is very different.

3867 We can see from that report that CTV considers specialty channels and their revenues to be an integral part of their operations.

3868 Yesterday, they attempted to skate away from that position by stating that from time to time they take different approaches to market comparisons, or that there are various perspectives of which their view at this hearing is just one.

3869 But they went beyond that perspective yesterday when Chairperson Bertrand asked them why only conventional services should be included. In answering the question, CTV's consultant put some percentages on the public record, and these were identified as being only for the English-language private conventional television market.

3870 But Doug Henning would be proud of CTV, because yesterday in their answer to a question about conventional television, CTV made the CBC disappear altogether. How can we treat with any credibility an argument that excludes over $200 million of conventional TV advertising from the answer to a question about the conventional television market?

3871 While it is disappointing that CTV has taken such an inconsistent approach, it's not surprising. With its acquisition of NetStar, CTV has become a dominant player in English-language television market with a 29.1 per cent share of market revenues based on the real market as described in CTV's annual report, not in their intervention.

3872 If CanWest's proposal is approved CanWest would move to a 25.4 per cent share of market revenues, hardly the dominant position that CTV claims CanWest will have. But CTV would obviously prefer a situation in which they are the dominant player and no one else is allowed to get close.

3873 If you follow the logic of CTV's intervention, they want CanWest limited to a market share of under 20 per cent, in order to keep a larger gap between they and their principal competitor.

3874 While CTV would like you to ignore the significant specialty service assets it owns, they are hard to ignore, Commissioners. The largest of those services, TSN, had 1999 operating income of more than $37 million. That's more than the operating income of all of CanWest Global stations outside of Ontario combined.

3875 Put another way, the profits of TSN and Discovery, which CTV acquired only a month ago, are roughly equal to the profits of all the WIC stations CanWest is seeking to maintain.

3876 And the recent track record of TSN and CTV on Maple Leafs hockey telecast should dispel any doubt about the advantage CTV has in TSN. TSN was able to outbid Global for the broadcast rights of those hockey games and then made a deal for CTV to carry those rights that TSN didn't want. They paid four times, TSN did, the amount of what Global was paying. And there are other examples, like the NFL, which I can get into if you wish.

3877 It's because TSN has a competitive advantage resulting from its dual revenue stream. In addition, it also has the right to request and has quite often taken advantage of simulcast privileges. Indeed, CTV conveniently forgot to mention that all of their specialties provide a significant revenue stream through subscriber fees which conventional broadcasters, like CH, do not have access to.

3878 On the other hand, contrary to Mr. Fecan's assertions, Prime cannot simulcast. Its programming has to be a minimum ten years old. Even the brilliant Doug Hoover has found it very difficult to simulcast a ten-year old program that doesn't appear anywhere on U.S. television.

3879 We are rather shocked that Mr. Fecan, perhaps Canada's most experienced when it comes to U.S. program buying, would have the audacity to state that should CanWest be approved in its entirety this would drive the cost of foreign product up. The CHUM group clearly rebuffed this assertion, and CanWest has stated its expectation of a reduction of foreign program costs as a principal reason for pursuing the WIC assets. You can decide who you wish to believe.

3880 And yes we are receiving an opportunity to increase our profits. How else would we be able to contribute $84.2 million back to the system in benefits and pool the resources to create additional hours of Canadian news, information and priority programming? This contribution exceeds 100 per cent of the WIC profits for last year.

3881 There are a few other issues raised by the Commissioners in the course of our discussion with you on Tuesday.

3882 With respect to the possible reallocation of certain benefits which the Commission discussed, we would be willing to exchange thoughts with you in that regard during our question period.

3883 We would like to respond to Commissioner Wylie's point and her request to propose some safeguards in respect of local news orientation of CHEK and CHCH to ensure that they remain truly local.

3884 In closing I would like to make this observation.

3885 Over the past three days we have been entombed in this room debating, discussing what are ultimately points about the nature of our business and the interaction between the respective players industry. But, thankfully, you Members of the Commission brought us back to what we are here for, what it's really all about, that is: What's going to be on the screens of Canadian television sets this fall and in the future? That's what we are here about.

3886 In 16 short weeks the new television season will be upon us. In homes in Hamilton, Victoria, places like Timmins, we have committed that those television screens will have eight hours of Canadian programming, which is four more hours per week than they receive today. And, Commissioners, it won't be basketball.

3887 If we receive a positive decision within the time frame we expect, that may leave us more like eight weeks to get our program schedule together and launch onto the airwaves, but I view that time frame as a great challenge, an exciting challenge which will require a great deal of teamwork, long hours and late nights to pull off. Hopefully not mine.

3888 The people at Global Television are up to it, though, the people at CHCH and CHEK I now know are up to it, and the hardworking men and women in the Canadian production sector are up to it.

3889 We look forward to the future. We are ready to launch right now into a whole new era of Canadian television.

3890 You know, in real estate law they have the saying "ready, willing and able" to describe a purchaser or seller's position in relation to closing a transaction. Well, here we are, ready, willing and able to step up with hundreds of new hours per year of priority programming on Canadian screens within months. We provide that certainty. You can choose between CTV's hypothetical, their apparition and their unproven suggestions, or you can choose the immediate in-the-flesh solution.

3891 We have, we submit, refuted Friends' claim that taking Hamilton away from millions of Ontarian is a good idea, as well as their misleading statistics regarding Global's performance in the production of Canadian programming. That leaves only two intervenors who are negative: Craig and CTV.

3892 I submit that their interventions at this hearing merely represent a battle of corporate interests masquerading as a contest of principles. We don't deny our interest in this transaction but we believe we have put forward a programming and benefits proposal that is worthy of the nature of the transaction. It's quite simple: CTV wants a weaker competitor after they have been strengthened by buying NetStar; and, Craig wants to buy Hamilton. They're asking you to look into the rear-view mirror while we ask you to scan the road ahead and guide the steering wheel according to what you see and what I hope I have conveyed to you that we too see ahead.

3893 Madame la Présidente, membres du conseil, du personnel.

3894 Je vous remercie beaucoup pour votre patience et vos questions réfléchies au courant de cette audience publique. Je m'excuse de mon manque d'expérience dans ce genre de procès, mais je dois vous dire que j'ai beaucoup appris au cours des trois dernières journées. J'ai maintenant une plus grande appréciation pour les complexités auxquelles vous faites face dans votre travail. Nous reconnaisons que l'ensemble de l'industrie est confrontée par les mêmes questions que nous.

3895 Toutefois, nous sommes d'avis que cette demande ne présente pas un choix difficile pour vous, compte tenu du fait que l'approbation de cette proposition assurera aux auditoires Canadiens une plus grande diversité de programmation Canadienne, laquelle sera accessible plus rapidement que dans toute autre alternative qui aurait pu se présenter devant vous.

3896 Je vous souhaite un bon été, et bonne chance dans vos délibérations. Nous allons maintenant nous tourner vers le travail qui nous attend en préparation pour l'audience publique pour les nouveaux services spécialisés.

3897 Alors, merci et certainement à bientôt.

3898 Thank you very much.

3899 LA PRÉSIDENTE DU CONSEIL: Merci beaucoup. Thank you.

3900 We will take 15 minutes and we will back with some questions relevant to the reply. So before we go for the summer, we still have some work to do.

--- Upon recessing at 1116 / Suspension à 1116

--- Upon resuming at 1143 / Reprise à 1143

3901 CHAIRPERSON OF THE COMMISSION: Alors, legal counsel has a few questions for you.

3902 MS MOORE: Thank you, Madam Chair.

3903 At the outset of your comments you made references to certain documents and a concern about that. Could I ask you to amplify on that, please. What documents were you referring to?

3904 MR. ASPER: Well, in the first case, there is a letter, a very definitive letter, from Mr. Asper to Mr. Eaton several years ago regarding a proposal in respect of CHAN-CHEK. There is CTV's proposal to acquire that they submitted to Wood Gundy approximately one week ago or a couple of weeks ago inviting -- in which they invite CanWest to submit an offer for any assets they may have, which was the response -- which was the letter which proceeded the letter which Mr. Fecan tabled. And, in addition, there was a few pages from the annual report, which are public documents, which we don't need to file with you. But those were the two documents, I think, we would wish to file if required.

3905 MS MOORE: To clarify, with respect to the letter that Mr. Fecan referred to, that has not been accepted on the public record. Does that change your position in respect of the other documents that you --

3906 MR. ASPER: Yes, it would.

3907 MS MOORE: Okay. So there are no other documents that you would wish to file with that knowledge?

3908 MR. ASPER: No.

3909 MS MOORE: Thank you.

3910 Those are my questions, Madam Chair.

3911 CHAIRPERSON OF THE COMMISSION: Thank you. That concludes our questioning. Thank you very much.

3912 MR. ASPER: Thank you very much.

3913 MS VOGEL: We're now ready to begin hearing intervenors with respect to the Corus application.

3914 For the record, Intervenor No. 1, Wayne Plunkett and Intervenor No. 3, Manuel Canales from MediaGroup are going to come in by phone from Toronto so we will hear them one after the other via a telephone hook-up.

--- Pause / Pause

3915 CHAIRPERSON OF THE COMMISSION: Alors, maybe we better make the announcement again, Madam Vogel.

3916 MS VOGEL: Thank you, Madam Chairperson.

3917 We are now ready to move on to the intervenors with respect to the Corus applications. In the agenda, Intervenors No. 1 and No. 3 will be coming via a telephone hook-up from Toronto and I believe we have established communications with those intervenors now. So their intervention will be fed through the sound system and they will be able to hear us as well.

3918 So the intervenor, Mr. Plunkett, is the first intervenor. If he could proceed whenever he is ready.

3919 CHAIRPERSON OF THE COMMISSION: Good afternoon, Mr. Plunkett.

3920 MR. PLUNKETT: Good afternoon. Can you hear me fine?

3921 CHAIRPERSON OF THE COMMISSION: Yes, we do. Please go ahead.

3922 MR. PLUNKETT: Good, because I'm not used to doing it across the country like this.


3923 MR. PLUNKETT: Good morning, Vancouver. I guess it still is morning out there. My name is Wayne Plunkett and I'm speaking to you from the Toronto regional CRTC office.

3924 Very briefly, I have been connected with the Canadian broadcasting industry ever since being one of the originals of CITY-TV Toronto in 1972 and then held senior financial positions in the radio, cable, advertising, television and motion picture distribution industries since then.

3925 Currently, I am a broadcast consultant and am writing a very comprehensive book outlining the history of every AM and FM radio station that has ever operated in Canada from day one in 1919 up to date. Obviously a major project. Thus, I have reviewed the far in excess of 25,000 CRTC decisions over the past 32 years, as well as BBG and CBC Board of Governors pronouncements before 1968. Quite a mountain of paper.

3926 Now I'm going to get into my intervention directly.

3927 I very much appreciate the opportunity to add the following comments to my written intervention and regret that I am not there in person to hear all the dialogue on the various applications by CanWest Global, Corus and Shaw. I will confine my remarks to the previous theme I have developed, that a great danger exists in the overwhelming number of radio stations in Southern Ontario that will be controlled by Shaw/Corus if Application 199917101 by Corus Entertainment Inc. is approved in its entirety with no divestiture requirements.

3928 As you know, barely one month ago on March 24, 2000, Corus was approved to acquire 17 radio stations in Ontario and Quebec from Power Broadcasting Inc. At this public hearing there is an application to add another 12 radio stations to the Shaw/Corus fold, four of which are two AMs and two FMs each in the Toronto-Hamilton overall market. All four of these stations have excellent signals day and night throughout Toronto-Hamilton and for great distances in all directions beyond, with the exception of CHML-900 whose night signal in eastern Toronto and Scarborough is sometimes weak and subject to interference.

3929 Commissioners, I hope you were more than a bit alarmed by the facts presented in Schedule B to my written intervention. The concentration of ownership of stations by Shaw Corus in the whole arc, as I call it, of southern Ontario, from London to Barrie to Peterborough and all parts in between, these are markets ranging in size from Toronto down to -- the smallest would be Collingwood, will give Shaw-Corus a total of 16 existing stations plus four more -- 2 in each of Toronto and Hamilton -- or thus 20 in total out of the overall total of 66 AM and FM commercial stations in the area just described, excluding ethnic -- or, in other words, fully 30 per cent of all such stations would be in one owner's hands.

3930 If that in itself can be rationalized as getting pretty concentrated but perhaps acceptable, then consider the following scenario. In the same area as described above, based on the location of license, the degree of concentration of Ownership becomes much more dramatic, per Schedule F, which follows. I won't read all the markets, but there are 12 markets with a total of 40 commercial stations of which Shaw-Corus would have 12 -- 20, I should say, 20.

3931 Now, we would have a situation where the total of Shaw-Corus stations in the above 12 markets would total cumulatively fully 50 per cent of all the commercial radio stations, excluding ethnic, and please note on the FM side 14 of 25 stations, or 56 per cent of the dominant FM stations in these markets.

3932 I wonder whether this is really what the Commission had in mind when the new Radio Policy PN 1998-41 was released two years ago the end of this month.

3933 From a single station, when Shaw entered the Ontario radio market ten years ago in March 1990 with the purchase of CHAY-Barrie, Decision 90-223, to a potential over-dominant position a decade later if the present application is approved without strings attached.

3934 Thus, the reality of the situation, as I see it, is allowing the purchase of CILQ-FM will give Shaw-Corus three FM stations in the Toronto market. I say that because CING-FM, which is licensed to Burlington and indeed physically located there, is being completely directed to the Toronto market in all facets of its operation, most particularly programming. The City of Burlington with a population of over 130,000, for all practical purposes, does not have a local radio station to serve its populace.

3935 Thus, as I say, the true reality of the marketplace is that Shaw-Corus will have three Toronto FM stations contrary to the maximum two allowed per the revised Radio Policy. Thus, I suggest that either CFNY-102.1, CILQ-107.1 or CING-107.9 should be required to be divested either the Commission's or the applicant's choice, as the Commission may decide.

3936 I also want to highlight a real concern with the past actions of the Shaw with one of its southern Ontario stations, CKDK-FM in Woodstock. This city of over 30,000 residents with a legacy of its own station dating back to CKOX-AM, which commenced in December 1947, has been very harshly dealt with in recent years due to the regionalization policy of the Shaw radio division. Thus, there is minimal local programming being provided to residents of Woodstock and Oxford County now, over the last couple of years.

3937 I can tell you firsthand from conversations with a number of business people and ordinary residents, many of them do not like at all how they have been treated. I fear that this pattern of establishing regional stations by pushing the interpretation of CRTC policies to the limit will continue by deft manoeuvring of programming in some of the stations just acquired in the Power Broadcasting deal and those being attempted to be acquired in this application presently being considered.

3938 I hate to think of even more format duplication than is the present case per Schedule G, which follows. I won't read it out. It's there based on what I interpret the various formats to be.

3939 Very probably, too, there will be further consolidation of group marketing of these stations to prospective advertisers to the detriment of smaller independent stations in the various markets which are all outlined in the ownership breakdown per Schedule C of my original written intervention.

3940 On there, by adding the names up, there are 13 such owner with one station each in that part of Ontario from London to Peterborough, as I described, as well as three smaller broadcasters with two stations each, which are: CJRN 710, Telephone City Broadcast and Tillsonburg Broadcasting.

3941 Undoubtedly, too, in every round of further consolidation there will be significant numbers of job cuts and less positions available for future broadcast school graduates.

3942 I'm sure I have now reached my time limit so I will not try to expand any more on my various points. I simply ask the Commission to carefully weigh all the evidence and facts presented in order to not completely destroy the delicate balance of ownership structure in southern Ontario radio that has been meticulously built up over the years and which has made the private sector of the Canadian radio industry one of the very best anywhere in the world.

3943 Thank you and I would be pleased to answer any questions you might have.

3944 Thank you, Commissioners.

3945 COMMISSIONER WYLIE: Mr. Plunkett, I'm Commissioner Wylie. Can you hear me?

3946 MR. PLUNKETT: Yes, I can, Commissioner Wylie.

3947 COMMISSIONER WYLIE: I'm a bit intimidated because I'm not writing a book on radio, but I would want to ensure that we understand that your point is as follows, that especially in the southern Ontario market, which is a very large extended market, the Commission's policy won't work as intended unless we take into consideration the technical overlap of stations rather than simply where they are situated and denominated as, let's say a Burlington station, an Oshawa station, and possibly, if I understood you well, the program orientation of the station over and above and separately from the overlap technically.

3948 MR. PLUNKETT: Well, my main concern is on the ownership structure of the southern Ontario stations, as I have said. I don't have concerns in the other markets across the country. They are far enough apart geographically that I don't think -- that I think that the Commission's policies work fine. It's just that there has been such a fast development since the new policy two years ago and of course to their credit has tried to take maximum advantage of the changes. Some of this was certainly anticipated by all concerned I'm sure. I just wonder whether this is too much too fast.

3949 Perhaps one of the other things which I didn't state was, if this application is approved and Corus does have the number of stations that I have outlined here, which would be the case, I wonder how far behind the other major players, Rogers and CHUM and Telemedia would be in trying to keep pace, and the possible continuing what I will call detrimental effect to the overall situation.

3950 COMMISSIONER WYLIE: I understand your concern. What I wanted more clarification on is how one meets it. I gather it would be, in part, by technical overlap.

3951 MR. PLUNKETT: Perhaps one suggestion would be that the existing rules and the various policies and regulations are fine except that it probably was not foreseen, until we now have these recent developments, that the southern Ontario market perhaps needs an additional rule or some section to perhaps provide for overlapping markets. I feel that this was not probably anticipated at the time that the present rules were established.

3952 COMMISSIONER WYLIE: You mentioned programming orientation. Would you suggest that if there is an intensely local station, even if there's an overlap, that that would not be a problem?

3953 MR. PLUNKETT: That would be less of a problem. But the trend seems to be that when local stations are bought out, and I don't mean just Shaw's and Corus' management style but just in general, the local stations are becoming more regionalized all the time, and I think to some extent that's probably inevitable, but I don't think it should go as far as presently before us.

3954 COMMISSIONER WYLIE: So I think I understand your position, that in the Greater Toronto Market one should consider technical overlap in deciding whether or not it becomes an exception to the maximum four-station ownership.

3955 MR. PLUNKETT: Right. Or, as I say, consider developing a new policy, and I realize that could only be done after the fact here, that would accommodate these kinds of situations.

3956 COMMISSIONER WYLIE: Thank you, Mr. Plunkett. Unless my colleagues have questions, I don't have any more.

3957 MR. PLUNKETT: I appreciate being heard very much, Commissioners.

3958 CHAIRPERSON OF THE COMMISSION: There is one additional question by Vice-Chair Colville.

3959 MR. PLUNKETT: Thank you.

3960 COMMISSIONER COLVILLE: Mr. Plunkett, David Colville here.

3961 MR. PLUNKETT: Yes, Mr. Colville?

3962 COMMISSIONER COLVILLE: I noted in response to Commissioner Wylie's question you said you had no concern with the other stations because they are geographically far enough apart --

3963 MR. PLUNKETT: You mean in Vancouver and the Alberta situation, Calgary and Edmonton? Is that what you mean?

3964 COMMISSIONER COLVILLE: That's right. The stations in the rest of the country beyond the area that you were discussing with Commissioner Wylie.

3965 MR. PLUNKETT: I'm more familiar with southern Ontario, you know. And I do feel, from my knowledge of Alberta, which would be the only other possible area, that there definitely is overlapping of coverage. Particularly on AM. The major stations in Calgary versus the ones in Edmonton can easily be heard in each market and Red Deer stuck in between. The FM, I feel that there is less of an overlapping of signals and I just decided I took on enough trying to analyze the southern Ontario situation.


3967 My question relates to the southern Ontario situation actually.

3968 I just wanted to say that I noted that you felt the others were geographically far enough apart. So even if we consider the stations that you have listed in your Schedule F, if we take, for example -- and I'm just taking this as an example -- Oshawa, say, as one case and then Barrie as another, would using your argument that the stations are geographically far enough apart -- wouldn't those two stations be considered geographically far enough apart?

3969 I mean, I guess the question is: How does one cut this pie if you're going to talk about overlapping markets?

3970 MR. PLUNKETT: Right.

3971 I feel at this present time that CHAY in Barrie is being directed properly to its local Barrie market. The fact it can be heard fairly well in the northern part of Toronto is a fact of the coverage the station has, but I'm not concerned about that in itself unduly.

3972 And the Oshawa situation, time will tell. Corus just took over the station a month ago. I would be concerned I suppose if they tried to change the Oshawa station into a regional station, like I feel they have done with Burlington, and start to really direct it to Toronto, which would be another signal, as I have said, in the Toronto market and whether it would be to the detriment of the local Oshawa market.

3973 COMMISSIONER COLVILLE: So is your fundamental concern that all of the stations around the fringes of Toronto would all end up being directed towards the Toronto market?

3974 MR. PLUNKETT: Well, I think that approving all this and what I would almost think would revolve after this, that could very well be the ultimate concern.

3975 COMMISSIONER COLVILLE: Okay. Thank you very much.

3976 MR. PLUNKETT: You're welcome.

3977 CHAIRPERSON OF THE COMMISSION: Thank you very much, Mr. Plunkett.

3978 MR. PLUNKETT: I most appreciate it.


3980 MS VOGEL: Now I would invite Mr. Canales of MediaGroup to make his presentation.

3981 MS KENNEDY: Madam Vogel, it's Margaret Kennedy speaking.

3982 MS VOGEL: Yes, Margaret?

3983 MS KENNEDY: Mr. Canales is not here. He will be contacting Mr. Healey in a few minutes. So I would like to thank you and I would like to thank the Commissioners for this special arrangement that you have made for both gentlemen and at this point we will be closing our line.

3984 Thank you very much.

3985 MS VOGEL: Thank you, Margaret.


3987 Alors, we will close ours too for lunch. We will come back at 1:30. Would that be convenient?

3988 MS VOGEL: At 1:30?


--- Upon recessing at 1202 / Suspension à 1202

--- Upon resuming at 1332 / Reprise à 1332


3991 MS VOGEL: Our next intervenor this afternoon is Specialty and Premium Television Association. Please proceed whenever you are ready.

3992 MR. FRASER : Thank you.

3993 Good afternoon, Madam Chair, Madam Vice-Chair, Mr. Vice-Chair, Commissioners. I hope you enjoyed your lunch as much as we did.


3994 MR. FRASER: My name is Fil Fraser. I am here in my capacity as Chair of the Specialty and Premium Television Association and I want to assure you that's the only hat I'm wearing today.

3995 With me is, starting from my left, SPTV's Director of Policy and Regulatory Affairs, Mario Mota. To my immediate right Jane Logan, our CEO and President of SPTV, and next to her Stephen Zolf of Heenan Blaikie, who is our legal counsel.

3996 SPTV welcomes the opportunity to appear before you today, Commissioners, as the industry association representing the vast majority of Canadian specialty, pay and pay-per-view networks. Our 40 members range from networks held by large corporate groups, to public broadcasters, to independent and stand alone networks, including third-language networks and French networks.

3997 Our comments today will focus on the application by Corus to acquire WIC's pay and specialty television assets. We recommend that Corus be required to divest these assets currently held in trust, while we wish to clarify that we take no position with respect to the disposition of WIC's other broadcasting assets, including radio and conventional television.

3998 In our remarks we will tell you why we support the Commission's current policy which prohibits further ownership by dominant BDU's of programming services and how that policy continues to apply to this day. We will also address competition and capacity and respond to points raised by Corus in their supplementary written filings.

3999 In your 1995 Convergence Report, the Commission determined that there was a potential for preferential treatment by cable BDU's of affiliated programming services in areas including access, pricing, packaging and promotion. You determined that the potential for undue preference could only be reduced if transparent access rules were established and sufficient channel capacity became available on cable networks.

4000 In subsequent rulings, the Commission found that market conditions with respect to channel capacity and competition did not materialize, as it had anticipated in the Convergence Reporter. Therefore, its newly enhanced, or enacted -- enhanced they should have been -- therefore, its newly enacted access rules were not having the desired effect.

4001 So, on the basis of this, the CRTC denied further ownership interests in pay and specialty services by dominant (cable) BDUs or their affiliates, pending changes in market conditions.

4002 Is this policy still relevant today? We submit that it is. While we argue that the past 12 months have been characterized by many technological advances, major corporate restructuring in broadcasting and in distribution, and regulatory developments including the digital licensing framework policy, very important, nevertheless, the natural market forces of ample capacity and true competition have not materialized. They have not mitigated the continuing market power of dominant distributors.

4003 Jane.

4004 MS LOGAN: Cable operators currently control about 90 per cent of the Canadian subscriber base, dominating the distribution market. Competitive BDUs, the new entrants, have a mere 9 per cent market share. A number of key observations are warranted:

4005 Nearly half of DTH's market share is made up of customers of Star Choice, which is controlled by Shaw.

4006 DTH's market share has been realized primarily through expanding the subscriber market rather than taking away customers from cable.

4007 The CCTA's most recently annual report shows growth in both residential cable subscribers and total cable subscribers in 1999 over 1998.

4008 And not one cable operator has applied to the CRTC for relief from basic rate regulation as a result of losing 5 per cent of its subscriber base.

4009 These are hardly the hallmarks of "sufficient competition" from the standpoint of our members. Programming services continue to rely on cable to reach about 8 million customers, or over 90 per cent of our total subscriber base.

4010 In fact, we have seen greater consolidation of ownership and increasing market dominance by large cable operators in the past year as they acquire more cable systems. This concentration of ownership is significant, since these companies often negotiate collectively when dealing with programming services.

4011 For pay and specialty services, channel capacity constraints are a reality in reaching the 96 per cent of Canadian cable subscribers who rely on analog service. The roll-out of digital cable has fallen far short of expectations. At one time, cable operators were confident that 15 per cent penetration would be achieved by September 1999, whereas today, the digital roll-out stands at less than 4 per cent. Shaw, which has been an industry leader, has about 7 per cent penetration of digital cable. Rogers last week announced that 77,000 of its 2.3 million subscribers are now receiving digital cable service and it won't be increasing in the near term because of a shortage of digital boxes.

4012 In this limited capacity environment, the potential for undue preference is in the areas of pricing, placement, promotion and packaging, in addition to access. The fact the WIC's pay and specialty services are already been carried by Shaw is not the issue.

4013 Corus argues that capacity issues are resolved in a digital environment, as this is where pay services will primarily be distributed. This ignores the reality that undue preference concerns go well beyond the issue of access. Our concerns in the pay environment include: the role of cable CSRs advising customers on package selection; the number of digital channels set aside for pay and pay-per-view; which customers are served first if there is a waiting list for digital boxes; and of course the other issues relating to pricing, promotion, packaging and contract terms.

4014 MR. FRASER: Corus argues that the undue preference prohibition and other existing regulatory mechanisms are sufficient to allay concerns about self-dealing. We respectfully disagree. There remains a major imbalance of power between dominant distributors and specialty and pay television networks. A distributor has the power to make or break a programming service based on issues such as pricing, channel placement and promotion -- the keys to survival and success in specialty programming.

4015 And while cross-ownership creates an incentive to confer an undue preference, the same power imbalance creates a disincentive for any network to complain about it. That is why the current complaints-driven process for dealing with undue preference yields few complaints. In any case, as the Commission has concluded, an after-the-fact finding of undue preference does not ensure a fair and transparent distribution market.

4016 WIC's pay and pay-per-view services were licensed years ago as analog services. The Commission clearly noted in its digital licensing framework policy that existing pay and specialty services are not affected by the new framework, and will continue to be subject to existing rules.

4017 Both Shaw and Corus have discussed a proposed Code of Access as a way of dealing with these issues, especially undue preference. We are not convinced that a Code is a substitute for the Commission's current policy, which prohibits further ownership by dominant distributors of pay and specialty services. The current prohibition precludes further incentives for dominant distributors to engage in anti-competitive behaviour vis-à-vis unaffiliated programming services.

4018 If ultimately the Commission decides to pursue a Code approach, we submit that the Shaw proposal falls far short of addressing issues relating to fair and equitable treatment of non-affiliated programming services. We have particular concerns about pricing, packaging, promotion, contract terms and so on. Furthermore, the Code approach raises a host of issues relating to effective monitoring and enforcement.

4019 Finally, we're concerned about the process. Developing a Code represents a major public policy shift. In our view, the public interest warrants a full proceeding in which any proposed Code should be subject to public comment and Commission scrutiny. It is too important an issue to be addressed on any kind of an ad hoc basis.

4020 So, in summary, SPTV believes that it is not in the public interest to approve Corus' acquisition of WIC's pay and specialty assets.

4021 We thank you for the opportunity to come here today. Nous sommes prêts à répondre à vos questions. Merci.


4023 I would Vice-Chair Wylie to ask the questions.

4024 COMMISSIONER WYLIE: Good afternoon, madam and gentlemen.

4025 Your position is quite clear in your written intervention and it is clear today in your oral intervention. I just have one area that I would like to explore with you. Do you know how many Shaw subscribers received their pay services with a digital decoder, as opposed to an analog decoder?

4026 MR. FRASER: Madam Vice-Chair, I am going to act as a quarterback and I am going to pass the question to Ms Logan.

4027 COMMISSIONER WYLIE: I understand it is not your company, but it is the services that you represent. Do you have an idea of how widespread that is or if there are still a lot of subscribers who receive pay services and pay-per-view services with an analog decoder?

4028 MS LOGAN: No. I think -- I don't have personal knowledge of the numbers. We know that generally throughout the cable world the penetration of pay television is at about 9 per cent overall.

4029 We know that the penetration of digital cable, which is targeted first at the pay subscribers is at about 4 per cent overall. Shaw has the higher level.

4030 COMMISSIONER WYLIE: But Shaw has a higher level?

4031 MS LOGAN: But Shaw is at 7 per cent.

4032 COMMISSIONER WYLIE: It's 7 per cent. So it would be 7 per cent of their subscribers have a digital box.

4033 MS LOGAN: That's right.

4034 COMMISSIONER WYLIE: Therefore, would you assume that -- I guess they can tell us that most of the subscribers who subscriber to pay services do it through a digital box?

4035 MS LOGAN: That would be my conclusion.

4036 COMMISSIONER WYLIE: Yes. The reason I am asking that is to see whether your view is different with regard to preventing more ownership or higher ownership or new ownership of the services that are at stake here, whether there is a difference considering that it's received digitally between the concern we may have with let's say Teletoon and the Family Channel which is still received on an analog basis compared to the other services concerned, one of which is a DTH pay-per-view and the other three subject to what Shaw has to tell us are probably received in the Shaw territories mostly with a digital decoder.

4037 I would like your views on whether that alleviates the concerns, especially since, as you point out, the access rules still apply because they are still under the rules as they exist, so they would have to be carried.

4038 Secondly, the capacity problem would be different. It's a different environment that has developed, especially in Shaw territory, whether a case could be made that the concerns are less perhaps, the concerns that have been traditionally expressed.

4039 MS LOGAN: You have made my first point, which is that the Commission's current policy continues to apply to the established pay television services.

4040 Do we have fewer concerns about undue preference in this environment because they are digital? I think it was Commissioner Colville who said yesterday that we are, of course, in a transitional environment, an environment which for most services depends heavily on analog and we are transitioning to digital.

4041 With respect to the pay television services, the other issues that concern us in due preference which go beyond access, packaging, pricing, placement, continue to be in play and I listed some of them in my opening remarks. The concerns are how are the services sold and packaged and how does that impact on the rest of the cable offer? What numbers of channels are then allocated to pay-per-view and pay television and how does that affect the ability of other services to launch or be made available?

4042 COMMISSIONER WYLIE: Is packaging not less relevant with pay services?

4043 MS LOGAN: Well, I think in any offer to consumers pricing is always an issue and it is what's your loss leader, what's your high margin service, what discounts are you offering, what free periods and are they all equitable? So those are all issues that come into the discussions of undue preference.

4044 COMMISSIONER WYLIE: And do you think that the -- you speak about Commission policy. The Commission has already established a policy with regard to vertical integration that will be followed when digital services -- where the services are themselves licensed as digital comes into play. How would you -- why would you make a difference between the current pay services that are offered in a digital world at the moment, to the point of requesting divestiture?

4045 MS LOGAN: Well, first there is a huge difference, of course, between networks that have been established for 15 years and are healthy and profitable and the new risky networks that you will be licensing later this year.

4046 I don't want to pretend to read the Commission's mind, but it was understood by many at the time where you allowed flexibility in BDU ownership for these new risky digital networks that you were doing so in order to ensure lots of new services out there and help drive the digital roll-out.

4047 I think when it comes to the pay television services, Mr. Cassaday said, of course, that movies are a driver of digital. But the fact is those services will be a driver of digital regardless of who owns them and they are established today.

4048 COMMISSIONER WYLIE: Do you think that a penetration of 7, 9, 8 per cent is not a risky business? You mentioned that the digital world will be different because it will be very risky, et cetera. I am just trying to see whether there is a distinction to be made between the pay services and the analog specialty services and your concerns. I gather you don't see a difference?

4049 MS LOGAN: I certainly see that the transition from analog to digital is much further along with respect to the pay television services. We continue to have undue preference concerns.

4050 COMMISSIONER WYLIE: My only area of questioning because the rest is -- I read your written presentation and heard you today, unless my colleagues have questions your position is clear. This was the only area that we were trying to think through ourselves, since you had thought of the possible distinction between the two in your concerns. But if you have nothing to add neither do I.

4051 Thank you, Madam Chair.

4052 CHAIRPERSON OF THE COMMISSION: Thank you very much, madam, messieurs. Thank you.

4053 MR. FRASER: Merci.

4054 MS LOGAN: Thank you.

4055 MS VOGEL: I would like to invite MediaWatch to come forward now for their presentation.

4056 CHAIRPERSON OF THE COMMISSION: Welcome. Good afternoon.


4057 MR. POYNTZ: Good afternoon, Madam Chair and fellow Commissioners. My name is Stuart Poyntz and I am the Director of Media Education Programs at Pacific Cinematech, a film institute in Vancouver.

4058 I am also a volunteer with MediaWatch. Irene Brenner, Executive Director of MediaWatch asked that I send her regrets for not being able to attend the hearing.

4059 As you know, MediaWatch is a national not-for-profit feminist organization which seeks to transform the media environment, from one in which women are either invisible or stereotyped to one in which women are realistically portrayed and equitably represented in all their physical, economic, racial and cultural diversity.

4060 MediaWatch has been actively involved in representing consumers who are concerned about the offensive programming by CILQ-FM, a WIC-owned station of the Howard Stern Show in Toronto since it came on Canadian airwaves in September 1997. MediaWatch was one of the many concerned viewers and organizations instrumental in getting it pulled from CHOM-FM, a Montreal radio station, and successful in dissuading CHUM television from broadcasting the television version of the morning radio show.

4061 But also, as you know, the WIC-owned CILQ-FM continues to air the Howard Stern radio show in Toronto and this property is one of many in the course transaction which is the purpose of my appearance today.

4062 The introduction of the sex role portrayal code for television and radio programming states clearly:

"Canadian broadcasters recognize the cumulative effect of negative and inequitable sex role portrayal and seek to address this issue effectively and responsibly with this code." (As read)

4063 It is the contention of this intervention that the continued airing of Howard Stern on CILQ-FM is in direct contradiction of the intent and spirit of the code. The guidelines define negative or inequitable sex role portrayal as referring to language attitudes or representations which tend to associate particular roles, modes of behaviour, characteristics, attributes or products to people on the basis of gender, without taking them into consideration as individuals. Negative or inequitable portrayal of women and men can be both explicit and implied.

4064 As CBSC decision made on February 20, 1998 regarding complaints made against the Howard Stern Show broadcast in December 1998 and January 1999 determined that codes were violated. The decision identifies that the use of the term "pigs" in referring to women was in breach of the provisions of clauses 2(c) and 4 of the sex role portrayal code. The portrayal of women as objects or meat, the emphasis on their height, weight and bust size are issues disparaging to women's self-image.

4065 The Ontario Regional Council of the CBSC determined that the shows manifested a degrading approach to women and that the Stern shows reviewed in the February 20th decision violated both the underlying spirit and express provisions of the sex role portrayal code.

4066 Although CILQ-FM installed a digital time shift recorder in February 1999, it is MediaWatch's contention that there continue to be violations against the code almost on a daily basis during the Howard Stern Show. This is particularly unfortunate given the show's broadcast time of 6:00 a.m. to 11:00 a.m. on weekday mornings, making it accessible to children and teenagers who are more influenced than adults by the attitudes expressed through the mainstream media.

4067 MediaWatch outlined our general concerns to John Cassaday, President of Corus Entertainment, on January 17 of this year. In response, we were informed that Corus is committed to abiding by the CBSC guidelines and would pull the Stern show if it were found to be in contravention of the sex role portrayal code.

4068 To persuade Mr. Cassaday pursuant to this hearing, MediaWatch developed a national research program. We believe that the results of the research demonstrate that despite the editing which Q107 has undertaken, the program does in fact continue to contravene the code.

4069 We hope that Corus will now act on its stated commitment and cancel the program on Q107 as one of the public benefits to this transaction to the purchase of WIC.

4070 Our main argument is that although we appreciate that the CBSC has on two previous occasions ruled the Stern show in contravention of the guidelines, the program continues to air and continues to include material that is degrading to women, despite the station's efforts to edit prior to broadcast.

4071 MediaWatch is convinced that this particular case of systemic sexism, which is not amenable to spot editing, undermines consumer confidence in the self-regulation process.

4072 Even in its edited form, the Stern show continues to not adhere to the spirit and intent of the guidelines.

4073 The intervention today is based on a poll, the results of five days of monitoring of the show on Q107 and an exploratory pilot study done by SFU communications students exploring reactions to Stern on TV. The poll results: To determine the climate of public concern on this issue, MediaWatch commissioned a poll on community attitudes towards standards of taste with Canadian Facts, a national public opinion firm.

4074 The national sample from the survey was 750 Canadians 18 years of age and over proportionate to population. Interviewing was conducted between April 8 and 16 of this year. The confidence limits are plus and minus 3 per cent.

4075 One in four Canadians report they have seen or heard something which they found offensive on the Internet or on the radio last year, but fully one in two were offended by television. Offences were more often reported for depictions of sex, bad language and violence, but stereotyping of women and verbal or physical abuse against women and racism were also found.

4076 When Canadians are offended by something they see or hear in the media the competitor wins. One in two report they will switch to another channel, 41 per cent that they will switch off and fully one in three will talk to others about what they saw, suggesting negative word of mouth may carry large market clout.

4077 Just one in twenty tried to complain to someone, suggesting that a complaints-based system of regulation will catch a very small proportion of those who encounter offensive programming.

4078 Awareness of the Howard Stern Show was lower outside of Ontario, but overall 51 per cent of Canadians have seen or heard something about Stern. Canadians were next read the following description:

"Stern is available on CILQ Radio in Toronto, which is owned by WIC, and may be seen on some satellite TV in Canada. As you may know, Howard Stern is a self-styled shock jock who says his brand of satire talk radio offers equal opportunity insults to women, to disabled and racial and linguistic minorities. Recently, the Canadian Broadcast Standards Council received a complaint against Stern and ruled that Stern's remarks present a threat to the equality of women resulting from degrading and offensive material. The CBSC ordered CILQ Radio to edit Stern's remarks before airing.

"Do you strongly support, support, oppose or strongly oppose the CBSC Council's ruling? "  (As read)

4079 A majority 61 per cent of all Canadians either strongly support or support the editing of offensive material that represents a threat to the equality of women; 23 per cent oppose such editing; 15 per cent are undecided.

4080 MediaWatch continued monitoring the Howard Stern show, selected five sample Howard Stern shows aired on Q107 in Toronto between the hours of 7:30 and 9:00 a.m. We will table a report of the transcripts of that monitoring separate to this brief.

4081 Our findings show that Howard Stern continues to break the broadcasting codes in ways very similar to the earlier CBSC rulings -- and if I can just ask for your indulgence, I would like to read a couple of clips from edited briefs from those shows.

4082 Two shows, one on February 3rd, 2000, Howard Stern says:

"Your sister's a little whore. Bring her down. Let me bang her right here on the show."

4083 Caller:

"You know my sister?"

4084 Howard Stern:

"Yeah. Bring her down. She's a filthy pig."

4085 Follow-up show, March 22nd, 2000, the program documents a contest involving three women who are competing to win breast implants and who are requested by Stern to reveal their breasts to him. A brief excerpt from the show goes:

4086 Howard Stern:

"Now, ladies, let me explain how the game works. I'm going to ask a series of questions of you, much like our `buck billionaire' contest. When you get a question wrong, you'll either be burped or farted on by one of those guys and your face must be right next to it."

4087 Robin quivers:

"Or you get thrown out."

4088 Howard Stern:

"That's right, you get thrown out of the game, so you can avoid these gentlemen's farts and burps. Now, Contestant Number 1 is Julie. Julie, and you want breast implants very badly."

4089 Julie says, "Yes".

4090 Howard Stern:

"And you're very flat. I can't tell. You look beautiful. You got some boobs."

4091 Howard Stern:

"I'll bet you got nice hips and everything. You got a nice ass. Let me see. Turn around and let me see your ass."

4092 He continues on. Howard asks a question. The answer is incorrect. Howard says:

"The answer is `a baseball player'. Unfortunately, you have to get farted on. Bring her over. Bring her over. And here's Jeremy. Now you gotta get your face right in this guy's butt. Here we go, poor girl. Get your face there. Get your face there."

4093 Farting noises.

"I think we have to get you a little closer.

4094 He carries on. Ends by saying:

"Go ahead. Get in there. How did you feel? Humiliating? It's gotta be. All right. You did the best you could."

4095 And there are other excerpts which are -- from the show -- which are going to be in the brief we'll provide.

4096 Our findings show that individually, together and in the context of Stern's general programming trends, these segments of the Stern show contravene four CBSC guidelines covering the interaction of women on TV and radio, questions of diversity, exploitation and program development and acquisition.

4097 MediaWatch intends to file another complaint to the CBSC and is confident of a ruling against the broadcaster, if necessary.

4098 In that case, we would argue that Corus is with -- to Corus that three strikes is more than enough for Corus to call Stern out on Q107.

4099 We trust that the results of monitoring will show that Howard Stern's offensive remarks on radio can speak for themselves. But, as you know, Stern comes into this country on more than radio.

4100 I would like to introduce Nicole Cokay who's an SFU communications student who will talk about a pilot study done at SFU on Howard Stern on television. Nicole would also like to air a brief video segment to give context.

4101 CHAIRPERSON OF THE COMMISSION: Aren't we close to the 10 minutes, now? I think you have --

4102 THE SECRETARY: We are right on the 10 minutes, at this point, yes.

4103 CHAIRPERSON OF THE COMMISSION: So could you please come to your conclusion.

4104 MR. POYNTZ: We can come to the conclusion.

4105 Does that mean that there is no time to air the video?


4107 MR. POYNTZ: Okay. To wrap up. The real position that MediaWatch has on this issue is that, with the evidence from the research, the monitoring, we're disappointed that Corus has not taken the opportunity to speak out on its responsibilities to the guidelines under the Broadcast Standards Council or demonstrated a sensitivity to the Stern issue. We presented data which suggested such offensive programming is not good business, that the CBSC's prior rulings have widespread public support, that monitoring the five sample days of the show on radio demonstrate continued system racism and sexism and that the problem will only get larger with the advent of the U.S. imports of Stern on TV.

4108 The opportunity of this hearing should tell Corus that performance counts and its reputation as a quality family broadcaster is at stake. As a public benefit, on the change of ownership, Corus should cancel Howard Stern. If the company refuses to do so, MediaWatch will mount a formal complaint against the CBSC and on the three strikes out rule Corus should cancel the show.

4109 What MediaWatch also wants to argue is that while we appreciate that the CBSC has, on two previous occasions, ruled the Stern show in contravention of the guidelines, the program continues to air and continues to include material that's degrading to women. The particular -- excuse me. Disabled women.

4110 The ongoing presence of Stern on our public airways also puts into question the relevance of the self-regulation process in any sale or new ownership transaction. Recommendations against Stern by this Commission can help change this trend.

4111 Thank you.


4113 I would ask Commissioner Pennefather to ask the questions.


4115 Thank you for being here.

4116 Your position is quite clear, both in terms of your presentation today and what you have put on file. I can only note that the licence renewal of CILQ-FM does address the fact that the Commission anticipates that CBSC's self-regulatory mechanism will continue to be effective and that, however, we do note the concerns and will continue to monitor the situation and your presentation today is continuing in that direction, in terms of also informing us on what MediaWatch is looking into, and on your discussions with the -- with Corus themselves. Corus has a reply on file -- I'm sure you're aware of that reply and I gather from your presentation you have taken the discussion further with them directly, which is appropriate, I would assume. So I really don't have any questions. It's clear that you're taking the approach that we proceeded to put forward in the licence renewal and public debate continues to be important, which is the mandate of MediaWatch, and I'm sure that media literacy is also high on your list of mechanisms whereby the public themselves can also bring their point of view to the situation.

4117 Thank you for bringing it again to our attention.

4118 CHAIRPERSON OF THE COMMISSION: Thank you very much.

4119 THE SECRETARY: Our next intervenor this afternoon is Concerned Children's Advertisers.

4120 Please come forward.

4121 CHAIRPERSON OF THE COMMISSION: Bonjour. It's a pleasure to have you again.


4122 MS BOOT: Well, good afternoon, and it's certainly a pleasure for us to be here again and we appreciate you receiving us and providing Concerned Children's Advertisers with the opportunity to participate, really, in this landmark hearing.

4123 My name is Sunni Boot and I'm a founding member of this organization and its immediate Past President. With me are Cathy Loblaw, Vice-President and General Manager of CCA, and Linda Millar, Director of Education.

4124 We are pleased to have the opportunity to share with you our support for the Corus application, an application which we believe will bring important benefits to Canadian children, both in terms of media programming and media literacy. It's an application that will strengthen this company's ability to serve, support and benefit these same Canadian children.

4125 As Canada's newest entertainment company, Corus' interest has a rich history and tradition of child-centered values and focus. Through YTV and Treehouse, Corus has contributed significantly to this country's child television landscapes and, with the approval of this application, will be better armed to continue to do so.

4126 From a media perspective, which is close to my heart, this application makes synergies possible and these synergies will allow Corus to enhance its existing programming services for the benefit of young Canadian viewers.

4127 Recognizing the economic limitations of children's television, Corus' priority, its focus and commitment to child programming is, in our opinion, the very underpinning of children's television in this country.

4128 The approval of this application is essential to maintaining and building a rich, diverse and age-appropriate Canadian place for children to spend their television time.

4129 We don't have to tell anyone in this room that the competitive and global marketplace is a reality for Canadian media.

4130 If we hope to preserve and grow Canadian children's programming, we must give our domestic broadcasters the support and the resources to compete and succeed.

4131 This Corus application creates the size, synergies and scope to secure the prominent place for Canadian television within the broadcast system. This will provide children with quality Canadian television because that's what Corus is all about. Through the approval of this application, Corus will be able to extend this commitment in unprecedented and meaningful ways.

4132 Cathy...?

4133 MS LOBLAW: I think it's important today that we also be reminded of our responsibilities in the area of media literacy education for young Canadians. When you consider the amount of time children spend with television -- an average of up to three hours a day -- it's imperative that we, as a country, as companies and as regulators take seriously our responsibility to help children interpret, cope with and understand the television they are watching and the media messages they are exposed to.

4134 Media literacy took center stage as an issue of importance for the Commission in 1995. It became an area of much discussion through the CRTC hearings on media violence and the protection of children.

4135 At the conclusion of the hearings, the CRTC issued its final report. In this report, the CRTC stated that long-term public awareness and media literacy programs will be the decisive factors in changing attitudes.

4136 To encourage the creation and delivery of such media literacy initiatives, the Commission went on to state that they will accept funding of third-party organizations directly involved in media literacy education as a tangible benefit at the time of transfer of ownership or control of broadcasting undertakings.

4137 A significant and important statement that has particular relevance to this application.

4138 It was in response to this that Concerned Children's Advertisers made an industry commitment to contribute to media literacy education that would help children to develop the skills to watch carefully and think critically. That commitment has resulted in the creation of a uniquely Canadian program called "TV and Me", connecting children and television responsibly.

4139 "TV and Me" is a comprehensive program designed for children in Grades K through 6 that delivered the apparent and educator workshops and on-screen television delivery.

4140 "TV and Me" represents the philosophy of learning that addresses current pressing needs in the area of media literacy education and healthy life-coping skills. Written by a Canadian educator, for educators, this child-centered resource fills a void in Canadian classrooms and homes.

4141 To try and help capture and share with you a little bit of the excitement and energy of the program, we have a small video presentation that we would ask you to kindly turn your attention to.

4142 If you could please roll the tape. Thank you.

--- Video presentation / présentation vidéo

4143 MS LOBLAW: Thank you.

4144 A program of this substance, quality and significance does not happen without significant past and future investments and commitments of shared resources and funding. We are deeply grateful and appreciative of Corus' commitment and support; it is making media literacy education a reality in Canada.

4145 Funding, a million dollars in funding in media literacy education will not only be unprecedented in its size and impact but, most importantly, in its value and legacy for our children. Truly a "tall tree".

4146 Thank you.


4148 I'm the one asking the questions this time.

4149 It's quite clear why your support goes to the application, but I would like to get your view. Do you see -- and I understand the importance of such a program and your initiative as an organization in this particular one, but I would be interested in getting your views as experts into children's programming and what you see on the screen, and certainly you don't go into media literacy for children without having kind of a diagnosis on what is the state of television for children, as we speak, in this country.

4150 Do you see that consolidation is really helping? Or, you know, some would say that while we do have consolidation and more focus of some player like Corus on children, well some feel that they don't have that responsibility any more and kind of get away from it. You know. What would be your diagnosis of this situation of children's programs in the country, as we speak, and where do you see consolidation being -- you know, is it an enhancement of children's programming? Or do you see it as neutral? How do you see that?

4151 MS LOBLAW: Maybe I will start and then ask Sunni to comment, as well.

4152 Certainly, we see the Canadian children's television landscape as a very strong landscape and certainly something that we all feel a lot of pride in. One of its great strengths is the diversity that it offers, in terms of the variety and the choice, and we see consolidation as playing a strong role in that in providing, in fact, more choice and in ensuring that the companies have the strength and the resources and the financial viability to be able to invest in children's television and to provide the kind of programming that makes sure that when kids are spending those three hours a day that they're seeing the Canadian experience, Canadian television and television that is age appropriate and enriching to them. In particular, Corus is, in our opinion, certainly the bedrock of Canadian television for kids and really play a significant role in making sure that experience is truly a Canadian one and truly one that's appropriate to their development -- and I know that Sunni would like to build on that.

4153 MS BOOT: Actually, you were -- you pretty well captured everything, but I would like to just maybe point out to the Commission that the big concern that we have is that if we don't have a strong consolidated player in the children's market, we could find ourselves inundated with foreign programming.

4154 Canadian children's programming right now, I think, enjoys a tremendous reputation around the world. So there is an opportunity to build on that and to export our product, and we very much see that everything that Corus has done and we have reiterated many times but, because there's such a focus on children, because they program it so well, it is age appropriate, it is a good balance of what we can get from other countries around the world but it also has such a Canadian bent. And, actually, what they're doing with the whole product, with YTV and Treehouse, I think what this will give them is a greater financial basis to build on that and to really have Canadian voices, not just for Canada but also maybe for the world, we have got something very good happening here, with programming.

4155 CHAIRPERSON OF THE CHAIRMAN: What happens, from your experience and your analysis, to the children's viewing, per se? You know, it's one thing to provide the windows and the strong presence, but do children come to the rendezvous? Are they there? Or do they choose other types of programming not necessarily meant for them?

4156 MS BOOT: They will migrate outside of what we would like to say are typical children's programming. They will migrate to prime time programming, to all family programming, and certainly numbers would support that. All the more reason for media literacy, by the way, because there is such a concern for children who are maybe viewing unattended inappropriate programs. But basically it is a very healthy market. If we can continue to provide -- and let's face it, at the end of the day, we need good entertaining programs, too -- so if we can provide that, they will come and view those programs. They certainly are going to Web sites -- and YTV also has an excellent Web site -- so, you know, they are certainly looking at multi media. But I still believe -- and BBM and Nielsen numbers bear this out -- that the largest concentration of child viewing still is in appropriate times early morning, after school and during family time periods.

4157 I don't know if I've answered your question but...


4159 MS LOBLAW: And certainly, from a media perspective, television continues to dominate children's --

4160 MS BOOT: Totally.

4161 MS LOBLAW:  -- children's activity and children's media.

4162 I mean there's no question that the Internet is growing at a rapid pace. But when you look at the numbers, television is still that dominant force in children's lives. And that's why, from our perspective, it's so important that we make sure that television time, that they have the media literacy skills to be able to deal with what they're seeing and to develop an appetite for television in a way that's healthy and appropriate to their individual choice and that we are, from a programming perspective, making that television as strong and Canadian as possible.

4163 CHAIRPERSON OF THE CHAIRMAN: Well, thank you. I don't have any questions, and I don't think my colleagues have.

4164 Thank you.

4165 MS BOOT: Thank you.

4166 MS LOBLAW: Thank you.

4167 THE SECRETARY: Our next intervenor is Alberta Motion Picture Industries Association.

4168 Would you come forward, please.


4169 MS EDWARDS: Good afternoon.

4170 Again, for the record, my name is Connie Edwards. I'm the President of the Alberta Motion Picture Industries Association.

4171 I would like to thank the CRTC for the opportunity to intervene on Corus Entertainment's acquisition of WIC's pay television and satellite assets.

4172 As you have heard, but for the record, for 26 years, AMPIA has represented independent producers and members involved in all aspects of the film and television industry in Alberta. The mandate of the Association is to ensure the growth and development of the indigenous industry at the producer, technical, talent and craft levels. Central to this mandate is maintaining an environment in which Alberta's producers can initiative, develop and produce films and programs over which they have creative and financial control.

4173 AMPIA supports the proposed $12.5 million television benefits package out of an asset value of $114 million. These include the Family Film Project, the Teen Drama Project, Canadian Children in the New Millennium, Young Filmmakers Co-Operative, Media Literacy Initiative, APTN/YTV Initiative, Export Initiative and the Corus Banff Program, under conditions that maximize benefits to the Alberta independent production sector.

4174 In practical terms, since the WIC pay television assets derive a significant portion of subscription revenues from western Canada, AMPIA feels it is reasonable and proportionate that benefits accruing from these initiatives be reserved for projects owned -- or, at a minimum, 50 per cent co-owned -- by independent producers who are resident in the service area. This would include B.C., Alberta, Saskatchewan and Manitoba, Yukon Territories, Northwest Territories and Nunavut.

4175 AMPIA, as you know, has an ongoing policy of lobbying for a fixed percentage or dollar amount of benefits to be allocated to Alberta independently-produced projects in order to guard against any potential regional inequities. However, Shaw has demonstrated a commitment to allocate funds equitably on a geographical basis via the Shaw's Children's Programming Initiative and, therefore, in this case, we are prepared to trust that this policy will also inform Corus Entertainment's allocation of their new proposed benefits.

4176 Regarding the terms of promise, AMPIA would recommend that these benefits be expended over a five-year period, in order to correspond with the benefits term proposed by CanWest Global, in regard to their acquisition of WIC's free television assets as part of this overall transaction.

4177 With regard to the portion of the funds that would be allocated to equity investment, as was put forward in our intervention, we have noted Corus' response and are satisfied that the investment will be recouped on a pro rata and pari passu basis with other investors and that all moneys contributed to production under Corus' tangible benefit initiatives will be incremental to the programming requirements and any returns from the equity investments will be reinvested in incremental Canadian programming initiatives.

4178 Regarding the issue of the management of these new benefits, AMPIA recommends that the existing administration in place in Calgary manage the funds under the Shaw Children's Programming Initiative. It is ideally situated logistically, geographically and philosophically to administer these new initiatives on behalf of Corus Entertainment.

4179 We note in their response that Corus would not be opposed to this recommendation if the Commission considers it appropriate.

4180 AMPIA is gratified to see, in the Corus Entertainment executive summary, that these new benefits will of course be incremental to the existing licence commitments of the existing WIC pay licences for Superchannel, Moviemax, Viewer's Choice, Family Channel, VOD and Cellular Vision. The principle of incremental benefits is a key concern for AMPIA and reflects principles of the CRTC.

4181 AMPIA would like to note that, in the past, WIC pay television has been a valuable partner for Alberta independent producers -- and as we had discussed yesterday, the value of meeting with people in your own region is great and is very good for the producers.

4182 We were pleased to note the commitment that these assets will continue to be managed from Edmonton facilities, provided that licensing and investment decisions continue to reside with local managers.

4183 YTV is currently underdeveloped in its licensing co-production commitments with Alberta independent producers and AMPIA seeks initiatives that would address this situation, such as regularly scheduled visits to Alberta by YTV programmers and co-production executives.

4184 We also suggest, as in our intervention, that in addition to the development in equity dollar benefits that Corus put additional dollars into licence fees over and above those proposed benefits. While development in equity funds are of great value to our industry -- and, again, similar to what we said to you about CanWest -- these licence fees would help to trigger additional funding necessary to complete the financing of the productions and get them onto the screen.

4185 In closing, AMPIA offers support for the Corus Entertainment application, with these above caveats. AMPIA looks forward to working in partnership with Corus in its pursuit of programming excellence.

4186 Thank you for this opportunity, and we would be happy to answer any questions.


4188 I would ask Commissioner Grauer to address our questions.


4190 I won't really have too much to ask you about today because I think we covered a lot of territory yesterday.

4191 Were you here this morning when we had the panel of producers here?

4192 MS EDWARDS: Yes, I was.

4193 COMMISSIONER GRAUER: As you know, we had a bit of a discussion about the issue of quotas and ceilings and floors and whatnot and, in light of that, I know you made a point of saying that AMPIA has a policy of requiring percentages. But I wonder if you would just comment on the views expressed by Mr. Thompson, in particular, and some of the others, about envelopes and...?

4194 MS EDWARDS: I think, you know, certainly everyone is entitled to their own opinion. I have nothing to say, you know, in terms of being opposed to that position on their part. What I found interesting was B.C. Film Commission who suggested -- and this may be -- this was very interesting -- part of the problem is trying to get out to that table, trying to let people know that we are experienced, we have good quality programming, we have got the facilities, we have the personnel to produce good Canadian programming. So perhaps, as was suggested -- and quotas are so difficult. We understand the business mechanism of this and that quotas are not necessarily the best way to go about it. Sometimes you have to implement quotas at the beginning and perhaps, then, phase them out, as the proof is in the pudding, if you will. So that was very interesting -- interesting notion that the B.C. Film Commission had.

4195 COMMISSIONER GRAUER: Well, given that -- well, let me phrase it another way.

4196 MS EDWARDS: And perhaps, if I could just elaborate, too, certainly there are lots of success stories in Alberta. There are also some of the, let's say, smaller producers that do need that little additional boost to get onto the national screen -- and I think that's why we -- asked for quotas. And especially when you look at the asset value, you want to make sure that you are seeing dollars in the community in a meaningful way.

4197 MS JANZEN: If I could just make a couple of additional comments.

4198 Part of the issue this morning related to what's happening in the community. And I think while overall in some areas it's just documentary or educational programming, things are going well. The statistics on the drama end, which is one of the key priority areas for the CRTC, remains rather abysmal -- a drop from roughly 24 million to 3 million. That's a huge concern and a key issue.

4199 The other issue is we -- well, what have been doing is looking at a transaction-by-transaction basis. So, for example, if you look at A channel when -- AMPIA has supported A channel. A channel made some very serious commitments to Alberta, and they have lived up to their commitments.

4200 In the case of Shaw, there's no specific envelope, but Shaw has worked very hard with the Alberta community and they have demonstrated a very close relationship.

4201 Our concerns on CanWest were on their record. And it's -- I think that -- I don't think there's any person that would say, "Let's stick to quotas to, you know, to tie ourselves in". The issue is, is there going to be -- is there a trust in a situation where there is going to be a strong relationship and commitment to where those assets are coming from. That's what our concern with CanWest. That is not our concern with Corus because of the very strong relationship between --

4202 COMMISSIONER GRAUER: And we should probably stick to Corus and to finish with CanWest but -- thank you very much. I think we have had a good airing of this issue over the course of the proceeding.

4203 Thank you.

4204 CHAIRPERSON OF THE CHAIRMAN: Thank you very much.

4205 THE SECRETARY: Our next intervenor this afternoon is Friends of Canadian Broadcasting.

4206 Would you come forward, please.


4207 MR. DUKE: Thank you. It's nice to be back before you again, on this different issue.

4208 Madam Chairman, Members of the Commission, we appreciate the opportunity to appear before you.

4209 From documents filed by the applicants, and as Commissioner Colville established yesterday, Friends note that one individual, J.R. Shaw, controls 77 per cent of Corus Entertainment's voting shares and 76 per cent of Shaw Communications' voting shares. Shaw and Corus are, therefore, affiliated companies. Their recent structural separation by J.R. Shaw is an attempt to respond to Commission policies limited increased ownership positions and specialty and pay licence fees by cable multi-systems operators.

4210 In its convergence report to the government, in 1995, the Commission noted that -- I quote:

"While competition in distribution is evolving, cable companies still exercise control over the delivery of most broadband services, and effectively control the bottleneck for the delivery of entertainment services to the home. The existing market power of cable companies provides the potential for preferential treatment of affiliated broadband services. The opportunity for preferential treatment, particularly in light of limited channel capacity, requires that more comprehensive access rules be established to deal with price, placement and packaging."


4211 At that time, the Commission determined that this concern would dissipate only after a combination of, first, access rules on price, packaging and placement, next, competitive broadcast distribution and, thirdly, digital compression technology were all in place.

4212 Ian...?

4213 MR. MORRISON: The 1997 broadcasting distribution regulations state that:

"No licensee shall give an undue preference to any person, including itself, or subject any person to an undue disadvantage."

4214 And added, in its public notice, that this prohibition applied to all matters related to the acquisition and distribution of programming services but will, more generally, apply to all broadcasting activities of BDUs.

4215 In its 1998 Sportscope decision, the Commission referenced the convergence report and the BDU regulations policy statement in denying Shaw permission to acquire 48 per cent of Sportscope because anticipated market competition and increased capacity had not taken place, therefore, concerns over the potential for undue preference remained.

4216 The Commission also cited Shaw's dominant market position, as well as its horizontal and vertical integration, as factors that could lead to anti-competitive practices and gate-keeping behaviour.

4217 In its subsequent SportsNet decision, denying Rogers Communications permission to increase its voting interest in CTV SportsNet from -- to 40 per cent from 20 per cent, the Commission referenced the Sportscope decision and stated:

"There remains insufficient channel capacity on cable networks and insufficient competition among distributors to overcome concern related to the potential for undue preference in the cable carriage of affiliated speciality or other such broadband services. Until these circumstances change, cable licensees and their affiliates should generally be prohibited from acquiring or increasing their interests, held either directly or indirectly, in programming undertakings other than those that provide over the air radio or television services."

4218 Just last year, in its French language specialty licensing decision, the Commission acted further on its policy concern over the potential for undue preference by limiting TVA's voting interest in licensed specialities to less than 10 per cent because of its affiliation with Vidéotron.

4219 TVA/Vidéotron, Shaw/Corus, they're both affiliated, structurally separate and publicly-traded corporations.

4220 Last year, the Commission required Cancom to divest ROB-TV because Shaw, the parent, would indirectly acquire a partnership interest of 10 per cent or more in ROB-TV.

4221 Thus, the Commission has developed a standard for evaluating applications by entities which are affiliated with dominant BDUs to acquire or increase a voting increase in a specialty or pay licence. Faced with concerns over vertical integration, the Commission has not hesitated to impose conditions, or even to require divestiture, even in cases where the investment does not involve control over but merely a significant interest in a specialty service.

4222 Chairperson Bertrand, you said, at the 1998 Cable Television Convention:

"Notwithstanding the introduction of competitive forces, at this point in time cable remains the dominant form of programming distribution in Canada. It has the power to make or break a programming service via access, and as such has the most important role in programming distribution."

4223 To alleviate the Commission's policy concerns, an applicant would need to demonstrate that the tests of ample channel capacity, a competitive BDU market and the roll-out of digital compression had all been met -- Daryl pointed out earlier.

4224 Friends notes that the Corus application, one, asserts abundant digital capacity in Shaw's systems while ignoring the low -- well, 7 per cent is not low by industry standards but it's low in terms of the total subscriber base -- penetration rates of digital which Shaw has thus far achieved and it fails to note that the properties it seeks to acquire are currently distributed in analog format and, therefore, that analog capacity is the undue preference matter at stake and it fails to address the matter of anti-competitive behaviour and undue preference in pricing, promotion and packaging.

4225 The onset of competition in the distribution market is evolving much more slowly than projected by the cable industry. Friends notes that no cable licensee has applied for basic rate deregulation -- an indication that none may have lost even 5 per cent of their subscribers to competitors; the 1999 CCTA data suggest that there may be only one million digital subscribers 2006 and current CCTA projections vary from 1.3 to 2.5 million digital subscribers by 2005 -- that would be digital penetration of only between 12 and 28 per cent five years from now; and, finally, the Canadian DTH competitors reach only 800,000 households, one-tenth of the penetration of cable, and the majority of those households are not passed by cable.

4226 In its applications, Corus argues that it owns no BDUs, that Shaw doesn't it and it has lots of diverse non-voting shareholders.

4227 These statements are true but totally irrelevant to the issue of undue preference.

4228 Corus goes on to assert that its structural separation from Shaw offers a safeguard against undue preference behaviour. Not so.

4229 Undue preference concerns arise from the alignment of interest of Corus and Shaw that result from their affiliation, creating an economic incentive for Shaw to treat programming services in which its affiliated company has an interest, or control, in a preferential manner. The structural separation of their programming and distribution activities does not in any way attenuate this incentive.

4230 While the above concerns may, in and of themselves, lead the Commission to deny Corus' applications, Friends wishes to add a further consideration; namely, ample evidence that, through its past and its current behaviour, Shaw has demonstrated a sustained record of providing undue preference to specialty and pay services in which it has an interest, to the disadvantage of those services which operate at arm's length.

4231 Friends notes that many of the executives responsible for this pattern of conduct are now in leadership positions with Corus. A few cases:

4232 In the year following Shaw's investment in Telelatino, that service's penetration increased from two million to 2.8 million subscribers -- the data comes out of your -- came out of your cable television database -- mostly on Shaw systems.

4233 Friends has heard credible reports that Shaw did not pay fair market value for its investment in Telelatino, instead offering to increase Telelatino's penetration in return for an equity share. We urge the Commission to inquire from Corus/Shaw whether this report is true or false.

4234 Within a month of its Sportscope purchase, subsequently denied by the Commission, Shaw placed Sportscope on its basic tier, while placing other newly licensed services on optional tiers.

4235 Similarly, Treehouse TV, a Shaw affiliate, was carried by Shaw on basic from its 1997 launch, while some other non-Shaw licensees of the same vintage were placed on Shaw on lower penetration tiers and still others were refused coverage.

4236 Shaw delayed the carriage of CBC's Galaxie for several months by negotiating in bad faith, all the while promoting a competing service in which it had an interest. This behaviour ended only once Shaw's WIC investment suggested a forthcoming CRTC hearing.

4237 Contrary to Commission policy, Shaw has used time allocated for local advertising in the signals of U.S. specialty channels for promoting its telecommunications services, such as high-speed Internet.

4238 MS VOGEL: Excuse me, we are past the 10 minutes. Could you wrap up, please?

4239 MR. MORRISON: Sure.

4240 MS VOGEL: Thank you.

4241 MR. DUKE: Madam Chair, Friends relates this litany in order to make the point that the leadership of Shaw/Corus has displayed a pattern of conduct which suggests to reasonable observers that they are prone to engage in undue preference behaviour.

4242 Friends recommends that the Commission maintains its current policies, which would prohibit Shaw's affiliate Corus from increasing its ownership position in these analog specialty and pay licensees.

4243 Friends therefore recommends that Corus be required to divest itself of the specialty and pay services in question.

4244 Thank you, Madam Chair, Commissioners. We look forward to your questions.


4246 Probably legal counsel will have a comment after Vice-Chair Colville who will ask you the questions.


4248 Good afternoon, gentlemen.

4249 Your presentation this afternoon was virtually identical to the written brief that you had sent us earlier with one notable exception and that was the deletion of the last paragraph of the written presentation, which was a recommendation that -- your first recommendation was to deny the acquisition of the premium and pay services, but in the alternative you have suggested that Corus pay and specialty acquisitions be approved only on condition that the current controlling shareholder be required to reduce its holding to 29.9 per cent. I guess I am curious to know why you deleted the alternative now, or is that still there?

4250 MR. MORRISON: Commissioner Colville, as I look at you you are wearing a halo the way you are framed and, therefore, I will be very respectful. We were trying unsuccessfully to stay within our 10 minutes and if we said it we'll stand by it.

4251 COMMISSIONER COLVILLE: So that still is your position as the alternative one.

4252 In that case, I am curious then to know given the strength of your position about the concerns here why you would be satisfied at 29.9 per cent?

4253 MR. MORRISON: Well, maybe we shouldn't be, Commissioner. I have a lot of trust for the skills and capacity and judgment of the Commission. I think what is most important here is the principles that we are putting before you and the evidence, and I have noticed in other decisions you kept people below 10 per cent. So, I must not put the last paragraph, which we decided to ditch, as our top priority advice to you.

4254 COMMISSIONER COLVILLE: No. I raise the issue because you have raised a concern here about incentive and opportunity for preferential treatment. I guess I was curious when I read that if you -- when I read your original brief and I got all the way to but the last paragraphs I thought that's pretty clear, and then, as I say, I was kind of curious wouldn't the incentive and opportunity still be there at that level?

4255 MR. MORRISON: Yes, maybe you are right.

4256 COMMISSIONER COLVILLE: Now, having read this brief, I mean I understand your point about the principle of the issues here, the points that the Commission raised in the Convergence Report and the other statements that you referred to on previous decisions that you referred to. I guess I am wondering how much of this is an issue of principle for you and how much of it actually relates to the specific services that are involved in this application because of the nature of the services?

4257 MR. MORRISON: The pay nature of the services?

4258 COMMISSIONER COLVILLE: The pay nature, yes.

4259 MR. MORRISON: If there was a principle here I guess when you are concerned with applicant A's benefits package, you are always thinking about somebody else with a benefits package down the road. The Commission operates on a precedent basis. Don't reward people who misbehave would be the principle behind it.

4260 And with respect to the details, we think it's an error to assume that digital capacity is unlimited and we can quickly calculate circumstances where 10 moves of 100 minutes' duration, starting every five minutes, occupy 200 channels and the 10 to 1 ratios that you have put forth mean that licensing 10 or 20 -- all of a sudden digital would be like a large hard disk filling up faster than you expected it to.

4261 So we don't accept the notion that, I will put it more succinctly, we agree with the Specialty and Pay Television Association.

4262 COMMISSIONER COLVILLE: In the brief, your written submission and again today you said, I guess it's page 5 on today's, of the three bullets the second one was:

"fails to note that the properties it seeks to acquire are currently distributed in analog format, and therefore that analog capacity is the undue preference matter at issue;"

4263 Now, in their written response and again in their presentation yesterday, Shaw/Corus had indicated that the premium services are carried on digital in virtually all cases now. Would that alter your view in any way?

4264 MR. MORRISON: No.


4266 MR. MORRISON: It's a question of degree. I was trying to save you time by saying that the exchange between Vice-Chair Wylie and Jane Logan, we would stand beside Jane Logan.

4267 COMMISSIONER COLVILLE: That's her view. You spent a lot of time in your presentation relating back to us our view and our view has historically been that we were fundamentally concerned about the availability of analog capacity. Our position was established in the Convergence Report around the concern over analog capacity. I guess you are saying you adopt SPTV's view and you would extend that concern to digital capacity.

4268 MR. MORRISON: Yes. We do not accept the notion that digital saves everything, but I don't wish with your time constraints to try to repeat anything, but access is by no means the only issue in an undue preference. We can see circumstances in the digital world where there will be significant problems for undue preference beyond mere access.

4269 COMMISSIONER COLVILLE: Okay. Those are all of my questions.

4270 Thank you very much. Thank you, gentlemen.

4271 CHAIRPERSON OF THE COMMISSION: I have a question. You haven't talked about radio. Do you have any views on the radio?

4272 MR. DUKE: May I answer that question, Madam Chair? I noted with some concern, despite repeated questioning by Commissioner Colville yesterday to Corus, that there seemed to be no need from the applicant to alter its application from the status quo.

4273 In fact, both applications that have come before you here in Vancouver seem to accept the status quo as being okay and that that status quo can continue on and on into the future.

4274 Commissioner Colville asked, well, don't you see anything beyond kids and music, kids and music, kids and music and he asked repeatedly and got nothing forthcoming.

4275 That concerned us greatly because the status quo cannot continue in this region. We are here where these applicants both come to this region and you are here and we are hearing these two corporations come to a region where the Premier is an Indo-Canadian for the first time in Canada's history, Ujjal Dosanjh. The Lieutenant-Governor, the previous one was a Chinese Canadian, David Lam. The present Chancellor of Simon Fraser University is a Chinese-Canadian. Thirty-one per cent of the Vancouver school districts speak a Chinese language, Mandarin or Cantonese. Some 45 per cent of the Vancouver school districts speak an Asian language. North and West Vancouver have the second-largest Iranian community in North America. There is over a quarter of a million Indo-Canadian citizens here and yet with all this evidence around them they come here before you without a single bit of acknowledgment that the status quo cannot continue, that Corus and CanWest, incidentally, have both come from a kind of white broadcasting world and think that programming can continue on as before.

4276 I was astonished to see the lack of responsiveness to the Commission's questioning yesterday, and that neither of them have showed any acknowledgment in their applications that there are very unique social, ethnic, cultural and linguistic changes going on in this region.

4277 So that I would just like to observe when it comes to radio or television, but radio is what we are concerned about at this intervention, that censorship, Madam Chairperson, is not from government today but from corporations; and racism is not from government, but from corporations; and lack of innovation is not ordained by you or by government, but is coming from lack of innovation is coming from corporate use of the opportunities that you were giving it and from corporate power. It's lack of innovation that is evident in the lack of responsiveness to Commissioner Colville and I think in both applications that we heard here today.

4278 This lack of innovation and following American models that is really to my mind detracting from both applications.

4279 MR. MORRISON: Ten seconds more only. We could have spent energy on radio. We thought we were active in your policy development on radio. We understand that Corus is pushing the limits and that your policy entails a judgment call on any given transaction. I think that the issue has been well aired here.

4280 Specifically, we would obviously endorse MediaWatch's intervention, radio related, invite Corus to indicate that it will clean up its predecessor's act, but our focus was on the 10 minutes or it turns out 11 minutes that we put before you.

4281 MR. DUKE: Madam Chair, may I just thank you, as we leave this table and you leave Vancouver this afternoon, may I thank you for coming to British Columbia for this hearing which is very important. We know that the Commission could have held these hearings elsewhere and we are appreciative of you coming to Vancouver.

4282 We sit here as two spokespersons for Friends, which represents 48,000 homes in Canada and a large percentage or per capita of that membership is here in B.C. They certainly look to the Commission to regulate more, not less, and to separate corporate interests from public interest. We certainly get from our membership a very keen interest in your proceedings and in your strengths and in your continued strength to know that Canada in these not unbridled market forces, but affirmative action and seeing that we can continue to know what kind of country we live in and see it persist.

4283 We thank you for coming and thank you for your deliberations.

4284 CHAIRPERSON OF THE COMMISSION: Thank you. Thank you for your participation.

4285 MS VOGEL: Our next intervenor this afternoon is Canadian Independent Record Production Association. Please come forward.

4286 CHAIRPERSON OF THE COMMISSION: We missed you this morning.

4287 MR. CHATER: I apologize. Unfortunately, I haven't yet learned how to be in two places at one time.

4288 CHAIRPERSON OF THE COMMISSION: But I think you have more to say on this one.

4289 MR. CHATER: Yes. Let me say my presentation would have been brilliant, witty and lucid, but you are not going to hear it, so I can say that.


4291 MR. CHATER: Thank you.


4292 MR. CHATER: Good day, Madam Chair and Commissioners. CIRPA is pleased to be here in Vancouver today to address policy issues regarding the applications that are of concern both to CIRPA and, we believe, a wider Canadian public. We thank the Commission for the opportunity to discuss these issues publicly.

4293 As we have only 10 minutes, we will concentrate on the issues of ownership concentration, musical diversity on radio and cross-ownership issues.

4294 However, first, CIRPA would like to put on record a fact that may seem self-evident, but seems too often ignored, to put it politely, by some of the players involved. It is simple. Canadian radio and television frequencies are owned by the Canadian people and are a valuable resource both culturally and commercially.

4295 The CRTC is charged with the responsibility of granting licences to applicants based on the best interests of the public. It is worth remembering that these valuable commercial entities have made many companies very rich based on a concept of restricted access to commercial broadcasting licensees and marketing competition granted by government or, more correctly, by the Commission.

4296 It is very clear that licensees have, in general, benefited greatly from these policies, while it has been by definition impossible for potential players to get into the game and compete as would occur in an unregulated industry.

4297 While CIRPA would agree that the next decade will see many changes, it is our view that the matters we have just elucidated should be central to future policy and commercial discussions. To illustrate this point, just compare the competitive situation for radio in the United States and Canada in a very simple way -- the U.S., with a population of about 250 million, has approximately 10,000 privately-owned radio stations and Canada, with a population of 30 million, has approximately 500 privately-owned stations.

4298 The U.S. per capita ratio is 25,000 per station, while in Canada it is 60,000 per station. This is borne out when one reviews the numbers of radio stations in markets of equivalent size in the U.S. and Canada. Generally, there are about two U.S. stations to one Canadian station in equivalent markets. One can argue the policies behind these numbers, but CIRPA submits that these numbers are clearly a fact and should have great bearing on any future policy discussions regarding ownership.

4299 CIRPA views this as a critical overarching policy issue. We would now like to address specific issues relating to these applications.

4300 First, the issue of musical diversity. CIRPA is pleased to note the applicants' comments in this regard and, given the commercial benefits involved, would expect to see a clear format diversity continue. However, given the realities of competition in radio compared with the U.S., CIRPA would expect a clear delineation being both maintained and defined in any licence granted, particularly given the fact as stated by the applicant as a clear and defined benefit and expanded upon at length in its applications.

4301 CIRPA notes that even with the much greater competition in the United States there is considerable evidence that consolidation has not brought real musical diversity, but in many situations has merely produced various sophisticated variants on what are essentially the same musical formats appealing to major demographic targets.

4302 With regard to the applicant's comments on competition with other media, CIRPA notes that the 1999 radio sales revenues, not quoted by the applicant, are substantially better than 1998, both in total market share of advertising for radio and in absolute dollars.

4303 Also, CIRPA was clearly under the impression that a major point in the consolidation issue was that consolidation enabled radio to better compete for national advertising dollars and that radio will not exist on local advertising solely, as the applicant appears to imply.

4304 In this regard it is common knowledge that this was a key factor in the sale of KISS-FM Toronto by Rawlinson to Rogers and the desire of Rawlinson to maximize value prior to substantial changes in the Toronto market.

4305 With regard to concentration of ownership in radio, and particularly in southern Ontario, there is clearly a case to be made that in the Toronto area Corus is already at the limit of four, with three licensed Toronto stations and a de facto Toronto station in Burlington.

4306 With the addition of stations in Hamilton and a station in Oshawa that are signals of excellent quality in the Toronto marketplace, CIRPA is of the view that this concentration exceeds the guidelines set by the CRTC in its Review of Radio policy statement in 1999.

4307 CIRPA feels that this particular point needs a very careful review, particularly given the overall numerical concentration that will be granted to Corus in Ontario should all of these applications be approved.

4308 The second issue CIRPA would like to address is that of access. In its response to our and other interventions, Corus addressed this issue but, with respect, we do not feel that they answered our concerns. The matter of cross-ownership of content and carriage is a major issue and one that the Commission will recall was raised by CIRPA through most of the nineties.

4309 As a recent article about Rogers and TVA remarked, those that have control of the pipe have a big say about the content. This article was written in the context of TV5 and TVA signals on Ottawa cable, but we submit it has general relevance.

4310 In particular in this regard, we would draw the Commission's attention to pages 2729 and 2730 of the 1995 Pay Audio hearings. Commissioner Wylie asked questions regarding access to delivery systems and at page 2730 she asks:

"What is your view about whether these concerns should extent to Audio services, as well; that is, ownership of programming undertakings for delivery by Cable?"

4311 And Mr. Stein responds:

"In terms of looking at the Access issue to other licensed services -- recognizing the fact that the Commission may well licence more than one -- in terms of the concerned raised by the CRTC in the Convergence Report filed with the Government, we decided that it would only be appropriate that we provide access to all of the services on Shaw Cable Systems.

We would provide access to all services that are designed for Cable..."

4312 Personally, I find this interesting for, as a subscriber to Shaw digital, while DMX was added to the system, and I stand to be corrected here if I am wrong, but I think I am not, at no time has there been any indication to me as a subscriber that Galaxie would be added or, to my knowledge, have I ever been asked as a subscriber if I would care to have access to Galaxie.

4313 The third and final issue that CIRPA wishes to raise is that of foreign ownership. While the purchase by Liberty is within the current guidelines, given the current milieu regarding ownership issues, the fact remains that this is not just any shareholder, but Liberty which is in turn owned by AT&T.

4314 While there is always the issue of voting share and ordinary share with regard to the control issue, CIRPA wishes to reiterate its point that 19.9 per cent is owned by Liberty and, while a minority shareholder, as everyone is aware, a minority interest of 20 per cent gives the shareholder a major say. It is totally different from a widely dispersed 20 per cent minority ownership and, indeed, Mr. Cassaday is quoted in the press as saying that the decision to involve Liberty was a conscious one.

4315 We note that the applicant states that having Liberty as an important shareholder will give better potential access for Canadian material in the U.S. markets. CIRPA submits the reality is that in the end Liberty will act in its best business interests and, in fact, must act in response to its shareholders' best interests, a point which the applicant has itself made regarding the policies of Corus and Shaw and the responsibility of the directors to the shareholders.

4316 This concludes our comments. We thank you for your time and look forward to your questions.


4318 I am particularly interested in the matters concerning diversity and to understand your position in terms of how we can in either approach, whether you agree with more consolidation or you don't -- you know, there was a journalist at lunch today who was asking me how would the Commission choose between some who say that competition brings diversity and others who consolidation brings diversity, especially in the world in radio where we say that format is part of the business plan, but is not regulated any more?

4319 MR. CHATER: Absolutely.

4320 CHAIRPERSON OF THE COMMISSION: So what are you views and what are the best ways to encourage, and what have you noticed out there in the marketplace from the point of view of the music industry where there is more possibility for diversity because that very notion that everybody goes into the MOR type of genre has its limits at one point I suppose.

4321 MR. CHATER: I agree, but equally obviously, rightly or wrongly, I think and again my friends in radio will tell me I am not quite correct, that the major demographic targets are still 25 to 54 for most advertisers. Therefore, your major markets now include every major city across the country. The key to that is, generally, how do we attract that audience? One attracts it by playing specific types of music, not all the same, but genres which all appeal to that particular age group, male, female, combinations of both. It's unlikely that there will be much -- you won't hear much Limp Biscuit on those stations, for example, which is from the point of view of radio -- I mean again, CIRPA has said it before and will say it again, we are not in the radio programming business. However, there are bigger issues here which you can elucidate at the start about the whole issue of licensing and licensees and the availability of licences.

4322 If you ask me in a simplistic way what I think would be the best answer -- more competition. The reality is we know that that's not the Canadian way at the moment. Maybe in the digital world when digital comes, there could be wide open competition. But digital, if it comes, the frequencies are not restricted. The only problems, as I understand it, with frequencies is you could have hundreds in any given city or 10 or 1,000, whatever. It's entirely an issue of can those licensees or can anybody in business remain commercially viable.

4323 I mean, given in today's world it is relatively tough and as you have done over the years you have removed the size of the licences because you have to play this type of music or that type of music or whatever. Once you do that, I mean you don't have, in my view, a great option in how to get tremendous -- keep or maintain tremendous diversity.

4324 Obviously one of the arguments for consolidation and you can argue this both ways, competition/consolidation, is that by nature it would be dumb if you owned four stations to play the same thing. You are obviously going to try and program across the board to pick up the most audience you can get to sell the most, the best advertising to groups. This is obviously a basic principle.

4325 That being said, say you have four, the four formats you choose might not be radically different. They might be, as I said, variations on a theme to get that bigger audience.

4326 CHAIRPERSON OF THE COMMISSION: But you don't think that with consolidation and if you have the possibility of more windows and the possibility of cross-promotion that it doesn't improve the capacity of the market to sustain more formats, different choices --

4327 MR. CHATER: As we said at the radio hearings two or three years ago, we have, and seriously because we are not joking, no position on consolidation. We don't think it is bad or good. We want to see the results and we have no particular concerns with the results so far.

4328 The point of it, I guess, if you go down this road almost indefinitely, I mean again my friends at radio tell me that we have seen obviously quite a bit of consolidation already. They feel, and it is their feelings not mine, that there will be considerably more in the next two or three years and again, I mean if you ask me or CIRPA do we have a tremendous problem with that, as a business situation, no, we don't.

4329 It's like, obviously, let's be blunt, we are self-interested to ensure that the most diverse music is played on as many stations as possible.

4330 To our membership, which ranges from classical to rap and everything in between, obviously to have everybody playing adult contemporary is going to be limited to a very small segment of our membership. Therefore, for representing our membership we obviously like diversity.

4331 Equally obviously, you have to sell to advertisers. You can't sell them something they don't want to buy. I think I would come back to your question, and the answer is if it's not sellable in the short term is more competition. That's not a feasible option in the Canadian situation given the allocation of frequencies and the government and the Commission's position.

4332 Therefore, as you have removed the absolute say you must play this, therefore, it becomes a question I guess of, how shall I put it, dual boning, of talking to people and making sure that things -- hey guys, let's not make it all too much the same. I mean, obviously, a radio person would say we are not going to because we are not going to be able to compete by selling the same thing to the same advertiser. There is no way, you have to change it, but what still happens clearly in markets across the country is there are several -- again, talking self-interest from our point of view, which get very little airplay and will continue to get very little airplay because they are not demographics which by definition advertisers are particularly chasing at this time.

4333 Does that answer your question or shall I stop there?

4334 CHAIRPERSON OF THE COMMISSION: Well, it does, yes. For the applicant to kind of reply, I am not here to kind of counterargue at this point in time.

4335 MR. CHATER: I could give you a different answer if you like.


4337 I am turning to my colleagues who were questioning on the radio matters and if they have anything to add.

4338 COMMISSIONER PENNEFATHER: Just one clarification --

4339 MR. CHATER: I am sorry if I am squinting, but you are not in the halo. You have just become God I think.


4341 COMMISSIONER PENNEFATHER: Well, I think I can arise to that occasion.

4342 You mention on page 3 of your oral presentation the concentration exceeds the guidelines set out in the radio policy. Specifically, what guidelines are you referring to?

4343 MR. CHATER: In this context we feel in major markets to FM and to AM. Our pleading is in this area that it is de facto in many instances one market.

4344 COMMISSIONER PENNEFATHER: I just want to clarify that because you were indicating that at some point you get to that point, but the concentration then becomes a concern. The radio policy discusses at length how we would review consolidation versus concentration. I am interested in you clarifying that word. Thank you.

4345 CHAIRPERSON OF THE COMMISSION: Thank you very much, Mr. Chater.

4346 MR. CHATER: Thank you.

4347 MS VOGEL: Our next intervenor this afternoon is CHUM Limited.



4349 MR. MILLER: Thank you, Madam Chair.

4350 For the record, my name is Peter Miller and I am Vice-President, Regulatory and Business Affairs, of CHUM Television. With me is Jay Switzer, Senior Vice-President, Programming and General Manager of CHUM/City.

4351 Members of the panel, we appreciate this opportunity to provide some very brief context to our written intervention and answer any specific questions you may have.

4352 We at CHUM were very pleased with Shaw's initiative to develop its voluntary access code and the attempt to proactively define what constitutes undue preference outside of the heat of a specific dispute. We believe that this kind of initiative is as important now as ever. We also believe that the key underlying elements of such a code will be as relevant in the digital and transitional worlds as they are in the analog world. That's why we put some energy into suggesting improvements.

4353 All of that being said, we agree with Corus that the current transactions do not raise new access concerns. Moreover, we are very pleased to confirm that unlike what some other MSOs, CHUM has concluded agreements with Shaw for the distribution of our orphan specialty services, Star and CLT.

4354 This and the undertakings made by Corus and Shaw in this proceeding give us considerable comfort. Thus, should the Commission prefer to defer further refinement of the Shaw access code, that would certainly be acceptable to us.

4355 However, as regards application to the digital environment in particular, we would recommend that Shaw be asked to finalize its code prior to the start of that proceeding.

4356 We would be pleased to answer any questions you might have.


4358 Vice-Chair Colville will have some questions.

4359 COMMISSIONER COLVILLE: Thank you very much.

4360 I guess and in light of what you heard yesterday and perhaps discussions that you have had with Shaw and thinking about the issue then, I take it with respect to these applications it's your view that their comments and commitments, absent the code, would not be a problem, and that the code might be something that one, perhaps as SPTV had suggested, that if one were to develop a code perhaps it should be developed in the context of the more open public process to deal with some of the issues that you raised in your intervention?

4361 MR. MILLER: I think we look at it somewhat differently. We understand that the code is a commitment that has been made and does stand. I think there are some clauses that are more relevant now than they were before, but our understanding is the code still stands.

4362 As to improvements or changes, as we have suggested I think we are suggesting that that could be deferred.

4363 COMMISSIONER COLVILLE: This issue about the -- you and others have raised this issue about our policy with respect to BDUs and I guess I raised the issue with Mr. Morrison and I think Commissioner Wylie did with SPTV. I would like to get a sense from you about understanding the distinction between the policy principle here and the specific applications that we are dealing with, recognizing that a number of them are the premium pay specialty, pay services that, as Shaw has indicated are largely on digital now and a half interest in the Family Channel, and whether for you when you take the policy and apply it against the specific applications whether the concern is still as significant as it might be if they were a different group of channels, specialty channels that might be involved here with a different ownership arrangement?

4364 MR. MILLER: I think the context is everything and the applications at issue are the ones that one has to consider, not some abstract situation.

4365 As Corus pointed out, the interest in the specialty services are minority interests that they are acquiring. That's a different issue than having majority control.

4366 In regard to the pay services, we noticed that that was one of the elements that was addressed in the Shaw access code, that in an analog environment they would not expand the channels occupied by such pay services, deny other channels. You could appreciate that for us that's a relevant consideration.

4367 We had digital carriage for Star, given capacity constraints, so we wouldn't want to see analog pay channels occupy more space if they happen to be affiliated with a BDU.

4368 So I think the circumstances change with the environment. I think we are in this transition where Shaw has made the commitment to swap out its analog boxes and that once all of that is complete it's a different set of issues.

4369 But what we have tried to indicate is that in the digital world these issues don't go away; they just become different. So we think this has to be dealt with any way in the context of the next specialty hearing. So we felt ultimately it could be dealt with then.

4370 MR. SWITZER: Commissioner Colville, if I might just add a note, you talked about -- your question in part discussed matters of digital and Peter has just talked about digital. There are issues in the code that are still very, very important to us.

4371 Having said that our relationship with Shaw is extraordinarily positive and we have solved our problems and we have had comfort from Mr. Cassaday and others that they won't either request or be party to preference, there still is the conflict of a related party and in all kinds of matters dealing with things beyond just access, including things such as migration of channels and how we are going to discuss with Shaw the cable company in the next few months, in the next few years, policies and details about possible migration of our channels, when we hear that, for example, music is a priority of Corus and music is a priority of CHUM, there is obviously aside from the excellent relationship concerns about undue preference in matters of migrating channels where we may be asked or encouraged quite firmly to migrate some of our channels, while at the same time there may be related Corus channels that may not be facing the same pressures.

4372 Those are the kinds of issues that touch on questions we have to deal with as part of the new digital environment.

4373 COMMISSIONER COLVILLE: I take your point, but did I misunderstand you when I understood that you were suggesting those issues should probably be dealt with in the context of a digital framework?

4374 MR. SWITZER: Yes. My point is that your question was absent the code I am trying to reinforce that the code remains important to us.


4376 I think those are my questions.


4378 Thank you, gentlemen.

4379 MS VOGEL: Our next intervenor this afternoon is Bell ExpressVu. Would you come forward please.


4381 MR. FRANK: Good afternoon, Madam Chairperson and Commissioners.

4382 My name is Chris Frank, and I am Vice-President, Government Relations and Corporate Development for Bell ExpressVu. Joining me today is David Elder, Regulatory Counsel for Bell ExpressVu. We appreciate the opportunity to appear at this important and timely public hearing.

4383 We would like to reiterate at the outset that we support those aspects of these applications dealing with the transfer of ownership of WIC's radio, video on demand and DTH pay-per-view licences to Corus, since these services operate in a competitive milieu.

4384 As to the other services which operate in national or regional monopoly genres, the company offers qualified support for Corus' acquisition of those pay-TV services controlled by WIC; that is Super Channel/MovieMax.

4385 Bell ExpressVu submits that these transactions should be approved, provided that competition is initiated in the Canadian pay television market, or failing that, that adequate safeguards are established to protected non-dominant distributors from potentially anti-competitive behaviour.

4386 It is the pay-TV transaction that are the focus of Bell ExpressVu's intervention. Bell ExpressVu is particularly concerned about these transactions for the following reasons:

4387 First, movie-based services are an essential component in Bell ExpressVu's programming line-up; a point that was made by Corus in respect of digital delivery platforms. They are, in fact, a key "driver" of new subscriptions. Indeed, more than 70 per cent of Bell ExpressVu's subscribers purchase pay-TV. There is every reason to believe that cable will experience the same pay-TV penetration when they fulfil their commitment to deploy digital boxes across a significant percentage of their customer base.

4388 Second, Bell ExpressVu is concerned that, if the pay-TV transactions are approved without modification, Corus would be potentially positioned to extend to Shaw undue preferential treatment with respect to the terms and conditions for the distribution of Corus' pay-TV holdings.

4389 By virtue of its cable distribution undertakings and its control of the Star Choice DTH and SRDU services, subject to prior CRTC approval, Shaw's position as the dominant distribution company in western Canada is unquestioned. Indeed, this position has recently been cemented further through a proposed swap of cable systems with Rogers. Corus, a Shaw affiliate, now proposes to acquire important services and the supply of which can affect the competitive position of Shaw's BDU rivals, including Bell ExpressVu.

4390 Despite the strong growth in subscribership experienced by Canada's two DTH suppliers, the distribution marketplace is still overwhelmingly dominated by the incumbent cable operators. Indeed, there is not yet sufficient competition in the broadcast distribution market to support the deregulation of any traditional cable company in any area of the country. As the Commission is aware, such deregulation requires a market share loss of only 5 per cent -- yet new entrants have yet to reach even this modest threshold in any licensed cable serving area.

4391 Bell ExpressVu notes that, in its reply to Bell ExpressVu's intervention, Corus has indicated that it would accept an "undue preference" condition of licence as a condition of approval, acknowledging the intention of the Commission to amend the Specialty and Pay TV Regulations.

4392 Corus has undertaken to provide its pay service to Bell ExpressVU on "similar" terms to those afforded to Star Choice. While these undertakings appear laudable and do offer a welcome and constructive start, Bell ExpressVu continues to have concerns. The undue preference prohibitions that exist in the Broadcast Distribution Regulations and that are proposed in the Pay Television and Specialty Service Regulations are extremely useful competitive safeguards in many situations; however, Bell ExpressVu would submit that these are not the most effective safeguards in all circumstances.

4393 In this regard, Bell ExpressVu notes that we are not just speaking here of some partial ownership interest that might give rise to an instance of undue preference; rather, we are looking at a situation where approval of these pay transactions as proposed would give Corus control of our most popular and powerful programming service in respect to western Canada. Bell ExpressVu submits that these are special circumstances; accordingly, special safeguards are required.

4394 Bell ExpressVu would note that both an undue preference COL and an undertaking to provide "similar" terms, as promised by Corus in its reply to interventions, while constructive in tone and spirit are necessarily open to differing interpretations, which may only ultimately be resolved by the Commission.

4395 Bell ExpressVu notes that, despite the Commission's best efforts against an increasingly challenging workload, such disputes may take time to resolve. Time is at a premium in a competitive market. In addition, Bell ExpressVu notes that there are significant evidentiary problems in establishing a case of undue preference, since Bell ExpressVu would not have ready access to the terms of Superchannel's agreements with Star Choice, or even Shaw cable.

4396 Bell ExpressVu submits that its concerns of undue preference by a vertically-integrated provider of both a single source programming service and a dominant broadcasting distribution operator would be more immediately and effectively assuaged by the existence of competition in this existing programming sector. That is, and with Corus' useful offer, the combination of competition and undue preference protection would, in our opinion, quite adequately balance any "anti-competitive" anxiety.

4397 Bell ExpressVu has consistently advocated increased competition in programming genres that can sustain such competition. With competition, access concerns by distributors are diminished because of the existence of alternative suppliers and the discipline imposed by the competitive market. Service providers are motivated both to improve their product by acquiring new and quality programming, a significant percentage of which is Canadian, and to attempt --

--- Technical difficulties / Problèmes techniques

4398 CHAIRPERSON OF THE COMMISSION: You have a real competitor here.

4399 MR. FRANK: It's undue competition.

4400 ...and to attempt to win the business of subscribers and distributors through attractive pricing and other commercial terms.

4401 The benefits of competition in the pay-TV sector would be significant for the subscribing public, program producers and other BDUs. The public will reap the benefits of competition which could include price -- which would include, excuse me, price and product competition; that is, new entrants will strive to offer a better product a competitive prices, giving the public more choice and variety.

4402 Program producers will have a new or expanded reach to which to market. This, together with the additional funding that will result should give rise to more Canadian film and program production. Pay-television will not be a zero sum game, so the program expenditure regime currently in place will channel new funding as well as new exhibition opportunities in a competitive structure.

4403 BDUs will have more premium programming to sell which will increase both the incentive to supply and the demand for digital set-top boxes.

4404 And the broadcast system as a whole benefits as more channel capacity -- derived from digital adoption or conversion -- becomes available from the expedited rollout of digital receivers.

4405 Therefore, and in recognition of the significant cost of distributing a regional pay-TV service via national satellite transponders, Bell ExpressVu believes that its concerns would be more efficiently and effectively addressed if the two current regional pay-TV monopolies were to operate on a national, as opposed to a regional, basis, and in full competition with each other and other new entrants which might be licensed by the CRTC. This would result in a more efficient and effective use of expensive and relatively scarce satellite resources as well, of course, as more choice and variety for pay-TV subscribers.

4406 Bell ExpressVu also notes that in Corus' reply to our intervention, is non-committal to the possibility of competition in the pay-TV genre. For its part, Bell ExpressVu notes the Commission's public policy of fostering competition in other sectors of the communication industry. While a reliance on a regional structure for pay-TV services might have been an appropriate mechanism to ensure the survival of such programming undertakings in the early days, recent growth and development and the move to digital distribution has changed the sectors performance and potential.

4407 First, these are now healthy services whose subscriberships have already increased markedly due to the growth of DTH undertakings and will increase dramatically as broadcasting distribution undergoes its digital evolution. Competition appears readily supportable. The pie is indeed growing. Bell ExpressVu notes in this regard that, in their most recent financial statements filed with the Commission, Super Channel showed a jump in revenue for 1999 of some 25 per cent over the previous broadcast year, despite a slight decrease in revenue from non-DTH distributors. MovieMax posted an even more impressive jump of 30 per cent revenue growth over the same period. The eastern Pay-TV service posted similar results; nearly 20 per cent revenue growth for The Movie Network and over 27 per cent for MoviePix.

4408 MS VOGEL: I am sorry to interrupt, but we are past the 10 minutes. Could you wrap up? Thanks.

4409 MR. FRANK: Alternatively, if a directly competitive pay-TV model is not ultimately favoured by the Commission, then Bell ExpressVu urges it to consider, at a minimum, additional safeguards.

4410 Corus would be required, by an undue preference condition of licence or regulation, to provide its pay-TV services on substantially similar terms and conditions to all Class 1, DTH and MDS BDUs. Ongoing disputes concerning the application of such an undue preference prohibition could be greatly expedited if Corus was required to file with the Commission copies of all of its affiliation agreements for pay-TV, thus minimizing a significant evidentiary hurdle to the effectiveness of this regulatory prohibition.

4411 In addition, in order to avoid any possible misunderstanding as to the application of the undue preference prohibition, Bell ExpressVu submits that there should be an explicit requirement from the Commission that the Super Channel and MovieMax services be provided to Bell ExpressVu on the same terms and conditions as afforded to Corus' DTH affiliate, Star Choice, assuming similar levels of subscribership.

4412 On the premise that the Commission has already concluded that it is in the public interest to have competition in the SRDU sector and, by logical extension, in this HITS business, Corus should also be required to allow the HITS distribution of all of its pay-TV and specialty services by all satellite competitors, on the same terms and conditions.

4413 Those are my comments. I am sorry to run past the 10 minutes.

4414 CHAIRPERSON OF THE COMMISSION: No. That's all right and we apologize for the disturbance of the noise, but we had nothing to do and neither had Corus.

4415 I would ask Vice-Chair Colville to ask the questions please.


4417 I must say I am having trouble understanding ExpressVu's position here with respect to the first part, the issue of the supposed or apparent or potential preferential treatment of the Super Channel service within Corus/Shaw relative to ExpressVu. I don't understand what the nature of the problem is.

4418 MR. FRANK: The potential nature of the problem is that they would be owned by a direct competitor of ours and there is a potential that that ownership could lead to unfavourable terms and conditions for us and render us -- or lessen our competitive position by making either the terms of carriage or the cost of carriage less attractive than Star Choice or cable.

4419 COMMISSIONER COLVILLE: So your concern is not how they might carry or offer the service on Shaw Cablesystems. Your concern is the price in terms that they would the service to you?

4420 MR. FRANK: That's correct, provided that in the carriage by Shaw Cable we were able to have the same degree of flexibility. For instance, if they were offering -- potentially, if they were offering 10 pay-TV channels to cable and only four or five or six to us, but, generally speaking, the carriage of pay-tv by cable is not of concern to us, no.

4421 COMMISSIONER COLVILLE: Do you have a concern with the existing framework that's in place in terms of the Commission's approach to dealing with preferential treatment? I know you have said there are problems here perhaps in terms of timing, but it's your view that -- it is your view that they should not be allowed to own it absent a competitive marketplace?

4422 MR. FRANK: That's our preferred -- that's our preferred fix. Absent open competition in pay TV, we have proposed some safeguards which we think should be adopted.

4423 COMMISSIONER COLVILLE: I guess you would appreciate that it's not for this Panel and this proceeding to deal with the issue of competition in the pay television market in Canada, that there is an existing policy framework --

4424 MR. FRANK: Yes --

4425 COMMISSIONER COLVILLE:  -- for that?

4426 MR. FRANK:  -- I appreciate that point. What we're trying to do here is encourage competition, national competition, in pay television so that we can grow our business and other BDUs can grow their business. We think the revenue opportunities offered by multiple pay services will increase revenue per subscribe which, in turn, encourages shareholders to finance the subsidy of those expensive set-top boxes that Mr. Stursberg was speaking of yesterday.

4427 We also see significant benefits for program producers and for, obviously, for subscribers and customers.

4428 COMMISSIONER COLVILLE: You understand that the primary content for the movie services is largely U.S. American movies?

4429 MR. FRANK: Yes, I do.

4430 COMMISSIONER COLVILLE: Were you here yesterday when the CHUM made their presentation relative to the Global acquisition to hear Mr. Znaimer's comments about the issues regarding acquisition of foreign product?

4431 MR. FRANK: Yes, I was.

4432 COMMISSIONER COLVILLE: What would your comment be, then, considering his position there if we had competition, more competition for acquiring that U.S. product on a national basis in Canada?

4433 MR. FRANK: That there would be -- are you suggesting that there would be too many potential suppliers chasing too few movies thereby bidding up the price?

4434 COMMISSIONER COLVILLE: I'm asking what your opinion is of his comments --

4435 MR. FRANK: I'm just trying to make sure I fully understand the question.

4436 I think that there is an opportunity for a competitive pay TV industry because there is, I think, an adequate supply of movies. When we look south of the border, there are a number of pay TV -- a number of pay TV companies, and they seem to be operating quite successfully and the benefits to both the subscriber and the distributors is quite obvious.

4437 COMMISSIONER COLVILLE: I guess I'm asking, in light of Mr. Znaimer's comments yesterday, is it obvious, or is the likely outcome that both movie services may end up paying more for access to that product?

4438 MR. FRANK: Well, I guess that would depend on the number of competitors that were in the marketplace and what the eventual structure was. We make the point, in our intervention, that we believe that it would be an effective approach to move the two regional pay companies, as quickly as possible, to national competition and if, in the future, or if at the same time, the Commission considered it wise to license others directly, then so be it.

4439 COMMISSIONER COLVILLE: Okay. Thank you, gentlemen. Those are all my questions.


4441 COMMISSIONER WYLIE: I have difficulty understanding this, as well.

4442 On page 5, when you talk about competitive, you mean your preference would be that there would be a competitive pay TV as an analog service, not in the -- under the policy that is going to govern the applications we'll hear later on this summer?

4443 MR. FRANK: Well, I think there's a natural migration of pay TV to digital. We had not envisaged this -- we did not envisage this as an analog situation. We understand that there is a shortage of analog capacity and having two national pay TV companies, presumably, with access requirements that would complicate the already chocked analog situation.

4444 COMMISSIONER WYLIE: So, were you envisaging the transition or the migration, as we have been discussing, to digital. Would your proposal not be contrary to the policy we have just issued about digital? My understanding was that the Commission was not going to license competitive services.

4445 MR. FRANK: Well, the full extent of our recommendation is, yes, to open up the marketplace. But if that's not in the cards, at least to allow or encourage the existing two companies to go head-to-head on a national basis.

4446 COMMISSIONER WYLIE: But that is your understanding, as well, that the applications that we said we would be prepared to hear would have to be not directly competitive with a general interest, pay-per-view, but a specialized movie channel, so it would require some unknown, fully aware of all the pay channels we may have here but a general interest one competitive with the existing one I don't think was what was contemplated.

4447 MR. FRANK: That is our understanding, too. And I guess to get back to Commissioner Colville's question, one might wonder how this would be done and, obviously, there would have to be a public process, (a) to take the temperature to see if there are other folks out there who felt the same way we did who think it is in the public interest to have competition in pay and if the response to that was, yes, then there would be a process, I presume, to allow the existing licensees to amend their licence and if you allowed other direct competitors, to consider them as well.

4448 We realize this isn't going to happen overnight but --

4449 COMMISSIONER WYLIE: No. And what you may well find is that there will be arguments that even the applications that may have been -- movie applications, movie services applications that have been filed will argue that they are not competitive and probably we'll see the incumbents argue that they are, so you'll have another chance to make your point during that hearing, because of the nature of the beast.

4450 Thank you.

4451 CHAIRPERSON OF THE COMMISSION: Thank you very much.

4452 MR. FRANK: Thank you.

4453 CHAIRPERSON OF THE COMMISSION: We will take 10 minutes.

--- Recess at 1545 / Suspension à 1545

--- Upon resuming at 1604 / Reprise à 1604

4454 THE SECRETARY: Our next intervenor this afternoon is Forefront Entertainment Group.

4455 Would you come forward please.


4456 MS CYNAMON: Good afternoon, Madam Chair and Members of the Commission.

4457 Thank you for the opportunity to speak to you on behalf of the Corus application.

4458 There has been discussion, over the course of the hearing, about the importance of creating growth curves for the broadcasting community. Also, I have heard the need for reorganizing -- I'm sorry. I have heard the need for recognizing and supporting the risks and the value of new partnerships.

4459 As the chair and founding partner of Forefront Entertainment, a B.C.-based company that specializes in creating and delivering quality family programming to international audiences, I will speak to some visible benefits for our community.

4460 I would like to base my following comments on what I perceive is Corus' forward-thinking proposals, a valuable package of new opportunities for the Canadian producer, the content provider.

4461 Historically, Corus' family TV networks have been -- the growth of Canadian family content. Many independent companies, like Forefront, have been able to showcase our product to the world because Corus has supplied us with critically needed funding.

4462 In our case, YTV and the Shaw fund have creatively embraced and generously financed three of our family calling card series. Because of this vitally needed instrumental support of our internationally award winning shows, the "Adventures of Shirley Holmes", "Madison" and "Magician's House", we have produced and distributed over 60 hours of family programs over 100 countries.

4463 In addition, Superchannel has been extremely supportive of the development and pre-license side of new family products.

4464 I'm inspired and encouraged by Corus' 12.5 million TV and film-related package of goodies. Their refreshing strategic vision aligns with the realities of the marketplace and the need for high-quality, 21st Century storytelling. Specifically, I would like to point out that Corus' proposed family film project could not be better timed or thought out. The market is hungry for family quality features. Most of us who are parents of young children ask ourselves constantly, where do we go when our children begs, "Take us to the movies"?

4465 And on the industry side of things, Corus has definitely shown an understanding of the need to support the marketing of family programming. Cross-promotion of family films is the key to continuous growth of the film and distribution industry. Forefront's own theatrical releasing division has domestically released two family features across Canada last year. There is an exponential value to the exposure of trailers on TV national screens.

4466 In addition, the marketing goals of the export initiative and the Corus -- programs are creative support mechanisms to get Canadian product out there in the marketplace.

4467 Forefront is also encouraged by the teen drama projects that would create an opportunity for Canadian producers to launch high-quality Canadian teen drama series with international appeal. The success of our own teen series, "Madison", opened many international doors for us.

4468 I would like to say that Corus' acquired broadcast holdings do not pose a threat to our chances for producing more product. This umbrella group offers producers a unique, synergistic opportunity. YTV, Teletoons, Superchannel and Family Channel are all distinctly managed broadcasting teams that have clear visions of their programming needs. We can truly benefit by their combined expertise and, where applicable, increased financial support through cross-platform licence fees and cross-promotional events.

4469 In conclusion, we at Forefront congratulate Corus' astute awareness of the market demand and economic benefits would result in the production of more Canadian television and film family programming and applaud their insight for recognizing that Canadians have the talent base to deliver critically acclaimed product to international audiences.

4470 Thank you for your time.

4471 CHAIRPERSON OF THE COMMISSION: Thank you very much.

4472 I would ask Commissioner Grauer to ask questions.

4473 COMMISSIONER GRAUER: Thank you, Madam Chair.

4474 I think your support is very clear and I don't have any questions of clarification.

4475 What projects have you got under way right now?

4476 MS CYNAMON: Right now we're supported by Superchannel in the "Magician's House" season two, also in development for a family feature called "A Little Bit of Heaven", and -- I'm just trying to think. Teletoon has an interest in certain projects, as well.

4477 COMMISSIONER GRAUER: So you are doing a lot of business internationally, though, with a lot of your products, are you?

4478 MS CYNAMON: Yes. The "Magician's House" is an international co-production with the BBC.

4479 COMMISSIONER GRAUER: Great. Okay. So, I actually don't have any questions.

4480 MS CYNAMON: What?

4481 COMMISSIONER GRAUER: I don't have any questions for you.

4482 MS CYNAMON: Okay.

4483 COMMISSIONER GRAUER: Thanks very much. Thanks for coming.

4484 CHAIRPERSON OF THE COMMISSION: Thank you very much for participating.

4485 MS CYNAMON: Thank you.

4486 THE SECRETARY: Our next intervenor is Great North Communications Ltd.



4488 MR. THOMSON: Good afternoon, Madame la Présidente Commissioners. It's a pleasure, once again, to be here before you, although I feel a little lonely without my panel that I was joined by this morning.

--- Laughter / Rires

4489 MR. THOMSON: It's a nice chance to meet people that I have never met before, but it worked out quite well.

4490 We are very pleased to be here to present our views on the matter currently before you: the acquisition of Western International Communications' radio stations and certain of its premium television assets by Corus Entertainment.

4491 Great North is primarily a producer and distributor of factual programs. We never work in radio and we rarely deal with premium television. However, we are here to support this application primarily because we believe that it is necessary to resolve the uncertainty that has surrounded the ownership of the services licensed to WIC for the last several years.

4492 The television properties or licences involved will only be able to thrive and make positive contributions to the system if they can count on staBle management. This application, and the application put forward by CanWest Global, regarding WIC's broadcast assets, will, if approved by the CRTC, certainly accomplish this.

4493 I am also here to support this application because it has attached to it a comprehensive package of benefits that will have a real impact on the Canadian broadcasting system, particularly by supporting the production of long-form family drama and feature films, drama for teenagers, as well as a number of initiatives that support the development of the broadcasting and production industries.

4494 We especially support Corus' decision to offer these benefits on a national basis where they can be utilized most effectively. While regional or province-specific funds can be helpful in developing regional production, it is also important that there exist national funds that can be accessed by producers from all across Canada for certain unique projects, usually distinctively Canadian, that simply couldn't otherwise be financed. Offering these benefits on a national basis will also help relieve the strain on the greatly over-subscribed Canadian Television Fund. I am pleased to see that Corus has resisted pressure from regional and provincial interest groups to create envelopes for these new funding initiatives.

4495 As Canada's leaDing producer of documentary programming, Great North is very pleased to see included in the benefits package a commitment to create a 40-episode television documentary series exploring the state of Canadian children at the beginning of this new millennium.

4496 We are also pleased to see included in the Corus benefits package a $500,000 export initiative program designed to help Canadian producers gain access to the international broadcast market.

4497 Oversubscription of the Canadian Television Fund increases every year despite the best efforts of the CTF management to make access to the fund increasingly selection. This situation will only get worse when the Commission licenses new digital channels later this year with significant Canadian content requirements. The CTF will, unfortunately, play a diminishing role in the financing of Canadian production and Canadian producers will have little choice but to look at foreign pre-sales as a primary source of production financing. Breaking into that market is a terrifying and intimidating process, especially for small- and medium-sized regional producers -- those for whom this fund has been designed.

4498 I would like to illustrate that with an anecdote from our experience. I remember the first time that Great North went to MIP-TV, in the spring of 1990, we were dragged there, literally, kicking and screaming, by our friend Ted Riley of Atlantis. Having just emerged from 15 or 18 years at the Film Board, I was of the very strong belief that my job was simply to make Canadian films for the Canadian marketplace and I never thought I would have to look outside that. But Ted insisted we come and they registered at the market and got us there and booked us hotel rooms and everything else. After three days of wandering around the Palais, we realized two things, one, that nobody had any time to talk to us and, secondly, every film we had ever dreamed of making had already been produced and was being sold there.

--- Laughter / Rires

4499 MR. THOMSON: So, after three days, we were ready to rent a car and drive to Italy and get away from the place. And Peter Sussman, one of Ted's partners, saw us standing forlornly in the corridor and came up to us and said, "You know, what's the matter?" And we told him. And he said, "Well, stop being so hard on yourselves. Take it easy. You're not here to sell a show or make a deal, you're just here to find out what the international market is all about, and two years from now you'll do a deal and you'll be able to say to yourself, `I did that deal because I went to MIP two years ago'".

--- Laughter / Rires

4500 MR. THOMSON: So, feeling much, much better, we toddled down the hall, to the Telefilm stand, which was the only place where we had faces that we knew, and I was talking to the receptionist at Telefilm and this little guy came up and asked her, behind my back, "Do you know where I can find Great North", and I spun around and said, "I'm Great North. Why?" And he said, "Well, I want to buy your film". We had only produced one film and we put an ad for it in the Playback International Magazine and he had seen the ad and he wanted to buy it. And it turned out that he was from Discovery, in the States. Discovery was a very, very small organization, at that point. I think he was their twenty-first employee and he -- we began negotiations, the negotiations took six months, and we met again, for lunch this time, at MIPCOM to close the deal and he brought a friend of his who was another new employee at Discovery and we had a nice lunch and signed the deal and then, six months, he and the friend brought two more friends and we had lunch with four people from Discovery, and that led to a dinner at MIPCOM, the following October, with eight people from Discovery, and I'm pleased to say that, now, Discovery -- the Discovery group of channels, which include the Learning Channel, Discovery Health, Discovery Travel, Animal Planet and Discovery itself, represent about 40 per cent of our production. And we just came back from MIP about 10 days ago and there we had our usual -- and which is going to become a semi-annual dinner with all of the senior broadcast executives from Discovery. There was 35 people there from all the different channels. There were six of us from Great North trying to entertain them all. And all that happened because Ted Riley dragged me to MIP and because Peter Sussman wouldn't let me leave.

4501 So any kind of initiative that can provide to other independent producers in Canada the kind of benefit that Ted and Peter gave us will be a huge, huge benefit.

4502 I don't want to bother to analyze each of the benefits attached to the application. Needless to say, they are well considered and will have a positive impact on the Canadian broadcasting system, as a whole.

4503 We are also pleased to note that these benefits put forward by Corus are in addition to the existing conditions of licence attached to the WIP licences.

4504 ALCOM pay television has been a valued partner for Great North and has invested in many of our projects over the past several years, including our biography of Ray Bradbury, produced for USA Network, a documentary about pigeons currently in production for the Discovery Channel, a docu-soap produced last year for Life Network, and two limited documentary series delivered just recently to the Learning Channel.

4505 It would have been difficult, if not impossible, for Great North to cover the deficit on these shows without ALCOM's timely participation and we hope that under new management they will be able to continue to be an active and valuable partner for Great North.

4506 In conclusion, in the interest of resolving the ownership situation at WIC of implementing an imaginative and beneficial benefits package, of giving Canada's small and regional independent producers the same international opportunities that Ted Riley and Peter Sussman once gave Great North, we urge the Commission to approve this application.

4507 We think the Commission for this opportunity to express our views and we would be pleased to answer any questions.


4509 I would ask Commissioner Pennefather to ask the questions, please.


4511 MR. THOMSON: Hello.

4512 COMMISSIONER PENNEFATHER:  -- and welcome again, and congratulations for mentioning the Film Board twice today --

--- Laughter / Rires

4513 COMMISSIONER PENNEFATHER: You discussed earlier, and again today, with Commissioner Grauer, your comment regarding the importance of the national program, in terms of that being of benefit not only to producers across the country but producers in western Canada, as well, but I would like to pursue a couple of other points here.

4514 CTF will play a diminishing role in the financing of Canadian production and Canadian producers will have little choice but to look at foreign pre-sales as a primary source of production funding. You have illustrated quite well the value of the international marketing fund to assist in doing that but, in your view, what effect will that have on Canadian production other than, yes, it's a source of financing but as a primary source of financing do you have any concerns that we will be leaning more and more towards foreign pre-sale and less and less to public funding in this country?

4515 MR. THOMSON: Yes, that's a very, very good question and it's not very easy to answer but I think that the public funding was initially put in place back in the early eighties, I suppose, in order to create an infrastructure that could produce Canadian programming and I think public funding has done a tremendous job of creating that infrastructure and there's no question that Canadians can produce television programming as well as anybody now, and they can produce that in all the regions of the country. There's no region that's fallen behind in terms of our ability and our expertise in producing programming.

4516 It's interesting to note at a market like MIP that Canada is consistently the fourth or fifth most represented country there. Obviously, the Americans and the British and the French are the top three, but it's always a toss-up between Canada and Germany as to who's the fourth or fifth largest country being represented as market. So that infrastructure is if we can produce tremendous programming and we can sell it all over the world.

4517 What's happening now, I think, is the need for those government funds have to shift from being there to support infrastructure to being there to support distinctively Canadian programming, because there is no question that distinctively Canadian programming is difficult to sell. I always use the example of a -- well, we do a series for History Television called "The Canadians" which is a series of biographies of dead Canadians and, quite frankly, many of them are of absolutely no interest outside of CaNada whatsoever, but it's a vitally important series to be produced in Canada and for Canadians. So I think the funds have to become much more project specific and must less industrially specific, and I think we'll see that -- I think we have seen it happen already, and I think it will continue to happen.

4518 COMMISSIONER PENNEFATHER: So as a corollary, you would then table, perhaps, that, as far as financing in this country, you're looking more and more to, for example, major transactions like this one to have an impact on financing of production in Canada?

4519 MR. THOMSON: Well, yes, if they could keep selling themselves back and forth forever it would be great.

--- Laughter / Rires

4520 COMMISSIONER PENNEFATHER: But my point was, though, over and above that, that, yes, there are benefits, but do you see that this transaction, perhaps others down the road, are really providing sufficient return, in terms of money to production? There are the benefits packages which you have underlined as very important, and indeed they are very attractive, but is that enough?

4521 MR. THOMSON: Boy, that's a really hard question to answer. I guess it depends on how much we want our broadcast system to reflect Canada or how much we want our broadcast system to both reflect Canada and present well-made, attractive programming that sells all over the world. And I'm not really sure about the answer to that. It's a really tough question. I guess right now the distinctively Canadian programming that we see is going to -- the amount of it is going to be governed, to a large degree, by the amount of public funds available.

4522 COMMISSIONER PENNEFATHER: Well, it's in line with our discussion over the course of the last couple of days regarding what ends up on the screen and the position of viewers in this country.

4523 One final point. The last paragraph, you say that the beneficial benefits package is an imaginative one and it is giving Canada's small and regional independent producers the same international opportunities that Ted and Peter Sussman had given you, at one point. So you're confident that while this is the national approach, the small and regional independent producers will have those opportunities?

4524 MR. THOMSON: Well, I think that particular fund is earmarked for small- and medium-sized and regional production companies. And I meant to preface my little anecdote about MIP by saying that while I appreciate there has been a lot of talk about benefits being designed to end up on the screen, as opposed to in other places, certainly that kind of benefit pays huge, huge dividends and, you know, it didn't directly end up on the screen. That kind of benefit will directly end up in people getting to the markets but what they pick up at those markets will have a huge impact on what Canadians see on their television screens down the road.

4525 COMMISSIONER PENNEFATHER: Thank you very much.

4526 MR. THOMSON: My pleasure.


4528 MR. THOMSON: Thank you.

4529 THE SECRETARY: Madam Chairperson, with your leave, we have Mr. Canales on the phone line right now and he is with Media Group and he's our next intervenor this afternoon.


4530 MR. CANALES: Hi. Can you hear me?


4532 MR. CANALES: Yes, I'm here.

4533 CHAIRPERSON OF THE COMMISSION: Please go ahead with your presentation.

4534 MR. CANALES: Okay. Good afternoon. I am really sorry I can't be in Vancouver due to circumstances beyond my control. I, you know, really think we would be able to do this through the benefit of the telephone.

4535 Good day, Madam Chair, Commissioners, fellow broadcasters. My name is Manuel Canales. I am a professional communications consultant --

4536 CHAIRPERSON OF THE COMMISSION: Excuse me, Mr. Canales. We don't hear you very well.

4537 THE SECRETARY: If you hold on, I will go and check.

--- Pause / Pause

4538 THE SECRETARY: Madam Chairperson, it appears that the connections are fine but the line that we got might not be good so we are calling him back to see if we get a better connection.

4539 CHAIRPERSON OF THE COMMISSION: Okay.  --- Pause / Pause

4540 MR. CANALES: Hello. Can you hear me now?

4541 THE SECRETARY: Mr. Canales, are you on speaker phone?

4542 MR. CANALES: No.

4543 THE SECRETARY: Could you say "hello" again and we will check to see how clear you are.

4544 MR. CANALES: Hello.

4545 THE SECRETARY: We are not getting you clearly, at all. Are you speaking right into the phone?

4546 MR. CANALES: I'm speaking right into the phone. It's a cordless phone, though.

4547 THE SECRETARY: Oh. We're not getting good reproduction here at all.

4548 MR. CANALES: What I did say is -- my notes is what I'm going to read, which has already been written out --

4549 THE SECRETARY: Well, Mr. Canales, is there a way that you can get to a land line?

4550 MR. CANALES: Yes. Okay.

4551 THE SECRETARY: Okay. If you could tell our operator what number he should call you back at and we'll call you back.

4552 MR. CANALES: Okay.

4553 THE SECRETARY: Thank you.

--- Pause / Pause

4554 MR. CANALES: Hello. Can you hear me better now?

4555 CHAIRPERSON OF THE COMMISSION: Yes, we do. Thank you.

4556 MR. CANALES: Okay. I'll proceed, then.

4557 CHAIRPERSON OF THE COMMISSION: We just want to tell you -- I'm Françoise Bertrand and I'm charing the Panel here. I just want to let you know that we have had a copy, a written copy, of your intervention.

4558 MR. CANALES: Yes.

4559 CHAIRPERSON OF THE COMMISSION: And I would like to remind you that you are allowed a presentation of 10 minutes.

4560 MR. CANALES: Yes.

4561 CHAIRPERSON OF THE COMMISSION: So if you want to just pick and choose because, you know, from the pages I see in front of me it might take more than 10 minutes to read all this, so maybe you want to select what you want to, you know, share with us orally.

4562 MR. CANALES: Madam Chair, I'm just going to be no more than 10 minutes. I'm only going to read the first five pages. The rest are charts and addendas that goes with it.


4564 MR. CANALES: So I'll start?


4566 MR. CANALES: Okay. I'll start again.

4567 I'm sorry not to be there in Vancouver, but I thank you that you are able to include me on the telephone.

4568 So, good day, Madame Chair, Commissioners, fellow broadcasters. My name is Manuel Canales. I am a professional communications consultant. I immigrated to Canada from Chile in 1974 and by 1975, I had my first radio position in Dartmouth, Nova Scotia. From there, I have worked in several consultant and employment positions in the broadcasting industry throughout North America for the last 25 years.

4569 From 1995 to 1997, I had the opportunity to work for CING-FM -- Burlington Broadcasting Incorporate -- as General Manager and Vice-President of Development and with Shaw Radio -- Shaw Communications -- and now Corus as they purchased the radio station from local business people and, consequentially, I am still involved in labour litigation and legal proceedings in order to obtain full payment of my employment services.

4570 I must say that through my experience with Shaw and Corus, I have come to the conclusion that they are a very determined company that stops at nothing to obtain their final wishes and, to my amazement, for a company the size of Shaw/Corus, they would go to any extremes to get what they want without regards to exemplar corporate culture or ethics.

4571 Today, I will concentrate my comments in a strictly professional view of these radio applications, bearing in mind the public interest.

4572 The background. In February 18, 2000, the Commission issued notice of public hearing CRTC 2000-1, giving interested parties a full description of the background of these proceedings -- I quote from that:

"The Commission intends to discuss, among other questions:

"- The level of concentration of ownership in the radio sector in terms of diversity of voices that could result from the transactions in specific markets such as Calgary, Edmonton and southern Ontario.

"- The level of cross-ownership between distribution, radio, specialty services and other media outlets that could result from the transactions; and,

"- In addition, the Commission intends to discuss the impact that the proposed transactions may have on the Canadian broadcasting system and its related benefits. The Commission will wish to explore whether the proposed transactions will be of benefit, from a programming perspective, to the markets in question as well as to the broadcasting system as a whole.

"Further, the Commission may wish to discuss the appropriate valuation of the transactions as well as the specific proposals for unequivocal tangible benefits. The Commission may wish to discuss whether it would be appropriate, in the circumstances, for CanWest Global, Corus and Shaw to divest a part of their broadcasting undertakings in the event the applications are approved in whole or in part."

4573 As noted earlier -- and this -- the public hearing -- Shaw's acquisition of the 41.25 per cent voting interest in WIC was completed prior to obtaining approval from the Commission. The Commission expects Shaw to address the manner in which this transaction came about, particularly the closing of the transaction without prior Commission approval and without Commission-approved trust arrangements in place.

4574 I did not make the comments -- because I was not present during the hearing so I don't know what the presentation was, so -- allowing them to cover the above points -- CRTC 2000-1...

4575 The concentration of media ownership. Although I filed my intervention on October 7, 1999, I only received a reply, enclosed, at April 20th, from Mr. Cassaday's office which I believe is contrary to Commission procedure in answering interventions within a specific time limit. Specifically to address the consolidation within the radio industry and the southern Ontario radio market, Mr. Cassaday writes -- and I quote:

"Corus agrees with the Commission's assessment of the effect of consolidation within the radio industry. However, to ensure that listeners continue to be well served by a variety of `voices', the Commission stated that in reviewing transfer of ownership of stations it would examine the impact of increased common ownership of stations in a particular market and the overall level of competition. To foster diversity, the Commission's radio ownership policies limit the number of stations that may be owned within a defined market area. However, limits have not been placed on the number of stations a particular owner may acquire across the country...."

4576 This is a typical Shaw/Corus corporate attitude to push the interpretation of CRTC policies to the limit.

4577 Please find enclosed Schedule F from Mr. Wayne Plunkett's -- who was here earlier today -- intervention showing clearly that should the Commission allow these transactions, in their entirety, Shaw/Corus will have a cumulative total of 50 per cent of the licensed radio undertakings in the corresponding markets and a whooping 56 per cent of the FM -- the most profitable section of the radio industry -- radio frequencies in those markets.

4578 Now, add to that the fact that since 1995 -- the CRTC 1995-60 paper -- the Commission determined that commercial FMs could apply to be relieved of their promise of performance commitments to operate in Group I or II. The applications when made and approved would be effective September 1, 1995. This change made possible for the marketplace to be in flux and it became possible for changes in a particular format to happen any time.

4579 How are we going to maintain diversity in the marketplace and ensure that listeners continue to be well served by a variety of voices with Shaw/Corus holding this freedom of programming and holding 50 per cent of the commercial licensed frequencies in the markets in question and how are we going to ensure that we foster diversity and examine the impacts of increased common ownership of stations in a particular market the overall level of competition when, by granting this application, in its entirety, to Shaw/Corus, the Commission will be handing over 50 per cent of the licensed market?

4580 Furthermore, any audience level measurements comparison of existing radio tuning levels will be obsolete by the sole right that Shaw/Corus will inherit to manipulate programming of all stations owned and target demographics to suit economic returns.

4581 Number 5: Radio advertising rep houses control lion's share of national business.

4582 An example of this is clearly demonstrated in the selling practices of Shaw/Corus existing stations. Please find enclosed Schedule 4, pages 5(78) to pages 8(75) of Dufferin Application 1999-10188 where Dufferin Communications elaborate -- and I quote:

"5. DEVELOPMENT OF LARGER SHAW RADIO GROUP (Corus) IN HAMILTON/TORONTO - CING, CFNY, CHAY, CILQ, Y-95, CHML AND CHOG - If and when the purchase by Shaw Radio (Corus) of stations CILQ and CHOG (Toronto) and Y-95 and CHML (Hamilton) is closed and approved by the Commission, the Shaw(Corus) combo (advertising package) now in the Toronto CMA will be expanded to seven stations. This group forming a combo with the Toronto CMA portion of the audience will be a formidable force in the marketplace in the face of independents."

4583 Hence, the definition of a radio market, as far as the Toronto CMA, requires a second look.

4584 The city has amalgamated into a larger greater metropolitan area, where all radio stations are in Toronto/Hamilton corridor currently enjoy a common listening area.

4585 Advertising is largely bought in regional packages and this market enjoys a larger portion of media-buying decisions from advertising agencies and media buyers that seek cost efficiencies and target specific demographics throughout the greater metropolitan area; thus, the combo packaging and accommodating of advertising impressions which, within the common ownership, encourages efficiencies of delivery of GRPs -- gross rating points -- facilitates the manipulation of competitive prices.

4586 Six: Geographical amalgamation of Burlington -- CING-FM -- to Toronto CMA.

4587 The potential amalgamation of Burlington/Oakville to the Toronto area, responsibility resides with other government agencies that do not keep check of radio ownership levels and can potentially officialize which is today already a reality of a common market of potential audiences in the greater Toronto area.

4588 This is, of course, without taking into consideration that Shaw/Corus/YTV have applied to an additional licence in the Toronto and greater provincial coverage -- 50,000 watts 740 AM -- and awaits the Commission approval for it.

4589 Number 7: CKDK-FM Woodstock has become a virtual repeater of station CING-FM Energy 108 and leaves little room for local programming.

4590 Number 8: Corus' 20 per cent foreign media. Not only we will be handing Shaw/Corus 50 per cent of all licences in the specified markets, but with that, we will also be fostering control of broadcasting by large corporate entities with its corresponding foreign ownership consequences.

4591 Number 9: Power --

4592 THE SECRETARY: Mr. Canales, I'm sorry to interrupt you, but you're past your 10 minutes. I'm wondering if you could wrap up.

4593 MR. CANALES: Yes, I will.

4594 THE SECRETARY: Thank you.

4595 MR. CANALES: Okay. Sorry about that.

4596 Like I said -- I'll just name the five things (inaudible) power corporation; additional swap of cable (inaudible) between Rogers and Shaw to facilitate the (inaudible); the mere fact that the Toronto applicants are so numerous and so on demonstrate the need of their Toronto frequencies and I urge you in closing that you look towards the future and we are allowed to create diversity in the business environment of (inaudible) radio broadcasting and (inaudible) to consolidation into a few entities.

4597 Thank you very much.

4598 If you have any questions I will be available.

4599 CHAIRPERSON OF THE COMMISSION: Yes, we do. It will be Vice-Chair Colville who will be asking you some questions.

4600 MR. CANALES: Okay.

4601 COMMISSIONER COLVILLE: I guess it's good evening, Mr. Canales, where you are.

4602 MR. CANALES: How are you?

4603 COMMISSIONER COLVILLE: I'm just fine.

4604 I noted at the bottom of page 3 in the presentation that you have read to us this afternoon that you have said:

"Hence the definition of a Radio Market, as far as the Toronto CMA requires a second look:"

4605 So you acknowledge that perhaps the definition needs a second look.

4606 MR. CANALES: At Toronto.

4607 COMMISSIONER COLVILLE: Would it be your view that these applications would fit within the current definition of the market in Toronto?

4608 MR. CANALES: No.

4609 COMMISSIONER COLVILLE: The current CRTC definition of a market?

4610 MR. CANALES: No. From what I understand, Corus is agreeing from the current definition. We believe that there is such a merge of audiences, in the French areas with the Toronto areas that there is not a real distinction in terms of the quality of the audience. So, for example, just to elaborate on that point, Shaw currently has a radio station called CFNY which is supposed to be a Brampton radio station, which was grandfathered years ago to be able to move down to Toronto and consequentially broadcast from the Eaton Centre in Toronto and the CN Tower, but it's still supposedly a Brampton radio station. Does that address your question?

4611 COMMISSIONER COLVILLE: It's your opinion that the Shaw stations go beyond the current CRTC definition of market, but do you understand that the CRTC -- that the stations have been licensed within the existing CRTC framework or definition of market?

4612 MR. CANALES: Yes, I understand that.

4613 COMMISSIONER COLVILLE: I noted in your written presentation that you sent in earlier, you said:

"In my opinion there should not be any more than 35 per cent market domination in any given case, taking into consideration the target demos, music format and concentration of ownership this will give it a fair playing ground and a fair chance to make a profit for all the broadcasters." (As read)

4614 When you say 35 per cent market domination, what's the 35 per cent of?

4615 MR. CANALES: Well, you have to analyze the demographics. What they do is they take 12 plus as the universe and they treat that as the general thing, but normally that's not what counts because the radio lists of advertising sales, the advertising sales are not bought in 12 plus. They are bought in target demographics.

4616 If you dominate the 12 to 24 market, you know, it's a much different thing than if you have the 12 plus. The 12 plus is much more general.

4617 The problem comes where the stations are allowed to change their format so that they can go like CISS went from country, which was an older demo, to a real teen demo, so that changes the mix in the market.

4618 So in my opinion the (inaudible) in the outlets and the licensed numbers of outlets that has the capability to capture audience. Then, in order to be again formed in a package for sale. (Inaudible) ...need a specific target audience. So they can meet a certain financial (inaudible).

4619 COMMISSIONER COLVILLE: That may be so, but the Commission expressly changed the policy to allow stations to move from one format to another. Are you suggesting we should change that policy?

4620 MR. CANALES: No, not at all. I am merely suggesting that in the case of Shaw and Corus they have too much going on and that I think it creates an imbalance in terms of the marketplace. If you went by the markets, like that's why I included the chart that there were 12 markets and they (inaudible) according to the chart 50 per cent of the radio stations in those markets.

4621 COMMISSIONER COLVILLE: As we discussed with Mr. Plunkett this morning, that chart runs all the way from Oshawa and points west of Oshawa all the way up to Barrie where some of those stations, a station in Ottawa doesn't necessarily overlap with a station in Barrie. So is that an accurate way to measure that entire market?

4622 MR. CANALES: Well, the market that they sell, really, when they sell it is really commercialized. It's like southern Ontario, they explained they packaged the advertising in order to share it with stations that they have low producing and so everybody gets involved, but the majority of the stations gives you the power to make the combination to suit the advertiser to acquire a bigger dollar.

4623 So if you have five stations you have an ability to acquire more audience than somebody who has two. Therefore, it makes a bit of a commercial disadvantage in terms of anybody else having more. So that's the area that is not currently regulated in terms of because you just having that thing happen right here right now with the situation in Toronto.

4624 I don't know of any other market as saturated as this in Canada.


4626 My last question then is: Is it your view that this application with the stations involved goes beyond the Commission's current ownership policy?

4627 MR. CANALES: Yes. I think it should be carefully assessed and you can hand out more like the term "a loaded gun" and then you just have to make sure that the overpowering of the freedom of the operation is what -- I mean they could very easily monopolize the market. That's the concern.

4628 COMMISSIONER COLVILLE: Okay. Thank you very much for your submission, Mr. Canales. We apologize for the difficulty in making the connection here today.

4629 MR. CANALES: That's fine.

4630 Thank you very much for hearing me today.


4632 MR. CANALES: Bye, bye.

4633 MS VOGEL: I would like to call the representatives from Pacific Music Industry Association and NewMusic West and O'Day Productions. They have agreed to sit as a panel and have 15 minutes for their presentations. Not each. In total.


4634 MR. DONNELLY: Madam Chair, Commissioners, thank you.

4635 My name is John Donnelly. I'm a Vancouver-based concert promoter and producer of special events. My background includes 15 years as a performer and, now, 15 years on the business side of music so I'm quite familiar with all areas of the music business and the entertainment business, in particular, in this market. Although I have also produced concerts and events in many other markets than Canada, I have had the opportunity to work with almost all of the Vancouver's local radio and television broadcasters over the past few years.

4636 I am appearing today on behalf of Corus Entertainment to speak, in particular, about CFOX and their unprecedented support for the local music industry with regard to their application which is before you.

4637 I understand that your approval of this application will allow Corus to effectively take over management of WIC's radio and specialty television properties, which includes Vancouver radio stations CKNW and CFMI. We strongly support this application.

4638 Corus is pledging to voluntarily distribute $10 million in radio public benefits funding over a seven-year period. Of that money, 3.1 million will go factor, one million will go to local initiatives in the six WIC radio markets and $100,000 per year will go to college and campus radio. This is a substantial commitment and is well allocated.

4639 To speak directly about Corus' current radio management team, they have proven to be strongly supportive of local music and the arts and I believe their music industry friendly management policy will carry over well to CKNW and CFMI.

4640 Two of the major initiatives that I worked on directly with CFOX are FOX Fest, which is their annual station festival which I produce for them -- it's taken many forms over the years but it's always had a very strong focus on promoting and supporting local talent.

4641 Another big initiative that I worked with CFOX on NewMusic Quest. This is Vancouver's annual festival for Canadian talent development. It's supported strongly by CFOX, both financially and promotionally, over the past nine years that we have been staging this event.

4642 Through these projects and other projects that I have produced, I have the chance to watch the management and staff at CFOX take direct action to support new ideas and new talent.

4643 NewMusic Quest in only two weeks and this year we are going to feature over 300 artists performing in 30 venues throughout Vancouver. If you turn in to CFOX, you'll hear promotional spots and (inaudible) supporting the event but, even more importantly, you will hear the music of many of these bands. CFOX has special programs, such as F-SPOT and ULTRAFOX, which are dedicated to supporting local music and breaking new artists. But they go above and beyond that. They will be interviewing artists, attending the shows. They will be doing entertainment reports from our festival event and they help promote both the festival and the new Canadian artists. This type of over-the-top coverage isn't even considered by the other stations in the market and they really come to the table for us and I'm pleased to report that this event has been a huge success. Last year we attracted almost 20,000 people and this year, now, it looks like we're going to draw 25,000. So we are really pleased and I believe our event, in particular provides a really good example of the type of support that CFOX gives to local entertainment events and groups.

4644 I have also both performed and produced (inaudible) many other markets in western Canada and I just know that it's very difficult to obtain that type of radio support, in particular, for groups featuring local artists. So in Vancouver, there's just a huge talent pool. The Pacific Music Industry directory lists 1,000 performers and over 150 live music venues. And the difference that a strong, local broadcaster can make for new artists, especially when they get into a project or get behind it, is really phenomenal and I know first-hand that the CFOX management and staff are very excellent local broadcasters and committed to supporting a local community.

4645 My personal experiences with Chris (inaudible), Bob Mills, Rob Robson(ph), Marianne MacKenzie(ph) and all the staff at CFOX have been nothing short of fantastic; they provided many opportunities to me over the past many years, and to my production company, and they were always there when we needed them. So it's my pleasure (a) to provide this endorsement for CFOX and their staff and I know that their application to take over the management of CFMI and CKNW will be a strong benefit to the local community. I think it's going to help them prove the support that we can get in the local markets for events and for artists and I know that their commitment is to serve the local community.

4646 MS O'DAY: Madam Chair, Commissioners, my name is Ellie O'Day and I'm currently working at O'Day Productions as a publicist in the arts and I'm arts consultant and without repeating a lot of things that John Donnelly just said, I am, too, supporting this application and with more an anecdotal background in that I was the executive director of the Pacific Music Industry Association from its first years, in 1991, until just about 10 months ago -- and by the way, I resigned because I like to work very directly with artists, and that's what I have done is I have gone back to work that allows me to work one-to-one with artists.

4647 During the years that I was executive director, one of the primary projects that I worked on was the Canadian talent development project from CFOX, known as DemoListen Derby/Vancouver Seeds. DemoListen was the talent competition and Vancouver Seeds was the resulting CD. I know there are a lot of stations that do similar home-grown projects but my experience with CFOX showed, I think, how most stations really should be doing these -- and I'll cite some specific examples.

4648 When CFOX did these projects, there was a tremendous excitement in the community that was generated by the on-air exposure of the ongoing competition that happened in many stages. Once we then adjourned to record the CD when there was less public profile of what was going on, that took place, and then once we had the CD out, then is the opportunity for the radio station to play tracks from the CD. I know this, again, happens in many contexts, but what CFOX does was very much above and beyond just giving air play to tracks on the CD. They had an amazing open-door policy to those artists who had gone through the process of taking part in the final stages of the project and that afforded them an ongoing relationship with the station and an ongoing opportunity to build their careers -- and a few examples are, Matthew Good Band, which is one of the leading rock mainstream bands in Canada today. It was one of the winners, I believe, in 1992. He started out as a solo artist and very quickly found a band and got exposure on the station through not one, not two, but a succession of, I'm sure, at least a half dozen singles that were exposed by the station. These were not singles that you could have found any trade paper because it was CFOX, in its local community, that was giving exposure to this artist and today, Matthew Good is seen on covers of magazines right across Canada and has a lot of his career to go.

4649 Another example would be Bif Naked, tattoos and all. She was another winner of our competition and, interestingly, she won the competition and then very shortly after her band broke up. So, therefore, she really couldn't take advantage of the second half of the competition, but what we allowed her to do was to use the studio time that she had won to put together some demos -- because, at the competition where she won, she was noticed by a local manager by the name of Peter Karroll who today, seven years later, is still her manager -- and through those demos got exposure to a local producer who then helped her record her very first album. She was subsequently signed to both Aquarius Records in Canada and to labels overseas, in Germany, and has an international career today.

4650 But what CFOX did in those intervening years, again, was not only to afford air play to her but also an opportunity for her to come onto the station where she has developed into one of the most amazing rock raconteurs I have ever seen in this industry and she has now been featured on talk shows in the United States, because she was allowed the opportunity to come into the station and use that context to develop that part of her personality.

4651 And most recently, Nickelback, who is on the very last of the projects that I took part in, put out an album last year, just following their release on the CD compilation that Vancouver Seeds was distributed on, and when they put out their own album, they finally got the national recognition, with the help, once again, over many years, with CFOX that has given them the encouragement to build their career, and I do understand that, in this past week, that they are now Top 10 U.S., and I'm very proud of them.

4652 I would just like to say that CFOX does much more on the (inaudible) of requirement of the Canadian talent development project and they really put their full creative support behind it and because of that, I support the way that they implement their promises of performance.

4653 MR. LaFRANCE: Madam Chairman and Commissioners, my name is Marc LaFrance and I am the President of the Pacific Music Industry Association. I am also a recording artist. And I also have a record label, called Delinquent Records. I am here to support (inaudible) CFOX, excuse my nervousness --

--- Laughter / Rires

4654 MR. LaFRANCE: I covered three people there then.

--- Laughter / Rires

4655 MR. LaFRANCE: I just wanted to point out that CFOX, as an artist back some years ago when I released an album were very supportive of me and played my record, which led to me developing my record company which ended up putting me in a position to represent other artists and shop their music throughout -- internationally throughout the world. I go to MIDEM every year and will be going to POPKOMM, but from the air playing exposure that I got from CFOX it helped me grow not just as an artist but also helped me as an entrepreneur and a record company to further my career and help other artists.

4656 I also wanted to point out that CFOX is also a tremendous contributor to the West Coast Music Awards, which celebrates our talent here in British Columbia, and also, they have also been a phenomenal support with the Seeds album which, you know, showcases our talent locally.

4657 I just wanted to add those few things, and excuse my jumbling, but that is -- you know, I throw my support behind CFOX. Thank you.

4658 CHAIRPERSON OF THE COMMISSION: Thank you very much.

4659 I would ask Commissioner Grauer if she has any questions for you.

4660 COMMISSIONER GRAUER: No, I think your -- well, not with respect to your support for Corus' application.

4661 I just have one other matter that I would appreciate your views on. Our policy which allows multiple-licence ownership -- there are a number of reasons for it, one of which is to hopefully increase the diversity of formats available in a market.

4662 I would be interested in your views on what the supply is of available music that will allow this diversity. In other words, we have Canadian content requirements and we hear, from time to time, from various people, that there is -- it's cyclical in the various genres and so, I just wonder if you could give me your thoughts on that I suppose is what I would appreciate.

4663 MR. DONNELLY: With respect to the project that I'm working on right now, which is the NewMusic Quest Festival, it really is a big festival to promote emerging talent in Canada. So the way we conduct it is we issue a call to new artists to submit their tapes to the festival. This year we broke 1,000 submissions. We almost had 1,100 artists from B.C., from the Pacific northwest, from Alberta, from -- a fair amount of Ontario and Quebec, as well, but really the concentration of it is from right here in our own market. So there's an incredible talent pool in this market. The quality of it, with just the increased quality in home recording and everything going digital, it's very -- it's way easier for groups. It used to be that it cost so much for a group to make a record to try and get the kind of quality that was available for radio broadcast. Now, with the advent of digital technology, we are finding that of the 1,100 submissions over 800 were CD-quality submissions put forward by new artists, so 800 of them are on CD and available. So I really believe there is no shortage of music that's available and it's only getting better as our whole industry matures. So, to have another outlet, in particular with the attitude and the approach that CFOX has taken, I know their plan, really, is that this management staff will now take over the other two new stations and I think that taking their attitude or supporting local music will only benefit our entire community.

4664 COMMISSIONER GRAUER: I guess part of my question was, for instance, if we wanted diversity in terms of, you know -- I don't know my music as well as you do, but jazz and adult -- is there's lots of -- is there ample supply in the different genres. If someone wanted to start a jazz station, could you do it with the --

4665 MR. LaFRANCE: Yes, I would say -- I represent all genres of music and there is an abundance of all types. There's more music, I think, produced now than ever in the history of mankind and I see a lot of it, local jazz, really good jazz, good even Celtic music, B.C. Celtic music. So we have a fairly -- a very large variety.

4666 COMMISSIONER GRAUER: Thank you very much.

4667 Did you want to add something?

4668 MS O'DAY: I just wanted to add that even within rock, there are so many -- the market has become very fractualized and there's so many distinctions within even what we used to broadly think of as pop and rock. Now, today, even within a market that has multiple rock stations, it's very different tastes, flavours, of rock within any one market and it will be attracting very different listenership, so I don't really see a problem there, in that regard.

4669 COMMISSIONER GRAUER: Thank you very much. I appreciate your comments.

4670 CHAIRPERSON OF THE COMMISSION: Thank you very much.

4671 THE SECRETARY: With your leave, Madam Chair, if those three intervenors could consult with our court reporter before you leave, please, there are some names that she would like to retrieve from you for the transcript.

4672 Those are all the intervenors with respect to the Corus applications and we're in your hands. Do we go straight to reply, at this time?

4673 CHAIRPERSON OF THE COMMISSION: Well, I understand Corus has been offered to have a decent time before they come for reply and they said they were ready, so we are taking their word on it.


4674 MR. CASSADAY: Good evening. We promise we won't spoil the great karma of that last presentation.

--- Laughter / Rires

4675 MR. CASSADAY: We know many of our stations are listening on the Web site to this proceeding and I hope they all take some satisfaction to the kind of difference each of them can make individually.

4676 Madam Chair and Commission, we thank you very much for the opportunity to have presented our case and for your patience, and the staff in particular for the patience in allowing us to get to this point. It has been a very long process.

4677 We would like to make just a very few and brief comments on the interventions that we have heard this afternoon and we would like to begin by thanking all of the intervenors, both those that supported our application and those that opposed it, and thank them in particular, in many cases, for the long trip they made to get here and the amount of time that they spent with us in these proceedings.

4678 As we listened to the conversation this afternoon, there were really three themes that emerged, in my mind anyway and I think in the minds of our team. The first was competition; the second was diversity; and the third was the issue of fairness.

4679 I would like to just make a few quick comments on each of those.

4680 First of all, as it relates to competition, whether it is in respect to television and the impact of cable versus DTH carriage or whether it's in respect to radio and the impact of various levels of tuning share or revenue share in a given market, the most important thing, in my mind, when one considers the impact of competition, is whether or not you have the presence of robust and aggressive competitors in the marketplace. And as an illustration, you know, to the intervenors, we would just like them to think about the impact that Virgin Airways has had in their particular sector, a very small competitor but one with a sense of purpose, one with a vision as to where they wanted to take it and they, you know, dwarfed by giants like Lufthansa and British Airways and American Airlines have made a truly significant impact on their business. And as it relates to our business, the television business, we have seen the arrival of ExpressVu, for example, who, while maybe small in absolute terms, are the career leader in digital, which we believe is the new business that we will participate in television.

4681 On the question of diversity, we would simply like to remind the intervenors that we believe one of the unique aspects that Corus, this new company, brings to the table is its western heritage. We have a deep respect for the importance that we have, the responsibility that we have, to reflect regional interests, particularly those here in the west, both as it relates to music talent and production talent, and that is a belief that is a part of our parentage and that we can assure the intervenors that will be maintained as we go forward.

4682 The final area that we just wanted to touch on is the issue of fairness. It seems that there is still the perception that there would be some sense of obligation on the part of Shaw management to demonstrate preferential treatment to Corus management simply because of the shared ownership that J.R. Shaw has in both of those companies and we just believe that that is not a valid or real concern. And we would remind the intervenors, as we said earlier, that approximately 50 per cent of our new company has shareholders that are unique to those of Corus and the Shaw family's total equity in our company is approximately 10 per cent. So we think that there is clearly in place the shareholding mechanism to ensure that there is fairness. And we also appreciate the comments of notable intervenors, such as CHUM, who pointed out the progress that we're making as an industry in moving forward on that front.

4683 So, Madam Chair and Commissioners, those are just a very brief response to what we think has been a very full hearing of our application and we, once again, thank you very much for your attention to our application.

4684 If there are any questions, myself or Kathleen or any of our team who are still here would be delighted to answer them.

4685 CHAIRPERSON OF THE COMMISSION: Thank you. We have a few questions.

4686 First, Commissioner Pennefather would like to pursue in some elements that you touched upon.

4687 COMMISSIONER PENNEFATHER: Thank you, Madam Chair.

4688 Indeed, I would like to return to one aspect of the application, and I reference paragraphs 33 and 34 of the radio policy. In fact, we discussed these three aspects referenced in that paragraph regarding the impact on competition and diversity and concentration, mainly the level of true competition, the potential for gate-keeping with respect to information and concentration of advertising -- of the advertising market in the hands of one person. Those three components are in paragraph 33.

4689 I would like to return to this matter because your application potentially raises issues regarding levels of competition and the Commission may determine that some form of divestiture in some or all of the markets involved may be required.

4690 If we look, then, at the markets involved, specifically, Calgary, Edmonton, Vancouver and southern Ontario, wherein we do see, when you combine the current Corus holdings and the holdings under consideration in this transaction, a position in the Calgary market of 48.4 per cent share in revenues and 40 per cent share in audience, in Edmonton 51.6 per cent and an audience share of 54 per cent, and in Vancouver a revenue share of 40 per cent and audience share of 33 per cent, in Toronto and Hamilton 15 per cent revenues 10 per cent audience share and in Hamilton 60 per cent share of revenues and a 29 per cent share of audience as a combination -- and I'll come back to the souther Ontario market in a moment. Considering this impact, do you agree that if we consider just the radio stations and the radio market, and using 1999 BBM numbers, which I just have, that the combination of your existing and acquired stations places Corus in a dominant position in these markets.

4691 MR. CASSADY: No, Commissioner Pennefather, we do not agree with that. We believe that in each of those markets there is robust competition, there are numerous competitors. For example, in the Calgary market, which you referred to, in the addition to the combined stations of Corus and WIC we have Standard, Rogers, CBC. We have CJSI-FM, an independent. We have CHFK, an independent. And we also have a campus radio station.

4692 In Edmonton, in addition to the combined ownership of Corus and WIC, we have, again, Standard, NewCap, Telemedia, CBS -- I'm sorry -- CBC. We have CKUA-FM, an independent; CJCA, an independent; CKER-FM, an independent; and, again, a considerable spill coming into that market. So, again, we look at the Edmonton marketplace as being an extremely competitive market within the country.

4693 All of the intervenors have spoken about the intense competition within the Toronto market but within the Toronto market, in addition to Corus/WIC, we have Telemedia, an operator with over 90 licences in Canada, Standard Broadcasting, CHUM, recognized throughout the hearing as one of the most dynamic competitors in our industry, Rogers, ethnic stations, CBC, once again, intense competition.

4694 In the Vancouver market, we also have levels of competition that virtually unprecedented in any sector that you look at within the Canadian industry, as a whole, with the competition from Rogers, CHUM, again Standard, the Pattison group, CBC, as well as ethnic broadcasters.

4695 So these are markets with intense competition.

4696 The other aspect, of course, of importance here is recognition that as it relates to advertising the radio business competes with many other forms of advertising that are available, notably, out-of-home, newspaper, magazine and television, all of which provide significant competition for us and we have provided for each of these markets, as part of our submission, detailed charts outlining the competitive framework in each market in which we compete.

4697 As it relates to our share of viewership, we also can point -- listenership, we also can point to the fact that our listeners in each of our market have access not only to the radio stations in those markets but also to a wealth of Internet stations which have emerged both from Canadian sources as well as from international sources.

4698 In addition, we have the opportunity for people to tune in to services like DMX and Galaxie, and we also talked about the imminent arrival of satellite radio, probably either made available in Canada directly through the automotive companies or through the two major players, Sirius and XM Radio.

4699 COMMISSIONER PENNEFATHER: So I take it that however you agree with the impact, per se, in terms of the revenue share and audience share that I mentioned in each of those markets that you will be occupying that position and your point is that it does not, however, undermine competition as a result. But you do agree that you will occupy that position -- those positions in those markets?

4700 MR. CASSADAY: Those are fair representations of the market shares in those -- I mean those markets.

4701 We would also put on the record the fact that in the radio business -- and I think Mr. Strain talked about this in some details -- there are ebbs and flows in formats and shares rise and fall rapidly based on the performance of the genre and the management of those individual stations.

4702 So we would hope that we can maintain and even grow our business in those markets, but there's no assurance, given the level of competition, that that would be the case.

4703 COMMISSIONER PENNEFATHER: Now, regarding southern Ontario, we note not only the percentage of revenues and shares in Toronto and Hamilton but, also, the extensive coverage your combined stations in these markets give Corus in southern Ontario, and the point has also been made that the numbers that I have mentioned still do not include the recent acquisitions from Power, namely, 11 stations in Ontario.

4704 In your view, does this not raise concerns regarding competition, diversity of new voices and concentration of the advertising market in one person's hands, in the particular situation of southern Ontario?

4705 MR. CASSADAY: No, it does not. The Ontario market tuning by major broadcast owner -- and we can cite statistics here -- accounting for 70 per cent of the province's tuning, the combined Ontario assets of Corus, the recently acquired Power stations would total just 9.4 per cent of market. The addition of the WIC stations would result in an Ontario share of Corus, combined, of 15.4 per cent. That compares to CHUM, with 13 per cent; Rogers, with 15 per cent; Telemedia, with 9.1 per cent; Standard, with 8.9 per cent; and the CBC, with 9 per cent; with others, which includes independent and out-of-market tuning at 29.6 per cent.

4706 So, once again, I think we can see that there is incredibly strong competition within the Ontario marketplace and that the position that would be held by Corus going forward would, in no way, represent a degree of concentration that should cause concern.

4707 COMMISSIONER PENNEFATHER: My question was regarding southern Ontario and the particular contours that result from the ownership you would acquire, if approved, in an area which covers London, up to Barrie, inclusive of the Power acquisitions. You, in this particular circumstance, were talking about CING-FM Burlington, CHML, CJXY-FM, CFNY-FM Brampton, CHOG or CFYI -- I believe they're the same -- and CILQ-FM North York cover a vast area in southern Ontario.

4708 Again, do you not consider this to be a risk or there are not concerns raised regarding diversity --

4709 MR. CASSADAY: No, we do not. And we think the information that we provided the Commission just a moment ago is quite reflective of the southern Ontario market position. When one considers that the Ontario radio market revenue is approximately $339 million, one could easily assume that at least 80 per cent, perhaps 90 per cent of that, would be in the southern Ontario market. So I think this is an excellent reflection of the situation in southern Ontario.

4710 We would also add that the positions that we have acquired and hope to acquire in Ontario are in complete compliance with the CRTC policy, as it relates to radio ownership and duopoly. In no instance, do we exceed the level of ownership that is allowed under the current regulations. We have three stations in Toronto, two -- we would have, with your approval, two FMs and one AM. We have a station in Burlington, which is a separate designated market. We have two stations in Hamilton. So, three in the Hamilton/Burlington area. We have two stations in Barrie which complies with the CRTC's regulations.

4711 So, with respect, we would argue that, given the level of competition in this marketplace and the fact that we are in complete compliance with the policy direction of the CRTC, that there should be no basis for concern over the position that we hope to acquire in that market.

4712 COMMISSIONER PENNEFATHER: I understand that point, which is why I raised the radio policy and the fact of when such a transfer would occur, I agree we're not challenging that, but we are looking at the consequences in terms of competition, diversity and news voices and the fact of the matter is that the results of these acquisitions cover a vast area of Toronto and southern Ontario and, in effect, render a position for Corus which, in your view -- I was interested in knowing your view on whether or not this was a cause of concern, regarding diversity of voices as well as concentration of advertising, because the effect of all of these acquisitions is a very large coverage of southern Ontario.

4713 MR. CASSADAY: We believe that as it relates to diversity that, in fact, the proposal that we have before you is a virtue in that, as Mr. Strain explained in his detailed discussions on this subject, we will have the opportunity, through extensive research, to create even broader play lists than are currently in existence now.

4714 One of the benefits of consolidation is the opportunity to move away from the pursuit of a single demographic and provide more choice for our radio listeners in Ontario and we're excited about that prospect.

4715 Secondly, as it relates to advertising, not only do we not consider our share of the radio pie to be in any way a threat to the competitive environment in southern Ontario but we point out, once again, to the supplementary material that we provided in our application with the number of newspapers, both dailies and weeklies, in each of those markets, plus the competition from out of home, plus the extensive opportunity for television advertising in that market, and for all of those reasons we would suggest that there is no reason for concern about the level of concentration that we will have in the southern Ontario market, either in terms of number of stations, share of audience or share of revenue.

4716 COMMISSIONER PENNEFATHER: So, in sum, you do agree, however, with the level of concentration which the facts tell us you will have as a result of these transactions?

4717 MR. CASSADAY: Yes. The statistics that we have provided you with, in response to your question, are accurate reflections of the situation as it exists in Ontario today.

4718 COMMISSIONER PENNEFATHER: Beyond the individual markets involved, and looking at all of Corus' radio holdings currently and as a result of this transaction, there can also be a question of the level of competition on a regional and national basis.

4719 In contemplating this aspect, should the Commission focus solely on adjustments in individual markets?

4720 MR. CASSADAY: We believe that the current approach that the Commission has taken to define radio markets is accurate. Radio is primarily a local business. As we have put on the record during these hearings, approximately 75 per cent of our total radio revenue comes from local advertisers and, as all of the Commission is well aware, our signals reach only discrete areas of the population, so we are in complete agreement with the current CRTC definitions, as it relates to market definitions for radio.

4721 COMMISSIONER PENNEFATHER: If the Commission were to determine that the concern is also, or instead, at a regional and national level, what kind of adjustments could be made?

4722 MR. CASSADAY: The Corus application that's before you is in complete accordance with all of the current regulations. It would be very difficult for me to speculate as to what the Commission might be considering, in terms of changes to those policies. We can only say that as it relates to the policies that we are aware of today, we believe that this application is completely consistent with both the word and the spirit of those regulations.

4723 COMMISSIONER PENNEFATHER: That's why I began with the policy itself. And under the existing policy, the Commission makes it clear that it would call upon the applicant to assess its consolidation against the issues of competition, diversity in news voices and concentration in advertising markets.

4724 Thank you. Those are my questions.

4725 MR. CASSADAY: Thank you.


4727 COMMISSIONER WYLIE: I have just one question.

4728 The numbers you were giving, I realize you said southern Ontario was upwards of what, 80-85 per cent of radio of Ontario market?

4729 MR. CASSADAY: That would certainly be my estimate, Commissioner. I think it would be very close to.

4730 Terry, would you agree?

4731 MR. STRAIN: Yes, John, I would.

4732 I think just one other thing I might add on top of what you said, it was interesting, one of the intervenors, for example, indicated that with our stations in Toronto we would dominate the 18 -- as they existed today -- would dominate the 18-24/18-34 market. We are not the Number One station with any station, either WIC or Corus, in that market, and you can dominate the 18-24/18-34 market, in Toronto, without touching a WIC station or a Corus station. In other words, you can buy around it. And I think when John said that there are opportunities for people to buy around this and do things, that is so -- you know, we had a pretty good -- and I'll come back to Commissioner Pennefather's one question on Burlington. We had a pretty good run with Burlington because we were lucky. We got in the CHR format. When we bought the station, it was in that format. There was no other station in that kind of area doing anything along the CHR. As soon as Rogers came along and bought CISS -- and they now have three stations in the market -- they went from a three-share to approximately an eight-share, and we went from about a three-and-a-half-share down to a two-share.

4733 So, these are -- when I'm talking about ebb and flows, this is what can happen within a market. And I'll tell you, you feel the hit of it, from a financial standpoint, immediately. It doesn't take a week. It takes a day.

4734 COMMISSIONER WYLIE: So the numbers you were giving, the percentage of shares, were for all of Ontario, though, so there could be a skew to those numbers, but not probably very large if it's 85 per cent. But you were giving percentaGes of the various players for all of Ontario?

4735 For example, if one is not in Ottawa, it skews the numbers for southern Ontario, which is what we are focusing on, where the overlap is --

4736 MR. CASSADAY: That's correct.

4737 COMMISSIONER WYLIE:  -- more serious. But considering the percentage, it wouldn't change those numbers a whole lot. But they were for all of Ontario --

4738 MR. CASSADAY: That's correct.

4739 COMMISSIONER WYLIE:  -- the numbers you were giving?

4740 Thank you.

4741 CHAIRPERSON OF THE COMMISSION: Legal counsel has questions.

4742 MS MOORE: Thank you.

4743 Some of the benefits proposed involve equity investments, and I was wondering if you would be able to commit to -- if your application is approved -- to report to the Commission, on an annual basis, as to the amount of the return on those investments and as to what initiatives the return has been reinvested in.

4744 MR. CASSADAY: Yes, we would be happy to do that.

4745 MS MOORE: Thank you.

4746 Those are my questions.

4747 CHAIRPERSON OF THE COMMISSION: Thank you very much.

4748 THE SECRETARY: I would like to invite Shaw to come forward, at this time, to comment on the interventions with respect to Corus' applications.


4749 MR. STEIN: Thank you, Madam Chairperson and Commissioners and Vice-Chairmen.

4750 I just had the great joy, over the last hour, of getting all of the kinks out of my system by writing out all my notes and now I'm just going to disregard them and give my comments as I feel then -- and of course, I'm here with Chris Johnston to make sure I get this accurate.

4751 I would like to comment on three of the interventions as part of this proceeding related to Shaw directly or indirectly.

4752 First, with respect to CHUM's intervention, we want to confirm our commitment to those elements of the code that are so applicable and, as well, to work on an industry-wide basis to ensure that we come up with an overall approach that will lead to the successful launch of the new digital services that will be equitable to all of the stakeholders involved.

4753 As well, I think that the -- I have to comment that the commitment to positive negotiations to ensure that all of the services that were licensed by the CRTC were launched, that CHUM referred to, that the ability to negotiate with programming services over the past couple of years has been a very positive experience and, I think, has led to a great success with our viewers, in terms of those services. So we tried to resolve those, the issues, in very commercial ways -- and as Jim said said, we always appreciate the Commission's patience as we sort those things out and, I think, in the end, benefit Canadian viewers in terms of the services that we now offer.

4754 Secondly, I would like to provide a comment on the issues raised by the Friends of Canadian Broadcasting, which put forward a list of supposed misdeeds and I would like to -- I think it would be important to deal with each of them in turn.

4755 First, in terms of Telelatino, the Friends said that there are rumours that Shaw did not pay fair market value. That the Friends would try to make a point based on rumour, I think, is typical of the spin and style that they unfortunately bring to the process. If the facts don't fit, they just start a rumour.

4756 As to the increased penetration numbers for Telelatino, this was part of an overall plan by Shaw to bolster our offerings to our viewers and to add more diversity to the package of services we offer.

4757 Mr. Morrison did not mention the other initiatives we have taken to benefit our viewers, including the move of Fairchild Television, a Chinese-language service, to basic in our areas that we serve in Toronto and that we were the first to launch all of the ethnic digital services across Canada. These are all part of initiatives undertaken by Shaw to strengthen the services that we offer in all languages to our subscribers.

4758 Secondly, the Friends, in their comments on Sportscope, have gone beyond rumours to becoming historic revisionists. Sportscope was always on basic on Shaw's systems, and had been for some years. What changed was that Sportscope secured a licence as a full-motion programming service from the CRTC. We kept the service exactly where it always had been for our customers. To move it would have been a disservice.

4759 With respect to Treehouse, first we need to look at the characteristics of Treehouse. It's targeted at children under six years old; it's commercial free; and, at the licence hearing, it was clearly stated that, as an incentive, the service would be offered on basic for free for a year.

4760 When we sat down and reviewed how we would offer the new services, we took a very consumer-focused approach. And during that process, we concluded that Treehouse would make a very attractive addition to our basic package, that it would be also great for Shaw's objectives to offer a service focused on children on our basic package and that the terms, quite frankly, were very attractive to Shaw on a strictly commercial basis.

4761 There had been a lot of issues with respect to the launch of the services licensed in 1996, but I think that the most important point is that we have successfully launched all of them, just as we committed to do.

4762 With respect to Galaxie, the Commission's regulation is quite clear, that an independent service -- which, in this case, is Galaxie -- should be carried provided that it could be delivered to cable hit ends with the appropriate technology.

4763 The short answer is that we were never able to come to an arrangement whereby the technology was compatible. There were discussions with respect to transponders; there were discussions with respect to technology. Despite this, we have continued discussions with Galaxie and we understand an agreement has been reached, and we look forward in terms of the benefits that that service will offer to our subscribers.

4764 Finally, in terms of the use of the local avails, the regulations allow us to promote cable services and we always interpret the regulations in very liberal ways and we took that to include Internet services as part of our cable services package. The CRTC decided that they were telecommunication services and so, we no longer use these avails to promote those services, given that CRTC's decision.

4765 The third intervention I would like to comment on is the intervention by SPTV -- and I'm surprised at the SPTV intervention and, obviously, I must have (inaudible) to have a lot more discussions with them, in terms of how we approach these issues, but I think that in this world of convergence of new technologies and new services, the best approach is the one where we identify the problem, discuss it and identify solutions and move ahead. That's how we make progress. And we believe that we have developed a great broadcasting system because we have solved problems. Nay sayers are not appropriate in this.

4766 We believe that the steps taken by Shaw and Corus -- namely, structural separation with the creation of Corus as a totally separate corporate entity; secondly, the launch of all of the services since 1996 licensed by the CRTC on satisfactory terms to all concerned; and, finally, our participation in all policy and regulatory processes, including the CRTC's development of a new digital framework -- that all of these demonstrate our commitment to make the system work better and to support the development of a strong Canadian broadcasting system.

4767 I think we have to talk more with SPTV about what we need to do to meet the needs of Canadian viewers, to talk about the development of strong Canadian services and to talk about investment and the risks of investment in Canadian programming. I think that these are important things and I think it reflects a failure, certainly, on our part, to perhaps not have advanced the discussions as much as we could to solve those problems.

4768 That's the sum of my comments, and I would be pleased to answer any questions you may have.


4770 Vice-Chair Colville...?

4771 COMMISSIONER COLVILLE: Just a fairly minor point of clarification.

4772 It was mentioned yesterday, I think, in Corus' reply -- well, I know it was mentioned in Corus' reply because I have it right in front of me -- to a number of the intervenors that Shaw has stated that 95 per cent of its subscribers to these services -- those being Superchannel, Moviemax and Viewer's Choice -- 95 per cent of subscribers to these services, those ones I just mentioned, distributed on Shaw's cable services now receive these services in a digital format by a digital set-top box.

4773 Can you confirm that that's correct?

4774 MR. STEIN: Yes. There's two numbers here. The first is, in terms of Shaw itself, I would say that close to 8-9 per cent of our subscribers now receive all those services on digital. A very small percentage in smaller communities still on analog but we're planning to, you know -- that's transitory. We plan to finish that through this year. So that they would all receive those services through digital.

4775 I think the other percentages, in terms of the subscriber numbers for the services themselves, a lot of those are made up of the direct-to-home services, the other digital services.

4776 I think, for example, now, the satellite companies are the largest distributors of their products. Like Superchannel has more satellite customers --

4777 COMMISSIONER COLVILLE: Now you have lost me.

4778 MR. STEIN:  -- than cable customers.

4779 Pardon?

4780 COMMISSIONER COLVILLE: You lost me now.

4781 MR. STEIN: Okay. Sorry.

4782 COMMISSIONER COLVILLE: Of the subscribers, I had understood this to mean you, virtually -- of all the subscribers that you had to the premium pay TV services would have had analog boxes; you've traded those analog boxes out for digital ones to the tune that 95 per cent of those subscribers are now subscribing through digital.

4783 MR. STEIN: Right.

4784 COMMISSIONER COLVILLE: Is that correct?

4785 MR. STEIN: That's correct.

4786 COMMISSIONER COLVILLE: When would you expect that to reach 100 per cent?

4787 MR. STEIN: Well, I would -- for all practical purposes, I would say through this year that we would reach that level. The only area where we might not is in terms of where we are doing conversions in smaller systems.

4788 COMMISSIONER COLVILLE: Now, would all new subscribers --

4789 MR. STEIN: Absolutely. Yes.

4790 COMMISSIONER COLVILLE:  -- services be digital subscribers?

4791 MR. STEIN: All new -- yes. Absolutely.

4792 COMMISSIONER COLVILLE: And in the case of Viewer's Choice, how many digital channels do you allocate to the Viewer's Choice service?

4793 MR. STEIN: I would have to check that exactly because that's part of when we do the upgrades on the systems, in terms of what we're rolling out in the digital boxes, so I wouldn't really be authoritatively able to answer that.

4794 The plan is to be able to launch all of the services with the same number of channels and not differentiate.

4795 We can get back to you on that number.

4796 COMMISSIONER COLVILLE: I would appreciate (inaudible) with respect to Viewer's Choice, and if you have plans for expansion of that --

4797 MR. STEIN: Okay. Sure.

4798 COMMISSIONER COLVILLE:  -- knowing what those plans and what the number of channels allocated to Viewer's Choice would be.

4799 MR. STEIN: Right. Okay.



4802 COMMISSIONER WYLIE: What is the percentage of your total subscriber base, cable base, that receives video programming digitally? Is that the 7 per cent you were mentioning?

4803 MR. STEIN: No, no --

4804 COMMISSIONER WYLIE: Out of your 1.8 million subscribers, how many have a digital box for video services excluding Internet access?

4805 MR. STEIN: Well, the 1.8 million subscribers we have is --

4806 COMMISSIONER WYLIE: One point nine million.

4807 MR. STEIN: I was using 1.8.

4808 COMMISSIONER WYLIE: One point eight, yes, that's what I was using, as well.

4809 MR. STEIN: We have about 130,000 digital boxes in place.

4810 COMMISSIONER WYLIE: Okay. That's the number CTV was using but I thought there was --

4811 MR. STEIN: Well, sometimes people have --

4812 COMMISSIONER WYLIE:  -- conflicting because I believe sometimes Internet receivers, those who receive Internet, or the at-home service, and not the video services also are added in.

4813 MR. STEIN: Not on the same box --

4814 COMMISSIONER WYLIE: So 130,000 of your 1.8 million subscribers receive their video services digitally?

4815 MR. STEIN: Yes.


4817 CHAIRPERSON OF THE COMMISSION: Legal counsel has a question.

4818 MS MOORE: Would you be in a position to file that information by tomorrow, for the public record, and would you be able to copy Corus with the information?

4819 MR. STEIN: Yes.

4820 MS MOORE: Thank you.

--- Laughter / Rires

4821 CHAIRPERSON OF THE COMMISSION: Copy Corus. And we want proof of it.

--- Laughter / Rires

4822 CHAIRPERSON OF THE COMMISSION: Well, thank you very much. That concludes our questions. Thank you.

4823 THE SECRETARY: Madam Chairperson, that ends the intervention phase, with respect to Corus applications.

4824 I would like to, with your leave, re-open the intervention phase for Global and recall Dean Butler. I would invite him to come forward now.

4825 CHAIRPERSON OF THE COMMISSION: And we are doing this with the permission of Global?

4826 THE SECRETARY: Yes, Global has reserved the right to another reply, with respect to this intervenor.

4827 CHAIRPERSON OF THE COMMISSION: Thank you, Mr. Butler. Thank you for your patience.


4828 MR. BUTLER: Most of my comments are already on the public record and I will just quickly summarize what those are and introduce myself and make myself available to questions if you like.

4829 My name is Dean Butler. I'm Director of Media Services with Glennie Stamnes Strategy, a regionally-based advertising company based here in Vancouver.

4830 My comments are relative to the application of Global to merge with WIC Television and divest itself of one station and in order to address that issue I wanted to bring a point of view from an advertising perspective.

4831 The comments that I have heard at the hearing are really interesting. It's the first time I have sat down at one of these, so. I'm not representing any broadcaster and I'm not representing any social point of view. My comments are more economic.

4832 The issue that I want to bring forward is the fact that in this market of Vancouver we are facing a very, very competitive situation for our viewers, period.

4833 There's sort of three components. There's Canadian conventional television; there's Canadian specialty cable television; and U.S. specialty television -- and I'm not even getting into satellite services, at this point.

4834 Since 1989, according to BBM, the share of hours tuned for conventional television has dropped from 60 per cent, in 1989, to 50 per cent, in 1998. Conversely, over that 10 years, with the growth of Canadian and U.S. specialty television, the share of hours tuned on those specialty cable channels has gone from 7 per cent, in 1989, to about 26 per cent, in 1998. And, in the meantime, the population of this market has grown 50 per cent, from about 2.1 million, in 1989, to about 3.2 million, in 1998.

4835 What does that mean? What it means is that conventional TV the audiences have been losing share of viewers to the growth of specialty cable. This, in turn, has put pressure on air-time supply as available advertising ratings available to Vancouver focused advertisers has dramatically decreased. Compounding this problem of diminished advertising time supply, for that matter, the increased demand in Vancouver as a market relatively based on the tremendous population growth we have seen over the last 10 years. The result is severe year-to-year inflation in terms of cost to buy advertising on television in this market.

4836 We, as advertisers, pay significantly more money for shrinking conventional TV audiences and, as a result, in certain respects, TV as a medium, as a viability for the local advertisers, is decreasing relative to escalating costs and advertising budgets. This is forcing advertisers, especially regional advertisers, out of television into other media, such as radio and newspaper, and that, in turn, is creating higher demand in those media and driving inflation there.

4837 Just in terms of expenditures, the average -- the total number of increased expenditures in the last five years, between 1994 and 1998, there's been a 65 per cent increase in advertising expenditures in all media in Vancouver, newspaper, magazine, out-of-home radio and TV, which is about 15 per cent a year, which is actually tremendous growth being financed by advertising.

4838 With respect to the CanWest Global WIC TV, we all know that viewers watch programs, not channels. To capture loyal viewers, conventional TV channels must increase the appeal of their programming -- this means producing of purchasing inventory that can compete with the best productions on specialty networks, both in the U.S. and Canada, as well as the existing competition from convention channels. Any TV station with mediocre programming can't exist in that environment and, actually, will only fragment the available viewing and maybe, in fact, aggravate the inflation situation.

4839 When DTV was introduced in the fall of 1997, we were hopeful that we would have more competition and greater competition for -- the opportunity for more audiences and greater competition within that that's mitigating cost increases. But, at the same time, I believe it was seven cable channels were introduced at the same time which, essentially, whitewashed any effect that DTV could have had relative to that situation.

4840 So, with CanWest Global, really, it, from my perspective, there's no real change in the market structure, other than the fact that with the power of Global, which has built itself on high-quality, prime time programming, and the power of WIC Television, which has built itself on high-quality news programming, as one company combining those opportunities as they may as one station and represented CHAN and CHEK, be able to provide a higher quality competitive product and, therefore, generate higher viewing and, therefore, make it more attractive for me, as an advertiser, at the same time, allowing the new owner to come in, bring more competitive programming and another competitive voice, in terms of the cost of TV.

4841 So, in my comments, I'm supporting the application of CanWest Global to merge with WIC and divest itself of one station; it will only increase the competitive aspect of this market, which is really necessary, and there's still room for more competition.

4842 Thank you.

4843 CHAIRPERSON OF THE COMMISSION: Thank you, Mr. Butler.

4844 Certainly my colleagues may have other questions. Tell me, what did neutralize the effect of the impact of DTV? I'm not sure I --

4845 MR. BUTLER: What happens is it's really a competition for a pie of people watching TV. And with specialty cable channels, they tend to be national signals and, as it's good-quality programming, it's attracting Vancouver viewers to those channels, and in doing so, it really removes those people from access through my advertising. I can't buy national cable channels to reach Vancouver; it doesn't make any economic sense. So what it's doing is it's taking audience and exploiting it, it's taking local audience and exploiting it where it's a value to national advertisers but of no value, relatively, to regional advertisers.

4846 CHAIRPERSON OF THE COMMISSION: Okay. So if I understand correctly, you know, kind of doing the analogy in the Global situation you're supportive because of their local commitments, in terms of --

4847 MR. BUTLER: Oh, definitely, they would provide higher quality product locally and higher quality product will then force the other stations to match that quality and, at the same time -- so better quality means, hopefully, larger share of viewers and, at the same time, hopefully, control some of the cost issues that we are facing as advertisers.

4848 CHAIRPERSON OF THE COMMISSION: You're a media buyer, so you certainly not only are buying viewers, you know what the viewers are looking for, and, in terms of local programming, what kind of local programming do you think has more -- is that news? Or is it the kind of programming that is more oriented towards, you know, public affairs, like, you know, they are proposing? Are they a format or a genre where you know that the viewers are more likely to migrate in terms of being present on the local market here in Vancouver?

4849 MR. BUTLER: I'm not really commenting so much on what program or genre. I do know that putting out mediocre programming that will only take up tunable hours that people don't want to watch will only make the situation worse. Really, put an onus on the TV stations and their programming people to come up with solutions that are real solutions for Vancouver and not perceived solutions. Give the people what they want, not what they believe they should have.

4850 CHAIRPERSON OF THE COMMISSION: So you don't care what they watch, as long as they are there, the --

4851 MR. BUTLER: Ultimately, yes.

4852 CHAIRPERSON OF THE COMMISSION: They have the choice --

4853 MR. BUTLER: I can make my choice --

4854 CHAIRPERSON OF THE COMMISSION:  -- as long as it's largely Canadian.

4855 MR. BUTLER: I can make my choices once they're there.


4857 Do my colleagues have any questions? No.

4858 Well, thank you very much.

4859 MR. BUTLER: Thank you.

4860 CHAIRPERSON OF THE COMMISSION: You have been very helpful and we will certainly make good use of your participation. Thank you.

4861 Marguerite is gone?

4862 MR. BLAIS: Marguerite has stepped out, so I get -- I'm indicated by the folks from CanWest Global that they don't require a reply on this additional information. So that ends the CanWest Global item on the agenda.

4863 CHAIRPERSON OF THE COMMISSION: And that concludes our work for this week and (inaudible) do we have any other --

4864 MR. BLAIS: It's my understanding that the last application -- do you require a...? No. For the final item there is no request for a reply orally. So that concludes that item, as well.

4865 CHAIRPERSON OF THE COMMISSION: Okay. So there's no reply, there's no intervention.

4866 MR. BLAIS: So, I believe that ends the hearing.

4867 CHAIRPERSON OF THE COMMISSION: That ends the hearing and that allows me to thank everybody. Thank you for the participants and thank you for the applicants and thank you for my colleagues, staff and the Panel, the stenotypists and everybody who was with us when we had heating -- the heater.

--- Laughter / Rires

4868 CHAIRPERSON OF THE COMMISSION: Thank you very much.

--- Whereupon the hearing concluded at 1758 /

L'audience se termine à 1758

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