ARCHIVED -  Transcript - Hull, QC - 2001/04/18

Transcripts

In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
Contents.

However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.

Transcription

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.

BEFORE / DEVANT:

ALSO PRESENT / AUSSI PRÉSENTS:

Hull, Quebec / Hull (Québec)

--- Upon resuming on Wednesday, April 18, 2001 at 0830 / L'audience reprend le mercredi 18 avril 2001 à 0830

1590 THE CHAIRPERSON: Good morning, ladies and gentlemen. Welcome to our proceeding.

1591 We will continue with the questioning this morning of the CTV panel regarding the group television renewals for CTV. The next issue that we will be questioning on is the issue of cross-media ownership and then we perhaps may have one or two follow-up questions on some of the issues that we covered yesterday.

1592 Then I believe there will be a small change in the panel to deal with the issue of extension of CTV service to the B.C. interior. That will complete the questioning of CTV on the group television renewals. We will then take a short break and commence the questioning of Global.

1593 With that, I will turn the questioning to Vice-Chair Wylie.

1594 COMMISSIONER WYLIE: Good morning to you all. I can guarantee that there is one question here that you didn't expect. It's my grandson's, right here. He was helping on the weekend.

1595 Although the Commission is not empowered to regulate the print industry, it has taken the position that it has the responsibility to ensure that ownership of other media by its broadcasting licensees does not reduce the number of news and information voices for Canadians or the quality of broadcasting programming, so there are really two issues.

1596 One is the diversity of news and information and, of course, editorial independence follows as well and also whether it has an impact on the quality of programming.

1597 The Commission has, therefore, raised in its Notice of Public Hearing the question of the mechanisms that may be appropriate to enjoy a proper level of functional independence between broadcasting and print assets owned by a licensed broadcaster.

1598 In this regard, Bell Globemedia is the owner of, among other properties, CTV, the Globe and Mail, NewsNet, Globe Interactive, an Internet content provider, Sympatico Lycos, an Internet portal, four Category 2 digital licences in the news genre and subject to approval, ROBTV.

1599 There are a number of areas I will explore with you in this regard: the potential negative impact on the diversity of voices, editorial independence and quality broadcast programming that could result from Globemedia's cross-media ownership and whether this negative impact is inevitable without safeguards from the exploitation of the synergies inherent in cross-media ownership and the safeguards, if any, that should be imposed, including functional separation between editorial decision-making and management of the broadcasting and print media, the need for a specific code of conduct to ensure that separation, the need for a specific complaints mechanism applicable to broadcasters who own other media assets and, as well, editorial board or other board membership restrictions that should be imposed.

1600 We, of course, are all familiar with the fact that the Commission has imposed such restrictions before, both in the Rogers-Maclean-Hunter transaction and in the Québecor/TQS transaction and, as most of you know, we just finished a hearing in Montreal to look at whether or not to approve the ownership of TVA by Québecor and similar safeguards as have been imposed before have been discussed and offered by Québecor.

1601 My understanding is that some of the safeguards in the form of a code of conduct and a complaints mechanism have been provided to you so that it's easier to have this discussion.

1602 CTV's position from its application is that the strength of the company that results from the cross-ownership of Bell Globemedia will ensure diversity and, therefore, will improve the quality of CTV's broadcasting output. However, you acknowledge at page 6 of the 14th of February answer to a question that editorial competition ensures diversity, if I am reading you well, that they are discussing the difference between the Québecor situation and the other. I read now a cite from that bottom paragraph:

"The Commission has found a rigid and complete separation of news gathering and editorial functions provided for in the code of ethics necessary to ensure editorial competition and thus diversity." (As read)

1603 I take from that that you acknowledge that generally speaking editorial competition ensures diversity.

1604 My question is: Will editorial competition absent safeguards not be reduced with the common ownership of CTV and the Globe and Mail?

1605 MR. FECAN: Vice-Chair Wylie, as you can imagine, this is a very important area for us so we have fulsome answers to your questions. I would like to start by perhaps just putting on the record the situation as we see it in terms of the overlap, if you will, in the cross-media situation just so that the fact basis is common.

1606 I think, as I mentioned to you yesterday, journalism is very important to CTV and the editorial independence of our various journalistic operations is paramount to us. The majority of CTV's journalism currently and for the foreseeable future, both in terms of dollars spent and time on air, is local, the local newsrooms.

1607 We do have a strong national newscast that we are very proud of and, of course, there is the matter of the Globe and Mail, which is a national newspaper, so there is, I guess, some potential for overlap if you will between the national newscast and the Globe and Mail, a national newspaper.

1608 There is a very visible effect of our overlap between a national newspaper and local newsrooms. The personality of CTV news is populist, the personality of the Globe and Mail is upscale and its most important section is its Report on Business Section. It's important in national affairs and commentary in arts and it's trying to build other areas as well.

1609 I think it's also important to point out that this isn't a situation where BCE acquired the Globe and Mail. This is a situation where Ken Thompson, who was the owner of the Globe and Mail effectively, bought into Bell Globemedia. He hasn't gone anywhere. He's still there. He's a 30 per cent shareholder. He's not the dominant shareholder, but he is not exactly your average minority shareholder given his financial capacity.

1610 He is still very much involved with the Globe as the Chairman of the Globe. We recognize that to ensure the independence of the Globe and Mail. I think, as you kind of drill into this, it's not quite us acquiring a print asset. These are subtle distinctions, but I think they are important distinctions.

1611 I think the other thing I would like to point out just as an opening, I know it was a long time ago and there was a lot of information yesterday, but we put a bunch of charts up yesterday. One of the charts was how we went from, I guess it was the seventies, from the big five networks, three U.S., two Canadian, owning -- having something like 90 per cent of the viewers and today it's down to -- I'm not sure what the figure was, 20 or 30 per cent of viewers, but it's a lot less.

1612 That was a chart about Canada, but let's for a second assume that it's a chart for Toronto because I think Toronto probably looked a little bit like Canada at the time. I mean I don't think it would be that different. Let's assume it maybe was even a few years before, like the sixties, when it might have been even higher than 90 per cent.

1613 At that time the CTV station in Toronto was owned by John Bassett. It was one of two stations in Toronto. The Hamilton station was there, but it was a distant signal. At the time he owned one of the three newspapers, the Toronto Telegram.

1614 I kind of put that on the table to say the cross-media ownership has been with us in various forms and in various countries and right at home for some time. Then if you consider basically he was one of two English-language stations in Toronto and one of three newspapers, today we are one of many stations in Toronto and one of seven daily newspapers that are available in Toronto. Then you add the Internet and pretty well can publish information on the Internet.

1615 There is a situation now where I believe if there was a problem there before -- I don't know that there was or was not. But it is a very different situation that we live in now. Our reach as CTV might be, on a good day, 15 to 16 to 17 per cent versus whatever our portion of the 90 per cent would have been before.

1616 I think that is a very important issue also to get on the record in terms of preamble, in terms of context.

1617 To answer your specific question about editorial competition, promoting diversity -- and we believe in diversity; we believe in the independence of these various units.

1618 When we talk about synergies, by the way, there is some back office synergy that we are looking at, administrative savings, that kind of thing, that was in our deficiency response. Primarily what we are talking about is adding more resources through the various editorial units to deepen the information and to make the news gathering stronger and to make the voices stronger.

1619 I think as I also mentioned yesterday, The Globe and Mail does not own a printing press. Its entire asset is intellectual. Anything that homogenizes that is really dumb for us in terms of business. The entire objective is to strengthen.

1620 With that, I would like to turn to Trina who like I in a former life was a journalist, but I think Trina is much closer to the profession of journalism. These issues, I think, weigh very heavily on her. I think you will see that she has a lot of passion for ensuring that journalism is strengthened through this potential combination.

1621 MS McQUEEN: Commissioner, I apologize in advance, because it is going to take a while to answer your question.

1622 Somebody asked me yesterday what this hearing was about, and I didn't give a very good answer at the time to the reporter. Thinking about it last night, I think one of the distinguishing features of this hearing is that it is about very big issues. It presents to you a series of very critical issues, whether it is priority programming or some of the others that we discussed to date.

1623 To us this is the critical question of this hearing. And because it is, we appreciate your indulgence in giving us time to put our views clearly forward on the record -- at least I hope they will be clear, but at least --

1624 There are four headings we would like to go through in answering your question.

1625 First of all, the difference -- and I will just go through the headings first: the difference between the Quebec situation and the situation in English Canada; second, briefly to talk about what Ivan talked about, about our particular situation, Globe and CTV; the third, the approach that we have come forward with you; and fourth, our belief -- and our strong belief -- that good journalism and diverse journalism will result from the opportunity we have before us.

1626 First, I wonder if Mr. Gourd could give you the comparison of the two situations that you have faced in these hearings.

1627 MR. GOURD: Merci, Trina, Madame la vice-présidente.

1628 Our strong commitment to editorial independence -- has to take into account the differences between Quebec and the rest of Canada in terms of markets, in terms of organizations, and in terms of regulatory environments.

1629 If I focus first on the markets, we are all aware that the Quebec market is quite concentrated between Sudbury and Moncton, but 90 per cent and more of the viewers are in Quebec proper.

1630 In that market you have organizations like TVA, which will draw 36 to 40 per cent of the viewers depending on the BBM.

1631 Then you have another competitor, Radio-Canada, which will draw 22 per cent. It has also CBC, three radio stations and two specialty services.

1632 Then you have TQS, which is around 14 to 15 per cent, again depending on the survey.

1633 If I take a look at print, Journal de Montréal has at least 36 per cent of the circulation. They have basically one other competitor, GESCA.

1634 If you take a look at the rest of Canada, 25 million at least spread out from Victoria to Newfoundland, in terms of the competition in broadcast, CTV across the day will get 9 to 10 per cent and, as Ivan has mentioned, in certain periods up to 15 to 16 per cent.

1635 Then you have a lot of competition, like CBC, Global, CHUM, et cetera.

1636 In terms of the newspaper situation, you have of course National Post, Toronto Sun, Toronto Star, Métro newspapers, and so on and so forth. So you have a group of seven newspapers as opposed to two organizations.

1637 If we take a look also at the various -- and I would have to say that The Globe and Mail in its best market, Toronto, will have around 16 per cent of the circulation as opposed to 36 per cent for Journal de Québec and Journal de Montréal.

1638 If we take a look, secondly, at the organizations, the approach of TVA is to be very focused, with great success, on the local market, the Quebec market, without a lot of gathering of international news, contrary to CTV, where Mr. LaPointe has announced additional foreign bureaus.

1639 They have also in a concentrated market two very strong organizations, Journal de Montréal and TVA, which gather news in a small territory with a concentrated population. Therefore, the requirements to have some mutual support is not there, because it is not their cup of tea. They leave it to Radio-Canada.

1640 In addition, we have to note that if the transaction is approved, Québecor will have 36 per cent of the equity of TVA, even though through multiple vote they control. With a minority of equity, it is always a bit challenging to move into significant synergies at the level, for example, of news gathering because then you favour the undertaking you own 100 per cent, like Journal de Montréal. Or do you favour the other? We don't have that situation in our case.

1641 At the end of the day these differences have been recognized by the regulatory framework. We all know Section 3(1)(c) of the Broadcasting Act, where it says English and French language broadcasting, while sharing common aspects, operate under different conditions and may have different requirements.

1642 That approach has also been recognized in the TV policy where, and I quote:

"The Commission recognizes the different conditions under which English and French language broadcasters operate. The finding of the proceedings confirmed the different realities of the French language market as well as its remarkable success."

1643 This regulatory approach has also been recognized in a series of decisions which, for example, can start in terms of the introduction of the first francophone specialty services in 1997, where at the time the CRTC, contrary to English Canada, said if you take one of these specialty services you take all.

1644 We can focus on the bilingual district. We can focus on the number of foreign services where you have tens of foreign services in English and one in French.

1645 We can focus in the recent launch of four analog francophone services and so on and so forth. If needed we would be pleased to file it.

1646 So at the end of the day because of all of these dimensions we would like to present to the Commission that our commitment to editorial diversity and independence has to be rooted in the realities of the viewers we want to service. Therefore, some differences in approaches are warranted, particularly at the level of news gathering. Thank you, Trina.

1647 MS McQUEEN: Thank you, Alain.

1648 So we have a different situation, French language and English language. In the particular situation of Bell Globe Media, CTV and the Globe, Ivan has noted the very different and diverse editorial positions of these two news organizations. The Globe is a paper that does have opinions in its editorial pages, a large number of commentators and it chooses those commentators not from any notion, particular notion, although I suppose that's part of it, but some notion of balance, but moreover a notion of provocative and challenging ranges of opinions.

1649 CTV, on the other hand, does not take editorial positions. Its entire regulatory atmosphere is that it must present a range of balanced views. So you have on the one hand an opinionated comment based newspaper and on the other hand a broadcasting organization that does not take editorial viewpoints.

1650 Each of these news organizations over the years has developed again a particular approach. For 150 years, more than 150 years, the Globe and Mail has been a paper that sought to be part of the influence of this country, aligned with the decision makers of this country, presenting opinion, report and debates interesting to those who shape public policy and are involved in the public life of this country.

1651 By contrast, CTV for 40 years has aimed to present intelligent, high-quality mainstream populist journalism, directed at people who live lives not necessarily in the public arena, but who are interested in the public arena.

1652 Each of these organizations has built its commitment, its connection with its users very differently and that diversity is the essence of each success. So that's the second point. With the Globe and CTV there is a strong impetus toward maintaining diversity.

1653 So we think the diversity comes naturally. However, we recognize the Commission under the Broadcasting Act and have been told its section 3 in which you are instructed I guess by the act to maintain a wide range of views on issues. We know this is of concern to you.

1654 We have laid out in our deficiency answers a fairly elaborate approach that we think will ensure the commitment under the Broadcasting Act. That approach is to be able to find synergies and better and higher-quality journalism in the ability to combine some newsgathering to make sure that the presentation of the news remains the independent preserve of each of the news organizations. To us, diversity comes not at the point when you are gathering what I would call the ingredients for journalism, but when the chef prepares those ingredients; in other words when the editor or the news director decides what items will be selected, how those items will be played, what elements will be included and, of course, whether the story will appear or not. To us this is the cutting edge of diversity is the actual decisions on what news will be presented and how it will be presented.

1655 Our fourth, and I guess it's an appeal to you, I have been in journalism or managing journalistic organizations for a long time. In the last, I would say, 15 years I think every journalist in this country has been very disappointed and saddened by the kind of cutbacks that we have seen in news organizations. We have lost foreign correspondents. We have lost the ability to do original reporting. We have lost investigative units. We have lost back-up support, research fact checks, good editing. Journalists today work harder than they have ever done before. They are required to produce more than they have ever done before.

1656 We live in an extremely competitive journalistic situation, probably the most competition that I have ever seen in my time in journalism. We do not have a quantity or a diversity deficit in journalism. What we have is a quality deficit. We believe there are two things that the ability to achieve co-operation and sharing among our organizations will achieve.

1657 Number one, it will improve the quality of journalism and that's the real diversity that the Canadian public needs is original journalism.

1658 Secondly, it will allow a new generation of journalists who don't see the mediums as separate silos that can never be connected, but have new ideas, new ways of expressing themselves, new -- I have to say new talents and new skills that my generation doesn't have. And we really hope that you will allow this kind of new journalism to exist and to flourish by allowing us to say to young journalists that you have opportunities to work in different media. And that's one of the strengths that this organization can provide.

1659 Perhaps I haven't exactly answered your question, but you can ask me more.

1660 COMMISSIONER WYLIE: Thank you.

1661 Of course we are delighted to have you put your position on the record. As you know, this exercise will be gone over again tomorrow in again a different situation. Both of you relate to the Québecor situation and distinguish yourselves from it. By both of you I mean both Global and you, and yet your situation and theirs is entirely different.

1662 So if you will indulge me now, since you are there and since you are getting a renewal for seven years and heaven knows what you will be owning by year seven, the question is interested in drilling down as Mr. Fecan likes to say, in understanding what the negatives are. Of course you see the positives and maybe when I learn to speak English the saying that puzzled me the most was the devil is in the details because that's not where the nuns have told us the devil was. I wanted somebody to show me his detail.

--- Laughter / Rires

1663 COMMISSIONER WYLIE: I do take your position on the record seriously.

1664 You list in a more detailed fashion in your response to the deficiency letter -- your response is dated the 6th of February. What you see as the infrastructure and resource synergies that will be exploited by Bell/Globe Media to improve what you see as improving content quality.

1665 They include, and so I am looking at pages 16 and 17, such things as combined research and news gathering, sharing of administrative and overhead costs, including rent, office equipment, information technology, marketing and cost platform advertising sales, journalistic training, combined investigative projects, combined original research and co-ordinated websites.

1666 On page 17 you outline the extent to which there will be a structural separation between the broadcasting and print presentation of news and a structural separation of broadcasting and print management.

1667 So what you see will be the synergies, some of which you discussed with the chairman yesterday, and then what you see as the separation that you will maintain.

1668 Could the synergies mean that the same personnel will gather the news, the same personnel will perform research, the same personnel could work in the same building, using the same computer systems, the same information-gathering aides or equipment, that the same personnel could share the same supervisor, with regard to cross promotion and cross sales, that the personnel could be trained together by the same people and the same training aides, and that they could also have joint investigative projects, research and development, performed by the same personnel?

1669 Now, you used the example of -- I think I understood -- gathering of ingredients and the preparation of the meal. But, at the end of the day, whatever one has brought from Loblaws is what one can use to make the meal. And if you didn't bring any vegetables, you are not going to have a vegetarian pizza, etc. So how will diversity and editorial independence be ensured only by a separate management team establishing overall goals and direction, as we see at page 17 of the same response, or ensuring that there are no common members on editorial committee between CTV and Globe and Mail? How can you separate so easily the gathering and the preparation and the investigation, and then the presentation, and not have something that may dangerously be similar? Because of the difficulty, I invite you to explain to me further how the gathering and the presentation can be so separate in the choice of what you handle and how you handle it.

1670 I do hear you about the difference between The Globe and the CTV News, but, you know, things change. How can you explain to me that there can be this common staff preparing, and then at the end it cannot end up looking a little more like the same?

1671 MS McQUEEN: Well, first of all, there is no intention to have a common staff. What we are simply asking is that we not be forbidden to share news-gathering resources. There is no intention that we will, in fact, amalgamate news-gathering resources. That simply doesn't make sense. One is television; one is print.

1672 Kirk, what is your estimation of how many stories television does, your national would do in a day, versus The Globe's stories?

1673 MR. LaPOINTE: Well, on the CTV National News at 11 o'clock there would be seven or eight full reports, and perhaps another dozen to two dozen very small scripted pieces, compared to something -- The Globe and Mail might have 150 to 200 stories in the course of a day. So the overlap there would be preciously small.

1674 And the techniques of creating those, the way that they are explained and represented, are dramatically different. Television essentially starts with pictures and writes to those pictures. Print -- because I have a print background, I was an editor in my last job -- print is actually the reverse. Print starts with words and it tries to paint pictures with them. And they require very different techniques. And even though I think in the next generation we are going to see the practitioners perhaps master both techniques, at the moment they are very different and they require different skill sets at an editor's level, at a news director's level, at a producer's level, to make sure that your respective competition is served up with your best story. So that my competition at CTV News would be very different than, say, the competition that Richard Addis, the editor of The Globe and Mail, would feel he has.

1675 MS McQUEEN: Just to say that the diversity is inherent in the mediums. However, although we have no intention of combining the news-gathering operations, there are occasions. And I guess our concern is that the Québecor Code, or anything like it, would forbid us to take advantage of the occasions when combined news gathering really does make sense. And there are two areas in which it does make sense.

1676 One, I think is what we call "commodity news gathering", which is, to accent, the core of a lot of journalism. You go out to the police press conference. They tell you what they are intending to do. You report it. You may want, later, to criticize it or to find other opinions, but in the actual obtaining of that basic information it is not impossible that one journalist might go to the press conference and might file a few lines to The Globe and a few lines to the CTV.

1677 How that story later is played in The Globe and Mail and CTV News may be entirely different. The Globe may choose to say, "Okay, here's this statement by the police. We understand that they said different things before. It relates to other cases going on in Canada. Here's a story in which the police have done a bad job." Whereas CTV may choose to link it to entirely another approach about -- maybe it concerns, for example, the case that they are talking about and whether this kind of behaviour is similar. But the fact base, the commodity base on which those two different reports occur, can certainly be done by one reporter. And that is common in journalism, where Canadian Press or BN attend functions and provide the kind of commodity base of news. So that is a possible opportunity.

1678 But the more important opportunity for us -- and I hope you will allow me to use two examples, because I think they illuminate this better than simple prose -- is when we are doing journalism, which Kirk calls "competitive journalism", in which we establish ourselves as different from other news media and which isn't commodity news.

1679 Let's take the example that there is a toxic spill somewhere in the west, somewhere in Edmonton, and we set out to cover this. We would have at our disposal a local newsroom that would understand the background of that company. Its record would know the people at the company and probably have some personal contacts with them, and would even maybe know a disgruntled employee -- a former employee. So you would have that resource.

1680 You might have a reporter from The Globe's Report on Business, who understood the multinational nature of that company, what it had done in other countries, its profit record, and so on and so forth. CTV has a very experienced health reporter, who could devote her resources to the effect of what that toxic material was.

1681 So what you have is three different kinds of resources brought to bear on a story. You increase the fact base and the knowledge base of that story by helping each other and sharing files. Again, The Globe may choose to play that story as, you know, an inside-the-page business story; CTV may want to play it in an entirely different way as a people-based story. But each one of them would have, because of the combined news gathering, a deeper and richer source of facts. One example.

1682 The second example, CTV has just announced that it will put a bureau in Africa, a very expensive proposition made possible by your approval of the BCE benefits. We know that that reporter in Africa is not going to get on the CTV National News with Lloyd Robertson every night, maybe even every week. So what happens to that person? One of the things that could happen to that person is The Globe and Mail could ask her to travel to other countries in Africa and to do some stories for them.

1683 The Globe and Mail would get some stories out of that that it wouldn't otherwise get and the CTV reporter would be enriched by the opportunity to travel to other parts of that sub-continent and learn about them and be better informed when the time came to do a story for CTV News.

1684 Those are just two examples of how the sharing and cooperation enriches and deepens the facts on which journalists can do their very diverse stories.

1685 Kirk, would you like to add to that.

1686 MR. LaPOINTE: Well, these are very early days, Commissioner, and we are still really getting to know each other as organizations, but already we have a degree of cooperation that is showing some very positive results and I will give you an example that I hope reinforces that point.

1687 In the recent Alberta election, and I think with the B.C. election that will be called today, traditionally media organizations, at least the largest ones that can afford to do it, will commission public opinion polls to get an understanding of the public attitudes and also to get a sense of who is probably ahead and who is not ahead in these types of things.

1688 These are very prohibitively expensive public opinion polls and they are getting much more so. They are in a lot of ways slipping out of the reach of even the best resourced news organizations.

1689 We were able in the Alberta election case to join CTV National News with our local stations in Alberta and with the Globe and Mail and to put the same amount of resources that we would have traditionally put into the poll, combine those resources and then wound up with a poll that not only, of course, looked at the surface area of who was ahead and who was trailing perhaps as the election campaign started.

1690 We got a very thorough going understanding of the attitudes of Albertans about the issues that matter to them. We were able to then present that story not just one night on CTV's newscast, but over three nights and the Globe and Mail was able to run the material not just in one day where it might have been more of a superficial look at the horse race, but to actually get a great understanding for its readers across the country about the attitudes of Albertans.

1691 We want to do the same thing with the British Columbia election to make sure that we have a full understanding of not just which leader is liked most because that's not necessarily the most durable of the journalism, but the durable journalism really comes in a greater understanding of the fundamental attitudes of people in those provinces.

1692 If I can just point to one area where I think we see the great advantage in having cooperation and perhaps ultimately journalists who will work for both.

1693 The schools of journalism these days are producing people who actually have these talents. When I came through journalism school, you either went along a print stream or a broadcasting stream. In fact, the courses were independent. It was very rare that people actually worked in both media.

1694 I have been fortunate to work in both and I have some friends who have, but largely that was a rarity. You either started as a print journalist and end as a print journalist or the other way around with broadcasting.

1695 The schools these days are producing people who really think differently, who have very different skills. Just in the last six weeks alone I have been approached once by an expatriate Canadian working in Florida who wants to return to Canada. In another case just in the last week by an expatriate Canadian working in Sri Lanka who would like to work for us in New Delhi.

1696 In both of those cases those reporters are having the times of their lives working abroad. They are very young, but the thing that intrigues them most about it is the ability to work in all media. Sure they would love to be on the air and, you know, make sure that mom and dad still sees them back home in Canada, sees that they are alive and well, but the greater thing for them is also the opportunity that would exist if they could work, provide some despatches for the Globe and Mail, work on the Web, do all these types of things because they are already thinking in that way with their journalism.

1697 Highly productive, but they feel they can serve both and serve both very well. We think it would be a shame if those new journalists would be expressly forbidden or restricted somehow in being able to work for more than one platform. We would probably see a number of our finest young journalists move to either organizations or to other countries. We would watch a new form of a brain drain in our journalism.

1698 MS McQUEEN: So what we are asking, I think, is let us do things for the viewers that are new things, that are innovative things and let us have the opportunity to be flexible in gathering the news.

1699 Again, not that we want to have common newsrooms. That's not part of our plan. Not that we want to have the same people, as you said Commissioner, doing all these things all the time, but where it will deepen the experience for the viewers, where the viewers will benefit from having a better fact base, where the viewers will benefit from the ability to hear an innovative presentation of the news.

1700 We don't think your policy should forbid that. We believe that we can ensure the diversity that you are looking for under the Broadcasting Act by a separation of management and by a separation of news presentation rather than by a separation of news gathering.

1701 We take your responsibilities to ensure diversity seriously. We believe we have come forward with a responsible approach towards that, but it is an approach that we think will benefit the viewers most.

1702 COMMISSIONER WYLIE: Well, ladies and gentlemen, you no longer have to convince us that there are advantages. You have had a good opportunity to explain them. You talked of synergies yesterday and this morning we have taken quite a bit of time listening to the advantages.

1703 I believe I can speak for my colleagues: we understand the advantages. Our difficulty is at a balancing act. Are the advantages weighed against the disadvantages such that there is no need for a safeguard which may indeed reduce the advantages, but in our wisdom balances the two.

1704 Interestingly, both you and Global tomorrow -- it's in their written material -- acknowledge that maybe we did the right thing in Quebec, in Montreal. Of course, we are interested in learning how different is it, but there were advantages spelled out there as well and a weighing exercise with the results that you saw with TQS and what has been offered in the recent hearing.

1705 We understand the advantages. What may appear a comfort to you is perhaps ominous to us, Mr. LaPointe, when you say these are very early days. That's the question. What is it going to look like in five years, what will have been the result of this consolidation?

1706 In particular, Ms McQueen, you say no common rooms. It's when I see that you are going to save on rent and office equipment and overhead costs and information technology and drivers and so on, I ask myself, you know, these are the synergies, what can they lead to?

1707 To say they are not going to be working in a common location and sharing information gathering, you know, these synergies certainly suggest that this would be possible and whether, if it did occur, it would be something that needs some mechanism to alleviate the possible consequences.

1708 I would like to ask you, Mr. LaPointe, you talked about journalists being able to work for a number of platforms. Do you see a difference between the viewer having more platforms, but the information that is formatted differently on these platforms coming from a common source in terms of diversity.

1709 Is the diversity of the format, the platform, be it the Internet, newspapers, if it's commonly prepared with commonly gathered ingredients, are we not confusing diversity of material and position taken as opposed to the platform it's on?

1710 MR. FECAN: Madam Wylie, before Mr. LaPointe answers that, I fear there may be a confusion here in what our intent is.

1711 It's not just the presentation that's common. We are saying these units are editorially autonomous, the choice of stories as well as the presentation. The presentation isn't just the media but how the stories, the angle of the story, how it's going to be played, what side bars there are, who the reporter may be, they are editorially autonomous.

1712 If they happen to be -- if in the case of Edmonton, for instance, as an example, we have a local newsroom and the Globe and Mail has a bureau there, if we happen to say "Well, we can save some money by putting them all under the same roof" because we happen to own a building there and we are renting space for a Globe and Mail newsroom, they are still editorially autonomous.

1713 It's not just the presentation. You will see on page 17 3(a), the very first point we make there is they will remain editorially autonomous. I can't stress that enough.

1714 It's not just, you know, you go to Loblaws and the ingredients you get are the ingredients you get. There are separate cooks and the cooks are telling the people go to Pissatelli's or go to Loblaws or go to the St. Lawrence Market and "I want this and this and this and that". Then they come back with the ingredients that were asked for.

1715 MR. LaPOINTE: Okay. Let me try to switch analogies.

1716 COMMISSIONER WYLIE: Remember it was yours.

1717 MR. LaPOINTE: I don't think I started this. Okay.

1718 The presentation structure, it's a nice term but really what it means is the difference between the editor and the news director and their highly subjective tastes on a given day.

1719 The direction that I would try to provide to CTV News on a particular story would be trying to fixate on what I felt other television viewers would be perhaps getting from either CBC or Global or another operation.

1720 The approach -- I don't want to think for Richard Addis on this one, but I would imagine that his approach would be how to win the day against the National Post or the Toronto Star or other newspapers in the country.

1721 You direct your people in very different ways. You ask for different angles to be emphasized. You refine the story, besides which -- I mean the assignment process where you direct people to go into the field and the process that then edits those stories and prepares them for publication in the case of a newspaper or broadcast in the case of television.

1722 They are done almost by separate units because the day of a newsroom lasts about 16 or 17 hours, so you have got a day side and a night side approaching this. There are all sorts of mechanisms that intercede here to make sure that in fact you don't get any kind of homogeneity.

1723 Alluding back to earlier to what Trina talked about, you know, someone who runs a news organization and who has been in journalism for 20 years, I can tell you that one of the great frustrations that I have and I think my colleagues have is that a lot of this low level journalism, a lot of the low level basic facts that exist out there, still are commanding a great deal of senior expert time in the field. They are almost press release approaches.

1724 Where the basic facts are accessible these days to almost anybody who has a computer or a fax or any types of things, yet journalistic organizations are still lurching day to day, going off to these events. I would love nothing better than to say I would like not to have to go to that if we could share a resource because I would like to be able to deploy my reporter to a better thing, to something with greater initiation that is going to have massive appeal to my viewers at the end of the day because it will be innovative, it will be material of his or her own initiative and enterprise.

1725 I think what we look at in terms of any synergy that we can have in news gathering is that it affords our organization the opportunity to deploy fewer people on those kinds of low level journalistic events and to make sure that they are deployed to the ones that matter most, that create the most meaning and memorability in the journalistic experience for our viewers.

1726 COMMISSIONER WYLIE: It's too bad that Québecor didn't know about this theme when they appeared before us.

1727 Let me -- we will leave this area and come back later to the possible need for safeguards and in what circumstances there should be some because you have acknowledged that in some circumstances, i.e., the Québecor-TQS situation there was some.

1728 MS McQUEEN: Commissioner, if I just may interrupt you --

1729 COMMISSIONER WYLIE: Yes.

1730 MS McQUEEN: -- to say that, you know, we have put forward what we believe are strong safeguards and they are safeguards that restrict us considerably. In a non-regulated world or in a world where you didn't have to do the commands of the Broadcast Act, there would be a lot of money to be saved by integrating news rooms totally and integrating the presentation structure and the management structure. Do we really need both a Richard Addis and a Kurt LaPointe? That is where the big synergy is.

1731 MR. FECAN: We do.

1732 COMMISSIONER WYLIE: He is getting as aggressive as I am.

1733 MS McQUEEN: And of course we do.

1734 But what I am saying is that if this was strictly a kind of approach when we are talking about news gathering that was something about efficiencies or effective use or, you know, cheapening down the news rooms, doing more for less, we would not have this separate structure that we have advanced before you, which we think restricts us very considerably, as well as preserving the diversity.

1735 So I don't want you to think that we don't agree with you that there are -- that we will provide mechanisms and that we have not taken your instructions to us or your call to us seriously. We have come before you with what we consider to be a plan that restricts our opportunities to lose diversity very strongly.

1736 COMMISSIONER WYLIE: I mentioned at the beginning that there were really two issues. One was, for us as regulators of broadcasting, is whether it will reduce the editorial voices or perhaps the number of editorial voices and reduce editorial independence. The other area is whether or not it may have an indirect effect of reducing the quality of the broadcasting offered.

1737 At page 9, at the very bottom of the page of your response, your 14th February response, you say that one of the safeguards, which you didn't, I think, elaborate on this morning, is strong economic incentive to good behaviour simply that you won't be able to get the rewards, I gather, from your assets if you make them the same and it's noticeable to people, et cetera.

1738 When we look at the economic imperatives, is it -- there is obviously -- I gave a list of the assets that are owned and may be added to by Globemedia, and if you want the economic benefits to be derived from the synergies that you talked about in the various platforms Mr. LaPointe talked about, will those synergies not also tend to drive decisions about programming and choices may be made more with regard to the ability to reformat, repurpose information on various platforms rather than discharging one's responsibilities as a broadcaster?

1739 In other words, issues that may not be as easily repurposed on the internet or portals or will not be handled because it's not as economically -- there is no economic incentive to do that if you can't get all the benefits from the synergy of the various platforms. In other words, will there not be a tendency to choose with that in mind, to standardize output and therefore to reduce the variety or diversity of information.

1740 MS McQUEEN: Well, this gets back, Commissioner, to the key message that we have in this hearing that what we are all about over the next years is growing our audience, that growing our audience is the fundamental objective to any kind of success that we have. And if you choose news for economic reasons, rather than for audience growth reasons, you will defeat yourself. You cannot cut costs continually, continually, continually and pretend that your viewers will not notice.

1741 You have to -- if you want to grow your audience, you have to satisfy that audience and you have to produce a quality product. So I think that is what we meant by saying that you have to -- there is an economic incentive to good behaviour.

1742 Sure, you know, evil people might come in and decide that we are going to only handle news that is so homogenized that it can appear on every conceivable platform. You know, in the famous thing, the image of the reporter with a satellite dish on one shoulder, a web-streaming apparatus on the other shoulder, a pencil and pad, a television camera lurching into some kind of news event.

1743 You know, you can contemplate that but you are not going to have much of an audience for your product because it will simply be pallid, weak, uninteresting, ill-informed and every competitor out in the market is going to make you look pretty useless.

1744 MR. LAPOINTE: Let's see. Further on that I mean we do recognize that in the vast majority of cases print does best for the newspaper reader and broadcasters do best for the viewers. There is precious little commingling. There are a few people in this country who have great talents and who can work in both more than adequately.

1745 But, you know, having come from a background of newspapers, I know that what got newspapers into trouble in the 1990s is that they stopped appealing to people, to that large segment of society that liked to read. In fact, you know, in some cases newspapers lost a little bit of their momentum by trying to outdo television at what it does best and so newspapers made their stories skinnier and more hyperactive and they thought that that was really going to lead people to use them more. And in fact, quite the opposite; people ran away in droves. They couldn't, you know, the declines were incredible.

1746 And so then some news organizations started harvesting. They began cutting their costs, you know, to try to keep pace with declines in revenues and it caused a huge problem in the newspaper business. And I think newspapers have only regained their voice in recent years by appealing to the large segment of society that likes to read. And I think it will ever be thus. I think that newspapers now know that they can't flirt with that any more, that that is just not a strategy. So each does best what each does.

1747 COMMISSIONER WYLIE: As I mentioned earlier, you are here, this is an issue. It's going to be an issue tomorrow. It was an issue two weeks ago. So we are trying to find out your views on some particular areas. I know the safeguards you have offered but we still want to discuss how we, as a Commission, in various situations should handle this.

1748 And both this morning -- well, this morning certainly the Québec situation was discussed at length and how different it is from yours. It is also in your written brief. In fact, it seems that you have two reasons, two major reasons why the Commission shouldn't use the same tact and why it really shouldn't impose anything beyond what you have suggested.

1749 The first one is that there is no increased consolidation at the local level combined with the fact that the Globe is a national newspaper, not a local one. And then the difference between the situation or with Québecor in Québec.

1750 Is it your view that it is only where TV stations also owns a local newspaper in the same markets that stricter safeguards are required? I would like to hear you more about the difference between the local newspaper and the local television station in the same market, as opposed to the national newspaper that the Globe is for many readers.

1751 MS McQUEEN: Well, I guess one of the things that we think is that the Commission probably would not want to get into regulating how journalism is done unless there is an absolutely clear and evident threat to the objectives of the Broadcasting Act. There is --

1752 COMMISSIONER WYLIE: Not necessarily evident. That it is evident that there is a potential one. We give seven year licenses based on the facts as we know them now and heaven knows what they will be in seven years.

1753 MS McQUEEN: That is right.

1754 COMMISSIONER WYLIE: How do we handle this issue in this context?

1755 MS McQUEEN: And again, I guess what we would say is that we think that many people who value the freedom of the press and journalist freedom would ask themselves where it is necessary to impose regulations on the actual performance of journalism unless, in the face of a potential threat rather than in the face of --

1756 COMMISSIONER WYLIE: That is exactly what I am asking you is to speak about this difference you make, which is the difference between the national and the local.

1757 MS McQUEEN: Yes.

1758 COMMISSIONER WYLIE: And whether we should look at the situation differently in that case.

1759 MS McQUEEN: And I believe that the judgement which you might apply would be does this actually -- is this actually a clear reduction and overlap in terms of the viewers and readers. I guess I'm trying to find the word.

1760 COMMISSIONER WYLIE: Yes, in terms of the output. But I have -- we, as a Commission, have very little indices of that other than to look at what you intend to do and then our judgement as to whether that will lead to a reduction.

1761 MS McQUEEN: Right.

1762 COMMISSIONER WYLIE: And I'm focusing now on the situation of the local newspaper as opposed to the national newspaper which you advance as one way of distinguishing between the two. And of course I might as well ask you now, in that case do you think some stronger mechanisms are required in Toronto where there is a metro addition which could be called a local newspaper for Toronto? And secondly, would it be functionally possible to have different requirements as between CTV in Toronto and the Globe and Mail?

1763 MR. FECAN: There are seven daily newspapers in Toronto at the moment. More per capita than London, England or any other city we know of in the world. I think there is lots of print diversity there.

1764 I think our view is that the tradition -- traditionally the Commission looks at situations on a case-by-case basis. And while we certainly are passionate about the merits of our particular case and our particular situation, I don't feel comfortable arguing for or against what CanWest's particular views are of their particular situation.

1765 COMMISSIONER WYLIE: No, I was asking you in Toronto where one could say that the Globe and Mail is a local newspaper, explain to me why we should have perhaps less concern there -- somewhere else and some more concern in Toronto because it's local and whether it is functionally possible to have stricter safeguards in Toronto?

1766 MR. FECAN: I think it is --

1767 COMMISSIONER WYLIE: We may end up indeed doing something. I mean we understand the positives of this. We have already put ourselves on the record that we are prepared to impose restrictions in certain circumstances. We have in Québec and considering the offer that has been made by Québecor it is likely there will be some again.

1768 You, yourself, talk at page 8 of the 14th of February response of the importance of fair, equitable regulation producing a balanced system in the public interest. So we are discussing what is a fair and equitable regulation when we are faced with situations that are somewhat similar but also different. That is what I am addressing.

1769 So I am asking you in Toronto is it -- I know how many newspapers there are in Toronto. I am asking you whether there is a difference between the Globe as a local newspaper to Toronto and the Globe as a national newspaper in the concerns we may have.

1770 MR. FECAN: The Globe and Mail may have a page of Toronto news, maybe a double page if you count the ads. I don't think by any stretch you can consider that a Toronto newspaper.

1771 COMMISSIONER WYLIE: Now, you also say in that same page 8, I think, or somewhere that there should be equitable regulation but there are situations where other news organizations operate without codes or restrictions. This is in both in the 14th -- in two places in the 14th of February response, and I am wondering what you mean here.

1772 You know, you seem to talk about there is a need for us to be fair, reasonable, look at every situation and then that there are -- what do you mean by other organizations who don't have any restrictions and are similar?

1773 MS McQUEEN: A couple of organizations might be Rogers-Maclean-Hunter, which owns news radio stations, the national weekly news magazine, which owns a number of specialty channels which have information products and television stations which broadcast news.

1774 In that situation you have a different kind of regulation.

1775 You look at CORUS, which owns a large number of radio stations and specialty television information components. I guess you look most of all at the CBC, which under a single ownership provides radio, provides television, provides specialty news channels, provides one of the large news Internet sites in the country and which also provides English and French news, and absolutely has a common infrastructure devoted to news gathering, which seems to work very well and produces good results for the viewers.

1776 These are some examples.

1777 COMMISSIONER WYLIE: And so have you.

1778 MS McQUEEN: Yes.

1779 COMMISSIONER WYLIE: You have Newsnet and so on, and surely you don't want to get into what limitations there should be between those. We are now focusing on the newspaper.

1780 MS McQUEEN: But if I could get to the actual question --

1781 COMMISSIONER WYLIE: And the Rogers-Maclean-Hunter situation did raise some concerns.

1782 MS McQUEEN: It did. In fact, it was dealt with in a different way. That brings me to the point -- you said, I think, Commissioner, that you have to balance these things. What you are asking us to do is to try and discuss with you how you can balance the positives and the negatives, if I am quoting you well.

1783 I think we are absolutely ad idem on that point; we are trying to find a balance.

1784 I think there are two things. In order to find the balance, you have to consider each case as it presents itself and decide whether that case presents particular situations. That will lead you to what we are asking about, which is equitable regulation.

1785 The second thing is that when you are looking at that balance, you have to balance the notion of diversity with the notion of quality and with the notion of innovation.

1786 I guess what we think is that we too have tried to find the right balance and to present to you for our particular situation an approach that restricts us but also gives us some flexibility to provide quality.

1787 That is what we are trying to come before you with: a notion of a balance that will allow us to provide journalism the best way we can and will allow you to achieve your objectives.

1788 Again, there is a balance there and we have tried very hard to present that balance to you.

1789 COMMISSIONER WYLIE: You talk about fair and equitable regulation and distinguishing between the two cases, which is exactly what we want you to have the opportunity to do, and the same thing for Global this morning.

1790 How different are the situations? What do they call for? Do they call for anything?

1791 In light of that, I will ask you a difficult question. Do you think that the Commission, to ensure a fair system, should or that it could use anticipatory mechanisms to capture certain situations?

1792 For example, in ownership for various reasons we say when X happens you have to come and ask us whether that is okay. Would there be situations where the Commission could have this type of requirement to come forward and explain why your situation is different?

1793 If you are interested in equity in regulation, a lot can happen in seven years. Do you think that would be one way that the Commission could pursue its goal?

1794 MS ROBINSON: One of the challenges that we all have is trying to predict how the future would unfold. What I might suggest is that it might be easier in that uncertain situation, rather than have anticipatory mechanisms set out in the decision, to remember that the Commission has broad power over broadcasters to call them before a hearing whenever it wants. It is a power that is used not on a regular basis, but it is a power that is there.

1795 I would think, given this situation, that might well be something that the Commission wanted to keep in mind in terms of its jurisdiction in the future as matters unfolded. In each case it could take a look at a particular situation and how it would handle it on the particular facts of a case if in fact that was necessary.

1796 To go back to the specifics of the situation here, in the proposals that have been put forward by CTV there are proposals which deal with the operations of the undertakings on an ongoing basis; separate presentation structures and separate management structures.

1797 Given the facts that are before us today, it seemed to us that those were proposals which met the particular circumstances.

1798 COMMISSIONER WYLIE: I may not have been completely understood or clear.

1799 What I meant was we have dealt with Québecor before, and we are going to hear Global tomorrow. We hear you as to the difference between national and local, et cetera. Then you go for seven years. It just so happens that newspapers were purchased before renewal.

1800 So if we want fair regulation, the Commission has very little means in five years, if you or another licensee end up with a situation that can be argued to be similar to Québecor, to do anything. Even if we call you we will have no -- in five years I guess we can, but between then and now.

1801 I was just wondering if you emphasize this fair treatment in each circumstance. Sooner or later we have to come to terms of why do we here and not there, how much to do, and how do you bring others into the fold as they may purchase or have possibly the ownership.

1802 I was wondering about a mechanism that would say if X happens, you have to get our approval.

1803 MS ROBINSON: Well, I am certainly dating myself by making the following observation. I can recollect proceedings that the Commission undertook in the early 1980s where fact situations had changed. In that case it dealt with the presentation of Canadian programming.

1804 The Commission called licensees before it for a full public hearing on discussion of the issues.

1805 COMMISSIONER WYLIE: Was this a newspaper issue?

1806 MS ROBINSON: This was not specific -- this was another issue.

1807 My point was that before a renewal was up, the Commission had a concern and called licensees before it for what was quite an extensive proceeding on a particular issue.

1808 And that is a jurisdiction that you have on an ongoing basis.

1809 My point was simply this: In a situation where all of us have some difficulty predicting how the future will unfold, I think it is difficult to have the anticipatory triggers that you were talking about.

1810 What I think you might take comfort in is the broad regulatory jurisdiction you have in any event, and certainly if there is a change in circumstances, to call licensees before you.

1811 COMMISSIONER WYLIE: I was thinking more of the way we handle ownership. If you reach certain thresholds, you have to come for approval; whether that was a way of getting a fair approach to this issue as it is growing, other than simply hoping that if something happens we may have concern about, there is a renewal coming shortly after.

1812 You have made much of the safeguard that you have offered, and I would like to understand it better.

1813 On page 17 of the 6th of February response you say that there will be no common members sitting on any editorial committee of any Bell Globemedia entity; that is, no officer or director of CTV will sit on the editorial board of Globe and Mail and vice versa, on the internal committee of CTV.

1814 When you use the words "officers or directors", are you talking about the boards of these organizations -- the boards in the classic or corporate sense?

1815 MS ROBINSON: I know who we meant, but I think Kathy can give you the answer to that question --

1816 COMMISSIONER WYLIE: Yes. I am looking at 4(d) on page 17 and trying to understand what your first -- in 3(a) this is your safeguard: that Bell Globemedia national news organizations will remain editorially autonomous with a separate decision-making process.

1817 Then at (d) are you talking about the board members will not be common?

1818 MR. FECAN: The Globe and Mail has an editorial committee that determines the range of opinion and how they look at various issues, quite apart from what they do in terms of journalism.

1819 COMMISSIONER WYLIE: Yes, I understand that.

1820 MR. FECAN: Nobody from CTV will sit on that board, on that editorial committee.

1821 COMMISSIONER WYLIE: What I am not clear about is when you say no officer or director of CTV, who do you mean?

1822 MR. FECAN: The officers and directors.

1823 COMMISSIONER WYLIE: Do you mean the board members of CTV as the company?

1824 MR. FECAN: Yes, the officers and directors of CTV as a company.

1825 COMMISSIONER WYLIE: Directors in the classic sense and officers: vice-presidents, presidents, et cetera.

1826 MR. FECAN: Yes.

1827 MS ROBINSON: We had picked up that wording from the Rogers-Maclean-Hunter decision, and that was the concept that had been put forward in that situation and accepted by the Commission and set out in its licensing decision on that.

1828 That is where that specific wording came from.

1829 MS McQUEEN: The principle is that nobody from CTV will be in the room when the Globe has its editorial committee meeting.

1830 The officers and directors were just examples.

1831 COMMISSIONER WYLIE: This committee must include people other than the board members of the companies in the classical sense.

1832 Would it not be a greater level of comfort if you changed the words "officers and directors" to something lower down the chain?

1833 MR. FECAN: We will come back to you with something.

1834 COMMISSIONER WYLIE: Do you know what I mean?

1835 MR. FECAN: No one from CTV intends to sit on the editorial committee of the Globe, period.

1836 COMMISSIONER WYLIE: If it said no member of the editorial committee of CTV will sit on the editorial committee of the other, then we would be lower down the chain and much closer to a safeguard that there will be actual separation between the two.

1837 MR. FECAN: We will come back to you with specifics.

1838 COMMISSIONER WYLIE: That is the safeguard: that there will not be interchange between the editorial committees.

1839 Is that correct?

1840 MR. FECAN: It is one of them. I think the autonomous editorial structures, choosing of stories that are covered, choosing of how they are going to be presented, that is also fairly substantial

1841 COMMISSIONER WYLIE: Well, it is substantial in the saying, but what is the structure that will ensure that this is not the case?

1842 MS McQUEEN: I think what we --

1843 COMMISSIONER WYLIE: Let me tell you the vision I have. I am sure it's simplistic, but the vision we have and the one we look at Québecor is journalists gather the news.

1844 They are possibly in the same location. They are using the same computer system. They are exchanging information. They are talking to each other. They see each other. What is the effect of that? They are sharing information. They are deciding what they are going to investigate, rather than something else, the manner in which they will do it. What is the effect over time of this even if the editorial committee gives broad guidelines as to what should happen? What is the potential over time?

1845 MS McQUEEN: Well, I think the potential over time if those journalists were all reporting to the same boss who made the decisions about the presentation, that's where --

1846 COMMISSIONER WYLIE: The committee is not their boss.

1847 MS McQUEEN: No, and we haven't talked -- in the management structure we are not talking about just the editorial committee. We are talking about each news manager having a separate --

1848 COMMISSIONER WYLIE: Can you lead me to that?

1849 MS McQUEEN: Well, 3(c), for example. All of these seem to be about that, 3(a), editorial autonomous with a separate decision making processing; (b) continue to develop own editorial policies; (c) each news manager empowered to choose; (d) local level.

1850 And (a), very important to me, we will not merge the audience and revenue objectives so that if Philip Crawley does a little bit better on the Globe that helps me out. I have my own budget and audience targets set for me. (b) we keep the news budget separate and they are under the control of the separate organization; (c) refers to the fact that there is a separate management team; and (d) again backs that up with even though there are separate management teams they may not come together in a common editorial approach.

1851 COMMISSIONER WYLIE: So you will speak to us later about (d), whether we should drill it down, as Mr. Fecan says?

1852 MS McQUEEN: Yes.

1853 COMMISSIONER WYLIE: And (c), is that something that a separate management team -- that would be at level below the editorial committee?

1854 MS McQUEEN: No. That would mean in crude terms that Richard runs the editorial group at the Globe and Kirk runs the editorial group at CTV.

1855 COMMISSIONER WYLIE: But what is the relationship of the editorial committee to that group?

1856 MS McQUEEN: The editorial committee at the Globe would be the purview -- would be under Richard Addis. And any editorial committees or boards at CTV --

1857 COMMISSIONER WYLIE: No, no, I mean the editorial committee at the Globe, what is its relationship with the management team of the news at the Globe.

1858 MS McQUEEN: You know, unfortunately, I don't know exactly.

1859 COMMISSIONER WYLIE: Because that's the devil in the details. Right?

1860 MS McQUEEN: Kirk, can you answer that?

1861 MR. LaPOINTE: There is, of course, the creature of the editorial board which determines every day what editorial positions the Globe will take on its op/ed pages. I think when we talk about the editorial board of the Globe and Mail that's what we discuss.

1862 MS McQUEEN: Who is on it?

1863 MR. LaPOINTE: That would be everyone from writers up to the publisher typically. Again, I can't pretend fully to speak for the Globe on that because I wouldn't know its full composition.

1864 In our case our management committee -- our editorial committee, I mean, involves our senior managers at CTV News and what they look after in the operation.

1865 COMMISSIONER WYLIE: I know what your answers will be, but you have been sent the code of ethics. To make this shorter, there is nothing in there that you feel is of any need in this circumstance, even though it was needed in the Québecor situation.

1866 You will see that they have added LCN Affaires, which would be -- LCN would be like your Newsnet, where there is a code that requires more practical or objective or physical separation mechanisms, such as no sharing of local, no sharing of computer systems and technology, and no sharing of information.

1867 MS McQUEEN: Well, we obviously have read the code. I guess what we would say is that we have come forward with a set of principles and an approach that suits our situation. We think this may be appropriate to the Québecor situation, not for us to judge.

1868 I will say that I think, Mr. Chair, at the beginning of the hearing you talked about taking into account the views of the intervenors. A number of journalistic organizations have chosen to intervene on this subject. I think that they generally, with the exception of the Friends, felt that this was not appropriate to the English Canadian situation.

1869 COMMISSIONER WYLIE: Interestingly, both of those were professors, correct, York University and Carleton? At least there were two very positive views.

1870 MS McQUEEN: I think we had about five journalistic academics. I think that is because these are the people in Canada who have the detached view of what the journalistic situation is and the academic view. So, they are not involved in the money grubbing activities.

1871 COMMISSIONER WYLIE: I know what some of them say of us.

1872 MS McQUEEN: I remember one of them in his intervention last time applauding you and saying that if it weren't for you civilization would cease to exist.

1873 COMMISSIONER WYLIE: That's good. I must reread the transcript and make myself feel better after this exercise.

1874 One of the restrictions that has been placed in the Québecor situation was the fact that a majority of the actual board of one company not be common to the other. Do you have a problem with this type of restriction?

1875 In the last renewal of TQS I believe no more than 40 per cent. Am I correct? There could be 40 per cent common board members. For example, that directors from the Thomson company, the Woodbridge company, et cetera, there be a limitation with common board members of the two companies.

1876 MR. FECAN: I don't think it's particularly relevant in our situation. I think since you raised the issue of board I think the fact that Ken Thomson is Chairman of the Globe and Mail speaks volumes and that's enshrined in our shareholder's agreement, speaks volumes for a commitment to maintain editorial separation and diversity.

1877 COMMISSIONER WYLIE: That leaves the last issue which is the issue of complaints. At page 10 of your 14 February response you seem to acknowledge that it is important -- yes, it's the third paragraph at page 10, "A public complaints mechanism is important to allow a voice for the public and for organizations and associations." I gather you mean complaints about whether this arrangement is leading to problems, et cetera.

1878 You were also given a copy of the Québecor -- what was the Québecor/TQS, what did they call it in English, monitoring committee or -- yes, monitoring committee. But you suggest that we deal with these complaints and/or possibly the CBSC.

1879 MS McQUEEN: Yes. We thought the CBSC which is I think in some ways your delegate for complaints about various codes would be the useful one. It is known to the public. It's well established. It has I think a record of independence, we say somewhat bitterly, having been the subject of some negative decisions.

1880 It seems to be successful in assembling panels that are well regarded, but most of all it's known to the public. It is an institution that has visibility and profile. It seemed to us it would be easier for the viewers to have a one stop complaints mechanism, rather than to have a group of people to whom complaints should be addressed.

1881 COMMISSIONER WYLIE: So the basis I guess, since you don't want a code and let's say you convince me you don't need one, it would be the RTND --  or convinced us, it would be the RTND code, not a code specific?

1882 MS McQUEEN: We would be willing to have this outlined as an approach by which the CBSC could look at complaints.

1883 COMMISSIONER WYLIE: What would you be prepared to outline; the mechanism that you are offering?

1884 MS McQUEEN: Yes. I mean we have set out how we want to run things in general. If people want to complain that we haven't lived up to that we would be happy to have the CBSC look at that.

1885 COMMISSIONER WYLIE: And why not a mechanism if the code or whatever it is that you say you are going to do, were outlined differently from the one that was judged to be needed for Québecor, why would you not want a monitoring committee of your own to handle complaints as to whether this is working or not?

1886 MS McQUEEN: I guess we just feel that for the viewer it would be easier to address complaints that they have about broadcasting in general.

1887 COMMISSIONER WYLIE: But we could send them to your committee then. That's what happens with the CBSC.

1888 MS McQUEEN: You know, I guess it just seems to us sensible that an external committee that is seen as independent is a better mechanism than an internal mechanism that we set up, kind of choose the people.

1889 COMMISSIONER WYLIE: The problem of course is we are not dealing with a very particular situation where a large broadcaster has cross-ownership. So, we wouldn't have this long discussion if the RTND code was sufficient to handle it.

1890 MS McQUEEN: Well, the RTND code and the CTV journalistic policy both are under the purview of the CBSC and that could be a mechanism. Those codes do contain what I would call clauses in it that relate to editorial independence.

1891 Kirk, can you cite those offhand?

1892 COMMISSIONER WYLIE: But do they have anything about CTV and the Globe won't share members on their editorial committee?

1893 MS McQUEEN: No, of course they --

1894 COMMISSIONER WYLIE: That's my point.

1895 MS McQUEEN: Of course they don't.

1896 COMMISSIONER WYLIE: Could it be that you would have a mechanism that would say we are going to do what we said we would do and if the results are not what we told you they would be and people want to complain, we will have our own way of handling it. You are familiar with the Québecor code monitoring committee idea.

1897 MS McQUEEN: Yes.

1898 COMMISSIONER WYLIE: A copy was sent to you. In other words, if there is already something there at the CBSC that is sufficient.

1899 MR. LaPOINTE: And already there is great past practice with the CBSC reviewing precisely the type of complaint that I think you might anticipate, which is issues of bias, of lack of fair treatment, of winnowing down of diversity of voices, the lack of due diligence in the journalism. The CBSC has already been charged with that responsibility and has a long record in rendering judgments on those that we, of course, have honoured and have then brought back to our viewers.

1900 COMMISSIONER WYLIE: The situation we are talking about is one where there is cross-ownership of two large organizations, one print and one television which basically you yourself are prepared to say different safeguards that are not applicable when the Globe was on its own or CTV was on its own may be necessary now and, therefore, there may be some need for a specific monitoring of how that's working.

1901 I believe you as well as Global, am I correct, filed with your application the Trudel Report?

1902 MS McQUEEN: We did not file it.

1903 COMMISSIONER WYLIE: You didn't, so it must have been filed with someone else or simply that I had an English translation of it. Then I won 't ask the question.

1904 In your view, you don't need any specific monitoring to check that. What you said you will do will be done, even if it's at the level of not mixing committees and editorial --

1905 MS McQUEEN: No. I think what we are saying -- I guess we are not making ourselves clear -- is that we think a public complaints mechanism really is important. We tried to choose the one that we thought was the most autonomous, most arms length from us and most familiar to the viewers who wanted to complain.

1906 COMMISSIONER WYLIE: Yes. I have difficulty making myself understood. What I mean is there is nothing specific in the codes that the CDSC uses --

1907 MS McQUEEN: No.

1908 COMMISSIONER WYLIE:  -- that addresses a situation.

1909 MS McQUEEN: Exactly.

1910 COMMISSIONER WYLIE: So if you told me well, we will have a little code that says we are going to do this and then CDSC will handle it, that's different.

1911 MS McQUEEN: Okay.

1912 COMMISSIONER WYLIE: Because the CSC is based on a violence code, it's based on a sexual stereotyping code.

1913 MS McQUEEN: Okay.

1914 COMMISSIONER WYLIE: Now we are talking about something that is different.

1915 MS McQUEEN: May we put these in our approach?

1916 COMMISSIONER WYLIE: I will think about it. You will be back.

1917 MS McQUEEN: We would be happy to put those things into, you know, a form that was --

1918 COMMISSIONER WYLIE: Because the Commission is prepared to examine your situation.

1919 MS McQUEEN: Sorry?

1920 COMMISSIONER WYLIE: I said the Commission is prepared to examine the situation you have outlined this morning separately or see the difference between it and Québecor or some other situation, but it is a new situation from yesterday in that we have two organizations -- one large broadcaster, one large newspaper combined under common ownership.

1921 MS McQUEEN: Right I guess there's two things that could be done. One is to ask the CSBC to adjudicate under the CAB code and in our deficiency responses we pointed out that the CAB code of ethics and the RTND code, the CAB code requires that news shall not be designed by the beliefs, opinions or desires of station management which generally is absolutely true about journalism.

1922 The RTND code further requires that broadcast journalists will govern themselves on and off the job in such a way as to avoid conflict of interest, real or apparent.

1923 The CSBC is already seized of a way into these particular issues. However, if you would like us to turn our approach into something that the CSBC could be more directly seized of, we would be happy to do that.

1924 COMMISSIONER WYLIE: We may not understand each other very well. If your attitude is good journalism was always necessary and the RTND code was there to ensure that and we now have a situation where we may feel that for transparency, for a certain level of comfort or recognition of the inherent or potential difficulties of the situation we are looking at, we need something more.

1925 MS McQUEEN: Well, I do understand you. Again, I am just trying to offer two approaches. One is codes that already exist as a monitoring -- that are monitored by the CBSC and, secondly, that we would submit our principles into a code which you could then -- I think you have the power to ask the CBSC to include as part of its purview.

1926 We would be happy to do that and thus the specific things that we promised could be part of their mechanism.

1927 COMMISSIONER WYLIE: Yes. I don't know if you have focused on the fact that there has been a complaint handled under the Québecor code by their independent committee, et cetera.

1928 MS McQUEEN: I'm sure there are.

1929 COMMISSIONER WYLIE: It may be that this would be a better way for you as well as for us.

1930 MS McQUEEN: Well, again --

1931 COMMISSIONER WYLIE: To leave it to your own independent committee.

1932 MS McQUEEN: It's funny. You would think we would be on other sides of this argument naturally because if we had come forward -- I guess we just think that it's -- we believe in the public complaints mechanism. Let's say that to start with.

1933 The only difference between us is which way is easier for the viewers, which way can we get the best results for our viewers complaints. Our kind of simple-minded approach is we have something that is already in place, it's doing a good job, the viewers know it's there, why not use that mechanism?

1934 COMMISSIONER WYLIE: Thank you very much. I hope you are satisfied that we both had a chance to express ourselves on this issue. It's difficult and this is only a dry run for the next applicant.

1935 We will see whether the fact that they have had a chance to hear you will make their answers longer or shorter.

1936 Thank you very much.

1937 Thank you, Mr. Chair.

1938 THE CHAIRPERSON: Thank you, Vice-Chair Wylie.

1939 I just have one question, perhaps one. I don't want to prolong this because I think it has been well canvassed this morning through the discussion.

1940 It isn't clear to me -- I guess one of the issues as a matter of principle it seems to me that you have said sort of bottom line here is this editorial autonomy that you want to maintain between the two organizations. That's, if you will, the main safeguard that you are putting forward.

1941 I was listening carefully to Mr. LaPointe's comments yesterday and today about his length of time being involved in this business, but more particularly this morning how even the approach to educating journalists has changed over the past while and in your earlier days the approach was a very distinct approach to print media as opposed to others.

1942 We have talked a lot over the last day and a half about its early days and all of this convergency synergy business and nobody seems to really know where it's all going to come to. One thing we do all know is both as a result of the changing convergence of corporations and the convergence of technologies that there is going to be some dramatic change.

1943 Given that and, you know, given the changing approach to journalism over time, it isn't evident to me, are you proposing this editorial autonomy because you think in today's environment it's what is publicly acceptable or because you really believe it's the thing that you need to do or is it quite possible that a few years down the road, and I guess this is the flip side of Vice-Chair Wylie's question regarding are there certain triggers that one might want to approach down the road similar to what we have done with ownership.

1944 Is it quite conceivable in two or three years time you might find that editorial autonomy is working against our best interests of serving our viewers and our readers and that perhaps it's something that seemed like a good idea in April of 2001 but in July or August of 2003 or 2004 maybe it's not.

1945 I didn't get a sense of whether this is being proposed as sort of conventional wisdom today that says that's the thing to do.

1946 MR. FECAN: At the Globe and Mail, editorial autonomy has been a principle for 150 years. It is editorial autonomy and diversity, voices. It's something that we feel is very important as an important principle, notwithstanding whatever the digital era of convergence might bring.

1947 It is not something that we are saying, you know, works today for whatever reasons. We think it's a principle that withstood the test of time. We think the value of our enterprises, our journalistic enterprises, depend on distinctive voices and we think that whatever technology brings and whatever tools technology gives us through digitization and all that is possible with that.

1948 The most important principle is the editorial autonomy principle, who chooses the stories and how they are told. That's why we focus on that principle and say "You know, there are things that we can do and there are things that may be useful", but the most important thing is that principle.

1949 THE CHAIRPERSON: Okay. At a minimum, you would agree that it would be appropriate to put in place safeguards that would at least ensure that that principle is maintained.

1950 MR. FECAN: We have proposed those.

1951 THE CHAIRPERSON: Which has been canvassed thoroughly with you this morning.

1952 I think several of the other Commissioners perhaps have a question or two maybe on this point or just to finish up on some other points.

1953 Commissioner Pennefather.

1954 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.

1955 I have a follow-up question on the monitoring committee which you discussed with Commissioner Wylie. In your proposal and subsequently in discussing whether you would have your code and how it would be structured, Commissioner Wylie was making the point that having your own code would really address the principles that you have established.

1956 The point I wanted to raise was you put an emphasis on your approach in terms of the public and the audience and the viewer having a capacity to complain, but if we look at the complaints that were brought to the monitoring committee in Québecor's situation, they were from journalists.

1957 There is a component that you haven't touched on and that is that the code addresses the capacity of journalists in fact to complain about the pressures of one organization on the other, transfer of information or even pressure from the owner.

1958 I was wondering if you had a comment on that component of a monitoring report.

1959 MS McQUEEN: We believe that journalists equally could make that complaint. In the past journalists have in fact complained to the CRTC when they thought editorial independence was being transgressed.

1960 I don't know whether Peter Kent is here now or not, but there was a fairly famous occasion when he personally appeared in front of you to complain about editorial independence.

1961 We think that the public mechanism would be available to any journalist who wished to complain.

1962 COMMISSIONER PENNEFATHER: Indeed, the translation is clear. It's from all sources. The importance here is really to underline that we are looking for the safeguards that secure the independence and autonomy of the newsroom from each other for the purposes that you have laid out.

1963 In that sense it's another piece of that safeguard that also deals with the aspect of diversity and the independence point of view, so it's a component that I hadn't heard you address and I am interested in your comments.

1964 MS McQUEEN: Thank you. We should have done that, but our notion is that obviously viewers are to us very important, but any journalist who wished to complain about practices in the newsroom could certainly avail herself of that mechanism that we have proposed.

1965 COMMISSIONER PENNEFATHER: Thank you. It also I think in our thinking should support -- I would assume you would now agree -- the importance of having your code and addressing these matters yourself directly.

1966 THE CHAIRPERSON: Thank you.

1967 Commissioner Cardozo.

1968 COMMISSIONER CARDOZO: Thank you, Mr. Chair. A couple of questions just covering things you talked about in the last days and a half.

1969 First, on the cross-media issue. In addition to the principle, Mr. Fecan, of diversity or of editorial separations, is the principle of diversity of voices versus diversity of editorial voices, which is slightly different -- I'm just struck that you haven't looked at that issue per se where you could have similar or separate editorial operations, but that the diversity of voices is something that is really stepped up.

1970 You have outlined all the positives of the synergies of consolidation but there are on the other side fears about voices that may be lost or will not be heard.

1971 I am wondering if you have given any thought to how a diversity of voices can be heard perhaps more or that those who have concerns about diversity of voices can be assured that you will give them more opportunity.

1972 I'm thinking in the print media we have, of course, letters to the editor which are really quite widely read. I'm quite impressed by how many people will read an entire page of letters to the editor or several letters.

1973 You have also got opinion pages in newspapers. Some of the newspapers like the Ottawa Citizen, for example, over the past couple of years has increased the number of pages it has dedicated to these voices. Some may not be satisfied, but certainly the amount of pages has increased.

1974 I wonder whether you have thought of doing that with television or whether your papers could as part of this whole, this bargain, offer more space for those voices in the newspapers and then on television you could look at the same sort of thing. You could either have public affairs shows, debate shows. You have the Vox Pop thing, the Speaker's Corner type of stuff, or perhaps something more formalized, where people had more access to the media. So that even if there was a consolidating of the ownership, the people, the public, had their voices heard.

1975 MR. FECAN: Of course, we have thought about it. As a preamble, I think it is important to note that in this day and age, with Chapters and the proliferation of Internet sites, it is pretty difficult to suppress any information. It is impossible. It will appear somewhere all the time. And I think that is different. That is a different situation now than what existed 10 or 15 or 20 years ago.

1976 I, respectfully, wouldn't really, as part of any bargain, deem to tell The Globe and Mail how to allocate their pages. I really do believe that they need to be autonomous and they need to run their business in the way that they see fit. Over at CTV, I understand, that from some time now we have been considering some kind of right-to-reply program. And perhaps I can turn it over to Trina, as I lose my voice.

1977 MS McQUEEN: Or Kirk.

1978 MR. LAPOINTE: Well, actually, Commissioner, one thing that we have been exploring -- and we intend to move forward with it -- there are a couple of vehicles we would like to try. First off, we have brought into our 11 p.m. newscast an actual feature on Fridays now called "Ask Us", which really permits viewers to ask any question of our news operations. And to date it has been questions on the facts of stories or on the future implications of some stories and they have sought from us, you know, a little bit of informed insight into where things are going. But it is also a vehicle for viewers to ask about our techniques.

1979 Beyond that, though, what we are proposing to do in the next number of -- well, I guess number of weeks now, is some programming inside NewsNet, where, of course, we have -- you know, we have such attentive audiences around news of the day, to try to present programming that looks a little bit more at our techniques, and it also provides an alternative viewpoint space for -- or, pardon me, a better way to express it is an opportunity for people to talk about point of view, documentaries, for instance, that run and on news events themselves, to really widen that. And so we want to try to give that sort of opportunity within our news programming for other viewpoints to be heard.

1980 MS McQUEEN: And I think you have put your finger on something very important about television versus newspapers: that there isn't a formal right-to-reply mechanism that exists so well in the papers. And whether we do it on NewsNet or whether we do it in one of our other vehicles, Kirk is certainly looking at a way to provide that.

1981 Oddly enough Discovery Channel, for some strange reason, does have that right of reply in a forum called Discovery Connection. And it is very interesting. It works to allow harder hitting stories because there is an opportunity to allow that kind of reply. So I think it benefits both ends. On the one hand you can do tougher stories because you know there will be a place where people can react to them.

1982 MR. LAPOINTE: If I just may pick on one other point on this one, not to belabour it too much. But I have found over the years, again, that people -- their loyal to you is incredible. They really do bring you into their homes everyday. And they build that kind of trust and you have a certain amount of currency and equity with them. But any time that you do something that perhaps runs counter to what they expected of you, they would like an explanation a little bit. They would like to know a little bit of your technique and your process and your decision-making. And I have always thought it has been the best thing for journalists to do, that it, in fact, builds a greater trust, greater credibility with your audience if you can explain to them how you arrived at a decision, that there is no mystique about journalism, all of that.

1983 It is usually well-meaning people making well thought-out judgments, often with a great deal of deadline pressure, but usually it is the right thing that they have chosen. But you sometimes need more of a demystification of that process. And so a program like this, or any kind of technique or elaborate way, with our website, or any other way, to explain more about how we do things is, I think, great for our viewers and it builds a greater bond with them. So we see virtue in it.

1984 COMMISSIONER CARDOZO: Is the program you are talking about at NewsNet a formal program? Is it a night --

1985 MS McQUEEN: No --

1986 MR. LAPOINTE: Well, no.

1987 MS McQUEEN:  -- it is just an idea that we are batting around as to how we could do right of reply. And we certainly don't know yet whether NewsNet is the appropriate vehicle or whether the main channel is the appropriate vehicle. But all we wanted to do is be responsive and say, "Yes, that is something important that is lacking in television now and it is something that we are considering looking for the appropriate vehicle."

1988 COMMISSIONER CARDOZO: All right. If that idea moves any further along the way to germination before the end of next week, I would be interested in finding out any more about it.

--- Laughter / Rires

1989 COMMISSIONER CARDOZO: A quick question on local programming. The question we have to face -- and you can make the decision about what you do on CTV National and on your local stations -- but the question that the regulator still has to figure out at the end of the day is: is there enough local programming out there for all the people who want it? And if everybody is sort of moving it down the food chain, and the specialties are national, and you can't afford doing very much and CBC can't afford to do very much, and people say, "Well, look, community cable is consolidating their shows and...," it is the old Internet, you know, "Give it to Mikey and we'll just sort of..." --

--- Laughter / Rires

1990 COMMISSIONER CARDOZO:  -- at some point television, somewhere, still has to do it. So I am wondering what your thoughts are -- if you can step aside from your own application, your own station -- but where we can look at -- where Canadians can get more local programming and where should we, as a commission, be pushing for it?

1991 Or is it not really an issue? People tell us it is. Is it just the right thing that everybody says, but they really -- they are not going to watch it in the end?

1992 MS McQUEEN: Well, let me give you some kind of blunt statistics. The fact is we all talk a lot about how people really want local information, but the voting rate in municipal elections is much lower than the voting rate in national elections.

1993 People in many towns served by us have decided that they will disconnect their cable and go to DTH, even though they know they will not get local service in DTH. So they are saying, with that move, that what they value is the signals national and international that they can get.

1994 So I guess what we are seeing is that there are a number of different groups in society today and there is a diversity of thinking about the kind of information that people want, and we have to try and serve all that diversity. We do see that radio is intensely local and maybe these people who disconnect from cable are looking to see local radio. Perhaps they are satisfied that they can get news from their local newspapers. I am not sure.

1995 But the other side of that equation is for people who do want local program -- and we believe that there are a lot of people who do -- we think that we are very successful. And sometimes it is hard to come in front of a commission with something that we think we are doing just an extraordinary job in: reflecting local issues, local cultures, local diversity, local opinion, local ideas, local celebrations, local tragedies, and to be told, "Well, you know, that's just kind of okay and there are things that you can do better" -- and we acknowledge that there are things that we can do better, but, frankly, we think that we are really proud of the local reflection that we have. We think we have a large number of hours, we think we reflect the community and we think we are very much part of that community, in a way, frankly, that no other broadcasting organization is in this country. So that is just a kind of statement of pride in what we are doing. Sure, we could do better and we could do more, but we do pretty good.

1996 COMMISSIONER CARDOZO: So is it your view that, realistically, this is what the system can expect to provide to the public -- not just you, but what they are getting overall?

1997 MS McQUEEN: I don't know about the system. I do know that there are many new voices in the system, many new opportunities. Commissioner Wylie referred to the issuances of regional news licences to a number of station groups.

1998 Although community channels may be consolidating, they are also investing much more resources in their local news operations. Perhaps the global purchase of the Hollinger newspapers will lead to a flourishing of those newspapers. It is hard for me to comment on the entire system. Maybe there are others who will, and could, do more and do better. We certainly think we could do better, but, in our terms, we do -- I have said it again -- we do good.

1999 MR. FECAN: And, you know, we are here with your for a week, and I really do hope that on Friday there is the time to speak to each and every one of our local station people so that they can tell you how they believe they are serving what the communities they live in and work in need and want and why we believe that we are connected with those audiences and we are giving those audiences the kind of coverage that they want in the form that they want it.

2000 And I think the quantity is there. I think the quality is there. And I think there is a pretty good diversity story there, as well. And so I do hope that when we get to Friday that they do -- you know, that in the compression and telescoping of time -- and you have a lot of issues you want talk about -- we are very hopeful that you give them an opportunity to talk. Because I think you will feel much -- you will have a much better picture of what is going on in each of these stations and communities, than, I think, as a corporate group, we could possibly give you.

2001 COMMISSIONER CARDOZO: Lastly on regional, in terms of the idea of having two or three -- I guess three of eight programs from the west or from the regions, you seem to be saying, "Trust us, we do about that. Not on a yearly basis, but overall it is something like that," and I am wondering what you would think of, rather than a three out of eight in every calendar year, or every year, that you would look at three out of eight over a period of time, like three years or the licence term, would balance that, would average out, to be programs that are produced in the regions? Do you know what I mean?

2002 MS McQUEEN: Yes, I understand exactly what you mean. And I understand the goal and I understand the reasons behind the goal.

2003 I guess, once again, we have described to you the kind of mechanisms that we have in place that will allow that to occur without your imposing a regulation on us that may force us to choose a creative project which is less good than another creative project. We go back to our notion that what we would like, at the end of the seven years, when we come back before you with a renewal, is CRTC policies grew Canadian audiences by X per cent, not the kind of headlines that we had going into this. And that is why we think your policy enables us to strengthen audiences.

2004 The mechanisms that we have in place will ensure that regional programs will be part of that. But do we think more regulation will help the objective of Canadian programming that audiences will watch? With respect, we think your policy is pretty good the way it is.

2005 MR. FECAN: And we would suggest that it is not just us that you are trusting, it is your policy and the several years of deliberation and listening to people and balancing interests that went into forming the policy.

2006 COMMISSIONER CARDOZO: Thanks for your answers.

2007 Thank you, Mr. Chair.

2008 THE CHAIRPERSON: Thank you.

2009 Well, we will take our morning break now. It has been a rather long morning thus far.

2010 And I believe counsel will probably still have some questions, so I will modify my earlier suggestion. We will stay with this panel, we will take our morning break, proceed with questions from counsel, then we will take a short break and then go to the panel with respect to the B.C. Interior.

2011 So we will take a break now for 20 minutes.

--- Upon recessing at 1040 / Suspension à 1040

--- Upon resuming at 1103 / Reprise à 1103

2012 THE CHAIRPERSON: Ladies and gentlemen, in the interests of flexibility, we have decided that a few questions that perhaps we had for the larger panel might be more appropriately asked at the time of rebuttal.

2013 We will now turn to the panel that is going to deal with the issue of CTV service to the Interior or British Columbia, given the changes that have gone on particularly in the Vancouver and Victoria market over the past while.

2014 I understand we will have a short presentation, which is finally going to give Mr. Hurst an opportunity to say a few words. I think he is about the only one of the 20-some-odd people from CTV that didn't get a chance to speak, and we felt compelled to give him an opportunity to get his name on the record.

2015 We will do that, and we will then take a break.

2016 I think what we will do is take a break, have Global do their presentation, and take a one-hour lunch break and begin the questioning of Global.

2017 With that, we will turn to Mr. Hurst -- or is it Ms McQueen?

2018 MR. HURST: Thank you, Mr. Chairman. My name is Robert Hurst, and I am the Senior Vice-President for CTV for British Columbia. I am also the General Manager of CIVT in Vancouver, also known as VTV.

2019 Before we begin some prepared remarks, I would like to introduce the panel, some of whom have already been introduced before.

2020 Trina McQueen is sitting beside me on the left, our President and Chief Operating officer. Beside her is Robin Fillingham, our Chief Financial Officer and Chief Administrative Officer of Bell Globemedia.

2021 Beside me, on my right, is Jim Macdonald, one of our consultants, who has long experience in B.C. broadcasting issues.

2022 Behind me is Louise Clark, Head of our Western Independent Productions, based at CIVT in Vancouver.

2023 Back at the back, on my left, is Brian McCluskey, who is our Vice-President of Revenue Management; Allan Morris, our Vice-President of Engineering Operations at CTV; and Tracey Pearce, our Legal Counsel from Goodmans.

2024 Commissioners, this application is about preserving the CTV program service to cable subscribers in the cities and towns in the British Columbia Interior.

2025 Four weeks ago, when newspapers in Kelowna, Quesnel, Kamloops and Fort St. John first reported that CTV might disappear from their cable systems, people began phoning, faxing, initiating petitions and writing letters. The Commission has received letters signed by more than 450 people supporting CTV's continuing carriage in the B.C. Interior.

2026 Mrs. Jean Prettie wrote from the Okanagan Valley -- and I quote:

"I read in our local paper this morning that we may be losing CTV programming as of Sept. 1. Our family would consider this a great loss of excellent programming which is very informative, entertaining and forms an integral part of the Canadian Mosaic."

2027 Babita Basra from Williams Lake wrote:

"Canada AM is part of my family. I have grown up with Lloyd Robertson, and CTV is my main news station. Many people would be upset if there were to be any change."

2028 And Jo-Anne Rondeau from Fort St. John, in the northeast Peace Country, wrote:

"...we will become even more isolated from the Lower Mainland, and will have to rely on television coverage from Alberta. We feel alienated in this part of the province already, and I fear this will only serve to further that alienation."

2029 Historically, CTV network programming has been an important part of the service these communities have received via BCTV in Vancouver. Over the decades, the Commission encouraged the expansion of BCTV's transmission, so CTV could be seen by Canadians in the cities and towns in B.C.'s mountain regions.

2030 However, with the acquisition of the station by Global, BCTV's affiliation with CTV will come to an end on September 1, 2001. On that date, most cable subscribers in the B.C. Interior will have access to two Global signals, BCTV from Vancouver and ITV from Edmonton, but no CTV service is this application is denied.

2031 On September 1st, CIVT in Vancouver will become the sole British Columbia source for CTV programs.

2032 Authorizing distribution of CIVT as a "distant signal" will ensure there is no interruption of CTV for the vast majority of homes in the B.C. Interior.

2033 We believe viewers in the B.C. Interior have reacted so strongly and so quickly to this issue, because they realize they will lose some of their most popular programs. "CTV News" is Canada's most popular newscast. "Canada AM" is Canada's most popular morning show, and "W-FIVE" is Canada's most popular investigative program.

2034 We are also gratified by the growing audiences for our Canadian priority programming. High quality choices such as "The Associates", "Cold Squad" and "Mysterious Ways" provide important alternatives to American offerings.

2035 We believe access to these priority programs is equally important. Without approval of this application, cable subscribers in the B.C. Interior will not only lose access to our national news and public affairs but also to eight hours of CTV priority programming.

2036 Two of those programs, the drama productions "Cold Squad" and "Mysterious Ways", are actually filmed in British Columbia.

2037 The authority to distribute CIVT as a distant signal is in the best interests of the broadcasting system. It furthers the objectives of the Broadcasting Act and is consistent with Commission policy. It enhances access to Canadian programming. It preserves and improves the diversity of Canadian choices.

2038 Commissioners, this issue in the past four weeks has been of such intense local interest in British Columbia that it was added to the agenda of several City Councils, notably Kamloops, Fort St. John, Penticton and Prince Rupert. Each of those communities has local television service and each of the City Councils voted for a resolution supporting this application.

2039 Chambers of Commerce in B.C. also debated the issue. These organizations are charged, of course, with promoting and protecting local business interests. In the B.C. Interior, several Chambers from communities like Kelowna, Penticton and Osoyoos have written in support of this application with not a single negative intervention from these organizations.

2040 Further to that, 22 Mayors from the 22 largest communities in British Columbia in the Interior have each written to the Commission endorsing this application.

2041 Colin Kinsey, the Mayor of Prince George, stated -- and I quote:

"I do feel that CTV plays an important role in our area in bringing a national perspective to our community, and the more links we in North West Canada have with the rest of our Nation, the more we feel connected and discussions regarding 'separation' do not occur."

2042 Mayor Jack Talstra of Terrace wrote:

"In an ever-increasing 'Americanization' of programming, it is important to maintain Canadian news and content wherever possible."

2043 The Heiltsuk Council in Bella Bella said -- and I quote:

"We feel this is particularly important so that Canadians can be educated about First Nations' history and current issues that are presented on the VTV show First Story. First Story is enjoyed by our community and promotes pride and up to date information."

2044 We see CTV as one of the cornerstones of Canadian broadcasting and a service Canadians simply expect as part of their choices. We have come forward with this application to ensure that these expectations are met for the majority of viewers in the British Columbia Interior.

2045 We look forward to your questions.

2046 THE CHAIRPERSON: Thank you, Mr. Hurst. I will turn the questioning over to Commissioner Grauer.

2047 COMMISSIONER GRAUER: Thank you, Mr. Chair.

2048 I know you have referred throughout to the issue of cable subscribers potentially losing CTV service. You are aware that over 25 per cent of Canadians get their television service over the air, and CTV has long been available over the air in British Columbia.

2049 Paragraph 47 of Decision 2000-221, which transferred ownership of CHAN and CHEK to CanWest Global -- the Commission addressed this issue at that hearing, and we noted that CanWest Global stated that:

"Should CTV be authorized to extend British Columbia's Central Interior, the service of its Vancouver station CIVT-TV CanWest Global would consider the sharing of transmitter sites and operating costs associated with the existing system of transmission facilities currently used by CHAN-TV and its rebroadcasters."

2050 Have you had any discussions with Global on this matter, and what has been the outcome of those discussions?

2051 MR. HURST: I think there are a couple of questions here. The first is the 25 per cent of Canadians over the air.

2052 We have done a detailed analysis -- and I would like to share that with you, if I may -- as to what the real impact of cable carriage is to these Class 1 systems and Class 2 systems in the Interior. Then I will chat a bit about Global and perhaps ask Mr. Macdonald to talk about it as well.

2053 COMMISSIONER GRAUER: I am not really as interested in discussing Class 1 and Class 2 systems as I am in -- if you have done information, what I would like to know is: How many viewers in the communities covered by this application would lose their programming if it is only available through cable?

2054 How many people in these communities, in the coverage areas, do receive it over the air or are not subscribers to cable or DTH?

2055 MR. HURST: Our analysis shows that if this application is granted, 30,656 households will not have access to the CTV television signal. That represents just under 2 per cent of all of the households in British Columbia.

2056 COMMISSIONER GRAUER: What about all of the households that currently are affected by these transmitters, which is more important, because frankly it is available over the air in the Lower Mainland. So that part of the population is not of as much interest to me.

2057 MR. HURST: There is no doubt that some people who currently receive CTV through over the air broadcasting in the Interior are going to lose right away, or on September 1st, their signal.

2058 We were presented with quite a problem last year. The problem was how do we maintain our coverage in the British Columbia Interior?

2059 We believe that there will be quite an outcry from people in the Interior if CTV is not carried in the Interior. We were searching for an immediate solution in a very short time period that would address our issues, our CTV issues, trying to find a solution where the Commission would not be inundated, where cable companies would not be inundated.

2060 We looked at several options and continue to look at several options. The easiest and the fastest option to provide cable coverage and continuing coverage was to grant authority to continue CTV/CIVT as a distant signal.

2061 Our analysis at the end of the day showed that of all of the households in British Columbia, only 30,000 would not have access to the signal.

2062 COMMISSIONER GRAUER: I wonder if we could go back to my question about the discussions.

2063 MR. HURST: We had some initial very early discussions with CanWest Global as part of our analysis, which was pursuing an engineering solution, a transmitter solution. The discussions began at an engineering level.

2064 Our analysis of the engineering solution required a significant amount of time to effect continuing coverage to the Interior of British Columbia and a significant capital build, which we continue to look at. But our immediate problem was what do we do by September 1st for a majority of the people in the Interior of British Columbia.

2065 COMMISSIONER GRAUER: Could you perhaps give me more details with respect to the expenditures and time from when you started these discussions.

2066 We are now towards the end of April and you are looking at September 1st. Presumably you have been at this for some time. You knew it was coming.

2067 MR. HURST: We began looking at this at CTV, I would say, early last fall.

2068 COMMISSIONER GRAUER: Early fall 2000?

2069 MR. HURST: Yes. Then we decided that the fastest and easiest and immediate solution, although perhaps not a complete solution, was to engage the cable companies to see if we could provide to the Commission one application. Our discussions with the cable companies proceeded through October, November and December, with our primary objective to find the easiest possible solution, to address the problem by September 1st, for the least disruption of service for the majority of people.

2070 So we have spent an immense amount of time with the cable companies in preparing a single application.

2071 COMMISSIONER GRAUER: I wonder if you could tell me when your discussions were with CanWest with respect to the possibility of using the transmitters.

2072 MR. HURST: Late November, early December.

2073 COMMISSIONER GRAUER: So certainly well past the time when you knew this was going to be a problem and may involve in fact time to do this on the transmitters.

2074 MR. MACDONALD: Commissioner Grauer, perhaps I could add a couple of comments. Global was certainly very willing to work with us on this.

2075 Also in discussions with John O'Connor who is the Vice President of Engineering at BCTV and who I know well from a former life. There was going to have to be a load analysis done on all of the transmitters, in some cases, additional buildings. In some cases we knew that the towers may have to be stressed differently to accommodate not only our antenna but also Global's digital antenna and ultimately VTV's digital antenna.

2076 So there was a lot of work on the engineering side, which made it -- as well as there was an impact consideration on the local stations that we also looked at. And when, as Robert said, the most important critical date for us was hitting September 1.

2077 We knew we couldn't file an application for rebroads without entering into negotiations with the interior stations. We knew that we couldn't come forward unless we had Industry Canada approval on frequencies and everything else. We knew we couldn't file that without the engineering analysis. And so when we backed it up, we were in a very difficult position in terms of being able to have lift-off on September 1st.

2078 COMMISSIONER GRAUER: But perhaps you could give me the date, and you know, we can get back to this.

2079 Certainly, you know, what is of principal concern of the Commission when looking at distance signal distribution is the impact on local stations in those markets. There has been historically a long arrangement between, you know, BCTV and these stations, which, according to their intervention, has essentially provided them with the life blood to keep operating and serving those markets.

2080 You have stated in your application that the distribution of CIVT will have no significant impact on local broadcasters in those communities and I wonder if you could explain and elaborate on that and explain to me where you have -- from whence you have come up with that conclusion, particularly given, I might add, Global's statement that they will not continue those arrangements with those -- that they have with those stations if this is approved?

2081 MR. HURST: Yes, I am going to ask Jim to answer your question because we have done an economic analysis, and I mean part of our economic analysis is because of -- I mean CTV, we have some small stations and we have some experience in other parts of the country where distance signals have been applied for and have been approved.

2082 MR. MacDONALD: Thank you, Robert.

2083 Commissioner Grauer, I would like to start by re-emphasizing something that Robert said on the in-chief which is this about preserving a service that already exists. If we want to get into what is new programming, it is the programming that Global will be introducing when they move over to BCTV. So I think that that is very fundamental to the way in which we have tried to look at this and we will come back on that -- on the 30-year deal that has existed with the interior broadcasters.

2084 The other thing I think that you should be aware of is that the overall impact of moving from BCTV to CIVT is a $12 million hit to CTV. There will be a $12 million reduction, and that assumes, of course, that this application is approved. If it is not, there is an additional three and a half million dollar hit and I can go into the calculation of where that comes from if you would like.

2085 COMMISSIONER GRAUER: Well, we can either talk about it here or we can talk about it on Friday because I think there is a number of complex issues involved in that $12 million which probably relate more to the local license than they do to this application.

2086 MR. MacDONALD: I would agree with that.

2087 COMMISSIONER GRAUER: Let's leave that for Friday.

2088 MR. MacDONALD: But it is, you know, it is certainly important to make sure that you are cognizant of the big picture and the big picture is certainly beyond the interior. But that is the transfer cost for CTV.

2089 So we have got --

2090 COMMISSIONER GRAUER: To which there are also going to be added revenues ultimately with that transfer costs. You expect your revenues to increase once CTV becomes --

2091 MR. MacDONALD: That is correct. That is correct.

2092 When we look at -- the 40 hour network schedule that is in the market already contains many of the top shows so I don't want to belabour that. We are going to be bringing in new hours of programming.

2093 But fragmentation is going to occur. I mean we will not take that away at all. The fragmentation will occur on two bases. First of all, from our additional programming but mostly, as I said earlier, from the introduction of a lot of new Global programming and the fact that there is simultaneous substitution on that programming.

2094 We have, as was mentioned earlier, had some experience when the -- when CHCH in Ontario applied for to come into northern Ontario. And of course I was also involved in that so I have some experience being on the other side; we were the applicant.

2095 So I was interested to talk to my colleagues from northern Ontario and just ask what the overall impact was. Because ONTV came into the market not just with cable carriage, but they came in with over-the-air transmitters and therefore simultaneous substitution.

2096 Now, we are not trying to say that northern Ontario is exactly the same as the interior but we are going to say that we were charged with the responsibility of providing local content, significant local content in northern Ontario and we had a major player coming in. And we found out that the impact was fairly insignificant. And I am going to go back and take you through the market a little bit if I may.

2097 If I look at the TVB data, total local, regional and national selective -- I'm not including network revenue here -- is $17.4 million, and 60 per cent of the hours tuned are to CHBC and we conservatively estimate that that brings about $10.5 million of the interior's revenue controlled by CHBC.

2098 I think you would agree that there is really no argument that can be made that their local revenue would be affected by this application. So we are looking only at the regional and national revenue.

2099 The total regional and national selective advertising impact that we project might be their total for Pattison and the Telemedia stations is $4.2 million. If we then apply the same experience that we had in northern Ontario, which was an overall impact on our regional and national selective business of 5 per cent, we find out that the impact on the Pattison Group is about $150,000 and on Telemedia is $65,000. That is a long way from their numbers.

2100 However, what they said is that the great impact would come as a result of Global walking away from the deal. And we would agree that the impact on that would be significant, absolutely significant. Global has got a number of top shows that have not been in the market, other than on U.S. stations before. They will affect the simulcast on those programs. They will still flow through on the national advertising and local. Local and regional will be the only things that will be covered off.

2101 So the Commission in the past has certainly enforced that existing agreement. We think that this is one of those situations where the pain should be shared across the Board. You know, Global bought BCTV and we see no reason why that agreement shouldn't be continued as part of that enjoyment of being able to acquire it. And that the services of CTV that have been there for better than 30 years, shouldn't be disadvantaged.

2102 What we have attempted to do is to look at the easiest, fastest and least impactful way of doing it and that is why we came forward with the proposal we did.

2103 COMMISSIONER GRAUER: You are suggesting that by some mechanism the Commission should continue to enforce the existing arrangement with BCTV/CanWest Global and permit you to come in as a distance signal and really -- not really concern ourselves too much about what the impact of that might be on the local broadcasters? Is that your --

2104 MR. MacDONALD: Well, we are certainly suggesting that is one option. We don't believe that the impact as a distance signal is anywhere close to the impact it would be if we set up rebroads. And recognizing that the existing deal with BCTV covers off only local and regional advertising, not national advertising.

2105 So in that scenario, all of the national advertising would still flow what is called full system on CIVT.

2106 COMMISSIONER GRAUER: Yes. Well, then we get into this discussion about what is national and what is regional advertising which, you know, I'm not going to get into here and now.

2107 But I do think that it is useful, I mean and quite instructive to me to listen to CTV's deep commitment to the smaller local stations and the willingness to cross-subsidize those stations, notwithstanding the fact that, you know, they may not be generating the same revenues. But if the audiences are there, how important that service is to those communities. And I am struck by that.

2108 And when I look at, if I understand correctly, the method in which regional advertising in Ontario is sold and collected and allocated to all of those other stations, and you know I went through it quite carefully, it is true it may not be seen as a subsidization. But in the way advertising is sold -- if you buy CFTO and you want Ontario, you buy all those other stations and that is managed, I assume, through CFTO.

2109 So there are different mechanisms that exist in different parts of the country. And if you are in a smaller community and you have the advantage of having your station owned by a large broadcaster, then you can take advantage -- you have the benefit of some of that cross-subsidization.

2110 But what if you are wrong and the intervenors are right in this situation and it does, in fact -- I acknowledge fragmentation is happening as do they -- but what if you are wrong and they are right and, in fact, the impact on them is such that the local service to these communities with everything involved in that that you have talked about, which is local reflection, local news, local engagement in the community, local jobs. You know, as you probably know, the Vancouver economy has done quite well. The interior is not as robust as has been -- as Vancouver and it's headed for not an easy time.

2111 MR. HURST: Well, we hope this doesn't happen. The communities in the interior and those television stations owned by the Pattison and Telemedia Groups provide an important, valuable service. We think that our analysis and our estimation of impact on the stations is accurate. We read with great interest, of course, the intervention from the Pattison and Telemedia stations and we have done an analysis of how parts of the BC interior are, in fact, booming. The Peace River area, the oil and gas area, the Alaska Highway corridor is booming with oil and gas and population has gone up significantly. I mean that is one point.

2112 I guess my overall point on this is, we are trying to find the simplest solution that impacts the least damage on everybody involved in this situation so our viewers in the British Columbia interior continue to get service on September the 1st. And we think the solution that we are proposing, which is distance signal to the Class 1 and Class 2 systems will solve the immediate problem. So the cable companies aren't inundated with letters of complaint and you aren't and we aren't either.

2113 MR. MacDONALD: Commissioner Grauer, there is no question in my mind that fragmentation will continue. I mean 50 new services will launch in September. That will certainly impact these stations as it will everywhere. And we certainly, in the theme of this hearing, anticipated this question and tried to look at where the fragmentation was really coming from.

2114 And this is a very unique circumstance. I have never been involved in an application where the service is already there.

2115 We are in the situation of, I won't call us the bad guys, but we are the predator coming into the marketplace when what we are really trying to do is preserve viewers' ability to get CTV and, therefore, we are not liking to be in the business of suggesting conditions of licence on somebody else's licence.

2116 We think that the biggest overall impact is going to come from the possibility of that agreement not staying put. We believe it is well within the Commission's authority and the Commission have in the past insisted that that be a condition of licence and we do not see why that would not be taken into consideration.

2117 Obviously we would be more than happy to revisit any other suggestion you might have. We have looked at bringing the signal in from Alberta as an example. We have looked at the impact on that and we have looked at the impact on the viewers.

2118 We considered asking you to potentially look at taking ITV off the air because why should Global have two sticks across the province. Well, we recognized that that was a bit of a non-starter because the Commission is really not in the business of denying viewers programming that they already have which got us right back to where we are, which is: How do we get the service to people with the least possible impact.

2119 We looked at possible revenue sharing situations that we might have with the stations. That was very difficult. VTV, as you said, is going to go through all kinds of different changes in its new relationship and how do we figure out what is really tied to the interior and what isn't.

2120 We are very open. We have come here with what we think is the best solution.

2121 COMMISSIONER GRAUER: You are one of the largest broadcasters in the country, the largest private broadcasters in the country. British Columbia is Canada's second largest English speaking province. You have one station there. It's new.

2122 I think everybody has a goal wanting to maintain the CTV service there, but the other services that have been there for some time have to be equally important to the people in those communities. It's a balancing act.

2123 I guess the question is have you explored any possible commercial arrangements with the interior broadcasters.

2124 MR. FILLINGHAM: I think perhaps, and I think you referred to it, Commissioner, the $12 million reduction, maybe we should go through that because that's really in a sense the basis of our -- as we move forward here with this suggestion, I think we should understand the economics of that $12 million because you refer to CIB revenues increasing.

2125 COMMISSIONER GRAUER: You know what? I would like to leave this discussion for Friday because we can have it on Friday when we talk about that licence. Really I just want to explore and get on the record here, you know, the information as we need it with respect to this particular application.

2126 MR. FILLINGHAM: It's the basis of this application. That's why I suggested it.

2127 COMMISSIONER GRAUER: Fine.

2128 MR. FILLINGHAM: The economics to CTV with the reconfiguration in Vancouver really does relate to this $12 million drop in revenue. Four million of that relates specifically to CIBT. That is the loss, if you like, from revenue that exists on the 40 hours of network service that is currently on CHAN/CHEK.

2129 That network service which the 40 hours comprises generates approximately $160 million in revenue, network revenues overall, right across Canada. Part of that revenue is earned from contribution of audience in B.C., currently on CHAN/CHEK, currently throughout the entire interior of B.C. province.

2130 That audience is basically sold on a cost per thousand basis. That programming shifts to CIBT Vancouver next year. The audience -- there will be an audience reduction from two factors.

2131 Currently there's two stations bringing in service to that 40 hour block of programming. The CHAN/CHEK off-scheduling within Vancouver itself will likely result in what we anticipate about approximately a $4 million reduction of the eight, four being CIBT alone, eight on the network component, so there is about a $4 million reduction within the CHAN/CHEK situation that's going to result as part of the eight.

2132 We anticipate the other four coming from the loss of audience from delivery throughout the province. On a net basis, because as I think Jim had mentioned earlier, that figure would likely be higher, probably by about two and a half million, if in fact no extension of service, even on this application, is received.

2133 So CTV is not going to recover that revenue. We are going to be taking an economic hit with or without. That was then kind of gauged if you like against other possibilities of duplicating the whole rebroadcast over-the-air system that currently exists for CHAN while again it could be -- it's a massive large capital investment which we can give you the figure on, but at the same time that kind of transmitters in some of the smaller markets does in fact impact the smaller broadcasters in a larger way.

2134 The whole basis of this application really was premised on the basis of saying everyone is going to get impacted here a bit. CTV is not going to recover completely. By putting it in on a distant signal into the smaller markets, it's going to minimize the impact on the smaller broadcasters.

2135 Very definitely, I think as Jim had mentioned, we do have a lot of small markets throughout the country and very definitely when distant signals get imported and put on to cable there is an impact, but it is less of an impact than the actual positioning of a broadcaster in those markets.

2136 In a sense those are the economics behind which we based this application. I know on the financial models you see, and it's a bit of a problem in terms of the new station group, while allocations are easier, the CIBT model now has an allocation of that complete network block which is why I think you see like the revenues do increase because you have had in a sense a reduction and then an allocation back of this network block of inventory in revenues that get allocated.

2137 COMMISSIONER GRAUER: Well, thank you for that. I think it's also that intuitively CTV is an enormously valuable brand everywhere in Canada and British Columbia no less. VTV is operated as an independent without having the powerful assets of CTV to help it generate revenues.

2138 Intuitively two things. First of all VTV has been in a start-up position, has not had the advantage really of being part of the CTV family in terms of generating both local and national revenues. Intuitively, aside from your projections, it stands to reason that when it becomes a full CTV station with everything involved in that that it's going to be stronger and more financially profitable to the CTV itself.

2139 MS McQUEEN: Well, the revenue drop, as we have said, comes from the fact that we used to have one and a half stations generating revenue and now we have only got one station. Hopefully VTV, as you suggest, will become stronger and will become a leader.

2140 There are two brands that were at work in the previous situation. One was the BCTV brand which, as you know, is probably the dominant local station in Canada. I don't think there's a local station anywhere that has the effect that that station has.

2141 Although VTV gains CTV's brand, CTV loses BCTV's brand and the enormous impact that its local news brought to the network operations, so you are right. Intuitively you are right, but there is also the notion that we have lost the BCTV brand.

2142 Again, what we are trying to fashion here and, you know, it's a really difficult situation. The funny thing is that in the end, the B.C. television system will be enriched. There will be more choice for viewers overall.

2143 What we are looking at is behind that to make sure that that happens with the least impact to everybody concerned. We have to take a little bit of water with our wine in terms of the revenue drop.

2144 The interior stations, we have tried to minimize the effect on them as much as we could with this solution, but there will be some impact. We think it will be minimal. We think the other partner in this trio, Global, can help.

2145 If each of us comes to the party with some kind of solution, we are not pretending that any one of them is perfect, you know, that there's a win-win-win situation that we can see here, but what we think is that if everybody works together, we can have the least possible losses for everybody in the system and the viewer will benefit by having access to more signals.

2146 COMMISSIONER GRAUER: I'm sorry, I got a bit sidetracked. I'm not sure I heard your response to my question of have you tried to work out a commercial situation and secondly, Ms McQueen, why you think this solution is doing -- this proposal of yours does your part to minimize the impact on the interior stations. I'm not quite sure I --

2147 MS McQUEEN: Well, as we have said, we think if we put rebroadcasters up, and again I would ask Jim to be more -- I guess to quantify that a little more, that rebroadcasters would potentially have more -- sorry?

2148 COMMISSIONER GRAUER: So you are saying rebroadcasters without an agreement similar to the one that is in existence with BCTV.

2149 MR. MACDONALD: Quite frankly, even with an agreement. I mean we never had any notion of establishing rebroadcast transmitters without entering into a similar type of agreement.

2150 I think, as you said, there has been 30 years of history and more recently the CBC have entered into a similar agreement. It was never within our expectation that we would come forward with a rebroad agreement that didn't have something like that attached.

2151 We did look at what would still flow through and not be covered off and, quite frankly, concluded that that would have a substantial impact.

2152 Again, I want to just make sure that we have been clear. The seamlessness of the service was really, really important to us.

2153 COMMISSIONER GRAUER: You have made that very clear.

2154 MR. MACDONALD: Okay. Also, the other point is we are very open to looking at other solutions that the Commission feel would be more appropriate.

2155 One of the things that we were also concerned about was cable, quite frankly, and that is if this wasn't approved that -- you know, DTH is now 105,000 subscribers and growing in the B.C. interior at 40 per cent per annum. You know, people will want CTV.

2156 COMMISSIONER GRAUER: I'm sure the cable industry will be thrilled to hear that you are concerned with their futures.

2157 MR. MACDONALD: We just wanted to make sure that we were taking care of -- we are here on behalf of cable after all.

2158 COMMISSIONER GRAUER: Absolutely. I understand that.

2159 MR. MACDONALD: But we do have a special discount on dishes if you are interested.

2160 COMMISSIONER GRAUER: Just finally before we leave this, do I take it that you have not had any discussions with these stations directly about possible commercial solution.

2161 MR. MACDONALD: Very informally. I spoke very, very briefly with Rick Arnish, but more as a courtesy to let him know that having looked at everything, we thought we would probably go forward with a cable option.

2162 COMMISSIONER GRAUER: Thank you.

2163 THE CHAIRPERSON: Thank you very much.

2164 The figures you were referring to Mr. Hurst earlier about the impact in the interior British Columbia, and I don't know whether your figures break out those who wouldn't have the service who did have it in the area we are talking about, which is not all of British Columbia, but just the numbers that you were referring to, could you make those available by the end of the day today on the public record for the intervenors and in particular Jim Pattison Industries and Telemedia.

2165 MR. MACDONALD: Absolutely.

2166 THE CHAIRPERSON: Okay. Thank you.

2167 I think those are all our questions. Vice-Chair Wylie.

2168 COMMISSIONER WYLIE: Am I understanding you to be saying financially there will be an impact because there is going to be one more station available in the interior one way or the other?

2169 MR. MACDONALD: That's correct, but it isn't us.

2170 COMMISSIONER WYLIE: No, but that's the whole picture is there will be a big impact because there will be one more station carried into the interior than there was before?

2171 MR. MACDONALD: Correct.

2172 THE CHAIRPERSON: Since I am getting informal we will turn to Karen now. Counsel.

2173 MS MOORE: Thank you, Mr. Chairman.

2174 First, if you could also file the economic analysis that Mr. Fillingham was referring to, similarly copying the appearing intervenors by the end of today. Is that acceptable?

2175 MR. FILLINGHAM: Well, I think we basically responded to it in a deficiency. The only thing I think we didn't refer to was the break down that I just gave on the record.

2176 MS MOORE: If you could just file that in writing that would be helpful.

2177 MR. FILLINGHAM: Certainly.

2178 MS MOORE: Thank you.

2179 Also, is there a CTV service from Alberta that's available on cable in these areas?

2180 MR. HURST: The large answer is no to the majority of the systems that this application addresses, except for the CTV service from Calgary is available to a couple of systems on the Rockies in the front range, like in the Fernie area, but it is very limited partly because Calgary has such close economic ties.

2181 The CFRN signal is available on cable systems just across the border in Dawson Creek and in the Alaska Highway corridor, but in the large communities in the Okanagan Valley, in Kamloops, Kelowna, Prince George, BCTV is the only current CTV signal. There is no other.

2182 MR. MACDONALD: Ms Moore, I would also like to add for the record that ITV, on the other hand, is available at virtually all of the cable systems that we are applying on behalf of to carry CTV. That's ITV in Edmonton.

2183 MS MOORE: Thank you.

2184 I have no further questions.

2185 THE CHAIRPERSON: Thank you, counsel.

2186 I think those are all the questions on this issue for now.

2187 I hadn't expected this would take quite this long. While it is not a problem, it is now ten minutes to twelve. I think what we will do now is take our lunch break and reconvene at one o'clock, at which time we will hear the Global presentation.

--- Upon recessing at 1150 / Suspension à 1150

--- Upon resuming at 1300 / Reprise à 1300

2188 THE CHAIRPERSON: Good afternoon, ladies and gentlemen. Welcome back to our proceeding.

2189 We now are about to turn to the presentation and consideration of the licence renewal for the Global Television group of television stations. I guess we had some humour yesterday around the fact of whether we could pose some questions that the panel hadn't anticipated. I guess that's going to be somewhat difficult given what we have gone through.

2190 Perhaps since you know all the questions already, we can just sit here and listen to you rattle off the answers. We could probably save a lot of time this afternoon and tomorrow, but I suppose in the interests of natural justice, as our counsel would remind us, we should probably turn to Mr. Noble or Mr. Asper to make your presentation.

2191 Welcome.

APPLICATION / APPLICATION

2192 MR. NOBLE: Thank you, Chairman Colville and Commissioners. Good afternoon. I am sure you will come up with some new questions for Global, some that I'm sure we haven't anticipated neither.

2193 First let me introduce the team. To my far left is Ken MacDonald, National Vice-President, Global Television Network. To my immediate left is Charlotte Bell, Vice-President, Regulatory Affairs. At the far end of the table to my right is Loren Mawhinney, Vice-President, Canadian Production, Global Television Network.

2194 Next to me on my right is Leonard Asper, President and CEO, CanWest Global Communications Corp, our parent company.

2195 In the back row to the far left is Katherine Browne, Senior Financial Analyst, Global Television Network. To her right is Doug Bonar, Senior Vice-President, Technology and Broadcast Operations. To his right is Jack Tomik, General Manager, BCTV and Senior Vice-President CanWest Media Sales.

2196 To my right is Doug Hoover, Senior Vice-President Programming and Promotion, Global Television and next to Doug on his left is Katie Fullerton, Vice-President Sales and Marketing, CanWest Media Sales.

2197 Let me also introduce our panel of experts. To your far right is Ken Goldstein, President, Communications Management. Next to Ken is Professor Peter Desbarats. Next to Professor Desbarats is Peter Kent, Senior Correspondent, Global Television Network. Next to Mr. Kent is Angela Marzolini, Vice-Chairman, Pollara, and finally we have Russell Mills, Publisher and President, The Ottawa Citizen.

2198 My name is Gerry Noble. I am the President and Chief Executive Officer of the Global Television Network.

2199 It gives me great pleasure to appear at this hearing today to present our plans for the next seven years. I have enjoyed and benefited from overseas broadcast experience over the past ten years, running and launching networks in Australia, New Zealand and Ireland, countries that share similar cultural concerns to those of Canada. They are each small economies trying to maintain their cultural independence with local productions in the face of competing high budget U.S. programming.

2200 This experience has given me a unique perspective into the importance of serving a local market and reflecting a local community. With this background, I am confident that with the Global team, we will continue with Global's fine tradition of providing its audiences with locally relevant and interesting programming.

2201 First I am going to turn to Leonard and ask him to outline his corporate views as to how Global Television fits into CanWest's new expanding empire.

2202 MR. ASPER: Thank you very much, Gerry.

2203 I would like to open my remarks by bringing greetings to you from my father, the founder of our company, the Chairman, our Executive Chairman, Israel Asper. While the day to day management of the company does fall on my shoulders, I can assure you that our Chairman remains keenly interested in involved in the strategic development of our company.

2204 I would also like to bring to you greetings from my brother and sister, David Asper and Gail Asper, who remain as Directors of the company and are very involved in its success to date.

2205 Il y a tout juste dix ans, presque jour pour jour, nous venions à peine de compléter la fusion de Télévison Global à l'est et les stations de l'ouest propriété de CanWest Broadcasting. Bien qu'il nous restait encore à étendre notre présence au Québec, dans les Maritimes et en Alberta pour compléter notre système national, notre statégie de déploiement au Canada était déjà bien enclenchée. Alors nous avons par la suite entrepris d'élargir cette stratégie en étendant, avec succès, les activités de radiodiffusion de CanWest Global à l'étranger.

2206 I know it is unnecessary to describe all the changes that have occurred in Canada since those ten years ago, but suffice it to say that in the ensuing decade the introduction of over 70 pay and specialty channels, dozens of radio stations and, of course the advent of the Internet, changed our strategic imperatives from the time we decided to expand internationally.

2207 Other factors have also been at play over the decade: ad agencies consolidating faster and more furious than any other industry thereby increasing their clout over broadcasters, and both Canadian and U.S. programming prices increasing, averaging 8 per cent annum increases.

2208 Over this past decade while all of that has been going on, the Commission has been moving towards more regulatory flexibility to help counter the negative factors and we certainly welcome it and applaud the Commission for recognizing some of the imbalances that have affected us and that are in the system.

2209 In the face of all that change, we are here to describe today how we plan to face this challenging yet exciting future by investing in our principal business driver, programming.

2210 Launching a national newscast from Vancouver, a public affairs show from Calgary, 20 new hours per week of local programming in Hamilton, 12 new hours per week of local television in Victoria and the plan to launch our digital services including the Financial Post business news channel and dramatic increases in our priority programming spending are all indications of our commitment to the Canadian broadcasting system.

2211 The ability to provide an accurate prognosis of the future, I think all have acknowledged, is not really possible. What we do know is that we need to find those audiences again, the ones that have been spread so thin over so many video and audio services, and to ensure ownership of and access to the best content to play on our platforms.

2212 That is what attracts people to our media, which in turn brings in advertising dollars, which again in turn provides the ability to reinvest in more programming. This is the virtuous circle that always has and always will drive our business.

2213 The corporate vision of CanWest is threefold. We seek to be in the five major advertising media and exhibition media, being television, print, the Internet, radio and outdoor advertising.

2214 The second component of this strategy is our desire to own or have access to the three pillars of content, being news and information, entertainment and sports.

2215 All of this is buttressed by the third component, the use of cross-promotion to enhance viewing and consumption of the programming we exhibit. Five media, three content genres and comprehensive cross-promotion. In a nutshell, this is CanWest's corporate strategy.

2216 More TV stations provide greater access to consumers and more news and information content. Our involvement in the Southam newspapers allows all that and in much more depth and breadth. Our investment in Web-based media, ranging from general portals to news sites to specialty websites featuring such things as hockey or amateur sports or medical information also provides these benefits.

2217 That is how CanWest expects to continue to provide the best product to its ultimate consumer -- the viewers, the readers and now, in the Internet vernacular, the users. We believe our success will flow from this.

2218 Put another way, what we are doing is strengthening our company in the face of fragmentation and changing consumer habits and even changing technology. Our ultimate goal is to have a one-to-one relationship with as many Canadians as possible throughout the day, from the time they awake to the time they retire at night.

2219 The result of all of this will be a strong company that can adapt to a changing marketplace and continue to provide local service to communities across Canada, one that weaves a national fabric of stories connecting east to west and west to east, one that tells Canadians national stories about themselves and one that provides valuable information to Canadians wherever they may be and, finally, one that adds a new, vibrant and provocative voice to stimulate debate about issues that are critical to our country.

2220 If we achieve all of these objectives as a company, we believe that the broadcast system will be better for it.

2221 I will now turn you over to Gerry to talk about Global Television's vision specifically.

2222 MR. NOBLE: Thanks, Len.

2223 Now that we are a truly national network, not quite a year old, we are in a position to build on our past successes. Specifically, Global can now offer the following:

2224 (1) greater access for Canadians to receive quality prime time, priority Canadian programming from different regions across Canada;

2225 (2) a truly alternative western based national voice in news and public affairs;

2226 (3) greater promotion and enhanced support for Canadian creators and performers; and

2227 (4) strengthened leadership in furthering the objectives of the Broadcasting Act.

2228 We now have the necessary critical mass to provide national support and resources, along with a focused, energized team to set out plans for the next term into motion.

2229 In 1999 the Commission set out its new television policy. It signified which types of programs were to be considered priority programs, and it sought to give television broadcasters flexibility in meeting the policy objectives.

2230 The applications from Global that you have before you today are a clear example of the new policy at work. The projected programming expenditures tell the story. Over the next licence period, Global will be a powerful engine for Canadian content in two key areas: news and Canadian drama and comedy.

2231 Indeed, over the next licence term Global will spend over one-quarter of a billion dollars on Canadian drama and comedy alone. This spending is in addition to the $84 million in WIC benefits we are contributing to the system over the next five years.

2232 Our vision for the Global Television Network has been carefully developed to provide Canadian viewers with the best of Canadian television: powerful episodic dramatic programming; compelling, issues-oriented documentary specials; continuing experimentation with highly successful new popular culture concepts such as "Popstars"; and the best news and information programming on both a local and national basis.

2233 We firmly believe that Canadians want a strong Canadian broadcasting system where programming choices are numerous, entertaining and relevant, and we can deliver.

2234 We are proud of the contributions we have made in the past in the development, creation and presentation of quality Canadian programming. Building on this and on our strong local stations across Canada, in both our national and regional schedules, with our firm commitment and resolve to seeing our vision unfold, Global will enhance the broadcasting system over the next licence term, with the best entertaining, informative, quality Canadian programming services possible.

2235 On the local front, our goal is to continue to provide locally relevant news and information programming. We see ourselves as a local village voice; involved, interested and at times maybe even provocative.

2236 We will continue to provide access and opportunities for local events and charities. Our local management and on-air personalities are involved in many worthy local initiatives. We encourage our employees through the CanWest matching charitable program and through our on-air activities to take leadership roles in their local communities.

2237 We aim to reflect the local community and to help the community communicate and benefit from shared experiences.

2238 We make this commitment in each of our local markets despite the trend over the past three years that has seen some of our smaller market stations struggling with reduced revenue opportunities while at the same time challenged with increasing costs.

2239 With the impact of new specialty services and the fragmentation of our traditional revenue and audiences that these new services have created, unfortunately we do not see the negative economic trend in our smaller markets reversing during this licence term.

2240 But this is all part of the bigger picture. Our new truly national status gives us the confidence and the economic stability to continue with our local commitments.

2241 Our short video presentation will now give you a better idea of what we are all about.

--- Video presentation / Présentation vidéo

2242 MS MAWHINNEY: Good afternoon.

2243 Global is pleased that the new television policy provides not only the challenge of meeting the priority programming requirement but also provides the needed flexibility with which to strengthen Canadian prime time fare. Through critically acclaimed drama and comedy series, we have created the "signature" of the Global Television Network.

2244 As we move into this next licence period, Global will capitalize on its past program successes of "Traders" and "Bob & Margaret". Our goal is to have long running, quality series that can stand the test of time and sustain viewership.

2245 The viewer response to our many award-winning documentary specials such as "The Riots at Christie Pits" and "The Sinking of the Edmond Fitzgerald" have informed and brought tears and smiles to Canadians in every region of Canada.

2246 Not only will we continue to develop, acquire and produce network documentary specials, but we will build on this experience with the "Our Canada" series. This series of 36 documentaries, produced in every region in Canada, will make the sharing of stories, issues and a diversity of perspectives to Canadians a reality.

2247 As the Commission knows, the popular tastes of television viewers may shift from one broadcast year to another. Today's generation of viewers have elected to watch fewer dramas series; game shows are seeing a resurgence, albeit in a different form; and reality-based programming has burst onto the stage.

2248 These shifts in viewer popularity emerge quickly and from different sources of creativity, whether it be internationally, from the Internet, or from other forms of entertainment. We believe that as each form of popular cultural programming emerges, we must be quick and nimble enough to ensure that Canadian choices are available.

2249 Our vision includes being there with our own Canadian pop-culture programming. Proof of this strategy is "Popstars". We are proud to say it is currently the highest rated Canadian entertainment series.

2250 As Gerry has said, the Global vision is to focus on quality Canadian episodic drama/comedy series, issues-driven documentary specials and pop-culture programming concepts. Our 16 hours a week of priority programs will include programs from independent producers from across Canada, such as those we have successfully aired over the past licence term in our prime time schedule.

2251 For example, this season we have worked with creative talent from across the country to select three comedy series for our prime time schedule.

2252 "Big Sound" is shot in Vancouver with Peace Arch Entertainment and produced by David Steinberg. It features West Coast Canadian talent from actors such as Colin Cunningham to musicians like Chantal Kreviasic.

2253 On the other coast, the hugely successful Salter Street Films is producing a program "Blackfly". We have worked closely with Canada's largest animation company, Nelvana, to ensure that Bob & Margaret's move to Toronto's Cabbage Town was seamless and successful.

2254 On the drama front, we have focused on Canadian mystery and are producing a powerful series entitled "Blue Murder" under the direction of Laszlo Barna, the multi-award winning Toronto-based producer.

2255 In this upcoming licence term, we know that we have the needed resources, have built strong relationships with independent producers and created a strategy for prime time that will ensure we can deliver a winning schedule.

2256 The importance of establishing Canada's newest network cannot be overstated. At the same time, Global is committed to serving all Canadian regions with distinctive, quality programming. Through shared experiences, beliefs and stories, we feel that Canadians from across the country will gain a better understanding of their country and its many diverse regions.

2257 For this reason, we are including a number of regional productions on our slate for this broadcast year.

2258 By far our most tangible benefit flowing from the WIC transaction is the creation of the $24 million CWIP Fund, a western-based, independently administered production fund based in Edmonton. Operating over a five-year term, this fund specifically addresses the need for more western-based production.

2259 Global is also the first national broadcaster with a daily commitment to an entertainment program seen through western Canadian eyes. As we saw in our video Kristie Mclelland's Pyramid Productions gathers top stories from across the country for our new show called "Inside Entertainment".

2260 Our production commitments in Toronto and Halifax have already been mentioned but let me tell you a little bit bout Montreal. We commission a Movie of the Week each year for national telecast on Global in English and TVA in French. "Task Force Caviar" was last year's MOW and now we are working on our latest project, "Deja Dead". Also from Montreal are the productions "Popular Mechanics for Kids" and "The Mystery Files of Shelby Woo" and the documentary programs such as "Fire and Ice" and "Rocket Richard Riots" as well as "Faith and Fortune, the Story of the Reichmans". Charlotte.

2261 MS BELL: Thank you, Loren.

2262 Global would not be able to meet its prime-time Canadian programming commitments without a vibrant independent production sector. We are proud of the significant contribution we have made in helping produce quality Canadian productions and air them on our stations. In our application it is clear that our first priority is to seek out the best programming possible for our audiences. It is our plan to continue to draw programming from a variety of sources throughout the next licence term, including our own production facility, Fireworks.

2263 In this highly competitive media world it is no longer good enough to simply say, "Show it and they will watch." There is competition at home for viewers from other Canadian broadcasters as well as the top-notch U.S. entertainment industry that is supported by big promotion budgets and extensive print coverage that builds the American star system and draws viewership.

2264 We are now building on our own proven promotional initiatives to increase awareness of our Canadian prime-time programming to attract larger audiences. With our WIC and print acquisitions, global is able to better promote Canadian programs to a national audience and enhance the performance of Canadian programs on all of our stations. We have made significant financial commitments to promotion, including the $6 million Promotion of Programming or "Pops" Fund, our $1 million International Marketing Fund and 100 on-air spots called "Star Minutes".

2265 MR. MacDONALD: In its role as Canada's newest national television network, this fall, Global will proudly unveil a wester-based national newscast hosted by award-winning journalist Kevin Newman, drawing on many new and existing resources, and designed to reflect Canada's regions to each other, in a way that we believe no Toronto-based national newscast has really attempted to do so far. It will provide an alternative national news voice.

2266 Produced from a new Global National News Centre housed within Vancouver news powerhouse BCTV, this program will draw upon the fortified resources of the new Global Television Network which now include the former WIC group of stations, a strong Internet presence through CanWest Interactive, a new Alberta national news bureau in Calgary, existing bureaux in Ottawa and Washington, our CanWest news operations internationally, a network of free lance correspondents overseas and where appropriate, strategic journalistic collaboration with our print counterparts, to further enrich our core news programming.

2267 Moreover, Global will draw upon the strengths of our successful local and regional newsgathering operations across Canada to provide national exposure for some of the journalists working in those operations, but more importantly to help ensure that regional perspectives are reflected in our national newscast.

2268 In addition, Global's new Calgary based Public Affairs program, also launching this fall, will provide a national forum for views on major national issues not just from the often insular world of Ottawa politicians and special interest groups, but from the various regions of the country where people really feel their voices are all too often never heard in the cut and thrust of national debate.

2269 But in addition to these exciting national initiatives, we realize that first and foremost, people need to know what is going on right in their own backyards. Global stations will continue to provide strong, comprehensive, daily local and regional news and information programming in each market, designed to not only cover the local news of the day, the regional news of the day, but to reflect the vibrancy and diversity within each of those communities.

2270 Global's belief in the importance of local and regional programming is demonstrated not only across the country on Global stations, but in Hamilton and Victoria where millions of dollars are being spent on CH and CHEK-TV to mount robust new local news and information programming schedules. And may I say parenthetically, Commissioners, that the Hamilton -- the CH new programming regime is already in place and we are absolutely overwhelmed with the response from the community.

2271 Indeed, the growth and maintenance of strong local and regional services is key not only to ensuring we meet the needs of our markets, but to the growth of our company as a premium provider of news and information nationally going forward and commensurate with our new national reach.

2272 Now that we have so many voices to reach viewers and readers, Global is very conscious of strengthening and complimenting its individual services to provide strong and distinctive news voices to keep Canadians informed about themselves.

2273 In addition to strong local and regional commitments and new national news programming, the addition of Global's print and Internet services allows us to offer Canadian more diversified information choices.

2274 Acquisition of the Southam assets gives us that ability. But each of the newspapers is a strong player in its respective community. Their success has been built on relentless local coverage and fierce editorial independence. Under CanWest ownership this will not change. These newspapers' proven editorial policies will be reinforced within the CanWest family of media holdings.

2275 Similarly, Global Television News programs across the country have been developed to reflect the communities they serve. Our plan is to maintain policies of editorial integrity in each media stream by maintaining clear and distinct editorial management structures.

2276 In short, viewers do not want to see their newspapers read aloud on that night's local TV newscast any more than readers would appreciate a rehash of that newscast on the front page of their morning paper.

2277 So, what we are doing and will continue to do in this next licence period is to build and expand upon our primary commitment to local and regional television news service along with the development of a new and exciting national news presence. The net result will be more choice for television viewers across the country. Together, better choice and quality to viewers will only serve to strengthen the system.

2278 MR. NOBLE: To meet the objective of reflecting Canadian society, we believe that our national status can provide the needed support to enhance our individual stations< efforts in each community. We now have the ability to share stories and perspectives, as they become matters of interest to wider audiences. Stories begin in communities -- and many of these stories have impact and relevance to individuals and groups across regions or across the country. We now have an increased capability to exchange information, reflect differing views across the country and report the impact of those issues on many groups and communities.

2279 Global is committed to reflecting the cultural diversity and richness of each of the communities that it serves by practising co-operation, respect and openness towards all segments of society. We achieve this through a program of initiatives and practices that include the programs we air, training and award initiatives, community involvement and our hiring practices.

2280 When last we met with you we promised that we would step up to the plate if you awarded us the WIC stations. We are here to say that we think we have hit a home run. We are proposing as minimum during the seven year licence renewal term: $260 million on Canadian drama and comedy spending; a commitment to continue and expand as promised our local programming, and in particular a commitment to continue to support those markets that are suffering the negative effects of fragmentation; and a policy of experimenting with new program initiatives within the new priority guidelines in order to repatriate audiences to conventional television.

2281 Chairman Colville, Commissioners, your television policy and our vision are joined in the applications you have before you. Our company is privileged to have committed ownership and dedicated and talented staff across the country. These are the elements that give us the firm conviction that we will succeed in our mutual objective to improve the quality and choices of the Canadian programming available to Canadian viewers.

2282 We are now prepared to respond to your questions.

2283 THE CHAIRPERSON: Thank you, Mr. Noble, and the rest of the team. I will start off with a few questions with respect to convergence, synergies, vision and then we will pass on to the other Commissioners to focus on some of the different issues.

2284 Perhaps let me start by picking up on a point you mentioned, Mr. Noble, in your opening comments here in your presentation, noting the fact that you have enjoyed and benefited from overseas broadcast experience over the past 10 years, both watching and running television networks in Australia and New Zealand and Ireland. You noted that they share similar cultural concerns to those of Canada.

2285 Perhaps we can start our discussion about the notion of synergies around that. I am wondering whether in your view, given the experience you have had there, what sort of synergies you see both in terms of your experience that you can bring to the Global operation here, but also perhaps, and this is sort of a (b) part of the question I suppose, is what synergies, if any, are there by the fact that Global has operations in these countries as well as Canada? What does that bring to the Canadian operation?

2286 MR. NOBLE: It does two things really. It gives us a greater pool of talent from which to choose ideas for some programming and promotion and advertising ideas from a marketing perspective.

2287 I think it also gives us an opportunity to -- for Canadian programming what we have done actually in some of these markets is we have been able to help fund Canadian programs in those markets where we actually have operations. We have done deals with some Canadian producers to purchase several programs from their libraries, in particular Alliance Atlantis. It was our relationship with that Canadian company that allowed us to do that in those foreign territories. If it had been some other owner I suspect that Alliance Atlantis may not have sold that product. So there is that.

2288 There is the sharing of ideas in terms of program concepts. For example, "Popstars" was a program developed out of Australia. I don't know if that's how it made it to Canada, but it is certainly on my list of something to consider.

2289 In addition, it allows us -- there are some Global employees who have had direct experience working in these markets. It has allowed them to gain talent, experience in those overseas markets. I am thinking of their sales and marketing people and there is programming people and technical people who travel around the world. So those are the main areas in programming and staff training and experience.

2290 The point I was making in my opening comments was from a programming perspective what those markets have taught me and certainly taught CanWest is that the importance of being relevant to your audience, relevant to your market and reflecting the local community. I will relate a story to you. When I first went to New Zealand politicians were asking me what were our plans for the news? Would we bring down Canadian news stories and Canadian hockey and all of that. I said, "I might if I thought my audience would watch it. I think they are more interested in what's happening in New Zealand than they are with what's happening in Canada".

2291 That taught us, not that we didn't realize it already, operating in Canada, but it sort of focused us in the area of local content against some very large and popular U.S. programming.

2292 We developed a niche in those markets by concentrating on local and have become quite successful at it.

2293 THE CHAIRPERSON: Well, over the years the knock on Global has been largely it has been a merchant of American programming and given the comments that you have just made about being relevant to that market and understanding the market, I suppose you could argue that satisfying that market is satisfying it through selling foreign programming. How would you respond to that in light of the comments you just made?

2294 MR. NOBLE: Your comment that it was a merchant of U.S. programs I think is an unfair one. We have a rich tradition from what I can see and I have only been back now for nine months, but we have certainly a rich tradition over the past few years of some very popular, successful Canadian programs.

2295 Yes, we do have top rating U.S. programs on our network, but those are the engine drivers that allow us to generate the types of revenues we need in order to invest in Canadian drama, in order to maintain some of these smaller market operations and that's our vision, that's our philosophy, reinvest the profits we earn on foreign and Canadian and in those local markets.

2296 MR. ASPER: Mr. Colville, if I could just add to that. I think to be fair it wasn't your comment about the knock on Global, but the knock by others has been unfair in the sense that Global airs as much Canadian and American content as CTV does, as CHUM does and any other Canadian broadcaster who operates under the same rules. I just wanted to take the opportunity to clarify that that knock has been just simply a statement of fact that has been wrong from the start.

2297 What we had always hoped with our international assets that has not come to pass as much as we would like is the ability to create Canadian programming that could play to a wider audience and that would have a place in the Australias, the New Zealands and admittedly we didn't get to England yet as much as we would like.

2298 The real big number for us has been to get to the United States. We have tried, and I think if Michael and Millen were here to tell you how much he tried to get "Traders" on an American network but just couldn't do it. I can tell you, if we owned an American network "Traders" would have been on that American network. It was a world class show.

2299 One just can't convince Americans that if it was not invented there that it is any good, but ownership -- that's why we fight so hard, as you know, to change the ownership rules in the U.S. to allow Canadians there. The big number is to get into those large markets, the U.S. and the U.K. and then be able to get our Canadian programming -- the programming that is produced for Canada and in Canada on to those networks.

2300 I always said that, you know, in any broadcast schedule there are winners and losers. There are programs that don't do as well as the other -- some of the hits. A very poor performing show on a U.S. network I think would have been -- could have easily been replaced by a "Traders" or today a "Blue Murder" for example.

2301 That was our ultimate goal in our international strategy and we are not finished yet. I think when we get to those larger markets, we will see more tangible benefits.

2302 THE CHAIRPERSON: Well, one of the problems we faced in Canada is the economics of programming and that you can't recover -- largely can't recover the cost of high priced drama in the Canadian market alone and/or that you have to compromise the Canadian-ness of a product to sell it in foreign markets.

2303 When you make the comment about the U.S. and the U.K., are you suggesting that with the situation in Australia and New Zealand and Ireland that that's not enough or the markets are perhaps culturally too different from Canada in order to be able to do much in terms of -- you gave one example, but as a general proposition, is there not enough -- I will use a term we used we have used in the last few days -- a synergy there to be able to market more Canadian programs in those markets?

2304 MR. ASPER: I think it's both factors. Gerry, you can step in here as the one who spent more time in those markets, but part of is that it's the critical mass and the ability to spend four or five million, which is what it takes now, what Americans are spending on their top shows, isn't open to Canadian producers and whether it's Alliance Atlantis of Nelvana, unless they have those big markets nailed down.

2305 It is a critical mass factor, but it's also a little bit of tastes. I think there is more affinity with programming taste between Canada and the U.S. than there is between Australia and Canada.

2306 Gerry, do you want to add to that?

2307 MR. NOBLE: I would just add that one of the issues when we try to develop a project with these territories, in those regions they also have certain content issues. If we create a program, it has to fit their content regulations which may make it less Canadian.

2308 There are some co-production issues that we couldn't just fit them together. That's why we looked at some high concept programming.

2309 The major issue is the fact that we let our stations operate fairly independently and they are very -- everyone is anxious and wants to do the project. The problem we have had is that we haven't been able to come up with the concept that suits all the markets yet, but we will. It will happen. One day it will happen.

2310 MR. ASPER: If I could just add, I think the other benefit, I think, if you talk to some of the producers, particularly the Alliance Atlantis who did benefit greatly from the fact that we just simply gave them an output deal in Australia and New Zealand. It just guaranteed their sales there. It didn't make or break the program, it's true.

2311 Italy and Spain and France and the U.S. or the U.K. buying the programs ultimately allows them to have a budget, enough to make the programs, but certainly every little bit helps. We in our own small way have been able to help some of the producers that way.

2312 THE CHAIRPERSON: So would it be fair to say that it would be more the exception than the norm that there would be an advantage to Canadian programming for the fact that you are into Australia and New Zealand and Ireland that as a general rule you wouldn't expect to see that sort of thing happen.

2313 MR. NOBLE: As Leonard says, with Alliance Atlantis we have a deal. We buy everything that they produce for those markets, so that's certainly -- I wouldn't call that an exception. That's happening now.

2314 THE CHAIRPERSON: No, but is that particular deal -- I take it from your comments you wouldn't expect to see a lot of those sorts of deals or would you?

2315 MR. NOBLE: There's only one other that I can think of so, yes, in that respect it would be the exception.

2316 MR. ASPER: I think it's fair to say we were not trying to suggest that the ownership of these other assets is going to -- has provided significant ongoing enhancement to the Canadian system. I think we use it as some examples.

2317 I think what we have gained from those markets is some experience in how to reach local -- how to respond to the cultural issues. In Ireland they are facing always the influx of British channels. In New Zealand it's U.S. channels and in Australia it's not U.S. channels, but U.S. programming.

2318 Their regulators have come up with different ways to respond to it. I think the collectivity of the ideas of how to create programming that works in those markets that's locally produced on lower budgets but is popular is something that we are gaining experience from.

2319 There are a few Australian shows now that are top hits, top ten hits in Australia that we produce that we are trying to bring to Canada, the format of which we are trying to bring to Canada. They are light entertainment shows, they are not drama shows.

2320 These kinds of sharing of ideas I think have and will benefit the system over the coming term.

2321 THE CHAIRPERSON: You mentioned bringing those concepts rather than the programs themselves. Going back to this issue about programming being the engine that helps run the Canadian system, to use your phrase, do you see programs from Australia, New Zealand, Ireland as being substitutes for some of those American programs to do that sort of thing or is the American engine just too powerful to overcome?

2322 MR. NOBLE: I would say that the advantage of simulcast in this country is important for Canadian broadcasters.

2323 THE CHAIRPERSON: It just outweighs any --

2324 MR. NOBLE: Yes. They wouldn't fit that, but the concepts themselves, in order to take an idea that has worked in those markets and perhaps replicate that idea here is a good one.

2325 MR. ASPER: Mr. Chairman, if I could just add to that. The affinity of Canadians for American programming just does outweigh -- regardless of simulcast, does outweigh the affinity of Canadians for Irish or Australian programming.

2326 It is, as you can see from the scheduling, it's something that specialty channels who get subscription revenues and don't have to rely on advertising revenues can afford to play. The "Coronation Streets", the "East Enders", these kinds of programs, we have tried to play them a few times and they just do not generate even the ratings of Canadian programming, never mind the blockbuster U.S. hits.

2327 It's different accents, it's different cultural values even that reduce those programs to more niche status than broad appeal status.

2328 THE CHAIRPERSON: So the substitution rule has a kind of perverse effect, recognizing on the one hand the North American or the Canadian program rights for those programs, it sort of drives you to that American engine and perhaps limits other foreign programming.

2329 Let's turn to the vision that you stated on page 6 of your presentation this afternoon. You noted three points as part of your vision. I guess I would like to get a bit of the sense of what drove you to those three statements as being the key elements of Global's vision here.

2330 MR. ASPER: Yes. Well, with respect to the first one, the advertising, it goes to what I think said on -- I'm not sure which page -- there are a number of factors.

2331 Our advertising revenues had flattened out in the mid-nineties and still have, conventional television advertising revenues. That's because of a few things.

2332 Number one, the specialty channels in that period all went from eight minutes to 12 minutes of advertising which opened up a massive amount of inventory in the marketplace. They can charge about a third of the price we charge for their advertising, so the specialty buy became much more efficient from an advertiser's perspective.

2333 As you can see from the statistics which you well know, the great influx of money went into specialty advertising and away from conventional. The advertising agencies went from about 25 to seven in terms of the size of -- the number of major agencies that buy most of our advertising, most of which is national advertising.

2334 Their demands and the pressure they put on the rates has been very significant. Others are better positioned here on our panel. Jack Tomik and others can speak to that more in depth.

2335 The rate of inflation that was holding us up and propping us up over the nineties while ratings went down, the price of a unit went up, but that flattened out too in the late nineties and we stopped being able to compensate for our lower ratings, lower shares.

2336 All of this advertising pressure or pressure on our advertising revenues and their audience share led us to feel that we had to be in other media that sell advertising to be able to even come close to the consolidation that had occurred on the buy side of the advertising equation.

2337 That's really the first point. We just felt we needed more avenues with which to negotiate the agencies and the major clients.

2338 The second part with respect to content is that in large part the suppliers of content, whether it be U.S. studios or even some of the Canadian producers, all launched their own channels and the reliability of supply became a problem for us or a concern for us, not necessarily that it has come to complete fruition today, but there is no doubt we can see anybody who is a supplier of programming wants to own the channels too, just like anybody who carries, the carriers want to own the channels.

2339 We used to be just the exhibitors and we bought programming from suppliers. Now the suppliers have said "Well, now we are exhibitors too". Even advertisers have become exhibitors. Labatt's has a website called beer.com which is as much a television -- it's very primitive. It's not a television channel, but it is a competitor for our viewers.

2340 So all of these issues that descended upon us led us to believe that we had to have much more access to our own content and to control our own content. We have been very successful in renting U.S. programming, two plays and then it goes back to the distributor, but we believe the future of Canadian broadcasting lies much more in the news and information and lifestyle programming area or it's at least a counterbalance to the reducing profits that are coming from the prime time schedule and the airing of the U.S. programs.

2341 Whether it's Canadian drama programming that Fireworks is producing, more distributing than producing -- Fireworks still produces very little. It distributes. It gets distribution rights to programming.

2342 Having control of our dramatic programming, the prime time schedule drivers and then the news and information programming, the six to sevens, the 11 to 12 at night and the lifestyle news and information programming during the day has been something that we wanted to have more control over.

2343 I think the third point of the cross-promotion is just the outgrowth of that from an economic perspective. All of these forces around us have led us down this path to having requiring more advertising platforms and more ownership and control of our content.

2344 THE CHAIRPERSON: On the second point, when you mentioned that you believed the future, I think to use your words, it's going to be more in news, information and lifestyle programming, I thought I heard you relate that to this notion of advertising revenues going down. Did I hear you correctly?

2345 MR. ASPER: I'm not sure what you mean by having related to --

2346 THE CHAIRPERSON: I thought you said the future, your sense of the future is programming, it's going to be more of information and lifestyle kind of programming.

2347 MR. ASPER: No, I don't think to the exclusion of drama over entertainment or comedy or anything. I just -- when I look at Global's schedule, and Gerry can comment further on this, it has been driven by the U.S. programming and laterally in the last few years we have had real success with Canadian drama programming from "Traders" to "Blue Murder" to "Bob & Margaret" and Popstars" now for sure.

2348 That is one component of our schedule, but that is only four or five hours a day. There are ten or twelve other hours during the day. We know that we are not going to be airing prime time drama at 2 o'clock in the afternoon, but we feel that we have to do better at 2 o'clock in the afternoon than we are doing right now, or at 10:00 in the morning.

2349 That is where news and information and lifestyle programming is going to play a large role.

2350 MR. NOBLE: To follow on from that, Mr. Chairman, our traditional audiences all across the schedule are being attacked by the specialty channels, particularly in the afternoon. A lot of viewers now are going to specialty channels in the afternoon, because they concentrate on that as an area where they think they can attract audiences.

2351 We are looking at ways of re-energizing our programming in the afternoon in the news, information and lifestyle genre. Prime time will still be focused on comedy and drama in both Canadian and the foreign schedules.

2352 I think is probably what I was getting at.

2353 THE CHAIRPERSON: Going back to the first element of your vision, you talked in the statement and I think you referred to it as "largely being driven by the concern about advertising revenues and what is happening there, we seek to be in the five major advertising and exhibition media: television, print, the Internet, radio and outdoor advertising".

2354 I would like to get a better sense of what has driven you to that. I understand they are all in the advertising business, but why would Global decide that given what we are expert in, that is the mix that we think would best fit with Global's strategy? Or why would that be a strategy for Global?

2355 MR. ASPER: I think we have to look at it from the CanWest perspective and the confidence in the future performance of Global Television as one of the assets that CanWest operates.

2356 We believe that the days when one can survive as a single channel operator of television stations in a market are handicapped by the lack of subscription revenues that our competitors have, which allows two things: it allows them to lower their advertising rates against us -- in other words, serve up a more efficient buy to the advertisers; and also to outbid us for programming.

2357 I will never forget that we were outbid by a certain sports network four-to-one on the Maple Leafs rights. When we happened to have opportunity to question the operators, they just said: We know we are getting $100 million of subscription revenue in this year, so we don't have to make our return on investment back on advertising.

2358 In our view, going into the future, Global TV alone is not a viable proposition, stand-alone. Just like CTV recognized when they went out and gathered up a group of specialty channels, it either needs the support of more stations, more conventional stations or more specialty stations, or more advertising vehicles, so that it can come to the advertisers with more clout and more bargaining power.

2359 I look at Global as just one of the elements in a strategy, a CanWest strategy. I think you can see the small market station operators are all selling out to bigger groups. One station in a market of 80 isn't a very pleasant proposition.

2360 THE CHAIRPERSON: I think I can understand a bit how this all helps CanWest. How does this mix help Global television? Can you be a little more specific?

2361 MR. ASPER: It helps Global in that Global will -- there will be a larger share of advertising dollars allocated to CanWest, of which Global will be a part of that larger group. In other words, I think I can pass this to Jack Tomik or Gerry to discuss how the advertising marketplace works.

2362 To the extent the CanWest group gets a larger share of a budget, Global participates in that larger share.

2363 MR. NOBLE: Leonard is up at the corporate view, and quite rightly I am down at the Global view. Our business, quite simply, is attracting audiences. That is what we need to do. That is what we have to do.

2364 Our only source of revenue is to go and sell those audiences to advertisers. We want to attract those audiences with top-notch Canadian programming and other programming in the schedule.

2365 In the advertising market world our access to the revenue continues to shrink. New stations, new services, new types of media puts pressure on what traditionally has been spent on conventional television.

2366 We are losing audience through fragmentation, and we are trying to get it back through new programming concepts.

2367 If your advertising dollar is spreading thin over more media and you are losing audience through fragmentation with other television stations, the only way to get advertising dollars back to help support that television business is to be part of a bigger group, to be part of a bigger advertising group, media group, that can offer advertising solutions to clients.

2368 That is the top corporate vision.

2369 From my business, Global Television, I am comforted by the fact that CanWest wants to go out and expand its media empire, because I know that Global will benefit when it continues selling its advertising, which will help fuel its spending on programming to attract those viewers, and again continue the circle, as Leonard called it, the virtuous circle.

2370 MR. ASPER: Mr. Chairman, I think another element is my third point, which is that it is one thing to promote a global program on a billboard and buy that billboard, buy the space on that billboard, but it is another thing to own the billboard company.

2371 When you own the billboard company, whenever you have unsold inventory, even if there is an accounting adjustment, any unsold inventory goes to promote global programming. Just like we are spending millions of dollars that Global never spent promoting Global programming in The National Post and all of the Southam dailies.

2372 The ability to rise above the clutter through the promotion of this programming, when people have 50, 60, 70 choices, is a very fundamental benefit in that it will increase ratings to our programming. Increased ratings means that more people watch and there are more advertising dollars.

2373 So I can't stress enough the benefits to Global of getting access to these marketing vehicles. Marketing and promotion, that expenditure line in any television station, whether it is specialty or conventional, has gone up significantly. The cost of acquiring a customer, of getting to the consumer, has increased because of all the clutter.

2374 The ownership of those other assets I think really helps Global gain their audiences and protect their audiences.

2375 THE CHAIRPERSON: It must get to be kind of a tough decision when you have to decide whether you sell the billboard ad to Coca Cola or to promote your own television program and which is going to generate the most revenue.

2376 MR. ASPER: No. I was referring to unsold inventory. Every billboard has a lot of unsold inventory, and the divisions still have to pay their retail rate.

2377 There is a lot of opportunity within the unsold side, whether it is the newspapers or the billboard.

2378 The National Post is not suffering because Global is getting ads. It has what in their lingo they would call remnant space, which is unsold space. It is only the cost of newsprint, of having to possibly print an extra page. They generally don't have to print an extra page. There is always space in the newspaper, at no cost to them, to print an extra promotion.

2379 It is the same thing with billboards or on a radio station -- not that we own them. But I am just saying that if we did, it is the same opportunity.

2380 THE CHAIRPERSON: On a practical level, how are you handling this? I am trying to better understand this advertising situation.

2381 If you can sell an ad across various media, the newspapers, television, Internet -- and it appears these days Internet advertising is not doing that well -- and the billboards, I would like to better understand more specifically how that benefits Global Television.

2382 MR. NOBLE: I guess the best person to answer this would be our sales executives who put these packages together, and I will ask Jack Tomik to comment.

2383 The benefit of Global being a member of a larger media group is the fact that it may get on the advertising list ahead of someone else. It may be part of an advertising buy where it would not otherwise have been, given the realities of the market.

2384 Jack, I will ask you to comment further.

2385 THE CHAIRPERSON: But is that true? Are you actually seeing that happening?

2386 I know it is new to this. All we have been hearing lately is early days in all this convergence stuff.

2387 A lot of this is nice theory, but is it actually working?

2388 MR. NOBLE: The fact is the revenue spent on conventional television over the past three years -- and Ken Goldstein has done a study on this -- has been flat to declining. That is a result of the drain of revenues to specialty caused by fragmentation of audiences, but also caused by the fact that they can now advertise at a 50 per cent increase in their advertising spots. They can sell it by the pound.

2389 Our fear is that with another 50 specialty channels coming on in September, they will continue to do the same thing. If each one of those 50 stations garnered $500,000, only half a million dollars in revenue, that is $25 million out of the system. And most of that would probably come off conventional television.

2390 Some of it would come from the other specialties, but our studies tell us that it is likely to come off conventional.

2391 We have seen this coming. Given those realities, as Global adds more planks to its media empire, it can benefit Global by including it in the advertising pitch that it makes to its clients.

2392 Jack, you may have some specific examples of how that is done.

2393 MR. TOMIK: Thanks, Gerry.

2394 I think there are a couple of interesting points going back and forth here. The first one is consolidation is not only a reality in the media business; it is a reality everywhere.

2395 There are brands that are all familiar to us, like Canadian Airlines and K-Mart and Plymouth and Mercury, that don't exist any more. All of the advertisers that we have been servicing for many, many years are consolidating.

2396 Part of that process is that during those consolidations and cost savings a lot of what historically was good strong marketing impetuses from those companies and their agencies have seemed to vanish. Really, those companies in a lot of cases are concentrating today on quarterly profits: what can we do tomorrow to satisfy our shareholders. And that is fair game.

2397 I think what happens is that without the thought process of what we are doing for those clients -- they don't want to buy television spots and they don't want to buy billboards and they don't want to buy print ads. They want to sell their product. Air Canada wants to sell seats. That is what they want to do.

2398 By this consolidation of cross medias, as Leonard has pointed out, what that gives us is the ammunition, the basket of goods to construct, not only selling the spots or selling the space, but consolidated marketing plans that we can in fact because of the size take to those advertisers, get in the door, which is a very difficult process on your own, and say: Here is a solution. Here is how ewe can sell more seats or sell more coffee or sell more hamburgers.

2399 Because of this ownership and this drive to get into other medias, we can take advantage of another what I call intellectual asset that this company has, and that is long-term relationships with advertisers.

2400 Specifically, has this been working? We have been at it for a few short months. But yes, we have had success already with advertisers who really have not seen the light of day of television, first.

2401 Or secondly, we have been able to approach advertisers that are traditional long-term advertisers and get a little bit more money from them.

2402 We are in the very early stages, but yes, it is working.

2403 THE CHAIRPERSON: So you are able to go to Air Canada, to use your example, and say: Have we got a deal for you. You can get a quarter page in The Calgary Herald and half a page in The National Post and we will give you a run on whatever program on television, and we will give you a couple of billboards at the side of the 401 in Toronto or the Gardiner Expressway, or whatever.

2404 Is that the sort of thing you are talking about?

2405 MR. TOMIK: And keychains too, if that is what they want.

2406 I think we should be clear on the drive for the company. In this case, in terms of advertising sales, the formula is one plus one has to equal three. If it does not equal three, certainly one plus one we can do on our own. We have very successful television sales reps, and we have very successful print sales reps in Southam.

2407 So it really has to equal something extra.

2408 To put these two medias together, or further medias in the future together and discount them is a bit of folly. There are no odds in discounting or turning your properties into a commodity.

2409 What we try to do is in the case of Air Canada take a look at what their marketing problem is, in this case selling seats, and see if there are some creative ways using these various assets, the net, the print outfits and the traditional broadcasters, as well as specialty, and say how can we mix these together? What kind of promotional opportunities can we give that excites your client to go and buy that seat, and by grafting pieces of it together that makes sense for each individual unit, but also in whole equals three.

2410 We have been very successful in delivering that solution of how to sell seats for Air Canada, how to sell beer for Sleeman's. Though it is very early, that one plus one equals three equation doesn't have to just work for us, but if it works in the future it will work for those advertisers.

2411 I am always astounded and Leonard and his father before him spent a lot of time asking me one simple question: Why for every dollar in television in Canada they spend two and a half dollars in the United States? It's a very significant question. When it was a buck and a half, Mr. Chairman, I could answer the question. Now that it's two and a half I am having problems.

2412 But I really firmly believe that having these assets available and how we construct them and craft them can be a huge benefit to television going forward.

2413 THE CHAIRPERSON: How do you manage that then with the relative -- the different operations that we are talking about here with those folks who are running the Internet and the folks that are running the newspaper, Mr. Noble who is running the television? In terms of the sales operation do you have one CanWest sales group that works hand in hand with the sales force at the Calgary Herald or the Post? Mr. Noble, how do you --

2414 MR. NOBLE: We have a -- there's a national sales team for television and there's a national sales team for print and then all the television stations and all the print operations have their own local sales teams and the web properties have a sales team.

2415 Superimposed in that is what we call the integration sales team. It's headed up by a lady called Roseanne Caron and she has a team of experts from the television side, the print side and the new media side. What they do is they -- I hope I am not giving away trade secrets, but they go out and deal with advertisers. It is not every advertiser. There is probably a group of about 20. What they do is they put together sales ideas, sales promotion concepts to those advertisers on a cross-media basis.

2416 Then they come back to the various sales teams, the television sales team, the print sales team and the new media sales team and they will say "here's what we have, price your inventory and if the deal makes sense for each of those units the deal will get done".

2417 THE CHAIRPERSON: Where does that group report to?

2418 MR. NOBLE: It reports essentially on the dotted line to myself and to the head of our print organization.

2419 MR. ASPER: It has to work for all the media. There is no cross-subsidization. What they do is essentially they go and borrow the inventory on credit. They put together a package which consists of "x" dollars of TV time and "y" dollars of newspaper time and "z" dollars of Internet space. Let's say that adds up to a million dollars. Their job is to sell that space for $1.5 million.

2420 The way they do it is they bring other products to the fore. They may say, "Look, we would like your $1.5 million, but we are also going to create an opinion poll branded your company." Let's say it's a financial institution.

2421 MR. NOBLE: Now you're giving away trade secrets.

2422 MR. ASPER: Don't worry. We'll be fine.

--- Laughter / Rires

2423 MR. ASPER: The competition hasn't copied us for 20 years. I'm not worried about it, except for stickums on the Globe and Mail. I would just like to point out we were doing that three weeks ago, the post-it notes.

2424 We'll say we are going to create something under your name on our websites, or we can say we will create a special show for you on Global that may cost us something to produce, but it will be less than the overall added value we get from the sale. So with the $1.5 million instead of the million, it may cost us $100,000 more to produce a show, it will still be a net profit of $400,000, a net net gain to us of $400,000 more than we would have otherwise received.

2425 It also goes to -- we could instead of creating a program create an event. They never took up my idea on this, but if you have the show "Survivor" why not have a Survivor event on Centre Island in Toronto.

2426 THE CHAIRPERSON: Walk downtown Toronto.

2427 MR. ASPER: How about Winnipeg in January. But those kinds of new marketing ideas that add to the overall buzz and, therefore, the results from an advertising campaign we could create a special supplement in a newspaper, again at some cost, but not nearly as much as the new revenue that would come in.

2428 Advertisers pay for the cumulative effect of a blanketing campaign where they get so much exposure they are willing to pay extra for it, rather than just buying the mere commodities of media. So we are seeing, we have several examples. I think even, Jack, the Toronto Auto Show, we got new money out of that, out of selling more presence in the auto show and in advertising surrounding the auto show than we otherwise would have had we sold just the advertising.

2429 It happened with us with the Molson Indy. It happened when we created a special health series on Global TV that tied into the Internet. We got more money out of Pepsi because we created just a series of tied events and promotion and seamless connection of programming that gave them more than if they had -- and in an easier fashion. They didn't have to go to five different people to figure this out. They got it all in one package.

2430 In an age where advertising agencies' personnel in Canada is contracting to New York effectively, or London in some cases, they are looking for the sellers of advertising to come and help them with their marketing campaigns.

2431 THE CHAIRPERSON: So, Mr. Noble, you mentioned that this is probably across 20 or so key accounts that this group would probably target. Do you then for the purpose of Global Television have a target budget that you would include as this is what I expect to get in revenues that we otherwise wouldn't get as a revenue line for Global Television out of this synergistic exercise that goes across these various media?

2432 MR. NOBLE: There has been no formal budget set. What we have challenged the group to do is to try to develop new forms of revenue, but we haven't set a target. We should set a target. Leonard wants us to set a target, but if we don't reach it we think we are in trouble.

2433 THE CHAIRPERSON: I would expect he would. I would.

2434 MR. ASPER: It's the same one I gave Bay Street.

2435 THE CHAIRPERSON: I'm starting to draft a condition of licence here now.

2436 MR. NOBLE: Mr. Chairman, this is an important discussion in terms of the business of television. I think the comfort that the Canadian public should get is the fact that our parent company recognized an issue some years ago, that fragmentation was going to create a problem with our traditional stream of revenue. In fact, indeed, that has occurred, despite the fact that we have had tremendous growth in the economy over the last three years, spending on conventional television has dropped. That's the first time in the history in this industry that this has ever happened. During recessionary times there has been a slow down and drop, but during tremendous growth in the economy spending on conventional television, I think I am right, Ken, in your analysis, is flat to drop over the last three years.

2437 Recognizing this is an issue, CanWest has set out to secure other forms of media revenue in order to buttress its television operation. That's the benefit to Global. That's the benefit to the system.

2438 MR. ASPER: Mr. Chairman, one final comments, I think Jack would like to add one more thing. We were just discussing what other benefit to Global comes from having a newspaper and TV sales force co-operating together. Jack.

2439 MR. TOMIK: The other benefit, and it's not just for Global but all of television, is in television we have a list of clients. It's about this big and in newspaper they have a list of clients and it's about this big. Certainly not all of them one day we hope to make into television clients and not just for us but for the system, but there are a lot there that historically have thought television is too expensive because of experiences in the 1980s that it just isn't the same game any more. So this is certainly giving us access to a whole series of new clients that we hope to bring to television through this.

2440 THE CHAIRPERSON: So this is obviously one of the main synergies that you see gaining out of being in these various media?

2441 MR. ASPER: The revenue side is by far more important we think than the cost side of this. We run fairly efficient television operations. We don't see much change. The only change that we see is we are building our local news forces and local programming back up. But the real benefit of all this is on the revenue side and it comes from the multimedia sales on the one hand and the increased ratings and circulation admittedly that we expect to get from the cross-promotion.

2442 THE CHAIRPERSON: One of the elements of this is the Internet. There was a lot of hype around that being the future of advertising. When we did our new media proceeding here a couple of years ago it seems to me there was one university professor who said the advertiser is going to go with the eyeballs and as soon as the eyeballs start to go the Internet is just going to totally disappear from conventional media.

2443 Now it seems, I don't know whether it is related to this current downturn in the high tech sector of what, but it seems that a lot of people are rethinking this notion of advertising on the Internet that doesn't seem to have paid off. What's your sense of that? Again, I appreciate it's the early days.

2444 MR. NOBLE: It's amazing what can happen in a year in that business. Our view is that on the Internet there will continue to be certain forms of advertising invested on the Internet, but we see that more as a cost recovery technique for our businesses, some profit, not huge, not big in the way the industry was speaking of two to three years ago.

2445 Canada sort of did not get all caught up in the same hype that the U.S. did in terms of spending on Internet and spending for Internet. So that the effect on the Internet properties here in Canada and our properties in particular is not as dramatic as it would otherwise have been had Canada experienced the same huge hyperactivity in that area.

2446 I wasn't at those hearings, but I think perhaps what the experts were saying was that if Canada replicates the U.S. experience this is what is going to happen.

2447 Yes, they are a factor still and will continue to be a factor, but we don't seem them in terms of our television business as a huge threat.

2448 THE CHAIRPERSON: Let me just go back to Mr. Tomik. Your point earlier about the U.S. being what, two and a half times the Canadian situation. How do you account for that? It is a number that has been around, it has grown as you have indicated. But it seems to me about 10 years ago sitting here I heard a similar figure.

2449 MR. TOMIK: Chairman Colville, I account for it very poorly these days to my bosses. I think there is a number of reasons. First, there is certainly the number of signals that are available on any market, when you compare market to market.

2450 The second thing is there are much more variety of regional advertisers in the body of the United States than there are in Canada. By and large, most clients, so we call them regional or nationals, like a McDonald's.

2451 I think the third thing is certainly in the area of health care a pharmaceuticals in the United States, which is a big, big industry and in the ability to be able to advertise prescription drugs. Also health care just in general is certainly a big part of that.

2452 Also I think in a lot of ways, especially recently with a very, very strong U.S. economy, there have been a lot of competitive factors from advertisers and television has been the main instrument of that. Certainly over the last few years as we have been trying to struggle along with 1 or 2 per cent increases in our rates, the United States has been moving along in 10 to 15 to 18 per cent increases year to year in conventional television because of the demands.

2453 I think in a big sense in Canada over the past four years the launch of the last tier of specialties has done much to slow the growth of rates in television in Canada.

2454 THE CHAIRPERSON: But in the U.S. we have grown from three to five, virtually five networks?

2455 MR. TOMIK: Yes, and I think, you know, in the last five years because I don't look at specialty any more. They are significant players. We put 16 on the air four years ago, they put two on in the U.S. It's a significantly different agenda of flex.

2456 I don't think four years ago I would have expected specialty to have the impact that they have had and good for them. Three years ago I started suspecting it. I see that growth curb frankly continuing for the next couple of years for them.

2457 Recently they put in a year with a 25 per cent increase in advertising revenues. I think there's a couple more years of that kind of growth left. The Canadian public loves specialty and that shows.

2458 MR. ASPER: Mr. Chairman, if I could just add, call it macro comments. I have been quite critical over the last year of the Canadian government for its management of the economy over the last ten years. This has been my non-expert theory only.

2459 THE CHAIRPERSON: I wasn't sure it was in the Aspers to be too critical of the Canadian government.

2460 MR. ASPER: Exactly. Well, certainly our taciturn approach to public policy is well known.

2461 The issue in my theoretical or at least my own opinion is, and certainly this is generated by some of the feedback we get from advertisers both here and in Australia and New Zealand, they say "Well, as the dollar keeps going down, my profits that I have to report back to my multinational headquarters in New York are down and where am I going to cut my expenses to get my profits back up?"

2462 There are only a few discretionary items in a budget when you operate a plant. There isn't much room. It's the advertising budget, marketing budgets, the reduction of brands. Lever Brothers goes from 200 brands they are advertising to 16. All these pressures.

2463 The fact that -- I have always said that because the tax rates are inordinately high in Canada, therefore, there is less disposable income. Suddenly we don't have room for two airlines, we only have one.

2464 We don't have those regional powerhouse retailers in Canada that you have in the United States. We have one national retailer, Canadian Tire, or maybe two, Zellers, whereas even on a per capita basis the U.S. retail is so much more advanced and voluminous.

2465 I think there are Canadian economic systemic and structural problems with our advertising market. We see the same kind of things in markets like Australia.

2466 THE CHAIRPERSON: In spite of all the concern about the advertising declines, your figures show that for the first year of the new licence term you would have about 60-some odd million dollars more in revenue than the stations generated in the year 2000.

2467 Is that virtually just as a result of the acquisitions or where else does that come from?

2468 MR. NOBLE: There is two impacts from that, Chairman Colville, and I will ask Katherine Browne to respond in a more detailed way, but in effect it's the disaffiliation. It's a transfer of the Global schedule to the BCTV schedule and disaffiliation that I think is the biggest impact.

2469 Katherine.

2470 MS BROWNE: Thanks. You are comparing fiscal 2000 with fiscal 2002. Is that correct?

2471 THE CHAIRPERSON: Yes.

2472 MS BROWNE: Yes. What you will notice between fiscal 2001 and fiscal 2002 because of the disaffiliation from CTV of the CHAN and CHEK stations there is automatically an increase of about 32 to 33 million dollars made available because of the extra inventory that is opened up for Global now to sell directly. That's half of the $60 million right there.

2473 We are also looking at in some of the former WIC stations we are still benefiting in the year 2002 from some of the integration initiatives that are translating into program schedule changes, et cetera, that we are hoping will positively affect our advertising revenues in fiscal 2002.

2474 We are seeing slightly higher than market revenue growth rates in that year.

2475 THE CHAIRPERSON: I don't want to go right through your presentation, but after when you talked about the vision you went on to talk about more TV stations provide greater access to consumers and so on. Of course, it has been an objective of CanWest Global for a number of years now to get more television stations across the country with greater or less success, depending upon the year and the location.

2476 Having said that, some of the stations are considerably more profitable than others. In fact, some aren't profitable at all. That's a similar issue that I raised yesterday with the CTV folks. I presume Global has gone into this with a number of the stations, recognizing full well that some of those stations are not now and indeed I suppose some of them may never be profitable and on a stand-alone basis.

2477 We are looking at the renewals today on a group basis rather than individual stations, looking at a separate network and we know historically Global doesn't even like to use that word.

2478 What is your view in terms of the group synergies just within the television stations in terms of the more profitable stations helping to sustain the less profitable or unprofitable ones?

2479 MR. NOBLE: Thank you, Chairman Colville. You are absolutely correct. We have unfortunately a regional disparity in our stations and the profitability of such. There are reasons for that.

2480 It is our view as a national broadcaster that it's one of our contributions to the Canadian broadcasting system that we will continue to operate these stations and provide the local programming commitments we have in our applications during the licence term, even though they continue to be running at a loss.

2481 We honestly believe that it's our duty as national broadcasters to ensure that these regions continue to receive our signal.

2482 THE CHAIRPERSON: As the Manager responsible for the operation of those individual stations, and through to CanWest presumably, what is your strategy with those stations, that ultimately they have got to become profitable and we will do what it takes to get them there or is there a corporate philosophy that we have got to run this as one big operation and maybe some of the unprofitable ones may never become profitable.

2483 MR. NOBLE: Let's hope that there's always a chance that we can make them profitable, but it is our philosophy that there will be in certain markets at certain times stations that don't contribute positively to the group.

2484 Despite that, they are still an important member of the network, the Global Television Network -- I will use that word -- as part of the national -- our view and our desire to be a national, a truly national network, despite the fact that they are unprofitable.

2485 We will and we do encourage our General Managers to look for new revenue opportunities, new program opportunities that can generate revenue opportunities. We do encourage them to try and find new resources and develop new concepts that ultimately may become profitable.

2486 It's not that we have accepted the fact that they don't make money, it's just that we are in this situation -- it's only in the last two or three years as a result of fragmentation that we find ourselves in this position, but we are here for the long term. We are a national network and we will not let these stations fail.

2487 THE CHAIRPERSON: What does it mean on the cost side? On the revenue side you said you encouraged them to find new sources of revenue. What does it mean on the cost side in terms of how far you go to be able to address the profitability question?

2488 MR. NOBLE: Well, again, if we are maintaining a local support and we have a local commitment to provide local programming on the cost side, there's not a lot we can do. That's why they are encouraged to generate whatever they can in extra revenues.

2489 Now, that is not to say that there isn't some minor modifications we can made to those operations. They already benefit substantially with the provision of programming, promotion services, national and international news services, management services, payroll, accounting, personnel services.

2490 They are already getting a huge benefit from the system. I guess my point is there's not a lot more room for us to go in those what I will call administrative back office costs.

2491 It's our view that, you know, the cost structure that we have in those stations presently is the cost structure required to maintain a current level of local programming in those markets.

2492 THE CHAIRPERSON: So is Global committed then to keeping all the stations going that are there now?

2493 MR. NOBLE: Yes, we are.

2494 THE CHAIRPERSON: Regardless of the profitability that the synergies gain that we talked about previously would help keep all those stations going.

2495 MR. NOBLE: Going.

2496 MR. ASPER: I think, Mr. Chairman, we look at this whole matter in the bigger picture with a big picture in mind. There are always lesser and better performing entities in an organization.

2497 Global Television Ontario may do better based on some policy or some programming decision. It may affect Winnipeg negatively in the sense that Winnipeg's profits are not helped by that.

2498 The overall picture we see is one -- from a regulatory sense as well is one that we are willing to say as well -- I think Trina McQueen said it best, some water with our wine. We just don't look at a Winnipeg in isolation and say it isn't profitable, let's shut it down. It's part of the bigger picture of the company we are trying to build and it always will be.

2499 We just would not come before you and say we are going to just shut down Regina or Winnipeg because it doesn't work. The whole thing works as a collectivity and that's what we are here to discuss I think.

2500 MR. NOBLE: And these stations are still contributors to the national system. We rely on them for local stories that have relevance nationally. We rely on them to develop new talent that can move throughout the system. We rely on them to be the real connection with the community in those markets and to develop and seek out creative ideas amongst their local groups.

2501 They may be a negative in terms of the financial numbers, but let's ignore those for a moment. They are huge contributors to the overall Global system. We rely on them to be our pipeline to the communities.

2502 THE CHAIRPERSON: Is Global pretty well at where you would expect to be in terms of your reach across the country in number of stations?

2503 MR. NOBLE: I can think of a couple of spots I would like to be. I think we are fairly comfortable with where we are at the present time in terms of the Global signal, yes.

2504 However, if CTV gives up Thunder Bay and North Bay, we would be quite happy to sell our programming into those markets.

2505 THE CHAIRPERSON: Focusing a little more on advertising, you didn't mention other than the more general discussion that we have already had about the impact of specialty channels and the general impact on advertising revenues your specific -- regarding changes in advertising in your presentation this afternoon.

2506 Can I assume though that you still --

2507 MR. NOBLE: We still stand by that. In fact, Mr. Chairman, in responding to your question to Jack about the $1.50 and the $2.50. I was going to say that one reason is we have too strict regulation in our advertising on television. Remove the 12 minute limit, local limits, and perhaps we can get up there.

2508 THE CHAIRPERSON: Perhaps to put in a question, maybe you could explain in detail what your proposal is.

2509 MR. NOBLE: Well, I would prefer to pass it to Jack Tomik or Katie Fullerton, these are the experts in this area, but it's essentially a modification of the existing system where we would average across a day 12 hours in the hours, but be allowed in peak time to expand that to enable us to attract new advertising dollars and respond to -- frankly, we turn away advertisers in some of our markets.

2510 That's the general thrust of it. I will ask Katie to respond more fully.

2511 MS FULLERTON: Certainly, Mr. Chairman, you have heard from Leonard and from Gerry and also from Jack talking about the fact that our revenue base is being threatened in part due to the proliferation of specialties, the erosion of audience and also combine that with the ever larger proportion of ad spend that's going to specialty due to the lower market rates and increased inventory.

2512 Certainly you have also heard the general comments about the fact that well, the total of television spending is going up, conventional and basically local and national spot are declining or flat and the growth is coming from specialty.

2513 That is basically the past and the present.

2514 If you take a look at the future coming up this fall, with basically potentially 16 Class 1 digitals, over 30 Class 2, and when you take a look at the digital cable expanding and satellite expanding maybe over 50 per cent over last fall, there are more threats coming up.

2515 What we did was take a look to find a way to expand the revenue, to bring the revenue back to a point that helps when you are depending on a single source.

2516 One of the ways to keep it viable is to have this flexibility of advertising. In keeping the revenue viable, that is the way that we can help Loren Mawhinney or Ken Macdonald return to you and do the promises and keep them.

2517 THE CHAIRPERSON: Let's stick with the advertising piece of it before we deal with the quid pro quo here.

2518 I would like to know how you see this proposal working. You are proposing a maximum of 14 minutes.

2519 MS FULLERTON: Yes.

2520 THE CHAIRPERSON: Averaged over the day.

2521 MS FULLERTON: Taking a look mainly at prime time but averaged over the day, averaged over the week.

2522 THE CHAIRPERSON: That is a big distinction. I could not parrot back exactly the words you just said. You are mainly concerned about prime time but averaged over the day.

2523 MS FULLERTON: Yes.

2524 THE CHAIRPERSON: So which is it?

2525 MS FULLERTON: We have put increased advertising time in prime time and then average it over the day.

2526 MS FULLERTON: Sir, if there is any confusion --

2527 THE CHAIRPERSON: The reason I am drawing it to your attention is that we had a discussion about this issue, as you may be aware, in Montreal a couple of weeks ago where the discussion focused on being averaged over prime time over the week.

2528 MS BELL: Which is what we applied for, Commissioner Colville -- Chairman Colville. And then we --

2529 THE CHAIRPERSON: I am not hung up on titles. They are fleeting anyway.

--- Laughter / Rires

2530 MS BELL: Sir --

--- Laughter / Rires

2531 THE CHAIRPERSON: So have you estimated, then, what the 14 minutes would bring you? Have those estimates shown up in your revenue projections or would this be extra?

2532 MS FULLERTON: These projections have been included in our revenue projections.

2533 THE CHAIRPERSON: They have been?

2534 MS FULLERTON: They have been. Basically, what we did is we have taken this into account and taken a look at the fact that with the threats coming up -- there is a good chance, with all the changes coming up this fall and with circumstances happening such as the downturn in dot-com and the economy turning down, that this may very well be what will keep us at the level that we projected.

2535 THE CHAIRPERSON: So what do you value that at? What is the loss to you, then, if you are not granted this?

2536 MS FULLERTON: Initially when I did this projection I took a look basically at the demand times of the year where this might fit in. I was looking at an amount of approximately -- it might generate $4.4 million to $5 million, which is a little bit under 1 per cent. That would be in the major markets.

2537 THE CHAIRPERSON: So $4.4 million to $5 million per year.

2538 MS FULLERTON: Yes.

2539 THE CHAIRPERSON: In the major markets.

2540 MR. ASPER: I think that it is total, taking into account the fact that it would be in the major markets where this would apply.

2541 THE CHAIRPERSON: I understand. It is not in each market. It is across the major markets.

2542 MS FULLERTON: Across the major markets.

2543 THE CHAIRPERSON: The avails would be avails that you would be using that are already there, that are used for promoting Canadian programs, local events, or whatever, now.

2544 MS FULLERTON: Yes, it is basically available inventory that is there now that comes in due to the American programs coming in short. There is available inventory in each break in relation to that.

2545 MR. NOBLE: Chairman Colville, it is a combination of there are some promos, as well as some PSAs. I think as part of this -- and I will ask Doug Hoover to comment -- we are also saying that the number of spots that Canadian promotions receive on this schedule will not be diminished.

2546 Doug, I think you have a plan where that is possible?

2547 MR. HOOVER: We are estimating that the American programming at times is coming in between 15.5 to as much as 17.5 minutes allocated to non-program information.

2548 We feel that we can expand the commercial units and still maintain our commitment to Canadian content promotion simply by being flexible in our usage.

2549 We would be quite prepared to make a commitment to guarantee at least one minute of Canadian content promotion, on average, over the week per clock hour.

2550 THE CHAIRPERSON: You no doubt were following the discussion yesterday. One of the concerns of the smaller stations in the major markets, and perhaps even some of the bigger stations in smaller markets, is that your gain would just be at their expense.

2551 How do you respond to that?

2552 MR. NOBLE: We don't agree with that. Yes, there will be increased competition for spots as they open this up. However, CHUM has six, seven movie nights a week. They have Blockbuster movies. We are assuming that the other broadcasters would also apply for the same flexibility, Mr. Chairman.

2553 I am assuming that CHUM and CTV will open up their inventory and also price it accordingly to sell.

2554 THE CHAIRPERSON: I presume they would because they feel they have to if it was granted. Over the years, as I indicated yesterday, it has even been advocated that perhaps the Commission should step away altogether from any sort of limits on advertising minutes.

2555 MR. NOBLE: I am all for that.

2556 THE CHAIRPERSON: For the most part, a consensus could never be reached among television broadcasters. Many of the players did not want it because it is quite nice to have a regulated market as it spreads the revenues more evenly among all of the players.

2557 The argument that was brought forward yesterday about Global tends to have, combined with CTV, however we want to debate it, the top programs, so this money for the most part will go to you and perhaps some to CTV.

2558 MR. NOBLE: There is no doubt that top programming is where the majority of dollars is spent. At the same time -- and I can't say definitively that this will not impact anyone in a negative way. I don't think it is going to increase the number of ad dollars spent. However, it may.

2559 Katie, I am sure, can conflict my opinion quickly.

2560 I see it coming back to conventional from the specialty, because if you are adding more inventory and you become more price competitive. I see it coming back from specialty.

2561 I think perhaps maybe CHUM and CTV are concerned that it will affect their specialty properties. We don't have that luxury. We have prime, but it is nowhere near in terms of the position that their specialty properties are.

2562 It is our desire to be flexible. It is our desire to repatriate dollars to the conventional system. We think this is one way of doing it, and we don't think it will harm, to a significant degree at all, anyone in the system.

2563 Certainly CHUM are big players.

2564 THE CHAIRPERSON: When you say "significantly", given the discussion that we have had about what is happening to advertising revenue, I take it there are not going to be new revenues in the system. As you just said, this will give you more inventory, which will allow you to be more price competitive with the specialty channels. So presumably you could --

2565 MR. NOBLE: It will give CHUM more inventory, CTV more inventory, the Craigs more inventory. It will give every conventional broadcaster more inventory and enable the conventional broadcasters to be more price competitive with specialty.

2566 THE CHAIRPERSON: So if there was a victim in this, the victim would be the specialties, in your view, then.

2567 MR. NOBLE: Possibly.

2568 THE CHAIRPERSON: Given that your whole argument has been that they are the ones who are most price competitive with you.

2569 MR. NOBLE: Yes, that is correct. There may be -- and I can't say this definitively -- an increase in the ad dollars. It has not happened before, so I don't expect it to happen here. So there will be a reallocation.

2570 THE CHAIRPERSON: Right. I take it, given the strategy here, this would be virtually all national advertising?

2571 MR. NOBLE: Yes. However, in some of the markets one of the complaints by some local advertisers is that they can't afford to get into prime time, because it is just too price sensitive to them.

2572 If the prices are adjusted accordingly, this may permit some local ad dollars as well. But we are not counting on that.

2573 THE CHAIRPERSON: But the bulk of it would be national.

2574 MR. NOBLE: Yes, that is true.

2575 THE CHAIRPERSON: If the Commission were to deny this request, how would you respond if you had to make up four and a half to $5 million?

2576 MR. NOBLE: We would just have to work harder to get revenue from our traditional sources.

2577 Jack would change his budget.

2578 THE CHAIRPERSON: His 20 key accounts would have to go to 25.

2579 MR. NOBLE: We think it is an important modification to assist the conventional industry. However, if it is something the Commission can't find itself agreeing to, then it will not affect our commitments going forward.

2580 THE CHAIRPERSON: The other issue about advertising has been raised around Global and your use of interesting logos on scoreboards in sports games, and so on, this notion that is referred to as virtual advertising.

2581 What is your view on that in terms of your current strategy? Where do you see it going?

2582 MR. NOBLE: Again, I will ask Doug Hoover eventually to talk about this briefly, and Katie or Jack to talk about the specifics in terms of the value to us.

2583 This is something that has developed with technology, and it is something that replaces what is developed at site venues. We have all watched hockey games where you see billboards along the sides of the boards and billboards on the ice. We have all watched car races with billboards.

2584 These advertising billboards in the event were developed and sold by owner of the event. Then the owner of the event would come to the broadcaster and say "I will sell you this product and I can afford to take less money from you because I have a whole bunch of advertising at the event that I know is going to show on television". We never got any of that money on television.

2585 What we have been able to do through the technology is to pay for those billboards that are already being broadcast and superimpose them using technology in a sharing arrangement with the producer.

2586 It is advertising that has always been there on the screen. It is just advertising that never flowed through to the broadcaster.

2587 THE CHAIRPERSON: Another form of simultaneous substitution.

2588 MR. NOBLE: Perhaps that is a very good way of looking at it.

2589 THE CHAIRPERSON: So do you see doing more of this?

2590 MR. NOBLE: In co-operation with the owner of the program, we see ourselves doing more of it, yes.

2591 It is also a response to a developing trend in the U.S. with Tivo and personal video recorders where people can preprogram their programming choices and zap the commercials as they go through the program.

2592 What this virtual advertising does is it inserts it, in a non-obtrusive way, in the program. That is how broadcasters and producers of programs in the U.S. are dealing with those personal recorder issues.

2593 THE CHAIRPERSON: Given that, I expect that it is going to go beyond sports programming.

2594 MR. NOBLE: I think that is a fair assumption, yes.

2595 THE CHAIRPERSON: Are you just doing it in sports programming for the most part now?

2596 I know there is a separate issue about superimposing. But the kind of stuff we are talking about right now is right in the program.

2597 MR. NOBLE: Yes. I will defer to others on that, Mr. Chairman.

2598 Doug...?

2599 MR. HOOVER: We have had a limited amount of success with virtual advertising. I was here earlier today when Rick Brace was speaking about the TSN experience. I think I am happy to say that our experience is a bit more positive than he articulated.

2600 The way we have come at it is we have made a three-way partnership, a partnership between the owner of the technology, the owner of the program rights and ourselves. Fundamentally, we all take a third of the revenue generated or some negotiated amount.

2601 If we use the virtual insertion in a Canadian content program, which we have done with Alliance Atlantis, they participate in that revenue stream.

2602 The biggest successes of course have been with the sporting events, because they amass the audiences that much greater. Super Bowl demands a greater rate and therefore programming this technology applies better.

2603 We believe it is an area that needs further development; that the technology needs to be developed further. It needs to be less intrusive than it may currently be.

2604 As Gerry indicated, with the new technology with Tivos and some of the other mechanisms that automatically strip out the conventional television advertising we have to find means to make that messaging to the consumer more transparent and more imbedded.

2605 We also believe it works a little better -- and I am going to take an extension because I did hear your line of questioning earlier -- than product placement, primarily because product placement, once placed in the program, tends to exclude all of the other manufacturers in the same category.

2606 So if we were to buy "Blue Murder" and the producer made a deal with an automotive manufacturer that they would only use, hypothetically, let's say, Chrysler cars, it would then mean that Katie and Jack would be restricted from going out and attracting sales from their competitors.

2607 We have always found the product placement, for the amount that it generates both for the producer and for us, to be so restrictive that the negative aspect outweighs the positive.

2608 With virtual insertion we can insert it on an episodic basis. We can insert it on a program basis. We can be much more flexible and apply the technology in a more creative way to maximize the value.

2609 Katie wants to speak to the actual significance of the revenue, because it really is not that great right now.

2610 Like everything, it has to start some place. There are no easy ways any more. We have to try every innovative way we can to add more revenue.

2611 MS FULLERTON: At this time in relation to virtual, as Doug was saying, we have had some success with it in relation to some of the sports properties and "Bob & Margaret". At this time the revenue -- and this has been included -- is approximately at a million dollars.

2612 We are hoping to see some growth in this. But as has been mentioned, there is very limited use at this time. It is rather awkward and it is difficult to place. Advertisers are often looking for guarantees as to where the commercials are going to run, exactly the length of the commercial, and how they are going to be used.

2613 At this stage, because we need certain camera positions and such, it is hard to guarantee this placement and therefore makes it a slightly awkward use at this time.

2614 THE CHAIRPERSON: So you can't guarantee that the Canadian Tire logo is going to show up on the scoreboard.

2615 MS FULLERTON: It will show up, but whether we --

2616 THE CHAIRPERSON: You can't say when or how long.

2617 MS FULLERTON: How long, yes. It could be three seconds; it could be six seconds. And if something happens and they change the shot at the last minute, then we can't say that they will get four placements. They might only get three placements.

2618 MR. ASPER: Mr. Chairman, it also has some limitations beyond that, in that it is very difficult to use it for, for example, not news necessarily, but reporting purposes. I remember the real trouble at CBS or one of the U.S. networks got into when they inserted a virtual ad in Times Square for the New Year's celebration. There were cameras reporting on what is going on in Times Square and they had inserted their own ad over whatever was on the billboard in Times Square.

2619 So the question became are they reporting the facts? Are they reporting the reality of what is going on there? So that programming, nobody really wants to go down that road right now and get in the way of the journalistic and the factual integrity of what is being shown on television.

2620 It is limited right now to sports programming. There is quite a debate going on between the sports' rights owners who have sold advertising to McDonald's for that board, on the basis that McDonald's is going to reach not only the 18,000 people in the stadium, but the other 6 million people that are watching it. So it's a very complicated area. It's in its early days and it is somewhat new revenue, but it has got a lot of troubles with it.

2621 THE CHAIRPERSON: You expect it to grow, I presume? You expect to work out these concerns and technical limitations. So if we are looking at an expectation of -- if we were back here for your licence renewal in five, six or seven years' time, let's say for the sake of argument seven years, how much revenue would you expect to be getting from this form of advertising at that time and what sort of programs might you expect to see it in?

2622 MR. NOBLE: Have we estimated, Jack? I think we have. At the moment I don't see it going much beyond frankly the sporting milieu during the term. However, if Tivo and other personal recording devices become more and more popular, this style and type of advertising will proliferate with conventional broadcasters.

2623 In our projections we haven't factored that in. I think we have just got a million dollars going along with the 2 per cent, the 2.5 per cent and 2 per cent growth rates.

2624 THE CHAIRPERSON: You have just taken that figure and grossed it by inflation?

2625 MR. NOBLE: Yes.

2626 THE CHAIRPERSON: Mr. Tomik

2627 MR. TOMIK: Chairman Colville, I would be happy to be here in seven years reporting that virtual revenues were $700 million and we are making 10 bucks out of 30-second commercials.

2628 THE CHAIRPERSON: I thought you might say something more like 10.

2629 MR. TOMIK: I think what my comments are is this is just one more way we are trying to be creative in driving the machine with more advertising revenue because we have seen the experience and you have of the last three years and we know the reality. It is very hard to predict because it is based very much on program rights and that seems to be a little bit confusing right now.

2630 But I think the point being is we as a conventional broadcaster and all conventional broadcasters have to think in different ways. You made the comment earlier about consensus before we could launch into releasing limits in advertising time. I am old enough and been around long enough to remember that it took until 1985 to build consensus in AM radio to release the limits, on the verge of something that was after.

2631 It was 1994 when the limits were removed from FM radio by this Commission. I look at their business today and say it's interesting their format now dictates how much commercial time they put into their day or their hour and that's a very interesting point.

2632 I think if this is our future, and it seems to be after the last three years, the ability to be creative in trying to develop new revenues through virtual, or the ability to manage our own schedules even in terms of advertising content are very important to our future.

2633 THE CHAIRPERSON: What about this other form of advertising where an ad may well just be superimposed on the screen or dancing cows or whatever? I didn't see them. I presume it's the milk producers.

2634 MR. NOBLE: In the South Pacific this was very common and we called them pull throughs. That's how we described them. I have to be honest, I have not seen that yet on a Canadian channel.

2635 Jack, do you want to comment?

2636 MR. TOMIK: Sure. I haven't seen the dancing cow yet either, but you have got us excited about it. We want to see it too.

2637 There is a limited amount of that kind of advertising being done now. Certainly what comes to mind for us is we have tried on a limited basis a little got milk, but also with information, the time of day as to when it comes on to the screen for a few seconds.

2638 I think to be honest with you the dancing cow across the screen, and some of that has been tried, is kind of disruptive for the viewer. We have had complaints when we have attempted to do this and it has been on a very rare occasion.

2639 But certainly when we are adding to the experience or the benefit for the viewer, like the time or the temperature or some piece of information with a little billboard on it, it seems to be acceptable to the advertiser or to the viewer.

2640 THE CHAIRPERSON: Sorry, it seems to be acceptable?

2641 MR. TOMIK: Yes. They don't generate complaints, as I would suppose a dancing cow does.

2642 THE CHAIRPERSON: I guess a bit of the sense we got in Montreal was that some of the program producers complained about it because they didn't think it was either appropriate to the style of the program or it's just a distraction from the program that they produced.

2643 In the case of sports programming you have got the agreement with the rights holders and so on, but I guess it raised the question in that case about whether or not the television network in this particular case had got the agreement of the program producer that actually superimposed these cows over their program.

2644 MR. NOBLE: That's right. We are prevented by contract from doing anything to the program during broadcast. We can put our bug in the corner of the screen, our logo bug in a corner of the screen, but that's it, unless we have an agreement with the producers as we have in our sports properties.

2645 THE CHAIRPERSON: So do you see this changing at all? Do you see that as people zap around more traditional commercials do you see this as well as the sort of virtual ad, the scoreboard sort of thing growing? Do advertisers seek ways to try and make sure their ad gets viewed by the audience?

2646 MR. NOBLE: I think that's possible and I think it's also possible as broadcasters continue to look for different forms of revenue in an increasingly fragmented market.

2647 Everyone is trying to be clever as to (a) how they can generate more revenue and (b) how they can get the message across clear.

2648 THE CHAIRPERSON: So if we loop this back to the 12 minutes then, I mean you are already beyond 12 minutes to the extent you are engaged in this other advertising activity? I don't mean this as a criticism in the sense of you violating the rule. I just mean as I was struggling yesterday with Ms McQueen, if the Commission were to try and -- how would the Commission control this sort of thing in terms of you treat this as advertising revenue I presume? The revenues you get from this sort of thing, so it's commercial content?

2649 MR. NOBLE: It's treated as advertising revenue, correct. I wanted to clarify one thing. In the majority of cases, particularly in the sporting cases, this advertising has always been there. It has always been out to venues. It has always been on the arenas, the side of the soccer fields. It has always been there.

2650 The difference now is that the producer, the broadcaster, and we owner of the technology are the ones that are controlling that revenue. To the extent that the producer is able in his negotiations with the broadcaster, he is getting paid for what he lost at the venue in any event.

2651 So, his advertisers have been on screen. It is just that we haven't been getting the revenue for it. Someone else has been getting the revenue for it.

2652 MS BELL: We are accounting for the revenues, but when you talk about accounting for this, if you are talking about how would we monitor it or include it to quantify how many seconds, I think that would be difficult to do in certain cases, especially with new technologies and who knows what is going to appear, but are you going to count three seconds here and a billboard there and a can of Coke here. I think it becomes very difficult to monitor that sort of thing and to log it and say you are at a compliance because you shot a five-second billboard?

2653 MR. NOBLE: If I may, if anyone -- this is the wrong city to say this in, but if anyone has attended a game at the Air Canada Centre in Toronto you will notice that all around the rink are rotating signs that for 10 minutes it says one thing and 10 minutes later it says another. Those things are not directed at the 18,000 people sitting in the rink. They are directed at the television audience that is getting the picture in the background. That type of advertising, as I say, has been around for a long time. All we are trying to do is again be clever and repatriate those dollars.

2654 THE CHAIRPERSON: I wasn't trying to be critical of your cleverness. It is just that because it begs the question of what should we be doing about advertising if on the one hand we have this 12 minute limit which you would like to push to 14. I guess ideally from your point of view you would like to do away with it all together, while at the same time we see this other activity going on in any event. That's probably going to grow as people find creative ways to get around the traditional commercial breaks in programs. So it is going to be a challenge for you and the advertisers, it seems to me, to be dealing with that issue.

2655 I think those are all the questions I have on this issue.

2656 MR. NOBLE: Mr. Chairman, I think Jack Tomik behind me wants to get one final comment in.

2657 THE CHAIRPERSON: A couple of my colleagues want to ask a couple of questions on this, but go ahead.

2658 MR. TOMIK: I just wanted to comment that you are absolutely correct. We would like you not to have any limitations on advertising. I think that that falls to two constituents, our viewers and what they find acceptable as far as clutter is concerned.

2659 We have to keep in mind that those viewers watch a lot of American television that are running up to 17 or 18 minutes of commercials today. You have to keep in mind that those viewers perceive an interruption to programming the same for a commercial as they do for a public service announcement as they do for a PSA for blue murder. I think that's an important point to make.

2660 The second one is the advertiser and what do they think? I know there is an intervention on file. However, those same advertisers in the United States accept and use television to a much bigger level. I think we have to leave it to those two constituents and especially the viewers to let us know what they feel is best, and that applies whether it is 30 second units, Mr. Chair, or virtual billboards.

2661 Virtual billboards do not grow exponentially because they lose their value as you have more of them. So, the market will tell us when we have to come back.

2662 THE CHAIRPERSON: Well, I guess there's a third player and that's your competitors. I mean one of the things the Commission has traditionally done is control market entry in broadcasting in this country. One of those controls has been around the economics of the market and one of the economic factors is the amount of advertising in any given market.

2663 Any time there is an issue around can a given market sustain an additional television station, the argument is all around how much advertising revenue is in that market. If we are going to start to shift the landscape, to push the advertising revenue to one or two of the players, as opposed to others in the market, then that's a concern.

2664 I am not saying at this time it is something we would deny, but it seems to me it's a fundamental piece of our regulatory levers, if you will, in this country.

2665 MR. HOOVER: Can I just offer a comment from a programming point of view?

2666 THE CHAIRPERSON: Sure.

2667 MR. HOOVER: I would like to go back to your expression of what's the role of the regulator and should you give us or should it just be open doors or how should you approach that.

2668 Certainly when it comes to children's programming you should not. I think the children's code is appropriate and I think it serves a very meaningful purpose and it should be there.

2669 When it comes to adult programming it's a little different. People can make their own choices. We are unregulated after midnight now and have always been unregulated as it applies to commercial content. I don't hear or see or receive feedback from our viewers complaining about us abusing that unregulated commercial time.

2670 I think that there is a demonstration of responsibility within the industry. I think that we will listen to our concerns -- our viewers and our advertisers. It is very much self-regulated. If it wasn't then there would be chaos after midnight already.

2671 THE CHAIRPERSON: Commissioner Pennefather.

2672 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.

2673 I would like to pursue the point I think Mr. Hoover just raised on programming. From the discussion it's very, very interesting. I would like to take a slightly different angle on that and ask you about more than sports programming, where one can picture a billboard and a virtual ad superimposed on that billboard with more or less success.

2674 You say those billboards already physically being there, it's not a change in that sense. I'm not thinking of this from the point of view of just revenues. What about other kinds of programming, a drama program for example? You mentioned "Bob & Margaret" I think where we were talking about inserting ads in the program. I don't mean product placement.

2675 I understood you to describe a kind of advertising which is inserted technologically into the program itself. How is this done and how will that affect dramatic programming?

2676 The Chairman talked about our discussions in Montreal and the concerns of producers regarding superimposed ads, but if those ads are imposed within the show itself, what effect will that have on programming choice on the kind of dramas we are going to see and on audiences because in effect wouldn't then the audience then not really see that there is a commercial there?

2677 It's more of a buried advertising if you will, but still gaining some revenues. I'm curious about it in other kinds of programming going forward because you did mention I think, Mr. Noble, that what might proliferate this kind of advertising might proliferate depending on the Tivo system and other software coming along which will allow us to remove the commercials as we know them today.

2678 Alternatives will be sought and I assume those alternatives will be sought in dramatic programming as well.

2679 MR. NOBLE: I think that's correct. We must be sensitive to it. I will ask Loren Mawhinney to respond because I know it is an issue that she has discussed with her producers.

2680 MS MAWHINNEY: Commissioner Pennefather, you are right. It's a very delicate matter. When a producer employs an actor, there are certain terms under the contract that we have to be cognizant of. In other words, there can be no implied endorsements.

2681 We would never put a hat on somebody's head that said, you know, "Pepsi" or put a T-shirt on them or even have them drinking a can of Coke because we don't have the right to say that Sonia Smith prefers Pepsi over Coke or what have you.

2682 What we have done is in the event that characters are shot on a wide shot because the technology is still rather crude and they are walking across a wall, we put a movie poster in conjunction with Alliance Atlantis -- I think it was Famous Players -- and the promotion that ran on a week to week basis on "Traders" had a different movie as Jack walked by this wall.

2683 The money was actually minimal but it was interesting to both Alliance Atlantis and to us to explore that way of finding new revenue.

2684 We have never run an ad, like placed an advertisement in the middle of a program. We are talking about virtual product placement.

2685 COMMISSIONER PENNEFATHER: Well, I wasn't thinking about the virtual product placement so much as in fact running an ad in a program by superimposing. Eventually, as you do in a sports situation, where as you say instead of me seeing what's on the boards or in the case of the Times Square example, is changing what physically is actually there.

2686 Similarly in a dramatic program, let's say one you bought, one you imported, if the advertisers and yourselves suspect that the viewer is not only zapping those ads but is recording the show and eliminating the ads through all the methods that are ahead of us, you are going to be looking for something else.

2687 I assume that might mean inserting ads which are not products, physical products, a hat on a head or a can of Coke as we see rather dramatically in movies these days, but rather the insertion of ads within programs that will replace the advertising as we know it today.

2688 MS MAWHINNEY: We haven't gone that far yet.

2689 COMMISSIONER PENNEFATHER: But I was looking ahead in terms of understanding what this discussion means in terms of the kind of effect this will have on dramatic programming or documentary programming or news.

2690 MR. NOBLE: Never news.

2691 MR. HOOVER: From a programming perspective, I think that, if I understand what you have described, I think you may have crossed the line where the consumer would react and react by turning off the channel.

2692 If I understand it, it's somewhat analogous to the sports programming where they squeeze the screen back and do the message underneath so that it's so embedded in the program that you can't zap it out. That's my interpretation of your description.

2693 I think that takes away in a dramatic program from the enjoyment experience that the viewer is getting. I mean if it's an emotional scene and suddenly some ad comes up, you know --

2694 There needs to be separation from watching the telling of the story to the commercial. I can't at this point envision the viewer accepting that. I think that would be going too far.

2695 COMMISSIONER PENNEFATHER: Thank you. That was very interesting. Until the day that we don't notice that the advertising is there, there is that whole discussion as well.

2696 Thank you. I appreciate those thoughts.

2697 THE CHAIRPERSON: Commission Wylie.

2698 COMMISSIONER WYLIE: Yes. The famous little cow supposedly dancing over a dying man's deathbed or something, but we talk about how crude things can be. They can also be made a lot more refined and subtle and work.

2699 In any event, what I want to put to you is Chairman Colville and I and Commissioner Pennefather were in Montreal where we had this first discussion about an alteration or a modification or an amendment to section 11 of the TV regs with regard to ads.

2700 Their initial application was for 14 minutes and it was to be averaged overall on a weekly basis, but it wasn't just prime time. That's all it was. Now, whether they saw our eyebrows raised or read your application, after the break they were down to 14 minutes in prime time averaged over the week.

2701 Then more eyebrows raised and some interventions. By reply, they said that actually it would be 14 minutes in all. Therefore, including PSAs, promotions, the whole thing, therefore, don't worry, Commissioners, it will be no more clutter than there used to be.

2702 More eyebrows were raised because now PSAs disappeared. So today we look at your application which is 14 minutes prime time average over the week and I think the promise of at least one PSA per hour is new. Right?

2703 MR. NOBLE: I don't know that it is. It's not a PSA. The promise was for Canadian promotion.

2704 COMMISSIONER WYLIE: Oh, promotion. Was that in the application?

2705 MS BELL: No, no. It was raised in interventions.

2706 COMMISSIONER WYLIE: In your replies. Okay.

2707 MR. NOBLE: For clarification.

2708 COMMISSIONER WYLIE: So that helps getting to my point which is considering that we have looked at this and the TV policy and decided to keep what we had and this running conversation now with the Commission through renewals, do you not think there would be some advantage in having an overall public process of some sort to sort this out and decide whether there is some value in your proposition?

2709 MR. NOBLE: Thank you, Commissioner. I will ask Charlotte to respond.

2710 MS BELL: In principle we don't object to you having a separate process. In fact, you know that we have added a --

2711 COMMISSIONER WYLIE: Of which you would be part.

2712 MS BELL: Of course.

2713 COMMISSIONER WYLIE: As opposed to getting what you want today.

2714 MS BELL: That's right, but we would like to get what we want today also.

2715 COMMISSIONER WYLIE: If --

2716 MS BELL: In response to your question.

2717 COMMISSIONER WYLIE: To the question of how legitimate is it to do this in this way then CTV will come back with something else and you will say well, if that's what they have got that's what I'm coming back for.

2718 Would it not be better perhaps to have some type of general look at this rather than accord you what you want in this process?

2719 THE CHAIRPERSON: Otherwise we are going to run out of eyebrows.

2720 MS BELL: I guess I would say a couple of things. Firstly, you know, the Commission increased the number of advertising minutes for I think almost every single specialty service in the last three or four years by condition of licence on a case by case basis.

2721 This is not unusual. This is consistent with that.

2722 COMMISSIONER WYLIE: It started before me.

2723 MS BELL: I had a second point which I am now losing which was really good, Madam Wylie, but I don't think this is inconsistent with what you have done in the past.

2724 My second point is that I believe that everyone who had an interest in this question has already intervened in this process, so you have almost had a separate process because I think everybody commented on the issue.

2725 COMMISSIONER WYLIE: The CHUMs, the Craigs.

2726 MS BELL: Exactly. They can apply on a case by case basis if they want to avail themselves of that and I think that it's totally fair for any other broadcaster to do the same thing.

2727 As was mentioned earlier, and I think, you know, every single time the Commission has tried to let go of advertising restrictions, there has always been this notion that the sky was falling and the clutter arguments. It's the same arguments.

2728 It's exactly the same arguments that you had in 1985 with AM, in 1993 with FM and, according to your own Public Notice, when you deregulated FM in 1993 you had noticed nothing unusual and no unacceptable advertising levels for AM. No calamity, so we wonder.

2729 COMMISSIONER WYLIE: But that wasn't exactly my point. My point was when we did it to AM and FM, I stand to be corrected but it was done following a process of some kind where it's not only a question of hearing everybody. It minimizes the number of applications we have, the ability of people to say "Well, that's not quite what I want, they didn't really get it right", et cetera, et cetera. There doesn't have to be a major hearing.

2730 We have this problem just in four weeks of hearing things mature or deflate just with two requests, one from TVA and one from you, so that is a bit of a problem in itself a long time ago that we looked at this either and the TV policy.

2731 Thank you, Mr. Chairman.

2732 THE CHAIRPERSON: Commissioner Cardozo.

2733 COMMISSIONER CARDOZO: Thanks, Mr. Chair.

2734 On the matter of virtual ads, one of the perspectives is that people look to the Commission as a body that addresses consumer issues, so there is a certain number of consumers who see these virtual ads and they are annoyed by them. They don't think they have got the power to do anything about it, to make you stop, so they say to us "Do something about it".

2735 Tivo is an example of how technology is helping people watch TV and not have to watch the ads they don't want to watch and you have outsmarted them in a sense. While some people may say this is clever, others might say a little too clever.

2736 I'm just wondering what your thoughts are on something like this. Should we do anything about it as a Commission? Do we have a role or should we just say get over it, there are other more important things we should be worrying about?

2737 MR. NOBLE: I don't want to speak for the Commission, but I think that there were bigger issues in the Canadian broadcast system than whether or not someone likes an ad. I think it's important that they deal with the complaint sensitively, but what we are trying to is quite simply create the proper business environment for us so that we can contribute in a positive way to the system.

2738 That requires in some cases, Commissioner, upsetting some viewers. Viewers are always going to complain about -- some viewers. Some will understand the system and are quite accepting, but some viewers will always complain about ads. CBC still gets complaints about ads in their news now. Unfortunately, that's the reality of the marketplace.

2739 COMMISSIONER CARDOZO: Would you say it's a commercial necessity and you try to do it?

2740 MR. ASPER: Commissioner, I would just buttress Gerry's comments by just reminding all involved that the engine of the system is advertising revenue. Somehow it has to stay in its place or be the contributor to it that it is today. Otherwise a whole set of dominoes falls from the lack of ability to rely on advertising revenues.

2741 We would be thrilled if you would legislate subscription revenues as I think you heard me hint a few times today for the conventional broadcasters. I haven't seen your eyebrows raise as high as they might have.

2742 COMMISSIONER WYLIE: That would require a process.

2743 MR. ASPER: Of course, of course.

2744 MR. NOBLE: And we would attend.

2745 MR. ASPER: I will go with you with you on that one. You know, Commissioner, Chairman Colville suggested that the landscape has been shifting. Well, in the six years or seven years that we were last before you with a Global TV Ontario licence renewal, that's when all the specialty channels went from eight minutes to 12 minutes of advertising.

2746 Really I think virtual ads is a very small part of our operation as you can see in terms of revenue. What we are really asking for is just a chance to respond to some of that shifting landscape as it has shifted against us a touch.

2747 The advertising model that the system is based on I think is quite precious to all stakeholders, including producers.

2748 COMMISSIONER CARDOZO: There is no question the advertising model is important, crucial and all that. The point I think we are dealing with is new issues and as the boundaries grow, should we or should we not be concerned about that. That's all I'm asking.

2749 I just want to ask about logging the number of seconds.

2750 Ms Bell, you said it was -- and I am putting words in your mouth -- sort of picayune to sort of pick out how many seconds. But the chances are you are logging those seconds for the purpose of collecting from the advertisers.

2751 Would it not be possible for you to give us those same numbers?

2752 I am not concerned about it in this sense so much right now, but in the future as it gets more sophisticated you may be dealing with two, three, four minutes in the course of an hour.

2753 So if you take your 12 or 14 minutes and then another few minutes, should we be concerned about that?

2754 MS BELL: I think it is going to become difficult to monitor that sort of thing.

2755 I am just throwing this out, but if you have something that is superimposed for a period of time or for the entire program and then you have something else that lasts for two or three seconds, how do you monitor that? How do you decide how long the advertisement was, if you want to count that as an advertisement?

2756 I am just saying I am not sure.

2757 COMMISSIONER CARDOZO: You would likely count it in some way for the purposes of collecting from the advertiser, wouldn't you?

2758 MS BELL: No, we don't.

2759 COMMISSIONER CARDOZO: It is free advertising? That doesn't fit into the model, in that case.

2760 MR. NOBLE: Commissioner, Doug Bonar will indicate how this stuff is put on air and also how it is tracked.

2761 MR. BONAR: Commissioner, there are three different methods for the technology that we use, and we actually have licensed to use one of the most sophisticated. That is why we have been rather successful.

2762 An example of a very successful event was the Molson Indy, where there were four virtual -- I will call them billboards, but they really were not billboards. One was a bridge that we constructed. There was another wall where we constructed a wall of ads, and there was a Global logo.

2763 On the track as you come down the straight-of-way, there was another ad on the tarmac and this ad actually started to disappear because of course the tires were wearing out and leaving marks on the road.

2764 So it is very sophisticated. But I only knew where three of the ads were. I didn't know where the fourth one was, and I could not find it.

2765 So virtual can be there, and you don't know it is there.

2766 To count it in the Molson Indy, where we thought that was very successful and the technology worked, we would go back to the tape and the number of times that we came under the bridge or went around the corner, you could add that up and put a value on that.

2767 But virtual technology is being used in many places. If you watch the NFL Football and you see the 10-yard line, that is virtual technology.

2768 It is being developed. It is here and it is here to stay. We could even be airing a program that has virtual placement of something in it, and we would not know because it really is an invisible process.

2769 There are two methods. One is live where we actually take a camera to an NFL game and we shoot an area of the stadium. We can zoom out or move the camera, and the positioning of the virtual whatever it is stays tracking with the camera.

2770 The other way is post production, a very difficult process where you have to examine tapes and look for a place where there is enough length of time with a camera that tracks around, and you can place something on a table.

2771 The "Bob & Margaret" example, all it was -- Bob is a dentist. So we just took a tube of Colgate toothpaste, and in the promotion just placed it next to his chair. The scene went on for just a little short piece.

2772 That is how we used it. That just gives you examples of what we have done.

2773 COMMISSIONER CARDOZO: You didn't put chocolates in the dentist's office, did you?

2774 MR. BONAR: You could put anything there.

2775 MR. NOBLE: Commissioner, this style of advertising is still in its infancy, and it is not sold by time; it is sold by the event. There are very few people who are involved in it at this stage, and there are very few programs where we have used it.

2776 As I say, it is something that we will continue to look to do.

2777 In order to answer your question directly, it is not sold by time. It is not that you will get three seconds here and two seconds over there. It is sold by the event.

2778 COMMISSIONER CARDOZO: Thank you very much for those answers.

2779 THE CHAIRPERSON: I am not sure Commissioner Cardozo doesn't appreciate -- I wonder if the camera could stay on him. Could you put the camera on Commissioner Cardozo as you had it and then look at the screen.

2780 Of course, the strategy is the more questions he asks, the longer --

--- Laughter / Rires

2781 THE CHAIRPERSON: Vice-Chair Wylie.

2782 COMMISSIONER WYLIE: I hope we are not going to start seeing everybody reading The National Post on "Blue Murder".

2783 MR. NOBLE: The natural quality of it lends itself to that.

2784 THE CHAIRPERSON: I think this is probably a good time to take our afternoon break.

2785 We will break now for 20 minutes.

--- Upon recessing at 1535 / Suspension à 1535

--- Upon resuming at 1555 / Reprise à 1555

2786 THE CHAIRPERSON: Welcome back to our proceeding. I think you have probably heard enough questioning from me for this afternoon, so I will turn the questioning over to Vice-Chair Wylie for the next while.

2787 COMMISSIONER WYLIE: Good afternoon.

2788 After this session you may want to make a Movie of the Week called "Déjà Vu".

2789 Some of the questions of course will be similar to those posed to CTV, except we will not visit their shortcomings on you, only yours.

2790 As I began with the yesterday looking over the numbers of viewing to Canadian drama programming, viewing to Global's Canadian drama programming in peak time has declined, as it has for CTV.

2791 The figures I have is from 7.6 per cent of all viewing to drama in 1997 to 5.5 per cent in 1998 and 5.1 per cent in 1999. And of course there has been a decrease overall in Canadian viewing in peak time.

2792 With regard to the drama decline, both of your eight hours of priority programming -- that is, for the Global group of stations and for the CHCH and CHEK priority programming rely a great deal on drama.

2793 How did you arrive, knowing what these figures are, at this mix of programming, which is skewed to drama?

2794 MR. NOBLE: Commissioner Wylie, thank you for that question.

2795 Without sounding too glib about it, that was then and this is now. And since I have been on board our Canadian programming audiences have increased substantially.

2796 That is not as a result of me, I should say.

2797 COMMISSIONER WYLIE: This is not a joke.

2798 MR. NOBLE: No.

2799 COMMISSIONER WYLIE: So it has increased in 2000.

2800 MR. NOBLE: It has substantially increased in 2000. Actually, there are reasons for the data that show a decline in 1999 over 1998. We have done a fairly significant analysis on that, and I will ask Ken Goldstein to lead the Commission through that.

2801 COMMISSIONER WYLIE: And you can give us figures for 2000?

2802 MR. GOLDSTEIN: We can't give you figures for 2000 that are completely comparable with these figures, because of course you have not done the coding yet.

2803 COMMISSIONER WYLIE: If you can tell us that it has increased, you must have some base line or reason for that.

2804 MR. GOLDSTEIN: Yes, I have a number of things --

2805 COMMISSIONER WYLIE: And to say that it has increased, you must know the number.

2806 MR. GOLDSTEIN: We know what some individual programming is doing in relation to other.

2807 I will just take a brief moment to go through this.

2808 The data you have before you and the data you placed on the public file are essentially for a different group of stations than you have before you today. Because the Commission chose its definitions the way it did -- basically you said we will report the revenues and expenditures for the 1999-2000 fiscal year on the basis of the fiscal year for those stations, but we will report the audience on the basis of the 1999 calendar year for those stations.

2809 In the case of this particular applicant or group of applicants, it means that we have an apples to oranges situation.

2810 Your staff was kind enough to produce for me -- and it is in one of my reports filed as an appendix to Global's intervention response -- the actual group of stations that is before you. And that right there, when you include all the stations, gives you some higher numbers.

2811 In terms of what has happened since, people yesterday were -- and I guess one other point should be made.

2812 Yesterday CTV said, quite properly, that they were having difficulties clearing Canadian programs on stations they didn't own. You can appreciate that if CTV was having problems getting that whole schedule of Canadian programs on stations they didn't own, you can see how Global in the old situation, when it was a much smaller group, would have even more problems.

2813 By putting together the data that your staff has done for us for that fall 1999 period, you can see quite different numbers, quite larger numbers.

2814 As a matter of fact, on the basis of those numbers you find that Global exceeded CTV in the fall of 1999 with the current group of stations, in terms of delivering audience to Canadian drama; indeed, about 61 per cent of Global's prime time Canadian audience was drama versus about 58 per cent for CTV being sports.

2815 COMMISSIONER WYLIE: When you say the current group of stations, what are you referring to?

2816 MR. GOLDSTEIN: I am referring to the group of stations that is before you now seeking licence renewals.

2817 COMMISSIONER WYLIE: But some of this priority or drama programming, in the case of the Vancouver and Victoria stations, for example, would be in large part CTV; right?

2818 We are not looking at Global --

2819 MR. GOLDSTEIN: Actually, if you remove the CTV stations from the Global totals, the percentage of drama goes up, not down.

2820 What we have now -- and we have asked the research people to use the latest Neilsen numbers. These are numbers that run for the current season, from August 28, 2000 to March 11, 2001. They have done it a couple of different ways. We look at the top 10, top 20 and top 30 Canadian priority programs in the Toronto-Hamilton market.

2821 I will pick the top 20, it being in the middle of those two, although the proportions don't change dramatically.

2822 In the top 20 Canadian priority programs -- and this is based on persons 18 to 49, and this is for programs that ran at least four times, because Global is of course committed to a series continuing strategy in terms of building audiences for these programs.

2823 Of the top 20 priority programs, the CBC had nine; Global had eight; CTV had three.

2824 If we go to the top 30, which actually works out to 32 because there are ties, the CBC had 16; Global had 12; CTV had 3; and CityTv had one.

2825 If we look at absolute audiences for Canadian programming in this most current ratings period, based on Neilsen data covering that whole approximately six and a half month period, the average audience figures -- and this will be the whole audience, for everyone two-plus -- "Popstars" was averaging more than 300,000 viewers per program in the Toronto-Hamilton market.

2826 Just to give you a comparison, "Hockey Night in Canada" gets a little over 400,000. That is a pretty incredible number.

2827 "Bob & Margaret" was doing over 150,000. "Blackfly" was doing about 130,000, and "Andromeda" was well over 100,000 and "Blue Murder" was well over 100,000.

2828 I think that what is happening today -- this is, after all, 18 months after the most recent of those data that are on the public file. When we consider what is going on today and when we consider the whole group of stations, I think it is absolutely fair for Gerry to say that was then and this is now.

2829 COMMISSIONER WYLIE: When you were speaking of the most popular programs in the various broadcasting undertakings, this was for all Canadian programs?

2830 MR. GOLDSTEIN: All Canadian priority programs. We left out news and sports.

2831 COMMISSIONER WYLIE: Not only drama.

2832 MR. GOLDSTEIN: Not only drama.

2833 COMMISSIONER WYLIE: Obviously you feel that drama is something that you can make work. What other considerations would go into the choice of your mix of priority programming?

2834 MR. NOBLE: It is a combination of several factors, Commissioner. I will ask Loren Mawhinney and perhaps Doug Hoover to elaborate on our scheduling and programming plans for Canadian.

2835 MS MAWHINNEY: Commissioner Wylie, we have a preponderance of drama because as Ken said we are a network that we want to encourage appointment television, so we have consistent scheduling of series programming and we tend not to do specials and MOWs on the Global system of stations.

2836 We also feel that through dramatic programming, and that includes comedy, we are building a star system. We are encouraging writers. We are contributing to the community and we think that we are going to create wonderful programs that will eventually compete on the same stage as American programs.

2837 We have real faith in "Blue Murder," for instance. I think that's a very successful franchise that will grow and improve and get better in year two and then in year three, et cetera.

2838 As we said in our opening remarks, there has been a trend away from the hour-long dramas to half-hour dramas. So we have tried to pick up on that trend and see if we could develop some franchises in that area. I am proud to say that at one point I think I had every comedy writer in the country working on one of our three shows. I know because a friend of mine is working at CBC Radio and he couldn't get any of them.

2839 So it has been a real challenge to mount that degree of variety of programming over this year. I also want to point out that for Global we had eight different series of dramatic programs this year and that's a huge leap and enabled us to buy programs from across the system -- from across the country.

2840 To that mix we have added our hour long drama specials, as we have got a history in that. We are proud of our documentary programs that we have done and we are going to build on that with our regional docs. We are trying to keep an open mind with the new genre of programs that have come out, like to use as an example "Survivor" or "Big Brother" and we in fact looked at doing a Canadian version of "Big Brother" here and felt that our audiences are a little too fragmented to put up with being in an enclosed space.

2841 But we were very excited when Lone Eagle brought us "Popstars". One of the benefits when Gerry and Leonard were talking this morning of owning different stations in different parts of the world is that we could call our colleagues in Australia and say "How did this perform? Is this producer telling us the truth that it was the hottest thing since sliced bread? What did it really do in that marketplace?"

2842 We were delighted to find out that it performed equally as well here.

2843 So to the mix of drama we will continue to add documentary specials. We are keeping our eyes open on this whole docu-soap trend that we think "Popstars" is at the forefront of.

2844 COMMISSIONER WYLIE: So that would be what you refer to in your supplementary brief as not foreclosing the option to pursue other emerging popular forms of programming. So you would look at "Popstars" as that type of programming?

2845 MS MAWHINNEY: Indeed.

2846 COMMISSIONER WYLIE: And you mentioned "Survivor" which is of course familiar to most of us, or contest driven shows, would they be also the same type or not, a "Jeopardy" type?

2847 MS MAWHINNEY: The interesting thing about "Popstars" is it culminates or at least in the middle of the series arc there is a group of winners, if you will, who make it into the band. Then some more traditional docu-soap in that it follows the girls as they make their album, as their release their video.

2848 The thing about "Popstars" is it is not just a show. There is a whole bunch of things that go into that program. There will be a record that will be released. There will be a live event that we will contribute to the success of.

2849 With regard to our website, we had a chat room a couple of weeks ago where people could log in and chat to the five girls. We had over 4,000 attempted log-ons. We recognize that particularly because this show appeals to the younger demographic who are conversant in the Internet and on their computers that we hit on something. So for the last five weeks of our show there will be the next day a chat with one of the members of the band that people can log into.

2850 I kind of took a tangent there. I don't know if I answered your question.

2851 COMMISSIONER WYLIE: Well, I was curious, by contest driven shows that's what you mean, the surviving type of -- it's all a surviving type of contest at the end. You either make it into the band or you don't.

2852 MS MAWHINNEY: "Millionaire" is the quintessential contest driven show. We don't have any plans to do that, even though it did very well for CTV.

2853 COMMISSIONER WYLIE: Not unless you get more advertising from Mr. --

2854 MS MAWHINNEY: But I will say that we are looking at another show that is a combination of "Survivor/The Eco Challenge" and in the end of that 13-week cycle the winner will win something. So, therefore, we would code that as a contest-driven show. People will have to be able to perform certain physical feats in order to stay in. That will qualify as a priority program now because of the flexibility in the new PN because I would have to code that as a contest even though it is really like a docu-soap, but it will be shot in the wilds of northern British Columbia.

2855 COMMISSIONER WYLIE: But you don't see this type of programming -- or do you see this type of programming taking over the amount of drama?

2856 MS MAWHINNEY: No.

2857 COMMISSIONER WYLIE: It would be a supplement, a complement to the basic drama pursuit which you see for the foreseeable future at least on both --

2858 MS MAWHINNEY: On both services, yes.

2859 COMMISSIONER WYLIE: On both services.

2860 There is no, as we discussed with CTV as well, there is no regional programming as such, in the sense that programming that would only satisfy a priority description by being regional, but you do have the "Our Canada" series. I am looking at pages 49 and 50 of your supplementary brief, where you outline how this will be done in various parts of Canada. You actually assign a number of specials that will be commissioned in the regions.

2861 Now, is this a commitment that this will be the number that will be produced in the region as defined here?

2862 MS MAWHINNEY: Yes.

2863 COMMISSIONER WYLIE: I don't know, some of our colleagues will agree that Global Ontario is a region, but there it is.

2864 So this is a minimum. This will be the number that will come from the various parts of Canada. Do you see "Our Canada" as an ongoing programming output with this type of plan of drawing from the regions?

2865 MS MAWHINNEY: We have proposed that this would be an annual commitment over the licence term.

2866 COMMISSIONER WYLIE: So you are prepared to commit to the fact that this will be done each year over seven years in the manner proposed on page 50?

2867 MS MAWHINNEY: Yes.

2868 COMMISSIONER WYLIE: Now, how will this work? Will there be budget money assigned to the regions and they will have complete control into what it is they bring to the "Our Canada" series from the region?

2869 MS MAWHINNEY: Yes. We used as our model the specials that we have been doing out of CKMI which were six specials and eight varieties. They came to the national system from the GM of CKMI and they had complete discretion as to what they were doing and informed us as to what they were doing. So we felt going into this next licence that it would be interesting to see what the different regions, what Saskatchewan would want to do versus what Manitoba would want to do versus what B.C. would want to do.

2870 In the west our Western Development Manager, Barbara Peterson, will be available to help the GMs because she of course accepts a lot of proposals from various western production companies i the event that the GMs don't have sufficient contacts. But this is brand new for us. We have just proposed this. It will come into effect next fiscal. I am delighted that out of the west right now we have identified 16 projects of their 20.

2871 COMMISSIONER WYLIE: For the "Our Canada" series?

2872 MS MAWHINNEY: Yes.

2873 So that we have either given development letters or had discussions, such that we recognize what these things are going to be.

2874 In Atlantic Canada Barry is a little more behind, only because they had not done these specials for a while, but we have still identified three programs that we feel good that could be a contender for this.

2875 COMMISSIONER WYLIE: I am not clear though on whether attached to the responsibility of proposing a development there is also an envelope of financial capacity to make the choice as well? When you say the GM, you mean the general manager of the station in that area?

2876 MS MAWHINNEY: Yes.

2877 COMMISSIONER WYLIE: Would have an envelope of money to spend in the area and to choose what will be added from that region to the "Our Canada" series and that will go on for seven years?

2878 MS MAWHINNEY: Yes.

2879 Commissioner Wylie, we have identified in the supplementary brief specific development amounts that would be attached to each station, so that GM would be free to use a portion of that if one of these ideas needed development.

2880 COMMISSIONER WYLIE: Special amount of money. Where do I find that? Do you remember?

2881 MS MAWHINNEY: Oh, you know what, it's not in the supplementary brief. It's in the --

2882 COMMISSIONER WYLIE: Well, in any event there is a certain amount of money.

2883 MS BROWNE: The script and concept development figure is in answer to question 3.3 in the addendum.

2884 COMMISSIONER WYLIE: Yes, where your vision is as well, yes.

2885 So we can expect this to occur, to come from the regions and the decisions to be made in the regions as to what it is that they feel is a suitable addition to the series.

2886 Now, we spoke about scheduling yesterday. The red is kind of spread out. "Our Canada" shows up on Tuesday at 10:00 to 11:00.

2887 Now, for something like that that you say will go on for seven years and you hope that "Blue Murder" will also be a project that works, et cetera. Do you put much faith in scheduling in a manner that will continue at least over time to look the same?

2888 You may have some comments about that, but there are interventions and speeches made, as you know, about how Canadian programming is not given a chance because it is too easily pre-empted and shifted and difficult to build loyalty over time. What is your comment about the value of that allegation or complaint with regard to assuring that audiences are grown for your successful programming and that the programming is successful faster? And what are your intentions about the schedule looking the same? I know it can't always be. It will shift over time if you get a five year licence or six years.

2889 What is your view of the importance of scheduling and of the validity of the complaints that are made about why Canadian programming doesn't always work as quickly or as well as it should?

2890 MR. NOBLE: Thank you, Commissioner. I will begin my comments and then toss it over to Doug Hoover, our expert in programming and scheduling in that area. I have to admit that I do agree with my colleague, Ivan Fecan, when he commented yesterday that there are no safe havens and it is a combination of competitive influences, lead-ins, promotion basis in the style and content of the program.

2891 With those issues I think Global's history has been excellent in trying to find homes and promote and find audiences for its Canadian programs.

2892 We would like to do better. Can we do better? We hope we can. Our philosophy, we think, gives Canadian programmings the best opportunity for viewing.

2893 MR. HOOVER: I certainly concur that there are no safe havens and we struggle every day with the balance between time periods that are highly competitive and other time period where perhaps the viewing levels or, as we refer to them, hot levels may be a little bit less.

2894 There is a bit of a balancing act between determining on whether a program should, say, run on a Saturday night, which is generally less competitive during the majority of the season, but the viewing levels are less, than perhaps running a program on a Thursday night where we have been criticized against a popular American program such as "ER".

2895 There's a couple of things that I think we need to take into consideration in making those decisions. One is that most American programs, particularly American dramas, only run 22 original episodes. That leaves 30 weeks a year where they are in repeats.

2896 During those 30 weeks a year of dramas, they tend not to perform very well from an audience point of view. If you have seen "West Wing" the first time, you will tend not to watch it the second time.

2897 Although there are certainly in every time period competitive, compelling programs to compete against, if we are clever and we choose our spots, we can take advantage of times when those programs perhaps aren't at their best because they are in repeats.

2898 If you look at our schedule today, you will find that we have "Black Fly" running on Tuesday, "Big Sound", "Blue Murder" on Wednesday, "Outer Limits" on Thursday, "Andromeda" on Saturday and "Popstars" on Sunday.

2899 We do have a very wide, broad selection of time periods and days of the week where we are scheduling Canadian programming. Certainly that's a factor that's brought about in part because we are running eight hours a week and it's necessary to fan it out over the schedule.

2900 One of the criticisms that I read was that we tend not to air those programs, those Canadian programs, in the same time period week in and week out. We are appointment television. That is our strategy, yet we tend to move our Canadian programming around was the critique. I don't agree with it.

2901 All programming is pre-empted. There is need to move the schedule. Things, although we would like them to be absolutely consistent week in and week out, that's not the case with all programming.

2902 I went back and I looked at some of our scheduling on a year to date basis. "Andromeda" aired out of 22 occasions, 19 at nine o'clock on Saturday, "Popstars" has run every occasion on Sunday in its seven o'clock time period, "Big Sound" ran three occasions on Monday and ten on Wednesday at 9:30, "Queen of Swords" has run 20 occasions in sequence on Saturday at seven, "PSI Factor" 25 occasions on Saturday at ten o'clock.

2903 "Black Fly" ran four times on Thursday and nine thus far Tuesday at seven. I think it will end up running additional times there. "Blue Murder" had run 12 occasions, 100 per cent of the time Wednesday at ten o'clock and "Outer Limits" Thursday at ten 17 out of 22 telecasts.

2904 I don't think I could run through a list of American programming in our schedule that has had a greater degree of consistency than that. In terms of scheduling, we do look for our spots. We try and place it where it will succeed. I mean we have got a lot of money invested in these programs. It's in our best interest to make them succeed.

2905 I think we have applied a bit of a different strategy than the other broadcasters. CTV tends to, and they mentioned it this morning that they tend to favour event programming, made for television movies, one time events.

2906 CHUM, as you know, is primarily movies. We are drama. We are serious drama but we are also serious comedies. The half hour comedies give us the ability to schedule them in hammocked time periods where they will have an opportunity to succeed.

2907 We have tried to implement a scheduling strategy and an acquisition strategy that will give us the best opportunity to exceed in a very competitive environment.

2908 COMMISSIONER WYLIE: Of course this criticism is often levied as compared to the scheduling that is driven by simulcasting and if Canadian programming had the same advantage, it would do better.

2909 You seem to agree that there is some value in attempting to create audience loyalty by knowing where the program is.

2910 Do you think that it's unfair criticism or the regulator should expect a spread of Canadian programming during a broadcast week or that doesn't matter? In other words, if I looked at your schedule in two years, could I possibly see that there are entire days that don't have -- entire prime times that don't have any Canadian programming.

2911 Does it matter and is it something that you would be prepared to argue we shouldn't be concerned about?

2912 MR. NOBLE: Commissioner, I think in order to meet the different needs of our audience, certainly if it is spread across the week in a fashion that the audience can -- not everyone can watch television at eight o'clock on Tuesday night, 8:30 on Tuesday night and nine o'clock on Tuesday night, but they might be able to watch 8:30 Tuesday night and nine o'clock on Wednesday.

2913 I think it advantages us to attract the audience by spreading it out across the week. In doing so, it gets the benefit of some of the higher rating programs as lead-ins and as promotion.

2914 For example, one of the strategies with -- one of the original strategies with "Blue Murder" was to the previous night promote its program in "NYPD Blue" which was a similar style program. That audience in "NYPD Blue" may transfer quite easily the next night on "Blue Murder".

2915 That was a promotion strategy and scheduling strategy there. I think that we do -- most broadcasters do a good job of spreading the schedule across the week, trying to maximize the opportunity for Canadians to find it.

2916 By the way, if you put something in the schedule, you have to tell your audience about it. One of our goals is to use the rest of our schedule to promote those Canadian programs and drive them through our schedule.

2917 At the same time, we are using our print assets to promote and further viewing to Canadian programs.

2918 COMMISSIONER WYLIE: Yes, and for us, of course, the whole TV policy I think was based on not requiring expenditures as before, but changing that to an expectation or a commitment that there would be an attempt to draw the artistic Canadian programming, not just consider it an additional fee for your licence.

2919 MR. NOBLE: We see that as essential to building our audience.

2920 COMMISSIONER WYLIE: So you would have no problem with the idea that the Commission may expect a spread of priority programming over the week.

2921 MR. NOBLE: I don't know that expectations require that. Certainly in our view there is strong commercial reason to program across in a similar fashion that we do now. I think that the commercial imperative requires us to do that. I don't know that that's completely necessary.

2922 COMMISSIONER WYLIE: I have said it's possibly a regulatory expectation that this is what was intended to work.

2923 On Hamilton, CHCH/CHEK, one of your daily programming is "Inside Entertainment", half hour a day. It is considered by you a priority program so it will fit the definition of that priority program with regard to its requirement that two thirds of the running time, excluding commercials, be promoted to Canadian entertainment.

2924 MR. NOBLE: Yes, that's correct.

2925 Loren, do you want to respond further?

2926 COMMISSIONER WYLIE: I would like to know what that's going to look like and whether as in "Our Canada" description there will be an attempt to use this type of programming to the extent possible to reflect the various regions, considering that there is no regional programming per se, you know, where the category "Regional" is met.

2927 MS MAWHINNEY: Commissioner Wylie, I believe at this point it qualifies as priority under two things. One, it's based in Calgary, so it's a regional program, but we don't code it as regional. I'm just looking to Katherine. We code it as priority because indeed two thirds of the subject matter go to dealing with Canadian entertain properties.

2928 COMMISSIONER WYLIE: I may not have expressed myself properly, but what I mean is no regional programming that has no other category that would qualify it as a priority program. We haven't seen any, but you recall there are certain categories that are not in themselves priority programs but become priority programs if they are regional.

2929 MS MAWHINNEY: Commissioner Wylie, yes, other than that exception that I mentioned earlier about a show that is a combination -- I feel like the player, you know that pitch in the player -- a combination of survivor/the eco challenge. Because in the end the winner wins something large, it would therefore be considered some sort of contest driven show. It would be a priority program --

2930 COMMISSIONER WYLIE: That's regional.

2931 MS MAWHINNEY:  -- because it's set in the regions, indeed.

2932 COMMISSIONER WYLIE: But in the case of "Inside Entertainment", because it's an entertainment program, it fits in that category.

2933 MS MAWHINNEY: Yes.

2934 COMMISSIONER WYLIE: My question was to what extent will it also in the same sense of discussion with "Our Canada" attempt to reflect many parts of Canada with regard to entertainment goings-on?

2935 MS MAWHINNEY: The producer, Christine McLellan, uses stringers from across the country. She has done interviews and pieces on "Big Sound" and "DaVinci's Inquest" in Vancouver, art galleries, book openings in the prairies, "Bullard" and something -- I can't remember the whole list in Toronto as well as she uses stringers in Montreal.

2936 She attempts to get a cross-section of entertainment oriented properties, not just necessarily television. She also does movies from across the country.

2937 COMMISSIONER WYLIE: So it could also be based on a fiddler from Quebec or Nova Scotia.

2938 MS MAWHINNEY: Yes, opening of a theatre, opening of an art gallery, anything like that.

2939 COMMISSIONER WYLIE: Do you expect this program to continue over some time?

2940 MS MAWHINNEY: Yes.

2941 COMMISSIONER WYLIE: As a bit of a branding for the CHCH/CHEK since it will be every day.

2942 MR. NOBLE: Branding for CHCH and CHEK as well as the development of the star system --

2943 COMMISSIONER WYLIE: Yes.

2944 MR. NOBLE:  -- which we see as critical to the system.

2945 COMMISSIONER WYLIE: In the WIC transfer hearing and as part of your plans, you had wellness documentaries that would be produced and nationally telecast. You speak of rounding out your priorities schedule with some documentaries, but we don't hear about the wellness documentaries, I don't think, anywhere in the application.

2946 MS MAWHINNEY: Commissioner Wylie, we --

2947 COMMISSIONER WYLIE: That was going to be Hamilton based, I think.

2948 MS MAWHINNEY: CHCH based, right.

2949 COMMISSIONER WYLIE: And?

2950 MS MAWHINNEY: We are still working on that concept. It has shifted in our minds to a daily show concerned with health using McMaster experts.

2951 MR. NOBLE: Commissioner, if I could. Patrick O'Hara, the General Manager of CH, is the one who carries this project.

2952 Patrick, if you are here and want to respond on the developments there -- are you involved with that? I think Ken is involved as well. I thought probably Patrick you are appropriate, if that's okay, Commissioner.

2953 Patrick O'Hara is the General Manager of our station --

2954 MR. O'HARA: Commissioner Wylie, the intent was to build the documentary series out of Hamilton because of the expertise of the health care system which is in and around the Hamilton region.

2955 We are working in our second year in developing a series. The commitment to spend $1 million will be respected, and I believe -- and I will look to Loren to confirm this -- it is separate from the documentaries that she has referred to earlier.

2956 The $1 million will be dedicated to the series, either a series or documentaries on wellness and health.

2957 Ken Macdonald is also working in collaboration with us, trying to integrate some of the synergies which exist throughout the system.

2958 COMMISSIONER WYLIE: With regard to other Canadian programming, as I recall, the Commission has expressed in the WIC decision some concern or expectation with regard to the relationship between prime and your stations of not overusing, I suppose, programming as between the two.

2959 What are your plans in that regard?

2960 For example, "Bynon" and "Prime Business" with Diedre McMurdy, et cetera. What other programming will be shifted from one to the other?

2961 MR. NOBLE: Doug Hoover...?

2962 COMMISSIONER WYLIE: Am I not correct that there was some expression in the decision?

2963 MR. NOBLE: Yes.

2964 MR. HOOVER: I am just drawing from memory, but I think it was in the order of 10 per cent, or some percentage of that nature.

2965 COMMISSIONER WYLIE: I recall something like that. I was hoping you would not show me as not remember exactly -- but you did.

2966 MR. HOOVER: At this time we have absolutely no plan to produce programming beyond the hour and a half that you have identified. We are still evaluating what will make up that hour and a half for prime.

2967 Our intent is to primarily produce programs for prime through independent producers. As you know, prime has a conditional licence I think of 20 hours a week of original programming, and that requires us to commission a lot of programming, and it is with independent producers that we do that.

2968 There is only the hour and a half that we are currently planning on using through our current systems.

2969 COMMISSIONER WYLIE: These are the programs I just mentioned?

2970 MR. HOOVER: They are the two programs you just mentioned. As I say, they may change in title and nature, but there is no intent to go beyond the hour and a half.

2971 COMMISSIONER WYLIE: They will be written down against the prime TV regulatory spending obligation which still remains on specialty.

2972 MR. HOOVER: I would defer to Katherine.

2973 MS BROWNE: Just to clarify, any time that the programs are used on other stations other than prime, we would charge a market value licence fee across and reduce the cost on prime TV accordingly.

2974 COMMISSIONER WYLIE: In the case of "This Global National News" and the program "This Country", which was part of the WIC commitment, "This Global National News" will now be "The Global National News" originating from Vancouver?

2975 MR. NOBLE: From Vancouver. That is correct, Commissioner Wylie.

2976 COMMISSIONER WYLIE: Am I correct that this was a commitment for five years?

2977 MR. NOBLE: That is correct.

2978 COMMISSIONER WYLIE: Would it go beyond five to the seven if you were given a seven-year licence term?

2979 MR. NOBLE: Our plans would be to continue that program through to the end of the licence term.

2980 COMMISSIONER WYLIE: Would this also be true of "This Country"?

2981 MR. NOBLE: Correct.

2982 COMMISSIONER WYLIE: Unless you have answers to questions I have not asked, that is it.

2983 MR. NOBLE: Thank you, Commissioner.

2984 COMMISSIONER WYLIE: Thank you, Mr. Chairman.

2985 THE CHAIRPERSON: Thank you, Commissioner Wylie.

2986 I just have a few questions I want to go back to on the vertical integration issue and the relationship with independent production.

2987 In your comments today in your presentation this afternoon, Ms Mawhinney, I think you made reference that programming will include programs from independent producers across Canada, such as those we have successfully aired over the past licence term in the prime time schedule". And Ms Bell referred to "Global would not be able to meet its prime time Canadian programming without a vibrant independent production sector".

2988 Recognizing your relationship with Fireworks, I would like to get a better sense from you -- and you probably followed the discussion we had with CTV about your view in terms of independent production as a starting point.

2989 MR. NOBLE: Yes, we do have a position, Chairman, and I will ask Loren Mawhinney to outline our thoughts.

2990 MS MAWHINNEY: Commissioner Colville, as Charlotte said in her remarks, we are very proud of the contribution we have made to the independent production sector, and we are grateful for the successes that they have enabled us to have via some of the programs that they have supplied to us.

2991 It is important to us that we maintain a good relationship with a broad variety of suppliers.

2992 I believe your concern is coming from what influence or degree would Fireworks take during our next upcoming licence.

2993 We plan our schedules as to how many hours of programming we need, what kind of programs we need, and we will continue to buy from a broad variety of suppliers, including Fireworks if they have programs that will suit our purposes at that time.

2994 THE CHAIRPERSON: If we go back to the vision and the second pillar of the vision, which was the content piece, the statement was with respect to the desire to own or have access to.

2995 I think, Mr. Asper, you mentioned the importance of being able to own content.

2996 I think we need a better sense of how much of this we are looking at owning and how much we are prepared to acquire from independent producers.

2997 MR. ASPER: I think there are a few items here. One is just to be clear on what Fireworks is.

2998 Fireworks is primarily a distributor of programming. Where it has to produce to get the program made, it will produce. But even when the company takes on a production like an "Andromeda", for example, it will then hire a producer, an independent producer, to produce that show. Fireworks has acquired the worldwide distribution rights in that case, in partnership with an American company, in that case Tribune.

2999 What happens is Tribune buys the U.S. rights for distribution. Fireworks puts in financing for the worldwide rights, and then collectively, or Fireworks alone sometimes, they hire a producer that is not an employee or related to Fireworks.

3000 Canada accounts for about 4 per cent of Fireworks' revenues on any one project.

3001 The strategy with Fireworks was really (a) a response to the fact that the suppliers of content sometimes are not making it available to us; and (b) in a long term sense the concern, however remote in time but not in likelihood, that American distributors will not sell their programming rights into Canada any more. They might use another distribution vehicle, either getting by satellite or Internet streaming.

3002 But it is also to be able to integrate a Fireworks show into our system of promotion and benefit Fireworks that way.

3003 If there is a program on Fireworks on a Global station, like an "Andromeda", it will benefit from all the promotion vehicles that we have.

3004 In the end, the people at Global choose their own programming.

3005 What Fireworks and other vehicles we may own present is what I call a content store. The programmers can pluck from that store, walk down the aisles and pick this program or that program.

3006 It just doesn't make commercial sense to say to Loren Mawhinney: I know you like "Bob & Margaret", but Nelvana produces it so we are not going to buy it.

3007 There is no -- I think I have referred to this. We will never create island communities in the world of content, whether it is Time Warner or CanWest in a much smaller sense, or NewsCorp.

3008 The best ideas come from basements in college dorms in Talahassee, Florida, or Brock University in Ontario. Or they come from Ron James out in the Maritimes. The corporate philosophy is you pick what is best for your stations, your network, and if we can supply it, great. That helps us. But it doesn't make or break Fireworks.

3009 THE CHAIRPERSON: I am interested in that philosophy, and perhaps we can pursue that.

3010 When we discussed at the start of the afternoon about your philosophy on the first point about advertising and exhibition media, you stressed how important it was for you to own the billboards, for example.

3011 I take your point in the case of Fireworks as largely being a distributor, but I don't expect that CanWest is going to stand fast with its existing holdings. It may well look at acquiring other assets farther down the road that may be in the production business.

3012 What is this philosophy, then? Is there a defined philosophy or policy within Global in terms of trying to take your point about the creativity that may come from basements in Talahassee or Truro. What is the policy?

3013 MR. ASPER: I guess it is trying to find a balance between allowing the station operators, the network operators, to program their stations the way they feel necessary to meet the demands or tastes of the audience, but also being able to benefit to some extent from the expenditures those stations are making on programming.

3014 Also, I really can't stress enough the fear we feel about lack of access to content, and the other owners of content, the other suppliers of dramatic programming, particularly dramatic and comedy programming, not making it available to unaffiliated companies of theirs.

3015 The policy is really one of flexibility in terms of the station operators. But on the other hand, where we own the content and have the content, it benefits us obviously to buy from a Fireworks rather than another producer.

3016 THE CHAIRPERSON: Given that, would you be prepared to accept some sort of a guarantee for independent producers, a condition with respect to the acquisition of independent -- and we could discuss what is defined as independent. And we have done that, as you are no doubt aware, with respect to CTV, with a certain amount of priority programming from independent producers.

3017 MR. ASPER: Yes, we would. But we would want to discuss the quantum and the level. We are not sure what you would be proposing in that.

3018 In principle, because that is the way we intend to operate as a matter of course, we would.

3019 THE CHAIRPERSON: What would you consider acceptable?

--- Pause / Pause

3020 MR. ASPER: We are just discussing definitions here.

3021 I think we would be comfortable with 50 per cent of drama as a starting point, as a point of reference.

3022 THE CHAIRPERSON: Why would you just focus on drama as opposed to the priority programming? What if we said, for example, 75 per cent of priority programming?

3023 MR. ASPER: I think I will turn it over to Gerry Noble because as the operator --

3024 THE CHAIRPERSON: Sure. I didn't mean for just you --

3025 MR. ASPER: It's just that from a corporate perspective, obviously, I would be saying to you we don't feel there should be these limits because it will happen naturally, but I think from an operator's perspective I think Gerry would have some comment on this.

3026 MR. NOBLE: If I could understand, Chairman Colville, when you say 75 per cent of priority are you saying that 75 per cent of priority would be accessed from the independent production community?

3027 THE CHAIRPERSON: We can define what unaffiliated would be. As you know, we have dealt with in several previous decisions it would be where you would have less than a 30 per cent interest, 30 per cent or less interest in the company.

3028 MR. NOBLE: Seventy-five per cent is a fairly big number. I guess if you add up all the priority hours that we have to produce with the two networks, the two systems, there will be a lot of hours that we are going out to the market to get and maybe 75 per cent is a number we could live with.

3029 I would have to sit down alone and work out the number of hours. What we were prepared to offer is 50 per cent of the drama hours. I want to sit down and work out in terms of our priority schedule how many of those going forward for the next seven years do we see at this stage. Of course, the mix may change, how many would fall in the drama, comedy and other category.

3030 THE CHAIRPERSON: If you would want to think about that and come back later, either before the end of this questioning or at the rebuttal stage that's fine, we could do that.

3031 MR. NOBLE: Yes. Thank you.

3032 THE CHAIRPERSON: What you might then consider is whether or not the definition of independent or affiliated company is appropriate in your view.

3033 The third point would be whether we should have some level for non-peak programming as well which could be considered to be in some because perhaps lower budget programming might be considered developmental in the case of some producers.

3034 MR. NOBLE: You mean non-news, non-local station off tape programming?

3035 THE CHAIRPERSON: It would be Canadian programming from independent producers off peak.

3036 Well, with that then that completes my questioning on this. We will wait to see what you come back with.

3037 I will then turn the questioning over to Commissioner Grauer.

3038 COMMISSIONER GRAUER: What I might do because to a certain extent the focus of my questioning has changed given the evolution between Commissioner Wylie to Commissioner Colville, and what I would like to do is start with the issue that you were just discussing with respect to Fireworks and sourcing your programming. The area that I am questioning is the whole area of regional reflection and the involvement of producers across the country in supplying programming to Global.

3039 I had my little speech, you heard it a year ago. I might refresh a little later today in terms of what that was, but essentially the Broadcasting Act is very clear about the Canadian broadcasting system and the need to consider regional concerns and then programming that originates from across the country, local, national and international sources.

3040 So is the TV policy and it talked about this area of regional programming which Commissioner Wylie talked about to a certain extent, in two respects. First, the category we established to really incent some production in a broader category in areas of the country that didn't have developed production centres.

3041 But the other, which is the other aspect of this which is what is spoken to in fact in the Broadcasting Act, is the extent to which all Canadians benefit from the Canadian broadcasting system. I think as one of the intervenors said, all Canadians from coast-to-coast have a right to expect a return in cultural and economic terms from their investment in this system.

3042 So when, if I can start with Fireworks, you talk about the fact that all of your suppliers, I think you put it, have their own channels and this is a problem for you, that is only a problem with the large producers based in Ontario. It's not the case with smaller producers across the country.

3043 When you talk about Fireworks not really being a problem because it is just a distribution company, no matter where it might go and hire a producer, what you are talking about as far as retaining the rights of programming and essentially having a service producer, which as you know has been long an irritant certainly in western Canada about the fact that there is a large production centre in Vancouver, but it largely does service production because of the challenges that the producers there face in trying to get broadcasting licences and the ability to grow an indigenous industry and be able to exploit the rights themselves.

3044 So that is in fact central to the decision about vertical integration and the ability to have a really meaningful reflection across the country from people there and for people to benefit from the investment in the system which, as you know, it is built on public property. Canadians through the tax system, through the cable subscription revenues in a lot of ways support that. Those people live all across the country, so that's why this is so important.

3045 It hasn't been a huge issue in Ontario, but it is, as you know, a huge issue certainly in the west. So that's my speech about asking a question, but that was one -- it sort of underpins this entire discussion of the ability of producers from across the country to really engage in the Canadian broadcasting system, particularly with private conventional broadcasters.

3046 MR. ASPER: Can I just make a couple of comments with respect to Fireworks, then I will turn it back to Gerry and Loren. Global and Fireworks being under the same corporate umbrella has not cost I think one hour of Canadian production, has not been at the expense of one hour of Canadian production to the existing production community because it's a question of if Andromeda was not purchased by Global CITY would have purchased it.

3047 So Fireworks is going to produce what it produces and it will be bought by somebody in Canada. So producing for Global does not mean that we don't commission another show from a Canadian producer because it now leaves a hole on CITY and CITY will commission from that producer. So there is no negative sum game because we own Fireworks and Fireworks supplies Global.

3048 My understanding, and I really defer to Loren on this, but in my personal conversations with producers, independent producers, not the big Ontario ones or if it is an Ontario one, a person who is more like a sole practitioner as opposed to an Nelvana or somebody, they say they would rather have strong distribution companies who can help get their show off the ground, rather than have to try to produce it on their own and scrape together the budget. As we all know, the broadcaster budget isn't enough to make it happen.

3049 I am a bit removed from this field, but my sense is that strong distributors are a boon for the producers.

3050 Gerry or Loren, do you want to add to that?

3051 MR. NOBLE: If I could and then I would ask Loren to take the microphone.

3052 Commissioner Grauer, it is our view certainly over the next few years an explosion in the demand for production talent, producing talent across the country with the creation of 50 new digital channels. We are looking at ways of filling our content on that and we are talking to several producers for that.

3053 I think there is going to be a big demand for producers across the country. I am sensitive to the thoughts you have expressed. Certainly as a national broadcaster it behooves us to ensure that the productions that we do commission across the country come from the various regions and the producers out west do get a fair shake at getting some of that business.

3054 I think I can say this confidently, we have been successful at doing that in the past. I will ask Loren to comment further on what our plans are and also on some of the development activity that is in the process at the moment.

3055 MS MAWHINNEY: Commissioner Grauer, since our happy conversation last year in Alberta --

3056 COMMISSIONER GRAUER: In Vancouver.

3057 MS MAWHINNEY: In Vancouver. We spent some time thinking about what would give you comfort. Not you specifically, but you as a body. That's one of the reasons that we came up with "Our Canada". We thought that would impose a certain discipline on all of our members of our team in looking for a product from across the region.

3058 I also want to draw your attention to a couple of the intervenors who I was grateful acknowledge the work that we have done in seeking out projects from a variety of sources from small to large companies. We are proud that we have accomplished that.

3059 At one point I want to take some issue with you in terms of B.C. producers being disadvantaged or not disadvantaged because I think that we have added to the situation via our CWIP fund, that it's a lot easier to get programs financed in the west than it is in the east, frankly, but that's another subject.

3060 The other thing that you should take comfort from is in our plans for CH. While we don't do a lot of MOWs in Global, we are really focused on series. We do have room in the schedule for CH. CH and the independents are going to be skewed to a slightly older demographic. We are intending to do more specials and more MOWs. So in that way in my planning process we have been able to identify smaller producers from the prairies that would be able to supply us with an MOW that would not probably be able to achieve the financing necessary for a series in terms of their own financial wherewithal.

3061 So I want to assure you that it is important for us to have a regional reflection and that there is always a balance because the other thing I always have to keep in mind is that it's a meritocracy of the most extreme sort. We are up against "West Wing". As I have mentioned before, the pilot for "West Wing" cost more than the entire season's budget for the last season of "Traders" and it wasn't even a full hour pilot.

3062 So the discrepancy in the amount of funding is insane. To try and capture an audience to a fully realized dramatic program or comedy program is very, very challenging.

3063 So we are always looking for the best of the best, notwithstanding that we own Fireworks. We are looking for regional reflection. We think we have demonstrated an ability and a willingness to do that via our plans that we filed with you. In our planning process for CH in particular we are looking for other things being on the series that we have got on air.

3064 Frankly, the on air schedule of CH isn't our schedule yet. We don't take full possession until this September.

3065 COMMISSIONER GRAUER: Thank you for that. I do want to talk about that and I do want to acknowledge the steps that you have taken with respect to "Our Canada" and I know with some other initiatives and I want to talk about it.

3066 The first thing, Mr. Asper, you talked about the importance of strong distributors to a lot of these producers and how important it is to get that international distribution. You are right, as far as I understand it it is a very important issue, but what is troubling to them is having to trade away their rights in order to get that distribution. That has never been a problem as I understand it. The whole issue is being able to retain some ownership of the rights with respect to the distribution.

3067 Now, I am not an expert in distribution, but that's the way it has been presented to me with respect to distributors.

3068 MR. ASPER: I guess I would just respond by saying that are -- most Canadian producers again from what they tell me, they are not interested necessarily in setting up large distribution operations to sell their wares and their product and the programming around the world.

3069 They would rather focus on the quality of the product as we like, as the broadcaster we like them to do. They find it easier. If they don't sell them to us or Alliance Atlantis or the Nelvanas of the world, they will go sell them to Polygram and they will sell them to Carleton Television or Warner Brothers.

3070 They are going to deal off in most cases those distribution rights as I understand it. I'm not an expert, but they prefer to stay as smaller businesses who focus on the product they create rather than becoming distribution companies.

3071 MS MAWHINNEY: Can I just add one more thing?

3072 COMMISSIONER GRAUER: Sure.

3073 MS MAWHINNEY: I take responsibility for this, probably getting down a distribution trail is not where we want to be going with respect to this renewal, but certainly --

3074 COMMISSIONER GRAUER: Well, we are on it now.

3075 MS MAWHINNEY: Yes.

3076 COMMISSIONER GRAUER: Yes, we are and you can have the last word. How is that?

3077 MS MAWHINNEY: And it's salient at this point because there is a number of projects that are in with Telefilm and with the EIP right now that don't have distributors.

3078 As you know, Mr. McMillan sent out a letter saying that broadcaster affiliate distributors should be allowed to have access to and distribute EIP product. It's something we feel strongly about because, you know, we are not asking and certainly Fireworks has no interest in having direct access as a production company to Telefilm funding, but it's very odd that they are precluded from distributing a program that would air on YTV.

3079 I mean that doesn't make any sense. Not that this has anything to do with your jurisdiction. It's a Telefilm issue.

3080 COMMISSIONER GRAUER: Just to let you know, I did know that.

3081 MS MAWHINNEY: But I did want to say that there are small producers that would love to get a letter from Fireworks.

3082 COMMISSIONER GRAUER: Back to my script. One of the areas that's of interest, as you know, is the whole area of development spending. I know that -- I actually had a big chart which I think I left in the other room which had detailed the various stations where your development expenditures were allocated.

3083 What I wanted to get a sense of from you is what is the rationale for that and how did you make those allocations and to what extent does the station manager or your development offices have authority to spend that money?

3084 MS MAWHINNEY: Well, first of all, it's a very generous amount of money, so I think there is room for the local GMs -- I jumped in Gerry, I hope that's okay.

3085 MR. NOBLE: Fine. Give us the total though.

3086 MS MAWHINNEY: Okay. It's $1.6 million. There is in my view more than enough to cover the local programs that we are talking about in "Our Canada". For instance, in CKVU we had just under $70,000 in development. That was an obligation per that station. We had a greater amount in total.

3087 Janice Talbot used almost the entire amount for her local specials and then I had a floating number if you will that we put in extra money for something like "Big Sound" or a "Madison", et cetera, et cetera.

3088 We are increased from -- Global had a national amount that we had to achieve that was a million a year. Because of our new acquisitions in WIC, we are now up to 1.6. What I did was keep the larger markets flat, in other CH and Global are the same at 450 and 200 respectively and we doubled some of the smaller markets where I felt there wasn't enough in there.

3089 For instance, Saskatoon went from -- I believe it was 21 to 50. Alberta remains the same because we didn't have Alberta. It's the WIC commitment of 210. Manitoba we doubled to 250 and Quebec we doubled to 50. In the maritimes we did not have a local obligation, so we instituted one or we proposed one of 25,000 and then as the over-arching amount to get to the 1.6, we have got $315,00 that can be ascribed as on an as-needed basis.

3090 In other words, when we go for a "Traders" or we go for a "Bob & Margaret" or we go for a "Big Sound", there is an awful lot of development expenditures that are attributed to that one show. It could be up to a hundred thousand dollars in order to get those scripts ready.

3091 I don't want to take away from one area. I wanted to have a generous amount that I could put to national programs that came from a particular region.

3092 COMMISSIONER GRAUER: Okay. So --

3093 MS MAWHINNEY: And these should be filed with you.

3094 COMMISSIONER GRAUER: I will tell you what I have got. I may be missing something. As I went through the projections for each station and picked out the amount, I didn't see an overall amount anywhere. I might have missed it because those numbers don't seem to correspond with what you have given me.

3095 MS BELL: It was filed with the response to interventions. I will just find the page reference. Do we have a -- no, I don't think so. I asked about this.

3096 MR. BROWNE: And I think Commissioner Grauer -- Katherine, could you just confirm where this $1.6 million sits.

3097 MS MAWHINNEY: Yes. The addendum to the application which has the entire group financials, if you look at the response to question 3.3, which is the list of expenditures over the group licensing term by category, there is a line "Script and Concepts", you will see it all totalled up there.

3098 The breakout that Loren has just been speaking of is -- the chart was included in the response to interventions. On page 13.

3099 Commissioner Grauer, the philosophy behind it was in order to assure that (a) the local stations had money enough to cover their own local needs and we had enough money to develop strong national programs.

3100 COMMISSIONER GRAUER: So when I look at this, and I'm sure it reflects what you said. It's just packaged differently because the figures 1.645, which I take it is the year one, there is $100,000 for Vancouver, $72,000 for CHEK, $300,000 for three of the four Alberta stations. I have Red Deer being a CBC affiliate which isn't in and Kelowna not as a CBC affiliate. Is this not --

3101 MR. BROWNE: Can I just clarify? What we did with our response to intervention was recategorize some of the spending that was originally proposed in the application. You are probably looking at old data, so to speak.

3102 COMMISSIONER GRAUER: No, it's okay. Perhaps rather than talk specifically, we can talk about maybe the role of the national office, your shop, the western development office, the two of them, and how they operate and what are their mandates vis-à-vis the mandate of local station managers with respect to identifying projects in markets, you know, big budget drama as opposed to other smaller projects.

3103 I was truly trying to fit in. It seemed as though the "Our Canada" documentary development funds were coming from individual station managers by Judson and I wondered how that fit in the overall picture.

3104 MS MAWHINNEY: We are proposing an annual amount of 1.6. Portions of that total are attributed to individual stations. The amounts came from existing obligations so that people weren't reduced or they were in other cases increased.

3105 This is new for us. The "Our Canada" series is new. It's going to be new for Barry to have development dollars. We are working it out. They are in the maritimes too. We are working it out. It's in progress.

3106 He will use the dollars that -- you know, as much as he needs in order to do those "Our Canada" specials. The reason that we have a floating total at the bottom there, Commissioner Grauer, of 315 is so that in the event there is a big MOW or a big series coming from his region, he is not stuck with just the 50.

3107 I want to be clear. It's our office and it's our team in Toronto that collects the data so that we know how to report it and how to allocate it.

3108 COMMISSIONER GRAUER: Maybe I can go at this another way as well. You talked about a meritocracy in terms of your program selections and what you decide to licence and what you decide to go with.

3109 In my discussion yesterday with CTV, there seems to be a general agreement the development money is the R&D of television. There's a wealth of talent across this country. I don't think anybody doubts that. There are wonderful talented people who have been able to develop careers in music, in writing, in all sorts of different creative arts.

3110 The development money is key to developing that. If you are going to have a meritocracy, you have to be investing in the various markets for which you want to find the talent. Do you understand what I'm saying?

3111 How are you guided with respect to the expenditures of the money? In this way I am thinking particularly of the big budget dramas, you know, the national programming you are developing. How do you and your development offices -- what funds do you have available, what's the mandate, how do you make your choices with respect to how to spend the whole pot?

3112 MS MAWHINNEY: There are standards in terms of, you know, there's a WGC rate in terms of scripts. If we are developing a series, we tend to ask for at least three scripts and a bible. If we are very interested in a series, we will ask for six scripts and a bible, so that dictates how much money we are going to be spending on that particular project which may or may not go into production.

3113 We had a long development process with, for instance, John Brenton for a series called "Hockey Boys" where I think we invested $75,000 with wonderful writers. Pierre Mitchell who came from "Traders" is now working on "Cold Squad" and we ended up not utilizing it.

3114 There are standards. Like it's not just out of the air. This is what it is going to cost and here's how much the producer is going to take. If you are asking what the magic is about choosing which projects, its' a combination of is it going to fit with the matrix that we have already got on our air? Are we looking for more comedy as opposed to drama? Who are the producers and what are their track records?

3115 COMMISSIONER GRAUER: I guess really what I was talking about was you have nurtured and developed producers in the past. They have come mostly from your drama been in Ontario. It's mostly where you have been, it's where you have had the big budget.

3116 Let's be honest about it, there has been some in the maritimes where you have had a commitment as part of a benefits. No?

3117 MS MAWHINNEY: "Black Fight" did not come out of a benefit.

3118 COMMISSIONER GRAUER: It did not come out of a benefit.

3119 MS MAWHINNEY: I just want to say that.

3120 COMMISSIONER GRAUER: Okay. But these are relatively new for you and you have said this is relatively new. So you understand the importance or nurturing talent and developing it and developing programs.

3121 What is the mandate for your western offices, your western managers, your western development people? To what extent do you work with them to do that? How are you doing that R&D?

3122 MS MAWHINNEY: We talk -- Barbara Peterson, who is here now and who will be appearing on our panel tomorrow or whenever we are doing our local, you could talk to her directly, but we talk or e-mail every single day to either the other two creative executives to get feedback on producers or where the script is at or what have you or with our business affairs department.

3123 We have a more formalized meeting monthly where everybody goes down the projects that they are in charge of and talks about the process or the developments on those particular projects.

3124 Barbara has been with us almost a year. The projects that -- she is totally in charge of our B.C. film initiative, the first producers, the initiatives coming out of B.C., in addition to the other four docs that are coming out B.C.

3125 She also is going to be working with the local GMs in the prairies. I'm reading Leonard's note very subtly here.

--- Laughter / Rires

3126 MR. ASPER: Commissioner Grauer, is what you are trying to get at how we choose this programming and how we source it, when you prefer R&D? Is that what you are getting at? How does Barbara in Vancouver find the next project?

3127 COMMISSIONER GRAUER: I think what I'm really trying to do is corporately, you know, how is your commitment to really developing all this across the country manifested? What are your goals internally that say, you know, "Yes, it's a meritocracy, but, yes, we are going to have to nurture and develop some of this talent, you know, so that we do end up with the kind of quality programming you're talking about on your screens that show all parts of the country and that all Canadians can see themselves?"

3128 MS MAWHINNEY: So, first of all, it's the amount. I mean, I think the 1.6 is very generous. It's more than, I think, our colleagues at another network have.

3129 And the other things is it's in our best interest to continue to seek fresh product from a variety of sources. Okay? Big Sound is a great example. Peace Arch had never done an indigenous program before. The idea came to us from the lovely and talented Sam Feldman. And we said, "You have to get a producer" and then we said, "You have to get somebody that's actually done comedy," and we gave them an order of 22 episodes, which was huge, considering they were fairly new to us.

3130 In the case of "Blackfly", we had met Charles Bishop, out of our Mitv half-hour dramas, when he was a smaller shop. He was then bought by Salter Street and became their head of production, and subsequently brought his high school buddy, Ron James, to us.

3131 So both those are sort of non-traditional entry points, and it was important to us that we embrace these new opportunities. So the production world is changing. People are buying each other and we just try and stay on top of fresh talent and be aware of fresh talent.

3132 COMMISSIONER GRAUER: I guess the only thing I would add, that it may be that you have more development money -- and I congratulate you on the amount of development money. You also have 16 hours of priority programming a week to deal with, and so it's going to require all your best work.

3133 MR. NOBLE: And that's why we increased it.

3134 COMMISSIONER GRAUER: Okay, I think that's it. Thank you.

3135 THE CHAIRMAN: Okay, I will turn now to Commissioner Pennefather.

3136 COMMISSIONER PENNEFATHER: Thank you, Mr. Chairman.

3137 We are going to talk about local reflection and your approach. Of course, the context is the TV policy, and in that TV policy we discussed both local news and local non-news programming. And as you will know from our discussion yesterday, our goal here, at this stage, is to get a better understanding from you your corporate strategy regarding local programming in both news and non-news.

3138 In preparing, we have looked at the supplementary brief, including Appendix 5, which describes in some detail the accomplishments of the local stations across the country to date, and the Schedules 10, in terms of specifically news commitments and what was accomplished. And, again, I will just note that we will be, obviously, reviewing these and other specific points with the individual stations, but the objective now is to get to look at your broad corporate strategy and where it fits in the balance of your choices and your programming choices you have to make.

3139 But as we look through the various station applications, one might say your approach to local programming is quite varied across the country, and I think it's important that we understand why. First of all, the general question.

3140 Does Global have a corporate strategy regarding the provision of local programming?

3141 MR. NOBLE: Yes, indeed, it does, Commissioner. And it's essentially in two areas: one is news and the other is non-news. And I agree with you, it does vary across the stations across the country, and there's some historical reasons for that.

3142 But in the news area, we want to be the best. We want to do the best that we can in investigative journalism and in covering news events in that community. And this is in a regularly scheduled newscast.

3143 In addition, we want to be able to do -- and we give the general managers the flexibility -- to do news specials, as they are necessary and as they occur.

3144 In the area of non-news, we have some local reflection programs in the maritimes and in Alberta and in British Columbia. "Maritimes Today" is one example. In Alberta we have a morning program which I guess it's quoted as news. I heard the exchange yesterday with CTV and I will say that in a lot of our programming, in morning-style programming -- some people would call it traditional newscast -- in that program are a lot of the elements of community reflection that do occur in those areas, in those markets, where we do have morning programs.

3145 Most of our stations cover city-watch vignettes, which are small vignettes, updates, about what's happening in the city, some arts and entertainment style stuff. Also in those local markets, we are adding the Our Canada Series, which we have discussed previously. I don't need to go over that again.

3146 I guess the overall philosophy is, number one, be the best in news, do the best you can in news; and number two, look for other programming opportunities that reflect your community. And these are, primarily, not regularly scheduled programs, but they are more or less specials, special events, bonspiels, telethons, natural events, things that require coverage, for example, the Winnipeg flood, which was a huge event -- and here's another example of how a local station benefits from the national group.

3147 During the floods in Winnipeg, CKND expanded its news by half-an-hour at night, and also expanded its nightly newscast, and put throughout the evening broadcast updates on the flood. This was a huge event for Winnipegers. They didn't have the resources to do that. So what Global did was it sent reporters from around the system, it sent equipment, mobile broadcast units from all around Canada, to Winnipeg to enable Winnipeg to do that. That's just one example of where the local stations really benefits directly in its local scheduling from being a member of the larger group. There are other examples. That's the one I remember because I happened to be in Winnipeg at the time.

3148 The general managers have carte blanche -- I will call it that. They have the ability, with some debate, if it's required, to produce and broadcast a program outside of what you would call the normal local schedule period into prime time. It has happened on occasion, especially in Saskatchewan, I'm thinking with bonspiel events.

3149 The GMs are also encouraged to be involved in the community, as are all the on-air people. Most of our on-air people in the local markets are heavily involved with local charities and a lot of our general managers sit on local hospital boards, things of that nature, so that this involvement in the community with our staff and with our executives helps the station become more of a relevant and local flavour in the market. But our primary focus is in the news and information area in those local markets.

3150 COMMISSIONER PENNEFATHER: Thank you for that description. And, as I said yesterday, I don't in any way want to undermine or put aside the important role in the community that a number of the stations and their personnel will play, but the focus that I'm after right now is actually what's on the air. And you are clear on the news component.

3151 If I can refer you to your supplementary brief, on page 52, where in fact you are discussing this whole area, you do say:

"Whether through news, public affairs, local talk shows, sports, documentaries or specials, each of our stations will continue to act as an integral part of the community." (As read)

And I heard news sports specials.

3152 Do you have examples of the documentaries or talk shows and where they would fit in the schedule? As you just said, I think if the local station manager wants to produce such shows, there will be room in the schedules. Generally speaking -- and I have a couple of examples after where we could look at this -- where are these documentaries made? What kind are they? Are there talk shows that are developed in the local stations for local audience consumption?

3153 MR. NOBLE: It's market specific, Commissioner, but there are talk shows in some of our stations. As well, as I believe, there's documentaries. But I think the comment was referring to the Art Canada Series.

3154 Ken?

3155 MR. MacDONALD: Commissioner Pennefather, on the issue of talk shows, we do have some talk shows. "Maritimes Today" has an interactive talk component to it, which is shown on Global Atlantic. CH, in Hamilton, has a daily talk show, which just has been launched, five days a week, Monday to Friday, called "Your Say". A similar talk show will be launched at CHEK-TV in the fall.

3156 And while we are on that issue of local reflection and local programming and talking about CH and CHEK, we are at a very interesting point right now. We have doubled in size. In some respects the news organizations we have been busy integrating over the last few months have had different approaches to news and local programming. Albeit there was a uniformity of commitment to the local markets that are served by all of the stations and the regions, but you may recall back at the work hearing we talked about an opportunity to experiment a little bit with local programming and local non-news programming. And as part of that experiment we talked about launching new non-news local programming on CH and CHEK, and in the very ambitious local projects that we have undertaken in those markets.

3157 And part of the reason for that is that we will see how some of these shows go. It's not just talk shows. In Hamilton we are doing a local talk show, we are doing a local public affairs show, we are doing a local arts and regional arts and entertainment program, and we are interested in seeing how these programs develop, as we fit all of these stations together and move ahead with a true national plan on news, now that we have a true national network.

3158 COMMISSIONER PENNEFATHER: I would like to get back to your point specifically. If I may, I would like to go through your plan on a step-by-step basis because, in fact, you are right, there are varied approaches here that are historical, I think as you said, Mr. Noble, in the sense that we have the original stations of the group, we have the WIC-acquired stations, and, in particular, in that group is the CHEK and CH approach.

3159 But just before we get there, staying again with the general sense of how you develop your local programming strategies as a whole, what is your understanding of the way that you assure that the levels of local programming, and the nature of that programming, really meet the needs of the communities to be served? Is there a group approach to this or is it left to the individual stations? Do they or you do surveys? Do you carry on public discussion to really get a sense of what's going to work for the local communities? And is this a corporate strategy?

3160 MR. NOBLE: The primary indicator of our success in the local area is really with the ratings we have and the feedback we get on the call sheets. But the general managers do participate in what's referred to as a committee of management meeting twice a year where they do discuss the local plans with our programming department: Doug Hoover, Loren Mawhinney and Ken MacDonald and myself. I haven't been involved in one of those yet -- well, actually, I was, but I was just an observer. And at those meeting the general managers do discuss issues that are happening in their market and they share views and ideas with the other general managers from across the country. And they discuss concepts on local programming issues and local concept issues.

3161 But it will be my instruction, our instruction, what I would like to see in the markets where it is economically possible and we are doing it in some markets now and Leonard referred to it earlier, sort of a cradle to grave type of programming, where you have a news and information stream and then you have sort of an information community stream, which is not hard news. It's sort of soft newsy talk type stuff.

3162 I would like to see that morning, noon, early evening and late night. You won't see that in your presentations today on every station because it is not something that I developed fully. It is something I want to discuss with the management team because I think that is where our real connection with the community is, but again there is economics involved with this and that is going to be something that we have to deal with at the local level.

3163 But I guess from a corporate policy point of view we see our main goal in these markets as the news and information. That's our main connection with the community. Then the other special programming streams, and some of them have regularly scheduled weekly shows, as Ken has mentioned, but continue to look for ideas that programs that can be produced and perhaps even supported by the local community groups that reflect the community.

3164 COMMISSIONER PENNEFATHER: Just staying then on your description of news per se and your hopes for it, are we to understand that if we looked at a schedule, the fall 2001 of the schedules that we have and we all recognize that there is some change there. But, generally speaking, you described three blocks of news.

3165 MR. NOBLE: Sorry, three blocks of local programs. Some of it would be news.

3166 COMMISSIONER PENNEFATHER: Yes, I am coming to that. The blocks which would say local programming would be normally indicated here as Global News, Local News, on most of these schedules. And within that hour one would assume, and I think we discussed this yesterday, that you would have news, national news, international news and some local news with perhaps an element that is a particular story coming from the local market.

3167 So proportionately, if you are depending on news as your main vehicle to be connected to the community and the community sees that on television on their screen in these blocks you are talking about, which we will call news, how much of that is actually local? How much really reflects the local community on an average basis?

3168 MR. MacDONALD: I would say in most of our local supper hour newscasts, most but not all, but probably 80 per cent, anywhere from 75 per cent to 90 per cent of the content is deep, deep local, strictly local.

3169 May I also add when there is national content used in these local shows, again most but not all, frequently what may happen is if there is an earthquake in Japan there will be a short piece of tape of the earthquake in Japan, but the story that follows that short piece of tape will be a local story on relief efforts in the community and talking to the cultural communities and so on.

3170 So there is national and international news in these local supper hour newscasts, but primarily it is a locally skewed newscast and it contains more than bad news stories locally as well. It could be coverage of a charity. It could be all kinds of things, a cultural festival. In the case of the morning news programs it could be a long interview or a feature interview with someone in the community. So it's all kinds of things.

3171 We have codes for all of these. I understand why we have to have them, but as a news person people don't sit down and say "honey, I think this is local reflection not news now, so I am going to turn away". It's hard to describe to talk about news. News is stuff you have to know and sometimes a national story may be of great importance to you personally in your market and that has to be there in some way, shape or form in your local newscast, again hopefully with a local spin to it. I think that's the goal and that's driven by the needs of the market as well.

3172 COMMISSIONER PENNEFATHER: That's very interesting and speaking of being driven by the needs of the market then, it sounds like you are putting the onus for reflecting the community on this news package, at least I will call it a news package for the moment.

3173 You have really, I understand, taken the choice that the news component will carry that responsibility, but you have not, and generally speaking, although we can find some examples here and there and let's leave CH and CHEK out of this for just one moment. There is very little non-use, do you have made a choice that the non-use kind of program is not of interest to the community, is not market driven. We don't see it. In fact, we are seeing reductions throughout the system, other than CH and CHEK and we will get to that in a second.

3174 How did you decide on this balance of news and non-news and why have you decided that the documentaries listed in your brief, which again you mentioned when you are discussing cultural diversity of the importance of non-use type programming to perhaps reflect the community and more details and not within the news package? Why have these non-news programs not stayed on your schedules?

3175 MR. NOBLE: I'm sorry, I am a bit confused here. I don't think we have reduced our non-news programs in the schedules that I am told we submitted.

3176 COMMISSIONER PENNEFATHER: Well, we will get to that. There may be some examples I could ask you as a question again in the more specific instances, but generally speaking I think you are saying that the news package is what you feel reflects the community, with less emphasis on separate shows that may be documentaries or --

3177 MS BELL: Commissioner Pennefather, can I just clarify that for you. When we filed our renewals we filed the same hours -- let's take the WIC stations for a moment, the same hours that were in the decision and that includes news and non-news, so that is what we filed for all of those stations.

3178 Then for the existing Global stations at the time we refiled the same commitments. Now, albeit for some of them you are right they only have news commitments and they were doing other types of programming outside of that that may not be reflected in those numbers, but we did not reduce any of the numbers of hours for any of the stations.

3179 COMMISSIONER PENNEFATHER: Let's go through that in detail then because we may not be understanding you on that. Starting with then the Decision 2000-221 in which the Commission approved, among other things, Global's acquisition of a number formerly WIC owned conventional TV stations, the Commission set out some specific local programming expectations at paragraph 43. I think that is what you are referring to, which indeed covered both local news and non-news programming.

3180 In the material that you filed I have two questions on this point. There seems to be a discrepancy in two cases between what is required in paragraph 43 and what you have submitted. I am looking at particularly the chart on page 54 regarding CHAN-TV.

3181 MS BELL: That's in the supplementary?

3182 COMMISSIONER PENNEFATHER: In the supplementary brief it's the charts which you have provided between pages 54 and 58 which are very helpful in summarizing what you think are the commitments for each, what you say are the commitments for each station.

3183 CHAN in paragraph 43 of Decision 2000-221 calls for 42.5 hours of local news, whereas the chart indicates 40 hours. Is there a reason for that discrepancy?

3184 MS BELL: That's the national newscast that wasn't reflected there.

3185 COMMISSIONER PENNEFATHER: So can you correct that with us because indeed we are talking about the conditions in Decision 2000-221. So we assumed they would be the same, but they didn't add up.

3186 Similarly, for the Calgary station there were to be nine hours of local news and the chart on page 55 indicates 8.5 hours according to our calculators. Is that something also you could clarify?

3187 MS BELL: We will check that for you, yes.

3188 COMMISSIONER PENNEFATHER: Then, looking at your comments to date here in our discussion and 2000-221, do you have any comment on the possibility of the conditions of licence laid out in paragraph 43 of 2000-221 becoming conditions of licence for the respective stations concerned?

3189 MS BELL: Are you referring to CH and CHEK or are you --

3190 COMMISSIONER PENNEFATHER: No, I am not for the moment. I will get to them in a moment. I am referring to paragraph 43.

3191 MS BELL: Which lists all of the other stations.

3192 COMMISSIONER PENNEFATHER: CHAN, CHBC, CICT, CISA, CITV and CKRD.

3193 MS BELL: They were not listed as conditions of licence in that Decision, Commissioner Pennefather.

3194 COMMISSIONER PENNEFATHER: Expects, expectations.

3195 MS BELL: They were commitments.

3196 COMMISSIONER PENNEFATHER: Yes. So what is your comment on those commitments coming forward in this Decision as conditions of licence for each of the individual stations concerned?

3197 MR. NOBLE: We were expecting, Commissioner, that they would be continuous commitments in those stations, rather than as a condition of licence.

3198 COMMISSIONER PENNEFATHER: I am just asking for your comment on that. If you would like to get back to us on that that's fine. Maybe legal will have a comment on it further, but you can understand that since 2000-221 and we also just discussed it took time to actually lay out those expectations and those commitments and those commitments came forward from the existing commitments in certain cases of those stations.

3199 We were looking at trying to understand your game plan. And as a result it would be interesting as to how far you will take that commitment for those stations in the new licence term.

3200 MS BELL: I'm not sure just on the question of imposing those commitments as conditions of licence. With the Commission's new policy, the Commission stated that it would, we understand that it was no longer going to impose quantitative commitments for news and that it would look at how we were serving local markets and apply specific conditions on a case-by-case basis if the Commission felt that we had not been serving local markets adequately.

3201 So I guess we did not come here assuming that those commitments would be automatically turned into conditions of licence because we felt that we were in fact serving those markets adequately.

3202 COMMISSIONER PENNEFATHER: Yes, I wouldn't say automatic. That's the reason I ask you the question, but it is the case that the TV policy, however, you are quite correct in its wording, but we did want to look at these commitments for local news and local non-news with you and explore all the possibilities, obviously, if we felt that overall we didn't get a good sense or we are not satisfied with the way the applicant was serving these goals.

3203 We will move on now to the CHCH and CHEK strategies which are based on COLs, 2000-760 and 2000-759. I have a couple of questions and you were beginning to describe the approach that you were taking in fulfilling those objectives and the understandings that we achieved at our hearing regarding the importance of the conditions due to the dual ownership in those markets. Our understanding of what you were going to proceed to do and to really provide a different and local programming strategies in these two stations.

3204 You may have some other comments, but I have a question about your description of your strategies for these stations in your supplementary brief on page 53. In fact, I think you were beginning to describe that to us: "It is our intention to use these stations as testing grounds for developing new local daytime programming. Our hope is that by developing innovative local programming concepts for both these stations we will find new ways of maximizing audiences."

3205 I have two questions. What do you mean by dynamic innovative local programming? So there is a platform for a bit of a description. And how and why do you say these programs once they have gone from concept to program could migrate to other stations?

3206 MR. MACDONALD: I should say one thing about the way that's worded and I thought it at the time. It makes poor Hamilton seem a bit like a petri dish. There was a lot more involved in that market than that.

3207 I think we walked into a market in the case of Hamilton that had greatly reduced its local news coverage to the point where it was almost non-existent in terms of the content and the focus. We said we are going to kill them with luck. It's going to be 36-1/2 hours and it's going to be entirely focused on the Hamilton-Niagara region.

3208 That in itself in that market I think was a bold move. Based on the history in the market, the recent history, I think it was innovative. We believe it was the only right decision to make for the market.

3209 You talked about the difference between news local programming and non-news local programming. That's maybe a bit where the experiment comes in with Hamilton and CHEK because you have correctly noted with us to some extent and with the previous applicant that there is more emphasis placed on news than non-news local programming per se.

3210 I think there is a reason for that. There is a feeling that people go to newscasts at news time to find out about their lives, their community. That's where a lot of the effort has gone on the local production side.

3211 However, and as Leonard said at the outset, we are moving into a new day. We believe that there is a future, a leadership role that we can play as we move forward in the area of news and information programming. It's our intention to develop that programming.

3212 In terms of Hamilton, the non-news programming, we are doing a daily interactive talk show that is entirely local in content. We are doing a local public affairs show on the weekend which again is entirely local or Hamilton-Niagara region in content. We are doing the regional arts and entertainment program.

3213 Pat O'Hara will tell you more about all of these programs in some detail tomorrow or whenever that day comes.

3214 In the case of the morning show, it's classified as news and it is news because there is rotating news, weather, traffic and sports. They have also done some innovative things in that program, some pill work with radium in the morning with a radio broadcast.

3215 They have a very innovative reporter -- you talk about regional reflection, every morning she shows up somewhere else in between the news, weather and sports, either at a local fire station or Dundurn Castle. She is out in the community and all she is there to do is send back a slice of life from that community and reflect the community and whether it's Hamilton or Niagara or Burlington.

3216 So those are the kinds of things we are working on in Hamilton and at CHEK. We spoke earlier about health programming, daytime health programming. That is currently in development. There's other daytime program concepts in development.

3217 We are taking a very close look at all of our stations in terms of local programming because we are now a network. We are now looking at news as a true network. We have started to move in that direction more in recent years.

3218 About two years ago all the local stations that benefit as being part of the group got new high end weather presentation systems. We created a common creative look for Global so that when you are watching Global in Vancouver, it's the same as -- a similar look and feel, different content perhaps. It's got to meet the needs of its market, but the show has a Global branding to it, a Global feel and the local commitment that goes with that.

3219 We are developing all of this. The CH and CHEK programming regimes will yield some useful information for us and some of those ideas may migrate, whether it's one of talk shows or a regional art show. I guess by those shows migrating we also mean the concepts. We primarily mean the concepts of those local programming ideas.

3220 We are evaluating the WIC local programming as well. It has not been that long that we have all been all together.

3221 If I could say one last thing about the importance of the local and regional stations to us as we build our national newscasts. I will make this quick because we may be talking about that later.

3222 This national newscast is predicated on regional relevance and on regional reflection on national issues. We want to nurture our local and regional coverage as much as we can and bring that into that system, almost as a farm team for the national newscast as well.

3223 COMMISSIONER PENNEFATHER: I have the schedules for CH and CHEK in front of me here. I must say I was intrigued with the Saturday schedule proposed that ran from seven until nine. I hadn't quite seen such an imaginative way of talking about fishing, "Ultimate Fishing", "Fishin' Canada", "Fishful Thinking", "Sport Fishing on the Fly" and "Going Fishing".

3224 MR. MACDONALD: Commissioner, you will note though there are no dancing cows or virtual advertisements in those programs.

3225 COMMISSIONER PENNEFATHER: Just a few swimming fish. Where on this schedule would I see the innovative programming? There's "Talk Back". Is that what you are referring to?

3226 MR. MACDONALD: That's correct.

3227 COMMISSIONER PENNEFATHER: And the other shows are the standard shows of CH or are they the new concept?

3228 MR. NOBLE: Maybe I should just ask Patrick O'Hara to comment. You will hear more from him on the local, but just let me introduce him. He has already spoken. I just want to explain something.

3229 CH was, in our view, a station in much need of a makeover. It was a station that had lost its roots. We promised the Commission that we would give it back to its roots. Patrick is here to tell you today that he has done just that.

3230 We went in there, revitalized the station, built new studios, turned the station back to the local market, put in some local programming in the morning, revitalized the news. I have to tell you it's one of the most wonderful feelings that you get as an operator that when your audience starts calling and saying "We're so happy. Thank you. You gave it back", it's a great feeling.

3231 Patrick is the man who did it with the help of some people at Global. But Patrick, I think the Commissioner is looking at what are some of our programming concepts and how do we experiment with that?

3232 COMMISSIONER PENNEFATHER: If I may just before you begin, I think we will have time when we go through the individual stations to give you in fact the space you need to really describe this so that we get a good picture of it.

3233 One of my background questions here though is developing the concept, the understanding that the whole point of this was to provide a very local station. What I am interested in as a programmer is how these concepts are really local, that they aren't being developed for a broader audience such as the cooking special, the variety series, wine and travel. How is that local? It's more in that line that I have a question at this point.

3234 MR. O'HARA: Commissioner Pennefather, I just want to reiterate what my colleague, Katherine Browne, mentioned. Unfortunately, you have information that is out of date.

3235 I will make sure that the Commission receives the official on-air launch of CH which was done very quickly, but very professionally with a heritage station that is very proud of its 36-1/2 hours of new local programming.

3236 To respond to your question, a great Canadian artist once said, Joni Mitchell, "You don't know what you've got 'til it's gone". That's exactly what I was faced with when I arrived at CH in Hamilton.

3237 The former owners decided to go in one direction and our mission, and it was a corporate plan and it was blessed by this company, was to turn the station around 180 degrees.

3238 How has it become local? As Ken Macdonald mentioned, it's local as much as it can be in your face, but it's done very professionally. What we have done is we have tapped into the resources of the professionals who are at the station who have been crying out to be local again.

3239 We have worked very, very close to form a very tight knit group to prove and to become the so-called station in the test tube where local works.

3240 If I may just, and I will give you a copy of the e-mail -- one reaction from one of our viewers which came in which was great:

"Great job on the morning show. For so long Hamilton has been deprived of any local program worth watching, but finally someone developed this great idea and I want to thank whoever is responsible for bringing this show to air. I am a McMaster student and I love the reports you did on the support staff strike and the racism on university campus. Please keep the show going just as is." (As read)

3241 An employee at CH which was my first contact at the station:

"Wow! Thank you for giving me a reason to be proud of telling people that I work at CH. The new morning show, the return to more local news, thanks for giving me back the station that I came to work for." (As read)

3242 It's a great, exciting venture that the whole station has been going through. How local have we been? Thirty-six and a half hours, we have doubled our programming 90 per cent. We have actually included that in our news format. I will repeat that. Ninety per cent of our news format at supper time news is local, uniquely local and regional, touching the Niagara Halton region, 90 per cent.

3243 That we are quite proud of and it's part of the format and everyone is on the program.

3244 COMMISSIONER PENNEFATHER: Thank you for that. When we talk again, I wouldn't mind looking at -- my colleagues will also be going through this with you -- the difference between that kind of local program and the innovative concepts that we are talking about which could be transportable concepts to other areas.

3245 If that takes over what you understand is local, I'm not sure that's what we have in mind.

3246 MR. NOBLE: If I could just clarify. I think, Commissioner Pennefather, that the comment about innovative programming is something that Loren is looking at doing for prime time on that network. It's sort of programming concepts.

3247 COMMISSIONER PENNEFATHER: I'm looking at the chapter dealing with CH and CHEK and in the context of the decision so that we were --

3248 MS BELL: Excuse me, if I can clarify that for everyone. It's something we actually discussed at the WIC hearing. It's actually -- if you look at the WIC transcript, we actually said it at the hearing, that we were going to transform these two stations, CH and CHEK TV, and bring them back to their roots and that we may discover some new, innovative types of local programming that might be transported to some of our other stations to invigorate local daytime programming.

3249 COMMISSIONER PENNEFATHER: Oh, yes, I'm aware of that. That's why I'm asking that.

3250 MS BELL: That's the reference.

3251 COMMISSIONER PENNEFATHER: That's my point exactly. What has that meant in terms of the scheduling for the local and for the innovative concepts which it seems will also be concepts for local programming, so we can expand on that.

3252 Speaking of that transcript, at that hearing, Mr. Asper, you said the following:

"I think it is ironic that national players like CBC are pulling out of local. We see that as a strong niche that we can exploit and we can generate more viewing to see our local programming. We see a very valuable service being provided to the local communities as specialty channels proliferate which are only national." (As read)

3253 The reason I'm quoting that is we have now gone through the description of the strategy following up from decision 2000-221. Now I'm at the originally owned stations. Here's where there's some issues that are troubling when we consider your statement and the importance that you place on local content.

3254 We notice looking at the charts again on pages 44 to 58 that there is a variety of levels of news, but there are certain areas where local non-news would appear to have disappeared and even local news to have decreased. I'm speaking now only of the originally owned stations, specifically CKND in Winnipeg.

3255 From what we have been able to calculate looking at the logs of what was happening and what you are proposing at this point and that we again used the charts on pages 54 to 58 because I think Ms Bell you said that was essentially the main source of information in terms of counting that. I think you informed staff of that.

3256 If then we look at the 1999-2000 TV log data and we look at CKND, there were nine hours 25 minutes of local news obligation and the TV logs show a local non-news level of ten hours a week. If we go to the charts on pages 54 to 58, that level of local non-news is zero. It just isn't there.

3257 I found that surprising, particularly reading through Appendix 5 and the description that CKND gave of the various programs over the years they have done and over the last term and their involvement in the community and their commitment to programming in the non-news category, and yet we see it at zero.

3258 Similarly, CFRE and CFSK go from respectively 3.5 hours non-news and 3 hours non-news to none. Can you explain how that, particularly with CKND, a comment in that Appendix 5 to the effect that we are committed to maintaining our service to the community as we have up to this point, which included this ten hours of non-news.

3259 MS BELL: I think what has happened is that -- you are absolutely right, the stations do -- and I believe I mentioned this a little bit earlier.

3260 Some of the stations do a number of non-news programs, but they were not part of their original local reflection or news commitment.

3261 So what we took were the past news commitments for those stations. We just didn't incorporate those numbers. They are not regularly scheduled. I think, to a large extent, they are specials; they are documentaries.

3262 In fact, the GMs are trying to react to events in their communities so that if there is a flood, if there is a telethon, if there is a special story that needs to be told, then they do have programs.

3263 I am probably not the best person to describe that, and I know that when our station managers are up here, they will be able to give you umpteen examples of what they have done.

3264 I think that is the disparity between the numbers, Commissioner Pennefather.

3265 COMMISSIONER PENNEFATHER: I appreciate that we would listen to them, but you do accept that there appears to be a significant drop in non-news; and in the case of CII -- which we will go through again with you tomorrow -- we see a drop in news as well.

3266 Those numbers will have to be clarified.

3267 It would appear -- and you may want to comment on this -- that where we have requirements, be they expectations, commitments or conditions of licence, we have a sense of your strategy for local news and non-news.

3268 But in the case where there is not, it seems to be certainly on the downside.

3269 MR. ASPER: Commissioner, first of all, I do stand by that statement as a corporate strategy. It is certainly our intent. It was no small part of our decision to acquire newspapers as well. We have a feeling that as the number of nationally focused specialty channels increases, there is a niche in being a strong local player. We continue to desire to exploit that and create programming to fill that niche.

3270 It does vary market to market. I can only say to you that if you looked at that again today, you would find that there has been more. In Winnipeg, for example, where I live, they have done a series of specials on the Winnipeg peacekeepers in Bosnia that John Luvland(ph) did over the last several weeks and months. So that number might be back up again.

3271 An overall trend that has been affecting our local programming decisions would be as follows. Ten years ago a lot of local reflection would be found, or something that might be filed as local reflection in regulatory terms would have been a locally produced cooking show or a locally produced exercise show. Now that is on TSN. The cooking show is on The Food Network.

3272 So the local managers have sought -- and it is the same thing with kids as well, although it is not locally produced. It is again another part of our schedule that has been appropriated, if you will, by the niche networks to whom people interested in cooking shows, for example, would turn first instead of their local station.

3273 What we have been struggling with and trying to do is to respond to that by building up our news infrastructure, because we do know that news and information programming has a chance to be the replacement for that local reflection programming, if you will, that was a little bit more generic.

3274 As the transition takes place, there may be some fluctuations in the station levels. But these are factors in those decisions.

3275 COMMISSIONER PENNEFATHER: If I understand you, are you saying then that for a conventional broadcaster like yourselves, local non-news programming is ceasing to be a priority, a reality?

3276 MR. ASPER: No. I think it depends what kind it is. A local talk show, for example, is still a priority. But the locally produced -- I can come back to my example of the cooking and fitness shows. They are going to be less part of schedules.

3277 We would like to try to interact, as we have said a few times, with the viewers from the morning onward. We have started to launch some breakfast shows, and that may be a possibility, not a certainty necessarily, in a Winnipeg or a Saskatchewan.

3278 We have to look at how many breakfast shows there are in that city already, and other factors. Again, that becomes a GM decision, a general manager's decision, not an overall programming strategy.

3279 COMMISSIONER PENNEFATHER: You can see, generally speaking, what the concern is here. A lot of imagination is being applied to the approach in CHCH and CHEK in terms of innovative programming which, as we understand it, will be local.

3280 In other words, my understanding of your statement on that is that there is potential for new imaginative approaches in local programming.

3281 In fact, as we said yesterday, this may be a genre of programming which will distinguish conventional broadcasters more and more from the challenge that specialty services and other programming is offering you from the challenge that the Internet is offering you, from the connection that the Internet.

3282 And I think that was the context of your discussion that I quoted to you: the opportunity before you to have even closer connection with your communities through new ways and new kinds of programming. If we take the core group of stations that you originally owned and have not now been subject to expectations or conditions of licence, that action is not happening. I was wondering why.

3283 It would appear from your statements and from other discussions that this is a genre of programming that might be an opportunity for conventional broadcasters, rather than something to just say: No, we will depend on the news.

3284 MR. NOBLE: Commissioner, I agree. It depends on the market. It depends on the audience, whether or not we can serve an audience in that way with a locally focused non-news program. It is essentially a scheduling issue.

3285 Back to your original point about the hours, these applications, as I understand it, and as we have filed them, do not reduce local in any way. I think we have to clarify the numbers so that you are satisfied and the Commission is satisfied, with some minor exceptions -- and Global is one of them, because of "The National News". We are replacing "The National News" with "The National News", although the current national news is coded as local because it is produced by Global in Ontario.

3286 There are some reasons, and there are some minor differences between the markets. But we have to clarify the numbers. We will get back to you on that by tomorrow.

3287 COMMISSIONER PENNEFATHER: Excellent. We will have to clarify that, because you can see that it leaves us with an impression.

3288 MR. NOBLE: Yes.

3289 COMMISSIONER PENNEFATHER: I am looking at page 20 of your presentation today, to point 2: a commitment to continue and expand, as promised, our local programming.

3290 I think you are referring there to your having stepped up to the plate and the quid pro quo involved in gaining the WIC stations.

3291 MR. NOBLE: That is right.

3292 COMMISSIONER PENNEFATHER: The balance of the sentence is interesting:

"...a commitment to continue to support those markets that are suffering the negative effects of fragmentation."

3293 You discussed this with Chairman Colville previously.

3294 It would seem to me that we may have thought that where local programming was dipping, if not disappearing in the full sense of the word, there were profitability issues here.

3295 My question is: Rather than say goodbye to a local station that is not profitable, do not synergies offer the opportunity to support local stations that have less success financially but which are important in terms of your responsibilities to local audiences across the country?

3296 Is that what this statement is about?

3297 MR. NOBLE: Yes, that is exactly what it is about.

3298 COMMISSIONER PENNEFATHER: In the case of what we are looking at here, maybe there are discrepancies in the figures, and we will look at that in the numbers. What we are also interested in is what your strategy is, what your commitment is. The Broadcasting Act calls on broadcasters to serve not only national audiences but local, and to draw from those resources as well.

3299 We understand you are in a balancing act, but we also are too. We have to look at what realistically the results will be from all these synergies.

3300 I don't know if you want to comment further on that.

3301 MR. NOBLE: The comment is that in the markets referred to specifically as suffering the effects of fragmentation, in those markets we are not making money. But they do have at present fairly significant news and local reflection programming.

3302 We are committing as part of this application to continue with those news programs and the local reflection programs, despite the fact that at present those stations are not making money.

3303 We will continue to try to find ways of turning them profitable. Perhaps it is a style of local program that can do that. So far, we have not been able to attract the local advertising support necessary to do that. But we will not give up.

3304 COMMISSIONER PENNEFATHER: In not giving up, then -- and here I am referring to the stations where currently there is no expectation, namely the originally owned stations. And I stand to be corrected on that.

3305 I made my point regarding these stations in terms of what appears to be a diminishing of local programming.

3306 What do you think would be an appropriate commitment in terms of these stations and their local programming?

3307 MR. NOBLE: We believe that the appropriate commitment is to continue with the current service in those markets at the current levels. Those are the numbers that we have to clarify.

3308 COMMISSIONER PENNEFATHER: Thank you.

3309 Thank you, Mr. Chairman.

3310 THE CHAIRPERSON: Thank you, Commissioner Pennefather.

3311 We still have a few more issues that we want to cover off. Commissioner Cardozo has a few questions with respect to closed captioning and children's programming. We will do that now.

3312 Just to give you a bit of a heads up, that will leave service to the visually impaired, cultural diversity and cross-media ownership to cover off tomorrow.

3313 There has been some discussion about changing events and more up to date accurate program schedules. We have already talked about that with respect to CHCH. I don't know whether that applies to any of the other individual local stations or not.

3314 It would be helpful for us the sooner we can get copies of that information.

3315 MS BELL: Chairman Colville, I think the issue is not that the information filed was not accurate. There are always sample schedules. It is just that this better reflects the programming that is on right now.

3316 THE CHAIRPERSON: I am not accusing anybody of having --

3317 MS BELL: No. I want to make sure --

3318 THE CHAIRPERSON: It is just the more up to date -- recognizing that these things are always changing and we are trying to deal with what is happening on a going-forward basis, it would be helpful for us, in terms of looking at the current situation and facing our questioning on that.

3319 If we are questioning based on information that was filed that was accurate at the time but in the meantime things have changed, it just makes for complicated questioning.

3320 If the question is "by the way, you haven't seen our latest schedule" --

3321 MS BELL: That is what I am asking. If you want us to file those schedules tomorrow morning, we can do that.

3322 THE CHAIRPERSON: That is what I am asking.

3323 MS BELL: Okay.

3324 THE CHAIRPERSON: The sooner you can do it -- if you can file some of that right now or at the end of the day today, it would be more helpful.

3325 Vice-Chair Wylie...?

3326 COMMISSIONER WYLIE: It is particularly important in the case of CHCH where it was part of the quid pro quo or of the deal. Your competitors keep saying that you have two networks.

3327 MR. NOBLE: I wish we did.

3328 COMMISSIONER WYLIE: I know. Even if it is one and a half, the extra half was granted as an exception to what would be perceived as a normal rule in exchange for a quid pro quo.

3329 Therefore, in the case of CHCH, which I have the responsibility for, I don't see why I should struggle tonight finding everything wrong with CHCH in terms of the promises that were made that were fundamental to our decision, and then springing something entirely different tomorrow morning.

3330 It is important in the other stations as well, but it is absolutely fundamental with CHCH and CHEK to show us how you will respond, or you are responding, and you will respond for seven years, to the quid pro quo that was localizing a station so that you could have two in the same market in the same language.

3331 THE CHAIRPERSON: So we recognize this is evolving and I understand you have the schedule there now. If you could file that with us tonight that would be helpful. And if there are any others that have evolved over time.

3332 COMMISSIONER WYLIE: And if you have access to a computer give us some new numbers. What are the numbers. I heard you say 36 hours for CHCH. That's not what I have before me.

3333 MR. O'HARA: Commissioner Wylie, it is 36.5 hours.

3334 COMMISSIONER WYLIE: And a half, yes.

3335 It is certainly not what I have before me now. So I would like to have something tomorrow that will not lead us to spend a whole lot of time arguing about whether CHCH is meeting its commitment with regard to local programming.

3336 THE CHAIRPERSON: I want to make it clear we are not trying to be critical here. We understand things evolve and this is a new situation in Hamilton. If you have got more up-to-date information, well, the sooner we can have that, the better, the easier it will make it go in terms of addressing any concerns or questions.

3337 With that I will turn to Commissioner Cardozo.

3338 COMMISSIONER CARDOZO: Thank you, Mr. Chair.

3339 What I will do is just go through a few questions on closed captioning, very similar to the ones yesterday. If you like you can answer all four of them right off -- no, maybe I will pose them to you in case I have a little nuance that I can throw at you maybe unexpectedly.

3340 As I said yesterday, this is really a good news story when one talks about closed captioning in the English language because it's a good news story for the industry and the Commission because it's a road we have been on together for some time and have really made some progress, more on the English language side than on the French.

3341 What I want to do is just clarify some of the commitments you have made for the record. You have indicated that all licensees forming part of your station group will meet the captioning levels as set out in Public Notice 1995-48?

3342 MS BELL: Yes.

3343 COMMISSIONER CARDOZO: Which means starting year 2001-2002 that would be 90 per cent of all programming and 100 per cent of all news programming?

3344 MS BELL: That's correct.

3345 COMMISSIONER CARDOZO: On the matter of our current policy which has a graded approach where the larger stations are required, the mid-level are expected and the smaller are encouraged, I take it, Ms Bell, you are familiar with what I am talking about. Do you have any thoughts about that, what as I understand you put it all your stations regardless of size will be going by the 90 and 100 percentage approach?

3346 MS BELL: That's correct.

3347 COMMISSIONER CARDOZO: Lastly, although I have three questions I guess, and the third is with regard to the expenditures on revenues. According to our calculations, looking at the annual returns under Canadian program expenditures and then the information you provided to deficiency dated February 14, which was on the revenue, the first part was on expenditures. We note that there was a revenue over expenditure situation which one may refer to as profit, but essentially the revenue over expenditure was $3 million in 1999 and $4.3 million in the year 2000. Does that reflect your records? You might not have kept the two figures together?

3348 MS BROWNE: Yes. I'm not certain where you are getting the expenditure figures from. I can tell you that on average we did file the revenue figures with which ranged about $5 million most recently.

3349 COMMISSIONER CARDOZO: The expenditure figures are from the annual returns under the Canadian program expenditures.

3350 MS BROWNE: On closed captioning?

3351 COMMISSIONER CARDOZO: Yes.

3352 MS BROWNE: Then that's just referring to direct expenses. Actually, the profits on closed captioning are about a million dollars on $5 million.

3353 COMMISSIONER CARDOZO: Okay. So that leads me to the main part of this third question, which is perhaps the main area of concern around this has been quality and accuracy. There is a lot of closed captioning that is happening and by the way it is important for us to remember in this discussion that the use of closed captioning goes well beyond people who are hard of hearing and deaf.

3354 Indeed, a lot of people have access to these at health clubs and restaurants and bars and so forth, where those who aren't regularly hard of hearing are rendered hard of hearing because of other levels of noise within the establishment. They then also have access to closed captioning. Is that something you could be prepared to move on given that this is not an overall expenditure situation, that you could now focus more closely on issues of quality and accuracy?

3355 MR. NOBLE: Commissioner, I am going to ask Doug Bonar to respond, our Senior Vice-President, Technology. I don't think we have ever had a complaint. I think our system is actually quite robust. Doug, I will let you respond.

3356 MR. BONAR: Commissioner Cardozo, we are very proud of captioning. We have championed this along the way and have led in many areas. In fact, we were the first to totally real time closed captioning our newscasts.

3357 We contract our captioning through two of the major captioning companies in Canada, one Broadcast Captioning and the other Nathanial Captioning. These people guarantee us accuracy of something like 95 per cent.

3358 We don't just take their word for it. We monitor our captioning. It is monitored in master control. It is monitored by our operations manager and so I don't think there is a real quality issue, especially not with CanWest Global stations.

3359 However, having said that, CAB has been working with a committee to draft a policy on really policy and procedures with regards to captioning. We have a member on that panel and Broadcast Captioning is also a member of that committee I should say. They are developing what should be the standards for captioning across all stations in Canada.

3360 I know we meet and we will meet those standards when the policy is complete.

3361 COMMISSIONER CARDOZO: Thanks for that.

3362 Let me then put it to you how if we would like to address the issue of quality in the renewal decision how would you be prepared to see it addressed? Would it be in terms of a commitment to meet the standards that you have just said basically?

3363 MR. BONAR: Actually, that would be a perfect solution for this because it's a CAB target. If this policy is written then I think broadcasters should meet this policy.

3364 It's a good way of ensuring that it's uniform across the whole country. Yes, we are happy with that.

3365 COMMISSIONER CARDOZO: Can I just clarify, are consumer groups or representatives of organizations that represent the deaf are they part of this CAB committee?

3366 MR. BONAR: I believe so. I can't say for sure. I am not the member. My broadcast manager is a member, but they have always had an input into this. So I would say they are.

3367 COMMISSIONER CARDOZO: Thanks. I appreciate that.

3368 I have a few questions on children's programming. I want to get a bit more clear what your approach is going to be in the licence term ahead. You have stated with the growth of specialties the focus on children's and family programming that, quote, "This will result in severely eroding the advertising revenues and viewing to children's programming on our stations."

3369 You have suggested "As a result, in the coming year we anticipate changes to the balance between programs targeted to children, youth and families as we adjust to market forces and demand for such programming."

3370 Can I take that to mean you are going to reduce the amount of children's programming. Is that what your plan is?

3371 MR. NOBLE: Yes. I think from what we have traditionally had in this schedule that's correct. It is our view that the children's genre is very well served with YTV and Treehouse and The Family Channel and Teletoon and that has taken audience right off the conventional broadcasters obviously. They are very well served. There is 24 hours on each of those channels of programming directed at kids.

3372 Even saying that, kids still will be a part of our schedule. I will ask Doug Hoover, our Senior Vice-President of Programming if he wants -- if there is a follow-up question, I am sorry, Commissioner, if Doug can comment on what our plans are for kids and family and teen directed programming. Doug.

3373 MR. HOOVER: You are quite right to focus on the fast evolution, the very rapid evolution that is taking place in viewing trends for children's programming. Kids are obviously early adaptors, so they find their full service channels very quickly.

3374 I have before me a chart that actually dramatically illustrates the issue. Viewing to specialty channels in the fall of 1996 they had about a 16 share of audience. They have now doubled that. They are up to 32 per cent.

3375 In that same time, Global's share of viewing for children's programming went from --

3376 COMMISSIONER CARDOZO: Who is that that went from 16 to 32?

3377 MR. HOOVER: Specialty as a group. Global's share of viewing amongst kids has declined from 13.6 to 8. It has dropped 41 per cent.

3378 So, it is a combination of the specialties and TVO and the CBC. That has taken place. At the same time, Global as a group of stations has changed its structure and we now have a service in Quebec. As you know, in the province of Quebec there is no advertising allowed to viewers of children's programming.

3379 So the combination of that trend in audience, our decline in viewership, has caused us to look at the true kids and migrated more to an audience of viewers from 12 to say 17, which we characterize as tweens. We used to target audiences of two to 11. Now we are moving from 12 to 17.

3380 So we think that we can still address younger viewers and cultivate those audiences for the future, but we really do feel that the true children's targeted programming is being very well served and we somewhat assume that the Commission agrees because children's programming no longer qualifies as under represented programming. So, I think your view of the universe of viewing options is the same as ours.

3381 COMMISSIONER CARDOZO: Yes, I see that this is in line with the fact that -- well, we haven't said don't do it, but it isn't awarded in the way it was.

3382 What are your plans in terms of like from year to year? Do you see is it a year or two years down the road that you see changing this programming? Do you have a time frame?

3383 MR. HOOVER: It has been an evolutionary process. it is something that we have already set on somewhat. Global has a promise of 30 hours of youth programming. We are meeting that. We intend to meet that. It is just that we have changed the nature of the focus from being animated children's programming in that sort of true sense to more the tween programs like "Popular Mechanics for Kids" and "The Addams Family," things of that nature.

3384 COMMISSIONER CARDOZO: So the changes are reflected in your financial projections, are they, for the seven-year term?

3385 MS BROWNE: Yes, that's correct.

3386 MR. HOOVER: You will notice I never answer financial questions.

--- Laugher / Rires

3387 COMMISSIONER CARDOZO: So long as we get the answer. We don't care where it comes from.

3388 Let me ask you about branding. I say this because as I understand it you don't have the branding of Kids' TV or KTV any longer. Is that right?

3389 MR. HOOVER: That's correct.

3390 COMMISSIONER CARDOZO: I know this because I conducted a scientific survey over the weekend. I took a random sample of kids at my dinner table, which happened to be my two kids and they informed me that KTV and Kid's TV had gone the way of the dodo bird a little while back. They were quite concerned about this.

3391 And let me tell you what my sample told me. Fifty per cent, the older age demographic, said: "I don't think this is a good idea. You should do a survey on the Internet or talk to kids somewhere where kids get together, like at a school." So I'm wondering if you had talked to -- I have to report on this stuff tonight, so, please, do what you can to help me here. Had you done any survey of this, of these plans, as to the popularity of Kids TV?

3392 MR. HOOVER: I guess it was very evident to us in the decline in audience, and, unfortunately, we weren't being as successful in attracting as mass an audience as we would have liked. And I appreciate the loyalty of your children, and we will work hard to try and recapture that, but our week-after-week results, day-after-day results, indicated that that trend was continuing and it was not going to be easily reversed.

3393 Global, as a network, though, is the youngest skewing network in the country. Our audiences tend to be younger than the others. And we, too, tend to target to a younger group. And it's our desire to keep that loyalty, but just grow it a little bit. And that's our strategy.

3394 MR. ASPER: Commissioner, if your children would be happy to accept a Neilsen people meter in their house, and we could hand some out to their friends, as well, we would be happy to revisit our strategy.

3395 COMMISSIONER CARDOZO: Actually, I think they were thinking more as a condition of licence, but...

--- Laughter / Rires

3396 MR. ASPER: I stand defeated.

--- Laughter / Rires

3397 COMMISSIONER CARDOZO: This is the way life is sometimes.

3398 Do you want me to tell you what the other 50 per cent said?

3399 MR. ASPER: Please.

3400 COMMISSIONER CARDOZO: It went like this (indicating), which is sort of a thumbs down and a verbal raspberry. When I told my son you were preparing to move out of children's programming -- don't take this personally, I'm merely reporting to you what I gathered myself -- he's more to the point than the older demographic in the household -- but it occurred to me in this conversation, which I looked at seriously, there was a branding issue here which was in our household -- my guess is this is quite common -- Kids TV was a brand that was recognized and Global was a brand that was recognized, so I'm just interested -- I'm not trying to push you back into it, but I just want to understand your thinking on this, that from a branding point of view, there were kids who liked Global because they liked this programming, and, therefore, they ensure that Global ran a certain amount in this particular household, once you move away from that, do you lose that kind of opportunity, and if you are skewing younger, then you are skewing also younger parents, who will have kids who look at that, and I just want to understand, from a point of view of long term, whether these are things you can afford to look at or whether you just have to look at those numbers of the slippage away from you and towards the specialties and figure maybe that's what's happened and there's not too much to be gained by it?

3401 MR. HOOVER: No, I appreciate your comment, and certainly it is a concern of ours and it's something that we have struggled with for some time.

3402 We concluded that to be a player or a seriously branded service for kids, you had to do it in a big way. And if you looked at our schedule, say, five, six years ago, you would have found that virtually all day Saturday, all day Sunday, and all mornings was dedicated to children's programming because when they chose to watch television, we had to have a product there that they wanted to watch. But when the other services were introduced and they were providing kids programming 24 hours a day, it didn't take long for the kids to realize that if it was 6 o'clock at night, they could still watch cartoons and so they started to migrate away from us to those other services.

3403 So it is a concern from a branding point of view, but we really do hope that success stories like we have tried to articulate with "Popstars" and that age bracket that gets you sort of into the younger adult and teens will bring them back to us. And that's why those programs are so important to us.

3404 We have kind of put up the white flag a little bit for a lot of the other date parts to compete against things like Teletoon. Now, that's not to say that -- you will see in our schedule we are still running Bugs Bunny on Saturday in the core children's time period, it's just that we can't devote as much of our schedule to that 2-to-11-year-old demographic that we once did. We can't support it economically, from a sales point of view, and it causes problems in the Province of Quebec.

3405 COMMISSIONER CARDOZO: Just on "Popular Mechanics for Kids", are you keeping that?

3406 MS MAWHINNEY: It's finished. I think there are 39 episodes and it's no longer in production. In fact, the girl, the star of the show, Trina was talking yesterday about "Oh, Lucky Girl", the movie, that's our popular mechanics host grown up. So five years makes a big difference in the life of children.

3407 COMMISSIONER CARDOZO: Yes. I'm going to have to look for a hotel room tonight! I'm not sure what I have to go home with.

--- Laughter / Rires

3408 COMMISSIONER CARDOZO: What are your thoughts about the intervenors who have asked us to press the conventionals to continue a certain level of children's programming because you play an important role in the system, you are large, you are available over the air? Should we be responding to that?

3409 MR. HOOVER: A comment from a programming point of view, and then I will turn it over to Gerry from a business perspective.

3410 The incentives for children's programming were removed when the under-represented category was eliminated. We used to be able to get 150 per cent credit, and that 150 per cent credit had a way of softening the effect of the eight-minute commercial hour. So there were two things at play there: that the reduced commercial inventory, the effect of that, was offset by the ability for us to count the 150 per cent against our Canadian content requirements, and so there seemed to be a balance. And when it was deemed that children's programming was no longer under-represented, because of the proliferation of channels, the dynamics for us changed significantly. And I'm speaking now from a programmer point of view, from managing the schedule, and I know Gerry wants to comment from the other perspective.

3411 MR. NOBLE: Okay. In terms of the contribution to the Canadian broadcast system, I think that it is a legitimate concern and we do have, I think, a responsibility, as conventional broadcasters. And that's why we have left some hours in the schedules. It's certainly not what we have been able to do in the past or what we have been required to do in the past. Indeed, we did have licence commitments. But we do see it, as a responsible broadcaster, something we should be doing. And I think that's what we do have. We have some hours on the weekend. But that's, unfortunately, about the extent economically that the company can go. It doesn't make any sense any more, from an economic, and certainly from an audience point of view. The children have demonstrated that they are quite happy to get most -- agreed, outside the cabled areas there is an issue, but most cable households kids are watching all the children's channels.

3412 COMMISSIONER CARDOZO: So in our decision, do you have any thoughts about whether we should address children's programming and how we should?

3413 MR. NOBLE: I think that the fact that children's programming is no longer under served, I don't see a need for it. But it's in our schedule. I don't know whether I can make it --

3414 MS BELL: Commissioner Cardozo, maybe you could encourage broadcasters to continue to do some level of programming.

3415 COMMISSIONER CARDOZO: You wouldn't want this as an expectation, in terms of the 15 hours that you were talking about or for us to recognize it as a commitment?

3416 MR. NOBLE: No, we would not, no. That would sort of limit us during this period to alternative programming. We have to respond to the market and our audience.

3417 MR. ASPER: Commissioner, I think we would just ask you to consider again the overall system in which children's programming has evolved. And without knowing the exact numbers, I would assume that, compared to five years ago, today there are many, many more hours of children's programming available to all and that the broadcasters' commitments be looked at in that light, and also in the light of the niche that broadcasters can fill in the local programming, which is what some of this dayside programming is starting to be replaced with more and more. So I guess I would just, again, come back to the larger picture in your deliberations.

3418 COMMISSIONER CARDOZO: Is some of the children's programming local or is it mostly syndicated of some kind?

3419 MR. NOBLE: I believe it's all network -- it's all national, provided by national, yes.

3420 COMMISSIONER CARDOZO: Okay, thanks very much for those answers.

3421 THE CHAIRMAN: Commissioner Pennefather.

3422 COMMISSIONER PENNEFATHER: Thank you.

3423 I just wanted to review the list of discrepancies and concerns, just so that we are absolutely clear.

3424 With the 2000-221 decision, paragraph 43, there appear to be a discrepancy concerning CHAN-TV. The expectation is 42 hours, 30 minutes; the chart appears to say 40 hours.

3425 Secondly, CICT Calgary, the expectation is for 24 hours, 30 minutes local news and 9 hours local non-news. We appear to have 8.5.

3426 In terms of CFRE Regina, CFSK Saskatchewan and CKND Winnipeg, we discussed what appears from the charts to be a decrease in news and local non-news, as I mentioned to you, and we need that to be clarified.

3427 And regarding CH and CHEK, it would appear that the amount of programming, the hours, as indicated in Decision 2000-221, are correct, however, my line of questioning was really to determine the nature of the programming, both in terms of news and non-news, since both are covered in these COLs, as to their local nature. And we need to hear more on that.

3428 THE CHAIRMAN: Thank you, Commissioner Pennefather.

3429 That will complete our questioning for today, then. I would just remind you on the issue of providing more updated schedules and hours, and whatever other statistical information you have, to copy the appearing intervenors, as well. The sooner you can get that to us, the better, in terms of the questioning tomorrow.

3430 So we will reconvene tomorrow, then. And just to give you a bit of heads up, the issues we have left to cover off are cross-media ownership, so we can give your panel of experts something to do tomorrow, service to the visually impaired and cultural diversity, and then we will move on to local stations.

3431 So thank you very much. That concludes our work for today.

3432 We will reconvene tomorrow at 8:30 a.m.

--- Whereupon the hearing adjourned at 1855, to resume on Thursday, April 19, 2001 at 0830 / L'audience est ajourné à 1855, pour reprendre le jeudi 19 avril 2001 à 0830