ARCHIVED - Transcript - Hamilton, Ontario 2001-12-06
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CANADIAN RADIO-TELEVISION AND
CONSEIL DE LA RADIODIFFUSION
ET DES TELECOMMUNICATIONS CANADIENNES
Public Hearing/Audience publique
Call for applications for a broadcasting licence to carry on a television programming undertaking to serve all or any one of Toronto, Hamilton and Kitchener, Ontario/Appel de demandes de licence de radiodiffusion visant l'exploitation d'une entreprise de programmation de télévision pour desservir chacune des villes Toronto, Hamilton et Kitchener (Ontario) ou l'une d'entre elles
HELD AT: TENUE A:
Hamilton Convention Centre Centre de conférence
Hamilton, Ontario Hamilton, Ontario
December 6, 2001 6 décembre 2001
A. Wylie Chairperson/Président
M. Wilson Commissioner/Conseiller
B. Cram Commissioner/Conseiller
J. Pennefather Commissioner/Conseiller
S. Langford Commissioner/Conseiller
_ _ _
D. Rhéaume Legal Counsel/
M. Amodeo Hearing Leader/Hearing chef
P. Cussons Hearing Manager/Gérant
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.
Afin de rencontrer les exigences de la Loi sur les langues officielles, les procès-verbaux pour le Conseil seront bilingues en ce qui a trait à la page couverture, la liste des membres et du personnel du CRTC participant à l'audience publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu textuel des délibérations et, en tant que tel, est enregistrée et transcrite dans l'une ou l'autre des deux langues officielles, compte tenu de la langue utilisée par le participant à l'audience publique.
Canadian Radio-television and Telecommunications Commission
Conseil de la radiodiffusion et des télécommunications canadiennes
Public Hearing/Audience publique
Index of Proceedings/Index de la séance
Opening remarks by Ms. A. Wylie/ 2854-2856
Remarges d'ouverture par Mme. A. Wylie
Intervention by CHUM Limited/ 2857-3106
Intervention par CHUM Limited
Intervention by Asian Television Network
International Ltd/Intervention par Asian 3107-3145
Television Network International Ltd.
Intervention by Fairchild Television/ 3146-3193
Intervention par Fairchild Television
Intervention by Canadian Association Of Physicians
Of Indian Origin/Intervention par Canadian 3194-3235
Association Of Physicians Of Indian Origin
Intervention by CIRV Radio International/ 3236-3309
Intervention par CIRV Radio International
Intervention by the National Film Board/ 3310-3334
Intervention par the National Film Board
Intervention by Indo-Canadian Chamber Of 3335-3356
Commerce/ Intervention par Indo-Canadian Chamber Of Commerce
Intervention by Urban Alliance On Race Relations/ 3357-3393
Intervention par Urban Alliance On Race Relations
Intervention by Communications and Diversity
Network/ Intervention par Communications and 3394-3423
Intervention by Black Business and Professional
Association / Intervention par Black Business 3424-3438
and Professional Association
Intervention by Bigfeller Productions/ 3439-3477
Intervention par Bigfeller Productions
Intervention by Canadian Association Of
Broadcasters/ Intervention par Canadian 3478-3514
Association Of Broadcasters
--- Upon commencing at 0834/L'audience débute à 0834
2854 THE CHAIRPERSON: Good morning, and welcome back to our hearing. Mr. Secretary, will announce the next phase?
2855 MR. CUSSONS: Thank you, Madam Chairperson. Indeed, we're now starting phase 3, outside intervenors, where intervenors are generally allowed 10 minutes to make their presentations; although our first one, CHUM, has requested 20 minutes and been granted that.
2856 But before I introduce CHUM, I would like to announce that we have several intervenors who had expressed an interest in appearing but unfortunately they are no longer able to do so, so these parties are now non-appearing intervenors. Specifically, the Canadian Film and Television Production Association, Ellis Entertainment Corporation, Leave Out Violence, Dalton Engineering and Construction Limited and the Canadian Broadcast Standards Council.
INTERVENTION BY CHUM LIMITED/INTERVENTION PAR CHUM LIMITED
2857 So I will now introduce our first intervenor this morning, CHUM television. We have Mr. Sherratt and colleagues. Good morning, Mr. Sherratt.
2858 MR. SHERRATT: Good morning, Mr. Secretary. Madam Chair, members for the Commission, for the record I am Fred Sherratt, Vice Chairman of CHUM Limited, and I am pleased to introduce the members the our team today.
2859 In the front it Moses Znaimer, President and Executive Producer of Citytv and a number of our channels. Next is Jay Switzer, President of CHUM Television, next to Jay is Peter Miller, Vice President, Planning and Regulatory Affairs, and next to Peter is Brigitte Davlut, Manager of Regulatory Affairs.
2860 In the back row to your far left is Greg Mudry, Vice President and General Manager of New PL, WI and NX, next is Peggy Hebden, Program Director of the New VR. Next to Peggy is Diane Boehme, Director, Independent Production, then Sarah Crawford, Vice President, Public Affairs of CHUM Television, and finally Stephen Hurlbut, Vice President and General Manager of CP24 and Vice President News Programming for Citytv.
2861 At the side table, starting at your left is Ric Davies, Director of Special Projects, then Dave Caporicci, Director of Sales Administration and Research, Dan Hamilton, Vice President National Sales (Conventional) and finally Hans Jansen, Partner of Bay Consulting Group. We have a number of senior executives including Ron Waters, Executive Vice President of CHUM Limited.
2862 You may think this is an unusually large number of people for an intervention. It is, but it speaks to the fact that we consider this to be one of the most important interventions we have ever done and we wanted to make certain that we had all of the expertise in the room that you might need to answer questions.
2863 Madam Chair, Commissioners, the great fear I have at these hearings is that they tend to take on a life of their own. The past three days have focused on a steady stream of glowing promises, all carefully designed to focus ALL your attention on who will be the successful licensee, not on the much more imperative question: should there be a licensee at all. In other words, the real question at this hearing must be, not "who", but "if".
2864 Everyone in this room has an interest. The real question is whose interests better coincide with the public interest.
2865 We come before you as the broadcaster that has done more to improve and invest in local broadcasting in Ontario than anyone else. We made that investment despite of market forces that have caused others to reduce their emphasis on local programming and reflection -- market forces that would inevitably have the same effect on us if the Commission licenses a new Toronto conventional station in this hearing.
2866 We also come before you as an experienced buyer of American program rights in Canada, with a consistent perspective on the need to avoid bidding up the rights to American programming and thus ensuring more money stays in Canada for Canadian programming.
2867 MR. ZNAIMER: The enduring puzzle of Anglo-Canadian television has been and continues to be how to finance high-quality, high-cost Canadian television that Canadians will watch. Surely, one answer is to keep more money in Canada.
2868 Two years ago at the Vancouver/Victoria licensing hearings, in the presence of Commissioners Wylie, Cram and Langford we said, I quote:
2869 "With luck, after the WIC process is complete, Canada will have only two national commercial networks aggressively pursuing National Foreign Network Series Programming. This will help greatly in redirecting the flow of money to Hollywood, where it now goes as a result of the bidding frenzy."
2870 Then, a few months later, at the actual WIC hearings, again in Vancouver, this time in front of Commissioners of Wylie and Pennefather, we explained our unexpected support of CanWest's attempt to keep CHEK along with CHCH in this way:
2871 "You have with this decision the potential to slow down or even reverse escalating U.S. licence fees, leaving more money in the Canadian system to support new Canadian programming. We believe this is a key factor -- perhaps "the key factor" -- that must be part of your decision. The stakes for the broadcasting system are huge. Although it is hard to be absolutely precise, based on applicants and intervenors' comments and on some considerable buying experience in the U.S., we estimate the program spending in the U.S. by Canadian broadcasting to be something in the order of 350 million dollars a year.
2872 "Even if this transaction only stopped the damage of price increases in the future, this could, as an approximation, represent a savings to the Canadian system of 35 or 45 million dollars each year, growing over time."
2873 "As we have previously indicated in several policy hearings, CHUM's vision of an optimum Canadian broadcasting system is one in which the competition for imports is sufficiently moderated so as to retain in Canada money that has otherwise gone, and will otherwise go, to the Hollywood studios as a result of too many Canadian buyers chasing too few American hits."
2874 We quote these transcripts extensively not only to show that we are not "Johnny-come-lately" to this concern for keeping the Canadian dollars in Canada, but also because that hearing and those words foreshadowed this hearing and these words, and we believe fervently that conclusions drawn at that hearing should not be forgotten at this one.
2875 Barely more than a year and a half ago, many parties at the WIC hearings argued that in addressing market impact, the Commission must address system-wide as well as local aspects. Barely more than a year ago, the Commission declined the opportunity to require CanWest to divest CHCH. Now consider the following statement by Craig in these proceedings:
2876 ". the pricing for mid-range and new product is typically not subject to the same escalation . with the disappearance of WIC, these prices are flat or declining."
2877 Which is precisely the point. The Commission had the opportunity to introduce a new player in the GTA when WIC was dismantled. Craig and others urged you to do so. Instead your decision resulted in import price stability. In your WIC decision you further observed, I quote:
2878 "There is a clear need for strong healthy industry groups in Canada's broadcasting industry" . and that, "These large Canadian broadcasters . are best able to invest in attractive Canadian programming."
2879 To license new over-the-air conventional outlets in the country's largest market so soon after establishing an orderly post-WIC market would be to seriously weaken that which you have just strengthened. For further proof that the structure in place is saving Canada money, you need look no further than the intervention from the major Hollywood studios as represented by the CMPDA. No one would relish a WIC replacement more than the people who would see their prices, once again go up, and up, and up.
2880 Contrary to Craig's and Alliance Atlantis's contention, there is little or no unused product simply sitting on a shelf at CTV. Global told you yesterday, there is none there, and we can assure you there is none at CHUM. Ontario is not Manitoba and Alberta where, regional broadcasters such as Craig, have the advantage of fewer stations in their markets and so can play CHUM, Global and CTV against each other thereby tapping that so-called "unused" product. But in southern Ontario, these titles are not available, so putting another buyer in place must inevitably drive the cost of foreign, especially American, programming much, much higher.
2881 At those same WIC hearings that we have been discussing we also brought forward some interesting world perspective on this question of how much is too much.
2882 "International experience also suggests that one more big buyer for Canada is unrealistic and potentially very damaging. The U.S., with approximately 260 million people, has four established commercial conventional networks and two struggling mini-networks. Taking these two together as one, the U.S. has, plus or minus, one mainstream conventional commercial network for every 50 to 55 million people.
2883 In the United Kingdom, with over 55 million people there are two . in France, with a market of approximately 60 million, there are again only two . So by comparison, the likelihood of Canada sustaining more than three national private terrestrial English-language buyers against an English-speaking population of 23 million is exceedingly slim."
2884 Thus two consequences of licensing new entrance into southern Ontario can be predicted with great certainty. 1) It will drive up import prices making serious increases in Canadian production budgets difficult, if not impossible. Please make no mistake, a new Toronto/GTA licence is not a "stand-alone" licence. Sooner or later it is the pivot to another national buying group and/or 2) To ensure program supply, the new entrant will ultimately link with, be controlled by, or be absorbed by another player - thereby eliminating the sought after diversity."
2885 All of which would seem an unnecessary and sad diversion when, just by saying no, you can let the system created so recently breathe a while and yield the many benefits that are only now becoming apparent.
2886 MR. SWITZER: The applicants in this proceeding would have you ignore the current economic situation and urge the Commission to look at long-term trends. So let's look at those trends. Total television viewing has been consistently flat during a period when channel availability has increased more than 10 fold. In Chart 1, we see that tuning to specialty channels has been increasing, clearly at the expense of conventional viewing. What happens when these two trends are combined?
2887 In Chart 2, we see the loss of total hours of viewing to conventional television over the past decade has been dramatic, a loss of four-and-a-half hours a week, over 20 per cent, in the past 10 years. Oh sure, they tell us, we'll repatriate viewers from the U.S. border stations, but repatriation only occurs when there is significant U.S. viewing and programs to repatriate. In Vancouver, for example, prior to launch of CIVT, U.S. stations were getting close to 30 per cent of tuning. Compare this with Toronto where U.S. viewing is hovering around 10 per cent. There simply isn't much left to repatriate, and the most watched station, WUTV, aggressively programs in a manner to avoid simulcast.
2888 The claim has been made that no new stations have been launched in the southern Ontario market in 30 years. This is simply wrong. When CFPL, CKNX, and CKVR disaffiliated with the CBC added additional transmitters and essentially three new local stations were born. These stations were further reborn with the launch of our NewNet in 1997. Crossroads TV was launched just three years ago, and the change of conditions for CFMT in effect added hours of U.S. prime-time programming every evening.
2889 In addition, over the course of the last 15 years, there has been a steady expansion of analog specialty services most of which, while national in nature, derive their resources and much of their revenue from the Toronto market. CP24, Canada's first 24-hour regional news service, is in its fourth year of operation and this fall, some 40 new digital services exploded onto the scene. Toronto is unequivocally already the best served and most competitive television market in the world.
2890 In addition, the Toronto area group of conventional stations is experiencing declines in the rate of revenue growth. According the Commission's own numbers, total revenue for this group, not including the NewNet stations, shrank by over 10 million dollars in fiscal '99/2000. And this was before the slow down in the economy which really didn't start hitting until late 2000 and well before the events of September 11th. As noted by HYPN, TVB numbers for the 2001 broadcast year show growth of 1.9 per cent (conventional non-network) and the most optimistic projection for 2002 is 0 per cent. Any reasonable projections going forward beyond 2002 put market growth at somewhere around 2 per cent, essentially flat after inflation, and a far cry of the '96-2000 period.
2891 Add all this together: Falling television tuning, many new channels in the market, increased fragmentation from specialty service, a sluggish economy, essentially flat conventional revenues, virtually no U.S. tuning left to repatriate, the events of September 11th -- this is not a picture of an ideal time and place to add a new station.
2892 In our written intervention, we documented in great detail the financial challenges facing our Ontario stations and the impact of licensing a new station. Our general conclusion, undisputed by applicants, was that revenue losses to CHUM stations would easily reach $10 million per year within two years with the licensing of Alliance or Craig; perhaps somewhat longer for Torstar or Rogers, and would remain less for Global. Again, we should point out our economic analysis did not include the inevitable increase in foreign programming costs that new entrants would guarantee, and that would be considerable.
2893 The applicants argue that the Commission should look to the longer term, and that CHUM can't expect a short-term turnaround of our Ontario stations. Given the magnitude of our investments in local programming across these stations, it should be obvious that we have taken the long-term view. In the Greater Toronto Area we currently offer more than 45 hours per week of original, unduplicated local programming on Citytv, more than half of which is non-news, and 70 hours on CP24. A significant amount of this could be at risk should the Commission license a new station.
2894 In communities like Barrie, London, Windsor, Wingham, Pembroke, Parry Sound, Huntsville and Ottawa we provide over 85 hours a week of original, distinct local programming. While some say this kind of programming no longer makes sense, we've added hours, we've added news bureaus, we've increased staff, all in stations that have lost $46 million since 1997. This is the long-term view, and a very serious investment in the future.
2895 It is these stations and this local programming that may be most at risk in this proceeding. The NewNet group of stations lives or dies based on its access to Toronto, and yet the applicants have barely mentioned, let alone attempted to address, the issue of impact on these stations. To be clear, we did not spend the last half dozen years investing in local programming across these communities only to tear it all down at the first sign of trouble. But any investment is made in the expectation return . some day. And any way we look at it, the introduction of a major new station in Toronto will jeopardize this programming we're most proud of.
2896 We don't have time in this presentation to discuss all the critical impacts of each of these applications individually, but we do believe, rather than raising the bar, they merely raise serious issues.
2897 On Tuesday, Alliance Atlantis revealed less ambitious plans for their own Canadian production business, but it is in the specific areas of program distribution, not production, that the dangers of self-dealing can be most damaging to the system. Alliance Atlantis' almost total domination of the Canadian theatrical distribution marketplace provides them with an undue competitive advantage, not only over other movie-purchasing broadcasters, but also over other independent Canadian film distributors striving to survive without the advantages of vertical integration, not to mention Canadian independent producers seeking distribution alternatives. Our attached analysis also shows, based on their application, that they offer no diversity of programming.
2898 As for the application from Craig, we respectfully suggest that there are virtually no COLs you could impose that would guarantee the service that has been so glowingly described this week would actually stay on the screen. At the end of the day, all you are left with is 14-and-a-half hours of local, and that is not altered by the new proposal for Category E ethnic programming, a category we understand no longer exists.
2899 Finally, Rogers. The notion that this station would not be damaging is simply false. Moreover, whatever merits that application might have, we seriously doubt the Commission would want to grant a monopoly in ethnic television in Toronto to Rogers without the consideration of other approaches and other applicants, as you recently did in Vancouver.
2900 MR. SHERRATT: Madam Chair, Commissioners, you have heard a lot of words this week, but the two words you barely heard were alternative and complementary. These are the qualities we have always strived for in our applications. That's the standard to which you have held us time and time again; and with good reason. And yet there is not a program, not a format, not a genre offered in any of these applications that is alternative, let alone complementary. More news, exercise and cooking from Alliance Atlantis; a variety show and some magazines from Craig; more news, documentaries and talk from Torstar.
2901 In other words, we respectfully submit that none of the applicants offer any compelling reasons to return to the vicious cycle of too many Canadian buyers chasing American hit shows and thus bidding up all foreign program rights. None offers significant benefits to the Canadian system, and certainly nothing to offset the harm that licensing would cause. None offers real evidence of demand for another station. And none have successfully disputed their disproportionate impact on CHUM Television's southern Ontario services. That is 918 employees, over 600 of whom are directly involved in delivering over 200 hours a week of original local programming.
2902 Finally, we would be remiss if we didn't comment on the fact that one of the original applicants has withdrawn. CTV's letter of withdrawal speaks volumes. And I quote:
2903 "Our MyTV business plan is no longer viable in the current environment. The advertising revenues forecast have become too optimistic, and the losses would not be tenable . For the same reasons, our fundamental concern with the licensing of any new conventional television station in Toronto and Kitchener has increased significantly. The markets in both Toronto and Kitchener cannot sustain a new conventional service without severe impact on existing services; even more so than when we raised the concern in our initial applications."
2904 CTV goes on to suggest that perhaps LPTV might be a better way to address the issue of "neighbourhood" television. We agree. And this is something you are currently exploring in another process. The Commission news release of a year ago following the WIC hearing, in referencing Toronto and Vancouver, stated:
2905 "The Commission is . of the view that these two large markets are already well-served by a good number of media outlets," and that there is a, ". plurality of voices and fora for expressing them ."
2906 It is difficult to accept the contention that this "well-served" market somehow became underserved in the last 12 short months. Yet that's what the applicants would have you believe. We began this presentation by cautioning against the temptation to pick a winner. We end by respectfully suggesting that by not choosing any of the applications before you the real winner the Canadian broadcasting system.
2907 Madam Chair, Commissioner, Jay Switzer and the team would be happy to answer any questions you may have.
2908 THE CHAIRPERSON: Good morning, Mr. Sherratt and your colleagues. I guess it would be fair to say you're not happy campers. You mentioned a number of hearings in which I participated where I saw you much happier. Having said that, we can certainly say you kept us busy reading as well, Mr. Miller. I think you have won the prize for the biggest intervention ever filed to the Commission. I had to buy a new suitcase.
2909 MR. MILLER: I respectfully suggest that Grant Buchanan -- still holds that record.
2910 THE CHAIRPERSON: Don't hire him now. I don't think we can -- we could manage that.
2911 Now, I will refer to your written intervention just to show you I read it, if nothing else, as well as to your comments of today. Now, to speak of conventional television stations in southern Ontario and being concerned about their licensing which is found at a number of places in your written intervention, in particular at paragraph 2, paragraph 7. What if the Commission were to license one of the proposals that has been claimed or argued is not a conventional station? Would your concern be as high? Since you focus on a conventional television station and you mention a number of factors that make you follow the hearing I suspect, what are the characteristics of a conventional station, as these are, in large, part your concerns, that you particularly say we shouldn't license such a station? What if it were not?
2912 MR. SWITZER: Madam Chair, it is fair to categorize our position as being against licensing anything at this time. However, there has been much discussion about use of the word "conventional" all week and certainly we would probably isolate the CanWest Global application as the only one that we would, in our understanding, define perhaps as not conventional and perhaps less damaging to the system.
2913 THE CHAIRPERSON: And you would include in conventional the Rogers proposal?
2914 MR. SWITZER: Obviously the Rogers proposal is a special situation and I understand they have been asked to be assessed under the -- the ethnic broadcasting policies and rules. We see the effect of the Rogers application as being material and serious, and because so much of their schedule does rely on American programming, we would group them conventional in the sense of replicating a model that exists that still relies on great amount of American programming.
2915 THE CHAIRPERSON: You also focus, for example, at paragraph 8 on page 4 of your application, that your concern about the effect of a station -- of any of the proposals on your -- on your -- on the local component of CHUM's properties over-the-air and CP24 - and, in fact, early in your intervention at paragraph 4 you say CHUM's local television - yet a number of times you express the view that these are not going to be local. In any event, there is nothing or little we can do you. We stated this morning that there is nothing we can attach to the Craig proposal that would keep it to what it is, et cetera. So if you don't think that they will be local, not particularly Craig, but the applicants, why are you concerned that they will have any affect, in particular, on your -- on the local approach of your properties? It seems contradictory to me, if you think they're going to be conventional, not local, why do you then say we're local and they're going to be damaging to us in particular because of that?
2916 MR. SWITZER: There are many reasons, and my colleagues may want to join in. The entrant of one of the conventional applicants you mentioned, in particular Craig, would be extremely disruptive for many reasons. They will grow their tuning, they will raise program prices. They will destabilize the whole balance of the system from a buying point of view, from a viewing point of view. It is for all the reasons we have talked about both today and in our filed application, that it would be hurtful. And without question, most of the applicants acknowledge that we will be disproportionately hurt. And it is our local programs that are most vulnerable and most at risk. Any disruption to the system will hurt existing broadcasters, and we will be disproportionately hurt, and it is our local shows not only with Citytv's but even more so with NewNet stations that rely upon Toronto revenues that will be the biggest problem for us.
2917 THE CHAIRPERSON: So your concern is not that they will program local programming appealing to the audiences against your local programming, but more the disruption of the market, the economic disruption of the market in a larger sense. My question was: you say we are -- even if they say they're going to be local, we can't keep them to that, they won't be. And you're local and, therefore, you will be damaged. Well I thought that meant --
2918 MR. SWITZER: Our comment --
2919 MS. CHAIRPERSON: I thought that meant --
2920 -- was really more as it pertained more to the variety show specifics and how difficult that is to ensure. I do want to add before Peter Miller joins in that what you have in front of you existed on the air every day is 45 hours of local on Citytv and 85 hours of local. You can look on the screen and see what we're doing every day. You're faced with proposals in some cases, in the case of the Craig's, both from a content point of view and volume point of view, at 14-and-a-half hours for what Drew called the most important market in Canada, while Edmonton and Calgary, my home town, are worthy of 31-and-a-half hours. It's a problem.
2921 MR. SHERRATT: Madam Chair historically, and you know this probably better than even I, Canadian television has operated on the Robin Hood theory. And the money to generate all of the local programming doesn't come from the local programming; it comes from the American programming, the foreign program that you are able to acquire. As second tier program buyers we have relied on local programming for revenue generation more than the others. But if the price of American goes up and you're sending more money to buy those American programs to generate the audience and the revenues you need to sustain the local programming, there won't be enough money in the pot to do the amount and quality of local programming we do now.
2922 THE CHAIRPERSON: This stress on American programming and the bidding process ending up in higher costs, there are proposals before us with very little American programming. Are those proposals where your comfort level would be higher?
2923 MR. MILLER: Madam Vice Chair perhaps I can link that question --
2924 THE CHAIRPERSON: I am the Chair.
2925 MR. MILLER: You are the Chair of the Panel, and the Vice Chair of the Commission. I am happy to address you either way that most --
2926 MR. SHERRATT: Peter, Madam Chair.
2927 THE CHAIRPERSON: You can call me sir, too.
2928 MR. LANGFORD: We often refer to her as her Godship.
2929 MR. MILLER: I like that. Your Godship, I will do that. Just first of all, the focus on local. We identified the impact on local for two fundamental reasons. One, because it is local that is most at risk in this proceeding. You have seen other players diminish local, you have seen us, in spite of market forces that have forced others out of local, put more emphasis on local. And when we look at economic impact on us it would be our local that's most at risk. Secondly, we believe fundamentally the essence of licensing a local television station is local programming. There would be no other reason to license a local station if there wasn't significant local programming brought to bear. So it's that twin aspect of impact and need, if you will, that brought us to focus on the issue of local.
2930 In terms of the issue of U.S. and relative impact, I think our analysis shows clearly that those applicants who have focused most heavily on U.S., and that would be Alliance Atlantis and Craig, would have the greatest impact. And when we look at -- and I hope we have a chance to discuss it -- our various ways of analyzing the impact, we see that those applicants would have an impact on the order of $10 million fairly early on after licensing. Applicants such as Rogers or Torstar would, with less of an emphasis on U.S. programming, have less of an impact, but still a considerable one over time.
2931 THE CHAIRPERSON: While you -- you just mentioned Alliance Atlantis so I will pursue a little bit your -- I'm not quite sure I understand your point about [inaudible] altogether. Are you suggesting that if Alliance Atlantis had an over-the-air television station they would keep -- there are only 24 hours a day for a broadcaster no matter how, who they are -- that they would keep their programming on the shelf rather than make it available to the system? Is that, in a simplistic statement, what you're driving at? Because they would now be competitors they would not distribute, sell or disperse their programming, and it would be in that their self-interest to keep on the shelf? Is that what you're saying?
2932 MR. SWITZER: We are saying it is a serious threat and a very large problem. They have grown from being a small producer to being a very large powerful company. Their revenues are approximately double of that CHUM. Their market capitalization is over a million dollars, and while they have made commitments in terms of protections and offered conditions of license on "independent production", they apparently to date have made no commitments with matters of distribution, and we believe conflicts with control of distribution are equally important and with respect and to respond to your concerns and are as important as the conditions of production.
2933 In other words, they could very easily, as has been the case with some shows in the recent past, gone to a "independent producer", theoretically not own the copyright, not own the ownership of the show, but for all intents and purposes distribute the show internationally, have creative direct or indirect control, receive future profits from the show through the distribution of shows that they make may theoretically not produce in-house. This is a very large, very powerful very integrated broadcaster/distributor and we applaud the quality of their productions. We just don't necessarily believe that they should be entitled to the privilege of being a conventional over-the-air broadcaster where those advantages would hurt both others and we believe the system.
2934 THE CHAIRPERSON: So the answer is yes, that is your concern if they became an over-the-air broadcaster, they would stop selling their products or distributing their products because -- to their competitors, even if they can't air it all on their own over-the-air station.
2935 MR. SWITZER: We believe they would telecast the best of their own shows.
2936 THE CHAIRPERSON: Well that's a little better, or more credible.
2937 MR. SWITZER: We're not suggesting they wouldn't ever sell anything to anyone, but certainly their dominance would result in a preferred status, a privilege that should be a concern of the Commission.
2938 MR. MILLER: Your Godship, I would like to add something here and make it very specific. I think all of us have celebrated and noted on the success of Alliance Atlantis and for example the film, the feature film area as a major theatrical distributor, as a major supporter of feature film. The likes of Robert Lantos and so on and so forth. That success in production and distribution has supported many of their specialty channels, Showcase and with your approval presumably ISC. If the next step is taken in terms of ownership of a conventional station, it totally tips the balance.
2939 By Alliance Atlantis's own admission they supply to CHUM on the order of 17 to 20 per cent of our feature film schedule, foreign and Canadian. And the privilege status they have developed as a producer, as a distributor, were they to have a conventional station would allow them to simply maintain all that product, keep it for their own conventional stations and not, for example, sell it to CHUM. That may be a business reality but it becomes an issue of public policy when status they have developed as a fundamentally important distributor and producer is one that public policy has created for them. And as you all know, the system was built on separation of production and distribution of foreign broadcasting. And it is such a fundamental shift should Alliance Atlantis become an over-the-air broadcaster, something I think has to be looked at very seriously in terms of safeguards and that's why we don't think that typical safeguards on production would be adequate. You would have to look a lot more deeper than that.
2940 THE CHAIRPERSON: I am looking at the number of stations in Toronto compared to the population in other cities where you, yourselves, are also -- that have the licensing of more than one station. In Toronto we have over six million people by now and there are six -- well really five over-the-air language - English-language stations, including the CBC. If you add CFMT, you have six. In Vancouver you have not quite three million people and you have six over-the-air television stations available to Vancouverites; in Edmonton, 1.4 million people and four stations; in Calgary, 1.2 million people and four over-the-air stations. Why is it such a concern that in Toronto we would envisage seven or six English-language stations over the air?
2941 MR. SWITZER: I have learned it's not wise to argue with the Chair, but if you are talking about a Greater Toronto Area and you referred to six million viewers, there are lots of stations providing local service to this area and perhaps -- or we believe that number is certainly more than five or six. Perhaps you are not including --
2942 THE CHAIRPERSON: I have counted in that CHCH so it would be CFMT, Global, CHCH.
2943 MR. SWITZER: We could certainly include CFMT to get to your 6 million, we would include the Peterborough station, who do local news in this area, our VR signal certainly. CTV's CKCO signal would be providing local service if you're talking about the area that would be covering the six million people as you referred to. CTS provides service as well. CBC obviously provides local service. It is an extremely competitive service in this market. My American friends don't understand, when we track ratings in Toronto, we shed tears or break out champagne with the growth or decline of as little as one tenth of one per cent share point, when my friends in Los Angeles celebrate over share gains of five per cent or three per cent. They said why are you so excited? And we say in the Toronto market that is a huge difference.
2944 The number one station in this market, in terms of total audience share, has approximately a 10 share of tuning. In any other market in the world, particularly any well-serviced Canadian or American market, that number one station would have a share of 15 or 18 or 20. It is the toughest, the most competitive commercial television market in the world, both in terms of number of services from a content point of view and number of services that are aggressively selling in the market. Because not only do we have all the local Toronto services, and the regional services, but we have to live with not only television signals from the border station, but sales offices and active selling of a whole range of American signals into the market. We listed nine or 10 Canadian stations providing local news and content, but there are an additional half dozen American services that are selling against us there as well. It is tough slogging.
2945 THE CHAIRPERSON: And to pursue on that, the population of the GTA has almost doubled since the Commission licensed any station except Crossroads in this area. I know that in your -- at page 8 of your presentation this morning you mention it as some stations, but one of those is CKVR, which is yours. Which leads me also to ask you, you have in the details already CITY, CKVR and CP24 that provides local programming; why are you so concerned that you can't compete in that area?
2946 MR. SWITZER: We believe we can compete. We look to the shows we're doing now. Our total share for all three stations combined that you just referred to, Madam Chair, would be approximately eight per cent. It's a number that we would like to see larger as more stations have launched in this market, not only over-the-air stations, which you quite correctly talked about as being competitive, but additional specialty channels which we have been beneficiary of, to some extent, as well as additional foreign channels that have been allowed into the market. Our share for example -- for Citytv, nine -- or eight or nine years ago was nine per cent. Our share today is approximately five per cent. We're not here complaining about that, we're here celebrating the local programming that the New VR and New RO in Ottawa and the New PL that Citytv is doing, and all the hours that we're contributing against this flood, this explosion of services to both local, distant and foreign, that we're all competing against.
2947 THE CHAIRPERSON: Perhaps instead of looking at or comparing with the U.S. situation, we can look at the GTA situation in particular and find, perhaps, less pessimism that you find. The Commission has put on the file the aggregate of the Toronto/Hamilton station revenues and expenses. They are at page 12, basically aggregated, and we don't have numbers for 2001. And I know we can discuss that, how much the world has changed, but as of 2000 the PVI cable 24 per cent, whereas Ontario is 18.5 and all of Canada, 14. So when we look at that comparison it's a great market to be in. I -- I know that -- that may not -- that -- city is not at that level, but I am not quite sure that the Commission should be in the business to that extent of protecting the business plans and success of any one particular player. Or should it?
2948 I know it's nice to be God for half an our hour, but we are criticized more often for intruding too much or not living with this competitive world and letting business people have as many possibilities in terms of the licences they have and let them find their way in the market. A PVI [inaudible] of that extent which is better, it's better than Ontario, it's obviously a great market to be in which explains why we have these applications, I suppose.
2949 What should be -- why is this -- why are you so pessimistic and why do you think that we should play a role in, over time, focusing on one player's view rather than the aggregate numbers in our forest?
2950 MR. SWITZER: Perhaps I can begin. We're trying to give you the tools you need or additional tools, so that you can make the balanced decision. At the beginning of the week, Commissioner Langford mentioned in one of his earlier questions I believe, perhaps we may not be creating anything new, if I may paraphrase. We may be hurting something and questioned the role of perhaps reallocating rather than creating new.
2951 We're here ultimately optimistic. This is a very uncomfortable position for us. I think after all of these years and decades, I think it is the first time in 15 or 20 years this team has appeared before you in a situation like this. We are growing our businesses and doing more programs. We are trying to follow the policies that you have set in place and have made considerable investments at the local level. We applaud CanWest's very large margins and CTV's much larger margins and they have realigned their businesses recently at the expense of local. We don't want to do that. It's our preference to grow local programming and we have been doing this consistently and, in particular, in the last five years according to our expertise, what we believe should be done in the markets, and to respond to your policies. Huge investments at local level. We are not asking for special protection nor a handout. We are trying to discuss and flag system risks and the effect any new licence in this market to the rebalancing of what we think is very good programming.
2952 THE CHAIRPERSON: The reason I raise this is, for example, because of the Price Waterhouse study that you have filed and there are charts at page 33 and the title there is "CHUM's regional conventional assets have underperformed the rest of the private conventional TV sector during the 1999 to 2000 period. CHUM's conventional TV services has posted revenue growth rates below that over the overall Canada, Ontario and Toronto markets and CHUM's revenue growth was dragged down by the negative growth of its Toronto-based assets."
2953 That is very pinpointed to your performance and to -- of course we are delighted that we have all this material, it does help and we're thankful for it, but my question is, should we at this stage look at this and say as a result of one player in a market that performs and has performed and is has shown real numbers that are -- that are healthy, what is our responsibility in focusing, in 2001, as a regulator, to the extent that you would like us to look at one player's performance in the market when one could argue they have been given tools to participate in the broadcasting system?
2954 MR. SHERRATT: Perhaps we could come at it from a slightly different approach. We -- we like to believe that we have been part of the process of rationalizing the Canadian system over the last few years. It wasn't that long ago that CTV was in somewhat disarray and we had to get some logic back into the system. We were part of the start of that process when we made the deal with what is now CTV regarding the Maritimes and southern Ontario. They needed to get one signal owner running CTV. We did the swap from the Maritime assets which were profitable for their Southern Ontario assets in London and Ottawa that -- we knew when we did that this was a long-term approach we were going to have to take, but it was part of the logic of making it all work.
2955 And the key part of the logic is what happens in Toronto has a fall-out effect on what happens on the rest of the country. I hate sitting here as someone who grew up in Truro, Nova Scotia and saying the centre of the universe is Toronto, but it is the centre of the market as you pointed out, and it is where it all starts and money that is attributed to Toronto falls out into the smaller markets and allows the smaller markets to maintain what they have going for them. CanWest have been very successful and they should be, they're good operators. The current CTV have come out of the blocks quite well with the structure they have put together and that's falling out across the country and they've got good service to the smaller communities. They continue to rationalize in some areas, but that's not what we're here to talk about.
2956 We are a second tier player, we don't buy number one American hit shows as our predominant base of our operation. We rely a great deal on the development of local programming and marrying that with lesser viewed American programming. But that's put stability in the pricing of the foreign product and the point we've been trying to make on that is that money that doesn't go south, stays here and goes back into programming. That's what we have been doing, to the point in the southern Ontario stations we have losses. We're not the only ones. The small market stations continue to have trouble. You need the fallout from the bigger markets to make those work. And Toronto is key to that. So if you bring another player in you can argue yes, I could sit here and argue, make the point that there is room in Toronto for another television station based on A, B, C, D, but to make the Canadian system work and develop what has already been put in place over the last two to three years, we need some time for the benefit in Toronto to fall out against the rest of the system.
2957 MR. HAMILTON: Madam Chair, I would like to make some comments about the health of the market. Most applicants have referred to growth of 5 to 7 per cent in Toronto based on the TVB/TSS reports for the broadcast year 2000/2001 and we agree, that's the right number. But the number bears examination of the makeup of where those dollars come from. And everyone reports local, national spots and network dollars. If you look at the trend of local and national spots over the last four years in Toronto, what you see is growth of about 0.08 per cent, which is what I would not call a healthy marketplace. A growth has been in the area of network, which is conventional and specialty networks sales growth. CanWest alluded to this yesterday as well. These are filed numbers.
2958 So the struggle in the Toronto is for local and national spot dollars. These new applicants would all be chasing those local national spot dollars that we all compete for. They wouldn't have access to go after the specialty or network dollars based on their coverage areas, based on their formats, whatever. So I think it's important to note that the Toronto market isn't as healthy as the overall number when you look at local spot revenues.
2959 THE CHAIRPERSON: Is it not possible that some of these applicants are right, that there is an appetite there for some different programming that could generate revenues that are not now generated? I know already your -- you want to tell me you provide local, but it's a type of local. Perhaps there is other local programming that would get some new money into the game because it's new -- a new way of looking at things.
2960 The CRTC you know, I know people call us God or your Majesty when we're sitting here, but that's not what they say after they're gone. And normally it's words more like dinosaurs, not being able to think out of the box, and only repeating what was done before and not putting enough risk into it. So is it possible that some more money can be generated that isn't there now because you are offering a different product?
2961 MR. HAMILTON: Certainly as optimistic sales people we would like to think so and we're going through that process with our lovely station Cable Pulse 24. You people were kind enough to change your condition of licence so we could sell local, and we're attempting to do that as we speak. We also sell local on Citytv and on VR. But on in the case of Cable Pulse 24, we're finding it difficult to attract new clients to the medium of television. It's hard work, it takes a long time, it takes relationships to be built with the clients. And in the last fiscal year we did about a million dollars of new business on Cable Pulse 24. We're quite proud of that, but that's not a significant amount of revenue in the whole scheme of things.
2962 We have an active new business development unit within the CHUM sales organization. We have eight people dedicated to new business alone, and last year they bought in a hundred new accounts to television on Citytv, VR, all of our stations and that equated to about three and a half million dollars. Some these are accounts like Wong's restaurant, which is a local client and some of them are national organizations as well, so we're constantly out there trying to develop new business. We know it's part of our future and our mandate. I guess the challenge is how much of that can you bring in and it comes at the cost of -- great expense to the sales operation to work those accounts, and to find the opportunities. So it's not like it's not being done.
2963 MR. ZNAIMER: If I may, our view is that timing is everything. There is always room for one more until there isn't. And sometimes you do get to a tipping point where the introduction of more of the same, well just leaves everybody poorer. We applied time and time and time again in Ottawa and were told, now is not the right time. The market is suffering, there is -- there is not demand, there is unsold inventory, come back again. We did, and we did again, and we can tell the same story of course in Vancouver. So I think that's our point here today. This is not just about CHUM. It is about the system and it is the tragic dilemma of the Canadian system that the price for the extra service in the big city is paid in the small city. That's how it works and if you can think a way out of that box we would be delighted to hear it.
2964 THE CHAIRPERSON: I thought you were in Ottawa, I see you all the time.
2965 MR. ZNAIMER: Yes, finally. What I am trying to say is we applied twice before we were allowed entry and denied because the market was not generating.
2966 THE CHAIRPERSON: What was the date of the hearing for an independent station in Ottawa?
2967 MR. SHERRATT: '89.
2968 MR. ZNAIMER: And we got in there not because we were granted a new licence but because of this deal that Mr. Sherratt has just mentioned.
2969 MR. SHERRATT: Madam Chair, I think we're having an important discussion because you're talking about the big picture and the role of the Commission in this kind of a dilemma. But it has ever been thus and we have a successful broadcasting system in this country not in spite of regulation, but because of it. And people do from time to time, no question about that, particularly the newspapers who aren't regulated about anything, love to criticize the way the broadcasting system works.
2970 But we live in a very unlikely scenario. We are the only country in the world that, by right, has the television output of two nations, one of them being the most prolific manufacturer of entertainment in the world, the United States. We have all of the United States television system and we have our own. And our own is very good. And yet we are this small nation with this unlikely piece of real estate and people decide 150 years ago might make a country. I think if you gave it to an academic they would say it's impossible, but we did it, and we have a broadcasting system because of the way we have done it. We don't always agree, the regulated and the regulator, but so be it, that's why the system works. And that kind of gentle hands-on approach by the regulator through the years has kept a balance that has allowed us to have the kind of system we have not just in Toronto, not just in Montreal or Vancouver, but in the small centres, the Peterboroughs, the Reginas and the Saskatoons. That wouldn't happen and we wouldn't have the kind of local television we have if we had gone without regulation. We would be Americanized and we would have virtually nothing in the way of local service and small markets the way they have in the United States.
2971 MR. SWITZER: Madam Chair you asked a question about content in terms of wouldn't it be wonderful if there was both some new ideas that met a new need. And we were certainly surprised to see that most of the research as presented by the applicants, as mentioned by many Commissioners this week, actually noted that viewers in the Greater Toronto Area were quite satisfied, were quite happy and in many ways were quite well served. You talk about new programming ideas. We talked this morning about Alliance Atlantis's proposal for bright, new, inventive ideas, a morning show for three hours at 6:00 a.m. which we are already doing at 6 a.m. A noon show for news which we're already doing, a news show at 6:30. At 11:00, a neighbourhood talk show, we're already doing at exactly the same time they're proposing and so on and so on. We take a step back and look at this -- this -- this kind of search, desperate search for a need and a way to fill something as opposed to just giving someone the opportunity to -- to get the riches from Toronto without in any way looking at the effect on the rest of the system, we're troubled.
2972 THE CHAIRPERSON: Mr. Hamilton, would you agree that some of the predictions as to how much new revenue there will be is also based on in part by looking further back at the projected health of the economy?
2973 MR. HAMILTON: I would agree.
2974 THE CHAIRPERSON: And I am puzzled at the extent of your pessimism and what I understood you to say this morning that no one is predicting a turnaround, if there is in fact a recession, for a long time, et cetera. In fact, you've seen the Conference Board numbers that say the oppositee, that the expectation would be what they even call a surge at the end of 2002 or the beginning of 2003. And should the Commission not take a longer view of the general market conditions, and temper the pessimism of some by some of these numbers and the fact that if we were to licence a new station it wouldn't be on the air possibly until that first quarter of 2003 or close to that? And even Mr. Goldstein, who usually is quite adept at making predictions and pie charts and so on, says he is not sure, how you can be predict whether it's going to be bad or good? The Conference Board has economists that looked at it, and their prediction is that it's not going to last very long. Why should we make our decision today for something that will be implemented in the future? Why should we base it on the immediate and not a longer view?
2975 MR. MILLER: Madam Chair, we're not suggesting you base it on the immediate. We are suggesting that the immediate is something that you also have to add to the mix. Mr. Goldstein also pointed to what he described as a major structural shift in television advertising where essentially all the growth is going to specialty services and this is not a sudden development. This is a trend you have seen over the late '80s where the rate of growth in conventional has declined considerably, has flattened out and that's a structural shift. So while the economy grew through that period, significantly, the rate of growth of conventional did not, and with all the new specialties, with all the increased fragmentation, it is not reasonable to assume we are going to get the same rates of growth off conventional that we have seen earlier on in the 1990s. And while you can't pick a number, you -- we have seen numbers in the CTV and Global renewals, the projections, undisputed by anyone, at the time were in the order of two, two-and-a-half per cent.
2976 THE CHAIRPERSON: Is it not at all possible, Mr. Miller, that this shift and the difficulties of the conventional television stations as you see them both in the States and here is because broadcasters are not any more nimble than we are in adapting to a new world? And maybe thinking out of the box will create something different? You know, everybody in the industry wants us to think out of the box, to not be dinosaurs. Sometimes they want us out of the box altogether, sometimes they want to be in the box with us depending on where their interests are. But in large part the reference point can't always be the way it was before.
2977 MR. MILLER: Obviously the Commission has to look at all the factors. The economic situation is one factor. While we all admit there is no way you can fully predict, if you look at the trends, trends would suggest more modest growth, more flat conventional than anything else, number one. Number two, the Commission obviously in its role of choosing or not choosing an application for a new station has to look at the benefits that are brought with licensing versus the costs. Conventional television is different.
2978 Mr. MacMillan pointed out yesterday that if you want successful local television, successful local programming, that involves a lot of money. We know that, we have invested a lot of money that hasn't yet seen a return. So the issue before you is, if you license, can you guarantee through conditions of licence benefits that outweigh the harm. And so as a regulator it seems to us that you have absolutely to look at what the impact would be and we have a responsibility as a licensee in particular to tell you what the impact is most notably because we're going to appear before you in April trying to set conditions for licence for our stations for the next seven-year period.
2979 So it seems so us that you absolutely have to weigh the proposed benefit against the impact. And in all that mix that we are suggesting, given the concerns and the doubts, that now would not be the time to introduce new stations in this market.
2980 MR. ZNAIMER: Madam Chair, that was one kind of explanation. I would like to address the creative question. I am a great student of local television and I would be really instructed, I would have been really instructed if I had heard a breakthrough thought on this question. It's one thing to talk about innovation; it's another to deliver [inaudible] over Citytv. So we draw your attention again to the fact that in hearing after hearing after hearing, we were always called to account for bringing an alternative idea, a street front, store front television station, videography, speaker's corner, innovations, genuine things that the scene had not seen before. And what we're offering in these proceedings is endless repetitions of the same old thing. That doesn't address your point about innovation. Had we heard innovation, we too might have shared that view.
2981 THE CHAIRPERSON: Well it's possible isn't it that returning to some older style is also innovative after a while, you know. It's up to -- it's up to the conventional broadcasters to find their niche or, in this competitive world, if it doesn't work, it doesn't work. But there isn't just one style of local television that can be brought to the people. And a number of us are students of -- of television. And the world changes and what the Commission now is facing is a demand for the more ordinary local television because it's disappeared on the conventional television stations who are more and more being networks and trying to compete with the specialty services. So it's not sure that there is just one way of doing things, and that it will work forever. So that is something as well that we have to factor in.
2982 But you have raised a matter of conditions of licence. And in your brief you do say at page 9, paragraph 34, that if, despite your instructions, we, in our wisdom, were to license an applicant that we should have meaningful conditions of licence that would ensure that the service they are proposing is the service that goes to air. You have said earlier, I believe that with the Craig application, there is nothing we could do that by way of conditions of licence. Are there any other conditions of licence that you would envisage that would reach what you have in paragraph 34? I understand your first alternative is no licence.
2983 MR. SWITZER: Yes, I am obliged to remind you that would be our first alternative. We have talked this morning in particular about the Alliance Atlantis and others and the one of our concerns certainly would be a firming up of their offer when they referred to 75 per cent of certain definitions of their programming being from independent producers. And we would certainly respectfully suggest that a more appropriate and more reasonable protection would be to expand that to include independent of their own distribution as well.
2984 We have other concerns, and it wasn't our place to suggest that you certainly, as it relates to the Craig application, not come up - we're sure that you are a very smart regulator - you come up one way or another, but it would be very difficult to construct traditional conditions of licence that would guarantee -although there is only 14-and-a-half hours being discussed - that at least the things that they promised would be there.
2985 And we look back to only four or five years ago where many of the promises in Calgary and Edmonton, Alberta about alternative time periods for newscasts, alternative shows, access shows, interactive shows that were part of that discussion four or five years ago were not on the air and are not on the air. A big part of that hearing, and I was there, was alternative newscast. Today we look in Alberta and there is a traditional 6:00 o'clock and 11:00 newscast. We're not suggesting that broadcasters don't have the right to change things over time; they do. But we propose that some of the unique elements and propositions that are being made to you without conditions of licence have very little value.
2986 THE CHAIRPERSON: I think that if you were following the hearing it has been expressed by us as well that if the proposal is to add something new and diversify the market and, therefore, worth the risk to the applicant. And perhaps to us if there is some difficulty to the system, that at a minimum, whatever it is that's proposed remains what the proposal was accepted as. I think our discussions indicate that we have concerns as well.
2987 MR. SWITZER: To round out the answer, Madam Chair, to your question, we believe that there was full and complete discussion of potential conditions of licence with Rogers and with CanWest. We believe the Torstar discussion about the difference between the 101 hours and the 118 hours, in fact, was significant and material, and we came to the same conclusion and did have those concerns and would certainly be much more comfortable if they, in fact, frankly honoured and respected and were prepared to accept a condition of licence based on the schedule they filed.
2988 THE CHAIRPERSON: So what would that condition of licence look like?
2989 MR. SWITZER: It would parallel the conditions that were discussed earlier this week, however replacing the 80 per cent with the 93 per cent that we believe would be fair given the paragraphs described in their schedules and their intent and their promise.
2990 THE CHAIRPERSON: I have just two small questions and then we will break and my colleagues have questions for you. Buffalo. Why is it that everyone, experts, hired experts, applicants, say that there is a range of 25 million flowing out, and you say there isn't any?
2991 MR. SWITZER: We will be very clear, Madam Chair, we do not dispute the 25 million dollars. Our issue is how much of that can reliably be repatriated. We're happy to give you detail on our comfort with the 25, that's not an issue, the major point is that that tuning will remain. Repatriation of dollars only occurs when there is repatriation of tuning and we don't believe there will be considerably repatriation of tuning. Firstly, because the Buffalo station controls its own programs and there can be no pull back of programs as was the case in the British Columbia model, and secondly, because the WUTV station in question aggressively programs in a way to avoid simulcast. They specifically will change episodes, do not provide listing information, change time of day. They will, in fact, hurt their Buffalo viewership so as to avoid what is to them a critical Canadian source of revenue. So we do not dispute the 25 million dollars. We do believe that the actual repatriation of two million dollars will not be significant.
2992 THE CHAIRPERSON: And my last question. I was a bit curious about your concern that's in your written intervention at paragraph 5 of, page 17, whatever it is, that you think there shouldn't be an ethnic station licence until there is what you call -- I can't find the paragraph right now, but a comprehensive review of the state of ethnic television in the GTA. What do you envisage should happen?
2993 MR. MILLER: Madam Chair, --
2994 THE CHAIRPERSON: Oh, I found it it's paragraph 17 at page 5.
2995 MR. MILLER: We made that suggestion in light of our experience in Vancouver where, after issuing a specific call to meet the needs of the multicultural community, you ended up with an applicant that you didn't have before you at the time you were considering the Rogers application. We think that kind of approach is even more warranted here in Toronto where Rogers is now asking for the privilege to have a second ethnic television station which would give them obviously a monopoly in the conventional ethnic television station in Toronto. I think that's a concern for many of the other ethnic broadcasters with specialty services who I am presuming will speak to that.
2996 I also think, given particularly what you have heard at this hearing, the evidence is inconclusive as to what is the greatest need. As you know, we have been pioneers in dealing with issues of cultural diversity, you have noted that. We ourselves have met, attempted to meet, the needs of the communities that we serve both through multilingual programming and through inclusiveness. We see those twin needs as both important, but what you heard at this hearing was two very different approaches. And before making a decision it seems to us that you would want to investigate that a little bit more.
2997 THE CHAIRPERSON: Does it boil down to you wanting -- or suggesting that the Commission should issue a call for ethnic broadcasting?
2998 MR. MILLER: If it is the panel's view that this is an area that is of need for greater service, and if you share our view that there isn't clear evidence of what the right way would be to go, then we're suggesting that would be a more appropriate route than issuing a licence to an applicant in this proceeding.
2999 THE CHAIRPERSON: We will break ann my colleagues have some questions for you, but I want to assure you, Mr. Miller, I may be God here but I turn into a pumpkin as soon as I get home. So we will be back in 15 minutes. We will be back in 15 minutes.
--- Recess taken at 0957/Suspension à 0957
--- On resuming at 1019/Reprise à 1019
3000 THE CHAIRPERSON: Order please. With my Godly ears I could hear some beepers and cell phones again. Would you please turn them off; they're distracting to participants and to us. Welcome back and I will ask my colleagues to ask questions that they have for you.
3001 Commissioner Langford.
3002 MR. LANGFORD: Thank you. If it's Julia Roberts for me, tell her we're finished, I just don't want any more of her calls.
3003 I wanted to explore just a couple of areas and Mr. Switzer did paraphrase me relatively accurately so I know where you are coming from and even if I didn't before I certainly did after the reading the brief and I know it even more this morning. So we are aware, I think all of us here but I am speaking for myself, I am very aware of what you're saying but there are a couple of areas I want to explore just to be absolutely sure. The first was mentioned just before closing by the Chair and it dealt with this CFMT situation. Because if I could characterize what I think you have said here today, which the easy answer is say no, which I think is a direct quotation. But then you muddied it just slightly by saying say no four times, then saying no the fifth time to CFMT, but start something else, start a process, if there is a need, perhaps do what we did in Vancouver, issue a call, focused narrowly on services which could be described as ethnic services. Could you expand on how you see that happening? Because a cynic might say that's a delaying tactic which is politically correct but perhaps it's more than that. So if it is more than that I would like to have a little more information on what your thinking is on where that might go and what kind of needs might be filled.
3004 MR. MILLER: That suggestion is based on at least three factors. First of all, we have, as a company in our own way since our very origins, tried to meet that need. We have spoken in other proceedings about those needs. We participated in ethnic policy hearing and we know this theme was a big part of our own participation in Vancouver. And we watched the developments there, and watched the fact that the Commission issued a call and we feel the result of that is the Commission had another applicant they wouldn't have otherwise had, and therefore, more choice as to deciding how to best meet that need. That's point number one.
3005 Point number two is, let's be frank about this call. This call was triggered by one applicant, Torstar for their home style, I think I may have that wrong, style of television. And then five other applicants, opportunistically responded. It's very hard to respond in the short time frame to a call, so you heard from established, well-financed players. Others that might have wanted to consider wouldn't have had the opportunity and time to come forward.
3006 So while you do have six applications, what is interesting to us, and this is the third point, is you have six applications each arguing for a very different demand. Each one of them has come to a different conclusion as to what the real need is. Each one has research to support it but, I think as your questioning indicated, the support for each applicant is no greater than the satisfaction with the existing services. So we think you would face an extraordinarily difficult decision among all those applicants. If at the end - and again, we're not going to suggest one way or another - you see the greatest need is for the ethnic communities of the Greater Toronto Area and the statistics and the numbers we all know certainly would allow you to reach that conclusion, we think issuing the call, perhaps similar to what you did in Vancouver, would give you more choice, would give you more opportunity to consider. And again just back to the specifics here, you know, the privilege of a licence is a very important one. And we're not disputing that Rogers and CFMT have done a good job. But to give them the only other ethnic station in the market without considering all the other options would seem to us to not be the most prudent course of action.
3007 MR. LANGFORD: But are you suggesting that in the present mood where we've had a focused call for ethnic services in Vancouver, so surely have awakened and sharpened instinct and interest in the field? And we have had a call here in Toronto where there are -- I would think any number of sophisticated business interests who, were they inclined to get into broadcasting or broadcasting with an ethnic format, would have at least been conscious of this going on. Are you suggesting that we would somehow sharpen that awareness even more or that we should? That somehow we have a duty beyond a call to say, if I may, Mr. Miller, that you know, some people respond opportunistically but -- I haven't got the record in front of me, but I would be willing to wager a doughnut at Hortons that not every licence you have ever been granted you were the first applicant in the field on. I may be wrong and I would be willing to ante up a chocolate glazed or whatever you want.
3008 I am trying to understand, and again I don't want to tar you with only a sort of cynic's role here, but I am trying to think what the benefit might be other than a delay, which may be a benefit but let's leave that one aside. What would be the benefit, what types of applications do you think might come up if another call were to come? And let me add to that -- sorry to ramble on, but -- how might they counterbalance? I mean if we were to licence the CFMT thing, the immediate obvious benefit is that a lot of people who aren't getting television in their tongue of choice would get it. If we don't, but do what you are suggesting, they would have to wait. So why would you suggest that one balances the other?
3009 MR. MILLER: Well, I think it goes to this notion of taking the long-term view. Whatever you license here will be here hopefully for a long time. There is a limited amount of spectrum, it's a big decision in the biggest market in Canada. It has huge impacts locally, it has huge impacts for the Canadian broadcasting system. If, at the end of this proceeding, this panel doesn't have a clear view of a clear demonstrated need that one applicant has demonstrated above all and that meets that need in the best possible way, then I think it would be appropriate to look further.
3010 And I again suggest that putting together an application is a difficult thing and players in ethnic broadcasting, be they the Lombardi family with CHIN, be they Shan Chandrasekar with ATN, be they any number of other players would take that opportunity, if they had a bit more time, to look seriously as to how they could contribute in a more direct way to a call, number one. And number two, again, if we are speaking specifically of the CFMT 'too' application, that's a huge thing to hand to that organization. As many people are supportive of CFMT, the Commission has heard at previous hearings people that were not happy with it, people that had concerns with access. Again, to give one broadcaster monopoly in ethnic television in the largest market in Canada will only exacerbate that concern. So taking a little bit more time to really make sure you have it right seems reasonable and prudent thing to do.
3011 MR. LANGFORD: Well, I take your point, I certainly understand it. I think I could remind you though that at the Vancouver hearing - when was it a couple of years ago that somebody referred to - one of your panelists referred to early on in your remarks, we didn't necessarily wait for perfection. And there were naysayers, there were those who had a say as you were coming to us, the Cassandras warning us about dragging what you refer to as the Trojan horse in. And we didn't listen to Cassandra and I bet you think it worked now and the Trojans didn't listen to Cassandra, it didn't quite work for them, but maybe we don't have to go that far back.
3012 You came at this point and I don't want to reargue or relive but you came with a very daring, very different proposition where you wanted two services, one in Vancouver, one in Victoria and in the process of discussions and cross questioning that got sharpened. The notion of severability was put on the table; people talked about that and you ended up with one news station in Victoria which I assume you're doing wonderful things with. So it didn't come to us, Mr. Miller, in a perfectly finished form, it really was a work in progress. And something came out of it. Now I know it's little harsh of me to use that example because it worked to your benefit, but still it is an example where perhaps we didn't have perfection in the application books but what came out of it was certainly acceptable despite the Cassandras.
3013 MR. MILLER: But you know what, that is a good example, because that was an example where the Commission had previously identified a need for service in Victoria. The Commission had looked at it but had concluded that a prior proposal for another station in Victoria was inappropriate and applicants, seeing that, came forward. Two applicants with proposals for service to Victoria, two very good applicants as was evident by the split decision of the panel, what you were choosing between there was two very good choices and you made one. And you decided at that time greater service in Vancouver wasn't warranted. And then what happened next was there was a further response from the Cassandras that said you know what, you missed an opportunity to serve the ethnic community here and you looked at it again and you are about to make a decision there. So I think that is a good example of how the process actually did work because what you licensed initially was consistent with the previous view. And then you had the opportunity to follow up.
3014 And you raise Vancouver/Victoria also here and it's important to draw a distinction between the two markets because in that market you had two strong incumbent broadcasters with high profit margins. In this market, while the chair has pointed to a strong average that average is entirely responsible and attributed to two groups, CTV and Global. All the other players are not sharing in that, so when you draw the differences between the markets I think you can come to different conclusions.
3015 MR. SWITZER: Finally, if I might add, Commissioner, in this market if there is any one particular urgent or perceived special need by any one community that needs access, Rogers is certainly able to provide some interim solution with their own existing service. It's a privilege they have and they do a good job at it. They have tools available to them to deal with the concern you raise about a delay. Obviously it's not perfect.
3016 MR. SHERRATT: I think it's important to point out that that process did take place. Rogers might well be a successful applicant; this is not to cast aspersions on their application or what they do. They do an excellent job and you may conclude going through that process that they are the right applicant and that is the right way to do it, we're not trying to adjudicate that. It's just I think you're trying to make a procedural argument that might let you examine the needs of a very complex community and what they really want.
3017 MR. LANGFORD: Well thank you for that, I would like to move on. I know we're a bit pressed for time again but this issue really does seem to go to the very foundation of it. You seem to divide, if I understand it, your remarks this morning in two broad areas. The immediate impact on your stations which I gather would not be beneficial, I think I understood that. And then the more ethereal kind of argument, less apparent, it can't be done with graphs and pea bits necessarily, but it's one that interests me and that is the notion, almost kind of borrowed notion, of equalization from the Canadian constitution or something where there is a feeding of the have-nots by the haves and the kind of ripple affect that that might bring. And I would certainly like to hear you little more on that.
3018 And without in any way seeming to be nasty or negative, it is as possible that though your dream is wonderful, you are perhaps just not as good at doing what you do as you think you are? I mean that's a nasty thing to say, but it is a possible interpretation so we could set aside the first one for a moment. You have made the point on the impact; you have given us ample charts and ample studies. But on the second one I would like to hear you at a little more length, this notion of a ripple effect and equalities that are built into it and what the impact might be outside of Toronto; is that clear?
3019 MR. SWITZER: It's the question, Commissioner Langford, and perhaps I can begin and others can join. It goes right to the point of this. There have been discussions this week that many conventional broadcasters have abandoned local service and we are here adamantly, optimistically, positively looking you in the eye and telling you we, as a group, have not abandoned local service. We have invested in it and we have invested in it in small markets. It's fundamental to what we think should be done and what we can do well. In Wingham, in Windsor, in London, in Barrie, in Pembroke, in Ottawa, strong local stations, local morning shows, local news shows, non-news programs, music entertainment magazine, the programmers are here to talk all about that. That's really the key -- the crux of the matter. Any decision made in Toronto will affect not only across Canada and frankly our stations as well but the smaller markets where we refuse to surrender in the way that CanWest and CTV have. We have not abandoned local service and that's what brings us to this table. And because of that, to respond to your question and Madam Chair's question earlier this morning, we believe you do have a stake in our profitability. We have an obligation to do the best job we possibly can and of course we put what we have on the air every day in these markets to the test. And that's --
3020 MR. LANGFORD: But does it go farther? And I don't want to preclude anyone from responding because I think Regina was mentioned, I think by you Mr. Znaimer; does the ripple affect go farther? Does it go beyond CHUM stations and CHUM smaller stations beyond Wingham? Does it go to stations you don't even own and if it does can you explain how that would work?
3021 MR. MILLER: I think it was evident from CTV and Global that the Commission expects those large broadcasting groups that have the privilege of a large system or network of stations and the profits for example that they get from a market in Toronto maintain service in markets where it's not profitable. And my recollection was, for example, that markets like Winnipeg, markets clearly like Sudbury, Timmins, North Bay, these are not profitable markets for CTVs or Globals. And while we are not here to make the argument for them, we think their argument, which is the profits they make from Toronto are in part what allows them to sustain a service in those less profitable markets, is a strong point.
3022 Local television is under threat. CTV rationalized it in North Bay, Timmins and as you well know the local community were not happy. The stations run by Corus in Peterborough/Oshawa, they just closed their Oshawa bureau a few months ago. When you get back to Hull I imagine you will have the joy of reading countless submissions from small market broadcasters across the country about the impact of BTH. So this notion of what happens in Toronto affecting other communities in Canada is both a direct and indirect effect. For us it's direct.
3023 The New VR, while you don't count it as a Toronto station under your Toronto analysis, is directly dependent on its access to Toronto to its survival and that group of stations, so we worry greatly about what we can commit to going forward when we appear before you in April if you were to license here because we see a direct impact. The direct impacts are things such as diminished profitability to the larger players.
3024 MR. LANGFORD: Thank you very much. If anybody else has anything to say on that I am happy to hear it, other wise those are my questions.
3025 THE CHAIRPERSON: Commissioner Cram?
3026 MS. CRAM: Thank you, Madam Chair and it is this very issue of the, if I could call it that, the financing paradigms of the broadcasters that I want to look at. And you, Mr. Miller, have talked about the issue that the profits derived by CTV and Global from the Toronto market do subsidize the smaller markets, the Reginas, the Saskatoons. But am I correct in saying, because Mr. Miller, you have said the profitability in Toronto doesn't belong to CHUM, am I correct in saying that essentially the specialties, your specialties are subsidizing your conventionals? And that is your financing paradigm where CTV has the other one.
3027 MR. SWITZER: Our recent success with specialties has certainly kept, on behalf of management, our owners at bay and has allowed us to invest more in conventional. And we have other issues and have filed comments and some research that suggest the rate of growth in the specialty world and those margins that we have enjoyed, not only for us but other specialty channel operators, is being reduced; that's not primarily what we're here to talk about. But yes, in the past that has helped a great deal.
3028 Our issue today has been historically the ability of a large market conventional station such as Citytv helping and supporting and paying for those daily newscasts in Wingham, the morning shows in Ottawa, the morning shows in Windsor, and so on, when the profitability of the conventional stations in the big markets like Citytv drops to five or six per cent, where our entire conventional profit is down to single digit millions of dollars.
3029 At five million dollars, the effect that some applicants have talked about even for one affected station, six or seven million, that is more than the entire profits of our conventional group. It's a serious matter. And yes, it is mitigated somewhat by our success on conventional -- on specialty, I'm sorry, but that by itself is already changing. We're obviously happy with the history. It is a big problem, and we're not here -- well we are here to flag and to -- we feel a responsibility to let you know what unintended consequences perhaps are of the effect on the system. It's more than just Toronto.
3030 MS. CRAM: When I talk about the system.
3031 MR. SHERRATT: You have latched onto the key issues and you have said it very succinctly, better than we did earlier. Historically, going back in our development specialty was built on the back of our conventional television when we started it in the '80s and we built it up.
3032 MS. CRAM: Congress is now happy.
3033 MR. SHERRATT: And Mr. Goldstein put it well yesterday when he said there is a fundamental structural change going on right now in the business and we thought that would happen when we got into the specialty in the 80s, and that has developed exceedingly well and we were pioneers in it. But conventional television is still the only way to serve local markets and it's trying to keep that system going within the new structure I think that we are trying to get across.
3034 MS. CRAM: But in the past the Commission has actually recognized your paradigm of financing. For example, in the Bravo renewal the Commission asked you why the Canadian content commitments should not be increased because of your substantial, I will say pea bit. Your answer was because your specialties were subsidizing your conventional and ostensibly that argument was accepted because your Canadian commitments were not increased. Is that not correct?
3035 MR. SWITZER: Yes it was, it was part of the reference, but of course the commitments of the channels such as Bravo are percentage driven and grow every year.
3036 MS. CRAM: I understand that, but the position of the Commission is they should be higher than they were.
3037 MR. SWITZER: And Bravo at its maturity is running a 50 per cent in.
3038 MS. CRAM: The system has accepted a lower commitment because of your paradigm of having the specialties finance the conventionals.
3039 MR. MILLER: Commissioner Cram, certainly I recall making the point that, as we have made in previous proceedings, that the success of specialty is first dependent on our conventional and increasingly the cross-subsidization argument works. Obviously, we don't know on what basis you made your decision and we do not agree that Bravo has a commensurately less contribution than any other specialty.
3040 MS. CRAM: Suffice it to say the commitments were not increased.
3041 MR. MILLER: Suffice to say. Obviously on what basis that was made we don't know.
3042 MS. CRAM: So if as Commissioner -- Chair Wylie asked you that we -- if we should be concerned in the Toronto market with individual broadcasters as apparently -- I mean this is, should we also consider, if we're considering that individual, should we also consider the fact that you have specialties and that those specialties have up to now been more than relatively successful, and that they have been subsidizing the conventionals? If we have to consider an individual, should we bifurcate them into the types of broadcasting entities they have, or should we consider them as a whole?
3043 MR. MILLER: I think it's fair for you to consider the whole picture it's because of that we asked PWC to look at specialty trends and again it's because you have to look at the long term that you have to also consider where specialty is going. And obviously now is not the time for us to have a full canvassing of the directions of specialty, but again all the evidence suggests that first of all as services mature, their profitability decreases.
3044 Secondly, in introducing 40 new digital channels, which everyone expects will grow to penetration of digital of say 40, 50 per cent in four or five years, there is going to be a tremendous impact on that. So as you try and look at the system and where it's going I don't think the notion that specialty can subsidize conventional is something that's going to continue. So what we would argue as a company and obviously this is something we are going to be talking about, is we have to get our conventional on to a sound footing and that we have to get a return on these investments and come to some reasonable level of profitability because this cross-subsidy model for specialty and conventional isn't going to work going forward. As you look at all these factors that when you contrast CHUM pea bit margins with that of other players, we are not up in the high tiers; overall pea bits being in the 15 to 18 per cent range and 25 per cent rage range with some other players. So it's clear we are putting back.
3045 MS. CRAM: And my last question is, Mr. Miller, you were talking about the concept of the tipping over, that there comes a pointed where conventional advertising revenues decline but the specialties increase almost incrementally. And notwithstanding your comments about things may be worse, the best prognostication, and one which you in fact have commented on favourably, is that specialties will keep getting advertising money, more and more incrementally.
3046 MR. MILLER: Absolutely and obviously I am not an expert in sales, but I am -- my understanding and I agree with Mr. Goldstein that most of the growth is to specialty. But again, what you have with specialty is still discounted in terms of price per point relative to the conventional, you have all these new specialties going in. So there is still a lot of growth for the specialty, but spread across a lot more channels so each individual channel, the average individual channel's success and profitability you will see go down, we suspect.
3047 MS. CRAM: But it's the analog specialties that have the best name and best good will and, for the foreseeable future, are certainly not going to end up failing.
3048 MR. MILLER: No, but look for example at MuchMusic facing competition from at least four, a number of them unexpected, digital channels that will have an impact. So as you look to the future I think all of us appreciate that specialty is still a good business, but it's not going to be the business it has been in the past.
3049 MS. CRAM: Thank you. Madam Chair?
3050 THE CHAIRPERSON: Commissioner Wilson.
3051 MS. WILSON: Morning. Her Godship and the archangels here are giving you a grilling this morning and I hope you will bear with me as I add to it. I am going to come back to one of the subject matters that Commissioner Cram was exploring with you. But I want to ask you first, why are your NewNet stations so unprofitable? You have had them how long now in Pembroke and London? I mean, there the pea bit margins are quite stunningly bad, so what's the explanation for it?
3052 I will also add, that when I looked at your expenses -- I went through the revenues and the expenses and I ask can see some increase in the advertising revenues, but I have also seen some fairly significant increases in expenses like your administration in general line that's gone up not a hundred per cent, but a lot. Salary levels up 50 per cent, salary levels at Citytv at 45 per cent which is far in excess of what's the norm in the industry. So I guess it goes to the rather harsh question that Commissioner Langford asked you, which is you know, could you be better at this?
3053 MR. SWITZER: Commissioner Wilson we are investing in more local programming at a time when others are backing away. Our percentage of revenue in the past year spent on Canadian programming for Citytv worked out to approximately a phenomenal 72 per cent of revenues. We have the privilege and luxury of shareholders that are allowing us a long-term view towards building viewers, and programs and shows. And if we had wanted a quick hit or improvement in one quarter we could have laid off staff, cancelled shows, and had a phenomenal single year.
3054 MS. WILSON: How long will it take you? Because it really goes to the whole notion that, you know, you're asking for us to protect you. So how long do you think you need protection?
3055 MR. SWITZER: The NewNet was put together in 1997, the improvements at VR were immediate. The New PL in London the New WI in Windsor and in the New NX Wingham took a little longer and the New RO in Pembroke, now Ottawa/Pembroke have taken even longer. The news is good; ratings are growing. In Ottawa, which has been the toughest to crack, we have had a terrific breakthrough where our local news is second in the market behind CJOH and ahead of the CBC. Hundreds of staff and tens of hours of new local programming is a risky proposition but one that we believe will ultimately and is ultimately showing results.
3056 The NewNet proposition will break even or make a small amount of money next year. It would be excruciatingly painful to see all that hard work change with a rebalancing of that market. Citytv profit margins are not yet acceptable; six per cent, five per cent. We're not expecting this would be a CanWest number of 30 and 40 per cent, but our shareholders have every reason to expect that margin to improve to a 15 per cent range or perhaps 18 per cent or even higher. Our margin will improve slightly this year and more so, but in total, investment as been 46 million dollars in operating losses with continued addition of local primarily non-news and news programming across the board. We would hate to see that -- that curve, that five and six year curve be changed or affected when everyone is working so hard and the early results are so good.
3057 MS. WILSON: With respect to your comments about U.S. border stations in Buffalo, you said in your opening remarks, compare this with Toronto where U.S. viewing hours -- or viewing hovering around 10 per cent, there simply isn't much left to repatriate. And then you went on to say in response to one of the questions of Commissioner Wylie, that if you get an increase of 0.1 per cent you celebrate. So it seems to me that 10 per cent, since you don't have a 10 per cent share yourself for Citytv, the 10 per cent is pretty significant in terms of potential.
3058 MR. SWITZER: If it were possible to actually swing 10 per cent of tuning over to the Greater Toronto market even one, even a piece of one, it would be wonderful. Our point is that the tuning will likely remain with Buffalo, even if there were another choice here.
3059 MS. WILSON: Can you explain that to me again?
3060 MR. SWITZER: I will. Because of their choice of programming format, choice of programs, they will remain untouchable. The American strips that they have, comedy and sitcoms that they specifically play at 5:30 and 6:00 p.m. and 7:00 p.m. when other stations, traditional stations, can't chase them. They play at 7:00 and 7:30 and at 11:00 p.m. and 11:30, those programs will remain with FOX, no Canadian broadcaster can hold them back. And if a Canadian broadcaster tries to simulcast them, we have direct experience with what happens, it's an eye-opening experience. This will only be very brief but I would like Peggy Hebden, Program Director, to talk to you about a phone call.
3061 MS. HEBDEN: Thank you, good morning. We have -- at CKVR, part of our business plan was we were going to repatriate some of those dollars. It was important to us and we went out and bought the programs, put them nicely in place and told everyone we're going to have simulcast with WUTV; WUTV had other plans for us. They had no intention of allowing us to do that. They phoned the general manager and the program director, called me one day in my office and said you can't do that. You can't ask for substitution over us. And I said I'm sorry I can, I have the Canadian rights and they said I am going to do everything in my power to make sure you can't. We are going to move episodes at the last minute, we are not going to list episodes, and they did that. That's exactly what they did and we have no control and we had no choice, we couldn't do anything about it.
3062 MR. SWITZER: The result is, if their tuning remains, as much as Canadian advertisers would like to advertise on the Canadian choice, we believe much or most or almost all of the revenues will remain. We're not pleased with that, but it's a completely different situation than in British Columbia where we in fact control programs, could pull those programs back. The Bellingham situation is different in that it's treated as a Canadian market by program suppliers and they cannot get their own programs.
3063 MS. WILSON: With respect to local programming, I think Commissioner Wylie had a bit of a discussion with you about local programming and different approaches to local programming. And I think it's fair to say that do have a particular approach to local programming that is quite distinctly yours. What market, target market demographic age does -- do you target with your local programming, where do you get your highest viewership? The reason I'm asking is because for example one thing my 80-year-old mother doesn't watch Citytv. But I --
3064 MR. SWITZER: She probably hasn't tried us out yet, but she may watch the VR.
3065 MS. WILSON: Because she doesn't wear black. I wear black in the family.
3066 MR. SWITZER: She may watch CFTO or CanWest. The point is there is choice.
3067 MS. WILSON: The comment that there is not enough local programming on those stations and you're saying that you do the local programming but she's not going there. And I guess the question goes to the notion that there are different, well, kinds of local programming that can be done that appeal to different kinds of people and you've got an aging boomer population, and --
3068 MR. SWITZER: I have to aggressively address this vision that everything is strange and hyper and everyone is wearing black and there is all this crazy, "funky experience".
3069 MS. WILSON: Brigitte started wearing black when she came to work at your channel. You never wore black in our office.
3070 MR. SHERRATT: Though you were all wearing black today except the Chair.
3071 THE CHAIRPERSON: When you're good you have to be different.
3072 MR. SWITZER: Putting aside CP24 for a moment, the New VR experience in Toronto on cable 20 and relies upon Toronto for much of its revenue is a much more traditional 25 to 54 --
3073 MS. WILSON: I have a NewNet I can do.
3074 MR. SWITZER: -- More traditional experience. But on Citytv, our flagship morning breakfast television show which in many weeks will do a hundred thousand viewers, perhaps the same audience as our prime time news, is a very traditional 25 to 54 primarily female driven program. Our City Line program as hosed by Marilyn Dennis is a - Moses will hate if I use this word - traditional, conventional --
3075 MS. WILSON: He's hanging his head in shame.
3076 MR. SWITZER: -- a very popular, successful, top-rated live, interactive, talk show/ help show/community show that is almost all women this their 40s and 50s. There is a mix of things. Yes, our news is primarily 18 to 49 and it provides an alternative, but if you look at full range of things we're doing we're reaching out to the Greater Toronto Area. Would you suggest -- I would ask you, a show like Media Television we produce that deals with media literacy, or Star television which is a celebration of the Canadian entertainment business is a traditional 18 to 54 right down the middle proud, let's say, to celebrate Canada. Our Speaker's Corner, the ultimate in democratic television, appeals to young, old, men, grandmothers, babies, an extraordinary experience. So the perception is different than if you look at the 45 hours.
3077 MS. WILSON: They say perception is reality. People in Ottawa know that very well.
3078 MR. SWITZER: 45 hours a week, look at what we're doing. What we do every week speaks to the history. This isn't anything we're talking about hypothetical.
3079 THE CHAIRPERSON: Mr. Switzer if you keep this up we won't have to do your renewal.
3080 MR. SWITZER: Yes, Madam Chair.
3081 MS. WILSON: I just have one final question and this goes to the notion of taking into account the profitability of the entire group. When we look at perhaps taking the kind of architectural view of the system that you are suggesting right now, which is quite interventionist, saying okay, we're going to protect you while this happens, and you know you won't get prize and you will get the prize at a time when, as Commissioner Wylie suggested, that we should probably back out of that a little bit.
3082 But Mr. Sherratt you said specialty was built on the backs of conventional. There are some people, probably cable subscribers, who might suggest that it was built on the backs of subscribers as well as conventional television services. Those services have a subscriber rate which constitutes the largest portion of your revenue and those services were given a lot of regulatory support in order to build that industry in this country and to make it work. And it's wonderful and you are very large and active participants in that. So you know the point that Commissioner Cram made about your paradigm, funding paradigm, being maybe different than some of the others and should we take that into account. It was a good question.
3083 But I am curious about the comment that you make on page 35 of the Price Waterhouse Coopers study where you say market pressure on CHUM specialty services -- you talk about the success of them, the increased share, the TV revenues and profitability, and then you say market pressure on CHUM's specialty services will result in lower profitability in the future, decreasing their ability to cross-subsidize and operate CHUM's conventional services. Your subscriber rates aren't going down, you've got that and they're fairly stable, so what's the evidence for that? Why should we be concerned that your funding paradigm is going to change?
3084 MR. SWITZER: There are at least three parts of that answer and maybe others may want to join. You are right in that as an industry, average, cable subscriber fees form a large part of any revenue source. I am sure you are also aware that, in our particular case, advertising makes up a much larger share of our total revenues than almost any other operator in the business and in many cases more than 50 per cent. So while others are looking at models of perhaps 80 per cent cable revenue, 20 per cent advertising -- MuchMusic for years, and others in our group have been predominantly advertising so we live or die on the quality of our service and on economic factors that affect advertising.
3085 Secondly, you're right in that cable rates have not risen but our costs certainly have, both because we want to invest in more programming, Canadian programming, and other costs of doing business and investment opportunities. Our contributions at MuchMusic, for example, which were -- which are producing fantastic results. Our contributions to VideoFact have increased our costs there by two per cent approximately per year and we're happy to do it, it's resulting in many more videos.
3086 MS. WILSON: I think we are aware of that.
3087 MR. SWITZER: Our costs continue to rise while our cable fees are essentially flat and our advertising growth is not growing at the large rate it has been in the past. You will see in the year coming up single digit revenue advertising revenue growth for specialty channels which, fine, that's terrific, five or six or seven per cent perhaps for some channels, but certainly not the 10 or 12 or 15 per cent that has been enjoyed in the past. Our costs are rising, we're putting up new services, and advertising is not growing as quickly.
3088 MR. SHERRATT: We are not here, Commissioner Wilson, to suggest to you we're going to hell in a hand basket and we're not here with our hand out for a handout. Our business is a good business. We have wonderful services and a number of them are profitable and we have a successful company. It's very difficult to come in this role -- and the Chair hit on it this morning that it sounds very pessimistic and you can't help but sound pessimistic if you're trying to react to overly optimistic situations. And I think we have to put it in balance. We're optimistic, but we're not overly optimistic about the future of conventional television. Yet it's a very important social instrument in this country.
3089 MS. WILSON: You're realistic.
3090 MR. SHERRATT: We're trying to be realistic and it's difficult. And I haven't quite liked the way this hearing has gone this morning because we tend to get sounding pessimistic and it's not that at all. We're optimistic. We're not overly optimistic about where conventional television is going and the revenues that are coming into it. And we're just trying to suggest, let's try and keep a balance to keep a very good system that we have in place and the one that filters out across the rest of the country.
3091 MS. WILSON: Thank you.
3092 THE CHAIRPERSON: Thank you. Perhaps we have to focus a little more on the fact that you are an intervenor here. We are not in the process at this time, despite the fact that you filed your supplementary brief to your renewals. But of all the pages I tried not to read it because you are here as an intervenor and, of course, you are part of it, but we are not in the process of examining why and in what way you either succeed or are not succeeding or what your own forecasts are. We are hering you in the context of the market and its indicies and of course you are part of it and the effect it may have on you. But we have to keep the record to your role at this time which is intervening in the larger picture as to the wisdom of licensing or not licensing. Commissioner Pennefather?
3093 MS. PENNEFATHER: Thank you, Madam Chair. On that note, in fact, I have just one question. And actually I am quite troubled by some of the comments this morning and it's not about optimism or pessimism, it's a very fundamental point that you have raised in various ways throughout the discussion. It's the balancing act that you just mentioned yourself. And this morning you said -- I think Mr. Miller said local television is under threat. And I take it I have heard carefully and read your intervention about what you mean in terms of CHUM in relation to that. But that's a very serious comment and we have a responsibility, I think, to look at that. And look at the bigger picture.
3094 In your written intervention in fact paragraph 31 you dismiss quite categorically all the applicants and saying that when we look at the balance of things what is being suggested by the applicants is minimal in terms of benefits to the system. If I take the point of local television being under threat, I would like to hear you more on why you think we should relay on just one player to resolve that problem? That seems to be the thesis here this morning. Surely there is -- our responsibility includes as well taking, as you have said earlier, the same old -- I think, Mr. Switzer, you went through a random schedule and said same old, same old, we do that, and the same in paragraph 31.
3095 Granted, for the sake of discussion, there may be limits on what conventional television can do; but surely there is an advantage to, among other things, the diversity of players the diversity of perspectives on the same old, same old. Can you tell us why our responsibility would not include adding to the diversity of players to solve the local television problem?
3096 MR. SWITZER: Of course that is the core of the matter here. Peter could you?
3097 MR. MILLER: First of all, again, we think the market you're looking at, the Toronto DMA, if you add up other services that serve communities around it, you're talking about 10 different conventional services. That's a huge amount of diversity. We are proud that research has shown how strongly we serve the community, but we are not the only ones. There is a wealth of local programming in this community.
3098 So to your point, I could see, we could see you taking the view that if it was just Toronto, if the addition of a new station in Toronto would merely cause some losses to say, some of our role in the programming, you might have a balance. What you gain on the one side you merely lose on the other side in the same market. But that isn't the case here. That isn't the case here, because Toronto both has systemic implications that we have talked to and moreover, you have services that are dependent on Toronto. So our biggest fear and the thing we think should give you most cause is that licensing in Toronto, the richest market, the market that many have argued can sustain a station, comes at the cost of service in other communities that rely on it. It comes at cost to service to London, to Wingham, to Windsor, to Barrie, to those other communities. And that's the thing we felt we had to outline and we felt we had a responsibility to outline.
3099 And the reason, by the way, we included our supplementary briefs from the renewal was not to argue the point, but to explain the challenges. And in each general manager's words, if you look at those you will see how difficult it has been for them to maintain and build local programming and it is that. So yes, you might achieve greater diversity in Toronto but the risk could be less diversity elsewhere.
3100 MR. SWITZER: One of the consequences of diversity would be this feeding frenzy in Hollywood. And it's easy to suggest that's one factor. We have two representatives of two major Hollywood studies here in the room this week: the presidents, effectively, of two major Hollywood studios, the Canadian presidents. They were here because they smell a hit, they smell a win. They are starting to salivate. That may be the result of a decision here; I say that at some personal risk to us, but they can sense that there is the possibility that things will go back to the way -- this is not a small few hundreds of thousands of dollars from a system point of view, it is tens of millions. The mere fact -- the moment -- if something is licensed, the moment that happens even before it's on the air, every existing purchaser of American products, prices go up immediately in anticipation of a new player regardless of what that player may end up doing a year later. That may be a fair cost to a decision. It's our job to point out that this Toronto market, because of its dominance and the buying power of product, will set off these forces that will cost not only us, but every other existing Canadian player.
3101 MS. PENNEFATHER: Thank you, but I take it that as you understand we have factored all that into the discussion but I think it's fair to say on the other side of the tipping over, if I can use that expression again, is the value of diversity of new voices. As far as Hollywood is concerned one day they're here salivating the next day they're demonstrating in an "I hate Canada" demonstration because of how well we're doing it here. It remains a dilemma and a fact of life of programming in this country as you said, U.S. acquired programming. But I am talking to you about what Canadian players can bring to diversity and the system, so I thank you very much and in the future if you want me a in a better mood don't run reruns of Generations the night before.
3102 THE CHAIRPERSON: Thank you, very much gentlemen. Thank you, Mr. Sherratt, Mr. Znaimer and your colleagues. We certainly appreciate all the help we can get. Even God has archangels and angels and thank you again.
3103 MR. SHERRATT: You and the angels have done well so far and thank you again.
3104 THE CHAIRPERSON: Merci.
3105 MR. LANGFORD: But even we can't keep Martha Wilson's mother from going to bingo instead of watching television.
3106 MS. WILSON: She will go to choir practice, not bingo.
3107 THE CHAIRPERSON: Mr. Secretary.
3108 MR. CUSSONS: Thank you Madam Chair. The next intervenor is the Asian Television Network International Limited.
INTERVENTION BY ASIAN TELEVISION NETOWRK INTERNATIONAL LTD./ INTERVENTION PAR ASIAN TELEVISION NETWORK INTERNATIONAL LTD.
3109 THE CHAIRPERSON: Morning, Mr. Chandrasekar, as soon as you are ready go ahead.
3110 JAYA CHANDRASEKAR: May name is Jaya and I am Vice President, Programming, of ATN. To my right is Shan Chandrasekar, the President, and next to him is Mr. Shanti Shah.
3111 SHAN CHANDRASEKAR: No relation to Jim.
3112 JAYA CHANDRASEKAR: To my left is Prakash Naidoo, our General Manager.
3113 You will appreciate that we appear here with mixed emotions. We go back a long way with our friends at Rogers and we hope we will maintain our friendships no matter what happens here. On other the other hand, we are very concerned about the financial harm to the Commission's fledgling ethic licensees such as our ATN service. Our little company is carrying a debt load of $5 million and a deficit of $10 million. If we are really lucky, we might turn cash flow positive this year, which would let us begin paying off some of our debt. While these kinds of numbers may not be significant for bigger companies, they are very frightening to us. We are confident of our ability to dig out from under, but not if CFMT 'too' is licensed.
3114 As I said, we come with very mixed feelings. ATN and CFMT go back a long way. ATN's South Asian television programming was in fact carried by CFMT right from the first day of its launch and for some 17 years thereafter. The ethnic markets we served was not as strong as a couple of other third language markets, so we were downsized over time.
3115 We thus felt that we had to find a niche of our own and to that end we persevered and in 1997 we were licensed by the CRTC as a specialty service. Since being licensed, it has been an uphill struggle. We had serious difficulties relating to carriage and while these are getting resolved, we are a long way from where we need to be. Satellite entails costs and outlays for consumers. Cable was not quite ready and the digital rollout was delayed. While it did occur, it is incomplete and there are still areas where digital cable is not available. Initially, for quite some time, there was also a shortage of digital boxes. It is as if we had our hands and feet tied and then we had to swim against the current.
3116 We are glad to say that we are still afloat and hope to reach the other shore if other regulatory conditions do not change. We have made progress, but unfortunately, our growth is not 350 per cent over 1998-2000 as stated by Rogers Media in their response to our intervention. It is our fault and Rogers has relied on our figures. We had reported both Canadian and U.S. revenues to the CRTC instead of just Canadian revenues. We are in the process of correcting this. Our real revenues are $600,000, not $1 million. We obviously remain vulnerable. The U.S. sales, which temporarily kept us afloat during the delayed launch, have dried up and just when we thought we could see some light at the end of the tunnel, the CFMT 'too' application came to light.
3117 To be honest CFMT 'too', would have too many advantages such as over-the-air delivery and base band carriage. Rogers Media, in its reply dated November 19th, 2001, has indicated that they are prepared to accept a cap established by condition of licence and they are prepared to limit the amount of ethnic programming in any single language that may be provided over CFMT and CFMT 'too' together to no more than 25 hours per week. Regrettably, the 25 hours per week would more than fulfill the average viewer's appetite. It would translate in our losing revenue as well as losing advertising revenue.
3118 There is only one failsafe solution, and that is to deny the Rogers application. With CFMT 'too' taking over the most lucrative Ontario markets, ATN would be left to serve a significantly reduced number of subscribers scattered in hamlets and small towns all over Canada. That is not financially viable. Advertisers do not stay when ratings are down. The answer is not to negotiate some kind of cap.
3119 We see a great future for ATN, but we do need time to establish ourselves in the market. To that end, we need to rely on the Commission for regulatory protection against unfair competition. We remain focused on the needs of one ethno-cultural community, and not one that purports to be all things to all people.
3120 We thank you for the opportunity to make this presentation and we would be pleased to respond to any questions you might have.
3121 THE CHAIRPERSON: Thank you Commissioner Pennefather.
3122 MS. PENNEFATHER: Thank you, Madam Chair and good morning. Thank you for your presentation. I have your written presentation in front of me and this morning's remarks. I just have a couple of questions because your position is quite clear, ut you have you have asked added couple of elements in today's oral presentation which I think are worth discussion.
3123 One of the points that you raise is in the oral presentation today is when you say, regrettably, the 25 hours per week would more than fulfill the average viewer's appetite. My interpretation of that, and correct me if I'm wrong, is that you feel that that's sufficient for the South Asian, possible South Asian viewership in the Toronto community. And yet we know that the South Asian population is a very large and growing. In fact, Rogers yesterday tables the South Asian population will be increased to 760,000 by 2011. So can you just explain to us what that means, and why you feel that even with the cap, the viewership would be satiated? That there isn't more South Asian programming, to your benefit?
3124 SHAN CHANDRASEKAR: Madam Commissioner, we realize we come from a truly multilingual, multicultural nation. The South Asian community is comprised of people from India, Pakistan, Bangladesh, Sri Lanka, East Africa, South Africa, the West Indies, Guyana, and the Caribbean living in Canada. The South Asian population speaks Hindi, Urdu, Punjabi, Gujarati, Tamil, [inaudible], Sinhalese and Bengali. The South Asian population comprises Hindus, Muslims, Christians, Zoroastrians, Buddhists, Jains and Jews. Nobody professes to be all things to all people even ourselves. But there is certain common elements in viewership.
3125 When we at CFMT -- by the way, I want to mention one thing here. It's been a very difficult exercise for us to even come here. For 29 years we have been involved in the broadcast industry. CFMT has been like a parent company to us. To go against Rogers has been a very difficult exercise, because I started my career at Rogers and we're very grateful to Rogers for whatever we have accomplished so far. We were pained to see that Rogers in their reply saw us as competitors, which shocked us because we always been under the impression we were complementing CFMT service from day one when we branched out. I come from a culture where we respect our elders we respect people who give us breaks in our life. If our Montessori school teacher walks in here I stand up. I respect, we would respect our Montessori school teacher even today, but that doesn't mean I have to remain in the Montessori school all my life. That is the kind of relationship that we have had. And for us to be seen frankly -- in one way, maybe we should take it as a compliment to be seen as a competitor, but I don't think the $600,000 revenue is a competition to a multi-billion dollar organization. I think we need time to grow.
3126 We came out, we decided we would not do programming that would compete with CFMT. They were excellent in South Asian programming with respect to news, local news. And we decided we would stay away from local news. We decided to do the things that were not available in CFMT when we branched out such as imported dramas, feature films and local programming that will be more magazine and entertainment oriented. And now, after we have slugged it out and tried to build up the market with the greatest difficulty with respect to digital launch -- I'm sorry I'm going a bit long for the answer. But the first month we launched our channel number was higher than my subscriber number that was the reality of so-called digital television.
3127 We -- we worked very hard because the cable industry wasn't ready and what was appalling at the present time was we watched Rogers in 1994, '95 at a CRTC hearing, literally crying, wetting the carpet, by saying why should not be -- why PowerDirect should not be licensed. Why death stars would kill their business and why they need time to launch a digital tier and a digital platform. We supported that. But what we were surprised that was even in the last round after informing the Commission that the Commission should license more digital services especially to serve the underserved communities and the ethnic communities, we were appalled to see that Rogers came up with an application for CFMT 'too' when they have excellent service on CFMT one which could do the majority of the things they're promising to do on CFMT 'too'. It looks fantastic. The package looks great to be honest with you, in terms of the promise of performance CFMT 'too' wants to do. Millions of dollars in handouts, and millions of dollars of good Canadian programming to be created, drama fund. Why can't those $30 million dollars be used on the current CFMT creating a drama fund? Because there is no such programming on the current channel, CFMT.
3128 The second concept is that when CFMT was founded, I was part of the ground floor in 1979. With pride I can speak about why that station was formed. It was formed because there was vacuum in the city, there was no ethic programming properly represented but it was a pipe dream because the truth is we began to realize what's ideal in life is not practical. What -- every ethnic community was supposed to be served at prime time and we launched our programming on CFMT in 1979 in prime time; Tuesday and Thursday in the evening at 8:00 o'clock and it was the longest running ethnic show at that time already in the city of Toronto with a station licence. But very soon we began to find out it was not economically practical because the Italian community needed more exposure, and we were all like a big family, give and take. Everybody was adjusting like each other so there were no areas of complaint.
3129 But 21 years later my feeling is Rogers is such a wonderful organization and they have had 16 years and they have done a super job from the time they took over CFMT when it was in distress. So they gave a life back to the organization, to CFMT, which we are extremely grateful about. But they have had substantial time to develop existing format of CFMT because the so called philosophy of Hollywood programming subsidizing ethnic communities was appropriate 20 years ago. But we won't buy it today.
3130 Because the fact that ethnic population of this city is it much greater, 50 per cent is greater than -- 50 per cent of Toronto's population are over -- is -- they're from different ethnic communities. So the so-called sub-city in our opinion has to be reevaluated. That model has been made to look at though that's not the only model that will work. We're not sure really that that's the only one that will work or whether it is really -- it has really not been given proper coverage in terms of ethnic communities.
3131 So we feel that we adore that the concept of CFMT wanting to sell Somali and Armenians, Ukranians and Polish and Hungarian and Chechoslovakians and Bengalis programming that is not currently available. But I think they can increase windows on the current station of CFMT and reduce some of their Married with Children. And probably move David Letterman to a late night show and I think there is opportunities. They still won't -- I don't know whether they have evaluated those concepts, whether they would lose revenue or not, but they can reduce Hollywood programming and increase ethnic programming. So we are here not -- we're not against CFMT, we're not against Rogers but we are here because I love ice-cream but I can't have it for breakfast lunch and dinner.
3132 MS. PENNEFATHER: Thank you, very much. You have aptly predicted the other two questions I had, or clarifications, really, in terms of your business plan and what you see the market to be. And I have got through all my questions thanks to your responses and I would also like to underline that we are here to listen to the oral words that actually fill in the blanks on the paper. The paper can only tell us so much so we appreciate you being here and clarifying your points. Thank you.
3133 SHAN CHANDRASEKAR: We have been listening to really fascinating presentations in the last two or three days. And it's beginning to make sense now that Canada's bilingualism policy with the CRTC's mandate -- maybe you have to make a minor modification now, there has got to be the category English, French and English with an accent.
3134 THE COURT: You are not talking about me, I hope.
3135 SHAN CHANDRASEKAR: Madam Chair, in fact talking to you, I was mentioning about Madam Chairman or Madam Chair. We come from India. In the hospitals in India, traditionally when I was a youngster there and going to school all hospitals had only female nurses. And for the first time they introduced -- and what the patients would call them would be with a lot of affection and respect, they would be called sisters all the nurses were called sisters and when they introduced male nurses for the first time the patients started calling them male sisters.
3136 THE CHAIRPERSON: Commissioner Cram.
3137 MS. CRAM: Mr. Chandrasekar, you say you need time to establish your business. How much time?
3138 SHAN CHANDRASEKAR: You know ma'am, I come from a very ancient culture. They brought me here in Hamilton to Dundurn Castle, and they said this is 120 years old. The garage in my house is older than that. You know my feeling is to be honest with you, if HBO was allowed and licensed in Toronto 20 years ago over the air as a television station, I don't think TMN and Astral didn't have a chance to get off the ground. If ESPN was licensed I don't think TSN would have gotten off ground if MTV was brought in here twenty years ago with a basic cable carriage, I don't think MuchMusic would have gotten off the ground. Our feeling is that we are leaving that decision really up to you because at this stage I feel we are at such a stage that beggers can't be choosy. Any life line we would get we deeply appreciate it.
3139 MS. CRAM: And are you comforted at all by what I thought I heard Mr. Sole say yesterday, that they would -- wasn't there some sort of limitation on the advertising -- we were discussing advertising and the fact that they grew the advertising and they would sort of unilaterally limit their advertising. Were you comforted by that at all?
3140 SHAN CHANDRASEKAR: I'm sorry, no, not at all. Let me also clarify a couple of points I think with all due respect to Mr. Leslie Sole and the team they made a statement that they have given air time to ATN. I would like to really correct that point. Any advertising on CFMT, we paid for it, we bought it. We supported CFMT so it was not given to us for nothing. Now, if there was spots from Rogers, that Rogers digital acquired from CFMT in terms of a promotional spot in which our service was certainly mentioned and showcased we're very thankful to Rogers, but where we are supposed to be paying for promotional costs. And that's a substantial amount of money. So we -- we still would like to co-exist with CFMT, so they were prepared to give us other spots, we would be delighted to take it and we would be very grateful, of course. But I think we have to streamline that little bit more.
3141 To be honest with you I think CFMT by virtue of the fact that they are owned by Rogers Cable, they have a responsibility towards all these new ethnic services that have been launched. There has to be some kind of a barter channel facility. There is no point having a great gold necklace and having it locked up in the safe; it has to be on the neck of a pretty lady. Nobody knows what we have in the programming, because the digital entrance cost is so high. So if you don't have a kind analog barter channel, in terms of promoting all the digital services, every digital will be a fledgling service. There is no point in Jim Shaw saying, you have to tell us they're going to die. It's probably because you're not promoting it properly. You're not giving us an opportunity.
3142 The second point is that if Rogers, as Canada's largest cable company, truly wants their digital services to succeed, they have to move more of these so-called concepts they are not able to serve in the existing CFMT into category 2. Ask them to do this licence, give them give them a category 2 licence, and I will negotiate carriage for them at Rogers cable for CFMT I will get them a good deal.
3143 THE CHAIRPERSON: Thank you very much.
3144 THE CHAIRPERSON: Thank you, Madam Chandrasekar, Mr. Chandrasekar and your colleagues.
3145 SHAN CHANDRASEKAR: Thank you very much for the opportunity.
3146 THE CHAIRPERSON: Mr. Secretary, please.
3147 MR. CUSSONS: I would now like to call upon Fairchild Television to present its intervention, please.
3148 THE CHAIRPERSON: Welcome Mr. Chan, and your colleague.
INTERVENTION BY FAIRCHILD TELEVISION LTD./
INTERVENTION PAR FAIRCHILD TELEVISION LTD.
3149 MR. CHAN: Good morning Madam Chair, members of the Commission. My name is Joe Chan and I am President of Fairchild Television Ltd. Fairchild currently operates Fairchild TV and Talentvision, both are national ethnic specialty television services, respectively catering to the Cantonese and Mandarin-speaking communities in Canada. Fairchild is also the licensee of eight new category 2 digital ethnic services, which have yet to be launched. On my right is Connie Sephton, our Manager, Corporate Affairs. We appreciate the opportunity to appear and discuss our concerns the regarding Rogers' application before you.
3150 In Public Notice CRTC 2001-51, the Commission issued a call for applications "for a broadcasting licence to carry on a television programming undertaking" for Toronto, Hamilton and Kitchener, not for an ethnic television undertaking. However, Rogers is proposing a multilingual ethnic service, CFMT 'too'. In its application, Rogers proposed to transfer the Chinese-language programming from CFMT TV to CFMT 'too' with a very significant increase in the amount from 19 hours per week on CFMT TV to 32-and-a-half on CFMT 'too', and specifically, an increase from 2 to 11-and-a-half hours in its Mandarin-language programming.
3151 We note that most of the other ethnic communities served by CFMT 'too' will receive no more than two hours of service per week. We also note that nothing in the current CFMT TV licence prevents Rogers from having additional Chinese-language programming on CFMT TV after this transfer. Should the applicant be willing to commit to the condition of licence limiting the amount of Cantonese and Mandarin-language programming on both services to what is currently available on CFMT TV -- that is, 19 hours per week -- Fairchild would withdraw its opposition.
3152 Fairchild is very concerned about the drastic increase in Chinese-language programming proposed on CFMT 'too'. Of a total of 88-and-a-half hours of ethnic-language programming per week, over one-third will be in Chinese. Without any concrete evidence and scientific proof of more need, such increases in Chinese programming will cause undue competition, thereby negatively affecting Fairchild's services. And in particular, the increase in Mandarin language programming will have a very detrimental impact on Talentvision.
3153 Fairchild was a pioneer in developing the all-Chinese specialty television service in a Canadian market. We took over Chinavision which was as in dire financial shape and on the verge of collapse in 1993 and named it Fairchild TV. We took a leap of faith that, with hard work, a substantial financial investment and a commitment to ethnic broadcasting, this service would become viable, in time. By 1998 our approach began to pay off. It took us years to pave this path.
3154 We have applied the same approach to Talentvision which was operated in BC at a loss for many years. In applying to Commission for a national licence, Fairchild submitted that Talentvision's very viability depended on distribution across Canada. Upon approval by the Commission, Talentvision became a national service in May this year, and began to be distributed in Toronto less than four months ago. It needs more time to take root. Success in the Toronto market is directly linked to its ability to explore available advertising and subscriber revenues, yet the ability for Talentvision to serve the Toronto Chinese community and establish a foothold and the Toronto Chinese advertising market has been significantly hampered by carriage difficulties.
3155 First, Talentvision recently arranged for digital carriage by Rogers. However, the take-up rate for this service has been and will likely continue to be modest given its carriage on a digital basis only on the premium tier of Rogers' service.
3156 Secondly, Rogers has not been able to deliver Talentvision to many districts in the Greater Toronto Area either due to technical difficulties or inadequate supply of digital equipment. With limited carriage, it has been very challenging to test the Toronto ethnic advertising market and achieve our revenue projections.
3157 Finally, because of these access problems, advertisers remain in "observation mode", waiting to see how accessible the service is for Chinese viewers before committing to advertise with Talentvision.
3158 These carriage issues have made Talentvision's transition into the Toronto market extremely challenging and, until it has had an opportunity to avail itself of the full revenue potential of becoming a national service, it will remain unprofitable. The introduction of new service which dramatically increases the amount of Chinese-language programming provided by Rogers in Ontario, and competes directly with Talentvision, will erode Fairchild's investment in making Talentvision a viable service, and will defeat the Commission's very purpose in licensing Talentvision as a national service.
3159 Fairchild is also very concerned about the overall drain of advertising revenue caused by CFMT 'too', if licensed. The ethnic advertising market was no rosier than that of mainstream market. The financial results of Fairchild TV for the last broadcast year indicate that we have experienced a decline in revenue. These are uncertain times, and events surrounding September 11th have compounded an already challenging economic situation such that we are projecting a further decrease for this broadcast year. Specifically, for the first quarter, there has been 26 per cent drop in advertising revenues compared with the same period last year. It is within this context that we are extremely concerned about the impact of a new service on our existing revenues.
3160 To compound this challenge, since Fairchild's two services along with CFMT are the main vehicles for Chinese programming in Toronto, it is fair to estimate that a significant portion of any increase in ethnic advertising revenues from CFMT 'too' would come out of Fairchild's revenue over the licence term. With the introduction of CFMT 'too', in year one alone, Rogers expects to earn $3.2 million from Chinese-language programming. That is 73 per cent of its total ethnic-language advertising revenues.
3161 We further note that CFMT 'too' would allow Rogers to increase its Chinese advertising inventory from 228 to 390 minutes per week, with a 71 per cent increase. With more inventory, nothing prevents Rogers from lowering advertising rates to further encroach on Fairchild's existing advertising revenues.
3162 While many ethnic communities in Toronto receive little or no ethnic-language programming each week, Fairchild Television and Talentvision provide the Toronto Chinese community with over 175 hours of Cantonese television programming and over 135 hours of Mandarin television programming. That's hardly an underserved scenario. Again, Rogers has not presented a single piece of evidence showing a demand or market for more Chinese programming.
3163 The limited audiences, program rights and advertising revenues available for ethnic television, represent considerable economic challenges to ethnic broadcasters. We share the Commission's view, as articulated in a new ethnic broadcasting policy that "the primary goal of the policy is to ensure access to ethnic programming to the extent practicable given resource limitations." Any increase in programming directed to the Chinese community would have a significant negative impact on Talentvision and on Fairchild's continued ability to serve the communities which have come to depend on it.
3164 In summary, Fairchild is opposed to the licensing of a new service which will undermine viability of existing ethnic services, particularly one which competes directly with Talentvision before Talentvision has an opportunity to establish itself in the Toronto market. In the event the CFMT 'too' is licensed, we ask that a condition of licence be imposed on both CFMT and on CFMT 'too' to limit the amount of Chinese-language programming provided by both services to 19 hours per week, as is currently available on CFMT TV.
3165 We thank you for your attention and we would be pleased to answer any questions you may have.
3166 THE CHAIRPERSON: Thank you, Mr. Chan. Commissioner Langford?
3167 MR. LANGFORD: Good morning. Thank you for that presentation. I want to ask some questions about the differences in programming. You were very clear about your prognosis for shares and market shares in advertising but I am not entirely clear myself about programming and I would like to have the benefit of your experience.
3168 From your knowledge of CFMT, and from what you have seen of the proposal of CFMT 'too', would it be the same type of programming that you're offering? Same languages I know, but would it be the same type of programming?
3169 MR. CHAN: Basically, CFMT TV and the proposed CFMT 'too' are basically doing more or less the same kind of programming we are doing. Namely, they are providing news, they have an hour of news every day. And also they have a couple of hours of what are called the talk show type of information programming, exactly as what we are doing now. And in addition to that, on the CFMT 'too' application, they are proposing to do some Mandarin-language drama which is also currently available on Talentvision right now.
3170 MR. LANGFORD: Now, do you just do news then, talk shows and drama or do you --
3171 MR. CHAN: You mean Fairchild or Talentvision?
3172 MR. LANGFORD: Either one.
3173 MR. CHAN: Both of us, -- I still remember one of the public hearings dating back to many years ago when Fairchild was one of the participants. Fairchild service was being considered as what we call a specialty conventional TV. What it means, by what we are providing is what a current conventional, traditional conventional TV is providing ranging from news, current affairs, information programming, education, drama, movies, you name it.
3174 MR. LANGFORD: And how much do you make yourself, or have you produced for you, and how much do you buy from foreign sources?
3175 MR. CHAN: Now with our condition of licence we have to do 30 per cent of our programming as Can-con and all the Canadian programs are being produced in-house. So the 30 per cent of -- say of the 126 weekly hours, that translates into over 30-something hours of local Canadian programming per week.
3176 MR. LANGFORD: And do you think it's possible then that you are -- though you offer some of the same products you offer so much more, that in fact even though people who are looking for Chinese programming find some on CFMT and find some -- well, perhaps no more on CFMT -- could we call it CFMT classic?
3177 MR. CHAN: I guess them call themselves CFMT one.
3178 MR. LANGFORD: Yes, one and too. They would find some on CFMT 'too' for sure. Is it conceivable though that they would be, in a sense, that it would whet the appetite for more? There would be so little on CFMT 'too', more than you want, but so little that it would not in any way satisfy the appetite in the city as large as Toronto, in a community as large as yours, so they would want more? It's like going to a street with one restaurant or going to street with six restaurants, the actual abundance seems to draw more people.
3179 MR. CHAN: I don't think it's the case because we -- in the last hearing we had in Vancouver, we quoted some of the survey figures showing that more people watch our programs than -- even though we are on a subscriber basis, they have to pay for that, more people watch our program than they watch on the free CFMT. So I don't think your statement about you know, whether the programming provided on CFMT could be an advertising for people to attract to subscribe to Fairchild, I don't think it's the case.
3180 MR. LANGFORD: But if you're offering so much more -- and I want you to know, I understand precisely what you said here. You are the expert so I want the advantage of your expertise. If you offer so much more, and so much different programming though you have some the same, it would seem to me that with a -- with a possible viewer base as large as it is in Toronto, that there would be lots of room for you and for CFMT 'too' and perhaps for more. I mean look, in English-language programming, there are hundreds and hundreds of available choices at any given hour of the day, and yet everybody with the exception perhaps of CHUM is doing quite well, thank you very much.
3181 So is it possible that what -- one would build on another one? The fact that though your initial fears based on statistics and numbers and the newness of your position with Talentvision are realistic and can be argued well, there could be in the alternative sort of a situation where you would actually bolster each other up and you would be good for each other.
3182 MR. CHAN: Mr. Commissioner, it's -- we have to look at the economics of it. Which is of course for as far as programming is concerned, always the more the merrier. But then if you look at because our lifeline you know, quite depend on advertising revenue, the advertising revenue generated within the Chinese market somehow quite limited, compared to the mainstream advertising pie. And all the Chinese media is competing for you know, that part. So the -- the economics of it, if Rogers is -- if you know, these applications being approved or whatever, they will be you know, getting some of the -- increasing their current shares of the Chinese advertise pie. That will adversely impact on the revenue of both Fairchild services.
3183 MR. LANGFORD: And do you feel that the pool of possible advertisers for your service really will come almost a hundred per cent from the Chinese community? You don't get advertising from outside the community?
3184 MR. CHAN: Yes, we do. We have advertising coming from national advertisers but our experience in the last -- since we took over, or even since the Chinavision days, our experience tells us the national advertisers, advertising in the Chinese ethnic market are not very reliable. In the sense that, you know, the revenue streams are very sensitive to the market situation. Say for example with the recent September 11th, the first couple of clients, major clients to us, which immediately hold their booking on us are those national advertisers. Seemingly they are the first one -- if they would like to cut the advertising dollars the ethnic advertising will be the first one they will cut.
3185 MR. LANGFORD: I think this is my final question and I am not attempting to getting into a horse-trading situation or a bargaining situation. But it would seem to me if there are 170 language groups in this area, and so little time available to give people something you know especially people who -- you know, I think -- I don't want to get my violin here, but housewives at home perhaps with children who don't speak English looking for some entertainment to get in touch with their culture and there is so little opportunity. Along comes Rogers and says we'll open that up we can get it from 20 up to 40. We can bring comfort here to more people; make some money as well. This is not Mother Teresa television we're talking about, but it's a nice balance of reaching out to the community, fulfilling needs and hopefully making some money. And your worry is clear. I could take some of the other language groups, don't take ours.
3186 You've suggested perhaps if they stayed at 19 hours that would be acceptable to you. And again I don't want to getting into horse trading, but I would like you to, as they say in the car business, sharpen your pencil. How much father can they go beyond the 19 hours that would still think, I can handle that. You said 88 is obviously too high, but could they go farther and still leave you with a feeling that you could compete?
3187 MR. CHAN: Mr. Commissioner, you said it right we are not on the bargaining table right now. The reason why we said that we can live with the 19 hours is because this is what they are doing now, and we have to live with this reality. And we are sharing this advertising market pie at the moment with this proportion. We could look at that.
3188 Any increase, like what they are proposing right now you know, from the current 19 hours to whatever they are proposing, 32.5 hours, already, you know, from the advertising projection day they are putting forward which is 3.2 million dollars, at the moment they are putting the focus on the Mandarin language. Which is already impacting very much on the -- actually the survival of Talentvision which is still very new in the Toronto market.
3189 So -- also, even having said that, there is nothing in the current licence that prevents them from moving the languages around or to increase the number of hours at the moment. So that is our fear. If they were allowed to have CFMT 'too' that increases their total inventory, air-time inventory.
3190 So that will, no matter how many hours they will put in, that will help them into -- as we say in our written, in our oral representation, that will increase the advertising inventory so that it could juggle their advertising rates downwards to compete with the local retail advertising.
3191 MR. LANGFORD: Thank you very much, those are all my questions. There may be others.
3192 THE CHAIRPERSON: Thank you, Mr. Chan, Ms. Sephton.
3193 MR. CHAN: Thank you. We will take a five-minute break and proceed with the next intervenor.
--- Recess taken at 1202/Suspension à 1202
--- On resuming at 1207/Reprise à 1207.
3194 THE CHAIRPERSON: Mr. Secretary please.
3195 MR. CUSSONS: I would like to call the Canadian Association of Physicians of Indian Origin to come forward and present its intervention, please.
3196 THE CHAIRPERSON: Good morning. Probably I should be calling you Doctor.
3197 DR. MORZARIA: Thank you, it doesn't matter really.
3198 THE CHAIRPERSON: Just checking.
3199 DR. MORZARIA: I am indeed.
INTERVENTION BY CANADIAN ASSOCIATION OF PHYSICIANS OF INDIAN ORIGIN/INTERVENTION PAR CANADIAN ASSOCIATION OF PHYSICIANS OF INDIAN ORIGIN:
3200 Good morning, Madam Chair and Commissioners. My name is Rasik Morzaria I represent a group called CAPIO, which stands for Canadian Association of Physicians of Physicians of Indian Origin. In my letter to you I outlined what CAPIO is all about. To give you a perspective, let me tell you a little bit about myself. I am a pediatrician. I was born in Kenya of Indian parents. My medical degree was obtained in England. I have lived in the United States briefly, but for the past 28 years I have chosen to make Canada my home. I do not have impressive credentials like some of your previous intervenors such as the Order of Ontario or the Order of Canada. Nonetheless, I have served on various institutions and community organizations as well as being the founding president of CAPIO. I have served on the foundation board as well as various committees at some hospitals. I am also past president and past member of the Advisory Board of the Indo-Canada Chamber of Commerce. I have also served on the Board of Governors at York University for the past nine years.
3201 In addition I am actively involved in the activities of the South Asian Council, of the Heart and Stroke Foundation and the Association of International Physicians and Surgeons as well as other South Asian community organizations. I have covered my principal arguments opposing the CFMT 'too' application in my submission so I will not go into those details. But I will elaborate on a couple of points.
3202 They would have you believe that they could be all things to all ethnic groups. I do not believe, however, that they can truly comprehend and serve the needs of the South Asian community. If I can give you an example, after 20 years living in this country, South Asians have twice the risk of developing diabetes and heart disease. Only ATN saw fit to cover a recent symposium by the Heart and Stroke Foundation on the subject -- at which, I should also add, Mr. Allan Rock saw fit to be present and give a keynote address. ATN has also agreed as a result to do a series again covering this aspect and other specific problem health problems affecting the South Asian community.
3203 Only a service like ATN can fully understand and appreciate the needs of this community. Having recently giving ATN the licence the CRTC must now protect it. As a pediatrician, I know a child must be protected and nurtured to her full potential before letting her loose in world. Giving CFMT 'too' this over-the-air licence would be like sending in Mark McGuire or Roger Clemens against a team of little leaguers, they don't stand a chance.
3204 It is not about one or two channels. It is not about providing service to other ethnic communities not served the by such specialty channels such as ATN and Fairchild. After all, CFMT has been around long enough and has had ample opportunity to do so; they could have easily served the other 150 languages it is not about semantics of national, regional or local content. These are semantics. It is quite simply about survival of ATN. ATN should instead be given better access to community. The word echo was used here. I heard an echo today and repeatedly, was not that kind of echo, it was that they have no access. The reasons have been never alluded to, but I can tell you that I serve a clientele that is poor in the South Asian community, that are recent immigrants, and they cannot access these channels, ATN, simply because it is prohibitively expensive and was not available for them.
3205 I should also add here, and I am also digressing from my notes, I hope I don't go too long. The 25 hours that they are referring to refers to any one language. They could easily fill the airway of CFMT 'too' so all television languages and never have to go outside. I would suggest you remember that.
3206 At a recent convocation at York University, an honorary graduate - Mr. [Hiro Siddiqi] of the Toronto Star commented, and I quote, "Canada is as close to heaven on earth as it gets. This is the feeling that the immigrants have." He went on to quote Charles Taylor, who is a prominent eminent philosopher that "our law accepts the politics of equal dignity for all cultural groups." End of quote.
3207 We have chosen to be Canadians. We all live in that heaven. We want to fully participate. All we need he had into the is the opportunity. One of the your presenters here said to you and I think, if I paraphrase him he meant to say, let us get to know one another. I say let us, indeed, but let's do it on a level playing field. If you offer CFMT 'too', at no cost, for five hours a week with the volume of movies that they referred to, most of my clients will accept that as opposed to having to pay 25 or $30 a week and that is the crux of the matter.
3208 I thank you for the opportunity of letting me speak to you today I have some other points and I would be happy to discuss with you but I just wanted it make a brief presentation.
3209 THE CHAIRPERSON: Thank you, Dr. Morzaria. Commissioner Cram, please.
3210 MS. CRAM: Thank you, Dr. Morzaria. Have you watched CFMT?
3211 DR. MORZARIA: Yes, I have watched some of the news programs they put on. They do three-and- a-half hours a week of Asian television.
3212 MS. CRAM: And that is local news, you said?
3213 DR. MORZARIA: It is local in the context that is pertaining to some of the local things but a lot of it is not local news, they provide Indian news from India and international news somewhat with Indian context.
3214 MS. CRAM: And when you look at ATN, is there news there, a similar kind of news?
3215 DR. MORZARIA: No, they provide service from India that is directly picked up off the air and I guess that's news from India. I think what you heard today is that they deliberately stayed a way from providing that kind of news. My suggestion would be they should provide this kind of news. My point to them would be they should penetrate the market and they tell me they can't because of the cost limitations. So this is the problem I think. Again, I will repeat five, six hours a week is a lot of time for free, as opposed to paying $25 or $30 and getting a lot more hours. A lot of people can't afford that kind of money.
3216 MS. CRAM: But I mean -- fair to say that essentially they offer different types of programming?
3217 DR. MORZARIA: At the moment, yes.
3218 MS. CRAM: And at the end of day, wouldn't it be preferable to have a choice of programming in South Asian, southeast Asian languages as opposed to no choice?
3219 DR. MORZARIA: Indeed, and they are providing at moment. We don't feel that we need to object to what's going on at the moment. The objection is the new channel, and one of the major proposals that they put forward that I happened to overhear yesterday was they're going to use the prime time which is Sunday afternoon, which would be considered prime time in this market to put on what's called a Bollywood movie. I think the peril here is they can easily compete and pay much higher prices for those movies because they have a much bigger market than ATN and that will take a substantial amount. Because one of things most people, new immigrants want to do is watch these movies. It makes them feel they are back at home and if they get to see a free movie every week on CFMT 'too' ATN is going to be the loser.
3220 MS. CRAM: That's really the crux, the Sunday afternoon Bollywood.
3221 DR. MORZARIA: No, I think that's a part of it, it's just the tip of the iceberg. I suspect that if they're going to put on 19 to 25 hours they're going to do some of the things that ATN does. But again I ask you, if you are a new immigrant in this country and you have parents both working and the grandparents looking after the children and there is no free service that gives you Asian services, whatever the content they're going to be happy to see that as opposed to pay very hard earned money to see ATN. I'm not sure what that you can do anything about what people have to pay for ATN; I'm not sure if that's within in your purview, but it ought to be made public and you out to be protecting ATN because they have been licensed by you and -- my point is made.
3222 MS. CRAM: So we should protect anybody we license, to the extent of not allowing the market to provide choices and diversity?
3223 DR. MORZARIA: We are Canadians, we are not Americans. The difference, it is said, between the Canadian and American is that it is said that she is not an American, she is a Canadian. I think that we have chosen in this country to have this regulatory system, we have a huge country which is spread out across and without this system we would probably have television service. We are finding the problems in Buffalo already alluded to. If you have chosen to do so and you have provided the licence, why give birth to a child and then toss out in the bath water? It is a basic question. I am not even sure it needs an answer.
3224 I'm sorry I don't wanted to sound very forward, but I think it point that is -- has been lost somewhere.
3225 MS. CRAM: Thank you for coming.
3226 DR. MORZARIA: Thank you very much.
3227 THE CHAIRPERSON: Dr. Morzaria, do I understand the point you're making if ATN, which is a national service offering South Asians the possibility of South Asian programming across this big country is -- its viability is rendered more difficult by over-the-air services, not lost to the Toronto area where as Commissioner Cram is saying that the added choice, do I take it it's because of it's national, of ATN being national?
3228 DR. MORZARIA: I'm not sure if it's national, but the cream is here, and if the Toronto market is affected they will not be viable. Is that the question?
3229 THE CHAIRPERSON: Yes, that --
3230 DR. MORZARIA: Only -- yes, I am sure they won't viable. Not in the present state; they may go back to being one or two hours a week.
3231 THE CHAIRPERSON: Because if it would not be for that repercussion, Commissioner Cram's point is obviously choice is always better than --
3232 DR. MORZARIA: It would be wonderful to have a choice if we didn't have to pay for ATN as well if it was over the air for free, I think that would be fine, but I think that CFMT 'too' would be agreeable to that and I don't think you would be either and I am sure you have a regulatory reasons and I don't profess to understand them. The point is that we have decided in this country to have a regulatory system and do this in logical and systematic manner, and once we do that then we have a responsibility. And by we, I mean all of us who are involved in the public service, including yourselves to protect what we have created. It is not unreasonable.
3233 THE CHAIRPERSON: Thank you, Dr. Morzaria for coming to share your point of view with us.
3234 DR. MORZARIA: Thank you very much.
3235 THE CHAIRPERSON: Mr. Secretary, please.
3236 MR. CUSSONS: Thank you Madam Chair the next intervenor is CIRV Radio International Limited.
3237 THE CHAIRPERSON: Morning, Mr. Alvarez.
3238 MR. ALVAREZ: I should say good afternoon Madam Chair.
3239 THE CHAIRPERSON: In Portuguese it is the afternoon.
3240 MR. ALVAREZ: (Portuguese spoken)
INTERVENTION BY CIRV RADIO INTERNATIONAL LIMITED/ INTERVENTION PAR CIRV RADIO INTERNATIONAL LIMITED
3241 My name is Frank Alvarez, president of ICRV International. With me today Maggie Medeiros; to my right, my assistant Bill Farsalas, director of sales for our radio and TV digital specialty service.
3242 CIRV Radio International hold the licence for CIRV-FM, an ethnic language station that provides service to 10 different language groups. Through a numbered company, we also hold the licence of Festival Portuguese Television, FPTV, a category 2 digital specialty service launched on Rogers Cable in September. We have provided a service on both radio and television to ethnic community in the Toronto area for over 15 years. In television, we started by purchasing time on local and regional television stations and offering both Portuguese and Punjabi language programming at various times. We have been providing one hour per week of Portuguese TV language programming on the new VR until last month.
3243 In radio, from our modest beginnings at 22 watts low power in 1986, we now have a signal that reaches the whole GTA with a limited class B, despite the still modest power of 1800 watts. Festival Portuguese is a 24 hour a day TV service at present only available through the digital boxes of Rogers cable subscribers. We continue to pursue carriage agreements with other distributors and are hopeful that we will reach even wider carriage. Our company has invested in new studios and master control at our head quarters on Dundas Street West and we provide a range of foreign and Canadian produced programming. Our foreign programming comes largely from SIC International, Portugal's premiere private television station, while our Canadian programming is produced in our own studios.
3244 We are particularly proud of our daily news program produced in our studios which includes many interview of interest to the Portuguese speaking communities from mainland, Azores, Madeira Islands, Brazil and African countries. We would like to show you a short video however there is no equipment, so we continue.
3245 Madam Chair, and members of the Commission, while we are proud of the progress that we have made it is still rather early days and we are far from profitable and sustainable business. While we are to commit the resources necessary to make a business that will provide service to the Portuguese speaking communities throughout Canada for many years, we expect that it will take us some time to reach carriage agreements with distributors that serve all of our communities. And the communities are small enough that we will need both advertising and subscriber revenues to be viable.
3246 CFMT TV does done a good job of providing service to a large number of ethnic groups in Ontario, including the Portuguese speaking communities. They now propose the addition of a second service within the Golden Horseshoe with the promise they will extent service throughout Ontario shortly afterward. The second station will allow them to provide additional hours to a number of European, Latin American and Caribbean communities on CFMT while moving the Asian programming to the new station. The effect of these changes, according the schedule 5 of the application, is to significantly increase the amount of Portuguese language propose broadcast by CFMT and in particular in the heart of peak viewing time.
3247 This English and Portuguese programming available on the analog television channel on cable and off air for other viewers will have a strong impact on the viability of our service. First it will slow the enrolling of new subscribers here in the GTA. Festival Portguese commissioned AC Neilsen Research to conduct a survey of the Portuguese speak being population throughout Canada and we have results segmented by province. While we found the strong interest throughout Canada including here in Ontario, the interest was evidently higher where there was no programming available. For example, while interest was at 72 per cent among those in Ontario with 46 per cent very interested, the numbers were higher in the west with interest over 80 per cent.
3248 We are concerned that the additional extended source of Portuguese programming just at a time when we are launching our new service will lower the interest of our both core target: those are highly interested and even more so over secondary target, those somewhat interested. They will now have the opportunity to have significant hours of Portuguese programming on basic cable or offered without the need to lease a digital box. Bill?
3249 MR. FARSALAS: We are concerned about the impact on our advertising sales. It will be difficult enough for English language digital channels to attract advertising sales. And they have Nielsen numbers to base their sales upon. Ethnic broadcasters have always had a difficult time of measuring their audiences and converting their viewing into advertising. In particular, national sales are difficult to elicit. Think of our position with two ethnics stations available on landlock cable and off air with all the largest ethnic groups and their audience, whether they be Chinese, South Asian, or Portuguese. Clearly this is a concern we share with other specialty broadcasters who are also intervening at this hearing, specifically Fairchild and ATN. As a radio broadcaster providing service to 10 separate ethnic groups in the city, we have an additional concern about the increase in television advertising inventory CFMT will cause.
3250 Instead of one station with 60 per cent ethnic advertising inventory, some 900 minutes per week, they will now have two stations selling with some 1,965 minutes per week. They will have the audience from their English language programming to offer national advertisers with additional advertising in third language as an add on. While CRIV is profitable radio station I am sure the Commission can examine the financial returns submitted by ethnic and English language radio stations in Toronto and note the significant difference in profit margins.
3251 In its right of reply to intervention Rogers mentions that radio revenues have known significant growth over the period much 1995 to 1999. But this growth comes after many years of low revenues and only now is starting to put ethnic radio on its feet. In Toronto ethnic markets are well served on radio with six over-the-air stations and many SCMO stations providing service.
3252 While it has been argued that radio and television are different markets, this may be true in the English language; these markets are not so different in ethnic broadcasting. We did a quick review for a one week period of Portuguese and Chinese advertisers by time, both on CIRV and CFMT and found a significant overlap. The following advertisers are on both stations: I am just going to submit it and not mention their names right now. Other than the above advertisers being active and both CFMT and the Portuguese radio and Chinese radio programs there are other clients that have been contacted that are also being aired on CFMT. Our account does not include the otherlap in some of the other languages we serve like Punjabi, but we are certain the same overlap exists. Why is this? The gap between radio and television rates is too high. CFMT makes its money on English language programming. I believe that some 80 per cent of its revenue comes from this source. They can then place ethnic programming very competitively. Televisions is a very attractive medium to advertisers, particularly over-the-air television available in all Ontario markets. The addition of new ethnic television inventory to the analog marketplace will have an negative impact not only on the ethnic specialty services, most of whom are on digital cable but also on ethnic radio.
3253 MR. ALVAREZ: Finally Madam Chair I would like comment on Rogers offer to cap the amount of Portuguese programming on Rogers to a combined 24 hours on both stations. In fact, in Rogers will program all its Portuguese programming on one station. And 24 hours per week represents a significant increase in hours, essentially the same amount as shown in the proposed CFMT schedule.
3254 If this application is approved, we were concerned about the amount of new programming proposed in the application, and this offer does not give us comfort; our concerns remain.
3255 Dear Commissioners, we would like to also like you to ask you to give further thought to the following: Having in mind the true reality of the recently licensed specialty digital ethnic TV services, out of which we believe 14 have already launched, is it fair for this new fledging TV station, still facing huge capital costs and revenue in terms of both subscriptions and advertising to be faced with a launched new service that will jeopardize the growth and stability of the services?
3256 Madam Chair, regretfully we must continue to oppose the granting of a second license to CFMT. Should the Commission see fit to license CFMT 'too', we would like to suggest to the Commission that the CFMT, combined with CFMT 'too', not be allowed to devote more than 10 per cent of its ethnic weekly schedule based on CFMT 60 per cent weekly ethnic and CFMT 'too's proposed 70 per cent ethnic, to programs in the languages of any of the new Canadian digital specialty services that have launched this year; and if that cap is accepted, to become a condition of licence as per attachment. Thank you for the opportunity to appear before you today and I would welcome any question that you may have.
3257 THE CHAIRPERSON: Commissioner Wilson?
3258 MS. WILSON: Good afternoon, Mr. Alvarez, nice to see you. Thanks for being with us this morning.
3259 In your written intervention you talked about the marketing efforts here involved in -- with respect to trying to drive the digital boxes. And talk there being a barrier and certainly there is I know Rogers includes the box in the price of service and Shaw takes a different approach. But what kind of access are you having in term of driving the penetration of the box?
3260 MR. ALVAREZ: Thank you for the question, Commissioner Wilson, well first of all let me tell you in our agreement we have negotiated with Rogers there is a portion of the 19.95 that belongs to Rogers and the remaining, it's split between the Rogers cable and FBTV. For that matter, the amount that was designated to the kind of monthly rental for the digital terminal, is five fifty out of 19.95.
3261 The kind of response that we are having I would like to answer you more openly, but so far we haven't received any report from the Rogers Cable. As you know, there were so many stations that were launched and it really takes some time, so we expect a report sometimes during December.
3262 MS. WILSON: They have got a free preview going on as well.
3263 MR. ALVAREZ: Yes. In our case we gave one month free preview up and until December the 15th, so anybody that subscribed up to December 15th will have one month free preview. But we also have it in mind that Rogers offers all different programs to their subscribers on digital. Including the VIP, so we have different programs there. What I may add to you is the fact that we have an indication in terms of the out of the 14 ethnic digital services that were launched, that we were doing fine. But in fact the word doing fine honestly, I -- I cannot address any figures any numbers, any numbers that I don't have, doing fine could mean whatever.
3264 MS. WILSON: It's relative.
3265 MR. ALVAREZ: I really don't know. But it's -- it's been difficult. Difficult for various reasons. One is that -- and I am very thankful to Mr. Rogers and Rogers Cable for the opportunity to carry us because Rogers is in fact the only cable company that is carrying FBTV. Even though trying to negotiate with others has not been very easy. But it's been difficult because in some areas, as the Commission may be aware, the digital cable is not available yet. I am talking the GTA, I'm not talk the whole province of Ontario. Even in the GTA it will take some time before the digital cable becomes available to subscribers. Also difficult because in our research when we commissioned AC Neilsen said it was demonstrated that nine per cent of the Portuguese households they do have DVH or satellite.
3266 And finally difficult because not every household even in those areas that have the facility for digital cable can afford the $19.95 a month. So we also have -- and I would like Maggie to elaborate on this, but part of the report -- federal report that we have is that some of the so-called potential subscribers, they did get the box for a month and a month later they took it back. So we will see. But it's -- it's been a bit hard, even though we can talk for three months only.
3267 MS. WILSON: Is it your sense that it he purely a cost issue? Because of the cost of the service, that they take the box back?
3268 MR. ALVAREZ: Well, we have to take various factors in consideration. One is that CFMT currently offers on basic cable and off air as you know, 13 and a half hours a week of Portuguese programming. Up to and including November we were producing one hour that was being carried by the new VR in Barrie. There is one more hour on weekends being carried on CITY TV in part of CHIN International Programming. And there is another half an hour on a weekly basis that is being aired on Rogers community channel.
3269 Plus the [RPDI], which is the Portuguese television network even though they were not approved by the Commission. But people are getting the signal and subscribe and getting the signal as demonstrated on the A.C. Neilsen report, 90 per cent. This is in terms of television but we can not forget that we have also in GTA, six radio stations off air that carry on multiple show programming. In our case CIRV produces nine hours a day of Portuguese programming. CHIN Also have a good portion of hours on a weekly basis of Portuguese; so does CJMR. And CHOW radio also carries on Portuguese programming and there are a few SCMOs and also being carried by cable, like cable service on radio as well. So that may justify the reason why it's somehow been difficult to achieve probably the numbers that we had expect on though we are not sure how many numbers. But we hope that for the future to achieve those.
3270 There is the reason why we -- I have no choice but oppose CFMT application even though it may look and it may sound like we're being here today before the Commission. If, on the other hand, we have a partnership with Rogers, in terms of cable, it's not a very comfortable situation for us to be here today, to appear here because of the partnership on one hand. On the other hand trying to -- trying to stop, not to stop it, trying to -- not try, but in fact opposing CFMT to acquire the second ethnic station. It may look awkward because of this association with Rogers cable.
3271 MS. WILSON: It's not the first time we have seen this kind of thing though, people are always intervening against one another trying to protect their interests.
3272 MR. ALVAREZ: I hope they understand and I hope Mr. Rogers also understands our position.
3273 MS. WILSON: I'm sure he does.
3274 MS. MEDEIROS: Could I just add something? I would like to indicate that even though the interest was shown when we did the research on the people wanting to acquire box and a service, we must try and convince these people now to turn in a interest into subscriptions, and being in the beginning as we just launched our service, we are trying to do that through promotion. And to have to compete with CFMT 'too', if it was licensed, it would not be a fair competition right now since there is no charge for the subscribers to get it.
3275 MR. ALVAREZ: One of the things that, if I may, I would like to add: when Mr. Farsalas was talking about the rates on television is so high, what he meant to say was the gap between radio and television rates is not so high. So this is why I believe that not only in terms of television, well in terms of television the great deal of difficulty we foresee should the Commission choose to license CFMT is the -- the great number of hours that would be increased. And if the Portuguese speaking community is in Southern Ontario will have a possibility of tuning a TV station that is part of the basic cable, or tuning in off-air, would be really very difficult to motivate our community to subscribe and pay 19.95 a month if they have 25 hours a week of Portuguese programming which is basically similar, what they are proposing to what we are offering in our new digital service. And one of the things that if I may, --
3276 MS. WILSON: I do have some other questions though. Maybe some of this will come out if I just ask a couple more questions.
3277 MR. ALVAREZ: Well it has to do were the number of hours that I am referring to. Because it's just to complement my answer to you is that on the reply of Rogers media item to intervention number 13 on second Rogers media has indicated it would be preparing to accept a cap established by conditional licence that to limit the amount of ethnic programming in a single language that may be provide by CFMT and CFMT 'too' together to no more than 25 hours per week, which according to their interpretation is equivalent to 20 per cent of the weekly schedule of CFMT 'too' or 10 per cent of the combined weekly schedules of CFMT and CFMT 'too'. We would like to call the Commissioner's attention to the fact that the Rogers media's CFMT is basing its calculation on 126 hours weekly on CFMT and 126 hours weekly of CFMT 'too'.
3278 It is our view however that the calculation should be based only on the ethnic portion of each thing as follows: CFMT 126 hours per week times 60 per cent of ethnic programming would give us 75.6 hours of ethnic a week. CFMT 'too', 126 hours per week times 70 per cent of ethnic programming as proposed would give 88.2 hours per week.
3279 Total hours per week, ethnic programming CFMT one per se, 60 per cent would give it 10 per cent, 75.6 hours, 10 per cent, seven hours and a half a week, CFMT 'too'. Seventy per cent of 126 hours would give us 88.2 hours a week, 10 per cent, eight hours and 50 minute, so the total combined hours would be, in our view, 16 hours and 20 minutes per week which would represent an increase of 25 per cent of the current --
3280 MS. WILSON: 13 and a half.
3281 MR. ALVAREZ: 13 and a half Portuguese programming hours. Thank you.
3282 MS. WILSON: You have that written down somewhere?
3283 MR. ALVAREZ: Yes, it is part of our -- yes. It is part of our -- it's attached.
3284 MS. WILSON: Oh, it's attached to the oral.
3285 MR. ALVAREZ: The last page, I believe.
3286 MS. WILSON: Okay. That's great. On your category 2 digital, 15 per cent Canadian requirement that you have, what kind of programming is it, and when is it scheduled?
3287 MR. ALVAREZ: Our Canadian content programming, as we are we doing it now, is scheduled from 7:00 p.m. to 8:30 p.m. and is repeated on the following day at 6:00 in the morning. It includes community news and events, interviews.
3288 MS. WILSON: So full range local programming.
3289 MR. ALVAREZ: Absolutely, including news from Canada and from -- and from Portugal that we receive via satellite from SIC, which is our main source of -- received from Portugal, source of programming, SIC.
3290 MS. MEDEIROS: Yeah. We also include dramas, telenovellas, talk shows.
3291 MR. ALVAREZ: Not part of the Canadian. The question was, if I am correct the question was about the Canadian content. Am I correct?
3292 MS. WILSON: Sorry?
3293 MR. ALVAREZ: The question was Canadian content?
3294 MS. WILSON: When was it, and when was it scheduled, yes. I don't remember the CFMT 'too' schedule off my by heart, but is any of it scheduled at the same time?
3295 MR. ALVAREZ: In addition to that I would like to add that programs like -- to serve the Portuguese of African background which we were licensed for, and Portuguese to the Brazilian community are being worked out and I am happy to report that Brazilian program will start in January, and we are discussing now with our African producers to establish at beginning of the year as well. This is one the reasons why we are repeating the show in the following morning. We do -- during the day, we do segments of three, four, five minutes of highlights, news of the day, or special reports also as part of the Canadian content. But for your information, we are even though we're starting in September, we are starting already our commitment to the Commission by providing on a weekly bases the 18 hours and a half or something like that, we are fulfilling that as of -- as we speak, as of today.
3296 MS. WILSON: Okay. So I take your point about what you think the cap should be based on: the 10 per cent which is something you could live with, the 10 per cent.
3297 MR. ALVAREZ: Yes, you heard me well. If the Commission sees fit to --
3298 MS. WILSON: Better you give us an answer in case we do go with it.
3299 MR. ALVAREZ: On that regard, Madam Commissioner, let me tell you to be very -- very transparent, very honest with you, at this pointed in time I am not sure that in fact there is a need in the GTA for a new ethnic television station. I am not sure. And I am--
3300 MS. WILSON: Let me just put it this way, okay. We have ATN, we have you, we have Fairchild coming before us, three large ethno-cultural groups in Toronto who have individual programming services and there are a number of others that have been licensed in category two. But there are many, many language groups that have no programming at all. So I understand you are here protecting your interests, I would do exactly the same thing and that's the purpose of this. But I am trying to, as a Commissioner, sort of sit here and think well, gee, demographics really have changed. They have changed dramatically I don't want to put anyone's business at risk. I cannot for a minute, particularly when the economics are much more challenging. But there is a balancing act that we're always talking about. How do you -- how can you say there is no need? Maybe there is no need for programming in Portuguese, or South Asian languages, or in Chinese or Mandarin or Cantonese, but how can you say with 170 different languages spoken in the GTA, which is such a dramatic difference, that there is no need?
3301 MR. ALVAREZ: Well, Madam Commissioner, I agree with most of your words. I am not saying there is no need. I am saying I am not sure at this point there is a need. That's what I'm saying. Perhaps this is only a suggestion, perhaps the Commission -- will women I am not stating my position, I need to probe what you're saying.
3302 MR. ALVAREZ: But I agree with most of your views, honestly I do. But perhaps the Commission, APS it's only a suggestion if I may, perhaps the Commission could put out a call for a study to ask the current broadcasters and to ask the public in general, like a study and let them speak up, let them come back to you, the Commission, and let's learn from that study whether or not in fact there is a need for another ethnic television station in -- in GTA.
3303 If the answer is positive, if the answer is yes, it's been demonstrated that there is a need, then perhaps the Commission can put a call for ethnic broadcasters that are interested to serve the communities or those not necessarily being broadcasted but those that are in the field of producing ethnic programs, just to give them the opportunity to perhaps voice the views, their opinions and who knows, they could also be part of the process and give them a chance to apply. Providing the -- the result out of that study is clearly indicating that yes, there is a need because as we speak I am not sure. But at the same time, just to close this paragraph here, I'd like to ask the Commission not only behalf of FPTV, but perhaps I can speak on behalf of all those 14 new services that were launched in September, perhaps the Commission could give us some -- some time to -- and protect us, give some time to implement our services, give some time to create our roots in the -- in the market. Then -- can ask perhaps later -- I am not trying to delay the process. What I am trying to say is that you know, we need some time to implement our services. If our service -- and I believe the Commission has encouraged the use of digital service, and the Commission has encouraged alliances and associations with local producers, Canadian producers, even with foreign services. So the Commission is being more than fair to give opportunities for those interested to serve the ethnic communities. And I was one of those that responded positively; I applied, I took financial risks.
3304 MS. WILSON: And you have been very successful at it.
3305 MR. ALVAREZ: A great financial investment and I would like to see sometime that I can really develop my -- my project and give some time to implement our service and let the FPTV be known because it's hard. That's all I wanted to tell you, the Commission.
3306 MS. WILSON: Thank you very much. Those are my questions.
3307 THE CHAIRPERSON: Thank you, Mr. Alvarez, Ms. Medeiros, Mr. Farsalas.
3308 MR. ALVAREZ: If I may Madam Chair, I would like to take the opportunity to wish you and all the staff of the Commission a happy holiday and a healthy and prosperous new year. Merry Christmas.
3309 THE CHAIRPERSON: Thank you we will now break for lunch until 2:15.
--- Recess taken at 1257/Suspension à 1257
--- On resuming at 1422/Reprise à 1422.
3310 MR. CUSSONS: I would like to call on the National Film Board of Canada to come forward and present its intervention.
3311 THE CHAIRPERSON: Good afternoon. I gather you are not Mr. Bensimon.
3312 MS. TOLUSSO: Mr. Bensimon couldn't come today, so he sent me today.
INTERVENTION BY THE NATIONAL FILM BOARD OF CANADA/ INTERVENTION PAR OFFICE NATIONAL DU FILM DU CANADA:
3313 Good afternoon. My name is Susan Tolusso. I am the senior communications officer of the National Film Board. It is my pleasure to be here representing Mr. Bensimon and the NFB and I'd like to thank the Commission and Madam Chairman for giving us this important opportunity to be here.
3314 As I am sure you know, the NFB has been Canada's public producer since 1939 and it is charged with the production and distribution of audio-visual works that interpret Canada to Canadians and to audiences the world over. And as everybody was discussing this morning, more and more these days we hear our cultures, artists, our statisticians, our census takers and ordinary Canadians noticing and taking note that Canada today is really all about more and more kinds of people than when we were all growing up. To use a simple metaphor, the threads of our national fabric really are multicoloured and on a nearly limitless palette. Today's neighbourhoods and TV audiences reflect multiple family backgrounds, multiple ethnic combinations, multiple choices that all need to come together in one cohesive and harmonious whole. This is certainly the case in Toronto and has been for many years. At the NFB, we have been working for many years to bring different points of view, based on different heritage and experience, into our productions. Nearly 30 per cent of our work in the English language reflects what we call cultural diversity, and we intend to do more in English and in French. We are reshaping in time for a new media universe and to be a truer mirror of a rapidly evolving Canadian society. So as we reorient the NFB, we welcome the chance to bring Canada's many heritage perspectives to the screen. If ever there was a time to emphasize understanding and tolerance, it is now, in a world that has experienced September 11th.
3315 Which brings me back to the point of this intervention. As Canada's public producer we cannot directly support any particular application as such, but we would like to underline the importance of multicultural reflection. Having reviewed the range of applications there is certainly merit in all of them. But we find the most salient criteria is to show the many faces of Canada on TV. The application that addresses this goal the most pointedly is that of CFMT 'too' from Rogers Broadcasting. This applicant's plan fits well with our own determination to develop the filmmaking community and seek out creators from as many communities as we can.
3316 In the search for new perspectives, and content production, we at the NFB will welcome creators who can infuse their work with culturally rich points of view. But where do these people get practical experience to develop their craftsmanship? Many can launch their careers at the type of station that CFMT 'too' promises to be. Its application says it will showcase the work of local independent producers. It also gives details on how it will invest tens of millions of dollars in drama and documentary programs in third languages and invest significant amounts in script and concept development, which of course is work we have to do as well and enjoy doing as well.
3317 With production staff experience and leading filmmakers as creative mentors, the NFB has a lot to offer in terms of further enhancing a culturally diverse talent base.
3318 Also, the proposed station will have access to the resources of the parent company Rogers Media, and one of these resources is to take the form of a $35- million fund to support the production of documentaries and drama over a seven-year term. As the NFB is a recognized documentary producer and does have plans to move into the production of alternative fiction, we are delighted to mentor artists working in these genres. We are particularly interested in exploring cross-cultural programming and drama because that relates to what we do. This is a key component of the CFMT application, so there are opportunities to work there together also.
3319 All in all, above everything else, the NFB wants to be a champion of cultural diversity and fulfil these important objectives that have been outlined in the 1999 Broadcasting Act and which I am sure will be reiterated as the Act is reviewed by the standing committee. As Marshall McLuhan said, so long ago and so poignantly, 'the medium is the message', so let's change the medium and let's evolve the message. Thank you.
3320 THE CHAIRPERSON: Thank you, Ms. Tolusso. Commissioner Langford?
3321 MR. LANGFORD: Thank you. I am not sure we have entirely changed the medium in this application, but they do want to extend the message. Another thing I'm not entirely sure of is how familiar you are with the whole briefs as I realize you're a substitute or a 'stand in' or you're doing someone a favour or something. So perhaps you could tell me if you have read the other - it isn't a crime if you haven't - but there is no point on me questioning you on them. Have you read the other applications?
3322 MS. TOLUSSO: Yeah, we have gone through the other applications and looked at the different points of emphasis. In a sense the idea of the multiculturalism is the more important one rather than the applicant's, although the applicant is a good applicant. So it's more the idea that we are looking to support.
3323 MR. LANGFORD: I understand your enthusiasm. I am not trying to take you off the subject of the CFMT. I can never get the numbers right, 'too', we'll call it, I am not trying to get you off the subject of that one. But in reviewing the other applications and keeping in mind your enthusiasm for script development and cultural, cross-cultural documentaries and some of the other points that you mentioned, what -- what sort of levels -- was there anything that caught your eye in the other applications that we were enthusiastic about?
3324 MS. TOLUSSO: We actually thought that it was exemplary, the level of multicultural opportunity that is expressed by almost all of the applicants, so it was just a question of looking at where the experience has already been developed in this particular case.
3325 MR. LANGFORD: You stated your enthusiasm for third language work. But what are your feelings about working in the ethnic field but working in the English language or French language? Some of the applicants were going to do work in ethnic programming but in English.
3326 MS. TOLUSSO: Well at the NFB we have a film that we were co-producer of called Atanarjuat, 'The Fast Runner', on the NFB site. It's an Inuit film that screened this past spring at Cannes and did very well there and it was produced in the Inuit language. It's the first full-length feature film that has done so. So the language isn't so much the point as getting the message of the culture across to the rest of Canada and so it's fine, and subtitles serve that purpose quite well so it has been subtitled both into French and English.
3327 MR. LANGFORD: There seems to be -- I wouldn't call it a conflict in any way, but a recognized need to serve at two different levels, and what we're hearing from the applicants, obviously the third language production that Rogers has put forward, and you commented on so eloquently today, and also second, third generation newcomers, if I can call them that, who -- whose first language of everyday operation is English but still wanted to know something about their culture, and there seemed to be in some of the other applications a kind of recognition that this was a niche that needed a little more work too. Have you done any work in that area with the Film Board as well?
3328 MS. TOLUSSO: Yeah, there has been work at the Film Board for years and we have cultural diversity programs in both English and French, so when a producer comes from the independent community, for example, or works internally with the NFB on a hundred per cent financed production, they can be expressing their culture in French or English as well and we have been doing that for a long time quite successfully, and especially when we're trying to encourage younger filmmakers to come to the Board most of them are speaking English or have changed over to English from their first language along the way. So this works very well and it's very, very effective.
3329 I will give you an example. We have a film called 'Obachan's Garden' on the NFB site and it's about the Japanese experience in Canada, from Japan, and also in Canada during the internment period in the Second World War and the language in the film predominantly is English. So what it does is take the experience of one group and explains and explores that to the rest of the country. I think it works very well.
3330 MR. LANGFORD: You mentioned in your initial letter and then again today that as a cultural agency of the Canadian government, you don't take sides, in a sense, you don't sponsor. But your enthusiasm is obvious and in trying to measure how remarkable - because you are walking very close to the line, which is fine, we appreciate anybody that wants to walk anywhere near the line - but in trying to measure how much impact that has, how often does the NFB go as far as you have gone today? Or is this quite unprecedented?
3331 MS. TOLUSSO: Well the NFB is a partner in a documentary channel, which is of course a private-sector-led channel, of course, entertainment along with the CBC and four private sector documentary producers. I think we're sometimes, recently especially, at the line. It's inevitable expansion in the marketplace and we live in that marketplace.
3332 MR. LANGFORD: Thank you very much. I'm glad you're joining the fray and we would like to get all points of view.
3333 THE CHAIRPERSON: Thank you, and our best to Mr. Bensimon.
3334 MS. TOLUSSO: Thank you very much.
3335 THE CHAIRPERSON: Mr. Secretary, please.
3336 MR. CUSSONS: Thank you, Madam Chair. We will now hear the intervention by the Indo-Canada Chamber of Commerce.
3337 THE CHAIRPERSON: Good afternoon Mr. Krishnan.
INTERVENTION BY THE INDO-CANADA CHAMBER OF COMMERCE/
INTERVENTION PAR INDO-CANADA CHAMBER OF COMMERCE:
3338 MR. KRISHNAN: Yes, good afternoon. Madam Chair, Ms. Wylie and the Commissioners on the panel, good afternoon to you, ladies and gentlemen. First of all I wanted to introduce myself. I am the president of the Indo-Canada Chamber of Commerce. It's a chamber representing a thousand members across the three cities of Toronto, Ottawa and Montreal. It's a chamber which has been around for 25 years and celebrates a silver jubilee this year. This will give you some background: ATN, as an industry sponsor of the chamber for over a decade, and ATN has supported the community, particularly the Chamber for many years.
3339 I am here this afternoon to represent or present the Chamber's intervention on behalf of three applicants; namely, Torstar, Craig Communications, and CFMT, who had requested the Chamber to present their views. The Chamber presents its views under the four following categories.
3340 The first one being very important, which is pipe versus content. The chamber believes that in principle a pipe and content provider should not be the same. This has been the chamber's position for many years. The chairman also believes that a dominance of such a provider is heightened when the same operator in a given local geography provides pipes and the contents. In every such case, a potential conflict arises and invariably an outside content provider, particularly independent co-producers, are snuffed out. Such mechanisms are often subtle, systemic and often hard to detect until it is too late.
3341 Under this category, we would favour the application of Torstar and Craig over CFMT. We would like to present our argument in the next category which is the ethnic diversity. We believe that local programming is all about life, living and enjoyment in the population, that this community lives and, by its own definition, it must allow all segments to be represented. It is not clear from the application as to whether this broad definition of ethnicity will be added to in their programming, meaning these stations have not specified how much of their programming is going to address South Asian needs. It is absolutely vital from the Commission's point of view that this particular point is paid attention to. While all three applicants are acceptable to us in this regard, we would prefer Torstar's application; this is due to the fact that the coverage of ethnic-related and diversity issues by the newspapers such as The Toronto Star and the many local print publications have a very good track record and perhaps the best amongst the print houses in Ontario.
3342 I would bring to your attention of the Hicks story that was published in The Toronto Star this last Saturday, which really represented the Indo-Canada Jain community in a positive way. Such presentations help us in integrating with the rest of Canada.
3343 The third point is in-house production versus your contracted production. Here again we believe that there is a large talent pool available in the ethnic community that needs your nurturing and support by way of giving production facility outside the studios. We prefer Torstar and Craig Broadcasting System here because, as per the application, they are talking of a larger share of money being given to ethnic local programming. They also talk about local job creation which is of particular interest to the Chamber. Regulatory, as I initially stated the Chamber definitely supports an expansion of media interest in the ethnic community, but the question is, at what cost? The CRTC is a proxy for the consumer at large. It regulates and protects as well Canadian cultural industry or diversity. The ethnic culture industry is going through a sensitive developmental phase and needs tender nurturing through continued survival, growth and blossoming. We believe that the Canadian cultural sovereignty is more vulnerable than ever.
3344 In conclusion we believe this is a tremendous advantage to include local programming and coverage in the TV media in Toronto, Kitchener and Hamilton areas. Talking about nurturing, I would just like to bring one or two points to the attention the Commission. I believe ATN as a provider of ethnic TV coverage does not enjoy a large portion of the dollar that a subscriber has to pay. Through some sources I have found out that only a small portion of that money really goes to ATN to support local programming or run their business. We also fully understand that ATN has now entered into a contract with Craig Communications to carry local programming across the country, which is very important for the community and for the Chamber of Commerce. In that respect, we would support Craig Communications because we see that as a bridge which allows the community at large to be connected.
3345 In conclusion, I would like to express the Chamber's interest in truly evolving diversity. I have seen how this works in Canada I have been here right from the morning, and I am amazed to see how much attention is paid to valuing diversity. I commend you, Madam Chair for a wonderful job that you are doing. Thank you.
3346 THE CHAIRPERSON: Thank you, Mr. Krishnan. Commissioner Pennefather.
3347 MS. PENNEFATHER: Thank you, Madam Chair and good afternoon, Mr. Krishnan. I would like to ask a couple of questions of clarification regarding remarks today and your written intervention and if I understand it, we look at your point on programming, which is in your written intervention, part D. Could you help us understand how this fits with what appears to me, if I am correct, your general support for the Craig application? Throughout the discussion, I can see that your approach to this is looking at your principles and then looking at the applications that have come nearest to it, but I see very often, as you said as well here, they seem to meet many of your criteria. You raise the point for D, however, that you believe ethnic communities are indeed well served by programs in ethnic languages. There is not any one applicant that intends to adopt this.
3348 Now my first question on that point is to help us understand why you say this, in light of the fact of the research with the Craig application, and their premise is present ethnic programming in English language on the basis of them saying there is no need for programming in third language. Can you reconcile that for us, and perhaps explain what you mean by section D, which would appear to contradict what you were saying about the Craig application, or are you -- or have I misunderstood your position?
3349 MR. KRISHNAN: Madam Commissioner, on point D, we are just saying that an ethnic program is desirable but if we are into really choosing one station over the other, to answer your question there I would say that both are important. Both language programming as well as English, because as a community Indo-Canadians come from a background which is largely English speaking and, as you may know, one of the biggest English presences in the product is Indo Canadians and English is the only language which links them together, so there are two aspects to it. One is yes, we do need ethnic programming to connect the older generation to, say, to back home, but the new and evolving generation is very much English speaking and relates more to English than any other programming.
3350 MS. PENNEFATHER: So in your experience and obviously with your knowledge of the community, the point was also raised that the younger generation is interested in English language programming; the older generation in the third language programming. Is that fair to say, or again, is it a mixed bag?
3351 MR. KRISHNAN: Actually, to be frank, the new generation, 18- to 25-year-olds, don't really speak any of the Indian languages. They just speak only English. So to answer that question, it's English that would probably appeal to the next generation.
3352 MS. PENNEFATHER: The other point I wanted you to expand on was part B of your written intervention concerning ethnic diversity. Local programming must allow all segments to be represented. Did you mean that in terms of a particular application or, generally speaking, if you would apply that it would seem to be met by stations under the ethnic policy, stations with alternate programs in terms of the broad service requirement? Could you tell us more what you mean about that paragraph?
3353 MR. KRISHNAN: The local programming --what we mean by ethnic diversity is that any TV station that covers local programming should include ethnic diversity, be it the Indo-Canadian community, be it the Chinese community; that the local programming content should include events that are happening in the city.
3354 MS. PENNEFATHER: All right. That's a little clearer. There are many different ways of saying diversity when we talk about the diversity within the South Asian community itself. And answering the needs of the tremendous diversity of the communities, let alone our society as a whole, is a challenge. Thank you for being with us.
3355 THE CHAIRPERSON: Thank you, Mr. Krishnan and adding to our record.
3356 MR. KRISHNAN: Thank you.
3357 THE CHAIRPERSON: Mr. Secretary, please.
3358 MR. CUSSONS: Thank you Madam Chair. Our next intervenor is with the Urban Alliance on Race Relations.
3359 THE CHAIRPERSON: Good afternoon.
INTERVENTION BY URBAN ALLIANCE ON RACE RELATIONS/
INTERVENTION PAR URBAN ALLIANCE ON RACE RELATIONS:
3360 MS. GOOSSEN: Good afternoon, Madam Chair. Thank you very much for giving me the opportunity to appear before you on the matter of the applications for a new television station in Toronto, Hamilton and Kitchener.
3361 My name is Pam Goossen. I am the president of the Urban Alliance on Race Relations. From 1988 to 1977 (sic) I also served as elected public school trustee on the former Toronto Board of Education and I chaired the race relations committee for the Board for the entire time I was there. Addressing the important issues that have emerged as a result of the ever-changing demographics of Toronto have been a major focus of my career for many years, and indeed it is a focus of many organizations in this region; certainly that includes the Urban Alliance.
3362 The Urban Alliance for Race Relations was formed in May 1975, when seven concerned Torontonians met in a restaurant to discuss an issue of grave concern, namely, the increasing frequency of hate-motivated violence against African and South Asian Canadians in Toronto's streets, subways and shopping plazas. For 25 years the urban alliance has been able to combat racism, improve police and community relations and tackle human rights issues through the educational programs and research initiatives with the help of countless volunteers and supporters from the diverse ethno-racial and faith communities in the GTA. And when I talk about GTA, what I mean is, I want to include cities like Oshawa and Ajax to the east, Markham and Richmond Hill to the north and Mississauga and Brampton to the west, although the issues addressed increasingly apply to cities like Oakville, Burlington, Hamilton and Kitchener.
3363 I wanted to address the issue of racial diversity in broadcast media and to bring one simple message: Toronto does not need another television station that is a throwback to the middle of the last century when Toronto was relatively unicultural, uniracial and unilingual. Indeed, in those days, religious intolerance referred to the tension between Catholics and Protestants.
3364 Rather, we need a station that truly reflects this urban area of today and is prepared to keep pace with the changing demographics in the years ahead and all its programming and all its workforce.
3365 The Greater Toronto Area can be proud of being one of the most culturally and racially diverse urban areas in the world. In many ways, it has worked very well, while in others there is still a lot of room for improvement. Issues of equal employment, police-community relations, combating hate crimes, diversity in the school system, the status of immigrants and refugees and political involvement are all issues that we continue to address with high priority.
3366 The media plays a vital role in shaping attitudes, forming and reinforcing positive and negative attitudes, and it is safe to say that television is the more powerful of all the media in this regard. In this incredibly diverse region, television is an important mirror and interpreter of our ever changing society.
3367 As I did write in my written brief, I would like to now focus on three areas briefly. First, the news and current affairs programming. Such programming needs to focus clearly on on-air presence of all ethno-racial groups to avoid constant and negative stereotyping, but rather to portray the breadth of news that is relevant to all life of all communities. There is an equal need to ensure that the off-air personnel reflect the reality of this region and they have means of story selection and storytelling that is sensitive and not harmful to some communities.
3368 Second, drama and entertainment programming. Such plans need to focus on the presence of actors from various backgrounds, including aboriginal peoples, and include realistic roles in those programs. You should award a licence only if a broadcaster can assure that they commission racial minority and aboriginal producers for independent programming that they purchase; that they understand stereotyping and that they ensure equal opportunity for minority producers, screenwriters and actors.
3369 Number three, employment equity. Even though employment is not monitored by the CRTC but rather by the Canadian Human Rights Commission, strong equity plans are an indication of the commitment to diversity objectives. Do the applicants have adequate plans for employment equity, especially for visible minorities and aboriginal peoples? Do they have a good track record in employment equity? While there is an improving vision of women in the broadcasting world, the women employed, especially in senior positions, do not reflect the racial and aboriginal reality of my gender.
3370 A new station must commit to a day one employment equity workforce. With a new station there are no excuses for anything else, there are supposedly no layers of seniority that stand in the way of real reflection. If you would allow me a rather corny metaphor, a new licence is like a clean slate and they can decide from day one whether to draw with white chalk only, or whether to reflect the diversity of colours that is the reality of who they want to broadcast to. I don't mean to convert to the converted - you don't need to be converted, is what I am trying to say.
3371 I am aware of the steps the Commission has taken recently and I can't -- I can take this opportunity to commend you for your efforts and good work. The task force by the Canadian Association of Broadcasters is an important step, as are the requirements of the major conventional networks, as well as the specialty networks, develop an interim plan that addresses the reflection of the multicultural and multiracial, aboriginal diversity.
3372 In closing, I say that you not only are right to press broadcasters on these matters, you have an obligation to demand better from the broadcasters, television and radio alike, just as they have an obligation to do better. Thank you.
3373 THE CHAIRPERSON: Thank you, Ms. Goossen. Commissioner Wilson?
3374 MS. WILSON: Thank you. Thank you for being here with us. Thanks for your comments, because they certainly expand on your written intervention and there are two or three areas that I wanted to ask you about.
3375 We talk about reflection on air and about the obligation of the current conventional broadcasters to do more of that, and I agree with you -- and -- with respect to employment equity and representation. And stunningly, you can't still walk into a room and not see enough women, let alone people of colour, so there is a long way to go there. We're talking about in the broadcast industry specifically. But in terms of reflecting the changing demographics of the Toronto Hamilton area, and Kitchener can certainly be included in that, what's the best way to serve that -- that reality? Is it through third language programming? Is it through cross-cultural programming that helps bridge some understanding between the official language groups and new Canadians? Is it some combination of the two? Is it reflection of that multicultural reality in every aspect of programming that's on the air? Is it all of those things? What's your view on what the best way is to go?
3376 MS. GOOSSEN: Ideally, I mean I -- I love television, by the way, I do watch an awful lot of television, especially the news programming and I also watch the CFMT third language broadcasts. I think ideally you would want to have a mixture of third and English all in one package, if you can. I think some stations have tried that and I think maybe one of the reasons it hasn't been that successful is because the third language component of some mainstream broadcasters is like an afterthought, it's added on. And there is not a whole lot of effort put into it. So in essence, if you want to watch a third language program, you pretty much have to go to the specific language -- language-specific programs.
3377 I -- you know, watching -- listening to the previous question addressed to the previous presenter, I do say though, at least from, say, the Chinese Canadian community, some of our youngsters actually have been able to improve on a little bit of Chinese by watching third language programs. And so you know definitely for the first generation like myself, immigrants, we watch both English and third language. But I think that's -- you know, we can have good programs in both formats, it will benefit the third generation as well. So it's a matter of how you -- how do you do that and what kind of effort you put in it. As I say, the several attempts, that ones that I watch, I think they don't put enough seriousness behind their programming to make it work for the mainstream broadcaster. English is the only one.
3378 MS. WILSON: You mentioned the cultural diversity task force. Are you participating in that? Because you mentioned in that the plans -- that the broadcasters file should -- that they should be filed with the Commission, not just on a shelf somewhere --
3379 MS. GOOSSEN: And monitored, too.
3380 MS. WILSON: -- and they should be detailed, measurable and meaningful. Have you had any thought how those things could be incorporated into a plan?
3381 MS. GOOSSEN: Not right now, but if there is an opportunity for us to participate in -- you know, talking about that, and planning about that, we will be delighted to have our.
3382 MS. WILSON: We are not actually running that initiative; it's being handled by the broadcasters and I believe there are some of the multicultural organizations involved.
3383 MS. GOOSSEN: I think, just to go back a little bit, I think one of the key things, and that's also true with almost all public institutions and oftentimes it's very easy to put a beautifully worded policy in the books or to file a beautifully detailed plan. The key is: Who is watching? Who is monitoring?
3384 So in a sense, it's fantastic that we have a group of people like yourselves who help us do that and community groups like ourselves are doing our part, whatever little we can, to keep that monitoring process a meaningful one. But I think that's really the key. You know, that -- so that I think all of us would have to play a role to making sure that that's -- that actually is done and it's actually effective and, you know, we should be open in the process to taking suggestions to improve on them. And then maybe from the broadcasting -- in this case, from the broadcasters point of view, there are some technical things that cannot be done then we should be brought into the suggestions and see how it can be improved better.
3385 MS. WILSON: I have heard people say it's got to have teeth.
3386 MS. GOOSSEN: Sharp ones.
3387 MS. WILSON: If they don't bring it with teeth, we can use our own. Is it your view that there is a need, I mean I don't know how long you have been here today, but some of the intervenors this morning said they weren't convinced there was need for additional third language or even cross-cultural programming in the GTA at this time. And is that something we should take a look at?
3388 MS. GOOSSEN: I wasn't here this morning so my kind of reaction on the spot would be there is a need for good programming, period. In any language. So see for instance for -- for our committee we hold -- actually held a police -- a conference on policing last year and it was a two-day conference and we wanted very much to have it broadcast because we had people outside of Canada to participate and it was a really high calibre program. So we were trying to -- we finally got CPAC, which we were very happy about, and they recorded quite a few hours but the thing is, when it came time to broadcast, it was all over the place. We had no idea, you know, the whole thing was broken up so the idea of having a good kind of station that would actually give the communities some real good access to good programming and also access to good times for broadcasting, is something that we will all enjoy, because right now it's very hard for communities to compete with any, you know, professionally-produced programs. But I think some of the stuff that's happening in the community, like our conference, was really excellent but to have that access to (a), bring people in and to shoot it and (b), what time slot is it going to be broadcast, was a real challenge.
3389 MS. WILSON: Did any of the local broadcasters cover that conference from the point of view of news?
3390 MS. GOOSSEN: Only very short, like CTV came in and got a few shots. So in that sense if communities could have that kind of access of programming that could actually give time to good stuff that's going on in the community, is certainly is needed.
3391 MS. WILSON: Thanks very much, Ms. Goossen. I appreciate your appearance here today.
3392 THE CHAIRPERSON: You mentioned the monitoring. It's related to these corporate reports that we asked for on the issue of cultural diversity. My understanding is the ones from Global and CTV are in. I have not seen them, but I suppose for one to be able to monitor you, you would have to have mechanisms that measure whatever is measurable so that over time you can see them. So that will be something we will be looking at. I don't know if that is included but measuring, the first step I suppose is to try to establish goals and measurements wherever possible. It's not always easy to do that when it's a subjective. We thank you for your participation.
3393 MS. GOOSSEN: Thank you.
3394 THE CHAIRPERSON: Mr. Secretary, please.
3395 MR. CUSSONS: Thank you Madam Chair. I would like to invite the Canadian Tamil Congress to present its intervention please. It would seem they are a not with us at least at the moment; perhaps I could try them later. In the meantime I invite the Communications and Diversity Network forward to present its intervention.
INTERVENTION BY THE COMMUNICATIONS AND DIVERSITY NETWORK/
INTERVENTION PAR COMMUNICATIONS AND DIVERSITY NETWORK:
3396 MR. RASALINGAM: Good afternoon Commissioners. Thank you for the opportunity to present before you today. My name is a Raj Rasalingam and I am the president of the Pearson-Shoyama Institute. On my right is Professor Lumb who is a member of the Communications and Diversity Network. That's not his only accomplishment; there are many.
3397 The Canadian and Diversity Network is housed under the Pearson-Shoyama Institute and it aims to modernize the portrayal of ethnic minorities in mainstream programming so that racial diversity in radio and television reflects today's multicultural and multiracial Canada. In pursuit of its mission, the CDN partners with broadcasters to establish research for full inclusion by minorities in casting and portrayal on screen, content creation and development, program production and the training of ethnic minority individuals. The CDN works to develop cross-industrial initiatives and share expertise, resources, and models of good practice in an effort that radio and television responds to changing demographics and consumer markets in its programming. Currently, the CDN has been cited for benefits by BellGlobeMedia, CHUM Ltd., Standard Broadcasting, and Rogers Media. Some of these initiatives include working to establish an online talent data base in ethnic communities, supporting their training and development in production, organizing a series of cross-country events to identify issues for action by media, raising the profile of multicultural issues, working harmoniously to sensitize broadcasters to these issues, and supporting broadcasters in the their delivery of these initiatives.
3398 The CDN maintains a policy of not endorsing any particular applicant in licensing hearings, and we will restrict the specifics of diversity should a new station be licensed in this room. We would also take this opportunity to commend you, Commissioners, and the Commission for your active involvement in issues of diversity in your recent decisions regarding CTV, Global, the Weather Network and most recently with Music Plus, Astral, Movie Max, the Movie Network, Discovery Channel, the Sports Network, le reseau sport, and Super Channel Limited. The CDN considers your directive 201-88 on cultural diversity to the Canadian Association of Broadcasters as particularly noteworthy in harnessing an industry-wide approach to this issue. Thank you for your efforts, Commissioners, and I will now hand it over to Professor Lumb.
3399 MR. LUMB: Thank you, Madam Chair and Commissioners. It's good to have this opportunity because this is an important turning pointed in licensing, we believe. A new station in a major market like Toronto presents both a challenge and a chance to get something right from the start; it's a clean slate, that the previous speaker spoke about. It's a challenge for the Commission as well as the successful licence applicant. For the Commission, there is the tough task of deciding which concept, which game plan, has the greatest merit and would most benefit the people of the region. I'm afraid, as Raj has pointed out, that the Communications and Diversity Network is not going to be much help there because we are not here to endorse a particular applicant. But we would like to highlight some vital aspects of what might be an ideal winning concept, and of course take any questions that you may wish to raise.
3400 For CDN, the starting point is that if a new station is launched in the region, it must deliver on this fundamental concept: that local has got to be multicultural, because that's what Toronto is these days. Programming that for once is truly of the people, by the people, and for the people of many different cultures that now occupy the exciting cosmopolitan mix that Toronto and the surrounding region have become. There is a richness of culture and ideas here that combine in the Toronto cocktail; a heady brew. One taste and you know it's very special, even when you live in Ottawa. Now that's the Toronto in which people live, work, play. The Toronto they helped to grow, economically and culturally. That's the Toronto people see and rub shoulders with as they walk their streets and shopping malls, go to schools and offices enjoy theatres and restaurants and sports stadiums -- the everyday places where everyday encounters enrich the everyday social experience.
3401 Then there is the other Toronto, the one we see in television news and information and drama and entertainment programs. It sure isn't a diverse and multicultural scene on television, with some notable exceptions course. With some notable exceptions, the programming makes the viewer gasp: "Where did all those people go?" Some facts about the invisible ones: the 1996 Census said visible minorities make up 31 per cent of Toronto's population. The figure is estimated now at a lot closer to 50 per cent in 2001, and about 40 per cent whose mother tongue is other than English and French. We know all these things, but we can't always realize these things when we watch television. And that's a pretty powerful constituency to virtually ignore in television, the most influential medium and the one most likely to fix images, good or bad, on entire groups of people. Any news station, if licensed, can and must commit wholeheartedly and visibly to building bridges and increasing understanding of the remarkable diversity that flavours the Toronto cocktail. That commitment in terms of quantity comes in amounts that the Commission can measure in the various submissions: 41.5 hours of local programming, five news bureaus; a minimum of 58.5 hours of local programming and so on.
3402 I am sure the quantity is important but what's vital is the actual content of that programming. Will it truly reflect the people of the region, the mix? How will the successful applicant guarantee that those now largely invisible be seen and heard in all their real life roles: doctors, dentists, lawyers, high tech workers shopkeepers, labourers, academics, entertainers, just plain family folk, real people, not stereotypes; individuals not groups; dreamers, doers, successful and the not successful, leaders and followers. Canadians all, with aspirations cultural differences, hopes, ideas and values that everyone should see and learn about.
3403 So this potential new station is a great opportunity to enrich Canadian society, make it more inclusive and embracing. CDN suggests that such applicant should be the one which best defines an inclusive approach in its programming ideas and what it puts to air and at what time it puts that to air, too, and which offers a most serious commitment to sustain and enhance those ideas. At a recent Round Table on Diversity organized by the Pearson-Shoyama Institute, one of the participants complained bitterly that he had been listening to the same kind of amateur broadcasters for 28 years. He saw little or nothing on Canadian television to encourage him that things would ever change.
3404 While we can't afford to be discouraged, diversity and its true reflection in media are far too important. As someone who studies media and society and has been working with Pearson-Shoyama Institute for about seven years in this area, I can say there is now a palpable momentum that simply wasn't there 10 years ago. And I know this because I was at the CBC 12 years ago and before that CTV, and I know of which I speak I was a news executive and a programmer of current affairs programs. So I know.
3405 Broadcasters in general, with encouragement from the Commission, are moving ahead with plans to increase diversity within their organizations and in their on-air portrayal of society. These are national networks, whose programming is spread across the wide spectrum of needs. Yet they are committing with an unprecedented vigour to diversity.
3406 Now this surely underscores the need that if there is to be - if the proposed new station does come to pass, it should be aimed directly at a local and regional audience to start right away where the networks are only now heading: a profound and deeply-rooted commitment to the community from day one. They should convince of you of that. If licensed, this new station must ensure what the Commission has sought in such recent licence renewals as that for Music Plus, which we have talked about earlier. It's all there, it's all there in your own document: the cultural diversity, the corporate accountability, making sure there is somebody who is at the head, you know. This is a top-down thing; it has to flow down from the top and you have -- you've got it right, it has to work that way, but it has to be sustained in bad economic times as well as in good ones, in times of expansion, and that requires a tremendous commitment and a tremendous long-term effort on the part of any broadcaster. CDN would like to assure the successful applicant that diversity is not a chore or a duty, it brings with it richness of experience, creative ideas, fresh approaches that are aching to be tapped and drawn upon. And I urge all broadcasters to dip in and spike that cocktail. And that's us. Questions, if you wish.
3407 THE CHAIRPERSON: Commissioner Langford?
3408 MR. LANGFORD: Good afternoon. You said 10 years ago you were kind of probably a lot longer without knowing it, 10 years if you're willing to count, and you see improvement and that's a good sign. Is there any way you can measure it or is it going to -- are we going get it right within your lifetime and mine? Or has the 10 years, the improvement over 10 years given you a feeling now that if it keeps on at this rate we will be there in another 10? I guess I am asking for a time line, or whether you have any sense of one.
3409 MR. LUMB: Yeah. I think I do. I think I can talk about it and I can point to a few signs that are there to be read. Back in '95 at Carleton University, we held a conference and invited the CBC and some of the CTV stations and some newspapers. And it was on reporting diversity and we produced a couple of checklists - a checklist which was distributed around to the Canadian Daily Newspaper Association members, that's all the newspapers and within the CBC and all of those things. It didn't seem to go anywhere and the momentum that I felt starting to built in '95 didn't seem to go very far. I think things have changed now. I think with the encouragement, as I said, of the Commission itself, with the willing participation of the CAB through its recent proposal to - indeed, to have a game plan, to measure where we are at, to measure what we are doing now in terms of diversity in broadcasting, and to try to get some gauge of how that can be made to stick, if you like, perhaps to grow and to become better. The first stage of course is to start to measure because that's what we don't really -- we don't really know. For instance, just to throw something into a mix, at another conference we held in July, we were happy to have CHUM come forward and present -- and give us a presentation on its diversity program which, indeed, is a very fine diversity program and preceded the CAB initiative, I believe. But it, too, does not include a form of measurement and that's something that we have to -- we have to consider. So if you ask me if I am optimistic now, I am, because I have never felt such a groundswell before. And I am an optimistic person; I am not wearing black for fashionable reasons; because I won't wear black because it would make me depressed.
3410 MR. LANGFORD: Gain a few more pounds and you will come around to black! Okay. Well that's good. And I must say as someone who has only recently myself begun to think of it in terms of 'Gee, I guess we do have to measure it, we have to be more scientific,' there was a sense that you said watching CHUM, watching CITY TV that 'Gee, it's really improving it,' but nobody sits down with a measuring tape and says how much but there is a vast difference from when I was niggling around in that part of the --
3411 MR. LUMB: With devilish political skill, one might add.
3412 MR. LANGFORD: --in the twelfth century, just before colour. I wonder, though, how far you can see it going? In other words, I can see people running stations, bringing in acceptable codes and programs and strategies but they don't have control over, even in their own stations. They control who they hire, they control a certain amount of -- all in-house production, a certain amount of out-of-house production you can put the pressure on, but then there is a certain question of the thickness of their wallets. And then there is the stuff they are buying from abroad, from the U.S. and from other foreign sources. And how much do you expect from them in those areas? Where do you see -- how do you see improving -- you know, what kind of strategies can you give them? Assuming the best will in the world, and we're seeing a lot of good will, we certainly saw it this week, what kind of strategies can you offer, or have you given any thought for dealing with what is, in large part, is out of their control? Although they're the ones that are going to present it to us.
3413 MR. LUMB: I just refuse to accept it's out of their control. I don't think the head of drama, for instance, at CTV has no control over the work being drawn up by -- by independent producers. I don't see why the producers can't be told that diversity is important and you are to look for scripts that would reflect diversity, you are to choose casting directors who understand that there are lots of actors out there who don't have to be chosen for anything other than their merit, but they should be from a wider pool. Do they exist? Yes, they do exist. Of course they are out there. You've got to look for a broader set of -- of performers in general and just widen the net.
3414 The parallel example that can be offered is that most of the networks have done rather well, certainly much better than in drama and entertainment, with their news programming. They've done it in their choice of on-air hosts and reporters, every station - just about every station across the country understands that this is the way to go. And they have done that, they have made significant progress. And if I -- I suggest if you can do it in news, you can -- and that would have, could come with some sort of top down, you know, listen, let's really get our act together on this and do this. It's got to be done. So I think in drama and entertainment where it really counts, because those are the things that also show up in prime time. So I think that there is every reason to say you can do this, but you have to commit to it.
3415 And what I believe is happening though is that the networks are now recognizing that things have changed and we should commit to this -- it's only common sense, for one thing. There is the altruistic idea of course, it's also more fair. That's nice, but it's also common sense and you can widen your -- you can widen your appeal to viewers and widen to advertisers. The advertising industry has long since recognized that and it's had lots of advice, given presentations to its members. I think it would work if there is a will.
3416 MR. LANGFORD: And how much do they have to get right? Obviously they have to get the demographics right, they have to get the numbers reasonably right, the representational elements reasonably right and I don't think anyone would argue that, I hope they wouldn't. If they don't I wouldn't argue against that. But then there is the other side of it too, there is the kind of an accuracy of portrayal. Of course I haven't done a scientific study on this, but when I look at American television, it's like someone somewhere not that long ago said, 'Look, there aren't enough blacks on television, get some, go get some.' And they did. But it seems like they got -- and I'm very, very you know, -- these are very broad strokes, but they seem to go out and get the two types: the criminal ones that they sprinkle through a whole bunch of shows, and then incredibly wealthy black people living in mansions with families that laugh a lot and all drive BMWs. And there doesn't seem to be anything in between. And it seems so unreal to me, I can barely get through them, and I wonder how we help them get it right without micromanaging, as well as getting numbers right.
3417 MR. LUMB: I don't believe the American model is the one we should be following. I think the British one is much closer, in any case, to the Canadian psyche. And I am quite convinced. Just a fast example: the successful Hollywood big movie 'Traffic' was based on a British drama series, a six-part series or something like that. And in that series you had a couple of the main characters were from Pakistan. There was a poor poppy farmer, there was the rich landowner type, the crook. Back in Britain, there was the -- there was a minister -- the MP, his daughter, who was a drug addict; over in Germany this was a very Euro concept thing as well. Now all of these characters interplayed one with the other, each of them carrying a share and just burden in advancing the script. Nobody came and made a sudden little appearance, touching the forelock and going down on one knee. Nothing like that happened. They all played to their own strengths. They were powerfully written. Each character had time to be developed and make an impact.
3418 And if you want to look at a successful program idea that could run here in this country and that it would take a little bit of courage - more courage than is automatically visible here because it's pretty rough stuff and we tend to be too nice sometimes - it would be the kind of thing that could be imitated. But that's just one of them. I watched occasional British dramas and in them you will find a blind woman Q.C. She's a lawyer, no surprise; she's just there. She's on the police commission, but playing a part that isn't the main role, but it's not an insignificant minor role either. But she's playing a role that somebody could play in real life. We have deputy vice-presidents of Nortel who are from Asia or South Asia.
3419 We have the heads of big computer companies are Chinese-Canadians or Indo-Canadians, we have hospitals run by the -- the head of gynecology at the Ottawa hospital is an African Canadian. I mean, this is real life. I can't imagine a series about lawyers which doesn't include an aboriginal lawyer. Ottawa is alive with young aboriginal lawyers. It's a pity they don't become journalists because that would be better from my point of view, but then not enough of them want to go into journalism, they want something more real like being a lawyer. But that's reality, you see, that's the reality of life and I think that it's high time, and there seems to be no compelling reason for it not to happen that producers, script editors or independent houses are told -- are told: If you want to get on to CTV, Global or CHUM, well, come up with a script that we're going to enjoy the diversity of, because diversity is good. It will make money for us, too.
3420 MR. RASALINGAM: I would just like to add to that, Commissioner, that essential in the Institute's role is that we not be advocating specific numbers and goals in terms of quotas. What we're trying to accomplish is to -- to communicate the value of expanding the markets of the broadcasters. And if you look at the immigration patterns, especially for this area, Toronto and Hamilton, Kitchener, especially the Toronto area from 1990 essentially up to the present time, you really have approximately 63,000 new immigrants into this area every year. Now it might not mean much in numbers but really that's like adding the population of North Bay or Victoria every year to this demographic mix. And essentially we believe that it's beyond numbers, it's a matter of including new markets, much like many of us would not be willing buy a school photo or university photo if we're not reflected in that photo. So we believe that it's economic sense and that's really where we are headed. We believe that numbers are the reflection in terms of numbers is more within the stations, is more a human resources issue left to the broadcasters.
3421 MR. LANGFORD: Thanks very much.
3422 THE CHAIRPERSON: Thank you, Mr. Rasalingam and Professor Lumb.
3423 THE CHAIRPERSON: Mr. Secretary, please.
3424 MR. CUSSONS: Thank you, Madam Chair. I now call on Alberta Motion Pictures Industry Association to present its intervention, please. In the absence at the moment of that organization, we call upon the Black Business and Professional Association. Mr. Hugh Graham, please.
3425 THE CHAIRPERSON: Good afternoon.
INTERVENTION BY THE BLACK BUSINESS AND PROFESSIONAL ASSOCIATON/INTERVENTION PAR LE BLACK BUSINESS AND PROFESSIONAL ASSOCIATION:
3426 MR. GRAHAM: Good afternoon, Madam Chair, Commission members. Thank you for first of all accommodating my schedule this afternoon, and secondly, for having me here to make this intervention. The BBPA has been around for 20 years as an organization. Our mission is to advantages the black community by facilitating the products and services which support the business, professional, economic development of the black community. One of the things I want to say up front is the black community is not by any means a homogeneous community and that has to be borne in mind by everyone. So I will not pretend today that my views are the views being expressed here today or representative of the views of all who identify themselves as black.
3427 The black and Caribbean communities have been in Ontario for hundreds of years. In Canada, the black community represents approximately two per cent of the population, and in the GTA, 20 per cent. And that is as of the 1996 census. This group includes people of all backgrounds: directors of many boards, including TVO and Ryerson University; corporate and government executives and city and provincial governments - banking, health care, education, insurance, et cetera; a former Lieutenant Governor of Ontario - and, I may say, a beloved resident of Hamilton; the owners of two of the largest mutual fund companies in the province, and if anyone would qualify, in the black community in Canada as perhaps mirroring Dr. Huxtable, it would be one of those individuals; owners of nursing homes, restaurants, newspapers, radio stations, owners of hundreds of small businesses; professionals of all stripes; many nurses and health care workers in hospitals and clinics are black and from the Caribbean -- or from the Caribbean; students in universities and colleges, high schools, primary schools and other learning institutions; winners of many awards of excellence and citizenship. Yet this partnership in society is not reflected in the television media.
3428 TV is the most influential of all media, yet the image of black and Caribbean people presented on many of our TV stations is a stereotype - often a violent, narrow stereotype. This stereotype is damaging to our young people who do not see their community, do not see people looking like them in roles requiring skill or authority, on the television screen. It is damaging to the adults who know that the vast majority of our community are hard-working, law-abiding citizens of this province. It is damaging to professionals and business people who want to be included when opportunities are made available in the media and in other institutions of our society. So this same false representation that is created of us by the media comes back to haunt us when we look for opportunities in the media and elsewhere. The stereotype has become so pervasive now, that it would probably surprise the average media executive to learn that most of us are not only uninvolved in crime, but most people from the black and Caribbean community have never met any of these criminals. I certainly haven't. And I do quite a bit of community work. We are responsible citizens who have a wide variety of skills and talents to offer the media.
3429 The Black Business and Professional Association is supporting Alliance Atlantis Broadcasting's application for two reasons: One, if Alliance Atlantis follows through on its promises, we believe it offers the best chance to integrate and portray the ethnic minority communities in the GTA by showing blacks, Caribbean people and others widely participating in society, not just in the stereotypical situations. Our second reason is -- for our support is because Alliance Atlantis has promised to integrate cultural diversity in all of its networks. I have heard other speakers speak to the issue of cultural diversity. This is especially important to us in the Black Business and Professional Association. This means more opportunities for both professionals and suppliers from ethnic minority communities. It means more outlets for creative talents of our actors, writers, on-air presenters, producers, journalists and researchers. Other than for the odd individual you see on television at times, one would wonder if these professional people do exist within the black community. It means opportunities for professionals in finance and administration, sales, promotions, human resources and other such areas. It also means opportunities for small businesses who supply products and services to these networks.
3430 We are supporting Alliance Atlantis Broadcasting's application because we know the wide variety of talent in our community. We have qualified professionals, artists and business people to fill the roles and the very areas I have identified. And we believe that the Alliance Atlantis proposal will offer the largest number of opportunities both behind and in front of the camera.
3431 Without being presumptuous, I would say we fully expect them to be awarded this licence and we are asking the CRTC, we are asking you, ladies and gentlemen, to help us to keep them honest to their intention by requesting, indeed making it a condition of licensing, that there is a process for monitoring the promises which should be made with regard to diversity in every aspect of their operation. Thank you.
3432 THE CHAIRPERSON: Thank you, Mr. Graham. Commissioner Pennefather, please.
3433 MS. PENNEFATHER: Thank you, Madam Chair. Good afternoon, and we're glad you would accommodate us and come and present your thoughts to us this afternoon. Very, very interesting. I have a couple of questions. On the last point, monitoring the process that you have mentioned. When you look at -- when we look at what you have said or the reasons for your support, many opportunities that Alliance Atlantis, should they get the licence, would offer, what would you like to see in such a monitoring report?
3434 MR. GRAHAM: As an organization we have not sat down and tried to figure out exactly what we would like to see. I think one of the important things that is critically important to us is the programming and one would have to determine what kind of mechanism you would establish in order to monitor that content. Perhaps easier than the programming in terms of monitoring would be monitoring around the, shall we say, the employment equity piece. I would like to echo what I heard earlier from another presenter in terms of employment equity, in large measure, over the last several years, has come perhaps to represent a proxy for gender equity which invariably evolves to gender equity of a non-ethnic nature. And I would like to suggest that, for instance, if we look at the banks -- it so happens I am employed by a bank, that's what I do for a living -- monitored on a federal basis and there are reports that have to be submitted on an annual basis that provide the statistical data by which the banks are monitored. And of course I believe Madam Chair, I heard you also mention there must be very specific recommendations that are measurable and that has to be the crux of the matter to start the process.
3435 MS. PENNEFATHER: You mentioned the previous discussion and indeed I was -- I am glad that you came right after it because you -- Commissioner Langford was raising the point about while there may be black actors on the screens, the point -- in point of fact the stereotyping is, in some sense, is getting worse in the kinds of roles, the kinds of portrayals that are there and you yourself have discussed this. This is not an easy bridge, not an easy road to take; it's not easy to change. What do you think are the most important things that would change that in both practical terms, and in terms of, shall I call it corporate attitude to changing that? Because it -- it -- and I -- we've heard you very clearly on the effects that has, that's there, and it's very invasive and very persistent. What are the most important steps to changing that?
3436 MR. GRAHAM: Again, television is a great educator. I think it is important, critically important, I believe as Professor Lumb, who spoke earlier to the fact that the television executives do have an ability to determine the content. Dr. Huxtable in no way portrays the average black Canadian. Similarly, there is an American broadcaster operating in Canada representing that it is -- it is servicing the black community and, quite frankly, I do not waste my time watching that because the images that I see there are very often demeaning, centred around music, centred around the portrayal of our women in -- in ways that are thoroughly unacceptable, centred around crime. And it does not create in any way a reasonable expectation or a reasonable understanding of the black community even in this diversity. Let's step back for a second and look at the make-up of the black community in Toronto and you're from the Caribbean, you're from Ethiopia, you're from Somalia, you're from Nigeria, et cetera. I think it is important to be able to -- for the broad Canadian audience to watch a program and in the same fashion that I learned from the Film Board's presentation -- I think the lady mentioned earlier about the Japanese Canadian and I watched that on Sunday afternoon and learned an awful lot about Japanese culture and food in that to be able to present that kind of programming that we all can say, 'Aha, I learned something new, I didn't know that.' And it's positive. I am firmly of the opinion that that can be done with the will of the television stations and the will of the producers.
3437 MS. PENNEFATHER: Thank you. I think that's the key word. The 'will' to do it. Thank you very much for your intervention and your comments today, Mr. Graham.
3438 THE CHAIRPERSON: Thank you, Mr. Graham. Mr. Secretary.
3439 MR. CUSSONS: Madam Chair. We now have an intervention in support of the Craig application. Bigfeller Productions.
3440 THE CHAIRPERSON: Good afternoon, Mr. Stark.
3441 MR. STARK: Good afternoon, Commissioners.
INTERVENTION BY BIGFELLER PRODUCTIONS/
INTERVENTION PAR BIGFELLER PRODUCTIONS:
3442 MR. STARK: First, I am pretty nervous, I would just like to say that the way that they talked about the Commission in school I presumed you would have weapons. I am actually glad to see that is not the case. For those of you who don't know me, which I think is everyone except my friend Jamal back there, my name is Jarrod Stark, I am a very recent graduate of Ryerson Polytechnic University School of Radio and Television and I have a production company called Bigfeller Productions that does a little bit of everything; pitched a couple of things, and we're waiting to see how that goes. We just do some corporate video and other stuff and that's not important, anyway.
3443 I first learned about Craig Broadcast systems in school, which we did case studies on various companies in a class I had with Jack Ruddle, who was a producer at CTV for many years, and Jack imparted several words of wisdom that I don't think I will ever forget and that is 'before you can do good, you must do well'. And I thought no more is that more appropriate than to the industry that we all work in now. I know the Commission these days -- this is what I came to talk about -- is faced with a very difficult dynamic balance between implementing policies that result in a strong broadcast system in Canada to compete against the, you know, American cultural Leviathan, but at the same time maintaining an industry that also has diversity of voice, diversity of choice and freedom of expression. Jack Ruddle was right, though; broadcasting is a business. But it is a business whose profits must support, according to the Broadcasting Act, the maintenance and enhancement of national identity and cultural sovereignty. A lot of big heady patriotic sounding words. But ultimately that's the difference between our broadcasting and the one in the States. Our airways are public; broadcasting is, despite its mechanisms, a public service and the resulting dynamic being culture, commercial and entertainment which has been somewhat skewed a bit in the last while by the fact that we have, some say three, I say four, major portals, especially in the GTA, to get news and information and you know, editorial choice. You know, voices, television series, drama. Our own media outlets have had to tell its story under the cacophony of the giant American cultural machine.
3444 Basically I can understand when the -- you know, Jerry Good, another professor from Ryerson, said we would be working for phone companies, whatever, we thought 'you're old and crazy' but he's right. I mean BCE just bought -- with the Commission's approval obviously - CTV. And the decision, you know, your decision to allow that to happen was obviously based on numerous factors. Again, we need a strong industry but, at the same time, we do need positive voices and a variety of voices. The result of all this is a few very powerful players but this competition has come at a price and that is the loss of voice. Well, our stories are louder and slicker and I applaud the production quality that is in some cases completely on par or exceeding that of American companies, of companies like Alliance Atlantis, who make really good shows. I mean people don't watch networks in Canada, we watch shows; we watch programs. It's not like radio; we turn on CSI. We don't say I wonder what CTV has got on right now. So companies like that still do have a voice.
3445 Craig Broadcast Systems, when I first started researching the company, I was very impressed because the company itself has a history, been in business for 45 years, broadcasting for 45 years, and it all started when Johnny Craig decided, said: I think I can probably serve this community better if I buy the radio stations instead of that GM dealership, after the war. And the quality that the company has that I respect and I think is worthy of licence consideration, is ownership. Throughout the company's history they have been owned by the Craig family. Now, there has been some tumultuous times when, through business practices, they have nearly lost control, but they never have. The company has maintained, you know, the -- the foundations upon which Johnny Craig built the company on 45 years ago. And that ownership I think is important because it results in a sense of accountability. If you look at the Craig management team now, I think they are much accountable for the work they do. I also, as an independent producer, am very interested in their new voices fund. A lot of multicultural stories that would not have had a chance to air, I think, would benefit from this. Just basically, you know, if their application goes through, I think it could really make a positive impact in multicultural broadcasting. I don't have to tell you that television is the most powerful cultural medium we have right now, but as far as local news programming goes or local non-news in terms of cultural diversity, I would say that especially in non-news programming CHUM is one of the only companies that has really made a strong effort to showcase the diversity that Toronto has. So I think Craig would do a much better job than anyone is doing right now. Also, aboriginal programming. I know that the -- there was some question over the exact nature of how they would incorporate aboriginal peoples into more mainstream television, and I second that as well. But I think the idea of having an aboriginal person on the news staff to help break down - not necessarily stereotypes, but have someone there in mainstream television who can serve as a voice, a dualistic voice, for both news and aboriginal issues. So anyway, because of everything that I have seen and everything that I have read - I am way less experienced than I think some people's children in this room - and I by no means have all the answers, but at the same time I can just tell you what I have seen, and from the -- this is my first hearing and I have never been on an escalator surrounded by Moses Znaimer in front of me and Michael MacMillan behind me. So there is a lot of people here who have been doing this work for a long time --
3446 MR. LANGFORD: You've still got your wallet, do you?
3447 MR. STARK: What's that? Yeah. It's been a new experience for me but I think that I probably echo the sentiments of a lot of people that say we do want to hear a new voice, especially in local programming in the GTA, and I think the Toronto 1 application is, from what I have seen, the best possible provider of that. Thank you.
3448 THE CHAIRPERSON: Welcome, Mr. Stark. Do you have a division called Little Women division?
3449 MR. STARK: Do you want to hear the story behind Bigfeller Productions?
3450 THE CHAIRPERSON: Yeah.
3451 MR. STARK: I used to work at Kodak. My dad was at Kodak for many years and I used to work at Kodak in the manufacturing sector. I actually made film, worked in the warehouse to pay for school and there was a guy there by the name of Dave Hatty who was huge. He used to be a body builder. He probably weighed 375 pounds, built like a truck. And this guy was always referred to by another gentleman who worked at Kodak, John Paul Gallant, who was from Nova Scotia, and JP would say, 'How are you doing, big feller?' And I thought, 'What the heck are you saying?' So I liked it - for Bigfeller productions - so much and I had this image of Dave Hatty and I named my production company.
3452 THE CHAIRPERSON: I am a not sure that's a good enough excuse.
3453 MR. STARK: Sorry.
3454 THE CHAIRPERSON: Commissioner Cram, please.
3455 MS. CRAM: Mr. Stark are you from Toronto?
3456 MR. STARK: I was born in Winnipeg, Manitoba, but I have grown up in Toronto for most of my life. I come from Oakville.
3457 MS. CRAM: Nice to know you came from God's country. So you went to school here in Toronto?
3458 MR. STARK: I have lived in Toronto most of my life, with the exception of spending a couple of summers in Alberta with my dad.
3459 MS. CRAM: So you have said you have just completed broadcasting in college?
3460 MR. STARK: Yes, Ryerson, four-year college program.
3461 MS. CRAM: Not that I don't think you have a lot of natural talent, but why did you choose broadcasting?
3462 MR. STARK: in all honesty, I wanted to be an actor but I wanted to eat too and I thought if I could get work rather than waiting tables and driving a bus -- not that there is anything wrong with those jobs -- I thought it would be more fun picking up one of those broadcast cameras and I picked up the direction bug and the acting bug and a whole bunch of other bugs and went through to first year. But after that I just sort of, I guess I decided that was, you know, the place where the fun stuff happens.
3463 MS. CRAM: And so when you say you were talking about -- the market here in -- and I am -- I say here I don't mean Hamilton, I mean GTA, you talk about the fact that -- I mean there are some voices, how many -- how many voices in terms of the broadcasting market would you say there are in television, from your point of view?
3464 MR. STARK: From my point of view, I am looking at the big players, in other words, who - who -- if there was a story had to go up that a particular newscaster thought was of relevance to the city and that story happened in direct detriment of, say, a national advertiser, let's say for example Firestone, you know, when the -- if tires started blowing out on Ford Explorers or Ford, and there is a reporter that finds out and has an inside scoop from someone at Ford or Firestone and they want to run the story on CanWest Global, one of their two affiliate stations wanting to run the story, and someone in Global's management says no, you can't do that because we have a $7.8-million contract with Firestone for this month so you're going to have to skew the story a little bit, give the facts but don't make it seem as bad as it is. So from that point of view in terms of editorial control, based on corporate ownership, I see CHUM, I see CanWest, I see CTV as a major player. I guess you could factor in -- that's the thing though, our cable penetration rate is so high if you factor in specialty channels, then the picture looks a little bit different because you start showing Alliance Atlantis, CTV as obviously one of them. So I guess I would say in terms of major off-air news, four.
3465 MS. CRAM: And is it your view that that is unduly concentrated? Diluted?
3466 MR. STARK: I think the more one watches the better and we have in the GTA close to six million people living here and I don't think four voices can adequately express the voices of six million people.
3467 MS. CRAM: Thank you very much, Mr. Stark. Now, Mr. Stark, I should advise you to change your name, because in all likelihood broadcasters have been listening to this. If you want a job! Thank you, sir.
3468 MR. STARK: Thanks.
3469 THE CHAIRPERSON: Either that or I am off to the gym.
3470 MR. STARK: Thanks.
3471 MR. MACMILLAN This is wrong attribution: Personally if I were a broadcaster I would be impressed by you.
3472 MR. STARK: Are you hiring?
3473 THE CHAIRPERSON: No, because I noticed you didn't mention being impressed by any of us.
3474 MR. STARK: Could you repeat the question?
3475 THE CHAIRPERSON: Unfortunately I am usually going down to the third floor with my --
3476 MR. STARK: Thanks again for your time.
3477 THE CHAIRPERSON: Thank you. Mr. Secretary, please.
3478 MR. CUSSONS: Thank you, Madam Chair. Our next intervention is the Association of Canadian Advertisers, Mr. Robert Rhéaume.
3479 THE CHAIRPERSON: Good afternoon, Mr. Rhéaume.
INTERVENTION BY ASSOCIATION OF CANADIAN ADVERTISERS/ INTERVENTION PAR ASSOCATION OF CANADIAN ADVERTISERS:
3480 MR. ROBERT RHEAUME: Good afternoon. Well, Madam Chairperson, Commissioners, Mr. Secretary, Commission staff, and Counsel. We very much appreciate the opportunity to appear before you today to elaborate on our written intervention. My name is Bob Rhéaume and I am vice-president media and research of the Association of Canadian Advertisers. Our organization, the ACA, has been representing advertisers' interests since 1914 and counts among its members a very broad cross-section of over 200 major companies who advertise their products and services in Canada and account for over $250-billion in annual sales. Our member companies come from many industry sectors, including manufacturing, retail, packaged goods, financial services, communications and many more. As you have heard us say before, television is very important to advertisers. After years of using this medium to promote our products and services, advertisers feel that we have made a substantial investment in television. As we have pointed out many times before, advertising is the primary resource that sustains the Canadian broadcasting system. In all its forms, advertising is estimated to have contributed $10.3-billion last year to the Canadian economy. Of this total amount, approximately 2.5-billion was invested in television advertising. Considering these substantial revenues, the role of advertising is critical to a healthy and robust broadcasting system in Canada. It is advertising that pays for content, the programs that entertain, inform and educate Canadians. Without advertising revenues, the broadcasting system could not survive. It is the advertising really that makes it possible for the system to fulfil the public objectives established by the Broadcasting Act by bringing essential economic strength to the system. Advertisers welcome this important hearing and look forward to the prospect of new, truly local conventional television stations in the markets of Toronto, Hamilton and Kitchener. We believe there is a genuine need in these markets that will both stimulate new economic activity and provide a much needed new local choice that is currently missing.
3481 In this regard we wish to indicate our support of the Alliance Atlantis, Craig and Torstar applications. At various times during this hearing many have pointed out the success that specialty stations have had over the past several years. Their share has grown from 14 per cent to 28 per cent, doubled in just the last five years. Advertisers have welcomed and supported the varied and many new offerings that you have seen fit to licence and they have, obviously. Unfortunately the growth in specially channels has done little to relieve the acute pressure on conventional station inventory that advertisers experience today. Conventional broadcasting continues to be the dominant force in Canadian broadcasting and certainly one of the main tools that advertisers use for brand building. However, most specialty stations are national in scope or regional in a few cases, and their entrance into the market has not really added to local market inventory. This lack of truly local availabilities is exacerbated by the trend in Canada over the past years of many previously local conventional TV stations expanding through repeaters and/or cable carriage, becoming, in effect, super-regional stations. And while attractive to many advertisers in their new configurations, these new entities have had the unfortunate effect of limiting the number of truly local coverage options for advertisers. This expansion has also had the expected effect of raising market rates and, unfortunately, driving some the advertisers out of television altogether and into other advertising media.
3482 The truth is, Commissioners, there really are no local stations left in any of these markets being examined at this hearing. Toronto's CFTO is as strong in Belleville as in Bobcageon. CFMT draws substantial viewing from London and Ottawa. CBLT has 17 rebroadcasting transmitters from Marathon, in the north, to Sarnia in the south. Hamilton's CHCH has seven rebroads through most of northern Ontario, including Sault Ste. Marie and Sudbury, as well as Ottawa. Kitchener's CKCO is available from Windsor to Wiarton. Even CITY TV, which once was synonymous for local Toronto television and whose accomplishments in local TV are internationally renowned, now has strong penetration in the major markets of Ottawa, Kitchener and London and all points in between and beyond. Which of these can we truly call a local station? Are they not all actually regional stations, much closer to the Global TV model than any real local entity? I must admit that I have not closely studied the local economy of Sudbury, but I am pretty sure consumers do not get their dry cleaning done in Hamilton. And how often do you suppose that people from Wiarton shop for groceries in Kitchener? More than one applicant during these hearings has cited the Pizza Pizza example. But faced with purchasing television commercials that will be broadcast simultaneously from White River to Ottawa, Kitchener to Hamilton, to Toronto, to Windsor simultaneously, what chance does the local pizza place have? Thirty days or free?
3483 Commissioners, in our rush to embrace the rich segmentations of demographics and the niche psycho-graphics that specialty channels offer us, we perhaps have lost sight of the most fundamental segmentations, and that is geography: a centre's commercial trading area is very much the key to most economic activity. Just like all politics it would seem, advertising and commerce too is almost always local. In our opinion, the time is right again for local television. So many retail businesses could take advantage of all that TV as to offer, if only they had an affordable, truly local alternative.
3484 These proposals before you will bring new retail advertisers to TV. At the same time, many national advertisers also would love to have truly local alternatives to both help them keep their market cost efficiencies in mind, as well as give them more options for coverage. Bulk purchase ratings, what advertiser refers to a weight, are still only available in sufficient quantity on conventional television. Due to the increasing cost of television advertising, many advertisers have pared their market lists over the years such that top 10, or top five in some cases, or just Toronto, Montreal and Vancouver are still required. In particular, these proposals offer national advertisers a Canadian alternative to consider rather than U.S. border stations.
3485 Most importantly though, licensing new opportunities markets will contribute toward ensuring that necessary and healthy competition is preserved in the Canadian broadcasting so obviously needed today to help balance the current trend in media consolidation. The Commission's long-standing policy of one owner, one station, per language, per market is as valid today as it has ever been.
3486 In the same way this represents an opportunity to take a positive step toward addressing the issue of clutter on television in Canada by offering Canadian viewers more stations with less commercials, not more commercials on the stations we have.
3487 We have heard over these past few days about the current uncertain economic times and yes, ad spending is soft, and it's true that certain sectors are hurting and yes, we are almost certainly in a recession. But there is also quite a bit of evidence for optimism too. October retail sales were outstanding. In fact, we shouldn't forget that consumer spending always goes up during recessions. That has happened during every single one, and we can expect that to be the case this time around also. In Canada, we have experienced seven post-war recessions, the average length of each being 11 months. We have the lowest interest rates in 40 years. The housing market is solid and inflation is well under control, the consumer price index being at two-and-a-quarter per cent. That wasn't the case during the last recession in 1991 when it was more than double that. That the unemployment rate will peak this time at eight per cent, it is estimated; in '90/'91, it was over 12 per cent. It is no wonder that many economists are calling for a mild recession this time around, with a return to growth in the second quarter of 2002.
3488 Zenith Media based in the U.K. and respected internationally for its ad-spending forecasts, recently predicted that Canada will fare much better than the U.S. this year, with 2.5 per cent ad revenues and a healthy 3.9 per cent projected for 2002. The demand will most certainly be there. If you licence them, Commissioners, we will buy.
3489 In conclusion, it is our belief that new outlets in these market will attract a significant audience and sustain it. New alternatives for local and national advertisers are much needed. Tv has so far been a great marketing tool for advertisers, but we also want to ensure that it remains so. For the sake of a healthy broadcasting system in this country, we want to respectfully suggest that you should want it to remain so also. This means ensuring not only a nourishing system for Canadian content and culture, but a powerful marketing system as well for commerce that remains competitive, uncluttered, effective and efficient. Commissioners, advertisers are very supportive of these proposals for new conventional stations in all three noted markets and we will support them financially. Once again, thank you for allowing us to present our perspective for your consideration, and we wish you well in your deliberations. If you have any questions I will be happy to try to respond to you.
3490 THE CHAIRPERSON: Thank you Mr. Rhéaume. It's nice to see you since, I suppose -- we appreciate your presence and you represent the financial fuel of stations. We are always interested to hear what you have to say. Would it be fair to say that for your members there has to be a balance between the -- the significance of lowering the cost, perhaps of advertising, and by adding more competition and yet the venues on which you advertise having good enough quality to attract audiences, which is your view?
3491 MR. ROBERT RHEAUME: Definitely there has to be a balance. I mean, you know, quality programming is -- is terrific but it's not to say that programming that atracts smaller audiences is not worth something, it's certainly worth something and certainly has some -- certainly has value. But a balance certainly is --
3492 THE CHAIRPERSON: What I meant was, if there are more stations in the market is it then less expensive for your members to reach the viewer, because it often has a tendency to lower the rates if competition has been increased to a point where some intervenors and some parties feel may be over the edge towards licensing a station. Now you obviously support the licensing of these three stations but presumably there is also a concern about the ability to get viewers. Would you -- you tend -- I guess you will agree that if we would license these services there would be room for the advertiser who was perhaps not able to afford the cross-Canada audience, but pay less and advertise on a smaller vehicle.
3493 MR. ROBERT RHEAUME: Definitely. This will attract new money into these three local markets. I am not suggesting that the new money will be enough to sustain the -- the station or stations, but it will definitely create a larger pie. It will definitely repatriate some dollars from Buffalo stations and I guess what you were getting at, and I have no argument with your position, it will also take dollars away from some of the incumbents and lower market rates.
3494 THE CHAIRPERSON: Which is a benefit, of course, to your members.
3495 MR. ROBERT RHEAUME: Indeed.
3496 THE CHAIRPERSON: When you make your decision as to whether to come forward and actually support one proposal or another, and not some, do you actually look at the proposals?
3497 MR. ROBERT RHEAUME: Each and every one.
3498 THE CHAIRPERSON: And you have no -- so in some detail? Not just the --
3499 MR. ROBERT RHEAUME: Yes.
3500 THE CHAIRPERSON: -- they are a generic proposal put forward. And you have no concern that any of these proposals would be of a quality that would not be of -- unlikely to be of a quality of interest to your advertisers?
3501 MR. ROBERT RHEAUME: I have no concern in that regard at all.
3502 THE CHAIRPERSON: There has been a lot of talk about Buffalo and you have raised it again today. And it's been put forward that perhaps it's not possible to repatriate because the Canadian advertisers advertise on the programming that is particular to these stations and is not available, sometimes because of difficulty of simulcasting and therefore repatriation is not possible. What is your view? You obviously think there can be some. But what is your view of this allegation that repatriation is very difficult because it's not the type of programming Canadian stations can do anything about.
3503 MR. ROBERT RHEAUME: This was the argument, I think, that was advanced this morning by the CHUM group, and in our opinion that logic is -- is strong. The -- the flaw in it, though, is that viewers whether -- if viewers have more choices to view, the chances are that some of the viewers from those programs will choose to view the new station. I think the argument that -- that CHUM made this morning was that because that programming will continue to come into the market and cannot be simulcast and is attractive to viewers, viewers will continue. To a certain degree that's quite true. The -- what you have to take into account in that regard, though, is that there will be a new choice and I don't think that a hundred per cent of the people who were watching those programs will ignore the new choice in the market. So the new choice in the market is going to get an audience; it depends on the attractiveness of programming they offer as to the size of the audience they garner. So if they can offer very attractive programming, they can take away some of that viewing from those Buffalo stations.
3504 THE CHAIRPERSON: With regard to the size of the pool, do you have any comment? I think the figure we heard the most often is in the range of $25- million that would flow presumably from some of your members to -- to Buffalo. Is that a figure that appears reasonable to you as the pool from which to try to get some back?
3505 MR. ROBERT RHEAUME: Yes, indeed. As a matter of fact one of the -- one of the companies who did one of the research studies in fact I believe is -represents, is the sales representative for one, and perhaps it is WUTV.
3506 THE CHAIRPERSON: That's Craig, I understand.
3507 MR. ROBERT RHEAUME: Right, air time sales, I think. I think that it -- it - earlier, two days ago they in fact indicated that was the amount; they should know.
3508 THE CHAIRPERSON: So you would feel that's probably accurate. Despite your dark suit, I gather that you are optimistic about it?
3509 MR. ROBERT RHEAUME: Yes.
3510 THE CHAIRPERSON: That you operated, particularly about the indices, about for the medium time at least or for the period when any new proposal that licence would get on the air?
3511 MR. ROBERT RHEAUME: Very much.
3512 THE CHAIRPERSON: Thank you, Mr. Rhéaume, and we -- do come back. There isn't too many advertisers who come to see us, and it's of course the fuel in the system. And it's very important to get. In a particular process or proceeding we have to get that view when we are speaking about advertisers supporting some things.
3513 MR. ROBERT RHEAUME: Thank you; it's very important for our members too, so we appreciate that.
3514 THE CHAIRPERSON: Thank you. I believe, Mr. Secretary, that that completes our work for today. We have had a long stretch but now we have a long evening. We will see you all -- well perhaps not you, but some of you, tomorrow morning at 8:30 when we will pursue with phase 3.
Whereupon the proceedings adjourned
at 1615, to be reconvened on Friday,
the 7th day of December, 2001, at 0830/
L'audience est ajournée à 1615,
pour reprendre le jeudi 7 décembre 2001
MINORI ARAI, CSR
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