ARCHIVED - Transcript / Transcription - Calgary, Alberta - 2002-04-10
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TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
HELD AT: TENUE À:
The Metropolitan Centre The Metropolitan Centre
333 Fourth Avenue South West 333, quatrième avenue sud-ouest
Calgary, Alberta Calgary (Alberta)
10 April 2002 Le 10 avril 2002
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Conseil de la radiodiffusion et des
Transcript / Transcription
BEFORE / DEVANT:
Barbara Cram Regional Commissioner for Manitoba and Saskatchewan / Conseillère régionale pour le Manitoba et la Saskatchewan
Ronald Williams Regional Commissioner for Alberta and the Northwest Territories/ Conseiller régionale pour l'Alberta et les territoires Nord-ouest
David McKendry Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Peter Foster Hearing Manager / Gérant de
Marguerite Vogel Hearing Secretary / Secrétaire de l'audience
Secretary / secrétaire
Leanne Bennett Legal Counsels /
Alastair Stewart conseillers juridiques
HELD AT: TENUE À:
The Metropolitan Centre The Metropolitan Centre
333 Fourth Avenue South West 333, quatrième avenue sud-ouest
Calgary, Alberta Calgary (Alberta)
10 April 2002 Le 10 avril 2002
TABLE OF CONTENTS / TABLE DES MATIÈRES
APPLICATION BY / APPLICATION PAR
by Craig Broadcast Alberta Inc. (CKAL-TV) 29
par Craig Broadcast Alberta Inc. (CKAL-TV)
by Craig Broadcast Alberta Inc. (CKEM-TV) 29
par Craig Broadcast Alberta Inc. (CKEM-TV)
by Craig Broadcast Systems Inc. (CKX-TV) 729
par Craig Broadcast Systems Inc. (CKX-TV)
by Craig Broadcast Systems Inc. (CHMI-TV) 729
par Craig Broadcast Systems Inc. (CHMI-TV)
INTERVENTION BY / INTERVENTION PAR
Debra DeWaal 1231
Calgary, Alberta /
Calgary ( Alberta)
--- Upon commencing on Wednesday, April 10, 2002 at 0930 / L'audience débute mercredi, le 10 avril 2002 à 0930
1 THE CHAIRPERSON: Good morning, ladies and gentlemen, bonjour mesdames et monsieurs. Welcome to this public hearing to consider television licence renewal applications submitted by Craig Broadcast Alberta Inc. and Craig Broadcast Systems Inc.
2 My name is Charles Dalfen, Chair of the CRTC, and I will preside over this hearing. Joining me on the panel are my colleagues, Andrée Wylie, to my right, Vice-Chair, Broadcasting; Barbara Cram, to my far left, Regional Commissioner for Manitoba and Saskatchewan; Ronald Williams, next to me, Regional Commissioner for Alberta and the Northwest Territories; and to Andrée's right, Commissioner David McKendry.
3 The team from the Commission assisting us at this hearing includes Coordinator Peter Foster, Legal Counsel, Alastair Stewart and Leanne Bennett, and Hearing Secretary Marguerite Vogel. They are available to try and answer any questions you may have about this hearing.
4 When the Commission issued its television policy in 1999, it announced that the licences of conventional stations owned or controlled by ownership groups would be renewed at the same time. Today's hearing will give us the opportunity to consider the Craig renewals in light of this policy and, of course, under the provisions of the Broadcasting Act, which sets out the Commission's mandate.
5 The television policy calls for the Commission to consider a number of elements when renewing licences. For example, we will examine Craig's corporate strategy, how each station will implement this strategy and the contribution that all facets of Craig's operations make to the Canadian broadcasting system.
6 In light of the recent decision of Monday, that granted Craig a new conventional television station in Toronto, the Commission will want to consider how this new station, in the country's largest market, will impact on Craig as a group and on the renewal commitments for Craig's existing conventional television stations.
7 The renewal of the licences for Craig's other broadcasting services will not be examined in this hearing. Nevertheless, in line with the television policy, we will examine the contributions of all aspects of Craig's operations to the broadcasting system.
8 In addition, we will explore whether the priority programs in the broadcast schedules of the Craig stations reflect an appropriate commitment to high quality Canadian programming.
9 Under the Commission's television policy, conventional television licensees are also expected to show how they intend to meet the needs of their regional and local audiences. Since the conventional stations we are examining today operate in two provinces, Alberta and Manitoba, the panel will examine how their programming reflects their region of operation and how they intend to provide programs produced by independent producers working in those areas. We will also review plans for newscasts or other local programming that the licensee intends to broadcast.
10 A further important matter we intend to examine is Craig's specific commitments to initiatives with respect to the reflection and on-screen portrayal of aboriginal peoples and of racial and cultural minorities living in the communities served by the stations. The panel will also explore the licensee's progress in responding to the needs of the visually impaired.
11 The duration of the hearing will be approximately one and a half days. I would ask that cellular phones and beepers be turned off when you are in the hearing room as they are unwelcome distractions for participants and Commission members. We would appreciate your cooperation in this regard at all times during the hearing.
12 Before we being the hearing, I would ask Hearing Secretary Marguerite Vogel to describe the procedure. Marguerite?
13 THE SECRETARY: Thank you Mr. Chairman. The applications on today's agenda will be heard in three phases. Phase I is the presentation by the applicant to the Commission. Twenty minutes is usually allocated for this presentation, however, today items 1 through 4 will be heard together and the applicant will be allocated 40 minutes for its presentation. Questions from the Commission will follow the applicant's presentation.
14 Phase II is where the appearing interveners make their presentations to the Commission. Ten minutes is allocated for each. Again, there may be questions from the Commission following each intervener's presentation.
15 Phase III provides an opportunity for the applicant to make comments or reply to the interventions that have been filed with respect to their applications. Ten minutes is allocated for this reply. And again, questions may follow.
16 Some general information. The public files associated with the items at this hearing are available for viewing in the Capitol Boardroom, which is right across from the door of this hearing room. CRTC staff in that room will be pleased to assist you. But please be aware that while an application is being heard, the public files associated with it will be in this room and not available for viewing.
17 There is a verbatim transcript of this hearing being taken by court reporters from Total Reporting Service, who are located at the table to my left. If you have any questions about how to obtain all or parts of this transcript, please approach Total Reporting Service for information.
18 Also, there are translation receivers available from ISTS at the back of this room. Finally, if you want to have messages taken, we would be happy to post them outside of the Isis room and the phone number in the public examination room is 266-2167. If you have any further questions, please do not hesitate to contact us. We'll be more than pleased to assist you when we can.
19 Now, Mr. Chairman, with your leave, I will call items 1 through 4.
20 THE CHAIRPERSON: Thank you. Over to you.
21 MR. CRAIG: Good morning, Chairman Dalfen.
22 THE SECRETARY: Excuse me. I'm sorry to interrupt so early, but I have to read the items into the record.
23 THE CHAIRPERSON: Thank you. I'm still a little rusty.
24 THE SECRETARY: Item 1 is an application by Craig Broadcasting Alberta Inc. to renew the licence of television station CKAL-TV Calgary and its transmitter CKAL-TV-1 in Lethbridge.
25 Item 2 is an application by Craig Broadcast Alberta Ltd. - I'm sorry - Craig Broadcast Alberta Inc. to renew the licence of television station CKEM-TV Edmonton and its transmitter CKEM-TV-1 in Red Deer.
26 Item 3: Application by Craig Broadcast Systems Inc. to renew the licence of television station CKX-TV Brandon and its transmitters CKX-TV-1 Foxwarren, CKX-TV-2 Melita and CKX-TV-3 McCreary.
27 Item 4: Application by Craig Broadcast Systems Inc. to renew the licence of television station CHMI-TV Portage La Prairie.
28 Please proceed when you are ready.
29 MR. CRAIG: Good morning Chairman Dalfen and Commissioners. Welcome to Calgary.
30 My name is Drew Craig and I am the President and CEO of Craig Broadcast Systems Inc. and Craig Broadcast Alberta Inc. It is my great pleasure to introduce you to the other members of our panel. In the front row, on my left, is Joanne Levy, Executive Director of the A-Channel Production Fund. On my right, Jennifer Strain, Vice-President, Corporate and Regulatory Affairs for Craig. Beside Jennifer, Al Thorgeirson, General Manager for A-Channel Calgary and Manager of Station Operations for Craig. Beside Al, Linda Noto, Craig's CFO.
31 At the table behind me from your right to left is Debra McLaughlin, Vice-President, Research, Airtime Television Sales; Jim Haskins, General Manager of A-Channel Edmonton and Vice-President, News Programming for the Craig stations. Beside Jim is Chris Duncan, Director of News and Entertainment Programming for A-Channel Edmonton; Barry Close, Promotions Manager for A-Channel Edmonton. And beside Barry, Dixie Baum, Promotions Manager for A-Channel Calgary.
32 At the side table, from your right to left is Alan Cruise, General Manager for CKX-TV Brandon. Beside Alan is Cam Cowie, General Manager for A-Channel Manitoba and Vice-President, Revenue Management for the Craig system; Shauna Palendat, Promotions Manager for A-Channel Manitoba; Darcy Modin, Director of News and Entertainment Programming, A-Channel Manitoba; Lisa Meeches, Executive Producer and host of our Aboriginal Program, "The Sharing Circle"; and Paul East, our Technical Consultant.
33 We are delighted to welcome you to Calgary and eager to talk to you about what we have accomplished out here in the West and how we see things unfolding over the next seven years.
34 As the Commission knows, we have been in the business of conventional television for 50 years. It is our core business. You rendered a decision two days ago that has profound implications for our company. We have not quite had time to grasp them all yet, but suffice to say, we are very thrilled and positive about the future and looking forward to the challenge of bringing new, local and multicultural programming to the GTA. I am on record as stating of how proud I am of what our team has built. Today gives me the opportunity to fully showcase why.
35 As you know from our application and having had us before you in other processes, our strategy is to be intensely local. It starts with having a location in each market that is very visible, accessible and interactive and it carries through to developing programming that reflects not just our cities, but the diverse communities and neighbourhoods within and around our cities.
36 I would like to offer a few specific examples of how we stand out. CKX Television, a CBC affiliate, is the only local television station in the Brandon market and has been operated by our family since 1955. It airs 17 and a half hours of news each week, plus other locally relevant programming. This is a significant, almost unheard of, level of service from a local television station in a market of this size.
37 A-Channel Manitoba, with studios in Winnipeg and Portage la Prairie, is the only broadcaster in the province that broadcasts stories from around the entire province, not just Winnipeg, every single day. We provide a vital service to rural Manitobans and we do significant amounts of weekly local programming.
38 Our A-Channel stations in Edmonton and Calgary have been on the air for less than five years and we have already established ourselves as the community-minded, intensely local station. We have more cameras and more reporters than our competitors. As a result, we are more likely to cover breaking news and the most likely to cover a community event. Our daily morning show, "The Big Breakfast," a combination of news and human interest programming has injected new life and energy into the downtown core of each city and onto viewer's television screens. Our coverage of the arts and culture in Calgary and Edmonton is unsurpassed.
39 In the area of licensing independent production, we are the only door to knock on in Western Canada. We meet and work with Alberta and Manitoba producers in their own backyards. And we have made a significant contribution in the area of licensing feature films, as Joanne will detail to you a little later on.
40 We were the first conventional broadcaster to give a permanent home on mainstream television to Canada's first aboriginal news magazine program, "The Sharing Circle" and we are happy to report that this program is now in its tenth season and still going strong on each of our four stations. We are delighted that the show will soon include the stories of Ontario's First Nations People and be widely available in Toronto.
41 Our programming is very reflective of the diversities of our city. Coverage is not limited to entertainment segments in newscasts and to occasional stories about particular festivals and multicultural events. Rather, the stories of our diverse communities are woven through all of our programming and showcased in a variety of formats, week in and week out, all year long.
42 Our expenditures on Canadian programming exceed our licence requirements and national and provincial averages by a wide margin, based on the CRTC's most recent statistical and financial summaries.
43 In summary, our track record and our history in conventional television are unique. It speaks volumes about the sincerity of this company's commitment to the broadcasting system, its regulatory obligations and to the communities we serve.
44 I would now like to turn to our individual station managers to give you a sense of what is happening in their respective markets. I will start with Alan Cruise from Brandon.
45 MR. CRUISE: Thank you, Drew. As Drew said, the Craig's have operated CKX Brandon since its inception in 1955. At that time, Brandon became the first market of its size to have its own local television station. Today, CKX offers 23 and a half hours of local programming to the community.
46 Brandon is the hub of a larger geographic region with a population of about 110,000. CKX links these communities together from the U.S. and Saskatchewan borders to Riding Mountain National Park in the north and Portage la Prairie in the east. Brandon has earned the nickname of the Host City by successfully holding many events: the first ever Olympic Curling trials, the World Youth Baseball Championships, and the Canadian Figure Skating Championships. Beyond these special events, Brandon is home to one of the province's largest broadcast technology programs at Assiniboine Community College and the world-renowned Brandon University School of Music.
47 It is hard for us to impart to you what it means to this community to have its own television station. CKX is integral to Brandon's ability to host events like the ones I just mentioned and to foster unique partnerships that make our city and area a great place to live and do business. It is not an exaggeration to say that there is not a group, business, charity or individual in Brandon that has not been touched by CKX.
48 Our regular daily programming includes a simulcast of "The Big Breakfast," live from A-Channel Manitoba with Brandon news inserts, the CKX Noon Show and CKX "News @ Six", the suppertime flagship of CKX Television.
49 We have televised many political debates covering civic, provincial and federal elections, as well as the Mayor's annual State of the City address. We provide coverage of every level of sports, from high school to University to our own Major Junior Hockey League team, the Brandon Wheat Kings.
50 And then there is the "Manitoba Farm Report", a co-production of CKX and CHMI that has been on the air for nearly 50 years. We will continue to air this provincially-based agricultural program as it evolved to provide our viewers with insight into the world of agriculture which is still Manitoba's principle industry.
51 We have won numerous awards and profiled and raised money for many charitable groups. CKX is simply an integral part of the Brandon community.
52 Right now CKX faces two major challenges. The first is the impact of DTH penetration. Today, 20 percent of CBC programming in Brandon goes to distant signals delivered by DTH and it's growing.
53 The second challenge is the status of our CBC affiliation. The affiliation payments we receive from the CBC represent about 25 percent of station revenues and are vital to our ability to continue to provide extensive local programming in Brandon. The CBC has recently indicated to us, and other affiliates, that their intent is to reduce our affiliation fees to zero while increasing the amount of network programming we would be required to take. While we continue to be hopeful that a mutually beneficial solution can be reached with CBC, as we sit here today, the future of our relationship is very much in doubt.
54 Indeed, the future of CBC affiliated stations across the country is very much in doubt. And it within that context that we have made an absolute minimum commitment of six hours per week of local programming.
56 MR. COWIE: Thank you, Alan.
57 In 1999, MTN, as CHMI was known for 13 years, was re-branded and re-launched as A-Channel Manitoba, with an enhanced commitment to serve Portage la Prairie, Winnipeg and Southern Manitoba. A key part of this re-branding was replacing our existing Winnipeg facility with a brand new, fully digital facility at the Forks.
58 The new location gave use the opportunity to expand our news coverage, both in Winnipeg and outside the perimeter highway, and to introduce Manitoba to itself, five mornings a week on "The Big Breakfast." Jim will be commenting in more detail on "The Big Breakfast" a little later, as it is a significant program in the schedules of all of our television stations and a vital contributor in the area of non-news local programming.
59 Currently, we broadcast 17 and a half hours of first-run local news as well as 12 hours of non-news local reflection. The latter includes "The Big Breakfast," "Best of the Big Breakfast," "Wired Actives," "The Sharing Circle" and "The Manitoba Farm Report."
60 For the last 6,000 years, the Forks has been the official meeting place of Manitoba as First Nations people gathered from across the North American plains. Today, it welcomes over 5 million visitors a year and plays an important role in our local strategy to be visible, accessible and interactive with all Manitobans.
61 Our new digital facility acts as the hub of A-Channel Manitoba's news operations, linking live cameras, bureaus and news crews throughout Manitoba. This has allowed us to go live from any corner of the province, breaking more local news stories that effect Manitobans, both in and outside the perimeter highway.
62 From Steinbach to Dauphin, to Churchill to Gimli, our news department has broken exclusive stories from across the province and covers rural events, activities and issues every day in its regular programming. This ongoing provincial perspective is truly unique. We think this is vitally important and is exactly what the Broadcasting Act prescribes when it speaks of reflecting diverse regions of Canada.
63 As the Manitoba Provincial Minister of Aboriginal and Northern Affairs, Eric Robinson said in his submission on our behalf, "This coverage has been a great benefit to all Manitobans in educating about the realities of life in northern and remote communities."
64 A sincere commitment to regional reflection requires a concerted and consistent effort to look beyond the urban centre of Winnipeg to the communities and neighbourhoods across southern Manitoba. At A-Channel, we make that effort every day. Our dedication to all areas of the province have been rewarded. We are Manitoba's local television station of choice. Al?
65 MR. THORGEIRSON: Thanks, Cam. Each of our stations in Calgary and Edmonton has a distinct approach to local programming, which is necessary given the differences between the two cities. But the stations do share a few things in common, such as the largest new gathering team in each city - our cameras really are everywhere; a commitment to be the most local and most reflective of their communities; and a commitment to cover local arts and culture.
66 We have been on the air less than five years in Edmonton and Calgary but we have already made an indelible mark on each city. We currently broadcast in excess of 22 hours of local news per week in each city. In addition, we air 14 and a half hours of local, non-news programming. Audiences for our local programs are growing and the quality of our news coverage is second to none.
67 For example, during our very first year on air, Calgary received top honours for "News @ Six," recognized by Canpro as the country's Best Newscast in a Large Market. Both A-Channel Calgary and A-Channel Edmonton have recently been announced as finalists in the category of Best Local Newscast for the upcoming Alberta Motion Picture Industry Association Awards for their "News @ Six" programs which aired September 11th. In addition, one of our Edmonton reporters is a finalist in the Best Reporter category for a story she did entitled, "Understanding Islam" and one of Edmonton's anchors is a finalist in the Best Anchor category. Last year, our Edmonton newscast received the AMPIA award as being the best in the province.
68 Our efforts and accomplishments have been recognized not only locally, by also regionally and nationally. Twice, we have received the top award from the Radio Television News Directors Association for Best News Coverage in the Prairie Provinces. Other major awards include a Gold Ribbon award for Best News Coverage from the Canadian Association of Broadcasters and a special CAB award for a very unique, hard hitting, anti-drinking and driving campaign.
69 All of this is to say that in a short time period, we have had a tremendous impact on these communities and we take our news obligations very seriously.
70 In addition to our news, we offer a daily program dedicated to showcasing the arts, culture and entertainment scene in Calgary and Edmonton. From local bands to art exhibits, theatre and locally produced films, our program "Wired" is the only local show of its kind in the market.
71 And then, of course, there is "The Big Breakfast."
72 MR. HASKINS: Our specialty is local programming. Perhaps the best example of this is "The Big Breakfast." It really is the signature show for each of our three A-Channel stations. It is a wonderful vehicle for showcasing and celebrating the cultural diversity of each city.
73 "The Big Breakfast" airs Monday to Friday on all of our stations. In each market where the show originates, the program is locally produced and is unique to the market. For example, the show in Edmonton has a different flow and format than the show in Calgary, and while the Alberta shows may have an urban feel, the Winnipeg program often celebrates rural events and broadcasts live from a southern Manitoba location each day.
74 Our hosts have quickly become the most recognizable and most popular broadcasters in each city, and they are in constant demand as public speakers. As well, their fundraising work on behalf of local charities is unsurpassed.
75 Every day, in each city, we feature a large number of guests and topics: from charitable groups to community and multicultural groups; from health professionals to local performers; from international celebrities to local stars just waiting to be discovered.
76 Some days we cover as many as 15 different subjects in one program. We champion local causes, we investigate local issues, and have done so much to promote local talent that we have been named the Television Station of the Year twice by the Alberta Recording Industry Association and have been nominated for the Industry Prairie Music Award for Media Outlet of the Year at A-Channel Manitoba two years in a row.
77 We work very, very hard to provide unmatched service to non-profit organizations that simply cannot get this kind of exposure on any other media outlet. Dixie?
78 MS. BAUM: To define a station as local requires demonstrating an involvement in all areas and at all levels of the community. We are the champions of the local chapters of national charities. But more important to us, we are the first call for small, local only fundraising and neighbourhood projects.
79 We are the cheerleaders for city-wide amateur sports and we are the talent scouts shining a light on and raising awareness of home-grown artists. Our interests are broad, our efforts genuine, and our success rate, high. We have raised millions of dollars for local interests, developed legions of fans for sporting teams, served as a launch pad for new talent and incorporated the communities' needs into the scope of our endeavours. Community service is not simply one of our interests, it is a guiding principal.
80 (VIDEO PRESENTATION)
81 MS. LEVY: I am Joanne Levy, the head of the A-Channel Production Fund. I would like to begin by saying how very proud I am of the commitment we made and significant achievements in providing viewers with quality Canadian long form drama and documentaries in this past four and a half years.
82 As the demonstration you have seen mentioned, we have licensed 15 completed movies, such as "The War Bride", which received seven Genie nominations and won two Genie awards just this last January.
83 As of October the first, 2001, the A-Channel Drama Fund has been re-named the A-Channel Production Fund to reflect the Fund's expansion into development and support for all forms of Canadian Priority Programming beyond long form drama. Since that time, we've licensed one documentary series and two feature documentaries that have already been completed and been on the air on our stations.
84 We provide an increasingly rare opportunity for filmmakers, especially those in our home provinces, to tell their stories, perfect their craft, and very importantly, to reach an audience. Toronto One will now guarantee our producers a window in Ontario. It's very, very important to them.
85 We provide diversity to both viewers and the entire Canadian cultural system. Productions we licence are seen around the country in movie theatres, on pay television and on the services of other Canadian broadcasters, both conventional and specialty.
86 We have received more than 500 project proposals and we've been in contact with more than 350 filmmakers as a result of our commitment to spend $14 million in Alberta on Canadian priority programming.
87 The fact that we've spent almost half of our commitment is a testament to the entrepreneurial skills of independent producers in Alberta and their inter-provincial and, in fact, international co-production partners.
88 Only about half of our projects received support from the Licence Fee Program of the Canadian Television Fund and only one of our movies has received Telefilm equity.
89 However, we are proud to do distinctly Canadian programming with the assistance of the funding agencies. For example, "The War Bride", which I mentioned earlier, is a Canada/UK co-production with a budget of $7 million, very high in Canadian terms. All of that money was raised entirely outside of the Fund.
90 That's my beacon of hope since mid- March. I found out that all three of the movie projects that we'd sent into the Fund had been turned down. Last year, the drama envelope at the CTF was under subscribed. This year, it's over subscribed. What was considered the maximum licence fee from the broadcaster last year has become the minimum and it bears absolutely no relationship to the budget of a project or its cultural objectives.
91 All of this aside, we are confident Alberta independent producers will rise to the challenge of bringing us the projects that will create many more hours of Canadian priority programming with the balance of this Fund and with our new commitment to independent production.
92 As we promised in our Renewal Application, we will air eight hours per week of priority programming in prime time. At least one hour will be local or regional reflection. We have also committed to make fresh expenditure commitments after the existing Production Fund commitment is retired in 2004. This takes two forms. First, we committed $200,000 per year to development of new programs and this will be used to support independent scripts and pilot programs. Second, we will, beginning in year 2005 and for the ensuing five years of the new licence term, commit to spend an additional $10 million with Alberta and Manitoba producers as their co-production partners. This $10 million expenditure will be in the form of licence fees and/or equity investments. No more that 10 percent of this amount will be used to offset the costs of administration and as a resource for producers. The licences offered may buy either national or regional rights depending on the project.
93 We believe this is a substantial commitment to the independent production community and a flexible plan that allows for maximum innovation in the creation of Canadian programming for a regional broadcaster.
94 MR. CRAIG: Thank you, Joanne. One of the programs of which we are particularly proud is "The Sharing Circle", Canada's longest running and most watched aboriginal news magazine. In partnership with the program's executive producer, Lisa Meeches, Craig first gave this show a broadcast window on CHMI-TV and CKX-TV ten years ago. And it then found a home on our Alberta stations when we were licensed here. Each newsroom in Winnipeg, Calgary and Edmonton retains an aboriginal reporter whose job is not only to report on issues affecting the aboriginal community in each city but also feed the stories for "The Sharing Circle".
95 I'd like to ask Lisa Meeches to elaborate on this program.
96 MS. MEECHES: Thank you. "The Sharing Circle" was the model used in the application used by the Aboriginal Peoples' Television Network as a program made for, and by, aboriginal people that had attracted audiences from a wide range of cultures. Its continued audience growth and its positive reception by audience was the first demonstrable proof that a broader Canadian population was interested in a show of this kind. It remains today one of the true success stories of the Canadian broadcasting system.
97 As the show enters its 11th season, the original mandate and commitment to spirituality remains its foundation. However, the show has outgrown its news magazine format and is expanding into a 26 part half-hour documentary series, providing more in-depth examinations of its stories and issues. Testimonials, stories of courage, love, respect, humility, wisdom, honesty and truth are shared with our viewers. Through these stories, people continue to discover peaceful solutions to conflicts within their own lives.
98 Adding to the spiritual strength is the universal appeal of the subject matter. Some of the topics identified for production this season include self-government, health, treaties, sacred places, language preservation, oral history and the art of storytelling, sports and entertainment. These are transcendent stories of history and social significance. By expanding on these issues, we will continue to enhance and strengthen the education legacy of "The Sharing Circle" that began a decade ago.
99 MR. CRAIG: Thank you, Lisa. I would like to talk now about our local programming commitments for the next licence term. I would like to be clear that we have no plans to cut back on local programming.
100 What we have said is that some local programs are more expensive to produce than others and we may find ourselves wanting to have the flexibility to devote more resources to fewer hours in order to effectively deliver an audience.
101 In addition, seven years is a long time. Not unlike our other broadcast colleagues, we face similar competitive challenges, many of which are more acute for Craig, that may impact our ability to maintain the number of hours of local programming that we are currently doing. For example, consolidation and convergence impacts us at every level, every day, from acquiring programming to acquiring advertising space in local papers to getting our local stations carried on DTH.
102 Three of our four signals are not up on DTH. In the Calgary and Winnipeg markets, we are the only local broadcasters who are not being carried. We already mentioned the impact of satellite penetration in Brandon. We are working with the CAB to resolve this problem, but carriage of distant signals on DTH continues to significantly impact our program rights, ratings and revenues.
103 We also mentioned the status of our CBC Affiliation in Brandon, which we are very concerned about.
104 The threat of a new conventional licence in Alberta and Manitoba is a problem for another process and day, but is apparent from CHUM's recently gazetted group licence renewal that it has now set its sights on expanding into Alberta.
105 What we have said in our application is that we intend to carry on with what we are doing, and under no circumstances will we do less than the minimum number of hours that we have outlined. These minimum numbers are on par with what our larger competitors are obligated to do and we think that they are reasonable.
106 I would also like to make some brief comments about our role in the broadcasting system. Other broadcasters have said that local reflection is not the business to be in. We fundamentally disagree.
107 Without distinct local programming and the community connection that develops from being intensely local, we are nothing more than aggregators of acquired programs. A CanWest or a CTV, with the buying clout to secure Top 20 programming for its network schedule simply has different priorities. We are not in that position and so we've had to be different.
108 This local corporate strategy not only makes good business sense for us, but it works for our viewers and it fulfils some very important objectives of the Broadcasting Act.
109 When we look at the markets we serve, and in fact, all Canadian markets, we can easily see the hole is in the local programming, locally produced and reflective programming. Is there a consumer appetite for this product? Of course there is. In almost all of the applications we have presented to you in the past five years, ranging from Victoria to Toronto, the continuing theme is the desire of Canadians to see themselves and hear their stories and share their values. But these stories and images are as many and varied as the Canadian landscape.
110 Each region, each market, and in fact, each neighbourhood is distinct. In recognizing this, we have found our market, our programming strategy and our business case. In each of our markets, and this will extend to Toronto, we are neither limited in our focus, nor driven by the need to export one size fits all programming across a system.
111 What does it mean for revenues? It is not at first glance immediately financially rewarding. Canadian programs in English Canada do not enjoy the high awareness or audience shares of that of foreign acquired programs.
112 But, we are well positioned to make this investment in local. As a privately owned company, we are not driven solely by quarterly financial results. And don't get me wrong - we like to make money as well. But, we have the freedom to explore and develop this programming strategy. We fill the void our competitors left when they made the reasonable decision to pursue other national programming strategies. We believe this is the opportunity and the role that mid-size broadcasters are uniquely positioned to fulfil.
113 I'd like to sum up today with the following. Despite the fact that Craig's reach of English Canada is far below the 70 percent threshold, we have made unequivocal commitments to broadcast a minimum of eight hours of priority programming on each of our four stations over the next licence term. One hour of that will be local or regional reflection in keeping with our belief that this type of programming is important and needed in the system.
114 We have committed to absolute minimum numbers of hours of local reflection programming and will strive to do much, much more.
115 We have committed $10 million to independent production for the benefit of Western-based producers, plus another $1 million in development funding.
116 At a time when independent producers are seeing their opportunities to tell regional stories dissipate because of consolidation, we look forward to giving them the funding and exhibition times to add new energy to conventional Canadian television.
117 Relevant, culturally diverse local programming will continue to be our focus, our strength and our primary contribution to the broadcasting system.
118 We thank you for your time, Commissioners and Staff. We are now happy to answer any questions you may have.
119 THE CHAIRPERSON: Thank you very much, Mr. Craig, and ladies and gentleman, for a very helpful presentation. I'll begin the questioning. We have divided the questions up among the members of the panel roughly so that I will be asking you questions on group strategy, some financial questions and perceived synergies. Vice-Chair Wylie will be addressing group programming issues. Commissioner McKendry will be addressing group social and cultural issues, access to your systems for the hearing impaired and visually impaired. Commissioners Williams and Cram will be dealing with the Alberta and Manitoba stations, respectively. But that isn't to say that these are watertight compartments, and what I welcome as a Chair is interventions by my fellow Commissioners as follow-up to questions and that gives you a certain coherence in the questioning as well. Of course, Counsel will follow up the questions as is usual.
120 So let me begin with a few questions about overall corporate strategy and I want to begin by reminding you, of course, that you sold your remaining radio programming undertakings recently and have launched a few digital specialties and have licences for a number more and have added, of course, a conventional television licence in the largest market in the country. Congratulations by the way on persuading the majority of the panel that heard you that you were the deserving licensee for the area.
121 MR. CRAIG: Thank you very much.
122 THE CHAIRPERSON: So with the change in make-up of the properties in the group's portfolio, how would you summarize your overall corporate strategy?
123 MR. CRAIG: Well, effectively, what we've been working towards over the last few years is to really divide the company into two parts. And as the Commission is also aware, we're also in another part of the business as well, in the wireless delivery business. We have MDS licences in Manitoba, in B.C. and we also have other wireless interests in other parts of North America and in New Zealand as well.
124 So really, what we've been working towards in terms of our corporate strategy is really developing two very distinct strategies; one on the wireless front and one on the media front. Over the course of the last year or so, we've been working towards a corporate re-organization that would take the wireless company and separate it from Craig Broadcast Systems. It was, as you may be aware, integrated with Craig Broadcast Systems and, of course, owned by our family.
125 So really, what we've done is separate the company into two parts. My brother, Boyd, is heading up the wireless division and we will completely separate that from Craig Broadcast Systems. It has its own needs and its own requirements and is a totally separate business, so we're going to set that on its own course. And we, under another banner, are putting all the media assets together. We, as you're aware, have different partners in different outlets on the media side, so we're putting them in one bundle.
126 So we're very much focussed on two areas, two very distinct areas: one on the wireless side and one on the media side. We are very much focussed in terms of our corporate strategy, of course, in terms of, on the broadcast side, on two areas: one on specialty television and one on conventional television. So that's really what we've been working very hard on and that's where you'll see the companies going in the future and how they'll be set up.
127 THE CHAIRPERSON: So I take it radio is not any longer considered part of your business plan?
128 MR. CRAIG: We had the very difficult decision to leave the radio business. You know, CKX Radio was our legacy asset. But we just found that we felt there were more opportunities, more new opportunities in specialty television and conventional television, so we reluctantly parted with the radio to pursue the two strategies that I just talked about.
129 THE CHAIRPERSON: Can you give us an idea of how the revenues that you generated from the sales of the radio assets are going to be used to bolster other elements of your media strategy?
130 MR. CRAIG: Effectively, what we've done is we've taken all of the proceeds to strengthen the balance sheet of the two companies. So, basically, all of the proceeds have gone right back into the organization and those proceeds are being use to provide us with an opportunity to grow both sides of our business.
131 THE CHAIRPERSON: Okay. So perhaps help me out a bit here. You say you've separated the businesses. From what point of view? I assume that they're still under the same ownership structure, or are they not?
132 MR. CRAIG: Well, basically what we're doing is the companies will be two distinct companies. There will be Craig Media Co. on one side and Craig Wireless International on the other side. They will be complete and distinct separate entities.
133 THE CHAIRPERSON: Right. And the shareholdings of those will be what?
134 MR. CRAIG: The shareholdings of those will be both owned and controlled by the Craig family.
135 THE CHAIRPERSON: All right. And did you just say that the proceeds of the radio sales were going to bolster both?
136 MR. CRAIG: Some of the proceeds went to the wireless side and some of the proceeds went to the broadcast side.
137 THE CHAIRPERSON: Can you give me a rough allocation?
138 MR. CRAIG: Approximately half.
139 THE CHAIRPERSON: Approximately half of the proceeds, of the net proceeds --
140 MR. CRAIG: About 50 percent. Fifty percent of the net proceeds went into the media side and about 50 percent into the wireless side.
141 THE CHAIRPERSON: All right. And going forward, you see these two arms as operating increasingly separately?
142 MR. CRAIG: Completely separately.
143 THE CHAIRPERSON: Completely separately?
144 MR. CRAIG: Completely separately.
145 THE CHAIRPERSON: So, for example, if you were to decide that your strategy was no longer to be in conventional television, as a hypothesis, and you wanted to go in some other direction, would the proceeds of a sale of those assets go to both sides or would they remain in the media company?
146 MR. CRAIG: They would remain in the media company. They're two separate companies at that point.
147 THE CHAIRPERSON: I see. So you've now drawn a line in the sand, as it were?
148 MR. CRAIG: We've absolutely drawn the line. I mean, it was very complicated and integrated before. I mean, if you look at the ERG chart that's on your website, it's pretty complicated, so we've tried to simplify that whole process.
149 THE CHAIRPERSON: Actually, I thought it was one of the more simpler ones on our website.
150 MR. CRAIG: Glad you thought so.
151 THE CHAIRPERSON: Okay, thank you. I have that pretty clearly. Now, I want to, even though I know that you've said that you're separating MDS out into the other company and are not -- and your own responsibility will be on the media side, would it be fair to say that MDS in Manitoba has been a challenge to the company?
152 MR. CRAIG: No question about it. I mean, you know, we got in that business in the very early days. We were the first licensee in the country. The telecom sector has taken a beating as you know - you read about it in the paper every day - and the fact that we're still standing, I think, is amazing. And certainly, the investment community looks at it as a huge success story. You know, Boyd is very passionate about that business. We still believe very strongly in that business. It has changed somewhat in terms of its ability to deliver service to rural Manitobans and to other people in the city of Winnipeg. And it has really gone a long way from being, quite simply, in its inception it was an analogue one-way service that was, you know, probably launched too late in the game because DTH came in and really impacted our ability to grow our subscriber base, just providing video.
153 But what we're able to do now is provide a two-way link between our facility and the consumer that provides digital TV, plus high-speed Internet delivery. And what's around the corner is -- and it was always limited, of course, by line of sight, and that was always its main limitation. And what we see on the horizon and the product that we're going to roll out in B.C., will actually be a non-line of sight product, and what we will employ in B.C. will be the first deployment anywhere in North America of what is called 3G wireless product. It's effectively a wireless, a mobile wireless product that's capable of delivering television and high-speed Internet on a non- line of sight basis.
154 So, as long as we can hang in there, you know, the consumer demand based on new products that are going to be introduced and new technology that's not a pipe dream, it's a reality, it's stuff that you can buy off the shelf, is going to make a huge impact to that business.
155 THE CHAIRPERSON: So are you going to be offering mobile services in Manitoba as well?
156 MR. CRAIG: We will eventually be there as well. Right now we're delivering a high-speed Internet product, but it's a fixed wireless high-speed Internet and the quality is amazing. And it's, you know, we've got, you know, I don't know the numbers, but the numbers are growing fairly rapidly now that this product has actually been introduced. Paul East, our technical consultant, is intimately involved in this. He's here if you want to talk to him more about this.
157 THE CHAIRPERSON: Right. Well, I think it would be an interesting discussion, but I think it will take us a bit off track for the moment.
158 MR. CRAIG: Right.
159 THE CHAIRPERSON: But it is interesting to hear those plans and you are certainly responding to the question.
160 MR. CRAIG: I guess the long and short of it, it was a drain for us on our resources. You know, we've put, I'm going to say in the order of magnitude in terms of what we've put into the wireless business, in terms of our family's commitment, we've put probably $35 million into that.
161 THE CHAIRPERSON: What was that number again?
162 MR. CRAIG: $35 million is what we've invested to date in the MDS side of the business. So basically, we've cleaned up the balance sheet. The wireless side is completely debt free and we're ready to move on.
163 THE CHAIRPERSON: Where's the debt in the corporate structure now?
164 MR. CRAIG: In terms of the wireless?
165 THE CHAIRPERSON: No, in terms of the overall --
166 MR. CRAIG: In terms of corporate --
167 THE CHAIRPERSON: If the wireless is debt free --
168 MR. CRAIG: The wireless is pretty much debt free. In terms of what we have for debt on conventional, we have a $20 million dollar facility in Alberta and we have a seven-and-a-half-million dollar facility for the specialty.
169 THE CHAIRPERSON: Right. But where did the debt go for the wireless? Where does it repose in your balance sheets right now? Am I understanding you correctly that you're saying you have a debt-free balance sheet on the wireless side?
170 MR. CRAIG: Pretty much.
171 THE CHAIRPERSON: Well, what do you do about that?
172 MR. CRAIG: The radio proceeds were used to pay that debt down.
173 THE CHAIRPERSON: I see. Were they sufficient to pay it all?
174 MR. CRAIG: Just about, yes. And remember that we did have a capital infusion from SaskTel as well.
175 THE CHAIRPERSON: Right.
176 MR. CRAIG: So the combination of their equity investment and our -- the radio proceeds, we've basically set wireless on its own now on a debt- free basis.
177 THE CHAIRPERSON: I don't want to stray into areas that are confidential, and you'll stop me if I do, but I'm trying to reconcile what you just said with a 50/50 allocation of the proceeds as among wireless and media.
178 MR. CRAIG: Yes. And then we did use some of the radio proceeds as well to pay down some debt on the conventional side.
179 THE CHAIRPERSON: All right. Well, perhaps you could file those answers with the Commission, and if they should be covered by confidentiality, that's fine, but I don't want to ask you questions that should remain confidential.
180 MR. CRAIG: No, that's fine.
181 THE CHAIRPERSON: And so you can perhaps address the issue of how the proceeds were allocated and your answers regarding the debt, wiping out the debt on the wireless side as regards the past. Going forward - I feel more comfortable here because there's no facts in the future - going forward --
182 MR. CRAIG: Well, I think the important thing in what we've done is we now have a very robust structure. We no longer have to feed the wireless side. The wireless has its own balance sheet, its own capital, and we've set the course for it and its now on its own.
183 THE CHAIRPERSON: And I understand the wireless side to mean both licensed broadcasting undertakings such as MDS, as well as possibly licensed telecom undertakings, possibly unlicensed undertakings of both kinds?
184 MR. CRAIG: That's right.
185 THE CHAIRPERSON: On the telecom side, essentially?
186 MR. CRAIG: That's right.
187 THE CHAIRPERSON: Or the wireless side.
188 MR. CRAIG: We've also made some international investments as well, too.
189 THE CHAIRPERSON: Right. Can you give us assurances that there will be no cross-subsidization from the media side to the wireless side?
190 MR. CRAIG: There can't be. They are two different companies.
191 THE CHAIRPERSON: They're two different companies, but having practiced law for a while and knowing how creditors like to see the world, I mean, the Craig family is likely to be involved and the controlling interest is likely to be involved and lenders like to have assurances that various assets are pledged, so I'm asking you the question in the context of a lender not necessarily to draw the same separations as you might want them to draw.
192 MR. CRAIG: Well, I think that's -- you know, our commitment is to divide the two companies into two very distinct parts, and that's why we've done it, because when you're raising capital for the telecom side and the wireless side it's a different set of investors, it has different capital requirements and it's a whole different business, and that's really why we separated. We don't want to, as a family, cross- subsidize it, so that's exactly why we've gone that route.
193 THE CHAIRPERSON: Right. Would you say that the future in MDS as regards, say, wireless cable as it used to be called, is there a future for that at, what is it, the equivalent of 60 analogue channels maximum? I believe that used to be the limit. Is that still --
194 MR. CRAIG: No. I mean, it has all sorts of opportunities in terms of delivering not only television, but data as well.
195 THE CHAIRPERSON: Right. But on the television distribution side, do you see it as a long- run competitor to cable and DTH?
196 MR. CRAIG: Yes. I still think it has application in terms of providing some video and some data in some combination. You know, Paul East could maybe talk more about what the potential is, but with digital compression and digital TV, for instance, on our Hawaii system we're delivering -- Paul, what's the number? I think it's 130, 140 channels.
197 MR. EAST: Including digital audio, it's a 145.
198 THE CHAIRPERSON: I didn't hear that.
199 MR. EAST: 145. Different frequency structure in the United States than Canada, but the technology is advancing at a rapid pace. Perhaps in that field it's easier, and in fact you have to think of data and TV as both being data. The video is compressed. The video is treated as digital data and, in fact, in British Columbia, as Drew has mentioned, with the portable system it will really merge TV as data. On the same system, both delivered via IP protocol, it will push them right together, more so than we are in conventional or digital specialty channels right now. And that's got to be the future for wireless, for MDS type companies.
200 THE CHAIRPERSON: Right. But would it not be the case that cable systems and DTH systems will still have whatever capacity they have more than what MDS has and can do the same thing?
201 MR. EAST: Quite true. And that's why I say for MDS it's not -- if you just play the game of counting bits versus ExpressVu or Rogers Digital, it's not a winning proposition, however, wireless has real strengths versus the fixed satellite dish, the hard line cable into the home, especially in this B.C. system. That strength is really played on with the portable wireless device that still delivers TV via IP instead of the traditional satellite path or hard line cable path.
202 So, that, I think is the future at Craig Wireless is merging -- TV data, Internet data; same thing.
203 THE CHAIRPERSON: Right. If I could just pursue that for a moment. In your B.C. systems and in California, are you, in effect, subdividing your MDS spectrum as between these different uses, for example, mobile and fixed?
204 MR. EAST: Quite true in Manitoba right now. You could actually point to a frequency and say that's an Internet channel, that's a television channel. The vast majority of the frequencies are used for television.
205 We're a strong believer that this is the future for MDS, this is how those companies will become profitable; merge those. You can't really just point to a frequency or a site and say, "That's a TV site." All sites propagate data. TV, Internet is data. That's really pulling together that concept in a very tangible example for British Columbia. It's going to be excellent quality video with stereo audio and high-speed Internet access pulled together on the same device, viewed on the same device.
206 So that's -- in fact, in the conventional TV, I mean, we talk about this all the time with DTV, over the air DTV in the work we've submitted to the Commission. We have to do that in conventional TV. We have to start thinking of video and audio as data. It is critical -- when you bring out interactive technology - we've been talking about it for years, but it is coming - as it moves to standards based platforms, that is going to be a real strength for creative people. Once us engineers get that figured out and it works, well, the creative people are going to take that and they're going to run with it, and there's going to be exciting uses of interactivity in TV shows and advertising, and we're going to need to be able to support that.
207 THE CHAIRPERSON: Just to kind of close off this loop, in your B.C. system, are your 3G mobile services going to be using the same portion of spectrum as you used to deliver the line of sight services to the home?
208 MR. EAST: Absolutely correct. It will be in the spectrum licensed by the CRTC.
209 THE CHAIRPERSON: But will the mobile users be on the same frequencies as the fixed users, or will you be subdividing that spectrum? And I'm trying to visualize how you could use both simultaneously.
210 MR. EAST: The system that will be on the air for July 6th will be strictly portable. We don't use the term "mobile" because it's not a cellular telephone, it's a portable, wireless modem. Those frequencies will be on the air for July 6. There will be no fixed line of sight.
211 THE CHAIRPERSON: I see.
212 MR. EAST: In terms of the technology we use in Manitoba, is it -- I guess perhaps I'm suggesting is a little splitting hairs now. They've really merged. I mean, the frequencies are the frequencies licensed by the CRTC and those we use to deliver the product. It adds a portable nature to those frequencies.
213 THE CHAIRPERSON: So those will be all portable in British Columbia is what you're saying? Used entirely for service that you're calling portable?
214 MR. EAST: That's the beauty of the non-line of sight. I mean, maybe just to back up for one moment on this. With the fixed wireless, the challenge there was the cost to install. Fixed wireless has to be professionally installed. The installation costs, the capital upfront to acquire a customer was huge, over $1,000 per customer. The non-line of sight technology, buy the modem at Radio Shack, hook it up to your computer, permission it on the website with your credit card and it's done. So it's a whole new way to acquire customers at a cheaper cost. Combined with that is the portable nature of it. It could work in your office and then you take it home and it works as well.
215 THE CHAIRPERSON: Right, okay. But it's not a mobile substitute is what you're saying?
216 MR. EAST: Correct.
217 THE CHAIRPERSON: Okay. And in California is this what you're planning as well, or do you have a system in operation there?
218 MR. EAST: The system in California is being rebuilt. The system in Hawaii is a fixed wireless TV system very similar to Manitoba, but just simply much larger.
219 THE CHAIRPERSON: Thank you. Turning to another -- did you want to add something? I interrupted you, Mr. Craig. You may have --
220 MR. CRAIG: I was just going to add that once you unplug everything and you have this portable device, it really changes the business dramatically. As Paul mentioned, one of the advantages now is the product itself provision. There's no truck roles, there's no huge infrastructure that you need to go and hook a customer up. You can go to Wal-Mart and buy this device for 200 bucks, plug it in and away you go.
221 So once you start doing that, then I think really we've got a great business.
222 THE CHAIRPERSON: I guess the interesting thing is that you see that as a substitute for ordinary couch potato cable service?
223 MR. CRAIG: That's right.
224 THE CHAIRPERSON: Do you have grounds for that confidence in experiments elsewhere around North America?
225 MR. CRAIG: It's brand new. Paul has been one of the first people to see the technology actually in action. The manufacturer actually has a system in place in the U.S., and I haven't seen it personally, but Paul has and my brother has, and it's a phenomenal product.
226 THE CHAIRPERSON: Good luck, Paul. How do you - turning to another subject, Mr. Craig - how do you see the possible rollout of your remaining Category 2 digital process?
227 MR. CRAIG: Well, we're very excited about what has happened in digital and, you know, the take-up has been beyond what we thought. The universe has grown beyond what we thought and, you know, we're ready to launch. We have a facility five minutes from here that's ready to launch up to 10 channels. We want to launch more channels. And it's really, our impediment is getting carriage agreements in place. But we're ready to go.
228 We've got another one, actually, that is ready to go and we're going to be rolling it out at the cable convention this weekend. The channel is called Stampede: Spirit of the West, and it's a Western genre channel. There was one launched. We were vying to launch one as well and we have a licence from you for that, and we have a partnership with the Calgary Stampede and we have a program supply arrangement. So we're ready to go. All we need is the green light from one or two major BDUs and away we go.
229 THE CHAIRPERSON: Thank you. You're launching a lot of ventures at this point, are you not? I mean, you have huge demands on your resources at this point.
230 MR. CRAIG: Yes, we are. But I think the way that we've also managed the company in terms of its structure and it's infrastructure and its facilities and its management to get ready for this. This is something that we've been getting ready for a long, long time. It isn't something that's come upon us. It's all come together really at one time, but it's all been part of the vision. It's all been part of the strategy.
231 So we have, as I say it, we've got a facility that is ready for more channels. Every time we add an incremental channel, as an example on this Western channel, the capital cost is a fraction of what it cost us to do the other three. Then what happens is the cost base of those other three comes down. So there's cost savings. The more channels you launch, the more efficiencies there are.
232 It's a strategy that we set up from the very beginning to say, look, you can't make this work on two or three channels, you need a larger magnitude, and so we're ready to go to launch more channels.
233 THE CHAIRPERSON: So you're saying that initial take-up has exceeded your expectations?
234 MR. CRAIG: We were pleasantly surprised when the first numbers came out on the digital side in terms of what the take-up was. We think with the preview period that our channels had, which wasn't very long, the take-up has been right on where we thought it was going to be.
235 THE CHAIRPERSON: Okay. Let me ask you about the additional synergies that the Toronto station will afford you and how these might affect the financial projections of your current stations.
236 MR. CRAIG: Well, the beauty is, for us, from the corporate perspective, is that we've been on the air for five years here. This market has been very healthy over those five years, you know, albeit there was a downturn for all of us when September 11th hit and it's -- you know, we're starting to see our way out of that, but we did see a trough occur, but we're confident that things are going to come back.
237 So in terms of the timing for us to launch a new station, it's actually a pretty good time. We've got all of our stations doing pretty well. We made a significant capital investment in Manitoba years ago that I think we're starting to realize on now, and when you take a look at the revenue projections and the financial plan for Toronto and you lay it on top of our renewal, we've got lots of cash flow to sustain the start-up and do what we need to do throughout the next licence term on our existing stations, plus deliver in Toronto.
238 THE CHAIRPERSON: Thank you. I assume that the synergies and commitments that were associated with, should you have been successful in Toronto, were not incorporated in the projections for this hearing; is that correct?
239 MR. CRAIG: That's correct.
240 THE CHAIRPERSON: Right. Now, you did make a commitment to spend an additional $10 million with Western Canadian producers, emphasizing Alberta and Manitoba, in the event that you did receive the licence.
241 MR. CRAIG: That's right.
242 THE CHAIRPERSON: I think you committed to licence fees and/or equity investments?
243 MR. CRAIG: That's right.
244 THE CHAIRPERSON: A number of questions that arise from that are, first of all, do you suspect that that commitment will be fulfilled within the licence term now being requested?
245 MR. CRAIG: Yes, we do. Sorry.
246 MS. STRAIN: I'm sorry, Mr. Chairman, did you mean this current licence term or the ensuing one?
247 THE CHAIRPERSON: Well, the ensuing licence term.
248 MS. STRAIN: The reason I'm asking is because we still have some commitments that we're retiring in our current licence term, but certainly the $10 million will be fulfilled over the next licence term.
249 THE CHAIRPERSON: Of the stations currently being renewed?
250 MS. STRAIN: Yes.
251 THE CHAIRPERSON: Is that correct? But I assume those commitments that are still, if you like, on the books, and are still not completely discharged are in the financial projections that you filed with this hearing?
252 MR. CRAIG: Yes.
253 THE CHAIRPERSON: But the $10 million of new commitment are not. And have you prepared financials that do incorporate them as revised projections that you might want to provide us with?
254 MR. THORGEIRSON: Chairman Dalfen, no we have not, but we see those additional dollars coming from three areas: a portion of the acquired area; some additional cost savings and synergies that may be realised as a result of Monday's decision; and some of it will come out of the bottom line. But at the end of the day, with Toronto on the air and these four stations, we're confident that all of those commitments can be met. We'll still show positive cash flow throughout the licence term on a consolidated basis.
255 THE CHAIRPERSON: Right. I guess what we would want is for you to identify that $10 million of expenditures on a line of some sort in your annual returns. You have no problem with that?
256 MR. THORGEIRSON: Certainly.
257 THE CHAIRPERSON: And do you have a problem with that $10 million commitment being attached as a condition of licence to these renewals?
258 MR. CRAIG: No.
259 THE CHAIRPERSON: Okay. And I guess what we would expect, and you can correct me if you think that that expectation won't be realized, that we would see that additional $10 million and not a subtraction from other expenditures that we might have considered to be of value as well, on programming for example, so that these -- your projected programming expenditures, as we find them in the projections for this hearing, would have a plus 10 attached to them over the period and not -- you wouldn't be removing from one pocket to put in the other, so to speak. Is that correct?
260 MR. CRAIG: Yes.
261 THE CHAIRPERSON: Do you want to caucus?
262 MR. THORGEIRSON: Chairman Dalfen, I'm just thinking that it might be easier for all of us if we simply filed a revised consolidated financial for these four stations with the Commission.
263 THE CHAIRPERSON: I think that to the extent that that commitment is there, that would be fine. The problem that I don't want to get into is because we're holding the hearing now, we don't want a billiard ball effect on two, three, five, six other numbers to change, and so I think we can take your evidence as the projections plus $10 million net additional expenditures across the licence period, and then, by all means, file revised, updated, if you like, projections to confirm that. If that understanding is satisfactory, then I think we're all right on that.
264 Now, the commitment was in the form of licence fees and/or equity investments. Have you decided on how you are going to discharge that in terms of the allocation between those two?
265 MR. CRAIG: I would defer to Joanne on that.
266 MS. LEVY: Much is going to depend on individual projects, so there's no notion of assigning a proportion to licensees and a proportion to equity. It will go forward on an as-project basis.
267 THE CHAIRPERSON: Thank you. Now, your supplementary brief explains the importance of having a station in Toronto with respect to the ability to have more control over the acquisition of foreign programming. I wonder whether you can tell us a bit more about your program rights strategy in light of the fact that you now have been licensed for Toronto. For example, does access to that market shift your emphasis away from being a buyer of regional rights from other major players to a purchaser of national rights and potentially a sublicenser of original rights? I wonder whether you could answer that.
268 MR. CRAIG: As we indicated in Toronto, the Toronto licence gives us the ability to control our destiny in terms of programs that we really want for our system. We anticipate that we will still be buying regional rights in many cases, in Manitoba and Alberta. Broadcasters have programs that they own national rights on that they don't have a home for them in our markets.
269 So we really see, effectively, a bit of a hybrid situation taking place, where in certain programs we're licensing national rights, in certain other instances we're buying local rights. You know, Global has already indicated to us that they want to continue to do business, you know, as an example. And frankly, so do we.
270 THE CHAIRPERSON: Right. I understand that. And I guess there is a -- how would you address the concern that you have no doubt dealt with and heard in light of the decision on Monday, that another national rights programming buyer, Hollywood Studios, are licking their chops? Is this good for the Canadian broadcasting system?
271 MR. CRAIG: I mean, I guess my reaction to that is there's a couple of points to it. First of all, as we indicated in our oral presentation today, we're not in the business of being competitive with Global and CTV. We're not ever going to go down to Hollywood and be able to outbid CTV for "West Wing" or outbid Global for "Friends". We don't need that to do what we do. So, they're, you know, they're the guys that are really driving up the program pricing at the high end. Every year there's three or four shows that everybody wants and everybody piles more cash on top because they want to come back and say that they've got eight of the top ten programs, or six of the top ten programs. So that's really where the war is fought.
272 There's a whole other level of programming that's out there that's available, that delivers the audience yields that we need to deliver to our audience that are available to us at the program rates that we think we can buy them at, that we know we can buy them at. So we don't buy the argument that we're going to be the guys that drive up the program prices in Canada.
273 THE CHAIRPERSON: Okay. And I guess -- I appreciate it's (a) new, and (b) not all that easy a puzzle to solve, but I'm sure you don't want to be yet another up bidder for rights, but I'm trying to -- you will have to serve Toronto and southern Ontario, which, you know, has, as does the rest of the country, a certain kind of level of quality appetite for programming and it's hard to see how you won't impact that bidding process, you know, in terms of upping the ante. Perhaps you can help me link them?
274 MR. CRAIG: I mean, it is sort of a hard thing to get your head around, but there are shows out there, there are new shows. When you take chances in programming, you find programs that stick to the wall that work. You have to mine those opportunities and find them. There are a lot of great examples that you can look to. I mean, CTV put the "Sopranos" on the air as an example. No one ever thought that would work. It was an HBO show that had no exposure in Canada, it was a complete risk and it worked. Those are the opportunities that we're going to have to find and that's the challenge that we're going to have upon us to find those opportunities to put them on the air.
275 I guess all that being said, we firmly believe that there's an oversupply of programming to serve the needs of the broadcasters in Canada. We can only put -- 40 percent of our schedule can be foreign, only 50 percent can be foreign in prime time. There's more and more product being produced for the U.S. market that is of a high quality. More and more networks are getting into original programming.
276 The highest -- the show in North America right now that's got the most buzz is a little program called "The Osbournes". It's been the highest rated show in MTV's history. It's a little show that was cheap to produce that no one wanted. They put it on the air. It's a huge success. Those are the types of programs that we're going to have to go out and find and buy them and put them on the air.
277 So, you know, this isn't going to be easy, but we've been around for a while. We're confident that we can find those programs to put in our schedules to generate the audience yields that we need. And they're modest. We don't need a "West Wing", we don't need a "Friends" to do the numbers that we need to do in our applications.
278 THE CHAIRPERSON: Commissioner Wylie has a follow-up question?
279 COMMISSIONER WYLIE: Good morning, Mr. Craig, and your colleagues. I would like to clarify something because it will also come up in the questions I have on programming and programming strategy, and likely will come up in the Alberta questioning by one of my colleagues.
280 Your licence term, you would agree with me, as set out by Decision 96-731, the expiry was August 2003; is that not correct?
281 MR. CRAIG: Yes.
282 COMMISSIONER WYLIE: So when the Commission imposed as a condition of licence, the expenditure of slightly over $14 million in a fund, in an Alberta fund for Alberta producers, would we not conclude that this sum had to be spent by the end of August 2003, because there certainly was no question at the time, maybe in your mind, but not certainly addressed to us, that the Toronto station would become a piece of the strategy? Would you agree that the condition of licence as expressed over the licence term was to have that sum expended by 2003? The reason I am asking is we see through the application, and again mentioned this morning, that you have until 2004 to spend that amount, and as a result the $10 million -- as a result of the licence in Toronto kicks in in 05, I have a bit of a problem with that, so perhaps it will give you the opportunity to talk about it amongst yourselves. But those numbers don't quite work.
283 I know that we are calling you and you are cooperating in having a group renewal, but the condition of licence remains what it was in a highly competitive process. There seems to be a gap there that from August 2003 to 2004 you are expecting to spend some other money that you were supposed to spend before 2003.
284 MS. STRAIN: Commissioner Wylie, I think the disconnect between the two years is that when we were licensed in Alberta, in our minds the original commitment was always to be expended over a seven-year term, and we filed a grid at the time that expensed the monies out over seven years and have, in fact, been operating on that assumption.
285 Having said that, you know, we've got lots of plans in the works and hope to be able to retire that whole thing -- will retire that whole thing by 2004. If it's a particular issue for the Commission, if it's something you stringently require us to fulfil by the end of 2003, we will. But it wasn't that we were ignoring the condition of licence, I think it was at the time of filing we had always assumed it was a seven-year, it had been filed on the basis of a seven-year commitment and the licence term was six years. That's where the issue was.
286 And having said that too, Joanne may just want to add that, you know, it's not for lack of trying that we haven't spent all of the money yet. We've had a whole lot of projects that we've had some difficulty getting through the Funds and other things and she may want to just expand on that.
287 COMMISSIONER WYLIE: Ms. Strain, the decision of the Commission was dated November 1996. I suspect that you knew, and everybody knew, you would likely go on air in 1998, September 1998, a year. Do you recall? Because the licence term for the Commission is whatever the decision says. Now, I don't have the transcript of that process at the time, but I suspect that you would have said, "We'll get on air 12 months from when we get a licence." Well, there is a gap unless you can come back and explain.
288 MS. STRAIN: Commissioner Wylie, I understand exactly what you're getting at and we will caucus, and if it's appropriate we'll just come back to you on that one.
289 THE CHAIRPERSON: Thank you. A number of my other colleagues have follow-up questions in this area which we will address right after the break. I would ask that the break be kept to 15 minutes and we will resume at 11:20.
--- Upon recessing at 1105 / Suspension à 1105
--- Upon resuming at 1125 / Reprise à 1125
290 THE CHAIRPERSON: We will continue the questioning now with Commissioner McKendry.
291 COMMISSIONER McKENDRY: Thank you Mr. Chair. Good morning. I just wanted to make sure I understood what was said about the 3G wireless in British Columbia and how it would work, which I took to be a portable as opposed to mobile and relying on a modem that you would buy in a retail store, such as Radio Shack or Wal-Mart, I think you mentioned. Where is the modem attached to, a computer, in one's home?
292 MR. CRAIG: I'll let the technical guy tell you how it works.
293 MR. EAST: The modem would attach directly to a computer.
294 COMMISSIONER McKENDRY: So if one wanted to watch television using this service, one would watch television on one's computer?
295 MR. EAST: Correct.
296 COMMISSIONER McKENDRY: Now, would the same modem provide the high-speed Internet service? I think you said it would.
297 MR. EAST: It would.
298 COMMISSIONER McKENDRY: So streamed video from the Internet, it would be seamless between streamed video from the Internet and the regular broadcast signals that BDUs normally demonstrate or distribute?
299 MR. EAST: Yes. I mean, it's not so much streaming video on the Internet. This would be a conditional access system restricted undertaking with correct rights, accounting for, subscriber counts and everything like that as per BDU.
300 COMMISSIONER McKENDRY: But if I'm sitting at home at my computer and I decide I want to watch some video, my choice would be presumably one of the broadcast services that we typically associate with the BDU or streamed video that was available on the Internet and it would be a seamless sort of thing for me as a user in terms of where I went with that modem?
301 MR. EAST: Yes. I think I could maybe just take a moment to step you through the concept. Perhaps you'd go to the website, the website for Craig Wireless customers. It is a protected system. I feel that's important. It's not one of those dot com ideas about streaming, you know, product out over the Internet. That's not it. You'd go to the website, maybe you'd click on the channel you want to watch, on an icon for that channel. It would open a window on your computer and that channel would be there, 30 frames per second with stereo audio. Meanwhile, you could also be browsing the Internet, you could be working on a Word document, I mean, whatever else you want. That's the niche: linking the television experience with the computer experience.
302 And I just might point out, it is a similar -- this is involving technology field, sometimes it's called TVIP. Craig Wireless, we think of ourselves as certainly being an innovator in that field. We're not totally alone. Alliant, the telecom company in Atlantic Canada is pursuing a similar but different strategy with their technology from Nortel Networks.
303 COMMISSIONER McKENDRY: So, the niche that you're targeting is the consumer that wants to integrate TV viewing with his or her use of the computer, and presumably that consumer would have traditional cable service or DTH also in their home, which would be connected to their television set?
304 MR. EAST: I think, yes. Of course, I'm not the marketing guy but that is the idea. It is a product -- we're looking to differentiate the system. It is a unique product, of a portable nature, with its integration of wireless Internet and TV that a consumer would add to their list of technology items they buy, not necessarily cancel out one service for another.
305 COMMISSIONER McKENDRY: Could the modem be attached to a personal video recorder that was connected to a television set?
306 MR. EAST: It is possible to have the modem display the TV on the computer, to have the modem go through a PVR or a VHS deck to. It is possible to have the modem and computer display the video on a TV or to go through the traditional TV appliances like a VHS deck or a PVR. That would be with a computer that has a TV outlet, which is actually not an uncommon thing in modern computers.
307 COMMISSIONER McKENDRY: Thanks for that. I just have one other question that struck me from your video presentation. I think you said you'd shown 2,300 bands on your services and I was amazed that there were 2,300 bands available. Is that since the beginning of time when you were in broadcasting?
308 MR. CRAIG: No.
309 COMMISSIONER McKENDRY: Are there really that many bands available?
310 MR. CRAIG: That's in the last four years.
311 COMMISSIONER McKENDRY: That's amazing that there would be so many bands. How do you identify these bands and sort them out?
312 MR. CRAIG: Well, I'll let Jim and Chris tell you, but we actually have people that are bookers and that's all they do.
313 MR. HASKINS: Actually, it would be even higher than that. The 2,300 is conservative and they range from international recording artists right to somebody who has launched their first CD. I know that our "The Big Breakfast" show in Edmonton is being credited for launching the career of at least one Edmonton singer/songwriter that went on to perform at the Lilith Fair Festival about a year and a half ago.
314 We have full-time staff in all of our markets whose sole responsibility is to find these acts. Some come to us. We get lots of CDs in the mail now since it's so easy to make your own recording, and we sift through those and make an assessment on whether they're ready for prime time or not. But it's not a tough job and we've found that, we've only been on the air for four and a half years in Alberta but we're turning away acts rather than having to scour for them.
315 MR. CRAIG: What amazes me is that they'll get up at five in the morning to come to the station to be on. Most of them don't go to bed.
316 MR. DUNCAN: If I could interrupt, these are performance acts, so it's not just rock and roll bands. It's theatre groups; it's poets; it's folk singers; it's, you know, quartets. So it runs the whole spectrum.
317 COMMISSIONER McKENDRY: Thanks. I'm sorry to get back to the 3G, but I did have one question that I noticed in my notes that I forgot to ask. You don't have any plans then to transmit the service to PDAs or to cell phones and to have your video signals available using 3G on portable devices, or mobile devices, I guess is a better word?
318 MR. EAST: I think that when we examined the niche for this product, we actually do look at things like RIM Blackberry pager, and a Palm 7 type wireless, which is only available in the U.S. But the product compares very favourable against those because instead of having stripped down email and web- browsing, the idea is that you hook it to your notebook computer and you have your full web-browsing, e-mail client software available.
319 Ultimately, this is -- so I hope that kind of answers your question. It's not something that -- it's not the same technology as a wireless pager. It's totally different technology. However, it is a standards-based technology. The standard is referred to as UMTS 2000, and hopefully - we're very confident that this is going to happen - systems like this will be licensed around North America. It's entirely possible that you could take a modem, just like you take your cell phone from San Francisco to Vancouver, you could take your modem and have full Internet connectivity just paying on a rate per minute or a rate per megabyte and connection back to your corporate HQ. It's a real together technology.
320 COMMISSIONER McKENDRY: Thanks. Thanks Mr. Chairman.
321 THE CHAIRPERSON: Thank you. Commissioner Williams?
322 COMMISSIONER WILLIAMS: Good morning. With "The Sharing Circle" moving away from news, how does Craig envision aboriginal stories being broadcast in terms of news events? Like say, for example, next week in Edmonton a prominent businessman, Herb Belcourts donating $5 million to help fund scholarships for aboriginal people to pursue post secondary education. So where would that type of story be carried? Would that be a "The Big Breakfast" or a news or a feature on "The Sharing Circle" or what?
323 MR. CRAIG: I'll ask Lisa to elaborate more on where she sees the show going and, as we mentioned, we're moving from more of a news magazine to a long form documentary to provide more in-depth opportunities. That doesn't change our commitment to have aboriginal reporters in our newsroom who also would be working on long form pieces that would be part of the show. So that doesn't change. I think that those pieces, those reporters would be feeding that material back into our own news shows, which they do now. That's something we do as a matter of course. We have the beauty of having Lisa overseeing it and having those pieces fold into "The Sharing Circle" but they also appear as part of our regular programming everyday. It's not something we just put on the air once a week. Maybe I'll ask Lisa just to elaborate on that.
324 MS. MEECHES: Yes. I guess the answer to that would be all of the above. What happens is one of "The Sharing Circle" reporters don't specifically just report to "The Sharing Circle". They are actually used in different capacities and weaved throughout the entire system and in each of their markets.
325 For example, Adrian Wolfeg who is from the Blackfoot Nation and Calgary, which is territory of the Blackfoot people in this Confederation, actually, he works sometimes as a researcher for some of the other stories, sometimes in sales and marketing, and depending on his knowledge of the sensitivities of the people in this region, he acts in different areas of the company. So my job is to make sure that the entire staff in all of the regions and all of the Craig Networks are well-prepared to deal and handle and work to the best of our ability as a group, sharing tradition and culture with all parts of the audience, as well as the teams that are out there.
326 To date, "The Sharing Circle" has produced over 800 five-minute features just on "The Sharing Circle" alone. Those five-minute features are then turned into one-and-a-half to two-minute stories on our different shows, whether it be "The Big Breakfast", whether it be "Wired", or whether it be in marketing or what have you.
327 So it actually works to the benefit of both the audience, to the non-Native audience, to the Craig staff and then of course it also provides, I guess, a huge relationship with the news people and especially in that department where aboriginal people have always felt that they've never been treated fairly, which is one of the reasons why we focussed it in that department because, you know, we need to have that understanding that we are not just what has been stereotyped by, say, media or society. So it actually works well and it's very, very effective.
328 COMMISSIONER WILLIAMS: Thank you. That was my question.
329 THE CHAIRPERSON: Commissioner Cram?
330 COMMISSIONER CRAM: Thank you, Mr. Chair. As you were talking in your introduction and then latterly in your discussion with Commissioner Wylie, I now see why over the next commitment you want the commitment to be $10 million in licence fees and/or equity. Because, do I have it right if -- and you talked previously, Ms. Levy in the introduction about the CTF not giving any additional fees for some productions this year, so if these productions then can't obtain the necessary funding, then your commitment about the licence fee goes, and so you're left with a fair bit of uncertainty in terms of expending that money. Is that how it goes?
331 MS. LEVY: It can be. Taking the risk on some of the bigger budget items to go to the Canadian Television Fund has become a big risk. It's a big gamble because you never know from one year to the next what the call will be on a particular envelope, in this case it's the drama envelope. This year, most of the money went to the CBC and CTV. They had 23 projects from the CBC, 11 from CTV. That scooped most of the cash.
332 So it put a lot of pressure on to - instead of having a licence fee commitment, ours grouped with other licenser, it made it very difficult to get some projects through. And even one of the projects that had 59 out of 59 points and as much licence fee as they could possibly want, that one got side-tracked because somebody decided that the presence of Adidas running shoes on one of the characters made it non-Canadian enough.
333 So we have some challenges. However, our producers, I'm sure, will be coming back to us with some other means of financing. They are right here so I'm hoping that they're listening. I'm looking forward to what creative deal-making they can do to ensure that those projects will go ahead.
334 COMMISSIONER CRAM: So I'm trying to get this. In terms of you, who have a COL that says you have to expend so much by way of licence fees over a period of time, the only way to ensure that you are fully compliant would essentially be to promise licence fees for more than your commitment in order to ensure that some of these licence fees are, in fact, expended because the producers can't get the full production costs.
335 MS. LEVY: I've always tried to be fairly -- we've always tried to be fairly -- well, we've always tried to be fair to the producers and to the system. We have never expected that all of our projects would go through the Canadian Television Fund and, in fact, if that was the case, we only would have done seven movies instead of 15, so we know that there are other ways of doing things, but it's --
336 MR. CRAIG: I mean, there is uncertainty. For instance, just to elaborate on what Joanne said. We put three projects in front of the Fund this year and we got zero. You know, one of these projects, we gave a commitment to last year and it went through, but the producer couldn't get their funding through and it didn't make it. It didn't make the cut this year. So we don't have certainty when we step up and put our licence fee on the table that these projects are going to go ahead.
337 MS. LEVY: For instance, the project that Drew is alluding to is one by -- it's a first feature by an aboriginal writer with an aboriginal protagonist. Its budget is half of one of the other movies that we put through, so the licence fee has pulled back somewhat. As a result, it was considered that it didn't have enough licence fees to make the cut. But last year, it went through the system with a licence fee that was even smaller. So, from one year to the next there isn't that much certainty.
338 COMMISSIONER CRAM: What I wanted to do, because what I'm concerned about is the drafting of COLs and if we're putting people in a position of what I would call almost a defensive impossibility. Say you're in the last year of a COL that says you have to expend a certain amount of money by way of licence fees and you have found the projects that you want and you're at your total number, but they can't get the total necessary production costs elsewhere, are you then put in a position where you can't comply with your COL because the producers are not getting other subsidiary funding elsewhere? Is that what happens?
339 MS. LEVY: It can, but we take our responsibilities and our commitments and our conditions of licence extremely seriously and we intend to comply.
340 COMMISSIONER CRAM: Thank you. Thank you Mr. Chair.
341 MR. CRAIG: Just one point of clarification I think is probably appropriate to put on the record right now is that we, in our expenditures through the drama fund, we have not included the CTF money, the top-up fees. And although we're behind somewhat in terms of getting this money spent because of the difficulty that we've talked about, if you include those CTF top-ups, we've spend about $9 million of the fund. We have not included those in our numbers that we supplied to Commission. So I just wanted to put that on the record.
342 MS. LEVY: The other issue is that as a result of moving the drama fund into a production fund it gives us a lot more scope and gives many more producers the opportunity to come to us with the kinds of projects that we can use, and that we can use more quickly. One of the things about doing long form drama is that when you're working with a producer as closely as we do, you have to be sensitive to some of their needs; their needs for time for, say, a theatrical release and then a pay TV window and so forth before it comes to our conventional window.
343 What the new production fund will allow us to do is, as I mentioned earlier, from October until now we were able to put money into a documentary series and two feature documentaries that have already been to air. So that opening up, I think, will allow us far more latitude to licence and support a greater number of programs that can come to our screens more quickly.
344 COMMISSIONER CRAM: Thank you. Thank you, Mr. Chair.
345 THE CHAIRPERSON: Thank you. Commissioner Wylie?
346 COMMISSIONER WYLIE: Thank you Mr. Chairman. As the Chairman mentioned earlier, I will discuss with you for your group of stations two areas: the priority programming and the local and regional reflection strategy. This will include the programming implications of the Toronto station very recently licensed to Craig as it affects its strategy for the group and, as was mentioned earlier, other members will have more specific questions on your performance and your plan with respect to the Alberta stations and the Manitoba station.
347 Now, perhaps before we start talking about priority programming we can get more illumination as to what all this fund is. If I look at your conditions of licence, it is both in the initial decision and in the decision that allows you to change the categories to fit with the TV policy as -- I'm going to read it from the decision and I quote:
"It is a condition of each licence that the licensee, over the course of the licence term, contribute a minimum of $14,070,000 to a fund in support of independent program production in Alberta, and to ensure that $11,835,000 of this amount is directed to independent Alberta producers for the production of priority programming as defined in Public Notice CRTC 1999-97."
348 When I look at your financials, would I find the amounts expended by the fund in line 17 where you break out the money spent on programs to be telecast and other programming expenses, I'm going to be assuming that someone has, altogether you have the application with you, so where is the fund, if one were to check on performance and projections, et cetera, where is the money going to the fund?
349 MR. THORGEIRSON: Commissioner Wylie, I believe in the form section of the application, it's actually in the Canadian acquired number.
350 COMMISSIONER WYLIE: Well, I'm looking at your financials as filed, both consolidated and per station, and in particular at the CKAL-TV it would be page 11.
351 MR. THORGEIRSON: Oh, sorry, it is line 17, yes, other programs.
352 COMMISSIONER WYLIE: Now, is it your view that this fund was to be expressed in a particular way, or was it simply an amount of money that you could show the Commission at the end of your licence term had been put in a fund and made available to independent producers?
353 MR. THORGEIRSON: The original intent, when the application was filed --
354 COMMISSIONER WYLIE: Well, I'm reading from the decision. How do you understand that?
355 MR. THORGEIRSON: No, I understand where you're going.
356 COMMISSIONER WYLIE: To put $14 million in a fund for producers.
357 MR. THORGEIRSON: What we contemplated was the $14 million would be spent over a seven-year licence term. What's in this renewal application is what we thought would be the last two years.
358 COMMISSIONER WYLIE: Well, I'm not addressing right now the timing.
359 MR. THORGEIRSON: But the amounts that are in the application --
360 COMMISSIONER WYLIE: Another Commissioner will deal with that. The amounts is what I want to know, where they are.
361 MR. THORGEIRSON: It's on line 17. And we filed a report annually with the returns.
362 COMMISSIONER WYLIE: Well, there is already a bit of a discrepancy between the numbers of your annual returns and what you say was expended in the application, which I understand is $4 million and some. I couldn't find quickly where you speak to that. The last time you filed with us was 2001.
363 MR. THORGEIRSON: Right.
364 COMMISSIONER WYLIE: Your projections start at 2003, so the confidential numbers, which I will not disclose, but I do have, show the last three years of the licence term as '01, '02 and '03 and then your projections begin at '03, so the '03 figure in line 17 is identical, correct? If I look at your annual returns, or even the sum that you claim in your application, which was $4 million and some, and I add to that to '01, '02, '03 even if I were to add 2004, do I get $14 million?
365 MR. CRAIG: Commissioner Wylie, I think you'll get $11.8.
366 MR. THORGEIRSON: Yes, it should be $11.8.
367 COMMISSIONER WYLIE: To the end of 2004?
368 MR. THORGEIRSON: $11,835,000.
369 COMMISSIONER WYLIE: So even with that additional year we would not get $14 million in the fund?
370 MR. THORGEIRSON: No. The additional -- what makes up the rest of the $14 million is the Script and Concept development dollars and the administration.
371 COMMISSIONER WYLIE: Okay, I'll leave Commissioner Williams to go into that further, but the fund, Ms. Levy, was not for licence fees, it was a fund?
372 MS. LEVY: Yes.
373 COMMISSIONER WYLIE: And it wasn't particularized. It is particularized in Toronto. And it was to be expended for that purpose, and even with 2004 we would all agree that there is a non-performance in that sense.
374 MS. LEVY: Commissioner Wylie, I'm sure I understand.
375 COMMISSIONER WYLIE: Well, in the sense that even to '04, your line 17, even when I take your numbers which are confidential at line 17 for the last three years, the ones where we have already, because your annual return for 2001 have been filed, 2002, 2003, then your projections start repeating the same amount for 2003, which is public, which is $1.5 million. And all of that adds to $11 million, not $14.
376 MS. LEVY: And that was in our original licensing application it was very clear that that $11 million that was going to independent producers and the difference between the 11 and the 14 was Script and Concept, which is accounted for elsewhere, and administration, which was, as far as we know, was accepted because that's how we filed our original application. So there is no --
377 COMMISSIONER WYLIE: And so, Ms. Strain, all together, by 2004, you are saying you will have met your commitment of $14 million?
378 MS. STRAIN: By 2004, actually we had caucused in response to your earlier question before the break, and what we said was - and you are quite right, when we think about our licence term, we thought of it starting in September '97, but you're right, the licence was issued earlier than that - and we would be prepared to say that we will have committed that money, that $11.8 million by the end of 2003. We will have committed it. That doesn't necessarily mean that it will be money that a cheque's been written and out the door and that's because of the vagaries of licensing independent production, but we will have signed committed agreements for those funds and they will be committed by the end of 2003, by the end of the licence term.
379 COMMISSIONER WYLIE: It raises the question as well of why the effect of Toronto is to start putting additional money in 2005, if we don't agree with the 2004 because otherwise --
380 MS. STRAIN: We'd start the Toronto commitment -- sorry the $10 million commitment would start in the ensuing years so it would be --
381 COMMISSIONER WYLIE: Because if we held you to the end of 2003, there would be nothing in 2004.
382 MS. STRAIN: Right, so we would start that in 2004.
383 COMMISSIONER WYLIE: You are now doing seven hours of priority programming between 6:00 and midnight and you had committed to five hours of priority programming, the definition of which includes airing between 7:00 and 11:00, but eight hours if you had a licence in Toronto. To what extent will these eight hours be the same on all -- well CBC, the CKX is a little more difficult, but on your Alberta station on CHMI and on Toronto?
384 MS. STRAIN: Commissioner Wylie, as we said in Toronto -- and I assume you're talking about across our whole system, then, not just our four stations?
385 COMMISSIONER WYLIE: No. You now have licence in Toronto as well.
386 MS. STRAIN: Right.
387 COMMISSIONER WYLIE: And that was brought into your application and the decision is out, so your commitments, depending on Toronto are the commitments we are going to discuss because you do have a Toronto licence.
388 MS. STRAIN: Yes. What we had anticipated in the Toronto application, as you may recall, five hours of priority programming in the case of Toronto was locally reflective programming that would be of interest primarily to Torontonians and wouldn't travel well to Western Canada. So we would anticipate that five hours would be distinct on Toronto, on our Toronto outlet, and that as many as three hours might be shared as between Toronto and our Manitoba and Alberta stations. And we've also said that one hour of the priority programming in Western Canada on our Alberta and Manitoba stations would be local or regional reflections. So that, again, is programming that would be distinct and likely would not travel to Toronto.
389 There would certainly be some sharing, some programs that would be the same in our schedule across Toronto and the West, but there would be those distinctions that I've just outlined.
390 COMMISSIONER WYLIE: That brings up the question both in your application and now and this morning in your presentation, you use the term that one of the hours of the eight hours will be local or regional reflection. How are you using the term, because as you know, definition of regional programming in the TV policy is in relation to where it's produced? So you are adding a component that is not necessarily there, the hope is always of course that if it's made somewhere else, than 150 kilometres from the big centres, then it's more likely to be regional.
391 But what definition are you using? I suspect that you could easily make programs here in Alberta that would fit the definition of regional programming in Toronto. How do you perceive all this? Is it regional in the sense of, you say reflection everywhere, rather than the technical definition of principle photography, 150 kilometres from Toronto, Montreal or Vancouver, because obviously if you use the definition of priority programming, programming produced here would be regional to Toronto. What do you mean by adding local or regional reflection?
392 MS. STRAIN: Commissioner Wylie, I think we use the word "regional" not in the technical sense of the Commission's TV policy, but more in terms of programming that would address issues of particular interest to our region in the West or to our locale in Calgary or Winnipeg.
393 COMMISSIONER WYLIE: If I understand you five hours in Toronto will be local to that area, then it won't be possible to air it? That's how you perceive your Toronto licence --
394 MS. STRAIN: That's how we perceive it.
395 COMMISSIONER WYLIE: -- would make that programming unlikely of interest? And would it be for you a test that if you can air it in Alberta or Manitoba, you haven't met your condition of licence in Toronto?
396 MS. STRAIN: I'm sorry?
397 COMMISSIONER WYLIE: I don't have the decision with me, but tell me again what it is you have committed to in Toronto in terms of five hours of local programming.
398 MR. CRAIG: The highlight was "The Toronto Show", which is a very Toronto-centric variety program that would run 10:00 to 11:00.
399 COMMISSIONER WYLIE: Okay. That would definitively not be of interest in Alberta.
400 MR. CRAIG: That show would, in all likelihood, not travel outside the region.
401 COMMISSIONER WYLIE: Thank you. Somehow or other I left my copy of the decision on the dining room table at home. I hope my husband enjoys it.
402 Okay. So then this priority programming commitment is going to be a big commitment. In your Manitoba and Alberta stations, you could easily have identical programming, could you, but for that hour?
403 MR. CRAIG: That's the way we contemplate it, that one of those hours would go beyond your definition of "regional" and go to our definition of "regional reflection".
404 COMMISSIONER WYLIE: How many kilometres between Winnipeg and Edmonton?
405 MR. CRAIG: More than 150.
406 COMMISSIONER WYLIE: Yes. So the same thing applies there that you would not have a problem with us taking up the regional programming and adding that component to it, that it's not the definition of our normal priority programming, you're adding another component to it, which is especially of interest to that area alone?
407 MR. CRAIG: We're adding a new nuance to priority. And we're saying we want the option to do one of two things. We want to have either the ability to put a local show on. Let's say we develop a local variety program that we think might have application in Manitoba, Calgary and Edmonton. We want the flexibility to adapt that show specific to those local markets, or if it was hosted by somebody from Western Canada who would have appeal in all of the markets, we'd want the ability to run that show across our whole system, but only in the West.
408 COMMISSIONER WYLIE: But would that satisfy then the definition that the twist you're adding of local reflection to our definition of regional priority programming, the fact that you can show it in Winnipeg as well as in Alberta? Do I understand that this may be possible?
409 MS. STRAIN: Yes, that's what we're saying.
410 MR. CRAIG: That's right.
411 COMMISSIONER WYLIE: That would be a regional reflection.
412 MS. STRAIN: It might be.
413 COMMISSIONER WYLIE: And it would lose -- it would no longer fit that commitment if you showed it in Toronto, and vice versa, because although the mayor of Toronto would be quite prepared to extend the Greater Toronto Area to Winnipeg, but I'm not sure we are.
414 MR. CRAIG: That's right. Well, you know, maybe you develop a regional show that becomes something that people in Toronto want to see. So I hate to be limited if we developed a show that could find an audience in Toronto and we had to sell it to another broadcaster to get it on the air in that market.
415 COMMISSIONER WYLIE: Mr. Craig, or your colleagues, when we draft a condition of licence about your eight hours of priority programming, do you want to maintain that there will be one hour that will be local or regional reflection in your Western licences? Do you want to maintain that addition, or do you want to simply hold yourself to regional programming?
416 MR. CRAIG: So the question is do we want one hour that is local or regional in the conditions?
417 COMMISSIONER WYLIE: Well, local or regional reflection. These debates are difficult.
418 MR. CRAIG: Sure.
419 COMMISSIONER WYLIE: Of course, there is an assumption that if something is produced 150 kilometres from the big centres, it's likely to be produced in a manner that will be reflective, not necessarily, as you said, it may indeed be not reflective enough to the specific region, that is, it's appealing to Toronto, so you have added a component that is more restrictive than what we have and I want to know whether you mean it.
420 MR. CRAIG: We've added?
421 COMMISSIONER WYLIE: By adding everywhere one hour of local or regional reflection, which is not in our definition of priority programming. Anyway, you think about it. You can come back to us.
422 MR. CRAIG: Sure.
423 COMMISSIONER WYLIE: Of course, it's fine with me and I'm sure Commissioner Cram will be delighted if it's local reflection, but it is more restrictive --
424 MR. CRAIG: No, we understand.
425 COMMISSIONER WYLIE: -- when one tests at the end whether it's worked. And, of course, the test will be, well, if it's local reflection in Toronto, local reflection in Edmonton, can they be the same?
426 There is no money shown in CKEM for regionally produced programming, but there is in CKAL. Is that because - that would be at line 9 in your financial - is that because they'll be the same all the time?
427 See, if I look at your projections for CKEM, line 9 is where there's regionally produced programming, which is I expect where one would find -- in CKAL's financials there are amounts for regionally produced priority programs in line 9 and there is not in CKEM.
428 MR. THORGEIRSON: I think, Commissioner Wylie, the contemplation there was that if it were to be a regionally produced program it would be emanating from the Calgary studio, so we decided to expense it in the Calgary side of the financial.
429 COMMISSIONER WYLIE: Can I conclude from that --
430 MR. THORGEIRSON: If the program were to be done out of Edmonton, it would be expensed there.
431 COMMISSIONER WYLIE: The regional programming will be, in your definition of "regional", will be able to fulfil that hour in both markets, in Edmonton and in Calgary?
432 MR. THORGEIRSON: Yes.
433 COMMISSIONER WYLIE: And to what extent will the eight hours in Alberta, on the two stations in Alberta, be identical, and to what extent is there an allocation in your financials as to the costs of producing priority programming?
434 MR. CRAIG: I think why we made the distinction for the one hour was to make sure that, you know, there could be some differences in the priority, in prime time, on each of the outlets. We wanted that flexibility. But I would think that there could be a good possibility that a lot of the rest of it, the seven hours, would be the same between Winnipeg and Brandon and in Alberta.
435 COMMISSIONER WYLIE: So that not only for the regional hour but for all the priority programming, to know what amounts will be spent in Alberta, I just add the two?
436 MR. CRAIG: Yes.
437 COMMISSIONER WYLIE: And then that would be the amount that is in the consolidation?
438 Now, we discussed earlier the fact that these financials were prepared before you knew you would be a Toronto licensee, but at the time of the projections you were producing seven hours of priority programming, albeit not having to schedule it between 7:00 and 11:00 and you were prepared to commit as a group to five hours of priority programming, that is, between 7:00 and 11:00; is that the basis on which these projections have been prepared, the five hours, or does it make any difference considering you were already producing seven?
439 MR. THORGEIRSON: No, it doesn't make any difference.
440 COMMISSIONER WYLIE: Doesn't make any difference?
441 MR. THORGEIRSON: No.
442 COMMISSIONER WYLIE: So your projections would not be changed if you were to re-do them knowing that you have a Toronto licence, is what you are saying, for priority programming?
443 MR. THORGEIRSON: Yes. But, Commissioner Wylie, I think maybe you need to have an explanation of producing priority programs versus acquiring priority programs and maybe Drew could speak to that. I'm not sure that all of the priority programs are --
444 COMMISSIONER WYLIE: No. But financially, Craig has to pay for them.
445 MR. THORGEIRSON: Yes, one way or another.
446 COMMISSIONER WYLIE: Either to have them produced or to acquire them. Your financials, you say, would not be different?
447 MR. THORGEIRSON: Correct.
448 COMMISSIONER WYLIE: Although you are now going to produce eight hours of programming that you will be able to schedule, or that you will have to schedule between 7:00 and 11:00.
449 On page 36 of your supplementary brief, you talk about your vision for the future so including a broad range of programming genres that are currently unrepresented in the broadcasting system. If I look at your schedule, how would I come to the conclusion that the type or range of priority programming that you are broadcasting is different from what one sees on other stations?
450 MR. CRAIG: Speaking in terms of priority or the overall programming?
451 COMMISSIONER WYLIE: No, priority programming.
452 MR. CRAIG: Priority programming.
453 COMMISSIONER WYLIE: I don't know if you -- your statement there was general that your vision for the future is to include a broad range of programming genres, currently unrepresented.
454 MR. CRAIG: I think that we were -- let me give you an example.
455 COMMISSIONER WYLIE: And I'm addressing at the moment priority programming, not local.
456 MR. CRAIG: Sure. Joanne will probably want to speak to this, and this is why we made the change in the program fund to include all priority programs, as per your definition, to give us broader flexibility but, you know, we will have this fall, in the schedule in Alberta, a prime time variety show. Never been done in this province, ever. And we will have it in there.
457 We will also have a new strand of long form documentaries from Lisa's stream and Joanne has other projects that we're working on. We think that we can contribute in different ways. Our competitors have focussed primarily on the area of drama, almost exclusively. So that's why we went back to you and asked for greater flexibility in changing the fund to that priority fund. I'll maybe ask Joanne to talk about some of the things she's working on.
458 MS. LEVY: I have a number of producers who are coming to me with projects that include interactivity, that include different kinds of subject matter, that could be comedy shows, that are based in sort of traditions that we have in Alberta, which is the home of TheatreSports and things like that. It is seen elsewhere but we originated it.
459 So, there will be, through the development process and the licensing process, I think you'll see, not only an attempt to create some different types of programming, but even within the recognized genres there will be some rather unique programming strands.
460 MS. STRAIN: Just one more quick thing, Commissioner Wylie. One of the areas even within the broad genre of drama that we have really focussed on over the last licence term is feature film, I think, to a much larger degree perhaps than some of the other licensors of that product. Is that fair to say?
461 MS. STRAIN: Yes, of the 15 movies that we've completed, eight are theatrical features and that's a big commitment and quite a unique commitment, and that was what the original drama fund was founded on. At the time that it was devised, long form drama, particularly feature film on Canadian television was very much an underserved category. We took on that challenge and I think we went a long way towards meeting it.
462 COMMISSIONER WYLIE: You have not provided, that I know of, any indication of how your priority programming would break down in terms of repeats, original and programming that has already been broadcast but is first on the conventional station. You discussed with the Chair this morning the question of sub-licensing, so that would be, of course, as well, sub-licensing, I think the discussion was more about foreign programming, but I notice in a response to a deficiency question, question 8, albeit talking about visually described programming, that you state that you currently sub-licence priority programs from the large station groups and, Mr. Thorgeirson -- am I doing it correctly?
463 MR. THORGEIRSON: Close enough.
464 COMMISSIONER WYLIE: Pardon me?
465 MR. THORGEIRSON: It's close enough.
466 COMMISSIONER WYLIE: It's close enough.
467 MR. THORGEIRSON: Thorgeirson, that's very good, thanks.
468 COMMISSIONER WYLIE: That you currently sub-licence a priority program. Are you in the position to break down for us the amount of priority programming that will be original, repeat and already broadcast? Or if not, could you be by reply time or later on?
469 MR. CRAIG: We can do that. The difficulty, as you indicated, is the fact that we're not going to control all this priority programming in terms of -- in other words, we're not CTV where we can commission eight hours across our whole system.
470 COMMISSIONER WYLIE: No. But when you prepare your projections, do you not have some view as to the possible ratio that you are expecting, and I wouldn't ask you to adhere to a condition of licence in that regard, or at least we wouldn't, I don't think, but it's good to know what you're looking at in terms of repeats and -- or maybe my other colleagues will.
471 MR. CRAIG: Maybe what we can do is go back and look at what it is now and tell you that.
472 COMMISSIONER WYLIE: Give us some view as how it will break down for the stations we are looking at today, to the extent that you can.
473 MR. CRAIG: Okay.
474 COMMISSIONER WYLIE: Now, if I look at your application at page 19 in, I guess that would be the addendum, you make the statement that your "approach to the presentation of Canadian dramatic and other priority programming is to schedule it at a time when it is most likely to garner audiences. We typically schedule such programs evenly throughout the week, Monday to Friday, as well as during the weekend, in peak viewing times."
475 You are aware of the Commission expressing some concern at the renewal of CTV and Global and, of course, it's been made a bit of fuss before the Parliamentary Committee about scheduling. I'm wondering whether your schedules in the coming term will look like the ones you've filed where for the Alberta stations three of the seven hours are during the week only and they are at 10:00. There is nothing Monday to Friday before 10:00 of priority programs. Same thing for CKAL. CKX is a bit more difficult because it's an affiliate. And in the case of CHMI there is nothing. There is no priority programming; am I correct, except on the weekend?
476 MR. CRAIG: The priority programming in Winnipeg, Monday to Friday, would be Canadian movies. So even though some of those movies are identified as foreign, a lot of the Canadian movies that we run, would run Monday to Friday.
477 COMMISSIONER WYLIE: In the slot where I see A-Channel Prime Ticket Movie?
478 MR. CRAIG: That's correct.
479 COMMISSIONER WYLIE: At 8:00?
480 MR. CRAIG: That's correct.
481 COMMISSIONER WYLIE: You are aware, are you, of the focus that is now being put by the CBC before the Parliamentary Committee, as you follow that, and also by French Canadian Broadcasting. There was a discussion which was referred to in the decision of licensing of renewing CKV, I believe, that we completely agree with your statement at page 19 that that type of programming should be scheduled. The intent or philosophy underlying the policy was to have it scheduled when it's more likely that there are audiences. But I will allow you to respond to my suggestion that Saturday night is not the greatest time to get audiences.
482 MR. COWIE: Drew, if I could? We took a look at that, and I guess what you have to do is look at the environment. The HUT levels from Thursday night are definitely higher than they are on Saturdays, but the competitive level of the programming is also considerably higher. So if you take a look at the three priority programs, for example, on Calgary, they run at 10:00, which is peak time, against programs like "Everyone loves Raymond" and so on. They deliver quite poorly. Programs of similar ilk or similar quality that we run on Saturday do two to three to four times the audience delivery.
483 So how do you define exposure? Is it defined as Monday is a better place to expose a show, or is exposure defined as audience garnered? If it's defined as audience garnered, then clearly Saturday and Sunday for some of those priority programs work considerably better.
484 You have to take all of it into consideration. Monday is not necessarily better to expose a show if it's up against "The Sopranos" or "Everybody loves Raymond" as it is maybe scheduled against "Hockey Night in Canada" on Saturday. So if you look at the delivery, the delivery of our priority programs on the weekend deliver considerably more audience than they do during the week.
485 COMMISSIONER WYLIE: It's Mr. Cowie? Yes? Would you agree, though, that if one produces or plans programming to be placed on Saturday night, that if you were a Commissioner you would perhaps think that maybe, if that's the intention, you're not going to put as much money or energy into it than if you were planning to air it on Tuesday night or Thursday night, as you mentioned? That's another side of the coin.
486 Broadcasters say, well how do you know? But the idea of the TV policy, I guess, was to have that programming not to demand expenditures as we did before, but to say the programming will be aired when a lot of people are watching so that broadcasters, our licensees, won't be commercially inept enough to put not very appealing programming in those hours. But if one puts them on Saturday night, I suppose, the formula or the assumption could be altered.
487 MR. COWIE: I think if you took those programs and you reversed them, and took the Saturday ones and placed them on the Monday and the Wednesday and the Thursday, what you're going to find is that the ones that move from the week to the weekend are now going to achieve better numbers, the ones that were achieving better numbers on the weekend.
488 I mean, we're taking five programs that are probably of similar budget, similar ilk and so on, and suggesting that there is potentially more audience for programs. I know that - I can't remember what hearing it was - but, Commissioner Wylie, you were excited to go home and didn't want anybody to talk about "Survivor", and if the priority program was up against "Survivor" then it may not get the type of exposure it would get on Saturday night, and I think that's what we're trying to say.
489 COMMISSIONER WYLIE: Perhaps we're both exaggerating.
490 MR. COWIE: Maybe a little.
491 COMMISSIONER WYLIE: What is the middle ground here?
492 MR. CRAIG: You know, Commissioner Wylie, there's another factor also that I think needs to be considered, and if you look at the schedule in Winnipeg, it's the area where we don't do -- sorry.
493 COMMISSIONER WYLIE: Go ahead, Mr. Craig.
494 MR. CRAIG: Where, admittedly, we don't do all that well in terms of what we schedule, and that's because of a couple of factors.
495 One is we're simulcasting against eastern time zones so we've got from 7:00 to 10:00 to maximize our simulcast, and with the exception of Canadian movies, we're not running any priority programming in those areas.
496 But the one thing to consider is that we do have a ten o'clock newscast for one hour, and we're using that ten o'clock slot to garner audience for that show. You know, you only have so much shelf space in the schedule and we think the best use of that slot in the Winnipeg market is to run a local show, where we have more opportunity to garner audience share than we would scheduling some of the priority programs that we're able to buy in that time slot.
497 COMMISSIONER WYLIE: Mr. Cruise or Mr. Craig, Mr. Cowie -- excuse me, and Mr. Craig, while you're here and we're discussing this, of course there are people who have suggested in the past and are suggesting this now, that the Commission should get into looking at the audiences that you garner as a measure. Isn't that what you're suggesting?
498 MR. COWIE: No. What I'm suggesting is that that's something that we have to look at, and we honestly believe that there are better opportunities in some cases for priority on the weekend where the competitive aspect is not as strong as it is during the week.
499 I think that's the point I'm trying to make. I don't think you want to start reading BBMs, it's not much fun.
500 COMMISSIONER WYLIE: So you're saying, like CTV said when I raised this, this is our business, not yours.
501 MR. COWIE: I can't believe CTV would say that to you because I certainly never would.
502 COMMISSIONER WYLIE: You would not. That's what you're going to have to get used to in Toronto; tough and rude.
503 MR. CRAIG: Commissioner Wylie, you know, we want the programs that we buy, and particularly the Canadian programs that we buy, and we commission and we purchase to deliver as much audience as we can. And you've got to fish where the fish are. If there's no opportunity to crack into a time block in prime time where there's three shows garnering 70 percent share or 80 percent share, it can be futile. You know, we've seen other broadcasters say, well I'm airing this show on Thursday night. Yes, but against "Friends", and whatever, so sure it's nice to say --
504 COMMISSIONER WYLIE: You're learning quickly all these lessons?
505 MR. CRAIG: We are, from others.
506 COMMISSIONER WYLIE: You mustn't listen to too many or read too many transcripts of Global.
507 MR. CRAIG: That's all we do. That's all we have time to do.
508 COMMISSIONER WYLIE: You are aware, of course, that the Commission in radio imposed a certain amount of its Canadian content in Category 2 music - I don't think you've sold your radio station so long ago that you don't remember - and said no, you can't have it all on the weekend and at night when no one listens -- not as many people listen to radio because it's a drive time. And so it's the same concern, really, that has been expressed, as I mentioned before.
509 I have a few more questions on independent production and then the local. The Chair has questions for you on this area so I'll --
510 THE CHAIRPERSON: I just have a follow-up, Mr. Craig, and it's kind of a bookmark, more systemic issue. The dialogue we've just had, many of us who have been around many years have heard many times, fish where the fish are and all that, and the notion of futility and so forth. The problem we face is that the fish are watching weekdays in prime time, and we, as Canadians, are not tackling that market. We are, in a sense, relegating ourselves to the fringes by that kind of logic. We don't feel capable of taking them on in the mid-week and it's a malaise in the system that we face, not just from you, for sure, but everybody in the system. As long as that attitude remains in force, we are going to be where we are because the logic is impeccable. Once you get there and you go where there are fewer viewers, less competition and you're likely to get greater numbers for the lower cost Canadian productions.
511 Somehow, I'm hoping that in the next while we can work our way out of that, and the extent to which regulation can assist in that process is something I'm trying to figure out as I go, but I'd like us to get out of that cycle so that we begin to get the confidence and that will grow with the deliverability to fish in the big pond and to compete for those big audiences that are there in the mid-week where even a smaller share, obviously, amounts to a larger number of viewers. But as long as the conclusion keeps being -- we keep getting into the circle we're in, I think we're going to be eternally at the fringe.
512 I'm hoping that the industry, working with us, can work our way towards solving it. I mean, one way we can do it is by simply requiring scheduling in those times and saying, do it. I mean, somehow solve the problem that way. Or by raising expenditure levels again as an issue and spend money on it or attract viewers. We don't want to do it in that kind of way. We don't want to do it in a way that is either unhelpful or ignores economic realities, but at the same time, I think that what I'm hearing and have been hearing for a long time is really a counsel of acquiescence in a situation that is somewhat second-rate and I'd like us to move to first-rate.
513 So I put those, as I say, as a bookmark here because that is going to be a theme that I certainly personally want to follow, and I would enlist the support of yourselves, who are far more expert than I am in the industry, in trying to get there.
514 COMMISSIONER WYLIE: I believe we will be adjourning shortly, but I would like to ask you before --
515 THE CHAIRPERSON: Excuse me. You have a comment?
516 MR. CRAIG: Just to follow-up and I won't take too long. I think every market is different and every market has its own nuances. Winnipeg has different problems in terms of scheduling than Alberta has, because we're simulcasting against the Eastern time zones and there's a very narrow window where we, frankly, have to make our money. But, you know, I think it will be really interesting when we launch in Toronto with "The Toronto Show", ten o'clock every night. That's a bold move. I believe when you look at the competition on the dial, with the size of that market and the magnitude of that show and the amount of dollars going into it, it will be interesting to see what we can do. I'm convinced that that show can find an audience by, as you say, stepping up and making that commitment.
517 THE CHAIRPERSON: Thank you. Commissioner Wylie?
518 COMMISSIONER WYLIE: Before we adjourn, may I ask you, when you come back, to walk us through using your financial statements as filed, because I've been told that Toronto doesn't affect that, how we arrive at having met your condition of licence by 2003 or 2004 in accordance with what you've filed, to walk us, to show us -- you what your annual returns were. They were lower for the production fund than what you have in your application. So your annual returns, and to the extent that you can - you don't have to disclose the numbers for historical figures since they're confidential - but to show us at what line one adds up to that amount. I believe we will adjourn now.
519 THE CHAIRPERSON: We will adjourn and resume at 2:00 p.m. sharp. Thank you.
--- Upon recessing at 1231 / Suspension à 1231
--- Upon resuming at 1400 / Reprise à 1400
THE SECRETARY: Vice-Chair Wylie.
520 COMMISSIONER WYLIE: Welcome back. Is someone ready to walk us through how we add up to $14 million, including the development money, tell us where it is? You are, of course, free to tell us what line, what year, without providing details of where you're entitled to confidentiality.
521 MS. NOTO: That's me, and I ran over so give me a minute to catch my breath here.
522 COMMISSIONER WYLIE: Just start when you're ready.
523 MS. NOTO: Okay. Do you want me to start to say -- do you want me to start to say what's in the seven-year budget?
524 COMMISSIONER WYLIE: I think that the discussion we had, the problem, or the discussion -- the desire for clarification should be clear by now. You had a condition of licence that $14 million would be spent, or put in a fund for the production with Alberta producers of drama, entertainment I believe, and variety programming was the condition of licence and the term of the licence ended in 2003. We have discussed this morning that your expectation and fashion in which you have presented your projection as also using 2004, but in either case, how can we test that $14 million has been expended?
525 MS. NOTO: Okay. Well, I'll work backwards because, first of all, I'll tell you what's in the renewal for 2003 and 2004 and what lines they're on so that you have what's in front of you. Line 16 --
526 COMMISSIONER WYLIE: Should I use the CKAL or one of the Alberta stations?
527 MS. NOTO: Yes, either. Either one.
528 COMMISSIONER WYLIE: Okay.
529 MS. NOTO: On line 17 you will see I've combined them, so between the two you would see $3 million for year 2004 for drama fund. On line 16, you would see $170,000 for development, and in our programming expenses, which won't be as easy to define the line, but in the programming expenses is $253,000. That's our admin portion.
530 In 2003, you will see between the two, CKEM and CKAL, you will see $3 million in the drama fund line; you will see $170,000 in line 16, which is script and development; and in programming expenses you will find the admin fees of $243,500.
531 Now, from there we need to go back to the 2001 annual return, which you would have numbers that we have filed that would give our total that we've done year-to-date, and then the balance would be in our budgeted numbers for 2002, which is our existing year.
532 COMMISSIONER WYLIE: And your expectations are that the returns for 2002 would be sufficient to get you there?
533 MS. NOTO: If they aren't, it is because the commitments don't equal the expenses. So there's always that possibility and we've struggled with that through, that what we commit to and what we can expense will fall over, but we could be assured that whatever didn't show up in 2002 gets added to 2003, and in this case we'll just stop at 2003. But the total of those lines would equal the $14,070,000.
534 Now, your 2002 that we filed was an estimate and because we committed and not expensed, there's about $1.4 to $1.6 million that would have to change in that budget.
535 COMMISSIONER WYLIE: In the projection for 2003, which is Year 1 of your projection, you say line 17 is how many million?
536 MS. NOTO: There will be one and a half million for each station.
537 COMMISSIONER WYLIE: Yes.
538 MS. NOTO: Line 16 will have $85,000 per station, and then the Admin Fund -- or the Admin Expenses for that fund are in our Programming Expenses, in our general programming expenses. So therefore --
539 COMMISSIONER WYLIE: And where do I find the development? You mentioned this morning that --
540 MS. NOTO: It's that $85 --
541 COMMISSIONER WYLIE: So then the balance is administration, what you call the expenses?
542 MS. NOTO: Yes, $243,000.
543 COMMISSIONER WYLIE: If we stay on these lines, would it be fair to say then that with Toronto -- without Toronto I see 05-06-07-08-09 having nothing in 17, in line 17?
544 MS. NOTO: Yes, that's correct.
545 COMMISSIONER WYLIE: And $85,000 continuing in line 16, Script and Concept Development?
546 MS. NOTO: That's right.
547 COMMISSIONER WYLIE: So with Toronto I would add $200,000 a year in line 16?
548 MS. NOTO: For all four stations though, $85 would be the stations' portion?
549 COMMISSIONER WYLIE: In the consolidated one there?
550 MS. NOTO: Right, consolidated.
551 COMMISSIONER WYLIE: And then in line 17 in the consolidated, I would add $2 million?
552 MS. NOTO: Correct.
553 COMMISSIONER WYLIE: Well, you will hear interveners of course saying that but for Toronto, there would be nothing to independent producers despite the 96 --
554 MS. NOTO: Well, obviously --
555 COMMISSIONER WYLIE: Yes, I take your point that you're going to have to produce programming. Yes. But that's what you'll hear in intervention and you'll have a chance to reply again as to why this is acceptable in the circumstances of the licensing in 1996, which was a competitive process.
556 That, at least, puts on the record how you arrive at it and will allow us to then see what the administrative expenses are. We still will have to sort out whether adding 2004 is correct or true to the licensing process when it says "under the licence of this term" to test compliance -- presumably on testing compliance by 2003.
557 MS. STRAIN: Commissioner Wylie, by 2003 we will have committed --
558 COMMISSIONER WYLIE: Oh, the calculations you have given me get you there?
559 MS. STRAIN: Yes, we will have committed that entire amount.
560 COMMISSIONER WYLIE: And if 2002 doesn't pan out the way you think it will, 2003 will spend more of that?
561 MR. THORGEIRSON: Correct. It will be that much higher.
562 COMMISSIONER WYLIE: Okay. I apologize, I made a mistake --
563 MR. THORGEIRSON: Commissioner Wylie, every year we have -- since A-Channel went on the air we've budgeted $2 million. What actually gets expensed, what we can only expense in any given fiscal year for the auditing process is what actually goes out the door and that changes, fluctuates. Sometimes it could be more, it could be less. It depends on which projects, you know, what the deals are.
564 COMMISSIONER WYLIE: You'll hear interveners about how they get to it from their perspective. In the Toronto commitment of $10 million, you say it will be $10 million to independent producers with emphasis on Alberta and Manitoba producers. What is intended by emphasis? This is the $15 million -- this is the $10 million added to the $15 million committed in Toronto for licence fees and equity with emphasis on Alberta and Manitoba.
565 MS. LEVY: In fact, in today's presentation I had made it clear that it is for Alberta and Manitoba producers and their co-production partners. I think it has always been contemplated that we work with the people that we live with, but they often have co-production partners in other provinces and, indeed, in other countries, but the funds and the spending is driven by the relationships that we have with our Alberta, and now Manitoba producers.
566 COMMISSIONER WYLIE: Could I conclude from that that none of this money will be expended on projects that does not include an Alberta or Manitoba producer?
567 MS. LEVY: That is correct.
568 COMMISSIONER WYLIE: Now, you have emphasized in this application and in Toronto that Toronto is a very important market to you, et cetera, and I think that if one makes a rough calculation of the revenues expected under -- if one consolidates your predictions, including the Toronto station, that it will generate about a third of your revenues. Would that be fair? Approximately?
569 MR. THORGEIRSON: Approximately.
570 COMMISSIONER WYLIE: How will this affect your approach to production -- the desire, of course to have attractive programming for Toronto viewers? How may it affect the participation of Manitoba-Alberta producers emphasis -- you say as long as there is a connection.
571 MR. THORGEIRSON: Sure.
572 COMMISSIONER WYLIE: Is there not a danger that the programming will be produced to generate funds in Toronto, and therefore have appeal there and be less Alberta or Manitoba driven?
573 MR. CRAIG: Commissioner Wylie, I'd like to start on this and then I defer to Joanne, but we produce programming right now. Everything that gets produced through the production fund has wide audience appeal. The concept was to provide licences, national licences to get projects done with the notion that those projects would be sold to other broadcasters. In every single case we have made a sale to an Ontario broadcaster.
574 It has taken us some time, but we have sold that programming to them, so they think it's -- they think it's good enough to air nationally. So I think that what we're talking about here is maintaining that direction to produce only the very best, and I think the projects that we produce in Alberta definitely have appeal in other regions of Canada and in most cases, around the world.
575 COMMISSIONER WYLIE: Mr. Craig or Ms. Levy, would you be prepared to accept a requirement or a condition of licence that this money only be expended when an Alberta or Manitoba producer is involved?
576 MR. CRAIG: Are you talking about the $10 million?
577 COMMISSIONER WYLIE: Mm-hmm.
578 MR. CRAIG: Yes.
579 COMMISSIONER WYLIE: So you would be prepared to --
580 MR. CRAIG: That's the intent.
581 COMMISSIONER WYLIE: -- be bound by that.
582 MS. LEVY: And we have lots of experience with that. That's how the fund has primarily been driven so far and it has been very successful. Our Alberta producers, and I know many in Manitoba who I'm looking forward to working with, have lots of experience with some very, very high end production and they can compete with the best in the country. There's no particular brain trust in any one particular area, and I think the cross-fertilization can produce some really marvellous results.
583 COMMISSIONER WYLIE: Yes. I was asking the question because when you take $10 million and you decide what emphasis you will put to spending it -- my husband and I have very different views of what emphasis means.
584 MS. LEVY: But at the end of the day the household runs.
585 COMMISSIONER WYLIE: But predominantly an emphasis are sometimes difficult. So you would be prepared to commit to that by a condition of licence that there would be an involvement especially with --
586 MR. CRAIG: Yes. We have no problem with that at all.
587 COMMISSIONER WYLIE: Have you thought of an allocation as between Alberta or Manitoba?
588 MR. CRAIG: I think we want the flexibility to look at this on a project-by-project basis.
589 MS. LEVY: And, in fact, there could be co-production between two -- between Alberta and Manitoba, so trying to split it up might be counter-productive.
590 COMMISSIONER WYLIE: Is there a Ms. Levy in Manitoba for Craig Systems?
591 MR. CRAIG: No, there is not.
592 COMMISSIONER WYLIE: Would there be one?
593 MR. CRAIG: If the --
594 COMMISSIONER WYLIE: You know what I mean?
595 MR. CRAIG: I know exactly --
596 COMMISSIONER WYLIE: I think Ms. Levy is the one who manages --
597 MR. CRAIG: -- where you're heading.
598 COMMISSIONER WYLIE: -- this effort and obviously very successfully, and is well recognized by the independent producers in that regard.
599 MR. CRAIG: Not that we want to spread Joanne too thin, but I think that her duties could extend into Manitoba so that the producers in Manitoba could have access to Joanne.
600 COMMISSIONER WYLIE: Because whereas the fund before was in Alberta --
601 MR. CRAIG: That's right.
602 COMMISSIONER WYLIE: -- promised in 1996, now it's an overall -- for all the stations, so if I were a Manitoban, I'd say where's my piece of it?
603 MS. LEVY: I'm going to get to know WestJet extremely well.
604 COMMISSIONER WYLIE: Good. I only have one more question on project programming and it's about drama credits. Although you are not -- at least 70 percent for each group, you are committing to the eight hours of priority programming between 7:00 and 11:00. As you know, we have maintained a 150 percent credit for 10-10 drama and 125 percent for 6-9. However, you probably understand, or are aware that for the large groups the credits do not have the effect of diminishing the 50 percent requirement in peak time, and I'm wondering what you are proposing in this case. It had the effect of reducing the eight hours but not the 50 percent. Do you have a view on what would be the right thing for the Commission to do?
605 In case you don't mention it, the Commission has spoken about this in the case of CHUM in a recent decision.
606 MS. STRAIN: Commissioner Wylie, we will get back to you on that. We're aware of what some of those license conditions are --
607 COMMISSIONER WYLIE: You realize the difference that if you --
608 MS. STRAIN: Yes. Yes.
609 COMMISSIONER WYLIE: -- had drama either 10 or 10-6-9 -- so that for the smaller stations there may be a case that one would want to make about how it should be treated. So you'll get back to us perhaps to reply --
610 MS. STRAIN: Yes.
611 COMMISSIONER WYLIE: -- whenever you have the opportunity. You'll be speaking to my colleague.
612 MS. STRAIN: Thanks.
613 COMMISSIONER WYLIE: I'll now look at local programming. There is no doubt that you both, in a number of places this morning in your presentation, as well as in your application, you define yourself as a local reflection station. If I read from the supplementary brief at page 36, you say, and I quote: "We have established our niche as being in the area of local reflection," and there are a number of statements to that effect in this morning's presentation. At page 7 you say, "Our speciality is local programming." Also, I'm sure you're not going to disagree with this, at page 2, that you have established yourselves as "the community-minded, intensely local station," et cetera.
614 So if I look at the decision licensing renewal in Alberta, you had conditions of licence that required 17 hours of first-run news or first playing news and 14 and a half hours weekly in categories other than news, for a total of 31 and a half hours. And in the Appendix 6A to your supplementary brief, I believe, in any event the one that talks about your conditions of licence, you have stated that you have met or exceeded the news but have been short on other reflection. Instead of 14 and a half hours, you had nine and a half hours on CKM for the first four years of the licence and eight hours on CKAL for the first four years. Correct, today?
615 Now, currently, in your licence application, at page 2 of the supplementary brief you say that you're currently actually doing in the current year, I would expect that that was when you filed, in 2001, correct?
616 MR. THORGEIRSON: That's correct, yes.
617 COMMISSIONER WYLIE: That you had 22 hours of first-run news and 13 hours of other programming. It's slightly higher today in your presentation, which would reflect what you're expecting to reach in 2002; correct?
618 MR. THORGEIERSON: Yes. We -
619 COMMISSIONER WYLIE: You say 22 hours of local news, but instead of 13 hours, 14 and a half hours of local non-news programming?
620 MR. THORGEIRSON: Correct.
621 COMMISSIONER WYLIE: Now, can I ask you what this other 14 and a half hours consists of and what the percentage of repeat is for the two Alberta stations, whether you take the 13 hours in 2001 or the 14 hours and a half in 2002?
622 MR. THORGEIRSON: Commissioner Wylie, currently the 22 hours and 22 minutes of first-run news is five hours of news at "Breakfast".
623 COMMISSIONER WYLIE: Yes, I did ask for repeat, so the first one would not --
624 MR. THORGEIRSON: The other general entertainment, human interest categories include another five hours of ""The Big Breakfast"" so an hour of that program per day is news content -- news, weather, traffic, that sort of thing, and interviews, and then another hour of that program is comprised of variety entertainment; bands, that sort of thing.
625 COMMISSIONER WYLIE: So this would go to make up the 13 hours or the 14 and a half hours?
626 MR. THORGEIRSON: Correct. So that's five hours, "Best of "The Big Breakfast"," which is recast in the afternoon with some fresh on-camera segments, et cetera, makes up six hours per week.
627 COMMISSIONER WYLIE: Five plus one, not five plus six.
628 MR. THORGEIRSON: Five plus -- there's one play on Saturday as well. And then "Wired", which is our nightly entertainment show, is two and a half hours per week, which gives you 11 hours and 15 minutes per week of non-news. And then "The Sharing Circle" which --
629 COMMISSIONER WYLIE: My question was particularly of which, it's difficult to -- do you have a figure as to what the repeats are?
630 MR. THORGEIRSON: On --
631 COMMISSIONER WYLIE: How much of ""The Big Breakfast"", et cetera is --
632 MR. THORGEIRSON: The one hour on Saturday is a repeat of the Friday afternoon show.
633 COMMISSIONER WYLIE: Okay. And "Wired" is always one play?
634 MR. THORGEIRSON: "Wired" is original every night.
635 COMMISSIONER WYLIE: It's Monday to Friday?
636 MR. THORGEIRSON: Correct, at 11:30 p.m.
637 COMMISSIONER WYLIE: At 11:30. Now --
638 MR. THORGEIRSON: And then the "The Sharing Circle" makes up another one hour; half-hour of original and half-hour of repeat.
639 COMMISSIONER WYLIE: Okay. Now, at CKX, which I realize is different because it's an affiliate, the renewal decision had an expectation of 16 hours and 45 minutes of first playing news, and your condition of licence filing indicates that it was largely met and currently that you're doing 25 hours of local reflection, of which 17.5 hours is first-run news. And that includes the portion -- that includes the re-broadcasting of CHMI's news?
640 MR. THORGEIRSON: With CKX, what we did previously was we took the CHMI late news and played it the next morning on CKX, so it was original to that market, plus CKX contributes daily to the CHMI news programs. What we do now is we run
the ""The Big Breakfast"" through on both CHMI and CKX and CKX personnel do live inserts on that show, and in addition, have constant crawls along the bottom of that program with local school bus information, weather conditions, highway conditions and that sort of thing, news headlines, et cetera.
641 COMMISSIONER WYLIE: And in that case, of the non -- so it's not quite the same everywhere, and in your supplementary brief at page 24, you say in 2001, I assume, 25 hours of local reflection of which 13 hours is first-run local news. Is that correct?
642 MR. THORGEIRSON: That would be -- at that time, that was correct.
643 COMMISSIONER WYLIE: 2001.
644 MR. THORGEIRSON: That was five hours of "News @ Noon," five hours of "News @ 6", plus news updates that were being done at that time. "Manitoba Farm Report" would fall into that as other information and "The Sharing Circle".
645 COMMISSIONER WYLIE: And so currently you would have how many hours of non-news local reflection?
646 MR. THORGEIRSON: The calculation which we just did last night was five hours, which was the five hours of the "The Big Breakfast", that would be considered non-news, "Great Big Saturday", which is kids' stuff, there's one minute of original and --
647 COMMISSIONER WYLIE: Yes, those are interstitials --
648 MR. THORGEIRSON: Yes, et cetera. So it's the five hours of "The Big Breakfast" and one hour of "Manitoba Farm Report".
649 COMMISSIONER WYLIE: So "The Big Breakfast" at CHMI is re-broadcast or only the news portion?
650 MR. THORGEIRSON: I beg your pardon?
651 COMMISSIONER WYLIE: Is all of CHMI's "The Big Breakfast" also on CKX?
652 MR. THORGEIRSON: Yes.
653 COMMISSIONER WYLIE: All of it, not just the news component?
654 MR. THORGEIRSON: That's correct. The way --
655 COMMISSIONER WYLIE: It's a re-broadcast of that program?
656 MR. THORGEIRSON: It's a simulcast as opposed to a re-broadcast. It's at the same time.
657 COMMISSIONER WYLIE: The same time, okay. At the same hour, same day?
658 MR. THORGEIRSON: Yes.
659 COMMISSIONER WYLIE: Especially if it's news, obviously. And CHMI then, the decision expected 15 hours and 4 minutes - that was calculated by someone even more difficult than me - first-run news, and again it's largely met. And currently -- that was 2001, you did 30 hours of local reflection with 17 hours of first-run news. And now the numbers are slightly different for 2002?
660 MR. THORGEIRSON: Yes. This year it's a total of 29 hours 36 minutes per week of local reflection.
661 COMMISSIONER WYLIE: And the proportion of first-run news is about the same?
662 MR. THORGEIRSON: Seventeen and a half hours a week of first-run news.
663 COMMISSIONER WYLIE: Yes. And at CHMI again, it's mostly ""The Big Breakfast""?
664 MR. THORGEIRSON: ""The Big Breakfast"", "Best of "The Big Breakfast"" and "Wired".
665 COMMISSIONER WYLIE: And "Wired" is on CHMI?
666 MR. THORGEIRSON: At CHMI, "Wired" is considered a portion of the ten o'clock news program. It's about, I think, Darcy, eight or nine minutes?
667 MS. MODIN: It's eight to 10 minutes.
668 MR. THORGEIRSON: Ten minutes of that show, plus there are "Wired actives, updates that come up throughout the evening.
669 COMMISSIONER WYLIE: Is "Wired" the type of program that could be transformed into entertainment, magazine priority?
670 MR. THORGEIRSON: It's -- it could be. It's really a combination of entertainment, magazine and variety right now.
671 COMMISSIONER WYLIE: Now, the strategy or the promise for the future. For your Alberta stations at your supplement -- well, first of all, you say you have no intention of reducing it and you repeated that this morning, at 12, "We have no plans to cut back on local programming." But we have been talking about conditions of licence and expectations and I noticed with great interest in the response to your deficiency question where you said that for you, an expectation is as binding as a condition of licence, albeit you were talking about closed captioning at the time or descriptive programming. But nevertheless, you say you have no intention of reducing, however, your commitment in the application remains the same today.
672 At page 42 of your supplementary brief there's 16 hours of local reflection. How much of that will be first-run news, which means that you can at any time during your licence term reduce it by half, which is what happened in the first four years of your licence for the non-news programming. Sometimes it was almost close to half, where you were supposed to do 14 and a half hours in the day. How much of that 16 hours, if it were reduced to that, would be news?
673 MS. STRAIN: Commissioner Wylie, we didn't actually -- we didn't distinguish between the news and non-news when we put the 16 hours in. It was meant to be total local reflection. So what you're asking me now what that would be, and I will come back to you unless you want us to do that now, but --
674 COMMISSIONER WYLIE: Yes, because apparently you're doing -- well, currently I didn't have your presentation, so of course I'm talking about your 2001 numbers, which are not dramatically different. You are doing 22 hours of first-run news, so if your commitment is 16 hours, it could be all news and you would be --
675 MS. STRAIN: It probably wouldn't be but --
676 COMMISSIONER WYLIE: -- meeting your commitment.
677 MS. STRAIN: It probably wouldn't be, but we can certainly put some more thought into that and come back to you with that, but the intention was that it would be total local reflection.
678 COMMISSIONER WYLIE: You see, the Alberta stations, you made some commitments as to what type of station you would have and why you should, in a competitive process, be licensed, so I think it's fair for interveners, and perhaps for us, to question how much you should veer from that, especially when you have in numerous places in your application and this morning in your presentation, considered yourself as having chosen local as a niche.
679 Now, would you agree that this 16 hours would represent a reduction in local reflection, including news, from what you're currently broadcasting of something like 54 percent - I made these calculations based on 2001 - and 49 percent less than you promised in 1996. In the case of CKX, it would represent six hours of local reflection - and again it's not broken down - would represent a 76 percent reduction from what you're currently doing and a 60 percent reduction from what you committed at renewal. In CHMI, it would represent a 67 percent reduction from what you're doing now and a third less than what you committed at licence renewal. The only explanation for that is that you're going to do quality instead of quantity, and we have no more details than that. As you just say now, you haven't broken it down in local news and local reflection.
680 What I'd like you to do is to connect what appears to me to be disconnected, when you talk about being a local broadcaster and we see the possibility of this amount -- of this level of reduction, especially where you were licensed in a competitive process.
681 MS. STRAIN: Commissioner Wylie, I'll try and take a run at this. We have no plans to cut back on our local programming, and I know that in the recent CTV and Global licence decisions that news commitments were set out in the decisions as notations in their licence and I'm prepared --
682 COMMISSIONER WYLIE: I'll say right away, Ms. Strain, that the Commission looks at what it requires depending on the circumstances.
683 MS. STRAIN: No.
684 COMMISSIONER WYLIE: You could take stations that are licensed to Global where there are requirements for local because the circumstances differed from their other stations. So that's not going to get you very far.
685 MS. STRAIN: No. I was just going to say that if you wanted to note in our licence decisions, the amount of news and non-news that we're currently doing, we're happy to live with that. That's what I was getting at. That was the first point.
686 What we wanted to do in our application -- and first of all bear in mind that this application was filed in November when Toronto was nothing but a glimmer in our eye and not something that we were counting on in any way, shape or form. We were approaching this next seven years having four stations, two of which were in markets that are not profitable at the moment, CBC problems with Brandon affiliate -- the problems with CBC affiliation in Brandon, DTH, satellite penetration. What we wanted to do, because we think it's incumbent on us to try and help you to understand some of the things that are impacting us in our business, so we put those in as absolute minimum commitments that we would live with as conditions of licence, if you were to require that, although I don't think -- I know there are circumstances where you have required conditions of licence. But what we wanted to say was that under no circumstances, despite all those competitive challenges, would we ever do less than that. In fact, those numbers are on par with what our competitors have in their licenses. But today, I can tell you that we have no plans to cut back.
687 Now, the other issue too, the quality versus quantity issue is one that we brought up in Toronto and we still believe that maybe that's an approach that broadcasters need to look at a little bit more. Sometimes just producing tonnage may not be the best way to go. Maybe you want to focus a lot of resources in a particular show like we plan to do in Toronto with the Toronto show that we talked about.
688 We have CHUM talking about perhaps coming into this market and that may have a drastic impact on where we re-focus our programming energy. So I just wanted to outline that, that we're not proposing reductions in our news or our local programming.
689 COMMISSIONER WYLIE: I have to go by your presentation, by your application, and in your supplementary brief you summarize - I think it's at page 42 - what your commitments are. I'm mindful of the fact that in a competitive process in 1996, you said 14 and a half hours of non-news, local reflection, and for four years one station did 9.5 instead and the other eight hours. That was not an expectation, it was a condition of licence, so --
690 MS. STRAIN: I think it was an expectation.
691 COMMISSIONER WYLIE: It was a condition of licence. Well, in case I'm wrong, I'll have a look -- yes, I would hate to mislead. Just a moment. I have the application. I'm reading from the decision now, from the CKEM and CKAL, "It is a condition of licence," -- "expectation". You're right. My apologies. I'm just going back to your deficiency --
692 MS. STRAIN: Commissioner Wylie, I mean, we --
693 COMMISSIONER WYLIE: -- that I was reading from the other day that in relation to closed captioning, you say, "We consider an expectation and a condition of licence to be equally binding and will be prepared to abide by the condition were the Commission to require it with respect to closed captioning." Now, may I ask whether that point of view or perspective is only for closed captioning? I referred to it earlier.
694 MS. STRAIN: No, of course it isn't.
695 COMMISSIONER WYLIE: I believed you to the extent that I then imported it back into the decision. So what is it now? Are you prepared to remain with what you had, and like many other licensees, say, "Well, seven years is a long time." Do you want a short-term licence?
696 MR. CRAIG: Commissioner Wylie, if I might. We've been talking about quality versus quantity, and I should just give you a little bit of context on the shortfall. We are up-front, we told you that we didn't do it, and basically what happened was, when we came in here and we had our application and we hired the experts to manage this programming and produce these programmings and to garner audience for us the way they saw fit, they said, "You know what? We think you should make a bigger investment in Canadian programming," and we did.
697 In fact, if you look at our track record in Alberta over the last four years I think we spent somewhere in the magnitude of $25 million more than we anticipated in the competitive process. That's why our programs are garnering audience, that's why our programs are winning awards. So we would hate to get trapped in an old-style volume model. We know what your concerns are in relation to local reflection. I think we've considerably stepped up in terms of saying we're going to put priority programming on the air that has local reflection in it. I think that's a major step up. And I think that we're prepared to caucus and think about this, about what we're prepared to commit to as an expectation or condition, or whatever you want to impose, to ensure that each station has outside-of-news programming - a significant amount, and a significant and serious commitment to non-news local reflection.
698 COMMISSIONER WYLIE: Your financial projections were prepared without regard to whether it would be this amount of local programming or a lesser amount. Because when I looked at your financials and I calculated, for example, 4-01-02-03 and 05 the percentage of expenditures for each category of what appeared to me to be local programming, and they're the same; it's linear. And similarly, as a percentage of all the expenditures on the programs that are telecast, it's also linear - more or less linear.
699 MR. CRAIG: Yes.