ARCHIVED -  Transcript / Transcription - Gatineau, Quebec - 2002-05-08

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                       SUBJECT / SUJET:


HELD AT:                               TENUE À:

Conference Centre                      Centre de Conférences
Portage IV                             Portage IV
Outaouais Room                         Salle Outaouais
Gatineau, Quebec                       Gatineau (Québec)

May 8, 2002                            Le 8 mai 2002

                           Volume 3


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

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


Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.

Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.

                 Canadian Radio-television and
                 Telecommunications Commission

              Conseil de la radiodiffusion et des
                télécommunications canadiennes

                  Transcript / Transcription



Charles Dalfen                     Chairperson / Président
Andrée Wylie                       Commissioner / Conseillère
Cindy Grauer                       Commissioner / Conseillère
Andrew Cardozo                     Commissioner / Conseiller
Stuart Langford                    Commissioner / Conseiller


William Howard                     Legal Counsel /
Leanne Bennett                     Conseillers juridiques
Michael McWhinney                  Hearing Coordinator  /
                                   Coordonnateur de l'audience
Pierre LeBel                       Secretary / Secrétaire

HELD AT:                           TENUE À:

Conference Centre                  Centre de Conférences
Portage IV                         Portage IV
Outaouais Room                     Salle Outaouais
Gatineau, Quebec                   Gatineau (Québec)

May 8, 2002                        Le 8 mai 2002

                           Volume 3

                         TABLE OF CONTENTS / TABLE DES MATIÈRES

                                                   PAGE / PARA

REPLY BY CHUM LIMITED /                             700 / 4020

Application No. / No de demande 2001-1327-5
Application No. / No de demande 2001-1323-3
Application Nos. / Nos de demandes 2001-1326-7, 2001-1388-7
Application No. / No de demande 2001-3121-7
Application No. / No de demande 2001-3125-9
Application No. / No de demande 2001-3124-1
Application No. / No de demande 2001-3122-5



Application No. / No de demande 2001-0226-0

PHASE II                                            870 / 5029


REPLY BY TELELATINO NETWORK INC. /                  872 / 5049



Application Nos. / Nos de demandes 2002-0127-8. 2002-0128-6


  1                         Gatineau, Quebec / Gatineau (Québec)
  2       --- Upon resuming on Wednesday, May 8, 2002 at 0930 /
  3           L'audience reprend le mercredi 8 mai 2002 à 0930
  4  4015                 THE CHAIRPERSON:  Order, please.  À
  5       l'ordre, s'il vous plaît.
  6  4016                 Mr. Secretary.
  7  4017                 MR. LEBEL:  Thank you, Mr. Chairman.
  8  4018                 We have now reached Phase III of the
  9       hearing of CHUM's application.  During Phase III CHUM
 10       will be asked to respond to all of the interventions
 11       submitted on their application.
 12  4019                 Gentlemen and ladies, you have
 13       10 minutes to reply.
 14       REPLY / RÉPLIQUE
 15  4020                 MR. SWITZER:  Mr. Chair, Members of
 16       the Commission, for the record my name is Jay Switzer. 
 17       We have already filed written reply comments and
 18       therefore our comments today will be brief.
 19  4021                 In response to the issue raised by
 20       several intervenors about the issue of a major
 21       multi-station group, we have discussed at length the
 22       dilemma of balancing the Commission's Television Policy
 23       of priority programming with the long-standing CHUM
 24       goal of intensely local stations, particularly in the
 25       case of CITY-TV.


  1  4022                 You have heard about the fact that
  2       funding agencies have not supported our distinctly
  3       Canadian dramatic series proposals in large measure, we
  4       believe, because of our lack of national reach.  That
  5       fact alone must support our view that we should not be
  6       required to carry the same levels of priority
  7       programming as the larger groups.
  8  4023                 In our discussion with Vice-Chair
  9       Wylie, we discussed the quandary of being required to
 10       offer eight hours of priority programming on CITY-TV at
 11       the expense of our innovative local magazine shows. 
 12       These productions are precisely the type of programs
 13       that help make CITY-TV the unique station it is.  We
 14       don't want to lose them.
 15  4024                 But even by the Commission's count,
 16       CHUM is not a major multi-station group.  Perhaps we
 17       could suggest that in the case of CITY-TV we could
 18       commit to the eight hours of priority programming, with
 19       the stipulation that up to two hours per week of our
 20       unique genre magazine shows would, for this purpose,
 21       qualify as priority.
 22  4025                 Turning to the intervention of the
 23       Directors Guild, we would like to make a few brief
 24       points.
 25  4026                 First of all, we can see no reason to


  1       use this proceeding as an opportunity to re-argue
  2       issues that were settled at the CKVU decision.  As I
  3       confirmed in discussion with Commissioner Grauer and
  4       the Vice-Chair, we are currently working with staff to
  5       arrange verifiable reporting procedures to ensure the
  6       incrementality of the CKVU transfer benefits, a
  7       procedure referred to in the transfer decision.
  8  4027                 We hope we have put to rest the DGC's
  9       concern regarding finding a home for B.C. drama.  Our
 10       commitments are clear, $7.8 million in license fees for
 11       B.C. independent producers.
 12  4028                 There is some concern that not all of
 13       this programming is guaranteed exposure by CHUM in
 14       Ontario.  All programming produced through our feature
 15       film initiative of $7 million will be seen across the
 16       country, and in the case of Vancouver's other stories,
 17       an amount of $800,000, we expect that at least some of
 18       these programs will be of intense and specific local
 19       interest and we do not feel we should automatically
 20       reject proposals of interest to Vancouver simply
 21       because may have no appeal in Toronto.  That is not
 22       what this initiative is about.
 23  4029                 Finally, we are asked to ensure that
 24       at least 75 per cent of our priority programming comes
 25       from independent producers.


  1  4030                 As we have been discussing for the
  2       past two days, CHUM stations are different.  That is
  3       precisely because, as the CFTPA pointed out, unlike the
  4       major station groups, we produce some of our
  5       programming in house.  Prem Gill described how in
  6       Vancouver we are developing the first in house
  7       production team dedicated to multicultural and
  8       aboriginal programming.  Some of these programs may
  9       well qualify as priority programming, and we cannot see
 10       ourselves accepting a condition that could have the
 11       effect of discouraging us from running this programming
 12       that is most unique to us.
 13  4031                 We genuinely believe that our support
 14       for the true independent production community is
 15       frankly unparalleled.  Moreover, as Diane Boehme
 16       pointed out yesterday, 95 per cent of the projects we
 17       actually supported over the license term came from
 18       small and medium-sized producers.
 19  4032                 Letters of support from across the
 20       country attest to this fact.  Unfortunately many of the
 21       producers who have supported us in this proceeding were
 22       unable to be here.  But two quick notes should
 23       demonstrate this point.
 24  4033                 First, from Phil Jackson from
 25       Danforth Studios in Toronto, and I quote:


  1                              "We have found the CHUM
  2                              Television Group of Broadcasters
  3                              have been an important,
  4                              consistently relevant, positive
  5                              force in an otherwise cynical
  6                              and contrived marketplace..." 
  7                              (As read)
  8  4034                 And I continue:
  9                              "...CHUM television is alone in
 10                              embracing, acquiring, buying,
 11                              and pre-buying, genuinely
 12                              independent Canadian product." 
 13                              (As read)
 14  4035                 End quote.
 15  4036                 From Christine Haebler of Crescent
 16       Entertainment in Vancouver, and again I quote:
 17                              "In our working with CKVU,
 18                              CITY-TV, we have found there
 19                              response unparalleled in
 20                              promptness and professionalism. 
 21                              If they choose not to support a
 22                              project, their executives give
 23                              very relevant, respectful,
 24                              critical feedback which allows
 25                              us to re-think our approach.  If


  1                              they choose to support a
  2                              project, the response is equally
  3                              prompt, as is their financial
  4                              support.  There is no comparison
  5                              to them in the Canadian market,
  6                              much less the Vancouver, B.C.
  7                              market."  (As read)
  8  4037                 End quote.
  9  4038                 We are proud of both the
 10       relationships we have developed and the films that have
 11       resulted from our work with independent producers
 12       across Canada.  We value the input and advice we
 13       received from Professor Lumb last night.  Some of his
 14       advice has already been reflected in our corporate plan
 15       filed last week, and we thank him for continuing to
 16       make us better broadcasters.
 17  4039                 We would also like to thank all of
 18       the other local interveners who have supported these
 19       applications, especially those who were able to be with
 20       us here yesterday as well as many who were forced to
 21       leave early.  Many of these speakers came a great
 22       distance to tell you there stories, and it is these
 23       intervenors who reflect the diversity and commitment in
 24       the communities we serve.
 25  4040                 Mr. Chair, that ends our oral reply.


  1  4041                 THE CHAIRPERSON:  Thank you
  2       Mr. Switzer.
  3  4042                 I hope you won't mind a few
  4       questions.
  5  4043                 I took your point on CKVU about
  6       incrementality and sorting out the base with staff, as
  7       you will eventually do, but I was wondering, on the
  8       Directors Guild chart -- I don't know whether you have
  9       their written intervention,  Do you have it?
 10  4044                 MR. SWITZER:  Just give us about five
 11       seconds and we will pull it out.
 12  4045                 THE CHAIRPERSON:  Sure.  This is
 13       page 12.
 14       --- Pause
 15  4046                 MR. SWITZER:  Please continue.
 16  4047                 THE CHAIRPERSON:  The question is: 
 17       After all is said and done the way I am reading these
 18       two charts is that what they are saying is that at the
 19       time of the takeover application CKVU's projections
 20       were filed to show that they would be doing a total of
 21       some $7.75 million of drama, excluding benefits.  If
 22       you go to the bottom of that page, the current filing,
 23       the current projections without benefits again, that
 24       the combined categories of drama and comedy would
 25       represent a total of $4.562 million of expenditures.


  1  4048                 I guess I am asking the question they
  2       asked:  Where is the missing $3 million?
  3  4049                 MR. MILLER:  Mr. Chair, the DGC's
  4       analysis is wrong in two fundamental respects.
  5  4050                 First of all, as you will see the
  6       charts on the left-hand side have different categories. 
  7       On the initial, they say "Category 2 to 5".  On the
  8       second they say Long Form 2b.  They omitted all of our
  9       2a to 5 categories in their revised analysis, which is
 10       a sum total of $4,275,000 over the license term.
 11  4051                 The second failure on their analysis
 12       is to take into account the fact that our first year
 13       operation with CKVU is not a full year.  As you know,
 14       we only took possession of the station November 1st,
 15       and so what we did in our financial is a full seven
 16       year term which took it over to the following period.
 17  4052                 The third thing -- and this is I
 18       think very important -- in all of our work with staff,
 19       and in our filing in our CKVU transfer decision, it was
 20       acknowledged that the historic baseline of CKVU was
 21       completely irrelevant for the purposes of our
 22       commitment to those categories.
 23  4053                 In other words, CKVU was a $70
 24       million station and CanWest had allocated whatever
 25       aspect of their priority programming to that station in


  1       accordance with its revenue.
  2  4054                 Under us we had projected on filing
  3       that it is was a $27 million station and had an
  4       appropriate allocation.  It went down because things
  5       were not the same, and we actually launched in the
  6       Vancouver market is very different including now the
  7       addition of a new ethnic service, to roughly
  8       $24 million on filing and Friday we refiled at
  9       $22 million.
 10  4055                 So we feel the only appropriate
 11       measure of our commitment, which was our understanding
 12       of how Commission staff felt we should go, was a
 13       percentage of revenue base.  So what we made sure is on
 14       the percentage of revenue basis our base commitment to
 15       those categories of programming remains consistent.
 16  4056                 THE CHAIRPERSON:  So the answer to my
 17       question is that in the drama category the new combined
 18       totals of four five six two should be taken by the
 19       Commission as your commitment, not withstanding the
 20       earlier seven-fifty for the reasons you have explained?
 21  4057                 MR. MILLER:  No.  As I said, on the
 22       drama side, if you want to isolate on drama, the
 23       difference is twofold.
 24  4058                 First of all, again, we had never
 25       assumed that there would be a fixed time of the base


  1       commitment by a specific revenue amount.  We assumed it
  2       would be calculated on the percentage of revenue basis.
  3  4059                 So what we are saying is, that number
  4       that was there is now different on a percentage of
  5       revenue basis.
  6  4060                 We will have to look at this again
  7       with staff, we understand that.  I'm sorry I am not
  8       more prepared to fully go through the details because
  9       we thought this was going to be handled in a different
 10       process, but what we tried to do and tried to do on our
 11       refiling on Friday is be consistent on our percentage
 12       of revenue basis.
 13  4061                 THE CHAIRPERSON:  I am just looking
 14       for what your commitment is in drama and comedy, and
 15       then I was going to ask you -- perhaps you could just
 16       file these with us -- to split out that four five six
 17       two between drama and comedy for the projected period,
 18       as to what the Commission in assessing your application
 19       can take as your projected expenditures on those two
 20       categories.
 21  4062                 Then what I hear you saying is that
 22       the $7,750,000 was from another time and another place
 23       and that you, from the point of view of a commitment
 24       going forward and excluding benefits, that isn't what
 25       you are speaking of, for the reasons you have


  1       explained.
  2  4063                 MR. MILLER:  The final difference is,
  3       of course, these numbers were based on our initial
  4       filings and we refiled on Friday.
  5  4064                 So what we will get for you in the
  6       next short period is those revised break downs, as you
  7       have requested.
  8  4065                 THE CHAIRPERSON:  Thank you.
  9  4066                 I wanted to also ask you about your
 10       Windsor proposal where you are proposing what you refer
 11       to, I think, as a two-year condition of license calling
 12       for 1.5 hours per week of separate local programming
 13       for CKNX and seven hours for CHWI.  Condition of
 14       license was what you meant?
 15  4067                 MR. MILLER:  We were prepared to do
 16       that to show our minimum commitment.  We understand
 17       that in most previous instances the Commission has just
 18       mentioned these as commitments, not as COLs, but
 19       because we felt that this was a very important signal
 20       to send to you we are prepared to accept the two year
 21       condition of licenses if that is the route you chose.
 22  4068                 THE CHAIRPERSON:  Yes.  The problem I
 23       have I suppose is, it is sort of when somebody says to
 24       you "I will be quite honest" the implication is "up to
 25       now I haven't been".


  1  4069                 Fred Sherratt goes back a long way
  2       and said, I think correctly, that we have taken this
  3       company as honouring its commitments over time.  So
  4       when you see a condition of license put in you suddenly
  5       say "Well, wait a minute.  Does that downgrade
  6       everything else?"
  7  4070                 MR. MILLER:  Not in the least.
  8  4071                 THE CHAIRPERSON:  So I had a hard
  9       time particularly following why you would request a
 10       condition of license instead of saying "We commit to
 11       doing that amount of programming" and seeing it on the
 12       same level as your other commitments.
 13  4072                 MR. MILLER:  At the risk of losing my
 14       job, can I confess to an error on my part, in that I
 15       had, as we were preparing that revision, not confirmed
 16       back in your previous licensing decisions as to how you
 17       would enforce those commitments on CanWest and Global. 
 18       I had just assumed when I wrote that that they had been
 19       COLs and then when I looked at it afterwards I realized
 20       they weren't.  So don't read anything into it.
 21  4073                 Having said that we are prepared to
 22       accept a COLs, we are prepared to, but there wasn't a
 23       suggestion that the other commitments were not equally
 24       firm even if they were not COLs.
 25  4074                 THE CHAIRPERSON:  Well the good news


  1       and the bad news, I think, Mr. Miller, is that if you
  2       look at the CITY-TV, CKVO opening statement on page 8,
  3       you will find that -- I think it was Stephen Tapp, but
  4       I am sure that we don't want to blame him for what
  5       might be a legal or regulatory --
  6  4075                 MR. MILLER:  I can be blamed for that
  7       as well.
  8  4076                 THE CHAIRPERSON:  He refers to:
  9                              "These commitments will
 10                              significantly exceed our current
 11                              conditions of license for local,
 12                              35 per cent higher than the COL
 13                              currently in place." (As read)
 14  4077                 When I look for a condition of
 15       license on local I don't find one.
 16  4078                 So I guess there is a loose parlance
 17       that I'm sure you now going to tidy up.
 18  4079                 MR. MILLER:  It won't happen again. 
 19       My error there.  I apologize.
 20  4080                 THE CHAIRPERSON:  Because it brings
 21       us to the larger issue here.  As I listened to the
 22       debate between yourselves and a number of the
 23       Commissioners yesterday, when I read your earlier
 24       decisions and the Commission's general decisions, I
 25       read about expectations of fulfilling commitments.  So


  1       it had a kind of surreal quality, the entire debate,
  2       because it was as though there was a fight over form
  3       rather than substance.
  4  4081                 I mean, what is at issue here is you
  5       have put forward certain commitments, they are reduced
  6       commitments from what you would have done had no
  7       license been issued in Toronto, is what I take you to
  8       be saying.  The Commission has a choice of either
  9       accepting that on the basis of all of its analysis and
 10       saying "We expect you in the normal course, subject to
 11       a debate about a conditions of license", if one removes
 12       that, expecting you to fulfil those commitments or
 13       saying "Well actually, having assessed the environment,
 14       and having assessed your capabilities, we actually
 15       expect you to do more than those commitments."
 16  4082                 Now, as a legal matter your situation
 17       doesn't change much, but what you would be getting back
 18       from us is a signal that we expect you to honour your
 19       commitments, you have made a commitment, and now we are
 20       expecting you to raise the bar, if indeed we go that
 21       way, because we think you are capable of doing more.
 22  4083                 That seems to me to be what the
 23       nature of the debate was and remains about and not
 24       about any hard and fast rock solid positions.  It is
 25       open to you, as you have, to tell us about the


  1       conditions you find yourselves in, the challenges you
  2       face, and so on, and it is our job to assess the entire
  3       environment and to see whether or not we accept
  4       those -- without doubting your word.  This at the end
  5       of the day is a different day is a different judgment
  6       about the nature of the environment you work in -- and
  7       to possibly up the bar for you.
  8  4084                 So I come at the end of it to say: 
  9       What I have just said, does that sound unfair or
 10       inaccurate as to the nature of the debate?
 11  4085                 MR. SWITZER:  Mr. Chair, it is
 12       absolutely accurate and very fair and has been part of
 13       our discussion and perhaps part of what we are talking
 14       about here.
 15  4086                 We would hope of course that any
 16       decision would also make reference to or in some way
 17       note our areas -- our activities in other areas, in
 18       areas of cultural diversity, in our development of
 19       Canadian drama, our development of Canadian series, our
 20       local reflection.
 21  4087                 And, yes, in doing so, we would hope
 22       that you also might note our record of
 23       over-achievement, particularly with CITY-TV in Toronto. 
 24       In fact, we have in some of our current licences,
 25       particularly with CITY-TV right now, there are


  1       references to notations of commitment, the fact that
  2       our proposed local commitments going forward are
  3       absolute minimums and that we have committed to
  4       continue to exceed those levels if market conditions
  5       allow.  We would expect that notations in a decision
  6       would be absolutely reasonable about our commitments in
  7       these areas.
  8  4088                 THE CHAIRPERSON:  I regret myself, to
  9       some extent, that we didn't dwell more on your positive
 10       achievements in so many areas.  I don't know how that
 11       happened, but it was flow of the game as it were and we
 12       got into areas that perhaps were harder than they
 13       needed to be, the edges were harder than they needed to
 14       be, in my view, because we were talking about a company
 15       that has fulfilled its commitments over time and has
 16       done some pioneering work in broadcasting and we expect
 17       it to do so.
 18  4089                 So I just wanted to make those points
 19       about tone, if you like.
 20  4090                 MR. SWITZER:  Mr. Chair, you have put
 21       it most eloquently.
 22  4091                 I couldn't help but think, in a very
 23       short period of time this morning you have captured the
 24       entirety of where we feel we should go and the approach
 25       we want to take to it.


  1  4092                 I guess it is the terminology, and
  2       you hit it bang on a moment ago, a condition of license
  3       is a legal phrase and if it is a condition of license
  4       and you are in breach, then you are breaking the law. 
  5       That is something we never want to be in a position
  6       that we might have to do.  That is why I think the team
  7       have been pushing these last two days that they are
  8       minimums and they are not what we want to do.
  9  4093                 You have captured it.  I hope
 10       somebody -- well, there is a transcript of that and I
 11       hope you take some of it and put it in the decision.
 12  4094                 THE CHAIRPERSON:  I guess we take
 13       conditions of license to an entirely different way, as
 14       you know, at the Commission.  I suppose the issue of
 15       the eight hours of priority programming would emerge as
 16       a condition of license out of this, but I'm not sure
 17       about the local.  I guess it was that it was initially
 18       your request to do so that puzzled me.
 19  4095                 In any case, thank you.  Those are
 20       all my questions.
 21  4096                 Commissioner Langford.
 22  4097                 COMMISSIONER LANGFORD:  I have just
 23       one question which is completely unconnected to the
 24       debate or the discussion that you just had with the
 25       Chair.


  1  4098                 But as this is reply to
  2       interventions, there was many interventions of course
  3       that you couldn't mention specifically, but there was
  4       one I wanted to bring your attention to which seems a
  5       little bit off the wall in terms of the process here,
  6       but I don't think that it is off the wall in terms of
  7       the sense of concern that underlies it and in terms of
  8       your unquestionably model commitment to cultural
  9       diversity and to cultural sensitivity.
 10  4099                 I am referring to Intervention No. 37
 11       from the Tamil Coordinating Committee.
 12  4100                 Really this is, as I say, just a bit
 13       odd in terms of this process because it deals with
 14       radio.  The intervenant clearly says, the writer on
 15       behalf of this, that she knows that in a strict sense
 16       radio is not on the table here in any way.
 17  4101                 However, she has concerns with one of
 18       your radio stations and notes that its home is in
 19       precisely the same building as your television and that
 20       she would ask that some investigation of her concerns
 21       be undertaken.
 22  4102                 I would ask you the same thing today,
 23       that you would make some best efforts to contact this
 24       woman and to this association and to deal with her
 25       concerns.


  1  4103                 MR. MILLER:  I remember the
  2       intervention and I have made some inquiries and we will
  3       follow up.
  4  4104                 COMMISSIONER LANGFORD:  Thank you
  5       very much.
  6  4105                 THE CHAIRPERSON:  Counsel.
  7  4106                 MR. HOWARD:  Thank you.
  8  4107                 You mentioned that you couldn't
  9       accept the 75 per cent for independent production.  Is
 10       there any level at which you would be more comfortable?
 11  4108                 MR. MILLER:  Our difficulty, counsel,
 12       is with the use of the term "independent production". 
 13       We are not, for any circumstances, considered
 14       independent producers from the perspective of the
 15       funding agencies, but large vertically integrated
 16       competitors, be they Nelvana, now owned by Corus, or
 17       Alliance Atlantis, are considered independent producers
 18       for certain circumstances.
 19  4109                 So until there is a more reasonable
 20       definition of "independent producer", we feel unable to
 21       make that commitment because it puts it as a major
 22       disadvantage and in a sense requires us to use our
 23       competitors for production.  We are simply not prepared
 24       to put ourselves in that position.
 25  4110                 We have a strong track record of


  1       commitment for small and medium-sized companies in
  2       independent productions.  We would be happy with a
  3       notation in the decision that refers to that strong
  4       commitment to small and medium-sized companies, but we
  5       are unable to accept a commitment to independent
  6       production as it is currently defined.
  7  4111                 MR. HOWARD:  At a D level I think you
  8       are saying.
  9  4112                 MR. MILLER:  That is correct.  Thank
 10       you.
 11  4113                 MR. HOWARD:  There was a discussion
 12       on Monday about the calculation of the potential reach
 13       of the group, remember there was 67 per cent.  You have
 14       mentioned today for example that -- I think your phrase
 15       was -- "even by the Commission's count"  I know there
 16       were discussions between Commission staff and your
 17       staff.
 18  4114                 Have you received enough information
 19       to understand how the Commission calculates its figure?
 20  4115                 MR. MILLER:  We have had some very
 21       useful discussion.  We have not had the opportunity to
 22       verify mathematically yet whether using the precise
 23       Commission methodology we would come up with the same
 24       number.  We will try and do that.  I suspect that there
 25       is no issue with the mathematical application of the


  1       Commission's approach.
  2  4116                 Our comments in this regard were
  3       merely to indicate that that doesn't tell the full
  4       story, that there are other measures that, while not
  5       the precise measure, the Commission has chosen to use
  6       that also tell something else about our real coverage
  7       and our real reach.
  8  4117                 So that is something we will get back
  9       to you.  If indeed we feel for some reason there is a
 10       difference of opinion on the mathematical calculation,
 11       we will get back to you, but I suspect that your
 12       colleagues are completely competent to make that
 13       calculation, so I suspect that we are unlikely to find
 14       a difference on the mathematical side.
 15  4118                 MR. HOWARD:  Basically our
 16       calculators are as good as your calculators.
 17  4119                 I will pass you on to my colleague.
 18  4120                 MS BENNETT:  Thank you.
 19  4121                 I just have a couple of follow-up
 20       questions, particularly on the CKVU renewal application
 21       and the CHRO.
 22  4122                 The first question relates to the
 23       commitment for CKVU for airing of feature films.
 24  4123                 In the renewal application, CKVU made
 25       a commitment to air all Canadian feature films suitable


  1       for broadcast, to air a minimum of 100 hours of
  2       Canadian movies.
  3  4124                 Could you comment on the possibility
  4       of the Commission imposing that commitment as a
  5       condition of license.
  6  4125                 MR. MILLER:  You may recall, counsel,
  7       yesterday we had a discussion, I think in regards to
  8       CITY-TV, about the 100 hours of movies and we had some
  9       discussion about what that meant.  We want to make sure
 10       that includes feature film, long-form documentary and
 11       made-for-television movies.
 12  4126                 With that proviso, we would accept
 13       the 100 hour commitment on both CITY-TV and CKVU as a
 14       condition of license.
 15  4127                 The other matter would be something
 16       we would expect you to note.
 17  4128                 MS BENNETT:  Thank you.
 18  4129                 The second question relates to the
 19       exhibition of programs created by B.C. independent
 20       producers as a result of the financial report, support
 21       that the producers receive from CHUM's B.C. Independent
 22       Production Benefit Initiative.
 23  4130                 Could you comment on the possibility
 24       of the Commission imposing that as a condition of
 25       license?


  1  4131                 MR. SWITZER:  Yes, counsel.  We
  2       reviewed earlier this week that we are fully prepared
  3       to make the transfer benefit specifics conditions of
  4       license as part of the new CKVU.
  5  4132                 Do you want to go into specifics?
  6  4133                 MR. MILLER:  Yes.  I think your
  7       comment was an exhibition question.  Is that correct?
  8  4134                 MS BENNETT:  That is correct.
  9  4135                 MR. MILLER:  To be clear, you are
 10       asking whether we are prepared to commit by condition
 11       of license to air what we fund on CKVU?
 12  4136                 MS BENNETT:  That is correct.
 13  4137                 MR. MILLER:  We will.  Again, the
 14       Commission could certainly note the other comments we
 15       made today about our desire to air any such productions
 16       funded by the benefits across the Canadian broadcast
 17       system on our other stations such as CITY-TV,
 18       recognizing that there is a distinction between the
 19       $7 million feature film initiative and the other
 20       stories.  I think the record is clear on what we have
 21       stated there.
 22  4138                 MS BENNETT:  Thank you.
 23  4139                 Now, just dealing with issue of the
 24       local programming benefits.  You have indicated earlier
 25       in the hearing, just now and in your application, that


  1       you are expecting the proposed benefits for the
  2       incremental broadcast of local programming on CKVU to
  3       be reflected in conditions of license.
  4  4140                 MR. MILLER:  My understanding -- and
  5       to look at the precedent you set with other such
  6       acquisitions -- is that, yes, for the first term of
  7       license it is appropriate for those commitments to be
  8       as conditions of license.  My understanding it would be
  9       the complete commitment, not just the incremental but
 10       the complete commitment would be the condition of
 11       license.
 12  4141                 MS BENNETT:  Okay.
 13  4142                 MR. MILLER:  Unless Jay corrects me,
 14       the total number of hours was 27 and a half, which was
 15       split between news and non-news.
 16  4143                 MS BENNETT:  So 15.5 hours of local
 17       news and 12 hours of non-news.
 18  4144                 MR. MILLER:  Precisely.
 19  4145                 MS BENNETT:  Okay.  Just as a
 20       follow-up, if the Commission did impose conditions of
 21       license, how should local programming be defined?  For
 22       example, in the Decision 2002-81, new television
 23       station for Toronto and Hamilton, the Commission
 24       outlined a definition of local programming.  Would that
 25       be -- I could read it if you --


  1  4146                 MR. MILLER:  I have a copy if you
  2       will give me two moments to find it.
  3  4147                 MS BENNETT: Sure.
  4       --- Pause.
  5  4148                 MR. MILLER:  It wouldn't hurt for you
  6       to read it while I am looking for it.
  7       --- Laughter / Rires
  8       --- Pause
  9  4149                 MS BENNETT:  Thanks.
 10                              "Substituting Vancouver for the
 11                              CKVU situation, it would be for
 12                              the purposes of this condition,
 13                              `local programming' means
 14                              station productions or
 15                              programming produced by..." 
 16                              (As read)
 17  4150                 In this case:
 18                              "...Vancouver-based independent
 19                              producers that reflects the
 20                              particular needs and interests
 21                              of Vancouver residents."
 22                              (As read)
 23  4151                 MR. MILLER:  No.  That seems to be a
 24       very different kind of application of the term "local".
 25  4152                 For the purposes of those commitments


  1       we would expect the Commission's traditional definition
  2       of "local" which is locally produced, either by the
  3       station or, in the case of an independent production,
  4       by a local independent producer.
  5  4153                 MS BENNETT:  Thank you.
  6  4154                 MR. MILLER:  Could you just refer to
  7       the clause number, because I am going to look for it
  8       just right now.
  9  4155                 MS BENNETT:  Do you got the clause
 10       number?
 11       --- Pause
 12  4156                 MS BENNETT: I don't have the clause
 13       number handy, but we can --
 14  4157                 MR. MILLER:  If we need to get back
 15       to you on that we will.  I will look at it subsequent
 16       to the hearing.
 17  4158                 MS BENNETT:  Okay.  Thank you.
 18  4159                 The next question also relates to
 19       CKVU and it relates to the transfer of control to CKVU
 20       to CHUM in Decision 2001-647.
 21  4160                 In that decision, the Commission
 22       noted a number of safeguards that CHUM offered to
 23       preserve programming diversity between CKVU and CKVI. 
 24       Those safeguards were set out at paragraph 6 of the
 25       Decision and the Commission noted them at paragraph 24.


  1  4161                 Again, I can read them if that would
  2       be helpful.
  3  4162                 MR. MILLER:  I have that in front
  4       of me. 
  5  4163                 MS BENNETT:  Okay.  So there were six
  6       safeguards that were set out.
  7  4164                 Could you comment on the possibility
  8       of the Commission imposing those safeguards as a
  9       condition of license?
 10  4165                 MR. MILLER:  I recall that again the
 11       Commission faced the same issue with respect to the
 12       safeguards on CHCH and CHEK.  I can look at it, but if
 13       the Commission was paralleling that in terms of the
 14       implementation of safeguards, that would be
 15       satisfactory to us.
 16  4166                 MS BENNETT:  Thank you.
 17  4167                 My next question relates to CHRO, and
 18       specifically the split feed application.  It is just a
 19       couple of details on the application.
 20  4168                 On page 6 of the application you
 21       listed three programs that would be used as part of the
 22       split feed strategy.  That was a morning show, a news
 23       program and an 11:00 p.m. news program.  In the
 24       application you have provided some detailed
 25       calculations showing the incremental revenue that you


  1       would generate from the morning show and the 6:00 p.m.
  2       news, but you didn't provide similar calculations for
  3       the 11:00 p.m. news.
  4  4169                 Are you in position to tell us on an
  5       annual basis how much additional advertising revenue
  6       you would expect to generate from the 11:00 p.m. news
  7       program?
  8  4170                 MR. MILLER:  I am wondering, counsel,
  9       whether you are missing a page.  I have Attachment 2 to
 10       our filing which, was initially filed confidentially
 11       but the Commission asked that we place it on the public
 12       record.  There is a Part A that deals with the morning
 13       show, a Part B that deals with 6:00 p.m. news, and then
 14       a Part C, which is on a second page, that deals with
 15       the Sunday news at 11:00 -- Monday to Sunday news at
 16       11:00 p.m.
 17  4171                 Just to read for you, it suggests
 18       that without the split the advertising revenue would be
 19       $348,000.  With the split feed the advertising revenue
 20       would be $438,000.  Then when we added all of these
 21       three calculations together we came up with a total
 22       benefit of the split feed of $803,000.  So we set that
 23       $800,000 as our potential benefit from this split feed
 24       proposal.
 25  4172                 MS BENNETT:  Okay.  Thank you.


  1  4173                 Also in relation to the split feed
  2       you have indicated that this split feed advertising
  3       would be within locally produced programming.
  4  4174                 Could you comment on the possibility
  5       of the Commission imposing that as a condition of
  6       license?
  7  4175                 MR. MILLER:  We would accept that as
  8       a condition of license.
  9  4176                 MS BENNETT:  Okay.  Thank you.
 10  4177                 Those are my questions.
 11  4178                 THE CHAIRPERSON:  Thank you
 12       very much.
 13  4179                 Thank you, ladies and gentlemen.
 14  4180                 We will take a brief five-minute
 15       break while we have the next panel.
 16  4181                 Perhaps you could call that now,
 17       Mr. Secretary.
 18  4182                 MR. LEBEL:  The next application will
 19       be the Telelatino Network Incorporated application.
 20       --- Upon recessing at 1006 / Suspension à 1006
 21       --- Upon resuming at 1018 / Reprise à 1018
 22  4183                 THE CHAIRPERSON:  Order, please.  A
 23       l'ordre, s'il vous plaît.
 24  4184                 Mr. Secretary, call the next item.
 25  4185                 MR. LEBEL:  Thank you, Mr. Chairman.


  1  4186                 We will now hear the application by
  2       Telelatino Network Incorporated, to renew the license
  3       of the national specialty television service known as
  4       Telelatino expiring the 31st of August, 2002.  The
  5       licensee provides ethnic programming directed to
  6       Italian and Hispanic Spanish audiences.  The licensee
  7       also proposes amendments to its condition of license
  8       numbers 1a) and 1b).
  9  4187                 Mr. Aldo Di Felice will introduce his
 10       colleagues.
 11  4188                 Gentlemen and lady, you do have
 12       20 minutes to make your presentation.
 14  4189                 MR. JOHNSTON:  Thank you,
 15       Mr. Secretary.
 16  4190                 Good morning, Mr. Chairman, Members
 17       of the Commission.
 18  4191                 I wonder before Mr. de Felice
 19       introduces the panel if I could speak to a procedural
 20       matter.
 21  4192                 Last Monday we filed on behalf of TLN
 22       revised seven-year financial projections.  The
 23       projections that were filed originally with the
 24       application were prepared in late 2000 and were clearly
 25       out of date so we thought it would be more useful for


  1       the Commission to have an up-to-date picture of how TLN
  2       sees the next seven years unfolding.
  3  4193                 So those were filed Monday. 
  4       Yesterday we had a request from CRTC staff to provide
  5       the assumptions under which the new projections were
  6       forecast.  So we have prepared a revised Schedule 18,
  7       which has the amended assumptions.  I have provided
  8       those to the Secretary today.
  9  4194                 So my request to the Commission is
 10       that these two documents be added to the record of the
 11       proceeding.
 12  4195                 THE CHAIRPERSON:  Any comments?
 13  4196                 MR. HOWARD:  No comments.
 14  4197                 I would think that intervenors should
 15       have 10 days to make any comments they wish, and
 16       perhaps three days for reply.
 17  4198                 Would that be suitable?
 18  4199                 MR. JOHNSTON:  That would fine.
 19  4200                 Thank you, counsel.
 20  4201                 THE CHAIRPERSON:  Go ahead,
 21       Mr. Di Felice.
 22  4202                 MR. DI FELICE:  Good morning.
 23       Mr. Chairman and Commissioners.
 24  4203                 My name is Aldo Di Felice, President
 25       of Telelatino Network Inc.  With me today are, from my


  1       far left, Agatha Pezzi, our Head of Production; John
  2       Montesano, our Head of Network Development.
  3  4204                 On my right is our Head of Finance,
  4       Rehaz Subdar, and beside him our legal counsel, Chris
  5       Johnston.
  6  4205                 We are also pleased to have in the
  7       audience representatives of long-standing shareholders
  8       at Telelatino, Ms Patricia Rosati, Mr. Joe Vitale, and
  9       Mr. Romeo Di Battista.
 10  4206                 Our Chairman, John Cassidy is unable
 11       to be here and sends his regrets.
 12  4207                 TLN went to air on December 10, 1984. 
 13       Eighteen years ago, TLN was a small network in a large
 14       country.  Today, the service provides Spanish and
 15       Italian programming to over three million homes across
 16       Canada.
 17  4208                  Over the years, TLN has steadily
 18       increased the quality, quantity and diversity of its
 19       service.  It now provides continuous, 24-hours per day,
 20       seven-days per week of news, information, sports,
 21       drama, children's shows and general entertainment
 22       programming to Canadian audiences of Italian and
 23       Hispanic ethnic origin and those who enjoy these
 24       cultures and languages.
 25  4209                 TLN has renewed its commitment to


  1       Hispanic and Italian Canadians and has taken steps to
  2       change the way people think about ethnic broadcasting
  3       in Canada:
  4  4210                 By investing in modern broadcasting
  5       technology to improve the look of the station and its
  6       programs;
  7  4211                 By dedicating ourselves to community
  8       outreach initiatives;
  9  4212                 By building a wide range of top
 10       programming from Canadian and international sources;
 11       and
 12  4213                 By pursuing programming and
 13       promotional campaigns that make it more accessible to
 14       all Canadians.
 15  4214                 Despite the many accomplishments and
 16       development of TLN as a network over the years, there
 17       continue to be dramatic and exciting changes sweeping
 18       over our communities and our industry which the service
 19       must continually address.
 20  4215                 Our main guiding principles are meant
 21       to enhance TLN's impact and include:
 22  4216                 Making and finding quality
 23       programming;
 24  4217                 Extending the accessibility and reach
 25       of ethnic programming;


  1  4218                 Involving and interacting with our
  2       communities; and
  3  4219                 Practising diversity on many levels.
  4  4220                 Time and time again, our audiences
  5       have told us -- as the many supporting interventions in
  6       this matter underline
  7       --- Laughter / Rires that these principles or
  8       "touchstones" at TLN, namely, quality, diversity,
  9       community commitment and accessibility, are reshaping
 10       people's views of TLN's importance.  These initiatives
 11       have proved to be a unifying force, both between the
 12       various Latin ethnocultural groups that TLN serves, as
 13       well as between these groups and mainstream Canada.
 14  4221                 All of these principles have served
 15       as ingredients to TLN's Canadian recipe for success --
 16       blending great Latin television from around the world
 17       with Canadian sensibilities, Canadian context, Canadian
 18       enhancements and, of course, thoughtful, relevant and
 19       enduring original Canadian content.
 20  4222                 We were pleased to see the article by
 21       John Allemang in today's Globe Review section of the
 22       Globe and Mail newspaper, recognizing the very type of
 23       programming and initiatives that we are talking about. 
 24       We have left copies of that article this morning with
 25       the Secretary of the hearing for your reference.


  1  4223                 MR. MONTESANO:  Good morning.
  2  4224                 With these objectives in mind, TLN's
  3       accomplishments over the current license term of which
  4       we are most proud and wish to underline, include the
  5       following:
  6  4225                 First, improved programming.  TLN has
  7       built an international network of relationships and
  8       alliances in the world television marketplace.  New
  9       deals and relationships have been struck with Univision
 10       Network, Telemundo Network, CNN en Español, Televisa
 11       Group in Mexico, Venevision in Venezuela, Artear in
 12       Argentina, RCN in Columbia and others.
 13  4226                 Even on the Italian programming side
 14       where TLN has, and still remains, highly dependent on a
 15       single foreign program supplier, TLN has introduced new
 16       sources of programs from Italy.  These international
 17       relationships have been multi-layered in relation not
 18       only to programming supply, but also special live event
 19       joint ventures and the partnerships involved in our
 20       newly approved Canadian digital ethnic channels.
 21  4227                 At the same time, TLN has sought to
 22       contextualize and enhance many of its international
 23       shows with a Canadian perspective.  And so, many of
 24       TLN's international specials have TLN-produced studio
 25       commentary.  For example, earlier this year TLN's own


  1       personalities added colour and commentary to the
  2       San Remo Song Festival from the Italian Riviera.
  3  4228                 The results:  The week long Festival
  4       attracted over 600,000 Canadians, while the Saturday
  5       finale alone was watched by 336,000 viewers.
  6  4229                 TLN is also "Canadianizing" many of
  7       its other international shows, including the addition
  8       of English subtitles to its weekly telenovela,
  9       "Calypso", and Canadian-made English play-by-play to
 10       many of the Copa America soccer tournament games
 11       broadcast last summer.  As well, we will be adding
 12       Italian play-by-play to World Cup games next month.
 13  4230                 But more than just much appreciated
 14       Canadian context, TLN's Canadian content efforts have
 15       sharpened their focus and resulted in extended reach,
 16       appeal and impact.  Although, as the CRTC knows, our
 17       recent history has included financially challenging
 18       years -- indeed TLN's cumulative deficit was only paid
 19       off in 1999 --  we have steadily increased both hours
 20       of programming and the amount of dollars devoted to
 21       Canadian-made programs.
 22  4231                 In fact:
 23  4232                 Canadian programs now make up over
 24       25 per cent of TLN's overall schedule; and
 25  4233                 TLN has spent approximately


  1       $9 million on Canadian programs during the current
  2       license term.
  3  4234                 Further, we propose to increase our
  4       Canadian program expenditures by 1 per cent per year
  5       starting in year four of our new license term, rising
  6       to 20 per cent in year seven.  This represents a total
  7       commitment of over $16 million to Canadian content
  8       production, or a 132 per cent increase over the last
  9       license term.
 10  4235                 We are also excited to report that
 11       TLN's popularity has been growing as measured by recent
 12       industry standard audience measurement services.  As of
 13       fall 2001, TLN had achieved record average weekly reach
 14       of over 1.1 million viewers.  Much of that growth has
 15       included some younger demographic groups.  For
 16       instance, 77 per cent more adults 18 to 24 and 39 per
 17       cent more adults 18 to 34 were watching TLN this past
 18       fall than the year before.
 19  4236                 MS PEZZI:  Good morning.
 20  4237                 Community outreach is very important
 21       to TLN in the context of its Canadian content programs. 
 22       TLN has focused its activities, in part, on daily
 23       television coverage of many community events and
 24       activities.
 25  4238                 For instance, in the past 15 months


  1       alone TLN has publicized more than 1,500 community
  2       events through its "Appunti" and "Apuntes" daily social 
  3       calendar segments.  TLN videographers and producers
  4       have prepared and broadcast more than 500 segments as
  5       part of TLN's "Nota Bene" and "Informese" segments.
  6  4239                 Besides these community
  7       micro-programs, TLN has developed a half-hour program
  8       to showcase important events in the Hispanic and
  9       Italian communities.  We call it "TLN Spotlight". 
 10       Twenty-four "TLN Spotlights" have been produced over
 11       the past 15 months.  These specials have brought to
 12       Canadian TV such rich ethnocultural events as the
 13       Toronto Hispanic Day Parade, a tribute evening for RCMP
 14       Commissioner, Giuliano Zaccardelli, the "Valigia D'Oro"
 15       tribute ceremony to immigrants, and the
 16       Canadian-Italian National Awards for the National Arts
 17       Centre in Ottawa.
 18  4240                 As well, TLN continues to produce and
 19       broadcast various other Canadian, community-oriented
 20       weekly programs throughout the year.  These include
 21       "Viva Domenica", an Italian lifestyle show, "Usted
 22       Decide", Hispanic issues segments, "Graffiti", a
 23       youth-oriented music program, and others such as
 24       "Hispanos en Canada" and "In Conversazione".
 25  4241                 In April 2000, TLN launched a special


  1       production effort, a collection of original
  2       documentaries exploring the Latin-Canadian experience
  3       we are calling the "Latin Heritage Series".  The series
  4       kicked off with an original 90-minute documentary
  5       entitled, "Pier 21:  A Life Torn in Two", a program
  6       shot in close collaboration with the Pier 21 Society in
  7       Halifax.
  8  4242                 A fund-raising dinner in Toronto to
  9       support the Pier 21 Society, that was organized in
 10       collaboration with TLN and the Canadian Broadcasting
 11       Corporation, subsequently followed the broadcast.  The
 12       evening was co-hosted by TLN's Alf De Blasis together
 13       with CBC's Hana Gartner and audiovisual "recollections"
 14       were collected from visitors to be permanently
 15       enshrined in the Pier 21 Museum library video archives.
 16  4243                 Pier 21 is just one of many primarily
 17       English-language original programs being produced by
 18       TLN, in most cases with the cooperation of independent
 19       producers within our communities.  A glimpse of
 20       upcoming instalments of the "Latin Heritage Series" is
 21       included in our video presentation today.  All in all,
 22       TLN's innovative and attentive approach to its ethnic
 23       mandate is allowing TLN to evolve with the
 24       Latin-Canadian community itself and actively creates
 25       new connections and opportunities


  1  4244                 TLN's community focus includes
  2       assisting community charitable work.  To begin with, we
  3       have worked with the Red Cross on several campaigns in
  4       relation to Latin American relief efforts.  We also
  5       provide ongoing promotional, production and programming
  6       support to many other charities.  These include Villa
  7       Charities and the Centre for Spanish Speaking Peoples
  8       in Toronto, Villa Marconi in Ottawa, the Leonardo da
  9       Vinci Centre in Montreal, and Costi Immigrant Services. 
 10       As well, TLN's annual "Caritas" telethon, in support of
 11       substance abuse programs, has itself raised over
 12       $1 million through awareness campaigns and the
 13       telethon.
 14  4245                 MR. DI FELICE:  As part of this
 15       license renewal, TLN is asking the Commission to permit
 16       an increase in the amount of non-third language ethnic
 17       programming from 15 per cent to 25 per cent.  The
 18       nature of this request is not revolutionary, but
 19       evolutionary.  TLN is seeking to follow the demographic
 20       developments of the Latin communities it is mandated to
 21       serve.
 22  4246                 We have filed statistics confirming
 23       what we already see around us in our communities.  The
 24       vast majority of Canada's 1.2 million Italian-Canadians
 25       do not identify Italian as their home language


  1       according to Statistics Canada.  The same holds true
  2       for the majority of Canadians of Hispanic/Spanish
  3       origins.
  4  4247                 The response to the TLN's "Latin
  5       Heritage Series" which features programs produced
  6       primarily in English, has shown us that our
  7       communities, and especially second, third and fourth
  8       generation Latin Canadians, crave and respond to unique
  9       stories that reconnect them with their cultural
 10       heritage.
 11  4248                 At the same time, mixed language
 12       programming -- i.e., programs that mix Italian with
 13       English or Spanish with English -- more accurately
 14       reflects the every day reality of both immigrants and
 15       their descendants.  An increase in the non-third
 16       language programming allowance would permit TLN to
 17       broadcast more mixed language ethnic programming.  Of
 18       course, TLN would remain overwhelmingly a third
 19       language service, as the license condition would still
 20       require a minimum 75 per cent level.
 21  4249                 A further amendment sought in this
 22       license renewal is the establishment of a minimum level
 23       of Canadian content to be broadcast during the evening
 24       broadcast period.  TLN proposes to introduce a minimum
 25       15 per cent level of Canadian content during this


  1       period.  Although TLN will need to balance a series of
  2       challenges, including the potential disruption to
  3       viewers' long-standing programming expectations,
  4       scheduling for two separate third language audiences --
  5       Spanish and Italian -- and the impact of unusually long
  6       Italian show formats, we believe this level is
  7       appropriate during the evening period.
  8  4250                 At this point, we would like to show
  9       you a short video presentation that illustrates some of
 10       the initiatives we have described.
 11       --- Video presentation / Présentation vidéo
 12  4251                 MR. DI FELICE:  In conclusion, TLN
 13       wholeheartedly supports the introductory statements
 14       made by the Commission in its revised 1999 Ethnic
 15       Broadcasting Policy.  The Commission enunciated the
 16       goals of:
 17  4252                 Ensuring access to ethnic programming
 18       to the extent practicable given resource limitations;
 19  4253                 Providing a framework for
 20       broadcasting that fosters opportunities for greater
 21       understanding among people with different cultural
 22       backgrounds; and
 23  4254                 Responding to the evolution within
 24       ethnic groups and in Canadian society at large.
 25  4255                 All three of these principles have


  1       guided and will continue to guide TLN's development
  2       over the next license term.
  3  4256                 Thank you, Commissioners.
  4  4257                 That concludes our oral presentation
  5       and we would be happy to answer any questions.
  6  4258                 THE CHAIRPERSON:  Thank you.
  7  4259                 Vice-Chair Wylie.
  8  4260                 COMMISSIONER WYLIE:  Good morning,
  9       Mr. di Felice and your colleagues, Mr. Johnston.
 10  4261                 This is perhaps not going to be an
 11       easy process in timing so we will have to make sure
 12       that we are looking at the same pieces of paper.
 13  4262                 To put this in context, Telelatino's
 14       license was expiring at the end of 2001 and there was
 15       an application for transfer of its control to Corus,
 16       which was approved in July of 2001.  The Commission
 17       then renewed the license administratively to 2002, so
 18       expiry is this coming September.
 19  4263                 So what we have on hand is an old
 20       application for renewal when Corus was not in control. 
 21       In the decision of July the Commission postponed to
 22       this renewal the discussion of issues and concerns that
 23       were raised by intervenors and by the Commission during
 24       the transfer decision.  They were to be revisited at
 25       this renewal hearing.


  1  4264                 We are in agreement as to how this is
  2       working?
  3  4265                 So I will be discussing with you
  4       those issues and concerns, which also were in the
  5       deficiency process between the Commission and
  6       Telelatino leading to what would have been a renewal
  7       for 2001.  So that is still on our books.
  8  4266                 That included a possibility of
  9       increasing Cancon both all day and during the evening
 10       period, so we will discuss that.
 11  4267                 It included a possibility of
 12       increasing the CPE requirements, so we will discuss
 13       that.
 14  4268                 It also included complaints re the
 15       adequacy of programming on Telelatino, particularly by
 16       the Hispanic speaking or the Hispanic community, so we
 17       will discuss that.
 18  4269                 There were also questions about
 19       commitments to service to the hearing and visually
 20       impaired in the deficiency process.
 21  4270                 So I hope that you have with you that
 22       application.
 23  4271                 Now, you have no problem to date with
 24       these dates and the process.
 25  4272                 So financial projections were filed


  1       originally in January 2001 when the application for
  2       renewal was filed.  They were revised in March in a
  3       first round of deficiencies, the 12th of March.  They
  4       were revised the month after, the 12th of April 2001 in
  5       a second round of deficiencies.  This morning, as
  6       Mr. Johnston highlighted, a new set dated 3 May -- that
  7       is when I got them anyway -- projections were filed.
  8  4273                 So the only set of projections filed
  9       under Corus control was the 3 May ones after the --
 10  4274                 MR. JOHNSTON:  That is correct.
 11  4275                 COMMISSIONER WYLIE:  Now you have
 12       filed this morning -- at least that is when I first
 13       have seen them -- the underlying assumptions for the
 14       3 May projections.
 15  4276                 MR. JOHNSTON:  That is correct.
 16  4277                 COMMISSIONER WYLIE:  So obviously I
 17       have had a chance to look at the 3 May projections but
 18       not very much at the financial assumptions so you may
 19       have to help me orally when I ask questions as to how
 20       it is supported because I won't have had time to really
 21       absorb it.
 22  4278                 The first question I -- well, to
 23       really put this in context, what I have done is I have
 24       taken the 12th March projections and compared them with
 25       the 3 May projections, only to find out as I pursued


  1       further into the file that they had been upgraded --
  2       well, they are always going up on the 12th of April.  I
  3       had done all my little calculations by then as to what
  4       the differences were.
  5  4279                 So if you don't mind, I will use the
  6       12 March projections attached to the first deficiency
  7       letter 12 March to compare with May.
  8  4280                 The April ones were raised further,
  9       so the difference between them and May in increases
 10       will be less, but if you will indulge me we will use
 11       the 12 March.
 12  4281                 It is simply to contextualize our
 13       discussion, because your responses to the Commission's
 14       prodding to improve and to how to meet the Spanish
 15       community's concerns were based on what you thought
 16       your ability financially would be according to the
 17       projections filed before the transfer and certainly
 18       before the 3rd of May.
 19  4282                 By focusing on the improvement of
 20       course we will now ask you why can't your answers be
 21       different since your financial projections are so
 22       different?
 23  4283                 MR. JOHNSTON:  That is why we wanted
 24       to -- it has been a steadily improving situation and we
 25       thought it would help the process if you could see what


  1       the picture looks like today based on the actual fiscal
  2       year 2001 results that of course were filed last
  3       November.
  4  4284                 But we, in preparing, have been
  5       looking at these various sets of projections, Madam
  6       Wylie, so whatever way you want to proceed is fine.
  7  4285                 The trends are the same, they are
  8       just a little bit better.
  9  4286                 COMMISSIONER WYLIE:  But it would be
 10       probably good for the record to examine just how a
 11       little bit is.
 12  4287                 In those two sets of projections your
 13       first line is 2001-2002, so that would be a mixture.
 14  4288                 Do you have the projections with you
 15       now, the 12th of March ones and the 3rd of May ones,
 16       the ones you just filed?
 17  4289                 We of course have confidentially the
 18       actuals for 2001 by now with a PBIT or -- yes, PBIT
 19       because there is interest in that period, which is
 20       about the same or just 1 per cent higher than 2002.
 21  4290                 Now, you have 2001-2002 as year one. 
 22       I suspect I would call that a mixture of actual.  Year
 23       one will actually be 2002-2003, which is year two, not
 24       that it matters a lot.  You see, those projections,
 25       your first year in the new term will end in 2003, so it


  1       is not year one really.
  2  4291                 You would agree that the first year
  3       2001-2002 is a combination of actual and prediction to
  4       August.  Correct?
  5  4292                 MR. JOHNSTON:  Yes.  I believe in the
  6       projections that we filed recently, the May
  7       projections, that year one -- correct me, Rehaz, here,
  8       but is year one based on the actual fiscal 2001
  9       results?
 10  4293                 MR. SUBDAR:  Correct, yes.  We have
 11       upgraded them.
 12  4294                 COMMISSIONER WYLIE:  Well, in part,
 13       and in part projections.  Correct?
 14  4295                 MR. JOHNSTON:  In part, okay.
 15  4296                 COMMISSIONER WYLIE:  Because it is
 16       the end of the year, the added year to your term.
 17  4297                 MR. SUBDAR:  Correct.
 18  4298                 COMMISSIONER WYLIE:  The first
 19       year is what you called year two of the projections
 20       would be --
 21  4299                 MR. SUBDAR:  Yes.  This year is 2001. 
 22       Year one is August 31st.
 23  4300                 To keep it consistent with what we
 24       initially submitted in the original application under
 25       section 6, the year one was 2001-2002 and we kept that


  1       consistent with this new one.
  2  4301                 COMMISSIONER WYLIE:  Okay.
  3  4302                 MR. SUBDAR:  So this year one is
  4       comparable to the original submission we did under
  5       section 6.
  6  4303                 COMMISSIONER WYLIE:  I am just trying
  7       to be sure that we don't talk about actuals when we are
  8       talking about projections.
  9  4304                 So you agree that 2001-2002 is a
 10       mixture of actuals and projections?
 11  4305                 MR. SUBDAR:  We based that based on
 12       our actual numbers of 2001.
 13  4306                 COMMISSIONER WYLIE:  Okay.  And not
 14       by looking at your actuals to date, to May.
 15  4307                 MR. SUBDAR:  No.
 16  4308                 COMMISSIONER WYLIE:  Because that
 17       year will end in August.  You run to an August
 18       broadcast year?
 19  4309                 MR. SUBDAR:  Yes.
 20  4310                 COMMISSIONER WYLIE:  Yes, okay.  So
 21       now to put this in context, we will use the year one,
 22       year two, year three, because it will be easier.
 23  4311                 MR. SUBDAR:  Correct.
 24  4312                 COMMISSIONER WYLIE:  The difference
 25       between the March and the May revision in revenue, by


  1       my calculation, increases by 11.5 per cent in year one
  2       to 40.8 per cent in year seven.
  3       --- Pause
  4  4313                 COMMISSIONER WYLIE:  Anyway, you can
  5       take my word for it for the moment and do the
  6       calculations.
  7  4314                 I simply took -- if you look at year
  8       seven, your projection in March was $10 million and it
  9       is $15.4 million in year seven in revenues.
 10  4315                 MR. JOHNSTON:  It was $10.9 million
 11       in March.
 12  4316                 COMMISSIONER WYLIE:  That's right,
 13       $10.9 million.
 14  4317                 MR. JOHNSTON:  And you are correct,
 15       $15.4 million now.
 16  4318                 COMMISSIONER WYLIE:  Just so we are
 17       looking at the same pages.
 18  4319                 MR. SUBDAR:  I would just like to
 19       make --
 20  4320                 COMMISSIONER WYLIE:  The result of
 21       that of course is a profit, a PBIT in the first year
 22       but then there is no interest so we will call it profit
 23       before taxes, which is 35 per cent in 2001, 34 per cent
 24       in 2002, 28.3 per cent in year three, 27.8 per cent in
 25       year five and 26.7 per cent in year seven.


  1  4321                 MR. SUBDAR:  Yes, correct.
  2  4322                 COMMISSIONER WYLIE:  I did a simple
  3       calculation of taking the estimated or projected, which
  4       compares to, in March, 18.2 per cent in year one,
  5       16.3 per cent in year three, 13 per cent in year five
  6       instead of 27.8 per cent, and 10.1 per cent in year
  7       seven compared to the revision 26.7 per cent.
  8  4323                 MR. SUBDAR:  Yes.  I would like to
  9       make a comment, if I may, please.
 10  4324                 On the Schedule 1d, that schedule was
 11       based on an annual forecast revision on the assumption
 12       that there is a zero per cent growth in advertising
 13       revenue.
 14  4325                 I have to refer back to why this was
 15       done with respect to the what the question was.
 16  4326                 COMMISSIONER WYLIE:  Yes.  At the
 17       moment I just want to put the context financially so
 18       that it forms a basis for our discussions about
 19       answering the issues and the concerns.
 20  4327                 MR. SUBDAR:  Okay.
 21  4328                 COMMISSIONER WYLIE:  Also, we can
 22       look at how this has increased.
 23  4329                 Now, this is great of course, it is
 24       looking better every time, on the fourth time.
 25  4330                 I don't know what you mean by -- oh,


  1       I see.  You have a Schedule 1d.  I call this 6.1, but
  2       that is the same thing.  The March ones are not
  3       identified.  But it is clear that we are looking at the
  4       same thing.
  5  4331                 So if I look at your revision, for
  6       example, I see that you have factored in what you are
  7       prepared to accept in CPE.  If I do the calculation it
  8       comes exactly to 17 per cent -- 16 per cent in years
  9       two, one, three, 17 per cent in year four, going by
 10       one per cent, 18 per cent in year five, 19 per cent in
 11       year six and 20 per cent in year seven.
 12  4332                 MR. SUBDAR:  Correct.
 13  4333                 COMMISSIONER WYLIE:  That
 14       nevertheless gives us the profit before taxes that I
 15       just read into the record.  Right?  Even though there
 16       is obviously a large increase in the expenditures
 17       on the Canadian content by virtue of the fact that
 18       the revenue is much higher and you apply 16 per cent
 19       and then 17 per cent, 18 per cent, 19 per cent,
 20       20 per cent.
 21  4334                 MR. DI FELICE:  If I may, just with
 22       respect to the numbers we are comparing, I believe we
 23       are taking the numbers that you have cited just
 24       recently, the raw numbers on gross revenues from
 25       Schedule 1d to our March 12th supplementary


  1       information.
  2  4335                 That schedule wasn't an update of our
  3       projections.  What it was was a schedule responding to
  4       a particular question indicating that we should make an
  5       assumption that Telelatino's -- what were the
  6       consequences of a denial of Telelatino's proposal to
  7       broadcast a minimum of 75 per cent Italian and Spanish
  8       language programs and a maximum of 25 per cent English
  9       or French-language ethnic programs.
 10  4336                 That schedule was prepared as part of
 11       the response and it was described as a schedule
 12       forecast based on zero advertising sales growth as
 13       opposed to the average 5 per cent growth originally
 14       forecast.  That was --
 15  4337                 COMMISSIONER WYLIE:  But it is
 16       nevertheless projections which underlaid or supported
 17       your response to questions by the Commission of any
 18       improvement in Canadian content, et cetera.  I suspect
 19       that May is simply your revised view based on what is
 20       happening at Telelatino of what your revenues will be
 21       for the seven years.  Wouldn't that be fair?
 22  4338                 MR. DI FELICE:  Actually I think I am
 23       questioning that assumption, because I think these were
 24       prepared in response to a question saying theoretically
 25       what if we changed one of the parameters, what are the


  1       potential consequences on your revised financials and
  2       this was the potential consequence.
  3  4339                 COMMISSIONER WYLIE:  Mr. Di Felice,
  4       if I had done this exercise using the January 1
  5       projections the difference would have been far greater. 
  6       Isn't that correct?
  7  4340                 MR. DI FELICE:  I'm not sure, but
  8       what I am suggesting is that --
  9  4341                 COMMISSIONER WYLIE:  Yes.  Take my
 10       word for it.
 11  4342                 MR. DI FELICE:  -- the numbers that
 12       we are comparing -- I think Rehaz will be able to
 13       indicate --
 14  4343                 MR. SUBDAR:  If I may, the difference
 15       would have been less because in our initial projection
 16       we had factored in a growth percentage.
 17  4344                 This specific schedule assumes a
 18       zero per cent growth in advertising revenue, so
 19       advertising revenue is flat all across the seven years. 
 20       So I think what we are trying to say is a proper
 21       comparison would the one that we just filed compared to
 22       our initial projection when we initially submitted it
 23       in January of 2001.
 24  4345                 MR. DI FELICE:  And the one that was
 25       most recently filed was an update not of the


  1       Schedule 1d to the March 12th response, but an update
  2       to the last filed revised statements, which were --
  3  4346                 COMMISSIONER WYLIE:  So the point you
  4       are making is --
  5  4347                 MR. DI FELICE:  The original schedule
  6       in the original application.
  7  4348                 COMMISSIONER WYLIE:  -- the
  8       comparison should have been made from the 19th of
  9       January 2001 and May?
 10  4349                 MR. DI FELICE:  Right.  Correct.
 11  4350                 COMMISSIONER WYLIE:  Your point is
 12       that because you were not factoring these other
 13       assumptions the difference would have been less.
 14  4351                 But you would agree that the numbers
 15       are higher?
 16  4352                 MR. SUBDAR:  Yes.  I can walk you
 17       through the changes.
 18  4353                 COMMISSIONER WYLIE:  Well, the
 19       revenue is higher -- yes, the revenue is higher in
 20       large part because there are a greater number of
 21       subscribers, which I suspect that -- I take your point
 22       about some aspects of comparing March 2001 and May
 23       2002, but not subscriber projections.
 24  4354                 Subscriber projections are what they
 25       were then and what they are now based on reality.  I


  1       would like to know where the increase comes from in
  2       subscribers which then yields more revenue.  It is an
  3       increase of -- I again was using the March numbers, but
  4       it is certainly an increase in subscribers.
  5  4355                 MR. DI FELICE:  Yes.  When it comes
  6       to subscriber revenues I believe there might not have
  7       been a change between the originally filed numbers and
  8       the Schedule 1d in March on subscriber revenues.  So I
  9       think it would be fair to compare numbers other than
 10       the advertising revenue numbers which were specifically
 11       generated on the assumptions that we were asked to
 12       generate them on.
 13  4356                 COMMISSIONER WYLIE:  There is some
 14       increase between -- do you have January handy, the
 15       first 6.1 that you want me to go back to?
 16  4357                 MR. SUBDAR:  I can read the numbers.
 17  4358                 Year one for discretionary service it
 18       was 3574, year two 3681, year three 3792, year four
 19       3792, all across to year seven.  In the Schedule 1d the
 20       number is just not rounded off but it is the same,
 21       3573, 3976, 3681, 3792, 3792, 3792 all the way across
 22       to year seven.  So in terms of discretionary service
 23       cable revenue, it is the same, there are no changes in
 24       the numbers from January 19, 2001 and from the March
 25       numbers here.


  1  4359                 COMMISSIONER WYLIE:  Perhaps then if
  2       you want to make the comparison between January 2001
  3       and 3 May, since I haven't read the changes in your
  4       assumptions, what is the increase caused by?
  5  4360                 MR. SUBDAR:  Yes.  We have revised to
  6       include both the changes that we projected based on our
  7       actual numbers that took place in 2001.  Most
  8       specifically, in the last six months of 2001 we felt
  9       that we could reasonably revise our forecast for the
 10       next seven years because we have an anticipated revenue
 11       on Bell ExpressVU which resumed paying TLN in January
 12       of 2001.
 13  4361                 So when we prepared these numbers in
 14       December of 2000 that we submitted in January 2001, we
 15       never had any revenue from Bell ExpressVu.  They only
 16       started paying us in January 2001.  At that time it is
 17       important to note that TLN was carried "a la carte" on
 18       Bell ExpressVU.
 19  4362                 So as a result of that and the change
 20       in status that we have taking place since January 2002
 21       which now TLN is carried in a tier, we felt that the
 22       changes should be reflected in the projected forecast. 
 23       That is why we have made the changes.
 24  4363                 So going back to the number of subs,
 25       we have assumed that we shall end up with 175,000 subs


  1       as of the end of 2002 and it will grow to about 250,000
  2       by the year seven.  That will translate into an average
  3       subs growth rate of 6.2 per cent, an average growth
  4       rate of revenue of 16.7 per cent.  We believe that is
  5       realistic.  That is direct-to-home service.
  6  4364                 MR. DI FELICE:  Direct-to-home subs
  7       we are talking about.
  8  4365                 COMMISSIONER WYLIE:  I take your
  9       point that the 12 March financial projections were
 10       based on certain assumptions.  The January ones,
 11       though, are based on similar assumptions, not factoring
 12       in what the Commission wanted you to illustrate.
 13  4366                 MR. DI FELICE:  The major difference
 14       between those two was that the original projections
 15       were our projections and then the second set --
 16  4367                 COMMISSIONER WYLIE:  And so are the
 17       May ones.
 18  4368                 MR. DI FELICE:  The May ones are as
 19       well.  Schedule 1d, though, assumed zero per cent
 20       advertising growth and so the only significant change
 21       in assumptions on Schedule 1d was that major
 22       assumption:  What would happen if you had zero per cent
 23       advertising growth?  That would also impact our
 24       Canadian program expenditures, but that was the
 25       major change.


  1  4369                 So, for instance, now that you have
  2       asked a question about sub revenues, I think Rehaz has
  3       pointed out that sub revenues, though, we didn't change
  4       on Schedule 1d because it was specially prepared with
  5       respect to one critical assumption being made.  That
  6       wouldn't be the assumption we would make if we weren't
  7       asked to make that.
  8  4370                 COMMISSIONER WYLIE:  Do you have a
  9       problem, however, with the profit before taxes?  By the
 10       time we get into year one of the next term we don't
 11       have interest.  So do you have a problem with the PBTs
 12       that I read out for 2001, 2002, 2004, 2006 and year
 13       seven, which range from 35 per cent in 2001 to 26.7 per
 14       cent in year seven, factoring in your acceptance of
 15       starting to have 17 per cent CPE in year four.
 16  4371                 MR. SUBDAR:  Correct.
 17  4372                 COMMISSIONER WYLIE:  Those are
 18       correct.  Okay.
 19  4373                 MR. SUBDAR:  That translates into an
 20       average of 28 per cent.
 21  4374                 COMMISSIONER WYLIE:  I am just trying
 22       to -- it is a very old filing and a lot has happened in
 23       between, control has changed and certain matters were
 24       raised in the decision, so I am just trying to
 25       contextualize.  I appreciate your explanation of the


  1       perhaps not helpful comparison between the March
  2       projections since they were prepared for special
  3       reasons.
  4  4375                 So that sets up at least the context
  5       we are discussing.
  6  4376                 I would like to now proceed to look
  7       at your programming.
  8  4377                 Oh, also I want to confirm that I
  9       have a revised schedule that was filed in the last
 10       10 days or two weeks, or very recently, and that would
 11       be what is currently on Telelatino?
 12  4378                 MR. DI FELICE:  Yes.  Commission
 13       staff asked us to refile based on the current schedule
 14       and I believe that is probably last weeks' schedule.
 15  4379                 COMMISSIONER WYLIE:  At the top of
 16       the sheet I have, to make sure we have the same one, is
 17       written "CRTC Schedule B, Block Program Schedule". 
 18       Correct?  Okay.
 19  4380                 So first, I noticed in your
 20       presentation that you acknowledge at the end of your
 21       presentation that you support wholeheartedly the new
 22       Ethnic Broadcasting Policy.
 23  4381                 So for the record, we are in
 24       agreement that there is a change now where your
 25       commitments are for 85 per cent third language


  1       programming and a 15 per cent English programming
  2       directed to the communities you serve and the service
  3       is 100 per cent ethnic.
  4  4382                 MR. DI FELICE:  I think the one
  5       clarification on that is that I think our current
  6       license limits the 15 per cent to a combination of
  7       former Categories C and D.
  8  4383                 COMMISSIONER WYLIE:  Yes, but now --
  9       yes.  Which ends up believe, I believe in English
 10       language.
 11  4384                 MR. DI FELICE:  Either what we call
 12       mixed language programming or unilingual English or
 13       French-language ethnic programming.
 14  4385                 COMMISSIONER WYLIE:  Yes.  So now
 15       what you would accept is 100 per cent ethnic divided
 16       55/45 between Italian and Spanish, or Hispanic
 17       communities.  I know that you are asking for a change
 18       to 75 per cent in third language, but currently under
 19       the Ethnic Broadcasting Policy you would be at 85 per
 20       cent third language and 25 per cent C and D.  Right?
 21  4386                 MR. DI FELICE:  Yes.  We just
 22       referred to --
 23  4387                 COMMISSIONER WYLIE:  What you are
 24       proposing then is 75 per cent -- 100 per cent ethnic,
 25       75 per cent third language and 25 per cent non-third


  1       language, or English-language directed to the
  2       communities you serve and your programming would be
  3       directed to the Italian and Hispanic communities in a
  4       ratio of 55/45.  I read that in part from your Nature
  5       of Service, except that we would have to agree to
  6       reduce the amount of third language programming by
  7       10 per cent and increase the English-language or mixed
  8       programming to 15 per cent.  Is that correct?
  9  4388                 MR. DI FELICE:  Yes.  We would
 10       increase the --
 11  4389                 MR. JOHNSTON:  Could I just huddle
 12       for a second?
 13  4390                 COMMISSIONER WYLIE:  Yes.
 14       --- Pause
 15  4391                 MR. DI FELICE:  Just in terms of the
 16       actual wording of the conditions of license, I believe
 17       the only two changes we are asking to make are the
 18       change to non-third language programming and the
 19       consequent change to third language programming.  So
 20       the 85 per cent going down to 75 per cent and the
 21       consequent increase in the non-third language
 22       programming and the introduction of the Canadian
 23       content during the evening broadcast period at
 24       15 per cent level.
 25  4392                 Those are the only two specific


  1       changes to the existing conditions of license.
  2  4393                 COMMISSIONER WYLIE:  Yes.  I was
  3       trying to confirm that you understand that under the
  4       ethnic policy the conditions of license look different. 
  5       We don't talk about Type A and Type C and D any more.
  6  4394                 MR. DI FELICE:  Understood.
  7  4395                 COMMISSIONER WYLIE:  If we were to
  8       allow an increase from 15 per cent to 25 per cent
  9       non-third language programming, how do you propose to
 10       allocate it as between Italian and Spanish groups or
 11       speakers?
 12  4396                 MR. DI FELICE:  Well, generally we
 13       have striven to achieve a balance.  I don't think there
 14       is a specific allocation as to that 10 per cent.  As
 15       you can see from --
 16  4397                 COMMISSIONER WYLIE:  My question
 17       now would be the 25 per cent, if we allowed the
 18       25 per cent.
 19  4398                 MR. DI FELICE:  Right.  Well,
 20       generally speaking we are achieving a balance between
 21       Spanish and Italian.  With respect to the Canadian
 22       content programming that we produce, we generally
 23       mirror what we are doing on the Spanish side with what
 24       we are doing on the Italian side.
 25  4399                 With respect to the actual type of


  1       programming that we would do, we would continue to do
  2       what we have already commenced doing, which is sort of
  3       a two-pronged approach, both our community level
  4       programming, our every day community segments, our
  5       community spotlight programming, and then the more
  6       ambitious documentary programming, our "Latin Heritage
  7       Series" type programming.
  8  4400                 Both of those two branches are
  9       generally equally balanced.  Not precisely balanced,
 10       but generally we maintain a balance between Italian and
 11       Spanish with respect to all parts of the service.
 12  4401                 We are in a challenging position
 13       because of the very nature of Telelatino's mandate.  We
 14       are a shared channel and so in some respects we can
 15       never be fully satisfying to anyone who is looking only
 16       for Italian programming or Italian-oriented
 17       programming, or fully satisfying to anyone who is
 18       looking for only Spanish or Hispanic programming.
 19  4402                 So as a result, this is one of the
 20       sensitivities that we are very attentive to.
 21  4403                 COMMISSIONER WYLIE:  First let's
 22       finish the comment you are making about how you would
 23       split the increased -- not only the increased 10 per
 24       cent, but the whole 25 per cent as between the two
 25       communities.


  1  4404                 You have made various comments about
  2       the difference between the Hispanic communities and the
  3       Italian communities and the argument for increasing the
  4       English-language programming is what is often called a
  5       generational difference between the two, et cetera.  I
  6       see, for example, in your supplementary brief at
  7       pages 4 and 5 where you discuss the landscape and the
  8       demographic challenge.
  9  4405                 I am wondering whether in light of
 10       this you wouldn't choose to have more Spanish-language
 11       programming in third language and more Italian-language
 12       programming in English in dividing that 25 per cent and
 13       then perhaps satisfy more the needs of the Hispanic
 14       community, which I gather from your comments is not as
 15       mature chronologically whereas you make a point about
 16       the Italian community not having increased by
 17       immigration for a number of years in any substantial
 18       way whereas the Spanish-speaking community has.
 19  4406                 MR. MONTESANO:  Yes.  I think the
 20       overall strategy speaks to a sensibility that we find
 21       in most immigrant communities.  I mean, I can speak
 22       personally to this.  My parents came to this country in
 23       1965.  I was born in 1966.  I was raised in a
 24       predominantly -- probably 100 per cent Italian-speaking
 25       home, yet went to school every day and spoke English.


  1  4407                 So I think even though there are
  2       newer immigrants on the Spanish side, I think this
  3       strategy embraces the reality of the new family in
  4       Canada, which is a multilingual reality.  I think we
  5       feel very confident that with our 75 per cent we can
  6       continue to provide the high quality international
  7       programming and the Spanish-language and
  8       Italian-language Canadian content programming that
  9       we do.
 10  4408                 But there is something with the way
 11       our communities have embraced these community segments,
 12       these documentaries and series that we have been doing,
 13       the "Hispanic Canadians", which is one of the titles
 14       that you saw in that video presentation.  When you see
 15       this documentary -- it will be on Telelatino hopefully
 16       in the fall.  We are just finishing the packaging of
 17       that -- it is in both languages and we ask people
 18       specifically to speak in whatever language they feel
 19       comfortable.  There are people in that video who have
 20       been in this country for decades and there are people
 21       who have been in the country for months and they are
 22       all telling similar stories about what it -- well, not
 23       similar stories, I guess diverse stories about their
 24       experience in this country.
 25  4409                 I think we really are trying to cast


  1       a net that really can encompass that complexity.  So
  2       this is really what that increase is about.  It is kind
  3       of venturing into that territory where you are going
  4       beyond -- where you are kind of embracing the family
  5       experience as opposed to just a number you would read
  6       on a piece of paper.
  7  4410                 COMMISSIONER WYLIE:  So when you say
  8       in two languages, you mean Italian and English or
  9       Spanish and English?
 10  4411                 MR. MONTESANO:  Yes.  Yes.
 11  4412                 COMMISSIONER WYLIE:  And you don't
 12       see any need, based on demographics and how recent some
 13       communities are compared to others, to divide this
 14       25 per cent, if it were allowed, more towards the
 15       Italian community and increasing the third-language
 16       Spanish programming based on the more recent
 17       immigration?
 18  4413                 MR. MONTESANO:  That might be part of
 19       the strategy.  I think what this will allow us, though,
 20       is the flexibility to do both.  Because I think what
 21       people are asking -- I think the reason why much of
 22       this programming has really touched a nerve is because
 23       it doesn't -- it allows different generations to get in
 24       front of the TV and share an experience together.
 25  4414                 I think when younger people --


  1       younger Hispanics, let's use the example of
  2       Hispanics -- are hearing their story told in English as
  3       well as Spanish -- because again, we are not trying to
  4       exclude one from the other.  I think sometimes its
  5       position is "Well, you want to do more English which
  6       means you want to abandon your core communities."  I
  7       mean, I think that doesn't speak to, I think, the
  8       success of the strategy and how people have gone out of
  9       their on both sides to say -
 10  4415                 I think the most telling thing is
 11       always we often go out of our way to say to people, you
 12       know, they say "Should we speak Spanish or Italian"
 13       because they understand that sometimes we are trying to
 14       tell these stories to all of Canada.  It is a really
 15       important part of our development strategy, is don't
 16       just tell stories to your own community.  These stories
 17       are relevant enough to the country, important enough to
 18       the country they should be shared with all.
 19  4416                 We don't tell them they have to speak
 20       in English as a result of that because we go out of our
 21       way to subtitle.  Anyone who is speaking in the third
 22       language is in regards to this type of strategy.  But I
 23       think that 15 per cent to 25 per cent just allows us
 24       that extra bit of flexibility to not have to worry
 25       about overcoming that 15 per cent and not being in


  1       compliance.
  2  4417                 COMMISSIONER WYLIE:  You wouldn't
  3       want, from what I hear, any particular restriction in
  4       meeting your 55/45 how you allocate that 25 per cent as
  5       between the two communities.  You would want the
  6       flexibility to respond yourself to the communities?
  7  4418                 MR. DI FELICE:  I think we would want
  8       that flexibility and I think there is good reason to
  9       have it.  I think the demographic statistics that you
 10       referred to quite correctly refers to obviously the
 11       maturity of the Italian-Canadian population and the
 12       relative newness of the Hispanic-Canadian population.
 13  4419                 That being said, however, I think
 14       those same statistics, that same census, indicated that
 15       in both cases a majority responded that they live their
 16       lives bilingually, they live their lives mixed dual
 17       language and in both cases a majority indicated that
 18       their home language was not of a third language.
 19  4420                 So that being said, I think there is
 20       an appreciation for programming on both sides, but you
 21       are correct that the one population has been here and
 22       been in Canada longer and perhaps has more people of
 23       second, third and fourth generations,
 24  4421                 But, as John has said, the response
 25       to unilingual and bilingual programming, whether in


  1       English or in mixed language on the Hispanic side has
  2       been as positive as it has been on the Italian side.
  3  4422                 Many of the intervenors in this
  4       matter were from the Hispanic communities and went out
  5       of their way to praise our efforts at making our
  6       programming accessible.  It has engendered a level of
  7       pride in the community that I think unilingual
  8       programming doesn't necessarily always do.  So I think
  9       that for reasons of that kind that flexibility I think
 10       is appropriate.
 11  4423                 I think our performance as well has
 12       demonstrated an attentiveness and a responsibility to
 13       the type of concern that I think you are expressing by
 14       seeking to define whether or not there should be strict
 15       limitations on the split between our service to English
 16       and our service to Italian and Spanish communities.
 17  4424                 COMMISSIONER WYLIE:  You speak of
 18       support and of course I spoke of complaints, that is
 19       usually how these processes develop.
 20  4425                 We have had complaints from the
 21       Spanish community about service and they were
 22       officially filed as interventions, some were sent to
 23       the Commission as form letters and the Commission has
 24       asked Telelatino to respond to them.  As far as I know
 25       there was no response.


  1  4426                 I am wondering how are complaints
  2       handled if you say you are trying to meet the needs of
  3       the community?  How are complaints handled, number one?
  4  4427                 Why is there no response when there
  5       is a complaint?  The Commission asked for a response?
  6  4428                 What is or what are your feedback
  7       mechanisms at the moment to respond to the Spanish
  8       community's expression of concern about service that
  9       they see diminishing in value to their particular
 10       community?
 11  4429                 That was picked up in the transfer
 12       decision at paragraph 17 and the Commission said that
 13       it was:
 14                              "...encouraging TLN's management
 15                              to maintain and strengthen its
 16                              ties with the communities to
 17                              ensure that the service and its
 18                              programming are fully responsive
 19                              to their needs."  (As read)
 20  4430                 So number one, what is the process
 21       for handling complaints and what are the mechanisms in
 22       place to achieve this feedback that I just read from
 23       paragraph 17 of the transfer decision?
 24  4431                 MR. DI FELICE:  Perhaps I can address
 25       the feedback mechanisms portion of the question and


  1       John will address the complaints handling procedures
  2       that we do.
  3  4432                 In terms of complaints feedback --
  4       and I do want to step back for a moment and acknowledge
  5       that although there were letters filed in intervention
  6       on this matter and in the previous matter, as you quite
  7       rightly acknowledged in some cases form letters from
  8       several intervenors, they were extremely outnumbered by
  9       letters from all sectors of the Hispanic society in
 10       Canada, including culture representatives, individuals,
 11       independent producers, community representatives,
 12       community social groups and consulates and foreign
 13       cultural representatives as well.
 14  4433                 So I would want to make that comment
 15       in relation to the impression that there are complaints
 16       coming out of the Hispanic community on an ongoing
 17       basis.  I think that there is much more praise, and
 18       certainly in recent years much more praise for
 19       Telelatino and the letters have gone out of their way,
 20       I think several -- many of the Hispanic community
 21       intervention letters in this matter have pointed out
 22       the improvements at Telelatino and referred to the
 23       concept of improvements in our Spanish programming
 24       schedule, our selection, our scheduling and our
 25       promotion of Spanish programming.


  1  4434                 Having said that, feedback
  2       mechanisms, both formal and informal, are things that
  3       we do.
  4  4435                 Formally, we have undertaken focus
  5       groups with Italian and Spanish speakers.  We have also
  6       undertaken, approximately 18 months ago, a major
  7       telephone survey of 600 Italian speakers and Spanish
  8       speakers in both Toronto and Montreal.  It was an
  9       extensive survey looking into audience tastes,
 10       preferences, demand for new channels, demand for new
 11       programming, and generally exploring their consumption
 12       of ethnic media and their reactions to some of the
 13       strategies that were demonstrated in our demo reel and
 14       our opening statement.
 15  4436                 Those are the kinds of formal
 16       feedback mechanisms that we have pursued and will
 17       continue to pursue.
 18  4437                 Informally, the very nature of our
 19       channel is that we have constant contact with community
 20       groups and representatives.  The "Appunti" and
 21       "Apuntes" and "Informese" and "Nota Bene" segments that
 22       we talk about in social calendars are all built with
 23       community involvement and they provide all the content
 24       and they provide all the information.
 25  4438                 So on a daily basis Agatha Pezzi or


  1       her staff, both on the Italian and Spanish side, are
  2       talking to people in the community and we have really
  3       become a beacon for anybody who is involved in any
  4       fund-raiser, any community event, any dinner, any
  5       social group gathering, any genealogy work and people
  6       trying to find their own relatives are putting their
  7       messages on Telelatino through our calendar service,
  8       through our 3,000 per week e-mail newsletters that we
  9       have set up
 10  4439                 So I think the informal mechanisms
 11       are part and parcel of our entire strategy, our
 12       programming strategy, which is to take the community
 13       and put it on camera and take their events and
 14       publicize them, both pre-event and post-event.
 15  4440                 So I think I would answer the
 16       question in that way.
 17  4441                 COMMISSIONER WYLIE:  Do you have an
 18       answer as to how you handle complaints, because there
 19       have been some expressed and normally the Commission --
 20       you are not a member of the CSBC so it comes directly
 21       to us?
 22  4442                 MR. MONTESANO:  We are.
 23  4443                 COMMISSIONER WYLIE:  You are?
 24  4444                 MR. MONTESANO:  We are a member, yes.
 25  4445                 COMMISSIONER WYLIE:  And in some


  1       cases these were interventions I guess.
  2  4446                 But the form letters, were you a
  3       member of the CSBC at that time?
  4  4447                 MR. DI FELICE:  I believe it was only
  5       recently, in the last fiscal year, maybe the last six
  6       months.
  7  4448                 COMMISSIONER WYLIE:  Ah, so you were
  8       not.  So they came directly to the Commission.
  9  4449                 But whether they come from us or from
 10       the CSBC, how do you handle complaints?
 11  4450                 MR. MONTESANO:  I can take that.
 12  4451                 The first wave is generally receiving
 13       phone calls.  We don't receive a lot of complaints, but
 14       we do have dedicated people at the station who take
 15       calls from community members on an ongoing basis, both
 16       positive and oftentimes people calling in with
 17       concerns.
 18  4452                 We are not sure what the reality is
 19       at other TV stations.  There is a real passionate
 20       relationship with the station.  People do not like to
 21       leave their names on machines at Telelatino, so we have
 22       really gone out of our way again to ensure that there
 23       is community relations people that are on the phone
 24       taking in calls, writing down what people are saying.
 25  4453                 We also use that as an opportunity to


  1       not only write down what people are saying, but also to
  2       ask them questions about what they would like to see on
  3       the station.  In the last six months we have initiated
  4       a monthly kind of informal meeting of some managers and
  5       some staff who are taking in these calls to just go
  6       through the ongoing reactions to what we do on the
  7       channel, for one.
  8  4454                 Secondly, when we do get a formal
  9       complaint from CSBC we go through -- we usually bring
 10       this up at management meetings, kind of review the
 11       concerns and put together a formal reply, which we
 12       recently did on a matter that was not specific to the
 13       Hispanic community but there was a formal procedure in
 14       place in terms of how we meet on a weekly basis to kind
 15       of respond to any of those concerns.
 16  4455                 Our overall strategy has been not to
 17       kind of -- not to kind of passively wait for complaints
 18       to take place.  When they do, if they are in the form
 19       of a letter we tend to reply in the form of a letter. 
 20       We often get people writing in asking us questions and
 21       stating some concerns through web sites, especially on
 22       the Hispanic side.
 23  4456                 The Hispanic side is generally a bit
 24       younger, a bit more kind of media-computer savvy, very
 25       plugged in, so they are writing in e-mails.  We have


  1       people who actually go through those e-mails on an
  2       ongoing basis and reply whenever possible to those
  3       types of questions on an ongoing basis.  Whenever there
  4       is something that kind of steps beyond a quick
  5       response, those are passed on to us as well and that
  6       tends to go to a manager and a manager tends to kind of
  7       get involved and get back to people directly.
  8  4457                 The other thing we have done in terms
  9       of trying to encourage that ongoing reaction is we now
 10       have a three-minute program that we have put in at the
 11       back end of our telenovela, which is one of the most
 12       popular things that Telelatino puts on its station, and
 13       what this is is the show "Usted Decide" and a show that
 14       actually encourages people to send in their responses
 15       on an issue of the week.  As well, it also encourages
 16       them to give us feedback.
 17  4458                 So those are also monitored on an
 18       ongoing basis and we specifically put that into a time
 19       slot evening broadcast where we knew a lot of people,
 20       tens of thousands of people would be watching the
 21       program.  That has turned out to be a fantastic success
 22       and that is a community member who is hosting that show
 23       for us.
 24  4459                 So it really depends on how people
 25       raise the concern.  We usually respond in -- if it is a


  1       letter, we will respond in a letter, if it is something
  2       through CSBC we will respond through the CSBC and
  3       onward.
  4  4460                 COMMISSIONER WYLIE:  I was dyslexic. 
  5       I should have said CBSC and now I have you corrupted.
  6  4461                 It remains that we have complaints on
  7       our files about your service to the Spanish community
  8       and after the break I will want to go through the
  9       schedule with you.
 10  4462                 I have highlighted on the block
 11       schedule that you have provided in the last 10 days
 12       what is identified as Spanish programming and I will
 13       raise with you the fact that there is no Spanish
 14       programming from 7:30 to midnight during the weekdays,
 15       or on the weekends, and that the Spanish programming,
 16       never mind Canadian or foreign, there is none, and that
 17       the Spanish programming is very early in the morning
 18       and during the night and ask you -- certainly during
 19       the week days there is more on Saturday, none on Sunday
 20       until after midnight.
 21  4463                 I will ask you to identify what these
 22       programs are and to what extent that serves the
 23       Hispanic community to the level of 45 per cent if you
 24       think that scheduling has any importance and if you
 25       were a Spanish speaker whether no Spanish programming


  1       between 7:30 and midnight is 45 per cent service of
  2       your specialty.
  3  4464                 Thank you, Mr. Chairman.
  4  4465                 THE CHAIRPERSON:  So we will start
  5       with your answer in 10 minutes.
  6       --- Upon recessing at 1130 / Suspension à 1130
  7       --- Upon resuming at 1143 / Reprise à 1143
  8  4466                 THE CHAIRPERSON:  Order, please.  A
  9       l'ordre, s'il vous plaît.
 10  4467                 The answer?
 11  4468                 MR. DI FELICE:  In relation to
 12       Spanish-language programming and in particular its
 13       scheduling.
 14  4469                 First of all, as to the quantum, just
 15       as in introduction, the 45/55 split is in fact
 16       exceeded, has been exceeded certainly over recent years
 17       by Telelatino.  On average over the last six and
 18       12 months I believe that is closer to 50/50 our actual,
 19       so we are exceeding the 45 per cent minimum on the
 20       Spanish-directed program.  In many cases it actually
 21       exceeds 50 per cent, depending on what we are doing
 22       during the year.
 23  4470                 But as to scheduling, compared to
 24       historical schedules that I have looked at from years
 25       gone by and during the earlier years of the current


  1       license term, we have actually increased the amount of
  2       Spanish-language programming in the fixed schedule that
  3       you see here by half an hour Monday to Friday in the
  4       evening.
  5  4471                 In addition, we introduced this past
  6       year late-night programming after the 11 o'clock news
  7       also in Spanish on Monday and Tuesday.  Those are both
  8       Spanish-language shows.
  9  4472                 But the bulk of our activity on the
 10       nesting of Spanish-language programming within our
 11       schedule isn't actually apparent from the block
 12       schedule that we filed, which is actually very, very
 13       frequent and substantial and has been referred to by
 14       many of the intervenors.
 15  4473                 John I think can provide some of the
 16       details regarding the Spanish-language programming we
 17       actually do broadcast both during the evening broadcast
 18       period and in prime time.
 19  4474                 MR. MONTESANO:  Well, what doesn't
 20       appear in the block program schedule are the community
 21       segments that we do throughout the week.  These are
 22       interwoven throughout our international programs,
 23       generally about 90 seconds long.  They both include the
 24       "Nota Bene", "Informese", community event-type
 25       segments, plus the community calendar segments.  Those


  1       have been very successful because, again, they are
  2       running at peak viewing periods attached to programs
  3       that are widely popular.
  4  4475                 As well as that, what doesn't appear
  5       on this because much of our programming is special
  6       event-driven programming, particularly on the Spanish
  7       side.  What we have been doing over the last -- let me
  8       just give you an example of the types of specials.  We
  9       are talking two-three hour specials, these are not half
 10       hour programs, they are major international events from
 11       around the world that have appeared in prime time, in
 12       evening broadcasts and prime time throughout our
 13       schedule.
 14  4476                 They include the "El Premio ASCAP
 15       Music Awards" out of Miami, "Viña del mar" that is a
 16       24-hour music festival out of Chile and we broadcast
 17       one hour in late night throughout a week and then we
 18       put the three hour finale in prime time during a
 19       weekday.
 20  4477                 Currently we are in the midst of a
 21       four-week series of specials called "Latin Beauties
 22       Series".  Last night was Ms Venezuela -- last week, the
 23       week before was Ms Columbia, the week before that was
 24       Ms Mexico and next week is Mr. Venezuela, appearing
 25       Tuesday night, nine o'clock, prime time, and they


  1       include creative captioning.  We have been getting some
  2       wonderful media on that initiative and that is again a
  3       Spanish-language program.
  4  4478                 Last year we had programmed in our
  5       Saturday night slot, we had an international film slot
  6       that included half the films in Spanish, half the films
  7       in Italian language, all of them subtitled.
  8  4479                 Last summer we featured the "Copa
  9       America" throughout our programming, hours upon hours
 10       of Spanish-language play-by-play Copa America games
 11       including all the way up to the final.
 12  4480                 In a few weeks we are going to have
 13       the Latin Billboard Awards on Telelatino in prime time,
 14       again a three-hour special.
 15  4481                 In June we are going to be providing
 16       perhaps up to 75 games coverage of the World Cup, a
 17       preeminent international sporting event.  Probably
 18       about 95 per cent of those games are going to be in
 19       Spanish language.  In the first two weeks alone from
 20       seven o'clock to nine o'clock every day for two weeks
 21       there will be a Spanish language play-by-play game.
 22  4482                 So it is difficult to put that in a
 23       block program schedule because they kind of pop in and
 24       pop out and our attitude is always try to do something
 25       special on an ongoing basis and whenever we have an


  1       opportunity we include it.
  2  4483                 The other thing that we have done in
  3       terms of a programming shift to address some of these
  4       concerns was, we put our telenovelas back to back
  5       because what we have found through surveys was that a
  6       lot of our Spanish-language viewers who loved
  7       telenovelas were watching the Italian telenovela and a
  8       lot of our Italian-language viewers were watching
  9       Spanish telenovelas.  There was a crossover audience
 10       there.
 11  4484                 So we actually moved the news that
 12       used to split those two audiences after the telenovela
 13       and put those back to back so that we can have an
 14       extended telenovela audience that could flow more into
 15       prime time.
 16  4485                 COMMISSIONER WYLIE:  Those specials
 17       you mentioned that would be integrated into the
 18       schedule and presumably preempt the programming that is
 19       there, does that occur for Italian programming as well?
 20  4486                 MR. DI FELICE:  We do have various
 21       specials in Italian as well, but as John pointed out I
 22       think most of our special event programming happens to
 23       be Hispanic-oriented special event programming.
 24  4487                 What I would add as well is that we
 25       are always keeping in mind the balancing act that I


  1       referred to earlier, their expectations on both sides,
  2       on the Hispanic side and the Italian side.  The
  3       long-standing schedule, specialty scheduling of
  4       9:00 p.m. two hour programs in Italian, primarily from
  5       RAI in Italy, is an expectation among our viewers and
  6       our advertisers that is difficult to resist.
  7  4488                 We have taken the approach of
  8       periodically interrupting that flow and thereby
  9       introducing Spanish-language programming in prime time
 10       in the manner that John described.  I think that is the
 11       least disruptive because, of course, once again there
 12       is a tension.  Each time we do broadcast
 13       Spanish-language programming in a traditional Italian
 14       programming slot we get the opposite reaction that you
 15       are referring to, which is the Italian community
 16       commenting on the drastic increase in Spanish-language
 17       programming.  So it is a balancing act.
 18  4489                 COMMISSIONER WYLIE:  Does it remain,
 19       however, that other than the micro-programs which I
 20       will discuss with you next, that this schedule tells me
 21       that if I am a Spanish speaker on an ongoing basis I
 22       will not have the assurance or the scheduled assurance
 23       that I will have programming in Spanish between 7:30
 24       and midnight?
 25  4490                 MR. DI FELICE:  I think that in


  1       fact --
  2  4491                 COMMISSIONER WYLIE:  This schedule
  3       doesn't lie, in other words, that that is Italian block
  4       programming between that period and early morning and
  5       overnight is Spanish programming during the week and
  6       some afternoon as well?
  7  4492                 MR. DI FELICE:  This schedule is
  8       actually -- I mean, a good example of how the --
  9       there are two pages to this schedule, the block
 10       program schedule, the CRTC Schedule B, and then the
 11       accompanying more detailed TLN schedule that comes
 12       with it.
 13  4493                 For instance, on Tuesday, April 30th,
 14       in the week that this schedule represents, there is a
 15       special that is a Spanish-language special that is
 16       interrupting two hours of what is normally an Italian
 17       prime-time slot from 9:00 p.m. to 11:00 p.m. Tuesday,
 18       April 30th.
 19  4494                 So in terms of answering your
 20       question as to what Hispanic viewers can come to expect
 21       from TLN's evening broadcast period schedule or
 22       prime-time schedule, I think that in recent years they
 23       have actually come to expect that these specials are
 24       regular and are continuing.  I think there is a long
 25       list of specials that we referred to that comprise a


  1       large number of hours of Hispanic programming in
  2       prime time.
  3  4495                 COMMISSIONER WYLIE:  I would like to
  4       go back to these micro-programs which I was going to
  5       ask you how long, but I understand they are 90 seconds. 
  6       They would be in both Italian and Spanish and will
  7       presumably connect that as well to the Canadian
  8       content.
  9  4496                 You use them, you say, to Canadianize
 10       or contextualize the foreign programming.  How many of
 11       those would one normally see between 6:00 and midnight,
 12       of these 90 -- I guess they are like interstitials or
 13       they are inserted in reasonable spots in the
 14       programming.
 15  4497                 MR. MONTESANO:  Yes.
 16  4498                 COMMISSIONER WYLIE:  How many
 17       90-second ones would there be between 6:00 and
 18       midnight?
 19  4499                 Next, how many would be in Spanish,
 20       considering that it is mostly Italian programming?
 21  4500                 MR. MONTESANO:  Well, each week there
 22       are three -- the strategy is that they appear 18 times
 23       throughout our schedule.  From 6:00 to 12:00 three
 24       different types of Spanish-language interstitials
 25       appear in the schedule, using during the Spanish time. 


  1       They are "Usted Decide" which is the call-in show.
  2  4501                 COMMISSIONER WYLIE:  When there is no
  3       Spanish, then what happens?
  4  4502                 MR. MONTESANO:  That is why they
  5       appear --
  6  4503                 COMMISSIONER WYLIE:  Oh, between 6:00
  7       there is the news.
  8  4504                 MR. MONTESANO:  They appear from 6:00
  9       and 7:30, yes.
 10  4505                 COMMISSIONER WYLIE:  But from 7:30 on
 11       let's say?
 12  4506                 MR. MONTESANO:  From 7:30 on the
 13       Italian ones will appear, except for Monday and
 14       Tuesday.  These are pre-scheduled, titled programs that
 15       are cast in our telecasts every week and they are
 16       packaged in with programs.  So on Tuesday late-night
 17       you might get one because there is a Spanish show late
 18       night and Monday late night you might get one because
 19       they are kind of worked in and interwoven into the
 20       shows.
 21  4507                 But I can tell you that on average
 22       three -- I believe it is three to four appear between
 23       6:00 and 7:30, and then from 7:30 to 11:00 I think
 24       another three to four Italian language ones will
 25       appear.  That is generally how it works out.


  1  4508                 COMMISSIONER WYLIE:  But you are
  2       saying that there would be some, for example, at 2:00
  3       in the morning when there is Spanish content?
  4  4509                 MR. MONTESANO:  There is also that,
  5       yes.  They actually appear 18 times.  Every single one
  6       we do appears 18 times throughout the schedule, which
  7       is the benefit of these, because what they actually are
  8       is, as well as contextualizing our international
  9       programs, they actually are cameras out in the
 10       community so they are often promoting, reflecting, they
 11       are actually supporting initiatives that go on in the
 12       community.
 13  4510                 So the reason they are so successful,
 14       and people call us time and time again, it is because
 15       they want them to appear often throughout the schedule
 16       so people who are watching them in the morning can see
 17       them and they will see them again in the afternoon and
 18       they will see them again in the evening and it kind of
 19       reinforces either the promotion of an event or
 20       information that was gathered out of an event or some
 21       educational work that was done in the community, so
 22       they are kind of interstitials that run through our
 23       schedule often culturally driven.  That is the idea.
 24  4511                 They run generally three to four
 25       times during the Spanish -- the Spanish language ones


  1       run three to four times between 6:00 and 7:30 and the
  2       Italian ones run three to four times during the
  3       Italian evening.
  4  4512                 COMMISSIONER WYLIE:  So they are
  5       connected.  The language is connected to the language
  6       of the program?
  7  4513                 MR. MONTESANO:  Yes.
  8  4514                 COMMISSIONER WYLIE:  Do I understand
  9       correctly that they are a minute and a half each and
 10       they are calendar-like of information-like as to what
 11       is going on in the community?  There is no time in
 12       90 seconds to develop a program about how to understand
 13       the labour law in Canada to a new immigrant or this
 14       type of programming, or it is not a variety program
 15       either from the community?  They are more like a
 16       calendar, almost a text?
 17  4515                 MS PEZZI:  Well, actually on the
 18       Spanish side we have three different micro-segments or
 19       community segments.  There is the Apuntes, which is the
 20       daily calendar and it is basically a voice over with
 21       some graphics explaining to people -- basically a
 22       promotion vehicle for organizations that have to
 23       promote their upcoming events or book launches or
 24       fund-raisers and things like that.  So that runs.  That
 25       is Apuntes.  That is our daily calendar.


  1  4516                 We also have "Informese", which is
  2       more of a community segment.  That is where our cameras
  3       are going out into the community covering more events
  4       more of the time.  We found that the only way that we
  5       could use our limited resources to address the needs of
  6       the community to adhere to -- or to respond basically
  7       to the calls we get to come out and cover all the
  8       events that are happening is to produce these
  9       micro-segments.
 10  4517                 But another added layer to the
 11       "Informese", if I may say, is that we don't just go out
 12       and cover the events.  Our cameras don't simply go,
 13       shoot and come back.  Our on-air personalities, our
 14       producers and our camera people are basically PR
 15       people.  They go out, they shake hands, they share
 16       bread, they build relationships with the community so
 17       now all of our on-air personalities are on a
 18       first-name basis with heads of community groups
 19       and things like that.
 20  4518                 So what we have managed to do is
 21       embark on an ambitious outreach campaign, and that is
 22       what has made "Informese" so popular with us.
 23  4519                 COMMISSIONER WYLIE:  So you have
 24       facilities to that extent at least.  I know you have a
 25       condition of license that prevents you from doing news,


  1       information and actualities.  If that condition of
  2       license were removed would you then have the
  3       wherewithal to expand these 90-second micro-programs to
  4       a larger information program, which from what I read
  5       from the complaints of the community is what the
  6       Hispanic community finds is lacking and that some
  7       programs that they had in the past have been reduced
  8       dramatically.
  9  4520                 Because in 90 seconds, yes, you can
 10       announce a book launch, et cetera, but you are not
 11       going to have a program with any depth.  Even if you
 12       had a 15-minute newscast there is a lot of foreign news
 13       in Spanish.  Could you, with the equipment and the
 14       capacities you have now, benefit from removal of that
 15       condition?
 16  4521                 MR. MONTESANO:  I am going to throw
 17       to Aldo in terms of --
 18  4522                 COMMISSIONER WYLIE:  Beat the
 19       complaints.
 20  4523                 MR. MONTESANO:  Yes.  Yes, I am going
 21       to throw to Aldo in terms of answering the news
 22       question.
 23  4524                 I just wanted to add a bit more
 24       information in regards to the work that we do to expand
 25       some of those community segments.


  1  4525                 Oftentimes we do go to an event, and
  2       that is generally what becomes our spotlight shows,
  3       which are longer form.  If we are at an event and there
  4       is a lot of material and it becomes something really
  5       substantive, or if we know ahead of time that it is
  6       going to be -- most recently we actually produced a
  7       half hour program in conjunction with the Ontario Art
  8       Gallery in regards to a Latin American arts and craft
  9       show that was at the gallery for an extended period of
 10       time.  So that was something that was substantial
 11       enough.  We do this on a weekly basis so we kind of
 12       pick and choose which micro-segments to take above and
 13       beyond.
 14  4526                 The other story I wanted to tell
 15       before I throw to Aldo is the issue of longer-form
 16       shows becoming community segments or these smaller
 17       segments.  I just wanted to pass on a story about how
 18       these segments have really provided, in our opinion,
 19       oftentimes a better service to the community.
 20  4527                 "Usted Decide" used to be a
 21       longer-form show.  We sat down with the host of the
 22       show and said "Look, how would you like to do something
 23       that is spread across micro-segments throughout the
 24       week?  We feel this would really -- we can interweave
 25       this with our more popular shows and we feel the


  1       response from viewers would be a lot -- it would be a
  2       lot more successful".
  3  4528                 He agreed with the test.  At first he
  4       was like "I'm not sure, you know, it sounds like less". 
  5       But we said "Well, look, let's test this out, because
  6       every time we have done this it has been wildly
  7       popular.  More people call, more people are connecting
  8       with us."
  9  4529                 So he tried this out.  He has been
 10       doing it now for a year, because they are more than
 11       just segments on TV.  He is attached to our web site so
 12       he is using it as a way to kind of get to a lot of
 13       viewers and share with them information through
 14, through his own personal contacts, and he
 15       has gone out of his way a couple of times to stop us in
 16       the hallway and say "Thanks for coming up with that
 17       idea", because it is achieving what he wants to
 18       achieve, which is reach people and share information as
 19       opposed to just have a longer-form show.
 20  4530                 I will throw to Aldo for the news
 21       question.
 22  4531                 MR. DI FELICE:  And I think that show
 23       does actually do a lot of what you referred to, Madam
 24       Wylie, the immigrant services or those types of social
 25       issues are what "Usted Decide", Mario Bianci does in


  1       his three-minute segment.
  2  4532                 With respect to your question on
  3       news, these segments aren't news segments, they are
  4       community happenings of various nature.  When they are
  5       worthwhile doing in a longer format we do, and we have
  6       produced I think 24 half-hour spotlights over the past
  7       year or so.  So we do a longer format program when it
  8       warrants.
  9  4533                 With respect to news itself, though,
 10       we have never been set up to do news and, as you know,
 11       as you have pointed out, there is a condition
 12       prohibiting us from doing news and actualities.
 13  4534                 Having said that, we haven't
 14       determined -- as a result of the condition being there,
 15       we haven't determined, nor has there been any great
 16       request for a TLN-produced Canadian news show from the
 17       people in the community that we talk to.
 18  4535                 We understand that there are some
 19       intervention letters that have referred to a news show
 20       and have referred to a previous news show that used to
 21       be aired years ago, not on Telelatino but on another
 22       network, but we would have to look at the feasibility,
 23       we would have to look at the demand, we would have to
 24       look at the logistics and technical infrastructure.  It
 25       would be a departure, through, from the production and


  1       Cancon strategy that we have related to you here today.
  2  4536                 COMMISSIONER WYLIE:  But you would
  3       have no problem with removing the condition?  It
  4       doesn't mean that the Commission would require you to
  5       do news.
  6  4537                 MR. DI FELICE:  No, a removal of the
  7       condition is not something that we would object to.
  8  4538                 COMMISSIONER WYLIE:  Now, Canadian
  9       content in Spanish, what is currently the Canadian
 10       content between -- I am just looking at the Canadian
 11       content in Spanish on the block schedule between -- I
 12       have difficulty -- 6:30 to 8:00.
 13  4539                 What is that program currently in the
 14       two-hour block?
 15  4540                 MR. MONTESANO:  In that from 6:30 to
 16       eight o'clock?
 17  4541                 COMMISSIONER WYLIE:  Yes.
 18  4542                 MR. MONTESANO:  Those are flagship
 19       Canadian programs that have been dubbed into Spanish. 
 20       So they are children's programs for the most part.
 21  4543                 COMMISSIONER WYLIE:  What is it in
 22       particular?
 23  4544                 MR. MONTESANO:  Oh, the programs
 24       are -- the names of the shows?
 25  4545                 COMMISSIONER WYLIE:  Yes, in English.


  1  4546                 MR. MONTESANO:  In English.  Shows
  2       like "Richard Scary", "Little Lulu" and "White Fang"
  3       are presently what is there.
  4  4547                 COMMISSIONER WYLIE:  Okay.  Then
  5       there is "Passions" from the U.S.A.
  6  4548                 The next Canadian is 8:30.  What
  7       is that?
  8  4549                 MR. DI FELICE:  Monday morning.
  9  4550                 MR. MONTESANO:  That includes -- yes,
 10       Monday morning.
 11  4551                 COMMISSIONER WYLIE:  That is Monday
 12       to Friday in both cases?
 13  4552                 MR. MONTESANO:  Yes.  Monday morning
 14       is a community-oriented showed called "Hispaños en
 15       Canada", it is a Canadian content show.  From Tuesday
 16       to Saturday is another Canadian-made program called
 17       "Food Essence" dubbed into Spanish.
 18  4553                 COMMISSIONER WYLIE:  It is in English
 19       dubbed into Spanish?
 20  4554                 MR. MONTESANO:  Yes.
 21  4555                 COMMISSIONER WYLIE:  Then at 8:30 you
 22       have the Spanish religious on Monday and Thursday and
 23       then a telenovela from Mexico.
 24  4556                 The next Canadian, then, after 9:30,
 25       after the religious program, is after midnight. 


  1       Correct?
  2  4557                 MR. MONTESANO:  Yes.
  3  4558                 COMMISSIONER WYLIE:  The next
  4       Canadian in on Thursday --
  5  4559                 MR. MONTESANO:  Yes.
  6  4560                 COMMISSIONER WYLIE:  -- at midnight. 
  7       What is that?
  8  4561                 MR. MONTESANO:  That is often our
  9       specials that we have produced throughout the year.  So
 10       right now we have "Carnival", "TLN Carnival", so it is
 11       highlights from our Carnival music festival that
 12       took --
 13  4562                 COMMISSIONER WYLIE:  And when you
 14       don't have a special?
 15  4563                 MR. MONTESANO:  Those are ongoing
 16       specials because we produce them throughout the year.
 17  4564                 COMMISSIONER WYLIE:  There is one.
 18  4565                 MR. MONTESANO:  Yes.
 19  4566                 COMMISSIONER WYLIE:  Then there is
 20       Canadian Spanish from two o'clock in the morning until
 21       really -- it goes through the night and starts in the
 22       early morning.
 23  4567                 What is from two o'clock in the
 24       morning to 6:30?
 25  4568                 MR. MONTESANO:  From three o'clock in


  1       the morning?
  2  4569                 COMMISSIONER WYLIE:  Yes, three
  3       o'clock, excuse me.
  4  4570                 MR. MONTESANO:  From three o'clock
  5       until six o'clock I believe are repeats of our morning
  6       programs.
  7  4571                 COMMISSIONER WYLIE:  Of "Emily of New
  8       Moon" and "White Fang" and your cartoons, et cetera.
  9  4572                 MR. MONTESANO:  And "Food Essence".
 10  4573                 COMMISSIONER WYLIE:  Then you have
 11       some --
 12  4574                 MR. MONTESANO:  And some different
 13       ones as well, excuse me.
 14  4575                 COMMISSIONER WYLIE:  How many of them
 15       are dubbed cartoons?
 16  4576                 MR. MONTESANO:  Three-quarters at
 17       this point.
 18  4577                 COMMISSIONER WYLIE:  Then on Saturday
 19       you have quite a bit of Spanish programming in the
 20       forenoon, sports news, Spanish news, et cetera.  What
 21       else is in there, because that is a big block of
 22       Spanish.
 23  4578                 MR. MONTESANO:  A lot of that is
 24       information-based programming from CNN en Español, so
 25       finance news, travel, health.


  1  4579                 COMMISSIONER WYLIE:  The Canadian
  2       portions?
  3  4580                 MR. MONTESANO:  No, those are the
  4       non-Canadian portions.  The Canadian portions are
  5       "Hispaños en Canada", the community show, a repeat of
  6       "Hispaños en Canada", the community-based show.  The
  7       other ones are more children's programming.
  8  4581                 COMMISSIONER WYLIE:  On Sunday, one
  9       o'clock in the morning.  Film.  Would that be Canadian
 10       film?
 11  4582                 MR. MONTESANO:  That is a film.  No,
 12       international film.
 13  4583                 COMMISSIONER WYLIE:  What about the
 14       one at 6:30?
 15  4584                 MR. MONTESANO:  Six-thirty is a
 16       repeat of one of the Saturday shows.
 17  4585                 COMMISSIONER WYLIE:  Now, it is no
 18       secret that when the transfer was approved the
 19       community thought, ah, you know, this is an opportunity
 20       to say we want better service, specifically from the
 21       Hispanic community.  Of course the transfer decision
 22       and the Notice of Public Hearing for this exercise
 23       repeated what the Commission would look at and what
 24       the complaints had been and what the promises were that
 25       had been made.


  1  4586                 In your supplementary brief at page 2
  2       you talk about alliances that have been made with
  3       companies like Nelvana, et cetera.  Is that what that
  4       is, they are cartoons that are already owned and are
  5       dubbed into Spanish and then become a large portion of
  6       the Spanish-language programming on the service?
  7  4587                 MR. DI FELICE:  Well, we have
  8       acquired Canadian content, both live action, both
  9       family and children's Canadian content from Sunar, from
 10       Nelvana, from Salter Street, from Alliance Atlantis,
 11       and perhaps one or two others whose names escape me.
 12  4588                 Those are Canadian-made programs,
 13       Canadian content programs that have been dubbed into
 14       Spanish.  There are also some Canadian-made programs
 15       that we are trying to acquire in Italian as well.
 16  4589                 COMMISSIONER WYLIE:  And some of
 17       these programs would be on other Corus services, right,
 18       and then simply dubbed and run in Spanish on
 19       Telelatino?
 20  4590                 What is the proportion of those and
 21       where do these cartoons come from and sports?
 22  4591                 MR. DI FELICE:  These cartoons were,
 23       I think --
 24  4592                 COMMISSIONER WYLIE:  Do you buy them
 25       directly --


  1  4593                 MR. DI FELICE:  Yes.
  2  4594                 COMMISSIONER WYLIE:  -- from Nelvana?
  3  4595                 MR. DI FELICE:  We actually bought
  4       most of -- I think all of this material prior to Corus
  5       taking control of Telelatino.  In fact prior to Corus
  6       having the 20 per cent interest in Telelatino we did
  7       pursue and acquire and schedule and program Canadian
  8       content, high level Canadian content that was not first
  9       run but that --
 10  4596                 COMMISSIONER WYLIE:  Yes, but was it
 11       cartoons?
 12  4597                 MR. DI FELICE:  -- but that was
 13       second run.
 14  4598                 COMMISSIONER WYLIE:  Because, you
 15       know, to the extent that --
 16  4599                 MR. DI FELICE:  It included cartoons,
 17       it included live action, kid's shows, and it included
 18       live action family.
 19  4600                 COMMISSIONER WYLIE:  To the extent
 20       that it does now as compared to the Italian?
 21  4601                 MR. DI FELICE:  Yes.  Yes, it did.
 22  4602                 COMMISSIONER WYLIE:  In your
 23       deficiency response at page 8, the first deficiency
 24       response, the March one, you talk about a Canadian
 25       series being bought from a Halifax-based production


  1       company.  Is that from Salter Street --
  2  4603                 MR. DI FELICE:  Yes.
  3  4604                 COMMISSIONER WYLIE:  -- "Emily of
  4       New Moon"?
  5  4605                 MR. DI FELICE:  Yes.
  6  4606                 COMMISSIONER WYLIE:  What is the
  7       other one?
  8  4607                 MR. DI FELICE:  I'm sorry, the
  9       other -- excuse me?
 10  4608                 COMMISSIONER WYLIE:  It says, "two
 11       Canadian series".
 12  4609                 MR. DI FELICE:  Oh, "Food Essence" I
 13       think was also a Salter Street program.
 14  4610                 COMMISSIONER WYLIE:  "Food Essence"?
 15  4611                 MR. DI FELICE:  "Food Essence".
 16  4612                 COMMISSIONER WYLIE:  So your view is,
 17       if I pulled out a schedule of Spanish programming, you
 18       have been on -- service has been going on for quite a
 19       long time, since 1984.  If I pulled one out from eight,
 20       nine, ten years, seven years, six years ago, I would
 21       see no reduction as claimed by the Spanish community in
 22       the Canadian content programming that is not dubbed but
 23       that is produced for the community?
 24  4613                 MR. DI FELICE:  I think we are
 25       producing more -- I am quite certain we are


  1       producing -- like when we are talking about only our
  2       original Telelatino-produced Canadian content in
  3       Spanish, we are producing more than we were six
  4       years ago.
  5  4614                 But I think to provide further
  6       clarification, the same explanation that we provided
  7       earlier relating to the nature of our schedule and the
  8       special-driven scheduling of our programming applies to
  9       Cancon.
 10  4615                 So we could go through I think a list
 11       of Canadian original Telelatino-produced content in
 12       Spanish that has appeared on our schedule in the last
 13       year, and more specifically has appeared in the evening
 14       broadcast period.  We previously referred to the
 15       TLN spotlights, some of which are in Spanish, some of
 16       which are in Italian.  There are several that we can
 17       talk about that have appeared recently.  They appear
 18       during the evening broadcast period.
 19  4616                 Furthermore, our "Latin Heritage
 20       Series" programs are all broadcast in prime time and
 21       those include both Italian and Spanish-oriented
 22       programs.
 23  4617                 COMMISSIONER WYLIE:  At paragraph 14
 24       of that decision, of the transfer decision, the
 25       Commission said it:


  1                              "...expected the management to
  2                              find constructive solutions to
  3                              the concerns about Spanish
  4                              programming raised by the
  5                              Canadian Hispanic Congress." 
  6                              (As read)
  7  4618                 What would be your reaction to a
  8       requirement of a certain percentage of Spanish
  9       programming from 6:00 to midnight, which is all
 10       devoted to the Italian community when your condition of
 11       license is a division 55/45?  Suppose we didn't apply
 12       exactly that ratio, but you say that there are programs
 13       over time.
 14  4619                 Perhaps after lunch you can suggest
 15       what would be a reasonable imposition of a percentage
 16       of programming directed to the Hispanic communities in
 17       the timeframe that people watch more TV, which is not
 18       2:00 or 3:00 in the morning, or six o'clock either.
 19  4620                 Anyway, you can come back --
 20  4621                 MR. DI FELICE:  Thank you.
 21  4622                 COMMISSIONER WYLIE:  -- as to what
 22       you would feel is, for all I know, reflective of what
 23       you do now, because your response is, "We do some
 24       specials and they are not shown in the block schedule." 
 25       Well, I suppose there are the Italian ones too, is my


  1       point, and where does that leave the Spanish community
  2       in those hours.
  3  4623                 Just a few questions before lunch.
  4  4624                 You talk at Schedule D about the
  5       production of a series of historical programs with
  6       English subtitles or in English, which you mentioned
  7       today.  How many of those will be Spanish and how many
  8       Italian that are already in the works?
  9  4625                 MR. DI FELICE:  The "Hispanic
 10       Heritage Series" is --
 11  4626                 You would like to talk about that?
 12  4627                 MR. MONTESANO:  Yes.  Presently there
 13       is a series of 14 programs, documentaries and specials
 14       in development.  These include a wide range of topics. 
 15       The exact number, let me just -- because we really try
 16       to kind of develop projects that whenever possible --
 17       well, there were two strategies here.
 18  4628                 One was let's create Canadian content
 19       that is enduring that we can put into prime-time
 20       schedules that our community can kind of embrace, that
 21       all of our viewers, our advertisers, everyone that kind
 22       of is connected to the station, our community groups
 23       could really embrace.  So the emphasis was on quality
 24       and accessibility.
 25  4629                 Once we started with that we said,


  1       "Okay, well let's come up with a couple of ideas that
  2       have crossover appeal." so stories like a one-hour
  3       special on Father Jenny Caporelli, who works for an
  4       organization called Caritas which organizes substance
  5       abuse programs specifically for the Italian and
  6       Hispanic communities, and I believe also the Portuguese
  7       communities.  That is something we felt had crossover
  8       appeal.  So although it is about -- because we find
  9       there is just a lot of crossover between the
 10       communities that we serve, on the one hand.
 11  4630                 Secondly, there is another -- there
 12       is the Hispanic Canadian, so we did the Italian
 13       Canadians, produced, broadcast.  We are at the back end
 14       now of producing, set to broadcast in the fall, the
 15       Hispanic Canadians long-form documentary as well.  So
 16       there was that.
 17  4631                 But I would say, you know -- I'm just
 18       trying to look here at a breakdown.  I didn't actually
 19       do a percent.
 20  4632                 COMMISSIONER WYLIE:  Well, perhaps
 21       you can come back with that as well.  We have to break.
 22  4633                 MR. MONTESANO:  You bet.  Okay.
 23  4634                 COMMISSIONER WYLIE:  There is also a
 24       Schedule 1c I would like you to look at which is from
 25       March.  These are the documentary series in process. 


  1       If I remember, they were filed in response perhaps to
  2       closed captioning, I'm not sure.
  3  4635                 But when I go down the list of these
  4       documentaries, there aren't too many Hispanic ones. 
  5       There are a couple that I can't tell which it is.  I
  6       would like you to look at that and see what is your
  7       view about how this 55/45 should guide you in your
  8       efforts.
  9  4636                 Thank you.
 10  4637                 THE CHAIRPERSON:  Thank you.
 11  4638                 We will break now and resume at 2:15.
 12       --- Upon recessing at 1213 / Suspension à 1213
 13       --- Upon resuming at 1415 / Reprise à 1415
 14  4639                 THE CHAIRPERSON:  Order, please.  A
 15       l'ordre, s'il vous plaît.
 16  4640                 Madam Wylie.
 17  4641                 COMMISSIONER WYLIE:  Welcome back and
 18       thank you, Mr. Chairman.
 19  4642                 When we last saw each other we were
 20       looking at that Schedule 1c and those are documentary
 21       series in process at the moment.
 22  4643                 MR. MONTESANO:  Recently completed.
 23  4644                 COMMISSIONER WYLIE:  Recently
 24       completed.
 25  4645                 MR. MONTESANO:  Yes.


  1  4646                 COMMISSIONER WYLIE:  Those I will
  2       have a couple of questions about the benefits later, so
  3       those were in the course of production.  They are not
  4       related to the $1.1 million benefit?  No.
  5  4647                 So some of them are clearly
  6       identified as Italian and some clearly, not many,
  7       identified as Hispanic and some I don't know.  So when
  8       you do a count of those, what would the ratio be
  9       between the two groups?
 10  4648                 MR. MONTESANO:  There are
 11       13 projects.  One of them is purely related to the
 12       Hispanic, two of them are related to both and the rest
 13       are all Italian.
 14  4649                 This was a pilot project series, this
 15       group of 13.  There are more to follow.  There are more
 16       in development right now.
 17  4650                 What we aimed to do at this stage was
 18       to mirror on the Spanish side the word we have done on
 19       the Italian side.  So let's a few of them.
 20  4651                 "Persona" is one example, the
 21       biography series.  We have now in development a similar
 22       series on the Spanish side.
 23  4652                 The same thing with "Regarde",
 24       Memories, on the Spanish side there is a similar
 25       series.


  1  4653                 So I think we intentionally came up
  2       with ideas that we could mirror as the projects
  3       unfolded.
  4  4654                 So the idea here was -- again I am
  5       not talking about the benefits.  These are
  6       unprecedented series at Telelatino.
  7  4655                 How we launched them was, we went to
  8       independent producers, we went to our advertisers, we
  9       went to people who would get excited about helping
 10       these become a success, because the concept was that we
 11       wanted to create long lasting programming for
 12       Telelatino that would speak to our constituents.
 13  4656                 This is one of the reasons as well
 14       they were a bit more heavily slanted on the Italian
 15       side.  We were successful with the first few series. 
 16       The first two were "Pier 21" and "Persona" and we got
 17       advertising -- for "Pier 21", which was the first, we
 18       did get a major Italian advertiser to support it and
 19       put money into it.  So we are really happy to see that. 
 20       This had really led to more development, more
 21       discussion, more work with independent producers. 
 22       So the eventual goal is to balance these out and to
 23       get 50/50.
 24  4657                 COMMISSIONER WYLIE:  Yes.  Is there
 25       something as interesting as the Italian wedding in the


  1       Spanish community?
  2  4658                 MR. MONTESANO:  Yes.
  3  4659                 COMMISSIONER WYLIE:  Do you have a
  4       Spanish wedding?
  5  4660                 MR. MONTESANO:  You know what, there
  6       are things like the inordinate number of Salsa dancing
  7       clubs that have sprung up in urban centres.
  8  4661                 COMMISSIONER WYLIE:  That you could
  9       use, yes.
 10  4662                 MR. MONTESANO:  Absolutely.
 11  4663                 COMMISSIONER WYLIE:  I don't know if
 12       you have seen -- is it "Monsoon Wedding"?  There is
 13       something particular about the effect of weddings in
 14       each culture probably.
 15  4664                 But obviously the point of the
 16       questions is to respond to this concern that this is a
 17       55/45 service and the Hispanic community deserves a
 18       similar look.
 19  4665                 With independent producers, is it
 20       easier to find producers in the Italian community
 21       because of the generational or completeness of the
 22       immigration patterns, et cetera, more established in
 23       Canada than it is to find Spanish producers?  Does that
 24       have anything to do with it, the age of the
 25       immigration?


  1  4666                 Because you are serving two groups
  2       which I see as old immigrants that have stratified very
  3       much like the mainstream and newer, and not only that
  4       but from varied communities simply combined by the
  5       language they speak, not by their source.
  6  4667                 Is it easier in the Italian community
  7       to get producers?
  8  4668                 MR. DI FELICE:  If I may, I don't
  9       think it is actually easier.  We have found that there
 10       is a deep well of different people who have audiovisual
 11       production experience in both communities.
 12  4669                 On the Hispanic side actually, we are
 13       working with a few freelance independents who have
 14       extensive experience in their home countries and a
 15       number years of experience.
 16  4670                 On the Italian side we are working
 17       usually with younger people who do have all their
 18       experience in Canada as opposed to all their experience
 19       in Chile or Peru or Argentina.
 20  4671                 So there are very talented people who
 21       were Hispanic who were available to us in Toronto that
 22       we were discovering over the last 24 months.  In fact,
 23       we hired one of those people actually in the last year
 24       to be our Broadcast Operations Manager, a
 25       Peruvian-Canadian who has about 25 years of production


  1       experience, senior production experience in Peru.
  2  4672                 COMMISSIONER WYLIE:  So there is no
  3       reason, then, to believe that it won't be -- that it
  4       will be difficult to have a Schedule 1c that would have
  5       a greater ratio of product aimed at the Hispanic
  6       communities?
  7  4673                 MR. DI FELICE:  That is our intent.
  8  4674                 COMMISSIONER WYLIE:  Because what I
  9       believe may have been a problem you say is not.  You do
 10       have access.
 11  4675                 Now, we talked about types of
 12       programming that are being purchased from Salter
 13       Street, cartoons, from Nelvana.  Does Telelatino
 14       purchase other types of programming exception
 15       children-oriented programming, Canadian programming?
 16  4676                 MR. DI FELICE:  Canadian, no.
 17  4677                 COMMISSIONER WYLIE:  There is no --
 18  4678                 MR. DI FELICE:  Can you think of --
 19       is there is maybe we can think of some isolated things.
 20  4679                 COMMISSIONER WYLIE:  For example,
 21       from CFMT or CJNT.  Is there no possibility there of
 22       acquiring rights?
 23  4680                 MR. DI FELICE:  Acquiring
 24       programming?
 25  4681                 What I can imagine is that there


  1       could be possibilities of co-licensing independently
  2       produced programming.  That has never happened before.
  3  4682                 Telelatino, although a specialty
  4       channel, isn't perhaps like other specialty channels
  5       taking second or third-run programming.  Our viewers
  6       have expectations that we operate like their own CBC so
  7       they want to see a lot of original programming,
  8       first-run programming, whether our original programming
  9       or acquired programming.  So no, we don't license
 10       programming from CJNT or CFMT and haven't really ever
 11       talked about it.
 12  4683                 But there would be an issue there of
 13       who takes the first run.  Our viewers from time to time
 14       will complain about seeing the program repeated.  They
 15       are not used to having repeats of programs.  Repeats,
 16       though, are obviously standard operating procedure with
 17       specialty channels in Canada, but for our audiences
 18       they have come to expect minimal repeats for example. 
 19       That is, I think, one obstacle.
 20  4684                 COMMISSIONER WYLIE:  Since you seem
 21       to be able to dub children's programming, is there no
 22       other Canadian programming that you could dub that
 23       would be other than cartoons and "Emily of New Moon"?
 24  4685                 MR. DI FELICE:  We don't actually dub
 25       the programming.  That would be a very --


  1  4686                 COMMISSIONER WYLIE:  Well, it gets
  2       dubbed somehow.
  3  4687                 MR. DI FELICE:  Yes.  Yes, it gets
  4       dubbed.
  5  4688                 COMMISSIONER WYLIE:  But are there
  6       other types of programming that could have a place as
  7       easily on your schedule that would not be
  8       children-oriented or cartoons but would be acquired as
  9       a second window and dubbed that would have as
 10       meaningful and addition to the screen as a cartoon for
 11       adults?
 12  4689                 MR. DI FELICE:  Right.  Besides
 13       "Emily of New Moon", besides "Jake and the Kid",
 14       besides big miniseries that have been broadcast on CBC
 15       like "Million Dollar Babies" that we did acquire dubbed
 16       into Spanish, and other miniseries and movies as well
 17       that we put into our schedule, usually during special
 18       occasions that were actually originally Canadian made. 
 19       Yes, there are possibilities in all genres, but what we
 20       have already acquired though does include various
 21       genres.  It isn't only animation and it isn't only
 22       children's programming.
 23  4690                 COMMISSIONER WYLIE:  Give me an
 24       example of a Canadian program that was dubbed.
 25  4691                 MR. MONTESANO:  "Food Essence" is one


  1       example.
  2  4692                 COMMISSIONER WYLIE:  Oh, "Food
  3       Essence".
  4  4693                 MR. MONTESANO:  It is currently on
  5       our schedule.
  6  4694                 MR. DI FELICE:  Or "Jake and the
  7       Kid".  "Jake and the Kid" is a series.
  8  4695                 COMMISSIONER WYLIE:  It is not a
  9       cartoon, but it is --
 10  4696                 MR. DI FELICE:  "Emily of New Moon". 
 11       All these are family series.
 12  4697                 COMMISSIONER WYLIE:  In the decision
 13       the Commission repeated that as one of the benefits,
 14       intangible I suppose, of the Corus ownership of
 15       Telelatino was that Corus planned to make YTV's
 16       state-of-the-art facilities and mobile unit available
 17       to TLN to enhance and increase the programming that is
 18       produced for the service.  Has any of that occurred?
 19  4698                 MR. DI FELICE:  Yes.  We have used
 20       the YTV mobile unit to cover a Latin festival that we
 21       produced.  It resulted in a number of hours of special
 22       programming, but we did use their mobile to do that. 
 23       That was a summer festival we did last year.
 24  4699                 COMMISSIONER WYLIE:  Do you foresee
 25       any more activity in that area to improve your ability


  1       to serve --
  2  4700                 MR. DI FELICE:  On the technical
  3       side, yes.
  4  4701                 COMMISSIONER WYLIE:  -- with Canadian
  5       programming?
  6  4702                 MR. DI FELICE:  Yes.  Especially on
  7       the technical facility side.  We have traded technical
  8       information, facilities information, staffing as well. 
  9       We have had our staff back and forth in order to find
 10       opportunities for us to see whether there are segments,
 11       or shows, for example that we would produce in their
 12       studios if they have equipment, cameras, editing
 13       equipment that we don't have, and we have in fact
 14       continued to supplement the infrastructure program that
 15       we have at Telelatino in view of the infrastructure
 16       that works at Corus.
 17  4703                 So our own broadcast operations
 18       manager has been to the YTV plant, for example, several
 19       times looking at there equipment, testing it, and then
 20       buying compatible equipment for us.  So it has been
 21       beneficial, both in terms of information, and in terms
 22       of assistance.
 23  4704                 COMMISSIONER WYLIE:  Now this morning
 24       I said we would look at issues of the complaints by the
 25       Spanish community about the extent of the service it


  1       gets in prime hours and the Canadian content.  I asked
  2       you if the Commission were to find it appropriate to
  3       require that in the evening period between 6:00 and
  4       midnight, as we define it, there should be a minimum
  5       amount of programming directed to the Spanish
  6       communities what would be a reasonable response?
  7  4705                 MR. DI FELICE:  We did take a look at
  8       that.  In doing so, I mean, I think I can underline our
  9       attentiveness and sensitivity to the Spanish community
 10       when it comes to programming, scheduling their
 11       programming appropriately.
 12  4706                 Doing the numbers based on our
 13       current schedule that we are looking at, we calculated
 14       that we have currently 10.5 hours during the evening
 15       broadcast period per week out of 42 evening broadcast
 16       period hours.  Ten point five of those hours are
 17       Hispanic, Spanish-directed programming.  That is 25 per
 18       cent, approximately.
 19  4707                 That is on a regular basis, alone. 
 20       That doesn't include --
 21  4708                 COMMISSIONER WYLIE:  How would you
 22       calculate it?
 23  4709                 MR. DI FELICE:  It is 1.5 hours every
 24       evening, Monday to Friday, plus an additional two hours
 25       on Saturday, plus an additional hour between Monday and


  1       Tuesday late-night, based on the current schedule.
  2  4710                 COMMISSIONER WYLIE:  But during this
  3       6:00 to 12:00 period, that is because I don't see some
  4       of the specials on the block schedule.
  5  4711                 MR. DI FELICE:  No. No.  That --
  6  4712                 COMMISSIONER WYLIE:  That is what
  7       you --
  8  4713                 MR. DI FELICE:  Excuse me?  I'm
  9       sorry.
 10  4714                 COMMISSIONER WYLIE:  Yes.  Go ahead.
 11  4715                 MR. DI FELICE:  That is just to
 12       finish the -- that is on a regular basis, exclusive of
 13       the specials we talked about earlier which, for
 14       instance that doesn't include, for example, that
 15       two-hour special we looked at that just happened to be
 16       broadcast in this schedule last week and the one that
 17       was broadcast last night in the same time slot, Tuesday
 18       at 9:00 p.m., as part of our "Latin Beauties" series.
 19  4716                 So that would not include the
 20       specials that we talked about, and those are fairly
 21       frequent.  They are not weekly, but they are frequent. 
 22       I think we went through a list of them earlier.  So
 23       beyond the specials we regularly now are broadcasting
 24       25 per cent Spanish-directed in the evening broadcast
 25       period.  That is more than in the past.


  1  4717                 In terms of what can we do, what do
  2       we want to do, the direction obviously is we have
  3       increased it, but we have to keep in mind that any
  4       increase on one side is a decrease on the other.
  5  4718                 COMMISSIONER WYLIE:  Are we still in
  6       a world where it is more difficult to sell advertising
  7       in programming to the Hispanic communities than the
  8       Italian?
  9  4719                 MR. DI FELICE:  Well, that is exactly
 10       right.  We looked at our advertising revenues and over
 11       two-thirds of our advertising revenues come in on the
 12       Italian side, on the Italian programming side.  That
 13       has historically been the case.  That is actually an
 14       improvement over the past where it was even higher on
 15       the Italian programming side.
 16  4720                 COMMISSIONER WYLIE:  But you are to
 17       tap the Hispanic advertisers for the Hispanic
 18       communities more easily now you mean?
 19  4721                 MR. DI FELICE:  Well, two things.
 20  4722                 Number one, there is more Hispanic
 21       community-owned business that is coming in.  But mostly
 22       in fact it is Italian businesses that we have
 23       encouraged to book advertising in both parts of our
 24       schedule.  They have found that the viewership, the
 25       people actually watching the spanish programming, do


  1       respond to the advertising.  So part of it is actually
  2       Italian-owned businesses advertising in Spanish
  3       programming.
  4  4723                 COMMISSIONER WYLIE:  As well.
  5  4724                 MR. DI FELICE:  The end result is
  6       that Telelatino continues to be dependant on
  7       advertising revenue, first of all.  That is the bulk of
  8       our revenues.  I believe it is about -- that continues
  9       to be, I think, 70 per cent of our revenue base.  That
 10       is mostly on the Italian side.  So, it is
 11       cross-subsidising, I think, the Spanish side.
 12  4725                 COMMISSIONER WYLIE:  Are these
 13       numbers that you are giving us now that you say is an
 14       improvement from what appears if you just look at the
 15       block schedule numbers for Spanish programming that you
 16       would be prepared to live with by condition of license,
 17       to have a minimum of Spanish-directed, Spanish
 18       community-directed programming measured over a week, a
 19       month.  What do you think?  If you were us and you were
 20       trying to respond to this complaint?
 21  4726                 MR. DI FELICE:  Well, I think we
 22       should look at our actual performance.  Our actual
 23       performance has exceeded our minimum requirements under
 24       our conditions of license.  Our actual performance is
 25       that --


  1  4727                 COMMISSIONER WYLIE:  Well, there were
  2       never conditions of license, I don't think, that said
  3       any more than directed 55/45 to the two communities. 
  4       What we are facing is one community saying, "That
  5       doesn't mean that mine has to be overnight and at six
  6       o'clock in the morning all the time".
  7  4728                 MR. DI FELICE:  Right.
  8  4729                 COMMISSIONER WYLIE:  You haven't had
  9       a condition of license in that fashion.
 10  4730                 MR. DI FELICE:  Yes.  When I referred
 11       to the condition of license it was exactly that, the
 12       55/45 with respect to the -- yes.
 13  4731                 COMMISSIONER WYLIE:  It still is, but
 14       do you think that to respond to the complaints there is
 15       a need to get a minimum?
 16  4732                 MR. DI FELICE:  I think that, I agree
 17       there has been no minimum requirement for the evening
 18       broadcast period.  I think we have shown our best
 19       efforts by virtue of what we have done, which is to
 20       gradually increase Spanish programming without
 21       disrupting both our advertising revenue base and our
 22       Italian expectations from our Italian viewers.
 23  4733                 I think we have been very, very,
 24       creative in terms of achieving this 25 per cent regular
 25       evening broadcast period Spanish content, at the same


  1       time supplementing it over the last couple of years. 
  2       There has been a big response from the community. 
  3       There are 50 intervention letters in this matter that
  4       have gone out of there way to talk about the
  5       improvement in the Spanish programming quality and
  6       efforts.
  7  4734                 We have gone out of our way to
  8       creatively nest Spanish specials in prime time.  We
  9       have talked about a couple of them.  We have done that
 10       on a financially negative basis.  We have lost money on
 11       each and every one of those specials, The "Latin
 12       Billboard Awards", the "Viña del mar" festival, the
 13       "Latin Beauties" contest.  We don't bring in the
 14       advertising money to pay for those specials.
 15  4735                 COMMISSIONER WYLIE:  Yes.  So do I
 16       hear you well that you have creatively achieved this
 17       level and you see no reason why it should decrease?
 18  4736                 MR. DI FELICE:  No, we intend to
 19       continue doing --
 20  4737                 COMMISSIONER WYLIE:  Of Spanish, of
 21       Hispanic communities-directed programming in the
 22       evening hours --
 23  4738                 MR. DI FELICE:  Evening broadcast
 24       period.
 25  4739                 COMMISSIONER WYLIE:  -- when there is


  1       more listenership.
  2  4740                 MR. DI FELICE:  That is certainly our
  3       intention.
  4  4741                 COMMISSIONER WYLIE:  Yes.  It is
  5       pretty obvious why I started my questioning by looking
  6       at the projections that you had in January 2001, which
  7       would have given you an average PBIT margin of 23 per
  8       cent which, we all agreed this morning, was now 29 per
  9       cent with the revised.  So in that context, of course,
 10       there is always the question:  Well, you certainly can
 11       continue doing what you are doing now, when you were
 12       projecting that you would do less well financially over
 13       the period.
 14  4742                 MR. DI FELICE:  Yes, I understand.
 15  4743                 COMMISSIONER WYLIE:  Okay.  Now we
 16       get to the crux of this now in terms of actual
 17       measurement.
 18  4744                 One is the Canadian content component
 19       and one is the CP, the level of your expenditures on
 20       Canadian content, which are measured by condition of
 21       license and by exhibition in one case and by money in
 22       the other.  You have been asked various questions
 23       about -- and there are two components to the Canadian
 24       exhibition:  Do we raise the 25 per cent overall; and
 25       you are prepared to except 15 per cent in the evening


  1       period should that be higher, considering every reason
  2       to believe that you are successful in that you have
  3       more optimistic projections one year later than you
  4       had. 
  5  4745                 So let's begin with the overall. 
  6       You are at 25 per cent.  If you look at other ethnic
  7       specialties, it is low.  You have been asked whether
  8       you could do more and the answer, of course, has
  9       been:  Well, we don't think we can afford it.  Maybe we
 10       now can.
 11  4746                 One interesting comment in your
 12       deficiency response is -- the March ones at page 1 --
 13       is you said "Well, even if we did 30 per cent overall
 14       it would not result in any increase in Cancon buy or
 15       produced for Telelatino."
 16  4747                 What would actually be there,
 17       then, if the Commission, in its wisdom, decided to
 18       increase it?
 19  4748                 MR. DI FELICE:  Well, I think that we
 20       are always spreading limited resources over the amount
 21       of programming that we have to do.
 22  4749                 Our preference has been, the strategy
 23       that we have followed, is to try to concentrate those
 24       resources in our Canadian content programming to bring
 25       it to a level that is competitive with mainstream


  1       broadcasting.  On that I think we have showcased here
  2       today.
  3  4750                 Increasing the broadcast requirement
  4       I think I am merely pointing out doesn't necessarily
  5       mean that we would increase production if that were to
  6       result in the negative consequence of reducing the
  7       quality of our production, especially given the
  8       direction that we have taken, which is to increase the
  9       level of ethnic programming quality to a point where it
 10       is competitive, where it can compete with other
 11       entertainment and information sources that our
 12       viewership has.  That started to become their
 13       expectation.
 14  4751                 So I think that comment is merely a
 15       reflection of the reality of how would we fulfil an
 16       increased broadcast requirement.  A repeat of a program
 17       would be one way to do it.
 18  4752                 COMMISSIONER WYLIE:  I think you said
 19       in the deficiency letter that it would amount -- this
 20       is for overall.
 21  4753                 Now, for the evening period, if it
 22       were 25 per cent instead of 18 per cent, it would
 23       amount to 1.5 hours daily.  Am I correct?
 24  4754                 MR. DI FELICE:  Yes.
 25  4755                 COMMISSIONER WYLIE:  If the


  1       Commission agreed to reduce the 25 per cent -- to
  2       increase rather from 15 per cent to 25 per cent the
  3       programming that is not in third language, would it
  4       ease the difficulty?  Would it be easier or would it
  5       free some more ability to have Canadian, ethnic
  6       Canadian, because it could be in English then?
  7  4756                 In other words, if we gave you the
  8       increase of 10 per cent in non-third language, would it
  9       not make it more flexible for you to be able to deal
 10       with an increase of 25 per cent in the evening, or
 11       30 per cent overall instead of 25 per cent, or a ramp
 12       up.
 13  4757                 MR. DI FELICE:  Well, there are a
 14       number of challenges we face there.  I can take you
 15       through them.
 16  4758                 The first one is that our intention
 17       was to in fact use the increased non-third language
 18       allowance to produce programming that would go into the
 19       evening broadcast period.  That would be programming
 20       that most likely would go in after our 11:10 p.m. news
 21       break, 11:00 to 11:10 p.m. news break in the evening,
 22       because that programming would (a) be able to address
 23       the needs of our changing audience and likely be dual
 24       language or mixed language programming that would be
 25       quoted as non-third language programming.  I believe


  1       most of it would be Canadian content, original content
  2       that we would create.
  3  4759                 As well, it would deal with the
  4       issues that we grapple with every day in terms of
  5       serving our audiences, which is that they already have
  6       expectations relating to what programming we are
  7       scheduling between 6:00 p.m. and midnight.  The
  8       challenge there is that we are a shared channel.  We
  9       are trying to provide a full complement of programming
 10       to both the Italian audience and to the Spanish
 11       audience during that evening broadcast period.
 12  4760                 So, we are trying to provide the
 13       staples that they are used to, the staples of their
 14       programming diet, which include news, a telenovela, and
 15       in the case of the Italian audience, the nightly 9:00
 16       to 11:00 p.m. foreign Italian programming slot from
 17       RAI.  That has been a long-standing scheduling
 18       practice.
 19  4761                 COMMISSIONER WYLIE:  Yes, of course.
 20  4762                 MR. DI FELICE:  So we are trying to
 21       grapple with that.  I think we are --
 22  4763                 COMMISSIONER WYLIE:  That is the
 23       practice that the Hispanic community is beginning to
 24       rumble about.  So it is not an answer.
 25  4764                 I know there are struggles and


  1       challenges in scheduling, but you are aware, are you,
  2       that Telelatino's overall Canadian content is 25 per
  3       cent, Fairchild is 30 per cent, granted you would
  4       probably would say it only has one community to program
  5       to.  TalentVision is 31.5 per cent and Odyssey is
  6       16 per cent.
  7  4765                 In the evening Fairchild is 40 per
  8       cent and TalentVision 33 per cent, Odyssey is 16 per
  9       cent.  Those are where Canadian programming
 10       expenditures that compare Telelatino's 16 per cent to
 11       Fairchild's 29 per cent and TalentVision 29 per cent
 12       and Odyssey 27 per cent.
 13  4766                 So another thing I am looking at,
 14       too, is, with the revenues that are projected to be
 15       higher that of course even at 16 per cent for the first
 16       three years generates more money for Canadian
 17       programming.  Why can't it generate more hours? 
 18       Because the 16 per cent is applied to a larger number
 19       so it generates a larger sum.
 20  4767                 MR. DI FELICE:  Yes.  You are right
 21       that we are projecting that we would have higher gross
 22       revenues and, as a result, higher Canadian programming
 23       expenditures.
 24  4768                 COMMISSIONER WYLIE:  So why not more
 25       hours then?


  1  4769                 MR. DI FELICE:  It probably will
  2       result in more hours potentially.
  3  4770                 COMMISSIONER WYLIE:  So how much more
  4       than 25 per cent overall?
  5  4771                 MR. DI FELICE:  But the number of
  6       hours we originally produce I think is -- I think the
  7       point I am trying to make is the number of hours we
  8       originally produce isn't necessarily related to the
  9       Canadian broadcast requirement percentage by
 10       percentage.
 11  4772                 COMMISSIONER WYLIE:  It is also for
 12       purchasing foreign, yes.
 13  4773                 MR. DI FELICE:  And it also involves
 14       repeats.  There is programming we produce, programming
 15       we acquire, and then the question of how often we --
 16  4774                 COMMISSIONER WYLIE:  Well repeats
 17       count into exhibition.
 18  4775                 MR. DI FELICE:  Yes.  I understand. 
 19       Exactly.
 20  4776                 So I guess the issue we always have
 21       is:  Do we make a program better by spending more on
 22       making it or do we make two programs with the extra
 23       money we are spending.
 24  4777                 COMMISSIONER WYLIE:  Yes.  It is
 25       always after telling us what good quality programs are


  1       on there schedule applicants usually say, "But if I
  2       make more money I will make them better", rather than
  3       "Don't ask me for more".
  4  4778                 You are aware that your Canadian
  5       content is low.  Now which is more difficult for you to
  6       handle, a rise to 30 per cent overall or 25 per cent in
  7       the evening period, instead of the 15 per cent that you
  8       agreed to --
  9  4779                 MR. DI FELICE:  Yes.
 10  4780                 COMMISSIONER WYLIE:  -- even with
 11       your lower projections
 12  4781                 MR. DI FELICE:  I think the --
 13  4782                 COMMISSIONER WYLIE:  Or something in
 14       between, a combination?
 15  4783                 COMMISSIONER WYLIE:  Well, increasing
 16       the evening broadcast period, broadcast requirement for
 17       Canadian content to 25 per cent would be the much more
 18       challenging option.  There are a number of reasons for
 19       that.
 20  4784                 We are highly dependant on ad
 21       revenues and they constitute -- I think earlier I said
 22       70 per cent.  I will correct myself.  I think it is
 23       about two-thirds, more or less, of our overall gross
 24       revenues.
 25  4785                 They are inherently less stable then


  1       other national specialty networks.  Our churn rate is
  2       about 35 per cent, meaning that we lose about 35 per
  3       cent of the advertising each year in the subsequent
  4       year and have to replace it with new advertising. 
  5       That, as I understand it, is a rate that is higher than
  6       other networks.
  7  4786                 Being a channel that is trying to
  8       please both audiences and being mostly slanted on the
  9       revenue side on the Italian side, increasing --
 10       displacing Italian programming that our viewers and our
 11       advertisers have come to want and know, will
 12       necessarily result, I think, in problems in achieving
 13       the revenue projections on the advertising revenue side
 14       that we have made.
 15  4787                 Our advertisers, I should point out
 16       as well, happen to be among our viewers.  We have a
 17       very intimate relationship with our advertisers and
 18       they tend to pick their shows they advertise in based
 19       on their own personal preferences and based on the
 20       preferences of those around them, as opposed to based
 21       on empirical data.  So losing a show to make space for
 22       another program that is required to be put into the
 23       evening broadcast period I think can have a negative
 24       impact both on our viewer relations, our expectations
 25       of our audience, and our advertising revenue.  That is


  1       the problem.
  2  4788                 COMMISSIONER WYLIE:  Mr. Di Felice,
  3       you may have churn with your advertisers, but you are
  4       in a pretty good position with your subscribers, where
  5       from what the numbers you have filed you are on
  6       extended basic which is pretty churn-free in millions
  7       of homes.
  8  4789                 MR. DI FELICE:  I think you are
  9       correct.
 10  4790                 COMMISSIONER WYLIE:  Which is steady,
 11       doesn't require effort, except an accounting
 12       measurement right?  You don't have to pay people to go
 13       and sell advertising and deal with the churn.  So you
 14       are in a very strong position in your subscriber
 15       revenues, despite the fact that it may be what I see as
 16       about half of your revenues.
 17  4791                 MR. DI FELICE:  Yes.
 18  4792                 COMMISSIONER WYLIE:  Is that correct,
 19       about half?
 20  4793                 MR. DI FELICE:  I believe it is much
 21       closer to a-third, our subscriber revenue.
 22  4794                 COMMISSIONER WYLIE:  Well, on the May
 23       hearing, discretionary services  residential and bulk,
 24       there is four million plus 233,000.  I was looking at
 25       the 2001 numbers.


  1  4795                 The first year, year two 2003
  2       numbers, 4.3 million.  Is that correct?  Plus 350 DTH? 
  3       Compared to 3.7 million and 3.4 million.  Isn't that
  4       the division between your subscriber revenue and your
  5       advertising revenue?  Correct?
  6  4796                 MR. SUBDAR:  Based on the new
  7       projection?
  8  4797                 COMMISSIONER WYLIE:  Yes.  I was
  9       looking at the May projection.
 10  4798                 MR. SUBDAR:  The division is 36 per
 11       cent, an average of 36 per cent revenue on sub-revenue. 
 12       It is about two-thirds -- one-third.
 13  4799                 COMMISSIONER WYLIE:  Two-thirds?  And
 14       two-thirds on advertising.
 15  4800                 MR. SUBDAR:  Correct.
 16  4801                 COMMISSIONER WYLIE:  But it is still
 17       very strong compared to some of these other services I
 18       was referring to.
 19  4802                 Now, with regard to the CP you did
 20       come up with at least a ramp up from year four, 17 per
 21       cent in year four, 18 per cent in year five.  Maybe at
 22       the reply stage -- we do have an intervenor -- you can
 23       come up with some imaginative way of dealing with this
 24       possible increase in Canadian content as between what
 25       we do with the evening period and what we do with the


  1       overall that would eliminate status quo that would be
  2       something more imaginative as to what you can live
  3       with.
  4  4803                 MR. DI FELICE:  Thank you.
  5  4804                 COMMISSIONER WYLIE:  With regard to
  6       the CP, depending of course on what you do with
  7       exhibition, or if you prefer if we wanted to try to
  8       generate more Canadian content for this service in line
  9       with your growing financial ability, you could raise
 10       the 16 per cent higher instead.  You can also discuss
 11       that.
 12  4805                 In any event, what you have now,
 13       which is beginning at year four, would be at a minimum
 14       acceptable as a condition of license, to start ramping
 15       up in year four with the 16 per cent CPE, ramping it up
 16       to 17 per cent and 20 per cent by year seven.  Correct?
 17  4806                 MR. DI FELICE:  Would you like me to
 18       respond to that or to consider that --
 19  4807                 COMMISSIONER WYLIE:  Yes.  Whether or
 20       not this is -- I read that from the calculation of your
 21       3rd of May.  The calculation I make generates 16 per
 22       cent in year one, two, three and in year four, 17 per
 23       cent, 18 per cent, 19 per cent, 20 per cent.  This
 24       would be your commitment by condition of license as
 25       opposed to the 16 per cent.


  1  4808                 MR. DI FELICE:  That's true.
  2  4809                 COMMISSIONER WYLIE:  At a minimum. 
  3       Now, you are going to come back and see whether there
  4       can be improvement in exhibition as well or improvement
  5       in considering that these were commitments you were
  6       prepared to make even when your projections were lower.
  7  4810                 Benefits.  $1.1 million was for
  8       license fee top up.  That is in paragraph 5 of the
  9       transfer decision.
 10  4811                 Since the calculation generates
 11       16 per cent, 17 per cent, as I just described, where is
 12       that money shown in your financial projections?
 13  4812                 MR. DI FELICE:  We haven't, I don't
 14       believe, unless you would like to correct me, Rehaz. 
 15       We haven't shown any of that money in our financial
 16       projections.
 17  4813                 COMMISSIONER WYLIE:  Why not?  So you
 18       probably would calculate this faster than me, but
 19       $1.1 million would be an average of more than $100,000. 
 20       Well, it doesn't have to be each year.
 21  4814                 But why is it not shown in those
 22       projections?  It is supposed to be incremental to --
 23  4815                 MR. DI FELICE:  Understood.  My
 24       understanding, and I have talked to the person who is
 25       preparing the rules relating to the establishment of


  1       this fund, which we hope to have established soon, is
  2       that the fund will fund the production of Hispanic and
  3       Italian programming, ethnic programming, but that those
  4       monies wouldn't necessarily come directly to us.  They
  5       may be in the form of license fee supplements that
  6       don't come directly to Telelatino, may go directly to
  7       independent producers or freelance producers.
  8  4816                 COMMISSIONER WYLIE:  No, but my
  9       question was more where does it show that it will come
 10       from Telelatino to producers, since the line showing
 11       programming expenses for Canadian, is there something
 12       that shows there?  Where is that money?  Under Canadian
 13       programs I made my calculations of course total
 14       Canadian programming as a percentage of revenues of the
 15       year before and I get 16 per cent, 17 per cent, 18 per
 16       cent, 19 per cent, so incremental to that should be
 17       that benefit.  Where does it show in the projections
 18       under programs to be telecast, Canadian program?
 19  4817                 MR. DI FELICE:  It is in an
 20       incremental benefit, I think you are correct, but it
 21       doesn't come from Telelatino, it comes from Corus.
 22  4818                 COMMISSIONER WYLIE:  Ah, so it would
 23       show on their books?
 24  4819                 MR. DI FELICE:  I presume it would
 25       show on their books, but we don't --


  1  4820                 COMMISSIONER WYLIE:  Presumably,
  2       Mr. Johnston, apart from what they are supposed to do
  3       for themselves in their other services?
  4  4821                 MR. JOHNSTON:  Yes.  I think the
  5       proposal was that the $1.1 million would go for license
  6       fees, top up license fees to produce programming which
  7       might -- which Telelatino might license, but other
  8       ethnic broadcasters might license as well.
  9  4822                 In other words, it wasn't a benefit
 10       that was exclusive to -- it wasn't money that was going
 11       to flow directly to Telelatino.
 12  4823                 COMMISSIONER WYLIE:  So to you
 13       that -- it says:
 14                              "...the benefits of $1.1 million
 15                              will be distributed..."
 16  4824                 This is paragraph 5:
 17                              " license fee top up
 18                              funding for the production of
 19                              programs directed to Canada's
 20                              Italian and Hispanic
 21                              communities."  (As read)
 22  4825                 So they may not end up on Telelatino
 23       at all.  So that is Corus money.
 24  4826                 MR. DI FELICE:  That is correct.
 25  4827                 COMMISSIONER WYLIE:  Not necessarily


  1       to the benefit of --
  2  4828                 MR. JOHNSTON:  The hope is that
  3       Telelatino would be able to license that, but it wasn't
  4       meant to be exclusive to Telelatino.
  5  4829                 COMMISSIONER WYLIE:  No, but
  6       somewhere in Corus' financials it will show as an
  7       increment --
  8  4830                 MR. JOHNSTON:  It should, yes.
  9  4831                 COMMISSIONER WYLIE:  -- as a benefit.
 10  4832                 MR. JOHNSTON:  Yes.
 11  4833                 COMMISSIONER WYLIE:  Okay.
 12  4834                 Cultural diversity.  Corus has a
 13       corporate plan.  Is Telelatino going to be involved
 14       in -- or covered?
 15  4835                 MR. DI FELICE:  In terms of
 16       employment equity, we would -- now having Corus
 17       Entertainment as our controlling shareholder we would,
 18       I think, quality to be covered under the provisions of
 19       the Employment Equity Act.
 20  4836                 COMMISSIONER WYLIE:  No, I meant more
 21       are you aware of the fact that now the larger
 22       broadcasters are involved as well --
 23  4837                 MR. DI FELICE:  In the Diversity Task
 24       Force through the CAB?
 25  4838                 COMMISSIONER WYLIE:  Yes.


  1  4839                 MR. DI FELICE:  Yes, I am aware of
  2       that.
  3  4840                 COMMISSIONER WYLIE:  Then for
  4       employment equity as such you would be under the
  5       Employment Equity Act through Corus, but the other
  6       diversity plan, and so on, is Corus involved,
  7       Mr. Johnston?
  8  4841                 MR. JOHNSTON:  I don't know.
  9  4842                 COMMISSIONER WYLIE:  No?
 10  4843                 MR. JOHNSTON:  I don't know the
 11       answer to that, Madam Wylie.
 12  4844                 COMMISSIONER WYLIE:  I'm not sure I
 13       do either, whether it was only for conventional
 14       television stations or specialties as well
 15  4845                 MR. JOHNSTON:  I could undertake to
 16       find that out for you.
 17  4846                 COMMISSIONER WYLIE:  Yes, perhaps the
 18       counsel will know whether someone who doesn't have a
 19       conventional station is involved or not in that.  We
 20       will both be fired.
 21       --- Laughter / Rires
 22  4847                 COMMISSIONER WYLIE:  But obviously
 23       that is something of importance to you as well.
 24  4848                 Sensitivity is also necessary,
 25       perhaps even more.  Do you have an ongoing


  1       sensitization information package for producers or
  2       employees to ensure that any group is properly covered
  3       and portrayed on the air?
  4  4849                 MR. DI FELICE:  Well, I think in
  5       terms of on-air portrayal we adhere to the standards we
  6       talked about earlier.
  7  4850                 In terms of our practising diversity
  8       and our hiring, I think we are very much in line, I
  9       think, with expectations, both in terms of, I think
 10       visible minority hiring in terms of the percentages of
 11       our staff that are visible minorities according to our
 12       filed information and I think in terms of our on-air
 13       diversity I think it speaks for itself.
 14  4851                 COMMISSIONER WYLIE:  Not only in
 15       terms of exhibition but the treatment of minorities,
 16       which have come up in your programming like anyone
 17       else's.
 18  4852                 Closed captioning.  You were asked by
 19       the Commission what is possible.  In light of the
 20       recently ownership changes in Telelatino and what
 21       appears to be a very optimistic term financially coming
 22       up, would it not be possible for you to close caption
 23       maybe 90 per cent of all your English programming,
 24       let's say by the end of the sixth year of your term?
 25  4853                 MR. DI FELICE:  I think there might


  1       be some possibilities in that regard.  I think John can
  2       speak to our closed captioning practices and efforts.
  3  4854                 MR. MONTESANO:  I will answer your
  4       specific question.
  5  4855                 In regards to our English-language
  6       programming, the only challenge that we foresee is the
  7       issue of dual language programming, because we want to
  8       go in this direction of encouraging dual language
  9       programs.  Whenever people speak Italian or Spanish we
 10       can subtitle it.  Oftentimes our communities are
 11       speaking in a dialect, so to actually get the expertise
 12       that is necessary to caption much of that is a bit of a
 13       challenge.  It is a challenge for us also to encourage
 14       many of our suppliers to provide captioning.
 15  4856                 So I think it really depends on the
 16       type of English-language programming we are talking
 17       about.  Because again, if we are talking about a show
 18       that is 80 per cent English and people slip in and out
 19       of Italian or Spanish, captioning that 80 per cent is
 20       not difficult, but captioning that 20 per cent and
 21       getting someone to kind of get the Spanish, capture it,
 22       have the expertise to be able to caption it, it is
 23       expensive.  Oftentimes that potentially could be more
 24       than what we are paying --
 25  4857                 COMMISSIONER WYLIE:  What if my


  1       question was:  Could you commit to captioning all of
  2       the programming that is totally in English?
  3  4858                 MR. MONTESANO:  I think we can strive
  4       to do that.  I think that is very --
  5  4859                 COMMISSIONER WYLIE:  Could you do
  6       that from year one if it were limited to the
  7       programming that is totally in English?
  8  4860                 MR. DI FELICE:  I think what we would
  9       be comfortable with would be striving to do 90 per cent
 10       of it by the end of the license term.
 11  4861                 Having said that, all of the "Latin
 12       Heritage Series" programs that we talked about earlier,
 13       of which there are the equivalent of, I believe,
 14       60 half-hour episodes that we have produced now that
 15       will start to go to air in the fall, all of those are
 16       closed caption.  The English portions of those are
 17       closed captions.
 18  4862                 I think John is relating to you some
 19       of the difficulties we encountered when we went to
 20       close caption them on the Italian or Spanish portions
 21       of those programs.
 22  4863                 COMMISSIONER WYLIE:  Mr. Johnston, we
 23       have just saved you some work.  Corus will file a plan
 24       and the specialties will all be included.
 25  4864                 MR. JOHNSTON:  Thank you,


  1       Madam Wylie.
  2  4865                 COMMISSIONER WYLIE:  My colleague may
  3       have other questions, he is more knowledgeable than I
  4       am about the closed captioning situation.  I
  5       understand, of course, with multiple languages it is
  6       difficult.
  7  4866                 That leads us to descriptive video
  8       and the use of the SAP for other language rather than
  9       descriptive video.
 10  4867                 I gather from your response in a
 11       deficiency letter that you have no plans to provide
 12       descriptive programming.
 13  4868                 Perhaps you can expand about why
 14       there is no possibility --
 15  4869                 MR. DI FELICE:  Yes.  It is not
 16       something we have -- excuse me.
 17  4870                 COMMISSIONER WYLIE:  Are you
 18       technically equipped now to have a SAP channel?
 19  4871                 MR. DI FELICE:  Yes.
 20  4872                 COMMISSIONER WYLIE:  What do you use
 21       it for?
 22  4873                 MR. DI FELICE:  We have been quite
 23       innovative in using the SAP to do dual language tracks
 24       to some of our programming.  For instance, our Italian
 25       soccer, about 20 or 30 of our Italian soccer games this


  1       year on Sunday afternoons I believe were the SAP
  2       channel -- correct me if I'm wrong.  The SAP channel
  3       was used for Spanish audio and the primary audio was
  4       done from our TLN studio, our own studio commentary to
  5       an international soccer game.
  6  4874                 Which, by the way, also, just as a
  7       coincidence, as a result of I guess a quirk in some of
  8       the rules that apply to recognition of Canadian
  9       content, that effort wasn't recognized even on a
 10       partial level as Canadian content because it was an
 11       international game being dubbed or versioned into
 12       English as opposed to a foreign language, but we used
 13       the SAP for that.  We used it over a whole month last
 14       year during the "Copa America" tournament to a language
 15       tracks as well, doing both English and Spanish audio
 16       commentary to soccer games.
 17  4875                 We had a series of 22 episodes run
 18       this broadcast season that just finished a few weeks
 19       ago, a drama series of 22 episodes in prime time that
 20       ran with Italian in the primary audio.  It was an
 21       original dual language series, dual language being it
 22       was double shot,  It was shot and dubbed over with
 23       English, although it was originally shot in Italian. 
 24       The first audio was Italian, the second audio was
 25       English.


  1  4876                 So we have used our SAP capability
  2       from time to time to do dual audio, two different
  3       languages.
  4  4877                 COMMISSIONER WYLIE:  Those are my
  5       questions.  Thank you for your cooperation, Madam,
  6       gentlemen and Mr. Johnston.
  7  4878                 We will hear from you in reply as to
  8       what your responses are in light of the financial
  9       context about the Canadian exhibition, both all day and
 10       in the evening.
 11  4879                 The CP, whether it remains at that
 12       level and what could it be combined with exhibition to
 13       show some improvement with regard to Canadian content
 14       approaching a little more the other specialty services
 15       considering your success, which of course we
 16       congratulate you for.
 17  4880                 It is always nice to see projections
 18       going up of course, it always puts the panels appearing
 19       before us in an awkward situation of being asked for
 20       more, but that is life.
 21  4881                 Thank you.
 22  4882                 MR. DI FELICE:  Thank you very much.
 23  4883                 THE CHAIRPERSON:  Thank you.
 24  4884                 Commissioner Langford.
 25  4885                 COMMISSIONER LANGFORD:  Thank you.


  1  4886                 I just have a few questions, one
  2       factual and one a little bit of blue-skying.
  3  4887                 I am picking up on your comment from
  4       your opening statement with regard to your request to
  5       move from 15 per cent to 25 per cent -- can I call it
  6       English ethnic programming?  I'm not quite sure how to
  7       define it.
  8  4888                 Obviously implicit in this "it is not
  9       revolutionary but evolutionary" is what you see as a
 10       sensitivity to demographics and the notion of different
 11       generations of immigration.
 12  4889                 But I'm wondering, if you have been
 13       studying the demographics, where this ends.  Do you
 14       have any sense, are you going to be back in seven years
 15       saying:  "Well, it is not revolution, it is evolution
 16       and we want to go to 35 per cent or 40 per cent".  Then
 17       in 14 years saying -- and that may not be a bad thing. 
 18       That may be the reality.
 19  4890                 So there is no trick to this
 20       question, I am just wondering whether in your study of
 21       the demographics and coming up with this kind of cute
 22       but also perhaps telling slogan, there is more to this
 23       than just simply moving after so many years one notch
 24       more in one direction.
 25  4891                 MR. DI FELICE:  I think it is a sort


  1       of a sociological fact in terms of immigration that
  2       subsequent generations tend to become assimilated and
  3       tend to lose the original home language.
  4  4892                 As to what will be the statistics
  5       when the next census is done in seven years from now, I
  6       think that our position is that we are established as a
  7       third language channel, we are predominantly third
  8       language, continue to be, I wouldn't foresee that
  9       changing.  I don't think there will ever come a day
 10       where we would be an all-English ethnic channel because
 11       the language is something that I think subsequent
 12       generations do end up craving.
 13  4893                 I have actually read some sort of
 14       sociological studies out of the U.S. and Italian
 15       immigration in the U.S., which perhaps there is a
 16       bigger Italian-American population in the U.S., but
 17       that is also consisting mostly of more subsequent
 18       generations than in Canada.  It is an earlier immigrant
 19       population there.
 20  4894                 And subsequent generations tend to
 21       want to recapture their language.  In fact, I think
 22       there is a dip in the interest in the language in the
 23       second and third generation and then a dip up, but in
 24       terms of a response to sort of blue-skying what might
 25       happen in the future, I think that would be my --


  1  4895                 COMMISSIONER LANGFORD:  So when you
  2       come before us in 30 years you may be wanting to go
  3       back to 50 per cent.  I intend to be here, so be
  4       careful on how you answer this question, I am going to
  5       hold you to it.
  6  4896                 You may want to go back to the more
  7       Italian and Hispanic.  I mean, that is conceivable, I
  8       am not being facetious.  If you follow the American
  9       example it is conceivable you could come in in seven
 10       years and say "A little more English", and in 14 years
 11       "A little more English" but in 21 years you might come
 12       in and say, you know, "No, we want to go back the other
 13       way".  Is that a possible timeline?
 14  4897                 MR. DI FELICE:  Yes.  I think, yes,
 15       it would -- I think anything is possible and I think
 16       that is just as possible a scenario as any other.
 17  4898                 COMMISSIONER LANGFORD:  Another
 18       approach to this, of course, would be to say that a
 19       kind of subset of your mandate or vision might be to
 20       cross generational lines in a way and to somehow make
 21       your programming an opportunity for a kind of a family
 22       bonding across a number of generations so that the
 23       ideal would be to have the program in Italian or
 24       Spanish for grandma and grandpa and having it subtitled
 25       in English for the children.


  1  4899                 MR. DI FELICE:  Those techniques are
  2       precisely what we do.  Those are some of the techniques
  3       that we use.
  4  4900                 COMMISSIONER LANGFORD:  So are you
  5       saying that would be included in what you are calling
  6       the English portion, the 25 per cent?
  7  4901                 MR. DI FELICE:  No.
  8  4902                 COMMISSIONER LANGFORD:  No?
  9  4903                 MR. DI FELICE:  But those techniques
 10       are what we have used and we have demonstrated
 11       subtitling is one way to make programming accessible
 12       and to overcome a language barrier.
 13  4904                 COMMISSIONER LANGFORD:  What type of
 14       programs, can you give me an idea, if you move from the
 15       15 per cent to 25 per cent, and I were to say you are
 16       going to, our order will be effective tomorrow and you
 17       are granted your wish, where would you see yourselves 
 18       buying these programs or what type of programs would
 19       you be making to make this change?  What goes out the
 20       door?  What comes in the door?
 21  4905                 MR. DI FELICE:  Well, in terms of
 22       produced programming, as I mentioned before, I think
 23       our intent would be to produce programming for the
 24       younger demographic that is dual language programming
 25       that would therefore be coded as English, for the


  1       late-night slot from 11:00 to 12:00.  We have talked
  2       about various ideas about programming that we either
  3       have done before to bring it back on a more regular
  4       basis or to do all new programming, but mostly
  5       youth-oriented.
  6  4906                 The nature of our audience,
  7       especially our 9:00 to 11:00 p.m. Italian audience,
  8       that it is a loyal, long-standing audience that is
  9       mostly older generation and doesn't tend to watch after
 10       11:00 p.m.  So it dovetails nicely with not disrupting
 11       the viewing patterns of our loyal viewers and also at
 12       the same time trying to attract younger viewers.  That
 13       programming I think in most cases would primarily be
 14       dual language.  That is on the original content side.
 15  4907                 On the acquired content side, there
 16       are a number of shows out of the States, because of
 17       their large Hispanic population, that are being
 18       produced now of various genres that are described as
 19       "Spanglish" type of shows where they -- once again what
 20       we have been describing as mixed language or dual
 21       language shows where they are talking both languages
 22       within a drama or within a variety show or whatever
 23       else and there are opportunities on the Hispanic side
 24       to acquire that kind of programming.  That apparently
 25       is doing well and crossing over well cross


  1       generationally in the States.
  2  4908                 COMMISSIONER LANGFORD:  So it is very
  3       much entertainment.  We are not talking about "Let's go
  4       shopping -- let's shop healthy at the St. Lawrence
  5       Mall" or something like that.  There is nothing wrong
  6       with entertainment, I like to be entertained, but this
  7       is definitely what we are talking about is this kind of
  8       a slightly later slot and entertainment of some sort?
  9  4909                 MR. DI FELICE:  Yes.  I think I have
 10       spoken that way, but it doesn't necessarily have to be
 11       that and it doesn't necessarily have to be that every
 12       night.  So the opportunities for doing English-language
 13       or dual language programming applies to any genre and
 14       we would look at all of it depending on what our
 15       audience tastes and reactions are.
 16  4910                 COMMISSIONER LANGFORD:  That brings
 17       me now to the one where I am a little less focused, if
 18       you can believe it, than I was on the first one.
 19  4911                 When we are talking, as Commissioner
 20       Wylie was a moment or two ago, about moving from
 21       foreign third language or foreign -- yes, third
 22       language programming to Canadian third language
 23       programming, in other words upping your Canadian
 24       content, I think there is sometimes a sense that the
 25       CRTC is what my grandmother used to call an endlessly


  1       greedy boots when it comes to Canadian content, but we
  2       do care about quality as well.  It is not just an
  3       endless search for higher numbers.  We are very
  4       concerned about high quality as well.
  5  4912                 I wonder, as I heard the reluctance
  6       in your voice, whether if we pushed too hard we might
  7       be forcing you into buying programs you really might
  8       not be quite as happy to have on your lineup.
  9  4913                 I am not trying to open a huge escape
 10       hatch for you here or anything, but I am cognizant of
 11       some of the remarks we heard from the last applicant,
 12       the CHUM Group, which is a bigger group than your
 13       standalone, although perhaps not bigger than your whole
 14       family at this point, who told us in no uncertain terms
 15       that even they, though they are becoming quite a large
 16       player, are not big enough necessarily to compete for
 17       the very top level, the highest costing shows.
 18  4914                 I wonder what your feeling is.  This
 19       is a bit of a touchy-feely question and I apologize for
 20       it, but where do we leave you in the competitive
 21       equation if we push you higher on the Canadian content
 22       side?
 23  4915                 MR. DI FELICE:  For an ethnic
 24       broadcaster, what we have done I think over the last
 25       license term, certainly over the last few years and I


  1       think it has been recognized by a lot of people, is we
  2       have overcome a lot of the stigma I think attached to
  3       the quality of ethnic programming, that it is low
  4       production value programming, that third language
  5       programming or ethnic programming is low production
  6       value programming.  That hasn't been -- and I think
  7       that ghettoization of ethnic programming is a real
  8       stumbling block, a real obstacle to Canadians embracing
  9       that kind of programming.  I think we have overcome it
 10       in many ways.
 11  4916                 Still with limited resources,
 12       certainly not in the league of the media group that you
 13       are talking about.  The resources that we are talking
 14       about are much more limited, but even with those
 15       resources we have been able to focus them on doing what
 16       we consider to be mainstream competitive programming
 17       that is ethnic though.
 18  4917                 That is what we are really proud of. 
 19       That is what people have actually reacted to.  We would
 20       like to continue to be able to do that, so increasing
 21       volume requirements I think is a concern, not because
 22       we don't want to do more, but because we want to
 23       maintain that success.
 24  4918                 COMMISSIONER LANGFORD:  What are we
 25       liable to get if we ask for more, more "Emily of New


  1       Moon" in Italian or Spanish, or are we more likely to
  2       get something originally produced by you or ordered and
  3       purchased by you?
  4  4919                 MR. DI FELICE:  Our intention is to
  5       continue to originally produce sort of trailblazing
  6       programming like that "Latin Heritage Series" that we
  7       are talking about.  So we will be doing more of that in
  8       any case.
  9  4920                 We will continue to be doing more as
 10       well of the community-oriented daily segments being out
 11       in the community.
 12  4921                 But, as I said before, I think the
 13       way to satisfy a condition of doing more is to, yes,
 14       either make it, buy it or, whether it is bought or
 15       made, repeat it more often.  Because specialty channels
 16       do repeat their programming on a wheel, we just have
 17       never typically done that at the same pace and our
 18       audiences have come to expect a service that doesn't
 19       repeat their programs often.
 20  4922                 COMMISSIONER LANGFORD:  Thank you
 21       very much.
 22  4923                 MR. DI FELICE:  Thank you.
 23  4924                 THE CHAIRPERSON:  Thank you.
 24  4925                 Commissioner Grauer.
 25  4926                 COMMISSIONER GRAUER:  Thank you.


  1  4927                 Just a quick follow-up to Commission
  2       Langford's question.
  3  4928                 You are making quite a tidy profit
  4       these days at your station.  It has been my experience
  5       that you have obligations to return to your
  6       shareholder -- to maximize shareholder value.  It is
  7       generally my experience that broadcasters will do what
  8       they have to do.  That is not to diminish what you do,
  9       but if we want to see more put in, whether it is more
 10       money for better production values or more in terms of
 11       more quantity it's kind of the way it goes, it is the
 12       push-pull isn't it, between what you have to do for
 13       your shareholders and what we try to do for the public.
 14  4929                 MR. DI FELICE:  I think that's true.
 15  4930                 I would point out that it is only
 16       very recently, in 1999, that our cumulated deficits
 17       have disappeared.
 18  4931                 COMMISSIONER GRAUER:  I understand
 19       that.  I completely understand.  I didn't mean to
 20       suggest anything other than that.
 21  4932                 One thing that I must say I have
 22       wondered about for some time, and I should know the
 23       answer to this, but I have several different reports
 24       about your carriage and where you are carried.  What I
 25       wondered is, are you carried anywhere on basis?


  1  4933                 MR. DI FELICE:  No.  As an ethnic
  2       service I think that according to the regulations we
  3       are required to be discretionary.
  4  4934                 COMMISSIONER GRAUER:  It is that I
  5       have you listed as on basic here, but perhaps it is
  6       extended basic.
  7  4935                 MR. DI FELICE:  Yes
  8  4936                 COMMISSIONER GRAUER:  To your
  9       knowledge you are not carried on basic anywhere?
 10  4937                 MR. DI FELICE:  That is correct
 11  4938                 COMMISSIONER GRAUER:  I notice it is
 12       fairly extensively through Ontario and through western
 13       Canada, in particular what has always struck me is that
 14       you had extended basic carriage in Victoria of all
 15       places.
 16  4939                 Do you know how that came about, what
 17       the criteria that was used to -- were you involved in
 18       negotiating carriage on the extended basic tier?
 19  4940                 MR. DI FELICE:  No, not for Victoria. 
 20       I think that at the time those Rogers systems added --
 21  4941                 MR. SUBDAR:  At the time.  In
 22       Vancouver we are on Special Pay, but I think those
 23       systems were Rogers systems.
 24  4942                 COMMISSIONER GRAUER:  Actually they
 25       are Shaw systems.


  1  4943                 One of the reasons that it has always
  2       struck me as odd is that I think there are 2,400 -- or
  3       1,100 people who speak Italian and 1,200 who speak
  4       Spanish and you have 43,000 subs, and then if you look
  5       at the demographics there are, I think, 7,000 Chinese,
  6       2,500 Punjabi.  In a perfect world I guess we could be
  7       delivering the ethnic services in a limited analog
  8       world to those communities where you had the large
  9       groups of population.  It is just our big challenge, I
 10       guess, is to try to sort out getting the services to
 11       those communities, and it is a big one.
 12  4944                 Okay.  That's all I have.  Thank you.
 13  4945                 THE CHAIRPERSON:  Thank you.
 14  4946                 Commissioner Cardozo.
 15  4947                 COMMISSIONER CARDOZO:  Thank you,
 16       Mr. Chair.
 17  4948                 Just a few things I wanted to
 18       clarify.
 19  4949                 On closed captioning, then, you are
 20       prepared to go to what in English programming?
 21  4950                 MR. DI FELICE:  I think that what we
 22       said was if it is English programming and not dual
 23       language, distinguish English from dual language, mixed
 24       English, so English I think would be what was formerly
 25       Type C programming, then we would be prepared to commit


  1       to closed captioning 90 per cent of that programming by
  2       year seven of our licence.
  3  4951                 COMMISSIONER CARDOZO:  Okay.  And for
  4       programming in other languages, in Spanish and Italian?
  5  4952                 MR. DI FELICE:  For Spanish and
  6       Italian, I think we have indicated that we think we
  7       need the ability not to close caption that programming
  8       for various reasons that I think John has described in
  9       terms of the difficulties.
 10  4953                 COMMISSIONER CARDOZO:  Our approach
 11       isn't you have to caption so much percentage because we
 12       think you must, it is because there are consumers out
 13       there who require it.  I am not aware that people who
 14       are hard of hearing have any different levels than any
 15       ethnic communities.  It crosses all ethnic boundaries. 
 16       So there are obviously people who are Spanish-speaking
 17       or from the Spanish and Italian communities who would
 18       benefit by closed captioning.
 19  4954                 Are you saying the technical
 20       difficulties are insurmountable?
 21  4955                 MR. MONTESANO:  There are a few
 22       issues.
 23  4956                 One of them is the fact that we get
 24       many of our programmings off satellite, the turnover
 25       time required to get them on TV oftentimes within


  1       hours, because most of our news and information
  2       programs that come in day-in/day-out, whether Spanish
  3       or Italian, the turnover time is really quick, on the
  4       one hand.
  5  4957                 Secondly, just the regular closed
  6       captioning expense is usually more than what we are
  7       paying in many cases for license fees.  The fact that
  8       you add the expertise of someone being a Spanish
  9       speaking or Italian speaking person who happens to work
 10       at a closed caption shop, that makes it, in many cases,
 11       much more cost prohibitive.
 12  4958                 COMMISSIONER CARDOZO:  Do you think
 13       that the programming you buy from American services in
 14       Italian or Spanish would be captioned?  Are you aware
 15       of that, whether there is?
 16  4959                 MR. MONTESANO:  It is not.  We are
 17       talking to them about including closed captioning and
 18       it is -- interestingly enough, as I said, sometimes
 19       there was a soap opera recently that came in from RAI
 20       from Italy that was open captioned for months, and then
 21       it disappeared.  So their service kind of comes and
 22       goes.
 23  4960                 COMMISSIONER CARDOZO:  Did you get
 24       any feedback on that, whether people found that useful?
 25  4961                 MR. MONTESANO:  No, we didn't.  I


  1       think, you know, strangely enough, I think the limited
  2       feedback I did get was people who were trying to learn
  3       the language who said it helped them learn the
  4       language.  You know, reading along helps them learn
  5       Italian or Spanish.  Because we get a lot of people who
  6       are trying to learn these languages who watch
  7       Telelatino.
  8  4962                 COMMISSIONER CARDOZO:  In terms of
  9       descriptive video you said the SAP is used from time to
 10       time.  Is there any pattern that it is used?  Is there
 11       any time period you think you could on a regular basis
 12       be doing descriptive video so that you wouldn't be --
 13       the SAP wouldn't be in a conflict with some other
 14       programming?  Could it be your afternoon programming,
 15       for example, every day would be available.  You
 16       wouldn't be using the SAP for the most part at a
 17       certain hour in the afternoon?
 18  4963                 MR. DI FELICE:  Well, that's true, it
 19       is not being used full time.  So that is a possibility.
 20  4964                 However, I think the same
 21       considerations apply to some extent, logistics and
 22       costs in terms of accomplishing that kind of
 23       initiative.
 24  4965                 COMMISSIONER CARDOZO:  In terms of
 25       cost, have you looked into sponsorships?


  1  4966                 MR. DI FELICE:  No, we have not.
  2  4967                 COMMISSIONER CARDOZO:  Let me ask you
  3       about audio description, which is describing
  4       alphanumeric stuff that goes up on your screen like
  5       phone numbers, names of people.  Do you have any
  6       practices in that area where you train your staff to
  7       make sure they are reading out alphanumeric text that
  8       pops up?
  9  4968                 MR. DI FELICE:  Just from my
 10       recollection -- and perhaps John or Agatha can speak to
 11       that in terms of our production staff and our own
 12       programs -- but I think I have always seen our people
 13       always read the keyed on graphics in all of our
 14       productions.
 15  4969                 COMMISSIONER CARDOZO:  Can I ask you
 16       a couple of things about your English-language
 17       programming.  I have more or less understood where you
 18       are going now given everything you have submitted to us
 19       in your discussion with my colleagues.
 20  4970                 What English programs do you have
 21       now?  At this point you can do 15 per cent.  Are you
 22       using that 15 per cent English?
 23  4971                 MR. DI FELICE:  Most of the time we
 24       are close to using all of it.  A portion of that, the
 25       majority of that, has been an added revenue source to


  1       Telelatino in the last two years and assisted in the
  2       financial success that we have talked about today. 
  3       That has been in the form of paid programming and
  4       infomercials.  We will need to preserve that in order
  5       to preserve the projections that we have made
  6       financially.
  7  4972                 COMMISSIONER CARDOZO:  Okay.  Assure
  8       us that you are not talking about sort of strip
  9       programming that may have an Italian-American actor
 10       on or a Latino person in an American strip comedy
 11       that you could run.  That is not what you are talking
 12       about, is it?
 13  4973                 MR. DI FELICE:  That is not what I am
 14       talking about.
 15  4974                 COMMISSIONER CARDOZO:  Okay.  It is
 16       sort of interesting as you ask for more, and just
 17       following up from Commissioner Langford's discussion, I
 18       was struck also that you are sort of -- in a sense we
 19       are trying to get the mainstream services to be more
 20       attentive to diversity and you are demonstrating that
 21       the ethnic services want to become more mainstream in
 22       the sense of English and there is an interesting
 23       meeting of the ways and it isn't our intention to keep
 24       people in boxes so I think yours is a fair request.
 25  4975                 The question is:  Do we at least then


  1       have certain needs met?  I guess that is a question
  2       that we have to decide in the end and that is the
  3       question that some people have intervened on for or
  4       against that.
  5  4976                 MR. DI FELICE:  Yes.
  6  4977                 COMMISSIONER CARDOZO:  When you ask
  7       to do more, 15 per cent Canadian content in the
  8       evening, it is a very odd request for us to say,
  9       "Please can we do more Canadian content during
 10       prime time".  Was this a quid pro quo you were looking
 11       at?  You could just do this on your own, but was it
 12       part of your quid quo pro that you will do 15 per cent
 13       Canadian content in the evening and you would like, in
 14       exchange, 10 per cent English?
 15  4978                 MR. DI FELICE:  I think it was part
 16       of the process of preparing our application and
 17       responding to requests and offering more than the
 18       status quo.
 19  4979                 COMMISSIONER CARDOZO:  So that is
 20       based on what you are asking for and the incredible
 21       lucrative position that has been talked about today
 22       that you find yourselves, just not knowing what to do
 23       with all this money you have?
 24  4980                 MR. DI FELICE:  I think I should
 25       point out as well, as I have pointed out before, that


  1       what you have described as an incredibly lucrative
  2       position perhaps in percentage terms might be true, but
  3       in real dollar terms I think it is -- we certainly
  4       continue to be dwarfed by most mainstream specialties
  5       and our cumulative deficits really did, as I said
  6       before, only get recouped in 1999 and our own
  7       shareholders have not received a dividend.
  8  4981                 The profits we are projecting, the
  9       operating revenues we are projecting, we do have plans
 10       for which relate to the potential launch of services
 11       that are complementary to Telelatino that are all
 12       Italian and all Spanish.  So we do intend to do more
 13       for our communities and we think it is a natural
 14       extension of Telelatino to do that.
 15  4982                 COMMISSIONER CARDOZO:  I have two
 16       more questions.  One is on the quality of Hispanic
 17       programming, and you will be happy to know the other is
 18       on the quality of Italian programming, just so we don't
 19       forget about that part of the equation.
 20  4983                 Certainly just so you understand when
 21       we talk about the concerns about quality of Hispanic
 22       programming we have certainly seen the letters in
 23       support of the improved quality that you have
 24       demonstrated, but we also look at the kinds of things
 25       that are raised in terms of the concern for more


  1       programming in the Spanish language, and then we look
  2       at your license and we look at the Act and we look at
  3       requirements for high standard, and so that is the
  4       context in which we pursue this issue.
  5  4984                 It is sort of interesting when you
  6       have stuff like Nelvana productions and "Emily of New
  7       Moon" dubbed into Spanish, it is kind of interesting to
  8       provide mainstream programming to people who are
  9       Spanish speaking, especially kids who may be growing up
 10       in homes that are Spanish speaking, they won't have
 11       missed out on that opportunity, so there is a certain
 12       integration aspect to it.
 13  4985                 But the flip side of it is that maybe
 14       there isn't enough Canadian-made Spanish programming
 15       that is made in the Spanish language in the first
 16       place.
 17  4986                 Could you tell me what you consider
 18       to be your best quality Spanish-language programs,
 19       Canadian-made?
 20  4987                 MS PEZZI:  In addition to our
 21       community segments that we have already talked about,
 22       our community calendars and our "Informese" segments,
 23       which our cameras go out to the community to record --
 24  4988                 COMMISSIONER CARDOZO:  Those are the
 25       short --


  1  4989                 MS PEZZI:  Those are the 90-second
  2       that run throughout our weekly schedule, as well as the
  3       "Usted Decide", which is a cumulative nine-minute per
  4       week issues-based show.  We have mentioned this before,
  5       but our TLN spotlight basically is an expansion of the
  6       "Informese", of the 90-second.  So we have produced, on
  7       the Spanish side in the last year, six of those.  And
  8       we continue to do more.
  9  4990                 COMMISSIONER CARDOZO:  But which
 10       would be -- or do you have Canadian-made Spanish
 11       programs that are half an hour or one hour in length,
 12       like a full program?
 13  4991                 MS PEZZI:  Yes.  This is one the
 14       TLN -- this is what the "TLN Spotlight" is one.
 15  4992                 COMMISSIONER CARDOZO:  This is the
 16       "TLN Spotlight", okay.
 17  4993                 MS PEZZI:  And we are going to
 18       continue to do more of those as the year progresses, as
 19       well as we have the "Hispaños in Canada", which is the
 20       half hour program.  That is basically a community talk
 21       show.  We plan to do more of the community segments as
 22       well.
 23  4994                 COMMISSIONER CARDOZO:  Do you have
 24       anything more in terms of half hour or one hour
 25       programs that you are planning?


  1  4995                 MR. DI FELICE:  Well, I think in
  2       terms of sort of what we would consider probably to be
  3       our best foot forward, I think that will be coming up
  4       this fall with the "Hispanic Canadians".  That is one
  5       of the "Latin Heritage Series" projects that --
  6  4996                 COMMISSIONER CARDOZO:  Then for the
  7       rest of the six and half years, is it that type of
  8       programming you are talking about?
  9  4997                 MR. DI FELICE:  Right.  We
 10       distinguish --
 11  4998                 COMMISSIONER CARDOZO:  Just tell me
 12       in a sentence --
 13  4999                 MR. DI FELICE:  In terms of
 14       quality --
 15  5000                 COMMISSIONER CARDOZO:  -- how you
 16       would define the kind of high quality Spanish-language
 17       programming that you are planning over the course of
 18       the license term.
 19  5001                 MR. DI FELICE:  We will continue with
 20       "Latin Heritage Series" type programming on both the
 21       Spanish side and on the Italian side.  That is, for us,
 22       ultra high-quality programming with enduring value,
 23       with lasting value that people responded to.
 24  5002                 Nonetheless, though, the quality and
 25       the production values and the response to the community


  1       programming, whether it is the half hour "Spotlights"
  2       or just the micro-programming, it is a different genre
  3       of programming, but the overall quality, the overall
  4       packaging, the overall content and the execution, is
  5       what we would call our highest quality.
  6  5003                 COMMISSIONER CARDOZO:  Okay.  Could
  7       you see yourself doing a news or current affairs or
  8       some kind of program in Spanish?
  9  5004                 The question that Commissioner Wylie
 10       talked to you about in terms of relieving you of that
 11       condition of license in Spanish is an interesting one,
 12       because if you go back historically it was probably
 13       there in a sense defend the turf of CFMT, but CFMT does
 14       good Italian news, Italian-language news, but doesn't
 15       do Spanish language news and so the Spanish speaking
 16       community doesn't have any other opportunities, as far
 17       as I know, to get any form of Spanish news, even a half
 18       hour a week.
 19  5005                 So I would see that there is more of
 20       an imperative for you to think about that as something
 21       to do than anybody else in the system.
 22  5006                 MR. DI FELICE:  Well, it is something
 23       that we will think about.  I'm not sure that a Spanish
 24       language newscast won't be done in the future, given
 25       the new conventional multiculturals in Toronto.  We are


  1       a -- there are different considerations that we would
  2       have to talk into account, a local conventional versus
  3       a national specialty, our striving to usually not be as
  4       "Torontocentric" as people have told us.
  5  5007                 One of the criticisms in the past was
  6       that we were Torontocentric and we have gone out of our
  7       way to include segments from Calgary, Vancouver,
  8       Montreal.  When it comes to newscasts, that would be a
  9       factor.  A local newscast would obviously be a local
 10       newscast.  I would think that would be one of the
 11       factors in exploring the feasibility of pursuing it.
 12  5008                 COMMISSIONER CARDOZO:  Even if you
 13       just did news footage with voice over.  That
 14       provides -- and I don't mean to be too cheap about
 15       this, but even that would provide -- if it was done
 16       well with perhaps one or two analysts who come on from
 17       to time you provide -- I'm thinking of what can be
 18       provided to that community that is not there now.
 19  5009                 MR. DI FELICE:  Right.
 20  5010                 COMMISSIONER CARDOZO:  Can you just
 21       tell me what you would consider to be your top Italian
 22       language shows currently?
 23  5011                 MR. DI FELICE:  Once again I would
 24       refer to the "Latin Heritage Series", I think the shows
 25       that we did there are probably sort of the top quality


  1       in terms of the amount of time we spent making them and
  2       the amount of money we spent making them.
  3  5012                 COMMISSIONER CARDOZO:  And ongoing?
  4  5013                 MR. DI FELICE:  Ongoing, the
  5       equivalent of our "Hispaños in Canada" would be our
  6       "Viva Domenica" weekly variety talk show in Italian.
  7  5014                 COMMISSIONER CARDOZO:  Okay.  Do you
  8       want to add anything more, Ms Pezzi?
  9  5015                 MS PEZZI:  Yes.  In addition to the
 10       community segments we talked about we have "Viva
 11       Domenica" and as well "Graffiti" which is a
 12       youth-oriented entertainment program weekly.
 13  5016                 As well, again on the Italian side,
 14       is the expanded version of the "Nota Bene" community
 15       segment which is "TLN Spotlight" and we have produced
 16       18 of those in the last year and a half.
 17  5017                 COMMISSIONER CARDOZO:  So the
 18       benefits of the transfer go towards some of these
 19       programs?
 20  5018                 MR. DI FELICE:  You mean the Corus
 21       benefits package?
 22  5019                 COMMISSIONER CARDOZO:  Right.
 23  5020                 MR. DI FELICE:  Well, there is
 24       potential for them --
 25  5021                 COMMISSIONER CARDOZO:  But they


  1       haven't --
  2  5022                 MR. DI FELICE:  -- this type of
  3       programming, but --
  4  5023                 COMMISSIONER CARDOZO:  They haven't
  5       kicked in as yet.
  6  5024                 MR. DI FELICE:  -- it would be, I
  7       think, a license fee supplement to the license fee we
  8       would pay for them to be produced.  So programming of
  9       this type could be one of the genres that are produced.
 10  5025                 COMMISSIONER CARDOZO:  Okay.  Thank
 11       you very much for that.
 12  5026                 Thank you, Mr. Chair.
 13  5027                 MR. DI FELICE:  Thank you.
 14  5028                 THE CHAIRPERSON:  Thank you.
 15  5029                 Is Mr. Magaly San Martin here, the
 16       intervenor, because that would be the next item on the
 17       agenda.  If he is not here, then we will proceed to the
 18       next item.
 19       --- Pause
 20  5030                 THE CHAIRPERSON:  Mr. Secretary, have
 21       you any information?
 22  5031                 MR. LEBEL:  No, Mr. Chairman, he has
 23       not reported to me.
 24  5032                 THE CHAIRPERSON:  Okay.
 25  5033                 Then I will assume that a


  1       representative of the Latin American Coalition Against
  2       Racism is not present and give you an opportunity
  3       now -- do you have any reply to the intervention?
  4  5034                 MR. DI FELICE:  Excuse me.  We did
  5       file a written reply.
  6  5035                 THE CHAIRPERSON:  There is no need to
  7       elaborate on it if you don't want to, but I am giving
  8       you the opportunity to if you wish to.
  9  5036                 MR. DI FELICE:  I believe it is --
 10  5037                 THE CHAIRPERSON:  You can assume we
 11       will read your reply.
 12  5038                 MR. DI FELICE:  Understood.
 13  5039                 THE CHAIRPERSON:  It's up to you.
 14  5040                 MR. DI FELICE:  I believe
 15       Commissioner Wylie asked me to respond to some
 16       questions after the reply, to come back again.  I'm not
 17       sure if you would like us perhaps to confer and then
 18       return to the questions that you left us with?
 19  5041                 THE CHAIRPERSON:  Why don't we do
 20       that then.
 21  5042                 We will take the break and then if
 22       you want to take the microphone after that we will do
 23       that and then we will immediately follow that with the
 24       next item.
 25  5043                 Is that suitable?


  1  5044                 MR. DI FELICE:  Thank you.
  2  5045                 THE CHAIRPERSON:  Great.
  3  5046                 We will resume in 15 minutes, at four
  4       o'clock.
  5       --- Upon recessing at 1545 / Suspension à 1545
  6       --- Upon resuming at 1602 / Reprise à 1602
  7  5047                 THE CHAIRPERSON:  A l'ordre, s'il
  8       vous plaît.  Order, please.
  9  5048                 Mr. Di Felice, it is your microphone.
 10       REPLY / RÉPLIQUE
 11  5049                 MR. DI FELICE:  Thank you,
 12       Mr. Chairman.
 13  5050                 In terms of addressing Commissioner
 14       Wylie's questions regarding our considering
 15       improvements from the status quo from the current
 16       license term to the next license term, I will talk very
 17       briefly about the three key issues that she mentioned.
 18  5051                 The evening broadcast period Canadian
 19       content broadcast requirement of 15 per cent that we
 20       proposed represents the establishment of a minimum
 21       where one did not exist before.  It is something that I
 22       think for the reasons we have tabled we would be
 23       comfortable with.  That does represent an improvement.
 24  5052                 With respect to Canadian programming
 25       expenditures, ramp up, the reasoning behind the


  1       graduated ramp up of 1 per cent per year starting in
  2       year four, it did dovetail with our plans to use our
  3       operating cash flow to help establish viable digital
  4       ethnic channels, all-Italian and all-Spanish versions
  5       of Telelatino.  That was part of our reasoning for
  6       starting the 1 per cent per year increase in year four
  7       moving up to 20 per cent.
  8  5053                 To total impact compared to the
  9       current license term of that proposal, that improvement
 10       on the status quo, is an increase, an extra $9 million
 11       in the Canadian content expenditures over the next
 12       license term compared to the current license term. 
 13       That represents $9 million or 132 per cent.
 14  5054                 What we are prepared to do is to
 15       further improve that proposal by, as Commissioner Wylie
 16       suggested, starting the 1 per cent per year increments
 17       in year one of the license, increasing by year seven to
 18       23 per cent.  The result would be that what was
 19       previously offered as a 132 per cent improvement in
 20       Canadian content expenditures, an extra $9 million,
 21       will become 168 per cent improvement over the current
 22       license term and will amount to a total Canadian
 23       content expenditure over the next license term of, as
 24       we calculated based on the May 3rd financial
 25       projections we tabled of $18.6 million total versus the


  1       $16.1 million total that we previously tabled which, in
  2       and of itself, as I have mentioned, was already an
  3       extra $9 million over the current license term.  So we
  4       believe that that is a major improvement.
  5  5055                 In terms of the third issue, Canadian
  6       content broadcast requirement which stands at 25 per
  7       cent in our overall ethnic programming, our view is
  8       that in the interests of our audience, and in order to
  9       preserve the integrity of our schedule as we have
 10       pointed out during this afternoon, the integrity of our
 11       schedule with our viewers and advertisers, and in view
 12       as well of the various type of Canadian enhancements
 13       and contextualization work that we do that was referred
 14       to in the demo reel and that we have referred to from
 15       time to time in the course of this hearing, there is
 16       various work that we do that is Canadian in nature,
 17       whether it consists of subtitling programming, whether
 18       it consists of dual audio tracks where TLN-produced
 19       commentary to a soccer game doesn't count as Canadian
 20       content, there is work that we do that is not counted
 21       as Canadian content, Canadian broadcast when it is
 22       done, and Canadian production, and we want to keep that
 23       in mind.
 24  5056                 So, as a result, we would prefer to
 25       keep the Canadian content broadcast requirement at a


  1       25 per cent level for the next license term in view of
  2       the significant improvement in the proposal we have
  3       made to the Canadian programming expenditure levels and
  4       to the establishment of the evening broadcast period
  5       requirement of 15 per cent content.
  6  5057                 As well, I can separately address the
  7       Latin American Committee on Race Relations.
  8  5058                 We have filed a written reply which
  9       addresses all of the issues raised by the letter, but
 10       beyond that I do want to point out that the letter did,
 11       and we do appreciate, the support for Telelatino and
 12       Telelatino's seven year license renewal that the letter
 13       expresses at its outset and the expressions of
 14       Telelatino's importance to the community.  We are in
 15       agreement with that and we appreciate those statements.
 16  5059                 We have replied in detail to the
 17       written interventions regarding the complaints in that
 18       letter and we leave it to the Commission to review that
 19       letter.
 20  5060                 Thank you.
 21  5061                 THE CHAIRPERSON:  Thank you very
 22       much.
 23  5062                 Next item, please.
 24  5063                 MR. LEBEL:  Thank you, Mr. Chairman.
 25  5064                 We will now hear Item No. 9 on the


  1       agenda, which is applications by Cable Public Affairs
  2       Channel Inc. to renew the broadcasting licences for the
  3       English-language and French-language satellite-to-cable
  4       programming undertakings expiring 31 August 2002.
  5  5065                 The licensee also proposes amendments
  6       to its broadcasting licence as outline in the agenda.
  7  5066                 Mr. Ken Stein will introduce his
  8       colleagues.
  9       --- Pause
 10  5067                 COMMISSIONER LANGFORD:  You are
 11       flattering our sense of youth if you think we can read
 12       that from here.
 13       --- Laughter / Rires
 14  5068                 COMMISSIONER LANGFORD:  We appreciate
 15       the flattery, but it is all going to catch up to us
 16       soon.
 17       --- Pause
 18  5069                 MR. LEBEL:  You have 20 minutes to
 19       make your presentation.
 21  5070                 MR. STEIN:  Thank you, Mr. Chairman,
 22       Commissioners, Madam Vice-Chair.
 23  5071                 My name is Ken Stein.  I am pleased
 24       to be here today as CPAC's Chairman.
 25  5072                 Allow me to introduce my colleagues,


  1       all of whom are known to you, but some perhaps in
  2       different capacities.
  3  5073                 To my left is Colette Watson, CPAC's
  4       President and General Manager.
  5  5074                 To my right is Phil Lind,
  6       Vice-Chairman of Rogers Communications Inc.  Phil
  7       played the key role in building the support in the
  8       cable industry that was necessary to allow us to launch
  9       CPAC in 1992.  Phil has served on the CPAC Board since
 10       that time.
 11  5075                 To Colette's left is Yves Mayrand. 
 12       Yves is the Vice-President, Legal Affairs and Corporate
 13       Secretary for Cogeco Inc.  He is also a director of
 14       CPAC.
 15  5076                 On the far right of the front row is
 16       Jim Deane, President of Access Communications of
 17       Regina.  Jim is a director of CPAC and represents
 18       western Canada.
 19  5077                 Behind Jim is Dean MacDonald, also a
 20       director of CPAC, and a Senior Vice-President of Rogers
 21       Communications, who represents the Atlantic Canada
 22       region on CPAC's Board.
 23  5078                 This represents all of our Board of
 24       Directors, with the exception of Pierre Karl Péladeau,
 25       who has just recently been elected to the Board of


  1       CPAC.
  2  5079                 In the back row, we have the team
  3       that has helped to prepare our license renewal
  4       application.
  5  5080                 Starting on my left is Patricia
  6       Hutton, CPAC's Director of Finance and Administration.
  7  5081                 To Patricia's right is Joel Fortune
  8       of Johnston & Buchan.
  9  5082                 Next to Joel is Robert Buchan of
 10       Johnston & Buchan, who is CPAC's Corporate Secretary.
 11  5083                 To Bob's right is Chris Kelly of the
 12       Strategic Counsel who prepared the market research
 13       included in our application.
 14  5084                 Mr. Chairman, I would note that
 15       today's proceedings are being streamed live on the web
 16       in video by CPAC and are also being taped for broadcast
 17       at a later date.
 18  5085                 Mr. Chairman, Commissioners, our
 19       application is predicated on the assumption that CPAC
 20       will continue to fulfil for a further seven years its
 21       primary mandate:  The distribution to Canadians of live
 22       "gavel-to-gavel" coverage of the proceedings of the
 23       House of Commons, in both official languages.  I am
 24       sure we all agree that this is the raison d'être and
 25       programming cornerstone of CPAC's service.


  1  5086                 But it is also clear from the wide
  2       support CPAC has received from Members of Parliament,
  3       provincial political leaders, educators, Canadian
  4       citizens and advocacy groups, that CPAC's service is
  5       also highly valued, because for 10 years CPAC has
  6       provided unfiltered, balanced coverage of the civic
  7       life of this country.  In addition to the daily
  8       proceedings of the House of Commons, CPAC has provided
  9       the place for civil discourse and discussion of the
 10       political issues of the day, on a full channel,
 11       24 hours a day, seven days a week.
 12  5087                 CPAC plans to continue to build on
 13       this blend of Parliamentary and other public affairs
 14       programming over the course of the next license term.
 15  5088                 In a few minutes we will outline
 16       CPAC's objectives for the license renewal term and the
 17       most important elements of our application.  First,
 18       though, I would ask Phil Lind to briefly review how
 19       CPAC has developed since 1992, from a two-year
 20       experimental service into a highly valued national
 21       public service that is now present in approximately
 22       nine million Canadian households.
 23  5089                 Phil.
 24  5090                 MR. LIND:  Mr. Chairman, in the
 25       mid-1980s a few of us conceived the concept of a


  1       specialty programming service like CPAC that would be
  2       offered by Canada's cable companies.  We prepared an
  3       application that was considered in the 1987 round of
  4       licensing hearings for specialty services.  We were 
  5       unsuccessful on that occasion, but our proposal to
  6       combine wrap-around programming, public affairs
  7       programming with live, unedited, TV coverage of the
  8       proceedings of the House of Commons, caught the
  9       attention of Members of Parliament and the President of
 10       the CBC, Pierre Juneau.
 11  5091                 Mr. Juneau recognized the possibility
 12       of a public/private partnership with the cable industry
 13       in the operation of an enhanced Parliamentary Service,
 14       and he worked hard with us to achieve that goal.  A
 15       further license application was prepared, based on that
 16       unique joint venture, and the proposal received "all
 17       party support" in the House of Commons.
 18  5092                 However, in the spring of 1991 the
 19       CBC, under a new President and facing continuing
 20       financial constraints, unexpectedly announced to
 21       Parliament and to the cable industry that it would no
 22       longer be able to underwrite even its own share of
 23       costs associated with the proposed joint venture
 24       Parliamentary Services.
 25  5093                 Immediately after this,


  1       representatives of the cable industry entered into
  2       direct discussions with the Speaker of the House -- The
  3       Honourable John Fraser -- because we were determined to
  4       save and improve upon the House broadcast service that
  5       had been available to cable subscribers since 1979.
  6  5094                 It is a matter of considerable
  7       professional satisfaction for those of us in the cable
  8       industry that the Speaker, and all Members of
  9       Parliament, all put their faith in our industry and
 10       have supported the establishment of CPAC service. 
 11       CPAC's first agreement with the Speaker of the House
 12       was completed in 1992, with a term of only two years.
 13  5095                 Since that time it has over the past
 14       decade built a relationship of trust and good faith
 15       with the House of Commons.  The House has demonstrated
 16       its confidence in CPAC in the renewed agreement between
 17       CPAC and the House which is included in this
 18       application.
 19  5096                 MR. STEIN:  Thank you, Phil.
 20  5097                 I would like to give the Commission a
 21       sense of the scale of CPAC's achievement since it was
 22       launched.  Since 1992 CPAC has broadcast:
 23  5098                 Every sitting day of the House of
 24       Commons, without exception;
 25  5099                 3,000 original hours of CPAC's own


  1       public affairs programming;
  2  5100                 5,500 additional original hours of
  3       other Parliamentary programming; and
  4  5101                 30,000 hours of "long-form" coverage
  5       of public events and enquiries.
  6  5102                 All of this has been achieved from
  7       the outset with funding provided initially by CPAC's
  8       shareholders and then through revenue contributed by
  9       its affiliates.  The vast majority of this funding has
 10       come directly from the cable industry.
 11  5103                 Over the past decade, CPAC's cable
 12       affiliates have contributed more than $40 million to
 13       create and operate CPAC as a public service and support
 14       its operations on a not-for-profit basis.
 15  5104                 As a result of this support, CPAC now
 16       provides a valuable public service that makes a
 17       significant contribution to diversity in the
 18       broadcasting system and serves as a unique platform for
 19       a collection of voices across Canada.
 20  5105                 We now have a short video that will
 21       give the Commission an idea of CPAC's current
 22       programming and on-air presence.
 23       --- Video presentation / Présentation vidéo
 24  5106                      MR. STEIN:  For the future, we
 25       have identified three key objectives for CPAC:


  1  5107                 First, to provide better, more
  2       relevant and timely public affairs programming;
  3  5108                 Second, to become more accessible to
  4       all Canadians; and
  5  5109                 Finally, to secure stable funding to
  6       ensure the continued success of the service.
  7  5110                 For the first objective, we see
  8       CPAC's public affairs programming continuing to provide
  9       a forum for the civil, balanced and in-depth discussion
 10       of issues of national importance
 11  5111                 CPAC's long-form coverage provides a
 12       platform for the participants in Canadian public life
 13       to speak directly to Canadians and to have their entire
 14       message delivered -- unfiltered by journalistic
 15       conventions.
 16  5112                 CPAC's more in-depth and neutral
 17       public affairs programming builds on this same
 18       principle.  The objective is to allow participants in
 19       Canadian public life to present their own views,
 20       in-depth, to a broad audience.
 21  5113                 CPAC's round table call-in
 22       programming also permits any Canadian who wishes to do
 23       so to become involved in the discussion.
 24  5114                 All of this programming is provided
 25       subject to CPAC's governing programming principles as


  1       set out in our first experimental license and in our
  2       renewal, namely to:
  3  5115                 1)   respect the letter and spirit of
  4       House of Commons agreement;
  5  5116                 2)   to maintain editorial
  6       neutrality;
  7  5117                 3)   to present a balance of diverse
  8       points of view;
  9  5118                 4)   to reflect Canada's dual
 10       linguistic nature;
 11  5119                 5)   to complement the public affairs
 12       programming of other programming services; and finally
 13  5120                 6)   to contain no commercial
 14       content.
 15  5121                 CPAC is uniquely situated to enhance
 16       the diversity of voices in the Canadian broadcasting
 17       system.  In this era of convergence, CPAC stands alone,
 18       and is independent of any other newsroom or editorial
 19       pressure.
 20  5122                 This is why it is important to the
 21       Canadian broadcasting system that CPAC continue to
 22       provide a full range of complementary public affairs
 23       programming and continue to improve both the relevance
 24       and the quality of this programming wherever possible.
 25  5123                 Given the importance with which


  1       Canadians view CPAC, we have outlined numerous specific
  2       commitments in our application that are intended to
  3       meet our second objective, to increase the
  4       accessibility of the CPAC service for all Canadians.
  5  5124                 I would ask Colette Watson, CPAC's
  6       President and General Manger, to review these
  7       commitments.
  8  5125                 Colette.
  9  5126                 MS WATSON:  Thank you, Ken.
 10  5127                 In preparing our license renewal
 11       application we focused on how CPAC could provide a
 12       better public service.  Clearly, as a public service
 13       CPAC should be made available to all Canadians, not
 14       only in terms of the programming offered, but also in
 15       the way in which this programming is offered.
 16  5128                 En notre qualité de service national
 17       mettant l'accent sur les activités du parlement du
 18       Canada, nous sommes d'avis que CPAC devrait présenter
 19       toute sa programmation dans les deux langues
 20       officielles.
 21  5129                 À cette fin, nous avons élaboré un
 22       plan visant à créer et offrir davantage d'émissions
 23       originales en français.  Parmi nos projets, citons la
 24       diffusion quotidienne de « Revue Politique », une
 25       émission en français d'affaires publiques actuellement


  1       présentée sur une base hebdomadaire, et la recherche
  2       d'un plus grand nombre de colloques en français.
  3  5130                 Nous estimons que la mise en oeuvre
  4       de ces engagements coûtera environ 12,5 millions $ pour
  5       la période couvrant la prochaine durée de licence.
  6  5131                 CPAC appuie également la politique du
  7       Conseil de s'assurer que toutes les délibérations de la
  8       Chambre des communes soient présentées dans les deux
  9       langues officielles à la grandeur du pays.  Nous avons
 10       donc réservé un budget do 300 000 $ pour aider les
 11       systèmes de classe 3 à se doter des modulateurs qu'il
 12       leur faut pour distribuer le second canal d'émissions
 13       sonores (SCES) du service CPAC.
 14  5132                 CPAC has an impressive record in
 15       providing full coverage of public hearings,
 16       conferences, political conventions and other events
 17       from all over the country.  Over the next license term
 18       CPAC is committed to enhance this service by
 19       broadcasting at least one public affairs program from
 20       each of Canada's provinces and territories per year.
 21  5133                 CPAC's long-form coverage is, by far,
 22       the most expensive programming that CPAC produces. 
 23       This commitment, therefore, represents a substantial
 24       allocation of CPAC's resources to ensure regional
 25       representation on CPAC's channel.


  1  5134                 We estimate that an incremental
  2       $7 million will be spent over the license term on this
  3       initiative.  This expenditure on regional programming
  4       represents approximately 40 per cent of CPAC's
  5       long-form programming budget.
  6  5135                 To provide better service to deaf and
  7       hard of hearing Canadians, CPAC will increase its
  8       closed captioned programming to the level of 90 per
  9       cent for CPAC's own English-language programming by the
 10       sixth year of the license term.  CPAC will also
 11       endeavour to achieve at lest 50 per cent closed
 12       captioning for French-language programming in the same
 13       time period.  This represents an incremental cost of
 14       $4.6 million over the license term.
 15  5136                 CPAC est généralement reconnue comme
 16       étant « la fenêtre du Canada sur le parlement » et sur
 17       d'autres délibérations à caractère public.  Notre site
 18       web pourrait éventuellement servir à la diffusion des
 19       événements que nous ne sommes pas en mesure de
 20       présenter à la chaîne principale.
 21  5137                 CPAC a su exploiter ce potentiel
 22       depuis les deux dernieres années en diffusant toutes
 23       ses émissions sur le web, dans les deux langues
 24       officielles.
 25  5138                 Les nouvelles technologies, y compris


  1       l'archivage sur le web et la diffusion en direct sur
  2       l'Internet du signal de CPAC, multiplient les occasions
  3       pour rendre encore plus accessibles les travaux du
  4       parlement et de nombreux autres événements publics dans
  5       les deux langues officielles.
  6  5139                 CPAC juge que ce sont là des
  7       engagements de taille qui, réunis, reflètent les
  8       efforts de la chaîne pour devenir plus accessible, à
  9       titre de service entièrement bilingue, pour tous les
 10       Canadiens.
 11  5140                 Yves.
 12  5141                 MR. MAYRAND:  Merci, Colette.
 13  5142                 Mr. Chairman, Commissioners, as you
 14       know, CPAC has proposed that the Commission approve,
 15       for the first time in its 10 years of operation, an
 16       authorized wholesale rate.  CPAC is entirely dependent
 17       for its operation on a single source of revenue, which
 18       is:  payments from affiliates.
 19  5143                 CPAC's Board of Directors
 20       established the wholesale rate at the lowest level
 21       we believe possible if CPAC is to continue to provide
 22       a high quality, highly valued public service, and to
 23       meet its commitments throughout the next seven year
 24       license term.
 25  5144                 There are two portions to the


  1       proposed rate:
  2  5145                 First, we have proposed a three cent
  3       public service portion that would be used to support
  4       the backhaul, assembly, uplinking and transmission of
  5       proceedings of the House of Commons and other
  6       Parliamentary programming.  This portion would be
  7       funded by CPAC's affiliates and not passed through
  8       directly to subscribers.
  9  5146                 Second, we have proposed a
 10       pass-through portion to provide CPAC with a stable
 11       source of funding in order to fulfil its commitments
 12       and to realize its full potential as a public service. 
 13       We are proposing that this portion of the wholesale
 14       rate be set at seven cents in the first two years of
 15       the license term, rising to eight cents in the third
 16       year.
 17  5147                 All of the revenue generated from
 18       this pass-through portio would be used by CPAC to
 19       support the production of high quality, long-form and
 20       in-depth public affairs programming from all regions of
 21       the country, and to fulfil the significant commitments
 22       that CPAC has made to increase the accessibility of its
 23       service to Canadians.
 24  5148                 Nous sommes convaincus que le tarif
 25       de gros que nous proposons est raisonnable et justifié. 


  1       Nous soulignons à cet égard deux facteurs
  2       significatifs.
  3  5149                 D'une part, nous avons reçu un grand
  4       nombre d'interventions favorables qui reconnaissent
  5       qu'un service offrant une programmation d'affaires
  6       publiques de grande qualité, équilibrée et sans parti
  7       pris éditorial implique des coûts importants et mérite
  8       d'être appuyé.
  9  5150                 D'autre part, aucune intervention n'a
 10       été reçue de quelque association de consommateurs ou de
 11       nos concitoyens en opposition au tarif de gros que nous
 12       proposons.
 13  5151                 MR. STEIN:  Thank you, Yves.
 14  5152                 Mr. Chairman, Madame Vice-Chair,
 15       Commissioners, CPAC now operates in a totally different
 16       broadcasting environment than when it was first
 17       licensed.  Over the past decade the sheer number of new
 18       programming services that have recently launched, and
 19       others that are available to be launched, have placed
 20       pressures on all existing programming services to
 21       improve the content of their respective services in
 22       order to remain relevant.  CPAC is no exception.
 23  5153                 Competition has also placed
 24       significant pressure on all distributors to decrease
 25       costs and to improve services.  It has become apparent


  1       to CPAC, and to its Board of Directors, that the
  2       continued funding of all of CPAC's operations by its
  3       affiliates, without the ability to recover at least a
  4       portion of that contribution from subscription revenue,
  5       is simply not a realistic option.
  6  5154                 CPAC itself does not compete in the
  7       conventional sense with other services for viewers. 
  8       CPAC carries no advertising, and it is not dependent on
  9       audience ratings.  But CPAC does compete for
 10       credibility among viewers and for the respect of the
 11       Canadian public.
 12  5155                 CPAC is proud to provide a service
 13       that does attract viewers, that is relevant, that
 14       provides high quality, balanced and informative
 15       programming and contributes to diversity in the
 16       broadcasting system.
 17  5156                 We believe CPAC is on the right track
 18       to maintain and increase its relevance for all
 19       Canadians and to preserve its role as a platform for
 20       the balanced and civil discussion of matters of public
 21       importance.
 22  5157                 Clearly CPAC has established itself
 23       as an important service to Canadians and should be
 24       encouraged to continue to provide its highly valued
 25       blend of Parliamentary, long-form and public affairs


  1       programming.
  2  5158                 We believe the proposals in our
  3       license renewal application point the way to CPAC's
  4       success for the future.
  5  5159                 Mr. Chair, We welcome any questions
  6       that you may have.
  7  5160                 Thank you.
  8  5161                 THE CHAIRPERSON:  Thank you very
  9       much.  Merci beaucoup, Madame Watson, Monsieur Mayrand.
 10  5162                 First of all Mr. Lind,
 11       congratulations on 20 years later.  I know you were
 12       there at the beginning and I know that the service has
 13       been an extremely good one for a long time.  We are at
 14       a bit of a crossroads.  In fact, it is essentially, as
 15       I understand it, two services combined together, an
 16       exempt undertaking of the House of Commons and then the
 17       wrap-around programming that is the licensed service in
 18       English and in French.
 19  5163                 So keeping those two in mind
 20       throughout the proceedings may tax my abilities from
 21       time to time, so I am going to ask our counsel to
 22       assist me in some of the questioning, particularly in
 23       regards to carriage, and pass-through details and the
 24       reconciliation of your proposal with the BDU regs. 
 25       Commissioner Cardozo will be assisting me with a number


  1       of the social issues arising from your application.
  2  5164                 I would like to begin, if I may, with
  3       some financial questions.  I am trying to separate out
  4       the two services, if you like, from a financial point
  5       of view.  As I look forward seven years with you, try
  6       to look forward at the sourcing of the revenues, so to
  7       speak, and the expenditure of those revenues of the
  8       period.
  9  5165                 So if you will bear with me I will
 10       try to go through it.
 11       --- Pause
 12  5166                 THE CHAIRPERSON:  If I look at your
 13       financial projections on the revenue side I see a rough
 14       figure of some $92 million dollars of projected
 15       revenues over the seven year period, all sources.  Is
 16       that correct?
 17  5167                 MR. STEIN:  What was the number,
 18       I'm sorry?
 19  5168                 THE CHAIRPERSON:  About $92 million.
 20  5169                 MR. STEIN:  Yes.  Right.
 21  5170                 THE CHAIRPERSON:  Of that $92 million
 22       I see approximately $66 million or about 72 per cent
 23       coming from cable subscribers and $25 million, or about
 24       28 per cent, coming from your affiliates, of that
 25       $92 million.  Is that correct?


  1  5171                 MR. STEIN:  Yes.
  2  5172                 THE CHAIRPERSON:  Okay.  Now, looking
  3       at those revenue numbers and comparing the revenues in
  4       the current year with the next year first, which would
  5       be year one of operation and, if I can find it, I am
  6       seeing a change in revenues from your affiliates going
  7       down from a total of roughly $6.7 million down to
  8       $3.8 million.  That is 2002 to 2003?
  9  5173                 MR. STEIN:  Yes.
 10  5174                 THE CHAIRPERSON:  Are those correct?
 11  5175                 MR. STEIN:  Right.
 12  5176                 THE CHAIRPERSON:  So that
 13       represents the drop in funding of, if you like, your
 14       affiliates, the cable industry and DTH providers, from
 15       2002 to 2003.
 16  5177                 MR. STEIN:  Yes
 17  5178                 THE CHAIRPERSON:  That line from 2003
 18       would carry on at approximately the $3.8 million level
 19       per year all the way out to get our $25 million at the
 20       end.
 21  5179                 MR. STEIN:  Yes.
 22  5180                 THE CHAIRPERSON:  Okay.  On the
 23       expenditure side I am trying to get an equivalent
 24       relationship, if there is one.  The $25 million that
 25       your affiliates would spend is your estimate of what


  1       the House of Commons programming would cost?
  2  5181                 MR. STEIN:  Yes.
  3  5182                 THE CHAIRPERSON:  That would total
  4       what over seven years?  I don't know that I have that
  5       figure.
  6  5183                 MR. STEIN:  Colette, do you want
  7       to --
  8  5184                 MR. WATSON:  If I am looking at the
  9       same chart you are, it would be the top line of three
 10       cents revenue contribution HOC.  If you follow that
 11       through to the end, the total for seven years is
 12       $25,742,000.
 13  5185                 THE CHAIRPERSON:  Right.  Okay.
 14  5186                 MS WATSON:  Une petite précision.  It
 15       is $3.4 million in 2002-2003, not $3.8 million.
 16  5187                 THE CHAIRPERSON:  It is either my
 17       handwriting -- no, you are absolutely right. 
 18       $3.48 million?
 19  5188                 MS WATSON:  Yes.
 20  5189                 THE CHAIRPERSON:  It was my
 21       handwriting.  Thank you.
 22  5190                 Okay.  Did you build these statements
 23       in that way, you estimated what the cost of the House
 24       of Commons proceedings would be and then you backed
 25       that over to what your affiliates should come up with


  1       and then divided by the number of subscribers and got a
  2       per-subscriber fee of about three cents?
  3  5191                 MR. WATSON:  We started out with the
  4       principle that the distributers would continue to
  5       provide as public service the distribution of the House
  6       of Commons programming service.  So we then, that being
  7       said, built out the cost of what is required to deliver
  8       that.  It worked out to three cents per subscriber, and
  9       then built the rest of it.
 10  5192                 THE CHAIRPERSON:  Okay.  So what has
 11       been transferred over really, the chunk, if you like,
 12       of expenditures that has been transferred from the
 13       cable operators to the subscribers, is the existing,
 14       let's call it wrap-around programming.
 15  5193                 MR. WATSON:  That is correct.
 16  5194                 THE CHAIRPERSON:  And the new
 17       wrap-around programming added on to the existing is the
 18       sum total of what the subscribers will be asked to foot
 19       the bill for going forward.
 20  5195                 MR. STEIN:  Well, it is the existing
 21       wrap-around programming plus the improvements in the
 22       service with respect to what we think is necessary for
 23       improved public affairs programming, but also in terms
 24       of the objectives we laid out in terms of regional
 25       coverage, French-language and closed captioning.


  1  5196                 THE CHAIRPERSON:  I hope that is what
  2       I had said.  So we are on the same wavelength.
  3  5197                 Those breakdown roughly in about
  4       $30 million each over the seven year period, $29 or
  5       $30 million?  That is the existing programming as is
  6       and the improvements, each have a price-tag or
  7       roughly -- to get up to our totals roughly $30 million? 
  8       Give me the correct figures.
  9  5198                      MR. WATSON:  The two combined,
 10       but the percentage proportion is very -- it changes
 11       after year three, but yes, the two combined would
 12       create the rest of the money.
 13  5199                 THE CHAIRPERSON:  Yes.  I guess
 14       another way to look at it is simply to say that if you
 15       just take the affiliate revenues from this year and you
 16       drop them roughly in half, which is what we are talking
 17       about, then --
 18  5200                 MR. WATSON:  There is no money to do
 19       anything else.
 20  5201                 THE CHAIRPERSON:   -- the costs
 21       associated with those revenues.
 22  5202                 MR. WATSON:  Yes.
 23  5203                 THE CHAIRPERSON:  As you have said,
 24       you geared the amount you should be as an industry
 25       responsible for to what you thought the House of


  1       Commons proceeding would cost period.
  2  5204                 MR. WATSON:  Yes.
  3  5205                 THE CHAIRPERSON:  All the wrap-around
  4       now goes into existing plus new for the balance of the
  5       amount.  For your total operating expenses over the
  6       period I make about $84 million?
  7  5206                 MR. WATSON:  Yes.
  8  5207                 THE CHAIRPERSON:  Is that about
  9       right?  The balance is depreciation and so forth to
 10       come to the balance back to our $92 million.
 11  5208                 MR. WATSON:  Yes.
 12  5209                 THE CHAIRPERSON:  Okay.  Thank you.
 13  5210                 Okay.  So with that cleared out of
 14       the way let me ask you a number of policy questions
 15       relating to that.
 16  5211                 I guess the first question is that on
 17       the face of it your application would seem to show that
 18       you politely declined the Commission's strong
 19       encouragement of the cable industry to continue to
 20       finance all programming of CPAC.  Is that correct.
 21  5212                 MR. STEIN:  I think we took a more
 22       balanced approach then that.
 23  5213                 I think that what we felt was
 24       important was to continue the commitment to the House
 25       of Commons and to commit to continue in terms of the of


  1       the wrap-around programming, but I think as members of
  2       the Board of CPAC what we were concerned about was that
  3       this had to be put on a sustainable basis.  We felt
  4       that the best way to this was to be able to establish a
  5       rate.
  6  5214                 Now, how the distributers choose to
  7       pass through that rate will be up to them, but we felt
  8       in terms of the service itself the three cents that --
  9       in using the round numbers, the three cents for the
 10       coverage at House of Commons and then the additional
 11       seven cents for the first period of license term and
 12       the eight cents would allow us, as a responsible Board
 13       for the CPAC service itself in its totality, put it on
 14       a stable funding basis.  That was the basis for it,
 15       regardless of what the distributers do.
 16  5215                 THE CHAIRPERSON:  What do you mean
 17       "regardless of what the distributers do"?
 18  5216                 MR. STEIN:  Well, we recognized that
 19       over time a number of things were happening in the
 20       environment.  One is that the whole environment was
 21       becoming very competitive on a distributer point of
 22       view.  Distributers were faced with, as they are now,
 23       cutting costs.
 24  5217                 I mean, the CRTC's own reports point
 25       out that in terms of the cable industry its revenues


  1       have been rather flat and its operating income has
  2       become negative, and that for the satellite side of it,
  3       because of the massive investments involved, there are
  4       significant losses.  So that as that whole distribution
  5       environment becomes more competitive the ability for
  6       our service over the next seven years to depend on that
  7       continuation would not be, in our view, wise.  It would
  8       put it at risk.
  9  5218                 So we felt that the best thing to do
 10       was to look at the budget, which we went at quite
 11       thoroughly, and to say "Okay, what do we need to run a
 12       good public affairs service -- a lean service, but a
 13       good public affairs service, and meet the obligations
 14       that are out there that we think will be out there over
 15       the license term."  So that was the basis of it.
 16  5219                 It was a realistic assessment of the
 17       fact that it is a very competitive environment out
 18       there and that we have to put this on a firm
 19       foundation.
 20  5220                 THE CHAIRPERSON:  Right.  So the
 21       House of Commons service, if you like, is not on a
 22       sustainable basis in an economic sense, but you are
 23       contributing to that.
 24  5221                 MR. STEIN:  We understand that.  That
 25       has always been a commitment.


  1  5222                 It is kind of interesting because
  2       when we first got into this, those of us who remember
  3       Phil's entreaties at the beginning to get us all into
  4       this, if I can put it that way, it was a commitment of
  5       about, I think we estimated about $4 million for your
  6       couple of years.  That was the commitment for two
  7       years.
  8  5223                 Somehow Phil got everybody to come
  9       along for about 10 years and $40 million.  The
 10       circumstances were different then.  We didn't have the
 11       massive number of new services.  If you look at Peter
 12       Grant's new volume, it is quite impressive to think
 13       that that yellow book would have probably been about
 14       20 pages when we launched this service.
 15  5224                 So the number of new services that
 16       have been launched, the competition in the distribution
 17       side that is there.  The world has changed
 18       significantly over that period of time.  The cable
 19       industry and the satellite industry are now required to
 20       contribute 5 per cent.  That didn't exist at that time.
 21  5225                 So there are a lot of very changed
 22       circumstances that are putting pressures on the
 23       distributors, both satellite and cable, and what we
 24       think is really important is that, as you pointed out,
 25       Mr. Chairman, we are at a crossroads and we want to


  1       make sure -- we are the policy wonks of the business
  2       and we wanted to make sure that what we felt was a
  3       really important service was going to be able to
  4       survive over the next number of years.
  5  5226                 THE CHAIRPERSON:  Thank you.
  6  5227                 The Commission is, of course, always
  7       concerned about approving steps that will increase the
  8       cost of basic service.  This proposal would add $1.20 a
  9       year per some and going up, wouldn't it?
 10  5228                 MS WATSON:  It would be 84 cents.  It
 11       is seven cents, not 10.
 12  5229                 THE CHAIRPERSON:  It is seven cents,
 13       not 10.
 14  5230                 MS WATSON:  Three cents of the
 15       10 cent rate is not borne by subscribers, does not show
 16       up on the basic cable bill.
 17  5231                 THE CHAIRPERSON:  Oh, I'm sorry.  You
 18       are quite right about that.  No, that is quite right. 
 19       So my math was wrong.  I was multiplying 10 and I
 20       should be multiplying seven.
 21  5232                 MS WATSON:  Yes.
 22  5233                 THE CHAIRPERSON:  What is it then,
 23       84 cents?
 24  5234                 MS WATSON:  Eighty-four cents.
 25       --- Laughter / Rires


  1  5235                 THE CHAIRPERSON:  Thank you. 
  2       Eighty-four cents going to 98 cents.
  3  5236                 MS WATSON:  Yes.
  4  5237                 THE CHAIRPERSON:  Phew.
  5       --- Laughter / Rires
  6  5238                 THE CHAIRPERSON:  Okay.  So that is
  7       an issue that we should talk about a bit.  Of course,
  8       you know, I asked you to help us with a number of
  9       scenarios.
 10  5239                 What if we were to say "Denied.  You
 11       can't have the proposal you are putting forward"?  What
 12       is Plan B here?
 13  5240                 MR. STEIN:  I'm not sure we have a
 14       Plan B.
 15  5241                 Well, I would think that what would
 16       happen is that the viability of the service would
 17       really be quite in question.  Because I think what we
 18       are looking for is the members of the Board of CPAC is
 19       we are looking for a guaranteed wholesale rate.  We are
 20       looking at a rate that as we move forward in this new
 21       kind of circumstances what we are saying is that as we
 22       negotiate with the distributors we want to have a rate
 23       that says:  This is worth 10 cents.
 24  5242                 I found it was quite interesting when
 25       we were talking to -- when members of the Board and


  1       Colette Watson and myself went around and talked to
  2       Members of Parliament and to the leaders of all the
  3       parties -- I thought actually, without being political
  4       about it, it was put best by Mr. Reynolds, the leader
  5       of the Alliance Party who said he thought this was the
  6       best bargain in broadcasting at 10 cents.
  7  5243                 I think when people have seen the
  8       dedication and effort of the 40 people who run this
  9       service, it is an important and it is an essential
 10       service.  I think that we believe that the
 11       indications -- from the interventions that we did
 12       receive in support and from the comments made and from
 13       the surveys, the research that Chris Kelly undertook
 14       for us, that we are prepared to say to Canadians that
 15       this is the right thing to do.  This is an important
 16       essential service, it is the only service of its kind,
 17       and we expect to be able to sell it on that basis.
 18  5244                 THE CHAIRPERSON:  Right.  But my
 19       question was, for whatever -- just as you politely
 20       declined our invitation to continue to fund, if we were
 21       to politely your application, what then?
 22  5245                 MR. STEIN:  It is in jeopardy. 
 23       Frankly, it is in jeopardy.  It is --
 24  5246                 THE CHAIRPERSON:  What is in
 25       jeopardy?


  1  5247                 MR. STEIN:  The service.
  2  5248                 THE CHAIRPERSON:  Which of the
  3       services is in jeopardy?
  4  5249                 MR. STEIN:  The House of Commons feed
  5       would still be there, but I think that the service
  6       would not continue.  I mean, to be blunt about it, we
  7       couldn't, as a Board when we looked at the other
  8       options, the ability of this service to stand on its
  9       own, would not -- it just wasn't -- it was not viable.
 10  5250                 THE CHAIRPERSON:  So are you saying
 11       that you would still spend the $25 million on the House
 12       of Commons service, but you would not spend the
 13       $30 million on wrap-around or any part of that?
 14  5251                 MR. STEIN:  We don't have a
 15       commitment from all the distributors for the
 16       $25 million.
 17  5252                 THE CHAIRPERSON:  So do you have a
 18       position to share with us as to the consequence of
 19       that, other than the service going --
 20  5253                 MR. STEIN:  We have some distributors
 21       who say that, yes, they would carry the House of
 22       Commons, but one would have to look in the kind of
 23       environment that we are looking at exactly how that
 24       is paid for.
 25  5254                 THE CHAIRPERSON:  And?


  1  5255                 MR. STEIN:  They haven't -- in other
  2       words, they have not made a commitment.  The commitment
  3       that has been made has been on the basis of the support
  4       for this application.  We haven't gone to them and said
  5       "Okay, if we don't get this" --
  6  5256                 I guess my problem is, when I started
  7       out life as a salesperson with IBM we were always
  8       taught that there was no alternative to buying a
  9       computer.  So I think that in our discussions with
 10       distributors what we basically have talked about is
 11       this application and moving forward with this
 12       application.  In terms of this application not being
 13       approved and not being able to get the pass-through,
 14       then I would say the service is definitely in jeopardy
 15       and it is just not a viable service.
 16  5257                 It is like any other service.  No
 17       service out there is viable without a rate that is
 18       provided to it.
 19  5258                 Part of the problem is that if you
 20       look at the Commission's own numbers, you know, you
 21       look at the significant revenue increases in the pay
 22       and specialty services over the past number of years,
 23       the significant improvements in operating income, they
 24       have not been matched on the distributor's side, so to
 25       expect the distributors to continue to support this in


  1       this way would be questionable.
  2  5259                 But in terms of the question of -- I
  3       think what would really influence people in all this is
  4       really where the subscribers are on this.
  5  5260                 Maybe if Chris could talk about the
  6       market research that he undertook for us it might help
  7       to shed some light on why we feel confident that we can
  8       do this.
  9  5261                 THE CHAIRPERSON:  Right.  No, that is
 10       not my question right now.  You are free to address
 11       that later on.
 12  5262                 As you know, last November,
 13       November 6, 2001 in Public Notice 2001-115, the
 14       Commission announced that it was going to amend the
 15       regulations requiring all Class 1 and 2 BDUs to
 16       distribute the proceedings of the House of Commons as
 17       part of basic service.  That reg will be in force I
 18       gather by the 1st of September and will be released for
 19       final comment I assume fairly soon.
 20  5263                 So there will be an obligation on the
 21       part of BDUs.  Are you saying that they may have an
 22       obligation to carry but there won't be anything to
 23       carry?
 24  5264                 MR. STEIN:  I think that the House of
 25       Commons will provide a feed, they do that now, and it


  1       will be available to individuals.  Depending on this
  2       application individuals would be free to pick up that
  3       feed and carry it as they see fit.  That is one of the
  4       options that the regulation would leave open.
  5  5265                 THE CHAIRPERSON:  So presumably on
  6       behalf of its members the CCTA would negotiate with the
  7       Speaker for the terms of carriage, bypassing the
  8       middleman, is that what -- I'm just trying to
  9       understand --
 10  5266                 MR. STEIN:  It hasn't worked that way
 11       in the last couple of years.  It is a much more
 12       competitive situation than it has been in the past and
 13       so the ability to come to those common commercial
 14       arrangements has not always been there.
 15  5267                 THE CHAIRPERSON:  But you are not
 16       saying that -- you are saying the feed will exist and
 17       the obligation will exist and the question is what will
 18       be the nature of the service.  Will it be anything more
 19       than the House of Commons.
 20  5268                 What I'm hearing you say is you don't
 21       have any commitment to go beyond -- at all to go beyond
 22       that if the pass-through should not be approved?
 23  5269                 MR. STEIN:  The commitment that we
 24       have from the cable distributors, because that is where
 25       the pass-through comes into play, it doesn't apply on


  1       the satellite side, but the commitment we have is for
  2       this application, that this application, after many
  3       discussions and some further discussions we have yet to
  4       have and hope to keep people together on this, is on
  5       the basis of this application.  Because it is felt that
  6       the value of this service is a total service.
  7  5270                 I don't know how to put it -- we
  8       don't want to contemplate the alternative -- maybe I am
  9       going around this a bit, but the thing is that we don't
 10       want to contemplate the alternative because we think
 11       that just having a single feed House of Commons service
 12       up there, which we totally agree with you should be
 13       mandatory, should be covered, carried, there is no
 14       issue with that at all.  The House of Commons service
 15       is in fact the core of this service so it should be up
 16       there and carried, but what we are saying is that a
 17       service like that without the wrap-around programming,
 18       the committees, the other proceedings, the inquiries,
 19       that is what makes this a distinctive service and that
 20       is what we would like to have.
 21  5271                 THE CHAIRPERSON:  I take that point. 
 22       The Commission has said that it is a valuable service
 23       so there is no issue there.  We are just quibbling over
 24       the price I think at this point.
 25  5272                 MR. STEIN:  Well, it is a good thing


  1       to quibble about.
  2  5273                 THE CHAIRPERSON:  I guess now the
  3       issue is that you say you don't have a commitment.  So
  4       what I want to ask you is, I mean what if the
  5       Commission granted part of your request in respect of
  6       the pass-through and said "Well, in our estimation you
  7       said it was lean and mean, we are saying make it leaner
  8       and meaner.  We are prepared to grant you, for argument
  9       sake, 50 per cent of your pass-through".  You can pick
 10       any number in between there.  What then would the
 11       service consist of?
 12  5274                 MR. STEIN:  We actually, as a Board,
 13       spent quite a bit of time going through this.  We had
 14       subcommittees and we spent a lot of time with Colette
 15       Watson going through the numbers and we had other
 16       discussions of CEOs in terms of what this rate should
 17       be.  Recognizing the competitive situation the
 18       instructions we had were to keep it as low as possible. 
 19       There were in fact, to be blunt, suggestions that it
 20       would be lower than it is.
 21  5275                 But recognizing that what we -- we
 22       wanted to have a service that we felt would meet the
 23       needs that are out there over the next number of years. 
 24       We felt there were certain programming principles that
 25       we really weren't doing as good a job at as we would


  1       like to do in terms of the French-language service, in
  2       terms of closed captioning services, et cetera, that we
  3       wanted to do a much better job at that.
  4  5276                 We essentially, when we looked at a
  5       lower priced alternative -- and we would be willing to
  6       talk to you about that in detail as to exactly what
  7       would come out of the service if we didn't get every
  8       little penny -- but we just felt this was the tightest
  9       number we could come up with and one which we said we
 10       really wanted to put forward and we felt that that was
 11       important.
 12  5277                 The other thing is that it is really
 13       important that this be a credible service.  We have
 14       built it up to a kind of a level of credibility, but it
 15       is interesting in one of the pieces of research that we
 16       filed that was undertaken by Barry Keifl on public
 17       affairs programming.
 18  5278                 Public affairs viewing in Canada has
 19       grown significantly over the past decade.  What is
 20       really interesting is that the viewing of the American
 21       public affairs programming has really grown over the
 22       past 10 years, triple the rate of the Canadian viewing
 23       of public affairs programming.  There isn't enough good
 24       Canadian public affairs programming.  We think that
 25       what we proposed was the leanest, meanest proposal with


  1       not a big increase in terms of the staff increases and
  2       the other increases.  This money is going to very
  3       clearly allocated proposals so if we don't -- like if
  4       you said "Okay, well, what if we took off two cents?" 
  5       I would say "Well, there goes regional productions". 
  6       Well, I think in terms of the credibility of the
  7       service to Canadians regional productions is an
  8       essential part of the future of what this is all about.
  9  5279                 French-language goes without saying. 
 10       We just have to do a better job on the French-language
 11       side.
 12  5280                 THE CHAIRPERSON:  Right, so --
 13  5281                 MS WATSON:  I'm sorry, if I could add
 14       one more thing.
 15  5282                 CPAC has been in operation for
 16       10 years at the same rate, so if you were to grant it
 17       50 per cent it is essentially another seven years at
 18       the same rate.  Costs go up, expectations go up over
 19       20 years, things like rent, hydro, staff salaries,
 20       insurance, tape costs.
 21  5283                 The equipment is 10 years old.  At
 22       some point it is just going to die.  So then we won't
 23       be able to do a thing.  So, you know, now it is in the
 24       end of its life cycle so maintenance costs are higher. 
 25       We won't even be able to maintain what we do now in the


  1       out years without this amount of money.
  2  5284                 THE CHAIRPERSON:  I appreciate that
  3       costs go up.  I guess what we are seeing is
  4       simultaneous having of the commitment, as we discussed
  5       before, from $6.8 to $3.4 million on behalf of the
  6       industry at the same time as costs are going up and you
  7       want more funding for all of the programming that you
  8       say would be so enriching for the service.
  9  5285                 So I am wondering why it would be
 10       unreasonable for the Commission to say something like
 11       "Well, maintain the trajectory of commitments that you
 12       have been maintaining a the $6.7-$6.8 million level
 13       rather than dropping down to the $3.4 million and
 14       possibly we will approve a pass-through for the balance
 15       to get you where you want to go" as, for example, a
 16       scenario.  Why would you back away from that?
 17  5286                 MR. STEIN:  I think it is important,
 18       first of all, that the historic commitment was to the
 19       carriage of the House.  The historic commitment has
 20       always been to what we estimate to be the three cents. 
 21       That has been the commitment.
 22  5287                 The second is that the circumstances
 23       for distributors have changed markedly over the past
 24       number of years and we have to face the reality that
 25       for the cable sector there is no growth and an


  1       increasingly negative cash flows in terms of basic.  On
  2       the satellite side there are huge investments that are
  3       being made and will probably continue to have to be
  4       made over the next time period.
  5  5288                 There already are other contributions
  6       that are being made by those sectors in terms of the
  7       Television Production Fund, as one big example,
  8       copyright fees, there are a whole range of things that
  9       have increased dramatically over the past number of
 10       years.  As we looked out over the future, we just did
 11       not feel that to expect that level to continue would be
 12       realistic.
 13  5289                 THE CHAIRPERSON:  Have you explored
 14       other methods of funding of the service than the two?
 15  5290                 MR. STEIN:  Not popular ones.
 16       --- Laughter / Rires
 17  5291                 THE CHAIRPERSON:  Other models or
 18       approaches?
 19  5292                 COMMISSIONER LANGFORD:  I'm sorry, I
 20       just missed that answer.  Excuse me.
 21  5293                 THE CHAIRPERSON:  Not popular ones he
 22       said.
 23  5294                 COMMISSIONER LANGFORD:  Oh, not
 24       popular ones.  Thank you.
 25       --- Laughter / Rires


  1  5295                 COMMISSIONER LANGFORD:  I'm sorry.
  2  5296                 THE CHAIRPERSON:  Were other models
  3       or approaches canvassed?
  4  5297                 MR. STEIN:  Well, we did look at
  5       other funding sources, but we felt that -- credits, for
  6       example, but they weren't areas that we felt -- I think
  7       what we felt was important in this was that there is
  8       very much a government policy to look at -- for public
  9       services to look at stable funding.  It is an issue for
 10       the CBC, it is an issue for the Canadian Television
 11       Fund, and we felt what was most important was to put
 12       this on a sustainable basis.  This is the cost of
 13       providing a good service.
 14  5298                 That is why we asked Chris to
 15       undertake the research that is to say:  Is this an
 16       important -- do people think it is an important
 17       service?"  So if it is an important service and people
 18       want it and feel that it is essential to have and that
 19       the wrap-around programming is essential -- I recognize
 20       the Commission has already said that and we appreciate
 21       that support, but we wanted to really find out what
 22       people felt and they did.
 23  5299                 That is what one of the charts that
 24       Mr. Langford is going to come over and look at later
 25       says, that it is really important that we have this


  1       kind of service and so we feel on that basis that this
  2       was the most appropriate funding model rather than
  3       going to, you know, take a percentage off the
  4       Television Fund contribution or out of the other
  5       services we operate.  We felt this was the most
  6       appropriate way to go.
  7  5300                 THE CHAIRPERSON:  If your license
  8       were not coming up for renewal this year, let's say it
  9       was two years away, presumably the cable industry would
 10       continue to fund the service, wouldn't say we need an
 11       urgent amendment to our license now because the money
 12       is running out.  You would presumably fund it for
 13       another two or three years at that $6.7 or $6.8 million
 14       level.
 15  5301                 MR. STEIN:  I think in a certain way
 16       you are correct.  There are a number of things that
 17       were happening.
 18  5302                 One is the renewal of the agreement
 19       with the House of Commons.
 20  5303                 Second was, the Commissioner of
 21       Official Languages Review and the court cases involved
 22       in terms of official languages.
 23  5304                 Third was that as people became more
 24       involved and aware of it -- I mean it is quite
 25       impressive the list of people that had been involved


  1       from the multicultural community, aboriginal
  2       communities have become involved, and so we felt we had
  3       to move forward this way.
  4  5305                 THE CHAIRPERSON:  Mr. Stein, you made
  5       the point and it is not that I have a large problem
  6       with it, but I am interested in that you mentioned that
  7       this programming, I think words to the effect that this
  8       isn't available from other broadcasters.  I wanted to
  9       go through your schedule at a high altitude level so
 10       that you could help me zero in on those programs that
 11       you don't think are or would be likely to be available
 12       on other services that are available and will be
 13       available on CPAC.
 14  5306                 Do you have that schedule?
 15       --- Pause
 16  5307                 THE CHAIRPERSON:  I appreciate that
 17       coverage of the House of Commons obviously, and of
 18       extended coverage of committees but for urgent
 19       situations, emergencies, crises are probably unlikely
 20       to be.  What else?  What other aspects of programming
 21       would -- Supreme Court?  I'm starting you off.
 22  5308                 MS WATSON:  Essentially we would
 23       reduce -- to begin with we would reduce with the
 24       long-form programming.  So there would be fewer
 25       opportunities to go to cover conventions or political


  1       conventions or inquiries.  It is extremely expensive to
  2       send a crew across the country to go cover the
  3       Walkerton Inquiry or the Blood Inquiry, the Somalia
  4       Inquiry.  These are long.  They last for months.  They
  5       require remote location television coverage which is
  6       more expensive.  So we would cut back there.
  7  5309                 There are things that are -- we would
  8       have to cut back on the number of staff we have.  We
  9       would cut back on the amount of programming we have
 10       simultaneously interpreted.  SI, as we call it, is
 11       incredibly expensive.  Having come out of a monopoly I
 12       have now entered myself in -- I have now encountered it
 13       on the other side as a consumer and they being a
 14       supplier.  There is no bargaining there.  So captioning
 15       is expensive.  So these things, rather than eliminate
 16       all together, we would just reduce overall.
 17  5310                 I'm not sure if you are looking for
 18       me to tell you I would cancel this program or that
 19       program.
 20  5311                 THE CHAIRPERSON:  I was looking --
 21       let me ask it another way.
 22  5312                 I look at the schedule and with the
 23       exception of the extensive coverage of the House, the
 24       Supreme Court and committees that are not at the high
 25       newsworthy level, there is no question, but when I look


  1       at "Talk Politics", "Prime Time Politics", "Rockburn
  2       Presents", and so on, "One on One", those are programs
  3       of a genre that one might find on other services, CBC,
  4       Newsworld and others, so I guess I am looking for the
  5       case for distinctiveness here.
  6  5313                 MS WATSON:  Right.  But if you take
  7       "Prime Time Politics" for example, that program is
  8       really a collection of -- a condensation of long-form
  9       programming, but is very different from a news program. 
 10       For example, on "Prime Time Politics" is where you will
 11       find scrums, is where you will find press conferences,
 12       is where you will find the round table discussion of an
 13       issue.
 14  5314                 If I were to break down that
 15       programming, 5 per cent of that program is the host,
 16       15.5 per cent of it is news conferences, and 61 per
 17       cent of "Prime Time Politics" is the round table
 18       discussion, either with three or four guests providing
 19       the balance on the issue or with Canadians through the
 20       phone-in segment.  So that would disappear.
 21  5315                 That happens to be very, very popular
 22       and it is also the way to include Canadians in the
 23       public policy discussion.
 24  5316                 THE CHAIRPERSON:  Right.  My only
 25       point is, could one not find a program like that on


  1       Newsworld or one of the other newly licensed services?
  2  5317                 MR. STEIN:  No.  Could I just jump in
  3       on this?
  4  5318                 I think that what Colette has tried
  5       to do over the last year in terms of this is to try to
  6       create an environment where people may not have watched
  7       long-form or may not have been watching during the day
  8       and being able to bring the scrums and other events
  9       into a context so that it is there.
 10  5319                 It is not that it is -- I don't
 11       want -- it's not that it is news items per se, it is
 12       but it is not covered in a news way, it is:  This is
 13       what is happening today.  This is long -- and even
 14       these shows are still focused on long forms of
 15       discussion.
 16  5320                 I know that when we went and talked
 17       to MPs, they thought that the opportunity to sit at the
 18       round table and be able to put out their views, their
 19       own views, even with other members of other parties,
 20       they thought that that was a very important way to
 21       reach out to Canadians and involve them in a very civil
 22       discussion about important issues.  They thought that
 23       that ability to do it -- it is not that you have
 24       somebody reporting on it or that you have an interview
 25       that might be rather intrusive, it was pretty much


  1       freewheeling allowing them to do it.
  2  5321                 I think that for those of us who are
  3       public affairs addicts in this, you have to try
  4       different experiments in terms of trying to see how we
  5       deal with issues like immigration and, you know, health
  6       care and that type of thing, and how do you stimulate
  7       those kinds of discussions in an informed way.  Using
  8       "Prime Time Politics" and other talk, "Legal Talk",
  9       those types of things, are ways we are trying to find
 10       out how to do this.
 11  5322                 I think Colette has really shown us
 12       that we can do these kinds of things in that kind of a
 13       way and it is complementary to the kind of programming
 14       that you get, say on Newsworld or NewsNet.
 15  5323                 THE CHAIRPERSON:  That is what I am
 16       missing, because a lot of what Colette was saying I
 17       would have thought -- and I haven't done the exercise
 18       to check it -- would have been part of the applications
 19       of those who were seeking the kind of license that
 20       Newsworld originally got.  That would be the kind of
 21       programming that they would have described as being
 22       shown on their further long-form news service so to
 23       speak, as distinct from the headline.
 24  5324                 So help me draw the distinction
 25       between that and what you are saying here.


  1  5325                 MS WATSON:  I would be happy to.
  2  5326                 We air the entire scrum, the entire
  3       press conference.  Newsworld, NewsNet, not to be
  4       critical of them, but just as an observation, will cut
  5       away.  So they will run five-six minutes of an
  6       exchange, a minute and a half perhaps of an exchange,
  7       which gives a different impression, gives the viewer
  8       not as much opportunity to form their own opinion.
  9  5327                 If I can give a case in point, CPAC
 10       covered the "Gavel to Gavel", the Canadian Alliance
 11       Leadership Convention earlier this year.  During the
 12       convention there was a letter written by Joe Clark to
 13       the new leader.  On "The National" that evening the
 14       clip with Joe Clark was seven seconds long.  The clip
 15       with Joe Clark on our coverage was in its entirety,
 16       about 20 minutes.
 17  5328                 So you get the difference.  You get
 18       to see the entire story.  We are not going to tell you
 19       what to think about it, but we are just going to put it
 20       out there for you to create your own opinion.  That is
 21       how we differ from the other channels.
 22  5329                 THE CHAIRPERSON:  I know it was
 23       inadvertent, but the Commission not too long ago went
 24       through a dispute resolution process where minutes
 25       became the issue and length of bits became -- and I


  1       don't think it is an experience that too many people
  2       want to repeat.  So any kind of criterion based on
  3       whether a thing is on minutes, although there are some
  4       of those in the regulations and in the guidelines,
  5       going in that is something that ought -- I think it
  6       would be desirable to try to avoid if we could and
  7       reach our distinctions on other grounds.
  8  5330                 But I take your point.
  9  5331                 MS WATSON:  Rather than assign a
 10       quantity to it, the principle is we will air from
 11       beginning to end that particular press conference or
 12       scrum, whereas others take pieces.
 13  5332                 THE CHAIRPERSON:  Okay.
 14  5333                 Mr. Stein, when you made the point
 15       about competitive issues regarding the funding of the
 16       service, are you saying -- if you did it on a
 17       per-subscriber basis, let's say, or a per-revenue
 18       basis, some uniform criterion, what is the funding
 19       method that you now use to fund CPAC in terms of
 20       dividing up the --
 21  5334                 MR. STEIN:  We have an affiliate
 22       affiliation fee.
 23  5335                 THE CHAIRPERSON:  Right.  Is it on a
 24       per-sub basis?
 25  5336                 MR. STEIN:  Yes.


  1  5337                 THE CHAIRPERSON:  Right.  So from a
  2       competitive point of view there is a wash, or are you
  3       saying that anybody who saves the cost of CPAC is that
  4       much farther ahead?
  5  5338                 MR. STEIN:  Distributors do negotiate
  6       pretty hard in terms of what rate they actually pay.  I
  7       think that what we felt was it was important at this
  8       juncture to establish a rate.  That is also related to
  9       our points about dual status.  But we thought that it
 10       was important to establish a rate and have it out
 11       there --
 12  5339                 THE CHAIRPERSON:  That is the
 13       wholesale rate for the service?
 14  5340                 MR. STEIN:  Yes.
 15  5341                 THE CHAIRPERSON:  But I guess I was
 16       asking about the funding of the service from the point
 17       of view of your affiliates as distinct -- am I missing
 18       what you are saying?
 19  5342                 MR. STEIN:  The way we fund it now is
 20       on a rate.  We basically set a per-subscriber rate and
 21       then we enter an affiliate relationship on that basis.
 22  5343                 THE CHAIRPERSON:  Right.  That is the
 23       same for all affiliates, is it not?
 24  5344                 MS WATSON:  Yes.  The difference
 25       between our service and another service is that there


  1       is a clause in the affiliation agreement that says not
  2       to pass the rate on to customers.
  3  5345                 THE CHAIRPERSON:  Right.  But it is
  4       the same rate per sub for all affiliates?
  5  5346                 MS WATSON:  There is a 1992 rate and
  6       then it went up over the course of the term.
  7  5347                 MR. STEIN:  There are different
  8       rates.
  9  5348                 THE CHAIRPERSON:  Why would that be?
 10  5349                 MR. STEIN:  We have different rates. 
 11       In 1997 we increased the rate that we charged to
 12       affiliates, so that affiliates that joined since 1997
 13       are charged a higher rate than the six cents.
 14  5350                 THE CHAIRPERSON:  Okay.  So that is
 15       an issue.
 16  5351                 MR. STEIN:  Yes.
 17  5352                 THE CHAIRPERSON:  Right.  If you were
 18       to fund it on a per-subscriber basis -- I'm trying to
 19       address the competition point and I'm just suggesting
 20       that except for the saving that not participating would
 21       entail for somebody, on a competitive basis if it is
 22       per-subscriber that is a kind of a uniformity of
 23       measure.  If you have 1,000 subs you pay 1,000 times
 24       the rate, if you have a million subs you pay a million
 25       times the rate.


  1  5353                 MR. STEIN:  Can I have Yves address
  2       that?
  3  5354                 MR. BUCHAN:  Mr. Chairman, can I just
  4       clarify?  I think I know partly where you are coming
  5       from.
  6  5355                 On the going-forward basis with the
  7       business plan it is one rate for all affiliates after
  8       September 1, 2002.  There is a differential and it is
  9       explained in an answer to a Commission deficiency, but
 10       that is part of the issue.
 11  5356                 THE CHAIRPERSON:  Right.
 12  5357                 MR. BUCHAN:  Then you are wondering,
 13       I think, where does the competition come into it.
 14  5358                 I think what Mr. Stein is speaking to
 15       is the issue of if that rate going forward is
 16       established, the business plan is built on the
 17       assumption it will be dual status with an established
 18       rate, then we won't get into negotiations of that kind
 19       with those distributors.
 20  5359                 THE CHAIRPERSON:  This is for
 21       carriage or for funding of the services, or in a
 22       sense both?
 23  5360                 MR. BUCHAN:  For the funding of the
 24       service.  The business plan was built on the assumption
 25       that there would be a rate established by the


  1       Commission and the carriage arrangements would be that
  2       way and then that is how the model was built and those
  3       were the assumptions.
  4  5361                 THE CHAIRPERSON:  Right.  I guess
  5       whatever you set that going-forward uniform rate at
  6       would be applicable to all affiliates?
  7  5362                 MR. BUCHAN:  Correct.
  8  5363                 THE CHAIRPERSON:  So therefore I am
  9       wondering what the competitive issue is there?
 10  5364                 MR. STEIN:  Can I ask Yves to talk
 11       to that?
 12  5365                 MR. MAYRAND:  First of all, just to
 13       be absolutely clear, all affiliation agreements -- all
 14       affiliation agreements are up for renewal coincidental
 15       essentially with the new license term.  So what this
 16       public service is going to be facing is negotiations
 17       with all its distributors.
 18  5366                 I guess the whole concept behind this
 19       proposal is really signalling a clear rate structure, a
 20       predictable one.  It has been publicly reviewed and
 21       discussed and exposed and questioned by the Commission
 22       as part of a public process and that we don't end up in
 23       a few months arguing on what is the appropriate rate
 24       with this and that distributor and possibly ending up
 25       in disputes which tie up resources, of course, of the


  1       participants and the Commission.
  2  5367                 To refer to your past experience, it
  3       might not deal with seconds, but it would certainly
  4       deal with very thorny issues.  So we think that it is
  5       very key to provide some signalling, clear signalling
  6       from the outset that is clear to all distributors
  7       concerned.
  8  5368                 THE CHAIRPERSON:  I take that point. 
  9       I guess you could set -- if the Commission approved a
 10       rate of seven cents instead of 10 cents let's say,
 11       everything you say would still apply.  You may not feel
 12       that it is enough to fund the service, but -- obviously
 13       not -- in terms of going forward, in terms of the
 14       competitive issues among each other, those would not
 15       arise.
 16  5369                 MR. KELLY:  I take your point.  If we
 17       are looking at a clear signal at a reduced level from
 18       the outset, then it forces -- because this is our
 19       single source of revenue, it forces a very difficult
 20       decision of where to cut in the program.
 21  5370                 THE CHAIRPERSON:  I understand.  I
 22       understand.
 23  5371                 I am going to move now to the survey
 24       and I was going to ask this question that the survey
 25       was done by Strategic Counsel I gather and a vast


  1       majority of Canadians believe that it was important for
  2       Canadians to have access to the daily proceedings of
  3       the House and other public affairs programming and that
  4       CPAC was found to be a valuable service.
  5  5372                 Now, the audience share of CPAC, do
  6       you know what that is in the fall of 2001?
  7  5373                 MR. STEIN:  Colette.
  8  5374                 MS WATSON:  Do I have share or do I
  9       have reach?  I have share or reach?  I have reach.
 10  5375                 THE CHAIRPERSON:  Oh, okay.  What is
 11       reach?
 12  5376                 MS WATSON:  Are you looking for a
 13       specific month or are you just kind of --
 14  5377                 THE CHAIRPERSON:  Well, when was the
 15       survey done?  Is it fall BBMs?
 16  5378                 MS WATSON:  We track through CMRI
 17       Nielsen's on a monthly basis using people meters.
 18  5379                 THE CHAIRPERSON:  Okay.  Well, I
 19       guess I have a share number from BBM for the fall of
 20       2001 at 0.014.  Is that about right?
 21  5380                 MS WATSON:  That would be about
 22       right.  We don't register high on the viewership scale.
 23  5381                 THE CHAIRPERSON:  Right.  I guess it
 24       is a question about ratings and surveys and marketing
 25       studies overall, but I guess what do you draw from


  1       statements of an overwhelming majority saying it is a
  2       valuable, important service and a 0.014 per cent share?
  3  5382                 What do we conclude from juxtaposing
  4       those figures?
  5  5383                 Perhaps Mr. Kelly would like to
  6       comment.
  7  5384                 MR. KELLY:  Yes.  I think that is
  8       exactly the point on the survey is that in fact what is
  9       deemed to be value is the existence of the survey and
 10       its coverage of both the House and the wrap-around
 11       programming.  The survey does not suggest that 81 per
 12       cent of Canadians are watching the service at any one
 13       time, but the fact that the survey exists and is
 14       available to them is what is deemed to be important and
 15       valuable.
 16  5385                 THE CHAIRPERSON:  But the survey is
 17       available to them?
 18  5386                 MR. KELLY:  The service is available,
 19       yes.
 20  5387                 THE CHAIRPERSON:  That the service is
 21       available to them.  I see.
 22  5388                 I gather in the survey that the
 23       10 cent monthly fee, willingness to pay was what,
 24       50 to 46?
 25  5389                 MR. KELLY:  Fifty-two per cent


  1       nationally indicated that they were willing to pay the
  2       10 cents and, yes, that's right, 46 per cent reported
  3       that they were unwilling.
  4  5390                 THE CHAIRPERSON:  So does this give
  5       you strong confidence in the level of support behind
  6       your application?
  7  5391                 MR. KELLY:  Well, I think there are a
  8       couple of things that emerge from the research.  The
  9       question that was posed initially was "Would you
 10       support or oppose a fee of 10 cents per month for the
 11       service?" and we did get 52 per cent indicating that
 12       they would support that.  Opposition in fact was well
 13       below that at 29 per cent.
 14  5392                 In any circumstance where consumers
 15       are being asked to pay more for a service there is
 16       going to be opposition and there is some unwillingness,
 17       but I think the fact that we are continuing to see,
 18       even when we ask the question "Are you willing to pay
 19       it?", more than one out of two consumers indicating
 20       that they are, that is a relatively strong number and
 21       an indication of the support for the continuation of
 22       the availability of the service.
 23  5393                 THE CHAIRPERSON:  Do you have any
 24       surveys that you have conducted where you perhaps have
 25       asked the same sets of questions for other, say,


  1       specialty service providers to give us some sense of
  2       the fact that, say, 52 per cent willing to pay
  3       represents strong support and is not followed by
  4       resistance on the street as it were?  Do you have any
  5       kind of track record in that regard that you could
  6       share with us?
  7  5394                 MR. KELLY:  No, I don't,
  8       Mr. Chairman.  There is lots of data on what consumers
  9       are prepared to pay, I think, for different types of
 10       services, but the CPAC one I think is an exception and
 11       I don't know that there is any comparable data or any
 12       normative data on that that would give us a sense of
 13       what is an acceptable amount to pay for any given
 14       service?
 15  5395                 THE CHAIRPERSON:  Again I haven't
 16       done the exercise, but I would have thought that the
 17       many, many, many applications for specialty services
 18       over the past year or so would have contained the kinds
 19       of surveys which showed consumer reaction and track
 20       willingness to pay with take-up, and I wonder what your
 21       view as an expert would be on the correlation.
 22  5396                 MR. KELLY:  Well, yes, there has been
 23       lots of survey research done on specialty services. 
 24       They tend to be tested on different amounts, you know
 25       $1 is typically an amount that is looked at where you


  1       would see levels of support or opposition.
  2  5397                 But again, I think the distinction
  3       here is that this is CPAC, it is a service for which
  4       there has not been a fee and I would argue that the
  5       willingness to pay here among one out of two Canadians
  6       suggests in fact that that is quite strong.
  7  5398                 It is, as you pointed out, a service
  8       that is not necessarily viewed, those other surveys
  9       would have been testing demand for the service based on
 10       likelihood of viewership.  So I think there is a
 11       distinction there that doesn't apply to this particular
 12       question.
 13  5399                 THE CHAIRPERSON:  Right.  Is there
 14       not also a distinction in that this is seen by most
 15       Canadians as the House of Commons service.
 16  5400                 Let me ask that as a question:  Did
 17       you ask that question, how is the service perceived?
 18  5401                 MR. KELLY:  Yes.  We asked both:  Is
 19       it important to have the service available?  We limited
 20       that to exclusively the House and question period and
 21       in fact there we got very high levels of importance. 
 22       We also looked at it in terms of value:  Is it a
 23       valuable service?  Again we got about eight out of ten
 24       Canadians saying:  Yes, it is valuable.
 25  5402                 There I think what does stand out is


  1       the strength of opinion on that.  You do get very
  2       strong proportions indicating that it is both very
  3       important and very valuable to them to have the service
  4       available.
  5  5403                 MR. MacDONALD:  Could I just add as
  6       well on the survey because we may cast the numbers a
  7       little differently here, is that in addition to the
  8       52 per cent that support it there is 16 per cent that
  9       neither do or don't.  So if you look at the numbers,
 10       29 per cent of the sample say they oppose a rate.  So
 11       to say one out of two, it is much less, really it is
 12       only less than a third of the people who expressed any
 13       concern about a rate.  Everybody else has said either
 14       they support it or they don't feel strongly about it
 15       one way or the other.
 16  5404                 THE CHAIRPERSON:  And you didn't get
 17       a reaction that said "Pay for the House of Commons?"
 18       and then "Isn't that our right as Canadians to get
 19       that", or even less kindly than that, depending on
 20       party affiliation?
 21  5405                 MR. KELLY:  No, Mr. Chairman, we
 22       didn't.  That is not a specific question that we
 23       looked at.
 24  5406                 We did look at the two issues that
 25       you pointed out, willingness to -- or support for


  1       payment at the 10 cent per month amount and willingness
  2       to pay, but we did not get significant opposition to
  3       that 10 cent fee.  We did see one out of two continuing
  4       to report that they were willing to pay for that
  5       service.
  6  5407                 THE CHAIRPERSON:  Thank you.
  7  5408                 I think we will break at this point
  8       and resume at 9:30 tomorrow morning.
  9  5409                 Thank you very much.
 10  5410                 MR. STEIN:  Thank you.
 11       --- Whereupon the hearing adjourned at 1735, to resume
 12           on Thursday, May 9, 2002 at 0930 / L'audience
 13           est ajournée à 1735 pour reprendre le jeudi
 14           9 mai 2002 à 0930

Date modified: