ARCHIVED - Transcript / Transcription - St. John's, Newfoundland / (Terre-Neuve) - 2002-12-11
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TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
Call for applications for a broadcasting licence to carry on a radio programming undertaking to serve St. John's, Newfoundland and Labrador
Appel de demandes de licence de radiodiffusion visant l'exploitation d'une entreprise de programmation de radio pour desservir St. John's (Terre-Neuve et Labrador)
HELD AT: TENUE À:
Fairmont Newfoundland Fairmont Newfoundland
115 Cavendish Square 115, carré Cavendish
St. John's, Newfoundland St. John's (T.-N.)
December 11, 2002 Le 11 décembre 2002
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Call for applications for a broadcasting licence to carry on a radio programming undertaking to serve St. John's, Newfoundland and Labrador
Appel de demandes de licence de radiodiffusion visant l'exploitation d'une entreprise de programmation de radio pour desservir St. John's (Terre-Neuve et Labrador)
BEFORE / DEVANT:
David Colville Chairperson / Président
Andrée Noël Commissioner / Conseillère
Stuart Langford Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Steve Foster Hearing Manager / Gérant
Peter McCallum Legal Counsel /
Pierre LeBel Hearing Secretary /
Secrétaire de l'audience
HELD AT: TENUE À:
Fairmont Newfoundland Fairmont Newfoundland
115 Cavendish Square 115, carré Cavendish
St. John's, Newfoundland St. John's (T.-N.)
December 11, 2002 Le 11 décembre 2002
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE / PARA NO.
PRESENTATION BY / PRÉSENTATION PAR
Newfoundland Broadcasting Company Limited 246 / 1593
Renewal of licence for CJON-TV
St. John's, Newfoundland / St. John's (Terre-Neuve)
--- Upon resuming on Wednesday, December 11, 2002
at 0830 / L'audience reprend le mecredi,
11 decembre 2002 à 0830
1593 THE CHAIRPERSON: Order please, ladies and gentlemen. We will return to our proceeding now and pick up where we left off yesterday . Newfoundland Television had done a presentation so we will start with the questioning. It is the last issue we have to deal with. I guess the audience in the room kind of reflects the fact we are getting towards the end of our proceeding.
1594 Good morning, Messrs. Geoff Stirling and Scott Stirling and the rest of your panel. I guess it wouldn't take a rocket scientist to figure out who is going to be doing the questioning today after what we did yesterday. I will be doing most of the questioning this morning. I am going to pick up really I guess the themes that you yourself picked up in your presentation yesterday, fundamentally: the affiliation or disaffiliation agreement, some issues around that; a few issues related to financial concerns; the time zone difference, the hours and how we calculate Canadian content; questions a little bit about Canadian content and priority programming; and then a bit on close captioning. That should cover it.
1595 I would like to start off just dealing with the issue of the affiliation agreement with CTV. A lot has happened with CTV and the structure of that over the past number of years, changes in ownership and so on. I was struck by a couple of comments that you made in your opening remarks. I think we will pick this up a bit at the outset and perhaps a little more when we talk about some of the programming changes that you have made as well.
1596 I noted at page 4 of your opening remarks yesterday that you said:
"While far from what we wanted or expected when negotiations with CTV began, the news supply arrangement with CTV does provide us with important benefits." (As read)
1597 I guess I was struck by the first part of that sentence, "far from what we wanted or expected". I was curious to know what you wanted or expected and how the negotiations went and how we got to where we are in terms of the agreement that you have.
1598 MR. S. STIRLING: I understand in the United States that networks could only buy a third of their affiliates. There has been a lobby effort by the affiliates to make sure that is preserved in the United States. The argument they give is that if a network has that much control and power they can dictate to all the affiliates whether they will give them compensation, whether they will give them programming, and the balance will be changed in terms of the negotiations.
1599 That is what has happened in Canada. That is what has happened to us. We have not been able to reach a deal with CTV that would enable us to continue to carry the full network service, the 40 hours. They will not pay us any compensation. They have increased the rates of the programs we buy sixfold from them so we can't afford to buy CTV programming. We buy one program, CSI. Because we had such an outcry from our viewers we decided, well we will buy that one show even though it is incredibly expensive, six times more than we have ever paid for any show.
1600 But the truth is that we are a 24-hour a day network and an 18-hour broadcast day. If we bought just 10 hours a day from CTV it would cost almost $6 million. You know our revenues so you know that would put us out of business. So the best that we could come up with was a news supply agreement.
1601 What that means, the benefit to CTV, is that they get news out of Newfoundland. We are a de facto news bureau for them. They don't have any news photojournalists here. There is no bureau. We are it. We provide all the news coming out of Newfoundland and Labrador to CTV. That is the benefit to them.
1602 The benefit to us is that we maintain a CTV affiliation with Lloyd Robertson, Canada AM, and so we have that Canadian news source. That is a real benefit to us, plus they give us the inventory and that which is not going to pay our bills, but the more important thing is to have that affiliation.
1603 The key is they have only agreed to this for two years. Our fear and our concern is what happens if they come back to you in two years and say,"You know, this is just not working with NTV. They won't by W5, they won't buy the Junos, they won't buy our Canadian programs, Cold Squad and all the other shows. We are no longer going to give them this news. We want to have a bureau in there. We are going to put a couple of people in Newfoundland, so we want you to let us come into St. John's."
1604 The majority of our programming now is from Global. We have a good relationship with Global. We have four years left on that contract. But they have put in writing in that contract that if CTV applies to come into Newfoundland, the deal we have with Global then becomes void and they will also apply to come into Newfoundland. So just the application by CTV could trigger a lot of problems for us in 18 months.
1605 It took us 18 months to negotiate with CTV and you see what we got. We have only got now almost basically 18-20 months left. So it's almost like we would have to start negotiating now to try to work out something with them.
1606 So we have a great concern that their strategy is to get through all of this and then two years later say, you know, "This is just not working. We want to bring ATV in" or "We want ASN to start carrying the programming", or something like that. We don't have any assurances from them. Why would we only get a two year news supply agreement? Why not seven years? So it doesn't seem to us that their heart is in it in terms of the long term, so this impacts directly on us.
1607 You were going to talk about Canadian content but that was seven hours of prime time, much of it is priority programming that CTV had on our schedule, that's gone and we can't afford to buy at those rates that Canadian programming. So there is a whole source of Canadian programming not available to us and our viewers are concerned.
1608 Most of the programming, the American programming, obviously our viewers, 80 per cent of the viewers who get cable or satellite, can watch ER, for example, on cable, but W5 and especially we are concerned about things like the Junos, the Canadian Open, the Canadian Figure Skating Championships. We have not been able to get any commitment from them that they will sell us those programs. We are still trying to get the Academy Awards as well.
1609 A couple of weeks ago they suddenly gave us a call and they said, "We have got about six or seven Christmas specials for you and they will be at the historic rates of what you actually paid up until now." So we said, "Well, we will take everything."
1610 I guess I'm cynical. It seems to me like two weeks before a hearing suddenly they are co-operating and they gave us some movies for Christmas, but we haven't been able to buy anything else from them.
1611 THE CHAIRPERSON: I'm not sure I quite understand what your fear is that might -- you said it was only a two year agreement and your worry is that they are going to do something in two years' time. What is it you are concerned with?
1612 MR. S. STIRLING: The fear is that they can say -- that they don't renew the news supply agreement in two years.
1613 THE CHAIRPERSON: Right.
1614 MR. S. STIRLING: And they use that along with their Canadian that is not coming into this market as the basis for an application to bring a CTV signal into our market. If that happens we lose our programming source with Global and then Global also applies. So that's the concern.
1615 THE CHAIRPERSON: Going back to my question, what was your expectation? You said in your comments how you were -- "far from what we wanted or expected"? What did you expect going into these negotiations?
1616 MR. S. STIRLING: We expected that we would have access to CTV programming. We thought that they would be interested in making some kind of a deal. I mean, we started negotiating for compensation for the full 40-hour service and the amount was going to be in the million plus range for compensation --
1617 THE CHAIRPERSON: So you figured it would just be a new financial arrangement on the old deal of programs.
1618 MR. S. STIRLING: We figured it would be -- yes, that the model of 35 years would hold up and that we would continue to be a full CTV affiliate. Once it became apparent that could not happen, we kept getting backed into the corner and we kept figuring: well what's our final position that we have really got to try to force through? That was a news supply agreement. That was the chairman of the board who was -- personally with Yvon(ph), and I'm sure that made it happen, but it was a two-year deal.
1619 THE CHAIRPERSON: It sounds like it was almost not a negotiation at all. You were just presented with a fait accompli: this is the deal; take it or leave it.
1620 MR. S. STIRLING: If I may totally be frank here, since there is not a lot of people -- thank you for coming here --
1621 THE CHAIRPERSON: Well, you are recording it.
1622 MR. S. STIRLING: Right.
--- Laughter / Rires
1623 THE CHAIRPERSON: You can ask your guy to shut the camera off. He works for you.
--- Laughter / Rires
1624 MR. S. STIRLING: We appreciate the fact that the hearing is here in St. John's and that it is not in Ottawa where there might be a whole battery of CTV lawyers.
1625 I don't know. I mean, I wouldn't say anything differently, to be honest. But that's the big concern. And it wasn't a negotiation. If I can characterize it, we felt at the time and in retrospect that it was a runaround. It was 18 months. We are talking this amount, 40 hours, and at the end of the day -- and I saw it coming. That's why we dropped General Hospital a year early because I thought, if they go that route, which I suspect, even though they are saying the opposite--
1626 THE CHAIRPERSON: You could be left with no programs.
1627 MR. S. STIRLING: -- if they go that route we are going to lose ER and General Hospital, which leads into our news, the Bold and the Beautiful, all our afternoon programming. We are going to lose a lot. One thing we don't want to lose is the soaps that we have had for 30 years at the same time as losing everything else, so we dropped that show, picked up Passions a year earlier. We took a hit in the ratings and of course viewers were upset, but we couldn't get into this September and lose everything including General Hospital. So we saw it coming.
1628 But at the same time, they would come down and the consultants would come down and we would all be talking friendly and rosy and, yes, this will happen and suddenly a roadblock would appear. Then we would try to get over the road block.
1629 I mean, it wasted a lot of our management time. We have a very thin management team. We have a very small company. So to spend 18 months and all of that negotiation and flying up there and them flying down here. It was really -- you know, we felt that we were getting a runaround.
1630 THE CHAIRPERSON: How is it that as a result of all this you ended up being left with the news?
1631 MR. S. STIRLING: I think Mr. Stirling in the stature of the hall of fame or talking directly to Yvon(ph) kind of forced them to make that concession. Probably the other thing, if I can be totally cynical, is that probably they thought, well, let's get through all these hearings, let's get through all of this, suddenly a couple of years later something new happens.
1632 I mean, they told you a year ago that we had an agreement.
1633 THE CHAIRPERSON: Yes, when we did their renewal. Yes.
1634 You mentioned you have a deal with Global.
1635 MR. S. STIRLING: We have a deal with Global for programming and they are also repping us in Toronto nationally.
1636 THE CHAIRPERSON: Sorry? I missed the last part.
1637 MR. S. STIRLING: They have an agency that reps NTV in Toronto.
1638 THE CHAIRPERSON: This is I presume more than a gentleman's understanding with Global. This is some sort of a signed contract.
1639 MR. S. STIRLING: Yes.
1640 THE CHAIRPERSON: Could you file that with the Commission?
1641 MR. S. STIRLING: Okay.
1642 THE CHAIRPERSON: I noticed that quite a few of the programs in your schedule were programs from Global.
1643 MR. S. STIRLING: That's right.
1644 THE CHAIRPERSON: So this is a program supply agreement.
1645 MR. S. STIRLING: We have a program supply agreement and we also have a sales representation agreement. The two were not signed at the same time but they are very much part and parcel of a deal.
1646 THE CHAIRPERSON: Given Global's interest in establishing a national presence and a national news service, why wouldn't -- since you obviously work with Global now and you have established this program supply agreement, why wouldn't you establish a news arrangement with them, and, given the nature of these discussions, sever all your ties with CTV --
1647 MR. S. STIRLING: For years we have tried, Newfoundland Broadcasting, to stick-handle through the maze and maintain a balance between CTV on the one hand and Global on the other. Global even at one time, 10, 15 years ago, the president, David Mintz, at the time talked to me about twin-sticking, applying for a licence and putting -- you know, at that point we were mostly CTV; we just bought a few Global shows. So they said, "Well, we have all kinds of shows. Why don't we twin-stick and apply?" I said, "The market can't bear it. The market cannot bear another TV station. It's very expensive to run a television station, especially with full news and all of those things. It's too small a market." He agreed with that.
1648 But it was always trying to keep them both at bay, both in balance. That is why I am being so frank with you today because I fear that two years from now CTV will apply and Global will then -- our contract is then void and then they would apply as well.
1649 If we made a news agreement with Global and decided to almost be a Global affiliate in that sense, CTV will immediately apply and then Global's deal with us will be void.
1650 MR. PRESCOTT: Commissioner Colville, could I just -- if we file the Global agreement, can we request confidentiality for that? I haven't seen the agreement myself so I don't even know what the terms of it are, but --
1651 THE CHAIRPERSON: You certainly can request it.
1652 MR. PRESCOTT: We can request it. Will be granted it, confidentiality? Is that something that --
1653 THE CHAIRPERSON: We will certainly consider the request --
1654 MR. S. STIRLING: It is one of the most confidential things, as you can appreciate, that we have.
1655 THE CHAIRPERSON: The prices and so on.
1656 MR. S. STIRLING: Prices and the deal and the programming costs and the commission rates on our agency business.
1657 THE CHAIRPERSON: Yes. Well, we would certainly understand that --
1658 MR. McCALLUM: If I may, I wondered if an abridged version can be filed for the public record. You can claim confidentiality for the parts you consider confidential and file an abridged version and explain why you are claiming confidentiality.
1659 MR. S. STIRLING: I'm sorry; I really can't make out what you are saying.
1660 MR. McCALLUM: What I wondered was whether you can explain the reasons for the claim for confidentiality. That is number one.
1661 Number two, if parts are confidential and other parts are not necessarily confidential, if you could file an abridged version of the document for the public file and then a confidential complete version.
1662 MR. S. STIRLING: It's a very short -- it's almost a gentlemen's thing. It's not a legal, lawyer drawn up contract. It's a letter of intent, a letter of agreement, very, very short. I think the whole thing should be confidential.
1663 THE CHAIRPERSON: If you file it with the Commission with your claim for confidentiality and why you want it kept confidential we will consider it.
1664 MR. S. STIRLING: Okay.
1665 THE CHAIRPERSON: You are concerned about CTV applying, but whatever applications would be held presumably would have to be considered by the Commission in terms of impact on this market, and you have expressed concern about the market. I guess from your point of view, from a business point of view, you would have to consider: Well, do we want to continue to be affiliated with CTV -- that seems to be withering away to almost nothing -- or, would we want to be affiliated with Global?
1666 I note that you are promoting yourself as Canada's superchannel now. I guess perhaps you are Canada's version of Ted Turner.
1667 MR. S. STIRLING: But because of the time difference our programs are first. Friends is first in the world here because of our time difference.
1668 THE CHAIRPERSON: Yes. Do you see the potential for NTV to exist on a going-forward basis as a totally independent station, as a superchannel?
1669 MR. S. STIRLING: If our deal with Global fell through and we suddenly didn't have access to network programs, we certainly could be an independent and have movies as independent channels, like the A-Channel in western Canada, and they survive, but if another station came in here we couldn't survive.
1670 THE CHAIRPERSON: But setting aside the other station issue for a minute, again, if another station was coming into this market, was licensed to serve this market, it would have to be approved by the Commission. So setting that aside for a second and looking at your opportunities, so you do see this as a -- is that something you could foresee within the next seven years?
1671 MR. S. STIRLING: When the contract with Global expires in four years we would attempt to renegotiate a new contract just as we negotiated about a year ago.
1672 THE CHAIRPERSON: You could have a contract just to purchase programs on Global and/or a number of other parties to feed a superchannel, right, I would presume? Is that something you foresee for NTV? Not necessarily sort of a deal with Global that in effect makes NTV an affiliate of Global so much as, yes, we can buy programs from Global, we could buy them from --
1673 MR. S. STIRLING: That is really exactly the status now. We are not an affiliate of theirs. We don't carry any of their news. We buy their programming. We play it. They rep us. They have an arm that reps stations right across the country including non-Global stations, including us. So we have been happy with this arrangement. They have been repping us for several years now. We have good relations with them, so I would hope and assume that it will continue.
1674 THE CHAIRPERSON: So you would continue to operate NTV essentially as an independent television station in Canada and probably continue to promote and grow it as a superchannel. You talked yesterday about the radio station being on ExpressVu and promote this as a superchannel being available on cable and on satellite throughout the country and presumably start to aggressively capitalize on that nature of the business.
1675 MR. S. STIRLING: On the spill, you mean?
1676 THE CHAIRPERSON: On the superchannel aspect of this.
1677 MR. S. STIRLING: It definitely helps in the sense -- I mean, the agencies still buy our market. They won't buy our numbers outside the market. They say, "Look, we buy Montreal and we buy the Maritimes, and now we want Newfoundland."
1678 But the fact that we do have spill is added value, so it does help with our sales. We have had growth of sales, as you know, for the last couple of years, but the main reason has not been because we are the superchannel. The main reason is that CBC basically went away as far as the competitor is concerned. They had the number one newscast. They made it a half hour. They changed the time and suddenly our news just took off. We were neck and neck until then. Once they cut it and moved it we just took off.
1679 So what we have been saying to the Commission for 20 years is that this market has been kept down by CBC underselling. It is at radio rates. That has been proven now because for the last two years we are dictating the rates and they are going up. Normally, the rates for television are at least three times what they are for radio. We really were at radio rates. We are only now double the radio rates.
1680 We heard yesterday how the radio market has improved. The reason for that is that television has improved and so therefore radio can move their prices up as well. There really is a correlation and yet we are still only 2:1 with radio. It should be 3:1. So we still have a ways to go with rates.
1681 MR. G. STIRLING: It should be 10:1.
1682 MR. S. STIRLING: It should be 10:1.
1683 THE CHAIRPERSON: You mentioned this phenomenon of you being available on satellite and on cable through Cancom across the country has really grown up over the last licence term I guess and a bit. I think you mentioned in your opening remarks somewhere yesterday that you are now available to 10 per cent of Canadians, was it? All right.
1684 MR. S. STIRLING: Ten per cent.
1685 THE CHAIRPERSON: Presumably, that is going to continue to grow, an interest in watching the superchannel is going to continue to grow, particularly if you are able to continue to purchase popular programs. So what do you see as the potential for that? I presume this will be sold through the rep house.
1686 MR. S. STIRLING: One of the reasons we went with superchannel is because the specialty channels starting branding themselves as the specialty channels. We saw that there was billions of dollars in advertising that was earmarked for either network or for specialty channels. So we thought, well we are on basic, on satellite; we are not on a high tier, so we are a specialty channel in that sense; in fact we are a superchannel. So that is really -- it was a marketing thing and we started talking in Toronto about that.
1687 But so far all the agencies and the clients tell us is, "Well, you are Newfoundland. You have the spill and that's great, but everyone on the satellite has spill. We buy you for your market. We buy them for their market." So we still have not broken through. Maybe sometime in this licence term that will happen and then that might give consternation to Global. On the other hand, they are repping us so they are making money off that too, so maybe that would be fine with them.
1688 That is one of the issues CTV said to us is, "Well, if you are an affiliate and you have got ER, that is taking away from our other stations on the satellite." We said, "Yes, but if your commercials are in ER then who cares? If they are watching NTV they are still seeing your clients."
1689 THE CHAIRPERSON: But as you pointed out, you have the huge advantage of being able to take prime time programs and make them available earlier in the evening right across the country.
1690 MR. S. STIRLING: That's true.
1691 THE CHAIRPERSON: So for an advertiser to get your ER or your whatever earlier in the evening, I would presume there is considerable potential there for you to increase advertising revenue.
1692 MR. S. STIRLING: Would you like to speak to this?
1693 MS POPE-JANES: To a certain degree that may help increase the rating and the audience outside the province. But as the president indicated, revenue is generated at this point for our audience that we reach within the province. We have more of a benefit of increasing a rating for a show that we could simulcast than we would in pre-release in the province. So there are benefits both ways.
1694 Simulcasting a program would strengthen our ability to garner a good rating as opposed to having it in pre-release in the province. All of our revenue at this point is generated from the audiences that we do deliver in Newfoundland.
1695 THE CHAIRPERSON: I understand that, the simulcast issue and the potential there locally, but I guess I just am trying to get a better understanding of whether you see this as a growth potential just in terms of -- I mean, it seems to me it is the one station in the country that has a bit of an advantage in that respect of taking advantage of the time zone difference and the fact you are on satellite and on cable that there should be some advertising potential growth --
1696 MS POPE-JANES: We like to think so, and we have worked that angle with the agencies and our national advertisers. The agencies work on behalf of the clients and part of their objective is to deliver an advertising schedule for the least possible dollars that can be accomplished, so even though they may recognize that we have that spill and that significant added value they will still only pay us for the audience that we do garner in this province.
1697 Because of the struggle I guess over the years trying to maintain or garner a rate that would be appropriate for the market, we have tried to use all kinds of angles with the buying community to maintain or justify or increase a rate which has been challenging.
1698 So we have definitely used that with the buying community for national advertisers. At this point not one of them has said, "Yes, we will pay extra for a spill that you may have, no matter how significant." When that will change, I mean who really knows? At this point, it doesn't seem like it would be in the near future.
1699 Also their arguments would be, the money that a national agency would have for this market would come from this market. Newfoundland Chrysler dealers, which we bought from an agency out of Toronto, the money that they would allot for this market would come from Newfoundland Chrysler dealers within this market. So their argument also would be, "Well, why would we take Newfoundland private viewers' money and pay for viewers that you may or may not get in other markets?"
1700 We have tried that and we have used the approach to help us even get a higher rate or a higher share or to compete when we are competing against CBC, but at this point we haven't garnered any dollars for that.
1701 THE CHAIRPERSON: What sort of level does the spill have to become before you think you can put a value on it that advertisers will pay a premium for?
1702 MS POPE-JANES: At this point they are saying none because the money that they are spending --
1703 THE CHAIRPERSON: No. I understand that at this point. Do you have a sense of what point that spill might have to grow to before you can say it is not worth something?
1704 MR. S. STIRLING: I think once we reach 20 per cent of Canada it is pretty impossible to not see those numbers.
1705 There is another wrinkle, though, and that is, as I said, we are repped by Global so Global doesn't necessarily want to sell our numbers in Calgary, British Columbia and so on, so they have a vested interest as well to not work that.
1706 When Jesse and Lorraine go up there they talk about the superchannel and they go into the agencies themselves and they make pitches. But as far as Global's sales staff is concerned, that is not something that is part of their mandate.
1707 THE CHAIRPERSON: I appreciate that, but I assume then it is going to become a trade-off for you about we have our program supply agreement with Global coupled with this rep house agreement, at some point in time does it become in our financial interest to perhaps deal with an independent rep house if we do get the 20 per cent of spill or 20 per cent of Canada where maybe it is now in our financial interest to --
1708 MR. S. STIRLING: It's quite possible. I mean, there is no reason to think that -- for example, the A-Channel or the Craig family, the only other private broadcaster that we know of in Canada, they are friends. We could call them up and say, "We want to negotiate a deal with you. You guys can rep us. Now you are in Toronto and you have got the supply of programming, you have got movies. We can make NTV more like the A-Channel, have prime time movies." So there are other alternatives.
1709 THE CHAIRPERSON: You also mentioned in your comments yesterday, or maybe it was in your video, that you have an affiliation with CNN. Can you describe what the nature of that affiliation with CNN is and again if there is a written agreement?
1710 MR. S. STIRLING: There must be a written contract. I haven't seen it. Our news director signed it. Basically, it is a certain amount of money that we pay for that service and then we have access to their news. Also, some of their correspondents will identify themselves, "I'm such and such in Jerusalem for NTV news", which is kind of nice. So the association gives us a lot more world content, world news and other things like weather graphics, things like that as well. We pay for that service.
1711 THE CHAIRPERSON: How much of your --
1712 MR. S. STIRLING: In exchange they can get content from us as well.
1713 THE CHAIRPERSON: First of all, can you file your arrangement with the Commission and if you wish to claim confidentiality for all or aspects of it feel free to do so.
1714 MR. S. STIRLING: The amount we pay, for example, we definitely want to have confidential.
1715 THE CHAIRPERSON: Yes.
1716 How much of the programming that goes to air would be CNN, then?
1717 MR. S. STIRLING: Very little.
1718 THE CHAIRPERSON: I'm assuming it would vary from day to day.
1719 MR. S. STIRLING: I mean, if you watch our local newscast at 6:00 to 7:00 you will see maybe two or three national or international stories. It is almost all local. However, we do have other newscasts. We have a 6:00 in the morning newscast that has just started in the last month or two, 6:00 to 7:00. That will take more advantage of CNN.
1720 Our late night news also now has more of an extended national-international newscast, the one between midnight and 1:00. But our new news and our prime time news is almost 100 per cent local.
1721 THE CHAIRPERSON: So at this point in time there is not a lot of news programming coming from CNN. It would be bits of your international.
1722 MR. S. STIRLING: There would be a few stories. Like, there might be at the most in any -- maybe the late night newscast might have three stories max, and I haven't even seen that yet. I don't want to speak for my news director, but he likes certain features. Like there is the Hollywood Minute, that kind of a thing that he would use in a top story, but we are not relying on it if that is what you are asking.
1723 THE CHAIRPERSON: Are there any other program supply agreements that you have?
1724 MR. S. STIRLING: We would like to have more. We would like to have one with BBC, for example, but that is the only one and that is fairly recent.
1725 THE CHAIRPERSON: So over the next licence term, as obviously the arrangement with CTV has wound down or is winding down and you are perhaps becoming more independent, you would see probably having more of these sorts of program supply agreements with a variety of program suppliers, I would presume.
1726 MR. S. STIRLING: Yes.
1727 THE CHAIRPERSON: In the case of CTV, in your application, you have noted that this results in a shortfall of $650,000 a year.
1728 MR. S. STIRLING: That was the deal that was signed seven years ago, so we would have expected considerably more than that this time.
1729 THE CHAIRPERSON: Sorry; you would have expected --
1730 MR. S. STIRLING: More. You are talking about the compensation.
1731 THE CHAIRPERSON: Yes.
1732 MR. S. STIRLING: Yes. That was the carry over from a deal signed seven years ago.
1733 MR. G. STIRLING: It never covered our engineering costs.
1734 MR. S. STIRLING: Yes. Anyhow, for many years the deal was with CTV because we were founding members of CTV and so there was an ownership and pride of ownership trying to build a network. So we, basically, for many many years, got very little return out of CTV for the 40 hours we gave up, not enough, as Mr. Stirling just said, to even cover our engineering. Then once the shareholder arrangement -- the difference when they ended up owning the thing and went public and so on, we would have looked for a better arrangement than what we made when we were shareholders.
1735 THE CHAIRPERSON: Right. I understand that. But just looking at the $650,000, going back over the last few years, our log shows that the network payments were approximately $400,000 a year, so I am curious to know what the difference would be between the --
1736 MR. S. STIRLING: The difference was it was the two amounts. That was one, which was just compensation. The other was $150,000 to help us on the satellite. The satellite was a huge commitment for us. It was $650,000 to go on the satellite, back before ExpressVu and so on, when we were up on E2. So that particular year, which was in this last licence term, NTV actually lost money. It was OZ that carried us through. This is one of the reasons we have made this application for another radio station is that, you know, a company needs some diversification because if you have a bad year with one company then -- so it was OZ that got NTV through and got over that hump.
1737 But CTV contributed $150,000 to the satellite costs and so they really paid us in two amounts.
1738 THE CHAIRPERSON: That still leaves another $100,000. It was $400,000 our records show for network payments. You are saying CTV provided you with another $150,000 to help cover the expense of going on the satellite, so then there would be another $100,000.
1739 MR. S. STIRLING: It was an escalating amount. Like, when we made the deal in 1995 it started at $333,000 and then every year it went up, so by the last year it was up to just under $500,000 and then the $150,000 made it the $650,000.
1740 MR. G. STIRLING: But that didn't cover, sir, the engineering costs of carrying the network back across Newfoundland.
1741 THE CHAIRPERSON: Right.
1742 MR. S. STIRLING: In not a single year with the CTV did we ever make any profit. We poured it back because you had to maintain that network. If we are going to build a Canadian network from coast to coast the only way it could survive is if 11 members gave up their time, their prime time, and allowed that to become a cash flow to create a network. So we never made any profit from it, if you look at the records. As I said, they never covered the electrical costs to create a network of 15 or 17 transmitters across Newfoundland.
1743 So it was far from a -- we appreciate the fact it was difficult to bring a network together from coast to coast, but we felt it was vital. I still feel it is vital.
1744 THE CHAIRPERSON: So now we have to replace this revenue. Now you have a new program supply arrangement with Global for some of your programs, I guess in your comments, I think it is in the application and I think, I can't point right to it but in your opening comments yesterday you referred to the fact that you just expect to sort of break even relative to the $650,000 in terms of your ability to sell advertising against that, what used to be the 40 hours from CTV.
1745 MR. S. STIRLING: To be honest, last year when we were negotiating with CTV, the figure we were talking was in excess of $1 million. The consultant at that time told me that Trina McQueen(ph) had approved $1 million a year. That is the kind of money that we feel we have to make up.
1746 MR. G. STIRLING: Even that was underestimated when you consider that they had 40 hours and 20 hours of that is prime time and when you consider the average rate they should have been getting. I mean, the back page of the telegram is $5,000 plus production. Even if we were getting $1,000 a unit, but we are talking, as we sit, radio rates, because of the no relationship to cost to the other shilling in the market. It has been very interesting because we had to simply get better and better. That is why we were the first, to my knowledge, in the world to go 24 hours almost 30 years ago, just as we were the first in Montreal to put on English FM for seven years.
1747 THE CHAIRPERSON: Okay. So let's assume it is $1 million. You no longer have the network payment from CTV, $500,000, plus $150,000 to help with the satellite. Your expectation was it might go to somewhere close to $1 million.
1748 Now you have the time and you have to sell that so now you have the opportunity to sell yourself that time that represented the network payments. I guess I want to get a bit of a sense of your ability to sell that time and earn $1 million in advertising revenue from that time that you now have available to you to sell.
1749 MR. S. STIRLING: It's a terrific challenge because we also have to turn around and buy CSI, for example, you know, $100,000 or whatever that would come out to be. There is not just the revenue we are not getting, there is the cost of the programming we have to pay.
1750 The other thing is we have lost an hour of entertainment programming. We used to carry CTV and the national news came in at 12:30 for years. That is the only time we could get it was Lloyd Robertson at 12:30. Now we can get it at 11:30 and we have moved it up to 11:30, but that has eliminated where we had ER, Third Watch, Law & Order, CSI. Those are all top 10 shows that we were carrying on the CTV network in simulcast between 11:30 and 12:30. That is no longer entertainment programming. So instead of 4.5 hours a night of prime time entertainment programming we now have 3.5 hours of entertainment programming. We have less inventory in terms of the total, we have more in terms of CTV has vacated, but then we have the additional costs and we have lost four top 10 shows.
1751 So it is a challenge, and we don't know, this has only been three months. We haven't even got our rating yet. We don't know what is going to happen. We have had incredible numbers of e-mails from viewers: where is Third Watch; where is this; where is that? That is why we felt we had to buy CSI. But until the ratings come or until more time passes we are not sure.
1752 THE CHAIRPERSON: But Global has a lot of the top 10 shows.
1753 MR. S. STIRLING: Global does, yes. We used to have -- that's why when we call ourselves a superchannel we have or still do, but we had all CTV's programming, we had all Global's programming to pick from. Now we do but we can't afford to buy it so we took the very top show and the rest is other sources including and especially Global.
1754 THE CHAIRPERSON: But what I want to get a sense from you is your opportunity to sell and earn revenues to make up -- I mean, essentially I take it you believe that you can make up through commercial sales the lost network payment from CTV, which, as you indicated, might have been and from your point of view should have been closer to $1 million. So you obviously feel that you can sell that time and make up for that.
1755 MR. S. STIRLING: I guess the way to characterize it would be cautiously optimistic, not bullish.
1756 THE CHAIRPERSON: Why wouldn't you be bullish?
1757 MR. S. STIRLING: Because what happens if the ratings come out and it turns out that all those audiences that were watching ER are now watching it on cable? What if our ratings go down? This is all about ratings, numbers and points.
1758 THE CHAIRPERSON: Given your program supply arrangement with Global, who indeed have a lot of the top 10 shows, why wouldn't your expectation be, notwithstanding the fact that we don't have some of the CTV shows that our audience wanted, the fact is we have largely the Global shows which in some cases were probably beating CTV so we should be able to sell against that? You say you are cautiously optimistic, so your own target to your management team I presume is: we are going to make that million that we should have got from CTV.
1759 MR. S. STIRLING: That's right. Because of the calibre of their shows. ER was the number one show for the last five years and it was one of our top rated shows. Law & Order, another top show; CSI; Miami, another top show. Those are all top 10 shows and they can be seen on cable in our market. It would be pretty hard to be bullish if you lose four of the top 10 and you still expect to not be affected.
1760 THE CHAIRPERSON: There was some discussion yesterday about whether or not you sold out coming up to Christmas. Over the next few years, how much of your prime time commercial availabilities do you expect to sell? What are you budgeting for in terms of your percentage of commercial availabilities in prime time?
1761 MR. S. STIRLING: I think the sales director should speak to that, if that is okay.
1762 MS POPE-JANES: There has been a lot of variables that will contribute to the future of our strength in the market place and our share and our average rating and our ability to sell. Because we don't have a rating since our affiliations changed with CTV, it is very hard to project what will happen and our ability to garner enough audience to maintain the revenues that we have had in the past. So we are basically taking on the challenge and doing what we can to make sure that we program the station to maintain those audiences, and even though we have the top Global properties, having the best of CTV and Global gives us a lot better position to maintain the ratings than just having the best of one program source.
1763 So it is very hard to project at this point, until we get a rating. This is a very crucial rating period for NTV. It will give us some direction or some indication to how we are going to be affected by the change to CTV. When we see that, that will give us a little more indication.
1764 When it comes to generating that million dollars from CTV, there may be some opportunity to do that with available inventory. Available inventory doesn't necessarily mean it is going to be more money spent in the marketplace. We haven't turned away revenue before for television. Even Wednesday TV has those 40 hours. We have been able to sell inventory. We don't have an inventory issue at NTV and at this point we don't have an inventory issue for sure because we -- but having more inventory doesn't necessarily mean there is a lot -- that million dollars is actually to be spent in the marketplace.
1765 The other opportunity to capitalize on, the fact that CTV doesn't deliver network points in the marketplace is there down the road but this year in particular, by the time the decision was made and our arrangement with CTV was confirmed, the buying community had already done their network buys for the following year. So a national agency would have bought CTV network assuming they were getting weight in Newfoundland because of network properties. Once they realized that wasn't going to happen, CTV didn't offer any money back type thing, so we couldn't realize any of those revenues this time around. Next year we will be in a better position to go after those particular revenues. There are some agencies who would have been dependent on the CTV network buy to get weight in Newfoundland.
1766 So we will give it as much as we possibly can when it comes to projecting how much we are going to sell out in prime time, but it depends on the rating, it depends on the rating and how it will change NTV's position when it comes to maintaining a prime time rating.
1767 THE CHAIRPERSON: You have to prepare a budget for your business operations and you have prepared a forecast for us in terms of your projections for the next seven years. I would like to get a handle on them. What are you expecting? I know there is a lot of uncertainties and whatnot, but at the end of the day I assume Mr. Stirling asks you: I need a budget to prepare a business plan here. I presume you start from: we have to generate some revenues; I have got a certain amount of commercial availabilities. I can expect to sell so many of those at such and such a rate.
1768 Can you give me a sense of the commercial availabilities in prime time, what you expect to sell?
1769 MS POPE-JANES: Because the economy is doing well in Newfoundland, probably the contributing factor that would help me assess, and the history of national advertisers increasing their revenue in this market, that would give me -- I would feel more confident basing a projection on that as opposed to more available inventory because the other uncertainties would make it very difficult for me to project that.
1770 THE CHAIRPERSON: So you would base it on what?
1771 MS POPE-JANES: The fact that national agencies or that revenues for this market have been growing because of the economy doing much better. I mean, the economy doing well really is in direct relation to national ad spending in a marketplace. As I said, the amount of money for Newfoundland Chrysler dealers would have been determined by the amount of Chrysler cars they are selling in this marketplace. There has been some growth in that area in the last couple of years. That would give us an indication that there is potential to grow our revenues. But to project a percentage of prime time sellout against the previous years, which I would think over the period of a year would be about 60 per cent -- would you think, Frank; 50 to 60 per cent? -- you know, in high demand periods it would be upwards 90 to 100 per cent.
1772 THE CHAIRPERSON: Sorry; could you just explain the 50 to 60 per cent?
1773 MS POPE-JANES: Prime time sellout.
1774 THE CHAIRPERSON: Prime time sellout.
1775 MS POPE-JANES: Over a 52 week period there are two times in the year where we would be 90 per cent, but during the summertime and the winter months it would be much less than that.
1776 THE CHAIRPERSON: As the economy strengthens, would you expect that to -- I noticed a recent article. I got this from the Globe and Mail on October the 29th. It was a Royal Bank of Canada forecast that talked about the economy of Newfoundland. It talked about the provincial economy will grow 6.2 per cent this year largely because of rebounding oil production and the pace will slacken only slightly in 2003 to 5.1 per cent if anything, and that Newfoundland is going to lead the country.
1777 So with that 50 to 60 per cent and the economy doing well, would you expect that to grow then over the next few years?
1778 MS POPE-JANES: The percentage of sellout in prime time does have a relation to the amount of rating points you garner. So if we drop in our average rating point because of those CTV programs not being there, we will have to sell/deliver a lot more inventory but yet delivering to the same audience. So if the ratings drop we may end up having to sell a lot more inventory but still only make the same amount of money. So the percentage of sellout and the amount of money that we can recoup is in direct relation to the rating that we will accomplish with the community.
1779 THE CHAIRPERSON: So the sellout could go up, but the --
1780 MS POPE-JANES: Yes, but revenue not increase. It depends on the ratings.
1781 THE CHAIRPERSON: Right.
1782 MR. S. STIRLING: I would like to make one point if I could and it was something that Lorraine touched on, that is that there is only so much money budgeted for this market. We have more inventory than we need. You know, we are not Toronto. We are not a big station in a big market. It is the pricing that is the key because they budget for this market from Toronto and so they say, "Okay, we want 100 GRPs and here is how much we are prepared for that market." Well, if it costs more to make that 100 GRPs then they will pay more. It is really not how much inventory as much as how many spots it takes to make their GRPs.
1783 THE CHAIRPERSON: Right.
1784 MR. S. STIRLING: So pricing is the whole key to this.
1785 MR. J. STIRLING: To interject briefly, my thrust in the company is mostly from a marketing aim, but I do also participate in the pitches on a national level, Toronto, Vancouver, Montreal, Halifax. The challenge to pick up this million dollars in advertising clearly isn't going to come from the local market who has no interest in the spill across Canada. No one is going to fly to Newfoundland to buy their cars or get their hair cut.
1786 The challenge we face is repositioning NTV as not a regional buy at this point, to be more of a national buy. That isn't happening right now and it is not happening for any of the other CTV or Global affiliates who are doing shares of rating points and getting viewers in different provinces besides their home territory. That isn't happening right now in Canada.
1787 Also the perceptions of Newfoundland is obviously a challenge to overcome, to try to reposition Newfoundland as a vibrant economy and a nice place to do business. So the million dollars to pick up squarely falls on Lorraine Pope-James' shoulders and my shoulders. What we need to do is essentially change the way television is bought and sold in Canada to be credited for our viewers totally across the nation.
1788 Right now, as I want to restate, we have not reflected a nickel in revenue from our numbers we do outside of Newfoundland and Labrador. We are planned by media buyers specifically for access to this market.
1789 THE CHAIRPERSON: And you haven't reflected a nickel in the figures we have currently and going forward.
1790 MR. J. STIRLING: Our growth is due to our very strong local newscasts and those numbers going up, a healthy Newfoundland economy and an attempt to position ourselves still has value added, meaning that if it is a consideration between CBC and ourselves, if it is consideration in this marketplace of billboards or print versus NTV, we do get that story out there, but every agency is standing packed on the fact they will not at all pay for the spill outside of Newfoundland and Labrador.
1791 THE CHAIRPERSON: Not yet.
1792 MR. J. STIRLING: Not yet.
1793 THE CHAIRPERSON: No. You have gone from -- our figures show about 1 per cent in 1997 to 28 per cent of all viewing to CJON in 2001 was outside of Newfoundland. Overall the economy has been down from an advertising point of view in television for the last couple of years, particularly since 9/11, but going back to the discussion we had before and the comments you have just made, I would presume that you fully do expect to start taking advantage of that spill, the national. The viewing outside of Newfoundland really should start taking hold and your whole branding of the superchannel, more than just a branding thing here, one would presume you should be able to start taking advantage of that within the next few years.
1794 MR. J. STIRLING: That is our theme, Mr. Commissioner, clearly. Also, with reference to competition is the specialty channels as well that are able to charge on cost per thousand whereas NTV is categorized as a regional traditionally CTV affiliate and hence in the pecking order the buys come in after the national, after the specialty. Then they will start attacking the regions.
1795 Obviously St. John's being the market it is, it is 17th in that order, so basically we are trying to come up to the fore and be seen as a national presence. Yes, they will only pay for Newfoundland viewership numbers, but hopefully we can influence the money coming into this province aggressively against print, aggressively against billboards, in store, et cetera.
1796 THE CHAIRPERSON: When do you expect that to start to happen?
1797 MR. J. STIRLING: Over the course of our licence term. Certainly, our goal over the next seven years. However, right now it is a challenge all, I would say, regional stations up on the satellite are embarking upon and we are -- the irony is a small market like ourself trying to lead the way and revolutionize the way television is bought and sold in Canada. An eyeball in Newfoundland should be just as valuable as an eyeball in Vancouver or Toronto.
1798 MS POPE-JANES: I would like to make another point to that. As soon as that happens for NTV and the buying community starts to recognize that spill, and if we generate some extra revenue from that, then our program suppliers at the same time would feel that in their markets, garnering an audience. Our program suppliers would look at us differently as well.
1799 So at the same point when we might be able to benefit from some of that audience is at the same point as when our costs of being able to deliver -- it would happen all at the same time. There would only be a short window before one would not trigger the other.
1800 THE CHAIRPERSON: I appreciate that. You have no doubt huddled, and we have got to make sure this picture doesn't look too rosy for the Commission. I can appreciate your concern that as the advertising potential goes up, because that has been driven by audience, that the program supplier is going to say, "Well, you get more advertising, a bigger audience, so we are going to charge you a little more for the --"
1801 MS POPE-JANES: That already happened with CTV. That has been their argument and their reasoning.
1802 THE CHAIRPERSON: Yes.
1803 MS POPE-JANES: So it has happened. We have seen it already. We are not at the point where we are generating that revenue in the Ontario market and --
1804 THE CHAIRPERSON: We are not running a charity here. I presume you have a -- the two gentlemen to your right, they are going to make sure that at the end of the day there is a little bit left in the till to stay ahead of the game.
1805 MR. S. STIRLING: National sales has really been growing for us in the last couple, three years. We have attributed most of that up to now on the fact that our news is so dominant. You know, we have an almost a 30 share, which is unheard of. I think we have the highest share in the whole country, maybe there is a station in Quebec perhaps. So to that we attributed most of it.
1806 But at the same time, the fact that national is outpacing other stations across the country makes us feel that perhaps clients are aware of it and they are not telling us and they are not admitting it but something is happening, yes.
1807 THE CHAIRPERSON: Given all that we have discussed, you projected a 4 per cent increase in the first year for national sales and then 2 per cent thereafter. I guess I am kind of curious as to why you wouldn't see that increase coming down or why you wouldn't see if at least you can steady it or it not increasing given the whole strategy that you have adopted here, which seems to make sense given this affiliation and the opportunities that you have, which would seem to be potentially greater than many other stations in the country.
1808 MR. S. STIRLING: It is very tentative. That's the point really is that we have to be conservative because what happens in two years if CTV makes an application and Global drops our programming? I mean, we don't have deals that cover the full seven years so we don't have the full confidence to be able to project and budget based on the snapshot of today. Things could change dramatically in a couple of years.
1809 THE CHAIRPERSON: But such is life. How long is the Global deal?
1810 MR. S. STIRLING: It's a five year deal and there are four more years left. There are three more seasons left after this year.
1811 THE CHAIRPERSON: So setting aside the potential threat from CTV, you have a fair degree of certainty with the top programs that Global was able to provide you for five years, four more years.
1812 MS POPE-JANES: One of the reasons as well why you would have seen that growth, and we still maintain the growth within the next year or so, national sales, most of that would come or a big portion of that growth in revenue would have come from us being able to raise the rates for this market. There is only a certain point at which you can raise the rates before the agencies actually resist it to a point where either they drop the station or drop the market.
1813 So within the last couple of years we have made tremendous gains in being able to raise the price of the market and raise the television rates. That has contributed to the growth in national revenue. But there comes a point when that increase from being in a market that has been underpriced to a market that is more fairly priced, you will see it levelling off a little after we have accomplished that, and we will see from over another year so if we may very well get to that point.
1814 THE CHAIRPERSON: I would have suspected that to be the case if we were just looking at a stable kind of local market with not a lot of spill. But in your case, you have a rather unique situation here where you have the national and your whole outside Newfoundland audience is growing and the potential there for growth seems to be headed to what any other station might normally not.
1815 MR. S. STIRLING: It is really the same as ATV. That is CTV. They have the exact same advantage with the time difference, a half an hour difference. They have all of that CTV programming in pre-release. Maritimes Global, it's the same thing there. They have Fear Factor ahead of us, for example, which we both carry. If you look at our national sales figures and go back five years, you will see a huge variation. Like, one year it dropped a million dollars. The next year it came back a million. That is one account. That is Proctor and Gamble. So that one account could decide, "Okay, we are going to go another route here." It's really hard for us to say, "Yes, we are very bullish. This is what is going to happen." With all of this uncertainty we are not positive. So, yes, we do have to be financially conservative in our projections.
1816 MR. G. STIRLING: When you consider, sir, that all our transmitters are all 25 years old, they were put there when the people in the area depended on that delivery system 100 per cent, but now 85 to 90 per cent of those people are either receiving it by direct or cable, so these transmitters are now -- the poorest segment and the unemployed depend more on this free service. In some cases 34 per cent of the little villages. So you have to be conservative if you are going to renew these transmitters for 5 or 8 per cent of the population in these areas.
1817 That is one of the things that had to be on our plate because we want to maintain that service. Well, these transmitters now have gone from $700,000 to $1,400,000. We had to take all of that into consideration looking into the seven years because we have gone from one competitor to 150 competitors for viewing and it has been a staggering challenge and one we are handling.
1818 This is why we are trying to be as frank as we can with you people because we feel it is so important to project -- you know, it is not everybody who can project what is going to happen in seven years let alone seven years with the present situation in the world.
1819 THE CHAIRPERSON: I understand that. As I say, I was trying to get a handle on where we are going.
1820 Just to sort of wrap this whole area up then, I guess you are confident that you can make up for the million dollars and perhaps then some recognizing there are uncertainties here in terms of the ratings that you get as a result of changing the program schedule, but you do have a five year agreement with Global, four more years to go. There is the uncertainty around CTV with the two year arrangement there and what they may do, but that could largely be in our hands.
1821 I take it then you are confident that you can make up the million and perhaps then some, and then you have the --
1822 MR. S. STIRLING: We have a lot of confidence in the short term. We have less confidence looking down the full seven years, yes.
1823 THE CHAIRPERSON: Given the Global arrangement, I assume your degree of confidence is fairly good out four more years.
1824 MR. S. STIRLING: Yes.
1825 THE CHAIRPERSON: Right. Okay.
1826 MR. S. STIRLING: A lot depends on the economy. If there was a recession, for example, even though Newfoundland is scheduled to grow and all the rest of it, but that would have a huge impact on our resources and our income revenue.
1827 THE CHAIRPERSON: Right. Okay. I would like to --
--- Off microphone / Sans microphone
1828 THE CHAIRPERSON: Sorry; go ahead.
1829 MR. G. STIRLING: When you are pioneering and you put in, like we did, FM here, for seven years before anybody was interested because you had to get the cars into FM -- it's going to happen with digital now, the unknown quantity now, like what happens with digital radio as you phase in the transitionary period? That again is going to require the pioneering until there are sufficient cars and receivers in the market to make it viable.
1830 Well, television is also interconnected because if you have your rates so low in television you can wipe out your radio stations, which is what happened, or wipe out the daily newspaper. If you are going to lower your rates so that they are unrealistic, which is what happened down here, and we have been struggling ever since to get them back -- but no other station in Canada has added 110,000 viewers to their news in the last four years, a staggering increase. That is what has done it for us --
1831 THE CHAIRPERSON: You have obviously done a remarkable job and have a huge loyalty to your news service.
1832 I would like to switch and just go over a few financial figures that I just would like some clarification on. I don't know if you need to turn to it but this is on Schedule F-2. Item 17 on the schedule is "Other program expenses". I have to be careful how I deal with this because confidentiality has been requested for this.
1833 The figure that I see there represents almost 40 per cent of your total program expenses. I guess if somebody came to me with a budget and I had 40 per cent of that budget listed under other I would be asking: well, what is that? So, what is that?
1834 MR. COLLINS: When we prepared this schedule all the departments that are not directly involved in programming would be considered in the other category essentially. So like our news department certainly is classified in Category 1, line 1, and all our program purchasing and so on, the direct costs, are in the balance of the schedule, but all the costs of the other departments, the master control operator to put it on the air, anything associated with things that aren't direct to programming essentially are categorized as other. That follows of course your schedule, I believe, as you required it to be completed.
1835 THE CHAIRPERSON: It seems high to me. I guess again, if I was putting myself in Mr. Stirling's position I would be asking you: can't we attribute more of those costs to particular cost items rather than throwing that all into other?
1836 MR. COLLINS: I recall actually with the Commission staff I believe having a discussion, and I don't recall the gentleman's or lady's name, about all these costs, how do I allocate them under the categories that you have broken down in that particular schedule. I remember being directed that a percentage of the totals would then classify as associated with each one.
1837 This schedule layout is actually slightly different from what is in the annual information return. Maybe that is where we got misled on this. I'm not sure. I don't have a copy of the one we completed for the annual information return here, but you take all your other expenses and you essentially put them under the Category 1, 2 and so on. They do appear though as a line called "Other" on that particular schedule.
1838 THE CHAIRPERSON: Could you file with us, it doesn't have to be today, a breakdown of what the significant items under "Other" are? As I say, it seems to me that if you were approaching me with a budget and 40 per cent of the budget was just listed as "Other", I would want to know what some of the major elements of that were. Whether it is from Mr. Stirling's point of view or a regulatory point of view, I would kind of like to know what some of those significant items are.
1839 MR. COLLINS: Certainly. Okay.
1840 MR. S. STIRLING: Did you say news is under "Other"?
1841 THE CHAIRPERSON: No. News is item one, but I guess some of this might be related to it. Let me put it this way. This item in aggregate is more than news, which is your largest by far --
1842 MR. COLLINS: Program.
1843 THE CHAIRPERSON: Yes. Your largest single program expense.
1844 MR. S. STIRLING: It sounds like a lot of operational, like the MTR operators and things like that, would be in there, but we will file that. I will certainly go over it with them.
--- Laughter / Rires
1845 THE CHAIRPERSON: I am sorry to have gotten you in trouble.
1846 Again, I don't want to look at specific numbers, but I guess I would like an explanation of some of the relative figures. When we look at some of your expense items and look at sales and promotional expense it is 9 percentage points higher than the other Atlantic stations and almost 12 per cent higher than the Canadian average. I guess I would like an explanation of why your sales and promotion expenses would be so high relative to other stations in the country.
1847 MR. J. STIRLING: We do engage in a lot of activity. One of our commitments, being Newfoundland Television we are the superchannel, but we never forget our roots, we never forget our local heritage. We are engaged in a tremendous amount of activity, which costs money. We talked about yesterday the Concerts in the Park, the George Street Festivals. These all cost a lot of money to set up: the symphony, the Maple Leaf, the Salvation Army, Big Brothers and Sisters, the Children's Wish Foundation. We are engaged with a tremendous amount of grassroots marketing activity in a geographic region which is very massive and diverse, so we try to connect with our local communities.
1848 I would say a large line share of that money is allocated towards not-for-profit and charity and audience promotion functions.
1849 THE CHAIRPERSON: But a lot of stations, virtually all television stations across the country, do this sort of activity and it was alleged at least yesterday that a Concert in the Park hasn't been done for a couple of years and the George Street function is largely paid for by the merchants there.
1850 Again, I don't see why NTV should be higher than the national average, especially given all the concerns about the market here that we have talked about already.
1851 MS POPE-JANES: You are talking about a total sales and promotions cost, the cost of sales and promotions?
1852 THE CHAIRPERSON: The ratio of your sales and promotion expense to revenue is higher than --
1853 MR. S. STIRLING: Let me speak to that.
1854 There is a lot of barter and contra that is done here in Newfoundland. In fact, the radio figure of $15 million for revenue I think is inflated. I don't think it is that high, as we said yesterday as that came up, that amount. Since NewCap took over advertising revenues have dropped to $13.5 million.
1855 I think what they have done is they have started to tighten up their formats with regard to contra. In other words, you say to a building, a store owner, "Can we put a big sign on the side of your building?" He says, "Okay". We say, "All right. Here is how much contra we will give you." That gets expensed as a cost and an income. Basically, it is a neutral factor.
1856 We have very high contra barter arrangements and I think that is kind of a tradition here in Newfoundland. I think that plays into this. I am not seeing the figures that you are talking about specifically in front of me, but we do an incredible amount of that kind of activity.
1857 When it talks about the George Street, there is a cost involved. We actually send cameras down there and we get involved down there. That is a several day event. We have posters and billboards and all kinds of things. So there is a cost to that as well.
1858 THE CHAIRPERSON: Wouldn't it concern you that it costs you more to earn a dollar of revenue than virtually any other station in Canada?
1859 MR. S. STIRLING: It would, but if you look at how we have grown, I think there is a connection to the promotion and the publicity. When Jesse took on marketing three years ago we made a conscious effort to get back to grassroots, to get involved with organizations, to get involved with Big Brothers, as you saw yesterday. I'm sure we do more than the average television station as far as community involvement is concerned.
1860 MR. G. STIRLING: The Hummer alone, sir, which is a prototype of a completely mobile television station, it can go anywhere and has its own antennae that goes up to 48 feet and so on. These are the kinds of costs that are also built into this kind of research and development, because if we are going to -- and I have a tape which we can show you -- if we are going to develop into Canadian content we had to do a lot of research and we had to do a lot -- every day almost we have a remote somewhere going on.
1861 All of this is built into our fighting to project into the seven years. You are not going to win this battle unless you are absolutely local in your efforts to be part of the communities across this country, in Newfoundland. That is where our focus is.
1862 A lot of these things we are doing and we are doing in tremendous numbers, more than any station and any market. When you consider we are the smallest market, these other people who have the same regulations are doing maybe $50 million more in gross or $100 million, and we are being challenged on the same things, trying to maintain with a tight staff and having closed down five stations and having taken the losses of those stations, finding they were selling spots in Corner Brook for $4 when the minimum wage for the going --
1863 I mean, we don't need to go into that one, but you really have to focus here as we look ahead to the seven years and what we have to do regarding all of these potentials that could happen. We are building our own superstars frankly, just as we are building the superheroes.
1864 It's a 20 year project to have something other than the Mounties and the flag to give identity. This takes a lot of energy and a lot of effort, particularly for the size of our station. But we are focusing on this and we have now, for turning out these books, the story boards, and all the material that is necessary to take the animation to the next place, but it is $12,000 a second.
1865 THE CHAIRPERSON: So I suppose the Hummer then shows up under "Sales and promotions", does it?
1866 MR. S. STIRLING: It probably should, at least a portion of it.
1867 We have a video tape actually of Captain Canada to show you some of the things we have done. We have never received any credit for it, Canadian content or anything. That is another thing really that we should take this opportunity to explain to you is that we are 24 hours a day. We have been for 25 years. There is something called Scenes of Newfoundland that comes on every morning from 5:00 to 6:00 --
1868 THE CHAIRPERSON: I want to get to some of the programming questions a little later on, so if we could just stick to the --
1869 MR. S. STIRLING: Okay. I would think that Captain Canada, those kinds of costs, are part of this. I mean, we are aware that this is high, but we have made a conscious decision in the last two or three years to get back some of the lost ground we felt we had lost at the grassroots level. Once we started having the cash flow, with CBC suddenly not number one and not dictating the rates, we started pouring money back in, whether it was the Hummer, or whether it was signs everywhere, or whether it is getting back involved in Concert in the Park, which we plan to bring back this summer as a matter of fact.
1870 So, yes, it may be high. On the other hand you could argue, well, look at the success. No one else has grown like we have.
1871 MR. G. STIRLING: You have to invest, sir. If we are going to make it against 500 channels, you have to invest.
1872 THE CHAIRPERSON: I understand your need for investing. I'm just looking at it from a business point of view, you looking at the bottom line, to look at yourself relative to your peers across the country and say: Wait a minute, guys and girls; it is costing us more to earn a dollar of revenue than any other station in Canada.
1873 MR. S. STIRLING: We are aware of it. It is a factor. It came up at budgets and, you know, it is true. It is not something that would continue the whole seven years.
1874 THE CHAIRPERSON: So in a relative sense you, from a management point of view, presumably would want to get that under control.
1875 MR. S. STIRLING: We have had conversations about it. A lot of it is contra, though. A lot of this is contra. These are deals with concerts and that kind of thing, so I can't --
1876 THE CHAIRPERSON: What about administration in general, which is about 20 percentage points higher than the Atlantic Canada stations and similarly above the national average?
1877 MR. S. STIRLING: I will let our CFO speak to that.
1878 MR. COLLINS: Yes. We took the numbers of course from our last filing and so on and projected forward from there. Our administration in general is going to include everything that our auditors would like us to post at year end of course and then taking into account tax considerations and everything else. So these numbers have been carried forward on that basis.
--- Off microphone / Sans microphone
1879 THE CHAIRPERSON: (Off microphone / sans microphone...) carried forward so much as, again, from a business point of view, because you are not operating a charity here, at the end of the day you want to be able to make a profit, I wondered from your perspective to say, you know, we have looked at sales and promotions and now administration in general, 20 per cent higher than other Atlantic stations --
1880 MR. S. STIRLING: But it is not apples to apples. We have an umbrella title called Stirling Communications International. It owns the printing. It owns the Internet Web sites we have. We have a magazine, a weekly magazine. We have other books we put out. So the management team works in those companies as well. Now, unfortunately one of those companies has had some financial problems, the printing press, and so we have not been able to put the full cost for the management team into that company or we would drive it further into losses.
1881 THE CHAIRPERSON: So then this would suggest that the TV station is paying for the management team for some of the other operations.
1882 MR. S. STIRLING: Not paying for but -- for example, I am not taking a salary out of The Herald, and so there is that element, I suppose. It is the same thing with MYFM and the NTV and OZ FM. These are people that would work -- you know, you are looking at general administration for NTV only, are you?
1883 THE CHAIRPERSON: Right.
1884 MR. S. STIRLING: Not OZ FM or not Newfoundland Broadcasting.
1885 THE CHAIRPERSON: Yes.
1886 MR. G. STIRLING: Also, sir, we went 11 years -- when we brought in FM it was 11 years before they broke even. In television it was almost 10 years because there was no television here and nobody wanted to bring it here and we were the only applicant. But we knew it was going to take at least -- we thought it would be seven years, but it was 10 years. It is the same with FM and the same in every other market we have gone into where we have brought in -- in Newfoundland, for example, we brought in the first 24 hour a day AM back in 1951. That was the only 24 hour AM on the air in Newfoundland. Then we brought in FM and we had to -- I think it was 8.5 years to break even, as the figures show.
1887 So we are not afraid to go into the future by spending the money now that may be out of proportion. We have billed, for example, a computer prototype where we can do inexpensive children's shows and many other things that we have rolling out. We never get an opportunity in 20 minutes or even in a hearing like this to in depth discuss the whole concept of Canadian content and how we feel it should be directed, just as we feel that the ExpressVu fund should be focused, at least 50 per cent, on Canadian children's shows and animation, developing something real and having a package.
1888 When we tried that million dollars an episode for Mount Royal it was a disaster to try to compete. But in children's shows we have a fighting chance, particularly when we develop our own superheroes and intermix it with live action, as we are now building up to.
1889 If we were in L.A. or New York, it would be a whole different ball game. But we are down here in the smallest market in Canada with the smallest gross of any second market in Canada and certainly the smallest staff of any station in Canada, let alone 24 hours a day, and I think we deserve a lot of praise for making that effort 28 years ago.
1890 THE CHAIRPERSON: I'm not trying to sound critical here. I'm trying to better understand the situation. That's all.
1891 Mr. Scott Stirling, you mentioned salaries. The Atlantic region average is about $55,000 and the national average is about $64,000. You are considerably above both of those. What would explain that?
1892 MR. S. STIRLING: Let's start right here. Lorraine Pope-James, for example. She is the sales manager, general sales manager of Newfoundland Broadcasting, NTV, OZ FM national, local. She is also our program manager. So the way we survived is that everyone, right down to the lowest person on the scale at the union, does many things, you know. It could be that the CBC would have one person for this, one person for that, one person for this, and we would have one person completely.
1893 So if someone is going to do that kind of a job, they deserve to be paid higher.
1894 MR. G. STIRLING: We do not receive a $25 million a year subsidy as they do here in St. John's. The total advertising is half of that.
1895 THE CHAIRPERSON: So then a number of the staff are working on the television operation, radio operation and perhaps some other things when it would appear then that the salaries are being charged against, largely charged against, TV.
1896 MR. S. STIRLING: I don't know. You would have to, and we could, look at OZ's application and look at general administration to see if that is above the national average or whether that is below. It could be that the allocation is putting quite a bit of administration into -- our CFO can talk to this.
1897 MR. COLLINS: Certainly. The allocations may be a factor indeed in how the salary percentages work out. I don't know the numbers right now off the top, but I would think we probably consistently followed some allocations over the years that maybe should be adjusted. There is that possibility.
1898 THE CHAIRPERSON: I'm sorry; I'm having difficulty hearing you.
1899 MR. COLLINS: I'm sorry. I'm saying that we do have of course allocations with people serving functions in radio and television, OZ FM and NTV. They do wear two hats or more and we do allocate some salaries. It may be a case that in the administration in general in radio that we are low compared to Atlantic or Canada. I'm not really sure. Some of those allocations that have been in place for quite some time maybe could be adjusted or need to be adjusted depending on how revenues have changed and so on. I can't verify right now that they have been altered significantly or substantially over the last years. I am pretty certain that they are quite consistent over the last seven years, for instance.
1900 THE CHAIRPERSON: Would it be fair to assume then that if we were charging against CJON just the expenses that were actually relative to CJON that these figures, sales and promotions, general and admin and salaries, would be somewhat lower?
1901 MR. COLLINS: I would just like to speak to a point that Mr. Stirling made earlier.
1902 Some companies were brought back together a couple of years ago, the companies that are owned in common, and there weren't necessarily adjustments in salaries for some of us who took on extra duties. There are at least four of us at this table, five of us really, who share duties in all the companies but there weren't necessarily salary adjustments that got loaded on to NTV or there weren't any increases at all to reflect those duties, so the salaries stayed where they were.
1903 MR. S. STIRLING: The main probable discrepancy with the allocation is between OZ FM and NTV. OZ FM lost money for about 15 years, so all the executive salaries and those kinds of costs we have put on NTV. We didn't want to drive OZ further. We were really trying to get a budget that would be realistic and that we could grow with. As OZ grew and was able to take on more, then we have allocated a lot of executive salaries into OZ, but a lot of that could be this. You are looking at NTV and really it is Newfoundland Broadcasting.
1904 THE CHAIRPERSON: Right. But in terms of the TV operation, the figures may be skewed a bit high relative to the actual work that is done for the television operation. Some of what is covered here may well be attributable to other operations of Newfoundland Broadcasting. That would be a correct assumption, would it?
1905 MR. S. STIRLING: (Off microphone / sans microphone).
1906 THE CHAIRPERSON: Okay. Let's move away from this.
1907 Maybe we will go a few more questions and then take a break.
1908 I want to talk about this time zone Canadian content issue. You have brought this up in your application and in your presentation yesterday.
1909 The news supply agreement, as I read it, made no reference to the CTV news being at 11:30. I guess I was struck by comments that you had made in your application and made again this morning, particularly as it related to simultaneous substitution. There is a statement that you made in your August 2nd letter back to the Commission. You don't need to turn to it but you can if you want to, it is at the top of page 6. I will quote it to you:
"The most advantageous time to apply simulcast is between 9:30 p.m. and 12:30 a.m. each evening. [Off microphone / sans microphone...] operated competitive programs in those time slots which would result in the loss of simulcast opportunities in audience would seriously jeopardize NTV's financial liability." (As read)
1910 I guess given that, and again you mentioned that this morning, why did you decide to run the CTV news at 11:30?
1911 MR. S. STIRLING: People go to bed by 11:30 or midnight and we felt it was important for people, like every other market, to be able to watch a local newscast before they go to bed, but for many, many years CTV was only available at 12:30. We couldn't pick it up at 11:30. It has just been in the last couple, three years that we could access it for that time. So that is the main thing.
1912 And it is a sacrifice that we have made, to give up one-third of our simultaneous substitution opportunity. That is why I'm saying we are cautiously optimistic and we have reduced our entertainment prime time programming from 4.5 hours a night to 3.5 hours a night.
1913 So that is part of why I characterize it as cautious and not bullish, because we have reduced our simulcasting opportunities, we have reduced the number of prime time entertainment programs we have, but it is the right thing to do.
1914 I mean we have to think of our audience and they want news. They want to be able to see the local news. We have really committed to news. I mean after so many years, 20 years, of suffering really in this market and not being able to afford even to have a reporter in Corner Brook, we now have a reporter in Corner Brook. This year now we have been able to budget for a full-time reporter in central Newfoundland. It's the first time in 20 years we have been able to afford that. CBC doesn't have that.
1915 So as we have been able to do these things we have realized how important news is and to have a news profile. With all the challenges we have with our programming, you can understand how important news is to us. That is why we now have a 6:00 a.m. to 7:00 newscast. We have 11:30 to 12:30 with news productions and current affairs. We have an hour of prime time. We have an hour of late night. That is a lot of news every day.
1916 THE CHAIRPERSON: Was running the news at 11:30 part of the deal with CTV?
1917 MR. S. STIRLING: They wanted it moved to 11:30. Once we realized that we did not have a -- you know, we weren't going to go forward with the kind of normal affiliation we started backing into a news supply agreement as a last resort, a plan B. They definitely wanted it at 11:30. That was one of the things that was discussed.
1918 THE CHAIRPERSON: Is it a requirement of the agreement that it be 11:30?
1919 MR. S. STIRLING: It was never signed. It was never --
1920 MR. G. STIRLING: We gave them our word.
1921 THE CHAIRPERSON: But they wanted it at 11:30.
1922 Left to your own devices, would you have put it at 11:30?
1923 MR. S. STIRLING: It was really hard once they made it available at 11:30 to ignore that because that is the right thing. I mean most newscasts start at 11:00. To be honest, even in a good show, like Third Watch, it is still 11:30 to 12:30. It is very, very late. So the points you might give up you can probably make back, or we would hope, with packaging news. We buy our prime time news and you get a spot on these other newscasts.
1924 So again, the jury is out. We really don't know. But that is how it ended up at the end of the day.
1925 THE CHAIRPERSON: What do you figure you are losing?
1926 MR. S. STIRLING: In terms of points or --
1927 THE CHAIRPERSON: In terms of dollars --
1928 MR. S. STIRLING: In terms of dollars.
1929 THE CHAIRPERSON: -- by running that as opposed to your simulcast?
1930 MR. S. STIRLING: We have some figures here, but they are based on earlier in prime time where there are much higher ratings.
1931 THE CHAIRPERSON: But the trade-off of running the news at 11:30 as opposed to running a prime time program at that point in time, what do you figure the net loss is? I mean, presumably this must have been part of the discussion. When they said, "Look, we want you to run the news at 11:30", you wouldn't have done it given the dollar figures that are involved here, I presume, unless they required it.
1932 MR. S. STIRLING: One thing that made it very attractive to us is that we have the inventory in it. Like, it would have been a hard decision when it was their inventory, but once they gave the inventory to us -- news does very well. The CBC has news at 10:30, it does very well. In a lot of markets there is a 10 o'clock newscast, so an 11:30 newscast followed by a local newscast -- again we haven't seen the ratings and so we can't say. Maybe you are right. Maybe we have made a terrible mistake.
1933 THE CHAIRPERSON: I don't know. I'm asking you.
1934 MR. S. STIRLING: We have some comparisons to just show you the difference because we are starting to get into the discussion now about Canadian content. We have decided, we have said, "Okay, let's say we have one hour left of American in the daytime or let's do the equation of one hour less of American in prime time and let's see what it would cost, let's see the difference."
1935 So let's take, for example, an hour of Canada AM, price it out, and let's take our soap in the afternoon, the Young and the Restless, price it out and let's see the difference. We will do the same thing in prime time. Canada AM, an hour of that, let's say, is worth $139,000. Let's say that yearly the inventory in the Young and the Restless is $2 million. That represents a difference of $1,956,000.
1936 If we talk about prime time, and we look at a top rated Canadian show like Stargate, and take that rating, and we look at that and we say, okay...
--- Short pause / Courte pause
1937 MR. S. STIRLING: You can see in the daytime how dramatic it is.
1938 THE CHAIRPERSON: Actually, rather than go through that now, I would appreciate seeing those numbers, if you could put them together --
1939 MR. S. STIRLING: We can dress them up for you.
1940 THE CHAIRPERSON: -- just do those and just file them with us.
1941 MR. S. STIRLING: Yes.
1942 THE CHAIRPERSON: If at the end of this you take a look at the rating points and decide, "No, we don't like this, we would be better off running the CTV news at midnight", can you do it?
1943 MR. S. STIRLING: Could we move it to midnight instead of 11:30?
1944 THE CHAIRPERSON: Without CTV's agreement?
1945 MR. S. STIRLING: What do you think?
1946 MR. G. STIRLING: We have the control of it. I think it is important to look at it from an overview of what is the best thing if we are going to do a Canadian impact. That is why I feel it is so vital, and we all do, to have the focus on local and regional and have as many reporters out across Newfoundland as we can afford, realizing that Newfoundland-Labrador is three times as big as the Maritimes.
1947 But the future of Canadian programming has got to be that in each market you have to have that big audience because with the fragmentation of all of these programs and as many as 10 different channels coming in, whether it is Toronto, all you have to do is study CKLW in Windsor, Ontario and look very carefully at what happens. Because they can't protect themselves, you have a 2 and 3 per cent share of the market in a market bigger than St. John's by far. At the same time, one company owns all four radio stations because of their competition.
1948 THE CHAIRPERSON: Thank you for that, Mr. Stirling, but it is getting back to this issue of the news being earlier in the evening. I guess I am just trying to understand if you took a look at the dollar situation from the lost simulcast opportunity versus what you make from the CTV, would you be able to change it to midnight?
1949 Mr. Geoff Stirling, I thought you said "It is under our control", so you could do that. There is nothing in your arrangement with CTV which prevents you from moving this national news to another time slot.
--- Off microphone / Sans microphone
1950 MR. G. STIRLING: One point, sir, is in the last 30 years we have been on the air 60,000 hours longer than the others, the CBC station in the market, so there are a lot of invisibles here.
--- Off microphone / Sans microphone
1951 MR. G. STIRLING: (Off microphone / sans microphone...) when you are concerned with the long range vital necessity to maintain a peak audience in your own market, you know, it's like the graphs of 500, I mean you have to have that peak, and that key peak is always between six and eight in any market in North America.
1952 THE CHAIRPERSON: I want to make it clear. What I'm trying to get an understanding of here is what actually is the arrangement with CTV. And, to be frank, I am trying to get a sense of whether there really is a disaffiliation because if you have to run the news at 11:30 and earlier, Mr. Geoff Stirling, you said, "We gave our word that we would do this", whether in fact you really have this affiliated because if there is a requirement that you run the news at 11:30 from CTV, then CTV is still controlling that portion of your schedule.
1953 MR. S. STIRLING: There is not a requirement, but they have made it clear that it is their preference, and it is our preference at this point for sure. But if the ratings come out and something dramatic happens, we would have to then make that decision.
1954 THE CHAIRPERSON: And you believe you could.
1955 MR. S. STIRLING: Yes. I mean, we can pre-empt it. It cannot go on tonight if we don't want it to.
1956 MR. G. STIRLING: It won't be out until mid-January, you know, the next ratings. It shall be the first time since this whole thing started that we will have an overview.
1957 MR. S. STIRLING: The only concern they have expressed to us is if we alter the show in terms of obviously if we played back the news the next day or something, and that would devalue the -- you know.
1958 For example, we had their Canada Coffee Talk, or whatever it was called, which has now been cancelled. They scheduled it for some reason an hour later than Canada AM ended for most of their stations. That didn't work for us because that interfered with our noon news. So we had a dilemma. We wanted to take all three hours of the Canada Am including the Coffee Talk, but the Coffee Talk is going to interfere with our news. We wanted it between 10:30 and 11:30, not 11:30 to 12:30, so until we could technically figure out how to do that and we did finally figure out how to get it in pre-release, we were playing it a day late.
1959 So Rod Black, on the last day of his tenure, shaved his moustache on air. That was a Friday. On the Monday they had their new host and meanwhile NTV had Rod shaving his moustache. We heard from them on that.
1960 THE CHAIRPERSON: Could you get the news, the CTV national news, before 11:30?
1961 MR. S. STIRLING: That is as early as we can get it, yes.
1962 THE CHAIRPERSON: Okay.
1963 Looking at the more general question of the broadcast day and the time, you have the CTV news now at 11:30 because that is when they make it available. That is the earliest they make it available I assume, and that is when the Atlantic stations pick it up, at 11 o'clock. Right?
1964 You have suggested we should back off the break, so to speak, that we have given NTV for the past number of years in terms of counting Canadian content because you used to get the CTV news at 12:30, followed by your own local news.
1965 I guess what has struck me about this issue is notwithstanding the fact that the other Atlantic stations, the Maritime stations, are one hour out of sync with the eastern time zone in Canada and more particularly the U.S. given the simulcast opportunities, and you are a half an hour out of sync with them, as I say, we don't give them any break, why should we give you more than a half an hour?
1966 MR. S. STIRLING: Well, you know the challenges we are up against. We have had this since 1989, so this is probably the worst time -- and we are asking for a reduction anyway in the break, up to 1:00 instead of up to 1:30, and we have increased our news to an hour, so that is a real service to this province to have an hour newscast that is earlier. It is over when the other newscast began. So that is a pretty big concession.
1967 But as far as comparing us to other stations, you had a hearing in March of last year. Global came before you. CTV came before you. They both told you that their small affiliates are losing money, that it is the bigger stations that are carrying the smaller stations. We are smaller than their smallest and we are an independent.
1968 It is these kinds of nuances, breaks, deals, whatever you say, that has kept us in this game and made it possible for us to be here.
1969 THE CHAIRPERSON: But your biggest concern is substitution. What I am struggling with here is, "Our biggest revenue opportunity in NTV is the simultaneous substitution opportunities we get from 9:30 to 12:30. We, NTV, agree to give up a chunk of that by putting the CTV national news at 11:30 and we still want the break until one o'clock."
1970 MR. S. STIRLING: Instead of 1:30.
1971 THE CHAIRPERSON: Instead of 1:30. I don't know. I am still struggling with why, given what we do in the rest of the Maritime stations -- not the Maritime stations, the rest of the Atlantic stations, why it should be any more than a half an hour here and we should go to 12:30.
1972 MR. S. STIRLING: I mean, it would be 12:30, I would imagine, if we had a half hour newscast, but we are producing an hour newscast. We are getting the credit for the full newscast. That is a very unique newscast.
1973 For example, our prime time newscast is a traditional newscast. It will take the premier's press conference and it will put it together into a three or four minute piece, and you will see a clip and we will describe what he said. Late night, you will hear 10 minutes of his press conference. So it's unique and Newfoundlanders appreciate that.
1974 Communication is the whole key to informing the population of the nuances in detail, not just a splashy three minute report, so we had a half hour newscast which we used to have we just repackaged from prime time. Now we have an hour newscast and we are not repackaging. We are putting in much more of the content.
1975 THE CHAIRPERSON: You said earlier that people in the rest of the country at least are used to getting their evening news at 11:00, and you run your supper hour news at 6:00, which is the convention in the rest of the country. So the usual practice is supper hour news at 6:00, late night news starting at 11:00.
1976 Given what you have argued about moving the national news to 11:30 and that you can make some money on that, we don't know quite how it nets out against the substitution opportunity. Why wouldn't or couldn't you run your own news starting at 11:00, perhaps do the local first?
1977 MR. S. STIRLING: Because of the half hour difference. The simulcasted shows go from 10:30 to 11:30.
1978 THE CHAIRPERSON: But you have already been prepared to give up on simulcast for the CTV news.
1979 MR. S. STIRLING: No, we --
1980 THE CHAIRPERSON: You are playing it at 11:30 and you used to have American programs in there on simulcast.
1981 MR. S. STIRLING: Yes, but because of the time difference eight o'clock is 9:30, so it is 9:30 to 10:30, that's one hour, 10:30 to 11:30, that's two hours, 11:30 to 12:30, which is what we are giving up, that's the third hour. So if we go to 11:00, now you are eliminating the second hour. Now we are down to one hour of simulcast.
1982 THE CHAIRPERSON: That's right.
1983 MR. G. STIRLING: Are we going to have an opportunity to get in -- I'm sorry.
1984 THE CHAIRPERSON: What is the net loss then? We tried to look at what the net loss is by moving the CTV news and you say, "We can make money at that."
1985 MR. S. STIRLING: I'm saying we hope to make money with that.
1986 THE CHAIRPERSON: Yes, and offset the lost simulcast opportunities.
1987 MR. S. STIRLING: We won't be able to offset the lost simulcast opportunities.
1988 THE CHAIRPERSON: So how much is the loss then? That is what I was asking. That is what I was trying to get a better understanding of --
1989 MR. S. STIRLING: All right. There is one thing in this and that is that a lot of CTV's service came in between 10:30 and 12:30, so probably three of those seven nights a week, that 11:30 to 12:30, was where our CTV was, so we didn't have that inventory to sell anyway. That was CTV's inventory.
1990 The fact that we now have something to sell there is what we hope will help us in trying to make up the difference.
1991 THE CHAIRPERSON: But if you hadn't agreed to CTV to run the news at 11:30, you could have bought a program from Global or Craig, a top rated American program, and had a simulcast opportunity in there.
1992 MR. S. STIRLING: But how do we make up the Canadian content?
1993 THE CHAIRPERSON: Assuming we would still agree to run it to say 1:00 a.m. that you have asked for.
1994 MR. S. STIRLING: We would have had to ask for subsidies of two o'clock then.
1995 THE CHAIRPERSON: All my point is, and the question is, you have chosen to put the news at 11:30 and gave up the simulcast opportunity, so there must have been a financial look at that to say: yes, it is in our interests; at the end of the day we can do that. If you can do it for the CTV news, what is the penalty for your own local news to do the same thing? I don't have a sense of that.
1996 I mean, it ends up being a dollars and cents issue. We could talk about the theory of the simulcast, but at the end of the day you have to look at the dollars. I mean, you looked at the dollars with the CTV national news presumably and said: yes, we could do this. My question is: why can't you do it with the local? Why should we give you more of a break than the half hour? I guess I need to be convinced.
1997 MR. S. STIRLING: We have had the break up until 1:30 and we had a half hour newscast. Now we are asking for it only up until 1:00 and we are producing a one hour newscast, and we are giving up simultaneous substitution so that we can move everything closer to better serve our viewers.
1998 THE CHAIRPERSON: Could you better serve them at 11:00?
1999 MR. S. STIRLING: We could probably better serve them at 9:00 for those who want to watch news, but --
2000 THE CHAIRPERSON: We know that conventionally that 9 o'clock and 10 o'clock newscasts have been tried. The CTV tried it and it didn't work.
2001 MR. S. STIRLING: Right.
2002 THE CHAIRPERSON: The convention is -- you had said it yourself earlier -- the convention is 11 o'clock, just as your convention is 6 o'clock in the evening. We could say, "Well, let's go from 6:30 to 12:30", right, but you would argue to me, "No, no, we can't do that because 6 o'clock is the time people want to watch the supper hour news", and you do that, right?
2003 MR. S. STIRLING: Yes.
2004 THE CHAIRPERSON: So that is why you wouldn't want us to change the start to 6:30, would you?
2005 MR. S. STIRLING: No.
2006 THE CHAIRPERSON: No.
2007 MR. S. STIRLING: What you are saying is instead of giving up one of the three hours of simulcast you have, why not consider giving up two hours of the simulcast you have.
2008 THE CHAIRPERSON: I'm saying one more half hour.
2009 MR. S. STIRLING: Yes, but those are hour shows. How do you cut -- I mean, I can't take half of Survivor.
2010 THE CHAIRPERSON: Assuming you choose to run an hour show in that time period. There are lots of half hour shows too. I mean, the rest of the country runs their schedule around 11 o'clock news.
2011 MR. S. STIRLING: I know. But the convention here has been 12:30, when we are talking convention, for 35 years it has been 12:30. Now it is 11:30. That is an advantage. To say that the convention is 11 o'clock, well it is not in Newfoundland, and it is a half hour difference.
2012 THE CHAIRPERSON: But it is 6 o'clock for the supper hour, even though it is half an hour --
2013 MR. S. STIRLING: Yes, it is. Yes, it is, because that is supper time.
2014 THE CHAIRPERSON: Mr. Neal, you have been trying to jump in --
2015 MR. NEAL: I think I would like to jump in here for a moment because I think we are going down a road that doesn't really seem to be getting us anywhere. I would like to just back up a little bit.
2016 I believe the reasoning for why we scheduled CTV news at 11:30, yes, there were issues that CTV were interested in doing that kind of thing, and I think we sort of made -- there is an accommodation there. In other words, yes, we feel that we can move the news to 11:30, but it is going to cost us money.
2017 THE CHAIRPERSON: Yes.
2018 MR. NEAL: I don't have the exact dollar figure that is going to cost us over the period because I didn't work that out based on that hour. I would really love to see what those ratings are going to be coming out in January.
2019 For instance, a prime time program, okay, if we just took the average rating points, across all of the evening periods, that just happens to be how I did it, and I said the yearly potential per hour is probably in the order of, you know -- and this is the maximum potential you have to understand -- two million, seven hundred and sixty-one twelve. Okay? So we have $2.76 million possibly, okay, that an hour in prime time would be worth over a year.
2020 I think what we are really thinking here or what we were really attempting to do is we will accommodate the request of CTV -- the desire, we will call it, not necessarily the request because it is not something that we have to do, but we are kind of hoping too that they are going to sell us at reasonable rates programs back at the end of the day. Okay?
2021 This was more or less -- I think that is where that was, but the programming thing doesn't seem to have come to fruition and I think we are stuck here with the CTV news where it is. Granted it is in the public interest and we would love to do it, but we really would like to get something -- we would like to have something back in return, but obviously that isn't happening for us --
2022 The CTV news, at that particular time period, we would have to consider how we grow that as a program because I mean it may go well, it may not go well. We don't know. We haven't even had one rating on that newscast -- which did what (off microphone / sans microphone...) once or something like that at the time slot it was in?
2023 MS POPE-JANES: Yes. Our research department has projected it to do an average rating of one from that 11:30 to 12:00 time period.
2024 THE CHAIRPERSON: Here is what I am going to want to ask you to do for us because I don't think we are going to reach an accommodation here. We are going to have to decide whether we go with one hour to 1:00 a.m. or a half an hour or nothing. In order to help us make that decision, it would be helpful for us to know what the financial impact is on you in terms of what you actually know in terms of the CTV going with the national news at 11:30 and what that costs you in terms of netting that against the simulcast opportunity and what the additional cost would be if you backed that up to 11:00, and that is assuming you still wanted to do an hour long local newscast.
2025 If you could provide those figures to us, it will be helpful for us when we have to sit down and decide do we grant it to 1:00 a.m. or do we grant it to 12:30 or no grant at all.
2026 MS POPE-JANES: When you say 11:00, did you mean the local news at 11:00 and CTV news at 11:30, because we can't --
2027 THE CHAIRPERSON: You will have to decide what you do when you -- we are not trying to tell you -- I'm not trying to tell you what time to schedule certain programs. The question at the end of the day is how much benefit are we going to give you after midnight recognizing the time zone change?
2028 MR. S. STIRLING: I think the key point right there though, you said you are not telling us how to program, but that is exactly what you are doing, because between 10:30 and 11:30 it is the last hour of the simulcast, it is the second hour, so 9:00 to 10:00, it is not family --
2029 THE CHAIRPERSON: Depending on the program you buy.
2030 MR. S. STIRLING: I know, but I mean --
2031 THE CHAIRPERSON: If it is an hour long program, that's true. If it's a half hour program --
2032 MR. S. STIRLING: But there are no half hour programs that late at night. I mean, half hour programs are sitcoms. Those are early evening programs. So how do we find a half hour 10:30 show seven nights a week?
2033 THE CHAIRPERSON: All I am asking you is, then that factors into your equation in terms of the trade-offs here, so help us decide that by telling us what the financial impact is going to be on NTV.
2034 MR. S. STIRLING: It would be huge. It's going to be huge.
2035 THE CHAIRPERSON: We want to know what the loss would be of the simulcast opportunity as against the cost and revenue potential, which would be less obviously, for whatever program you put in there. I am not trying to imply in this question that we have made up our mind on a half an hour versus an hour.
2036 You have come forward with a reasonable proposal based on the changing environment that you have with the CTV news going to 11:30. I think if we are going to continue this arrangement, then we have to know what it means to NTV from a financial point of view. It is a historical thing that we have adopted, going to 1:30, and I think if we are going to continue it, whether it is a half an hour or an hour, then I want to know what we are agreeing to.
2037 MR. S. STIRLING: To give you an example --
2038 THE CHAIRPERSON: You don't have to do that now, by the way.
2039 MR. S. STIRLING: All right.
2040 THE CHAIRPERSON: You can do the numbers and file it with the Commission.
2041 MR. S. STIRLING: I know you are trying to get through it quickly, but these are important points to us. CSI is the one show that we buy from CTV. We have told you how expensive it is. We felt it so important for us that we went out and bought it. We carry it in simulcast. That is at 10:30 to 11:30. The most important shows are at that time of night. I just want to make that point.
2042 THE CHAIRPERSON: Yes. Would CSI --
2043 MR. S. STIRLING: There is a show right there we would have to drop.
2044 THE CHAIRPERSON: And that's fine. CSI is the most popular show this year. In two years' time maybe it is something else. I don't know.
2045 MR. S. STIRLING: But it is going to be at that time of night. It's ER for the last five years.
2046 THE CHAIRPERSON: Fine. Tell me what the numbers are. Not now, I mean file it.
2047 We better take a break now. We will take a 15 minute break and reconvene at a quarter to 11:00.
--- Short recess at / Courte suspension à 1030
--- Upon resuming at / Reprise à 1045
2048 THE CHAIRPERSON: Order please, ladies and gentlemen. We will return to our proceeding now.
2049 Hopefully, I can pick up the pace a little bit now that I have probably given you a collective heart attack over our last issue that we have discussed. I just want to pick up a few points on programming, non-news programming.
2050 On Schedule P-16, and you don't really have to turn to it, you list a whole lot of programs, independent production. I guess I would just like to get a better sense of what your specific plans and commitments are for the new licence term in terms of independent production.
2051 You have highlighted what you have done the last time and there is a lot of good and interesting stuff you have done there. I guess we are just supposed to infer from what has gone on in the past that it is going to continue on in the future, but I would like to get a better sense of what specific plans you have just for independent production.
2052 MR. S. STIRLING: Since the CBC has cut back quite a bit of their local involvement many more independent producers are now coming to NTV looking for involvement in their presentations for developing a new project. So we have been very receptive and have learned how to give broadcast licences and to let independent producers go forward, get their funding. It is quite reasonable for us to do. The amount of moneys that we have to put up are very reasonable because of this funding, and so we have been doing more of it every year because we can and we think it is the right thing to do.
2053 We had Untold Story, which we really should have highlighted more in our videotape for you because that was about the women's Suffragette movement in the 1920s here in Newfoundland. We were one of the last places to let women vote. That was depicted in an actual drama. It won an award in Los Angeles at a film festival there. We are very proud of these kinds of involvements and we want to do more of them.
2054 In fact, we have an independent producer right now who has two proposals for next year. One is a regular weekly show called The Fishery Now. Another one would be a tourism type show where we would -- and Gordon Pinsent would be involved as kind of the moderator. It would go into different communities and highlight all the tourist attractions and the wonderful things that are in that community. Both of those we have signed onto and we have agreed to give them a broadcast licence. It hasn't got to the point that it is verified yet. So we want to do more of this.
2055 THE CHAIRPERSON: So where would I find the amount for the licence fees in the budget?
2056 MR. S. STIRLING: How much we actually paid for those --
2057 THE CHAIRPERSON: Going forward. No, going forward. Presumably, you have budgeted for a continuation perhaps of growth of independent production over the next seven years and the licence fee would be the reflection of that. Where would I find that in the budget?
2058 MR. COLLINS: I would think these are already included in our programming costs certainly. In our historical numbers we have had some of these type of productions already and we have continued to include that type of expenditure.
2059 THE CHAIRPERSON: But if there are new projects you get involved in and new licence fees, can you point me to the line where I would find that, and what have you budgeted for?
2060 MR. S. STIRLING: I'm not sure where that would be, what line. Our CFOs perhaps can find that, but as I recall it was in excess of $25,000.
2061 THE CHAIRPERSON: So that is per year for seven years.
2062 MR. S. STIRLING: That was each year. It was each year.
2063 THE CHAIRPERSON: Okay.
2064 Schedule P-13, under "New Canadian Programming", you have said:
"We are constantly looking for new ideas and scripts." (As read)
2065 I wanted to get a better sense of what we are talking about here. Does this relate to what you were just mentioning in terms of independent production?
2066 MR. S. STIRLING: Yes. For example, on Friday at 2 o'clock I have a meeting with an independent producer who wants to propose a show. He called up and he asked if he could meet with me and make that presentation and we set up a time. So many of these are initiated by the independent producers themselves and they have particular projects. We don't tell them, "Well, we want" -- in some cases we help shape it. For example, The Fishery Now, that was a weekly show, so we did help shape that and told them what we wanted. But as far as like The Untold Story, she came with the idea, she had her script, we signed off on it and we had no further creative control over it.
2067 THE CHAIRPERSON: Do you expect to continue that kind of relationship with the industry?
2068 MR. S. STIRLING: Yes.
2069 THE CHAIRPERSON: So this would fall within -- in terms of The Fishery Now, are still new programs being created around that?
2070 MR. S. STIRLING: That ran for two seasons. It is not on the air this year, but the independent producer is looking at next year and we have agreed to a broadcast licence if he gets his funding and goes ahead.
2071 THE CHAIRPERSON: I guess I'm wondering, given what is happening to the fishery, how long one can continue. It might have to become the oil industry, an hour of Voisey's Bay now, or something.
2072 MR. S. STIRLING: There is a lot of actually good news that a lot of people don't recognize and that is what this show is really all about. It is to show fishermen and to show communities alternative ways to make up from the traditional fishery. They have, for example, cod hatcheries and those kinds of farm fishing. There are certain bays that have nets and the whole bay is full of fish and so on.
2073 Those are the kinds of things that are revealing, you know, because if one person in one part of the province is making a living doing something like that, then it is informative to everybody to see that.
2074 THE CHAIRPERSON: One last question in this area -- maybe not.
2075 Captain Canada, I'm not sure whether that is Brian Tobin or not, in the application at paragraph 12 you say:
"Newfoundland Broadcasting has developed Canada's first superhero. Captain Canada exists in storyboard and several comic-style books. Animation is the next step in the Captain's evolution." (As read)
2076 It wasn't clear to me what that means in terms of what we might see over the next licence term from NTV. I mean, to say that it is "in storyboard and several comic-style books. Animation is the next step", I mean, do you see this as being something that is going to appear on the screen, on NTV and presumably sold elsewhere within this next licence term? I would like to get a better sense.
2077 A little more specifically, what is --
2078 MR. S. STIRLING: The answer is yes, but I would like Mr. Stirling to elaborate, if he could.
2079 THE CHAIRPERSON: Captain Canada.
2080 MR. G. STIRLING: The concept, if we go back to 1980, was when we decided that if we are going to contribute anything of real content in Canadian content we had to focus on children's adventure stories and develop our own superheroes so that it wasn't just American heroes. As you might remember, in the CRTC renewal, they said that they had no plans for children's programming. That is why we feel if 50 per cent of that 2 per cent of the gross is directed to children and animation development in Canadian programming, then you are going to have a focus on it.
2081 But to not have a focus and just go and try to do a drama or these kind of levels, hopefully it will work out eventually, but you only have 8 per cent of the grid of North America as the talent pool which are being asked to do 50 per cent. If we reduced the Canadian content, we could focus more and more on the quality to be competitive.
2082 When you look at the theatre releases that have made it in the last 10, 15 years, 85 per cent were based on animation. So we had to go into this area if we are going to develop Canadian shows. This is why we can show you a few minutes of Captain Canada's development. We had them in the Thanksgiving parade.
2083 There is half a million people in the Detroit-Windsor area and we have built up -- we are looking forward to being able to get it in the Rose Bowl parade, so you introduce Captain Canada, along with the other heroes -- we have developed heroes for every province. We have 282 different heroes we have developed over the years with the top artists, going slowly because if we had the fifty or $60 million that it takes to bring out an animation top show -- but at least we are setting up the groundwork with the top artists.
2084 I don't know if you have ever seen any of the material that we have done, but I mean we can show you the -- it is this kind of level, quality storyboards. We can show you the tape, it is about four minutes if you want to see it, if you have time.
2085 THE CHAIRPERSON: I guess what I am really trying to get a feel for is what are your specific plans in terms of taking this from the concept that you have here to a regular program on television?
2086 MR. G. STIRLING: Yes. You develop the storyline, the billboards, then the artists, then the dialogues, and then you look hopefully to a series. I mean, we see it as a Saturday morning potential for half hour animation/semi-animation programs. This is why we have built the computer, which is a prototype, where we can experiment. This is why we have only been able to experiment late at night.
2087 All of the development of Captain Canada and the other heroes was done outside of Canadian content credit. I mean, we couldn't interfere with the regular commercial programs to jeopardize your ratings, but we could late at night develop these superheroes and cut them into different kinds of programs, which we have done. That is where we have developed it, but we would like you to give us some credit, maybe 500 hours, for what we have done late at night because it will balance the effort.
2088 It is one thing to just say 50 per cent Canadian content, which might have been fine when there was borders, but right now when you have 150 channels coming in at you, you have to maintain that Canadian viewing. It is like a constituency. That is why local programming is so important in my opinion, and news and all of the other side-effects, but we also focused on children's programming development, which is where we are making the headway.
2089 We have over three books with 27 different storylines finished. Now it is the question of the capital investments to take it to the next place.
2090 THE CHAIRPERSON: Is that going to be there? Let's assume that you can't count on this other fund from the satellite deal, what is your expectation in terms of in the next seven years, the licence term we are talking about here, that Captain Canada might make it to the screen? Is it likely to happen?
2091 MR. G. STIRLING: Yes. We have pitched it in the states. But it is not that simple. I mean, it is a big investment, a huge investment, to carry this on. The smallest station in the market is developing superheroes and we think we have done a fantastic job so far, but we haven't billed. A lot of the contributions we do we don't bill anybody because we are doing them ourselves.
2092 The artists -- Scott did all the dialogues in the superheroes -- the top artists we could find, and we have won awards for some of the -- we are still working on this. I mean, it is a growing concern --
2093 THE CHAIRPERSON: So at best we can consider it a work in progress.
2094 MR. G. STIRLING: Yes. I think it took 42 years for Superman to break through. It took 28 years for Spiderman. So these are long, drawn out -- you started with a cartoon with an adventure story in the magazine where we introduced Captain Canada, and you carry it through and you build your following. In fact, the biggest circulation we had was when we had Captain Canada on the cover.
2095 THE CHAIRPERSON: Given how well you have aged, no doubt you will still be around when Captain Canada has the same stardom as Superman and Spiderman.
2096 MR. G. STIRLING: I think Canadians are superheroes.
2097 THE CHAIRPERSON: Yes.
2098 Just to clear up just a couple of fine points on the $25,000 we were talking about, can I just confirm that was $25,000 each year for the seven year period.
2099 MR. S. STIRLING: I can confirm it verbally.
2100 THE CHAIRPERSON: Okay. No. That's fine.
2101 Priority programming. You have said in your application that, I guess this is in Schedule P-3:
"...NTV is only able to commit at this time to broadcast a minimum of 2.5 hours of priority programming." (As read)
2102 I was having a bit of trouble trying to figure out where that appears in the schedule.
2103 MR. S. STIRLING: Saturday night is (off microphone / sans microphone...) Friday night, Pop Stars as Canadians.
2104 THE CHAIRPERSON: Yes, Pop Stars. On the schedule I have here Pop Stars is a half hour. Right?
2105 MR. S. STIRLING: Yes.
2106 THE CHAIRPERSON: That is a half hour from -- is it 9:00 to 9:30 on Friday; and then that again on Saturday; Friday and Saturday?
2107 MR. S. STIRLING: It is one. There are Canadian shows on Saturday night.
2108 THE CHAIRPERSON: And Stargate is on --
2109 MR. S. STIRLING: Stargate and drama, I believe.
2110 THE CHAIRPERSON: -- on Saturday.
2111 I couldn't see 2.5 hours. Stargate is one hour, Pop Stars is a half, so I get an hour and a half.
2112 MS POPE-JANES: Queen of Swords. Queen of Swords starts at 6:30, goes to 7:30, so that is a half hour from 7:00 to 7:30.
2113 THE CHAIRPERSON: On which night?
2114 MS POPE-JANES: On Saturday. On Saturday right after --
2115 THE CHAIRPERSON: All right. Okay.
2116 MS POPE-JANES: -- the Queen of Swords. So that is an hour program that would go into the half hour of private programming time slots between 7:00 and 11:00.
2117 THE CHAIRPERSON: So other than the Friday night time slot there is no priority programming. I guess I was wondering, given the discussion that we have had earlier about how important the eastern prime time is, which 8 o'clock eastern ends up being 9:30 Newfoundland, and that your concern that the 6 o'clock news still be at 6 o'clock so we start the broadcast day at 6:00, and I don't want to get back into that discussion, so if we start the broadcast day at 6:00 and you run your supper hour news, it seems to me that there is a potential here early in the evening, probably a bigger potential than most other television stations in Canada, for you to run more priority programming earlier in the evening than most other stations would have.
2118 It also strikes me that with your arrangement with Global that you have a number of programs here that would qualify as priority programs that you could run in what is your prime time in the evening schedule which wouldn't sacrifice the simultaneous substitution opportunities that don't start until 9:30.
2119 Given all of that I guess I'm kind of wondering why you couldn't commit to doing more in terms of priority programming earlier in the evening, prior to 9:30, especially given your global program arrangements.
2120 MR. S. STIRLING: I think we are pretty much taking everything that Global has in terms of Canadian content. To put a Canadian show in prime time when you have an American show that can generate over $2 million, and to take that out and put in a Canadian show --
2121 THE CHAIRPERSON: Mr. Stirling, I don't want to interrupt unnecessarily. I am not suggesting it be in prime time, in the prime time that substitution is normally available for. I am suggesting earlier in the evening. Like the Global shows you run earlier in the day, Saturday and Sunday, those could qualify as priority programs in your early evening time slot which wouldn't sacrifice a substitution opportunity.
2122 MR. S. STIRLING: I am not just talking about simultaneous substitution. I am talking about prime time and the fact that a prime time hour can generate one to two million dollars. If you put a Canadian show in there that doesn't get any -- you know, it gets one-tenth the rating, that impacts directly on our revenues. So we are looking always for the best Canadian we can find. We feel Pop Stars is a good show. They came here to St. John's. There were a lot of Newfoundlanders that tried out. Five of them made it into the next round. That is a great show for prime time.
2123 But some of the other shows that are in the afternoon, they just can't generate the kind of ratings. It really comes down to dollars and cents again. It has to displace an American hour to go in there. So we are looking all the time. As soon as we see something, like Mutant X, looks pretty hopeful we put that in. In fact, that is where Queen of Swords is now. Queen of Swords is actually not a new episode, so we put in Mutant X on the schedule that hasn't been updated, but that is a brand new Canadian show.
2124 So we are looking --
2125 THE CHAIRPERSON: When is that?
2126 MR. S. STIRLING: It's called Mutant X and it goes where Queen of Swords is, Saturday night, 6:30 to 7:30.
2127 THE CHAIRPERSON: Saturday. Okay. Right.
2128 MR. S. STIRLING: So the answer is trying to find enough prime time quality Canadian shows. We don't have access any more to the seven hours of CTV quality shows. I mean, if we could get some of their quality dramas we would probably feel more comfortable, but we are maximizing what we feel can do well in prime time. We can show you the comparisons, Queen of Swords, Adromeda, Stargate, and we can show you those ratings compared to the American shows at the same times on other nights.
2129 THE CHAIRPERSON: We are expecting though, from the other larger groups, to run eight hours of priority programming a week. Of course they have the substitution problem -- opportunity, I guess I should say, earlier in the evening when the normal prime time is; for you it is later. You are running 2.5 hours, a half hour on Friday night, the rest of it largely on the weekends. What would be the problem for you to run through the week, Monday to Friday, a half hour or an hour of priority program earlier in the evening, if it was a requirement?
2130 MR. S. STIRLING: For example, Friends is 8 o'clock, Everyone Loves Raymond is at 8 o'clock, Fear Factor is at 8 o'clock. These are all our bread and butter shows. For every hour we have to drop one out and put another one in that is Canadian, that is a loss of substantial amounts of money, over $1 million potentially.
2131 THE CHAIRPERSON: And in the 7 o'clock time slot with Entertainment Tonight or Fraser, which is the strip?
2132 MR. S. STIRLING: Those are actually outperformed prime time shows. Entertainment Tonight is I think the second rated. It is right behind our news. It follows our news obviously and I think it has 350,000 viewers.
2133 THE CHAIRPERSON: I guess I am trying to consider in my mind the overall trade-offs that we are looking at here with NTV in terms of the issue that we discussed before the break, in terms of the news and the advantage that the Commission is prepared to give you, whether it be a half an hour or an hour, to take advantage of the Canadian content rule and what commitment NTV is prepared to make in terms of priority programming assuming the Commission is prepared to bend the rule a bit and provide an opportunity to take advantage of a Canadian content commitment that no other station in the country gets.
2134 MR. S. STIRLING: Like I say, we don't have access to probably 50 per cent of the good Canadian content, which is CTV's Canadian content. We don't have that. So these are shows --
2135 THE CHAIRPERSON: But Global has a lot of the --
2136 MR. S. STIRLING: They do. They do. And I could say we are taking them all.
2137 Can I see that schedule please?
--- Short pause / Courte pause
2138 MR. S. STIRLING: For example, we carry Stargate, which is a strip, in the afternoon on Sundays; we carry Adromeda.
2139 THE CHAIRPERSON: Right.
2140 MR. S. STIRLING: Those are the kinds of shows you are talking about, but we feel they can't generate the kind of ratings that a Pop Stars or a Mutant X can. Really that is why that decision has been made. For example, if you said, "Well, we want Adromeda between 7:30 and 8:30 on Sunday night", we would have to drop Malcolm in the Middle and Becker. It goes right to revenues.
2141 THE CHAIRPERSON: I guess if all of this made economic sense we wouldn't need to have a regulator. It is the checks and balances that -- you know, you have the responsibility of Solomon to figure out exactly what the best balance is and what is fair and what is appropriate.
2142 From our point of view, facing what we are facing right now, 2.5 is what we felt we could commit to.
2143 MR. G. STIRLING: Surely the key here in Canadian content is to not have such a disproportionate system where you not only lose your audience when the Canadian program comes on, but you don't get them back. The next show they don't automatically come back. You have lost the audience. They have that clicker and 162 options and you are trying to compete with what should be maybe 10 or 15 per cent Canadian content, which should be double the grid potential you have in Canada.
2144 Because what you have done, you have it out of balance from the sense if you check your Canadian viewing from coast to coast you will see what is happening in southern Ontario and other areas because they are trying -- it is like trying to have 35 per cent Canadian music in Detroit where they eliminated CKLW when you forced them into 35 per cent. They had 2 million audiences in Detroit. Now they have less than 150,000.
2145 THE CHAIRPERSON: I take your point, Mr. Stirling, but the Commission is requiring the large station groups to do eight hours of priority programming through the week. You are the first of the non-big players that we are taking a look at in terms of how do we approach this whole question of our TV policy. The Commission has recognized the particular difficulties that you face in terms of the time zone difference and it has given NTV credit in the past and we are looking at what is the best approach going forward there.
2146 I guess what I am looking at here is I don't see as strong a commitment as I might want to see from NTV in terms of trying to fit into that middle ground here, especially recognizing, as I said earlier, you have the program arrangement with Global, who have got a lot of the top rated programs, and you have the advantage earlier in the evening of that time that is prior to the golden substitution opportunities.
2147 I take your point about the value of the American programs you can run in that time slot that aren't substitution programs, but I guess my sense was Newfoundland Television can probably make a stronger commitment than it has.
2148 MR. S. STIRLING: We had the advantage up until now of CTV's prime time schedule. They had seven hours of Canadian per week in prime time. They paid us to carry that with their commercials. So we did all that right up to now. But to not be an affiliate and to have to try to buy the Cold Squad, for example, at these incredible prices -- you know, that is the point really, is trying to pick the best Canadian to put into prime time, not just to take everything Global has and put it in there.
2149 I would wonder if the Commission could consider putting a condition -- if you are going to put a condition in, phase it in over the course of the seven years. Ask us to do 3.5 next year and 4.5 -- you know, give us some way to perhaps get up to speed with this. But you can see the incredible challenges we have in front of us right now.
2150 THE CHAIRPERSON: We are here to discuss --
2151 MR. S. STIRLING: And an expectation, I should have said.
2152 THE CHAIRPERSON: -- that sort of thing. Is that something which you would consider to be reasonable, growing to a target at the end of the seven year licence term?
2153 MR. S. STIRLING: I think if you gave us --
2154 THE CHAIRPERSON: So what would be a reasonable target to achieve at the end of seven years?
2155 MR. S. STIRLING: We were 100 hours over with Canadian content last year.
2156 THE CHAIRPERSON: No. But I am looking at priority programming and prime time.
2157 MR. G. STIRLING: If you cripple us it is going to make it even more difficult.
2158 THE CHAIRPERSON: Mr. Stirling, I don't want to cripple you. That is why I asked for the financial figures on the other issue so we can make sure we don't cripple you.
2159 MR. S. STIRLING: If we had access to really good Canadian programming, we would have no problem putting this in, but to put Stargate in, The Simpsons would go on a prime time, that has a real dollar and cents impact on our company which then means we can't do as much news and all those kinds of things. It really is a trade-off. That is why I say you have to have the wisdom of Solomon to make your decision, but if you would put in an expectation that we would increase this --
2160 THE CHAIRPERSON: So if we had an expectation to go to six hours at the end of seven years.
2161 MR. S. STIRLING: At this point, I can't see how --
2162 THE CHAIRPERSON: Let's say five hours. That would be an hour a day.
2163 MR. S. STIRLING: I mean, we have lost 11:30 to 12:30. You are asking a lot of a company that doesn't even have a network any more or a --
2164 THE CHAIRPERSON: In your example when you started you said go to 3.5 and then maybe 4.5. So I'm saying at the end of seven years, five hours.
2165 MR. S. STIRLING: At this point, I can't see how we can do that. But if at the end of seven years there is fantastic good Canadian, then great.
2166 THE CHAIRPERSON: And if it was an expectation?
2167 MR. S. STIRLING: If it was an expectation, then we would try to meet that expectation.
2168 THE CHAIRPERSON: Okay.
2169 MR. G. STIRLING: Unrealistic regulations, though, sir, are really going to be negative to the whole concept. I think it is vital that you look at the Canadian viewing to Canadian stations from coast to coast and watch what is happening, we are now third, in the sixth to seventh period, the highest viewers to news of all the stations from coast to coast.
2170 THE CHAIRPERSON: You do a great job.
2171 MR. G. STIRLING: We have managed to develop that by going 24 hours a day. That was a vital issue to make a -- you had to do it, as we did, with the first day we went on the air with AM radio in Newfoundland in 1951. We went 24 hours a day. And the same with FM in Montreal and everywhere else we were involved. The audience you are building has to be a 24 hour pattern or you are not going to make it. You will make it for certain key times, but you had to have the availability to be there at all times.
2172 If you have an insomniac or a night watchman or police working the night shift, you have a night shift audience. It may be only 2 or 3 per cent but it is accumulative, and it makes a big difference after 20 years and 25 years. It takes a long time to build that audience where you could add 100,000. I mean, if the Globe and Mail added 2,000 to their circulation they would think it was a big deal. We have added 127,000 in 37 months to Canadian viewing.
2173 THE CHAIRPERSON: I think NTV has done a great job particularly in news. The numbers reflect that. I want to assure you, we do not want to do anything that is going to cripple or financially jeopardize the viability of this television operation. From what we discussed earlier, it looks like there is a considerable potential for this station to grow, but we don't want to jeopardize that either.
2174 I want to switch to captioning for a bit. We are getting near the end here.
2175 You mentioned that NTV is now technically capable to caption all local news programming in the new licence term. Then you have gone on to say, this is in Schedule P-7 at point No. 10:
"NTV has captioned all of its major newscasts." (As read)
2176 When you say you have captured all of your major newscasts, what is "major"?
2177 MR. S. STIRLING: That would be the 6:00 to 7:00 six days a week.
2178 THE CHAIRPERSON: So the supper hour.
2179 MR. S. STIRLING: The supper hour news. That is our, by far, number one newscast.
2180 THE CHAIRPERSON: And the late night newscast, the new logo newscast that you are going to run from whenever to whenever depending on -- from 12:00 to 1:00 --
2181 MR. S. STIRLING: For argument's sake, or for discussion purposes let's say 12:00 to 1:00. We also have a 12:00 to 12:30 newscast in the daytime. And we also have a 6:00 a.m. newscast in the morning that goes up to 7:00 a.m.
2182 THE CHAIRPERSON: That 6:00 a.m. one, is that a repeat of an earlier --
2183 MR. S. STIRLING: That is a repackage. It is not a repeat, but it is a repackage.
2184 THE CHAIRPERSON: So if the original was captioned the repackaging would capture the captioning?
2185 MR. S. STIRLING: I have talked to the news director about why can't we take the clips out of the prime time news and use those same clips in the late news because they will already have the captioning on them. It is very expensive. We are spending $65,000 to capture that. Again, you can appreciate the fact that a large station which has to caption everything pays the same amount to caption as we do, a small station.
2186 The other thing is that CBC is producing 2.5 hours of news a week and we are captioning six hours, and our promise of performance was only seven hours and we are producing 20 hours. So in a way it is a catch-22 for us: the more news we produce the more onus is on us to close caption. These are the things you have to consider, Solomon again: how much of their news should they caption, how much of their Canadian content, how much American can they afford to drop? These are all those things.
2187 THE CHAIRPERSON: I take your point on that. You have said that you have the technical capability to do it all. It is an expense issue. I understand that. I am just trying to get an understanding.
2188 So the supper hour news is 100 per cent. What about these other news periods?
2189 MR. S. STIRLING: Basically, to caption everything right now we would have to go from paying basically $50,000 to $60,000 we are paying now to $150,000, $160,000.
2190 THE CHAIRPERSON: So will the night time one be captioned then?
2191 MR. S. STIRLING: For $160,000 everything would be captioned.
2192 THE CHAIRPERSON: But are you going to do it? That is what I am asking.
2193 MR. S. STIRLING: We did not have a condition to caption this much and we have got this far. We are ahead of schedule in that sense. If we get sponsors that enjoy captioning and so on, then that makes it a lot easier. That is something we have tried to develop. Again, it depends on what you decide. I mean, it depends on our resources at the end of the day.
2194 THE CHAIRPERSON: Yes. But given your -- am I to understand that under the current environment -- let me ask it this way.
2195 You are now running the local news from midnight to 1:00. Right?
2196 MR. S. STIRLING: Yes.
2197 THE CHAIRPERSON: Is any or all of that captioned?
2198 MR. S. STIRLING: That is not captioned.
2199 THE CHAIRPERSON: It is not captioned at all?
2200 MR. S. STIRLING: No.
2201 THE CHAIRPERSON: Okay. And the noontime news?
2202 MR. S. STIRLING: The only captioning is between 6:00 and 7:00 six days a week.
2203 THE CHAIRPERSON: That is the only captioning.
2204 MR. S. STIRLING: That is the only captioning right now.
2205 THE CHAIRPERSON: And it is 100 per cent.
2206 MR. S. STIRLING: One hundred per cent.
2207 THE CHAIRPERSON: Okay. So then you did mention in your application, and you have just mentioned here this morning, that if you could get sponsorship, which is the way a lot of captioning is done, both in Canada and the U.S., if you could get sponsorship and you said both locally and nationally to help offset -- you hope to attract sponsorship, both locally and nationally, to help offset this expense. Could you give us a better sense of where you are at in terms of attracting that?
2208 MR. S. STIRLING: Perhaps the sales manager would like to address that.
2209 MS POPE-JANES: The way the industry has gone when it comes to pricing unit rates less than a 30-second rate, the buying community has tried to creatively accomplish the same thing with their advertising weight levels by spending less money. One of the ways that they have done that is to take a typical schedule that you would air in a 30-second brand cell, run half of that -- buy a portion of it in 15s -- which usually rates 65 per cent of the price of a 30, and then buy another portion of that in billboards. A lot of those billboards could be close captioning billboards where they get an opportunity to make an impression.
2210 So that has been an opportunity that we have as a TV station, and the industry has. Recently we have been able to capitalize on that opportunity.
2211 The opportunity is there for close captioning and/or billboards, so it is not necessarily something that an advertiser would gravitate to just because it was close captioned. We haven't been able to get enough funds at this point, since we incurred the costs of close captioning, to say that we have generated new revenue from an advertiser just for those close captioning billboards in the news. Again, that requires a focus.
2212 If it was my objective to make sure that we offset that cost, then I would focus on our advertisers to make sure that new money -- where that came from. At this point we haven't cost recovered the cost of what we have in the news by new advertisers or new money. But that is an objective and it is part of my mandate to try to make that happen. The opportunity is there, but it does present us with a challenge to sell it out.
2213 THE CHAIRPERSON: The evening newscast is a pretty important newscast for you, the late night news, presumably. Given that some of your audience depends on captioning in order to be able to be informed, what would be a reasonable target to have not only the supper hour but the late night local newscasts captioned? What time period would it be reasonable to expect that you would have that late night news captioned? Let's say pick a September 1: 2004 or 2005?
2214 MR. S. STIRLING: Okay. According to the ratings, our noon news would be the second by far most watched newscast as opposed to the late night news, so based on that and also having to bring sponsors into it, we would probably caption the noon news next. That would be our next goal. Then after that would be the late night news.
2215 THE CHAIRPERSON: Okay.
2216 MR. S. STIRLING: Because that is a half hour, that is probably going to be $40,000. If I had some indication of how you may decide on all of these things, I could make more commitments about, yes, where we can do all that. Not knowing what is going to be decided, it is hard for me to say. We would like to caption that and certainly as soon as possible, as far as I'm concerned.
2217 THE CHAIRPERSON: What is a reasonable target?
2218 MR. S. STIRLING: I would say 18 months.
2219 MR. G. STIRLING: (Off microphone / sans microphone...) I mean, the whole thing, sir, is we have -- obviously, over the 35, 45 years, we have never been forced to do things. We have done them because we see it as the right thing.
2220 When you start to put in overwhelming regulations to smaller stations it becomes -- it takes the joy out of it. I mean, instead of being able to go along at our own speed if we can afford to do it, when we suddenly find we have to replace a transmitter, because you are dealing with -- there is a tremendous expense to television. It is not like radio. Therefore, to be able to develop it at our own speed as we have done -- I mean, 24 hours a day is very -- there are a lot of stations in the states in big markets not doing that.
2221 In Europe it is four and five hours a day, in some cases eight hours a day maximum. We are trying to do a lot of things here, but we realize that if you don't go 24 hours you are never going to make it consistently. You have to go 24 hours to be totally dependable by the viewer.
2222 THE CHAIRPERSON: I agree. So if we said the noontime by September 2004?
2223 MR. S. STIRLING: For the new news?
2224 THE CHAIRPERSON: Right. Yes.
2225 MR. S. STIRLING: We would accept that.
2226 THE CHAIRPERSON: And late night a year later?
2227 MR. S. STIRLING: Again, it is so -- that's an hour package and we may find it is much more expensive because that is going to be -- this is a service in Toronto that receives us from satellite and instantaneously transcribes. Actually, it is from fibre optic, isn't it?
2228 MR. NEAL: No. It comes back down by telephone line into our encoder at the studio and then it is inserted. So this is real time captioning.
2229 THE CHAIRPERSON: Right.
2230 MR. S. STIRLING: So it may be more expensive to do a late night newscast, especially like a 6:00 a.m. newscast which is, you know, 4 o'clock in Toronto, so to get somebody to actually do the transcribing then. I don't have a handle right now on those particular costs.
2231 THE CHAIRPERSON: We said 2004 for noon and you are kind of hesitant. Somewhere 2005-06?
2232 MR. S. STIRLING: Oh-five.
2233 THE CHAIRPERSON: Okay.
2234 MR. S. STIRLING: I feel like we are horse trading or something here.
2235 THE CHAIRPERSON: Okay. I think those are all the questions I had.
2236 One of the issues that I guess we will have to deal with is your current licence runs to the end of February, as I understand it. It is not clear that we will likely get this decision out before then, so what we would probably want to do is an administrative renewal to -- what seems to me to make sense would be the end of August for your current term, extend that to the end of August next year, and then the new term would kick in probably starting September 1, 2003 and then go on for however many years.
2237 MR. S. STIRLING: Full term then.
2238 THE CHAIRPERSON: I just wanted to note that.
2239 MR. S. STIRLING: Okay.
2240 THE CHAIRPERSON: Because given our own schedule and other hearings going on, I doubt that we would get this decision out by the end of February when this current term runs out.
2241 MR. S. STIRLING: That's fine.
2242 I guess just in wrap-up from our point of view, and this is something Mr. Sterling alluded to, that is that we have huge challenges, technical challenges. We have, as you know, 20 transmitters, aging transmitters, for the FM and for television to try to reach all the population across this geographic location. And with such a small population there is digital television, digital television coming down the pike that we have to be concerned about, digital radio coming down the pike we are concerned about. We have this application from MYFM. We have a tremendous amount of capital and operating to get that off the ground for two, three years. So when you look at our resources and the fact that they are starting to improve, before you start turning to Canadian content and to priority programming, just keep in mind all those other things.
2243 THE CHAIRPERSON: We will. I am somewhat familiar with it. That is one of the reasons why I wanted to get a better handle of the financial implications, for example, moving your news to 11:30 and so on, so that we can get a better understanding of what the financial implications are here.
2244 MR. S. STIRLING: Okay. We will give you very detailed information.
2245 THE CHAIRPERSON: That is why I wanted to go through the financial numbers as well earlier so that we -- as I said, we don't want to be in the position of putting the station into financial jeopardy. We recognize that.
2246 MR. S. STIRLING: We appreciate that.
2247 THE CHAIRPERSON: I believe Commissioner Langford has a question.
2248 COMMISSIONER LANGFORD: I just have one question. I am kind of building on Mr. Geoff Stirling's notion that he would prefer we didn't take the joy out of this business for you. You have had a chance this morning to listen to the Chairman's areas of concern. Some of them obviously might have troubled you more than others, but I think the point he kept making is we are not saying we are going to force you to do this, we are not saying we are going to force you to do that. What we are looking at is what would happen if we did this, and what would happen --
2249 In those discussions it must be clear to you where the interests of the regulator are focused, it is less clear what they might do, but where they are focused. If we were to say to you in a decision, and this would be a very unique piece of drafting, "We want to keep the joy in broadcasting for you, but you know what interests us and you know what concerns us", and if that is all we were to say and renew your licence, where do you think you could be in seven years in the sense of some of these broad areas that the Chairman has focused your attention on today: close captioning; a little more Canadian in prime time? You know the list as well as I do.
2250 Where do you think you could be in seven years?
2251 MR. S. STIRLING: Who are you asking?
2252 COMMISSIONER LANGFORD: You or anybody who wants to answer. You are a team, I gather.
2253 MR. S. STIRLING: If we got everything we wanted, let's say, and you just watched to see what we would do, you would be very pleased and happy. You would see that we would do everything. We would close caption. I mean, we have done it. You asked us for seven hours of news. We have produced 20 hours of news. You didn't put a condition on licence for close captioning; we did that too. We have done more community involvement, more Untold Stories and the (off microphone / sans microphone...). The track record speaks for itself.
2254 If we had the resources, yes, we would do more of that. We would put MYFM on. We would get MYFM on the satellite. We would perhaps --
2255 COMMISSIONER LANGFORD: Don't sell us on radio again, if you don't mind.
2256 MR. S. STIRLING: Television.
2257 COMMISSIONER LANGFORD: I know it is tempting, but I'm just thinking about television.
2258 Let me give you a sort of more specific example. You have spoken eloquently today about your news and your success in news and your 6 o'clock news broadcast. It is successful. It is watched. People rely on it. People like it. So you have a big audience there from 6:00 to 7:00.
2259 Then you said, "We would hate to lose Entertainment Tonight because we have a big audience for Entertainment Tonight." You can't help but wonder, do you have a big audience for Entertainment Tonight because you have a big audience for the news and they stay with you or do you have a big audience for Entertainment Tonight because they really want to see that as well.
2260 What I am trying to say is if you were to move some of your Saturday shows into that Entertainment Tonight slot, just to use that example of the shows you have, Bob and Margaret Blackfly, whatever, choose some of them, from Monday to Friday, what is your sense of would the audience stay?
2261 We are letting you keep the joy in broadcasting but we are also saying: Humour us a little; tell us where your expertise and your sense of joy tells you you could maybe move the pieces a little bit here.
2262 MR. S. STIRLING: On Saturday night right now we have two U.S. shows, JAG and The District. I could see dropping those and putting Canadian shows in. It would absolutely financially ruin us to drop Entertainment Tonight. It is, like I said, 350,000 viewers. Many of the shows that have developed have developed because they have been in that slot for a long time. Entertainment Tonight did not succeed in the beginning. It very slowly picked up. It always followed our news and it has very slowly picked up. Now, as our news picked up it also picked up.
2263 I would like to see seven years from now if all things were perfect, yes, I would love to have seven -- I would like to surpass the network with priority programming and have fantastic Canadian programming, be more involved with independent producers, be more involved with the musicians, get Captain Canada off the ground and get that produced as a one hour pilot perhaps. Those are the kinds of things.
2264 We know what you want and we would love to give it to you, but shows like Entertainment Tonight are bread and butter for us. That is really the problem, because we have been so marginal for so long we still think that way, and because of the challenges ahead of us. So we are very tight with all of these promises. That is not to say that if a good show like Pop Stars got expanded to an hour we wouldn't take that. We would overachieve.
2265 THE CHAIRPERSON: Okay. Thanks.
2266 Just one administrative point. There were a number of issues that we have agreed you would file information on the cost numbers that we looked at. Would by the end of next Friday be acceptable?
2267 MR. S. STIRLING: That would be fine.
2268 THE CHAIRPERSON: Okay. Counsel?
2269 MR. McCALLUM: Just a couple of points, if I may.
2270 If we start with what the Commission would consider to be the evening broadcast period, what would your reaction be if the Commission wanted to or decided to make the evening broadcast period let's say seven hours, 6:00 p.m. to 1:00 a.m.?
2271 MR. S. STIRLING: That is what we have asked for.
2272 MR. McCALLUM: Implying of course 50 per cent Canadian content during that period of time or 3.5 hours, if that were how it were to operate.
2273 MR. S. STIRLING: I think you will see in the submission we made exactly how much dollars and cents that would impact on us and on our bottom line. So the answer is that would impact dramatically on our bottom line seven nights a week, an extra half hour of -- one less half hour of Canadian. As we have pointed out, an American hour is worth up to $2 million if it is 100 per cent sold out and Canadian shows a tiny portion of that. So on a half hour show you are talking a million dollars. You are talking hundreds of thousands of dollars difference.
2274 So if that is the priority of the CRTC instead of an hour newscast you want a half hour newscast, or instead of close captioning you don't want close -- from our point of view, what we have asked for is very incredible from our point of view. We have asked for a reduction from a one-thirty allowance right to one. We are doubling our commitment. We don't have the million dollars from CTV. We now have to go out and buy the shows. We have given up an hour's simulcast. We told you what we think we can do.
2275 MR. McCALLUM: So your answer is combined with the figures that you will be filing will be your answer to that question. Is that right?
2276 MR. S. STIRLING: Those figures will demonstrate that it is not feasible for us to try to introduce another half hour of prime. Actually, you are asking for 3.5 hours of prime when everyone else across the country produces three hours of prime. You are asking us to have more Canadian than anyone else.
2277 MR. McCALLUM: What if I ask the question about 6.5 hours, 6:00 p.m. to 12:30 a.m., and the requirement were for 3.25 hours of Canadian content in that 6.5 hours?
2278 MR. S. STIRLING: Three and a quarter hours. We would resist having anything put on us that is more than anyone else. I mean, if everyone else has to do three hours, we would absolutely resist any suggestion that we should, the smallest affiliate in the whole country, or smallest station, have to produce more Canadian.
2279 MR. G. STIRLING: It is important I think that you realize the Canadian reality. I mean, if you look at CKLW, you see what happens to the audience. If you lose your audience, all the Canadian content is not going to help us. We have to have quality shows and we have to have a fair ratio so we have both the funds and the energy to try to do them. But if you watch what has happened to the Canadian audience since 1970, and how many were viewing Canadian television and now look at it starting in Windsor, you will get sort of a more realistic indication of how difficult it is to maintain a viable audience here against 170 channels that an advertiser is interested in.
2280 Once you drop below a certain point, you are irrelative, regardless of all the other things you are doing. You can't make it work, not with 175 competitors, and you are going to have 350 within the seven year period.
2281 MR. McCALLUM: If I ask similar questions relating to the broadcast day, then, for the 18 hours staring at 6:00 a.m., 6:00 a.m. to 12 midnight, how would you feel if that is counted as the broadcast day over which you have to do 60 per cent?
2282 MR. S. STIRLING: I'm sorry; you said between 6:00 and midnight, which is 18 hours.
2283 MR. McCALLUM: Yes. I am going to give you four possibilities, so I will give them to you at once. Then you can respond as you see fit. Six to 12, that's the first one; 6:30 to 12:30; 7:00 to 1:00; and 7:30 to 1:30. And of course 60 per cent Canadian content over any one of those.
2284 MR. S. STIRLING: Sixty per cent?
2285 MR. McCALLUM: Sixty per cent, as per the regulations.
2286 MR. S. STIRLING: Sixty per cent is daytime, though. You are saying 60 per cent between 7:30 in the morning and 1:30 in the morning?
2287 MR. McCALLUM: It is over the whole broadcast day, the whole 18 hours. Obviously, if you are achieving 50 per cent in the evening then -- 60 per cent is the overall.
2288 MR. S. STIRLING: We like 6:00 to 1:00.
--- Laughter / Rires
2289 MR. G. STIRLING: I think we deserve it. I mean, if you are going to try to whittle us down with these kind of -- you are suddenly talking as if there is one competitor, the CBC, and ourselves. That is when these regulations were set up. We have 175 competitors in a flash of a second. If you add restrictions too heavy to any of us, let alone in the smallest two station market in Canada, which has gone 24 hours a day years before any station including Toronto, Montreal or Vancouver had done it, and we have proven that a Canadian station can win back 100,000 viewers if it focuses and focuses on it for five or six years -- the seven year plan would be to fulfil all the things, have our shelves both equipped with digital radio, digital television, having our own Saturday animated show, using the computer we are now building for more inexpensive children's programming, which we can do, and also taking advantage of the Hummer which is a portable television that can operate anywhere and (off microphone / sans microphone...) --
2290 MR. McCALLUM: If I could ask this quick question though.
2291 MR. G. STIRLING: -- if we are hobbled because it takes the fun out of it. I mean this a tremendous challenge but you have to love it to be involved in it passionately. And to see the Canadian audience going down and down and down across Canada where some markets are down to 30 per cent and 70 per cent are watching nothing consistently but American programming.
2292 MR. McCALLUM: If I can take the 6:00 a.m. time, though, I mean I think the BBMs seem to show that the 6:00 to 7:00 a.m. ratings are approximately 1 per cent of the audience. Is that correct?
2293 MS POPE-JANES: 6:00 a.m. to 7:00 a.m.?
2294 MR. McCALLUM: Yes. Our figures show that the BBMs for that period of time is approximately 1 per cent.
2295 MS POPE-JANES: Most likely that is correct. But if you eliminate that hour and we have to replace that with another time slot, that would be a much higher rated time period that we would have to replace that with.
2296 MR. McCALLUM: But with such low ratings, an 18 hour day starting at 7:00 a.m., going from 7:00 a.m. to 1:00 a.m. the following morning should be something that would be possible.
2297 MS POPE-JANES: But we would have to take that hour and replace it with an American program sometime later in that day after 7:00 a.m. where our ratings start to pick up where we can generate revenue.
2298 MR. McCALLUM: Will the figures that you are filing in response to Commissioner Colville show what the cost would be of doing precisely that?
2299 MS POPE-JANES: Yes.
2300 MR. McCALLUM: And if not, will you undertake to do so?
2301 MS POPE-JANES: I think that could be part of the report, yes.
2302 MR. S. STIRLING: A couple of things. One is the 1 per cent you are talking about was before this year. We have a newscast there now, 6:00 to 7:00 in the morning. We used to have a kid's cartoon. In previous licences there was mandated kid shows, teen shows, Canadian teens, Canadian kids. So you are comparing a Canadian kids' cartoon show to a news live -- you know, not a live but a newscast, 6:00 to 7:00.
2303 Canada AM starts in Toronto at 6:30 in the morning, so why would you not give us credit between 6:00 and 7:00 in the morning?
2304 MR. McCALLUM: Thank you for your submission on that.
2305 If I can just go back to the priority programming. Again, looking at priority programming, not because the Commission has made up its mind, I am asking only in the context of what the possibilities might be for the Commission, I assumed that as a baseline the 2.5 hours that you have committed to could be imposed as a condition of licence if the Commission so desired. That is correct?
2306 MR. S. STIRLING: Yes.
2307 MR. McCALLUM: In terms of if the Commission wanted to impose a condition of licence in line with the discussion that was done in the context of an expectation of making it five years by let's say the beginning of year six of the licence term so that in the seventh year you would be up to five hours, I take it that would be an acceptable condition as well. Would that be correct?
2308 MR. S. STIRLING: Did you say that the big guys only have to do seven hours?
2309 MR. McCALLUM: Eight. Eight hours.
2310 MR. S. STIRLING: Eight. So you are expecting us to do five.
2311 MR. McCALLUM: I am picking up on the discussion that you had earlier with Commissioner Colville and I'm saying if that expectation were indeed a condition for the last year of the licence term, that would be I assume a reasonable thing to do.
2312 MR. S. STIRLING: It would be reasonable to have that process, but five is not reasonable if eight -- you know, if the biggest multinational companies in this country are held to eight and then you come down and ask the smallest guy to do five, that is not reasonable.
2313 MR. McCALLUM: You also said it would be possible to ramp it up possibly at 3.5 hours and 4.5 hours. I was wondering when, if the Commission wanted to, I am not saying that it will, if the Commission wanted to, when should it consider ramping it up to 3.5 hours? Could it be, for example, September 2004 and the 4.5 hours at September 2005?
2314 MR. S. STIRLING: I would say if Global and CTV, with all their billions of dollars are only asked to do eight, then I don't see why we should be asked to do more than four.
2315 MR. McCALLUM: But if the Commission wanted to start ramping it up to whatever it does, whether five or four, when should it start ramping it up: September 2004, September 2005?
2316 MR. S. STIRLING: Yes. Because of the uncertainty which will become more clear over the next couple of years, if you gave us another year at 2.5 and then made it 3.5, that would be something that we could hope for at this point, especially if it is an expectation.
2317 We pride ourselves in exceeding expectations, but at the same time we are not going to shoot ourselves in the foot.
2318 MR. McCALLUM: Thank you very much.
2319 Finally, when you said that you are paying a lot more for CTV programming, their prices for example have increased sixfold, I assume that would also be true of the other CTV affiliates that it has such as in Thunder Bay, Kenora, other places like that.
2320 MR. S. STIRLING: Right. I don't think that is true at all. I mean, they are owned and operated stations. In the case of Thunder Bay in particular I have no way of knowing what is happening. But if they have put their prices up six times and if that station has to fill their schedule with a CTV program, then they are going to be out of business.
2321 MR. McCALLUM: So effectively, you are saying you don't know for the other affiliated ones, not the owned and operated ones but the other affiliated ones, you are saying you don't know yourself?
2322 MR. S. STIRLING: My understanding was they had some kind of a supplementary deal. In fact, that is what we tried to -- you know, one of our negotiating angles and divisions was, well, let us be a supplementary affiliate like some of your smaller other stations; in other words, give us the programming, let us air it and put our own commercials in it. But they would not go for that.
2323 MR. McCALLUM: Thank you, Mr. Chair.
2324 THE CHAIRPERSON: Thank you, counsel.
2325 That then completes our questioning for your renewal. There are no appearing intervenors. I don't know whether you want an opportunity to respond to any of the written interventions.
2326 MR. PRESCOTT: Just before you do that, if I may, Mr. McCallum, could you just run through -- I think I have the four items that we are supposed to -- the final item that we are supposed to submit by Friday of next week is: the Global agreement; the CNN agreement; a breakdown of the other programming costs; and the final item is I guess sort of a large item, the costs of simulcasting and the 11 o'clock to 11:30 time frame, and the 11:30 to 12:30, and the losses or the costs involved in putting Canadian programming in that period of time.
2327 THE CHAIRPERSON: And a similar figure for the early morning time period is what counsel had added.
2328 MR. PRESCOTT: Okay. Thank you.
2329 THE CHAIRPERSON: Mr. Stirling, was there anything you wanted to add?
--- Off microphone / Sans microphone
2330 MR. S. STIRLING: We are not really aware of any.
2331 THE CHAIRPERSON: I believe you had a lot of interventions in support --
2332 MR. S. STIRLING: Oh, letters of support. I forgot about those.
--- Laughter / Rires
2333 THE CHAIRPERSON: I read them. I assumed you would.
2334 MR. S. STIRLING: We were tempted to bring a lot of supporters in here and ask them to appear on our behalf and to just talk about these things because it is one thing for us to say what we are doing and just put a tape on, but it means a lot more when you hear the top officer of the Salvation Army talk about how important we are and all those kinds of things. So we just want to thank everybody who submitted on our behalf and gave us that support. I thought all those letters said it better than we could.
2335 MR. G. STIRLING: All three political leaders over the years have always congratulated us on the balance of the news without exception.
2336 THE CHAIRPERSON: No, I know that. I had read all of the submissions. The process provides for you to have an opportunity to reply to interventions, whether they are positive or negative, and I just wanted to give you the opportunity to do that.
2337 Actually, I have kind of assumed part of the secretary's job of going through that next phase of the process.
2338 So, Mr. Secretary, I think that concludes it for this application.
2339 MR. LEBEL: It does, Mr. Chairman.
2340 THE CHAIRPERSON: Are there any closing comments you wish to make?
2341 MR. S. STIRLING: Any closing comments? We just would like to --
2342 MR. G. STIRLING: I can think of a lot of closing comments, but --
--- Laughter / Rires
2343 THE CHAIRPERSON: Do you want to shut the camera off first?
2344 MR. G. STIRLING: But I think as a Canadian talking about the power of communications to keep Canada the growing nation it is, it is vital to realize the competitiveness that happens when you suddenly add, as you can imagine, 100 additional channels and you are in the smallest market and you have to do a certain amount of Canadian content material by focusing on what we can do best, but, as I said, this is only -- of the entertainment grid of North America you have 8 per cent that are Canadian writers, actors, directors, producers, if we say we are twice as good as the Americans let's make it 40 per cent, but 50 per cent, I mean it is staggering when you think in terms of what is being asked to be competitive against shows that pay the individuals stars $600,000 a week like Friends, and you have to compete against that level of talent.
2345 So it is better I feel for Canada to have realistic regulations that can compete against these additional channels coming in, but they have to be realistic. I mean, if we are treated the same way as CFTO with 150 million, and we are down less than 12 million, it is like Jonathan Seagull expecting to be congratulated and suddenly finding he has a problem.
2346 THE CHAIRPERSON: Let me assure you we want to be realistic.
2347 Mr. Scott Stirling, do you want to --
2348 MR. G. STIRLING: I think that is a closing comment.
2349 THE CHAIRPERSON: Okay.
2350 MR. G. STIRLING: I would like some compassion, understanding and generosity.
--- Laughter / Rires
2351 MR. S. STIRLING: I would just like to thank you for coming down and having the hearing here in St. John's. I think you gave us a very honest appraisal. I certainly felt like we said everything that was on our mind. We didn't hold back. We felt that comfort level with you. We really appreciate it.
2352 THE CHAIRPERSON: Nobody has ever accused me of holding back either.
2353 MR. G. STIRLING: Thank you for coming. We really appreciate the opportunity to have the hearing here in Newfoundland.
2354 THE CHAIRPERSON: You are welcome.
2355 MR. G. STIRLING: Very kind.
2356 THE CHAIRPERSON: And thank you all.
2357 M. G. STIRLING: Merci beaucoup.
2358 THE CHAIRPERSON: Mr. Secretary?
2359 MR. LEBEL: Thank you, Mr. Chairman.
2360 I would like to point out at this time that there are a number of non-appearing applications on the agenda of this public hearing. Interventions were received on some of those applications and the Commission will consider these interventions along with the applications and a decision will be rendered at a later date.
2361 This, Mr. Chairman, does complete the agenda for this public hearing. Thank you, Mr. Chairman.
2362 THE CHAIRPERSON: Thank you, Mr. Secretary.
2363 I want to thank all those involved. I know we don't have many folks in the chairs, but we had a good crowd here yesterday. We certainly enjoyed it in spite of the somewhat windy and snowy weather since we have been here. Some of us have never been to Newfoundland before and some of us have, but we all --
--- Off microphone / Sans microphone
2364 THE CHAIRPERSON: Yes. She desperately wanted to be on this panel just to come to Newfoundland.
2365 So it I think has been a good hearing. It has been helpful for us to better understand the two radio applications and the renewal for the CJON. I would like to thank all those involved, our own staff, your own television folks, our technical people and the court reporter.
2366 This then concludes our hearing. I will say good day to you all.
--- Whereupon the hearing adjourned at 1200 /
L'audience est ajournée à 1200
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