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Please note that the Official Languages Act requires that government publications be available in both official languages.
In order to meet some of the requirements under this Act, the Commission's transcripts will therefore be bilingual as to their covers, the listing of CRTC members and staff attending the hearings, and the table of contents.
However, the aforementioned publication is the recorded verbatim transcript and, as such, is transcribed in either of the official languages, depending on the language spoken by the participant at the hearing.
TRANSCRIPT OF PROCEEDINGS BEFORE
THE CANADIAN RADIO‑TELEVISION AND
TRANSCRIPTION DES AUDIENCES AVANT
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
VARIOUS BROADCAST APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
HELD AT: TENUE À:
Fairmont Hotel Vancouver Fairmont Hotel Vancouver
900 West Georgia Street 900, rue Georgia O.
Vancouver, British Columbia Vancouver (C.-B.)
March 3, 2005 Le 3 mars 2005
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
VARIOUS BROADCAST APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
BEFORE / DEVANT:
Charles Dalfen Chairperson / Président
Andrée Wylie Commissioner / Conseillère
Ronald Williams Commissioner / Conseillier
Joan Pennefather Commissioner / Conseillère
Stuart Langford Commissioner / Conseillier
ALSO PRESENT / AUSSI PRÉSENTS:
Pierre Lebel Secretary / Secrétaire
Alistair Stewart Legal Counsel /
Joe Aguiar Hearing Manager /
Gérant de l'audience
HELD AT: TENUE À:
Fairmont Hotel Vancouver Fairmont Hotel Vancouver
900 West Georgia Street 900, rue Georgia O.
Vancouver, British Columbia Vancouver (C.-B.)
March 3, 2005 Le 3 mars 2005
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PRESENTATION BY / PRÉSENTATION PAR:
Rogers Broadcasting Limited 929 / 5640
INTERVENTION BY / INTERVENTION PAR:
Multivan Broadcast 1084 / 6716
Dr. John Burns 1110 / 6859
Irene Chu 1116 / 6910
Reginald W. Bibby 1119 / 6930
Darrell Peregrym 1128 / 6978
Aboriginal Peoples Television Network 1134 / 7010
Global Television Network 1141 / 7052
CHUM Limited 1149 / 7092
REPLY BY / RÉPLIQUE PAR:
Rogers Broadcasting Limited 1164 / 7174
PRESENTATION BY / PRÉSENTATION PAR:
Standard Radio Inc. 1181 / 7288
Evanov Radio Group Inc. 1244 / 7687
Vancouver, B.C. / Vancouver (C.‑B.)
‑‑‑ Upon resuming on Thursday, March 3, 2004
at 0835 / L'audience reprend le jeudi
3 mars 2005 à 0835
SEQ 1_0 \* Arabic \r 56375637 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît. Good morning, everyone.
SEQ 1_0 \* Arabic \n5638 MR. LEBEL: The next item on the agenda are applications by Rogers Broadcasting Limited to acquire the assets of the English‑language television programming undertakings CHNU‑TV Fraser Valley, British Columbia from NOWTV British Columbia Inc. (NOWTV BC) and CIIT‑TV Winnipeg, Manitoba Inc. (NOWTV Manitoba). The latter station is not yet in operation.
SEQ 1_0 \* Arabic \n5639 Appearing for the applicant, Mr. Rael Merson. He will be introducing his colleagues. You have 20 minutes to make your presentation.
PRESENTATION / PRÉSENTATION
SEQ 1_0 \* Arabic \n5640 MR. MERSON: Good morning, Mr. Chair, Madam Vice‑Chair, Members of the Commission. I am Rael Merson, President of Rogers Broadcasting. It is our pleasure to appear before you today to present our applications to acquire assets of CHNU‑TV, serving the Fraser Valley and CIIT‑TV, Winnipeg, and for authority to establish a rebroadcast transmitter for CHNU‑TV in Victoria.
SEQ 1_0 \* Arabic \n5641 With me today are Leslie Sole, CEO, Television for Rogers Broadcasting' Madeline Ziniak, Vice‑President and General Manager, OMNI Television; Jeff Thiessen, Senior Vice‑President, Trinity Television; and Alain Strati, Vice‑President, Business and Regulatory Affairs.
SEQ 1_0 \* Arabic \n5642 At the next table we have Albert Lo, Vice‑President Corporate Affairs and Director of Balanced Programming for NOWTV; Willard Thiessen, President and CEO, Trinity Television' Tony Viner, President and CEO, Rogers Media; Laura Nixon, Vice‑President Finance and CFO, Rogers Media' and Malcolm Dunlop, Vice‑President Programming and Marking for OMNI Television.
SEQ 1_0 \* Arabic \n5643 As well, a number of additional people are available to answer any questions, including Tim Smith, Vice‑President of Programming for NOWTV; Kelly Colasante, Vice‑President, Operations and Engineering for OMNI Television; Terry Mahoney, Station Manager for NOWTV; Tom Ellie, Vice‑President, Finance for OMNI Television; and Gloria Thiessen, Director of Human Resources for NOWTV.
SEQ 1_0 \* Arabic \n5644 In our presentation today we are going to describe to you why, given our experience and expertise as a niche broadcaster, we believe we are the most appropriate owners of NOWTV and why the approval of this transaction is in the public interest.
SEQ 1_0 \* Arabic \n5645 But first I am going to ask Jeff to describe the sequence of events which have lead Trinity Television to this point.
SEQ 1_0 \* Arabic \n5646 MR. J. THIESSEN: Good morning, Commissioners.
SEQ 1_0 \* Arabic \n5647 In 1976 my parents, Willard and Betty Thiessen, launched Canada's first Christian television talk show "It's A New Day" on CKND in Winnipeg. This show was and still is a huge success. It is available on conventional television stations in western Canada and across the country on Vision TV.
SEQ 1_0 \* Arabic \n5648 From that solid base, the Trinity Television Ministry expanded to include Christian programming for children, first with the program "Follow Me" and then, in 1986, with "Sunshiny Day", which continues to air in many countries around the world.
SEQ 1_0 \* Arabic \n5649 In 2000 we were granted a licence for a new religious television station in the Fraser Valley. We launched NOWTV in September 2001 and are immensely proud of what we have accomplished since then. From day one our objective was to present viewers with a message of hope and faith by offering a wide variety of spiritual, moral and value‑based programming.
SEQ 1_0 \* Arabic \n5650 Our program schedule is built around a solid core of Christian programming, programs like "It's A New Day", "LifeLine" from the Miracle Channel in Lethbridge and "FreeTV" from the "FreedomEyes" in Toronto. These programs provide a forum for the discussion of Christian values and beliefs in our modern society.
SEQ 1_0 \* Arabic \n5651 Our schedule also includes programs which more specifically examine morals and values in today's relationships. One example is "Pure Sex and Relationships" hosted by John and Helen Burns, two Pastors from a local Church in the Fraser Valley. We complement that programming with almost 20 hours of balanced programming each week including: issues‑oriented programs such as "Online", our call‑in viewer input and feedback program, and faith‑specific programs such as "Muslim Faith" and "Aaradhna", examining the values, beliefs and teachings of non‑Christian religions.
SEQ 1_0 \* Arabic \n5652 Our schedule also includes entertaining comedies and dramas that use storytelling and illustration to demonstrate some of the challenges faced by modern families and individuals. While these programs in and of themselves address moral and ethical issues, we also produce interstitial segments to provide additional context and perspective to the issues and dilemmas raised by these programs.
SEQ 1_0 \* Arabic \n5653 We were honoured in 2002 when the Commission granted us a licence for a religious station in Winnipeg, my family's home town. We intended to launch that station expeditiously, as we did with NOWTV, but unfortunately financial challenges intervened. The cost of operating NOWTV has far exceeded our expectations. As a not‑for‑profit organization, we have found it impossible to raise the capital necessary to cover our on‑going losses and, at the same time, finance the start‑up of our new station in Winnipeg.
SEQ 1_0 \* Arabic \n5654 We have tried to resolve these problems in various ways. We obtained the CRTC approval for a corporate reorganization to make it easier for us as a for‑profit corporation to raise capital from institutional sources. We also filed an application for a rebroadcast transmitter in Victoria to put ourselves on an equal footing with our competitors. But the fact is, we ran out of time and we ran out of money. After careful consideration we came to the very, very difficult conclusion that we had no choice or option but to sell NOWTV.
SEQ 1_0 \* Arabic \n5655 After engaging the services of an investment banker and undertaking a complete offering to any interested parties, we are very pleased to enter into an agreement with Rogers. Rogers' size and financial stability was critical to give our creditors the comfort necessary to allow us to continue to operate NOWTV while these applications were being considered. Rogers has the resources necessary to improve the performance of NOWTV and to launch NOWTV in Manitoba. They have the experience and expertise in niche broadcasting, which will be an important asset for the future success and development of NOWTV.
SEQ 1_0 \* Arabic \n5656 Most importantly Rogers has committed unequivocally to continue the mandate we started with NOWTV, which means that while we have to give up our ownership position, we do not have to give up on our original objective.
SEQ 1_0 \* Arabic \n5657 In addition, my family and I will have the opportunity to continue to play a meaningful role in the religious television broadcasting industry in Canada. We are pleased that our agreement with Rogers provides for that.
SEQ 1_0 \* Arabic \n5658 Rael...?
SEQ 1_0 \* Arabic \n5659 MR. MERSON: We are proposing to acquire the assets that Trinity uses to operate NOWTV, as well as the rights that Trinity holds in the broadcasting licence to operate a religious television station in Winnipeg.
SEQ 1_0 \* Arabic \n5660 The purchase price for the two undertakings is $13 million, of which $12.25 million has been allocated to the purchase of NOWTV, with the remaining $750,000 allocated to the assets of NOWTV Manitoba. We derived the valuation of NOWTV by present valuing the financial forecasts for that television station, plus an estimated residual value. NOWTV Manitoba was valued in accordance with the costs incurred to date.
SEQ 1_0 \* Arabic \n5661 Our agreement also provides for the continuing involvement of the Thiessen family in the operation of NOWTV. Willard Thiessen will be offered the position of Chair of the Local Advisory Board in Winnipeg; Jeff and Gloria Thiessen will be retained as consultants for ongoing projects and initiatives at NOWTV.
SEQ 1_0 \* Arabic \n5662 We have also committed to a production agreement, enabling us to continue to access their experience and expertise in Canadian religious programming. Taken together we believe these agreements will assist us in our efforts to establish and strengthen NOWTV and religious programming in Canada.
SEQ 1_0 \* Arabic \n5663 Rogers is the logical purchaser for the NOWTV television stations. Like ethnic broadcasting, religious broadcasting is about serving a specific under served segment of the viewing audience. Over‑the‑air religious and ethic television stations are governed by stringent policy requirements, and both are based on challenging business models.
SEQ 1_0 \* Arabic \n5664 We acquired CFMT‑TV in 1986 after that station had experienced many years of financial difficulties and was facing insolvency. At the time many questioned our motives for buying the station and suspected that we would operate it as much more of a mainstream station.
SEQ 1_0 \* Arabic \n5665 We did not do that. Instead, we rebuilt the station from top to bottom, making substantial investments in CFMT's ethnic programming, its studio and production facilities, and in the management and operation of the station.
SEQ 1_0 \* Arabic \n5666 After a number of years, CFMT turned the corner and became a viable television station. In 2002, with your approval, we expanded our service to other ethnic communities in Toronto for the launch of a second ethic station.
SEQ 1_0 \* Arabic \n5667 Throughout our 18 years of ownership of CFMT we have not only remained true to its core mandate of ethnic broadcasting, but have gone further to establish the station as an internationally recognized provider of award‑winning programming, with a proven commitment to ensuring the highest standard of self expression for ethnic and linguistic communities.
SEQ 1_0 \* Arabic \n5668 Our two stations now serve at least 40 different ethnocultural groups each month in at least 33 different languages. We have also committed $48 million to specific initiatives for the development and production of Canadian ethnic programming, establishing the only source in Canada for the funding of Canadian ethnic documentaries and dramas.
SEQ 1_0 \* Arabic \n5669 With NOWTV we are faced with a situation very similar to that of CFMT almost 20 years ago. We believe we are ideally suited to take on the challenge of serving the community of religious communities in the Fraser Valley and in Winnipeg.
SEQ 1_0 \* Arabic \n5670 Much like we have with CFMT, we are determined to invest the programming and financial resources necessary not only to establish a sound financial foundation for NOWTV, but also to use that foundation to develop and produce the very best in Canadian religious programming.
SEQ 1_0 \* Arabic \n5671 Leslie.
SEQ 1_0 \* Arabic \n5672 MR. SOLE: We have committed unequivocally to maintain the NOWTV religious television mandate, operating fully within the requirements of the religious broadcasting policy. We are not seeking any relaxation of the existing conditions of license for these stations. In fact, we have proposed two additional conditions.
SEQ 1_0 \* Arabic \n5673 First, to allay any concerns that we might seek to use the NOWTV stations as vehicle to focus on ethnic programming we have proposed that the Commission attach a condition of license to limit the amount of third language programming on these stations to 5 per cent of the broadcast schedule.
SEQ 1_0 \* Arabic \n5674 Second, in our reply to an intervention we reaffirmed our commitments to Canadian balanced programming and proposed additional conditions that the Commission could attach to the NOWTV licences. These conditions would require us to broadcast greater amounts of Canadian balanced programming in prime time. We would be pleased to discuss those proposed conditions in greater detail.
SEQ 1_0 \* Arabic \n5675 One of the most significant benefits to the NOWTV stations will be their ability to access OMNI's highly experienced national sales force.
SEQ 1_0 \* Arabic \n5676 The more evident benefit relates simply to the lower costs of sales based on NOWTV using OMNI's in‑house resources. However, another important benefit relates more directly to the sales team, one that has already faced the challenges of convincing advertisers of the benefits offered by niche broadcasters.
SEQ 1_0 \* Arabic \n5677 Canadian religious television stations rely on appropriate entertainment programming to address the interests and demands of their viewers. For those programs that meet its religious policy programming criteria, NOWTV will also benefit from available programming synergies with the OMNI stations, allowing them to offer high quality entertaining programming at a reasonable cost.
SEQ 1_0 \* Arabic \n5678 MS ZINIAK: Balanced programming is a cornerstone of the religious broadcasting policy and is the defining element of the Canadian approach to religious television programming. This is an area in particular where we believe we have much to offer.
SEQ 1_0 \* Arabic \n5679 We understand that the reflection of diversity in television programming, whether it is religious or ethnic in nature, requires a detailed understanding of local issues and concerns, as well as strong, positive working relationships with local community groups and leaders. We will use our experience with the OMNI stations to build on and enhance the relationships NOWTV has established with local faith groups in the Fraser Valley and throughout the Vancouver area.
SEQ 1_0 \* Arabic \n5680 NOWTV also has working relationships with local independent producers. We will expand and enhance those relationships through a strong, community‑based program development process similar to that employed by the OMNI stations.
SEQ 1_0 \* Arabic \n5681 At OMNI we have shown that it is possible to produce excellent programming for many smaller ethnic and linguistic groups by building strong relationships with them and by working closely with community‑based independent producers. We will take that same approach at NOWTV for the development of balanced programming for a diversity of larger and smaller faith groups.
SEQ 1_0 \* Arabic \n5682 Local independent producers representing faith groups from throughout the community will have the opportunity to submit program proposals. We will work with them to develop programming concepts that meet the needs of their communities and which comply with our broadcast quality standards. We will help them identify and access the programming and economic infrastructure necessary to support their programs. A portion of the benefits we have proposed is specifically earmarked to support this type of project development.
SEQ 1_0 \* Arabic \n5683 We will expand the NOWTV Program Balance Committee to incorporate all of the community advisory functions of the very successful OMNI Television Community Advisory Board, while at the same time ensuring that NOWTV Board continues to address program balance issues.
SEQ 1_0 \* Arabic \n5684 We will establish a similar advisory board for NOWTV in Winnipeg. Based on our experience with OMNI, we understand the important role that advisory communities play in ensuring that a diversity of voices from within the community is heard and that their concerns are addressed.
SEQ 1_0 \* Arabic \n5685 Alain...?
SEQ 1_0 \* Arabic \n5686 MR. STRATI: We believe the approval of our application will result in significant and unequivocal tangible and intangible benefits for viewers in the Fraser Valley and Vancouver, and in Winnipeg, for Canadian independent producers of religious television programming and for the Canadian broadcasting system as a whole.
SEQ 1_0 \* Arabic \n5687 We have proposed a comprehensive package of six tangible benefit initiatives worth a total value of $1.3 million over the license term. They include:
SEQ 1_0 \* Arabic \n5688 $450,000 to establish the NOWTV Documentary Fund for the independent production of Canadian religious and faith‑based documentaries;
SEQ 1_0 \* Arabic \n5689 $300,000 in license fees for a four‑part series examining the history of aboriginal faith and spirituality in Canada with APTN as the executive producer and first window broadcaster;
SEQ 1_0 \* Arabic \n5690 $150,000 in development grants for the production of religious television programming by independent producers in British Columbia and Manitoba;
SEQ 1_0 \* Arabic \n5691 $200,000 for Canadian independent production projects developed in collaboration with Vision TV;
SEQ 1_0 \* Arabic \n5692 $100,000 in scholarship awards at the British Columbia Institute of Technology in Vancouver and the Red River College in Winnipeg; and, finally,
SEQ 1_0 \* Arabic \n5693 $100,000 to support comparative religious seminars in collaboration with Regent College and Trinity Western University.
SEQ 1_0 \* Arabic \n5694 The approval of this application will also result in significant intangible benefits. They include:
SEQ 1_0 \* Arabic \n5695 the long‑term viability of NOWTV will be assured and a new religious television station in Winnipeg will be launched;
SEQ 1_0 \* Arabic \n5696 NOWTV and the Canadian religious broadcasting industry as a whole will continue to benefit from the experience and expertise of members of the Thiessen family;
SEQ 1_0 \* Arabic \n5697 NOWTV staff have been offered continued employment at the station and will also benefit from the increased job training and career advancement opportunities that a large broadcasting company has to offer.
SEQ 1_0 \* Arabic \n5698 Rael...?
SEQ 1_0 \* Arabic \n5699 MR. MERSON: We have applied for a licence to establish a NOWTV rebroadcast transmitter in Victoria. The approval of that application will ensure that residents of Victoria have access to a religious station that is freely available to viewers elsewhere in the market. In addition, it will ensure that NOWTV is placed on equal competitive footing with all of the other television broadcasters operating in the Vancouver/Victoria market.
SEQ 1_0 \* Arabic \n5700 As part of the rebroadcast transmitter application we have proposed additional tangible benefits including:
SEQ 1_0 \* Arabic \n5701 first, $250,000 to the NOWTV Documentary Fund; and
SEQ 1_0 \* Arabic \n5702 second, $100,000 for development grants to local independent producers based in Victoria and on Vancouver Island.
SEQ 1_0 \* Arabic \n5703 We have also committed to produce local religious programming for Victoria specifically reflecting the faith and spiritual communities of that community.
SEQ 1_0 \* Arabic \n5704 We believe the approval of our applications will have no material economic impact on other local television broadcasters in the Vancouver/Victoria or Winnipeg markets. Experience in the Toronto market clearly shows that there is sufficient programming available to allow all mainstream ethnic and religious stations to offer attractive program schedules consistent with their respective mandates.
SEQ 1_0 \* Arabic \n5705 Vancouver/Victoria is the country's fastest growing television market and is likely to continue to experience a strong growth for the foreseeable future. The evidence clearly suggests that the national advertising revenues from our rebroadcast transmitter in Victoria can easily be accommodated within natural market growth.
SEQ 1_0 \* Arabic \n5706 Television broadcasters in Winnipeg as a group have experienced increasing profitability over the past five years. NOWTV Manitoba is unlikely to change that trend. The launch of NOWTV Manitoba will provide a valuable new outlet for advertisers who are seeking an independent local market alternative to the national television broadcast groups.
SEQ 1_0 \* Arabic \n5707 Winnipeg is one of the few major markets in this country without an independent television station.
SEQ 1_0 \* Arabic \n5708 Mr. Chair, Madam Vice‑Chair, Members of the Commission, we believe the approval of our applications would be in the public interest for the following reasons:
SEQ 1_0 \* Arabic \n5709 first, the proposed transaction will ensure the continued operation of a failing religious television station in the Fraser Valley and will ensure the launch of a religious television station in Winnipeg;
SEQ 1_0 \* Arabic \n5710 second, the approval of a NOWTV rebroadcast transmitter in Victoria will provide residents of that community with access to a religious television station and will place NOWTV on an equal competitive footing with other broadcasters in the market;
SEQ 1_0 \* Arabic \n5711 third, we are the logical purchaser of the NOWTV television stations. We have proven expertise in niche television broadcasting. We understand the significance of balance and reflection and have demonstrated our ability to offer high quality programming that addresses the needs of a diversity of local groups and communities;
SEQ 1_0 \* Arabic \n5712 fourth, as further evidence of our commitment to Canadian balanced programming, we have proposed conditions of license that would require the NOWTV stations to provide more of that programming in prime time; and finally,
SEQ 1_0 \* Arabic \n5713 we have proposed a comprehensive package of significant and unequivocal tangible benefits and plan to undertake other programming enhancements that will result in a material increase in the choice, diversity and quality of Canadian religious programming.
SEQ 1_0 \* Arabic \n5714 We believe all of these programming and operational commitments will be to the benefit of the Canadian broadcasting system and contribute to the continued growth and development of Canadian religious programming.
SEQ 1_0 \* Arabic \n5715 That concludes our presentation. We thank you for your time and attention and would be pleased to answer any questions that you may have. Thank you.
SEQ 1_0 \* Arabic \n5716 CHAIRPERSON: Thank you.
SEQ 1_0 \* Arabic \n5717 Vice‑Chair Wylie...?
SEQ 1_0 \* Arabic \n5718 COMMISSIONER WYLIE: Thank you, Mr. Chairman.
SEQ 1_0 \* Arabic \n5719 Good morning ladies and gentlemen.
SEQ 1_0 \* Arabic \n5720 I will have programming questions for you. The Chairman will then have financial and licensing issues that he will discuss with you. So they are obviously not complete silos, but I am focusing on the programming.
SEQ 1_0 \* Arabic \n5721 In your application at Part 1.6, which you filed under cover of letter 24 November 2004 ‑‑ before the Commission asked for it because you notice that you had not filled that part ‑‑ you accepted that your application will be operated under the same terms and conditions as the current licence. That is also repeated in your supplementary brief at more than one place.
SEQ 1_0 \* Arabic \n5722 This morning you also said, at page 10, that you are not seeking any relaxation of the existing conditions of license. You are proposing an additional one with regard to ethnic programming and what you call an additional condition which we can discuss that you raised in reply and that is, in my view, an alteration of a condition that exists now.
SEQ 1_0 \* Arabic \n5723 Can you confirm first whether in filing that completed page, 1.6 of the application form, and making the commitments you made at various parts of your supplementary brief, your point of reference was the CRTC decisions related to NOWTV BC and NOWTV Winnipeg rather than what is on the air now, what the programming schedules are?
SEQ 1_0 \* Arabic \n5724 MR. STRATI: Yes, that is correct.
SEQ 1_0 \* Arabic \n5725 COMMISSIONER WYLIE: What is your understanding of the phrase "terms and conditions" that you are prepared to accept?
SEQ 1_0 \* Arabic \n5726 For example, does it include conditions of license only or the commitments that were made at licensing originally and referred to in the related Commission decisions?
SEQ 1_0 \* Arabic \n5727 MR. STRATI: The terms and conditions would be the terms in terms of, for example, the 100 per cent religious programming, terms from the religious policy as well the specific conditions of license.
SEQ 1_0 \* Arabic \n5728 COMMISSIONER WYLIE: Only the specific conditions of license? You see that as the terms and conditions?
SEQ 1_0 \* Arabic \n5729 MR. STRATI: That's correct.
SEQ 1_0 \* Arabic \n5730 COMMISSIONER WYLIE: Maybe we can speed up the process about what it is that you are committing to when you say you will continue these services as they were licensed.
SEQ 1_0 \* Arabic \n5731 We could go through the conditions of license, as well as the commitments that are in the decision, and see what your view is of whether they will be the commitments and conditions that you will be operating under and, if not, why not?
SEQ 1_0 \* Arabic \n5732 Do you have the decisions with you, because that will be quicker. It will be faster than ‑‑ you have the initial decisions, 218 for Fraser Valley and 229.
SEQ 1_0 \* Arabic \n5733 MR. STRATI: Yes. Yes, we do. Yes, we do, Madam Chair.
SEQ 1_0 \* Arabic \n5734 COMMISSIONER WYLIE: So No. 1, 100 per cent religious, you have agreed.
SEQ 1_0 \* Arabic \n5735 MR. STRATI: Yes, Madam.
SEQ 1_0 \* Arabic \n5736 COMMISSIONER WYLIE: Then under 2(a), 18 hours of balanced programming. That is Winnipeg, sorry. Let's go back.
SEQ 1_0 \* Arabic \n5737 The Fraser Valley one first. Eighteen hours of balanced programming a week, of which 12.5 hours between 7:00 to 11:00 and 15.5 original first run programming.
SEQ 1_0 \* Arabic \n5738 I do have a copy of your reply and at pages 4 and 5 you raise different options for balanced programming.
SEQ 1_0 \* Arabic \n5739 I guess to my question would you accept to abide by this condition of license, 18 hours of balanced programming of which 12.5 hours between 7:00 to 11:00 and 15.5 original first run programming, is not what you would accept as a condition of license.
SEQ 1_0 \* Arabic \n5740 MR. MERSON: We would absolutely accept it as a condition of license. We believe the terms we proposed are in addition to that, but we would absolutely accept that as a condition.
SEQ 1_0 \* Arabic \n5741 COMMISSIONER WYLIE: Your proposal on page 5 of the reply is option 2, which would be a minimum of 12 hours of Canadian balanced programming from 6:00 to 11:00 as opposed to 7:00 to 11:00?
SEQ 1_0 \* Arabic \n5742 MR. SOLE: Yes, that's correct.
SEQ 1_0 \* Arabic \n5743 COMMISSIONER WYLIE: What is your understanding of the change between that and the condition of license?
SEQ 1_0 \* Arabic \n5744 MR. MERSON: Madam Vice‑Chair, the change is an attempt by us to introduce more Canadian balanced programming into prime time, while at the same time trying to maintain a sufficient window to allow for the broadcast of Christian programming in prime time.
SEQ 1_0 \* Arabic \n5745 So we were looking for the ability to find a way to continue to do effectively two hours of balanced programming in prime time, while still doing at least an hours' worth of Christian programming in prime time.
SEQ 1_0 \* Arabic \n5746 COMMISSIONER WYLIE: So it would be reduced from ‑‑ you would still do 18 hours of balance programming?
SEQ 1_0 \* Arabic \n5747 MR. MERSON: Absolutely.
SEQ 1_0 \* Arabic \n5748 COMMISSIONER WYLIE: Of which 12 hours instead of 12.5 would be between 6:00 to 11:00. And 15.5 would be original first run programming, but 12 hours would be Canadian?
SEQ 1_0 \* Arabic \n5749 MR. MERSON: Absolutely. We seem to have one ‑‑ let me check with Alain quickly.
SEQ 1_0 \* Arabic \n5750 For some reason we had thought the balance commitment in prime time was 12 hours, not 12.5, but perhaps we can confirm that at a later point.
SEQ 1_0 \* Arabic \n5751 COMMISSIONER WYLIE: Are you speaking about your alteration of the condition or the one that was attached?
SEQ 1_0 \* Arabic \n5752 MR. MERSON: The one that is in the licence. Perhaps it is just a misunderstanding on our part, but we will clarify it.
SEQ 1_0 \* Arabic \n5753 COMMISSIONER WYLIE: I may have made a mistake.
SEQ 1_0 \* Arabic \n5754 MR. STRATI: That's fine, Madam Chair. It is just a quick clarification. The current condition of license is 12 hours.
SEQ 1_0 \* Arabic \n5755 COMMISSIONER WYLIE: Is 12 hours.
SEQ 1_0 \* Arabic \n5756 MR. STRATI: Correct. It is 15.5 originally.
SEQ 1_0 \* Arabic \n5757 COMMISSIONER WYLIE: My apologies. Twelve hours between 7:00 to 11:00.
SEQ 1_0 \* Arabic \n5758 MR. STRATI: So the same number of hours, just that it would be Canadian now.
SEQ 1_0 \* Arabic \n5759 COMMISSIONER WYLIE: Same number, an hour more, and Canadian.
SEQ 1_0 \* Arabic \n5760 MR. STRATI: That's right.
SEQ 1_0 \* Arabic \n5761 COMMISSIONER WYLIE: So those are the conditions that were attached to the Fraser Valley.
SEQ 1_0 \* Arabic \n5762 There were also commitments that the Commission chose to pick up in the decision as one of the reasons why it was awarding the licence I guess.
SEQ 1_0 \* Arabic \n5763 At paragraph 14, 7.5 hours of the 18 hours of faith‑specific programming would be produced by non‑Christian groups and broadcast ‑‑ that is paragraph 14 ‑‑ weekdays between 9:30 and 10:00 and Saturday from 8:30 to 1:30.
SEQ 1_0 \* Arabic \n5764 MR. MERSON: We would absolutely commit to that.
SEQ 1_0 \* Arabic \n5765 COMMISSIONER WYLIE: Okay. At paragraph 19, 80 per cent Canadian content between 7:00 and 11:00.
SEQ 1_0 \* Arabic \n5766 MR. STRATI: Just to clarify, Madam Chair, there was a subsequent decision that clarified that it wasn't 80 per cent. It was going to be, I believe, 50 per cent from 7:00 to 11:00.
SEQ 1_0 \* Arabic \n5767 COMMISSIONER WYLIE: Do you have a number for that decision?
SEQ 1_0 \* Arabic \n5768 MR. STRATI: Yes, it is the same decision just ‑1.
SEQ 1_0 \* Arabic \n5769 COMMISSIONER WYLIE: ‑1 was a correction.
SEQ 1_0 \* Arabic \n5770 MR. STRATI: That's correct.
SEQ 1_0 \* Arabic \n5771 COMMISSIONER WYLIE: Thank you.
SEQ 1_0 \* Arabic \n5772 At paragraph 20, 40 per cent of annual growth revenues would be spent on Cancon, of which $100,000 on script and content development.
SEQ 1_0 \* Arabic \n5773 MR. MERSON: No, that would be a commitment we could not meet.
SEQ 1_0 \* Arabic \n5774 COMMISSIONER WYLIE: Why not?
SEQ 1_0 \* Arabic \n5775 MR. MERSON: I have to think through the financing of the operation, but it would be just difficult for us to meet. It is a number that we know the specialty channels are comfortable with. But I don't really know ‑‑ and perhaps I ask Leslie for what a relative number would be for an over‑the‑air broadcaster, but I think it's a far lower number. My guess would be around 20 per cent.
SEQ 1_0 \* Arabic \n5776 MR. SOLE: Yes. We haven't used this in conventional broadcasting since the policy review, but my recollection is that conventional over‑the‑air broadcasters could be anywhere from 16 to 24 per cent. I have not looked at any current numbers, but from our own experience that the relationship between Canadian content spending and gross revenue would be under 25 per cent in most cases.
SEQ 1_0 \* Arabic \n5777 COMMISSIONER WYLIE: Do you have a substitute number for that then, or is it your intention to just abandon paragraph 20?
SEQ 1_0 \* Arabic \n5778 MR. MERSON: No, we do not, but perhaps we could come back with ‑‑
SEQ 1_0 \* Arabic \n5779 COMMISSIONER WYLIE: Yes, good idea.
SEQ 1_0 \* Arabic \n5780 MR. MERSON: We could caucus about it a ‑‑
SEQ 1_0 \* Arabic \n5781 COMMISSIONER WYLIE: And see how it can be.
SEQ 1_0 \* Arabic \n5782 MR. MERSON: ‑‑ and see what we can come up with.
SEQ 1_0 \* Arabic \n5783 Again, it is a number that is a difficult number to meet as an over‑the‑air broadcaster, but let us caucus and we will come back with something.
SEQ 1_0 \* Arabic \n5784 COMMISSIONER WYLIE: Would it also be difficult to spend $100,000 on script and content development over the term of the licence?
SEQ 1_0 \* Arabic \n5785 MR. MERSON: No, that would not be difficult. In fact ‑‑
SEQ 1_0 \* Arabic \n5786 COMMISSIONER WYLIE: That is okay. So you will come back to us about the percentage.
SEQ 1_0 \* Arabic \n5787 MR. MERSON: Yes.
SEQ 1_0 \* Arabic \n5788 COMMISSIONER WYLIE: At paragraph 22, 6.5 hours per week to children 2 to 11, and 8.5 for 12 to 17.
SEQ 1_0 \* Arabic \n5789 MR. MERSON: Absolutely.
SEQ 1_0 \* Arabic \n5790 COMMISSIONER WYLIE: Now if we go to the other decision ‑‑ I think it's quicker to do it this way.
SEQ 1_0 \* Arabic \n5791 If you go to the 229 Decision, the Winnipeg one, you are accepting 100 per cent religious?
SEQ 1_0 \* Arabic \n5792 MR. MERSON: Yes.
SEQ 1_0 \* Arabic \n5793 COMMISSIONER WYLIE: I think I left out there was also a paragraph ‑‑ yes, 21‑22 hours per week ‑‑
SEQ 1_0 \* Arabic \n5794 I'm back to the Fraser Valley one, paragraph 21. Twenty‑two hours a week of programming would come from Winnipeg, which I assume at the time meant the production facilities of Trinity? Because this was before ‑‑ this was when Fraser Valley was licensed.
SEQ 1_0 \* Arabic \n5795 Do you have paragraph 22?
SEQ 1_0 \* Arabic \n5796 MR. MERSON: I'm just looking at 21. Twenty‑two hours a week. Can I interpret that as local programming, locally produced programming?
SEQ 1_0 \* Arabic \n5797 COMMISSIONER WYLIE: Oh, I'm sorry. You are right. Paragraph 21, excuse me.
SEQ 1_0 \* Arabic \n5798 MR. MERSON: If we can interpret that as locally produced programming, absolutely.
SEQ 1_0 \* Arabic \n5799 COMMISSIONER WYLIE: But locally produced ‑‑
SEQ 1_0 \* Arabic \n5800 MR. MERSON: In either Winnipeg ‑‑
SEQ 1_0 \* Arabic \n5801 COMMISSIONER WYLIE: ‑‑ in Winnipeg or the Fraser Valley?
SEQ 1_0 \* Arabic \n5802 MR. MERSON: No. In the Fraser Valley for the Fraser Valley and in Winnipeg for Winnipeg.
SEQ 1_0 \* Arabic \n5803 COMMISSIONER WYLIE: Because at the time you didn't have ‑‑ there was Winnipeg station. What do you understand this to be?
SEQ 1_0 \* Arabic \n5804 MR. MERSON: I understood this to be a commitment by the Thiessens to produce programming locally in Winnipeg that would serve the Fraser Valley market. We would prefer to interpret that as programming produced in the Fraser Valley to serve the Fraser Valley market.
SEQ 1_0 \* Arabic \n5805 If you are okay with that, we would absolutely do it.
SEQ 1_0 \* Arabic \n5806 COMMISSIONER WYLIE: Is there a connection between that and the commitment you have with Trinity for, is it $500,000?
SEQ 1_0 \* Arabic \n5807 MR. MERSON: No, there is no connection between the two. We will engage the Thiessens ‑‑
SEQ 1_0 \* Arabic \n5808 COMMISSIONER WYLIE: But would it be some of that programming that would be produced?
SEQ 1_0 \* Arabic \n5809 MR. MERSON: Possibly to the extent it was produced in the Fraser Valley, but if it was produced in Winnipeg, not at all. So we interpret this as a local programming commitment and we are comfortable with it as a local programming commitment.
SEQ 1_0 \* Arabic \n5810 COMMISSIONER WYLIE: We can discuss a bit later the issue of local programming.
SEQ 1_0 \* Arabic \n5811 So Winnipeg then 100 per cent religious, 18 hours of balanced programming a week of which 12 hours ‑‑ I think I have it right this time ‑‑ is to be Canadian original content and of 2.5 original locally produced Canadian content from a faith‑specific non‑Christian's perspective.
SEQ 1_0 \* Arabic \n5812 I'm looking at 2(a) of the attached conditions of license. Is your intention to discuss the different proposal you have made in your reply to this one as well?
SEQ 1_0 \* Arabic \n5813 MR. MERSON: Absolutely.
SEQ 1_0 \* Arabic \n5814 COMMISSIONER WYLIE: So would you alter 2(a) as you propose it for me?
SEQ 1_0 \* Arabic \n5815 MR. MERSON: Yes, Madam, we would do that.
SEQ 1_0 \* Arabic \n5816 COMMISSIONER WYLIE: Can you do that now?
SEQ 1_0 \* Arabic \n5817 MR. MERSON: Verbally? Absolutely.
SEQ 1_0 \* Arabic \n5818 COMMISSIONER WYLIE: Yes.
SEQ 1_0 \* Arabic \n5819 MR. MERSON: Our proposal, if I can lay my hands on it, is to adopt either one of two options and that is to ‑‑
SEQ 1_0 \* Arabic \n5820 COMMISSIONER WYLIE: Well, your option 2 is the preferred one, so let's discuss that.
SEQ 1_0 \* Arabic \n5821 MR. MERSON: So talk about only option 2.
SEQ 1_0 \* Arabic \n5822 Option 2 is an option that is the condition of license currently that Crossroads Television has in Toronto and it is to expand the definition of prime time from 7:00 to 11:00 to 6:00 to 11:00, but to require all the balance that occurs between 6:00 to 11:00 to be Canadian.
SEQ 1_0 \* Arabic \n5823 This is something we would like to do. Over and above that, the reason for doing it that way is to ensure that we had sufficient opportunity in prime time or in that period of time to continue to do Christian programming as well.
SEQ 1_0 \* Arabic \n5824 COMMISSIONER WYLIE: Now, in both the British Columbia and Winnipeg stations it is 18 hours of programming of which some is in prime time.
SEQ 1_0 \* Arabic \n5825 Am I to understand that instead of 18 hours of balanced programming a week you would do 12 hours?
SEQ 1_0 \* Arabic \n5826 MR. MERSON: I'm sorry, Alain.
SEQ 1_0 \* Arabic \n5827 MR. STRATI: Madam Chair, just to clarify, it is 18 hours in both instances for balanced programming. In Winnipeg there are 12 hours of original.
SEQ 1_0 \* Arabic \n5828 In terms of the 7:00 to 11:00 slot, the current requirement is 7.5 of Canadian original. So, as we have talked about for the expansion from 6:00 to 11:00, we have talked about 12 hours of Canadian balanced being within that time.
SEQ 1_0 \* Arabic \n5829 So the overall hours per week is still at 18 hours.
SEQ 1_0 \* Arabic \n5830 COMMISSIONER WYLIE: The 18 hours is the same?
SEQ 1_0 \* Arabic \n5831 MR. STRATI: That's correct.
SEQ 1_0 \* Arabic \n5832 COMMISSIONER WYLIE: The 12 hours remains the same.
SEQ 1_0 \* Arabic \n5833 MR. STRATI: That's correct.
SEQ 1_0 \* Arabic \n5834 COMMISSIONER WYLIE: But if you look at the condition of license attached to Winnipeg it says that 12 hours shall be original Canadian programming.
SEQ 1_0 \* Arabic \n5835 MR. STRATI: That's correct, so perhaps the ‑‑
SEQ 1_0 \* Arabic \n5836 COMMISSIONER WYLIE: So what you are doing is, you are keeping the same number of hours, but expanding by one hour the timeframe in which it is to be broadcast.
SEQ 1_0 \* Arabic \n5837 Is that correct?
SEQ 1_0 \* Arabic \n5838 MR. STRATI: The 12 hours of Canadian balance ‑‑ of original hours ‑‑ it would be at any time during the broadcast week. The 7:00 to 11:00 is currently seven and half hours of Canadian original, so within that there is of course the ability to do 4.5 hours outside of that 7:00 to 11:00.
SEQ 1_0 \* Arabic \n5839 So if we go from 7:00 to 11:00 to 6:00 to 11:00, what we are doing is actually increasing the number of Canadian balanced hours from 6:00 to 11:00.
SEQ 1_0 \* Arabic \n5840 COMMISSIONER WYLIE: And expanding by one hour the timeframe in which it can be placed ‑‑
SEQ 1_0 \* Arabic \n5841 MR. STRATI: That's correct.
SEQ 1_0 \* Arabic \n5842 COMMISSIONER WYLIE: ‑‑ as a quid pro quo.
SEQ 1_0 \* Arabic \n5843 Now, 2(b) is 7.5 hours of the 18 hours of balanced programming to be broadcast between 7:00 and 11:00 is where the change comes. Right?
SEQ 1_0 \* Arabic \n5844 MR. STRATI: That is correct. To 12.
SEQ 1_0 \* Arabic \n5845 COMMISSIONER WYLIE: No. 3, to report at the end of each broadcast year about how you are performing with regard to the No. 2 condition of license.
SEQ 1_0 \* Arabic \n5846 That is acceptable?
SEQ 1_0 \* Arabic \n5847 MR. MERSON: Absolutely.
SEQ 1_0 \* Arabic \n5848 COMMISSIONER WYLIE: The commitments in Winnipeg, at paragraph 13, 26 movies a year as part of balanced programming.
SEQ 1_0 \* Arabic \n5849 Any comment?
SEQ 1_0 \* Arabic \n5850 MR. MERSON: No. We would like to continue to have that option.
SEQ 1_0 \* Arabic \n5851 COMMISSIONER WYLIE: At paragraphs 25, 26 and 31 the Commission, in the Winnipeg decision, addresses the purchase of rights ‑‑ I just point out to you that is something that we will get back to ‑‑ that the expectation when the Winnipeg licence was granted was that the purchase of rights for programming would not alter the relationships of the other broadcasters in the market for the purchase of rights.
SEQ 1_0 \* Arabic \n5852 Can you focus on those, because I will get back to that.
SEQ 1_0 \* Arabic \n5853 At paragraph 26, for example, where it says:
"Trinity stated that it had no intention of competing with conventional local Winnipeg television stations in the acquisition of programming and the applicant indicated that it would be prepared to wait until all other players in the market had put together their program schedules before purchasing rights for any programs that fit it's programming vision." (As read)
SEQ 1_0 \* Arabic \n5854 Do you have an initial comment about whether this commitment is one that you would abide by?
SEQ 1_0 \* Arabic \n5855 MR. MERSON: We would absolutely abide it. It is a reflection of the reality of buying program rights in the Canadian marketplace in the sense that they are three very strong national broadcast networks that invariably, simply because of their buying power, tend to buy first.
SEQ 1_0 \* Arabic \n5856 Absolutely we would abide by it, but I think it would be forced on us more than we would abide by it ‑‑ more than we would need to have to formally abide by it.
SEQ 1_0 \* Arabic \n5857 COMMISSIONER WYLIE: At paragraph 31 ‑‑ because we will get back to that as well ‑‑ as I read from paragraph 31:
"As regards the intervenor's concern with respect to potential competition by Trinity for acquisition of popular foreign programming, the Commission is of the view that Trinity's business plan for Winnipeg clearly demonstrates that Trinity will not have the resources to compete with existing television licensees in that regard." (As read)
SEQ 1_0 \* Arabic \n5858 Is it your view that paragraph 31 could be put in a decision approving this application?
SEQ 1_0 \* Arabic \n5859 MR. MERSON: Absolutely. Rogers clearly has the resources to buy television programming when it needs. The reality is simply that the program suppliers will fulfil the requirements of the major buyers before they even chat with us.
SEQ 1_0 \* Arabic \n5860 So it isn't as much a question of resources as it is a question of buying power or bargaining power and we lack the bargaining power with program suppliers. And nothing in any of these decisions will change the balance of power within the Canadian television marketplace.
SEQ 1_0 \* Arabic \n5861 COMMISSIONER WYLIE: Paragraph 37, The Commission expects Trinity to adhere to the commitment to broadcast 19.5 hours per week of programming devoted to children and youth and maintain this level for the entire term of license.
SEQ 1_0 \* Arabic \n5862 Comments about your intentions?
SEQ 1_0 \* Arabic \n5863 MR. MERSON: Our intentions are to adhere to it completely.
SEQ 1_0 \* Arabic \n5864 COMMISSIONER WYLIE: And then spend $4.1 million on the production and distribution of priority Canadian programming over the license term.
SEQ 1_0 \* Arabic \n5865 MR. MERSON: Absolutely.
SEQ 1_0 \* Arabic \n5866 COMMISSIONER WYLIE: And $105,000 to support the Manitoba independent production industry.
SEQ 1_0 \* Arabic \n5867 MR. MERSON: Absolutely.
SEQ 1_0 \* Arabic \n5868 MR. MERSON: Sorry. Perhaps, Madam Chair, Alain has just sort of tweaked me to a point I might have overstepped on.
SEQ 1_0 \* Arabic \n5869 MR. STRATI: Sorry, Madam Chair. I just want to clarify in terms of priority programming.
SEQ 1_0 \* Arabic \n5870 NOWTV is not required to do priority programming because it doesn't have, as you know, the distribution across the country in terms of meeting that.
SEQ 1_0 \* Arabic \n5871 So certainly I think if we look at the programming commitments we have made in terms of Canadian balanced programming and what we would do with programming on NOWTV, I think there is an interest in increasing the quality and certainly increasing the Canadian programming content on the stations, but I don't think that it would be a specific expenditure commitment to Canadian priority programming.
SEQ 1_0 \* Arabic \n5872 Certainly we could, as we have discussed before about in terms of the first licence for Vancouver in terms of Canadian programming expenditures, I think we could discuss in the same way and come back to you in Phase III and talk about a commitment for Canadian programming for Winnipeg.
SEQ 1_0 \* Arabic \n5873 COMMISSIONER WYLIE: So you will address later the commitments in paragraph 37?
SEQ 1_0 \* Arabic \n5874 MR. STRATI: We will do so for both stations.
SEQ 1_0 \* Arabic \n5875 COMMISSIONER WYLIE: And to what extent you would abide by them or have some other proposal.
SEQ 1_0 \* Arabic \n5876 MR. STRATI: That's correct.
SEQ 1_0 \* Arabic \n5877 COMMISSIONER WYLIE: So I will leave it to you at the next stage. You will have had an opportunity to think about it.
SEQ 1_0 \* Arabic \n5878 Because you have addressed or proposed to have 100 per cent religious programming, can we have your understanding of what is religious programming according to the Commission's policy?
SEQ 1_0 \* Arabic \n5879 MR. MERSON: I will hopefully give you a quick introduction and then ask Leslie ‑‑ or Jeff perhaps first and then Leslie just to elaborate.
SEQ 1_0 \* Arabic \n5880 Our understanding is, as the definition provides, that every program that appears on the air on this channel needs to be 100 per cent religious. A definition is ‑‑ the one that is provided that describes programs that deal with moral, ethical or spiritual issues or religious services.
SEQ 1_0 \* Arabic \n5881 But over and above that, over the past four years of the running the station, Jeff and his team have developed a set of criteria and a set of exclusions that really give them, to a greater degree, a framework that describes what it is that they would find acceptable on the station and what would not.
SEQ 1_0 \* Arabic \n5882 We have spent a bit of time thinking as well about what absolutely would not fit on a religious television station.
SEQ 1_0 \* Arabic \n5883 I am going to ask Jeff just to add his comments.
SEQ 1_0 \* Arabic \n5884 MR. J. THIESSEN: Thank you, Rael.
SEQ 1_0 \* Arabic \n5885 One of the things that we wanted to do when we were licensed for this market was to create a service that would really meet the religious needs of the community and to find innovate ways to really discuss topics that haven't been discussed on any other station. We worked through the policy very carefully, worked through the decisions that have happened with Vision and CTS over the past, and developed a framework during our Winnipeg process that really articulated how we do programming at NOWTV very clearly.
SEQ 1_0 \* Arabic \n5886 What we did was, we created a criteria that was a framework that we would have to get through to determine whether a program is religious or not. It was based entirely on the policies of 93‑78.
SEQ 1_0 \* Arabic \n5887 Perhaps it would be okay if I just go through that criteria list now so we are ‑‑
SEQ 1_0 \* Arabic \n5888 COMMISSIONER WYLIE: Yes. And we will expect one of the applicants to explain what their understanding is.
SEQ 1_0 \* Arabic \n5889 MR. MERSON: Of their ‑‑ of course.
SEQ 1_0 \* Arabic \n5890 COMMISSIONER WYLIE: Or do they now. Since it will be the purchaser who will be operating this licence, it may be better to see what their understanding is of how you have done it and why they will continue or why it fits the policy.
SEQ 1_0 \* Arabic \n5891 I don't want to prevent you, Mr. Thiessen, but we want to make sure that the purchaser also understands.
SEQ 1_0 \* Arabic \n5892 MR. MERSON: We would be happy to do that.
SEQ 1_0 \* Arabic \n5893 COMMISSIONER WYLIE: So perhaps you can tell us to what extent you agree with what Mr. Thiessen ‑‑
SEQ 1_0 \* Arabic \n5894 MR. MERSON: Perhaps we can simply ask Leslie to do the information.
SEQ 1_0 \* Arabic \n5895 COMMISSIONER WYLIE: Of course I am well aware that the Thiessen family will have an ongoing relationship with the purchaser, so as long as the two of you understand what it is you are going to be doing and confirm that that is what will continue however you want to address it.
SEQ 1_0 \* Arabic \n5896 MR. SOLE: You can imagine that there were a number of discussions about this because of the Thiessen family maintaining an interest and consulting us in the future. We have agreed, in fact. I will be delivering to you the things that Jeff and I and other programming and management people have agreed to.
SEQ 1_0 \* Arabic \n5897 The six criterion start with an initial criterion that asks: Does the program raise and specifically address issues or questions which are spiritual, moral, ethical or religious in nature?
SEQ 1_0 \* Arabic \n5898 The second distinction is: The program is constructive and positive in its portrayal of moral or ethical issues, religious ideas, dogma and traditions.
SEQ 1_0 \* Arabic \n5899 The third one: The program enhances freedom of religious expression.
SEQ 1_0 \* Arabic \n5900 Fourth: The program promotes understanding and respect of religious differences.
SEQ 1_0 \* Arabic \n5901 Five: The program presents religious teachings, music, services or events.
SEQ 1_0 \* Arabic \n5902 Or, in the sixth: The program tells stories dealing with religious or spiritual themes events, morals or characters.
SEQ 1_0 \* Arabic \n5903 That is the first layer of identifying programs that may be suitable for a religious television station. The supplemental review that we have agreed to use, and we found effective in the hypothetical, is we have decided that any program that glorifies socially reprehensible or questionable behaviour in three specific areas, sexuality and sexual themes, violence, and then the third one, hate crime and illegality.
SEQ 1_0 \* Arabic \n5904 We think that most programming, acquired programming and foreign programming, and even domestic programming, need to pass through these screens to be part ‑‑ a useful part of a religious television station, Madam Vice‑Chair.
SEQ 1_0 \* Arabic \n5905 COMMISSIONER WYLIE: I have read, like you, those six principles which are found in your supplementary brief at paragraph 31. Perhaps a more helpful discussion would be to look at the program schedule and pick a program that is not obviously fitting within these criteria and explain to us your understanding of why it would fit within the religious policy and how it is handled to perhaps increase its ability to fall under religious in the coding.
SEQ 1_0 \* Arabic \n5906 If you look at the NOWTV Vancouver fall schedule, "Fresh Prince of Bel Air", "Everybody Loves Raymond", "Leave It to Beaver", pick one of these programs and fit it within the six criteria you read, both in your understanding of how they are religious and, second, how they are handled by Trinity at the moment and how you would handle them.
SEQ 1_0 \* Arabic \n5907 MR. SOLE: If we could use the term "situation comedy", does that capture the ones you have just described?
SEQ 1_0 \* Arabic \n5908 COMMISSIONER WYLIE: Pick one of these because they are on the schedule for the fall that you have provided us.
SEQ 1_0 \* Arabic \n5909 MR. SOLE: We could be very specific, and I shall pick one of them.
SEQ 1_0 \* Arabic \n5910 COMMISSIONER WYLIE: Pick the one that the intervenors focused on. Then we will know we have the one that is the most difficult to fit within your six criteria.
SEQ 1_0 \* Arabic \n5911 MR. SOLE: If we want to get into the actual content of the program, if that is the exercise, I would be happy to do that.
SEQ 1_0 \* Arabic \n5912 COMMISSIONER WYLIE: You know what the exercise is. We want to know what is your understanding of a religious program, how programs that may not appear to be religious at first glance may become religious and may fit the Commission's definition. You are going to be the licensee so we want to see what you understand.
SEQ 1_0 \* Arabic \n5913 MR. SOLE: Those particular programs are storytelling, and that storytelling invariably has spiritual, moral and ethical challenges and resolutions in almost every single episode.
SEQ 1_0 \* Arabic \n5914 MS ZINIAK: I would also add that I think what NOWTV has begun, which we would continue and actually OMNI has had experience in doing, is also having interstitials that would bookcase the program which actually would contextualize and actually enhance the relationship of spirituality and religion with the actual program.
SEQ 1_0 \* Arabic \n5915 NOWTV has been doing this, OMNI also has been doing this in another way, but we find very effective and does contextualize and bring further meaning and spirituality or religious values to the program.
SEQ 1_0 \* Arabic \n5916 COMMISSIONER WYLIE: Mr. Thiessen, at the moment do you have interstitials? Do you have introduction to this programming that enhances its ability to fit within the six criteria Mr. Sole was reading?
SEQ 1_0 \* Arabic \n5917 MR. J. THIESSEN: Sorry. Go ahead.
SEQ 1_0 \* Arabic \n5918 COMMISSIONER WYLIE: Either of you. Both of you preferably.
SEQ 1_0 \* Arabic \n5919 MR. J. THIESSEN: Perhaps I could start.
SEQ 1_0 \* Arabic \n5920 COMMISSIONER WYLIE: Because presumably you will be proving some programming.
SEQ 1_0 \* Arabic \n5921 MR. J. THIESSEN: We are going to, absolutely.
SEQ 1_0 \* Arabic \n5922 COMMISSIONER WYLIE: Rogers will either accept it or not, depending on where it fits. Because you know this is raised all the time: What is a religious program? Is a program that is not religious on one station religious on the other?
SEQ 1_0 \* Arabic \n5923 Tell us what your understanding is.
SEQ 1_0 \* Arabic \n5924 MR. SOLE: But there will be local production that contextualizes these programs hosted by people from various faiths and their reflections between these programs.
SEQ 1_0 \* Arabic \n5925 As Maddie said, we do it on Ontario, but Trinity Television is doing it ‑‑ has been doing it for quite some time.
SEQ 1_0 \* Arabic \n5926 Maybe I disappointed the answer a little bit by not mentioning that, but in between these situation comedies there are a Canadian spiritual reflection and now I should say of a spiritual moral or ethical nature.
SEQ 1_0 \* Arabic \n5927 COMMISSIONER WYLIE: Normally the panels before us give answers to questions we didn't ask. Now I have to prod you.
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n5928 COMMISSIONER WYLIE: Perhaps one way of doing it, Mr. Sole, is to look at your six criteria and tell us what kind of a situation comedy would not be acceptable because it would breach or violate one of the six criteria?
SEQ 1_0 \* Arabic \n5929 MR. SOLE: I am far more comfortable with those examples. Situation comedies, "Sex and the City", "Drew Carey", "Coupling".
SEQ 1_0 \* Arabic \n5930 COMMISSIONER WYLIE: What criteria would they violate?
SEQ 1_0 \* Arabic \n5931 MR. SOLE: They would be in the second layering where the sexuality or the language was glorified or used in a way that had no relation to enhancing the actual challenges and resolution of the story. They would be not necessary and therefore ‑‑ we don't want to use violence or sex or hate and crime as a source of entertainment, but at the same time they are quite legitimate in a discussion with resolution. Where Drew Carey tells a lot of just off‑colour jokes and that is a certain kind of show, it would not suit our channel.
SEQ 1_0 \* Arabic \n5932 I have as many more examples if you would like them, Madam Vice‑Chair.
SEQ 1_0 \* Arabic \n5933 COMMISSIONER WYLIE: Of course, I don't think that the purchaser has focused on religion as much in the last five years as they have in the last two months.
SEQ 1_0 \* Arabic \n5934 Would that be fair?
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n5935 MR. SOLE: Yes.
SEQ 1_0 \* Arabic \n5936 COMMISSIONER WYLIE: Yes. So we are testing your understanding of this.
SEQ 1_0 \* Arabic \n5937 MR. MERSON: I think it's fair to say we have wrestled with this issue. We understand the need to find a way to really ‑‑ I won't say circumscribe, but build a framework to allow us to deal with the issue of what is religious and what isn't religious. So we have developed this sort of set of criteria that run over and above what we think is in the policy to really, as much as anything else, guide us into making these decisions.
SEQ 1_0 \* Arabic \n5938 Just to refer to the interstitials as well, I think we feel strongly that no amount of interstitials can turn a non‑religious program into a religious program. It has to qualify as a religious program first, and then if the context and the detail are not self‑explanatory you need to ensure that the context and the detail are explained thereafter.
SEQ 1_0 \* Arabic \n5939 So it is just as we go through the filters and the screens it is the sequence of events.
SEQ 1_0 \* Arabic \n5940 COMMISSIONER WYLIE: Mr. Thiessen, at the moment how many of the programs that are scheduled in prime time actually are the subject of interstitial introduction?
SEQ 1_0 \* Arabic \n5941 MR. J. THIESSEN: So how many programs in prime time do we have interstitials with?
SEQ 1_0 \* Arabic \n5942 COMMISSIONER WYLIE: Yes.
SEQ 1_0 \* Arabic \n5943 MR. J. THIESSEN: Anything that is not overtly religious.
SEQ 1_0 \* Arabic \n5944 COMMISSIONER WYLIE: So what would be a ballpark figure between 7:00 and 11:00?
SEQ 1_0 \* Arabic \n5945 MR. J. THIESSEN: Something like "60 Minutes" would always have a discussion, call‑in discussion afterwards.
SEQ 1_0 \* Arabic \n5946 COMMISSIONER WYLIE: No, I'm talking about the type of situation comedy that we have been discussing.
SEQ 1_0 \* Arabic \n5947 MR. J. THIESSEN: Those, 100 per cent of ‑‑
SEQ 1_0 \* Arabic \n5948 COMMISSIONER WYLIE: How common is it have an introduction?
SEQ 1_0 \* Arabic \n5949 MR. J. THIESSEN: One hundred per cent.
SEQ 1_0 \* Arabic \n5950 COMMISSIONER WYLIE: Is that what you plan as well, Mr. Sole?
SEQ 1_0 \* Arabic \n5951 MR. SOLE: Yes. It's our intention to put these interstitials together with specific episodes for long periods of time so they would become part of the presentation.
SEQ 1_0 \* Arabic \n5952 COMMISSIONER WYLIE: So that they are contextualized.
SEQ 1_0 \* Arabic \n5953 MR. SOLE: Right, and so that the interstitial is actually connected to the episode as opposed to the program in general.
SEQ 1_0 \* Arabic \n5954 COMMISSIONER WYLIE: When you were asked by the Commission in a deficiency letter to identify what changes you would make to the programming schedules, your answer was ‑‑ that would be on page 23 of the first deficiency response which is December 10, 2004.
SEQ 1_0 \* Arabic \n5955 Question 33, page 23. You answered:
"It's very difficult for us to provide further specificity as to the changes, if any, we might make to the NOWTV programming schedule." (As read)
SEQ 1_0 \* Arabic \n5956 Later, at the top of paragraph 24:
"As a result, we are not in a position to provide the Commission with suggested changes we would make to the current NOWTV schedule, nor to file a proposed programming schedule for the station." (As read)
SEQ 1_0 \* Arabic \n5957 This application is based on an asset purchase so therefore you are applying for new licences.
SEQ 1_0 \* Arabic \n5958 What is the term you are applying for?
SEQ 1_0 \* Arabic \n5959 MR. MERSON: Perhaps Alain could answer that?
SEQ 1_0 \* Arabic \n5960 MR. STRATI: We would be seeking a full license term. However, given the circumstances and certainly that NOWTV is up for renewal in, I believe, 18 months, we would be willing to come back for a shorter term and discuss what our programming has become and our programming plans and how they have developed.
SEQ 1_0 \* Arabic \n5961 COMMISSIONER WYLIE: You are getting ahead of me.
SEQ 1_0 \* Arabic \n5962 MR. STRATI: Sorry.
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n5963 COMMISSIONER WYLIE: I was only going to ask you why it wasn't fair to ask for programming schedules when you are applying for new licences of seven years and they expire on the 31st of August.
SEQ 1_0 \* Arabic \n5964 So what you offering now is a term of 18 months?
SEQ 1_0 \* Arabic \n5965 MR. STRATI: The current licence ‑‑
SEQ 1_0 \* Arabic \n5966 COMMISSIONER WYLIE: Yes, but they will be new licences.
SEQ 1_0 \* Arabic \n5967 MR. STRATI: Yes, I agree.
SEQ 1_0 \* Arabic \n5968 COMMISSIONER WYLIE: Well, what is your ‑‑ it is very odd to say we are not filing programming schedules. The Commission always wants them to get a feel for ‑‑
SEQ 1_0 \* Arabic \n5969 The Winnipeg programming schedule was filed in 2001 and never implemented. So you prefer an 18 month and then you will come with a programming schedule or prepare one for us now?
SEQ 1_0 \* Arabic \n5970 MR. STRATI: We would ‑‑
SEQ 1_0 \* Arabic \n5971 COMMISSIONER WYLIE: I am accommodating.
SEQ 1_0 \* Arabic \n5972 MR. STRATI: Sure, I agree.
SEQ 1_0 \* Arabic \n5973 At the time we were discussing just because of the current scheduling it was difficult for us to sort of develop a new schedule. Certainly we would be ‑‑ there are some people here ‑‑
SEQ 1_0 \* Arabic \n5974 COMMISSIONER WYLIE: Why? I don't understand.
SEQ 1_0 \* Arabic \n5975 MR. STRATI: Understand, there are plenty of here, we would be glad to do that.
SEQ 1_0 \* Arabic \n5976 COMMISSIONER WYLIE: Why is it difficult to develop a schedule for Winnipeg? The schedule was 2001. Would you like us to say, "This is what you have to abide by"?
SEQ 1_0 \* Arabic \n5977 I understand that schedules are just an indication, one indication, a helpful one for the Commission to understand what the intentions are.
SEQ 1_0 \* Arabic \n5978 MR. STRATI: Parts of the schedule would be similar in terms of some of the available programming, but there would be certainly some local programming from Winnipeg.
SEQ 1_0 \* Arabic \n5979 If Commission deems it appropriate, we would be glad to provide a schedule that would provide further detail in terms of the programming from Winnipeg. Some of it may not have specific titles, but they would certainly be an indication of the genre of programming, the type of programming that would be in the schedule.
SEQ 1_0 \* Arabic \n5980 MR. MERSON: Perhaps we ‑‑
SEQ 1_0 \* Arabic \n5981 COMMISSIONER WYLIE: And how it would be scheduled.
SEQ 1_0 \* Arabic \n5982 MR. MERSON: Perhaps we weren't sufficiently clear in the response to the intervention.
SEQ 1_0 \* Arabic \n5983 What we had intended to say is essentially the programming blocks that you see on NOWTV in the Fraser Valley now is what we would program into and adopt largely as a schedule.
SEQ 1_0 \* Arabic \n5984 We obviously don't have programming because we couldn't fit in titles, but contextually the program schedules would be the same with the possible adjust of Canadian balanced programming in prime time.
SEQ 1_0 \* Arabic \n5985 COMMISSIONER WYLIE: Have you examined, Mr. Strati, the Winnipeg schedule that was filed with the application in 2001?
SEQ 1_0 \* Arabic \n5986 Is that what you would want us to refer to at renewal time, however late or short your term of license is?
SEQ 1_0 \* Arabic \n5987 MR. STRATI: I do have the Winnipeg schedule.
SEQ 1_0 \* Arabic \n5988 I think, as Rael mentioned, the Winnipeg schedule would be much sort of along the same lines in terms of the current Vancouver/Fraser Valley schedule, in terms of the development of that schedule would be much more along the lines of what the Winnipeg station would ‑‑ how it would program its schedule.
SEQ 1_0 \* Arabic \n5989 COMMISSIONER WYLIE: Well, I leave it to you to discuss further.
SEQ 1_0 \* Arabic \n5990 This is an asset purchase. I did see in your ‑‑ you have talked about ‑‑ at least in your CTT, in your tangible benefit commitments, seven year term so I assumed you wanted a seven year term. You would be getting new licences.
SEQ 1_0 \* Arabic \n5991 I leave it to you to see whether you want to file your own programming schedules, which would be the case if you were applying for a licence, abide by the ones that are there or, as Mr. Strati suggested, have these licences we would give you expire at the end of 2006.
SEQ 1_0 \* Arabic \n5992 MR. MERSON: Thank you for pointing that out.
SEQ 1_0 \* Arabic \n5993 That was something that wasn't obvious to us and absolutely we will do that.
SEQ 1_0 \* Arabic \n5994 COMMISSIONER WYLIE: Because we are trying to determine, as are the other parties participating in this, what are your intentions and what it is that one would look at to see whether you are abiding by what you proposed when you applied, and also what you will end up with in a decision if these were to be approved.
SEQ 1_0 \* Arabic \n5995 Let me go now to the synergies in programming that would flow from these applications if they were approved.
SEQ 1_0 \* Arabic \n5996 You have addressed them in a number of places. Some of them are obvious administrative overhead and obviously, as the Chairman will probably discuss, also sales where there will be an advantage because you would have a station in Winnipeg, one in Vancouver and two in Toronto, with rebroads in Ottawa and ‑‑ London, is it? And London. That would be a very different force from what we now have.
SEQ 1_0 \* Arabic \n5997 I would like to look at those synergies as between the NOWTV Vancouver and Winnipeg, as between the NOWTV stations and the OMNI stations and the effect on programming rights, both with ‑‑ in relation to what programming will end up on the screen and obviously that it probably will have revenue repercussions in the market, although you already have intimated that that is not your conclusion.
SEQ 1_0 \* Arabic \n5998 Let's look at Vancouver and Winnipeg.
SEQ 1_0 \* Arabic \n5999 Could you clarify, in a general fashion, the symmetry or lack of symmetry that there would be between the programming schedules of the two NOWTV stations if you were the licensee of both?
SEQ 1_0 \* Arabic \n6000 MR. MERSON: Thank you.
SEQ 1_0 \* Arabic \n6001 We do think there would be tremendous synergies on the programming side between NOWTV in Vancouver and in Winnipeg.
SEQ 1_0 \* Arabic \n6002 I will ask Leslie just to elaborate a little bit further.
SEQ 1_0 \* Arabic \n6003 COMMISSIONER WYLIE: That is obviously what one could see more easily if one had two programming schedules based on the assumptions that you have made.
SEQ 1_0 \* Arabic \n6004 MR. SOLE: We will undertake to provide you with the Winnipeg schedule before the day is over, Madam Vice‑Chair.
SEQ 1_0 \* Arabic \n6005 COMMISSIONER WYLIE: And also indicate ‑‑
SEQ 1_0 \* Arabic \n6006 MR. SOLE: The similarities.
SEQ 1_0 \* Arabic \n6007 COMMISSIONER WYLIE: Oh, probably file a schedule of your own unless it is exactly the one that is in place now.
SEQ 1_0 \* Arabic \n6008 MR. SOLE: It will be in relation to this question and illustrate the similarities between ‑‑ what our plans would be.
SEQ 1_0 \* Arabic \n6009 The synergies between NOW Vancouver and NOW Winnipeg go back to the origins of the licences. We think that a market like Winnipeg will need the substantial backing of a market like Vancouver in program production and program development and the purchase of technology.
SEQ 1_0 \* Arabic \n6010 We think that in multi‑faith or inter‑faith broadcasting that there is an ability to reach a broader audience outside of geography and so there would be portability for talent, there would be portability for programming ideas that would work in both markets.
SEQ 1_0 \* Arabic \n6011 On the purchase of specific entertainment programming, it would be a sum game, it would be our ability to buy Ontario, Manitoba and Vancouver. On a very specific religious program like "The Ten Commandments", we would be able to buy Vancouver and Winnipeg.
SEQ 1_0 \* Arabic \n6012 But we have commonality in systems, we have commonality in sales and marketing, we have commonality in technological innovation and growth, commonality in training that we would be able to offer these employees. So we think Winnipeg and Vancouver are one fit.
SEQ 1_0 \* Arabic \n6013 The big thing when you put NOWTV with the multi‑ethnic or the multilingual channels is that the synergies become even larger.
SEQ 1_0 \* Arabic \n6014 We own a national sales organization that is on the Lakeshore in Toronto with 15 people. NOWTV in Winnipeg and NOWTV in Vancouver will have a very substantial saving in the cost of advertising sales. I mentioned that earlier. But even more importantly, because we are there and because we are with the agencies on a regular basis, these channels will have more of an opportunity to sell the programming to the advertisers that they are meeting.
SEQ 1_0 \* Arabic \n6015 So cooperative production, cooperative acquisition and cooperative development.
SEQ 1_0 \* Arabic \n6016 COMMISSIONER WYLIE: Would you focus on the financial ‑‑ the assumptions that were filed with the Winnipeg projections?
SEQ 1_0 \* Arabic \n6017 MR. MERSON: I'm sorry?
SEQ 1_0 \* Arabic \n6018 COMMISSIONER WYLIE: You filed with the Winnipeg financial projections a page of assumptions that were used to construct them.
SEQ 1_0 \* Arabic \n6019 COMMISSIONER WYLIE: I may not have it in my binder at the same place as you do.
SEQ 1_0 \* Arabic \n6020 MR. MERSON: Ah, too much paper.
SEQ 1_0 \* Arabic \n6021 COMMISSIONER WYLIE: Annex D were the projections, but attached to them was financial projections.
SEQ 1_0 \* Arabic \n6022 Do you have that?
SEQ 1_0 \* Arabic \n6023 MR. MERSON: Yes.
SEQ 1_0 \* Arabic \n6024 COMMISSIONER WYLIE: Financial assumptions, rather.
SEQ 1_0 \* Arabic \n6025 At the top it says:
"Much of the same programming costs already included in CHNU's projections would run on the Winnipeg station." (As read)
SEQ 1_0 \* Arabic \n6026 How much of this programming would be the same? "Much of the same programming". What would be the level of programming that would run on the same station ‑‑ on the two stations, excuse me?
SEQ 1_0 \* Arabic \n6027 MR. MERSON: Perhaps I can ask Laura just what her assumption was at that point, if it is a financial question.
SEQ 1_0 \* Arabic \n6028 As a programming question ‑‑
SEQ 1_0 \* Arabic \n6029 COMMISSIONER WYLIE: I'm trying to look at it would seem to me that is one way of asking the question about what the programming will look like, because it says "Much of the same programming" would be included in Winnipeg and in Vancouver and that is why we constructed the projections in that fashion with regard to incrementalism only.
SEQ 1_0 \* Arabic \n6030 All costs assumed to be incremental, much of the same programming. So from a programming perspective it raises the question of just how much of the programming will be the same.
SEQ 1_0 \* Arabic \n6031 MR. MERSON: Perhaps I could address the question from a little bit of a different angle, and that is to answer the question sort of as in terms of local programming.
SEQ 1_0 \* Arabic \n6032 We have assumed we would produce between 20 and 22 hours worth of original local programming weekly in Winnipeg.
SEQ 1_0 \* Arabic \n6033 COMMISSIONER WYLIE: Okay.
SEQ 1_0 \* Arabic \n6034 MR. MERSON: Does that help?
SEQ 1_0 \* Arabic \n6035 COMMISSIONER WYLIE: Yes. It all helps because it certainly isn't there.
SEQ 1_0 \* Arabic \n6036 MR. MERSON: Absolutely.
SEQ 1_0 \* Arabic \n6037 COMMISSIONER WYLIE: How much of the balanced programming will be there too? How much of the programming between 7:00 and 11:00 will be the same? What is going?
SEQ 1_0 \* Arabic \n6038 What would those two schedules look like when you file them?
SEQ 1_0 \* Arabic \n6039 MR. MERSON: Could we get back to you on that point ‑‑
SEQ 1_0 \* Arabic \n6040 COMMISSIONER WYLIE: Yes.
SEQ 1_0 \* Arabic \n6041 MR. MERSON: ‑‑ and identify all of those as part of the schedule?
SEQ 1_0 \* Arabic \n6042 COMMISSIONER WYLIE: Yes, and perhaps then give an answer, because here it says "Much of the same programming". There is nothing, unless you point it to me, in the application that I saw that gave me a sense of how much these two stations would be the same.
SEQ 1_0 \* Arabic \n6043 MR. STRATI: I agree.
SEQ 1_0 \* Arabic \n6044 COMMISSIONER WYLIE: Thank you.
SEQ 1_0 \* Arabic \n6045 MR. STRATI: Just on the ‑‑ it did mention ‑‑ I know they had the example of the Thiessen contract and its balanced programming, so there would still be ‑‑ the COL is still 12 hours of original so it would be Winnipeg. There may be opportunities for some of the Fraser Valley, but I understand.
SEQ 1_0 \* Arabic \n6046 The same programming was to be a limited amount of programming, but I understand we haven't clarified that and we will.
SEQ 1_0 \* Arabic \n6047 COMMISSIONER WYLIE: Yes. Presumably if one is to rely on the financial projections, and I hope you will, you have some idea where the savings will be, the synergies will be, and for us perhaps where the sameness will be between the two. You will get back to us.
SEQ 1_0 \* Arabic \n6048 At the bottom of the same page, close to the bottom, it is"
"All programming will be coordinated through Toronto and Vancouver, with input by local program station manager." (As read)
SEQ 1_0 \* Arabic \n6049 Are you expecting to have an independent station manager in Winnipeg?
SEQ 1_0 \* Arabic \n6050 MR. SOLE: Yes.
SEQ 1_0 \* Arabic \n6051 COMMISSIONER WYLIE: An autonomous programming manager in Winnipeg?
SEQ 1_0 \* Arabic \n6052 MR. SOLE: I would say in the case as described it would be the same person, Commissioner Wylie.
SEQ 1_0 \* Arabic \n6053 COMMISSIONER WYLIE: In the second deficiency letter, the one that was filed ‑‑ response rather, that was filled on 23 December 2004, at page 2, we were asked to explain this:
"All programming would be coordinated through Toronto and Vancouver, with input by local program station manager." (As read)
SEQ 1_0 \* Arabic \n6054 I expect that would be the station manager in Vancouver as well as Winnipeg?
SEQ 1_0 \* Arabic \n6055 MR. SOLE: Yes.
SEQ 1_0 \* Arabic \n6056 COMMISSIONER WYLIE: In Vancouver would you have a programming manager separate from the station manager?
SEQ 1_0 \* Arabic \n6057 MR. SOLE: Yes.
SEQ 1_0 \* Arabic \n6058 COMMISSIONER WYLIE: And not in Winnipeg?
SEQ 1_0 \* Arabic \n6059 MR. SOLE: Not in Winnipeg.
SEQ 1_0 \* Arabic \n6060 COMMISSIONER WYLIE: At the bottom of the answer there to Question 2, Part (b), you say:
"Of course, as a local television station the programming manager at NOWTV in Winnipeg will be responsible for the production of the local programming that reflects the interest and demands of local Winnipeg viewers." (As read)
SEQ 1_0 \* Arabic \n6061 Will that be the extent of the involvement of the manager in Winnipeg? You say programming manager, but you now say it is going to be a station manager.
SEQ 1_0 \* Arabic \n6062 MR. SOLE: Yes. I could get into the evolution, but television sales and administration, as I said, is somewhat centralized so the station manager and the program manager many times become the same.
SEQ 1_0 \* Arabic \n6063 There is more than just that person. We are going to have an advisory board in Winnipeg and in Vancouver, as we do in Ontario, that would help any of the programmers at any time deal with editorial or contentious programming acquisitions or scheduling.
SEQ 1_0 \* Arabic \n6064 COMMISSIONER WYLIE: Yes, problems, contentious advice, et cetera. But I am focusing more on the ongoing operation of the station in Winnipeg and the extent to which it will be autonomous.
SEQ 1_0 \* Arabic \n6065 MR. MERSON: Perhaps I can just point out why it is ‑‑
SEQ 1_0 \* Arabic \n6066 COMMISSIONER WYLIE: Which will not be your advisory committee.
SEQ 1_0 \* Arabic \n6067 MR. MERSON: Perhaps I can just point out the structure that NOWTV currently has in place.
SEQ 1_0 \* Arabic \n6068 It has a station manager in the Fraser Valley and its Vice‑President of programming, Tim Smith who is here, operates out of Winnipeg. These stations work together. One programming manager would be more than enough to oversee programming for both stations.
SEQ 1_0 \* Arabic \n6069 Does that help at all?
SEQ 1_0 \* Arabic \n6070 COMMISSIONER WYLIE: The local programming, how much would be only Winnipeg and how much will be Vancouver?
SEQ 1_0 \* Arabic \n6071 Address for me the tendency to delocalize if you have two stations that are the same, that are under the same ownership and the same type of station.
SEQ 1_0 \* Arabic \n6072 MR. MERSON: I can deal with it in the general terms. Maybe Leslie can do some of the specifics.
SEQ 1_0 \* Arabic \n6073 I think business people look for synergies and so wherever they tend to find them they tend to look for them.
SEQ 1_0 \* Arabic \n6074 On the other hand, the offsetting force is the need to be relevant to the local communities and somewhere between the two, obviously at a general level, is a happy medium.
SEQ 1_0 \* Arabic \n6075 When you look at NOW's programming requirements, including the requirements for original programming and balance and the constraints of working within the religious policy, you can see a natural tendency to find a way to ensure that as much religious programming is possible so it would operate on both stations. I think it's fair to say that to the degree you could find those synergies, you would look for them.
SEQ 1_0 \* Arabic \n6076 Unlike sort of a conventional television station that has a requirement to local news, or has local news and local current reflection as a fundamental part of its core programming, a religious television station tends to have programming and values and content that is more applicable to sort of a broader audience. We see that in the broadcast world in general. The more niche the programming tends to be, the more your requirement to find a larger audience to distribute it over.
SEQ 1_0 \* Arabic \n6077 So somewhere there is a happy medium. Perhaps in terms of specific numbers, when we present the program schedule for Winnipeg we can highlight exactly which one each of those will be.
SEQ 1_0 \* Arabic \n6078 COMMISSIONER WYLIE: In the first deficiency letter, the response to December 10, 2004, at page 24, Question 34, you say there:
"In a typical broadcast week we would expect that as much as 20 per cent of the programming schedule for NOWTV Vancouver would consist of local programs serving the local television viewers." (As read)
SEQ 1_0 \* Arabic \n6079 And although you are still developing the plans for NOWTV, which you will continue doing for us, Winnipeg, we would expect it to offer 10 per cent of local programming.
SEQ 1_0 \* Arabic \n6080 So those are numbers. They are more specific.
SEQ 1_0 \* Arabic \n6081 What is the overlap between the two that you are expecting, or is that something you are going to tell us later?
SEQ 1_0 \* Arabic \n6082 Because I presume even the religious community is not the same here as it is in Winnipeg, so local programming of a religious nature or of any nature presumably would be different. What will be the overlap?
SEQ 1_0 \* Arabic \n6083 Have you thought about that? Because that also has a revenue implication, doesn't it, certainly an expense implication if you can air the programming on both stations and call it local programming in either case.
SEQ 1_0 \* Arabic \n6084 MR. MERSON: Absolutely. I think our intention here was to ensure ‑‑ was to commit to 20 per cent local programming in the Fraser Valley and 10 per cent in Winnipeg.
SEQ 1_0 \* Arabic \n6085 COMMISSIONER WYLIE: And that is the per cent of...?
SEQ 1_0 \* Arabic \n6086 MR. MERSON: Of the broadcast week. In terms of actual we have not had a discussion about what the overlap might actually be between the two, but perhaps we can address it and present it as part of the program schedule.
SEQ 1_0 \* Arabic \n6087 COMMISSIONER WYLIE: Mr. Sole, in your view is programming produced in Winnipeg and identified as local programming to meet a condition of license or a commitment, can it also be in Vancouver to meet the same condition of license or commitment?
SEQ 1_0 \* Arabic \n6088 MR. SOLE: It could be in Vancouver, but it would no longer be local. It would be original Canadian. That's my understanding. Market of origin is the only place where a channel ‑‑
SEQ 1_0 \* Arabic \n6089 COMMISSIONER WYLIE: So you can address, then, the overlap, because it may well be that it is local in Winnipeg, but it is an acceptable program in Vancouver.
SEQ 1_0 \* Arabic \n6090 So they are two different questions, I agree with you.
SEQ 1_0 \* Arabic \n6091 Lets' talk about exchanges and sharing between NOWTV and the OMNI stations.
SEQ 1_0 \* Arabic \n6092 If you look at your deficiency response of 23 December at pages 2 and 3 ‑‑ and that is also in your financial projections ‑‑ assumptions, rather. You talk about six hours of programming per week from the Rogers Television properties would be made available at no incremental cost.
SEQ 1_0 \* Arabic \n6093 It continues on the following page. The last sentence is:
"We have assumed that a relatively small amount of that kind of programming would be made available to NOWTV at no incremental cost." (As read)
SEQ 1_0 \* Arabic \n6094 What type of programming is that, those six hours?
SEQ 1_0 \* Arabic \n6095 MR. MERSON: Perhaps I can ask ‑‑
SEQ 1_0 \* Arabic \n6096 COMMISSIONER WYLIE: They are, I think I am correct, referred to in your financial assumptions?
SEQ 1_0 \* Arabic \n6097 MR. MERSON: Yes, it is in the financial assumptions.
SEQ 1_0 \* Arabic \n6098 COMMISSIONER WYLIE: Yes, in the financial assumptions for the construction of your Vancouver stations. Correct? Yes.
SEQ 1_0 \* Arabic \n6099 MR. MERSON: That is correct.
SEQ 1_0 \* Arabic \n6100 COMMISSIONER WYLIE: Yes.
"Six hours of programming per week from Rogers at no incremental cost." (As read)
SEQ 1_0 \* Arabic \n6101 What will be those six hours?
SEQ 1_0 \* Arabic \n6102 MR. MERSON: Perhaps I can ask Maddie to describe the program.
SEQ 1_0 \* Arabic \n6103 MS ZINIAK: Thanks, Rael.
SEQ 1_0 \* Arabic \n6104 I think there are some definite synergies where indeed OMNI does sometimes and is producing multilingual programs that would be considered balance that are taking a look at faith programmings or celebrations. That's just one example.
SEQ 1_0 \* Arabic \n6105 Also, we have had the wonderful opportunity of producing documentaries in third language because of our benefit with OMNI and we have had some proposals not only coming from Ontario, and in fact also from British Columbia and Manitoba. An example of that would be a program called "My Jihad" that looks at a woman's discovery of her own Muslim faith.
SEQ 1_0 \* Arabic \n6106 Also to talk about something that we are very excited about and feel is very meaningful and that is our partnership with APTN. As part of our benefits we suggested some series as far as aboriginal spirituality goes.
SEQ 1_0 \* Arabic \n6107 So this is just some of the things that we are looking at. I would be happy to give you more detail, but when we take a look at perhaps ethnicity and multilingual programming, there are some occasions where there are celebrations of ethnocultural faith demonstrated in issues as well as celebrations as far as church services, et cetera.
SEQ 1_0 \* Arabic \n6108 COMMISSIONER WYLIE: These six hours, then, would not be foreign programming, would they, or could they be foreign programming, those six hours?
SEQ 1_0 \* Arabic \n6109 MR. SOLE: They would be local ‑‑ they would be original Canadian productions.
SEQ 1_0 \* Arabic \n6110 COMMISSIONER WYLIE: Can we add these words to the six hours ‑‑
SEQ 1_0 \* Arabic \n6111 MR. SOLE: Yes.
SEQ 1_0 \* Arabic \n6112 COMMISSIONER WYLIE: ‑‑ so that it would say, "six hours of Canadian" ‑‑"
SEQ 1_0 \* Arabic \n6113 MR. SOLE: An average of six hours per week of original Canadian production.
SEQ 1_0 \* Arabic \n6114 COMMISSIONER WYLIE: Okay.
SEQ 1_0 \* Arabic \n6115 In the deficiency letter response at page 22 you address the ‑‑ you have already made a commitment that there would be 5 per cent only of third language programming on either of these stations.
SEQ 1_0 \* Arabic \n6116 Is that correct?
SEQ 1_0 \* Arabic \n6117 MR. MERSON: That is correct.
SEQ 1_0 \* Arabic \n6118 COMMISSIONER WYLIE: I think you ‑‑ well, I don't think you do address at page 22 at the bottom in response to Question 32(c), that of course anyone is allowed to have up to 15 per cent of ethnic programming without any special permission, but that you would do far less than 15 per cent.
SEQ 1_0 \* Arabic \n6119 How much less?
SEQ 1_0 \* Arabic \n6120 MR. MERSON: We don't have a specific number for it. We wanted to sort of give you the confidence to ensure that we were comfortable with the 15 per cent ethnic limit.
SEQ 1_0 \* Arabic \n6121 Do you have any more information, Les?
SEQ 1_0 \* Arabic \n6122 MR. SOLE: Again, I think we were highlighting the flexibility in all television stations to do 15 per cent and it said in all likelihood we would do less.
SEQ 1_0 \* Arabic \n6123 If you wanted us to quantify that, I could give you something like 10 per cent now, but I would like to talk to the other people before we gave you that percentage.
SEQ 1_0 \* Arabic \n6124 COMMISSIONER WYLIE: Yes. You helped me. I was going to ask you, since you would be doing far less would you accept 12 hours, which is 10 per cent?
SEQ 1_0 \* Arabic \n6125 You want to come back?
SEQ 1_0 \* Arabic \n6126 MR. MERSON: Yes, absolutely.
SEQ 1_0 \* Arabic \n6127 MR. SOLE: That's fine.
SEQ 1_0 \* Arabic \n6128 MR. MERSON: Ten per cent would be fine.
SEQ 1_0 \* Arabic \n6129 COMMISSIONER WYLIE: Would that 10 per cent of ethnic programs include the 5 per cent in third language?
SEQ 1_0 \* Arabic \n6130 MR. MERSON: Yes, it would.
SEQ 1_0 \* Arabic \n6131 COMMISSIONER WYLIE: Would you accept six hours so that we wouldn't have to calculate 6.6 and a half hours of third language?
SEQ 1_0 \* Arabic \n6132 MR. MERSON: Absolutely.
SEQ 1_0 \* Arabic \n6133 MR. SOLE: Yes, we would.
SEQ 1_0 \* Arabic \n6134 COMMISSIONER WYLIE: You can confirm what you are prepared to live with when you come back with the other answers.
SEQ 1_0 \* Arabic \n6135 In the first deficiency letter again at page 26 you talk about the possibility of religious programming on OMNI.
SEQ 1_0 \* Arabic \n6136 How many hours are there currently of what could be called religious programming on OMNI? You may not have ‑‑
SEQ 1_0 \* Arabic \n6137 MR. MERSON: I'm going to ask Madeline to address the issue, but I think it's hit and miss and I think she wanted to point out that it was sort of a hit and miss process.
SEQ 1_0 \* Arabic \n6138 COMMISSIONER WYLIE: A ballpark figure obviously. I can't expect you to have calculated that.
SEQ 1_0 \* Arabic \n6139 MR. MERSON: Madeline, any ‑‑
SEQ 1_0 \* Arabic \n6140 COMMISSIONER WYLIE: I'm more interested in how much more would there be if you were granted these two licences.
SEQ 1_0 \* Arabic \n6141 MS ZINIAK: I would say generally that one cannot say it is the norm for OMNI to be producing as a public affairs a new station religious programming, but indeed there are occasions where there are special celebrations like Baisakhi for the Sikh community, the ordination of Deacons and Priests for the Greek Orthodox Church, installations of Bishops, that we would cover and we would do specials on.
SEQ 1_0 \* Arabic \n6142 It would be a guess to say how much throughout the year, but there is an intrinsic value in celebrating faith leaders in the ethno‑specific communities that indeed during the course of what we do at OMNI we would cover. We would see this as something that certainly would enhance balanced programming on NOWTV and would certainly be relevant to the ethnocultural communities across Canada.
SEQ 1_0 \* Arabic \n6143 We have also seen quite an interest from other audiences in exactly what are some of the religious values and celebrations of these communities?
SEQ 1_0 \* Arabic \n6144 COMMISSIONER WYLIE: In order to ensure that NOWTV remains a religious station and OMNI directed to the ethnic community, do you see any possibility of accepting a limitation of the percentage of Canadian programs that would be shared between NOWTV and OMNI?
SEQ 1_0 \* Arabic \n6145 The aim would be to ensure that those two stations, which have very different formats, or are supposed to have a different format ‑‑
SEQ 1_0 \* Arabic \n6146 MR. SOLE: Could I just ask one point of clarification?
SEQ 1_0 \* Arabic \n6147 COMMISSIONER WYLIE: ‑‑ and are not in the same cities, that there isn't a temptation ‑‑ now that you are in religious programming you can talk about temptation ‑‑ to move away from their particular format or their particular audiences.
SEQ 1_0 \* Arabic \n6148 MR. MERSON: Could I just chat with Alain quickly?
SEQ 1_0 \* Arabic \n6149 COMMISSIONER WYLIE: You can get back on that too.
SEQ 1_0 \* Arabic \n6150 MR. MERSON: Yes.
SEQ 1_0 \* Arabic \n6151 COMMISSIONER WYLIE: We are just trying to frame this so that it will be what you say it will be and what we want it to be.
SEQ 1_0 \* Arabic \n6152 So would there be an appropriate limit of the Canadian programming that would be on both stations, on both sets of stations, the OMNI station and ‑‑
SEQ 1_0 \* Arabic \n6153 MR. MERSON: I have to admit, we have not thought about it.
SEQ 1_0 \* Arabic \n6154 COMMISSIONER WYLIE: You are looking very puzzled.
SEQ 1_0 \* Arabic \n6155 MR. MERSON: Yes. No, we ‑‑
SEQ 1_0 \* Arabic \n6156 COMMISSIONER WYLIE: An ethnic station and a religious station, if they end up looking the same, may have steered away a bit from their initial vein.
SEQ 1_0 \* Arabic \n6157 MR. MERSON: That is obviously not our intent, but I have to admit we haven't thought about it. If you give us the time, we would be happy to respond.
SEQ 1_0 \* Arabic \n6158 COMMISSIONER WYLIE: I hope somebody is keeping track of all this homework. When there is a lot of homework it is because there are a lot of things missing. That is what the nuns used to tell me. And they were religious, so heaven knows. They must have had it right.
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n6159 COMMISSIONER WYLIE: Let's talk now about the acquisition of program rights.
SEQ 1_0 \* Arabic \n6160 In the first deficiency response at page 25 ‑‑ and you talked about that again today, that there would obviously be synergies despite that fact that it will be 100 per cent religious programming.
SEQ 1_0 \* Arabic \n6161 There will obviously be a desire ‑‑ well, an obvious potential to purchase program rights, foreign and Canadian, that are possible on both the OMNI stations and the NOWTV station.
SEQ 1_0 \* Arabic \n6162 Is Rogers currently providing programs to NOWTV?
SEQ 1_0 \* Arabic \n6163 MR. MERSON: Yes, we have in the past.
SEQ 1_0 \* Arabic \n6164 COMMISSIONER WYLIE: Would those be foreign, Canadian or both?
SEQ 1_0 \* Arabic \n6165 MR. MERSON: I believe both is the answer, but I will double check with Maddie.
SEQ 1_0 \* Arabic \n6166 COMMISSIONER WYLIE: Your financial projections show that in year one there will be $3.5 million spent on foreign programming; year three $4,2 million; year five $5 million; year seven $5.8 million.
SEQ 1_0 \* Arabic \n6167 How does that compare with what is being spent on foreign programming now? It is not broken down, if I recall, in the 2003 return that we have for NOWTV. Those would obviously be confidential because they are historical, but do you have a sense of what the difference is?
SEQ 1_0 \* Arabic \n6168 MR. MERSON: Perhaps I could ask Tim Smith if he could give us ‑‑
SEQ 1_0 \* Arabic \n6169 COMMISSIONER WYLIE: We intend to respect, obviously, the confidentiality of the 2003 returns. The Chairman will get with you why we don't have the 2004 returns, but perhaps you can give us some level of at least ballpark difference or lack thereof between 2004 foreign programming as opposed to the figures that I have just picked up from the financial projections filed by Rogers.
SEQ 1_0 \* Arabic \n6170 MR. MERSON: Could we get you that number and submit it?
SEQ 1_0 \* Arabic \n6171 Tim, do you have it?
SEQ 1_0 \* Arabic \n6172 COMMISSIONER WYLIE: Obviously ballpark figures because they are confidential.
SEQ 1_0 \* Arabic \n6173 MR. SMITH: Just for my clarification ‑‑
SEQ 1_0 \* Arabic \n6174 COMMISSIONER WYLIE: I'm trying to see what is the difference of what is proposed in expenditures for foreign programming compared to what is currently being spent on foreign programming.
SEQ 1_0 \* Arabic \n6175 MR. SMITH: I'm going to say that we are roughly 25 per cent less.
SEQ 1_0 \* Arabic \n6176 COMMISSIONER WYLIE: That's good enough.
SEQ 1_0 \* Arabic \n6177 And that would be true for 2004, because we don't have these figures.
SEQ 1_0 \* Arabic \n6178 MR. SMITH: That is correct.
SEQ 1_0 \* Arabic \n6179 COMMISSIONER WYLIE: Thank you.
SEQ 1_0 \* Arabic \n6180 In your financial assumptions again you say that:
"Programming acquisition costs will be coordinated in Toronto where national rights are involved." (As read)
SEQ 1_0 \* Arabic \n6181 That will be four ‑‑ is that correct? I think that's in your financial assumptions for Vancouver.
SEQ 1_0 \* Arabic \n6182 Will that be true for both Vancouver and Winnipeg?
SEQ 1_0 \* Arabic \n6183 MR. MERSON: Yes, that would be the case.
SEQ 1_0 \* Arabic \n6184 COMMISSIONER WYLIE: Talking about the synergies related to foreign acquisition, by national advertising agency ‑‑ "natural advertising synergies" do you mean airing the same program in the schedule of all four stations and selling national advertising across all four stations for the program concerned?
SEQ 1_0 \* Arabic \n6185 MR. MERSON: No. It would be impossible to coordinate all those schedules.
SEQ 1_0 \* Arabic \n6186 What we meant is when our buyers ‑‑ when the advertising agencies call for pictures, our sellers go in and explain what it is we have. They are generally looking for audience demographics that they can fulfil and we will simply have the ability to pitch to them a broader range of offerings than what we currently have.
SEQ 1_0 \* Arabic \n6187 COMMISSIONER WYLIE: Do you see it as possibly happening though?
SEQ 1_0 \* Arabic \n6188 MR. MERSON: Absolutely.
SEQ 1_0 \* Arabic \n6189 COMMISSIONER WYLIE: That all four stations would show the same program?
SEQ 1_0 \* Arabic \n6190 MR. MERSON: Oh, no.
SEQ 1_0 \* Arabic \n6191 Leslie should speak to it.
SEQ 1_0 \* Arabic \n6192 MR. SOLE: It would be very rare.
SEQ 1_0 \* Arabic \n6193 The four stations could, in some cases, use the same programming, but there is clearly two different program mandates. There are two different ‑‑ in this case there are many different local markets.
SEQ 1_0 \* Arabic \n6194 We also don't think that ‑‑ we only think a percentage of these acquisitions will apply to all four channels. So on the occasion where ‑‑ I could give you one, if there was a live Papal broadcast from Rome, that would be an exception where that might happen. Otherwise we would program these stations locally and directed towards the religious mandate in Manitoba and B.C. and the ethnocultural mandate in Toronto, Ottawa and London.
SEQ 1_0 \* Arabic \n6195 COMMISSIONER WYLIE: You are talking here about a program, a special program, a Papal broadcast, not ‑‑
SEQ 1_0 \* Arabic \n6196 MR. SOLE: Yes. I get ‑‑ we have no intention of networking these stations, Madam Vice‑Chair.
SEQ 1_0 \* Arabic \n6197 COMMISSIONER WYLIE: Would you be comfortable, then, with a limitation on the percentage of foreign program? We are talking about the acquisition of program rights and the concern obviously of those who already have stations in these markets. You have read the interventions as well as I have. You will hear from them as well.
SEQ 1_0 \* Arabic \n6198 Would you be comfortable with a percentage limitation of the number of the foreign programs that would be shared between the OMNI television stations and the NOWTV television station?
SEQ 1_0 \* Arabic \n6199 MR. MERSON: Could we think about it?
SEQ 1_0 \* Arabic \n6200 COMMISSIONER WYLIE: Yes.
SEQ 1_0 \* Arabic \n6201 Mr. Strati, I hope you have your list. You guys are going to have a busy lunch.
SEQ 1_0 \* Arabic \n6202 Do you currently sell regional rights of non‑Canadian programs you purchase nationally to Channel M?
SEQ 1_0 \* Arabic \n6203 MR. SOLE: We do sell programming to Channel M. I'm not sure it's of the description ‑‑ did you ‑‑ foreign?
SEQ 1_0 \* Arabic \n6204 COMMISSIONER WYLIE: Perhaps you can tell us what you sell to Channel M?
SEQ 1_0 \* Arabic \n6205 MR. SOLE: Malcolm...?
SEQ 1_0 \* Arabic \n6206 MR. DUNLOP: Thanks, Leslie.
SEQ 1_0 \* Arabic \n6207 Presently we sell Channel M a show called "Canada: A Peoples History". We sell it to them in seven languages. It's the 31‑part series that CBC produced that we translate into seven languages.
SEQ 1_0 \* Arabic \n6208 MR. DUNLOP: Last year we also sold them some English programming. We sold them "King of the Hill", but that contract ended, I believe August of last year.
SEQ 1_0 \* Arabic \n6209 COMMISSIONER WYLIE: We discussed briefly paragraph 26 of the Winnipeg decision regarding the acquisition of rights. You briefly explained that that situation would not change if you were to be the licensee of these stations.
SEQ 1_0 \* Arabic \n6210 Can you expand on that? I'm looking at the extent to which the ability of Trinity, the current licensee, to purchase foreign programs and the ability of Rogers, with all the stations they have, to purchase foreign programming are, to me, fairly apparently different, at least unless their difference is explained away, which is what you did this morning.
SEQ 1_0 \* Arabic \n6211 Paragraph 26. Do you recall we have discussed briefly where the Commission, one of the reasons for it licensing Winnipeg was the belief that despite the interventions at the time it was not going to have an impact.
SEQ 1_0 \* Arabic \n6212 MR. MERSON: The television landscape in Winnipeg really has shifted dramatically in the last couple of years with the acquisition of Craig by CHUM. So when you look at the television broadcast landscape in Winnipeg they are essentially ‑‑ all three large commercial networks have outlets in Winnipeg. Winnipeg, in fact, at this point is one of the only markets that doesn't have an independent television player.
SEQ 1_0 \* Arabic \n6213 Nothing we could do in Winnipeg would move us up the pecking order relative to those national networks and we could not ‑‑ the landscape, which is the pecking order in terms of buying foreign programming would not change at all.
SEQ 1_0 \* Arabic \n6214 COMMISSIONER WYLIE: If the concern was to ensure that these stations remain religious stations, do you think that one way to ensure that would be to impose a limit on the amount of U.S.‑produced programs aired during prime time?
SEQ 1_0 \* Arabic \n6215 I have the impression with the changes we are making to the balanced programming, the one you have suggested, by adding an hour you would have more opportunity ‑‑ the balanced programming spread between 6:00 to 11:00 instead of 7:00 to 11:00 would give you more flexibility ‑‑ am I correct in reading that ‑‑ to air possibly foreign programming, popular foreign programming? And is that likely to detract from the niche format of this station and should it be limited?
SEQ 1_0 \* Arabic \n6216 MR. MERSON: We don't believe it should be limited. Very similar to ‑‑ from two perspectives.
SEQ 1_0 \* Arabic \n6217 The first perspective is ‑‑ and Jeff speaks passionately about this, so I might ask him just to sort of speak to it as well.
SEQ 1_0 \* Arabic \n6218 COMMISSIONER WYLIE: But he won't be in charge.
SEQ 1_0 \* Arabic \n6219 MR. MERSON: No, I understand. But he speaks passionately and we believe it to be true as well that a lot ‑‑
SEQ 1_0 \* Arabic \n6220 COMMISSIONER WYLIE: You have to be passionate about it.
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n6221 MR. MERSON: ‑‑ that a number of the morals and ethics and lessons that are to be taught that occur within a religious framework really are told best in the nature of storytelling and in lessons.
SEQ 1_0 \* Arabic \n6222 Jeff is more eloquent on the topic than I am about how it is. History has really built storytelling as a ‑‑ the best religious leaders were the best storytellers. So we do believe we need a significant component of storytelling within the schedule to make all the lessons that the station seeks to tell evident.
SEQ 1_0 \* Arabic \n6223 But more so than that or equal to that is the need to provide a reasonable financial framework into which these stations can operate. The model that is currently being followed, which is a model of mixed ‑‑ three different areas of religious types of programming really hasn't been a success. It hasn't broken through over here at all and it would be a difficult model to sustain in Winnipeg. It will take some time to build these stations, but to impose more conditions that might actually limit the attractiveness or the desirability of the programs to viewers I think would be very difficult.
SEQ 1_0 \* Arabic \n6224 COMMISSIONER WYLIE: If the Commission disagreed with you and felt that it was necessary to impose a limit on the broadcast of U.S.‑produced programs during prime time and, secondarily, on the amount of simulcast of popular U.S.‑produced programs during prime time, would you think of what the limits could be and get back to us?
SEQ 1_0 \* Arabic \n6225 I understand you don't want any limits, but should we impose them at least you can go upwards from zero to what would be an acceptable limit.
SEQ 1_0 \* Arabic \n6226 What would be the impact ‑‑ you addressed it a little, the impact on NOWTV if the Commission felt it necessary to impose the conditions? What would be the financial impact, the extent of the financial impact?
SEQ 1_0 \* Arabic \n6227 In other words, what have you relied on in building your financial projections? I'm sure you have decided just how much of your revenues would come from simulcast opportunities from airing U.S. popular programming, so if you back it out now you can tell us what the impact would be of removing some of that flexibility that you have built into the model.
SEQ 1_0 \* Arabic \n6228 MR. MERSON: Perhaps I can ask Malcolm just to take us through how the model was built and the degree of reliance on that type of programming.
SEQ 1_0 \* Arabic \n6229 MR. DUNLOP: Thanks, Rael.
SEQ 1_0 \* Arabic \n6230 COMMISSIONER WYLIE: From the programming perspective. The Chairman will look at revenues and expenses. Just connect it to the questions I ask.
SEQ 1_0 \* Arabic \n6231 MR. DUNLOP: With any lost U.S. programming our revenue model would decrease, depending upon what the restrictions were. For example, if an hour were to be taken way in prime time you would be looking at somewhere around $800,000 to $900,000 a year in lost revenue.
SEQ 1_0 \* Arabic \n6232 COMMISSIONER WYLIE: Thank you.
SEQ 1_0 \* Arabic \n6233 I would like to look now at the consulting agreement and the programming agreement with the Thiessen family.
SEQ 1_0 \* Arabic \n6234 You filed a programming supply agreement with Trinity according to which you will pay $500,000 in licence fees per year for exclusive rights to first run original programming eligible for complementary funding.
SEQ 1_0 \* Arabic \n6235 Is that correct?
SEQ 1_0 \* Arabic \n6236 MR. MERSON: That is correct.
SEQ 1_0 \* Arabic \n6237 COMMISSIONER WYLIE: That will be religious programming?
SEQ 1_0 \* Arabic \n6238 MR. MERSON: Yes.
SEQ 1_0 \* Arabic \n6239 COMMISSIONER WYLIE: Will that programming be intended for airing on both OMNI and NOW?
SEQ 1_0 \* Arabic \n6240 MR. MERSON: Potentially, yes.
SEQ 1_0 \* Arabic \n6241 COMMISSIONER WYLIE: Is that ‑‑
SEQ 1_0 \* Arabic \n6242 MR. MERSON: Oh, I'm sorry. You said OMNI and NOW. I thought you said both NOWs.
SEQ 1_0 \* Arabic \n6243 No, not at all. Directed only for the NOW stations.
SEQ 1_0 \* Arabic \n6244 COMMISSIONER WYLIE: Could it not be that in some cases it would be possible to air the same program on the OMNI station? Or you intention is to have that air on the NOWTV stations only?
SEQ 1_0 \* Arabic \n6245 MR. MERSON: That is our intention. It is possible, but it is not our intention to have them air on both stations.
SEQ 1_0 \* Arabic \n6246 COMMISSIONER WYLIE: Is this arrangement ‑‑ the Chairman may get back to this, but from a programming perspective, is that part of the purchase and sale agreement? In other words, but for that you wouldn't have purchased those assets?
SEQ 1_0 \* Arabic \n6247 MR. MERSON: Not at all. We don't know religious programming, as it has been pointed out to us, and the Thiessen's have a long and proud history in producing religious programming that predates NOW by a significant number of years.
SEQ 1_0 \* Arabic \n6248 We wanted them. You might argue this is a contract that is more to our benefit than necessarily to theirs. We want some continuing involvement by the Thiessens in the ongoing operations of the business.
SEQ 1_0 \* Arabic \n6249 You will note that some of the other clauses beyond ‑‑ as you get into the consulting arrangements, they go beyond normal consulting arrangements which simply speak for services rendered and payments to be made. They really speak to the success of the stations going forward. We want to keep them involved in the stations in every possible way.
SEQ 1_0 \* Arabic \n6250 COMMISSIONER WYLIE: What is the meaning of Clause 3 of that agreement, Mr. Thiessen? Most Favoured Nation clause in non‑legalistic language, what is in the intention, or the other parties as well?
SEQ 1_0 \* Arabic \n6251 This is the agreement that you filed.
SEQ 1_0 \* Arabic \n6252 By the way, what I have is unsigned. Is that an agreement that has been executed?
SEQ 1_0 \* Arabic \n6253 MR. MERSON: Yes, it has.
SEQ 1_0 \* Arabic \n6254 COMMISSIONER WYLIE: Has it been executed exactly the same as it was filed in draft form with us?
SEQ 1_0 \* Arabic \n6255 MR. STRATI: Yes, it's the same agreement. I just filed it for the purposes of filing it electronically so it would be available electronically, but we certainly have the hard copy.
SEQ 1_0 \* Arabic \n6256 COMMISSIONER WYLIE: The one I have is November 15, 2004.
SEQ 1_0 \* Arabic \n6257 MR. STRATI: Yes.
SEQ 1_0 \* Arabic \n6258 COMMISSIONER WYLIE: Clause 3, just explain to me what is the intention?
SEQ 1_0 \* Arabic \n6259 MR. MERSON: Trinity Television produces a showed called "New Day Ministries" ‑‑ I'm sorry, called "It's A New Day" and part of what it was that Trinity required from Rogers was in the event that we became the owners of the station they would have some ability to continue "It's A New Day" on NOWTV.
SEQ 1_0 \* Arabic \n6260 We, because we hadn't finalized the schedule, really couldn't find a place to guarantee to them that we might find a home for "It's A New Day" on NOWTV, so we came up with a clause that essentially said if we decide to open up time on the station for brokered programming we agree that you will have an opportunity to bid for that time and that we will not charge ‑‑ we will not sell the same time to anybody at a lesser price than the opportunity that you have to buy it from us.
SEQ 1_0 \* Arabic \n6261 COMMISSIONER WYLIE: Is that your understanding, Mr. Thiessen, as well?
SEQ 1_0 \* Arabic \n6262 MR. J. THIESSEN: Yes.
SEQ 1_0 \* Arabic \n6263 COMMISSIONER WYLIE: What percentage of Trinity's production yearly will this represent, this $500,000?
SEQ 1_0 \* Arabic \n6264 I assume that eligible for complementary funding means from existing funds in Canada that the programming would be acceptable for.
SEQ 1_0 \* Arabic \n6265 Is that the intention?
SEQ 1_0 \* Arabic \n6266 MR. MERSON: Perhaps I can ask Jeff. This is a clause he wanted.
SEQ 1_0 \* Arabic \n6267 MR. J. THIESSEN: Thank you.
SEQ 1_0 \* Arabic \n6268 Yes, indeed we are looking to develop greater abilities in programming and when we discussed the program arrangement we really wanted to find ways of using that as seed money.
SEQ 1_0 \* Arabic \n6269 Right now currently our cost of production is about $2 million. This is a significant amount of more money to include in programming. We would love to work with Rogers and other groups to apply for CTF, or any other funding opportunity to create great religious programming.
SEQ 1_0 \* Arabic \n6270 COMMISSIONER WYLIE: If you were unsuccessful in getting complementary funding from Canadian sources, would that have an effect on the $500,000 yearly in license fees?
SEQ 1_0 \* Arabic \n6271 MR. MERSON: It would have no effect from our perspective. We are committed to $500,000.
SEQ 1_0 \* Arabic \n6272 The reason we were a little oblique about the nature of the programming is Jeff would like to use this, as he said, as seed money. So we didn't commit to numbers or hours, we merely committed to doing this on sort of normal commercial terms.
SEQ 1_0 \* Arabic \n6273 If it turns out that he can in fact engage one of the funding sources to help with the programming we think we can produce something that would be more interesting than something that we might be able to do if we can't engage some of the other funding sources.
SEQ 1_0 \* Arabic \n6274 COMMISSIONER WYLIE: In this contract, in Section 1 where programming is described for the purpose of the contract, I haven't seen the word "religious" anywhere there.
SEQ 1_0 \* Arabic \n6275 Mr. Thiessen, is all the programming you produce religious programming?
SEQ 1_0 \* Arabic \n6276 MR. J. THIESSEN: It would in fact be religious. That was only an omission because it was taken for granted it would be religious.
SEQ 1_0 \* Arabic \n6277 COMMISSIONER WYLIE: Yes, but is all the programming that you produce ‑‑ is this produced through New Day Ministries or through Trinity production? What is ‑‑
SEQ 1_0 \* Arabic \n6278 MR. J. THIESSEN: It's actually through ‑‑ the contract is with Trinity Television, but we are able to delegate that to any of the other organizations we are involved with.
SEQ 1_0 \* Arabic \n6279 COMMISSIONER WYLIE: Yes. Would all your production satisfy a definition of religious programming?
SEQ 1_0 \* Arabic \n6280 MR. J. THIESSEN: Yes, it would.
SEQ 1_0 \* Arabic \n6281 COMMISSIONER WYLIE: What percentage of Trinity's production would that likely represent?
SEQ 1_0 \* Arabic \n6282 I'm looking at page 8 of the first deficiency response, the one December 10. At page 8, you provide there under Question 12:
"The production expenses accounted for by programming that was produced by Trinity for year one, year two and an estimate for year three..." (As read)
SEQ 1_0 \* Arabic \n6283 The numbers are there. I don't think confidentiality was requested for it.
SEQ 1_0 \* Arabic \n6284 Is that what the body with which you have the contract ‑‑ is that the amount of production, or does that represent local production via the television station as a opposed to the production entity.
SEQ 1_0 \* Arabic \n6285 I'm trying to get a fix on how much of the programming produced by Mr. Thiessen's company would $500,000 a year represent.
SEQ 1_0 \* Arabic \n6286 MR. MERSON: As you can tell, it is a little difficult to determine. Currently I think what Trinity does for NOWTV is fairly simple talk‑formatted type programming.
SEQ 1_0 \* Arabic \n6287 We contemplated that we might do something a little different with this programming. It is the reason we haven't been specific in the programming agreement about how many hours that might be produced, because Jeff wanted to go back and see if we could perhaps build something a little bigger with the funding. Obviously we thought it would be a good idea and we wanted to encourage him to do that.
SEQ 1_0 \* Arabic \n6288 Is your question: If the worst comes to the worst and what you end up producing is a talk show of some sort, how many hours might that represent?
SEQ 1_0 \* Arabic \n6289 COMMISSIONER WYLIE: So some of these license fees may not end up in a program that would be on the stations.
SEQ 1_0 \* Arabic \n6290 MR. MERSON: I'm sorry, I misunderstood the question.
SEQ 1_0 \* Arabic \n6291 COMMISSIONER WYLIE: The $500,000 is license fees per year, then presumably there would be other funding and a program eventually produced that is satisfactory or not for putting on the air.
SEQ 1_0 \* Arabic \n6292 MR. MERSON: We wanted to leave Jeff that flexibility, yes.
SEQ 1_0 \* Arabic \n6293 MR. J. THIESSEN: But I think just to confirm to you, it was paid out as a licence fee, which means they would be licensing it from us to be aired on NOWTV.
SEQ 1_0 \* Arabic \n6294 COMMISSIONER WYLIE: Yes.
SEQ 1_0 \* Arabic \n6295 MR. J. THIESSEN: Specifically as a license fee means we would be airing it.
SEQ 1_0 \* Arabic \n6296 COMMISSIONER WYLIE: Likely end up ‑‑
SEQ 1_0 \* Arabic \n6297 MR. J. THIESSEN: Yes, absolutely on NOWTV.
SEQ 1_0 \* Arabic \n6298 COMMISSIONER WYLIE: ‑‑ broadcast.
SEQ 1_0 \* Arabic \n6299 MR. J. THIESSEN: Correct.
SEQ 1_0 \* Arabic \n6300 COMMISSIONER WYLIE: There is also a contract with Mr. Thiessen and his wife Gloria Thiessen, with you and your wife. You were retained in a consulting role for $155,000 per year.
SEQ 1_0 \* Arabic \n6301 Was that contract filed with us? I don't have it in my file.
SEQ 1_0 \* Arabic \n6302 MR. MERSON: Pardon?
SEQ 1_0 \* Arabic \n6303 Madam Chair, in the response to deficiencies we did highlight sort of in summary what the contract entails. Though we didn't file the agreement we certainly have it and would be glad to file it as well.
SEQ 1_0 \* Arabic \n6304 COMMISSIONER WYLIE: Fine. Since I only have the summary and not the contract, would you expand on the role of Mr. and Mrs. Thiessen as it affects programming?
SEQ 1_0 \* Arabic \n6305 MR. MERSON: The contract with the Thiessens is for $155,000 per anum.
SEQ 1_0 \* Arabic \n6306 The two major roles that we want to engage them in, the first really is the launch of the Winnipeg television station. We do think it will take up a substantial portion of their time for the first at least two years of the contract.
SEQ 1_0 \* Arabic \n6307 Over and above that, we wanted them to essentially ‑‑ we wanted Jeff to act as a sounding board and Jeff to act as a liaison with the religious communities to allow us to really engage them in what it is that we are trying to build.
SEQ 1_0 \* Arabic \n6308 As I mentioned earlier, the contract isn't a simple consulting agreement and I apologize, I didn't realize it wasn't filed. But it has a term in it as well that is essentially success based, that if the Winnipeg station turns out to be a successful station there is a residual payment that is due to them as well. We want to engage them in the success of building the Winnipeg station. It's the primary responsibility and function of the contract.
SEQ 1_0 \* Arabic \n6309 COMMISSIONER WYLIE: I will leave it to the Chairman to see whether that contract should be filed. It appears ‑‑
SEQ 1_0 \* Arabic \n6310 THE CHAIRPERSON: I think you can ‑‑ I have taken it that we would like to see it filed.
SEQ 1_0 \* Arabic \n6311 MR. MERSON: Absolutely. We would be happy to do that.
SEQ 1_0 \* Arabic \n6312 COMMISSIONER WYLIE: Yes, because it has an impact obviously on ‑‑
SEQ 1_0 \* Arabic \n6313 I have a few questions about your tangible benefits.
SEQ 1_0 \* Arabic \n6314 You have, on page 3 of the second deficiency letter ‑‑ I think it is, if I recall, dated 23 December, 2004. You have talk here about a minimum of $75,000 of the $1.3 million would be directed to NOWTV Winnipeg; $50,000 would be accounted for by the original Red River scholarship; and a minimum of $25,000 specifically directed to independent producers based in Manitoba through the pilot development grants for independent producers and NOWTV Documentary Fund.
SEQ 1_0 \* Arabic \n6315 How much of the $25,000 will come from the NOWTV Documentary Fund and how much from the pilot development grants for independent producers?
SEQ 1_0 \* Arabic \n6316 MR. MERSON: Perhaps I can ask Alain.
SEQ 1_0 \* Arabic \n6317 COMMISSIONER WYLIE: In other words, what is the likeliest split of this $25,000 taken from these two different tangible benefits?
SEQ 1_0 \* Arabic \n6318 MR. STRATI: Given the dollar amounts involved it is probably more likely that it would come from a development grant to support the production. Unfortunately, it probably is not enough to support a licence, a specific documentary licence.
SEQ 1_0 \* Arabic \n6319 COMMISSIONER WYLIE: Are you prepared to suggest what this split would be?
SEQ 1_0 \* Arabic \n6320 MR. STRATI: I wouldn't hesitate to say 100 per cent, but I think a very high proportion of the $25,000 would be towards pilot development and that the documentary fund would be more towards Vancouver.
SEQ 1_0 \* Arabic \n6321 COMMISSIONER WYLIE: Okay, thank you.
SEQ 1_0 \* Arabic \n6322 You have proposed a comparative religious studies conference, $100,000. Will this be one conference consisting of multiple seminars or a series of seminars? Expand a little on what this will be.
SEQ 1_0 \* Arabic \n6323 MR. STRATI: Sure, I would be glad to. This is a great initiative. It's something we have also done with Rogers Sportsnet in terms that we developed a workshop with four different schools regionally, and basically what it is is an opportunity ‑‑ we would be looking for a one or two‑day seminar to discuss comparative religious issues, and certainly at Regent College and Trinity Western.
SEQ 1_0 \* Arabic \n6324 So we were looking at an ongoing process that would be interchangeable between the schools. For example one year we would have it at Regent College, the subsequent year at Trinity Western, and vice versa.
SEQ 1_0 \* Arabic \n6325 In terms of how often we would do it, the Sportsnet workshops, we currently have budgets of about $20‑$25,000 for those and they have been quite successful. Given that, we would be probably looking at about four total seminars in the seven year timeframe. So two at each of the two universities.
SEQ 1_0 \* Arabic \n6326 COMMISSIONER WYLIE: So not necessarily once a year.
SEQ 1_0 \* Arabic \n6327 MR. STRATI: That's correct.
SEQ 1_0 \* Arabic \n6328 COMMISSIONER WYLIE: Is the participation going to be limited to the students at those colleges, at those institutions?
SEQ 1_0 \* Arabic \n6329 MR. STRATI: Certainly that would be the focus of it. I don't think it would be limited. For example at the schools for Sportsnet, we have expanded it to ‑‑ for example it is held at BCIT here in Vancouver and it is by no means limited to BCIT students. The seminar workshop on sports programming, sports broadcasting is open to other students as well as others who are interested in sports broadcasting.
SEQ 1_0 \* Arabic \n6330 COMMISSIONER WYLIE: Is Rogers participation in that just money or is the staff involved as well in the organization, et cetera, or simply money that you give these institutions. Would you organize, have a hands‑on role in organizing?
SEQ 1_0 \* Arabic \n6331 MR. STRATI: Sure We have found that the success comes from both. In planning, for example, the Sportsnet seminar here in Vancouver they actually work with BCIT to schedule it so that when ‑‑ they do cover the Vancouver Canucks for example, so they try to make sure that Jim Hughson for example is here and a lot of others are here in Vancouver at the time of the seminar so that it can access the resources of Sportsnet talent and staff and producers to discuss the elements that go into the production.
SEQ 1_0 \* Arabic \n6332 COMMISSIONER WYLIE: So you are going to use a similar approach ‑‑
SEQ 1_0 \* Arabic \n6333 MR. STRATI: Absolutely. I think it is more engaging for the students and they appreciate it.
SEQ 1_0 \* Arabic \n6334 COMMISSIONER WYLIE: ‑‑ for comparative religious studies instead of hockey. That could be turned into a labour problem now instead of hockey. Right?
‑‑‑ Laughter / Rires
SEQ 1_0 \* Arabic \n6335 COMMISSIONER WYLIE: The Vision TV, it is discussed in your supplementary brief at page 16.
SEQ 1_0 \* Arabic \n6336 How is the Vision TV Foundation managed? Is there a separate management board from the Vision TV Management Board?
SEQ 1_0 \* Arabic \n6337 MR. STRATI: Yes. As I understand it, with the Vision TV Foundation there is an independent board that oversees the production decisions.
SEQ 1_0 \* Arabic \n6338 COMMISSIONER WYLIE: As a result of the money that you put into this, would you have a seat on that board, on the board of that foundation?
SEQ 1_0 \* Arabic \n6339 MR. STRATI: No, we would not.
SEQ 1_0 \* Arabic \n6340 COMMISSIONER WYLIE: So it would be more a financial contribution ending up with some programming. Right?
SEQ 1_0 \* Arabic \n6341 MR. STRATI: That's correct. Actually it is specifically ‑‑
SEQ 1_0 \* Arabic \n6342 COMMISSIONER WYLIE: What kind of programming? Drama? Documentary?
SEQ 1_0 \* Arabic \n6343 MR. STRATI: It can be either, probably more likely for documentaries. In discussing with Vision, they discussed a couple of projects as examples that they are working on and have ‑‑ are working on in that they have the projects in front of them, the project proposals, and they would see the opportunity for additional license fees in order to meet the budgets in order to trigger those productions and make those productions happen.
SEQ 1_0 \* Arabic \n6344 In terms of discussing it, that was the opportunity. Given not only number of projects but also the licence fees involved, we would be probably talking about some documentaries.
SEQ 1_0 \* Arabic \n6345 COMMISSIONER WYLIE: In your tangible benefits you have added $350,000 if the Commission approved your application for the transmitter in Victoria.
SEQ 1_0 \* Arabic \n6346 How did you arrive at that amount? Why is it not $250,000? What was the ‑‑ how did you arrive at the amount?
SEQ 1_0 \* Arabic \n6347 MR. STRATI: I believe ‑‑ maybe someone can ‑‑ in terms of the projections, I believe it represents 10 per cent of the additional revenue from Victoria.
SEQ 1_0 \* Arabic \n6348 COMMISSIONER WYLIE: Of the additional revenues you project.
SEQ 1_0 \* Arabic \n6349 MR. STRATI: That's correct.
SEQ 1_0 \* Arabic \n6350 COMMISSIONER WYLIE: Captioning and described video. What are your intentions in that regard?
SEQ 1_0 \* Arabic \n6351 Confirm whether or not you would accept as a condition of licence to close caption 90 per cent of all of the Fraser Valley and Winnipeg stations programming beginning the first year of operation?
SEQ 1_0 \* Arabic \n6352 MR. MERSON: Yes, we would.
SEQ 1_0 \* Arabic \n6353 COMMISSIONER WYLIE: Okay. And described video. The Commission has now a requirement for descriptive video imposed on the CTV stations, the Global stations, the CHUM stations and I guess on OMNI.2 as well.
SEQ 1_0 \* Arabic \n6354 Comment on the appropriateness of a similar condition of license on the Winnipeg NOWTV and the Vancouver NOWTV.
SEQ 1_0 \* Arabic \n6355 MR. MERSON: Perhaps I can ask Alain to address the issue and Kelly to describe what we do at OMNI.
SEQ 1_0 \* Arabic \n6356 MR. STRATI: Sure, I think that would be ‑‑ certainly Kelly can talk about described video we do currently at OMNI, but we do feel that would be appropriate.
SEQ 1_0 \* Arabic \n6357 COMMISSIONER WYLIE: The same conditions.
SEQ 1_0 \* Arabic \n6358 MR. STRATI: That's correct.
SEQ 1_0 \* Arabic \n6359 COMMISSIONER WYLIE: Diversity. You mentioned at page 18 I think of the first deficiency letter at some length your corporate cultural diversity plans for 2002 and 2003 and that 2004 would be submitted at the end of January 2005 ‑‑ the 2004 plan rather. Has that been submitted?
SEQ 1_0 \* Arabic \n6360 MR. STRATI: Yes, it has, Madam Chair.
SEQ 1_0 \* Arabic \n6361 COMMISSIONER WYLIE: Would you confirm that you would include these two stations, should you be licensed to operate them, into your corporate plan?
SEQ 1_0 \* Arabic \n6362 MR. STRATI: Sure. Absolutely.
SEQ 1_0 \* Arabic \n6363 COMMISSIONER WYLIE: Thank you, Mr. Chairman. Those are my questions.
SEQ 1_0 \* Arabic \n6364 Thank you ladies and gentlemen and good luck with the homework.
SEQ 1_0 \* Arabic \n6365 THE CHAIRPERSON: Thank you very much.
SEQ 1_0 \* Arabic \n6366 Would it be possible to get a copy of that consulting agreement before we resume?
SEQ 1_0 \* Arabic \n6367 MR. MERSON: Absolutely. We can give it over right now.
SEQ 1_0 \* Arabic \n6368 THE CHAIRPERSON: Good. We will resume in 15 minutes. Nous reprendrons dans 15 minutes.
‑‑‑ Upon recessing at 10:45 a.m. /
Suspension à 10 h 45
‑‑‑ Upon resuming at 11:05 a.m. /
Reprise à 11 h 05
SEQ 1_0 \* Arabic \n6369 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.
SEQ 1_0 \* Arabic \n6370 Mr. Merson and ladies and gentlemen, we will proceed with the questioning. I am going to basically cover three areas with you: the value of the transaction, both properties; the impact of what the granting of the application would be on the markets involved; and a general question about the integrity of the licensing process related to the Winnipeg facility.
SEQ 1_0 \* Arabic \n6371 Those will be the general areas and the order will be intermittent.
SEQ 1_0 \* Arabic \n6372 First of all, on the filing of your 2004 numbers, the date is November 30th. This is for CHNU. The date was November 30th and they have not been filed.
SEQ 1_0 \* Arabic \n6373 MR. J. THIESSEN: We have just recently filed those.
SEQ 1_0 \* Arabic \n6374 THE CHAIRPERSON: Like a minute, a day?
SEQ 1_0 \* Arabic \n6375 MR. J. THIESSEN: I believe we did last week.
SEQ 1_0 \* Arabic \n6376 THE CHAIRPERSON: Have we received those? Not to our knowledge.
SEQ 1_0 \* Arabic \n6377 So the answer is you have filed them. Okay. We will have to have a look at them.
SEQ 1_0 \* Arabic \n6378 I won't go over the confidential figures of the file, but in the application there were financial statements for Trinity Television and those had 2004 numbers in them, as well as 2003 numbers. So that underlined my question as to why we hadn't received the filings for 2004. We will use these as rough estimates without divulging the numbers since we did grant confidentiality.
SEQ 1_0 \* Arabic \n6379 When I look at the 2003 figures ‑‑ again without mentioning the specific numbers ‑‑ they don't reconcile with the financial summaries that are public that we issued based on Trinity Television's results. They are off by annoyingly small amounts, but off.
SEQ 1_0 \* Arabic \n6380 So I wonder whether you could ensure when you file that you compare with staff what the discrepancies are, and also look at the 2004 year in the same light and see what it is. I think we have the general drift for 2004 based on these filings.
SEQ 1_0 \* Arabic \n6381 MR. J. THIESSEN: We would be pleased to do that. We waited until filing to make sure we had audited statements to ensure that they would be correct this time.
SEQ 1_0 \* Arabic \n6382 THE CHAIRPERSON: So these statements in your application are not audited?
SEQ 1_0 \* Arabic \n6383 MR. J. THIESSEN: That is correct.
SEQ 1_0 \* Arabic \n6384 THE CHAIRPERSON: Okay. But they were filed in November I assume and so the 2003 figures should have reconciled with the year old figures that the Commission had published in its financial summaries, but they don't.
SEQ 1_0 \* Arabic \n6385 MR. J. THIESSEN: I'm sorry.
SEQ 1_0 \* Arabic \n6386 THE CHAIRPERSON: Okay. So you want to check into that.
SEQ 1_0 \* Arabic \n6387 I haven't had a chance to review your consulting agreement. I think I have your own copy of it. A quick read I think suggests that the description did not do it justice, that there is more in that consulting agreement than is described in the response to Question 9 in the deficiency letter.
SEQ 1_0 \* Arabic \n6388 As you noted earlier, Mr. Merson, there are incentives and lump sum payments, and so forth, that I haven't had a chance to digest in the few minutes, but I guess the numbers in the deficiency are pretty well the bottom number, the lowest conceivable numbers?
SEQ 1_0 \* Arabic \n6389 MR. MERSON: That is correct. They could increase, depending on the profitability of the Winnipeg station.
SEQ 1_0 \* Arabic \n6390 THE CHAIRPERSON: Right. So most of them appear to be contingent on getting other licences, and so forth, and success.
SEQ 1_0 \* Arabic \n6391 I don't know, have you done an analysis of what, based on various sensitivities, you feel that that contract is worth?
SEQ 1_0 \* Arabic \n6392 MR. MERSON: We have. We thought the kicker, for lack of a better work, might be worth something up to $500,000 in our estimation.
SEQ 1_0 \* Arabic \n6393 The contract is a response to Jeff's request to really stay involved with the station and our desire to keep him involved in the operation of the Winnipeg stations. He has a vision for what NOWTV might become which he wanted to sort of remain true to, including applying for a licence in Alberta, should that make sense.
SEQ 1_0 \* Arabic \n6394 This is something he believes in and really wants to advance and wants to stay involved with the business. So this was our attempt to find a way to ensure that he retained an interest in the business continuing forward.
SEQ 1_0 \* Arabic \n6395 But it depends. Not only are they contingent, but they are contingent upon future activities.
SEQ 1_0 \* Arabic \n6396 THE CHAIRPERSON: Right. I understand that.
SEQ 1_0 \* Arabic \n6397 I guess there is a present value of the guaranteed flow and I suppose some estimate of the contingencies that you think you have. Where this bites of course is on the value of the transaction because, as you know, the definition of "transaction value", that is a commonly used definition, one is from the International Business Brokers' Association, would deem it to be the total of all considerations, including consulting agreements and future considerations.
SEQ 1_0 \* Arabic \n6398 So you have valued this transaction at $13 million, $12 and a quarter for the Vancouver assets. The question we have to decided is: Is that the real value or should it be topped up by the value of these consulting agreements?
SEQ 1_0 \* Arabic \n6399 Perhaps I could have your views on that first.
SEQ 1_0 \* Arabic \n6400 Second, if the Commission did deem the value to be increased by the value of those considerations, what number should the Commission us.
SEQ 1_0 \* Arabic \n6401 Third, what additional tangible benefits would you be prepared to offer?
SEQ 1_0 \* Arabic \n6402 So it is a three‑part question and perhaps you can take them in order.
SEQ 1_0 \* Arabic \n6403 MR. MERSON: As to the valuation question, the key for us are the future services that are to be rendered by Jeff, Laura and Willard in the continuing evolution of the business. As I said, this is something we wanted and demanded more than they necessarily pushed us to do.
SEQ 1_0 \* Arabic \n6404 So to some degree from the valuation perspective, the consulting agreements, as I'm sure you know, really were in respect of services that were going to be rendered that clearly are incidental to the transaction and should be added to the transaction.
SEQ 1_0 \* Arabic \n6405 We will extract every iota of value for $155,000 out of Jeff and Gloria. We don't know this business and are determined to learn it and be as good as we possibly can at it.
SEQ 1_0 \* Arabic \n6406 So to some degree we really believe the service is going to be rendered, so it is an issue and it is the reason we divorced it from the transaction itself. In fact, it took a lot longer to negotiate the consulting agreement and the programming agreement then it did the basic agreement. It was done. The consulting agreements and the programming agreements were done over a period of time thereafter.
SEQ 1_0 \* Arabic \n6407 The second part of your question I think is: How do we get a sense of what the value of the kicker might be?
SEQ 1_0 \* Arabic \n6408 The kicker really is dependent on the last few years of the contracts.
SEQ 1_0 \* Arabic \n6409 If you look at the Winnipeg projections ‑‑ and I'm trying to find them
SEQ 1_0 \* Arabic \n6410 THE CHAIRPERSON: Section 6.
SEQ 1_0 \* Arabic \n6411 MR. MERSON: What you would see in your 6 and 7 is around ‑‑ in fact it is an average of years 5, 6 and 7. You would see around $3‑$3.2 million worth of, let's say, EBITDA as it is defined. The Thiessen's percentage of that would be 12 per cent. Multiplied by the multiplier, so 12 per cent would be ‑‑ my math is terrible ‑‑ $320‑$350,000 roughly, multiplied by 10, which would be $3.5 million, present value of that today.
SEQ 1_0 \* Arabic \n6412 THE CHAIRPERSON: That is from the consulting agreement.
SEQ 1_0 \* Arabic \n6413 MR. MERSON: That is from the consulting. That is the additional sort of value that might be attributed to the kicker if you did the calculation.
SEQ 1_0 \* Arabic \n6414 THE CHAIRPERSON: Would that be a fair number, in your view, to add to the value of the transaction?
SEQ 1_0 \* Arabic \n6415 MR. MERSON: I think it would be an aggressive number, but I think it would be fair. It certainly is one we contemplated. And if you thought benefits would be 10 per cent of that number, it might be 10 per cent of the $3 million present value back to day one.
SEQ 1_0 \* Arabic \n6416 THE CHAIRPERSON: So you would be prepared to commit to that level of ‑‑
SEQ 1_0 \* Arabic \n6417 MR. MERSON: Absolutely. If it was deemed to be an additional part of the transaction. As I say, we feel strongly we will make them work for this, but that is your determination.
SEQ 1_0 \* Arabic \n6418 THE CHAIRPERSON: I want to give you an opportunity to make the case that it shouldn't or do simply agree that it should?
SEQ 1_0 \* Arabic \n6419 MR. MERSON: No, in my opinion it absolutely should not. It is a completely separate agreement. It was one, as I say, we negotiated over a period of time. We asked ourselves: Who do we have who could launch a Winnipeg station for us? We didn't have anybody. Jeff and Gloria were there, they knew the community, they are committed to religious broadcasting and wanted to play a part in the evolution of the business.
SEQ 1_0 \* Arabic \n6420 So I believe it is an entirely different agreement. If you had said to us in retrospect: If you thought this was going to be an issue and for an additional $300,000 worth of benefits would you have included it as part of the original transaction? Absolutely would have. It was something we would have done. But I think it is a completely separate issue.
SEQ 1_0 \* Arabic \n6421 THE CHAIRPERSON: I can see that the motivations could have been quite different and normally every transaction is unique in some ways and has its own motivation, but wouldn't you agree that it is often the case that senior officers, key personnel, are kept on as part of a consideration for a transaction, whatever the motivations.
SEQ 1_0 \* Arabic \n6422 MR. MERSON: Absolutely. Non‑compete agreements. We have seen some evidence of those.
SEQ 1_0 \* Arabic \n6423 THE CHAIRPERSON: If, pursuing that line, you were to add another $300‑$350,000 of benefits, what would they likely be?
SEQ 1_0 \* Arabic \n6424 MR. MERSON: Could we think about it?
SEQ 1_0 \* Arabic \n6425 THE CHAIRPERSON: Yes. You can think about it, yes.
SEQ 1_0 \* Arabic \n6426 MR. MERSON: Thank you.
SEQ 1_0 \* Arabic \n6427 THE CHAIRPERSON: Let's look at the programming agreement now. Again, I have a number of questions about it. This we do have.
SEQ 1_0 \* Arabic \n6428 I note that the programming, Section 1 of this agreement, provides for at least $500,000 for programming during each year of the term, representing, it says:
"...up to $3.5 million of license fees over the seven‑year term." (As read)
SEQ 1_0 \* Arabic \n6429 MR. MERSON: That is correct.
SEQ 1_0 \* Arabic \n6430 THE CHAIRPERSON: Right. But I guess when I read it with paragraph (d), the last sentence in paragraph (d) says:
"If the purchaser pays license fees of more than $500,000 for programming during the year of the term, the purchaser's commitment for future years will not be reduced." (As read)
SEQ 1_0 \* Arabic \n6431 So it is the words "up to $3.5 million". This could actually exceed $3.5 million, couldn't it?
SEQ 1_0 \* Arabic \n6432 MR. MERSON: I think what we were trying to do with that clause is just allow Jeff the flexibility to ‑‑ depending on when the contracts are made for production of programs ‑‑ to slide between. But the agreement is only ‑‑
SEQ 1_0 \* Arabic \n6433 THE CHAIRPERSON: So even though it doesn't say "subject to paragraph (b)", which would put a cap on it ‑‑ caps are very timely ‑‑
SEQ 1_0 \* Arabic \n6434 MR. MERSON: Oh, I apologize. It was clearly intended to be a cap.
SEQ 1_0 \* Arabic \n6435 THE CHAIRPERSON: It was a cap?
SEQ 1_0 \* Arabic \n6436 MR. MERSON: It was clearly intended to be a cap.
SEQ 1_0 \* Arabic \n6437 MR. J. THIESSEN: Not necessarily on my side, but on his side.
SEQ 1_0 \* Arabic \n6438 THE CHAIRPERSON: His side. But that is how you understand it, Mr. Thiessen ‑‑
SEQ 1_0 \* Arabic \n6439 MR. J. THIESSEN: Yes.
SEQ 1_0 \* Arabic \n6440 THE CHAIRPERSON: ‑‑ that there is a cap there? Okay. Thank you.
SEQ 1_0 \* Arabic \n6441 I appreciate from your deficiency response that you have been doing approximately $1.2 million of programming with your production facility, at least that is what you have booked over the last three years, and this represents less than half that. So you are in a comfort zone, Mr. Merson, I suppose.
SEQ 1_0 \* Arabic \n6442 MR. MERSON: Absolutely. And it reflects what we think might be a little bit of a shift in our Canadian production to balance in a way from Christian programming.
SEQ 1_0 \* Arabic \n6443 THE CHAIRPERSON: Okay. I have that.
SEQ 1_0 \* Arabic \n6444 So now let's again discuss whether this is a consideration that you formed prior the purchase price? What is your view?
SEQ 1_0 \* Arabic \n6445 MR. MERSON: Absolutely not. It is a programming agreement. We would engage somebody to do it for us. The terms, the normal commercial terms ‑‑ the only reason it isn't as specific as a traditional programming agreement might be, which essentially refers to hours of production and dollars related to that production is we wanted to give Jeff the flexibility to retain the copyright to the shows and that we would only license the rights to broadcast the shows on the various NOWTV stations.
SEQ 1_0 \* Arabic \n6446 So once you go down this path ‑‑ I'm not a lawyer, but as we started working down this path of how it is you describe this transaction in general terms rather than specific just to allow him the flexibility to go and look for additional sources of funding and come to us with proposals, we ended up in an agreement that is a little atypical of a traditional programming agreement, only because it doesn't say hours and dollars directly.
SEQ 1_0 \* Arabic \n6447 THE CHAIRPERSON: So it is your position and your evidence here, I guess, that this was not intended, nor should it be regarded as, part of the consideration of the overall transaction?
SEQ 1_0 \* Arabic \n6448 MR. MERSON: That is correct.
SEQ 1_0 \* Arabic \n6449 THE CHAIRPERSON: Is that your view, Mr. Thiessen?
SEQ 1_0 \* Arabic \n6450 MR. J. THIESSEN: As I understand it, Rael is going to make me work for every dollar of that, and so because of that, we are providing them, it is not actually dollars that are given, it is dollars worked for.
SEQ 1_0 \* Arabic \n6451 THE CHAIRPERSON: I'm talking about the licensing of the programm.
SEQ 1_0 \* Arabic \n6452 MR. J. THIESSEN: That is correct.
SEQ 1_0 \* Arabic \n6453 THE CHAIRPERSON: Where do you draw the line between the consulting services and the programming services?
SEQ 1_0 \* Arabic \n6454 MR. J. THIESSEN: Where do I draw the line between then?
SEQ 1_0 \* Arabic \n6455 THE CHAIRPERSON: Because you are going to have to work under both I gather.
SEQ 1_0 \* Arabic \n6456 MR. J. THIESSEN: That is correct. Because it's not ‑‑ like $500,000 is an awful lot of money to produce programs, but it isn't, I guess, as much as I would dream to have for producing programs. So the money that would be in this particular contract for programming would be applied directly to the programming amount, not according to my salary.
SEQ 1_0 \* Arabic \n6457 MR. MERSON: The other thing I would point out, and I don't have the programming agreement in front of me so I say this with just the recollection of hindsight, but the programming agreement, as I recall, is with Trinity Television and the consulting agreement I believe is with the principals ‑‑ not the principals of Trinity. Trinity is a registered charity and the consulting agreement is with the Thiessen's themselves.
SEQ 1_0 \* Arabic \n6458 THE CHAIRPERSON: Yes, that is what it says. I believe you are correct. I think I have your views on that.
SEQ 1_0 \* Arabic \n6459 Just a question on brokered time sales. It was difficult for us to determine where those were accounted for in your annual returns to the Commission since they don't appear to be on those returns and they don't appear to be either in the financial statements you filed.
SEQ 1_0 \* Arabic \n6460 Where did you account for those brokered time sales?
SEQ 1_0 \* Arabic \n6461 MR. J. THIESSEN: Brokered time sales.
SEQ 1_0 \* Arabic \n6462 The first year I think we did approximately half a million of brokered sales, then it went up to about $900,000, then I think the third year we did about $1.1 million I believe.
SEQ 1_0 \* Arabic \n6463 THE CHAIRPERSON: We have those numbers at least in the ‑‑ $419,000 in 2002; $936,000 in 2003; and $1.178 million in 2004.
SEQ 1_0 \* Arabic \n6464 My question is, where in your returns, in which line of the returns were they accounted for?
SEQ 1_0 \* Arabic \n6465 MR. J. THIESSEN: I can refer this to Tim for clarification, but I believe that those would be under advertising revenue.
SEQ 1_0 \* Arabic \n6466 THE CHAIRPERSON: Local? National?
SEQ 1_0 \* Arabic \n6467 MR. J. THIESSEN: National.
SEQ 1_0 \* Arabic \n6468 THE CHAIRPERSON: You are certain?
SEQ 1_0 \* Arabic \n6469 MR. J. THIESSEN: It would not be local.
SEQ 1_0 \* Arabic \n6470 THE CHAIRPERSON: As I say, your file of Trinity Television ‑‑ unaudited as I now understand ‑‑ financial statements or your returns have that line in them.
SEQ 1_0 \* Arabic \n6471 So you are saying that we should find them in the national airtime sales line?
SEQ 1_0 \* Arabic \n6472 MR. J. THIESSEN: Yes. That is actually sold by our national agency directly, so it would be under their line, out of their revenue.
SEQ 1_0 \* Arabic \n6473 THE CHAIRPERSON: Okay. By the way, I have been passed a note that your annual return has not, as of today, been received at the Commission, so if you filed it last week it is still not with us.
SEQ 1_0 \* Arabic \n6474 MR. J. THIESSEN: I will ensure that ‑‑ there is probably somebody listening at the office right now who will check that for me.
SEQ 1_0 \* Arabic \n6475 THE CHAIRPERSON: Let me move now to the issue of simultaneous substitution on your programming, on the revenues that flowed from them.
SEQ 1_0 \* Arabic \n6476 I know Commissioner Wylie had a dialogue with ‑‑ let me get the chart ‑‑ Sole. No, it wasn't with Mr. Sole, the gentleman in the back ‑‑ Dunlop, yes ‑‑ on that.
SEQ 1_0 \* Arabic \n6477 What numbers do simultaneous substitution currently represent would you estimate in your revenues?
SEQ 1_0 \* Arabic \n6478 MR. DUNLOP: Are you talking now to me?
SEQ 1_0 \* Arabic \n6479 THE CHAIRPERSON: Yes.
SEQ 1_0 \* Arabic \n6480 MR. DUNLOP: When I estimated the revenue projections I did not differentiate whether they would be simultaneous substitution or not. I just projected the revenue based on what we felt we could achieve in a rating point in the market.
SEQ 1_0 \* Arabic \n6481 THE CHAIRPERSON: Using roughly the same schedule as we see in the November 2004 for now?
SEQ 1_0 \* Arabic \n6482 MR. DUNLOP: Basically for 2004, yes.
SEQ 1_0 \* Arabic \n6483 THE CHAIRPERSON: How many programs are simulcast currently?
SEQ 1_0 \* Arabic \n6484 MR. DUNLOP: Tim would know that.
SEQ 1_0 \* Arabic \n6485 MR. SMITH: There are currently two programs.
SEQ 1_0 \* Arabic \n6486 THE CHAIRPERSON: Which are those?
SEQ 1_0 \* Arabic \n6487 MR. SMITH: "60 Minutes" on Wednesday evenings at eight o'clock and "48 Hours" Saturdays at 10:00.
SEQ 1_0 \* Arabic \n6488 THE CHAIRPERSON: How do you work the interstitials in with that?
SEQ 1_0 \* Arabic \n6489 MR. SMITH: Those two programs actually carry a full one‑hour open‑line program that follows the program to discuss the issues presented in the program.
SEQ 1_0 \* Arabic \n6490 THE CHAIRPERSON: I see. So there are two currently, those two. Do you have plans to increase the number of programs that will be simulcast?
SEQ 1_0 \* Arabic \n6491 MR. DUNLOP: It would always be our intent as much as possible if we can get simultaneous substitution that we would, particularly in our strip programming with some of the U.S. stations that come into the market.
SEQ 1_0 \* Arabic \n6492 THE CHAIRPERSON: Right. I know in the Winnipeg proceeding you were licensed. I think it was Mr. Thiessen who indicated that he didn't think that you would have the Vancouver rights for a number of these programs going forward but you seem to have been able to acquire those rights. I think in our decision we had indicated that testimony.
SEQ 1_0 \* Arabic \n6493 So I guess you are going to try to get more is what you are telling us?
SEQ 1_0 \* Arabic \n6494 MR. DUNLOP: Yes, we dill
SEQ 1_0 \* Arabic \n6495 THE CHAIRPERSON: This goes to impact now, Mr. Merson. You are projecting revenues of course which when compared with the original projections for the Vancouver Fraser Valley station which are considerably higher than they were then. I can give you the magnitudes but you probably have seen them.
SEQ 1_0 \* Arabic \n6496 Currently there is a projection for CHNU seven‑year total of $87 million versus $21 million in the original projections of the seven‑year total, and that going up to the $93 million with Victoria.
SEQ 1_0 \* Arabic \n6497 MR. MERSON: Yes.
SEQ 1_0 \* Arabic \n6498 THE CHAIRPERSON: So naturally the question of impact arises on the market. I note in your deficiency response you have provided an answer to that, but I wonder whether you can summarize that answer for me here as well.
SEQ 1_0 \* Arabic \n6499 What impact CHNU‑TV as NOWTV would have on the Vancouver television market?
SEQ 1_0 \* Arabic \n6500 MR. MERSON: Vancouver, Victoria, the Fraser Valley is far and away the fastest growing television market in the country. It grew by around 11 per cent last year. The market size at the end of last year I think was $370 million. So we are forecasting that the business would grow by approximately $10 million worth of revenue over the period of the next seven years; $12 million with the inclusion of Victoria as well.
SEQ 1_0 \* Arabic \n6501 So our contextual take on what the market impact might be was, you know, if you assume that the market might grow by the rate of around 4 per cent per annum over the next seven‑year period of time, it will grow by approximately 30 per cent over the seven years, and 30 per cent of $370 million is around $120 million.
SEQ 1_0 \* Arabic \n6502 So the $10 million is a very small proportion of just the growth of the marketplace, less than 10 per cent of simply the estimated growth, and that is if the market slows down and calms down.
SEQ 1_0 \* Arabic \n6503 In absolute terms, if we hit $16 million in sales in this business, it would be less than 1 per cent of the size of the market.
SEQ 1_0 \* Arabic \n6504 My mistake. My math is off. It would be $16 million over approximately $500 million if that was the case, so less than around 3 per cent of the entire market size in absolute terms. But even in growth terms it will account for less than 10 per cent of the growth of the market.
SEQ 1_0 \* Arabic \n6505 If we look at the market, nothing goes up in straight lines we know and last year was a phenomenal year for the Vancouver‑Victoria marketplace, but it literally grew by the size of two stations the size of NOWTV in one year.
SEQ 1_0 \* Arabic \n6506 THE CHAIRPERSON: Right.
SEQ 1_0 \* Arabic \n6507 MR. MERSON: So we can't imagine we are going to have much impact on the growth of the market.
SEQ 1_0 \* Arabic \n6508 THE CHAIRPERSON: It is interesting that the numbers that we show in our financial summaries are growths in revenues for the market ‑‑ I think I better begin by saying that we are a little puzzled as to where you get the $369 million, because when we look at our returns for the conventional market six television stations ‑‑ we didn't have CHNU so we couldn't do a seventh ‑‑ the revenues in the market are just under $250 million. That includes Lower Mainland and Victoria.
SEQ 1_0 \* Arabic \n6509 So how does it get grossed up to $370 million?
SEQ 1_0 \* Arabic \n6510 MR. MERSON: The difference between the two is the impact of network revenues on the marketplace. The numbers we have Malcolm can elaborate on where they come from.
SEQ 1_0 \* Arabic \n6511 MR. DUNLOP: Certainly. As Rael said, they were included in the network. Even if we look at the spot market itself it is about $260 million approximately. I think $259 million was the number.
SEQ 1_0 \* Arabic \n6512 THE CHAIRPERSON: $250‑plus?
SEQ 1_0 \* Arabic \n6513 MR. DUNLOP: $259 million in the spot market, plus network, I'm sorry. $121 million for network, equalling $380 million.
SEQ 1_0 \* Arabic \n6514 THE CHAIRPERSON: When you say "network" you mean what?
SEQ 1_0 \* Arabic \n6515 MR. DUNLOP: We would mean CBC, CTV, specialty, digital, and so on.
SEQ 1_0 \* Arabic \n6516 THE CHAIRPERSON: You are including the specialty services?
SEQ 1_0 \* Arabic \n6517 MR. DUNLOP: That would be under "network", yes.
SEQ 1_0 \* Arabic \n6518 THE CHAIRPERSON: I see. And you are including the CBC?
SEQ 1_0 \* Arabic \n6519 MR. DUNLOP: Yes, we are.
SEQ 1_0 \* Arabic \n6520 THE CHAIRPERSON: Are you included CBUT or the network allocation for ‑‑
SEQ 1_0 \* Arabic \n6521 MR. DUNLOP: These are funny numbers sometimes because we get them from the TV Bureau. So some of it I believe is spot and some of it is network for the CBC for example.
SEQ 1_0 \* Arabic \n6522 THE CHAIRPERSON: You are going to build on those numbers.
SEQ 1_0 \* Arabic \n6523 Could you help me out with a reconciliation of your numbers with what you see in our annual summaries, including convention and specialty, just to show me how again hopefully these numbers ‑‑ because there is a fair gap. In fact, if we remove ‑‑ you see, we have for network payments a number that is currently zero and it used to be, back in 2000‑2001 a number of $4 million plugged in for those and then it went down to zero because of ‑‑ don't ask me why, but it did.
SEQ 1_0 \* Arabic \n6524 Then there were infomercials and syndication production which ‑‑ but if you take only national and local you get a number of about $240,000, as you will see.
SEQ 1_0 \* Arabic \n6525 So if you could do a comparative chart that builds from this and shows us how we get to the $370 million, that would be very helpful.
SEQ 1_0 \* Arabic \n6526 You might as well file that at the beginning.
SEQ 1_0 \* Arabic \n6527 So now looking at your projections for Vancouver that you whizzed the numbers by me unfortunately, Mr. Merson, so I didn't quite follow. You can do it either way. I see where you go the $16 million, that is year six and year seven revenues for your station. But could you do it either on the basis of the seven‑year total or some average so that we can do a bit of apples to apples, and building in your assumptions indicate how ‑‑ I guess your point is that $87 million will be a lot smaller than the growth in the market.
SEQ 1_0 \* Arabic \n6528 MR. MERSON: Absolutely. Could we present those numbers together with the reconciliation that you have requested?
SEQ 1_0 \* Arabic \n6529 THE CHAIRPERSON: Okay. That would be helpful.
SEQ 1_0 \* Arabic \n6530 THE CHAIRPERSON: Have you done a calculation as to ‑‑ I don't believe I saw it ‑‑ the percentage of your projected revenues that will come from existing stations?
SEQ 1_0 \* Arabic \n6531 MR. MERSON: We have not done that. It is unlikely that much of it would come, just the market growth is strong enough to ensure that there is more than adequate revenue to go around.
SEQ 1_0 \* Arabic \n6532 THE CHAIRPERSON: But you have to assume their growth ‑‑ they would grow as well, right, with our without NOW?
SEQ 1_0 \* Arabic \n6533 MR. MERSON: Absolutely there would. Again the numbers, even if you use just the spot market as against the local television station and you are using the number ‑‑ I think it is $260 or $270 million, just spot. And how much did it grow?
SEQ 1_0 \* Arabic \n6534 MR. DUNLOP: It grew 6.88 per cent.
SEQ 1_0 \* Arabic \n6535 MR. MERSON: It grew 6.88 per cent.
SEQ 1_0 \* Arabic \n6536 THE CHAIRPERSON: When you say "spot", do you mean national and local?
SEQ 1_0 \* Arabic \n6537 MR. MERSON: National and local, but none of the network revenues and none of the specialty revenues. So $260 million ‑‑ I'm doing this in my head ‑‑ at 7 per cent would be around close to $20 million annually.
SEQ 1_0 \* Arabic \n6538 THE CHAIRPERSON: Right. Again, our charts ‑‑ and these are public ‑‑ show a lot smaller numbers than that. They do show a big leap in 2003 over 2002 of 34 per cent in national sales, but for 2004 over 2003 we just show 2.8 per cent growth for national sales and then 8.3 per cent for local, but given the ratios would be a lot closer to 2.8 per cent than to 6 per cent, based on this chart.
SEQ 1_0 \* Arabic \n6539 MR. MERSON: Based on that chart.
SEQ 1_0 \* Arabic \n6540 THE CHAIRPERSON: Yes.
SEQ 1_0 \* Arabic \n6541 MR. MERSON: Perhaps we can submit the same reconciliation at the same time.
SEQ 1_0 \* Arabic \n6542 THE CHAIRPERSON: If you could do that as well that would be helpful.
SEQ 1_0 \* Arabic \n6543 If you could then, based on that, give me an estimate of what you think you would draw from other stations?
SEQ 1_0 \* Arabic \n6544 MR. MERSON: The cannibalization would be.
SEQ 1_0 \* Arabic \n6545 THE CHAIRPERSON: It may be that I would just save a lot of questioning by asking you to do the same for the Winnipeg market?
SEQ 1_0 \* Arabic \n6546 MR. MERSON: Absolutely. Happy to do it.
SEQ 1_0 \* Arabic \n6547 THE CHAIRPERSON: Thank you.
SEQ 1_0 \* Arabic \n6548 I would like to move over to that market. In Winnipeg of course the station has not launched. I guess I was having a little trouble figuring out what exactly is being acquired by Rogers. What are the assets that are in effect being acquired in Winnipeg.
SEQ 1_0 \* Arabic \n6549 MR. MERSON: The only asset would be the broadcasting licence, subject to your approval.
SEQ 1_0 \* Arabic \n6550 THE CHAIRPERSON: Is that an asset? Have you consulted Mr. Engelhart on that?
SEQ 1_0 \* Arabic \n6551 MR. MERSON: No. No assets then, if that is the case.
SEQ 1_0 \* Arabic \n6552 THE CHAIRPERSON: It is $750,000 being allocated for we are not sure what. I think we have your answer, but ‑‑
SEQ 1_0 \* Arabic \n6553 MR. MERSON: $750,000 was simply the cost that was sunk into the application, plus some accumulated obligations that Trinity has entered into, lease of transmitter site, those types of things, in anticipation of launching a licence that haven't yet been dealt with so the accountants keep them on the balance sheet. In real terms they are sunk.
SEQ 1_0 \* Arabic \n6554 THE CHAIRPERSON: Right. But it seems to be a notional figure because it is hard to relate it to anything. You did, for example, in the Vancouver station, file an investment analysis which included license application.
SEQ 1_0 \* Arabic \n6555 I didn't see one for Winnipeg. Was there any reason that wasn't filed? The last page of the financials for ‑‑ you did one for ‑‑ it was Appendix E.
SEQ 1_0 \* Arabic \n6556 MR. MERSON: We certainly have that number which is the reason I'm sort of hesitating. We did go through and calculate the costs that had been spent on acquiring the Winnipeg licence and sort of costs that had been incurred on programming to date and the transmitter.
SEQ 1_0 \* Arabic \n6557 So we absolutely have it. I apologize if it wasn't filed, but we will certainly file it.
SEQ 1_0 \* Arabic \n6558 THE CHAIRPERSON: Again, I think it would complete the record. I'm not sure how useful it would be because again I think you probably just did an allocation based on an estimate.
SEQ 1_0 \* Arabic \n6559 Is that correct?
SEQ 1_0 \* Arabic \n6560 MR. MERSON: No, it was based on sort of hard costs that were incurred to acquire the licence.
SEQ 1_0 \* Arabic \n6561 THE CHAIRPERSON: Okay, then it will be helpful. So you would identify the costs incurred and describe what it is that that covers.
SEQ 1_0 \* Arabic \n6562 We do have, in your deficiencies, an indication that launch is going to be costing another $1.2 million. These are entirely new costs in addition to the sunk costs that you have already incurred that are under the umbrella of the $750,000 is what you are saying?
SEQ 1_0 \* Arabic \n6563 MR. MERSON: I must admit, sort of reading the $1.2 million number when I saw the financial and asking Alain what it related to, but the launch of Winnipeg will cost more than $1.2 million. $1.2 million is our estimate of the pre‑operating costs just to get the station on the air in terms of sort of the organizational activities that we have to engage in, commitments we have to make.
SEQ 1_0 \* Arabic \n6564 Over and above that, we have budgeted for $3.3 million as the cost of acquiring the assets necessary to launch the station, the hard costs.
SEQ 1_0 \* Arabic \n6565 THE CHAIRPERSON: Okay. Perhaps it will flesh out a bit better when we have the investment analysis.
SEQ 1_0 \* Arabic \n6566 We talked about market impact in Vancouver and I guess there is a similar issue in Winnipeg. It goes to the nature of the stations that were licensed and the component of revenues for example that would come from donations and other. So the image of the stations at licensing were certainly originally in Vancouver and Winnipeg were religious stations which were going to have a large component of brokered programming and a large component of donations and would not be powered by a strong multiple ownership group.
SEQ 1_0 \* Arabic \n6567 So in addition to the numbers, do you think that is a legitimate concern of people, that this is in effect a transformation and raises concerns that almost go back to the notion of should there be a call for a new licence in Winnipeg?
SEQ 1_0 \* Arabic \n6568 MR. MERSON: Clearly not as robust a market as Vancouver‑Victoria is. It has all three conventional networks in place. By our calculation the market has actually been fairly stagnant over the last few years, but profitability of the business has dramatically increased.
SEQ 1_0 \* Arabic \n6569 The questions we ask ourselves as business people is: Does the demand exist for this type of service? Would more competitors stimulate the market or would they necessarily cannibalize the other players in the marketplace? Because we know there is some notion of activity in the marketplace actually stimulating a market. Winnipeg is the only ‑‑ I say "the only", it is one of the only major markets that doesn't have an independent broadcaster of any sort.
SEQ 1_0 \* Arabic \n6570 If you would look across the country there is some evidence that suggests an independent operator can actually stimulate some activity in the marketplace.
SEQ 1_0 \* Arabic \n6571 So it is a reasonable business opportunity. It isn't a slam‑dunk and it's the reason we think it really works best with NOWTV Vancouver in place.
SEQ 1_0 \* Arabic \n6572 As to the prior question, which is: Has the station evolved, perhaps Jeff could take you through the history of how it is and why it is they felt it necessary to evolve the way they program in Vancouver, but sort of as I understand it they have tried both models. They found the revenues simply didn't exist, particularly as it related to Canadian religious programming.
SEQ 1_0 \* Arabic \n6573 So I don't want to put words in Jeff's mouth, but that is how it was explained to me how the models evolved.
SEQ 1_0 \* Arabic \n6574 Do you want to add anything?
SEQ 1_0 \* Arabic \n6575 THE CHAIRPERSON: I don't mean to cut Mr. Thiessen off, but that really isn't my question. I think we have read that and you have documented that very well as to why you needed to move in the direction you did and Vice‑Chair Wylie has been through the programming questions.
SEQ 1_0 \* Arabic \n6576 I suppose if the acquisition were by another religious organization or faith‑based organization seeking to acquire this asset and make a go of it I wouldn't be asking these questions, but I think that from the point of view of the perception in the marketplace my question is: Is it legitimate to say that the ownership of this enterprise by Rogers Broadcasting is a very different kettle of fish from a religious organization and therefore raises issues of competitive fairness in terms of licensing and so on?
SEQ 1_0 \* Arabic \n6577 MR. MERSON: This is a licence that has many facets and requires sort of a complicated schedule. Every single program on the air has to be religious and if the context isn't obvious ‑‑ we have committed to ensuring that the context of the programming is obvious.
SEQ 1_0 \* Arabic \n6578 Over and above that, we have an obligation to sort of 60 per cent Canadian content in Winnipeg, 12 hours worth of balanced in prime time, including sort of a large proportion of that sort of being locally produced. The opportunity evolve the channels with something much more mainstream doesn't exist.
SEQ 1_0 \* Arabic \n6579 The requirements of having to deal with the different constraints in building the program schedule essentially limit the amount that you really can do with the station to do anything much more different from what it is that Jeff and the Thiessen's have done with it with Vancouver currently.
SEQ 1_0 \* Arabic \n6580 Leslie and Malcolm have worked on the schedule, I don't know if you wanted to add anything.
SEQ 1_0 \* Arabic \n6581 MR. SOLE: I would just add that one of the material differences between Rogers owning the Winnipeg licence and the plan that was forwarded by Trinity is that we are a corporation that is traded on the stock exchange and we are not in the business of collecting or calculating donations directly from viewers. So we are very naturally pushed to the advertising model.
SEQ 1_0 \* Arabic \n6582 THE CHAIRPERSON: Okay.
SEQ 1_0 \* Arabic \n6583 MR. MERSON: But we are tied up in knots. There is very limited opportunity to ‑‑
SEQ 1_0 \* Arabic \n6584 THE CHAIRPERSON: I take that point. I guess it is really ‑‑ it goes to the integrity of the licensing process. If you like Part A is the nature of the transition and Part B is what used to be called trafficking and may still be in some quarters. The idea that a licence issued and not launched should not be put out for call is I guess the issue you have to address.
SEQ 1_0 \* Arabic \n6585 MR. MERSON: Perhaps I can just ask Alain for a little perspective on it.
SEQ 1_0 \* Arabic \n6586 MR. STRATI: Sure, I would be glad to.
SEQ 1_0 \* Arabic \n6587 Mr. Chair, I think we have looked at certainly other issues and other precedence in terms of other transactions in terms of what are the issues that were discussed. To specifically address the issue you have mentioned of course is to ensure the integrity of the licensing process is maintained.
SEQ 1_0 \* Arabic \n6588 I think in terms of the licence trafficking issue there has been a couple of specific points that have been raised in terms of issues such as the reasonability of any financial gain, if there is one. Certainly there is the issue of financial distress, if the station is in financial distress and the ability of someone to come in and retain the viability of the station.
SEQ 1_0 \* Arabic \n6589 More specifically, on issues of unlaunched stations, there have been other instances I can think of. You may remember the Télémedia transaction. There was a station in Calgary, an FM station that was licensed. At that point in time there was a discussion in terms of value, there was a discussion in terms of sunk costs, costs that had already been incurred by the licensee. So there had been investments that had been made in terms of an effort to launch the station.
SEQ 1_0 \* Arabic \n6590 I think there was also discussion in terms of the benefits, in terms of the industry benefits, the Canadian broadcasting benefits. So from our perspective we are looking at the overall transaction in terms of financial gain which would incorporate both licences certainly.
SEQ 1_0 \* Arabic \n6591 The financial distress of NOWTV in terms of where they are at, in terms of the need to sell both stations, but perhaps a bit more specifically on Winnipeg, is that investments have been made. In terms of the integrity of the licensing process, we have talked a little bit about program acquisition rights and the fact that at the time there was a lot of discussion about acquisition rights. In fact, I think it was one of the specific elements of discussion.
SEQ 1_0 \* Arabic \n6592 Given the fact of the nature currently, there is three national players in Winnipeg, they will purchase programming by and large for multiplicity markets including Winnipeg. NOWTV will likely be very different, in that quite apart from its religious programming mandate there will also be de facto that it will not buy nationally. It may buy from Vancouver and Winnipeg, it may buy for Winnipeg.
SEQ 1_0 \* Arabic \n6593 So from a rights perspective we feel that the same issues are discussed here and there is not a significant difference in terms of what NOWTV was discussed then as what it would be now.
SEQ 1_0 \* Arabic \n6594 The revenue Rael has discussed in terms of the fact ‑‑ and I think Leslie mentioned as well in terms of the advertising revenue certainly a much greater part of it because of it.
SEQ 1_0 \* Arabic \n6595 But the Thiessen family has made an investment in the station, there have been some costs, there is a significant effort and we do think that launching the station in Winnipeg would benefit the industry not only because there is a new station in Winnipeg that there has been a strong demand there for quite a long time, but also because of the ability of NOWTV in Vancouver and NOWTV in Winnipeg which would provide a robust two‑station accommodation.
SEQ 1_0 \* Arabic \n6596 THE CHAIRPERSON: I have your answer. Our rule is that we are very suspicious of any transfer of licence in the first term of a licence. That goes back to the beginning of the Commission. There are individual cases where, as you say ‑‑ and there are others we could name ‑‑ where the Commission has nevertheless approved transactions either because they were part of a package or because of distress situations. You are saying that this is one such case when exception should be made to that rule.
SEQ 1_0 \* Arabic \n6597 MR. STRATI: That's correct. I think some of the similar circumstances where these issues have been discussed are also present here as well.
SEQ 1_0 \* Arabic \n6598 THE CHAIRPERSON: Right. Let me take you to the doomsday scenario, though, Mr. Merson.
SEQ 1_0 \* Arabic \n6599 Assuming that the Commission were inclined not to approve this part of the transaction but were inclined to approve the Vancouver part ‑‑ and we will get to Victoria in a moment ‑‑ but if Vancouver were approved and Winnipeg were not, would you proceed with the closing?
SEQ 1_0 \* Arabic \n6600 MR. MERSON: We would proceed with the closing. We continue to believe we would be the best owners and NOWTV Vancouver would be ‑‑ Fraser Valley would be the natural partner to NOW Winnipeg. We believe the demand exists.
SEQ 1_0 \* Arabic \n6601 We are not sure this is a great idea, but absolutely we would proceed.
SEQ 1_0 \* Arabic \n6602 THE CHAIRPERSON: Perhaps I overlooked it in reading the purchase and sale agreement that that contingency was addressed where you would get approval for one and not the other, in which case what would happen to the purchase price?
SEQ 1_0 \* Arabic \n6603 MR. MERSON: You have me there. I can't recall. I know we discussed it. I can't recall whether it is in the agreement itself.
SEQ 1_0 \* Arabic \n6604 THE CHAIRPERSON: Mr. Strati, did I miss it? Is it in the agreement itself?
SEQ 1_0 \* Arabic \n6605 MR. STRATI: I can check quickly.
SEQ 1_0 \* Arabic \n6606 THE CHAIRPERSON: I didn't recall seeing it.
SEQ 1_0 \* Arabic \n6607 MR. VINER: I would be surprised if it didn't say subject to terms and conditions that were ‑‑
SEQ 1_0 \* Arabic \n6608 MR. STRATI: Yes, it does obviously refer to CRTC approval. I would just verify quickly whether it is contingent on the either/or scenario like you mentioned.
SEQ 1_0 \* Arabic \n6609 THE CHAIRPERSON: You can get back to us on that and, if you like, what the price would be. Would it remain $13 million or not?
SEQ 1_0 \* Arabic \n6610 MR. MERSON: No, the price would be reduced by the $750,000. That is the recollection that comes back to me, that we had a discussion at the time about the relative values and what they might be. What I can't recall is whether the agreement directly addresses the ability to proceed on one without the other. We will check that.
SEQ 1_0 \* Arabic \n6611 THE CHAIRPERSON: That is what I can't recall either. Thank you.
SEQ 1_0 \* Arabic \n6612 Would that scenario in any way affect your Vancouver business plan, as far as you can see?
SEQ 1_0 \* Arabic \n6613 MR. MERSON: It would absolutely affect the business plan.
SEQ 1_0 \* Arabic \n6614 As Madam Vice‑Chair was sort of discussing with us, there are some natural synergies in the programming between the two stations so it would affect it to some degree. But perhaps we can sort of quantify how that would work in response to her question.
SEQ 1_0 \* Arabic \n6615 THE CHAIRPERSON: That would be fine, if you could do that.
SEQ 1_0 \* Arabic \n6616 Let's turn to Victoria. What growth would you see in your revenues? I guess the total is, what, $6 million over seven years. Right? It goes from a total of $87 million without Victoria and $93 million with Victoria, so that is the measure of that.
SEQ 1_0 \* Arabic \n6617 MR. MERSON: That is correct.
SEQ 1_0 \* Arabic \n6618 THE CHAIRPERSON: What would be your view ‑‑ you have probably read the interventions and we will hear the intervenors so I don't want to preempt that discussion, but what in your view would be the effect of us granting you the Victoria transmitter on the revenues of CHET‑TV and CIVI‑TV?
SEQ 1_0 \* Arabic \n6619 MR. MERSON: Again, we can't imagine it will have a material impact. Our projection in year seven is that the gross revenues of the station would be $2 million more. So this is over a period of seven years. At the end of the seven years we think Victoria might add an incremental $2 million to the business.
SEQ 1_0 \* Arabic \n6620 This again is in a market that is growing fairly rapidly.
SEQ 1_0 \* Arabic \n6621 We know the demand exists. This is religious programming. Victoria is a market that is part of the Greater Vancouver marketplace. The advertisers, when they look to buy, don't differentiate. They do not distinguish between Victoria and the rest of the marketplace. They expect that when they but they will receive coverage in the entire Fraser Valley, downtown Vancouver and Victoria as well.
SEQ 1_0 \* Arabic \n6622 As well, the program suppliers. When you buy rights to the Vancouver marketplace automatically sell rights to Victoria as well. So it is very much one economic market, much in the way that sort of Hamilton and Toronto are one economic market.
SEQ 1_0 \* Arabic \n6623 So in answer to your question: Do we think this will have much impact? We really don't think it will have much impact, simply based on the absolute value and number of the dollars in the marketplace.
SEQ 1_0 \* Arabic \n6624 We think the demand exists and Jeff has tons of anecdotal evidence to suggest that the demand exists. This is something that would simply put the business on an equal competitive footing.
SEQ 1_0 \* Arabic \n6625 Jeff, as he analyzed why it was the business wasn't succeeding as well as he might have hoped, really focused on it as being one of the major issues he had to deal with. It was the reason they applied to the Commission a couple of years ‑‑ I forget when the initial application was, about a year back ‑‑ to add the Victoria rebroadcaster.
SEQ 1_0 \* Arabic \n6626 THE CHAIRPERSON: Could you detail that, Mr. Thiessen, as to that view that Mr. Merson just expressed that you held?
SEQ 1_0 \* Arabic \n6627 MR. J. THIESSEN: As soon as we launched NOWTV in Fraser Valley there was an immediate response from Victoria, pastors calling up saying "What is going on here? We don't get it on our channel service."
SEQ 1_0 \* Arabic \n6628 Since that time there have been e‑mails and phone records and people calling up. When I realized that it was imperative for us to get going in Victoria I called up some dear pastor friends out that way and they were saying, "You know what, it is going to be very, very important."
SEQ 1_0 \* Arabic \n6629 I also know Mr. Low is here as well and he has had some of our independent producers who produce other types of religious programs and they themselves have wanted an expression into Victoria and Vancouver Island as well.
SEQ 1_0 \* Arabic \n6630 So it is not just from the Christians who have called me, but it has also been other faith groups expressing a desire to ‑‑ there are pockets of those faith groups in that area that are lacking a religious service and we think that NOWTV is the best service.
SEQ 1_0 \* Arabic \n6631 THE CHAIRPERSON: So that is on the service front.
SEQ 1_0 \* Arabic \n6632 What have advertisers told you?
SEQ 1_0 \* Arabic \n6633 MR. J. THIESSEN: Local advertising. We didn't actually in our application have any local advertising.
SEQ 1_0 \* Arabic \n6634 THE CHAIRPERSON: No, I understand that.
SEQ 1_0 \* Arabic \n6635 MR. J. THIESSEN: Sorry.
SEQ 1_0 \* Arabic \n6636 MR. MERSON: The limitation of not having Victoria.
SEQ 1_0 \* Arabic \n6637 MR. J. THIESSEN: Oh, from the national point of view? Oh, I can't express the difficulty we have had both from the nationally ‑‑ us being the last on the list for sure and then having us not having the opportunity of pitching Victoria.
SEQ 1_0 \* Arabic \n6638 One of the biggest problems we have is even locally here there are opportunities where our local sales people have four Subway franchises, say, to pitch, and because we have franchises in Victoria and Vancouver that goes into a common pot for advertising, we just simply don't get any of those buys.
SEQ 1_0 \* Arabic \n6639 So there is significant difficulties for anyone who is not in Victoria and I think that it is one of those things that just is very, very important going forward.
SEQ 1_0 \* Arabic \n6640 MR. W. THIESSEN: If I could just add one point here, even in the area of religious brokered programming we have had a number of people that wanted the Victoria market and we missed the buy on brokered religious programming because we didn't have the Victoria marketplace. So it has hit us not only on national sales but even on the brokered market side.
SEQ 1_0 \* Arabic \n6641 THE CHAIRPERSON: I may have missed your answer to Madam Wylie's questions, but are you planning to do brokered programming?
SEQ 1_0 \* Arabic \n6642 MR. MERSON: Yes, we are. Limited amounts.
SEQ 1_0 \* Arabic \n6643 THE CHAIRPERSON: Limited amounts. Again, you didn't show those in your projections, did you?
SEQ 1_0 \* Arabic \n6644 COMMISSIONER WYLIE: $100,000.
SEQ 1_0 \* Arabic \n6645 THE CHAIRPERSON: $100,000.
SEQ 1_0 \* Arabic \n6646 MR. MERSON: Yes, we did.
SEQ 1_0 \* Arabic \n6647 THE CHAIRPERSON: That is the other. It says "barter", but is that ‑‑
SEQ 1_0 \* Arabic \n6648 MR. MERSON: Same thing.
SEQ 1_0 \* Arabic \n6649 THE CHAIRPERSON: Same thing. So that represents then ‑‑
SEQ 1_0 \* Arabic \n6650 MR. MERSON: No. I think it's under paid programs. It is under paid programs I think.
SEQ 1_0 \* Arabic \n6651 THE CHAIRPERSON: Sorry?
SEQ 1_0 \* Arabic \n6652 MR. SOLE: Infomercial. There are infomercials and paid programs.
SEQ 1_0 \* Arabic \n6653 THE CHAIRPERSON: Again, there are many financial pages.
SEQ 1_0 \* Arabic \n6654 I see $100,000 in the Winnipeg lines throughout. I don't see any in the Vancouver with or without Victoria projections.
SEQ 1_0 \* Arabic \n6655 I will go back to your original. This is our copy of that.
SEQ 1_0 \* Arabic \n6656 MR. STRATI: Mr. Chair, I am looking at the ‑‑
SEQ 1_0 \* Arabic \n6657 THE CHAIRPERSON: Oh, infomercials, paid programs.
SEQ 1_0 \* Arabic \n6658 MR STRATI: ‑‑ and paid programs. That's correct. The first year is $842,000.
SEQ 1_0 \* Arabic \n6659 THE CHAIRPERSON: I'm sorry, you are quite right. So that represents ‑‑ that doesn't change with Victoria. So that is six of 87 ‑‑ or six and half of 87 or six and a half of 93.
SEQ 1_0 \* Arabic \n6660 Mr. Thiessen, they are not showing any Victoria brokered programming here. Do you think that is an untapped opportunity?
SEQ 1_0 \* Arabic \n6661 MR. W. THIESSEN: There is a great opportunity there.
SEQ 1_0 \* Arabic \n6662 THE CHAIRPERSON: Right. In Winnipeg you have the $100,000 of barter in addition to the infomercials. A much higher percentage in Winnipeg than in Vancouver.
SEQ 1_0 \* Arabic \n6663 Is that correct? I'm looking at seven year totals, four of 27. What's that? More than a quarter?
SEQ 1_0 \* Arabic \n6664 MR. MERSON: I am going to ask Malcolm just quickly for that assumption and what the basis of it was.
SEQ 1_0 \* Arabic \n6665 MR. DUNLOP: When I put the paid programming estimates together I based it on the following: In Vancouver I based it on 10 hours of American and 15 hours of Canada, and I based the same in Winnipeg and the same hours in both markets.
SEQ 1_0 \* Arabic \n6666 THE CHAIRPERSON: The same absolute hours?
SEQ 1_0 \* Arabic \n6667 MR. DUNLOP: Yes, basically the same hours in terms of for estimating.
SEQ 1_0 \* Arabic \n6668 THE CHAIRPERSON: I see. The difference between the $6.5 million and the $4.1 million is what the Vancouver market will be able to achieve for you?
SEQ 1_0 \* Arabic \n6669 MR. DUNLOP: Yes.
SEQ 1_0 \* Arabic \n6670 THE CHAIRPERSON: All right. Okay. Thank you.
SEQ 1_0 \* Arabic \n6671 THE CHAIRPERSON: Let me just review this to see whether I have covered everything I wanted to. I believe I have covered most of it.
SEQ 1_0 \* Arabic \n6672 THE CHAIRPERSON: There are a number of questions that you will be addressing in reply and I may, when I have seen the filings that I hope we will be able to get as soon as possible.
SEQ 1_0 \* Arabic \n6673 Do you believe that you will have ‑‑ how much of that filed material do you think you will have before the final phase of the proceeding, which will be today?
SEQ 1_0 \* Arabic \n6674 MR. MERSON: We hope virtually all of it. My sense is there is some information that is more rapidly needed than others, particularly the program schedule and the stuff we went over earlier this morning. So if we could focus on that first, we will present all that stuff as quickly as we can, hopefully by the end of lunch, just to give you the opportunity of just looking through and spend some time with us.
SEQ 1_0 \* Arabic \n6675 Then ensure the stuff that isn't going to arise ‑‑ hopefully will not arise again, we will file hopefully by the end of the day.
SEQ 1_0 \* Arabic \n6676 THE CHAIRPERSON: Thank you. Those are my questions.
SEQ 1_0 \* Arabic \n6677 Vice‑Chair Wylie.
SEQ 1_0 \* Arabic \n6678 COMMISSIONER WYLIE: Following the Chairman's question about the possible dissociation of the two, I understand your response to his request that in coming back to us with programming you will also address the possibility that that would be just for Vancouver, to the extent that it has any impact?
SEQ 1_0 \* Arabic \n6679 MR. MERSON: Absolutely.
SEQ 1_0 \* Arabic \n6680 COMMISSIONER WYLIE: As well as whether it is the two stations.
SEQ 1_0 \* Arabic \n6681 MR. MERSON: Absolutely.
SEQ 1_0 \* Arabic \n6682 COMMISSIONER WYLIE: Thank you.
SEQ 1_0 \* Arabic \n6683 COMMISSIONER WILLIAMS: Mr. Viner, would it be fair to characterize this application as a bailout of a troubled licensee, that due to your size and scope of your organization you may be able to make successful if you had all the pieces?
SEQ 1_0 \* Arabic \n6684 MR. VINER: I wouldn't characterize it as just that, Commissioner Williams.
SEQ 1_0 \* Arabic \n6685 At Rogers Media we would like to grow and we would like to grow in television, although we would like to grow in a way which matches our core competencies. So there are a number of reasons why we are interested.
SEQ 1_0 \* Arabic \n6686 The first is, this is a robust market in which we do not find ourselves.
SEQ 1_0 \* Arabic \n6687 Second is that niche broadcasting, as we have perhaps boringly repeated, is a core competency of our company skill that we built over the last 20 years at OMNI, and we really believe that we can bring some very positive ‑‑ make very positive contributions to the system, and we can make this profitable because we know how to make these things profitable, not wildly so, but nonetheless we can provide the financial stability and the skill‑set necessary to make them profitable.
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