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Providing Content in Canada's Official Languages
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
TELECOMMUNICATIONS COMMISSION
TRANSCRIPTION DES AUDIENCES DEVANT
LE CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT/SUJET:
VARIOUS BROADCASTING APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
Portage IV Portage IV
140 Promenade du Portage 140, promenade du Portage
Gatineau, Quebec Gatineau (Québec)
May 1st, 2007 Le 1er mai 2007
Transcripts
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
Contents.
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Transcription
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès‑verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio‑television and
Telecommunications Commission
Conseil de la radiodiffusion et des
télécommunications canadiennes
Transcript / Transcription
VARIOUS BROADCASTING APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
BEFORE / DEVANT:
Konrad W. von Finckenstein Chairperson / Président
Rita Cugini Commissioner / Conseillère
Helen del Val Commissioner / Conseillère
Stuart Langford Commissioner / Conseiller
Elizabeth Duncan Commissioner / Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
Chantal Boulet Secretary / Secrétaire
HELD AT: TENUE À:
Conference Centre Centre de conférences
Outaouais Room Salle Outaouais
Portage IV Portage IV
140 Promenade du Portage 140, promenade du Portage
Gatineau, Quebec Gatineau (Québec)
May 1st, 2007 Le 1er mai 2007
TABLE DES MATIÈRES / TABLE OF CONTENTS
PAGE / PARA
PHASE II
INTERVENTION BY / INTERVENTION PAR:
Suzette Couture 259 / 1590
Jack Rabinovich 261 / 1606
Jully Black 265 / 1627
Universal Music 270 / 1652
Plasma Management & Productions Inc. 274 / 1669
Corner Gas 304 / 1830
Epitome Pictures 313 / 1888
Patrick J. Hurley 348 / 2052
Communications, Energy and Paperworkers 365 / 2159
Union of Canada
Illusions Entertainment Corporation 389 / 2310
Canadian Broadcasting Corporation 416 / 2486
ACTRA 465 / 2815
Writers Guild of Canada 495 / 3010
Canadian Recording Industry Association 512 / 3097
Canadian Independant Record Production 526 / 3177
Association
Seneca College School of Communications Arts 536 / 3241
Manitoba Motion Picture Industry Association 549 / 3305
Canadian Film and Television Production 556 / 3347
Association
Alberta Motion Picture Industries Association 579 / 3454
Association of Canadian Advertisers 587 / 3504
Canadian Association of Film Distributors 595 / 3560
and Exporters
Gatineau, Quebec / Gatineau (Québec)
‑‑‑ Upon commencing on Tuesday, May 1st, 2007 at 0905 /
L'audience débute le mardi 1er mai 2007 à 0905
LISTNUM 1 \l 1 \s 15811581 THE CHAIRPERSON: Good morning.
LISTNUM 1 \l 11582 Today is interventions day so we will be listening to the interventions. We will listen to you in groups and then we will have questions for you.
LISTNUM 1 \l 11583 If we do not have questions for any person in particular, it doesn't mean that we didn't listen to you or didn't appreciate your intervention, it just means your submission was clear and needs no further elucidation.
LISTNUM 1 \l 11584 Before we proceed, Madam Boulet, you have certain announcements?
LISTNUM 1 \l 11585 THE SECRETARY: Thank you, Mr. Chairman.
LISTNUM 1 \l 11586 Good morning, everyone.
LISTNUM 1 \l 11587 We will start by the first panel of five supporting intervenors. We have Ms Suzette Couture, Jack Rabinovitch, Jully Black, Universal Music and Plasma Management & Productions Inc.
LISTNUM 1 \l 11588 We will start with Ms Suzette Couture and you each have 10 minutes for a presentation.
LISTNUM 1 \l 11589 Please go ahead, Ms Couture.
INTERVENTION
LISTNUM 1 \l 11590 MS COUTURE: Good morning, Mr. Chairman, Commissioners.
LISTNUM 1 \l 11591 THE CHAIRPERSON: Good morning.
LISTNUM 1 \l 11592 MS COUTURE: Thank you for the opportunity to appear before you today in strong support of the CTVglobemedia's application to acquire CHUM Limited.
LISTNUM 1 \l 11593 My name is Suzette Couture and I am a screenwriter who lives and works in Canada. My first feature film "La Florida" won the Golden Reel Award for the highest grossing Canadian movie of the year; my miniseries "Jesus" for CBS in the United States was nominated for an Emmy; and my last movie, for CTV, "The Man Who Lost Himself" was the highest‑rated television movie of 2005.
LISTNUM 1 \l 11594 But enough about me. I strongly believe that the marriage of CTV and CHUM will bring more opportunities for high quality Canadian television. CTV's commitment to achieving the highest possible quality in everything they do to support Canadian television and their stated commitment to nurture CHUM's differences can only mean that some very exciting television will be coming to our screens.
LISTNUM 1 \l 11595 Bringing together CTV and CHUM will give them each greater strength in an entertainment world that is now almost borderless.
LISTNUM 1 \l 11596 Bringing them together will also allow for greater opportunities to foster emerging talent. Both companies have a dedication to developing emerging writers, directors and actors, and I believe this transaction will expand that capacity to nurture talent and showcase it on a larger scale.
LISTNUM 1 \l 11597 For that reason, I am also in full support of the proposed CHUM Writer Only Benefit. The BCE/CTV Writer Only Benefit provided emerging writers and experienced writers with an unparalleled opportunity. Writers must be moved by a story or an idea in order to fully pursue it with the kind of passion needed to write an exceptional script. Sometimes that idea or story is a producer's and sometimes it is the writer's own. The proposed Writer Only program is a rare opportunity for a writer to develop his or her own idea before involving a producer.
LISTNUM 1 \l 11598 This is what writer's dream of, creative freedom in the early stages. This kind of authorship is what has resulted in television history's finest programs.
LISTNUM 1 \l 11599 Providing key support to feature films and committing to maintaining CHUM's past levels of support for Canadian film is important for our industry as well. To that extent, I am really excited by the drama funding included in the proposed benefits package for feature film, as well as that provided for television drama.
LISTNUM 1 \l 11600 In the end, all successful shows come down to the passion of the writer and the words that she puts down the page. It will always be critical to the success of our industry that writers are allowed the freedom and the opportunities to create those stories, stories which will find an audience here at home and around the world.
LISTNUM 1 \l 11601 I have every confidence that the proposed acquisition of CHUM by CTV will enhance that freedom and opportunity to create.
LISTNUM 1 \l 11602 I thank you for this opportunity.
LISTNUM 1 \l 11603 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11604 THE SECRETARY: Thank you.
LISTNUM 1 \l 11605 We will continue with Mr. Jack Rabinovitch's presentation.
INTERVENTION
LISTNUM 1 \l 11606 MR. RABINOVITCH: Good morning, Mr. Chairman, Members of the Commission. My name is Jack Rabinovitch and I am here to support the proposal by CTVglobemedia to acquire effective control of CHUM Limited.
LISTNUM 1 \l 11607 The reason for my support is quite simple, they have done an outstanding job of supporting Canadian literature, Canadian authors and Canadian publishers.
LISTNUM 1 \l 11608 As you may or may not know, I am the founder of the Giller Prize for Canadian fiction. I set it up in 1994 with my late friend Mordecai Richler to honour my wife Doris, who was a great lady and a prominent woman of letters, and to support Canadian fiction. In 2005, Scotiabank became a partner and it is called the Scotiabank Giller Prize.
LISTNUM 1 \l 11609 My direct association with CTVglobemedia started in the summer of 2005. The CBC, which had previously televised the Giller, had a strike and was in turmoil regarding their program planning. I therefore called Ivan Fecan and asked if he could help, and here I quote him. He said "Jack, I understand that the Canadian publishing industry is in trouble and I would like to be part of the solution."
LISTNUM 1 \l 11610 He offered the Giller Foundation a five‑year contract and told me to speak to Susanne Boyce about making it happen. And she did. CTV put their full promotional communication and programming resources behind the Giller Prize.
LISTNUM 1 \l 11611 The first year CTV aired the show was in 2005, and they did that in record time. It was aired live on CTV Newsnet and later on the main network. It was cross‑promoted on TALK TV and a number of other CTV services and the result in terms of viewership was outstanding.
LISTNUM 1 \l 11612 But in 2006 CTV really pulled out all the stops. They took a major risk and broadcast the Giller live in prime time on CTV main channel. I repeat, prime time from 9:00 to 10:00.
LISTNUM 1 \l 11613 The show reached an unprecedented television audience of 550,000 people, an astounding figure for a literary award shall and an unprecedented breakthrough for Canadian literature and its authors.
LISTNUM 1 \l 11614 In addition, CTV streamed a live feed of the show over CTV broadband network, making it the first broadcaster in Canada to deliver a Canadian network awards program live on broadband. CTV promoted it daily on all its services, produced it and showcased it to the hilt.
LISTNUM 1 \l 11615 Just as Ivan Fecan and Susanne Boyce had promised, CTV did a sensational job.
LISTNUM 1 \l 11616 That broadcast and the promotion that preceded it was a major breakthrough for Canadian literature. Because of CTV's strong programming and promotion which brought the Giller Prize such a great audience, book sales exploded for the Giller's nominees.
LISTNUM 1 \l 11617 Last year's winner was a doctor named Vincent Lam who saw his book "Bloodletting and Miraculous Cures" sail to the top of Canadian bookseller list and it sold in excess of 200,000 copies, a first in Canadian book sales.
LISTNUM 1 \l 11618 The other short‑listed authors also benefited because they enjoyed a major spike in their sales.
LISTNUM 1 \l 11619 I tell you this story not just to laud what CTV has done for Canadian literature, Canadian authors and the Canadian publishing industry, but to point to CTV's commitment to Canadian culture.
LISTNUM 1 \l 11620 CTV understands the importance of flagship events like the Giller Prize and understands what their partnership can do for Canadian authors. Because of this commitment, I am confident they will be great owners for CHUM, which itself plays an important role in showcasing Canadian talent.
LISTNUM 1 \l 11621 I think CHUM will flourish under CTV's leadership and I therefore ask the Commission to support CTV's application.
LISTNUM 1 \l 11622 Thank you.
LISTNUM 1 \l 11623 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11624 THE SECRETARY: Thank you.
LISTNUM 1 \l 11625 We will continue with the presentation of Jully Black.
LISTNUM 1 \l 11626 Thank you.
INTERVENTION
LISTNUM 1 \l 11627 MS BLACK: Good morning, Mr. Chairman and Members of the Commission. I would like to thank you personally for the opportunity to share my views on why I support the transfer of the ownership and for giving me the opportunity to share my perspective.
LISTNUM 1 \l 11628 My name is Jully Black. I am a singer, I am a songwriter, but first of all I am the youngest of nine children born to an immigrant mother who came to this country with just a dream ‑‑ just a dream. As a songwriter in this country I feel that we need to protect our borders and nurture and take care of our wealth.
LISTNUM 1 \l 11629 Over the course of my career I was fortunate enough to have the opportunity to tour Canada many, many times, not only on my own but in support of the Black Eyed Peas, who we all know are a huge American band.
LISTNUM 1 \l 11630 As an artist, I can tell you that this transaction means more than a lot to the music community in Canada. The significant benefit dollars that will result from this transaction will enable more artists like me ‑‑ and I say "like me" ‑‑ so you know that I am 29 years old and I am carving out a road and walking on the road at the same time. I am willing to take a blow to be a pioneer, to diversify the face of Canadian music. Without the benefit dollars, this is not possible.
LISTNUM 1 \l 11631 The development of my career has greatly been helped by FACTOR and Radio Starmaker Fund and, like just about every emerging artist in Canada, I have had to rely on these funds in order to pay for the high cost of recording, touring, production, making music videos, et cetera. If this funding did not exist, I don't know many Canadian artists or record companies that would be able to break artists and build the profile necessary to have a successful career in this country and abroad.
LISTNUM 1 \l 11632 FACTOR and Starmaker will see their budgets increased greatly thanks to the benefit packages proposed by CTV. Without this benefit money, many, many voices would not be heard and, to be quite honest, we run the risk of our industry becoming extinct.
LISTNUM 1 \l 11633 A career in music is harder now than ever before, being illegal downloading, theft of my music personally. I was stolen from 2.5 million times by the sake of illegal downloading and many, many others. Illegal downloading and theft of my music, and many others, continues unabated, while the cost of recording and touring increase.
LISTNUM 1 \l 11634 There is a growing amount of competition out there, not just from other artists, but also from other entertainment sources and we are all vying for the listener's attention and dollars. If we as Canadian musicians did not have FACTOR and Starmaker, we would easily drown in the torrent of American and foreign content that floods across the borders. Again, we need to protect our borders.
LISTNUM 1 \l 11635 I have seen firsthand how the power of airplay on radio and television, supported by promotion and entertainment news coverage, can boost an artist's profile.
LISTNUM 1 \l 11636 At this very moment I would like to take a moment to acknowledge the profile. My profile is bigger than my record sales, and that's okay, because CTV had vision. They picked this little girl from Jane and Finch and said "You have talent. You don't have a journalist degree, you don't have any degree as first television is concerned, but you have talent. We trust you."
LISTNUM 1 \l 11637 And Susanne Boyce, my hero, gave me a chance. She gave me a chance. CHUM‑FM was an early believer in Jully Black. R&B ‑‑ I am a rhythm and blues singer, which is in its infancy. There is no way that at 29 years old I am the pioneer of an industry in this country that has been around for eons, right, but CHUM‑FM ‑‑ and right now I would like to shout out Rob Farina.
LISTNUM 1 \l 11638 Rob Farina played a song that I wrote for my mother called "I Travelled", because she came to this country and worked for $1.68 an hour and one by one by one brought her children from Jamaica, so I could dream in 1977.
LISTNUM 1 \l 11639 In 2004 the release of my own CD, "This Is Me" ‑‑ 2005, I'm sorry ‑‑ came out with Universal Music Canada, sake of the support of CHUM‑FM. We need the resources. We need to feed the people. This is a business, right?
LISTNUM 1 \l 11640 Thanks to the outlets such as eTalk Daily and CHUM radio stations, MuchMusic, MuchMoreMusic, City News and Star, I now have a solid foundation and a high enough profile to build my career, both home and abroad.
LISTNUM 1 \l 11641 When I reflect back to the 13 years as a professional singer and songwriter, and performer, I am most proud of gaining national recognition in my very own country, because I don't feel that we should be exiled. We need to build our army here and be able to compete globally as Canadian musicians.
LISTNUM 1 \l 11642 We have the strongest and biggest exports, whether you are a singer/songwriter, comedian, screenwriter, you name it. We have David Foster, we have Shania, we have Celine, but they left in order to come back and then their stock was raised. We need to stop that. We need to eliminate that.
LISTNUM 1 \l 11643 Music has the ability to reach beyond borders and boundaries. It is the only language that every race, culture, religion ‑‑ we all speak music and we need to understand that it's an art form that is that the risk, again, of becoming extinct.
LISTNUM 1 \l 11644 I think the joining of these two complementary companies, television and music ‑‑ a lot of times they don't understand each other, but it is a husband‑and‑wife scenario. We could build a family. Husbands don't understand wives all the time, we know that.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11645 MS BLACK: Okay? But it's a marriage and I think that it is a match made in heaven.
LISTNUM 1 \l 11646 CTV has vision. It doesn't matter what these budgets are saying. You could have millions and millions of dollars, but if you don't know what to do with it, it doesn't really matter. And CTV and CHUM has vision and that is what we also need to acknowledge.
LISTNUM 1 \l 11647 CTV is making a positive contribution to Canadians and for this reason I, Jully Black, support this transaction.
LISTNUM 1 \l 11648 I would like to thank you, the Commission, for granting me your time to share my personal journey and I thank you.
LISTNUM 1 \l 11649 I welcome any questions that you have.
LISTNUM 1 \l 11650 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11651 THE SECRETARY: We will continue with the presentation of Mr. Randy Lennox of Universal Music.
INTERVENTION
LISTNUM 1 \l 11652 MR. LENNOX: To begin, I just want to echo and congratulate you, Jully, for great words there.
LISTNUM 1 \l 11653 MS BLACK: Thank you.
LISTNUM 1 \l 11654 MR. LENNOX: Fantastic.
LISTNUM 1 \l 11655 Good morning, Mr. Chairman and Commissioners, and thank you for the opportunity to appear today in support of the application by CTVglobemedia to acquire CHUM also.
LISTNUM 1 \l 11656 My name is Randy Lennox and I am Canadian born and raised. I have worked my entire adult life in the Canadian artist industry in a variety of different positions, and today I am the CEO of Universal Music here in Canada. We are Canada's leading record company releasing over 1,000 CDs both digitally and physically per year, representing over 35 Canadian‑owned labels and 140 Canadian artists. These artists include such diverse artists as Paul Anka, Bruce Coburn, Shania Twain, Diana Krall, Lorena McKinnon, and Nelly Furtado.
LISTNUM 1 \l 11657 I am also the Vice‑Chairman of Canada's Walk of Fame which airs in partnership with CTV. I am on the Executive Board of the Canadian Association of Recording Arts and Sciences which runs the Juno Awards each and every year in partnership with CTV, and I am also on the Advisory Board of MusicCan, a charity program that puts musical instruments in much‑needed school programs across Canada; again, a charity that CTV is very much involved with.
LISTNUM 1 \l 11658 However, I am here first and foremost as the CEO of Universal Music Canada and we wholeheartedly support this application.
LISTNUM 1 \l 11659 It is my firsthand experience over a period of several years that CTV shares our passion and commitment for Canadian artists and for music in general. Their focus on artist development, both spiritually and financially illuminate this point, whether it's our industry's partnership on those Juno awards which helps raise industry sales 40 percent each and every week after it airs each year; the Canadian Idol phenomenon which finds and develops brand new Canadian superstars or their everyday music commitment of media time through eTalk Daily. It is clear to me that music, particularly Canadian music, is CTV's priority.
LISTNUM 1 \l 11660 And like Universal Music, CTV recognizes that we compete every day with American content given our proximity to the United States. Their idea to take the Juno Awards not only nationwide but worldwide shows a like‑minded ambition with the music industry to raise our Canadian artists' awareness not only here at home but around the world through their media efforts.
LISTNUM 1 \l 11661 And CTVglobemedia's leadership and track record to music makes them the ideal custodian for CHUM; CHUM who by the way is another culture whose stations and brands are very focused in the music space and partnership with our industry. Incredible brands such as MuchMusic, the NewMusic, have seen Canadian artists nurtured and celebrated for decades now.
LISTNUM 1 \l 11662 The development of VideoFACT, a funding organization invented and managed by the CHUM group to help Canadian artists make and develop videos here at home. And this has helped us at home and developed, as Jully said, artists for the world.
LISTNUM 1 \l 11663 So I am heartened by CTV's commitment to maintain the unique culture that the CHUM television and radio properties represent. On the radio side we are also pleased as an industry to see that CTV and CHUM are both committed to the continuing dialogue towards the establishment of industry benchmarks for airplay and promotion of our new and emerging artists. We look forward to continuing work with CTV and CHUM towards this common objective.
LISTNUM 1 \l 11664 Out of necessity, the music industry in Canada and around the world has seen much consolidation. In fact, Universal Canada is the product of two merged organizations ourselves and in the seven years since we began as one merged company our Canadian artists' commitment has helped us gain an additional 25 percent market share in growth during difficult times. This has kept us at a market leadership position while always being focused on offering a wide array and variety of choices for the Canadian music‑buying public. We spend our time on diverse artist development and Canadians benefit.
LISTNUM 1 \l 11665 So I believe that both CTV and CHUM will continue to act in the spirit of this artist development because Universal is proof that it is not size that matters in business as much as what you do with that size.
LISTNUM 1 \l 11666 CTV's priority and emphasis and the commitment to maintain CHUM's culture will benefit Canadians and, again, we support wholeheartedly this merger of two great Canadian companies.
LISTNUM 1 \l 11667 THE SECRETARY: Thank you, Mr. Lennox.
LISTNUM 1 \l 11668 We will continue with the presentation of Mr. Farley Flex from the Plasma Management & Productions Inc.
INTERVENTION
LISTNUM 1 \l 11669 MR. FLEX: Good morning, and thank you, Chairman and Commissioners.
LISTNUM 1 \l 11670 I appreciate the opportunity to appear here today. I am here to speak in support of the application of CTVglobemedia to acquire CHUM Limited.
LISTNUM 1 \l 11671 My name, as mentioned, is Farley Flex and I am a Canadian music business entrepreneur. For the past 20 years I have built a multifaceted career in the Canadian music industry as a producer, manager, radio station music director, DJ, entrepreneur and probably my most‑known role as a judge on Canadian Idol. But I am here today first and foremost as an artist manager working primarily in the urban music industry.
LISTNUM 1 \l 11672 I support this application for the following three reasons:
LISTNUM 1 \l 11673 CTV is the ideal candidate to preserve the unique contributions and nature of the CHUM services.
LISTNUM 1 \l 11674 Secondly, this transaction will increase the diversity of choice to Canadians.
LISTNUM 1 \l 11675 And, lastly, the $42 million in benefits that will flow to the Canadian music industry.
LISTNUM 1 \l 11676 Allow me to elaborate. I believe CTV is an ideal candidate to preserve the unique contributions and nature of the CHUM services. Each of these companies has played a distinct role in fostering Canadian music talent and I believe that this will continue under the new ownership structure. CTV have shown themselves to be true champions of Canadian culture and talent. Their track record with Corner Gas, Canadian Idol, the Junos and eTalk Daily is impressive to say the least.
LISTNUM 1 \l 11677 CTV's commitment, not just to make Canadian programming but to make successful widely‑viewed Canadian programming is unquestionable and has been proven over and over again.
LISTNUM 1 \l 11678 I also believe in the importance of having a 100 percent‑owned Canadian broadcasting company nurturing those CHUM stations. CTV realizes that it takes special care, patience and financial investment to create Canadian hits and Canadian stars. This builds success not just for CTV but for the artists in those shows.
LISTNUM 1 \l 11679 A strong company with substantial financial resources is also important in the fight to keep Canadian voices heard above the increasing noise of foreign and unregulated sources coming into Canada. Those financial resources are also necessary when it comes to building Canadian artists up to a level where they can thrive on the global stage, something that is important for the artists' artistic and financial development and to bring our Canadian culture to the rest of the world.
LISTNUM 1 \l 11680 I also support this application because I believe it will increase the diversity of voices in the broadcasting system. We saw this happen in radio when the Commission changed its policy to allow an operator to own two FM and two AM stations in each market. The Commission understood that this was no threat to the amount of choice available to listeners but a means to ensure more choice. This has been proven in market after market. In Vancouver, for example, CHUM owns four stations each with a distinct format and unique target audience. It is simply good business.
LISTNUM 1 \l 11681 Lastly, I would like to speak about the proposed benefits package. CTVglobemedia support for FACTOR and Starmaker is vital to the health of the music industry. I welcome and applaud the $42 million in additional funding and music‑related projects. It will make a tangible positive difference to the Canadian music industry.
LISTNUM 1 \l 11682 Thank you and I am ready to take any questions you might have.
LISTNUM 1 \l 11683 THE CHAIRPERSON: Thank you very much. Thank you for all your testimonials. You obviously believe very strongly in CTV and what it can do for CHUM.
LISTNUM 1 \l 11684 Now, I assume you were yesterday in the audience or else you read the papers, so you know that this is a problematic application for us because it doesn't really fit within our rules and we made that perfectly clear yesterday.
LISTNUM 1 \l 11685 Mr. Fecan made it quite clear that Citytv will be sold. It is a very valuable item. If he doesn't buy it or we don't allow him to buy it, somebody else will buy it. So really, the key question for us and you have sort of ‑‑ not really addressed and I would like to put a point to it, what would be the best difference if Rogers, let's say for argument, bought City rather than CTV? You all made the case for strong Canadian artists, funding, industry, champion somebody who pushes you, et cetera, but I am not ‑‑ I would like to see your views as to why this champion whom you obviously think very highly of, will be superior to whomever other players there may be in the Canadian industry.
LISTNUM 1 \l 11686 I am just mentioning Rogers as a name that comes to mind because they are buying the A‑Channel, but if you could address that to us that would be very useful. So whoever wants to take it on?
LISTNUM 1 \l 11687 MR. FLEX: I will begin with that.
LISTNUM 1 \l 11688 You know, I think that when I can look at CTV acquiring CHUM and maintaining the unique culture of CHUM versus anyone else, two things come to mind, experience and leadership. You know, in dealing with CTV everyday they are completely invested spiritually and financially in the space. They understand it better than anyone, and the leadership of the organization as has been suggested this morning, the competency and vision is second to none.
LISTNUM 1 \l 11689 So if you were to line up four or five companies that could all have the wherewithal to buy CHUM, CTV would still come out ahead just because they will maximize value for the Canadian consumer and they will keep their word. And I was here yesterday and heard every word that was said. They will keep their word as to what they will do in terms of the zero overlap and the cultural sovereignty of both of these networks of radio and television stations. So I think that's a very important thing for them to sustain and they will do it.
LISTNUM 1 \l 11690 And I am not suggesting Rogers wouldn't but I am saying that CTV is very qualified to do so because they have lived in this space all of their lives with respect to these other multimedia companies who have not.
LISTNUM 1 \l 11691 THE CHAIRPERSON: Okay, thank you.
LISTNUM 1 \l 11692 Ms Black.
LISTNUM 1 \l 11693 MS BLACK: Personally, you are not going to go to a dentist that has no teeth, you know.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11694 MS BLACK: So let's be honest, right? And I think ‑‑ you see, I just ‑‑ let's just be real.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11695 COMMISSIONER LANGFORD: You want to come and sit up here, I think.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11696 COMMISSIONER LANGFORD: We are ready for ‑‑ I can't match that. I am ready to retire now, you know.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11697 MS BLACK: But on a serious note, I mean, CTV has number one, vision; number two, the cool factor. Yesterday, I sat here and I listened to people speak about why not we be ‑‑ why don't we be safe and appeal to the older audience, the buying audience? Well, they are going to die, okay.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11698 MS BLACK: And the reality is that the younger generation ‑‑ that CTV is setting up without even realizing an apprentice system. They are passing the baton onto the next generation.
LISTNUM 1 \l 11699 And no disrespect to Rogers or anybody else, but if they were to get ‑‑ if they were to acquire CHUM they are going to have to hire everybody from CTV anyway. So you know it's like Tommy Hilfiger doesn't make his own clothes. He hires the people to do it. CTV knows what they are doing. They have teeth in their mouth.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11700 MS BLACK: That's the reality. So you can't beat experience and a company that is willing to make ‑‑ to take a high risk situation and deal with the circumstance. They are okay with whatever the outcome is.
LISTNUM 1 \l 11701 Change is growth. That's why CTV should acquire CHUM.
LISTNUM 1 \l 11702 COMMISSIONER LANGFORD: Okay.
LISTNUM 1 \l 11703 MR. FLEX: My good friend Jully Black.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11704 MR. FLEX: I have proposed to this woman about 40 times, just so you guys know.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11705 COMMISSIONER LANGFORD: Even after you heard her views on husbands and wives you still proposed?
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11706 MR. FLEX: Even ‑‑
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11707 COMMISSIONER LANGFORD: You are a brave man.
LISTNUM 1 \l 11708 MR. FLEX: Even after that, even after that.
LISTNUM 1 \l 11709 COMMISSIONER LANGFORD: Yes, you keep lifting those weights.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11710 MR. FLEX: That's the whole idea.
LISTNUM 1 \l 11711 COMMISSIONER LANGFORD: You are going to need it.
LISTNUM 1 \l 11712 MR. FLEX: That's the whole idea.
LISTNUM 1 \l 11713 MS BLACK: Or his chequebook. He could lift the chequebook.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11714 MR. FLEX: What I wanted to emphasize, and I mentioned it actually on my way here this morning is that, you know, growing up as a black person in this country, CHUM has been the flagship station in terms of ethnic diversity. When you grow up in the city of Toronto and there is no question that Citytv was the first media entity to truly reflect the diversity of Toronto and we all know how great the diversity of Toronto is.
LISTNUM 1 \l 11715 And to be enhanced by the "deep pockets" of CTV, I think, is an important point as well because with the spirit of the CHUM group being held intact and the vision that they have had over the years in terms of representing the cultures and the great diversity and all of the different aspects of colour that they show on that TV screen, I think it is really important to emphasize that having an enhanced opportunity to do that will just enhance what it already is, which is a respectful and I guess you could say inclusive and fully open door system.
LISTNUM 1 \l 11716 Like my career was built an opportunity for an artist that I managed named Maestro Fresh Wes to walk into Electric Circus and get a record deal walking out the door on Queen Street. That's literally what happened, right, and my opportunity now as a judge on Canadian Idol.
LISTNUM 1 \l 11717 I do a tremendous amount of community work and for me to go into communities, aboriginal, you name it, all the marginalized communities across this country and have young people be willing to listen to what I have to say because they think that someone special is coming to see them, right, and then I can impart on them the other aspects of my life and the work that I do to uplift them; these are all opportunities that are enhanced indirectly and directly through my association with both entities. So you know it's a no brainer for me in so many respects because I see it happen every single day.
LISTNUM 1 \l 11718 I received a phenomenal award on Saturday evening for an organization called "The Black Business and Professional Association" and the award was in arts, media and entertainment and it was for community service and my professional work, and all of that is built on the foundation of an opportunity that began with CHUM, right, and then now is flourishing with CTV. So that is why I am here.
LISTNUM 1 \l 11719 Thank you.
LISTNUM 1 \l 11720 THE CHAIRPERSON: Mr. Rabinovitch.
LISTNUM 1 \l 11721 MR. RABINOVITCH: Yesterday, as I was listening I heard a lot of discussion about expectation and commitment and I think that the five first intervenors here have demonstrated, I think very clearly, that forget commitment, forget expectation; CTV has demonstrated support and endorsement of Canadian artists and literature and in music.
LISTNUM 1 \l 11722 THE CHAIRPERSON: I was fascinated by your little story about the Giller prize. I mean, I would have thought that this was something that you know was ready‑made for CBC and, yet, you had to go to CTV to get the exposure. What is the difference in attitude between CBC and CTV here that led to ‑‑ how would you analyse it?
LISTNUM 1 \l 11723 MR. RABINOVITCH: I think that they were in turmoil, as I said. The strike sort of fouled up their program planning and they didn't know exactly what to do, and the strange part about it is that the young group that Susanne Boyce put together had many booklovers in it, and when you see kids between the ages of 18 and 25 reading books and passionate about books it's quite a wonderful experience.
LISTNUM 1 \l 11724 THE CHAIRPERSON: Go ahead.
LISTNUM 1 \l 11725 MS COUTURE: Oh, just lastly I would like to say that CTV gets it. They understand the audience, they understand story.
LISTNUM 1 \l 11726 I mean, for a writer the worst thing to do is to write a script and put so much of yourself into it and actually come up with what you think is a very compelling script that will attract audiences and then the execution of it and the promotion of it falls so far short that your efforts are ‑‑ you know, they vanish and the audience isn't there. And Jully said it, you know, it doesn't how much money is in the budget. It's how you use that money and who is making it happen.
LISTNUM 1 \l 11727 I think that my experience with CTV, one of the reasons I have remained in Canada even though I continue to work in the U.S., is because they get it. They understand the audience. They promote things beautifully and they are not just doing Canadian programming because they have to. They actually treat it as, you know, a great value for the audience. I just can't imagine who else would do a better job.
LISTNUM 1 \l 11728 THE CHAIRPERSON: Okay, thank you.
LISTNUM 1 \l 11729 Commissioners, any questions?
LISTNUM 1 \l 11730 Helen.
LISTNUM 1 \l 11731 COMMISSIONER DEL VAL: Just one question, just one question for the writers, Ms Couture and Mr. Rabinovitch.
LISTNUM 1 \l 11732 Now, I don't know whether you had a chance to take a look at the intervention of Illusions Entertainment Corporation where they criticize the writers‑only initiative and they said that ‑‑ this is what they said:
"CTV's writers‑only development program undermines the role of the independent producers and the creative process and it may be a more accurate statement of how CTV views the producer's role when they state writers can fully realize their creative vision before the script is assigned to an independent producer." (As read)
LISTNUM 1 \l 11733 Do you care to comment?
LISTNUM 1 \l 11734 MR. RABINOVITCH: I would have to read it. I have no comment at this moment.
LISTNUM 1 \l 11735 MS COUTURE: I would like to comment. I mean, I am both a writer and a producer so I am sort of in an amusing position of either supporting myself or not supporting the other side of myself.
LISTNUM 1 \l 11736 I think that it's a fear and a concern that I really think is a problem for certain producers who perhaps don't work as much with writers as they would like because there is no problem with the producer getting a script that is already written. In fact, as a producer I would welcome that because you see the intentions of the writer. It's all there. And I think that to get a script from a writer means that you don't have to do all of the development work that a producer needs to do to raise the money to work with the writer.
LISTNUM 1 \l 11737 So I think that it's actually the opposite, I would say, for the independent producers. They should welcome getting specs ‑‑ what we call spec scripts that have been developed by CTV. In fact, CTV has done that with my company and it was a terrific experience.
LISTNUM 1 \l 11738 On the other hand, I think for writers the fact that they have the opportunity to write for themselves before all of the other voices come in to say not this, not that, that's what writers in Canada particularly support.
LISTNUM 1 \l 11739 COMMISSIONER DEL VAL: Great, thank you. So you don't necessarily agree with their conclusion that that's ‑‑
LISTNUM 1 \l 11740 MS COUTURE: I think they are looking at it negatively when they should look at it positively, and I would like to talk to each and everyone of them to explain that to them. So they can call me at home.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11741 COMMISSIONER DEL VAL: Thank you very much.
LISTNUM 1 \l 11742 THE CHAIRPERSON: Rita, do you have any questions?
LISTNUM 1 \l 11743 COMMISSIONER CUGINI: Further to that, Ms Couture, you have had projects that were funded out of the BCE‑CTV benefits?
LISTNUM 1 \l 11744 MS COUTURE: Yes, I have.
LISTNUM 1 \l 11745 COMMISSIONER CUGINI: And yesterday they told us that one of the huge advantages of a self‑administered fund, as they have proposed, is that it is one stop shopping. In other words, the producer doesn't have to go look for additional funding, that they can go to this pool of money and it's all there for them. Was that your experience?
LISTNUM 1 \l 11746 MS COUTURE: I think the big advantage with it already being at CTV is that you are in the door. The biggest thing is to get a broadcaster to be excited by the project, to be in at the birth of the project and then they have a vested interest in following it through to the end.
LISTNUM 1 \l 11747 So I think to have it be in an outside funded group and to then go to CTV, I think that is not the advantage that writers are looking for, and I don't think producers have that advantage if it's from an outside group.
LISTNUM 1 \l 11748 COMMISSIONER CUGINI: Thank you.
LISTNUM 1 \l 11749 Mr. Lennox, just one more question for you.
LISTNUM 1 \l 11750 In your written submission you said that you supported the CRIA submission, especially as it related to new and emerging artists and you did just say that you were here yesterday. I'm just wondering if you could comment on the initiative undertaken by the CHUM Radio Station Group to support and promote new and emerging artists and if that is in keeping with your support of the CRIA submission.
LISTNUM 1 \l 11751 MR. LENNOX: Yes. I think from the moment that submission was written to this moment things have evolved in an extremely positive fashion. I think there has been additional growing empathy between CHUM and the music industry in terms of understanding that our artists' recording costs have exponentially increased, so therefore our reliance and need of true partnership at the early stage of the artist development is much more illuminated than it was even 6 or 12 months ago.
LISTNUM 1 \l 11752 So in those ensuing weeks that has evolved, and even know we don't have a perfect template yet as to how that will be framed in terms of criteria, the great news is that the will is there. The will is there from CTV, CHUM and the music industry to now, you know, build a framework for a new and developing artist program.
LISTNUM 1 \l 11753 So I feel very good about it.
LISTNUM 1 \l 11754 COMMISSIONER CUGINI: Thank you.
LISTNUM 1 \l 11755 Thank you, Mr. Chairman.
LISTNUM 1 \l 11756 THE CHAIRPERSON: Any other questions?
LISTNUM 1 \l 11757 Thank you very much, then.
LISTNUM 1 \l 11758 We will take a five‑minute break while the next panel sets itself up.
‑‑‑ Upon recessing at 0942 / Suspension à 0942
‑‑‑ Upon resuming at 0951 / Reprise à 0951
LISTNUM 1 \l 11759 MR. WEINSTEIN: It's a change of order?
LISTNUM 1 \l 11760 THE CHAIRPERSON: Change of order, I understand.
LISTNUM 1 \l 11761 THE SECRETARY: Then Mr. ‑‑ please introduce yourself before you ‑‑
LISTNUM 1 \l 11762 MR. WEINSTEIN: Okay. Mr. Chairman and Commissioners, my name is Larry Weinstein. I'm a producer, director, and founding partner of Rhombus Media, a small independent Toronto‑based film and television production company that has largely specialized in high‑end performing arts programming since 1979.
LISTNUM 1 \l 11763 Thank you for allowing me to support the CTVglobemedia's application to acquire CHUM Limited, and in turn the performing arts specialty channel Bravo.
LISTNUM 1 \l 11764 Canada has long been at the forefront in the creation of performing arts, documentaries, and performance specials. We, our company, and a number of other producers across Canada have won more awards in this genera then those of any other country. Rhombus itself has earned a reputation for high‑quality programming that has attracted new audiences in the arts in Canada and abroad. It's been our mainstay, it's been our passion, and it's allowed us to enjoy a huge international reputation.
LISTNUM 1 \l 11765 But making these types of programs has become increasingly difficult over the last few years. Now more than ever we need strong Canadian champions or cultural defenders that have the financial strength and creative vision to invest in Canadian culture.
LISTNUM 1 \l 11766 With its strong financial pledges and commitment to Bravo, it is clear that CTVglobemedia is perfectly positioned to be such a champion. Their commitment of $6,000,000 towards performing arts documentaries on top of existing budget levels would be a great boom to Canada's culture. With this pledge, and a number of others outlined in their benefit package, I believe that CTVglobemedia is the perfect group to nurture and support Bravo, Canada's premier arts channel.
LISTNUM 1 \l 11767 Rhombus has produced many shows with Bravo and with Bravo Fact from the channel's very inception. We greatly benefited from their heyday in the mid to late '90s, 2000, 2001 when they were able to invest substantial licence fees into what were to become many of our most acclaimed programs awarded in broadcast throughout the world.
LISTNUM 1 \l 11768 Your approval of this proposed transfer of ownership, will allow Bravo not only to return to those days, the heydays, but likely to thrive more than ever.
LISTNUM 1 \l 11769 CTVglobemedia has shown its expertise and commitment in building Canadian programming of other genres in the past, enhancing Canadian production, and bringing large audiences to the work of filmmakers and TV producers. Their investment in CHUM and Bravo will encourage our company and others to continue to work in Canada, and have the opportunity to create some of the best cultural programming in the world. In ‑‑ which in turn will have great resonance with all Canadian cultural institutions ‑‑ performing arts institutions.
LISTNUM 1 \l 11770 In the past Bravo often came to the rescue of many of the most important projects when other broadcasters faltered. If CTVglobemedia is given the opportunity to fall through on its pledges, it will infuse Bravo with the support it needs to continue to play this pivotal role.
LISTNUM 1 \l 11771 The development and creation of the performing documentary is under threat as never before in television broadcasting history. Funding for performing arts on television in both the international and national scene is diminishing, and in some cases has completely been disappearing.
LISTNUM 1 \l 11772 The recent termination of CBC's flagship program ‑‑ arts program, Opening Night, was a devastating indication of what these shows are up against, and what terribly difficult decisions broadcasters have had to make.
LISTNUM 1 \l 11773 We need national broadcasters to support and promote arts programming so that it can reach a substantial audience, an audience that does have an appetite for these programs. Bravo can fulfill such a role, and with CTV as its new owner we believe that it can also thrive.
LISTNUM 1 \l 11774 This will not benefit only art's program producers but innumerable talents across Canada; musicians, actors, designers, choreographers, dancers, composers, writers, and directors. They'll all be greatly affected.
LISTNUM 1 \l 11775 In this way I believe CTVglobemedia in support of Bravo will be regarded a visionary ‑‑ that they have already committed to preserving and nurturing Bravo, and thus recognizing an important contribution made by this channel and its affiliated independent producers is highly commendable and can't be underestimated.
LISTNUM 1 \l 11776 With diminishing funding over the past few years Rhombus and others have had to look in other directions turning to non‑arts related productions. We sincerely want to reverse that trend.
LISTNUM 1 \l 11777 We are producers with a passion for Canada and for the arts, and a passion for the creation of the cultural Canadian legacy that is seen here and also exported around the world.
LISTNUM 1 \l 11778 If you approve this transaction you will be protecting and nurturing not only the integrity of Bravo, but the entire Canadian performing arts community at large, and the invaluable contribution that they make to defining the Canadian nation ‑‑ sorry, the identity of our nation.
LISTNUM 1 \l 11779 I can't think of a more worthwhile and admirable endeavor. Thanks for your time, and I'd be happy to answer any questions.
LISTNUM 1 \l 11780 THE SECRETARY: We will proceed with Mr. John LaRose of the Aboriginal Peoples Television Network Incorporated.
LISTNUM 1 \l 11781 Mr. LaRose.
LISTNUM 1 \l 11782 MR. LAROSE: Mr. Chair, Commissioners, I am Jean LaRose, an Abenaki citizen of the Odanak First Nation in what is now called Quebec. I am also the Chief Executive Officer of Aboriginal Peoples Television Network Incorporated.
LISTNUM 1 \l 11783 I am pleased to appear today on behalf of APTN in support of CTVglobemedia's application to acquire CHUM Limited. At APTN, we believe that this application will have a direct and immediate impact to increase the level of participation of First Nations, Inuit, and Métis Peoples in television broadcasting. We believe that this application will improve the position of Aboriginal Peoples for a number of reasons.
LISTNUM 1 \l 11784 First, CTVglobemedia has committed to contribute $2.25 million to APTN over seven years to be used to fund dramatic movies and series with Aboriginal independent producers. We should say that this commitment did not just materialize "out of thin air". It came from CTVglobemedia's working collaboratively with APTN to identify the area of Aboriginal production that could most benefit from direct support. It also derives from discussions I had with CTVglobemedia that we could, jointly, develop a dramatic series that would be attractive to both our audiences. I applaud CTVglobemedia's recognition of this possibility.
LISTNUM 1 \l 11785 Drama programming is tremendously important for Aboriginal producers and for APTN. Drama continues to be among the more popular forms of TV programming. I reaches out to the largest audiences. Once that audience is reached, drama helps to build bridges: it increases understanding and empathy.
LISTNUM 1 \l 11786 It is regrettable but until recently good dramas featuring Aboriginal talent was close to non‑existent. I don't think I am saying anything controversial when I say that there is a significant lack of knowledge among the wider Canadian population about Aboriginal Peoples, about the challenges we face in Canadian society, and about the historic ‑‑ meaning very long‑standing, generation after generation ‑‑ nature of these challenges.
LISTNUM 1 \l 11787 I would suggest that there is a connection between how Aboriginal Peoples are portrayed on television ‑‑ whether they are portrayed at all, as a matter of fact ‑‑ and the level of knowledge about Aboriginal Peoples in Canadian society generally.
LISTNUM 1 \l 11788 You can't blame the media alone for the poor level of knowledge that exists, generally speaking, but the media is definitely part of the solution.
LISTNUM 1 \l 11789 Drama programming sits at the top of the programming hierarchy. It is the most challenging and expensive to produce, and it builds the most sought‑after skills among those involved in the production.
LISTNUM 1 \l 11790 One of quite a few Aboriginal producers that intervened in this proceeding in support of CTVglobemedia, Big Soul Productions, described the situation very well.
LISTNUM 1 \l 11791 Big Soul stated that Aboriginal producers need to take responsibility for keeping Aboriginal peoples in the industry.
LISTNUM 1 \l 11792 Allocating more funding, therefore, to support higher drama, budget drama productions by Aboriginal independent producers, which draw Aboriginal writers, directors, actors and behind the camera personnel will build expertise that will help Aboriginal talent in the industry in the years to come.
LISTNUM 1 \l 11793 Finally, APTN has identified high quality drama programming as a priority for our network, but it is something that we do not have the sufficient resources to produce in quantity on our own.
LISTNUM 1 \l 11794 We have to partner with others to get this kind of programming off the ground.
LISTNUM 1 \l 11795 We are tremendously encouraged by CTVglobemedia's positive response and clear commitment to help APTN to produce more of this important genre programming.
LISTNUM 1 \l 11796 The second way in which CTVglobemedia's benefits proposal will improve the position of Aboriginal peoples in broadcasting, is that CTVglobemedia has chosen to allocate its funding to drama production through APTN.
LISTNUM 1 \l 11797 In other words, while the funding will ultimately be used to support Aboriginal independent production, APTN will also benefit in that we will obtain broadcast rights to those productions.
LISTNUM 1 \l 11798 We believe that this approach reflects an understanding on CTVglobemedia's part that APTN has to play a leading role in representing Aboriginal peoples in television, and in ensuring that Aboriginal peoples have the opportunity to tell their own stories from their own advantage point.
LISTNUM 1 \l 11799 We believe that CTVglobemedia's allocation of funds directly to APTN shows that it views APTN as a partner to be supported in the broadcasting system. A partner that is working towards mutually compatible goals.
LISTNUM 1 \l 11800 And it also validates the CRTC's vision of providing a place for Aboriginal peoples in the broadcasting sector when it licensed APTN in 1999.
LISTNUM 1 \l 11801 Today key place in the industry now recognize, support and actively contribute to further enhance and solidify the vision that Aboriginal peoples had, and that the CRTC shared.
LISTNUM 1 \l 11802 It is important, we believe, that Aboriginal peoples control the telling of their own stories.
LISTNUM 1 \l 11803 CTVglobemedia's other important benefits proposal for Aboriginal peoples in this transaction includes the allocation of 3 million over seven years to social benefits in support of traditionally under‑represented groups.
LISTNUM 1 \l 11804 Aboriginal peoples will not be the exclusive recipients of these dollars, but we expect that a significant portion would be spent on Aboriginal initiatives.
LISTNUM 1 \l 11805 We noted in our written intervention that the Aboriginal media education fund would be well positioned to assist CTVglobemedia to direct funding to youth skills training, where it is needed most. And we expect that IMF will follow up with CTVglobemedia to show how it can be of assistance.
LISTNUM 1 \l 11806 Above and beyond the specific benefits CTVglobemedia has proposed, we think it is important to underline our support for this application has much more to do with our experiences with CTV since APTN first launched.
LISTNUM 1 \l 11807 We accept the argument that it is important for Canada to have large and healthy media companies that can face head on the challenges that the future can bring, and there are many.
LISTNUM 1 \l 11808 But, from our perspective, as a small stand‑alone service, it is just as important that these large companies support the smaller services that also have a direct role in fulfilling important broadcasting policy initiatives.
LISTNUM 1 \l 11809 Otherwise, smaller services risk being left behind and policy objectives will not be met.
LISTNUM 1 \l 11810 Consistently over the years CTV has shown that it shares our understanding of APTN's role in the system, and CTV's role in supporting APTN.
LISTNUM 1 \l 11811 For example, the financial support offered to APTN as part of the Bell Globemedia benefits package allowed APTN to build seven news bureaus across Canada.
LISTNUM 1 \l 11812 This led directly to the success that APTN National News has achieved in bringing news stories of direct relevance to Aboriginal peoples from across the country to the airwaves everyday.
LISTNUM 1 \l 11813 Without CTV's support, it is doubtful that APTN National News would be as vital a source of information as it is today.
LISTNUM 1 \l 11814 We are just as pleased to report that CTV's commitment to APTN did not stop with the benefits funds.
LISTNUM 1 \l 11815 We found that CTV was prepared to work with APTN to draw on APTN's resources in the field to enhance CTV's own news capabilities.
LISTNUM 1 \l 11816 This has led to increased opportunities for our news personnel.
LISTNUM 1 \l 11817 CTV's commitment to APTN in this area, we need to emphasize, is continuing beyond the lifetime of those previous benefits commitments.
LISTNUM 1 \l 11818 We have just signed a five‑year agreement between APTN and CTV News, which sets out the framework for continued cooperation in news and current affairs.
LISTNUM 1 \l 11819 Among other things, the agreement commits us to share news materials with each other, and provides APTN with access to CTV's substantial archives.
LISTNUM 1 \l 11820 Obviously having CTV's resources available to us makes a huge differences for our news capabilities.
LISTNUM 1 \l 11821 It is a two‑way street, though, and CTV News will also benefit from this arrangement, as it has in the past.
LISTNUM 1 \l 11822 In conclusion, we believe that CTVglobemedia has proposed tangible benefits that will provide direct support to Aboriginal peoples in broadcasting, and that this application will allow CTVglobemedia to build on its past support for Aboriginal initiatives. For these reasons, we support this application.
LISTNUM 1 \l 11823 Finally, the Aboriginal production community has supported this initiative to a level unheard of before.
LISTNUM 1 \l 11824 We have provided 75 letters of support to the CRTC in favour of this proposal, and you have received these.
LISTNUM 1 \l 11825 Interestingly enough, as an aside, that's as many letters of support as they provided for our own license renewal, which has left me somewhat ‑‑
‑‑‑ Laughter / Rires
‑‑ curious as to where they actually stand, but that's another issue altogether.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11826 I suggest to you that the entire community has recognized the importance of the proposed benefits package, both for APTN, as well as for their own stories in finding new and innovative outlets for their stories.
LISTNUM 1 \l 11827 I thank the Commission for this opportunity, and I will answer any questions that you wish to ask of me. Thank you.
LISTNUM 1 \l 11828 THE SECRETARY: Thank you.
LISTNUM 1 \l 11829 We'll proceed with the next presentation, Mr. Brent Butt and Virginia Thompson of Corner Gas.
INTERVENTION
LISTNUM 1 \l 11830 MR. BUTT: Good morning, Mr. Chairman and the Commissioners.
LISTNUM 1 \l 11831 My name is Brent Butt, and I am the creator, head writer, principal actor and an executive producer of the Canadian TV series Corner Gas.
LISTNUM 1 \l 11832 I'd like to thank you for this opportunity to speak at this hearing, because I want to express my full and enthusiastic support for CHUM Limited's transfer of ownership to CTVglobemedia.
LISTNUM 1 \l 11833 Also joining me is my co‑producer, Virginia Thompson.
LISTNUM 1 \l 11834 I've been a stand‑up comedian for almost 20 years now. And the first 15 of those years could be fairly described as eking a meager existence, while doggedly pursuing a crazy dream.
LISTNUM 1 \l 11835 Actually more accurately described as barely eking a meager existence ‑‑
‑‑‑ Laughter / Rires
‑‑‑ and often failing to eke out what could reasonably called an existence.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11836 But that's the life of an artist and a performer. You do it because you have to, and you hope that somewhere down the line you find the way to pay the bills.
LISTNUM 1 \l 11837 But I always knew that I wanted to step things up at some point to work in television. I love television. I seriously considered humanities greatest achievement.
LISTNUM 1 \l 11838 I know that sounds like I'm trying to be funny, but I'm not.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11839 I won't bore you with my arguments as to why I consider television to be greater than penicillin or man flight, but I do.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11840 Working in television comedy was always my goal.
LISTNUM 1 \l 11841 I often spoke to others about various ideas that I had for sitcoms, but the discussions would always end with the person I was talking to telling me that a sitcom in Canada was impossible.
LISTNUM 1 \l 11842 They would say, "Yeah, it's a funny idea. Could be entertaining, but we can't make sitcoms in Canada."
LISTNUM 1 \l 11843 And I always wondered why. And when I asked why, there was usually some vague talk about being in a small market and having to compete with Americans who just do it better. And that never sat well with me. I always thought do it better? Have you ever seen an episode of She's the Sheriff?
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11844 They don't automatically ‑‑ they don't automatically do it better. We should be doing our own shows.
LISTNUM 1 \l 11845 Over the years I had a few opportunities to work in television, but those opportunities were always short‑lived. I can't definitively say why those opportunities didn't pan out, but I have some theories.
LISTNUM 1 \l 11846 From the start, I was paired up with a producer I didn't know, with a writer or two that I didn't know and that didn't know me. And even once I was paired up with a director who told me he had never seen an episode of the Tonight Show. He had, however, shot several figure skating specials and so was therefore apparently the right guy to shot the comedy I was working on.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11847 I don't mean to sound ungrateful for those opportunities, I just mean to illustrate the frustrations that come from having accountants talking to me about jokes in the script.
LISTNUM 1 \l 11848 I once had an accountant say these words to me, seriously I'm quoting these words in regard to a show I was working on: "A chicken suit would be funnier."
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11849 I said, "Do you mean it would be less expensive?" He said, "No, I really think that it would be funnier. But, yes, it would be less expensive ‑‑
‑‑‑ Laughter / Rires
‑‑ there's a chicken suit in the wardrobe warehouse."
LISTNUM 1 \l 11850 At any rate, those shows either never saw the light of day or never lasted, and I always found myself back touring the nightclubs.
LISTNUM 1 \l 11851 But Corner Gas was a very different scenario. The executives at CTV suggested that I start interviewing production partners.
LISTNUM 1 \l 11852 They didn't assign me a producer, they wanted me to find a producer that I felt comfortable with, who I felt understood the project and my sense of humour. And then they asked me who do you think should write the show with you. What a wonderful and refreshing question.
LISTNUM 1 \l 11853 In short, what I'm trying to say here is that at all times throughout the creation of Corner Gas, and through its multiple seasons, I've been allowed to focus my energies in the directions where I can actually have some impact.
LISTNUM 1 \l 11854 So I don't know how much more expensive a duck suit is than a chicken suit. I even have a hard time verbalizing why it might be funnier in a given situation.
LISTNUM 1 \l 11855 I just know that it's one of those intangibles that you have to feel, and it's why creative people should be allowed to create.
LISTNUM 1 \l 11856 But the scripting and the jokes and the acting are only the most visible of the many reasons why Corner Gas is watched by more Canadians than any other sitcom, which it is. It's the most watched comedy, Canadian or American.
LISTNUM 1 \l 11857 When was the last time that the top‑rated sitcom in Canada was Canadian? I was trying to think, I don't think it's ever happened.
LISTNUM 1 \l 11858 And a huge part of that success is due to the support that we received from the BCE CTV benefits. It made a huge difference getting the vast majority of our production financing from one place, and the one‑stop shopping financing model.
LISTNUM 1 \l 11859 As you know, this kind of funding model and support is highly unusual in Canada.
LISTNUM 1 \l 11860 I strongly endorse the approach the CTVglobemedia is taking with the CTV CHUM benefits, because it will breed success.
LISTNUM 1 \l 11861 And when I say success, I'm not talking about whether or not the shows will turn a profit. I just don't know a lot about those things.
LISTNUM 1 \l 11862 Me talking about the bottom line would just be the reverse of the duck suit thing.
LISTNUM 1 \l 11863 When I say success, I'm talking about Canadians from coast to coast, lots of them, sitting down at a specific time of the week to watch a specific show, a specific Canadian show.
LISTNUM 1 \l 11864 The CTV CHUM benefits is set up to give creative people a chance.
LISTNUM 1 \l 11865 I know a ton of very talented writers and actors and comedians and directors and young producers who can't break into the business because they just don't know how to raise the necessary funding from the various agencies that support the arts. It's just not an easy process.
LISTNUM 1 \l 11866 So these creative people end up missing the boat because they don't know how to do the paperwork, or simply scrapping their ideas because they can't alter their vision to suit the varying demands of the separate funding agencies.
LISTNUM 1 \l 11867 The CTV CHUM benefits will allow those people an opportunity to better realize their vision, because they can spend time and energy writing, and casting, and story boarding, and rewriting, and designing sets, and doing all those other intangible things that don't show up on a balance sheet.
LISTNUM 1 \l 11868 I'd like to sum up by correcting a misconception about Corner Gas.
LISTNUM 1 \l 11869 There are some who think that, for whatever reason, I approached other broadcasters with the idea for Corner Gas, and that they turned it down, thereby missing out on this huge success story.
LISTNUM 1 \l 11870 It makes for a good urban legend, I guess, but it's just not the case.
LISTNUM 1 \l 11871 I want to make it clear that CBC or Global or anyone else did not turn down Corner Gas. I never approached them with the idea of Corner Gas.
LISTNUM 1 \l 11872 And, in fact, I never actually approached CTV either.
LISTNUM 1 \l 11873 The truth is CTV came to me. They sought me out as a creative person and they said, "Hey, do you have any ideas for a TV show?" And that's when I started talking about this small gas station show that I had.
LISTNUM 1 \l 11874 My point is the executives of CTV and the Comedy Network were actively seeking out talent, and they still are.
LISTNUM 1 \l 11875 I don't know if any of you have ever heard the name Shawn Proudlove. Not many people have. But for my money he's one of the most original and unique minds in the country, and he's never had a national forum for his talents.
LISTNUM 1 \l 11876 So you can imagine how it warmed my hearts and bolstered my belief in Canadian show business to find out that the Comedy Network is giving Shawn Proudlove his own special.
LISTNUM 1 \l 11877 I can almost guarantee no one else in the country was going to give such a unique artist a shot.
LISTNUM 1 \l 11878 Corner Gas is about to start shooting its fifth successful season, with an average audience now of over one and a half million viewers.
LISTNUM 1 \l 11879 It has been sold to more than 26 countries, including a sale to U.S. channel, which has over 70 million subscribers. There's a companion book and merchandising and DVDs.
LISTNUM 1 \l 11880 So, from my perspective, the BCE CTV benefits has accomplished exactly what they said they would, and then some. And I have no doubt the CTV CHUM benefits will lead to the same type of success.
LISTNUM 1 \l 11881 As an artist, I was able to benefit from this system, and I don't want to see it taken away from the next generation.
LISTNUM 1 \l 11882 I don't have anyone telling me that a Canadian sitcom is impossible any more. What happens now is people say to me, "Hey, I've got a great idea for a sitcom."
LISTNUM 1 \l 11883 This is a good time. It's finally a good time for artists in this business. It's what me and my friends used to dream about.
LISTNUM 1 \l 11884 I had to create a production company to do business, and I've always been kind of crazily symbolic about things for whatever reason. I wanted to give a name to my production company that meant something, and since working with CTV I called my production company Sparrow Media, because I no longer feel the need to fly south.
LISTNUM 1 \l 11885 Thank you for your time. Virginia and I are happy to answer any questions.
LISTNUM 1 \l 11886 THE SECRETARY: Thank you.
LISTNUM 1 \l 11887 We'll proceed with the next presentation. Mr. Steven Stohn and Linda Schuyler of Epitome Pictures.
INTERVENTION
LISTNUM 1 \l 11888 MS SCHUYLER: Mr. Chairman and Commissioners, thank you for the opportunity to present to you today.
LISTNUM 1 \l 11889 My name, as you heard, is Linda Schuyler, and I own a company with Steven Stohn.
LISTNUM 1 \l 11890 I am the creator, and together we are the executive producers, of two awarding‑winning Canadian dramatic series, Degrassi: The Next Generation, and Instant Star, both of which air on CTV in Canada, and are also seen in over 150 and 120 countries respectively around the world.
LISTNUM 1 \l 11891 We are immensely proud of the fact that young audiences internationally are watching these 10 out of 10 Canadian series.
LISTNUM 1 \l 11892 We're here today to talk in full support of CTVglobemedia's acquisition of CHUM Limited.
LISTNUM 1 \l 11893 Joining Steven and me today, we are pleased to have two cast members from our series, Stacie Mistysyn and Melissa McIntyre.
LISTNUM 1 \l 11894 Stacie Mistysyn has been an actor with us since the earliest days of the kids of Degrassi Street, which is over 25 years ago. Sorry to do that to you, Stacie.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11895 And she is still working with us today.
LISTNUM 1 \l 11896 And Melissa is one of our stars on Degrassi: The Next Generation, and has been for seven years.
LISTNUM 1 \l 11897 Our relationship with CTV has given us the platform to build bigger audiences for high quality Canadian programming. And we have no doubt that the proposed acquisition of CHUM will only add to this visionary's company's ability to provide even more opportunity to Canadian independent producers.
LISTNUM 1 \l 11898 CTV's commitment to Canadian programming of the highest quality, particularly drama, is demonstrated through their incredible support for Degrassi and other shows made possible through the BCE CTV benefits program.
LISTNUM 1 \l 11899 The CTV CHUM benefits that are proposed in this application are based on a similar model, and we can speak to the reason that this model is poised for success.
LISTNUM 1 \l 11900 MR. STOHN: Our entertainment industry is fraught with many challenges, perhaps foremost among them being how to finance projects.
LISTNUM 1 \l 11901 I firmly believe that CTV's staunch support of Canadian programming, as well as the BCE CTV benefits have been at least part of the solution to this problem.
LISTNUM 1 \l 11902 The BCE CTV benefits package, and the series extension benefit in particular, was of enormous help in achieving Degrassi's success.
LISTNUM 1 \l 11903 The additional financing provided under this benefit was sufficient to extend the typical series order of 13 to a larger number of episodes, like 22 or 19, or in the case of this season, 24.
LISTNUM 1 \l 11904 And this made our series far more attractive to international buyers. And that has been critical in telling our identifiably Canadian stories to the world.
LISTNUM 1 \l 11905 As an example, last year during our sixth season of Degrassi, we surpassed the 110 episode mark. And that's a key number, as it permits broadcast each week day for 22 weeks without repeats.
LISTNUM 1 \l 11906 And that, in turn, opened the door to a successful syndication sale in the United States. Expanding us from the digital channel that we now appear on, to daily over the air broadcasts in all of the major cities of the United States, and indeed over 90 percent of all U.S. communities.
LISTNUM 1 \l 11907 And that's in addition to broadcasts on super stations such as WGN in Chicago, WPIX in New York and KTLA in Los Angeles.
LISTNUM 1 \l 11908 So we strongly believe that the inclusion of a similar funding envelope in the CTV CHUM benefits package is extremely positive.
LISTNUM 1 \l 11909 I'd also like to speak to the extraordinary support CTV has given us in the development of multi‑platform adjuncts to our series.
LISTNUM 1 \l 11910 CTV has been a financial creative and marketing supporter of the highly successful websites for both Degrassi and Instant Star, and an array of new media initiatives, such as webisodes, mobisodes, animated webisodes, graphic novels and soundtrack albums, and these, in turn, have propelled forward even further initiatives.
LISTNUM 1 \l 11911 For example, just yesterday afternoon many of our cast members were in a Broadway theater in New York for an event hosted by Rosie O'Donnell and to be broadcast on the Internet via AOL.
LISTNUM 1 \l 11912 It was featuring stars from the cast of Degrassi, five of them, and five members from the cast of the hit Broadway musical Spring Awakening.
LISTNUM 1 \l 11913 They were together discussing teen issues and challenges in a town hall forum in front of a live teen audience, in addition to the huge audience expected via the Internet.
LISTNUM 1 \l 11914 And, may I say, hearing the reports of that event, it wasn't just a teen audience, it was a screaming pandemonium of a teen audience.
LISTNUM 1 \l 11915 And this is not unexpected. Susanne Boyce has been with us on some of our mall tours in the United States, which we've had to actually stop doing because thousands of fans come out to see, you know, two of our Degrassi stars at a mall in Woodbridge, New Jersey, and the police have had to be called in because ‑‑ no matter how much security we have it tends to get out of control.
LISTNUM 1 \l 11916 My fond dream is that one day the President of the United States will be one of those fans who was lined up in the mall in Woodbridge, New Jersey or in the Eugene O'Neil Theatre in Broadway and seeing our identifiably Canadian stories in action.
LISTNUM 1 \l 11917 MS SCHUYLER: CTV support and promotion ‑‑ financial, creative, and promotional for both Degrassi and Instant Star have been tremendous. CTV could not have been more encouraging and supportive of our desire to develop new writers, actors, and directors, which you've heard a lot about today is so important.
LISTNUM 1 \l 11918 Because we know that our future industry rests on what we do now to develop and encourage diverse young talent. And unusually for Canada, both our series have had the benefit of creative and far‑reaching publicity and promotional campaigns.
LISTNUM 1 \l 11919 All of this together with these series being given prominence on CTV schedule has resulted in Degrassi and Instant Star, being the top two English language Canadian drama series on air today.
LISTNUM 1 \l 11920 We support this application because we know from experience and from CTV's demonstrated success that the benefit models proposed will breed further success. CTVglobemedia's track record of working in tandem with independent producers to develop and promote identifiably Canadian dramatic television series is unmatched.
LISTNUM 1 \l 11921 In this borderless media age where new technology has increased the competition for media companies worldwide, we should applaud a Canadian broadcaster who wants to meet the challenge of creating compelling stories that reflect Canadians to themselves. Success deserves to be regarded and encouraged. And we encourage you to approve this application. Thank you.
LISTNUM 1 \l 11922 THE SECRETARY: We will continue with Mr. Heyges, Bright Light Pictures Inc.
LISTNUM 1 \l 11923 Sorry, for the pronunciation.
LISTNUM 1 \l 11924 MR. HEYGES: It's okay. It's Heyges. Thank you. It happens a lot.
LISTNUM 1 \l 11925 Good morning, Mr. Chairman, Commissioners. Thank you for the opportunity to appear at this very important hearing in support of the CHUM Limited transfer of ownership to CTVglobemedia.
LISTNUM 1 \l 11926 My name is Steven Heyges. And I'm a producer and principal of Bright Light pictures, a Vancouver based production company that develops finances and produces independent feature films and television projects for the domestic and international marketplace.
LISTNUM 1 \l 11927 To date we've produced over 30 feature films as well as multiple television series. We are thrilled that CTVglobemedia has made a firm commitment to preserve Citytv's unique contribution to the broadcasting system, including their support of Canada feature films.
LISTNUM 1 \l 11928 In an increasingly competitive global environment TV licencing is an integral part of the financing structure for Canadian feature films. Without it Canadian film creators would never be able to compete financing requirements and go on to exhibit our films both in Canada and all over the world.
LISTNUM 1 \l 11929 The ability to showcase Canadian programming domestically and on the international stage can only continue if we have strong industry partners with a broad reach. And without Canadian broadcast partners so many excellent Canadian films would never be seen in many Canadian markets. Theatrical releases can be short lived and free TV windows are often the key platforms through which these films reach Canadian audiences.
LISTNUM 1 \l 11930 I believe that CTVglobemedia with their demonstrated history of investing in Canadian programming and building success is the right choice to take on CHUM assets, and become a much stronger voice for Canadian content and Canadian feature film.
LISTNUM 1 \l 11931 The winning combination of CHUM's experience in feature film and CTV's expertise in promotion and building audiences will be an immense benefit to our industry. Right now we are telling Canadian stories, and have seen a huge talent pool in Canada, but increasingly we see this talent go south.
LISTNUM 1 \l 11932 If there are more production opportunities in Canada for and by Canadians, we can create opportunities for the best and brightest in Canada. Our success has enabled us to nurture many emerging writers and directors and producers. CTVglobemedia's commitment to maintaining CHUM's focus on supporting feature films is of critical importance to independent filmmakers.
LISTNUM 1 \l 11933 CTV has shown itself to be passionate about building Canadian programming and audiences, and succeeded into doing so. This is no small feat. I believe that under CTVglobemedia's ownership the unique CHUM services will thrive, and their ideas and innovation will be better financed.
LISTNUM 1 \l 11934 This will mean that we do not lose the important contributions that Citytv and the other CHUM services have been making to the broadcasting system, and that Canada feature films will continue to have a free TV platform in Canada, and the opportunity to travel around the world.
LISTNUM 1 \l 11935 The marriage of these great companies while preserving City's distinctive voice will contribute greatly to the vitality of our broadcasting system thereby enhancing Canadian content.
LISTNUM 1 \l 11936 THE CHAIRPERSON: Thank you very much. It's fascinating to hear you all. Obviously you're very satisfied with your relationship with CTV. You've had a long relationship and it has been mostly beneficial.
LISTNUM 1 \l 11937 For us the key question, of course, is what I posed to the previous panel, why CTV? Would not another owner of CHUM do the same thing? That company would have Canadian obligations. It would offer benefits. It would make commitments for film, for independent production, et cetera. And, of course, you are extremely talented and successful producers some of you. Working with you would be to ‑‑ other owners benefit, of course, because you put a product that people want to see ‑‑ that sells, et cetera.
LISTNUM 1 \l 11938 So explain to me what is special about CTV? What is its difference? Why another owner could not do exactly the same thing that CTV has promised or committed to do?
LISTNUM 1 \l 11939 MR. HEYGES: If I could jump in. From the feature film standpoint ‑‑ I wanted to address this ‑‑ because feature film is in crisis in this country right now. And I think that what ‑‑ CHUM has been a supporter of feature film, and our company wouldn't be where it is today had it not been for the support of CHUM and feature film.
LISTNUM 1 \l 11940 What I see in CTV, as Brent mentioned earlier, is a creative company that has the ability to promote and market Canadian content. That is a component that is missing from the feature film community right now. To have the creative knowledge and marketing and promotion is an essential component to the success of any feature film. I think those ‑‑ that is something that is a unique ‑‑ a unique ‑‑ something that is ‑‑ really I can only see CTV as the company that can do that properly.
LISTNUM 1 \l 11941 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11942 MR. BUTT: I ‑‑ oh, sorry. I just wanted to ‑‑
LISTNUM 1 \l 11943 THE CHAIRPERSON: Whoever wants to speak.
LISTNUM 1 \l 11944 MR. BUTT: When you first posed this question the word that really stuck out in my mind was relationship. You said we seem to enjoy a good relationship with CTV.
LISTNUM 1 \l 11945 For me personally that's ‑‑ that is what it comes down to. Because I've worked with other broadcasters. I've worked with CBC, I've worked with Global, I worked with some other independent producers. But it really comes down to the relationship of the individuals.
LISTNUM 1 \l 11946 When you talk about Rogers or anybody else, you know, adding to these benefits or having to make commitments ‑‑ with CTV it's not legal obligations with them. It goes more than that. They can satisfy the legal obligations that they have in a lot easier ways than what my experiences has been with them.
LISTNUM 1 \l 11947 One of the things that comes to mind is one of the executives that was put in charge of Corner Gas in the beginning ‑‑ being on the phone with me until 1:30 in the morning listening to my ideas about how I could alter the resolution of the third act of the script I was working on.
LISTNUM 1 \l 11948 She didn't have to do that. She could have easily said, well, you know, e‑mail it to me tomorrow ‑‑ or I'll give you my ideas ‑‑ I said I'm going to be working on this late. She said, well give me a call whenever you want. I said it's not going to be until 1:00 or 1:30 in the morning. And she said that's all right. We'll talk about it then. Because she knew I wanted to get this to the story department the next day.
LISTNUM 1 \l 11949 So it's those kind of commitments that go beyond the ‑‑ just the obligations that they have to satisfy the Commission. It really is them wanting to make sure that the creative people have the most opportunity to put their product out there. That's been my experience.
LISTNUM 1 \l 11950 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11951 MS THOMPSON: And following up with Brent. I think what makes CTV and this exciting, you know, merger to companies ‑‑ exciting for me is that you say we're very interesting and talented bunch, and ‑‑ but I think you have to understand that CTV has nurtured our talent. On Corner Gas I was a creative producer. Not an executive producer championing other creative talents before Corner Gas.
LISTNUM 1 \l 11952 CTV took a chance on me and on our company to be able to develop us and grow us as they developed Brent and his vision. It's an extraordinary situation when you have a broadcaster ‑‑ and I believe this broadcaster is extraordinary because of their knowledge.
LISTNUM 1 \l 11953 CTV understands producers because I think their staff members ‑‑ some of them are former producers. They're also exceptional broadcasters. They're also exceptional marketers. They also have an amazing, you know, capacity to understand new media. They nurture us. We nurture them. It is extraordinary.
LISTNUM 1 \l 11954 And I've been a producer in Canada for, you know, now ten years. The most extraordinary experience that I had before working on Corner Gas with Brent Butt and CTV was when our first series, Incredible Stories Studio ‑‑ it was a huge hit in Canada, but it didn't actually really hit until it went overseas. And I had the opportunity to work with Disney.
LISTNUM 1 \l 11955 And Disney just worked differently than Canadian broadcasters. They worked as a team. They nurtured this project and they made it relevant to the European community. And they knew how to market, and they knew how to promote, and they knew how to nurture.
LISTNUM 1 \l 11956 And I had never been nurtured, marketed, and promoted in that way. I got that nurturing from Disney International. And I came back to Canada and I thought I wonder if that could ever happen again. And it's happened with Corner Gas.
LISTNUM 1 \l 11957 So I do believe that this is an exceptional company with exceptional people that have a broad base of knowledge in so many different aspects of broadcasting, marketing, promotion, et cetera that they bring out the best in us. And I do very much hope that they can bring that with the next generation of producers with this acquisition.
LISTNUM 1 \l 11958 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 11959 MS SCHUYLER: I would just like to follow up on that. It was ‑‑ I don't know about Jully's teeth analogy, but I do know that in sports that the only way that we have winning teams is when we have great depth in the bench.
LISTNUM 1 \l 11960 It was 20 years ago that Ivan and I first met. And at that point Degrassi was running on CBC, and it was running on a Sunday afternoon time slot around 5 o'clock.
LISTNUM 1 \l 11961 And Ivan called me ‑‑ had just come back to work at CBC, and he called me into his office. And he said, Linda, I've been aware of this show of yours, and I think we should actually move it to an 8:30 time slot. And I looked at him and I said, oh very nice to meet you Ivan, but I really don't think that's a very good idea.
LISTNUM 1 \l 11962 And he said well why? And I said well because I don't feel ‑‑ I don't know if my show is ready for it or whatever. And he said I am your broadcaster. I am telling you, you are ready for 8:30. He said you do your job. You go and ‑‑ you produce the shows. I will do my job and I will broadcast them.
LISTNUM 1 \l 11963 And in those days Ivan and I worked quite closely. He used to come down to our office, which was in an old basement. And he would watch the first cut of every season. And we would, you know, make sure that together we were happy with the story telling that we were doing.
LISTNUM 1 \l 11964 Now we're back with Degrassi the Next Generation. And I think that word "next generation" speaks volumes. Not just to what we're doing in front of the camera, but to what's going on behind the camera.
LISTNUM 1 \l 11965 Ivan does not come down to my basement office anymore. In fact, I'm not even in a basement office anymore. He has around him ‑‑ when you look at Susanne Boyce and his whole Canadian team, he's not able to work with me on a daily that he used to. But he has a team around him who share the vision and the passion.
LISTNUM 1 \l 11966 I also don't work as closely on the floor on my show as I used to. I've had to build around me an ‑‑ an infrastructure. In fact, one of my co‑producers now on Degrassi: The Next Generation is Stefan Brogren who if you knew the original Degrassi he used to play Snake and was one of zit remedy. He has now grown to be a producer with me.
LISTNUM 1 \l 11967 So we are together through what CTV is doing, and what we're now able to do in our country is nurture this next level of talent. Our industry is still a baby industry. And we're competing as we well know with the forces south of us.
LISTNUM 1 \l 11968 And it is only ‑‑ we are only going to mature as an industry if we can continue to build on those relationships and nurture our talent. So it's ‑‑ you're dealing with a lot of things that are not easy to measure. Because we're dealing with talent. We're dealing with creative people and ‑‑ but I think you've heard a lot today about relationships and nurturing, and I can't speak highly enough of the importance of that.
LISTNUM 1 \l 11969 MR. STOHN: If I could just add two small points to what Linda said. And certainly what Steve, Brent, Virginia, and Linda have said, and indeed the previous panel on this issue resonate completely with me. I'm just trying to make two different points perhaps.
LISTNUM 1 \l 11970 We are facing a very uncertain future in the television world. I also have a music background, and I know the music industry in the face of the Internet has really ‑‑ is going in to free fall and it's going into massive transformation now. It's highly likely that over the next few years the television industry may be facing similar kinds of pressure.
LISTNUM 1 \l 11971 So we're going to need teams that are, you know, innovated, looking to the future, and willing to adapt. That also means that we need ‑‑ there is something good about being big and being able to survive what's going forward. CTV has shown in our relationship with them an extraordinary capacity to innovate in the new media and work with us. We're small.
LISTNUM 1 \l 11972 I think ironically in this world it's good to be very big. And it's good to be very small. We can be nibble and run around and come up with ideas. CTV ‑‑ I think big ‑‑ they're going to be very, very good and actually crucial over the next while to really have the ability to withstand some of the hurricanes that are going to be thrust in our path.
LISTNUM 1 \l 11973 The second is diversity. And you know what ‑‑ what I see looking out over the dial, what Linda and I see as producers looking to different networks are ‑‑ as networks get into trouble they tend to move more towards the middle, this may be true in radio as well as in television, and start to appeal more and more to the mass audience.
LISTNUM 1 \l 11974 Where you've got one owner of two different channels, you actually are going to get more diversity in the system. If a Rogers were to take over a CHUM, you know, surely their economic self‑interest ‑‑ regardless of what expectations or commitments they made, their economic self‑interest is going to be ‑‑ to make it look more like the most successful network in the country, CTV.
LISTNUM 1 \l 11975 So there's going to be pressures on them to do that. Whereas, in CTV's economic self‑interest is to make them as different as possible, and indeed they've made that commitment already. Because they've already got CTV. Now they want something that, you know, is an adjunct to it. It's complimentary not in competition with it. So thank you very much.
LISTNUM 1 \l 11976 MR. BUTT: I'd like to just add one thing if I could too. It's a little anecdotal maybe, but I think it applies to what we're talking about here. Recently we received word that ABC was interested, based on the success of Corner Gas, of buying the rights to remake it and make it an American show. Basically take Corner Gas and make it American.
LISTNUM 1 \l 11977 I know for a lot of reasons it ‑‑ probably from the business standpoint ‑‑ was very exciting. And I think it probably made a lot of sense for CTV financially to have that happen.
LISTNUM 1 \l 11978 Virginia and myself and David Story ‑‑ the other executive producers, we just talked about it and it just wasn't sitting well with us. It was kind of taking the work that the writers and the actors and we as the producers had done and kind of erasing that and getting rid of it. And suddenly here's a gas station in Nebraska or Idaho, and there is some other guy with a big round head and glasses doing it.
LISTNUM 1 \l 11979 ‑‑‑ Laughter / Rires
LISTNUM 1 \l 11980 It just didn't sit well. So I didn't know how to say that to CTV really, but I said it. I said it doesn't sit well with us. And they said well you don't have to do it. If you don't want to do it we'll talk to ABC, and it will be fine. Don't worry about it.
LISTNUM 1 \l 11981 They as a champion that was big enough, you know, were able to step between us and a large broadcaster who wanted to essentially take what we did. They were able to step between them and us and say look, if they don't want to sell they don't have to sell.
LISTNUM 1 \l 11982 THE CHAIRPERSON: Mr. Larose, you represent a community that's clearly growing all the demographics ‑‑ I would suggest becoming more and more important, et cetera. You mentioned your good relationship that you have with CTV. And when I visited you about two months ago you could explain it to me in more greater detail as part of my general education.
LISTNUM 1 \l 11983 You must be courted by other networks, too. I mean other networks must be seeing you. Can you explain why you have such a good relationship with CTV? Why you wouldn't be on equal footing with other networks?
LISTNUM 1 \l 11984 MR. LAROSE: Well, we do work with other networks. Part of what APTN tries to do is open opportunities for Aboriginal peoples across the broadcasting sector.
LISTNUM 1 \l 11985 Where CTV has made a huge difference for us in many cases is in some of the ‑‑ as I mentioned in my presentation it has gone beyond the strict wording of what the special benefit was. When we look at the arrangement under the Bell Globe Media transaction, CTV was committed to providing so many dollars for so many years to open the bureaus. And that was the ‑‑ that was strictly the wording of the arrangement.
LISTNUM 1 \l 11986 However, in building the relationship with them it has become much more than that. We are now two years past the special benefits. We have worked to establish an entirely new relationship, built on the fact that they have a range of outlets across the country that allow us to tell our stories to Canadians from our perspectives from our point of view. That is really the only outlet we have right now outside of APTN when it comes to news in that formal arrangement.
LISTNUM 1 \l 11987 When we started discussing this proposal initially, the idea that I had ‑‑ and I mean it's interesting that I am sitting at same table as Mr. Butt ‑‑ I keep using Corner Gas as an example of the type of production that APTN would dearly love to do with somebody like CTV where we have Warren Cardinal, to whom I spoke by the way about this proposal and he was all enthusiastic about the opportunities it may provide to some of our actors and other players in the industry.
LISTNUM 1 \l 11988 This is the type of thing that we feel right now and we know by experience that the commitment that they have made will be lived up to. They have lived up to every commitment and then gone beyond.
LISTNUM 1 \l 11989 Last fall when we did the Aboriginal People's Choice Music Awards we approached ‑‑ I approached Bell ExpressVu which is part of the overall family, if you wish, and I asked them ‑‑ I said, you know, you don't have any obligation to APTN but we are doing this live show and I would love to do it in HD and I would love to get it out across the view channel. ExpressVu provided it at no charge to APTN or to the producer, the Aboriginal Production community, at all, their HD truck; all of their equipment, all of their personal. Basically, they provided us a one‑time benefit of over $170,000 just to help us put this show out, something that nobody else has ever offered before.
LISTNUM 1 \l 11990 So I think ‑‑ to me, what has been key in this relationship and we are trying to build that relationship with others like Omni, as an example where we have many similarities, and we have been successful with Omni.
LISTNUM 1 \l 11991 But with CTV I know that when I call ‑‑ whether it's Robert Hurst, it's Terry Snazel; it's one of the key people over there with whom I am working, not only will I get a callback, often I get a response. They actually pick up the phone and we can actually talk about these things and something concrete has come out of it.
LISTNUM 1 \l 11992 The same was with CHUM. I could call Sarah. I can call people over there and I knew that they would be part and parcel of finding a solution and helping us move forward.
LISTNUM 1 \l 11993 And to us that's key having been out of this industry, you know, forever until the CRTC gave us an opportunity almost eight years ago now, has been ‑‑ you know, they have been very strong supporters of the aboriginal people initiatives and we believe that this merger will only reinforce not only the relationship but the possibilities. I don't see any negatives to it. I mean, I can go back to when we looked back in the sixties when ‑‑ a study in journalism. We had the Kent Commission on media concentration and the newspaper industry. There were great fears that there would be ‑‑
LISTNUM 1 \l 11994 THE CHAIRPERSON: Wait just for the fall when we have the diversity of voices hearing.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 11995 THE CHAIRPERSON: We want to hear from you then.
LISTNUM 1 \l 11996 Helen, you had a question?
LISTNUM 1 \l 11997 COMMISSIONER DEL VAL: Just I am following up on the question on your loyalty to CTV, and I obviously can sense that, but what about thinking of it from another perspective as well? CTV will be there. Like the CTV stations as they stand is what you have built the loyalty with your successes with, but what about the opportunity of an additional outlet; someone else who also has or could be as strong for you to also start building another ‑‑ the same type of relationship? What about an additional outlet?
LISTNUM 1 \l 11998 Do you think that your existing relationship with CTV can completely outweigh the possibility of additional opportunities?
LISTNUM 1 \l 11999 MR. STOHN: Well, I think to us, to Linda and me, I mean I don't think we are looking at this as just having one outlet. I think the commitments that certainly I heard yesterday, was that there was going to be a vibrant and increasingly successful CHUM network with a separate program buyer and we have got our existing relationships with CTV. So it seems like almost the best possible situation.
LISTNUM 1 \l 12000 THE CHAIRPERSON: You mentioned, basically, only CTV can complement and I would like you to explain that. I find this kind of goes contra to us as far as I am concerned.
LISTNUM 1 \l 12001 Surely, you want to find a part of the market where you can compete and you can make a lot of ‑‑ your suggestion that if CHUM was sold to somebody else they would move to the centre, they would shed the City image and edginess and just try to become another CTV, obviously that's a possibility but there clearly is a market for CHUM. Otherwise, CTV wouldn't want to have it.
LISTNUM 1 \l 12002 Secondly, CHUM has been around a long time. It has been very successful; of late, not so much but the question is whether that market can't be explored more meaningfully with somebody with deeper resources.
LISTNUM 1 \l 12003 So why are you automatically assuming that CHUM under a different owner would gravitate towards the centre rather than exploring the established niche, if you want to call it that, that CTV ‑‑ that City established?
LISTNUM 1 \l 12004 MR. STOHN: The analogy that I used, I went to university in a small town in Ontario which only had two radio stations and they were both owned by different people and they both ended up sounding like Hot AC contemporary stations. And that was nice if you happened to like Hot AC and contemporary music, but if one person owned both those stations in the market then it would seem, it just seems to me both intuitive and economically the way it would happen is that they would have one Hot AC contemporary station and another, perhaps a country station or a niche station because why compete with themselves?
LISTNUM 1 \l 12005 So that's why it is my view that if someone is owning two stations in a market, it will be in their self‑interest rather than competing with and trying to cannibalize themselves to really stretch out. I think what you are saying is, well, isn't it in somebody else's interest to do that as well.
LISTNUM 1 \l 12006 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 12007 MR. STOHN: And to a certain extent, after the middle has been occupied that may be that they are forced to the edges, but the low hanging fruit will be that core middle audience that the advertisers are really desiring and that they have been able to deliver and that's why CTV has so many of the Top 20 shows already. People are going to want a share of that pie.
LISTNUM 1 \l 12008 That's my view in any event.
LISTNUM 1 \l 12009 THE CHAIRPERSON: But your analogies and casting back to your youth, different age, different time and much more sophisticated, much more demanding audience; not many more platforms in a fragmented market and urban market. Doesn't that ‑‑ it is basically saying the middle is ‑‑ the low hanging fruit is not that big anymore and that all you can have is the off centre very successfully?
LISTNUM 1 \l 12010 MR. STOHN: Certainly, we know that in the specialty area that's exactly what has happened, so on the cable channels we are seeing the success of the specialty channels that have arisen. But when we are still in the conventional over‑the‑air space where there are a limited number of players, to me it seems there that when you are appealing to the mass audience the tendency will be to move towards the middle.
LISTNUM 1 \l 12011 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 12012 Rita, you had a question? Oh, I am sorry. I apologize.
LISTNUM 1 \l 12013 COMMISSIONER DEL VAL: So I am sorry. May I finish with my question?
LISTNUM 1 \l 12014 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 12015 COMMISSIONER DEL VAL: Just because there is a lot of concern from other intervenors on just the loss of the ‑‑ the number of outlets and I think the panel before us here are established, you know, by any stretch of the imagination but if you think on when you were starting would it not be beneficial to have more doors to knock on, to have just more strong outlets because the fact is that what is being asked before us that will be created is a very, very large conglomerate and then you do think about, you know, who are the others who could survive. There probably will not be that many. So then there would be diminished amounts of players.
LISTNUM 1 \l 12016 I mean, can you comment on the loss of outlets and do you see any benefit in sort of creating opportunities for other strong outlets? Thank you.
LISTNUM 1 \l 12017 MR. STOHN: If I can ‑‑ I don't mean to monopolize this but what I am hearing you saying is that because CTV CHUM between the two outlets will become so dominant that it may result in other players having to leave the marketplace and I am not seeing that. I know that the Competition Bureau has looked at this and said, no, no, there won't be that kind of dominant position.
LISTNUM 1 \l 12018 So to me I am seeing the same players still in the marketplace and an even stronger CHUM outlet as a result of this acquisition.
LISTNUM 1 \l 12019 MR. WEINSTEIN: I am seeing this from an entirely different point of view and, actually, it's sort of the opposite of what you are saying in that CTVglobemedia is ‑‑ when I found out about this possible acquisition I was actually quite terrified because ‑‑ I told you a little bit about the trends in classical music and performing arts and my first thought was, okay, well, that's it. Bravo! is dead because a lot of people will look at these trends.
LISTNUM 1 \l 12020 And then I started speaking to the people there at Bravo! and at City and they were having meetings with the people at CTV and they started having ‑‑ they started having this optimism and this ‑‑ and I thought ‑‑ I didn't know what this was all about and then I was talking to some of the CTV people and I realized there was this sincere interest in preserving the distinct nature of the channels but also to really promote culture. It is something that CTV hadn't done as much and it was really exciting to them. This was really something that reassured me.
LISTNUM 1 \l 12021 And, in fact, this whole question yesterday about edge. I mean, edge, edgy programming what does that mean? Does that mean it's hip? Does it mean ‑‑ what does that mean? But in a way, I mean, I make classical programs. They are the least edgy things if you think about them but it was about groundbreaking as well and about pushing extremes.
LISTNUM 1 \l 12022 So Bravo! was always really interested in the ideas that we are a little more experimental or a little bit more political musical and these things did very well. But the idea of ‑‑ when I realized ‑‑ I mean, Ivan Fecan's own interest in both preserving the different nature of these channels but also of the love of culture and the importance of that.
LISTNUM 1 \l 12023 What it made me realize is the opposite, which is I didn't want just a monopoly in culture in Canada. I have a wonderful relationship with CBC but I also have a wonderful relationship with Bravo! and the idea of one of those things disappearing terrifies me and, you know, for a while there it looked like both were going to disappear in terms of culture but I think that's not the case in either case.
LISTNUM 1 \l 12024 MR. BUTT: Yes, I don't ‑‑ sorry, I was just going to say I don't really look at this as, you know if this acquisition is allowed to take place, I don't look at it as there being fewer doors suddenly. I look at it long term as those existing doors that are out there have a greater chance of still being there 10 or 15 years down the road and my fear is that without a strong champion stewarding those, you know the keepers of those doors, those doors might be boarded up in a few years.
LISTNUM 1 \l 12025 COMMISSIONER CUGINI: Thank you.
LISTNUM 1 \l 12026 Well, we certainly have covered a lot of ground this morning so I hope to not keep you here for too much longer. But I do have just a couple of questions on specifics and in particular for Ms Schuyler and Mr. Stohn.
LISTNUM 1 \l 12027 You spoke about the CTV ‑‑ BCE‑CTV benefits providing financial, creative and marketing support of the websites for both Degrassi and Instant Star and an array of new media initiatives. Who owns the rights to those initiatives?
LISTNUM 1 \l 12028 MR. STOHN: We do.
LISTNUM 1 \l 12029 COMMISSIONER CUGINI: So you are able to fully exploit all the new media and ancillary rights?
LISTNUM 1 \l 12030 MR. STOHN: Absolutely. So CTV has licensed certain rights during the term of their television rights within Canada but in the foreign markets we control those rights.
LISTNUM 1 \l 12031 COMMISSIONER CUGINI: Okay, thank you.
LISTNUM 1 \l 12032 And now for Rhombas, Sparrow and Epitome, all three of you are members of the CFTPA?
LISTNUM 1 \l 12033 MR. STOHN: Yes, thank you.
LISTNUM 1 \l 12034 MS THOMPSON: Yes, and I just wanted to make one point. Corner Gas has been fully financed by the BCE benefits so the show, the website, all aspects of it. Well, until most recently. But let's just look at the first three seasons. We own the rights to the show. We own the rights to the merchandising line, et cetera, et cetera, et cetera.
LISTNUM 1 \l 12035 What is most fascinating to us, though, is that once the BCE benefits were finished CTV continued to finance us in the same way post benefits. So they have covered, you know, up to 80 percent of our production financing budget since ‑‑ you know, for the last five years with benefits and without and we have been able to maintain copyright all the way through.
LISTNUM 1 \l 12036 COMMISSIONER CUGINI: Of, again, all platforms?
LISTNUM 1 \l 12037 MS THOMPSON: Yes.
LISTNUM 1 \l 12038 COMMISSIONER CUGINI: On all platforms.
LISTNUM 1 \l 12039 Have you had the opportunity to read the CFTPA intervention ‑‑ again, for all three of you and whoever would like to answer? And I would just like to know if you have any comments on what the CFTPA has submitted as part of these proceedings since you are members.
LISTNUM 1 \l 12040 MR. STOHN: If I can make one comment, and it's on terms of trade because I was actually very involved with the negotiation, much more heavily involved than I wanted to be at the time because it went on and on; the negotiation of the initial terms of trade agreement with the CBC.
LISTNUM 1 \l 12041 And what I found about that was people ‑‑ you can look at terms of trade in one of two ways. One is that there is heavy bargaining on exact deal points and that tends to be ‑‑ but that's a little bit more the British model where it is almost mandated that there be this kind of imposed relationship between broadcasters and producers.
LISTNUM 1 \l 12042 But what we negotiated with CBC really opened the door to a much better understanding between the two parties. It was really setting the parameters of the relationship, making things that had been obscure and transparent even within the CBC and, certainly, between producers and the CBC as to how they operated, how their decision making took place, what the turnaround times would be. So there was ‑‑ it turned out to be a wonderfully illuminating experience. The CBC in the end made a website which made it more open and transparent, all of its policies to all the producers.
LISTNUM 1 \l 12043 So that aspect of the terms of the trade, you know, we think can only be beneficial both to the broadcaster, in this case the CTV, and to the producers because it just makes everything run that much more efficiently.
LISTNUM 1 \l 12044 MR. WEINSTEIN: Sorry. I just wanted to clarify just for the record that Sparrow Media is not a member of CFTPA. My company is a loan out company just providing my services as a creative entity.
LISTNUM 1 \l 12045 COMMISSIONER CUGINI: Thank you. Thank you very much, Mr. Chairman.
LISTNUM 1 \l 12046 THE CHAIRPERSON: Okay, thank you very much. I think we will take a 15‑minute break and then we will hear from those who are opposed close to the transaction.
LISTNUM 1 \l 12047 Thank you.
‑‑‑ Upon recessing at 1057 / Suspension à 1057
‑‑‑ Upon resuming at 1120 / Reprise à 1120
LISTNUM 1 \l 12048 THE SECRETARY: Please be seated. Excuse me. Please be seated.
LISTNUM 1 \l 12049 Thank you, Mr. Chairman.
LISTNUM 1 \l 12050 We will proceed to the next presentation by the intervenor Patrick Hurley.
LISTNUM 1 \l 12051 Mr. Hurley, you have 10 minutes for your presentation. Please go ahead.
INTERVENTION
LISTNUM 1 \l 12052 MR. HURLEY: Mr. Chairman, Members of the Commission, thank you very much for allowing me to come here personally to make my presentation and to participate in the public process.
LISTNUM 1 \l 12053 After listening this morning to all of the intervenors, positive intervenors, listening to all the positive consequences of the proposed takeover, I am afraid that you are about to hear a bit of a reality check. My concern is about the negative consequences of such a takeover.
LISTNUM 1 \l 12054 This year I celebrate my 50th year in broadcasting. I believe you have a copy of my curriculum vitae. It has been a long and rewarding career, beginning in 1957, radio station CFJB in Brampton, Ontario.
LISTNUM 1 \l 12055 It ended abruptly when I was fired by Rogers Communications Inc. in September of 2002, not because of my performance but because I was over the age of 65. Ted Rogers, I might add, at that time was 72 years old, but he was the Chairman and I was just a sales representative selling broadcast time for one of their many radio stations, The Fan 590.
LISTNUM 1 \l 12056 Telemedia had sold the station to Standard Radio in June of 2002 and Standard then flipped it to Rogers.
LISTNUM 1 \l 12057 September 1 I was called to a meeting with the new sales manager to discuss my new budget for the coming year. When I arrived for the meeting, I saw the human resources person in the office with the sales manager and I knew then what was about to happen. I said to her, "You are going to release me, aren't you?" She smiled and said, "We have to make some changes." "Here I am, in the autumn of my career, performing as a top sales representative, and you are going to fire me. I have never been fired in my entire broadcast career. Why?"
LISTNUM 1 \l 12058 Two weeks before I had just sold a promotion to a restaurant chain and a brewery for $100,000 with no commercials, just promotion. When the Vice President of Programming at Rogers heard about it, he came to my office to congratulate me. He shook my hand, saying that it was a great sale, and now, two weeks later, here I was being fired.
LISTNUM 1 \l 12059 The sales manager hastened to say that they had a package for me which the human resources person handed me with a smile. I turned to the sales manager and said "Why are you letting me go?" All she would say was "We have to make changes."
LISTNUM 1 \l 12060 I asked other pertinent questions, but she would give me no answers.
LISTNUM 1 \l 12061 The HR person then said, "You can call in the morning to make an appointment to come and clear out your office." So I said, "Well, why can't I get my things now?" "It is company policy", she replied. "Just don't let them dump all my files with all my personal information in it in my computer", I asked.
LISTNUM 1 \l 12062 I was then unceremoniously escorted out of the building like a convicted criminal. I have never been so humiliated in my life. This, the end of what I believe was a distinguished broadcasting career as a sales representative, a sales manager, a station manager and, finally, as a station owner of a radio station where I started my broadcast career in Brampton, Ontario.
LISTNUM 1 \l 12063 I had served the industry by serving on various committees of this CAB, I was a Director of the Broadcast Executive Society for 10 years, I served as a Director of the Radio Marketing Bureau for two years, and then two years as Chairman of the Board.
LISTNUM 1 \l 12064 I called the next day to make arrangements to come in and clear out my office. I was told this had to be done after hours so the other employees would not be upset seeing me there.
LISTNUM 1 \l 12065 I met the Human Resources person and she escorted me to my office and I asked if they had my files and personal information on a disk. I was told that they had accidentally deleted it all. Even though I said that was unacceptable, she just looked at me and shrugged her shoulders. Was it done on purpose? I think so.
LISTNUM 1 \l 12066 I was the innocent victim of a takeover by one broadcast company by another which was approved and sanctioned by the CRTC. My story is the same as hundreds of other people who have worked in the broadcasting industry here in Canada since the inception of the CRTC.
LISTNUM 1 \l 12067 In my view, the mandate of the CRTC is to protect the public interest in terms of programming to make sure there is a variety of programming to serve various tastes of the listening and viewing public, but I also believe it is my view that the CRTC has a mandate and an obligation to protect employees of the broadcast operations from unfair treatment by station owners, because broadcasting in Canada is controlled by the government through the CRTC. It is not like the private sector.
LISTNUM 1 \l 12068 I believe the record shows that the CRTC, in my view, has failed miserably through the years of its existence to protect the jobs of dedicated people who work in these broadcast operations in both radio and television. Who comes first, the employees who create the programs, entertain the audiences across Canada, or the shareholders whose driving force, sole interest, is profits.
LISTNUM 1 \l 12069 These channels and radio frequencies are public domain. They are not owned by the shareholders of the broadcast operations which operate them. They are licensed, not owned.
LISTNUM 1 \l 12070 Let's look at the record and some of the consequences of takeovers during the life of the CRTC.
LISTNUM 1 \l 12071 When Allan Slaight was given permission by the CRTC to acquire Standard Radio, hundreds of employees were let go to cut costs so he could afford to pay for the cost of the acquisition. These were hard‑working, qualified broadcasters who just wanted to do their jobs.
LISTNUM 1 \l 12072 As a result, the record will show that there were over 200 false dismissal claims filed by ex‑employees against Slaight Broadcasting as a direct result of the takeover. These people had to pay for their own legal fees just to get what they felt was fair severance. They also had to look for a new job with other broadcast operations.
LISTNUM 1 \l 12073 I am not aware of any action by the CRTC to intervene and protect these innocent victims of the takeover by Slaight Broadcasting.
LISTNUM 1 \l 12074 The CRTC granted a licence to Rawlco Communications to provide country music in Toronto on a new radio frequency. This licence was granted in spite of dissenting voices on the Commission at that time. All the programming experts stated at the time the licence was granted that it would attract a 3.5 share, not the share projected by Rawlco at that time.
LISTNUM 1 \l 12075 Country music, as most broadcasters know, is not a popular urban format. With good marketing, KISS‑FM got an initial share of 7, but gradually dropped to 3.5 over the following 7 years that Rawlco operated the station.
LISTNUM 1 \l 12076 The station was not allowed to change formats, as I understand it, for 7 years, until the seven years had expired.
LISTNUM 1 \l 12077 The same year as the commitment to country music expired, Rawlco sold the station to Rogers Communication Inc. for a reported amount in excess of $80 million. The first thing Rogers did was to change the format and fire many of the staff, including the on‑air staff who had built the loyal following of country music listeners.
LISTNUM 1 \l 12078 Now two things happened: Toronto no longer had a country music station; and employees who had worked so hard to make the station popular were out of a job. Did the CRTC intervene? Not to my knowledge.
LISTNUM 1 \l 12079 Rogers had changed the format to attract a new audience. A year later employees were again fired as the programming was a financial disaster and it did not attract the audience it had hoped.
LISTNUM 1 \l 12080 The programming format has been changed again. These programming formats of course do not have to be approved by the CRTC.
LISTNUM 1 \l 12081 Where was the CRTC? Nowhere in sight.
LISTNUM 1 \l 12082 Who benefited? In my view, the shareholders, the Beaubien family members, by some $40 million.
LISTNUM 1 \l 12083 Now let's turn our ‑‑
LISTNUM 1 \l 12084 THE CHAIRPERSON: Mr. Hurley, you are reading from your submission. We have read your submission. I have let you read until now because I wanted to see how loyally you follow your submission.
LISTNUM 1 \l 12085 I would really appreciate it if you would take it that we have read this and tell us with regard to the specific transaction what your objections are. That is really the purpose of your ‑‑ we have read your submission.
LISTNUM 1 \l 12086 So can we come to this transaction and the proposed takeover of CHUM by CTV and why you feel this should not be allowed by this Commission?
LISTNUM 1 \l 12087 MR. HURLEY: Okay.
LISTNUM 1 \l 12088 I was reading it because I felt that I had laid that out very clearly.
LISTNUM 1 \l 12089 THE CHAIRPERSON: You have, but ‑‑
LISTNUM 1 \l 12090 MR. HURLEY: You want me to summarize it?
LISTNUM 1 \l 12091 THE CHAIRPERSON: ‑‑ as I say, either summarize it or come right to the issue of CTV‑CHUM.
LISTNUM 1 \l 12092 MR. HURLEY: Okay. I was just about to start on that.
LISTNUM 1 \l 12093 May I continue or do you want me to ‑‑
LISTNUM 1 \l 12094 THE CHAIRPERSON: Sure. Go ahead.
LISTNUM 1 \l 12095 MR. HURLEY: As I said, turning to television. TSN was part of Netstar, which was a thriving broadcast operation when CTV was allowed to take it over by the CRTC. In my view, it was cash‑rich and very profitable.
LISTNUM 1 \l 12096 I worked at TSN for two years to turn their struggling radio division around. It turned around for them and retired two years later. I got to know many of the people at TSN at that time, including Rick Brace.
LISTNUM 1 \l 12097 Who benefited from this takeover?
LISTNUM 1 \l 12098 The programming did not improve, so the viewers did not benefit.
LISTNUM 1 \l 12099 A number of employees were once again fired to reduce overhead.
LISTNUM 1 \l 12100 The sales staff went through quite an upheaval. Imagine being a sales representative and not knowing what your sales budget was until January, when the broadcasting year had started in September. They didn't know what their income was going to be and the stress on the sales representatives and their families was untenable.
LISTNUM 1 \l 12101 Who benefited? In my view, the shareholders of the CTV.
LISTNUM 1 \l 12102 Now we come to another issue: control and consolidation of ownership in the broadcast industry.
LISTNUM 1 \l 12103 I oppose this proposed takeover of CHUM Limited because it further reduces the ownership of television stations in this country to a few. I'm sure others will raise the consequences of this consolidation in more detail.
LISTNUM 1 \l 12104 My major concern is the possible bias in news coverage. This is always denied, but the viewing public is not stupid and they know the political leanings of the shareholders.
LISTNUM 1 \l 12105 CHUM Limited, in my view, has been, since its creation by Allan Waters, one of the best owned and operated broadcast operations in Canada bar none. He has maintained high standards in programming, management and employee relations. In the industry, it was the company everyone wanted to work for.
LISTNUM 1 \l 12106 Since the announced takeover by CTVglobemedia, several hundred employees have been given their pink slips.
LISTNUM 1 \l 12107 Why? Even before approval by the CRTC? I don't know.
LISTNUM 1 \l 12108 Could it be Bell Globemedia will not have to pay out all these employees? I don't know that either.
LISTNUM 1 \l 12109 Was the company suffering such losses that jobs had to be cut?
LISTNUM 1 \l 12110 The big question is: How many more people will lose their jobs if this proposed takeover is approved by the CRTC?
LISTNUM 1 \l 12111 THE SECRETARY: Excuse me, Mr. Hurley, your 10 minutes has expired so I would ask you maybe to conclude.
LISTNUM 1 \l 12112 MR. HURLEY: Okay.
LISTNUM 1 \l 12113 I personally believe the viewing public will be shortchanged just as it has been in the past with all takeovers. Much is promised but little improvement is evident after the takeover.
LISTNUM 1 \l 12114 Employees are the ones who will bear the brunt of the upheaval and will suffer the most. In spite of denials, there will be hundreds of jobs eliminated to immediately reduce his overhead to help pay for the cost of the acquisition. This is the clear pattern established and documented when takeovers take place in the private sector.
LISTNUM 1 \l 12115 Therefore, in conclusion, I ask that the Commission give serious consideration to the case I have made on behalf of all employees of CHUM Limited and deny this application outright.
LISTNUM 1 \l 12116 Such a decision by the Commission would also send a clear message to individuals like myself who work and love the broadcast industry that the Commission has finally taken into consideration the rights of hard‑working and dedicated broadcast employees in this country who lose their jobs because of decisions by the Commission.
LISTNUM 1 \l 12117 THE CHAIRPERSON: Stuart?
LISTNUM 1 \l 12118 COMMISSIONER LANGFORD: Thank you. Mr. Hurley.
LISTNUM 1 \l 12119 I did read all of your intervention, by the way, so even though you didn't have time to get it all on the record today it is on the record. I want you to know that it will be part of the permanent record of this proceeding. It is there.
LISTNUM 1 \l 12120 I have a problem, though, with what you are suggesting I might as well just put it on the table.
LISTNUM 1 \l 12121 This deal is done. I mean, we haven't approved our regulatory aspect of it, but the Waters family, as I understand it, has sold. They have sold to CTVglobemedia.
LISTNUM 1 \l 12122 It is up to us as to whether we allow the structure as Mr. Fecan has said is his preference ‑‑ and I won't review that, but you know what they want. They want the radio and the specialties and some of the television channels, divest of some of the others, or whether we allow some alternative of that. But it is highly unlikely that we would ‑‑ that anyone would tolerate us ‑‑ this is my view. I'm only speaking for myself here ‑‑ just saying no, and particularly just saying no on the grounds that some employees will be laid off.
LISTNUM 1 \l 12123 I don't want you to think that we are insensitive to the pain of people like you. I felt your pain when I read this thing. I think, you know, you must have felt, as you said, humiliated, and nobody wants to go through that.
LISTNUM 1 \l 12124 So it's not that I didn't feel your pain, but people who own assets ‑‑ I don't want to sound like I'm being patronizing here ‑‑ but they have the right to sell it, whether it is a car or a painting or a house or company. Other people who buy it have a right, then, to structure it. And yes, there is going to be some pain when that is restructured.
LISTNUM 1 \l 12125 So that if you buy a company that has, because of the way it fits with your own company, too many salespeople or too many advertising people were too many programmers, unfortunately there is going to be some re‑engineering.
LISTNUM 1 \l 12126 You are quite right, there is going to be some pain on a personal basis but, you know what, fortunately or unfortunately ‑‑ I happen to think it's fortunate because I don't really feel I have the ability to deal with those kinds of questions, frankly, personally ‑‑ we can't do anything about that. That's our problem.
LISTNUM 1 \l 12127 So we understand your pain and we don't take it lightly.
LISTNUM 1 \l 12128 I think you might be gratified ‑‑ I don't know if you were in the room yesterday and I don't want to appear to be making CTV's case for them, but I think they genuinely understand this pain, too. I have the feeling that no matter how this goes they are not just going in there to slash and burn people's lives, that they are going to try as hard as they can to use people.
LISTNUM 1 \l 12129 If you were here yesterday you would have seen that their team already composed of some CHUM people. It wasn't just a CTV team and CHUM sitting in a back in room. We had Mr. Ski here, who is doing his thing for radio, and different people on the team, I saw Mr. Goldstein over there taking notes. So obviously these people, it appears, are being worked into the bigger picture. Not everybody is going to go, but you are right, some people are going to go.
LISTNUM 1 \l 12130 Anyway, I have gone on too long. I want you to know that we have read your stuff, we have heard you today, we have huge sympathy for you and I think the people involved in this deal have the same sympathy. I mean, we heard people talk very, very eloquently yesterday about how these teams hope to work together and how many of them hope they can find a career there. But you are dead right, not all of them will.
LISTNUM 1 \l 12131 Unfortunately, that is just not what we do. But we appreciate you bringing it to our attention, we really do, it is just not what we do. We don't have the jurisdiction to step in and stop sales on the grounds that there may be some restructuring and personal pain.
LISTNUM 1 \l 12132 MR. HURLEY: Is there any reason why the company that has purchased the shares of CHUM Limited cannot be told to operate the company as a separate entity rather than have it been taken over by CTVglobemedia?
LISTNUM 1 \l 12133 COMMISSIONER LANGFORD: Well, from a programming side that is what we are wrestling with right now, from the side of what people will see in their living rooms on television and what they will hear in their cars on the radio.
LISTNUM 1 \l 12134 Yes, we do have some jurisdiction there and there is a lot of to‑ing and fro‑ing right now between the Panel you see in front of you and the applicants who have come before this Panel. We are pushing for a little extra and we are pushing for more, but when it comes down to John Doe or Harriet Smith who work as receptionists or salespeople or in advertising where there will be duplication, no, we don't go there. That is not our bailiwick. We feel the pain, but we can't go there.
LISTNUM 1 \l 12135 MR. HURLEY: No, no, I understand.
LISTNUM 1 \l 12136 THE CHAIRPERSON: The answer to your specific question, the company is now being held by a trustee pending his approval.
LISTNUM 1 \l 12137 MR. HURLEY: Yes.
LISTNUM 1 \l 12138 THE CHAIRPERSON: If it doesn't get approved, the trustee will have to sell it to somebody else. The trustee is not going to operate the company.
LISTNUM 1 \l 12139 MR. HURLEY: I understand that.
LISTNUM 1 \l 12140 My question is: Obviously I get the impression that they Commission feels, and the case has been very well presented here, that rather than have it sold to someone else, an unknown, that CTV Bell Globemedia is probably the best option.
LISTNUM 1 \l 12141 Is that what ‑‑
LISTNUM 1 \l 12142 COMMISSIONER LANGFORD: We are not going to say that. I hate to see Mr. Fecan up and dancing this early in the proceedings.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 12143 COMMISSIONER LANGFORD: So we will keep the dancing until later.
LISTNUM 1 \l 12144 But that is what we are discussing, what will happen and what will happen to the pieces.
LISTNUM 1 \l 12145 You know: Are we happy? In a sense we are not happy. I mean, this is a wonderful company that has been a huge part of Canadian broadcasting at every level but, on the other hand, we have heard from the people who know the company best that the time has come.
LISTNUM 1 \l 12146 I mean, Mr. Fred Sherratt is not a happy guy today in a lot of ways, you know. We don't have to have a tag sale for him, so don't worry about that ‑‑
LISTNUM 1 \l 12147 MR. HURLEY: No, that's for sure.
LISTNUM 1 \l 12148 COMMISSIONER LANGFORD: ‑‑ But he is not a happy guy in the sense of his own personal history, and yet he sees the writing on the wall and he has been very clear about it.
LISTNUM 1 \l 12149 So, as the Chairman just said, this company is going to be sold, it is just to whom.
LISTNUM 1 \l 12150 So anyway, as my kids would say, thanks for coming out. We heard you loud and clear and we share a lot of your sympathies and we will do our best.
LISTNUM 1 \l 12151 MR. HURLEY: Thank you very much.
LISTNUM 1 \l 12152 THE CHAIRPERSON: If there are no other questions, let's go on to the next intervention.
LISTNUM 1 \l 12153 Madam Boulet.
LISTNUM 1 \l 12154 THE SECRETARY: Thank you, Mr. Chairman.
LISTNUM 1 \l 12155 I would now as the next appearing intervenor the Communications, Energy and Paperworkers Union of Canada, Mr. Peter Murdoch, to please come forward.
LISTNUM 1 \l 12156 COMMISSIONER LANGFORD: Mr. Hurley, you can step down, relax and join the spectators there and we will have the next intervenors.
LISTNUM 1 \l 12157 Thank you.
‑‑‑ Pause
LISTNUM 1 \l 12158 THE SECRETARY: Mr. Murdoch, when you are ready for your presentation if you could introduce your panel and you will have 10 minutes for your presentation.
INTERVENTION
LISTNUM 1 \l 12159 MR. MURDOCH: Thank you and good morning.
LISTNUM 1 \l 12160 My name is Peter Murdoch, I am Vice President, Media for the Communications, Energy and Paperworkers Union of Canada. I have with me CEP's counsel, Monica Auer, who is to my left.
LISTNUM 1 \l 12161 CEP represents approximately 25,000 members in the media at Canada's radio stations, newspapers, magazines, television and film industries.
LISTNUM 1 \l 12162 In television we represent employees at CHUM as well as CTV.
LISTNUM 1 \l 12163 We have two major points.
LISTNUM 1 \l 12164 The first is that CTV hasn't met the burden of the CRTC's ownership test.
LISTNUM 1 \l 12165 The second is that if granted the application's significant negative effects will be difficult to reverse.
LISTNUM 1 \l 12166 Our first point is that even with CTV's new annual zero overlap promise its application doesn't meet the ownership test.
LISTNUM 1 \l 12167 Our written intervention listed almost 40 questions raised by the application. CTV hasn't answered most of those, or many of yours, and hasn't denied its failure to meet the test. It hasn't met the ownership's test first part since it hasn't shown that this is the best possible application under the circumstances. Instead, it is saying "Trust us, we believe in Canadian programming." I am reminded of an old expression, "Don't tell me what you believe, tell me what you do and I will tell you what I believe."
LISTNUM 1 \l 12168 As of last night, CTV wouldn't even commit to 30 more minutes per week of original local content, original news or continuing original Canadian drama. We don't know what their plans are.
LISTNUM 1 \l 12169 Rather than imaginative programming proposals, CTV is either handing us a status quo, an edgier status quo, or maybe even less than the status quo if the zero overlap promise allows non‑overlapping repeats in or outside the year.
LISTNUM 1 \l 12170 While CTV says creative people are key to his edgier plans for CHUM, we wonder just who CTV has in mind since CHUM dropped at least 344 full and part‑time positions between late 2003 and 2006.
LISTNUM 1 \l 12171 We wonder, is CTV really prepared to hire any of these positions back if half an hour of new Canadian programming threatens CHUM's viability?
LISTNUM 1 \l 12172 As for CTV's self‑proclaimed status as CHUM's white knight, we think it's evidence is dubious. CHUM's own annual reports are far more positive, recording:
"...a significant improvement in operating results in fiscal 2005 over 2004 due to broadcasting." (As read)
LISTNUM 1 \l 12173 Frankly, if this is the best use of more than 60 valuable licences, then Canadian broadcasting really is in sad shape. Settling for these meagre proposals because they are all you have, does not meet the test.
LISTNUM 1 \l 12174 CTV hasn't met the second part of the test about ownership concerns because promising to maintain separate presentation styles still allows reporters to share stories and resources and, indeed, with questions I might tell you in fact encouraged.
LISTNUM 1 \l 12175 CTV's journalistic safeguard won't protect editorial diversity because it can't. Different management and distinctive graphics won't increase full‑time news staffing levels or foster competition between journalists working for the same owner with the same cost‑cutting concerns and the same deadlines.
LISTNUM 1 \l 12176 Gatekeeping will still be a problem, for three reasons.
LISTNUM 1 \l 12177 First, those who hire, hire like‑minded people who fit the corporate culture.
LISTNUM 1 \l 12178 Second, CTV's manager and staff know who signs their cheques.
LISTNUM 1 \l 12179 Third, as the old saying goes, those who pay the piper pick the tunes.
LISTNUM 1 \l 12180 We think this analogy works in broadcasting because of the results from a recent survey of Canada's working journalists. I can supply you with a summary of this study and the appropriate questions I quoted here. We just released it to our members on the weekend.
LISTNUM 1 \l 12181 Among more than 800 responses, fewer than a third agreed that the editorial agenda was not affected by the politics of their company's corporate owners. Almost half agree that advertisers influence editorial decisions. Two‑thirds of broadcast journalists said they had been assigned stories to promote their station or management at least once. And more than three‑quarters of the respondents agreed that promotional consideration affect the news agenda.
LISTNUM 1 \l 12182 Recent empirical research from the U.S. found the media grow less critical of themselves after merger. If large media groups won't study themselves critically, what else are they missing?
LISTNUM 1 \l 12183 There is some evidence that ownership affects broadcast content in this country. Six months after buying CTV, BCE replaced four separate newscasts in Northern Ontario with one regional program. Weekly original local programming content has disappeared almost all together from CTV's current schedule for Northern Ontario.
LISTNUM 1 \l 12184 If central problem obviously is that CTV hasn't define diversity but, as Ivan Fecan said yesterday, if you can't measure it, you can't manage it. Perhaps more to the point, you can't enforce it.
LISTNUM 1 \l 12185 But even measurable safeguards can be breached, since CHUM itself breached the conditions of licence for original local news in Vancouver in 2006.
LISTNUM 1 \l 12186 Overall, since CTV hasn't shown that its giant, economy‑sized plans for journalism will safeguard, let alone strengthen diversity, it hasn't met the second part of the test.
LISTNUM 1 \l 12187 CTV also hasn't shown that its application is in the public interest, since instead of evidence it simply claims over and over that it needs to grow to do more for Canadian programming, but what, we just don't know. If size or the answer to Canadian content, CTV should have solved this problem long ago.
LISTNUM 1 \l 12188 But more concentrated ownership hasn't produced a more and better Canadian content or more and better local original content. Quite the reverse. As concentration of ownership has grown, so too has spending on foreign content, outstripping spending on Canadian programs. CTV's own projections show that in 2008‑2009 it plans to spend 58 percent more on foreign programming that on Canadian programs.
LISTNUM 1 \l 12189 But what really matters is that we don't know what CTV will or won't keep in CHUM's schedule, how fewer staff will generate more original content or how CTV will improve local news on the stations it wants to buy. We just simply do not know what the plans are.
LISTNUM 1 \l 12190 There is no one‑size‑fits‑all definition of "the public interest", but an application without one subsequent plan to increase original Canadian content surely does not meet the definition by anyone's standard.
LISTNUM 1 \l 12191 CTV hasn't shown how its application will meet the fourth part of the ownership test because its on‑air benefits for our system are, at best, unclear and, at worst, almost non‑existent. When TQS bought Cogeco's TV stations in 2001, more than $9.00 out of every $10 in benefits were directed to the screen.
LISTNUM 1 \l 12192 CTV's benefit for the system is "more efficient spending on non‑Canadian programming and lower non‑Canadian programming costs".
LISTNUM 1 \l 12193 Although CTV has attempted to convince many that it will protect our system from foreign and other competition, the fact is that non‑Canadians can't hold licences and carriage and simulcasting will still protect Canadian TV broadcasters.
LISTNUM 1 \l 12194 Our system doesn't need cheaper foreign programming, it needs more original Canadian content from more sources.
LISTNUM 1 \l 12195 Our second main point is that the application's negative effects on competitive news gathering may be irreversible until CTV itself decides to sell to the highest bidder. Their problem is this: Once a predator is released it is hard to entice it back into a cage or to make it live by new rules.
LISTNUM 1 \l 12196 It seems to us, with all due respect, that you have four options.
LISTNUM 1 \l 12197 The first is the simplest: Grant CTV's application as filed.
LISTNUM 1 \l 12198 Although 2000 interventions support this, often for similar reasons, we don't think that well‑informed, reasonable people would agree that this application serves the public interest. We think they would ask why CTV expects the CRTC to put the financial interests of two private companies ahead of Canadians' interest in a competitive marketplace of ideas.
LISTNUM 1 \l 12199 Some intervenors would support the application, but with conditions precedent. The question is whether this would be fair to CTV, whose business plan is based on the application it filed. Conditions precedent don't address the more fundamental problem that unless diversity can be measured, safeguards can't be enforced.
LISTNUM 1 \l 12200 The third option is to briefly postpone this decision until after the fall ownership policy hearing. We think any harm to CTV or CHUM would be outweighed by the benefits to the public interest.
LISTNUM 1 \l 12201 Postponement would grant all broadcasters equal treatment, not just the ones who are quickest to the post. A delay would also give everyone the chance to collect information about the effects of concentration of ownership and time for analysis. It are view, this might be the best option.
LISTNUM 1 \l 12202 Finally, you could deny CTV's application because it leaves too many questions unanswered. We all know that the broadcasting system and broadcasters have survived when other ownership transactions have been denied.
LISTNUM 1 \l 12203 We strongly recommend that you postpone your decision in this proceeding, but if delay isn't possible we urge you to deny this application because CTV hasn't answered our questions, the questions for Canadians and, more importantly, hasn't answered many of your questions.
LISTNUM 1 \l 12204 Thank you for your time.
LISTNUM 1 \l 12205 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 12206 You are making a lot of points.
LISTNUM 1 \l 12207 Let me just say at the outset, your preferred option of postponing, as you know we have specifically rejected that, for the simple reason that, you know, we are not in the business of killing deals. I don't think deals of this magnitude you can ask them to hold in abeyance for that long. It is just the business reality is different. People have to plan, and they have to get ready for the next schedule, et cetera, and it would lead to a tremendous loss of value in the assets which are not necessarily of commensurate gains.
LISTNUM 1 \l 12208 I told you that part in correspondence and I have told you publicly, we are going to do this deal on the basis of our rules as they are right now.
LISTNUM 1 \l 12209 That being said, you made some very interesting points and I would like you to elaborate on them.
LISTNUM 1 \l 12210 Your first one was on editorial diversity. If I understand it, essentially you can't have editorial diversity unless you have separate owners. If you have the same owner you are not going to have editorial diversity.
LISTNUM 1 \l 12211 I believe that is, in essence, the nub of your position.
LISTNUM 1 \l 12212 Is that correct?
LISTNUM 1 \l 12213 MR. MURDOCH: Yes. Let me say that it seriously puts diversity in jeopardy. We have seen that in a number of ‑‑ particularly across media ownership.
LISTNUM 1 \l 12214 Let me just kind of ‑‑ it used to be if you were at the Globe and Mail and you offered a story to CTV, you would be fired for it. Now you are rewarded for it. So I think it is very, very difficult to have diversity.
LISTNUM 1 \l 12215 I think, Mr. Chair, all you need to do is sort of ‑‑ I know you are aware of the newspapers. The Post and CanWest is a different organization, with different values, different principles than, say, the Toronto Star. That ideology, those principles, those political positions, move their wear down into newsrooms, sometimes for political reasons, sometimes for niche marketing reasons, but it does happen and it is based on ownership, ownership trying to find their market, their market in a democratic debate.
LISTNUM 1 \l 12216 THE CHAIRPERSON: Were you hear yesterday? Were you here yesterday during the hearing?
LISTNUM 1 \l 12217 MR. MURDOCH: I'm sorry?
LISTNUM 1 \l 12218 THE CHAIRPERSON: Were you here yesterday during the hearing?
LISTNUM 1 \l 12219 MR. MURDOCH: Yes, I was. Yes.
LISTNUM 1 \l 12220 THE CHAIRPERSON: I asked Mr. Fecan exactly about that and he gave a very eloquent answer about, you know, it is in his interest to be diverse, to cover as much markets as possible. By reigning in journalists he is really not doing himself a favour. That was essentially his point.
LISTNUM 1 \l 12221 His journalists, the various editors will decide whether to share stories or whether to send out separate journalists to cover events, because only that way can he serve the very diverse markets that we have in Canada.
LISTNUM 1 \l 12222 I gather you don't except that line of reasoning.
LISTNUM 1 \l 12223 MR. MURDOCH: No. I mean initially it strikes me a bit as though a monopolistic practice is the way to ensure diversity, because you will spread the marketplace with a variety of products, a kind of Wal‑Mart view of the economy.
LISTNUM 1 \l 12224 No. I think that ownership brings with it the power and authority, over all employees to some degree, including journalists. In the long run people understand what it is that the ownership is looking for. I don't think that ‑‑ let me put it in another way.
LISTNUM 1 \l 12225 I don't think that the people who work at the Montréal Gazette or the Ottawa Citizen have a clear ‑‑ they have as clear understanding about what CanWest's ideals are and what their politics are as do the people at BCTV and Global Toronto. I think the same thing ‑‑ and those are different, different platforms. I think the same thing is more likely to happen where the platforms are the same.
LISTNUM 1 \l 12226 THE CHAIRPERSON: All right.
LISTNUM 1 \l 12227 Do you ‑‑
LISTNUM 1 \l 12228 MR. MURDOCH: Just excuse me if I can, Mr. Chair.
LISTNUM 1 \l 12229 THE CHAIRPERSON: Yes.
LISTNUM 1 \l 12230 MR. MURDOCH: One of the problems I have here with Mr. Fecan's remarks is: If he believes this, where are the plans and the ideas to foster this? All he is telling the Commission and all he is telling Canadians is, "Trust us. We kind of believe in it."
LISTNUM 1 \l 12231 I'm sorry, I don't think it is good enough.
LISTNUM 1 \l 12232 THE CHAIRPERSON: When I questioned him about this he talked about separate news management and I said "Why don't you go one step further and go separate news gathering, which is what we have imposed in the Québec market on Québecor?" He basically said "No, that is not really a viable option because journalists, being what they are, they don't like being told and the best way for an owner is don't get involved in the news side at all. Tell them they are free and let them work it out, let them decide whether to share or not."
LISTNUM 1 \l 12233 I gather you don't agree with that either?
LISTNUM 1 \l 12234 MR. MURDOCH: No. First of all, let's remember that Mr. Péladeau has very recently said that he doesn't want that Code of Conduct to apply any more, so we are aware that it is difficult to site that when the person that was obligated to is saying "I want to renege on my commitments."
LISTNUM 1 \l 12235 But no, I don't. I mean, I think that what we need is competitive debate. What we need is actually journalists to compete with each other and to fund newsrooms, to fund news gatherers, to get the people out there finding out different kinds of information, to be competitive in the marketplace, so that Canadians over their kitchens and at their picnics can say, "You know, I read this. I saw this on CTV. I saw this on CHUM. I read this in the Globe and Mail", so that there is true diversity of news, information and opinion.
LISTNUM 1 \l 12236 I don't think that happens with same ownership.
LISTNUM 1 \l 12237 THE CHAIRPERSON: Okay. Then you mentioned gatekeeping.
LISTNUM 1 \l 12238 Could you elaborate on what you meant by "gatekeeping"?
LISTNUM 1 \l 12239 MR. MURDOCH: Let me just get back here.
‑‑‑ Pause
LISTNUM 1 \l 12240 MR. MURDOCH: Yes, I mean ‑‑
LISTNUM 1 \l 12241 THE CHAIRPERSON: What I took down is that people hire like people and basically as a result of this CTV's owners will hire the type of people they like rather than ‑‑ I assume that is where you are going with that?
LISTNUM 1 \l 12242 MR. MURDOCH: Right. I don't think it's ‑‑ well, it probably is that, too.
LISTNUM 1 \l 12243 But certainly there is an expectation of points of view. There is an expectation of style, there is an expectation of look, and there is an expectation of political points of view.
LISTNUM 1 \l 12244 I think I would be very surprised if CTV hired, no matter how brilliant, some wild‑eyed lefty.
LISTNUM 1 \l 12245 So yes, I think there is a hiring practice that the corporation tends to hire within its image. I don't think there is one company that is unique in the course of doing that. In fact, I think ‑‑ anyway.
LISTNUM 1 \l 12246 And I think that people who they do hire know who is paying the cheques. So if I know what ‑‑ it's just easier for me to use CanWest.
LISTNUM 1 \l 12247 If I know what Mr. Asper's political point of view is ‑‑ and, by the way, he will certainly let me know ‑‑ I know within a certain framework I am expected to at least echo those.
LISTNUM 1 \l 12248 The third thing is that there is a sense of loyalty to the corporation.
LISTNUM 1 \l 12249 So it is very, very difficult to meet. I can see as a kind of gatekeeping to ensure diversity. Diversity of opinion comes out of the competitive marketplace. That is where you really see it, at least in the news and information part of the game.
LISTNUM 1 \l 12250 THE CHAIRPERSON: I raised yesterday the issue of self‑censorship. I gather you are saying that in different words. If I am an employer for CanWest, then I am going to write something that falls within the general line of the owner, to take your example.
LISTNUM 1 \l 12251 MR. MURDOCH: Yes, absolutely.
LISTNUM 1 \l 12252 By the way, I'm not suggesting that ‑‑
LISTNUM 1 \l 12253 THE CHAIRPERSON: We are not picking on CanWest.
LISTNUM 1 \l 12254 MR. MURDOCH: Yes. I'm not suggesting this goes on every day, you know.
LISTNUM 1 \l 12255 But what we do know is that where there is competition that chances are, if the Finance Minister gives a budget, I can assure you the National Post is going to have a different spin on that then the Toronto Star. That is a good thing, by the way, on both of those, and it is there because they are competing. They are true competitors.
LISTNUM 1 \l 12256 THE CHAIRPERSON: You mentioned a study that you just ‑‑ have you furnished a copy of that study to us?
LISTNUM 1 \l 12257 MR. MURDOCH: No. We just released it on the weekends in St. John's, Newfoundland to our members. I will furnish you with a summary of the copy and the ‑‑ and the questions that I have referred to here.
LISTNUM 1 \l 12258 THE CHAIRPERSON: And who conducted the study for you?
LISTNUM 1 \l 12259 MR. MURDOCH: We did a study in conjunction with Ryerson and McMaster University. We surveyed news rooms across the country ‑‑ our news rooms across the country, and we had about 850 respondents, and ‑‑
LISTNUM 1 \l 12260 THE CHAIRPERSON: Okay. And, finally, you went to the big league programming. You mentioned northern Ontario and that there has been a reduction and, in effect, that you are expecting ‑‑ you were expecting in this application to see a commitment to ‑‑ to local programming or a reversal of the situation in northern Ontario.
LISTNUM 1 \l 12261 It caught me somewhat by surprise. Tell me what happened in northern Ontario first of all. And, secondly, what you would have wanted ‑‑ expected to see in the CTV application regarding local programming.
LISTNUM 1 \l 12262 MR. MURDOCH: There were, and I've just got to jog my memory, there were services provided out of three communities I can remember. I think it was Timmins, possibly Masson, and I'm sorry I can't recall, that were withdrawn.
LISTNUM 1 \l 12263 And, you know, CTV suggested, of course, that it was in longer economically feasible to do this, and that they would be able to provide the same kind of service out of a central station.
LISTNUM 1 \l 12264 Our problem with ‑‑ and surely, as you know, in terms of let alone local news gathering, there's almost no local programming in the sense that there used to be, you know, the Galloping Gourmet here in Ottawa, or Tales of the Klondike or ‑‑ you name it, right across the country.
LISTNUM 1 \l 12265 Those shows have disappeared off the airwaves almost.
LISTNUM 1 \l 12266 So what we're concerned about now is to ensure that the news gathering part and the ‑‑ and particularly local news and information, remains as part of the obligations of ‑‑ of broadcasters.
LISTNUM 1 \l 12267 If we see through consolidation and concentration the ability for broadcasters to further erode that, it is grave concern to us, to our members, and I think to Canadians.
LISTNUM 1 \l 12268 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 12269 My fellow Commissioners, do you have any questions for Mr. Murdoch?
LISTNUM 1 \l 12270 Stewart?
LISTNUM 1 \l 12271 COMMISSIONER LANGFORD: It's a question that the Chairman has put to a number of people, and maybe I should have just trusted him if he didn't put it to you, he must have had some reason, but I'll pick up on it anyway, take a chance.
LISTNUM 1 \l 12272 The problem with what you're suggesting is that this company is sold. And so what's your alternative here?
LISTNUM 1 \l 12273 I mean, when you look at what confronts us here, somebody's going to get pieces of it, not quite all of it I don't think. I mean, I suppose anything is possible. But somebody ‑‑
LISTNUM 1 \l 12274 If CTV is somehow so constrained by us that they just want out of the deal, that it's not worth it any more, the benefits are too high, and they don't have enough for economies of scale, then their only option at this point ‑‑ the Waters don't want it back, and they're not going to take it back.
LISTNUM 1 \l 12275 So, as of this moment really, the likelihood of CHUM existing, as it has existed, is just about zero. And what may exist is pieces.
LISTNUM 1 \l 12276 And I'm not sure what comfort you would get from the pieces going to unknown players, or us gathering here again in a month because "X" had bought one piece, or "Y" had bought another.
LISTNUM 1 \l 12277 Which doesn't mean it is a slam dunk for CTV, because what we have to wrestle over now is what conditions we can put on it to try to achieve some of the same sort of goals that you're speaking about. Which, interestingly enough, are some of the same goals that CTV spoke about yesterday.
LISTNUM 1 \l 12278 So we're all talking about the same thing here.
LISTNUM 1 \l 12279 And I guess what I'd like to hear from you more is rather than put it off, which the Chairman has rightly said isn't going to happen because we're here. Rather than deny it, which I think really is a mug's game because it's just going to go to someone else if we deny it.
LISTNUM 1 \l 12280 What can we do ‑‑ what can we put in place to get some of the goals you want, but allow something like this deal to go through?
LISTNUM 1 \l 12281 What would you suggest?
LISTNUM 1 \l 12282 MR. MURDOCH: Well, I don't think that ‑‑ that CTV should automatically get the green light because, as you know, Mr. Fecan characterizes CTV in some ways yesterday as a kind of Mother Teresa of the Canadian Broadcasting System and brings $1.75 billion to helped the afflicted.
LISTNUM 1 \l 12283 Clearly what we don't know here is what other proposals are possible. What other proposals were out there.
LISTNUM 1 \l 12284 The idea that CTV is the only possibility is, in fact, incredulous to me.
LISTNUM 1 \l 12285 What we do know, in fact, is that there is a very competitive market out there for media companies in this country, and the financing clearly available to it.
LISTNUM 1 \l 12286 So ‑‑ and remember that along with the company, we are buying and selling licenses. Not companies.
LISTNUM 1 \l 12287 And so ‑‑ so I'd like to have known what else is out there, and known what it is CTV is actually planning to do, other than simply saying, "Trust us, we're big."
LISTNUM 1 \l 12288 COMMISSIONER LANGFORD: Well, if you were here yesterday, you know we pushed pretty hard on that, and they may or may not come back with the homework we assigned them.
LISTNUM 1 \l 12289 I certainly would repeat that I'd advise them to, but nobody has to ‑‑ nobody has to add anything to an application. They can let it stand or fall on its own merits. They may or may not add something.
LISTNUM 1 \l 12290 But along the lines of what we're pushing, do you think, then, generally speaking, maybe it's not fair to ask you to come up with a whole formula, but do you think that with some toing‑and‑froing and pushing and pulling we could whip this into shape?
LISTNUM 1 \l 12291 For example, let me ask you a big question: Would you feel more comfortable if they were buying the A Channels, keeping them, and divesting of City?
LISTNUM 1 \l 12292 Are you more troubled because they're buying City instead of the A Channels?
LISTNUM 1 \l 12293 I'm trying to get a sense of what really troubles you here.
LISTNUM 1 \l 12294 MR. MURDOCH: Right.
LISTNUM 1 \l 12295 What troubles me is that we were not ‑‑ Canadians have not been provided with the kind of information about what they plan to do with this company, by the way, which was once new itself, which prospered through some very creative and very good management.
LISTNUM 1 \l 12296 And the idea of us simply saying that it's going to be rescued by CTV, and now for you to ask me, well ‑‑ and I want you to know what would make you most comfortable in terms of the rescue package. I'm afraid I'd say, you know what would make me most comfortable, tell me what they're going to do. Tell me what the rescue is. I don't know what it is, and neither do Canadians.
LISTNUM 1 \l 12297 COMMISSIONER LANGFORD: Okay. So you want more details is what you're saying? I mean, that would at least be ‑‑ that's the road we should start down.
LISTNUM 1 \l 12298 Do you agree we started down that road yesterday or would you ‑‑
LISTNUM 1 \l 12299 MR. MURDOCH: You know, I was impressed. You certainly tried. I don't think you got very far.
LISTNUM 1 \l 12300 COMMISSIONER LANGFORD: We're not there yet. Well, we'll keep marching.
LISTNUM 1 \l 12301 Thank you very much.
LISTNUM 1 \l 12302 MR. MURDOCH: Appreciate it.
LISTNUM 1 \l 12303 COMMISSIONER LANGFORD: Those are my questions.
LISTNUM 1 \l 12304 THE CHAIRPERSON: Thank you very much, Mr. Murdoch.
LISTNUM 1 \l 12305 MR. MURDOCH: Thank you.
LISTNUM 1 \l 12306 THE CHAIRPERSON: Ms Madam Boulet.
LISTNUM 1 \l 12307 THE SECRETARY: Thank you, Mr. Chairman.
LISTNUM 1 \l 12308 We now invite the next appearing intervenor, Illusions Entertainment Corporation to make their presentation.
LISTNUM 1 \l 12309 If you could please introduce yourself, and you'll have ten minutes for your presentation.
INTERVENTION
LISTNUM 1 \l 12310 MR. HARVEY: Yes, I'm Bruce Harvey from Illusions Entertainment.
LISTNUM 1 \l 12311 I don't even have a copy of my intervention here, so I can't read it. I'm just going to go down that road.
LISTNUM 1 \l 12312 It's quite ironic that as I was driving here today that I noticed the Scott Paper Mill down the street.
LISTNUM 1 \l 12313 My first full‑time job was working at number 14 machine in that building. As a good union member, and now some number of years, which I won't go into, later I'm sitting at a table with the Paperworkers Union talking about the acquisition of Citytv by CHUM.
LISTNUM 1 \l 12314 That's not the ironic part. The ironic part is when I was living in Ottawa at that time there was Global Television, CTV, CBC. And a number of years later we're going back to Global TV, CTV and CBC.
LISTNUM 1 \l 12315 And, in the meantime, there have been a number of license granted across the country, there have been a number of opportunities through specialty TV and other licenses that gave people like myself, producers, windows to look at.
LISTNUM 1 \l 12316 We had stations that were owned by ‑‑ specialty stations owned by distributors, the biggest distributor in the country, the biggest lifetime programmer in the country, an independent film maker from the Maritimes had a station.
LISTNUM 1 \l 12317 Citytv, which, if you're wondering why maybe Citytv's numbers don't look so good, they were the original specialty programmer.
LISTNUM 1 \l 12318 The reason why Space, Bravo, MuchMusic are all doing so well is because they came from City. And City was the regional specialty programmer, and that's why they got the licenses.
LISTNUM 1 \l 12319 I read the ruling from the CRTC when they were granted the license, instead of the alternative choices. And the reason you gave them a license for MuchMusic is because they were going to use those assets from Citytv to help support MuchMusic.
LISTNUM 1 \l 12320 And the reason we can't separate Citytv from MuchMusic today, as Mr. Fecan said yesterday, is because they're so interrelated. You can't value one without valuing the other, and that's in the valuation portion, which I'll get to later on, creates quite a problem when you're trying to say what the benefits package should be.
LISTNUM 1 \l 12321 I suppose it's better to put it into the specialty so you don't have to pay so much for the conventional side. You only have to pay the ten percent.
LISTNUM 1 \l 12322 The reason I'm here ‑‑ one of the biggest reason I'm here is I'm an independent producer ‑‑ film producer from Alberta. And I was before the Commission some number of years ago when you first put out a call for the new stations in Alberta.
LISTNUM 1 \l 12323 I was there for the first call when we had Wendell Wilks, and we had CanWest Global, and we had the Craig family come up looking for a license. And, as you recall, they were all turned down.
LISTNUM 1 \l 12324 And the reason they were turned down is there was no additional programming benefits. There was no benefits seen to the industry at the time.
LISTNUM 1 \l 12325 A few years later you put a second call out, and at that time CanWest Global came forward and so did the Craig family.
LISTNUM 1 \l 12326 And we had a benefit at that time because we had two people looking to get those licenses, to get the station in Edmonton and the station in Calgary.
LISTNUM 1 \l 12327 And we were able to look at their bids, we were able to look at what benefits packages they were doing. And, more importantly for me, I was able to look at a programming schedule.
LISTNUM 1 \l 12328 And the reason that was important is because CanWest Global made a lot of claims. They talked about how much programming they were going to do, how they were going to give new TV series in Alberta, how they were giving new TV series in the Maritimes, how they had their existing programming across the station.
LISTNUM 1 \l 12329 But, when we looked at the programming schedule, there was only one one‑hour slot. And they were talking about how much they were going to do, but there was one one‑hour slot.
LISTNUM 1 \l 12330 So it was easy for us to look at it and say, great, you're not making any firm commitments for those things, that you don't even have a window for them on your proposed broadcast schedule. You can't even accommodate the things you're saying you're doing in your future look.
LISTNUM 1 \l 12331 Today I don't have that benefit, because I don't have a programming schedule for City, and I don't have a programming schedule for the new CTV.
LISTNUM 1 \l 12332 I just have what they have in the past, and I have this piece of paper here, which is a very slim consolidated financial projection for what's going to happen on Citytv.
LISTNUM 1 \l 12333 When we got to the licensing for the Craig family, at that time they were given the licenses for those two stations, and they were required to do three hours of drama programming and one feature film ‑‑ dramatic feature film a week.
LISTNUM 1 \l 12334 That dramatic feature film, 26 of them had to be original dramatic feature films.
LISTNUM 1 \l 12335 A Channel had committed to spend $150,000 licensing. They didn't ‑‑ not as a conditional license, but they undertook to us to spend $150,000 on each of those licenses.
LISTNUM 1 \l 12336 We move forward a few years, things were working great, Citytv and the Craigs had a good working relationship, and then everything went to hell.
LISTNUM 1 \l 12337 Citytv started programming Access with feature films, all their programming off the Citytv networks. A Channel was given a broadcast license in Toronto. They became competitors. They weren't supporting each other. And, understandably, the Craig family suffered.
LISTNUM 1 \l 12338 The venture into Toronto, as we all know, was a mistake.
LISTNUM 1 \l 12339 So Citytv came to their rescue.
LISTNUM 1 \l 12340 When we first supported the purchase by Craig for the license, the first granting of the licenses, one of the reasons we did is because it was so complementary to Citytv.
LISTNUM 1 \l 12341 Their programming schedule was very similar: commitment to feature length films.
LISTNUM 1 \l 12342 Why is that important to an Alberta producer? There's very few slots on the dial anywhere in Canada for dramatic programming for series, and we'll get to that later on. We can talk about how much money CTV actually has available for dramatic series.
LISTNUM 1 \l 12343 There's very, very few windows. And it's one producing team that does each dramatic series.
LISTNUM 1 \l 12344 Feature films, each one of them, is a new producing team.
LISTNUM 1 \l 12345 So 26 hours ‑‑ 26 feature films is 26 producers. 26 hours of ‑‑ or 22 hours, if that's what we get from CTV with the new extended series, is one producer.
LISTNUM 1 \l 12346 So the benefits were much greater ‑‑ especially in the prairies it was hard for us to get in and start creating series. The diversity of view was much greater. It was a much better deal.
LISTNUM 1 \l 12347 So, anyway, we come along to Citytv. You give the license to Citytv, you have 100 hours of programming for feature films in ‑‑ no, 100 hours in both Vancouver and Ontario and Toronto, and they get Citytv now in Alberta that has the same commitment.
LISTNUM 1 \l 12348 They bought those stations for ‑‑ those two stations for around $150 million. It was a long time ago, it was like two years ago, but they were worth $150 million then.
LISTNUM 1 \l 12349 The station they bought in Vancouver they paid I think it was $130 million for.
LISTNUM 1 \l 12350 Unfortunately, they gave it to the wrong management team, and we all made a mistake, you guys made a mistake because you granted them the sales, and said that they were going to make this a better programming industry, better broadcasting industry.
LISTNUM 1 \l 12351 And they squandered those assets so badly that now those assets are only worth 110 to $150 million. Low and high end.
LISTNUM 1 \l 12352 And that's after throwing Citytv Toronto into the mix, which is the flagship station.
LISTNUM 1 \l 12353 So add the flagship, lose $300 million. I'm not sure how that works, but...
LISTNUM 1 \l 12354 So when we went to ‑‑ we're in the situation now where we're told that Citytv has been losing money for ten years, prior to the point when you granted the right for Citytv to buy Vancouver and Edmonton and Calgary.
LISTNUM 1 \l 12355 And I'm pretty sure that I would not have supported the acquisition if I knew that Citytv was such a losing venture. I wouldn't have said that the best way to save Alberta was to give it to another losing venture.
LISTNUM 1 \l 12356 But, anyway, we're told that they were losing $68 million. More than they spend on Canadian content. I think they said yesterday it's $4 million a year.
LISTNUM 1 \l 12357 So that's $40 million over ten years. They lost 68.
LISTNUM 1 \l 12358 So we agreed to get a license to get the sale to City. City is in trouble. They want to sell now.
LISTNUM 1 \l 12359 So what do we look at today?
LISTNUM 1 \l 12360 I was here yesterday and I heard that we're all happy that Citytv is going to be sold to CTV. And the reason that is is that's going to provide more programming, more strength. It's going to get rid of the two big issues that were facing Citytv, why they struggled.
LISTNUM 1 \l 12361 One, was that the flagship stations, the Citytv stations, had to support the A Channel stations. They had to find programming that was going to fit the older demographic, and find some way to support those.
LISTNUM 1 \l 12362 The second one is was there actual programming that they were running. That the programming was not beneficial to the station. They got away from their edginess.
LISTNUM 1 \l 12363 So we look at what CTV is going to give us today that's going to relieve those problems so that this Citytv group will go forward and be a strong player in the marketplace.
LISTNUM 1 \l 12364 Well, the programming they're going to give us for the new Citytv is the left over programming that CTV has right now.
LISTNUM 1 \l 12365 They said that historically, and I assume that means over a period of years, they've been required to buy excess programming from the American broadcasters, and it's very important for the Canadian Broadcasting System to help support the divestiture of those American programs.
LISTNUM 1 \l 12366 I don't know why, if they had been buying programming that was so appropriate for the Citytv stations, that they didn't just call up their good friends, as they mentioned yesterday, and say we have this programming that we can't run on our station, it fits perfectly for you.
LISTNUM 1 \l 12367 Rather than throwing it in the garbage, like we're telling the CRTC we have to do now, why didn't they sell it to City? If it's such a good fit and if it makes such economic sense, why didn't it happen already? I don't understand that.
LISTNUM 1 \l 12368 But, anyway, we move along.
LISTNUM 1 \l 12369 They were able to get rid of the dead wood, and they sold the dead wood for 137 million I think. $137 million for the A Channel stations, with Access thrown in and Canadian Learning.
LISTNUM 1 \l 12370 So the dead wood they sold for 130, the good stations were worth 110 to 150.
LISTNUM 1 \l 12371 So now we're stuck with what's going to go forward.
LISTNUM 1 \l 12372 I feel a bit like Dustin Hoffman sort of banging up against the glass saying, "Please stop the wedding, please stop the wedding," from The Graduate, but that's what it feels like.
LISTNUM 1 \l 12373 Because when we look at what's being proposed here, all the other producers are very happy about all the benefits we're getting, all the new windows.
LISTNUM 1 \l 12374 When I look at the financial projections for CTV, there's category 7, which is where Corner Gas, Degrassi kids, all of the new programming, the new ones that Citytv have, the budgeted item, as I see it here, is slightly less than $19 million, growing a little bit each year.
LISTNUM 1 \l 12375 It sounds like a lot of money. It's double what they pay on travel and entertainment. It's almost as much as they pay to CRTC for the licenses on a yearly basis. Substantially less than you pay for outside management when it's 65 million.
LISTNUM 1 \l 12376 But, anyway, $18 million for drama and comedy.
LISTNUM 1 \l 12377 And what CTV is going to do with that is they're going to give us more Canadian programming, they're going to give longer licenses, because right now, as Citytv said yesterday, as Roma said, we only can give less than 13 episodes on some series. Others we can give a little bit more. We can't give a full amount of license fee. They can only give $350,000 per show, and it just can't get programming on the air.
LISTNUM 1 \l 12378 They need to do something more. And Citytv is going to come along and do that for us.
LISTNUM 1 \l 12379 The other thing Citytv says, they're going to be a one‑stop shop for us.
LISTNUM 1 \l 12380 They know that the CTF is tapped out, so they'd like to be the one‑stop shop that's going to provide these benefits for us.
LISTNUM 1 \l 12381 So let's look at the number, $18 million. Pick a show on CTV like Whistler. Whistler's budget is I think $1.2 million. They can tell me if I'm wrong.
LISTNUM 1 \l 12382 It's going to grow ‑‑ if you take growing one series to 22 episodes, the budget for that show is $26 million.
LISTNUM 1 \l 12383 The full budget for drama under CTV is $18 million.
LISTNUM 1 \l 12384 Let's say they do two shows. So they can give roughly 35 percent for those two one hours of drama. That's all they can commit in their budget.
LISTNUM 1 \l 12385 What they're giving in the benefits is supposed to be incremental. It's above that. So let's just look at what the real CTV Citytv is.
LISTNUM 1 \l 12386 CTV Citytv is looking at less than one hour paid for by CTV of Canadian drama.
LISTNUM 1 \l 12387 When you look at the benefits package ‑‑
LISTNUM 1 \l 12388 THE SECRETARY: Excuse me, Mr. Harvey ‑‑
LISTNUM 1 \l 12389 MR. HARVEY: Yes?
LISTNUM 1 \l 12390 THE SECRETARY: You have 30 seconds to complete your presentation.
LISTNUM 1 \l 12391 MR. HARVEY: History got a bit longer for theirs. Can I have a bit longer for mine? I think History TV had a couple of more weeks to go before they have to get rid of C.S.I., don't they? I can have maybe ten more minutes?
‑‑‑ Laughter / Rires
LISTNUM 1 \l 12392 THE CHAIRPERSON: I wasn't here for ‑‑ we're running this hearing in a very disciplined method. That's the only way we can get through all this maze of stuff.
LISTNUM 1 \l 12393 MR. HARVEY: All I can tell you is that ‑‑
LISTNUM 1 \l 12394 THE CHAIRPERSON: Please take your 60 seconds to wrap up your presentation.
LISTNUM 1 \l 12395 MR. HARVEY: I can't. The benefits package is one of the biggest things going to producers. I cannot wrap this up in 60 seconds. I'm sorry.
LISTNUM 1 \l 12396 THE CHAIRPERSON: Well, we have your submission. I'm sorry, you knew beforehand ‑‑
LISTNUM 1 \l 12397 MR. HARVEY: Each of these ‑‑ each of these items in here ‑‑ none of these items provide ‑‑ when you look at the amount that's here ‑‑ trendsetters, risk takers 30 point 75 million. The Commissioner thought it was a lot of money yesterday, broken down over a one‑year period that's not one series.
LISTNUM 1 \l 12398 Ten million dollars for feature films and dramatic ‑‑ dramatic films and documentary films spread over seven years is about a million dollars per show. That doesn't meet the commitment that A Channel made when they committed to 26 originals at $150,000 per show. The commitments in this ‑‑ the broadcast ‑‑ the benefits they're giving are less than what the Craig family gave to acquire the two stations in Alberta.
LISTNUM 1 \l 12399 Everyone can jump up and down and say it's great. There's not enough money in the benefits and in the budget for CTV to cover the producers that were up here before supporting us let alone to give new programming.
LISTNUM 1 \l 12400 THE CHAIRPERSON: Okay. Thank you. Helen, you have questions?
LISTNUM 1 \l 12401 COMMISSIONER DE VAL: Thank you, Mr. Harvey. I've read your intervention. I've listened to your presentation today. On your intervention you had talked about the writers only ‑‑ the criticism of write only, and I had the answer of Mr. Rabinovitch and ‑‑ yes, Mrs. Couture.
LISTNUM 1 \l 12402 The pattern seems to ‑‑ seems to be ‑‑ I hear all the problems. Maybe here is your two minutes to tell me in a nutshell what you want us to do? What's your solution? What ‑‑
LISTNUM 1 \l 12403 MR. HARVEY: What ‑‑ what ‑‑ not what I want you to do. I mean what they should have done. What they should have asked for. One thing I wanted to clarify too is I take ‑‑ I have a different stance than Commissioner Langford, as to what assets Citytv owns. Citytv has some great buildings. They have great logos. They do not own the licences of the actual broadcast rights.
LISTNUM 1 \l 12404 Broadcasting in Canada is privilege. It's not a right. You apply for a licence. You get a licence. You don't own it for the rest of your life.
LISTNUM 1 \l 12405 COMMISSIONER DEL VAL: So what would you like them to do?
LISTNUM 1 \l 12406 MR. HARVEY: What I would like them to do ‑‑ what could they have done? If they really believed in Canadian drama and feature film, and if they were going to increase series and they were going to make the commitments, they would have at least met the commitments that the Craigs had made for those stations. They could have met those across the Citytv format.
LISTNUM 1 \l 12407 They could have committed to doing ‑‑ to actually investing in 100 films, not just carry them with zero licence fee. They could have committed an actual licence fee similar to what they paid for dramatic programming that is series. So they could have given something more than a $150,000 an hour. But a $150,000 is a lot of money. That's $4,000,000 for this size programming.
LISTNUM 1 \l 12408 What they could have done is they could have said that they weren't going to run their Canadian content on the ‑‑ the two networks at the same time. Not just that they wouldn't have any overlap, but the Canadian content from `City would not run at the same time as the Canadian content from CTV. They would run opposite each other.
LISTNUM 1 \l 12409 That would help support. They could have taken and said ‑‑ come to the Commission and said we've listened to Telefilm, we've listened to the producers that were at the ‑‑ that Telefilm a month ago where they said how valuable it would be to have 30 second promotions for Canadian feature films on the network, and that we have two minutes of programming in all of our American programming that we run that we make all our money on.
LISTNUM 1 \l 12410 Why don't we give half ‑‑ one of those 30 seconds of one of those spots in every American show to promoting Canadian feature films and we'll give that to CAFDE, the film distributors and exhibitors.
LISTNUM 1 \l 12411 Those are the sort of things they could be doing to actually promote things. They could actually be putting this money in the budget to meet the commitments that they say in the redirect that they're going to do for Canadian content dramatic production.
LISTNUM 1 \l 12412 If there was money in here to cover Brent, to cover Steven Stohn, to cover Steven Heyges programming, to cover the programming from Alberta that was there already ‑‑ if that was in the budget then I would be happy. Because I could see what they said they were going to do ‑‑ I can see how they're going to do it. And it's here.
LISTNUM 1 \l 12413 It's not that I think what they're doing is that bad. I mean the amount of money that they're actually giving to production to put on screen is limited. I don't really understand how the theatre schools on ‑‑ end up on the screen. But ‑‑ and whether ‑‑ you know Bravo Rocks doesn't belong on there either I don't think ‑‑ or City Rocks, whatever it is called. Canada Rocks for the Cause.
LISTNUM 1 \l 12414 But providing proper benefits ‑‑ properly evaluating those assets and not saying that City was so poorly ‑‑ as the manager in the last two years ‑‑ that they squandered $300,000,000. Take the money that was set aside that they said was debt that wasn't there, attribute that to the conventionals where it really belongs, and give benefits that reflect that. Because you're taking a twin stick and you're putting there ‑‑ giving more than ten percent on those benefits.
LISTNUM 1 \l 12415 I can understand why you push and say that the conventionals aren't worth very much. Because that's where you have to give the added benefits. But the reality is that those stations are worth something. And the past shows, they're worth something.
LISTNUM 1 \l 12416 What they sold the stations ‑‑ the A Channels for shows a value. And that value is greater than what they attributed under the Merrill Lynch forecast.
LISTNUM 1 \l 12417 COMMISSIONER DEL VAL: Thank you. Those are my questions.
LISTNUM 1 \l 12418 MR. HARVEY: Oh, and by the way you mentioned my name earlier about writers. I work with both independent writers ‑‑ with independent writers from start‑up to academy award winning writers. I write myself. I'm familiar with the problems that Suzette mentioned. But I do work with writers. The reason why independent producers ‑‑ have to make money through development as well. And if you cut them out of the development process all they get is the production and all they're getting is drama series production, you're doing ‑‑ under these numbers that are in CTV you're helping to support three or four producers a year.
LISTNUM 1 \l 12419 COMMISSIONER DEL VAL: Thank you. Ms Couture wants you to phone her.
LISTNUM 1 \l 12420 MR. HARVEY: I know that.
LISTNUM 1 \l 12421 THE CHAIRPERSON: Stuart, I believe you have a question.
LISTNUM 1 \l 12422 COMMISSIONER LANGFORD: Yeah, I just ‑‑ do you accept the notion that the applicant is put before us that they are going to carry forward whatever benefits are owed under the A Channel purchase? Is what you're telling us that you don't suspect they'll do that? I'm just having a little difficulty?
LISTNUM 1 \l 12423 MR. HARVEY: No, no. I'm not saying that. I'm saying that if they're making the same commit ‑‑ benefits are an add on. We know that we are coming down to very few broadcaster left in the country. There's going to be less opportunity for acquisition, less opportunity for benefits. Benefits is not what it's about. And if we believe what they say that those are incremental, what's in the budget should be what we're really looking at. That those are the real carry forward numbers.
LISTNUM 1 \l 12424 COMMISSIONER LANGFORD: Right.
LISTNUM 1 \l 12425 MR. HARVEY: So when you look at what's here ‑‑ yes, you can say that. We can have benefits for under the A Channels ones. And there will be some producers in Alberta that will get something. I'm not saying the money should go all to Alberta from here. That's not what I'm saying.
LISTNUM 1 \l 12426 COMMISSIONER LANGFORD: No, no. That's ‑‑
LISTNUM 1 \l 12427 MR. HARVEY: But feature film ‑‑
LISTNUM 1 \l 12428 COMMISSIONER LANGFORD: But you do accept that they're carrying forward the A Channel benefits?
LISTNUM 1 \l 12429 MR. HARVEY: Absolutely.
LISTNUM 1 \l 12430 COMMISSIONER LANGFORD: Okay. So what's the problem? And sorry, I just ‑‑ this is just a straight information question.
LISTNUM 1 \l 12431 MR. HARVEY: We're going to have two major conventional broadcasters in this system.
LISTNUM 1 \l 12432 COMMISSIONER LANGFORD: Right.
LISTNUM 1 \l 12433 MR. HARVEY: The Canadian content drama production ‑‑ the larger one that it's committing to is $18,000,000 a year. That's what ‑‑ that's what our landscape is going to look like when the benefits are gone. Incrementally $18,000,000 going up about 2.8 percent is what we look at here. When we read their submission as to how much they expect it to go up over the licence, that's what they're talking about.
LISTNUM 1 \l 12434 COMMISSIONER LANGFORD: Well, I didn't get that impression from what they said yesterday. But I see Mr. Fecan scribbling, so we'll ‑‑
LISTNUM 1 \l 12435 MR. HARVEY: It's only ‑‑
LISTNUM 1 \l 12436 COMMISSIONER LANGFORD: ‑‑ get his answer.
LISTNUM 1 \l 12437 MR. HARVEY: It's only in the financials. I mean I'm not ‑‑ I didn't make this number up. I described their financials that they submitted.
LISTNUM 1 \l 12438 COMMISSIONER LANGFORD: But do I understand you to say ‑‑ and again I'm looking ‑‑ I'm not challenging you, I'm actually looking for information here. You're the man on the spot here. Do I understand you to take the position that you see the 18 million as all that's going into the programming? I mean ‑‑
LISTNUM 1 \l 12439 MR. HARVEY: I see it as going into drama and comedy category 7; 2008, $18,862,000; 2009, $19,398,000.
LISTNUM 1 \l 12440 COMMISSIONER LANGFORD: Right.
LISTNUM 1 \l 12441 MR. HARVEY: The benefits package that is given is incremental programming, that's due to this sale here.
LISTNUM 1 \l 12442 COMMISSIONER LANGFORD: Right.
LISTNUM 1 \l 12443 MR. HARVEY: I'm not talking just about what this sale ‑‑ what we're going to get just today. I'm talking about where our Canadian landscape is going.
LISTNUM 1 \l 12444 COMMISSIONER LANGFORD: But do you take their term one‑stop shopping to mean that ‑‑ if you were to put together some sort of production scheme that you would get absolutely every dime you need from CTV or just enough to get you rolling?
LISTNUM 1 \l 12445 MR. HARVEY: I can't with this amount ‑‑ with what we're talking about ‑‑ incremental ‑‑ yesterday Roma said they have seven dramatic series that they've been developing of which they might be able to get one right now.
LISTNUM 1 \l 12446 COMMISSIONER LANGFORD: Right.
LISTNUM 1 \l 12447 MR. HARVEY: With CTV they'll be able to get two or three. We heard this morning from the producers, and we heard yesterday from City ‑‑
LISTNUM 1 \l 12448 COMMISSIONER LANGFORD: Let me ask you ‑‑
LISTNUM 1 \l 12449 MR. HARVEY: ‑‑ from Citytv ‑‑ hold it ‑‑ saying that the CTF is tapped out and that the benefit coming to them is that they'll be able to provide the funding so that producers can work on casting, on script development, and we don't have to worry about going out and finding funding all around the countryside. So yes ‑‑
LISTNUM 1 \l 12450 COMMISSIONER LANGFORD: But that doesn't mean they don't have to worry about getting more funding, does it?
LISTNUM 1 \l 12451 MR. HARVEY: But I believe it means more ‑‑ at least something close to a third.
LISTNUM 1 \l 12452 COMMISSIONER LANGFORD: Okay. Well, then we'll put that to Mr. Fecan and he can enlighten us ‑‑
LISTNUM 1 \l 12453 MR. HARVEY: ‑‑ commitments are that now.
LISTNUM 1 \l 12454 COMMISSIONER LANGFORD: See, I've got another impression. I got the impression ‑‑
LISTNUM 1 \l 12455 MR. HARVEY: I know you got the other impression. But look at the numbers that are here.
LISTNUM 1 \l 12456 COMMISSIONER LANGFORD: I've seen the numbers.
LISTNUM 1 \l 12457 MR. HARVEY: They're not here.
LISTNUM 1 \l 12458 COMMISSIONER LANGFORD: I've even seen the ones on the pink pieces of paper.
LISTNUM 1 \l 12459 MR. HARVEY: Yeah, which I'd love to see.
LISTNUM 1 \l 12460 COMMISSIONER LANGFORD: Yeah.
LISTNUM 1 \l 12461 MR. HARVEY: I will give you a better analysis if you show me the pink ones.
LISTNUM 1 \l 12462 COMMISSIONER LANGFORD: I'll show you yours, you show me mine.
LISTNUM 1 \l 12463 ‑‑‑ Laughter / Rires
LISTNUM 1 \l 12464 COMMISSIONER LANGFORD: But I ‑‑ I know that line. It's like if anything happens I'll marry you, which is another one I never really wanted to trust to heavily.
LISTNUM 1 \l 12465 ‑‑‑ Laughter / Rires
LISTNUM 1 \l 12466 COMMISSIONER LANGFORD: What we have here is some questions to put to Mr. Fecan. Would you agree? I saw it differently. I thought he was explaining something differently. So let's wait for the reply. Those are my questions. I think we'll get the answers from them. And I appreciate your questions. Thank you very much.
LISTNUM 1 \l 12467 THE CHAIRPERSON: I want to ask you a bit more philosophical questions. I find your whole attitude of premise on the fact that we've got to force CTV to do this. They won't do it on their own.
LISTNUM 1 \l 12468 I mean I come at it from exactly the other end. We impose upon them Canadian content requirements. Every ‑‑ it's absolutely in their interest to meet that with the best programming possible in order to sell it, in order to get the audiences. And if that means spending money on Canadian drama they will.
LISTNUM 1 \l 12469 I mean what you put in seems to me is just sort of an illustration of what ‑‑ an indication. But the main thing is I feel it depends on their self‑interest. They can't get around the Canadian content requirement.
LISTNUM 1 \l 12470 So if you have to live it, make sure you produce the absolute best in order to get the greatest audience. I would have thought that has to be the basic equation facing Mr. Fecan and his people.
LISTNUM 1 \l 12471 MR. HARVEY: I agree, yes. But the best he can afford to put on the schedule ‑‑ but he has to look at the CFO who tells him that this is how much money he has to do that. If he can show me ‑‑ if he can go through here and say that this an accurate forecast for where their revenues are going, although City wasn't very good at it when they did their two licences. But if they can go through and say where the items are coming out ‑‑ I mean I trust them that this is how much money they say they are going to make.
LISTNUM 1 \l 12472 So if you can tell me where it is that they have money available ‑‑ where the slush funds are that should be going to Canadian content and that they are going to put them there, I'm on side. I'm not saying that ‑‑ don't get me wrong, I do not think that Ivan Fecan is bad broadcaster. I think he's a brilliant broadcaster. I think the programs they put out or excellent.
LISTNUM 1 \l 12473 I'm just saying that what we're looking at by combining these two stations together is not going to necessarily create the best environment for Canadian broadcast industry for producers. And there isn't enough money in here to do these things.
LISTNUM 1 \l 12474 So to sit there and say that the reason we should be going forward is because of A, B, C, and D ‑‑ they don't do A, B, C, and D. So give us another reason why we should go forward.
LISTNUM 1 \l 12475 Tell me what should happen? Tell me I should get out of the business and I should go back working at Number 14 Machine. You know, tell me something that says that there is some benefit for why we're doing this. I mean I think ‑‑ personally I think Paul Gratton is one of the best broadcasters in the country. I think he's got a great eye for feature film. I'm glad he's at CHUM City. And I think ‑‑ I love working with their group.
LISTNUM 1 \l 12476 Every film I've made has been on CHUM city. I've done films that have been for a million and a half to $33,000,000. They have all been on CHUM City. None of them have been on CTV. None of them have been on CBC. They have all been on CHUM. They have all been ‑‑ through Alliance.
LISTNUM 1 \l 12477 So when you look at what's there, there's a window that's available. We're going to lose that window. So where's it going to? What rights am I going to have? I supported A Channel. I was here in front of the CRTC saying don't let Global get these stations for these reasons. So ‑‑ you gave a licence. I have the licence here ‑‑ what was granted. Now we can go through all the licences and see what it was ‑‑ what part of the broadcast community you were trying to support.
LISTNUM 1 \l 12478 So I'm going to give that up. I want to know what I'm going to get in exchange? Now what's going to happen to the broadcast community? I just don't see the numbers there. I'm sorry.
LISTNUM 1 \l 12479 THE CHAIRPERSON: Okay. Thank you very much. Are there no further questions? We still have an awful lot of interveners to go through today. And then tomorrow, I guess, we're going to hear from CTV. So I would suggest we take an hour break and we come back here at 1:30.
LISTNUM 1 \l 12480 Thank you.
‑‑‑ Upon recessing à 1232 / Suspension à 1232
‑‑‑ Upon resuming at 1333 / Reprise à 1333
LISTNUM 1 \l 12481 THE CHAIRPERSON: All right. Let's resume.
LISTNUM 1 \l 12482 Madam Boulet.
LISTNUM 1 \l 12483 THE SECRETARY: Thank you, Mr. Chairman.
LISTNUM 1 \l 12484 We will now proceed with the CBC presentation. Mr. Richard Stursberg will be introducing his panel, after which you will have ten minutes for your presentation.
LISTNUM 1 \l 12485 Please go ahead.
INTERVENTION
LISTNUM 1 \l 12486 MR. STURSBERG: Thank you. Good afternoon, Mr. Chair, Commissioners and CRTC staff. My name is Richard Stursberg and I'm Executive Vice‑President of CBC English Television.
LISTNUM 1 \l 12487 To my right is Kirsten Layfield, who is the Executive Director of Network Programming. To my left is Dave Scapilatti, the General Manager of Sales and Marketing. And to his left is Bev Kirshenblatt, the Senior Director of Regulatory Affairs.
LISTNUM 1 \l 12488 In opposing this transaction we have addressed a number of issues in our intervention. Today I would like to focus on three key questions:
LISTNUM 1 \l 12489 (1) Why is this particular application before you today?
LISTNUM 1 \l 12490 (2) Is this proposed transaction in the public interest?
LISTNUM 1 \l 12491 (3) If there are problems ‑‑ and we believe there are ‑‑ can the transaction be salvaged?
LISTNUM 1 \l 12492 Why are we here today?
LISTNUM 1 \l 12493 Let's start at the beginning. This application is the result of a decision by the Waters family to sell their interest in CHUM after the death of CHUM's founder, Alan Waters. Contrary to the suggestions of CTV, CHUM was not a struggling company that needed to be rescued, a company that was financially distressed in any way. The opposite is true. CHUM was a very successful broadcasting company that was growing on all fronts.
LISTNUM 1 \l 12494 The 50 percent premium that CTV paid for the CHUM shares is a clear testament to the success of CHUM and the value of the CHUM assets. By way of confirmation of this valuation, Astral was outbid by only 5 percent.
LISTNUM 1 \l 12495 The Waters family sold CHUM because they wanted to leave the broadcasting business, not because they had to save the company from insolvency.
LISTNUM 1 \l 12496 Is that a sufficient reason to approve this transaction? We do not think so.
LISTNUM 1 \l 12497 The Commission has an obligation under the Broadcasting Act to assess whether the transaction is in the public interest and fulfils the policy objectives of the Act, which brings me to our second question: Is this transaction in the public interest?
LISTNUM 1 \l 12498 As we identified in our written submission, this application raises numerous concerns. In our oral remarks, we would like to focus on what we consider to be the most important of these points, the effect this transaction would have on competition.
LISTNUM 1 \l 12499 CTV has tried to argue that this transaction will level the playing field between itself and Canwest. This is simply not the case. CTV is already the largest and most successful English language television broadcaster in Canada. It is not playing catch‑up with anyone.
LISTNUM 1 \l 12500 CTV wants to own two local operations in the five most important English language markets: Toronto, Vancouver, Calgary, Edmonton and Winnipeg. In their written interventions CBC, Canwest and others have shown that the existing Canwest situation is totally different from what CTV is proposing for itself.
LISTNUM 1 \l 12501 Canwest does not own two stations in any local market as defined by the CRTC. There is no structural imbalance that needs to be remedied. And while CTV has argued that the common ownership policy is no longer relevant in a world of increasing program choices, the Commission has clearly indicated that it will not review its current policy in this proceeding.
LISTNUM 1 \l 12502 Based on the facts before us, there is no justification for an exception to the Commission's common ownership policy, but that is only the beginning of the story.
LISTNUM 1 \l 12503 If this transaction were approved, CTV would capture 50 percent of all television advertising revenue in the English market, conventional and specialty. This would be a remarkable outcome. Our largest English language television broadcaster would become even larger and enjoy unprecedented market power.
LISTNUM 1 \l 12504 This level of market power would exceed all traditional measures of acceptable industry concentration, well above the Competition Bureau's market share threshold of 35 percent. If this transaction were permitted, only two major private broadcasters would remain together controlling 75 percent of all advertising revenues.
LISTNUM 1 \l 12505 In the United States, the U.S. Department of Justice and the Federal Trade Commission used the Herfindahl Index to measure concentration. Any measure above 1,800 is regarded as highly concentrated. In the case of this transaction, after the merger, the industry would be close to 3,200. Most economists would certainly regard this as an unacceptable level of concentration.
LISTNUM 1 \l 12506 The effect on other broadcasters would be significant and negative in two ways.
LISTNUM 1 \l 12507 First, this level of market power would allow CTV‑CHUM to obtain prices for its advertising inventory that would be higher than a fully competitive environment would permit. The ability to extract those premiums would inevitably come at the expense of smaller players, most notably the CBC, the only broadcaster that shows Canadian programming in real prime time.
LISTNUM 1 \l 12508 We put some data together for you in your reference materials. This is the chart. It's at the back of the speech.
LISTNUM 1 \l 12509 This chart, which relies on the CRTC's own financial data from 2005, shows how CTV would be able to use its market power to maximize its revenues and the possible consequences for smaller players.
LISTNUM 1 \l 12510 Put simply, it will be able to do two things.
LISTNUM 1 \l 12511 First, it will be able to raise the price for its existing high value properties, most notably its successful U.S. shows. This will reduce the money available to others since the conventional advertising market is flat and may shrink in the future.
LISTNUM 1 \l 12512 Second, it will be able to bundle the relatively lower valued CHUM inventory, the inventory that CBC competes against, with its high value U.S. shows to deny us selling opportunities. As a result, CTV‑CHUM's programs will become "must buys" for advertisers. Advertisers will be obliged to redirect spending away from the CBC and with more revenue going to CTV‑CHUM we will be unable to dedicate the same resources to the production of Canadian programs.
LISTNUM 1 \l 12513 We can return to the chart later, if you would like to.
LISTNUM 1 \l 12514 It is worth noting that we are not alone in thinking this would happen. The Association of Canadian Advertisers is equally concerned. The ACA states that approving the CTV application would give CTV an undue competitive advantage.
LISTNUM 1 \l 12515 If the advertisers are worried, I think we also have a right to be.
LISTNUM 1 \l 12516 The new CTV would also be able to use its dominant position and enhanced revenues to outbid others in the programming market.
LISTNUM 1 \l 12517 From CBC's perspective, this is especially troubling in the context of Canadian programming and CTV's proposal to keep all the tangible television benefits to itself.
LISTNUM 1 \l 12518 With the enhanced advertising revenues available to it, as well as control of millions of dollars of benefits money, CTV would be in a position both to outbid CBC for new Canadian programs, as well as tie up independent producers formally or informally with first look deals for CTV's sole benefit.
LISTNUM 1 \l 12519 I would like to take a moment to focus on this issue of self‑directed benefits in the context of the present transaction.
LISTNUM 1 \l 12520 The very purpose of the public benefits mechanism is to ensure that the deal also benefits the public, since the licence being sold actually belongs to the public. It is completely incompatible with the purpose of public benefits to assign them to the parties involved in the transaction. To do so turns them from public into private benefits.
LISTNUM 1 \l 12521 The only proper approach to benefits in a situation such as this is to require the benefits to be assigned in a way that benefits the broadcasting system as a whole, not just CTV and CHUM. In our view, the best mechanism for this is the Canadian Television Fund.
LISTNUM 1 \l 12522 CTV argues that the Commission should adopt the approach to their benefits as it did in 1999. It notes that the arrangement worked well because it allowed producers one stop shopping. Rather than running around trying to organize their financing, producers were able to focus on the creative work associated with making television shows.
LISTNUM 1 \l 12523 This was probably a good argument in 1999, but now all broadcasters can offer one stop shopping because the Canadian Television Fund has adopted an envelope based approach to allocating its resources.
LISTNUM 1 \l 12524 The envelope system works pretty much the same way CTV would like to use the benefits money itself. This means that putting the money directly into the Canadian Television Fund can also achieve the one stop shopping objective.
LISTNUM 1 \l 12525 We recognize that the Competition Bureau looked at this transaction. They issued subpoenas to many companies to gather information on the impact of the proposed transaction on the advertising markets. Then, before all the evidence was received, they halted the process.
LISTNUM 1 \l 12526 In this sense, it appears to us that the Bureau neither approved nor disapproved the transaction.
LISTNUM 1 \l 12527 In any event the CRTC's mandate is more fundamental and far broader than that of the Competition Bureau, and therefore its examination of this transaction is far more important. We don't think that the Commission should give any weight to the fact that the Competition Bureau chose not to take steps to further investigate and possibly block the CTV acquisition of CHUM.
LISTNUM 1 \l 12528 The Commission is in charge of ensuring that Canada has a diverse, vibrant and robust broadcasting industry which is capable of achieving the goals of the Broadcasting Act. In our view, it is clearly contrary to those goals and against the overarching public interest to permit the creation of a mega broadcaster, a company that would be able to dominate the English television market, squeezing both advertisers and other broadcasters.
LISTNUM 1 \l 12529 That brings me to our final question: Can this transaction be salvaged?
LISTNUM 1 \l 12530 Given the clear problems with this application, it is natural to ask: Is there a way to fix it? CTV says yes: safeguards.
LISTNUM 1 \l 12531 In our view, this makes no sense. There are no policy reasons for approving this transaction. The CTV acquisition of CHUM would not solve any problems. It would only create them.
LISTNUM 1 \l 12532 Why would the Commission want to create a behemoth only to then forge a set of chains to make sure it doesn't wreak havoc on the broadcasting system? Why create an unnecessary regulatory burden for the Commission and others? Why create problems of administration, monitoring and enforcement? Why do this when it is totally unnecessary?
LISTNUM 1 \l 12533 CTV does not need to buy CHUM. CTV is doing very well already and CHUM does not need to be bought by CTV. There are lots of other Canadian media companies who would be interested in the CHUM assets.
LISTNUM 1 \l 12534 That brings me back to the beginning of our presentation. Why are we here today?
LISTNUM 1 \l 12535 Because the Waters family wanted to sell CHUM and CTV and outbid Astral for the assets. That is not a good reason to approve this transaction. This transaction is against the public interest and it should not be approved.
LISTNUM 1 \l 12536 Thank you for giving us the opportunity to present these comments, and we would be happy to answer any questions that you might have.
LISTNUM 1 \l 12537 THE CHAIRPERSON: Thank you very much, Mr. Stursberg.
LISTNUM 1 \l 12538 Can you walk me through the chart for a moment and explain the numbers?
LISTNUM 1 \l 12539 MR. STURSBERG: I will. Actually, what I will do is I will ask Dave Scapillati, who is the Head of Marketing and Sales, to walk you through the chart.
LISTNUM 1 \l 12540 MR. SCAPILLATI: What we have attempted to do is put this into an easy to understand chart to take you through and try and quantify what the impact would be, using some conservative assumptions of what the impact would be with the two concerns that we have.
LISTNUM 1 \l 12541 If you look on the left, we have all the major broadcast competitors and the first column is the share of the conventional market. Currently, Canwest and CTV have primarily premium U.S. programming making up 73 percent of the total dollars.
LISTNUM 1 \l 12542 The lower demand programming is fulfilled in the market currently by CHUM, CBC and all other smaller independents.
LISTNUM 1 \l 12543 After the merger, you would see that CTV and CHUM together would represent 52 percent of conventional advertising revenues.
LISTNUM 1 \l 12544 If it holds true that they are able to command a premium, raise the price of t heir premium U.S. programming, in addition to the bundling effect by forcing advertisers to buy some of the lower priced, less demand CHUM inventory in order to get the premium price U.S., then we are looking at a range ‑‑ and I have used conservative estimates ‑‑ of 2 to 5 percent.
LISTNUM 1 \l 12545 Given that the conventional advertising market is not growing ‑‑ it is staying flat to maybe negative ‑‑ that is just sharing a pie. Any gains from one come right out of the pockets of the others.
LISTNUM 1 \l 12546 THE CHAIRPERSON: Even if I accept that, which I have some difficulty with, why would it come all out of your hide? Why not out of Canwest?
LISTNUM 1 \l 12547 MR. STURSBERG: It's possible that some of it could come out of Canwest. The idea is actually just to give you an illustrative sense of this.
LISTNUM 1 \l 12548 Our general feeling is twofold. One, as we were saying, they will be able to command the premiums in the market because they will have more market power. Second, they will be able to move the CHUM inventory more effectively.
LISTNUM 1 \l 12549 So it might be that some of it would come out of Canwest, but Canwest retains a significantly stronger position in the market than any of the smaller players.
LISTNUM 1 \l 12550 The way we have done it here, as you will see, as David will show you, is we have simply assigned the losses to the bottom players. We could do it another way, but it is just illustrative.
LISTNUM 1 \l 12551 David.
LISTNUM 1 \l 12552 MR. SCAPILLATI: So if you look at the new market share post acquisition ‑‑
LISTNUM 1 \l 12553 COMMISSIONER DEL VAL: I'm sorry, I just want to clarify. This share is of advertising revenues.
LISTNUM 1 \l 12554 MR. SCAPILLATI: Advertising revenue total conventionally.
LISTNUM 1 \l 12555 COMMISSIONER DEL VAL: Thank you.
LISTNUM 1 \l 12556 MR. STURSBERG: This is just conventional advertising revenues. It doesn't include the specialty revenues.
LISTNUM 1 \l 12557 MR. SCAPILLATI: The new share post acquisition, if we look at a 2 to 5 percent range for CTV‑CHUM combined, would be 54 to 57. CBC‑All Others would drop from 15 down to between 13 and 10.
LISTNUM 1 \l 12558 So let's look at that in real dollars and real percentage change.
LISTNUM 1 \l 12559 If they were to shift 2 percent, then total advertising revenues for the CTV and CHUM together would grow 3.8 percent. That coincides with CTV's response to deficiencies where they did say that they forecast it to grow 3 percent. So it is not too far out of the range. We believe the low end is accepted by CTV.
LISTNUM 1 \l 12560 The impact on CBC and the other smaller independents would be a much bigger impact because of our smaller base. It would be in the range of 13 to 33 percent; if you look at real dollar terms, between $38 million and $95 million.
LISTNUM 1 \l 12561 So even that small shift of 2 percent creating a $38 million shift in advertising revenues; very significant.
LISTNUM 1 \l 12562 MR. STURSBERG: Just to put it into perspective for you, right now CBC's total English language advertising revenues are about $200 million. So if it were to the high end with a $95 million loss, and even if it were split 50:50 between ourselves and the others, you can see that would wipe out almost 25 percent of our current advertising revenue.
LISTNUM 1 \l 12563 So it potentially has a very big impact on us, and we think the impact would be disproportional to the smallest players in the market; i.e., ourselves and others who are left.
LISTNUM 1 \l 12564 THE CHAIRPERSON: The second question is: You basically said we should stop this transaction. Let's not approve it and let the market speak and somebody else will come forward and pick up the assets, I gather.
LISTNUM 1 \l 12565 Yesterday, first Commissioner Langford and then I mentioned that we have trouble with this transaction because it doesn't really fit at all our two‑stick policy. The two‑stick policy is based on failing stations and I expressed the view that I didn't see that City stations fail. You could make the argument that the A stations are failing. They are certainly much unhealthier than the other.
LISTNUM 1 \l 12566 If you had a flip and in effect City chose to buy the A station and divest the City stations, will your opposition still remain the same?
LISTNUM 1 \l 12567 MR. STURSBERG: We would be much more comfortable with that.
LISTNUM 1 \l 12568 THE CHAIRPERSON: And third, on the CTF, you seem to be one of the rare people who seems to think the CTF works fine and is an example to be emulated.
LISTNUM 1 \l 12569 Do you mean to basically restructure CTF or just the CTF as right now; that all the benefits should go there?
LISTNUM 1 \l 12570 MR. STURSBERG: I think the CTF actually has come a long way. I used to have the pleasure of chairing the CTF in conceivably its darkest days, and I think they have made a lot of progress.
LISTNUM 1 \l 12571 Having said that, could the CTF operate better? Absolutely.
LISTNUM 1 \l 12572 We met Michel Arpin the other day and we gave him a series of suggestions as to how we thought the CTF could operate better. But my general feeling would be that as between letting CTV keep all the benefits money and discharge it itself versus putting the benefits money into the CTF, even as it stands now, we are much better off doing the latter.
LISTNUM 1 \l 12573 THE CHAIRPERSON: Are there any other examples where the CTV suggestion of self‑administered funds like this is in existence? You suggest the benefits should be public and not CTV‑owned. That's why they should go to the CTF or another mechanism like that rather than being administered by themselves.
LISTNUM 1 \l 12574 Is CTV ploughing new grounds?
LISTNUM 1 \l 12575 MR. STURSBERG: No. There are other benefits packages that have been put into other independent funds, but the independent funds have never been to allocate the money uniquely to the people who established the funds. Indeed, they have had requirements that they had to have boards of directors and so on and so forth.
LISTNUM 1 \l 12576 As far as I know, this is the same general structure that they proposed in 1999 and that was accepted by the Commission at the time. Indeed, I remember I was then the Chairman of the Television Fund and they had come to ask me whether I thought this was a good idea, and I said at the time I thought it was probably not a bad idea.
LISTNUM 1 \l 12577 But as I said in my oral remarks, that is now eight years ago and times have changed substantially. I think what they say has merit; that it was a good idea to have a situation where there was one stop shopping. I think it is a good idea that people can make more than 13 episodes of a show exactly along the lines that Linda Schuyler was saying earlier on today. Those are good things and we have made exactly the same points to Michel Arpin. So we agree with all that.
LISTNUM 1 \l 12578 But right now the situation is that since there is an uninvolved structure within the CTF ‑‑ and what that means is that each broadcaster is essentially handed a certain amount of cash out of the CTF and said here, go ahead make your deals with producers ‑‑ every broadcaster can now have a one stop shopping relationship with the producers.
LISTNUM 1 \l 12579 So it is in that sense that we say 1999, that was one time; 2007 it's another time. You put the money into the CTF. You can also have one stop shopping.
LISTNUM 1 \l 12580 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 12581 Elizabeth, please.
LISTNUM 1 \l 12582 COMMISSIONER DUNCAN: Mr. Stursberg, I would like to start reviewing the transaction because there are more aspects to it than just the over the air television.
LISTNUM 1 \l 12583 Are you opposed to the sale of the radio portion?
LISTNUM 1 \l 12584 MR. STURSBERG: No.
LISTNUM 1 \l 12585 COMMISSIONER DUNCAN: And are you opposed to the sale of the specialty?
LISTNUM 1 \l 12586 MR. STURSBERG: No.
LISTNUM 1 \l 12587 COMMISSIONER DUNCAN: So your issue is only with conventional television.
LISTNUM 1 \l 12588 MR. STURSBERG: Our issue is with the conventional television and with the structure of the benefits.
LISTNUM 1 \l 12589 COMMISSIONER DUNCAN: On the fact that you have just said that you would be more comfortable with the A Channels, it seems to me, listening to your arguments earlier, that the issue would be the same. They would still have the advertising clout. They would still be able to force people to buy.
LISTNUM 1 \l 12590 I don't understand why you would be more agreeable to the A Channels than you would be to the CHUM channels.
LISTNUM 1 \l 12591 MR. STURSBERG: I think what I said was I would be less disagreeable on the subject. It would give me less concern but it would still give me concern.
LISTNUM 1 \l 12592 The plain fact of the matter is that the A Channels are not doing very well compared to the CHUM conventional channels. So to the extent that they are doing poorly, to that extent does alleviate my concerns. But my concerns, as you say, would still continue.
LISTNUM 1 \l 12593 COMMISSIONER DUNCAN: With the over the air television review, of course, we learned that all of the television broadcasters are sort of falling on hard times as advertising is being redirected.
LISTNUM 1 \l 12594 I think the evidence that we got yesterday from CTV was that CHUM's results are on the decline. So it seems to me that they do need to be bolstered. I didn't get the impression that they were as financially sound as you maybe thought.
LISTNUM 1 \l 12595 MR. STURSBERG: Well, I don't know. I don't have any particular insight into the CHUM numbers.
LISTNUM 1 \l 12596 What I do know is that if you were to look at the analysts' views as to the situation with respect to the performance of these assets ‑‑ this is, for example, Scotia Capital's review of the Bell Globemedia offer for CHUM in which they attempt to assess whether fair market value is being paid and the pros and cons of the transaction, et cetera. This is the August 2006 Scotia Capital piece.
LISTNUM 1 \l 12597 In their model summary of CHUM Limited, what they do is they calculate what was known in 2003, 2004 and 2005. These are actuals and then they estimate 2006, 2007 and 2008.
LISTNUM 1 \l 12598 Their estimate is that EBITDA would grow from $79.9 million in 2003 ‑‑ this is just CHUM alone ‑‑ to $137.6 million, which would mean in fact that the gross margin would improve from 15 to 20 percent. This is the view of Scotia Capital. This is not my view. But that doesn't sound to me like a distressed asset. That sounds to me like an asset which is in reasonably good shape.
LISTNUM 1 \l 12599 COMMISSIONER DUNCAN: I guess it's hard for us to comment really. They are projecting those numbers, Scotia Capital. We are relying on the folks from CHUM and CTV to give us the information they have given us.
LISTNUM 1 \l 12600 MR. STURSBERG: As I say, I have no insight into the numbers that they have produced for you. I can't comment on those. All I know is the numbers that we read from the financial analysts and the investment banking community.
LISTNUM 1 \l 12601 COMMISSIONER DUNCAN: And the fact that Astral was only below the bid by 5 percent, they must have been all in the same ballpark as far as valuing the transaction.
LISTNUM 1 \l 12602 MR. STURSBERG: Yes. Well, clearly if there had been a gigantic difference as between Astral and what it was CTV was prepared to pay, then you could say that there was something odd going on in the market.
LISTNUM 1 \l 12603 But I think the fact that Astral was only 5 percent below, what it shows is that in fact (a) there are other buyers and (b) that the other buyers will pay a substantial amount of money and a substantial premium over market for the CHUM assets.
LISTNUM 1 \l 12604 COMMISSIONER DUNCAN: And so you think that we have a concern I think about delaying the transaction. You don't think there is any concern or that we should be concerned?
LISTNUM 1 \l 12605 MR. STURSBERG: We are not proposing that you delay your decisions in any way. We understand ‑‑
LISTNUM 1 \l 12606 COMMISSIONER DUNCAN: Not to delay the decision but ‑‑ well, I guess that's what I understood you to be saying. If we don't approve it, the sale will be delayed because they will have to find another buyer.
LISTNUM 1 \l 12607 MR. STURSBERG: Or you could approve it subject to their disposing of the City TV assets. That's another way to do it.
LISTNUM 1 \l 12608 COMMISSIONER DUNCAN: What about if the funds ‑‑ and we heard a lot of support and got a lot of written interventions in support of the self‑directed fund, as we talked about.
LISTNUM 1 \l 12609 If the fund goes to the CTF fund, CBC gets 37 percent of that number. Is that correct? That's what I understood.
LISTNUM 1 \l 12610 MR. STURSBERG: That's correct.
LISTNUM 1 \l 12611 COMMISSIONER DUNCAN: So that means the money wouldn't be going directly, as I understand it, to these independent producers and writers. It would go to broadcasters, including the CBC.
LISTNUM 1 \l 12612 MR. STURSBERG: No, that's not right.
LISTNUM 1 \l 12613 The way it works in the Fund is that all the money within the Fund has to be spent on independent producers. So the 37 percent that the CBC has, that money is spent in fact licensing programs from independent producers. But the independent producers continue to own the copyright in all the programs.
LISTNUM 1 \l 12614 COMMISSIONER DUNCAN: Does the money come to CBC first?
LISTNUM 1 \l 12615 MR. STURSBERG: Well, it's not that it comes to the CBC first. The money is earmarked in such a way that the CBC can spend it with independent producers. It would be exactly the same way as CHUM is proposing to do it, as I understand it. The money would be spent on productions that would be commissioned from independent producers, which is exactly the way the CTF works right now.
LISTNUM 1 \l 12616 COMMISSIONER DUNCAN: So from your point of view there is no advantage, one system over the other.
LISTNUM 1 \l 12617 MR. STURSBERG: Yes, there's a huge advantage. The huge advantage is that if you put it into ‑‑
LISTNUM 1 \l 12618 COMMISSIONER DUNCAN: From the producers' point of view, the creative people's point of view.
LISTNUM 1 \l 12619 MR. STURSBERG: No, I don't think there will be any significant advantage. In fact, I think it will be better for the producers. I think that the producers will find themselves in a situation where they have more doors to knock on and that they will not be wholly dependent on CTV in the kind of way that they would be were the merger to go through and were CTV's proposal with respect to benefits to be agreed.
LISTNUM 1 \l 12620 Just on this point, if you don't mind, I might ask Kirsten to comment on it because we are very concerned about what this would imply about the relationship to producers.
LISTNUM 1 \l 12621 MS LAYFIELD: I think we have heard today from some producers who have had great relationships with CTV and we are not going to disavow that. In fact, CTV has done a great job in the community, and that's what makes us have a great industry.
LISTNUM 1 \l 12622 I think the concern that we have is with the self‑directed benefits package. Again, as Richard was saying, was the fact that it really pigeonholes or directs those funds to those two broadcasters.
LISTNUM 1 \l 12623 We would much prefer a system that would allow the funds to float throughout the system and actually support a broader industry.
LISTNUM 1 \l 12624 It would support program producers who produce programming that might not necessarily fit into either CTV or CHUM's programming strategy. We'd like to have a variety and keep the industry stronger.
LISTNUM 1 \l 12625 MR. STURSBERG: You know, it's not just cash. It's talent.
LISTNUM 1 \l 12626 And what worries us is that if this were to go ahead, CTV could also start to, you know, monopolize talent. Talent is rare.
LISTNUM 1 \l 12627 And the way in which this can happen is it can happen formally or it could happen informally. That essentially they'd set up a series of first‑look deals with the most gifted people.
LISTNUM 1 \l 12628 So they would say, "You come around and see us first. And, if we like it, we'll buy it. But you don't go and see anybody else until we've passed."
LISTNUM 1 \l 12629 And we think that would be destructive, not just to us, but it would be destructive to the other broadcasters in the system.
LISTNUM 1 \l 12630 COMMISSIONER DUNCAN: The CTV has proposed a number of checks and balances. I take it that you don't think that those are adequate?
LISTNUM 1 \l 12631 MR. STURSBERG: We think they're unnecessary. We think that the better ‑‑ as I was saying in our opening remarks, the ‑‑ this transaction creates a series of problems.
LISTNUM 1 \l 12632 We don't understand why the transaction is in the public interest or what the benefits would be for the public.
LISTNUM 1 \l 12633 So our view is rather than create a series of safeguards to deal with the problems created by the transaction, where there's no public interest in the transaction in the first instance, it's better simply to decline the transaction, and you don't have to get into all the safeguards.
LISTNUM 1 \l 12634 COMMISSIONER DUNCAN: And what about potential checks on ‑‑ if it were approved, what type of checks could be put in place as far ‑‑ to control them controlling the advertising? Can you think of any?
LISTNUM 1 \l 12635 MR. STURSBERG: I think it would be ‑‑
LISTNUM 1 \l 12636 COMMISSIONER DUNCAN: If it was approved. If the deal was approved.
LISTNUM 1 \l 12637 MR. STURSBERG: No, I think it would be exceptionally difficult to do that. I think that they would be exceptionally powerful in the advertising market.
LISTNUM 1 \l 12638 But, you know, you want to ‑‑ may speak to this, too, David. You're closer than I am.
LISTNUM 1 \l 12639 MR. SCAPILLATI: Well, the bundling/packaging strategy goes on today. And, you know, they're a big company and they've made all the competitors better.
LISTNUM 1 \l 12640 So I have no ‑‑ no problem at all going against a large competitor when they can make ‑‑ advertisers can make a decision on where to put their dollars when there's a somewhat level playing field.
LISTNUM 1 \l 12641 What I am resisting is where advertisers have to make decisions because they're being forced to. And it's just simply wrong. And that makes it uncompetitive for us.
LISTNUM 1 \l 12642 I don't mind going against a good competitor. I embrace that. And today they're a formidable competitor. 40 percent of the market. 52, it swings the balance.
LISTNUM 1 \l 12643 MR. STURSBERG: I'd just like to make my little point. Sometimes people think that the price of advertising inventory is just a function of how many eyeballs that you bring in. So the cost per thousand is going to be the cost per thousand. But that's not the case.
LISTNUM 1 \l 12644 That many kinds of programs command very substantial premiums in the market because they're exceptionally desirable to advertisers because the programs have such tremendous reach or cache or bang within the market.
LISTNUM 1 \l 12645 And the programs that command the greatest premiums are, in fact, the top 20 American shows.
LISTNUM 1 \l 12646 Those are the shows where you can get very big premiums.
LISTNUM 1 \l 12647 Now, if you want to pursue a bundling strategy along the lines that Dave is talking about, then what you do is you take all your low‑value inventory. And the lowest value inventory I have to tell you, sadly, is Canadian programs.
LISTNUM 1 \l 12648 And you say to the advertiser, "You want to buy the stuff you really like? Do you want to buy these terrific American shows that carry the big premiums? Fine, you have to take this as well."
LISTNUM 1 \l 12649 So that what it does is it gives them a capacity to be able to take the low‑value inventory, and the CHUM inventory by and large is very like ours. It's relatively lower value. It doesn't command the same premiums as the big U.S. shows.
LISTNUM 1 \l 12650 And they'll say, "You must take that inventory from CHUM if you want to get the top U.S. shows."
LISTNUM 1 \l 12651 Obviously we can't do that, and so suddenly we find ourselves at a very significant competitive disadvantage. As of to Dave's point, what's happening then is he's not competing on a level playing field. He's competing on one that's heavily tilted because they can engage in those kinds of bundling strategies.
LISTNUM 1 \l 12652 COMMISSIONER DUNCAN: I think I understand your point there.
LISTNUM 1 \l 12653 Could you just ‑‑ just refresh my memory on the percentage of U.S. programming that you have?
LISTNUM 1 \l 12654 MR. STURSBERG: We have essentially no U.S. programming except a couple of strips in the afternoon.
LISTNUM 1 \l 12655 You want to talk to it?
LISTNUM 1 \l 12656 MS LAYFIELD: Yes. We have a foreign programming allotment of 20 percent of the schedule.
LISTNUM 1 \l 12657 COMMISSIONER DUNCAN: All foreign.
LISTNUM 1 \l 12658 MS LAYFIELD: Yes, all foreign.
LISTNUM 1 \l 12659 COMMISSIONER DUNCAN: Yes. Okay.
LISTNUM 1 \l 12660 MR. STURSBERG: But what we have is we have, correct me if I'm wrong, Catherine, two strips in the afternoon. One is "Arrested Development", the other is "Seinfeld". Sorry, "Simpsons". We wish we had "Seinfeld".
LISTNUM 1 \l 12661 No. The "Simpsons" and then we have "Coronation Street". We'll have occasional American movies on, and that's pretty much it.
LISTNUM 1 \l 12662 But I would say this, which is why this links to the public policy issue, the deeper public policy issue, is that the CBC is the only big conventional broadcaster that puts Canadian programs on in deep prime time.
LISTNUM 1 \l 12663 The CRTC defines prime time as 7:00 to 11:00, you know, seven days a week. But the truth is, when Canadians come to watch television, they watch from 8:00 to 11:00 and the deepest part of that is Monday to Thursday.
LISTNUM 1 \l 12664 Where we try to put Canadian programs on is when Canadians are actually watching.
LISTNUM 1 \l 12665 That block of time for Global or CTV is totally taken up with their American shows. That's when they put them on. And they put them on then for good reason.
LISTNUM 1 \l 12666 So the Canadian shows fall into the sort of lower part. So it's Saturday evening, it's 7:00 to 7:30, it's 7:30 to 8:00, whatever it happens to be.
LISTNUM 1 \l 12667 But if the goal of the Commission is ultimately to ensure that the system can allow Canadian programs to get made, that are watched by Canadians, then to the extent that you damage the CBC in that respect, to that extent you damage the goals of the Commission as a whole.
LISTNUM 1 \l 12668 COMMISSIONER DUNCAN: Thank you, Mr. Stursberg.
LISTNUM 1 \l 12669 THE CHAIRPERSON: Rita?
LISTNUM 1 \l 12670 COMMISSIONER CUGINI: Thank you.
LISTNUM 1 \l 12671 You talk about CanWest does not own two stations in any local market as defined by the Commission, and therefore there's no structural imbalance that needs to be remedied.
LISTNUM 1 \l 12672 Do I take that to mean that you do not ‑‑ you don't recognize Toronto and Hamilton as one market?
LISTNUM 1 \l 12673 MR. STURSBERG: That's correct.
LISTNUM 1 \l 12674 COMMISSIONER CUGINI: If I live in Oakville, and we're going to use Toronto/Hamilton because it just happens to be the city I know best.
LISTNUM 1 \l 12675 But if I live in Oakville and at eight o'clock I tune to channel 3 and I'm watching "House", and then at nine o'clock I go to channel 11 and I'm watching "Raines", I may have the nights mixed up, and then at ten o'clock I go back to channel 3 and I'm watching "Brothers and Sisters."
LISTNUM 1 \l 12676 Isn't that what CTV is talking about? Because if I'm living in Oakville, I have no idea, nor probably do I care, that any ‑‑ that one of those shows or two of those shows are coming from Toronto, and the third one was coming from Hamilton.
LISTNUM 1 \l 12677 MS LAYFIELD: I live in Oakville, so I can answer that question.
LISTNUM 1 \l 12678 I think in terms of programming, you know, you're right. There is a huge amount of variety of programming on the air at any given time.
LISTNUM 1 \l 12679 I think given that we're now in a digital world, there's actually hundreds of channels. I can also watch something coming from the Atlantic CTV feed at eight o'clock at night at the same time.
LISTNUM 1 \l 12680 So I think, in terms of programming, that's probably not as much of the point we're trying to make. I think it's more in terms of the advertising markets that we see them to be a little more distinctive.
LISTNUM 1 \l 12681 COMMISSIONER CUGINI: But isn't that also the point that CTV is trying to make, in that those two Global stations, whether I'm watching them on cable or over the air, can potentially dominate the viewer's prime time schedule. Because they're watching in that one market, like I say, both signals, either over the air or on cable.
LISTNUM 1 \l 12682 And that's the structure imbalance, therefore, that CTV is addressing when it says that it wants to correct.
LISTNUM 1 \l 12683 MR. STURSBERG: Well, I've just got to say, I think there's two or three things we should bear in mind.
LISTNUM 1 \l 12684 First of all, that the local markets that we're talking about are the local markets as defined by the Commission. And, in that sense, you know, Hamilton and Toronto remain distinct local markets.
LISTNUM 1 \l 12685 Second point is that in both of those markets what has to happen is they have to continue to put up a local news cast in Hamilton, as they would put a local news cast for a locally‑licensed station in Toronto.
LISTNUM 1 \l 12686 So these are ‑‑ these are complet‑‑ and indeed their ability to be able sell across these two in advertising terms is defined by the Commission.
LISTNUM 1 \l 12687 But the other point I would make, which I think is a very important point, is that when you look at the markets where Global actually has these kinds of extension arrangements through the CH network into Hamilton or into Victoria and so on, these are minor markets.
LISTNUM 1 \l 12688 What CTV is proposing is actually to have two stations in the most important markets in the entire country. In fact, overwhelmingly the richest advertising markets in the entire country.
LISTNUM 1 \l 12689 COMMISSIONER CUGINI: Thank you. Thank you, Mr. Chairman.
LISTNUM 1 \l 12690 THE CHAIRPERSON: You speak about public interest, but you, strangely enough, do not mention at all diversity of voices.
LISTNUM 1 \l 12691 For us this is probably the biggest concern. As you know, the whole two stick policy is there to assure diversity. And we've heard from lots of people very strong views one way or another.
LISTNUM 1 \l 12692 I'd be very interested to hear what your view is on this part.
LISTNUM 1 \l 12693 MR. STURSBERG: Well, we focus on diversity issues in our written ‑‑ in our written brief, and we certainly would take the view that the greatest guarantor of diversity is, in fact, separate ownership.
LISTNUM 1 \l 12694 You've heard a lot about that in the course of the testimony over the last little while, and we would accept that in general terms that is an accurate description of what happens.
LISTNUM 1 \l 12695 Common ownership leads inevitably to a kind of cultural uniformity within the organizations that are commonly owned.
LISTNUM 1 \l 12696 We take that view. We chose to focus here rather than on the issue of concentration, rather than on the issue of diversity, but we would not distance ourselves from anything that you've already heard from people who are concerned about exactly that point.
LISTNUM 1 \l 12697 THE CHAIRPERSON: No, but you say this transaction is not in the public interest, and you only have mentioned concentration and not diversity of voices. That's why I'm raising it.
LISTNUM 1 \l 12698 MR. STURSBERG: No, I agree with you. I think we would be equally concerned about diversity, that's why we cover it in our written brief, but just in the interests of brevity, I thought we would talk about concentration, because I wanted to focus on those areas that were most particularly damaging to the CBC as an organization, rather than the areas of broader public policy.
LISTNUM 1 \l 12699 But, absolutely, with respect to general concerns about diversity, we share those concerns.
LISTNUM 1 \l 12700 THE CHAIRPERSON: Okay.
LISTNUM 1 \l 12701 Any other questions? Stuart?
LISTNUM 1 \l 12702 COMMISSIONER LANGFORD: Yes. Thank you, Mr. Chair.
LISTNUM 1 \l 12703 It's very interesting, and I'm pleased that you could take the time to come out and, you know, give us even more of your views than in your written presentation.
LISTNUM 1 \l 12704 I have just one general question.
LISTNUM 1 \l 12705 Remind me again of why you're not worried about the specialty situation. Because if you're talking about concentration in ownership, they do move into a kind of rarified world once they ‑‑
LISTNUM 1 \l 12706 I mean, they're pretty strong now. They're not going to get any weaker with the ‑‑ with the acquisition of the CHUM specialties.
LISTNUM 1 \l 12707 Why aren't you worried about that?
LISTNUM 1 \l 12708 MR. STURSBERG: Well, I'm not unworried about it. I mean, I think would the CBC be in a better situation if it had more specialty channels? Absolutely.
LISTNUM 1 \l 12709 It allows you to diversify your revenue, it allows you to have more different kinds of advertising inventory to be able to bundle together.
LISTNUM 1 \l 12710 So all those things are true.
LISTNUM 1 \l 12711 And, in fact, of course, the more advertising and inventory you have generally, then the greater your market power becomes.
LISTNUM 1 \l 12712 So, yes, I would agree with you on that.
LISTNUM 1 \l 12713 But the thing that preoccupies us most, just because of where we happen to be, as conventional broadcasters, is the people who are competing against us in the conventional advertising markets. Particularly for the reasons I was mentioning earlier, that the kind of inventory that CHUM has is very similar to the kind of inventory that we have.
LISTNUM 1 \l 12714 COMMISSIONER LANGFORD: M'hmm. Let me talk then ‑‑ thank you for that.
LISTNUM 1 \l 12715 Let me talk about this plan to put it with the CTV.
LISTNUM 1 \l 12716 And, of course, it always makes us nervous, or anyone nervous when something seems just a little too self‑serving.
LISTNUM 1 \l 12717 I'm not indicating that that's your only purpose in doing it, but it doesn't hurt you to have 37 percent of these benefits come your way, if everything goes with the CTF. So ‑‑
LISTNUM 1 \l 12718 MR. STURSBERG: To the contrary. I would agree with that. That would be a good thing for us. And I think it would also be a good thing for the system as a whole, and I'll tell you why.
LISTNUM 1 \l 12719 Is the reasons that I mentioned earlier on, that the CBC is the only big‑time broadcaster that puts shows into real prime time, our performance is better than anybody else's.
LISTNUM 1 \l 12720 Right now we take about 50 percent of the money for English drama, and we take about two‑thirds of the audiences for English drama.
LISTNUM 1 \l 12721 So if you want to spend your money effectively, in the sense that you want to make shows that Canadians will watch, you're better course, frankly, is to put the money into the CBC.
LISTNUM 1 \l 12722 COMMISSIONER LANGFORD: Well, that's certainly an approach.
LISTNUM 1 \l 12723 If they were to put it into the CTF, you would get 37 percent. What would the others get? Can you give me some rough figures?
LISTNUM 1 \l 12724 Do you happen to know, sort of, off the top of your head, or reasonably what the other ‑‑ I'm using your chart here more or less, you know. Going down, what would the others get? Do you have any sense of that?
LISTNUM 1 \l 12725 MR. STURSBERG: I don't have the envelope splits on me. But the way in which the envelopes were constructed in the first instance was based on historical draws.
LISTNUM 1 \l 12726 And so the historical draws within the CTF, whatever it was that people happen to make, and then they created various mechanisms whereby the envelopes could wind up or wind down depending on audience performance.
LISTNUM 1 \l 12727 The only one that was put to one side was the CBC.
LISTNUM 1 \l 12728 And so the CBC envelope was established at 37, which also represented the historical draw, but it was not subject to the same competition rules in terms of the reallocation of envelopes.
LISTNUM 1 \l 12729 So what they would get is whatever their envelope happens to be now as a proportion of the total money that's available in ‑‑ in the CTF.
LISTNUM 1 \l 12730 I just can't remember if it's ‑‑ if it were ‑‑ if it were CTV is getting 15 percent ‑‑ don't hold me to the numbers.
LISTNUM 1 \l 12731 COMMISSIONER LANGFORD: No, no, no, just ‑‑
LISTNUM 1 \l 12732 MR. STURSBERG: Then they would get 15 percent ‑‑
LISTNUM 1 \l 12733 COMMISSIONER LANGFORD: Right.
LISTNUM 1 \l 12734 MR. STURSBERG: ‑‑ you know, if Global is getting ten percent, they would get ten percent. I think that's the way it would work.
LISTNUM 1 \l 12735 COMMISSIONER LANGFORD: And where would City be? Way low in your estimation?
LISTNUM 1 \l 12736 MR. STURSBERG: I don't know. I don't know what the ‑‑ I don't what the ‑‑ I don't have the CHUM number in my head ‑‑
LISTNUM 1 \l 12737 COMMISSIONER LANGFORD: Right.
LISTNUM 1 \l 12738 MR. STURSBERG: ‑‑ as to what the split currently is.
LISTNUM 1 \l 12739 COMMISSIONER LANGFORD: I don't either. I mean, we can get it, but I just thought you might have it 'cause you have some background with this organization.
LISTNUM 1 \l 12740 Is there another strategy ‑‑ you've come to us and said don't deny it, but if you do deny it, make sure we get 37 percent of the deal ‑‑ of the benefits. Or, sorry, if you do approve it.
LISTNUM 1 \l 12741 Deny it, but if you do approve it ‑‑ sorry. As soon as I get into numbers at least half my brain dies.
LISTNUM 1 \l 12742 But if you do approve it, make sure we get 37 percent.
LISTNUM 1 \l 12743 Give me another strategy where you wouldn't be guaranteed, where it just doesn't look so self‑serving.
LISTNUM 1 \l 12744 MR. STURSBERG: I have ‑‑ I have no embarrassment whatsoever ‑‑
LISTNUM 1 \l 12745 COMMISSIONER LANGFORD: I'm not asking you to be embarrassed or not embarrassed.
LISTNUM 1 \l 12746 MR. STURSBERG: But I am not embarrassed.
LISTNUM 1 \l 12747 If you want to do something in the public interest, it seems to me ipso facto if the money goes to the public broadcaster, it is in the public interest.
LISTNUM 1 \l 12748 And I tell you this, which I think is fundamental, and I know that you ‑‑ you thought I was perhaps making a joke, but it is true that if you want to have success with Canadian television programs, you've got to put them on when Canadians are watching.
LISTNUM 1 \l 12749 And we can see it in the numbers that we can generate. Nobody else can generate those numbers.
LISTNUM 1 \l 12750 And I don't ‑‑ this is no criticism of CTV, it's no criticism of Global. They don't put big Canadian shows into deep prime time. I understand why they don't, and that's fine. It's not a criticism.
LISTNUM 1 \l 12751 I'm just saying that if you want to do the best possible thing for the system as a whole, and your goal is to make Canadian shows that Canadians want to watch, an investment in the CBC is going to be a better investment than in other people. That's all.
LISTNUM 1 \l 12752 COMMISSIONER LANGFORD: I didn't think it was a joke. I thought it was interesting perspective. But ‑‑
LISTNUM 1 \l 12753 MR. STURSBERG: I think it's a factually‑based perspective.
LISTNUM 1 \l 12754 COMMISSIONER LANGFORD: Yes. One man's facts are another man's whatever.
LISTNUM 1 \l 12755 But let me try another ‑‑ let me try another proposition on you.
LISTNUM 1 \l 12756 If you want to do something in the public interest, as you said, for Canadian broadcasting, another formula might be to ensure that commercial broadcasters who don't get a statement from the government, who have to start at zero every year and go out and sell ads for every cent of money they get, don't get off to a flying start with a ‑‑ with a government handout, that they put themselves in a position where they can create some Canadian programming, too, and play it at prime time, and CTV has given us some examples of such programming that they've financed. And I think everyone would agree it's pretty successful. Some of it anyway. And they're playing some of it in prime time.
LISTNUM 1 \l 12757 And now they would like to triple City's budget and see if they can bring them up into the same stratosphere and to start playing some Canadian programming.
LISTNUM 1 \l 12758 Why isn't that equally valid?
LISTNUM 1 \l 12759 MR. STURSBERG: In the last proceeding before you we filed a set of studies that looked at the relative value of the public preferences that are granted to the different broadcasters in the country.
LISTNUM 1 \l 12760 In the case of ‑‑ in the case of the large conventional broadcasters, not only do they have market entry limitation rules, they also benefit from a series of rules that have to do with simultaneous subsidization, and the extent to which taxes can be deducted for expenditures in other countries.
LISTNUM 1 \l 12761 We tried to make an evaluation of the ‑‑ of the size of those preferences. And this is quite apart from, you know, the ‑‑ the incentive program you recently put in place that allows them to sell an extra couple of minutes of advertising.
LISTNUM 1 \l 12762 And the size of the preference is possibly larger in dollar value than the size of the public subsidy that comes to the CBC.
LISTNUM 1 \l 12763 Now, that's quite apart from the value of the preferences that are associated with the specialty channels.
LISTNUM 1 \l 12764 COMMISSIONER LANGFORD: Can I just ask you a question. Was that a net preference when it comes to conventional? Or does it take into account the price of these programs that they're putting on?
LISTNUM 1 \l 12765 MR. STURSBERG: No, this is ‑‑ this is the relative value of simultaneous substitution in C58. Both of those preferences.
LISTNUM 1 \l 12766 COMMISSIONER LANGFORD: Simply simultaneous substitution ‑‑
LISTNUM 1 \l 12767 MR. STURSBERG: No, and C58. You'll see, it's in our filing, and you have that.
LISTNUM 1 \l 12768 But my only point in saying this is I think it would be a misunderstanding to believe that somehow or another there is a public broadcaster, and that there are private broadcasters.
LISTNUM 1 \l 12769 What we have in this country is a mix. All the private broadcasters in this country enjoy significant public preferences.
LISTNUM 1 \l 12770 Quite apart from that, they also have access to tax credits. They have access to the CTF, which is public money, in exactly the same way.
LISTNUM 1 \l 12771 When it comes to specialty services the way the Commission set them in the first instance, was they would say, "Fine, we give you a licence and we're going to fix the basic rate that you're going to have to get".
LISTNUM 1 \l 12772 In very large measure, that is as surely the granting of a public preference as it is to have cash in the treasury.
LISTNUM 1 \l 12773 So let me make these points to say that we all find ourselves benefiting from public preferences, but public preferences of different kinds.
LISTNUM 1 \l 12774 And the consequences of those preferences and the strategies of the broadcasters result in different outcomes.
LISTNUM 1 \l 12775 But if you want, and I come back to it one last time, to actually build audiences for Canadian shows, you're best to put them on when Canadians are watching.
LISTNUM 1 \l 12776 COMMISSIONER LANGFORD: Right. And that could be done by a commercial broadcaster?
LISTNUM 1 \l 12777 MR. STURSBERG: No, it cannot be done by a commercial broadcaster.
LISTNUM 1 \l 12778 In fact, CTV and Global will not pull their U.S. programming between 8:00 and 11:00 to accommodate Canadian programs on a systematic basis.
LISTNUM 1 \l 12779 We do it. That's all we put on between 8:00 and 11:00.
LISTNUM 1 \l 12780 They can't, because their economics don't allow it. Their economics run off precisely American programming and simultaneous substitution.
LISTNUM 1 \l 12781 Their schedules are, in effect, dictated by what happens in the United States to be able to guarantee that they can realize those substitution revenues.
LISTNUM 1 \l 12782 What happens in terms of CTV and Global's scheduling for the eight to the eleven o'clock period is they look to see what the Americans are doing, and then they put it on at the same time. So they can get the benefit.
LISTNUM 1 \l 12783 COMMISSIONER LANGFORD: Right. We're all aware of that sort of paper chase.
LISTNUM 1 \l 12784 Thank you very much. Those are my questions.
LISTNUM 1 \l 12785 COMMISSIONER DEL VAL: Just to clarify, Mr. Stursberg. I think ‑‑ I believe I heard you say that in the ‑‑ when you were talking about the one station per market rule, you referred to a local market.
LISTNUM 1 \l 12786 So in your interpretation of the one station per market rule, is the market a local market rather than the BBM market?
LISTNUM 1 \l 12787 MR. STURSBERG: We're using the CRTC definition of local markets, which are based on broadcast contours.
LISTNUM 1 \l 12788 COMMISSIONER DEL VAL: Okay. The A or the B contours?
LISTNUM 1 \l 12789 MR. STURSBERG: I defer to Bev Kirshenblatt.
LISTNUM 1 \l 12790 MS KIRSHENBLATT: The Global CH stations aren't local stations in the markets where Global has another station.
LISTNUM 1 \l 12791 So, for example, Toronto and Hamilton ‑‑ in the case of Hamilton there would be local programming that is geared towards the Hamilton market.
LISTNUM 1 \l 12792 MR. STURSBERG: Is that the A or the B contour?
LISTNUM 1 \l 12793 MS KIRSHENBLATT: It's not based on the (indiscernible).
LISTNUM 1 \l 12794 MR. STURSBERG: Oh, sorry. I'm mistaken.
LISTNUM 1 \l 12795 THE CHAIRPERSON: Okay. Can you correct yourself, sir?
LISTNUM 1 \l 12796 MR. STURSBERG: I'm going to ask Bev to correct me. I don't know the correct answer.
LISTNUM 1 \l 12797
‑‑‑ Laughter / Rires
LISTNUM 1 \l 12798 COMMISSIONER DEL VAL: No, I asked the wrong question. It's not A or B is what she's trying to tell me.
LISTNUM 1 \l 12799 THE CHAIRPERSON: Yeah ‑‑
LISTNUM 1 \l 12800 MS KIRSHENBLATT: In defining local ‑‑ we've defined local in looking at the focus or the commitments or conditions of licence with the focus of programming that these stations have.
LISTNUM 1 \l 12801 So, for example, in Toronto and Hamilton, although you ‑‑ the discussion has been they may be one market for advertising. The focus of the local station ‑‑ of the station is different. And it's not ‑‑ in the case, for example, of the Toronto local ‑‑ the Toronto Global station it's not Toronto/Hamilton. It's simply Toronto.
LISTNUM 1 \l 12802 COMMISSIONER DEL VAL: Do you have ‑‑ and the precedence you rely on are the ‑ are the 2006 ‑‑ are the decisions that we've made, or can you point us to some precedence? Can you ‑‑ that lead ‑‑ that support that interpretation?
LISTNUM 1 \l 12803 You can submit that. You can file that later. Can you sort of do an analysis to support that interpretation that the ‑‑ that in the one station per market rule, a market should be interpreted as such rather than the BBM market? Could you, please?
LISTNUM 1 \l 12804 MS KIRSHENBLATT: We can. We can follow up, yes.
LISTNUM 1 \l 12805 COMMISSIONER DEL VAL: Great. Thank you. So how long do you need?
LISTNUM 1 \l 12806 MS KIRSHENBLATT: By the end of the week.
LISTNUM 1 \l 12807 COMMISSIONER DEL VAL: Thank you.
LISTNUM 1 \l 12808 THE CHAIRPERSON: Okay. Thank you very much. I think that's all our questions for you.
LISTNUM 1 \l 12809 Madam Boulet, who's next?
LISTNUM 1 \l 12810 THE SECRETARY: Thank you, Mr. Chairman.
LISTNUM 1 \l 12811 The next appearing intervenor on the agenda is the Canadian Conference of the Arts, and they have agreed to change places with the Alliance of Canadian Cinema, Television, and Radio Artists, which are number 25 on the agenda.
LISTNUM 1 \l 12812 I would therefore ask ACTRA to come forward.
LISTNUM 1 \l 12813 Excuse me, Mr. Steven Waddell ‑‑ Waddell is representing ACTRA. Sorry, for the pronunciation.
LISTNUM 1 \l 12814 If you can introduce your panel. And you will have ten minutes for your presentation.
INTERVENTION
LISTNUM 1 \l 12815 MR. WADDELL: Thank you. And good afternoon, Mr. Chair, Commissioners, and Commission staff.
LISTNUM 1 \l 12816 My name is Steven Waddell. I am National Executive Director of ACTRA, the Alliance of Canadian Cinema, Television, and Radio Artists.
LISTNUM 1 \l 12817 With me today is Julie Stewart, a prominent Canadian performer and a member of ACTRA, a star of Canadian television, who you should recognize from her leading role in the TV series "Cold Squad".
LISTNUM 1 \l 12818 Also with me today to assist with your questions is Ken Thompson, ACTRA's Director of Public Policy and Communications.
LISTNUM 1 \l 12819 ACTRA represents over 21,000 Canadian professional performers working in the English language recorded media in Canada.
LISTNUM 1 \l 12820 Our members are the most visible part of this industry. Their creativity brings to life the stories that resonate with Canadian TV audiences. But, to be relevant, the work of writers, directors, and performers must be seen on Canadian television.
LISTNUM 1 \l 12821 In previous hearings before this Commission, you've heard us say this before, if Canadian creators don't have the opportunity to tell our stories on television, no one will, and Canadian culture will inevitably atrophy and die.
LISTNUM 1 \l 12822 Thank you for the opportunity to speak with you today at this very important hearing.
LISTNUM 1 \l 12823 When our number one private broadcasting network purchases our number three private broadcasters ‑‑ private broadcaster, it's clear that there will be significant changes impacting our broadcasting system.
LISTNUM 1 \l 12824 In our view, however, these changes will not come without a cost and must benefit the system as a whole.
LISTNUM 1 \l 12825 In ACTRA's opinion this application by CTV fails our broadcasting system. So please note for the record that ACTRA opposes this application as proposed by CTV.
LISTNUM 1 \l 12826 In our written submission we focused on three issues, which we believe are significant in this review, and which we would like to revisit in this presentation.
LISTNUM 1 \l 12827 Number one, the negative impact of media concentration. Number two, the inadequate valuation of the proposed benefits, which must be increased in our view, and the under‑representation of drama, which requires the greatest possible allocation of tangible benefits to the production of ten point Canadian drama.
LISTNUM 1 \l 12828 MS STEWART: Our issue with media concentration is quite simple. Fewer Canadian broadcasting networks means fewer choices for Canadians to access Canadian dramas and other Canadian programs.
LISTNUM 1 \l 12829 While we look forward to participating in this fall's diversity of voices policy review, we understand the current application of CTV, as well as the pending ownership applications by CanWest, Global, and Astral Media, will be assessed in light of the existing regulations and policies.
LISTNUM 1 \l 12830 As a consequence, the Commission's decision to go forward with these major ownership applications, using existing rules, will diminish the relevance of that important policy review.
LISTNUM 1 \l 12831 Your approval of applications like CTV's and CanWest Global's in the intervening period will reduce the Commission's ability to influence the ownership structure of the Canadian media for the future.
LISTNUM 1 \l 12832 We are not alone in expressing our concerns about the effects of media consolidation on the broadcasting system. Our views are shared by a number of other prominent industry stakeholders.
LISTNUM 1 \l 12833 But while it is essential for ACTRA and our partners to give you authoritative, comprehensive, and contemporary research and data about how media concentration has and will continue to affect Canadian broadcasting and other media, ACTRA and other like‑minded groups do not have the resources needed to undertake this kind of research.
LISTNUM 1 \l 12834 In this application CTV has proposed to provide a tangible benefit in the amount of $1.5 million to fund such third party education and research studies as the CRTC deems most valuable.
LISTNUM 1 \l 12835 Therefore, we propose that one half of these research funds be set aside for the benefit of a public interest coalition comprised of stakeholders such as ACTRA, other unions and guilds, associations of producers, the Canadian Film and Television Industry Coalition, and other public interest organizations such as the Friends of Canadian Broadcasting.
LISTNUM 1 \l 12836 An established research institute, such as the Canada Centre for Policy Alternatives, could define the parameters, commission, and oversee appropriate research and studies.
LISTNUM 1 \l 12837 We now want to comment on the benefits package offered by CTV in this application.
LISTNUM 1 \l 12838 As you know, ACTRA and the Coalition of Canadian Audio‑visual Unions, the CCAU, have been calling for the reinstatement of English language drama expenditures and scheduling requirements for Canada's private broadcasters for some time now.
LISTNUM 1 \l 12839 CTV's application, along with the recent broadcaster financial reports from the Commission, shows that Canada's private broadcasters are spending less again this year on Canadian drama, but they are spending almost seven times more on foreign predominantly Hollywood dramas.
LISTNUM 1 \l 12840 As we have had to say repeatedly to this Commission, the 1999 television policy let the private broadcasters off the hook and we want the CRTC to put them back on the hook.
LISTNUM 1 \l 12841 Because Canada's private broadcasters have failed to live up to their commitments to this Commission and the Canadian public, and clearly must be required by regulation to produce Canadian drama.
LISTNUM 1 \l 12842 In its submission, CTV says it plans to re‑aggregate audiences and provide CHUM Services with access to CTV's excess U.S. programming that is consistent with CHUM's brands, programming niches, and styles.
LISTNUM 1 \l 12843 Again, quoting from its submissions, CTV says: "For conventional television, the strength of the schedule is measured by the amount of programs that rank in the top 20."
LISTNUM 1 \l 12844 According to BBM for the week of March 5th to the 12th, 2007 the top 20 programs in Canada were predominantly U.S. shows.
LISTNUM 1 \l 12845 They dominate most of Canada's private broadcaster's prime time schedules; "American Idol", "CSI", "CSI Miami", "CSI New York", "Law and Order", "The Amazing Race", "Cold Case", "Criminal Minds", "The Class", and "Lost", to name several.
LISTNUM 1 \l 12846 So, according to CTV, the synergy that will bring about the revival of the Citytv stations effectively means that the top 20, mainly U.S. licenced shows, will be re‑purposed and shown on its Citytv stations.
LISTNUM 1 \l 12847 It's no comfort that CTV has committed that no more than ten percent of the overall programming it plans for Citytv stations in any broadcast week will duplicate programming aired on CTV stations.
LISTNUM 1 \l 12848 Ten percent of the overall programming could translate into almost three prime time hours each day for seven days in each week. That's 21 hours per week of U.S. drama programming in prime time that will be aired on Citytv stations.
LISTNUM 1 \l 12849 COMMISSIONER LANGFORD: Ms Stewart, I never before interrupted someone giving their presentation, but I just thought it might help you to know that they ‑‑ yesterday CTV committed to having a zero overlap. They have dropped the ten percent.
LISTNUM 1 \l 12850 So just helping you in formulating your arguments. I'm sorry to interrupt you, but I thought you might want to know that.
LISTNUM 1 \l 12851 MS STEWART: So we're making some headway. That's excellent.
LISTNUM 1 \l 12852 COMMISSIONER LANGFORD: You're getting there. On the long march. Sorry to interrupt again. Go ahead.
LISTNUM 1 \l 12853 MS STEWART: That's quite all right. I still will continue in saying that more exposure of popular U.S. shows is going to mean less exposure for Canadian dramas.
LISTNUM 1 \l 12854 MR. WADDELL: The figures provided by CTV show that together CTV and CanWest will control two‑thirds of Canada's English language conventional television revenues, and will have a market share greater than 60 percent.
LISTNUM 1 \l 12855 This is what CTV claims is the twin stick approach to the markets it shares with CanWest Global, and will ensure competitiveness.
LISTNUM 1 \l 12856 How concepts in broadcasting change over time.
LISTNUM 1 \l 12857 The original twin stick operations were designed in the early 1960s to ensure that when the CTV network came to local markets, the local privately owned affiliates of the CBC were not disadvantaged.
LISTNUM 1 \l 12858 By ensuring continued access to local programming, as well as the two national networks, it was a policy that favoured diversity.
LISTNUM 1 \l 12859 Now in the view of the applicant it has become merely a means for private broadcasters to amortize costs across a greater audience.
LISTNUM 1 \l 12860 If CTV obtains approval to maintain ownership of the Citytv stations, and has two over the air televisions licences in each of the five English language markets, CTV will be fundamentally transformed into the dominant player in Canadian television.
LISTNUM 1 \l 12861 That's why we urge you to approve exceptions to the Common Ownership Policy only with the A Channel group of stations. In our view, CTV should be required to divest its Citytv stations.
LISTNUM 1 \l 12862 The Citytv stations have a stronger financial base, are much more attractive, and would clearly contribute more to diversity of voices in the broadcasting system if divested by CTV.
LISTNUM 1 \l 12863 This would seem to provide a more realistic, although in our view still unlikely, opportunity for a third national player to emerge.
LISTNUM 1 \l 12864 To be clear, ACTRA takes the position that the CTV acquisition of CHUM should not qualify for an exception to the CRTC Common Ownership Policy to own more than a single station per market.
LISTNUM 1 \l 12865 The exception should be limited to the A Channel group of stations.
LISTNUM 1 \l 12866 However, should the Commission approve the exemption, then tangible benefits in the amount of 15 percent of the value of the transaction would be inappropriate and a reasonable amount for CTV to return directly to the communities and to the broadcasting system in exchange for CTV achieving such a dominant market position through this acquisition.
LISTNUM 1 \l 12867 Now we want to turn to the tangible benefits offered in the package.
LISTNUM 1 \l 12868 MS STEWART: ACTRA and the CCAU are in the forefront of the campaign to raise awareness of the desperate state of English language Canadian television drama.
LISTNUM 1 \l 12869 We are concerned about the level of investment, the on air scheduling, the lack of adequate promotion, and the type of Canadian dramatic programs being made.
LISTNUM 1 \l 12870 CTV has recognized the need to fund Canadian drama productions by allocating some of the transfer benefits package to drama programming.
LISTNUM 1 \l 12871 However, this amount is far too low to have a significant impact on the production of new English language Canadian drama or a positive influence on the Canadian Broadcasting System as a whole.
LISTNUM 1 \l 12872 After reaching a peak in 1999/2000, the volume of production of English language fiction drama declined to a low point in 2002 and 2003.
LISTNUM 1 \l 12873 Since then volumes have risen in '05/'06, but that's still ‑‑ it's still 20 percent lower than the peak year of 1998.
LISTNUM 1 \l 12874 Producing high qualify drama programs requires more creative technical and financial resources than any other programming genre.
LISTNUM 1 \l 12875 But drama production trains and develops and employs Canadian writers, actors, directors, editors, technicians and other key creative individuals. And dramatic programming best speaks to our Canadians and tells us more about our country, our landscape, our stories, our myths and culture than any other programming genre.
LISTNUM 1 \l 12876 We contend that maintaining drama expenditures and scheduling requirements are what is needed.
LISTNUM 1 \l 12877 We do not accept that the proposed benefits in this package are in any measure a substitute for regulation.
LISTNUM 1 \l 12878 A 2004 study confirms that broadcast licence fees paid by Canada's private broadcasters are substantially lower than those in any other English language country.
LISTNUM 1 \l 12879 As a consequence, Canadian producers must look to other markets and other sources for close to 82 percent of a production's financing.
LISTNUM 1 \l 12880 On numerous prior occasions the Commission has acknowledged the crucial role that dramatic programs play in our broadcasting system and in our lives.
LISTNUM 1 \l 12881 The current application by CTV seeks approval to purchase Canada's third largest private conventional broadcaster.
LISTNUM 1 \l 12882 This provides an historic opportunity for the Commission to act to begin to change the situation.
LISTNUM 1 \l 12883 We say that CTV must direct more resources in this benefits package to the production of ten point English language Canadian drama.
LISTNUM 1 \l 12884 MR. WADDELL: Let's look at the proposed benefits package for a moment.
LISTNUM 1 \l 12885 For a start, it's inappropriate for CTV to exclude the debts, since the value of the enterprise being acquired includes debt.
LISTNUM 1 \l 12886 CTV was aware it was acquiring debt and was assuming obligations for the continuing payment of tangible benefits which arose from CHUM's acquisition of CKVU TV in 2001 and Craig Media in 2004.
LISTNUM 1 \l 12887 These factors must have been taken into account in the calculations of the CTV purchase offer.
LISTNUM 1 \l 12888 We agree with the Director's Guild of Canada, analysis of the debt is part of the purchase. When the $270 million debt is included in the evaluation, an additional 27 million benefits becomes due.
LISTNUM 1 \l 12889 We propose this additional 27 million should be specifically allocated to ten point Canadian drama.
LISTNUM 1 \l 12890 The Commission should set the benchmark to determine the incremental nature of benefits as against both CHUM and CTV.
LISTNUM 1 \l 12891 If only CHUM is used as the benchmark, then CTV will just move its spending to CHUM and there will be no added benefit in the system.
LISTNUM 1 \l 12892 This ensures that benefits will indeed be incremental to the system.
LISTNUM 1 \l 12893 To recap. We're proposing that the five percent premium for the exceptions to the Commission's one conventional station per market rule should be calculated using the total value of the conventional television assets.
LISTNUM 1 \l 12894 We agree with the Director's Guild the total value should be five percent of 104 million, which is 5.2 million, which is the amount that CTV paid for the conventional stations.
LISTNUM 1 \l 12895 It should also pay five percent of the debt of 270 million, which equals 13.5 million.
LISTNUM 1 \l 12896 So the ‑‑ so the total premium to be paid for the exception to the Commission's one station per market rule should be, we say, 18.7 million.
LISTNUM 1 \l 12897 In addition, it is ACTRA's opinion that two‑thirds of the total benefits package proposed by CTV should be allocated to ten point Canadian drama.
LISTNUM 1 \l 12898 This amount, or 68.31 million, should go to programs and series produced at arm's length from CTV. The balance of the benefits package would then need to be restructured.
LISTNUM 1 \l 12899 That concludes our presentation. Thank you for your attention. We welcome your questions. And we did it within ten minutes.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 12900 MR. WADDELL: Thank you.
LISTNUM 1 \l 12901 THE CHAIRPERSON: Thank you. I congratulate you on the speed of your delivery.
‑‑‑ Laughter / Rires.
LISTNUM 1 \l 12902 THE CHAIRPERSON: Let's go to page five, first paragraph.
"Fewer Canadian broadcasting networks means fewer choices for Canadians to access Canadian dramas and other Canadian programs."
LISTNUM 1 \l 12903 We have had a lot of discussion here about what this merger means in terms of diversity of voices, media concentration, et cetera.
LISTNUM 1 \l 12904 I don't understand the logic of this. If there are fewer networks it may be undesirable for a lot of reasons, but why does it mean fewer access to Canadian dramas or other Canadian programs? I mean, the obligations on Canadian content will be there whether you have one network or two, so what brings you to this conclusion?
LISTNUM 1 \l 12905 MR. WADDELL: Well, it goes to the diversity of voices issue, which you are going to be dealing with later in the fall, in terms of there are fewer opportunities for Canadian producers and other programmers, writers and directors, performers to be able to pitch to different networks that might have different programming schemes, and so on, and so different program buyers and developers, and so on.
LISTNUM 1 \l 12906 So just having two major networks and that's all the choice there is, doesn't give the opportunity for creative folk and producers to be able to pitch different types of programming, different genres, and so on, to ‑‑
LISTNUM 1 \l 12907 THE CHAIRPERSON: Oh, you mean variety of Canadian programming. You don't mean overall total programming but just the variety of programs.
LISTNUM 1 \l 12908 MR. WADDELL: The variety of choices, and so on, which creates additional programming and programming types. Of course, appreciating where we come from, drama is particularly important to our membership.
LISTNUM 1 \l 12909 THE CHAIRPERSON: On page 20, the second last paragraph, you say:
"So the total premium to be paid for the exception to the Commission's one station per market rule should be $18.7 million." (As read)
LISTNUM 1 \l 12910 You seem to suggest that you can buy an exception through additional premiums.
LISTNUM 1 \l 12911 That is not exactly the way we normally look at these things.
LISTNUM 1 \l 12912 MR. WADDELL: I appreciate that, but that is what it's coming down to it would appear.
LISTNUM 1 \l 12913 THE CHAIRPERSON: So that is your interpretation.
LISTNUM 1 \l 12914 MR. WADDELL: Yes. I mean, we would prefer, as we said, that the CHUM stations be divested and that the purchase go through with respect to the A‑Channel. We think that is a better way to go.
LISTNUM 1 \l 12915 THE CHAIRPERSON: Well, if that is the case ‑‑
LISTNUM 1 \l 12916 MR. WADDELL: But if you don't go that route, then we are looking for more money for production, yes.
LISTNUM 1 \l 12917 THE CHAIRPERSON: All right. So if you have your wish ‑‑
LISTNUM 1 \l 12918 MR. WADDELL: That is what it comes down to.
LISTNUM 1 \l 12919 THE CHAIRPERSON: ‑‑ the City channels get divested in the A‑Channels are retained and this premium goes down.
LISTNUM 1 \l 12920 Is that the logic?
LISTNUM 1 \l 12921 MR. WADDELL: That would not necessarily be the logic, but yes, that would probably be the consequence.
LISTNUM 1 \l 12922 THE CHAIRPERSON: I see. All right. Thank you.
LISTNUM 1 \l 12923 MR. WADDELL: Thank you.
LISTNUM 1 \l 12924 THE CHAIRPERSON: Rita, you had some questions I do believe?
LISTNUM 1 \l 12925 COMMISSIONER CUGINI: Yes, I do. Thank you.
LISTNUM 1 \l 12926 Just to follow up on that because, as usual, your written submission and your oral presentation are quite clear, or at least they make your position very clear. If we were to take you up on your recommendation and ask CTV to divest ‑‑ or we approved the acquisition of the A‑Channels and not the Citytv channels, which of your concerns, outlined both in your written submission and your oral presentation this afternoon, would go away?
LISTNUM 1 \l 12927 In other words, why is this a better choice for you?
LISTNUM 1 \l 12928 MR. WADDELL: Well, I think the CHUM assets are definitely in a better financial position than the A‑Channel assets and, as we say in our submissions and today, there is a possibility that the CHUM assets, if it were allowed to continue, could find a buyer that might create a third network and therefore a competitive environment and an opportunity to ‑‑
LISTNUM 1 \l 12929 COMMISSIONER CUGINI: But there are a lot of ifs and mights and mays in your statement.
LISTNUM 1 \l 12930 MR. WADDELL: Sure. Yes.
LISTNUM 1 \l 12931 COMMISSIONER CUGINI: So that leads me to ask once again, I mean, what led you to make this recommendation in a way that makes it a more palatable transaction for your members? Because again, a lot of whats, what ifs and mights and mays in that statement.
LISTNUM 1 \l 12932 MR. WADDELL: Yes. Well, there are a lot of what ifs, there is no question about that.
LISTNUM 1 \l 12933 Basically we think that having the CHUM assets divested would give an opportunity for a third network which would create a competitive environment, instead of having two dominant players in the broadcasting system.
LISTNUM 1 \l 12934 COMMISSIONER CUGINI: I don't know if you followed the interventions this morning, but there were a number of producers here who spoke very highly of this transaction and gave us a history of their relationship, both with CTV and CHUM and the City stations in particular, including the specialty services.
LISTNUM 1 \l 12935 Did that give you any comfort? Did anything you heard this morning give you any comfort at all?
LISTNUM 1 \l 12936 MR. WADDELL: Well, certainly I respect the presentations from our member Brent Butt, and of course Linda and Stephen from Epitome Pictures, but, you know, I also listened to Bruce Harvey tell you about what it is like to produce. I have a great deal of sympathy, obviously, because he was singing our song with what Bruce was saying.
LISTNUM 1 \l 12937 Ms Schuyler and Mr. Stohn are doing very well, thank you, and "Corner Gas" is always ‑‑ certainly "Degrassi" and "Corner Gas" are both held up as being shining examples of what Canadian production should be, could be and we aspire toward.
LISTNUM 1 \l 12938 They are fortunate in that they have been producing for number seasons, certainly in the case of "Degrassi" have been producing for quite a number of years, and are excellent products.
LISTNUM 1 \l 12939 For those who are others who come before you, including Mr. Harvey and others, you will hear from the CFTPA which represents the producers, I believe that they will be saying that this proposed acquisition is not going to work necessarily in the favour of most producers because it reduces the opportunity overall and the ability for producers to produce because there is just not enough money in the system.
LISTNUM 1 \l 12940 I'm going to go back to our point which we have made so many times before this Commission, that this Commission, we believe, needs to reestablish regulations with respect to scheduling and expenditure requirements on Canada's private broadcasters particularly.
LISTNUM 1 \l 12941 As Ms Stewart has said in the presentation, Canada's private broadcasters are paying the lowest licence fees of any broadcasters in the English‑speaking world. That has to change. That just can't go on. We can't continue ‑‑ we can't survive ‑‑ our members, our performers cannot survive in this environment, there is just not enough work opportunity for Canadian performers, writers, directors and producers.
LISTNUM 1 \l 12942 We hope the Commission will be listening to our pleas as we have been making them, and I think quite articulately over the past seven years, to go back and change the regulation, reinstate those regulations.
LISTNUM 1 \l 12943 COMMISSIONER CUGINI: Well, thank you very much.
LISTNUM 1 \l 12944 MR. WADDELL: Thank you.
LISTNUM 1 \l 12945 COMMISSIONER CUGINI: Thank you, Mr. Chairman. Those are my questions.
LISTNUM 1 \l 12946 THE CHAIRPERSON: Stuart, did you have a question?
LISTNUM 1 \l 12947 COMMISSIONER LANGFORD: Just a couple.
LISTNUM 1 \l 12948 I wanted you to look at it from another way for a second, just to make sure that ‑‑ I'm sure you people kick this around in committees and conferences but still you might have missed something and we are only going to get the one chance to talk to you.
LISTNUM 1 \l 12949 You have talked here about, you know, don't approve this as filed, but if you do approve it put a premium, you know, an extra 5 percent here and then don't allow the debt there and crank it up here and crank it up there. That's all well and good and I understand the position and if it were just an endless pile of money who could object to it, it is all going to a good cause, Canadian programming.
LISTNUM 1 \l 12950 But the money is going to have to come from somewhere and we have heard that from earlier intervenors. This just isn't an endless money tree I assume, or if it is I would like to get a little sapling or something so I could start one in my garden.
LISTNUM 1 \l 12951 So doesn't it really mean just more secretaries getting fired and more ad salesmen being laid off and more marketers being laid off and more receptionists out the door? They are going to find the synergies somewhere. I mean, if it is not an endless money tree, aren't you really saying: Help us, but help us on the backs of another bunch of vulnerable people who are in broadcasting in a different way? They are not the actors, and they are not the producers and they are not the directors maybe, they don't get the lights on them very much, but they might get the boot.
LISTNUM 1 \l 12952 Have you thought about it in that way? I mean, how much of a burden do you want to put on whoever buys this for efficiencies, because we all know where those efficiencies are going to come from, and that is not something we regulate. Once we let that out of the bottle, that genie is going to go and wreak havoc wherever it goes, because that is the rule of the marketplace.
LISTNUM 1 \l 12953 MS STEWART: I think we understand that it is not an endless money tree. I think a number of us are actually painfully aware of that right now.
LISTNUM 1 \l 12954 I even appreciate the reality of the fact that, you know, a private broadcaster such as Mr. Fecan can say that, you know, love it or hate it we have to use the American programs to finance Canadian programs. But if there was some balance we might not have to reiterate what we are saying time and time again about the fact that the Canadian shows are not made, especially, as we pointed out again here today, since the 1999 regulations loosened on what qualifies as Canadian content the American spending, the money on American programming, is not resulting in more Canadian shows. We can see that by looking at graph after graph after graph of all the American shows that we are getting to watch and the fact that the Canadian shows are not getting made.
LISTNUM 1 \l 12955 That doesn't mean that we are asking for more money, we are asking for a balance in the money that comes to Canadian programs as opposed to ‑‑
LISTNUM 1 \l 12956 COMMISSIONER LANGFORD: All right.
LISTNUM 1 \l 12957 That may be a bigger issue than this and this is certainly the sort of proposition you have put in the over‑the‑air examination.
LISTNUM 1 \l 12958 But in terms of issue, I put a proposition to Mr. Fecan yesterday, and if his hair wasn't white when I started it was certainly pure white when I finished, but it is not so Bolshevistic, I don't think, and I wonder what you would think of it.
LISTNUM 1 \l 12959 My proposition was: Okay, maybe we don't hate you for a lot more money on the benefits, as you are saying, because it is a pretty big pot right now, but we ask you to do something different with it, maybe another half hour a week of priority programming, or a half‑hour week of local programming, or another half hour week of drama, if we really want to get detailed, and put it somewhere at least close to prime time, closer than you have been.
LISTNUM 1 \l 12960 Would that strike you as a reasonable kind of trade‑off, to look at it in a different way rather than always just the total amount?
LISTNUM 1 \l 12961 MS STEWART: Sure.
LISTNUM 1 \l 12962 COMMISSIONER LANGFORD: Does that sound like a reasonable proposition?
LISTNUM 1 \l 12963 MS STEWART: I don't know. I mean, really I want to see Canadian shows, as has been said earlier today, during the times when people are going to watch television.
LISTNUM 1 \l 12964 COMMISSIONER LANGFORD: Yes.
LISTNUM 1 \l 12965 MS STEWART: I'm tired of seeing shows ‑‑ you know, I'm very, very happy for the success of "Corner Gas", I think it is a great example of what can happen when a show gets put in prime time and gets properly advertised, but there are some stories that unfortunately didn't work out that way, and I could give you some personal examples although I don't know if I want to get into that right now.
LISTNUM 1 \l 12966 COMMISSIONER LANGFORD: No, we know them. We got them.
LISTNUM 1 \l 12967 But would you agree just generally there maybe some other ways to skin this cat, to use that old expression ‑‑
LISTNUM 1 \l 12968 MR. WADDELL: Sure.
LISTNUM 1 \l 12969 COMMISSIONER LANGFORD: ‑‑ that we might be able to go at it?
LISTNUM 1 \l 12970 MR. WADDELL: Sure.
LISTNUM 1 \l 12971 COMMISSIONER LANGFORD: Let me ask you one other ‑‑
LISTNUM 1 \l 12972 MR. WADDELL: Sure. That is what we have been saying, is that we feel that there should be some regulation placed on the broadcasters to require more Canadian programming, because that is what we have right now.
LISTNUM 1 \l 12973 COMMISSIONER LANGFORD: I know.
LISTNUM 1 \l 12974 MR. WADDELL: We have been waiving these around for years, which are the prime time schedules ‑‑
LISTNUM 1 \l 12975 COMMISSIONER LANGFORD: Let me ask you to reconsider ‑‑
LISTNUM 1 \l 12976 MR. WADDELL: ‑‑ which are all blue showing American programming instead of red.
LISTNUM 1 \l 12977 COMMISSIONER LANGFORD: That might make Mr. Harper happy, he might misunderstand that ‑‑
LISTNUM 1 \l 12978 MR. WADDELL: There you go.
LISTNUM 1 \l 12979 COMMISSIONER LANGFORD: ‑‑ and think it is Conservative programming or something, who knows.
LISTNUM 1 \l 12980 MS STEWART: It does make him happy.
LISTNUM 1 \l 12981 COMMISSIONER LANGFORD: No more political jokes. I will pay for that.
LISTNUM 1 \l 12982 Let me ask you one other sort of way, another way to look at it, another way to turn the telescope.
LISTNUM 1 \l 12983 You are worried about them getting bigger and may be losing some diversity of voices.
LISTNUM 1 \l 12984 On the other side of that equation, though, is it not arguable that they have paid a big buck for this, they have a lot invested and they are professional broadcasters. They are probably as good as any we have in Canada for sure.
LISTNUM 1 \l 12985 They are committed to spending a heck of a lot of money ‑‑ I'm not trying to make the case for them, I'm just trying to look at it from another way ‑‑ if we say no, if we say you can't have City or you can't have the "A", or whatever we say, it is conceivable this could be bought by someone who really doesn't have the experience and doesn't have the depths of pockets that they think they have. We have had examples of people getting into the television business in this country who had to get out and get out in their socks because they just didn't have it.
LISTNUM 1 \l 12986 Isn't it in a way maybe safer to try to find some diversity of voices, some programming safeguards than to just leave the whole thing open and pray that if we put this back on the market another person with their kind of experience will come along and buy it?
LISTNUM 1 \l 12987 MS STEWART: I would just like to point out that maybe they are pouring buckets into it, but the fact of the matter is that this isn't like some other businesses, they are making that money and they are pouring that money into something that is publicly owned. The airwaves are publicly owned and so the business that they are conducting is using something that we all own together, not the private broadcasters.
LISTNUM 1 \l 12988 COMMISSIONER LANGFORD: Right. I agree with you.
LISTNUM 1 \l 12989 MR. WADDELL: Right. And the benefits that they accrue are mainly through simultaneous substitution, right, which is a huge subsidy for private broadcasters.
LISTNUM 1 \l 12990 COMMISSIONER LANGFORD: I agree with that, but you haven't answered my question if it is answerable.
LISTNUM 1 \l 12991 MS STEWART: But I also think ‑‑
LISTNUM 1 \l 12992 COMMISSIONER LANGFORD: Is there a big risk? Are you willing to take the risk of dropping ‑‑
LISTNUM 1 \l 12993 MS STEWART: I think one of the problems right now ‑‑
LISTNUM 1 \l 12994 COMMISSIONER LANGFORD: ‑‑ these people and taking Brand "X", because we don't know who is coming around the corner with a bag of money.
LISTNUM 1 \l 12995 MS STEWART: I think one of the difficulties that we have run into so far is that the Canadian television industry, you know, relatively to behemoth that is next to us, being the States, is relatively young. We are relatively inexperienced.
LISTNUM 1 \l 12996 But one of the problems with only having one or two or three major networks making all the programs, making all the creative decisions, choosing who is going to be making the shows, is limiting the number of people who are actually learning how to do it and develop the talent.
LISTNUM 1 \l 12997 Talent is not border‑specific. At this point in time we need to develop the people who don't yet know how it works. The only way we are going to do that is if we keep it from becoming too monopolized.
LISTNUM 1 \l 12998 COMMISSIONER LANGFORD: Thank you.
LISTNUM 1 \l 12999 Those are my questions, Mr. Chair.
LISTNUM 1 \l 13000 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 13001 I think just before we leave I can't help but correct you.
LISTNUM 1 \l 13002 I do not accept ‑‑ speaking for myself personally ‑‑ at all the premise that you suggest that you can buy yourself a little hole. If we oppose this deal it is because we feel it complies with the rules or is a legitimate exception here.
LISTNUM 1 \l 13003 The size of the benefits is important, but that is not going to drive as to whether we allow the deal or not.
LISTNUM 1 \l 13004 That being said, let's take a 10‑minute break.
LISTNUM 1 \l 13005 Thank you.
LISTNUM 1 \l 13006 MR. WADDELL: Thank you, Mr. Chairman.
‑‑‑ Upon recessing at 1455 / Suspension à 1455
‑‑‑ Upon resuming at 1509 / Reprise à 1509
LISTNUM 1 \l 13007 THE SECRETARY: We will now proceed with the next intervenor, the Writers Guild of Canada, and Ms Maureen Parker will introduce her panel.
LISTNUM 1 \l 13008 After which you will have 10 minutes for your presentation.
LISTNUM 1 \l 13009 Ms Parker.
INTERVENTION
LISTNUM 1 \l 13010 MS PARKER: Thank you.
LISTNUM 1 \l 13011 Good afternoon, Mr. Chairman, members of the panel, Commission staff, ladies and gentlemen. My name is Maureen Parker and I am the Executive Director of the Writers Guild of Canada.
LISTNUM 1 \l 13012 To my left is Kelly Lynne Ashton, Director of Industrial and Policy Research at the Guild and on my right is our Policy Consultant, Robert Armstrong of Communications Media Inc.
LISTNUM 1 \l 13013 The Writers Guild of Canada is a national association representing more than 1800 screenwriters working in film, television, radio and digital production in Canada.
LISTNUM 1 \l 13014 We care deeply about maintaining the health and integrity of the Canadian broadcasting system and, in particular, encouraging the production of high quality Canadian priority programming.
LISTNUM 1 \l 13015 The WGC supports the CTVglobemedia application to acquire CHUM's assets. Like so many of the intervenors in this hearing, we are big fans of CTV. CTV has supported high quality Canadian programming with TV series like Corner Gas and Movies of the Week such as "The Man Who Lost Himself" at a time when less and less Canadian drama is being produced for other broadcasters.
LISTNUM 1 \l 13016 While we are concerned about media consolidation, we feel that ‑‑ we fear that, rather, given the highly competitive nature of the international communications market, consolidation is inevitable if Canada is to have entities strong enough to preserve our distinct broadcasting system. The bottom line is that the Waters family wanted to sell CHUM Limited and CTVglobemedia is probably the most appropriate buyer.
LISTNUM 1 \l 13017 Given the size of the proposed acquisition; its potential consequences for the Canadian Broadcasting System and certain specific aspects of the application, the WGC recommends that the Commission approve the application, but subject to certain changes to CTVglobemedia's proposals. These are the value of the transaction for benefit purposes, the size of the benefits package as a percentage of the value of the transaction, the incrementality of the benefits package and the allocation of additional benefits to the funding of 10 point drama production.
LISTNUM 1 \l 13018 Since the publication of the CRTC's `99 television policy, the value of debt has been included in all decisions that required assessing the volume of tangible benefits to be paid with respect to the acquisition of television and radio assets. The Writers Guild considers that the $270 million of CHUM debt assumed by CTVglobemedia should be included in the value of the transaction for the purpose of determining the amount of tangible benefits.
LISTNUM 1 \l 13019 Furthermore, in our written intervention on the CTVglobemedia application, we demonstrated that the allocations concerning the relative value of CHUM's radio assets and its television assets are sensitive to the assumptions made by the CTVglobemedia and that their assumptions tend to diminish the relative value of television compared to the value of radio. This is important because the CRTC's policies require that tangible benefits be paid at a minimum rate of 10 percent of the value of television assets as compared to a minimum rate of 6 percent of the value of radio.
LISTNUM 1 \l 13020 To the extent that CTVglobemedia has undervalued television relative to radio, the overall value of the proposed benefits package is lower than it should be.
LISTNUM 1 \l 13021 As our written intervention demonstrated by revising Merrill Lynch's results in the way that we have ‑‑ sorry, the way they have ‑‑ CTVglobemedia has reduced the total benefits package. The sensitivity analysis conducted by the Writers Guild reproduced CTVglobemedia's own analysis, using alternative parameters provided in the Merrill Lynch study. This analysis indicated that the allocations chosen by CTVglobemedia undervalue the total benefits package by an amount between $3 and $4.9 million.
LISTNUM 1 \l 13022 In summary, using the lower of these two calculations based on Merrill Lynch's adjusted mean values and including CHUM's debt as previously mentioned, the Writers Guild believes the appropriate value of the transaction for benefits purposes is $1.4975 billion.
LISTNUM 1 \l 13023 MS ASHTON: CTVglobemedia's proposed acquisition of CHUM Limited will lead to an unprecedented degree of horizontal integration, vertical integration and cross‑media ownership in Canadian broadcasting.
LISTNUM 1 \l 13024 The CTVglobemedia transaction would give CTVglobemedia the ownership of 33 radio stations, 26 television stations as well as the ASN satellite‑to‑cable service, a significant interest in 36 specialty television services, production companies, music publishers, Canada's largest national daily newspaper, the Globe and Mail, and magazines.
LISTNUM 1 \l 13025 CTVglobemedia already has significant ownership links to Canada's largest local daily newspaper, the Toronto Star, book publishing, Harlequin Enterprises and a major broadcast distribution undertaking, Bell ExpressVu.
LISTNUM 1 \l 13026 What is more, five of CHUM's conventional stations duplicate CTV's coverage in six major markets and CTVglobemedia is requesting an exemption to the Commission policy that prohibits ownership of more than one over‑the‑air television station in one language in each of these markets.
LISTNUM 1 \l 13027 As we mentioned, we do not oppose such a massive consolidation in the marketplace. However, we do want to ensure that the Canadian broadcasting system benefits appropriately from the transaction.
LISTNUM 1 \l 13028 There are at least two occasions on which the Commission has endorsed benefit packages that exceeded 10 percent. Both decisions involved transactions in which the applicant had requested an exception to the Commission's policy on horizontal integration that:
LISTNUM 1 \l 13029 "...generally permits ownership of no more than one over‑the‑air television station in one language in a given market". (As read)
LISTNUM 1 \l 13030 We believe that the Commission should once again require an enhanced benefits package in exchange for approving an exception to its horizontal integration policy. Accordingly, the Writers Guild concurs with other intervenors including the DGC, ACTRA, the CFTPA and CAFDE that considering the size and importance of the acquisition of CHUM Limited CTVglobemedia should increase its benefits package from 10 percent to 15 percent of the value of the relevant assets.
LISTNUM 1 \l 13031 In the WGC's view, all of the television assets in the transaction and the associated debt that was generated by CHUM essentially through its acquisition of television assets should be subject to the 15 percent benefit calculation.
LISTNUM 1 \l 13032 Accordingly, the appropriate value of the benefits package is $163.4 million for the television assets and $24.6 million for the radio assets for a total of $188 million intangible benefits.
LISTNUM 1 \l 13033 A short table is provided as an appendix to this presentation that sets out the basic calculations used to derive these results. $163.4 million intangible benefits for television is $86.9 million more than CTVglobemedia is currently proposing. Considering how difficult it is to finance Canadian drama, the Writers Guild supports ACTRA's proposal that these additional benefits be allocated to arms‑length 10 point Canadian drama.
LISTNUM 1 \l 13034 CTVglobemedia proposes to acquire five conventional stations that form the Citytv group and duplicate CTV's conventional television coverage in those markets. We do not oppose such consolidation provided that the objectives of section 3 of the Broadcasting Act are realized.
LISTNUM 1 \l 13035 In this case, CTVglobemedia's objective of maintaining separate brands by retaining two distinctive priority program schedules is fundamental and should be fulfilled. Yesterday, CTVglobemedia said that there would be no overlap of programming between CTV and Citytv. We applaud this commitment which is essential both to ensure the distinct brands of CTV and Citytv and to maintain the current level of priority programming within the Canadian broadcasting system.
LISTNUM 1 \l 13036 CTVglobemedia has said that the benefits package will fund incremental programming. However, CTVglobemedia's definition of incrementality is unclear. Consistent with previous Commission decisions, the CTVglobemedia benefits package should be additional to any spending on the existing eight hours of priority program commitments for both CTV and CHUM stations.
LISTNUM 1 \l 13037 In the CHUM/Craig transaction the Commission decided that the baseline for determining incrementality should be the combined priority programming spending of both CHUM and Craig. This approach took into account the historical expenditures of both station groups, ensuring that the additional funding proposed as a benefit to the Canadian broadcasting system was truly incremental to the expenditures already made by both CHUM and Craig.
LISTNUM 1 \l 13038 MS PARKER: In a notice of public hearing regarding this application the Commission said that it may wish to discuss the appropriateness of the proposed benefits package and, in particular, whether it is truly incremental; that is, directed to projects that would not be undertaken in the absence of this package.
LISTNUM 1 \l 13039 While we support many aspects of the benefits package and, in particular CTVglobemedia's commitment to the funding of additional priority programming, we would like to take this opportunity to tell you a little bit more about two programs that we believe will significantly increase the quality of Canadian programming, the Writer Only Drama Development Program and the WGC Diverse Writers Immersion Program.
LISTNUM 1 \l 13040 Both Canadian screenwriters and CTV have been happy with how the BCE‑CTV Writer Only Development Program has been working and both would like to see a similar program in place for the CHUM stations. The Writer Only Development Program is seed money that helps screenwriters nurture their idea to a stage of development that will interest a producer.
LISTNUM 1 \l 13041 Broadcasters are the gatekeepers when it comes to getting programs produced as they are the ones that get to pick which programs they will air. The beauty of the Writer Only Development Program is that it directly links the people who write TV programs with the buyers. A producer will be much more attracted to a project if it comes to the door with a broadcaster already attached. Development will of course then continue with the creative and financial involvement of a producer.
LISTNUM 1 \l 13042 The WGC Diversity Immersion Program is a new program for the Writers Guild that arose from discussions we have had internally and both with CTV about the need for more diverse writers in order to be able to authentically produce stories that reflect Canada's multicultural society. Canadian society is changing rapidly and our current pool of professional writers does not fully reflect the composition of Canada as most Canadians know it.
LISTNUM 1 \l 13043 There are talented, yet inexperienced writers in diverse cultural communities across the country, that need training to assist them to write professional quality scripts. There are no other programs in Canada that target diverse writers in the way that we propose. We would not be able to conduct this program without funding from the benefits package.
LISTNUM 1 \l 13044 So at the end of the day, the WGC encourages CTV to continue to finance great Canadian programs like Degrassi, Corner Gas, but we want to ensure that CHUM continues to support its edgier programs like Godiva's and Terminal City. Both CTV and Citytv have distinct brands that appeal to different audiences.
LISTNUM 1 \l 13045 The WGC supports the CTVglobemedia application subject to the changes that we have proposed this afternoon.
LISTNUM 1 \l 13046 Thank you and we will accept any questions if you have them.
LISTNUM 1 \l 13047 THE CHAIRPERSON: Thank you very much for a very clear and concise first submission.
LISTNUM 1 \l 13048 Just one question; how does the Writer Only Development Program work?
LISTNUM 1 \l 13049 MS PARKER: Well, currently, the way this all comes together is that a writer and a writer could also be a producer or a director, but the person who is actually creating the content, the screenwriter generally comes up with it generally speaking ‑‑ there are different examples ‑‑ and they develop concepts, pitches, ideas and they will take that project and pitch it, in this particular case to the broadcaster to see if that's something the broadcaster may be interested in making.
LISTNUM 1 \l 13050 CTV has very definitive ideas about what they want to see on their network so, if as a writer I am making a pitch, I should know, I try to know what it is that they are looking for. Sometimes they say it is "in the tent" programming.
LISTNUM 1 \l 13051 So that way we are working directly with the writers, working directly with the broadcaster to see if that program is something they are interested in. If it's not, that writer will very much know then not to go that route, not to proceed any further.
LISTNUM 1 \l 13052 And what happens as well is that CTV if it is interested will finance those very early stages of development which are usually financed out of the writer's own pocket. In our system you have to have a script fairly developed before you start to get development money and, for example, there isn't a lot of development money allocated at the CTF. Development money is in very short supply in our system so this puts the money directly in the pockets of the people who are doing the developing.
LISTNUM 1 \l 13053 THE CHAIRPERSON: So just to make sure I have got this straight, the writers only program then, the money from the benefits that is set aside would be used by CTV to pay a writer to in effect develop a script where you provided ‑‑ at the time of pitch you only had a rough idea. Is that the idea?
LISTNUM 1 \l 13054 MS PARKER: Well, it goes on further than that and there are a whole list of programs that CTV can provide you with that have been developed under the writers only program. At a certain stage, perhaps it is the draft stage of the script, a producer is brought into work on the project and then the rights, you know, do flow back to the producer. It's not ‑‑ it's sort of a start‑up program.
LISTNUM 1 \l 13055 THE CHAIRPERSON: Okay. Thank you.
LISTNUM 1 \l 13056 Stuart, did you have any comments?
LISTNUM 1 \l 13057 COMMISSIONER LANGFORD: Just a couple of quick ones.
LISTNUM 1 \l 13058 It is very clear except in one area. I am just a tiny bit confused about the bottom of page 7.
LISTNUM 1 \l 13059 Yesterday, I don't know if you were in the room ‑‑ you are talking here about your notion of incrementality. It's getting late in the day. It's like trying to pronounce phenomenon and I never know where to stop.
LISTNUM 1 \l 13060 "It should be additional to any spending on the existing eight hours of priority programming commitments for both CTV and CHUM stations." (As read)
LISTNUM 1 \l 13061 I believe I heard Mr. Fecan say yesterday that all of this benefits spending on priority programming would be for the City stations, so that really what they are spending on CTV shouldn't come into it, should it, because there is no benefit going to CTV? The benefit is coming out of the CTV shareholders but it's going all to City.
LISTNUM 1 \l 13062 So do you have any objection to that? Then the test would be incremental or additional to what they are doing now for City.
LISTNUM 1 \l 13063 MS PARKER: Well, what you are doing here is you are creating a new entity and so we want to ensure that any spending that either party would be making, CTV and Citytv or CHUM, is going to be spending on top of that, that the benefits will be on top of anything they have historically been spending on priority programming.
LISTNUM 1 \l 13064 COMMISSIONER LANGFORD: I understand that.
LISTNUM 1 \l 13065 MS PARKER: This is a whole new ‑‑ yes.
LISTNUM 1 \l 13066 COMMISSIONER LANGFORD: I understand that but it doesn't seem fair to me, frankly. I mean, I am trying to be fair to all parties.
LISTNUM 1 \l 13067 They are not spending this money on CTV. They are spending all of it on ‑‑ or sorry, on CTV. They are spending all of it on City and they have given us an undertaking that there will be no overlap, no duplication of program. These will be completely standalone in terms of programming. So is it fair to lump the big CTV purchase existing expenditures in?
LISTNUM 1 \l 13068 MS PARKER: Well, at the end of the day you are going to determine as the Commission ultimately what is fair.
LISTNUM 1 \l 13069 COMMISSIONER LANGFORD: Oh, absolutely.
LISTNUM 1 \l 13070 MS PARKER: We are only here to give you some input and a bit of advice and just as a point of reference, you have already made a decision along these lines. So there is a past precedent in the CHUM/Craig purchase where you did ‑‑
LISTNUM 1 \l 13071 COMMISSIONER LANGFORD: But they were going ‑‑ they were being put together, weren't they, those two?
LISTNUM 1 \l 13072 MS PARKER: M'hm.
LISTNUM 1 \l 13073 COMMISSIONER LANGFORD: This one is not.
LISTNUM 1 \l 13074 MS PARKER: So you are saying that because of the overlap and the distinctive branding that you believe it's not ‑‑
LISTNUM 1 \l 13075 COMMISSIONER LANGFORD: I am not saying I believe it. I am just wondering whether you can see that as an argument and something we should consider or whether you are completely tied to this, no matter what.
LISTNUM 1 \l 13076 MS PARKER: Oh, I am completely tied to it.
LISTNUM 1 \l 13077 COMMISSIONER LANGFORD: Are you?
LISTNUM 1 \l 13078 MS PARKER: No, no, I am actually ‑‑ I am just saying it's all ‑‑ it's all new information. We can just point out what has been done in the past.
LISTNUM 1 \l 13079 COMMISSIONER LANGFORD: Okay. Okay, thank you for that.
LISTNUM 1 \l 13080 One last question; the notion of ‑‑ and I tried this on the earlier group that was here ‑‑ God, and my mind is starting to go ‑‑ ACRTA, thanks very much. Everybody has got an acronym. I am going to get one.
LISTNUM 1 \l 13081 The problem, one of the problems with cracking up the benefits package ‑‑ I know the benefits of cracking it up and you spell them out very clearly, but one of the problems of course is that somehow they have got to be paid for. So if we get to be greedy boots on one side, a whole lot of secretaries, receptionists, whatever, are going to get fired on the other side; people who are in the industry. Maybe they are not writers and maybe their life isn't as exciting but they probably have mortgages.
LISTNUM 1 \l 13082 And how ‑‑ do you understand the kind of tension that we are in under that? I mean, we cannot control synergies but we know somehow whoever buys this, whether it's CTV or someone standing in the wings somewhere, they have got to pay for it.
LISTNUM 1 \l 13083 So if you crack it up it all seems like a great idea, but can you see the attraction of maybe not squeezing that last dime out because someone is going to pay for it somewhere in efficiencies?
LISTNUM 1 \l 13084 MS PARKER: I have a couple of thoughts on that. One of my first thoughts would be that Mr. Fecan is a very good businessman and I would expect that he had expected that we would be trying to up the price of the package. So I would say I negotiate for a living, that's what I do running a union, that this is in part a negotiation, finding the right value and the right benefits package.
LISTNUM 1 \l 13085 So I don't feel that this is undue hardship. I feel that, you know, there are a lot of benefits. I read this morning in the paper the Chairman speaking about, you know, that this is unprecedented, two stations in five markets. So therefore there has to be some compensation for that very unusual circumstance.
LISTNUM 1 \l 13086 Now, we are supporting this application but we are saying that you know that it is different, that the rewards are greater than ever before. This is consolidation to an extent that we have never seen and, therefore, you will have to pay for that.
LISTNUM 1 \l 13087 COMMISSIONER LANGFORD: Okay.
LISTNUM 1 \l 13088 MS PARKER: So no, I don't think it's not affordable.
LISTNUM 1 \l 13089 COMMISSIONER LANGFORD: Okay. Thanks very much.
LISTNUM 1 \l 13090 Those are my questions.
LISTNUM 1 \l 13091 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 13092 Madam Boulet, who is next?
LISTNUM 1 \l 13093 THE SECRETARY: Thank you, Mr. Chairman.
LISTNUM 1 \l 13094 I would now call on the Canadian Recording Industry Association to come forward to make their presentation.
‑‑‑ Pause
LISTNUM 1 \l 13095 THE SECRETARY: Mr. Graham Henderson will be introducing his panel.
LISTNUM 1 \l 13096 After which you will have 10 minutes for your presentation.
INTERVENTION
LISTNUM 1 \l 13097 MR. HENDERSON: Thank you, Madam Secretary, and good afternoon, Mr. Chairman, members of the Commission.
LISTNUM 1 \l 13098 My name is Graham Henderson. I am president of the Recording Industry Association.
LISTNUM 1 \l 13099 I am joined by Duncan McKie. He is chair of Pollara Research and Stephen Zolf, partner in Heenan Blaikie and our regulatory counsel.
LISTNUM 1 \l 13100 CRIA is pleased to appear before the Commission today to address CTV's application and, as the Commission is aware, we have indicated our support for the application subject only to what I am about to say.
LISTNUM 1 \l 13101 CRIA also recognizes that CHUM Radio over many decades has been one of the leaders in Canada in supporting musical artists and we are happy to see that CTV will also continue to support music in Canada through the CHUM radio system.
LISTNUM 1 \l 13102 The purpose of our remarks today is to address those points in our written comments that relate specifically to the issue of airplay and promotion for new and emerging artists and the process by which we can achieve our shared goals of ensuring that they have shelf space.
LISTNUM 1 \l 13103 Thanks to a collaborative consultation process in which we engaged with CTV, there are now many points of agreement between the two of us on this issue.
LISTNUM 1 \l 13104 For example, we both acknowledge the importance of airplay for new and emerging Canadian artists. For my members new and emerging artists are the lifeblood of our industry.
LISTNUM 1 \l 13105 We both recognize that the Commission's concerns with respect to administrative and regulatory burdens inherent in establishing incentives for quotas for new and emerging artists play on radio that are both fair and can be administered and monitored, and we both acknowledge how hard it is to establish benchmarks for new and emerging Canadian artists given that airplay of these artists is not necessarily appropriate to the same degree in all formats.
LISTNUM 1 \l 13106 What we both recognize is that we need a tailored system whereby radio stations air specified levels of new and emerging content. We have rules for Canadian content which have worked. There is no reason why we cannot have rules for new and emerging content.
LISTNUM 1 \l 13107 However, we do consider that it is crucial that Canadians have an opportunity to hear these artists at peak times and in major markets. However, as I have said before, any such system must be geared to individual formats.
LISTNUM 1 \l 13108 We wish, therefore, to reiterate our request for an all industry consultation to establish benchmarks for this objective. We initially proposed this working group approach before the Commission at the radio review hearing last spring. CTV embraced this proposal in its written reply in this proceeding and we were pleased to hear them confirm their support for the approach in response to questions from the Commission yesterday.
LISTNUM 1 \l 13109 The Commission may properly ask why CTV and CRIA feel this process is necessary. It's necessary because it became evident during our consultations that there is a legitimate disagreement over a variety of issues, not the least of which is getting a handle on what is exactly happening in the marketplace right now. To offer a sporting metaphor, the teams are being asked to take the field unsure of whether it's first in goal or they are in the shadow of their own goal posts. We don't know whether to punt, pass or kick and we need to find out.
LISTNUM 1 \l 13110 The result of our discussions was outlined in part by Mr. Ski yesterday and we hope to build on what he said and will commend our proposal to the Commission to adopt and deploy.
LISTNUM 1 \l 13111 What we proposed to CTV was a working group like that set out in public notice 2000‑65. This notice created a consensus‑based problem‑solving model described as follows by the Commission:
LISTNUM 1 \l 13112 "Staff facilitated meetings involving participation in a working group by a broad cross‑section of industry representatives and other interested parties having a demonstrable, direct interest in the outcome." (As read)
LISTNUM 1 \l 13113 Now, the key here, I would add, are the words, magic words "demonstrable" and "direct". We do not want this to become a Tower of Babel‑like process.
LISTNUM 1 \l 13114 The working group provides an ideal procedure for investigating an issue, determining the facts and proposing a solution on a consensus basis that would be brought before the Commission for approval. Commission and staff would be available to help break an impasse.
LISTNUM 1 \l 13115 The working group process would ‑‑ I have got about four things that it could do.
LISTNUM 1 \l 13116 First of all, produce through consensus workable and meaningful commitments by commercial radio licensees with respect to new and emerging Canadian artists including maximizing exposure in prime time periods to achieve critical mass of airplay.
LISTNUM 1 \l 13117 Two, recognize that individual radio stations must be accorded some flexibility in applying commitments to new and emerging artists. The model must recognize differing radio formats and any potential limitations within the supply chain.
LISTNUM 1 \l 13118 Three, it must establish a criteria to manage, fund and monitor a transparent and measurable national database of airplay of new and emerging artists. We can do this now. We talked about this last spring. It becomes ever more easy as time marches on. This database will permit the industry to report its progress to the Commission and, indeed, to the Canadian public across the entire radio spectrum.
LISTNUM 1 \l 13119 Fourth, the working group process would develop appropriate procedures to resolve disputes within a framework of consensus‑based problem solving.
LISTNUM 1 \l 13120 We submit this is ideally suited to establishing workable and meaningful commitments for radio play of new and emerging artists. We have to get this right.
LISTNUM 1 \l 13121 Now, yesterday we heard from Commissioner Langford that he had assigned some homework to our friends at the CTV and while we share the Commission's desire to get numbers onto the record, we would suggest at this time that perhaps it's premature with all due respect. We might well all be assigned such homework. We might well all come with different numbers and we might be no further ahead than we are today.
LISTNUM 1 \l 13122 We are committed to this. CTV is committed to this, and we believe that a consensus‑based model is ideal because it contemplates an environment in which all of the stakeholders are brought together at the outset. The Commission would be engaged in finding a resolution of issues that are industry wide in scope and a procedure would be extremely useful in achieving this consensus.
LISTNUM 1 \l 13123 In summary, we submit that a Commission‑initiated working group process would provide a way forward on this important issue. This process should be applied uniformly, moreover. As more applicants come before you, as they surely will in the context of prospective applications for change of control as well as licence renewals, it would be appropriate for the Commission to widen the net and encompass these applicants under the working group process. It would be a positive move forward from where the Commission left things in last year's radio Review policy which addressed commitments on a more granular, case‑by‑case basis. If you will, it's almost a compromise between the original ideas presented and what the Commission came up with.
LISTNUM 1 \l 13124 Ideally, the working group's inclusive process would find workable solutions that govern all the particular circumstances of each type of commercial radio station and for every given musical genre. Then, the broadcasters will be accorded the necessary flexibility to tailor their commitments with respect to emerging Canadian artists that is suitable for them and acceptable to ourselves and to the Canadian public.
LISTNUM 1 \l 13125 Ultimately, these could be adopted by conditions of licence, following the ultimate resolution of the working group process or by amendments to the radio regulations.
LISTNUM 1 \l 13126 We appreciate this opportunity to appear before the Commission, welcome your questions and thank you for your time.
LISTNUM 1 \l 13127 THE CHAIRPERSON: Thank you very much. That's very interesting. I must say it takes me back to when we last met and I ruled against you on procedural grounds. I denied your application and became, I think, your least favourite judge at that point in time.
‑‑‑ Laughter / Rires
LISTNUM 1 \l 13128 THE CHAIRPERSON: Is there any reason why I shouldn't do that here? I mean, what you have just done is very fascinating, but it has absolutely nothing to do with this transaction, other than your first sentence saying that you support this transaction.
LISTNUM 1 \l 13129 I'm not taking away anything from the merit of what you said and the proposal, but how does it fit into what is before us, namely the application by CTV to acquire CHUM?
LISTNUM 1 \l 13130 MR. ZOLF: I will answer that, Mr. Chairman.
LISTNUM 1 \l 13131 I think it is relevant because, as we already said, the Commission has articulated in the recent Radio Policy in December of 2006 that it will address the issue of commitments to new and emerging artists as including transactions for change of effective control, and here we are today for that.
LISTNUM 1 \l 13132 What we wanted to articulate was, we think that rather than that granular approach the Commission does need to ‑‑ that it now is the appropriate time ‑‑ or the next application is the appropriate time, this is the first one that is really before you ‑‑ to adopt that approach.
LISTNUM 1 \l 13133 THE CHAIRPERSON: Accepting that, let's take granular, what is before me is CTV‑CHUM.
LISTNUM 1 \l 13134 What do I do here?
LISTNUM 1 \l 13135 MR. HENDERSON: Well, I might add that I think you have an unusual situation where the stakeholders are saying "Give us a chance to try to work this out together in a mediated matter and we will come up with something that ‑‑ my sense all along in these proceedings has been that the Commission is anxious to ensure that new and emerging artists get their fair share of shelf space. We are too, so is CTV. So we need to establish the state of play and then we can start moving the chains.
LISTNUM 1 \l 13136 THE CHAIRPERSON: I am pragmatic. I am going to deal with what is before me, CTV‑CHUM.
LISTNUM 1 \l 13137 So basically you say approve this transaction, as far as CRIA is concerned work out this whole thing that was started with the Radio Review Policy, come to a solution and, in effect, ask CTV now to agree beforehand to buy into that solution once it has been reached on a consensus basis?
LISTNUM 1 \l 13138 MR. HENDERSON: Yes, that's right.
LISTNUM 1 \l 13139 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 13140 Rita...?
LISTNUM 1 \l 13141 COMMISSIONER CUGINI: Thank you, Mr. Chairman. Just a couple of questions.
LISTNUM 1 \l 13142 Mr. Henderson, do you see the commitment that Mr. Ski described yesterday and announced on Friday, its commitment to new and emerging artists by the CHUM stations.
LISTNUM 1 \l 13143 MR. ZOLF: You mean the Calgary proposal?
LISTNUM 1 \l 13144 MR. HENDERSON: Commissioner Cugini, I take it you are referring to the commitment that Mr. Ski made yesterday about the issue.
LISTNUM 1 \l 13145 COMMISSIONER CUGINI: That's right. Yes.
LISTNUM 1 \l 13146 Were you here yesterday? Did you hear Mr. Ski's ‑‑
LISTNUM 1 \l 13147 MR. HENDERSON: I'm afraid I wasn't, no.
LISTNUM 1 \l 13148 COMMISSIONER CUGINI: I don't have the details with me. I thought I had brought the press release.
LISTNUM 1 \l 13149 But they are committing to a project across the CHUM stations ‑‑
LISTNUM 1 \l 13150 MR. HENDERSON: Yes.
LISTNUM 1 \l 13151 COMMISSIONER CUGINI: ‑‑ for the airplay and promotion of new and emerging artists.
LISTNUM 1 \l 13152 MR. HENDERSON: Yes. I am familiar with it, yes.
LISTNUM 1 \l 13153 COMMISSIONER CUGINI: Do you see that as the start of a terms of reference for this consultation group?
LISTNUM 1 \l 13154 MR. HENDERSON: Listen, I think it would be obviously that is an integral part. In a sense, they are coming to the table with that. But I also think they are coming to the table with something more, which is: Here is a start, here is what we want to do, but we both recognize that there is more that we may need to do.
LISTNUM 1 \l 13155 This goes back to not knowing where we are. There is a fog out there. This came legitimately to our attention in our discussions after we both made our filings, starting to sit down and say "Well, what is a new and emerging artist? Is this one? Is that one? Should this one? Should that one not be?" And you come up a slightly different numbers.
LISTNUM 1 \l 13156 So I think that is the beginning of the discussion. We found them to be remarkably open in their desire to get down to it, and I believe that both parties and the other stakeholders who have this demonstrable direct interest in this, will come together and, in a mediated environment, come up with answers that will be an enormous value to the Canadian public.
LISTNUM 1 \l 13157 COMMISSIONER CUGINI: Have you started to have these conversations with other major radio broadcasters in the country?
LISTNUM 1 \l 13158 MR. HENDERSON: No. Our starting point was in the last few weeks with CTV.
LISTNUM 1 \l 13159 COMMISSIONER CUGINI: Is that why you believe that you need the Commission's intervention to get the stakeholder consultations going?
LISTNUM 1 \l 13160 MR. HENDERSON: Yes.
LISTNUM 1 \l 13161 MR. ZOLF: If I could just add to that, absolutely, Commissioner Cugini.
LISTNUM 1 \l 13162 We think the Commission should be predisposed to ‑‑ I mean ideally in its ultimate ruling when it addresses radio issues, and this issue in particular, to request the industry to go ahead and do that and to participate in the process, not unlike, for example, what it has done on television, for example the Digital Migration Working Group where the Commission actually ordered those parties to try to achieve a consensus.
LISTNUM 1 \l 13163 Now, sometimes a consensus wasn't achieved and it went a different direction with an MOU, but the point is the Commission did see fit to request that process.
LISTNUM 1 \l 13164 MR. HENDERSON: I think when the decision came out in Radio Review, we regarded it as a very progressive solution to the problem, I mean, to deal with this on a station‑by‑station basis. It made sense for all of the reasons that we are really sort of saying it make sense today, different formats, different genres, different situations, different markets.
LISTNUM 1 \l 13165 But we do have a very unusual opportunity here in the case of this transfer to take a group of stations, with willing broadcasters, willing stakeholders, to sit down and come up with something, which ultimately will, in effect, kind of roll through the whole system and do something.
LISTNUM 1 \l 13166 I honestly believe there is a historic opportunity here. Now, we can't let that lapse into sort of a piecemeal sort of case‑by‑case approach or we can establish an important benchmark off the top that will ripple through the entire broadcasting network and have a pronounced effect on new and emerging artists.
LISTNUM 1 \l 13167 COMMISSIONER CUGINI: Thank you.
LISTNUM 1 \l 13168 Thank you very much, Mr. Chairman. Those are my questions.
LISTNUM 1 \l 13169 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 13170 Anybody else?
LISTNUM 1 \l 13171 Thank you very much.
LISTNUM 1 \l 13172 MR. HENDERSON: Thank you.
LISTNUM 1 \l 13173 Madam Boulet, who is next?
LISTNUM 1 \l 13174 THE SECRETARY: Thank you, Mr. Chairman.
LISTNUM 1 \l 13175 I would now call on the Canadian Independent Record Production Association to come forward.
‑‑‑ Pause
LISTNUM 1 \l 13176 THE SECRETARY: Please go ahead, Mr. Mair, when you are ready. You have 10 minutes for your presentation.
INTERVENTION
LISTNUM 1 \l 13177 MR. MAIR: Thank you.
LISTNUM 1 \l 13178 Good day, Mr. Chairman. My name is Alexander Mair, I am the Chair of the CIRPA Government Relations Committee and the publisher of "Applaud", which you all receive.
LISTNUM 1 \l 13179 CIRPA appreciates the opportunity to appear at this hearing, the first major hearing to take place under the new Chair.
LISTNUM 1 \l 13180 Given the short time available to us, I would like to quickly highlight the points we have made in our written presentation and, in particular, the following issues:
LISTNUM 1 \l 13181 One, our request regarding allocation of funding from the television part of the transaction;
LISTNUM 1 \l 13182 two, our requests regarding funding from the 1 percent discretionary funding; and
LISTNUM 1 \l 13183 three, programming issues and emerging artists.
LISTNUM 1 \l 13184 As the Commission is aware, the worlds of both broadcasting and music are undergoing substantive and indeed, in the case of music, seismic changes from the previously established norms.
LISTNUM 1 \l 13185 In light of this, CIRPA feels that while the points we make in this hearing are very important, equally important is an ongoing understanding and continuing review by the Commission of the impact of technological regulatory and policy oriented changes that are occurring across the whole field, not just for the regulated sector but for many of the content providers as well on an ongoing basis.
LISTNUM 1 \l 13186 These changes are a day‑to‑day reality music industry and certainly will not stop tomorrow. They can be expected to keep occurring, at least until the end of the decade if not longer, as the industry at just to a new world and new environment that is a result of technological and business changes.
LISTNUM 1 \l 13187 Even since the filing of this sale with the Commission almost a year ago, there have been key music business changes. We would ask that the Commission consider our intervention with this reality in mind as it explains the reasoning behind our approach and the requests we are making.
LISTNUM 1 \l 13188 We now turn to our written intervention.
LISTNUM 1 \l 13189 In paragraph 4, regarding money from the television transactions benefit, we feel that our written requests are clear but for the sake of clarity suggest that these funds be controlled by music industry organizations. They are designed to help the independent sector access new opportunities and better achieve success both in Canada and abroad.
LISTNUM 1 \l 13190 Each of the three suggestions we make will be of considerable assistance in achieving this objective. In our review, each proposal will have positive and concrete results for the independent sector and the artist it represents should the Commission agree with our thoughts and introduce these benefits in its decision.
LISTNUM 1 \l 13191 To turn to our second suggestion as outlined in points 5 and 6 of our intervention, CIRPA feels that a portion of the 1 percent discretionary monies would be more beneficially spent to help the independent sector by the Commission considering replacing part of the suggested proposals with the following approaches.
LISTNUM 1 \l 13192 One, education and business development and research/knowledge for the sector. Today's rapidly changing music business continues to be radically affected by advances in technology that are restructuring both the music business itself as well as the administrative business needs of CIRPA members.
LISTNUM 1 \l 13193 It will be vitally important that independents are provided with adequate professional knowledge and upgrading of skills through seminars and courses both in person on online on a regular and continuing basis in order that they are able to compete effectively in tomorrow's highly competitive environment.
LISTNUM 1 \l 13194 They also need to obtain regular and detailed information and resource bulletins of high quality usefulness so as to adapt to the continually changing business circumstances and opportunities that technological advances will continue to bring for the foreseeable future. These services are currently provided by CIRPA to members in a very limited fashion, but with the provision of realistic levels of funding a much enhanced service can be provided on an ongoing basis that will greatly assist the independent sector in the future.
LISTNUM 1 \l 13195 Two, support for international trade shows and international festivals.
LISTNUM 1 \l 13196 International trade shows such as Midam, POPCOM and South by Southwest are vitally important tools in the branding of Canadian music and companies in the international marketplace. In today's very tough business conditions and highly competitive marketplace, a company just cannot survive on the Canadian market alone. Export success is critical and events such as these play a major role in the international marketing plans of all Canadian companies and artists.
LISTNUM 1 \l 13197 While Canada was a pioneer and leader in establishing national stands and coordinated marketing campaigns, this was duly noted and acted upon by many other countries which has resulted in fierce competition for visibility and success. In order to raise our game and continue to be successful, and to be regarded as a major player, more stable long‑term funding is sorely needed. Were such funding to be provided, the benefits to Canadian artists and companies would be substantial and immediate and their efforts to sustain and indeed increase their success internationally over the next few years as the business transforms and evolves.
LISTNUM 1 \l 13198 The third issue that CIRPA would like to address is that of emerging artists, as noted in paragraph 8 of our intervention. We feel that our concerns are clearly expressed in the intervention, but there are two specific points that we wish to bring to the Commission's attention in this regard.
LISTNUM 1 \l 13199 The first is the definition of what, in our view, constitutes an emerging artist.
LISTNUM 1 \l 13200 The second is a guarantee of airplay for independent artists or artists signed to Canadian‑owned and controlled companies.
LISTNUM 1 \l 13201 As the Commission will note, CIRPA suggests that:
LISTNUM 1 \l 13202 One, an emerging artist is one who has released no more than five CDs, has not hit platinum in Canada and gold in the U.S. or the U.K. We propose that 50 percent of the applicable Cancon level be emerging artists.
LISTNUM 1 \l 13203 CIRPA requests that 50 percent of all Cancon be Indie artists or artist signed to Canadian‑owned and controlled companies.
LISTNUM 1 \l 13204 CIRPA does not support any bonus system for emerging artists that would reduce Cancon levels.
LISTNUM 1 \l 13205 Over the weekend CTV agreed to support CIRPA's proposal for the creation of working committee to define emerging artists. Mr. Henderson has already discussed that we are in full agreement and support.
LISTNUM 1 \l 13206 We note CTV's comment regarding the lack of a database. In this regard, CIRPA would like to draw the Commission's attention to the existence of the Canadian music industry database which operates in conjunction with CIRPA from its offices. It already has in place a considerable amount of the data necessary, and with appropriate funding levels would be fully capable of adding to its data and information base to enable it to provide all necessary services to the various stakeholders.
LISTNUM 1 \l 13207 In addition, CIRPA would like to point out that current programming trends and tight playlists on radio are, in our view, damaging the careers of numerous talented young Canadians.
LISTNUM 1 \l 13208 It is interesting that Jully Black is the only artist speaking when we are talking about culture, not just business.
LISTNUM 1 \l 13209 Broadcasters are ignoring the fact that the airways are public property that is licensed to them by the Commission on behalf of all Canadians. As such, CIRPA feels that the substantial and ongoing benefit clearly comes with the requirement to expose and promote new and emerging Canadian artists as part of broadcasters' responsibilities under the Act.
LISTNUM 1 \l 13210 In this regard, we would draw the Commission's attention to the recent FCC decision in the United States requiring airplay for independents and the question that raises. CIRPA notes in this regard that independents in both the U.K. and Europe have made the same request to regulators and governments and have made strong representations in this regard.
LISTNUM 1 \l 13211 One final point that CIRPA would like to make is to voice its concern on one aspect of the VideoFACT, BravoFACT funding.
LISTNUM 1 \l 13212 It is our understanding that if VideoFACT or BravoFACT funds any part of a video, by contract the record company is precluded from collecting payment through AVLA and Much acquires certain unfettered rights that we feel belong to the record company or the artist involved.
LISTNUM 1 \l 13213 CIRPA feels that it is unfair and unjust and that Much should be precluded by condition of licence from having such provisions.
LISTNUM 1 \l 13214 These are our key concerns with the application.
LISTNUM 1 \l 13215 In closing, yesterday I received the American trade paper Billboard and I read it on the plane this morning. The number one single in the United States is by a group from Hamilton, Ontario called Junior Boys, an independent act debuted at number one.
LISTNUM 1 \l 13216 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 13217 At page 4 of your submission you talk about the Canadian music industry database.
LISTNUM 1 \l 13218 MR. MAIR: Yes.
LISTNUM 1 \l 13219 THE CHAIRPERSON: You say with appropriate funding level it would be fully capable.
LISTNUM 1 \l 13220 What does "appropriate" mean and where would it come from?
LISTNUM 1 \l 13221 MR. MAIR: What it would need would depend on the outcome of the discussions between CTV and the music industry stakeholders. What information was required, I cannot but I figure on the table, but we would be looking towards CTV as part of the merger obligations, or the acquisition obligations.
LISTNUM 1 \l 13222 THE CHAIRPERSON: So CTV pays it as part of merger obligation, but the whole industry benefits?
LISTNUM 1 \l 13223 MR. MAIR: Someone would have to pay for it. It is of prime importance to broadcasters to have a definition of "emerging artist", it is of importance to you to know that the conditions are being met.
LISTNUM 1 \l 13224 THE CHAIRPERSON: I understand that, I just asked for the funding and you suggest this merger should fund it.
LISTNUM 1 \l 13225 MR. MAIR: Yes.
LISTNUM 1 \l 13226 THE CHAIRPERSON: All right. Thank you.
LISTNUM 1 \l 13227 MR. MAIR: Out of the 1 percent discretionary.
LISTNUM 1 \l 13228 COMMISSIONER CUGINI: Just one additional question, Mr. Mair, and it relates to the 1 percent of discretionary spending of the radio benefits.
LISTNUM 1 \l 13229 Did you have an opportunity to speak with or make your proposal to CTV prior to their filing of their application?
LISTNUM 1 \l 13230 MR. MAIR: No, we didn't. I contacted someone and through a series of unavoidable things we did not connect prior to the submission.
LISTNUM 1 \l 13231 COMMISSIONER CUGINI: And you did not send them a letter to outline your proposal?
LISTNUM 1 \l 13232 MR. MAIR: No. No, we preferred to sit down face‑to‑face initially.
LISTNUM 1 \l 13233 COMMISSIONER CUGINI: All right. Thank you very much.
LISTNUM 1 \l 13234 Thank you, Mr. Chair.
LISTNUM 1 \l 13235 THE CHAIRPERSON: All right. Thank you very much.
LISTNUM 1 \l 13236 Madam Boulet...?
LISTNUM 1 \l 13237 THE SECRETARY: Thank you, Mr. Chairman.
LISTNUM 1 \l 13238 We will now invite the Seneca College School of Communication Arts to come forward.
‑‑‑ Pause
LISTNUM 1 \l 13239 THE SECRETARY: Mr. Jim Craig is representing the intervenor.
LISTNUM 1 \l 13240 If you can introduce your colleague and you will have 10 minutes for your presentation.
INTERVENTION
LISTNUM 1 \l 13241 MR. CRAIG: Thank you very much.
LISTNUM 1 \l 13242 Mr. Chairman, Commissioners, Commission staff and attending representatives, of CTVglobemedia and CHUM Limited, thank you for allowing us this opportunity to make comment regarding the application by CTVglobemedia Inc. to purchase CHUM Limited.
LISTNUM 1 \l 13243 My name is Jim Craig. I am a proud full‑time faculty member of the Broadcast Division of the School of Communication Arts at Seneca College in Toronto. I am also a broadcast consultant and radio programmer.
LISTNUM 1 \l 13244 With me as the Chair of our School of Communication Arts Jed DeCory. Prior to joining Seneca in 1999, just in time for the opening of our York University Campus, Mr. DeCory was Director of the Banff Centre for the Arts Media and Visual Arts Division and the Founding Director of the Banff Centre Media Production And Training Department.
LISTNUM 1 \l 13245 We are not here to oppose this transaction. If anything, given CTVglobemedia's long‑standing demonstrated history of broadcast excellence, we are generally positive to their application, although, as broadcasters and broadcast educators, we do have concern with any initiative that could precipitate further broadcast employment downsizing in the name of corporate efficiencies that could have an adverse effect on career potentials for our graduates.
LISTNUM 1 \l 13246 Rather, we are here to comment on the tangible benefits package tied to this application.
LISTNUM 1 \l 13247 I would like to begin with a quick 38‑second overview of Seneca College and our School of Communication Arts. With about 18,000 fulltime day students on eight campuses in North Toronto and an overall enrolment of over 100,000 students, we are Canada's largest college operating as a community college.
LISTNUM 1 \l 13248 The School of Communication Arts has 3,790 students with about 1,500 directly connected to broadcast related programs. Seneca also partners with York University in joint degree granting programs and we are recognized by the industry as one of Canada's leading broadcast educational institutions.
LISTNUM 1 \l 13249 First, the current realities of broadcast education must be understood and Jed DeCory is well versed in the facts of fiscal life at Seneca.
LISTNUM 1 \l 13250 MR. DeCORY: Thank you. Gone are the days when someone could leave school and begin a career in radio or television by walking into a local station and training from scratch on the job with little or no formal education in the skills and technologies of the broadcast business.
LISTNUM 1 \l 13251 One of my former instructors got his break simply because he delivered a daily paper to Jack Kent Cooke. With today's ever changing technological advances, broadcasters are demanding that even entry level candidates be fully trained on professional equipment and computer software that is compatible with their gear.
LISTNUM 1 \l 13252 Therefore, our educational facilities must be, at a minimum, up to date to satisfy the industry employers if they are going to hire our graduates. To do so, we need to be state of the art and that requires money.
LISTNUM 1 \l 13253 Since 2003 the Seneca School of Communication Arts has spent almost $4.6 million on equipment, broadcast facilities, hardware, software and other materials used in television, radio and broadcast journalism programs. $1.3 million was spent last fiscal year and this year we are planning on another $1.2 million. All of this to make our broadcast related programs viable, professional and acceptable to the demands of broadcast employers. And we are doing it at a time when Seneca is projecting an overall operating deficit of between $3 million and $4 million.
LISTNUM 1 \l 13254 This money is all capital expenditure for broadcast equipment, hardware and software, just to keep up with the change. None of it is allocated to faculty, support staff or general costs.
LISTNUM 1 \l 13255 Refer at your leisure to the following page and you will see the scope of purchases we have made to support broadcast programs vis‑à‑vis our relevance to industry standards.
LISTNUM 1 \l 13256 In these days industry demands graduates who are job ready, and our graduates are. They are competent, not only in how to use a video camera, a digital recorder, digital editing suite or solid state production board, they are familiar with all aspects of the broadcast process, including emerging new media forms, such as streaming, webcasting and information management of station websites.
LISTNUM 1 \l 13257 To produce the level of graduates required by industry, we must constantly keep up with this ever‑advancing technology curve. If we still taught editing the way I learned it, with 16 mm film and a Steinbach, the industry wouldn't even be interested in interviewing our graduates.
LISTNUM 1 \l 13258 In fact, that would be the case if we were still using the 20‑year‑old technology that we have strategically replaced since 2000.
LISTNUM 1 \l 13259 MR. CRAIG: As I said before, we are not here today to oppose the sale of CHUM Limited to CTVglobemedia. However, given the enormity of the deal with its huge $103 million tangible benefits package, along with the pending associated Rogers A Channel acquisition, we feel compelled to make our feelings known regrading the allocations in such packages.
LISTNUM 1 \l 13260 First of all, we take issue with a plan that would simply transfer funds into Canadian programming development activities that the buyer is already obligated to do per CRTC regs, policy and guidelines. As we all know, the Canadian television undertakings are required to provide a set percentage of Canadian content.
LISTNUM 1 \l 13261 So is there anything new over and above existing obligations being proposed in this self‑administered plan?
LISTNUM 1 \l 13262 Second, we note that allocations in the radio portion of the plan include money for Corus and CHUM Radio. The Corus allotment is to support events such as the Juno Awards, which are primarily television broadcast events that help achieve TV CanCon obligations. And the proposed CHUM Music Fest, although designed to showcase Canadian talent at Canada Music Week, appears to be more of a self‑serving CHUM Radio promotional vehicle and we question whether that lives up to the spirit of Commission expectations.
LISTNUM 1 \l 13263 Mr. Chairman and Commissioners, perhaps we can offer a better idea for tangible benefits and, as Stu Langford has said, do something different with it.
LISTNUM 1 \l 13264 A precedent for capital investment in education as part of a tangible benefits package has already been set. Decision CRTC 99‑482 awarded CHUM Limited a new FM radio broadcast licence for London, Ontario in 1999 which included a $1.2 million commitment made to the Fanshaw College Music Industry Arts Program for three new recording studios, labs and equipment upgrades.
LISTNUM 1 \l 13265 This was a CRTC‑approved capital investment in broadcast education. And if there is any difficulty in recognizing or defining capital investment in broadcast education as either Canadian Talent Development initiatives or Canadian programming development opportunities, we direct you to the DVD that we have provided.
LISTNUM 1 \l 13266 It contains the 2004 Academy Award winning Best Animated Short "Ryan", which was created by a team of Seneca College students and grads utilizing the facilities of our Seneca at York School of Communication Arts campus.
LISTNUM 1 \l 13267 Jed DeCory was the Executive Producer. The people involved are Canadian talent, and the finished product was aired on Canadian television as Canadian content programming.
LISTNUM 1 \l 13268 MR. DeCORY: To sum up, Seneca College, along with other Canadian institutions preparing students for jobs in the broadcasting industry, depends largely on provincial operating grants to fund broadcasting programs. Government underfunding and post secondary education over the past decade and rising costs and demands of maintaining leading edge training facilities means new sources of added funding are necessary if we are going to maintain the professional quality of our programs to satisfy broadcast employers.
LISTNUM 1 \l 13269 But there has been very little direct investment by broadcasters and school training in schools that are training the vast majority of their future employees for them. In essence, they are getting a free ride.
LISTNUM 1 \l 13270 Our message is simple. Consideration must be given to a capital investment in broadcast education if the industry is going to continue to enjoy the luxury of not having to train or apprentice new employees on the job.
LISTNUM 1 \l 13271 MR. CRAIG: We believe Canadian programming and Canadian Talent Development contributions inherent to all new broadcasting licensing and broadcast property acquisitions present a significant opportunity for educational capital funding, which in turn would alleviate cost pressures faced by post secondary training institutions like Seneca College and serve the need of broadcasters. That's a win‑win scenario.
LISTNUM 1 \l 13272 The sale of CHUM Media to CTVglobemedia could have provided an excellent starting point, and perhaps it still can. However, we are flagging this message for consideration by Rogers Media as it prepares for its A Channel transactions, also for Astral Media as it creates the tangible benefits proposal for its application to acquire Standard and for other broadcasters with future deals that are lurking in the wings.
LISTNUM 1 \l 13273 Bottom line, here's a solution. At Seneca, we are intending to establish a growing endowment fund that could eventually cover our annual broadcast education capital expenditure needs. We are inviting the corporate broadcasting community to use this vessel to invest in broadcast education as a start toward ensuring a sufficient flow of the pretrained employees they demand for their future needs.
LISTNUM 1 \l 13274 We hope the Commission understands the capital investment needs of broadcast educators across Canada if we are to continue playing our vital part in feeding the system with exceptional highly trained graduate Canadian talent who can walk into a broadcast facility, sit down and do the job.
LISTNUM 1 \l 13275 Mr. Chairman and Commissioners, we leave you with one last point to ponder. Wouldn't it make sense for the CRTC to entrench capital investment in broadcast education as a readily acceptable option for tangible benefits packages alongside CTD and Cancon programming? That would be your easy investment in a bright future for Canadian broadcasting.
LISTNUM 1 \l 13276 We thank you for your time and indulgence and we would be certainly pleased to hear any of your comments and answer any questions that you might have.
LISTNUM 1 \l 13277 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 13278 I'm somewhat surprised that you say you support the merger and at the same time you are afraid that the corporate efficiencies will have an adverse effect on career potential of your graduates. I have never seen a corporate merger that has not produced corporate efficiencies. That is one of the reasons you have a merger.
LISTNUM 1 \l 13279 So aren't you supporting something that is not in your interest?
LISTNUM 1 \l 13280 MR. CRAIG: We understand the realities. That is the reality of the business. As broadcast educators, we also try to educate our students in an understanding of what the business is all about. And we fully understand that. There will be some efficiencies.
LISTNUM 1 \l 13281 There is obviously concern that those cost efficiencies might affect the hiring probabilities of a few of our students, but that's life. That's life in the broadcast zone.
LISTNUM 1 \l 13282 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 13283 My fellow Commissioners don't seem to have any questions.
LISTNUM 1 \l 13284 Mr. Langford?
LISTNUM 1 \l 13285 COMMISSIONER LANGFORD: Just in a general sense. I mean, everybody is for education and against war and poverty and whatnot, and I don't want to make light of what you are saying. But aren't we the kind of wrong forum for this?
LISTNUM 1 \l 13286 I know you have that one radio decision from 1999, but we generally don't do bricks and mortar. Isn't that something that fund raisers at a college like yours get around? Ryerson has a building named after Rogers and I assume they made some kind of deal. And we see business schools named after people. They recognize donations and there's charitable consequences and taxation consequences.
LISTNUM 1 \l 13287 Aren't those sorts of things usually done in a different forum than this?
LISTNUM 1 \l 13288 MR. DeCORY: I think at this point we are doing them in every way we possibly can. One of the issues when we go to a broadcaster with a pending licence renewal or a purchase, they quote the parameters.
LISTNUM 1 \l 13289 Unfortunately, my 20 students in my independent music production may qualify under the current CRTC rules. However, my broadcast television students and my broadcast radio students, the heart-blood of what makes these networks run, don't qualify under the current parameters.
LISTNUM 1 \l 13290 What we are asking is for you to look at perhaps making those parameters a little more wide open so that we can go to our broadcast partners, and we will provide them the place to put it if you provide them with the ability to put it and include it under a tangible benefits package.
LISTNUM 1 \l 13291 MR. CRAIG: And we are not looking for bricks and mortar money. We are looking for the dollars that will help pay for those parts of the facility that the broadcasters are quite frankly demanding we have in place for our students to be able to be trained so that they can then suck them into the system.
LISTNUM 1 \l 13292 COMMISSIONER LANGFORD: And you realize without further process, this couldn't come out of this decision. You understand that.
LISTNUM 1 \l 13293 MR. CRAIG: We fully understand that, unless, of course, as has been suggested, there might be some more money added to the pot ‑‑ which we know won't happen.
LISTNUM 1 \l 13294 COMMISSIONER LANGFORD: You might want to be talking that way. Thanks very much.
LISTNUM 1 \l 13295 MR. CRAIG: Yes.
LISTNUM 1 \l 13296 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 13297 I think you have had your forum to advertise your endowment fund.
--- Laughter / Rires
LISTNUM 1 \l 13298 MR. CRAIG: Thank you so much.
LISTNUM 1 \l 13299 THE CHAIRMAN: Let's go on.
LISTNUM 1 \l 13300 Madam Boulet, who is next?
LISTNUM 1 \l 13301 LA SECRÉTAIRE: Merci, Monsieur le Président.
LISTNUM 1 \l 13302 J'inviterai maintenant la prochaine intervenante, Radio enfant ado à se présenter à la table des intervenants, s'il vous plaît.
LISTNUM 1 \l 13303 We will proceed to the next appearing intervenor, the Manitoba Motion Picture Industry Association, if you will come forward.
‑‑‑ Pause
LISTNUM 1 \l 13304 THE SECRETARY: Ms Todd, you have ten minutes for your presentation; thank you.
INTERVENTION
LISTNUM 1 \l 13305 MS TODD: The Manitoba Motion Picture Industry Association (MMPIA) supports the CTV application.
LISTNUM 1 \l 13306 My name is Kim Todd. I'm the Chair of MMPIA and President of Original Pictures, which is an independent production company based in Manitoba.
LISTNUM 1 \l 13307 MMPIA is a non‑profit membership driven organization that represents the interests of Manitoba's motion picture industry. Our members are individuals, companies, labour groups, broadcasters, distributors, suppliers and exhibitors representing more than 1,400 people.
LISTNUM 1 \l 13308 Our support of the CTV application and our comments are the result of a survey of our members requesting their views at an open meeting to shape our intervention.
LISTNUM 1 \l 13309 Many of the points raised in our letter to the Commission are repeated in other letters and submissions, and in the interests of time today I will focus mainly on the issues specific to Manitoba.
LISTNUM 1 \l 13310 CTVglobemedia has been a good partner to Manitoba's production community. We support their pledge to ensure distinct programming for CTV and CHUM, to bring financial stability to CHUM and to enable CHUM to return to their "original programming philosophy".
LISTNUM 1 \l 13311 Our members feel that their concern about this acquisition reducing the number of outlets that they have for the sale of their productions is answered by the CTV promise that there will be separate programming departments and separate executives with decision‑making power in each broadcaster. We support this as a condition of licence.
LISTNUM 1 \l 13312 I would like to address the twin sticks discussion which happened recently and since we have written our letter, at this point before I talk about the benefits package, because Winnipeg is obviously in that discussion.
LISTNUM 1 \l 13313 In Manitoba we have experienced the effect of CHUM's waning fortunes. Our Citytv station there laid off more people than any other City station when the layoffs happened. In fact, we hired one of them at my company.
LISTNUM 1 \l 13314 Much as CHUM has attempted to be a player and a participant for the producers and the viewers in Manitoba, it hasn't happened.
LISTNUM 1 \l 13315 We note that our local programming on the CHUM station is 15 hours per week as opposed to Edmonton's, which is 31.5. Alternatively, we have seen CTV meet and surpass commitments to our community, more, it must be said, than any of the other broadcasters.
LISTNUM 1 \l 13316 We believe the alternative to the CTV proposal is either the sale of our local station to a less well capitalized owner, and we will have Citytv all over again, a struggling station that provides neither the opportunity for production nor the programming for viewers that it wishes it could; or the closure of our station.
LISTNUM 1 \l 13317 We suggest that the twin sticks rule may be outdated in the world of fragmentation and cable delivery.
LISTNUM 1 \l 13318 Further, the discussion of Canadian programming in prime time which arose today in the CTV intervention, it is our understanding that CHUM unfettered by simulcasting, which is not the case with Global or CTV, and bolstered by CTV's financing, will provide unique Canadian programming in prime time; programming of the innovative and daring type that distinguished CHUM in the past. That's programming in drama, arts, music, news and all other genres.
LISTNUM 1 \l 13319 We would expect the CRTC to monitor the performance of CTV and CHUM in this regard and to exercise its power at the time of licence renewals on this point.
LISTNUM 1 \l 13320 On the benefits package, we support of course the intent to put new funding into development and production of Canadian television programming. Our support of this particular proposal is based in part on CTV's impressive performance in our community in the last few years.
LISTNUM 1 \l 13321 I point to the paragraph in our letter that describes the CTV Western Development Office which was established in Winnipeg in 2001 as a part of the benefits package attached to the CTV purchase of CKY in Manitoba. That office has had a direct impact on Manitoba's independent production sector: $11 million in production leveraged from CTV's investment of $600,000 from the Manitoba Script and Development Fund and $1.6 million from the Local and Regional Programming Initiative; 56 shows licensed over 30 Manitoba production companies.
LISTNUM 1 \l 13322 We suggest that, given the success of this office and the local CTV development person who runs it, that a similar CHUM office could be set up in Winnipeg and in other regional areas of the country. There is CHUM development office in Edmonton right now that covers Winnipeg, but due to distance and the differences in provincial industries this office has not resulted in the development and production of Manitoba programming in the same way as the CTV office has in Winnipeg.
LISTNUM 1 \l 13323 One has to note that it takes as long to fly to Edmonton from Winnipeg as it does to fly to Toronto, so local doesn't really apply.
LISTNUM 1 \l 13324 MMPIA is not recommending a guaranteed regional spend, but we are requesting that the Commission require CTV to demonstrate how the regions will be equitably dealt with under the benefits package and how they will be well represented in the programming on CHUM. I repeat the notion that we only have 15 hours of local programming in Winnipeg on CHUM right now and we would like to have the 31.5 that Edmonton has.
LISTNUM 1 \l 13325 It is important to us that contributions made under the proposed benefits packages will be incremental, as discussed and promised by CTV. In part, because CHUM owes a significant amount of money on the previous benefits package to the Manitoba area still.
LISTNUM 1 \l 13326 And finally, MMPIA particularly supports the investment of $2.25 million in APTN, the Aboriginal Peoples Television Network, drama development fund. Our community has one of the largest Aboriginal populations in the country and it is a priority for us that these Canadians be represented in our television programming.
LISTNUM 1 \l 13327 We appreciate this opportunity to appear before the Commission and would be happy to answer any questions about our particular region or arguments. Thank you.
LISTNUM 1 \l 13328 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 13329 Helen, you had a question?
LISTNUM 1 \l 13330 COMMISSIONER DEL VAL: Just one small question, Ms Todd.
LISTNUM 1 \l 13331 On the regional aspect I think CTV has made their plans out in all of their submissions. So and your particular request is that there be a creation of a development officer in Winnipeg specific to that aspect. Is that your particular request?
LISTNUM 1 \l 13332 MS TODD: Yes. It has been our experience that for very little investment there is a huge payoff to having a person on the ground in the market.
LISTNUM 1 \l 13333 COMMISSIONER DEL VAL: And not other regions?
LISTNUM 1 \l 13334 MS TODD: I mentioned in other regions as well. Winnipeg is where we live and it is the example we have where we have either had success or not had success, depending on the activities of broadcasters.
LISTNUM 1 \l 13335 COMMISSIONER DEL VAL: Thank you, those are my questions.
LISTNUM 1 \l 13336 THE CHAIRPERSON: And you suggest that this twin sticks policy is outdated given the experience in Manitoba? Have I understood you correctly?
LISTNUM 1 \l 13337 MS TODD: Yes, sir, we suggest it might be. It is a new issue that has come up. We are looking at how it affects. I mean, if twin sticks refers to the towers, isn't how things are delivered anymore, and ‑‑
LISTNUM 1 \l 13338 THE CHAIRPERSON: I know, but I just wondered why you feel that the experience in Manitoba, which I gather was not conducive to diversities, necessarily applicable to the rest of the country.
LISTNUM 1 \l 13339 MS TODD: No, I think it is probably applicable to the rest of the country. I am just trying to use our specific experience as an example.
LISTNUM 1 \l 13340 Twin sticks, in my understanding, refers to one entity owning two channels in a market. But given the digital channels and the cable channels and the proliferation and the fragmentation of our industry it is very difficult, as I think someone else made the point on the panel, when you are turning the channels you are not aware of where the signal is coming from anymore.
LISTNUM 1 \l 13341 THE CHAIRPERSON: Okay. Thank you very much.
LISTNUM 1 \l 13342 MS TODD: Thank you very much.
LISTNUM 1 \l 13343 THE CHAIRPERSON: Who is next, Madame Boulet?
LISTNUM 1 \l 13344 THE SECRETARY: Just for the record, I would just like to indicate the Canadian Conference of the Arts have advised us that they will not be appearing as intervener.
LISTNUM 1 \l 13345 The next two interveners have switched places. Therefore, I would now call on the Canadian Film and Television Production Association to come forward.
LISTNUM 1 \l 13346 Mr. Guy Mayson will be introducing his panel, after which you will have 10 minutes for your presentation.
INTERVENTION
LISTNUM 1 \l 13347 MR. MAYSON: Thank you, it is a pleasure to be here.
LISTNUM 1 \l 13348 Mr. Chair, members of the Commission, my name is Guy Mayson and I am the President and CEO of the Canadian Film and Television Production Association.
LISTNUM 1 \l 13349 With me today are three prominent Canadian producers. On my left here, Ira Levy of Breakthrough Films & Television of Toronto and Chair of the CFTPA. Among the programs he has executive produced are kids' shows such as the animated Atomic Betty and Adventures of Dudley the Dragon, as well as the documentary series Little Miracles and King & Country.
LISTNUM 1 \l 13350 On my right, Sandra Cunningham, President of Strada Films in Toronto, is Co‑Chair of our Feature Film Committee. She is a Co‑Producer of such Canadian features as The Statement, Being Julia, Where the Truth Lies and, most recently, Fugitive Pieces and the soon‑to‑be‑released theatrical feature length documentary 27.
LISTNUM 1 \l 13351 And to Sandra's right, Julia Keatley, President of Keatley Entertainment of Vancouver. She's a Creator and Executive Producer of the drama series Cold Squad and Godiva's. Julia is a past Chair of the association and co‑chairs our Broadcast Relations Committee.
LISTNUM 1 \l 13352 The staff members with us today, to my left, are John Barrack, National Executive Vice‑President and Counsel; Marc Séguin, far end, Vide‑President of Feature Film and New Technology; in between there is Mario Mota, our Senior Director of Broadcast Relations and Research.
LISTNUM 1 \l 13353 The CFTPA represents almost 400 companies that create, finance, produce, distribute and market feature films, television programs and interactive content for new digital platforms. The producers on our panel are here to share with you their experiences in creating Canadian films, drama and documentary programs and the impact that approval of this transaction could have on they and their colleagues do business.
LISTNUM 1 \l 13354 The strategic importance of the combined television assets of CTVglobemedia and CHUM in terms of their production of original Canadian programming makes this a landmark transaction. While CTVglobemedia talked at length about positioning itself vis à vis its Canadian competitors and the largest international media conglomerates, our concerns rest with the inordinate influence this single broadcaster could wield within the Canadian television market.
LISTNUM 1 \l 13355 You referred to this yesterday, Mr. Chairman, when you spoke of the danger of a national champion becoming a national predator. In reply, Mr. Fecan suggests that CTVglobemedia would be on a short leash because they would be coming before you in 2008 for licence renewal. We have framed these remarks in order to provide the Commission with our thoughts on just how short that leash should be.
LISTNUM 1 \l 13356 At the outset, we would like to say that CFTPA supports this application and, in general, is not opposed to consolidation in the broadcasting sector provided sufficient safeguards are in place to alleviate our own and the Commission's concerns about gate keeping, undue preference and anticompetitive practices.
LISTNUM 1 \l 13357 Our written submission addressed ownership consolidation, the valuation ascribed to the television assets and the proposed related benefits. We have made 22 recommendations. Among these are two that we consider essential, a requirement that CTV enter into a terms‑of‑trade agreement with us on behalf of the Canadian independent production companies and, second, that the purchase provide the Commission with a revised package of benefits pertaining to the television assets. We have framed these recommendations as conditions for approving the transaction.
LISTNUM 1 \l 13358 Ira.
LISTNUM 1 \l 13359 MR. LEVY: Thank you, Guy.
LISTNUM 1 \l 13360 Yesterday, Mr. Fecan stated that the proposed transaction will expand the diversity of voices. He told you that growth is a necessity to face the challenges of the unregulated universe and that with growth with scale CTVgm will be able to provide the resources to enrich the programming of the CHUM services. He said the transaction will result in new opportunities for the production and promotion of Canadian programming and referred to enhanced quality and distinctiveness of programming for Canadian audiences.
LISTNUM 1 \l 13361 We welcome and appreciate these positive statements made on behalf of CTVgm. However, like the Commission, we want to see those statements framed as something that is measurable, enforceable conditions of licence.
LISTNUM 1 \l 13362 We ask you to give this application particular scrutiny because of the enormous power this single broadcaster will have if you approve this transaction. Never has the pressure from broadcasters on producer rights been greater. This is why we need substantive terms‑of‑trade agreements.
LISTNUM 1 \l 13363 We have been in discussions with CTV on this for more than a year and we are pleased that they agree with us that terms of trade will ensure fairness, clarity and responsibility and that such agreements are important for the stability of the production industry as well as for future growth.
LISTNUM 1 \l 13364 They have said that they are committed to finalizing a framework that will set clear parameters for the commercial relationship between Canadian independent producers and CTVgm. Mr. Fecan also told you yesterday that the terms of any such agreement would also apply to the CHUM services.
LISTNUM 1 \l 13365 But he also said that he didn't want completing such an agreement to be linked to this proceeding, saying that such a requirement would tilt the balance of power in favour of the producers. Quite frankly, the power all rests in the hands of the broadcaster. The broadcaster has the choice of which producers they will work with and it is their commitment to air the program that is the trigger for all of the financing that producers bring to the project.
LISTNUM 1 \l 13366 This is why we are looking for the Commission's support to ensure a fair and more balance partnership. Requiring a terms‑of‑trade agreement to be finalized as a condition of licence will ensure that the negotiations currently underway are successfully completed to the satisfaction of both parties.
LISTNUM 1 \l 13367 Sandra.
LISTNUM 1 \l 13368 MS CUNNINGHAM: When CTVgm spoke to you yesterday about ensuring distinctiveness between the city and CTV stations Mr. Fecan committed to zero overlap. That is a good start. But we would like to see that commitment expanded to encompass zero program overlap between the CHUM and CTV speciality channels.
LISTNUM 1 \l 13369 To us, diversity and differentiation means separate programming, separate decision making and separate program budgets. This is a way to ensure that we continue to have a number of different doors to knock on when we are seeking buyers for our programming.
LISTNUM 1 \l 13370 Now, turning to feature film for a moment. As Steve Heyges stated this morning, the English‑Canadian feature film industry is in crisis. Outside of the U.S. feature films simply do not get produced unless there is a broadcast partner. CHUM is the only Canadian conventional broadcaster to have played a meaningful role in this regard.
LISTNUM 1 \l 13371 If CTVgm is serious about the prominent place of feature film on a re‑branded City TV, a position suggested by Mr. Fecan when he met with our CFTPA Board of Directors last fall, then it is going to take money, much more than the $10 million over seven years proposed in the current benefits proposal. That equates to about $1.4 million a year or almost enough to licence and properly support one quality feature film.
LISTNUM 1 \l 13372 For instance, a sizeable upfront commitment to a project could open the door to the possible delivery of a quality feature film to the network quite quickly following its theatrical release allowing for greater promotion and growth of audiences. So we think a significantly increased commitment to feature film would provide a unique opportunity for CTVgm, the feature film community and, most importantly, Canadian audiences.
LISTNUM 1 \l 13373 Julia.
LISTNUM 1 \l 13374 MS KEATLEY: Thank you, Sandra.
LISTNUM 1 \l 13375 Our written submission raised a number of concerns with regard to the valuation report filed with the application. We disagree with CTVgm's arguments for not including the debt of $270 million and have recommended that additional benefits should be allocated to development, licensing and promotion of priority television programming.
LISTNUM 1 \l 13376 We see merit in may of the proposed television initiatives, but consider that the amount allocated to support for priority programming should be greatly augmented. We have recommended that the purchaser be required to file a revised benefits package as a condition of approval.
LISTNUM 1 \l 13377 Because the proposed transaction, if approved, would result in common ownership of two conventional television operations in five separate markets the CFTPA has requested that benefits be assessed at 15 per cent of the value of the transaction.
LISTNUM 1 \l 13378 We urge CTVgm to ensure that some initiatives are independently administered and made available to the industry at‑large. The interactive media sector is a key component of the multiplatform environment that CTVgm has embraced. We underscore the need for specific and tangible commitments to this area similar to those made in the context of the BCE‑CTV transaction.
LISTNUM 1 \l 13379 CTVglobemedia has said that greater scale would give them greater program buying power. We sincerely hope that they intend this greater buying power to be devoted to original Canadian production and not just U.S. purchases.
LISTNUM 1 \l 13380 We have talked to you about the enormous disparity in the spending by Canada's largest television broadcasters on foreign mostly‑U.S. entertainment programming compared to their Canadian program expenditures. In 2005 the foreign Canadian drama differential was five to one. Recently released statistical information for 2006 indicates that the portion for foreign drama expenditure was 87 per cent or a differential of almost 10 to one. You have heard why this has come about, competitive bidding for the top U.S. programs to fill prime time.
LISTNUM 1 \l 13381 We have recommended that a majority of the revised television benefits be accessed by independent production companies for the creation and production of original Canadian programming. Only in this way will you have a clear and transparent means of ensuring that this self‑directed package of initiatives is clearly incremental.
LISTNUM 1 \l 13382 We hope that the financial support CTVglobemedia will provide to the city stations will enable them to match the level of investment and priority programming that has been previously made by CTV's conventional television stations.
LISTNUM 1 \l 13383 Thank you. Guy.
LISTNUM 1 \l 13384 MR. MAYSON: The Broadcasting Act recognizes a role of independent production within the Canadian broadcasting system. It has producers based in every part of this country who have the passion and the ability to create content that speaks to our own culture, values and interest and that tells Canadian audiences our stories.
LISTNUM 1 \l 13385 This is where program diversity originates. We believe that big broadcasters should bear bigger responsibilities. If CTVglobemedia can spend more than $1.3 billion to acquire most of CHUM's broadcast assets we believe that it can well afford to contribute more to the development, creation, scheduling and promotion of priority programming.
LISTNUM 1 \l 13386 We have asked the Commission to send a clear message to CTVglobemedia about the obligations it will be expected to fulfil in return for the privilege of being granted ownership of additional conventional and speciality television services. We would like to see evidence of this particular broadcaster make Canadian programming its number one priority, not just with words but with expenditure and exhibition commitments.
LISTNUM 1 \l 13387 What appeals to audiences is programming, it is content. Viewers do not care who provides the content or how they obtain it. In future broadcasters' success will depend on connecting to audiences with the best programming possible. It will mean making serious commitments to original Canadian programming because the foreign content is going to be easily accessible in many different ways.
LISTNUM 1 \l 13388 To do this requires the strengthening of the traditional broadcaster‑producer partnership to ensure that there is a critical mass of quality, original domestic content that speaks to Canadian and world audiences. This transaction provides the opportunity to rebalance the relationship between our member companies and Canada's largest television broadcaster.
LISTNUM 1 \l 13389 Thank you for your attention and we would be pleased to answer any questions that you may have.
LISTNUM 1 \l 13390 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 13391 You were here I presume this afternoon when Mr. Stursberg was here from CBC and you heard him say quite clearly that he opposes the transaction. In his view there is no necessity for it other than the death of Mr. Waters and that we should deny it and await other purchasers making a pitch for it.
LISTNUM 1 \l 13392 And his fallback position was if not, then at least make them diverse the City channels and so that there is a greater chance of another network emerging. What is your position on that, on both of those points?
LISTNUM 1 \l 13393 MR. MAYSON: I think, simply put, we are supporting the application. I think that Mr. Fecan mentioned yesterday there is a complementarity in the acquisition between the two entities. Provided there is a very distinct programming strategy for both entities, I think we are supportive.
LISTNUM 1 \l 13394 THE CHAIRPERSON: But isn't it in your long‑term interest that there be a strong network emerging?
LISTNUM 1 \l 13395 MR. MAYSON: I think ‑‑
LISTNUM 1 \l 13396 THE CHAIRPERSON: I see your short‑term benefit or greater benefit of this transaction versus the long‑term benefits of having a strong network emerging.
LISTNUM 1 \l 13397 MR. MAYSON: We are also interested in the long‑term as well. I think the benefits package is very important. But what we are really interested in is a distinct programming strategy and a strong commitment to Canadian programming for ‑‑
LISTNUM 1 \l 13398 THE CHAIRPERSON: Do you have any position on whether CTV purchases City group or whether it purchases the A Channels?
LISTNUM 1 \l 13399 MR. MAYSON: I think, as we said, we support the application. I think it is a good fit.
LISTNUM 1 \l 13400 THE CHAIRPERSON: On page 7 of your submission you say, "We urge CTVgm to ensure that some initiatives are independently administered and made available to the industry at‑large." What exactly does that mean, "some initiatives?"
LISTNUM 1 \l 13401 MR. MAYSON: I will make a general comment, but let other people comment too.
LISTNUM 1 \l 13402 I think there is aspects of some of the benefits that were proposed that we think should be made generally available to the industry at‑large in terms of new media in particular, perhaps some promotional packages.
LISTNUM 1 \l 13403 I think it is important that we see the value of the self‑directed approach, but I think it is also important to have some elements of the benefits package available to the industry at‑large.
LISTNUM 1 \l 13404 Do you want to comment on that, Julia? No?
LISTNUM 1 \l 13405 MS KEATLEY: I mean, obviously you have heard from a number of producers who are very happy with the BCE‑CTV benefits packages and obviously producers who have been beneficiaries of that would be very supportive of it.
LISTNUM 1 \l 13406 At our board level we had a great debate about this in terms of self‑directed. I mean, obviously there are kinds of funds that are out there, whether it be things like the Independent Production Fund or the Shaw Fund that have come out of various transactions and those also help to finance various projects.
LISTNUM 1 \l 13407 So we did debate this but we did see the success of essentially the kind of programming that came out of the BCE‑CTV benefits was actually, and overall, a very good thing for the system and I think the kind of hits that came were good things. And so then in light of that, in terms of Mr. Stursberg's comments for instance, that this money should go to the CTF, you know, realistically if you took the $65 million that is currently on the table for benefits as a one‑time only put into the CTF it is a drop in the bucket over those number of years.
LISTNUM 1 \l 13408 So this kind of a proposal actually gives some volume to a transaction at this time.
LISTNUM 1 \l 13409 THE CHAIRPERSON: You are one of the few, if not the only, submission that really refers to multiplatform environment and new media and suggesting that the benefits be made available to that. Can you explain that to me?
LISTNUM 1 \l 13410 I mean for us, obviously, where they link here with over‑the‑air stations and we want to make sure that they stay healthy and that because that is our primary generator of local content. I appreciate you can generate local content for all sorts of platforms, not only for over‑the‑air, but why should we in this case when we are talking about TV stations make this departure?
LISTNUM 1 \l 13411 Because it may very well be in that case that only a very small portion goes to the stations and a lot of it goes to other platforms.
LISTNUM 1 \l 13412 MR. MAYSON: There was a lot of support certainly within our own sort of new media community I think for looking at ways to encourage more interactive content which comes, in many cases, out of television and so it is more designed to assist on the interactive components of television programming.
LISTNUM 1 \l 13413 But certainly the new media industry in general is hard pressed to find sources of funding and the Bell New Media Fund, which was established in previous transactions, has been a very important source of funding for new media. So I thought it was an area that could be explored in terms of putting a benefits package into something like that.
LISTNUM 1 \l 13414 THE CHAIRPERSON: That is all pretty vague. What exactly are you suggesting?
LISTNUM 1 \l 13415 MR. MAYSON: It is all pretty vague?
LISTNUM 1 \l 13416 THE CHAIRPERSON: Yes. I mean, you say here:
"The interactive media sector is a key component of the multiplatform environment CTVgm has embraced. We underscore the need for specific and tangible commitments to this area similar to those made in the context of the BCE‑CTV transaction." (As Read)
LISTNUM 1 \l 13417 So translate them to me from BCE‑CTV to CTV CHUM, what do you think we should accept from CTV in this context?
LISTNUM 1 \l 13418 MR. MAYSON: I think it is an area that needs to be explored in terms of a specific commitment that is available to the entire industry, whether it is set‑up as a separate fund administered by CTV or put into an existing fund I think there is benefit in this area because a smaller amount of money can go a great distance in that area.
LISTNUM 1 \l 13419 THE CHAIRPERSON: Okay. Stuart.
LISTNUM 1 \l 13420 COMMISSIONER LANGFORD: Just one question to you, Ms Cunningham, assuming you have authorship and ownership of your statements.
LISTNUM 1 \l 13421 On page 6, second sentence, you indicate your increased enthusiasm of the zero overlap idea and then said you would like to see that commitment expanded to encompass zero program overlap between the CHUM and CTV specialty services.
LISTNUM 1 \l 13422 You have a lot of recommendations and I got the sense that they are not all equal in a sense of how devoted you are to them, not that they are not all important. I wonder in a sense of genre protection, you know, with the obvious exceptions of things like news and sports where kind of one to where genre is getting a little harder to define. But in other areas we do have genre protection. One thinks of Bravo as being pretty distinct, MuchMusic is pretty distinct, whereas Discovery and History are going to be totally different.
LISTNUM 1 \l 13423 I mean, do you really think you need to put their feet to the fire on this one or do you want to give them a little bit of leeway so they can have a second window, they have spent a lot of money on these programs. I mean, just how tough do you want to make it for them out there?
LISTNUM 1 \l 13424 MS CUNNINGHAM: I will start, but I will invite anybody else to jump in, because this was collective.
LISTNUM 1 \l 13425 COMMISSIONER LANGFORD: Sure, we are a egalitarian to a fault here.
‑‑‑ LAUGHTER / RIRES
LISTNUM 1 \l 13426 MS CUNNINGHAM: For us, it is about ensuring more Canadian programming and the more overlap that there is the fewer original programs there are and that is the basic principle.
LISTNUM 1 \l 13427 I will let my colleagues who produce for television specifically talk about the specific genres. But I think the idea is more original programming and let us not disguise that by overlapping too much in terms of working with a broadcaster to amortize cost.
LISTNUM 1 \l 13428 COMMISSIONER LANGFORD: Yes, I understand your goal, but I just wonder whether sometimes, you know, in trying to attain one goal you might just make it so much difficult on the other side that it is almost not worth buying programming, they just can't, as you say, amortize it.
LISTNUM 1 \l 13429 MS CUNNINGHAM: Well, we were actually quite impressed with the express desire of CTVgm to re‑brand the CHUM stations including Bravo and certainly City TV and I think that implies a very strong genre going back to its roots and we logged that.
LISTNUM 1 \l 13430 So I am not sure that they would necessarily have a problem and will probably naturally keep distinct channels. But so philosophically I don't think they would have a problem either. We think it is probably a good business model for them as well.
LISTNUM 1 \l 13431 MR. MOTA: Commissioner Langford, if I could just add to that.
LISTNUM 1 \l 13432 I think our concern is that the overlap doesn't get any greater than already exists. We recognize there is already a lot of overlap when you drill down on individual programs across CHUM's services and, separating that, CTV's services. We don't want to see that grow.
LISTNUM 1 \l 13433 I mean, there was a very recent example where the Commission wrote for a particular speciality service saying a particular U.S. program they were airing was not on side with their particular nature of service genre. When you drill down by program there, in fact, is a lot of flexibility in terms of the programs that they can air because they fall within a particular programming category.
LISTNUM 1 \l 13434 So we are just trying to be sure that the overlap is not growing to the extent that reduces opportunity for producers and for original Canadian programming.
LISTNUM 1 \l 13435 COMMISSIONER LANGFORD: But this seems to me, if I am reading it correctly, like absolutely no overlap. So I mean, like that is a big ‑‑
LISTNUM 1 \l 13436 MR. MOTA: Well, what exists today is fine, it is because we are bringing these two entities together let us not have the CHUM service programming end up on CTV's specialty services and let us not have the CTV's specialty service programming end up on the CHUM services.
LISTNUM 1 \l 13437 COMMISSIONER LANGFORD: But, why not?
LISTNUM 1 \l 13438 MR. MOTA: We are just taking it to a new level.
LISTNUM 1 \l 13439 COMMISSIONER LANGFORD: But, why not? I mean, obviously, if you are running, for example, Bravo and you suddenly come on with 15 animated cartoons for kids, I think the market will take care of you there. There is not going to be a problem. Or, you know, you are doing MuchMusic videos, you know, on some channel where it just doesn't work.
LISTNUM 1 \l 13440 But if you actually have something that fits with both and there is, as you said, minimal opportunity for overlap anyway, but I mean if it actually fits why would we put their feet to the fire so much and just say you just absolutely can't use this? Isn't that, in a way, going to hurt you guys in the long run because they are just going to be less keen to buy and to put big money into programming if they can't get maximum usage out of it.
LISTNUM 1 \l 13441 MR. MAYSON: I will say something quickly. I think it is a very good point you raise, but I think it goes to the heart of where the concern is in the production community about transactions of this scale. What you don't want here is to have any kind of diminishment in opportunities for production. You want diversity, you want to encourage as much as possible. The more cross‑over there is it is a major problem.
LISTNUM 1 \l 13442 COMMISSIONER LANGFORD: We will hear Mr. Fecan reply tomorrow. I mean, it is just kind of ‑‑ and I don't want to appear to be pleading his case for him ‑‑ but I have a sort of proclivity for taking a contrarian view to everything everyone says and it probably all evens out in the end.
LISTNUM 1 \l 13443 Sorry, you wanted to say something?
LISTNUM 1 \l 13444 MS KEATLEY: No, I would just like to add. I mean, this is one of the things we are trying to negotiate in our terms‑of‑trade negotiations with CTV. In fact, if what you did is you separated out those additional platforms or the licenses then perhaps there wouldn't be a problem. What is happening now is for the one, you know, lump licence fee they are taking everything and the fear is it would go across all those specialties and therefore there is no secondary market where there used to be. That is essentially one of the things that we are trying to negotiate.
LISTNUM 1 \l 13445 COMMISSIONER LANGFORD: Well, good luck with it.
LISTNUM 1 \l 13446 Thank you very much, those are my questions.
LISTNUM 1 \l 13447 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 13448 Madame Boulet, how may people do we have left?
LISTNUM 1 \l 13449 THE SECRETARY: We have five more interveners on the list.
LISTNUM 1 \l 13450 THE CHAIRPERSON: Okay, let us take a five‑minute health break. My intention is to try to get through all the five today, so five minutes literally it is. Thank you.
‑‑‑ Upon recessing at 1648 / Suspension à 1648
‑‑‑ Upon resuming at 1701 / Reprise à 1700
LISTNUM 1 \l 13451 THE CHAIRPERSON: We seem to have lost our Hearing Officer. Madam Boulet.
LISTNUM 1 \l 13452 THE SECRETARY: Thank you, Mr. Chairman. I would now call on the Alberta Motion Pictures Industries Association, if they are in the room.
LISTNUM 1 \l 13453 All right, you can go ahead. Please introduce yourself for the Panel. Thank you.
INTERVENTION
LISTNUM 1 \l 13454 MR. PATENAUDE: Mr. Chairman, Commissioners, my name is Jean Patenaude and I am the Vice‑President North of Alberta Motion Pictures Industries Association, a nonprofit association also known as AMPIA, a strong voice from the West.
LISTNUM 1 \l 13455 We did present you with a written submission. I didn't want to repeat what we had given you in a written form, but I thought perhaps I could highlight some areas that we really hold at heart.
LISTNUM 1 \l 13456 We recognize CTVglobemedia commitment to continue the legacy that Allan Waters and others began by maintaining the CHUM brand in the CHUM culture. The uniqueness and willingness to take risks in programming have done a great service in allowing voices from across Canada, and especially from Alberta in our case, to tell their stories in their own way. We are also happy to note that CTVglobemedia will continue to adhere to the specific licence genre of the specialty services. The CHUM specialty services play an important role for Alberta's independent producers.
LISTNUM 1 \l 13457 As we have stated in previous intervention letters and at recent public hearings, independent producers in Alberta continue to struggle to bring together the necessary financing to develop and create uniquely Canadian programming. If this transaction is approved, our members would face an additional challenge of having fewer Canadian broadcasters to pitch their program concepts to.
LISTNUM 1 \l 13458 While consolidation has significant fiscal benefits and efficiencies, it also limits the number of distinct and regional voices that may be seen or heard on our television screens. So AMPIA respectfully recommends to the Commission that as a condition of licence CTVglobemedia agrees to maintain distinctly separate brands between CHUM and CTV, therefore allowing separate buying of productions from independent producers to take place.
LISTNUM 1 \l 13459 Mr. Fecan said yesterday that it is an expectation that this will take place and that there will be separate buyers. We want just a little bit more than that. We want a guarantee that that will actually happen.
LISTNUM 1 \l 13460 AMPIA also respectfully recommends that the Commission make it a condition of licence that CTV commits to the continuation of senior development officers. My colleague from Manitoba alluded to that previously. So decision‑making capabilities are done in regions, in our case Alberta, as part of this transaction.
LISTNUM 1 \l 13461 As AMPIA has discussed with the Commission on prior occasions, this is a critical matter for our members, to have senior executives who are familiar with our independent producers, that understand our environment, that understand our stories and what we are trying to tell. So that is very important for us to have these senior representatives in our community, in our case in Edmonton.
LISTNUM 1 \l 13462 AMPIA is also concerned with the lack of opportunities for underserved programming. We support the need for additional dollars for high‑quality dramatic programming.
LISTNUM 1 \l 13463 As far as dramatic programming, my colleague Bruce Harvey spoke about that earlier today very eloquently.
LISTNUM 1 \l 13464 So we believe there should also be opportunities for independent producers from all strands of productions. It is important to balance the needs of large budget dramatic programming with other types of programming also. In addition to our superb drama producers, we have heard loud and clear, as far as our membership is concerned, from our documentary and performing arts producers indicating a critical need for significant first window licence fees for their hard to finance programs.
LISTNUM 1 \l 13465 It turns out this way. I am an artistic producer and I will illustrate what is happening to me and then you will understand how we stand over there in Alberta, because there are some artistic producers.
LISTNUM 1 \l 13466 It has become very difficult in Canada to produce artistic programming in both French and English and in trying to represent the regions, in my case Alberta.
LISTNUM 1 \l 13467 We need significant first windows financing for performing arts. As an example, the new Canadian operas. I produced last year Filomena. Filomena was on opening night. Opening night is gone. First windows are gone. When are we going to see an opera on our screens again?
LISTNUM 1 \l 13468 There is also extensive music documentaries, artistic series. There are now in Canada, in both French and English, very few broadcasters left to support original artistic programming, especially from the regions, and that will be shown on prime time television in our country.
LISTNUM 1 \l 13469 So what I'm trying to say is that in this transaction Bravo! has become very important in promoting the arts along with its counterpart RTV in French Canada.
LISTNUM 1 \l 13470 Finally, AMPIA has a major concern in regards to ongoing yearly sponsorship support for Alberta's production community. For over 32 years AMPIA has presented the Alberta Film and Television Awards, an annual fundraiser that celebrates honours and acknowledges the individuals involved in Alberta's film and television industry. This support is extremely important for AMPIA. The funds raised at the yearly event are specifically dedicated to professional development workshops and seminars to assist in continued growth and development of our members.
LISTNUM 1 \l 13471 We are pleased to advise the Commission that over the years both CTV and CHUM have always been generous supporters of this annual event, including CHUM's yearly commitment to license the program for broadcast on their specialty channels and an Citytv stations and Alberta.
LISTNUM 1 \l 13472 However, in previous transfers of ownership, we have experienced, AMPIA has experienced, a critical erosion of sponsorship support when two broadcast companies become one and the new owner determines that it is no longer necessary to have separate profiles at this major event and tends to treat sponsorship commitments as a cost‑saving opportunity.
LISTNUM 1 \l 13473 So AMPIA is hopeful that this will not be the case if this application by CTVglobemedia is approved.
LISTNUM 1 \l 13474 I will just close with this on a positive note, because we are in support of this transaction. We see over here a tremendous opportunity for the production of Canadian programming through this transaction. With more dollars there will be more investment into independent production.
LISTNUM 1 \l 13475 We would respectfully suggest that CTVglobemedia has a real opportunity to grow the Canadian audience by investing in new Canadian programming, but especially by investing significantly in independently produced regional programming.
LISTNUM 1 \l 13476 Thank you.
LISTNUM 1 \l 13477 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 13478 Elizabeth, did you have some questions?
LISTNUM 1 \l 13479 COMMISSIONER DUNCAN: Your presentation today was very clear and so were your written remarks.
LISTNUM 1 \l 13480 I wanted to just clarify, what currently is the situation with the Senior Development Offices? Is there both a CHUM and a CTV Development Officer in Alberta?
LISTNUM 1 \l 13481 MR. PATENAUDE: Just CHUM.
LISTNUM 1 \l 13482 COMMISSIONER DUNCAN: Just CHUM?
LISTNUM 1 \l 13483 MR. PATENAUDE: CHUM, yes, through Citytv and Access and all that. In Edmonton, yes.
LISTNUM 1 \l 13484 COMMISSIONER DUNCAN: In Edmonton?
LISTNUM 1 \l 13485 MR. PATENAUDE: Yes.
LISTNUM 1 \l 13486 COMMISSIONER DUNCAN: So that is what you are looking for, is continuation of that one position?
LISTNUM 1 \l 13487 MR. PATENAUDE: Yes. We wanted to continue, yes.
LISTNUM 1 \l 13488 COMMISSIONER DUNCAN: All right. Those are all my questions, Mr. Chairman. Thank you.
LISTNUM 1 \l 13489 THE CHAIRPERSON: With regard to sponsorship, if I understood you correctly, it is your expectation, because CTV will continue the two labels, CTV and City, that there will continue to be two sponsorships?
LISTNUM 1 \l 13490 MR. PATENAUDE: That is the concern.
LISTNUM 1 \l 13491 THE CHAIRPERSON: Yes. You expressed a concern. You didn't express a remedy. That is why I was wondering what you had in mind.
LISTNUM 1 \l 13492 MR. PATENAUDE: Yes. Well, the concern is that it will become one or one will see the other and that it will be just one sponsor.
LISTNUM 1 \l 13493 THE CHAIRPERSON: You heard Mr. Fecan stating that there would be no overlap in programming and so obviously he is going to sell it under two labels, either on the City label or CTV.
LISTNUM 1 \l 13494 MR. PATENAUDE: That is, yes.
LISTNUM 1 \l 13495 THE CHAIRPERSON: So that should address your concern.
LISTNUM 1 \l 13496 MR. PATENAUDE: Hopefully, yes.
LISTNUM 1 \l 13497 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 13498 MR. PATENAUDE: Thank you.
LISTNUM 1 \l 13499 THE CHAIRPERSON: Madam Boulet?
LISTNUM 1 \l 13500 THE SECRETARY: Thank you, Mr. Chairman.
LISTNUM 1 \l 13501 We have had to rearrange the order of some of the interveners appearing and I appreciate the cooperation of the two interveners that will have to be delayed until tomorrow.
LISTNUM 1 \l 13502 I would now call on the Association of Canadian Advertisers to come forward for their presentation. They will be the last appearing intervener for the day.
‑‑‑ Pause
LISTNUM 1 \l 13503 THE SECRETARY: Please introduce yourself to the Panel and you will have 10 minutes for your presentation.
INTERVENTION
LISTNUM 1 \l 13504 MR. REAUME: Thank you very much. Good afternoon.
LISTNUM 1 \l 13505 Mr. Chair, Commissioners, Commission staff, my name is Bob Reaume and I am Vice‑President Policy and Research at the Association of Canadian Advertisers.
LISTNUM 1 \l 13506 With me is Ron Lund who you have met before, President and CEO of our organization.
LISTNUM 1 \l 13507 We are very pleased to have this opportunity to appear and comment before you today to represent the views of advertisers in Canada.
LISTNUM 1 \l 13508 As we have pointed out many times before, advertising is a primary resource sustaining the Canadian broadcasting system. In all its forms, advertising is estimated to represent an annual $13 billion investment in the Canadian economy. Of this total amount, approximately $3 billion is invested annually in television advertising. It is a substantial contributor of funds to the Canadian television broadcasting system, and clearly the role of advertising is critical to a healthy and robust broadcasting system in Canada.
LISTNUM 1 \l 13509 In short, advertising brings essential economic strength to the system.
LISTNUM 1 \l 13510 For many advertisers, conventional broadcasting continues to be the workhorse of brand building. Advertisers have also embraced and supported the many and varied specialty channels that the Commission has licensed, but it is still conventional stations where advertisers go to purchase mass audiences.
LISTNUM 1 \l 13511 Strong and stable media companies are not only important to advertisers, but to the broadcasting system as a whole. CTV has consistently provided advertisers with a proven track record of programming that performs and no doubt will continue to offer advertisers sound and steady leadership in broadcasting in Canada.
LISTNUM 1 \l 13512 They have been, and no doubt will continue to be, terrific partners with Canadian advertisers. That is why we do not object to the bulk of this merger. It is important that strong broadcasting companies be able to flourish in Canada.
LISTNUM 1 \l 13513 Adding radio assets, for instance, to the television and newspaper offerings from CTVglobemedia provides advertisers with opportunities and options for media mix synergies.
LISTNUM 1 \l 13514 Not unlike other interveners, we believe that the addition of the Citytv stations to the CTVglobemedia stable, however, does give us cause for serious concern. For advertisers, if this portion of the merger is allowed, then the markets of Toronto, Winnipeg, Calgary, Edmonton and Vancouver will all have two very local stations by the same owner and will create undue competitive advantage.
LISTNUM 1 \l 13515 Advertisers seeking time in those markets in the future would find it extremely difficult, if not impossible, to buy around CTV, leaving them unable to exert any substantial leverage in response to unacceptable price offerings. Excessive market cost increases for TV time would be inevitable and force manufacturers to pass these costs on to consumers. The Commission's long‑standing common ownership policy of one conventional station, one owner, one market, has served the broadcasting system well. It has ensured healthy competition and diversity of voices.
LISTNUM 1 \l 13516 If this merger were approved by the Commission, it would represent the first time that this policy is breached.
LISTNUM 1 \l 13517 The applicant has suggested that the Commission has already set several precedents in this regard by allowing, for instance, CanWest's ownership of CHCH‑TV Hamilton as well as common ownership of stations in Red Deer, Calgary and Edmonton, Barrie, Toronto, Victoria, Vancouver, et cetera.
LISTNUM 1 \l 13518 In our opinion, these are true exceptions. The Red Deer, Barrie, Hamilton and Victoria stations all have licences to serve those specific markets, licences that come with obligations for local programming, local news, and local advertising sales. Exceptions for distinct but nearby markets are much different, in our opinion, than two local operations in the very same city.
LISTNUM 1 \l 13519 The applicant argues, quite rightly, that past ratings success is never a predictor of future success, but if anything is, it most certainly is the number of local distribution channels. This merger would give CTV two local signals in five top markets in English Canada and confer an undue competitive advantage.
LISTNUM 1 \l 13520 We believe the Commission should approve this merger to preserve strong and stable broadcast entities in Canada but also require that the applicant divest itself of the five Citytv stations in order to preserve healthy competition and an important and successful policy.
LISTNUM 1 \l 13521 Mr. Chair and Commissioners, we thank you again for the opportunity to present our views on behalf of Canada's advertisers and we wish you well in your deliberations.
LISTNUM 1 \l 13522 We know that time is tight this evening as well, but if you do have questions we would be happy to answer.
LISTNUM 1 \l 13523 THE CHAIRPERSON: Thank you very much. We too are also reaching the saturation point, but I appreciate your short and very precise submission.
LISTNUM 1 \l 13524 Going right to the bottom line at the end, were you suggesting that we should ask CTV to divest the five City station? What is your position on the A‑Channels?
LISTNUM 1 \l 13525 MR. REAUME: The A‑Channels are more analogous to what the CanWest organization has in operation right now, in our opinion. It is never our position to suggest to a company what they should sell or buy. So I can't tell you that we think they should keep the A‑Channels and divest the Citytv channels, but that would seem to be, I think, a more analogous situation.
LISTNUM 1 \l 13526 THE CHAIRPERSON: But you seem to echo here what I said yesterday, that the A‑Channels seem to fall more readily into the exceptions so far established in the City channels.
LISTNUM 1 \l 13527 MR. REAUME: Indeed.
LISTNUM 1 \l 13528 THE CHAIRPERSON: So if that was the line we would take, would that address your concerns?
LISTNUM 1 \l 13529 MR. REAUME: It would.
LISTNUM 1 \l 13530 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 13531 Rita, did you have any questions?
LISTNUM 1 \l 13532 COMMISSIONER CUGINI: Yes, just a couple of questions for clarification. It may be the time of day, but can you please explain to me anyway what you mean when you say at the bottom of page 3 "to buy around CTV"?
LISTNUM 1 \l 13533 MR. REAUME: In broadcast buying, our agencies that we hire to do this for us will go into the marketplace and hopefully they still have a couple of options available to them in a market to purchase.
LISTNUM 1 \l 13534 They will compare prices. They will price shop. If one entity owns 50 percent of the inventory in a market, you can't buy around them. In other words, you will have to buy something on the CTV‑CHUM entity. If they know that and we know that, they pretty much can name their price.
LISTNUM 1 \l 13535 COMMISSIONER CUGINI: So your fear is that the price will be so inflated.
LISTNUM 1 \l 13536 MR. REAUME: Yes.
LISTNUM 1 \l 13537 COMMISSIONER CUGINI: And even if they inflate their prices, your advertisers don't have any other choice but to buy.
LISTNUM 1 \l 13538 MR. REAUME: We have other choices, but we could not get our total objective from the other choices. We will have to at least put a portion of our buy on the CTV‑CHUM entities.
LISTNUM 1 \l 13539 COMMISSIONER CUGINI: Were you here earlier today for the CBC intervention?
LISTNUM 1 \l 13540 MR. REAUME: We were.
LISTNUM 1 \l 13541 COMMISSIONER CUGINI: And would it be safe to say that in essence you agree with this chart that they provided and explained, or to a certain degree?
LISTNUM 1 \l 13542 MR. REAUME: Well, I would say to a certain degree we do agree. But before I would say categorically, I would like to study it a little bit more.
LISTNUM 1 \l 13543 COMMISSIONER CUGINI: Fair enough.
LISTNUM 1 \l 13544 One final question. Do you consider Toronto‑Hamilton to be one market?
LISTNUM 1 \l 13545 MR. REAUME: BBM Nielsen says it is one market.
LISTNUM 1 \l 13546 COMMISSIONER CUGINI: Right.
LISTNUM 1 \l 13547 MR. REAUME: And for purchasing, it would be one market. But the trouble with that statement is that no buyer is going to go out and approach CHCH Hamilton as the first buy in the Toronto‑Hamilton market to cover Toronto. They are not going to approach CHCH. It is not considered to be a Toronto station, or a top line Toronto station.
LISTNUM 1 \l 13548 You can carry that reasoning too far. Do we think Home and Garden Television is a Toronto station? It is available in nearby markets.
LISTNUM 1 \l 13549 COMMISSIONER CUGINI: Right. But if you want to buy the Toronto audience that is watching 20/20 you have to go to CH to buy that Toronto audience.
LISTNUM 1 \l 13550 MR. REAUME: Yes. Yes, because they are the only entity, sure, with that program, yes.
LISTNUM 1 \l 13551 COMMISSIONER CUGINI: All right. Thank you.
LISTNUM 1 \l 13552 Thank you, Mr. Chairman.
LISTNUM 1 \l 13553 THE CHAIRPERSON: Thank you very much.
LISTNUM 1 \l 13554 Madam Boulet, I gather we have a complication?
LISTNUM 1 \l 13555 THE SECRETARY: We have three intervenors left. I understand the Canadian Association of Film Distributors and Exporters are in the room and cannot stay for tomorrow, if they are still here.
LISTNUM 1 \l 13556 THE CHAIRPERSON: All right. Would you come forward. I warn you, we are literally at the saturation point. I apologize, but there is only so much one can absorb in one day.
LISTNUM 1 \l 13557 So come right to the point.
LISTNUM 1 \l 13558 MR. EAST: Thank you.
LISTNUM 1 \l 13559 THE SECRETARY: Please introduce yourself for the record.
INTERVENTION
LISTNUM 1 \l 13560 MR. EAST: I will be brief. My name is Ted East and I am President of the Canadian Association of Film Distributors and Exporters and I'm going to be brief. I am just going to highlight and expand on some of the key points we made in our written submission.
LISTNUM 1 \l 13561 We think it is important to stress how important a traditional broadcast licence is for feature films. I will just go through this quickly.
LISTNUM 1 \l 13562 In the 1930s the average Canadian would go to the movie theatre between 40 and 50 times a year. Now the number is between four and five. Our love of film has not decreased. In fact it has increased. Canadians are now watching movies mostly at home.
LISTNUM 1 \l 13563 CAFDE members have long been frustrated by the lack of feature film programming by traditional broadcasters. The only consistent buyer for films has been Citytv. They have been important partners for Canadian producers and distributors and have had a long and distinguished track record in programming and promoting Canadian films.
LISTNUM 1 \l 13564 So the news that they had been purchased by CTV GM makes us nervous and we feel any reduction in support for feature film by the traditional broadcast sector could be disastrous.
LISTNUM 1 \l 13565 Therefore, we are urging the CRTC to ensure that support for films at City by CTV GM be continued and in fact strengthened.
LISTNUM 1 \l 13566 I should say that I have met with Mr. Fecan and Mr. Sparkes who made a very convincing case about their commitment to feature films at City in the future, and I was very encouraged to hear this and believe that they were being sincere.
LISTNUM 1 \l 13567 However, we have seen broadcasters change their minds or not live up to promises in the past.
LISTNUM 1 \l 13568 In the year 2000, before this Commission the CBC committed to invest $30 million over five years in the production, acquisition and promotion of Canadian films, a commitment they did fall short of.
LISTNUM 1 \l 13569 Looking at CTV GM's benefits package, we noted very limited support for feature films. We believe 33 percent of the benefits package dedicated to television programming should be allocated to the production, promotion of Canadian films. We are also in agreement with the CFTPA, the WGC and others in recommending increasing the benefits package to 15 percent of the transaction and we are also recommending increasing the number of original hours from 100 to 250 per year.
LISTNUM 1 \l 13570 That is my quick presentation.
LISTNUM 1 \l 13571 THE CHAIRPERSON: Certainly short and to the point.
LISTNUM 1 \l 13572 Helen...?
LISTNUM 1 \l 13573 COMMISSIONER del VAL: Thank you.
LISTNUM 1 \l 13574 I'm just referring to your written submissions where one of the recommendations is that the CRTC ensure safeguards are put in place to prevent anti‑competitive practices. Is there any practice that you can think of that has not been mentioned already?
LISTNUM 1 \l 13575 MR. EAST: No, I think everything has been covered.
LISTNUM 1 \l 13576 COMMISSIONER del VAL: Thank you very much.
LISTNUM 1 \l 13577 Those are my questions, Mr. Chairman.
LISTNUM 1 \l 13578 THE CHAIRPERSON: Thank you.
LISTNUM 1 \l 13579 MR. EAST: Thank you.
LISTNUM 1 \l 13580 THE CHAIRPERSON: We will then resume tomorrow morning and deal with the remaining intervenors. Then we will hear from you, Mr. Fecan, and we will have some questions for you and that will be the end.
LISTNUM 1 \l 13581 I have to give a speech tomorrow at noon to the Québec Association of Broadcasters, so we have to be out of here by 11:30 at the latest. Hopefully we will be out before that.
LISTNUM 1 \l 13582 How many intervenors to have tomorrow?
LISTNUM 1 \l 13583 THE SECRETARY: Mr. Chairman, we have two more intervenors left for the morning.
LISTNUM 1 \l 13584 THE CHAIRPERSON: Why don't we start at nine o'clock tomorrow morning. Thank you.
LISTNUM 1 \l 13585 THE SECRETARY: Thank you.
‑‑‑ Whereupon the hearing adjourned at 1725, to resume
on Wednesday, May 2, 2007 at 0900 / L'audience
est ajournée à 1725, pour reprendre le mercredi
2 mai 2007 à 0900
REPORTERS
____________________ _____________________
Kristin Johansson Monique Mahoney
____________________ _____________________
Jean Desaulniers Jennifer Cheslock
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