ARCHIVED - Transcript, Hearing 5 April 2011
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Abridged Corus transcript
TRANSCRIPT OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION
To consider the broadcasting applications for the group-based licence renewals for English-language television groups listed in Broadcasting Notice of Consultation CRTC 2010-952, 2010-952-1, 2010-952-2 and 2010-952-3
140 Promenade du Portage
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.
Canadian Radio-television and Telecommunications Commission
Abridged Corus transcript
To consider the broadcasting applications for the group-based licence renewals for English-language television groups listed in Broadcasting Notice of Consultation CRTC 2010-952, 2010-952-1, 2010-952-2 and 2010-952-3
Konrad von FinckensteinChairperson
Joshua DoughertyLegal Counsel
Valérie DionneLegal Counsel
Sheehan CarterHearing Manager
140 Promenade du Portage
5 April 2011
- iv -
TABLE OF CONTENTS
PAGE / PARA
Corus Entertainment Inc. (Cont.)118 / 802
- v -
PAGE / PARA
Undertaking124 / 847
Undertaking146 / 1011
--- Upon resuming at 1539
795 MR. CASSADAY: Mr. Chairman...?
796 THE CHAIRPERSON: Yes.
797 Well, first of all, we had better make sure.
798 Are we in camera now?
799 THE SECRETARY: Yes, we are in camera right now.
800 THE CHAIRPERSON: Okay, thanks.
801 Go ahead.
802 MR. CASSADAY: We think that we did a poor job explaining two things and you may think there were more than two things that we did a poor job explaining but --
803 MR. CASSADAY: -- the two things that we would like to come back to is the 150 percent question on Movies Central and the other one is the area you were exploring with me on YTV and Treehouse.
804 THE CHAIRPERSON: Yeah.
805 MR. CASSADAY: And I missed the nuance there.
806 So if you don't -- if it's okay with you we will take --
807 THE CHAIRPERSON: By all means let's go back, yeah.
808 MR. CASSADAY: Just a minute.
809 Jocelyn, why don't you start with the 150?
810 MS HAMILTON: So I will start with the 150. And I am sorry if I didn't explain it properly. A few people were just saying that perhaps I could explain it again.
811 So I just wanted to clarify the nuance of, if we pre-licence something -- only if we pre-licence something before principal photography has started, do we get the 150 percent credit. So that's the nuance.
812 If we acquire it, we would only get 100 percent credit. So it's about incentive for us to pre-licence before principal photography.
813 So I'm not sure if that clarifies it.
814 COMMISSIONER KATZ: And the advantage if purely to get them the financing?
815 MS HAMILTON: Pardon me?
816 COMMISSIONER KATZ: It's purely to give them the financing --
817 MS HAMILTON: Correct, and therefore --
818 COMMISSIONER KATZ: -- which they couldn't get anywhere else?
819 MS HAMILTON: Correct, and it's better for the producer to know upfront that they have Movie Central onboard from day one before principal photography. If they wait and shoot the movie or whether they even can shoot the movie and then we acquire it, you know it's just not upfront in their finance plan.
820 And then upfront we know prior to principle photography it's better for the producer and if we had the incentive of 150 percent credit, it's better for us.
821 COMMISSIONER KATZ: And this was a creative CRTC idea a number of years ago?
822 MS COURTEMANCHE: It was also supported by TeleFilm Canada.
823 COMMISSIONER KATZ: Okay.
824 MR. CASSADAY: Karen Phillips will just talk about the YTV/Treehouse.
825 MS PHILLIPS: So if I understand, Mr. Chairman, the two conditions of licence that you are referring to is the current condition of licence on YTV that currently states that a minimum of 30 percent of programming be to a target of children up to five years of age, 48 percent to children and youth at a maximum of 22 to families, which we are requesting is changed and that a minimum of 78 percent of the programming distributed on the service shall have of its target audience children and youth up to 17 years of age, in conjunction with the amendment that we have asked that has to do with shared programming between YTV and Treehouse.
826 Currently, the condition of licence says that in any one month we cannot share programming between the networks with the exception of the month of December where we can share a maximum of, I believe, it's 20 hours of programming.
827 I can understand when you would look at those, that that could be perceived as suggesting that what we might be trying to do is actually increase the amount of preschool programming on YTV and then share programming across Treehouse and YTV. That's actually not the intent whatsoever.
828 They are not tied together at all. We are just looking for the flexibility of not having to measure on a monthly basis where we do, so that if we happen to have a program on the first week of February on YTV, you know, and we pulled it off the air, right now we conceivably could not switch that over to the other network for the other three weeks.
829 So that's really just a scheduling flexibility. We have no intention of increasing the preschool programming on YTV.
830 THE CHAIRPERSON: Where is this monthly prohibition that you talk about?
831 MS PHILLIPS: I believe it may actually be in the Treehouse licence.
832 MS PHILLIPS: I believe it is 8(a):
"Except as provided in subsection (b) in any month none of the programs broadcast by the licensee shall be broadcast by the specialty service YTV." (As read)
833 THE CHAIRPERSON: But you want to delete that, so you are taking that out, right?
834 MS PHILLIPS: Right, yes.
835 THE CHAIRPERSON: So you request to delete 8(a)?
836 MS PHILLIPS: Yes, we are. The intention of deleting that is strictly from a scheduling and monitoring perspective. It is not at all intended to raise the preschool levels on YTV. If, in fact, you were concerned --
837 THE CHAIRPERSON: No, but by taking that out and by your new condition on YTV which says that:
"In each broadcast year a minimal of 78 percent of the programming distributed under the service shall have as its target audience children and youth up to 17 years of age." (As read)
838 You can have, as far as I can see, 78 percent overlap.
839 MS PHILLIPS: I can agree with you that I could see where that would be construed and, yes, that would be -- would make it possible.
840 It is certainly not our intent. And I can also tell you that if the Commission is concerned about that we would be happy to retain the condition of licence on Treehouse that says that we cannot share programming between the two networks. That would be fine.
841 THE CHAIRPERSON: Yeah, or alternatively reword it differently if it's too limiting the way it is right now.
842 MS COURTEMANCHE: We understand your concern.
843 THE CHAIRPERSON: Okay.
844 MS COURTEMANCHE: We thought maybe we could come back and reply. Is that okay because --
845 THE CHAIRPERSON: Sure. Why don't you address it? Now that you know what the concern is, address it in some other way of language.
846 MS COURTEMANCHE: Yeah. I think you have addressed a valid concern and we would like to try to address it in reply.
847 Thank you.
848 THE CHAIRPERSON: Okay. Now, with these schedules you have caused massive confusion. My analyst doesn't understand them.
849 THE CHAIRPERSON: Hopefully, somebody can walk us through and explain to me what you have done here?
850 MR. KNIGHT: So I guess that is me, and I apologize for causing confusion. I was obviously trying to address the questions from yesterday.
851 THE CHAIRPERSON: Yeah.
852 MR. KNIGHT: So the schedule that we are looking at, at the bottom, the bottom right-hand corner, CP Analysis, Corus Entertainment.
853 THE CHAIRPERSON: Yes.
854 MR. KNIGHT: Essentially, the first schedule is not new. This is actually on the public record. This is a determination of our historical CPE rate for each of the individual services as well as on a group basis, 28.82. This is on the record.
855 Essentially, what we have done is for each of the services gone through and figured out what our historical rate is without the CTF licence top-up that the Commission has said that we can adjust our -- or we can request to adjust our historical rates for.
856 On the next page what I have attempted to do and, in talking with your analyst, I may have slightly mistaken how the policy was supposed to work, but I have taken that 28.82.
857 I have taken that historical rate and I have plugged it in to say, you know, what would our CPE be over the life of the new term, 2012 to 2016, using that 28.82 rate and using the formula put through by the Commission -- I think it is paragraph 51-52 -- so therefore using the historical rates on each of the services including the conventional stations.
858 And I'm going to get in the next schedule into the difficulty on the conventional stations. So you can see the conventional stations are historical. It's 27.24.
859 So this would under the 28.82, using our COL amendment revenue projections, we come to $637. That's at the bottom right side under the total CPE, $637.
860 So on the next schedule what I have then done is plugged in the 30 percent rate that the Commission has said would put out there as the initial rate. So instead of using our historical rate of 28.82 we said, "What if we put a 30 percent rate into the formula in the policy?"
861 The issue there is if you go right over almost to the right side, the second-last column or conventional, using the understanding of how I understood the formula, our conventional would end up with a 61 percent CPE rate, you know, going forward using the 30 percent overall.
862 Obviously, for us, 61 percent on our conventional stations when we only do local news programming we couldn't possibly meet this condition, obviously.
863 But what it does show is on the bottom again, on the bottom right hand the most important, you know, thing to the Commission is the amount of CPE that we would spend over the term and how much we are projecting. You can see it's 660 million. So that's close to what we had originally proposed under our fixed group rate which was 657 million.
864 So we are not opposed to using -- you know, I don't want you -- but you know I mean it's close enough that 3 million is not a big number using this formula.
865 But the issue here is the conventional. We just cannot have a CPE rate on our conventional stations at 61 percent.
866 So on the next page what I have then attempted to do is to shift some of that CPE spending over to our pay and specialty services by going back to the standardized rates that we put forward in our proposal.
867 So you can see under the highlighted in yellow line, "CPE Rates Proposed" so this goes again to the 31 for our specialties, 30 for our pay and 15 for our Cat Bs. And the conventional rate we have just brought it more in line to what the historical is which is around 27 percent.
868 And then you see on the bottom right hand again, the total CPE over -- we are projecting over the life of the term -- is $657 million, which is again very close to what we had originally proposed.
869 So again I apologize --
870 THE CHAIRPERSON: What did you do between page -- the previous one where you had the 61.32?
871 And I can understand you have a problem with it. So how did you bring it down to 27 percent?
872 MR. KNIGHT: It is by shifting some of the spend, that total spend, the formula --
873 THE CHAIRPERSON: The conventional into --
874 MR. KNIGHT: Right, into the specialties and pays. So we are saying, you know, we can do it as a group, right, but we just can't do it on a conventional.
875 So we want to shift some of that over to the specialty and pays. That's all this whole analysis is trying to show.
876 THE CHAIRPERSON: Len, you are my numbers man.
877 COMMISSIONER KATZ: In 2010-167 we provided flexibility of 25 percent from the conventional to go into the specialty.
878 MR. KNIGHT: Right.
879 COMMISSIONER KATZ: And 100 percent to go the other way. I gather you have taken more than 25 percent out of conventional based on the formula?
880 MR. KNIGHT: Well, I think that flexibility is based on what the initial rate is. So for example, if you left it at the 61 percent you could only then transfer 25 percent of that requirement.
881 COMMISSIONER KATZ: That is right.
882 MR. KNIGHT: Right?
883 COMMISSIONER KATZ: Yes.
884 MR. KNIGHT: So that still would only bring it down to, you know, 45 percent which you know again --
885 COMMISSIONER KATZ: Yeah, so your unique situation which we talked about even before --
886 MR. KNIGHT: Right.
887 COMMISSIONER KATZ: -- was that you don't have very much in the way of conventional to play with.
888 MR. CASSADAY: We don't have very many hours of airtime that we program with anything other than local news.
889 THE CHAIRPERSON: And plus, your conventional are not really your conventional. They are really CBC, right?
890 So I mean the programming you don't -- it's not like Shaw, et cetera, et cetera who control their programming. You don't control your programming, most of it.
891 MR. CASSADAY: CBC provides us the --
892 THE CHAIRPERSON: Yeah.
893 MR. CASSADAY: -- provides us with the program and that's, quite frankly, why these stations are successful. We have got a quality and affordable service and we provide them with a great local newscast which connects us to the community. That is the format.
894 COMMISSIONER KATZ: Now, there is no LPIF in here because you don't qualify for LPIF?
895 MR. KNIGHT: We do qualify for LPIF.
896 COMMISSIONER KATZ: You do?
897 MR. KNIGHT: But it is not included in our regular revenue, right, at the moment. It is about $2.5 million per year.
898 COMMISSIONER KATZ: Okay, so that would be in -- have to go in there as well.
899 MS COURTEMANCHE: Okay. Do you want us to redo the numbers with the --
900 THE CHAIRPERSON: What you are saying is you can live up to 30 percent per group to see the internal division. You want to have an exception given that you only have three small stations and that they are affiliates. They are actually not your own but the overall outcome will be the same.
901 MR. CASSADAY: Yeah, and that's the point we made earlier. We think we can get to where you want to be.
902 We just -- we don't want to -- I can't remember the exact numbers, Mr. Chairman, but I think we were going to take the Cancon spending on our local affiliates from like $2.5 million to $8 million which would have automatically rendered those services no longer financially attractive.
903 So if we can have the flexibility in the schedule we will get to the same point in terms of Cancon but we won't kill a business.
904 MS COURTEMANCHE: Tous les chemins ménent à Rome, Monsieur le Président.
905 COMMISSIONER KATZ: But you don't want us to lock in. I mean on the last page your proposal was to use this 30 percent and 31 percent. You don't want us to lock in.
906 You want the flexibility to move it around between any one of these specialties, do you not?
907 MR. KNIGHT: Absolutely, and that's why standardizing them is really not a huge change because what we spend on each service, in each pay and specialty service because you can transfer 100 percent of it, the actual rate is not a factor in it.
908 THE CHAIRPERSON: And what is the second sheet?
909 MR. KNIGHT: I am sorry?
910 THE CHAIRPERSON: You gave us two sheets.
911 MR. KNIGHT: Yes. So the other sheet goes to address one of the --
912 MS COURTEMANCHE: The pay issue because you asked us if we were to remove pay. Because one of the questions you asked yesterday is what would happen if the pay weren't in? So we thought we should answer that as well.
913 MR. KNIGHT: Right. And we did this --
914 MS COURTEMANCHE: So we did the homework.
915 MR. KNIGHT: The same analysis but without pay.
916 MS COURTEMANCHE: But just to be clear, we would accept -- you know, notwithstanding the 100 percent flexibility, we are accepting that we would have fixed CPEs on our speciality and pay services individually just to make sure that we are correct on that, right?
917 MR. MAAVARA: Yeah, the point is that we can't indiscriminately move.
918 There are instruments in the policy and in the COLs that would prevent us from moving -- shifting all of the money from one place to another, so it's not -- theoretically it's 100 percent but practically it isn't.
919 And the reason it isn't is because we still have to fill the Canadian content buckets for each channel, and that's a cost. We still have to meet some of the other conditions; for example, PNI for each channel.
920 So what the group licensing is doing for us is it gives us some flexibility but there is still going to be considerable spend on CPE on each channel.
921 COMMISSIONER KATZ: But it's at your choosing and not at our mandating.
922 MR. MAAVARA: No, but there is an element of CRTC mandate because, as I said, there is still a Canadian content element, for example. That's point number one.
923 So, for example, if you have to do a certain percentage, you are going to have to pay for the programming to fill that. So there is a cost associated to that.
924 And then the second part is PNI. There is also a cost associated with that.
925 So 100 percent flexibility is only theoretical in the sense that theoretically you could say, "I'm not going to spend any money on Treehouse on Canadian content" but in fact you can't because you have to fill the Canadian content bucket.
926 Plus, you have to meet some of the other conditions that relate to that channel. So the benefit of group licensing for us is the ability to move stuff around and be strategic, but we are not throwing the baby out with the bathwater with respect to a particular channel.
927 COMMISSIONER KATZ: When you say you have to have a certain amount of exhibition, what are you referring to?
928 You still have to do something. Like for argument's sake, if I look at the last page here, you have VIVA -- and we talked about VIVA -- your calculated CPE is 42 percent. You are proposing 31.
929 If we said we could care less if it's zero as long as you make up that shortfall somewhere else on this page, why could you not do that?
930 MR. MAAVARA: Because you would still have to -- from an accounting standpoint you would still have Canadian programming and unless you were getting that programming at zero cost there would be a cost associated with it.
931 COMMISSIONER KATZ: What if you choose to have an all American station with -- or European with no Canadian programming at all on VIVA?
932 MR. MAAVARA: That would be contrary to the licence.
933 COMMISSIONER KATZ: The licence...?
934 THE CHAIRPERSON: VIVA is a Cat A.
935 COMMISSIONER KATZ: Okay.
936 THE CHAIRPERSON: Or it was until --
937 MS COURTEMANCHE: Yes. Cat As and Cat Bs have --
938 THE CHAIRPERSON: -- half an hour ago.
939 MS COURTEMANCHE: Yeah, Cat As and Cat Bs have station requirements.
940 COMMISSIONER KATZ: So that --
941 THE CHAIRPERSON: It's late in the afternoon. I'm sorry. I am totally confused now.
942 Can we get you to start from basically -- you want to count pay and specialty services, I gather, where we said no, right? That's what it was.
943 MS COURTEMANCHE: You haven't said no.
944 THE CHAIRPERSON: Oh. We have asked you to exclude it because we wanted to see what the differences were.
945 And you are giving me these two sheets and you basically -- on either one of them you can make 30 percent CPE, if I understand it, as long as there is -- you call it 29 but you sort of hinted broadly that 30 can be acceptable, that it's the conventional part where you have the problem.
946 And if conventional, as you put it here, is tagged at -- what is it, 27 et cetera --
947 MR. KNIGHT: Correct.
948 THE CHAIRPERSON: -- and you can distribute it over the specialty, you can live with it. That's what you --
949 MS COURTEMANCHE: Right; correct.
950 MR. KNIGHT: Sorry, to be very clear, on the second schedule, the one without pay obviously, you know, we would assume that our pay would you know fall under the normal historical spending rates because if they are outside of the group licensing process obviously they still have to have their licence renewed. Correct.
951 THE CHAIRPERSON: Is it more advantageous for you to be -- for them to be in or out?
952 MS COURTEMANCHE: It is more advantageous to the system to have them in group licensing.
953 Bill will explain that to you.
954 MR. KNIGHT: Yeah. It is actually because our historical rate is 28.82 and what we are proposing is to actually go up to 30, we are actually proposing an increase in our CPE spending over the next five years.
955 When you include pay with that, that pay is accepting some of that additional spending. So now we have taken pay out of the mix, right, and we lose some of that additional you know one point -- you know 1.8 or 1.8 percent that pay and specialty would -- or excuse me, the pay stations would have picked up.
956 So therefore, now the total if you added our pay and pay assets under their historical rates as well as our new group rate, we would be $13 million less in CPE over the five-year period.
957 MS COURTEMANCHE: If we were to exclude pay the system would lose $13 million. So by including pay in group licensing the system is better off by $13 million.
958 THE CHAIRPERSON: Doesn't pay have its own obligations?
959 MS COURTEMANCHE: Yes, but you would go to the historical.
960 THE CHAIRPERSON: Okay. Now I get you.
961 MS COURTEMANCHE: Okay.
962 MR. MAAVARA: The second thing you are getting is the PNI which doesn't exist now.
963 And going back to my point about not being able to move is under the PNI, 75 percent of it is independent. So that independent producer unless they are going to give us that content for nothing, is going to charge us for something.
964 So if we have to spend on PNI in a certain place and 75 percent of it is coming from a third party, there is a cost associated with that.
965 THE CHAIRPERSON: Okay.
966 And who -- Peter...?
967 MR. CASSADAY: At the risk of moving -- staying in this thing, the other thing that I would like to make the Commission think about in this particular aspect of the discussion is Encore.
968 You know, when I think about one of the biggest opportunities that we have with group-based licence, it's to take the CPE allocated to Encore and again use that judiciously to trigger the creation of new content. Because right now, because that money is specifically targeted at a classic movie channel, the only thing we can do is invest that money in programming with a copyright at least three but more often than not five years old.
969 So we are not advancing anything with that. It's just a push into increasing expenditures on classic movies. This flexibility we get at Encore is huge in terms of being able to make a difference.
970 THE CHAIRPERSON: No, I will come back and let my colleague go first.
972 COMMISSIONER MENZIES: No, carry on. I don't think there is much left.
973 THE CHAIRPERSON: Before when we had Rogers who had basically the flipside of you, they have next to no specialty and they are a fairly large conventional. Their problem is that using the group-based licensing puts obligations on them.
974 I don't want to go into numbers or something -- that they feel they can't live up to and especially in terms of PNI but also in terms of CPE, because only having three specialties that count, the Sportsnet being outside. And they mentioned you and said you would be absolutely the flipside of it because you have lots of specialties and only those three small conventional.
975 Now, the fix for you is relatively easy because you are not violating sort of the integrity of the group program because the overall group CPE is still there. The overall PNI is there.
976 You are just asking us in effect to allow a greater internal reallocation than we do because otherwise the conventional gets overloaded.
977 MR. KNIGHT: That is correct.
978 MR. MAAVARA: Their charts were, I have to say quite persuasive, except that there were so many variables that were missing from the model that they were using that in fact they are almost irrelevant.
979 What do I mean by that? First of all, there are not four companies that are each deriving a billion dollars of revenue. In fact, we are much less than that, as you know.
980 The second thing is that you can't just put up on the chart specialty and have them all the same. In fact, and as we said in a recent submission that we made to the Commission with respect to the linkage rules in the proposed changes to the BDU rules, Corus, in fact, over the last few years has launched more Category 2 services than anybody.
981 In fact the entire Canadian industry combined has not launched as many channels as we have. And there you are starting from zero in terms of subscribers and the build in terms of the Canadian content spend and that sort of thing is low by definition.
982 So you can't just take the chart and say that's Corus and that's Rogers and that's CTV and that's Shaw. The analysis has to be much deeper than that.
983 So we certainly agree with them from the perspective that everybody is different; absolutely.
984 As far as the rest of their analysis, I won't make a positive or negative comment with respect to their particular point about themselves, just that the comparator is not as reliable as they made it look.
985 MR. KNIGHT: And I apologize. I wasn't here this morning but I do have a copy of their thing.
986 THE CHAIRPERSON: Yeah.
987 MR. KNIGHT: Essentially, they have said that we are at a 34 percent group rate which obviously would then skew this entire analysis. So I have shown you in our analysis that we are at 28.82 as a historical rate. I don't know where they came up with their 34 percent rate.
988 MS COURTEMANCHE: Well, they arbitrarily put 25 and 35. That's why.
989 THE CHAIRPERSON: No, whatever.
990 All I am saying is sort of trying to set this whole group system up, our thinking was we wanted to lock in the Canadian spending so that that wouldn't decrease and make sure we get -- you use your expertise to get the most out of that money. You know you have to spend it.
991 We give you a break on the exhibition agreements and we abolish it as a priority programming, et cetera. But overall, we wanted to put -- have everybody play in the same ballpark with small variations.
992 What you are asking here is a small variation because you have it -- but I saw what they did. To me they in effect asked for a less than 30 percent rate. So that's not an adjustment as far as I can see. That is just completely changing the system that we have, the underlying -- you are accepting basically the underlying approach to it that we have done.
993 MR. CASSADAY: I think you asked the million dollar question this morning: What is your spending on foreign?
994 I mean what they said is on an operating level we are losing a lot of money.
995 THE CHAIRPERSON: Yeah.
996 MR. CASSADAY: Now the question is, why?
997 So in terms of solutions it's either reduce money here or make more money here or come back to us as, I think, Commissioner Katz suggested, and come back to us in two years and we will look at it again. We would like to help you get off your knees here.
998 But you know again, our whole basis here, you know, we are just about -- we would like the system to do great. But I don't think any of us feel capable of prescribing formulas for anybody else. We had enough trouble figuring it out on our own.
999 So I don't know what works best for them but, you know, I do understand that City is a particular problem in this analysis because of its historical financial position.
1000 THE CHAIRPERSON: The group rates are subject to the small adjustment you make. We are in the same ballpark as you.
1001 What about PNI? What would be your PNI for over the five years?
1002 MR. MURPHY: We are recommending that we have a 5 percent PNI, consistent with the notion of the level playing field.
1003 THE CHAIRPERSON: We were very careful and we said specifically at least 5 percent above revenue over the licence term. Obviously, we don't want to lower what you have done so far.
1004 If I understand, your historical PNI standing is way above that, right? You are close to 10 percent and that, interestingly enough, is what the Directors Guild, the Actors Guild and all -- CPME, et cetera, all suggest it should be 10 percent PNI for you give your historical spending.
1005 MR. CASSADAY: We can come back to you with a proposal on that.
1006 As Bill said to you earlier, the problem we have, we are at -- I think he said 9.8 percent -- 9.2 -- but basically it's all on YTV and on Movie Central.
1007 So if we wanted to say -- I mean one of our big strategic challenges right now is on W where we are suffering serious ratings erosion. We would like to really invest in that service and get back into number one position and that might include investing in drama.
1008 There may be other solutions to that but if -- you know, we simply are asking for the flexibility. I certainly think, as Bill also suggested, we are not talking about ramping down from 9.2 immediately. So I'm sure there is a position here that we can come to that will make both parties happy.
1009 THE CHAIRPERSON: Why don't you do that and come back to us on both the PNI, the CPE now that you know exactly what you require in order to have the flexibility, you know.
1010 I think those are all the things that I need.
1011 MR. CASSADAY: Yeah.
1012 THE CHAIRPERSON: Tom, anything you want to...?
1013 COMMISSIONER PENTEFOUNTAS: No. If you are going to re-evaluate your PNI, that will be great.
1014 THE SECRETARY: Sorry, please.
1015 COMMISSIONER PENTEFOUNTAS: Sorry.
1016 You know, sharpen those pencils and try and come up and get creative on the PNI. It's important, especially Canadian drama. You are doing a great job but should at least maintain where you are at.
1017 The idea of the PNI and the CPE was to bring people up and in your case we are bringing you down, or we are allowing for a floor that's below where you are at now and that's just not where we want to go with Canadian content and Canadian drama especially.
1019 THE CHAIRPERSON: And to put it quite bluntly, to give you a break on this conventional, et cetera, I think the quid pro quo for that is that you come out at 30.
1020 COMMISSIONER PENTEFOUNTAS: One last question.
1021 You mentioned of CBC affiliates that you are doing a nightly newscast, is that correct, and you are receiving 2.5 million a year on LPIF to do that, to contribute to that newscast? Is that correct?
1022 MR. ELLIS: That is correct.
1023 COMMISSIONER PENTEFOUNTAS: And what are you -- what are your expenses as per that newscast on a yearly basis?
1024 MR. ELLIS: Our Canadian programming expenditures which bulk news is about 3.3.
1025 COMMISSIONER PENTEFOUNTAS: And 2.5 of that you are getting from LPIF?
1026 MR. ELLIS: Correct.
1027 COMMISSIONER PENTEFOUNTAS: Okay. Did you get it? Did you get it?
1029 THE CHAIRPERSON: Okay. I think that's all then.
1030 Let's -- we have to go for a moment formally back on the record so that my counsel can read out the undertakings so we will share it with the world.
1031 Okay. So if you want to reconnect us, Madam Secretary?
1032 THE SECRETARY: Yes, so this concludes the in camera session.
--- Upon recessing at 1609, to resume immediately in public
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