ARCHIVED - Transcript, Hearing 27 June 2011
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Volume 5, 27 June 2011
TRANSCRIPTION OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION
To review its regulatory framework relating to vertical integration. Broadcasting Notice of Consultation CRTC 2010-783, 2010-783-1 and 2010-783-2
140 Promenade du Portage
27 June 2011
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
To review its regulatory framework relating to vertical integration. Broadcasting Notice of Consultation CRTC 2010-783, 2010-783-1 and 2010-783-2
Konrad von FinckensteinChairperson
Stephen MillingtonSenior Legal Counsel
Eric BowlesLegal Counsel
Stephen DelaneyHearing Manager and Senior Advisor, Broadcasting
140 Promenade du Portage
27 June 2011
- iv -
TABLE OF CONTENTS
PAGE / PARA
30. Corus Entertainment Inc. (int. #65) 989 / 5668
31. Stingray Digital Group Inc. (int. #19) 1043 / 5945
32. Asian Television Network International Limited (int. #39) 1080 / 6160
33. Fairchild Television Ltd (int. #52) 1088 / 6196
36. Association des producteurs de films et de télévision du Québec (APFTQ) (int. #12) 1107 / 6296
- v -
PAGE / PARA
Undertaking 1042 / 5938
--- Upon commencing on Monday, June 27, 2011 at 0900
5662 THE CHAIRPERSON: Good morning. Bonjour. Madame la Secrétaire, commençons.
5663 THE SECRETARY: Good morning.
5664 For the record, the Commission has been advised that WOW TV, the Canadian Media Production Association, CMPA, and Evanov Communications Inc. listed on the agenda for today will not be appearing at the hearing.
5665 We will begin with the presentation by Corus Entertainment Inc.
5666 Please introduce yourselves and your colleagues and you have 10 minutes for your presentation.
5667 Thank you.
5668 MR. CASSADAY: Good morning, Mr. Chairman, Commissioners and Commission staff, my name is John Cassaday and I am the President and Chief Executive Officer of Corus Entertainment Inc.
5669 With me today is Sylvie Courtemanche, Vice-President, Government Relations; and Gary Maavara, Executive Vice-President and General Counsel.
5670 Thank you for the opportunity to appear today. You have our written comments. You have asked that we speak to specific questions that were set out in the agenda for the hearing that was sent to Corus.
5671 In the next 10 minutes we will speak to some of these and would be happy to respond to the others during question period. In the interest of time we will not repeat the questions asked by the Commission, but we have included them in the written text of our remarks as guidance. We trust this is satisfactory.
5672 As the panel is aware, Corus is both a creator and broadcaster of content. We also have a corporate, but not an operating affiliation with Shaw Communications, a BDU. So we are vertically integrated, but mainly in program production and broadcasting.
5673 An expression that we often use at Corus is that a problem well defined is a problem half solved.
5674 So our first approach is to ask: What is the problem with vertical integration and is the system meeting the goals of The Broadcasting Act?
5675 The Act was proclaimed into force almost 20 years ago on June 4, 1991.
5676 We examined the Ottawa television market in 1991 and compared it to the market as it exists today. The details are set out in Appendix "A" of these speaker's notes.
5677 In 1991, the residents of this city could subscribe to only one cable distribution system and they could access from 40 to 60 channels depending on where they lived in the city. Ku band satellite services, with their small dish receivers, were still years away. Large "C" band services with their three-metre dish were really only a rural service at that time. So 20 years ago, there were only two distribution systems, over-the-air and cable, in Ottawa.
5678 Today all consumers here can access four or more BDU services delivered by either cable, telco or satellite operators, as well as over-the-air. Appendix "A" sets out the current Rogers cable offering in Ottawa which ranges from 500-plus channels to over 600 if we count HD. Added to that linear content are the menus of on-demand programming which expand the range of content available.
5679 It is safe to say that residents of the Nation's Capital have access to the best that the television world has to offer. This is probably true for the vast majority of other Canadians as well. So the system is meeting the mandate set out in section 3 of the Act. The programming is certainly varied and comprehensive. We also have many more players in all sectors, content creation, broadcasting and distribution, than ever before.
5680 Of course, among the other developments in the last 20 years are the arrival of the internet and the advent of digital interactive technology in its many forms. The impact on Canadians of these new technologies changes each day.
5681 A fundamental change is that the traditional value chain of content creation and distribution is being battered in almost unimaginable ways.
5682 We included a chart in our submission, which is included for convenience as Appendix "B" to these notes.
5683 This chart demonstrates that the roles of content creator and distributor are blurred, as are the discrete types of media. Digital technology simply changes everything.
5684 The result is that Canadians can create, distribute and access content in ways that were not imagined by the drafters of the 1991 Act. The term "vertical integration" once had a specific meaning, but now it is less clear what it means.
5685 The parade of companies that have appeared before you in the last week is illustrative of the complexity that the Commission must sort through. Each company is distinctive and each plays a variety of roles in the digital interactive value chain.
5686 Vertical is also probably a misnomer now because the value chain is no longer linear and the ability to define the elements is increasingly difficult. The discussion is made even more complex by the fact that the "pipes" and spectrum channels that are the basis for the Act are augmented by other new factors such as proprietary software and hardware platforms and rights management tools.
5687 Not surprisingly each company has a unique perspective and corresponding set of recommendations. Meanwhile it is important to recognize that the core Commission mandate, that is, how best to achieve the broadcasting objectives, - cannot be ascertained on the particular strength or viability of any particular company, but rather it should be based on an assessment of the strength and viability of the system as a whole.
5688 The new market puts a variety of pressures on our costs and revenues as the fragmentation increases. Linear television will continue to be the core of value creation for producers for the foreseeable future but we cannot ignore how the market is evolving. It takes enormous resources to make an impact in this fragmented market.
5689 Much of the debate of this hearing and at the Television Group Based Licensing process was about programming. At the heart of the Canadian system is the preservation of a discrete copyright market for Canada, regardless of the platform.
5690 This foundation element allows us to provide the best in programming to Canadian audiences and provides us with the revenues and returns to support Canadian producers.
5691 As platforms become more fragmented and rights more complex, we need to have players in the Canadian system who can amass the resources to buy and to produce the programs that Canadians want and will pay for.
5692 In this context, the answer to the Commission's first question is yes; vertical integration is beneficial to the system because of the need for scale to compete in this new media global market. We have a more diverse system than ever in our history as the Ottawa market illustrates. In our view, the vertical aspect is less important than the need for strong players.
5693 If not companies like Corus, then who will be able to compete against the global giants for rights and the attention of Canadian consumers?
5694 But even at the size we are, Canadian companies are still relatively small on a world scale.
5695 We attach as Appendix C a chart of the market capitalizations of a variety of Canadian and foreign players to illustrate the financial power that we are up against. We need the strength to meet the goals of the Act to safeguard and strengthen the cultural, political, social and economic fabric of Canada.
5696 The alleged problems with vertical integration must be assessed in this context.
5697 MR. MAAVARA: On the matter of access to exclusive rights it is important to remember that copyright owners generally have broad freedoms to distribute content in the manner in which they feel is most beneficial to them.
5698 The new Terms of Trade Agreement, especially section 6, which places constraints on the rights that broadcasters can acquire, is a good illustration of this. For convenience we have attached section 6 as Appendix "D" to our notes. It shows how Canadian broadcasters won't be allowed to acquire certain rights.
5699 This agreement underscores the fundamental notion of copyright, which is that the owner has the right to decide where rights are placed.
5700 So a rights owner could assign linear TV rights to a Canadian licensed broadcaster and other rights to another player for other platforms.
5701 Should a copyright owner be able to assign rights exclusively to an entity that would require consumers to also acquire a particular technology?
5702 The practical reality is that it already often occurs on devices such as gaming platforms. Part of the consumer purchase decision is about content as well as about the hardware. And the Apple iPad has different apps than does the RIM Playbook.
5703 So what does the Commission do in this context?
5704 We suggest an approach which recognizes that content that is placed in a linear channel format on traditional regulated distributors should be accessible by all new platform operators, such as mobile, for distribution in that form. This is also one of the fundamental tenets of the Terms of Trade Agreement.
5705 However, where the content is new, different, or served up in an on-demand platform, that new platform should be able to acquire exclusive rights. This will provide mobile and other new platform operators with an incentive to acquire or to create new content. It also avoids the problem of whether the Commission has the legal right to determine how copyrights or new platforms should be regulated.
5706 MS COURTEMANCHE: On the matter of protection for content distribution by independents, Corus has many of the same concerns about the consequences of the implementation of the Digital Migration Rules as you have already heard from others.
5707 Some of our channels, and hence programming rights, will lose some access to subscribers. Our solution is to keep improving them so as to make consumer demand the best reason for carriage. We have also launched more channels than anyone else in Canada in the last three years, so our distributors can count on us for new products.
5708 This brings us to the linkage rules and to some of the recommendations that you have heard in the last week. In our view, the debate has been too insular.
5709 Preventing companies like Corus from launching new channels will not help the Canadian broadcasting system. We are only going to win Canadian consumers by offering them compelling services.
5710 If we base our regulatory framework primarily upon the objective of maintaining the viability of the Canadian independent broadcasting sector, we will decrease the system's ability to compete in the global media environment for access to rights.
5711 It is also clear that a linkage 3:1 ratio or even a 1:1 ratio is unrealistic based on history. Foreign services are invading our territory and taking our rights. Asking BDUs to find matching independent Canadian launches before they can even contemplate their own channels is not the recipe for success. This is a fatal model for Canadian broadcasting and it cannot be sustained.
5712 We strongly urge you to reconsider the real impacts of the linkage rules. They hurt companies like Corus and they won't create markets for channels that would not otherwise succeed in a highly fragmented market.
5713 The Commission can rely on a variety of existing and effective tools to ensure fair access to carriage by BDUs. These existing tools are:
5714 - the carriage entitlements of OTA, section 9(1)(h) and Category A services;
5715 - the preponderance policy as enforced by section 6;
5716 - the undue preference rules;
5717 - the Commission's licensing jurisdiction over BDUs; and
5718 - the Commission's historical ability to "raise its eyebrow" as we discussed at the Group-Based Licensing hearing.
5719 The Commission's decisions on the TELUS and Bell complaints against TVA and Quebecor are a clear and laudable illustration of the undue preference rule at work. As the matter of content access joins carriage as an issue, this decision establishes the ground rules that the Commission still has an ability to manage the system.
5720 MR. CASSADAY: Mr. Chairman and Members of the Commission, we hope that we have answered at least some of the questions that you have posed.
5721 In the 20 years that the Act has been in place, we have certainly developed a strong Canadian television system. But the world is changing. Digital technology poses complex challenges where even defining the problem is difficult.
5722 A fundamental premise must be that you allow Canadian players to achieve the scale to compete. Integration is one such method. And you still have a variety of effective tools to manage the rules of access.
5723 However, constraining any company's ability to compete is a flawed approach. The linkage rules are an example of a rule regime that might have worked in a closed market but does so no longer.
5724 In a digital market it could simply serve to foster the entry of new players over which you will have no regulatory or persuasive powers at the same time as it prevents companies like Corus from offering new content for Canadians to enjoy.
5725 Thank you and we look forward to your questions.
5726 THE CHAIRPERSON: Thank you. It is always a very measured approach, which I appreciate.
5727 I gather on the exclusivity rule, which really sparked this proceeding, you are basically in the same boat as Rogers. You say anything that is created for linear television should also be available on mobile or Internet; anything that is created elsewhere should have whatever rights people want to attach to it?
5728 MR. CASSADAY: Yes, that's correct.
5729 THE CHAIRPERSON: Now, you mentioned -- when you go through the summary of ex ante rules you don't mention at all the proposal that various people have made about reverse onus. Right now, reverse onus only applies in some areas and not in others.
5730 There have been people before us who suggested we should have a reverse onus across the board. Certainly for the vertically integrated companies, given their access to information and power, if a claim is raised, which is most probably going to be a very difficult decision for a small guy to do because, as you well know, time works on the side of the integrated players and you don't want to harm a relationship or face retaliation later on, so let's think long and hard before -- but if it's so grave that you feel you have to raise it, then there should be a reverse onus. So once you establish preferential, then it's up to the other side to demonstrate that it's not self-serving or undue --
5731 MR. MAAVARA: I guess our first response to that is that Corus hasn't relied on the system as it exists now, so we don't have a lot of experience with how the undue preference process works.
5732 THE CHAIRPERSON: But that speaks for itself. You are one of the biggest BDUs in the company corporately. Everybody knows you are not program-wise. I appreciate that, but still for you to suffer undue preference is going to be a rare case.
5733 MR. MAAVARA: Well, I guess we theoretically could suffer an undue preference with respect to another large player.
5734 But I guess at the end of the day in terms of the process, the reverse onus does have some attraction because at the end of the day the party that in a sense has the most facts has the ability to put it on the table much more easily.
5735 But, you know, we don't have strong points of view on either side of the equation.
5736 THE CHAIRPERSON: You certainly do have strong views on linkage rules, and let me explore that with you a bit, because the 3:1 rule which we put in two years ago, which will enter into effect in September, is already lowering from the 5:1 to 3:1 given the recognition that in the digital age there will be a lot more channels available, et cetera.
5737 But the fear that a lot of independents have expressed is that the 3:1 rule basically will lead to an accommodation between the four large vertically integrated groups, and fine, you launch your own channel, you launch three others from somebody else, so you launch a Rogers channel, a Bell channel and a Vidéotron channel and you are home free or whatever.
5738 So it really doesn't do anything for independents and there is a great fear that having four large integrated channels will lead to a preponderance of homogeneity of channel line-ups, et cetera, and that the independents, whose only way to survive is by differentiating themselves and picking programming that nobody else has, the only way they can do it is if we have such a rule as 3:1 where we provide that one of the three has to be an independent.
5739 What is your answer to that?
5740 MR. CASSADAY: It is true that we need to be sensitive to the interests of all parties in the system, including the smaller independent broadcasters.
5741 One of the points that we have tried to make, however, is that the key to the success of the system is to continue to grow, and, quite frankly, the independents represent a very, very small portion of the system.
5742 Corus has been the most innovative programmer in recent times. As Gary mentioned in his opening remarks, we have launched more new services than anyone else, and yet our distribution remains lowest from a penetration perspective on the Shaw systems than any other system, which in fact almost is a reverse form of discrimination.
5743 Our services have been very well received on the other major providers, but because of the linkage rules we haven't been able to get the access that we have been looking for on Shaw.
5744 So our point here is that we think that there are enough provisions in the current Regulations to protect independents but that the linkage rules in fact prohibit those that are best funded and most capable of making a contribution to the system from doing so.
5745 THE CHAIRPERSON: But the linkage rules you are talking about are the existing rules. As I pointed out, as of September 1 they are already being lessened, going from 5:1 to 3:1. So that, if anything, should allow you to launch more channels.
5746 MR. CASSADAY: Yes. Even 3:1, in our view, is constraining to our growth potential.
5747 THE CHAIRPERSON: You didn't say anything about the two questions we had at the end about skinny basic and reintroduction of benefits on BDU sale.
5748 MR. CASSADAY: I will touch on the skinny basic and leave the second one for Gary or Sylvie.
5749 As it relates to skinny basic, we would strongly encourage you to avoid that. As a number of interveners have already mentioned, there has been no overwhelming consumer demand for skinny basic.
5750 The implications of instituting skinny basic, however, in our view, could be very detrimental to the system.
5751 If you were to consider for a moment one particular service, that being Treehouse, Treehouse currently benefits from being available on extended basic in many, many homes across the country, has access to approximately 6 million households, and as a result makes a huge contribution to the development of independent production, despite the fact that we have no ad revenue on that service, simply by virtue of the subscriber fees that we are able to collect.
5752 If we were to lose that by virtue of a skinny basic and perhaps available only to the 1-2 million households that have children age 2-6, it would result in a significant diminution in our ability to contribute to the development of independent Canadian production.
5753 That is just one example. Bottom line is virtually every specialty service in the country would be detrimentally impacted by a move to skinny basic, and specialty and pay are, I think -- and we would all agree -- making the most significant contribution to the development of Canadian programming in independent production in the system.
5754 THE CHAIRPERSON: But speaking for consumers, why should childless couples, why should people without children in their house have to pay for, what do you call it, Treetop or something if there is no demand in the household for it?
5755 MR. CASSADAY: It's a very good question and it's obviously the dilemma that we're having to face here in this hearing. And again, what we're basically talking about is what I call the greater good and my view is that since there has not been a significant demand by consumers for such a service, the impact of pushing us into skinny basic would be very detrimental to all specialty programmers in Canada.
5756 THE CHAIRPERSON: But you are fully aware of the very large outcry from consumers about cable rates and feeling that they're too high?
5757 MR. CASSADAY: I am, but I don't think skinny basic will correct that. I think that for a very small percentage of people who could probably get quite similar service available on over-the-air it will address it, but I think, again, to the point of the greater good it would be a significant detriment to the system.
5758 THE CHAIRPERSON: Okay.
5759 MR. MAAVARA: On the subject of benefits, our fundamental position is that the benefits regime should be set aside except where the original premise for the benefits regime still exists, for example, with respect to over-the-air spectrum, whether it's either television or radio, and the Commission well understands that the reason for benefits was to make up for the fact that there was not a call for general applicants for a particular piece of spectrum.
5760 Having said that, we understand that subject has been explored in the past. In our view then there should be some form of cap as we're moving up the scale on the value of these transactions.
5761 One of the things that Corus has recommended in the past is that there be some kind of stepped benefits, so that the numbers don't become astronomical. So, if the price tag of the transfer is huge, the benefits would be more predictable. You could have some kind of step basis, sort of the reverse of how we pay income tax, for example.
5762 THE CHAIRPERSON: We have a funny situation. We have 6 percent benefits on radio, 10 percent on TV, and zero on BDU. It is historical, but I don't think there is the sort of logic that you can divide it this way.
5763 One could argue, rather than reintroducing it on the BDU, why don't you just do it uniformly throughout for all three of them, at 6 or something like that.
5764 I just do not understand why we treat one element of the broadcasting system differently, if the benefits are all aimed at the same thing, creating Canadian content.
5765 MR. MAAVARA: I guess it gets back to spectrum, but if we are in the situation of bidding, how does 3 percent sound for both, and maybe a small increment --
5766 THE CHAIRPERSON: We can agree on the number, all I meant was to treat them the same. I just don't get it. Not having been around 20 years in this industry, I just do not understand the logic of having different elements treated differently.
5767 MR. MAAVARA: The logic of the BDUs -- and I venture to say that it should apply to specialty and pay services, as well -- is that we are not dealing with the finite asset, being spectrum. Effectively, the BDU market and the specialty and pay markets are wide open, so why should there be -- and you referred to it earlier last week as a tax on the transfer.
5768 Now, there are some benefits --
5769 THE CHAIRPERSON: I was very careful. "Akin to" I said.
5770 MR. MAAVARA: Akin to a tax. Fair enough. I am not going to hold you to any constitutional elements of what the CRTC can or can't do.
5771 The point is, simply, that we had an initial benefits regime that was based on that scarcity problem, and, really, with the inadequacy of having a system where, if every time the Commission came to the end of a licence, or to the transfer of a licence, you would have to call for new applicants, which is the fact in the United Kingdom, for example, we decided in Canada that we weren't going to do that, again along the lines of what Mr. Cassaday said, because there was a greater good in that.
5772 Having said that, the system has kind of gotten away from itself a little bit. Personally, as someone who has been at this for about 35 years, I have never understood the difference, why there is 6 percent on one and 10 on the other.
5773 As I said, maybe it should be 3.
5774 THE CHAIRPERSON: The problem with the greater good is, we all agree on it, but we all define it differently.
5775 Let's leave that for another day. Steve, do you have some questions?
5776 COMMISSIONER SIMPSON: Thank you very much, Mr. Chair.
5777 Good morning. It's always great to see you guys.
5778 I would like to try to understand a little bit about the generality of both your written and your oral presentations, starting with the comment that the broadcasting industry is more diverse and bigger than ever, in terms of available product to the consumer, and you also say, I think, in your written presentation, that because entities are getting bigger, they are getting more capable of supporting and producing content in this country. Yet, at the same time, I am hearing that the go-forward recommendation from Corus is that, because these companies have demonstrated the ability, because of their size, to compete in the global market, we should be getting our foot off the brake pedal with respect to restrictions on how and where you spend your money.
5779 Is that correct?
5780 MR. CASSADAY: Generally, yes, that's correct. Our view is that we need less regulation to compete effectively.
5781 The basic premise of our entire presentation -- actually, there are two things: one, the argument for the creation of larger media companies, and secondly, for the relaxation of the linkage rules.
5782 But as it relates to the first comment, why we think that the creation of larger media companies is in the best interests of the system, it relates to the fact that, in our market, we are entirely dependent on having access to strong U.S. content. Why? Because Canadians are going to have access to that content. Whether it is owned by a Canadian owner or not, that material will be available to them.
5783 The U.S. content effectively supports the exhibition of our Canadian content.
5784 So our ability to continue to get the attention of major U.S. studios to acquire content is dependent on our size and scale. If we are a rounding error, they will ignore us.
5785 Recently, in the case of our negotiations with Nickelodeon, an important supplier to our children's programming assets, we acquired the rights to their digital assets. We didn't really need them, because we had sufficient digital rights on our own account, but we were concerned that if we did not acquire them, they would begin to exploit them in Canada on their own, and that, ultimately, the linear television rights would be available only through non-regulated platforms, as well.
5786 So we wanted to control all of that IP, and the only way we could do that was to pay for it, and it was only our size that allowed us to step up and make that investment.
5787 COMMISSIONER SIMPSON: Also in your written presentation you went to great lengths to make a point about the ratio of foreign services to domestic services that were coming on line. I think you cited Commission statistics that indicated that something like 30-some-odd foreign services had come on line -- I am using that term descriptively -- within a three-year period, yet only 7 domestic services had come on line.
5788 Can you help me unpack that statement? Are you making that statement in relation to your position on the need to detach the three-in-one policy and other policies that are restricting BDUs from being able to -- the linkages, essentially.
5789 Are you making that point specifically with respect to linkages, or are you trying to make another point about the fact that Canadian services are not, for other reasons, being able to get carriage?
5790 MR. CASSADAY: The point that we are trying to make is, while we are debating whether five-to-one or three-to-one -- or, in our case, the view that any linkage requirement is unnecessary -- there are a bunch of players coming in the backdoor with absolutely no constraints.
5791 We believe that we need to be mindful, not only of competition domestically, but we have to be mindful of the fact that we are living on the North American continent, with global flows of content available to all Canadians. We should be doing everything in our power to maximize the potential of the domestic players to meet the need for new and innovative services.
5792 We did more than anyone in the last number of years, but we would have done far more than we did if we weren't encumbered by linkage rules.
5793 And even with three-to-one, we are not able to get new services distributed on the platforms that we need at this particular point in time.
5794 COMMISSIONER SIMPSON: Not to belabour the point, but I am still having a bit of a problem understanding the comment you made with respect to Canadian services not being able to get adequate funding to get launched. Going into that a little further, it would seem that there is a preponderance of foreign services right now, with or without the linkage rules. There are more than enough Canadian services to be able to match the foreign service to domestic service requirements, and I am trying to understand -- we have licensed what seem to me to be hundreds of Category B applications in the last few years, and given that there is such a preponderance of foreign services coming in, I am still struggling with why there is difficulty with the Canadian Category Bs getting carriage.
5795 MR. CASSADAY: Commissioner Simpson, I think the question probably could be stated in another way, that is, why are these Category Bs not getting launched.
5796 One could say, "Is it a distribution problem or is it an investment problem," and it would be my opinion that many of these services are not being launched because the applicants that acquired these Category Bs do not have the capital to sustain the launches.
5797 It wasn't that long ago when simply being granted a licence by the CRTC meant that you were profitable immediately. Those days are gone. Now this requires an investment, just like in the real world, where you could be looking at three, four, five years of negative cash flow before you get into profitability.
5798 So the question is: Are these services not being launched because they can't get distribution, or are they not being launched because they do not have the financial capability to withstand the losses.
5799 We would argue that it is the latter, not the former.
5800 Perhaps you could say, "Well, if they were granted an exorbitant licence fee for an insect channel, they could launch," but the fact of the matter is, as the Chairman said, that is getting more and more difficult to pass on. There has to be value there, and in a lot of the niche Category B services there is not sufficient consumer value to justify a sport-type licence fee. As a result, they are sitting there waiting for -- I don't know what.
5801 We have launched those services. We have experienced significant losses to get them into a profitability situation. Cosmopolitan Television was a classic example. We started that service three years ago. We lost money for three years. This year we are profitable. It looks like it is going to be a winner, but I don't imagine that there would have been a whole lot of our competitors that would have been able or willing to withstand the losses in the early years.
5802 COMMISSIONER SIMPSON: Thank you.
5803 Corus is a company that seems to have guessed right at a lot of your corporate decisions, and it seems, in my mind at least, to be nicely poised to be able to go in just about any direction, as the market dictates.
5804 I found it interesting that you had, again, in your written presentation, which I found quite challenging and compelling -- with respect to the BDU industry, you seem to be alluding to the fact that video on demand is going to be the avenue that the BDUs are going to be relying more and more on, in your judgment, to keep the consumer engaged in linear programming.
5805 I was wondering if you could expand on that a bit.
5806 This is from page 3 of your written presentation.
5807 MR. CASSADAY: Consumer behaviour, of course, is changing as a result of having access to content on multiple platforms. Clearly, their expectation is going to be the same on television. The ability to be able to watch what you have paid for through your subscription when you want it is, I think, an important part of the value equation going forward.
5808 As a result, what we have attempted to do is secure video on demand rights for virtually all programming that we acquire so that those BDUs that are interested make it available to our customers. We have not generally used that as a lever to increase price but, rather, to continue to justify the value equation that we have in place.
5809 Our premium pay movie service is just such an example. We have been successful in reducing churn to some degree by virtue of us making that content available on demand and as a result increasing the value that the consumer perceives in that service. If you want to watch Game of Thrones Monday night instead of Wednesday night, it's there for you. That, we think, is an important part of competing successfully in this new environment.
5810 OMMISSIONER SIMPSON: I noticed that you have a video on demand licence but you mean, as you have indicated, you are not using it. Is this because -- if I heard you correctly -- that you negotiated video on demand rights for the content you acquire but you are using the BDUs video on demand services?
5811 MR. CASSADAY: That's correct.
5812 COMMISSIONER SIMPSON: Okay, great.
5813 So what is the role of linear TV in the future?
5814 MR. CASSADAY: Linear TV is the end-isle display and in a supermarket it's the window in a major department store. It's the main promotional device for any program which gets mass distribution.
5815 And then once you have got people committed to viewing it again on demand and access to that program on other platforms it's simply a way of keeping them engaged and continuing to build viewership.
5816 COMMISSIONER SIMPSON: And what is the role in your mind of the OTA going forward, given that you know, your presence is very heavily weighted to the specialty area and digital distribution?
5817 I ask this question because of questions I'm going to ask in a minute regarding, you know, the importance of local television and how you feel that's going to be enhanced or threatened.
5818 MR. CASSADAY: There are a number of different ways of looking at the value and role of OTA going forward.
5819 One is its role as a local broadcaster and the ability to provide local content and information. I think that is as compelling today as it ever was.
5820 We certainly see this in radio. We look at the reasons why radio has continued to be successful. We would put that solely on the basis of its relevance to local consumers.
5821 The second big advantage that over the air has is its ability to simulcast and that provides huge advantages to advertisers that we can't provide with specialty and that is access to big audiences available only by virtue of being able to acquire North American rights and simulcast them.
5822 A great audience for us on a typical specialty channel is a couple hundred thousand viewers. A big audience on an over the air service with simulcast can be three, four million. Makes a huge difference to an advertiser looking to launch a new product or announce a new benefit in an existing product, one where we can't compete effectively.
5823 So I think there is a valuable role for OTA both in terms of meeting local needs and in terms of addressing a demand on advertisers to reach mass audiences quickly.
5824 COMMISSIONER SIMPSON: I hear you very clearly in that you are trying to give everyone a heads up that the digital realm -- you know the direct hit of content to a consumer based on digital delivery is not only in your mind where things are going but that also that the entire industry has to be more mindful of the fact that technology is going to be driving new opportunities with respect to advertising.
5825 I'm thinking particularly with respect to local TV that within the digital distribution platform of BDU that there is an opportunity to deliver more local content into a marketplace that isn't necessarily coming over the air.
5826 I saw this with your application a few months back with Local 1 which was a very innovative idea that I think challenges the regulatory system as it currently exists.
5827 On the comment that you made to the Chairman with respect to rights negotiations, could you elaborate for me on what you were saying with respect to exclusivities?
5828 I heard you say that you feel that exclusivities should not -- are problematic for a broadcaster because when you are negotiating for content you are looking for maximum utilization of that investment going back into all types of platforms. And your recommendation was instead for certain types of platforms to have the program producer deliver a different kind of content that's related to the core product and that could be made on an exclusive basis.
5829 Is that -- did I hear you correctly on that?
5830 MR. CASSADAY: It's a complicated issue because, on the one hand, our system is based on not withholding content to any distributor and now we are into a realm where we are looking at new devices that don't necessarily generate revenue at this particular point in time.
5831 So if you are Bell and you have invested a substantial amount in the Olympics and you want to parlay some of that investment into value-added for your mobile subscribers, how do you justify making that available to others and at what price point?
5832 We could say as we have recommended in our proposal today that whatever is available in a linear fashion to traditional broadcasters through traditional BDUs be made available on mobile, we are saying it's still going to create huge problems in negotiating a fair price for that given the rights that have to be incorporated into your thinking.
5833 But at the end of the day there is still going to be an opportunity for that rights holder to innovate by perhaps offering different angles, more depth. It's going to evolve overtime as the dollars become more real in that realm.
5834 Gary, I don't know if you want to add any comments to that?
5835 MR. MAAVARA: Yeah. We were just trying to get at the notion of, if something is running on a linear-regulated system and in a sense a new digital platform comes along which sort of replaces that then there should be access. The difficulty, though, with the other types of digital platforms and the other ways of packaging information through those platforms is that it gets hugely complex as to what it is you are talking about.
5836 I think, to guide the Commission, one of the areas you might want to look at is the copyright tariffs for music as they are now unfolding for internet or the Copyright Board has a difficult task of defining what is the difference between streaming, download to own and that sort of thing.
5837 One of the great aspects to the terms of trade discussion was, as we sat in the room discussing it with the producers was, that we had an enormous difficulty in defining those things.
5838 When you look at the terms of trade agreement you will see that there is provision in there for review every six months and a potential for changing the agreement every couple of years. And the reason that we collectively agreed to do that was because it's so difficult to define what a right is in the context of this new technology.
5839 Looking at it from a consumer's standpoint, consumers traditionally have felt that they should have access to streams of content and I think everybody recognizes that. But the world is now evolving to a new place and people are increasingly accustomed as a consumer decision process that, "I'm going to buy a particular device and it has certain attributes and it's also going to have certain software" and part of the purchase decision is effectively whether you want that content or not.
5840 Anybody who is in the gaming realm, if you are a parent like myself and are trying to decide between the Nintendo and all the rest of that stuff, of course the kids say "We should have it all". But if you have to make a decision it's very difficult because the kids can only do this game on that device, et cetera.
5841 That's the challenge that we have with rights and that's why I think the terms of trade agreement tries to come to grips with that by giving the copyright owner the right to lever certain rights without the broadcaster being able to get at it.
5842 But in terms of the greater good, as John described it, and the access to rights and the Olympics was discussed last week, then maybe if it's available to everybody in a certain platform and it's going out the same way and if it's on a cell phone in a streaming fashion, that should be available to anyone. You shouldn't have to go out and buy a different cell phone to do that.
5843 But if they are packets of information value, as John described, then the rights holder should have the right to benefit from the exclusivity which of course drives the value. That's the essence of copyright.
5844 COMMISSIONER SIMPSON: That's very helpful.
5845 I had asked -- I can't recall which organization that was before me last week, but I had asked that question specifically about pure play companies such as, you know, when mobile and others who might not otherwise have a chance to get into a particular event, you know something like the Olympics.
5846 And if I'm putting words in your mouth please correct me, but I think what I hear you saying is that the terms of trade agreement is a work in progress and you wouldn't be entirely opposed to the notion that certain types of product if derived specifically for other platforms that are complementary to, but not necessarily identical to the main rights holder, wouldn't bother you.
5847 MR. MAAVARA: Yes, but there is a quid pro quo to that, and that is that if a new platform are making the argument that they should have an access right because they are providing diversity of distribution, then of course the quid pro quo is what is the public benefit?
5848 This hearing isn't about OTT but that, of course, is one of the fundamental elements, is that if you are going to establish a new delivery system for what traditionally has been delivered elsewhere and you are doing it effectively in sort of the same way, then what are you going to put on the table in terms of contribution?
5849 The Corus position on this is that we need to be able to build our own business, which is what we discussed early. Second, we need to eliminate some of the constraints on our ability to grow such as the linkage rules and that sort of thing.
5850 So that new platform that wants to come in and take advantage of the Commission saying, "You are going to get access" has to be prepared to do some of the things or all of the things that the existing platforms are doing, otherwise it's an asymmetrical system and you are effectively hurting the regulated system and benefiting the non-regulated.
5851 COMMISSIONER SIMPSON: Thank you. I just have two more questions.
5852 Going to item 4 in your six point bit six dissertation on recommendations for the Commission to look at, you had indicated in item 4 that:
"We recognize a private media enterprise success is what will lead to a stronger cultural system, not the current system of progressive fees, conditions and tariffs."
5853 So following through on the thinking that I presume you are saying that, you know, less regulatory intervention and policy will be a good thing, a two-part question: What will happen without mandated obligations? You feel that the large vertically integrated companies are going to rise to the occasion and spend in a manner that is appropriate to the needs of the cultural system.
5854 Is that what you are saying?
5855 MR. CASSADAY: The basic premise is that success will result in a greater contribution to the system. If you were to -- let's just assume hypothetically that we end up at somewhere around a 30 percent spend level coming out of group based licensing, well, clearly 30 percent on a $10 million business is more than $30 million on a $5 million business.
5856 So the thought in the past has been we are going to make sure we get the contribution by "taxing" these players. Our view is that if we flourish there is more in the system than a tax on success. Let's let these companies grow and as a result of growing they will make a more significant contribution on a linear basis to the system.
5857 COMMISSIONER SIMPSON: I guess as a top line idea, to get from where we are now to where you think we should be, that transitionally perhaps some of the mandated obligations going forward that revise what we have now would be to put more money into promotion -- particularly I'm thinking outside of the country -- to content that allows the size of the vertically integrated company to be able to market content on a more global basis rather than just domestically.
5858 Would that be something that would --
5859 MS COURTEMANCHE: Is it to allow a portion of the CPE contribution to be used instead of for programming for marketing.
5860 Is that what you are talking about?
5861 COMMISSIONER SIMPSON: I'm trying to work with the notion that a bigger company has not only the ability to spend but the ability to leverage assets and I think one of the things that I'm picking up as an undertone to your submission is that the Canadian marketplace is a finite market by population size and by capital expenditure ability and the link, and yet it seems that the cultural industry is always wanting to break out beyond the borders of our country and perhaps a larger vertically integrated partner would provide Canadian content the opportunity to do that and at the same time give you a bigger bang for your buck.
5862 MR. MAAVARA: I guess the short answer is yes and those new areas are not only in promotion but also in some of the strange things that people like myself get excited about, but I can assure you that some of the members of the management committee at Corus don't get so excited about and those are things like rights management tools.
5863 The Commission, to its credit, allowed us to establish, as part of our benefits on one of our purchases the funds that we were going to use to develop basically an industry consortium to be developing semantics and taxonomy rules, that's an example which is going to help the entire industry, both domestically and I think Canada can lead the rest of the world.
5864 COMMISSIONER SIMPSON: So you are saying that you wouldn't be adverse to having an appetite to get onto the promotional bandwagon of content if you had better control of the rights?
5865 MR. CASSADAY: Yes, and if we got recognition. I mean there are a variety of different areas of our spent that the recognition would be helpful.
5866 COMMISSIONER SIMPSON: Okay. Okay.
5867 Last question. I'm hearing pencils on mics.
5868 This is a specific question to page 9 of your written submission. You said:
"VOD and pay-per-view should be taken out of the proposed section 19 and recommend that the Commission examine a new administrative regime for the on-demand system."
5869 What are you referring to with respect to section 19? This is at the bottom of page 9.
5870 MR. MAAVARA: This is with respect to the linkage rules.
5871 COMMISSIONER SIMPSON: Okay.
5872 MR. MAAVARA: Under the definition now those assets form part of the definition, we are just suggesting that they should be taken out.
5873 COMMISSIONER SIMPSON: Okay. Thank you very much. That's it.
5874 THE CHAIRPERSON: Len...?
5875 COMMISSIONER KATZ: Thank you. Good morning. Just one question.
5876 You say in your opening remarks today, on page 2, you have a corporate but no operating affiliation with the BDU. I understand that completely.
5877 Last week there was discussion about MFNs and whether MFNs should be or should not be used as basis for comparison purposes between independents and BDUs vis-à-vis vertically integrated companies.
5878 Can I get your comments on that, given that you are in that situation where you do have a controlling shareholder who also controls the BDU as well?
5879 MR. CASSADAY: I guess a couple of things.
5880 First of all, I would say that MFNs had become common practice in the industry. That would be number one.
5881 Number two, MFNs are in the eyes of the beholder. So our MFNs really talk to the total value chain.
5882 What we are most driven by is transparency. We always assume that any customer could ultimately be acquired by another customer and that ultimately our terms of trade with that customer have to stand up to scrutiny. So we treat everybody fairly, but we treat everybody differently.
5883 As it related to independents, I'm not sure why they should be treated any different than anyone else. What every distributor wants to know is that they are getting as good a deal as the next person and I think that's fair.
5884 COMMISSIONER KATZ: I think the issue was more of an independent being levered because the deal they have made with another BDU subsequent to yours is lower and therefore they are being approached to come back and adjust the deal they have already struck a year ago, two years ago, whatever the case may be.
5885 So to the extent that Corus has entered into a deal with Shaw Cable and then subsequent to that another deal arises as well, that is where the issue of MFNs come in, is my understanding.
5886 MR. CASSADAY: Well, ultimately that particular programmer would have to decide whether or not he wants to go back and revise his previous deal or hang tough. Hang tough is something that we did, for example I mentioned earlier on Cosmo. We waited a long time to get distribution for Cosmo until we could get it on terms that were acceptable to us and that would be fair to all distributors. We weren't prepared to "give it away" to get access. Again, by virtue of our size we were able to withstand that.
5887 The other comment I would make Vice-Chair, Katz, is that, as I said earlier, there are many ways of creating value for a BDU, they are not all necessarily guaranteeing them $0.08. It can be about promotion, it can be about on-demand content. There are a number of different ways of creating value for the parties and, again, I think this is just part of the normal commercial relationship that exists between the programmer and the distributors.
5888 COMMISSIONER KATZ: Let me ask the question a bit differently.
5889 Assuming you have an MFN with Shaw Cable, can Shaw Cable, from your perspective, use that in negotiating a deal with somebody else?
5890 MR. CASSADAY: I don't know how they could. Perhaps you could give me an example of how they might want to do that.
5891 All of our deals are different. We have services that we think are grossly underweight relative to the share of tuning that we are getting, but that's the deal that we made. We have others where arguably we are getting more than we are justifying in terms of the audience that we are delivering. So every deal is different.
5892 COMMISSIONER KATZ: And you wouldn't justify the rate that you have with Shaw as a basis for why you can't make a different deal or a better deal -- better deal I guess -- with another cable company that is not vertically integrated with yourself?
5893 MR. CASSADAY: All of our deals are different, but all of our deals would stand to a test.
5894 So if for example one of the major BDUs bought another one I would feel very comfortable that we could justify the arrangement that we have with them relative to the company that they just acquired, but it might not necessarily be the same rate per service, it could be based on the provision of VOD rights, it could be the basis of multi-platform rights, it could be any number of nuances that create a value in that relationship.
5895 COMMISSIONER KATZ: Okay. Thank you.
5896 THE CHAIRPERSON: Candice...?
5897 COMMISSIONER MOLNAR: Thank you. I have a couple of questions regarding dispute resolution.
5898 First of all, I heard you say that you have never participated or your have never sought dispute resolution from the Commission. Have you used third party arbitration, independent third party arbitration?
5899 MR. CASSADAY: No, we have not.
5900 COMMISSIONER MOLNAR: You haven't. You have just worked it out.
5901 MR. CASSADAY: That's right.
5902 COMMISSIONER MOLNAR: Okay.
5903 Under the approach where there would be a reversal of onus it is possible you may be in dispute resolution in the future if that approach was adopted. I would like your views on a couple of things that have come up by independent distributors.
5904 The first is the notion of a standstill provision. You have likely heard their discussion that the standstill needs to encompass the whole portfolio of services that they would received from the broadcaster.
5905 What are your thoughts on that?
5906 MR. CASSADAY: My colleagues may have other views, but from my perspective what I would say is that perhaps some sort of provision for a standstill would be appropriate but that it should be time limited.
5907 Ultimately the only strength that a programmer has is their ability to withhold programming, so I would think that it would be imprudent to deny them that right, but I think there should also be a process in place which encourages the parties to reach an agreement.
5908 MS COURTEMANCHE: I mean, we would strongly encourage the status quo with respect to the withholding of rights. Right now it's tied to your access right, so where you have access rights you can't withhold your signal. That's fair because you have this foothold in the system.
5909 Whereas the free market rules, which is the Cat "B"s, you do not have access right, then you have taken away our last leverage. That's where you can withhold your signals. We think that that should be sustained, that regime that currently exists, as to when you can withhold your signal.
5910 MR. MAAVARA: Commissioner Molnar --
5911 COMMISSIONER MOLNAR: I'm sorry because I think I just heard two different responses to the question.
5912 MR. CASSADAY: You heard an intelligent response from Sylvie and a spontaneous response from me. I would encourage you to accept Sylvie's response.
5913 MS COURTEMANCHE: He said subject to being contradicted at the beginning.
5914 COMMISSIONER MOLNAR: Okay. Thanks.
5915 MR. MAAVARA: I was just going to make the observation that in negotiating annals there is the strategy known as the row boat strategy, which is you have two people with drills in a row boat and one of them says to the other, "I can drill a hole in this boat more quickly than you can".
5916 I think going forward as we look at the market that we are in, when we are facing the challenges, as it were, outside of the market, when we get into these situations of withholding signals and effectively abusing consumers by taking away something they have become accustomed to or not offering them something that they were accustomed to, we as an industry collectively have to start with the consumer and say: How are we going to keep people inside of the system and how are we going to keep them happy?
5917 The problem with these kinds of disputes is that effectively we are kind of defying that challenge and it's one of the reasons why Corus hasn't -- we have always taken the approach that we have to get a deal with the carriers as opposed to trying to go outside of the process.
5918 COMMISSIONER MOLNAR: Okay. Thank you.
5919 MS COURTEMANCHE: John's point is right when he says, you know, if you are going to institute a standstill provision it has to be time limited.
5920 You know, I'm guilty of being the first person to write the dispute resolution rules that the Commission is working and at that time I didn't know anything about dispute resolution and I thought the worse thing that we could do is make things go on forever. We shouldn't necessarily try to find the right decision, but a swift decision. Palm tree justice.
5921 So the first time there was a dispute before the Commission, it was a rate decision between a specialty service and a medium sized cable operator and it came before the Commission and basically by the time we had the complaint and the time the Commission ruled on it, two weeks had elapsed. We did baseball arbitration. You know what, which one was the more reasonable? Didn't try to find the right answer. And that was it, two weeks later the position was gone. I can tell you, one party was really not happy, but it was in order to encourage people to come to your resolution of your disputes.
5922 So I guess if you are going to have a standstill provision it should be tied to very, very swift resolution and you should understand that in such a circumstance you may not have the exact right decision, but that you are looking to swift resolution as opposed to the exact right decision.
5923 I think that's where things have perhaps gotten bogged down, because the Commission is concerned that they have to get the decision that's in the best public interest, but I think the public interest might be better served if you encourage people to come to resolution and the best way to do that is, I think, palm tree justice.
5924 COMMISSIONER MOLNAR: Just one more follow-up. The other thing, as well as standstill there has been discussion about a head start on new services -- you mentioned you launch a lot of new services -- and the proposal is that it needs to be launched with at least one independent BDU or that you can't launch with simply an affiliated BDU.
5925 You are okay with those sorts of proposals as well?
5926 MS COURTEMANCHE: It's a Cat "B". You know, we have said that you should be able to negotiate the best terms that you have because you don't have access right.
5927 John explained that we didn't launch with certain operators or distributors of Cosmo because we couldn't get the right deal and we waited until we could. So that would prevent us from doing that, you know, to negotiate the best deal that's in the best interest of the service and to make sure that, you know, it doesn't turn into a viable service.
5928 So you tie it to your access rights. If you have access rights, absolutely, you know, you shouldn't be able to have a head start; if you don't, then you should be able to go out in the free market and negotiate the best possible deal.
5929 MR. MAAVARA: I think the Commission's approach on the Bell Canada complaint and the TVA Quebecor was very instructive in terms of how that sort of thing could be dealt with and also in terms of the Commission's power. I think it is very persuasive decision.
5930 COMMISSIONER MOLNAR: Thank you.
5931 THE CHAIRPERSON: Given your overall approach to linkage rules I assume you are not in favour of this no head start rule that has been advocated by some people?
5932 MR. MAAVARA: You have come back to the same problem, which is you have to go looking for someone else to come on board in order to launch a new product and that is sort of counter intuitive.
5933 THE CHAIRPERSON: That's what I assumed you would say. Okay. Thank you.
5934 You didn't mention at all the code. You heard me all last week talking about the need for a code and I asked people to put their hand at drafting one because it would be useful to see.
5935 Now you, like Rogers, are occupying one of the more moderate centre-based approaches rather than some of the extremes that we heard, so if you have the time and would devote your energies to doing a draft code the way that we have asked, or principles, or whatever you want to call it, but in effect that when we have disputes, which we will have more undoubtedly in light of vertical integration, what should be the way we approach it would be very helpful.
5936 MR. MAAVARA: I guess certainly we will take a very close look at it, but I think we would start from the premise, which I think is the underlying theme of our appearance this morning, that there are a lot of elements of that code already there for the Commission and to guide the players in terms of what they can and can't do.
5937 THE CHAIRPERSON: I can only ask for your help, you don't have to give it.
5938 MR. MAAVARA: We will certainly undertake to do that.
5939 THE CHAIRPERSON: Okay. Thank you very much. Those are all our questions.
5940 We will take a 10-minute break now.
5941 MR. CASSADAY: Thank you.
--- Upon recessing at 1007
--- Upon resuming at 1021
5942 LE PRÉSIDENT : O.K., Madame la Secrétaire, commençons.
5943 THE SECRETARY: We will now proceed with the presentation by Stingray Digital Group Inc.
5944 Please introduce yourself and your colleagues and you have 10 minutes for your presentation. Thank you.
5945 MR. BOYKO: Merci.
5946 Bon matin, Monsieur le Président, Monsieur le Vice-président, Conseillers et adjoints. Mon nom est Eric Boyko. Je suis Président et Chef de la Direction de Stingray Digital Group.
5947 Avec moi, aujourd'hui :
5948 - à ma droite, Éric Albert, Vice-Président Exécutif; et
5949 - à ma gauche, Rob Braide, Vice-Président, contenu et affaires réglementaires.
5950 Fondée en avril 2007, Stingray est une nouvelle entreprise canadienne de radiodiffusion, maintenant présente dans plus de 65 millions de foyers et 45 pays dans le monde. Avec plus de 130 employés, dont 65 sont des ingénieurs, développeurs, graphistes et designers, Stingray est aussi à l'avant-garde des nouvelles technologies et des nouvelles plateformes de diffusion, et nos différents services sont présents sur ce que nous appelons communément " les trois écrans. "
5951 En comparaison avec la majorité des autres entités qui participent à cette audience et qui opèrent principalement dans l'industrie réglementée au Canada, Stingray est habituée à exploiter ses activités aussi dans des marchés non ou peu réglementés. Par contre, Stingray n'aurait possiblement pas le succès qu'on connaît aujourd'hui sans l'apport du CRTC dans la réglementation de l'industrie de diffusion canadienne.
5952 Le message clé que nous voulons communiquer aujourd'hui est que le Canada a besoin de plus de diffuseurs indépendants. Comment y arriver? En offrant une certaine protection aux entreprises de diffusion grâce à des mécanismes comme les règles d'accès et d'assemblage et la résolution accélérée des conflits entre les diffuseurs indépendants et les distributeurs.
5953 An important note is that if a BDU, Corus or Astral for example, had purchased the Galaxie pay audio service, it is unlikely that they would have exported the product internationally as they are focused solely on the Canadian market.
5954 The same situation exists in the United States where the pay audio service, Music Choice USA, owned by Comcast, Cox and Time Warner, only operates in that market.
5955 Access rules make a company like Stingray Digital feel comfortable about investing in a business like Galaxie, which ends up in tens of millions of homes around the world. Additionally, we know that should a BDU launch a pay audio service, Galaxie would have to be carried by them.
5956 Stingray's services include the Galaxie and Music Choice International pay audio services, which are carried in 25 million households in North America, Europe, the Caribbeans and Africa. We also own The Karaoke Channel, which is in 50 million homes; Concert TV, available in 30 million U.S. households; and Stingray 360, a leader in sensorial marketing solutions for businesses, and we are in about 25,000 locations in Canada.
5957 The scale that Stingray has developed has allowed the company to amortize fixed costs and invest more money in R&D, thus helping our partners, such as the Canadian BDUs.
5958 We are here today because the system works. We would like to demonstrate to the Commission how a combination of access rules and a strong, vertically integrated communications industry has allowed a company like Stingray to prosper.
5959 We will also offer cautionary notes with an eye to the future of the independent broadcasters in Canada.
5960 MR. ALBERT: Stingray Digital has made six acquisitions in just over four years. A strong entrepreneurial drive combined with a young, energetic workforce and supportive management has seen all of those acquisitions integrated into the company successfully.
5961 As mentioned previously, Stingray invests heavily in research and development in order to remain at the cutting edge of technology required to deliver compelling music services to customers around the world.
5962 Most recently, Stingray's acquisition of Music Choice Europe on April 4, 2011 has transformed Stingray into a truly global music broadcaster. These accomplishments have resulted in Stingray becoming a leader in interactive music distribution worldwide and an exporter of Canadian technology and culture.
5963 We are strong supporters of emerging Canadian musicians and through our Rising Stars Canadian Content Development program we are actively working with those artists to bring their work to the public on Canadian stages.
5964 Through its 50 Canadian-produced music channels, Stingray gives exposure to more Canadian artists in more genres than any other broadcaster in the world. Additionally, Stingray's various services contribute millions of dollars in rights and royalties to Canadian creators and artists every year.
5965 MR. BOYKO: We support light-handed regulation combined with free market competition. This stimulates innovation, promotes entrepreneurial spirit and produces the best product offering for consumers.
5966 The regulatory framework should be designed to be minimally disruptive to market forces while at the same time providing opportunities for independent players to bring innovative products to market and have a chance to succeed against large vertically integrated competitors.
5967 Stingray is not opposed in principle to vertical integration. Canada needs large, well-financed domestic players in order to compete in an increasingly borderless communications and entertainment environment.
5968 However, vertical integration needs to be balanced against the public policy objective of ensuring that Canadians receive content from a variety of sources and have access to a range of voices and perspectives.
5969 We believe the system can be further enhanced to ensure that diversity of voices and opportunities for new entrants are protected and enhanced in the new era of vertically integrated market leaders.
5970 Galaxie and Stingray are the successes they are today because the Commission has had the foresight to create a regulatory framework that allows vertically integrated broadcasters to develop the strength and scale they need to compete against international media conglomerates while at the same time providing the protections needed by smaller independent broadcasters to survive alongside large integrated competitors.
5971 It is the combination of a wide variety of players and diversity of voices that together make Canadian broadcasting the enviable success it is today. We urge the Commission to maintain that balance going forward.
5972 We would like to express Stingray's opinion on the topic of skinny basic which has been discussed on several occasions during these proceedings.
5973 Stingray believes that by mandating a skinny basic offering, the Commission would actually be going against the free market approach we believe is important to foster innovation.
5974 As demonstrated by several parties, skinny basic effectively exists today with some distributors offering basic packages for as low as $9.95 per month. As such, we do not believe that the Commission's involvement in determining the contents of a basic package would benefit Canadian consumers at this time.
5975 MR. BRAIDE: Our suggestions on how to maintain the balance that Mr. Albert referred to are the following.
5976 While Stingray suggested in its original submission that it wanted to see a 1:1 linkage rule, after listening to the comments by various interveners we have decided to change our ask to a 3:1 linkage rule amongst category B channels whereby one of the three would be independent and two would be unaffiliated. We feel this is a more reasonable solution that responds to the concerns of the vertically integrated companies in terms of content acquisition while protecting the independent broadcasters.
5977 We believe that the access rules for pay audio should be amended to require carriage of one independently owned pay audio service if a BDU carries a pay audio service with which it is affiliated or if it carries any pay audio service owned by a vertically integrated BDU. This will ensure that independent pay audio services such as ours always have fair access to BDU customers. Once we have access, we are fully prepared to compete on an equal footing with all operators, large or small.
5978 One of the greatest threats to Galaxie today is not from vertically integrated licensed domestic competitors but from unlicensed over-the-top music applications that completely bypass the regulatory system.
5979 While Stingray will express its opinion on this topic in its forthcoming submission on the OTT situation, in order to ensure the continued viability of Canadian pay audio services we recommend that the Commission amend the Regulations to implement a "buy-through" requirement similar to that adopted by the Commission for general interest, third language, ethnic Category B services, so that vertically integrated BDUs that choose to distribute over-the-top music applications or services -- such as Slacker, Pandora and others in a similar fashion to what the Commission has already developed upon the licensing of Sirius and XM satellite services -- may do so only to subscribers who also subscribe to a Canadian pay audio service licensed to an independent broadcaster.
5980 In order for independent operators to achieve the scale necessary to make meaningful long-term contributions to the Canadian broadcasting system they need an opportunity to develop a relationship with BDU customers and their subscribers.
5981 As a result, we are recommending that genre protection should be provided for all independently owned Category B specialty services vis-à-vis vertically integrated BDU/broadcasters for three years from the launch of the service or until the service achieves at least one million paid subscribers, whichever is earlier.
5982 This would prevent a vertically integrated BDU from launching a service that is directly competitive with that of an independent broadcaster during the applicable time period but would not prevent independent broadcasters from launching services that are directly competitive with each other during that time period. This would allow independent broadcasters to compete on a more level playing field and allow their services a greater chance of success. In other words, a light regulatory touch combined with a strong free-market approach.
5983 In any undue preference or disadvantage complaint involving an independent broadcaster and a vertically integrated undertaking, we believe that the vertically integrated undertaking, including the programming services of the vertically integrated undertaking, should have the reverse onus of proving that their actions were not undue.
5984 Where there is a dispute between a vertically integrated BDU and an independent programming undertaking with respect to terms of carriage or packaging, the implementation of any change including removing a service from the BDU's channel line-up should be prohibited pending a final decision of the Commission resolving the dispute.
5985 M. ALBERT : Lorsqu'une entente de distribution entre un distributeur intégré verticalement et un diffuseur indépendant arrive à échéance, les conditions de l'entente existante devraient continuer de s'appliquer jusqu'à ce qu'une nouvelle entente soit conclue entre les parties ou que la Commission rende une décision suite au processus de résolution des conflits.
5986 Dans le cadre des mandats de vérification, les entreprises de distribution intégrées devrait avoir l'obligation de fournir sur demande certaines informations provenant des terminaux numériques concernant l'utilisation des services des diffuseurs indépendants.
5987 Finalement, Stingray croit fermement que la publication par le Conseil, sur une base individuelle, de l'information financière des diffuseurs indépendants pourrait créer un environnement inéquitable pour ces derniers lors de la négociation des ententes commerciales avec les entreprises de distribution de radiodiffusion. A cet égard, nous supportons donc le traitement confidentiel de l'information financière, sur une base individuelle, des diffuseurs indépendants.
5988 M. BOYKO : En conclusion, Stingray Digital soumet une fois de plus que nous supportons une industrie solide de radiodiffuseurs et de distributeurs verticalement intégrés, tout en assurant le maintien d'une industrie de diffuseurs indépendants toute aussi solide afin d'assurer le maintien de la diversité des voix dans l'industrie de la radiodiffusion au Canada.
5989 En employant une approche de réglementation légère et peu encombrante, tout en encourageant l'innovation et la possibilité pour des joueurs émergents comme Stingray de croître tant au Canada qu'à l'étranger, le Conseil pourra atteindre les objectifs de la Loi sur la radiodiffusion et promouvoir un système de radiodiffusion canadien soutenable et exportable.
5990 Nous vous remercions de l'opportunité que vous nous avez donnée afin d'exprimer notre point de vue sur le sujet de l'intégration verticale. Nous pourrons maintenant répondre à vos questions. Merci.
5991 THE CHAIRPERSON: Thank you.
5992 You make a curious suggestion regarding Category B. You say if we also have a Category B for an independent, then that should have general protection for three years so they can get up and running.
5993 The whole idea of genre of B is that it doesn't have a genre. You can do a genre in B, whatever you want, as long as you don't encroach on an existing protected genre.
5994 So how would this actually work?
5995 MR. BOYKO: No, we did this more for the independents' market. So if Stingray decides to launch The KARAOKE Channel, I think that we should have at least protection for the vertically integrated BDUs to compete against us, or if we want to launch Concert TV as an example. So I think by giving three years you just create a window for new entrants.
5996 THE CHAIRPERSON: Yes, but I mean Category B is unprotected. You are now trying to protect it for the first three years and --
5997 MR. BOYKO: But only --
5998 THE CHAIRPERSON: Okay, but on what basis? You have the licence to launch it. Take your example, The KARAOKE Channel. Why couldn't Shaw do the same?
5999 MR. BOYKO: What we are saying is that independents in the market can compete but I think it's difficult for us to compete against the BDU that carries us. If you have a very successful new product, then the BDU will automatically take that product.
6000 So independents can compete against each other so it creates a marketplace, but we need protection for three years regarding the vertically integrated companies.
6001 THE CHAIRPERSON: But also implicit in that is that we only license independents in that genre. So you want to launch The KARAOKE Channel, Astral wants one. I guess under your model we could license Astral at the same time as you?
6002 MR. BOYKO: Exactly. So if Astral --
6003 THE CHAIRPERSON: So you have no problem going against Astral, but you have a problem going against Shaw. Explain to me what is the difference.
6004 MR. BOYKO: Again, I think, you know -- today we don't really see it, it's not an issue for Stingray. But in the future if we want to launch more channels, and Concert TV could be one -- if we want to launch Concert TV and do a deal with Ivenko, then I would be competing against Bell or Vidéotron in Quebec getting all the content. So how could an independent compete in that space?
6005 THE CHAIRPERSON: And the buy-through requirement that you want to impose, why is that required since we already have a one for one? I don't quite understand that. For audio services right now, if you are a BDU, to carry your own, you have to carry an unaffiliated one. Why do we need the buy-through as well?
6006 MR. ALBERT: The pass-through would apply in the event that -- let's assume, for example, that Slacker, which is already available in Canada on the mobile platform and the Internet, but it's not on the regulated system, let's assume that the Commission eventually opened up the rules and Slacker was allowed to be available on the regulated system, if you will.
6007 We would like that the BDU would also have to carry, similar to the rule that exists today for Sirius and XM -- because those services don't have any Canadian content requirement to offset, if you will, the impact that these would have on the system, you would have to carry a Galaxie service or an independent pay audio service before you could offer one of these American services. Again, this rule exists today for Sirius and XM.
6008 THE CHAIRPERSON: But you presuppose that we would allow the carrying of Slacker without any Canadian content by Canadian TV?
6009 MR. ALBERT: That is the --
6010 THE CHAIRPERSON: That is quite a presumption.
6011 MR. ALBERT: It is, but, you know, we don't know tomorrow what is going to happen, I mean, you know, over-the-top -- and again, this is going to be discussed at length in the other proceeding for over-the-top -- but it is conceivable that those services would be available, you know, eventually on the services, and because these rules and regulations apply for a long period of time in the future we're sort of being pre-emptive, if you will, with that approach.
6012 THE CHAIRPERSON: We don't regulate over-the-top, as you well know. So if it's available over-the-top definitely. But you are suggesting that we would in effect authorize a BDU to carry it, notwithstanding that it doesn't have any Canadian content?
6013 MR. ALBERT: No. We are not suggesting that the BDUs be authorized to carry them at this point. All we are saying is that in the event --
6014 THE CHAIRPERSON: Yes, but your buy-through only has any meaning or only applies if we do such a thing?
6015 MR. ALBERT: Correct.
6016 THE CHAIRPERSON: Okay.
6017 Tom, you have some questions?
6018 COMMISSIONER PENTEFOUNTAS: Yes. The Chairman touched on two of those questions, but one of them, obviously getting back to Slacker and Pandora, I mean they are OTT services, so the buy-through wouldn't necessarily apply to them in the current context. We agree on that?
6019 MR. BOYKO: On that point I think it was good last week when we heard Bell say that the IPTV is regulated, because with IPTV it's a very grey line between is it over-the-top, is it Internet or is it regulated, but it was good to hear Kevin from Bell confirm that to us. So that was where we had more questions.
6020 COMMISSIONER PENTEFOUNTAS: Okay.
6021 Vous avez parlé, au deuxième paragraphe, de l'avant-garde des technologies et des nouvelles technologies que Stingray offre.
6022 Peux-tu élaborer un petit peu de quel genre de technologies qui sont nouvelles que vous avez et que les autres n'ont pas pour essayer de...
6023 M. BOYKO : Oui. Alors, une des choses... Nous autres, il faut comprendre, hein, Stingray, deux des propriétés qu'on a achetées, on a acheté Galaxie de CBC, puis on a acheté Max Trax de Corus, qui étaient deux produits que si on demandait à nos clients... un produit en déclin dont le taux diminuait de façon drastique.
6024 Une des choses qu'on a tout de suite fait chez Stingray, qui est différente, c'est qu'on investit par année pas loin de 4 millions de R et D. Alors, on a développé, bien sûr, la musique pay audio sur le broadband, sur l'Internet, on l'a développée sur le mobile. On a développé plusieurs applications, que ce soit sur Mediaroom de Microsoft.
6025 So it's all -- it's a mix of our investment that made our products really available to all the consumers, and while doing this, it was good for around the world.
6026 COMMISSIONER PENTEFOUNTAS: Is there anything unique in your technologies? Is there any new technological innovation that you have introduced?
6027 MR. BOYKO: Oh, we do -- you know, just in a year we are -- as you know, because we invest in R&D and we get the R&D credits back, we invested in a huge music offering system where all the digital rights -- so if you think about karaoke song, you think about a song, for every song you play, you need to pay eight people, nine people.
6028 So we have a unique system that distributes all the rights worldwide for all our songs, for all the music videos, for all the pay audio.
6029 COMMISSIONER PENTEFOUNTAS: You also mentioned --
6030 MR. BRAIDE: If I might add, we have 130 people on Wellington in Montreal; 60 of them are engineers.
6031 COMMISSIONER PENTEFOUNTAS: I saw that in the brief.
6032 MR. BRAIDE: And there is a great amount of new thinking that goes on. Our music management system is called Gypsy. It's an alternative to GSelector, which is what a lot of music operations use around the world. We find ours more sophisticated.
6033 There has been a massive amount of investment involved designing the streaming service for Galaxie on the mobile, which is launching within a couple of weeks. There's a lot of engineer work that goes on.
6034 COMMISSIONER PENTEFOUNTAS: That's great.
6035 You also mention that you contribute millions of dollars in rights and royalties to Canadian creators and artists everywhere.
6036 Is that public knowledge? Do you have a figure to that in terms of 2010 which you gave back to the artists and creators?
6037 MR. BOYKO: No. I guess we are -- we don't really -- we're a private company. Most of the information is private at this stage and which is the advantage of not being public compared to our competitor, which is Pandora and it just went public.
6038 COMMISSIONER PENTEFOUNTAS: Okay. It would be nice to have sort of a figure attached to that. It's great to make sort of blanket statements about how we're helping the creative community of Canada but it would be nice to have a figure beside that, but I will leave that up to you.
6039 You have also changed -- from your brief and your comments today you went from a 3:1 linkage to a 1:1 linkage.
6040 Is there a specific reason? You touched on it briefly, but is there something that has helped your reflection on that?
6041 MR. BOYKO: Yes. I think, you know, in the case of -- if you look at Stingray, we are not very focused that much in Canada. Our real focus as a company is the world. So we are in 65 million homes and right now we have about 12-13 deals in new countries. So that's where as CEO of the business I am most focused. But, you know, Canada is our base country and that is where our head office is.
6042 But going back to this, one thing that I noticed here -- and we have only been here for four years -- there aren't many new players. And I look around and I see GlassBOX and I see maybe -- and so I am worried about who are going to be the new players in the industry going forward.
6043 And I like John's point, we need some large companies, but every large company was small one day. And I know Corus says they are the most innovative, but, you know, I think we are also very innovative.
6044 So to go back to this situation, I think that creating (indiscernible) with one being an independent will create a marketplace to have new independent players come in and have access to the distribution.
6045 COMMISSIONER PENTEFOUNTAS: On your genre protection issue, if GlassBOX, as you mentioned, came up with a service, you came up with KARAOKE or some service tomorrow -- your Concert service, that's an interesting idea. So you have the Concert service you launch and then GlassBOX wants to launch a month later, you don't have a problem with that?
6046 MR. BOYKO: No.
6047 COMMISSIONER PENTEFOUNTAS: They're a fellow independent. Free market should rule?
6048 MR. BOYKO: Absolutely.
6049 COMMISSIONER PENTEFOUNTAS: Okay.
6050 And on the standstill provision, if there's a dispute and you want things to remain -- sort of maintain the status quo in the meantime, right, isn't your greatest weapon pulling that service in a negotiating situation?
6051 MR. BOYKO: The fact here is that we have -- you know, we're in a situation, a lot of small independent broadcasters, that if one or two of your customers decide to pull your service out that you're bankrupt. So it's, you know --
6052 COMMISSIONER PENTEFOUNTAS: One or two of the BDUs?
6053 MR. BOYKO: Well, you know, if Shaw and Bell tomorrow morning decide to take you off and you're an independent, then you're out of business.
6054 So, you know, it's -- and if the contracts arrive at the same time and they start negotiating with you, you're not talking -- you know, if you're a larger company, you can lose one or two channels, but if you only have one channel, one pay audio service, it really hurts you. So what does the Commission do to put a safety net to protect us?
6055 COMMISSIONER PENTEFOUNTAS: And you would be willing to live with the results of dispute resolution down the road? If it takes six months, you understand it will be retroactive to the end of the contract term, as an example. You would rather live with that, the unknown of the conditions, rather than pulling your service from a BDU?
6056 MR. BOYKO: Yes. And just to mention, so far, in the four years we've been in business, we've never had any dispute. We've never had any issues. We've come to terms by negotiating, a bit like Corus was talking before, but again, it's good to have a safety net.
6057 COMMISSIONER PENTEFOUNTAS: And you really feel that sense of weakness whereby you have to maintain the service, because pulling it you just don't have a rapport de force égale avec les EDR?
6058 MR. BOYKO: In some ways with Galaxie and the pay audio service we have in Canada, we have, you know, 70 percent of people listening to us, so we do have a rapport de force.
6059 But if we go back to the industry as a whole, and we're not talking only for us but we're talking for smaller independents, I think it would be -- I would be more nervous.
6060 I guess in a way Stingray is between -- we're in between a small independent and a bigger independent because now we have many products in many countries.
6061 CONSEILLER PENTEFOUNTAS : Écartons les autres indépendants pour 30 secondes et concentrons sur vous.
6062 Vous, où vous êtes rendu présentement, vous ne voyez pas ce rapport de force où vous pouvez menacer de retirer le signal dans le but d'aller chercher une meilleure entente avec les EDR?
6063 M. BOYKO : Non, c'est sûr qu'en ce moment si on regarde le service de pay audio Galaxie au Canada, on est assez confiant de notre produit. Ça fait que je trouve qu'on a un produit qui... pour ce produit-là, je suis d'accord avec vous.
6064 CONSEILLER PENTEFOUNTAS : Alors, statu quo comme tel... Pour retourner sur vous et vos préoccupations, statu quo, vous n'êtes pas intéressé... malgré le fait que vous vous sentez assez fort, vous voulez maintenir le statu quo le temps qu'on négocie une entente avec les EDR? C'est votre position, n'est-ce pas?
6065 M. BOYKO : Oui.
6066 CONSEILLER PENTEFOUNTAS : Et vous sentez qu'il y a un plus grand pouvoir de force en maintenant le statu quo qu'en vous permettant le droit de retirer le signal?
6067 M. BOYKO : Oui, mais une des choses mondialement -- pas seulement sur Stingray au Canada -- mondialement, on ne retire jamais notre signal. C'est quelque chose qui... Si tu retires ton signal, c'est la fin de toute communication entre toi et ton client. Alors, ce n'est pas quelque chose qu'on ferait jamais, non seulement au Canada mais... On va toujours vouloir négocier.
6068 CONSEILLER PENTEFOUNTAS : Vous avez parlé également... Éric Albert nous a parlé d'un traitement confidentiel de l'information financière pour les indépendants. C'est exact?
6069 M. BOYKO : Oui.
6070 CONSEILLER PENTEFOUNTAS : Est-ce qu'on doit appliquer cette même logique pour les intégrés? C'est-à-dire que vous demandez qu'on garde vos renseignements confidentiels, mais qu'on publie les informations financières des intégrés?
6071 M. ALBERT : Pour nous, ça ne change pas grand-chose qu'on ait l'information sur les intégrés ou pas. La plupart de ces compagnies-là, de toute façon, sont des entreprises publiques. L'information, elle est disponible publiquement.
6072 Nous, ce qui nous préoccupe, c'est d'avoir l'information spécifique par service, au niveau de la rentabilité, par exemple, du service Galaxie ou du service Concert TV ou quoi que ce soit.
6073 Quand... les distributeurs intégrés ou verticalement intégrés, c'est possible pour eux d'envoyer des informations, si on veut, d'un bord ou l'autre, sans nécessairement dire camoufler l'information, alors que pour un distributeur ou un diffuseur indépendant comme nous, c'est plus difficile d'enrober l'information, si on veut.
6074 Donc, c'est plus facile de soutirer l'information du diffuseur indépendant que du verticalement intégré.
6075 CONSEILLER PENTEFOUNTAS : Mais vous ne voyez pas une possibilité d'un traitement inégal? C'est une question de deux poids, deux mesures.
6076 M. ALBERT : Encore là, le distributeur verticalement intégré va avoir un rapport de force que le diffuseur indépendant n'aura pas nécessairement.
6077 CONSEILLER PENTEFOUNTAS : Et il faut compenser ce rapport en cachant en quelque sort vos états financiers?
6078 M. ALBERT : Absolument.
6079 CONSEILLER PENTEFOUNTAS : Sur les terminaux numériques, qu'est-ce que vous voulez chercher exactement sur ces terminaux-là?
6080 M. ALBERT : C'est plus au niveau...
6081 CONSEILLER PENTEFOUNTAS : Question d'information.
6082 M. ALBERT : C'est l'utilisation des services. Donc, aujourd'hui, par exemple, un service comme Galaxie, l'information de BBM, par exemple, que les stations de télévision et les stations de radio ont...
6083 CONSEILLER PENTEFOUNTAS : Oui.
6084 M. ALBERT : ...un service comme Galaxie n'a pas cette information-là aujourd'hui. On est en discussion avec BBM pour être capable de l'obtenir. Par contre, aujourd'hui, cette information-là n'existe pas.
6085 Donc, en négociant avec un distributeur, par exemple, qui nous dit, votre service n'est pas utilisé, ça ne vaut pas X sous par abonné, ça vaut le tiers de ça, on n'a pas grand-chose de notre côté pour contrebalancer cette information-là.
6086 Alors, si on pouvait dire au distributeur, donnez-nous l'information sur l'utilisation du service comme tel, à ce moment-là, on aurait la même information que le distributeur.
6087 CONSEILLER PENTEFOUNTAS : Est-ce que ces renseignements appartiennent... Les renseignements sur les abonnés, est-ce que ça appartient aux EDR ou est-ce que ça appartient à Galaxie Stingray?
6088 M. BOYKO : Non, mais ça, c'est une... Nous autres, déjà aujourd'hui, plusieurs des distributeurs nous donnent l'information. Alors, ce qu'ils nous donnent là, on a déjà peut-être trois-quatre distributeurs qui vont nous donner le positionnement de nos chaînes. Ça fait que la chaîne Galaxie Rock est 11; après ça...
6089 Ça fait que ce n'est pas de l'information par client qu'on cherche. C'est juste comment est notre classement, puis comment qu'on peut améliorer la qualité de nos chaînes.
6090 CONSEILLER PENTEFOUNTAS : Est-ce que vous avez un moyen de vérifier ces données-là indépendamment?
6091 M. BOYKO : Non, pas en ce moment.
6092 CONSEILLER PENTEFOUNTAS : Vous êtes à la merci en quelque sorte des EDR?
6093 M. BOYKO : Oui.
6094 CONSEILLER PENTEFOUNTAS : Il faut accepter leur bonne parole, autrement dit?
6095 M. BOYKO : Mais au moins si on peut partager cette information-là, ça nous aide de savoir ce que notre service... où on est.
6096 CONSEILLER PENTEFOUNTAS : Dans le contexte actuel...
6097 M. BOYKO : Oui.
6098 CONSEILLER PENTEFOUNTAS : Dans le contexte actuel, vous êtes strictement à la merci des EDR?
6099 M. BOYKO : Oui.
6100 CONSEILLER PENTEFOUNTAS : O.K. Merci.
6101 THE CHAIRPERSON: On that last point on the question of information you said you have no problem getting the information from the BDUs.
6102 Other parties have mentioned that they would like an audit right because when they try to find out who are the customers, how many households there are, et cetera, the BDUs sort of string them along. There's a question of who is the auditor, how long, et cetera, and then they get the audit way too late. I think it was Cogeco who pointed out that they have been waiting over a year for audit rights.
6103 Do you have any issue with audit right?
6104 MR. BOYKO: No. So far in the business we're on basic digital. So, you know, there hasn't been, you know, much issues with audits. And to be honest, you know, in our case it's been sometimes more negative than positive. So we're trying to stay away from audits. And they're expensive. So no issue for us.
6105 THE CHAIRPERSON: Okay.
6107 CONSEILLER MORIN : Merci, Monsieur le Président.
6108 Juste pour enchaîner sur l'information, est-ce que dans les... Vous faites affaire dans 45 pays, ai-je compris. Est-ce que vous avez plus d'information ailleurs qu'ici?
6109 M. BOYKO : C'est intéressant de voir que... On prend l'exemple... beaucoup en Angleterre ou dans beaucoup d'endroits, l'information est plus disponible, je dirais, que celle du Canada.
6110 CONSEILLER MORIN : Est-ce que vous pourriez nous donner quelques exemples?
6111 M. BOYKO : Ah, mais nous autres, avec... exemple, avec ce qui est l'Angleterre, avec Virgin, on offre le service de KARAOKE, et vraiment, on a un service de tout ce qui est écouté sur vidéo-sur-demande de façon... Le 1er du mois on a chaque vidéo. Ils ont investit beaucoup là-dessus, ça fait qu'il y a un bon partage d'information.
6112 Et aussi sur l'écoute de nos chaînes avec beaucoup de nos distributeurs mondiaux.
6113 CONSEILLER MORIN : Et ce genre d'information, vous avez de la difficulté à l'obtenir ici au Canada?
6114 M. BOYKO : Au Canada, on la reçoit de quelques joueurs. Mais moi, je pense que ça serait bon pour un service comme le nôtre puis pour les indépendants de l'avoir de façon... surtout durant les négociations.
6115 Quand on négocie notre contrat, moi, je me rends compte... On a négocié un contrat dernièrement, puis le distributeur nous a dit à la fin... Il a dit : Ouf! Il a dit : On est content d'avoir signé parce que vous êtes vraiment écoutés. Mais j'aurais aimé ça savoir ça avant la négociation, puis pas après, t'sais, qu'ils veulent...
6116 Ça fait que, comprenez-vous... Ça fait que moi, je suis un peu... je négocie, c'est un peu comme jouer au golf dans le noir, t'sais, je ne sais pas où ma balle va. Ça fait que c'est un peu les difficultés qu'on a avec Galaxie.
6117 CONSEILLER MORIN : Sans nous donner de noms là, bien sûr, est-ce que ce sont des gros ou des petits qui font obstacle à votre demande d'information? Est-ce que c'est pour des raisons techniques qu'ils ne peuvent pas vous le donner ou ça ressemble plus à une volonté de ne pas vous donner ce que vous voulez?
6118 M. BOYKO : Si on joue au poker, puis moi, je vois vos cartes, vous ne voyez pas les miennes, il y a un avantage, t'sais.
6119 CONSEILLER MORIN : Mais c'est les gros ou les petits?
6120 M. BOYKO : Bien, c'est un peu tous les distributeurs, je te dirais, autant les gros que les petits. Nous autres, on n'a pas d'information sur notre écoute de toutes nos chaînes. C'est difficile de toujours se positionner dans notre négociation.
6121 CONSEILLER MORIN : Vous avez parlé du service minimaliste, le skinny basic service de $9.95. Est-ce que vous êtes sur ce service-là de $9.95?
6122 M. BOYKO : Non. Je n'ai pas encore accès à IPTV chez nous.
6123 CONSEILLER MORIN : O.K.
6124 M. BOYKO : Moi, je pense que pour le skinny basic... puis je vais revenir là-dessus. Regardez, Stingray Digital, nous autres, on est sur le service de base canadien. On est dans tous les foyers. On a 100 pour cent de pénétration.
6125 CONSEILLER MORIN : Dans tous les services hybrides offerts par les EDR actuellement?
6126 M. BOYKO : Oui. Et puis on est... et le service de pay audio aussi. Et c'est la même chose en Amérique du Nord, en Europe puis en Amérique Latine. Ça fait que tout le monde, sur son service de base a un service de musique comme Galaxie. Alors, ça, c'est un peu la tendance.
6127 Alors, pour nous autres, si un matin on voudrait changer ça puis dire, bien maintenant, on va créer un minimaliste ou un -- excuse-moi -- "skinny basic," tous nos contrats puis nos ententes de huit ans seraient réouverts. Il faut voir l'importance pour Stingray que nous autres, on s'est endetté pour faire de l'expansion mondiale et acheter, et là, ça mettrait en cause tous nos termes avec nos banquiers.
6128 Ça fait que pour nous autres, ce n'est pas seulement un impact de réglementation, c'est un impact sur le futur de notre compagnie puis le futur de ce qu'on peut faire comme expansion.
6129 CONSEILLER MORIN : Mais compte tenu de l'information que vous avez avec certains distributeurs, en tout cas, vous ne pensez pas que la demande pour votre service serait là?
6130 M. BOYKO : Comme je vous dis, moi, c'est juste qu'on a un système, on est en train de jouer un match et en plein milieu du match, on veut changer les règlements.
6131 Moi, j'ai signé des ententes à long terme avec des taux qui étaient agressifs avec mes clients parce que je veux me sécuriser à long terme, sécuriser mes clients, et là, après un an ou deux ans dans nos contrats, on dit, on va peut-être changer le système.
6132 Parce que tous nos contrats, comme vous le savez, peuvent être réouverts s'il y a un changement réglementaire. Alors, nous autres, ça nous met dans une position un peu d'incertitude, puis un entrepreneur n'aime pas l'incertitude, et ni les banquiers.
6133 CONSEILLER MORIN : Mais d'une façon générale, est-ce que... Vous savez qu'avec le service minimaliste, évidemment, c'est de confier au marché beaucoup plus de choix, d'offrir au consommateur beaucoup plus de choix que dans le système actuel, où le consommateur est accablé par des services qu'il ne veut pas nécessairement prendre. Vous connaissez l'argument.
6134 Pourquoi vous, qui êtes efficace à travers 45 pays à travers le monde, auriez-vous peur? Au point de vue simplement conceptuel, je comprends que si vous êtes sur tous les services de base que vous ayez... l'incertitude est toujours... Mais au fond, est-ce que le dommage serait si évident que ça?
6135 M. BOYKO : Alors, nous autres, dans nos 45 pays qu'on fait affaire, on n'a jamais vu dans aucun marché un service minimaliste ou de skinny basic. Alors, aux États-Unis, il n'y en a pas. Il n'y en a pas nulle part en Europe. Il n'y en a pas en Amérique latine. Alors, c'est un service que nous autres, Stingray, on a de la difficulté à comprendre, puis ça n'existe pas.
6136 Puis moi, je vois ça comme un peu le concept de forcer tous les restaurants canadiens d'offrir le même service de menu de base pour qu'ils se comparent.
6137 Ça fait que, étant capitaliste de nature et entrepreneur, laisser aux distributeurs offrir certains avantages, des points air miles s'ils voudraient dans le futur, pour de différencier entre eux autres, moi, je trouve que la compétition est bonne.
6138 CONSEILLER MORIN : Vous avez révisé votre position en ce qui concerne le 1:1 pour le 3:1.
6139 Est-ce que vous pensez que le marché québécois, qui est quand même un petit marché... On parle d'une audience de francophones peut-être de 6 millions. Le Canada, c'est 33 millions. Trente-trois millions moins six, ça fait 27 millions pour le Canada, 6 millions au Québec.
6140 Est-ce que vous pensez que, avec le joueur, si important soit-il, qui s'appelle Quebecor Media, les indépendants pourraient répondre à la demande d'un ratio de 3:1?
6141 M. BOYKO : Moi, je crois que, t'sais, si on regarde le iPhone, quand ils ont développé la plateforme iPhone, maintenant, il y a combien d'applications. Si on donne une chance de créer un marché où les indépendants ont accès -- comme on dit en anglais a marketplace -- moi, je suis très confiant qu'il va avoir plusieurs entrepreneurs québécois puis même du reste du Canada qui veulent remplir cette position-là.
6142 Ça fait que moi, je pense que ça donne une chance à nous autres. Puis moi, je pense que c'est important. Quand on dit accès, ce n'est pas seulement d'avoir accès la distribution, mais c'est d'avoir accès aux gens qui prennent les décisions.
6143 Puis nous autres, chez Galaxie, à cause du produit de Galaxie, qui est un produit bien répandu, Stingray a eu accès à toutes les têtes dirigeantes puis les dirigeants dans chacune de ces compagnies-là. Mais moi, je pense qu'il faut donner ça à plus d'indépendants pour qu'eux autres aussi aient accès aux dirigeants.
6144 CONSEILLER MORIN : Même dans le marché québécois, qui est quand même un petit marché à l'échelle nord-américaine?
6145 M. BOYKO : Oui. Moi, je suis d'accord avec cette proposition-là. Moi, je pense que ça serait positif.
6146 CONSEILLER MORIN : Merci beaucoup.
6147 Ce sont mes questions, Monsieur le Président.
6148 THE CHAIRPERSON: Okay, thank you very much. Those are all our questions.
6149 MR. BOYKO: Thank you.
6150 THE CHAIRPERSON: We will take a five-minute break before we do the next intervener. Thank you.
--- Upon recessing at 1056
--- Upon resuming at 1104
6151 THE CHAIRPERSON: Let's resume.
6152 I am delighted to see you here. I thought you would be sleeping in after the IFA.
6153 MR. CHANDRASEKAR: I am delighted to be here.
6154 THE CHAIRPERSON: Good.
6155 Madam Secretary, over to you.
6156 THE SECRETARY: We will now proceed with the presentations by Asian Television Network International Limited and Fairchild Television Ltd., who are appearing as a panel to present their interventions.
6157 We will hear each presentation, which will then be followed by questions from the Commissioners to the panel. Each intervenor will have ten minutes for their presentation.
6158 I would now invite Asian Television Network International Limited to begin.
6159 Please introduce yourselves. You have ten minutes.
6160 MR. CHANDRASEKAR: Mr. Chairman, Vice-Chairmen and Members of the Commission, my name is Shan Chandrasekar, and I am the President and CEO of ATN, Asian Television Network International Limited.
6161 With me today are Prakash Naidoo, Vice-President and General Manager, and Jane Logan, our regulatory consultant.
6162 Thank you so much for this opportunity to voice our concerns. We want to use our time before you today to lay out the critical reasons why ATN believes that today's regulatory instruments for third-language services must be kept in place in the vertically integrated environment of the future.
6163 We negotiate for carriage with giant companies and compete with their vastly resourced services for programming and audiences. We had little leverage before and we have even less now. We must respectfully tell you that the linkage rules that have anchored our success are more critical than ever for us to operate as an independent company in this environment.
6164 As you know, we operate one Category A service, our flagship ATN, which broadcasts mostly in Hindi. With Category B licensing, we have created a variety of niche services to provide value-added choice to our subscribers. Most of our services are aimed at Canada's growing population of South Asian origin. Twenty-two of our services have already been launched, mostly by Rogers Cable, including nine in the past year, and we salute Rogers for that.
6165 We are here to request that you maintain critical linkage rules which apply to third-language services. We need these rules to maintain ATN's spending on quality Canadian content, and the health of all of our Category B services depends on ATN as well.
6166 Buy-through with foreign services:
6167 Today's rules include a one-to-one linkage policy between Canada's five Category A third-language services and corresponding foreign services. ATN used to have genre protection, but the Commission replaced it with buy-through in 2004. In our case, buy-through means that a general interest foreign service that is 40 percent or more in the Hindi language can be offered only when it is packaged with our flagship general interest service ATN.
6168 The draft BDU regulations are unclear on buy-through and we urge you to clarify and maintain this critical policy.
6169 This linkage rule is substantially less protection than the genre exclusivity that English and French-language Category A services have had for years against their foreign counterparts. ATN has only been on cable since 2001. Even vertically integrated services that have been on basic for 15 years or more benefit from full genre protection.
6170 Without linkage rules, ATN would compete head-on with foreign services that have recovered all costs, particularly in the Indian subcontinent, in our case, where there are markets of 1.3 billion in population, but make no contribution to the expression of Canadian values. It is far better that we partner with these foreign networks in a winning combination for Canadian consumers.
6171 The second linkage rule that must be maintained is that, if a general interest Category B service offers 40 percent of its programming in the language of an ethnic Category A, then the subscriber must first take the Category A service. Again, this rule was put in place as a substitute for genre protection.
6172 As a Category A service, ATN is in the unique position of having direct competitors -- Hindi general interest services -- that are Category B services. The buy-through rule does not apply to niche services like Hindi music or Hindi movie services. Needless to say, without buy-through, ATN would be highly vulnerable if a vertically integrated company were ever to own and operate a general interest Category B Hindi service.
6173 Commissioners, we stand behind the value of our Canadian programming to our audiences and our contributions to the Canadian broadcasting system.
6174 Our company plays a critical role in providing Canadian programming to Canada's South Asian communities, spending over $20 million on Canadian content just in the last five years. That is original programming, and it is drawn from our studios in Newmarket and from our production crews in Montreal, Ottawa, southern Ontario, especially Toronto, Calgary and Vancouver. We cover more South Asian events in this country than anyone else.
6175 We interview Prime Ministers, Cabinet Ministers and local politicians on issues of concern to new Canadians. We showcase the arts, like classical and popular music, as well as dance performances, and we are a partner in major community events.
6176 A recent Canadian programming initiative was broadcasting the 2010 Vancouver Olympics in partnership with CTV. This was one of the most exciting events in the life of our company.
6177 Seven ATN services delivered the opening ceremonies and 107 hours of live Olympic coverage in six different languages. We had hockey in Hindi, bobsled in Bangla, downhill skiing in Gujarati, speed skating in Urdu, and figure skating in Punjabi. This premium Canadian content gave our community a chance to cheer on the Canadian Olympic team.
6178 We cannot understand why third-language Category A services would be treated less favourably than English and French-language Category A services that enjoy full genre protection. Rogers has suggested that Category A services should have genre protection so that a vertically integrated company cannot enter the genre. We support this completely. At the very best, buy-through was the substitute for genre protection and should stay in place. Ideally, we would love to have both.
6179 Packaging with foreign services for all Category B services:
6180 Finally, we are here to ask for a packaging rule which will benefit every third-language Canadian specialty service. As section 27 of the draft BDU Regulations stands, the three-to-one ratio of foreign third-language services to Canadian third-language services is required for services offered, but not services received.
6181 CRTC 2008-100 made no reference to this change at all. This change means that BDUs could offer packages of foreign third-language services with no Canadian services in the package, so long as they offer enough Canadian third-language services in other packages to maintain the three-to-one ratio.
6182 Consider this scenario. A family chooses basic cable, and Tiers 1 and 2 for that matter, receiving a majority of Canadian services. It could then buy a package of foreign services in Hindi and never subscribe to any Canadian Hindi service at all, yet all of the linkage ratios may have been met.
6183 If you maintain buy-through, this change would hurt many Canadian Category B services in other languages; not only ours, even our competitors' services.
6184 Foreign services can be offered in well-branded, attractive packages, but they carry no Canadian content and provide no connection to this land. Meanwhile, Canada's multicultural population is growing rapidly. It is surely contrary to the objectives of the Broadcasting Act regarding the provision of Canadian programming to multicultural Canadians. Packages of foreign services should not displace Canadian programming.
6185 We appreciate -- we actually tremendously appreciate the fact that CRTC 2008-100 recognized the contributions of Canadian third-language services to the Canadian broadcasting system. However, the sole reason it gives for altering distribution rules affecting third-language services is streamlining the rules to achieve regulatory simplicity.
6186 Stripping rules away in the name of regulatory simplicity is like removing the supporting beams in a home in the name of architectural simplicity. The result may be superficially attractive, but it jeopardizes the entire structure and those housed within. The first casualty for the broadcasting system will be the diversity of voices and independent multicultural content.
6187 It is vital that the relevant distribution and linkage rules for third-language services are maintained. This is the only way to ensure that truly unique and truly necessary multilingual and multicultural Canadian services such as ours continue to be viable and provide an essential service to our Canadian subscribers.
6188 Mr. Chairman, Vice-Chairmen and Members of the Commission, our future is in your hands.
6189 Sir, I would like to spontaneously add a statement here. We are extremely indebted to the CRTC. I think without this Commission, frankly, we may not have even been alive, we may not have even been born, and there would have been no voices for third-language independent broadcasters in this country, and we really salute you for that.
6190 It has been an incredible journey for us from where we started, and we have no words to thank not only the Commission, but the policies that have been established by the Commission, both the current Commission and its predecessors.
6191 Finally, we want to thank the staff of the CRTC, who have been extremely helpful to us, especially being a young new service. From time to time when we have needed clarification, and they went beyond the call of duty. Many staff have interpreted rules and regulations for us from time to time, and we have no words to thank the staff as well.
6192 Thank you.
6193 THE SECRETARY: Thank you.
6194 I would now invite Fairchild Television Ltd. to begin.
6195 Please introduce yourselves. You have ten minutes.
6196 MS SEPHTON: Mr. Chairman, Vice-Chairs, Members of the Commission and Commission Staff, my name is Connie Sephton. I am the Director of Corporate Affairs of Fairchild Television Ltd. With me today is Andrée Wylie, Fairchild's outside counsel. Mr. Chan, Fairchild's CEO, regrets not being able to be in Ottawa today and sends his respectful greetings.
6197 Fairchild is before you today in response to the inclusion in Notice 2010-783 as an issue to be discussed in this proceeding, "What specific measures, if any, should be contemplated to take into account the particular situation of smaller independent broadcasting services."
6198 Fairchild is the licensee of two of the smaller independent broadcasting services mentioned in Notice 2010-783. It is the licensee of Fairchild TV and Talentvision, two analog general interest ethnic specialty services, one in Cantonese and one in Mandarin, licensed in 1984 and 1985 respectively.
6199 The services provide a broad range of programming, Canadian and foreign, to Canadians of Chinese heritage. Their market is limited, their PBITs modest. For the period 2005-2009, Fairchild TV's average PBIT was 19 percent, and Talentvision's was -6 percent. The services' combined average PBIT for that period was 13 percent.
6200 However, Fairchild's services are not smaller specialty services when one focuses on their conditions of licence. Fairchild TV must exhibit Canadian programs 30 percent of the broadcast day and 40 percent during the 6:00 p.m. to 11:00 p.m. broadcast period.
6201 Talentvision must exhibit Canadian programs 31.5 percent of the broadcast day and 33 percent during the 7:30 p.m. to 10:30 p.m. broadcast period.
6202 The services have CPE requirements of 29 percent of gross revenues, and together have spent close to $50 million on Canadian programs between 2005 and 2009.
6203 Fairchild's main concern is the continued applicability of the buy-through mechanism for its services. The applicability of the buy-through beyond September 2011 has been put in doubt by Public Notices 2008-100 and 2010-931. The buy-through is more essential than ever to the continued performance of Fairchild's specialty services. Its abandonment, particularly with the vertical integration recently approved by the Commission, would threaten the very sustainability of Fairchild's specialty services.
6204 We agree with the Chair's remarks early last week that some concerns have been rendered more acute by widespread vertical integration in the Canadian broadcasting environment. That is why we are before you today.
6205 Notice 2010-931, which invited comments on proposed amendments to the BDU Regulations, does not expressly maintain the buy-through mechanism. Fairchild expressed its concerns and made recommendations in its submission in Notice 2010-931 with regard to the apparent proposal to abandon the buy-through. Fairchild's submission in that proceeding is attached to its written submission in this proceeding.
6206 As of September 1, 2011, according to Notice 2008-100, Fairchild TV and Talentvision will be Category A services. Like other Category A services, such as MuchMusic, the Food Network, Fashion Television, The Comedy Network and Home and Garden Television, they will have to be offered to subscribers by BDUs.
6207 The distribution status of Fairchild TV and Talentvision will differ significantly from that of the other Category A services however. Other Category A services, including those licensed to vertically integrated entities, are protected from direct competition from licensed and foreign services by genre exclusivity. Fairchild TV and Talentvision face head-on competition from several Canadian and foreign general interest services in Cantonese and Mandarin, licensed by the Commission since 2006, or authorized for distribution in Canada since then.
6208 How did this come about? In 2004 and 2005, the Commission replaced genre exclusivity for the five analog ethnic services with an open-entry model. Henceforth, general interest services in the language of broadcast of the analog ethnic services would be authorized for distribution and licensed.
6209 However, a buy-through requirement of the analog ethnic services would be substituted for genre protection in order to allow them to discharge what the Commission recognized as their more onerous regulatory obligations.
6210 Fairchild cannot sustain a change in this regulatory bargain. The buy-through requirement is by no means a perfect substitute for the genre exclusivity against which Fairchild and its predecessors made business decisions, investments and commitments for more than 20 years, and on the basis of which the Commission has imposed regulatory obligations, but it is a substitute that Fairchild cannot lose.
6211 Vertically integrated BDUs will operate to maximize profits for their shareholders. Regulatory flexibility will allow them, more than ever, to serve their own commercial interests, while maintaining stable costs to their subscribers in order to prevent migration to competitors. They will advantage their own services, to the detriment of vulnerable services, with preferential packages, pricing and promotion.
6212 Here are some of Fairchild's particular concerns in the new vertically integrated landscape.
6213 First, vertically integrated BDUs have the freedom, with the proposed regulations reflecting recent deregulation, to offer subscribers packages of Chinese-language services, both general interest and niche, chosen from a plethora of low-cost foreign services that they have sponsored and Canadian services that the Commission has licensed.
6214 The first have no Canadian requirements whatsoever, and their costs are usually already amortized. The second have no CPE requirements and must exhibit only 15 percent Canadian content, with no constraint on repeats or period of broadcast.
6215 Even totally foreign Chinese-language packages will be available to subscribers.
6216 Second, compared to the owners of services such as Fashion Television, The Comedy Network and the Food Network, Fairchild TV and Talentvision not only have a limited market, but no access to the benefits of consolidation and vertical integration, and they cannot meet their regulatory obligations across multiple services.
6217 Third, the importation into Canada of a significant number of competing services has already had a negative impact on Fairchild's access to and the cost of programming rights.
6218 Fourth, some foreign Chinese-language services on the eligible list are already inserting into their service local advertising time sold in Canada, in competition with Fairchild.
6219 Fifth, the negotiation of a sustainable wholesale rate for Fairchild's premium services will become more difficult with vertical integration, for the reasons already stated.
6220 Sixth, an OMNI station owned by a vertically integrated licensee already competes with Fairchild in major markets, and its Chinese-language programming can easily be repurposed for other platforms, including VOD.
6221 Seventh, nothing prevents a vertically integrated licensee to hold competing general interest Category B licences in Chinese.
6222 Eighth, the Commission has exempted from licensing requirements any third-language services offering less than 40 percent of the language of broadcast of one of the five analog ethnic services. A general interest service 39 percent in Cantonese, 39 percent in Mandarin, and 22 percent in English, even assuming strict compliance with its language of programming limits, which is a complicated matter to monitor, is effectively additional non-regulated competition for Fairchild TV and Talentvision.
6223 Fairchild is not opposed to vertical integration, it simply does not want to be its victim.
6224 The Commission initiated this proceeding to consider whether additional regulatory tools and measures are necessary to better prevent anti-competitive behaviour. Fairchild is not asking for additional regulatory tools and measures, it is respectfully asking that the regulatory bargain struck in 2005, and, in fact, in effect for less than five years, be maintained. If it is not, vulnerable ethnic services such as Fairchild's will face head-on competition as a Category A service from both foreign and Canadian services, while vertically integrated Category A services, such as Fashion Television and the Food Network, will be protected by genre exclusivity.
6225 Even vertically integrated Category C services will be protected from foreign competition.
6226 It is difficult to see how this result would enhance the attainment of the express objectives of the Broadcasting Act, with which you are more than familiar.
6227 Before closing, we will comment briefly on three additional matters raised in this proceeding.
6228 First, we agree that MFN clauses in affiliation agreements are anti-competitive, detrimental to small services, and probably unenforceable, and should be prohibited. We applaud Rogers' resolve to move away from them.
6229 Secondly, for the reasons expressed already by a number of parties, although dispute resolution can only serve as a mechanism of very last resort for vulnerable services such as Fairchild's we agree with proposals to improve it, and to make it more timely.
6230 Thirdly, we agree with the imposition of a standstill provision for the party initiating a dispute. It is particularly necessary for small independent services who can ill afford expensive time and resources consuming disputes in the first place.
6231 We thank you for your attention and we will respond to any questions you may have as best we can. Thank you.
6232 THE CHAIRPERSON: Thank you very much.
6233 Explain this to me. You are both making an observation which I find difficult to understand. You say the survival buy-through after September 1st is unclear. Why is it unclear, I mean?
6234 MR. CHANDRASEKAR: So personally I would be the happiest person under the sky if it's all clear for you. I mean we could just you know go away with a lot of comfort that it continues.
6235 Where we just want to make sure that -- it's like I was a student of Marshall McLuhan, sir, many years ago when I was young. He brought these -- in those days this was all way before 9/11. He brought a group of hijackers, you know, into the class to demonstrate. He brought an airline pilot and he sent him -- he was taking a flight from Toronto to Miami and he had a gun at his head and said, "I want you to take this plane to Miami" and the pilot said, "We are already going to Miami". He said, "No, I just want to make sure it lands there. I don't want to go to Cuba".
6236 So I guess what it is primarily is that we just want to, sir, ensure that buy-through continues for us because that was the only compromise unfortunately that was made after the last genre protection laws for us and every other step that the Commission brought from our perspective we embraced it even though we thought it may be difficult for us.
6237 We sincerely adopted every one of them. Category B licences were supposed to be coming in and they were competing. We still took the initiative. We floated those Category B licences and we made them somewhat successful.
6238 So every step of the way we have done it but this buy-through is an integral part in terms of both foreign and domestic services, sir.
6239 THE CHAIRPERSON: The buy-through, as you understand it and as you like it, would do what? How would it work? Explain to me exactly what you have in mind.
6240 MS SEPHTON: Mr. Chairman, the buy-through currently enables subscribers to purchase Canadian legacies or language services if they wish to subscribe to foreign services.
6241 THE CHAIRPERSON: Regardless of whether that foreign service is a Category B -- or a foreign service, it applies in both cases?
6242 MS SEPHTON: The current buy-through applies both to foreign service -- foreign language services as well as general interest Cat B, Canadian services.
6243 THE CHAIRPERSON: And that, both of you maintain, that should be maintained. So that Category As which both of you own one, benefit from a buy-through.
6244 Anybody who wants to buy other channels in that language also has to buy yours?
6245 MS WYLIE: General interest not an issue.
6246 THE CHAIRPERSON: I am sorry, explain that to me, please.
6247 MS WYLIE: Only if the service is a general interest service, which is defined by the Commission. I'm not quite sure. I think broad programming or more akin to a mainstream over the air.
6248 THE CHAIRPERSON: So a Chinese specialty music channel, let's say for argument's sake, if there is such a thing, would not trigger the buy-through?
6249 MS WYLIE: No.
6250 THE CHAIRPERSON: Okay.
6251 Rita, I believe you have some questions?
6252 COMMISSIONER CUGINI: Yes. Good morning.
6253 Just a couple more just again for clarification, and I'm going to ask you about the packaging question.
6254 Is it your position that because the Notice 2010-931 is silent on packaging you feel that what we said in 2008-100 is threatened, because we said in 2008:
"Non-Canadian third language services can only be offered in a package with Canadian ethnic third-language services in the same languages if one exists in a ratio of one Canadian service up to three non-Canadian services".
6255 That's what we said in Notice 2008-100.
6256 So what do you feel is threatened?
6257 MS WYLIE: The difference between 2008-100 and what exists today in the regulation is that 2008-100 speaks to offering. Buy-through speaks to buying.
6258 COMMISSIONER CUGINI: So it is the combination of those two that you are asking us to reinforce?
6259 MS WYLIE: Well, mainly there are concerns obviously about other rules applying to ethnic services, but mainly Fairchild's concern is that no one can buy a general interest foreign or licenced service without buying Fairchild's service in that language, which is what is possible now.
6260 But the word in 2008 is "offer" and the word in the proposed regulations is "distribute" --
6261 COMMISSIONER CUGINI: Okay.
6262 MS WYLIE: -- which is a very different thing from "receive" or "buy".
6263 In other words, instead of general exclusivity, the Commission -- the quid pro quo was you won't have genre exclusivity to have more services offered to third-language communities but, rather than leave you adrift without genre exclusivity and nothing else, we will give you the buy-through.
6264 So the concern is in my respectful opinion -- in my respectful opinion, neither 2008-100 nor the proposed regulations continue that because the only time you see the word "receive" in the proposed regs is that every subscriber must receive a preponderance of Canadian services. The rest is an imposition on the BDU to distribute or offer the service. It doesn't force anyone to buy it.
6265 COMMISSIONER CUGINI: And of course this is true regardless of vertical integration, but if I'm to understand your position more clearly, it's exacerbated by?
6266 MS WYLIE: Yes. I think that concern -- many concerned parties have taken the opportunity to respond to the Commission's invitation to express their concern which I think it is legitimate for them to say they have been rendered more acute with vertical integration.
6267 COMMISSIONER CUGINI: Okay. Thank you.
6268 Mr. Chandrasekar, do you have something to add?
6269 MR. CHANDRASEKAR: No. We just would like to clarify, you know, we are not against vertical integration at all. In fact, we support vertical integration.
6270 We are very proud of some tremendous Canadian companies you know that have been extremely successful. You know companies like Astral, Alliance Atlantis, you know, CHUM, these are all great success stories in this country and some of you know the standard broadcasting and others which got vertically integrated as well or the recent Bell takeover of CTV and Shaw's takeover of CanWest.
6271 Frankly, you know, we applaud a lot of these decisions. We just want to make sure that the small guys are not forgotten when some big things are happening in the marketplace.
6272 We also want to emphasize that we are not against genre protection. We are very proud of the English and French services which have genre protection and we want to support that as well. For no reason we are saying that that should ever be dismantled.
6273 20 years ago if we didn't have -- if HBO was available in this country I don't think we would have had a strong Astral. If Nickelodeon was available in this country, I don't think we would have had a strong YTV and if MTV was allowed in this country, you know, to operate freely, I don't think we would have had a successful MuchMusic. And there are several examples. I can go on and on and on.
6274 So we just want to make sure that somewhere along the lines that the contributions of third-language communities which were very miniscule maybe 20 years ago, but by virtue of the fact that a number of us have made lots of investments -- and these are Canadian investments -- these are not made -- these investments are not just from the ethnic community per se, just from our own community.
6275 Our South Asian service we are very proud. We are a Canadian service that's listed on a Canadian stock exchange which is the first of its kind in North America for a multicultural television network, and we are very proud of that. And our shareholders are Canadian as well.
6276 So I think what we need to emphasize here is that there is great room for us.
6277 We have tremendous ambitions for the future as well and we are very grateful to you for allowing us to even graduate to this extent. We just want to make sure that that momentum is not lost as we have -- and we have come to you not from a promise of performance, from a proof of performance to request the continuance of buy-through.
6278 COMMISSIONER CUGINI: Well, thank you both very much. Your positions are very clear and I have no more questions.
6279 THE CHAIRPERSON: Did you make your position clear both after the 2008-100 decision and the one after the draft regulations were put out for comment?
6280 MS LOGAN-LOGAN: We did, absolutely.
6281 THE CHAIRPERSON: Okay, fine.
6282 MS WYLIE: Actually, Fairchild's comment in the proposed regulations was attached to its comment in this one. It's the same position but with the added concern that vertical integration is not going to make access any easier for vulnerable services.
6283 THE CHAIRPERSON: Okay.
6284 If there are no other questions, Mr. Chandrasekar, satisfy my curiousity. Downhill skiing in Gujarati, who in Gujarati skis?
6285 MR. CHANDRASEKAR: Sir, they didn't even know terminology. In fact we had to, you know, invent words that didn't exist in the vocabulary for some of those; in the luge for that matter. I mean there was --
6286 THE CHAIRPERSON: Just skiing, I mean there is an interest of people who speak Gujarati and skiing, notwithstanding that they can't ski at home?
6287 MR. CHANDRASEKAR: Well, sir, you know, you have got to understand people who come from, you know, hot climates, they are not used to -- first generation are not used to either skiing or skating. I could do neither of those. But the youngsters who are born in this country, you know, where multilingualism will fade but multiculturalism is strong, a lot of them have taken to skiing and it's just a family experience. It's a novelty for them. So basically, you know, that's the kind of exposure.
6288 The fact that we were associated with something like Olympics gave us a real upliftment. That was more than anything else. It's not as though we got Nielsen rating points for downhill skiing in Gujarati.
6289 THE CHAIRPERSON: Okay, thank you very much. As my colleague said, your position is very clear. Thank you.
6290 MR. CHANDRASEKAR: And thanks again, sir, for the opportunity and thanks a million for all the help. And we promise you we will acquit ourselves worthy of your consideration in the future as well.
6291 THE CHAIRPERSON: Thank you.
6292 Madam la Sécretaire, I think we have one more before lunch. Let's do it.
6293 THE SECRETARY: Thank you.
6294 J'inviterais maintenant l'Association des producteurs de films et de télévision du Québec à venir à la table de présentation.
6295 S'il vous plaît vous présenter et vous avez 10 minutes pour votre présentation. Merci!
6296 MME SAMSON: Bonjour, Monsieur le Président, Messieurs les Vice-présidents, Mesdames et Messieurs les Conseillers.
6297 Mon nom est Claire Samson, présidente-directrice générale de l'Association des producteurs de films et de télévision du Québec. M'accompagne aujourd'hui, madame Suzanne D'Amours, consultante au dossier.
6298 Précisons que nous n'avons nullement l'intention de répéter ce que nous avons énoncé dans notre mémoire. Nous sommes convaincus que vous en avez pris connaissance et nous serons ravis de répondre à vos questions le concernant.
6299 Tout d'abord, nous aimerions mentionner que nous avons pris connaissance des positions des différents intervenants de la présente audience. Nous interviendrons particulièrement sur les positions mises de l'avant par les intervenants qui évoluent dans le système de radiodiffusion de langue française. Toutefois, nous appuyons entièrement la position de nos collègues producteurs du Canada anglais exprimée dans le mémoire présenté par le CMPA.
6300 Si nous pouvons résumer les différentes interventions, les entreprises de distribution de radiodiffusion (les EDR) qui sont fortement intégrées verticalement souhaitent un minimum de réglementation. Les entreprises de radiodiffusion privées non intégrées à une EDR demandent une protection par une réglementation.
6301 Finalement, les entreprises de production indépendantes essaient de trouver le moyen de survivre dans ce nouvel environnement où l'intégration verticale est tellement soutenue que les débouchés pour leurs produits se rétrécissent comme peau de chagrin. Et cela, particulièrement au Québec, puisque le marché compte trois radiodiffuseurs conventionnels (un public, Radio-Canada; un intégré, TVA et un indépendant, V) et un grand groupe de services spécialisés qu'est Astral. A cela s'ajoute Télé-Québec et quelques joueurs moins dominants qui détiennent des services spécialisés de catégorie 1 et 2.
6302 Pouvons-nous rappeler pourquoi la production indépendante fait partie intégrante de l'industrie de la radiodiffusion canadienne et pourquoi nous sommes étonnés que nous en fassions très peu de cas dans cette audience?
6303 Premièrement, la télévision s'est développée au Québec, pendant les trois premières décennies, sur la base d'une intégration verticale quasi complète des activités de production, de programmation et de diffusion. Le rôle de la production télévisuelle indépendante au cours de cette période a été très modeste, voire marginal.
6304 Deuxièmement, rappelons l'impasse à laquelle a conduit ce modèle d'intégration verticale des activités de production et de diffusion et le diagnostic sévère qu'ont posé sur cette situation deux commissions d'étude indépendantes au début des années '80.
6305 En l'essence, celles-ci ont constaté: une concentration indue des décisions de création et de production aux mains de quelques-uns; une faible innovation, un essoufflement et une sclérose de la création; une baisse d'efficacité, de productivité et de compétitivité; un apport limité au développement de nouveaux talents et à la diversification des lieux d'idéation, de création et de production.
6306 Pour résoudre ces graves problèmes, les deux comités ont identifié la même solution: obliger les télédiffuseurs à affecter une portion significative de leur budget de programmation canadienne à l'acquisition d'émissions en provenance d'une diversité de producteurs indépendants.
6307 On peut certainement affirmer que la majorité des objectifs imposés alors ont été atteints et que la production indépendante a changé radicalement le portrait de la télévision québécoise. Un retour à un modèle d'intégration verticale sans recours à la production indépendante conduirait inévitablement aux mêmes problèmes de diversité d'idéation et de création.
6308 Dans un univers où les modèles de production et d'exploitation évoluent, le processus de diversification des lieux de création et de production doit se poursuivre. Cet objectif transcende les intérêts propres du milieu de la production indépendante. Son atteinte est essentielle au maintien du dynamisme et de la compétitivité du système de la radiodiffusion dans son ensemble, de sa capacité de faire appel à tous les talents créateurs d'ici et de jouer adéquatement son rôle d'intermédiaire entre l'expression créatrice de nos auteurs, réalisateurs et artistes et les attentes des téléspectateurs d'ici et d'ailleurs.
6309 Le système de radiodiffusion a subi des transformations importantes au fil des ans. Cette évolution a su s'opérer dans le respect des objectifs prévus à la Loi sur la radiodiffusion, loi qui permet aux Canadiens de retrouver à l'écran le reflet de leurs valeurs dans toute sa diversité. Ce succès repose depuis de nombreuses années sur le maintien de piliers que sont: un (premièrement), un diffuseur public doté d'une mission claire; deuxièmement, des diffuseurs privés distincts assurant une grande diversité des voix; troisièmement, une industrie de télédistribution solide et quatrièmement, un secteur de production télévisuelle indépendant offrant des produits de qualité et variés.
6310 Les contributions substantielles versées par ces joueurs et requises en vertu de la réglementation ont permis le développement d'une industrie canadienne de radiodiffusion forte et en santé qui joue un rôle important dans l'économie canadienne. Ce succès économique n'aurait pu se réaliser en se basant uniquement sur les forces du marché.
6311 Nous sommes toujours estomaqués de lire dans le mémoire présenté par Quebecor que ce dernier sollicite encore de pouvoir verser les redevances de Vidéotron au Fonds Quebecor «...afin de décider des projets dans lesquels Quebecor Media devrait investir pour lui assurer un niveau de compétitivité satisfaisant et refléter une vision qui lui est propre.» Voilà où mène parfois le désir de contrôle de certaines entreprises.
6312 Dans ce cas-ci, Quebecor est plus intéressé à assurer le succès de son entreprise et du groupe dans son ensemble que du succès du système de radiodiffusion. Nos visions sont diamétralement opposées, malheureusement.
6313 Passons maintenant aux différents points qui nous interpellent et qui ont été définis par le Conseil dans le cadre de cette audience.
6314 Les règles d'assemblage: à partir de septembre 2011, l'ensemble des règles qui régissaient l'ère analogique auront été éliminées. Dans un univers sans règles d'assemblage, la flexibilité pour l'offre à l'abonné sera quasi sans limite.
6315 Nous sommes d'avis que le Conseil doit maintenir des règles minimales de distribution qu'il devrait intégrer dans le Règlement sur la distribution de radiodiffusion afin d'assurer que les services indépendants puissent coexister dans un univers aussi fortement intégré. Ces services recourent de façon importante à la production indépendante et contribuent par ce fait à la diversité des contenus proposés aux abonnés.
6316 L'APFTQ appuie entièrement la proposition d'Astral, présentée dans son mémoire aux articles 43 à 45, et demande au Conseil d'y donner suite.
6317 De plus, l'APFTQ croit qu'étant donné le degré élevé d'intégration verticale distribution/programmation qui prévaut aujourd'hui dans le système canadien de radiodiffusion, il devient nécessaire d'intégrer au Règlement sur la distribution de la radiodiffusion le principe de suspension des changements unilatéraux aux conditions de distribution d'un service de programmation. Plus précisément, lors de l'expiration de la convention d'affiliation, dans le cadre d'un processus de règlement de différend, les changements proposés par l'EDR seront suspendus jusqu'à ce que le Conseil ait statué au terme de ce processus.
6318 Quant à la divulgation des données financière, le Conseil divulgue chaque année, depuis longtemps, les informations détaillées concernant les revenus et les dépenses des services canadiens payants et spécialisés et rien ne prouve que cette pratique ait nui à la capacité concurrentielle de ces services, bien au contraire, lorsqu'on regarde les résultats financiers de ces entreprises dont les BAII atteignent parfois plus de 30 pour cent.
6319 Le Conseil a aussi publié des données financières et statistiques détaillées additionnelles concernant plusieurs télédiffuseurs en direct à l'occasion du renouvellement de leurs licences en 2001, et rien ne prouve non plus que ce geste ait eu une incidence néfaste pour eux. La divulgation des données favoriserait l'équité horizontale au sein de l'industrie, car tous les groupes seraient traités de façon équitable, et aucune preuve n'a été fournie pour justifier comment un groupe pourrait être désavantagé par rapport à un autre.
6320 Si certaines entreprises sont en mesure de démontrer lors du dépôt annuel des formulaires avec preuves à l'appui que la divulgation de certaines données leur serait préjudiciable, nous sommes convaincus que le Conseil a tous les outils en main pour en faire l'analyse et les exempter de la divulgation, le cas échéant.
6321 Nous tenons à rappeler au Conseil son objectif stratégique concernant la divulgation des informations financières qui est de mettre à la disposition du public une quantité suffisante de données financières relatives pour lui permettre de participer de façon plus éclairée et constructive aux instances publiques et aux processus décisionnels. Nous sommes d'avis que toutes les entreprises de radiodiffusion devraient être tenues de mettre à la disposition du public des données financières pouvant démontrer qu'elles répondent aux exigences de leur licence.
6322 Je remercie le Conseil de nous avoir permis d'exprimer notre opinion et on est prêt à répondre à vos questions.
6323 LE PRÉSIDENT: Merci.
6324 Rafraîchissez-moi la mémoire. Vous dites dans la page 4: «L'APFTQ appuie entièrement la proposition d'Astral, présentée dans son mémoire, articles 43 à 45...»
6325 Qu'est-ce que cela...?
6326 MME SAMSON: Oh! Je vais devoir le sortir. C'est sur les assemblages...
6327 MME D'AMOURS: C'est les règles d'assemblage.
6328 MME SAMSON: C'est les règles d'assemblage, oui... 43 à 45.
6329 MME SAMSON: Voilà!
6330 MME D'AMOURS: Règles d'assemblages et de distribution.
6331 MME SAMSON: Alors, il s'agit des règles d'assemblage, de distribution. Donc, de maintenir les règles d'assemblage qui sont contenues à la section 23... 1 et 2. Ensuite, la proposition plus spécifiquement d'Astral propose que:
«Le Conseil devrait adopter une règle applicable aux services de catégorie B dans les marchés de langues française et anglaise, à l'effet que tout service de catégorie B doit être offert dans au moins un forfait composé d'un minimum de cinq services, avant d'être offert à la carte».
«Dans un troisième temps, que le Conseil prévoit que le prix chargé aux consommateurs pour un service de programmation indépendant doit être de valeur similaire au prix chargé pour un service intégré équivalent.»
6333 LE PRÉSIDENT: Le dernier point, comment atteindre un résultat comme ça... que le prix, essentiellement, soit raisonnable et comparable au prix chargé aux autres services?
6334 MME SAMSON: A un prix chargé...? Que le distributeur pourrait demander pour un service dont il est propriétaire.
6335 LE PRÉSIDENT: Est-ce que ça ne nécessite pas un code ou quelques normes pour dire ça, parce que ce sont des termes assez généraux: «équitable», «comparable», et cetera. On peut avoir beaucoup de conversation sur «si un prix est comparable ou non».
6336 MME SAMSON: Bien, je pense qu'essentiellement...
6337 LE PRÉSIDENT: Excusez... Est-ce que vous croyez qu'on va avoir des disputes chaque fois, pour régler ces normes-là?
6338 MME SAMSON: Bien, j'imagine qu'il va y avoir des disputes certainement, oui.
6339 LE PRÉSIDENT: O.K.
6340 Autre chose qui n'est pas exactement liée à cette audience, mais comme vous êtes ici, je vais profiter de l'occasion. Où êtes-vous, en"terms of trade" pour les négociations que vous faites avec Radio-Canada et TVA? Je sais que vous avez un accord avec Astral...
6341 MME SAMSON: Oui.
6342 LE PRÉSIDENT: Mais on va avoir le renouvellement de SRC et TVA en octobre (ou quelque chose...) et est-ce qu'il y a une pré-condition qui veut qu'il y ait une "terms of trade". Je ne sais pas comment on dit en français--
6343 MME SAMSON: Oui, oui, il y a des ententes...
6344 LE PRÉSIDENT: ... vous parlez toujours à moi de "terms of trade."
6345 MME SAMSON: ...il y a des ententes commerciales. On les appelle comme ça, aussi.
6346 Alors, bon... Mise à part celle d'Astral, qui a été conclue en décembre dernier, nous avons eu d'autres rencontres avec Radio-Canada, qui nous a fait une proposition. Je prévoyais cette semaine -- ou peut-être au plus tard la semaine prochaine -- retourner voir les gens de Radio-Canada avec une contre-proposition de notre part, puisque la proposition qu'ils nous ont faite n'était pas acceptable pour nous.
6347 Donc, j'imagine que ces discussions-là vont se poursuivre cet été et, ultimement, tenter d'avoir une entente avant l'audience pour le renouvellement des licences.
6348 Pour ce qui est de TVA... de Quebecor, nous n'avons eu aucune rencontre -- une rencontre avec Quebecor, qui a envoyé un représentant à nos bureau, mais pas plus. Et je me dois de... ou enfin, je me promets bien de relancer TVA avec une invitation dès mon retour de vacances la semaine prochaine.
6349 LE PRÉSIDENT: Bon. J'aimerais réitérer qu'on espère qu'un accord entre vous et TVA et un accord entre vous et SRC soit là avant qu'on discute du renouvellement de leur licence.
6350 MME SAMSON: Nous y mettrons tous les efforts possible, Monsieur le Président.
6351 LE PRÉSIDENT: Oui, oui, oui. Parce que ce n'est pas notre but d'imposer, mais c'est une seule solution qui reste, si l'accord n'est pas négocié.
6352 Michel, tu as des questions?
6353 CONSEILLER MORIN : Merci, Monsieur le Président.
6354 Si j'ai bien lu et bien noté, dans votre présentation orale ce matin je ne trouve pas le mot «consommateur».
6355 MME SAMSON: Le mot «consommateur»?
6356 CONSEILLER MORIN : Oui. Parce que cette audience-là, on se demande avec l'intégration verticale si le consommateur ne doit pas lui aussi y trouver son compte.
6357 Et votre ami, Quebecor Media, offre actuellement un service de base qui n'est pas très loin du service minimaliste -- le «skinny basic service» -- dont la Commission vous a demandé des commentaires.
6358 Quelle est votre position, exactement? Le service de base de Quebecor, actuellement, c'est vraiment le service de base avec quelques services, et les services 9(1)(h) et, bien sûr, les généralistes. Quelle est votre position, vous, en tant que producteurs qui avez profité -- je ne parle pas uniquement de vous...
6359 MME SAMSON: Oui.
6360 CONSEILLER MORIN: ... mais des producteur indépendants en général, qui avez profité d'un service élargi, depuis de nombreuses années, le service hybride, tel qu'on le connaît, qui a ses deux composantesCRTC et l'entreprise de distribution locale qui ajoute et ajoute des services au service de base et qui ne laisse pas le choix au consommateur s'il veut faire partie du système.
6361 MME SAMSON: Moi, je vous dirais que nous avons toujours demandé au Conseil, et nous continuons de vouloir présenter au Conseil l'importance pour nous de conserver une prédominance des services canadiens dans l'offre que font... ou les offres que font les distributeurs pour les consommateurs, qu'ils soient diverses...
6362 Quant à l'offre minimaliste, comme vous dites, nous croyons qu'il y a des consommateurs qui veulent effectivement un service minimum, qui ne seront peut-être pas des grands consommateurs de...
6363 Je ne connais pas l'offre spécifique de Quebecor. Vous ne serez pas surpris de savoir que je ne suis pas abonnée au câble, mais...
6364 CONSEILLER MORIN : Je suis surpris, oui.
6365 MME SAMSON: Vous êtes surpris, oui.
6366 CONSEILLER MORIN : Parce que vous êtes avec le satellite?
6367 MME SAMSON: Oui, avec le satellite. Oui, oui, oui, oui.
6368 CONSEILLER MORIN: Ah! O.K. D'accord.
6369 MME SAMSON: Mais il y a une partie de la population, il y a des consommateurs qui souhaitent une offre minimaliste. Je vous donnerai l'exemple de ma mère, qui consomme les mêmes stations de télévision depuis 50 ans et qui a très peu de services sur son offre de câble (elle, elle est abonnée au câble) et ça la satisfait totalement et... bon!
6370 Par contre, moi, je vous dirai qu'en tant que consommateur, chez moi j'ai la palette complète de l'offre, parce que ça m'intéresse, parce qu'on est dans l'industrie et tout ça.
6371 Mais tant et aussi longtemps que nous souhaiterions que -- peu importe la diversité de l'offre d'un consommateur -- que l'entreprise de distribution doive s'assurer qu'il y ait une prédominance de services canadiens dans l'ensemble ou le menu que se fera le consommateur.
6372 CONSEILLER MORIN : Mais en principe, vous n'êtes pas -- si je comprends bien en utilisant l'exemple de votre mère -- vous n'êtes pas contre le principe d'un service de base qui soit minimal, qui soit offert au consommateur. Évidemment, l'un n'empêche pas l'autre; on peut avoir un service de base minimal, c'est le choix qui serait défini par le CRTC, et ensuite, le consommateur, dans le marché, choisit les services...
6373 MME SAMSON: ...qu'il juge...
6374 CONSEILLER MORIN: ...qu'il veut bien. Et ce principe-là, pour vous, fait du sens?
6375 MME SAMSON: Tout à fait.
6376 CONSEILLER MORIN : En ce qui concerne les règles d'assemblage, quelle est votre position exactement, au Québec? Est-ce que vous pensez que ça devrait être un pour un, pour... réservé aux indépendants, ou un pour trois ou un pour deux? Est-ce que...?
6377 MME SAMSON: Non. Je pense que, au Canada anglais, le trois pour un est probablement plus adapté. Au Québec, un pour un serait probablement acceptable, compte tenu du marché, la spécificité du marché québécois. Peut-être qu'au Canada anglais ça pourrait être plus problématique.
6378 CONSEILLER MORIN : Mais compte tenu du marché quand même plus étroit au Québec...
6379 MME SAMSON: Oui.
6380 CONSEILLER MORIN : ...vous pensez que, pour faire une place aux indépendants, un pour un serait justifié...
6381 MME SAMSON: Serait...
6382 CONSEILLER MORIN : ...et que finalement, ça pourrait se traduire par une offre...
6383 MME SAMSON: Oui.
6384 CONSEILLER MORIN: ...des indépendants?
6385 Alors, ce sont mes questions, Monsieur le Président.
6387 LE PRÉSIDENT: Tom?
6388 CONSEILLER PENTEFOUNTAS: Alors bonjour.
6389 MME SAMSON: Bonjour.
6390 CONSEILLER PENTEFOUNTAS: Juste pour retourner un petit peu sur les ententes commerciaux... je dirais -- l'entente commerciale -- la possibilité d'en conclure une...
6391 MME SAMSON: Oui.
6392 CONSEILLER PENTEFOUNTAS: ...à brève échéance -- et peut-être élaborer sur la question, je pense, que le président a déjà posée -- où sommes-nous, là et qu'est-ce qui bloque? Où est-ce que le bat blesse, sur l'entente commerciale au Québec?
6393 MME SAMSON: Bon, essentiellement, je vous dirais, c'est sur l'exploitation des droits. Comme les diffuseurs sont intégrés verticalement -- ce n'est pas le cas de Radio-Canada, mais dans le cas de Vidéotron et de Quebecor, nous --
6394 CONSEILLER PENTEFOUNTAS: Mettons les choses au clair. Il y a RadioCan et TVA.
6395 MME SAMSON: Oui.
6396 CONSEILLER PENTEFOUNTAS: On s'entend là-dessus?
6397 MME SAMSON: Oui.
6398 CONSEILLER PENTEFOUNTAS: O.K. Écartons pour l'instant RadioCan.
6399 MME SAMSON: Oui.
6400 CONSEILLER PENTEFOUNTAS: Parlons un petit peu de TVA, compte tenu du fait qu'ils occupent une place importante sur le marché québécois.
6401 MME SAMSON: Oui... Oui, bien sûr.
6402 CONSEILLER PENTEFOUNTAS: Où êtes-vous, avec TVA, dans vos discussions?
6403 MME SAMSON: Nous somme nulle part, Monsieur.
6404 CONSEILLER PENTEFOUNTAS: Nulle part. Vous avez fait une demande, j'imagine... écrite?
6405 MME SAMSON: Nous avons fait... lancé l'invitation à plusieurs reprises...
6406 CONSEILLER PENTEFOUNTAS: Mm-hmm.
6407 MME SAMSON: Il y a eu une rencontre qui s'est tenue à nos bureaux avec un représentant de Quebecor et ça n'a pas... il n'y a pas eu de suite. Il devait retourner à ses mandants...
6408 CONSEILLER PENTEFOUNTAS: Vous lui avez fait part de vos préoccupations, sans doute...
6409 MME SAMSON: Bien sûr, bien sûr.
6410 CONSEILLER PENTEFOUNTAS: ...lors de votre... vous avez fait?
6411 MME SAMSON: Bien sûr.
6412 CONSEILLER PENTEFOUNTAS: Est-ce récent, cette...?
6413 MME SAMSON: Oh, non! Ça date d'il y a plus de... plus d'un an.
6414 CONSEILLER PENTEFOUNTAS: Plus d'un an?
6415 MME SAMSON: Plus d'un an, oui.
6416 CONSEILLER PENTEFOUNTAS: Et est-ce qu'il y avait une réaction au moment même, suite à vos revendications, vos demandes?
6417 MME SAMSON: Très peu. Et nous avons écouté leurs revendications aussi et un peu leur «pitch», si vous me permettez l'expression...
6418 CONSEILLER PENTEFOUNTAS: Ça va.
6419 MME SAMSON: ...mais il n'y a pas eu de suite et il n'y a pas eu de retour.
6420 Alors, je me propose -- c'est parce que je suis en vacances cette semaine, mais je me propose de lancer l'invitation à nouveau dès lundi prochain.
6421 CONSEILLER PENTEFOUNTAS: Mais depuis un an, il devait avoir suite. Est-ce que vous avez essayé de rejoindre cette personne-là pour voir quelle était la réaction de ses mandants.
6422 MME SAMSON: Oui. Nous n'avons pas eu de retour d'appel et nous avons envoyé une autre -- j'ai envoyé une autre correspondance à monsieur Dion, au président de TVA, et nous n'avons pas eu de suite.
6423 Je pense que... Honnêtement, je pense que TVA a toujours été très clair. Sa position n'a pas changé et il n'a pas l'intention de conclure d'entente avec l'Association des producteurs.
6424 CONSEILLER PENTEFOUNTAS: Et le principal point de blocage, ça serait quoi? Qu'est-ce qui empêche cette entente, d'après vous... ou d'après les discussions que vous avez avec TVA?
6425 MME SAMSON: Je ne peux pas vous donner leur argument. Je pense que c'est parce qu'ils veulent faire comme ils veulent, quand ils veulent et... Je pense que c'est... C'est simplement une fin de non recevoir de leur côté.
6426 CONSEILLER PENTEFOUNTAS: Aussi simple que ça?
6427 MME SAMSON: Selon moi, c'est aussi simple que ça, mais il faudrait leur demander.
6428 CONSEILLER PENTEFOUNTAS: Et la nature de votre relation avec RadioCan, est-ce que ça diffère?
6429 MME SAMSON: Oh! C'est différent. Bien que Radio-Canada n'est... ce n'est pas facile non plus avec les différentes plateformes, l'exploitation des droits et tout ça, alors c'est...
6430 Dans le cas de Radio-Canada, c'est vraiment sur l'exploitation où il faudra travailler très fort et avoir beaucoup de discussions avec eux. Avec l'exploitation de TOU.TV, les nouvelles plateformes, l'exploitation même à l'international...
6431 Donc, c'est vraiment... Toute la question, c'est la question de l'exploitation des droits.
6432 CONSEILLER PENTEFOUNTAS: Oui. Mais les négos au niveau du produit qui est diffusé sur une base linéaire est plus facile?
6433 MME SAMSON: Oui.
6434 CONSEILLER PENTEFOUNTAS: C'est les autres plateformes où ça se...?
6435 MME SAMSON: C'est les autres plateformes, bien sûr. Tout à fait!
6436 CONSEILLER PENTEFOUNTAS: ...ça bloque un petit peu?
6437 Merci beaucoup!
6438 MME SAMSON: Merci à vous!
6439 LE PRÉSIDENT: A cet égard, l'accord qui existe au marché anglais -- je peux apprécier que le marché anglais est assez différent -- est-ce que ça vous servira comme modèle pour vos négociation, si on a des nouvelles négociations?
6440 MME SAMSON: Bien sûr! Bien sûr! Le modèle négocié par le CMPA avec les diffuseurs privés est beaucoup plus élaboré, beaucoup plus en détails et plus exigeant que celui que nous avions travaillé, mais il est très inspirant et... On ne peut que les féliciter.
6441 Je pense que cette entente-là, elle est très bonne pour tout le monde. Elle est bonne pour les radiodiffuseurs, elle est bonne pour les producteurs et pour les ayants droit. Il faut penser aux ayants droit, aussi, dans toute la question de l'exploitation des plateformes.
6442 LE PRÉSIDENT: O.K. Je crois qu'il n'y a pas d'autre question.
6443 Merci beaucoup pour votre présentation.
6444 MME SAMSON: Merci à vous.
6445 LE PRÉSIDENT: Et Madame la Secrétaire, je crois que c'est tout pour aujourd'hui?
6446 LA SECRÉTAIRE: Oui, et nous recommencerons demain à 9 h 00.
6448 LE PRÉSIDENT: O.K. Merci!
--- Whereupon the hearing adjourned at 1200, to resume on Tuesday, June 28, 2011 at 0900
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