ARCHIVED - Transcript, Hearing 16 April 2012

Volume 1, 16 April 2012

TRANSCRIPTION OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION

SUBJECT:

Review of the Local Programming Improvement Fund - Broadcasting Notice of Consultation CRTC 2011-788, 2011-788-1 and 2011-788-2

HELD AT:

Outaouais Room

Conference Centre

140 Promenade du Portage

Gatineau, Quebec

16 April 2012

Transcription

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

Transcription

Review of the Local Programming Improvement Fund - Broadcasting Notice of Consultation CRTC 2011-788, 2011-788-1 and 2011-788-2

BEFORE:

ALSO PRESENT:

HELD AT:

Outaouais Room

Conference Centre

140 Promenade du Portage

Gatineau, Quebec

16 April 2012

- iv -

TABLE OF CONTENTS

PAGE / PARA

APPEARING ITEMS

PHASE I

PRESENTATIONS

APPEARING INDIVIDUALLY

PANEL OF INTERVENERS

APPEARING INDIVIDUALLY

PANEL OF INTERVENERS

PANEL OF INTERVENERS

- vi -

UNDERTAKINGS

PAGE / PARA

Gatineau, Quebec

--- Upon commencing on Monday, April 16, 2012 at 0900

1   THE CHAIRPERSON: Good morning, ladies and gentlemen, and welcome to this public hearing.

2   The panel for this hearing consists of:

3   - Tom Pentefountas, Vice-Chairman of Broadcasting;

4   - Elizabeth Duncan, Commissioner for the Atlantic Region and Nunavut;

5   - Suzanne Lamarre, conseillère régionale du Québec;

6   - Peter Menzies, Regional Commissioner for Alberta and the Northwest Territories;

7   - Candice Molnar, Regional Commissioner for Manitoba and Saskatchewan;

8   - Michel Morin, conseiller national;

9   - Marc Patrone, National Commissioner;

10   - Louise Poirier, conseillère nationale;

11   - and myself, Len Katz, Acting Chairman and Vice-Chairman of Telecom, and I will be presiding over this hearing.

12   The Commission team assisting us includes:

13   - Joe Aguiar, Hearing Manager;

14   - Peter McCallum, General Counsel; and

15   - Jade Roy, Hearing Secretary and Senior Public Hearings Officer.

16   Please speak with Ms Roy if you have any questions regarding hearing procedures.

17   At this hearing, the Commission will review the Local Programming Improvement Fund.

18   En 2008, le Conseil a établi ce Fonds pour assurer que les téléspectateurs dans les petits marchés continuent de recevoir une programmation locale, en particulier en ce qui a trait aux émissions de nouvelles locales. Il visait aussi à améliorer la qualité et la diversité de la programmation locale et à assurer une certaine parité dans les marchés francophones. Lorsque le Fonds a été créé, les dépenses en programmation locale des diffuseurs privés stagnaient.

19   The following year, in response to the severity of the economic downturn and the impaired advertising market, the Fund was modified and expanded to provide sufficient support to local programming. Cable and satellite distribution companies were required to contribute 1.5 percent of gross broadcasting revenues. In 2010, 78 stations received over $100 million in funding. In 2011, 80 stations received more than $106 million in funding.

20   When the Fund was created, we stated our intention to conduct a review in its third year of existence. During this hearing, the panel intends to discuss a number of issues, including:

21   - the Fund's objectives and the performance of the stations that have received funding;

22   - the incremental expenditures on local programming as a condition to receive funding;

23   - the current eligibility criteria and allocation formula; and

24   - the level of contributions made by cable and satellite companies.

25   This review will help us decide whether the Local Programming Improvement Fund should be maintained, modified or discontinued.

26   Vendredi dernier, le Conseil a ajouté au dossier public des renseignements additionnels sur la quantité moyenne de programmation locale diffusée par les divers groupes de propriété. Ces renseignements sont fondés sur un examen des journaux de télédiffusions déposés par chaque bénéficiaire au cours de quatre dernières années, et elle est disponible sur notre site Web. Des copies supplémentaires, en français et en anglais, sont également disponibles dans la salle d'audience.

27   Again, this past Friday, the Commission added additional information to the public file concerning the average amount of local programming aired by different ownership groups. This information is based on a review of the television logs filed by funding recipients over the last four years and is now available on our Web site. Copies are also available in French and English in the hearing room.

28   I would now invite the Hearing Secretary, Jade Roy, to explain the procedures we will be following.

29   Madame la Secrétaire.

30   LA SECRÉTAIRE : Merci, Monsieur le Président, et bonjour à tous.

31   Before beginning, I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.

32   When you are in the hearing room, we would ask that you please turn off your cell phones, beepers and smartphones as they are an unwelcome distraction and they cause interference on the internal communication systems used by our translators. We would appreciate your cooperation in this regard throughout the hearing.

33   The hearing is expected to last five days. We will begin each morning at 9:00 a.m. We will advise you of any scheduling changes as they occur.

34   Please note that the Commission Members may ask questions in either English or French. Simultaneous interpretation is available during the hearing; the English interpretation is on channel 1. You can obtain an interpretation receiver from the commissionaire at the entrance of the Conference Centre.

35   We would like to remind participants that during their oral presentation they should provide for a reasonable delay for the interpretation while respecting their allocated presentation time.

36   Veuillez noter que les membres du Conseil peuvent poser des questions en français et en anglais. Le service d'interprétation simultanée est disponible durant l'audience. L'interprétation en français se trouve au canal 2. Vous pouvez vous procurer les récepteurs d'interprétation auprès du commissionnaire à l'entrée du Centre.

37   Nous désirons rappeler aux participants d'allouer un délai raisonnable pour la traduction lors de leur présentation à vive voix, tout en respectant le temps alloué pour leurs présentations.

38   There is a verbatim transcript of this hearing being taken by the court reporter sitting at the table to my right, which will be posted daily on the Commission's Web site. If you have any questions on how to obtain all or part of this transcript, please approach the court reporter during a break.

39   We will now proceed with the presentations in the order of appearance set out in the agenda.

40   And now, Mr. Chairman, we will begin with the presentation by Shaw Communications Inc.

41   Please introduce yourselves and you will then have 10 minutes for your presentation. Thank you.

PRESENTATION

42   MR. BISSONNETTE: Thank you.

43   Good morning, Chairman Katz, Vice-Chairman Pentefountas and Commissioners. I am Peter Bissonnette, President of Shaw Communications.

44   I am joined by Jean Brazeau, Senior Vice-President of Regulatory Affairs, Troy Reeb, Senior Vice-President of News and Station Operations, and Dean Shaikh and Jon Medline from our Regulatory team.

45   We welcome this opportunity to discuss the effectiveness and future of LPIF as a mechanism to support local programming. For Shaw, local programming is fundamental to our content strategy as we strive to exceed consumer expectations in a dynamic and highly competitive digital environment. Local content provides a distinct and powerful opportunity to engage with Canadian consumers and communities.

46   Shaw's commitment to local TV motivated our acquisition of the Global Television Network, which is the cornerstone of Shaw Media.

47   As proud owners of Global, we are dedicated to producing the best local content and creating a news powerhouse. We see enormous potential to change the face of local programming and respond to evolving consumer demands.

48   We also know with certainty that this potential can only be realized with two essential tools: innovation and investment. LPIF undermines this vision.

49   LPIF was created in response to exceptional and transient economic circumstances. The 2008 downturn led to a dramatic fall in advertising revenue for over-the-airs, which precipitated fears about the sustainability of local television stations and doubts about their financial ability to convert to digital. Today, we face a completely different reality.

50   Our acquisition of Global is one of several critical changes in the broadcasting system since the creation of LPIF. Today, there is ownership stability, an improving advertising market and less financial uncertainty for local stations.

51   Digital conversion, which was one of the main drivers behind LPIF's introduction, has been largely completed with tremendous success and, importantly, without burdening taxpayers.

52   The Commission has also introduced several new regulatory measures to support local stations.

53   Finally, distributors now face unprecedented competitive pressure from regulated and unregulated sources. In today's digital environment, innovation and investment will ensure the strength and relevance of the system. Relying on inefficient and ineffective subsidies, we believe, will only weaken the system.

54   For these reasons, we respectfully submit that it is in the public interest to eliminate LPIF by the end of this broadcast year.

55   In response to the Commission's areas of focus, let me begin by discussing Shaw's highest priority: the interests of consumers.

56   Shaw's commitment to our customers is clear from such recent innovations as the Shaw Plan Personalizer, Shaw Gateway and our Exo network. We have also invested billions in broadband and satellite infrastructure, including our Digital Network Upgrade and the launch of a new satellite which will allow us to carry many more local stations.

57   After three years, LPIF has not resulted in any meaningful increase in total viewership to local programming. Furthermore, the majority of BDU customers receive nothing in return because they do not live in LPIF-eligible markets.

58   Also, LPIF redirects revenues away from the innovations and investments that are so critical to our customers and to strengthening the Canadian broadcasting system.

59   At Global, we are working hard to build a bright and exciting future for local content and we are very proud of the successes we have already achieved. We ask the Commission to support these endeavours, not through distortive subsidies that pick winners but rather by letting market forces drive innovation and investment. By adopting this approach, the Commission will ensure that the system is responsive to the demands of Canadian consumers.

60   Troy.

61   MR. REEB: Thank you, Peter.

62   In response to the Commission's first question, at Shaw Media, LPIF has been directed entirely to news programming in four main areas:

63   - staffing;

64   - technical and equipment;

65   - extension of local coverage; and

66   - community outreach and involvement.

67   In addition to hiring reporters and other staff, some of our initiatives have included:

68   - establishing distinct evening newscasts for each of Nova Scotia and New Brunswick;

69   - creating the newsmagazines Focus Saskatchewan and Focus Manitoba; and

70   - expanding Global Okanagan's supper hour news by 30 minutes each day.

71   However, as much as we have used our LPIF dollars responsibly, we prefer to move our business forward by innovating and becoming more efficient.

72   For example, Shaw Media now employs centralized news production facilities in Toronto, Calgary, Edmonton and Vancouver. Staff members in these facilities control all the "back-shop" work -- cameras, audio, graphics and switching -- for newscasts in every Global station. It is one of the most innovative and efficient systems in North America.

73   How efficient? Our 5:00 news hour in Kelowna goes to air every night using a crew in Toronto and at 5:30 is seamlessly handed off to another crew in Vancouver with zero disruption for the anchor team or the audience.

74   These efficiencies allow us to spend less on overhead, and more where it belongs, in the community, with reporters and cameras on the streets. They have allowed us to introduce new programming, like "The West Block" with Tom Clark.

75   None of these innovations would have happened if our operations were simply propped up with subsidies. Preserving LPIF -- particularly with its current formula of "spend more, get more" -- will simply reward inefficient local news operations, deter innovation and distort the market.

76   For example, CBC competes with Global TV, for viewers, for advertising revenue, for content and for talent. CBC has leveraged its $1 billion in Government funding to increase its share of LPIF. In Halifax alone, CBC receives $5.7 million in LPIF, five times more than Shaw's station in Halifax, which produces almost the exact same amount of local news.

77   To put that into perspective, $5.7-million is more than half the base budget for Global National, with news operations across the country and around the world. Stations like CBC Halifax are not increasing the local programming audience, which on conventional TV is flat at best. They are simply taking audience share away from other stations and making the sustainability of private broadcasters even more challenging.

78   CBC's marginally increased audience share in certain communities is not evidence of success. It is evidence of the harmful market distortion that results from subsidization.

79   We welcome competition from the CBC and from other stations. However, as a journalist, it is particularly objectionable to be forced to compete for an increasing share of subsidies. The independence and integrity of our reporting should not be compromised by subsidies from a Government agency. This has been an issue bubbling under the surface from the moment LPIF was announced. These concerns will only grow if the fund becomes permanent and essentially turns many private stations into a "second CBC."

80   Jean...?

81   MR. BRAZEAU: Thank you, Troy.

82   The Commission's final area of concern deals with the impact of eliminating LPIF and the question of whether other methods or incentives should be introduced to support local programming. The Commission has, we would argue, already address this by:

83   maintaining carriage and substitution rights,

84   increasing flexibility to meet regulatory obligations,

85   providing full-time distribution of small-market stations on DTH, and

86   preserving the Small Market Local Programming Fund.

87   LPIF and other proposed funding mechanisms are inconsistent with the specific objectives of private and public undertakings under the Broadcasting Act.

88   Under the Act, BDUs are responsible for the carriage and delivery of programming. BDUs have spent billions of dollars in building broadband networks to achieve the objective of providing efficient delivery of programming services at affordable rates.

89   Private broadcasters must create and present Canadian programming and respond to the demands of the public, but only to an extent consistent with available financial resources. This objective does not compel or mandate the Commission to make those resources available by taxing BDU customers.

90   LPIF should not turn private local stations into another tier of public broadcasters. This would be inconsistent with the Act, the dynamics of a competitive market and the Commission's commitment to relying on market forces whenever possible.

91   Shaw's position is that LPIF should be eliminated for all stations, including independents. Remarkably, on average, independent stations receive subsidies that actually exceed their spending on local programming. Of course, these stations also earn advertising revenues and, in some cases, that revenue is generated in large non-LPIF markets.

92   It is difficult to accept that LPIF, which has existed for only three years, is now critical to the viability of any station. This would only reinforce that subsidies create dependency, while acting as a disincentive to innovation and efficiency.

93   With respect to the public element, the CBC's specific objectives relates to "national and regional" audiences. If the CBC wants to prioritize local programming as a strategic objective, this should be funded entirely within its existing budget. The steps taken by the Government to make the CBC more accountable and efficient will benefit Canadian taxpayers. These efforts should not be undermined by an LPIF regime that has little accountability, distorts markets and perpetuates the status quo.

94   Peter...?

95   MR. BISSONNETTE: In conclusion, LPIF does not benefit Canadians or strengthen the system. However, innovation and investment will do both. We therefore ask the Commission to adopt our vision for the future of local programming, as reflected in Global's hard work and creativity. If these and other innovations and investments are given the space to thrive, the system will remain competitive and responsive to consumers in our dynamic and borderless digital world.

96   Preserving LPIF threatens this vision by distorting the marketplace, incenting inefficiencies and crowding-out innovation. As a permanent subsidy, LPIF will undermine the long-term health and relevance of the system. We agree with the warnings in the LPIF dissenting opinions that "[t]axpayers should not have to pay twice" for the CBC, newsrooms should not become "permanent wards of the state" and BDU customers should not be forced to "pay the costs of their confinement and care."

97   We respectfully ask the Commission to eliminate LPIF and we oppose any reallocation of LPIF contributions to other areas or causes.

98   Thank you. We look forward to your questions.

99   THE CHAIRPERSON: Thank you very much.

100   I want to focus on the state of the market today and you have gone to great lengths, both in your submission of February 15th and again this morning, to talk about how things have changed and when LPIF was first introduced and subsequently amended. Obviously the world as we know it today was not what it was back then.

101   And you comment on "improving advertising market and less financial uncertainty for local stations". Last paragraph on page 2 is what I'm just reading from right now.

102   Can you elaborate on what's happening in the marketplace today with regard to advertising revenue, where you see it; where it's come from; has it taken hold and is the marketplace stronger? Are people buying ads not at the last minute, but in advance and making commitments going forward or is it just last-minute type advertising based on specific needs at the point in time?

103   MR. BISSONNETTE: Well, clearly it's greatly improved since 2008 and there is certainly much more predictability in our advertising business.

104   Let me ask Troy to maybe give you a little insight on that.

105   MR. REEB: Peter, I acknowledge first off I'm not an expert in the sales area, but we do know that there was a significant improvement in advertising across the system last year, it softened up a little bit again this year with the international financial uncertainty but, interestingly enough, in our case at least, where our most stable advertising has been has been in the local market. It has been the international-driven advertising, the agency-driven advertising that has gone a bit softer this year, but our local market advertising has held up quite strongly and obviously that is primarily targeted into our local program.

106   MR. BRAZEAU: Just to add a couple of other points that Peter alluded to in his presentation also is that we seen some significant transaction in the last -- since 2008, of course our acquisition of the Canwest assets and the Bell acquisition of the CTV assets. So there's been significant financial stability for the over-the-airs in addition to the changing economic conditions which are significantly better than in 2008.

107   So we think all of these conditions have created an environment where maybe the -- in 2008 LPIF was a reasonable response to these conditions, but today certainly is no longer required.

108   MR. BISSONNETTE: And, of course, on the BDU side, Mr. Chairman, you know, BDUs have really -- you know, from 2008 to 2009 it's like night and day. You know, 2008 there certainly was a competitive environment, but this competitive environment that we see ourselves now, particularly in western Canada, is intense.

109   I don't know if you follow any of our quarterly reports and that type of thing, but our margins in the last quarter have come under particularly stress. I think our margins dropped in a quarter about 380 basis points and that's the cost of competition.

110   So I think we just also made a revision to our free cash flow guides about $100 million. We have to spend more in our business to continue to attract customers. Our investments are becoming much more critical in competing in our environment so the cost of the digital network upgrade is significant and in order for us to compete and to offer the kinds of services that our customers are asking for, we have to spend those and make those kinds of commitments.

111   So the BDUs are no longer -- they are vertically integrated companies that have the wherewithal to provide for those vertically integrated broadcast assets, but we also have much, much more restraint, if you will, necessary in the way that we use our dollars. We think that using our dollars to bolster the capability of a BDU is, frankly, more important at this time than it was in 2008.

112   THE CHAIRPERSON: Let's talk about the term "our dollars". Whose dollars really are they?

113   When I read over your submissions, you have sort of interchanged BDU money and consumer money. The reality is -- first of all, let me ask the basic question: Do you put the LPIF charges separately on the consumer bill today?

114   MR. BISSONNETTE: On the cable side we don't because, you know, for numerous reasons. One of them is, obviously it's very competitive out there and the competition, frankly, right now with the new entrant really buying market share is based on cost. So when you are giving away products for $10 for each of the three products, you are providing those products at much below cost. So to put another LPIF charge on our bill to our customers would not be very, very smart in the context of trying to compete in a realm of cost kind of pricing, competitive pricing.

115   THE CHAIRPERSON: So you do not separately identify LPIF?

116   MR. BISSONNETTE: On our cable we don't because of the intense competition in western Canada. I believe we did on our satellite bill, just for transparency, and it was only recently.

117   THE CHAIRPERSON: So you do it on your satellite bill, but you don't do it on your cable bill?

118   MR. BISSONNETTE: That's correct.

119   THE CHAIRPERSON: And the reason you do that is for competitive purposes. In one case it makes more sense as a business to put it on, in the other case it does not?

120   MR. BISSONNETTE: That's correct, Mr. Chairman.

121   THE CHAIRPERSON: Okay. So when the LPIF was first created there was two stages obviously. The first stage was when I guess it came to us that OTA was not very financially viable and we created an LPIF at that time -- in 2008 I guess it was -- it was 1 percent and it was based on incrementality and then 9 months or 12 months later things got direly difficult and we came back and basically said: No longer incrementality and move it up to 1.5 percent.

122   One of the things I hear you saying in here is that sort of the crisis that some people have called it has been reduced dramatically and so one can then make the assumption that maybe one alternative is to go back to the 1 percent scenario. What you're saying is, go right back to the beginning and don't have it at all.

123   I'm just trying to understand whether -- I can perhaps see the fact that the crisis has abated, but I can't see, at this point in time, evidence that the OTA marketplace still is not viable and solvent to the extent it's recovered.

124   MR. BISSONNETTE: If we just went from category to category -- so if we talk about vertically integrated companies -- I mean, we made a conscious decision in our company to invest $2 billion to buy Global and specialty services, and we did that because we have, we believe -- a strategy of owning content is really important in our long-term future with respect to attracting customers, having content that is meaningful, and being prepared to commit to even making content a much more attractive viewing alternative for our customers.

125   If you recall, we have sat in front of the Commission on many occasions talking about fee for carriage, value for signal -- we never did have a chance to talk about LPIF, but, you know, a similar subsidy kind of approach, and we have always said that rather than doing the subsidy approach to things, if you were to look at doing things that create incentives and utilize your infrastructure in a much more creative way, there are other ways, other than subsidies, of broadcasters flourishing.

126   And, frankly, the experience that we have had since we have acquired Canwest Global has been absolutely that.

127   Do you recall the acrimony a couple of years ago? The broadcasters couldn't even look a cable guy in the eye because of the differences of views, but we have, I think, demonstrated in a short period of time that there really are some benefits from vertical integration with respect to providing a really strong broadcasting face to our nation, and doing things that represent creativity.

128   Now, maybe Troy, again, could talk about some of the things that have happened in the short period of time that Shaw and Canwest Global, now Shaw Media, have come together.

129   But it's a great example of being able to do something without subsidies.

130   MR. BRAZEAU: Just to add, I think, again, you have to put it in context. The OTAs that were asking for help were not asking for LPIF, to start off with, and the two that were there were Canwest and CTV, and both of them now are under different ownership and different conditions.

131   Even the independents did not ask for LPIF.

132   So I think it's a misnomer to suggest that somehow there was this incredible cry for LPIF in 2008. There was not and, again, the circumstances have changed dramatically since then.

133   THE CHAIRPERSON: When you look at your LPIF-eligible stations in Global, with and without LPIF, how are they financially looking?

134   Has LPIF gotten you over the hump, basically, to the point where they are positive PBIT, or however you want to measure it?

135   MR. REEB: The LPIF-eligible markets, which, for us, include Lethbridge, Kelowna, Regina, Saskatoon, Winnipeg, and Halifax and Saint John, without LPIF, would all be money losers. There is no doubt about that.

136   But, overall, in news we are a money loser. We lose money doing news in Toronto.

137   We view our local news operations as core to the business. They are core to our community relevance -- and many other categories of Canadian programming also lose money, as the Commission will well be aware.

138   So it's not to say that these are a standalone in need of some kind of subsidy.

139   We have addressed those difficulties through the implementation of efficiencies.

140   The LPIF would put those stations, in a standalone sense, at least in a break-even position, but we don't believe that that's a necessary support, because, as I say, in some non-LPIF markets, particularly Montreal, we are also very challenged.

141   THE CHAIRPERSON: So let's say, hypothetically, that there was no LPIF, and three years down the line you had to go to the markets and you had to find a way of convincing the markets either to raise equity or debt, or support your stock price, and those LPIF-eligible stations were no longer getting LPIF and were under water. What would you do?

142   MR. BRAZEAU: Just a couple of points before Troy jumps in here.

143   First, I don't think that we should be looking at specific subsidies for specific local stations. We run a network, and a network has certain efficiencies, and having these stations there, even without LPIF, would still be very important.

144   THE CHAIRPERSON: Would you turn down those stations and leave Canadians in those markets without an over-the-air station?

145   MR. BRAZEAU: I think that Peter has indicated -- and he can certainly reinforce it -- that that was not our aim when we acquired Canwest. It wasn't to close stations.

146   MR. BISSONNETTE: There is actually a greater risk of stations closing if LPIF is maintained.

147   MR. BRAZEAU: Exactly.

148   MR. BISSONNETTE: If you look at the example that Troy mentioned in his presentation, in Halifax the CBC is generating $5.7 million of LPIF every year, five times more than the LPIF-eligible station that we have in Halifax. So there is this distortion of the market that is taking place that, frankly, in reality -- you know, if CBC is taking it all, is there really a reason for a station in Halifax?

149   Now, the benefit of vertical integration is, we didn't spend $2 billion to close stations. We are committed to these stations.

150   I remember when J.R. was looking at the Canwest Global stations, and he looked at it in the most positive way, in terms of what ownership in that content could do for our company in respect of TV everywhere, in terms of branding for our company, in terms of marrying, if you will, the strengths of the specialties with the strengths of the over-the-airs.

151   We saw a great picture with respect to the long-term viability of those assets, and we continue to strongly believe in that, in the absence of LPIF.

152   MR. BRAZEAU: Just to finish off on your question about financial markets, I think the financial markets would be much more concerned that we are net payers in LPIF to the tune of $24 million. I think, on the financial bottom line, that has a much more significant impact than the $8 million we receive in LPIF.

153   THE CHAIRPERSON: This goes back to who the "we" is. Is it the consumer or is it your shareholders?

154   MR. BISSONNETTE: Well, our shareholders have some impact on our views of the world, as you know, and when you have a net loss, frankly, of $24 million going to LPIF that could be used, you know, we believe, in much more effective ways of contributing to the system, there is an imbalance.

155   And the Commission made that decision in 2008, and frankly, even though it came out of -- you know, from all of the other discussions on the health of the industry, it was a great thing at the time, frankly, because it took what was an acrimonious, unknown kind of environment -- we knew that digital was launching, and there was a lot of discussion about who could or couldn't convert to digital. That is now behind us.

156   We knew on the Global and CTV front that they were strong -- actually, Global wasn't a strong proponent of fee for carriage or value for signal, but we know that with the health of vertical integration, those two areas are no longer requiring it.

157   The CBC had already announced, before LPIF came out, that they were going to increase local programming. So, to appropriate the benefit of LPIF on CBC's programming, we don't think, is really well-founded.

158   And, then, on the independent broadcasters, if you look at the protections that some of the broadcasters have, they still have the Small Market Fund, they have protections that were in place before you introduced LPIF, they now get guaranteed carriage on satellite.

159   Our satellite that we are launching, G1, in the next couple of months, many, many of those transponders are dedicated to carrying local programming. They have carry-over, so that a station in Kamloops, for instance, that you would think would be somewhat at risk, they get to overlay their advertising on the Global and CTV channels; a great opportunity for them to generate more advertising revenues.

160   So there are a whole host of protections and regulations that exist that should be sufficient to provide for those stations without that subsidy.

161   THE CHAIRPERSON: Mr. Bissonnette, I want to come back to something you said at the beginning of your remarks just now; that is, that your shareholders have some say on where that money goes.

162   I think I heard you say earlier, with regard to your satellite service, that you identify on the bill clearly that it's an LPIF charge directed from the CRTC.

163   Are you saying that if this Commission decided to remove LPIF, you would take that money and roll it up into revenues and provide it back to your shareholders for investment purposes, or for running the business, as opposed to returning it to the consumer, from which it came?

164   MR. BISSONNETTE: Yes, we have identified it on the bill to understand that there is a component of our costs which go to LPIF.

165   Frankly, if we gave the money back to our customers, which would be -- you know, in effect, you are doing that -- the costs of running our satellite business far exceed the 1.5 percent that would be attributable to LPIF.

166   So, in time, it would be moot.

167   THE CHAIRPERSON: But you are running your business regardless. This is a charge that comes from government, from the CRTC, to the consumer, in order to support OTA. What you have to do in order to provide the service, to support your investment, is a decision that you and your shareholders have to make.

168   But if what you are saying is, you are going to take that money and roll it into your operating business --

169   MR. BISSONNETTE: I didn't say that --

170   THE CHAIRPERSON:  -- on what I will call the back of a regulatory decision, I think that is being totally unfair to the consumer.

171   MR. BISSONNETTE: That is not what we just said.

172   Maybe you could phrase it another way.

173   MR. BRAZEAU: I think what Peter is alluding to is that, first off, we put the 1.5 percent LPIF on the bill just to make sure that customers understood why their rates were going up.

174   Now, should the Commission eliminate the LPIF -- and we would certainly support that -- that is 1.5 percent of our total cost. Our total cost for satellite services is increasing every year by a tune of greater than 1.5 percent --

175   THE CHAIRPERSON: That's your decision. We are not here to discuss the costs of running your business.

176   MR. BRAZEAU: So we would remove that cost from that business, absolutely -- so it would no longer be a cost to that business -- but our costs continue to increase.

177   So instead of having a rate increase of 3 percent, you would have a rate increase of 2.5 percent.

178   It would be certainly reflected in whatever increase we were talking about, but we wouldn't, you know, start saying: Okay. Well, all of a sudden one cost went down, and here is a cheque.

179   We don't do that when our other costs go down --

180   THE CHAIRPERSON: All of your costs are going up every year, and I am sure that every year --

181   MR. BRAZEAU: Oh, absolutely.

182   THE CHAIRPERSON:  -- you have rate reviews and you have inflation adjustments, and everything else.

183   The question only is -- what you do for that part of your business we are not here to discuss. The issue only is, that part of the component of your charges that is as a result of a regulatory decision, if that decision gets changed, will the consumer see the benefit?

184   MR. BRAZEAU: Absolutely. Their cost would go down by 1. -- by that percentage, and it would be reflected in a reduction in our total cost.

185   THE CHAIRPERSON: Let me carry this further --

186   MR. BRAZEAU: And we would also see, probably, some increase in investment. So they would see two benefits from it.

187   THE CHAIRPERSON: Your evidence and your comments this morning talked about removing the LPIF effective this fiscal year.

188   Do you think that's reasonable relative to where we are right now when a decision will be rendered, people's budgets, people's plans, as opposed to something that's more evolutionary if we chose to go that way?

189   MR. BISSONNETTE: Well, we are reasonable people as well, Mr. Chairman, and if September is, you know, not achievable or is unrealistic, then clearly if it takes longer to have people adjust to a non-subsidy environment we are certainly prepared to accept that it may take two years.

190   THE CHAIRPERSON: Okay. I don't know if you have had a chance to read all the submissions. I'm sure someone on this panel has.

191   The Official Languages Commissioner made some comments with regard to minority language support in the province of Quebec. You actually operate a station in Quebec.

192   One of the suggestions that I believe you made is all else failing, if the Commission decides to continue on with LPIF you believe that station should receive some support as well as part of the minority obligations under the Official Languages Act. It's something that I guess the Official Languages Commissioner has mentioned as well.

193   Can you elaborate on your views in that regard and if you did get it, what you would do with the money and how it would provide support for minority groups in Quebec?

194   MR. REEB: Yeah, Mr. Chairman, I mean, the fact that our station in Montreal was not LPIF eligible we believe is yet another example of the unfairness of the allocation formula which is, as you know, sort of split three ways.

195   One of them being the more you spent in previous years the more you get. That, of course, is how the CBC has managed to leverage an ever-increasing share of it. While LPIF revenues went up 6 percent, the CBC's take of it went up 24 percent.

196   In respect to our station in Quebec, it has always been a challenged market for Global Television. We have an award-winning newscast there that has won the best newscast from the RTDNA a number of times and, yet, continues to struggle in being able to be commercially viable.

197   We certainly put forward the position that if the LPIF was to be maintained that it should be an eligible market as a Global station so that we can further support the kind of community programming that we're doing for the Anglophone community in Montreal.

198   We have very much attempted to refocus our programming there from being sort of a big broad-based Montreal station to being a more community-focused station that, you know, takes part in the St. Patrick's Day Parade and spends lots of time in the West Island and is very much an Anglophone-focused station in Montreal to attempt to build the business from that standpoint.

199   MR. BISSONNETTE: But let's be clear that that is hypothetical. We aren't LPIF-eligible and we don't support LPIF.

200   THE CHAIRPERSON: My last question. In your submission of February 15th in your executive summary and again in your conclusions, you make a comment about transitioning from a subsidy-based regime to an investment-based regime. And I'll read the sentence. It says:

"If the Government and Commission want to establish a strong, relevant and self-sustaining broadcasting system in the modern digital economy we simply must transition from a subsidy-based regime to an investment-based regime and the elimination of LPIF is a logical step in this process."

201   You say the same thing in the conclusions but in the heart of the document there is nothing there in terms of a roadmap as to how to get us from your perspective from a subsidy-based regime to an investment-based regime.

202   What were you thinking about and can you sort of put some sort of meat on the bones here because there is nothing in the heart of this document other than it's an executive summary and it appears again in the conclusions.

203   MR. BRAZEAU: Well, I think we have already shown the road. I think with the acquisition of Canwest, with the acquisition of CTV and now the other acquisition of Astral, I think the roadmap is there.

204   You know, these investments are significant investments. We are talking about something in the neighbourhood of $8 billion in total acquisition costs for these assets. So I think that's the roadmap to investment.

205   Troy can talk a lot, you know, about innovation and how by allowing the system to innovate we'll be in a better position to respond to the changes that are happening in the marketplace like over the air, over the top and fragmentation. That's the way to deal with ensuring that we have a sustainable system going forward is through innovation and --

206   THE CHAIRPERSON: So what you are saying is the solution for the four vertically-integrated companies to buy up all the smaller independents out there.

207   MR. BRAZEAU: No, it's for the market to --

208   THE CHAIRPERSON: We keep talking about vertically-integrated companies here, the acquisition of Astral and CTV and Global, but there are still 20-25 percent of Canadians that are getting service and getting information through independent broadcasters, not through vertically-integrated players.

209   MR. REEB: Could I? I have got, you know, a couple of examples I can provide on that one.

210   If you look at a market like Kelowna where we actually have a subsidized station that receives over a million dollars for Global Okanagan, while Canwest was going through CCWA and while the station was sort of focused on trying to find new ownership and putting its hand out wherever it could to be able to get support, another competitor came along in that market and it has no relation to Shaw.

211   It's a very small operator called Castanet which provides an online video television service and now does more than $3 million in annual revenue every year very profitably. It exists as a very small, very independent and outside the system competitor that obviously innovated in a time when you know the broadcast system was going through some spasms. It took advantage of that market opportunity.

212   We believe, you know, there are many market opportunities as a large company like that that we can take advantage of and continue to innovate and there are other examples out there.

213   THE CHAIRPERSON: It just dawned on me. I have got one more question.

214   Mr. Bissonnette, you mentioned the Small Market Fund. Do you see, I won't say similarities, but an opportunity to look at a Small Market Fund and look at LPIF or those people that perhaps should remain in LPIF? I think you actually used the term residual eligible stations in your submission as well that there may be some value in some of the players being supported from the system as well.

215   Do you see that sort of coming together as one solution or one possible solution to protect the small market from losing their over-the-air stations and the news that is associated with that and local programming?

216   MR. BISSONNETTE: Yeah, that fund is intended specifically for those small independents and some of the things that we do as a distributor are contributing to their opportunities to continue to flourish.

217   Some of the regulations that you introduced are also intended to help them to flourish so we get mandatory carriage by distributors on satellite; all of the things we talked about for that station in Kamloops that benefits from all those good things.

218   We aren't arguing here that the Small Market Fund should be eliminated. We think that it's sufficient for its purpose.

219   What we have said also is that we don't think you should take LPIF and somehow redirect it somewhere else. We think you know there is innovation and investment necessary in a broadcast distributor's area that could better be utilized to provide the benefits to Canadians.

220   THE CHAIRPERSON: On the issue of Kamloops is it Kamloops where you are getting LPIF?

221   MR. REEB: We don't operate the station in Kamloops. It's a Pattison Group station and the Pattison stations in both Kamloops and Prince George have a regulated right to cover over our Global signals into those markets and sell local advertising into our signals essentially.

222   THE CHAIRPERSON: But you are in Kelowna?

223   MR. REEB: We are in Kelowna, yes.

224   THE CHAIRPERSON: And you get LPIF in Kelowna?

225   MR. REEB: Correct.

226   THE CHAIRPERSON: Is there anybody else offering service in Kelowna?

227   MR. REEB: No, not as a broadcasting --

228   THE CHAIRPERSON: You are the only ones?

229   MR. REEB: Yes.

230   THE CHAIRPERSON: Okay, those are my questions.

231   Mr. Vice-Chair?

232   COMMISSIONER PENTEFOUNTAS: Yes. Good morning.

233   Just briefly or, listen, we're not going to be reinventing the wheel. I think Chairman Katz covered most of the questions and I think a lot of the questions are going to keep coming back over the week.

234   But as fine observers of the industry, certainly in Western Canada, if we were to blow up LPIF what happens to local, independently-owned and operated television stations? I mean that's the big question. Is there an economic model for them?

235   MR. BRAZEAU: Mr. Vice Chair, there was an economic model before three years ago or before 2008 there was an economic model. The economic model existed. All of a sudden we have had LPIF -- we have a subsidy for three years and all of a sudden, you know, it's a "must have" and without it it's the end of the world for them. I mean, I don't know what happened or what has transpired.

236   There were some specific economic conditions in 2008. Those have been resolved largely. The Commission has introduced new regulatory tools in order to ensure that the independents can compete and can survive. So I'm not quite sure why now that we have this subsidy that it has to go on forever.

237   COMMISSIONER PENTEFOUNTAS: Some may argue that the marriage between BDUs and broadcasters -- and you made allusion to them on occasions of your purchase of Canwest and Global and Bell's purchase of CTV and now Astral. That's the fundamental change and that makes it even harder for these small independents in small markets to survive.

238   MR. REEB: Well, I think your question is: Is there an economic model?

239   The economic model for a small independent station like Kamloops for instance right now includes access to the Small Market Fund, mandatory access to cable systems, mandatory access to satellite systems, simultaneous substitutions, cover over rights for other competing signals that come into the markets. Global and CTV signals get covered over with local ads.

240   It has limited digital transition requirements, a lower overall CanCon exhibition requirement, lower local programming exhibition requirements than larger markets, no limits on their advertising; no programming category restrictions and even closed captioning costs are covered in those markets.

241   Is that an economic model? That's another question.

242   But to say yet one more layer of subsidy is what's going to make that economically viable when you have already got one that's specifically targeted to those markets in a Small Market Programming Fund is questionable.

243   COMMISSIONER PENTEFOUNTAS: A fundamental question: If there is no economic model, is it the CRTC's responsibility to create one?

244   MR. REEB: It's a very good question and I would point back to the example of Castanet in Kelowna, which actually does compete with us and takes a good chunk of our advertising dollars, unfortunately, but has made a very viable business.

245   I would point to another example where the Commission -- some of the Commissioners, I'm sure, were part of the decision to license the Niagara News Channel, which was a standalone on the cable system's News Specialty Channel to serve the Niagara Region of Southern Ontario.

246   It happened to go head-to-head with a station that receives probably as much or more LPIF dollars than almost any other in the system, CHCH, and Niagara News Channel, as you well know, is out of business now. That was a very innovative and efficient model that they had put into place there and it lasted about a year before going under.

247   COMMISSIONER PENTEFOUNTAS: You mentioned CHCH. There's also CHEK out in Victoria. And is that a reasonable means of calculating what a small market is and is Victoria a small market?

248   MR. REEB: Victoria is not a small market. CHEK in Victoria uses -- sells into the Vancouver market. They air simulcast programming across the Vancouver market.

249   The Bell-owned station in that market, as part of the CTV Two network, if you look at BBM measurement or in their advertising paraphernalia, it's listed as CTV Two Vancouver even though it's based in Victoria. So it has access to one of the largest -- well, second-largest English-language market in the country.

250   And, you know, there's a situation there, like in Toronto, where what was the Toronto 1 licence was allowed to lapse. The market was overlicensed in Toronto.

251   I would leave it to the Commission to determine whether the Vancouver market is overlicensed, but clearly there's a challenge there when one station really has only one viable program and it's Five O'Clock News.

252   COMMISSIONER PENTEFOUNTAS: Back to your CBC argument or that part of your argument that mentioned CBC and the situation in Halifax.

253   Are there any other examples across the country where you're feeling a similar impact and you sort of feel disadvantaged by the fact that, you know, CBC is using over $5 million to compete with you in the Halifax market?

254   MR. REEB: Well, I think the CBC situation is repeated in multiple markets, even in large markets where, you know, CBC's facilities in markets like Vancouver and Toronto are co-located with Radio-Canada, which does receive LPIF funding in those markets, and clearly, CBC must have some synergies between their Anglo and Franco news divisions.

255   So in many cases the CBC push into local news, which has included rating talent from private broadcasters and looking to build -- not very successfully, as you point out -- looking to build a stronger local news presence, is being done with the support of LPIF that's coming out of smaller markets.

256   It is very instructive to note in your documentation that was done in preparation for this hearing that CBC still, as a category, is producing the smallest amount of local content, local programming, but it is getting by far the lion's share of LPIF.

257   It is collecting more than 40 percent of LPIF and, as I say, in the first year of LPIF, its take of it -- well, the total LPIF went up 6 percent, CBC's take went up 24 percent because they're leveraging the government funding as part of their base budget.

258   MR. MEDLINE: And Halifax is not unique, right? I mean, Regina, it's more than twice as much. In Winnipeg it's twice as much. So this is being replicated across the country.

259   COMMISSIONER PENTEFOUNTAS: Twice as much. I'm sorry, what --

260   MR. MEDLINE: The amount of the LPIF funding that goes to the CBC compared to a Shaw Media station.

261   COMMISSIONER PENTEFOUNTAS: Okay.

262   If Montreal became eligible, what would that add to your revenues, if LPIF remained as is and Montreal became eligible? Have you calculated that?

263   MR. MEDLINE: It's actually impossible to calculate out because we don't know -- it's not transparent to us, to any entity except yourselves, what the spend is in that market. But the minimum under the current formula currently would be in the $450,000 range.

264   MR. BISSONNETTE: And just to be clear, that is -- we're not asking for LPIF in Montreal, we're asking for LPIF to be discontinued.

265   MR. REEB: What he said.

--- Laughter

266   COMMISSIONER PENTEFOUNTAS: Keep hammering away. We know what works. Well, thanks so much.

267   THE CHAIRPERSON: Commissioner Molnar?

268   COMMISSIONER MOLNAR: Thank you.

269   Good morning. Your message is clear that you're asking for LPIF to be discontinued and you've also had -- our Chairman tried a couple of times with you as it regards what happens if in fact we accept your position and what happens to consumer bills.

270   You rolled the increase onto the bills. You showed it for DTH at least as a separate line item. Your proposal is if the LPIF is removed, you're going to use it for innovation and investment, so effectively reallocating that money to the BDUs.

271   How is it we can be assured that consumers receive the benefit?

272   MR. BISSONNETTE: I think what we have tried to portray for you is that the 1.5 percent of LPIF for our satellite customers, because this does not apply to our cable customers, it would go back to our customers.

273   There are costs also that are arising for our satellite business that go well beyond the kind of costs that -- you know, what LPIF represents.

274   If you look at the cost of providing services, I mean the benefits that our customers are seeing just through competition, our lower rates, I mean our average revenue per unit in the last quarter for about 150,000 of our customers went down by $28 for Internet, phone and video services.

275   So, you know, we're trying to cap -- you know, make our services attractive to our customers, make our pricing very valuable. LPIF would disappear. Other costs would continue.

276   COMMISSIONER MOLNAR: Just help me. I understand your other costs are going up. This has been -- even you have noted it as a tax on BDUs.

277   If it's removed, how will your consumers -- how can we be assured that your consumers will know that and benefit? Can you put something on the bill? Can you do something --

278   MR. BISSONNETTE: So they will know it? Because we will actually make a notice on the bill. We will say that LPIF is no longer one of the costs that is incorporated in the bill and their bills will be reduced by 1.5 percent.

279   COMMISSIONER MOLNAR: They will? You're going to reduce the bills by 1.5 percent?

280   MR. BISSONNETTE: Yes, they will be reduced by 1.5 percent.

281   COMMISSIONER MOLNAR: Okay, thank you. I didn't understand that. Thanks, that's my question.

282   THE CHAIRPERSON: Commissioner Patrone?

283   COMMISSIONER PATRONE: Thank you, Mr. Chairman.

284   Good morning. I just heard a slight inconsistency that I want some clarification on with regards to your answer to Commissioner Molnar, the answer you gave earlier.

285   Earlier, what I thought you said was that any future increases would be mitigated by 1.5 percent going forward in case there was an expected increase in your operating expenses. That's not the same as cutting back, cutting bills by 1.5 percent.

286   Can you help me understand that?

287   MR. BRAZEAU: I will try, and Peter can add.

288   I'm not quite sure where or how we would implement a 1.5-percent reduction if LPIF would be eliminated.

289   So what you're suggesting is that we tell our customers, okay, your bill just went down by 1.5 percent, and the next day we say, by the way, your bill just went up by 3 percent because our costs went up by 5, we subtracted the -- or it went up by 5 percent.

290   I mean we would send them two notices, one notice that your bill went down by 1.5 percent and then the next day your bill went up by 4 percent because that's what our costs went up by.

291   I mean I'm not quite sure how you would implement something like that.

292   MR. BISSONNETTE: So let's not get too complicated here. It's very simple. We'll tell you that your bill will go down by 1.5 percent. In the future there may be increases that go up, but they would go up in accordance with whatever the costs and whatever the market makes available to ourselves, but our customers would know that LPIF no longer exists and it's not a component of our cost structure.

293   COMMISSIONER PATRONE: Okay. Did I hear you say or suggest that Channel Zero, which had the benefit of a subsidy going forward, somehow contributed to the demise of a competitor which did not have the benefit of a subside and is that the kind of market distortion that you're referring to when you talk about that?

294   MR. BISSONNETTE: That's one example of that, exactly. Halifax is another example.

295   So, you know, there's unfair, if you will, unintended consequences from LPIF that I'm sure Niagara never would have foreseen, that it was the LPIF basically, the differences in their ability to compete that in fact resulted in their demise.

296   COMMISSIONER PATRONE: Last question. I would like you to address the pressures brought about by OTT services going forward. I haven't heard that in any of your previous arguments and we have heard that discussed in the past.

297   To what degree is it important that you have pricing flexibility going forward given these external pressures on your customer base?

298   MR. BISSONNETTE: You know, sometimes you have to lick them and sometimes you have to join them, and, you know, OTT is a fact. Netflix, we know, has over a million customers in Canada.

299   On the other hand, what we have tried to do with our broadband strategy is to encourage the use of broadband. We're spending millions and millions of dollars each year trying to increase the capability of our network to accommodate video streaming, one of which, of course -- one of the major ones, which, of course, would be over-the-top, which currently is embodied in Netflix. The investment that we're making in our network is being enjoyed by our customers because they're seeing unbelievable capabilities on broadband.

300   Our WiFi strategy, which you may or may not be aware of, is intended to add more value to a Shaw customer because they can take the experience that they have in their home with live video streaming and they can take it outside and go somewhere else with it and do the same things. They can watch Global news on an iPad or on a smartphone. They can do it in their home, unattached to a television.

301   So the types of things that we're trying to do with our broadband network and our WiFi network are to essentially differentiate ourselves from our competitors. Some of it's driven by experience, some of it's driven by price.

302   COMMISSIONER PATRONE: I guess my question had more to do with the need for nimbleness going forward and more flexibility going forward given those pressures.

303   MR. BISSONNETTE: Absolutely. We have to be able to -- I mean I think we're known as a nimble company. Some people were questioning whether or not we were too nimble in the last quarter, where we were able to just change, if you will, the -- I mean competition is a bit of a parity, so, you know, there's times where you're driving pricing, you're driving value, you're driving features.

304   Our Exo network was launched to provide a service that customers saw as very, very differentiated from our competitors, at great cost.

305   Our digital network upgrade, to be able to do that, we have to have resources. This year we're spending $75 million making our network fully digital as opposed to all of our tiers. That drives customers and customer value and customer perceptions.

306   COMMISSIONER PATRONE: Thank you.

307   MR. REEB: Commissioner Patrone, I would just say too that this is not just about, you know, trying to protect your ability to deliver sort of the Hollywood content, the kind of stuff you're going to compete with on Netflix. This is about local programming as well.

308   We are in the midst of a pretty intense effort right now to look at introducing new Global news local services in markets which do not have OTA broadcasters to be able to serve those communities through new media technologies.

309   And that's the kind of innovation that if there's going to be subsidized old model competing against us, we're not going to be able to introduce, but there are multiple markets where we're looking into doing that.

310   THE CHAIRPERSON: You are a very popular panel. You got a lot of commissioners interested in what you have to say.

311   So we're going to move on to conseillère Lamarre.

312   CONSEILLÈRE LAMARRE : Merci, Monsieur le Président.

313   Bonjour. First, a point of clarification. In your presentation this morning on page 2, last paragraph, you said that:

"Today, there is ownership stability, an improving advertising market and less financial uncertainty for local stations. Digital conversion..."

314   A key expression for my question.

"...which was one of the main drivers behind LPIF's introduction..."

315   I was frantically looking through notice 2008-100 and I don't find this as being one of the main drivers. So could you expand on why you feel this was one of the main drivers?

316   MR. BISSONNETTE: Well, it was certainly one of the main concerns of the previous Chairman with respect to having that digital transition successfully completed and looking for ways to address concerns of the broadcasters, and there were broadcaster concerns being expressed about their ability to convert to digital. In fact, the public broadcaster still hasn't completed that chore.

317   And I know Global had some concerns about the cost of digital transmitters. I know CTV had the same thing. There were discussions about having to close stations down.

318   So there was a lot of concern expressed, maybe not in the context of LPIF because we never really talked about LPIF. It became, if you will, something that was introduced after all of the other discussions were taking place around fee-for-carriage. But the digital transition was clearly a discussion and the means to do that.

319   MR. SHAIKH: Just to be clear, 2008-100, especially considering (off microphone) would be at this time, the Commission explicitly said they would consider the status and impact of digital conversion, and I think we've referenced a few spots in our submission where digital conversion was a key consideration for the Commission when it was considering the introduction of LPIF. So it was 2008-100.

320   MR. MEDLINE: You would also, I think, see it in the next iteration of LPIF that came out about eight months later. You would look at that. I think 2009-406 if memory serves.

321   COMMISSIONER LAMARRE: Well, I am going to look through it again but it doesn't strike me as being one of the main drivers. It definitely was a concern because it was an additional expense that every broadcaster had to go through, and hence, money not growing on trees, you had to make cutbacks someplace else and local programming could be the target of those cuts. But if you meant it in that sense, then I think I would agree.

322   MR. BRAZEAU: Well, I think at that time most of the over-the-airs, the large over-the-airs were trying to use, I think, every argument possible to ensure that they would be -- you know, that their financial issues would be taken into consideration by the Commission.

323   COMMISSIONER LAMARRE: Okay.

324   In your presentation and even in your answers to the Chairman and other Commissioners, you make a strong plea in favour -- there's no need for the LPIF, let market forces drive the products we need to come up with and let us innovate.

325   Well, by saying you want to innovate, you do target one of my second favourite objectives of the Act, which is that you should innovate indeed.

326   But my first favourite objective of the Act is actually section 3(1)(d)(i) that says that:

"(d) the Canadian broadcasting system should (i) serve to safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada,"

327   And to me that includes a concern for every Canadian, not only those that live in areas where market forces do work. So in areas where there are less people, there are small independents or even in areas where you have a minority official language community, it becomes more of a concern.

328   I get it, you want the LPIF eliminated. Yet, in one of your answers you mention if it's maintained, Montreal for the Anglophone station should be eligible. You have people from the Anglophone community actually stating the same thing. And you did mention that if you had LPIF for the Montreal station you could make it more relevant for the community and in that sense you're in sync with the other intervention we received.

329   So if even in Montreal where you have a million or so, a little bit less, Anglophones to target, you could be more relevant if you had the LPIF money. How do you reconcile this with the fact that we should let market forces drive the products in much smaller markets?

330   MR. REEB: Well, I think anytime you want to hand us money, we're generally happy to take it. This is a case where, you know, more than $100 million is being put into the system right now. A hundred million dollars is a lot of money. Look at the Halifax example. I don't know that I would know how to spend $5.7 million doing local news in Halifax.

331   In Montreal, certainly if we're going to get, you know, handed cash by the CRTC to do a more relevant, better job in Montreal, we absolutely would. We would take that responsibility very seriously, but that's not what we're asking for. We're asking for the ability to make our decisions according to how we believe we can best serve that community.

332   We're looking at making new investments and in the Commission's wisdom you approved as a benefit of the CanWest purchase the launch of a new Montreal morning show at the Global station there, which we will undertake this fall.

333   So we are looking at making investments and continue to do so.

334   COMMISSIONER LAMARRE: But you are not telling me how I can actually reconcile this with the fact that they are much smaller markets and that the product in the markets where there's no market forces at stake because of the size of the population or the number of broadcasters, how do I make sure that local news and local programming in those areas remain relevant if you can make it more relevant with handed money in a market of one million?

335   MR. REEB: As I say, we're in the process of looking at a number of -- and they are admittedly very small markets. Each one of them is a city of under 100,000 people. There are three markets we're looking at -- and I'll keep their names confidential for the moment because we're looking at introducing product there -- but we are studying them for launch of new local programming services using new media or the potential use of the cable system to innovate and provide new local programming services.

336   So we believe that there are ways to do it innovatively. We have a very innovative production system which is low cost and allows us to, as we say, put more money in the community and with reporters and cameras on the streets reflecting those communities.

337   And we're committed to in some cases continuing to lose money to do that, particularly in markets like Saint-John, Fredericton, Moncton, where we provide a separate standalone newscast even though we're not regulatorily required to do so because we believe it's important for community service and it's an important part of our ability to provide news from all parts of the country to the national network.

338   COMMISSIONER LAMARRE: Okay. Even though you don't like LPIF, even though you would prefer that it disappear, let's assume for a minute that we do keep it, let's assume for a minute that we do agree with your proposal that the English stations in Montreal should be eligible.

339   You did mention at one point that you don't like the formula as it is. You feel it's being unfair. And the expression I noted down is that the more you spend, the more you get. You feel it's unfair.

340   So how would you propose we formulate the --

341   MR. BISSONNETTE: I don't know if I have to say it again, but we're not asking you for LPIF in Montreal. We're saying we're quite happy to stand on our own and invest as we see fit and as the market dictates to us that Montreal --

342   COMMISSIONER LAMARRE: You've said it and I actually repeated it for you a couple of times also.

343   MR. BISSONNETTE: I appreciate that. So we're not asking how we can make LPIF fairer in terms of the way it's distributed because we don't think it's fair right now, but we think that by eliminating it, you essentially clear the field.

344   And we've said that we think that there's room for small independent broadcasters and if you go through the list of who that would represent there are funds for them as well.

345   Shaw has done tremendous things for small independent Canadians in small communities. We just launched the Internet partnership with Xplornet so that customers in every region of Canada can get very, very fast Internet services along with a very, very compelling video product. All of these local stations are going to be carried on our satellite.

346   So to the extent that there are things that we're doing for Canadians in small communities, I think there's a richness of products that we offer.

347   You know, I'm not trying to be smart about saying we don't want LPIF in Montreal. We want to make Montreal a really relevant and compelling channel, but there's other ways of doing it other than providing a subsidy and that's what we're saying. Let the market dictate it.

348   You know, we drive Troy to make his radio operations the best in Canada. And how do we do that? That's up to his creativity. It's up to the technology, how does he apply technology.

349   We have some fabulous people working on broadband portals that reflect Global, that reflect the local stations. Those didn't exist, you know, two or three years ago, but we have teams of people working to do that.

350   We have looked at how, as a BDU, we can make Global an even more successful broadcast company in Canada. Is it in simultaneous, non-simultaneous substitution? Do we have technologies that allow them to do that on satellite, which we have found we can, to make their programming even more relevant in those communities.

351   So that's our challenge and we don't need LPIF to do it.

352   COMMISSIONER LAMARRE: Okay. Those are all my questions.

353   Merci, Monsieur le President.

354   THE CHAIRPERSON: Thank you.

355   We now have conseiller Morin.

356   COMMISSIONER MORIN: Thanks, Mr. Chair.

357   Since the implementation of the fund no television stations have been closed and you remember quite well what it was before with Red Deer, Alberta; Wingham, Ontario; Brandon, Manitoba. It was the first in the world. So I urged you before, when Mr. Bissonnette said you are committed about the stations you already have even if they are unprofitable.

358   But my question is the following: Can you guarantee that you won't close any stations prior to the Supreme Court ruling about the value for signal?

359   Why I'm asking this question is that the value for signal will be, for you, a new took in your box.

360   MR. BISSONNETTE: We can assure you that if LPIF disappears no stations will disappear. Our commitment is to local programming -- it's that important to us -- and our commitment is that with respect to LPIF -- I'm not going to talk about value for signal because that's another realm, we have been here --

361   COMMISSIONER MORIN: Yes.

362   MR. BISSONNETTE:  -- at least six times talking about value for signal, What it means. What does value for signal even look now with vertically integrated companies? I don't know. I don't understand it.

363   So to make a commitment with respect to something that I don't know how it's going to unfold would not be proper for me.

364   But in terms of LPIF our assurance is that if LPIF is discontinued in its entirety that Shaw will continue to operate its television stations in all of the markets that we currently operate.

365   COMMISSIONER MORIN: For how many years? Could you put a number three for instance?

366   MR. BISSONNETTE: You know, I'm telling you we're not going to close stations over LPIF.

367   COMMISSIONER MORIN: So it's possible that the value for signal will be a tool if the decision from the Supreme Court is positive -- we don't know -- but as a regulator wouldn't it make more sense to take the less risky path, to be more cautious, to proceed step-by-step? Because now the odds are that the Supreme Court decision will be positive and then you will have this tool in your hand.

368   I know that -- and we said that and I was dissenting at that time, we said that it's not a permanent fund, it's a fund that was created to cope with the crisis we already know. We still have this gap of revenues at the local level.

369   MR. BISSONNETTE: Well, you made a decision in your wisdom in 2008 and we understand why you would have made that decision. So we don't find fault with that. In fact, it probably -- when you look at the acrimony that existed at the time it was probably the right time at the time, but the temporariness of that was very, very, clear as well and the conditions have changed. There is vertical integration now.

370   You know, most of the people that were -- we have been through the digital transition, which was going to be a big burden, and the advertising world has changed to a better situation. There are other ways to -- you have created new regulations for small independent broadcasters and so we believe that there is no need any more for LPIF.

371   Value for signal, I mean some look at it -- we don't support value for signal, even though we own a broadcasting company, so let's be clear with that. We have made that point clear. We are not in favour of value for signal. We don't think subsidies are the right approach to making our broadcasting a much more healthy industry. You know, we have said all along that investment -- working closely together, doing things creatively are the solutions to that.

372   MR. REEB: Commissioner Morin, you opened your remarks by pointing out, quite correctly, that no over-the-air stations have closed since LPIF was introduced. For $100 million I would certainly hope that no local over-the-air stations would close as returned.

373   But in that same period a local specialty broadcaster closed in a market where it had to compete with a heavily subsidized OTA; a local newspaper closed, The Halifax Daily News, and certainly many other local newspapers have closed, too.

374   The media market continues to evolve very, very rapidly. The transition to digital and new media properties and the way that we as a news industry evolve are being forced to change very, very quickly and the maintenance of a subsidy to maintain an old way of doing things becomes an impediment to the necessary innovations that will keep our journalism, our news industry at the forefront of the world.

375   COMMISSIONER MORIN: Yes. I don't want to insist more but, as you already know, in the United States the value for signal is there for the last 20 years and it's a huge success. So the Canadian broadcaster will have eventually -- possibly, I don't know -- the percentage of insurance but, you know --

376   MR. BISSONNETTE: We are not here arguing value for signal --

377   CONSEILLER MORIN : Yes.

378   MR. BISSONNETTE:  -- because we could get all the arguments out again about the different environment in the U.S., subsidies, you know, the simultaneous substitution, regulated and protected kind of market. So we will have to deal with that at the next hearing.

379   COMMISSIONER MORIN: Yes.

380   THE CHAIRPERSON: Get it right. This hearing is not to discuss value for signal --

381   COMMISSIONER MORIN: No, no.

382   THE CHAIRPERSON:  -- I want to stay away from that topic completely. We are here to discuss LPIF and let's focus on that issue. Thank you.

383   CONSEILLER MORIN : Certainement, Monsieur le Président. J'ai préparé un tableau que j'aimerais qu'on distribue aux journalistes et au public. This table is based on the result of a survey that has been made for many stations in the LPIF and the non-LPIF markets. This table is about local news, average local news per station per week/

384   Here what we have -- because many people are mixing local programming with local, local news and it's not the same.

385   In the CRTC concept right now you have local programming, but it can be made of federal Category 1 news or provincial Category 1 news or even international news and it's considered as local programming.

386   So we ask you in the survey -- and here you have all the categories -- we asked you to provide us the right numbers about the real local segments, cultural, political, economic, et cetera. This table is about CBC, the VI -- the English VI, the independent English.

387   Why I'm putting this table on the table is we can see that the English Vis, Bell, Rogers and Shaw, produce more than 11 hours per week in comparison to CBC, 5 hours per week in the non-LPIF market.

388   In the LPIF market the comparison is in favour of the independent English, nearly 11 hours per week, and you, the Bell, Rogers and Shaw, it's just only in the LPIF market 5 hours per week. So there are a lot of differences.

389   My question is: What could be the threshold -- what could be the threshold per week of local, local news if we stay with this fund, this LPIF fund, for some years?

390   I don't want you to give me the answer today, because we will probably have reply, but the point is I would like to know what do you think about some kind of threshold based on local news, a concept that doesn't exist right now in the CRTC's book.

391   MR. BRAZEAU: Monsieur Morin, there's a basic assumption in all the questions you have asked us and that's somehow this LPIF is generating significant benefit for the system. We fundamentally disagree with that.

392   If you look at the amount of additional programming, local programming as a result of LPIF, it's not significant for the amount of money that's been spent. If you look at the amount of original programming, that's even smaller. Then you start looking at the impacts, the unintended consequences of distorting the marketplace as a result of LPIF.

393   So you add all of those things up and we cannot come to the same conclusion that you have, which is somehow LPIF has generated significant benefits to the system. We come to a very, very different conclusion.

394   MR. REEB: Commissioner, I would say that -- and we will certainly undertake to take a look at this, and I know our team will provide something back, but I would say that this does point to a distortion here if you look at the CBC numbers in particular where they are averaging more local news in the very small markets than they are in the large markets in a chase for LPIF dollars.

395   So essentially -- I mean I don't want to split out markets, but this would suggest they are doing more local news in a place like Charlottetown than they are in Toronto.

396   THE CHAIRPERSON: I'm going to interrupt you. This is a request by Commissioner, take it under advisement, we will decide later on this week the due date for whatever follow-up items might be coming up as well. I don't want to debate the issue at this point in time. The data is there for you. I'm sure Commissioner Morin will ask others the same question as well and I will leave it to him to do that, but at the end of the day it's up to you to provide the answer that you think is best for your constituency and your shareholders.

397   MR. BISSONNETTE: We will do that.

398   We were given tables previously that would take you down that same conclusion and when we look at it in one example, for instance, of a station that has almost doubled their news, it's actually they have one news station, they repeat it 15 times throughout the day and so is that what we're trying to achieve here?

399   THE CHAIRPERSON: I will leave it to you to respond in the fullness of time.

400   Any other questions, Mr. Morin?

401   COMMISSIONER MORIN: But I just want to mention another time that local, local news is not the same as local programming. You can comply with local programming Category 1 news and doing nothing about local news. That's the point that I want to raise here.

402   Thanks, Mr. Chairman.

403   THE CHAIRPERSON: Thank you.

404   Commissioner Duncan...?

405   COMMISSIONER DUNCAN: Thank you and good morning. I have just a few questions, because I think everything has been very well covered.

406   Of course I am from the Halifax market and I do see what Global is doing there to improve the quality of the local news so I think that's very important.

407   I wanted to ask you first of all just to clarify on the Chairman's first question.

408   With respect to your cable bills, was the 1.5 percent included in the rate increases for those. Is that reasonable to assume or you didn't pass it through?

409   MR. BISSONNETTE: No, we did not pass it through.

410   COMMISSIONER DUNCAN: So that was a cost you absorbed?

411   MR. BISSONNETTE: Yes.

412   COMMISSIONER DUNCAN: In all your cable systems, but not the satellite?

413   MR. BISSONNETTE: That's correct.

414   COMMISSIONER DUNCAN: Okay.

415   I'm also wondering, in 2008 the Commission said that they talked about how we had found that local programming over the previous 10 years had been on the decline and that was the reason that we wanted to support local programming.

416   So I'm just concerned how long -- you say you're willing to carry losses but, you know, you do have shareholders, it is business, you do want to make money, how long are you going to be prepared to carry Halifax or these other markets where you're not going to be making a positive PBIT? You may, hopefully you will, but if you don't?

417   MR. BISSONNETTE: Yes. Our objective is to and we believe that having a network like we have, that that in itself lends great value. And all of the components of the network don't necessarily make a profit, but in the context of what we are trying to achieve as a vertically integrated company, it makes sense to us to have those stations -- that local programming taking place in those markets.

418   They are not there just because of LPIF in our particular approach to programming.

419   COMMISSIONER DUNCAN: So in a market, for example, like Halifax, what is your overall objective, can you say, in percentage of newscasts that would be local, truly local?

420   MR. REEB: Currently in our Halifax newscast -- I'm looking for it here -- 68 percent of the Halifax newscast is local content, the rest is a mix of international and regional news, some from New Brunswick and from Ottawa or wherever the case may be.

421   We believe that clearly our news strategy is focussed very much on local. The more relevant we feel that our brand can be to the local community, the more relevant, the bigger Shaw brand can be to all of the potential customers. So that's where our focus is, is in maintaining local programming.

422   COMMISSIONER DUNCAN: So that 68 percent is probably typical in all of those LPIF stations?

423   MR. REEB: Yes. They range from 68 to 76.

424   COMMISSIONER DUNCAN: So not all markets would have a Shaw local station, but viewers would be interested in local programming in all markets. It's very important, I think, to Canadians. We all can agree on that.

425   MR. REEB: We absolutely can.

426   COMMISSIONER DUNCAN: So in some of these markets where there is no Shaw local station, what kind of criteria do you think we could put -- I understand you don't want to see the LPIF continue, but what kind of criteria could we talk about that we could put in place to ensure those markets get the support so those citizens get to see the local news -- their local news?

427   MR. REEB: The interesting thing, Commissioner Duncan, is that there are many markets in this country where there is no local station and the Commission can do nothing to ensure that the people in those markets continue to get local news because they don't get any now, cities like Brantford, Ontario or Sault Ste. Marie. These are markets that don't have local television.

428   We are looking to -- you know, we would like to expand the Global News brand. We are looking to use new media to do that, to innovate and use our innovative production methods to introduce local news programming, video programming, to multiple new markets.

429   So I don't know if there is any kind of formula that you can put in to guarantee that it's going to exist.

430   As you see, I mean the CBC stations are getting the lion's share and yet are producing the lowest amount of local programming.

431   COMMISSIONER DUNCAN: Thank you very much.

432   Thank you.

433   THE CHAIRPERSON: Commissioner Menzies...?

434   COMMISSIONER MENZIES: Thank you.

435   A couple of sort of parochial questions I guess.

436   You have one recipient in Alberta, Lethbridge, one of the issues there in Lethbridge was carriage, DTH carriage, is that fixed now?

437   MR. REEB: Yes. Lethbridge is now being carried on DTH.

438   COMMISSIONER MENZIES: Okay. SO they can reach their audience. I just wanted to confirm that.

439   As I recall -- I just heard people mention that no stations have died. As I recall, Red Deer died in August 2010 and LPIF started in September 2009, and nobody cared. Your regional managers got, you know, a couple of phone calls maybe and that sort of stuff. I'm just using that as -- I mean there is an awful lot of money comes out of Alberta into LPIF and the one station that died was in Alberta that was supposed to be an LPIF recipient.

440   I'm just using that and I will try to make this brief, but what I'm hearing from you overall -- and I just want you to confirm or straighten out my understanding -- is that you were interested in producing more local news in more markets, but you were not interested in using OTA to do it because it's not the most efficient way to do that sort of thing in the 21st Century. I look at markets like Fort McMurray that have grown very rapidly and have a lot of money in them, I mean there is 140,000 people, some of them part-time, but at any one time living in Fort McMurray, it's Alberta's third largest -- there's no stampede of people to open up an OTA there. There's no stampede of people to reopen anything in Red Deer.

441   So what I'm hearing is, you are trying to move forward and invest in local news in innovative ways using new technologies and LPIF is subsidizing a 20th Century structure.

442   Am I --

443   MR. REEB: You very accurately characterized that, yes.

444   COMMISSIONER MENZIES: Thank you.

445   If this fund dies, say September 1st -- and you have had this question before, but just to confirm my understanding.

446   If in my neighbourhood there are, for instance, a lot of Shaw subscribers, if this fund ends, the charges on it end on September 1st this year, will my neighbour's cable bills actually go down at the end of September or the end of October?

447   MR. BISSONNETTE: So on the cable bill there will be no change because we have never passed the cost of this through to our customers. If you had a satellite customer beside you, Shaw's direct customer, they will see a notification that their bill will go down 1.5 percent.

448   COMMISSIONER MENZIES: Thank you.

449   THE CHAIRPERSON: Just to confirm, when LPIF was introduced and you did have a rate increase at some point in time in that year, did you inform your customers that the increase included such things as additional operating costs and the LPIF?

450   MR. BISSONNETTE: We didn't. We have never passed through LPIF on our cable bill.

451   THE CHAIRPERSON: And you never notified the customers that there was a charge for it buried in the bill?

452   MR. BISSONNETTE: No, we didn't.

453   THE CHAIRPERSON: Okay. Thank you.

454   Commissioner Poirier...? No.

455   Counsel, do you have any questions to follow up?

456   MR. McCALLUM: Yes, Mr. Chair.

457   Understanding that you do not want LPIF to be continued, if the Commission did decide to continue LPIF notwithstanding, what would you say if the Commission imposed a condition of eligibility for LPIF recipient stations that the amount received from LPIF for each individual LPIF-eligible station is publicly disclosed?

458   MR. BISSONNETTE: So we understand your conundrum and the conundrum isn't with vertically integrated companies, it's not with the CBC, it's not with independent broadcasters who have a network, but it's sole independent broadcasters. We understand why you may consider extending LPIF for a period of time to give them the opportunity to adjust, if you will, to the new reality, and we would suggest that for all but vertically integrated companies, the CBC, everybody but that stand-alone independent broadcaster, that for maybe two years -- which we think is pretty reasonable -- that it exists, but immediately it's capped to only capture that small amount.

459   You know, we would think that just looking at the kind of percentages -- we don't like percentages because it's like the old cost of living kind of approach to things, but having a fixed cap of, say, $15 million to provide those independents -- and that's essentially what they are getting right now -- an LPIF subsidy for two years, would be a reasonable compromise for the Commission that gives sufficient notice.

460   It's always been temporary, but you are now saying it's temporary and we believe it should come to a conclusion within two years, but those vertically integrated companies don't -- you know, it should not be a necessity in terms of continuing to provide the kind of programming that they have within their wherewithal as a vertically integrated company.

461   MR. McCALLUM: I'm sorry, I don't think I understood an answer to my question.

--- Laughter

462   MR. McCALLUM: What if it were a condition of eligibility?

463   MR. REEB: I should just say, and if that was the case we would absolutely support that there be transparency and that those amounts be made public.

464   MR. McCALLUM: For each individual station?

465   MR. REEB: Yes.

466   MR. McCALLUM: Thank you.

467   MR. REEB: That's right.

468   THE CHAIRPERSON: Okay. Great.

469   I think that concludes our examination. Thank you very much.

470   We will take a break for 15 minutes.

--- Upon recessing at 1036

--- Upon resuming at 1053

471   THE CHAIRPERSON: Madam Secretary...

472   THE SECRETARY: Thank you, Mr. Chairman.

473   We will now proceed with the presentation by Bell Canada.

474   Please introduce yourselves. You have ten minutes for your presentation.

475   Thank you.

PRESENTATION

476   MR. BIBIC: Thank you, Madam Secretary.

477   Bonjour, Membres du Conseil. Mon nom est Mirko Bibic de BCE.

478   J'aimerais vous présenter notre panel.

479   A ma gauche, se trouvent Chris Gordon, président, radio et télévision locale, à Bell Média; et, à sa gauche, Jim Fealy, vice-président, finances, radio et télévision locale, à Bell Média.

480   A ma droite, Kevin Goldstein, vice-président, affaires réglementaires, à Bell Média; et, à sa droite, Richard Gray, vice-président régional, exploitation des services de radio et de télévision, Est du Canada et chef national, CTV Two News.

481   Nous sommes heureux d'être ici aujourd'hui pour discuter de l'avenir du Fonds pour l'amélioration de la programmation locale ou FAPL, et je vais utiliser le terme " LPIF. "

482   BCE offre au Conseil une perspective unique dans le cadre de cette instance. Nous sommes un contributeur majeur au LPIF, ayant payé plus de 25 millions de dollars au Fonds en 2010-2011. Nous sommes aussi un bénéficiaire majeur de celui-ci, vu que nous avons un engagement beaucoup plus important vis-à-vis les stations locales des plus petites communautés que tout autre radiodiffuseur privé.

483   En raison de l'incidence négative du LPIF sur notre position financière, il aurait été très facile pour nous d'argumenter, comme l'ont fait d'autres contributeurs, que le LPIF devrait être supprimé. Nous l'avons certainement envisagé. Et si, au bout du compte, le Conseil décide de suivre cette voie, alors, BCE ne s'en trouvera que mieux placée sur le plan financier. En bout de ligne, nous serions confortables avec la position de Shaw d'éliminer le LPIF.

484   Mais nous ne pensons pas que l'élimination du LPIF soit dans le meilleur intérêt des téléspectateurs canadiens ni du système canadien de radiodiffusion. C'est pourquoi nous proposons que le LPIF soit prolongé pendant au moins deux années de plus, quoique dans une forme modifiée.

485   Our position employs a familiar principle for BCE: symmetry. We believe that viewers in all smaller communities, regardless of the corporate structure of the local TV stations serving those communities, should benefit from the LPIF.

486   And, under that same principle, if the fund is to continue, it would be asymmetrical to exclude a vertically integrated local TV station from receiving LPIF funding, yet require its BDU affiliate to continue to contribute to the fund.

487   With that, I turn it over to Chris.

488   MR. GORDON: Our support of the LPIF is grounded in the fact that CTV has a greater commitment to local television, in terms of stations, local programming hours, viewers, employees, and expenditures, than any other private broadcaster.

489   We believe that TV stations that serve smaller communities, despite their many operating and financial challenges, continue to have an important role to play in Canada and they deserve special consideration.

490   Bell Media operates 26 local TV stations, and 19 of them are in LPIF-eligible markets.

491   We provide 155 hours of original local news programming every week, when our local programming commitment is 91 hours.

492   We spend $45 million annually on local programming, and employ 890 people in the communities that these stations serve.

493   These stations are integral to the local identity of these communities.

494   We operate 11 stations in Ontario alone. In contrast, Shaw and Rogers, who both argue that the LPIF should be discontinued, serve Ontario with one English-language station in Toronto, and enjoy the operational and financial benefits associated with that arrangement.

495   To assess the merits of the LPIF, it is useful to consider the key principles that underpinned its creation.

496   First, local TV programming, particularly local news, is a critical part of the Canadian broadcasting system.

497   Second, viewers in smaller communities are just as deserving as those in metropolitan centres of having access to local programming, regardless of who serves them.

498   Third, providing local programming in smaller communities is one of the reasons why conventional TV has faced ongoing financial challenges, in an era where BDUs have enjoyed financial stability.

499   And fourth, without a local programming subsidy, viewers in many small communities are at risk of losing their access to local programming.

500   These principles continue to be relevant, and in this context the LPIF has been successful. This is shown by the fact that while overall viewership of conventional television has been declining, viewership of local news has remained stable.

501   Some have argued that LPIF is no longer needed. They will likely point to the financial summaries for conventional TV released by the Commission two weeks ago.

502   But before we pop the champagne to celebrate the success in local TV's return to profitability, we need to carefully assess the situation.

503   To begin, without $65 million in LPIF funding in 2011, the profitability of private conventional TV would have been significantly lower.

504   Also, conventional TV in Quebec has never experienced the same financial challenges that private broadcasters in the rest of Canada have, and Quebec's performance was, again, strong in 2011.

505   Most importantly, there is a significant difference between the performance of stations in metropolitan centres and smaller communities.

506   In Bell Media's case, many of our LPIF-eligible stations had another challenging year in 2011. Without LPIF funding, 10 of our 19 LPIF stations would have been unprofitable. Even with LPIF funding, 6 were unprofitable.

507   And while advertising rebounded in the 2011 broadcast year, we have seen a reversal of that trend in the last several months. Data from the Television Bureau of Canada shows that since September 2011, conventional TV advertising has declined in every month, typically between 5 and 7 percent, compared to the previous year.

508   It doesn't matter that Bell is vertically integrated. Being vertically integrated doesn't make the small towns we serve any bigger. We still need feet on the street to gather and deliver news, we still need local production equipment and facilities, and we still need to provide our viewers with a locally relevant perspective, in a high-quality, professional manner.

509   As we mentioned earlier, viewers in smaller communities are just as deserving as those in metropolitan centres of having access to local programming. In the same spirit, viewers served by vertically integrated small stations are just as deserving as those served by non-vertically integrated small stations. A viewer is a viewer, wherever they reside and wherever they are, and whatever the corporate structure of their local television station.

510   Without LPIF, the business case for keeping these stations open deteriorates significantly and quickly. With it, we don't have to make some of the difficult decisions about our unprofitable small local stations that we otherwise would.

511   MR. GOLDSTEIN: Let's discuss our proposals for making the LPIF better.

512   We think that a fixed dollar allocation to all LPIF-eligible stations remains appropriate, and we don't see any reason to change the current one-third/two-thirds split.

513   We also think that the current 30/70 split of the variable portion of the LPIF for francophone and anglophone markets remains appropriate.

514   Where improvements are needed is in the methodology used to allocate the variable portion of the fund.

515   We propose that a viewer-centric, market-based model should replace the current model, based on historical local programming spend.

516   Under our model, the amount of LPIF funding a local station receives depends on the number of viewers in the market and the station's share of local program viewership in that market.

517   In our viewer-centric model, the viewers decide how much LPIF funding each station receives.

518   The proposed model offers several advantages. First, it ties the distribution of LPIF funds directly to each broadcaster's demonstrated success in producing high-quality local programming, as determined by viewers. This type of success-based model is not uncommon. For example, it is used by the Canada Media Fund and Telefilm.

519   Second, smaller independent broadcasters, who may not spend as much on local programming as their larger competitors, are not disadvantaged. In fact, under our viewership-based model, independent broadcasters will receive more LPIF funding.

520   Third, gaming is not an issue. If a station's local programming is attractive to viewers, it is rewarded with LPIF funding. In this way, LPIF funding also rewards the most efficient local TV stations, those that use their limited resources to attract the most viewers.

521   Fourth, a model where LPIF funding is based on ratings from the previous year allows stations that have improved the quality of their local programming, in the eyes of viewers, to realize the benefits of that improvement more quickly. Their LPIF funding will increase in the following year, rather than waiting for improvements to show up in a three-year average.

522   Our model is viewer-centric by putting the viewer in control. It is market-based by rewarding performance and allowing competition within a market to determine financial outcomes.

523   The final aspect of our proposal that we would like to discuss relates to the CBC. In our written comments, we recommended that the CBC should become ineligible for LPIF funding. Our reasoning was policy-based. The CBC receives over $1 billion each year from Parliament to fulfil its mandate, which includes providing local TV services across the country.

524   In consideration of this parliamentary appropriation, a regulatory requirement that private sector BDUs also fund the CBC through the LPIF seemed unnecessary. We weren't alone in this view.

525   But as we have discussed today, the future of local TV continues to be troubled, and we are increasingly concerned that private sector station closures are likely.

526   In that event, the CBC will become the only local TV option for viewers in a growing number of smaller communities. We believe that those communities deserve to receive quality local programming for as long as possible, and this requires sufficient funding.

527   In the interest of these viewers, therefore, we can accept that the CBC continues to receive LPIF funding.

528   Without question, this is a compromise, but we see it as a compromise that is consistent with our viewer-centric model for the LPIF, under which a viewer is a viewer.

529   That concludes our opening remarks. We would be happy to respond to any questions you may have.

530   THE CHAIRPERSON: Thank you.

531   Vice-Chairman Pentefountas will lead our examination.

532   COMMISSIONER PENTEFOUNTAS: Good morning, gentlemen.

533   Why don't we start from the bottom, where you closed off with respect to the CBC.

534   Doesn't the CBC have an obligation under its mandate to serve small markets?

535   MR. GOLDSTEIN: Yes.

536   COMMISSIONER PENTEFOUNTAS: Irrespective of the funding.

537   MR. GOLDSTEIN: Correct.

538   COMMISSIONER PENTEFOUNTAS: So why the change of heart?

539   MR. BIBIC: The change of heart came -- look, if ultimately, in the Commission's wisdom, there is a decision made to exclude the CBC, you will hear no complaint from BCE.

540   But it didn't quite seem to hang together for us to come forward to you this morning and say: Look...

541   Excuse me for fumbling through papers.

--- Pause

542   MR. BIBIC: If you look at the Chairman's speech this morning, right off the top it was indicated that the Commission created this fund to ensure that viewers in smaller markets continue to receive local programming, particularly local news programming.

543   So that was the principal motivation. We still think that remains valid today, in 2012. We didn't think that it would hang together for us to come forward and say, "Look, we have a viewer-centric model, where a viewer is a viewer wherever they live, whoever serves them," and then to turn around in the next breath to say, "But not if it's the CBC."

544   That didn't seem, to us, to hang together very well. That is why we have adjusted the position this morning.

545   There have been other factors, as well. Since we wrote our submission on February 15th, of course, there was a reduction in the CBC's budget. Again, you are not going to hear BCE cry a river for the CBC, but it is a factor and that had an impact, as well.

546   COMMISSIONER PENTEFOUNTAS: I don't understand how Bell is, in some way, responsible for cutbacks to the CBC.

547   MR. BIBIC: We are not.

548   COMMISSIONER PENTEFOUNTAS: I don't understand how your shareholders would feel any responsibility.

549   MR. BIBIC: It comes down to -- you know, you are going to put forward a case -- a strong case. We felt that the strongest case, both for policy and business reasons, was to say: Look, if we are still interested in ensuring that viewers in small markets continue to be served by their local station, then let's make that the number one policy priority, and in that event it ought not to matter who serves you.

550   That is our guiding principle.

551   Look, if the CBC is excluded, again, we are totally comfortable with that.

552   The one thing I would say, in addition, just before we close on this, Vice-Chairman, is that the model -- the allocation methodology needs to be changed.

553   If you look at the stats over the course of the LPIF, the CBC has increased its local programming station production expenditures by $100 million. I don't know how that's possible. As a result, its share of the LPIF has grown.

554   And if you take a look at the stats in detail, you will see that their lowest spending year was 2008, the first year. You have a three-year spending trailing indicator, so if you eliminate -- this year we are going to be eliminating 2008 in the baseline. So their allocation is only going to go up, because their lowest spending year is going to be removed from the denominator.

555   And what did we get out of this? Well, the CBC crows about how it increased its local programming by 40 percent in the course of that time period, still 40 percent below what Bell Media delivers.

556   We are not here to say, "Take the harsh line. Eliminate the CBC from LPIF funding," but clearly there need to be changes, in our view, in the allocation methodology.

557   COMMISSIONER PENTEFOUNTAS: You mention on page 4, paragraph 17, that given the Television Bureau of Canada data, conventional TV advertising has declined in every month, typically by 5 to 7 percent, compared to the previous year.

558   So there is hardship, and the advertising revenue is having a hard time.

559   But are BDUs responsible for hardship or difficulties?

560   Should they subsidize -- should they be sort of a fail-safe mechanism? When advertising revenues go down, should we tax the consumer, and BDUs, as a consequence of that?

561   MR. BIBIC: I will take a couple of stabs at that, in two different ways.

562   We have the fund. The fund is in place. What we are saying is: Let's keep it in place --

563   I am going to add more colour to our previous answer.

564   COMMISSIONER PENTEFOUNTAS: Colour away.

565   MR. BIBIC: Let's keep the LPIF in place for two more years. A couple of things, I think, might become clear -- in two more years might become clear. We will see where the ad market is going, because right now it is still very unstable. That's one.

566   We will see where value for signal takes us. That's two. I don't want to, necessarily, debate it, but it is a factor in our thinking.

567   In 2008, the Commission provided a framework for broadcasters to be compensated for distant signals. That was to be implemented in September 2011. There are negotiations in place between broadcasters and BDUs.

568   So let's see where that takes us. The model hasn't yet kind of -- the marketplace model hasn't yet crystallized.

569   And then we will see where we are in two years on those two things, and then we can make another judgment call.

570   So what we are saying is: We have the fund. Since we have it, and there is still so much uncertainty, let's keep it going for two years, but in the meantime there is no reason not to make the fund better.

571   And we think that our proposal to make it better is actually a market-based model within the confines of a subsidy and --

572   COMMISSIONER PENTEFOUNTAS: I have no question on your proposal. I like the new model. I will tell you straight, it's interesting.

573   MR. BIBIC: Thank you.

574   COMMISSIONER PENTEFOUNTAS: That being said, the market will always be unstable. The ad market will always be unstable. There will always be new challenges. And just because we have the LPIF doesn't mean that it will stay there forever.

575   You would agree with me?

576   MR. BIBIC: Yes, so let me answer that directly.

577   The answer is, if the Commission decides to eliminate the fund -- and, typically, BCE does not support subsidies -- if you decide to eliminate the subsidy, we are okay with that, recognizing this, though: that we would expect to be treated the same as every other actor in the marketplace.

578   So it means a couple of things. It means that the marketplace will govern, and some small market stations will close, because we won't continue to fund chronically unprofitable, tiny stations, in tiny towns. That's one.

579   And, two, we would like, then, the flexibility to operate in an efficient manner, just like Shaw and Rogers do, which is -- take Ontario. We have a station in Toronto. Obviously, that will stay open. Maybe Ottawa -- probably Ottawa. It's a large market. Maybe another large market in Ontario, but other than that, we would like the ability to cover Ontario just like Shaw and Rogers do: one stick, one town, the whole province gets covered.

580   So if we are going to eliminate the fund and let the market dictate, we are signing up for that, too, but we would like to be treated like everyone else.

581   COMMISSIONER PENTEFOUNTAS: There is no viable economic market for keeping those stations open?

582   MR. BIBIC: The smallest stations?

583   COMMISSIONER PENTEFOUNTAS: Yes.

584   MR. BIBIC: No.

585   COMMISSIONER PENTEFOUNTAS: Shaw came this morning and told us that nothing would shut down, nothing would change.

586   MR. BIBIC: Well, Shaw has 7 LPIF-eligible stations, some in fairly decent-sized towns. We have 19 -- Yorkton, Timmins, Sudbury -- you know, we are the private station group that has, by far, the most investment in smaller communities and smaller LPIF-eligible stations.

587   We have the most stations. We produce the most hours of local programming, on average, compared to the others. We have the most employees. We spend the most on wages.

588   At some point, if the market is going to dictate the outcomes here, we are going to have to sharpen the pencil and say, "Okay, which ones get closed and which ones stay open," and for those that stay open, "What steps do we take to make those more profitable --" or more sustainable, rather.

589   COMMISSIONER PENTEFOUNTAS: What about a model, Mr. Bibic, where the only spend on LPIF is on news -- Cat 1 local news?

590   MR. BIBIC: I will turn it over to Richard.

591   Richard Gray can provide more colour to this answer. But when we do the calculations for our stations, and if you count regional programming for we have regional small station clusters as well in Ontario and in the Atlantic, if you do that our range of local programming that is used across our 19 stations goes from 75 percent all the way up to 95 percent.

592   So we do rather well and far better than this aggregated data seems to suggest that was filed this morning.

593   COMMISSIONER PENTEFOUNTAS: Okay. So that would allow -- my question is would those stations be viable if we concentrated LPIF on -- if we cut LPIF in half what happens to the viability of those small markets?

594   MR. BIBIC: Well, recognize that even with LPIF funding as it is, I guess what I'm saying is based -- we do really rather well on Commissioner Morin's suggestion. So let's assume nothing changes for BCE because we're from 75 percent to 95 just for the sake of this at a high level, a conceptual level.

595   Even with that funding as it exists today, six of our 19 stations remain unprofitable.

596   COMMISSIONER PENTEFOUNTAS: Remain unprofitable?

597   MR. BIBIC: Remain unprofitable. Six out of 19 are unprofitable with LPIF.

598   So assuming the status quo nothing changes and we meet Commissioner Morin's requirements, we still will have six out of 19 profitable stations. Now, if that gets cutback for whatever reason more will be unprofitable obviously.

599   COMMISSIONER PENTEFOUNTAS: And what -- sorry. Sorry, go ahead.

600   R. GRAY: The amount of local programming that we're doing outside of news in those 19 stations is negligible presently. It's almost entirely.

601   COMMISSIONER PENTEFOUNTAS: Mr. Bibic made it quite clear.

602   Back to independents and a potential financing model for the independents, I understand you would be in disagreement with that kind of model even if you were to cut the LPIF to sort of 1.25 and limit LPIF funding to independent television stations and small markets. You would be against that kind of -- that type of proposition?

603   MR. BIBIC: Well, we wouldn't be against a discussion around reducing the 1.5 percent to something lower or capping as long again as within the eligibility envelope and everyone is treated the same. If you serve a small market and you're serving the viewer you're eligible.

604   MR. KEVIN GOLDSTEIN: I think also to add to that, I think one of the interesting things about the smaller market independent stations is that they actually have two forms of subsidy which is that they get LPIF and they also get the Small Market Local Programming Fund. We don't get that in any of our stations even though in certain markets it's a similar size to what they would offer.

605   COMMISSIONER PENTEFOUNTAS: M'hmm.

606   MR. BIBIC: But then a last point is under the viewership model that we're proposing, as we said in the opening statement, the small independents --

607   COMMISSIONER PENTEFOUNTAS: No, it's because they are getting an --

608   MR. BIBIC:  -- are faring quite well.

609   COMMISSIONER PENTEFOUNTAS: Yeah, yeah.

610   But independent small markets -- you know if things go south for you, you shut down and you keep on keeping on. They own a single station. They are independents.

611   Isn't there a justification for allowing a small fund to keep these independent market stations functioning at least over the short term to allow them to adjust to the fact that LPIF will no longer be around?

612   What do you say to the diversity of voices argument?

613   MR. BIBIC: Well, I mean, I can give you a financial answer which is if the fund is cut down to something like $15 million as Peter Bissonnette suggested then BCE financially on the whole is probably much better off.

614   But then I would throw a question back at the Commission which is then I think that outcome says to viewers that, look, if you are in Yorkton served by CTV, too bad, you don't count as much as if you are in Rouyn served by RNC Media even if RNC Media would count because they believe they have more than one station.

615   But you know I can't off the top of my head, can't think of the one example I would give where it's a single stake owner. But that's basically what the Commission would be saying to viewers.

616   COMMISSIONER PENTEFOUNTAS: In the interests of a sort of diversity of voices principle your heart wouldn't feel any warmer?

617   MR. BIBIC: Well, I mean, again in a -- you know, Yorkton is a one-station market. It's operated by CTV so then your diversity is going from one to zero.

618   So I don't see a link to diversity of voices in saying one station markets if you're served by a single station network it is okay, but if you're served by a single station network that happens to be owned by somebody who has another station big or small then you're out of luck.

619   COMMISSIONER PENTEFOUNTAS: Thanks, Mr. Bibic.

620   THE CHAIRPERSON: I have got a couple of questions. I'm sure some of my fellow Commissioners do as well.

621   I think I heard you say that in the absence of LPIF if some of these LPIF-eligible stations aren't profitable they will close. Is that your view?

622   MR. BIBIC: That is our view.

623   THE CHAIRPERSON: Okay.

624   On September 24th, 2010 you filed an application to acquire CTVglobemedia and in there, there is a number of statements in there but there is one that I'll quote. It says:

"BCE will continue to provide CTV with the resources necessary to ensure the fulfilment of its local and national interests mandates in a competitive multiplatform environment."

625   Can you tell me how what you just said matches with the commitment that you made in the acquisition of CTV for all their stations?

626   MR. BIBIC: Would you read that again?

--- Laughter

627   THE CHAIRPERSON: Okay.

"BCE will continue to provide CTV with the resources necessary to ensure the fulfilment of its local and national interests mandates in a competitive multiplatform environment."

628   And there are other quotes I can find as well, but this one just it's right in front of me here.

629   MR. BIBIC: Okay. So BCE and Shaw acquiring Global and acquiring CTV and, in the case of Rogers it was vertically integrated well before as well as Québec 'A', TVA.

630   We have always maintained and continue to maintain that those acquisitions provided a much needed measure of stability to broadcasting writ large and to conventional as well and we don't -- you know we continue to maintain that view.

631   We have made massive investments in broadcasting. So some examples.

632   We have launched RDS2. It wasn't there before.

633   We have upgraded to HD for -- we had three HD stations before in the Bell Media stable. We now have 14.

634   We have launched TSN jets. We have made a big play on TV, on mobile. All these things --

635   THE CHAIRPERSON: I am not saying you haven't done things in a multiplatform environment. My question is very focused and very specific.

636   How can you come before us two years after you acquired all those stations with a commitment to maintain and invest in them and then tell me now that if the LPIF closed you would shut down those stations if they weren't viable?

637   And you have already admitted that currently they're not viable even with LPIF.

638   MR. BIBIC: Commissioner Katz, I think we made some very specific commitments in the context of benefits to keep the CTV's two stations open for three years. Nothing I'm saying testifying here today derogates from that commitment.

639   THE CHAIRPERSON: This wasn't for three years. It's an open-ended statement.

640   MR. BIBIC: No, no, but there is no commitment in that statement that you read that says we're keeping all stations open however chronically unprofitable they are forever.

641   There was, however, a very specific commitment to keep CTV's two stations open for three years in exchange for about $28 or $29 million in benefits funding. That commitment we are not moving away from. We made that commitment.

642   That's a general statement about Bell's commitment to investing in conventional TV and we are doing that. We are not saying we are going to close 19 stations; absolutely not. What we are saying is in the absence of LPIF some of the smallest and most unprofitable and chronically unprofitable stations may have to close. That's all we're saying.

643   And as Kevin points out, the Broadcasting Act does say that private networks should to an extent consistent with the financial and other resources available to them, contribute significantly, et cetera.

644   So I mean we'll continue to attain those ideals. It's not just a blanket commitment for all time to keep 19 small market stations open.

645   THE CHAIRPERSON: Okay. Do you currently pass through the 1.5 percent on your customers' bills?

646   MR. BIBIC: There is a specific line item on our customers' bills identifying LPIF.

647   THE CHAIRPERSON: On both your satellite-based service as well as your land-based service?

648   MR. BIBIC: Yeah, Fibe TV and Bell Satellite TV both indicate it separately.

649   THE CHAIRPERSON: If this Commission either rolled back or did away with LPIF, how would you handle that on your notification to customers?

650   MR. BIBIC: The short answer is I don't know because I don't make those pricing decisions. But I figured you would ask having been here this morning. It's a complicated answer. I really don't know.

651   So part of it will be what will the market does or what our competitors do. Will we, you know, immediately reduce the price? I don't know.

652   Will those funds be freed up to invest in carrying more programming that we don't carry today?

653   Will we have service enhancements, technological enhancements at the level of the PVR? I mean all of these things will factor into it.

654   Will it serve to reduce what would otherwise have been a greater price increase in the future?

655   I mean all these things will have to be discussed internally and we're not there. I can't make the decision here on the spot as to what we'll do. I cannot commit, though, that the price will automatically be reduced.

656   THE CHAIRPERSON: So I am sitting here looking at Channel Zero's evidence that they filed, and they'll be up here shortly, and they attached a copy of a Bell Canada bill from somebody. It's not private because there is no name on here.

657   But there is a line item on here that says the Bell TV account number. There is a number on there which isn't here and then it says contribution fee to CRTC's LPIF.

658   You are saying that in the absence of us or in the presence of us modifying the amount of money going into it you would consider leaving that unchanged?

659   MR. BIBIC: Obviously, that line item would disappear.

660   THE CHAIRPERSON: It would disappear.

661   MR. BIBIC: There would no longer be a line item that says "Contribution to CRTC's LPIF $1.07". That wouldn't be there anymore.

662   THE CHAIRPERSON: And would you then arbitrarily take that number and put it into your base rates?

663   MR. BIBIC: I mean there are price increases that occur in the normal course of business.

664   THE CHAIRPERSON: Well, you do that normally. I went through that with Shaw this morning.

665   MR. BIBIC: Okay. Well, your simple answer is: Would that line item disappear? Yes, it would have to.

666   THE CHAIRPERSON: So you would notify customers that there is no longer a charge or a modified charge whatever that is?

667   MR. BIBIC: Well, I mean you're asking me about notifying. I don't know what we would do but that would definitely disappear.

668   THE CHAIRPERSON: Okay. I have a slew of people who are interested in asking other questions.

669   Commissioner Lamarre...?

670   CONSEILLÈRE LAMARRE : Merci, Monsieur le Président.

671   Je veux continuer dans ce que monsieur Katz discutait avec vous au sujet de la facturation pour les clients.

672   Donc, compte tenu de ce que vous venez de dire, le paragraphe 5 de votre présentation devrait être corrigé en ce sens que ce n'est pas BCE qui a contribué au LPIF, ce sont vos clients?

673   M. BIBIC : C'est vrai.

674   CONSEILLÈRE LAMARRE : O.K. Merci.

675   Maintenant, vous proposez que le LPIF -- parce que moi aussi, j'utilise l'expression indépendamment en français ou en anglais -- continue pour deux ans avec modifications. Qu'est-ce qu'on fait après deux ans?

676   M. BIBIC : On réexamine.

677   CONSEILLÈRE LAMARRE : Donc, on se retrouve ici deux ans plus tard?

678   M. BIBIC : Étant donné les circonstances et le marché, est-ce que value for signal a été approuvé par la Cour suprême, si ça été implanté par le CRTC, et caetera.

679   CONSEILLÈRE LAMARRE : O.K. Maintenant, je veux discuter un petit peu plus en détail avec vous votre proposition d'allocation des argents en fonction de la performance avec l'auditoire.

680   Vous précisez au paragraphe 18 que même si vous avez une entreprise qui est intégrée verticalement, ça ne rend pas les petites municipalités ou communautés que vous servez plus grosses. C'est vrai. Je suis d'accord avec ça.

681   Vous dites aussi qu'un auditeur ou un téléspectateur, c'est un téléspectateur, peu importe la structure corporative de la station de télévision. Encore là, c'est difficile de ne pas être d'accord.

682   Mais là où ça commence à être difficile de comprendre comment est-ce qu'on pourrait mettre ça en oeuvre, c'est d'abord parce que, dans un premier temps -- et vous me contredirez si vous estimez nécessaire -- dans un premier temps, ce que j'ai cru comprendre de ce que Shaw a présenté ce matin, c'est que d'avoir une entreprise réseau, ça comporte quand même des bénéfices et des économies d'échelle, ce qui n'est pas le cas si on est un plus petit joueur indépendant, qu'on a seulement des stations de radiodiffusion dans des marchés qui sont petits.

683   Et l'autre chose, c'est que dans les petits marchés, il y a beaucoup d'indépendants qui ne sont pas membre BBM, et non seulement ça, la méthode de mesure des performances d'auditoire, plus le marché est petit, plus la marge d'erreur est élevée.

684   Alors, comment est-ce que vous proposeriez qu'on mesure la performance des différents radiodiffuseurs dans les petits marchés de façon à être équitable?

685   MR. KEVIN GOLDSTEIN: I will try.

686   So our model has two components before it. There is one component before you actually get to the viewership allocation. What that is you actually allocate the dollars in the variable portion once you have determined how much is going to English and how much is going to French on the 70/30 split based on population.

687   When we did the analysis we didn't know of any situation in which there were a market that had more than one station or more than one station of a different owner that wasn't a BBM member and wasn't measureable. Because the first step is that if you are in a small market that only has one station you will get the entire amount of the allocation to that market.

688   Where the viewership really kicks in is in markets with more than one station where essentially you have competition for viewing. We were able to do that analysis and come to the conclusion that, you know, find the information, you know, and it was pretty reliable in markets of that size. So that's how we got there.

689   We can look at it again and determine whether or not there is a specific issue in terms of really, really small stations, BBM, but based on the way in which we did the calculations because you know any market where that might apply would be small that there would maybe be only one player or if it's a twin stick operated by the same player they would get all the dollars anyway. It didn't really impact the model.

690   COMMISSIONER LAMARRE: Okay. So if you could indeed look at it again to either reassure me or fix it, whichever would be suitable?

691   That doesn't, though, answer the question about if you do have a couple of stations in a smaller market you do have a margin of error with BBM measurements. How would we address that?

692   MR. KEVIN GOLDSTEIN: Do you mean in terms of if they are both BBM members and in terms of a margin in error?

693   COMMISSIONER LAMARRE: M'hmm.

694   MR. KEVIN GOLDSTEIN: Realistically, the way in which we did it was based on total average weekly tuning, two plus. So essentially it was an average over the year.

695   So, one, I would suggest that perhaps any kind of error that might occur might even out over the average over the year. But again we could look at that. I wasn't aware that that was an issue.

696   CONSEILLÈRE LAMARRE : O.K. Il y a peut-être aussi un autre effet indésirable à un tel modèle. C'est le fait qu'au fond, on se trouve à aider le meilleur à devenir meilleur plutôt qu'aider le système à conserver une diversité des voix.

697   Et en plus de ça, certains intervenants, dont l'APFTQ, ont fait remarquer que dans les petits marchés, l'auditoire pour la programmation locale, plus particulièrement les nouvelles, a plafonné. Peu importe la qualité de la programmation, les auditeurs, il n'y en aura pas plus parce que la programmation est meilleure.

698   Qu'est-ce que vous répondez à ça?

699   M. BIBIC : Ce n'est pas une question de... Il n'est pas nécessaire d'augmenter l'auditoire total. C'est une question de... Le gagnant, c'est celui qui va réussir à avoir...

700   CONSEILLÈRE LAMARRE : C'est le différentiel, au fond?

701   M. BIBIC : C'est le différentiel entre ton concurrent. Voilà la grosse différence.

702   Là, si on regarde les petits, les petits joueurs là. Si je regarde les renseignements qui ont été rendus publics par le Conseil la semaine dernière, les petits joueurs, ils en produisent de la programmation vraiment locale, encore plus que nous, mais ils vont bien faire, je n'ai aucune crainte.

703   Le système actuel... Tout ce qu'on dit d'après le système actuel, c'est si on dépense, on empoche plus de fonds, d'argent de LPIF. Dépensez, dépensez, dépensez, et vous allez en avoir plus d'argent. Ça ne donne aucun incitatif de faire les choses d'une meilleure façon.

704   J'aimerais vraiment que Richard vous donne un exemple concret de ce qu'on peut faire si on essaie de réduire les coûts et réinvestir dans la programmation au lieu de simplement dépenser.

705   MR. GRAY: There is an opportunity in newsrooms today to innovate in such a way that you automate control rooms. The net effect of that potentially could be to reduce your staff complement by as many as 20 people and it --

706   COMMISSIONER LAMARRE: Assuming you have at least 20 people in your news staff.

707   MR. GRAY: Yes, and let me explain sort of where that number comes from.

708   So if you have got two news crews on, okay, at a station doing noon and six, six and eleven, seven nights a week there is an opportunity through the utilization of technology called overdrive to reduce your control room complement from somewhere between 12 and 14 people potentially to as few as two.

709   So in the station that I described there is an opportunity to reduce your staff complement by 20. In the situation that you describe let's say that number is 10.

710   What you could do is reinvest half of those monies on the street. You could hire five video journalists. You could hire five reporters, five cameras.

711   You could substantively improve the quality of your product in both of those cases while at the same time spending significantly less overall on news production. So that is the flaw in the current model.

712   COMMISSIONER LAMARRE: Okay.

713   MR. KEVIN GOLDSTEIN: If I could just add one thing because I think you also asked, Commissioner Lamarre, about how essentially -- aren't you just essentially rewarding the player who is the number one in the market?

714   And I think what we're -- I think one of the beauties -- you know, great things about the model is, that there is a couple of different ways in which you can increase your share under the viewership-based model.

715   If you're going head to head with you know six o'clock newscast with another player and one of them has 70 percent of the share and the other has a 30 percent share. If you increase your share from 30 to 40 or 40 to 50 and take it away from the other guy then, yes, you will increase your share.

716   But you don't have to increase it against him because you can also -- because it's a cumulative audience. If you offer more hours at different times and accumulate viewer audience to that you will also increase your overall share against the guy who is only doing six and eleven or doing six and eleven. You can do it at different times and get audience there, so when a player who has 100 viewers for each hour and does 10 hours would get the same shares as a player who does 20 hours and gets 50 viewers. So that's how the model was structured.

717   COMMISSIONER LAMARRE: Okay. Well, I am calling on smaller broadcasters. I'm hoping they made notes when Mr. Gray was speaking and that they will be able to comment on just how relevant such a situation could be for them.

718   On a different topic. Certains intervenants, dont l'APFTQ, ont proposé qu'il y ait un critère supplémentaire pour augmenter l'incitatif pour avoir recours à la production indépendante.

719   Quelle est la position de BCE à ce sujet? Vous pouvez ne pas en avoir là, ça peut vous laisser indifférent, mais si vous en aviez une.

720   MR. KEVIN GOLDSTEIN: We don't operate in a French market in terms of conventional television and so we are not a recipient there. But I think really --

721   COMMISSIONER LAMARRE: But it could also apply on the English ones if we were to adapt it?

722   MR. KEVIN GOLDSTEIN: Yes, if it applied on the English side. I think we need to look back to sort of first principles on the LPIF and that it was designed to try to increase the amount of local requirements, specifically local news programming that was being offered.

723   I don't know of a situation in the country where any player is doing local news through an independent producer. I think that requires a level of infrastructure internally to do it properly.

724   Maybe I'll ask Richard to comment further.

725   MR. GRAY: You know, I think the other answer to that question is the difficulty that is inherent in producing a daily newscast.

726   You know you're making decisions as to what you are going to cover, you know, that day and often those decisions are changing as the day changes to instead utilize independent producers to provide you know some of that material. Or material in place of that would certainly be problematic, I think, from the standpoint of what it is that we do, and that is you know local news as we said earlier.

727   COMMISSIONER LAMARRE: So, if I get this right, given that BCE's biggest chunk of local programming is news and you see it with difficulty being undertaken by independent producers. You never -- you didn't give much thinking to that position?

728   MR. GRAY: We haven't thought a lot about it, no.

729   But you know, as I said, the difficulty and the challenge has to do with the manner by which daily news assignments are handed out. And if you want to get maximum bang for your buck, it is through the production of five or 10 stories a week as opposed to one that takes two weeks to produce.

730   MR. BIBIC: Having heard Kevin's and Richard's answers I can give you what the position is, I wouldn't support it.

731   CONSEILLÈRE LAMARRE: En terminant, seulement pour clarifier ce que vous dites au paragraphe 32 au sujet de l'éligibilité de Radio-Canada pour le fond, vous dites: «In that event, the CBC will become the only local TV option for viewers and a growing number of smaller communities. We believe those communities deserve to receive quality local programming for as long as possible and in the interest of these viewers, the CBC continues to receive LPIF money.»

732   Est-ce qu'on peut ajouter: «Dans chacune des langues officielles, indépendamment l'une de l'autre?»

733   M. BIBIC : Oui.

734   CONSEILLÈRE LAMARRE: Merci.

735   M. BIBIC : Mais surtout, il ne faut pas oublier qu'on...

736   CONSEILLÈRE LAMARRE: Quand vous dites que c'est le seul joueur dans le marché.

737   M. BIBIC : C'est ça.

738   CONSEILLÈRE LAMARRE: Je comprends.

739   M. BIBIC : Oui. It's a viewership model qu'on prend.

740   CONSEILLÈRE LAMARRE: O.K.

741   M. BIBIC : Et le changement à la location. Merci.

742   CONSEILLÈRE LAMARRE: Merci. Ce sont toutes mes questions. Merci, Monsieur le Président.

743   LE PRÉSIDENT : Merci. Commissionner Poirier?

744   CONSEILLÈRE POIRIER: Bonjour, Messieurs.

745   C'est très intéressant de voir la position que vous avez adoptée aujourd'hui avec certains changements par rapport à ce que vous aviez présenté.

746   Et je trouve très noble que vous vouliez vous assurer que l'ensemble des Canadiens, partout, autant dans les grands centres que dans les régions, puisse bénéficier d'un bon service de programmation locale.

747   Mais pourquoi cet intérêt ne durerait que deux ans? Deux ans, c'est très peu de temps entre autres, pour des producteurs privés, pour des gens qui font de la programmation, de présenter des projets.

748   Pourquoi cet intérêt ne durerait que deux ans? C'est très, très peu. Et on nous a souvent dit, on a une vision peut-être des fois trop à court terme. Trois ans, c'était déjà difficile de mettre en oeuvre tout ce système-là.

749   Est-ce que les communautés linguistiques minoritaires n'auraient plus besoin de ce support-là pour avoir de la diversité dans deux ans?

750   M. BIBIC : On serait prêt à avoir un débat sur la période de temps, entre deux ans ou trois ans, si vous me dites: «On accepte (inaudible) votre position.» Mais ça serait trois ans. On dirait: «D'accord, on accepte».

751   On essayait de dire, on a dit deux ans, que ce soit, disons une période temporaire. Mais quand même assez courte, pas permanente. Parce qu'en bout de ligne, si on est contre, en principe, généralement, des subventions et des subventions qui deviennent... des régimes de cette sorte qui deviennent permanents.

752   Et on s'est dit, écoute, si le value for service, le value for valable (ph) pour service devient une réalité, je crois... on croit vraiment que ça peut résoudre beaucoup des problèmes, beaucoup de problèmes pour les services, les stations conventionnelles tant dans les gros marchés que les petits marchés.

753   CONSEILLÈRE POIRIER: Donc, ce qui pourrait avoir changé dans deux ans, ça pourrait être ça, le value for signal, comme vous dites.

754   Mais les revenus, par exemple, de publicité locale ne sont pas là actuellement dans les chiffres qu'on a pour venir supporter les petites stations indépendantes et leur permettre de continuer à offrir - je pense entre autres, monsieur Gray serait bien placé ici à Ottawa pour nous dire que les revenus de publicité locale ne sont pas là plus qu'avant.

755   M. BIBIC : Et je vais laisser Richard répondre. Mais c'est vrai. Ça pourrait bien être le cas que dans trois ans, deux ans, prenons la période de temps, qu'il y aurait peut-être value for signal, mais les revenus sur la publicité ne seraient pas là. Ça serait un débat qu'on aurait dans ce temps-là.

756   Mais Richard peut vraiment constater que le marché de la publicité n'a pas rebondi à date.

757   MR. GRAY: Yes, generally speaking with respect to advertising we find ourselves in a very similar position today that we found ourselves in in 2008 when the fund was created. There was a short and a small rebound in between. So I think that sort of serves us as the basis for the two-year timeframe that we are talking about. It's not just about value for signal, it is this hope -- not an expectation, but a hope that we are going to see a bounce back in terms of ad revenues and hopefully this time that bounce back will be a little more sustaining than it was this past...

758   CONSEILLÈRE POIRIER: Et ça me permet d'enchaîner sur quelque chose que j'ai trouvé assez surprenant ce matin dans la première présentation.

759   On nous a dit que ce fond-là semblait avoir été créé pour régler la crise économique.

760   J'ai devant moi le règlement 2008-100, l'objectif n'était pas ça. Et vous reconnaissez effectivement les objectifs de création du LPIF qui étaient de faire en sorte que les petits marchés avaient besoin de diversité, que les marchés de langue française ne devaient pas être désavantagés et qu'on devait chercher à améliorer la qualité et la diversité de l'information.

761   Donc, est-ce que vous reconnaissez que les fondements de la création du LPIF demeurent?

762   M. BIBIC : Oui. Et encore, si je regarde le discours du président ce matin. On est d'accord avec ce qu'en effet le premier paragraphe de substance de son discours avec... c'est vraiment les mêmes principes que vous avez cités.

763   Et on est, en gros, on est d'accord avec les objectifs du fond.

764   CONSEILLÈRE POIRIER: Oui.

765   Les cotes d'écoute, madame Lamarre en a parlé. Mais effectivement, ce ne sont pas tous les marchés qui peuvent aller dans ce sens-là.

766   Est-ce que vous avez des bonnes cotes d'écoute dans les 19 stations qui obtiennent un LPIF actuellement?

767   M. BIBIC : Oui, en effet oui, présentement. Mais c'est aujourd'hui. Et avec la méthodologie qu'on propose, on serait obligés de garder notre positionnement comme le premier ou le deuxième pour être assurés de recevoir le financement du fond.

768   Et le marché est dynamique, et je crois que... je crois vraiment que les modifications qu'on propose serviraient à augmenter la concurrence dans les marchés où il y a deux, ou trois, ou quatre petits fournisseurs. Et ça bénéficierait les consommateurs...

769   CONSEILLÈRE POIRIER: Mm-hmm.

770   M. BIBIC : ... les auditeurs dans ces petits marchés.

771   CONSEILLÈRE POIRIER: Alors, si on demande aux divers intervenants de nous donner des informations supplémentaires d'ici une ou deux semaines, seriez-vous prêt à nous donner les cotes d'écoute des 19 stations qui sont subventionnées par le LPIF?

772   M. BIBIC : On pourrait les fournir. C'est déjà public je crois.

773   CONSEILLÈRE POIRIER: Oui, c'est ça. Mais pour les avoir...

774   M. BIBIC : L'affaire de BBM, bien oui.

775   CONSEILLÈRE POIRIER: Dans le cadre de l'audience et puis...

776   M. BIBIC : On pourrait le faire, oui.

777   CONSEILLÈRE POIRIER: Et qu'est-ce que vous feriez des autres critères? Il y avait plusieurs autres critères. Il y avait la preuve de succès. Mais il y avait l'augmentation des recettes de publicité locale. Il y avait l'augmentation du nombre de reportages originaux.

778   Est-ce que vous voudriez les maintenir dans un prochain LPIF qui pourrait être amélioré?

779   MR. BIBIC: Could you repeat the question?

780   COMMISSIONER POIRIER: I was wondering if you would keep the same criteria that were set for the LPIF or you would get rid of all the other ones except the BBM?

781   MR. BIBIC: I think the only criterion of any consequence in the current model is spending, three year historical spending levels. I believe that some of the factors you mention were referenced in the decisions establishing LPIF, but more as measures that the Commission might look to to determine if the fund was successful. But I think ultimately, I think the ultimate funding criterion is spending.

782   MR. GOLDSTEIN: Yes, I think there's two for the variable portion of it. Essentially there is an initial threshold of local programming required to determine eligibility of the stations in the markets that are non-metropolitan markets, you have to get to the seven hours for English, and I think it's five for French, and then in terms of the variable it's just based on --

783   COMMISSIONER POIRIER: Yes. This is for allocation, but I'm talking about the benchmarking, the indicators of the success of the LPIF. We have plenty of criteria.

784   MR. KEVIN GOLDSTEIN: Yes. One of the other things I think it's important to highlight is that those criteria were highlighted in 2008-100 --

785   COMMISSIONER POIRIER: Yes.

786   MR. KEVIN GOLDSTEIN:  -- when the Commission implemented --

787   COMMISSIONER POIRIER: With cap.

788   MR. KEVIN GOLDSTEIN:  -- sort of announced the LPIF and what it would be. There was a fundamental change to what the LPIF became that happened the following summer in July in 2009-406 when the Commission changed it from a fund that was centred on incrementality to one that was much more rooted in sustainability.

789   To us in terms of looking at what is the number one factor or qualitative factor in what the LPIF has accomplished, it's ensured stations stayed open. In fact, for one of our stations it actually caused us to reverse a decision to close it, and that was in Windsor. It was quite public at the time.

790   COMMISSIONER POIRIER: Yes.

791   MR. KEVIN GOLDSTEIN: So that realistically I think those criteria sort of made sense in the context of a fund that has incrementality as at its root, but not necessarily in what the fund became.

792   MR. GORDON: And the criteria also, from our point of view looking at the amount of news and the local news that we produce, to maintain between 70 and 90 percent local news in a market, that's the criteria really that we would look at as a successful model in this case.

793   CONSEILLÈRE POIRIER: O.K. On a eu d'autres suggestions de modèles, entre autres, le modèle avec bonus aux stations qui auront fait preuve d'innovation.

794   Pour une entreprise qui est privée comme vous, et intégrée verticalement, est-ce que c'est un bon modèle qui pourrait aussi servir? Parce qu'on relierait l'intérêt de Shaw à l'innovation. Mais en même temps, le LPIF pourrait se baser sur de l'innovation et des succès autres que les cotes d'écoute qui, parfois, sont difficiles à prouver, surtout dans des petits marchés.

795   M. BIBIC : Je crois que notre modèle est meilleur, notre modèle est objectif, quantitatif, non qualitatif.

796   Avec le modèle de Shaw, ce qui va arriver, c'est, nous, on en fait l'innovation. On serait quand même généralement assez confortables.

797   Mais là, ce qui arriverait, c'est que le Conseil serait en position d'être l'arbitre. Ça, c'est l'innovation qu'on aime, et qu'on va appuyer ces défenses-là? Non, parce qu'on aime pas ça.

798   Fait que notre modèle, c'est quantitatif. C'est objectif. On a les données, on est capables de calculer le financement d'une façon quand même assez... d'une façon très facile et immédiate.

799   CONSEILLÈRE POIRIER: Et vous êtes prêt à maintenir le 1.5 pour cent, malgré le fait qu'on ait augmenté de 1 à 1.5 pour cent la contribution des consommateurs, comme c'est écrit souvent sur les factures, pour le LPIF?

800   M. BIBIC : On serait prêt à accepter la continuation du 1.5 pour cent si les modifications sont portées à la méthodologie.

801   On serait aussi prêts à accepter le 1 pour cent et un taux réduit.

802   Et comme je l'avais indiqué au vice-président, un cap aussi -- Shaw a parlé d'un cap -- ça, ça serait... on serait prêt à discuter d'un cap aussi.

803   CONSEILLÈRE POIRIER: Un cap pour?

804   M. BIBIC : Un cap, mettre un cap sur le montant global...

805   CONSEILLÈRE POIRIER: Le montant...

806   M. BIBIC :... du financement.

807   CONSEILLÈRE POIRIER: ... total.

808   M. BIBIC : Oui.

809   CONSEILLÈRE POIRIER: Parfait. Merci, Monsieur le Président. C'est tout.

810   LE PRÉSIDENT : Merci.

811   Conseiller Morin?

812   CONSEILLER MORIN : Merci, Monsieur le Président.

813   Je voudrais justement revenir sur ce que vous venez de dire, un critère quantitatif.

814   Et je pense, c'est extrêmement important que les régulateurs aient toujours des chiffres pour justifier leur décision. Et je pense en avoir présenté ce matin avec la pièce numéro1 qui est déjà sur le site internet et qui donne un résumé agrégé par catégorie.

815   Alors, pour me rattacher à ce que vous disiez tout à l'heure, effectivement, les dépenses, c'est pas nécessairement un indicateur qu'on est efficace. On peut dépenser beaucoup, puis en bout de ligne, parce qu'on n'est pas efficace, on arrive pas avec un chiffre de nouvelles locales.

816   Je vais prendre votre définition des nouvelles locales que vous avez, les cinq groupes: Astral, Bell, Corus, Vidéotron, Rogers et Shaw.

817   Vous vous êtes entendus sur cette définition des nouvelles locales. Et c'était à partir, évidemment, des rubans témoins.

"News programming that originates with the station airing the programming or is directly relevant or tailored to the needs and interest of the local market audience." (As read)

818   Et on sait que jusqu'ici, il y a plein de confusions au CRTC. On sait pas qu'est-ce que c'est des nouvelles locales.

819   On parle de programmation locale, mais ça peut constituer 10 pour cent de nouvelles locales, parce que justement, le risque avec les gains de synergie est de monter dans juste une station, c'est qu'on oublie les stations locales. Tout ce qui reste, c'est l'antenne.

820   Alors, ma question est simple. Vous avez parlé d'un critère. Je n'en discuterai pas. Ça a été abordé par d'autres conseillers avec moi.

821   Mais, si le CRTC décidait d'un seuil que vous pourriez commenter dans un premier temps, bien, on aimerait que vous y répondiez d'abord.

822   Est-ce que vous seriez d'accord pour dire que ce qui compte au fond, c'est que les consommateurs aient des nouvelles locales locales comme je l'ai expliqué ce matin.

823   Autrement dit, je regarde les entreprises intégrées du côté anglophone dans les marchés du FALP, c'est cinq minutes.

824   Dans le marché francophone, vous n'êtes pas, mais où Vidéotron est, c'est beaucoup moins. C'est uniquement deux heures par... j'ai dit cinq minutes. C'est cinq heures par semaine de nouvelles locales. Dans le marché francophone, c'est deux heures. C'est beaucoup moins.

825   Est-ce que, ma première question que je vais reposer constamment au niveau des... pendant l'audience, c'est, c'est quoi, ça serait combien d'heures locales de nouvelles vraiment locales suivant votre définition? Que ce soit dans le domaine culturel, sportif, politique ou économique. Ce serait quoi votre chiffre?

826   Quel serait le chiffre que vous considéreriez acceptable? Parce qu'on peut pas avoir un fond de 106 millions sans savoir si, au bout de la ligne, on va avoir des nouvelles locales. Ça m'apparaît la première des conditions.

827   Jusqu'ici on considérait pas ça. On considérait les dépenses sans savoir si vraiment il y avait des nouvelles locales.

828   Alors, est-ce que vous auriez un chiffre à suggérer et sur quelle base on pourrait avoir un seuil pour les entreprises intégrées dont vous faites partie avec Rogers et Shaw qui serait le nombre d'heures par semaine auquel vous devriez vous astreindre.

829   Et je vous le dis tout de suite. Souvent, avec nos... quand je suis arrivé, moi, au CRTC, il y avait 1000 pages de réglementation.

830   Maintenant, pour la télévision, on est rendu à 1500 pages.

831   Alors, moi j'aimerais que la réglementation soit vraiment transparente. Je pourrais, moi, si on dit que c'est cinq heures par semaine, je pourrais, chez moi, sur mon fauteuil, vérifier si vraiment Bell diffuse cinq heures de nouvelles par semaine.

832   Et si vous le faites pas, bien je me plains au CRTC, je dépose une plainte formelle.

833   C'est ça l'idée d'avoir un seuil.

834   Et j'aimerais avoir votre point de vue là-dessus.

835   MR. KEVIN GOLDSTEIN: I think it's important to put some context around this so we know exactly, you know, that if we are going to put any kind of threshold in place that we know exactly what we are talking about, because we looked -- I know the definition you read, I was one of the parties who was involved in the drafting of it with the other groups.

836   We need to actually decide as to whether what we are talking about is local newscasts or local news segments within a newscast. The number that is actually in front of me on the screen and on the page you distributed earlier that shows that the VI players had 5.5 hours of local news, that's local news segments. Those are specifically -- so for example if you're in Victoria that's a local news story that is within the parameters of the Greater Victoria area, okay.

837   The definition you read talks more specifically to a local newscast and what a local newscast does. A local newscast has a number of different components to it. It has purely local news, it has regional news, it has national news of relevance to the local community.

838   So I think we need to understand, first off, are we talking local news segments, what that mean?

839   COMMISSIONER MORIN: It's not the right definition.

840   MR. KEVIN GOLDSTEIN: Well, it's not a matter of what the definition is, it's a matter of what is the threshold we are putting on. Are we putting a threshold on local news segments that we are going to deliver each week or are we putting a threshold on local news, is it local and regional combined?

841   I want to pass it over to Richard because Richard I think can give some really topical examples as to what we are talking about.

842   MR. GRAY: Yes, I'm not surprised to hear you say that there was confusion at the Commission when it came to the dissection of the material that you received because even inside of our stations there was a great deal of confusion when they were looking at doing an assessment of their own products.

843   A number of our stations in their submissions made to you we determined later took a very, very strict definition of "local news". It was local news specifically for the market that they are in. What it didn't include, what they didn't count was weather, which is very local. It didn't count sports, which is, you know, a large portion of the sportscast on a nightly basis, is very, very local.

844   And I think more importantly than that, what a number of our stations didn't count was what I would call regional news, and that was news that they did locally from markets that were just beyond their major metropolitan centre.

845   I'm going to talk specifically about an example of what we do in Victoria on Vancouver Island.

846   Our CTV Two station on Vancouver Island produces a newscast as part of their two hour block at suppertime that's called "Vancouver Island Report". What Vancouver Island Report is specifically about is stories from the mid-Vancouver Island region. We are not licensed for that area, but we have determined that it's part of the public interest for that television station to be reflective of life and the going on and the happenings across the entirety of Vancouver Island, not just Victoria.

847   So there is a half an hour newscast every night Monday through Friday that is devoted to covering local news in communities like Duncan, Nanaimo, Port Alberni, Ucluelet, Tofino, Courtenay Comox, Campbell River. And we have journalists specifically located in those communities who are doing stories on a nightly basis.

848   There is a case where I think we are making a major contribution to the broadcast system, I think that local television station is super serving its market, but by the strictest of definitions that we apply, you know, about local news, that in some cases you have mentioned in some cases we have applied ourselves, a lot of the production that's done there wouldn't be classified as local.

849   MR. BIBIC: Commission Morin, you have heard -- so if we are told its news segments that count we could give you a number; if we are told that it's the newscast so long as it's local we can give you a number; if you tell us regional has to count -- we think it should -- we can give you a number, but putting those data issues aside and those definitional issues aside, we agree with what you said.

850   CONSEILLER MORIN : Parce que justement, moi, ce qui est important, c'est que, relié à l'antenne, relié à l'antenne, c'est des segments locaux. Ça ne vous empêche pas d'avoir dans le bulletin des nouvelles de Nanaimo ou de n'importe quelle autre ville de la Colombie-Britannique.

851   Mais je voudrais m'assurer, moi personnellement, que les nouvelles qui sont diffusées à partir d'une antenne à Victoria, pour prendre cet exemple-là, ont vraiment... il y a vraiment un seuil à atteindre pour que vous satisfiez, vous pourriez satisfaire aux conditions.

852   Alors c'est dans cet esprit-là que je parle. On peut avoir toutes sortes de critères, mais il y en a un, si on parle d'un fond de 100 millions pour les nouvelles locales. On parle pas de 100 millions pour les nouvelles régionales, provinciales ou fédérales. C'est ce que je veux dihimre.

853   Merci, Monsieur le Président.

854   THE CHAIRPERSON: Again, this is not for answering now it's for under advisement and we will let you know when to file it. Thank you.

855   Commissioner Patrone...?

856   COMMISSIONER PATRONE: Thank you, Mr. Chairman. Good day.

857   I can appreciate that Bell likes the fund and sees that it is, relatively speaking, a good thing. If the Commission were to get rid of it is there anything stopping or preventing Bell from essentially continuing to collect the 1.5 percent, calling it the CTV Local News Fund and simply diverting those funds to the various stations with are now supported by the LPIF?

858   MR. BIBIC: What would happen in that case -- I recognize right now we are in a net deficit position vis-à-vis the LPIF and so if the fund is eliminated altogether that is right away a benefit overall to BCE. It would leave a significant funding gap for the local stations in small markets and I think what you just suggested is, well, solve the funding gap yourselves. Nothing is preventing you from doing that.

859   In that event we will do those kinds of things. We will look at these 19 stations and say which ones close, because they are chronically unprofitable and, you know, we are just going to stop investing in those and in others that we see there might be some hope for we will do some things on the ground in terms of reducing costs and trying to be more innovative to try to get them into a sustainable position and others we will continue to operate. So that's what we will do.

860   COMMISSIONER PATRONE: But it's a zero sum game at the end of the day or it may even work out in a positive sense. As you yourself said, you are in a negative situation as far as contributions to the fund compared with what CTV affiliates take from the fund.

861   I guess where I'm going with this is you like the fund and that's great, but why thrust it or force it on those BDUs that don't like it when you could in fact simply fund your own affiliates through your own fund? I mean your own customers are already used to paying the fund anyway.

862   MR. BIBIC: I think that my answer remains the same, if that's where we go we will -- you know, the market will operate and we will make the investments that we judge appropriate in those stations that we won't -- ought to continue to get funding.

863   And we are comfortable -- as I said right off the top in our opening statement, we are comfortable with the Shaw position of eliminating the fund. What we said, though, is recognizing what the objectives of the fund were in the first place, which remain appropriate, recognizing that the fund is in place, let's keep it going for another two or three years -- I started at two and Commissioner Poirier got me to three -- two to three years --

864   COMMISSIONER PATRONE: She will get you to five in a minute.

865   MR. BIBIC: Got me to three, see where things stand, but in the meantime let's make the fund more performance-based rather than output based or spending based. That's all were saying.

866   Now, ultimately, Commissioner Patrone, let's just treat everyone the same. If the fund is in place let's make it market-based and let's treat everyone the same. If the fund is going to be eliminated, let's treat everyone the same. We can live with both outcomes.

867   COMMISSIONER PATRONE: But I guess I'm left with the reminder that you reserve the right to close stations.

868   MR. BIBIC: Absolutely. We also reserve the --

869   COMMISSIONER PATRONE: I'm trying to square that with the fact that in dollar terms you wouldn't be any further behind by simply allocating the 1.5 percent to your own stations than you would under the current system, which is the money going into a pool and then diverted to all the stations, including your competitors.

870   MR. BIBIC: Commissioner Patrone, I think the difference is, we make funding decisions or budgeting decisions at the global level and we assign the limited capital envelope or expense envelope to the priorities and, frankly, you know, the chronically unprofitable, super tiny stations aren't going to fare very well on that prioritization. That's just the way it goes. Whereas the fund is directed specifically -- specifically to maintaining specific small-market stations. That's the difference.

871   COMMISSIONER PATRONE: Okay. I just don't see why you couldn't make a fund just as specific, but let's leave it for now.

872   MR. BIBIC: Without the funding these stations -- well, some of these stations will close.

873   COMMISSIONER PATRONE: Okay.

874   My second question is: Do you feel that pressures and competition arising from over-the-top services have placed BDUs in the position of trying to be more nimble and flexible on the pricing front?

875   In other words, as those pressures increase -- and I think you agree that those are going to increase going forward -- wouldn't eliminating the fund help you be a little bit more nimble on the pricing front given that consumers appear to be showing an increased sensitivity as far as pricing pressures are concerned?

876   MR. BIBIC: Again, I think you are asking again -- you're trying to explore why BCE doesn't simply prefer eliminating the fund.

877   COMMISSIONER PATRONE: No, I'm trying --

878   MR. BIBIC: And that's just one other factor that we would consider in deciding what our position is.

879   Ultimately we are okay with fund being eliminated, we just think that what we have proposed is a better model for viewers in small communities across the country.

880   COMMISSIONER PATRONE: Because you feel that the model rewards success rather than expenditures?

881   MR. BIBIC: As modified in our proposal, yes.

882   COMMISSIONER PATRONE: Yes. Thank you very much.

883   MR. GORDON: Or more sustainability then success.

884   I mean if you talk about over-the-top, at some point content is going to rule on over the top. So if there is a local newscast in, you know, Sudbury, that's available both over-the-air and over-the-top, that's going to be more relevant for our business overall.

885   COMMISSIONER PATRONE: Thank you very much.

886   THE CHAIRPERSON: Thank you.

887   Commissioner Menzies...?

888   COMMISSIONER MENZIES: Thanks. A couple of questions I have.

889   Regarding your model, when the competitive models for those markets -- actually, let me back up a second.

890   Did you look at any models regarding -- given that this is a subsidy -- that just dealt with stations that actually need it financially to break even?

891   Because part of the challenge is what justification is there for subsidizing profitable operations whereas there obviously might be a justification and part of the original purpose of the program was to help unprofitable states. You have six that are unprofitable, wouldn't it make more sense for those to be supported by a fund then to have that fund spread equally over profitable and unprofitable stations?

892   MR. BIBIC: Well, the first thing is that those six are stations that are unprofitable even with LPIF.

893   COMMISSIONER MENZIES: Right. Wouldn't it make sense to have more LPIF for unprofitable stations and less LPIF or no LPIF for profitable stations?

894   MR. BIBIC: No, I understand the question, I just wanted to clarify that the six is even after LPIF.

895   COMMISSIONER MENZIES: No. I understood that, yes.

896   MR. BIBIC: Okay.

897   MR. KEVIN GOLDSTEIN: We didn't look at that. We didn't look at the model.

898   I think also, one, -- I think there's two issues.

899   One is that the LPIF dollars are designed to help fund local programming, they're not just a bottom line calculation. The dollars can't be used anyway we want to use them, they have to be used against local programming expenses.

900   The second thing is that we would only have data in terms of markets where there are unprofitable stations relating to our stations. We would know on and industry-wide basis how the metropolitan/non-metropolitan market split. I know the Commission put that data on the record on Friday.

901   We would know at sort of an industry level for the larger players how their conventional television is performing, but not the small independents. So I don't know how we could begin to structure that model.

902   COMMISSIONER MENZIES: Okay.

903   The next question was, in paragraph 16 you mentioned, regarding -- and I was trying to square these two.

904   In paragraph 16 you say:

"... conventional TV in Québec has never experienced the same financial challenges that private broadcasters in the rest of Canada have, and Québec's performance was again strong in 2011."

905   Then you say that you are still happy with the 30/70 split. Commissioner Morin's data shows a lower volume of local news in Québec.

906   Do you think -- some of those same kind of anachronistic in the sense that when the fund was formed the crisis was in the English-language stations and then the fund was split 70/30, right, and we haven't seen a significant upturn in local news production. In many of the markets the 30 is low.

907   Will your model address those anomalies?

908   MR. KEVIN GOLDSTEIN: We haven't proposed a split, haven't changed the 70/30 split.

909   COMMISSIONER MENZIES: Right.

910   MR. KEVIN GOLDSTEIN: I think the 70/30 split somewhat corresponds to population essentially in the markets that are affected when we looked at it.

911   COMMISSIONER MENZIES: So 30 goes to the French market and then it gets competed for within that?

912   MR. KEVIN GOLDSTEIN: Yes. What happens is that in each market, both on the English side and the French side, there is an initial allocation based on size of the market and then where there are situations where there are more than one station they compete based on tuning or audience to their --

913   COMMISSIONER MENZIES: So while the exact numbers aren't -- what you're looking at is to basically do -- is this like a regional model where you would do, you know, population-based, so you would have whatever the population of Québec is as a percentage, the percentage of that would go to that fund?

914   MR. KEVIN GOLDSTEIN: No, no. There's a 70/30 split off the top. So let's say there's $100 million, $30 million -- let's just make it easy numbers, we will call it $100 million -- I know that's more for the variable portion --

915   COMMISSIONER MENZIES: Okay.

916   MR. KEVIN GOLDSTEIN:  -- and $30 million to Québec. So if one market had --

917   COMMISSIONER MENZIES: So it is not a Statistics Canada-based --

918   MR. KEVIN GOLDSTEIN: No. Essentially what would happen is that if one eligible market in Québec had 10 percent of the population of the eligible markets in Québec, it would get $3 million out of that --

919   COMMISSIONER MENZIES: Okay.

920   MR. KEVIN GOLDSTEIN:  -- and then the stations in that market would compete for that $3 million.

921   COMMISSIONER MENZIES: Okay. When you did a preliminary analysis on your position, what did -- financial analysis, what was the net positive impact -- because I'm guessing there is one because it would be very unusual for somebody to appear here without doing something that was in the best interests of their shareholders, not to take away the nobility of the local programming commitment.

922   When you did your preliminary financial analysis, what was the net benefit to LCTD of having a competition-based system?

923   MR. BIBIC: There is some amount of guesswork here, but we could file that with you.

924   I think generally speaking, yes, you are correct. You know, the Bell Media stations would be a beneficiary if you take a snapshot in time as of today, given our relative performance today. Small-market stations were also net positive under our model. CBC would face a reduction in both the French and English markets because it now rewards viewership, not spending.

925   But we can file -- we can run some numbers and file with you, you know, as best we can kind of the numbers that you're looking for.

926   But again, in our case you have to remember the most in terms of private broadcasting, the most number of stations, the most -- the highest amount of hours, 40 percent more than the CBC even after all their spending, the most number of -- the highest number of employees and investment, et cetera. But we can file that with you.

927   COMMISSIONER MENZIES: I'm not aware that any of these are yours, but I'm aware that there's some local (indiscernible) who when they do a local news will do it like a one-hour package and then they will rerun it basically the next hour. Would those hours count in your model in terms of that, because it would be more hours of local programming, but it would be not more hours of original local programming, if you know what I mean.

928   MR. KEVIN GOLDSTEIN: I will pass it to Richard in the second to talk about what we do, but I can say that the numbers that are in our opening statement where we talked about what we are exceeding in the LPIF markets, 155 over the 91 requirement, none of that is repeat hours.

929   So I will pass it over to Richard.

930   MR. BIBIC: That's paragraph 11 where we have given you the numbers for original.

931   COMMISSIONER MENZIES: Okay, it has to be original. Yes, because it would still be -- you know what I mean, if you run it from 5:00 to 6:00 and then you run it from 6:00 to 7:00 it could still be categorized as original.

932   MR. BIBIC: We have a regulated commitment across our stations to do 91 hours a week and we do 155. This is original local news programming.

933   MR. GORDON: And not rebroadcast.

934   COMMISSIONER MENZIES: I'm sorry?

935   MR. GORDON: They are not rebroadcast hours.

936   COMMISSIONER MENZIES: Not rebroad, right. Okay, thank you.

937   MR. GRAY: No, we do a small amount of rebroadcasting and that is on our CTV Two stations in Ontario, in Windsor, in London and in Barrie, and it's the rebroadcast of the late news in an enhanced enriched screen that has new information and that has been done since we cancelled those specific local morning shows in 2009. But that's the only place where we are doing any repeat and it's not in our numbers.

938   COMMISSIONER MENZIES: The last question is: I'm going to assume that you have a positive presence in these markets that would work under this funding model and your argument that that funding model would inspire competition is not a bad one, but you're also talking a two-year timeframe; right?

939   Do you think two years is an appropriate timeframe to inspire anybody to bother competing and making an investment in that market to compete for dollars that might not be there after two years?

940   MR. KEVIN GOLDSTEIN: I think it is a reasonable timeframe.

941   I think when I was speaking with Commissioner Lamarre, one of the ways in which you can quite easily increase your share is to increase the amount of programming you offer and given that the programming is largely produced in-house I think you can make those decisions relatively quickly and move in that direction.

942   You know, we just had benefits commitments relating to our two new morning shows in certain markets in Western Canada as a result of the BC/CTV transaction. That was approved in March. We were up, ready to go several months later. It's not something that takes two years to develop, it's something that you decide you want to do it, you decide you want to put the resources behind it and you can turn it pretty quickly.

943   COMMISSIONER MENZIES: So for example then, you would -- take Lethbridge, right, as Global there and CTV there, 70,000-75,000 people, or something like that. Over a two-year period that market would be attractive enough to you to invest more heavily to compete for local news viewership in that market?

944   MR. BIBIC: Investment doesn't necessarily mean spending more.

945   COMMISSIONER MENZIES: Okay.

946   MR. BIBIC: It's just make sure -- if we are number one --

947   COMMISSIONER MENZIES: You would market it more with your own promos, in-house promos, you would -- your anchors would speak to the Chamber of Commerce, you know what I mean, but you would actually be -- a company your size would get excited about competing hard in Lethbridge? That's what I'm --

948   MR. GORDON: Absolutely.

949   COMMISSIONER MENZIES: Okay. Thank you.

950   THE CHAIRPERSON: Thank you.

951   Commissioner Duncan...?

952   COMMISSIONER DUNCAN: I have just a few questions and I hope it's nothing repetitive, but with respect to closing stations you made it very clear that you were prepared to make a decision if stations weren't profitable you would close them and you have pointed out that there were the six stations that were not profitable even with the LPIF funds.

953   What's your plan with respect to those stations?

954   MR. GORDON: Well, the plan is, you know, to continue the LPIF funding for those stations.

955   You know, closing stations is not a topic of discussion that we take lightly. It's not in our business plan and it's not something that we want to do as an organization. We want to continue to compete and compete vigorously in every market that we are in. That's why we proposed the viewer-centric model. We would have to look very, very hard and long at the stations that are underperforming. You know, there are options of reducing programming and there are options of closing the stations. That's not where we want to go, but given the economic conditions of the last six months it's a discussion that is being raised a lot more than it was.

956   MR. BIBIC: And there is a couple of other -- I mean, the reason for the two years is there are a couple of other very, very important factors that will weigh into these decisions.

957   One is, can we get, as between BDUs and broadcasters, the right model for distance signal compensation. We haven't settled that yet. It's going to take a bit of time still. And again, where does value for signal go and how does that help conventional stations, including the small ones in particular markets and that would have, if it becomes reality, a bearing on which ones remain open or don't, but hopefully they do all remain open.

958   COMMISSIONER DUNCAN: Okay. I understand that the qualitative reports that you filed -- and I'm looking at some here, one for CFCN TV5 I guess it is -- and I think that your qualitative report sort of followed a similar format, much more abbreviated than those filed by some of the others. I don't know if you have looked at the ones for example that Pattison or Corus filed.

959   I'm just wondering, I'm familiar a bit with the Halifax market obviously and I just wonder if the money just went to offset costs and not really to improve the programming in those markets.

960   MR. GRAY: You know, it's a great question and it's a difficult one to answer because it's dependent upon where you start the measurement.

961   I would suggest to you that we have been in these markets for a very long time and have produced extraordinarily high quality, high-caliber newscasts and if you were to look for a specific measure as to our continued demonstration of our desire to do that through the existence of the LPIF, it's that our 13 newscasts originating from our 19 LPIF stations during the course of the funds' three-year existence have won 79 RTDNA Canada or RTDNA International Awards of News Excellence, including 22 for best newscast, best information program or overall excellence.

962   So, you know, viewers are showing up to watch our shows because we do a really, really good job of reflecting their local communities. We have passionate staffs in all of those markets who are out fighting to make sure that the story that they are leading the newscast with is both more creatively told and more substantively told than any other news organization in the city. Our personalities are out at more Chamber of Commerce luncheons and are involved in more charitable fundraisers than anybody else.

963   So again, as I said at the outset, really difficult to say, you know, how have you improved, where have you improved as a result of the spending of dollars "X". For us, we have maintained, as I said, at extraordinarily high quality product in every one of the markets that we are in.

964   COMMISSIONER DUNCAN: It's helpful, I think the qualitative reports are probably referred to by consumers and representatives of consumers and I just wonder if you think that those reports captured...?

965   MR. BIBIC: I did look at them and the reports that we file do not capture all of that.

966   COMMISSIONER DUNCAN: kay.

967   MR. BIBIC: And others have provided a lot of detail. There was no specific requirement to be very detailed or not detailed, but I think it's a point well taken and I think if the fund continues it's something we probably ought to do to convince the Commission and those who read them that, yes, a significant amount of value is being delivered to them by this cluster of stations across the country that we have.

968   COMMISSIONER DUNCAN: Thank you.

969   So, Mr. Gray, your comments, does it also include for example, Alive at Five? I don't know if you have that in every market, but certainly you have it in Halifax. Does that include that as well?

970   MR. GRAY: That would include Live at Five as well, yes, for Halifax, but that's not -- that's a program that we do specific to the Maritimes, it's not a program that we offer everywhere.

971   COMMISSIONER DUNCAN: Just with respect to this and your model that you have proposed, would you agree that you would have a leg-up on capturing eyeballs by virtue of the fact that you are able to buy the top shows?

972   MR. KEVIN GOLDSTEIN: The tuning is purely to local programming, it's not --

973   COMMISSIONER DUNCAN: No, I know. I understand that's the measure --

974   MR. KEVIN GOLDSTEIN: Yes.

975   COMMISSIONER DUNCAN:  -- but once you get the eyeballs on your station watching the news or tuning in to watch a good show that's coming on, a popular show, don't you think that would give you an added advantage over others may be and keeping those for the news?

976   MR. GRAY: You know, this is a debate that goes on at television stations, and particularly in television newsrooms, across the entire country and it has been going on for the entirety of my 20-year career. Generally what I have found is that the news operations that are number two in the ratings say that the only reason that they are number two is because of the lead-in program and the ones that are number one it's of no consequence.

977   I think probably the fairest answer to your question is that there might be a tiny, tiny advantage because of the promotion that you are able to do in the rest of program schedule, but at the end of the day people are tuning into local newscasts because of the quality that's delivered inside of them. If they show up there and they don't get what they are looking for, if they're not getting the kind of quality coverage of their local community that somebody else is offering, they are not going to stay just because, you know, that particular station is airing CSI or some other program.

978   COMMISSIONER DUNCAN: Thank you.

979   I have one last question and it's a little bit different than what's been going on in a lot of the questions to this point.

980   But I noticed in the funding that the LPIF funding that the BDUs contributed, that the small BDUs are obviously committing their share, based on the revenues, and the CCSA has raised the point that the regulation should not require small independent BDUs to put their money directly into the pockets of either massive, well-funded competitors like Bell and Shaw, or the publicly funded Canadian Broadcasting Corporation.

981   And even in -- I don't know how many instances it was passed on, but if it was passed on, then even more consumers in small communities are being asked to fund Bell or the CBC or Shaw.

982   I would be interested in your reaction to that statement.

983   MR. GOLDSTEIN: I think the Commission has already made the determination that if you are below 20,000 subscribers, you are exempted from not just regulation as a BDU, but also from paying the LPIF.

984   So I think the fact that we have that exemption order in place already takes care of the vast majority of the situation.

985   So the CCSA is highlighting, in other situations where those BDUs are competing and paying the LPIF, that they are licensed -- they are subject to every other obligation that any other Class 1 cable system is subject to, and I am not certain why, should the Commission determine that the LPIF should continue, they would merit any kind of special exemption. They meet every other requirement.

986   COMMISSIONER DUNCAN: For example, Access Cooperative...

987   MR. GOLDSTEIN: Access Coop is a bit of a different situation. They argued specifically, because they said that they are a not-for-profit.

988   Now, the interesting thing is, I read -- because they filed an earlier application, and I read over it this morning, and they said, you know, that they really need this because they want to invest in their community television programming, and they highlighted a previous decision from the Commission that allowed them to use all of their 5 percent contribution -- instead of having to give some to the CMF, to also actually -- you know, they could direct it all to their community television programming.

989   What I didn't see was them saying that they will put the 1.5 percent to their community programming. Essentially, that would just go into their pocket at the end of the day.

990   Realistically, that is the only area where they are exempted from the other obligations of the BDUs, and to me it's kind of like we are exempting them on an ad hoc basis.

991   You know, they compete in a market with SaskTel. Are we going to exempt SaskTel next because they are government-owned?

992   Ultimately, I think, if you are a BDU of a particular size, and you are competing in a particular market, and you are subject to the obligations that other BDUs have, then you should be subject to this obligation, as well.

993   COMMISSIONER DUNCAN: I think that the distinction that I understand they are making is that they are not vertically integrated companies, so they don't have other ways of getting a return on their investment.

994   MR. GOLDSTEIN: I think, ultimately, I hearken back to what we said earlier, which is that a viewer is a viewer. You know, the underpinning of the fund is that we want to support access in smaller communities to local program. One community isn't any more valuable than the next. One viewer isn't -- you know, if the player is non-vertically integrated, they should continue --

995   COMMISSIONER DUNCAN: You are going back to viewers, but I am talking about the contributors.

996   MR. BIBIC: The BDU sector remains stable and financially healthy. That was one of the factors that the Commission mentioned back when the fund was created, and it is repeated in the Broadcasting Notice of Consultation, and that applies to the BDUs who do not own broadcasting. They are also quite financially healthy.

997   Yes, some have to compete, like Shaw.

998   TELUS is non-vertically integrated, and it is doing, seemingly, quite well in its TV business.

999   Shaw continues to do well, although I do concede -- and it's hard to argue with Peter Bissonnette's testimony that competitive pressures have become more intense in the west, but it remains a healthy business.

1000   Cogeco remains healthy. Just look at some of their quarterly results, including the latest quarter that Cogeco had.

1001   The point, I think, that we are making is, it's not because you are not vertically integrated as a BDU that you should be excluded from a model, if the Commission chooses to continue with it, to fund --

1002   MR. GOLDSTEIN: Also, I think it's important to highlight that to say that they don't benefit from it -- it doesn't go into our consolidated revenue. It's not like dollars are coming in from the BDU side and, you know, it's like advertising revenue. It has to be used against direct local programming expenditures.

1003   If you are not doing those expenditures, you are not getting the money.

1004   If your expenditures on local programming are below what your LPIF allocation would be, you cannot access more than what you are spending.

1005   So, to say, "Oh, we are vertically integrated," yes, and we are offering -- you know, we have the most stations in LPIF-eligible markets that offer local programming. So I don't really understand what the connection is.

1006   COMMISSIONER DUNCAN: Thank you very much. Those BDUs will have their chance to speak to it, too.

1007   THE CHAIRPERSON: We have a couple of follow-up questions, one from the Vice-Chair of Broadcasting.

1008   COMMISSIONER PENTEFOUNTAS: Thank you, Mr. Chair.

1009   Deux questions hyper rapides.

1010   D'abord, en vertu de notre décision 2011-163, alinéa 45, si j'ai bien compris votre engagement, c'est à l'effet que vous vous êtes engagé à continuer à diffuser les quatre stations de la chaîne 'A', Windsor, Victoria, Barrie-London, et Pembroke-Ottawa, et cet engagement est nullement dépendant de l'existence du FAPL?

1011   M. BIBIC : Dans la décision, un n'est pas dépendant sur l'autre. Vous avez raison, oui.

1012   CONSEILLER PENTEFOUNTAS : Parfait!

1013   The second point: You are receiving LPIF in 17 stations.

1014   Is that correct?

1015   MR. BIBIC: Nineteen.

1016   COMMISSIONER PENTEFOUNTAS: Nineteen, and 6 of those are already --

1017   MR. BIBIC: Six of those are unprofitable.

1018   COMMISSIONER PENTEFOUNTAS: Why are they still up and running?

1019   MR. GORDON: It's part of a business model that we think, long term, has legs. You know, if the Commission deems that LPIF is a valuable contributor to the Canadian broadcasting system, those are stations that we will be able to keep open.

1020   But, you know, based on Mr. Bibic's comments about VFS and other things, there is a time-limited offer on looking at those situations.

1021   But, for now, we believe that it's part of our long-term business model. But should that business model change, and should the funding change, then that situation will change, as well.

1022   MR. BIBIC: I think what the situation -- and I hope that Chris corroborates this, but when the fund was established, CTV was independent. I suspect the decision was made: Okay, now that we have the LPIF funding, let's see where it takes us.

1023   In the intervening period, BCE acquired CTV, and what we are saying is, "Well, it has taken us a fair ways," and now what we are prepared to do is say: Okay, let's see how the dust settles on those two or three other factors that I mentioned, and then make that decision.

1024   So basically what we are saying is, rather than close them all right now, let's wait to see if distant signal compensation/value for signal hits, and the impact that it has, and if it doesn't hit, or if it doesn't have the impact we hope, then the outcome is likely going to be closure.

1025   COMMISSIONER PENTEFOUNTAS: Yes, but if we take LPIF off the table, value for signal and distant signal off the table, none of those three elements becomes a reality, are you going to be shutting down 19 stations?

1026   MR. BIBIC: No, not 19, but a fair chunk of --

1027   COMMISSIONER PENTEFOUNTAS: Well, according to you, 6 of them are already unprofitable, and the rest are going to become unprofitable if LPIF goes south.

1028   MR. BIBIC: We said in the opening statement, actually, that without LPIF funding, 10 of our 19 would have been unprofitable.

1029   COMMISSIONER PENTEFOUNTAS: Okay.

1030   MR. BIBIC: So half --

1031   COMMISSIONER PENTEFOUNTAS: And contrary to what Shaw came to tell us this morning, which was that they would keep on operating, for numerous reasons, their network -- economies of scale, exposure, visibility -- all of the elements that you would take into consideration in your business model -- you came and told us the opposite; that if LPIF disappears, you are going to be shutting down a lot of those stations.

1032   MR. BIBIC: Well, they have 7 stations. We have 19. And chronically unprofitable, tiny towns --

1033   What I am saying is, not all 19 -- I hope that I have made this clear -- not all 19 will close, but without value for signal, without distant signal compensation and/or without LPIF funding, some of those will close.

1034   COMMISSIONER PENTEFOUNTAS: Thank you, Mr. Chairman.

1035   THE CHAIRPERSON: I just have one question. I asked this question of the folks from Shaw this morning, as well.

1036   You operate an English-language station in Quebec. Have you seen the letter filed by the Commissioner of Official Languages?

1037   MR. BIBIC: I know of it.

1038   THE CHAIRPERSON: Do you have any comments with regard to his views that there needs to be a renewed focus in Quebec on the English language, the minority?

1039   MR. BIBIC: Are you talking in terms of making those stations eligible for LPIF funding? Is that the specific issue?

1040   THE CHAIRPERSON: He is suggesting that we look at the issuance -- and recognizing the fact that there isn't enough exposure for the English-language minority.

1041   One suggestion is -- and others have made it, as well -- that the Montreal market should qualify for LPIF.

1042   MR. BIBIC: We are not pushing for the Montreal English-language market to become eligible. We recognize that if that's a decision you take, we would profit from that.

1043   It wouldn't be big, but we would profit from that, because we operate CTV Montreal, CFCF, and we would draw funds from it.

1044   But, despite that, we are not here to say, you know, you must do it.

1045   THE CHAIRPERSON: Is the Montreal CFCF market profitable?

1046   MR. GORDON: It would be close.

1047   THE CHAIRPERSON: Above the line or below the line, on a PBIT basis?

1048   MR. GORDON: I don't have the figure, exactly, in front of me, but we can file that with the Commission. It's close.

1049   THE CHAIRPERSON: Hypothetically, if it did qualify, what additional things could you do to promote English-language minority rights in Quebec -- in Montreal?

1050   MR. GORDON: I think that is a situation where we would have to examine the programming that we do. I don't have the Montreal figures in front of me. I know it's a very strong station. CFCF has been a big brand in Montreal for a long time.

1051   But that would be a situation where we would look at different types of programming, potentially, other than news, or expanding our news footprint in that marketplace.

1052   Other than that, I don't have the figures right in front of me.

1053   THE CHAIRPERSON: Could you undertake to file something at a later date?

1054   We will discuss when the filing would be due later on this week, once we get a sense for how many filings are going to be going on.

1055   But if you could let us know what additional things you could do in order to -- and I urge you to read the letter from the Commissioner, as well. Then we could make an informed decision as to whether there are benefits there that -- and we would weigh the implications of it, obviously, as well.

1056   MR. BIBIC: Okay.

1057   MR. GORDON: Yes.

Undertaking

1058   THE CHAIRPERSON: Commissioner Lamarre...

1059   COMMISSIONER LAMARRE: Just to follow-up on what you answered Commissioner Katz, what do you mean by increasing your news footprint?

1060   MR. GOLDSTEIN: Right now, CFCF, if I remember correctly, doesn't have any rebroadcasting transmitters or anything outside of the greater Montreal area, so the coverage on the station is largely centred around its coverage footprint.

1061   Perhaps we could look at going into communities outside of that, or expanding it, you know, I think, to devoting resources in places where they currently aren't now.

1062   COMMISSIONER LAMARRE: Okay. So you would be looking at retransmitting, outside Montreal, news from Montreal?

1063   MR. GOLDSTEIN: Not necessarily, but the thing is that it has -- right now our focus is on the area served by the station.

1064   COMMISSIONER LAMARRE: Okay.

1065   THE CHAIRPERSON: Why don't you let them file something, we can give it some thought and file something, as well.

1066   Counsel, do you have anything at all?

1067   MR. McCALLUM: If the LPIF were continued, what would you say about a condition of eligibility that the amount received from LPIF for each individual station be publicly disclosed?

1068   MR. BIBIC: Under our viewership model, that data is public. The viewership data is public, so I can't see too much of an issue saying, "Okay, each station has received X amount of dollars," given how the viewing methodology shakes out.

1069   Under the current methodology we are less keen on it, but we could also accept the idea that the amount that each station gets be publicly disclosed, so long as that is the only thing that is disclosed, and the Commission doesn't then disclose all of the financials of the station on such a disaggregated basis.

1070   MR. McCALLUM: Thank you.

1071   I have taken note of several undertakings that were made. The first one was in response, I think, to Commissioner Lamarre. You are going to check for small markets -- if there is a vertically integrated broadcaster where there is also a small independent broadcaster.

1072   The second one that I took note of was in response to Commissioner Poirier, where you undertook to provide listenership data, la cote d'écoute des 19 stations subventionnées par LPIF.

1073   I wonder, in response to that, if you could also advise if the answer would be any different, in your opinion, if the LPIF were calculated as per your model.

1074   MR. BIBIC: I'm not sure -- I thought that Commissioner Poirier's question was: Could you file the viewership data that would be used under your methodology.

1075   MR. McCALLUM: Yes.

1076   MR. BIBIC: Okay. So what is the follow-up question, then, under that context?

1077   MR. McCALLUM: In other words, it would not be any different if it were to follow -- if it's as per your model. That's what you are saying.

1078   MR. BIBIC: Correct. It's just the viewership data that BBM releases. We will file that.

1079   MR. McCALLUM: And the third one was in response to Commissioner Morin, the threshold question that has been submitted.

1080   MR. GOLDSTEIN: The only thing is, as we discussed on the threshold issue, before we can answer that question, we need to know whether or not we are talking about local news segments, local news programming, local and regional news segments -- it's a different number, depending on which one we are talking about.

1081   MR. McCALLUM: I think you would have to file it using various different assumptions, and say what they would be under the various different assumptions.

1082   MR. GOLDSTEIN: That's fair.

1083   MR. McCALLUM: And the fourth one was in response to Commissioner Menzies, which was, I think, to provide examples of how the funding criteria would operate, and provide the numbers.

1084   MR. BIBIC: We could file our best guess as to the numbers, assuming a snapshot in time today, yes.

1085   MR. McCALLUM: And, then, the last ones were just done a few minutes ago, with Commissioner Katz.

1086   Thank you, Mr. Chair.

Undertaking

1087   THE CHAIRPERSON: Thank you.

1088   That concludes our examination of Bell Canada. We will break now.

1089   Could you give us some direction, Madam Secretary?

1090   THE SECRETARY: We will resume at two o'clock. Thank you.

--- Upon recessing at 1239

--- Upon resuming at 1401

1091   THE SECRETARY: We will now proceed with the presentations by Channel Zero Inc. and CHEK Media Group. These two interveners will be making a joint presentation.

1092   Please introduce your colleagues and you have 20 minutes for your presentation. Thank you.

PRESENTATION

1093   MR. MILLAR: Thank you, Madam Secretary.

1094   Our script says good morning, so I'll change that right off the bat. Good afternoon, Mr. Chairman, Mr. Vice-Chair and Commissioners.

1095   Thank you for including us in today's hearings. As you know, Channel Zero is the owner of the independent television stations CHCH-TV in Hamilton and Metro 14 CJNT in Montreal. We also own specialty services Movieola - The Short Film Channel and Silver Screen Classics.

1096   CHEK Media Group is the owner of the independent television station CHEK-TV in Victoria.

1097   While Channel Zero and CHEK are not related companies, we have had similar experiences as owners of English-market independent television stations and have combined our opening remarks in order to save some time.

1098   I would like to introduce the panel:

1099   - to my right is John Pollard, President of CHEK Media Group;

1100   - to his right is Mike Katrycz, News Director for CHCH;

1101   - beside him is Chris Fuoco, Vice-President of Sales and Marketing for Channel Zero;

1102   - to my immediate left is Donna Skelly; Donna is a broadcaster and journalist with CHCH; and

1103   - beside Donna is Joel Fortune, regulatory counsel for both of us.

1104   John.

1105   MR. POLLARD: The LPIF has been a phenomenal policy success for local television. LPIF has led directly to more local programming and greater programming diversity in the local markets we serve, especially in local news and editorial programming.

1106   It is not an exaggeration for us to say that without LPIF it is highly likely that both CHEK and CHCH would not be on the air today.

1107   In the case of CHEK, CanWest announced in late July 2009 that it intended to shut the station down as of August 31. Layoff notices were sent to the staff. The employees and investors in our community were determined to make sure that did not happen.

1108   At the time, we were rightly concerned about whether a standalone local station could be viable. The existence of LPIF was absolutely essential to address the concerns and to keep CHEK on the air.

1109   CHEK is now part of a new model for local television based primarily on providing high-quality local programming. Most of our local programming is news, produced specifically by us for Victoria and Vancouver Island.

1110   We view our local news programming as our core programming stream. We are working diligently to improve the quality and scope of this programming and to fully monetize its commercial value.

1111   Just to give you a sense of the local programming that we now provide, our weekly schedule includes:

1112   - over 52 hours of local programming, a weekly increase of 29 hours since 2009;

1113   - Vancouver Island's only noon newscast;

1114   - CHEK News updates from 1:00 p.m. to 4:00 p.m.;

1115   - our flagship news at 5:00 p.m. and 6:30 p.m.; and

1116   - the Island's only 10:00 p.m. newscast.

1117   We have made very prudent use of our LPIF funding. We have expanded our news-gathering capabilities in Victoria and throughout Vancouver Island. We have added staff, growing from 39 to 72 people. At the same time we have made substantial investments in rebuilding and restoring our broadcast facilities.

1118   MR. MILLAR: Channel Zero's experience with CHCH Hamilton has been essentially the same as CHEK's. CanWest had decided to sell or close CHCH at the end of the 2009 broadcast year. Channel Zero stepped forward to purchase the station and to keep it operational.

1119   By 2008 CHCH and CHEK had spiralled down into a weak financial state. Ten years of consecutive losses, chronic under-investment and neglect had completely broken the once successful stations. Shutdown and layoffs were imminent.

1120   Given this dire situation, a complete and total overhaul of the business model at CHCH was required. Our approach, built around investing in local news, was completely untested, ran counter to the thinking of the entire broadcasting industry and would come with great risk and uncertainty. Taking on such a rebuild would have been beyond Channel Zero, were it not for LPIF.

1121   LPIF was and is the one stable platform in the CHCH business plan. It continues to play a vital stabilizing role, bracing up the business, if you will. LPIF is like a support wall that reinforces a building while it is being renovated. It does not have to be a forever thing, but it is necessary in the immediate term while construction is under way.

1122   We now offer more local programming than any other television station that we are aware of. We provide 78 hours a week of original locally produced programming.

1123   Here's what it looks like:

1124   - we sign on the day with Canada's only 4:00 a.m. morning show;

1125   - our morning show, "Morning Live," come on the air at 5:30 a.m. and stays with us till 9:00 a.m.;

1126   - we then go to live local news desks throughout the day, from 9:00 a.m. till 5:00 p.m.;

1127   - we have a live current affairs program at 5:30 p.m. that we call "Square Off";

1128   - our flagship evening newscast runs from 6:00 p.m. till 7:00 p.m.;

1129   - we then go to a half-hour of daily sports analysis, locally produced, at 7:00 p.m. called "Sportsline";

1130   - and we end our local programming day with another 30 minutes of news at 11:00 p.m.

1131   Similar to CHEK, increased revenue for local programming has also allowed CHCH to make other improvements to our local service.

1132   In August 2009, at a time when other broadcasters were cancelling local programming and laying off employees, we hired 29 new employees. And we have added additional staff in each year since.

1133   Our local programming has increased dramatically from 39 hours per week before LPIF to more than 78 hours per week with LPIF. We have made technical improvements that have enabled us to expand and enhance our live coverage.

1134   The LPIF has resulted in the continued survival of two important local television stations in two very different parts of the country.

1135   MS SKELLY: In preparing for this hearing, we wanted to understand how Canadians view the LPIF and the value they place on local programming. We asked them for their opinion through an online survey.

1136   We were overwhelmed by the response we received. In just 10 days 15,765 people took the time to complete the survey and 9,201 of them added comments. We submitted these comments as part of our original filing.

1137   Now, they make a compelling case for local television and they affirm without a doubt the importance people place on seeing their own communities represented in their media:

1138   - 85 percent of the respondents watch CHCH News more than once a day;

1139   - 72 percent watch more than 6 hours of our local programming per week;

1140   - almost half (47 percent) don't watch news and local programming on any other station;

1141   - 96 percent feel news and local programming is extremely or very important to them; and

1142   - coverage of their local community is what they like most.

1143   Now, I would love to take you through all 9,201 of the comments that we received but instead we have a very short videoclip which will give you a good sense of the flavour of some of those comments.

--- Video presentation

1144   MS SKELLY: Every single person that I approached to produce that segment spoke favourably about CHCH and local television. But it's not just the people on camera, it's the people that I speak to every single day in my community who are passionate about local television.

1145   They support the concept of the LPIF and the idea that just a small portion of their BDU subscription fee should be used to make local programming. Now, this support is also reflected in the large number of written comments from individual Canadians filed in this proceeding.

1146   In our experience, Canadians support local television programming and they have absolutely no difficulty with supporting the Local Programming Improvement Fund.

1147   MR. FUOCO: LPIF has been an unquestionable success in Hamilton and Victoria simply because it ensured the survival of local television in those markets in a difficult economic time. It provided a support structure that gave us the confidence to launch a radical new business model for local television in this country.

1148   There are a few other more precise indicators of success that the Commission has stated it will review and our stations are high achievers in those areas as well.

1149   Both CHEK and CHCH have realized significant gains in audience share for our local programming since the start of LPIF.

1150   Today CHEK averages 55,800 viewers per minute for its major evening newscast. That is the biggest audience CHEK has had in 20 years.

1151   From 2010 to 2011, CHCH's audiences for its six and eleven pm news broadcasts grew by 15 and 25 percent respectively. Our evening news at six is the number one news broadcast in the Hamilton region with an average minute audience of 83,000 viewers. That is more than double the audience watching our competitors, combined.

1152   Importantly, this increased audience share for our local programming reflects increased audience in our own local markets. We do not target the adjacent metropolitan markets of Vancouver and Toronto, respectively.

1153   An analysis of our audiences shows that more than 90 percent of news viewers come from our local area. In other words, viewers in our communities are watching our television stations because we are local. That dedicated audience motivates us to offer local content distinctive from the content available on stations that serve the much larger adjacent metropolitan area.

1154   Another measure of the success of LPIF has been the impact on our local advertising base.

1155   At both CHCH and CHEK local advertising revenues are 20 percent higher pre-recession and pre-LPIF levels. We are attracting more first time local advertisers today than ever before.

1156   There is a direct correlation between the local focus of our stations, and the attractiveness to local advertisers, the businesses that drive our local economies.

1157   MR. KATRYCZ: All of the new jobs that were created at CHCH and CHEK are directly involved in creating and delivering local programming.

1158   And here is just a little taste of what that means:

1159   When a winter storm shuts down schools or cancels bus service, we are there. We are reporting live "in the moment".

1160   When a truck rolls over and shuts down a major highway we provide immediate and sustained information for our community so commuters can get to and from their destinations.

1161   We help law enforcement solve local crimes. We help find missing people in our communities.

1162   We reflect our communities' successes and their challenges.

1163   LPIF funding has allowed CHCH and CHEK to go further with investigative reporting than we had previously been made possible.

1164   At CHCH we investigated a voicemail hacking scheme that left phone subscribers with tens of thousands of dollars of fraudulent charges.

1165   We probed a sexting scandal at a local high school.

1166   CHEK uncovered a health hazard tied to so-called smart meters.

1167   It is important to keep in mind that providing a local, independent television station involves much more than just providing local coverage. We cover provincial matters, national events and even international stories but from a local perspective.

1168   The Commission has asked whether there are other indicators of LPIF's success and there is at least one: The role of the LPIF in maintaining editorial diversity in local markets and more broadly in the broadcasting system.

1169   When the Commission first announced the LPIF in Public Notice 2008-100, it made it clear that LPIF was intended to counterbalance the trend of media consolidation.

1170   The Commission said:

"[I]t is in the public interest for the Canadian broadcasting system to include healthy local stations that will enrich the diversity of information and editorial points of view."

1171   Now, that sentiment was echoed over and over by our viewers who responded to our survey and perhaps most succinctly by David A, one of the respondents you will find on page 11. His quote is:

"Journalism is vital to democracy; there can be none without it. (It is) vital to the nation's interest."

1172   LPIF has been instrumental in increasing editorial and news diversity in the broadcasting system. Both CHEK and CHCH are now well established as independent voices serving their local markets.

1173   MR. MILLAR: With the objective of maintaining editorial diversity in mind, the question of increased vertical integration and consolidation becomes even more relevant.

1174   Based on the data provided by the Commission just last week, it appears that the broadcasters that rely most on the LPIF are not vertically integrated. These broadcasters do not have the ability to draw on subscriber revenue to support their broadcasting operations and do not enjoy the many other advantages that arise from ownership of the means of distribution.

1175   The logical conclusion is that it would be appropriate to consider a station's ownership when evaluating its LPIF eligibility. We do not think that the Commission necessarily contemplated in 2008 that a large proportion of LPIF funding would reflect inter-corporate transfers within and between the owners of Canada's largest BDUs.

1176   With respect to other aspects of LPIF's structure, we support the continuation of the current funding level for LPIF at 1.5 percent. The system can support this funding level. As you saw in the video, there is wide consumer acceptance of it, and it is having a positive impact on local programming.

1177   However, if the Commission were to reduce the funding level to 1.1 percent, then it is essential for the Commission to exclude vertically- integrated stations from eligibility. Otherwise we will be going backwards.

1178   We do not think that the overall distribution formula needs to be radically altered. We do recognize that one way to increase the level of local programming produced with LPIF funds would be to decrease the base funding level for each broadcaster and to provide more funding to those broadcasters that produce more local programming on an incremental basis.

1179   MR. POLLARD: The viewership of our major daily newscast is higher today than it has been in the last 20 years. This says something important about local programming and probably local, independent ownership.

1180   But, just like the economy, our current financial situation is still fragile. It is apparent, based on the financial information released by the Commission last week that stations in non-metropolitan markets are still only marginally profitable and this profitability is dependent on the receipt of LPIF funding.

1181   LPIF has provided us with a stable platform in a time of great uncertainty and change. As we said at the beginning of this presentation, without LPIF funding, our stations would have gone dark and our communities would have been worse off as a result.

1182   Much will be said over the course of this hearing, but the voice that really matters belongs to the viewers who have said over and over that local programming matters and they're willing to pay for it.

1183   Thank you for allowing us this opportunity to present our views on the LPIF. We welcome your questions.

1184   THE CHAIRPERSON: Thank you.

1185   I would ask Commissioner Patrone to lead the questions.

1186   COMMISSIONER PATRONE: Thank you, Mr. Chairman.

1187   Good afternoon. Appreciate your presentation today and I want to congratulate you both for your success that you have had over the last couple of years from where you did and reaching the point where you're at now.

1188   I was drawn to page 4 of your oral presentation where you write in the second paragraph:

"LPIF is like a support wall that reinforces a building while it is being renovated. It does not have to be a forever thing, but it is necessary in the immediate term,..."

1189   The question that came to mind was just how long you are going to be renovating because you know these funds do tend to go on forever sometimes unless they are not prevented.

1190   So for the next little while I am going to give you every opportunity to make your case as to why we should maintain the fund because there are those, and you have probably heard them, who say that it's time to cut the apron strings and allow you to go on without the fund.

1191   What do you make of the idea that it's in the interests of consumers, of BDUs, in doing away with the LPIF which some have referred to as a tax? In fact, at least one BDU has now bowed to lower its prices if the LPIF is done away with. Do you not think consumers deserve a break?

1192   Mr. Pollard, you can take that if you like, or will Mr. Fuoco?

1193   MR. POLLARD: Well, our research, number one, says that people don't have an issue paying for local programming.

1194   Do I think there would be a break? I don't actually know. I know what my cable bill is.

1195   But the LPIF is working. It's not time to change that yet. It's a work in progress.

1196   In 2007 these stations were not viable. They were losing millions and millions and tens of millions of dollars a year according to our former owners.

1197   We have changed the model of local television and it's -- you know, it's a work in progress but it's not over.

1198   MR. MILLAR: To maybe more directly address the issue of when would the construction be complete, it's a very good question. It's one that we don't have a specific answer to today, but there is two points I would like to make on that.

1199   Number one, conventional television as we know it, had been in decline for let's say 15 years prior to us trying a new model. We are two and a half, two and three-quarter years into the current funding and our attempt to change the model and we are making progress. So we would encourage the concept of we have done a review after three years, to come back again in another three or four years and to ask the very same questions.

1200   At some point we would agree with you that you can't have a subsidy or support forever. And we don't disagree with that but we're not certain that the time is now. This is a review and a well-deserved one.

1201   COMMISSIONER PATRONE: There is -- I am sorry, Ms Skelly.

1202   MS SKELLY: I was going to say that in terms of whether or not the consumer or the public is looking for a break in terms of that percentage, the 1.5 percent on their bill, I had an opportunity to speak directly with them and no one, no one -- some of these people I had scheduled interviews with, but many I simply stopped on the street when I went out with a camera.

1203   I do have an opportunity to spend a lot of time in the community and people knew from the history of the station that it had been -- it was very fragile. We almost did go under three years ago. And so they are very concerned about it and they are very passionate about it and the discussion surrounding LPIF is quite common.

1204   When I brought a bill with me -- I brought several bills with me -- and pointed out the LPIF to them, these are their words, "I don't mind paying the equivalent of a cup of coffee a month if I know I'm getting local news".

1205   COMMISSIONER PATRONE: Yeah.

1206   MS SKELLY: So they have no problem with it if they are guaranteed to get local news.

1207   COMMISSIONER PATRONE: Well, I have heard a lot of complaints about cable bills whenever people find out what I do for a living.

--- Laughter

1208   COMMISSIONER PATRONE: There is also the argument that subsidies kind of breed a kind of dependency that once the money gets into the system there is really no ending it, that it just becomes sort of like the lifeblood that supports the industry.

1209   That's one of the arguments that we have heard over the course of the hearing up to this point.

1210   What do you make of the argument that LPIF essentially distorts markets, rewards inefficient operators by essentially propping up operations that aren't creative or efficient enough to exist without a subsidy?

1211   MR. MILLAR: It's a good question. Let me address that first at a level and then perhaps a couple of other people will join me in this, but first at the level of subsidies and their efficacy and their use throughout the broadcasting industry.

1212   You know, as we did our research and our preparation for this hearing we took a look at things like the Canadian Media Fund. It became very obvious that the large vertically integrated broadcasters, Bell and Shaw specifically, reap $50 million -- in excess of $50 million a year from the Canadian Media Fund. And I notice they take it. They cash the cheque and I'm sure they put it to good use.

1213   The LPIF is a subsidy. It is a support. But it is one and the only one that we get for local news.

1214   And while I'm not to address the issue of whether it breeds inefficiency -- I can't speak for others -- it certainly hasn't at CHEK and CHCH. We have taken that money and we have expanded what we are doing and we are seeing results but the job is not finished yet.

1215   COMMISSIONER PATRONE: But your news operation is a big part of the reason why people tune in, is it not? I mean it's built into your -- you have movies and you have news and that's basically what you do.

1216   MR. POLLARD: By and large, yes.

1217   COMMISSIONER PATRONE: Is that not a cost of doing business that you have got to have reporters and producers and people on staff?

1218   MR. MILLAR: Right. Part of the model itself is the -- let me step back for a second and say that when we first acquired the stations and collectively, we looked at CHCH.

1219   What we saw was under its previous ownership that they were doing a mix of news and acquired programming and what was working was news and what wasn't was the acquired programming. However, the losses were incredibly deep.

1220   So we decided to try something different which was exactly what you said. It's just a focus on the local news. That's why each year we have seen increase in sales, increase in viewership, reduction in losses and last year very small profitability but profitability that came essentially because we had LPIF funding.

1221   COMMISSIONER PATRONE: And one could argue that now that you have been jumpstarted that maybe it's time to, you know, leave mum and dad's basement and just tackle that on your own without the use of a subsidy. But that's the argument that those who don't want the LPIF to continue are making, as you know.

1222   MR. KATRYCZ: I would like to address that one.

1223   Both Donna and I were there for the past decade and endured the dark days when the station was being neglected and gutted. In order to overcome all of those years it's going to take more time. If we were to drop LPIF now I think we would return to the model that the CRTC set out to fix with LPIF.

1224   MR. FUOCO: I think another aspect in this is collectively stations like -- or CHEK and CHCH have a very long uphill battle to change the perspective that media buyers place on the value of local audiences because we have the largest media companies in the country that have trained them that the largest audiences, the schedule that you want to buy is the primetime schedule that is predominantly simulcast programming.

1225   We are lone voices in the industry saying local news has huge value. There is huge audiences there and it will take time for us to shift the opinion and start to get more advertisers realizing the significant value in our news and local programming.

1226   COMMISSIONER PATRONE: Could either one of your operations survive without the LPIF if it were to disappear?

1227   MR. POLLARD: No. I know when we looked at the programming models prior to getting everybody together to invest in this station they didn't work. This is the only one and the only reason that we could attract any help other than everybody liked us was that this model will not lose money.

1228   But we're not there yet. I'll tell you. We are a lot closer than we were but it would be very difficult.

1229   COMMISSIONER PATRONE: Mr. Millar?

1230   MR. MILLAR: I would say the same answer but with -- as John would have said -- not yet. That is that if the LPIF disappears tomorrow we will find ourselves suffering large losses, being forced to, you know, slow down the things we are doing, not adding employment, not adding additional shows, not working on growing audiences but stemming losses which I think we have seen for the last 15 years hasn't worked. It became a downward spiral.

1231   COMMISSIONER PATRONE: Mr. Millar, one of our interveners this morning raised the issue this morning of market distortion. His assertion was that one of your competitors essentially was driven out of business in part because they were not the recipient of a subsidy and, hence, could not compete fairly with a subsidized operation.

1232   MR. MILLAR: I am glad you brought that up.

1233   Frank Thibodeau is the gentleman who tried to launch Niagara Television. First, let's set the record straight. We called Frank Thibodeau and offered assistance. We thought what he was doing was interesting. We didn't see it as a direct competitor because it was a Category 2 or Category B service.

1234   He offered it for free instead of taking a wholesale fee to Cogeco and only in Niagara. We shared our view that we didn't know that it was sustainable with him but we said that, you know, we have a bureau in Niagara and we don't see it as threatening. We would be quite prepared to work with you.

1235   Unfortunately, it didn't work. And I think that goes actually to show it is very difficult in smaller markets to do local news without any assistance.

1236   COMMISSIONER PATRONE: But there is the argument that subsidies essentially prop up old models that are no longer economically viable and in the process stymie newer models that are looking around and saying, "Well, what are different ways of doing this?"

1237   MR. MILLAR: Fair.

1238   COMMISSIONER PATRONE: Is it an innovation killer essentially?

1239   MR. MILLAR: No, not at all. In fact we have -- we are the ones that are innovating.

1240   I'm sorry. I think the issue at hand is that perhaps the network model of conventional television and spending exorbitant amounts on Hollywood simulcast programming may be what is not the innovation.

1241   MS SKELLY: If I could speak to that, we were three years ago in a crisis. Broadcasting in Canada was in the midst of a crisis.

1242   I appeared before a committee and I remember talking next to a person, my previous employer, and we talked about the old model versus the new model. Well, the old model was expensive American programming and at the cost of local television news and it didn't work.

1243   This is a new model and I think we have to let it have some time to breathe and to grow or we will go back to another crisis in television in Canada.

1244   COMMISSIONER PATRONE: Could you talk a little bit about how your ratings success has translated into revenue increases and why those new revenues shouldn't essentially negate or cancel the need for a subsidy?

1245   At what point do your successes, you know as far as a ratings vehicle and as a draw for viewers, get to the point where you can say: All right. Well, we're done with the LPIF. We don't need it anymore.

1246   Because you know it's awfully difficult once you are getting that subsidy to simply say -- to reach a point where you get, that's fine. I don't need it anymore. But you have said -- you have gone on at length -- I believe it was you, Mr. Fuoco, who had talked about how your ratings have gone up and how your sales have also increased.

1247   MR. FUOCO: And they certainly have where we have on the local advertising front -- and keep in mind their growth has come because previously the stations under their prior direction had essentially walked away from the local market by not having locally-focused accessible advertising for small businesses. They simply couldn't access the schedule. They had abandoned television as an advertising vehicle entirely.

1248   That's part of the reason why we have created the amount of news so that we have more affordable advertising product for local advertisers to get into.

1249   So the first step has been to create a product that is highly relevant for the local audience, highly relevant for the local advertisers and they have flocked to it.

1250   But again, that's putting us on a good path of growth but not to a point where we are fully sustainable without the support mechanism that the LPIF has provided.

1251   COMMISSIONER PATRONE: You have cut your ad rates, is that what you're telling us, Mr. Fuoco?

1252   MR. FUOCO: No, we haven't cut our ad rates.

1253   COMMISSIONER PATRONE: Did you not cut your ad rates in order to make it more attractive?

1254   MR. FUOCO: No. No, we did not.

1255   COMMISSIONER PATRONE: Okay.

1256   MR. FUOCO: Because we were selling local advertising prior. There was just -- we just opened up more inventory and started to sell more and aggressively went and targeted more customers and said, "We're back in business".

1257   You have to also understand too that the community -- the station had -- I mean it had really lost its focus and was about airing -- it was all about its primetime schedule. It wasn't about its premiere news. And the advertisers realized that and by doing basic fundamental things like going back and restoring it to its heritage brand name and making news at the primary product offering the advertisers have followed.

1258   But, as I said earlier, that's working on the local side but when it comes to clients that are buying say national advertisers and such, they still don't value that audience and that's the piece that will take time for us to educate and train and that's what we're working towards.

1259   COMMISSIONER PATRONE: Okay. Let's shift gears a little bit.

1260   I want you to draw some distinctions between local programming and local news. There has been some of that in your written presentations.

1261   Is there much in the way of gaming the system relative to certain operators producing let's call it cheap programming in order to qualify for LPIF rather than real news?

1262   That's part one of that question, and part two is where does Sportsline fit into that? Because that's essentially a call-in show, right, where you have got -- because it's like single camera or two cameras.

1263   MR. MILLAR: Go ahead.

1264   MR. KATRYCZ: Sportsline is a sports analysis show. It's not a call-in show. It's a couple of really good sports experts we're fortunate to have who just go at it all the time about the sports of the day.

1265   It's informative. It falls within news. Sports is always part of a newscast. They talk about local sports. They also talk about all the professional sports as well.

1266   COMMISSIONER PATRONE: Did you want to add to that?

1267   MR. MILLAR: In terms of addressing Sportsline because it is a sports property and that's, you know, an extension of news. It's locally produced. It's locally directed. It's locally presented and to the extent that Hamilton has a professional football team it has a local element. We cover the Hamilton Bulldogs, but of course we cover the professional sports.

1268   COMMISSIONER PATRONE: Do you see much gaming in the system from other operators? I thought I read something in your presentations about how some operators are essentially moving a camera into the radio booth and taking some commentary from an announcer and qualifying that as somehow local programming and therefore eligible for LPIF funding.

1269   MR. MILLAR: Right. It's difficult for us to comment. I think one of the undercurrents has been CBC Halifax and the growth.

1270   One of the things that was fundamental to what we think are some of the changes that could be made would be the implementation of random audits by the LPIF Board, by the administrator of the fund to keep everybody honest. Because I think you are right, without the threat and the reality of somebody checking, there is always the opportunity for gaming.

1271   It's difficult to know in the example. We included an example of just that, where an AM radio station had essentially put a camera or two inside. They just run their radio station with a camera on it. They refer to the radio station, not the television station.

1272   What we don't know because there aren't audits and because we are not privy to is is whether that is in fact gaming it. Perhaps they are simply using it as very bad uncompelling television without putting the costs in and we certainly don't know that. Our solution is perhaps to employ a series of audits.

1273   COMMISSIONER PATRONE: Mr. Millar, has your organization used LPIF money for sending reporters to other parts of Canada and abroad and do you think that's a suitable use for LPIF?

1274   MR. MILLAR: Sure. And I will let Mike Katrycz maybe touch on it.

1275   But yes, we have. Have we used LPIF money directly? Well, I mean it's revenue that comes in. But because we are not part of a network we don't actually have a Calgary station so during the federal election we sent a local crew -- which included a local presenter and a local cameraman -- to Calgary because we believe, I think rightfully, that the citizens of Hamilton would want to see the Prime Minister's acceptance speech, no different than we could do if the Leader of the Opposition or the Leader of the country happened to be in Hamilton we would cover it.

1276   So I think it's a fair question of what is local and what's not and Commissioner Morin has attempted to address that.

1277   But there is a real fundamental difference about what is local when you are a local station without network affiliates across the country and what is local when you are a network.

1278   Mike...?

1279   MR. KATRYCZ: Yes. I think another example that we could site is when the earthquake hit Haiti we went down there with a crew, but not just to report on the earthquake, which was certainly devastating, as we know, but also to really focus in on what local people from our area were doing to help down there.

1280   There was one woman in particular who had been running an orphanage down there for over a decade and we really focused a lot of our reporting on her efforts and her insights into what was going on down there, so much so that the community of Hamilton rallied around and actually organized a telethon to help raise funds so that within a day or so they managed to raise about a half a million dollars for Haitian earthquake relief, thanks to the broadcast on CHCH and the community's efforts. We opened our doors to them.

1281   COMMISSIONER PATRONE: I appreciate your answer. I can well appreciate there is a Haitian community in Hamilton -- or in both your communities presumably -- and that there would be local interest in international stories.

1282   Mr. Pollard, I believe in your submission you said that you were planning to increase the amount of local programming. When is that going to take place?

1283   MR. POLLARD: We have increased it slightly. I guess it's sort of a Catch-22. Once it's monetizable it will increase. There is some paid programming that we are not crazy about, but at this point from a business point of view it doesn't make sense to have it out of there. When it does, it will. We have increased even some of our afternoon stuff so far.

1284   The beauty of being a small independent station is you don't have to wait, you can change things whenever you want to or whenever it makes sense.

1285   COMMISSIONER PATRONE: Yes.

1286   MR. POLLARD: So on a weekly basis we can change a half hour programming with no issues.

1287   COMMISSIONER PATRONE: I have a couple of more questions because I know my colleagues are probably anxious to get in on this and ask you some questions themselves..

1288   I would like some thoughts about some of the proposals that we have heard thus far, specifically your thoughts about a two-year phase-out where the fund would be continued for small independent broadcasters like yourselves for a period of two years in order to adapt to the new world order and then that's it?

1289   I know, Mr. Pollard, you said you could not survive currently without the LPIF. Would that scenario give you any degree of comfort?

1290   MR. POLLARD: It would give us two years, but I would certainly look at a review in a couple of years to see where we are. I have no crystal ball that says everything is going to better.

1291   I will tell you I think what we are doing is excellent and I think it's a great model, but it's going to take some time. Is two years the right number? I don't know that.

1292   MR. MILLAR: I would only add, in reference even to Rogers model, it was a three-year phase-out that they suggested, it's just an arbitrary selection of a number of years. As John said, we don't have a crystal ball.

1293   I think our track record is that we are getting there and we are making progress. We would be certainly more than happy to look at it again, and seriously look at it with always the reality that it may not be continued. It shouldn't be a forever thing, but is it one year, is it two years, is it five years? We don't know sitting here today, but I would think we would have three years better knowledge three years from now.

1294   COMMISSIONER PATRONE: Do you have any thoughts about the Bell model which seeks to reward viewership and success, in other words ratings, rather than a model that is based on expenditures.

1295   Do you have any thoughts about how that might impact your business models, whether that might work?

1296   MR. MILLAR: Have we got some thoughts on it? Yes, we have quite a number of thoughts.

1297   The first thought is that recognizing that Bell was the one that had suggested it I think it wouldn't be too far off the mark to assume that they have done a good job thinking about it and it probably would benefit them. I don't know if it benefits others.

1298   I think that rewarding success if a very good idea, but I would draw your attention to the fact like any subsidy there is a certain incrementality and a certain self-regulating element to this that is built in, and that is that for every dollar we spent we get about 30 cents in LPIF for local programming. So it's almost illogical to say that somebody would just start spending money because they would be spending every dollar to get 30 cents.

1299   So I don't know whether in fact a different audience-based one -- there's a lot of unknowns within that audience-based measure, which areas we are going to focus on, which CMAs, which coverage area. Our CMA is Hamilton, but we do have viewers because there are no other television stations outside of that that tune into us to find out we have a Niagara Bureau which was mandated under the previous ownership and that we continued, and Niagara is an area that is under served. So is that counted in or not? There is an awful lot of unknowns.

1300   COMMISSIONER PATRONE: Okay.

1301   MR. FORTUNE: I think, Commissioner, another thing that we talked about when we were looking at the Bell model was: What's the purpose of this? It sounded an awful lot like one of the reasons was this gaming idea around, as Cal said, spending more on local programming in order to increase the access to the fund.

1302   It seemed to us, if that's the issue that they are trying to address, then maybe part of the answer is what we have suggested, which is a more clear idea on spending on what local programming is okay and better monitoring of that spending, if that's the ill that we are trying to address.

1303   COMMISSIONER PATRONE: Right.

1304   That leads me to my final question, which is: Would you approve improved reporting? Because that has been one of the criticisms, that the money is going out but there has not been enough reporting back on how the money is used.

1305   Would you agree to, say, a stricter monitoring and reporting vis-à-vis results of how that money is being used?

1306   MR. MILLAR: In a simple word, yes. And a slightly answer, which I get accused of doing all the time, would be to say that -- and I think that our annual reports -- CHCH's ran to 15-16 pages and we tried to do that, but there weren't specific criteria and if there was something specific we would be happy to do that.

1307   COMMISSIONER PATRONE: Thank you very much.

1308   Mr. Chairman...?

1309   THE CHAIRPERSON: Thank you. I have a few questions, as I'm sure my colleagues do as well.

1310   I want to talk about fairness. A lot of parties have brought up the fact that the LPIF model the way it is structured is not fair and you folks have brought forward an awful lot of parties who certainly support LPIF in what it's done for CHCH and CHEK and I commend all of you for what you have done.

1311   But the people that you asked were the people in those communities and it begs the question: Did you go out to Pictou, Nova Scotia and ask them if they are supportive of subsidizing programming in Hamilton or in Victoria? That's one of the critical issues that as I read all the submissions from all the parties came up again and again and again.

1312   It's one thing for you to ask your own constituency, your own viewers whether they are prepared to pay for the programming and if they are and it's your decision to charge them for it and they are prepared to pay for it, that's what market forces are all about, but when you start to ask other people in other parts of the country, some of whom may be in poor economic conditions as well, to subsidize it, it becomes a bigger issue.

1313   MR. MILLAR: Of course, we went out with the resources we had to talk to the people that we could reach easily and acknowledge that it was not intended to be strictly a perfect sampling across the country.

1314   That said, we have done some back of the envelope calculations over the last few weeks and we believe our area is probably a net exporter of LPIF monies because as you take sort of the catchment area and multiply it by the average cable bill and multiply that by 1.5 percent, it comes out to a larger number than we receive in LPIF funding.

1315   So while I take your point I don't know that it entirely applies to CHEK or to CHCH.

1316   THE CHAIRPERSON: Mr. Pollard...?

1317   MR. POLLARD: A very similar experience in our case. If I look at what we really figure is our core Vancouver Island and Victoria I mean we certainly have more than enough people to sustain what we are doing. You know, went this station nearly shut down the groundswell of support was huge. They organized rallies and T-shirts and you name it. So there seems to be, I think the in grand scheme of things, some great support for what we are doing, for local television.

1318   MR. FUOCO: I think, to add to that, there has also been a lot of different messages put out into the market as far as what this is and one of the things that we did -- and we talked to the consumers or the viewers that you saw in the video there, when we actually talked to them about what that dollar and change on their bill was and that it was going to support stations like CHCH in close to 80 markets across the country, they understood that.

1319   To your point about someone in Nova Scotia, how do they feel about funding a television station in Hamilton, I sort of look at it in the reverse because there actually are local stations in their markets that viewers in Ontario are providing. So it's part of creating a very healthy broadcasting system across the entire country that all constituents, all customers pay into and it makes for a better system on the whole.

1320   THE CHAIRPERSON: I think I heard my fellow Commissioner from Alberta this morning say that Red Deer closed down and virtually all of Alberta is subsidizing the LPIF with perhaps a small exception, but the reality is there are no beneficiaries in Alberta and yet there are millions of people living there that are contributing to LPIF and contributing to Hamilton and Victoria and other markets as well.

1321   MR. MILLAR: Sure. Mr. Chair, I think again at a slightly larger level, we live in a country that has a number of -- first of all, we have one large broadcasting system and there is cross-subsidization in it all over the place. LPIF is not the only one.

1322   We also live in a country where we subsidize. Not everybody makes use of National Defence, not everybody makes use of 9-1-1 service on any given year, there are a whole pile of things and the concept is to spread it across the entire base.

1323   That doesn't mean  -- we have heard other vertically integrated operators say this morning that they might leave some markets. We are examples of where large broadcasters left markets that they said were unsustainable. We are making progress in them and I suspect that for instance there may be an opportunity in Red Deer for us or somebody else longer term to step in.

1324   So I think that if you are asking whether as a society we subsidize across provinces or across areas into paying for things we don't use, we do.

1325   I think the real question is: Are we asking for this to be a permanent subsidy forever; no. It's temporary in nature and we recognize that there will be some areas that over contribute and some that under contribute and some that receive no benefit and some that receive some benefit.

1326   THE CHAIRPERSON: I'm going to pick up then on what you just said and your discussion with Commissioner Patrone as well on the temporary nature of the subsidy as well. You are prepared to say: Well, let's look at it again in a couple of years.

1327   I guess the real issue is, the reason -- and we all talked about the reason why there is an LPIF, but brass tacks, the reason there is an LPIF is because there wasn't enough revenue going into the system because of the proliferation of programming that was out there, coupled with, in 2009, the economic collapse around the world and here as well. So it was a revenue stimulator or enhancer as opposed to a cost subsidizer.

1328   What I'm hearing from you folks is advertising revenues coming back dramatically, I look at your financials here, it may not be back to where you might like it to be, but you folks in 12 to 18 months have done a sterling job in running your business, getting consumer to want to watch your programming, and ultimately as part of the eyeballs on there comes advertising revenue as well. So why as your revenues grow shouldn't your subsidy drop?

1329   MR. MILLAR: It's a good question.

1330   I guess I have trouble understanding the connection, from your standpoint, "as revenues grow". We haven't found the balance yet of what the optimal revenue level is and the expenditure that creates just a reasonable return on the investment. Without LPIF right now our revenues are exceeded by our expenses and if the LPIF were to disappear tomorrow, as any business in the free market system would do, we would immediately have to cut costs or raise revenue.

1331   We have spent two and a half years trying to raise revenues and I think we have done okay with that, thank you, but we are not at a point where revenues exceed expenditures, so we would be cutting expenditures and we might -- which is what the old model did, was everybody cut their local news, and it became a vicious circle downwards. We are trying to establish sort of a virtuous circle going upwards.

1332   THE CHAIRPERSON: Yes. I think many of us on this panel and others have run businesses before and, like I said, you have started your business less than two years ago and you are virtually there. I'm not going to quote numbers here, you have the numbers in front of you as well as I do. Most businesses take a number of years to turn around and become profitable. You have done a phenomenal job and part of it obviously is attributable to the subsidy regime that was put in place as well. But I mean for most businesses that start up with bricks and mortar and hardware and customers and everything else and go to the bank with a business plan, it takes three or four years to turn it around and the banks will finance you. You have done it in a lot less than that.

1333   I guess the question only is: At what point in time should this subsidy start to be reduced because you have made these phenomenal inroads and been very successful.

1334   We could be here today with you say the same problem you have today you had two years ago as well and you need more subsidy, but that's not what we are facing here. We are facing a very successful turnaround. And yes, it may not be where you want it to be, you may not all be driving Porsche's and everything else as well, but the reality is the business is sustainable and far from being on the margin. It's financeable, it's clearly financeable right now I can tell you just looking at these numbers.

1335   So why should the system have to continue to support it to the extent that it has been?

1336   MR. POLLARD: I just don't think we are there yet. We need a little bit of help. We need a little bit of time to make this work. This is a different model and I went to a lot of banks in 2009 and that didn't work at all. We are looking better now certainly and we have made some huge inroads, but we just need a little bit of time.

1337   THE CHAIRPERSON: Okay.

1338   MR. MILLAR: Not to disagree with you, Mr. Chair, but we acknowledge we had the advantage of having an existing -- both have existing stations with, albeit old technology, neglected, rundown infrastructure and plant that had not had any investment in a number of years, but we have continued to make investments in the hardware. We did the digital transition last year in August, we have begun the process of upgrading to HD throughout the organization, adding staff and so forth.

1339   Our staff, as an example, we have renewed and renegotiated collective agreements and finally got our staff an increase after about six years without a single even cost of living increase, because the previous owners were in financial difficulty.

1340   So we acknowledge the advantage we had by coming in. These stations are 58 and 56 years of age, it's not like a new business where everything was brand new and nobody knew us. That was a huge advantage, but you can see the numbers, we are not there yet, but I think that our track record when we sit here before you and say that we are making progress and nothing would make us happier than to come back here in a few years and way, "We're good, thank you. Give it to those who need it."

1341   THE CHAIRPERSON: Those are my questions.

1342   Commissioner Morin...?

1343   COMMISSIONER MORIN: Thanks, Mr. Chair.

1344   Shaw Communications and Bell didn't answer my question this morning about the threshold so I'm back with this Exhibit No. 1 that is already Twittered and on the website of the CRTC.

1345   If the Commission -- and I insist -- if the Commission decides to set such a threshold, what number do you suggest to the Commission from your experience?

1346   MR. MILLAR: I think a couple of us will take an attempt at this, but I will start off.

1347   First of all, I applaud you for recognizing that there is local and local and local, local. Could I also suggest that there is local, local, local, local; locally produced, locally directed, locally presented and locally relevant.

1348   I'm not trying to dodge the question, the reality though is that when you are dealing with individual station operators that don't have the ability to have some of our local content produced in another province or another part of the country, everything we do is local.

1349   Now, the numbers that the Commission has calculated are averages, maybe someone will correct me if I'm wrong, but I suspect that a big part of the reason that the independent English stations that are not vertically integrated have an average that is pretty much double any other groups the way they have been grouped, is that average has been pulled up by CHEK and CHCH.

1350   So there is almost an inequity because we do so much local for us to give you a threshold because I think we would set the bar higher than perhaps other people could sustain.

1351   But we have adopted the new model and the new model says there is more local, local, local and local.

1352   COMMISSIONER MORIN: But do you recognize that local news can be edited in another city, not in Hamilton, but it's about the events or something that happened in Hamilton. That's the point.

1353   Because the big guys usually can be more efficient if they edit all the things in one place instead of four, but they are covering the different cities with local news, and that is the important point.

1354   MR. MILLAR: Well, it is, but I don't think that you can jump to the next stage, which is to say that the good people of Hamilton have no interest in what goes on in our nation's capital, that they have no interest in what happens in Washington or in Europe.

1355   And those are not local stories, but as Mike gave examples, even when we are doing international and national stories, there is a local element to them, because we are the ones creating the story. You can't help it.

1356   I am not trying to argue with you --

1357   COMMISSIONER MORIN: No, no.

1358   MR. MILLAR:  -- I think the reality is that we do more local -- the reason that number is 11 hours is that we do more than everybody else because we are local. But if one of the objectives --

1359   I am not sure that those network efficiencies are anything to be proud of. You know, the other way of phrasing that is that Shaw and the predecessor, Canwest, laid off people in Hamilton and Victoria and Red Deer, and reduced the amount of local input into those stories, simply to achieve efficiencies.

1360   MR. POLLARD: During 2008, our control rooms were gone, our master control was gone, they were both in other cities. Our cameramen in the studio were gone, they were robotic cameras. And if you went in there and watched the 11 o'clock news, there was somebody sitting there with a microphone thing in their ear, and that's all. There was nobody there.

1361   That is not local television.

1362   What we do is local. We have a new control room, we have a new master control -- we have people there. It's like a real TV station.

--- Laughter

1363   COMMISSIONER MORIN: But it's also an old model. You can improve -- because you have to draw the line someplace, and it's not impossible to cover a lot of events at the local level, and all of those events are edited at some other place, but the important point is that they are aired locally. That's the point.

1364   The other question is, would you agree that this threshold will be the only criterion?

1365   I don't think that we have interest, as a Commission, to micromanage everything, regardless of whether the expense is eligible or not, regardless of whether the increase of those expenses -- even regarding the ratings.

1366   I think that it is very important for the subscriber to get some news about his city that is very, very local.

1367   Will it simplify everything to have just one criterion?

1368   And, as I said this morning, this criterion will be fully transparent. If I want to time, every week, the number of hours that aired about a local subject, I can do it, and if the number is not there, I can complain to the CRTC.

1369   MR. MILLAR: We looked at a number of possible improvements in the system, and, Commissioner Morin, that may well be one. Perhaps we would suggest 10 hours a week, because we are fully compliant. Maybe it's 20 hours --

1370   COMMISSIONER MORIN: Thank you.

1371   MR. MILLAR: I don't know if it solves the problem, because the Chair has pointed out that we get relatively large -- already get fairly large amounts from LPIF, and that may make that inequity worse, I don't know. I recognize --

1372   THE CHAIRPERSON: Why don't I suggest this? Commissioner Morin has circulated a document. You will have an opportunity to comment on it and elaborate on your views at that point in time. Okay?

1373   MR. MILLAR: Thank you.

1374   COMMISSIONER MORIN: Thank you.

Undertaking

1375   THE CHAIRPERSON: Commissioner Molnar...

1376   COMMISSIONER MOLNAR: Thank you.

1377   Good afternoon. First an easy one. You had mentioned that you did some rough calculations over the last couple of weeks and determined that your region is, in fact, a net contributor. If you could file those as an undertaking with us, I would be very interested in seeing your calculations, because it is a little bit surprising to me.

1378   MR. MILLAR: Yes, we will take that as an undertaking.

Undertaking

1379   COMMISSIONER MOLNAR: Thank you.

1380   I listened with interest to your discussions with Commissioner Patrone and the discussions with Chairman Katz about the length that you would require a subsidy. Tell me where I am wrong here.

1381   You have built a business model that is not sustainable without subsidy. I think I heard you say that if the subsidy was eliminated, you would have to change your business model, likely cut back to something where you could afford the programming with the advertising revenues that you are generating currently, and if the subsidy is not removed now, you can't tell us when you would actually make those changes and become profitable.

1382   Did I hear you wrong, or is that what you said?

1383   If we maintain the subsidy, you will not be changing your business model, and you don't know when you will be profitable. If we remove the subsidy, you are going to change your business model, and you are going to get profitable.

1384   MR. MILLAR: Yes, you did hear us wrong.

1385   COMMISSIONER MOLNAR: I heard you wrong?

1386   MR. MILLAR: Yes, just a little bit.

1387   What we said was, we wouldn't have been able to start this model in 2009.

1388   We also said that we are not sustainable today. We used the words "not yet". We used the words --

1389   COMMISSIONER MOLNAR: But you did not say when.

1390   MR. MILLAR: Because we don't have a crystal ball.

1391   COMMISSIONER MOLNAR: But what business doesn't have a strat plan that says: Here is how we are moving forward, and here is how we are going to achieve profitability?

1392   MR. MILLAR: And that is exactly what we are doing.

1393   COMMISSIONER MOLNAR: So you have that, so you have a timeline that says when you are going to achieve profitability?

1394   MR. MILLAR: And like all good strat plans -- Canwest had a terrific strat plan coming in here buying Alliance Atlantis. Sometimes they don't work out exactly in the five-year range.

1395   What we are saying is, we are three years into this. We have made significant progress. We are trying something that everybody told us wouldn't work. It is beginning to work.

1396   What we said about getting to profitability if the LPIF disappeared is, we will have no choice. We will have to abandon the model we are building, which is focused on local, and we will be forced to revert to the cutting.

1397   The cutting is not a good model. That isn't just to get to profitability, it would be to get to breakeven, because the money that we otherwise had seen as stable for the last three years would be gone.

1398   That is not the same as saying that we are building a model that is only reliant on a subsidy.

1399   COMMISSIONER MOLNAR: But regardless of how many times you are asked, you are not going to tell us when you could possibly become profitable without subsidy, under the model that you are pursuing now, which is heavily targeted toward local programming, which is not profitable on a standalone basis.

1400   So you are going to pursue this model and continue to pursue it as long as the subsidy is there to support it, but you can't tell us whether that model is, in fact, self-sustaining without subsidy.

1401   MR. POLLARD: What we have seen so far -- when we originally set out on this track, it was basically said to me: What you are doing is impossible.

1402   And it was. We did it anyway. And after the first year there were some losses. After the second year we are getting closer. And you know what? It's working.

1403   If it wasn't working, we wouldn't keep going down this road. We are not those people.

1404   We believe in what we are doing. What we are doing will work, it just needs some time, and I can't tell you how much, I'm sorry.

1405   COMMISSIONER MOLNAR: You can appreciate that we are asking every consumer in this country to support your business plan, and to trust you that at some point you are going to be profitable and they don't have to any more.

1406   That's a lot for us to trust you on.

1407   MR. POLLARD: Thank you. We will be profitable.

1408   THE CHAIRPERSON: Thank you.

1409   Commissioner Menzies...

1410   COMMISSIONER MENZIES: I want to give you the opportunity to address a concern. There can be good cases for subsidies, transitional, and start-up, and that sort of thing, but it makes it difficult, as Commissioner Molnar was saying, to conceive of something that is eternal, unless it has a really overwhelming social cause to it.

1411   First of all, what is your view if the sort of fund was created so that it would only support a certain level of sustainability, very low profitable levels?

1412   It does not seem, to many people, appropriate to be subsidizing something that is profitable, beyond a certain basic need to find finances.

1413   So what would be that point, because we don't want to be buying -- if we decide that we want to sustain local programming, that's one thing, but we don't really want to be buying you a new BMW every year -- assuming that you already have one.

1414   MR. MILLAR: No, I don't, but thanks for asking.

--- Laughter

1415   MR. MILLAR: I guess that there are a bunch of ways to approach that, because we do, obviously, spend a fair bit of time thinking about these same issues.

1416   Bear with me, because one aspect of it is -- and I know we are not here debating the Canadian Media Fund. That has been done over a number of years. But we are not talking about the fact that that subsidy accrues to the large, vertically integrated, multi-business conglomerates because, for some reason, a subsidy for scripted programming is completely acceptable.

1417   And that is now a permanent subsidy.

1418   We have a temporary subsidy that has been just in place for two and a half years. We alluded to the fact that the old model of conventional television took 15 years to spiral to the point where it seemed to be unsustainable.

1419   We had Shaw Media here today telling us that some of their stations, while unprofitable -- unsustainable -- they have the ability to self-subsidize them.

1420   One of the lines of questioning this morning to Bell Media was that you can subsidize it yourself.

1421   We don't have that opportunity.

1422   The LPIF was created to ensure a diversity of voices and to ensure that local --

1423   COMMISSIONER MENZIES: I get that, I just want to know what would be the number beyond which, if you had to pick one --

1424   You don't have to pick one, you can just sort of decline and say: I don't know, I will have to get back to you.

1425   But what would it be, a 2 percent profitability level, a flat number? What would be the number?

1426   MR. MILLAR: I think that we would want to take that under consideration.

Undertaking

1427   COMMISSIONER MENZIES: Okay. My other question is, what is there in this to prevent this scenario: You guys paid 2 bucks, or something like that, for these stations. You get the subsidy, you work on your business model, you achieve sustainability without subsidy, or with subsidy, or something like that. You get tired. Somebody comes along with a chequebook and you sell it for -- I don't know -- 10 million, 15 million, 20 million bucks.

1428   It's a pretty good return on your investment, and then it just goes back into the flow of the system, and all of that money doesn't end up, in the long run, being anything.

1429   I understand -- I am not doubting your sincerity in the short-term, but we all get tired eventually.

1430   MR. POLLARD: We were there once. We had owners who basically said that to us: This is going to be great.

1431   I don't think that's a model that we are looking at. We actually like what we do. We are owned by the employees. The employees have a big say in where we go and, you know what, they want to do what they are doing.

1432   I don't see that.

1433   And who knows what the future brings, but, you know what, it is a pretty motivated group of people that I work with.

1434   MR. MILLAR: I would just add, if I could, perhaps to dispel some of the -- and I don't direct it at you, but we have certainly heard that comment before: Well done. You bought it for $2.

1435   That doesn't recognize the $7 million to $8 million that we invested of our own money to float the working capital in this business, and it doesn't recognize the fact that we are still sustaining losses at this point.

1436   So we have a fairly significant investment in this. If somebody came along and gave us a return on that investment, we can't tell you what would happen.

1437   But we are having fun doing it, and we are, frankly, having fun proving that our crazy idea of not quite three years ago is headed in the right direction. We are getting closer.

1438   And in contrast to some others, you can judge us on the few years that we have done.

1439   COMMISSIONER MENZIES: Thank you.

1440   THE CHAIRPERSON: Those are our questions. Thank you very much.

1441   I'm sorry, counsel has some questions. I apologize.

1442   MR. McCALLUM: If I may ask a similar question to the one I asked other people, which is, if the LPIF is continued, what would you say if it were a condition of eligibility that the amount received from LPIF for each individual LPIF station was publicly disclosed?

1443   MR. MILLAR: Our answer is a little bit different. As standalone recipients of LPIF, we believe that the disclosure of the LPIF amount specifically would give our competitors more information than we would receive from just seeing their LPIF receipts.

1444   So we would suggest that if, in fact, that is going to be disclosed, why don't we turn the over-the-air stations and disclose all of the financials in the same way that specialities are disclosed.

1445   We would be prepared to do that.

1446   MR. McCALLUM: If I read your answer the other way around, if it were a condition of eligibility that only the amounts received for LPIF for each LPIF-eligible station were disclosed, and no more, that would be a very big problem for you.

1447   MR. MILLAR: Yes, we believe it is.

1448   But if you are asking would we attorn to it, of course we would.

1449   MR. McCALLUM: Thank you.

1450   THE CHAIRPERSON: Thank you very much. We will adjourn until 3:30.

--- Upon recessing at 1517

--- Upon resuming at 1527

1451   THE SECRETARY: Please take your seats.

--- Pause

1452   THE SECRETARY: We will now proceed with the presentation by Jim Pattison Broadcast Group Limited Partnership.

1453   Please introduce yourselves and you have 10 minutes to make your presentation. Thank you.

PRESENTATION

1454   MR. ARNISH: Thank you, Madam Secretary.

1455   Good afternoon, Mr. Chairman and Commissioners.

1456   My name is Rick Arnish. I am the President of The Jim Pattison Broadcast Group Limited Partnership.

1457   I am accompanied today by my colleagues representing each of our three television stations in the provinces of British Columbia and Alberta.

1458   To my immediate left is Doug Collins, Director of News and Information & TV Operations for our station in Kamloops, CFJC-TV.

1459   On Doug's left is Mike Clotildes. Mike is the Program Director for CKPG-TV Prince George.

1460   And to my far left is Marc Westby, Program Director of CHAT Television, our station in Medicine Hat, Alberta.

1461   Mr. Chairman, we appreciate the opportunity to appear before you this afternoon.

1462   Our three television stations have a proud tradition of over 50 years of local service. In fact, they provide the only source of local news and information on conventional television in Kamloops, Prince George and Medicine Hat.

1463   The LPIF has been a tremendous success. For Pattison Broadcasting, it came at an absolutely critical time. We were faced with structural, economic and competitive challenges that called into question our ability to sustain our historic levels of local programming. With LPIF we have been able to expand and improve the quality of our local news and information programming.

1464   Pattison Broadcasting wants to continue serving viewers to the best of our ability. LPIF support at current funding levels is critical to our ability to do just that.

1465   Mr. Chairman, the Commission has asked us to address three specific questions at this hearing. The first one is how each station has used LPIF funds to produce local programming and particularly local news. The second concerns how consumers have benefitted from the LPIF. These questions are closely related, and I will now ask my colleagues to respond to them in relation to their respective stations.

1466   Here is Doug Collins.

1467   MR. COLLINS: The last licence renewal for CFJC-TV Kamloops was in 2004, before the 2009 policy that harmonized levels of local programming at seven hours per week in non-metropolitan English-language markets. We are still bound by our 2004 commitment to broadcast an average of 13 hours per week, or 676 hours annually, of original local news.

1468   I am pleased that we have been able to exceed that commitment. Last year, with the help of the LPIF, we produced 736 hours of local news, 60 hours more than our commitment. We also did 155 hours of other local programming, for a total of almost 900 hours of original local programming last year.

1469   In our written submission we described our local newscasts and provided examples of initiatives that we have undertaken over the past two years with the assistance of the LPIF.

1470   This year, we plan to increase local production in several areas. A series of outdoor features will highlight scenic areas of the B.C. Interior.

1471   We are in discussions with the Tk'emlups Indian Band to produce a series of short features on the history of the First Nations in Kamloops.

1472   We hope to work with the museum in Kamloops to create a series on the general history of our area.

1473   And while these plans are on-going we will not be able to bring them to fruition without the continued assistance of the LPIF.

1474   We take great pride in our local news coverage. More than just the total hours that we provide, it is the outstanding effort our team puts forward on a daily basis to produce the best newscast that we can. With an increased budget thanks to LPIF funding, we have improved the quality of the newscasts that we put on the air. This has enabled us to retain the loyalty of our viewers in the midst of the enormous range of choices that they have available.

1475   We are gratified that our efforts have been so well received by our viewers and our peers. Moreover, our local newscasts in Kamloops have been recognized with several awards -- among them the 2012 RTNDA Regional Award for Best Newscast, the 2011 BCAB award for Excellence in News Reporting and the 2011 RTNDA National Award for Best Newscast, Small Market.

1476   Local news is at the heart of what we do. With the assistance of the LPIF, we can continue to meet the very ambitious targets for local news that we committed to in 2004, with the highest possible quality. It is what we must do to remain relevant to our viewers.

1477   MR. CLOTILDES: In Prince George, we committed to 6.5 hours per week of local news at our last renewal in 2004, equivalent to 338 hours per year. We were able to exceed that commitment in the early years of the licence term.

1478   Over the past two years, with the support of the LPIF, we have been able to maintain local news at elevated levels while making tangible improvements in the quality of our local news and information programming. Last year we produced 699 hours of local programming, of which over 96 percent was news.

1479   Our focus with LPIF funding in Prince George has been to improve the quality of our local newscasts. We have increased our local programming budget by over 16 percent from 2009 to 2011. Our written submission provides several examples of the initiatives we have undertaken with this increased funding.

1480   We have put a particular emphasis on improving our news gathering and reporting in outlying parts of the coverage area, towns such as Vanderhoof, Mackenzie, Quesnel and Dunster. Viewers in these areas rely on CKPG-TV for news and information about their communities. We are delighted that we have been able to improve this aspect of our service with the help of the LPIF.

1481   In 2012 we plan to increase local production. We will produce several features titled Functional Fitness, a series about training your body to handle real-life situations. We will do a series of vignettes about the historic town of Barkerville, which is turning 150 years this year. The Prince George Exhibition turns 100 years old in 2012 and plans are underway to broadcast our news live from the grounds. As well, we will produce a special TV documentary on this monumental moment.

1482   This spring we are also upgrading our studios in Prince George to full HD capability. We are doing the same in Kamloops and Medicine Hat. Now, we recognize that this is not an eligible LPIF expenditure per se. The reality is, however, that we would not be able to undertake the considerable expense of this upgrade while maintaining our local programming budget, without the vital support provided by the LPIF.

1483   Our local programming in Prince George has received numerous awards. In 2011 we were recognized by the RTNDA with a BC Regional Award for Short Feature, which then went on to win the National Award. This year we were again recognized by the RTNDA, this time in two categories, for Best Short Feature and Best Long Feature.

1484   At the 2012 BCAB Awards of Excellence we are finalists in several categories, including a Community Service Award for our week-long telethon production.

1485   CKPG-TV provides a vital service to the residents of Prince George and the surrounding area. LPIF funding has allowed us to maintain high levels of local news and to make significant improvements in the scope and quality of our news coverage. We urge you to maintain LPIF funding so that we can continue to provide this outstanding service.

1486   MR. WESTBY: At the last renewal hearing for CHAT-TV Medicine Hat we committed to 10.5 hours per week of local programming, comprised mostly of local news. This amounts to 546 hours each year, a very aggressive target given the size of the Medicine Hat market and the depressed economic climate in south-east Alberta.

1487   While we met this target up until 2009, it would have been very difficult to continue producing this level of local content without the LPIF, due to the impact of the 2008-2009 recession. With the benefit of LPIF funding, instead of cutting back on local programming we were able to increase the number of hours last year to 561. Local news alone constituted 547 hours.

1488   Further, instead of freezing or reducing our local programming budget, we have been able to increase it by almost 15 percent. This has given us the resources to improve the quality of our local coverage and to undertake initiatives that we could not have done otherwise.

1489   We have described several local programming initiatives in our written submission. Several of them have won prestigious awards -- among others, the 2012 RTNDA Prairie Region Long Feature Award for a feature we did on rural education and the 2011 RTDNA National Award for best Long Feature for a series of news features on the Canadian Army's involvement in the Italian campaign of World War II.

1490   We are also proud of two co-productions we did with our sister stations in Kamloops and Prince George, one to mark Remembrance Day in 2010 and a second to celebrate Canada Day last year. These special co-productions were a first for Pattison Broadcasting, made possible by the support we received from the LPIF. We would like to do more of these co-productions in the future.

1491   Going forward, we are looking at the expansion of CHAT News at Noon from a half hour to a full hour. This would increase our weekly local news content to 13 hours, well above the 10.5 hours we committed to at our last renewal.

1492   We are also considering the addition of a five minute mid-afternoon newscast which would add approximately 20 hours of local programming over the course of a year.

1493   Medicine Hat viewers demand excellence in their local programming. We may be the only local television service in Medicine Hat, but our viewers expect the same standard of quality in our local news coverage as they see on the big market stations available on cable and DTH. This means thorough coverage of breaking stories, in-depth reporting of important local issues and the highest possible production values.

1494   With the LPIF, we are confident that we can continue to meet the expectations of our viewers and provide a reason for them to continue to tune to our station.

1495   MR. ARNISH: Mr. Chairman, the third question that we have been asked to address is the impact that elimination of the LPIF would have on our local programming, and whether there are other methods and incentives to ensure that we continue to produce local programming.

1496   Without LPIF, Pattison Broadcasting will be faced with very difficult choices in our local programming budgets. We will make every effort to meet the commitments that we made in 2004, but those commitments do represent a significant reduction compared to the number of hours we are now doing.

1497   More importantly, there is no doubt that the quality of our local news coverage will suffer. Lower budgets mean reduced production quality, less in-depth coverage, reduced capacity for thorough coverage of breaking news, and cutbacks in the feature reporting that has garnered so many awards for our stations in the past.

1498   The loss of the LPIF will undermine the heart of what we do: The provision of excellent, relevant and comprehensive local programming. Without that, we cannot compete, because local programming is the only thing that sets us apart from everybody else.

1499   Regulatory incentives are not the answer in this case. The need to retain the loyalty of our viewers provides all the incentive we need to produce the best local programming we can.

1500   The critical issue is lack of resources. With access to appropriate funding, we will maintain and improve our local content. Our track record bears this out.

1501   Mr. Chairman and Commissioners, thank you for your attention this afternoon. We urge you to extend the LPIF so that we can continue to provide the quality of local programming that our viewers deserve.

1502   We would be pleased to respond to any questions you might have. Thank you.

1503   THE CHAIRPERSON: Thank you very much.

1504   Commissioner Duncan will lead the questioning.

1505   COMMISSIONER DUNCAN: Good afternoon.

1506   I certainly was impressed by your brief and also by your qualitative report. I see that you have done a lot in your programming in your various markets.

1507   I'm just wondering just one quick question. You haven't had your licence renewal so that you haven't gotten the standardized minimum. What will you do when you get the standardized minimum?

1508   MR. ARNISH: That's an excellent question. We talked about that throughout our group as well and it has been coming up eight years now since we were in front of the Commission for a licence renewal.

1509   I guess the short or long answer to your question is, and why we are here today as well, and we addressed it in our closing comments, is to be relevant we have to continue doing the levels of local programming that we are currently doing.

1510   We made some certainly commitments back in 2004 but we realized over the last eight years that every opportunity that we had to certainly improve upon the quality of our local news coverage and actual local programming as a whole, that we also needed to increase the hours of that.

1511   In answer to your question we believe the threshold is appropriate for even smaller market stations than ourselves. We would adhere to that. But I think for us to continue to be relevant we would have to maintain what we are doing today.

1512   That's our goal at the end of the day anyway.

1513   COMMISSIONER DUNCAN: So when you say you believe the threshold you don't mean the minimum. You mean the level you're at now.

1514   MR. ARNISH: Well, the threshold is there for companies that have had their licences renewed in the last couple of years.

1515   We haven't had that opportunity yet to discuss that but it is a minimum requirement. We believe strongly that we have to over-perform on that minimum requirement.

1516   COMMISSIONER DUNCAN: Okay.

1517   Just I would like to start, first of all, talking about the economic conditions of the markets that you operate in.

1518   I'm wondering, you point out that you still haven't recovered from the effects of the global recession in 2008 and 2009. It seems that some markets at least have.

1519   I'm just wondering when you think the advertising will return to those levels and what the reason would be in each of your markets that you haven't recovered yet.

1520   MR. ARNISH: That's an excellent question as well, Commissioner Duncan.

1521   I'm not sure and I don't know that anyone has a crystal ball when it will return to the very smallest markets that we represent and that the SMITS Group represents as well.

1522   We noticed a serious erosion in our national and regional advertising as far back as 2004 when we had our last licence renewed. That certainly has been exacerbating in all three of the markets in Kamloops, Prince George and Medicine Hat over the last eight years. It continues to do that today.

1523   We have strived to do a very good job in our local marketplace with local advertising.

1524   What we are seeing nowadays in our markets is the fact that the major metropolitan stations in markets like Vancouver, Calgary, Toronto, Montreal and Ottawa to a degree, I guess, and perhaps Halifax as well, I mean, the agencies are really focusing their attention on the major markets.

1525   We see the same similarity in our radio division as well that the secondary markets are sort of being forgotten about. We don't see that there is going to be a return to that unless the Canadian economy as a whole really starts to grow and perhaps gets back to levels of the early 2000s.

1526   I think that that is certainly a real challenge for all small market independent television stations right across the country.

1527   COMMISSIONER DUNCAN: The LPIF of course as you know was put in place for three years and the intention was this review that we are having now, to determine whether it should be maintained, modified or discontinued.

1528   So can you just tell me what other options you have explored to at least reduce your dependency on the LPIF in the event it is reduced or eliminated?

1529   MR. ARNISH: Well, we would hate to have to, as others have discussed here at this hearing today so far, look at reducing the numbers of hours of local programming because that impacts the employment levels of our great teams that we have in the Pattison Broadcast Group.

1530   The LPIF funding, I think if you look at it today and if you look at it going out into the future, certainly helps us maintain what we are doing in our marketplaces because fee for carriage -- and I know you don't want to get into a discussion about that. That was brought up this morning -- but value for signal carriage or fee for carriage for small market stations like yourselves just doesn't work. We are way too small.

1531   Distant signals coming into our marketplace has exacerbated and fragmented our audiences terribly, quite frankly.

1532   We have had some subsidy as well with the distant signal regime for the four plus one stations that have come into our marketplaces but that's sort of -- it's on the table today but it may be off the table tomorrow.

1533   LPIF is very, very important and you're going to hear that tomorrow as well from the SMITS Group for continuing what we are doing today.

1534   I know in our marketplaces as well, and you have heard that here today as well, that our viewers are -- we believe anyway are very pleased with the service in Kamloops and Prince George and Medicine Hat that we provide on a daily basis. They would certainly be disturbed as well if we had to cutback in the number of hours of local programming that we do.

1535   We do a great job. I don't know if you would like my colleagues to give you a few examples of what we do but we certainly could do that as well.

1536   COMMISSIONER DUNCAN: I think you articulated those very well in your submissions. I appreciate that offer.

1537   MR. ARNISH: Okay.

1538   COMMISSIONER DUNCAN: A number of questions for you.

1539   So I'm just wondering then because I think Channel Zero and CHEK before you that the impression that I was left with there was that we understand it's a temporary assist and that, you know, we are working towards getting in a place where we would be independent of that. I don't hear you saying that.

1540   MR. ARNISH: Well, they certainly have a different model than we do and they certainly operate in much larger markets than we do; the Victoria-Vancouver Island market. Also, they have flow into the Lower Mainland as well. I'm not sure from a business perspective how that works for them. CHCH Hamilton has flow into Toronto and markets like that.

1541   We are in these very small markets. Our market area is our market area.

1542   Just to give you an example of the size of our market in Kamloops, British Columbia our next largest centre that we can go and try and sell advertising to; let alone Doug's team going there and covering news stories, is Williams Lake, British Columbia. It's a three and a half hour trip one way to go Williams Lake and do a story and drive back to Kamloops because we don't have the technology yet today to be able to deliver that story out of Williams Lake, but it's almost a seven hour round trip and we haven't even got the story done yet in a sense.

1543   Our footprint for our small market station in Kamloops we did this a number of years ago with all of our re-broadcasters, all the community re-broadcasters that we have in the Interior is about -- the footprint is the size of the State of New Jersey and our population in that whole area is about 250,000 people.

1544   So for us to go out into the regional marketplace to produce local programming and local news we have relied on LPIF to allow us to do that, to have the resources to go ahead and produce that kind of programming.

1545   COMMISSIONER DUNCAN: So my next question was going to be to ask you to comment on Rogers' suggestion that if we don't discontinue it that at least to be phased out over three years or the suggestions that we have heard here today.

1546   So I gather that you think it should be made a permanent fund.

1547   MR. ARNISH: No, not necessarily. I understand from the questioning from the Commission Panel today that you know subsidies aren't something that -- I guess a lot of us live in the west as well. We sort of have that type of philosophy in mind.

1548   But right now, as you heard in our presentation today, the Commission made the right decision in 2008 in launching LPIF. I'm not sure that the jury is out on that yet, but that should be in perpetuity or whether it should be looked at over the next three years and perhaps reviewed. I certainly would support that viewpoint from our company.

1549   I just think we really have to see in these smaller markets. And I have got to emphasize that and I know the Commission knows this, but we are certainly in a fight of our life going forward in these small markets to be able to able to maintain what we are doing today because that's what our viewers want, and we are licensed to do that, and we are proudly licensed to do that, and I'm hoping that three years out from now that we are not going to need LPIF and that we can get back to the normal business of conventional broadcasting but, you know what, I'm not sure about that.

1550   COMMISSIONER DUNCAN: All right. Thank you.

1551   Just switching to the objectives of the fund and I see that you supported the SMITS Coalition's submission for a fourth objective. I don't think I need to read it out here, but I was having difficulty trying to understand the objective of it, other than to put the words "small market independently owned" in the objectives.

1552   What effect are you expecting it to have on the money that you get from the fund?

1553   MR. ARNISH: I'm not sure I understand the question.

1554   COMMISSIONER DUNCAN: Well, you wanted to add a fourth objective and it says:

"To ensure the financial health of Canadian small market independently owned television stations which enrich the diversity of information and editorial viewpoints through their local programming in Canada's smallest television markets." (As read)

1555   So you want that statement incorporated along with the other three in the objectives and I'm just asking, I guess, why? What will it do for you?

1556   MR. ARNISH: We will talk more about that tomorrow when the SMITS Committee presents its presentation to you, but I think it comes back to exactly what I'm talking about this afternoon with the fact that we have to reflect what is going on in our communities to our viewers.

1557   And I certainly believe -- and I know my colleagues here at this table as well strongly believe -- that there would certainly be in all of our markets a huge concern if we weren't able to continue reflecting a viewpoint, social and economic and political in our local marketplaces and the LPIF fund has certainly allowed us to do that in more ways than on.

1558   COMMISSIONER DUNCAN: So you are not looking for more money as a result of it going to small market stations?

1559   MR. ARNISH: No. From our perspective -- I mean, everyone wants more money, right -- but from our perspective the LPIF fund for the Pattison stations, and I believe for SMITS as well, has done what it set out to do. We are not necessarily looking for a huge incremental increase in the LPIF funding, we can work with what we have today.

1560   COMMISSIONER DUNCAN: You have talked a lot about local news, all of your managers as well have talked about local news and the importance of it to your viewers, and I'm just wondering, do you think that the LPIF objectors should focus entirely on all local programming or just local news or should there be some other types of programming? We have seen mention of some.

1561   MR. CLOTILDES: At CKPG in Prince George primarily 96 percent of our local programming is local news, weather, sports and that is the main reason why people tune in to us, it's for that. They want to know what is going on in their communities and their areas.

1562   We do produce other programs as well, quiz shows for grade 7 kids and some sports programs and certainly some specials throughout the year that are seasonal, but primarily I think this is all about local news and information for our communities.

1563   MR. COLLINS: If I could just add to that, Madam Commissioner, some of the local programming that we do outside of our local news is very relevant to our viewers and we think that that should be and needs to be considered among the qualifications for any continuation of the LPIF fund, because when we go out and on our midday program for example cover a lot of events in the community that may not on a normal newscast be considered hard news, it's very relevant to the community and we feel that those kinds of programs do bear some consideration when the Commission considers what they are going to do with the fund.

1564   COMMISSIONER DUNCAN: Do you think that the definition of local news is specific enough, narrow enough, precise enough to allow us to be able to analyze all across the country and compare the results or do you think we need to fine tune that?

1565   MR. COLLINS: Well, we have said in our submission that our local news programming consists, under our definition, as major newscasts and news breaks that are locally important, locally produced, directed, edited and presented by our team of newscasters.

1566   That's our definition and that's the one we try to live by. I imagine that there may be others who feel differently, but that's the way we consider local news and how we present it in the material that we have submitted to you.

1567   COMMISSIONER DUNCAN: We have seen some other questions come up as a result of the information that we got. For example, repeats.

1568   Do you count repeats in yours when you report the quantity of local news?

1569   MR. COLLINS: No. In the information that we have submitted -- are you talking about the repeat of, say, a 5 o'clock newscast --

1570   COMMISSIONER DUNCAN: Yes.

1571   MR. COLLINS:  -- in its entirety at 6 o'clock? No, we don't.

1572   COMMISSIONER DUNCAN: What about stories within a newscast?

1573   MR. COLLINS: Well, by nature some stories are repeated in subsequent newscasts absolutely, and that's true for just about every news station across the country, there are certain repeats that are -- if there is a significant local story on a local fire for example, it may be broadcast at 5 o'clock and that same story may be part of the newscast at, say, 11 o'clock and that's true of smaller market stations as well as larger market stations.

1574   COMMISSIONER DUNCAN: Sometimes I wonder because I'm able to anticipate the next word coming out in the next broadcast.

1575   So do you do yours identical or do you try to enhance them in subsequent --

1576   MR. COLLINS: No. We try to enhance them and I'm sure, as you can appreciate, in a smaller market that's a little bit more difficult to do with the resources that we have available, but for example on our newscast at 11 o'clock for example we may have a re-cut version of that same story, it may be enhanced in some other way, there may be new information. If it's a breaking news story we not only would have a news story probably at 11:00, but we would have news breaks throughout the evening which would also update the story as -- and I'm thinking in terms of things like, you know, there might be a tragic fire or there might be a murder, it might be forest fires as we have had over the years in the interior of British Columbia, those kinds of things would be updated on a regular basis.

1577   To say that every story is done that way, no, that's not -- you know, we do repeat some stories within the context of the revamped newscast.

1578   COMMISSIONER DUNCAN: Do you have news people and reporters and that working, what, 24 hours a day, 20 hours a day?

1579   MR. COLLINS: Not in the small market we don't have them working 42 hours a day.

1580   COMMISSIONER DUNCAN: You are looking at me like that was a stupid question. What was I thinking?

--- Laughter

1581   MR. CLOTILDES: I might add as well, for our purposes in Prince George we have a 5 o'clock 60-minute newscast and we have a 6:30 30-minute newscast with a new anchor, different anchor and full production crew in the back, director, switcher. So certainly some of the headline stories would be repeated of course, because that's what people tune in for, the headline of the day, but it's a new production.

1582   COMMISSIONER DUNCAN: What were those times again you would have that...?

1583   MR. CLOTILDES: Five until 6:00 is our flagship newscast and again at 6:30. And I will add as well, we have a noon package that is 30 minutes and then the 11 o'clock package, 30 minutes.

1584   COMMISSIONER DUNCAN: Okay.

1585   We have a number of questions here that relate to what should be considered local news. Maybe I could just go through them in case you have some view on them and it would help staff coming up with a recommendation that we might end up with in the end.

1586   So the question is about how local news should be defined, but:

"Should a news segment in which the principal photography and/or post-production takes place outside of the station's market be considered local news?" (As read)

1587   Now, I gather you are not doing that, but if you are compared to other people who are, should it be allowed as a general...?

1588   MR. COLLINS: If I understand your question correctly, you are suggesting that there may be a story with some footage, let's say from Parliament Hill where the Prime Minister makes a statement and we tie that perhaps into a local reaction, a local angle.

1589   COMMISSIONER DUNCAN: Yes.

1590   MR. COLLINS: The whole package would probably be considered as a local story because we have taken that and made a local angle out of it.

1591   COMMISSIONER DUNCAN: Yes.

1592   MR. COLLINS: Traditionally, if we take a story that comes to us in its entirety and we just turn it around and put it on the air, we don't consider that to be a local story.

1593   COMMISSIONER DUNCAN: Okay.

1594   MR. COLLINS: But if we have to significantly work it or take a local angle to it, then we would be more inclined to consider that a local story.

1595   That's a bit of a grey area in terms of trying to determine what's local and what's not, but if we have put significant resources into that story and taken our crews out in the street and added to that story, we consider that more of a local story.

1596   MR. CLOTILDES: An example I suppose -- sorry.

1597   MR. COLLINS: Go ahead.

1598   MR. CLOTILDES: An example I suppose is, again, our 5 o'clock package. We are going through the numbers and we submitted back in February 13 minutes out of our -- I guess you call it a 45-46 minute package, is considered non-local, which would be your national and international stories, because our people want to -- you know, our viewers certainly want to know what's happening as well, but the rest of that would be considered local, where our shooters, our editors, our voice guys, our anchors, our weather, which is significant as well, is considered local.

1599   COMMISSIONER DUNCAN: So those national stories, what is the source for those?

1600   MR. CLOTILDES: We have an association, in British Columbia anyways, with Global.

1601   COMMISSIONER DUNCAN: Okay. Sure.

1602   I think I'm just going to leave it to my colleague, Michel Morin, to ask any more questions on news. I will give him a chance. I'll leave him some questions here.

1603   With respect to indicators of success, I wanted to spend some time talking about that.

1604   Across the board we found that intervenors were very concerned with what they saw as a lack of transparency, both on the part of recipient stations and the Commission itself, and many said that the reason for that was a lack of clear standardized financial and programming information that would allow the public an opportunity to evaluate the LPIF results.

1605   So I'm just wondering how you would react to a reporting process that was more detailed than it currently is. For example, requiring the release of details on the LPIF funding received and how it is spent in terms of local production?

1606   MR. ARNISH: Well, from our perspective I clearly understand where the Commission is coming from on this. We want to be transparent, we talk about transparency in our company all the time.

1607   As far as the reporting function goes, I will deal with that first.

1608   We believe our three television stations provide on an annual basis, the last two years in particular, a very, very detailed overview of where the LPIF money that we have received has been spent, what it has gone into, how it has enhanced our programming, how we have hired more people or we have been able to send people away to cover events, like someone mentioned earlier to sending a reporting crew to Haiti for example.

1609   We have so many reports nowadays and the Commission, as I know, has so many reports you have to deal with on an ongoing basis, I don't know how much more detail we could provide. I'm not sure what other companies provide, but we believe we provide a very, very detailed report.

1610   COMMISSIONER DUNCAN: Certainly your qualitative report was very detailed.

1611   MR. ARNISH: Right.

1612   COMMISSIONER DUNCAN: But what about dollars?

1613   MR. ARNISH: Well, I'm concerned, I think as others are, about a competitive disadvantage. Even though we talk about transparency, about making that figure in the public domain. I would certainly like to defer to my SMITS cohorts and stations to talk about it and perhaps come back tomorrow afternoon with a more definitive answer to that.

1614   COMMISSIONER DUNCAN: Okay.

1615   MR. ARNISH: But we do believe, though, it could end up being a very competitive disadvantage for three small market stations.

1616   COMMISSIONER DUNCAN: Okay. Thank you.

1617   MR. ARNISH: If I can just add to that, it may not be for the vertically integrated companies.

1618   COMMISSIONER DUNCAN: No.

1619   MR. ARNISH: But as a private company, we would find that to be disconcerting to a degree.

1620   COMMISSIONER DUNCAN: I understand.

1621   You are generally satisfied with the existing indicators of success you say and you point out some that should be provided less weight than others, for example increased local advertising revenue and the number of news stories picked up nationally. I understand that.

1622   But with respect to evidence of audience success and viewer satisfaction, what do you think? Perhaps you do it now, but what would you think of an annual survey done consistently that would allow you to satisfy yourself and others that it is successful?

1623   MR. CLOTILDES: Well, I guess, our best gauge, other than direct public feedback, all of our stories are on social media so we have that interaction with our audience, but other than that we use BBM ratings. We don't have personal people meters in our markets, but BBM meters are sort of our judge as to where our newscasts fall in line with all the other programming and I am very proud to say our newscast, our flagship newscasts are number one in our markets. People want to know what is happening in their community and they trust us to deliver that information.

1624   COMMISSIONER DUNCAN: And in all of those three markets I think you have said you are the sole source of local television. Yes, okay.

1625   Have your advertising revenues increased as a result of the LPIF funds?

1626   MR. ARNISH: I will go back to my previous comments that locally, even through a tough economy, it has been better in two of our three markets. Southeastern Alberta has experienced a downturn, particularly in natural gas prices, believe it or not. At one time they were probably $7.00 or $8.00 a gigajoule, I think they are about $2.00 or less, something to that effect. So that has an impact.

1627   The British Columbia economy sort of ebbs and tides and Price George is a very resource-dependent town so the revenues there sort of ebb and flow as well. The southern interior perhaps is in a little bit better shape.

1628   Local is okay, as I said, in British Columbia. Where we really see a decline in advertising is because of the fragmentation. As we all know, there is 750 choices out there in the universe in Canada of available television and then you have the over-the-top companies coming into the marketplace and we have the social media and we have all the major companies being able to provide all of their services on social media platforms, so again that continues fragmentation for our small market stations.

1629   And that is where we are most impacted with regional and national advertising. Again, the agencies are not looking at secondary markets as being where they want to spend their money. They are focusing now always on the major markets in Canada and it is to the detriment of the small market stations.

1630   If you go back 8 to 10 years ago, go back to the early 2000s, national and regional advertising was good for conventional television, but we could certainly see an erosion from 2004 onwards and it has gotten worse every year and we don't see that changing.

1631   COMMISSIONER DUNCAN: You told us which indicators you felt should be given less weight, but you didn't, I don't think, make any suggestion as to what indicators might be useful in markets of your size. Is there any suggestion that you have to add?

1632   MR. ARNISH: You mean as far as the success of LPIF?

1633   COMMISSIONER DUNCAN: Yes.

1634   MR. ARNISH: Well, I think we have talked about that here today, we are talking about it in our annual reports, but perhaps there is a model that we can take a look at.

1635   Go back to your question about is there an annual reporting function beyond what we do that we should be taking a look at, I think that's good and I think it's important for us to be able to look at a model as well, to say, okay, maybe we do have to go back out into the community more and talk more to our constituents to say, "Are you happy with the job that we are doing?"

1636   We believe we are with the response that we get to our programming in all three markets -- Mike, you might want to jump in, or Doug -- but perhaps there is another model we need to take a look at.

1637   I'm not a firm believer in BBM. It does give us a guide. As Mike said, we are not in the PPM market, we are in the diary market still. BBM tries to do a great job, but as consumer everybody is busy nowadays and we might get 1,000 ballots put into our marketplaces and BBM may only get back 200 or 250 ballots. To us that's not a real good overview of what our stations are doing.

1638   It's when we go into the marketplaces, even with advertising. You have a new advertiser come on the air, or somebody is on our TV news or they are on midday or you see a young child, a girl or boy from an elementary school in Prince George on the Quiz Me show and they are on there and they are going out into the community and their peers and their friends are saying, "Hey, I saw you on TV last night."

1639   You know, that still happens in small markets. It doesn't happen in big markets per se. It does, but not to that extent. But when you can get the local viewers being shown on your local TV station and they are getting that kind of response in the community, they come back and tell us, "Hey, I'm getting this great response to your TV station."

1640   COMMISSIONER DUNCAN: So that might be something that if the fund is continued, even for an interim period, it might be something you would want to consider for the next review.

1641   MR. ARNISH: Absolutely, yes.

1642   COMMISSIONER DUNCAN: Okay.

1643   I want to talk about incrementality because I think that is really an important item here. You have indicated that you don't think it is appropriate.

1644   But given the amount of the LPIF funding has increased in 2011 over 2010, and would reasonably be expected to increase annually with increases in BDU revenues from broadcasting activities, can you explain why you would think it wouldn't be appropriate for us to impose an incrementality requirement? You are assured it's going to go up, you are assured your portion is going to go up if it stays as it is.

1645   MR. ARNISH: Madam Commissioner, a very fair question and we have talked about that amongst ourselves as well.

1646   I guess the best way for us to answer that -- have me answer that -- is the fact that we don't have that current minimum requirement that other licensees now have with the seven hour minimum in English Canada and I believe it's five hours in Quebec, in French Canada.

1647   We pride ourselves on obviously -- by our licence renewals of 2004 -- I know I'm going to go back and repeat this, but I think it's important -- that we are producing a lot more programming, not just news but certainly great programming with local reflection, many, many hours per week on all three of our television stations, way beyond our past expectations, if I can put that in our license renewals of 2004.

1648   Now, having said that, amongst our group many years ago we used to have in two of our three stations in front of you today local weekend news. We now have on two of our stations what we call "Week in Review" where we take the top local news stories and we package together, with a host and all that, a review of our evening news. That airs on the weekend.

1649   But we used to run local news on Saturdays and Sundays and it got to the point where we, at the end of the day, just couldn't continue to do that because we knew we wanted to put those resources into our evening news and that's what we did.

1650   If there was an incremental status for LPIF going forward, then yes, I would say on behalf of everybody from the Pattison team here today, that we would look at incremental programming so that we could perhaps look at adding local weekend news on all three of our TV stations.

1651   Keeping in mind that we are in Kamloops, Prince George and Medicine Hat, sometimes there's not much news that goes on that is really exciting on the weekend. So we are sort of in a Catch-22; we would love to do it, but sometimes -- I go back to Commission Morin's comment about you don't want all just fluff and stuff and sometimes that's what you end up putting on the air on the weekend. We would rather put the resources in during the week where we know that we are going to have good solid news and it's going to have good content.

1652   But I guess the short answer to your question is: If there is incrementality one of the things we would be looking at is adding weekend news. I don't want to make that a condition of licence today --

1653   COMMISSIONER DUNCAN: No, no.

1654   MR. ARNISH:  -- but those are some of the things that we are thinking about.

1655   COMMISSIONER DUNCAN: So you are saying you are maxed out on your Monday to Friday?

1656   MR. ARNISH: I don't know that we are ever maxed out, but  -- Mr. Collins?

1657   MR. COLLINS: I don't know that we are maxed out, Madam Commissioner, but I think there are some options that we could certainly look at.

1658   We think that because we are already doing well and above our commitment, well above our commitment in 2004, based on the seven hour commitment that was put into effect recently, if we wanted to make incremental adjustments based on that, well, we are already way ahead of the game.

1659   COMMISSIONER DUNCAN: I'm probably one of the people not too happy about the seven hours.

--- Laughter

1660   MR. COLLINS: But we think that we are --

1661   COMMISSIONER DUNCAN: I like your first story.

1662   MR. COLLINS: We think that we are doing a pretty good job. If incrementality came into effect, obviously we would have to look at that and see where that leads us. We certainly have plans to increase already our base level for this year.

1663   MR. CLOTILDES: I just have to add to that.

1664   Go ahead, Mike. Go Ahead.

1665   MR. WESTBY: I was just going to add that there is special event programming, you know, things other than news, or you take a news story and you expand on it, you do the half hour documentary or what have you.

1666   It's things like that that personally I would love to do more of and build on that local angle.

1667   COMMISSIONER DUNCAN: That would be an opportunity.

1668   MR. CLOTILDES: I would just like to add one thing to what Mike just said and I do agree with what he is saying about the special programming that we do. I think we all try to do those things and we like to be reactive to the situations. If there is a big fire, for example, or the floods in southern Alberta over the last couple of years, we have done programming surrounding that.

1669   But I think that adding a half-hour to our noon news package, that is going to put an extra two and a half hours into our weekly commitment, which brings us up to 13.

1670   So if we could put that into effect, I think that is a huge piece of the puzzle for us.

1671   MR. ARNISH: If I could just wrap that up, Commissioner Duncan, again, for us to be relevant, we have to do what we are doing now, and then some, if we can, without a doubt. We are committed to that.

1672   With so many channels coming into our marketplaces, if we are not doing a good job in the local community of what we are licensed to do, then we are going to become irrelevant.

1673   And, you know what, I wouldn't blame people for not watching us.

1674   But what we want to do is provide great programming -- great local programming that gives them a reason to watch us, and right now they are.

1675   And that is our commitment to our community.

1676   COMMISSIONER DUNCAN: What I hear you saying is, you are doing it, you recognize that it makes good business sense to do it, and you don't really need a requirement to do it.

1677   MR. ARNISH: That's what we are saying, yes.

1678   COMMISSIONER DUNCAN: The fund was intended to improve the quality and diversity of local programming, particularly local news programming in small markets. What justification would we have for not introducing an incrementality requirement? If we don't, wouldn't we simply be transferring PBIT dollars from BDUs to small market broadcasters?

1679   So the money is going from this pocket over to this pocket, and that is, I think, a concern.

1680   MR. ARNISH: That is a very fair question, and I certainly have given that an awful lot of thought. I don't know what my SMITS colleagues would have to say about that, but I am sure you are going to ask them that tomorrow.

1681   But I think we have to keep in mind that there are two different parallels here, in my respectful opinion. You have the vertically integrated companies -- and the CBC, quite frankly -- that have a lot of stations, and they access the majority of the LPIF money. That's a given, we know that.

1682   We access the LPIF money, and you have heard where we spend that money, and good reasons for that.

1683   I will go back to my point earlier, that with the distant signal regime, and perhaps value for signal carriage coming about -- I understand that the hearing is tomorrow at the Supreme Court here in Ottawa, and the presentations. We don't know where that decision is going to go, but if that happens, and there is no LPIF funding, we have no power to negotiate with the BDUs.

1684   We are having a hard enough time now. We have spent in our company, over the last -- it will be by the end of May -- almost $2 million for our three TV stations to convert our entire plant to HD, and we weren't mandated by the Commission to have over-the-air HD transmitters, and we don't.

1685   But what we decided to do was, to be relevant -- again, if I can use that word, because I think it's very important -- we have spent the money to convert our stations to HD. We are having a hard time getting the BDUs to carry our HD signals.

1686   COMMISSIONER DUNCAN: Yes, I see that in your submission.

1687   MR. ARNISH: And it's frustrating. You have companies in front of you today that are talking about LPIF and the fact that it shouldn't be renewed, and we know the results of the BDUs from this past year. I mean, their profits -- their subscription revenues and their profits have increased substantially over the last 12 months, or 24 months, or 36 months. Ours are going in the other direction, and we can't get them to uplink our HD signal.

1688   You are going to hear from some SMIT stations tomorrow that there are some over-the-aid HD stations that aren't on the HD BDU cable system.

1689   Anyway, having said all of that, we just feel that there is going to be more and more pressure on us to be able to continue doing what we are doing, with the LPIF funding -- if it's not in place. It has done its job very, very well over the last two and a half, almost three years now, and with all of these pressures, and the fact that we are such small operators, and we have absolutely no power to deal with the BDUs on value for signal carriage -- and I know that you don't want to get into that.

1690   But if the LPIF were to go away, and we have no negotiating powers with the BDUs, and the regime for distant signals goes away, we are virtually out of business.

1691   COMMISSIONER DUNCAN: Yes, I am interested in what you are saying, but we do have a limited amount of time, and I have just been given that -- whatever that's called.

1692   MR. ARNISH: Sorry about that.

1693   COMMISSIONER DUNCAN: There are two questions that I really would like to ask. Without a requirement for incremental spending, what would be the justification for not reducing the rate of the LPIF from 1.5 to 1 percent, or even discontinuing it altogether?

1694   I mean, even the 1.5 to 1 percent, I don't hear you explaining to me why it shouldn't at least go back to the original level.

1695   MR. ARNISH: I guess it could go back to the 1 percent -- and I will try to be as brief as I can be -- but I think that you have to look at things from the vertically integrated companies and the CBC that access the fund -- and we really don't want to get into that. That is a decision that we know the Commission is going to deal with and make.

1696   But I think that if it was to go back to 1 percent, or I think I heard this morning, maybe, three-quarters of a percent, we are fine with that, as long as the true independent television stations across the country, hopefully with that 1 percent, or three-quarters of a percent, are made whole on what we are currently receiving now.

1697   It would work that way.

1698   COMMISSIONER DUNCAN: I have a list of the PBIT margins for all OTAs, and there is a considerable variance, and of course it's confidential, so I can't talk in terms of numbers, but it would seem that some stations need assistance and others do not. Some have seen their PBITs increase, and certainly level out.

1699   So I am just wondering what you would think of criteria based on the average PBIT for the last three years, excluding the impact of the LPIF funds, and providing assistance to those stations who are at a certain level, to be determined, maybe 5 or 8 percent, for example, PBIT.

1700   MR. ARNISH: That's a very interesting question, and without giving it a lot more thought than the last three or four hours -- personally, I think we have to be concerned -- and I say this with the utmost of respect. I mean, we are on the public record, and you know what kind of job we are doing in our marketplaces. Perhaps other companies have not had the resources to do that, or just have chosen not to do that. I don't know the answer to that question.

1701   Right now I have to say that I would be quite concerned about going down that path.

1702   COMMISSIONER DUNCAN: All right. Thank you very much. I will give my colleagues a chance.

1703   THE CHAIRPERSON: Thank you.

1704   I have a question or two, and they have to do with your financials.

1705   I will take you back to your February 14th submission at paragraph 29, which Commissioner Duncan quoted from; that is, that you and the SMITS coalition support a fourth objective: to ensure the financial health of Canadian small market, independently owned television stations.

1706   What is it that you are looking for? You are already alone in those markets, in the majority of the markets. You are a monopoly. You want a guaranteed rate of return, as well?

1707   MR. ARNISH: No --

1708   THE CHAIRPERSON: What do the words "ensure the financial health" mean? Quantify that for me.

1709   MR. ARNISH: Well, when we talk about ensuring the financial health of the stations, I think, Mr. Chair, it is all the points that we have made in our submission and we are making here today; that small market independent television stations across the country continue to have fragmentation in our marketplaces, and we see the business model changing dramatically over the next three to five years.

1710   I am not sure -- I said it at a CAB panel that I sat on in 1995, that I wasn't sure there were going to be half of the conventional television stations in 2015 still on the air. And there may be some truth to that.

1711   There were a lot of people in the room at the time who sort of rolled their eyes and said, "Well, whatever," but I am not sure in 2015 that you are going to have as many television stations on the air as today because of all of the pressures the small market stations have.

1712   THE CHAIRPERSON: But if that is the case, then maybe that's what consumers want.

1713   MR. ARNISH: I disagree with you. I don't think that's what consumers want.

1714   I can tell you, in our marketplaces -- and all three of my colleagues here will support the notion -- consumers in our marketplaces want their local television station. We are the only conduit, for the most part, of news and local reflection and information in these marketplaces.

1715   THE CHAIRPERSON: So if they want it, then they are watching it. If they are watching it, then you can sell advertising revenue. If you can sell advertising revenue, you have a business to run.

1716   MR. ARNISH: Absolutely, if the economy is working at 100 percent and there hasn't been a slippage in the number of business licences issued in a city in a very tough economy.

1717   I mean, it's easy to say from a distance that we have a model that you can go out and sell locally, but even then, in certain markets, we are all having a tough time doing that.

1718   THE CHAIRPERSON: I am looking at your financials here, and, again, they are confidential, but when I look at the numbers and I look at the amount of money that you have received for LPIF, and I look at the amount of money that you received in the Small Market Fund, and I look at your PBIT margins, I have to wonder.

1719   I guess it begs the question that Commissioner Menzies asked earlier, to an earlier panel; that is, at what level of profit should subsidies no longer be appropriate?

1720   You have your numbers. You know what your numbers are. You are staring at the same page as I am, and I would like you to put down something in writing to us -- if you don't want to give it to me publicly -- as to what you think is an appropriate level when I look at what I am staring at here.

1721   MR. ARNISH: We will do that. We will take that as an undertaking.

Undertaking

1722   THE CHAIRPERSON: Great, excellent.

1723   Commissioner Molnar...

1724   COMMISSIONER MOLNAR: I just have one question. Are you carried on DTH, all of your stations?

1725   MR. ARNISH: Yes.

1726   Well, no, Prince George and Kamloops are carried on DTH, in standard definition. Medicine Hat is carried on Bell.

1727   COMMISSIONER MOLNAR: Do you see an upside with the change in the DTH carriage requirements that are coming up?

1728   MR. ARNISH: Yes, and we will thank the Commission for that, as well. But I will qualify that by saying that it only works, down the road -- and the BDU players will go, "Oh, why is he going there" -- if there is capacity.

1729   And right now, how it would work for all of us, is if our HD signals were carried and our SD signals were not carried.

1730   But right now it's only carried in SD, and we have advertisers and viewers saying -- well, advertisers in particular -- I can't see your station in HD, so why would I continue advertising with you?

1731   So, both on cable and on satellite -- this is not the time to request it, but I will put it on the record -- from our viewpoint, we need to be carried in HD or we won't be relevant.

1732   COMMISSIONER MOLNAR: Thank you. I will leave that for another time, if you want to come in.

1733   MR. ARNISH: Thank you, we will.

1734   THE CHAIRPERSON: Before I pass it on to counsel, I have one more question.

1735   I was flipping pages here, and again in your submission of February 14th, at paragraph 37 -- I just glanced over it and it raised a question. It says: LPIF funding also makes it possible to continue producing other local programming that might otherwise have to be scaled back. This includes 15 episodes each year of our elementary school program Quiz Me, in collaboration with CKPG, the University of Northern B.C., School District 57, and local independent schools.

1736   Is Quiz Me funded through LPIF?

1737   MR. CLOTILDES: The expenses for Quiz Me do go through LPIF, yes.

1738   THE CHAIRPERSON: Okay. Thank you. Those are my questions.

1739   MR. McCALLUM: I have no questions, Mr. Chair.

1740   THE CHAIRPERSON: I'm sorry; Commissioner Menzies.

1741   COMMISSIONER MENZIES: I just wanted to follow up quickly, because I asked this question earlier. I know we are running late, but...

1742   I asked it of Shaw, and I will ask it of you. I am curious about your take on the future of local OTAs and what we are subsidizing here, because, to note, nobody -- and I don't like using regional examples, but they are the best example in this case. You have rapidly growing places like Fort McMurray, Grande Prairie, Fort St. John, and that sort of stuff, and nobody is looking to start new television stations in those areas.

1743   Is the OTA not the model for local broadcasting and local news in the future?

1744   MR. ARNISH: That's a great question. I guess it depends how far out in the future you want to talk.

1745   Currently, I believe that the model will continue to be the model that it is today. It may not be for every market. Maybe there truly are some very small market scenarios in Canada that won't work at the end of the day.

1746   But maybe there is a plausible opportunity in a Grande Prairie or a Fort McMurray for someone to apply for a conventional television station.

1747   You know, we have even talked -- it hasn't gone very far, but there are some markets in Canada that we have looked at that perhaps we would look at applying, if we know that there is a business model there for the future.

1748   But, Commissioner Menzies, again, I will say this: I am not sure, ten years out, that a lot of the stations that are licensed by the Commission today are going to be in existence, as we know them. I don't know that.

1749   COMMISSIONER MENZIES: Thank you.

1750   THE CHAIRPERSON: Thank you very much.

1751   We will take a very short five-minute break, and reconvene with the next panel.

1752   MR. ARNISH: Thank you.

--- Upon recessing at 1627

--- Upon resuming at 1635

1753   LA SECRÉTAIRE : Nous entendrons maintenant les présentations de l'Alliance des producteurs francophones du Canada, de l'APFTQ, and On Screen Media (sic). Ils feront leurs présentations. Les questions du panel suivront.

1754   Nous débuterons avec l'Alliance des producteurs francophones du Canada. S'il vous plaît vous présenter et présenter votre collègue, et vous avez 10 minutes pour votre présentation. Merci.

1755   S'il vous plaît, ouvrez votre micro.

PRESENTATION

1756   MME LAGACÉ : Bonjour, Monsieur le Président, Mesdames et Messieurs les Conseillers, membres du personnel. Mon nom est Suzette Lagacé. Il me fait plaisir de prendre parole devant vous en tant que vice-présidente de l'Alliance des producteurs francophones du Canada.

1757   Natalie McNeil, la directrice générale de notre association m'accompagne.

1758   L'APFC tenait à faire entendre le point de vue des producteurs indépendants oeuvrant en francophonie canadienne dans le cadre de l'examen du Fonds de l'amélioration de la programmation locale.

1759   Nos membres, tout en participant à la diversification du contenu télévisuel canadien, travaillent à montrer des réalités, à raconter des histoires, à refléter les imaginaires du million de francophones au Canada qui s'ajoute aux six millions de francophones québécois.

1760   La francophonie canadienne à l'extérieur du Québec est de plus en plus diversifiée et riche. Nous sommes plus qu'une minorité car nous sommes des citoyens qui travaillons à bâtir notre avenir en français, certes par attachement historique, mais aussi par conviction profonde de notre potentiel, de notre apport et de notre valeur pour le Canada tout entier.

1761   Rappelons que l'un des éléments centraux de la politique de radiodiffusion canadienne est de refléter la dualité linguistique ainsi que la diversité sociale et régionale du Canada. Les réglementations et divers mécanismes de financement tels que le FAPL permettent aux citoyens canadiens d'avoir accès à des nouvelles locales et à des productions télévisuelles de grande qualité.

1762   Ces productions sont le reflet de ces communautés, et elles stimulent l'économie locale en employant une main-d'oeuvre qualifiée. Elles contribuent grandement à la rétention d'un bassin d'artistes et de créateurs et participent à notre tissu social, mais surtout donnent un sentiment de fierté et d'appartenance aux francophones de partout au pays.

1763   Aujourd'hui, nous souhaitons mettre l'accent sur certaines des recommandations émises dans notre mémoire. Notre présentation s'organise autour des deux questions posées par le CRTC, soit celle des retombées du FAPL pour le consommateur et celle portant sur l'impact de l'annulation du FAPL et des autres modalités de financement disponibles pour la programmation locale.

1764   A la première question du CRTC, « Comment les consommateurs ont-ils bénéficié du FAPL? », l'APFC rappelle avant tout que pour les communautés des langues officielles en situation minoritaire, les stations régionales de Radio-Canada sont souvent les seules stations dans le bouquet de base des cablôdistributeurs à offrir une programmation locale en français.

1765   D'autre part, des diffuseurs affiliés tels que Télé Inter-Rives, titulaires directs ou indirects de licences de télédiffusion, en bénéficiant du FAPL, parviennent à contribuer à la bonification de la programmation locale francophone.

1766   Pour les francophones vivant et oeuvrant en situation minoritaire, les besoins des communications et de contenus identitaires sont d'actualité et nécessaires, et ce, malgré l'avènement des technologies et des révolutions médiatiques. Ils cherchent ce que les grands conglomérats médiatiques n'offrent plus, ou de moins en moins, c'est-à-dire une programmation spécifique et ciblée en français.

1767   Ainsi, les francophones vivant à l'extérieur du Québec ont pu bénéficier de journaux télévisés régionaux sept jours sur sept. Ces stations ont embauché des chroniqueurs culturels de façon plus systématique ou encore produit et diffusé des magazines culturels estivaux. A ces nouvelles et magazines d'information s'ajoutent des contenus dont les Canadiens et Canadiennes sont demandeurs.

1768   Par exemple, les stations régionales de Radio-Canada auront produit et diffusé la série d'affaires publiques « Tout le monde en parlait », le talk-show « Luc et Luc », « La Revue Acadienne », ou encore « C'est ça la vie. » Le FAPL aura permis de capter des galas et événements rassembleurs et significatifs pour nos communautés tels que le Gala des prix Trille Or à Ottawa, le spectacle « Les rencontres qui chantent » en Ontario ou encore la soirée Les Éloizes à Moncton et à Bathurst.

1769   Télé Inter-Rives, titulaire des licences de radiodiffusion qui desservent différentes régions au Québec ainsi que le nord-est et le nord-ouest du Nouveau-Brunswick, a pu proposer aux 235 000 francophones de cette province des contenus produit par des producteurs indépendants, soit « Tout le monde à bord », deux séries de 8 épisodes, et « La gang arrive », une série de 10 émissions, ou encore « RURAL.com », une dramatique de 10 épisodes.

1770   En d'autres mots, les francophones de Winnipeg, London, ou encore de Caraquet et Edmundston, ont pu avoir des nouvelles locales de qualité et être informés de ce qui se passait dans leur région. Ils ont pu bénéficier de productions de qualité qui assurent la diversification des genres, participent à l'enrichissement des contenus canadiens et contribuent à contrer la montréalisation des ondes.

1771   Dans sa seconde question, le CRTC demande l'avis des intervenants quant à l'impact sur le montant et la variété de la programmation locale produite advenant la suppression du FAPL, et quels autres méthodes ou incitatifs sont disponibles afin d'assurer la production continue de la programmation locale.

1772   L'APFC réitère ses félicitations au CRTC de la mise en oeuvre de ce Fonds. Le FAPL est un outil indispensable de développement des médias francophones en région, et il contribue au développement durable des communautés francophones de partout au pays. Il agit comme instrument de développement régional, tant culturel qu'économique. Il serait donc déplorable que le CRTC décide d'abolir le FAPL.

1773   Selon les données complémentaires fournies dans l'avis de consultation, le FAPL a permis à presque tous les bénéficiaires d'augmenter leur offre de programmation. Par exemple, les stations régionales de Radio-Canada ont pu augmenter de 27 pour cent leur programmation de nouvelles et de 50 pour cent leurs contenus diversifiés. On note également que Télé Inter-Rives a, pour sa part, proposé 63 pour cent en plus de nouvelles locales et 50 pour cent de contenus diversifiés.

1774   Aucun mécanisme existant ne peut assurer une telle diversification de programmation pour les petits marchés. Toutefois, il est cependant difficile d'analyser avec précision l'utilisation des ressources offertes par le FAPL aux stations régionales admissibles.

1775   Tout comme le pourcentage de la production indépendante, nous profitons de notre intervention pour réitérer notre demande de publication de données financières, présentées par groupe et par catégorie d'émission de la part de l'administrateur du FAPL.

1776   De plus, nos réaffirmons la nécessité d'un rapport public détaillant l'utilisation des sommes reçues, ainsi que le nom des émissions de programmation locale, comptabilisées aux fins de l'atteinte au seuil minimal hebdomadaire de programmation locale des stations régionales bénéficiant du FAPL, et ce, dans des délais adéquats.

1777   Le FAPL est un incitatif sans qui ces contenus issus de la production indépendante ayant un fort ancrage régional, et qui assurent la diversification aux Canadiens vivant en région ou en situation minoritaire, n'auraient jamais vu le jour.

1778   Nous estimons toutefois que le CRTC doit réfléchir au fait que certains montants du FAPL ont été utilisés pour produire en région certaines émissions destinées à une diffusion réseau et non à un marché local. Cet état de fait pose la question de la délocalisation de la production pour une production réseau. Nous questionnons ici l'atteinte des objectifs initiaux du FAPL, qui sont de permettre aux spectateurs de petits marchés canadiens de recevoir une programmation locale diversifiée et de qualité.

1779   Devant ces faits, nous demandons au CRTC d'imposer l'utilisation des fonds à des émissions produites et diffusées à partir des régions.

1780   Si le Conseil ne souhaite pas imposer aux bénéficiaires l'utilisation des fonds à des émissions produites et diffusées exclusivement dans les marchés locaux, il doit alors élargir l'accès au FAPL à d'autres détenteurs de licences de radiodiffusion qui se consacrent à servir les CLOSMs.

1781   Ainsi, le diffuseur francophone TFO, dont le principal mandat est de représenter les communautés francophones de l'Ontario, et TV-5 Québec-Canada, qui a, elle aussi, pour mission de refléter l'ensemble de la communauté francophone au Canada, devraient pouvoir bénéficier du financement du FAPL, et ce, même si elles ne possèdent pas de stations régionales.

1782   Enfin, nous constatons que les activités des EDR au Canada génèrent toujours de bons rendements et qu'ils sont en croissance constante. Selon les relevés statistiques et financiers que le Conseil publie, les marges bénéficiaires des EDR francophones québécoises sont passées de 23,2 pour cent à 35,5 pour cent entre 2006 et 2010, ce qui permet d'affirmer que la contribution exigée de 1,5 pour cent des revenus bruts des EDR au FAPL demeure appropriée et tout à fait acceptable.

1783   En conclusion, nous remercions le CRTC d'avoir mis en place un mécanisme de financement indispensable à l'essor et à la vitalité de nos communautés. Comme l'a signifié la presque totalité des intervenants au dossier public, le FAPL a répondu à tout point aux objectifs fixés, qui étaient d'assurer aux téléspectateurs des petits marchés canadiens une programmation locale diversifiée, que celle-ci soit de qualité et diffusée dans les petits marchés de langue française, et de faire en sorte de les favoriser.

1784   L'APFC est confiante que le Conseil tiendra compte des recommandations et maintiendra le FAPL. Merci beaucoup.

1785   LA SECRÉTAIRE : Merci.

1786   Nous procéderons maintenant avec l'APFTQ. S'il vous plaît vous présenter et présenter votre collègue. Vous avez 10 minutes.

PRESENTATION

1787   MME SAMSON : Merci.

1788   Monsieur le Président, bonjour, Monsieur le Vice-Président, Mesdames et Messieurs les Conseillers. Je suis Claire Samson, Présidente-directrice générale de l'Association des producteurs de films et de télévision du Québec et je suis accompagnée de madame Suzanne D'Amours, consultante au dossier.

1789   D'entrée de jeu, mentionnons que nous ne recommandons pas l'abolition du FAPL. Au contraire, nous sommes convaincus qu'un financement additionnel et spécifique à la programmation régionale devrait contribuer à une amélioration et à une augmentation des heures de programmation destinées aux Canadiens situés en région, et cela particulièrement pour la diffusion de nouvelles locales. D'ailleurs, le Conseil a reçu à cet effet 1 355 interventions, dont la presque totalité provenait de personnes qui demandaient un maintien du FAPL au soutien de la programmation.

1790   Comme nous l'avons exprimé dans notre mémoire, nous ne sommes pas convaincus que les sommes reçues de ce Fonds aient vraiment servi à améliorer la qualité et la diversité de la programmation locale des marchés télévisuels canadiens non-métropolitains.

1791   Ce dont nous sommes, cependant, convaincus, c'est que les dépenses effectuées grâce au FAPL n'ont pas permis d'augmenter significativement le nombre d'heures de programmation de nouvelles locales. A l'exception des radiodiffuseurs indépendants situés en région qui ont augmenté le nombre d'heures de programmation de nouvelles locales, les stations régionales appartenant aux grands réseaux ont tout juste rempli leurs conditions de licence à cet égard.

1792   Et encore, pendant cette période, V s'est vue priver de la contribution du FAPL pour les stations de Trois-Rivières, Sherbrooke et Saguenay en raison de l'interruption temporaire de la diffusion de nouvelles locales.

1793   Devons-nous comprendre que sans le FAPL les nouvelles locales à l'antenne des stations régionales seraient mises en péril? Pourtant, ces services conventionnels ont obtenu leur licence sur la base d'engagements fermes à l'effet de fournir des services de nouvelles locales, engagements inscrits dans les conditions de licence qui leur permettent d'opérer un réseau ou une station régionale.

1794   Si on résume brièvement, les diffuseurs traditionnels publics et privés reçoivent aujourd'hui des sommes additionnelles pour réaliser au mieux le même nombre d'heures de programmation de nouvelles locales qu'avant la création du Fonds.

1795   Comme vous avez pu le constater en lisant notre mémoire, nous sommes particulièrement préoccupés par l'utilisation du financement du Fonds pour certains types d'émissions qui sont diffusées sur le réseau de Radio-Canada. De toute évidence, Radio-Canada n'avait pas compris la même chose que nous lors de la création du Fonds.

1796   On a pu constater, par exemple, que l'émission de téléréalité « Les chefs », produite en coproduction avec un producteur indépendant de Montréal, a bénéficié du financement du FAPL et cela même si cette émission ne correspond aucunement à la définition de programmation locale. A cet effet, les seuls éléments régionaux probablement de cette émission sont la cuisinière et le réfrigérateur utilisés par les chefs.

1797   On peut en dire autant de l'émission de jeu-questionnaire « Génie en herbe », produite à Sherbrooke, animée par un animateur de Montréal et diffusée sur le réseau depuis je ne sais plus combien d'années, qui a aussi bénéficié du financement du Fonds.

1798   On pourrait poursuivre ainsi avec le talk-show d'après-midi « C'est ça la vie », animé par Marcia Pilote et produit à Ottawa, qui lui aussi a été financé avec le Fonds.

1799   Nous pensons que plusieurs autres émissions du même type ont pu être financées par le Fonds sur d'autres réseaux, mais nous ne pouvons vérifier cette information, d'une part parce que tous les bénéficiaires n'ont pas déposé de rapports et parce que les documents financiers ne comprennent pas ce type d'information.

1800   D'autre part, nous ne pouvons vérifier l'information puisque les rapports demandés mettent l'accent sur les indicateurs de succès, plutôt que sur la description des émissions soutenues, ce qui donne des rapports anémiques comme celui de la station locale de Québec CFCM, propriété de TVA, pour 2009-2010, qui confirme sur trois pages que le Fonds a simplement contribué à financer les 193 heures additionnelles d'émissions locales pour répondre à ses nouvelles conditions de licence, pas une minute de plus.

1801   Cette absence de transparence accentue l'impression de dérive des objectifs et de mauvaise utilisation des ressources en provenance du Fonds.

1802   C'est pourquoi nous demandons au Conseil d'exiger de toutes les stations de télévision traditionnelle qui bénéficient du Fonds qu'elles soumettent annuellement au Conseil, dans le Rapport sur l'utilisation des fonds du FAPL, une liste de toutes les émissions de programmation locale qui ont été comptabilisées aux fins de l'atteinte du seuil minimal hebdomadaire de programmation locale.

1803   La compilation de cette information ne devrait pas être compliquée puisque le Conseil entend demander les mêmes informations sur les dépenses d'émissions d'intérêt national, et lors des dernières audiences de renouvellements de licences, les requérantes se sont dites disposées à remplir les rapports.

1804   De plus, lorsque le Fonds sert à financer d'autres émissions qui ne sont pas des émissions de nouvelles, il nous apparaît approprié que la contribution du Fonds soit mentionnée au générique de ces émissions. Au moins les abonnés pourront réellement comprendre à quoi sert leur contribution au FAPL identifiée sur leur facture de câble ou de distributeur.

1805   De plus, les producteurs indépendants qui produisent ces émissions locales et régionales financées à même le Fonds doivent être informés de la part de financement provenant de cette source, ce qui n'est pas le cas. Cette information est essentielle à différents niveaux, comme par exemple pour répondre aux exigences de licence-seuil du Fonds des médias du Canada et de l'impact de cet investissement sur les crédits d'impôts qui financent également ces productions.

1806   Entendons-nous bien, l'APFTQ ne s'oppose pas à ce que les émissions de programmation locale soient diffusées réseau. Au contraire, nous considérons hautement souhaitable que les émissions produites en région puissent connaître un rayonnement national, à la condition toutefois qu'elles soient produites dans le respect des paramètres de la définition du Conseil, à savoir être créées par des producteurs indépendants locaux et refléter les besoins et les intérêts propres à la population de leur marché local d'origine.

1807   Si le Conseil accepte que le Fonds puisse financer des productions dites régionales, mais d'intérêt national, diffusées uniquement sur un réseau, nous demanderons dans ces conditions que l'accès au FAPL soit élargi à d'autres détenteurs de licences de radiodiffusion qui n'exploitent pas de stations locales et qui n'ont pas accès à des redevances de distribution, comme Télé-Québec par exemple.

1808   L'APFTQ considère qu'elle devait faire état du malaise que provoque le renouvellement du Fonds, particulièrement suite aux demandes de renouvellement de licences des services conventionnels de langue française qui devront être accordés par le Conseil ce printemps. Que ce soit TVA et ses affiliés ou V et ses affiliés, ces services conventionnels demandent soit des allègements concernant la programmation locale ou une garantie de financement du Fonds pour maintenir un engagement envers cette programmation. Et Radio-Canada n'en demandera pas moins lors de son prochain renouvellement de licence. D'ailleurs, c'était déjà prévu l'année dernière, et les coupures de la CBC/SRC n'étaient pas encore annoncées.

1809   Nous comprenons fort bien que le Conseil, en créant le Fonds, voulait aider les services conventionnels à passer à travers la crise financière et leur permettre de retrouver une rentabilité. C'est fait. Les résultats financiers publiés par le Conseil concernant les stations de télévision conventionnelles canadiennes démontrent que ces dernières ont renoué avec la rentabilité. Les niveaux de BAII et la marge de BAII sont les plus élevés depuis 2005. Il ne faudrait tout de même pas que ce soit les abonnés qui fassent les frais de cette décision sans qu'ils en retirent le moindre bénéfice apparent.

1810   Le Conseil se questionne justement dans le cadre de cette audience à savoir comment les consommateurs ont bénéficié du Fonds.

1811   Si on lit toutes les lettres d'appui au renouvellement qui parviennent de gens des diverses régions canadiennes, il semble que les Canadiens désirent une programmation qui leur est destinée et particulièrement au niveau des nouvelles locales.

1812   Quand on lit les rapports fournis par les stations locales, exception faite des stations indépendantes comme RNC Media par exemple, qui ont augmenté le nombre d'heures de programmation de nouvelles locales, on constate qu'ils ont au mieux répondu aux exigences de leur condition de licence. Il faut comprendre qu'ils étaient dans une période financière difficile et qu'ils devaient modifier leurs installations pour prendre le virage numérique. Nous le comprenons, et le Fonds leur a permis de passer à travers cette période difficile. Maintenant que c'est chose faite, nous pensons que le Conseil doit être plus exigeant.

1813   Le Conseil se questionne aussi sur l'impact que pourrait avoir l'annulation du Fonds sur la variété de programmation locale produite. Nous pensons qu'on devrait plutôt se préoccuper de la programmation et de la production de nouvelles locales en priorité puisque ce sont ces émissions qui sont les plus à risque et ce sont celles-ci que réclament les Canadiens qui vivent en région.

1814   Évidemment, le Conseil devra être très vigilant afin de s'assurer que les stations de télévision régionales s'acquittent de leurs obligations incluses dans leurs conditions de licence concernant la diffusion de bulletins de nouvelles locales.

1815   Par contre, on pourrait certainement craindre une diminution des émissions produites localement et destinées à un public local. Il ne fait aucun doute que l'abandon du FAPL aurait des conséquences néfastes sur ce genre de production.

1816   Nous sommes d'avis que le Conseil devrait maintenir le Fonds et établir des conditions strictes quant à l'utilisation de ces fonds.

1817   De plus, le Conseil devrait exiger des récipiendaires de produire des rapports exhaustifs concernant les émissions qui ont bénéficié du Fonds, comme nous le proposions dans notre mémoire.

1818   Enfin, le gestionnaire du FAPL devrait avoir comme mandat d'établir des données statistiques pour démontrer l'effet du FAPL sur la production d'émissions locales.

1819   En terminant, nous répétons que si le Conseil permet que le Fonds puisse financer des émissions diffusées uniquement sur un réseau national, ce Fonds devrait être accessible à tous les radiodiffuseurs conventionnels qui diffusent des émissions régionales à leur antenne. Il est question ici d'équité envers l'ensemble des joueurs et des services conventionnels.

1820   Je vous remercie de votre écoute et nous sommes prêtes à répondre à vos questions.

1821   LA SECRÉTAIRE : Merci.

1822   J'invite maintenant On Screen Media[sic] à faire sa présentation. S'il vous plaît vous présenter et vous avez 10 minutes pour votre présentation.

PRESENTATION

1823   MME MATIATION : Merci.

1824   En fait, le nom de l'organisme, c'est On Screen Manitoba.

1825   LA SECRÉTAIRE : Excusez.

1826   MME MATIATION : Monsieur le Président, Membres du Conseil et membres du personnel, je m'appelle Nicole Matiation. Je suis la directrice générale de On Screen Manitoba.

1827   Je vous remercie de m'accorder l'opportunité de présenter nos commentaires sur le Fonds d'amélioration de la programmation locale, un Fonds que l'industrie de production au Manitoba considère un outil essentiel pour assurer la diversité de la programmation canadienne.

1828   On Screen Manitoba est l'association professionnelle de l'ensemble de l'industrie de production des médias de l'écran dans notre province. Nos membres comprennent des scénaristes et réalisateurs, des producteurs, des guildes, des syndicats, des fournisseurs de services, des festivals de films et autre organismes et individus ayant un intérêt dans ce secteur au Manitoba. Parmi nos membres se trouvent des individus des milieux anglophone, francophone et autochtone.

1829   Avec son peuple aussi diversifié que sa géographie, le Canada a reconnu depuis longue date le rôle essentiel que les systèmes de communication et leur contenu jouent en engendrant un sens d'appartenance et de connexion chez les citoyens. La politique des communications au Canada ainsi que ses pratiques sont basées sur des principes qui garantissent aux Canadiens l'accès à un contenu qui reflète les intérêts du Nord, du milieu rural et des centres urbains ainsi que les réalités culturelles des communautés autochtones, francophones, anglophones et multiculturelles.

1830   On Screen Manitoba croit que les producteurs indépendants en région jouent un rôle clé dans la production d'émissions de qualité et qu'ils contribuent de façon significative à la diversité de la programmation en ondes. Étant donné que la qualité et la diversité sont deux objectifs clés du FAPL, On Screen Manitoba encourage fortement la Commission à dédier une portion du FAPL au soutien des émissions des producteurs indépendants locaux, et ceci, dans tous les genres : documentaires, variété et fiction.

1831   The LPIF has proven an effective tool for maintaining and, in the francophone community at least, sometimes increasing the quantity, quality and diversity of local programming. This has had both a cultural and economic impact by providing more opportunity to put local voices on the air, through coverage of local cultural events and news, and increased broadcast-related employment opportunities in smaller markets.

1832   The first objective of the LPIF is to ensure that viewers in smaller Canadian markets continue to receive a diversity of local programming, particularly local news programming. Based on available reports and our own observations of local programming in Manitoba and discussions with colleagues in other non-metropolitan areas, it is apparent that the LPIF has successfully ensured the maintenance and, in some cases at least, an increase in local news programming and coverage of local events.

1833   Nous constatons que les sept stations régionales de Radio-Canada situées à l'extérieur du Québec diffusent des journaux télévisés sept jours sur sept et ont embauché des chroniqueurs culturels de façon plus systématique et ont pu diffuser des magazines culturels produits en région de façon plus régulière. Nous croyons dans la valeur du diffuseur national public du Canada et sa capacité à répondre aux besoins des citoyens en milieu minoritaire comme majoritaire, dans les deux langues officielles, moyennant les ressources financières nécessaires.

1834   Soulignons encore que ce Fonds a permis la production et la diffusion d'émissions de projets ou d'événements rassembleurs et significatifs pour les CLOSM francophones, et ceci, par des diffuseurs privés comme publics. Par exemple, Télé Inter-Rives démontre clairement que l'utilisation de ce Fonds a été optimal et a contribué à augmenter considérablement le volume d'heures de production à travers diverses initiatives.

1835   The LPIF has allowed both private and public broadcasters in smaller anglophone markets to maintain local programming, primarily through news and local event coverage. This is of real value to Canadian consumers who have clearly communicated the importance they place on local programming. However, we encourage the Commission to renew the original intention of the LPIF to provide support for incremental expenditures on local programming.

1836   Renewal of the LPIF represents an opportunity to respond to growing concerns with regard to the centralization and vertical integration of broadcasters in metropolitan centres. Over the past few years On Screen Manitoba and other industry associations have highlighted their concerns regarding centralization and vertical integration and the potential loss of diversity of voice on the airwaves.

1837   According to broadcast regulatory policy 2009-406, local programming is defined as:

"... programming produced by local stations with local personnel or programming produced by locally based independent producers that reflects the particular needs and interests of the markets residents." (As read)

1838   Independent producers have access to production incentives that allow them to increase the size of production budgets to produce content that is of high quality. The award-winning Canadian drama and factual programming that is being bought around the world attests to both the efficiency and professionalism of independent producers.

1839   We encourage the Commission to consider implementing a mechanism within the LPIF that would provide broadcasters with an incentive to work with local independent producers.

1840   Certainly we believe that local programming should include news programming. However, On Screen Manitoba also believes that to ensure a true diversity of voice all genres should be represented in local programming. This includes, but is not limited to, features and series and documentary fiction and children's format.

1841   Current reporting mechanisms do not provide a breakdown of in-house and independently produced programming on a station-by-station basis.

1842   The Commission's report includes broad indicators of success:

1843   35 percent of reporting stations use the LPIF to begin to expand the broadcast of locally focussed magazine series, documentaries and reality television;

1844   25 percent of reporting stations reported using LPIF funds to purchase at least some programming from local independent producers. We believe that the public should have access to how the funds were spent locally.

1845   In order to truly assess the efficiency of the LPIF, On Screen Manitoba urges the Commission to adopt a transparent and detailed reporting process for stations that benefit from the LPIF.

1846   We agree with the APFC and the APFTQ that reporting should be annual and include a public annual report detailing the use of the funds received, along with a list of the programs used to accumulate the minimal weekly number of hours of local programming by each station benefitting from the LPIF, an annual public report published by the LPIF stating funding amounts accorded to broadcasters by group and type of program.

1847   C'est assez clair que le FAPL a réussi à maintenir et, dans certains cas, augmenter la quantité et la qualité de la programmation locale.

1848   Comme L'APFC, On Screen Manitoba note que parfois le FAPL a aussi servi à produire en région des émissions destinées au réseau plutôt qu'au marché local. On Screen Manitoba ne s'oppose pas forcément à cette pratique -- moyennant un investissement majoritaire et significatif dans les ressources locales, voir dans la commission de l'émission par un producteur indépendant local. Toutefois, en acceptant cette utilisation du FAPL, il semblerait logique d'ouvrir le FAPL à des diffuseurs régionaux ayant un mandat de servir des marchés locaux aussi -- je pense par exemple à des diffuseurs tels TFO et TV5 Canada-Québec, qui ont un mandat de servir les CLOSM.

1849   On Screen Manitoba believes that the 1.5 percent contribution by broadcast distribution undertakings to the LPIF established by the Commission is both reasonable and acceptable.

1850   Further, we believe that both private and public broadcasters should continue to be eligible for LPIF funding.

1851   Before closing, On Screen Manitoba wishes to note the intervention provided by the CMPA. We are also concerned with regard to the erosion of support for feature films within the Canadian broadcast system and, like the CMPA, urge the Commission to hold separate consultations regarding this issue.

1852   En résumé, On Screen Manitoba croit que le FAPL joue un rôle essentiel dans le maintien de la programmation locale, très chère aux Canadiens. Nous croyons que le FAPL doit être renouvelé, car il a agi comme un incitatif efficace à maintenir, et dans certains cas, à augmenter la programmation locale dans des petits marchés.

1853   Nous demandons à la Commission de considérer les actions suivantes pour améliorer le rendement du FAPL :

1854   - La mise en place d'un mécanisme pour inciter les diffuseurs à commissionner et/où acquérir des émissions de tout genre, réalisées par des producteurs indépendants locaux;

1855   - Un processus d'évaluation du FAPL plus transparent et qui inclut des rapports plus détaillés, annuels, publiés par le FAPL ainsi que par les diffuseurs qui en bénéficient;

1856   - Un renouveau de l'intention initiale du FAPL à soutenir les dépenses additionnelles de programmation locale.

1857   Je vous remercie de m'avoir écoutée aujourd'hui.

1858   LE PRÉSIDENT : Merci bien. Nous commencerons avec la conseillère Lamarre.

1859   CONSEILLÈRE LAMARRE: Merci, Monsieur le Président. Merci d'avoir été si patient aujourd'hui avec nous, vous êtes aussi le premier panel totalement féminin qu'on a depuis ce matin. C'est rafraîchissant.

1860   Je vais commencer par toucher un point que vous avez, les trois groupes, distinctement, mais abordé de la même façon, c'est-à-dire la question de la délocalisation de la production, plutôt que de la mise en oeuvre de production locale. Et vous en arrivez tous les trois à la même conclusion en disant : Écoutez, on constate qu'il y a des émissions qui sont produites en région, mais qui sont diffusées pour le réseau et qui ne ciblent pas nécessairement les marchés dans lesquelles ces émissions ont été produites.

1861   Et vous continuez en disant : Écoutez, si c'est pour continuer, il faudrait considérer à ce moment-là élargir la liste des bénéficiaires du FAPL.

1862   Alors, ma question c'est la suivante : Laquelle des deux options vous préférez? Qu'on mette fin à la délocalisation de la production ou qu'on élargisse la liste des bénéficiaires?

1863   Madame Samson?

1864   MME SAMSON : Bien, dans un premier temps, je vous dirais qu'on privilégierait plutôt l'élargissement.

1865   CONSEILLÈRE LAMARRE: O.K.

1866   MME SAMSON : Puisque... Puis, je vais prendre l'exemple de Télé-Québec, parce que c'est dans mon marché. Télé-Québec fait l'acquisition de plusieurs émissions produites en région, et c'est son mandat de le faire. Et je ne vois pas pourquoi, par équité... par souci d'équité, on la priverait de bénéficier du fonds. Et nous pensons que si le Conseil détermine les genres admissibles, que ça devrait être assez équitable puis il ne devrait pas y avoir d'abus. C'est-à-dire les émissions d'intérêt national.

1867   Moi, je redoute qu'un jour, quelqu'un nous dise que de faire la captation d'une partie de hockey des Sénateurs d'Ottawa c'est une production locale.

1868   Parce que si c'est n'importe quoi, ça va être n'importe quoi... Mais si le Conseil lève la barre pour cette deuxième vie au fonds en disant, un...

1869   D'ailleurs, dans notre mémoire c'est ce qu'on propose, c'est qu'il y ait une partie du fonds qui s'en aille aux nouvelles locales. C'est ça que les gens veulent.

1870   CONSEILLÈRE LAMARRE: Je vais revenir là-dessus.

1871   MME SAMSON : O.K.

1872   CONSEILLÈRE LAMARRE : Mais pour l'instant, vous, ce que vous me dites, c'est que vous préféreriez l'élargissement, mais balisé?

1873   MME SAMSON : Balisé, oui.

1874   CONSEILLÈRE LAMARRE: O.K.

1875   MME LAGACÉ : Bien, pour notre part, également... puis qu'on fait beaucoup... Certains des diffuseurs, TFO et TV5 Canada, également, ce sont des diffuseurs qui nous... avec qui on travaille beaucoup et pour qui... qui représentent des contenus aussi pour la francophonie canadienne.

1876   Alors, ils touchent aux régions et à ce moment, bien, ils n'ont pas accès à ce fonds. Et cela aiderait beaucoup à faire... à voir un reflet des différentes régions à travers le Canada.

1877   CONSEILLÈRE LAMARRE: Oui.

1878   MME MATIATION: Nous également, on est pour un élargissement pour des raisons très similaires à celles que Suzanne a... Suzette a mises en avant.

1879   CONSEILLÈRE LAMARRE : Et dans votre cas, contrairement à l'ensemble de vos collègues, j'imagine que vous auriez la même opinion aussi, du côté de la production anglophone?

1880   MME MATIATION: Oui, tout à fait, on a des producteurs qui travaillent de la même façon, oui.

1881   CONSEILLÈRE LAMARRE: Donc, vos collègues seraient pas d'accord, mais définitivement l'APFTQ et l'APFC, vous avez principalement fait vos commentaires au niveau de la télévision francophone, alors...

1882   Oui, Madame Samson?

1883   MME SAMSON : Contrairement à mes collègues ici, j'aurais peut-être une réserve sur TV5, parce que j'aurais préféré que le fonds soit réservé aux diffuseurs conventionnels.

1884   Alors, si on ouvre à TV5, on ouvre à toutes les stations de... tous les propriétaires de signaux. Et je pense que là, ça serait trop large, donc, ça risque d'être plus du saupoudrage qu'autre chose. Mais de continuer d'encourager les stations conventionnelles.

1885   CONSEILLÈRE LAMARRE: C'est noté.

1886   MME MCNEIL : Je voudrais compléter en disant qu'effectivement, si on est pour l'élargissement, il faut bien évidemment qu'il soit balisé.

1887   Pour répondre à la question de TV5, nous l'avons inclus parce que... compte tenu de la... du très peu de chaînes francophones disponibles pour les communautés vivant en situation minoritaire. Alors, voilà pourquoi on a inclut TV5 dans notre principe d'élargissement.

1888   CONSEILLÈRE LAMARRE: Donc, ce serait pour... Pour vous, l'élargissement à TV5, ça serait une façon de procurer au CLOSM francophone une diversité des voix?

1889   MME MCNEIL : Tout à fait.

1890   CONSEILLÈRE LAMARRE: Aussi, soit directement... Donc soit explicitement ou implicitement, vous avez inclus dans vos mémoires et vos présentations une demande à l'effet qu'il devrait y avoir un incitatif quelconque pour qu'il y ait de la production locale qui soit faite par les producteurs indépendants.

1891   Alors, Madame Samson, je vais commencer en vous posant la question directement à vous. Est-ce que la proposition que l'APFTQ a fait dans son mémoire, de scinder le fonds pour qu'il y ait une portion qui soit réservée pour la production indépendante de genre autre que les nouvelles, est-ce que c'est l'incitatif auquel vous faites référence?

--- Off microphone

1892   CONSEILLÈRE LAMARRE: Votre microphone, s'il vous plaît, Madame Samson...

1893   MME SAMSON : Je n'appellerais pas ça un incitatif, puisque ce qu'on dit, c'est que si on a bien compris les mémoires puis les interventions diverses qui ont été faites devant le Conseil, les gens veulent des nouvelles locales. Ils en veulent. Donc, on pense qu'il y a un minimum du fonds qui devrait être octroyé aux diffuseurs qui ont réellement l'intention d'améliorer ou d'augmenter leurs nouvelles locales. Dans un premier temps, c'était l'objectif louable qui était poursuivi à la base.

1894   Deuxièmement, un autre fonds... l'autre partie du fonds qui servirait à d'autres genres d'émissions... C'est le bout balisé... mais qui pourrait être fait par des producteurs indépendants, idéalement, mais il y a des réseaux qui ont, dans des régions, des facilités de production dont ils pourraient vouloir se servir.

1895   Tant et aussi longtemps que ce sont des genres d'émissions qui sont balisées il n'y a pas de problème, mais idéalement... Il est évident que pour les producteurs indépendants en région ça représente un potentiel intéressant, surtout parce que ces émissions-là risquent d'être diffusées sur l'ensemble du réseau. Et ça, c'est certainement un plus pour les producteurs indépendants.

1896   CONSEILLÈRE LAMARRE : Et votre proposition, dans votre mémoire, Madame Samson... Vous l'avez qualifiée, mais vous ne l'avez pas quantifiée. Est-ce que vous allez être en mesure de nous fournir un petit peu plus de détails sur quel genre de formule on devrait adopter, si on adoptait votre solution?

1897   Mme SAMSON : Bien, honnêtement, Madame la Conseillère, quand on n'a pas accès aux données - moi, ça fait tellement longtemps que j'ai pas géré une salle de nouvelles. Puis, je sais plus comment ça coûte faire un bulletin de nouvelles aujourd'hui.

1898   Donc, qu'est-ce que ça peut vouloir dire si une station a comme condition de licence de faire cinq heures par semaine et qu'en allant, en accédant au fond du FAPL, son objectif, c'est d'en faire six?

1899   Je ne sais plus combien coûte l'heure de plus, parce qu'on a pas accès à ces chiffres-là, puis je ne voudrais pas vous lancer des pourcentages...

1900   CONSEILLÈRE LAMARRE: O.K.

1901   Mme SAMSON : ... 30/70 - 40/ 60 - 50/50, sans bien comprendre le coût lié à augmenter la qualité et la quantité des nouvelles locales.

1902   CONSEILLÈRE LAMARRE: O.K.

1903   O.K. Je comprends votre dilemme, mais...

1904   Mme D'AMOURS : Est-ce que je peux compléter?

1905   C'est que si, avec les informations qui sont demandées à l'ensemble des chaînes, on pourrait avoir ce genre d'informations. C'est ce que nous souhaitions d'ailleurs quand on a demandé des informations additionnelles.

1906   CONSEILLÈRE LAMARRE: Oui.

1907   Mme D'AMOURS : Si on avait pu avoir des informations à l'effet que le pourcentage réservé au bulletin de nouvelles et le pourcentage réservé aux autres, avait été identifié, ça serait très facile de vous répondre aujourd'hui.

1908   CONSEILLÈRE LAMARRE: O.K. Donc vous nous invitez...

1909   Mme D'AMOURS : Alors, c'est pour ça que les informations qu'on demande tous les trois, à savoir les informations plus précises concernant l'utilisation de ces fonds-là, nous aiderait justement à mieux vous faire des recommandations.

1910   CONSEILLÈRE LAMARRE : Oui. Et je vais venir sur les critères un petit plus précis de rapport. Mais ce que je comprends, c'est que vous nous invitez à analyser ces données-là pour nous-mêmes en tirer les conclusions qui s'imposent, si on décide d'aller dans cette voie-là.

1911   Madame Lagacé, vous vouliez peut-être ajouter quelque chose?

1912   Mme LAGACÉ : Oui, également.

1913   Bien, autant que les nouvelles sont très importantes égales en région, c'est sûr qu'on veut augmenter le montant des nouvelles.

1914   Mais, ils ont déjà été augmentés. Puis, déjà, je peux pas dire si ça satisfait à 100 pour cent. Mais déjà, c'est une grande amélioration.

1915   Mais pour nous aussi, la diversification de gens qui sont très importants. Parce qu'en région, on a beaucoup moins, on a très peu la chance d'avoir des émissions d'humour, d'avoir des émissions dramatiques ou les émissions également dans les autres genres. Même pour le documentaire aussi, qui peuvent également toucher et déclencher plusieurs projets.

1916   Je pense qu'on devrait considérer aussi la diversification des genres aussi avec les nouvelles.

1917   CONSEILLÈRE LAMARRE: Mais à ce moment-là, quel genre d'incitatif est-ce qu'on pourrait établir pour justement faciliter ce développement-là, selon vous?

1918   Mme LAGACÉ : Oui, bien, il y a la proposition des seuils, qui sont très intéressants. On pourrait toujours avoir les seuils pour les nouvelles, mais aussi des seuils pour un autre type de programmation sans nécessairement cibler le pourcentage direct de documentaires, dramatiques ou variétés, mais au moins, avoir une enveloppe qui puisse encourager également la production dans... la diversification également. Je pense à des émissions jeunesse aussi.

1919   On en a pas qui reflètent la réalité de nos jeunes. Et face à la construction identitaire, c'est très important. Tout ce qui leur vient, vient d'ailleurs.

1920   CONSEILLÈRE LAMARRE: Madame Matiation, est-ce que vous voulez ajouter?

1921   Mme MATIATION : Oui. Juste pour souligner ce que Suzette a amené aussi, un mécanisme avec des seuils potentiellement.

1922   Mais encore une fois, pour souligner l'importance de comprendre la programmation locale, non seulement du point de vue des nouvelles.

1923   Oui, les nouvelles, c'est la première chose. Mais ensuite, les populations locales, elles ont le droit et le besoin et l'envie de voir leur monde représenté sur les ondes aussi. Que ce soit les émissions de variétés ou les émissions de jeunesse par exemple, aussi bien en anglais qu'en français.

1924   CONSEILLÈRE LAMARRE: Et pour ma prochaine question, je vais continuer avec vous, Madame.

1925   J'ai cru comprendre que tout le monde ici souhaitaient que Radio-Canada puissent continuer à être éligible au FAPL.

1926   Cependant, il y a des intervenants qui s'objectent.

1927   Une des bases que j'entends pour soutenir l'éligibilité de Radio-Canada, c'est le fait que dans les... dans certains CLOSM, c'est en fait le seul signal francophone disponible.

1928   Mais, en même temps, qu'est qu'on répond à ceux qui nous disent que c'est dans le mandat de Radio-Canada avec ou sans FAPL d'offrir cette programmation-là dans les deux langues officielles à travers le pays.

1929   Mme MATIATION : Bien, c'est évidemment une question très difficile à répondre. Mais moi, dans ce cas-là, je regarde... je regarde la politique canadienne envers les communications. Ce qui est de regarder l'ensemble du système et de faire marcher les parties pour que l'ensemble réponde à ses principes de bases, diversité de voie, de dualité linguistique à travers le pays en dépit du défi de taille d'un village à l'autre.

1930   Donc, parfois on est obligé de demander aux parties de faire... certaines parties de faire une plus grande contribution pour s'assurer un ensemble logique et qui respecte ce genre de philosophie.

1931   Mme LAGACÉ : Oui. Moi, j'ajouterais que le mandat de Radio-Canada, ou il est très large et le pays est très large et les communautés aussi sont... il y en a plusieurs et ils ont tous chacun leurs spécificités.

1932   Donc, autant que... oui, Radio-Canada a un mandat. Mais aussi, quand le FAPL, si je me souviens bien, quand il a été instauré, Radio-Canada avait un manque à gagner de 40 pour cent qui... et le FAPL est venu combler une partie de ce 40 pour cent-là d'un manque qu'ils avaient de puis longtemps.

1933   Et donc, maintenant, là c'est plutôt, je pense que ça a répondu à ce besoin-là. Mais maintenant, je pense qu'il faut regarder plus vers l'avenir et la construction d'une production forte par région.

1934   Et si on nous enlevait, présentement avec cet appui également à Radio-Canada, on perdrait énormément. Parce que c'est notre... c'est notre diffuseur principal. C'est celui avec qui on fait affaire.

1935   Et les autres diffuseurs, si on ... qui préféreraient voir retirer cette... le FAPL de Radio-Canada, ce ne sont pas des diffuseurs avec qui on fait... qu'on produit avec beaucoup. Parce que souvent, ils sont beaucoup plus centrés vers Montréal.

1936   Et quand on... et même quand on les approche, et il y a parfois des projets intéressants qu'on peut leur proposer, ils sont très... c'est très, très axé vers Montréal.

1937   Et quand on leur amène un contenu très régional, c'est trop, ce n'est pas assez vendeur pour eux, sur leur marché.

1938   CONSEILLÈRE LAMARRE: Si je comprends bien, si... vous estimez que si le FAPL était retiré à Radio-Canada, ça compromettrait la reconsolidation des acquis en termes de programmation locale dans les régions hors Québec?

1939   Mme LAGACÉ : Vous avez très bien compris.

1940   CONSEILLÈRE LAMARRE: Madame Samson?

1941   Mme SAMSON : Bien, je vois pas pourquoi on exclurait Radio-Canada. D'abord, ils font de la production régionale. Ils font des nouvelles régionales, puis effectivement dans certains marchés, ils sont les seuls à le faire.

1942   Cependant, je pense que le Conseil serait en droit de s'attendre à ce que Radio-Canada se comporte de façon exemplaire en faisant de la programmation supplémentaire régionale. Mais vraiment de la production régionale et pas de la fausse production régionale pour acheter un show de Montréal qu'ils veulent, puis qu'ils vont envoyer tourner dans un studio de Québec pour justifier un financement qui, à mon avis, n'est pas approprié dans ces cas-là en particulier.

1943   CONSEILLÈRE LAMARRE: C'est noté.

1944   Mme McNEIL : Est-ce que je peux compléter? Je suis absolument d'accord avec ce que Claire Samson vient de dire, bien évidemment, puisqu'on l'a dit dans notre allocution et dans notre mémoire.

1945   Mais, parmi les quelques données qu'on a pu obtenir, il y a quand même 24 productions régionales qui ont été faites grâce au FAPL.

1946   Alors, est-ce que c'est en plus ou en moins de ce qui doit se faire régulièrement?

1947    On n'est pas en mesure de le dire pour les raisons que vous savez.

1948   Et puis, je voudrais quand même dire qu'aujourd'hui, c'est la première journée d'audience, et qu'on a vu une belle volte-face de la part de Bell qui est tout à fait circonstancielle par rapport à Radio-Canada.

1949   CONSEILLÈRE LAMARRE: Je vous remercie.

1950   La question des critères, de rapport, le prix détaillé de la part des bénéficiaires du FAPL, vous avez fait un petit peu un copié-collé d'une proposition à l'autre et c'est correct. Ça nous facilite la tâche.

1951   Mais quand je regarde ce que vous proposez, et je vais prendre comme document de référence celui de l'APFTQ, c'est au paragraphe15. Vous parlez du titre de l'émission de catégorie et du nombre d'épisodes, etc.

1952   Moi, je lis ça et j'ai l'impression que je me retrouve face à un rapport d'émissions qui ne sont nécessairement pas des nouvelles.

1953   Est-ce que ce genre de rapport-là pourrait être adaptable ou adapté à des émissions de nouvelles? Et dans ce cas-ci, comment?

1954   Parce que vous avez vous-même mentionné aujourd'hui, on l'a entendu pas mal toute la journée, que la production locale numéro un, et que les gens veulent, ce sont des nouvelles.

1955   Donc, à ce moment-là, comment est-ce que votre proposition de rapport détaillé s'adapte aux émissions de nouvelles?

1956   Madame Samson?

1957   Mme SAMSON : Je pense que dans le cas des émissions de nouvelles, il y a des statistiques qui existent sur le... bien, il y a des conditions de licence, chez les réseaux, à savoir combien de nouvelles locales ils doivent faire à tous les jours, à toutes les semaines ou les moyennes ou je sais pas quoi.

1958   Alors que dans leur rapport, ils disent: «Notre condition de licence, c'est tant d'heures de nouvelles locales. On a fait tant d'heures de nouvelles locales. On a présenté X nombres de topos locaux.»

1959   Et ainsi, les administrateurs du fonds pourraient voir de façon réelle, année après année, ou saison après saison, les améliorations.

1960   Ça, bien sûr, naturellement, ça ici, c'est plus pour des émissions non information. Mais, je suis convaincue que les bénéficiaires ont des statistiques sur le nombre de minutes de nouvelles qu'ils font à tous les jours, le nombre de topos, etc., et ils le savent. Mais ils pourraient au moins justifier le bien-fondé du financement qu'ils reçoivent du fond.

1961   CONSEILLÈRE LAMARRE: Madame McNeil? Madame Lagacé? Non? O.K.

1962   Ce sont toutes mes questions, Monsieur le Président. Merci.

1963   Merci.

1964   LE PRÉSIDENT : Merci.

1965   Conseillère Lamarre?

1966   CONSEILLÈRE POIRIER : Non, Poirier!

1967   LE PRÉSIDENT : Poirier, excusez.

1968   CONSEILLÈRE POIRIER : Oui. I am used to that. Je suis habituée!

1969   Alors bonjour Mesdames.

1970   Vous savez que notre formule de répartition des argents du fond est basée sur les niveaux de dépense. O.K.?

1971   Et beaucoup de gens semblent se questionner à savoir si c'est la meilleure façon de fonctionner.

1972   Est-ce qu'on ne devrait pas aller plutôt vers une augmentation du volume de... une présentation de nouvelle ou d'émission plutôt que d'y aller sur des dépenses?

1973   Les dépenses, bien, ça nous invite à dépenser de l'argent sans nécessairement aboutir à des résultats.

1974   Alors quel est, brièvement, parce que la journée s'étiole, votre point de vue là-dessus? Est-ce qu'on serait mieux de changer notre façon de procéder?

1975   Mme McNEIL : Écoutez, nous, vraiment, on n'a pas réfléchi à la question.

1976   CONSEILLÈRE POIRIER : O.K.

1977   Mme McNEIL : C'est extrêmement technique ce que vous posez.

1978   CONSEILLÈRE POIRIER : Parfait. Alors, pas de réponse. Vous êtes pas obligée d'en donner. Ceux qui en ont, vous y allez.

1979   Est-ce que vous avez une réponse à l'APFTQ?

1980   Mme D'AMOURS : Bien, moi qui dois travailler avec ces chiffres-là régulièrement, c'est sûr qu'au niveau des nouvelles, par exemple, c'est plus difficile à cerner, parce que, effectivement, on peut mettre plus d'argent en nouvelles.

1981   Est-ce que les coûts de faire des nouvelles, c'est combien on en met de plus en pourcentage pour avoir une même qualité, ou pour avoir une qualité augmentée?

1982   Tandis que quand on est dans les autres genres, par exemple, c'est pas le nombre qui va faire... le nombre d'heures qui va faire une différence. Mais la qualité va être vraiment touchée par la dépense qu'on va en faire.

1983   Alors là encore, on a deux formes de comparaisons.

1984   Ce que, instinctivement, j'aurais envie de vous dire qu'en nouvelles, il devrait y en avoir plus, en heures.

1985   Et puis, instinctivement, je vous dirais, si on veut avoir une bonne qualité, et donner ce qu'il faut aux producteurs régionaux pour faire des bonnes émissions, c'est de leur donner un bon budget, quelque chose qu'ils soient capables, qu'ils vont faire d'autres choses que simplement un show de chaises.

1986   Mme SAMSON : Votre question, Madame Poirier, soulève une question dans ma tête. Le fond, lorsqu'il est attribué, est-ce que c'est sur une base purement mathématique ou si les détenteurs de licence doivent déposer un plan au gestionnaire du fonds qui dit: «Nous aimerions avoir tant d'argent, parce qu'on veut engager un journaliste de plus, un caméraman de plus. On veut faire un bulletin la fin de semaine. On veut faire deux documentaires.»

1987   Ces gens-là, leur grille de programmation, ils la font pas à la petite semaine. J'imagine que les détenteurs, pour aller chercher quelques millions, ils pourraient déposer un plan qui permettrait aux gestionnaires de dire: «Bien ça, ça marche, ça, ça marche pas.»

1988   Et peut-être que si un tel plan existait, peut-être qu'il y a des choses insensées qui se seraient pas produites.

1989   CONSEILLÈRE POIRIER : Oui.

1990   Mme McNEIL : Bon, vous comprendrez que je ne suis pas là pour nécessairement répondre aux questions.

1991   CONSEILLÈRE POIRIER : Ça veut dire, votre question reste quand même un peu ambigüe entre le volume et l'argent à dépenser.

1992   Dans certains cas, c'est de l'argent qui évalue la qualité de ce qui est présenté dans d'autres cas, ça peut être la quantité.

1993   Donc, peut-être pour les nouvelles, par rapport à la programmation locale, autre que nouvelles, on pourrait avoir des critères différents. C'est ce que je retiens de votre point-de vue.

1994   Vous sembliez dire aussi que vous vouliez qu'on revienne aux sources du fond, mais les sources du fonds, c'est sûr, c'était «incremental». Il y a pas vraiment de bon terme français pour dire une augmentation.

1995   Mais le fond au départ était à 1 pour cent, un .5 a été ajouté parce qu'il y avait, on dit, une crise économique.

1996   Est-ce que ça veut dire aussi que vous êtes d'accord avec le fait qu'on devrait revenir à 1 pour cent?

1997   Mme SAMSON : Non. Pas du tout. Le 1.5...

1998   CONSEILLÈRE POIRIER : Mais, comment le justifier d'abord, le .5? On était capables de le justifier avant.

1999   Mme SAMSON : A cause de la crise.

2000   CONSEILLÈRE POIRIER : Oui.

2001   Mme SAMSON : Écoutez. C'est sûr que là, c'est plus difficile à justifier.

2002   CONSEILLÈRE POIRIER : Oui.

2003   Mme SAMSON : Mais naturellement, en tout cas, je vais vous donner mon opinion personnelle. Moi, je me suis habituée à le payer. D'ailleurs, ça m'a pris des mois avant de m'apercevoir que je payais ça. Je m'en étais pas aperçu vraiment.

2004   Mais maintenant que je suis habituée, ça me dérangerait... je sais pas... c'est pas majeur. Mais je pense que l'important pour nous, c'est l'utilisation optimale de ce fonds-là.

2005   S'il est à 1.5 et que le Conseil décide de le laisser à 1.5, je pense que le Conseil serait bien placé pour lever la barre un peu aux bénéficiaires.

2006   CONSEILLÈRE POIRIER : Autres choses à ajouter?

2007   Mme LAGACÉ : Oui. Compte tenu des coupures que nous avons connues tout récemment, également, auprès de notre diffuseur public, et je pense que cela viendrait... nous allons ressentir, la production en région va donc souffrir d'un manque de production.

2008   Et si le FAPL n'y est plus, je veux dire, les possibilités seront très, très limitées.

2009   CONSEILLÈRE POIRIER : O.K.

2010   Je reviens sur une position que vous avez dite.

2011   Vous parlez au paragraphe16 de l'APFTQ, que si le Conseil accepte que le FAPL puisse financier des productions dites régionales, diffusées uniquement sur le réseau, bon, ils devraient le faire pour tout le monde.

2012   Mais dans son essence aussi, le fond a été fait pour les diffuseurs traditionnels.

2013   Et là, je veux pas exprimer un point de vue. Je veux soulever une cohérence ou une incohérence de votre part.

2014   Parce que, à partir du moment où on veut l'offrir à d'autres diffuseurs, que ce soit Télé-Québec parce qu'ils vont un peu la même chose que Radio-Canada, on peut se dire, bien, on va l'offrir à la télé communautaire. On va l'offrir aux télés religieuses. On va l'offrir aux télés ethniques.

2015   On peut l'ouvrir à beaucoup de monde.

2016   Or, au début, ça a été fait pour répondre au besoin des chaînes traditionnelles, et une chaîne traditionnelle offre des nouvelles. Ceux que vous dites n'offrent pas de nouvelles.

2017   Alors je repose la même question que madame Lamarre, est-ce que vous préférez qu'on augmente le nombre de récipiendaires ou vous préférez qu'on réduise les conditions avec lesquelles la SRC dépense de l'argent au risque... au risque de devoir l'ouvrir aussi à d'autres?

2018   Mme SAMSON : Nous souhaitions qu'il soit élargi et ouvert aux autres diffuseurs conventionnels qui, dans les faits, font appel et reflètent sur leur réseau des réalités régionales quand même.

2019   Et c'est le cas de Télé-Québec.

2020   A notre point de vue, je comprends qu'à l'extérieur du Québec, souvent TV5...

2021   CONSEILLÈRE POIRIER : Même s'ils n'ont pas de nouvelles? Ils n'offrent pas le service de nouvelles.

2022   Mme SAMSON : Même s'ils n'ont pas de service de nouvelles locales. Dans les autres provinces, souvent TV5 est le seul autre signal francophone dont les résidents disposent.

2023   Mais dans le cas du Québec, nous l'avions limité au conventionnel.

2024   CONSEILLÈRE POIRIER : Est-ce qu'il y a d'autres points de vue?

2025   Mme MATIATION : Oui. Je voudrais juste souligner encore une fois que cette notion qu'est la programmation locale, ce n'est pas que des nouvelles et que, dans certaines communautés...

2026   CONSEILLÈRE POIRIER : O.K.

2027   Mme MATIATION : ... c'est vraiment important d'avoir cette diversité.

2028   CONSEILLÈRE POIRIER : Oui. J'ai presque terminé, Monsieur le Président.

2029   On pense quand même, et ça a été soulevé quelquefois, qu'il y a des stations qui sont profitables et qui reçoivent quand même le LPIF.

2030   Est-ce qu'on devrait pas mettre une sorte de plafond à la profitabilité de certains récipiendaires du fond à ce moment-ci?

2031   Alors, quelqu'un qui a déjà des profits, on lui donne du LPIF et les profits restent les mêmes. Qu'est-ce que vous en pensez?

2032   Vous avez pas de point de vue sur ça?

2033   Mme SAMSON : Bien un, en ce qui concerne, puisque c'est ouvert également aux diffuseurs publics, la profitabilité.

2034   C'est plus un critère qui s'applique à tout le monde.

2035   Tant et aussi longtemps que l'accès au fond et les argents qu'on reçoit du fond devraient normalement servir à faire plus que les conditions de licence, plus que le minimum requis pour être en affaires.

2036   CONSEILLÈRE POIRIER : Et Radio-Canada proposait une heure de plus. Est-ce que c'est quelque chose qui pourrait être intéressant?

2037   Mme SAMSON : Encore, je vous dirais que je ne suis pas assez familière avec les coûts de production des...

2038   CONSEILLÈRE POIRIER : Parfait.

2039   Mme SAMSON : ... émissions de nouvelles et d'information. Je pourrais pas vous dire si c'est...

2040   Pour l'argent qu'ils reçoivent, est-ce que c'est suffisant ou non? Je ne serais vous dire.

2041   CONSEILLÈRE POIRIER : Ma dernière question va s'adresser à On Screen Manitoba.

2042   Vous avez noté que le LPIF était essentiel pour les minorités francophones situées à l'extérieur du Québec. Je pense que c'est votre point de vue fort.

2043   Qu'est-ce que vous pensez du fait qu'on puisse appliquer la même médecine aux Anglophones du Québec?

2044   Mme MATIATION : Pardon, je crois qu'il y a de bonnes raisons pour faire ça également.

2045   Donc, on est... à distance, on soutient nos collègues en situation minoritaire.

2046   CONSEILLÈRE POIRIER : Il faudrait changer les règles, parce qu'à ce moment-là, ce sont dans des grands marchés. Montréal est un marché beaucoup plus grand que les conditions de base.

2047   Mme MATIATION : Oui, on reconnait ça. Oui, on reconnait ça. Mais on reconnait en même temps que le CMF ou le FMC maintenant, et Téléfilm maintenant commencent à regarder Montréal comme... les Anglophones de Montréal comme une situation linguistique minoritaire.

2048   Disons qu'on est ouvert à la discussion.

2049   CONSEILLÈRE POIRIER : Parfait. Merci beaucoup, Mesdames.

2050   LE PRÉSIDENT : Merci. Et Conseiller Morin?

2051   CONSEILLER MORIN: Merci, Monsieur le Président.

2052   Ma question s'adresse aux trois.

2053   Tous les trois, vous plaidez pour l'élargissement. Dans votre cas, c'est Télé-Québec, dans votre cas c'est TV5.

2054   Mais l'élargissement, ça veut dire un peu la dilution finalement.

2055   Vous avez vu cette pièce que j'ai déposée. Alors, quand on regarde les chiffres pour les Francophones, que ce soit dans le service public, que ce soit pour les entreprises intégrées, que ce soit pour les indépendants, les Francophones, en matière de nouvelles sont largement en-dessous des Anglophones.

2056   Regardez CBC versus la SRC. C'est deux fois moins.

2057   Regardez les entreprises intégrées, anglais, cinq heures par semaine.

2058   Si on regarde les entreprises intégrées du côté francophone, c'est même pas la moitié. Et je ne parle pas des indépendants. Les indépendants font 11 heures. On a vu Pattison ce matin, c'est-à-dire, il y a quelques minutes. On a vu CHCH et CHEK. C'était 11 heures, 12 heures de programmation en nouvelles essentiellement.

2059   Quand on regarde les indépendants, c'est même pas deux heures par semaine.

2060   Alors, moi je sais pas, mais il faut peut-être mettre les priorités quelque part ou avant d'élargir. Ce fond d'amélioration de programmation locale n'existerait pas si les nouvelles n'avaient pas été menacées.

2061   C'est les salles de nouvelles et les entreprises de diffusion de nouvelles qui étaient menacées. C'est pour ça que le Conseil est intervenu.

2062   Là, vous plaidez pour un élargissement alors que les sommes consacrées aux nouvelles par semaine dans ces trois secteurs, sont bien en-deçà des niveaux atteints par les Anglophones.

2063   Et des nouvelles, je vous rappellerai simplement, au mois de juillet dernier, la FCC aux États-Unis a fait une vaste enquête sur les nouvelles locales.

2064   Ce qu'ils ont constaté, c'est que depuis sept ans, les nouvelles locales aux États-Unis ont augmenté de 35 pour cent. Il y a donc un marché potentiel important pour les nouvelles locales.

2065   Et pour les Francophones, est-ce que c'est pas mieux d'avoir un produit d'encrage important que sont les nouvelles locales, plutôt que d'éparpiller les fonds dans toutes sortes d'émissions qui peuvent avoir leur raison d'être et qui peuvent encourager les producteurs locaux?

2066   Mais en termes de priorité pour nous, est-ce qu'on devrait pas, compte tenu des résultats qu'on a devant vous, qu'on a devant nous, est-ce qu'on devrait pas d'abord et avant tout mettre la priorité sur les nouvelles locales pour dépenser les argents du public?

2067   Il me semble que, enfin, c'est ma question.

2068   MME SAMSON : Monsieur Morin, on partage votre opinion. L'origine et l'objectif original étaient louables, augmenter les nouvelles locales. Nous sommes d'accord. On ne s'est pas bien compris. Nous ne plaidons par pour un élargissement.

2069   Nous vous disons que si ce type de financement là est acceptable aux yeux du Conseil, avec les deux exemples que j'ai donnés à Radio-Canada, bien, par souci d'équité, cette même possibilité-là devrait être ouverte à tous.

2070   Et même en élargissant, on dit, tout en limitant à des genres d'émissions bien précis, qu'on ne se ramasse pas avec n'importe quoi. Parce que là, de toute évidence, on se ramasse avec un peu de n'importe quoi.

2071   Mais il est évident dans notre tête que la priorité doit être placée sur les nouvelles locales. Je pense que c'est ça que les gens vous disent qu'ils veulent, c'est des nouvelles locales.

2072   MME LAGACÉ : Oui, nous avons... Disons, si je pense, en Acadie, nous avons un bulletin d'une heure à tous les jours à Moncton, et je veux dire les nouvelles ont augmenté avec le FAPL. Également, ils ont ajouté des services à la fois à la radio, plus de ressources, et ça, on a vu une différence. Et puis c'est sûr que les nouvelles sont très importantes, mais on ne veut pas négliger non plus l'augmentation de ce côté-là.

2073   Mais pour la programmation, c'est aussi... Bon, nous, on travaille surtout en production indépendante, et c'est ce qu'on se préoccupe, d'avoir une production beaucoup plus enrichie et de permettre aux gens en région de se voir à l'écran. Parce que s'ils ne se voient qu'à travers les nouvelles, ils n'existent pas, l'expression culturelle non plus, que ça soit par le documentaire, par la dramatique ou tous les autres genres qui peuvent s'exprimer, et ça, ça dépend des stations locales aussi, qui vont choisir la programmation qu'ils désirent.

2074   Mais je pense que le public aussi demande ça, et il nous cherche à l'écran. Et quand on diffuse des documentaires, il cherche à les avoir parce qu'aussi, on n'a pas des cases régulières dans lesquelles se trouvent les documentaires, et c'est un peu disparate selon la programmation, tout dépendant de la saison. Mais c'est très important pour nous.

2075   Si tu veux compléter?

2076   MME McNEIL : Oui. Je voudrais revenir à l'évolution des nouvelles locales et de l'agrégation que vous avez proposée dans votre tableau.

2077   Dans les données qui ont été versées au dossier public vendredi, moi, ce que je vois, c'est que les télévisions francophones ont tout de même augmenté légèrement. Ce n'est pas parce qu'ils sont mauvais élèves dans votre tableau qu'il n'y a pas eu un effort conséquent qui a été fait d'augmentation, que ça soit chez Télé Inter-Rives, Groupe TVA, V Interactions ou Radio-Canada, français, bien sûr. Donc, il y a quand même eu une augmentation de nouvelles locales, donc, une certaine efficience, on pourrait dire.

2078   MME MATIATION : Je voulais aussi juste noter qu'une heure de nouvelles de qualité vaut cinq heures d'une qualité faible. Donc, on ne peut pas uniquement regarder le nombre d'heures. On doit aussi regarder la qualité de l'émission.

2079   Donc, c'est là où... On a discuté légèrement, mais on n'est pas compétent pour parler de ça. Le coût actuel des nouvelles, je ne sais pas, moi, combien ça coûte actuellement.

2080   Mais ce que je voudrais voir, moi, chez moi, c'est une heure de qualité de nouvelles, et puis oui, en plus, si je pouvais voir une production localement faite qui me touche directement. Que ce soit un documentaire ou que ce soit une émission de jeunesse que je regarde avec ma famille, bien, j'en serais d'autant plus contente.

2081   CONSEILLER MORIN : Merci. Ce sont mes questions, Monsieur le Président.

2082   LE PRÉSIDENT : Merci beaucoup. Ça conclut l'intervention.

2083   LA SECRÉTAIRE : Merci.

2084   THE CHAIRPERSON: We have somebody else today?

2085   THE SECRETARY: Yes.

2086   For the record, I would just like to ask if Peter O'Connell is in the room. He is not.

2087   So we will now proceed with Mr. Blake Roberts, who is appearing via videoconference from Windsor.

2088   Hi, Mr. Roberts. Can you hear me well?

2089   MR. ROBERTS: Yes, I can.

2090   THE SECRETARY: Perfect. Thank you.

2091   So you can begin. You have five minutes to make your presentation.

PRESENTATION

2092   MR. ROBERTS: Okay. Well, thank you for the invitation to appear before you and for your cooperation in arranging this presentation by teleconference.

2093   I would like to commend Jonathan Sinasac here at the University of Windsor's Centre for Teaching and Learning for his work on this end.

2094   I am a sessional instructor of Political Science and Journalism at the University of Windsor. I also teach courses in Canadian Studies at Wayne State University in Detroit. I have an MA in political science and I'm completing my PhD studies as well.

2095   If you just indulge me for a moment, I would like to establish my journalistic credentials too because I worked in both private and public sector journalism from 1990 until 2003. I started in private radio and I finished my career in public broadcasting. I have been a reporter, a videojournalist, an editor, a producer, a host, did lots of things.

2096   In my academic work I study the role of journalists in political development and I would say that I believe strongly in the liberal-pluralist model of journalism wherein more voices are better, and competition between journalistic organizations is, on the whole, a benefit to the public discourse.

2097   Now, specific to my presentation today, here at the University of Windsor for the past three years I have been involved with the development of a new Digital Journalism -- DJ as we call it -- degree here, a program of which I am currently the Interim Academic Coordinator. I will return to the significance of the DJ program and the LPIF in a moment.

2098   Before I get to my comments on the LPIF specifically, I note that I have had discussions with elected officials, members of Windsor City Council. I have also discussed the LPIF with members of the university community here, friends and colleagues and average citizens, and I think I can say with confidence that there is a great deal of support in this community for maintenance of the LPIF, specifically money directed toward CBC Windsor.

2099   Which brings me to the LPIF. Most Canadians live within a day's drive of the United States, as I'm sure you know, but they don't visit the U.S. regularly but for shopping and vacations, whereas here in Windsor we are obviously right next door to the United States. We have multiple daily interactions with Americans and their media is blasted across the border.

2100   As I present these remarks I'm sitting in a studio that is less than three kilometres away from WDIV in Detroit. That's Channel 4 in Detroit. In light of this American media inundation, as I would call it, the maintenance of local television is vital to inform us about local issues and to tell our stories to ourselves and to the rest of the country.

2101   According to the CBC, the LPIF has enabled CBC Windsor to expand its television footprint. A local 10-minute insert has been added at 10:55 every evening, which has expanded overall TV content, according to my math, by about 17 percent here at the CBC station. This insert does contain new material produced by journalists who would not otherwise be covering stories breaking in the evening, without the LPIF.

2102   Overall, the CBC has increased its full-time equivalent (FTE) employee complement by about 20 percent during the two years of LPIF funding. Anecdotally I can confirm that there are more stories from this area making it onto national news programs -- I've seen that and have made that observation -- and CBC Windsor, in my opinion, has become more relevant in the past year or so than it was in the years immediately preceding the LPIF.

2103   This may, of course, have to do with other changes above and beyond LPIF funding, such as new leadership and the hiring of new, young journalists, but this newfound relevance, as I've observed it here anyway, of CBC locally has at least coincided with LPIF funding.

2104   In my discussions with CBC managers I have heard several times that without the LPIF, CBC Windsor's television newscast could face severe cutbacks. This eventuality is difficult to verify because since the CBC has received LPIF funding for two years it has not scaled back its news footprint, and since the CBC will not tell me its annual budget for CBC Windsor I cannot assess whether the $1.4 million it received under the LPIF in 2011-2012 is such a significant amount that the loss of it would necessitate the scaling back or even the elimination of the local news show here.

2105   So it's difficult for me to know whether the CBC's, what I would call, veiled threat to cut back Windsor without the LPIF is genuine. I can tell you, however, that there is precedent for the slashing and burning of news programming here. The CBC took away the local news show and turned Windsor into a bureau from 1990 to 1994. So I have little choice but to take the CBC at its word that without LPIF funding there could be a serious cutback to CBC programming here.

2106   And I find that disturbing because if CBC Windsor loses its LPIF funding and does cut back, we will lose one more source for information and one less opportunity to tell stories about this vital part of the country to the rest of Canada.

2107   As an educator interested in helping the University of Windsor's digital journalism students get experience and potentially part-time employment, I fear we would lose such opportunities, opportunities for our students that the CBC, by the way, has shown strong interest in providing.

2108   In conclusion, the CBC has met its commitment to the LPIF, I think. I have tremendous confidence in the local and regional CBC leadership. The CBC has a relatively new and very impressive Managing Editor here in Windsor who has brought vigour and renewal to the station.

2109   With the continuation of the LPIF, I think CBC Windsor television has a bright future. I hope that they will expand that late insert into potentially a half-hour newscast and maybe get into weekend programming. I think a vital Canadian source for local news and information will be preserved if the LPIF funding is continued, and of course the digital journalism program at the University of Windsor will continue to have a place where our students can be trained and mentored by outstanding journalists.

2110   So with that, that's my five minutes. Thank you for your time and I welcome any questions or comments that you might have to direct to me.

2111   THE CHAIRPERSON: Does anybody have any questions?

2112   Commissioner Patrone.

2113   COMMISSIONER PATRONE: Hello, Mr. Roberts. Just one question.

2114   MR. ROBERTS: Hi.

2115   COMMISSIONER PATRONE: Did you notice any improvement in the CBC service when the LPIF came into being?

2116   MR. ROBERTS: Yes. I mean in retrospect I can look back and definitely the 10-minute insert didn't exist before. So that's at 10:55 p.m. and then runs to 11:05. There's definitely an increase in content. About 20 percent of that 10-minute insert is new content.

2117   There is at least one more journalist, probably a video journalist, who is covering events at night that was not previously out on the street, so this would be covering breaking news, covering a lot of meetings process stories, City Council and such, occur in the evening, so I have certainly seen that.

2118   As I said, anecdotally I have observed that there are more stories appearing on The National and Newsworld and such and I can compare that. We have a private sector affiliate here with CTV and I can say that I have never seen a report from this area produced by someone locally that has made it onto the CT National News for example.

2119   So yes, I would say that I have seen, at least anecdotally, improvements.

2120   COMMISSIONER PATRONE: Of the new --

2121   MR. ROBERTS: In addition to the 10-minute insert.

2122   COMMISSIONER PATRONE: Yes. Of the new content, of the 10 minutes, how much of that is local?

2123   MR. ROBERTS: That is entirely local.

2124   COMMISSIONER PATRONE: Is it one pack, is it one --

2125   MR. ROBERTS: Some of that is taken from the 6 o'clock show, but all of that 10-minute insert is virtually local coverage, local stories and then of that 10-minute insert I would estimate about 20 percent of it is entirely new stories, so whatever it is, breaking news down here or a meeting or something like that.

2126   COMMISSIONER PATRONE: So two minutes of the 10-minute insert is local?

2127   MR. ROBERTS: Yes. I think we have to keep in mind that there is at least one commercial break in there, too, so to get down to the specifics, but I would estimate that you are probably seeing three, three and half, maybe four minutes -- you know, it varies of course depending on what stories are out there, but that may be a packaged report, it might be a voiceover, it might be a new copy story. But yes, I think that's -- yes, three minutes...

2128   COMMISSIONER PATRONE: That does not include stuff bumped over from the 6 o'clock?

2129   MR. ROBERTS: No. The remaining seven would be bumped over from the 6:00. But there is probably new material -- and I know it doesn't sound like a great deal, but --

2130   COMMISSIONER PATRONE: I'm just trying to get a read feel, Mr. Roberts, of exactly how much new content we are talking about.

2131   MR. ROBERTS: Yes.

2132   COMMISSIONER PATRONE: We are talking about local here, not national stories or international.

2133   MR. ROBERTS: Right. Right.

2134   Well, in the CBC documents themselves I think they talk about 20 percent. So yes, if you want to boil that down you would be talking three minutes.

2135   COMMISSIONER PATRONE: All right. Thank you, Mr. Roberts.

2136   MR. ROBERTS: Thank you.

2137   THE CHAIRPERSON: Commissioner Lamarre...?

2138   Commissioner Poirier...?

2139   COMMISSIONER POIRIER: You are baptizing me.

2140   Mr. Roberts, only one question. You seem to be very involved as a citizen and as a teacher and I conclude that you don't have all the information to make a very good judgment on the performance of CBC in Windsor.

2141   What kind of information as a taxpayer, as a consumer, as a viewer and as an involved citizen would you love to have to maybe have a better idea of the performance of CBC in Windsor, with the LPIF naturally.

2142   MR. ROBERTS: Well, that's a great question.

2143   I'm a scholar who studies journalism as well so I'm very much interested in data and I have tried to get some data out of the CBC, for example what their annual budget is for example, and they told me, frankly, I can't have that. I suppose there is some sort of competitive reasons for that, but I would love to get my hands on budget numbers so that I could -- again as a scholar -- determine whether the $1.4 million that they get from LPIF is such a significant amount or part of their overall budget that it would be such a devastating loss.

2144   I don't have that data, but I do take them on their word that it would certainly, in these challenging fiscal times -- and given that the CBC is facing cutbacks, as I'm sure we all know -- how much of a hit that would be out out their total budget and I'm unable to get that. They will not provide me with that.

2145   COMMISSIONER POIRIER: Thank you. I would have asked you the same question if you had been talking for CTV or Global because I think we face the same issue.

2146   Thank you very much, sir.

2147   THE CHAIRPERSON: Thank you very much. I think that concludes our examination, Mr. Roberts.

2148   Madam Secretary?

2149   MR. ROBERTS: Thank you.

2150   THE SECRETARY: We are done for the day and we will reconvene at 9:00 tomorrow morning.

2151   Thank you.

--- Whereupon the hearing adjourned at 1752, to resume on Tuesday, April 17, 2012 at 0900

REPORTERS

Johanne Morin

Karen Paré

Jean Desaulniers

Monique Mahoney

Date modified:

2012-04-16