ARCHIVED - Transcript, Hearing 21 June 2012

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Volume 3, 21 June 2012



To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2012-224 and 2012-224-1


Outaouais Room

Conference Centre

140 Promenade du Portage

Gatineau, Quebec

21 June 2012


In order to meet the requirements of the Official Languages Act, transcripts of proceedings before the Commission will be bilingual as to their covers, the listing of the CRTC members and staff attending the public hearings, and the Table of Contents.

However, the aforementioned publication is the recorded verbatim transcript and, as such, is taped and transcribed in either of the official languages, depending on the language spoken by the participant at the public hearing.

Canadian Radio-television and Telecommunications Commission


To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2012-224 and 2012-224-1


Tom PentefountasChairperson

Timothy DentonCommissioner

Candice MolnarCommissioner

Marc PatroneCommissioner

Louise PoirierCommissioner


Jade RoySecretary

Shari FisherLegal Counsel

Michael CraigHearing Manager


Outaouais Room

Conference Centre

140 Promenade du Portage

Gatineau, Quebec

21 June 2012

- iv -







8. Sirius XM Canada Inc. 523 / 3436




1. The Junction Inc.611 / 3947

2. Ryan Malcolm614 / 3971

3. Les disques Indica615 / 3980


5. ADISQ698 / 4545




8. Sirius XM Canada Inc.747 / 4847




9. Radio 710 AM Inc. 758 / 4922



No interventions



No reply

- vi -



Undertaking561 / 3653

Undertaking661 / 4280

Undertaking663 / 4290

Undertaking668 / 4325

Undertaking678 / 4396

Undertaking689 / 4458

Undertaking753 / 4877

Undertaking788 / 5118

Gatineau, Quebec

--- Upon resuming on Thursday, June 21, 2012 at 1021

3419   THE CHAIRPERSON: We will get started right away. That lovely music is gone. That is good.

3420   Madame Roy.

3421   THE SECRETARY: Thank you, Mr. Chairman.

3422   The non-compliance portion of this hearing will resume this afternoon with the consideration of item 9, an application to renew the broadcasting licence of Radio 710 AM Inc.

3423   However, we will now proceed with item 8 on the agenda, which is an application by Sirius XM Canada Inc. to renew the broadcasting licence for the satellite subscription radio programming undertakings Sirius Canada and XM Canada, expiring 31 August 2012.

3424   Mr. Chairman.

3425   LE PRÉSIDENT : Merci, Madame Roy.

3426   As part of the renewal application for Sirius XM Canada we will be examining the future of satellite radio, including the development of competing technologies and the business plans of the two services.

3427   We will also examine the licensee's behaviour over the course of the licence term and discuss its request for amendments to its conditions of licence in order to determine the framework under which the licensee will operate going forward.

3428   The Commission provided the licensee over the past week with additional material regarding Canadian talent development contributions over the last licence term. The panel intends to discuss with the licensee the broad concepts regarding CTD contributions, including the eligibility of initiatives in general, and appropriate proof of payment.

3429   Should the licensee feel that it requires additional time to answer any questions posed by the panel on the details provided in those materials, it may do so in reply comments to be filed with the Commission by the 28th of June.

3430   Thank you.

3431   We are ready to go.

3432   MR. BITOVE: Mr. Chair.

3433   THE CHAIRPERSON: Yes. If you are, we are.

3434   MR. BITOVE: Thank you. And you know what, on behalf of the company as well, sorry for any confusion but I think staff and counsel have done a good job trying to figure out how to rectify the stuff going forward because we are committed to what we do, we love it and we know the benefits that it throws off to the artists and everything. So whatever process to get it --

3435   THE CHAIRPERSON: As do we.


3436   MR. BITOVE: Good morning, Mr. Chair, Members of the Commission and Commission staff. I'm John Bitove and I am the Chairman of Sirius XM Canada Inc., operator of two Canadian satellite radio brands, Sirius and XM.

3437   With me today, from your right to your left, are:

3438   - John Lewis, our VP Programming and Operations;

3439   - Andréanne Sasseville, our Director of Talent and Industry Relations;

3440   - Michel Tremblay, Senior VP Corporate Strategy and Business Partnerships at the CBC and a Director of Sirius XM Canada;

3441   - Mark Redmond, our President and CEO;

3442   - Michael Washinushi, our CFO;

3443   - Grant Buchanan, Partner, McCarthy Tétrault LLP, our outside counsel; and

3444   - Oliver Jaakkola, our VP and General Counsel.

3445   Also in the audience today, we are pleased to note the presence of:

3446   - Gary Slaight, President and CEO of Slaight Communications, one of our key shareholders and a director of Sirius XM Canada;

3447   - Robert Buchan, Partner, Faskens, our outside counsel and the original counsel for XM satellite radio; and

3448   - Paul Cunningham, our VP Sales and Marketing.

3449   I will begin with our presentation.

3450   We welcome this opportunity to discuss our past performance, our current situation and our plans for the future and how we can work together going forward to allow satellite radio to continue to achieve the objectives of the Broadcasting Act.

3451   In 2005, the Commission established the following goals when it licensed satellite radio:

3452   - to increase the diversity and comprehensiveness of programming choices available to Canadians;

3453   - to bring new services to rural and remote areas where radio options are often quite limited;

3454   - to increase exposure and monetary support for Canadian musicians, particularly new and emerging artists; and

3455   - to offer Canadian radio listeners multi-channel services in their cars and other vehicles.

3456   We have done just what the Commission expected. We now have more than 2.1 million Canadian subscribers from coast to coast to coast, with our greatest success in terms of penetration percentage coming in parts of Canada others just don't find profitable enough to serve.

3457   In 2004, satellite radio in Canada was a grey market. However, in a combined licensing and policy hearing, you crafted a regulatory framework and took some risks in licensing our two predecessor companies. Today, more than seven years later, we are not asking you to change that framework, although, as we will be discussing with you, we are asking you to create a new Canadian talent development contribution figure for our renewal term.

3458   Moreover, instead of hurting our competitors, we have obviously "grown the entire category." Commercial radio and pay audio have continued to thrive, as the figures you released earlier this month for commercial radio demonstrate. Far from harming them, satellite radio has developed its own listener base, has not aired local programming, has little or no advertising revenue, yet has provided Canadian artists with a new platform for their talents to be displayed in Canada and across North America.

3459   As well, by August 31st of 2012, so just in a couple of months, we will have contributed more than $52 million in Canadian talent development over our first seven years of operation. That is $10 million more than anyone predicted in 2004.

3460   I also want to comment upfront on the possibility raised in the Notice of Consultation of a three-year licence.

3461   The contract approved by the Commission in 2005 between us and our U.S. shareholder has an automatic renewal clause provided that there is no "material change" in our CRTC licence terms. While we do not believe that a licence with a term of three years would constitute a "material change," we do not know what position our U.S. shareholder would take. That is, of course, our single most important contract.

3462   We can see no reason why the Commission would not, in these circumstances, grant us the full renewal term we have requested. To do otherwise could weaken our business substantially. There is no benefit to a short-term renewal. If you give us a full-term renewal and circumstances change, we can always reapply. On the other hand, we have proven that we have not been harmful to other licensees, and the Commission can unilaterally change conditions of licence after five years.

3463   Mark will have more to say about this later, but from my perspective there is simply no benefit to a three-year licence but there could become great risk to us.

3464   Finally, I would be remiss if I did not thank the Commission for approving the merger of Sirius Canada and Canadian Satellite Radio last year. It is no secret that prior to the merger there were some financial uncertainties, which have since been greatly reduced. Although we are still not profitable, the merger has allowed us to improve our competitiveness moving forward.

3465   J'aimerais maintenant céder la parole à Andréanne Sasseville. Andréanne est avec notre compagnie depuis le jour 1.

3466   MS SASSEVILLE : Thank you, John.

3467   Monsieur le Président, Mesdames les Conseillères, Messieurs les Conseillers, tout au long de sa première période de licence, SiriusXM Canada a soutenu un très grand nombre d'artistes, la plupart émergents, d'autres mieux connus. C'est, entre autres, en leur attribuant des montants substantiels pour des programmes de développement de talents canadiens que SiriusXM Canada a participé activement à leur promotion tant au pays qu'à l'international.

3468   Pendant cette période, SiriusXM Canada a démontré son engagement envers la scène culturelle canadienne :

3469   - d'abord, en soutenant l'industrie musicale et artistique aux différents festivals et concours tels que Canadian Music Week ou Les Francouvertes, aussi aux différents galas (par exemple, celui de l'ADISQ), et aux colloques, qui appuient, eux aussi, la promotion des artistes d'ici;

3470   - aussi en travaillant étroitement avec nos programmeurs canadiens pour s'assurer d'augmenter la visibilité et surtout de faire valoir les artistes et artisans canadiens partout au Canada et aux États-Unis sur nos stations canadiennes en s'assurant de produire du contenu de qualité via des concerts en direct ou des entrevues de fond;

3471   - enfin, en créant aussi nos propres initiatives (par exemple, une tournée de concerts d'été ou notre concours Canada's Next Top Comic) pour directement promouvoir les artistes canadiens.

3472   La radio satellite a certainement su aider le talent d'ici, tant francophone qu'anglophone, à élargir son public nord-américain.

3473   Au fil des ans, nous avons donc bâtis et entretenus de nombreux partenariats avec des organismes musicaux et culturels à travers le pays. Nous avons eu l'opportunité de travailler directement avec des centaines d'artistes.

3474   J'ai personnellement eu le bonheur de voir de nombreux artistes canadiens faire leurs timides débuts pour ensuite se voir propulsés sur la scène internationale. Je peux vous donner comme exemples Karkwa ou Arcade Fire, que vous connaissez peut-être.

3475   D'ailleurs, nombre d'entre eux nous ont remerciés d'avoir fait partie intégrante de leur cheminement et que notre soutien avait certainement contribué à faire une grande différence dans l'ascension de leurs carrières.

3476   Tel que proposé avec notre nouvelle grille de programmation, les bonnes nouvelles risquent fort de se poursuivre pour ces artistes canadiens lors d'un prochain terme de licence.

3477   Si vous le voulez bien, maintenant, j'attire votre attention sur la vidéo suivante, qui saura mettre en lumière les bons coups de SiriusXM Canada au terme de notre premier mandat.

--- Video presentation

3478   M. REDMOND : Merci, Andréanne.

3479   Mr. Chairman, Commissioners, I hope that video gives you a sense of the impact that Sirius XM Canada has had on some great Canadian musical and comedic talents and how we have been able to help them reach an audience throughout North America.

3480   I would now like to address five areas in particular:

3481   - our satisfaction of your merger conditions;

3482   - our Canadian programming line-ups;

3483   - our CTD achievements and administrative proposals;

3484   - the changing competitive and technological landscape; and

3485   - our request for a recalibrated CTD rate of 0.5 percent of revenues for our renewal term.

3486   As part of the merger approval last year, you imposed certain conditions. You required that we distribute an Aboriginal channel, implement a temporary price freeze, make interoperable radios available, introduce a "best of" or premier package and make reasonable efforts to offer subscribers of either service the ability to subscribe to the content on the existing online media player of either Sirius or XM.

3487   We are pleased to tell you that the first three of these requirements have already been achieved.

3488   With respect to the "best of" or premier offering, as the Commission foresaw, lengthy negotiations were required. Nevertheless, we expect to be launching that package on October 1, 2012.

3489   Finally, the ability of each subscriber base to subscribe to the other's Internet offering has been unavoidably delayed as a result of technical issues. However, it is coming as soon as the necessary technical changes to our online media players are finalized, which we expect to occur later this year.

3490   We have provided the Commission with the new Canadian line-ups for Sirius and XM going forward. These new line-ups must respect four sometimes competing elements: existing commitments, ongoing bandwidth limitations, regulatory obligations and, last but probably the most important, Canadian consumer demand.

3491   Some of the highlights of the new Canadian line-ups are as follows:

3492   - More than 60 percent of the combined Canadian-produced line-ups are Canadian music channels;

3493   - CBC/Radio-Canada channels will be available to all subscribers on both the XM and Sirius platforms;

3494   - The number of Canadian music channels available to Sirius subscribers increases by over 14 percent, growing from 7 to 8;

3495   - The number of Canadian music channels available to XM subscribers increases by 40 percent, growing from 5 to 7; and

3496   - The number of French music channels available to XM subscribers increases by 100 percent, growing from 2 to 4.

3497   We supplied in our written submission some backup information for each Canadian channel and also for the "best of" or premier options. We would be pleased to discuss the details in the question period.

3498   With respect to compliance, the merger hearing in February 2011 and your resulting decision addressed issues related to our past compliance to that point. I note that Commission staff's letter last Thursday afternoon invited us to comment on subsequent issues and we have supplied the requested new data on Tuesday as requested. As part of the response, we have given you with a concrete plan that provides you with reassurance with respect to future payments.

3499   That proposal contained a five-point plan:

3500   - First, we will revamp our third-party initiative approval process.

3501   - Second, a monthly compliance meeting will be instituted, chaired either by myself or our CFO.

3502   - Third, the Vice-President of Sales, Marketing and Distribution will become responsible for providing a complete written CTD report to me.

3503   - Fourth, we have arranged to hire an additional in-house counsel, Mr. Christopher Ferguson, formerly of Faskens in Ottawa. His specific functions at the company will include CTD compliance matters.

3504   - Fifth, we will advise any beneficiary to which we are proposing to contribute CTD funds that unless they have their invoice to us by August the 1st they will not be paid and the funds will instead be directed to another qualifying entity by August the 31st.

3505   In terms of strategies for the future, we have already provided you with a number of strategic observations in our written materials but I would like to highlight a couple of matters that we think about regularly.

3506   First, we are in a dogfight for what you might call "control of the dashboard." Obviously, our commercial radio friends are in the fortunate position of having AM and FM receivers in every car. We have worked hard to get satellite radio receivers built into the dashboards of more than half of the new cars sold in Canada, and unlike commercial radio, we subsidize every one of those radios by paying the car manufacturers.

3507   As if the competition with commercial radio were not enough, a number of car manufacturers are putting Internet radio in cars.

3508   As we noted in our reply to interventions, virtually every major car model is now rolling out, or has already rolled out, apps-based Internet radios. Further, in the U.S., the Internet radio service Pandora has already made certain agreements directly with a number of car manufacturers. It is not that we are afraid of the Internet. In fact, it forms a part of our future strategy.

3509   Mr. Chairman, in your speech at Banff a couple of weeks ago, you referred to Internet radio as "complementary" so far. We agree completely as far as conventional radio broadcasters are concerned and you pointed out the reason in your speech.

3510   Conventional radio broadcasters are locally relevant. Satellite radio, on the other hand, is prohibited from airing local programming, and we see Internet radio as a major competitor.

3511   That said, we are not afraid of competition. We have been competing since we got licensed seven years ago. But the combination of business risk with regulatory uncertainty poses unique problems for a business like ours.

3512   I would ask you to put yourselves in the position of a car manufacturer. Why would you choose to support the satellite radio dashboard proposition when the proponent is regulated and subject to a short-term renewal and its Internet radio competitor isn't? Car manufacturers typically make model year decisions three years in advance.

3513   Going forward, more than 75 percent of our new subscribers will be coming from Canadian consumers buying new cars. Thus, in our business, which is so dependent on dashboard configurations, a short-term licence would be very damaging. I cannot emphasize this enough.

3514   Regulatory obligations such as copyright tariffs, CTD payments, CRTC fees or any other form of payment that is tied to our top line, rather than our bottom line, poses a significant concern.

3515   The Commission is aware from our Supplementary Brief of the magnitude of both our cumulative deficit and debt load. Costs have been much higher than predicted in 2005, as a result in part of the huge increase in the number of competitors. This means that it costs us more to convince, convert and retain a subscriber.

3516   This is not unique to us. Every BDU has challenges of this nature. But in our business, it is worth noting that when you first licensed us only seven years ago last week, iPhones and other smartphones were not yet on the market, nor were any of the online music services that now compete with us.

3517   So we are spending a great deal of our time trying to minimize uncertainty in our business wherever possible. That is why we are working hard to finalize our copyright tariffs on a long-term basis. It is why we have locked in our main financing through 2018.

3518   In other words, we have taken numerous steps as a publicly traded company in a competitive market to reduce the number of unknowns in our business while we are trying to attract more listeners.

3519   I want to emphasize what John said about a three-year renewal term. It is also problematic for our relationships with our car manufacturing partners and especially the more than 2.1 million Canadian subscribers. It is the last thing we need and it is unwarranted.

3520   Finally, we have asked for a fair CTD rate going forward. Because the Commission's CTD policy calibrates contributions with the financial health of the industry, we have asked you to reset the figure for satellite radio for the next licence term at 0.5 percent.

3521   Satellite radio has high fixed costs and high variable costs, much more so than its commercial radio competitors. And yet, we are only seeking to pay the same rate they pay, not less. This will level the playing field with renewal-term commercial radio licensees. That is both fair and transparent.

3522   Currently, our company contributes more CTD money to Canadian artists than the entire yearly basic contribution of all of Canada's renewal term commercial radio licensees put together!

3523   To be clear, we currently spend more than $12 million a year on CTD. This contrasts sharply with the $7 million per year for all of Canada's commercial radio licensees in their renewal terms, according to your latest Communications Monitoring Report.

3524   At the same time, we are not profitable and we are operating in a competitive environment which still requires significant investments.

3525   I would like to reiterate what John said at the beginning. Satellite radio has gone from being a grey market problem to a success story for Canadian talent and for Canadian consumers, thanks to the foresight of the Commission and risk-taking and hard work on our part.

3526   When we were first licensed, there was not a single legal Canadian subscriber to satellite radio. Now there are more than 2.1 million of them. We want to be able to continue to grow, to serve our present and future subscribers and to contribute our fair share toward the achievement of the objectives of the Broadcasting Act.

3527   In conclusion, we have done a lot of great things over the past seven years. While it has not been free of some bumps along the way, we have created huge benefits for Canada. Between our regulatory fees, our CTD expenditures and our copyright royalty payments we have injected more than $115 million into the system, plus numerous jobs, tangible benefits and North American exposure for Canadian artists.

3528   Mr. Chairman, Members of the Commission, that concludes our opening presentation and we would be pleased to answer any questions you might have.

3529   THE CHAIRPERSON: Well, thank you very much.

3530   I'm surprised to see anybody actually listens to those speeches -- it was last week, by the way, it wasn't two weeks ago -- and it's nice to see that people are watching and following.

3531   Madame Sasseville, Karkwa et Arcade Fire, est-ce qu'ils devaient faire partie du texte ou...

3532   MME SASSEVILLE : Non. Ça été très spontané pour vous donner des exemples.

3533   LE PRÉSIDENT : Du ad lib, c'est bien. Merci.

3534   Alors, on va céder la parole à madame Molnar.

3535   COMMISSIONER MOLNAR: Thank you.

3536   Good morning, everybody. As you rightfully noted, we are here today both to speak of past performance and the terms and conditions that are appropriate so that you can continue to contribute to the system going forward.

3537   So I would like to be able to clean up, if you will, the past licence term and the issues related to that as quickly as we can so we have enough time to talk about the future and your environment and what may be necessary from our part to help you succeed.

3538   Having said that, we are going to begin with issues of compliance in the last license term and I'm going to begin with Exhibit 1, the issue of CTD.

--- Pause

3539   COMMISSIONER MOLNAR: For the record, Exhibit 1 is a sheet of CTD contributions on behalf of Canadian Satellite Radio (XM Canada) and page 2, the contributions on behalf of Sirius Canada.

3540   There are full confidential versions provided to you folks and there are abridged versions for the public record. I want to note my goal here today is not to go through all the information on this sheet, but I thought it was important that everybody have a common understanding of the information at least we as Commissioners are provided regarding the CTD payments made and issues that may be associated with them.

3541   So I'm looking below the line. Not the expenditures you claimed or the payments that had been made, below the line.

3542   Maybe first I should just note that, as you pointed out, in your 2011 merger decision there had been findings related to your CTD for the years 2006 to 2009 and I'm not going to deal with that again. So we are really focused on 2010-2011.

3543   The requirement out of the 2011 merger decision was that all CTD late payments be brought up to speed by the end of the license, by the end of 2011.

3544   What I want to focus on are the issue of late payments, that if I look at the first page for XM Canada there was a late payment in 2010 in that the payment was made in 2011 and claimed for 2010.

3545   And for Sirius Canada, similarly there was a payment made for 2010 that was actually paid in 2011 and then that occurred again in 2011 where the payment was late.

3546   So I'm not interested in the amounts of these payments, but I would like to give you an opportunity to speak to -- assuming you agree that there were late payments, I mean I think that is a matter of fact and not conjecture that the payments occurred after the year -- if you want to have an opportunity to explain why this occurred.

3547   More importantly, I appreciate that you have put in your opening statement your five-point plan as it regards compliance with CTD issues going forward, so maybe just emphasizing what your plan is going forward to ensure that payments are made on time.

3548   MR. REDMOND: Thank you.

3549   You know, we received these numbers the other day, we have been going through them and I would like to comment on a couple of things.

3550   I think, first of all on the Sirius side, the $800,000 late payment that's in here, we are still going through the details, but we do believe some of it had to do with the post merger decision of recalibrating the activation revenue and the additional amount of revenue that was included in the Sirius numbers was about $800,000 that we had to deal with between June 21st and August 31st.

3551   Second, I think in all cases that I have seen so far the expenditures were committed prior to August 31st, both verbally and written, and I think in some cases there may have been some payments that went out in September because we didn't get the invoice until September 1st or 2nd or 3rd or 5th from the relative party, but the commitment and the activities took place prior to August 31st.

3552   Acknowledging that there may be an issue related to when the activity took place versus when the cheque went out, we put the five-point plan in place so now that if we don't see an invoice from a particular party prior to August 1st of that year we will not accept it to ensure that we have 30 days to be able to process the cheques, get them out prior to August 31st. So I think we are still working through the details of each of these payments to ensure that we have a full understanding of them.

3553   But I think between the five-point plan that we put in place and the fact that we have never tried to put an expense into one year and expense it in the following year, we understand the need to ensure that we put the expense into the current broadcast year and the full commitment was there with the particular parties to do that.

3554   COMMISSIONER MOLNAR: Just to confirm, you understand that you put the expense into the year that the activity occurred, but you also understand the requirement is that you actually make the payment so that -- you know, there is not an accrual system here, the obligations are to actually physically make the payments in the year.

3555   So you agree with that obligation?

3556   MR. BUCHANAN: I have actually been looking at that. I am unable to find any requirement under the CTD process where that's a requirement.

3557   COMMISSIONER MOLNAR: So you disagree that there is a requirement to make the payments in the year?

3558   MR. BUCHANAN: I'm sorry, we --

3559   COMMISSIONER MOLNAR: That the full 5 percent commitment must be paid with the full 5 percent paid within the year each year?

3560   MR. BUCHANAN: It's the "paid within the year" part that I have been unable to find anything under CTD. I have found it under CCD.

3561   MR. REDMOND: I think if the expectation is that that's what the process is under CTD or CCD, then by all means we will fully comply with it.

3562   The regime we are under today is CTD and we have not purposely tried to put an expense in the one year and pay it in the following year or vice versa.

3563   So if the expectation moving forward under CTD or CCD is that the expense is incurred and paid prior to August 31st, we will abide by that.

3564   COMMISSIONER MOLNAR: Thank you.

3565   I will appreciate that you have done your homework, I'm going to leave it to our staff to confirm that that requirement actually does exist.

3566   I can tell you, just speaking for myself, you know, you folks have been contributing significant monies and when I look at what's on this chart it's not material in the whole scope. I mean it's important that the obligations are met. If there is actually no full and firm requirement that it be paid within the year, that the full 5 percent be paid each year, I understood that requirement existed, but we certainly will also do our work before.

3567   I appreciate as you move forward -- and I hope you will agree -- that that requirement does exist moving forward under the CCD regime and so the commitment will be there to actually physically pay that 5 percent each year.

3568   MR. REDMOND: Absolutely.

3569   COMMISSIONER MOLNAR: Okay. Thank you.

3570   MR. BUCHANAN: Yes.

3571   And as Mark said earlier, the fact that it wasn't a requirement that we found had no bearing on the actual activities, all of which took place before August 31st, all of which were activities that they were writing cheques for. So, in a sense, you could have dated all the cheques August 31st and not September 10th or 15th or whatever, 30 days after the invoice came in.

3572   But in practical terms, as you point out, first of all, it's a very small percentage of what happened and, second, it was just prudent accounting, you match the invoice to the cheques and they came very late.

3573   Something that had a festival at the end of August, I mean arguably they could have pushed a cheque out the door. Obviously in the future that's what's going to happen given this process.

3574   MR. REDMOND: Again, we fully support and will abide by the conditions moving forward.

3575   The last thing I will say is that we also want to make sure that we don't have a policy breakdown internally, that we are not paying stuff out without seeing the proper invoicing, et cetera.

3576   COMMISSIONER MOLNAR: I just want to confirm that in the 2011 decision there was a directive that all outstanding CTD payments be made by the end of the year. This would indicate there were some that were paid late.

3577   Do you agree that there were some paid after?

3578   MR. REDMOND: What I have been able to look at so far I can't conclusively say that.

3579   As I said earlier, we had an $800,000 makeup on the revenue fee activation difference that we had to do between June 21st and the 31st and we made commitments to particular third-party for the money. If that cheque didn't go out until September 6th or 7th, it wasn't because we didn't try to make the commitment and get the payment out by August 31st.

3580   But I still haven't been able to go through every detail, which I will.

3581   COMMISSIONER MOLNAR: Thank you.

3582   I encourage you to go through those details and provide -- there is an opportunity for you to undertake to provide further comment on this and I encourage you to do so.

3583   MR. REDMOND: I absolutely will and I would be happy to meet with the Commission staff to go through all the detail.

3584   COMMISSIONER MOLNAR: Yes, thank you.

3585   At the same time, as you know there are issues related to what Commission staff have questioned as eligible initiatives and there is work underway on that. I'm not going to look at any particular initiatives here today or any specific amounts, but I did just want to talk more generally about the types of initiatives that there was concern about on our part and give you an opportunity to comment here.

3586   You will have an opportunity to comment again on the particulars later. I know that you provided comments earlier this week and you can continue that conversation later, but it's been noted that some of the initiatives have been for self-promotion or have included salaries to station staff.

3587   Some appear to be what would be typical programming expenses and that CTD is to be over and above the normal costs of doing business and some of the initiatives would appear to be supportive of the normal costs of doing business and not over and above.

3588   And, finally, that there are some initiatives where they are related to the undertaking -- or there are relationships with the undertaking being Sirius or XM.

3589   MR. REDMOND: You know, in the letter that we provided back to you on Tuesday we addressed every one of the items that you reference.

3590   I will tell you, just from a high level, there are no initiatives that we go out to do that are self-serving. What we have tried to do is bring initiatives forward that benefit Canadian consumers and, more importantly, Canadian artists, whether they are musical or comedic. Quite frankly, we think we have done a very good job in the last seven years.

3591   Is it perfect, no. But we have done hundreds and hundreds of events that have been supported by us with some branding of our brand around the event in conjunction with the branding of the artist and then the broadcast of the event for the artist exposure to a North American audience.

3592   So on the surface I don't feel that's self-fulfilling and we are going to go through again all the details of each actually.

3593   COMMISSIONER MOLNAR: Yes. I encourage you to go through the details, but you don't believe branding the initiative as your own is self-serving?

3594   MR. REDMOND: No. I don't think we're branding the event as a Sirius XM event. We have done a multitude of events that are branded somebody else. We put signage up there to be able to get the artists to the stage where they are performing for us, or if we have guests that are going or consumers that are going, that they know where to go. But we are not doing "Sirius XM presents" events so I don't --

3595   MR. BUCHANAN: I could perhaps go a little bit further.

3596   It clearly is not offside to have banners and promotion, and so on, at concerts that you set up specifically for artists. I mean the Commission has been very clear about that.

3597   If I go back to Astral's CIBK renewal last year, if I go to your own Public Notice of Consultation, in fact your Consultation Notice said it should be possible for broadcasters to differentiate CCD from station promotions by demonstrating that the CCD projects have been designed to go well beyond promotional activities by keeping the focus on supporting and exposing Canadian talent. I don't think there is anything that comes close to losing that focus in what they do.

3598   I mean if you are looking for a high-level Birdseye view of it, we will get into the weeds when we do our subsequent filing, but for sure you are allowed to have placards and lanyards or whatever to show you are there.

3599   COMMISSIONER MOLNAR: Fair enough.

3600   And you would agree -- I think one of the concerns also was that there were some initiatives that appeared to be available only to Sirius or XM subscribers versus open to the public?

3601   MR. REDMOND: Again, I haven't gone through all the details yet, but I don't believe that there is. We did a big event last year that was the Face the Music Contest and that was open to anybody in the community that we brought that concert to. They didn't have to be a subscriber to our service.

3602   So I need to go through each one that has been identified, but --

3603   COMMISSIONER MOLNAR: Yes, exactly. Fair off.

3604   I think that perhaps more important thing here is that you have laid out this five-point plan which would include -- let me see what's all here.

3605   A monthly compliance meeting. So going forward the rules around CCD are quite clear as to what is and is not eligible, I believe so at least, and you would agree that self-promotion, self-serving initiatives, typical programming expenses or initiatives that have any relationship -- where there is relationships to your undertakings, or clear relationships between members, if you will, of one organization and your organization, are not eligible CCD on a go-forward basis?

3606   MR. BUCHANAN: I'm not crazy about the way you phrased that whole description.

3607   Of course there are relationships between --

3608   COMMISSIONER MOLNAR: Well, please, I mean let me say my description right here is me talking off the top of my head and there are clear rules and regulations where you can find the clear rules around CCD going forward.

3609   So following those, you will put in place monthly compliance meetings and what it -- maybe just go through your five-point plan and tell me how this will ensure that initiatives going forward will be compliant with CRTC requirements?

3610   MR. BITOVE: Commissioner, if I could interject, because I think it's really important for the framework of how we were licensed and the collaborative approach we have had with you in the past and going forward.

3611   Part of the reason we are under the CTD regime and not CCD is in our application to get licensed seven years ago we talked about having music ambassadors kind of going beyond what commercial radio and others do that we would fund as part of our ongoing commitment. In the decision that you came back we were allowed to include some of those in the 5 percent.

3612   It's really important going forward that we flag some of those items and, depending on what rate we end up with, you know, whether they count or they don't count.

3613   So I caution you from automatically assuming that we can move into CCD because there are certain things unique to our licenses and our business that I think the artists love, the Commission has seen the benefits of them in the past, that we make sure that those are still eligible or not.

3614   That's why from my perspective in this last week when I started seeing CCD rules and all that stuff, I was saying to Grant, some of these things -- "Like we are under CTD, where did they come from?" He says, "Well, they are making assumptions we are in CCD". So I am only giving that as a cautionary overtone for the discussion so that we can make sure things that are valid and work in our CTD framework, we find a way to keep them working forward in whatever regime you want us operating under.

3615   MR. BUCHANAN: If I could add to that?

3616   For example, in the questionnaire that we got last November, the view expressed was that we would no longer be able to contribute to comedic talent if we moved from CTD to CCD. We didn't agree with that, but if that's the interpretation then we need to have a conversation because they have been committed to the comedic talent, they have a lot of channels that are fed by comedic talent. There shouldn't be any reason -- and we don't actually see that in the CCD descriptions, that you can't do comedic talent as well as musical talent. But boy, we don't want to blindly go down something where we have had those commitments.

3617   As well, the ambassador program that the Commission specifically approved back in 2005, we would like to be able to continue that.

3618   So part of the reason for wanting to talk with the staff was to get a handle on what are you thinking of that we would no longer be able to do that we have been doing.

3619   MR. BITOVE: And the other -- and this comes from all of us with a vested interest in the success of satellite radio.

3620   Whatever is ineligible, like clearly in eligible under CTD or whatever, we will stand behind it. This should not be a monetary issue. In my estimation, the only issue we may have is certain understandings and clarifications that need to come forward. And anything that shouldn't be in there, that we accidentally put in there, we will make up for it because we don't -- we want to make sure -- this isn't a monetary issue, it's a principle about what the benefits satellite radio brings and what we are funding and what we are doing going forward with full clarity to you and your staff.

3621   COMMISSIONER MOLNAR: I think that's very fair and it's an important point. It's important, whatever the level of CCD or CTD may be going forward and I would like to have that conversation a little later.

3622   But it is very important that it be clear that you were provided clear guidance up front as to what is and is not eligible. It's not appropriate to hit license renewal and then be looking at whether something is or is not.

3623   So you have brought up the issue of the ambassador program and is set Humber College comedy projects or is it something greater than that that you're talking about when you describe comedy?

3624   MR. REDMOND: It's greater than that, but one of the initiatives that we have done has been with Humber College's comedy element within the school and it creates content for us to put up on our Canadian comedy channel. I think the comedians would tell you that it's probably one of, if not the only platform that they have had available to get their content out there.

3625   But with Humber it's related to their comedy activities.

3626   COMMISSIONER MOLNAR: So what particularly do you want?

3627   You want an exception. Is it CCD with exceptions to make it clear that comedy programs are allowable?

3628   MR. BITOVE: We did a great job seven years ago of creating a framework. I don't know what the answer is, but I do know that it's in our mutual interest to make sure that we find where we are going to pigeon-hole these items.

3629   And Grant brings up a great point. Now, in our program line-up, we are putting "Laugh Attack" on both services, because one of the complaints on the Sirius side is: Why don't you have a Canadian comedy channel?

3630   And funding Canadian comedic talent is really important to us going forward, and I think for those artists, as well.

3631   It's not onside with CCD, from our interpretation, so we want to make sure, with you and your staff, that there is a framework that allows it to be done.

3632   MS. SASSEVILLE: If I may, I just wanted to add -- we are speaking to comedy. Just as we did on the musical side of things, where we are supporting up-and-coming or new emerging artists, we wanted to implement the same structure on the comedy side.

3633   So we put forth, first via XM, and as a newly emerged company, via Sirius XM, "Canada's Next Top Comic", which is a contest across the country to find new and emerging comedic talent.

3634   So that is another initiative that has grown the comedy networks across the country that we have put forward, and also that issues content for our network, which we would like to discuss, as well, as part of this.

3635   MR. BUCHANAN: If I could add, first of all, we do think that already qualifies under CCD, and we gave our reasons in the application in January. But if it doesn't, under section 15 of the Radio Regs you have the ability to exempt any of those things by condition of licence anyway.

3636   It's not hard, you can do it under the Regs or, since ours is all condition of licence, it's fairly easy to craft something, if you want to do that.

3637   COMMISSIONER MOLNAR: Fair enough. I guess what I am asking is, what particularly are you asking us to craft?

3638   MR. BUCHANAN: The only one that was identified by staff that was of consequence to us was the comedy. They did mention "Songwriters' Café". Again, I don't know why that wouldn't qualify, but since that's an initiative that the company isn't interested in supporting any more anyway, it doesn't need to be an issue.

3639   But, again, it's just understanding -- making sure that there is nothing in our current panoply of donations and so on that gets skated offside.

3640   MR. BITOVE: We will give you a written -- why don't you put the onus on us in the intervening period between now and the decision, where we will go through the list --

3641   If you want us under the CCD framework, we will go through the list, we will suggest the exemptions that we think are appropriate for the artistic community in Canada and the programs that we fund, and that way you have it in writing, instead of trying to do it on the fly today.

3642   Is that okay, Commissioner?

3643   COMMISSIONER MOLNAR: Yes. I mean, I think that's very necessary here, if you are --

3644   It's not clear to me that you did not want to go under the CCD -- I mean, CCD is the new form of contributions, and having read your entire file, it wasn't obvious to me that you were not -- you know, that you were against going under the CCD framework.

3645   There were a couple of things here that stood out, comedy being one and the Ambassador being another.

3646   Anyway, you have a week, if you could just put in place what it is particularly that you are requesting as it regards the future -- not the amount. We are going to talk about the amount later. Regardless of the amount, are you looking at -- or are you willing to go under the CCD, and if so, what further are you requesting as it regards potential exemptions.

3647   I will leave it at that.

3648   MR. BITOVE: We are.

3649   COMMISSIONER MOLNAR: I think it is very important that this be clear, so we are not again in a situation, as we are now, wondering whether things are or are not eligible as we go into the next licence term, and you have laid out this five-point plan to ensure compliance and good governance. Part of that is to have the rules clear upfront, as to what you are going to assess this against.

3650   MR. BITOVE: Absolutely.

3651   COMMISSIONER MOLNAR: So, please, take the time -- June 28th, I believe, is the date, if you can get that into us by then.

3652   Thank you.

3653   MR. BUCHANAN: We will do so. We will need to talk with staff. I don't know if we need to ask you for an exemption for comedy, for example. We already think that it fits, and I don't know if they do. So it will have to be interactive.


3654   COMMISSIONER MOLNAR: For sure, or you can lay it out and say that you want an exemption if it does not fit.

3655   I mean, you don't want to be, once again, in the situation where you are interpreting one way and the Commission is interpreting another.

3656   MR. BUCHANAN: Absolutely.

3657   COMMISSIONER MOLNAR: It's just not useful.

3658   Thank you.

3659   There are a few other issues that relate to your past licence term and some issues that were found by staff at the time, when they were doing their assessments of the programming.

3660   When they were monitoring -- and I think it was in 2008 -- they found some issues, and we are going to go over those now, briefly.

3661   I am going to start with issues related to the monitoring of XM.

3662   One of the issues is, at the time of monitoring, there was a requirement under your conditions of licence -- and it's Condition of Licence 2 -- that the licensee shall, in a week, devote a minimum of 85 percent of the total musical selections broadcast on all Canadian-produced channels, considered together, to Canadian selections, as defined in section 2.2 of the Radio Regs.

3663   The monitoring revealed that XM's results were 78 percent.

3664   Let me first say: You have been provided those results?

3665   I mean, it was years ago now, but you have been provided those results? You are aware of that issue?

3666   MR. REDMOND: I personally am not, but I guess --

3667   MR. JAAKKOLA: Yes, we have been, and we have actually met with staff to discuss that particular report.

3668   COMMISSIONER MOLNAR: Do you agree with the monitoring results?

3669   MR. JAAKKOLA: What had happened was, during the monitoring, our third language multicultural channel, ATN, was included in that analysis, and we did not understand at first the criteria used to include that channel.

3670   But it was brought to our attention that ATN, which was designed as a talk channel, had evolved into a music channel, per se, and we worked with staff to determine what was the appropriate mix of Canadian content.

3671   And then we found out that the other issue is the emerging component of our condition of licence.

3672   So, in particular, the challenge was how to demonstrate that the South Asian music that was played on this multicultural channel was emerging, because this condition can only be evaluated in the context of music industry charts.

3673   So, since we couldn't point to a Top 40 chart for Canadian South Asian music, for example, we explained this situation to Commission staff, and they did agree to grant relief for the emerging talent portion.

3674   For the rest of the channel, we worked with ATN, our programming partner, to ensure that additional Canadian content was included in their programming, so that we would comply.

3675   So, as soon as we were informed of the issue, the programming of the ATN channel was brought into compliance.

3676   COMMISSIONER MOLNAR: Okay, thanks.

3677   And it is the issue of ATN that both influenced Condition 2, your collective 85 percent, and, as well, Condition 6. As you pointed out --

3678   Let me find it here.

3679   Each Canadian music channel requires a minimum of 25 percent of the musical selections broadcast to new Canadian music.

3680   So you are saying that ATN has new Canadian music?

3681   MR. JAAKKOLA: Yes, it does.

3682   COMMISSIONER MOLNAR: It didn't at the time, and now it does. So that's how it has been corrected?

3683   MR. JAAKKOLA: It did have Canadian music at the time, we just had trouble pointing to how it was Canadian music.

3684   Because it's a third language channel, it is not necessarily English Canadian music, it could be new Canadian South Asian music, and we just didn't have the reference system to explain that properly.

3685   And the corollary of that is that it actually has quite a bit of emerging music on it, but we cannot point to any kind of Top 40 or -- we don't have the reference points to explain how that might be emerging Canadian music.

3686   MR. BITOVE: It's the measurement of emerging with ATN, and this is Shan Chandrasekar's channel. He produces it, so we have outsourced it to him to produce the channel.

3687   And I think that, in the correspondence that I have seen over the last time, you have pretty much exempted this channel from some of the mandatory requirements of the English and French channels by recognizing that it is a third language channel.

3688   And I think what is important, Commissioner, again -- like you will see anytime that there were issues raised by your people -- your staff -- we got up here to try and rectify it. In this case we got Shan involved directly, about making sure that we get -- between you and us and the CRTC, we get onside.

3689   MR. JAAKKOLA: The other steps we have taken though, with ATN in particular, is that it does play Canadian English music, as well.

3690   COMMISSIONER MOLNAR: So can I just ask, with ATN, you are able to now measure the amount of Canadian music?

3691   MR. JAAKKOLA: Yes.

3692   MR. BITOVE: Yes, but I just --

3693   COMMISSIONER MOLNAR: But you can't identify whether it is emerging because there is no definition of --

3694   MR. BITOVE: We can't identify if it's emerging, and to make sure that it hits the Canadian threshold, there is non-Southeast Asian music that they play that they can at least verify is Canadian.

3695   COMMISSIONER MOLNAR: Do you need something from us as it regards emerging -- a definition -- or are you comfortable today with how you are able to meet these COLs?

3696   MR. JAAKKOLA: We had asked for relief from the emerging part of the COL, and we were granted that in the staff's letter. So we would appreciate that relief going forward.

3697   COMMISSIONER MOLNAR: You will appreciate that, actually, staff can't relieve you of COLs, so maybe just be clear. What do you want? You want relief from the requirement that the third language station meet its requirement to emerging music, or you want us to define emerging so that you can clearly meet your requirement?

3698   That station should have 25 percent --

3699   MR. BITOVE: Thank you.

3700   I think, going forward, what we would like is that third language channels, in the absence of having measurements on what emerging is, be exempt from that, but we will live within the Canadian content framework of what content goes on those third language channels.

3701   Satellite radio is continually evolving. Who knows, we may at some point have, you know, another third language channel on there, and I think that it's important for all of us to recognize that Canadian content has to be done, it's the measurement of the emerging that can become an issue on those channels.

3702   MR. BUCHANAN: Why would we not be able to exempt it from the whole new and emerging calculations? Why wouldn't we just have it as part of a Cancon calculation? I mean, that would be a better scenario.

3703   COMMISSIONER MOLNAR: I would suggest that you have a collective requirement that 85 percent of the total musical selections broadcast on all Canadian-produced channels, considered together, are Canadian.

3704   And I am not sure why we would exempt ATN to the point that they wouldn't have a requirement to also support Canadian content and Canadian culture -- I mean, in whatever language it is, but they should also --

3705   And the fact that there was a requirement that each channel have 25 percent emerging was a requirement that every channel contribute to that.

3706   So if we exempt it entirely, are we not providing an opportunity that ATN may not be having to contribute?

3707   MR. BUCHANAN: I'm sorry if I misspoke, I didn't mean to. It would be part of the Canadian calculation, just not part of the new and emerging calculation, given that nobody ever thought of third language services at the time we crafted the framework back in 2005.

3708   MR. REDMOND: I think the challenge is how we measure new and emerging in a third language. It's not that they don't play some new and emerging, and, clearly, we want them to abide by the Canadian content elements of it, but I think that the new and emerging related to third language gets a little more challenging from a measurement standpoint.

3709   We can put it in, I'm just not sure that we are going to be able to measure it effectively for you, but we can ask ATN if we can't --

3710   COMMISSIONER MOLNAR: Yes, fair enough. We need to address the issue, that if it remains a condition of licence, that it be defined.

3711   But would you agree that there are benefits, regardless of the language?

3712   MR. BITOVE: Oh, yes, absolutely.

3713   COMMISSIONER MOLNAR: So simply exempting it because it's hard to define seems a --

3714   MR. BITOVE: It's the measurement that is -- if there isn't any independent measuring vehicle, that's where it becomes problematic for us. But emerging artists is what satellite radio is about, and Canadian content is part of our licence.

3715   I just want to clarify; I think what you offered was to say, going forward, do we want a COL that third languages do not have an emerging -- that it's kind of like best efforts on emerging talent, that we don't have this 25 percent threshold because it's hard to measure.

3716   Is that what you offered to us before?

3717   COMMISSIONER MOLNAR: I sure hope that's not what I offered to you.

3718   MR. BITOVE: Okay. So, then, I would seek clarification --

3719   COMMISSIONER MOLNAR: I think I maybe heard that --

3720   MR. BITOVE: Please, for our benefit, what did you offer us before that we owe you a response to?

3721   I just want to make sure that we understand -- when you mentioned are we expecting a COL going forward -- a change in COL going forward --

3722   COMMISSIONER MOLNAR: I was asking because you suggested that there was difficulty in measuring new and emerging, and you mentioned that staff had provided you an exemption for ATN, and I suggested that, in the long term, COLs cannot be exempted, except by a decision of the Commission.

3723   So, I was asking, are you looking for an exemption from the 25 percent?

3724   MR. BITOVE: I think the answer is yes. That's why I am clarifying.

3725   I think the answer is yes. For third languages, the emerging artist quotient, we are hoping, can be removed as a COL. Not the Canadian --

3726   COMMISSIONER MOLNAR: Okay. Now I would like to provide you the reason to convince us why we should exempt it.

3727   MR. BITOVE: Because there is no independent measurement, and we think that third languages -- you know, satellite radio goes where commercial radio doesn't go, and third languages may become more important as the country continues to grow, and if there was a measurement out there, we would be happy to abide by it. But in the absence of an independent measurement, we don't think you want us ever not carrying third language channels because we can't find a measurement for emerging talent.

3728   COMMISSIONER MOLNAR: So let me ask you, if the Commission were to provide an exemption to the requirement for emerging music, would you be open to a COL of some sort that still indicates that there is a requirement for Canadian music on third language?

3729   MR. REDMOND: Yes.

3730   COMMISSIONER MOLNAR: Yes. Okay, thank you.

3731   One last little issue regarding the monitoring back in 2008 with XM. COL 9 requires that no more than six minutes of national commercial messages can be played within any clock hour and, as I understand it, you exceeded that limit back in 2008, in a Montreal Canadiens hockey game, or something to that effect.

3732   MR. REDMOND: Correct.

3733   COMMISSIONER MOLNAR: Let me just ask, if you just agree that, yes, you know that this monitoring occurred, and yes, that was the result, maybe we should just focus on -- are there now some safeguards to ensure that you can stay within the requirements of that COL?

3734   MR. JAAKKOLA: If I could just explain -- and this is on the record in correspondence with staff -- these particular feeds of Montreal Canadiens games had embedded terrestrial radio commercials in them.

3735   We did not sell any national advertising. In fact, we did not know that these were being sold at the national rate. That was all to the benefit of these terrestrial radio stations, who had their messages embedded in the feed.

3736   And our other sports feeds do not work this way.

3737   We did not know about this until it was brought to our attention. As soon as it was brought to our attention, we had no choice but to reprogram the service and drop those feeds.

3738   So it is no longer an issue. It was taken care of immediately when we found out about it. The sad thing is, now we do not have a way of -- there is no availability for a feed that doesn't include these kinds of commercials, so we aren't able to broadcast Habs games on our French channel.

3739   MR. BITOVE: Commissioner, I am so glad that you brought this issue up, because I think this is another COL that we need some clarification on.

3740   And I will tell you, the unfortunate part is the sports fan. Fortunately, we have the Leafs and the Raptors, but still, we cannot carry Montreal Canadiens hockey games in French because of the way the COL -- the specific wording.

3741   What we think is appropriate is, any embedded advertising, where we do not receive any revenue, that should be exempt.

3742   For instance, in the Montreal Canadiens example, if there are embedded ads that are put in by the local station and we put it up on the satellite, the same thing we do for baseball, basketball, hockey and everything else in English, it's caught by this issue of being a dirty feed, and it throws us offside.

3743   So what did we do? We pulled Montreal Canadiens games in French going forward, and I don't think that's right.

3744   So what we think is, if it's an embedded feed -- and Grant probably knows the wording even better than I do -- we are not deriving any benefits from this, other than providing the feed -- putting it on the bird and providing it to our listeners -- this should be allowed to exist going forward.

3745   MR. BUCHANAN: It's not hard to do. When we did the pay-per-view, the video-on-demand stuff, in the Pay Regs -- we originally had, of course, a prohibition against advertising, and that still exists today. But we quickly realized that when you are bringing in event -- sports event programming in particular, they often have ads embedded in them, and as soon as we realized that, we just moved to amend the Regs, and that's what you would find now. Some variant of that language would be what we would propose to use, to say --

3746   The whole reason for the condition was to protect the commercial broadcasters. It's not causing them any harm, it's already in the feed.

3747   We are not selling against them, so it ought to be not an issue.

3748   But the purpose of it remains intact, even if you exempt the dirty feed.

3749   MR. BITOVE: In actuality, it's helping them, because if the local radio station that we pick up the feed from -- the local radio station is selling ads, the local feed, sometimes they will tell their sales guys, you know, also mention the fact that satellite radio is picking it up.

3750   We get zero benefit from it, other than giving our listeners what they want to listen to.

3751   COMMISSIONER MOLNAR: Does this issue exist for anything besides sporting events, where you would pick up a feed that is the commercial radio feed?

3752   MR. BUCHANAN: I don't know if it does for them. It did for us in the pay-per-view -- we had the wrestling, we had probably --

3753   No, I'm not -- if I think of something over the next week, I'll give it to you.

3754   Is there something on satellite radio that might --

3755   MR. REDMOND: Well, it's on the Canadian channels, and we only have a couple that are non -- commercial-free -- the NHL channel, "Laugh Attack" -- that's basically it, moving forward.

3756   So I don't believe that will be an issue for us on any of the Canadian channels.

3757   MR. BUCHANAN: But it ought not to be drafted that way. I mean, suppose there were a special that you wanted to run on the comedy channel that did have commercials embedded in it. You ought to be able to do that if you are not selling against the broadcasters.

3758   COMMISSIONER MOLNAR: Fair enough. I think we have heard, and you have requested -- it's not clear to me how big a problem this should be, given that your requirement is to create original Canadian content on your channels. So this really shouldn't -- it wouldn't appear, should be a big problem for you.

3759   I mean, if it's just happening once or twice -- and how else is it original if you are picking up a commercial feed?

3760   MR. BITOVE: As you asked, we don't think it involves anything other than sports, and what we think is really clear -- and Grant made the point -- the reason you didn't want us selling local advertising was to go against the stations. This is clearly not the intent by this. We get zero from this. If it's an embedded ad that a local station does for a sports team, we are really helping them sell their inventory.

3761   There is no benefit to us, other than we are providing the feed to the listeners, particularly those driving between cities, to listen to Montreal Canadiens hockey games in French.

3762   So, however best you think they fit in going forward but -- I'm glad you raised the question because it's one of the things where we kind of overreacted and went the other way and said, forget it, we're not going to carry Habs games in French.

3763   COMMISSIONER MOLNAR: Fair enough. I'm sure that does affect some of your listeners. You probably would have got a little more sympathy talking to some of these other commissioners because I'm pretty sure I've never listened to a hockey game but, anyway, to move on, I want to talk about an issue in the monitoring of the Sirius channel.

3764   The issue relates to Condition 1, that, as you know, the requirement is that for every non-Canadian channel there be one original Canadian channel -- sorry, for every nine non-Canadian there be one original Canadian, and as I'm sure you know, because you've probably memorized your COLs, that the definition of "original Canadian produced channel" is "a channel produced in Canada that consists of programming not less than 50 per cent of which is produced for and broadcast for the first time on that channel".

3765   We are trying to understand how CBC Radio 1 meets that COL, and I am just going to let you convince us that having CBC Radio 1 as it was in the past, you know, on your Sirius, meets that condition of licence.

3766   MR. REDMOND: Well, I guess, first of all, CBC Radio 1 happens to be the no. 1 Canadian channel on our services, so there is clearly a number of Canadians and non-Canadians listening to it. We've tried to meet the Condition of Licence with Radio 1 by changing out the programming to meet the 50 per cent requirement and we have a lot of negative complaints from subscribers.

3767   I'll ask John and/or Michel to comment a little further on it, but the CBC channel is -- in all cases, are very important to us and our subscribers continue to tell us, especially with Radio 1 and Première Chaîne, that they want to listen to it the way they've been accustomed to listening to it. My guess is that a lot of `em are transient people that are driving from Montreal down to Florida or back, and when we're interrupting the program and changing it out, they don't find it to be a very good experience.

3768   John, do you want to...

3769   COMMISSIONER MOLNAR: And I would appreciate, as you answer this, that you really answer in two sections; one is, what you did provide as a CBC Radio 1 channel, which I understand was a little bit of a modified CBC Radio 1, but how you felt that those modifications allowed you to meet the conditions of your licence through the last term, and if you want to talk to the future, let's do that separate.

3770   So first, let's just talk about what was broadcast on CBC Radio 1 and why you felt that that met the requirement for original produced programming.

3771   MR. LEWIS: Sure. I would be pleased to speak about it.

3772   With the CBC Radio 1 schedule that we have provided in response to some of the deficiency questions, in fact, it goes back to the time period that you spoke about this, we have had that banter back and forth with Commission staff. Because of the way that the CBC has altered the schedule to put it up on the satellite radio version as opposed to the terrestrial version, it was our understanding that that shift in programming, that time shift in programming, allowed the CBC to broadcast, I believe its 59 per cent of its programming, first on Sirius, thereby meeting the condition of licence.

3773   COMMISSIONER MOLNAR: You understand that the condition of licence says that it is "programming that is produced for and broadcast for the first time on that channel", so because they accelerated the broadcast of some of the programs, I mean, it's hard for me to make your case, but if you're telling me that "Vinyl Cafe", that's broadcast a little earlier because it's on -- than it is on CBC 1 is all of a sudden produced for Sirius, that's going to be a hard case to make.

3774   MR. LEWIS: Sure, and I do appreciate where you're coming from with this. Let me try and make that case again, regardless of the difficulty in doing it.

3775   Some of the discussions that I've had with the programming staff of the CBC have given me a little more confidence and some of the issues that they've raised, they've done some research recently, within the last couple of years, that indicates that there are in excess of 10 per cent of Canadians across the country that now are picking up their CBC feeds from Sirius satellite radio. In fact, in western provinces it's 15 per cent.

3776   So that suggests to them that there is a growing population of Canadians that in fact are choosing to get their CBC feed solely from satellite radio. So for them, the program "Vinyl Café", that it's produced for them as individual Canadians, regardless of where they're getting it. They happen to be getting it from satellite radio. So that was one.

3777   Another one that gave me some confidence was that, as extensive as the CBC is broadcast across the country, there's still in excess of a million Canadians that do not have access to a terrestrial feed, so they're not getting CBC terrestrially at all. They are getting CBC from satellite radio. So for them, they're produced for and broadcast first on satellite radio would certainly fall in that condition.

3778   MR. TREMBLAY: I would suggest, commissioner, that we're hitting a central issue, because I think that while we certainly recognize that the overall regulatory framework was put in place for Canadian service at the outset applies well to brand new services yet to create, once you're entering the territory of the CBC core services, like "Première Chaîne" or Radio 1, I think the expectations of the listener is quite different.

3779   Certainly we have endeavoured to really attempt to meet the condition in whatever way we could. For example, in the case of Première Chaîne, in order to meet the 50 per cent original content, we are interrupting the regular programming and replacing it with other programming, musical or not. So it means that as of 5 o'clock in the evening, people who are used to listen to programs like "Désautels" or "Classe économique" or top rated programming, do not have access to these programs because we have to revert to music or something else. So the bottom line is that we have to distort the schedule in order to meet the condition.

3780   We've been respectful of it, but I think it's created significant problem and numerous complaints, both to the CBC and to Sirius. So I think that I'm happy that we're having the discussion today, because I think that dealing with an existing service of the scope of Première Chaîne or Radio 1 is a significant issue and we would hope that now we can engage in a discussion that will lead us to applying a different regime and an exception to these two services.

3781   COMMISSIONER MOLNAR: Okay. You know, it appears quite evident that there is a value to your subscribers in receiving these stations; however, one of the requirements, as you know, in trying to balance the large number of non-Canadian channels that were coming in to the nation was there needs to be some give-back, and you've done a good job in your video of saying how you have created all this through your original channels.

3782   It's not obvious what you've created. The requirement was for every nine non-Canadian to come in, one original Canadian channel would be produced. It is not obvious to me in any way how the retransmission of CBC, whether you've moved around the timing of their schedule, I mean, you're not suggesting you've created or produced new programming, you just shuffled the schedule, as far as I understand, how that meets the COL that says "create new programming", add new channels to our system to compensate for the number of non-Canadian channels that you've brought in.

3783   MR. BITOVE: You know, Commissioner, I wasn't involved with Sirius when they made this decision, but I will give you my perspective, because it is irrelevant. It's not a benefit to us as much as it's a benefit to Canadians that some of the main CBC feeds, you know, the primary English and French top channels, are up on satellite radio, because there's people who won't give the radio service if not for satellite radio, and it's Canadians who aren't necessarily in the Canadian geography who really want to -- sorry, I thought I had this off -- who really want to hear CBC programming.

3784   Within the specifics of the law, are they on side? Yeah. They -- Gerry manned the programming to make sure they complied with the COLs, just as you recognized, and they can keep doing that. And Michel's been asking us to kind of do this to make sure that this is part of this hearing.

3785   The CBC would like their flagship English and French channels on satellite radio to be simulcasted so that it's the same programming for Canadians no matter where they are. So we can either keep doing it the way we have, which we think within strict compliance is on side, or we can recognized the fact as the CBC two premier channels in French and English are important to all Canadians and satellite radio is one of the ways of getting it to all Canadians.

3786   MR. LEWIS: I wonder if I could add just a small point to that.

3787   We get a constant flood of complaints coming in about CBC and particularly post-merger for folks on the XM side. One that we got last week really struck home. It's a Canadian who happens to drive from Canada into the U.S., had Sirius, had the CBC, bought a new vehicle that only had XM. It struck him that he is able to pick up the American public broadcaster, NPR, but he's not able to pick up the Canadian public broadcaster, and he posed that queestion to us, to say, isn't that fundamentally wrong? There's something, as a Canadian citizen, that just isn't right about that.

3788   COMMISSIONER MOLNAR: We're going to have a larger discussion about your proposed channel line-up that's going forward, probably after lunch, but we're now talking about the CBC issue, and I just want to be clear that if I said to you that I thought what you were doing with CBC today met those conditions, I apologize. I ask that you convince me that what you're doing, how CBC today is produced meets the requirements that it be produced for Sirius, and I'm not sure I actually heard that answer.

3789   Where the content is created for CBC Radio 1 and the times are shifted as to when it's broadcast within the satellite feed versus the other terrestrial feeds, I remain to be convinced that that actually meets the condition of the licence that exists today. So you may try once again, we'll have it on the record, and there's many commissioners who maybe are convinced, so --

3790   MR. TREMBLAY: Radio 1 and Première Chaîne are what they are, and I know it's been decided from the outset that Sirius would carry them because they are of value, both to subscribers and Canadians at large. We have endeavoured to meet the condition in the way that you describe, and I think that, you know, it's been a challenge from the outset and doing so has generated subscriber dissatisfaction and this has to be addressed.

3791   COMMISSIONER MOLNAR: Right. You have noted that Radio 1 and Première Chaîne are expected by your customers, but there is nothing that prohibits you from carrying those outside of your COL requirements, right? Is there anything that would prohibit you from carrying those?

3792   MR. REDMOND: Yes. We have no additional bandwidth or capacity to put any additional channels on, so if it's not within the 12 or 13 that we're broadcasting in each network today, there is no ability for us to put it up. And we have contractual commitments with the CBC.

3793   COMMISSIONER MOLNAR: Explain to me you have contractual commitments; you're committed to carrying those channels?

3794   MR. REDMOND: Yes.

3795   COMMISSIONER MOLNAR: Even though they don't meet your COLs?

3796   MR. BITOVE: I think it's the other way around. Before the mergers here, since CBC had a contract where CBC would produce channels that comply with the COLs and if they did, Sirius had to carry it, and that's still the case going forward. But as Mark says, we don't have more bandwidth from the Americans, so in the event that you said these channels are off, it would mean delisting them from the program line because there's no other way to put them on there; our bandwidth is finite.

3797   COMMISSIONER MOLNAR: Okay. So fair enough. So really the options are either CBC produces for you a channel that complies with your COL and you carry that as you've proposed, or we as a Commission agree to exempt CBC Radio 1 and Première Chaîne from COL 1.

3798   MR. REDMOND: Yes; two of the six CBC channels, the other four would remain as they are and broadcast the way they are.

3799   COMMISSIONER MOLNAR: Before we get into the future, the last thing I just wanted to cover from prior licensing requirements and prior decisions were the commitments, the five commitments that you made upon the merger. I know you referenced it in your opening statements, that you have met the majority of those commitments.

3800   The "Best of" package, if I understand, is scheduled to come out in October; is that true?

3801   MR. REDMOND: Yes.

3802   COMMISSIONER MOLNAR: Okay. And we'll talk about that a little bit more too as some of the details of that "Best of" package.

3803   The last is the online media player. You've mentioned that you have technical issues with delivering that product. Could you expand a little bit, and you're doing it, I think you said, later this year?

3804   MR. REDMOND: We hope to have it in place by the end of this year. It starts with the fact that the two companies, prior to the merger, had two different media players, two different IT systems that support the back ends of how you authenticate somebody using either media player, and it's taking us time, along with the US, to work to a combined media player that would allow us to stream both sets of channels. We're working hard at it, but we don't have all the technical work done as of yet.

3805   It's not as simple as just saying "turn one on, turn one off". I mean, today, our IT systems don't even allow us to look at a Sirius subscriber and an XM subscriber that are on either system. We have no mechanism today to be able to look at that customer as a Sirius XM customer; they're on one network or the other. That work is going to take us a while to get a combined system in place to manage that.

3806   COMMISSIONER MOLNAR: So would it be true that -- I mean, it was identified as one of the benefits to customers of the merger, but it would also be of benefit to you in the online space to have that as a combined resource; is that true?

3807   MR. REDMOND: Well, I think now that we're moving towards a harmonized channel line-up in Canada, a harmonized channel line-up in the US, and a "Best of" offer for best of Sirius to an XM and a best of XM to a Sirius subscriber, I think it's probably less important because an XM subscriber online today is virtually getting all the same music channels that a Sirius subscriber gets online today. The only thing they're not getting is "The Best of" and a few of the Canadian channels, and our objective moving forward would be in the online world to be able to give them the opportunity to do that.

3808   So I don't think you necessarily -- we necessarily need two separate media players to fulfil a consumer's appetite to want to have what's on both networks in a streamed world.

3809   COMMISSIONER MOLNAR: Mr. Chairman, those are my questions related to the past licence term, and I will leave it to you whether we want to have a break before we go into the future or whether any other commissioners or legal or anybody has any questions related to the past term.

3810   THE CHAIRMAN: Thank you, madame Molnar. Perhaps the future this afternoon, but just a couple of points and maybe other commissioners may have some points in the next few minutes and then we'll take a lunch break.

3811   Maître Buchanan, it's not your contention that there is a carry-forward possibility for CTD?

3812   MR. BUCHANAN: I'm sorry; that there's a carry-forward position...?

3813   THE CHAIRPERSON: You mentioned that there's no requirement under CTD that the 5 per cent be made within the broadcast year.

3814   MR. BUCHANAN: Well, the commitments are made within the broadcast year, the actual passing of the cheque.

3815   THE CHAIRMAN: And the payment should be made within that broadcast year, should it not?

3816   MR. BUCHANAN: Certainly under CCD it's been clearly stated by the Commission. I haven't seen that with respect to CTD, no.

3817   THE CHAIRPERSON: And under CTD, if you look I think it's 7(a): During each broadcast year, the licensee shall contribute a minimum of 5 per cent of gross revenues.

3818   And that is not dissimilar from the indication under CCD.

3819   MR. BITOVE: I don't think, Mr. Chair, we're disputing to contribute; I think the word "contribute" means the cash is paid or the commitment made --

3820   THE CHAIRMAN: In the broadcast year.

3821   MR. BITOVE:  -- in the broadcast year. I think that is the issue. But irrespective of that, we agree with Commissioner Molnar, going forward, and that's why it's part of Mark's five-point plan. If they don't have it in by August --

3822   THE CHAIRMAN: It's in the five-point plan, I understand.

3823   MR. BITOVE: So going forward, there's no uncertainty on this.

3824   THE CHAIRPERSON: Okay. Great.

3825   And on the comedy initiative, my understanding under CCD and CTD is that journalism and music programs would qualify, but humoristic or comedy schools would not qualify. Are you asking for an exemption to that or do you disagree with that interpretation?

3826   MR. BUCHANAN: We disagree with that interpretation. I'll find it at some point; we laid out our reasons in the January 19th filing.

3827   THE CHAIRMAN: We can look at that this afternoon.

3828   MR. BUCHANAN: Sure.

3829   THE CHAIRMAN: And on the self-serving issue, would you agree that, you know, supporting Humber as part of your -- and the content that is derived from Humber as part of your channel line-up, that this may be considered self-serving in that it's not incremental to the cost of doing business, you're paying yourselves.

3830   MR. BITOVE: You know what, Mr. Chair, it is and it isn't, and I'll tell you why. We're kind of going above and beyond the programming we would do for "Laugh Attack" by funding these school programs so we can have extra programming or extra content. So we don't have to do it, but I guess it's one of those if we're giving them the money to do it anyway, and all of artists want exposure anyway, then we'll put it on our programming line-up as well.

3831   So the true answer is somewhere in the middle.

3832   THE CHAIRMAN: Yes, I understand that and that's the point I'm trying to make, that that would constitute self-serving. We make a whole sort of debate on what's self-serving or not, but you understand where the line of questioning comes from.

3833   MR. BITOVE: Okay, and that's why I'm saying that I don't think it's a black and white issue because -- let's take an example. We gave Humber a cheque to do it; they put on a comedy event, and we don't carry it. I think they'd be more upset with that than you or we would be, and I think that's the point we're trying to make, that if we give them the money and they do it, and all artists want exposure, and the fact that we don't have to have that content on our channel but we elect to do it really to help them out, and that's why it's kind of like -- it's a holistic world between the artist and what we provide and how the CTD money is spent to pull it all together.

3834   MR. REDMOND: And I'll just add. I think it is important for us to try to help foster new content that is being created and developed in Canada to go on to a North American platform and that's effectively what we're doing.

3835   We have a condition to have 85 per cent Canadian on our Comedy channel, we want to continue to make sure that people that are listening to that channel are being exposed to the latest and newest and emerging, no different than music emerging talents that are out there.

3836   THE CHAIRPERSON: That was clearly part of the raison d'être of the SIRIUS XM back in '05.

3837   MR. BITOVE: So, where I take -- where I think -- I think we don't view it as self-serving because we don't have to put it on there and we don't need their content. If it's self-serving anyone's interest it's at artist interest who says -- who says hey! the more exposure you give me, the better it is.

3838   THE CHAIRPERSON: Yes. Well, that's fine, I understand that and you're paying the artist to produce the content and you're promoting the artist by playing it on SIRIUS XM.

3839   Briefly, is there any --

3840   Monsieur Denton, I think you had a question? Mr.Buchanan, you want to comment?

3841   MR. BUCHANAN: I did find the quote from January 19th. One of the bullets in the 2006 Policy because the question is if we move to CCD with this continued account. So, the CCD checklist includes: Independent artists dedicated to producing new spoken word content that would otherwise not be produced for broadcast.

3842   So, that's not dependent on whether it's humour or journalism or anything else, it's spoken word, and that's what this is. It's incremental, we do agree with that, incremental spoken word programming.

3843   THE CHAIRPERSON: Okay. Maître Denton.

3844   COMMISSIONER DENTON: Well, just a very short question regarding your content. You mentioned on page 10 of your brief that conventional radio broadcasters are locally relevant, satellite radio in Iran is prohibited from airing local programming and you raised the issue but move directly to the question of the extension of your term for seven years.

3845   Are you sort of raising and dropping the question of licensing of ability to give -- to have local radio? Is it relevant to your business given your continent-wide distribution system?

3846   MR. REDMOND: I didn't expect to get that one, but -- You know, to be perfectly honest with you, we didn't come in here expecting to talk about the edition of local content to our network. Is there some relevance in us having some local content on the network? Absolutely, but you know, the point was that, you know, from a satellite radio standpoint, the internet radio companies are more relevant competitors to us because of the national scope.

3847   COMMISSIONER DENTON: Indeed, global.

3848   MR. REDMOND: Yes, global scope. And around the universe it's not 120 channels, in the universe it's 5,000, 10,000 channels.

3849   COMMISSIONER DENTON: Yes, I have internet radio at home and it's anything in the world, anywhere.

3850   So, given that internet radio is anything in the world, anywhere, any time, how relevant do you see that form of competition to you in the future and in particular, to the question of getting appropriate technology into cars?

3851   MR. REDMOND: Well, you know, they're in the car. It's a question of how much further they get into the car. They have done deals with Ford, with GM, with Chrysler and others and I think, you know, for us, you know, what's relevant for our business is to continue to bring exclusive relevant content to our subscribers that they're willing to pay for and not just quantity but quality.

3852   And, you know, what we'll try to do moving forward is to supplement our broadcast network with an IP delivered solution as well so that we don't look like we're uncompetitive to internet radio. But if people do decide that they want to stream content on a wireless device, we'll have solutions for them.

3853   COMMISSIONER DENTON: And that's extremely important; isn't?

3854   MR. REDMOND: Yes and, you know, we have the solutions today with, you know, the apps that we've developed for iPhone and Blackberry and Android devices and, you know, I believe for us what's important is to be able to give our subscribers that are paying us $15.00 a month access to our content irrespective of the platform.

3855   Ideally, we like it through our broadcast network, but if they want to ultimately listen on their iPhone and pay, you know, whatever data charges a month to listen to our content on their iPhone, we should give them the ability to do that.

3856   If they want to stream it at their home on their computer, we should give them the ability to do that because at the end of the day, they're going to be more attached to our content and a better subscriber for us on the long run.

3857   COMMISSIONER DENTON: Yes. Well, I mean, I'm having internet radio, I'm fully conscious of the fact that you've got a value price proposition with the consumer and given -- when I see the figures, you're Canada's in a sense largest radio station in terms of contributions.

3858   So, if you will excuse the curiosity and you either can or cannot answer this question, you've said: « And unlike commercial radio, we subsidize everyone of these radios by paying the car manufacturers."

3859   Are you allowed to say how much your subsidy -- do you pay for the entire costs or some part of the costs?

3860   MR. REDMOND: We pay some part of the costs. If you look at our financials, we have a line in there called "subsidies and distribution", you know that number this year is close to $35 million we'll pay out in subsidies.

3861   You know, we have to entice to want to put our content and our service into their vehicle and that has been a part of our business model from the beginning.

3862   COMMISSIONER DENTON: Thank you. Those are my questions.

3863   THE CHAIRPERSON: Madam Poirier.

3864   COMMISSIONER POIRIER: Yes. Maybe one thing to add to the record. I was told that comedy is mentioned eligible, but it can't be for broadcast solely by the licensee and should be organized by a third party. That would make Humber not suitable. So, do you agree on that?

3865   MR. BUCHANAN: That it is not organized by a third party? I thought these donations were going out to Humber out to Just for Laughs out to these third parties; am I wrong on that?

3866   MS SASSEVILLE: No. That's correct.

3867   COMMISSIONER POIRIER: Okay. Thank you.

3868   THE CHAIRPERSON: Yes, they are going on third parties and that makes them eligible. But the programming rights must not be proprietary to the licensee. That's my understanding and maître Buchanan can --

3869   MR. BUCHANAN: And they are not. I mean, I think if there is a comment that comes out of the Humber school system that's that we put up on our service, we put it up to give that person exposure. It's not exclusive to us by any means.

3870   MR. LEWIS: If I could add too, in addition and to just follow up with what Mark was saying, each comic actually walks away with their content in a disc that they can then use and sell themselves.

3871   THE CHAIRPERSON: Right. It is their property.

3872   MR. LEWIS: It's their property.

3873   THE CHAIRPERSON: It has to be their property, it has to be incremental to the cost of doing business for the licensee.

3874   THE CHAIRPERSON: I think -- I think where get confused, and I know we are a little bit in the weeds here  --

3875   MR. BITOVE: I am trying to say because -- I think what you're actually trying to deal with is if you had a -- whether it was a top 40 station or whatever, trying you know to put on a concert, put on a promotion whatever else and then put, carry it on its channel or on its radio station and then broadcast it.

3876   THE CHAIRPERSON: I think it's available to their listenership.

3877   MR. BITOVE: We satellite radio, we kind of go where no one goes and this money is really spent on where these people don't have it and don't have the exposure and everything else.

3878   So, the problem we think of it in a standard context of someone trying to self-promote or take advantage of, you know, in a popular format, but these are unpopular formats where we're trying to create popularity rent.

3879   MR. BUCHANAN: And if you look at the other stuff that you have done on CCD and sort of this area, you look at -- it has to be a sort of a departure or something you -- it can't be something you normally do and I think that's what these irregular activities are with Humber and Just for Laughs and so on.

3880   I am looking at this CORUS case last year or two years ago in St. Thomas where you said this is like normal for music base stations what you do there. This is the same as what you've done in the past.

3881   THE CHAIRPERSON: Are you quoting me again?

3882   MR. BUCHANAN: I am, I am, this was a great one.

3883   THE CHAIRPERSON: I think that was last year.

3884   MR. BUCHANAN: Yes, it was 2010, is that right, November 2010.

3885   THE CHAIRPERSON: That was me.

3886   MR. BUCHANAN: It says here, you know, and they they shared it amongst their stations. So, you say that doesn't work. These are -- that is not what this is. So, I mean, we looked at some of that stuff, in fact this fits fine. I mean, it would fit under CCD if we were under CCD.

3887   THE CHAIRPERSON: Right. Now, that was an ASTRAL station last year, okay, I'm sorry.

3888   Back to the dirty feeds and maybe just to touch upon CBC Radio-Can. and I understand the conundrum you're in. That being said, how else can you compensate for the « engagement », the undertaking that you agreed to and that was providing the original content, given that you don't want to -- je ne veux pas déplacer Maisonneuve et les autres, là, c'est des émissions qui sont populaires et ça dérange les gens de ne pas être en mesure de les écouter au moment où ils sont diffusés, alors -- is there anything else that you could sort of put on the table in exchange for that kind of flexibility?

3889   MR. TREMBLAY: I guess what I can say is that now we have attempted in good faith from the outset to really, you know, modify a number of the channels and because we are number 1 trail to be on a new platform, I think the experience has demonstrated that now we did so at our peril and that has raised a lot of concern.

3890   We have not had such concern with like, now we are, you know, SIRIUS carries currently four additional CBC services and they are designed specifically to meet the requirements of the condition.

3891   So, I think that now where we could have total freedom like now we have delivered the goods and I guess that, you know, if there are opportunities for growth, like now we would be pleased to be providing like now additional content, but I think that the experience with Radio One and Première Chaîne has proven to be quite difficult, given the expectations because now as people walk out of their car, walk into their home and then they are on a different feed and this is an issue.

3892   LE PRÉSIDENT: Mais peut-être qu'il y a un moyen de trouver une autre solution pour compenser l'idée derrière ce contenu original qui est exigé. Admettons qu'on soit d'accord avec vous, là, sur ce point-là et qu'il y a une petite réflexion qui peut être apportée à cet égard.

3893   M. TREMBLAY: On s'engage à réfléchir dans ce sens-là. Je comprends bien le sens de votre question.


3895   LE PRÉSIDENT: Merci.

3896   And back to the dirty feeds, there is no real solution, hey, to offering people a real hockey team on satellite radio.

3897   MR. BITOVE: You put the limitation on us from selling local advertising to protect the local radio stations. If we are not deriving a benefit from it, then it should be -- we should be able to carry.

3898   THE CHAIRPERSON: Would you be able to derive a benefit from it and that you might pay less for the feed given the fact that they're advertising on satellite radio? Is that a potential way of getting the system, I just put it up there?

3899   MR. REDMOND: I don't think so. I mean, remember, this is a group that doesn't really like us and doesn't really like us to take our advertising.

3900   THE CHAIRPERSON: Canadians' fans are you talking about?

3901   MR. REDMOND: No; commercial radio, so --

3902   THE CHAIRPERSON: Okay. You don't see that as a potential way of giving the system or circumventing the idea behind commercial free satellite radio?

3903   MR. REDMOND: No. I mean, clearly, if we had an opportunity to remove the dirty feed and put our own ad in and sell it and, you know, we should pay our fair share for that. But if we don't, I don't -- you know, we are not going to try to circumvent this.

3904   THE CHAIRPERSON: Would you pay less for that feed, given the fact that the broadcasters national advertising is getting additional exposure?

3905   MR. REDMOND: We don't actually pay for the fee. It's part of our agreement with the NHL that they have to provide us with the games to be able to put up.

3906   THE CHAIRPERSON: Well, someone pays for that feed?

3907   MR. BITOVE: Well, we have a -- so the way it works, we have a deal with the NHL where we can pick up any game, right. So, what we do with all the English language channels is we just get it from the local broadcaster, put it up on the bird and our listeners have it and they run the local -- they run the ads. Somehow --

3908   THE CHAIRPERSON: The local ads?

3909   MR. BITOVE: They run the local ads.


3911   MR. BITOVE: And if some of the teams promote the fact that satellite radio picks up their feed as well.


3913   MR. BITOVE: So, we don't derive anything. There is no -- there is no contract between us and the local team and us on the local radio station.


3915   MR. BITOVE: It's all done through the league.

3916   THE CHAIRPERSON: And how do we do something about that for French?

3917   MR. BITOVE: I think Mr. Buchanan can speak to it, but something along the lines if it's imbedded in the local feed and we do not sell, you know, we are not getting any benefit from it, then we should be able to carry it.

3918   MR. BUCHANAN: We will get you the language over lunch.

3919   THE CHAIRPERSON: Okay. Anything else? Commissioner Patrone.

3920   COMMISSIONER PATRONE: Thank you, Mr. Chairman. Just to that point, are you able to do SimSub and I am using the term loosely, but over the local ads that are going over the game?

3921   MR. LEWIS: There are some programs that we can do that, but we need to have the rights to do that and with these feeds we don't have the right to do it. We can't broadcast it.

3922   COMMISSIONER PATRONE: But there is no regulatory --

3923   MR. LEWIS: It's not a regulatory issue. It's a contractual issue with the NHL.

3924   COMMISSIONER PATRONE: But potentially that would --

3925   MR. LEWIS: We have to take the dirty feed and the nature of this one happens to be that the way that the French broadcaster sells the deal, they sell it at a national rate, as opposed to local rate and that's where we ran into difficulty.

3926   COMMISSIONER PATRONE: But I mean, there is nothing preventing you from reaching some kind of contractual agreement that would allow you to monetize essentially those sports presentations?

3927   MR. BITOVE: I think then if you take the Chair's example, there is nothing I would imagine that could stop us from going to the Canadian teams and the local broadcasting and carving a deal that if we sell ads, we have to pay them something, but we would be governed by your six minutes, right, the Ad Regulations you have on us. So, I don't think we can gain the system, so to speak.

3928   COMMISSIONER PATRONE: I am not suggesting --

3929   MR. BITOVE: No, no, but up to this point, I think if we end up going that route, there will be contracts in place and then we are under the COLS that we have with you.

3930   COMMISSIONER PATRONE: So, it's not worth it is what you're -- is that where you're going? Yes?

3931   MR. BITOVE: Not at all, not today.


3933   COMMISSIONER POIRIER: And just to add on the same topic, is someone else benefiting from that though? You are not, but someone else could be benefiting from that?

3934   MR. BITOVE: I mean, I think the only potential beneficiary is the commercial radio channel that is broadcasting the game and whether or not they are selling that advertising at a higher rate than it typically would.

3935   COMMISSIONER POIRIER: That's it. And so, a third party could be benefiting from that.

3936   MR. BITOVE: Yes, but madame Commissioner, the way these teams work, you know, ultimately it would make its way back to the Club, the local team. The next time their rights are up for bid, the local broadcaster would -- you know, they would be aware that they get extra dollars for inventory by being on satellite radio and they turn those over to the team.

3937   But as Commissioner Patrone -- like there is no revenue on it today and I am not sure there ever will be because it's a fraction of the audience. What you are really serving is -- sorry, Commissioner Morin, but the die hard fed who is driving between big cities and can't get the broadcast one wants to hear, that's what you are really serving in this.

3938   Because usually, you know, the Habs fans in Montreal is pretty much listening to it on his local station. He really doesn't listen to it on us. He only listens to it on us when he is leaving Montreal on his way to Quebec City or Sherbrooke around.

3939   THE CHAIRPERSON: Or on his way to Florida.

3940   Alors, madame Roy, 13 h 45 -- so 1:45 we will be back, part 2. Thank you.

--- Upon recessing at 1217

--- Upon resuming at 1346

3941   THE CHAIRPERSON: Good afternoon. Just leave us your CD and go. Let's hear the demo and go.

3942   Madam Roy...?

3943   THE SECRETARY: We will now hear three interveners and after we will come back with questions for Sirius.

3944   We will hear the presentation of The Junction Inc., Mr. Ryan Malcolm and Les disques Indica. We will hear each presentation individually which will then followed by questions from the panel.

3945   We will start with The Junction Inc. Please introduce yourselves for the record and you have five minutes

3946   Thank you.


3947   MR. JAMESON: My name is Matt Jameson and I play in a band called The Junction. I'm also the President of The Junction Inc.

3948   I'm here in person today to basically express my support for Sirius XM because over the years they have supported us greatly by playing our music on their stations. We have been part of events.

3949   They have had our music featured on NHL plays of the week.

3950   I'm trying to think. Oh, we have also been in studio for interviews, sort of they have an online community which they share recorded performances of ours and even play those live performances on the radio stations.

3951   So that's simply why I'm here.

3952   I would like to see this business grow and I think it's important to bands. I mean I know a lot of other bands that we were with or just hanging around with.

3953   On the surface it's important and the accolades that we get, you know, in terms of being part of the grocery list and having you know success with them is great for our resume when we are trying to get the music outside of Canada.

3954   THE SECRETARY: Thank you.

3955   THE CHAIRPERSON: Great. Is that helping you -- do you have any other bands that you have managed or that you --

3956   MR. JAMESON: I have played in this band for over 10 years.

3957   THE CHAIRPERSON: Okay, The Junction Inc. only takes care of Junction?

3958   MR. JAMESON: That's correct.

3959   THE CHAIRPERSON: Okay, and does that -- are you having success off the border?

3960   MR. JAMESON: I wouldn't say we were having success. You know we just simply put the record out digitally. Our most recent release we put it out digitally south of the border.

3961   We have had other successes just in terms of, you know, some sync placements on television and you know particular emails, people reaching out that may have heard it that, you know, say, "If you guys ever make it out to Arkansas please make sure you hit us up" kind of stuff like that.

3962   THE CHAIRPERSON: You got any gigs from being heard down there?

3963   MR. JAMESON: Yes, we performed last February or maybe it was the February prior to that where we did a tour of the east -- some of the eastern states basically going down past the Falls, out to Boston, down to New York and back.

3964   We have got another show lined up in Niagara Falls next month on the New York side as well.

3965   THE CHAIRPERSON: Okay. Would you credit some of that success to your playtime on Sirius?

3966   MR. JAMESON: I would; I would. They are very quick, you know. A of times when you want to - our music is -- it's not written for commercial radio but it is definitely something that can get played on the radio. It's not death metal. You know we definitely got featured on their stations and some terrestrial stations as well.

3967   But in terms of us handing them a new record and the speed of which that music gets onto their airwaves, as opposed to traditional commercial radio stations, definitely much quicker. It feels like they are very supportive of what we do.

3968   THE CHAIRPERSON: Thanks.

3969   Well, next time bring us some of the music.

3970   Mr. Campbell -- sorry, Malcolm?


3971   MR. MALCOLM: Hi. My name is Ryan Malcolm and I am a lead singer of a band called Low Level Flight and also the owner of Brave Records which is the band's label.

3972   You know it's very similar to Matt's story. We have had a tonne of support from Sirius XM over the last three or four years on our previous album and our current album.

3973   You know, just sort of to reiterate what Matt was saying is saying, they seem a lot quicker and more about the artist, I think. We do get play on commercial radio but I think the difference is, especially for satellite radio in Canada, the type of music listener that we encounter whether it's at our shows or whether it's online getting messages from south of the border, these are people that pay for the service. So they really are fans of our music because they are actually putting, you know, their money where their mouth is.

3974   Those types of fans for independent bands are very important because we need shows to make money. You know it's one of the ways that we are able to do that.

3975   THE CHAIRPERSON: Okay. And are you getting some exposure off the border?

3976   MR. MALCOLM: I mean we are. We get, aside from the numerous spins that our music gets, you know, social networking; social media. We are well beyond where we thought we would be a year ago both overseas and south of the border.

3977   You know a lot of times we will get messages from people in California saying they heard our stuff while driving the car or, you know, that's led to shows, you know a lot like Matt was saying, here and there.

3978   THE CHAIRPERSON: Thank you, Mr. Malcolm.

3979   Les Disques Indica.


3980   M. SCHULLER : Bonjour. Je m'appelle Franz. Je joue dans un groupe de musique qui s'appelle GrimSkunk. Je suis président des Disques Indica, qui est une étiquette de disques de Montréal qui existe depuis 15 ans, indépendante.

3981   Je suis ici surtout pour soutenir la radio satellite Sirius XM, que j'ai soutenue dès le début, mais particulièrement, en fait, pour essayer de dire à quel point c'est important d'avoir de la diversité, puis des choix, puis des options de diffusion pour nos artistes, pour notre musique, pour notre culture en ce moment dans notre pays.

3982   Ce que Sirius puis XM ont fait depuis le début de leur existence, c'est soutenir non seulement -- je suis trop fort, hein? J'ai une grande gueule, excusez-moi -- c'est non seulement soutenir des artistes de manière...

3983   LE PRÉSIDENT : Apparemment, tu as un certain effet sur les femmes aussi là.

--- Laughter

3984   M. SCHULLER : ...soutenir les artistes directement avec les contributions qu'ils font avec votre ruling initial de mettre de l'argent dans le milieu, qui est essentiel, c'est précieux, mais non seulement ça, mais aussi dans des événements qui sont des événements artistiques, culturels, musicaux, ces choses-là.

3985   Par exemple, les Francouvertes, c'est un exemple au Québec. C'est un événement où les jeunes artistes peuvent présenter, puis les Francouvertes, c'est devenu un peu... c'est devenu une référence pour « breaker » des nouveaux artistes, en fait, au Québec.

3986   Et le fait d'avoir du soutien d'une compagnie comme SiriusXM pour beaucoup de ces événements-là, c'est aussi important puis aussi essentiel que le soutien direct de nos artistes, et évidemment, le airplay qu'ils donnent aux artistes.

3987   Moi, j'ai beaucoup de soutien du côté anglophone et francophone de la part du service.

3988   Peut-être un exemple intéressant, c'est l'exemple d'une artiste qui s'appelle Caracol, avec qui je travaille, qui chante surtout en français, puis qui reçoit presque quotidiennement un message de quelqu'un, particulièrement aux États-Unis -- je ne sais pas pourquoi -- quelqu'un qui dit, je viens d'entendre ta musique sur la radio satellite, je trouve ça génial. Par exemple, quand elle jouait à New York, il y a des gens qui ont fait cinq heures de voiture pour venir voir son spectacle, tellement qu'ils étaient enchantés.

3989   Je pense qu'on parle de « breaker down » les frontières avec ce système-là. D'avoir des trucs qui sont nationaux ou même plus que nationaux, c'est vraiment ça qu'on a besoin parce qu'en ce moment, la radio commerciale terrestre, pour nous, c'est presque... c'est une catastrophe.

3990   On est au bord, en fait, de la faillite totale de notre industrie et de la culture, particulièrement au Québec et en français, avec la situation actuelle des radios commerciales, surtout en français, qui, grosso modo, ne jouent plus de musique francophone ou d'artistes canadiens ou francophones ou québécois at all almost. Ils ont plus ou moins arrêté de jouer complètement.

3991   Ah, oui, oui. Allez voir le Top 20 d'Énergie puis amusez-vous à trouver un artiste francophone dans le Top 20 qui n'est pas sur Star Académie. Faites vos recherches.

3992   We are at a crossroads right now in this country and services like this are absolutely essential.

3993   I would argue that we should go the other way than the government is going and we should double or triple the CBC and Radio-Canada's budget and do what the Australians have done and do what the British have done and have a very, very strong public broadcaster that's not worried about advertising, that's not worried about ratings but is about programming and about culture. If we don't do it we're in big, big, big trouble. However, that's not what we are here to discuss today.

3994   THE CHAIRPERSON: It's outside the scope of this hearing --

3995   MR. SCHULLER: It has a lot to do with --

3996   COMMISSIONER POIRIER: Come back in November. Revenez au mois de novembre.

3997   M. SCHULLER : Je vais revenir avec plaisir.

3998   Ça l'a rapport avec ce que je veux dire par rapport à la radio satellite parce que c'est un service qui est basé sur de la programmation et sur de la diversité, puis c'est ce qui nous manque gravement. Puis, grosso modo, si on n'avait pas ces services-là, on serait dans la marde -- excusez le terme.

3999   Et puis on a perdu les systèmes que j'appellerais les stepping stones. T'avais les mainstream media, par exemple, la radio commerciale ou la télévision, les « Tout le monde en parle », les « George Stroumboulopoulos », les choses qui touchent la grande masse. Et t'as les jeunes artistes comme Ryan ou Matt ou mes artistes qui sont en bas, inconnus.

4000   À l'époque, entre les deux, on avait des MusiquePlus, on avait des MuchMusic, on avait des choses qui servaient de stepping stone pour grimper l'échelle puis arriver au mainstream. Maintenant, il n'y en a plus. Ça fait qu'on a besoin de services comme ça qui servent de stepping stone pour pouvoir monter graduellement puis arriver à se faire entendre.

4001   Moi, j'ai fait une conférence pour les gens de Réseau Centre, qui sont les diffuseurs du Centre du Québec, les gens qui font les spectacles, les salles, les théâtres. Ils m'ont invité pour parler dans un truc qui s'appelle « L'avenir de la musique francophone. »

4002   Puis la raison pourquoi ils m'ont invité, c'était qu'ils ne vendent plus de billets pour leurs spectacles francophones. Ils capotent parce qu'il n'y a plus personne qui vient acheter des billets pour les spectacles d'artistes québécois et francophones. Et la raison que je leur ai donnée : En grande partie, c'est parce qu'on ne les entend plus dans le mainstream.

4003   On a besoin de systèmes comme SiriusXm et d'autres, je pense, encore plus larges -- puis on peut en parler en novembre -- pour donner une chance aux artistes d'être entendus, et caetera, mais aussi surtout pour que la diffusion se fasse en grades, en étapes. Puis pour moi, ce grade-là, c'est un peu le first ou le second step de beaucoup, beaucoup d'artistes puis de producteurs de contenu au Canada. Ce service-là est essentiel. Si on ne l'avait pas, on aurait presque rien.

4004   LE PRÉSIDENT : Puis l'étapisme musical, est-ce que ça manque au niveau francophone ou également au niveau anglophone?

4005   M. SCHULLER : Pardon?

4006   LE PRÉSIDENT : L'étapisme que vous avez décrit?

4007   M. SCHULLER : L'étapisme?

4008   LE PRÉSIDENT : Oui. Est-ce que ça manque strictement au niveau de la musique francophone ou ça existe également au niveau anglophone?

4009   M. SCHULLER : Non, c'est partout au pays. La raison que je soulève la question francophone, c'est qu'elle était moins affectée avant. On avait quand même un 65 pour cent de contenu francophone sur les radios francophones, que vous connaissez très bien.

4010   LE PRÉSIDENT : Qu'on a toujours, d'ailleurs.

4011   M. SCHULLER : Qu'on a toujours, d'ailleurs, mais que, comme vous le savez très bien, la grande majorité des stations commerciales au Québec s'amusent à faire des montages de 8 à 10 tunes de deux minutes anglophones pour contourner le règlement.

4012   LE PRÉSIDENT : Ça aussi, c'est une audience qu'on a faite l'année passée.

4013   M. SCHULLER : Et je pense que ce que ça démontre... Ce n'est pas de critiquer les radios commerciales. Je ne suis pas venu pour faire ça. Je suis là pour essayer de montrer à quel point il y a un système qui s'appelle les radios commerciales qui s'en va dans une direction, puis il y a un système de nouveaux diffuseurs qui devrait être mis en place, puis soutenu, puis fort, pour offrir un choix, puis une option, puis une diffusion, puis une diversité.

4014   Puis si on n'a pas ça, on va être affecté gravement, parce que le Québec, à l'époque, on survivait sur le soutien que la radio commerciale faisait aux artistes francophones et ne fait plus.

4015   Ça fait que nous autres, on est en train de souffrir comme le Canada a souffert pendant longtemps.

4016   LE PRÉSIDENT : O.K. Et vous êtes heureux avec la contribution de Sirius vers ce but-là?

4017   M. SCHULLER : Bien, en ce moment, c'est souvent un des seuls recours qu'on a.

4018   It's one of the only places that a lot of artists can be seen or heard now and, you know, it's needed desperately.

4019   THE CHAIRPERSON: Great, we get it.

4020   MR. SCHULLER: Yes. Okay.

4021   THE CHAIRPERSON: Questions?

4022   Madame Poirier...?

4023   CONSEILLÈRE POIRIER : J'en ai une question, mais, malheureusement, elle ne touche pas la future programmation francophone de Sirius ou de XM parce que je constate qu'il y a quatre stations de musique francophone prévues sur XM et quatre stations de musique francophone sur Sirius.

4024   But in English, okay, on Sirius they plan to have three English music stations and only two on XM out of 120 channels. That's not a lot. Do you think it's sufficient, two out of 120 for Canadian English music?

4025   MR. SCHULLER: I would always like to see more myself.


4027   MR. SCHULLER: However, the question for me is about diversity and quality of programming. That is the issue. That is what we have lost with commercial radio. Commercial radio plays the same song over and over again on every station. That's what we are suffering from right now.

4028   So if you have two or three or four or five really great stations that offer great programming and great diversity, it's pretty good and it's a heck of a lot better than what we have everywhere else.

4029   Now, again, I would argue that I think we need to improve CBC Radio-Canada and make a pop rock and alternative station English and French nationally across the board and pay for it with our tax money but that's not we are here to talk about today.

4030   COMMISSIONER POIRIER: Could I have the reaction of Matt and Ryan, only two English radio stations out of 120 while they have -- they offer four in French. So that is why this guy is happy.

--- Laughter

4031   MR. MALCOLM: Well, I mean I agree with what you are saying.

4032   I think that obviously more would be better, especially when it comes to art which is what the three of us definitely view it as. More doesn't always mean better and if you ever listened to the radio in the last five years there might be stuff that wouldn't qualify for those two stations.

4033   You know I think quality better than -- quality is definitely more important than quantity in my opinion.

4034   COMMISSIONER POIRIER: And to fill in the gap.

4035   MR. MALCOLM: Oh, sure.

4036   COMMISSIONER POIRIER: And what about you? Do you have a viewpoint, Matt?

4037   MR. JAMESON: Just simply echoes what they are saying in terms of concern with dilution and what that programming would actually be.

4038   When I think about, you know, Canadians and the diversity of music that we have, I feel a lot of it is still going to be able to get into the other channels that are there. You know to have a strictly Canadian jazz channel, you know, sure there is a lot of Canadian jazz artists but is it going to be as popular as just the other jazz channel that they have? Are they going to skip right past it?

4039   So quality over quantity.


4041   MR. SCHULLER: Can I step back in for a second and say also in answer to that question is -- have the three of us or most of the artists that I work with, have we had a hard time finding a home on the stations they do have, and the answer is no.

4042   Do you understand?

4043   Most of my artists do wind up playing on one of the stations. So whether there is five or 50 of them, for the moment anyway -- I mean, we'll see. They'll change. They'll reorganize. You know, something we have to look at and see how well they do.

4044   But, certainly, we're getting the support that we need from them regardless of whether there is, you know, 20 channels or only a few of them. If the few of them that are there are really great and well adapted to the needs then we're okay.

4045   THE CHAIRPERSON: I think that's it. We are done. Thanks.

4046   For the record, I had hair like yours before I got this job. Now look at me.

--- Laughter

4047   THE CHAIRPERSON: Thanks, guys, for coming out.

--- Pause

4048   LE PRÉSIDENT : Madame Roy, on continue? O.K.

4049   So I'll put you back in the capable hands of Madam Molnar and we'll continue.

4050   COMMISSIONER MOLNAR: The good news is we are not going to be talking about compliance this afternoon.

4051   We are going to be talking about the environment in which you operate to ensure that we all here can understand better your environment, your risks, competitive risks and other business risks that you have and within that scenario, and then look at the terms and conditions that might be appropriate for satellite radio going forward.

4052   For me, I tend to look at financial projections as a way of just anchoring a discussion on the future. So I have taken your financial -- the financials that you filed as part of your renewal application. I note that you have projected improving financial performance in the next licence term. I'm going to be very cautious because I know we have a lot of confidential information regarding your operations.

4053   So if I do tend to step somewhere you are uncomfortable let me know. But one of the first things I just wanted to do is confirm that in these projections that you filed and you filed with us projections with and without your changing CCD request. Regardless of them, they do indicate an improved financial situation.

4054   I want to confirm that the projections reflect the estimated $20 million that you would have obtained through the synergies and cost savings as a result of the merger.

4055   Is that true?

4056   MR. WASHINUSHI: They do. Our estimations for 2012 and 2013 indicate a realization of $20 million of synergies over 18 months.

4057   COMMISSIONER MOLNAR: So what you had estimated in fact you still believe to be the value of that merger?

4058   MR. WASHINUSHI: That's correct.

4059   COMMISSIONER MOLNAR: And it is reflected and would be part of this improved financial --

4060   MR. WASHINUSHI: That's correct.

4061   COMMISSIONER MOLNAR: Yeah, okay, thank you.

4062   I also just want to ensure -- there has been a discussion and we should go into it a little bit as to the competitive threats that you have and the risks that you filed with us; a set of risks. I want to go over them in some detail.

4063   First of all, let me just ask; do you view commercial radio as a competitor?

4064   MR. REDMOND: Yes.


4066   MR. REDMOND: Yes.

4067   COMMISSIONER MOLNAR: I had -- frankly, I assumed you did and having read your file I assumed that you did view them as a competitor but I then noted in your opening statement that you stated that in fact you had built your own niche. That's what had me a bit confused.

4068   I am going to see if I can find the page here. You folks probably know.

4069   MR. REDMOND: I think you know when I said that we built our own niche, I think you know when you look at the success of commercial radio since the launch of our service, you know, we obviously haven't taken a dent out of their business. So we have somehow created a niche in the sense that people are listening to our service at the same time as commercial radio is growing.

4070   But you know at the end of the day we are competing against any and all technologies that are out there that people are using to consume audio entertainment. Terrestrial radio or commercial radio is still our biggest competitor and it's free.

4071   COMMISSIONER MOLNAR: So it was -- you know commercial traditional radio has been around for 50-plus years and so, clearly, it was in the environment within which -- at the time that you came forward and sought a satellite radio licence.

4072   I guess I'll just ask instead of assuming.

4073   Has the competitive impact of commercial radio been different than what you had anticipated when you first joined this business?

4074   MR. REDMOND: I don't know that I would say that it's different. I think -- and I don't want to speak on their behalf but they have had to adapt and evolve their business as well. But I don't -- I am not sure they are doing anything too unique where, you know, we clearly are.

4075   I think, you know, with two million subscribers we have got a whole lot of Canadians that have seen the value in the content that we are providing and the uniqueness that we are providing. I think the three gentlemen that were just up is a prime example of that.

4076   There was no platform for them to be heard prior to us launching. There is now and I think there is a lot of people out there that want to listen to new and emerging music and we are giving that to them. I don't think the commercial radio broadcasters are.

4077   So I think, you know, we found a niche there.

4078   COMMISSIONER MOLNAR: Fair enough.

4079   You did point out in your opening statements that at the time you were initially launched, iPads and other kinds of apps weren't even considered. Internet radio I'm not sure how much that would have been or not considered at the time you initially launched. You did have a conversation with Commissioner Denton about internet ratio.

4080   So just how large of a competitive threat is that on your business?

4081   MR. REDMOND: Well, I mean, internet radio has been around a long time. I think what has changed is that it's moved from largely being an area where people listen to it at their home computer to now being a mobile in-the-car application. That in itself has changed the dynamic clearly for us.

4082   It's one thing to have a 1,000 channel universe that you can listen to sitting at your home computer and streaming a classical channel like Commissioner Denton likes to listen to. It's another thing when it starts to move into the vehicle where you know where people do consume a lot of their audio entertainment and, obviously, the area that is near to dear to us.

4083   COMMISSIONER MOLNAR: I'm just trying, as I said, to get a better sense for all of us there that we truly do understand the environment. As I said, you have projected for us how you would see your revenues changing and your subscriber base changing and so on.

4084   And I am trying to get a sense, in those projections you have incorporated all these competitive threats and risks and so on, I assume, into that when you did your estimations?

4085   MR. REDMOND: Yes. I mean, you know, where we can. You know, it's obviously hard to project and anticipate what technology may be coming out three or four years from now that could have an impact to us.

4086   And, you know, as I referenced in my opening remarks and you just made a comment to, I mean when we launched the business in 2005 the iPhone was not in existence -- never mind being launched, it wasn't even in existence -- and seven years later it's a device that consumers are using to consume audio entertainment. So we have had to compete with that.

4087   So it's hard to project all of the risks, you know, in our business, and I, quite frankly, want to spend more time trying to figure out the opportunities in our business, understanding what the risks are, but the projections that you have from us best encapsulate what we are aware of today and what we think we are going to be up against over the next seven years.

4088   COMMISSIONER MOLNAR: Fair enough.

4089   Just one more question on this before I move on.

4090   I think you made a comment that you were active in the online world and taking steps to be able to respond to things like Internet radio.

4091   Would you be able to tell us a little bit as to what you are doing and then confirm that too as part of the business environment within which you built this financial projection?

4092   MR. REDMOND: I guess, first, you know, what we built into the financial projections have, again, what we know and what we are aware of over the next couple of years. You know, today I don't anticipate a huge amount of our revenue coming from Internet-based services.

4093   I think I referenced this morning that I am a believer at the end of the day that if somebody is paying us $15, $18, $20 a month that we should give them access to our content, irrespective of the platform, because they are going to want to consume it as they move out of the car into the home, to the cottage, to the boat, to a secondary car, and I think the more they can get attached to our content in totality, the stickier, the better the customer they are for us.

4094   So for us, you know, the Internet initially is going to be more a complement of what we do on the broadcast network.

4095   So if we have the CBC, for instance, or Verge music, The Verge channel, on our broadcast, we want to also have it on our Internet streaming app, either through your computer or through your wireless device, so that if somebody moves from listening to our content via the broadcast network in their car and they want to continue listening to it as they move into their office we want to be able to give it to them on their wireless device and/or streamed through their computer.

4096   So it's not for us going to be, again, quantity as much as it will be quality in the subscriber's experience in being able to seamlessly listen to our content, hopefully, you know, over time, with no real understanding whether it's coming via satellite or coming via the Internet, because I'm not sure they are going to care if they are satisfied.

4097   COMMISSIONER MOLNAR: Is it actually an opportunity for you then? Again, I am just trying to understand.

4098   Whereas before you needed to have devices, particular devices, you know, to capture satellite radio at your home, in your vehicle and so on, and now the device is really transparent, you can use your mobile phone or whatever it is.

4099   So is this actually an opportunity that is helping you to grow into the future?

4100   MR. REDMOND: You know, I think the opportunity is more protecting our business moving forward. Because I don't think, you know, today if I have to compete with Pandora or one of the other streaming services at $4.95 a month versus $15 for what I am providing, I don't know how I would do that with the cost structure that we have in place.

4101   At the same time there may be opportunities for us to charge a couple of dollars more in giving customers the ability to access our content wirelessly and through the Internet. So that poses an opportunity for us from a revenue standpoint. But I don't -- you know, with the cost I'm not sure that it will flow through completely to our bottom line.

4102   MR. BITOVE: Commissioner, before we leave this section, I thought we were much closer to a radio business when we applied seven years ago, but we are so drastically different.

4103   The reason why I am explaining this is because we are part broadcaster in that we are producing content, we are part BDU in terms of getting it out over the pipe, and we are almost part electronic or whatever to get either the chip sets in the cars or the radios into the retailers to sell.

4104   There is a whole -- when they ask me -- you know, when everyone says what is your biggest surprise in the business that you learned, I never realized the cost, that you would have to do the telemarketing, everything else to this business compared to what radio does, which is simply, you know, turn on your signal and go sell advertising and program your station.

4105   It is just so much more involved and so much more complicated, which is why when you asked the question to Mark today, for instance, what do you subsidize the manufacturers to put the radios in the car, it's an astounding tens of millions per year, and so that is where we are drastically different from radio.

4106   COMMISSIONER MOLNAR: You provided us a list of risk factors.

4107   MR. BITOVE: Is it long enough?

4108   COMMISSIONER MOLNAR: It certainly was. I am not looking to go through that entire list, but maybe could you just highlight for us what you view to be the most significant going forward?

4109   MR. WASHINUSHI: I am assuming you are referencing the Schedule 1, which is the risk factors in Sirius XM Canada's 2011 annual information form.

4110   So the way we outlay the risks is in order of what we think is the greatest risk to the smallest risk.

4111   So the first one you see in terms of "current economic conditions may adversely affect our financial results and financial position" is probably the largest risk to the business and it works its way down.

4112   Part of the reason why we put that as one of the highest risks is we are a discretionary service. So as economic times do get harder, the unemployment rate goes up, people look at their bills and look at their ongoing bills and justify, do I really need satellite radio, and that is potentially one of the first things that they could cut out of their budget.

4113   MR. BITOVE: And in the last recession, as less cars were sold there was a direct impact on us as well.

4114   COMMISSIONER MOLNAR: This just takes me directly to another question I had for you.

4115   I expect that you are very aware of the PricewaterhouseCoopers assessment of satellite radio and its future potential?

4116   MR. WASHINUSHI: Yes.

4117   COMMISSIONER MOLNAR: Their report, as I understand, assumed a compound annual growth rate of 16.8 percent to 2015 and it was their opinion it would grow at a faster rate than the U.S. as the Canadian market is still in the early stages of growth and they also linked it to growth -- to improvement in the economy.

4118   It is interesting that your most significant risk factor is current economic conditions, where PricewaterhouseCoopers suggests that the current economic conditions are in fact an opportunity for growth and they too linked it to the purchase of vehicles.

4119   Would you maybe kind of --

4120   MR. WASHINUSHI: It does work the other way around. If the economic conditions do get better, then there is a greater, obviously, proclivity for people to sign up for satellite radio.

4121   Now, PricewaterhouseCoopers just, I believe, last week released their Global Media Technology Report, which I attended last week, and if my recollection is correct, they had revenues estimated for satellite radio growing by about 10 to 11 percent.

4122   COMMISSIONER MOLNAR: Okay, we are going to do some checking on our end if there is an updated forecast.

4123   MR. WASHINUSHI: It was literally released last week.

4124   COMMISSIONER MOLNAR: Yes. Well, there you go.

4125   So you are very comfortable in what you have projected then and what you have provided to us as it regards the state of the economy and validated by current estimates and so on?

4126   MR. REDMOND: Yes, we are.

4127   The only other thing I would add is that aside from the auto industry and the fluxes that potentially happen there, we are not in 100 percent of the vehicles. So even if one car manufacturer and one model happens to have a good year, we may not have a position in that vehicle as of yet, so we don't necessarily get the benefit.

4128   Secondly, what we have had to do through '08 and '09 especially was when the economy was slowing down, what we saw was an effect on the level of discounting we had to provide to a new subscriber and/or retaining a subscriber.

4129   So we are not effectively getting -- even though our price is $14.99, we are not effectively getting $14.99 from the majority of the subscribers that we have. And depending on the state of the economy, we could have to flex that more, depending on the consumer's purchase behaviour at the time.

4130   COMMISSIONER MOLNAR: But as noted, the state of the economy, a relatively conservative estimate within your projections, and potential upside should the economy -- is that right? Did I understand that?

4131   MR. WASHINUSHI: I would comment that our projections, we feel, are realistic based on the economic conditions that we know now.

4132   MR. REDMOND: We have part of our board here too, so we don't really want to tell them that our numbers are going to be any better than we forecasted them to be.

4133   But, you know, are we seeing a little bit of benefit today? Absolutely. But the car industry happens to be good today too. If interest rates go up and the car industry starts to soften we will feel the effects of it.

4134   COMMISSIONER MOLNAR: Fair enough.

4135   Clearly, I understand everybody always provides their best projections but I don't know too many people who would come into the Commission with a very highly optimistic projection of the future, frankly. So we are just trying to understand what there is and what are the upsides as well as the downsides, as you have laid out in your risks.

4136   MR. BUCHANAN: You may remember the projections from 2005. No?

4137   COMMISSIONER MOLNAR: Well, I don't remember them but I have --

4138   MR. BUCHANAN: They had us crossing into profitability about year three or year four and not having this incredible cumulative deficit and debt that is sitting there right now.


4140   MR. BUCHANAN: These are projections. They are the best available information. PricewaterhouseCoopers was interesting. I was there last week too. They always kick it off with what they got right and what they got wrong from last year. You should read that section too.

4141   COMMISSIONER MOLNAR: Yes, and I get that.

4142   MR. BITOVE: It is an important point.

4143   COMMISSIONER MOLNAR: I should just restate what I said. People do come to the Commission with optimistic projections when they want first licences.

4144   COMMISSIONER MOLNAR: Go ahead, please.

4145   MR. BITOVE: Yes, and we got that wrong. That was all I was going to say.

--- Laughter

4146   THE CHAIRPERSON: Yes, but you got a licence.

4147   COMMISSIONER MOLNAR: And clearly, you still want that licence because you are here in front of us today. The numbers might have been wrong but you are here.

4148   MR. BITOVE: I guess the point I was trying to make is some would have probably thought we were optimistic or if we were pessimistic in that first licence to hide stuff or whatever, as Grant said, seven years later we still have not turned a profit.

4149   It has been a longer road to get there and the biggest reason it has been a longer road, as I said earlier, there's just so much more cost in this business than we understood when we started.


4151   And just so I understand, because I was talking about the potential upside as, you know, more cars, but the short-term impact of that is you are subsidizing -- so how long does it take you to turnaround profit when -- you know, how many years does it take you or months or what is the ROI on that investment for the cars?

4152   So if car sales go up this year, when do we see that in your financial results as a positive outcome?

4153   MR. WASHINUSHI: The way I would almost describe it is on a per car basis. So on average we invest about $50 in every car to have satellite radio installed and the ROI or before we actually start making a profit is approximately 12 months after that car has signed up to be a self-paying subscriber for our system and has been paying us.

4154   MR. REDMOND: The challenge in that -- and that is just the fixed cost element of subsidizing the radio. You have the variable costs of marketing efforts and call centres handling calls and material being sent out to the customer saying I hope you enjoy your trial subscription, please call us so that we can get you in as a paying subscriber.

4155   And then on top of that we have what we think is a pretty good churn rate of 2 percent per month but it still equates to a quarter of our subscribers leave us every year.

4156   So we have that and then we also have the effects of trying to take somebody from being a trial subscriber to a paying subscriber, and although we don't publish what we call a conversion number, you know, we convert about four out of 10.

4157   So this isn't without its trials and tribulations of trying to take somebody from experiencing it the first time in a car that we have already invested in, getting him in a trial period, trying to convert them.

4158   Once we convert a handful of them, we lose part of them every year just through regular attrition of being in a subscription business, and at 2 percent, we are pretty good compared to most other subscription businesses.

4159   So it is a tricky equation.

4160   COMMISSIONER DENTON: I am sorry, I just missed that. Two percent per...?

4161   MR. REDMOND: Per month.

4162   COMMISSIONER MOLNAR: Okay, thanks.

4163   I want to turn to another issue and that is technology.

4164   If I understand correctly, in the U.S. they are looking at Sirius 2.0 as a new technology and we are not aware that there has been movement on your part to move to that same technology. Could you just let us know where you are on that?

4165   MR. REDMOND: Yes. I think, first of all, I wouldn't get too hung up on it being technology as much as it is a reference internally as being called SiriusXM 2.0, is some new features and functionality within the service, both related to some elements on the broadcast and some elements that will only be available via the IP-delivered content.

4166   But it starts with simple things. We don't have a channel guide today. Trying to navigate your way through 12, 20, 100 channels can be cumbersome. So we will have a channel guide.

4167   We will have in the future the ability to time-shift so that if somebody wants to listen to a CBC program but won't happen to be in the car at the time they will be able to time-shift it and come back and listen to it when they get in the car in the afternoon.

4168   COMMISSIONER MOLNAR: I'm sorry, I just want to stop you for one second.

4169   Are you saying you are going to implement this technology and these are the benefits of --

4170   MR. REDMOND: Yes. These are some of the features and functionality.

4171   COMMISSIONER MOLNAR: Okay. So you are going to implement it?

4172   MR. REDMOND: Oh, yes. Yes. Yes.

4173   COMMISSIONER MOLNAR: Okay, thanks. Go ahead.

4174   MR. REDMOND: So, you know, what I view it as is just an evolution of the feature and functionality that we need to do as a company to stay competitive with what we are up against related to wireless devices and other in-car applications, whether it is Internet radio or the streaming of content, period.

4175   And it is the first time in a long time the company has been in a position to be able to start investing back into the technology and research and development in the product.

4176   There is more to come as we start to unveil some of the features and functionalities. In most cases there is no incremental cost, this is just a better customer experience. In most cases it is not backward-compatible, so it is on all future products. But it is a necessity for us to try to stay competitive with what is out there.

4177   COMMISSIONER MOLNAR: Do I understand correctly that as well as features and functionality it actually provides additional channel capacity?

4178   MR. REDMOND: In the States they have added some additional channels on the network, largely on the Sirius side. The little bit of capacity they had there was used for video. On the XM side they are using it for a few additional channels, largely in their case to address the Latin and Spanish market in the States.

4179   At this point there is no opportunity for us or any planned additional content to come along with whatever we bring to market with the 2.0 functionality. It will all be kind of features and not content.

4180   COMMISSIONER MOLNAR: With the exception of the interactive channel guide, which would be essentially -- would that essentially be a channel or you are saying that is --

4181   MR. REDMOND: No. That is just more user interface to try to be able to seamlessly show somebody what is on the screen in their vehicle.


4183   So just so I understand, the fact that in the U.S. there was additional capacity and here you are going to implement it with no additional capacity, is that a choice that you have made?

4184   MR. REDMOND: The capacity was never offered to us and they have clearly full control over what they do from a capacity standpoint.

4185   But we don't -- you know, for us it is not a matter of quantity as it is quality and getting some of the functionality better for the consumer to be able to seamlessly manage through the content and hopefully be in a position where we can give you access to the content the way you want to consume it at the times that you want to consume it, obviously within whatever copyright and rights we have the ability to do.

4186   MR. BITOVE: They have been pretty unequivocal, particularly since their merger down South, where they even had demands from FCC to add more channels and stuff that there is zero bandwidth capacity for us for more channels if we want to, which is why we answered your (c) question the way it is. You know, if you want to change channels, play with what you got because we are not giving you any more.


4188   So you have the capacity for 24 channels, is that right, Canadian channels?

4189   MR. REDMOND: Today we have 13 on XM and 12 on Sirius.

4190   COMMISSIONER MOLNAR: Can you tell me how many unique non-Canadian channels are currently distributed?

4191   MR. LEWIS: 108 on each platform.

4192   MR. REDMOND: Yes. We have a 1:9 ratio, so there's actually 108 on each today.

4193   COMMISSIONER MOLNAR: And they are all unique?

4194   MR. REDMOND: No.

4195   COMMISSIONER MOLNAR: I was asking for unique.

4196   MR. REDMOND: Oh, unique.

4197   MR. LEWIS: Unique as in if it's Sirius and XM?

4198   COMMISSIONER MOLNAR: If you are duplicating, count it once if it's on both platforms.

4199   MR. LEWIS: I would have to add them up. What we have provided on "the best of" would be unique channels. There's 7 or 8 unique from each side. So if I was to take the 108 less 7, so there would be approximately 100 that are the same on both sides. So the 7 or 8 would be unique to one platform or the other.

4200   MR. BITOVE: So somewhere between 15 and 20 probably unique.

4201   COMMISSIONER MOLNAR: On each platform?

4202   MR. BITOVE: No, on both. Seven to eight on each. Seven to eight on each is what John said.

4203   COMMISSIONER MOLNAR: Non-Canadian?

4204   MR. BITOVE: Non-Canadian.


4206   MR. LEWIS: Yes.

4207   COMMISSIONER MOLNAR: That's it?

4208   MR. BITOVE: Pretty much. They harmonize their lineup.


4210   MR. BITOVE: And I think, Commissioner, part of the reason they harmonize their lineup is for people -- you know, so much of this is driven by the car companies with the chips that they have deployed. Someone pays for satellite radio. You know, they have one car that has XM, another car that has Sirius, they get in and they don't have the same thing. It was frustrating to the listener, which is why a year ago April they harmonized the lineup, made the same channel numbers, got rid of a lot of duplication. There was no point having a '60s on XM and a '60s on Sirius that was different.

4211   COMMISSIONER MOLNAR: So while these channels are essentially harmonized, it's still your plan that you would have the separate lineups. There would still be a Sirius in their lineup and an XM lineup and a "best of", but over the full license term. Is that your plan?

4212   MR. REDMOND: Yes. And the reason being is that the two networks operate independently, so we have 2 million subscribers here in Canada, they have 22 million in the U.S. that are split between the XM network and the Sirius network, so we still have to deal with all of the legacy product that is out there and it's going to be well beyond seven years before there is any kind of consolation to one satellite that would service the future.

4213   So we will continue to operate both networks through at least this license, next license term.

4214   COMMISSIONER MOLNAR: Okay. I want to talk to you about your proposed channel lineup that you filed maybe a week or so ago, if you can help me.

4215   I know you gave some details in your opening statement, but I'm going to go to what you filed on June 12 and you show the new Canadian lineups for the XM and Sirius, as well as your "best of", so I just want to make sure I understand it.

4216   So 25 Canadian channels today and you are proposing on a go-forward basis that there would be nine channels that are common between the two lineups, three unique Canadian channels on XM and three unique Canadian channels on Sirius; correct?

4217   So we are going from 25 unique Canadian channels to 15?

4218   MR. LEWIS: Well, it's actually you are not including the "best of" channel and so --

4219   COMMISSIONER MOLNAR: I'm not including the "best of" right now.

4220   MR. LEWIS: Yes, but on the XM platform the thirteenth channel, if you like, is up there and is accessible, available to XM subscribers, even those who don't take the "best of". It becomes a channel that's provided to Sirius subscribers if they pay for the "best of".

4221   So you were correct in your 15, you add that other one and it becomes 16.

4222   COMMISSIONER MOLNAR: What am I adding?

4223   MR. LEWIS: If you look on slide 5 from what we presented --


4225   MR. LEWIS:  -- on the left side, the XM lineup, there are the 12 channels that are shown and then there is a line drawn and the thirteenth channel is below that.

4226   COMMISSIONER MOLNAR: Okay. I had a question about that, too, actually so I will ask that right now.

4227   I thought the intention of the "best of" was to provide customers who subscribed, for example to Sirius, access to some of the most desirable content that was solely on XM.

4228   So how does putting in a unique channel that is not available to XM or to Sirius customers meet the requirements of creating a "best of" package?

4229   MR. LEWIS: It comes back to the linkage. So if you are going to bring in nine U.S. channels you need a Canadian channel to do the one to nine. So that channel in question becomes the one Canadian channel that allows you to bring in the nine U.S.

4230   So if you are a Sirius subscriber, you don't get the XM Sports Schedules unless you subscribe to "best of". If you subscribe to "best of", that becomes the Canadian channel that then allows you to bring in the U.S. channels.

4231   If you are an XM subscriber, the reason that we have it below the line is that we are not actually counting it in the one to nine ratio because that is going to be the channel that is used to bring the Sirius over. So it's that linkage.

4232   Really, on the case of the XM Sports Schedules, it's the channel that allows you to bring in the Sirius lineup, the "best of Sirius".

4233   COMMISSIONER MOLNAR: I understand, but is it part of the Sirius lineup?

4234   MR. LEWIS: No, it is not part of the Sirius lineup.

4235   COMMISSIONER MOLNAR: Right. So how does that meet the notion of creating a --

4236   MR. LEWIS: So if you go the other way --

4237   COMMISSIONER MOLNAR:  -- "best of" the two when it's only unique to one? That's what I'm trying to understand.

4238   MR. LEWIS: All right. So if we take, then, just on the XM side. So if you are an XM subscriber you get the 13 channels that are listed on the left-hand side here, the thirteenth being the XM Sports Schedules.

4239   The linkage that we use, the one to nine, we are only using the first 12 for the one to nine. So that there are 108 channels that go with the 12 to make 120. So if we then want to say to an XM subscriber who wants the "best of", "We want to bring in the U.S. channels, we need a Canadian channel -- an additional Canadian channel -- to create that linkage. So XM Sports Schedules is that channel.

4240   COMMISSIONER MOLNAR: I'm going to ask the same question once more and I'm not going to ask it again, I promise, but I still fail -- I understand that it allows you to meet your nine to one ratio, but I don't understand the promise of "best of" that was created at the time of the merger was that you would provide to, for example in this case the XM customers, services and channels that were available only to Sirius.

4241   That's what I understood. That's what the "best of" is about.

4242   MR. LEWIS: And that's correct.

4243   COMMISSIONER MOLNAR: And you would provide to Sirius services that are only available to XM.

4244   So what I'm seeing here is, as part of "best of" these XM customers -- are not getting a service that's only available to Sirius.

4245   MR. LEWIS: Well, if I could use -- on slide 7 there's some examples.

4246   MR. REDMOND: If you go to slide 7.

4247   MR. LEWIS: Let's just take one channel. We could take Martha Stewart Living. So if you are an XM subscriber, you do not have access to Martha Stewart Living as a channel unless you pay the extra and get the "best of". So if we want to bring Martha Stewart over to an XM subscriber, as well as the other channels that we listed there, we need to have a Canadian channel to provide that linkage and that's the channel 13.

4248   MR. REDMOND: So I think --

4249   COMMISSIONER MOLNAR: I get it. I'm not going to ask again, I just don't see how that's "best of". I mean it's "best of" the U.S. programming, but it doesn't appear to be "best of" Canadian programming.

4250   MR. LEWIS: No, it is not "best of", it was never intended to be "best of" Canadian. It is the best of the lineup. It's not the best of Canadian.

4251   COMMISSIONER MOLNAR: Well, with all respect, it's -- you are in front of the Canadian broadcaster here.

4252   MR. LEWIS: Yes.

4253   COMMISSIONER MOLNAR: Or broadcast regulator.

4254   MR. LEWIS: And that's why we have the linkage. We are abiding by our linkage rules.

4255   MR. REDMOND: But under our harmonized channel lineup, the Canadian customer gets all of the channels. The only difference is that we have put The Verge music on XM and Iceberg on Sirius. If the Commission would like us to put as part of our "best of" those two channels that we have left as distinct on one network versus the other, to give the artist the ability to have a greater airplay, we would be happy to include it in there, but it may push us to one to ten versus one to nine.

4256   But when when we were in front of the Commission for the merger, the "best of" was always viewed as the content that wasn't available on Sirius that was XM and vice versa. That was always the U.S. program because in Canada we had planned and had talked to the Commission during the merger hearing about harmonizing our lineup similar to the way that the U.S. did. Now, under this scenario, a Canadian consumer gets everything.

4257   MR. BITOVE: I think, Commissioner, had you used the reverse example of "best of", Home Ice is probably one if not the strongest on the XM lineup that would become available to a Sirius subscriber if they get the "best of".

4258   COMMISSIONER MOLNAR: Exactly. That's why I was a little confused about the other side where we are not taking the best what's available on the Canadian lineup and moving it, we are creating something new. But fair enough, let me just talk about it.

4259   Could you just give me a little bit of detail exactly what is XM's Sports Schedules?

4260   MR. LEWIS: XM Sports Schedules is a channel that provides, as it says, sports schedules, as well as additional content such as sports updates, interviews, sports current events.

4261   COMMISSIONER MOLNAR: So it's not just a listing file, it --

4262   MR. LEWIS: No. It's not just a listing file, no. There is the schedule so that it will direct our subscribers to where tonight's Toronto Maple Leafs versus Habs game is and we --

4263   COMMISSIONER MOLNAR: It's Canadian sports?

4264   MR. LEWIS: Yes.

4265   COMMISSIONER MOLNAR: It's a Canadian sports schedule?

4266   MR. LEWIS: Well, it's a schedule that provides content about where all the games are whether it's Canadian games or not. It could be two U.S. teams playing.

4267   But then, to use my example of the Habs versus the Leafs, we may interview the General Manager of one of the teams, we may say what happened in the schedule or in the record up to that point in time, who has won what games, and so on. So it gives a little bit of context around that game as well as where the game is going to be.

4268   COMMISSIONER MOLNAR: Could you just give me a sense roughly how much -- like I assume it's on a wheel of some sort, how much spoken word -- it's a spoken word channel, how much spoken word, original spoken word, in a day there would be?

4269   MR. LEWIS: Well, the plan going forward was to have 15 minute wheels that are updated six times a day.

4270   COMMISSIONER MOLNAR: Okay. I want to go through the rest of this lineup just to make sure we are understanding.

4271   You said today there are seven or eight unique non-Canadian on each of XM and Sirius and that's what's continuing and what's being addressed through the "best of" package.

4272   Is that correct?

4273   MR. REDMOND: I haven't looked at it in detail, but that would probably be the majority of it, yes.

4274   COMMISSIONER MOLNAR: Okay. Okay. The majority or that would be it? That would be the amount that --

4275   MR. LEWIS: Well, there are some rights issues that every now and again fall off. So major league baseball, play-by-play rights exist on the XM, not on the Sirius side. And then as new events --

4276   MR. REDMOND: Both in Canada and the U.S.

4277   MR. LEWIS: Yes. As new events happen Euro Cup right now, I believe they negotiated the rights for both sides, but the next time around it might be on one platform or another.

4278   COMMISSIONER MOLNAR: I would like you to comment -- and if you need to consider and do this as an undertaking you are free to do so, but I would like your comment on whether or not you are willing to accept a COL requiring that no less than 10 percent of all distinct channels distributed by the two undertakings be original Canadian content.

4279   And if you are not willing to accept that, please explain why.

4280   MR. REDMOND: We will take it under advisement.


4281   COMMISSIONER MOLNAR: Thank you.

4282   Just going through this list, we have had the discussion a bit here already about CBC Radio One and Première Chaîne, which is now Première Plus, is that right? Is that the same?

4283   MR. REDMOND: Yes.

4284   COMMISSIONER MOLNAR: Okay. CBC Radio 3, that's the internet radio station, rebroadcast in its totality?

4285   MR. REDMOND: That's our CBC indie music channel and it is on the internet.

4286   COMMISSIONER MOLNAR: Is it different or is it --

4287   MR. REDMOND: There are times that it's different, but rarely. In fact, the way it was positioned was that they take the CBC Radio 3 that we have on satellite and put it on the internet.

4288   MR. TREMBLAY: So it's not programmed in a similar way when it was only for the internet platform. They reprogrammed it because now we had an outlet on satellite radio and this is what they are using on the internet now.

4289   COMMISSIONER MOLNAR: Okay. Just to go back to the CBC Radio One and Prèmiere Plus, if our determination is that there is not an exemption for CBC, you will find a way to meet the condition of license, go back to CBC and have them reprogram that station so that it meets the condition of license that exists today, that 50 percent be originally produced for as well as broadcast?

4290   MR. TREMBLAY: This is something we are going to have to take under advisement as to whether or not right now we are prepared to modify the schedule to that extent.


4291   COMMISSIONER MOLNAR: Well, just to be clear, if we don't believe that an exemption is warranted it doesn't comply with the condition of license today.

4292   MR. TREMBLAY: So I guess --

4293   COMMISSIONER MOLNAR: I'm not sure if you would be taking under advisement whether you choose to comply or not.

4294   MR. TREMBLAY: Yes. I think that we will be having a discussion internally on this matter between now and the 28th and we will come back with an answer.

4295   COMMISSIONER MOLNAR: You are going to come back to me with an answer on what?

4296   MR. TREMBLAY: I guess we had the conversation as well with the Chair, Mr. Pentefountas, just before the break that no, if we were going to go in this direction right now is there any kind of other arrangement we would be prepared to propose and I said that no, we would be looking at this possibility whether there is any other possible arrangement that we would consider and we are prepared to look at that.


4298   Could you confirm for me on each of these lineups -- in the XM lineup, how many English-language music channels exist?

4299   MR. REDMOND: There is CBC Radio 3; there is The Verge, so that's two; ATN does have to meet our conditions of license, as we discussed this morning, does have some English-language new music on it to ensure that we do meet that. So I'm not sure if it would qualify as an English channel or not or is there a separate qualification for a multicultural channel? It would probably more fit there, but it does have English-language music on it. So maybe two and a half might be the answer.

4300   COMMISSIONER MOLNAR: How about Sirius?

4301   MR. LEWIS: On the Sirius side we have the CBC Radio 3; we have the same ATN, so the same response on that; we have Voices Radio that is programmed by AVR and it is predominantly English-language music; and we have Iceberg. So three and a half.

4302   COMMISSIONER MOLNAR: Can you maybe just do the same thing for French-language music channels so I understand?

4303   MR. LEWIS: So on the XM lineup we have Radio-Canada Espace musique; we have Bande à part; Country and Folk, three; and then we have Sur la Route, so four.

4304   And it's four on the Sirius side as well, the same coming from Radio-Canada. In addition we have L'Oasis Francophone.

4305   COMMISSIONER MOLNAR: So you have five French-language music channels on Sirius?

4306   MR. LEWIS: No, I believe I said four, Espace musique; Bande à part; Country and Folk, is three; and then the fourth is L'Oasis Francophone.

4307   COMMISSIONER MOLNAR: Okay. Now, assuming that ATN, which is, as far as I know, not in the English language...?

4308   MR. LEWIS: Well, there are parts of it that are in English. There are parts of it that are not in a language, it's chants. In fact, I was us visiting them last week going through some of this. They have some in there that are 40 to 50-minute long chants. It's not English/French, it's not spoken word. I don't know how else to describe it.

4309   COMMISSIONER MOLNAR: I'm sorry --

4310   MR. LEWIS: And then there is the 25 percent new that is --

4311   COMMISSIONER MOLNAR: I mentioned ATN, is that what you're talking about?

4312   MR. LEWIS: ATN, the Asian Radio, yes.


4314   MR. LEWIS: Yes.

4315   COMMISSIONER MOLNAR: For purposes of this, my understanding is that is a third-language radio station that may have thrown in a couple of English-language musical selections in order to meet its COL requirements. That's what I understood of ATN, it's a third-language station.

4316   MR. LEWIS: Well, it's more than what you're describing.

4317   In order to meet the 25 percent new there is a high percentage of that which is Canadian English-language music. In addition, there are the non-language chants, the religious music that they have that plays. I don't know where you would classify that. Certainly you have Canadians who speak English who listen to this. Lots of Canadians who speak French listen to it.

4318   COMMISSIONER MOLNAR: First, for purposes of my question here let's assume that we don't believe ATN, which we understand to be primarily a third-language station, does not meet the criteria of an English-language music station.

4319   I would like you to comment, if you would, on whether or not you would be willing to accept a revised COL requiring three French-language and three English-language music channels on both services while retaining the existing requirement for at least four French language channels per service.

4320   So what would be the implication if there was a requirement to add an additional English-language English music channel?

4321   MR. BITOVE: My understanding of the bandwidth configuration -- and John is better than this -- the only way we would be able to do that is to drop either aboriginal or ATN.

4322   COMMISSIONER MOLNAR: Was the aboriginal not a requirement coming out of the merger, if I remember?

4323   MR. BITOVE: Well, it was, but now you are making another requirement to change it and there is only -- as we have said, bandwidth is finite so if you are going to make that requirement you have to recognize that it's a zero sum game, if you push something in, we have to take something out.

4324   COMMISSIONER MOLNAR: So is that your response, that you would be willing to do it, recognizing there is consequences and something gets pushed out if we put that in?

4325   MR. REDMOND: I think like your other COL question, we will take it back and come back with a response, but that was kind of the first reaction to your comment. But we will respond to the COL change the same as the other one.


4326   COMMISSIONER MOLNAR: Okay. Thanks.

4327   I have to go back to the "best of" for just one second.

4328   There was a question here on the price premium for "best of", could you tell us what is the price premium?

4329   MR. REDMOND: We haven't finalized our pricing for it yet, but it's likely going to be about $4.00 per month.

4330   COMMISSIONER MOLNAR: Okay. Thanks.

4331   MR. REDMOND: The same price on both.


4333   So the good news is I have only two other things to talk to you about and I think you want to talk about both of them, it's the CTD, CCD and the license term.

4334   MR. BITOVE: Just before we go there, because when Madame Poirier was asking the artists and she said, but there's only two English, and then when Franz was up here, the English-language artists who produce music have a lot more opportunity on other channels of XM that we don't necessarily produce.

4335   So I think it's important to recognize it's not two to four or two to three or three to four, it's kind of like 50 to four in terms of language spoken of the music programming that happens.

4336   I think it's really important when you think about that in terms of equality between the channels.

4337   By saying that English and French music have to be the same on the Canadian side, it's not really fair because the English-language Canadian artists have so many more channels to get onto on the total XM lineup than the Francophone artists. I think it's really important when you're thinking of the equality.

4338   COMMISSIONER MOLNAR: So you are suggesting they get onto the non-Canadian channels?

4339   MR. BITOVE: They do, absolutely. Nation and all these other channels we have that are fringe or some of the other emerging artists channels, the English bands have a lot more opportunity.

4340   That doesn't mean that they don't play the French stuff either, but --

4341   COMMISSIONER MOLNAR: So when you provided us the video of the opportunities it provided for different music, were you talking there about Canadian and non-Canadian channels?

4342   MR. REDMOND: I think the video was more about Canadian, but clearly the Canadian artists get opportunities to get on other channels that are non-Canadian program channels on our network.

4343   Interviews in New York. I just got a note the other day from Dala's manager that they were in New York last week and played a live session. These are two young girls out of Toronto that are kind of folk/country.

4344   COMMISSIONER MOLNAR: Okay. You have taken the opportunity to comment fully by next week, so please do so.

4345   MR. REDMOND: Thank you.

4346   COMMISSIONER MOLNAR: Moving on to the issue of -- do you care if I call it CTD or CCD going forward?

--- Laughter

4347   COMMISSIONER MOLNAR: We are going to call it CCD, but we understand that you are a unique beast and there may be some movement.

4348   But, here is the thing. You have proposed a 90 percent reduction in your CCD requirements, along with your reduction in the number of Canadian channels that will be produced. Original Canadian channels, that will be going down, and you have further proposed this 90 percent reduction.

4349   First of all, I just want to go back. We looked at the history -- I looked at the history, actually. This was a very interesting file, because I was trying to figure out: are you trying to say that you are like a BDU or you're not, or are you like commercial radio or are you not. And you did make the comment that, you know, you are a unique beast and you are a little bit of everything. You are a little bit of a BDU and a little bit of a broadcaster.

4350   But the 5 percent CTD that you have been paying to date, looking back, was not trying to, as I understand it, equate you to anything. It wasn't because BDUs paid 5 percent or anything else, it was what had been offered at the time of the first licensing.

4351   I believe that Sirius offered up 5 percent CTD at the time of the first licensing, and XM 4 percent. So the Commission, in its wisdom, chose 5 percent.

4352   So that's where it was, the history of it being that's what had been offered to the Commission.

4353   So now the suggestion is that we move from 5 percent to 0.5 percent, and I want to fully understand your rationale for 0.5 percent.

4354   I know that I have seen it in your brief and I have seen it in some of the press, that you compare yourself to commercial radio. So is the reason for 0.5 percent to achieve some sort of competitive or regulatory equity with commercial radio?

4355   Or, what really is the background for selecting 0.5 percent as you ask here?

4356   MR. REDMOND: I will start, and the team can jump in.

4357   I wasn't around when the 5 percent was set. We have abided by it and lived with it for seven years. We are in a renewal term, and the conventional radio broadcasters get an automatic reduction from their first term licence to second term on CCD, and the Commission has looked, primarily, at the financial health of the industry. Clearly, we have not made any money in the first seven years, so you can understand that the industry has not materialized to the level that any of us would like it to be.

4358   The request is to put us on a level playing field with conventional radio broadcasters in Canada, so that we can, effectively, spend similar to the levels that they do, continue to support Canadian artists, continue to give them a North American-wide platform for their content to be heard on, and to give us the financial wherewithal to be able to compete with a multiple of competitors that we are now up against, including the unregulated, that pay nothing.

4359   COMMISSIONER MOLNAR: Fair enough. Tell me, how would you respond to those who would argue that conventional radio, commercial radio, has a requirement of 35 percent or more Canadian content, and your requirement is less than 10 percent?

4360   I think there is the view, somewhat, that a larger contribution to Canadian creative and other resources through CTD serves to offset, in some ways, that reduction.

4361   How would you respond to that?

4362   MR. REDMOND: I will let the others chime in, as well, but I think that it starts with our conditions on our channels: 85 percent Canadian content, 25 percent new and emerging, 25 percent new.

4363   One of our channels is equivalent to 50 radio stations. If you took just new and emerging, it's equivalent to 60.

4364   I think that the Commission, at the time, set the --

4365   COMMISSIONER MOLNAR: I'm sorry, I will just stop you so you can explain that to me, because I am not sure that I understand what you mean. One of your channels is equivalent to what?

4366   MR. REDMOND: When you look at the 85 percent Canadian content versus a 35 percent Cancon requirement for traditional conventional radio, and you look at the new music and the emerging music element of our channels, what we play in the way of Canadian content is equivalent to 50 conventional commercial channels at 35 percent.

4367   I think we had that in our supplementary brief to you.

4368   COMMISSIONER MOLNAR: Yes, I didn't understand it there, either, to be honest.

--- Laughter

4369   COMMISSIONER MOLNAR: Because I don't think that I can quit my traditional radio station and get 100 non-Canadian channels. That's the key difference.

4370   Would you agree?

4371   MR. BITOVE: I think that part of what Mark is saying is that 35 percent versus 85 percent, right there you are at a three-to-one ratio, in terms of the amount of Canadian content provided on that channel versus that radio station at 35 percent Cancon.

4372   But I think that the other thing, Commissioner -- as I understand it, part of the CCD/CTD -- whatever it is -- what is the ability that you have to pay? We will never, ever come close to the margins that commercial radio operators have in this country, and I think that is part of the reason we are asking for it, as well. On a margin basis they are significantly higher, paying an incremental slice of CCD or CTD to what we do.

4373   COMMISSIONER MOLNAR: Thank you for that. That's what I needed some clarity on.

4374   Are you requesting this reduction for competitive and regulatory equity, or are you requesting this reduction so that your contribution back is in alignment with your financial capacity to contribute?

4375   MR. BITOVE: I think it's all of the above.

4376   COMMISSIONER MOLNAR: It's both.

4377   MR. REDMOND: Yes.

4378   MR. BUCHANAN: It is actually all three.

4379   When we outlined the three reasons in the supplementary brief, the third one was that the BDU proxy was an inappropriate proxy that we advanced the first time.

4380   I know you said in your preamble that it wasn't that it was trying to equate to BDUs, but it was, because that's why we proposed it.

4381   COMMISSIONER MOLNAR: Fair enough, if that's why you proposed it. I'm just saying that it was accepted because it was offered.

4382   MR. BUCHANAN: Okay, we are circular then, but --

4383   COMMISSIONER MOLNAR: If that's why you offered it, that's fine.

4384   MR. BUCHANAN: It was never designed to match or to set off an underachievement on the exhibition side.

4385   The Commission sets the CCD rates in accordance with financial capacity. That's what you have done with pay audio, it's what you have done with commercial radio. It's not a set-off for exhibition.

4386   I mean, you can change your policy anytime you want, but that's never been what you have done so far.

4387   COMMISSIONER MOLNAR: But you would also agree that this is the interesting issue with satellite radio, is that we are establishing policy through the terms and conditions.

4388   MR. BUCHANAN: Yes, that is what we did in the first round --

4389   COMMISSIONER MOLNAR: And we are not having a policy hearing. So this is the combined policy/licensing hearing that we are having right now.

4390   MR. BITOVE: We will accept that fact. I know that my counsel would think otherwise, but the reality is, yes, we keep creating a framework, because there is nothing else like us, and we both know that we are doing great stuff together, and we will continue that way.


4392   I would like you to comment on the implications if the Commission were to impose a CCD requirement of 1 percent, or 2.5 percent, or 3 percent.

4393   I would believe that, maybe, is something you want to provide to us next week, as well.

4394   Or, you are welcome to do that next week.

4395   MR. REDMON: Yes, and in the spirit of trying to continue to work with the Commission and bring the benefits that we have, we are happy to step back and kind of think about it in a bit of a different light than the light we have been shining on it.

4396   We will do that and come back to you with the responses that we get next week.


4397   COMMISSIONER MOLNAR: Thank you very much.

4398   MR. BITOVE: I just want to be clear, what were those percentages, so that we have them?

4399   MR. REDMOND: One, two and a half and three.

4400   COMMISSIONER MOLNAR: Yes. You proposed 0.5 percent, and we are just looking at alternative scenarios. You know, the Commission may choose to accept your proposal or look at alternatives, and the ones that I proposed were 1 percent, 2.5 percent or 3 percent.

4401   I want to move on to the licence term. You have provided us quite a bit of information as it regards the risks of going with a short licence term. I assume that your request is seven years.

4402   Is that right?

4403   MR. REDMOND: Yes, it is.

4404   COMMISSIONER MOLNAR: Seven years.

4405   MR. REDMOND: Yes.

4406   COMMISSIONER MOLNAR: As you may know -- well, you know that there was non-compliance determined in the 2011 look at your past, and there are potential areas of non-compliance that we have addressed here today, and it is the Commission's normal practice that, in situations of non-compliance, the licensee receives a shorter licence term.

4407   That doesn't mean it's three years.

4408   You have given the reasons why three years would be harmful, or would put you at greater risk with your suppliers and so on.

4409   If the Commission were to determine that there was non-compliance, and that there needed to be some outcome for that, that being a shorter licence term, could you tell me if a licence term in the range of five years would mitigate those risks that you have discussed in here?

4410   MR. BITOVE: I will go first, because I referred in my speech to that.

4411   Our arrangement with our American licensee, shareholder, content provider -- whatever you want to call them -- says: If it is renewed on the same material terms.

4412   The same material terms as when it was crafted, and part of those negotiations was seven years. That was what was envisioned, because that's what you were granting at the time, and we do not want to put that at risk.

4413   And to your point about compliance, Commissioner, I don't believe that there has been non-compliance, especially wilful non-compliance. There may be teething pains on understanding how this process is to work -- CTD or CCD payments -- you know, commitments made in the year versus cash in the year or anything else.

4414   I think that our management team has done a fantastic job of, when there are issues, trying to get on top of them, and I think, together with your staff -- we have even talked internally, on our side, about how we can be more proactive in making sure that anything -- where there could be a potential misunderstanding, because there haven't been precedents of how we address it.

4415   But, I think, to allege that there has been non-compliance on us, with all that we have done -- and you even said that it's almost an immaterial amount in terms of what we are talking about -- isn't fair to our company and fair to us, because I don't believe that there has been anything of material significance, other than issues -- communication or collaborative issues that need to be worked out.

4416   COMMISSIONER MOLNAR: Just to be clear, I am not really alleging; it was determined and found in 2011, at the time of the merger, that there was non-compliance and that it would be addressed in this hearing.

4417   So there are further issues that we have talked about today, some issues related to different programming, whether or not CBC Radio One, with a little bit of a goofy time shift, you know, accounts for original, and different issues.

4418   There are certain items that we are determining as part of this, but the fact that there is non-compliance was actually a determination made last year. So now we are just talking about the outcome of that non-compliance, and normally the outcome of non-compliance is a shorter licence term, in the first instances of non-compliance.

4419   MR. BITOVE: So you go with a shorter licence term, you put at risk a contract. That could have great consequences for us, the artistic community, and yourselves, in terms of what the future is.

4420   Could -- I didn't say would, I said could. And why risk it?

4421   COMMISSIONER MOLNAR: Okay. Well, let me ask you something -- and you made the point, it being a material outcome. In fact, you know, I asked you about a five-year licence term, and you may know, and certainly your counsel will know, that we have often moved to five-year licence terms because of the uncertainty over a seven-year period.

4422   So, in periods where there is no apparent non-compliance -- for example, in television it's five-year licence terms now; not because of compliance, because the environment suggests, you know, that seven years is simply too long.

4423   So if we were to move from a seven to a five-year, you are suggesting that puts your supply agreement at risk, that that would be material in this day and age, where you pointed out to me, you know, that seven years ago there weren't such things as iPads, and you don't even know what kind of risks are coming forward.

4424   So you think that the material risk is us moving from a seven to a five-year licence term?

4425   MR. REDMOND: Yes, we do, and, I mean, it's a matter of the time in which, you know, it falls, one; and two, if we had a seven-year term, you still have the ability to call us in on the fifth year, or prior.

4426   It feels like we have had nothing but uncertainty around this business since it first got licensed, and what I have tried to do in the last couple of years is get as much certainty around our business, so that we can really start to focus on running the business and stop having to worry about, you know, our Copyright tariffs and where they are, and where they are going, whether we are going to be able to get refinanced, and whether the markets are going to be strong enough to refinance at competitive rates.

4427   I think that between the conclusion of the merger, which was absolutely critical for us in the long term -- we are a point now that if we can get the right level of certainty around our business, we can really start to spend the time needed to vigorously compete and try to grow this business over the next term.

4428   You know we launched this business with very little certainty around whether we were even going to get licensed, and it cost us a couple of years, in the case of Sirius, with the automotive manufacturers.

4429   COMMISSIONER MOLNAR: Can you tell me, when is it that you are needing to renegotiate the supply agreement?

4430   MR. REDMOND: We have one that is 2015 and one that is 2017.

4431   MR. BITOVE: And the 2015 wording -- and we are happy to provide your counsel with the wording, and show them the contract -- if we are renewed on basically the same material terms, it's an automatic renewal, with the U.S.

4432   COMMISSIONER MOLNAR: And you believe that they would consider --

4433   MR. BITOVE: Oh, I answered in the reverse. I don't want to give them the opportunity to challenge.

4434   COMMISSIONER MOLNAR: Let me put it this way. You have proposed to us terms that are materially more beneficial to you than the ones in place today. I am asking if moving from a seven to a five-year licence term would put this at risk.

4435   So I would say they are material -- the changes that you have proposed are material. A five to a seven-year licence term, you are suggesting, is material.

4436   MR. BITOVE: We will provide you with the wording in our agreement, and I think you can take it, with your counsel, under advisement, which way it is.

4437   But, from our interpretation, it could create uncertainty, and we all know that sometimes people can take advantage of a contract, what they may or may not want to do, and I am just saying that we don't want to risk it.

4438   So we will just provide you with the wording, you can meet with your counsel and have their discussions about it.

4439   THE CHAIRPERSON: We will take ten minutes with the document. We will take a look at it in confidence, and we will decide as to the interpretation, to see if it coincides with your interpretation.

4440   Ten minutes. Thank you.

--- Upon recessing at 1519

--- Upon resuming at 1537

4441   THE CHAIRPERSON: At the end of the day, you came in, you offered 5 points on the dollar basically to get the licence, you got your seven-year licence. You haven't made any money in seven years. You've contributed considerably or will have contributed over 50 million dollars in CTD contributions, much appreciated by the Canadian music industry.

4442   And you're coming back asking that that be dropped to .5. You're also dropping your Canadian channels from 25 to 15. You're dropping your CTD or CCD contributions from 5 points to .5 points.

4443   I'm not going to get into the figures, but your forecasts are much lower than what PWC's forecasts may be for satellite radio, and I'm not a big PWC fan but for the record, that's out there.

4444   You're also claiming that any changes would perhaps catastrophically impact the agreement you've signed with your primary content provider and, by the by, we already have that contract, you don't have to deposit it, it's there. And all that for the right to import a hundred US stations.

4445   If you can't offer more CanCon in a number of stations, as an example, how does dropping from 25 to 15 -- how do we justify that drop in Canadian stations if our primary preoccupation is the health and welfare of the Canadian broadcasting system?

4446   You can't offer more CanCon, and you want to drastically reduce your CCD as well, and that was the offer back in the day, in 2005.

4447   MR. BITOVE: I think on the channels, and the artists even said it, it's quality over quantity. So one of the big inventory changes is putting the six CBC channels onto XM, which we think is in Canada's -- you know, it's a national interest not just ours.

4448   The music channels we could have easily consolidated the Verge and Iceberg, but from the independent artists, keeping more independent, more spin opportunities, is important to them. As Mark said, there's four factors -- band width, contracts, listenership, NCOLs -- that got taken into account.

4449   So we think these 16 channels we're carrying going forward are of significantly better quality than the 25 that we would have otherwise.

4450   MR. REDMOND: And I'd add that, you know, I think we've also proven that we haven't hurt conventional radio, if anything we may have helped grow the whole category. We're up against an unregulated competitor that doesn't pay any of these fees, that obviously had some concern to us. And the fact that we haven't made any money, we have to get to a point over the next seven years that we turn, you know, at least a single digit profit for us to --

4451   THE CHAIRMAN: I'm not going into details again, but under your own projections my understanding is that you will be profitable, even at a 5 per cent contribution level.

4452   MR. REDMOND: We will, but not near the levels of conventional radio or pay audio. I mean, we're talking about probably single digit pivot in the next five to six years, assuming that everything is good from an economic standpoint and --

4453   THE CHAIRMAN: But you are your own sort of self-contained entity. It's tough to compare you with conventional radio broadcasters, I think you agree with that.

4454   I'm not going to get sort of into the back-and-forth and to-and-fro that most conventional broadcasters don't make money their first licence term either, that's not what's important.

4455   The important thing is, there's always been a sort of quid pro quo in the Canadian system, and you wanted to compare yourselves to other broadcasters that in their second term get a break on their contributions. Well, they don't get a 90 per cent on the contribution, and they bring something else to the table.

4456   I'm just looking at it sort of objectively, and I'm not saying -- there's a potential problem in your presentation is what I've just outlined, and I'm not saying it is a problem because we're looking at it objectively and there's no preconceived notion here.

4457   We'd like you to help in the process because it looks like it's all "ask" and it's no "give".

4458   MR. BITOVE: Commissioner Molnar asked us to look at other scenarios on the CCD. We will undertake to do that.


4459   MR. BITOVE: And on the channels, we think it's just better quality programming. Canadians ask for CBC on XM and we'd like to be able to offer that.

4460   THE CHAIRMAN: Let's just say, for the sake of argument, we accept that there's a technical problem with offering more Canadian channels, and Sirius' 2.0 is not going to resolve that problem. Hypothetically, if we accept that, then the only other option is the contribution to the system.

4461   MR. REDMOND: Yep.

4462   THE CHAIRMAN: In dollars and cents.

4463   MR. REDMOND: And I think we heard that loud and clear from Commissioner Molnar, and we're going to go back and --

4464   THE CHAIRMAN: Let me ask you about another issue that may be of interest to the Commission.

4465   There are some discretionary spending and it may have gotten you into trouble or may not have gotten you into trouble. We can argue about whether or not it was de minimis infraction or not, but it creates complications, and some of those complications you've addressed them in your 5-point plan, and I never mind people hiring more lawyers, it's always fun to find work for members of the bar.

4466   MR. BITOVE: We approve --

4467   THE CHAIRMAN: Yes, we approve and support -- at least I got a laugh out of Bob!

4468   But what if you just had a mandatory straight up contribution to Musicaction and Factor and you didn't have to worry about the rest of the stuff that could get you into trouble?

4469   MR. BITOVE: I don't think the artist would be happy.

4470   THE CHAIRMAN: Elaborate.

4471   MR. BITOVE: I think -- my personal view is that it should go the other way. I think we can do more to propel independent artists and bands by what we can do compared to what the collectives can. I'm sure the collectives would give the opposite argument.

4472   When you give 25 grand to a band to allow them go do a show, whether we carry it or not, it is huge, or to record a CD. So I think -- my own view, I think it should go the other way, because I think it's much more of an impact in terms of what it can do for the artistic community.

4473   THE CHAIRMAN: I'm just trying to lower your administrative costs.

4474   MR. BITOVE: Okay but, you know what, it's --

4475   THE CHAIRMAN: I can't, I'm not a lawyer.

4476   MR. BITOVE: Thank you for that, but that's not how I view this, to be honest with you. I'd rather spend a little bit more and have a deeper impact to the artistic community, because I believe in what they're doing and I think it's great that, you know, what satellite radio can do for them than the other way around.

4477   MR. REDMOND: And I don't think it takes away from us continuing to support Musicaction and Factor, because we have for the first seven years, so I think it's just, you know, if we can get to a point where we know what the fee is and then we'll try to manage giving the collectives some as well as trying to manage --

4478   THE CHAIRMAN: You appreciate the balance between the collectives and what you can --

4479   MR. BITOVE: Yes. And it's unfortunate, Mr. Chair, an employee would have seen it, we didn't bring any comedians here as interveners, but we're like their only thing in Canada ---

4480   THE CHAIRMAN: You didn't bring any...?

4481   MR. BITOVE: Comedians, the comedy community. And we are a country known for comedy. We've got some great comedy artists and everything. We're really their only outlet and probably their major funder other than doing live shows. They don't even have a collective or if they do, I can imagine what it would be like!

4482   So there are elements beyond kind of what traditional radio does fund that we get into. We wear it as a badge, you know, it's part of what makes us distinct.

4483   THE CHAIRMAN: Okay. Mr. Buchanan. I see you champing at the bit.

4484   MR. BUCHANAN: Well, I did just want to add that the original bargain that you referred to in your list, it's not a question of dropping from 25 to 16; 16 was the bargain.

4485   THE CHAIRMAN: We're not going to get into that, it's fine.

4486   Any other questions?

4487   Legal?

4488   MS FISHER: I guess I'll just do some cleanup on the undertakings, sir?

4489   THE CHAIRMAN: Yes, please.

4490   MS FISHER: The first undertaking was with the discussion with Commissioner Molnar on the tables and the other material related to the CTD initiatives, so just to go through the details. I think we have discussed working with staff to the extent necessary that we can get that information cleaned up by the 28th.

4491   MR. BITOVE: Sorry. Please repeat.

4492   MS FISHER: With respect to the discussion with Commissioner Molnar --

4493   MR. BITOVE: Yes.

4494   MS FISHER:  -- on the initiatives, the CTD initiatives in the material that have been provided to you in the table and the letter that was sent a week ago, just to go through the details --

4495   MR. BITOVE: Absolutely.

4496   MS FISHER:  -- and to work together to get those details finalized by the 28th.

4497   MR. BITOVE: Yes.

4498   MS FISHER: Okay.

4499   The second undertaking was to comment on the CCD initiatives and to suggest where you see exemptions possibly, and rationale for that.

4500   MR. BITOVE: Agreed.

4501   MS FISHER: And that can be provided by the 28th as well?

4502   MR. BITOVE: Yes.

4503   MS FISHER: The Chairman had discussed with you compensation to the system for some flexibility around the CBC and Commissioner Molnar had followed up about finding a way to meet the COL if no exemption had been granted, so if you can provide --

4504   MR. BITOVE: Mr. Tremblay has confirmed he will -- yes.

4505   MS FISHER: By the 28th? Thank you.

4506   You had also said that you would provide language for the Condition of Licence on advertising.

4507   MR. BITOVE: The embedded; yes, we will.

4508   MS FISHER: By the 28th, please.

4509   And there were a few conditions of licence that Commissioner Molnar had asked you to comment on: the condition of licence that no less than 10 per cent of all of the unique channels taken together are Canadian; the condition of licence --

4510   MR. LEWIS: Could we go back to that one? I don't fully understand that one.

4511   MS FISHER: I think she had proposed a condition of licence that no less than 10 per cent of all of the unique channels taken together over the two systems, so the Sirius and the XM systems --

4512   MR. LEWIS: Are these Canadian channels?

4513   MS FISHER: Yes. So 10 per cent would be Canadian --

4514   MR. LEWIS: 10 per cent of all of the --

4515   MS FISHER: Of all the channels.

4516   MR. BITOVE: Just to clarify, this is a concept that is completely new to us. We understand the question, and you want us to opine whether implications or it can be put into practice or anything else, and we will do so, because we were all trying to figure out the during the break what exactly it means. So there might be a follow-up with you to understand it, but for today's intents and purposes the answer is yes.

4517   MS FISHER: And if you need clarification, feel free to contact us to clarify what exactly we need.

4518   The next one was the condition of licence requiring three French language and three English language music channels on both services.

4519   And the third thing you had to comment on was the implications of the alternative CCD proposal, so the 1 per cent, the 2 per cent, 3 per cent. If you could provide all of that as well by the 28th?

4520   MR. BITOVE: Yes.

4521   MS FISHER: That's all I have.

4522   MR. BITOVE: I think there's one more. Didn't Commissioner Molnar ask us to comment on the CO? Yes, 1, 22 and 3 we believe were the numbers, right?

4523   MS FISHER: I think she had said 1, 2 and 3, but --

4524   COMMISSIONER MOLNAR: No, I believe you're right, 1, 22 and 3.

4525   MR. BITOVE: Okay.

4526   COMMISSIONER MOLNAR: Feel free to comment on 2 if you like!

4527   MR. BITOVE: And I think, Commissioner Molnar, you had asked when it came to the 3rd language channel, about something along the COL that had to do with the emerging quotient.

4528   COMMISSIONER MOLNAR: Yeah. I believe this morning we were talking about what was necessary if you felt that there -- and you had undertaken to take that away, I believe.

4529   MR. BITOVE: Right. So I believe that's one more item that we owe you.

4530   COMMISSIONER MOLNAR: I like that!

4531   THE CHAIRMAN: That was a self-imposed undertaking. I think that's why Legal didn't get it, because you were trying to sort of figure out what is emerging in the 3rd language category and it was complicated and you wanted some kind of -- so we'll take a look at that as well.

4532   If you want to throw 2 into the mix, fine, I mean, it's simple math.

4533   That's it.

4534   MS FISHER: That's all I have.

4535   MR. BITOVE: Thank you so much for spending the day with us. It's too hot outside anyway so at least we're in an air conditioned environment here!

4536   THE CHAIRMAN: This is one of the few times that no window helps!

4537   MR. REDMOND: That's true!

4538   THE CHAIRMAN: Thank you very much.

4539   Est-ce qu'il faut 5 minutes? We will take five to get the people in.

4540   Five, madame Roy, cinco minutos.

--- Upon recessing 1553

--- Upon resuming at 1558

4541   LE PRÉSIDENT : Rebonjour.

4542   Madame Roy.

4543   LA SECRÉTAIRE : Bonjour.

4544   Nous entendrons maintenant la présentation de l'ADISQ. S'il vous plaît vous présenter et vous avez 10 minutes. Merci.


4545   MME PROVENCHER : Merci.

4546   Au nom des producteurs indépendants d'enregistrements sonores, de spectacles et de vidéos du Québec, je tiens à vous remercier de nous recevoir cet après-midi.

4547   Je suis Annie Provencher, directrice aux Affaires réglementaires à l'ADISQ, et je suis accompagnée de Marie-Julie Desrochers, agente de recherche, qui sera disponible pour répondre à vos questions.

4548   Permettez-moi de vous présenter Louise Chenail, directrice générale de MUSICACTION.

4549   MME CHENAIL : Bonjour. Je suis ici aujourd'hui pour représenter la Fondation MUSICACTION à titre d'intervenant tiers indépendant pouvant témoigner de l'impact des contributions des radios satellite sur nos interventions en soutien à l'industrie de la musique francophone canadienne et des artistes qui la composent.

4550   Je me rends disponible pour répondre à toutes vos questions à la fin de l'intervention. Merci.

4551   MME PROVENCHER : Notre intervention portera sur deux points.

4552   Dans un premier temps, nous aborderons la demande de Sirius XM de voir ses contributions au développement du contenu canadien passer de 5 pour cent à 0,5 pour cent de ses revenus, ce qui correspond à une baisse de 90 pour cent.

4553   Dans un second temps, nous nous pencherons sur la place qu'entend réserver Sirius XM au contenu canadien, musical et francophone sur ses ondes au cours de sa prochaine période de licence.

4554   D'emblée, l'ADISQ souhaite réaffirmer le caractère drastique de la baisse de ses contributions au contenu canadien demandée par Sirius XM, une baisse de 90 pour cent, et ses doutes quant à sa nécessité.

4555   Afin de la justifier, Sirius XM insiste lourdement sur ce qu'elle nomme ses difficultés financières.

4556   Comme vous le savez, l'ADISQ n'a pas accès aux états financiers de la compagnie. Nous n'avons d'autre choix que d'observer les quelques indices disponibles au public, par exemple, son nombre d'abonnés, qui dépasse maintenant les 2 millions, ou encore, une annonce relayée par les médias en février 2012 à l'effet que la compagnie aurait connu un premier trimestre rentable.

4557   De plus, l'ADISQ note que lors du processus entourant la demande de fusion des deux compagnies, il a été avancé que cette transaction serait profitable pour l'entreprise. Impossible, de même, de ne pas mentionner que la titulaire avait de plus été exemptée de verser toute forme d'avantages tangibles lors de cette transaction, un privilège qui laissait aussi présager une rentabilité plus aisée à atteindre.

4558   Il demeure que le portrait financier que nous sommes en mesure de tracer ne peut être qu'approximatif et nous laissons évidemment le soin au Conseil d'en juger à partir des faits.

4559   Maintenant, permettez-nous de préciser que lorsqu'une entreprise présente une rentabilité exceptionnelle, l'ADISQ considère généralement que cette rentabilité doive s'accompagner d'une hausse des contributions de cette entreprise au développement du contenu canadien, et non de son simple maintien.

4560   C'est ainsi que, sensibles au fait que la rentabilité de Sirius XM semble actuellement modérée, nous n'avons pas demandé dans notre intervention que la part qu'elle consent au développement du contenu canadien soit augmentée.

4561   Mais surtout, contrairement à Sirius XM, nous ne croyons pas que la rentabilité soit la seule donnée à considérer lorsque vient le temps de déterminer la part des contributions au DCC à verser.

4562   Au contraire, et comme l'ont souligné plusieurs intervenants, notamment les radiodiffuseurs et CIMA, le Conseil cherche toujours à atteindre un équilibre pour s'assurer que les services contribuent le plus possible à l'atteinte des objectifs de la Loi sur la radiodiffusion.

4563   Sirius XM est un service unique dans le paysage canadien de radiodiffusion. Il ne fait pas de doute qu'en lui attribuant sa première licence, le Conseil était conscient de cet aspect inédit d'un service utilisant des infrastructures satellitaires américaines et diffusant sur notre territoire une proportion sans précédent de chaînes étrangères. Il en a assurément tenu compte lorsqu'il lui a imposé ses conditions de licence.

4564   L'ADISQ déplore que Sirius XM demande à être considérée comme une radio terrestre traditionnelle lorsque vient le temps de déterminer la somme de ses contributions, mais s'écarte drastiquement des obligations qui leur sont imposées quant au contenu canadien et francophone. La comparaison avec les radios commerciales ne tient simplement pas la route -- les radiodiffuseurs eux-mêmes sont à nouveau d'accord avec nous sur ce point.

4565   Enfin, toujours dans le but de justifier une baisse drastique de ses contributions, Sirius XM invoque la menace des services par contournement.

4566   L'ADISQ, qui s'exprime au nom de l'industrie ayant été la première à être confrontée aux nombreux défis posés par l'arrivée de ces services, ne saurait sérieusement être accusée d'en méconnaître les effets. Or, comme nous l'avons affirmé dans notre intervention, nous constatons que ces services ne menacent pas l'industrie de la radio, qu'elle soit satellite ou hertzienne, mais qu'ils y sont plutôt complémentaires.

4567   Nous partageons, d'ailleurs, cette analyse avec plusieurs intervenants. Pensons au chef de la direction de Sirius XM aux États-Unis -- un pays où les services par contournement sont en avance par rapport au Canada -- monsieur Karmazin, qui affirmait en mai dernier qu'il croit que le contenu programmé (curated content) comme celui qu'offre Sirius XM est plus important que jamais et continuera de l'être dans le futur, alors que de plus en plus de contenu deviendra disponible, particulièrement sur Internet.

4568   De même, un haut dirigeant d'Astral affirmait le 5 juin dernier dans le quotidien « La Presse » que « la radio est un média qui compose très bien avec l'éclatement des plateformes de diffusion. »

4569   Pour conclure cette partie de notre intervention, je rappellerai que les contributions versées par Sirius XM sont vitales pour l'industrie de la musique.

4570   Plusieurs membres de l'ADISQ, en manifestant leur soutien au renouvellement de la licence de Sirius XM dans le cadre du présent processus public, l'ont d'ailleurs affirmé clairement. Pensons par exemple aux Francofolies, qui ont écrit que « le portrait culturel montréalais est difficilement envisageable sans leur présence » ou encore au Festival de musique émergente, selon lequel « les contributions de Sirius XM demeurent essentielles à notre culture nationale. »

4571   Nous aimerions d'ailleurs souligner les contributions importantes et essentielles qui ont été versées par Sirius XM à l'ADISQ au cours des dernières années afin de soutenir certains événements que nous organisons. Nous la remercions pour cet apport.

4572   Je m'attarderai maintenant au contenu diffusé par Sirius XM.

4573   L'ADISQ souhaite insister à nouveau sur l'importance pour le Conseil de s'assurer que Sirius XM fasse, conformément aux voeux et au mandat du Conseil, la meilleure utilisation possible des ressources créatrices canadiennes.

4574   En 2005, les limites techniques étaient la seule raison qui avait motivé le CRTC à se contenter d'une proportion anormalement faible de canaux canadiens et francophones. L'ADISQ se questionne quant à l'évolution de ces limites et considère que les réponses fournies par la requérante au dossier public, qui se contente d'affirmer qu'il n'y a pas d'espace supplémentaire disponible, sont incomplètes et insatisfaisantes.

4575   Dans sa réplique, Sirius XM affirme qu'il n'y a pas de négociations prévues avec son pendant américain avant 2017. Or, la fusion n'a-t-elle pas obligé la titulaire à effectuer certaines modifications à ses obligations contractuelles? L'établissement d'une programmation « best of » -- sur laquelle nous reviendrons -- n'a-t-il pas impliqué la réouverture de certaines clauses?

4576   Permettez à l'ADISQ de douter que toute ouverture quant aux obligations contractuelles de Sirius XM Canada, incluant les possibilités de bande passante supplémentaire, soit réellement impossible avant que 12 ans ne se soient écoulés.

4577   D'ailleurs, dans le document fourni par Sirius XM après que la période d'intervention ait été fermée, on retrouve la programmation canadienne et la programmation « best of », mais aucun détail n'est fourni quand à la programmation régulière. Demeure-t-elle inchangée? La programmation « best of », selon ce que l'ADISQ en comprend, semble s'ajouter à la programmation régulière. Chaque service contiendrait-il donc dorénavant 130 chaînes? Est-ce que cela ne signifierait pas que de l'espace supplémentaire a été libéré?

4578   Quoi qu'il en soit, l'ADISQ réitère qu'elle considère qu'un ratio de 10 pour cent de canaux canadiens est nettement insuffisant.

4579   En offrant un nombre limité de chaînes canadiennes, Sirius XM n'est pas en mesure de refléter la riche diversité des genres musicaux canadiens.

4580   La stratégie actuellement adoptée par Sirius XM met de l'avant des chaînes diffusant une forte proportion de contenu canadien, ce qui constitue, aux yeux de l'ADISQ, une forme de ghettoïsation de la musique canadienne, qui se trouve noyée parmi une offre étrangère dominante, plutôt que d'être mise en valeur au sein d'une offre musicalement homogène.

4581   Par ailleurs, regardons de plus près la programmation « best of. » Le Conseil l'a sans doute constaté : Aucune chaîne francophone, aucune chaîne musicale, et, bien entendu, aucune chaîne musicale francophone n'y figure. Une seule chaîne canadienne s'y retrouve et il s'agit dans les deux cas d'une chaîne sportive anglophone.

4582   L'ADISQ n'a évidemment d'autre choix que de dénoncer cette programmation « best of. » Appliquer le ratio canadien/étranger en vigueur pour la programmation globale à cette offre limitée à neuf canaux est fallacieux. Plutôt qu'un ratio un pour neuf (enfin, ici, de un pour huit), pourquoi ne pas exiger un ratio un pour un? L'offre limitée, à l'instar de l'offre globale, pourrait ainsi comprendre des canaux musicaux canadiens, des canaux francophones et des canaux musicaux francophones.

4583   L'ADISQ se questionne aussi quant au nombre de neuf chaînes. Pourquoi la programmation « best of » n'en compte-t-elle pas davantage? Cette programmation est la seule qui sera offerte à l'ensemble des auditeurs de Sirius XM et elle bénéficiera sans doute d'une visibilité plus grande que l'ensemble des autres chaînes.

4584   Il est nécessaire que le contenu canadien et les ressources créatives du Canada, notamment la musique canadienne francophone, y soient présents.

4585   D'ailleurs, si, comme nous le pensons, ces neuf canaux s'ajoutent à la programmation régulière, faisant passer le nombre de canaux à 130 pour chacun des services, il appert que les auditeurs qui s'abonneront au service « Premier » ne seront pas exposés aux mêmes proportions de canaux canadiens musicaux que ceux abonnés à la programmation régulière seulement.

4586   Le tableau que nous avons fourni en annexe montre bien que pour un auditeur abonné au service « Premier », les pourcentages de canaux musicaux canadiens seraient, respectivement, de 54 pour cent et 62 pour cent pour XM et Sirius, plutôt que 58 pour cent et 67 pour cent.

4587   L'ADISQ est persuadée que Sirius XM, une compagnie comptant aujourd'hui plus de 2 millions d'abonnés à travers le Canada, a le devoir d'offrir un contenu canadien, francophone et musical le plus nombreux et le plus diversifié possible afin de plaire à ses auditeurs et de remplir sa mission.

4588   Nous souhaitons vivement que le Conseil explore, par exemple, les possibilités nouvelles offertes par la fusion, en exigeant un rehaussement de la programmation « best of » et en imposant un plus grand nombre de canaux canadiens, francophones et musicaux, tout particulièrement à un moment où la requérante cherche à diminuer le soutien qu'elle offre au développement du contenu canadien.

4589   C'est en tout respect que nous vous soumettons aujourd'hui ces propositions. Nous avons la conviction qu'elles peuvent fournir au Conseil, comme à Sirius XM, des balises pertinentes pour favoriser l'atteinte des objectifs établis par le cadre réglementaire. Nous avons surtout la conviction que ces propositions contribueront à maintenir une identité nationale forte et permettront à des auditeurs de partout au Canada et en Amérique du Nord de découvrir la créativité de nos artistes et la richesse de notre culture tout en respectant la dualité linguistique de notre pays.

4590   Nous vous remercions de votre attention et sommes maintenant prêtes à répondre à vos questions.

4591   LE PRÉSIDENT : Oui, ce n'est pas la matière qui manque.

--- Laughter

4592   LE PRÉSIDENT : Écoute, est-ce qu'on peut brièvement regarder votre tableau...

4593   MME PROVENCHER : Oui.

4594   LE PRÉSIDENT : peut-être nous expliquer ça rapidement. C'est la première fois que je le vois.

4595   Pratiquement parlant, quelles sont vos exigences au niveau des chaînes francophones? Vous aimeriez quoi?

4596   MME PROVENCHER : Actuellement, si on considère juste l'offre canadienne...

4597   LE PRÉSIDENT : Oui.

4598   MME PROVENCHER : ...nous, on trouve que les chaînes francophones et musicales francophones sont bien représentées.

4599   LE PRÉSIDENT : C'est bien.

4600   MME PROVENCHER : Nous, le problème, c'est dans le nombre limité au total de chaînes canadiennes. Ça serait là notre demande, puis c'est ce qu'on avait dit en 2005 à l'époque. C'est le principal problème. Si on regarde juste le line-up canadien, on peut dire que...

4601   LA SECRÉTAIRE : Un instant s'il vous plaît. La traduction...

--- Pause

4602   LE PRÉSIDENT : Alors, au niveau des chaînes francophones, vous arrivez à quel chiffre?

4603   MME PROVENCHER : Bon, pour Sirius, avant l'audience, avant qu'on ne soit fourni une autre grille, c'était six canadiens francophones.

4604   LE PRÉSIDENT : Oui.

4605   MME PROVENCHER : Après l'audience, sans considérer le « best of », on en a cinq.

4606   LE PRÉSIDENT : Oui.

4607   MME PROVENCHER : Et ça ne change pas, évidemment, avec le « best of », à cinq chaînes francophones.

4608   LE PRÉSIDENT : O.K. Ça va.

4609   Et du côté anglophone?

4610   MME PROVENCHER : Le total des canaux canadiens, ça augmente à 13 puisqu'il y en a une qui est « best of ».

4611   LE PRÉSIDENT : Oui, c'est ça.

4612   MME PROVENCHER : Donc, c'était 12, 12 et 13.

4613   LE PRÉSIDENT : Mais là, vous exigeriez plus de chaînes...

4614   MME PROVENCHER : Oui.

4615   LE PRÉSIDENT : langue anglaise?

4616   MME PROVENCHER : Bien, canadienne au total.

4617   LE PRÉSIDENT : O.K.

4618   MME PROVENCHER : Avec les mêmes proportions ensuite qui suivraient de francophones.

4619   LE PRÉSIDENT : Et les empêchements d'ordre technique? Vous avez entendu le témoignage ce matin ou cet après-midi. Ça ne vous impressionne pas autant?

4620   MME PROVENCHER : On a de la misère à comprendre surtout dans le contexte de la fusion.

4621   LE PRÉSIDENT : Oui.

4622   MME PROVENCHER : On se disait qu'il était logique de penser qu'il pourrait y avoir de l'espace qui serait libéré. Par exemple, pour les deux services offerts à leurs abonnés, cette même entreprise-là, elle a un service Sirius XV, on répète plusieurs chaînes.

4623   On a calculé, nous, qu'il y avait eu... dans notre mémoire on expliquait qu'on avait compté 95 chaînes qui se dédoublaient et chacun des services avaient une vingtaine de chaînes au total, là, exclusives.

4624   Donc, pour entrer les chaînes Sirius dans le satellite XV, j'imagine qu'il y a dû y avoir de l'espace technique de libéré ou... On pose des questions ou on ne comprend pas toute cette technique-là, évidemment, mais c'est la raison, hein, l'énigme technique.

4625   LE PRÉSIDENT: Oui. C'est ça qui est invoqué.

4626   MME PROVENCHER: On essaie de bien les comprendre avec les données qu'on a. Mais je me souviens aussi en 2005, la première décision... en fait, l'offre qu'avait présentée Sirius XM c'était cinq canaux canadiens, je me souviens bien, mais quand même...

4627   LE PRÉSIDENT: Mais juste pour y revenir, tout l'aspect de ce partenariat avec Sirius XM aux États, il y a une bande passante, on utilise le spectre des États. Et est-ce que vous pensez vraiment que Sirius XM Canada a les coudées franches de jouer?

4628   MME PROVENCHER: Mais ce que je racontais avant, justement ils avaient... vous aviez imposé... on avait discuté à l'audience en 2005 de cinq canaux canadiens, mais le CRTC avait quand même décidé d'en imposer huit et, là, maintenant, ils sont à 12, il y a quand même de l'espace qui se dégage, là, à un moment donné, là, ce n'est pas aussi fixe qu'on pense.

4629   LE PRÉSIDENT: Et les engagements contractuels, vous pensez qu'il y aura flexibilité de la part des partenaires américains, vous avez mentionné également dans vos textes?

4630   MME PROVENCHER: Bien, on espère. C'est une entreprise canadienne qu'on opère ici. Il y a des règles de contenus canadiens qui sont vraiment de celles qu'on impose à d'autres services de radiodiffusion ici.

4631   LE PRÉSIDENT: Oui, sauf que disons que les radiodiffuseurs canadiens ont les coudées vraiment franches de jouer ce qu'ils veulent et s'il y a une espèce d'association presque bicéphale, donc vous avez Sirius Canada et vous avez ce qui se passe aux États et ils sont... je ne dis pas qu'ils sont piégés en quelque sorte, mais ils sont pris en otage, si vous voulez, par les exigences et les intérêts du produit et du contenu qui émane des États.

4632   MME PROVENCHER: Bien, c'est dommage.

4633   LE PRÉSIDENT: Est-ce que ça rentre en ligne de compte dans la réflexion à la confection de votre document ici?

4634   MME PROVENCHER: Bien, on comprend qu'ils ont des obligations contractuelles, mais nous, vous comprendrez que notre rôle c'est de mieux positionner le francophone musical et on trouve que ce qui résulte du total...

4635   LE PRÉSIDENT: Je comprends que vous voulez promouvoir ça.

4636   MME PROVENCHER: On veut promouvoir ça.

4637   LE PRÉSIDENT: Mais il faut que ça soit basé dans une réalité.

4638   MME PROVENCHER: On veut être certain qu'on comprend bien les limites techniques, contractuelles. On n'a pas trouvé que dans les documents publics il y avait beaucoup de réponses, beaucoup de détails là-dessus. Je comprends qu'il y a des aspects de confidentialité là-dedans, mais...

4639   LE PRÉSIDENT: Mais, vous, dans votre lecture, là, les empêchements techniques, ça ne vous a pas impressionnée.

4640   MME PROVENCHER: Bien, on n'est pas des experts, mais on veut s'assurer que le CRTC pose les bonnes questions pour vraiment être certaine que c'est vraiment impossible. Mais, moi, ce que je trouve c'est qu'à travers des années il y a eu de l'ajout de canaux canadiens et de l'ajoute de canaux aux États-Unis, eux aussi depuis sept ans ils ont bonifié leur offre. Donc, il y a de l'espace visiblement qui s'est libéré.

4641   Je comprends les ententes contractuelles ensuite entre l'entreprise canadienne et américaine, mais...

4642   LE PRÉSIDENT: Ce que je veux dire c'est qu'il n'y a pas de liberté totale.


4644   LE PRÉSIDENT: De faire ce qu'ils veulent. Et est-ce que vous avez tenu compte de ça dans la confection de votre document? C'est ça la question que je pose.

4645   MME PROVENCHER: On est conscient qu'ils ont des limites techniques et contractuelles, mais on essaie de voir s'il n'y a pas lieu... il n'y a pas une marge de manoeuvre.

4646   LE PRÉSIDENT: O.k.

4647   MME PROVENCHER: Puis on essaie de poser les questions pour voir s'il n'y en a pas une qui peut se dégager.

4648   LE PRÉSIDENT: Ça va. Mais quant à la rentabilité, alinéa 11, là, vous avez parlé que ça ne doit pas être la seule considération, mais l'industrie privée doit être rentable, surtout si on tient compte du fait qu'il y a une espèce de partenariat qui a été établi entre la communauté créatrice artistiques canadienne et les radiodiffuseurs, que ce soit dans la télé ou la radio.

4649   Je veux dire, s'ils font bien, si leurs affaires vont bien, bien plus qu'il va en découpler pour la communauté artistique, n'est-ce pas?

4650   MME PROVENCHER: Hum, hum, oui.

4651   LE PRÉSIDENT: Alors, la rentabilité est importante?


4653   LE PRÉSIDENT: Et elle ne peut pas être négligée.

4654   MME PROVENCHER: Mais ce n'est pas la seule raison, ce n'est pas la seule raison.

4655   LE PRÉSIDENT: Non, non, je comprends.

4656   MME PROVENCHER: Nous, on a parlé d'équilibre, là, étant donné qu'on a entendu aussi aujourd'hui, là, il y a un équilibre à trouver entre l'offre de contenu qu'on entend, canadien, et les conditions financières, je pense qu'on l'a entendu aujourd'hui, là, que c'est cette recherche d'équilibre là aussi qui est importante pour le CRTC en même que la rentabilité.

4657   LE PRÉSIDENT: D'accord. Sur les services par voie de contournement, vous avez mentionné... vous avez mentionné -- moi, j'ai déjà plaidé devant un juge qui saisissait les téléphones cellulaires qui sonnaient dans la salle.

4658   Bon. Vous avez mentionné un autre dirigeant d'Astral, qui était cette personne-là?

4659   MME PROVENCHER: Charles Benoît.

4660   LE PRÉSIDENT: On peut faire la recherche, là.

4661   MME PROVENCHER: C'était Charles Benoît.

4662   LE PRÉSIDENT: C'est Charles, O.k. Je vois que madame Poirier a des questions puis je peux retourner par la suite.

4663   CONSEILLÈRE POIRIER: Parfait. Merci beaucoup de votre document. D'ailleurs, ça serait intéressant que dans la réponse finale Sirius nous donne peut-être plus d'information sur la question que vous posez, sur la disponibilité de la bande passante suite à la fusion de XM et de Sirius.

4664   Je sais qu'ils ont déjà dû le faire dans certains documents, mais moi j'apprécierais, effectivement, qu'on nous explique davantage en réponse à votre demande.

4665   Par contre, j'ai quelques questions plus spécifiques qui suivent les discussions qui se sont déroulées cet après-midi.

4666   Comme on le sait la Commissaire Molnar a aussi demandé à Sirius de répondre à des possibilités de contribution de CCD de 1, 2.5, 3 pour cent. J'aimerais avoir votre avis sur ça. Qu'est-ce que vous en pensez?

4667   Est-ce que vous accepteriez... est-ce que vous seriez en accord qu'il y ait quand même une diminution, considérant la cause qui a été présentée devant nous et est-ce qu'il y aurait un chiffre sur lequel vous seriez prêt à vous ranger?

4668   MME PROVENCHER: Comme je disais, nous, ce qui est important, c'est la recherche d'équilibre. S'il y a une baisse de contribution financière, nous, certain qu'on pourrait voir d'un autre côté qu'est-ce que gagne notre industrie en terme d'exposition, en terme de contenu. Je pense qu'un doit s'accompagner de l'autre.

4669   Mais peut-être que je laisserais Louise Chenail de MusicAction peut-être vous expliquer qu'est-ce que ça pourrait signifier une baisse aussi de cette nature-là.

4670   CONSEILLÈRE POIRIER: Oui. Je vais la laisser répondre, mais ce que je comprends de ce que vous dites, c'est on ne peut pas baisser les deux. Si on baisse le CCD, il faut au moins donner plus d'exposition. Est-ce que c'est ce que vous êtes en train de dire?

4671   MME PROVENCHER: Bien, en fait, l'exposition ça serait de la monter en fait.


4673   MME PROVENCHER: Là, on ne propose pas vraiment de la baisser.

4674   CONSEILLÈRE POIRIER: On ne fait pas les deux en même temps.


4676   CONSEILLÈRE POIRIER: O.k. Et madame Chenail?

4677   MME CHENAIL: Écoutez, je n'ai pas de chiffre à proposer. Juste pour vous dire que, en fait, le plus important pour nous c'est de pouvoir prévoir un peu les ressources dont on va pouvoir disposer de façon claire, nette et précise, ce qui n'a pas été le cas durant les sept dernières années, ce qui a pour nous amené une certaine incertitude dans la gestion de nos budgets.

4678   Mais par ailleurs, nous sommes très heureux des montants que Sirius XM ont donné au cours des six dernières années, c'est substantiel. Je regardais seulement dans la dernière année et ça correspondait, la somme donnée, bien qu'il y a eu deux montant, là, qui étaient dans deux années financières radio différentes, mais données la même année, mais ça correspondait pour nous au financement, finalement, de 30 albums francophones en production.

4679   Alors, c'est énorme, mais c'est pour revenir au fait que nous, nous sommes d'emblée donc un appui à la création, mais qui assure aussi aux radios un répertoire de musique francophone diversifié et de qualité. Donc, cet apport est excessivement important.

4680   Et je faisais le calcul de passer... je regardais ce qu'ils nous ont donné basé sur ce cinq pour cent versus le plan de contribution qu'ils avaient déposé et ce qu'ils nous promettaient versus 1.5, alors c'était vraiment une chute drastique dans les contributions. Ça baissait les montants de 71 pour cent.

4681   Alors, sur six ans, au lieu de recevoir ne serait-ce que pour XM, je ne parle pas de Sirius, là, alors au lieu de recevoir ce que nous avons reçu sur six ans, 906, je comptais que ça aurait été 262,493,00 $, donc une baisse.

4682   CONSEILLÈRE POIRIER: Alors, ça veut dire combien de CDs de moins, ça?

4683   MME CHENAIL: C'est énorme, de CDs de moins par année, si je divise sur six ans, écoutez, ça ne serait pas 30 comme cette année, là, ça serait deux par année, alors c'est vous dire.


4685   MME CHENAIL: Et je pense que c'est une industrie qui en a grand besoin présentement, il y a une grande mouvance, hein, technologique, numérique. Il faut continuer de produire du contenu. Nous, on soutient aussi les auteurs-compositeurs, on soutient à la production, à la commercialisation, mais on a aussi des nouveaux mandats qui sont le développement des marchés numériques.

4686   On sait que le Québec francophone n'a pas pris sa place encore sur ce marché, alors il y a du terrain à reprendre. Alors, et aussi, d'emblée, les jeunes producteurs et c'est le monde de maintenant, donc, pensent immédiatement à toucher le monde, ils pensent à une stratégie internationale.

4687   Donc, il faut développer aussi collectivement de nouveaux outils.

4688   CONSEILLÈRE POIRIER: O.k. Mais j'ai entendu des choses aujourd'hui qui sont quand même intéressantes et qui endossent l'approche de Sirius. Par exemple, monsieur Schuller a dit: « Mieux vaut de la qualité que de la quantité en terme autant de chaînes de stations qu'en terme d'exposition. »

4689   Il y a une exposition qui se fait de leur production partout aux États-Unis, et on a entendu aussi les représentants de Sirius nous répéter la même phrase que c'est: "Better quality than quantity", O.k.

4690   Alors, qu'est-ce que vous en pensez de ce côté-là? Est-ce qu'on est mieux de baisser de 25 à 16 chaînes? Est-ce qu'on est mieux d'en avoir seulement deux ou trois, mais d'avoir de la qualité plutôt que d'avoir la quantité?

4691   MME CHENAIL: Juste avant, je vais laisser Annie répondre à cette question, cette dernière question, mais quant à la visibilité et l'exposition, ce dont parlait France aussi, donc ce territoire américain, je voudrais juste souligner que pour les artistes québécois, francophones, le territoire de prédilection hormis le Québec et le Canada français, c'est évidemment l'Europe et plus précisément la France, la Belgique et l'Europe et non pas les États-Unis.

4692   CONSEILLÈRE POIRIER: C'est ça. Alors, Caracole n'est pas nécessairement joué beaucoup ou apprécié aux États-Unis, ça ne l'aidera pas beaucoup dans sa carrière.

4693   MME CHENAIL: Mais je veux dire... ce que je sais, par ailleurs, c'est que, nous, on investit... à l'international, on a investi 1,4 million cette année et ce qui fait la différence, c'est quand les artistes y vont, ils restent. Alors, il y a du développement à faire et c'est du développement terrain, par le spectacle, entre autres.

4694   CONSEILLÈRE POIRIER: Alors, madame Provencher et madame... qu'est-ce que vous avez à répondre sur la qualité plutôt que la quantité?

4695   MME PROVENCHER. Mais je pense qu'en premier lieu, il y a beaucoup de qualité, je pense qu'il y a de la place, là. Ce n'est pas en mettant plus que, là on va sortir des choses qui ne sont pas de qualité, là, je veux dire, il y a beaucoup de qualité, il y a beaucoup de genres musicaux.

4696   Le fait d'avoir un nombre restreint de chaînes ça force à mélanger peut-être des genres qui cohabitent plus ou moins bien ensemble. Le fait d'avoir plusieurs chaînes, même avec des niveaux canadiens moins élevés, on les insère dans une offre internationale, tout en les laissant dans une place adéquate.

4697   Mais il me semble que pour un auditeur c'est plus intéressant d'entendre, par exemple, un artiste hip-hop canadien au sein d'une chaîne hip-hop plutôt qu'entendre une pièce hip-hop puis, ensuite, passer au pop, au rock.

4698   C'est ça en fait ce qu'on voulait dire dans notre élément de ghettorisation. Pourquoi ne pas insérer chaque artiste canadien dans un style où il ressort mieux en fait.

4699   CONSEILLÈRE POIRIER: Parfait. J'ai terminé, monsieur le président. Je vous laisse continuer.

4700   MME CHENAIL: Est-ce que je pourrais rajouter quelque chose?

4701   LE PRÉSIDENT: C'était des points intéressants.

4702   MME CHENAIL: Vous parliez de la qualité de la musique.


4704   MME CHENAIL: Nous venons de vivre une dernière inscription, une sélection à MusicAction en musique vocale francophone et on a dû refuser 65 pour cent des projets et je vous dis que pour certains c'est vraiment à contre-coeur parce que nous savions que la qualité y était, mais nous ne pouvions apporter notre soutien.

4705   CONSEILLÈRE POIRIER: Donc, vous avez besoin de tous les argents qui vous étaient octroyés?

4706   MME CHENAIL: Absolument. Voilà.

4707   CONSEILLÈRE POIRIER: Vous maintenez le cinq pour cent. Est-ce que c'est ça que vous...

4708   MME CHENAIL: Je ne dis pas ça.

4709   CONSEILLÈRE POIRIER: O.k. Vous ne dites rien.

4710   MME CHENAIL: Je vous laisse. Moi, je veux que témoigner.

4711   CONSEILLÈRE POIRIER: Aucun chiffre entre les deux, là?

4712   MME CHENAIL: Non, non, je ne veux pas témoigner en ce sens, mais seulement vous dire, voilà, les besoins sont grands, voilà ce que nous faisons et...


4714   LE PRÉSIDENT: Merci. En parlant justement de la rentabilité, l'importance de la rentabilité, quant aux avantages tangibles, une entreprise qui n'est pas rentable, ma compréhension c'est qu'ils ne paient pas d'avantages tangibles et ça explique pourquoi il n'y avait pas d'avantages tangibles en 2008, lors de la fusion.

4715   MME PROVENCHER: Aussi le délai de cinq ans en fait, pour avoir existé depuis cinq ans pour pouvoir se prévaloir de cette non-rentabilité-là parce que le CRTC tient compte du fait qu'il y a quand même une période de démarrage.

4716   LE PRÉSIDENT: Trois ans.

4717   MME PROVENCHER: C'est là où ils arrivaient juste en fait. Ça faisait un peu plus que cinq ans qu'ils étaient en opération.

4718   LE PRÉSIDENT: Mais les trois dernières années, les trois années précédentes n'ont pas été rentables.

4719   MME PROVENCHER: Ça, on ne contestait pas ça. C'est juste le fait qu'ils dépassaient à peine la période de cinq ans, là.

4720   LE PRÉSIDENT: Non. Je comprends. Merci beaucoup. C'est intéressant. Bonne fin de journée. Madame Roy.

4721   LA SECRÉTAIRE: Merci. J'inviterais maintenant the Canadian Independent Music Association to come to the presentation table.

4722   Please introduce yourself and you have ten minutes. Thank you. Please open your mike. You have to open it. Yes, thank you.

4723   MR. JOHNSTON: I'll look at that technology. Great.

4724   Good afternoon, Mr. Chair, and Commissioners. My name is Stuart Johnston, I am the president of the Canadian Independent Music Association.

4725   CIMA has represented the interests of Canada's English language music production companies for the past 37 years.

4726   We represent more than 180 small and medium sized Canadian-owned businesses and professionals engaged in the worldwide production and commercialization of Canadian independent music who, in turn, represent many times that number of Canadian artists and bands. My members include Canadian-owned recording companies, music publishers, managers, agents, artists and other music industry professionals from across the country.

4727   To begin with, CIMA wants Sirius to continue, Sirius XM to continue broadcasting in this country, and would therefore support the renewal of its license, with a few very important and fundamental caveats, of course.

4728   First off, CIMA and its members believe that Sirius XM delivers a high quality service to the Canadian public and to my industry in general.

4729   My members appreciate the broad reach in terms of potential listeners that SXM has from coast to coast to coast. From large urban centres to the most rural of villages, Canadians are able to access the multitude of channels that Sirius XM offers to its subscribers in their homes, and through online, mobile and in-car devices. This potentially exposes millions of Canadians to the great music that my members and their artists create.

4730   We note with interest Sirius XM's recent submission to the Commission, in which it outlines its new channels under its combined, corporate brand. CIMA is pleased that SXM appears to be increasing the number of Canadian-produced music channels by three, and that eight of its 10 music channels will have a very strong focus on Canadian independent artists. We are also pleased that Sirius XM is making an effort to comply with its licence obligation to feature one Canadian-produced channel for every nine non-Canadian produced channels offered to subscribers.

4731   Indeed, Sirius XM notes that many of these music channels will feature 90 to 100 percent of Canadian content, which exceeds its licence mandate to broadcast a minimum of 85 percent Canadian music.

4732   We acknowledge SXM's plans, which seem to fulfil its licence obligation that at least 60 percent of its Canadian-produced lineup must be music channels. When one considers the total number of music channels from both Sirius and XM, this 60 percent threshold is met. However, CIMA points out to the Commission that when one views the number of music channels from a subscriber point of view, the math is slightly different.

4733   While Sirius subscribers will enjoy eight Canadian-produced music channels, which constitute 67 percent of its music line up, thereby meeting its licence obligations, XM subscribers will only be able to access seven Canadian-produced music channels, or 58 per cent of its license obligation.

4734   But to clear up some confusion on my part, we asked that the Commission confirm whether XM subscribers are able to access the same level of Canadian music as Sirius subscribers. We must ensure that all subscription packages offer the same level of Canadian-produced music channels, regardless if one is a Sirius or XM subscriber and that it meets the 60 per cent threshold.

4735   In a broader sense, it is unfortunate that only 10 percent of SXM's total broadcast package is Canadian and of that, a little more than 60 percent is dedicated to domestic, independent music. This is a very low figure and demonstrates a disconcerting lack of exposure of Canadian music artists to Canadian audiences through satellite radio, particularly in relation to the disproportionate amount of foreign music to which Canadians are exposed.

4736   We acknowledge SCM's position that the number of Canadian channels is physically limited due to a finite level of bandwidth available on the US satellite network. However, if and when additional bandwidth does become available, CIMA would strongly recommend that SXM gives serious consideration to expanding the number of Canadian-produced music channels at that time.

4737   CIMA has a deep appreciation of the important role that broadcasters play in Canada. CIMA and my membership enjoy a healthy working relationship with the broadcast industry, and believe that we have an important, symbiotic relationship that serves to benefit all Canadians.

4738   CIMA gratefully acknowledges the significant financial contributions that SCM to the independent industry over the years. Its CCD contributions are very important to the growth and viability of Canadian independent music, particularly in these recent years, when we have experienced dramatic declines in revenues.

4739   SCM's combined CCD of over /12 million in its last fiscal year is a significant contribution to the Canadian-owned music industry, but it is also of a significant enough level that its reduction will create a tangible and detrimental impact on the sector that I represent.

4740   CCD funds are the lifeblood of my industry. They provide much needed capital to help the industry grow.

4741   Every penny of CCD funds is effectively and successfully leveraged to support and develop Canadian artists as well as the businesses behind them. These funds enable businesses and associations to record, provide, support, develop and market a broad range of artists from the "export-ready" to the grassroots levels, both domestically and abroad.

4742   In an industry where margins are very narrow, revenues are depressed and cash flow is a challenge, every dollar of support goes a long way towards growing the industry and developing and promoting our artists. This in turn provides new and greater repertoire for SXM and others to broadcast, thereby expending the musical catalogue for its playlists and its subscribers to enjoy.

4743   To illustrate this, SXM is one of several important partners in CIMA's global exporting and investment strategy.

4744   This economic development strategy is truly a public-private partnership, wherein CIMA works to establish the Canadian music industry's business presence worldwide, while providing opportunities for our artists to showcase their exceptional talent.

4745   In short, CIMA acts in the capacity of a music export office, but our missions would not be possible without the generosity and support of partners such as Sirius XM.

4746   Its longstanding support of CIMA's key business and showcasing event at the annual SCSW music conference and festival in Austin, Texas, h as given our emerging artists and their labels, as well as the Canadian brand, outstanding coverage and exposure, which they would otherwise not have had at this strategic event.

4747   SXM's sponsorship of the Canadian Blast BBQ and showcase, and its live broadcast is a key marketing tool for CIMA and our members at SXSW, and we truly value that partnership.

4748   SXM'S sponsorship underwrites the costs of our BBQ, the performances, showcase production, marketing and promotion, and enables CIMA to leverage this event to invite between 400 and 500 key international VIPs, key business contacts for our Canadian music representatives to meet and conduct business with.

4749   This year, CIMA's delegates reported almost $3 million worth of business completed or initiated during our SX mission, and the Canadian Blast BBQ is a key component of that strategy. That's a $3 million infusing into the industry and by extension the Canadian economy, thanks in large part to our partners like Sirius XM.

4750   Clearly, CIMA believes that Sirius XM's CCD contributions are needed, and absolutely appropriate.

4751   If the applicant were to lower its CCD by 90 percent, it would mean that its contribution last year would have been reduced by almost $11.5 million. This would have had profound implications and a ripple effect on the entire industry. As such, the level of CCD as set by the Commission in 2005 was and still remains appropriate, in our view.

4752   Clearly we are strongly opposed to the reduction of CCD levels by Sirius XM.

4753   Satellite radio is a unique service, one that is virtually unmatched in certain respects. It enjoys a virtual monopoly, in a sense, and is unique in that its broadcast can reach every corner and coast of Canada, unlike terrestrial radio and existing mobile or in-car streaming services. This ,privilege in our view, sets satellite radio apart from other broadcast players.

4754   As such, a contribution of at least 5 percent is of a level appropriate to its unique position in the marketplace.

4755   Considering that Sirius XM cannot offer additional benefits by way of increasing its music channel selection, this then provides sufficient reason for the Commission to maintain Sirius XM's current CCD commitment, in our view.

4756   Now, the Commission had noted issues of compliance relating to the conditions of license under CCD contributions and we are pleased from today's discussion that the Commission and the applicant are working together to resolve this issue going forward.

4757   I want to thank you for the opportunity and I would welcome any of your questions.

4758   Thank you.

4759   THE CHAIRPERSON: Thank you very much.

4760   Madame Poirier...?

4761   COMMISSIONER POIRIER: A fast closing.

--- Laughter

4762   MR. JOHNSTON: Yes.

4763   COMMISSIONER POIRIER: I didn't expect it. Thank you very much for coming.

4764   If I go to page 3 in today's presentation, maybe we should ask Sirius to give us the answer you are asking for related to:

"... XM subscribers must be able to access the same level of Canadian music as Sirius subscribers."

4765   Maybe they are the ones who should answer that, not the CRTC.

4766   MR. JOHNSTON: Fair enough.

4767   COMMISSIONER POIRIER: Okay. So I was wondering, you mentioned that:

"... if and when additional bandwidth does become available, CIMA would strongly recommend that SXM gives serious consideration to expanding the number of Canadian-produced music channels..."

4768   Would you want us to put this as a condition of license or an expectation in the final decision?

4769   MR. JOHNSTON: I guess the simple answer to that is yes. The Commission had put forward questions to the applicant earlier about perhaps increasing the number, talked to my friend Franz about whether it's quantity over quality, and I addressed it a little bit in my remarks by actually asking for more if possible, which is the basis of your question.

4770   So the simple answer is yes. Yes, quality over quantity is important. We would like to see a number of Canadian channels increase.

4771   I'm qualifying my remarks right now only because the honest answer is probably a lot larger than what we could offer here today, it's more philosophical in nature.

4772   In an ideal world our members would like to live in a world where there is a multitude of channels, where Canadian music, particularly emerging and new acts, are blended in a reasonable level with foreign music so there is no ghettoization of Canadian music as it were.

4773   So ideally we would like to live in a universe where there is a high level of Cancon, or an appropriate level of Cancon mixed in with foreign music on a multitude of channels.

4774   Now, to roll it back a bit to what this applicant is putting forward in their business plan -- and we understand the restrictions thereof, that's why I'm saying the simple answer and the easy answer is yes, we would like to see more.

4775   COMMISSIONER POIRIER: Considering there seems to be a cost of doing business that is higher with satellite radio than with commercial terrestrial radios, shouldn't we lower the CCD commitments to make their contribution more competitive with the commercial terrestrial radio? We have asked them to come with numbers that are different, 1 percent, 2.5 per cent, 3 percent.

4776   What do you think about that?

4777   MR. JOHNSTON: Well, I would be speaking from a position of ignorance in a sense because I do not know what the financial numbers really are.

4778   So with that as a given, our members, as I said in my remarks, leverage every penny that is currently given and a 90 percent reduction, an $11.5 million loss last year, just as an example, would have had a serious impact.

4779   So my members would hesitate to have any level of CCD reduced when they are looking at the larger universe and noticing how their revenues are dropping from a multiple of sources, this would just be another detrimental effect to the industry, another kick at the industry.

4780   COMMISSIONER POIRIER: Yes, but Sirius doesn't seem to be profitable.

4781   MR. JOHNSTON: Well, going forward we don't know that.

4782   COMMISSIONER POIRIER: You have been here today all day long and you heard what we heard.

4783   MR. JOHNSTON: Yes.

4784   COMMISSIONER POIRIER: And this is your conclusion?

4785   MR. JOHNSTON: Well, going forward I think it is a bit of crystal ball gazing. We would like to see a continuation of the 5 percent.

4786   The Commission sort of alluded to it today, that the price of doing business here, particularly with less than 10 percent of Cancon being delivered, because of the physical restrictions or the technological restrictions of delivering more Canadian music to this market, I think would be an appropriate level of the cost of doing business here.

4787   COMMISSIONER POIRIER: It's seems Sirius also wants to lower the number of Canadian channels, in my view, they seem to want to offer 13 instead of 25, so are you supportive of that or do you prefer to keep the CCD commitments or are you accepting to lower the number of Canadian stations instead and keeping the amount of money you get?

4788   MR. JOHNSTON: That's a tough question because --


4790   MR. JOHNSTON: Yes. Exposure is great for our artists and the royalties resulting from those plays are absolutely fundamental as well. CCD of course has a direct tangible benefit to not only individual artists but broadly as the industry as a whole because, as you know, it goes to FACTOR and MUSICACTION and to groups like ourselves and ADISQ and others. So we would hesitate to agree to a drop in the CCD.

4791   We recognize that from a business decision they are looking at dropping the number of Canadian channels to what they are proposing today and so then we go back to the quality versus quantity.

4792   COMMISSIONER POIRIER: Yes, that's it.

4793   What do you think about that comment we got from some artists and from the owner of Sirius, they all seemed to agree that quality is better than quantity. What do you think about this?

4794   MR. JOHNSTON: Well, of course, because it's quality that's going to drive the audience.

4795   You know, in a multitude -- in this universe that we live in you can put a video on YouTube with the hundreds of millions that are already out there, if it's not any good you're not going to get noticed. Even if it is good, you might not get noticed. However, if you keep putting out quality product on a channel or channels, I think that's better than quantity.

4796   COMMISSIONER POIRIER: Okay. So you want us to keep the same conditions of license that we held Sirius to up to now and you want us to keep the same amount of CCD contribution. You want the status quo?

4797   MR. JOHNSTON: That is correct.

4798   COMMISSIONER POIRIER: And no other in between position?

4799   MR. JOHNSTON: Well, we would have to evaluate what that in between position is. I'm not prepared here to sort of speculate on what those positions could be.


4801   Mr. Chair, I'm done. Thank you.

4802   THE CHAIRPERSON: Merci, Madame Poirier.

4803   Commissioner Patrone and then Commissioner Molnar.

4804   COMMISSIONER PATRONE: Thank you, Mr. Chairman.

4805   I appreciate your comments this afternoon.

4806   Does your organization factor in the possibility that there are regular or periodic fluctuations in the amount of CCD that is available to your members and your organization?

4807   MR. JOHNSTON: Oh, of course. You know, as an example we know that Sirius' CCD is based on their gross revenue, so of course it's going to fluctuate.

4808   COMMISSIONER PATRONE: Well, because on page -- I'm sorry, you don't have a page number here. Oh, here it is, near the end.


4810   COMMISSIONER PATRONE: I guess it's the second last page 4:

"This would have had profound implications and a ripple effect on the entire industry."

4811   You are talking about the possible reduction of CCD from 5 percent to .5 percent.

4812   MR. JOHNSTON: Which paragraph?

4813   COMMISSIONER PATRONE: I guess it's page 4, right near the bottom.

4814   So that got me wondering about whether or not every time you get a certain level of funding, whether that sort of becomes the new floor on which you see the universe.

4815   Why not do a better job of factoring in the fact that you have these periodic fluctuations and live within that reality?

4816   MR. JOHNSTON: Oh, believe me, the music industry does live in that reality and they don't live beyond 12-month windows. They don't live beyond six or eight month windows at times.

4817   What I was attempting to do in my remarks was just to illustrate what drop that would have been should the CCD have been reduced by 90 percent maybe last year, but it's just to illustrate in real dollars what that would have been.

4818   COMMISSIONER PATRONE: But you have to look at the fact that you would have been looking forward to a possible revision going forward.

4819   I mean don't you think it's a little disingenuous to say, "Well, this would have had this impact last year"? I mean logically if last year was the time when this revision was supposed to have happened, you would have had a period ahead of time in which you would have been able to look ahead and say, "Well, you know, this might happen in the year 2011."

4820   MR. JOHNSTON: True. I could have changed my remarks to say next year if the $12 million were to be the same then we would be having less than that by $11.5 million.

4821   Eleven and a half million dollars is a big chunk of change in any industry, particularly in the music industry. As an example, my industry, through this federal budget this year, has lost $2 million in funding. Two million dollars is having a dramatic effect on those companies and artists that is being affected.

4822   COMMISSIONER PATRONE: Sure. If they were to decide that they were tired of losing money though --

4823   MR. JOHNSTON: Yes...?

4824   COMMISSIONER PATRONE:  -- and folded up shop, you would still suffer that massive hit, wouldn't you?

4825   MR. JOHNSTON: You are absolutely right.


4827   Those are my questions, Mr. Chairman.

4828   THE CHAIRPERSON: Thank you, Commissioner Patrone.

4829   Commissioner Molnar...?

4830   COMMISSIONER MOLNAR: You are just getting beat on all sides by this position. I think we are all somewhat surprised by your submission that would say that just maintain the level at 5 percent, that that is appropriate.

4831   You would agree that the Act requires that all the elements of the broadcasting system contribute appropriately and that it is in the best interest of the system to have healthy broadcasting undertakings, financially healthy broadcasting undertakings, and that it -- I mean you may or may not agree, but where you have an undertaking that has never generated a profit, do you not believe it is our responsibility to ensure that we don't place so many financial and other obligations on that undertaking that we essentially drive them out of viability, that we need to be concerned with their financial viability so that they can invest and continue to operate?

4832   MR. JOHNSTON: Yes. Quite frankly, we do believe in the wisdom of the Commission to review all points. I'm just here to offer you what my members have debated and talked about and decided upon --


4834   MR. JOHNSTON:  -- that the CCD contribution at 5 percent, in their view, is appropriate.

4835   COMMISSIONER MOLNAR: And if it was not financially sustainable -- I understand it's a difficult position because of course we are seeing financials that are not available --

4836   MR. JOHNSTON: Correct

4837   COMMISSIONER MOLNAR:  -- and of course as much money as possible is the rational position, however at the end would you agree that the level needs to be set at a manner that allows them to be a sustainable and healthy participant in our system?

4838   MR. JOHNSTON: Well, given the information that you have at your fingertips, if that is the conclusion that you absolutely reach, then we would bow to your wisdom on that particular point.

4839   COMMISSIONER MOLNAR: Thank you.

4840   THE CHAIRPERSON: Mr. Johnston, thank you very much.

4841   MR. JOHNSTON: Thank you very much. I appreciate it.

4842   THE CHAIRPERSON: Enjoy the rest of your day.

4843   Reply immediately, Madame Roy?

4844   THE SECRETARY: Yes.

4845   I would now ask Sirius to come back to the table.

--- Pause

4846   THE CHAIRPERSON: You haven't had a chance to put anything down on paper in terms of we just finished the hearing, but we can have a discussion and you can lead it off or we can lead it off. I think it's better if you lead it off.


4847   MR. REDMOND: Yes. I will open and I will let John conclude.

4848   I guess first of all we would like to thank the intervenors, both positive and negative in their points of view. We clearly have listened and understand what they are saying.

4849   We would also like to thank the Chair and the Commissioners for spending the day with us. We know it has been a long day and I don't want to keep you any longer than we have to. We have a lot of work to do between now and next Friday.

4850   I hope we have given you a sense of what we have tried to accomplish in the support that we have given to the Canadian broadcasting industry in the last seven years.

4851   I hope you get a sense that we are not looking to be treated differently than others. We want to vigorously compete, we want to take this great Canadian talent and bring exposure to it through North America and we look forward to continuing to do that in the next term of our license, whatever that may be.

4852   Again, we certainly appreciate the time and effort that you spent looking at our documents and listening to us today, so I would like to thank you.

4853   THE CHAIRPERSON: Well, thank you.

4854   Just briefly two points and then maybe you can keep going on the issues that may have been raised.

4855   ADISQ mentioned that there was an announcement to the effect that you would be profitable in the first semester of this year.

"The media reported in February 2012 that the company would be profitable in its first semester.

4856   Do you want to comment on that?

4857   MR. REDMOND: I think what we referenced at the time was that we were going to be cash positive. Our last quarter that we reported we were negative about $3 million, again in the --

4858   THE CHAIRPERSON: That's not necessary, I just want clarification on that point if you are going to contest it. You obviously have and there is an explanation as to the statement or the press release that was put out.

4859   This ghettoization notion that was raised by CIMA and by ADISQ, is there a means by which we can greater promote Canadian artists on U.S. stations through your association with Sirius XM south of the border? Is there work that can be done on that front

4860   MR. REDMOND: It's part of the work that starts with me and our music ambassador does with working with the programmers of all of the U.S. channels on a consistent basis to get these Canadian artists exposed to them, their CDs down to them, airplay, interviews. I think I highlighted one of the examples I got from a manager of a band Dala that was in New York last week that they performed.

4861   THE CHAIRPERSON: Is there a way of negotiating something more concrete to that effect? I know it must be complicated. We are a small country next to this entertainment colossus and I understand the challenge, but would there be an opening there? Would there be a slight window that may allow us to better promote Canadian artists on those stations or get better play?

4862   If it's a commitment, great, if it's an undertaking, I don't know how you want to refer to it. An engagement, as we say in French.

4863   MR. REDMOND: I mean it's something that I want the Commission to understand we do do today with them and will continue to do. We can take back as another area we look at in determining whether there is something more we can try to do with them to continue to foster and create those opportunities for Canadian artists, but I think with the great artistic talents that are coming out of this country the Americans take notice and hopefully we can find some additional ways.

4864   THE CHAIRPERSON: It should be an easy sell.

4865   COMMISSIONER POIRIER: Maybe it's more of a comment. I just want to make sure that this application survives through all the difficulties they seem to face, but they seem to be going in the right direction. But the Canadians have to be winners. Canadians are the ones we are serving so make sure in your final remarks that you prove to us that Canadians will be winning, not only the industry, not only Sirius, but all Canadians. To me that's the most important factor and I just wanted to outline this because we are here for Canadians.

4866   MR. REDMOND: I can't agree with you more. The good news is that we have two million that have already spoken and hopefully we can get another million or two over the next five to seven years.

4867   COMMISSIONER POIRIER: That's great. Thank you.

4868   MR. BITOVE: In listening to the intervenors I think there is a few things just to clear up.

4869   So the "best of" channels that we are proposing to bring on the system in our -- which was asked on the merger hearing, all we are essentially doing is lighting up unlit channels. So it's not like there is new inventory that is going to be created by the Americans to do this.

4870   If you had the two radios side by each, there is more channels lit up on the U.S. radio than there is on the Canadian one because of our linkage. So it's not new content being created, it's just lighting up channels that are already out there. So it's not a matter of going to get more capacity, because there isn't any.

4871   On the question about if there is more capacity would we live with an expectation that it be music, the answer is of course. We are in this together and that's part of what we want to accomplish so we would be happy to do that.

4872   I also believe that if you can word it in a way that there is an expectation that we will work with our American programmers -- you know, we all know, anyone in this industry knows programmers, it's like "Don't touch me", but having said that, anything you want to do with wording about "encourage and promote and undertake" to help our Canadian acts on the channels that we don't program, we would be willing to live with that as well.

4873   In summary -- sorry, Madame?

4874   COMMISSIONER POIRIER: I was saying maybe you should write the wording. You should be the one writing the wording.

4875   MR. BITOVE: That's fine. We will put it in our --

4876   COMMISSIONER POIRIER: And present it to us.

4877   MR. BITOVE: We will.


4878   COMMISSIONER POIRIER: I would prefer that instead of us doing so.

4879   MR. BITOVE: So I did scribble down some notes when we were there in closing because this isn't easy and, as I say to my kids, if it is easy everyone would be doing it.

4880   But the fact of the matter is we have crafted our framework together and we really apologize for the confusion this morning, but it was really important. Part of the reason there was confusion is because we are cutting new grass, so to speak.

4881   We both know we can improve the interaction and Mark has committed to me and the Board that this won't happen again and we are going to make sure of that going forward because I think there is going to be a lot more clarity going forward in terms of what this means.

4882   But Mark did talk about the $115 million that we have put into the system over the last seven years. While we put that $115 million into the system we have lost a half a billion dollars in terms of satellite radio. But that doesn't mean we are willing to give up because we do rally think that we are turning the corner and that we can get to the future.

4883   So everything we have undertaken to get back by June 28th will be done.

4884   There is something I want to make the Commission aware of, though, in terms of timing.

4885   We were hoping to implement these changes, program changes, on October 1. This isn't like commercial radio where you can just switch it on and turn it off in a day. We have to get materials printed for our subscribers, we have to get out front, communicate these programming changes, everything else. So we really are hoping that you can get a decision to us by the end of August, which means anything we have to do from our end to get up here and work through details with your staff we will do it.

4886   We thank you for your probing questions because at the end of the day what you are really trying to do is strengthen the broadcasting industry here in Canada.

4887   I think, Madame Poirier, the question you said is: How are we benefitting Canadians? Every intervenor is supportive of our renewal. Not one of them said they weren't in support of extending the renewal. They may have had different wants and needs, because we all have different wants and needs, but I think that is a testament in itself that we are all in this together for the benefit of the Canadian broadcasting system and thank you for your time.

4888   THE CHAIRPERSON: The flowers weren't necessary, but we will take them.

--- Laughter

4889   THE CHAIRPERSON: Enjoy the rest of your day.

4890   Madame Molnar, go ahead.

4891   COMMISSIONER MOLNAR: I just want to clarify, you are suggesting -- I'm not able myself right now to promise a decision by the end of August, but if you had a decision by the end of August you would be able to continue to implement your "best of" package in October? Is that what you're saying?

4892   MR. BITOVE: That was the plan.

4893   MR. REDMOND: Yes. We are moving down the path now.

4894   COMMISSIONER MOLNAR: So you essentially need two months?

4895   MR. BITOVE: It's more than two months.

4896   MR. REDMOND: We need more. We have already started the work, we need to implement a whole bunch of activity in our IT systems that require months of development work to have it ready and implemented. We then we need to have the right amount of time to communicate to our subscribers the changes and what's going on.

4897   We are down a path now that says everything is fine and we are going October 1st.

4898   MR. BITOVE: It's kind of six month process, revamping and changing channels. So, as Mark said, we are kind of halfway down it.

4899   THE CHAIRPERSON: What happens if you don't have a published decision by August 31?

4900   MR. BITOVE: Well, what we are telling you is October 1 is what we told you that we are implementing it.

4901   I know, we are just trying to be frank in terms of recognizing -- because again we are different. So the channel displays that are up on cars and the radios and everything else, all this stuff has to be keyed in and put in and it takes time to do everything. So we just want to make you aware.

4902   Again, it's not like commercial radio where things can change overnight, there is six months of lead times in terms of revamping channels.

4903   THE CHAIRPERSON: We have taken good note.

4904   MR. BITOVE: Thank you.

4905   THE CHAIRPERSON: Thank you so much. Thank you. Thank you so much.

4906   Have a pleasant, safe trip back wherever it is you're going.

4907   MR. BITOVE: Thank you.

4908   THE CHAIRPERSON: Thank you.

4909   THE SECRETARY: We will take a 5-minutes break and listen to the last item.

4910   THE CHAIRPERSON: Five minutes.

4911   THE SECRETARY: Yes, five minutes.

--- Upon recessing at 1702

--- Upon resuming at 1707

4912   THE CHAIRPERSON: Good late afternoon.

4913   How are you, sir?

4914   Madam Secretary...

4915   THE SECRETARY: Thank you, Mr. Chairman.

4916   We will now proceed with Item 9 on the agenda, which is an application by Radio 710 AM Inc. to renew the broadcasting licence for the English-language tourist radio programming undertaking CJRN Niagara Falls, expiring the 31st of August 2012.

4917   The Commission is concerned that the station may be operating in non-compliance with the Radio Regulations, 1986, related to the submission of logger tapes and annual returns, as well as Condition of Licence 1, requiring it to only broadcast pre-recorded tourist information for the purpose of informing visitors to Niagara Falls.

4918   The Commission expects the licensee to show cause at this hearing why mandatory orders requiring the licensee to comply with the Regulations, and, in particular, sections 8.5, 8.6 and 9.2 of the Regulations, as well as its Condition of Licence 1, should not be issued.

4919   The Commission also expects the licensee to show cause why the Commission should not consider recourse to additional measures, such as short-term renewal, suspension, non-renewal, or revocation of the licence in question.

4920   Please introduce yourself. You will have 20 minutes for your presentation.

4921   Thank you.


4922   MR. FERRI: Thank you.

4923   Mr. Chairman, Commissioners, ladies and gentlemen of the Commission, my name is Andrew Ferri, President of Radio 710 AM Inc., licensee of CJRN 710.

4924   Unfortunately, David Dancy is unable to be here today. However, before beginning our formal presentation, I would like to read comments that David Dancy asked to share with you in his absence.

4925   Comments from David Dancy:

4926   I regret that I am unable to attend the hearing.

4927   As the Commission is aware, I have had a significant interest in CJRN 710 AM since the 1980s and have worked on the station's programming and production since it became a tourist station in 2002, specifically to improve the content within the regulatory conditions that CJRN has been under.

4928   I have lived in the Niagara area for over 30 years, and the primary reason that I stayed involved with CJRN in 2002, when its conditions of licence changed, was to be a part of a new, larger radio service that served the millions of tourists and visitors coming to Niagara.

4929   In 2002, CJRN was supported by the Niagara Parks Commission, the Niagara Falls Bridge Commission, Casino Niagara, and the Ontario Ministry of Tourism. A lot has changed in the almost ten years since that time, but the guiding purpose of CJRN is still to provide the best possible service to the visitors and tourists coming to Niagara Falls and the Niagara Peninsula.

4930   I believe that Andrew and I have demonstrated our desire to work with the Commission on several occasions to better understand any concerns that have arisen and the limitations that the CJRN condition of licence has. I renew that desire and commitment today.

4931   As I have been involved in the day-to-day operations of the station, and as I confer with Andrew on the issues affecting the radio station, I understand that the basis of this hearing involves the conditions of licence relating to content on two issues -- the broadcast of news and sports information and the broadcast of "Reflections on Islam" during the Holy period of Ramadan, and the apparent confusion on our part regarding the interpretation and application of this condition, as well as a logger/self-assessment issue and an issue with the late filing of two annual returns.

4932   I am confident that Andrew Ferri can clarify these matters and provide information to explain why, in some cases, we have erred. I believe that CJRN has corrected these issues, so that, in my opinion, we will be operating to the Commission's satisfaction.

4933   Andrew will address each issue and, with the help of Christopher Grossman in the area of logger compliance, will be able to provide the Commission with confidence that any past errors we may have made were corrected, and, along with some discussion and clarification with the Commission on two of the issues, our future looks bright.

4934   Allow me to say that CJRN has tried to diligently address the concerns that the Commission has had when they were raised and we hope that this hearing will provide you with the confidence to provide CJRN with a longer term renewal, so that we can focus on the importance of achieving the stability necessary for the station to continue to make a meaningful contribution to our community.

4935   Andrew Ferri has provided a letter from Paul Mand, lawyer for Niagara Tourist Media Group Inc., which has expressed a desire to acquire all the shares of Radio 710 Inc. They presently operate CHQI, a tourist station in Niagara-on-the-Lake.

4936   Thank you, David Dancy.

4937   MR. FERRI: Mr. Chairman, Members of the Commission, we are very proud of the fact that during this licence term we have remained committed to serving the tourists and visitors coming to Niagara. We are deeply engaged in a number of important historical initiatives and have continued to offer significant amounts of production time and energy to information on Niagara's history, Historica -- Canadian heritage vignettes -- and to the official Niagara Falls City Historian, Sherman Zavitz.

4938   I would like to begin, however, by addressing the issues identified by the Commission in its Notice of Public Hearing with respect to our programming.

4939   By way of background, CJRN 710 AM is licensed to serve the tourists and visitors coming to Niagara Falls and we consider our market area to be the Niagara Peninsula.

4940   Like other Canadian border stations, we are situated across the water from a large American city, Buffalo, New York, where many tourists and visitors are travelling through to reach Niagara Falls.

4941   In September 2002, CJRN was re-launched as a tourist radio station. We do appreciate the difficulty that this format presents from a regulatory perspective, because it does not lend itself to the standard regulatory conditions, such as news and spoken word content.

4942   The first two issues I would like to address are the apparent failure to comply with CJRN's conditions of licence.

4943   With respect to the broadcast of news and sports information, I submit that when the Commission issued its Radio Policy Review in December of 2006, it contained an amendment to the definition of spoken word material which made the inclusion of local news, weather and sports mandatory.

"...licensees must include spoken word material of direct and particular relevance to the community served, which will include local news, weather and sports, and the promotion of local events and activities."

4944   CJRN serves the tourist and visitor community in Niagara and, therefore, we understood that the pre-recorded spoken word, news and information should reflect their needs.

4945   Accordingly, CJRN, virtually immediately, arranged with its sister stations, CKEY and CFLZ at the time, to provide this material to CJRN's programming.

4946   We regret that we misunderstood that CJRN was exempt from that part of the changes in the Act by condition of licence, and as the Commission is aware, that information was deleted from the station programming immediately when the Commission expressed its concern. Subsequent audits have proven this to be true.

4947   I will be asking the Commission for clarification on this issue. For example, as a community that is adjacent to the United States, would the Commission consider information such as border security and fluctuations in the currency exchange as being in compliance? In our view, these have significant relevance to the tourists and visitors in Niagara that we serve.

4948   With regards to the "Reflections on Islam" programming broadcast, both David Dancy and I did not see this as a compliance issue, but rather as a public service for the tourists and visitors to Niagara. CJRN also broadcasts information during the times of other religious and cultural events, and has since 2002. So we appreciate the opportunity to discuss this with the Commission to understand the specific concerns the Commission has and to see if, in fact, it is a compliance issue.

4949   Having said that, we recognize and respect the fact that the Commission is empowered to impose whatever conditions of licence it feels appropriate, so we only ask for the Commission's rationale, whatever the Commission decides, so that we can ensure compliance going forward.

4950   Another issue that the Commission has raised was the failure to supply the logger tapes for August 14th and 15th of 2011. We regret that the actual logger tapes were not supplied. It occurred when the technician erred in transferring the files to be sent to the CRTC, causing the content for those two days to be missed. However, CJRN was able to supply exact copies of all information broadcast, as all the material broadcast on CJRN is pre-recorded.

4951   CJRN also supplied information from "Reflections on Islam", as well as copies of their programs on separate CDs.

4952   To ensure future compliance, CJRN has contracted Haliburton Broadcast Group, the new licensee operating the commercial FM radio stations in Niagara Falls and Fort Erie, who are sharing the same broadcast facility that CJRN is located in, as well as the Haliburton staff, who have the responsibility for their logger to tapes, to look after this essential function for CJRN.

4953   CJRN is in the process of upgrading its system to include a remote control access to permit an employee of CJRN to monitor the logger tapes daily. In this regard, we have attached a letter fax memo from Christopher Grossman, confirming our relationship. We believe that this will solve any future problems.

4954   The final issue that we would like to address is regarding CJRN annual returns. We regret that for the years 2008-2009 and 2009-2010, it appears that CJRN filed late, in large part due to the fact that CJRN hired a general manager to look after operations while both David Dancy was away, as well as myself, due to medical reasons. David Dancy was looking after his mother and stepfather, who were terminally ill, from October 1, 2008 through 2010, and returned when both had passed away.

4955   Unfortunately, I had health issues at the same time to deal with, which I will explain in more detail next.

4956   David returned in June of 2010, and David and I will look after all future filings, as we did for 2010-2011. David and I will be doing the 2011-2012 annual returns.

4957   With regard to my health issues over the past few years, I submit them by way of explanation and not as an excuse.

4958   In 2006 I was diagnosed with leukemia.

4959   In 2007 I suffered a DVT, which led to cardiopulmonary emboli, blood clots in the lungs.

4960   In 2009 I was diagnosed with congestive heart failure, due to atrial fibrillation.

4961   In 2010 I had two heart operations.

4962   In order to travel to this hearing, I had to be examined by my cardiologist. I attended at his office on June 19th, 2012, for tests, and he cleared me for travel.

4963   In closing, I would like to submit that during my association with the Commission, CJRN has never acted in a manner other than in a respectful way to the Commission and the Commission's rules and regulations, although I admit that some errors were made.

4964   I look forward to your questions.

4965   THE CHAIRPERSON: Thank you, sir.

4966   Commissioner Denton...

4967   COMMISSIONER DENTON: Good afternoon, Mr. Ferri.

4968   I just note that the first condition of licence in Decision 2009-515 states that the licensee shall use this station solely to broadcast pre-recorded tourist information for the purpose of informing visitors to Niagara Falls.

4969   And the second is that the licensee shall not broadcast any commercial messages.

4970   So, let's begin with that.

4971   In the broadcast week of the 18th to the 24th, 2010, we note that you broadcast the following: newscasts within international, national and regional items, sports updates and promotions for 105.1 The River, and the all-new, presumably, Z101 at 101.1 on the FM dial.

4972   So, why were these broadcast?

4973   MR. FERRI: As I alluded to in my presentation, the staff felt that we had a requirement to do news and local information, which we now understand was exempt from the rules governing the other two FMs, and therefore this was done, not wilfully to contravene any rules, but by an error in interpreting the rules.

4974   COMMISSIONER DENTON: Good. Thank you.

4975   MR. FERRI: And --

4976   COMMISSIONER DENTON: That's okay. That's an answer, a straight answer. Good. You made a mistake.

4977   Now, with respect to the airing of promotions for 105.1 The River and the all-new Z101, if the purpose of the broadcast of the promotions was to provide -- as you noted in your response to questions from staff, if your purpose was to provide information relevant to tourists to Niagara Falls, could you explain why the licensee did not air any promotions for radio stations in an area other than those under your control?

4978   MR. FERRI: The explanation for that is, when the production of that material was done for the other two stations, those references were already in there.

4979   COMMISSIONER DENTON: References to --

4980   MR. FERRI: To the other stations, which should have been pulled out, which would have required a little more work, but they should have been, and they weren't.

4981   Again, as soon as I was made aware of it, it was stopped.

4982   COMMISSIONER DENTON: Okay. With respect to the airing of promotions for those two radio stations, were there any considerations exchanged for the broadcast of the promotional messages?

4983   MR. FERRI: No, there weren't.

4984   COMMISSIONER DENTON: Do you consider the airing of promotions for those radio stations to be advertising, contrary to the conditions of your licence?

4985   MR. FERRI: I would say yes. I didn't at the time, but now, after reviewing everything, I think the answer is yes.

4986   COMMISSIONER DENTON: Good answer. Thank you.

4987   So there have some compliance issues in the past that were raised in our previous licensing decision. The previous licensing decision I'm referring to is 2009-515. It mentioned that you'd had, prior to that time, some compliance questions.

4988   Did you put in place measures to address those previous non-compliance issues?

4989   MR. FERRI: Could you give me the specific reference to what those issues are, so I can give you a relevant answer?

4990   COMMISSIONER DENTON: I don't have the decision before me.

4991   MR. FERRI: And I'm sorry, I don't either.

4992   COMMISSIONER DENTON: Staff will get that for me. We'll move on to "Reflections on Islam".

4993   In your previous renewal decision, the Commission found certain brokered programming broadcast on CJRN was not consistent with the station's conditionss of licence, specifically, the information broadcast as part of the 3rd language brokered programming was not solely directed to visitors to Niagara Falls and cannot be defined as tourist information. And it appears that the spoken word program "Reflections of Islam" is similarly not consistent with this station's conditions of licence.

4994   This appears to be the second instance of apparent non-compliance, and if you're found in non-compliance in this decision, it will be the third instance in a row of non-compliance with Condition of Licence no. 1.

4995   In light of this, can you tell me what measures Radio 710 has taken to ensure compliance with Decision 2009-515, namely that the first condition of licence is "it shall be used solely to broadcast pre-recorded tourist information for the purpose of informing visitors to Niagara Falls."

4996   MR. FERRI: Again I would ask if you could give me the specific reference. I can guess at what --

4997   COMMISSIONER DENTON: Here's the specific reference: You're not supposed to do anything other than broadcast pre-recorded tourist information for the purpose of informing visitors to Niagara Falls.

4998   On several occasions you have gone way beyond that. In one case, we're speaking of "Reflections of Islam" but there's others.

4999   So, what measures are you taking to comply with your Conditions of Licence?

5000   MR. FERRI: If you're referring to one instance which I am aware of, as soon as I became aware of it, I pulled it off the station. Again, that was in a different language and I was at a disadvantage. I had it translated. I met with the people, and they were in violation of our agreement that there would be no commercials, there would be just strictly information.

5001   They weren't compliant, and I immediately pulled it off the air. They were going to sue us. They didn't sue us, but the agreement was absolutely no commercials and they violated it. As soon as I became aware of it, I personally pulled it off the station.

5002   COMMISSIONER DENTON: So, as you became aware it was not compliant, you pulled it off.

5003   MR. FERRI: Correct

5004   COMMISSIONER DENTON: Okay. So, if it becomes necessary -- I would like to invite you to comment on the possibility that we might need to put a mandatory order in, in the Federal Court, to cause you simply to have that weight of that Court order behind us that you comply with Condition 1 of your licence. Is that an acceptable outcome?

5005   MR. FERRI: I would say that if you think that is necessary, I will respect you and the Commission for doing that. I would like to place that, if the Commission would be willing to sit with our staff and develop guidelines, I think it would be very important because we would not want to be offside in any way, shape or form.

5006   We would like to accommodate some of these groups that would like to have some information on the station, but we would only want to do it with the blessings of the CRTC.

5007   So I think that if you could really be of assistance to us is develop some guidelines so we could properly assess better the programming and information that would be acceptable to the Commission.


5009   MR. FERRI: I might add -- if I could just add, we would like to accommodate this group, Reflections of Islam, only if the CRTC gives its blessings. If they say here and today that it is offside, then that is the end of that matter.


5011   MR. FERRI: If there's a way of accommodating that group multiculturally, we would like to attempt to do it, if it's possible.

5012   COMMISSIONER DENTON: I think that the basis issue is whether there is a common understanding of the nature of the licence that was awarded to you, and whether there's an understanding on your part of the nature of your rather stringent conditions of licence which compel you to, as I say, solely to broadcast pre-recorded tourist information for the purposes of informing visitors to Niagara Falls, and that's pretty black and white.

5013   I'm not sure that it would be necessary to further specify what that means. I'm sure that staff might be available for that, but we have to see on your part a spirit of cooperation with the fairly strict rules that govern this particular kind of tourist information station.

5014   The issue in question is really the use of certain kinds of programming that you had put on there that were clearly outside the scope of your licence.

5015   You've admitted to the error of this and I think the real question is, do you understand -- and we'll find out in the course of this afternoon, do you understand the nature of the licence that is being granted to you?

5016   So, no answer is immediately required. We'll see as the course of the questions.

5017   There's a section in 9(4) of our Regulations with respect to the failure to respond to a Commission enquiry, which in this case concerns submission of logger tapes, music lists and self-assessment report.

5018   In particular, there's an apparent failure to comply with sections 8(5) and 8(6) of the Radio Regulations: inserting the provision of a clear and intelligible tape, recordings or other exact copy of the matter broadcast.

5019   And there's an apparent failure to comply with Section 9(3)(a) and 9(3)(b) of the Regulations with respect to submitting a self-assessment report and music list.

5020   There have been several attempts to obtain from you logger tapes, a list of all musical selections and spoken word programs broadcast and the programs logs for the period of the 14th to the 20th of August 2011, and the broadcast week of the 25th of August 2011. We've not received logger tapes for the 14th and 15th of August 2011 or the list of musical selections broadcast during that week.

5021   If Radio 710 has been able to comply -- are you able to confirm that Radio 710 has been able to supply a clear and intelligible tape recording or other exact copy of all matter broadcast for the 14th and 15th of August 2011?

5022   MR. FERRI: I have been led to believe by David Dancey(ph) that he did supply that to the Commission. For those two days, he supplied the exact written information of what was broadcast on those two days.

5023   COMMISSIONER DENTON: Have you been able to supply proof of submission of this material to the Commission?

5024   MR. FERRI: Again, all I can say is that he told me that it was already done. I had no reason to doubt that it was done.

5025   COMMISSIONER DENTON: We have reason to believe that it has not been done.

5026   So, are you going to supply logger tapes for those days?

5027   MR. FERRI: Absolutely, and I'm a little disappointed if that's the case, I must say, in our staff.

5028   COMMISSIONER DENTON: Well, we were advised that the reason you hadn't provided the logger tapes as requested was that staff responsible for ensuring the logger tapes were properly working were transferred to the new broadcast company, which was this new broadcast licence for CFLZ-FM and CKEY-FM, and these stations and yours are located in the same location. It appears that direction was not in place to ensure that staff were informed to check the CJRN logger when CFLZ-FM and CKEY-FM loggers were checked, and that's the response of yours of January 12, 2012.

5029   So apparently employees of these organizations didn't supply this material.

5030   MR. FERRI: What I was led to believe, when they were made aware that this material needed to be submitted to the CRTC, he erred in not including those two days. And by the time the information got to the CRTC, those two days had been erased. That's why I was led to believe that we submitted a written format of all that was pre-recorded broadcast material.

5031   COMMISSIONER DENTON: I know as an apparent fact that you were originally requested this material on the 25th of August 2011 by the CRTC and it took four and a half months to inform the Commission of the missing logger tapes. Do you have any comment on that?

5032   MR. FERRI: I don't deny that happened and again I'm disappointed that staff didn't respond in a more timely manner.


5034   So, I am going to refer to the issue of the spoken word programs. The spoken word program we are referring to is "Reflections of Islam", which is a spoken word program containing musical selections, so it raises a question: Are you or were you aware of what's broadcast on your station?

5035   MR. FERRI: Yes.

5036   COMMISSIONER DENTON: Do you agree in fact that this was broadcast music in a spoken word programming?

5037   MR. FERRI: Yes.

5038   COMMISSIONER DENTON: So what are you going to do to make sure that you comply with the terms of your licence going forward?

5039   MR. FERRI: If that's the Commission's interpretation, there will be absolutely nothing ever broadcast like that again, and again I don't offer this as an excuse, that before I became involved in the station, that "Reflections of Islam" has been there for about eight or nine years. It was on there before I became involved with the station, and again that's somewhat of an excuse but again I was led to believe that that was acceptable, and I now realize that it isn't, and it won't happen again.

5040   COMMISSIONER DENTON: Okay. So I'm getting toward the end of this.

5041   You have been asked by Commission staff to provide lists of musical selections, broadcasts in a self-assessment report for the broadcast week of the 14th to 20th, August 2011. This had not been done.

5042   In the response you gave us of the 10th April 2012 you appear to have readdressed your apparent failure to comply with Condition of Licence 1 rather than the non-compliance with section 9.4 of the Regulations.

5043   So my concern in this is, are you prepared to live with a mandatory order requiring you to live with the Regulations of the Commission in relation to these various transgressions?

5044   MR. FERRI: Yes.

5045   COMMISSIONER DENTON: All right.

5046   Now, annual returns, section 9.2 of the Regulations require the annual returns. In 2008-2009 your annual return was received late. The deadline then was December 15th. It was -- sorry, we received it on December 15th and it was meant to be delivered Nov 30th.

5047   In the year 2009-2010 the annual return was received late again, this time on January the 3rd and the deadline was December 15th.

5048   So it appears that a certain slackness in relation to necessary financial returns. What's going to be done about that?

5049   MR. FERRI: As I said in my presentation, the general manager that was responsible for that is no longer with the company and the next return was filed on time.

5050   I will personally be involved in this year's return with David Dancy. So it will be on time without a doubt and we will be going forward.

5051   COMMISSIONER DENTON: So reviewing what's gone on in the past, there seems to be that it's been, I think, admitted in fact that certain programming was broadcast which was beyond your licence. Terms were late and there seems to be some repetition of this over time. We are faced with a decision, really, to renew, suspend or not renew.

5052   So now is your time to make your pitch but we are looking critically at a past record of failure to comply with the Regulations. What would you propose that we do?

5053   MR. FERRI: In terms of the tapes if I would undertake today to -- if the information hasn't been filed to your satisfaction that I will undertake to have that done.

5054   In terms of the rest of the situations, I must admit now I am much more conversant with it and I don't see them happening again. You have made it -- spoken loud and clear and there is no ambiguity there.

5055   COMMISSIONER DENTON: Well, I hope it is clear because there seems to have been some repetition of these errors over a period of time, indicating that there was a non -- a lack of understanding of the nature of your licence itself, not just you know derelictions from any particular conditions but just not getting the concept of what your licence is for.

5056   So we have to take into consideration whether you have understood the conditions of your licence and are prepared to adhere to them.

5057   Are you?

5058   MR. FERRI: Absolutely, sir.

5059   COMMISSIONER DENTON: Thank you. You may expect to hear from us.

5060   THE CHAIRPERSON: Mr. Ferri, you are the licensee and you realize you are solely responsible for the respect of the conditions that are imposed on the licensee?

5061   MR. FERRI: Yes.

5062   THE CHAIRPERSON: Do you realize that you cannot be blaming staff at worst? At best it shows that there is a lack of oversight. You don't have any idea what's happening in your station.

5063   MR. FERRI: I fully understand that.


5065   MR. FERRI: As I said in my presentation, unfortunately I became very ill for a couple of years, like I was an absentee owner. And I understand that's not an excuse and I must accept full responsibility for that and I'm willing to do that.

5066   THE CHAIRPERSON: Do you also understand that the mandatory order has a quasi-criminal quality to it?

5067   I understand you accepted the potential mandatory order but the consequence of not respecting the condition that will be imposed under that order --

5068   MR. FERRI: Yes, I do.

5069   THE CHAIRPERSON:  -- brings forward some grave consequences potentially for you?

5070   MR. FERRI: Yes, I do.

5071   THE CHAIRPERSON: Okay. And this is not your first time at the rodeo, right? You have been here before?

5072   MR. FERRI: Yes.

5073   THE CHAIRPERSON: Okay. And you are asking the Commission for help in interpreting the conditions of your licence. Did I understand that correctly?

5074   MR. FERRI: Well, I was never here for CJRN 710 AM.

5075   THE CHAIRPERSON: Okay. You have been her before for...?

5076   MR. FERRI: For the DFMs. We had --

5077   THE CHAIRPERSON: The other incident?

5078   MR. FERRI: Yes.

5079   THE CHAIRPERSON: Okay. Now, you have some radio experience. You are asking for -- you know you feel that the Commission interprets the conditions perhaps differently than you have interpreted them?

5080   MR. FERRI: Yes.

5081   THE CHAIRPERSON: That's my understanding in your answering questions of Commissioner Denton.

5082   Can I ask you what it is that you need to have interpreted when we look at Condition of Licence No. 1, that states:

"A licensee shall use this station solely to broadcast pre-recorded tourist information for the purpose of informing visitors to Niagara Falls."

5083   Now, what is it you need help interpreting in that statement?

5084   MR. FERRIS: What I was asking the Commission's assistance in determining would -- a simple example.

5085   If we broadcast the fluctuations in currency for people coming into the Falls and like if the bridges were jammed up and that type of thing to assist them coming into Niagara Falls, would that be permissible or would that be outside the parameters acceptable under the Condition of Licence?

5086   THE CHAIRPERSON: And how does a broadcast from reflections of Islam reflect to pre-recorded tourist information for the purpose of informing visitors to Niagara Falls?

5087   MR. FERRI: Well, again, before I was with the station, their interpretation was it was non-commercial; it was a non-profit organization that gave information to the Muslims travelling to Niagara Falls. That was the rationale.

5088   THE CHAIRPERSON: In a third language?

5089   MR. FERRI: Yes.


5091   Madam Poirier...?


5093   How many staff have you got, sir?

5094   MR. FERRI: There is myself, David Dancy and an assistant.

5095   COMMISSIONER POIRIER: Are they accountable to someone?

5096   MR. FERRI: Yes.


5098   MR. FERRI: To me.

5099   COMMISSIONER POIRIER: Okay. And are they knowledgeable of the CRTC regulation?

5100   MR. FERRI: Well, David -- I would like to think David Dancy as he has been in the radio business for over 30 years and his father was in the radio business for probably longer than that.

5101   COMMISSIONER POIRIER: Have you thought of checking if he knows about the CRTC regulation?

5102   MR. FERRI: Well, he professes to know and I guess after today's hearing, I will have to have a sit-down with him and make sure he is onside with exactly what your expectations are.

5103   COMMISSIONER POIRIER: I believe it's a good idea. You know there is a public phone number where whoever is in the broadcasting field can phone too and get some advice from the CRTC.

5104   We would be pleased to give you this number before you leave today so your staff and you can phone any time our staff to check and make sure that whatever you broadcast is following the regulation for tourist radio broadcasters.

5105   MR. FERRI: I appreciate that. So you would not be offended if we called in ahead of time if we had any doubts about potential programming to get your view on that?

5106   COMMISSIONER POIRIER: Never. It's a kind of service we have been offering for at least three years.

5107   MR. FERRI: Because I'm worried that if we did that you might think we don't know what we are doing, so a double-edged sword.

5108   COMMISSIONER POIRIER: No, please. Please do so. The more you do the better it is.

5109   MR. FERRI: Okay. I appreciate the clarification.

5110   COMMISSIONER POIRIER: Thank you very much, sir.

5111   THE CHAIRPERSON: Any other questions? Okay.

5112   I believe Commissioner Denton asked you -- laid out the options. Just for clarification, one option was to not renew your licence and the other, another option is to potentially renew a shorter-term renewal and I'm not sure that there was -- that that question was asked.

5113   And we have to get that on the record, your reaction or your -- yeah, your reaction to the potential shorter licence renewal given the infractions.

5114   MR. FERRI: I would appreciate that. I think it's an order. Like I'm not going to stand up here and say that it isn't. If I was sitting in your position I would do the same thing.

5115   THE CHAIRPERSON: Okay, appreciate the answer and the honesty.

5116   Legal, is there anything else?

5117   MS FISHER: No other questions, but just to confirm the undertaking to provide the logger tapes for the 14 and 15 August 2011 by the 28th of June.

5118   MR. FERRI: I just want to clarify that again, that we don't have the logger tapes for those two days but what we are going to supply is an exact copy, written copy of what was broadcast.


5119   MS FISHER: Okay, thank you.

5120   THE CHAIRPERSON: It is what is.

5121   Madam Roy...?

5122   THE SECRETARY: Thank you, Mr. Ferri.

5123   For the record, please note that no interventions were received for this item. This therefore concludes part 2 and part 3 for this item.

5124   Thank you for your presentation.

5125   This completes the consideration of items 1 to 9 on the Agenda.

5126   Also, there are nine non-appearing applications on the Agenda of this public hearing. Interventions were received on some of these applications.

5127   The Panel will consider these interventions, along with the applications and decisions will be rendered at a later date.

5128   This completes the Agenda of this public hearing.

5129   Thank you, Mr. Chairman.

5130   THE CHAIRPERSON: I would like to take this opportunity to thank staff not just for their tireless work this week -- it's been a very tight schedule and very long days -- but for the weeks and months leading up to this hearing.

5131   Thank you all so much and enjoy the weekend.

5132   COMMISSIONER POIRIER: And thank you to the translators and the technicians.

5133   THE CHAIRPERSON: Thank you.

5134   Bonne Fête nationale. Enjoy.

5135   Thank you.

--- Whereupon the hearing concluded at 1747


Benjamin LaFrance

Jean Desaulniers

Karen Paré

Sue Villeneuve

Monique Mahoney

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