ARCHIVED - Transcript, Hearing 26 April 2013
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Volume 4, 26 April 2013
TRANSCRIPTION OF PROCEEDINGS BEFORE THE CANADIAN RADIO-TELEVISION AND TELECOMMUNICATIONS COMMISSION
Applications for mandatory distribution on cable and satellite distribution systems pursuant to section 9(1)(h) of the Broadcasting Act and applications for the licence renewal of independent conventional, pay and specialty television services
140 Promenade du Portage
26 April 2013
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
Applications for mandatory distribution on cable and satellite distribution systems pursuant to section 9(1)(h) of the Broadcasting Act and applications for the licence renewal of independent conventional, pay and specialty television services
Leigh-Anna GatesLegal Counsel
Pierre-Marc PerreaultHearing Manager
140 Promenade du Portage
26 April 2013
- iv -
TABLE OF CONTENTS
PAGE / PARA
1. Bruce Harvey1065 / 6410
2. Nabet 700 CEP1088 / 6530
3. Blue Ant Media1100 / 6593
4. 2251723 Ontario Inc.1121 / 6731
5. Jeff Hanks1149 / 6877
9. The Public Interest Advocacy Centre (PIAC)1163 / 6964
6. Merg Kong1194 / 7152
10. Tyna McNair1204 / 7213
7. Dimitri Lascaris1218 / 7301
8. Gustavo Ruiz1235 / 7380
- v -
PAGE / PARA
Undertaking1189 / 7103
--- Upon resuming on Friday, April 26, 2013 at 0900
6399 THE CHAIRPERSON: Good morning.
6400 À l'ordre, s'il vous plaît.
6401 Madame la Secrétaire, s'il vous plaît.
6402 LA SECRÉTAIRE : Merci, Monsieur le Président.
6403 We will start today with Phase II, in which interveners appear in the order set out in the Agenda to present their interventions.
6404 I would like to remind all interveners that oral presentations are to only address appearing items of this proceeding.
6405 Also, just as a reminder, pursuant to section 41 of the Rules of Practice and Procedures you must not submit evidence at the hearing unless it supports statements already on the record. If you wish to introduce new evidence as an exception to this rule, you may ask permission of the Panel of the Hearing before you do so.
6406 For the record, the Commission has been advised that Youth eMage Jeunesse Inc. and Mr. Joe Clark will not be appearing today.
6407 We will start with the presentation by Mr. Bruce Harvey.
6408 Mr. Harvey, you have five minutes to do your presentation -- I'm sorry, you have 10 minutes.
6409 THE CHAIRPERSON: Welcome, Mr. Harvey, and as the Secretary said, you can have up to 10 minutes to make oral presentations and then there will be questions. So please go ahead.
6410 MR. HARVEY: Thank you.
6411 Mr. Chairman, Mr. Vice-Chairman, other Members of the Commission, thank you for having me here. My name is Bruce Harvey and I'm a regional producer from Western Canada.
6412 I don't want to have any rhetoric, I'm not going to wave a flag or anything, I'm just going to deal specifically with the reply from Starlight to deal with some issues brought up yesterday during your questioning that I think I can elaborate on and then to try and elaborate on any questions you may have.
6413 In the Starlight reply to my intervention, there are, I think, four paragraphs that they responded to and I just would like to deal with each one of those and have a chance to respond to it.
6414 The first issue that Starlight brought out was that in my intervention I dealt with the value of licence fees that are coming from broadcasters to Canadian film and they said that if that was my assumption then that had nothing to do with Starlight's application, and I would say that is my intervention, is that it doesn't have anything to do with Starlight's application and that's why I'm intervening, is that it should have something to do with Starlight's application.
6415 The issue as to whether or not I have the same opinion as the CMPA, if I had the same opinion I wouldn't be here. The CMPA -- there are five films nominated for Best Film in Alberta this year for the Alberta Film Awards that were announced on Wednesday. Not one of those producers is a member of the CMPA, for whatever that's worth. There are only two members in Alberta, period, that list themselves as being -- that are members of the CMPA that list themselves as theatrical producers, for whatever that's worth, and there are a variety of reasons why that's the case.
6416 The next point that they bring up in paragraph 130 deals with the issue as to whether or not these are broadcaster productions, the comment that I made that 8 to 12 productions a year are broadcast productions. I would refer you to paragraph 118 of their reply where they state, and I can read out it again even though it's on the record:
"Terms of trade have never been considered to be appropriate for broadcaster-produced or broadcaster-affiliated programming. In this case, Starlight has committed to the creation of Starlight Fund, which expects to fully fund the 8 to 12 projects, and go on and say that terms of trade are not appropriate because these are broadcaster-produced programs."
6417 I think it's pretty clear that Starlight thinks they're broadcaster-produced programs too and that they're in-house and they are not independent productions.
6418 I think we can go into big arguments as to what the ratio is for independent production but I'm sure that the Chairman, having been on CAVCO, knows the ratio of ownership and what that means for whether or not you're independent or not independent.
6419 One of the issues that I did bring up was the fact that in the original application there was nothing that dealt with the licensing of new material, just old material and then the new programs. In their reply, Starlight says that they are planning to license every Canadian film. Nothing talks about what the value is. If they're talking about it just being a $10,000 archive fee, like a library fee, we can talk about that and see what that really means.
6420 Yesterday they made it fairly clear to the panel that all of those titles they were going to get from distributors, which was consistent with what I had said and not what their reply was here. They said that they weren't going to be getting them from the two major distributors in Canada. In their response yesterday they said they would get them from those same two distributors.
6421 A $10,000 licence fee, just to explain what that means. It's spread over four years, $2,500 a year. A lot of these titles that we're talking about that are in the library, those 3,000 titles were produced more than 20 years ago. I would bet you everything I have that not one of them was shot in HD or had an HD master created. I would say several of them would be in one-inch tape or on 35mm film and they are going to require a conversion cost to be able to put them onto digital basic.
6422 I would hope that this channel is an HD channel. I know that when I watch my TV I only watch the HD channels, so I'm hoping that it is broadcast in HD, and if that's the case, I don't see anywhere in their plan where they're going to cover the cost of converting or remastering.
6423 When Turner Classics came on, one of the big reasons that they came on was to be able to remaster all those films. If they're not going to be remastered, I don't want a film from 20 years ago that hasn't been cleaned up, hasn't been recoloured, going on the air and saying this is what the best of Canadian filmmaking is. That's not going to build an audience for Canadian film.
6424 So where those costs are I haven't seen. And if it's coming from my library -- I mean I've only produced 15 films. I don't have thousands of films. But of those 15 films I've produced, the cost to me of converting is more than $10,000, and if I'm getting $2,500 a year to do it, I don't see how it makes any financial sense.
6425 The issue that was brought up yesterday that when the -- I think it was Commissioner Simpson who asked what the priority was for the channel and they said it was access. I would disagree. I think it's easy to get access on Canadian broadcasting.
6426 If I was to go to CHCH and offer them all of my titles for free, I think they would probably take them. Most of them are award-winning titles. I think they would have some value to them. If I went to Super Channel when they were struggling and said I'll give you all my titles for free, I'm sure they would take them too.
6427 The question of being able to get access if you're going to give them for free, that's not the issue. But, unfortunately, that doesn't help the film industry in Canada.
6428 This licence is a one-off. There won't be a second Starlight. The Commission is not going to sit here next year and say let's talk about all the applications that come in, we're going to give mandatory licences for three more Canadian film channels. That's not going to happen. So if it's going to happen, it better be done in the right way.
6429 Yesterday Commissioner Simpson was talking and I think a number of commissioners actually mentioned the fact that these films have been paid for by Canadians and that therefore they should be -- you know, Canadians should see them for free and why should they be paying for them.
6430 This isn't the broadcast world, this is the feature film world. In broadcasting today, with the combination of the Canadian Media Fund, broadcaster support and the tax credits and tax incentives that are out there, you can pretty much finance 100 percent of drama.
6431 In the feature film world, Telefilm is contributing approximately 16 percent to English-language production, so across the board 16 percent; broadcasting less than 1 percent; distributors around 7 percent -- and the distributors, that's not really government money, but arguably it is, so let's throw it in the bundle. That's less than 25 percent that we have of money coming in to us. The rest of it we have to finance from private sector investment or from other funding sources around the table. So for us, our films are not being supported.
6432 You mentioned yesterday -- you were asking what the numbers were of that $381 million in production. English-language film is $264 million -- $264 million. Telefilm is putting in around $38 million of that. The tax credit system is -- Chairman Blais knows, the CAVCO system for -- if you compare a foreign film coming into Canada that's shooting -- Steven Spielberg's mini-series that's shooting right now or any of the feature films, the support they get from the Canadian tax system is almost exactly the same as what a Canadian gets because of the grind that exists under the CAVCO Canadian film or television production credit, and the provinces don't care whether it's Canadian or non-Canadian in most instances. So the tax credit system is the same whether it's Canadian content or not. So we shouldn't even talk about that.
6433 So what we're looking at is Canadians are supporting really somewhere between 16 and 20 percent of the cost of feature films. So in order for us to be sustainable we need to have broadcast partners.
6434 I've been producing now for 25 years roughly and during that time we've seen the level of support from broadcasters diminish incredibly.
6435 I remember when I first started producing, the rate from -- or shortly after I started producing, when First Choice came on side and Allarcom was producing Super Channel, the rate for a feature film if it was shot 35, if you had theatrical release in three or more cities, I think it was 25 cents a subscriber that you would get, 15 cents a subscriber if it was shot in 16mm.
6436 If I was able to get 25 cents a subscriber now from the pay services, that's around a $500,000 licence fee. Today the starting licence fee from Movie Central and TMN is $50,000 each. So you're looking at around $100,000. That's one-fifth of what we used to get.
6437 Telefilm's budget -- 10 years ago I could get from a regional production -- from Telefilm you could get $1.5 million to put towards the film. Today the most that a region can give you is $500,000.
6438 If you look at Telefilm -- and I want to just segue into that for just a minute -- of the $38 million that are going into Telefilm English language, it's broken up into a number of pots. Even if we talk about the whole $38 million, one-third of that goes to Quebec for French language right off the top. The rest that's set aside is split between the regions and is split in three ways.
6439 The first way is an envelope system and there are no regional producers that have an envelope. None. Not one in Western Canada and I don't believe there's one in the Maritimes. So the only envelope partners are the ones that are in Quebec and Ontario.
6440 Next it gets split out between the national projects and the regional projects. So what comes down for Western Canada, Manitoba, Saskatchewan, Alberta, B.C., all the Territories, there's just over $2 million that's available for production funding.
6441 So when you look at how much support there is, it's minimal. It's not like the Canadian taxpayer is supporting the film production in Western Canada.
6442 One of the issues that came up as well, that I just talked about, is how many films are produced in Canada and Starlight questioned my numbers as to whether they were there. I think if you look at their Appendix and add up how many films there are every year, it adds up to 70 English-language productions.
6443 But better than looking at their appendix, if you go to I think Profile 2012 that the CMPA put out and look at the Canadian Theatre Owners Association, their numbers show that there were 70 English-language films last year that were released theatrically in Canada. So the numbers I think are pretty accurate.
6444 THE SECRETARY: Mr. Harvey --
6445 MR. HARVEY: Yes?
6446 THE SECRETARY; -- you have one minute left. Please conclude.
6447 MR. HARVEY: Okay.
6448 I think you get the gist of where I'm going. I think we have an industry that if you only support the start-up -- eight start-up or 12 start-up productions every year, Starlight will be the exact name for this channel, because it will be just like looking at a star that has been dead for a billion years and you are looking at the shining glimmer of it and then you realize that it doesn't even exist anymore. That will be the Canadian film industry. We will be out there promoting 3000 old titles and there will be no industry out there.
6449 We have the opportunity with this channel to be supporting the entire industry, not to be picking and choosing. Canadians don't get to pick and choose whether they have this channel, every Canadian is going to do it. My mother is going to be paying, my family is going to be paying, they should have the right to choose the same way every Canadian film should be supported. There is enough money there to make a huge difference.
6450 If you look at 45 percent of all of the films made in North America, all of North America last year, were less than $1 million. In Canada it's almost exactly the same numbers of films that are produced for the same amount. Not one western regional film last year -- not one -- was worth more than a million and a half.
6451 So when you look at what the dollars are, $4 million, yes, you can have a couple of people that are out there, four projects that of the eight that are for the regions, maybe you get one in Alberta once every license period.
6452 And don't forget, these titles are not going to show up on their channel for two years. So they are committing to do 8 to 12 films, none of them will show up on the channel for the first two years because you have to produce them, you have to theatrically released him and so they get to the channel 2 years later.
6453 They provide at best, if you are doing 12, slightly less than half an hour of original programming a month. You have another half-hour that is their own in-house production that's there. So as far as original programming there's nothing. They could have supported every single film in Canada. Every single film could be on the channel licensed with a license of $250,000, something that made a difference that wouldn't change their financial picture at all, except they wouldn't own them, they wouldn't get the 30 percent of every revenue dollar that came in to boost it up -- which I would have a problem with, given that Canadians should own the channels.
6454 But anyway, I will stop.
6455 THE CHAIRPERSON: okay. Well, thank you.
6456 Commissioner Molnar will have some questions for you then, which will allow you to elaborate on some of your points.
6457 COMMISSIONER MOLNAR: Good morning.
6458 MR. HARVEY: I tried to speak really fast.
6459 COMMISSIONER MOLNAR: Yes.
6460 COMMISSIONER MOLNAR: Well, and I'm pleased to see you are here today, because knowing you were from Alberta I thought, "I hope you are not joining us by videoconference at this time of the morning".
6461 Obviously this is very important to you and you feel passionately about this. I want to go back to what you said about the fact that this is not about access. I mean it has been presented to us as Canadians need access to Canadian film and you don't see that as a huge barrier right now?
6462 MR. HARVEY: I think if you want to give it for free, it's never a barrier; if you want to give it for a price that allows you to make a return to your private investors -- I have a young filmmaker that has just made $250,000 film, totally private sector money, there is not one cent of government money, broadcaster money or anything, he has to have a way of making that money back. We all have to have -- we don't exist -- we can't keep going to the private trough.
6463 It would totally different if we had the equivalent broadcaster support, CMF support, where we are 100 percent financed, we can just take our fees out and be happy, I wouldn't care how much was going to the license -- the license fees were.
6464 But Canadians do deserve to see Canadian films. The mandate of the Broadcasting Act is that you provide Canadian content to Canadians. I totally agree with that, but it has to be at a price that makes sense and it doesn't have to be an outrageous price. You know, a Canadian hour -- "Heartland", "Heartland" costs about $1.6 million an hour to make. I told you how much Canadian feature films are being made for. That's twice the length for less money.
6465 So you know, we are not asking for big amounts of money, we just need to survive as industry.
6466 COMMISSIONER MOLNAR: Let's talk about the industry within the western region right now.
6467 To what extent were you involved at all, or members within your region, in creating the Starlight proposal? Anything?
6468 MR. HARVEY: I was not contacted at all and I am the senior film producer in the province. And AMPIA was not, to my knowledge, contacted. I talked to the Executive Director. Their Broadcast Committee does not have any feature film members on it.
6469 But no, to my knowledge there was no contact from Starlight at all.
6470 COMMISSIONER MOLNAR: And your expectation, if this proposal was to be approved, of the ability of the western region to participate in creating films or even having your films shown?
6471 MR. HARVEY: I think I wouldn't be -- I have no expectation that I would be prejudiced at all. I think that, you know, if someone like Paul Gratton is the programmer, I think he's a pretty fair guy, that he would program from all across the country.
6472 I think it's easier of course when you're in Toronto, because we all know the broadcasting world has certainly migrated to Toronto. We have a few broadcasters in the west, but very few, so it makes it a little bit more difficult. There still is a $2000 cup of coffee once in a while.
6473 But, no, I think that their commitment to do four regional productions, I think they will do that, I just don't think that it's really going to make an industry survive.
6474 COMMISSIONER MOLNAR: Okay. I want to go back to something that you had in your initial submission. You said:
"Rather than Starlight the CRTC should require each BDU to provide a dedicated Canadian VOD channel at no cost per film to their subscribers."
6475 The Starlight folks have argued that VOD is not a reasonable or feasible means of getting Canadian film in front of Canadians. You view that something like a dedicated Canadian film channel would be a reasonable way?
6476 MR. HARVEY: A free Canadian video-on-demand channel, yes. I think that the difference why it's difficult to do video-on-demand is because when people are already on their TV set and looking at what the content available to them is and they are looking at the price point for Canadian video-on-demand versus foreign video-on-demand, the price point is questionable for a blockbuster versus a small title.
6477 But I think the success of Netflix shows that if the price is right, people watch a variety of programming. When I go on Netflix I see a lot of Canadian content there now.
6478 The ability to have a free video-on-demand, it could be offered for -- when I say "free", you are still increasing the subscription price allowing the BDUs to take that $.45.
6479 And I didn't say that "it should", I said "it could". Or if I didn't say "could", I meant to say "could".
6480 I don't think that the CRTC should do anything, I think that it's one option that they could do if the goals were the same goals to make Canadian films available to the Canadian consumer, that for smaller price point you could do the same thing and you could still provide tremendous support to the Canadian film industry. There are a lot of options that would be available there.
6481 The BDU's could set up a similar-type Canadian Media Fund, only for theatrical film.
6482 COMMISSIONER MOLNAR: I just have one more question.
6483 You know, here you said if it's free it would be viable. But you know the quality of Canadian film, do you believe if a service such as Starlight -- and let's put aside how they would propose to fund the films or anything, but a service 100 percent Canadian film -- was offered to the Canadian public for a fee, like other channels within our dial are offered, don't you have a sense that Canadians would subscribe?
6484 MR. HARVEY: It's not my expertise. Really I'm not the person to answer that question. I have never pulled -- I know I can look at what this survey says here that Starlight did, I can look and say that there are, I think, 13 points listed here as to why Canadians think it's a great idea to have the service, I would say that only four of them apply to the library titles that the majority of the programming is going to be, unfortunately, but the other nine points are only -- really only applicable to the 8 to 12 films that they are going to be in-house producing and that if they really wanted to meet all of these things that the Canadian public says they really want they should be supporting every Canadian film.
6485 COMMISSIONER MOLNAR: Thank you. I think you made your point very well.
6486 Thank you.
6487 THE CHAIRPERSON: Mr. Vice-Chair...?
6488 COMMISSIONER PENTEFOUNTAS: Sorry.
6489 Mr. Harvey, I'm just trying to understand, you don't have a problem necessarily with the application, but you would like them to support more films by devoting less monies to each film?
6490 MR. HARVEY: Yes, I guess that would be the case. I would like them to support not more films, I would like them to support every film. There are only -- if we believe their numbers, they say there is around 50, I say there is around 70, it's probably in that range. If you look at the $22 million per year on average they are looking to spend on the 8 to 12 films --
6491 COMMISSIONER PENTEFOUNTAS: Yes...?
6492 MR. HARVEY: -- that would provide on average for, especially in the regions, more than 25 percent of the cost of production. It would come close to replacing what broadcasters 10 years ago provided to the Canadian theatrical industry. So it's replacing -- decisions were made by this Board to allow Citytv and to allow other broadcasters to get out of broadcasting film and the decision was made by the Board to change how the CMF and allow other things to happen that have killed our industry. It was your decision and you have the right to make those decisions, but in this instance if we are going to do something to help feature film and we are going to meet these -- you know, all of these points that Canadians say that they want from the survey that was done for Starlight, then there is a proper way to do that.
6493 COMMISSIONER PENTEFOUNTAS: Your proposal is that we give each film $300,000 --
6494 MR. HARVEY: Yes.
6495 COMMISSIONER PENTEFOUNTAS: Yes.
6496 MR. HARVEY: Yes. And it doesn't have to be just for license fee, there are ways -- yesterday when you heard the esteemed panel that were here -- and I totally respect all those people that were here, when you heard them talk about the lack of promotion, lack of accessibility, there are a number of issues, the financing that was available, all those panel members went through all the key things that were there. It wasn't just accessibility, it was the amount of financing available, it was the amount of advertising that was available, all the reasons that were there.
6497 I mentioned the fact that, you know, why doesn't the channel say that: We are going to play -- and it came up yesterday in the questions, why don't they play the trailers for every Canadian film that are out there for a month before they come to the screen? You know, that --
6498 COMMISSIONER PENTEFOUNTAS: Yes. I don't think they have a problem with that.
6499 And the cost of remastering your films as an example? What would it cost to remaster a film?
6500 MR. HARVEY: It depends what it is.
6501 COMMISSIONER PENTEFOUNTAS: Ninety minutes worth of film?
6502 MR. HARVEY: If it's from film --
6503 COMMISSIONER PENTEFOUNTAS: Yes.
6504 MR. HARVEY: -- doing an HD transfer --
6505 COMMISSIONER PENTEFOUNTAS: Yes.
6506 MR. HARVEY: -- if you can get a bulk deal and colour correction, if an old one, boy, maybe if you do a deal with Deluxe, $15,000-$20,000 I guess, for the older ones; for newer titles that are in better shape, or if you are just doing a transfer from 1-inch, if you are going to allow them just to do a basic up convert -- which no broadcaster in Canada will allow you to do, you have to go back to the master -- but if that's all they are going to do is a cheap up convert, you can do it for substantially less. But, you know, with stock and costs like that a couple of thousand dollars.
6507 COMMISSIONER PENTEFOUNTAS: But a true remaster you need $15,000?
6508 MR. HARVEY: Yes, if you get deals.
6509 COMMISSIONER PENTEFOUNTAS: On a bulk deal.
6510 MR. HARVEY: I mean I owe a bill to Deluxe now for $24,000 for doing one film.
6511 COMMISSIONER PENTEFOUNTAS: Right. Well, if you had 3,000 you can probably get a good bulk deal.
6512 MR. HARVEY: Yes, you could probably get a -- definitely get a deal, yes.
6513 COMMISSIONER PENTEFOUNTAS: And shouldn't some of the monies, especially in the first years, go towards remastering old Canadian films?
6514 MR. HARVEY: That would be an interesting option, yes.
6515 COMMISSIONER PENTEFOUNTAS: Okay.
6516 Thank you so much, sir.
6517 THE CHAIRPERSON: Just one question, Mr. Harvey.
6518 You have made a number of points to modify this particular application, at one point it becomes a new application; would you not agree?
6519 MR. HARVEY: I think that's why it's a negative intervention and not just --
6520 THE CHAIRPERSON: Right. So contrary perhaps to what you answered to the Vice-Chair, you are actually opposing this licensing?
6521 MR. HARVEY: I opposed it because I understood from the Commission in previous ones that you are not looking to rewrite applications during the hearing process.
6522 THE CHAIRPERSON: We have a lot of other things to do and that's not one of the things we do, no.
6523 MR. HARVEY: Yes.
6524 THE CHAIRPERSON: Okay. Thank you very much. Thank you for your intervention. It was very enlightening.
6525 MR. HARVEY: Thank you.
6526 THE CHAIRPERSON: We will now go to the next presenter.
6527 THE SECRETARY: Yes. I will now invite NABET 700 CEP.
6528 THE SECRETARY: Please introduce yourself for the record.
6529 Gentlemen, you have 10 minutes.
6530 MR. AHEE: My name is Jonathan Ahee, I am the President of NABET 700 CEP.
6531 MR. MOSEK: My name is Jayson Mosek, I am the Business Agent with NABET 700 CEP.
6532 THE CHAIRPERSON: Welcome. Please go ahead.
6533 MR. MOSEK: Thank you.
6534 Chairman and Commissioners, thank you for allowing us the opportunity to appear before you today at this hearing and convey our support of this license application you have before you from Starlight, the Canadian feature film channel.
6535 Further to our written submissions, NABET 700 CEP is a Local under the Communications, Energy and Paperworker's Union of Canada and represents film, television and digital media technicians in 70 different categories across 16 different departments. These departments include: hair, make-up, wardrobe, construction, set dec, props, special effects, sound and lighting, to name a few. NABET 700 CEP currently represents 2,200 technicians who regularly service feature films, television motion pictures, television series, mini-series and original digital media content in the Province of Ontario.
6536 In 2012, the NABET 700 CEP membership serviced 43 different media productions representing almost half a billion dollars in production volume in the Province of Ontario. This volume accounted for over 1,700 days of filming, including 225 episodes of television. Unfortunately, Canadian feature films only represented just under 20 percent of this total volume.
6537 Canadian feature films accounted for approximately $95 million in production volume and almost 400 shooting days over the course of 15 different feature films, feature films including "The Colony", "An Enemy", "Wolves", "Debug" and "The F-Word".
6538 Since 2010, NABET 700 CEP has serviced over 30 Canadian feature films, including other titles such as "Breakaway", "388 Arletta Road", "Down the Road Again", "Antiviral", "Score: The Hockey Musical" and "The Samaritan".
6539 NABET 700 CEP feels that it is imperative for a channel like Starlight to be in existence in Canada. Without such, Canadian feature films all too often go unnoticed, cannot be found by the public and, frankly, may leave the Canadian taxpayer wondering where provincial and federal tax dollars are going.
6540 By committing its entire programming slate to Canadian feature films, without commercial interruption in prime time, Starlight will give the Canadian public access to Canadian feature films and showcase to the country the many talents and incredibly highly skilled individuals that reside within this country -- sorry, within this industry in Canada, that which is on par with, if not better than, the rest of the world.
6541 This is a sentiment is echoed by the over 60 NABET 700 CEP technicians that took it upon themselves to personally put forward their support for Starlight application. Two in particular I would like to draw your attention to:
6542 Tanya Lemke, Props Department Member who stated:
"I highly support the application for Starlight, an all-Canadian (feature) film channel, as a content creator, and more importantly, as a viewer. I am not currently a cable subscriber, but if the Starlight channel is made available, I intend to become one again."
6543 Two, from Mr. Frank Iacobucci, Paint Department Member who stated -- and this is an excerpt from his overall submission:
"... as a film technician, I have often been frustrated by the fact that the great shows I have worked on never seem to gain traction in this country ... I feel that having a repository for the great work we do here would be a great step in accessing the talent in this country."
6544 With that, I will turn it over to Jonathan.
6545 MR. AHEE: Thank you.
6546 To be frank, the goal of NABET 700 CEP, or any union, is to increase work opportunities for its members. It is in this regard that NABET 700 CEP supports Starlight's application.
6547 We are specifically intrigued by the Starlight Feature Film Fund and Starlight's commitment to fully finance 8 to 12 feature films per year in order to ensure not just a historical catalogue of Canadian feature films are available to the Canadian public, but also a steady stream of new and original content. It is the Starlight Feature Film Fund, which NABET 700 CEP looks to as a mechanism to increase the work opportunities for its members and others in the industry in our sector.
6548 While the Commission will hear a great deal of how Starlight will satisfy a number of the cultural objectives as outlined in the Broadcasting Act, there is one aspect that in our opinion has not received much attention in these proceedings, and that relates to the economic aspects as called for under section 3(1)(d) of the Broadcasting Act.
6549 Obviously you are intimately familiar with that so I will skip the part that is most relevant to us, and that is point (iii) of that.
"(iii) through its programming and the employment opportunities arising out of its operations, serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children, including equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society and the special place of aboriginal peoples within that society..."
6550 As outlined in their application, Starlight has indicated they are committed to fully financing 8 to 12 feature films from the Starlight Feature Film Fund of roughly $22 million per year. This amounts to feature films in the range of $2 to $4 million Canadian and, based on their submission, roughly 25 percent of which, or 2 to 3 feature films to be produced in the Province of Ontario.
6551 To put this in perspective for NABET 700 CEP and the work opportunities for its members, we will use a recent example of a Canadian feature film shot in Toronto.
6552 This Canadian feature film shot in February/March 2013 and had a budget of $3 million Canadian:
6553 Production shot over the course of 19 days in Toronto;
6554 NABET 700 CEP members worked on the production over the course of roughly 43 days;
6555 Over 75 NABET 700 CEP technicians worked on the production;
6556 NABET 700 CEP member and permittee earnings on this production were approximately $600,000 Canadian.
6557 We fully believe that there never has been and likely never will be a proposed 9(1)(h) service that could promise so much in the way of economic benefits to Canada as Starlight. Even removing the employment opportunities created directly at Starlight itself, the amounts contributed to the Starlight Feature Film Fund are expected to aggregate over $155 million over 7 years. When you add in tax credits, that amount jumps to almost $200 million.
6558 Since the majority of production funds are spent on labour, the licensing of Starlight will translate into a large number of new, high quality jobs over the first license term.
6559 To put this in a larger context, NABET 700 CEP had 545 applicants in 2012. Only a small fraction of these emerging young filmmakers managed to gain regular employment on film production. There is massive room for growth and increased capacity in our industry and the Starlight Feature Film Fund would be an integral component to that growth. Many of those who have gone on to become Canada's most recognized and greatest filmmaker's, winning worldwide acclaim and recognition on behalf of Canada, got their start in jobs just like the ones that would be created by Starlight Feature Film Fund.
6560 This is a huge additional contribution toward the objectives of the Broadcasting Act and to the satisfaction of the Commission's section 9(1)(h) criteria.
6561 Thank you very much for inviting us to appear before the Commission and we welcome any questions you may have.
6562 THE CHAIRPERSON: Thank you very much gentleman.
6563 The Vice-Chair will have some questions for you.
6564 COMMISSIONER PENTEFOUNTAS: Thank you so much.
6565 I think it's no secret that already Ontario is getting the lion's share of productions in Canada.
6566 MR. AHEE: That would be correct. We do have a significant volume of work.
6567 COMMISSIONER PENTEFOUNTAS: Yes. And for your members, I mean whether it's a feature film or TV serial work or any other kind of work, I mean work is work, it doesn't really make a difference.
6568 MR. AHEE: I would actually disagree with that.
6569 COMMISSIONER PENTEFOUNTAS: Explain to me why.
6570 MR. AHEE: A majority of our membership prefer to work on Canadian feature films. That's usually what gets them into the business is the feature film. They view that with high regard. To be fair, series work is more stable, is longer running. It's difficult to make a living in feature film work, it's more sparse, but they prefer the stigma and the appreciation that comes with a Canadian feature film versus a television series. More people talk about being in the film industry than the television industry and I think that the feature film carries that stigma with it.
6571 COMMISSIONER PENTEFOUNTAS: They may prefer it, but work is still work. I mean the majority of the revenues that your members acquire come from serial work, from series television and not feature film.
6572 MR. AHEE: It offers a different nature of work as well. Television series are formulaic, they fit a pattern; feature films allow for greater artistic expression, depending on the area and the department you are in. I will submit the transportation obviously, a department we represent, the nature of the film versus television, very similar; costume, wardrobe design, very distinctly different; hair, make-up, wardrobe, very distinctly different and for them it is a subjective artistic interpretation that working on the film is much better than working on television and we have quite a few members that refuse to work on a television series and hold not only for feature films as they become available.
6573 COMMISSIONER PENTEFOUNTAS: It must be nice to be able to refuse work.
6574 Given what we heard this morning and given the state of affairs in Canada and the fact that the Ontario film industry is doing quite well, how would you feel about reserving the funds that may be derived from Starlight for productions outside of Ontario?
6575 MR. AHEE: I am struck with a bit of a duality on that.
6576 Obviously as someone who represents people in Toronto and Ontario I would like to see money go to Ontario in Toronto to put them to work in an industry in which they value and which they have decided to make a career.
6577 As a film technician myself many years ago, I am not concerned with where the money goes. I would like to see film technicians in any sector fostered. And I'm sure I will get a bit of a whipping when I return to Ontario for that statement, but the honest answer, sir, is money towards film production, money that goes to support Canadian jobs in the film industry, whether it goes in Ontario or any other province or jurisdiction in Canada, is money in Canada that is valued and will go to a good cause.
6578 COMMISSIONER PENTEFOUNTAS: We will keep an eye on you as you cross the bridge when you leave from here into Ontario.
6579 MR. AHEE: That's okay, sometimes the truth makes enemies.
6580 COMMISSIONER PENTEFOUNTAS: In your intervention -- you didn't talk about it today, but you talked about funds for aboriginal producers and aboriginal members of your Union.
6581 Do you want to sort of put some more meat on that bone? Is there a plan in place to address that membership?
6582 MR. AHEE: Not specifically, no. We would like to see if money was attributed to that, to go towards that.
6583 Obviously, we have many equity committees within our union. We would do what we can to develop it, but there is nothing specifically that we have developed for that, no.
6584 COMMISSIONER PENTEFOUNTAS: That's all for me, Mr. Chairman. Thank you.
6585 THE CHAIRPERSON: Your intervention was clear, so we don't have any additional questions for you.
6586 Thank you very much for your time.
6587 Let's hear the next intervenor, please.
6588 THE SECRETARY: Thank you, Mr. Chairman.
6589 Next is Blue Ant Media.
6590 I would invite you to come forward, please.
6591 THE CHAIRPERSON: Welcome.
6592 Please identify yourselves for the record. You will have ten minutes to make your presentation.
6593 MR. KHANNA: Good morning, Mr. Chairman, Vice-Chairman and Commissioners. Thank you for the opportunity to appear at this public hearing.
6594 My name is Raja Khanna, and I am the CEO of Television and Digital at Blue Ant Media.
6595 I am accompanied today by Michael MacMillan, CEO of Blue Ant Media, and Asha Daniere, EVP of Business and Legal Affairs.
6596 Blue Ant is one of the few remaining independent broadcasters licensed by the CRTC to provide Canadian English-language Category A and B specialty services.
6597 We are here today because we believe that if the Commission were to license any of the applicants listed in the Notice of Consultation seeking mandatory carriage on basic, who are not currently on basic, the industry, the consumer, and independent broadcasters will pay the price.
6598 To be clear, we oppose the licensing of any programming service not currently on basic seeking mandatory distribution of their service as part of the basic tier.
6599 We are not commenting on the individual applications; rather, we are suggesting that granting 9(1)(h) status to any of these applicants, all but one of whom happen to be non-affiliated with any BDU, will cause harm.
6600 We believe that such a decision will cause harm specifically because it is consumer unfriendly, and therefore potentially harmful to the industry, as it may accelerate the threat of cord shaving and cord cutting.
6601 It harms our ability to reach commercial solutions with BDUs that create value for consumers.
6602 It limits bandwidth capacity, jeopardizing the launch of HD versions of existing Category A services.
6603 And, it masks the real issues faced by all independent broadcasters.
6604 In our view, it is no coincidence that all but one of the applicants at this hearing are independent broadcasters. Over the last few days the Commission has heard terms such as "encouraging new entrants" and "diversity". We submit that there is already a mechanism in place that encourages new entrants and diversity, and that is through the Category B licensing process. It was created for just that.
6605 For services to now come before the Commission and seek the most protectionist regulatory tool that it has to dispense, in the name of encouraging new entrants and diversity, obscures and exacerbates the existing and material challenges faced by independent broadcasters.
6606 The addition of these services will not serve the policy directive of building a stable of competitive independent broadcasters. It will, in fact, undermine that directive by force-feeding content to consumers at a time when these consumers are increasingly turning to alternatives. These are alternatives where they can access content on demand, where and when they want, on a very selective and cost-efficient basis through alternate technologies.
6607 Moreover, the licensing of these services will cause material harm to Blue Ant services. The threat of cord shaving is very real, and can best be illustrated with concrete examples.
6608 For instance, 7 of our 8 specialty services are currently being carried in the least penetrated, most expensive tier, on one of the major BDUs. Should the cost of basic service increase, there is a real probability that consumers will respond by reducing the number of services they receive. Specifically, occupying the most expensive and least penetrated tiers puts us in the most vulnerable position, making us most likely, therefore, to be dropped by consumers.
6609 At a moment in time when we must strive to do all we can to keep our viewers in the system, we are gravely concerned by the spectre of consumers being force-fed additional programming services on basic that, ultimately, they will either pay for or cut the cord to escape from.
6610 Furthermore, we know that consumers have adopted HD and expect the programming they want to watch to be in high definition. Travel + Escape, a service that is best viewed in HD, cannot get carriage of its HD version with two of the major BDUs. The stated reason: bandwidth.
6611 If the Commission further constrains bandwidth capacity by adding mandatory services, Travel + Escape may never be available in high definition to customers who want it.
6612 As we stated in our written intervention, we are also concerned with the downward pressure on subscriber fees received by independent specialty programming services. Consider that in 2012 all English-language independent specialty broadcasters carried on discretionary tiers, not on basic, including the NHL Network, generated approximately $80 million in revenue. This total includes all subscriber and advertising revenues.
6613 If the Commission licenses just 2 applications -- for example, FUSION and Starlight -- the revenues requested by these two services alone is $83 million a year. This figure is more than the total revenues received by all discretionary-tier independent English-language specialty broadcasters in 2012.
6614 BDUs will seek to recover these costs, not only from their customers, but also from independent broadcasters, by applying pressure on us to decrease our wholesale fees and/or dropping our Category B services.
6615 MS DANIERE: As independent broadcasters, we are focused on creating value for our viewers. As such, we rely on our ability to reach commercial negotiations with our BDU partners in an increasingly competitive market.
6616 To now, quite frankly, turn back the clock and advance the notion of protectionist regulation through applying 9(1)(h) sends the wrong message. It promotes the conclusion that the only way in which an independent broadcaster can succeed in the current environment is by way of depending on heavy-handed regulatory intervention. We do not believe this to be true.
6617 Independent broadcasters are ready and able to compete for market share, and will do so effectively if the right structures are put in place to ensure a fair playing field. Key to this fair playing field is a robust and reliable Code of Conduct that is enforceable.
6618 We ask that the Commission amend the Code and render it an unequivocal obligation on the part of the BDUs to consider all of the elements of the Code of Conduct when negotiating with programming services.
6619 Also, we would ask that the Commission take the first available opportunity to explore all means by which a revised Code of Conduct can meaningfully apply to all vertically integrated BDUs, whether that be through attaching it as a condition of licence, amending the broadcast regulations, or some other mechanism.
6620 We believe that an enforceable and reliable Code of Conduct that applies to all vertically integrated BDUs represents a much less intrusive and less heavy-handed regulatory tool than 9(1)(h).
6621 Also, as we have said in our intervention -- and at every other opportunity, as you may have noticed -- we are urging the Commission to undertake an independent broadcast policy review to explore effective and light-handed solutions to ensure a fair playing field in the industry.
6622 MR. MacMILLAN: Mr. Chairman and Members of the Commission, we have told you why licensing one or more of these mandatory channels would be harmful to Blue Ant, and harmful to the other independent broadcasters who are striving to appeal to viewers to achieve success on commercial terms. We believe that the harm to us is real.
6623 We have outlined clear and immediate damage which will befall us should you decide to license mandatory channels.
6624 But apart from Blue Ant's commercial interest, beyond the damage that we may suffer, there is something more important, frankly, and that, obviously, is the health of the whole broadcast system.
6625 New competitive technologies are here to stay. Consumer insistence on greater choice is a fact of life and is not going away. Canadian citizens want greater choice, and they are willing to go out of their way to exercise that choice.
6626 It is in this context that these applications for mandatory channels seem positively anachronistic.
6627 Just as we can be certain that Canadian consumers want and deserve accessibility, affordability and choice, we can be equally sure that industry players, including independent broadcasters, want fair play rules for all. Neither these consumer needs and expectations nor the needs of the overall broadcast industry will be met by the CRTC picking one or two 9(1)(h) so-called winners.
6628 We would be happy to answer any questions that you may have for us.
6629 THE CHAIRPERSON: Thank you very much for your presentation. I have a few questions for you.
6630 First of all, I take it that you have been following the hearing and the comments made. Has anything during the course of the hearing changed your views in any way, shape or form?
6631 MR. MacMILLAN: No.
6632 THE CHAIRPERSON: So you are in agreement with your original position.
6633 Is that correct?
6634 MR. MacMILLAN: That's correct.
6635 THE CHAIRPERSON: Now, I will get to the new services, but I want to fully understand your position with respect to existing services.
6636 And I know that you don't want to be commenting on anyone individually, as you have said, but we do have some services that are already distributed with mandatory distribution orders, and some of them have asked for rate increases.
6637 What is your view with respect to that, in light of your broader argumentaire?
6638 MR. KHANNA: Our position is that we don't want to take away anything from folks who already have it.
6639 Beyond that, in terms of the rate increases, we didn't look at the individual rationales behind each one of those requests, so we can't really, fairly, comment on them.
6640 But, in general, I think we would say that the effect of a rate increase on 9(1)(h) services would have the same detrimental effects that we are describing in our intervention. So we would be opposed.
6641 THE CHAIRPERSON: To rate increases.
6642 MR. KHANNA: Yes.
6643 THE CHAIRPERSON: Even though there may be some public service value?
6644 MR. KHANNA: There may be, and that's why I put the caveat in front of my comments that we have not had a chance to review each one individually.
6645 So there may be solid rationale there that is in the public interest, but for an existing service.
6646 THE CHAIRPERSON: I am having difficulty understanding the rationale of you not taking a position on the existing 9(1)(h) services, because if one follows part of your argument, it is that consumers want more choice, more diversity of the ability to choose when, and on what platform, to a certain degree, they want to do that.
6647 So those that have 9(1)(h), those who are up before us, we don't necessarily need to renew them.
6648 MR. MacMILLAN: May I take a crack at this?
6649 MR. KHANNA: Yes.
6650 MR. MacMILLAN: I think we are saying that for existing channels that are on basic and have enjoyed that privilege for a long time, since they are already there, we don't have a problem with them continuing to be on basic.
6651 But for channels that exist that aren't currently on basic, that seek to be on basic, we would be opposed to that.
6652 We are also opposed to new channels that don't yet exist applying and getting mandatory carriage on basic.
6653 And, in general, we would oppose price increases for those that already have 9(1)(h).
6654 MR. KHANNA: And on top of that, I would say that taking away the protection that 9(1)(h) provides to an existing independent service is a dangerous thing to do without the context of a broader public policy review around independent broadcasting.
6655 That is why we are not making a blanket statement that we should get rid of this regime altogether.
6656 And, maybe, ultimately, that is where we would land, but only in the context of doing a more complete policy review.
6657 THE CHAIRPERSON: Is your position vis-à-vis -- in my opening remarks I mentioned that 9(1)(h) -- everybody always assumes that it is mandatory on basic, but there are other types of 9(1)(h) orders: "Must Offer" variations on the theme, regional offers, linguistic market variations.
6658 Is your point just with respect to basic?
6659 MR. KHANNA: When it is not on basic, it starts to look and sound a lot like a Category A licence, and we have noticed that the Commission seems to be backing away from licensing new Category A channels. Looking at that as an ongoing tool that you have, the policy direction seems to be different than that.
6660 So we have assumed -- and we support the idea --
6661 THE CHAIRPERSON: Right. I have a bit of familiarity with that. When we created what they were calling Category 1's and 2's at the time, it was always the belief, at least at that time, that for Category 1's, that was the last -- in 2000 I believe it was -- that was the last time we would be giving those out.
6662 Do you believe that there has been a slippage of that?
6663 MR. KHANNA: No, that's what I am saying, I am supporting that policy direction, that you have kind of stopped doing that.
6664 In our minds, if that regime has kind of come to an end and we are not looking at it again, looking at 9(1)(h) without basic carriage is kind of the same thing. It is another way to get at the same thing, and we have already all kind of understood that that is no longer on the table.
6665 MR. MacMILLAN: Also, our comments apply to the English-language market, not the French-language market.
6666 THE CHAIRPERSON: Noted.
6667 Could you explain to me in a little more detail -- I want to fully understand, particularly on the second page of your presentation today, the impact that you perceive with respect to the launch of HD versions of Category A services.
6668 Exactly what is happening in the marketplace, and why are you concerned about that?
6669 MR. KHANNA: It is a small, little technical point that has a dramatic impact on our ratings and on our viewers. We thought it was important to raise, because the pushback that we always receive, from all of the BDUs, is: We can't launch your HD signal because we don't have the bandwidth.
6670 Now, we haven't done the analysis to see how many of their own services they have launched in HD. I am sure that would be telling.
6671 In the Category A regime, you are not licensing new licences, but, again, one of the very few protections that we have as an independent broadcaster, which we rely on today, is the ability to have that "Must Carry" status.
6672 We don't think that should go away without the context of a larger policy review.
6673 So given that, here we are today, we have mandatory spending requirements, we have more burdensome conditions of licence compared to Category B channels, and yet we do not enjoy the full, high-quality, distribution of our channel. Even in the low penetrated tiers on which we are carried, we are not carried in HD.
6674 I think that this 9(1)(h) proceeding gives them yet another excuse to put us further down the list.
6675 Our channel Travel + Escape has, roughly -- I think that 14 percent of its subscriber base has the channel available to them in HD. We broadcast an HD signal that is available to everyone to pick up, and yet only 14 percent have that available to them.
6676 And this is a channel. It is a travel channel. As you can imagine, it is beautifully shot in HD. Everything is shot in HD, it is meant to be in HD.
6677 That does have a meaningful and direct impact on our ratings, and therefore our ability to sell advertising.
6678 THE CHAIRPERSON: So, on this point, are you saying that it is a real technical issue, or it is another argument that you would get?
6679 MR. MacMILLAN: Probably both.
6680 THE CHAIRPERSON: Mostly one, mostly the other?
6681 MR. KHANNA: They are launching channels in HD, just not ours.
6682 THE CHAIRPERSON: Okay. I noted in your presentation, and I have heard you in other venues talk about the need to review the VI code.
6683 Throughout the hearing -- and you said that you were following it -- it seemed clear to me that -- for instance, Sun mentioned some difficulty negotiating access with non-vertically integrated companies, like TELUS and MPS. Vision talked about both VI and non-VI, and I believe the Natural Resource Channel also mentioned not just VIs in their comments.
6684 Are you suggesting that the review is VI-specific, or broader than that?
6685 MR. KHANNA: Broader than that.
6686 In our intervention to this proceeding, we introduced a list of 12 what we think are light-handed approaches to creating a more fair playing field for us in the market.
6687 We don't believe that the answer to independent broadcaster's challenges is more heavy-handed regulations. We think that 9(1)(h) is perhaps the worst tool in your repertoire to deal with our challenges, because, as we have laid out here, it actually has a negative effect on us.
6688 But there are other, simpler tools, and we have tried to propose a few.
6689 The things that affect us every day are little things, like HD carriage, or the fees that we pay for uplink, or how our channels are marketed. A lot of these things can be dealt with by simple approaches beyond just the Code of Conduct.
6690 So we are suggesting a review of not just that Code, but of the whole regulatory regime.
6691 THE CHAIRPERSON: The broader framework.
6692 MR. KHANNA: Yes.
6693 MR. MacMILLAN: Just to reinforce what Raja was saying, our specific point about 9(1)(h) is that it could be something that might be seen to be medicine to help solve a problem. We think it actually could backfire and have a negative impact on the broader --
6694 THE CHAIRPERSON: On the broader system, because of cord shaving and so forth.
6695 MR. MacMILLAN: Yes.
6696 THE CHAIRPERSON: I know that you have made some points about consumers, and others have as well, about choice of consumers, but we should also look at it with a broader public service-type lens.
6697 I sometimes talk about citizens, which is not quite the same thing as a consumer, right?
6698 So would you say that there is some room under 9(1)(h) for citizenship-type considerations that are not pure consumer-driven issues?
6699 MR. MacMILLAN: Certainly. The whole nature of -- what is fundamental to the Broadcasting Act is based on citizenship and not just our role as consumers. That is sort of the essence of the Act,
6700 So, yes, absolutely.
6701 MR. KHANNA: Yes, absolutely, but in the context of -- again, it is hard to answer some of these questions because we are not looking at specific applications, and we have not reviewed them, nor are we commenting on them.
6702 But as a regime -- if you told us that there was a channel or a licence application that met all of your criteria, would we be opposed to that? The answer is yes, we are still opposed. We do not think that any of these should be granted.
6703 THE CHAIRPERSON: Because you can understand that there are situations where a particular group or subgroup in Canadian society, by their numbers -- and being distributed across the country -- whether because of a disability, or some other reason -- you can't entirely rely on the force of the market, because they are necessarily in a minority situation.
6704 I am not just talking about linguistic minorities, and yet they are full citizens in the country.
6705 MR. MacMILLAN: Yes, and I guess our observation is that while probably all of these applicants are worthy or worthwhile, the impact on the system, on citizens, consumers and industry players -- the negative impact is disproportionate to the benefit created by licensing these 9(1)(h) applications.
6706 MR. KHANNA: And maybe there is a new regime that should be looked at to support those types of applicants. We just don't think that 9(1)(h) is relevant in today's consumer-driven environment.
6707 THE CHAIRPERSON: Okay. Thank you, that is very clear, and you may very well have an opportunity to make comments in a broader framework, so stay tuned.
6708 Mr. Vice-Chair...
6709 COMMISSIONER PENTEFOUNTAS: Just briefly, I just want clarification on one of your points.
6710 Did I understand you correctly that people that already have 9(1)(h) status should be able to hold onto that status?
6711 MR. KHANNA: We are not opposed to them holding onto that status.
6712 COMMISSIONER PENTEFOUNTAS: Ad infinitum? I mean, things change. Why should you have some kind of acquired right to 9(1)(h) status forever and a day?
6713 MR. KHANNA: We are not supporting it, we are just not opposed. We are not commenting on those because, for the reasons I laid out before, we don't want to take away one of the protections that an existing independent broadcaster might have today without the broader policy review.
6714 COMMISSIONER PENTEFOUNTAS: And are you of the belief that if the BDUs were to carry fewer 9(1)(h) status stations, they would return the proceeds back to either their client or that would free them up to be kinder and gentler to independent broadcasters such as yourselves?
6715 MR. KHANNA: They would call us immediately and raise our rates. It's a constant challenge. Although, we are up for that challenge.
6716 I hope you saw in our comments here that we're ready and willing to compete and build our business on a commercial basis and we just think that this type of regulatory approach actually puts a hurdle in front of us doing commercial deals. We just want you to remove hurdles, not put on more hurdles.
6717 MS DANIERE: Again, one of the reasons we focus so much on this broader question is because the truth is, you know, whether these services are licensed or not, are we going to get a call from the BDUs? Of course not. Are we going to see a dime? Are we going to see better treatment? Highly unlikely.
6718 But the broad point we're really trying to make is this is not the answer, this is not the salve for the wound. Help us find the right salve and don't think that this is it.
6719 COMMISSIONER PENTEFOUNTAS: Thank you.
6720 THE CHAIRPERSON: Thank you.
6721 All you want is a -- I think you used the words "a level playing field"?
6722 MR. KHANNA: A fair playing field.
6723 THE CHAIRPERSON: There's a previous Vice-Chair that kept mentioning though that there's no such thing, that's why we change ends at half-time.
6724 MR. MacMILLAN: Yes. And indeed, Mr. Chairman, that's why we use the phrase "fair playing field," not level.
6725 THE CHAIRPERSON: Okay. Great. Got it. Very good. Thank you very much.
6726 We will hear now from the next interveners.
6727 MR. MacMILLAN: Thank you.
6728 THE CHAIRPERSON: Thank you.
6729 THE SECRETARY: The next intervener is VMedia. I would invite the gentlemen to come forward to the presentation table.
6730 THE CHAIRPERSON: Welcome. As is usual, please identify your panel for the stenographers and then go ahead. Ten minutes please.
6731 MR. TCHERNOBRIVETS: Thank you, Mr. Chairman, Mr. Vice-Chairman and Commissioners for giving VMedia the opportunity to present its views to you on this very important matter.
6732 My name is Alexei Tchernobrivets and I am the CEO of 2251723 Ontario Inc., a licensed Class 1 terrestrial BDU which carries on business as VMedia.
6733 To my immediate right is Vadim Sloutsky, our Vice-President, Business Development, and beside him is Ivan Smirnov, VMedia's Chief Architect. To my left is George Burger, VMedia's advisor, our partner and a member of our board of directors.
6734 VMedia recently launched its innovative Internet-based BDU service which offers Canadians an affordable, technologically advanced platform giving them easy access to both content regulated by the Commission as well as over-the-top content through hundreds of apps which we make available to our subscribers.
6735 We seek to offer Canadians as much flexibility and choice in their entertainment options as possible, within the limits of regulation and our contractual commitments to content providers. Our approach is crucial to keeping Canadians a part of the broadcasting system, in particular that growing cohort of potential cord-cutters, our children. Disconnected from our broadcasting system, they will be increasingly disconnected from our culture.
6736 Given that objective, we feel we must try to persuade the Commission that if ever there will be a time when it is appropriate to issue licences issued under section 9(1)(h), which obliges Canadians to receive and pay for channels which they do not choose, this is not it, and if ever there will be applications that deserve to be awarded such valuable licences, with very few exceptions, the ones before the Commission are not them.
6737 The right of a service to mandatory distribution is of great value in and of itself in an environment where carriage prospects are becoming increasingly scarce. Even without fees, it is a privilege to be awarded instant penetration to all Canadian homes and a sound basis for building a profitable business.
6738 Where there is also a prescribed cost to consumers, the burden of proof that there is a clear need for a service of exceptional importance is near insurmountable. How else can one justify the imposition of a universal recurring fee, effectively a tax that must be paid by virtually all Canadians regardless of their means?
6739 VMedia objects in particular to the Stornoway, Starlight and Vision applications. They have proven no such need, nor any exceptional importance. They are, however, conceived and structured to exploit the well-intentioned policy objectives of Canada's broadcasting framework as well as all Canadians for the purpose of generating substantial financial benefits for the principals involved.
6740 Stornoway, Starlight and Vision, private enterprises all, will use those public monies to build lucrative businesses in which Canadians will have no stake whatsoever. In addition, by being subsidized in this way, the principals behind those businesses will be able to build them without incurring any financial risk whatsoever beyond the cost of submitting their respective applications. This will give a new and surely unintended meaning to the concept of a private-public partnership.
6741 We do not think it useful to repeat the detailed arguments in our intervention, except to say that nothing that has been said in response by the three applicants successfully refutes any of our substantive arguments, although we will be happy to answer any questions the panel may have in that regard.
6742 We do, however, wish to highlight certain key elements.
6743 Specifically, we do not believe that any of the three applications have the slightest merit.
6744 In the case of Fusion and Vision, while the financial liberties they have attempted to take with Canadian taxpayers' money are not as bold as Starlight's, their pitches are straightforward and they do not try to exploit the sentiments of regulators and the Canadian public.
6745 Starlight, however, is an application unto itself and most clearly reflects the underlying elements of these applications.
6746 MR. BURGER: Starlight believes it is of national importance that Canadians have 24/7 access on linear television to the thousands of movie titles in the Canadian feature film canon. Not only should Canadians have access but they should be compelled to have that access. And not only should they be compelled to have that access but Canadians should be compelled to pay for those movies. And for the second time.
6747 Canadians have already paid for them once through billions in generous subsidies and tax credits and other benefits over the last 40 years provided in the service of cultural imperatives. These generous benefits have, incidentally, launched and sustained the careers of and greatly enriched much of the Starlight board.
6748 However, instead of reaching into their pockets and giving back to the system and to the public that bankrolled them and launching such a service on their own at their risk, they are going back to the well. They are seeking a new windfall, this time over $300 million over seven years. Based on the costs of delivery and mark-ups by BDUs, that would cost Canadians over $700 million in total.
6749 Where will this money go? A quarter of it will go toward licensing content to fill the schedule and running a TV channel. The rest of the money will go toward funding the creation of a "mini-studio," as Starlight's application calls it, which will invest about $200 million in movies which, contrary to the vigorous denials of Starlight's founder in the media and in front of the Commission yesterday, it has expressed the intention to green-light, own and exploit.
6750 Indeed, Starlight boasts that over 70 percent of their revenues will be spent on Canadian films, more than any other broadcaster -- obviously hoping no one realizes that its largesse is funded exclusively by Canadian taxpayers.
6751 These additional amounts include breathtakingly outsized expenses. As Starlight put it in its reply to VMedia's intervention, which pointed to Starlight's lavish and unexplained line items:
"VMedia fails to recognize that there has never been another service like Starlight, and it will have to incur costs unlike those of any other Canadian broadcaster."
6752 Nothing Starlight has said in these proceedings is more true.
6753 This would be laughable and worthy of parody if it were not in its own way a parody of itself. Leave aside the growing irrelevance of linear TV. Leave aside the loud objections by consumers to having expensive channel packages forced into their homes. Leave aside this reach into the pockets of hardworking Canadians by people whose idea of hardship is having a suite on the Riviera without a sea-view.
6754 The point is none of this mini-studio stuff has anything to do with the supposed need which this application purports to address: to give Canadians access to this huge library of unseen Canadian film treasures.
6755 Where is the argument that justifies taxing Canadians to fund this mini-studio? Where is the argument that not enough Canadian feature films are produced every year?
6756 Piers Handling himself, as staunch a proponent of Canadian films as anyone, has said he is "shocked" at the number of movies produced by Canadians:
"We shouldn't be making 250 feature films in this country."
6757 Clearly, that issue is not of exceptional importance, and in fact no argument to that effect was made in the Starlight application.
6758 At their appearance yesterday, Starlight's executives claimed the fund concept was driven by the requirements of the new mandatory carriage criteria. That is unsupportable.
6759 The relevant requirement is that an applicant must make exceptional commitments to original first-run programming. And an original first-run program is one that has not been distributed by another broadcasting undertaking.
6760 That means their objective would be just as well served by simply acquiring those television rights to all those Canadian movies made every year that other broadcasters have apparently cast out, parentless, into the cold.
6761 So, again, why are Canadians being asked to pay for this cavalier business plan?
6762 Even acknowledging, solely for the sake of argument, that Canadian films are indeed orphans in Canadian broadcasting and having a channel that will give Canadians 24/7 access to these movies qualifies for the extraordinary privilege of mandatory carriage, what does that have to do with the creation of a mini-studio?
6763 How does that justify millions of dollars of Canadians' money being spent on promotional junkets to Cannes, Los Angeles and Paris and the other perks that are buried in the undetailed line items in Starlight's business plan?
6764 How does it justify a $5.5-million administrative expense line and a $4.5-million ad and promotion line which will not even be spent on marketing those movies?
6765 Our film industry is often the place where greed meets policy, where well-intentioned public officials are talking culture and jobs and elevating a struggling industrial sector while supposed private-sector cultural champions are really talking about money, specifically the conversion of taxpayers' money into their wealth.
6766 In this case people already greatly rewarded for less than robust results, notwithstanding endless boasts to the contrary, have, instead of giving back, come back for more, draping themselves in the Canadian flag in a daring attempted cash grab of unprecedented magnitude.
6767 We would submit that the entire process is an anachronism, one which was inherited by the current slate of Commissioners as part of a process begun in 2006, the Pleistocene era in the context of the developments in communications technology and the sea change in viewing habits since then.
6768 Regardless of the times, these appeals for handouts should be dismissed. The costs are too big, the possible windfalls too undeserved and the potential blow to our broadcasting credibility too great to do otherwise.
6769 But all is not bleak. Where Starlight represents the rehashing of old tropes and failed concepts, VMedia represents new ideas and innovation. Where Starlight represents endless dependence on public support, VMedia puts everything on the line every day. Where Starlight seeks to impose its channel on Canadians, VMedia seeks opportunities to create more choice and ways to continuously enhance the lives of Canadians.
6770 To illustrate the difference, VMedia proposes the following.
6771 If it should turn out that Starlight is not awarded the licence, VMedia undertakes to the Commission that it will develop an app, at its own cost, which will allow Canadians to watch Canadian movies on all their screens at any time.
6772 It will collect and make available through that app every single Canadian feature film and documentary ever made, compellingly packaged and fully catalogued, which Canadian distributors will be willing to license to us on a revenue-share basis.
6773 VMedia will make that app available for distribution to all BDUs across Canada to offer to their subscribers. The cost of the app will be $1.99 per month and all of the proceeds, except for our documented costs of operation, will be distributed to the rights holders.
6774 Our costs of operation will be made available to the public and we will offer them for audit by any authority from Telefilm up to the Office of the Auditor General. We will guarantee total transparency and that we will make no profit whatsoever on this venture.
6775 This in our view is how, in this day and age, content, no matter how precious, should be made available to Canadians economically, taking advantage of the tremendous efficiencies of the Internet and related technology and with the highest respect accorded to the right of consumers to choose where they will spend their hard-earned money.
6776 Mr. Chairman, Commissioners, these hearings are a watershed moment for Canadian culture, and for Canadians. The outcome will dictate not only how our basic packages will look but also how Canadians will participate in this constantly changing and improving content universe.
6777 We are most grateful for the opportunity to be able to contribute to this process and look forward to your questions.
6778 THE CHAIRPERSON: Thank you very much, gentlemen. You definitely haven't held back any punches. That's good.
6779 Commissioner Simpson will ask the first questions.
6780 COMMISSIONER SIMPSON: Thank you very much.
6781 Mr. Tchernobrivets, I will direct my questions to you and you can decide how you want to field them.
6782 You've made your point very clear on three of the applicants and I think I'm going to just leave that alone but try and elevate some of the conversation regarding your views on any imposition of mandatory carriage applications as being a threat to the future of linear television and, you know, through BDU, and we'll start off with that.
6783 First, I want to understand something. In your written submission, on paragraph 5, and I'll just sort of graze over it, you say you can't conceive of a compulsory service which would be sufficiently exceptional in its importance to justify the additional imposition of a cost to the consumer.
6784 I'm paraphrasing here, but are you looking at that, in making that statement, through the lens of the Broadcasting Act at all or are you just looking at it from the standpoint of the health of the BDU industry?
6785 MR. TCHERNOBRIVETS: George Burger will comment on this question.
6786 COMMISSIONER SIMPSON: Yes, thank you.
6787 MR. BURGER: We're looking at it, I think, partly from the point of view of how information is made accessible today. And I am absolutely 100 percent behind the origins of 9(1)(h). I think that certainly there are needs that must be met. There are definitely public interests that relate to such needs, but at this stage, given the access that every citizen with any interest of any small micro-subject has of its availability on the Internet, which is completely ubiquitous at this point -- I mean my mother is 85 and she's on the Internet all the time -- it's very hard to make a case for what really should have this special privilege. I would almost qualify it as literally a service that is saving lives.
6788 COMMISSIONER SIMPSON: M'hmm.
6789 You mentioned in your oral submissions this morning that you think that it's of national importance that Canadians have 24/7 access. That was in reference, granted, to Starlight but I'm reading through that to say that access is paramount in your mind, that this whole thing is about affordability and accessibility. Is that correct?
6790 MR. BURGER: I think that that's the underpinning certainly of many of the applications and the premise of all of them, frankly. Yes.
6791 COMMISSIONER SIMPSON: Okay. Well, where I'm going with this is there was a time, a long time ago, and that horse has left the barn, where Canadians had unrestricted access over the airwaves and BDUs came along with the notion of trying to extend their footprint and, you know, we arrived at the doorstep of where we are today, and 9(1)(h) and other factors that the Commission feels are important are a way of being able to make sure that the intent of the Broadcasting Act as it was devised in an over-the-air world is still able to maintain its intent with respect to nation-building, civility, societal importance, and I can't help but get the feeling that in your sort of binary view of things that that is not as important as affordability and access alone and we should really get out of the notion that we're in now that we need to impose some cultural or societal programming on Canadians through you.
6792 MR. BURGER: I really -- I have to backtrack only a little bit. All we said when we wrote this is that we can't conceive of what would qualify.
6793 COMMISSIONER SIMPSON: M'hmm.
6794 MR. BURGER: Clearly, what we've seen do not, with one -- we have mentioned that actually we do accept one in particular. I think the extension of the service as VMI makes eminent sense and I think that that's almost a variation of saving lives. I mean there you're dealing with people who are challenged and need help.
6795 But we simply can't think of it. So I think if you put something in front of us, you know, we would be happy to consider it, but these ain't them.
6796 COMMISSIONER SIMPSON: Okay.
6797 On the cost issue, I think we all are feeling the consumer pain that costs are getting to the point where they're significant to the household. I've been exposed to some numbers that were showing it to be -- in aggregate, between cell phone, entertainment, cable and the whole enchilada, it was getting to the point where it was almost the number 5 expenses in the household. So we understand each other with respect to cost.
6798 But on the cost issue you've sort of thrown your chips in this morning and said, you know, we've got a really good idea, there's an app for that, if you want Canadian films to be exposed to Canadians we have a robust finance system and a cultural and financial support system to make these films, and if exhibition is a problem, we'll help you, we'll build an app, we'll distribute it and we'll do it at no profit.
6799 Now, I'll ask you this. I'll see you and raise you one. Why doesn't the BDU world take that view to the cost of basic cable? Because there's a lot of stuff on basic cable that is not a cost item. I mean there's a cost of carriage but there's not a cost of acquisition. There's the cost of the stuff we impose through 9(1)(h).
6800 But if BDUs are that concerned with basic cable costs, why aren't they more inventive with respect to bringing down some of those costs to get the subscriber and hold onto them?
6801 MR. BURGER: Well, we're, first of all, a different kind of BDU because we're not dealing with the kind of profits and margins that would let us even begin to think about that kind of problem, if you want to call it a problem. So I suppose we're probably not really prepared with an answer for that.
6802 But at the end of the day, I think BDUs are -- you know, certainly, they're a regulated industry sector but they are private enterprise and they price as they think the market entitles them to price.
6803 I think that our offer is one that illustrates what's doable. It's something that we're certainly prepared to do but I'm not sure that that's necessarily up everybody's alley. Perhaps that's what makes VMedia so special.
6804 COMMISSIONER SIMPSON: M'hmm. I appreciate your unique position, being a new entrant and all that and also that you're IP-based, but I was just curious if you saw a strategic advantage in pricing your basic a little more entry level acceptable given the cost concerns.
6805 MR. BURGER: For what it's worth, I mean, forgive me, I really don't mean to be pitching ourselves, but that is a fundamental aspect of our business plan. It is to try to grind the size and the cost of basic as low as possible and that's just a sincere answer to your question.
6806 COMMISSIONER SIMPSON: Great. I appreciate that.
6807 On the subject of cost, how much does it cost a channel to your basic service, excluding the wholesale fee? I mean if a digital signal is delivered to your head end and this is a no-cost but mandated carriage service, what kind of costs would be passed back to that broadcaster, assuming that there's a cost for carriage?
6808 MR. BURGER: Well, the cost that we pass back to the broadcaster is their mandated fee, but beyond that the cost that we have to bear.
6809 COMMISSIONER SIMPSON: This is in a no-fee situation though.
6810 MR. BURGER: Oh, in a no-fee situation?
6811 COMMISSIONER SIMPSON: Yes.
6812 MR. BURGER: The cost that's borne by us is the transport cost, because it's unlikely that 9(1)(h)'s would be structured in such a way that the -- certainly, a non-fee-earning 9(1)(h) would not have the means to be able to pay for transport and so inevitably somebody has to pay for it, and the range of pricing there -- I don't think I'm breaching any confidentiality -- is anywhere in the range of, you know, 8 to 15 cents, depending on whether you're SD or HD or so on, per home per month.
6813 COMMISSIONER SIMPSON: M'hmm.
6814 MR. BURGER: So there is very clearly a cost associated with that in addition.
6815 COMMISSIONER SIMPSON: And going from that basic cost, is there a formula you can share, without giving away the store, with respect to how you calculate the ultimate retail price on a service?
6816 MR. BURGER: The general rule of thumb -- I mean we do spend some time looking at our competitors and how they price, and of course we don't share the same beneficial pricing on the wholesale side, but I would say that it's consistently north of 100 percent mark-up.
6817 COMMISSIONER SIMPSON: Being newcomers into the market and going back to your expression of concern to keep Canadians in the linear distribution system, you talk a lot about innovation, and I'm not trying to walk into another ad for your service, but what is it that you are doing or you think needs to be done that's not being done by the traditional VI BDUs?
6818 MR. TCHERNOBRIVETS: Perhaps I will answer this question.
6819 VMedia is able to deliver its programming not only through a traditional digital box, which is something that Canadians are used to, these days the service could be delivered through any available TV screen, be that smart TVs, gaming consoles, tablets, cell phones, online access or any variety of available players in the market, be that Rocket Player, Apple TV, Sony TV, all those brands available in the stores. So the technology is there.
6820 And we've only been doing this business for about eight years, being a software company and in these years we have developed all sorts of apps and if we are allowed to deliver our content to those streams, we could make it tomorrow. So, it's just, you know, we are not allowed to do that yet.
6821 COMMISSIONER SIMPSON: And you're not allowed to?
6822 MR. TCHERNOBRIVETS: Well, contractually and there are some other limits.
6823 COMMISSIONER SIMPSON: With respect to your negotiations, right?
6824 MR. TCHERNOBRIVETS: That's right. But if the channel or BDU content was made available to us contractually, then we could carry it and make it available to all those devices and that would give a lot of choice to consumers and a lot of flexibility on how they want to consume that content and where.
6825 MR. BURGER: And there is a range of other innovations that we have available and that we would be ready to implement tomorrow if we did not have constraints which frankly are not regulatory and they are primarily constraints that relate to the rights that we are entitled to exercise with the content that we get.
6826 I think that, you know, we should all probably stay tuned to how we can deal with those innovations. For example, we have PVR solutions that would completely transform the way people deal with time shifting right now.
6827 COMMISSIONER SIMPSON: Um-hm.
6828 MR. BURGER: So, there is -- to answer your question, there is quite a bit that we have up our sleeves.
6829 COMMISSIONER SIMPSON: Last two questions. If there was an imposition coming out of this hearing for some of the mandated services, how would you reflect the cost of those services on your bill? Would it just simply be reflected in an increase in the basic service? Would it be a line item like we have seen in the past where it becomes a CRTC cultural tax? How would you handle that?
6830 MR. BURGER: Sorry, if you mean specifically with any licence that was awarded on this round?
6831 COMMISSIONER SIMPSON: If we --
6832 MR. BURGER: No, we wouldn't break it out. We don't break it out now. We have, you know, the Weather Channel in there and CPAC and so on and so, it's just programming.
6833 COMMISSIONER SIMPSON: And flipping it over the other way, if there were services that are disallowed going forward, this may be -- and you have been around a long time, Mr. Burger -- do you think the industry and yourselves in particular would reduce the cost of Basic if there were -- if there was a lessening of mandated services that you had to provide?
6834 MR. BURGER: I think it's probably unlikely, but I can tell you from our point of view that that would be as much because we would be grateful for the cushion that we would be given for the increases in the private sector content that -- where those prices are constantly going up and to the extent that we have that cushion, we are able to retain our prices at the level that they're at, we would prefer that route.
6835 COMMISSIONER SIMPSON: I have but one more question, I apologize to the Chair.
6836 Cable bills have been going up and this is an across board statement, it's not specific to basic, but it always starts with the basic costs, cable bills it has been argued have been going up at sometimes four or five times the rate of inflation, that they have not been tracking with costs.
6837 Is it your experience that the costs behind from programmers to the cable companies are going up at the same rate or is there something else that we don't know about?
6838 MR. BURGER: We have not done an analysis in terms of how they move in long step, but there is no question that there is a significant upper pressure on content rights, especially in the sports area, so --
6839 But how that's all going to play out over time with other sources of contents that are not I guess conventional in that respect, that's hard to say. But we are dealing with an absolutely scarce resources force and I think that that's the one area where there is the greatest amount of potential sensitivity and risk to our business model.
6840 COMMISSIONER SIMPSON: Um-hm. Thank you very much.
6841 THE CHAIRPERSON: Commissioner Poirier.
6842 COMMISSIONER POIRIER: Yes. I have a question related to francophone services. Do you offer some francophone services?
6843 MR. BURGER: Absolutely, we do, yes.
6844 COMMISSIONER POIRIER: Okay. So, I wonder how you choose which one you offer?
6845 MR. BURGER: At this stage, candidly, it's relatively random because, you know, we hate to plea the proper at every opportunity although it's completely true, but we haven't had a chance to do market research and we don't have a sense of a track record of what our demographic requires.
6846 Specifically, our initial licence was for the greater Toronto area and Kitchener and Waterloo, which does not have a very substantial francophone population, whereas we were just recently awarded an extension of our licence to the rest of Ontario -- thank you to the
6847 Commission -- and we are now in Sudbury and we're in other parts where there is a more substantial francophone population. And so, we are going to be definitely taking out of that.
6848 COMMISSIONER POIRIER: To be more specific, are you offering ARTV?
6849 MR. BURGER: As a matter of fact, we are.
6850 COMMISSIONER POIRIER: Everywhere in all of your markets?
6851 MR. BURGER: Yes, as well as UPA, ARGENT, ADIKTV, there is quite a lot of us, LCN.
6852 COMMISSIONER POIRIER: Okay. And I was wondering related to TV5, okay, they are asking for two feet, okay. What difference would it make for you if we accepted TV5 request?
6853 MR. BURGER: In general principle, I think it would be the same impact. We would be -- instead of being able to offer to our subscribers their selection of which francophone channels they would have, this would be another one where it would be essentially trust on them.
6854 COMMISSIONER POIRIER: Okay. Thank you, Mr. Chair.
6855 THE CHAIRPERSON: Just two quick questions from me, gentlemen. The first one, you know, we are not in the business of licensing applications, APPS, but you wouldn't have thrown this into your presentation if you hadn't done some thinking about it.
6856 So, in developing this idea, have you concurred the issue of how you acquire rights to programming, whether it would be internationally available and how similar or different would it be than the National Film Board's application which they managed to develop a number of years ago to do precisely this?
6857 MR. BURGER: If I may speak to one part of it. We don't mean to be sounding cynical, there is plenty of that around anyway, but the fact is that the claim was made that there is no value to Canadian movies in the television window.
6858 So that would make us assume that any distributor that has got Canadian films on its library would be very happy to give it to us on a revenue share basis and make whatever they can make from that. So, our expectations is that there would be a very considerable supply of those movies.
6859 THE CHAIRPERSON: And have you thought about the international marketplace? Why don't you put it on the content on an application, it could or be GO blocked I guess, be available to international markets?
6860 MR. TCHERNOBRIVETS: Well, yes, currently we do have access to international market and we have been upgrading internationally over the past eight years and certainly this APP would be made available in all those places.
6861 THE CHAIRPERSON: And are you familiar with the NFBs application and how similar would it be?
6862 MR. TCHERNOBRIVETS: Yes, we are. We are familiar with that, yes. I'm sorry, I couldn't hear your question.
6863 THE CHAIRPERSON: How similar would it be?
6864 MR. TCHERNOBRIVETS: Well, we have to look at the content that would be made available to us and, you know, plan the actual design and the flow of the application and, I mean we don't have that answer right at this moment, but --
6865 THE CHAIRPERSON: Fair enough, fair enough. Now, you are the first BDU to be before us, but I will be asking this of all the others, and it's more of an undertaking and there will be a work sheet available soon in digital form, I think, well, through the staff. I'll be able to tell you in a moment exactly how, but also in the Examination Room.
6866 But basically, what we would need is a breakdown from you, that's if at all possible by the 2nd of May, of all the news services and they are identified in the work sheet, and broken by the country of origin, whether they are Canadian or non-Canadian and then broken down between US and non-US, where they are positioned on the channel and how it's distributed as well as the wholesale rate paid to the service.
6867 And it's up to you to decide whether you wish to ask for confidentiality on the wholesale rate, and that work sheet will be available.
6868 And those that are following the hearing have prior notice that I will be asking them, so they can start working on that and it's all for the 2nd. Is that feasible?
6869 MR. TCHERNOBRIVETS: Yes, certainly.
6870 THE CHAIRPERSON: Thank you very much. Those are our questions and we will be taking a 15-minute break, so -- well, not quite 15 minutes. We will be back at 1045 for the next intervention. So, thank you very much gentlemen.
6871 MR. TCHERNORIVETS: Thank you.
--- Upon recessing at 1022
--- Upon resuming at 1046
6872 THE CHAIRPERSON: Order, please. Welcome Mr. Hanks. You have ten minutes to make your presentation and we might have some questions for you. So, please go ahead. Just make sure your mike is on by pressing the button there.
6873 MR. HANKS: Which mike?
6874 THE CHAIRPERSON: Right in the middle, which has a speaking --
6875 MR. HANKS: Hi!
6876 THE CHAIRPERSON: There you go.
6877 MR. HANKS: My name is Jeff Hanks. I am from London, Ontario. I am a nurse. I am just concerned that Sun News is not fair and balanced.
6878 First of all, I would like to say Canada has lost its way in today's world where the governments, silencing watchdogs, scientists, civil servants, charities, tempering with acces-to-information request, stifling debate to send really holding legitimate press conferences. Any information that gets out there has a lot of influence.
6879 When the Harper Government tries to put its Director of Communications in the Chair position of a news network there is concern that the main purpose is to distribute propaganda. There is even great concern when months before the Sun News Network goes on-air there is a mysterious push from out of nowhere, from a government to committee to change the CRTC's regulations to allow the broadcast of false and misleading news.
6880 With great prudence, the CRTC did not give in to this request, but in my opinion, this did not stop Sun News Network from frequently allowing news that is not fair and balanced to be part of their broadcasting and it's for this reason that they should not be allowed to have the mandatory carriage on basic cable.
6881 Recently, Ezra Levant apologized for its hateful and racist remarks on the Roma. This is not the first time he and Sun News Network have attacked groups of people. A gentleman I work with, Dr. Faisal Rehman, found the comments of a guest on Ezra's The Source very hateful with his ideas about Muslims and Islam.
6882 Geert Wilders basically said his culture was superior to that of Muslims and Islam is an ideology of hate, of submission, of violence. He also said if you educate your children with the ideology of hate, referring to the teachings of Islam, we have lost them for the rest of their life.
6883 Telling Muslims they cannot educate their children with the teachings of Islam or the Quran is the epitome of offensive, and no attempt was made to highlight the many positives of Muslim culture or refute this claim.
6884 One of Ezra's commentaries on the Occupy Movement, which I was proud to be a part of, was titled "Mindless Mobs". I have a couple of degrees. So, he went on to say that they were illiterate, dirty hippies, at a dirty semen-staining, overflowing bathroom protest. He made remarks about insight as part of the movement. His colleague, Jackie Delaney said "The people in the park were loser hooligans" and another colleague, John Robson, alluded that they had no brainwave activity.
6885 Every attempt was made to humiliate, ridicule and de-legitimize the Occupy Movement and if his commentary was fair and balanced, there would have been some kind of portrayal of these people as human beings and they would have been given some kind of respect.
6886 I noticed they would look for the weakest person in the group and that had the greatest chance to misrepresent the group as a whole and then that is the interview they would air.
6887 First Nations have also been attacked by Sun News, belittling their hunger strikes, accounting practices and championing them being put in third party oversight, but there is very little mention of the Government's reluctance to let its own parliamentary budget officers see its own balance sheet for things or the Idle No More Movement fight to stop pipelines, toxicity of the tar sands, the harm of trade deals that give away too much and finally, the recent loss of protection of millions of lakes in Canada.
6888 What I found really disturbing, "Ezra Levant on Slander against Canadian troops" was the name of the video, from the source that attacked opposition parties in the CBC for raising the question that Afghan prisoners are probably tortured and if we handed them over then we were guilty of war crimes.
6889 This is not about being against our troops. It is about signing an International Convention on Torture and honouring the agreement. His argument went that if you're against torture, you are against our troops. And I believe he also said there was no evidence of torture.
6890 He asked the Liberals to apologize vehemently and vociferously and a few months later the UN came out with a report that confirmed what we suspected, that Afghan prisoners that we handed over were tortured. You won't see the video anywhere because it has been removed. To see that what kind of outrageous false and misleading news, you won't have to ask them to produce the video.
6891 A news story has come out that the Sun News Network, Ethical Oil campaign and government all have websites that are side by side on servers, meaning that there is close connection between all of them. So, it's difficult to determine where government begins and where the Sun News Network and Ethical Oil campaign ends.
6892 How can Sun News Network remain fair and balanced if it acts as an echo chamber for propaganda from the Government and is being used to further the interest of corporations. The answer is it cannot have people involved in all three groups and continue to deliver news that is fair and balanced, but the truth is it was never created for that purpose.
6893 It was created to present one side of a story only, over and over again. The tar sands are good for the economy, we have to privatize Health Care because it's unsustainable, we have to lower taxes otherwise the job creators won't create jobs. We have to stop the unions because of the greedy union bosses. We have to support Israel and our troops unconditionally. We must stop funding the CBC.
6894 Sun frequently has groups that are funded by corporations whose main goal is to further corporate interests. For instance, they will have people from the Simon Fraser Institute the Canadian Tax Payer Federation or the National Citizens Coalition, whose main goals are to muddy the waters on climate change so their donors, the billionaire Koch brothers can continue to see their interest in the pipelines protected, the Canadian Taxpayer Federation can continue to feign protection of the taxpayer when they are really trying to protect the tax cuts corporations that have taken about $15 billion a year out of Ontario's revenue and starve social programs and the National Citizens Coalition that was formed to destroy Public Health Care.
6895 No attempt is made to make the case to increase taxes on corporations and the wealthy which would increase revenues and decrease the inequality in society, which would decrease the infant mortality, decrease mental illness, decrease crime, teen pregnancy, decrease unemployment, all the social ills, and protect Public Health Care, et cetera.
6896 Canada has a responsibility to the world not to allow a News Network to only show the ethical side of the tar sands. It has destroyed our reputation worldwide.
6897 We have to look no further than the US to see the dangers of letting a news network that is not fair and balanced reach more people because they were an echo chamber in the States when the Iraq War was going on and attack those that dissented and it resulted in the biggest and costliest foreign policy mistake America has ever made.
6898 In the last election, the Conservatives got their majority by 6,000 votes across 14 ridings.
6899 The Sun News Network aired a smear campaign against the leader of the NDP several days before the election. The coverage of his election bid was not fair and balanced. They did not smear any of the Conservatives.
6900 Letting Sun have mandatory coverage will give them the power to affect outcomes of future elections with similar smear campaign and they will use it despite apologies and words to the contrary.
6901 In closing, the close relationship between corporations, the Steven Harper Government, and the Sun News Network have combined to have a toxic influence on Canada and has indeed already taken us to on the road where none of us believe possible for Canada to go.
6902 Sun Network's News that is not balanced attacks environmentalists and the environment, public Health Care and social programs, the unions, Muslims, First Nations, social justice movements, groups like Arabs and the Roma, CBC and people with left-leaning ideals, like Doctor Suzuki.
6903 If we allow them a greater audience and subsidize it, we are poisoning ourselves in the equal society that we would all like to have.
6904 Do we want a society based on hate and false news that is propaganda from governments and corporations, or do we want balanced news that respects people and genuinely tries to get at the truth.
6905 Our society will reflect our choice, so we need to choose carefully.
6906 THE CHAIRPERSON: Thank you,
6907 Mr. Hanks. You know, I noticed that you travelled here from London, Ontario. Is that correct?
6908 MR. HANKS: Yes.
6909 THE CHAIRPERSON: So, I want to thank you for doing that. Not many Canadians put as much effort as you have in participating in our hearing and I want to thank you for that and commend you for --
6910 MR. HANKS: Thank you very much.
6911 THE CHAIRPERSON: You probably may not have had the chance to hear what I said on the record just before Sun presented, but I said two things.
6912 The first one was, contrary to some of the other parties seeking 9(1)(h) applications, Sun already has a licence, and in terms of the content broadcast on Sun, because they already have a licence, there is already a framework to deal with the content which, in your view, is inappropriate and I respect your opinion, that there is already what we do in terms of content, we don't prevent it before it's broadcast, Courts have been quite clear, we don't have a censorship role before broadcast is done, but we do -- we can look at the content after it has been broadcast and we also have the Canadian Broadcast Standards Council that looks at those complaints.
6913 So, I've set out that that's the way to deal with content and --
6914 MR. HANKS: Did Sun News back out of that organization?
6915 THE CHAIRPERSON: No. They are still there. As a condition, they have to be members in good standing of that Association.
6916 MR. HANKS: Thanks.
6917 THE CHAIRPERSON: So, you know, if you or some of your other colleagues have views to be made, I think that would be one avenue, but when we look at the distribution order, the Act actually tells us, the Broadcasting Act which tells us what we can and can't do really tells us we have to respect the freedom of expression and you would agree with me that that's pretty important fundamental premise that we all agree on. Do you agree?
6918 MR. HANKS: Yes.
6919 THE CHAIRPERSON: Now, there have been comments in the past through various judgments that -- in broadcasting and elsewhere in the United States that, in fact, it can be quite dangerous for institutions like us to try to get involved in the actual content on news and public affairs programming and that our job should be to make sure that a variety of views are available in the broadcasting system and so Canadians are exposed to a diversity of views on matters of news and public affairs.
6920 You do not think -- I know you may not want to watch Sun News, you may not want to pay for it, but they do bring a point of view; do they not?
6921 MR. HANKS: Yes, they do bring a point of view. And you know, Conservative, Liberal, NDP, everybody has something valuable that contributes to the sphere of public and, you know, to our society.
6922 My concern is that if the regulation says that you can't produce news that's misleading or false and, you know, people are on their news station saying that climate change doesn't exist, the tar sands are ethical and sort of -- or our like we have to privatize Public Health Care when there is a lot of evidence that says the opposite is true. More people die, it costs more, there is greater patient satisfaction and less poor outcomes if we don't privatize.
6923 If the only one viewpoint's given, then is it -- you know, are you -- like, is somebody looking at the different programs that Sun News does and with that in mind and if they break that, is there a consequence?
6924 THE CHAIRPERSON: Right. How do you get news and information? What -- are you always on -- do you read newspapers?
6925 MR. HANKS: As many different venues as I can.
6926 THE CHAIRPERSON: So, both traditional platforms and online platforms? And do you consider yourself well-served?
6927 MR. HANKS: As in -- well, I suppose I have access to a lot of different mediums for news.
6928 THE CHAIRPERSON: Right. And have you actually watched Sun News Network?
6929 MR. HANKS: I have seen it before.
6930 THE CHAIRPERSON: You are obviously not --
6931 MR. HANKS: I have seen quite a bit of it actually. And you know, when Ezra said there was no torture in Afghanistan, the Liberals and the CBC, they are -- you know, they are not telling the truth.
6932 And then, you know, people think that, yes, you know, there was no torture and we didn't commit war crimes. Like, we did sign that document -- the Convention on Torture and it says if we give prisoners to somebody else and they are tortured, whether we suspected it or not, we are guilty of war crimes.
6933 So, like, if you are not going to talk about that and you're only going to talk about if you're against torture, you're against our troops, it kind of -- it's not balanced. It's one-sided and it can really, you know --
6934 I think -- like, there was a report that came out afterwards, that confirmed that torture happened, so -- and we transferred prisoners to be tortured. So if he can reach millions of people and say it's black when the truth is white and we continue to let that happen, like why do we have a CRTC?
6935 THE CHAIRPERSON: Would you agree, though, on some issues what's black and white is not always clear in the --
6936 MR. HANKS: Absolutely. Absolutely.
6937 THE CHAIRPERSON: And therefore we are best served by a healthy marketplace of ideas?
6938 MR. HANKS: We are best served by a CRTC with teeth that has the gumption to enforce the regulations.
6939 THE CHAIRPERSON: Okay. And you are of the view that we haven't done enough on that score?
6940 MR. HANKS: (Nods head in the affirmative / signe de tête affirmatif)
6941 THE CHAIRPERSON: Fair enough.
6942 MR. HANKS: But, you know what, your job is very difficult and the fact that you didn't allow Sun News -- I guess I forget, they wanted to be -- they wanted news to be not fair and balanced and you guys said no. So, you know, that's huge and that's amazing that you guys had the foresight.
6943 THE CHAIRPERSON: Okay.
6944 Well, your written intervention and your oral presentation this morning has been quite clear and we thank you for participating in the process. It's important and thank you for being there.
6945 MR. HANKS: Okay.
6946 THE CHAIRPERSON: Do you want to add anything?
6947 MR. HANKS: Just if there was -- like say Sun keeps putting out news that's not fair and balanced, is there a court -- like could someone sue the CRTC for not enforcing their own regulations?
6948 THE CHAIRPERSON: There are recourses available against administrative tribunals that don't do their duty, but what I would suggest to you, and perhaps you can touch base with Commission staff that can inform you a little bit more about the complaints process, both directly to us and/or concurrently with the Canadian Broadcasting Standards Council.
6949 MR. HANKS: Okay.
6950 THE CHAIRPERSON: Those recourses are there for you and we listen to both sides and we try to make a fair and balanced decision in the end.
6951 MR. HANKS: Okay.
6952 THE CHAIRPERSON: Okay?
6953 MR. HANKS: Thank you very much for your time.
6954 THE CHAIRPERSON: So thank you very much for your participation.
6955 Madam Secretary...?
6956 THE SECRETARY: We might have to change a little bit the order of appearance, Mr. Chairman.
6957 THE CHAIRPERSON: Okay.
6958 THE SECRETARY: Just for the record, Mrs. Merg Kong, Mr. Dimitri Lascaris and Gustavo Ruiz will be heard later on today.
6959 The next Intervener ready to present is PIAC. I would invite you to come forward to the presentation table, please.
6960 THE CHAIRPERSON: So take your time to settle in there. I know we are going a little faster than foreseen.
6961 I know sometimes we abbreviate things, but I know it's not just the Public Interest Advocacy Centre, but you're also here on behalf of the Consumers' Association of Canada, the Council of Senior Citizens' Organizations of British Columbia, and National Pensioners and Senior Citizens Federation.
6962 Please identify yourselves for the transcript and make your presentation please.
6963 Thank you.
6964 MS LO: Thank you.
6965 Good morning, Mr. Chair and Commissioners of the panel. My name is Janet Lo and I am Legal Counsel for the Public Interest Advocacy Centre or PIAC. With me is Alysia Lau, PIAC's Articling Student. We are here today representing the Consumers' Association of Canada, the Council of Senior Citizens' Organizations of British Columbia and the National Pensioners and Senior Citizens Federation.
6966 We are pleased to appear before you today to share our views on the applications for mandatory distribution on basic service under section 9(1)(h) of the Broadcasting Act. In particular, we would like to share with you Canadian consumers' views on the composition and affordability of the digital basic service today.
6967 The Broadcasting Act articulates the objective of affordability in section 3(1)(t)(ii):
"distribution undertakings should provide efficient delivery of programming at affordable rates."
6968 Our concern with affordability focuses on the entry-level point through which consumers access the regulated broadcasting system, that is, the affordability of basic television service.
6969 Canadian consumers are concerned about the cost of basic TV services and are sensitive to rate increases. Television is important to all Canadians as a lifeline connection to news and information about social and political events in their community. TV is also one of the least expensive forms of in-home entertainment.
6970 Any rate increase to basic television service has a disproportionate impact on low-income Canadians. A rate increase could result in a reduced standard of living in the household in order to maintain the TV subscription, or a household decision to cut the cord and save the monthly expense.
6971 And yet all data shows the trend of rising cost of television services, increasing at a significantly higher rate than other communications services and the Consumer Price Index. Since the Commission deregulated basic television service in 1997, the average monthly rate for basic service has doubled. In our view, this access point to Canadian television, the basic television service, is currently not affordable.
6972 But cost is not the only concern for Canadian consumers. Consumers want maximum choice and flexibility in the television services they subscribe to. PIAC's 2012 consumer survey shows that not only do consumers think the cost of television is too high, consumers are also dissatisfied with the level of flexibility and choice offered for television services.
6973 The Commission has deregulated basic service and packaging requirements and, as such, consumers rely on effective competition in the marketplace to offer choice and flexibility in the packaging of services. However, competition is not working for all Canadian consumers. Increased BDU flexibility has not manifested in more flexible offerings to consumers in the TV distribution market, as BDUs continue to cram more services into basic service.
6974 Consumers want a "skinny" all Canadian basic television service. A skinny basic service would meet Canadians' needs to access essential Canadian television services such as local and regional news and content, educational and community programming and select services that make exceptional contributions to Canada's linguistic and ethno-cultural diversity, all for an affordable price. In our view, a skinny basic service would also give consumers the flexibility and choice to add to the basic any channels that they want. Consumers might be willing to pay for many of the applicants' services if the choice was offered in the market. However, this does not mean that the service should be forced into all basic service packages and paid for by all consumers.
6976 MS LAU: We recognize the value of the 9(1)(h) regulatory tool in ensuring access to services that fulfill the specific needs of certain groups, needs that have not been met in the broadcasting market. However, consumer access to affordable and flexible basic service packages must be a central consideration for the Commission. Therefore, mandatory distribution is a regulatory tool that should be granted on an exceptional basis; the criteria for 9(1)(h) status should be applied narrowly. Furthermore, the full burden must be on the applicants to show that their service meets all of the 9(1)(h) criteria established by the Commission.
6977 In our view, the public interest balance between access to exceptional services and consumer flexibility and affordability can be achieved if mandatory distribution is only granted in exceptional cases.
6978 Many applicants in this proceeding are independent broadcasters and have referenced ongoing challenges in carriage negotiations with BDUs, and the vertically-integrated BDUs in particular. Thus, they maintain that they need mandatory distribution in order to be viable. However, this problem lies in the reluctance of the vertically-integrated BDUs to negotiate fairly with some independent services and should not be addressed with mandatory distribution.
6979 We are very sympathetic to the plight of independent broadcasters; consumers do value their voices. Therefore, we support their request for a separate regulatory framework review.
6981 MS LO: To guide our examination of all of the applications for 9(1)(h) status, we established the following six consumer principles:
6982 Principle 1: Access. Canadians should have access to television services that meet specific diversity, cultural, linguistic and social needs that fulfill the objectives of the Broadcasting Act where those needs have not been met by the broadcasting market.
6983 Principle 2: Affordability. The cost of basic TV services must be affordable so that the cost is not a financial barrier to the ability of Canadians to access broadcasting services.
6984 Principle 3: Consumer Choice. Any restriction on consumer choice or flexibility to select the broadcasting services consumers want should be minimal and necessary.
6985 Principle 4: Competition. Competition is in the public interest if it encourages greater access to vital Canadian programming while passing through efficiencies such as lower prices, greater flexibility and choice to consumers. Where broadcasting needs and policy objectives are not met by market forces, regulatory tools may be needed to ensure that these needs and policy objectives are met. Broader problems with competition should be addressed in the regulatory framework, but not through mandatory distribution which imposes the maximum constraint on consumer choice and flexibility.
6986 Principle 5: Uniqueness. Mandatory distribution status should be granted in exceptional circumstances to meet unique, unmet broadcasting needs.
6987 Principle 6: Transparency. The wholesale rate must be transparent and clearly allocated to make exceptional contributions and commitments to Canadian programming.
6988 We analyzed all of the applications for 9(1)(h) status and chose to support a select few services that, in our view, meet both the Commission's criteria and our principles.
6989 We support renewal of mandatory distribution orders for APTN, Avis de Recherche, Canal M, CPAC, AMI-tv and AMI-,Audio subject to reservations noted in our written submissions.
6990 We also support the applications of the Legislative Assemblies of Nunavut and the Northwest Territories, AMI-tv Français, All Points Bulletin, and ARTV, again with reservations noted in our written submission.
6991 Finally, we urge the Commission to examine the cumulative affordability impact of any applications that meet the 9(1)(h) criteria. An important component of the Commission's analysis will be scrutiny of the applicants' proposed wholesale rate.
6992 However, the Commission's scrutiny cannot end there. BDUs have stated that approvals of 9(1)(h) status will result in a significant increase in the price of basic television services for their customers. We note that many BDUs are appearing next week, with the notable and disappointing exception of Bell who is a major BDU with a large subscriber base. We urge the Commission to ask all BDUs how any wholesale rates approved for mandatory distribution would manifest in price increases at the retail level.
6993 Moreover, the Commission should parse out the components of any markup to the wholesale rate. For instance, it is unclear whether BDUs expect to earn margin for the addition of mandatory distribution services, which consumers would pay for. In our view, it would be inappropriate for BDUs to use any approved 9(1)(h) service as an excuse to increase prices to consumers to expand their margins.
6994 We also urge the Commission to ascertain the current cost and composition of the basic service offered by these BDUs. In our written intervention we compiled the retail cost of basic service in select metropolitan markets for the Commission's information, but our market scan cannot be a substitute for comprehensive and proper information collection by the Commission.
6995 Finally, we urge the Commission to examine BDUs' claims that 9(1)(h) services will restrict consumer flexibility for television services.
6996 With respect, our view is that BDUs themselves control the level of packaging flexibility they offer consumers. Even if a few deserving services are awarded the privilege of mandatory distribution, this would not restrict BDUs' ability to give consumers more flexibility with non-9(1)(h) services.
6997 Thank you for the opportunity to present consumers' views on the cost and composition of the basic service. We welcome your questions.
6998 THE CHAIRPERSON: Thank you very much. And thank you as well to accommodate us by making your presentation earlier in the day. I'm sure there is plenty of other work waiting for you at the office.
6999 I take it then, based on what you have heard so far in the hearing, your position has not changed, that what you have positioned in your written and oral are concurrent?
7000 Is that correct?
7001 MS LO: That's correct.
7002 THE CHAIRPERSON: I always struggle with the word "affordable", because I'm not quite sure how big -- you know, is it bigger than a breadbox, and it really depends on the market and what the offer is. It's part of a larger context and, as well, it really depends on who the consumer is, right. What I may consider affordable may not be for someone down the street, right, or somebody living through a different socioeconomic situation.
7003 So help me understand in your view what the criteria for affordability might be.
7004 MS LO: Affordability has several dimensions, as you have noted. When we look at our work in defining basic services in particular, affordability takes on an especially important dimension. We look at basic services, we are often -- as consumers and consumer groups we look at what is essential. What is essential level of service required for full participation in society and that is sort of how we look at basic service for all communications services.
7005 But we have also looked into affordability and the whole point of defining a basic service is to ensure that everybody, regardless of their income level, can afford to access at least that base level of service.
7006 We have taken a look at affordability in a number of different ways. One way to look at that is the level of income that is being spent on that service as a proportion of income, and through that lens we are always very mindful of the impact on low income or fixed income households because they will spend more in order to preserve that level of service in the house.
7007 So affordability is an interesting question and we have done a lot of work in the past on it.
7008 I came across a really interesting study last night that PIAC had conducted in 1995. We would like to update this research because I realize it it out-of-date, but I think it helps shape a view of what basic service -- the role of basic television and what role it plays for consumers.
7009 We did a survey with low income consumers in 1995 asking them how they would respond to a rate increase for telephone service and we asked them to tell us what they would cut out of their monthly budget. What was very surprising to me when I looked at this survey is that 69 percent of respondents said that they would cut back first on food and clothing before they would cut back on cable television. So I think that sort of speaks to the level of essentiality of the service and the importance of maintaining -- when we are talking about basic service, ensuring that that level of service is affordable for all Canadians.
7010 THE CHAIRPERSON: In your view, should we be looking, when we consider issues of affordability, with technology being convergent, affordability of communications services or should we be looking at merely the BDU affordability?
7011 MS LO: Well, you have before you two Acts, you have the Telecom Act and you have the Broadcasting Act. The Broadcasting Act itself doesn't speak to basic service, but certainly the Broadcasting Distribution Regulations do speak to a basic service and has defined what at minimum must be included in that basic service.
7012 So in the context of this proceeding you are looking at what needs to be in digital basic service, so I think in looking at affordability of digital basic service you have to look at simply affordability of television service. I'm not sure that other factors beyond that in terms of access to Internet for example will factor in.
7013 I can speak from my several conversations with our senior citizens groups in particular, they have stressed to me several times that for their members television is essential, it plays a very important role in their household and so affordability of a basic television service for those groups is very important.
7014 THE CHAIRPERSON: I was wondering if you could help me understand in terms of affordability whether -- and I look at your page in your written submissions, Tables 5 and 6 where you sort of tally up what you would approve -- what in your view you are suggesting we should approve.
7015 If I understand both tables, you tally up the amount and separate them between English and French and it comes out to somewhat less than or around -- less than $1.00 per month.
7016 Is that, in your view, affordability?
7017 MS LO: This is where we get into the black box of pricing.
7018 We decided not to take a view on whether the wholesale rates that were proposed and the ones that we support themselves are affordable. The reason for that is because there is a lack of transparency between whatever wholesale rates the Commission may decide to approve and how it translates at the retail level.
7019 That is the biggest struggle that I try to figure out on a daily basis and my clients are trying to figure out as well. The groups that we work with, they are the ones who get the bills that say this is how much your bill is increasing, and I have seen some that are $3.00 a month, $5.00 a month for television with not much of an explanation.
7020 So I sort of hesitate to say whether these wholesale rates themselves are affordable or not because we simply do not understand how they will translate into actual price increases for individual BDUs and that will impact our consumers.
7021 THE CHAIRPERSON: So you are saying that in fact what might look like, I don't know, a $0.76 increase of wholesale may very well translate in a much higher? I have heard it said that it almost doubles when it gets through the mark-ups.
7022 MS LO: Yes. And I actually heard --
7023 THE CHAIRPERSON: And the taxes of course.
7024 MS LO: And in one case I heard triple. But again, it's anecdotal from BDUs.
7025 I'm not sure how this would factor into other potential price increases they are planning. So I'm not sure if they would, for example, say: The Commission approved these 9(1)(h) services, therefore we are increasing your bills for this much or we have planned another increase on top of that and we will bill it all into one big increase.
7026 THE CHAIRPERSON: Now, you are inviting us in your submissions to have that discussion with the BDUs on how exactly all this is passed through, do you have any suggestions on how we should frame a potential regulatory oversight?
7027 MS LO: As a starting point, information collection is key, so you need to have all the information. Ideally, from the public interest perspective, not only should the Commission have all the information, but the public should have all the information. So I think we need to understand what the BDUs are actually charging when they say "this is basic" and not just simply "This is our discounted bundled price for basic for the first three months of service", but when a consumer is with you for long enough, what is the price. What are the required fees on top of that price, if they are still continuing to charge LPIF or if there are set-box fees or any digital-box fees, that's all factored into the consumer decision.
7028 But I do that you as a Commission need to understand what is the entry level cost for each BDU in the market to a consumer and ideally that should be published so that all Canadians at least know what is a basic service cost.
7029 THE CHAIRPERSON: Right. Some might argue that we have largely deregulated that, that we rely on market forces, that most Canadians have access to at least two BDU service providers, including satellite, and that the market should manage that.
7030 MS LO: In the Commission's decision to deregulate I also noted that the Commission stated that it believed that the market would discipline the price and that's why you made the decision to deregulate. So I think there is a very important condition there and a very important assumption that the Commission believes that the market will discipline prices, so you need to be sure that the market is actually disciplining the prices.
7031 So I don't necessarily see information collection as reneging on a decision to deregulate, I think it is an accountability measure to ensure that the deregulatory decisions that you have made are actually working and to ensure that the market is serving the consumers the way you expect it to.
7032 THE CHAIRPERSON: Which we haven't done for a number of years. Why would we do it now, presumably when there is even more competitive choices?
7033 MS LO: I think the --
7034 THE CHAIRPERSON: Including non-regulated, non-licensed choices.
7035 MS LO: Sure. The trends of increased prices, the fact that television services, in particular BDU services -- the cost of those increasing at a rate that seems to be vastly exceeding CPI is a bit of a red flag for us, in particular.
7036 I would have expected other types of services, like over-the-top, to serve as a potential for further discipline or competition, perhaps some pricing competition in the market to emerge, and that doesn't seem to have happened at the BDU level.
7037 So I do think that the Commission has an important role to play in collecting that information and making it available to the public.
7038 THE CHAIRPERSON: As I mentioned in the opening remarks, there are other ways of doing 9(1)(h) distribution orders other than on basic.
7039 I see that in your submission -- because we did have one here with respect to ARTV, and you seem to be in favour of that.
7040 Do I take it, then, that you are more favourable and, in fact, are neutral when mandatory orders touch anything but basic?
7041 Is your entire position with respect to basic?
7042 MS LO: I would agree with that. I think that speaks to our principle of access. We think that Canadians should have access to services that are in the market.
7043 ARTV wants a mandatory carriage order, or a "Must Offer" status, and that is something we are supportive of.
7044 THE CHAIRPERSON: There are high penetration tiers that are also available, and probably a lot of consumers -- the difference between basic and these extended basics or high penetration tiers is -- as you might be aware, the difference between those isn't always fully understood in the marketplace.
7045 Wouldn't you be concerned, as well, for extended basic-type tiers, or extended tiers, on affordability, because that is what is happening in the marketplace?
7046 MS LO: It's interesting, because I heard extended basic mentioned in discussion yesterday, and I looked it up, and I couldn't find it defined anywhere. So perhaps you could --
7047 THE CHAIRPERSON: It's not a regulatory term, it's just, you know, as part of your -- you know, things are thrown in with what is the basic regulatory requirement.
7048 MS LO: When you say basic, you are talking about section 7, and the regulations -- what is required there, and then the extended basic being everything else that a BDU might put into a basic service?
7049 THE CHAIRPERSON: Correct.
7050 MS LO: We have spoken at length with a number of our organizations, and at the end of the day we keep coming back to -- you know, we agree with what is in section 17 of the Broadcasting Distribution Regulations as what should be required as basic.
7051 In our ideal world, we would like to see that offered as a standalone basic.
7052 On top of that, consumers would be able to pick maybe a tier, maybe a bundle, perhaps theme packs, what have you.
7053 Ideally, I think we would always like to have the maximum choice, which is pay or à la carte services on top of that.
7054 But the smaller the basic service, in our view, the better choice consumers will have in the market, and we suspect that if you have a smaller basic service, the cost of that basic service will also be commensurate with that, so likely smaller, which would free up more discretionary income for the consumer to spend on discretionary services that they wish to add.
7055 That is, ideally, what consumers want from broadcasting services.
7056 THE CHAIRPERSON: Okay. I have two final questions. I know you represent seniors, and that is why I am asking this question.
7057 It has been said by at least two presenters so far, among others perhaps, but two that I recall in particular, Vision and Sun, that more senior Canadians, often perhaps shut in, as well, on top of that -- that we should be particularly concerned about them, and there was a suggestion that we should even require -- should we consider it sufficiently essential to require these 9(1)(h) -- even though it wasn't part of the original process and public notices, that we should actually extend it to analog basic.
7058 Do you have views on that, from the perspective of seniors?
7059 MS LO: We haven't discussed the analog basic, although I think our position applies to that. We have discussed both the Sun and the Vision Television applications with both of our senior citizens' groups, the national organization, as well as the senior citizens' organization in British Columbia, and both of them are opposed to including those services on basic in a mandatory fashion.
7060 Both of those groups have said to me that they would like to have, ideally, a skinny, all-Canadian television package, which would mostly feature local news and community content. And then, if seniors want to pay for Vision Television and Sun News on top of that, that would be how seniors, as well, could exercise their place in the market.
7061 Both groups were quite principled and quite clear to me, in that they didn't think that either service should be included in an expanded basic service.
7062 THE CHAIRPERSON: My last question relates to Table 5 of your written submission. This is your position on new and existing services -- and these were more for the new ones.
7063 For Accessible Media and All Points Bulletin, contrary to a lot of the others that don't have a rate related to basic -- and I understand why you are supporting the Legislative Assembly and the CBC, ARTV, but for the other two, the All Points Bulletin and Accessible Media, you are supportive.
7064 Could you explain to me why you are taking that position, why you think those are of such exceptional importance for achieving the objectives of the Broadcasting Act?
7065 MS LO: Sure. I will start with Accessible Media.
7066 We believe very strongly in the service they have offered on the English side. We believe that their service is quite unique, in the sense that they enable Canadians who could not otherwise access the broadcasting system -- who could not otherwise enjoy it to the full extent that those without visual disabilities could.
7067 We believe that they do provide an essential service in ensuring that all Canadians have access to broadcasting services.
7068 So, for Accessible Media, we are quite happy to support their proposal, although we did note some concerns with the rate that they have proposed, because it is higher on the French service than for the English service.
7069 All Points Bulletin -- we had a look at their past approval for Avis de Recherche, and we believe that All Points Bulletin does play an important service in terms of public safety and safeguarding the social nature of the broadcasting system.
7070 So we believe that All Points Bulletin does provide some very central information, and we are happy to support the All Points Bulletin proposal, although I think that we also noted some concerns with the closed captioning.
7071 THE CHAIRPERSON: Maybe you could help me, because I look at your principles in paragraph 14 and -- could you walk me through how you apply them to All Points Bulletin?
7072 MS LO: All Points Bulletin is not a service that, in our view, would be provided without the market, and we did feel that it broadcasts unique content that would not otherwise be provided by other players in the market.
7073 We did think that it played a fairly important public interest role, just from the public safety perspective of missing persons, as well as crime prevention.
7074 THE CHAIRPERSON: But why should subscribers pay for that, as opposed to the general tax base?
7075 MS LO: We noted your question on the first day, and I did take that to heart, and I have thought about it. I think it is a valid question. I am not sure that it changes our position, because we still feel that it is an exceptional service, because it is unique in nature, and it does appear that it provides access to the basic service objectives that the Commission enumerated, in terms of safeguarding the political and social nature and fabric of Canada.
7076 So we had looked at that service in terms of whether it would exist otherwise in a competitive environment, and how else consumers might get access to that information and that programming in a competitive environment.
7077 THE CHAIRPERSON: And about the other criteria?
7078 Nothing specific there?
7079 MS LO: Nothing very specific, other than access. I would highlight access, simply because consumers wouldn't have access to that service without it existing through 9(1)(h).
7080 THE CHAIRPERSON: Okay. Thank you.
7081 I believe that Madame Poirier has some questions for you.
7082 COMMISSIONER POIRIER: I saw in your application and in today's comments in paragraph 15 that, yes, you would support the renewal of mandatory distribution for APTN. What about the increased rate?
7083 MS LO: We had a look at their increased rate, and we were actually quite pleased that they were able to break it out the way they did, into the three different components. That was a little bit different from the way other applicants had gone about it.
7084 We do believe that they should be able to operate at, at least, the existing level of service that they are now. So we did support in our written intervention the rate increase component that is attributable to sort of keeping them on par.
7085 In terms of the other components, we are hesitant to support them because we are not sure how they would translate, again, at the retail level for consumers.
7086 But I do have a lot of sympathy for the service, and I understand their strategy in terms of reaching youth and building the digital drum. I do understand why that is important to their service.
7087 We haven't decided if we would support that component. I don't think we are explicitly supporting that component. I think we are sympathetic to it, but the most that I am willing to support at this stage is simply the component that keeps them on par.
7088 COMMISSIONER POIRIER: And the total amount would be, then?
7089 MS LO: I would have to double-check, but I think it was 5 cents.
7090 COMMISSIONER POIRIER: Inflation --
7091 MS LO: Yes.
7092 COMMISSIONER POIRIER: -- programming and the new platforms, I think.
7093 MS LO: That's right.
7094 COMMISSIONER POIRIER: Those are the three components.
7095 MS LO: So we would just be approving maintaining the resource base component, to keep it comparable to 2005.
7096 COMMISSIONER POIRIER: Five cents?
7097 MS LO: Yes.
7098 I can't remember what they had in their application.
7099 We are not really in a position to examine whether the rate increase would cover that.
7100 COMMISSIONER POIRIER: Yes, but you would be supportive of an increase.
7101 MS LO: Yes, and we are supportive of the principle of keeping them on par -- maintaining the resource base it needs to maintain its programming.
7102 COMMISSIONER POIRIER: Do you want to give a second thought to that and come back to us with what you support exactly by the end of next week?
7103 MS LO: Sure. For the reply?
7104 COMMISSIONER POIRIER: Mr. Chair, that would be --
7105 THE CHAIRPERSON: May 2nd.
7106 COMMISSIONER POIRIER: I have the same question with the other service increase that was requested by CPAC. They are asking for a 1-cent increase.
7107 What do you think about that?
7108 MS LO: I understood that, as well, to ensure that it continues to be sustainable.
7109 The difficulty, Commissioner, is that we are not really in a position to examine their budgets. That is certainly not our expertise. I understand that the Commission has a bit more expertise than we do.
7110 We are supporting the increase insofar as it goes toward ensuring that they are on a level playing ground, and that is sort of where we defer to the Commission to be able to examine whether that is where the wholesale rate increase would go.
7111 COMMISSIONER POIRIER: But you are not against it.
7112 MS LO: No, we are not opposed to that one.
7113 COMMISSIONER POIRIER: Thank you. Those are my questions, Mr. Chair.
7114 THE CHAIRPERSON: Thank you very much.
7115 We will do one more intervenor before the lunch break, but because it is a videoconference linkup, let's take a quick five-minute break, so that we can organize that.
7116 Thank you very much. And, Ms Lau, I hope you are enjoying your articles. It is strange, the CRTC's Legal Directorate also has an articling student working specifically on this. It must be the sort of file that you find interesting.
7117 Thank you.
--- Upon recessing at 1138
--- Upon resuming at 1143
7118 THE CHAIRPERSON: Order, please.
7119 THE SECRETARY: Mr. Chairman, the next intervenor is Ms Merg Kong. She is appearing from the Toronto Regional Office by videoconference.
7120 Ms Kong, can you hear us well?
7121 MS KONG: Yes.
7122 THE CHAIRPERSON: Okay. We can hear you and you can hear us.
7123 Welcome to our hearing. First of all, I understand that you are attempting to add new documents to the record, which, of course, is something you have to request permission for, and we will not rule on it right away. The panel will take that away.
7124 So, either way, we won't be using these documents until we have ruled on them.
7125 Could you tell me why you weren't able to provide these documents earlier, and why they are relevant to our proceeding?
7126 MS KONG: I didn't provide the third document that I submitted to the Commission because it was not sent to me until, literally, after the deadline.
7127 And the two other documents that I am requesting the Commission to consider, I didn't submit them, either, because of the timing of when I received them, with the exception of the proxy from one director. That was given to me prior to --
7128 THE CHAIRPERSON: Okay. So you did have the document that is dated the 20th of February in time, but you just didn't add it.
7129 Is that correct?
7130 MS KONG: It was sent to a different area of the CRTC, and that person responded a little bit closer to when I submitted my intervention.
7131 It was just the timing.
7132 THE CHAIRPERSON: The other document that you -- which is called a summons, "Citation judicielle(ph)" --
7133 Oh, that's okay. It's Spanish, it wasn't French. That's why I mispronounced it.
7134 MS KONG: Yes.
7135 THE CHAIRPERSON: It's from the San Jose courts. That, too, you did not have possession of in time to add?
7136 MS KONG: I did not have that until I had already submitted my intervention.
7137 THE CHAIRPERSON: Why do you believe that these documents are relevant?
7138 MS KONG: They support governance, which is the only thing that I am discussing today with the CRTC Commissioners in regards to the applicant.
7139 THE CHAIRPERSON: And the other document you are submitting in confidence?
7140 MS KONG: Actually, all three, for the most part, if the CRTC will allow it.
7141 THE CHAIRPERSON: You want to file them in confidence?
7142 MS KONG: Preferably, but the Commission can rule on that, if you wish to do otherwise.
7143 THE CHAIRPERSON: Okay. We will, but why would you want us to consider these in confidence?
7144 What is your argument?
7145 MS KONG: The nature of the civil suit alone, it is a public record, but unless people search that specific civil suit, they normally would not have access to it.
7146 However, I leave it to the Commission's decision whether or not to accept the documents, and then whether or not you want to even keep them in confidence.
7147 I am okay either way.
7148 THE CHAIRPERSON: Okay. So you are not insisting on confidential treatment.
7149 MS KONG: No, I am not. I am not, I am flexible with the Commission's decision.
7150 THE CHAIRPERSON: Okay. As I said earlier, it is not part of the record yet. The panel will have to decide that, so please don't refer to it in your presentation.
7151 I would invite you to go ahead. You have 10 minutes to make your presentation.
7152 MS KONG: Thank you very much.
7153 Basically, I am a disabled female who is a visible minority. EqualiTV and I naturally fit, given EqualiTV International's mandate.
7154 Post a car accident, my health was irreversibly changed. It has been a life-altering experience.
7155 In 2010, I joined EqualiTV and brought my business development, fundraising and IT experience to the organization.
7156 Previous employers include BCE and American Fortune 500 information technology companies.
7157 My intervention today has to do with governance.
7158 The board's duties and liabilities are broad since the position is one based upon trust, expectation their actions are in the best interest of the corporation.
7159 Meeting regulatory requirements are important.
7160 For instance, our own internal by-law at the previous Takten Gyurmey Foundation, now known as EqualiTV International Foundation, By-law 1.17 has not been addressed when it comes to changing the directors that were listed in the 2008 CRTC application for Category 2 approval.
7161 Also, the witness that supposedly witnessed the document does not recall having done so. That's Mark Mackay. He is a director of record still.
7162 The 2004 board had no vacancy, directors of record never resigned, nor were they removed according to By-law 1.17.
7163 In 2011 there was an AGM with the charity. Four out of the five directors were informed and did actually attend in person. At the conclusion of that AGM the Chairman Rinpoche actually requested in an October 11, 2011 email that all the attendees refrain from making changes till his return in 2012 return.
7164 There has been, unfortunately, within the organization of the charity that has applied for mandatory carriage 9(1)(h) an inconsistent recordkeeping.
7165 The 2008 CRTC application states, for instance, Edmond Marc Du Rogoff is a 2006 director of record, whereas Jerry Ford, who you have already met, is not listed. The 2007 CRA record lists Edmond as a current director, 2008 omits him. Then in 2009 the CRA documentation lists him with an end date of April 15, 2005. All these changes curiously occurred within the period of January 30th, 2013.
7166 What is even more odd is the fact that Jerry Ford was omitted off the 2008 CRTC application. All the paperwork seems to contradict itself. Basically, Jerry Ford is an unsanctioned director.
7167 All these processes or steps taken by the unsanctioned board at this point, I'm alleging is contrary to the CRA Income Tax Act when operating a charity and Industry Canada Not for Profit Corporations Act and I've given a few examples of the discrepancies that I've located on the CRA 2007 filing, CRA 2009, and also Industry Canada's profile on the charity itself. There's a few discrepancies on that site.
7168 When it comes to the actual February 13, 2008 CRTC application, it is not inaccurate despite the chairman or president, self-appointed, Sheila Richardson signing that she had full knowledge of all matters declared therein because of these discrepancies for the board members alone.
7169 Per our By-law NFP 29, there are requirements for a quorum for any decisions to be made in regards to recordkeeping or changes and certainly removal or addition of directors.
7170 NFP 34 permits, for instance, proxy sharing. However, it's only during an AGM and the by-laws themselves for the charity have to actually reflect that this can be done.
7171 The Not-for-Profit Corporations Act was in force since October 17, 2011. NFP item 13 names five requirements to comply with this Act. One specifically requires a minimum of three directors, two of them who are not officers or employees of the corporation or its affiliates. There has been an absolute non-compliance with that alone as Sheila Richardson, Jerry Ford and Walter Giacomini all are both directors of the Foundation and also on the affiliate, intermediary or the corporation itself.
7172 Basically, from a recordkeeping standpoint again, Mr. Giacomini was added as a director dated July 26, 2012 for a 2011 CRA filing that the charity has to do every year for records and to comply with the CRA requirements. It's odd because how do you have a post-dated director? I mean it doesn't make sense.
7173 Basically referring to NFP 39, voting of officers/chairpersons is by directors. At the point of each of these new directors that have since been added since the application in 2008 to the CRTC, they have not had enough votes to actually install Ms Richardson or any of the folks that have since changed from the application that was submitted from a directors' perspective.
7174 Hence, Sheila Richardson's position and even the current CEO -- I'm losing track of who's who right now -- they're essentially invalid.
7175 And the charity itself, the de facto directors, they have not chosen the intermediary nor authorized its name to be used by it.
7176 Current by-law 1.22 permits the Foundation chair to have two votes and a minimal of three directors have to be voting. So there really hasn't been an opportunity for the current board to actually install new members, change the majority of the names within the charity itself, for instance, moving it from Takten Gyurmey to EqualiTV International Foundation. There just has not been a compliance with the regulations and steps required.
7177 Moreover, the Foundation's required resignation By-law 1.5 and also NFP 9 specifically state that there is a requirement for a quorum to make any director changes and such, and the general rule that the members must elect the directors means that it is not permissible to have ex officio directors, and at this point those before you, although they didn't differentiate who they were, are essentially ex officio.
7178 NFP 44 requires directors to maintain their documentation on the charity to comply with the articles and the purpose of the corporation, and they're also required to remain informed, and unfortunately there hasn't been a very good communication between the de facto directors and those who chose to make the various changes that have occurred with the charity since even the 2008 application.
7179 When it comes to the mandatory carriage application itself, item 12 actually strays from the original charity's mandate per section 1 of the CRTC application, most notably:
"It is understood that the charity would recruit third parties to run the businesses with the charity remaining as the financial accountability centre and reporting station."
7180 There has been a real disconnect in that respect because the charity's de facto directors were not informed of the details of all these changes, they just occurred.
7181 When it comes to governance, again, especially in regards to an intermediary, the problem that exists right now with the existing structure at the Foundation is that we have people with signatory authority within every third party group or the Foundation itself or intermediary. In addition, you have unsanctioned directors such as Jerry Ford and Walter Giacomini who sit on both sides of the house and essentially this contradicts the Not-for-Profit Act item 13 where they suggest a maximum of two directors do share those types of responsibilities.
7182 THE SECRETARY: Excuse me, Mrs. Kong.
7183 MS KONG: Sorry.
7184 THE SECRETARY: Excuse me, you have one minute remaining. Can you please conclude your presentation?
7185 MS KONG: Sure.
7186 Essentially my concern has always had to do with governance with the organization. The opportunity to have mandatory carriage was very exciting. However, given the representatives who came before you and those who are the de facto members of the Foundation, we only ask the CRTC at this point to consider somehow allowing us to make the reparations needed to potentially maybe either reapply or have it defer our application.
7187 The problem that existed was that the de facto directors, ironically, didn't have the signatory authority to challenge everything that has occurred, because the people who did make those changes, they had it, they had the signatory representation.
7188 So thank you.
7189 THE CHAIRPERSON: Well, thank you. Your position is quite clear.
7190 So you are supportive of this service but not by these applicants?
7191 MS KONG: No, and that's the primary concern. And it's taken about a year for us to actually get to know each other. I'm not a board of director. However, I have certainly been in communication with everybody that you have on record within the original 2008 application.
7192 THE CHAIRPERSON: Okay. Well, your position is --
7193 MS KONG: So it's outside of those that I'm concerned.
7194 THE CHAIRPERSON: Yes. Your position is quite clear and I don't think we need to ask you any further questions of clarification. You've done a very good job in outlining your position and I want to thank you for participating in our hearing through the regional office in Toronto.
7195 MS KONG: All right.
7196 THE CHAIRPERSON: So thank you very much.
7197 MS KONG: All right. Thank you very much for your time.
7198 THE CHAIRPERSON: We will now take a break until 1:00 -- 1:15. Okay, 1:15. It's because there's logistic issues here. So we'll break till 1:15 and continue with the next interveners.
7199 And those are all lined up, Madam Secretary?
7200 THE SECRETARY: Well, technically, the next intervener will be Mr. Gustavo Ruiz, but we haven't heard from him yet. So we'll see after lunch.
7201 THE CHAIRPERSON: Okay. Well, we'll be here at 1:15. I warn everyone who was supposed to appear today that they should be here because we will keep going through the published agenda for everyone that was supposed to appear today and then we'll adjourn for the weekend. Thank you.
--- Upon recessing at 1200
--- Upon resuming at 1315
7202 LA SECRÉTAIRE : À l'ordre, s'il vous plaît. Thank you.
7203 For the record, I would just like to inform you that we're experiencing some logistical issues right now. So the Commission will convene at 2:00 p.m. this afternoon.
7204 Je voulais seulement annoncer que nous avons quelques petites difficultés techniques présentement, et nous reviendrons à 2 h cet après-midi. Merci.
--- Upon recessing at 1316
--- Upon resuming at 1400
7205 LE PRÉSIDENT : À l'ordre, s'il vous plaît.
7206 Hi there. You're Tyna McNair, is that correct? Yes. Can you hear us?
7207 MS McNAIR: Yes, I can now.
7208 THE CHAIRPERSON: Okay. And we can hear you as well. So welcome to our hearing.
7209 MS McNAIR: Thank you.
7210 THE CHAIRPERSON: Please go ahead and make your presentation. You have 10 minutes and we'll see you after that.
7211 MS McNAIR: Yes.
7212 THE CHAIRPERSON: Okay, thank you. Go ahead.
7213 MS McNAIR: Great. I'm going to go through the slides quite quickly for the first bit, so please don't ask what page number I'm on.
7214 So again, I'm Tyna McNair from Vancouver, Canada. I have no party affiliation with Sun Media, their parent company or any of the competitive media as well.
7215 Slide 3. I have broken it down -- can you hear me okay?
7216 THE CHAIRPERSON: Absolutely. Go ahead.
7217 MS McNAIR: Wonderful!
7218 I've broken it down into four areas that we'll run through and I'm just going to touch on each slide: so, Sun Media, the Canadian deficit, media in the year 2012, and articles pertaining to Sun Media.
7219 Slide 4. This is what Sun News is known for, both in the U.K. and Canada, which is tabloid journalism. This is fine as an adult, we can make our choices. However, this is also seen by children under the age of 15, which I do have a problem with.
7220 Slide 5. Again, in regards to tabloid journalism, there's a lot of comments that are made and catchy titles that are given that really aren't news, they're just commentary.
7221 Slide 6. This is one that's for instance. I've been following both of these gentlemen on Twitter for approximately eight months and saw the unravelling of our former Senator. This is partisanship in a very negative way and there was never news. It was a lot of opinions and mud-slinging, unfortunately.
7222 Page 7. This is another one where there's inaccurate statements made from Sun Media and threats of lawsuits and retractions made.
7223 Slide 8. This is another one in which Mr. Levant had made a statement and the Canadian Broadcasting Standards declared his outburst a violation of ethical standards.
7224 Slide 9. In one program their former host Krista Erickson received over 6,000 complaints to the CRTC.
7225 And then we all know about slide 10, the fake citizenship ceremony. So somehow they missed the real one and decided to have people from Sun Media participate in a citizenship ceremony, and that's been widely reported.
7226 Page 11, slide 11. Then in late fall or I guess early -- sorry, early 2012, we heard an apology for the comments made with Roma through the CRTC, which is very timely with their application for mandatory carriage.
7227 Slide 12. When you go onto Sun Media News this is what you'll see, which are comments such as "The Battleground," "The Source," "The Arena," which again imply controversy, but with that they also quote "providing strong and balanced opinions." So let's look at that in detail.
7228 So this is Sun Media and that's slide 13 or page 13. All of these are resources, so you can go back and find the link if you'd like after, but I'm just going to touch on them shortly.
7229 So in 2011 there was more complaints about Sun Media to the CRTC than there actually was viewership. In 2011, the Huffington Post reported that Sun Media only had .1 percent viewership as compared to CBC at .4 percent. So their viewership is still quite low.
7230 A journalist at Ryerson called Janice Neil actually said they are so high in ranting and opinion that it's difficult to wade through and find what should be fair and balanced.
7231 Also make a note that from their website, their parent company, Quebec Media Inc., their revenues for 2012 are up 3.5 percent to $145 billion. Yet, Sun Media has a loss of $17 million and they've also received over $5 million in grants from the Canadian government in the last five years.
7232 Slide 14 or page 14. In their latest press release to gain mandatory carriage, Sun Media said they do not begrudge their competitors. However, there's plenty of information in which they accuse CBC of political bias and constantly print articles in regards to that.
7233 When we talk about media bias, there's a group called the Sixth Estate that went through all the major newspapers and showed that all Canadian news media outlets do have a bit of a Conservative bias, which is fine, but Sun Media does have the highest percent, and you can check that stat there.
7234 Along with that, Mr. Levant's book "Ethical Oil" was prominently featured in Sun Media over a five-month period, and when research was done it was found to have 50 party affiliations to the Conservative Party.
7235 Along with that, we're all aware that the CEO and Vice-President of -- well, I think he's changed his title now -- Sun Media also used to be Director of Communications for Stephen Harper. So there is a lot of bias and not so fair balanced.
7236 Page 15. I know we all move into different job areas and things change but it is important to note that the CEO of Quebecor, a profit-generating company, did work for the CRTC and does have a lot of inside information on application processes.
7237 And along with that, the former CEO, there's an article stating that he was asked to step down basically from Sun Media with conflicts with that.
7238 So there is a lot of information and it doesn't seem to be very well balanced in terms of Canadian content opinion or facts.
7239 Slide 16. I've lived in Alberta as well as B.C. and I'm very aware of the Western Standard. So both the Western Standard and Alberta Report, Mr. Levant has worked for. Both of them are now defunct and I'm just not sure why we should be paying for media that is eventually probably not going to be substantiated.
7240 And again, another comment on media bias. Michael Coren, I've listened to many topics that he's given on CBC, on different radio stations -- I follow politics quite closely -- and it is very hard for him to separate his opinion from his political beliefs.
7241 Page 18. It's no surprise that in this day and age in Canada we're facing the toughest and highest deficit that we ever have. Under Policy Alternatives, they list that cuts have been made to Statistics Canada, the Public Service Centre, Environment Canada, international aid agencies, employment centres and different foundations, just to name a few. At this point it makes me wonder how we can justify or the CRTC can justify spending money on a revenue-losing company.
7242 19. I believe that CBC used to have mandatory carriage but they do not now, and in all the trends, if you look at the resources that I provided, there has been an increase in cable viewership very slightly but the overall trend is to decreased viewership for cable. So I know a lot of people in my general population that don't even have cable anymore. They're moving towards Apple TV, they're moving to Internet streaming. So it is an area which they are losing viewership, thus revenue long term.
7243 Page 20. One thing that was very surprising to me, and I'm glad that you guys brought it up, is that on Tuesday you asked Sun Media and their parent company why they're not on their own cable company Videotron.
7244 There have also been issues with Avaaz, the online petition where they have asked for a probe in which Sun Media was tampering with the Sun TV News petition.
7245 And again, with media in the year 2012, just yesterday from the Province newspaper and the Sun it was quoted that they believe their business is unsustainable and 80 percent of Sun Media and Sun Media Network is print newspaper. So when they are running at a revenue loss, why are we going to support a dying media format?
7246 Page 21. These are just articles that I have found and there were so many it was hard to go through to find out which ones would be useful or not, but it just discusses the trials, tribulations and any kind of controversy in terms of Sun Media. Tabloid journalism is not news in Canada.
7247 Page 22. The second point there is that Sun Media is already charging for content for many different platforms of their media and yet they're still losing revenue. They also cut over 500 jobs in 2012.
7248 There are so many reports I don't even know where to start about Sun Media attacking CBC and not providing balanced news with that. I really don't thing that's something that we should be supporting. It's just -- it makes no sense to me.
7249 It's very disturbing also to me that they did not participate in the Canadian Press contract negotiation, which is the standards such as in the U.S., as the Associated Press, and now there's an article discussing how Quebec Media Inc. would like to take over the Canadian press group.
7250 Page 23. This is all about Mr. Levant and many different articles that have been posted about him, and he continually gives opinions versus facts, and he does not apologize and he has hateful rants. I do follow him on Twitter and it's very disturbing to me that this is the kind of news that is going to be promoted publicly.
7251 Page 24. Chris Waddle of Carleton University made a comment:
"It is possible that Sun News and owner Quebecor Media Inc. could still make money without anyone watching through media carriage."
7252 So Canadians will be paying for them to be publicized and make money off taxpayer dollars and yet their viewership is quite low.
7253 I'm not willing as a Canadian taxpayer to support Sun Media while their parent company is still making a profit.
7254 And to keep it nice and short, my last page there, you can read it, I have just concluded the things that I found important and why they shouldn't be allowed to have public mandatory carriage in Canada and I don't think that we should move forward with that application.
7255 And that's it. Thank you.
7256 THE CHAIRPERSON: Thank you very much, Ms McNair. The Vice-Chair will have a few questions for you.
7257 COMMISSIONER PENTEFOUNTAS: Hi. How are you? Hello?
7258 MS McNAIR: I'm great, thank you.
7259 COMMISSIONER PENTEFOUNTAS: Thanks for joining us.
7260 I can't go through all your 25 pages but just maybe a couple of questions.
7261 MS McNAIR: That's fine.
7262 COMMISSIONER PENTEFOUNTAS: We understand your position. It's pretty clear.
7263 MS McNAIR: Yes.
7264 COMMISSIONER PENTEFOUNTAS: But in terms of the Sunshine Girls, I don't know that there are that many Sunshine Girls on Sun TV News.
7265 MS McNAIR: They're still part of the media group that is part of it and they are not because they have to pay for it now.
7266 COMMISSIONER PENTEFONTAS: Okay. So, there are no Sunshine Girls on television, on Sun TV News. Is that correct? Would you agree with me?
7267 MS McNAIR: No, it's just newspapers.
7268 COMMISSIONER PENTEFONTAS: Newspapers. And on the newspapers, do they still have the Sunshine Girls? Or did you say that they don't have them any more?
7269 MS McNAIR: I thought they still do.
7270 COMMISSIONER PENTEFONTAS: Okay, I don't know. Okay.
7271 MS McNAIR: As far as I know, they do have them.
7272 COMMISSIONER PENTEFONTAS: Okay. So, that's not really an issue in terms of Sun TV News. Is it?
7273 MS McNAIR: Well, it's still the same group, is it not? Under the same umbrella?
7274 COMMISSIONER PENTEFONTAS: Yes. You mentioned that -- I think it was Quebecor has received over $500 million in subsidies over the last five years. Is there documentation to support that?
7275 MS McNAIR: All the links will be there that does support that, yes.
7276 COMMISSIONER PENTEFONTAS: Okay. And how would you calculate what constitutes subsidies, from your perspective? How do you qualify a subsidy?
7277 MS McNAIR: It's an article that was -- okay. This was an article that was published with the Huffington Post and if you would like, I can ask the writer of that to send that to you and they can send you that information.
7278 COMMISSIONER PENTEFONTAS: Okay. You also mentioned that there are 50 party affiliations with respect to Ethical Oil and -- what -- how is the link there with the network, with the news channel in that they are talking about the book that one of their presenters published? What's the problem there?
7279 MS McNAIR: The more research that I went into and the more I looked into Sun Media and different areas such as the CRTC, the more I realized there was a lot of partisan relationships that are there.
7280 So, when you look behind some of the supporters, whether it's websites, whether it's funding, whether it's writers behind all of these ethicaloil.org websites, they are supported by people who either have party affiliation to the Conservative Party and/or have worked previously for the Conservative Party.
7281 COMMISSIONER PENTEFONTAS: And that's available? And that's available somewhere? You could send us the link that shows that there were 50 party affiliations with -- go ahead.
7282 MS McNAIR: Yes, the link is there, but again I can contact the writers of these articles and ask them for more information, but this is what I found over the last months of researching.
7283 COMMISSIONER PENTEFONTAS: Okay. And then, you know, page 15, you're throwing out all kinds of theories about former chairs and their implication in something that resembles some kind of sort of conspiratorial approach to the issue. You talked about Françoise Bertrand who was chair -- I don't know, twelve years ago, I guess, was when she last left. You talked about the previous chair, but isn't that a little gratuitous, with all due respect?
7284 MS McNAIR: Okay. Well, first of all, I did not make any theory with that. I stated the fact that she had worked for the CRTC and now is the Chair of Quebecor.
7285 COMMISSIONER PENTEFONTAS: Okay. So?
7286 MS McNAIR: So--
7287 COMMISSIONER PENTEFONTAS: What's the link we, or the general public should make? Why would you make that?
7288 MS McNAIR: So, my comments -- my comment with that, Sir, was simply that she would have a lot of access and knowledge to the CRTC application process.
7289 COMMISSIONER PENTEFONTAS: Okay. I think we could go on page by page, but I think we understand your positions. We appreciate it and we thank you so much for joining us today. I don't know if some of my colleagues may have some questions.
7290 THE CHAIRPERSON: No. I think that those are our questions, Ms McNair. I thank you very much. So, your position is quite clear.
7291 MS McNAIR: Yes, it is.
7292 THE CHAIRPERSON: And thank you for following our proceedings, and as I have mentioned to others, the number of questions is generally inversely proportional to how clear your position is. So, just because there are a few questions, it doesn't mean we don't understand your position. It's quite the opposite. so, thank you. Thank you very much.
7293 MS McNAIR: And thank you, and I would just like to say that I did add the resources to everything that I have had there and if there is more information required, please e-mail me and I will provide that or put you in contact with the writer of the article.
7294 THE CHAIRPERSON: Thank you for that offer and as well thank you for participating in our proceedings through our video conferences in Vancouver, we appreciate it.
7295 MS McNAIR: Great. Thank you very much for having me.
7296 THE CHAIRPERSON: Thank you. Madame la secrétaire.
7297 THE SECRETARY: We now have
7298 Mr. Dimitri Lascaris appearing by Skype, Mr. Chairman. I think he is connected. Can you hear us, Mr. Lascaris?
7299 MR. LASCARIS: Yes, I can.
7300 THE SECRETARY: So, you can go ahead with your presentation. You have ten minutes.
7301 MR. LASCARIS: All right. First of all, thank you for your patience and your indulgence. I know you had to do some reorganizing to accommodate me. I much appreciate that.
7302 By way of background, I am a Canadian Citizen and resident of Ontario and a practising lawyer. My legal practice, however, is focused on Securities Class Actions and I have a very limited experience in Canadian Broadcasting Law.
7303 Having said that, I do have some experience with broadcasting inasmuch as I am a Board Member and a financial supporter of the Real News Network. This is a television news and documentary network focused on providing independent journalism, and the defining characteristic of the Real News as it does not accept advertising or government or corporate funding.
7304 Although I am a Board Member and a financial supporter of the Real News, however, I have not intervened in this application as counsel to the Real News, as a representative of the Real News or, indeed, as counsel to any other individual or entity, and I am not receiving any compensation in my capacity as a lawyer or otherwise in connection with this intervention.
7305 Rather, I am intervening in this application for one and simple reason, and that is in my submission that the Sun News application is profoundly contrary to the purposes of the Broadcasting Act as I understand them and to the public interest.
7306 As this Commission is undoubtedly aware, Section 3(1) of the Broadcasting Act states in part that:
"It is hereby declared as the broadcasting policy for Canada that..."
7307 Clause (d):
"the Canadian broadcasting system should
(i) serve to safeguard, enrich and strengthen the cultural, political, social and economic fabric of Canada,
(ii) encourage the development of Canadian expression by providing a wide range of programming that reflects Canadian attitudes, opinions, ideas, values..."
7308 -- and I stress values -- as well as:
"(iii) through its programming and the employment opportunities arising out of its operations, serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children, including..."
7309 -- and I stress --
"...equal rights, the linguistic duality and multicultural and multiracial nature of Canadian society and the special place of aboriginal peoples within that society..."
7310 Further, as stated in Notice of Consultation 2013-19, there are three criteria for assessing this application and the first of them is whether the programming service:
"...makes an exceptional contribution to Canadian expression and reflects Canadian attitudes, opinions, ideas, values and artistic creativity."
7311 In my submission, therefore, this application raises squarely the question of Canada's identity and values and any such application does.
7312 The question of what it means to be Canadian undoubtedly generates different answers, depending on which Canadian you ask, but I would submit to you all that there are certain core values to which virtually all Canadians ascribe and certainly ought to ascribe, and that lie at the heart of our identity and, in my submission, one such value and perhaps the over-arching Canadian value is tolerance.
7313 This brings me to an individual of whom you have heard much today, Mr. Ezra Levant. Mr. Levant's program, The Source, is the flagship program of Sun News, as I understand it, and as is demonstrated by the fact it is listed under "Primetime" on the Sun News Network website as the first of its primetime programs.
7314 Furthermore, on that website of Sun News, Mr. Levant's program is described in the following terms:
"Your go-to controversially Canadian content. The Source is set to be the most provocative and thought changing multi-media show in Canada. What are the foundations of our freedom and where are those freedoms under siege? In answering these critical questions, professional pundit and provocateur Ezra Levant turns conventional Canadian values and beliefs on their head with a cultural counterspin you won't find on any other network."
7315 So, we can see that Sun News quite proudly declares on its website that Mr. Levant turns conventional Canadian values and beliefs on their head, which in my submission is essentially an acknowledgement by Sun News that the objective of its flagship program is not to preserve, promote and strengthen traditional Canadian values, but rather to subvert them and to substitute in their place a belief system which posits that our basic freedoms are under assault from some sinister group and that this assault should be our constant fear and preoccupation.
7316 Now, if confirmation were needed that the face of Sun News is seeking to subvert the core Canadian values, you have only to listen to what Mr. Levant has to say and then, as we now know only too well, in September of last year, Mr. Levin unleashed what can only be described as a racist and profoundly uncanadian rent against the Roma people. This nine-minute diatribe included the following two statements:
"First, gypsies aren't a race, they aren't a religion, they aren't a linguistic group, they are the medieval prototype of the Occupy Wall Street Movement, a shapeless group of hobos that doesn't believe in property rights for themselves or for others. They rob people blind."
7317 And next, Mr Levant was quoted a saying:
"These are gypsies, a culture synonymous with swindlers. The phrase "Gypsy" and "cheater" have been so interchangeable historically that the word has entered the English language as a verb, he gypped me. Well, the gypsies have gypped us, too many have come here as false refugees and they come here to gyp us again and rob us blind as they have done in Europe for centuries. They are gypsies and one of the central characteristics of that culture is that their chief economy is theft and begging."
7318 It was painful for me to have to say those words and I hope it was painful for all those who heard them to have to endure their repetition, but I would have to say them and we all have to say them in the context of this hearing, so that Sun Media can be called upon to explain to us today how these statements are even remotely reflective of Canadian values and particularly the core Canadian value of tolerance.
7319 Now, while it is true that on March 19th of this year, Mr. Levant publicly expressed regret for the statements, one must ask a few questions about that expression of regret.
7320 First, was it sincere? Mr. Levant made his comments about the Roma people to a national audience on September 5th, 2012, but did not issue a statement, to my knowledge, of regret until more than six months later.
7321 Did it take him six months -- did it take six months of pressure from the public and from his employer, presumably, to realize -- for him to realize that his comments were deeply offensive. Was this not apparent to Mr. Levant the moment those hateful words crossed his lips?
7322 A second question to ask is: Was Mr. Levant's expression of regret enough. It is important to note that Mr. Levant's apology, if it can be termed that, was coupled with the statement that he remains concerned "about immigration, fraud and crime gangs", and in my submission it was wholly inappropriate for him to express that concern in the constant apology to the room of people because the expression of that concern in that context had the potential to leave his audience with the impression that the group to which he was purportedly apologizing bears some particular responsibility for immigration, fraud and crime gangs.
7323 But finally, and most importantly, even if the statement of regret was sincere, and even if it was untainted by an insinuation that the room of people bears some particularly responsibility for immigration, fraud and crime gangs, that statement was not, nor could it ever be, enough.
7324 My basic proposition to this Commission is that it should have zero tolerance for racism in Canadian broadcasting. Racism is not baseball and those who encourage it should not get three strikes before they are called out by the CRTC.
7325 A broadcaster that provides a national platform to someone who slanders an ethnic or religious group should be denied maturity distribution, even if the broadcaster manages to coax an apology out of the person who uttered that slander. A license to broadcast is a privilege and mandatory distribution is an extraordinary one at that.
7326 Moreover, Mr. Levant's diatribe, in my submission, was but an extreme example of Sun News' abuse of its broadcast privileges and its (off microphone).
7327 Sun News engages in scaremongering that polarizes our social and political discourse and pits group against group and fans the flames of intolerance in regard to other religious groups, including Muslims. It does so through its relentless and bombastic coverage of Islamic extremist threats, both real and imagined, and what appears to be an utter indifference to the violence and injustice that western governments and their proxies have sometimes visited upon innocent Muslims around the world.
7328 Sun News is slowly but surely elevating the risk in this country of the marginalization of vulnerable groups, including the Muslim community and of the erosion of Canadian civil liberties.
7329 It is not the embodiment of Canadian values, whatever its application to this Commission may suggest, it is the very antithesis of them. It is a sickness that has infected Canada's broadcasting industry and the rejection of this application is the beginning of its cure.
7330 Thank you.
7331 THE CHAIRPERSON: Thank you very much for your presentation.
7332 I believe Commissioner Simpson will be asking you a few questions.
7333 COMMISSIONER SIMPSON: Good afternoon, Mr. Lascaris.
7334 MR. LASCARIS: Good afternoon.
7335 COMMISSIONER SIMPSON: Thank you very much for your intervention.
7336 As the Chair has echoed, we truly value anyone and everyone who wants to take the time and the interest to come before our hearings. We take everything at highest consideration and your points have been noted and are on the record and are well understood.
7337 I would like to, if you will permit me to ask you a few questions that will help clarify my understanding of the point you are taking.
7338 I want to get into the issue of free speech and why you feel that there is a time when this Commission should -- or the broadcast industry shouldn't tolerate free speech, particularly if it has to come at a price tag through mandatory carriage.
7339 Where you feel the line is being drawn here?
7340 MR. LASCARIS: Well, our legal system, as I'm sure you all know, imposes quite significant restrictions on free speech and in fact our Criminal Code goes so far as to criminalize hateful speech in certain circumstances. So the right of free speech, as extraordinarily important as it is, particularly in democracy, must be subject to reasonable limits. It should be with great hesitation.
7341 I frankly acknowledge that this Commission (off microphone) governmental body should impose limitations on free speech, but there is a line that cannot be crossed and when that (off microphone) when someone ventures into realm of promoting hatred of any particular group, vulnerable or otherwise, that is when an organization of this nature has to step in and take decisive action.
7342 In my submission, the only rational conclusion, if one looks objectively at the words that were spoken, it was a 9 minute rant against a room of people. And if one looks hard at what was said, it's extraordinary difficult not to come to conclusion that that speech, that diatribe, had the potential to promote hatred of that group.
7343 COMMISSIONER SIMPSON: Thank you.
7344 This Commission, while it is concerned, it doesn't preoccupy itself to the extent that it legislates content, we have checking mechanisms and balances that take care of that supposedly.
7345 CBSA, which has been referred to earlier to the previous intervener, is the first system where that organization has been set up, much like the Bar Association, so that the first line of defence is one of self-correction where the industry itself takes it upon itself to fund and administer an organization that will police the actions of its members. And of course if that doesn't work it then comes back to us. We have also the mechanisms of the Human Rights Tribunal and a lot of other checks and balances.
7346 If I may venture to say, this country has probably more checks and balances in place to not only protect on one hand the right of freedom of speech, but also to try and corral or put a fence around what might be offensive or abusive.
7347 So I'm trying to pull apart the issue of why they shouldn't be on the air from your concern that they are somehow subverting the values of this country.
7348 MR. LASCARIS: Well, I take you back to statutory mandate of the Commission, sir, and of the criteria that the Commission has determined should be applied in circumstances of this nature. As I understood those criterion -- and as I said at the outset, I don't purport to be an expert in this area -- I understand that a functional objective in the context of the decision you are called upon to make here is to ensure that Canadian values are promoted, preserved, strengthened.
7349 I think and I hope that we can all agree that tolerance is one such value and giving mandatory distribution -- the privilege of mandatory distribution to a network that has provided a platform to an individual who is capable of not only harbouring such thoughts but expressing them quite emphatically to a national audience is, in my submission, contrary to the core objectives of the mandate of this Commission inasmuch as it is submersible of values.
7350 I understand that there are other organizations, organs of the state that play a role in protecting people against hate, but I believe that this Commission also has a role to play and that role comes into play when the boundaries of subverting fundamental Canadian values have been crossed.
7351 COMMISSIONER SIMPSON: Yes. Well, not to protract this debate, but again I'm trying to stay to the core of the business why we are all here.
7352 Their argument is that I would presume by making the stake -- driving the stake into the ground that they have with the programming that they do, they are contending that -- or I believe that their belief is that there is an audience out there for whatever message they broadcast, but they can't reach that audience unless barriers are removed.
7353 So help me with, you know, are we to be the determining factor as to what's right and wrong as opposed to the public?
7354 MR. LASCARIS: I believe that the Commission has to give the broadcasting industry a very large degree of latitude in terms of expression but, as I say, there are boundaries which ought to be observed and enforced by the Commission and when you stray into the category of hateful speech it seems to me that it ought to be non-controversial that you have passed that boundary.
7355 So, you know, sir, I would take it almost as a self-evident proposition that no organ of the state should tolerate the kind of speech that Mr. Levant engaged in in September of last year.
7356 COMMISSIONER SIMPSON: But it seems that this particular columnist, if that's the right word for a broadcasting concern, has overwhelmed any other merits that the broadcaster has in your mind.
7357 MR. LASCARIS: Well, yes. I would say that what he did was that offensive; correct.
7358 COMMISSIONER SIMPSON: Okay.
7359 Last question and then I will turn it back to the Chair.
7360 I want to pull apart or see if there are two different views that you share with respect to access versus cost, because one of the things about mandatory carriage is that it can come with a subscriber fee which is being asked for by the broadcaster here, and the other is a ruling where a must-carry ruling would allow the broadcaster to have that in their back pocket and go in and negotiate a fee or some kind of a compensation with the BDU.
7361 Why I'm making this distinction is, do you feel that the issue that you are most exercised about is Canadians paying for something they don't believe in and want to hear or that they should be outright denied access to make up their own mind and decide whether they want to pay?
7362 That's a big question.
7363 MR. LASCARIS: Yes. And I have to confess I'm not necessarily the best person to answer that question because of my limited understanding of the regime that is applicable here.
7364 COMMISSIONER SIMPSON: Yes.
7365 MR. LASCARIS: But I would think it's mostly the former, sir.
7366 COMMISSIONER SIMPSON: Okay. Those are my questions, sir.
7367 Mr. Chair...?
7368 THE CHAIRPERSON: Thank you very much for participating in our hearing and those are all our questions at this point. Thank you very much.
7369 MR. LASCARIS: Thank you.
7370 THE CHAIRPERSON: We have one other intervener who is missing in action and we are told is about to arrive soon. So we will take a 5-minute break and if the individual is not here in 5 minutes, then we will just adjourn.
7371 So a 5-minute break, that's my tolerance. The appearance was originally scheduled for quarter past two, so we are well beyond that now.
7372 THE SECRETARY: Thank you, Mr. Chairman.
7373 THE CHAIRPERSON: Thank you.
7374 So a 5-minute adjournment.
--- Upon recessing at 1436
--- Upon resuming at 1444
7375 THE CHAIRPERSON: Order, please.
7376 Have a seat and get yourself prepared and make your presentation, please.
7377 You have 10 minutes and all I ask you to do is to press the button there so the little light comes on so we can hear you well.
7378 MR. RUIZ: Okay. Thank you.
7379 THE CHAIRPERSON: Thank you.
7380 MR. RUIZ: I'm here as a private citizen, a concerned citizen. I have no financial interest or nothing to gain here, okay.
7381 I believe the key question to be address in this hearing could be why Canadians should be obliged to pay for a channel that promotes hate speech and intolerance?
7382 In September 2012, Mr. Ezra Levant referred to a particular ethnic group in the following terms:
"Gypsies are not a race. They're a shiftless group of hobos. They rob people blind. Their chief economy is theft and begging. For centuries these roving highway gangs have mocked the law and robbed their way across Europe".
7383 Not happy with denigrating the Gypsy community he went even further, "The Jew versus the Gypsies".
7384 If this kind of talk is not identified as hateful, then what it is? That's my question.
7385 The majority of people in the country don't want to pay to be fed racism and intolerance.
7386 On Tuesday April 23rd, here in this hall, the applicant, meaning Sun News Network, argued that already 40 percent of the country has access already to its product, which leads to think that if almost half of Canadian households have the channel, but only 14,000 -- which is what they quoted -- are watching it during prime time, that means an awful lot of people who choose not to be an audience of this type of programming.
7387 The question is: Is this odd? Why wouldn't more people want to watch this open-minded agreeing gentlemen with each other? Would it be that in fact the topics of some of their programs are based on ideas that promote discrimination and intolerance against minorities?
7388 If, the applicant is a producer of news, then it should be honest and name their segments accordingly to the content being found in them. When Sun News speaks of their evening segment as "Straight Talk", I wonder why they are not straight and calling it for what it really is, "hate talk". Anyone that has seen the shows, this particular show and others, would be able to agree with me. It is continuous hate talk.
7389 Would it be because their intention is to present apples as oranges, hateful talk as objective talk, and therefore misleading potential new customers, audience, hoping that their evil ideas be spread with no one to find them accountable?
7390 The "Straight Talk" segment offered in the evenings, it is not aimed to produce an objective, all sides have a voice, not taking political sides product. Unfortunately, given their numerous and continuous attacks on ethnic minorities in this particular segment, it is quite evident their programming is not aimed to be a product that dictates common sense and, as a result, will not be appreciated by reasonable people.
7391 Furthermore, If this broadcaster considers itself to be a public affairs service representing the views of a group of concerned citizens, as they claim to be, then why they had to warn this Commission on Tuesday this week about the possibility of their soon to materialize demise, instead of relying on the sound judgment of the expert members of the Commission? That is a question.
7392 Is this warning an admission of guilt, I wonder, of which they are now trying to escape unpunished? I really hope that is not the case.
7393 While the job of CRTC is to allow the promotion of a variety of voices in the country, hate speech and the promotion of intolerance, it is not a part of a healthy spectrum of ideas.
7394 Finally, the applicant is failing because few people want to watch it -- that's the reality -- and forcing subscribers to pay for unwanted, substandard content, it is not within the mandate of the CRTC, nor is it in the interest of the Canadian viewing public.
7395 As a conclusion, the applicant does not deserve, in my opinion, does not deserve the must-carry designation because the open promotion of intolerance in its programming does not allowed them to act in the broad interest of society, acting against the required mandate of being a public service provider. That is plain and simple.
7396 Thank you.
7397 THE CHAIRPERSON: Thank you very much for that presentation.
7398 Madam Poirier will have some questions for you.
7399 COMMISSIONER POIRIER: Thank you for coming, Mr. Ruiz.
7400 MR. RUIZ You're welcome.
7401 COMMISSIONER POIRIER: A Friday afternoon, it's really appreciated. Thank you very much.
7402 MR. RUIZ: Thank you.
7403 COMMISSIONER POIRIER: I wonder if you listened to the hearing up to now. Have you listened to the Sun's presentation on Tuesday?
7404 MR. RUIZ: Yes, I was looking at the CPAC channel.
7405 COMMISSIONER POIRIER: Okay.
7406 MR. RUIZ: So I was able to listen to the comments and their arguments.
7407 COMMISSIONER POIRIER: Okay. Do you have any reaction to their presentation? Because they mostly related to one of the criteria we have to give the 9(1)(h) distribution to a broadcaster and one of their arguments is related to the business plan. They say they lost $17 million last year in 2012 and because of that if they get the carriage, the 9(1)(h) distribution, it will help them and they need the exhibition in front of the Canadian population to get more visibility so after a term of five years they wouldn't need the 9(1)(h) distribution anymore.
7408 So what is your reaction to that?
7409 MR. RUIZ: My reaction is that is a cynical position because by the statistics they provided in here on Tuesday, if half of the Canadian households have access already, which is mostly in Quebec, if Canadian households already have access to them and only 14,000 choose to watch them, it is just simple, people don't want their message of intolerance. It is that simple.
7410 So I would have to respond to them, you have made your case. You already had -- this network has been on the air for how long, a year, two?
7411 The message has been consistent, they have a point of view they want to make, Canadians don't agree, people don't want to watch them so, unfortunately, if your product doesn't sell, you go out of business.
7412 COMMISSIONER POIRIER: I will quote what they wrote in their application to maybe support criteria number -- I say number 3, but making exceptional commitments to original first-run Canadian programming and probably also programming that will enhance Canadian identity and cultural sovereignty.
7413 So the quotation is:
"We safeguard, enrich and strengthen the political, social, cultural and economic fabric of Canada by offering voice to a wide range of views."
7414 Could you comment on this, please?
7415 MR. RUIZ: If they believe their particular interpretation of a point of view of society to be widely accepted in the society, I think it's just not the case.
7416 Precisely the statistics they were showing here on Tuesday are completely against the claim.
7417 COMMISSIONER POIRIER: Well, from the public file they have around 5,000 supports, while 5,000 are in opposition, so it's quite a tie I would say.
7418 MR. RUIZ: Yes, but all of us know the people in this country are busy, they work, they don't have the time. If there would be other channels under which people would be able or encouraged to participate more openly, I'm sure there would be a lot more demonstrations against.
7419 COMMISSIONER POIRIER: You know, there is the possibility we might grant them the distribution in all the BDUs and satellite, this is a possibility, but we can also make sure they are offered to all Canadians so Canadians would have the the choice to pay for the service. Would it be sufficient, from your viewpoint?
7420 MR. RUIZ: Sufficient for...?
7421 COMMISSIONER POIRIER: To respond to the criteria we have to offer Canadians different viewpoints and to let them choose whatever they want to listen to?
7422 MR. RUIZ: I think Canadians have already spoken.
7423 I mean, I know of the people here and in Gatineau -- I have spoken with at least 30 different neighbours and no one wants to pay attention this kind of hate talk. I'm sure there are a lot more citizens like me in many areas where this service is being provided already that feel the same way I do. I'm sure there are a lot of different people in different areas that wouldn't to be able to be here if they could. A parent, a mother with children, they wouldn't be able to be here, living in Quebec City, living in the different areas where the service is provided already.
7424 But it's quite simple to force people to pay for something that they don't want. I mean, what's the point, except for to continue to promote hateful speech in society. There is no objective point of view in promoting that type of business model.
7425 COMMISSIONER POIRIER: So I think your viewpoint is well understood.
7426 I just wanted to make sure that you know about the CBSC, the CBSC being the Canadian Broadcast Standards Council. They receive complaints because they apply seven different codes to make sure the content of information or whatever is said in the Canadian broadcasting system is respectful of these codes, so if ever you feel you need to complain about whatever service that is provided on the Canadian system, the CBSC is there to receive your complaints.
7427 MR. RUIZ: Okay.
7428 COMMISSIONER POIRIER: Thank you very much --
7429 MR. RUIZ: Thank you.
7430 COMMISSIONER POIRIER: -- for coming this afternoon.
7431 MR. RUIZ: Thank you.
7432 THE CHAIRPERSON: Thank you. Those are our questions. Thank you very much for participating in the hearing. We appreciate it.
7433 MR. RUIZ: You're welcome. Thank you for having me here.
7434 THE CHAIRPERSON: Okay.
7435 So that finishes the interveners for today, we are adjourned until 9 o'clock Monday morning.
7436 Thank you.
--- Whereupon the hearing adjourned at 1500, to resume on Monday, April 29, 2013 at 0900
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