ARCHIVED - Transcript, Hearing 5 November 2013

Volume 1, 5 November 2013

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

SUBJECT:

To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2013-448, 2013-448-1 and 2013-448-2

HELD AT:

Outaouais Room
Conference Centre
140 Promenade du Portage
Gatineau, Quebec
5 November 2013

Transcription

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

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

Canadian Radio-television and Telecommunications Commission

Transcription

To consider the broadcasting applications listed in Broadcasting Notice of Consultation CRTC 2013-448, 2013-448-1 and 2013-448-2

BEFORE:

ALSO PRESENT:

HELD AT:

Outaouais Room
Conference Centre
140 Promenade du Portage
Gatineau, Quebec
5 November 2013

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TABLE OF CONTENTS

PAGE / PARA

PHASE I

PRESENTATION BY:

PHASE I

INTERVENTION BY:

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UNDERTAKINGS

PAGE / PARA

Gatineau, Quebec

--- Upon commencing on Tuesday, November 5, 2013 at 0900

1   LE PRÉSIDENT : À l'ordre, s'il vous plaît.

2   Bonjour, Mesdames et Messieurs, et bienvenue à cette audience publique.

3   You seem very far. I don't know what the room setup is. It seems like not two sword lengths but more two cannon lengths away from us over there.

--- Laughter

4   THE CHAIRPERSON: The Panel will begin by considering applications by Corus Entertainment to acquire certain television channels that are currently held by Bell Media Inc., specifically the TELETOON Services, including the Cartoon Network, Historia and Séries+.

5   The Panel will then consider TELETOON's request to renew the broadcasting licences of TELETOON/TÉLÉTOON, TELETOON Retro (English) and TÉLÉTOON Rétro (French), all of which are due to expire on March 31st, 2014.

6   In June 2013 the CRTC approved the acquisition of Astral by BCE. As part of that approval we required BCE to divest itself of a number of Astral's radio and television services. The services we're discussing today are among those identified for divestiture.

7   I would like to remind everybody that, as with all ownership transactions, it is the responsibility of the applicants to demonstrate that a transaction is in the public interest. Corus bears the burden of proof. We will consider the impact these proposed transactions could have on the market concentration and vertical integration as well as their proposed tangible and intangible benefits.

8   We will also consider Corus' request to apply the group-based approach for the licensing of TELETOON and TÉLÉTOON, TELETOON Retro (English) and TÉLÉTOON Rétro (French).

9   I realize I'm pronouncing both those words the same because it's very difficult for me not to put accents on TÉLÉTOON in French -- but anyhow.

10   In studying those applications the Panel must be persuaded that the proposed transactions will provide benefits to Canadians as well as the overall Canadian broadcasting system. As most of you know, the CRTC is currently hosting "Let's Talk TV: A conversation with Canadians about the future of television." Canadians' views and ideas will feed into a hearing that will be taking place in September 2014. However, let me remind all participants that at this hearing the Commission is looking at the applications in light of the current regulatory framework until such time as the new one is in place.

11   That being said, I strongly encourage everyone to participate in the conversation "Let's Talk TV." That includes the Canadians here this morning and those listening over the Web.

12   If we are to ensure that the Canadian television system continues to serve the needs of Canadians, we need to have access to the broadest diversity of views possible.

13   Nous nous pencherons ensuite sur une demande de RNC Média visant à renouveler la licence de radiodiffusion de CKLX-FM Montréal, tout en considérant les modifications à certaines conditions de licence de la station. Plus précisément, RNC souhaite convertir la formule musique jazz et blues de la station en une formule à contenu à prépondérance verbal.

14   Ce n'est pas la première fois que RNC Média demande au Conseil l'autorisation de changer la formule de cette station. En mars 2013 le Conseil a refusé une demande semblable au motif que RNC Média n'avait pas respecté plusieurs exigences réglementaires liées, notamment aux pièces musicales, aux rubans-témoins et aux contributions au titre du développement du contenu canadien. Nous avions alors indiqué que nous examinerions ces cas de non-conformité au moment du renouvellement des licences de radiodiffusion de CKLX-FM.

15   Le Conseil a également rejeté la demande de changement de formule, étant donné que la modification proposée aurait pu nuire aux chances de réussite de la station de radio AM de langue française à prépondérance verbale de TTP Media dans le marché de Montréal, dont le lancement n'avait pas encore eu lieu.

16   Enfin, le Panel considérera -- et nous avons appelé la titulaire qui exploite CJMS St-Constant -- une station de radio commerciale de langue française afin de traiter des questions liées à son non-respect des articles 1.1, 1.5, 1.6 et 9.4 du Règlement de 1986 sur la Radio.

17   Depuis décembre 2012, le Conseil a tenté à plusieurs reprises d'obtenir des rubans-témoins et les registres de programmation auprès de la titulaire de licence. Nous avons absolument besoin de ces enregistrements et documents pour analyser la programmation en prévision du renouvellement de la licence de la station en 2014.

18   La licence de la titulaire a été renouvelée la dernière fois pour une période de quatre ans, plutôt que pour une période de sept ans, en mai 2010. Il s'agit maintenant de la quatrième période consécutive que CJMS se trouve en non-conformité. Le Conseil s'attend à ce que la titulaire justifie pourquoi elle ne devrait pas faire l'objet d'une ordonnance l'obligeant à respecter le Règlement.

19   La titulaire de CJMS aurait aussi l'occasion de démontrer pourquoi le Conseil ne devrait pas suspendre la licence ou tout simplement la révoquer en raison de maintes situations de non-conformité.

20   Comme dans toute instance publique, l'opinion des Canadiens et des Canadiennes est très importante car elle nous aide à nous acquitter de nos responsabilités législatives. Nous tenons donc à remercier tous ceux et celles qui ont accepté de participer à l'audience, soit en soumettant leurs commentaires, soit en comparaissant devant nous.

21   The Panel for this hearing, as you can see, is consisted of:

22   - Tom Pentefountas, the Vice-Chair of Broadcasting;

23   - Raj Shoan, Regional Commissioner for Ontario; and

24   - myself, Jean-Pierre Blais, Chairman of the CRTC. I will preside over this hearing.

25   The Commission team assisting us today includes:

26   - Valentina Lavigne, Marie-Claire Bouthillier, Diane Massie, Carl Pineau, who are Hearing Managers for various items in this hearing;

27   - as well as Steve Millington and Shari Fisher, who will be Legal Counsels; and

28   - Lynda Roy, who is the Hearing Secretary.

29   I would like now to invite the Hearing Secretary, Madame Roy, to explain the procedures we will be following.

30   LA SECRÉTAIRE : Merci, Monsieur le Président.

31   Good morning and welcome, everyone.

32   Before we start, I would like to go over a few housekeeping matters to ensure the proper conduct of the hearing.

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

34   The hearing is expected to last two days. We will advise you of any scheduling changes as they occur.

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

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

37   Please note that the Commission will also be tweeting the documents during the hearing at @CRTCHearings using the hashtag #CRTC.

38   Just a reminder that 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 public record. If you wish to introduce new evidence as an exception to this rule, you must ask permission of the Panel of the hearing before you do so.

39   Please note that if parties undertake to file information with the Commission in response to questioning by the Panel, these undertakings will be confirmed on the record through the transcript of the hearing. If necessary, parties may speak with the Commission's Legal Counsels at a break following their presentation to confirm the undertakings.

40   We will now begin with item 1 on the Agenda, which is an application by Corus Entertainment Inc. for authority to acquire the television broadcasting undertakings Historia and Séries+, through multi-step transactions, and 8324441 Canada Inc., on behalf of TELETOON Canada Inc., for authority to effect a change in ownership and effective control of the undertakings of TELETOON Canada to Corus Entertainment Inc.

41   Please introduce yourselves for the record. You will then have 20 minutes for your presentation.

PRESENTATION

42   MR. CASSADAY: Good morning, Mr. Chairman, Commissioners and Commission staff. My name is John Cassaday and I am the President and Chief Executive Officer of Corus Entertainment.

43   It is with great pleasure that we are here today to present our applications for the acquisition of TELETOON Canada --and I too, Mr. Chairman, will pronounce TELETOON the same way in both French and English -- and Historia and Séries+.

44   Let me begin by introducing our panel members.

45   With me today, to my immediate left, is Doug Murphy, our Executive Vice President and Chief Operating Officer.

46   To his left is Mario Cecchini, President of Corus Média and Head of our Eastern Ontario assets. Mario will be a key individual in helping us establish a strong presence in the province of Quebec.

47   And to Mario's left, Jocelyn Hamilton, Vice President, Programming and Original Production for Corus Kids.

48   To my right, Gary Maavara, Executive Vice President and General Counsel.

49   To Gary's right, Judy Adam, our Vice President of Finance.

50   In the second row, starting from the left end of the table, Greg Kane, our external legal counsel from Dentons LLP.

51   Next to Greg is Kathleen McNair, Executive Vice President, Human Resources, Communications and our Chief Integration Officer.

52   To her right, Colin Bohm, who is our Vice President of Television and Head of our Corus Kids business.

53   To Colin's right, Bill Knight, Vice President Television, Head of Business Development and Planning.

54   To Bill's right, Sylvie Courtemanche, Vice President and Associate General Counsel, Government Relations and Compliance.

55   To Sylvie's right, Judith Brosseau, Senior Vice President, Programming, Communications and Digital Media for Historia and Séries+.

56   And to Judith's right, Carole Bonneau, Vice President, Programming, TELETOON Canada.

57   In the third row, starting from the right side of the table, Pierre Boivin, Trustee for Bell Media Inc.

58   To Mr. Boivin's left, from Shaw Communications, are:

59   - Michael Ferras, Vice President, Regulatory Affairs;

60   - Peter Johnson, General Counsel and Corporate Secretary;

61   - Cynthia Rathwell, Vice President, Regulatory Affairs; and

62   - Rob Malcolmson, who is a Partner with Goodmans.

63   Mr. Chairman, Corus welcomes the opportunity to present our applications for the acquisition of the TELETOON Canada, Historia and Séries+ assets that BCE Inc. was instructed to divest by both the Commission and the Competition Bureau.

64   You have our applications and our responses to your questions that already form a comprehensive record of this proceeding.

65   Before we begin, we would like to share with you a short video to give you a quick overview of Corus.

66   We hope our video reminds you of the important role that our services play in the lives of Canadian consumers, creators and the economy as a whole. What you will see here is precisely what we are working so hard to preserve, foster and grow with the acquisition of these services.

--- Video presentation

67   MR. CASSADAY: Our portfolio of television assets currently includes 24 specialty and pay services, along with three over-the-air television stations servicing Eastern Ontario. Corus employs over 2,000 people across Canada.

68   Since 1999, Corus has invested more than $600 million in licence fees to independent producers. We are responsible for triggering well over $2 billion in original Canadian productions.

69   In 2000, the Corus group of companies spent $28.7 million annually on Canadian programming. By 2013, this had grown to $120 million annually, representing a fourfold increase.

70   We have state-of-the-art infrastructure. Corus Quay, our headquarters, is one of the world's most advanced digital operations and represents exactly the type of investment and commitment needed to truly meet and exceed our consumers' high expectations. We have done the same with investments in our other facilities across Canada.

71   Corus is one of Canada's largest producers of high-quality Canadian television programming. We invested in Nelvana, Canada's premier animation production studio. We promote and sell Nelvana programming in over 140 countries and, in fact, our content is aired regularly in the United States on Nickelodeon, Disney and the Cartoon Network as well as other numerous networks around the world such as TF1 in France, Super RTL in Germany and Televisa in Mexico.

72   We recognize that in an environment where Canadians have the ability to access a wide variety of information and entertainment, we need to provide high-quality content each day. Our ratings, financial performance and industry awards clearly demonstrate that we are on the right track.

73   We are here today to convince you that we are not only the best possible home for these assets but that our acquisition of these assets is in the public interest. Allowing Corus to continue to grow will translate into more spending on Canadian content and healthy competition in Quebec.

74   In brief, our key messages to you today are as follows:

75   First, these applications are in the public interest.

76   The future of the Canadian broadcasting system depends on making sure that Canadians want to stick with our system and its content. Corus can achieve this critical public interest objective by ensuring that the services that must be divested continue to provide compelling programming for Canadians where and when they want it. We are confident that our strong plan, our track record and our digital infrastructure ensures that Corus is the right home for these services.

77   Second, we believe that we are the best possible buyer for these services.

78   Both the Commission and the Competition Bureau instructed BCE to divest these assets. BCE therefore cannot operate these services and, of course, Astral has departed the system. The Competition Bureau consented to the Corus acquisition of these services but more importantly, Corus has the scale and the track record. This, and our commitment to established safeguards and a commensurate benefits package, makes us the best possible buyer for the TELETOON services and Historia and Séries+.

79   Third, we want to sustain and grow competition in the French-language market.

80   With Astral's departure, our plan to ensure that this broadcast voice is replaced with another well-financed media company is the best option to meet the public interest objective of diversity in the French-language market. Corus Média will ensure diversity and foster opportunities for the creative sector. We will have a team of approximately 30 people in our Montreal office. We will become a strong fourth private voice to compete with Bell Média, Québecor and V Interactions.

81   Fourth, keeping Canadians within the Canadian broadcasting system.

82   Over-the-top programming access is no longer a theoretical concept. Netflix alone now has 2.5 million Canadian subscribers. Its viewing share is closing in on that of Corus. With popular, unregulated services such as Netflix being readily available in Canada, it is important that Canadian broadcasters have the scale and competencies to compete. Corus knows programming. We will grow the investments these services make in Canadian Content.

83   Our proposal to acquire the TELETOON services and Historia and Séries+ will directly contribute to achieving these critical public interest objectives and yield net benefits to the Canadian broadcasting system.

84   MR. MURPHY: This part of our presentation will focus on TELETOON Canada, but first, let's watch a short video about the TELETOON services to remind us what they are all about.

--- Video presentation

85   MR. MURPHY: Corus has been a 50-percent owner of TELETOON Canada with Astral for the last seven years and a shareholder since day one. Under a 2006 Unanimous Shareholder Agreement approved by the Commission, it was already contemplated that in the event one of the partners left, the other had the first right to purchase the balance of the shares. So when BCE purchased Astral and were told they could not keep Astral's 50-percent ownership interest, we became the logical buyer.

86   Corus is an expert in animation programming both domestically and internationally. We invested not only in Nelvana but also in ToonBoom, a Quebec-based company producing Emmy Award winning software for the global animation industry. ToonBoom needed help. We retained both the company and the jobs in Montreal.

87   It is important to remember that TELETOON's programming is aimed at all ages, from kids to teens to adults. In fact, 57 percent of TELETOON's audiences are adults. So our plan with TELETOON is to continue to expand the appeal of animation programming to all age segments within the current licence parameters. We believe this will create further global opportunities for Canadian animation producers.

88   Corus' proven record as a successful operator of channels will ensure TELETOON benefits from our investment in the new technologies and platforms necessary to succeed in this rapidly changing media environment.

89   Through our request to include TELETOON and TELETOON Retro English in our group-based licence, the CPE for TELETOON would be increased from 29 percent, the rate proposed in the TELETOON licence renewal application, to 31 percent. The Corus total PNI rate would increase from 9 percent to 12 percent and TELETOON Retro English would, for the first time, have defined CPE and PNI requirements.

90   With regards to the tangible benefits proposal associated with this transaction, Corus has put forward an incremental $24.9-million proposal. This represents a significant monetary contribution to the Canadian broadcasting system that will assist the independent production community both domestically and abroad. In addition, Corus would immediately, after closing, include TELETOON under the auspices of the existing Terms of Trade Agreement with the CMPA.

91   In sum, Corus intends to continuously improve our understanding of what Canadian consumers and distributors want from TELETOON. We will strive to execute our programming plans superbly well and we will market and promote these services at the highest standard. We firmly believe that Corus is the best possible party to steward these services and their important brands.

92   M. CECCHINI : Comme nous l'avons déjà exprimé, Historia et Séries+ sont deux services spécialisés qui connaissent un franc succès dans le marché francophone.

93   Avant de poursuivre, nous vous invitons à regarder la vidéo suivante.

--- Video presentation

94   M. CECCHINI : Vous pouvez constater donc l'excellence de ses services. Et notre objectif est de construire sur ces assises qui sont si solides.

95   L'une des forces de Corus est sa façon stratégique d'aborder les affaires. La perspective de faire une percée au Québec dans le domaine des services télévisuels représente un très beau défi.

96   Nous avons oeuvré dans le marché québécois pendant plus de 10 ans. Nous sommes donc sensibles aux besoins du marché francophone. Je me joins de nouveau avec fierté à l'équipe de Corus Média, qui, je vous l'assure, occupera une place importante et connaîtra une grande croissance dans le marché francophone. J'oeuvre dans le marché médiatique québécois depuis près de 30 ans. Je connais bien l'industrie et ses joueurs.

97   Tout commence donc avec la proposition de Corus d'acquérir des services spécialisés de langue française attrayants, performants et qui constituent des éléments importants, bien ancrés dans le marché du Québec.

98   Depuis leur lancement en janvier 2000, les chaînes Historia et Séries+ ont toujours été exploitées par Astral. Ces services de programmation offrent un solide contenu diversifié aux populations francophones du Canada et connaissent un franc succès au sein de ce marché.

99   La possibilité d'acquérir et d'exploiter les chaînes Historia et Séries+ représente donc pour Corus une occasion intéressante de croissance qui lui permettra de mettre à contribution sa solide expertise comme assembleur de contenu et exploitant de services spécialisés un peu partout au Canada.

100   Corus va s'impliquer activement à l'évolution de l'univers de la radiodiffusion de langue française. Et, pour réaliser cet objectif, il lui faut une solide présence au Québec.

101   Corus entend donc, mettre en place une équipe expérimentée d'experts en radiodiffusion bien enracinés au Québec, une équipe comprenant des personnes qui ont déjà contribué au succès d'Historia et de Séries+. Toutes les questions concernant la programmation, la mise en marché, la communication, la promotion et la vente de publicité de même que celles liées aux échanges avec les EDR sur la tarification et les projets multiplateformes relèveront de notre bureau du Québec à Montréal.

102   L'apport continu d'un joueur médiatique important permettra à Historia et à Séries+ de poursuivre leur objectif de déployer leur contenu sur plusieurs plateformes et dans l'univers en constante évolution, qui est celui des médias, de répondre aux besoins des consommateurs et de leurs partenaires en production. Et, à ce chef, Corus a hâte d'intensifier ses relations avec les producteurs indépendants francophones.

103   À la suite du départ d'Astral, l'entrée de Corus dans le marché assurera le même niveau de diversité de propriété. Compte tenu du nombre de dramatiques prévues sur Séries+ et de documentaires offerts sur Historia, les producteurs indépendants continueront donc d'avoir accès à une fenêtre importante et distincte dans le marché francophone.

104   En plus des avantages tangibles et intangibles importants assortis à cette demande et qui représentent un investissement minimum de 13 860 000 $ sur sept ans pour des projets de langue française, les téléspectateurs bénéficieront d'investissements substantiels en contenu canadien et notamment, évidemment, celui de langue française.

105   En somme, un point capital à retenir est que l'arrivée de Corus en tant que propriétaire et exploitant de services spécialisés de langue française comme Historia, Séries+, TÉLÉTOON et TÉLÉTOON Rétro garantira la présence sur le marché québécois d'un groupe médiatique bien capitalisé, exclusivement voué à la radiodiffusion et qui livrera une concurrence plus saine et un contrepoids intéressant notamment à Québecor, Bell Média et V Interactions.

106   Par ailleurs, nous n'avons pas l'intention de recourir à l'approche par groupe pour exploiter Historia et Séries+. Nous avons proposé un pourcentage de DÉC qui reflète la moyenne des dépenses allouées à des émissions canadiennes au cours des trois dernières années de radiodiffusion conformément aux nouvelles pratiques du Conseil à cet égard. Par conséquent, nous proposons des DÉC de 30 pour cent pour Historia et de 17 pour cent pour Séries+. D'ailleurs, notre proposition sur le cadre réglementaire relatif à Historia et à Séries+ est appuyée par l'Association québécoise de la production médiatique.

107   Et, enfin, nous avons informé l'AQPM de notre intention de nous joindre à la toute nouvelle entente commerciale très récemment conclue avec Bell Média.

108   MR. MAAVARA: Corus structured its applications on the basis of the Commission's existing policies including its Group-Based Licensing (GBL) Policy, which has now been in place for a little more than two years. The GBL Policy provided greater CPE flexibility to broadcasters and it shifted the regulatory emphasis to spending rather than volume and exhibition.

109   The Commission coupled this flexibility with major new support for independent producers, including:

110   - new CPE requirements on conventional stations and Category B services with 1 million subscribers or more;

111   - a new Group PNI requirement;

112   - a requirement that 75 percent of Group PNI spending go to independent producers; and

113   - the terms of Trade Agreement.

114   In its own words, the Commission struck a balance in the Group Licensing Policy between supporting the independent production sector and providing broadcasters with appropriate flexibility.

115   We do not believe that this is the proceeding to undermine that balance, especially given the fact that the Commission has recently launched its TV Policy Review, which, Mr. Chairman, of course, you referred to this morning.

116   That said, rather than pressing for full seven-year licence terms that we believe TELETOON services merit, we are prepared to accept the term ending August 31, 2016 to match the rest of the Corus television group. In effect, this means we will be filing group renewal documents with the Commission less than 24 months from the date of this proceeding. We believe this represents a significant safeguard.

117   MR. CASSADAY: Corus intends to build on the success of these great Canadian services.

118   We have a plan and we will execute it superbly. Corus can and will compete with all players in the system, both regulated and unregulated. We are pleased that the interventions filed, that there was only one clear opposition. We understand, Mr. Chairman, that you will be well acquainted with that fact already.

119   We would like to thank the Commission for this opportunity to outline our plans and ask that you approve these applications. We would now be happy to answer any questions that you may have.

120   THE CHAIRPERSON: Well, thank you very much, Mr. Cassaday and your colleagues. I know a lot of work goes into these applications and we're grateful for you to take it very seriously. And, indeed, it's important because, as you know, once the omelette is scrambled, it's sometimes almost impossible to undo.

121   So my colleagues and I will be sharing the questioning as we go forward and I will of course begin. I'll start with a few questions for the trustee. Then I'll turn to you, Mr. Cassaday and your team for some other questions.

122   Alors, monsieur Boivin, je vais commencer avec vous ce matin. Vous allez donc bien comprendre que vous n'avez pas perdu votre temps trop, trop dans le trafic ce matin en venant de Montréal. Si je comprends bien, il y a encore des Montréalais qui pensent que ça ne prend que deux heures pour se rendre à Ottawa. Ça n'a jamais été le cas puis ça ne le sera jamais, je ne pense pas.

123   Toujours est-il, suite à la transaction de BCE Astral, vous avez sous votre contrôle un bon nombre d'actifs de radios et de télévision pour assurer que, effectivement, le contrôle est entre vos mains. Vous avez commencé votre mandat à quel moment?

124   M. BOIVIN : J'ai commencé mon mandat au début du mois de juillet. Je n'ai pas la date exacte, là, mais je pense que c'était autour du 6 juillet.

125   LE PRÉSIDENT : Est-ce que vous pourriez nous décrire la nature et la portée de vos activités par rapport aux divers actifs radiophoniques et télévisuels?

126   M. BOIVIN : Bon, mes activités se résument à m'assurer de façon régulière, donc c'est au moins de façon mensuelle et souvent avec des échanges hebdomadaires, que les actifs sont opérés dans le cours normal des affaires, de répondre à des questions que les équipes de direction peuvent avoir. Souvent, dans ces périodes de transition, il y a des espaces gris, et c'est mon rôle de m'assurer qu'ils ont une réponse rapide et qu'ils peuvent continuer la bonne gestion de ces actifs-là, en étant indépendant à la fois de Bell et de l'acquéreur prévu pour ces actifs.

127   LE PRÉSIDENT : Donc, vous laissez les opérateurs opérer le quotidien et vous n'intervenez que périodiquement, si je comprends bien votre réponse.

128   M. BOIVIN : C'est tout à fait la responsabilité des opérateurs, des dirigeants d'opérer le quotidien. Dans le cours normal des affaires, ils ont des plans d'affaires annuels, ils ont des budgets mensuels, ils ont des opérations qui ont pas mal d'historique et qu'ils ont l'habitude de gérer, et donc, moi, je suis là pour m'assurer qu'ils ont toutes les ressources nécessaires pour opérer dans le cours normal des affaires.

129   LE PRÉSIDENT : Depuis le début de votre mandat, est-ce que vous avez eu des contacts ou des communications, directement ou indirectement, par BCE, Bell, Bell Média ou les représentants de Corus ou leurs agents, et, si oui, quelle a été la nature de ces contacts ou ces communications?

130   M. BOIVIN : J'ai eu des contacts à la fois du côté Corus et du côté Bell. Généralement, en fait presque totalement, c'est pour m'informer, pour m'assurer que j'ai bien compris mon rôle, que je vais chercher de l'information qui n'est peut-être pas disponible aux équipes de direction de façon à bien guider leurs décisions en ce qui concerne leurs opérations.

131   Il y a aussi, dans le cas de Bell, un contrat de service. Donc, il y a certains services qui sont prêtés aux différentes entités, notamment au niveau de la comptabilité, des services de support au niveau de DRH et d'autres fonctions. Donc, je m'assure que tout fonctionne roulement, que tout roule très bien au niveau de ces services-là.

132   LE PRÉSIDENT : Lorsque vous refléter sur la période depuis le début de votre mandat au mois de juillet, est-ce que, à votre avis, il y a eu des individus ou des entités, soit du côté de Bell ou de Corus, qui ont tenté d'une façon ou d'une autre d'avoir un exercice sur le contrôle des actifs et donc intervenir ou interférer avec votre mandat?

133   M. BOIVIN : Aucunement, non.

134   LE PRÉSIDENT : Est-ce que vous considérez que vous avez toutes les ressources nécessaires pour continuer d'exercer votre mandat en tant que fiduciaire?

135   M. BOIVIN : Tout à fait.

136   LE PRÉSIDENT : D'accord. Merci.

137   Mr. Cassaday, let me now turn to you for a few questions. You are proposing to purchase some assets for a considerable amount of money in both the French and English markets. Could you explain to us how you foresee the broader television environment, and how those assets will operate in that future?

138   MR. CASSADAY: Thank you, Mr. Chairman.

139   There is no question that there are storm clouds on the horizon as we deal with the change the technology is enabling, but I would really like to focus -- at least initially -- in my comments on the things that we still believe are fundamentally strong in our system.

140   First of all, people are still watching a lot of television. Even young people are still watching a lot of television, despite what you might read in the newspapers or other periodicals. The average millennial is still watching around 18 to 20 hours of television a week. In fact, I think the numbers are slightly above 20 hours, so what we are finding is that there is essentially an insatiable appetite to consume media, so it's not a zero-sum game as we look at the introduction of new technologies and new methods of receiving content.

141   Secondly, for us, largely a speciality television operator, about half of our revenues are derived from advertising and advertising still works, we are still able to demonstrate clearly that we provide a return on investment for our customers and we believe that that will continue to be true in the foreseeable future.

142   It is true that the television lead as the largest media component is shrinking. We now see Internet advertising over $3 billion and television advertising around $3.3-3.5 billion, so the gap is closing, but we can't forget as we get ourselves wrapped up in all the negative stories that the TV business is still fundamentally a strong business.

143   The third point I would make in defense of our acquisition and our commitment to the continued growth of these assets is that many people are referring to today's age as the Golden age of television. Why are they saying that? Obviously a lot of fragmentation; there must be a reason.

144   The reason is that there are some fantastic shows that are being produced that are drawing people to our medium, and what we are seeing in various services, even here in Québec with SRC and the successful drama that they have on the air right now, if you create great stories you can generate large audiences and still generate substantial revenue.

145   So we are encouraged by that and we've made very clear that kind of commitment that we have made to Canadian content and the contribution that we have made to the system. When we started appearing before you 14 years ago, I think many people thought "What difference can Corus make?" We have made a huge difference in that time and we believe a lot of our success is due to our commitment to Canadian content.

146   Also, when I think about the positives, I have to think about our company. You know, we are a company that has great relationships with our advertisers, with our distribution partners, with our partners, including the likes of Google, but I think we have a great relationship with our program suppliers, and all of them I think would say that we have treated them with tremendous respect since our inception, that we pay our bills, that we honour our commitments and that we have been a great partner, and our success has also resulted in considerable success for them.

147   And then, most importantly, we have demonstrated the ability to build great brands. Our brands are differentiated, they stand out in the marketplace. The positioning of each brand -- and I know there is going to be likely some discussion, certainly at the intervention stage, about the temptation to blend these and repeat programming, and I think that it's important to note that I believe that there may be others who are equal, but there is no one better at differentiating and positioning these brands in the marketplace with distinct programs.

148   We tend to look at television as somewhat of a utility, when you flip the switch you know the light is going to go on, when you turn on one of our channels we believe that our customers and consumers know exactly what they are going to get, and that has been fundamental to our success.

149   I did mention that there are some issues that we have to deal with when we make an acquisition. You know, we are putting almost $500 million on the line here. The economy has stalled, that's an issue for us, it has affected our advertising. You will have seen our results last year were not up to our usual standards.

150   We still did well, we had great margins, but earnings were below the year before, and that is because we did not achieve the level of advertising growth that we anticipated. Our ratings were up, but the economy stalled and we weren't able to generate the return on our rating improvement that we expected.

151   Fragmentation is an issue, no question. People are getting better at what they do, and we are seeing content coming in on the likes of YouTube and Netflix that are -- and iTunes and many other sources that are taking our audience and fragmenting it into smaller pieces.

152   A third issue that we are concerned about is escalating programming costs. This has been a significant challenge for us. We do compete directly, not for advertising, but for program rights from Netflix, and we have lost important packages of programming to them. I received a call from a long-time associate, someone I have been doing business with for 20 years over a major package two years ago, and he said, "John, here's the number I got."

153   And it was more than double what we had paid and I said, "Thank you for the call, that's the deal you have to make."

154   We just can't chase recklessly these packages, but it's important for you to know that these pressures are real on our system and we have to show good judgment and good discipline to maintain the system and our business model effectively. We have had a lot of discussion about pick-and-pay recently, and I think all broadcasters, distributors, and I hope everyone in the system, including the regulator, is, you know, concerned about the implications of that.

155   We have a system that is based on a series of quid pro quos that have helped us develop a Canadian system. You know, we support health care, we support education in this country and, quite frankly, we have supported an indigenous Canadian broadcasting system, so we are going to have to figure out together how we do that going forward, but I am absolutely convinced that there is enough goodwill and enough wisdom and judgment amongst all the parties that we are going to be able to figure that out carefully.

156   So I am confident that we can survive with a focus on consumers and I am confident that we can survive if we find ways to cooperate. Here I'm talking about our distribution partners, programmers, the regulator, possibly even the Government of Canada on this one, and ensure that this investment that we made 10 years from today looks like it was a no-brainer.

157   THE CHAIRPERSON: So when you refer to the storm clouds on the horizon, I'm hearing you talk about branding and other strategies. Is it more of the same and better and faster or are you actually thinking that there is a need for a shift?

158   MR. CASSADAY: First of all, as it relates to these services, it is what I would call same game, but better. These services are running well, and we think in the immediate term have the potential to continue to grow. So we are committed to maintaining the same nature of service, we are committed to maintaining the existing safeguards they have in place.

159   There are minor changes -- you will hear about them later in the TELETOON application -- where we are looking for some of the flexibility that has been afforded others, but by and large, same game, but better.

160   Our strategic plan a couple of years ago was themed "Core and Explore" and the fundamental premise was that we believe our core business is sustainable and viable into the immediate future, but we need to continue to explore. We spent over $150 million on a new facility to ensure that we had the capability of distributing our content digitally on whatever platform in whatever geography and whatever language our customers wanted.

161   We have made investments in start-ups. One is called "Fingerprint", which is a kid-oriented start-up out of Silicon Valley. We have been involved in start-ups to increase the vibrancy of our websites and our radio stations, so we are looking at everything that moves as it relates to the evolution of our business and the progression into a totally digital nonlinear environment, but, you know, as we sit here today, 95 percent of our revenue is done -- is achieved from collecting subscriber revenues, by satisfying our customers and selling advertising, and that is the business that we are in, and one that we continue to believe has -- still has considerable upside.

162   THE CHAIRPERSON: Okay. Thank you for that.

163   From the 20,000-foot level, perhaps we can move down to some more of the detailed issues.

164   I must admit -- when I was preparing and reviewing your application, I must admit that I felt a little bit like St. Augustine trying to figure out the mystery of the Holy Trinity. Let me explain.

165   He was actually trying to figure out the theological problem of having to figure out the three distinctive personalities of the Father, the Son and the Holy Ghost, and within a single God. Now, we are unlikely to solve that problem this morning, but we do have the problem of Shaw and Corus.

166   So you requested that Shaw and Corus be treated as one group when it comes to ownership issues such as value of the transaction, but request that they be treated separately when it comes to our Diversity of Voice Policy, our Group-Based Licensing Policy and our Vertical Integration Policy.

167   Maybe you can help illuminate me as to what appears to be a contradiction?

168   MR. CASSADAY: There are a number of facts at play and, like everything else in life, things are never as simple or as complicated as they seem, but there are a number of nuances to this service, so -- or this particular relationship. So the fundamental premise here is that we are controlled by J.R. Shaw, he controls 80 percent of our company. He also controls approximately that of another company called Shaw Communications Inc., but there are no cross-ownership positions as between Corus and Shaw Communications.

169   There are no cross-directorships, there is no managerial crossover, we are structurally separate, but we are affiliated. So we acknowledge that affiliation and, in many respects, the rules that are in place recognize that; for example, the vertical integration rules.

170   As it relates to structural separation, when I am meeting with investors, the most important question that they want me to address is, "Convince me or give me comfort that the interests of Shaw will never take precedent over the interests of Corus and my shareholding in your company."

171   So we do, by virtue of this relationship, end up walking both sides of the street on a frequent basis but, you know, we are clearly an affiliated company, but we are also -- also structurally separate. And of course as it relates to -- I guess, ultimately which you are leading to is the question of benefits, and particularly as it relates to Historia and Séries+ -- the reality of it is, is that we are structurally separate, that J.R. Shaw, when he acquired these assets from Canwest already paid benefits on them and, in fact, when we acquired the Historia and Séries+ shares we didn't trigger a change of control. That change of control was only triggered when we acquired the shares from Bell.

172   So we feel, in this particular instance, for the reasons I have mentioned, that there is clarity, at least as it relates to this issue. I know we have Greg Kane with us today and it might be an appropriate time for him to just offer any additional comments on that somewhat complex issue.

173   Greg...?

174   MR. KANE: Good morning, Mr. Chair.

175   The way I think it might be helpful to look at this issue is to separate the corporate and operational aspect of the relationship between Corus and Shaw, and then the regulatory aspect of it, because when you look at the situation, Corus was founded by J.R. Shaw in 1999, the Commission's regulatory policies were to insist upon structural separation and that's really why the two corporations were created in the manner that they were.

176   But since that time, when you look at the way the regulation has been applied to the two companies, increasingly -- not increasingly -- in fact, from the very beginning, the two companies have been treated as one by the Commission, and that applies in terms of the ownership -- if you look at the Commission's website in terms of the ownership, it clearly states that the two are owned by the same person, in the legal sense of that. The ownership chart demonstrates that.

177   In the Commission's Monitoring Report it states very clearly that Shaw is affiliated with Corus, as J.R. Shaw has voting control of both companies. But more importantly, as I say, in terms of the regulatory issues that have taken place, the two have been treated as one when you look at the calculation of audience share, for example, if you look at the manner in which Shaw can distribute services in terms of independent companies, and the ratio of the companies that have to be carried.

178   The regulatory is done in a manner that is different from the corporate and the operational. So there is that inconsistency, but when you -- in my respectful submission, you have to look at it from the regulatory perspective -- and we can now get down into more of the detail with respect to the Benefits Policy, if you wish, but when you look at it from the perspective of the Benefits Policy, quite clearly this is a situation in which the Benefits Policy does not apply because we do not have a transfer of the effective ownership or control of the company.

179   THE CHAIRPERSON: Now, I fully appreciate that's your position. Where I am trying to square the circle, I guess, is trying to figure out how come, from a regulatory policy, we can't be one thing and another at the same time.

180   I understand that your argument with respect to ownership is one, but then suddenly when it gets to other policies you seem to want to pick and choose a perspective that is more favourable.

181   MR. MAAVARA: Mr. Chairman, I didn't think we would be talking about religion today, but in the context of the comment you made about the three elements, I guess our position is in fact we are not contradictory to any of those.

182   I guess you are going to be getting into more detail, but our basic point on the H&S benefits is the fact of an absence of transfer of control. So even before you get to the structural issue, our purchase from Shaw was for 50 percent and the clear regulatory precedent on that is that if it's 50 percent there is no transfer of control. That was a separate transaction.

183   So then you might ask yourself, well, was this a step transaction for the purposes of avoiding benefits? Well, in fact, it wasn't, because the second part where we did acquire control was at the order of the CRTC. So we didn't structure this process. In fact, it was the CRTC and the Competition Bureau that got the ball rolling on that. So this isn't a step transaction as that's defined. That's the benefits issue.

184   On the diversity issue, we accept the fact that the measurement is as between Corus and Shaw, and our position is that we accept that we go into the zone between 35 and 45, and our position is that, notwithstanding that, this transaction is in the public interest and the things that we put on the table, both in terms of benefits and in terms of the increased safeguards which result from this transaction, allow you to meet the standard that you have set for any transaction that goes up to that level.

185   I guess we could also point out that in fact we have always measured our aspect of relationship in TELETOON anyway, so there is no change in the English market from a regulatory standpoint and, in fact, in the French market we are adding diversity. So again, there is a great public interest element.

186   And then on the VI rules, what we have said is that we would accept the rules as they apply to a programmer, which is what we are. So we tried to divine from that list of rules which ones apply directly to us and we have said we will accept those in this proceeding. So we are not -- we are not really trying to be different things in different ways, and I guess it is not before us today, but one of the other ways where we are clearly linked into a measurement with Shaw is the 3:1 Rule.

187   And again, we recognize the fact that that applies to us. If I can say for the record that it is very problematic for us in terms of our growth, but it is what it is.

188   THE CHAIRPERSON: Okay.

189   So you do agree that from the viewing share perspective, the right approach would be to consider you in the 35 to 45 percent range?

190   MR. MAAVARA: Yes, but there is also an element -- and you clearly said in the policy that a growth in percentage based on the elements of your existing service would not be counted against the applicant, and we are happy to say that in fact the thing that has put us up over 35 is the fact that we are doing quite well with audiences, and that wasn't a result of any acquisition, it is just what we have been doing.

191   THE CHAIRPERSON: Right.

192   MR. MAAVARA: So we realize we are in the zone, as it were, but we are just into the zone and we think that the public benefit trumps the concerns that you might have.

193   THE CHAIRPERSON: And the reason we look at that particular zone of 35 to 45 -- and I think our calculation based on 2012 numbers is about 36.4 percent. I don't know if you would agree that's about where we should be?

194   MR. MAAVARA: That's about right.

195   THE CHAIRPERSON: Okay.

196   MR. MAAVARA: And perhaps this isn't the time to discuss it, because we do have a TV Policy hearing coming, but in our reply we put some of the latest statistics on viewing -- and we mentioned it earlier today -- it behooves all of us to start looking at what is that 35 or 36 percent of, because clearly the evidence is that conventional viewing is dropping precipitously. Specialty is not dropping as quickly, but it has dropped a little bit.

197   So, as Mr. Cassaday says, people are still watching television, but the market is shrinking and when you start looking at OTT, as you see on that Table 5 in our reply, that outside bar of the audience reach of Netflix now -- and there is a lot of folklore about how much of the Internet traffic it takes up every night and the Commission is able to look into that, but, you know, they are starting to -- they are just touching against the Rogers share and then they are just behind us, and that's one service.

198   And you compare it to Rogers, for example, with a big heavyweight sports service and with us with 24 channels and, yet, they're taking a big chunk of the audience. So we're 36 percent of sort of about 75 percent of what Canadians are really doing.

199   The other 25 percent is either to -- well, it's all to non-regulated either U.S. channels or Netflix or other OTT. It's an important issue.

200   THE CHAIRPERSON: As you know I prefer to refer to them as unlicensed rather than unregulated.

201   MR. MAAVARA: Exempt.

202   THE CHAIRPERSON: Exempt, yeah, because exemption is a form of regulation, after all.

203   MR. MAAVARA: And as I keep reminding everybody, everything is regulated whether you know it or not. It's just is how apparent it is.

204   THE CHAIRPERSON: That's correct.

205   So historically when the Commission has been tackling these issues and quite recently when you're in that zone, as you refer to it, we have looked at a number of means of perhaps counterbalancing it. The concern or the risk, as I said earlier, you can't unscramble the egg. And one of the first things that we sometimes look at is structural changes. Of course here I'm just trying to develop the record. I'm not necessarily putting it to you as that's what we've decided. We're a long way from that.

206   So I'd like to get your view on whether -- what would your reaction be if, hypothetically, the Commission were to be concerned to such a degree that we would require a level of divestiture of some of the assets either pre-owned or proposed to be purchased. How would you react to that?

207   MR. CASSADAY: We believe that acquiring all of these assets is in fact in the public interest and that we are the logical buyer that by virtue of already owning 50 percent of TELETOON we have already been involved in that business from the beginning.

208   And we believe our contribution to competition in Quebec shouldn't be underestimated. Competing against Quebecor and Bell is not for the weak of heart. It requires somebody that knows what they're doing that's going to come in this, to this battleground well-funded.

209   Perhaps there is another buyer out there. Perhaps they have to leverage themselves to the hilt to be able to step up and meet the purchase price.

210   What are the implications of that as it relates to the program service going forward? We think they could be quite dramatic. So again, we think we are the appropriate buyer for those reasons.

211   Again, you know, we would remind the Commission that market share does not change one-tenth of a point as a result of us acquiring these assets. The 50 percent interest in TELETOON was already included in the combined Corus/Shaw numbers.

212   THE CHAIRPERSON: Right. And I understand that's your going-in position.

213   What I am asking, though, is the hypothesis that we disagree not just on market share, but as you know you would have 49 percent of the revenues of Category A English-language services. You would have the second-highest share of TV revenues in the English market at about almost 30 percent. I mean, there is other reasons other than the numerical argument based with market viewing shares that might lead the Commission to a different conclusion.

214   Therefore, I'm asking, to complete the record, what would happen if based on the full process, the Commission comes to the end and says, "Look, yes, but you must divest something". What would your reaction be?

215   MR. CASSADAY: There is no stakeholder, with the possible exception of some of the interveners for their own reasons, that would try to define the market as Category As, Category Bs and conventional.

216   Viewers watch shows. They don't watch Category A shows. No one has ever turned the television on saying, "I really want to watch a Category A television network tonight or a Category B television network". They say, "I want to watch the Property Brothers. That is the way the world is viewed.

217   We believe that Canada needs strong, competitive media companies that are capable of withstanding some of this global flow of content and the possible usurping of our access to this content. In the absence of that I really do believe that we put the system at risk.

218   I know your question is somewhat more than hypothetical but, at the end of the day, I would just really urge you to think about the public interest of allowing Corus to continue to grow and prosper, continue to make the contribution that it has made to the system, continue to add diversity by virtue of now being allowed to compete in Quebec.

219   We assure you that we will do as we have done over the past 14 years, a superb job in executing and being accountable.

220   THE CHAIRPERSON: I appreciate it is not your Option A, B, C or D but the question is purely hypothetically if the Commission, based on the entire record -- it's early in the proceeding today -- came to the conclusion that there was a concern, would you step away from the transaction if it was added to it a condition of divestiture as a means of addressing some of the concerns?

221   MR. CASSADAY: Mr. Chairman, we would cross that bridge when we come to it, but there is no line in the sand that's going to be drawn by us today. We realize that you have the discretion and authority to rule as you see fit. Ultimately, we would decide that, as I said.

222   Maybe, Gary, you want to add? I know you have a chart there you'd like to share.

223   MR. MAAVARA: Well, I guess, first of all just a hypothetical. We don't really know what the hypothetical is yet, so it's tough to comment.

224   But you also mentioned and one of the elements of this Commission has been fact-based decision making. You mentioned a number of factors being a share of Category A and a share of audience and revenue and that sort of thing.

225   I guess I just wanted to make the point that in fact the magic of the CRTC's licensing process starting with genre exclusivity is that in fact you have created pools of content activity which has resulted in pools of audience and revenue activity. What do I mean by that? It's illustrated on Table 5 of our reply. You see the average age of viewers. There is a bubble chart there.

226   And the interesting thing about the chart is that when you look at the distribution of the audiences over the four quadrants being men, women, young and old and you see the bubbles there effectively are two news players in Canada, main players that hit a certain audience plus the CBC. There are two sports players in Canada plus the CBC. There are two kids players in Canada plus the CBC. I could go on about lifestyle programming.

227   And that's the magic of what you've accomplished with respect to genre exclusivity and licensing is you have created a market where there are two big players and then there are some smaller players. As a result of that, that's where the revenue and the audiences have gone. That as a result gets reflected in the rating statistics and with the revenue statistics that you refer to. So that there's a reason for this.

228   THE CHAIRPERSON: I fully appreciate people don't tune into a Category A saying "I'm going to watch a Category A tonight" but the fact remains that it's prime real estate from a regulatory perspective and it has added value. That's the question I was asking with respect to that issue.

229   But I think I have heard you, Mr. Cassaday.

230   MR. CASSADAY: And we're talking about TELETOON and we already own 50 percent of TELETOON. When we filed our shareholders agreement in 2007, it was clearly identified in that shareholders agreement that should one of us exit the business the other would have a right of first refusal. The Commission approved that.

231   So just respectfully we would, you know, encourage the Commission to look at our record of having acted in a fair-minded way, having been very cognizant of the safeguards that are in place and never has anyone ever complained about their access to our programmers or our services and that they haven't got treated fairly.

232   THE CHAIRPERSON: Right. Beyond structural safeguards we've also looked at behavioural safeguards in the past and in the deficiency process we put to you for your reaction whether or not you would accept the safeguards inspired from Appendix 2 of the BCE/Astral Decision in 2013-310.

233   As I understood your position you would accept the conditions of licence; one, five to nine and 11 to 13. I take it that you're rejecting anything relating to your relationship within the corporate entity or related companies that deal with BDUs. Is that correct?

234   MR. CASSADAY: That's correct. We have no influence over Shaw. So anything related to their application of these vertical integration rules we have no influence over, zero.

235   THE CHAIRPERSON: So if the Commission wanted to do that your view is that we should use another means of achieving that?

236   MR. CASSADAY: Correct. As you and Gary have mentioned, there is going to be a review in the foreseeable future. We believe that there are other times and places to discuss this but that it is not an issue that should be addressed in this hearing because they are not the applicant. We are and we can't control how they conduct their affairs.

237   THE CHAIRPERSON: Right.

238   Now, your position is, if I'm not mistaken -- correct me if I'm wrong -- that you would be okay with those conditions in Appendix 2 of that decision if they related to the six programming services at issue here.

239   MR. MAAVARA: Yes, because those are the licences that before you.

240   THE CHAIRPERSON: Two questions then. It seems to me that one could, in all logic, look at condition two which deals with the factors to be considered when negotiating rates; three which deals with mandatory filings of affiliation agreements and, three, the requirement for pre-dispute resolution before the expiry of the contracts could easily be interpreted as relating to programming undertakings. And I'm not sure why you have taken the position that those should not apply.

241   MR. MAAVARA: Well, actually, Mr. Chairman, I think we'd be prepared to accept those.

242   THE CHAIRPERSON: Okay.

243   MR. MAAVARA: It was just an interpretation at the time.

244   Our position is that we would accept one to 11 to the extent that they are appropriate because at the end of the day, as you point out, what you're really talking about is a process, an examination of a process, and we accept that.

245   THE CHAIRPERSON: Now, with respect to the fact that you seem to want only them to apply with respect to the six services, if I understand your argument it's because the Commission does not generally have the jurisdiction to impose or amend condition of licence except at the two last years of a seven-year term.

246   But here you've made a request and the Commission has a condition of approval, not a condition of licence, a condition of approval to require changes. So are you saying that we couldn't do that in this particular instance?

247   MR. MAAVARA: Well, actually, you could do that, but our suggestion is that you probably don't want to.

248   THE CHAIRPERSON: Okay, tell me more.

249   MR. MAAVARA: And the reason -- pardon?

250   THE CHAIRPERSON: Tell me more. Why?

251   MR. MAAVARA: Well, the reason is because first of all, I mean, we made the point about the licences not being before you. And I think -- I think you'll agree that it does represent a change to change another licence.

252   If you asked us to, for example, apply then we would. But the circumstances that -- in fact we don't really have a record in this circumstance with respect to the other channels.

253   We would submit that this situation is a little bit distinguishable from that of Bell and Astral in the sense that that hearing was occurring in the context where effectively you had all the BDUs except for one major one intervening against a transaction. You were really just finishing the two major arbitration processes where there was a record with respect to the channels that weren't directly in front of the Commission. But in fact there was -- all of the players were on the record on that.

254   Whereas in this case the interveners, with one minor exception, really haven't spoken to the issue with respect to our other channels so there is no record per se. That's why we took that position.

255   Having said that, if it was a condition of approval we don't want to stand in the way of that. And as we said with the VI rules, we would accept what's appropriate and we would move forward with the other licensees as well on that basis.

256   MR. CASSADAY: Just to build on what Gary was saying, we did consider what the interests of the Commission might be in this regard and we did really come out firmly in the view that this is a different set of circumstances than the one you were faced with when you were talking to Bell.

257   The company that we are affiliated with doesn't own a mobile platform so the risk of having issues associated with granting programming to that particular platform don't exist in this case. And without denigrating our services, Treehouse is not TSN. We just do not have the same degree of muscle that the Bell applicant had in that particular case.

258   And then as Gary said, there is no record of us having been abusive in any way. In fact, I think in the Astral hearing I was sent a copy of the Rogers transcript where they described us as being -- I'm going to paraphrase here -- but the best and easiest people to work with, the most accommodating and the most customer-oriented. So on that basis we feel that you should be relaxed about that.

259   MR. MAAVARA: I guess two factual additions to that is that, in fact, in the Quebec market we have completed affiliation agreements with the BDUs there, specifically Bell and Quebecor. So there is no dispute issue on the table at this time.

260   THE CHAIRPERSON: At this time. They come up for renewal, I understand.

261   MR. MAAVARA: Well, that's true. They do come up for renewal but they come up for renewal after our licence renewals.

262   So as we said, one of the important safeguards of our application today with respect to TELETOON and Historia and Séries+, is that we're saying we will group those into our application for renewal so that you're going to be able to see whether we're doing good things or bad things and all those folks behind us are going to have an opportunity to speak to it.

263   So I think that's a very important safeguard and our affiliation agreements expire after that point.

264   THE CHAIRPERSON: So if I were to summarize your position, in a gross oversimplification -- I appreciate that you were more eloquent than this -- but essentially all right for the six programming services. You think you're distinguishable from the BCE/Astral situation because you don't have all those multiplatforms as a distributor. But in any event should we decide to require it as a condition of approval it's not your hill to die on.

265   MR. CASSADAY: Exactly.

266   THE CHAIRPERSON: Condition 17. It's not a major point but Condition 17 relates to access to station advertising on commercially reasonable terms. Do you have views on that?

267   This was an issue -- perhaps you might want to say the same thing you've said that this was an issue discussed at the hearing on BCE/Astral that might be unique. I don't want to put words in your mouth but there is a condition relating to advertising that was there.

268   MR. MAAVARA: I remember that conversation.

269   First of all from the factual perspective, we haven't had that issue with anyone. So I guess the first thing is we didn't have a point of view because we never had to have a point of view.

270   It's hard for me to figure out how it would come up with us. I mean, the reality is that we're kind of never sold out so we're always looking for customers.

271   THE CHAIRPERSON: So there is no risk in your case. Are you telling me that you would use your access to your radio advertising as potentially an anticompetitive...?

272   MR. MAAVARA: Yeah. Well, I mean, I guess we have been talking a lot as an industry about this. Our view is and according to the Corus values, effectively if we offer it to one then we offer it to everyone. So as a matter of principle does Condition 17 -- would it apply to us? I think the answer is yes.

273   THE CHAIRPERSON: Okay.

274   MR. MAAVARA: And then again, in the factual context in the Quebec market we don't have any radio stations, so it would apply to the rest of the country.

275   THE CHAIRPERSON: Thank you.

276   I just want to make sure. You have some colleagues from Shaw in the back row there. I'm wondering if you have anything to add to this conversation.

277   MR. FERRAS: I think that we totally share the view that Mr. Cassaday and Mr. Maavara shared about the Bell transaction being a very different record and a very different transaction than this transaction. That was a very big transaction that had structural implications for the industry. The record was immense. The number of interveners, the issues that were raised, the number of Canadians that had strong views.

278   The Commission had a very good conversation with Bell about those issues and Bell talked about some of the conditions that it would accept. The Commission had that discussion and the Commission ended up with a set of remedies that describe and fit that transaction. So a very different transaction, a very different record from what we have here before you now.

279   Just generally speaking, I think that we feel that the existing code of conduct that the Commission has, has been a very powerful regulatory tool in the Commission's toolbox that is certainly governing Shaw's behaviour and how we conduct our affairs. When you add to that all of the ex-ante and other ex-post remedies that the Commission has in its toolbox to deal with issues, you've got a very good framework.

280   And that's how we operate. But in terms of how we see the Bell conditions of licence and how they might be applied to the industry we see that very much as a different -- the same concerns but a very different record and a very different transaction.

281   THE CHAIRPERSON: Thank you.

282   Maybe one last question before -- and now I'm addressing the programming undertakings here.

283   You know, the Commission historically has been a bit preoccupied with issues of affordability and choice, particularly with respect to non-VIs and smaller BDUs. One could argue that this set of transactions might give you more bargaining power. So what kind of assurances can you give us that it won't have a negative impact on subscriber choice and affordability?

284   MR. CASSADAY: Is the question regarding programs that we might acquire and the volume of programming that we might acquire?

285   THE CHAIRPERSON: No, more about your programming services and how you go into arrangements with programming -- distribution undertakings as a programming undertaking.

286   MR. CASSADAY: Yeah.

287   Do you want to handle that?

288   MR. MAAVARA: I think, again, the factual context is important here. First of all, starting with Quebec we are a small, relatively small player in that context. We have agreements in place for the next few years.

289   And in the English-language market, I subject Doug to a correction. Most of our agreements are in place; for example, some of the smaller BDUs. And as John mentioned earlier, our history with them is of service. I mean at the end of the day it's an important element of our business plan to get out there in front of consumers because advertising is so important as a revenue model.

290   MR. MURPHY: I was going to just build on that that it's critical for us to get the widest distribution as we can with our linear services.

291   And so we embrace the smaller BDU communities, the CCSA and all of the smaller BDUs across our country because it behoves us to ensure our channels are reaching as many Canadians as possible. Advertising remains a very significant part of our businesses. Mr. Cassaday noted earlier in his comments so there is no issue there from our point of view.

292   THE CHAIRPERSON: So those arrangements are in place till -- would it be possible for you as an undertaking to provide us exactly the end dates of all those affiliation agreements?

293   MR. MAAVARA: The entire system?

294   THE CHAIRPERSON: No, for non-VIs and licenced smaller BDUs.

295   MS COURTEMANCHE: Could you define small, because there are some really small ones out there.

296   THE CHAIRPERSON: Well, they would be exempted, wouldn't they?

297   MS COURTEMANCHE: Yeah, I guess. Okay, so everything that's licenced?

298   THE CHAIRPERSON: Yeah.

299   MS COURTEMANCHE: Okay. Thank you.

300   THE CHAIRPERSON: So 20,000 and up, okay? Perhaps we can discuss offline how that would take you to turn that around and --

301   MR. MAAVARA: Just for specificity, so what we're talking about here is the existing Corus channels plus the ones that are subject to this exemption?

302   THE CHAIRPERSON: That's correct. That's correct.

303   MR. MAAVARA: Okay.

Undertaking

304   THE CHAIRPERSON: Because if I understand your argument is that we shouldn't worry about it because for the next couple of years there are arrangements in place and therefore we shouldn't have to be too concerned about it and we can always catch up to it within a broader policy review.

305   MR. MAAVARA: I guess the other thing, though, to remind the Commission about it is, as Mr. Ferras referred to, there are already some pretty strict rules. The undue preference rules or inability to withhold the signal and the evolving CRTC arbitration process which you announced as part of the Bell proceedings that in fact the test that you apply to that process may change from history. I think those are pretty big hammers that exist now, even before you get to the VI rule, and we're embracing that. So we'll provide you with this information, we'll do our best.

306   THE CHAIRPERSON: Okay.

307   MR. MAAVARA: But I think you already have some pretty solid tools.

308   THE CHAIRPERSON: Okay, understood. Maybe just a final group of questions before we take a break and it relates to Group-Based Licensing as it relates to TELETOON and TÉLÉTOON Rétro. It's my understanding that you want to include both French and English services in the group. And, of course, that has an impact on the allocation of expenditures.

309   When I'm looking at this, it would seem that, for TÉLÉTOON Rétro, who has a nature service that deals with 10 year-old product, perhaps the issue of original French language content might not me as top of mind, because the fact that it would be within or outside of a larger English bundle of services as a group doesn't really have a direct impact on expenditure of original programming; would you agree with that?

310   MS COURTEMANCHE: Yes.

311   THE CHAIRPERSON: So maybe we can spend a little more time on the issue of TELETOON French being within that larger English group.

312   MS COURTEMANCHE: Sorry, can I just clarify?

313   Yes, when it relates to TELETOON Retro English. We are proposing that TÉLÉTOON Rétro French not be in the Group-Based Licensing. So I just wanted to make that clarification.

314   THE CHAIRPERSON: Okay. Okay. I appreciate that.

315   MS COURTEMANCHE: Yes.

316   THE CHAIRPERSON: The TELETOON French, not the Retro, the regular TELETOON French, one could be concerned about the level of expenditures on French language original programming that might be produced or acquired, because some people might think that the decisions to spend might go more to English services rather than French services. What is your perspective on that? Do you think that that's unfounded preoccupation or a founded one?

317   MS COURTEMANCHE: Well I think what you need to do -- and we did do that in our reply comments to the Commission, but, in French, on parle de la feuille de route...

318   LE PRÉSIDENT : Oui.

319   MME COURTEMANCHE : ...de TÉLÉTOON. Alors, ce qu'on dit, c'est que le soutien et l'engagement de TÉLÉTOON envers le secteur de la programmation de l'animation francophone depuis son lancement est impressionnant à notre esprit.

320   On a télédiffusé 1351 des meilleures émissions provenant du Québec, ce qui représente 29 pour cent de l'ensemble de la production et des dépenses de 56,8 millions dans cette seule province. Depuis 2000, 38 émissions de TÉLÉTOON ont été développées au Québec. Au cours des six dernières années, on a investi près de 15,8 millions à l'adaptation et aussi 1582 heures d'émissions originales.

321   Alors, quand on regarde quel est le montant de revenus qui proviennent du Québec -- et on a aussi fourni ces données-là dans notre réplique -- et aussi au niveau des revenus au niveau des abonnés, l'investissement dans la production francophone est sensiblement la même qu'au niveau des revenus. Alors, je pense qu'en ce qui a trait à la production francophone, on regarde la feuille de route et c'est ça qui est garant de l'avenir. On a l'intention de continuer dans la même envergure. Ça fait que, selon nous, il ne devrait pas y avoir de préoccupations.

322   On a une licence, elle a toujours opéré comme une licence qui offre un service anglophone et francophone. Pourquoi? Parce que ça permet une tarification nationale qui est sensiblement la même. Si on avait à opérer un service francophone indépendamment du service anglophone d'animation, je parle, le tarif au Québec ou dans le secteur francophone serait sensiblement plus élevé. La réalité est que les revenus anglophones viennent subventionner la production francophone, quand on regarde l'ensemble. Alors, je pense que, oui, il ne devrait pas y avoir de préoccupations à ce chef-là si on intègre le service TÉLÉTOON qui comprend la composante francophone et anglophone dans le Group-Based Licensing.

323   Et ça ne serait pas gérable, sur un point administratif, là, ça ne serait pas gérable de commencer à essayer de disséquer, là, sortir le service francophone TÉLÉTOON, là, du groupe, ce ne serait vraiment pas gérable. Alors, c'est ce qu'on préconise. On a une bonne feuille de route. On continue. Et on pense que c'est ça qui est dans l'intérêt public. Merci.

324   LE PRÉSIDENT : Je comprends, c'est une excellente feuille de route. Par contre, comme disait monsieur Cassaday tout à l'heure, il y a des nuages à l'horizon dans le système télévisuel et j'oserais dire que peut-être les nuages sont plus foncés et plus menaçants du côté du marché anglophone et il pourrait y avoir une tendance de vouloir déplacer des investissements pour de la production ou de l'acquisition francophone vers de l'acquisition anglophone.

325   MME COURTEMANCHE : Ce serait aux dépens de nos auditoires francophones puis ce n'est vraiment pas une bonne idée de commencer à les -- bien, je vais laisser Carole parler, là, au niveau de comment est-ce que TÉLÉTOON achète de la programmation puis garantit d'aller chercher ses auditoires dans les deux marchés -- de commencer à cannibaliser le service francophone pour soutenir... Ça n'a pas de sens.

326   C'est un service national qui dessert deux services et il n'y a aucune vraiment justification de faire ça, parce que ce serait au dépend de revenus quand même assez importants qu'on va chercher dans le marché, mais je vais demander à Carole d'expliquer comment est-ce qu'on fait la part des choses entre les deux marchés, parce que je pense que c'est une vraie préoccupation puis ça vaut la peine qu'on entende comment est-ce qu'on fait ça.

327   MME BONNEAU : Alors, du côté de la programmation en français, on a une stratégie compétitive face aux autres chaînes. Donc, ce n'est pas dans notre intérêt de ne pas offrir à notre auditoire francophone ce qu'il désire. Donc, toutes les émissions qu'on offre à TÉLÉTOON sont des émissions pour le marché. Alors, c'est pour ça qu'on s'assure que les versions francophones sont faites en français au Québec avec des voix francophones et qu'on s'adresse à ce marché.

328   MME COURTEMANCHE : J'ajouterais qu'un bel exemple d'où ce n'est vraiment pas le cas, c'est la série « Têtes à claques ». C'est une série qui a été créée au Québec et puis ils se préparent présentement à créer une série qui va être la version anglophone. Ça fait que c'est un transfert, là, d'une idée de programmation qui se fait du marché francophone au marché anglophone.

329   L'idée, c'est de s'assurer qu'on a la meilleure programmation pour nos auditoires, que ce soit français ou en anglais. C'est ça qui est garant d'un service, c'est ça qui va garder nos auditoires. Ça fait que, honnêtement, je vois mal pourquoi qu'on voudrait cannibaliser un service.

330   Et, dans Group-Based Licensing, on ne veut pas dévaluer la portion francophone non plus. Il n'y a aucun incitatif de vouloir faire ça, même dans Group-Based Licensing. Ce n'est pas ça l'idée. L'idée de Group-Based Licensing, c'était d'assurer qu'on faisait de la meilleure programmation, ça nous permet de cibler, mais, réellement, je pense que ça va être juste meilleur pour TÉLÉTOON s'ils vont partie du groupe.

331   LE PRÉSIDENT : Je comprends, oui, je comprends que, à votre avis, il y a des forces en présence dans le marché pour aller chercher des auditoires et que vous voulez maintenir donc vos investissements, je comprends. Mais si le Conseil voulait s'assurer, peut-être sous forme d'une... on pourrait parler d'attentes ou d'objectifs pour s'assurer que les montants historiques, votre feuille de route est maintenue par rapport aux dépenses en programmation originale canadienne de langue française, est-ce qu'on peut s'inspirer de la feuille de route, les chiffres que vous avez mis en réplique pour créer des attentes? Est-ce que ce serait un niveau acceptable?

332   MME COURTEMANCHE : Il faudrait revenir en réplique parce que, là, là, faire ça sur un cheveu sur la soupe, là, je veux parler avec l'équipe avant de dire oui ou non. Alors...

333   LE PRÉSIDENT : Oui, oui, mais vous comprenez ce à quoi...

334   MME COURTEMANCHE : Oui, je comprends, je comprends la question.

335   LE PRÉSIDENT : Et peut-être on parle d'attente ou de conditions de licences.

336   MME COURTEMANCHE : Pardon?

337   LE PRÉSIDENT : Soit une attente ou une condition de licence...

338   MME COURTEMANCHE : Oui, on aimerait mieux une attente qu'une condition de licence, là, mais, ça, c'est clair. Ça, c'est clair. Mais, oui, on va revenir en réplique avec quelque chose pour vous proposer à ce chef-là. Merci.

339   M. CECCHINI : Et, Monsieur le Président, si je me permets...

340   LE PRÉSIDENT : Oui.

341   M. CECCHINI : ...pour rajouter en tant qu'opérateur éventuel de Corus Média au Québec, je ne peux que rajouter à ce que vous avez entendu, monsieur Cassaday a mentionné ce matin que ce n'est pas pour les faibles, weak of heart, faibles de coeur d'aller se battre, au fond, sur le front avec Québecor et Bell. Et je ne peux qu'insister sur le fait que l'importance, vous savez, notre structure au Québec au début avant une croissance éventuelle et souhaitée ne bénéficiera pas de la structure qu'Astral avait. Essentiellement, on va dépendre de notre performance de cotes d'écoute pour percer le marché et grossir ces produits-là.

342   Ceci étant dit, dans les quelques 30 employés qui seront à Montréal, une équipe de programmation dédiée à TÉLÉTOON sera présente lorsque -- je m'échappe pour le terme français -- mais vous avez sûrement là le meilleur safeguard pour s'assurer que les productions pour se battre convenablement et garder nos parts de marché au Québec soient par conséquent dédiées, l'argent dédié qui était là historiquement va continuer à l'être au niveau de TÉLÉTOON. Merci.

343   LE PRÉSIDENT : Je comprends bien, mais -- puis je ne mets pas en doute la bonne volonté, la bonne foi de personne -- mais, des fois, on fait face à des situations qui évoluent sur une période de deux, trois ans. Et, parfois, donc, c'est mieux d'avoir des protections réglementaires additionnelles pour s'assurer du bon déroulement des choses. Ça va? Donc, on va revenir à la réplique avec... Je crois que c'est le moment opportun pour prendre une pause. Il est presque... on va prendre une pause de 15 minutes. O.K.? Donc, on va revenir à 10 h 55 -- c'est un petit peu plus que 15 minutes, là -- 10 h 55 pour la reprise de l'instance. Merci. 10:55.

--- Upon recessing at 1035

--- Upon resuming at 1054

344   LE PRÉSIDENT : À l'ordre, s'il vous plaît. Order, please.

345   So I will put you in the hands of the Vice Chair now.

346   COMMISSIONER PENTEFOUNTAS: Good morning. Bonjour, tout le monde.

347   Étant donné que je suis bien trop jeune, contrairement à mon collègue à la présidence, d'avoir été instruit par les Jésuites, j'étais pour vous faire part des références à Justin, sauf qu'en écoutant la réponse de maître Kane, Justin était un barbare et un orateur exceptionnel qui maîtrisait la langue... qui maîtrisait le latin comme très peu le faisait à son époque, sauf que son grec laissait beaucoup à désirer.

--- Laughter

348   CONSEILLER PENTEFOUNTAS : Alors, il apportait toujours une optique hyper-romaine dans ses lectures des oeuvres grecques, qui n'était pas sans conséquence aux divergences entre l'église, pour séparer l'église occidentale de l'église orientale. Alors, même Dieu, deux églises.

349   Et ça me fait penser à la réponse de maître Kane. Vous avez J.R. Shaw et Corus Shaw, mais il y a une séparation là.

350   I'm probably stretching and certainly digressing, and hopefully it will be a doctoral thesis somewhere somehow.

--- Laughter

351   COMMISSIONER PENTEFOUNTAS: That being said, back to business.

352   Corus has a relationship, and I would like you to sort of speak to us briefly on the continuation of that relationship with independent broadcasters from all regions of Canada and obviously more specifically with the OLMC communities and their regional presence throughout Canada, and how that will change or improve following the acquisitions that are before us today.

353   MR. CASSADAY: Are you referring to independent producers?

354   COMMISSIONER PENTEFOUNTAS: Yes, the independent producers, and certainly more specifically members of the OLMC.

355   MR. CASSADAY: Okay. I'll ask Jocelyn to take that.

356   COMMISSIONER PENTEFOUNTAS: Official Language Minority Communities.

357   MS HAMILTON: Hi.

358   COMMISSIONER PENTEFOUNTAS: Hi.

359   MS HAMILTON: Well, we have fantastic relationships with all the producers across the country. In particular, in Quebec there are many producers that we commission projects from, YTV, Treehouse, and then in the future potentially TELETOON.

360   So if you're referring to our relationships, I think they're fantastic.

361   COMMISSIONER PENTEFOUNTAS: Speak to me on how this proposed transaction will create and promote compelling new content. I mean what's the added value following the transaction?

362   MS HAMILTON: I think we are going to continue to maintain the fantastic job that's already been done by the TELETOON staff and what they have done for Canadian independent production over the years and we're just going to continue to do great jobs looking for fantastic shows, looking for the best shows that rate, and it's just going to continue on in that manner when they're part of our family.

363   COMMISSIONER PENTEFOUNTAS: And do you want to bring some specifics to the table and tell me what you will do above and beyond what Astral would have continued to do anyways?

364   MR. CASSADAY: One of the things that often happens at these hearings is there's a big focus on the vision because a lot of times people are picking up a derelict asset. In this particular case, these are all Crown jewels that Bell is forced to sell reluctantly. So we're in a fortunate position of not having to come in here and tell you that we can fix this. They are not fixer-uppers.

365   So the real benefit is going to be from, you know, our secret sauce, which is growing businesses and continuing to increase revenue, which translates into incremental spending for Canadian programming, and of course the huge benefit that's on the table is the public benefits monies, of which 75 percent is going to go on the screen. So I think there's a huge public benefit.

366   And perhaps Gary might want to expand if you would like, Vice Chair, on that or save that for a later point.

367   COMMISSIONER PENTEFOUNTAS: Go ahead. We have some time.

368   MR. MAAVARA: Well, John spoke to the benefits. We have a comprehensive benefits package and I have to say that our proposal was written in February and filed in March, long before the benefits policy statement which came out, but one of the things that we noted about the policy statement was the high level of third-party administration of funds, and in our proposals we in fact, I think, have a higher level of third-party administration than is usual in the past. So we were kind of on the right track, I think, in the context of your thinking.

369   And by that, I mean on the TELETOON funds, we have -- 34 percent are third-party administered, and on the Historia and Séries+ side it's actually 47 percent. So we're looking to groups like Telefilm and the CMF and their expertise to administer these funds and we think that's an important change, an important benefit.

370   COMMISSIONER PENTEFOUNTAS: We will probably have a chance to get into that a little more deeply further down the road.

371   Again, I come to my original question: What, above and beyond what Astral is already doing and would have continued to do, is Corus going to bring to the table for productions amongst official language minorities and regional productions, if anything, above and beyond the fantastic work -- and I'm quoting you -- that you've already done? Is there anything above and beyond the continuation of the "fantastic work that's already been done"?

372   MR. MURPHY: Before, Joce, you answer that, I want to just make one comment and it was à propos to Mr. Chair's questions earlier before the break.

373   One of the things that -- and John referred to it earlier -- one of the things that we're passionate about is ensuring we have highly differentiated channel brands. That means every single brand needs to stand for something that is unique and different --

374   COMMISSIONER PENTEFOUNTAS: Yes.

375   MR. MURPHY: -- and that's both because it drives audiences and it's important to advertisers and to the BDU community.

376   So we have to make sure that we invest in creating a distinct voice, and so, building off the noteworthy success that TELETOON had thus far, one area that warrants further focus is on young adult and adult-based programs.

377   We spoke earlier in our opening comments about how TELETOON is, you know, principally a channel that is watched by adults that don't watch sports, it turns out, and so we view this as an opportunity from a content strategy point of view to go out and take pitches from independent producers across the country that could further build on some of the momentum we have in that audience delivery.

378   As for specifics around -- I wrote down your -- the official minority language producers and regions, Jocelyn, if you want to add to that you can or we can invite Carole who also could probably address that question.

379   MME BONNEAU : Alors, on travaille avec des producteurs québécois, avec des producteurs à l'extérieur du Québec, encore une fois, à la recherche de produits pour notre auditoire. Alors, on a présentement en développement quatre séries en français vraiment pour notre auditoire au Québec.

380   CONSEILLER PENTEFOUNTAS : Qui sont produites hors Québec?

381   MME BONNEAU : Produite hors Québec, on a une série, je pense, hors Québec... Non, il n'y a pas de série hors Québec. Non, pas encore. On n'a pas eu de projets qui ont été déposés hors Québec.

382   CONSEILLER PENTEFOUNTAS : O.K. Est-ce qu'il y a une planification à cet effet-là?

383   MME BROSSEAU : Monsieur le Vice-Président, bonjour.

384   CONSEILLER PENTEFOUNTAS : Bonjour.

385   Je pense qu'il y a trop de micros d'allumer, Gary. Merci, Monsieur Maavara.

386   MME BROSSEAU : Ça va.

387   CONSEILLER PENTEFOUNTAS : Voilà!

388   MME BROSSEAU : Bonjour.

389   Du côté des chaînes Historia et Séries+, par exemple, dans le vidéo, vous avez vu, il y a une très jolie minisérie documentaire qui s'appelle « L'histoire du jouet », qui a été produite à Vancouver.

390   Vous savez, parce que vous l'avez entendu souvent, que ce n'est pas une question de volonté de travailler avec les producteurs hors Québec, c'est une question -- et là, je vais utiliser un anglicisme -- de « fit » de projet par rapport aux marques et aux besoins qu'on a en termes de programmation.

391   Mais l'histoire d'Astral avec les producteurs francophones au Québec a toujours été une histoire de collaboration et de priorisation de projets adaptés à nos marques. Alors, je ne vois pas pourquoi ça irait en descendant.

392   Cela dit, j'en profite pour dire que la culture de Corus, tout comme celle d'Astral, est une culture extrêmement proche des producteurs, quelle que soit la région dont ils viennent. Donc, je pense qu'à ce niveau-là, ça va bénéficier à la fois aux producteurs du Québec mais aussi aux producteurs hors Québec.

393   CONSEILLER PENTEFOUNTAS : Et est-ce que ça comprend des voyages des programmeurs de Corus dans les régions où peuvent se trouver des producteurs de langue française hors Québec?

394   MME COURTEMANCHE : Oui. À chaque année, Monsieur le Vice-Président, on soumet au Conseil le 30 novembre, avec notre rapport annuel justement, la liste de tous les producteurs qui sont en région, alors, à l'extérieur de Vancouver et Toronto, et dans le contexte de programmation anglophone, ça comprend... Montréal est maintenant considéré régional. Alors, on vous fournit une liste détaillée.

395   Je regrette là, avoir su, elle est presque prête, cette liste-là, j'aurais pu vous la fournir. On va la déposer à la fin du mois.

396   Et aussi, on vous soumet à chaque année la liste de tous les endroits où on se rend pour justement avoir un contact face-à-face avec les producteurs indépendants. Mais je peux vous assurer que ça, ça se fait de Vancouver jusque dans l'Atlantique.

397   CONSEILLER PENTEFOUNTAS : Et vous êtes prêts à vous engager à continuer à le faire...

398   MME COURTEMANCHE : Absolument.

399   CONSEILLER PENTEFOUNTAS : ...à le produire et à le déposer au sein du Conseil?

400   MME COURTEMANCHE : Et notre feuille de route est déposée à chaque année avec notre rapport annuel.

401   CONSEILLER PENTEFOUNTAS : Excellent! Merci.

402   Getting back to TELETOON and TELETOON Retro and your adherence to the Terms of Trade with the CMPA, you would have no objection if that were to be considered -- place under a condition of licence?

403   MR. MAAVARA: No, no objection.

404   CONSEILLER PENTEFOUNTAS : Parfait!

405   Désolé, we're going back and forth linguistically. I'm really sorry about the headphones.

406   Pour Corus, et peut-être vous donner une chance de me décrire la nature de votre relation avec l'AQPM, et dorénavant...

407   Oui, Madame Courtemanche.

408   MME COURTEMANCHE : Il y a une entente de principe qui tout récemment vient d'être conclue entre Bell Média et l'AQPM.

409   CONSEILLER PENTEFOUNTAS : Oui.

410   MME COURTEMANCHE : Il va avoir... J'ai parlé avec madame Samson lors de la pause, et puis nous avons déjà indiqué -- on l'avait fait précédemment -- que si on contrôle les actifs d'Historia et Séries+, on va se soumettre à la même entente qui a été conclue avec Bell Média. Alors, il n'y a pas de problème à ce niveau-là.

411   CONSEILLER PENTEFOUNTAS : À brève échéance?

412   MME COURTEMANCHE : Bien, c'est parce qu'on attend là d'être...

413   CONSEILLER PENTEFOUNTAS : Approuvé.

414   MME COURTEMANCHE : ...de contrôler les actifs francophones là.

415   Mais écoutez, si votre décision sort une journée, je vous assure que le lendemain...

416   CONSEILLER PENTEFOUNTAS : Le lendemain. O.K.

417   MME COURTEMANCHE: Ça ne sera pas... Ça ne retardera pas du tout.

418   CONSEILLER PENTEFOUNTAS : Pour les services Historia, Séries+, TÉLÉTOON...

419   MME COURTEMANCHE : Oui. TÉLÉTOON Rétro, oui.

420   CONSEILLER PENTEFOUNTAS : ...et TÉLÉTOON Rétro?

421   MME COURTEMANCHE : C'est ça.

422   CONSEILLER PENTEFOUNTAS : O.K. Excellent.

423   MME COURTEMANCHE : Oui. Et toute autre acquisition qu'on pourrait faire dans le futur là.

424   CONSEILLER PENTEFOUNTAS : Excellent! Ça va.

425   Pour retourner sur TÉLÉTOON et les pratiques d'acquisition d'émissions de langue française, est-ce qu'il y a des plans qui risquent de changer suite à l'approbation de la transaction?

426   M. CECCHINI : Si vous permettez, Monsieur le Vice Président...

427   CONSEILLER PENTEFOUNTAS : Voilà!

428   M. CECCHINI : ...juste avant que peut-être Carole parle de ses plans.

429   Je voudrais juste revenir. C'est important de rappeler un peu ce qu'on a dit dans nos commentaires d'ouverture et prendre un peu ce que M. Cassaday et M. Murphy ont mentionné.

430   Dans le contexte... quand vous parlez du côté francophone de TÉLÉTOON, on ne sera pas dans la même structure qu'Astral avait ou que les opérations avaient avant. Alors, on va être définitivement plus dépendant de nos opérations et de notre proximité donc avec le marché.

431   On a déjà -- et Carole va en parler dans quelques instants -- beaucoup de travail qui a été engagé à TÉLÉTOON dans le passé, puis ça été intéressant de constater ça au niveau des pourcentages de développement qui sont engagés donc envers les producteurs au Québec et éventuellement qu'on va espérer que c'est des projets qui vont se transférer d'un côté... parce qu'on le rappelle encore une fois, TÉLÉTOON est un produit qui est francophone et anglophone au moment du développement, qui permet donc aux producteurs indépendants québécois de rayonner.

432   Je ne sais pas, Carole, si...

433   MME BONNEAU : Pour répondre à votre question, je pense que notre stratégie de programmation est en place. Alors, on va continuer à faire la même chose.

434   CONSEILLER PENTEFOUNTAS : O.K.

435   MME BONNEAU : Donc, les séries qu'on double au Québec, on va continuer à les doubler au Québec, et les séries qu'on développe au Québec, on va continuer à les développer au Québec. Parfois, ça prend un tout petit peu plus de temps.

436   On est en train de travailler sur une série avec Oasis, par exemple, avec les animateurs de « Les Grandes Gueules », qu'on veut animer. Donc, c'est une série qui est en développement. Ils ont travaillé très fort sur les scripts, et on travaille avec eux justement pour faire en sorte que nos séries soient développées pour être compétitives avec le reste, avec l'ensemble de la programmation offerte.

437   CONSEILLER PENTEFOUNTAS : La prochaine question est assez grande, si vous voulez, dans le sens où j'aimerais parler un petit peu de votre stratégie numérique, le contenu qui est destiné à la communauté qui peut-être n'est même pas souscrite à une EDR et qui regarde... qui se divertit par une voie autre que la télé et se trouve surtout en ligne via l'Internet.

438   Mais voulez-vous me parler un petit peu de cette stratégie-là et de ce que cette transaction-là, l'approbation éventuelle, puisse vous permettre dans le cadre de tout ce qui se fait non pas sur les services linéaires mais plutôt en ligne.

439   You can answer that in English. It's fine.

440   MR. MURPHY: Thank you, Mr. Vice Chair.

441   I'll start by talking about how we look to our websites to market our services, first and foremost --

442   COMMISSIONER PENTEFOUNTAS: Sure.

443   MR. MURPHY: -- because that's an essential part of the answer to your question.

444   We look at the websites really as a way to drive audience back to our linear channels and, you know, in terms of content that's available on those websites we really offer a sampling strategy where you can get, you know, a few full episodes but not the whole season of any point in time because we realize that the BDUs are our real customers in terms of the licensing of content on a business-to-business basis. So we think very long and hard about the availability of content on multiple digital platforms.

445   The websites, first and foremost, are designed to engage audiences when they're not watching a linear service or sometimes when they are but mostly to drive them back to the channel so we're able to build our audiences and our ratings.

446   As regards the availability of content on non-linear services, we work with the BDU ecosystem to make sure that we add as much value as possible.

447   So to the authenticated video subscriber who is paying for their service in their home, if they want to see Treehouse on demand, whether they're Rogers or Bell or Shaw or TELUS, there is a lot of content available for them to consume and that's part of our overall economic relationship with the distributors.

448   COMMISSIONER PENTEFOUNTAS: I appreciate the answer, especially when I try to sort of get six questions jumbled up into one.

449   MR. MURPHY: Sure.

450   COMMISSIONER PENTEFOUNTAS: Do you see that spend as a tangible or an intangible benefit?

451   MR. MURPHY: What spend would that be?

452   COMMISSIONER PENTEFOUNTAS: On the digital media presence for Corus.

453   MR. MURPHY: That is, frankly, part of our negotiations for our affiliation agreements. You know, it is not necessarily incremental in this day and age when we are seeking distribution, we need to provide increased value to our BDUs so they can minimize subscriber churn. So that is part of the whole content deal that we make with our distributor partners.

454   COMMISSIONER PENTEFOUNTAS: Nothing will be specifically produced that won't be available on a linear service through a BDU. Everything that is produced -- go ahead.

455   MR. MURPHY: Well, by and large that is correct. Nelvana is experimenting with some short-form web-based content only just as an innovative way to look at new forms of monetizing content, and that content is not part of any channel per se.

456   COMMISSIONER PENTEFOUNTAS: Yes.

457   MR. AURPHY: It will look to be distributed globally on, you know, YouTube and Google and other platforms such as that, but that's sort of a different line of business than is the linear services.

458   COMMISSIONER PENTEFOUNTAS: Right. And are you troubled by any of the -- potentially, some of the tangible or intangible benefit resources going towards the strictly web-based services, Mr. Maavara?

459   MR. MAAVARA: Mr. Vice-Chairman, we have stated on the record that one of the conditions would be that there would be a limit on that of no more than 10 percent, which is the accepted limit.

460   COMMISSIONER PENTEFOUNTAS: Okay.

461   MR. MAAVARA: But again, back to the point about third-party administration --

462   COMMISSIONER PENTEFOUNTAS: Yes, sure.

463   MR. MAAVARA: -- it will be up to them. And on your OMLC question, I guess I would just make the observation that, to the extent that the Canada Media Fund or Telefilm are administering the money, they have a mandate to explore those markets as well, so that would be different from our application to what's happened in the past.

464   And I think without making a pre-submission on the pension -- not the pension, on the benefits policy, that is going to be one of the important elements of that 80 percent rule.

465   COMMISSIONER PENTEFOUNTAS: Thank you, Mr. Maavara.

466   The Montréal programming team, you have it -- you are establishing that team and you listed it as an intangible benefit resulting from the TELETOON transaction. You didn't identify this project as an intangible benefit resulting from the acquisition of Historia and Séries+.

467   At the end of the day, my question is, isn't that team part of the cost of doing business, given the acquisition? Why would you see it as an intangible benefit for TELETOON and a tangible benefit for Historia and Séries+?

468   MR. MAAVARA: I think, just generally, our point on that is simply we were going to be building a presence in Québec and it is an intangible benefit in that sense. I mean it is -- it is doing business, but I guess the distinctive aspect of it is that it's a well-financed, well-capitalized, seasoned broadcaster that is going in there and we are going to be able to make a difference in terms of diversity in that market.

469   With the fact that Astral has passed away, if you want to put it that way, there is a vacuum and we are filling that vacuum and we can hit the ground running. As John said, these are not fixer-uppers, the standard we have to meet is very high. I mean, Judith and her team have set a very high standard, as has Carole on the TELETOON side.

470   COMMISSIONER PENTEFOUNTAS: No, I understand that, I just -- I'm going to sort of repeat my question. I would think that once you are acquiring Historia, Séries+ et TELETOON Français that a programming team in Montréal would be a simple part of doing business and should not be considered a tangible or intangible benefit of a transaction.

471   MR. MAAVARA: I would say no, but it's a question of approach. It's the fact that we are making an investment even on simple things like facilities and premises there.

472   There is -- just the way we do things that Corus is always first class, and we see that as a benefit.

473   COMMISSIONER PENTEFOUNTAS: You see the way you do it as a benefit, in that it's above and beyond how everyone else may want to do it in the industry?

474   MR. MAAVARA: Well, I mean we don't --

475   COMMISSIONER PENTEFOUNTAS: I'm just trying to understand.

476   MR. MAAVARA: We don't necessarily compare ourselves to other people, is just we set a standard and we try to hit it.

477   COMMISSIONER PENTEFOUNTAS: In the event that the Commission denied the proposed TELETOON transaction, would you still go forward with the creation of a Montréal-based team?

478   MR. MAAVARA: Which parts of the transaction?

479   COMMISSIONER PENTEFOUNTAS: TELETOON. Would you still have a Montréal-based programming team for Historia and Séries+?

480   MR. CASSADAY: Again, I think we answered that question earlier, and that is that we can't contemplate a scenario where this acquisition is not approved in its entirety.

481   COMMISSIONER PENTEFOUNTAS: Okay.

482   I think some of the other questions I had here were in part sort of answered following the Chair's questions, in that how should we consider Shaw/Corus one entity or two entities for the purposes of group licensing. You are separate entities for the purposes of ownership changes, you are one and the same. I gather that is your position?

483   MR. CASSADAY: Yes, that is.

484   COMMISSIONER PENTEFOUNTAS: And you don't see anything incoherent in that position?

485   MR. CASSADAY: No, it is what it is. When you look at the group-based licensing, for example, when we talked about this previously, it was recognized that because these companies are separate and make separate programming decisions, that the notion of having them work together to make coherent group-based programming decisions was clearly impractical. So in that context, as in many others, we are completely separate, and yet as it relates, as Mr. Kane mentioned earlier, on so many other respects, the Commission and other government bodies do look at us as being one and the same, and we accept this.

486   As I mentioned, it is a complicated relationship and, quite frankly, often times even our employees are confused about the situation. But I can assure you that, you know, we understand where the application of being affiliated applies and where the application of us being structurally separate applies, and the lines never cross, in my mind anyway, so --

487   COMMISSIONER PENTEFOUNTAS: I understand.

488   MR. MAAVARA: I think in the context of the regulatory obligation, the Commission gave us an indication of where that dichotomy exists as a matter of regulation in your decision with respect to Rogers last week, where you said the licensee had the obligation to be responsible for the service.

489   In this context it's the same thing, we run our 24 channels structurally separate and are responsible for that. Under securities law, we have fiduciary obligations to the Corporation in the same way as Shaw Communications has fiduciary obligations to the Corporation.

490   So we are both legally and structurally separate, and in some ways we are considered to be related. So, for example, as was said earlier, on the diversity policy we accept that, on linkage policy we accept that that's applied. We don't like it, but it's the case.

491   On something like group licensing, it's impossible for the Shaw television people to be responsible for what we do and vice versa.

492   MR. CASSADAY: I would like to just come back to one point, because it has been raised a couple of times today, and that is the possibility of an ordered divestiture of TELETOON. Just to put this on the record, there are approximately $25 million of benefits that are being offered here as a result of our acquiring the 50 percent interest in TELETOON that we do not currently own.

493   In the unlikely event that such a divestiture was required, whoever purchased the remaining 50 percent would not be triggering a control position and, as a result, those benefits would be lost to the system.

494   COMMISSIONER PENTEFOUNTAS: Understood.

495   At the risk of repeating myself and at the risk of you repeating your answer, but for the purposes of the record, if -- would Corus still go ahead with the acquisition if tangible benefits were imposed on the transaction? You can tell me it's a hypothetical, but --

496   MR. CASSADAY: You are talking about tangible benefits in addition to those that have been offered today; is that the question you're asking?

497   COMMISSIONER PENTEFOUNTAS: For the purpose of Séries+ and Historia?

498   MR. CASSADAY: In the -- sorry, are you finished?

499   COMMISSIONER PENTEFOUNTAS: Yes. No, go ahead.

500   MR. CASSADAY: Okay. In the event -- the tangible benefits in the case of Historia and Séries+, as a result of my comments and Mr. Kane's comments, are we do not believe that those are justified, given the fact that (a) this is a result of a transaction between two parties both controlled by J.R. Shaw. Secondly, he has already paid those benefits; to make him pay twice I think would be unfair.

501   So a simple answer to the question is that, again, we do not believe doubling the benefits on Historia and Séries+ is an appropriate action.

502   COMMISSIONER PENTEFOUNTAS: Okay.

503   Sur les avantages tangibles, quelle serait l'apport du Fonds d'appui à l'exploitation à la production des nouvelles émissions canadiennes? Vous avez parlé du Fonds. Peut-être dans la deuxième rangée, Madame Bonneau ou Madame Brosseau.

504   MME BONNEAU : C'est Gary qui va répondre.

505   CONSEILLER PENTEFOUNTAS : Vous avez proposé un Fonds d'exploitation?

506   MR. MAAVARA: Let's start with the Telefilm Talent Fund.

507   Telefilm came to us with this proposal and we jumped at it for a couple of reasons. First, as I said earlier, a seasoned professional third-party administration was an idea -- their vision is to build a fund and develop new talent and would oversee that, so that's why we allocated to them; (a) they know what they're doing; (b) they have the governance and mandate to operate properly; and (3) we had confidence in their vision.

508   As far as the Export Fund is concerned, it is very interesting, over the last few years there have been a lot of proposals made in this area, and I would start by saying if one looks at the study that was done by the -- presented by the CMPA, Profile 2012, a really important statistic -- they report two things which are important. One is that the market for content in Canada is about $6 billion and, secondly, at page 9, they had a chart which talks about export value and they said that basically the combination of sales offshore and production in Canada by foreign studios is about $2 billion, about one third.

509   So clearly the great opportunity for Canadian producers is to grow that number. So we looked at that. That's the context.

510   The Throne Speech the Governor General says:

"Our challenge is to use all the investments made by the production..."

511   Oh sorry, this is actually the Chairman of the CRTC:

"Our challenge is to use all the investments..."

--- Laughter

512   MR. MAAVARA: You haven't been elevated yet; I picked up the wrong document.

"Our challenge is to use all the investments made by the production industry stakeholders to fuel creativity and produce content of global interest, in all forms and formats."

513   And we heard that. And of course that was your speech in Québec City. And now the throne speech:

"To further promote the success of Canadian exporters, our Government will launch a comprehensive new plan to assist Canadian businesses as they expand abroad."

514   Clearly, the message is we should be helping export. And the CMPA, if you go on their Web site, you'll see they have a number of studies where they talk about the importance of developing export. So we thought, "Why don't we take out a chunk of money, have it administered by a third party so they decide and they will decide how best to use that money?"

515   And when we sat down with the CMF and with Telefilm to talk about this, they said, "Yes, indeed, we think that's a great idea." So we're excited about it.

516   COMMISSIONER PENTEFOUNTAS: Great. Si on peut peut-être regarder brièvement les avantages à l'écran et l'ÉIN -- the famous PIN back in the Group licensing days -- mais nous avons énoncé certains principes dans notre décision 2013-310, d'abord que 100 pour cent des sommes ÉIN doivent être dédiées à des producteurs indépendants, que 10 pour cent du financement doit aller aux CLOSM et que 100 pour cent de la programmation doit être originale.

517   Est-ce que vous serez d'accord à respecter ces énoncés qui ont été mis de l'avant dans notre décision 2013-310? That's the recently published Bell Astral decision.

518   MR. CASSADAY: We're going to have to rely on one of our bilingual colleagues. The simultaneous translation's not working right now. So --

519   COMISSIONER PENTEFOUNTAS: We'd ask for 100 per cent of PNI to go towards independent productions, 10 per cent to go towards OLMC's and 10 per cent to go towards original programming.

520   MR. MAAVARA: We have not discussed this, but basically our position as we filed was that the 75 per cent of the funds would go to independent producers of the moneys that we administer. And then on the export, for example, we set on the record that, in fact, we would not access that fund at all for Corus. And, again, that's going to be third party administered.

521   COMISSIONER PENTEFOUNTAS: Okay.

522   MR. MAAVARA: And then with TELETOON, it was 90 per cent animation as well. So there was quite a number of conditions on that money.

523   COMISSIONER PENTEFOUNTAS: Understood. The Cercle Molière, HEC and Telefilm, do these organisations have a direct link to television?

524   MR. MAAVARA: Well, it's interesting you mention that because I was going to refer to Cercle Molière when you asked the question again about OMLC. I mean, here, you have this group in Winnipeg who've had terrific success in developing stories. And I wouldn't look at it strictly speaking in terms of television, for what they do is they create stories for the francophone community, not only in the west, but in our discussions with them, they've talked about some of the Québec writers --

525   COMISSIONER PENTEFOUNTAS: M'hm.

526   MR. MAAVARA: -- who have their works presented there. And also, the result is it works from the west, go to the east as well. So we certainly think that they're a valid recipient because they form part of the development of story telling capacity across the country. And what were the other two groups that you referred to?

527   COMISSIONER PENTEFOUNTAS: HEC, Hautes Études Commerciales, the business school in Montréal, and Telefilm.

528   MR. MAAVARA: Well, again, they really go to understanding our business and where it's going better. We looked at them, first of all, the person we've talked to has a strong background in television. And effectively, what they're working on is helping the rest of us understand better what's happening in the system and where it's going. So that's why we thought it was appropriate.

529   COMISSIONER PENTEFOUNTAS: Festivals, we always have a debate on festivals and maybe if you want to speak to festivals and the fact that you would be buying tickets and promoting festivals as part of the benefits package.

530   MR. MAAVARA: Yes, you know, it's interesting, but with festivals, we live in a digital age and we have Skype and all the rest of it and it's really easy to get together with people electronically. And having said that, the good old fashioned festival -- whether it's Banff or the Ottawa Animation Festival here -- I was a speaker at the festival here just about a month or two ago and the fascinating thing about that was that most of the people in the room were from somewhere else. And the reason they came was to sit down with colleagues and develop projects, discuss ideas and that sort of thing. So are festivals important? Yes, they are, absolutely.

531   COMISSIONER PENTEFOUNTAS: There'd go the link with Canadian content and the sale of Canadian content around the world, I gather.

532   MR. MAAVARA: Yes and, for example, in the animation areas, as Mr. Cochrane will tell you, we were really thrilled with the kids section of Banff which started a few years ago. And the result is, for example, the head of BBC acquisitions in the kids area comes every year and spends three or four days with Canadian producers and gets to see a lot of stuff. And that doesn't happen without that sort of an event.

533   CONSEILLER PENTEFOUNTAS : O.K. Je ne sais pas si les traducteurs sont de retour, mais, pour Historia et Séries+, présentement, il y a 1,5 pour cent de leur grille horaire annuelle aux émissions originales de première diffusion. Quels sont les plans de Corus en ce qui a trait à la production, à la diffusion d'émissions originales pour ces services-là? Je ne sais pas si monsieur Cecchini veut s'adresser à la question.

534   M. CECCHINI : Votre question est en lien avec les bénéfices tangibles toujours?

535   CONSEILLER PENTEFOUNTAS : Je ne dirais même pas avec les bénéfices tangibles, mais plutôt avec les émissions d'intérêt national et la quantité de cette grille horaire qui sera dédiée à la programmation originale.

536   M. CECCHINI : Oui, alors on n'a pas -- si je comprends bien votre question, peut-être que madame Brosseau pourra ajouter après -- mais, pour le moment, monsieur Pentefountas, Monsieur le Vice-Président, comme, encore une fois on a mentionné souvent, on a la chance de mettre la main potentiellement sur des produits qui sont en santé extraordinaire, donc notre première réflexion en entrant lorsqu'on va avoir la chance, je le souhaite, d'être propriétaire de Historia et Séries+, c'est vraiment d'abord d'être à l'écoute des gens qui ont bâti ces succès-là.

537   Et de par conséquent voir comment la nouvelle réalité de ces chaînes-là, ne faisant plus partie d'un grand groupe au niveau du Québec...

538   CONSEILLER PENTEFOUNTAS : Um-hum.

539   M. CECCHINI : ...mais faisant, évidemment, étant liées. Puis lorsqu'on parlait ce matin, en termes de -- je ne sais plus si c'est tangible ou intangible, mais l'apport de Corus va rendre les produits, va assurer à ces produits-là qui vont devoir se battre dans un nouvel aréna et dans un nouvel uniforme avec essentiellement une agilité et une capitalisation importante, comme on a mentionné ce matin.

540   Alors, en ce sens-là, je vous dirais en bon français, going in, je ne vois pas de grands chambardements. Après ça, le marché puis les défis que le marché va apporter, là, effectivement, comme on fait à toutes les fois, comme monsieur Murphy a mentionné ce matin, on est des experts à bâtir des marques, à se démarquer en programmation.

541   Donc, selon ce qui va arriver, selon la réaction des autres joueurs, selon les coûts aussi... On a un enjeu de coûts. Monsieur Cassaday a mentionné ce matin comment les coûts progressent d'une façon vertigineuse. Alors, en ce sens-là, il y aura... Très dur de répondre à cette question-là sur le long terme. Mais, à court terme, ce qui est intéressant dans cette acquisition-là, c'est qu'il n'y a pas d'enjeux le jour 1. Et, ça, pour nous, c'est très important.

542   Je ne sais pas, Judith, si...

543   MME BROSSEAU : Bien, en ce moment, ces deux chaînes-là, dans le cas de Séries+, il y a 95 pour cent de la grille qui est dédiée à la dramatique, qui est une émission d'intérêt national. Et, dans le cas de Historia, bon an, mal an, la grille est constituée de 40 à 50 pour cent de documentaires.

544   Et, encore là, pour reprendre ce que mes collègues ont dit, ce sont des marques extrêmement fortes dans le marché du Québec et il n'y a pas de raison de changer cette recette-là qui est extrêmement populaire auprès des téléspectateurs.

545   CONSEILLER PENTEFOUNTAS : En parlant d'une marque forte, ça enchaîne la prochaine question. Vous avez en quelque sorte demandé d'être traités de la même façon que Groupe TVA était traitée, jusqu'ici, on se...

546   MME COURTEMANCHE : Oui, oui, oui, dans le sens qu'on demande d'opérer, par nos demandes, on demande qu'on ne soit pas obligés d'être... bien, qu'on n'ait pas d'obligations, pardon, au niveau des ÉIN, là, mais on demande d'être assujettis, par exemple, ou on propose, pardon, une condition de licence quand ça vient aux dépenses en programmation canadienne.

547   CONSEILLER PENTEFOUNTAS : Non, je comprends ça, ayant présidé ce comité-là. Mais expliquez-moi en quoi vous êtes semblable au Groupe TVA. Sans leur lancer des fleurs, il y a un service exceptionnel dans le sens de la quantité de programmation, du contenu canadien, de la programmation originale. Puis je ne vous fais pas part de tous les chiffres, là, mais DÉC, ils sont à 88 pour cent, chose qu'aucun autre diffuseur, il n'y a personne d'autre qui peut se comparer à ces chiffres-là.

548   Alors, en quoi êtes-vous exceptionnels de la même façon que TVA est exceptionnelle? Et, par cette exceptionnalité, vous auriez en quelque sorte les mêmes conditions de licence que le Groupe TVA?

549   MME COURTEMANCHE : Bien, je ne pense pas que, quand on a proposé le régime qu'on a proposé, ce n'est pas parce qu'on se pensait exceptionnels. C'est que, quand on a regardé la politique qui s'applique présentement, on s'est dit: "Bien, on a deux choix. On opère soit indépendamment ou on opère dans le contexte d'un groupe."

550   La politique prévoit qu'on peut opérer un groupe dans le contexte où on a des services qui sont conventionnels, puis services payants, spécialisés. Et on a au-delà de 100 millions de revenus. Bien, dans ce cas ici, ce n'est pas le cas pour Historia et Séries+, on n'aurait pas 100 millions ou plus de revenus.

551   Alors, on s'est dit: "Bien, vu qu'on n'opère pas, là, dans le contexte d'un groupe..." Et, pardon, on a aussi regardé la décision d'Astral en 2012 qui a été permis de créer un groupe anglophone et francophone. Et il avait un contexte très particulier, parce que, dans ce contexte-là, les revenus qui provenaient du marché francophone que du marché anglophone étaient comparables. Alors, le Conseil a créé un grand groupe pour les fins, là, de la politique, qui comprenait des services francophones et les services anglophones.

552   Mais on a noté que, lors de cette audience-là, il y a eu plusieurs producteurs du côté francophone qui se sont objectés. Ils ont dit: "Non, non, il devrait y avoir deux groupes. Il devrait y avoir un groupe et un groupe anglophone." Parce qu'ils avaient une préoccupation que peut-être il y aurait une allocation des dépenses démesurées du côté anglophone aux dépens des services francophones.

553   Alors, on a pris tout ça en ligne de compte et on s'est dit: "Bon, alors, ce qu'il y a le plus d'allure dans le contexte, c'est de dire qu'on va opérer ces services-là indépendamment." Quand on regarde au contexte réglementaire quand c'est indépendant, bien, on a regardé ce que le Conseil fait. Puis le Conseil n'impose pas des ÉIN, c'est juste dans le contexte d'un groupe. Alors, on a proposé les dépenses. Et c'est tout simplement ça.

554   L'allusion qu'on faisait à TVA, c'était tout simplement de dire que, nous autres, on va être un beaucoup plus petit joueur. Alors, on ne devrait pas avoir plus d'obligations que le plus gros joueur en radiodiffusion au Québec qu'eux autres n'ont pas les mêmes obligations.

555   CONSEILLER PENTEFOUNTAS : Oui, mais, oui, mais leurs obligations, c'est un DÉC, dépenses en contenu canadien de 88 pour cent, premièrement.

556   MME COURTEMANCHE : Oui, mais...

557   CONSEILLER PENTEFOUNTAS : Sur la comparaison avec Astral, dans le temps, il y avait un équilibre total entre les services francos et anglos. Et au niveau des revenus, c'était pas mal égal également. C'est parmi les facteurs qui ont motivé la décision telle quelle.

558   Corus ne jouit pas de ce même équilibre entre les deux langues. Le DÉC, je ne pense pas que vous allez proposer 80 pour cent en dépenses en contenu canadien non plus. C'étaient les deux éléments les plus en faveur de ce genre de traitement pour ces services-là. Alors, tout ce que je veux dire, c'est que quelqu'un verra mal comment on peut se comparer, que ce soit avec le Groupe TVA ou avec Astral dans sa mouture ancienne.

559   MME COURTEMANCHE : Bien, c'est parce que c'est ça que je saisis mal. On ne tentait pas de faire une comparaison. On faisait tout simplement une constatation de faits. C'est la constatation de faits, c'est que: comment est-ce qu'on va opérer ces services-là? Est-ce qu'on va les opérer dans un groupe ou est-ce qu'on va les opérer indépendamment?

560   On a regardé la politique, on a regardé les faits. On a regardé ce qui se passe dans le marché. Puis on s'est dit: "Bien, la seule chose qui est réaliste ou qui se conforme avec le plan réglementaire existant, c'est de les opérer indépendamment.

561   Dans le sens, la comparaison, c'était tout simplement de dire qu'on trouvait que c'était raisonnable vu le fait que le bureau de radiodiffuseur du Québec opérait de cette façon-là. Maintenant, oui, vous avez bien raison, il y avait des raisons très particulières pourquoi que, premièrement, Québecor n'a pas demandé d'opérer comme un groupe et deuxièmement pourquoi vous avez dit: "Oui, ça a du bon sens dans le contexte."

562   Mais c'est tout simplement pour vous dire: on tentait tous simplement d'appliquer la politique telle qu'elle existe. C'était ça notre objectif. C'est ça que je veux vous répondre. Ce n'est pas la comparaison.

563   CONSEILLER PENTEFOUNTAS : J'apprécie votre lecture...

564   MME COURTEMANCHE : Ce n'est pas la comparaison.

565   CONSEILLER PENTEFOUNTAS : J'apprécie votre lecture. Ceci étant, dans le régime d'attribution de licences par groupes, on exige un DÉC de 30 pour cent. Dans le cas de Séries+, je pense que votre proposition nous ramène à 17. Comment est-ce qu'on peut justifier cette faible dépense en DÉC?

566   MME COURTEMANCHE : Bien, c'est parce que, justement, c'est l'application de la politique. Parce que, quand on soumet un DÉC de 30 pour cent dans ce contexte-là, c'était dans... Présentement, le DÉC de Historia et de Séries+ est de 30 pour cent, mais c'était dans le contexte que ces services-là opéraient dans un groupe.

567   CONSEILLER PENTEFOUNTAS : Um-hum.

568   MME COURTEMANCHE : O.K.? Nous autres, on ne propose pas qu'ils soient opérés dans un groupe, on propose qu'ils soient opérés indépendamment. Alors, on n'aura pas la flexibilité, là, que... On ne pourra pas dire: "Il y a des dépenses d'Historia qui vont aller à Séries+" puis vice versa, là...

569   CONSEILLER PENTEFOUNTAS : Et la contrepartie pour le système en agissant ainsi?

570   MME COURTEMANCHE : Bien, que la façon que vous avez opérée pour Blue Ant dans le sens que c'est... Pardon, peut-être, Blue Ant, ce n'est pas une bonne comparaison, mais dans le contexte que n'importe quel service indépendant, le cadre réglementaire prévoit qu'ils vont avoir un DÉC, O.K., un DÉC qui prévoit les sommes historiques moins les licences, là -- comment est-ce qu'on dit ça en français?

571   CONSEILLER PENTEFOUNTAS : Bien, on a fait...

572   MME COURTEMANCHE : Le top-up, là. Ce n'est peut-être pas bien français, mais, en France, ils diraient le top-up. Ça fait que c'est correct de le dire ici. Alors, c'est tout simplement l'application de la politique de dire que, quand on a un service qui opère indépendamment, on regarde qu'est-ce qui avait été dépensé historiquement durant les trois dernières années. On exclut les top-ups. Et on est arrivés au chiffre de 17 pour cent. Alors, c'est tout simplement, c'est comme ça que ça s'est fait.

573   Pour nous autres, si on était obligés d'opérer Séries+... Séries+ a un DÉC de... anciennement, avant qu'ils soient incorporés dans le groupe, là...

574   CONSEILLER PENTEFOUNTAS : Oui.

575   MME COURTEMANCHE : ... d'Astral, ils avaient un DÉC de 22 pour cent.

576   CONSEILLER PENTEFOUNTAS : Um-hum.

577   MME COURTEMANCHE : Alors, c'est juste... c'est l'historique, là, c'est tout simplement, ce l'application de la politique...

578   CONSEILLER PENTEFOUNTAS : Oui.

579   MME COURTEMANCHE : ... telle qu'on la connaît et on estime qu'on la comprend.

580   CONSEILLER PENTEFOUNTAS : Je comprends. Ceci étant, vous... Séries+ et Historia feront partie si la transaction est approuvée d'un groupe, mais on va les traiter indépendamment?

581   MME COURTEMANCHE : Ils ne feront pas partie du groupe pour les fins des dépenses en émissions canadiennes. Alors, nous autres, on a un groupe anglophone...

582   CONSEILLER PENTEFOUNTAS : Je comprends, mais, pour les fins, je vous interromps, je suis vraiment désolé, mais pour les fins de... la propriété sera partagée. Le propriétaire sera commun, mais on va les séparer parce que ça vous avantage sans nécessairement avantager le système.

583   Et, dans ce régime d'attribution de licences, on a regardé les dépenses historiques pour essayer d'établir un plancher, disons, et non pas un plafond. Et, si la demande est de baisser même la dépense historique et de ne pas les traiter comme faisant partie du groupe...

584   MME COURTEMANCHE : Mais c'est ça où est-ce qu'il faut pas se tromper, c'est qu'on ne diminue pas la dépense historique. La dépense historique est maintenue. C'est ça, je pense que c'est ça ou je saisis mal votre question. Nous autres, la dépense historique, on la maintient. On l'a regardée, c'est la même... On a regardé ce qui a été dépensé durant les trois dernières années. Et la seule chose qu'on a exclue, c'est le top-up du Fonds des médias canadiens.

585   CONSEILLER PENTEFOUNTAS : Canadiens.

586   MME COURTEMANCHE : Alors, on ne dépense pas moins, on dépense la même chose. Alors, c'est ça où je ne saisis pas la problématique.

587   CONSEILLER PENTEFOUNTAS : Ça va. L'impact sur la viabilité de Séries+ qu'aurait un seuil de 30 pour cent de DÉC sans la marge de manoeuvre accordée à un groupe, quel sera l'impact?

588   MME BROUSSEAU : Je me vois obligée de répondre à une question pour laquelle je n'ai pas vraiment toutes les compétences. Alors, vous allez devoir être indulgent. Ce n'est pas moi qui ai fait ces calculs-là. Je présume que vous les avez faits du côté de Corus.

589   MME COURTEMANCHE : Nous autres, on a fait les calculs. Do you want to talk about how you did the calculations and --

590   MR. KNIGHT: I think I'd have to get back to you with the exact dollar amount on what it would be, but...

591   COMISSIONER PENTEFOUNTAS: Okay. Just to get back to judicial spend of these services, for Séries+, would 22 percent be the exact figure on historic spend?

592   MR. KNIGHT: That was the historic spend with the CMF bÉINg out of use...

593   COMISSIONER PENTEFOUNTAS: With the top-up.

594   MR. KNIGHT: That's correct.

595   COMISSIONER PENTEFOUNTAS: The famous top-up.

596   MR. KNIGHT: Yes.

597   COMISSIONER PENTEFOUNTAS: Okay, and now, you're proposing 17 excluding that top-up, if you will.

598   MR. KNIGHT: That's correct.

599   COMISSIONER PENTEFOUNTAS: Okay, okay.

600   MME COURTEMANCHE : Which is consistent with the policy, just to be clear.

601   M. CECCHINI : Et je peux ajouter, Monsieur le Vice-Président, encore une fois, au sens plus large, ça va être important de garder une certaine flexibilité qu'on prend ici, qu'on respecte effectivement les trois dernières années d'investissement sans le top-up et comme mentionné en commentaire d'ouverture, je pense qu'il est justifié de rappeler au conseil que l'Association québécoise, que l'AQPM supporte notre position puis notre proposition.

602   CONSEILLER PENTEFOUNTAS : Je comprends. Si on était pour se comparer à Showcase, qui est un service canadien de Cat A, qui se consacre entièrement aux dramatiques et Showcase a un DÉC de 33 pour cent, ce qui est largement supérieur à la proposition de Corus de 17 pour cent, comment est-ce qu'on trouve une façon de relier ces deux faits-là?

603   MME COURTEMANCHE : Je ne suis pas certaine si j'ai bien saisi la question. On essaie de relier le fait que, présentement...

604   CONSEILLER PENTEFOUNTAS : Showcase dépense 33 pour cent en DÉC.

605   MME COURTEMANCHE : O.K.

606   CONSEILLER PENTEFOUNTAS : Et on propose à ce que Séries+ dépense 17 pour cent en DÉC.

607   MME COURTEMANCHE : Bien, c'est deux services complètement distincts dans deux marchés différents, qui ont été autorisés d'une façon complètement différente. Historiquement, Showcase avait toujours un DÉC qui était plus élevé que Séries+. Séries+ a débuté... L'objectif de Séries+, il faut retourner à la nature du service, là, Judith peut en parler mieux que moi, là, parce que c'est elle qui l'opère, mais la nature du service était de vraiment apporter le meilleur des dramatiques non canadiennes aux téléspectateurs francophones. Maintenant, en reconnaissant cette nature de service-là, ils ont été autorisés avec un DÉC de 22 pour cent.

608   Showcase avait... là, je ne l'ai pas, là, il faudrait que je regarde dans mes livres, là, je ne l'ai pas par coeur, là. Mais, si je ne me trompe pas, historiquement, Showcase avait toujours un DÉC qui était plus élevé que ça. C'est de création, ça. Ce n'est pas nous qui l'ont inventé, ça, c'est un fait qui existe depuis le début du temps que ces services-là ont été autorisés. Attendez...

609   COMMISSIONER PENTEFOUNTAS: If you have the number, Gary, you can just give it to us, if you have it there.

610   MME COURTEMANCHE : Je devrais le savoir, j'étais l'avocate au dossier du CRTC quand on a l'autorisé, mais... Je devrais le savoir par coeur, mais, là, non. Attendez une minute, là. Je peux vous revenir en réplique avec cette donnée-là, là. Je ne veux pas prendre trop de temps, là, mais ce n'est pas...

611   CONSEILLER PENTEFOUNTAS : O.K., O.K.

612   MME COURTEMANCHE : Je regarde dans mon livre puis je ne vois pas le DÉC original, mais je vais aller vous le chercher.

613   CONSEILLER PENTEFOUNTAS : Je vais vous citer brièvement le ministère de la Culture et des Communications au Québec qui est intervenu dans le processus et a soulevé des inquiétudes quant aux impacts potentiels négatifs que les diminutions de DÉC pourraient avoir sur l'industrie québécoise de la production audiovisuelle.

614   Qu'en pensez-vous?

615   MME COURTEMANCHE : Bien, je vais répéter le fait que, historiquement, ce qu'on fait là, c'est qu'on ne dépense pas moins. Alors, la réponse, c'est que notre investissement n'est pas en diminution.

616   CONSEILLER PENTEFOUNTAS : O.K.

617   MME COURTEMANCHE : Alors, on maintient la dépense, et comme M. Cecchini l'a dit tantôt, l'AQPM, qui est au pif de ces choses-là, saisit très bien et ils étaient d'accord avec ce qu'on proposait. Alors, je ne pense pas là qu'on cherche à désavantager personne.

618   Au contraire, on veut soutenir l'investissement qui va se faire mais au niveau qu'il est présentement, et il va être bonifié, cet investissement-là, Monsieur le Vice-Président, par les bénéfices tangibles qu'on a proposés.

619   COMMISSIONER PENTEFOUNTAS: Last kick at the can.

620   Les services de Cat A profitent de certains privilèges, protection du genre, distribution obligatoire et ainsi de suite, et tout ça se fait en échange d'obligation plus élevée en matière de contenu canadien. On s'entend sur ce point-là jusque là, Madame Courtemanche?

621   MME COURTEMANCHE : Oui.

622   CONSEILLER PENTEFOUNTAS : O.K. Alors, dans quelle mesure la contribution à la programmation canadienne que vous proposez est-elle à la hauteur de ces privilèges? Je vous ramène à votre chiffre de 17 pour cent, et si vous voulez réciter les dépenses traditionnelles historiques, libre à vous de le faire.

623   MME COURTEMANCHE : Bien, moi, ce que je vous dis, c'est que quand le Conseil a autorisé ce service-là, il l'a autorisé sur une base de catégorie A et il a estimé à cette époque-là que c'était le genre d'investissement qui justifiait une licence de catégorie A. Alors, je ne pense pas qu'au fil des années ce fait-là a changé.

624   Il y a eu des renouvellements depuis 2000, et le Conseil a regardé encore les montants d'investissement qui étaient faits par cette catégorie-là qui justifiaient justement les accès privilégiés, et ça n'a pas changé.

625   Et tout simplement, nous autres, on dit, bien, O.K., c'est justifié, c'est justifié depuis que ces services-là aient été autorisés. Donc, nous continuons sur ce qui a été fait et nous allons bonifier avec des avantages tangibles. C'est comme ça qu'on voit ça.

626   MME BROSSEAU : Monsieur le Vice-Président, pour mémoire, quand la demande a été faite pour obtenir une licence pour Séries+, il y avait énormément de craintes de la part des diffuseurs conventionnels québécois francophones à l'idée que nous allions envahir le champ des téléromans et des dramatiques canadiennes.

627   Quand on sait les coûts de production qui y affèrent et les besoins qu'ont ces productions-là d'aller chercher des sous, entre autres, au Fonds canadien des médias, c'est clair que c'est pour ça que le CRTC, dans sa sagesse à l'époque, avait accepté notre proposition, qui était d'offrir le meilleur de toutes les fictions à travers le monde, mais non pas exclusivement des fictions québécoises -- pour mémoire.

628   CONSEILLER PENTEFOUNTAS : Je comprends.

629   MME COURTEMANCHE : Et je dirais aussi qu'il y a une différence d'échelle entre Showcase et Séries+. Ça, c'est un autre fait qui est important à retenir parce que la base d'abonnés et d'auditoires est sensiblement plus grande dans un marché anglophone qu'elle l'est dans un marché francophone.

630   Mais tout ça, je vous reviendrai avec les chiffres précis là en période de réplique.

631   CONSEILLER PENTEFOUNTAS : Je pense que le DÉC original de Showcase était de 42 pour cent. Ça vaut ce que ça vaut.

632   MME COURTEMANCHE : O.K.

633   COMMISSIONER PENTEFOUNTAS: Would you like to add something, Mr. Maavara?

634   Je me demandais si maître Maavara voulait rajouter quelque chose.

635   I saw you sort of champing at the bit.

--- Laughter

636   COMMISSIONER PENTEFOUNTAS: I may be wrong.

637   MR. MAAVARA: I was just -- I guess the observation we make in addition to the scale of Showcase is that Showcase would also be inside that group, the other group.

638   COMMISSIONER PENTEFOUNTAS: Yes. Yes.

639   MR. MAAVARA: So those numbers are illusory in the sense that they've moved over. And on the scale point, you know, you're talking about 8 million subscribers, so just covering the base costs makes the opportunity for programming much different

640   COMMISSIONER PENTEFOUNTAS: And that also is part of the motivation for not including these services in the group. Would you at that, Madam Courtemanche?

641   MS COURTEMANCHE: No.

642   COMMISSIONER PENTEFOUNTAS: No?

643   MS COURTEMANCHE: No, it wasn't the motivation. The motivation was just the regulatory framework that exists currently. That was the motivation.

644   COMMISSIONER PENTEFOUNTAS: And you are comparing yourselves with Groupe TVA in arriving at that?

645   MS COURTEMANCHE: We are just saying that -- we did. We did.

646   COMMISSIONER PENTEFOUNTAS: Okay.

647   MS COURTEMANCHE: But I think that, you know, it was just the point that, you know, I think it's fair. The point was more one of fairness. I think it's fair for us to operate on an independent basis in a circumstance where the biggest competitor in the market works under these parameters, that they have less -- you know, certainly not -- why would we have more obligations than the biggest competitor in the market?

648   I think it was more of the fairness argument.

649   CONSEILLER PENTEFOUNTAS : Ça complète pour moi, Monsieur le Président. Merci.

650   THE CHAIRPERSON: Thank you.

651   Commissioner Shoan...?

652   COMMISSIONER SHOAN: Good morning, thank you for being here.

653   I have some questions for you with respect to tangible benefits, CPE and PNI. Before I get into those I had a couple of follow-up questions from some of the comments and exchanges we have had this morning.

654   I may have missed this in an exchange you had with Commissioner Pentefountas, so I thought I would ask it again just to be clear. When Nelvana programming is removed, what percentage of the programming broadcast by TELETOON Services is independently produced?

655   MS COURTEMANCHE: More than 75 percent is independently produced if you remove the Nelvana titles.

656   COMMISSIONER SHOAN: Thank you, that's very helpful.

657   MR. MAAVARA: I'm sorry, just for clarity, we have a confusing of words there. When you remove the Nelvana titles --

658   COMMISSIONER SHOAN: Yes?

659   MR. MAAVARA: -- they are all independently produced. There isn't another producer that is related to --

660   COMMISSIONER SHOAN: Okay.

661   MR. MAAVARA: -- so it's 100 percent independent. With Nelvana in, the number is roughly 80 percent.

662   COMMISSIONER SHOAN: Eighty percent, okay. Great, thank you.

663   You made mention this morning of the ominous cloud of Netflix and other over-the-top services. I was curious whether Corus or Nelvana license content to Netflix. If so, how much? If it's confidential you can say so, I'm just trying to get a sense of whether or not these OTT services are also a revenue-generating opportunity for Corus.

664   MR. MURPHY: Thank you. In Canada, as I referred to in my earlier comments, we work with the BDU ecosystem and support the system in Canada, and our nonlinear arrangements with the BDUs are part of our affiliation agreement, so we do not license Netflix in Canada accordingly.

665   Internationally, we do license Netflix in any markets they are pursuing. We look to take advantage of opportunities for this growing platform in all foreign markets. Nelvana has 4,000 episodes versioned in more than 50 different languages, so if we can find new ways to exploit and derive revenue from that, we will certainly look at that.

666   But in Canada we focus entirely on our BDU partners.

667   COMMISSIONER SHOAN: Okay.

668   In the future, in the event this application were to be approved, you would have quite a bit of dominance in the animation production sector, the animation sector. Do you envision an approach with respect to your nonlinear rights whereby you would take them online or perhaps sort of remove yourself from the BDU ecosystem?

669   MR. CASSADAY: No, we do not. We see continuing with our practice and, as Doug mentioned earlier, our basic philosophy is that it is in our mutual advantage to keep as many Canadians in the system as we can so to ensure that they have access to our content in linear and nonlinear fashion and on whatever platform they want to watch it on.

670   We believe that that is the enlightened approach for all programmers, but it is certainly one that we have adopted. So our practice would not change in the future in that regard.

671   COMMISSIONER SHOAN: Okay, thank you.

672   I would like to ask you about the Corus Export Initiative Fund. My first question is with respect to the impacts, if any, of the fund on the production of new Canadian programs in either language market. As a follow-up to that, one could argue that perhaps the Corus Export Initiative Fund is actually an off-screen benefit and not an on-screen benefit, so I wanted you to address the possible reallocation of the Corus Export Initiative Fund as an off-screen benefit.

673   MR. MAAVARA: Well, I will start with the second part of your question. One of the things that we said in response to deficiencies was that if the Export Fund was not acceptable in the Commission's perspective, then we would just move the funds into script and concept development and on-screen in the same proportion.

674   So we have accepted that that would be what the disposition of those funds would be.

675   COMMISSIONER SHOAN: And by that, Mr. Maavara, you mean you would move it into the programming initiative aspect?

676   MR. MAAVARA: Yes.

677   COMMISSIONER SHOAN: Okay.

678   MR. MAAVARA: Yes.

679   And the reason that that is preferable, in our view, is simply that we have already stated who the recipients are of the other funds and effectively what both of us as applicants and the Commission as regulator would be saying to all these people is that, "Oh, sorry, you can't have it."

680   So we think that would be a preferable method.

681   In terms of development of new programming, I mean, clearly the system as it's set up now, the Canadian producer relies upon the combination of the various tax credits, the CMF funds and other certified independent fund sources, and the Canadian broadcast license fee. That pretty much is the green light for a project, and export is really, for a lot of producers, is where the potential profit comes in.

682   But will it necessarily increase the amount of new Canadian content in the system? I think you can't make a direct link, but as we said in the application and as I referred to earlier, the only way for us to really grow the business is to develop the export market.

683   That is the way -- and the real opportunity -- the Canadian bucket is effectively not going to grow very much right across the system. The CPE is going to grow effectively with revenue, government funding and tax credits, as we all know, is being challenged, both on a provincial and federal level, so of the $6 billion, $4 billion is pretty much topped-out.

684   So where are we going to grow? It's got to be with export.

685   COMMISSIONER SHOAN: Okay, thank you.

686   With respect to the script and concept development in the Corus Export Initiative Fund, I wanted to talk to you about management.

687   You alluded to high-level conversations, I suppose with certain third parties, but have you reached an agreement with an organization for the administration of those funds? And with respect to that, would the management of the French language initiatives be done independently from the English-language ones?

688   MR. MAAVARA: We have not reached a definitive agreement. We have written proposals and we haven't gone into the detail yet, first of all because we don't know whether we are going to get approved or not -- we sure hope so -- but we have had fairly extensive discussions, as recently even as last week, to talk through these ideas.

689   In terms of the English-French split, as I suggested earlier, for example, if it goes to either Telefilm or CMF, which is likely going to be the largest administrator groups, they have existing governance mandates as to how they allocate their funds. And again, that would be their governance mechanism that would do that; we wouldn't have any role in that.

690   COMMISSIONER SHOAN: You wouldn't mandate that a certain amount of the funds would have to be allocated to French language initiatives in your agreement with these third-party funds?

691   MR. MAAVARA: Well, to start with, the package -- I mean, it's implicit I think that the H&S funds would be directed at Francophone producers. And with respect to the TELETOON side, again, there is going to be a split.

692   But the interesting thing is it's hard for us to say that we are going to leave it to a third-party administrator to decide that we trust to administer properly, and then also say, "Oh, by the way, here's the following things we would like you to do." I'm not sure that meets the governance test for independence.

693   But we can assure the commission that the people who administer these funds are going to be certified, recognized.

694   COMMISSIONER SHOAN: Okay.

695   So assuming a theoretical approval, would you commit to a timeline to reach an agreement and subsequently file such supporting documentation with us?

696   MR. MAAVARA: Yes.

697   COMMISSIONER SHOAN: Okay, thank you.

698   I wanted to speak to you about the programming initiative, which is really the lion's share of the tangible benefits. How do you intend to administer that initiative in the benefits packages and in both languages? And if you intend to self-administer, can you confirm whether any administration fees will be charged?

699   MR. MAAVARA: Well, I will start by -- the first aspect of that chunk of money -- first of all, script and development, that's all gone to third parties, and then a portion of the other funds is going to be directed at the Telefilm Talent Fund as set out in the materials.

700   And then the balance of that we would administer -- and I will turn it over to Jocelyn on that subject.

701   MS HAMILTON: Okay. Thank you, Mr. Commissioner.

702   Our intent would be to -- again, it's incremental benefit, so we would be looking for the best shows possible. At the moment, we have talked about potentially a third of it going towards French language production or Québec producers, but ultimately we would be looking for the best programs, as we do for all the shows that we do, and so that's the intent.

703   We would be looking to just have it be incremental spend.

704   MS COURTEMANCHE: And there would be no administration costs, just to be clear.

705   COMMISSIONER SHOAN: Ah, thank you; that was my follow-up question.

706   So would you be willing -- I mean I certainly don't want to tie you down right now, you can perhaps come back in reply, but you mentioned a third allocated to French language programming. Would you be willing to commit to that or perhaps a lesser number, a greater number? And if you would prefer to think about it, feel free to think about it.

707   MR. CECCHINI: Yes, we will come back to you on that.

Undertaking

708   COMMISSIONER SHOAN: Sure, that's great.

709   Can you describe the types of animation programs that will receive funding from the programming initiative? And in terms of the mechanisms you can put in place to ensure that productions receiving funding would not have been acquired by Corus in the normal course of its operations, so that it is in fact incremental?

710   MR. MAAVARA: Let's start with just the regulatory tests and then I will turn it back to the programmers because they get mad if I go into that room ever.

711   The first test -- and part of the magic of group licensing -- is the CPE, so it makes it really easy to measure what's incremental. So any spend that we have on benefits will be above our reported CPE number.

712   Now over to you, Jocelyn.

713   MS HAMILTON: Exactly that. We would normally be planning and putting a certain amount into development and a certain amount into production, based on our CPE, and this would be incremental to that. We would be looking for projects above and beyond.

714   COMMISSIONER SHOAN: Okay.

715   Again, with respect to the programming initiative, in terms of mechanisms that could be put in place, would potentially be put in place to ensure that the benefits were allocated as widely as possible within the production community, do you have any proposed approaches or thoughts with respect to that?

716   MS COURTEMANCHE: We don't, but I would just reiterate the fact that every year we file with the Commission our report and we have done tremendously well. I wish I had brought our regional report because we do very well.

717   We have producers from across the country, we have productions from everywhere. Jocelyn, perhaps you remember off the top of your head -- I'm sorry I don't have the list with me.

718   MS HAMILTON: Sure, absolutely.

719   I mean, we have productions in Vancouver, we have productions in Halifax, we have productions across the country. So our intent -- we go to all the different festivals, we are regularly in the regions and taking pitches. In fact, just last week, Québec City had a fantastic conference called Québec Connection, and our commissioning executives were there along with many international broadcasters and other producers, and so we are pretty much everywhere looking for new productions at all times.

720   COMMISSIONER SHOAN: Okay.

721   Would you commit to filing an annual report with respect to these tangible benefits initiatives if approved?

722   MR. CECCHINI: Yes.

723   MS HAMILTON: Yes.

724   COMMISSIONER SHOAN: Thank you.

725   I wanted to speak to you about the initiatives involving the Concerned Children's Advertisers, as well as the Inner-City Research Initiatives, and I wanted to flesh it out a little bit further in terms of -- for example, with respect to the PSAs that the CCA would be creating, would they be broadcast on regulated broadcasting platforms, would they be produced by independent production companies, would there be specific communities targeted by either of these initiatives?

726   Essentially, I want to get an idea of how it fits under the broadcasting system and the Act.

727   MR. MAAVARA: A great question. CCA is an organization that we are really proud to be involved with. The content they produce is indeed all produced by independents and, essentially, they try to distribute that content wherever they can.

728   And in our discussions with them with respect to these funds, first of all, one of their top mandates is to improve their French language presence and develop more training programs and improve their website and all of the things that they do as it relates to the French language. And then, on the English side, it's about continuing the work they do.

729   As you see, in the proposal we made, we are continuing an existing contribution over the balance of the years with respect to CCA.

730   MR. CASSADAY: Just as it relates to the Inner City Program, and Mr. Maavara can comment on how the funds will actually be applied, but we are an important player in children's programming in Canada and, as a result, we feel we have an obligation to assist kids in leading an active, healthy lifestyle.

731   We sell a lot of advertising to children, so we have to be very responsible. In fact, about 90 percent of our advertising business is three categories, and one third of that business is food. The single biggest issue that we are dealing with as an industry right now is societal concerns around childhood obesity. So we believe, given our obligation and the opportunity here to make a difference in that particular area, that developing contemporary programming images that will help children understand the importance of a healthy, active lifestyle is something meaningful that we have the opportunity and should do.

732   And I would say that we do a fair bit of this on our own airwaves now, but I think through health care providers and other people dealing with, particularly, new Canadians that aren't really aware of the importance of nutrition, this is a meaningful benefit.

733   MR. MAAVARA: If I could, Mr. Commissioner, we actually have a one minute video that was created by one of the participants in our programs.

734   This is young man who basically didn't ever aspire to even going to high school necessarily, although he lives in Toronto, just lives in an environment that is not conducive to that necessarily. He was involved in one of our programs and, working with professional people training him, developed a video that he and all of us were delighted to discover was selected by the Toronto Board of Health as a tool that they would use to educate kids.

735   So if we can see that video? It's only a minute long.

736   COMMISSIONER SHOAN: Sure

--- Video presentation

737   MR. MAAVARA: That's what happens with these kinds of programs.

738   COMMISSIONER SHOAN: Thank you.

739   I presume that particular segment was produced by a participant in the City Life Film Project initiative?

740   MR. MAAVARA: No, actually that was the YMCA in Toronto. They run a school up -- there is a small strip mall up around Dixon Road where they have a regular -- they have a little lab and the kids come in. They usually have between 15 and 25 kids who work with the trainers. The trainers are all professional writers and cinematographers.

741   COMMISSIONER SHOAN: Okay, thank you.

742   So that type of programming that you just demonstrated to me very clearly falls within the ambit of the Broadcasting Act and what it hopes to achieve, and I think it's terrific. I am somewhat struggling to see how the CCA and The Inner City Research Initiatives, while certainly laudable and important, tie as closely to the objectives of the Act as with such as something that you just demonstrated from the YMCA initiative.

743   MR. MAAVARA: I guess you could say it's really script development. On the subject of obesity, one of the big issues right now is -- and it's interesting, because the Ontario government has just released a report on communications issues around the subject, and then there has been another report released by Sandbox, which was actually started by a Minister of the present government, and they are talking about the best way to speak to people about this subject and influence behaviour.

744   So what we are looking at with respect to these funding mechanisms is how do we develop those stories about the best way to do it and I would submit that that is directly with the Broadcasting Act is looking for. No, it's not in the professional scheme of things, but it is going to end up that way. You know, this Muhammad, for example, he's going to end up as a professional producer.

745   MR. CASSADAY: The other important thing is the linkage, and that is that were we to lose the opportunity to sell advertising to children, it would have a dramatic impact on our revenues, which would have a dramatic impact on our ability to support Canadian production, so continuing to remind people about our social responsibility and how aggressive we are in living up to the expectations people have of us we think is really critical to the ongoing success of our business and the sustainability of what we do as it relates to the development of programming for children.

746   COMMISSIONER SHOAN: I can understand that, Mr. Cassidy. I guess, in terms of tying it more closely to the objectives of the Act, I think perhaps there would be a greater level of comfort if, for example, it did -- it was specifically allocated to something such as Mr. Maavara mentioned, such as script development or something.

747   I will leave it at that. Perhaps you might want to turn your attention to maybe drilling down a little bit deeper to give us a greater level of comfort.

748   You proposed to delay some of the off-screen initiatives because they currently benefit from funding. Please comment on whether, given that these initiatives are already receiving funding from Corus, whether there would be more beneficial uses for this funding, for example for the relocation to certain French language initiatives.

749   MR. MAAVARA: You mean with the existing recipients?

750   COMMISSIONER SHOAN: That's right.

751   So there were certain initiatives that wouldn't initially receive funding right off the bat, that there was a delay in terms of their implementation.

752   MR. MAAVARA: Right. Well, on some of those, they were already involved with French language projects. The Broadcast Museum for example, there is a big chunk of developed to develop the Québec and Francophone Canada stories about the business and the history of the business. CCA, same thing.

753   And then on the independent -- effectively, well, all of the off-screen stuff is independently administered, and a big chunk of that -- I think we did a calculation -- probably -- well, it's more than a third and probably close to half of it is directed at Francophone projects.

754   COMMISSIONER SHOAN: Okay. Thank you for that.

755   My colleague, Commissioner Pentefountas asked this question to you earlier. I actually wanted to re-ask it, but this time decouple it somewhat. So I'm going to ask it again, and I will explain why I am asking it to get your specific perspective on a certain aspect.

756   It was with respect to the tangible benefits package and whether or not it would be appropriate for you to comment on the appropriateness of potentially requiring it to be 100 percent to independent producers or 10 percent to OLMCs or to mandate a certain amount of original Canadian programming.

757   I just wanted to put it out there again, and instead of having it presented as perhaps an all-or-nothing proposal, whether there were elements of one of those three approaches that was more appealing to you than others?

758   MR. MAAVARA: Well, I guess on the subject of 100 percent to the independent producers, I would say that on the H&S side 47 percent of the funds are going to be administered by a third party and it will be their decision. And we are not a producer in that form of content very much these days, so that in a sense, historically, is who we are, so we are probably not going to do much on that.

759   On the animation side, I guess the submission I would make is that the rule has always been as we proposed, but if it was to be 100 percent, say, what the Commission would be saying is that probably the best animation producer in Canada would not have access to some funding, which is probably counterintuitive to where you want to take the system.

760   In terms of the OLMCs again, as we said earlier, the third-party administrators, they are going to have that mandate as part of their governance structure now and, as Jocelyn said, we are certainly going to be looking for projects from wherever we can find them.

761   COMMISSIONER SHOAN: Okay, thank you.

762   And again, in my exchange with Ms Hamilton and Mr. Cecchini, I look forward to any potential commitment with respect to French language initiatives in the future.

763   In the event the Commission should decide to reallocate a portion of the off-screen benefits that you have proposed, would it be appropriate to reallocate those funds to the Broadcasting Participation Fund? Do you have any view on that?

764   MR. MAAVARA: Well, I guess the first observation I would make is that it's not on-screen and it doesn't relate to the development of content really in any way, shape or form. It's just -- is purely a regulatory tool. It wouldn't be our first choice.

765   And I guess the other problem, which I alluded to earlier, is, to the extent you reallocate, it means that we have to adjust somewhere. We either say so-and-so doesn't get something or we are going to have to adjust all the numbers so that we take something from everybody.

766   You know, I mean, is that possible? Yes.

767   COMMISSIONER SHOAN: Okay.

768   Did you have something to add, Ms Courtemanche?

769   MS COURTEMANCHE: No, other than we might come back in reply and provide some further clarification there, but I think Mr. Maavara has explained, you know, the issues revolved around that -- a result revolving around that.

770   COMMISSIONER SHOAN: Okay. Thank you.

771   Turning to CPE, the Commission's approach in adjusting CPE requirements for the exclusion of the CMF generally subtracts the CMF amount from the CPE required. In this regard, TELETOON currently has a CPE requirement of 47 percent, and the CMF amounts that have been recorded for the service represent about 13 percent of the revenue, which suggests a CPE requirement of 34 percent for the service.

772   Would you adhere to a CPE requirement of 34 percent for the service, TELETOON?

773   MR. KNIGHT: I think the way we calculated it and the way we look at it is within the group licensing framework and what is required under the group licensing framework, of which the Corus group has been at 30 percent. And the way with TELETOON and also the other Corus services moving to an accrual basis, taking right from the CRTC returns, we get a number lower than your 34 percent.

774   But having said that, we have upped it in order to get to the 30 percent within a group context.

775   MS COURTEMANCHE: Our calculations don't take us to 34 I think is what he's trying to explain.

776   COMMISSIONER SHOAN: Right. Yes, I'm sorry.

777   MS COURTEMANCHE: Our calculations take us to 29, but we are proposing 31, which is consistent with our group-based licensing. All of our -- we were different to other groups. Other groups had varying CPE requirements on their Cat As. Astral had a straight 30 percent on all their Cat As and Cat Bs, and Corus had decided that, in order to achieve the overall 30 percent, that all of our Cat As would have a CPE of 31 percent, and the Cat Bs that were included in group-based licensing would have a CPE of 16 percent. So that's how we got there.

778   So we are not sure where the 34 percent, our calculations don't take us there.

779   COMMISSIONER SHOAN: Okay, thank you.

780   All right, well, I am going to continue with this line of questioning assuming a 34 percent CPE, and if you want to contest the numbers, that's fine. I just want to carry it forward to its logical conclusion.

781   Assuming a 34 percent CPE for TELETOON and a 16 percent CPE requirement for TELETOON Retro English, it could have an effect on Corus' group requirement, potentially raising it to 31 percent. So I would ask for you to comment on a 31 percent group CPE. Are you comfortable with that? Would you object to that?

782   MS COURTEMANCHE: We will come back in reply, sure. Yes.

783   COMMISSIONER SHOAN: Some intervenors are concerned that should TELETOON be included in the Corus group, you would use your spending flexibility to "flex" your CPE muscles and move away from Canadian animation programs to more easily monetized types of programming on your other services.

784   Can you comment on that?

785   MR. CASSADAY: It's a false premise.

786   We are deeply committed to children's programming, both domestically and internationally. I don't think anyone has demonstrated that more clearly than we have, through our investment in Nelvana, so it's absolutely not a concern or issue that anyone should be worried about.

787   COMMISSIONER SHOAN: All right. Thank you very much.

788   Those are my questions, Mr. Chair.

789   THE CHAIRPERSON: Those are all our questions on the first application we have considered, so we will come back after the lunch break, if that's okay with you, to do the renewal aspect of the proceeding.

790   So why don't we come back at 1:30 for that, and obviously there are some people who don't necessarily need to form part of that panel in the afternoon.

791   Okay? Thank you very much.

--- Upon recessing at 1223

--- Upon resuming at 1329

792   LE PRÉSIDENT : À l'ordre, s'il vous plaît. Order, please.

793   So, Madam Secretary.

794   THE SECRETARY: Thank you.

795   THE CHAIRPERSON: You have to make an announcement, don't you or do we just call the next item?

796   THE SECRETARY: Well, I can read it for the record.

797   THE CHAIRPERSON: Go ahead, please.

798   THE SECRETARY: All right. Thank you.

799   We will now hear item 2 on the Agenda, which is an application by TELETOON Canada Inc. to renew the broadcasting licence for the national English- and French-language specialty Category A programming undertaking known as TELETOON/TÉLÉTOON, which expires 31 March 2014.

800   TELETOON Canada Inc. also filed applications to renew the broadcasting licences for the national English-language specialty Category B programming undertaking known as TELETOON Retro and the national French-language specialty Category B programming undertaking known as TÉLÉTOON Rétro, both of which expire 31 March 2014.

801   Please introduce yourselves for the record and you have 10 minutes.

PRESENTATION

802   MR. COCHRANE: Thank you.

803   Good day, bonjour, Mr. Chairman, Mr. Vice Chairman, Commissioner and Commission staff. My name is Len Cochrane and I am the President of TELETOON Canada.

804   Before we begin our presentation, I'd like to take a moment to introduce our panel.

805   To my right is Carole Bonneau, TELETOON's Vice President of Programming.

806   To her right is Sylvie Courtemanche, Vice President and Associate General Counsel, Government Relations and Compliance, for Corus Entertainment.

807   To her right is John Cassaday, Corus' President and CEO and a director of TELETOON for the last 14 years.

808   To my left is Trent Locke, TELETOON's Vice President of Business Operations.

809   And to Trent's left is Athena Georgaklis, TELETOON's Manager of Original Programming, based in Montreal.

810   Thank you for giving us the opportunity to appear before you today to support TELETOON Canada's licence renewal.

811   By way of background, TELETOON Canada was founded in 1997 and has grown to become the destination for the best in animated and animation-related entertainment, with a suite of five specialty services: TELETOON English, TÉLÉTOON French, TELETOON Retro English, TÉLÉTOON Rétro French, and the recently launched Cartoon Network.

812   From some of TELETOON's earliest original series like "Caillou," "What's With Andy" and "6Teen" to our most recent successes such as "Fugget About It," which has enjoyed great success on HULU lately with over a million views in the United States, and the "Total Drama Island" franchise, which has garnered stellar ratings in both English and French and is the most successful foreign series on Cartoon Network U.S. ever, TELETOON has played a major role in the creation, development and production of Canadian animated programming for the broad demographic we serve. These are kids, teens, adults and families.

813   Our goal is to place great importance on cultivating high-quality Canadian original productions that parallel the high-profile acquisition programming that's available on our network.

814   To illustrate this point further, allow me to give you a snapshot of three of our Canadian original series produced by independent producers. They are: "Johnny Test" produced by DHX Media Ltd., "Rocket Monkeys" from Breakthrough Entertainment Inc. and "Camp Lakebottom" from 9 Story Entertainment.

815   TELETOON developed, nurtured and launched these shows. Each of these shows rank consistently among the top 15 shows on TELETOON and are part of the seven home-grown series that we have in our Top 15 shows for kids 2 to 11.

816   Like many other TELETOON original series that have become successful international franchises that have sold to international networks, these three titles were picked up by major U.S. networks and are broadcast around the world. "Johnny Test" we sold to Cartoon Network, "Rocket Monkeys" to Nickelodeon and "Camp Lakebottom" to Disney.

817   With a focus on producing these types of hit shows, TELETOON has been instrumental in building and moulding Canada's animation business into a world-class industry.

818   Many of the production partners in animation today were nonexistent prior to TELETOON. However, with TELETOON's strong commitment to Canada's animation industry over the last 16 years, we have been able to foster Canadian talent, contribute to the launch of many new production companies and collaborate with various industry stakeholders to create first-rate world-class animation programming.

819   MME BONNEAU : Le soutien et l'engagement de TÉLÉTOON envers le secteur de la production englobent aussi l'industrie de l'animation au Québec.

820   Depuis son lancement, TÉLÉTOON a diffusé 1 351 demi-heures d'émissions provenant du Québec, ce qui représente 29 pour cent de l'ensemble de notre production, et des dépenses de 56,8 millions de dollars dans cette seule province.

821   Depuis 2000, 38 émissions de TÉLÉTOON ont été développées au Québec. Au cours des six dernières années, nous avons investi près de 15,8 millions de dollars à l'adaptation en français de 1 582 demi-heures d'émissions originales.

822   Au-delà de tout cela, nous avons connu le succès dans ce marché parce que nous avons tenu à offrir à nos téléspectateurs francophones une véritable et authentique expérience de divertissement à la fois très attirante et adaptée sur le plan culturel.

823   Nous avons réussi cela en faisant adapter au Québec la plus grande partie de notre contenu original, comme la franchise « Défis extrêmes » et « Faut pas rêver », ce qui rend la programmation plus attirante pour tous nos auditoires de langue française.

824   Pour la toute première fois, nous avons produit une version française du jeu télévisé « Skatoony » en faisant appel à des concurrents du Québec.

825   Nous avons aussi récemment confié au comédien québécois Mathieu Cyr l'animation de « Slaque la cravate », un bloc de programmation destiné aux adultes, diffusé le jeudi soir après 21 h 00.

826   De même, lorsque nous achetons des émissions comme « Les Simpson », « American Dad » et « Family Guy », nous tenons compte des particularités de notre auditoire de langue française. Ces émissions sont doublées au Québec et présentent des voix, un langage, un humour et un ton bien québécois. C'est pourquoi nos téléspectateurs du Québec et des autres communautés francophones au Canada s'y reconnaissent. Nous avons ainsi doublé 864 épisodes d'émissions étrangères au Québec.

827   L'un des succès les plus retentissants parmi les émissions de langue française est certainement le phénomène de l'émission en ligne « Au Pays des Têtes à Claques », où nous avons réussi, en collaboration avec Salambo TV, à transformer un concept en ligne de deux minutes en une série d'émissions de 30 minutes.

828   Cette série québécoise originale de TÉLÉTOON a remporté un immense succès, figurant parmi nos 10 émissions les plus populaires chez les adultes de 18 à 49 ans. Nous travaillons présentement à développer une version de « Au Pays des Têtes à Claques » destinée au marché canadien anglophone.

829   Cette série démontre aussi comment TÉLÉTOON a pu promouvoir les artistes francophones et faire connaître leur créativité au reste du Canada.

830   TÉLÉTOON s'est aussi associé à L'institut national de l'image et du son (L'inis), un centre de formation professionnelle en cinéma et en télévision établi au Québec, en vue d'offrir des ateliers de création de scénarios consacrés à l'écriture d'émissions d'animation en langue française.

831   Grâce à ce projet, TÉLÉTOON travaille, de concert avec Sardine Productions, à développer « Cartooned », un concept créé par un étudiant inscrit à l'un de ces ateliers.

832   MR. LOCKE: As you can see, TELETOON's overall contribution has been unparalleled in cultivating a gold standard animation industry in both English and French.

833   Since launching in 1997, TELETOON has commissioned shows from 66 different independent producers and licensed approximately 4,700 half-hours, with that number essentially doubling if you consider both English and French.

834   TELETOON has developed 138 titles since 2000 and in the last five years alone has received 1,351 pitches to our Original Programming Departments in Toronto and Montreal.

835   To date, TELETOON has invested over $310 million in home-grown content, triggering $1.2 billion in Canadian production. In fact, TELETOON has by far exceeded the investments in CPE originally forecasted.

836   Apart from the financial contribution, TELETOON has also helped grow the profile of the Canadian animation industry, celebrating successes both in Canada and abroad.

837   This brings us to TELETOON's licence renewal and we'd like to take a moment to briefly address our key requests.

838   We are seeking to refresh certain conditions of licence (COLs) with current standard industry COLs and we have also asked for some minor changes to our on-air scheduling.

839   First, we requested the removal of the daily one-hour of Canadian Content between 8:00 p.m. and midnight. During the last renewal, some members of the CRTC panel were worried that TELETOON -- who was then asking for a 2:00 p.m. to 8:00 p.m. Prime Time -- would have free reign to air nothing but foreign programming every night between 8:00 p.m. and midnight. The fact that the decision by the Commission gave us a Prime Time of 4:00 p.m. to 10:00 p.m. makes the one-hour 8:00 p.m. to midnight redundant in our opinion given that TELETOON is already subject to a COL requiring the airing of 60 percent Canadian Content during the peak viewing period and throughout the day. We feel this represents a degree of micro-regulation that is no longer necessary.

840   Second, we requested to remove the existing cap on Categories 12, 13 and 14 programming in order to provide us with greater flexibility across our schedule. We have already stated in our written reply that we would be happy to adopt the industry standard of limiting these various programming categories to 10 percent of the broadcast month in accordance with the Commission's policy. TELETOON will still be staying true to the nature of service and will maintain a broadcast schedule that showcases the excellence and quality of Canadian animated programming throughout the day.

841   Third, we have requested a recalibration of the CPE to 29 percent, taking into account the changes in the rules of calculating CPE and the CMF top-up. TELETOON will, however, continue its commitment to historical spend levels of Canadian programming.

842   Fourth, TELETOON has requested a change in the nature of service for TELETOON Retro English and French by reducing the copyright restriction from ten years to five. The original intention was to address a shortage in inventory of Canadian animated programs. In our response to interventions, TELETOON has proposed to adhere to the 10-year restriction on foreign programming and has requested a five-year limit for Canadian Content only. Since the majority, or 65 percent, of the content on these services is non-Canadian, the requested change will ensure that these channels maintain their nature of service and provide a meaningful selling opportunity for Canadian animation producers.

843   In the hearing notice, the Commission noted that TELETOON might have failed to comply with certain conditions of licence for TELETOON and TELETOON Retro regarding the broadcast of Canadian Content during the 2011-2012 broadcast years. We have fully responded to the Commission in writing and we have demonstrated that TELETOON's on-air CanCon levels are actually higher than our COL requirement of 60 percent in both English and French. In fact, we broadcast in the range of 65 percent to 67 percent throughout the various day parts in question.

844   The proposed amendments that we have put forward have been considered very carefully and we are confident that these changes will have a positive impact on all stakeholders. The proposed changes allow TELETOON to stay relevant, remain competitive in the current marketplace and confront the challenges facing our industry today.

845   MR. COCHRANE: To summarize, TELETOON's founding principle was to bring the best in animated and animation-related programming to all our audience segments: kids, teens and adults. I can proudly say that we have stood by this unwavering commitment and we hope that with your support we can continue to offer consumers across the country a standout product with exceptional value, all the while leading the way in Canada's animation industry.

846   In closing, I would like to take this opportunity to address Corus' acquisition of TELETOON Canada.

847   On behalf of my colleagues, we believe the best outcome for our suite of services would be to have Corus shepherd the successful trajectory of our channels. Personally, I am very pleased that the TELETOON employees -- whom I consider my second family -- will have the opportunity to become part of the larger Corus family.

848   I'd like to thank you for your time today. With that, my colleagues and I will be pleased to answer any questions that you may have.

849   THE CHAIRPERSON: Thank you very much, Mr. Cochrane and your colleagues. I'll pass it on to Commissioner Shoan.

850   COMMISSIONER SHOAN: Good afternoon. Thank you for being here today.

851   I'd like to jump into a discussion of the copyright restriction, that you raised in your presentation, from 10 to five years. You noted this morning that in response to interventions you proposed a suggestion of limiting it to 10 years for foreign or non-Canadian animated content but five years for Canadian content.

852   My question to you is: If the limit is only five years to Canadian content, would that be a situation where you would primarily focus on obtaining animation programming from Nelvana or other related companies of Corus?

853   MS BONNEAU: This is not our intention at all. I think the intention is that we nurture and produce these shows on TELETOON, and our successful Canadian shows we would like to give them another window. So that gives the producer another chance to license his show to the network. So our successful shows that, you know, had success on TELETOON for five years we would like to give them another opportunity on TELETOON Retro instead of moving them off the schedule.

854   MS COURTEMANCHE: And there's a limitation to the type -- like Nelvana content is young children content. So that channel gears to kids, teens and adults, and so we wouldn't look to change that proportion right across the schedule.

855   So, you know, Nelvana does not do any programming directed to teens or adults, so just to be clear, and we're not changing Nelvana's mandate with respect to producing only young children's content.

856   MS BONNEAU: Yeah. The majority of Nelvana offering is pre-school and we don't do pre-school, and this is certainly not the programming strategy for Retro.

857   COMMISSIONER SHOAN: That is very clear, thank you very much.

858   I wanted to discuss briefly the apparent non-compliance issues with respect to correcting of logs. Some quick questions.

859   I think you're all aware of the importance of correcting logs, given that it is a regulatory obligation.

860   Can you describe in a bit of detail for me the measures that will be put in place to ensure that TELETOON services' logs are corrected in a timely manner going forward, particularly when new programs are certified, in terms of ensuring that those certifications, if they do not occur in a timely manner, are reflected once received?

861   MS BONNEAU: Well, I must say that as soon as we get those certifications we resubmit the logs. So I think the problem lies in the fact that we don't have those numbers. I think there's 39 titles right now that we're waiting for certification and I don't think it's our intention not to submit those logs. Our staff is very truly -- and always communicating with the CRTC and making sure that, you know, we resubmit every time we have our logs -- the certification.

862   COMMISSIONER SHOAN: Thank you.

863   I'm curious when you negotiate these production deals where independent companies are providing you with this programming and the "C" numbers, is there anything in those contracts about timely registration of these companies to obtain their "C" numbers or anything in their contracts or anything to require that?

864   MS BONNEAU: There is a payment that's tied to the delivery of the number, but often, I think it's upon themselves the responsibility to make sure, and often, they don't have the staff or, you know, they can't fulfill it right away. But they -- I think we make sure that we can help them any way we can. But there is a payment that's tied to the delivery.

865   MS GEORGAKLIS: If I may add, producers, they do fulfill the requirement. The time it takes to receive the number is also a factor. The CAVCO number takes a longer period of time than the CRTC number might, and producers may prefer to apply for the CAVCO number instead of the "C" number. We encourage them to do both but it lies in their decision-making power to do so. But we do have a final payment tied to that. Apart from that we encourage them to try to get it done as quickly as possible.

866   COMMISSIONER SHOAN: Okay, thank you very much.

867   I'd like to turn briefly to TELETOON Retro. Given that TELETOON Retro is only authorized to broadcast programs that have been copyrighted at least 10 years before they are broadcast on this service it would appear that Canadian programs that are still awaiting certification from the Commission would not count for the service's apparent non-compliance.

868   Can you explain the circumstances of the apparent non-compliance with respect to logs for TELETOON Retro?

869   MS BONNEAU: I think, again, when you deal with older programming sometimes it was more difficult for the producer to provide the number. But we are, you know, diligently going after those numbers and we will resubmit as soon as we have them.

870   COMMISSIONER SHOAN: But, Ms Bonneau, it strikes me as odd that if you're broadcasting a program that has been provided to you from a producer that's 10 years old surely they must have filed their numbers by that point. If they haven't given you the numbers does that not strike you as odd?

871   MS BONNEAU: You would think so but often we have to request a number.

872   COMMISSIONER SHOAN: Okay.

873   TELETOON currently offers a safe haven block of programming. What are Corus' plans regarding this block of programming for the next licence term? If Corus' application were to be denied would TELETOON's plans and the change in this regard?

874   And by safe haven programming I believe I'm referring to the children's programming, the commercial-free aspect.

875   MR. COCHRANE: One of the things that we had -- we've had that since the beginning. Over the years there has been some incredibly successful pre-school programming and preschool like Treehouse and now there is Disney Junior. So we actually don't show any preschool. We tend to show older programming in that block.

876   COMMISSIONER SHOAN: Okay.

877   And that programming is targeted towards which demographic age group?

878   MR. COCHRANE: It's slightly targeted towards moms and four to seven-year olds.

879   MS BONNEAU: Yes, four to eight.

880   COMMISSIONER SHOAN: Okay. And will Corus be maintaining that safe haven block going forward?

881   MS COURTEMANCHE: In the same manner that -- as we indicated this morning our intention is to continue in the same manner. We will try to grow some adult audiences but it wouldn't be within those timeframes. It would be at later times.

882   COMMISSIONER SHOAN: Okay, thank you.

883   TELETOON requested additional flexibility in order to use short programs to fill time between animation programs of varying lengths. So I'd like to dive a little bit deeper into that request.

884   My first question is would programs from Categories 12 interstitials and Categories 13 public service announcements respond to this need?

885   How would programs from Category 14 infomercials be used on this service and would it be appropriate -- pardon me -- would it be appropriate to increase the limit on the use of programmings from Categories 12 and 13 while continuing to limit the use of programs from Category 14?

886   MR. COCHRANE: I think what we asked for in the replies for intervention was to -- we would accept what everybody else has, is the 10 percent; that we have no issue if the way you want to get around it is do 12 and 13 and a smaller percentage on 14 from an infomercial point of view. Like right now we don't have any and I think the most that we've had in the last 10 years is two infomercials overnight.

887   COMMISSIONER SHOAN: Do you envision using more infomercials? Is that on your radar?

888   MR. COCHRANE: That would be up to Corus of course --

889   COMMISSIONER SHOAN: Well, yes.

890   MR. COCHRANE: -- but from a TELETOON point of view we have no -- one of the things that TELETOON is a commercial service and when you show infomercials it doesn't garner a big audience. So we're not in the infomercial business.

891   COMMISSIONER SHOAN: Okay.

892   Mr. Cassaday and Ms Courtemanche...?

893   MR. CASSADAY: Yes. As Mr. Cochrane said, our real need here is to have the flexibility to fill programs, program time that when we get an animation program that's less than 30 minutes. So that's the big thing.

894   And as it relates to infomercials we have no intention to change the approach that TELETOON has employed as we've been at the table since the beginning. As Mr. Cochrane said, all we want to do is be treated like everyone else so that we have the flexibility to do that. But certainly it's not our intention to do so today.

895   COMMISSIONER SHOAN: Okay. Thank you.

896   Given the diverse audience served by TELETOON in the evening which definition of peak viewing period is more appropriate for this service, from four to ten p.m. as is currently the case or from six p.m. to midnight?

897   MR. COCHRANE: Four to ten.

898   COMMISSIONER SHOAN: Thank you very much.

899   I just have one more question. Your application is very thorough.

900   You mentioned this morning -- Corus, pardon me, mentioned this morning about aligning these services with this renewal in 2016. I just wanted to clarify whether that applied to all the services or simply the English ones. I'm specifically wondering whether it was your desire to align TELETOON Retro's renewal with the other French-language services Corus is acquiring, Historia and Séries+ in 2017.

901   MR. CASSADAY: TELETOON is one licence so that would come up in 2016. Quite frankly I haven't really thought about how we are going to handle Retro. I imagine along the same --

902   COMMISSIONER SHOAN: I'm referring to TELETOON Retro.

903   MS COURTEMANCHE: And TELETOON -- so the ones that would be included in Group A's licensing, both TELETOON and TELETOON Retro English --

904   COMMISSIONER SHOAN: Right.

905   MS COURTEMANCHE: -- the licence would expire in 2016.

906   With respect to the French-language services Historia and Séries+ are up a year to 2017.

907   COMMISSIONER SHOAN: That's right.

908   MS COURTEMANCHE: So we could align that to, you know, to Historia and Séries+. I think that would make sense.

909   COMMISSIONER SHOAN: Okay, great. Those are my questions. Thank you very much.

910   THE CHAIRPERSON: Okay. We'll just take that little -- the last answer and put it in the other application if you're okay, because I think it --

911   MS COURTEMANCHE: Yes, you're absolutely right. Thank you for pointing that out.

912   THE CHAIRPERSON: It deals more with the application, but if you're okay with that.

913   MS COURTEMANCHE: I could -- as a "compromis," I could come back and reply and put it in the record officially then.

914   THE CHAIRPERSON: No, no. We don't have to trip over things like that. I just wanted to make sure that we could consider it in there.

915   MS COURTEMANCHE: You are absolutely correct. Thank you.

916   THE CHAIRPERSON: Now, just one thing about "C" numbers. You know the independent production sector is a partner of the broadcasting sector. They have a duty to -- and get a bigger price for their product because it has a "C" number. They have a responsibility to make sure they go and get that "C" number and it's not left way behind.

917   I know sometimes independent producers get caught because of co-productions in foreign jurisdictions, but that's more the exception than the rule. I'm certainly hoping that people that are following this hearing understand that we certainly look for the independent producers to do their part and that doesn't just mean coming to the hearings and asking for a certain part of benefit packages. It also means helping the broadcasters meeting their regulatory obligations.

918   So that was just more a declaration than a question.

--- Laughter

919   THE CHAIRPERSON: I think that completes our questions for this phase. Your application was quite clear. I know you were a big group and you prepared for this but those were all the questions of clarification we had at this juncture, okay?

920   Thank you very much.

921   Madame la Secrétaire.

922   LA SECRÉTAIRE : Oui.

923   J'inviterais maintenant les premiers intervenants de la Phase II, qui sont l'UDA, la SARTEC et l'ARRQ, s'il vous plaît à prendre place.

--- Pause

924   LE PRÉSIDENT : Donc, nous sommes évidemment dans la Phase II pour entendre les interventions. Nous avons les représentants de l'UDA, la SARTEC et l'ARRQ.

925   Donc, Monsieur Legault, j'imagine que vous allez aller en premier... ou non. Non. D'accord.

926   MME LUSSIER : On vous déjoue aujourd'hui.

927   LE PRÉSIDENT : C'est ça.

928   Donc, Madame Lussier, veuillez présenter...

929   MME LUSSIER : Bonjour.

930   LE PRÉSIDENT : ...les membres de votre panel et procéder.

931   MME LUSSIER : Avec plaisir.

INTERVENTION

932   MME LUSSIER : Alors, bonjour, Monsieur le Président et membres du Panel. Je suis Sylvie Lussier, présidente de la SARTEC.

933   Aujourd'hui, je suis accompagnée de :

934   - François Côté, président de l'Association des réalisateurs et réalisatrices du Québec; et de

935   - Sophie Prégent, présidente de l'Union des artistes.

936   Sont également présents :

937   - Raymond Legault, ancien président maintenant de l'Union des artistes;

938   - Yves Légaré, directeur général de la SARTEC; et

939   - Caroline Fortier, directrice générale de l'ARRQ.

940   Alors, TELETOON/TÉLÉTOON demeure le principal déclencheur de productions télévisuelles en animation au Canada et joue donc un rôle primordial dans le secteur, comme on vient de le voir. Si le déclin de la production de langue française décrié dans les rapports mentionnés dans notre intervention écrite du 27 septembre dernier n'est pas de sa seule responsabilité, il n'en demeure pas moins que son absence de l'espace francophone a contribué grandement à la pauvreté de la production francophone actuelle.

941   Malheureusement, les quelques engagements pris par TELETOON/TÉLÉTOON devant le CRTC, et identifiés dans la dernière décision renouvelant sa licence en 2004, n'ont pas été discutés dans ses demandes actuelles de renouvellement et n'ont pas fait l'objet de questions de lacune par le Conseil.

942   Dans sa réplique du 9 octobre dernier aux interventions, Corus estime que nos propos à cet égard sont sans fondement. Elle se justifie en faisant référence à sa performance en production « québécoise », au doublage, au développement, à l'étude de projets, à deux ateliers de l'INIS en scénarisation, à l'acquisition de concepts québécois, et à un jeu télévisé avec des concurrents francophones.

943   Corus ne parle, toutefois, nullement d'émissions originales de langue française écrites et produites au Canada.

944   Selon elle, que les revenus de publicité en français représentent 16 pour cent des revenus de TÉLÉTOON en publicité et 27 pour cent de sa clientèle d'abonnés constitue une preuve que la programmation de langue française n'est pas désavantagée.

945   En ce qui nous concerne, nous déplorons le fait qu'un soi-disant service francophone ne réussisse pas chaque année à diffuser une seule série originale de langue française écrite et produite au Canada.

946   Puisque Corus détient déjà 50 pour cent des actions avec droit de vote de TÉLÉTOON, c'est par l'acquisition du reste des actions avec droit de vote qu'elle acquiert le contrôle effectif de l'entreprise. Selon Corus, les avantages tangibles ne sont exigibles que sur la valeur de 50 pour cent des actions avec droit de vote.

947   D'après nous, Corus devrait payer un montant supplémentaire lié aux synergies qui s'établiraient entre TÉLÉTOON et les autres services de Corus suite à l'approbation de cette transaction ainsi qu'une prime de contrôle découlant de la prise de contrôle de TÉLÉTOON par Corus.

948   Une valeur supplémentaire semblable a été prescrite par le Conseil dans maintes décisions concernant des transferts de contrôle effectif, dont celle transférant le contrôle de TVA à Quebecor Média, celle transférant le contrôle de CHUM à CTVglobemedia, celle transférant le contrôle de BCE et celle modifiant le contrôle d'Astral en faveur de BCE.

949   Nous considérons donc que la véritable valeur de la transaction aux fins du calcul des bénéfices tangibles devrait se situer à près de 100 pour cent de la valeur de TÉLÉTOON et serait donc d'environ 498 millions de dollars, soit deux fois le prix payé par Corus à Bell Media. Le bloc d'avantages tangibles de Corus devrait bien sûr être ajusté en conséquence.

950   Et je passe maintenant la parole à François.

951   M. CôTÉ : Monsieur le Président, dans l'élaboration de son bloc d'avantages tangibles proposé, dont 21,2 millions de dollars seraient affectés à des projets à l'écran, Corus ne fait nulle mention de la production d'émissions originales en langue française. Nous considérons donc que le CRTC devrait exiger comme condition d'approbation que TÉLÉTOON Canada commande la production d'au moins 26 demi-heures par année de séries d'animation originales écrites, développées et tournées dans la langue française au Canada.

952   D'après la proposition de Corus, 1,8 million de dollars des avantages tangibles serait versé à un export initiative au profit de producteurs indépendants canadiens admissibles afin de leur faciliter l'accès aux marchés internationaux. Et 2,8 millions de dollars seraient investis dans le développement de scénarios et de concepts.

953   Quoique Corus prétende que les producteurs francophones pourront se prévaloir d'une partie de ces enveloppes, il n'est pas évident que le montant proposé en développement de scénarios et de concepts s'ajouterait au niveau de dépenses en scénarisation déjà atteint.

954   Tout compte fait, il n'y a aucune garantie que les productions originales de langue française seraient privilégiées ou financées. Enfin, nous considérons que l'export initiative de Corus ne constitue pas un avantage tangible à l'écran admissible selon les critères du CRTC. D'après son intervention du 27 septembre dernier, l'AQPM se range à notre avis.

955   En avantages tangibles hors écran, du total de 3,7 millions de dollars, une seule initiative serait appliquée à un projet implanté au Québec, soit Animaze Festival pour un montant de 175 000 dollars. Selon nous, les montants consacrés aux initiatives hors écran devraient être répartis entre les institutions francophones et anglophones en fonction de la valeur des actifs francophones et anglophones impliqués dans la transaction présentement à l'étude, tel qu'exigé par le Conseil dans la décision 2013-310 modifiant le contrôle effectif d'Astral en faveur de BCE. L'AQPM et le ministère de la Culture et des Communications du Québec partagent cet avis.

956   Dans sa réplique du 9 octobre dernier aux interventions, Corus affirme que, dans l'ensemble, ses acquisitions télévisuelles accroîtront considérablement l'enveloppe des nouveaux investissements dans la production de langue française. Mais il n'en reste pas moins que, selon les demandes à l'étude, il n'y aucune garantie que TÉLÉTOON déclencherait une seule émission originale de langue française en animation écrite et produite au Canada.

957   Considérant le grand succès financier de TÉLÉTOON et sa pauvre performance à titre de diffuseur de programmation originale de langue française, comme condition d'approbation de la présente transaction, l'UDA, la SARTEC et l'ARRQ proposent que la licence de TÉLÉTOON soit scindée en deux.

958   Ainsi, la gestion du service de langue française, TÉLÉTOON, pourrait être intégrée à la gestion de TÉLÉTOON Rétro, Historia et Séries+ au bureau que Corus dit vouloir mettre sur pied au Québec.

959   Sinon, afin de satisfaire aux exigences de TÉLÉTOON francophone en matière de dépenses d'émissions canadiennes et d'émissions d'intérêt national, Corus pourrait compter les dépenses effectuées par un ou plusieurs de ses services spécialisés, de télévision payante ou de télévision généraliste de langue anglaise faisant partie de son groupe.

960   Ou, faute de quoi, Corus aurait la possibilité de faire passer 100 pour cent de ses DÉC de TÉLÉTOON à un service spécialisé, de télévision payante ou de station de télévision traditionnelle admissible de langue anglaise au sein du même groupe.

961   Selon nous, la Loi sur la radiodiffusion accorde des pouvoirs très larges au Conseil qui lui permettraient d'imposer comme condition d'approbation de la prise de contrôle de Corus une obligation de soumettre une demande de scinder en deux la licence de TÉLÉTOON.

962   Une telle obligation permettrait à chacun des deux services de poursuivre des objectifs appropriés aux auditoires de son marché linguistique. À tout le moins, le Conseil pourrait obliger Corus de sortir TÉLÉTOON de son groupe anglophone en ce qui a trait à la comptabilisation des DÉC et des ÉIN et d'établir deux ensembles distincts d'obligations, un pour le service anglophone (TÉLÉTOON) et un autre pour le service francophone.

963   Déjà, TÉLÉTOON, grâce à son statut de diffuseur bilingue, obtient du Fonds des médias du Canada une enveloppe de langue anglaise et une autre de langue française qu'elle distribue à son gré, finance la production anglophone avec des mises de fonds destinées au secteur francophone.

964   Vu sa réussite financière exceptionnelle, nous croyons que TÉLÉTOON français pourrait facilement atteindre un niveau de DÉC de 37 pour cent des revenus bruts de l'année de radiodiffusion précédente. Ce niveau permettrait aux créateurs de contenu canadien francophone ainsi qu'au public canadien de bénéficier de tels rendements qui sont, en fin de compte, le résultat des barrières érigées à l'entrée de l'industrie télévisuelle découlant du cadre réglementaire établi par le CRTC.

965   Dans sa demande de renouvellement de la licence de TÉLÉTOON, Corus a également proposé une exigence en matière d'émissions d'intérêt national de 26 pour cent des revenus bruts de l'année de radiodiffusion précédente. Nous pourrions nous accommoder de cette proposition si elle s'appliquait au seul service de langue française de TÉLÉTOON et si le Conseil exigeait la production d'au moins 26 demi-heures par année de séries d'animation originales écrites, développées et tournées en langue française au Canada, comme nous l'avons déjà proposé.

966   Maintenant, Sophie.

967   MME PRÉGENT : Comme dans le cas de la demande d'acquisition de contrôle de TÉLÉTOON par Corus, l'UDA, la SARTEC et l'ARRQ considèrent que la véritable valeur de la transaction impliquant Historia et Séries+, aux fins du calcul des bénéfices tangibles, se situe à 100 pour cent de leur valeur. C'est-à-dire 277,2 millions de dollars, soit le prix total payé pour les deux services par Corus.

968   Corus devrait ainsi payer un montant supplémentaire lié aux synergies avec les autres services de Corus, multiplateformes ou autres, qui seraient obtenues, ainsi qu'une prime de contrôle, découlant de la prise de contrôle d'Historia et de Séries+ par Corus qui résulterait de l'approbation de cette transaction.

969   Ce montant supplémentaire équivaut au prix payé par Corus à Shaw pour la moitié des actions. Le bloc d'avantages tangibles de Corus devrait être ajusté en conséquence. Entre autres, l'AQPM, le ministère de la Culture et des Communications du Québec, la CMPA et la WGC partagent cet avis.

970   En rapport avec l'achat d'Historia et de Séries+, Corus propose d'investir 11,8 millions de dollars qui s'appliquerait directement à des projets de programmation. De ce montant, 1,2 million de dollars serait destiné à un fonds d'appui à l'exportation afin d'aider les producteurs indépendants à percer sur les marchés internationaux.

971   Il s'agit d'une activité de commercialisation sans lien direct avec des projets de programmation et encore moins avec la programmation de langue française. L'UDA, la SARTEC et l'ARRQ considèrent donc que ce fonds ne constitue pas un avantage tangible à l'écran admissible selon les critères du Conseil.

972   Corus propose aussi de mettre sur pied un fonds de 2,8 millions de dollars réparti sur sept ans et consacré à la conception et à la rédaction de scénarios. Il n'est pas évident dans quelle mesure le montant proposé comme avantage tangible constituerait un supplément au niveau de dépenses déjà atteint.

973   Aussi louables soient-ils en principe, il nous semble que des versements au C2-MTL, un évènement immersif de trois jours se voulant un Boot Camp de création, ne constitueraient pas une contribution au système canadien de radiodiffusion, comme exigé par l'avis public du CRTC 1993-68.

974   Corus propose d'exploiter Historia et Séries+ comme des services indépendants non intégrés au groupe Corus et se dit prête à poursuivre l'exploitation d'Historia et de Séries+ selon les conditions de licence de la décision CRTC 2012-241, sauf pour les conditions ayant trait aux DÉC et aux ÉIN. De notre part, nous acceptons le cadre réglementaire proposé par Corus, à l'exception de ses propositions concernant les DÉC et les ÉIN.

975   Selon nous, Historia, Séries+ et TÉLÉTOON sont rentables, en partie, à cause du régime réglementaire mis en place au fil des ans par le CRTC et, entre autres, grâce à sa politique d'exclusivité des genres propre aux services de catégorie A.

976   Ce régime réglementaire maintient des barrières d'entrée au secteur empêchant la venue de nouveaux joueurs qui auraient pour effet de diminuer les taux de rendement extraordinaires réalisés par les joueurs actuels. Nous ne nous sommes pas opposés à ce régime pourvu que les bénéfices exceptionnels découlant de la réglementation du CRTC soient partagés par tous les éléments du système de radiodiffusion et par les citoyens canadiens.

977   Concernant les DÉC, au lieu de réduire le contenu canadien d'Historia et de Séries+ comme le propose Corus, l'UDA, la SARTEC et l'ARRQ recommandent au Conseil de s'appuyer sur la politique du Conseil énoncée dans l'avis public de radiodiffusion CRTC 2004-2. Considérant le succès financier d'Historia et de Séries+, nous croyons que chacun des deux services pourrait facilement répondre aux exigences de dépenses en émissions canadiennes de 37 pour cent des revenus bruts de l'année de radiodiffusion précédente tout en excluant les mises du Fonds des médias du Canada comme le veut le nouveau régime du Conseil.

978   Et, pour ce qui est des ÉIN, dans la décision 2013-310, le Conseil a ordonné à BCE et à Astral, à titre de condition d'approbation de leur transaction, de déposer une demande en vue de réviser le pourcentage lié aux ÉIN à un seuil minimum de 18 pour cent. Dans sa demande, Corus dit souhaiter soustraire complètement Historia et Séries+ à ces obligations imposées au mois de juin dernier.

979   L'UDA, la SARTEC et l'ARRQ recommandent au contraire de les maintenir à un seuil minimal de 18 pour cent au niveau des autres anciens services de langue française d'Astral.

980   Enfin, si les présentes demandes sont approuvées par le CRTC, le Conseil devrait ordonner à Corus de déposer une proposition expliquant clairement le mandat du bureau qu'elle dit vouloir mettre sur pied au Québec et énoncer les résultats escomptés et la façon dont ceux-ci seront mesurés.

981   C'est ainsi que le Conseil a agi dans la décision CRTC 2013-310 concernant la modification du contrôle effectif d'Astral en faveur de BCE. Les rapports annuels que Corus fournit au Conseil devraient inclure les renseignements comparables à ceux exigés par cette même décision.

982   Sylvie.

983   MME LUSSIER : Merci. Même si TÉLÉTOON et TÉLÉTOON Rétro sont des services de langue française, aucun document des demandes reliées à ces services n'a été déposé en version française. Cela augure mal pour un service qui dit vouloir desservir le public canadien de langue française.

984   Selon l'intervention de l'AQPM du 27 septembre dernier, la demande de transfert de TÉLÉTOON à Corus « témoigne d'une totale insensibilité à la dimension francophone de TÉLÉTOON et d'une absence de préoccupations en regard d'un meilleur équilibre régional de la production d'animation au Canada. » Nous adhérons à cette évaluation et nous proposons plusieurs modifications aux demandes de Corus pour les rendre acceptables.

985   Corus n'a à peu près pas d'expérience comme producteur ou comme diffuseur d'émissions télévisuelles canadiennes originales de langue française. Et son expérience dans le domaine des émissions de langue anglaise destinées à l'auditoire féminin et dans celui des émissions pour enfants n'a pas de pertinence particulière quant à la programmation d'Historia et de Séries+.

986   D'après Corus, cette affirmation est sans fondement, car elle est titulaire de deux services de télévision payante anglophone Movie Central et Encore et a donc acquis une grande expertise dans les domaines de dramatiques, de films et de documentaires, soit le genre d'émissions offertes par les services Historia et Séries+. À notre avis, elle fait preuve d'une insensibilité à l'égard de la dimension francophone d'Historia et de Séries+.

987   L'UDA, la SARTEC et l'ARRQ n'appuient donc pas les demandes de TÉLÉTOON et de Corus à moins que l'ensemble des recommandations élaborées dans nos interventions écrite et orale ne soit mis en oeuvre. Merci.

988   LE PRÉSIDENT : Merci beaucoup. Mesdames, messieurs, c'est le vice-président.

989   CONSEILLER PENTEFOUNTAS : Bon après-midi. Merci beaucoup pour votre présentation. Très claire, comme d'habitude. Il me fait plaisir de vous revoir tous ensemble.

990   Par où commencer? Commençons d'abord avec... Puis, à l'intérieur de la question, il y a plusieurs autres éléments qui vont ressurgir. Les changements que vous avez remarqués depuis l'approche par groupe dans le financement des projets, les projets de langue française et généralement l'impact, ça fait quelques années déjà, alors commençons par l'impact de cette approche par groupe sur les productions québécoises, disons. Je pense que le micro...

991   M. LÉGARÉ : On n'a pas noté de changements particuliers nécessairement depuis l'adoption de l'approche par groupe, là.

992   CONSEILLER PENTEFOUNTAS : Conséquemment, de quelle manière ces changements justifient-ils vos craintes en regard de l'inclusion de TÉLÉTOON et TÉLÉTOON Rétro dans le groupe de Corus?

993   M. LÉGARÉ : Bien, d'une part, nonobstant l'achat de TÉLÉTOON par Corus, on avait beaucoup de problèmes avec l'expérience TÉLÉTOON actuellement.

994   CONSEILLER PENTEFOUNTAS : O.K.

995   M. LÉGARÉ : C'est-à-dire que, depuis le début des années 2000 et même en 2004, l'UDA et la SARTEC avaient fait paraître une étude, là, sur les problèmes en animation. On remarque que, effectivement, la production d'animation au Québec ne s'écrivait plus en français, que tout se faisait en langue anglaise et bien sûr dans le reste du Canada également. Les seules émissions francophones étaient des coproductions avec la France écrites en français en France et diffusées en version française ou en version doublée ici.

996   Donc, il est sûr que, avec ce problème récurrent ce TÉLÉTOON - dont la licence d'ailleurs n'a pas été renouvelée depuis 2004 et on n'a jamais pu donc aborder de front ce problème-là, TÉLÉTOON va passer entre les mains de Corus, qui a peu ou pas d'expérience au Québec. Et on n'a aucune garantie que le problème de la production de langue française va se résorber, au contraire, puisque le marché dominant ou prédominant est un marché de langue anglaise.

997   CONSEILLER PENTEFOUNTAS : Alors, ce n'est pas l'approche par groupe qui a changé ça, c'est un problème qui date d'une décennie ou...

998   MME LUSSIER : C'est un problème qui vient avec la licence bilingue de TÉLÉTOON où l'argent qui devrait théoriquement être destiné à des productions en français va à des productions en anglais, et c'est le doublage qui est subventionné ou qui est payé.

999   M. LÉGARÉ : On avait évalué en 2004 que la valeur de la part canadienne des productions d'animation, coproductions et productions 100 pour cent canadiennes, s'élevait à 1,4 milliard. Et on avait aussi évalué que les écrits francophones, donc au Québec, ont été totalement exclus de ce marché-là.

1000   CONSEILLER PENTEFOUNTAS : Est-ce qu'il n'y a pas une autre façon de s'assurer ou de se rassurer que de séparer les deux services? Il doit y avoir des conditions... Pardon, allez-y.

1001   M. LÉGARÉ : Ce qu'on vous propose aujourd'hui, justement, sachant que peut-être que la scission de ces deux services-là pourrait peut-être soulever, en tout cas, des problèmes au CRTC, c'est qu'à tout le moins, les deux services aient des obligations différentes et très claires. Entre autres, qu'au niveau francophone, on puisse avoir un certain nombre de productions qui sont écrites et produites en langue française au Québec.

1002   CONSEILLER PENTEFOUNTAS : Vous demandez 13 heures par année.

1003   M. LÉGARÉ : Vingt-six, oui.

1004   MME LUSSIER : Vingt-six, c'est souvent des demi-heures, donc 26 demi-heures, oui.

1005   CONSEILLER PENTEFOUNTAS : Vingt-six demi-heures.

1006   M. LÉGARÉ : Et c'est un minimum, c'est-à-dire ce n'est pas...

1007   CONSEILLER PENTEFOUNTAS : Non, non.

1008   M. LÉGARÉ : Ce n'est pas à fonds perdu, c'est-à-dire, ces productions de langue française vont être doublées en version anglaise et vont pouvoir effectivement être largement diffusées sur le volet anglophone de TÉLÉTOON.

1009   CONSEILLER PENTEFOUNTAS : Tout à fait.

1010   M. LÉGARÉ : Un peu ce qui existe à l'heure actuelle, sauf en sens contraire et presque toujours unilatéralement.

1011   CONSEILLER PENTEFOUNTAS : Et je comprends que c'est un plancher. Sauf que, selon nos registres d'émissions déposés par TÉLÉTOON, le service de langue française semble avoir diffusé 99 heures d'émissions originales de langue française en 2011-2012. Ça vous laisse perplexe, surpris?

1012   M. LÉGARÉ : Ça me laisse très perplexe, parce que nous avons une exclusivité de représentation pour les scénaristes québécois et on a reçu bien sûr quelques contrats pour des étapes, synopsis, enchaînements séquentiels, mais rarement des contrats pour des versions complètes. Et donc, est-ce que ces productions de langue française ont été des coproductions écrites en France en partie et au Canada en autre partie? Donc, oui, le 99 nous étonne beaucoup et on aimerait voir les titres pour pouvoir les corroborer ou les infirmer.

1013   CONSEILLER PENTEFOUNTAS : On va essayer de voir s'il n'y aurait pas une manière d'avoir ces titres-là.

1014   Je ne vais pas faire tout le tour de la question des transactions multiples et la raison pour laquelle vous voulez considérer le tout comme un transfert comme tel, mais êtes-vous en mesure de nous identifier d'autres transactions, puis si on les considère des acquisitions minoritaires, où il y avait un changement de contrôle et ça se faisait par étapes et où le Conseil a imposé des avantages tangibles sur l'ensemble de ces transactions-là. Est-ce que vous avez d'autres exemples...

1015   MME LUSSIER : Ceux qu'on vous a donnés ici.

1016   CONSEILLER PENTEFOUNTAS : ...dans l'histoire récente ou éloignée du Conseil?

1017   M. LÉGARÉ : Pas d'autres que ceux qui sont mentionnés et je ne peux pas nécessairement vous préciser si, dans tous les cas, ça avait été des changements par étape ou pas. On pourra peut-être vous le préciser par la suite, cependant.

1018   CONSEILLER PENTEFOUNTAS : O.K. Quant à cette flexibilité dans les catégories 12, 13 et 14, votre objection fondamentale face à cette flexibilité-là, est-ce que ça joue un si grand rôle de ça dans la vie de vos membres?

1019   MME LUSSIER : Est-ce que nous nous sommes prononcés là-dessus? Peut-être sur notre rapport précédent ou...

1020   CONSEILLER PENTEFOUNTAS : Oui, dans votre document, dans votre mémoire...

1021   MME LUSSIER : Dans le mémoire du 27?

1022   CONSEILLER PENTEFOUNTAS : Oui.

1023   MME LUSSIER : Je m'excuse, je l'ai relu, mais je ne le connais pas par coeur.

1024   CONSEILLER PENTEFOUNTAS : Bien, la question est de savoir : est-ce que ce sera acceptable, d'après vous, de hausser la limite concernant l'utilisation des programmes de catégories 12 et 13 surtout pour mettre plus de flexibilité à TÉLÉTOON?

1025   M. LÉGARÉ : De catégorie 12?

1026   CONSEILLER PENTEFOUNTAS : Et ça a été soulevé il y a quelques minutes par mon collègue.

1027   MME LUSSIER : Oui, 14, je me rappelle que ce sont les infopubs. Ça...

1028   CONSEILLER PENTEFOUNTAS : Des intermèdes en 12, les infopubs dans 14 et les annonces publiques dans 13.

1029   MME FORTIER : On ne s'est pas prononcés là-dessus.

1030   CONSEILLER PENTEFOUNTAS : Vous pouvez nous revenir là-dessus.

1031   MME FORTIER : On ne s'est pas prononcés.

1032   CONSEILLER PENTEFOUNTAS : O.K.

1033   MME FORTIER : Mais on pourrait, oui.

1034   MME LUSSIER : On pourrait se prononcer, oui, oui.

1035   CONSEILLER PENTEFOUNTAS : Vous pouvez vous prononcer par voie d'engagement?

Undertaking

1036   MME LUSSIER : Oui.

1037   CONSEILLER PENTEFOUNTAS : O.K. Et on va également vérifier pour les 99 heures, parce que ça me semble être toute une différence dans la façon de calculer. Il doit y avoir un problème quelque part, parce que, si vous demandez 13 heures puis les registres démontrent qu'il y avait 99 heures de programmation originale qui étaient diffusées, il y a un problème quelque part.

1038   M. LÉGARÉ : Effectivement.

1039   MME LUSSIER : Et, si on n'a pas reçu les contrats des auteurs qui ont écrit ça, on a un gros problème quelque part.

1040   CONSEILLER PENTEFOUNTAS : Je pense qu'on a fait le tour des questions...

1041   MME LUSSIER : Merci.

1042   CONSEILLER PENTEFOUNTAS : ...qui sont comme englobées dans une grande question avec toutes sortes de sous-considérations. Je ne sais pas si, au niveau du contentieux, il y a quelque chose à rajouter ou s'il y a des collègues qui aimeraient rajouter? Monsieur le Président.

1043   LE PRÉSIDENT : Je ne pense pas que le contentieux ait de questions, non, normalement, ils me le signalent. Non, ça va? Moi, j'ai une question par contre. Vous vous objectez au C2 je ne sais pas si on dit Montréal ou MTL. Ça me laisse sur mon appétit. Pourquoi vous pensez que ce n'est pas un événement qui appuie le système de radiodiffusion? Il me paraît que ça porte en partie sur l'audiovisuel, qu'on a des créateurs de l'audiovisuel qui semblent avoir participé par le passé. Donc, je saisis mal votre objection.

1044   MME LUSSIER : Bien, écoutez, en fait, comme on l'a dit, c'est un événement qui est, effectivement, très intéressant sur la créativité, mais on ne voit pas le rapport direct avec de l'investissement en programmation ou pour le bien-être de la radiodiffusion au Canada.

1045   Mais c'est sûr que c'est un événement très intéressant et que s'ils veulent participer financièrement, ça serait très louable et très valable, mais peut-être pas au niveau des avantages tangibles.

1046   LE PRÉSIDENT : Peut-être parce que ce qu'on entend par la radiodiffusion est en pleine effervescence...

1047   MME LUSSIER : Oui. Tout à fait.

1048   LE PRÉSIDENT : ...et peut-être qu'il faut explorer les nouvelles frontières. Vous ne pensez pas?

1049   MME LUSSIER : Oui, peut-être. Mais, en tout cas, je n'ai pas assisté au dernier C2MTL, donc, je ne peux pas vous donner mon avis sur la pertinence. La pertinence de l'événement, oui. La pertinence de le financer par rapport à des avantages tangibles, j'ai encore mes doutes.

1050   LE PRÉSIDENT : Oui. Je comprends votre position.

1051   Alors, comme disait mon collègue le vice-président, votre position est très claire. Je pense qu'on a vos arguments, et puis on aura, à la réplique, l'opportunité de s'entretenir avec les requérants. Merci beaucoup à vous tous.

1052   MME LUSSIER : Merci.

1053   THE CHAIRPERSON: Let's now turn to ACTRA. I'll ask them to come up to the table, please.

--- Pause

1054   THE CHAIRPERSON: Mr. Leibovitch? Okay, just press your button and please go ahead. We're listening.

INTERVENTION

1055   MR. LEIBOVITCH: All right.

1056   Thank you, Mr. Chair, Vice-Chairs, Commissioners and staff. My name is Jacob Leibovitch and I am National Director of Research for ACTRA, the Alliance of Canadian Cinema, Television and Radio Artists.

1057   We are present as the voice of 22,000 professional English-language performers, members of ACTRA. For almost 70 years we have represented performers living and working in every part of the country who are pivotal to bringing Canadian stories to life in film, television, sound recordings, radio, and digital media.

1058   ACTRA believes strongly in a diverse and robust broadcast sector, one that offers Canadians an opportunity to experience the wide range of stories produced and exhibited in the very country they live in.

1059   We are here today to talk about the purchase of TELETOON Canada's broadcasting assets by Corus Entertainment, as well as the licence renewals of the services themselves.

1060    While ACTRA supports Corus's application we do have some concerns about the make-up of the proposed transaction as well as attempts to water down the Canadian content requirements of the specialty licences.

1061   This proposed transaction comes in the midst of a flurry of similar industry acquisitions and mergers that have drastically reshaped the Canadian broadcasting landscape over the last decade. Bell and CTV, Shaw and Global, Bell and CTV again and most recently Bell and Astral have winnowed the number of players from which Canadians can purchase their television services. It's clear that the status quo for Canadian broadcasters is changing.

1062   It's worth noting that Corus is only in the position to purchase the TELETOON stations after Bell Media was obligated to divest themselves of the specialty services as a result of their purchase of Astral Media earlier this year.

1063   This industry consolidation has come about as a response to an explosion of technological growth that has given Canadians an abundance of choice when it comes to how they view the content that matters to them. New exhibition platforms and the rise of over-the-top services like Netflix have fractured an already strained industry and necessitated a re-think of how these services are delivered.

1064   Naturally, ACTRA has concerns with the industry implications of ownership concentration should this pattern persist. As larger players within the broadcasting landscape con1inue to absorb smaller participants there will be fewer and fewer doors for creators to knock on when pitching their ideas.

1065   For this transaction to proceed it must be demonstrably clear that the loss of diversity to Canadian media ownership must yield incremental benefits to the larger recorded media industry, as well as Canadian audiences.

1066   On its own, Corus's audience share would be small enough to allay any concerns we would normally have about media concentration. However, Corus has a clear connection to Shaw Media, whose own market influence must be taken into account in any analysis done by the Commission of Corus's market share.

1067   Particularly worrying, is the loss of TELETOON as an independent voice in animation production and exhibition. TELETOON is a key player in the development of children and youth animated programming and with this proposed transaction Corus stands to be the dominant player in Canada's animation sector. This concentration has the potential to create a power imbalance between Corus and Canada's independent animation production community.

1068   ACTRA feels it is in the best interests of Canada's broadcasting sector and creative community that the Commission examine this transaction with an eye to creating robust safeguards that will preserve the diversity within Canada's broadcasting landscape and continue to promote healthy competition within the animation sector.

1069   We have no objection to Corus adding TELETOON and TELETOON Retro to its group framework, providing the Commission sets CPE and PNI levels for the services that will preserve Corus' 30 per cent group CPE level.

1070   What troubles us is the fact that ACTRA, and those of us in the creative community, continue to rely heavily on the Commission to analyze the financial documents used by TELETOON to arrive at their proposed CPE and PNI levels. The creative community is often unable to conduct independent analysis in these types of transactions and reach their own because so many financial records are confidential.

1071   We would like to remind the Commission that in the framework of the group based licensing policy it is crucial that broadcast groups are obligated to submit detailed reports that lay out their required PNI spending and public benefits expenditures, and that this information is made publicly available. Without access to this reporting, ACTRA, and other stakeholders do not have the crucial data they need to ensure that ownership groups are living up to their responsibilities.

1072   With increased media ownership concentration there are more opportunities for confusion and influencing the system. Clarity and transparency are vital to maintaining the integrity of the broadcasting sector and to ensure the regulatory obligations continue to be met.

1073   ACTRA urges the Commission to consider service-by-service reporting on CPE and PNI expenditures that defines incremental public benefits expenditures that will be required to be made publicly available.

1074   On the whole, ACTRA finds the allocation of Corus's tangible benefits monies to be consistent with the Commission's policy on public benefits.

1075   If the Commission sees fit to approve this transaction we believe that Corus should begin disbursing its benefits' monies on completion of the successful transfer of the TELETOON assets. After all, if Corus is able to reap the rewards provided by its new services, then surely the Canadian broadcasting industry deserves the same consideration.

1076   Corus has also proposed a wide range of film festivals and cultural organizations on which to spend its off-screen benefits money.

1077   ACTRA is not here to judge the relative worth of any proposed benefits' recipient on Corus's list. However, ACTRA respectfully asks the Commission to examine these beneficiaries in order to determine whether any monies they receive will go towards providing a net benefit to the Canadian broadcasting sector.

1078   Benefits' monies are meant to deliver incremental improvements to the broadcasting sector and should not be spent on initiatives, no matter how worthwhile, that have only a tenuous relationship to the sector.

1079   Our greatest concerns with this hearing are the easements TELETOON is seeking to its Canadian content requirements. TELETOON is looking to remove the cap that limits them from drawing no more than 5 percent of its content from programming categories that include public service announcements, interstitials, infomercials and promotional and corporate videos.

1080   TELETOON claims removing the cap is necessary in giving the service greater flexibility in arranging their programing lineup. We understand the importance of flexibility in Canada's competitive specialty market. However, it cannot be used as the justification for robbing audiences of the content they're looking for. Increased programming flexibility doesn't equate to more opportunities to advertise to viewers.

1081   TELETOON's proposal to remove the condition of licence requiring it to broadcast a minimum of one hour of Canadian programming between eight p.m. and midnight is equally disappointing.

1082   Canadian programming needs to be made available at a time when audiences have the greatest opportunity to find it. This means making it available during primetime, not burying it in the graveyard of TELETOON's programming schedule

1083   Licences are a responsibility, awarded on the understanding that the holder will provide Canadians with interesting and engaging content that is relevant to them. They are not an entitlement to be amended on a whim, simply because a service believes their obligations to the Broadcasting Act have become an inconvenience to their financial ambitions.

1084   We are prepared to support this transaction only if the Commission continues to hold Corus responsible for its obligations to the broadcasting sector and Canadian audiences.

1085   Thank you for taking the time to hear our concerns.

1086   THE CHAIRPERSON: Thank you very much for that presentation.

1087   Commissioner Shoan will be asking you some questions.

1088   COMMISSIONER SHOAN: Thank you for being here, Mr. Leibovitch.

1089   We'll get to a discussion of safeguards in a moment. I wanted to ask you on a preliminary basis just some high-level questions about the children's programming and animation sector in Canada as a whole.

1090   Can you tell me a little bit about how children's programming and animation production sectors compare and differ from other sectors of programming and production and how they may differ by language market as well?

1091   MR. LEIBOVITCH: Give me one sec.

--- Pause

1092   MR. LEIBOVITCH: I am sorry. Can you repeat the question. I'm sorry.

1093   COMMISSIONER SHOAN: Yeah, no problem.

1094   MR. LEIBOVITCH: I've lost my notes on it.

1095   COMMISSIONER SHOAN: In terms of the children's programming and animation production sectors --

1096   MR. LEIBOVITCH: Right.

1097   COMMISSIONER SHOAN: -- can you compare and explain how they differ from other sectors of programming production including by language market?

1098   MR. LEIBOVITCH: Well, in relation to the TELETOON and Corus, the acquisition of TELETOON by Corus?

1099   COMMISSIONER SHOAN: Discussed in that context or just generally in terms of how the production sector functions.

1100   MR. LEIBOVITCH: My understanding is that the concentration is much greater in children's programming.

1101   Of course, you know, we're talking 50 percent currently and then, I think I read that it's liable to go up to 70 percent concentration. So you know that's quite a large number and it raises concerns over the concentration in terms of the ownership and then also in the power imbalance and potentially programming children's channels.

1102   COMMISSIONER SHOAN: Thank you.

1103   There are a number of support mechanisms for independent production presently in place and also remedies against anticompetitive behaviours. Why are these insufficient to protect children's programming and animation production sectors?

1104   MR. LEIBOVITCH: Well, I don't think that they are insufficient but we would just want to ensure that Corus is bound by -- I think what we're suggesting is through the condition of licence to hold the line on their requirements.

1105   COMMISSIONER SHOAN: Okay. You mentioned today that -- I'm just looking for it:

"Increased programming flexibility doesn't equate to more opportunities to advertise to viewers."

1106   And previously there was an appearing party before us. Forgive me, I forgot who it was. I discussed with them the possibility of expanding -- oh, actually, I believe it was actually TELUS -- the possibility of expanding the potential access to Category 12 and 13 but limiting access to Category 14 which of course is infomercials.

1107   What are your perspectives on that potential approach?

1108   MR. LEIBOVITCH: I mean, at this point with Corus you know expanding its role within children's programming we don't see any need or any justification to increase in any of those Categories 12, 13 or 14.

1109   Clearly, 14 may be viewed as being more, you know, direct advertising in the form of infomercials than, say, public service announcements, but given the current circumstances we don't see the need for that kind of flexibility or that increase in advertising versus broadcasting on the creative side.

1110   COMMISSIONER SHOAN: Okay. And you hold that view despite the fact that Corus and TELETOON have committed to maintaining their safe haven portion of programming?

1111   MR. LEIBOVITCH: Yeah, we don't see any reason or any justification for backing away from those requirements.

1112   COMMISSIONER SHOAN: Okay.

1113   I wanted to ask you about the Corus export initiative fund. Does the promotion of Canadian content in Canada and abroad impact the production of new Canadian content and if so can you elaborate on that and if not, why not?

1114   MR. LEIBOVITCH: Yeah, I don't really have an answer to that question. I'm sorry.

1115   COMMISSIONER SHOAN: Okay, that's fine.

1116   Can you describe any changes you have experienced in respect to programming funding since the implementation of the group based approach?

1117   MR. LEIBOVITCH: I don't have an answer to that one either. I could get back to you certainly.

Undertaking

1118   COMMISSIONER SHOAN: Actually, that would be very helpful.

1119   MR. LEIBOVITCH: Yeah, sure.

1120   COMMISSIONER SHOAN: If you could ask some of your constituents about that.

1121   MR. LEIBOVITCH: Sure.

1122   COMMISSIONER SHOAN: That would be great. Thank you.

1123   In its BCE/Astral Decision the Commission imposed specific safeguards and expectations on BCE regarding the way it can manage and negotiate non-linear multiplatform rights. In the present application neither Corus nor Shaw is a wireless service provider contrary to BCE.

1124   Does that lessen the concerns with respect to the availability of non-linear rights for competitors? Do you have any concerns with respect to the availability of non-linear rights?

1125   MR. LEIBOVITCH: Again, I would have to get back to you with an answer to that question.

Undertaking

1126   COMMISSIONER SHOAN: No problem at all, Mr. Leibovitch.

1127   Since Shaw and Corus would not be acquiring additional market share as they have argued within the proposed transaction, is it really necessary for the Commission to impose further safeguards as a general question.

1128   MR. LEIBOVITCH: I don't know about further safeguards but certainly we want to hold the line on the current safeguards in place through the conditions of licence of course.

1129   COMMISSIONER SHOAN: Okay. I take your point with respect to the potentially -- I believe the language used is disappointing loss of the one hour of Canadian content between eight and twelve.

1130   I think the alternative viewpoint and alternative argument is that given that there is an evening broadcast period or a primetime definition for TELETOON which was just confirmed to be four to ten of which there is a significant Canadian content requirement it alleviates or mitigates the need for that potential additional requirement. What are your views on that?

1131   MR. LEIBOVITCH: Yeah, I agree. I think it does.

1132   COMMISSIONER SHOAN: Okay, great. Those are my question. Thank you very much.

1133   THE CHAIRPERSON: Thank you. Just one question from my point of view, Mr. Leibovitch.

1134   You're the National Director of Research. I was wondering. I noticed in your presentation you say there is 22,000 professionals, performers and members of ACTRA benefit from this, but could you actually give us the number of how many of your members benefit directly from the services of TELETOON and work in the area? I know dubbing or whatever it is.

1135   MR. LEIBOVITCH: Right.

1136   THE CHAIRPERSON: Do you have a sense of that?

1137   MR. LEIBOVITCH: Mainly dubbing and voiceover. I don't have an exact number, but I would be happy to get it to you because we --

1138   THE CHAIRPERSON: Well, the problem is this is the time, right? So we have to be fair to the applicants. So this is the time to be answering questions because they get a reply and pretty much we close the file and make a decision.

1139   So if you're unable to answer now we understand that but --

1140   MR. LEIBOVITCH: I didn't bring the number of our members that are working directly with me now. Sorry.

1141   THE CHAIRPERSON: Do you have a sense of magnitude?

1142   MR. LEIBOVITCH: No, I would hate to venture a guess and be way off.

1143   THE CHAIRPERSON: Okay, well, I appreciate that you might not have those numbers at hand.

1144   So thank you very much. Those are our questions.

1145   MR. LEIBOVITCH: Thank you.

1146   THE CHAIRPERSON: We'll do one more intervention before taking a break. So we'll call up --

1147   LA SECRÉTAIRE : Alors, vous pouvez y aller quand vous êtes prête, Madame. Vous avez 10 minutes.

1148   LE PRÉSIDENT : Votre micro, s'il vous plaît. Merci.

INTERVENTION

1149   Mme McNEIL : Monsieur le Président, Monsieur le Vice-président, Monsieur le conseiller, membres du personnel, je suis Natalie McNeil, directrice générale de l'Alliance des producteurs francophones du Canada.

1150   L'APFC représente les producteurs indépendants francophones oeuvrant dans les communautés de langue officielle en situation minoritaire.

1151   Tout en participant à la diversité de la télévision, du multimédia et du film canadiens, ces producteurs indépendants contribuent à retenir les artisans, les artistes et les créateurs dans leurs milieux respectifs. Ils donnent une voix également à leurs communautés et leur tendent un miroir dans lequel elles se reconnaissent et qui les représente dans le paysage audiovisuel d'aujourd'hui.

1152   Nous tenons à remercier le Conseil de la place faite aux communautés francophones en situation minoritaire dans le cadre des examens qu'il instruit.

1153   Nous vous remercions également de nous inviter à comparaître dans le cadre des acquisitions de Historia, Séries » et TÉLÉTOON par Corus.

1154   Ces transactions sont d'une grande importance pour notre industrie et nous reviendrons aujourd'hui sur certaines des observations et recommandations que nous avons émises dans le mémoire déposé au dossier public, en septembre dernier.

1155   Notre présentation reprendra dans un premier temps les points concernant Historia et Séries+, puis ceux portant sur TÉLÉTOON.

1156   Alors, Historia et Séries+, tout comme l'AQPM, le CMPA ou encore l'UdA et OSM, l'APFC est en désaccord avec Corus lorsque celui-ci propose de verser des avantages tangibles sur seulement...

1157   LE PRÉSIDENT : Un moment, on n'a pas d'interprétation. Donc, vous pouvez ralentir un petit peu?

1158   Mme McNEIL : Oui, pardon!

1159   LE PRÉSIDENT : C'est ça le problème.

1160   Oui, allez-y.

1161   Mme McNEIL : Bien, je vais recommencer le paragraphe 4.

1162   LE PRÉSIDENT : Oui.

1163   Mme McNEIL : Tout comme l'AQPM, le CMPA ou encore l'UdA et l'OSM, l'APFC est en désaccord avec Corus lorsque celui-ci propose de verser des avantages tangibles sur seulement 50 p. cent de la valeur d'Historia et de Séries+.

1164   En dépit de l'avis juridique soumis par Corus, l'APFC considère que les circonstances particulières à cette transaction justifient le paiement d'avantages tangibles sur la totalité de la valeur des services acquis.

1165   En effet, après cet examen porté devant le Conseil, le Groupe Corus, avant cet examen, le Groupe Corus ne détenait aucun intérêt dans Historia et Séries+ et ne jouait aucun rôle, quel qu'il soit, dans leur gestion ou leurs opérations.

1166   Si les transactions sont acceptées, il détiendra 100 p. cent des actifs et en exercera le contrôle effectif. Il est donc logique que Corus paie des avantages sur la totalité des actifs qu'il acquiert. De toute évidence, Corus s'apprête à acheter deux fleurons du marché des chaînes spécialisées francophones qui présentent un haut niveau de rentabilité et, selon les données fournies, ont obtenu des bénéfices avant intérêt et impôt de 25 millions de dollars avec des marges de 46 p. cent pour Historia et de 54 p. cent pour Séries+.

1167   Nous demandons donc au Conseil d'exiger que Corus verse des avantages tangibles calculés sur la totalité de la valeur de l'actif de ces deux chaînes, soit 277,2 millions et non sur 138 millions.

1168   En ce qui concerne la répartition des avantages tangibles et la notion de production indépendante en provenance des CLOSM francophones, nous constatons que le requérant n'a pas saisi l'opportunité d'offrir un engagement plus formel dans sa réplique et dans sa présentation de ce matin.

1169   Dans notre mémoire, nous demandions de réserver 10 p. cent des avantages tangibles à la production indépendante de langue française située en milieu minoritaire.

1170   Corus n'y consent pas, préférant, et je cite « privilégier ce qui se fait de mieux en termes de production parmi toutes les régions du Canada. »

1171   Or, ceci est loin de nous convaincre ou de nous rassurer, tout simplement parce que depuis les 10 dernières années, la presque totalité des productions provient du Québec et que la force du marché s'y situe.

1172   Lors des deux derniers examens, le Conseil a rappelé à maintes reprises l'importance des CLOSM et la nécessité que les diffuseurs...

1173   LE PRÉSIDENT : Ralentissez un peu.

1174   Mme McNEIL : Encore?

1175   LE PRÉSIDENT : Si ce que vous avez à dire est important, on va prendre les quelques minutes de plus, puis on...

1176   Mme McNEIL : Excusez-moi. Je ne me rends même pas compte que je vais vite.

1177   LE PRÉSIDENT : Oui, oui, oui, oui.

1178   Mme McNEIL : Je suis désolée.

1179   LE PRÉSIDENT : C'est très important. Donc, prenez votre temps.

1180   Mme McNEIL : D'accord.

1181   LE PRÉSIDENT : On va vous écouter, puis tout le monde va vous entendre.

1182   Mme McNEIL : D'accord.

1183   Alors bon.

1184   Lors des examens des deux dernières années, le Conseil a rappelé à maintes reprises l'importance des CLOSM et la nécessité que les diffuseurs participent à l'amélioration de l'accès aux services de radiodiffusion et de télécommunication ainsi qu'à l'accroissement de leur présence au sein du système de radiodiffusion.

1185   Ces deux prérogatives sont apparues clairement dans les dernières décisions prises par le Conseil. L'APFC est donc déçue que Corus ait laissé de côté ces impératifs alors même qu'il exploite ou compte exploiter les marchés francophones au Nouveau-Brunswick et en Ontario.

1186   L'APFC rappelle respectueusement que dans le cadre des transactions Bell-Astral (2013-106) et TVA-Quebecor Média (2011-384), le Conseil, dans sa sagesse, a imposé une condition de licence stipulant que 10 p. cent des avantages tangibles à l'écran soient réservés à des entreprises de production indépendante de langue française situées en situation minoritaire.

1187   Sur la base de ces deux décisions, l'APFC demande au Conseil d'imposer par condition de licence que Corus réserve 10 p. cent des avantages tangibles à l'écran à des entreprises de production indépendante de langue française situées en situation minoritaire.

1188   En ce qui concerne la nature des avantages tangibles à l'écran, pour l'initiative Émissions, nous notons avec satisfaction que Corus, dans sa réplique, affectera les sommes à des projets d'émissions en supplément au DÉC exigibles de ces deux services pour financer des émissions de langue française.

1189   Pour l'initiative Scénarisation, nous sommes satisfaits de noter que les sommes serviront exclusivement au développement d'émissions de langue française, tout comme nous sommes d'avis que la gestion de ce fonds pourra tout à fait être conduite par Téléfilm ou le Fonds des médias du Canada.

1190   Enfin, nous constatons que pour l'initiative Fonds d'appui à l'exportation, Corus s'en remet à la décision du Conseil et accepterait, et je cite « que les sommes prévues pour le Fonds d'appui à l'exportation soient réparties en parts égales entre les volets émissions et scénarisation.

1191   Selon nous, cette initiative ne s'apparente pas à des avantages liés à l'écran, tel que défini par le CRTC. Et, nous estimons que cette répartition retenue par Corus devrait prévaloir.

1192   En ce qui concerne les avantages tangibles hors écran, l'APFC appuie tous les groupes reliés directement à la radiodiffusion et à la formation en autant que ceux-ci aient un impact direct sur l'industrie.

1193   Plus précisément, nous réitérons notre satisfaction à voir l'Inis, le pôle HEC et le YMCA Média à être d'éventuels bénéficiaires.

1194   Comme nous l'avons exprimé, nous estimons que 10 p. cent des avantages tangibles hors écran doivent servir les CLOSM et avoir un impact direct sur l'industrie de la production.

1195   Par ailleurs, nous reconnaissons le pouvoir discrétionnaire de Corus et nous pensons justement que celui-ci l'autorise tout à fait à exiger que les futurs gestionnaires ou bénéficiaires réservent une part de 10 p. cent au développement et à la formation destinés à la francophonie canadienne.

1196   Nous réitérons donc notre demande en ce sens, car de tels mécanismes permettraient réellement le développement et la formation et sauraient être profitables à toute notre industrie.

1197   Section TÉLÉTOON, nous ne nous opposons pas à l'acquisition par Corus de TÉLÉTOON. Cependant, nous émettons des réserves, compte tenu du fait que le requérant n'a pas révisé sa position et a choisi d'assimiler le service bilingue de catégorie A TELETOON/TÉLÉTOON à un service de langue anglaise, et en orientant la quasi-totalité des avantages tangibles aussi bien à l'écran que hors écran, vers des productions, des institutions et des événements de langue anglaise.

1198   Tout comme l'AQPM, l'APFC estime que le Conseil doit exiger de Corus qu'il soumette une répartition linguistique de la valeur de la transaction et qu'il distribue les avantages tangibles entre production de langue anglaise et de langue française au prorata de cette répartition.

1199   Le Conseil devrait également exiger que pour chaque groupe linguistique, la répartition témoigne d'un souci de représentativité régionale.

1200   De plus, et tout comme les autres associations de producteurs, nous demandons au Conseil d'exiger de Corus qu'il renouvelle tous les services d'animation acquis, comme des services indépendants, ainsi qu'il propose de le faire pour Historia et Séries+.

1201   En effet, pour toutes les raisons évoquées par les associations de producteurs dans leurs interventions écrites, nous croyons qu'il serait préjudiciable pour les producteurs indépendants d'animation que ces services soient inclus dans le groupe de radiodiffusion Corus et que celui-ci puisse transférer les obligations de dépenses d'émissions canadiennes, de ces services d'animation vers d'autres services et d'autres catégories d'émissions.

1202   En conclusion, notre appui est entre autres conditionnel à des engagements clairs envers les CLOSM et envers les producteurs indépendants oeuvrant à l'extérieur du Québec.

1203   Notre position est donc de demander légitimement qu'un environnement favorable à la croissance et au développement d'une industrie indispensable à l'équilibre du système de radiodiffusion canadien soit pris en considération dans le cas de cet examen.

1204   Le Conseil est le garant de l'intégrité du système de radiodiffusion canadien. Les règles qu'il fixe doivent appuyer la production indépendante canadienne-française en conformité avec la Loi sur la radiodiffusion et la Loi sur les langues officielles.

1205   Les producteurs de la francophonie canadienne contribuent à l'exécution de ce mandat en offrant des productions télévisuelles de grande qualité qui peuvent à la fois refléter les réalités de ces autres francophonies tout comme s'adresser à divers publics en abordant des thèmes fédérateurs.

1206   Je vous remercie de votre attention. Et je suis prête à répondre, au nom de la PFC, à vos questions.

1207   LE PRÉSIDENT : Merci beaucoup, Madame McNeil. On vous a très bien entendu, mais je demanderais aux interprètes de s'assurer que vous êtes sur le bon canal quand vous faites l'interprétation. Je pense qu'on a perdu quelques personnes avec un changement, à un moment donné, mais on s'est rattrapé.

1208   Donc, je vais passer la parole au vice-président.

1209   CONSEILLER PENTAFONTAS : Bonjour, Madame McNeil. Bon après-midi.

1210   Mme McNEIL : Merci.

1211   CONSEILLER PENTAFONTAS : Je vous laisse le temps de...

1212   Non, non, vas-y!

--- Rires

1213   Mme McNEIL : Merci.

1214   CONSEILLER PENTAFONTAS : C'est important de respirer quand vous voulez répondre à des questions.

1215   Mme McNEIL : Je voulais pas prendre plus de 10 minutes. Alors j'ai...

1216   CONSEILLER PENTAFONTAS : Non, non, non.

1217   Mme McNEIL : Je galopais.

1218   CONSEILLER PENTAFONTAS : Non, je comprends. Ça nous arrive à tous et à toutes.

1219   Voilà! Très claire, votre présentation, et point par point.

1220   Alors, je vais juste, pas effleurer le document, mais en parler un petit peu.

1221   Je ne sais pas si ce matin vous avez été en salle. Mais j'ai essayé de soutirer des gens de Corus qu'est-ce qu'ils étaient pour offrir de supplémentaire, si vous voulez, de valeur ajoutée. Je ne veux pas utiliser le terme « Top up » qui a été utilisé ce matin. Mais quelque chose de plus, d'extra, de plus value.

1222   Qu'est-ce qui rend différent ou plus intéressant ou plus fantastique pour utiliser leurs termes, suite à la transaction?

1223   Étiez-vous satisfaite de la réponse?

1224   Mme McNEIL : Vous voulez que j'oriente ma...

1225   CONSEILLER PENTAFONTAS : Et je parle précisément en ce qui a trait à des CLOSM...

1226   Mme McNEIL : Par rapport aux CLOSM.

1227   CONSEILLER PENTAFONTAS : Une production franco...

1228   Mme McNEIL : Oui, bien sûr.

1229   CONSEILLER PENTAFONTAS : Hors Québec surtout.

1230   Mme McNEIL : Non, pas du tout.

1231   CONSEILLER PENTAFONTAS : O.K.

1232   Mme McNEIL : Je vais être...

1233   CONSEILLER PENTAFONTAS : On peut se poser des questions aussi longues qu'on voudra. Mais les questions risquent d'être brèves.

1234   Et vous, dans votre esprit, qu'est-ce qu'il y a de... qu'est-ce qu'il y a que le système peut exiger suite à cette transaction-là?

1235   Mme McNEIL : Ce qu'on demande en fait...

1236   CONSEILLER PENTAFONTAS : Mis à part le 10 p. cent et ce qui est déjà inscrit là.

1237   Mme McNEIL : Oui, oui. Mais écoutez, durant les sept, huit dernières années...

1238   CONSEILLER PENTAFONTAS : Oui.

1239   Mme McNEIL : Il y a eu très peu de production indépendante émanant de Séries+ et Historia.

1240   En fait, à ma connaissance et selon les membres de l'APFC, donc on peut parler de 98 p. cent de la production indépendante hors Québec, il y a eu deux productions indépendantes émanant de la francophonie canadienne. Une de Vancouver qui était par ailleurs dans le...

1241   CONSEILLER PENTAFONTAS : Oui, on a vu ça dans la vidéo.

1242   Mme McNEIL : Dans la vidéo. Et une autre qui a été faite en 2010-2011.

1243   Donc, c'est à peu près tout. Alors, je dirais vraiment avec beaucoup de respect que c'est très bien d'aller dans les communautés, d'aller dans les marchés, d'aller à la rencontre des producteurs.

1244   Mais, en termes de résultats, c'est pas extrêmement probant de notre point de vue, puisque ça n'a résulté qu'en deux productions.

1245   Ensuite, moi je veux bien qu'on « fit pas », d'accord. Mais je crois que c'est un peu simple et que c'est souvent question de volonté, d'opportunité et les producteurs indépendants qui vivent en situation minoritaire vivent dans... sont aux prises avec des problématiques systémiques dans leur relation avec les diffuseurs, puisqu'ils sont loin, ils sont éloignés. On ne les connaît pas. Ils se connaissent pas.

1246   Ils se voient, certes, dans des marchés. Mais bon, ils font un peu stimuler tout ça. Et, la seule façon de les stimuler, c'est par des règles. Et quand il y a des règles qui sont mises, on voit qu'il y a des résultats.

1247   Donc, je reviens toujours devant vous depuis plusieurs années avec des demandes de conditions de licence. Parce que c'est la seule façon dont on peut évacuer ce problème et qu'il y ait des relations plus naturelles qui se créent et que tout le monde est satisfait d'un côté comme de l'autre.

1248   CONSEILLER PENTAFONTAS : Mais, est-ce qu'il y a assez de produits de qualité qui peuvent se produire parmi ces producteurs indépendants hors Québec?

1249   Mme McNEIL : Mais ça, c'est toujours la question de la qualité. La qualité existe. Histoire de jouets, qui était dans le clip, a obtenu des cotes d'écoute exceptionnelles. Et pourtant, donc pourtant, ça vient de Vancouver. C'est fait par Red Letter Films. Ça a été diffusé cet automne. Et, cote d'écoute exceptionnelle. Donc, oui.

1250   CONSEILLER PENTAFONTAS : Et, est-ce que ces producteurs n'ont pas les moyens de se promener à Toronto, à Montréal pour faire vendre leurs produits?

1251   Qu'est-ce qui pourrait changer la donne?

1252   Mme McNEIL : Bien, c'est pas...

1253   CONSEILLER PENTAFONTAS : Avant même qu'on arrive au stade des productions.

1254   Mme McNEIL : Ce qui pourrait changer la donne, c'est... je pense que les producteurs ont les moyens d'aller à Montréal. C'est certain qu'un billet d'avion Vancouver - je dis toujours la même chose. Un billet d'avion Vancouver-Montréal, c'est 950 $. Un parking pour aller voir Radio-Canada ou Astral ou Bell, bien c'est 12,50 $ à peu près.

1255   Donc, c'est facile de faire le calcul. Donc, il y a une histoire d'économie, de coûts. Mais les producteurs se déplacent énormément et vont à la rencontre. Donc...

1256   CONSEILLER PENTAFONTAS : Les programmeurs se déplacent également, non?

1257   Mme McNEIL : Un peu moins. Mais, il y a des opportunités de rencontres dans les marchés.

1258   Mais, c'est toujours plus facile de faire affaire avec quelqu'un qui habite à Montréal, en grande banlieue montréalaise. Et peut-être un peu moins facile quand on habite en grande région, enfin, au Québec. Mais bon, un peu plus naturel aussi.

1259   CONSEILLER PENTAFONTAS : Alors vous, vous ne voyez pas cet intérêt, cet effort de la part des programmeurs de Corus et d'autres à se déplacer en région pour rencontrer les producteurs indépendants.

1260   Mme McNEIL : Mais je pense que...

1261   CONSEILLER PENTAFONTAS : En situation minoritaire.

1262   Mme McNEIL : Il faut aussi créer des opportunités de rencontre. Les opportunités existent dans les marchés. Donc, ils se présentent.

1263   CONSEILLER PENTAFONTAS : O.K.

1264   Mme McNEIL : Mais, je pense qu'il faut aller au-delà de l'effort. Il suffit pas de rencontrer un producteur puis dire, voilà, c'est fait, de faire la liste et encore respectueusement, de la remettre au CRTC.

1265   C'est pas suffisant. Je veux dire, c'est très bien, mais c'est pas suffisant. Ça donne pas du contenu à l'écran émanant des communautés francophones en situation minoritaire.

1266   CONSEILLER PENTAFONTAS : Je comprends. Vous avez également indiqué que sur la question de TÉLÉTOON et des avantages tangibles, que la quasi-totalité de ces avantages se trouvera du côté anglophone du bilan, si vous voulez.

1267   Mme McNEIL : M'hmm.

1268   CONSEILLER PENTAFONTAS : Est-ce que vous avez fait le calcul de pourcentage ou...?

1269   Mme McNEIL : Non. J'ai pas fait le calcul, j'ai écouté très attentivement ce matin.

1270   CONSEILLER PENTAFONTAS : Oui.

1271   Mme McNEIL : Non. J'ai pas fait le calcul. Mais...

1272   CONSEILLER PENTAFONTAS : Vous n'avez pas calculé la répartition, mais vous, dans votre esprit, c'est très, très élevé du côté anglophone.

1273   Mme McNEIL : Mais, quand je vois la liste des avantages hors écran, c'est très élevé au niveau anglophone, indéniablement.

1274   Et, à moins d'avoir mal compris ce matin, pour ce qu'il s'agit de l'écran, est-ce qu'on a parlé? Est-ce qu'il y a un engagement certain envers... ou une répartition entre le marché francophone et anglophone? Moi je l'ai pas entendu clairement.

1275   Mais, j'ai peut-être mal compris. J'ai peut-être été inattentive. Mais je ne l'ai pas entendu clairement.

1276   CONSEILLER PENTAFONTAS : Nous avons également suivi la question de l'approche par groupe. Et, je sais pas si vous faisiez partie de l'audience à l'époque. Mais une des considérations était d'essayer de trouver une façon de rejoindre les programmeurs avec les producteurs francophones hors Québec en tant qu'exemple.

1277   Quel est votre sentiment, suite à cette approche par groupe? Est-ce que ça a amélioré les choses depuis quelques années?

1278   Mme McNEIL : Pas du tout.

1279   CONSEILLER PENTAFONTAS : Pas du tout.

1280   Mme McNEIL : Absolument pas.

1281   CONSEILLER PENTAFONTAS : C'est clair, c'est simple. L'histoire de ce fonds à l'exportation, vous voyez pas des avantages pour vos membres non plus?

1282   Mme McNEIL : Écoutez, c'est pas que je vois pas des avantages pour mes membres. Mais je crois que c'est, comme plusieurs l'ont exprimé aussi, que ça serait... il aurait été plus intéressant de le présenter en avantages tangibles hors écran plutôt qu'à l'écran.

1283   CONSEILLER PENTAFONTAS : Qu'à l'écran, O.K.

1284   Mme McNEIL : Voilà! Bien sûr, que je vois des avantages, mais peut-être pas situées dans cette portion-là du calcul. Et, que je trouvais intéressant que Corus reprenne la proposition de l'AQPM, je crois, de répartir, enfin, que si c'est le choix du Conseil que la somme qui est octroyée au Fonds, pourrait être répartie entre Scénarisation et Émissions.

1285   Mais aussi, je ne veux pas dénigrer Téléfilms et cette initiative qu'ils ont. Donc, ça serait au Conseil d'en décider.

1286   Mais, selon la PFC, c'est pas un avantage à l'écran.

1287   CONSEILLER PENTAFONTAS : Mais c'est bien que vous mentionniez Téléfilms. Et puis, on peut parler du CMF et d'autres.

1288   Ceci étant, vous avez exprimé une crainte quant à cette inclusion de TÉLÉTOON et TÉLÉTOON Rétro dans le groupe Corus. J'imagine que c'est quelque chose qui dérange tous les producteurs francophones et non seulement les producteurs francophones hors Québec.

1289   Mais, je vous donne la chance de nous en parler. Puis, ça revient encore à cette approche par groupe. Ça changera rien pour vous, même si on exige que 10 p. cent des productions soient faites par les producteurs en situation minoritaire linguistique.

1290   Vous pensez pas que ça peut, si on exige le 10 p. cent, comme exemple, que ça peut vous mettre plus à l'aise d'inclure TÉLÉTOON dans l'approche par groupe pour Corus?

1291   Mme McNEIL : Bien, Monsieur...

1292   CONSEILLER PENTAFONTAS : Vous vous êtes objectée à l'inclusion.

1293   Mme McNEIL : Oui.

1294   CONSEILLER PENTAFONTAS : Puis, je me demande s'il y a des manières ou des moyens règlementaires qui peuvent la rendre plus appétissante, si vous voulez, plus facile à digérer.

1295   Mme McNEIL : Bien, premièrement, je voudrais préciser une chose. Vous allez constater comment la PFC est peu gourmande.

1296   C'est qu'on ne demande pas 10 p. cent des bénéfices tangibles à l'écran dans la transaction pour TÉLÉTOON, mais pour Historia et Séries+.

1297   Pour TÉLÉTOON, on se rallie derrière l'AQPM dans un souci de protection du marché francophone. Et voilà...

1298   CONSEILLER PENTAFONTAS : Dans son ensemble, global, oui.

1299   Mme McNEIL : Dans son ensemble global.

1300   CONSEILLER PENTAFONTAS : Tout à fait.

1301   Mme McNEIL : Et particulièrement pour TÉLÉTOON. On a très peu... on n'a pas de production, pas de producteur qui ont fait de l'animation hors Québec. C'est pas parce qu'ils n'en ont pas fait qu'ils n'en feront pas. Mais ceci étant, l'expérience n'est pas là.

1302   Mais d'un point de vue plutôt macro et général, on se rallie derrière l'AQPM pour défendre la production indépendante d'animation francophone et s'assurer qu'il y ait une juste répartition.

1303   CONSEILLER PENTAFONTAS : Et c'est grandement apprécié.

1304   Merci beaucoup. Votre document est clair. Vos demandes et vos points de vue le sont également. Merci.

1305   Mme McNEIL : Merci.

1306   CONSEILLER PENTAFONTAS : Monsieur le Président.

1307   LE PRÉSIDENT : Donc, je voulais vraiment clarifier. À votre connaissance, il y a jamais eu de production d'animation faite dans les communautés à l'extérieur du Québec?

1308   Mme McNEIL : Non. Il y a une tentative qui a échoué, mais c'est pas... c'est pas un genre qui est très exploité et qui nous permettait de véritablement exiger une condition de licence du côté de TÉLÉTOON.

1309   Par contre, Historia et Séries+, c'est vraiment l'expertise de la production indépendante. C'est une transaction qui est très importante.

1310   LE PRÉSIDENT : Est-ce que vous avez de l'expérience dans les documentaires et même les téléséries?

1311   Mme McNEIL : Voilà!

1312   LE PRÉSIDENT : Oui, oui.

1313   Mme McNEIL : Voilà!

1314   LE PRÉSIDENT : O.K. C'est très clair.

1315   Merci beaucoup.

1316   Mme McNEIL : Merci.

1317   LE PRÉSIDENT : Merci, Madame McNeil.

1318   Nous allons prendre une pause de 15 minutes. So we'll be back at 3:20.

--- Upon recessing at 1505

--- Upon resuming at 1520

1319   LE PRÉSIDENT : À l'ordre, s'il vous plaît. Order, please.

1320   So we will now hear from the Canadian Cable Systems Alliance. Please identify yourself and please go ahead. Thanks.

INTERVENTION

1321   MR. EDWARDS: Good afternoon. I'm Chris Edwards, Vice President of Regulatory Affairs for the CCSA, and with me today is our regulatory consultant, Harris Boyd.

1322   The CCSA's comments in this proceeding are directed to items two and three of the Notice of consultation, that is the proposed transfer of a number of television programming assets from Astral to Corus. CCSA's comments in this matter deal only with the matter of vertical integration and application of the Commission's VI Policy framework to the proposed transactions.

1323   In its requests for clarification to Corus regarding the proposed transactions, the Commission noted that, as a result of Decision 2013-310, remedies against anticompetitive behaviours were, as a condition of approval, to be added to the broadcasting licenses for all undertakings that will be operated by a BCE-related entity following the close of the transaction between BCE and Astral.

1324   Given that Shaw and Corus are part of the same ownership group, the size of the combined Shaw-Corus entity and the resulting opportunity for anticompetitive behaviour, the Commission asked Corus to comment on the applicability and relevance of remedies against anticompetitive behaviours such as those set out in Decision 2013-310 in the context of the current transaction.

1325   Corus responded that it would accept the imposition of such remedies as conditions of license, but only with respect to the television licenses that are subject to this proceeding, that is the services that are proposed to be transferred.

1326   In Broadcasting Notice of Consultation 2013-448, the Commission again said, given the applicant's ownership structure, the Commission may wish to discuss the applicability and relevance of remedies against anticompetitive behaviours such as those set out in Astral broadcasting undertakings, change of the effective control 2013-310. We want to discuss that, too.

1327   As a practical matter, companies under common ownership such as Shaw and Corus operate as an integrated enterprise, and concerns about anticompetitive behaviour do apply. In the June 2011 public hearing on Vertical Integration Policy, Cogeco told the Commission that windows were being broken, that is, in Cogeco's view, the potential harms associated with these major vertical integration transactions were in fact occurring more than two years ago. We concurred with that view.

1328   The Commission's vertical integration policy, including a new Code of Commercial Conduct, was issued in September 2011. Since that time, the independent distributors engaged in a drawn-out dispute resolution process about a single contract for 29 specialty services that Bell was imposing on us. During that entire dispute resolution process, the Code of Commercial Conduct remained a voluntary Code, it was unenforceable, and it was of no use to us whatsoever.

1329   Nearly 2 years after the Code was first issued, the Commission made its terms mandatory on all Bell licensees. The Commission did that by making it a condition of approval of Bell's purchase of Astral assets, that Bell apply for the license amendments necessary to make that happen.

1330   Today we are well over two years out from Cogeco's assertion that windows are being broken, and from the introduction of the VI Policy and the Code of Conduct. Today, the Policy and the Code remain enforceable on only one of the four major players -- that is Bell, Shaw, Rogers and Vidéotron -- that the Commission has recognized as being VI companies. For three of the four, compliance remains completely voluntary. Meanwhile, those companies keep consolidating and their power keeps growing.

1331   Meanwhile, contracts are being made in the context of the massive imbalance of power that characterizes our industry today. As a result, we are seeing substantial price increases at the wholesale level for television programming. Even more critically, we are seeing greater restrictions placed on our members' ability to package services in flexible ways that respond to consumer demand.

1332   Today we face minimum penetration guarantees and packaging rules that are unlike anything we have seen before. Over the past few years, especially with broadcasting policy 2008-100, the CRTC dramatically loosened its own carriage, linkage and packaging rules. The Commission did that to allow the broadcasting system to respond to growing consumer demand for flexibility.

1333   Over the same period, as the VI companies acquired more and more TV channels, CCSA found itself in a position of having to do single contracts for 10, 20 or 30 channels at a time. CCSA has little power to negotiate any of the fundamental terms of such omnibus agreements, including packaging provisions. The VI companies, on the other hand, have the power and a strong motivation to protect their existing revenues.

1334   As a result, we now find ourselves tied to affiliation agreements that, in their practical application, perpetuate and even tighten the old regulated carriage and packaging rules. Such agreements often impose minimum penetration levels that force the BDU to offer services in the basic or highly penetrated tiers.

1335   In addition, even if no minimum penetration is imposed for services, at lower penetrations the rates become so high that they effectively force packaging in highly penetrated service tiers. In fact, under the contracts we are seeing today, the wholesale rates at lower penetrations are astronomically high, high enough to prevent a hybrid analog-digital BDU from offering the channel in digital-only format.

1336   So the Commission has relaxed its rules, but the rules have not gone away. Now the VI companies are able to use their power to perpetuate and even tighten those rules in agreements they impose on independent BDUs.

1337   The VI Policy was created, based on evidence gathered in an extensive public record, to address the potential for abuse of market power and anticompetitive behaviour. That potential does exist and it exists in relation to all of the vertically integrated companies.

1338   The Bell Media contract was a fundamental departure from customary affiliation agreements in the Canadian broadcasting industry. We are seeing the sorts of terms that first appeared in that contract being picked up in the terms we are now seeing from other large programmers, including Corus.

1339   Those terms guaranteed the programmers existing revenues, and more. They are bad for our members and, more importantly, they raise prices and restrict choices for Canadian consumers.

1340   Without an effective enforceable VI Policy and Code of Commercial Conduct that is applicable to all vertically integrated companies, we have no means to hold those companies to the basic principles of the Code, such as prohibitions against requiring an unreasonable rate, minimum penetration or revenue levels that force distribution of the service on the basic tier or in a package that is inconsistent with a service's theme or price point, refusing to make programming services available on a standalone basis.

1341   The Commission has made a VI Policy. As we have said consistently, that Policy must be enforceable. The Commission has a present opportunity to make that policy enforceable on all of the licensed undertakings owned by Shaw. We agree with TELUS' statement that it would be inconsistent for the Commission not to subject Shaw and its affiliates to the same measures as applied to Bell and its affiliates.

1342   We also agree that the jurisdictional issue raised by Corus is irrelevant. Just as it did with Bell, the Commission, as a condition of approval of this transaction, can require all Shaw-affiliated undertakings to apply for license amendments that require compliance with the policy and the code.

1343   The Commission should do that. Moreover, the Commission should pursue whatever means are available to it, including the enactment of Regulation, to ensure that the VI policy and code are enforceable on all vertically integrated companies as soon as possible.

1344   This matter is important and urgent to us, and thank you for your time and attention, and we would be happy to answer any questions.

1345   THE CHAIRPERSON: Thank you, gentlemen.

1346   Were you here this morning when we were doing the questioning of Corus?

1347   MR. EDWARDS: I was listening.

1348   THE CHAIRPERSON: Okay. So you have the gist of the exchange. I am summarizing, but we can look at the transcript in more detail, but essentially I took away that Corus was saying that unlike -- that this was distinguishable, the situation of Corus, plus or minus Shaw, was distinguishable in terms of safeguards because BCE was a different kettle of fish, in part because there had been conduct -- their argument -- and that in the case of Corus there had been no bad behaviour, one argument.

1349   And second, that unlike BCE that may have a greater presence within the same company, but also Internet, wireless, telephony, that that was a distinguishable characteristic and that we shouldn't necessarily carry forward the BCE/Astral decision into this particular case.

1350   What are your views on that?

1351   MR. EDWARDS: So I think first of all, you know, we referred to the evidentiary record in the VI proceeding, and that record established essentially as a factual basis that there was a potential for anticompetitive behaviour and harm to consumers out of that, and we see no difference in that respect.

1352   I am not going to comment on whether there has been a bad behaviour or not. We haven't certainly come to the sorts of -- the depth of standoff that we had with Bell probably at the time we were doing the VI hearing, but we are concerned.

1353   As I have said, we do see the same sorts of terms that came out of the Bell agreement flowing into the offers we are seeing now. So that's the first part of it.

1354   The second part, you know, it really for us comes down to are we able to secure the rights for distribution of both the linear product and the broadband products on terms that are fair and reasonable. On that question I think there is really nothing to distinguish the two cases in terms of the balance of power. In terms of the number of properties, you know, it's slightly different, but it is still a lot of television assets we are dealing with here, and I think it essentially boils down to the same negotiating proposition.

1355   MR. BOYD: Maybe just a couple of comments. I mean, safeguards are generally designed to assist in the event that future activity is anticompetitive or discriminatory, as opposed to fixing things that have happened in the past.

1356   So what we need and feel should be put in place is those kinds of safeguards, just in case their behaviour -- of the larger company -- should violate the VI Policy. If the safeguards are not needed, if the behaviour is normal and they remain the kind of good partner that they have been -- and I am speaking of Shaw as a whole -- then they will not be affected by the safeguards.

1357   The other point I would like to make is, about the only service Shaw doesn't have at this point in time is wireless, they do still have spectrum, we don't know what might happen in the future, they are the second largest cable company, second-largest satellite company, big telephone company, a big Internet company and they are our second largest competitor in terms of our members nationally across the country.

1358   So the potential is there for them to use their force. They will own over 40 specialty and pay services with this transaction; they could use that against other distributors.

1359   THE CHAIRPERSON: So you don't buy the argument that it's distinguishable? That's a no, for the record?

1360   MR. BOYD: That's a no, sorry.

1361   MR. EDWARDS: On the fundamentals, no.

1362   THE CHAIRPERSON: Okay.

1363   So when you're saying, though, at paragraph 10 of your written submission that as a matter of principle you think that all VIs should be subject to the same regulatory constraints, I had read that "as a matter of principle", that is that there is no real problem on the ground.

1364   Is that what you're saying, or not?

1365   MR. EDWARDS: In our view, there is a real problem on the ground. I know that the Bell negotiation is past history, but we feel still that that was a real problem and it is going to translate into a problem for consumers. We are currently in negotiation with Corus. As I have said in the oral remarks, we see the same sorts of terms emerging in that negotiation, which are new.

1366   So some of it is very real. Having said that, you know, our preference all along, going back to the question of these rules should apply to all of the VI companies, we do think that is a correct principle, and our preference all along would have been for regulation, I think, to apply equally to all those players, but what we see is the Commission chose to use the opportunity in the Bell/Astral transaction and we have another transaction before us that creates an opportunity, and we will take whatever protection we can get as soon as we can get it.

1367   THE CHAIRPERSON: Right.

1368   Maybe I can get to the renewals of your current affiliation agreements. I took it earlier that one of the arguments put forward by the applicants were we shouldn't worry too much because a lot of the agreements have been put in place -- and we are going to get more detailed information on that -- but you are telling me that is not the case, you have a number of affiliation agreements that are pending?

1369   MR. EDWARDS: My understanding is that for all of the Corus services, except ABC Spark, we are currently out of contract and negotiating renewals.

1370   THE CHAIRPERSON: Okay.

1371   With respect to nonlinear rights, is it an equally important issue? I take your point that, you know, the Corus/Shaw group has presence in a lot of markets, but they really, setting aside may be a Wi-Fi play, that it would appear that they are less of a wireless player?

1372   MR. BOYD: Well, the broadband rights are very important, so they are nonlinear rights as well. So all of our -- first, all of our members are in the broadband business and so is Shaw. In terms of the mobile, the wireless side, none of our members have a wireless service if you don't count Eastlink, and they are sort of a semi-member, but that doesn't mean they won't have in the future, and need those rights.

1373   We might do it through a partnership with a regional player. Obviously these are things we are looking at because you need it to compete. So again it comes back to, as the future unfolds, we will need all the rights just the same as all of our competitors have.

1374   THE CHAIRPERSON: Right.

1375   MR. EDWARDS: I would just like to add to that, actually, a little bit. So we have progressed, finally, we are actually getting some members rolling out TV Everywhere product for the first time, and so it is becoming critically important to us at this stage as far as the broadband rights go. So that's an important thing.

1376   As far as the mobile rights go, we are continuing to look for partners to help our members roll out that service and we feel like we are getting closer to that.

1377   So the third aspect to that is, typically, affiliation agreements in this business are long-term agreements and so it's very much a concern to us.

1378   MR. BOYD: And maybe I just can make one other comment. I notice Corus said this morning that these licenses would be very short-term because they would end them, I think, in 2016, the same as the rest of the group, and so that in itself would be a safeguard, but we don't really think that the length of the license term makes much difference, because our contracts, if we ever get them in place, will last longer than that, and we will still be locked in when their licenses expire.

1379   THE CHAIRPERSON: Understood.

1380   When we were talking about these potential safeguards this morning, it appeared quite clear that, in fact, in the efficiency process, the applicant clearly said that with respect to the six programming services that were the subject of the ownership application, they have proposed safeguards, and this morning there seemed to be an openness to add 2, 3 and 4, I think, as long as it was programming.

1381   I think there was also, in the exchange we were having, I realization that the commission could, notwithstanding the general rule that we can't reopen conditions of license, the condition of approval could extend that to potentially all of Corus' programming services.

1382   The question that is still hanging out there, and I would like to have your views, is should it extend as well to Shaw's programming services and then, the penultimate one is also Shaw's BDU licences?

1383   MR. EDWARDS: I think, you know, from our point of view, an integrated enterprise is an integrated enterprise. When you did it with Bell, it was the BDU licensees, it was the programming licensees all together, and we are in a situation where we are buying almost all of our Canadian programming that's available from these players now at the same time as they are our most important direct competitors.

1384   Additionally, Shaw is actually the transport supplier for most of the signals for our members, so we really do view it as a holistic competitive problem.

1385   THE CHAIRPERSON: Right.

1386   MR. EDWARDS: And from our point of view, the same safeguards that were applied in the Bell situation should apply in the same way to the vertically integrated enterprise, including all of its parts.

1387   THE CHAIRPERSON: But before us today we only had Corus. I guess, in a sense, we indirectly had J.R. Shaw, who ultimately controls.

1388   Don't you think there is an issue there?

1389   MR. BOYD: But you -- the Commission has defined the Shaw/Corus entity as one of the four vertically integrated companies. It's not our definition, it's yours.

1390   You know, we don't want to refight past battles, but I guess if you asked us to comment, we would say the Vertical Integration Policy probably should have existed before the Global purchase or the CTV purchase were allowed, and given that wasn't the case, when the Vertical Integration Policy was put in place, it should've been mandatory as opposed to voluntary.

1391   So now we have those activities that have taken place, and about the only tools left are now conditions of license. So given the horse is long out of the barn -- in fact there are a lot of horses out of that barn -- we think you should take this opportunity, and if you get opportunities with the other two companies in the future, you should take them as well.

1392   THE CHAIRPERSON: The other two being Vidétron --

1393   MR. BOYD: Québecor and Rogers.

1394   THE CHAIRPERSON: And Rogers. Well, they are not in the hearing room either. What prevents us from doing it here?

1395   MR. BOYD: Well, it seems to me you have to have a transaction.

1396   THE CHAIRPERSON: I mean, if you follow the logic --

1397   MR. BOYD: You have to have a transaction.

1398   THE CHAIRPERSON: But if you follow your logic, one, I think Shaw would argue -- I don't want to put arguments in their mouths, but Shaw would argue that they are not part of this application.

1399   MR. BOYD: But they are. They are.

1400   MR. EDWARDS: So that takes us back to my statement that our preference from the outset, as we have said all along, would have been that regulation would have been made that applied equally to the VI entities, but we will take the opportunities where they appear.

1401   THE CHAIRPERSON: Understood. Understood.

1402   I realize your preference, what they would be, but I was just trying to get you to help us a little bit getting our head around it.

1403   MR. BOYD: We are always trying to help, but this is a pretty serious issue for us.

1404   THE CHAIRPERSON: Oh, I fully appreciate that.

1405   MR. EDWARDS: I mean, on one level, you go back to the evidence on the record of the vertical integration proceeding, which was basically around what constitutes a vertically integrated enterprise, how can that enterprise be expected to behave and what are the potential harms that come out of that, and when we look at it, we see those vertically integrated enterprises that Harris mentioned, the four of them, and they look the same to us.

1406   COMMISSIONER PENTEFOUNTAS: So you would like us to tie, by virtue of the transaction, Corus to the broadcasting arm of Shaw and, by extension, the distribution arm of Shaw?

1407   And you wouldn't see any legal or other problems from that stretch?

1408   MR. BOYD: Well, I mean, you have done it with Bell, and while Bell is structured somewhat differently --

1409   COMMISSIONER PENTEFOUNTAS: Right.

1410   MR. BOYD: -- it does have a very strong distribution arm which is growing quite dramatically, and has a slightly larger programming portfolio, but not that much larger than Shaw.

1411   COMMISSIONER PENTEFOUNTAS: No, I see the comparison in terms of the programming portfolio, when you add the assets of Shaw and Corus, that's fine, and the numbers are there.

1412   MR. BOYD: Yes.

1413   COMMISSIONER PENTEFOUNTAS: They are comparable, 36.4, they have 35.8, if I'm not mistaken. That's fine, but then you hop onto -- you hop onto the distribution arm of Shaw as well.

1414   MR. BOYD: Because that's the part that competes with us, and that's where the danger exists, is they will provide an advantage to their distribution arms, because they are plural, that they don't provide to independent distributors, and they own that programming so they can, within their family -- and I can use that word either way -- that it is quite possible that those kinds of activities could take place.

1415   COMMISSIONER PENTEFOUNTAS: Okay.

1416   And, again, not going back to fight old battles, but I guess how is the Code of Conduct working out for you?

1417   MR. BOYD: Not very well.

1418   COMMISSIONER PENTEFOUNTAS: Do I need to ask, given what I heard this afternoon?

1419   MR. BOYD: Not well.

1420   COMMISSIONER PENTEFOUNTAS: Okay. Thank you, those are my questions.

1421   THE CHAIRPERSON: Commissioner Shoan...?

1422   COMMISSIONER SHOAN: Just a couple of quick questions.

1423   Typically, on average, how long are the affiliation agreements signed by your constituents?

1424   MR. EDWARDS: A typical affiliation agreement is usually a five-year agreement.

1425   COMMISSIONER SHOAN: Okay.

1426   MR. BOYD: I should clarify, I think what we came out of the Bell mediation process with was a three-year agreement, but that -- that was based on the circumstances.

1427   MR. EDWARDS: There was about a year and a half retroactivity as well, so it ended up almost five in total.

1428   COMMISSIONER SHOAN: Okay, thank you.

1429   Certainly I don't wish to prejudice your negotiations at present with Corus, but you mentioned that you had seen similar behaviour in your current negotiation as you have seen from other VI companies, can you articulate a bit further what that behaviour is without treading upon confidential negotiations?

1430   MR. EDWARDS: Yeah, it's a little difficult to answer specifically, but, you know, we would see things like requirement to carry certain services on the basic service, grandfathering of existing carriage for the services, minimum penetration guarantees, those sorts of things.

1431   Some of them have existed in the past, but the levels may have changed radically, but some of these are fairly new concepts as well.

1432   COMMISSIONER SHOAN: Okay. Thank you very much.

1433   THE CHAIRPERSON: Your position is clear, so we probably can continue to discuss this with the applicants during the reply phase, so thank you very much, gentlemen.

1434   MR. EDWARDS: Thank you.

1435   MR. BOYD: Thank you.

1436   THE CHAIRPERSON: We will now hear from --

1437   THE SECRETARY: TELUS.

1438   THE CHAIRPERSON: -- TELUS.

--- Pause

1439   LE PRÉSIDENT : Alors, bienvenue. Comme d'habitude, je vous demanderais de vous identifier et de faire votre presentation. Merci.

INTERVENTION

1440   MME MAINVILLE-NEESON : Merci beaucoup, Monsieur le Président.

1441   Good afternoon, Mr. Chairman, Mr. Vice-Chair, Commissioner, my name is Ann Mainville-Neeson and I am Vice President, Broadcasting Policy and Regulatory Affairs, at TELUS. With me is Nav Saini, Senior Manager, Content Acquisition.

1442   Thank you for providing TELUS with this opportunity to further expand on our written comments filed in this proceeding.

1443   When the Commission approved Bell's application to acquire Astral Media earlier this year, it did so only on condition that Bell's broadcast distribution services and all its programming services accept conditions of license which provide additional safeguards against anti-competitive behaviour incented and made possible by vertical integration. The Commission stated that it must:

"... ensure [...] that increased consolidation and scale do not jeopardize the diversity and competitive balance in the Canadian broadcasting system."

1444   TELUS submits that the safeguards that were put in place for Bell's distribution services and Bell Media's programming services should also be applied to Shaw Cable and Shaw Direct, Shaw Media and, of course, Corus, as a condition of approving the transaction being considered today.

1445   TELUS acknowledges that Corus is its own publicly traded company and structurally separate from Shaw, however, as again acknowledged by Mr. Cassaday this morning, Corus is also ultimately controlled by J.R. Shaw.

1446   TELUS is concerned that from time to time opportunities will arise where Corus will be able to give a preference to its affiliate Shaw over other competitors without harming the interests of Corus. We have seen it with respect to the "on-the-go" rights that were given to Shaw before Corus provided the same rights to TELUS.

1447   TELUS urges the Commission to ensure that it implements safeguards against such possibility of anti-competitive behaviour. In this fast-paced consumer-centric environment, even a short delay in being able to offer content can have a significant impact in market.

1448   Protection against potential anti-competitive behaviour is particularly important with respect to Shaw and Corus because a combined Shaw/Corus is, by some measures, even bigger than Bell/Astral. Regulatory parity should dictate that Shaw and Corus be subject to the same additional safeguards as have been imposed on Bell and its affiliated companies.

1449   Nav...?

1450   MR. SAINI: Moreover, ensuring adequate protection against potential anti-competitive behaviour by Shaw/Corus is particularly important to TELUS. First, Shaw's cable arm and satellite services are the main competitors to TELUS' Optik TV service in western region.

1451   Second, Corus holds the western rights to the premium services Movie Central and HBO Canada, as well as numerous other highly popular Category A services, making Corus one of TELUS' most important content partners to date.

1452   The combined programming services of Shaw Media and Corus are far more significant to TELUS than any other group of services, because we carry more of their services than any other broadcast group and their specialty and premium services are the most desired by our customer base.

1453   Accordingly, it's just as important that Shaw/Corus be subject to the additional safeguards that were imposed on Bell/Astral.

1454   MS MAIVILLE-NEESON: Finally, TELUS has taken note of Corus' reply comments to our intervention. Corus attempts to dismiss the example of preferential treatment to their affiliated BDU, Shaw, by creating a cloud of complexity around the granting of digital rights.

1455   Corus' statements in its reply comments in this proceeding are contradicted by the evidence provided by TELUS in its initial complaint back in 2012. Accordingly, TELUS has appended to its opening comments the evidence it filed in relation to that 2012 complaint in relation to the head start provided to Shaw to offer Movie Central on the Go.

1456   In its reply comments in this proceeding, Corus attempts to create the illusion that the rights that TELUS was seeking were different than what was being provided to Shaw. This is untrue. TELUS merely sought exactly the same rights as were being granted to Shaw -- and this goes to the discussion that you just had with the previous party, CCSA, with respect to Shaw not having a wireless division.

1457   You will from the attached evidence how the Shaw Go service could be accessed from any mobile device, including a device connected to a cellular network. I refer you to page 6 of the evidence appended to these opening comments, where you will see that the Shaw Go service is actually being accessed by Shaw subscriber on the TELUS 3G network.

1458   But TELUS does not wish to rehash this complaint yet again. The only point TELUS wishes to make is that Corus can, and has at times, provided its affiliated BDU with an anti-competitive advantage in market. TELUS acknowledges that not all of its dealings with Corus have raised concerns resulting from its affiliation with Shaw. Nevertheless, the prospect remains that it can, it has before, and it might again.

1459   This transaction provides an opportunity for the Commission to implement the additional safeguards which it determined were appropriate for the large conglomerate created by Bell's acquisition of Astral Media. It can apply this to an equally large, if not larger conglomerate, namely Shaw/Corus.

1460   Finally, TELUS notes that Corus, in its reply comments, states:

"None of the interveners speak to the changes in the media environment."

1461   However, TELUS' request that additional vertical integration safeguards be put in place speaks specifically to the changing media environment. The additional safeguards proposed, specifically regarding the access to multiplatform and non-linear rights, are directly tied to the changes in the media environment and the need for all distributors to compete with OTT.

1462   En conclusion, TELUS invite le Conseil à mettre en oeuvre la parité réglementaire entre les deux plus grandes sociétés de radiodiffusion intégrés verticalement au Canada en imposant sur Shaw/Corus les mêmes garanties qu'il a imposé sur Bell/Astral. Cela permettra d'assurer un environnement concurrentiel dans le système canadien de radiodiffusion et aidera à relever les défis qui nous attendent.

1463   Nous remercions le Conseil de nous avoir permis de participer à cette instance et nous serons maintenant heureux de répondre à vos questions.

1464   THE CHAIRPERSON: Okay. Thank you for that.

1465   You have the advantage of having heard the same questions I'm probably going to ask you with my discussion with the CCSA.

1466   Were you here this morning?

1467   MS MAINVILLE-NEESON: Yes, we were in the public exam room.

1468   THE CHAIRPERSON: So you followed the discussion, and you may have heard what I thought I heard, that Corus was making the argument that sort of the bad behaviour alleged vis-à-vis BCE may have led to certain conditions -- that's their argument -- in the approval just isn't present in the case of Corus.

1469   Now, in your submission, contrary to the CCSA, you are giving one example, but if I recall my geography classes, one point does not make a line, you need at least two, so I was wondering, you know, yes, there was an incident, but it may be the exception rather than the rule, and I was wondering if you could share if you have any other concerns that are real and not just theoretical about potential abuse of market power?

1470   MS MAINVILLE-NEESON: Sure.

1471   One example that was raised with me, because of course our Business Unit -- and we have Nav here today who might have some additional things to add -- but that was raised to my attention was some Shaw Media services that launched an HD version and, of course, Shaw is ready to launch -- Shaw's distribution arm is ready to launch that service virtually immediately, well before we even received notice that the HD services available for distribution.

1472   Now, TELUS prides itself as being an HD leader, and that delay in obtaining the HD signals or notice that these HD signals will be available is important. So these are the types of things which you might say that's relatively small, but they add up. All of these instances add up to ultimately a lot more difficulty in competing when you have so many premium and very popular services in the hands of our main competitor.

1473   THE CHAIRPERSON: Right, but we still have the VI Code and the undue preference provision. I'd put it to you that if you thought it was significant you would have had an avenue of recourse there.

1474   MS MAINVILLE-NEESON: Sure.

1475   And at this point, this was, you know, raised to was relatively recently and so I have yet to determine whether or not I will be putting in something. Of course, it was not a no-head-start thing, it's -- you know, at this point they have provided us notice, so it's just a delayed notice that unfortunately is not addressed by the VI Code.

1476   However, it would have been addressed by the condition of license that has now been imposed on Bell/Astral with respect to providing 90 days notice. So that problem might have been effectively resolved had these conditions of license been put in place, which is why there are still numerous HD services to be launched, and I would see these additional conditions of license might prove to be very useful in market.

1477   THE CHAIRPERSON: I believe that Corus was also arguing that they are not like BCE because they don't have the same footprint. Among other things, they are not present, it would appear, in the wireless sector. I do know that they have perhaps some plans with respect to WiFi.

1478   What is your view with respect to the comparativeness of BCE and Shaw?

1479   MS MAINVILLE-NEESON: Well, you know, by some measures, Shaw/Corus is in fact bigger than BCE, as it stands now. Certainly from a BDU perspective, the combined Shaw Cable and Shaw Direct are a bigger BDU. Shaw is a bigger Internet provider in our markets them TELUS, so from our perspective Shaw is a massive competitor, and to say that they are, you know, nowhere near as big as BCE is, I think, not truly looking at the problem the way it needs to be looked at.

1480   And with respect to wireless, I think it's very important -- and it goes back to what I was showing you on page 6 here -- because the way that the market is operating, the way that programming services are being offered to consumers is we offer the service and try to tie it to the BDU service, so Shaw, when it offered its Shaw Go service, it made it available to any BDU subscriber, to the Shaw BDU service. It had nothing to do with whether or not Shaw offers a wireless service and, in fact, that's why a Shaw Go, or a Shaw subscriber accessing Shaw Go could access it on the TELUS network.

1481   So they have a TELUS mobile device, but they are a Shaw subscriber from a BDU perspective. Our Optik TV is a direct competitor to Shaw Cable and Shaw Direct and that's where the competitive aspect really comes in.

1482   So right now as it stands, if you tie everything to your BDU subscription, which seems to be where the market is going, it is actually pretty much irrelevant whether or not Shaw owns any wireless.

1483   THE CHAIRPERSON: Right.

1484   What is the state of your affiliation agreements, in terms of renewals, with both the Corus programming undertakings and the Shaw programming undertakings, because, as I understood it, one of the positions the applicant was putting before us earlier today was that there is a certain amount of stability.

1485   MS MAINVILLE-NEESON: I will let Nav answer that question.

1486   MR. SAINI: Sure.

1487   So we are currently in agreement with both entities that you have mentioned, so Corus undertaking and Shaw as well, so we are currently in agreement at this point in time.

1488   THE CHAIRPERSON: So you have agreements with --

1489   MR. SAINI: Absolutely.

1490   THE CHAIRPERSON: -- all of them, so you are not a negotiation --

1491   MR. SAINI: We are not a negotiations.

1492   THE CHAIRPERSON: -- on any fronts. So what do you --

1493   MS MAINVILLE-NEESON: Although we are in negotiations for some nonlinear rights and some multiplatform linear rights from Shaw Media.

1494   MR. SAINI: Yes.

1495   THE CHAIRPERSON: As addendums to those affiliation agreements?

1496   MS MAINVILLE-NEESON: That's right.

1497   MR. SAINI: That's correct, yes.

1498   THE CHAIRPERSON: Okay.

1499   But to a certain degree you have affiliation agreements. Would you therefore agree with Corus' argument to the effect that there is stability for a little while, that we don't -- it's somewhat different than other situations?

1500   MS MAINVILLE-NEESON: It certainly is different than what we faced with Bell for sure. However, those agreements will have a certain term and those terms do not coincide with the license renewals, and so to the extent that it might be considered appropriate to merely review whether or not additional conditions of license should be in place at the time of license renewal, we may very well be locked into another agreement that is not favourable and would have been better-negotiated had some safeguards been put in place prior to.

1501   THE CHAIRPERSON: If I were to ask you what the terms of -- the end dates of all those affiliation agreements, is a complicated answer that would be best dealt with in writing?

1502   MR. SAINI: Yes, I think we will file it as an undertaking.

1503   THE CHAIRPERSON: Okay. Can you make sure that you do that before the reply phase?

1504   MR. SAINI: Absolutely.

1505   THE CHAIRPERSON: Well before.

1506   MR. SAINI: Yes, we can do that.

1507   THE CHAIRPERSON: And give a copy to the applicants?

1508   MS MAINVILLE-NEESON: We certainly can do that. In fact, we can do that tonight, but it is considered confidential information, the timing of agreements, so we would prefer to do it in writing.

Undertaking

1509   THE CHAIRPERSON: Well, you can ask for confidential treatment in the normal course.

1510   Now, similar to the question I was asking earlier, it would appear that with respect to the safeguards -- and I take it your position is with respect to behavioural safeguards, you are not advocating structural safeguards?

1511   MS MAINVILLE-NEESON: That's right.

1512   THE CHAIRPERSON: Okay.

1513   So with the behavioural safeguards, I think we clearly, through the interrogatory process, it would appear that the applicant were comfortable with at least making some of the conditions of license as a condition or approval applicable to the programming -- the six programming undertakings.

1514   And this morning in the conversation, we have expanded that to additional two, three and four, conditional license to three and four. We also seem to have landed on potentially the Commission having the authority to go as a condition of approval to all of the Corus programming undertakings.

1515   What's left dangling, however, are the Shaw programming undertakings and the Shaw BDU undertakings. What's your view with respect to that?

1516   MS MAINVILLE-NEESON: Certainly our view is that you should include all Corus properties, not merely those that are part of this particular transaction and all of the Shaw properties.

1517   To the extent that, you know, a line has been drawn is it Corus to Shaw Media to Shaw Distribution I would suggest that the line actually is from Corus to Shaw Distribution which are the main concerns, right? It's the fact that it's Shaw's distribution service that is a direct competitor to us that causes the anti -- the potential and the incentive for anticompetitive behavior.

1518   THE CHAIRPERSON: But you have no dealings with Shaw Distribution. Your dealings are with Shaw programming and Corus programming.

1519   MS MAINVILLE-NEESON: Right, but if the distribution undertaking -- so to the extent that Shaw when we had this issue with respect to Movie Central on-the-go, I believe that it was Shaw Distribution that was urging Corus to provide it with preferential treatment.

1520   You see that's the -- the incentive is to provide the advantage to the distribution undertaking and that's why for us, whatever advantages that the distribution undertaking might achieve through its programming services whether Corus or Shaw Media, that's the link. We compete with the distribution undertaking which also owns those programming services.

1521   If you look at the potential, you know, and we have filed a lot of evidence in Bell/Astral as well as in the arbitration with Bell Media, the incentive lies with the BDU. The carrier is what -- is where you try to achieve your anticompetitive intent.

1522   THE CHAIRPERSON: You know, some people are saying well, you did it in the case of BCE/Astral and therefore you should do it here. But isn't there a major difference between that case? In that instance we had BCE in the hearing room as an applicant.

1523   MS MAINVILLE-NEESON: In this case, to the extent that Corus is in fact owned by J.R. Shaw of course, Mr. Shaw wasn't in the room, but you did have some Shaw representatives at the table. I think that was necessary because it was put in your Notice of Hearing that you were willing or wanting to discuss those particular issues.

1524   So Shaw was in the room. Shaw was at the table. They will be here in Reply, presumably, and I think that that is something that is absolutely within your power and should be something that you do. Regulatory parity in itself should dictate.

1525   THE CHAIRPERSON: But there is a distinction between putting a notice that you want to discuss something and actually actioning it.

1526   MS MAINVILLE-NEESON: Absolutely. But to the extent that, you know, some of the comments that were made that it shouldn't apply because there is no rationale for -- you know there's no bad behaviour and that there's not as many interveners as were there for Bell/Astral, well, you've got to look at who competes directly with Shaw. Those who do compete directly with Shaw are here today.

1527   THE CHAIRPERSON: Okay. And you are absolutely right. We will, in all fairness, to hear the counterpoint during Reply on these sorts of issues.

1528   I think those are our questions. Thank you very much.

1529   MS MAINVILLE-NEESON: Thank you very much.

1530   THE CHAIRPERSON: We'll now hear from the next interveners which are the Canadian Media Production Associations.

1531   THE SECRETARY: CMPA, Mr. Chairman.

1532   THE CHAIRPERSON: I saw Mr. Hennessy and Mr. Thomson in the room earlier, so if they can approach?

--- Pause

1533   THE CHAIRPERSON: Good afternoon, Mr. Hennessy and Mr. Thomson. Please -- I don't think you need to present yourselves but your text probably already does so. So go ahead and we'll listen.

INTERVENTION

1534   MR. HENNESSY: Good morning -- good afternoon, Mr. Chairman, Commissioners.

1535   My name is Michael Hennessy and I am the President and CEO of the Canadian Media Production Association. With me today is Jay Thomson, CMPA's Vice President, Regulatory.

1536   In our written submissions, the CMPA addressed the various applications before you today: Corus's application to purchase TELETOON, including the proposed benefits package, the TELETOON and TELETOON Retro renewal applications and the Corus application to purchase the French-language services, Historia and Séries+.

1537   At the conclusion of this oral presentation, we would, of course, be pleased to respond to any questions you may have including the issue of integration.

1538   But we would like to use our time right now to focus our remarks about the Corus/TELETOON application, and specifically on the need for enforceable associated safeguards, should the Commission approve the application.

1539   Mr. Chairman, if this Corus/TELETOON application is approved, the Canadian broadcasting system will lose yet another independent broadcasting voice and buyer of programming. Another independent source of programming for Canadian audiences will disappear and another independent door for Canadian producers to knock on will close.

1540   It is important in this context to appreciate that today while TELETOON has been jointly owned by two large, horizontally-integrated broadcasters in Astral and Corus, it has truly operated as an independent. This has been due in large part, if not entirely, to the fact the Commission has always required that TELETOON assign responsibility for its programming decisions to persons who were not employees or principals of any of its shareholders. And we are trying to replicate that as much as possible in our recommendations.

1541   If this application is approved, the competitive children's programming market that we had in Canada will be replaced with a near-Corus monopoly. With TELETOON under Corus' full ownership and control, Corus' share of the overall children's television audience to Canadian English-language programs will rise to 70 percent.

1542   In terms of the children's audience to Canadian English-language animation programs, Corus' share will rise to over 85 percent.

1543   With respect to the overall children's audience, after Corus's 70 percent share, the remaining 30 percent of children's viewing will be dispersed over different services, owned by a number of organizations both public and private.

1544   Based on historical figures, the company eventually buying the Family Channel assets will have somewhere around a 12 percent share. Everyone else, including the CBC, will come in at low single digits or less. And with CBC moving away from children's programming, its presence in the market is likely only to get smaller.

1545   So while there are other players in the field, no one company or service will come anywhere close to the children's audience share Corus will control.

1546   With respect to children's animation viewing, after Corus's 85 percent share, the next in line will be TVO, way down at 7 percent, with the rest split amongst two other public broadcasters, the CBC and Knowledge Network, as well as the Family Channel assets.

1547   It is clear then that with the purchase of TELETOON, Corus will gain a near-monopoly over the children's and animation markets. Such market dominance raises many, many red flags for Canadian consumers, citizens and creators.

1548   In 2012, the Commission denied BCE's first application to purchase Astral. You did so because of your concerns about what that deal would mean for competition, ownership concentration, vertical integration and the exercise of market power.

1549   Then earlier this year you approved a revised BCE application. But you only did so because of the significant safeguards you put in place to address your earlier concerns. Those safeguards are intended to ensure a continued dynamic marketplace and a healthy and competitive broadcasting system. That's our goal today.

1550   Admittedly, the Corus/TELETOON deal is much smaller than the BCE/Astral deal. There are fewer broadcasting services at play and the total, overall audience impact is arguably less substantial. But the concerns about what this deal will mean for competition, ownership concentration and the exercise of market power are just as big and just as serious. And the corresponding need for enforceable safeguards to therefore ensure a continued dynamic marketplace and a healthy competitive broadcasting system is equally just as real.

1551   When you assess the impact of this transaction, it is important to recognize that no single broadcasting company has a near monopoly over sports programming or news. No broadcaster has a near monopoly over drama shows or lifestyle programs or shows that target women or that target men.

1552   But with the approval of this transaction, one single company, Corus, will have a near monopoly over children's programming and animation.

1553   With the approval of this transaction, Corus will own three of the four most popular children's services. Seven of every 10 children tuning the family TV to watch their shows will get those shows from Corus. When those kids look for cartoons, over eight of every 10 will tune to a Corus channel.

1554   The Commission has long considered children to be a unique and underserved audience. The Broadcasting Act specifically references the importance of children's programming in the Canadian broadcasting system. The Act specifies that children of all ages, interests and tastes should have access to programming that is varied and comprehensive, and provides a balance of information, enlightenment and entertainment.

1555   How can it be right then that this specifically identified, underserved audience, children, could become the only audience in the Canadian broadcasting system whose viewing opportunities will be under the near monopoly control of one single company?

1556   In answer, the sad reality is that there are very few broadcasters who want to do kids' programming these days. To Corus' credit -- and we do sincerely give them credit for this -- they have demonstrated over the years that they are committed to children's programming and are successful at it. And we were pleased to hear them reinforce their commitment this morning.

1557   But even this admirable commitment and track record does not change the fact approval of this transaction will mean one single broadcaster will control significantly the fate of children's and animation programming in this country. One single broadcaster will decide what the large majority of Canadian children will get to see on TV.

1558   For the most part, that one single broadcaster will decide if new, original children's and animation programs get made and what those programs will be and how much will be spent on those programs and who will make them.

1559   That is why, should this transaction be approved, we urge the Commission to attach strong, enforceable safeguards to TELETOON's licence to promote a range of independent voices to offset that concentration. Those safeguards, we submit, are necessary to ensure a continued diversity of children's programming in this country by making sure that there is a place for truly independently-produced and original shows in TELETOON's schedule.

1560   Jay...?

1561   MR. THOMSON: Mr. Chairman, Commissioners, it is clear that we have many concerns about the impact of this transaction. But you will also note that despite all these concerns we still support it.

1562   There's a simple reason for that support. It's a matter of if not Corus, who else?

1563   We acknowledge that given their existing 50 percent ownership of TELETOON, Corus would seem to be the natural choice to acquire the remaining 50 percent. And, as we have noted, Corus has a long and successful record in children's programming. We also appreciate that Corus has confirmed that they will accept the Terms of Trade Condition of Licence for the TELETOON services.

1564   Just as important, we also recognize that in the current market there seem to be no well-capitalized or serious alternative buyers for TELETOON.

1565   And we agree that neither independent producers nor Canadian television audiences would benefit from a protracted period of further uncertainty regarding TELETOON's ownership and management.

1566   What this all means is we are faced with the unfortunate reality that a deal by which Corus will acquire a near-monopoly over Canadian children's and animation programming appears to be the lesser of two evils.

1567   Given this reality, it is therefore critical that if the Commission approves this application you establish safeguards, enforceable as Conditions of Licence, to mitigate the negative impact on the diversity of programming available to Canadian children that will otherwise result from this transaction.

1568   We fully described in our written submission what those various safeguards need to be. In addition to TELETOON maintaining an independent programming team, they include:

1569   One, to preserve funding for children's programming, TELETOON and TELETOON Retro should be excluded from the spending flexibility provisions of the Group Licensing Framework;

1570   Two, TELETOON should be required to ensure that a minimum of 75 percent of all expenditures on original, first-run Canadian programming is directed to independent production companies. It should also be required to ensure that a minimum of 75 percent of all such original programming broadcast on the service is acquired from independent production companies;

1571   Like YTV, TELETOON should be required to broadcast a minimum of 90 hours of original, independently-produced Canadian programming each year, and;

1572   Like Treehouse, TELETOON should be limited in its ability to broadcast any program shown on any of Corus's other children's or animation services.

1573   We also ask that the Commission to confirm that the Corus-owned Nelvana does not qualify as an independent production company in terms of these safeguards.

1574   Given Corus's statements that they will generally maintain the status quo at TELETOON with respect to independently-produced programming, they should have no trouble accepting these reasonable, enforceable obligations and limitations.

1575   Michael...?

1576   MR. HENNESSY: Mr. Chairman, if you impose the safeguards we have proposed, we can support this application. Absent them however, any rationale for our support would completely disappear. Without these safeguards, we cannot see how approval of this application could possibly be in the public interest. It would be BCE/Astral number one all over again.

1577   Mr. Chair, one final comment on integration. We do not agree that Shaw TV and Corus are integrated when it comes to programming.

1578   In our submission we have noted concerns we had that the proposition that the acquisition of Historia and Séries+ would not require benefits on the value of Shaw assets was troubling and we are deeply concerned that this proposal is a test, a Trojan horse if you will, that would open the door to a larger takeover of Corus without benefits.

1579   We disagree with this approach but, as Mr. Cassaday made clear, Corus operates as a separate company with a fiduciary responsibility to minority shareholders to operate independently from Shaw.

1580   We also think that this is not the proceeding to set such a major precedent but as our intervention itself argued, you can address the benefits issue for the specific transaction without having to go there.

1581   Thank you, Mr. Chairman. We welcome your comments.

1582   THE CHAIRPERSON: Thank you very much. I'll put you in the hands of Commissioner Shoan, please.

1583   COMMISSIONER SHOAN: Thank you very much.

1584   My very first question was to ask you about the children's programming and animation sector and how it differs from other sectors and genres of programming, but you very clearly and articulately described that difference in your presentation by noting that in no other sector or program genre is one company as dominated in terms of its control of that production sector.

1585   So thank you for that.

1586   MR. HENNESSY: Well, I think also the industry itself is different in that there tends to be, if you look at our major companies, and we have some significant companies from DHX, 9 Story, Nerdcore, many others, Breakthrough -- the majority of people working in the animation business today tend to be much younger, I think average age of 25. They tend to be very consumer or computer-savvy, much more open to convergent ideas and much more skilled in CGI narratives as well as narrative storytelling.

1587   So if you think of the future it's not only future for kids, but it's also a future for a younger generation of creators who have learned how to actually take the software and creative tools and marry them.

1588   MR. THOMSON: There is also a special skillset for the producers and writers of that kind of programming because of the audience that they are dealing with and the sensitivities of that audience and of course the families that are part of the audience as well. So the issues they go into and the skills and the ideas that are involved in children's programming are much different than in adult drama, for example.

1589   COMMISSIONER SHOAN: Okay. And the the workers or the producers and the developers and the creators who work in animation and children's programming, given their particular skillsets, are you of the view they are more likely to stay in that genre of programming moving forward?

1590   MR. HENNESSY: I think in that genre, certainly in that area where, you know, there has to be a much greater marriage of computer graphics and animation.

1591   So it may not be children's. You know, many of the companies that do mostly children are also very attuned to the opportunities presented by adult content which is one of the reasons we believe you still have to keep at least that hour of adult content, at least an hour of adult content after the nine p.m. period, Canadian.

1592   MR. THOMSON: Okay. And without being glib, I think it's fair to say that amongst our animation and children's producer members that they look to the decision coming out of this particular proceeding to determine very much what their future is going to look like and whether they will still be able to stay in the business or not.

1593   COMMISSIONER SHOAN: Thank you.

1594   I'll get to your safeguards in a moment. I just wanted to ask you some general questions about the support mechanisms currently in place for independent producers and the corresponding remedies against anticompetitive behaviours.

1595   Why are these insufficient to protect the children's programming and animation production sectors?

1596   MR. HENNESSY: Yes, start.

1597   MR. THOMSON: So if you are talking about the existing system that includes a combination of the provisions of the group licensing policy as well as the current conditions of licence and expectations that are applicable to TELETOON, they are certainly helpful but they are not enough.

1598   COMMISSIONER SHOAN: Okay.

1599   MR. THOMSON: Of course there is the -- the starting point is that those safeguards, particularly as they apply to TELETOON specifically, were established many years ago when TELETOON was an independent broadcaster owned by various different parties. And the status quo was changed. Those rules were for a different time under different circumstances.

1600   So rules that were important at that point because of Commission's concerns about these issues; concentration of ownership, market power and so on, they certainly can't be sufficient in a time when those concerns have substantially increased as a result of this transaction.

1601   So the GLP provides for CPE and PNI which helps support Canadian programming, certainly, but in themselves they don't promote diversity of original Canadian programming because that expenditure can be on any kind of programming.

1602   TELETOON's current conditions of licence also don't deal specifically with original programming. For one, they allow -- they do address expenditures on original programming but they allow 50 percent of those expenditures to be allocated to Corus, to Nelvana.

1603   And there is a 75 percent exhibition expectation for original programming. But what that ends up meaning is that 50 percent of the expenditures can be spent on Corus' 25 percent of programming and the other 50 percent for the Indies are spent on 75 percent of programming. So there is more for less for Corus and less for more for independent producers.

1604   So in a combination they don't address diversity overall. They don't really promote original programming and the safeguards that we have proposed will do that.

1605   COMMISSIONER SHOAN: Okay, thank you.

1606   Can you describe the changes, if any, that you have experienced in respect of broadcaster funding of programming since the implementation of the group based approach?

1607   Does that inform your position today?

1608   MR. HENNESSY: I don't think it necessarily informs what's happening with respect to this market today because, to a large extent, this market has been outside of the Group Licensing Framework because it has been -- it has been dealt with independently.

1609   In general, I think you see much -- you know, a shift in expenditure from volume to larger program budgets in some circumstances which I don't much -- you know, a shift in expenditure from volume to larger program budgets in some circumstances which I don't by the way, disagree with.

1610   I think that you can have higher budget programming that draws bigger audiences as we see in many of the scripted series like Flashpoint, Rookie Blues, Saving Hope, Combat Hospital, The Listener, Republic of Doyle, that's all greatness when these often hit over a million or more subscribers and then we really move the quality of programming up into the big leagues.

1611   But the issue -- you know, our concern really when we come back to this in terms of group licensing is that -- and particularly if we move into more of a pick and pay environment -- is that some programming is by its very nature more profitable than others because, for instance, maybe drama can -- adult drama can attract, for instance, more advertising than children's have.

1612   And as the margins of companies get squeezed, which they will either from competition from broadband television or from the smaller and smaller packages which are almost certain to evolve, then the openness of the corporate entity that ultimately controls things to continuing, say, to put money into programming that may not generate as much revenue for the corporation as a whole may mean, you know, if you work back down the line that less children's programming is done just by, you know, shareholder tradeoff.

1613   That's obviously a concern because there is something in the essence of children's programming and the importance of how we communicate and serve children to the future that transcends pure economics. And that's really what we're trying to do here, is ensure just as today there are spending requirements for specific spending requirements on children's programming that it's guaranteed, not that it's committed to, but that it's guaranteed going forward in the future.

1614   We aren't really thinking of having conditions of licence for what now is going to be a couple of years to do something that people suggest they are likely to do anyways is any sort of burden. But you know, given how fast the universe can change, I think, you know, particularly since it is children's programming and that the industry is so dependent on Corus for its growth and for some companies even their survival, that it's not a very interventionist request to make.

1615   MR. THOMSON: One of the challenges that we have in terms of understanding the impact of the group licensing policy is that -- and you've heard this before and you've heard it from ACTRA already today, and we've made these presentations to the Commission before -- is that we do not have access to the spending data. We do not know where broadcasters are moving their money. So we can only go on the basis of what we assume would be the natural business decisions that they would make which in this case we worry, well, threaten children's programming.

1616   But until we have access to that data -- we are hoping that at some point we will be able to get it -- we can't give you hard facts.

1617   COMMISSIONER SHOAN: Okay, thank you.

1618   Let's talk about the independent programming team that you recommended. So you proposed that the Commission require that the primary responsibility for the development, acquisition and investment in programming be delegated to persons that are not employees or principals or any of the other licensees in the Corus group.

1619   So how do you envision this independent programming committee/team? What would it look like? How would its members be nominated? Can you expand upon its responsibilities?

1620   MR. HENNESSY: It's important to be clear, right, that other -- so we're saying other people that are involved in that financing/development/ acquisition of programming in the company that are responsible for other channels should not for this channel. We're not saying that these people should not be employees of Corus and of TELETOON, just that they should operate separately.

1621   So it's very similar, you know, if you look at the structure that Len would have under him today in terms of programming choices. We're just saying that that should be the same kind of structure.

1622   It can even be a different structure, but that there isn't a conflict between the choices that that team is making and the choices that are being made on behalf of other channels, particularly given what I think is a significant threat if TELETOON is allowed to operate under the group licence policy.

1623   COMMISSIONER SHOAN: Okay. And can you provide any examples of where a similar structure has been used in another situation, perhaps any other jurisdiction?

1624   MR. HENNESSY: I'm not sure outside of the structure that was adopted for Corus and Astral and TELETOON whether there is one.

1625   COMMISSIONER SHOAN: Okay, thank you.

1626   You mentioned in your presentation to preserve funding for children's funding, TELETOON and TELETOON Retro should be excluded from the spending flexibilities of the Group Licensing Framework. Does that mean their CPE and PNI should -- what comments do you have, then, on the proposed CPE and PNI?

1627   MR. THOMSON: Well, we support the proposals for the amounts, the levels of CPE and PNI. Ultimately, it will mean that they will be held to spend those amounts on that very service and not be able to move that spending around to other services, particularly non-children's services.

1628   COMMISSIONER SHOAN: Okay.

1629   Can you describe the impact on independent producers once Nelvana is considered to be related to TELETOON? And will this result in new opportunities for independent producers?

1630   MR. HENNESSY: If the numbers are right, I guess, right now in terms of what was the -- just today.

1631   MR. THOMSON: They said 75 per cent.

1632   MR. HENNESSY: So there shouldn't be -- I don't think there should be.

1633   COMMISSIONER SHOAN: Well, the issue --

1634   MR. THOMSON: The problem that we have is that there is some confusion right now over what role Nelvana had with respect to TELETOON. At one point we heard that Nelvana was considered a related company with respect to TELETOON. In other circumstances we heard that it was not considered a related company to TELETOON. We believe it is a related company to TELETOON under the Commission's definition of related.

1635   But they said that notwithstanding those differences 75 percent of the programming on TELETOON is truly independent as in non-Nelvana programming. And that's a good number but, again, it doesn't speak to the promotion and diversity in original programming from independent producers which is at the heart of our safeguards.

1636   MR. HENNESSY: It does make the condition of licence that we're proposing again on its face something that won't be a burden since it already seems to represent the status quo.

1637   COMMISSIONER SHOAN: Right. So to that point I noticed that during the 2011-2012 broadcast year, TELETOON broadcast 138 hours of English-language first-run Canadian programs and 99 hours of French-language first-run programs.

1638   You have proposed a level of 90 hours which is less than the service's current performance. Can you explain that, justify that?

1639   MR. THOMSON: It's a minimum level. It's a floor, not a ceiling. We would hope that they would exceed it.

1640   COMMISSIONER SHOAN: And is that 90 hours to be distributed across both feeds, English and French?

1641   MR. THOMSON: Yes.

1642   COMMISSIONER SHOAN: Okay.

1643   So the Commission has been shifting away from a focus on exhibition and moving more towards an expenditure model. You're proposing both expenditure and exhibition safeguards.

1644   Can you explain why TELETOON's expenditure requirements would be insufficient to ensure that the broadcast of an appropriate number of hours of original programs and would require additional exhibition requirements?

1645   MR. THOMSON: So right now they have an exhibition requirement and a spending requirement and both relate to new original Canadian programming.

1646   We are arguing that those safeguards as existing safeguards should be maintained but also strengthened. So the spending safeguards which currently allows 50 percent of their spending on new to go to Corus, as I mentioned before, we say, should be 75.

1647   Under the current circumstances there are plenty of producers out there capable of filling 75 percent of that requirement. When it was set at 50 the argument was that there wasn't enough product out there. That's certainly not the case anymore.

1648   Okay, so the same safeguard bumping 50 to 75.

1649   Exhibition, same safeguard, changing it from an expectation to a condition of licence simply to make it more enforceable and make it a stronger obligation and send a signal that it is an important issue for the Commission.

1650   But the combinations already existed and we're not asking for more beyond what I have said.

1651   COMMISSIONER SHOAN: Okay, thank you.

1652   In your presentation you suggested that TELETOON should be limited in its ability to broadcast any programs shown on any of Corus' other children's or animation services. TELETOON, Treehouse and YTV as Category A services are subject to the specific nature of service definitions that prevent them from competing directly with each other while Treehouse and YTV are not subject to the limits on the broadcast of animation programs. Treehouse's animation programming would be directed at preschooler and YTV's animation programming would be directed at teens.

1653   So in light of that current situation can you describe the risk of programming overlap? Do you see it as a legitimate concern that could occur or do you feel that the nature of services and the target audiences would mitigate that fact?

1654   MR. THOMSON: The Treehouse/YTV condition exists, notwithstanding your point about the different audiences. When one looks at the animation that's actually made available on YTV and the animation that's made available on TELETOON during the day part up until nine o'clock, they are very similar and the opportunities to do a crossover will only increase with the ownership transaction being approved.

1655   So we believe that there is a legitimate concern that there will be crossover. When we look at BBM figures we see that the audience of children of 2 to 11 is a relatively similar breakdown, for example, between women -- not women -- young girls and boys, for those services during those daytimes. So the possibility is very real.

1656   COMMISSIONER SHOAN: To be clear, you feel the possibility is real between TELETOON and -- sorry, the other services?

1657   MR. THOMSON: It's really the possibility for any -- for Corus to transfer any programming for many of its animation services --

1658   COMMISSIONER SHOAN: Okay.

1659   MR. THOMSON: -- and reuse them on TELETOON to fill slots.

1660   COMMISSIONER SHOAN: Do you think there should be a blanket limit applied to the sharing of programming across any of these services and, if so, what would that number be?

1661   MR. THOMSON: Well, our submission is that there should be no sharing --

1662   COMMISSIONER SLOAN: Okay.

1663   MR. THOMSON: -- of animation programming between Corus' animation services -- any of the services in which it shows animation -- and TELETOON and vice versa.

1664   COMMISSIONER SHOAN: Okay.

1665   This morning you heard me ask Corus about filing annual reports on the tangible benefits, and they are already required to file annual reports on PNI and regional production.

1666   Do you think there is any information missing from those reports, any useful information that you feel would help assist the industry in terms of the effectiveness of the work these broadcasters do?

1667   MR. THOMSON: Well, if they were willing to divulge how they have shared their spending, using the flexibility available to them, that would be much appreciated.

1668   COMMISSIONER SHOAN: Right.

1669   MR. THOMSON: We have asked for a separate report with respect to TELETOON going forward because of the specific safeguards that we have asked and be attached to TELETOON's license, and we think that a separate report on their behalf would be necessary to ensure that they comply with those safeguards.

1670   COMMISSIONER SHOAN: Based on the safeguards you provided -- that you suggested?

1671   MR. THOMSON: Yes, right.

1672   COMMISSIONER SHOAN: Okay.

1673   Speaking of safeguards, in terms of Anglo versus Francophone markets, interveners have been mostly -- the preoccupations of interveners have mostly been related to increasing original French language production in terms of tangible benefits, CPE and PNI.

1674   Do you think that your proposed safeguards could be translated for the French market?

1675   MR. THOMSON: I don't see why not, but I would defer to those representing the French production community to sign on with our ideas.

1676   MR. HENNESSY: I think there is one important thing to remember when you are looking at spending -- if you try to look at English versus French market -- is that probably of all the genres, in animation there is a significant ability to serve both markets with the same programming, you know, different voiceover.

1677   So many of our companies today actually serve both markets and so they were actually very encouraged by the idea that -- in this case, that there was going to be increased competition in the Québec market, sort of ironically.

1678   But it is a unique market, so it would be the hardest thing to kind of quite figure out which is which in terms of spending, because there will be a high degree of duplication, I suspect.

1679   COMMISSIONER SHOAN: Thank you for that, and that is actually part of the reason why I was asking, because I noted in your presentation you referred to Corus' share of animation viewing and children's viewing was fairly substantial, at 85 percent, and then the next line would be TVO, and I just wanted to know whether you had similar numbers for the French language market.

1680   I was wondering whether the dynamic was the same in terms of having Corus assets being as dominant in the provision of children's programming and animation in the French language market as the English one.

1681   MR. THOMSON: We only gathered English language, or audiences for English language programming because that reflects their membership.

1682   COMMISSIONER SHOAN: Right. Fair enough.

1683   I wanted to ask you about the Corus Export Initiative Fund and your views with respect to the promotion of Canadian content in Canada and abroad through that fund. Ultimately, do you feel that it would impact the production of new Canadian content and, if so, why? If not, why not?

1684   MR. HENNESSY: I don't think a lot.

1685   So putting aside the arguments that you heard about on-screen versus off-screen, I think actually it may have been John Cassaday himself that might've hit the point -- or Doug Murphy -- is that when you go to a market, let's say MIP Junior, which just occurred in Cannes, in terms of selling children's programming, usually the business done in a lot of these places is not so much the pitch to develop the program, as to actually sell something that you already have licensed somewhere else, so the companies that are most likely to benefit from the trip to Europe may be the companies that really least need the trip because the global markets are already a part of doing -- and a necessary part of doing business.

1686   So I'm not sure, in terms of creating a lot of new product, that that is as likely. That's my view. I think I share what Corus was saying from that perspective.

1687   COMMISSIONER SHOAN: Okay, thank you.

1688   You have proposed that tangible benefits be imposed on the full value of the transaction, stating that Shaw and Corus are two separately traded companies. However, Corus has stated that both companies are controlled by one person through a voting trust arrangement agreement.

1689   Can you explain your rationale with respect to the effective control of Shaw and Corus?

1690   MR. HENNESSY: Yes. So we will do it in two parts, perhaps as I suggested in comments. I totally believe John Cassaday today when he said when he goes to the market, to investors, and they say, you know, can you guarantee to me that my investment in your company is not going to be impacted by decisions made on behalf of Shaw Media.

1691   That has been, I think, something that certainly as long as I have been in the industry, or as long as -- you know, I have been in the industry, I guess, longer than Corus has been around -- but has always been the case.

1692   It has been something that has been recognized by the Commission many times over, it is why Corus, when they were questioned and Shaw was questioned, leading to the development of the group licensing framework, made a very compelling case -- and I think Jay pointed out to me and filed a legal argument as to why they operated as very separate companies when it came to independent decision-making.

1693   Then there is that importance of the fiduciary responsibility to any minority shareholder. You can't, simply because you have a majority shareholder, act only in the interest of them when you come to make economic decisions. And everything I think everybody knows, certainly from the programming side of things, that Corus has, and we believe still continues to, operate very independently from Shaw Media.

1694   So I don't think it's a cut-and-dried thing to begin with, that this is simply an inter-corporate change of control, don't worry about it. As I said, I am paranoid to believe that, you know, this is a well-thought out, and there were certainly enough of the senior lawyers and people from Shaw in the room this morning to backstop this particular issue, that it is raising, you know, what people anticipate at some point might happen in terms of a merger between the two companies, which do have different minority shareholders.

1695   So they are two -- you know, the same people that own Shaw may overlap, but there are a number of different shareholders in Shaw versus Corus, and their interests must be taken into consideration. But putting that aside for a second, that's why we don't believe -- and I said, you know, from a programming perspective, I don't believe we are dealing with integrated entities; you know, they are licensed separately, they have operated separately, so I don't believe that that's a slam dunk.

1696   But I don't necessarily believe that that precedent has to be dealt with in this proceeding to require benefits to be paid by Shaw, and that is probably something better explained by Jay.

1697   MR. THOMSON: So our view is that this is one transaction that generates benefits based on the entire value of the whole transaction. So prior to this transaction, Corus had no ownership or control of either of those services. It's only by way of this transaction that they will gain control of those services. If they were to buy only the Bell 50 percent they would not gain control, if they were to buy only in the Shaw 50 percent they would not gain control, it's only by buying both the Shaw and Bell portions that they will gain control, which then triggers the benefits payment.

1698   COMMISSIONER SHOAN: Thank you very much, those are my questions.

1699   THE CHAIRPERSON: Mr. Vice-Chair?

1700   COMMISSIONER PENTEFOUNTAS: Thank you, Mr. Chairman. I think the question was answered partially, but in previous hearings where bilingual services were in play, the CMPA always offered their opinion on the breakdown in the benefits, and what percentage should go to Francophone as opposed to Anglophone productions, and I think you might have sort of answered the question partially that was asked by my colleague, but do you have any thoughts on the benefits package that is proposed and the linguistic split of that package?

1701   MR. THOMSON: With respect to the benefits for the Historia and Series» transaction, we are perfectly comfortable with all of those benefits flowing to French language initiatives, of course. We did not do an analysis of the TELETOON benefits package. It doesn't seem to us to provide a split.

1702   We are comfortable with -- given, as Michael was explaining, the nature of animation programming, we are comfortable with the notion that it will be split appropriately.

1703   COMMISSIONER PENTEFOUNTAS: Okay. Thank you, Mr. Thomson.

1704   MR. HENNESSY: But historic would be always a good measure to look back on and see if it's tracking or if has changed substantially.

1705   COMMISSIONER PENTEFOUNTAS: Would you base a spend on revenue acquired?

1706   MR. HENNESSY: You know, to the extent -- I mean the problem is we don't know what the number is exactly. It would be the expenditure.

1707   COMMISSIONER PENTEFOUNTAS: No, but in terms of the benefits package --

1708   MR. HENNESSY: Okay.

1709   COMMISSIONER PENTEFOUNTAS: -- and the split in benefits -- benefit spending?

1710   MR. THOMSON: I think what Michael is saying is consistent in that if you look at the way that TELETOON has historically split its expenditures between English and French language programming, then if you match that with respect to the split of the benefits, then you would be doing something that would be acceptable.

1711   COMMISSIONER PENTEFOUNTAS: That would be the model you would follow. Great, thank you.

1712   I just wanted to give you a chance to chime in on that. Thank you. Merci, Monsieur le président.

1713   THE CHAIRPERSON: Thank you. Just one question.

1714   It has been suggested by some interveners that the Export Initiative Fund might not be an on-screen benefit, if a benefit at all.

1715   MR. HENNESSY: That's our position, yes.

1716   THE CHAIRPERSON: You agree that it would not be an on-screen benefit?

1717   MR. HENNESSY: That's right.

1718   THE chairperson: But it would be a benefit to the system?

1719   MR. HENNESSY: Okay, consistent more with the recent philosophy of the Commission that, as much as possible, an off-screen benefit should at least bear some sort of connection to the broadcast system itself.

1720   THE CHAIRPERSON: Or the communities served.

1721   MR. HENNESSY: Or the community served. And I think to the extent that you are actually -- you know, the idea is to support the export opportunity, sales opportunities for Canadian programming, then you can draw a connection.

1722   THE CHAIRPERSON: I'm sort of surprised about that position from your part, because I would have thought you would be an advocate of promotion as creating more revenues to make more content.

1723   MR. HENNESSY: We are. And, you know, we said -- and I actually understand why it is probably not possible now, having listened to the interveners, but increasingly, particularly in an environment where it's entirely possible that all genres may begin to see declining revenues, that as much as possible, content on-screen is maximized.

1724   So this is -- you know, it is a promotional thing, but it is much more about promoting the product in overseas markets and, as I said, the parties that are most likely to take advantage of that already go to those markets and it is -- you know, to them it is a cost of doing business and valuable because what was put on-screen in Canada allowed them to have a product to take to market.

1725   THE CHAIRPERSON: Would it give you more comfort if the promotion money was associated earlier on before the product was in the can and was related to original programming?

1726   MR. HENNESSY: We are still talking off-screen though, as an off-screen benefit?

1727   THE CHAIRPERSON: No. Well, as an on-screen benefit, because then it would be, in a sense, closer to the actual funding of the content, because it would be part of the budget structure.

1728   MR. HENNESSY: Yeah, I'm just not sure that --

1729   THE CHAIRPERSON: It just diversifies the source of funding for domestic production.

1730   MR. HENNESSY: Yeah. No, no, I follow and, you know, often we are seeing an increase, particularly going to the U.S. market, to get a licence so that we can show a Canadian broadcaster that they are able to do that.

1731   Again, you know, there may be -- there may be a value -- I'm not even sure there is a value for a smaller producer because if they go to a Disney or somebody, or anybody else in Los Angeles or New York, they are just as likely to be told, you know, come with a Canadian licence and we will talk to you, because we don't know you. We know 9 Story, we know DHX, we know Nerdcore, so I'm not sure it's of that significance.

1732   I certainly wouldn't see it as significance enough to make the trade-off with what would be clearly on-screen, nice as it is.

1733   THE CHAIRPERSON: All right. Yeah, okay. I understand.

1734   COMMISSIONER PENTEFOUNTAS: May I follow up on that, Mr. Chairman...?

1735   THE CHAIRPERSON: Sure.

1736   COMMISSIONER PENTEFOUNTAS: I'm sorry. Would the CMPA ever foresee a day where we could move, migrate some of the funds from production into promotion?

1737   MR. HENNESSY: Well, here's an idea. If the fund is declining, I think that's very hard to do. I believe, and you have begun a discussion on the approach to benefits, and one of the things you said in your PN is that currently, today, benefits don't apply to the transfer of licences of distribution undertakings. They did at one point, but for reasons, many of them opaque at a particular time, I guess about --

1738   MR. THOMSON: Ninety-five.

1739   MR. HENNESSY: -- '95 that disappeared. I think as we move into a convergent world that there is an opportunity -- I know I'm getting way ahead of things, but I think there is an opportunity to actually grow the pie if there are benefits made because we are now dealing much more in a convergent kind of corporate environment.

1740   If the pot is bigger it is a lot easier to take money -- you know, to take a chunk of the growth and put it into promotion. If the pot is shrinking, then you may just be exacerbating a problem by less on-screen -- you know, making even less on-screen and promoting what's left. So it's, you know, I'm not sure, it's a bit of a Sophie's choice on the downside.

1741   COMMISSIONER PENTEFOUNTAS: A two point response. I mean one, in terms of the pot growing or not growing, given all the transactions we have had in recent years, the pot, in terms of benefits, is substantial.

1742   Would you not agree with me?

1743   MR. HENNESSY: The pot right now, in terms of benefits, is very good.

1744   COMMISSIONER PENTEFOUNTAS: Okay.

1745   And do you disagree, then, if there is a fixed envelope, that a part of that envelope go towards promotion, and you have to believe that that promotion will ensure even greater production monies, given that promotion leads to sales, leads to revenue and that revenue can be funneled back into production?

1746   I mean, I have to believe in that premise, so that if there is a fixed envelope the CMPA will one day say, "We agree with moving some of that money out of production and into promotion."

1747   Can we foresee that day?

1748   MR. HENNESSY: I would love to see a day when there is more promotion. So, you know, I'm not shutting the door on the idea you are putting forward. I mean, it would be -- it's not really -- you know, I'm quite sure that when you came to actually spending the promotional dollar it wouldn't be a producer decision, because once the show is made under, you know, any commercial agreement I could envision, it would be the responsibility of the broadcaster to promote the show.

1749   So if you could figure out a way where it was actually incremental, and that the broadcaster was interested in really pushing it further than they do today, it is certainly an idea worth discussing.

1750   COMMISSIONER PENTEFOUNTAS: A much larger debate. Thank you.

1751   THE CHAIRPERSON: Isn't that the problem? The producers don't have skin in the game, that they don't care about exporting in other markets?

1752   MR. HENNESSY: No. First of all, we care --

1753   THE CHAIRPERSON: That's what I heard.

1754   MR. HENNESSY: No. First of all, we care, we care tremendously about exporting in other markets because, as somebody pointed out today, that is --

1755   THE CHAIRPERSON: You collect the rent domestically from the tax credits and the funds, and you are saying --

1756   MR. HENNESSY: No, I'm not saying that.

1757   THE CHAIRPRESON: -- from what I'm hearing, you don't care about promoting.

1758   MR. HENNESSY: No, I'm not saying that. I am absolutely not saying that, 100 percent not saying that. We absolutely think it is critical to sell into other markets, and the opportunity under terms of trade for us to actually grow our product, to expand the market, to create profit for our members, comes from international because there is generally not profit within what we sell to the broadcaster and the rights we give away for five years in the domestic market.

1759   But I think -- I'm not sure whether we are talking about two things. There is, do we producers -- perhaps I misunderstood Mr. Pentefountas, but I was assuming when we were talking about more monies into promotion under the funds that exist today, we are talking about promoting to Canadian audiences and that's what I was suggesting is not under our control, because we would love to have more of a say in marketing and promotion and ideas about how you could get into things like product integration, branded entertainment to grow the brand domestically. We would love to be a partner in that.

1760   It's not that were saying, oh well, we don't want any backend in Canada, it's really saying right now we don't have any backend in Canada. So, you know, I think that that is definitely a missing piece of the puzzle, and I'm not suggesting that that is a bad thing at all. I think it's a great thing, because everybody in the industry, I think if you listen, whether you are talking to ACTRA, Writers Guild or producers, all feel that there isn't significant promotion of Canadian product, and if there was promotion equivalent to what we get from spillover and what, spending on promoting U.S. shows on Canadian networks, if the same thing happened to domestic productions, I think we would see great uptick. And we do in shows, and we have seen commitment like, you know, "Rookie Blue" or the amount of effort that, you know, CTV put into "Orphan Black".

1761   So yes, that's what I'm saying, I think promotion is an incredibly important thing, but I'm not sure if the only choice is to take the promotion dollars off-screen and we still don't, you know, under the terms of trade, have no control domestically over how it's promoted, I'm not sure necessarily that's a good idea. That was all I was saying.

1762   That's why I say, you have to discuss the details, but if it's not promoted, it's dead, particularly in a pick-and-pay environment. I totally agree with you there, I mean if that's where you're going.

1763   THE CHAIRPERSON: Well, you had the opportunity to put your position, perhaps we don't see eye-to-eye on this particular one.

1764   MR. HENNESSY: Well, I hope we do. I'm not sure what the difference of opinion is, but that's fine.

1765   THE CHAIRPERSON: Okay.

1766   It's late and we still have two other interveners to hear this evening, to relieve some people that have obligations, so thank you very much, gentlemen.

1767   We will now hear from On Screen Manitoba.

--- Pause

1768   LE PRÉSIDENT : Bonsoir. Bienvenue. Donc, vous êtes habituée, donc, allez-y, s'il vous plaît.

INTERVENTION

1769   MME MATIATION : Bonsoir. C'est ça. On n'est plus bon après-midi.

1770   Monsieur le Président, membres du Conseil et membres du personnel. Je m'appelle Nicole Matiation. Je suis la directrice générale d'On Screen Manitoba et je vous remercie de m'accorder l'opportunité de présenter nos commentaires sur l'acquisition de TELETOON, Historia et Séries+ par Corus.

1771   On Screen Manitoba est l'association professionnelle de l'ensemble de l'industrie de production des médias de l'écran dans notre province. Nos membres comprennent des scénaristes, des réalisateurs, des producteurs, des guildes, des syndicats, des fournisseurs de services, des festivals de films et autres organismes et individus ayant un intérêt dans ce secteur au Manitoba. Parmi nos membres se trouvent des individus des milieux anglophone, francophone et autochtone.

1772   On Screen Manitoba croit que les producteurs indépendants en région, anglophones comme francophones, jouent un rôle clé dans la production d'émissions de qualité et qu'ils contribuent de façon significative à la diversité de la programmation en ondes. La proposition de Corus a une composante qui implique la production indépendante anglophone d'une part et la production francophone d'autre part.

1773   Je vais commencer par l'achat de TELETOON et son impact dans un milieu anglophone, pour ensuite revenir à l'impact dans le milieu francophone de l'achat de TÉLÉTOON ainsi que d'Historia et de Séries+.

1774   The animation business in Canada is perceived to be located in large centres such as Montreal, Toronto and Vancouver. However, I would like to emphasize that it is an industry that exists across the country in both linear and interactive formats.

1775   Manitoba has recently stepped into the animation sector with the creation of a commercial animation studio last fall. This enhances local resources by employing some of the many talented auteur animators that make Winnipeg their home and complements an existing sound post-production facility and several interactive production companies. In the past couple of months these endeavours have resulted in two feature animation co-productions.

1776   On Screen Manitoba acknowledges Corus' statements that it will seek the best in independent animation production from all regions of Canada and in both Anglophone and Francophone communities. However, we encourage the Commission to reinforce this stated intention with a condition of licence or at the very least an expectation backed up with appropriate annual reporting.

1777   On Screen Manitoba supports the purchase of TELETOON by Corus along with the licence renewal of TELETOON and TELETOON Retro conditional on acceptance of safeguards and conditions of licence put forward by the CMPA both in terms of the ownership transaction and the licence renewal.

1778   On Screen Manitoba recognizes that Corus sees no difficulty in maintaining an independent programming approach for TELETOON and its other broadcast holdings as it has had an ownership position in TELETOON for some time. However, ownership control of TELETOON and its other assets within a group licence context represents a centralization of ownership with reduced opportunities for Canadian creators to sell their products and ultimately less choice for audience.

1779   On Screen Manitoba is in agreement with a number of other organizations that to avoid further concentration of ownership, TELETOON should operate as an independent entity. The determination of the licence structure falls of course to the CRTC, and regardless of that structure, On Screen Manitoba agrees with the conditions of licence and other safeguards the CMPA proposes.

1780   On Screen Manitoba appreciates Corus' commitment to the Terms of Trade with the CMPA and also with the AQPM and their willingness to accept that as a condition of licence, as they mentioned this morning.

1781   As we have in the past though, we urge the Commission to establish as a condition of licence a transparent annual reporting mechanism that would demonstrate that producers in all regions of Canada have contributed to the original Canadian programming on TELETOON, original programming and expenditures and exhibition obligations are being met, and, following usual practice, that there is a condition of licence of annual reporting around tangible benefits that may result from this transaction going forward.

1782   On Screen Manitoba notes that Corus proposed tangible benefits that represent 10 percent of the estimated $249-million purchase price and On Screen Manitoba leaves the determination of the value to the expertise of the CRTC, along with that of the social benefits.

1783   On Screen Manitoba believes that 100 percent of on-screen benefits should be directed to independently produced original Canadian programming as a condition of licence.

1784   In speaking for a region that has an emerging animation sector and as an organization that represents regionally based writers, directors and producers, On Screen Manitoba strongly supports the Script and Concept Development Fund along with the contribution to Telefilm's Canadian Talent Fund, but again, we urge the Commission to include as a condition of licence or an expectation at the very least that a portion of these on-screen tangible benefits be spent on productions sourced from all regions of Canada.

1785   On Screen Manitoba appreciates the proposed allocation of $1.75 million to an "export initiative" administered by a third party that would provide marketing and travel support for independent producers. As an organization representing regionally based producers, On Screen Manitoba is acutely aware of the travel costs to markets. However, we believe that this Fund should be considered as an off-screen benefit at this time.

1786   Manitoba is a new player in the Canadian animation business, but it is home to a community of creative entrepreneurs who are seeking opportunity to produce original Canadian programming. There are other provinces that have communities of animators looking for opportunity to participate in the industry.

1787   We encourage the Commission to ensure that the purchase of TELETOON by Corus includes measures to offer opportunity to independent producers in all regions of Canada, working in both official languages, to provide original Canadian content in the form of animation for young audiences or older audiences.

1788   I will now make some comments regarding the transaction of TÉLÉTOON, Historia and Séries+.

1789   Nous sommes en accord avec l'Association québécoise de la production médiatique et l'Alliance des producteurs du Canada que la composante francophone de TÉLÉTOON n'est pas reflétée dans les bénéfices tangibles de la proposition de Corus, bien qu'on a parlé des intentions ce matin.

1790   Nous comprenons qu'il peut y avoir des avantages à créer un service bilingue. Toutefois, nous constatons que dans le contexte du système de la télédiffusion au Canada, les particularités du marché anglophone et du marché francophone exigent un traitement adapté et clairement défini.

1791   En ce qui concerne la vente d'Historia et de Séries+, On Screen Manitoba, comme l'APFC et l'AQPM, entre autres, croit que l'achat d'Historia et de Séries+ mérite une considération spéciale.

1792   On constate que Corus n'avait aucun intérêt dans Historia et Séries+ et ne jouait aucun rôle dans leurs opérations jusqu'ici. Confirmation de l'achat d'Historia et de Séries+ donnera 100 pour cent des actifs et le contrôle effectif à Corus.

1793   En regardant ces faits, il est logique que Corus propose des avantages sur la totalité de l'achat et non pas sur les 50 pour cent.

1794   Le CRTC a reconnu plusieurs fois dans ces décisions récentes le rôle important que la production francophone hors Québec joue dans les CLOSMs et dans le système de télédiffusion canadienne. On Screen Manitoba apprécie que Corus a l'intention de prendre des meilleurs productions de partout au Canada, et ceci dans les deux langues officielles, mais nous croyons que cette intention sera renforcée par une condition de licence.

1795   Le CRTC a établi des précédents tels la transaction Bell-Astral et celle de TVA-Québecor Média, où une condition de licence stipulait que 10 pour cent des avantages serait réservé aux producteurs francophones oeuvrant et vivant hors Québec. En s'appuyant sur ces deux décisions et en accord avec l'APFC, On Screen Manitoba demande au Conseil d'imposer une condition de licence à cet effet, réservant 10 pour cent des avantages tangibles à l'écran à des entreprises de production indépendantes de langue française situées en milieu minoritaire.

1796   On Screen Manitoba en tant qu'organisme qui représente des scénaristes, des réalisateurs et des producteurs en région apprécie fortement la proposition de la création d'un fonds de scénarisation ainsi que le soutien proposé pour les nouveaux talents à Téléfilm Canada.

1797   On Screen Manitoba est satisfaite de la réponse de Corus qui confirme que les sommes serviront exclusivement au développement d'émissions de langue française.

1798   De plus, On Screen Manitoba apprécie que Corus a confirmé que les sommes affectées à l'initiative « Émissions » soient en complément des obligations en DÉC d'Historia et Séries+.

1799   Comme nous avons mentionné dans le contexte des avantages de TÉLÉTOON, nous apprécions l'idée de créer un fonds indépendant pour soutenir le marketing et les frais de voyages des producteurs indépendants voulant assister aux marchés internationaux, mais nous croyons qu'un tel fonds est un avantage hors écran et devrait faire partie de ces considérations.

1800   Nous croyons que les avantages tangibles reliés à l'écran devraient être dirigés à 100 pour cent vers les émissions canadiennes originales.

1801   En ce qui concerne les avantages hors écran, On Screen Manitoba laisse ces décisions à l'expertise du Conseil. Nous sommes en accord avec l'APFC que 10 pour cent des avantages hors écran devrait être dirigé vers des initiatives qui soutiennent le développement de la production francophone en CLOSM, en privilégiant la formation des créateurs et des producteurs.

1802   Toutefois, sachant que l'un des plus anciens groupes de théâtre au Canada, Le Cercle Molière, basé à Winnipeg, est parmi les organismes considérés pour les avantages hors écran et sachant qu'il existe peu d'organismes qui permettent aux acteurs francophones hors Québec de développer leurs talents, nous appuyons tout particulièrement cette proposition.

1803   Le Manitoba est une communauté francophone dynamique qui reflète la diversité de la francophonie au Canada aujourd'hui. Elle bénéficiera de la programmation canadienne originale qui reflète cette réalité, une réalité partagée avec d'autres communautés francophones en situation minoritaire au Canada.

1804   C'est pour ces raisons qu'On Screen Manitoba souligne l'importance de considérer la contribution des producteurs hors Québec en déterminant la distribution des avantages qui découlent de la vente de TÉLÉTOON, TELETOON Rétro, Historia et Séries+ à Corus.

1805   Finally, On Screen Manitoba appreciates the opportunity to speak to the importance of establishing conditions of licence and according tangible benefits that ensure diversity of voice and the opportunity for regionally based creators and producers from all regions of Canada to participate in the production of original Canadian programs in both Anglophone and Francophone communities.

1806   Je vous remercie de cette occasion de partager le point de vue des membres d'On Screen Manitoba.

1807   LE PRÉSIDENT : Merci beaucoup. Je vous mets entre les mains du Vice-Président.

1808   CONSEILLER PENTEFOUNTAS : Merci.

1809   Bonjour. Bonne fin d'après-midi.

1810   MME MATIATION : Bonjour.

1811   CONSEILLER PENTEFOUNTAS : Votre document et clair, et vos exigences également, somme toute, encourageant, sauf dans le cas du 10 pour cent, vous aimeriez ça que ça fasse partie des conditions de licence, parce qu'on fait confiance dans les bonnes paroles de Corus qui voyage à travers le pays à la recherche de contenus, mais vous aimeriez bien que ça fasse partie de...

1812   MME MATIATION : Oui. Enfin, on a trouvé que ça l'a bien marché par le passé avec les autres ententes qu'on a, et on voit...

1813   CONSEILLER PENTEFOUNTAS : O.K.

1814   MME MATIATION : Ça donne un cadre dans lequel on opère. Mais c'est sûr que les visites aux marchés et toutes les échanges qu'on a avec les télédiffuseurs sont aussi très importantes.

1815   CONSEILLER PENTEFOUNTAS : O.K. Et je vois également que vous laissez à notre discrétion les avantages hors écran, sauf en ce qui a trait à 1,75 million de dollars destinés à des frais et la promotion dans les marchés internationaux. Vous pensez que ça ne doit pas faire partie des dépenses sur l'écran mais hors écran?

1816   MME MATIATION : C'est ça, mais je peux vous dire très honnêtement que ça été une grande discussion parmi les membres pour déterminer si c'était une question hors écran ou sur écran, et finalement, la majorité était de l'avis que pour l'instant, ça touchait plus, dans ce contexte, un bénéfice hors écran.

1817   Mais la possibilité absolument d'aller dans les marchés, de faire de la promotion, c'est une grosse préoccupation des producteurs au Manitoba. Une grande partie de mon travail est de les aider à trouver les moyens pour y aller et de développer l'industrie au Manitoba. Une partie de ce travail-là, c'est autour de la promotion et la présence dans les marchés.

1818   CONSEILLER PENTEFOUNTAS : Et j'imagine que la minorité était d'avis que ces outils promotionnels aident à créer des productions qui se trouvent sur l'écran, n'est-ce pas?

1819   MME MATIATION : Oui, sauf qu'au Manitoba, en fait, on vient de terminer une étude sur les retombées économiques de l'industrie au Manitoba, et ça pointe vers une montée de coproductions au Manitoba, mais ces coproductions ne sont pas en télévision, elles sont en film. Donc, mes membres ne se sentaient pas à l'aise de se prononcer sur l'effet sur la télévision, si on pouvait espérer les mêmes résultats.

1820   Mais c'est vrai, on a constaté qu'au niveau de la production de films, avoir accès aux marchés internationaux par le biais d'un fonds qui existe au Manitoba a aidé à augmenter le nombre de coproductions.

1821   CONSEILLER PENTEFOUNTAS : Il y a plusieurs questions qui chevauchent entre la présentation du CMPA et la vôtre, et vous voyez sans doute des différences entre des programmations de nature animée par rapport à d'autres et des différences entre la programmation pour enfants et adultes.

1822   Est-ce que vous voulez rajouter quelque chose à cet égard?

1823   MME MATIATION : Bien, seulement que pour nous aussi, pour les gens... enfin, pour les membres d'On Screen Manitoba, la production pour enfants est très importante, et on est certainement d'accord avec le CMPA que c'est quelque chose qu'on doit protéger, promouvoir dans le sens où les enfants ne sont pas ici pour défendre leur point de vue.

1824   Donc, je pense qu'on doit donner une considération toute particulière à cela, et donc, on partage pas mal l'avis qu'a présenté le CMPA aujourd'hui par rapport à la programmation pour enfants.

1825   COMMISSIONER PENTEFOUNTAS: And existing mechanisms to remedy anticompetitive behaviour, you don't find that they're sufficient as is in terms of programming for children and animation?

1826   MS MATIATION: There's just concern that if we are in a group licence environment that we're not going to have independence to be able to be sure that there isn't duplication so that the same program is not going from one station to the other. So we support the independent model for TELETOON and the other Corus --

1827   COMMISSIONER PENTEFOUNTAS: And you have raised the next question I had with respect to group licensing and the impact that you've experienced since group licensing came to be, especially at it regards TELETOON and TELETOON Retro.

1828   How has that impacted the community in Manitoba, the production community?

1829   MS MATIATION: You know, I couldn't speak to that. We really haven't taken a look at the impact of group licensing on our productions specifically. And then in terms of TELETOON, of course, as I said, we're new to that market and --

1830   COMMISSIONER PENTEFOUNTAS: Have you noticed anything different in the acquisition of independent programming recently on the part of Corus?

1831   MS MATIATION: Not with Corus specifically, no.

1832   COMMISSIONER PENTEFOUNTAS: With anyone else?

1833   MS MATIATION: Nothing specific. I mean we're always in the same boat where our producers are trying to have access to broadcasters through a variety of mechanisms, trying to bring forward regional productions. Manitoba has only had one TV series shooting in the past year. A great year for film but not a great year on the broadcast side in terms of fiction. So, you know, it does go up and down and it does depend on those meetings with the broadcasters.

1834   COMMISSIONER PENTEFOUNTAS: What new opportunities for independent producers in Manitoba would -- considering Nelvana as part of the TELETOON family, what would be the impact of that on independent producers in Manitoba?

1835   MS MATIATION: Again, I think we are so new in the animation market that I can't speak to that. We've got one commercial studio in Winnipeg and they're really just at the very beginning of their work. Most of the other animation companies are involved in the interactive field, so they're not actively supplying linear broadcast. They may be doing products for nonlinear pieces to broadcast though.

1836   COMMISSIONER PENTEFOUNTAS: Well, great. As I said earlier, it's a very clear document and your asks are also very clear. My colleagues may have some questions.

1837   THE CHAIRPERSON: No. I agree with you it has been clear.

1838   Thank you very much for this participation.

1839   MS MATIATION: Thank you.

1840   THE CHAIRPERSON: So before we end today, we'll have one last presentation from the Writers Guild of Canada please.

1841   They turn off the air conditioning in here at five. So hopefully, we'll be able to survive for the next little while.

--- Pause

1842   THE CHAIRPERSON: So, welcome. I think you know how to go about this, so please, we're all ears. Thank you.

INTERVENTION

1843   MS PARKER: Thank you very much for taking us before the end of the night. Thank you very much.

1844   Good evening. My name is Maureen Parker and I am the Executive Director of the Writers Guild of Canada.

1845   With me today is Neal McDougall, the Director of Policy at the Writers Guild.

1846   The WGC is a national association representing over 2,000 professional English-language screenwriters across Canada.

1847   The WGC conditionally supports this transaction provided that our concerns are addressed and the safeguards we propose are adopted. We note that in its reply to interventions, Corus rejected many of our proposals out of hand. If Corus is unwilling to even consider our proposals, we would suggest that it is unlikely to abide by them unless they are in the form of ironclad language and made enforceable through conditions of licence.

1848   Corus's share of viewing to English-language television would be around 36 percent if this transaction is approved. However, Corus will have 70 percent of the English-language children's television audience to Canadian programming and 85 percent of the English-language children's television audience to Canadian animation programs. These numbers from the CMPA -- which Corus has not disputed -- represent a dominant position to have in any audience or programming segment, particularly one as important as programming for children.

1849   Corus has gone to some length to downplay this fact, so it bears some discussion. For one, Corus has said that its audience share will not increase as a result of this transaction. In other words, nothing is really different.

1850   Absolutely, things are different. Corus has applied to change effective control of the TELETOON suite of channels and Cartoon Network from a previously independent Board of Directors to direct control by Corus.

1851   Additionally, TELETOON currently has a programming department that is independent of both Corus and Bell/Astral. Corus is going from a non-majority owner with partial influence at the Board level and none at the programming level to sole owner with complete control at all levels.

1852   Corus also points to the genre exclusivity policy, stating in its written reply that "in each major genre of programming, the Commission has licensed two strong players." This presumes a balanced system with audiences for each player in the 33-50 percent range for their genre. Corus will be in the 70-85 percent range in English children's television and animation. That goes beyond being a strong player -- it makes Corus the dominant player.

1853   Also, Corus's argument confuses the meaning of the word "genre." When the Commission talks about "genre exclusivity," it is referring to a broadcaster's "nature of service," which must be exclusive for Category A channels. But the word "genre" could also refer to the CRTC's programming categories, like "2(b) documentary" or category 7 "drama and comedy" or "genre" can refer to a generally recognized category like children's or animation programming.

1854   The WGC is concerned about calling -- about a type of programming, rather -- call it a genre if you wish consisting of children's programming and animation, which Corus is poised to take overwhelmingly dominant position in.

1855   The CRTC didn't create this situation with genre exclusivity, because children's programming is not the exclusive nature of service for any one broadcaster. Corus' dominance is the result of corporate acquisitions and certainly Corus' success in the sector.

1856   But regardless of how it occurred, if their dominance is a reality, then it is a concern, and our proposed safeguards are meant to address that concern.

1857   Finally, Corus has said in its reply that nothing changes with the calculation of viewing for the purposes of the application of the Diversity Policy. While it is true that the Commission's Diversity of Voices Policy focused on total audience share in each language market, the Commission did not say that this was the only thing it would ever look at.

1858   In denying BCE's first application to acquire Astral, the Commission replied on:

"multiple indicators of market power, competition and ownership concentration, rather than be limited to the television market share thresholds set out in the DoV policy."

1859   This included market presence in specific genres.

1860   For all of these reasons, the WGC submits that safeguards for diversity of programming are necessary if this transaction is to proceed. We would like to highlight three safeguards in particular that we feel are crucial.

1861   Neal...?

1862   MR. McDOUGALL: The first is to limit to a maximum of 10 percent the programming overlap between YTV and TELETOON, TELETOON Retro English, and Cartoon Network; and between Treehouse and TELETOON, TELETOON Retro, and Cartoon Network. This condition of license currently exists between YTV and Treehouse in order to ensure diversity of programming by limiting the amount of repeat programming between the two services.

1863   With TELETOON, TELETOON Retro and Cartoon Network coming under the Corus umbrella, the same logic applies to these channels.

1864   The second safeguard was not in our written intervention, but having read the submissions of some of our colleagues, in particular the CMPA, we feel it is important as well. This is the requirement that TELETOON, by condition of license, ensure that a minimum of 75 percent of all expenditures for original first-run Canadian programming broadcast on the service is directed to independent production companies.

1865   TELETOON has a similar condition of license now at 50 percent. With TELETOON being brought into the corporate group that includes Nelvana, it becomes even more important that TELETOON, as a part of Corus, not be allowed to direct half of its Canadian programming expenditures essentially to itself.

1866   While there is a rule under the group-based licensing framework to this effect for PNI, that is the group-based rule subject to flexibility under that policy.

1867   Given the specific relationship between Corus and Nelvana for children's animation, we feel that a more granular safeguard is appropriate here. Similarly, we also support the CMPA's request that TELETOON's current license expectation that a minimum of 75 percent of all original first-run Canadian programming broadcast is acquired from nonrelated producers to be converted into a condition of license.

1868   The third safeguard was also not in our written submission, but we feel it must be addressed, that is the maintenance of TELETOON's current condition of license, requiring it to devote a minimum of one hour between 8:00 p.m. and midnight to Canadian programs. TELETOON is the only Category A service that is both devoted to animation programming and which includes adults as one of their key demographics.

1869   The 8:00 p.m. to midnight period is the prime time, the most appropriate time to air edgy adult focused animation programming. We believe that losing this condition of license will mean losing this choice of Canadian programming, with a consequent loss for consumers looking for Canadian adult-oriented animation.

1870   The WGC believes that these safeguards are very important and without them we could not support the application.

1871   Maureen...?

1872   MS PARKER: With regards to the benefits package Corus has proposed, the Commission has our comments in our written submission. Given the discussion earlier today, however, we would like to reiterate that the long-standing policy of the Commission with regard to tangible benefits is that they should not be self-serving.

1873   That was highlighted again in the Notice of Consultation for the upcoming tangible benefits review. As such, we believe that 100 percent of self-administered tangible benefits for programming should be directed to independent producers and not to Nelvana, otherwise 25 percent of this money would simply be circulated back to Corus.

1874   Thank you very much for your time and we would welcome any questions.

1875   THE CHAIRPERSON: Thank you very much. Commissioner Shoan will have some questions for you.

1876   COMMISSIONER SHOAN: Good afternoon, thank you for being here today.

1877   I have been questioning some appearing parties about the children's programming animation production sectors, just to get a feel for what the potential impact of an approval would be on those working in the sectors, and I have been told the obvious statements with respect to Corus' dominance in the market, we heard from the CMPA with respect to the particular skill sets that can be attributed to the individuals working in these sectors.

1878   Do you have anything to add for the record with respect to the particular characteristics of the children's programming and animation sectors?

1879   MS PARKER: I think I would like to add that, you know, this transaction is being watched very closely by our membership as well. We currently have approximately 600 members working in animation. It is a field that is attracting both a mix of technology and narrative storytelling skills, and the worry is with one dominant player, certainly for our membership, is that of course there are fewer doors to knock on with your great new animation series.

1880   So definitely dominance, control, are a huge concern with respect to this transaction, which is why we believe we need safeguards. This is -- and I'm sure you are aware of this, but children's programming, and animation in particular, has a wonderful reputation in Canada. We sell well internationally. It is considered our strength, and we would of course like to ensure that that diversity and the original programming that we create in children's and animation remains.

1881   COMMISSIONER SHOAN: Thank you.

1882   I will get into a discussion of the safeguard shortly, but before I do I wanted to get a sense from you with respect to why you feel that the current support mechanisms for independent production or the remedies against anticompetitive behaviours that are presently in place are not sufficient.

1883   Can you explain that a little bit further?

1884   MS PARKER: Well, I think it's quite easy to explain in then everything is different. With this transaction, everything changes. Corus goes from being a non-majority owner to having complete control over Treehouse, YTV, TELETOON, TELETOON Retro, Cartoon Network.

1885   So rather than, you know, perhaps being a part shareholder with some concerns with respect to operations, it's now the shareholder and it will be running the organization from programming on down. So it's a very different scenario should this transaction come into place.

1886   COMMISSIONER SHOAN: Okay.

1887   And can you expand a little bit further with respect to the potential harm?

1888   MS PARKER: Well, the potential harm is the concentration of ownership and, you know, there are always temptations when you are making programming to place it on other networks. So repeats are certainly a very big concern, not only for writers, but also for audiences.

1889   You know, kids like to see something new, they want original, diverse programming, and if you own everything, I would certainly think you would be quite tempted to put some of that programming on other channels; it's cheaper. It's much more expensive to make original programming than to repeat programs that have already been made.

1890   COMMISSIONER SHOAN: Thank you.

1891   I note one of your safeguards is to limit to a maximum of 10 percent the programming overlap between YTV and these selected specialties, and between Treehouse and the selected specialties. Do you feel this is absolutely necessary, given the specific natures of service of these services, as well as their differentiated audiences?

1892   MS PARKER: Yes, we feel it's absolutely necessary, and we would withdraw our support of this application should there not be a 10 percent maximum with respect to overlap programming.

1893   COMMISSIONER SHOAN: Thank you.

1894   Have you just witnessed or do you have any evidence or anecdotal stories about changes you have experienced in respect of programming funding since the implementation of the group-based approach?

1895   MR PARKER: You know, we find this a very interesting question because we really can't determine anything from the current data that we are getting at the CRTC. It's not broken out into program service, it is still PNI with reference to the group, but not PNI for the individual service. We need that data in order to see what is truly going on.

1896   And I am sure you are aware, we have -- the Writers Guild, the CMPA, the DGC and ACTRA -- have been in discussions with the Commission to get a further comprehensive breakdown of the data. Right now, the way it is being delivered, we can't make head nor tails of it. So it is impossible to tell you, you know, what the data is saying right now, other than on a very, very large generic basis.

1897   Neal, do you want to add anything to that?

1898   MR. McDOUGALL: Yes, it's mainly about data by service as opposed to data by the whole group, and as the Commission knows, one of the key aspects of the group-based policy is flexibility within the group.

1899   We feel that that is pretty important, to see how that flexibility is being used, in terms of as between services, in terms of the genres within the category of PNI, which right now is sort of a block of one thing.

1900   So for those reasons I think we are looking for more granular reporting on the group-based policy.

1901   COMMISSIONER SHOAN: Thank you.

1902   Do you have any concerns with respect to the availability of nonlinear rights for competitors? As you know, in the BCE/Astral decision that Commission imposed specific safeguards and expectations on BCE regarding the way it can manage and negotiate nonlinear multiplatform rights.

1903   MS PARKER: I must admit that I am rather confused by that question.

1904   COMMISSIONER SHOAN: Okay.

1905   MS PARKER: Neal, do you want to --

1906   MR. McDOUGALL: Well, I'm not sure I understand the question completely, but I think it may not be entirely our issue.

1907   COMMISSIONER SHOAN: Okay.

1908   MS PARKER: There's a Terms of Trade Agreement between producers and broadcasters in the English market that does deal with those sorts of things, so from that perspective it is sort of covered there. So I don't think we have thought about it specifically beyond that.

1909   COMMISSIONER SHOAN: That's fine, thank you. I wanted to get your perspective on the Corus Export Initiative Fund; we have heard a lot of discussion about it. Some appearing parties say it shouldn't be considered an on-screen initiative, we have had some discussion about whether or not it will actually impact that production of new Canadian content.

1910   Do you have a perspective to provide on that?

1911   MS PARKER: Yes. We agree with our colleagues that it is not an on-screen benefit. In fact, looking at, you know, what we have submitted in quoting the program, it is clearly not an on-screen benefit.

1912   It was interesting, the questions that you were asking about promotion. We see the value in promotion, but perhaps this is not the program to promote. We believe that, really, this program should be put back as part of the social benefits and then reassessed.

1913   With respect to promotion, we would simply like to say that our members do promote their programs quite a bit through social media, as do producers and actors and directors; we are all on twitter and promoting our programs like mad, because we need them to succeed in order to be employed. But, you know, I think, all that said, we do have to adhere to the terms of the Broadcast License Agreements which do not give us a lot of control with respect to publicity and promotion, because a broadcaster is trying to create a brand and, you know, they don't necessarily want our social media, tweets, et cetera, mixing around with that.

1914   So it's, you know, a bit of both.

1915   COMMISSIONER SHOAN: Okay. Thank you.

1916   You heard TELETOON earlier today reconfirm their peak viewing period of 4:00 to 10:00 p.m. In light of that reconfirmation, do you still feel that requiring a minimum of one hour between 8:00 p.m. and midnight to Canadian programs is necessary?

1917   MS PARKER: Yes, we absolutely feel that's necessary. The prime time that they are -- their special prime time 4:00 to 10:00, really you can load up with your Cancon in the early hours and attract kids.

1918   What we need -- and why the current condition exists for 8:00 to midnight -- is because it covers adult animation programming. We currently have three adult programs on TELETOON right now as required by the condition of the license. If that was removed, those programs would leave the system, there would be no opportunity for Canadians to watch adult animation, and that would be a bad thing. Again, it is restricting diversity and lessening choice.

1919   COMMISSIONER SHOAN: What are those? Can you list those programs for me?

1920   MS PARKER: I have them on my BlackBerry -- sorry, my iPhone now. No BlackBerry, just iPhone. Hang on, I will look it up. You could ask me another question and I could just get that for you, if you have one.

1921   COMMISSIONER SHOAN: Sure.

1922   MR. McDOUGALL: I do think one of them is "Fugget About It".

1923   MS PARKER: Yes.

1924   MR. McDOUGALL: I don't know if I pronounced that properly.

1925   COMMISSIONER SHOAN: We heard about that earlier.

1926   MS PARKER: Yes, it is "Fugget About It".

--- Pause

1927   MS PARKER: Okay, "Crash Canyon" and the first one was, as Neal was saying, "Fugget About It". "Fugget About It", hmmm. And "UnderGRADS".

1928   COMMISSIONER SHOAN: "UnderGRADS". That's great, those are my questions. Thank you very much.

1929   MS PARKER: Thank you.

1930   THE CHAIRPERSON: Mr. Vice-Chair...?

1931   COMMISSIONER PENTEFOUNTAS: Just briefly -- and I don't want to belabour the point about the export fund and the promotional aspect that we have discussed earlier -- would you qualify your position as somewhat harsh with respect to broadcasters when you pigeonhole them into that -- in the sense that they are strictly concerned with the brand and the promotion of the brand, their brand and not necessarily the promotion of the content that is presented on the vehicle that is their brand?

1932   Do you want to sort of take another hit at that?

1933   MS PARKER: Well, okay.

1934   Yes, I think they are absolutely promoting promoting the content as well as their brand, you know. I certainly didn't mean to imply that they wouldn't do that, but I think, you know, it was the whole question of, as I recall, whether promotion should be part of the on-screen benefits.

1935   And, you know, we agree with the CMPA that the on-screen benefits really should be dedicated to production, not that promotion isn't very, very, very important, it's just the cost of producing animation production is exorbitant. Animation is very expensive content to produce, and I don't see that changing anytime soon.

1936   So if it's a question between actually making something and promoting it, I would pick making it every time.

1937   COMMISSIONER PENTEFOUNTAS: I understand that. I'm not surprised that you are in lockstep with the CMPA; the contrary would be surprising. But back to the point I made earlier, do you believe that promotional budgets contribute to the creation of production budgets?

1938   MS PARKER: Absolutely. You know, we need production, we need promotion, we need marketing and --

1939   COMMISSIONER PENTEFOUNTAS: Ergo, can we move some production money into promotion?

1940   MS PARKER: I would say no, and again, because I don't think that there is enough money in the system currently for production. I know you believe there is a lot of benefits money.

1941   Maybe I can just relate a little personal tale. You know that we track our data very closely, and to date we have had a very slow year, production has been down, development is down, and across the board: Animation, kids, one hour, MOWs, across the board.

1942   I can't figure out why because we really should have more money. We have group licensing and we have benefits, and that's why we require and rely on reporting, because we have to figure that out. We should be having one of the best years ever, and it's not there, it's not in production.

1943   Now, to be fair, there are always delays in production. Maybe this was a later start up year, maybe some series aren't going to, you know, be produced until late November or December, but traditionally we are much further along -- well, it is November -- in November than we are currently.

1944   COMMISSIONER PENTEFOUNTAS: But you would know what's coming down the pipe. I mean --

1945   MS PARKER: We do know.

1946   COMMISSIONER PENTEFOUNTAS: And you also know what the revenues are, so you know what the spending should be.

1947   MS PARKER: Well, you know, again, you know that we are struggling with the reporting and the data, so we are trying to analyze that, and also, you know, the benefits reporting as well. So, you know, we have to get a clear handle on the data and the timing is always an issue -- that's not due for several months for this year -- so it's a retroactive process.

1948   But I'm just telling you what's happening now, live on the floor, live in the community. It's not a booming year with respect to Canadian production.

1949   COMMISSIONER PENTEFOUNTAS: Live at Five or Live at Six, or whatever we are at.

1950   MS PARKER: That's it, that's my news report.

1951   COMMISSIONER PENTEFOUNTAS: Thank you so much.

1952   THE CHAIRPERSON: When you make the argument to the effect that Corus might have an unfair stranglehold on children's programming as a category, correct me if I'm wrong, but I get the impression you are calculating all of TELETOON's programming as children's programming -- you or the CMPA, the media folk.

1953   MR. McDOUGALL: We relied on the CMPA's numbers.

1954   THE CHAIRPERSON: Yes, so you relied on that. Because you will admit that there is programming in the evening that is definitely not for children, hopefully.

1955   MS PARKER: Yes, but -- okay, we could be off by a few percentages, but nonetheless it would still remain a dominant player.

1956   THE CHAIRPERSON: Right. But to your knowledge, the 70 percent number that you are using that comes from another intervener might not have calculated the fact that it's not all children's programming?

1957   MS PARKER: That's correct, and we could verify that.

1958   THE CHAIRPERSON: No, we can do that.

1959   MS PARKER: Okay, well thank you.

1960   THE CHAIRPERSON: We can do that, but we were trying to deconstruct the number --

1961   MS PARKER: Sure.

1962   THE CHAIRPERSON: -- and we were having difficulty getting to your number unless you assumed 100 percent of it was kids programming.

1963   Thank you very much, those are our questions. Thank you for agreeing to do this late at night; it's appreciated so we keep on schedule.

1964   Thank you. Those are all our questions.

1965   MS PARKER: Thank you for the opportunity. Thank you.

1966   MR. McDOUGALL: Thank you.

1967   THE CHAIRPERSON: We are adjourned until 9 o'clock tomorrow morning.

1968   Thank you very much.

--- Whereupon the hearing adjourned at 1747, to resume on Wednesday, November 6, 2013 at 0900

REPORTERS

Lynda Johansson

Carmen Delisle

Monique Mahoney

Jean Desaulniers

Karen Paré

Date modified:

2013-11-05