ARCHIVED - Transcript, Hearing 8 September 2014

Volume 1, 8 September 2014

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

SUBJECT:

Let's Talk TV: A Conversation with Canadians

HELD AT:

Outaouais Room
Conference Centre
140 Promenade du Portage
Gatineau, Quebec
8 September 2014

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

Let's Talk TV: A Conversation with Canadians

BEFORE:

ALSO PRESENT:

HELD AT:

Outaouais Room
Conference Centre
140 Promenade du Portage
Gatineau, Quebec
8 September 2014

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TABLE OF CONTENTS

PAGE / PARA

PRESENTATION BY:

- v -

UNDERTAKINGS

PAGE / PARA

Gatineau, Quebec

--- Upon commencing on Monday, September 8, 2014 at 0902

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

2   Mesdames et Messieurs, bonjour et bienvenue à cette audience publique sur la télévision canadienne.

3   Il s'agit de la première de trois grandes audiences que le Conseil tiendra cet automne.

4   At the end of the month, we will hold a hearing to ensure that competition in the wholesale mobile wireless services market is sustainable. In November, we will review the regulatory framework for wholesale telecommunications services, which will include an assessment of the current state of fibre-to-the-home network deployment in Canada.

5   Le fil conducteur de ces instances est le suivant : le choix et la concurrence durable. Le Conseil met à jour ses règlements et a les yeux rivés sur l'avenir. Nous visons à mettre en place les conditions qui permettront aux Canadiens de profiter d'un système de communications de classe mondiale, et ce, pour plusieurs années à venir, un système qui leur donne accès à du contenu de radiodiffusion et à des services sans fil et Internet novateurs, peu importe où ils demeurent au Canada.

6   En octobre 2013, le Conseil a lancé « Parlons télé : une conversation avec les Canadiens » afin de savoir ce qu'ils avaient à dire au sujet de leur système de télévision.

7   Cette conversation se poursuit ici aujourd'hui. Il est fort symbolique que cette audience se tienne à quelques pas du confluent des rivières Gatineau, Rideau et des Outaouais, là où les Premières Nations algonquines se réunissaient pour leurs activités commerciales, culturelles et diplomatiques; là où certains premiers explorateurs français ont voyagé; là où se situe notre Parlement aujourd'hui; là où près de 35 millions de Canadiens convergent, par l'entremise de leurs institutions nationales, pour parler et tracer la voie de leur avenir commun.

8   Canadian television finds itself at a crossroads.

9   In 1946, the American movie producer and studio executive Daryl Zanuck predicted, and I quote:

"Television won't be able to hold on to any market it captures after the first six months. People will soon get tired of staring at a plywood box every night."

10   Well, with apologies to Mr. Zanuck, television has proven to be a popular, enduring and resilient medium.

11   The average Canadian watches 28 hours of television each week to be informed and entertained, to discover what is happening in their neighbourhood and elsewhere, to be challenged by our storytellers. The regulations that underpin Canadian television have helped create a thriving industry that employs nearly 60,000 people. Television offers Canadian and non-Canadian services that cater to a wide variety of interests, and in recent years broadcasters and television service providers have been exploring ways to make content available on mobile devices and over the Internet.

12   Mais en dépit de cette réussite, la structure du modèle réglementaire n'est pas adéquate pour accommoder nos réalités contemporaines : les Canadiens regardent la télévision différemment, au moyen de technologies diverses. De fait, chez les 18-34 ans, nous assistons à un déclin dans la manière traditionnelle de regarder la télévision.

13   Des entreprises comme Google et Netflix sont des chefs de file quand vient le temps d'offrir des options de visionnement novatrices. Nous aurons l'occasion d'entendre parler directement de leurs expériences et de poser des questions sur leurs modèles d'affaires. Google présentera aux membres du comité aujourd'hui, et Netflix sera ici la semaine prochaine.

14   While the current regulatory model was appropriate to achieve the objectives set out in the Broadcasting Act, based on past technology and past viewing habits it has grown into a complex and at times unwieldy framework. How Canadians interact with television has changed. Broadcasting has changed. It's time the regulatory model also changed.

15   When we began the "Let's Talk TV" conversation last October, we had new ideas in mind, ones that departed from the way the Commission has viewed television in the past. We wanted to shift our focus from rules to outcomes, from constraint to choice, from scheduled to on demand, from channels to programs, from meeting quotas to embracing new opportunities, from domestic to global.

16   Le nouveau cadre pour la télévision reposera sur une approche fondée sur des principes. Le résultat ne doit pas être rien de moins qu'un cadre qui tient compte des réalités actuelles et qui est suffisamment souple pour accommoder les changements à venir. Plutôt que de protéger certaines chaînes, des radiodiffuseurs en particulier ou un modèle d'affaires donné, nous devons nous assurer que le système de télévision dans son ensemble satisfait aux besoins et aux intérêts des Canadiens, aujourd'hui et pour plusieurs années à venir.

17   Le cadre visera à faire en sorte que la télévision canadienne favorise le choix et la souplesse dans la sélection des émissions, qu'elle encourage la création par les Canadiens d'un contenu percutant et accessible sur des plateformes multiples, et elle doit outiller les Canadiens afin qu'ils puissent faire des choix éclairés.

18   But its most important characteristic is that it will put Canadians first. This is only right since Canadian television belongs to them. It is their system.

19   By now, I'm sure many of you will have seen the working document we released last month. It contains a list of the key issues that we are studying and we believe that we have enough information on the record to come to conclusions on many of these issues.

20   The panel will therefore focus on those that require further exploration. These are:

21   - first, maximizing choice and flexibility for Canadians;

22   - second, fostering the creation of compelling programs made by Canadians;

23   - third, fostering local programming; and

24   - fourth, setting the ground rules for fair and sustainable wholesale relationships, that is, the relationships between cable and satellite companies on the one hand, and television services on the other hand, whether or not they are independent or part of vertically integrated groups.

25   This proceeding will serve the same objective as the two other hearings this fall: ensuring Canadians have access to innovative content, wireless services and Internet services.

26   Avant de commencer, j'aimerais remercier tous ceux et celles qui participeront à cette audience au cours des deux prochaines semaines.

27   Les Canadiens qui ne peuvent être présents peuvent tout de même participer en affichant leurs commentaires en temps réel dans notre forum de discussion en ligne au www.crtc.gc.ca/parlonstele. Tout au long de l'audience, nous garderons l'oeil sur vos commentaires que nous attendons avec impatience.

28   Because of this online forum, in a very real way, our hearing room is not just here in the National Capital Region, it stretches from coast to coast to coast.

29   I would also like to thank everyone who has participated in this important conversation so far.

30   Nous avons reçu plus de 10 000 commentaires au cours des trois phases de « Parlons télé », une indication que les Canadiens et Canadiennes se préoccupent de leur système de télévision et s'investissent dans son avenir.

31   We would not be able to fulfill our legislative responsibilities without the views and participation of Canadians. All comments will be taken into consideration as we finalize the framework that will carry our television system into the future.

32   Finally, I would like to provide a few introductions.

33   The panel for this hearing consists of:

34   - Tom Pentefountas, Vice Chairman of Broadcasting;

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

36   - Stephen Simpson, Regional Commissioner for British Columbia and the Yukon;

37   - Yves Dupras, Regional Commissioner for Quebec; and

38   - myself, Jean-Pierre Blais, Chairman of the CRTC, and I will of course be presiding over this hearing.

39   L'équipe du Conseil qui nous assiste comprend :

40   - Sheehan Carter, Rachelle Frénette et Donna Gill, les cogestionnaires de l'audience;

41   - Joshua Dougherty et Jean-Sébastien Gagnon, les conseillers juridiques; et

42   - Jade Roy, secrétaire de l'audience et superviseure des audiences publiques.

43   Donc, j'invite maintenant la secrétaire de l'audience à expliquer la procédure que nous suivrons.

44   Madame Roy.

45   LA SECRÉTAIRE : Merci, Monsieur le Président, et bienvenue à tous.

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

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

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

49   Veuillez noter que les documents seront disponibles sur Twitter sur le compte du CRTC à arobase CRTCaudiences, au pluriel, en utilisant le mot-clic diaise CRTC.

50   Please note that the Commission will also be tweeting the documents during the hearing at @CRTChearings, using the hashtag number sign CRTC.

51   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.

52   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 Commission legal counsel at a break following their presentation to confirm the undertakings.

53   For the record, please note the following changes to the Agenda :

54   - Corus will now be appearing on Wednesday, September 10, end of day.

55   - Shaw Communications and Friends of Canadian Broadcasting have switched places on the Agenda. Therefore, Friends will now be appearing on Wednesday, September 10, and Shaw will now be appearing on Thursday, September 11.

56   And now, Mr. Chairman, we will begin with the presentation by Lemay-Yates Associates Inc.

57   Please introduce yourself and your colleagues and you have 15 minutes for your presentation. Thank you.

PRESENTATION

58   MME LEMAY : Merci.

59   Bonjour, Monsieur le Président, ainsi que Mesdames et Messieurs les Conseillers et toute l'équipe du CRTC. Mon nom est Johanne Lemay et je suis co-présidente de Lemay-Yates Associés.

60   À ma gauche est Stéphanie Robitaille, qui m'assiste ici aujourd'hui, et, à ma droite, Jason Kee de Google, mais pas de Lemay-Yates Associés.

61   Il me fait plaisir d'être parmi vous aujourd'hui dans le cadre de l'audience publique « Parlons télé: une conversation avec les Canadiens » pour vous présenter l'étude réalisée par Lemay-Yates (LYA), laquelle a été soumise conjointement au CRTC par Google et Netflix.

62   Le titre de l'étude, qui est en anglais, est « The Evolution of TV and New Media in Canada. » L'objectif de l'étude était de discuter de l'évolution de la télévision et des nouveaux médias sous quatre angles d'approche, soit :

63   - une discussion du rôle de la technologie dans l'industrie de la télévision;

64   - comment les consommateurs et entreprises canadiens perçoivent ces nouvelles technologies;

65   - comment le cadre règlementaire canadien qui chapeaute les nouveaux médias a évolué au cours des 15 dernières années; et

66   - en dernier lieu, une discussion de certaines des règles associées au financement de contenu télévisuel canadien.

67   Notre étude est donc axée sur une discussion de l'innovation technologique ainsi que des bénéfices et opportunités qui découlent des nouveaux médias, que ce soit pour les consommateurs comme pour l'industrie de la télévision.

68   Une brève comparaison des technologies et des services de télévision au Canada en 2014 comparativement à 1999 -- donc, il y a 15 ans -- est incluse au tout début de l'étude.

69   Mais en premier lieu, permettez-moi de brièvement présenter LYA.

70   LYA est une entreprise indépendante offrant des services-conseils et de recherche touchant les technologies et les marchés des télécommunications et de la radiodiffusion depuis plus de 20 ans. Notre expérience combinée à notre expertise sont les fondations sur lesquelles nos services sont offerts. Nous sommes très actifs dans plusieurs types de mandats incluant le développement de stratégies et de plans d'affaires, les vérifications diligentes ainsi que divers mandats d'études lors de consultations publiques.

71   Nous possédons une expérience de pointe dans toutes les questions reliées aux fréquences hertziennes et les enchères. D'ailleurs, depuis 2012, LYA a développé sa propre plateforme d'enchères, laquelle comprend aussi l'usage de robots qui a été utilisé ici au Canada de même qu'à l'étranger.

72   Nous sommes actifs aussi dans les marchés hors Canada depuis 1995, dans les secteurs de la mobilité, de la câblodistribution ainsi que des octrois de licences et des enchères.

73   Je tiens à préciser que je parle ici au nom de LYA et non au nom de Google ou de Netflix.

74   LYA n'est pas un intervenant dans cette consultation, nous ne sommes pas un télédiffuseur, mais il me fera plaisir de répondre à vos questions portant sur notre étude.

75   Je vais continuer en anglais puisque l'étude est en anglais.

76   The Canadian television industry, including the distribution of television signals, is a success story. In 1999, the first time that CRTC conducted a review of new media, it reported 48 Canadian television services in English and 21 in French and a growing viewership for Canadian programming.

77   Since 2001, the launch of digital specialty channels, VOD services as well as over-the-top programming has significantly enriched the television industry. In 2013, CRTC indicated that there were 229 pay, pay-per-view, VOD and specialties entities providing financial reporting.

78   We know that from 1999 to 2012 total broadcasting revenues increased by 177 percent, with divergent evolution paths between specialties and conventional broadcasting. Conventional TV, thus excluding pay, specialties, pay-per-view and VOD, has generated little or no revenue growth over the last few years, from 2009 to 2012, while its profit margins have remained low amid increased competition from specialties, video-on-demand and over-the-top offerings. Industry operating margin for specialties, pay, pay-per-view and VOD is significantly higher than for conventional TV and has slightly increased to close to 29 percent as per the CRTC reporting of last August.

79   We note comments from CRTC at paragraphs 26 and 27 of Public Notice 2014-190 that initiated the current hearing:

"Over the past decade, each generation of technological innovation has made watching programming more individual and customizable. More programming is being made available on demand to Canadians. Licensed BDUs and programmers are launching services that allow viewers to access on-demand content on exempt alternative platforms. These technological innovations have also allowed new types of content aggregators or curators and new means of content distribution to emerge. Canadians have access to an increasing number of exempt Internet video service providers, both Canadian and non-Canadian, which may be affiliated or unaffiliated with licensed programming services and BDUs. These providers offer a significant amount of content, including Canadian programming. While Canadians increasingly watch video programming online, they also continue to watch television in the traditional way. Currently, online viewing and traditional television viewing complement rather than replace each other."

80   I would like to highlight why I entitled a section of our Report "Technology is Central to the Business of Television." Technology has always been integral to the business of television and has continually strived to enhance consumer benefits derived from watching video, starting with the first over-the-air stations and broadcasting distribution networks back in the fifties, so quite a long time ago.

81   No doubt if today's technology had been available back then in the fifties or even in the 1990s, the current broadcasting regulatory regime would be completely different from what we have today.

82   Second, I view television as a business, implying that it operates in a competitive environment and that its key financial objective is to be profitable. A key to success is obviously meeting the needs of its customers.

83   Broadband access, fixed and mobile, coupled with storage technologies and the Internet have significantly enhanced the benefits consumers derive from not only television but all types of entertainment and information services. The diversity and quality of content now available at one's fingertips is phenomenal compared to what was the case 15 years ago when the first new media review took place.

84   We note that, as per CRTC, at year end 2012 fixed broadband access speeds with download speeds of 50 Mbps or higher were available to 76 percent of Canadian households. Long Term Evolution, LTE, mobile broadband technology providing peak speeds of up to 75-150 Mbps was also available to 76 percent of Canada's population. We know that broadband speeds will continue to increase, both mobile and fixed, enhancing the quality of the user's experience with online video and enhancing increasing usage.

85   Technology does bring change and it is sometimes as a discontinuity as opposed to a linear evolution.

86   I note here that 2014 marks the 50th anniversary of the publication of Marshall McLuhan's "Understanding Media: The Extensions of Man." The caption "The medium is the message" was viewed as controversial in 1964 but garnered significant recognition over the ensuing years.

87   I would argue that the same observation applies today to the online distribution of media content as online has clearly shaped and influenced the type of content as evidenced by the social media explosion and by consuming usage of the various over-the-top offerings.

88   For the reasons stated above, our assessment is that the online medium is a discontinuity for the business of television.

89   Our report also provides a number of examples of how Canadian consumers and firms are fully engaged in new media, both as users and content providers. Canadians are world leaders in broadband penetration for access speeds at 5 Mbps or higher and household internet usage has been increasing at double-digit rates for a number of years.

90   The vast majority of Canadians also watch online video and increasingly share their usage across multiple devices. The comments provided in response to the CRTC consultations and other research on the public record of this proceeding show that Canadian consumers like OTT services for their convenience to watch programming they want, when and where they want it.

91   One of the major benefits of the Internet and the high quality broadband access is the window it provides on the entire world. Based on the record of the proceeding, and specifically to the answers provided to the CRTC's Choicebook, a large proportion of Canadians want more, more of international content as well as more content from the US.

92   We note that LYA primary market research published in 2011 had reported that penetration rates for various online services and apps offered by Canadian broadcasters such as Radio-Canada Tou.-TV and broadcasting distribution undertakings, in addition to other over-the-top services such as iTunes, Netflix and YouTube were, for the most part, already back then in the double digits penetration range, from 10 to 15 per cent on a national basis, and that the average user made use of more than one service.

93   The report for this CRTC last Thursday obviously shows that, for example, Netflix penetration has increased and continued to increase significantly since then.

94   Since 2011, which was when the CRTC conducted a review of OTT, Canadian broadcasters have developed extensive suites of on-the-go apps for both their conventional and specialty services as well as other content.

95   The suite of apps launched by Shaw Media for its Global network as well as its various specialties is a very good example. Bell promotes extensively the availability of a large selection of TV channels on its mobile broadband platform. Videotron launched its online TV service Illico Club Unlimited in early 2013 and Rogers and Shaw have teamed up for the new streaming service Showmi that was announced then just last week.

96   Rogers has also announced their would be streaming live NHL hockey games starting this upcoming season, so there is no shortage of activity on the new media side.

97   But, these are not the only players in town anymore. Many new entities including individuals, newspapers, corporations can and do now participate in the creation of video content that is widely distributed. Thus, innovation and opportunities in video content are no longer driven solely by broadcasters and television or film producers.

98   In our report, we discussed as one example the success of LaPresse+, as well as the new Ottawa Citizen which, in our view, dazzle with their tablet apps and extensive over-the-top video content providing news to anyone, Canadian or not, wherever they may be, as long as you have a reasonable broadband connection, mobile or fixed.

99   Our report also provides a number of examples of online distribution of Canadian content by various content aggregators or providers, both domestically, to give an example, Excentris Cinema and the National Film Board, as well as internationally, including Netflix, Hulu, Apple and Studio 4.0 in France. I add herein a few additional examples.

100   For example, in March 2004 there was an announcement of two new seasons of the Trailer Park Boys, which I think is just starting this week, exclusively for Netflix, as part of an international distribution deal with Entertainment One.

101   And just a few days ago, iTunes sent out its online promotion of 2014 TIFF movie releases featuring Canadian movies and documentary, in addition to a number of others.

102   We believe the online medium is a major benefit to the distribution of Canadian content in Canada and everywhere else, especially as international distribution has become an increasingly critical element in the mix for financial success for many producers and content providers.

103   We have reviewed the financing of Canadian TV content focusing of priority of programming of categories of national interest. We highlight the different sources of television financing such as the broadcasting distribution undertakings of BDUs, the Canadian Media Fund or CMF tax credits and other private parties.

104   We discuss in our report how the current financing system is essentially a closed- circuit system, limiting or even excluding participation by foreign firms, such as the fact that foreign firms cannot participate in the Canadian Media Fund or that there is no co-production treaty between the US and Canada.

105   Our analysis also includes a discussion of the success of the current financing framework using as a criteria the evolution of audience share for Canadian programming and the programming categories of national interest.

106   We did an analysis of Canadian programming audience shares since 2000, which indicates a declining trend, a slightly declining trend I would say, for the various categories that are identified as being of national interest.

107   This is not necessarily a reflection on the quality of the programming developed. Rather, it suggests that this decline may have arisen from deficiencies in the financing framework itself and of its ability to adapt to the evolution of viewing habits and preferences of consumers.

108   The solution, we believe, is unlikely to reside in increasing regulatory funding obligations for Canadian Broadcasting Distribution Undertakings and broadcasters or in imposing legacy regulations on new media. Indeed, force-fitting participation in a closed circuit funding mechanism desired for a completely different technology and consumer behaviour paradigm, and where, due to foreign ownership some cannot be full participants would be ill-advised.

109   Finally, our report reviews the numerous consultations undertaken in Canada since 1999 on the subject of the impact of new media and if it should be regulated. Based on our count there were about five such different reviews offered, including the ones on mobiling and all of that.

110   So, the regulatory framework governing media services in Canada has consistently strived to favour an evolution toward a more market driven approach.

111   We highlight that, in 2011, CRTC noted that: "New technologies, service providers and consumer behaviour underpin a transformation that is characterized by greater choice, a global marketplace and new opportunities for Canadian creators.."

112   Without going over each of the CRTC's prior reviews of new media, but based on our analysis of the evolution of TV and of new media, we believe that CRTC got it right in not regulating new media activities over the years and that this approach has fulfilled the objectives of the Canadian Broadcasting Act.

113   Technology has created a discontinuity in the business of television worldwide, not just in Canada. Extending a regulatory framework developed specifically for linear TV many years ago would, in our view, contravene the objectives of the Act, and thwart the objective of fostering innovation and maximizing consumer benefits.

114   En terminant, je vous remercie de votre invitation à participer à cette audience publique. Il me fera maintenant plaisir de répondre à vos questions portant sur notre étude.

115   LE PRÉSIDENT: Merci beaucoup, madame Lemay.

116   Je comprends bien votre situation, que vous êtes ici non pas comme intervenant, mais parce qu'on voulait vous poser des questions plus en détail sur votre étude en tant qu'experte.

117   D'ailleurs, je vais commencer, étant donné que vos conclusions sont basées et puis vous l'avez déposé, je crois, à la fin du mois de juin, votre rapport.

118   Est-ce que vous avez vu des études, des publications qui vous amèneraient depuis la fin juin à changer votre point de vue d'une façon considérable?

119   MME LEMAY: Si j'ai vu d'autres études, mon Dieu, je lis sur ce sujet à tous les jours. Pas vraiment, non, je vous dirais que je n'ai pas vu d'autre chose qui m'amènerait à changer.

120   J'ai lu, évidemment, aussi les autres interventions qui avaient été mises sur le record de cette audience, mais pas, je dirais, à 100 pour cent, mais en grande partie, surtout touchant la question de nouveaux médias.

121   Je ne vois pas vraiment de choses qui me porteraient à changer d'avis par rapport à ce que nous avons soumis, là, le 25... le 25 ou le 27 juin, je crois.

122   LE PRÉSIDENT: Je voulais juste confirmer que, effectivement...

123   MME LEMAY: Oui.

124   LE PRÉSIDENT: ... la base factuelle de vos conclusions n'a pas vraiment changé.

125   MME LEMAY: Non. C'est ça. J'ai pris note aussi de ce que vous avez... du document qui a été publié jeudi dernier et qui montrait la croissance continue de l'usage des nouveaux médiums.

126   LE PRÉSIDENT: Dans l'Avis de consultation 2014-190, aux paragraphes 25 à 32, le Conseil tente, puis c'est vraiment un sommaire, de décrire l'environnement actuel et futur pour le contenu audiovisuel.

127   MME LEMAY: Hum, hum.

128   LE PRÉSIDENT: J'imagine que vous en avez pris connaissance?

129   MME LEMAY: Oui, oui, oui. Je l'ai même cité dans mon texte, là.

130   LE PRÉSIDENT: J'ai bien vu ça, oui, ce matin. Est-ce que cette description qu'on retrouve dans le document est conforme à votre propre point de vue?

131   MME LEMAY: Bien, si vous me permettez, je vais relire tous les autres paragraphes avant de vous répondre.

132   LE PRÉSIDENT: C'est 25 à 32.

133   MME LEMAY: Oui, c'est ça.

--- Pause

134   MME LEMAY: Oui, je pense que... grosso modo, oui.

135   LE PRÉSIDENT: D'accord.

136   MME LEMAY: Je suis d'accord avec le constat que vous tirez ici.

137   THE PRESIDENT: Now, at pages 13 and 14 of your evidence, and again this morning you argue, you don't argue because you conclude that the confluence of innovation broadband and growth -- I guess you refer to both speed and storage -- and I am quoting you here: "Yields an environment that is not simply an evolution along the continuance of conventional broadcasting technology" and I take it when you talk about conventional you mean traditional as opposed to over-the-air?

138   MME LEMAY: Hum, hum.

139   THE PRESIDENT: And I continue here: "But in fact constitutes a major discontinuity". And I would like to understand a little more your conclusion and so, if you could elaborate. And here, I am asking more specifically: Why is this generation of advancement not similar to past training points and I am thinking of the advent of home video in the 1980's, the launch of direct to home satellites in the 1990's and perhaps even the digital upgrade of cable systems that allowed addressability and interactivity with customers?

140   MME LEMAY: Hum, hum.

141   THE PRESIDENT: So, why is this, in your view, so different than those technological changes?

142   MS LEMAY: Yes. Thank you. Well, I see, for example, the launch of DTH that was done in the nineties and specialties is really in the same continuity and it enhances choice, but really along the same types of usage and behaviours that were there before.

143   You just have a lot more choice. And I think it's the same thing with, you know, even to a certain -- I think they are, essentially, very, very similar. You just had -- for many, many years, a Canadian broadcasting system was built up to provide an increasing and fairly large array of choice. And that's what DTH did. The digital did that by enabling to pack more signals into the single channel. So, it really has done the same -- all of this choice, but you still have the same model of linear TV that you watch at home.

144   In today's environment, with online, it's totally different. You bring it wherever you go. You watch it whenever you want. You consume, I would say, more, based -- certainly based on the statistics you released, overall consumption has increased because there's more content, more availability and you can watch it whenever you can.

145   So, I think it's a fairly different paradigm that we're seeing, compared to the previous technologies, which basically meant that you provided better quality. Certainly, for digital and HD TV, you had better quality video. But it was still, I think, in the same behaviour that consumers had when TVs -- 30 or 40 years ago.

146   I think, today, it's quite different, when you have all of this information available, like I said, in your pocket or that you can have on your phone or your tablet. It opens opportunities that you didn't have before. And certainly when you had digital TV, you didn't have user-generated content because you had digital TV, but you do now with the online technologies, and it's not because you had DTH or digital specialties that you would have user-generated content. So, I think there's a number of factors that make this -- as we say, we think it's a discontinuity in the business model.

147   THE CHAIRPERSON: But isn't it, in a sense, just a variation on the same theme? Like a consumer back in the eighties who suddenly could have access to home videos? Now, back then, the VCRs, as they were then called, cost 700 bucks, not as accessible as they are today, and they are dying out now because of other platforms, but it allowed consumers that, yes, you could watch television, traditional television, but you could also have the choice of going to the video store.

148   MS LEMAY: Yes, you could go to the video store and rent a movie. You could do that.

149   THE CHAIRPERSON: I realize your point is that the new broadband technologies, the gadgets, make it more quick and efficient to do so because you can just download it, purchase it on an online service, but it's always been about providing more choice.

150   The same thing with the addressability offered by digital, where you had SVOD, the OD services, new VOD pay services.

151   Perhaps I'm missing your point why this is completely different.

152   MS LEMAY: Well, if you went to, sorry, but many years ago, if you went to rent a home video at the video store -- and there are still some of those around, a few -- you certainly would not have watched it when you were on your way to work or in your bed, at night, unless you had everything set up in your bedroom, but I mean it was, I think, a very different means of -- it was not a linear appointment when you went to rent a movie, but it was a very different mode of consumption than what we have today, when you can start watching it on your phone, on the way to work, watch more of it at night on your tablet or on your TV, stream it using a Chromecast or Roku. I think it's very, very different.

153   I think the benefits to consumers of new media have been tremendous and it increases their enjoyment significantly, I think, and we see that in the numbers they really do like it. But I do think the changes in technology, it's an explosion, in terms of content, and the user-generated content is certainly not something that you had even with digital specialties. DTH are not technologies that would provide that. So, I do think there's significant differences.

154   THE CHAIRPERSON: As you know Section 3.(2) of the Broadcasting Act states that the Canadian broadcasting system constitutes a single system.

155   I was wondering, in your view -- and I think I -- well, I'll let you answer.

156   So, in your view, are the subscription VOD services that we see today that operate pursuant to the digital exemption order, do you see them as part of that single system, even though they operate pursuant to an exemption, as opposed to under a licence?

157   MS LEMAY: It's not really a question that I addressed fully, in that sense, but I think they have been defined as broadcasting services.

158   I would say, in my view, maybe I don't really agree with that definition, that they are really like traditional broadcasting services. But I know that, for all purposes, CRTC has, you know, in the past, defined these services to be broadcasting services.

159   From my perspective, I think many of them are fairly different than conventional broadcasting, so they might be -- should they be outside or within, or are they part of the system? I think that depends -- I say that would depend on some of the services.

160   THE CHAIRPERSON: All right. But you still are of the view that whether they're part of the single system or not, they contribute to audio-visual content that meets some of the objects also identified in the --

161   MS LEMAY: Yes, I think so. Yes, I do agree with that.

162   THE CHAIRPERSON: At page 14 of your written report that was filed at the end of June, you say that traditional TV is not obsolete.

163   Do you foresee a time, based on your expert view, that it will become obsolete?

164   MS LEMAY: I wouldn't dare. (Laughs)

165   THE CHAIRPERSON: So, in sort of the next five to 10 years, you would not see traditional television becoming obsolete.

166   Why do you come to that view?

167   MS LEMAY: It might. I think it's very, very hard to actually, you know, to predict how these things will evolve. I can see a lot of live TV being streamed, as opposed to being delivered, you know, delivered over different frequencies over the same cable, if you're looking at a traditional cable TV net. It is still live TV and it would be streamed, as opposed to being delivered over the cable portion of the hybrid fiber coax system that gets into your home. So, I can see that.

168   Does that mean that conventional TV has no place? No, that's absolutely not.

169   I think it is definitely undergoing a major transformation, but I would not predict its death over the next five years. I don't quite see that, at this point in time.

170   THE CHAIRPERSON: What would be, in your view -- and I realize it's difficult to predict the future; nobody has a perfect crystal ball -- but what would be the factors that would make it more likely or less likely that traditional television would stumble?

171   You've mentioned the advent of new technology.

172   MS LEMAY: Well, it's a plus. I think there's a lot of new technology that's a plus for conventional TV. You can reach more clients, more places, at more times. I think it can be a plus.

173   What would make it stumble? If it stops being relevant. If it's mostly -- if you don't have, you know, the content that people want to watch. I think that's the key issue for TV, all the time.

174   THE CHAIRPERSON: Now, let me turn to another issue.

175   You've said that, a number of places in your report, many new players, including individuals -- I'm citing from page 2 here of your report, but you say it elsewhere. You'll see what I'm getting at:

"...that many new players, including individuals can and do now participate in the creation of video content."

176   The argument being that on the new platforms, there's lots of new Canadian-made choices.

177   So, I was wondering whether your research has led you to be able to quantify the amount of content so created?

178   MS LEMAY: That's very difficult. And I wish I had numbers like that for you. We haven't been able to actually put some numbers on that, so we do provide examples which are interesting examples, but they are examples. It would be great to have an overall view on the amount of content provided, but I think it's extremely difficult to do that. With the diversity of sources of content that we have today, it's a major task, so, we don't have that.

179   What we do see is that there is a lot of Canadian and everybody else's content out there. I think there's increasingly a fair amount of content. I like to mention the examples of the newspapers as providing over-the-top video content. I mentioned LaPresse. When you read LaPresse+, it's like you're almost watching a news bulletin, to some -- you know, you can really compare to that, there's so much video content: interviews. They send their reporters to different places and bring back some video reporting. So, it's very extensive. And I think they're having huge success with it, which shows how Canadian consumers are really looking for that or enjoy that type of content.

180   THE CHAIRPERSON: Right. But you're not aware, nor have you done any studies on the availability, let's say, of French versus English versus third language Canadian-made content?

181   MS LEMAY: I cannot give you statistics on that. And I think that would be very interesting to have, but I cannot give you statistics on that.

182   THE CHAIRPERSON: Nor would you be able to distinguish on that availability between, let's say, a young filmmaker at Ryerson's first short film versus a 12-year's pictures of a cute kitten?

183   MS LEMAY: No. (Laughs)

184   THE CHAIRPERSON: Which may be her first short documentary.

185   But you'll understand it's not the quality or the professionalism and the importance in terms of storytelling may be different there.

186   MS LEMAY: M'hmm.

187   THE CHAIRPERSON: Now, to your knowledge, are you aware of any innovations that is used to support discoverability or curation, as we've mentioned in the public notice, that has occurred or developed in the online world that we really -- that should be a lesson for Canadian-made content in both the online and traditional platforms in Canada, that we haven't fully leveraged?

188   MS LEMAY: A technology that we haven't fully leveraged?

189   Well, I think, obviously --

190   THE CHAIRPERSON: In the Canadian marketplace --

191   MS LEMAY: Yes. Well, I think the technologies for discovery, for pointing consumers into what you like to watch, want to watch, is maybe something that doesn't seem to maybe yet have been fully leveraged in the Canadian content. But I think as we get more streaming services from Canadian sources, that may come. That's certainly one aspect which I think would be interesting, because discovery is always a big issue, the consumer interface, to learn about this content. The promotion of online content I think is a significant issue I think for many parties, and certainly I've noted that. In the interventions it's been mentioned quite a few times.

192   THE CHAIRPERSON: The flip side of that would be -- and you mention in your evidence at a couple of places that television services need to adapt, evolve and ensure that they fully engage in new technologies and services the consumer want.

193   In your view, when you've looking at these issues, as an expert, and doing studies -- and perhaps you don't have a view, but I'm wondering if you do have a view -- are there currently regulatory obstacles for traditional TV services that prevent them from innovating in the way you suggest?

194   MS LEMAY: I don't think so. I think the major issue is always acquiring the rights and having -- you know, making sure that you have the rights. And I don't think --

195   THE CHAIRPERSON: The rights to the technology or to the content?

196   MS LEMAY: To the content.

197   THE CHAIRPERSON: To the content.

198   MS LEMAY: To the content. But, I mean, I don't think there is something, particularly on the technology side, that would prevent them from leveraging this. On the contrary, I think Canadian networks and -- networks of telcos and BDUs and very much up to speed, if not better than what we find in many countries, and have the ability to deliver this.

199   THE CHAIRPERSON: Right. But by the same token, the Canadian market is quite small. A company that would have to engage in that sort of new business line would have to invest some money, and do so in a market that's smaller than California.

200   MS LEMAY: Actually, they don't have to do it just for Canada as well. I think, if I look at -- you know, we have Netflix and Google as clients for this. Netflix started in the U.S. They're now in many, many countries, and expanding. What's stopping a Canadian firm from launching a service in Canada and expanding internationally? I don't think there's anything stopping them. Or to do the same thing. I don't think that's the case.

201   I think that's one of the lessons of new media, is that when you launch a service, and when you think about launching a service, having a perspective on how you can leverage that, and go internationally, I think is very important because that's the world that we live in today.

202   THE CHAIRPERSON: Right.

203   Now you mentioned rights, availability of rights to content. Now there's been some debate and discussion as to the role exclusivity of rights --

204   MS LEMAY: M'hmm.

205   THE CHAIRPERSON: -- plays in that. Some would argue that content should be available on all platforms and argue that exclusivity prevents that from occurring. And others, however, argue that, you know, if you want to brand a particular platform, a particular service, you need exclusivity because that's how you ensure that in the minds of the consumer a particular content is associated with that brand, and even moreso in a world that's less based on a schedule but more on programming.

206   So where do you fall on that, based on your observations?

207   MS LEMAY: Okay.

208   Well, I would say we have not covered that at all in our report: issues touching on exclusivity. We did a few years ago do something for Vidéotron, actually, on the subject of exclusivity for VOD and I think in -- you know, I think there's an issue -- there can be issues with exclusivity, certainly as we can see in the marketplace. But I think a total ban on exclusivity I think does not provide incentives to promoters or creators and distributors to really invest in programming.

209   So that would be my view, but I would say we have not addressed this in our report. But I think a total ban is certainly not necessarily conducive to broadcasters and VO -- you know, broadcasting entities investing significantly in programming.

210   You'd like to be able to leverage this and make more money and obtain the rights and be able to sell them internationally.

211   THE CHAIRPERSON: Now my last area of exploration before I turn it to some of my colleagues. There's a few places in your report, and again in your presentation, but in your written report I refer, you know, more specifically at pages 2, 56, 58 and 60, where you refer to the decline of the outcomes for development of priority Canadian television programming content, and you seem to suggest that this decline has arisen because of deficiencies in the financing of that content.

212   And then you go on to say:

"It would be time for the CRTC and the Department of Canadian Heritage to examine its policies and regulatory framework."

213   I can't speak for the Department of Canadian Heritage, but I thought that's what we were doing here. So what is your view on this?

214   MS LEMAY: Well, I think what I see is, you know, some of the categories, for example, that our national interests are not necessarily growing in viewership. I see -- like I mentioned, the report also -- broadcasters are placing a significant amount of funds on sports and other categories that are not part of these.

215   We see, based on the statistics that we looked at, that were published by the CRTC, that there's a certain declining trend in the proportion of viewership by Canadians to some of the categories of programming and that -- to the Canadian programming, so -- and also see a system where the key protagonists, the broadcasters and the BDUs, don't essentially have significant incentive to necessarily invest more into those categories, such as drama and comedy, you know, variety, and all of those things.

216   So that's why I think there's a lot of -- been a lot of focus, I think, on developing significant -- you know, significant production. I mean, it's more than $2 billion, as per the report of the CMPA, that is being spent each year on production of content.

217   But I think some of the ones, if I look at the last -- the numbers that are reproduced in the report from the last year, you have a million of that -- a billion of that -- a million, a billion -- coming from broadcasters and BDUs, and some of the terms that -- or the conditions that they have to invest that money, it doesn't give them a significant amount of control or the ability to leverage these funds, which -- fully, I think.

218   So I think if you want to have a system that -- basically, you know, when you invest significantly into development of TV content, you want to be able to really leverage that content and get the rewards for it. I think that's what I mean when I think the -- you know, it suggests that there are some deficiencies in how the financing is being set up.

219   I'm not sure that -- I know that this increasing focus on outcomes as opposed to, you know, quantity or volume, maybe you need to go further on that basis.

220   LE PRÉSIDENT : Mais vous mentionnez l'exemple des dramatiques.

221   MME LEMAY : Oui.

222   LE PRÉSIDENT : Si on regarde dans le marché anglophone, les dramatiques, qu'ils soient canadiens ou non canadiens est une forme de contenu, que ce soit en ligne ou par des plateformes plus traditionnelles, qui sont les plus populaires.

223   Donc, ce que vous constatez n'est pas un déclin dans l'appétit des téléspectateurs pour la forme de dramatique. C'est plutôt les dramatiques canadiennes qui sont moins visionnées.

224   MME LEMAY : Mais si on regarde les chiffres, il n'y a pas vraiment de croissance. Je sais que... je pourrais pas dire que je pense que les statistiques donnent toute l'histoire, si on veut, sur les questions des dramatiques.

225   Ils démontrent un peu de décroissance dans la part de marché des dramatiques canadien. Est-ce que tout est... est-ce qu'ils capturent l'ensemble des visionnements? Ça non plus, je ne pourrais pas vous dire que c'est le cas.

226   Alors, c'est une indication qui semble, qui n'a pas... qui semble pas y avoir de croissance dans le visionnement, je dirais dans le visionnement des contenus canadiens.

227   LE PRÉSIDENT : Canadiens.

228   MME LEMAY : Oui, c'est ça.

229   LE PRÉSIDENT : Mais...

230   MME LEMAY : Mais...

231   LE PRÉSIDENT : Sur les dramatiques, toutes sources confondues, canadien et non canadien...

232   MME LEMAY : Oui.

233   LE PRÉSIDENT : C'est encore le contenu le plus populaire.

234   MME LEMAY : Oui, oui, c'est le...

235   LE PRÉSIDENT : Un des contenus les plus populaires.

236   MME LEMAY : Je pense, d'après vos... les statistiques, c'est le contenu le plus regardé. Oui, c'est ça.

237   LE PRÉSIDENT : Et vous pensez qu'il y a une solution basée sur les modèles de financement?

238   MME LEMAY : Pardon?

239   LE PRÉSIDENT : Pour... vous croyez qu'il y aurait une solution pour accroître le financement?

240   Vous pensez qu'il y a des problèmes dans notre structure actuelle, d'appui à ces dramatiques canadiennes, par exemple?

241   MME LEMAY : Bien, moi je pense que ceux qui investissent énormément d'argent dans les dramatiques, si on regarde les sources de financement, on parle des broadcasters et des BDUs.

242   Je crois que dans un marché plus ouvert vers un marché qui fonctionnerait de manière plus commerciale, si on veut, quelque chose de plus réglementé, peut-être qu'à ce moment-là, il pourrait y avoir plus... je crois qu'il pourrait y avoir plus de succès pour développer des dramatiques et des séries peut-être à plus gros budget, prendre plus de risques, être plus innovateur et plus créateur, puis que ça pourrait rentabiliser leurs efforts de manière additionnelle.

243   LE PRÉSIDENT : Mais, votre document fait spécifiquement référence à des actions, soit par le CRTC ou par le ministère du...

244   MME LEMAY : O.K.

245   LE PRÉSIDENT : Et j'essaie de voir exactement à quoi vous songez. Peut-être vous n'aviez pas de suggestion concrète.

246   MME LEMAY : J'ai pas... on n'a pas... ça faisait pas partie de notre mandat de faire des suggestions principales. Mais je sais qu'il y a quand même pas mal d'informations qui ont été mises sur le record public concernant la relation entre les producteurs et les télédiffuseurs et les câblodistributeurs dans le cadre de cette audience.

247   Je pense qu'il y a plusieurs pièces qui sont intéressantes. Par exemple... comme je te dis, je sors du contexte de l'étude que nous avons faite. Mais peut-être...

248   LE PRÉSIDENT : Je me basais uniquement...

249   MME LEMAY : Oui, c'est ça. C'est ça.

250   LE PRÉSIDENT : Sur les commentaires que vous aviez faits.

251   MME LEMAY : Mais ça va un peu plus loin, mais disons, pas nécessairement avoir des catégories de national interest. Mais laisser les télédiffuseurs et les autres décider c'est quoi les catégories qui sont les plus importantes pour développer leur contenu.

252   Je pense que déjà là, donner plus de flexibilité, je pense que ça pourrait donner des résultats.

253   LE PRÉSIDENT : Qui pourraient inclure la baisse de reportage d'affaires publiques, s'ils sont pas populaires, la baisse de documentaires.

254   MME LEMAY : C'est possible. C'est possible.

255   LE PRÉSIDENT : Et vous croyez que ça, c'est conforme à notre objectif, les objectifs identifiés dans la Loi sur la radiodiffusion?

256   MME LEMAY : Euh... je ne suis pas sûre que c'est d'identifier de dire qu'il faut faire des documentaires. Mais il faut refléter, avoir du contenu canadien. Refléter l'environnement canadien, la culture canadienne.

257   Alors, si les télédiffuseurs mettent l'accent pour développer des séries et mettre plus d'argent de ce côté-là pour aider la culture canadienne, je vois pas pourquoi ça serait contraire à...

258   LE PRÉSIDENT : Et si, un cas extrême, on se retrouve uniquement avec des matches de hockey.

--- Laughter

259   LE PRÉSIDENT : Et, je sais pas moi, des compétitions pour devenir le meilleur chef et qu'il n'y a que ça, vous pensez que le Conseil aura atteint son objectif?

260   MME LEMAY : Pas nécessairement, et si c'était le cas, j'en serais très déçue.

261   LE PRÉSIDENT : Ah bon!

262   MME LEMAY : Si c'était tout ce qu'on avait à la télévision. Il me semble qu'il y a quand même... on a beaucoup d'intervenants du côté de la télédiffusion. Il y a pas juste le hockey dans la vie. Et il y a de la place pour...

263   LE PRÉSIDENT : Oui, c'est vrai. Il y a du football aussi!

264   MME LEMAY : Il y a du football, il y a du tennis, tout ce que vous voulez. Il y a pas juste les sports pour amener les gens à la télévision.

265   LE PRÉSIDENT : D'accord.

266   MME LEMAY : Et je pense que les gens apprécient les dramatiques. Et je crois que, comme il y a une demande pour ça, il devrait y avoir de la création pour ça.

267   LE PRÉSIDENT : D'accord. Merci.

268   Monsieur le vice-président?

269   CONSEILLER PENTEFOUNTAS : Madame Lemay, bonjour. Juste pour poursuivre sur ces enjeux qui ont été soulevés par monsieur le Président.

270   Si c'est pas rentable commercialement de produire des dramatiques, à moins d'obligations règlementaires, il risque de ne plus en avoir, de ces productions-là.

271   Je pense, ça va à la base de la question du président, et de ma question. Est-ce que vous ne pensez pas que dans ce contexte-là, il faut être... il faut diriger plus, si vous voulez, la dépense de ces sommes-là?

272   MME LEMAY : Bon! Mais ça, c'est l'approche qui a été traditionnelle, si on veut.

273   CONSEILLER PENTEFOUNTAS : Oui.

274   MME LEMAY : Alors, parce qu'on pense, on dit qu'on ne peut pas faire d'argent avec des dramatiques, en fait, que c'est très difficile, donc, il faut obliger les entreprises à investir, sans ça, elles ne le feront pas.

275   Je crois que comme on est dans notre avis, dans une nouvelle donne, c'est peut-être le temps maintenant de regarder des nouvelles approches, à faire quelques changements pour faire, comme je l'ai mentionné, ne pas diriger toutes les mêmes catégories, par exemple, le financement et voir sur quelques années, qu'est-ce que ça peut donner. Parce que je crois que ça pourrait être bénéfique pour l'industrie de la télévision d'avoir plus de flexibilité.

276   CONSEILLER PENTEFOUNTAS : Et vous avez parlé également de ce circuit fermé, closed circuit et du fait que les non-Canadiens ne peuvent pas participer dans les Fonds des médias canadiens.

277   Vous avez également parlé de coproductions canado-américaines.

278   Voulez-vous peut-être rajouter un petit peu plus sur ces enjeux-là, sur ces questions-là?

279   Est-ce que vous pensez que le fonds doit être disponible par la participation des non-Canadiens, d'abord?

280   MME LEMAY : Le Canadian... le Fonds des médias?

281   CONSEILLER PENTEFOUNTAS : Yep, c'est ça.

282   MME LEMAY : Bien, en fait, il me semble que les gens qui... premièrement, je dirais que Net Flexible ne contribue pas pour l'instant et ne sont pas éligibles pour aller chercher des fonds.

283   Donc, si le Conseil voulait qu'ils contribuent, je pense qu'éventuellement, d'une manière ou de l'autre. Parce que c'est pas évident non plus, parce que ce ne sont pas des entités canadiennes.

284   Mais, si le Conseil voulait qu'ils contribuent, à ce moment-là, il me semble que dans une certaine justice, qu'il faudrait au moins qu'ils puissent aller... obtenir des bénéfices de cette contribution.

285   CONSEILLER PENTEFOUNTAS : Conditionnel à leur contribution, bien entendu.

286   MME LEMAY : Oui.

287   CONSEILLER PENTEFOUNTAS : Quand vous parlez des non-Canadiens.

288   MME LEMAY : Pardon?

289   CONSEILLER PENTEFOUNTAS : Quand on parle des non-Canadiens.

290   MME LEMAY : Oui.

291   CONSEILLER PENTEFOUNTAS : Ça doit être conditionnel à ce qu'ils contribuent également au fonds.

292   MME LEMAY : Pour le Fonds des médias.

293   CONSEILLER PENTEFOUNTAS : O.K.

294   MME LEMAY : C'est ça. En termes de traiter de productions Canada/États-Unis, c'est différent. C'est pas la même chose. Pas besoin de contribution au fonds des médias pour ça.

295   CONSEILLER PENTEFOUNTAS : Je comprends.

296   And just to bring you back to article -- sorry, paragraph 15, you mentioned that if this technology existed in the fifties -- well, let's not go back that far, let's go back to the nineties, for example -- that the regulatory system would be different.

297   How would it be different?

298   MME LEMAY : Comment il serait différent?

299   CONSEILLER PENTEFOUNTAS : Oui.

300   MME LEMAY : Bien, je pense que si on avait commencé avec...

301   Vous voulez que je parle en français ou en anglais?

302   CONSEILLER PENTEFOUNTAS : Peu importe.

303   MME LEMAY : O.K.

304   CONSEILLER PENTEFOUNTAS : Libre à vous.

305   MME LEMAY : Si on commençait avec -- if we started with a clean slate today --

306   COMMISSIONER PENTEFOUNTAS: Yes.

307   LE MAY: -- with the technology that we have, I don't think you'd want to have all those content regulations necessarily, because there's such a hotbed of content generation that you may want -- and that's what you've been doing with new media, basically, is letting the market develop and thrive, basically, and I think that's -- if it was starting today with a clean slate, I don't think that you necessarily would see the need to have a -- you know, the rules that we've had for the last 30 or 40 years on that side and the rules that regulate the BDUs in terms of all their packaging rules and the linkage rules and all of these things. I'm not sure that you would necessarily look at that and say, "Well, we need that today." I'm not sure that that would be my conclusion.

308   COMMISSIONER PENTEFOUNTAS: You talked about the nineties. I mean you're only about 10 years behind in terms of when the technology really developed and started changing the landscape in Canada. So are we 10 years away from that reality that you see?

309   MS LEMAY: I'm not sure I understand your question.

310   COMMISSIONER PENTEFOUNTAS: Let me put it to you differently. If the consumption trend is towards streaming --

311   MS LEMAY: M'hmm.

312   COMMISSIONER PENTEFOUNTAS: -- okay, and you're getting away from the BDUs, as an example, as a delivery mechanism, for one, and you're also getting away from channels per se, and people are more interested in programming --

313   MS LEMAY: M'hmm.

314   COMMISSIONER PENTEFOUNTAS: -- right, and that is all going to be consumed online, right --

315   MS LEMAY: M'hmm.

316   COMMISSIONER PENTEFOUNTAS: -- and those are all exempt services, how do you go about finding the funds that have been financing this system over the last 40 years?

317   MS LEMAY: But if I'm a broadcaster, let's say, when you see that there's no more channels -- if you look at Roku or other, you know, streaming devices, you do have channels on it. Broadcasters do bring their content as channels on this.

318   And they're not all free. Some of them you do pay. I mean as a broadcaster you can bring a lot of your content online, it will not be free. You will receive compensation for this, and you will want to enhance your content and make it high-quality content and make more of it with what is successful. So I think you would -- that would drive, you know, the spending of your expenditures to develop content, the same way that you -- you do it now becuase you're kind of forced to do it, or you have an incentive to do it.

319   But the notion that you would stop spending on Canadian content because it's online -- or it's delivered online, I'm not sure that I agree with that, or that you would necessarily significantly reduce the spending on Canadian content.

320   COMMISSIONER PENTEFOUNTAS: Thank you.

321   THE CHAIRPERSON: Thank you. I think those are our questions.

322   Merci beaucoup, madame Lemay.

323   MME LEMAY : Merci beaucoup. Je vous remercie.

--- Redacted

530   We'll take a short break now and we will be back at 11 o'clock.

--- Upon recessing at 1047

--- Upon resuming at 1100

531   THE SECRETARY: Please take your seats.

532   LE PRÉSIDENT : À l'ordre, s'il vous plaît. Donc, il est 11 h 00. On a l'intention de rester fidèle à nos promesses en termes des pauses. Donc, je vous invite à respecter cette demande.

533   Donc, Madame la Secrétaire.

534   LA SECRÉTAIRE : Merci.

535   Nous entendrons maintenant la présentation de Éléphant, mémoire du cinéma québécois.

--- Pause

536   LA SECRÉTAIRE : Je crois qu'il y a une vidéo. Oui, parfait!

PRESENTATION

--- Video presentation

537   MME CORDEAU : Monsieur le Président, Monsieur le Vice-Président, mesdames et messieurs les conseillères et les conseillers, bonjour. Je me présente : Sylvie Cordeau, vice-présidente, Philanthropie et commandites de Québecor Média et responsable corporative d'Éléphant, mémoire du cinéma québécois.

538   Permettez-moi de vous présenter les collègues qui m'accompagnent aujourd'hui. À ma gauche:

539   - Marie-Josée Raymond, producteur de cinéma, codirectrice d'Éléphant; et à ma droite:

540   - Claude Fournier, réalisateur, écrivain et codirecteur d'Éléphant.

541   Depuis la naissance d'Éléphant il y a cinq ans et demi, c'est la deuxième fois que nous comparaissons devant le Conseil de la radiodiffusion et des télécommunications canadiennes et, chaque fois, à l'invitation de votre organisme. Nous vous en remercions, j'allais dire, bien humblement, mais, je l'avoue, c'est très difficile pour nous de rester humbles et effacés devant le succès que connaît Éléphant.

542   Depuis le début, nous avons donné au projet le nom ludique d'un animal réputé pour sa prodigieuse mémoire, l'éléphant, mais nous n'aurions jamais imaginé qu'en si peu de temps, il atteindrait la taille qu'il a maintenant et qu'il se fraierait si rapidement un chemin jusqu'à des endroits aussi prestigieux que Cannes Classics en mai de cette année.

543   Éléphant, qui a commencé modestement sa carrière sur la vidéo sur demande Illico de Vidéotron en novembre 2008 avec seulement 25 longs métrages, compte aujourd'hui plus de 200 films. En novembre 2013, fraise a fait son entrée sur iTunes Canada avec plus de 75 films. Les autres suivront d'ici la fin de l'année pour reprendre notre rythme de croisière : une cinquantaine de nouveaux films environ par an. Et il reste dans notre mire plus de 1000 films à numériser. En mai dernier, nous sommes aussi devenus disponibles sur iTunes France et dans tous les pays où la langue officielle est soit le français, soit l'anglais.

544   Et nos films ne languissent pas. Depuis le début, nous avons enregistré plus d'un quart de million de commandes. En 2009, 23 295 films ont été loués sur Éléphant. En 2013, ce sont 64 581 films qui ont été commandés, une augmentation de 300%.

545   Comme il nous est permis de compter en général deux spectateurs pour chaque commande, un demi-million de personnes auront vu des films du répertoire Éléphant, des films pour la plupart indisponibles et qui dormiraient encore dans les cinémathèques, des films morts ressuscités par Éléphant.

546   Éléphant, c'est aussi un site Web dédié à notre cinéma. On y trouve outre l'information essentielle des centaines d'entrevues exclusives avec les créateurs et des dossiers spéciaux. Il provoque la découverte de notre cinéma. Par exemple, à partir du site, il est possible d'aller directement sur iTunes louer des films de notre collection.

547   Selon les chiffres de Google Analytics, une moyenne de 30 000 pages par mois sont vues par une moyenne de 12 000 visiteurs. Deux pour cent des sessions viennent des États-Unis, 10% de France, 80% du Canada, les autres du reste du monde.

548   À l'occasion de son cinquième anniversaire, Éléphant a demandé à Serge Bouchard de porter sur les premiers 60 ans de cinéma québécois son regard d'anthropologue. Un livre magnifique intitulé « Les images que nous sommes » a été publié aux Éditions de l'homme. Une édition, la première en son genre, est aussi disponible sur iTunes et sur Kobo. Elle contient au-delà de 72 extraits de films.

549   Depuis deux mille sept (2007) jusqu'à juillet 2014, Québecor a investi plus de 6,2 millions de dollars et 10,1 millions de dollars en valeurs publicitaires pour un montant total de 16,3 millions. C'est à ce jour la plus importante contribution philanthropique de Québecor aux arts et à la culture. Rappelons aussi que la totalité du produit de la location des films sur les différentes plateformes est retournée aux détenteurs des droits et aux créateurs.

550   Je cède maintenant la parole à Claude Fournier.

551   M. FOURNIER : Merci.

552   Après huit ans de journalisme, il y a maintenant 57 ans que j'oeuvre dans le cinéma. Jamais en 60 ans je n'aurais imaginé qu'un jour quelqu'un viendrait me faire prendre conscience de l'importance de notre patrimoine cinématographique et me demander s'il n'y avait pas un moyen de non seulement préserver ce patrimoine pour l'éternité, mais surtout de le rendre accessible.

553   C'était Pierre Karl Péladeau qui venait, dans un des nombreux tiroirs de son cerveau, de faire la trouvaille de ce qui deviendrait Éléphant.

554   Pierre Karl Péladeau, l'ancien élève du philosophe Gilles Deleuze, avait bien retenu de son maître que la vraie philosophie, c'est créer des concepts. Il venait, lui, de créer le concept de la cinémathèque du futur : une cinémathèque numérique dont les trésors pourraient être diffusés dans le monde entier. Sa première idée était de numériser tout le cinéma québécois depuis ses débuts, y compris les documentaires. Seulement côté fiction, nous avons dénombré 1200 longs métrages entre les années 1940 et 2000, une bouchée déjà gigantesque. Éléphant deviendrait donc un répertoire du cinéma de fiction québécois.

555   La disponibilité : nous commencerions sur la VsD de Vidéotron. Puis il faudrait intéresser les autres câblos canadiens afin que les films puissent être vus à travers tout le Canada.

556   C'est cette notion d'accessibilité qui a piqué la curiosité du gouvernement français, qui venait de créer le Grand Emprunt pour la numérisation des oeuvres. Marie-Josée Raymond et moi avons donc été convoqués deux fois à Parias pour expliquer notre modus operandi, d'abord à Madame Nathalie Kosciusko-Morizet, Secrétaire d'État chargée de la Prospective et du Développement de l'économie numérique et ensuite à Monsieur Éric Besson, son successeur.

557   Chaque fois, ces ministres sont arrivés à une conclusion : nous avions beaucoup de chance d'avoir un mécène qui prenait à sa charge une tâche qui, presque partout, reste dévolue à l'État. En effet, nous n'avons jamais rien demandé ni à Québec ni à Ottawa.

558   Il a fallu six mois pour mettre au point un protocole technique de numérisation et de restauration avec Technicolor à Montréal, mais, aujourd'hui, notre unité de restauration compte une dizaine de personnes et nous sommes à la fine pointe des nouvelles technologies.

559   Les films que nous avions commencé à numériser en haute définition le sont désormais en 4K. Dans le volet archivage, nous avons entrepris la mise à jour des films numérisés il y a cinq ans en les reportant sur des rubans LTO 6 et nous suivons de près les recherches de ceux qui, à travers le monde, sont préoccupés par la pérennisation des données et métadonnées.

560   Non seulement Éléphant fait revivre tout un patrimoine cinématographique, mais il est devenu un laboratoire d'exploration et de recherche dans l'univers numérique.

561   Je cède la parole à Marie-Josée, ma codirectrice.

562   MME RAYMOND : Merci. « Éléphant, partout dans le monde où la technologie le permet ». Lorsque j'ai lancé ce slogan passionné il y a deux ans, tous, y compris mon collaborateur immédiat, ont cru que j'étais secouée par un délire artiste. Pourtant, nous y arrivons. D'ici quelques mois, toute notre collection sera sur iTunes dans les pays francophones et anglophones. Tous nos films sont sous-titrés dans l'autre langue.

563   Nous étudions aussi la possibilité migre vers d'autres plateformes afin de répondre à son principe fondamental d'accessibilité pourvu que soient respectées les caractéristiques essentielles d'Éléphant : un prix de location ou de vente uniforme, que la collection soit disponible en tout temps et que les films soient groupés sous la bannière Éléphant. Nos rapports avec iTunes, par exemple, ont été impeccables jusqu'ici. Au fait, le plus compliqué a été presque d'obtenir qu'on mette les accents aigus sur le mot Éléphant.

564   Afin que les détenteurs de droits ne soient pas privés du pourcentage normalement retenu par un agrégateur qui voit à toutes les opérations de verser les films sur des plateformes comme celles de iTunes, Éléphant est devenu lui-même cet intermédiaire, cet agrégateur et il ne retient pour ce faire aucune commission. Nous assumons aussi les frais d'encodage.

565   Le voeu de Pierre Karl Péladeau, l'initiateur d'Éléphant, a toujours été que l'opération demeure le plus transparent possible, que personne ne doutât jamais de son caractère philanthropique.

566   Mais, pour nous, il était important aussi que les films Éléphant ne soient pas distribués gratuitement aux consommateurs. Des ententes ont donc été conclues avec les détenteurs de droits et avec les syndicats d'acteurs, de réalisateurs, de scénaristes qui ont accordé à nos films un statut patrimonial particulier qui leur permet en retour de recevoir les montants qui leur sont dus comme créateurs des oeuvres.

567   La diffusion de ces films de répertoire, dans la production desquels l'État a souvent investi constitue aussi pour ce dernier un retour culturel sur son investissement. La vie active de presque tous les films Éléphant était terminée et, dans certains cas, notre intervention a même empêché les oeuvres de disparaître à jamais.

568   Mais ne nous méprenons pas, la vie d'Éléphant n'a pas été qu'un long fleuve tranquille comme notre enthousiasme pourrait le laisser croire. Quantité d'embûches ont été surmontées et il reste des irritants. C'est encore difficile de faire comprendre à certains diffuseurs qui montrent les films que nous avons restaurés l'importance de conserver le logo Éléphant et la notice garantissant le respect des attributs de l'oeuvre originale. Aussi, dans la jungle touffue où il évolue, il est certain qu'Éléphant aimerait entendre plus souvent les tam-tams de la télévision publique, plutôt discrète jusqu'ici, tambouriner ses prouesses.

569   Il reste aussi certains détenteurs de droits qui détiennent un pan de notre patrimoine cinématographique et qui nous en retiennent encore l'accès nonobstant l'immense valeur ajoutée aux films, qui profitent de la restauration et de la promotion d'Éléphant.

570   Éléphant a jusqu'ici restauré et redonné au public plus de 40 millions d'images comme les losanges du kaléidoscope de Schopenhauer, à chaque tour, les mêmes éléments humains et les mêmes actions forment une configuration différente de notre société, une sorte de grand miroir anthropologique.

571   Elles reconstruisent le passé, elles amusent, elles font réfléchir, elles sont essentielles. Je vous laisse avec cette réflexion de Voltaire :

« Je n'ai des idées que parce que j'ai des images dans la tête. »

572   Nous vous remercions de votre attention. Nous sommes à présent prêts à répondre à vos questions.

573   LE PRÉSIDENT : Merci beaucoup, mesdames, messieurs, premièrement, d'avoir accepté notre invitation de faire partie de nos audiences, c'était à notre invitation. Vous savez, on a lancé l'invitation à d'autres, notamment Amazon, qui sont un joueur en croissance dans le domaine de l'audiovisuel, mais j'imagine qu'ils étaient trop occupés à tirer de l'argent du marché canadien plutôt que de participer à notre instance. Mais donc, bienvenue.

574   Je crois que la raison que nous vous avons invités, monsieur Fournier, vous l'avez identifié dans vos remarques notamment en disant que vous êtes devenu un laboratoire d'exploration et de recherche dans l'univers numérique et c'est de ça qu'on tente de tirer de votre expérience. Et donc, vous n'êtes pas seulement Éléphant, vous êtes aussi the elephant in the room, comme disent les Anglais parce que vous avez une expérience dans le domaine du domaine en ligne.

575   Ma première question porterait plutôt sur si vous pouvez me décrire un petit peu plus en détail votre modèle de financement parce que vous m'avez mentionné tout à l'heure votre, je crois, qui devrait être une fausse humilité, là, en termes de votre succès parce que vous semblez, nonobstant le fait que c'est une initiative philanthropique, vous semblez avoir eu un succès où des entreprises à but lucratif n'ont pas tenté ou n'ont pas eu autant de succès ou n'ont pas eu le courage de procéder. Donc, j'aimerais mieux comprendre votre modèle pour toute cette oeuvre de restauration, mais aussi de distribution.

576   MME CORDEAU : Oui, Monsieur le Président. Le modèle est assez simple, vous l'avez souligné, c'est une oeuvre à 100$ philanthropique. Donc, tous les frais sont entièrement assurés et assumés par Québecor.

577   Le produit de location, parce que, jusqu'à maintenant, les films ne sont disponibles que par location, autant sur illico que sur iTunes, à part un pourcentage de 10%, qui est destiné à couvrir une infime partie des frais de plateforme, l'entièreté du produit donc de location est redistribué auprès des détenteurs de droits d'une part et des créateurs d'autre part.

578   Et les créateurs en question se partagent, donc, l'argent va à quatre associations: l'Union des artistes, l'ARQ, la SARTEC et l'Association des producteurs. L'argent, donc, en fin de compte, on pourrait garder selon les modèles que nous appliquons, mais est redonné. Donc, le modèle est assez simple en ce sens.

579   Là où il y a eu du travail -- et peut-être que Marie-Josée pourrait compléter parce qu'elle a été plus au coeur des négociations, ça a été mentionné dans notre présentation, nous avons aussi fait des ententes avec ces associations parce que, évidemment, les règles applicables normalement auraient rendu un peu difficile le partage des sommes et il a fallu leur faire reconnaître le caractère particulier d'Éléphant, ce caractère patrimonial qui, dans le fond, porte le projet un peu au-dessus des règles de commerce usuelles, en fait.

580   Marie-Josée, si tu veux compléter cet aspect.

581   MME RAYMOND : Oui, on a décidé que c'était très important que, d'abord, comme je le disais, que les films ne soient pas offerts gratuitement parce que les créateurs qui ont fait ces films méritent de toucher leur juste part. Et on a donc entrepris de discuter avec l'Union des artistes, l'Association des réalisateurs, l'Association des scénaristes et de trouver ensemble une façon d'aborder la redistribution des montants qui étaient touchés à l'achat d'un film ou à la location d'un film.

582   Mais, en même temps, ce qui était important, c'est d'assurer la faisabilité, parce que beaucoup de ces films anciens sont des fois même orphelins et la redistribution de l'argent posait vraiment un problème.

583   Alors, on a fait des ententes avec les unions qui acceptent que, en fait, pour résumer, il y a un pourcentage qui est pris par le diffuseur à la source, qui est renvoyé avec des rapports que, nous, nous faisons directement aux associations qui, elles, se chargent de le renvoyer à leurs membres. Ce qui veut dire que ce flux-là est extrêmement transparent et surtout qu'il se fait même pour des films qui ont 30, 40, 50 ans d'existence, ce qui est des fois un peu rare dans notre milieu.

584   M. FOURNIER : Je pense que c'est aussi important de savoir qu'on a monté, Marie-Josée Raymond a monté avec des informaticiens une banque de données très complexe qui enregistre tous les éléments de la restauration, à partir d'où les éléments viennent, où ils sont livrés, qu'est-ce qu'on a fait comme travail.

585   Donc, c'est une banque pour l'avenir et aussi une banque de données qui s'occupe de la redistribution de l'argent aux ayants droit, ce qui est assez complexe maintenant qu'on est sur iTunes, parce qu'il y a quand même de l'argent qui vient de plusieurs pays du monde et qu'on doive administrer pour redonner aux ayants droit.

586   LE PRÉSIDENT : Certains pourraient dire que, puisque vous êtes à refaire -- c'est du répertoire quand même patrimonial -- qu'on ne peut pas comparer ce que vous faites avec des nouveaux modèles d'affaires où on met en ligne du contenu plus contemporain. Mais, si je comprends bien, ça ne se fait pas sans investissement majeur pour retracer les pellicules -- j'imagine qu'on parle de pellicule d'ailleurs en piètre état -- la restauration, la numérisation, la libération des droits des créateurs et des auteurs, des comédiens.

587   En moyenne, est-ce que vous avez une idée du coût par heure pour toute cette oeuvre?

588   MME RAYMOND : C'est difficile de faire une... enfin, on peut faire une moyenne, mais les cas sont très différents. Si on a affaire à un producteur très, très méticuleux qui a gardé justement les négatifs dans une belle boîte très hermétique, ça va bien. Si, comme on vient de l'avoir, on a retrouvé un négatif dans la shed du producteur, sa veuve nous appelant pour nous dire : « J'ai des boîtes qui vont peut-être vous intéresser »; le réalisateur était très content de voir qu'on retrouvait le négatif.

589   Mais, en ce moment, on travaille avec un groupe maintenant qui fait participer des experts de France, de Los Angeles, au besoin, d'Italie, enfin, on commence à avoir accès aux grands centres de numérisation pour être capable de faire ces cas extrêmes. Mais, en fait, je vous dirais qu'en gros, ça varie entre 40 000 et... il y en a un qui n'est pas terminé encore et on cherche des solutions parce que ça va plutôt ressembler à 150 -175 et même 200 000. Il y a des choses sur cet inter neg-là (ph), le négatif ayant disparu, ils sont extrêmement difficiles à corriger.

590   Alors, c'est aussi à chaque film une surprise.

591   LE PRÉSIDENT : Mais, le chiffre que vous avez mentionné, puisque j'avais posé la question par heure, je comprends peut-être qu'il n'y a pas de moyenne. Mais ça, c'est pour un film, le 40 000, c'est pour la restauration et toute l'entreprise globalement pour un seul...

592   MME RAYMOND : Pour un seul film.

593   Pour la numérisation, la restauration, on fait aussi évidemment la bande-annonce, le poster, l'affiche, l'ensemble.

594   Donc, c'est vraiment pour cet aspect technique-là. Ça exclut l'aspect promotionnel ou c'est vraiment sur le plan technique.

595   M. FOURNIER : Mais, je pense aussi que de plus en plus, quand on observe le monde de la restauration, qui devient un monde qui grandit, surtout en Italie, aux États-Unis, en Allemagne, ce sera... ce qui serait intéressant, c'est qu'Éléphant devienne, si vous voulez, une bannière pour des films québécois, même beaucoup plus récents, même s'ils ont pas à être restaurés.

596   Parce que dans un sens, si vous allez sur une facture comme iTunes US, et que vous avez un film perdu dans la masse innombrable de films qui sont là, bien, ils pourraient être... ça pourrait être regroupé sous une bannière comme celle d'Éléphant et donc, plus facile à trouver pour les spectateurs. Et ça profiterait d'une sorte de synergie sur le plan publicitaire.

597   Donc, c'est pour ça qu'éventuellement, moi je vois Éléphant devenir, si vous voulez, une bannière pour le cinéma québécois, non seulement le restauré ancien, mais aussi les films beaucoup plus récents, même ceux qui auraient déjà été faits en numérique.

598   LE PRÉSIDENT : Donc, lorsque... mais, jusqu'à maintenant, vous focussiez plus sur les anciens films. C'est quoi votre définition, parce que bon, des fois, lorsqu'on les voit en noir et blanc, on réalise que c'est un petit peu plus vieux.

599   Mais, je crois que j'ai vu des extraits de Léolo, donc, des choses un petit peu...

600   Comment vous décidez comment loin aller en arrière?

601   MME RAYMOND : Bien, c'est-à-dire qu'en arrière, depuis le début du cinéma québécois.

602   Mais en avant, on s'est fixé de se rendre jusqu'au moment où les films seraient tournés déjà en haute définition, en HD, en deux K, en quatre K, en numérique, en sachant que même là, au début... à la fin des années 1990, il y a déjà eu des films un peu plus expérimentaux qui ont été tournés déjà en numérique et que ceux-là, on doit déjà les restaurer, même s'ils ont été faits en numérique.

603   Il faut pas oublier que le numérique a une vie courte au point de vue durée de son... en fait, je pourrais dire, de sa pellicule.

604   LE PRÉSIDENT : Oui.

605   MME RAYMOND : Et que l'archivage demande une mise à jour constante. Et ça, c'est vrai pour les films tournés actuellement et les jeunes producteurs qui font leurs films se préoccupent pas souvent.

606   Oui, mais quel est l'intérêt d'Éléphant pour moi? Dans cinq ans, tu viendras me revoir, tu vas être très content que nous, on prenne charge non seulement de les rendre disponibles parce que souvent, après leur vie commerciale initiale, ces films sont souvent laissés pour compte.

607   Mais en plus, c'est que cet archivage est très important parce que pour le moment, ça demande à être mis à jour sur une base régulière.

608   M. FOURNIER : Moi, je dirais qu'Éléphant s'occupe, à toute fin pratique, notre limite, si vous voulez, c'est des films qui sont plus vraiment en distribution courante. C'est un peu... on s'arrête là, si vous voulez.

609   Donc, on redonne de l'accessibilité à des films qui seraient peut-être montrés une fois par deux ans dans une télévision conventionnelle.

610   MME CORDEAU : Parce que si je peux juste pour conclure, parce que le but premier d'Éléphant, c'est l'accessibilité. Bien sûr, ça passe par la restauration, la numérisation. Mais le but premier, c'est l'accessibilité. Donc...

611   LE PRÉSIDENT : Pour les oeuvres plus contemporaines, est-ce que vous avez des ententes particulières? Il y a moins d'ouverture de la part des associations d'auteurs et de créateurs pour libérer les droits ou est-ce que la porte est aussi grande ouverte?

612   MME RAYMOND : Mais, on n'est pas encore rendus à un moment -- vous savez, on a encore du pain sur la planche.

613   Et, avant d'aller mettre sur Éléphant des films qui vivent une vie commerciale efficace, ils ont pas besoin de nous, dans un sens.

614   Mais, comme dit Claude, l'important c'est de les récupérer quand leur vie commerciale décline.

615   Et on n'est pas encore... on n'a pas encore frappé de ces films-là. Quoiqu'il y a des demandes. Il y a des gens qui sont intéressés à ce que les films soient mis sur Éléphant justement à cause de cette bannière Éléphant qui commence à gagner une notoriété comme là où on peut voir les films québécois dans le monde. Et que c'est supporté par notre site web qui donne quand même une information sur le corpus de films québécois et donc, ceux qui peuvent être vus à travers Éléphant.

616   LE PRÉSIDENT : Dans votre présentation, vous avez décrit votre marche vers une plus grande distribution sur diverses plateformes.

617   Pouvez-vous m'expliquer si, le long de ce périple, ce chemin, vous avez fait face à des barrières qui vous empêchaient d'avoir l'expansion vers des auditoires, soit au Canada ou à l'international?

618   Et, la difficulté, comment vous avez surmonté ces difficultés?

619   MME RAYMOND : Je pourrais vous donner un exemple où le statut d'Éléphant fait que tout le monde est intéressé à être sur Éléphant.

620   Alors, quand on est arrivé par exemple en France, iTunes en France, a eu un questionnement, parce que, comment mettre ensemble sous la même bannière, des films qui appartiennent à des grandes compagnies concurrentes?

621   Et, comme ces grandes compagnies concurrentes n'avaient pas fait cet effort de rassembler le cinéma français, le patrimoine du cinéma de longs métrages français, il y avait un petit malaise. Est-ce que c'est une bannière patrimoniale de films québécois qui va être, en fait, la première à rassembler les films québécois sur iTunes.

622   Et puis finalement, ils ont trouvé que c'était une très bonne idée, et puis que peut-être ça encouragerait d'autres pays à faire la même chose.

623   Et, on est en train de discuter avec d'autres pays qui nous demandent, comment est-ce que vous organisez ça?

624   Un des grands atouts, c'est que comme on a vraiment établi un protocole aussi bien légal, technique, surtout technique, ça nous permet une certaine efficacité.

625   Dans d'autres pays, chaque compagnie fait sa propre restauration. Et des fois, ça peut être plus compliqué.

626   M. FOURNIER : Mais moi, si je peux répondre plus directement à la question du président, c'est que les écueils, dans un sens, qu'on a frappés quand on a voulu au moins être distribués dans le reste du Canada, ce qui était notre ambition, tous les câblos ont été vus. Bell, Rogers, Cogeco, Tellus, Shaw. Et personne, tout le monde, pour des raisons différentes que Marie-José pourrait expliquer, ont reculé. Et c'est ce qui a fait que nous n'avions plus d'autres choix si on voulait être accessibles partout, de nous tourner vers une plateforme comme iTunes.

627   LE PRÉSIDENT : Donc, ce que vous me dites, c'est que si je suis, mettons, francophone, francophile ou même anglophone en Colombie-Britannique, pour avoir accès à ce contenu, que dois-je faire?

628   M. FOURNIER : iTunes.

629   LE PRÉSIDENT : C'est la seule solution?

630   M. FOURNIER : La seule solution.

631   LE PRÉSIDENT : Donc, pas disponible en version... donc, c'est du téléchargement à l'achat et non pas...

632   MME RAYMOND : Location.

633   LE PRÉSIDENT : Location, pardon. Bien, location pour la durée...

634   MME RAYMOND : Location pour le moment, parce que c'était plus simple à expliquer à beaucoup des détenteurs de droits qui avaient de la difficulté à vivre avec la vente de leurs films.

635   Alors, pour le moment, c'est location.

636   LE PRÉSIDENT : D'accord. Et, j'ai remarqué à plusieurs reprises, vous avez souligné l'importance de la présence de la marque Éléphant lors de la distribution ici et ailleurs.

637   Pouvez-vous m'expliquer l'importance pour vous d'associer la marque?

638   MME RAYMOND : Bien, c'est, parce que justement, avec toutes ces plateformes qui offrent souvent gratuitement des bribes de films, on n'a pas forcément l'assurance que les films qui sont montrés le sont comme ils ont été créés.

639   Et, c'est dans le respect de l'oeuvre original qu'on pense que c'est extrêmement important d'avoir, au début de chaque film, que la restauration que vous allez voir respecte l'authenticité et l'intégralité de l'oeuvre.

640   Et ça, on pense que le cinéma étant quand même le septième art, c'est très important d'avoir cette assurance-là.

641   LE PRÉSIDENT : D'accord.

642   Vous avez été des pionniers - en fait, pionnières, de mettre du contenu audiovisuel en ligne.

643   Un peu dans l'esprit de mieux comprendre votre laboratoire d'exploration et de recherche dans l'univers numérique, pourriez-vous nous partager, si vous avez des leçons à tirer de votre expérience, que d'autres entrepreneurs canadiens, dont ils pourraient tirer de votre expérience pour, à un certain niveau, bénéficier de ce domaine qui appartient un peu au long tail du monde audiovisuel?

644   M. FOURNIER : C'est que je pense que c'est important de faire comme on a fait, de monter une unité de restauration. Que ce soit à une compagnie ou à une autre.

645   Nous, on a choisi Technicolor après avoir lancé des appels d'offres.

646   Mais, je dois dire que de travail... parce que finalement, même à l'intérieur de Technicolor, quand on fait ce genre de travail-là, il faut contrôler beaucoup de choses. Il faut aussi -- il faut travailler toujours avec les mêmes personnes ou à peu près. On peut pas changer le coloris, changer de restaurateur comme ça, parce qu'ils finissent par développer des techniques particulières et là, et qui s'affinent constamment.

647   Parce que l'incroyable, c'est que des films que nous avons restaurés il y a cinq ans, on est en train d'en reprendre plusieurs, parce que les softwares se sont améliorés. Nous nous sommes améliorés.

648   C'est un peu un work in progress qu'on fait.

649   Ce qui a peut-être été à l'avantage d'Éléphant, c'est mon âge et celui de Marie-José -- j'insiste moins sur le sien, parce que ça fait tellement longtemps qu'on est dans le cinéma et qu'on connaît tout le monde. Ça a beaucoup contribué à donner confiance. Et ça a beaucoup aidé, souvent techniquement de pouvoir, quand ils sont pas morts, appeler un directeur photo, appeler un réalisateur.

650   Ce que nos successeurs sont peut-être pas aussi à même de faire que moi et José.

651   Alors, mais je dirais qu'il faut rester près du produit. Et, ça prend des gens de cinéma pour arriver à faire le job.

652   On pourrait pas juste confier et dire, on prend n'importe quoi et on confie ça à des techniciens et ça va fonctionner.

653   Ça va être... il va... ça va produire un résultat. Mais sûrement pas un résultat qui a, par exemple, complètement soufflé les gens à Cannes Classics, qui nous comptaient pas encore, je dois dire, de calibre international sur le plan de la restauration. Et maintenant, on l'est.

654   Depuis qu'on est allé à Cannes, on est maintenant invités par eux au Festival lumière à Lyon. On est en train de faire des contacts avec Turner Classic à Hollywood. On est un peu comme rentré dans les grandes ligues de la restauration.

655   MME CORDEAU : Et j'ajouterais à cet effet-là aussi qu'il faut pas craindre de voir plus grand à ce niveau-ci. Aussi, Marie-José faisait allusion tout à l'heure de s'entourer des gens qui ont une expertise aussi, qui peut compléter la nôtre, surtout dans des domaines technologiques comme ça, de numérisation, de restauration des domaines très pointus qui évoluent très vite.

656   Il faut pas hésiter à aller compléter notre expertise avec de l'expertise qui est à l'extérieur. Ça nous aide. Puis en même temps, ça nous fait rayonner et ça met de l'avant l'expertise qui a été développée chez nous également.

657   M. FOURNIER : Si... c'est un peu anecdotique. Mais si vous voulez, quand je parle d'un laboratoire de recherche, c'est que via Technicolor, on est en train de faire des recherches en Norvège pour forcément trouver une façon de trouver une... que le méta data et le data deviennent plus pérennes.

658   Et, il y a des expériences actuellement qui se font sur des cellules humaines pour conserver du data, puisque sur une cellule humaine, il se trouve une quantité d'informations incroyable.

659   Donc, on participe aussi à ce genre de recherche-là, avec le travail qu'on fait.

660   LE PRÉSIDENT : Dans le monde numérique surtout en ligne en particulier, il y a une abondance de contenu. Et un des défis qu'on entend dire, discuter souvent, c'est, comment aider le téléspectateur ou le cinéphile ou le consommateur, ou peu importe, à découvrir le contenu.

661   Et, j'imagine, c'est particulièrement vrai dans votre domaine, parce que c'est des oeuvres patrimoniales.

662   Comment utilisez-vous la technologie ou peut-être c'est une prochaine étape, d'utiliser la technologie pour jouer un rôle de curateur?

663   C'est-à-dire, si vous avez visionné ce film-ci, possiblement vous seriez intéressés dans l'oeuvre, une autre oeuvre où on trouve la même comédienne, le même réalisateur.

664   MME RAYMOND : On a déjà pensé à ça, et l'établissement de notre site web elephant.canoe.ca fait au fur et à mesure ce travail-là en ce sens que pour chaque film qu'on restaure, on fait une entrevue de présentation.

665   On fait aussi les entrevues avec les gens qui ont participé à ces films-là. Et on les regroupe de telle façon que quelqu'un qui voit un film de Denis Arcand ne peut effectivement savoir quels sont tous les films qu'il a faits, voir des extraits, des bandes-annonces, des photos, des entrevues de Denis Arcand qui dit : « Bien, celui-là je l'aime pas. Ou, pourquoi est-ce que j'ai joué du violoncelle dans tel film? »

666   Enfin, des choses très, très personnelles qui ne sont pas des vidéos de vente; ce qui arrive quand un film sort, mais qui sont des témoignages humains des créateurs.

667   Et ça, je pense que dans le sens de ce que vous soulignez, c'est très important. Parce qu'à ce moment-là, on a la redécouverte de films que les gens ne pouvaient pas voir.

668   Là, on a entre autres une demande, un festival en Irlande qui a dit : « J'ai jamais vu le film Gina aussi beau. On le veut à notre prochain festival. »

669   Mais, ils vont faire Gina, mais ensuite ça veut dire que l'oeuvre de Denis Arcand va être accessible. Et c'est ça. Puis on parle de Denis Arcand. C'est celui qui est probablement le plus accessible.

670   Et, pensez à tous ceux qui ne sont pas accessibles, qu'on découvre par, justement, ces vidéos et ces mentions sur le site web.

671   M. FOURNIER : Mais, il reste aussi qu'au Canada, ou au Québec d'abord, on avait l'avantage de pouvoir profiter de tous les médias de Quebecor pour la publicité d'Éléphant. Ce qu'ils ont fait très généreusement.

672   On le fait là, ou on a commencé à le faire au Canada.

673   Mais, vous comprendrez qu'Éléphant, étant l'oeuvre qu'elle est, ne rapportant rien à ceux qui la font, bien, dans les pays étrangers, en France, aux États-Unis, etc., on va faire des choses comme s'arranger pour aller... être invité à des festivals. Et ce qui nous donne beaucoup de visibilité.

674   Seulement Cannes Classics nous a, en France, cette année, énormément donné de visibilité. Donc, on va un peu miser là-dessus pour pouvoir profiter d'une publicité qu'on peut pas vraiment s'offrir dans d'autres pays du monde pour faire connaître Éléphant.

675   LE PRÉSIDENT : Mais vous êtes pas tout à fait dans le monde où on voit chez Netflix, chez Amazone, on remarque que vous avez visionné La vraie nature de Bernadette. Et donc, vous allez peut-être aussi apprécier un autre film.

676   M. FOURNIER : Ça, c'est... il faut faire, il faut, mettons comme avec iTunes, faire nous-mêmes ce travail-là qu'iTunes ne fait pas et qu'on n'a pas, pour le moment, Monsieur le Président. Éléphant, c'est deux personnes pour le moment.

677   Et, c'est disons que c'est une oeuvre qui est très... c'est très ligne comme opération. Et c'est évident qu'iTunes n'est pas du tout récalcitrant à ce genre de travail-là. Mais c'est nous qui devrons le faire. C'est pas eux qui le font.

678   MME CORDEAU : En fait, on va y arriver incessamment. Éléphant est encore un tout jeune animal, si je peux dire. Et l'important pour nous, on s'est vraiment attelé à le développer, à le créer.

679   On est parti d'une page blanche, il n'y avait aucun modèle du genre qui existait. Et maintenant on est rendu, je pense, à aborder une étape de ce type-là où on va pouvoir envisager ces avenus.

680   Mais jusqu'à maintenant, on vous avoue qu'on était plus occupés à démarrer le projet et à en définir les bases et les modèles.

681   Et... oui.

682   M. FOURNIER : Il faut vous dire qu'au début, Sylvie disait : « Faudrait que ça finisse par marcher comme une usine à saucisses. »

683   Bien, on a dit : « Tu sais, ça sera jamais une usine à saucisses, le film. »

684   Mais, il reste qu'elle avait en partie raison, puisqu'actuellement, on a un rythme de croisière d'environ 40 films par année, ce qui est absolument énorme comme rythme de travail.

685   Et on essaie aussi de continuer ça, d'agrandir le monde de notre accessibilité et aussi, s'occuper de détail comme comment mieux profiter d'iTunes.

686   MME RAYMOND : Mais, au-delà d'iTunes, moi je voulais juste ajouter que peut-être aussi que, après plus de cinq ans maintenant, d'existence, il y a des gens qui vont se rendre compte que le cinéma est un véhicule extraordinaire pour une culture, pour un pays, pour une... Et que des gens, on peut imaginer qu'un ministère du Tourisme serait intéressé à montrer Kamouraska ou à montrer...

687   Parce que la connaissance d'un pays, c'est sûr qu'à travers le cinéma, c'est d'une valeur incroyable. Et on a eu des témoignages, par exemple en France, où le ministre des Affaires étrangères disait : « C'est un de nos grands problèmes. On ne peut plus faire visionner nos films dans nos ambassades, parce qu'il n'y a plus de projecteurs 35, il n'y a plus de copies. »

688   Donc, dans cet aspect-là, moi je pense que maintenant qu'on a fait nos preuves, bien, on attend, ou en fait, on essaie de susciter. Mais ça aussi, c'est pas évident, de l'intérêt pour les gens qui pourraient se servir de notre cinéma pour faire connaître ce qu'on est.

689   LE PRÉSIDENT : D'accord. Donc, si je comprends bien, il y a encore du développement à faire sur certaines... donc, un Éléphant, mais c'est encore tôt. Donc, un éléphanteau. C'est ça.

--- Laughter

690   LE PRÉSIDENT : Bonne chance à la traductrice!

691   Monsieur le Vice-président.

692   CONSEILLER PENTEFOUNTAS : Merci, Monsieur le Président. J'étais pour demander s'il y avait un comité qui s'occupait du triage à savoir par quel film commencerons-nous.

693   Mais là je viens d'apprendre, si j'ai bien saisi vos commentaires, que le comité c'est deux, vous deux.

694   Est-ce qu'il y a un ordre?

695   M. FOURNIER : C'est-à-dire que dans certains pays du monde, comme en France, ils ont fait des comités pour, autrement dit, essayer de déterminer quels sont les chefs-d'oeuvre, avec quoi on commence?

696   Nous ici, comme notre... nos prémisses de départ, c'était qu'on faisait tout. Donc, on le fait un peu selon la disponibilité et non pas nécessairement selon la qualité critique ou d'un titre.

697   Et on avait, depuis aussi le début, décidé de ne pas aller dans le sens des chapelles. Parce que pourquoi une madame X, cinéaste, aurait pas autant le droit d'être connue ou d'être vue qu'un Denis Arcand.

698   Et aussi, je vous donne... c'est ce que dit toujours Claude Lelouch. « Il y a jamais un film entièrement mauvais. »

699   Il y a dans chaque film quelque chose qui vaut la peine qu'on regarde ce film-là. Et quand ça devient un film plus ancien, plus patrimonial, bien, il y a d'autres raisons aussi, de le regarder. Il y a des raisons sociologiques, il y a des raisons de mode, de...

700   Vous voyez un film qui a été fait, tourné en 1950 à Québec par exemple, bien, en plus de l'intrigue, il y a aussi l'intérêt de voir comment les gens vivaient à Québec en '50, puis quelles étaient les paysages de Québec en 1950.

701   CONSEILLER PENTEFOUNTAS : Alors, il n'y a pas de triage là?

702   M. FOURNIER : Non.

703   CONSEILLER PENTEFOUNTAS : On ne priorise pas un film par rapport à l'autre. Alors, si nous avons plusieurs films qui sont disponibles, comment est-ce qu'on décide qu'on commence avec ce film-là et non pas l'autre?

704   M. FOURNIER : Bien, on mène, en général, une dizaine de films de front, et certains s'étendent... Par exemple, on a commencé à restaurer « Le gros Bill », qui, pour nous, est un film important de la fin des années 40 pour le cinéma québécois. Bien, on ne s'est pas... ça fait un an qu'on travaille dessus. On n'est même pas certain d'arriver à le faire d'ici deux ou trois ans, tellement il y a de travail de restauration à faire.

705   CONSEILLER PENTEFOUNTAS : C'est ça. Et ma deuxième question était pour savoir est-ce qu'il y a un test de qualité. Puis là, vous avez déjà répondu à ça.

706   M. FOURNIER : Oui. C'est un film... C'est que ça va être effrayant parce qu'on va peut-être dépenser 200 000 ou 250 000 dollars pour ce seul film, mais sans ça, c'est un film qui disparaîtrait et c'est un... on considère un des films importants.

707   CONSEILLER PENTEFOUNTAS : Je comprends. Je vous donne un exemple. Je veux... puis on peut parler d'Elvis Gratton là. Je comprends que ce n'est pas le ministère du Tourisme qui va peut-être promouvoir ce film-là, peut-être le ministère du Tourisme de Santa Banana mais pas nécessairement du Québec. Mais ceci étant, je n'ai pas vu Elvis Gratton 2 ou 3 dans votre liste dans le catalogue.

708   MME RAYMOND : C'est en cours. Il y a des questions justement de droit et on a commencé par le premier.

709   CONSEILLER PENTEFOUNTAS : Alors, il n'y a jamais question de qualité?

710   MME RAYMOND : Non, ce n'est jamais une question de qualité.

711   CONSEILLER PENTEFOUNTAS : Parfait!

712   MME RAYMOND : Non, jamais.

713   CONSEILLER PENTEFOUNTAS : Deuxièmement, vous avez parlé que c'est disponible sur Illico, c'est disponible sur iTunes. Il y a des ententes entre iTunes et Éléphant, entre Illico et Éléphant, rien qui est gratuit. Il y a sans doute... Est-ce qu'il y a un partage de revenus? C'est quoi la nature de l'entente entre et iTunes et Illico?

714   MME CORDEAU : Bien, c'est ce qu'on vous disait tout à l'heure. Tous les films qui sont loués, l'argent, à part un minimum de 10 pour cent, est entièrement redonné...

715   CONSEILLER PENTEFOUNTAS : Je comprends ça pour Illico...

716   MME CORDEAU : Oui.

717   CONSEILLER PENTEFOUNTAS : ...mais iTunes, est-ce que c'est la même entente?

718   MME CORDEAU : iTunes se garde un pourcentage, et tout le reste est redonné entièrement...

719   CONSEILLER PENTEFOUNTAS : Et leur pourcentage est-il supérieur au pourcentage gardé par Illico?

720   MME CORDEAU : Oui. Oui.

721   CONSEILLER PENTEFOUNTAS : Est-ce que vous avez le chiffre ou est-ce que...

722   MME RAYMOND : Oui, oui, absolument, mais c'est parce qu'on pense quand même que les diffuseurs canadiens pourraient participer sur le même modèle qu'Illico, mais quand on arrive sur iTunes Monde, c'est très difficile de leur demander de renoncer à leur 30 pour cent.

723   CONSEILLER PENTEFOUNTAS : Je comprends.

724   MME RAYMOND : Parce que, en général, on a choisi un créneau où le pourcentage gardé par iTunes est approximativement de 30 pour cent.

725   CONSEILLER PENTEFOUNTAS : Et le modèle de YouTube ne fonctionnera pas pour Éléphant ou est-ce que les tentatives n'ont pas porté fruit?

726   MME RAYMOND : Oui. On est sur YouTube...

727   M. FOURNIER : Non, non, pas...

728   MME RAYMOND : Pas sur... ah, excusez-moi...

729   M. FOURNIER : Bien, ça fonctionnerait s'il y a une façon de récupérer... si ça peut fonctionner selon les paramètres que nous avons à Éléphant, et il faut dire que...

730   CONSEILLER PENTEFOUNTAS : Mais pour trouver des annonceurs, ça ne fait pas partie du modèle et ça ne fonctionnera pas?

731   M. FOURNIER : Ça ne fait pas partie de notre modèle. Puis pour ce qui est, par exemple, de iTunes, c'était évident qu'on ne pouvait pas demander à iTunes de faire de la philanthropie. Mais nous, où on a poussé cette philanthropie-là, iTunes, au début, ils nous demandaient sérieusement de passer par un aggrégateur qui prenait lui aussi 25 pour cent, et c'est là qu'on a décidé, nous, de devenir aggrégateur et de ne pas charger ça aux ayants droit parce qu'ils auraient perdu 30 pour cent plus 25 pour cent. Il ne leur serait pas resté grand-chose.

732   CONSEILLER PENTEFOUNTAS : Pas grand-chose. Merci beaucoup. Merci beaucoup de votre temps.

733   LE PRÉSIDENT : Juste une dernière petite question rapidement. Que ça soit une oeuvre dans le domaine public ou non, c'est le même modèle, n'est-ce pas? Parce qu'il y a des oeuvres plus vieilles là qui auraient tombé dans le domaine public, non?

734   MME CORDEAU : En fait, non, c'est le même modèle pour toutes. Évidemment, les oeuvres orphelines, j'imagine c'est à ça que vous faites référence...

735   LE PRÉSIDENT : Non. Les oeuvres, à cause de la durée de la protection du droit d'auteur au Canada, il y en a qui seraient dans le domaine public, non?

736   MME RAYMOND : On n'en a pas encore rencontré. Parce que les détenteurs de droit gardent quand même... renouvellent les contrats de distribution et des oeuvres cinématographiques dans le domaine public pour le long métrage, je n'en ai pas rencontré encore.

737   LE PRÉSIDENT : O.K. Je comprends. Merci. Ce sont nos questions. Merci beaucoup d'avoir accepté notre invitation.

738   M. FOURNIER : Je vous remercie.

739   LE PRÉSIDENT : Merci beaucoup.

740   MME CORDEAU : Merci beaucoup.

741   MME RAYMOND : Merci.

742   LE PRÉSIDENT : Madame la Secrétaire.

743   THE SECRETARY: I will now ask the Competition Bureau to come to the presentation table.

--- Pause

744   THE SECRETARY: Please introduce yourselves and you have 15 minutes. Thank you.

PRESENTATION

745   MME DAGENAIS : Bonjour. Merci, Monsieur le Président et tous les Commissaires, d'avoir invité le Bureau de la concurrence à faire une présentation dans le cadre de la présente audience.

746   Je m'appelle Martine Dagenais et je suis la sous-commissaire à la Direction générale des politiques économiques et de la mise en application du Bureau de la concurrence.

747   Je suis accompagnée aujourd'hui par la docteure Renée Duplantis, titulaire de la Chaire T.D. MacDonald en économie industrielle au Bureau, ainsi que par notre avocat, Maître Jonathan Chaplan, qui est le directeur exécutif et avocat général principal des Services juridiques du Bureau de la concurrence.

748   Le Bureau de la concurrence, en tant qu'organisme d'application de la loi indépendant, veille à ce que les entreprises et les consommateurs canadiens prospèrent dans un marché concurrentiel et innovateur. Dirigé par le commissaire de la concurrence, M. John Pecman, le Bureau est responsable de l'administration et de l'application de la Loi sur la concurrence dans pratiquement tous les secteurs de l'économie canadienne, y compris la radiodiffusion. La Loi sur la concurrence a pour objet de préserver et de favoriser la concurrence au Canada dans le but notamment de promouvoir l'efficacité et l'adaptabilité de l'économie canadienne et d'assurer aux consommateurs des prix concurrentiels et des choix en matière de produits.

749   Nous sommes heureux de participer à cette audience dans le cadre du travail de promotion du Bureau. Les articles 125 et 126 de la Loi sur la concurrence permettent au commissaire de témoigner devant les organismes fédéraux et provinciaux qui supervisent les industries réglementées afin de faire la promotion d'une concurrence accrue dans divers secteurs de marchés. Dans le cadre de ses efforts soutenus de promotion des avantages de la concurrence, le Bureau milite pour que les organismes de réglementation et les décideurs ne réglementent que les secteurs où il est nécessaire de le faire et qu'ils s'appuient sur les forces du marché autant que possible pour obtenir les avantages de la concurrence. Lorsque les forces du marché sont insuffisantes à l'atteinte de certains objectifs stratégiques, le Bureau dispense des conseils aux responsables de la réglementation afin de les aider à mettre en oeuvre des politiques qui permettent d'atteindre ces buts de la façon la moins intrusive possible.

750   Je vais maintenant céder la parole à la Dre Duplantis, qui exposera les détails de la présentation du Bureau.

751   MS DUPLANTIS: Thank you, Ms Dagenais.

752   The Bureau is pleased to participate in this important consultation.

753   We are here to comment on four particular areas of the broadcasting consultation:

754   (1) consumer choice and flexibility;

755   (2) vertical integration;

756   (3) genre exclusivity; and

757   (4) the availability of information to consumers.

758   With respect to consumer choice and flexibility, the Bureau believes that consumers should have the ability to choose the channels they value and that they should only have to pay for the channels they choose.

759   Currently, many discretionary services are bundled together, requiring consumers to purchase channels they do not want or do not value highly in order to obtain the ones they do value highly. Bundling also has the effect of reducing or removing competition between the discretionary services. By eliminating bundles and moving to a system with increased consumer choice and flexibility, discretionary services will be forced to compete through innovative offerings, which will benefit consumers.

760   There is a general agreement among economists who have studied bundling by broadcast distribution undertakings that the primary incentive for and effect of such bundling is to allow distributors to appropriate a larger share of the potential value of broadcast programming to consumers. While this does not imply that consumers necessarily lose from bundling, since bundling may increase total value, it does create a rebuttable presumption that restrictions on bundling, or à la carte, are likely to benefit consumers.

761   Given that the issue cannot be definitely resolved through economic theory, however, this is ultimately an empirical and fact-specific enquiry. Moreover, while numerous empirical studies have attempted to determine the effect of bundling on broadcast consumers, they have conflicting results and, more importantly, are specific to the demand, supply and regulatory conditions of the United States.

762   Fortunately, however, the Canadian experience, notably that in Quebec and Atlantic Canada, provides a natural experiment that is not open to concerns as to the estimating techniques, the assumptions involved in the simulations or inapposite fact situations.

763   As the Commission's consultation document points out, consumers currently have choice and flexibility from some BDUs operating in Quebec and Atlantic Canada. That natural experiment in the broadcasting industry in Canada -- the shift from bundling to increased consumer choice in Quebec and Atlantic Canada -- could be used for predictions regarding what could happen to the broadcasting industry by moving to increased choice and flexibility for consumers.

764   There have also been recent examples of successful unbundling with consumer benefits in other industries. For example, Apple has unbundled music and consumers can now purchase individual songs instead of an entire album, and academic publishers have unbundled journals and allow consumers to purchase individual journal articles.

765   The Bureau understands that a potential result of moving to a system like a pick-and-pay or à la carte regime is that some programming undertakings may not survive. We believe that increased choice and flexibility for consumers, by introducing greater competition between discretionary services, will allow consumers to benefit through a reduction in their monthly broadcast bills. In our view, programming undertakings should compete on their merits and not, in effect, be subsidized through what could be considered a form of tied selling.

766   We have reviewed the Commission's recently released working document and we have not come to a conclusion that any one option articulated by the Commission is preferable to the others.

767   We do caution, though, that the Commission should carefully consider the potential incentives that may arise from these options. For example, allowing BDUs to determine which channels should be included in the basic package may incentivize upstream programming undertakings to implement pricing strategies to force BDUs to place their channels in the basic package. That would circumvent the entire point of this consultation.

768   Therefore, we urge the Commission to consider the dynamics at play between all of the different proposals in this consultation to ensure that a solution in one area does not cause adverse incentives in another area.

769   However, the Bureau fully supports the move to increased consumer choice and flexibility.

770   The second area we are commenting on is vertical integration.

771   The potential for vertically-integrated firms, in any industry, to use their market power to engage in anti-competitive acts or to lessen or prevent competition substantially is a concern for the Bureau.

772   In the broadcasting industry, the Bureau is concerned that vertically-integrated firms may have the incentive to disadvantage rival downstream BDUs to the benefit of their own distribution offerings. This could occur through strategies that raise rivals' costs, limit rivals' consumer offerings, or stifle innovation.

773   Of particular concern is the potential for vertically-integrated firms to use their market power from the extremely popular discretionary services they own -- sometimes called "must-have" services -- to disadvantage downstream rivals. This could occur by: one, negotiating higher fees from BDUs for the right to resell their discretionary services; or, two, imposing contractual terms on BDUs that limit choice and flexibility in their offerings to consumers. Actions such as these can manifest themselves downstream to consumers of both the vertically-integrated and non-vertically-integrated firms through higher subscription fees, less choice, and fewer innovative offerings.

774   Given the incentives for the potential abuse of market power, the Bureau believes that measures such as those set out in the Vertical Integration Code are necessary to maintain competition from non-vertically-integrated discretionary services and BDUs.

775   In addition, given all of the potential changes being considered in this consultation, the Bureau recommends that the Commission examine the impact on the vertical integration framework and the VI Code of any changes it intends to implement, to ensure that they do not adversely affect the safeguards already in place.

776   As noted earlier, the Bureau urges the Commission to carefully consider the incentives that may arise from the scenarios on consumer choice and flexibility discussed in the working document.

777   As part of that working document, the Commission outlines several themes and proposals related to vertical integration, including addressing affiliation agreement issues that impact the ability of BDUs to offer more choice and access for non-vertically-integrated programming services.

778   The Bureau fully supports additions like these to the VI Code, to ensure that vertically-integrated firms are not incentivized to exercise their market power in ways that harm downstream BDUs or hinder the ability of those BDUs to offer the choice and flexibility consumers want from this consultation.

779   The third area that we would like to address is genre exclusivity.

780   Genre protection insulates discretionary services from competition and limits their adaptability. More competition among services with greater flexibility to adopt their programming based on consumer demand is likely to result in higher quality programming and a more valuable service to Canadian consumers.

781   Therefore, we support the proposal in the Commission's working document that would eliminate genre protections for Category A pay and speciality services.

782   The final area that we would like to comment on is the availability of information to consumers.

783   The Bureau applauds the Commission's efforts to improve clarity and transparency in broadcasting service contracts. We support the development of a code of conduct as a means of improving the operation of the broadcasting industry.

784   At the same time, we caution that any code should not restrict either the content of advertising or other business practices more than is necessary. Advertisements and promotions that are not false or misleading, and agreements that are not reached unfairly, lead to greater choice and better-informed consumers. They provide an important means of competition for service providers. Mandating unnecessary restrictions on such activities or contracts could have unintended consequences on the proper functioning of the marketplace.

785   The ability of consumers to act on the information they receive, including the ease with which they can switch between service providers, is critical to ensuring that markets remain competitive.

786   Therefore, the Bureau supports the proposals put forth in the Commission's working document to establish a BDU code and an Ombudsman to oversee it. When consumers have the necessary information to understand what they are buying, the broadcasting industry will function more effectively.

787   In conclusion, the Bureau supports increased consumer choice and flexibility; we support safeguards in the VI Code to ensure fair competition between vertically-integrated and non-vertically-integrated firms; we support the elimination of genre exclusivity for Category A pay and specialty services; and we support the development of a BDU code of conduct to ensure consumers are informed about the products they are purchasing, as well as the appointment of an Ombudsman to oversee it.

788   We would be more than pleased to answer any questions you may have, and we thank you very much for your time and consideration.

789   THE CHAIRPERSON: Thank you very much.

790   I'll put you in the hands of Commissioner Molnar now. Thank you.

791   COMMISSIONER MOLNAR: So, good afternoon.

792   MS DUPLANTIS: Good afternoon.

793   COMMISSIONER MOLNAR: I want to make sure I'm understanding what you're saying on page 3 of your remarks.

794   You begin by saying that there is rebuttable, I think, rebuttable presumption as to whether or not unbundling will increase consumers' total value.

795   MS DUPLANTIS: Yes.

796   COMMISSIONER MOLNAR: And then, further down, you say that introducing greater competition will allow consumers to benefit through a reduction in their monthly broadcast bills.

797   MS DUPLANTIS: Right.

798   COMMISSIONER MOLNAR: So, is it your presumption or expectation that unbundling will reduce consumers' overall prices?

799   MS DUPLANTIS: I think what we are getting at is the economic results on bundling, in the broadcasting industry, are mixed. There have been several studies that say that moving to "à la carte" or "unbundling" would be harmful to consumers. But there have also been studies that say that consumers would benefit from this.

800   From an economic theory perspective, we don't know what's going to happen because so much of it is based on assumptions and simulations which yields to, sometimes, positive or negative results.

801   So, our perspective is that looking at what happened in Quebec is the best option to determine what might happen to the rest of Canada, and we think that increased consumer choice will benefit consumers.

802   COMMISSIONER MOLNAR: So, you believe. It says, we believe that increased choice in flexibility will allow consumers to benefit through a reduction in their monthly broadcast bills.

803   MS DUPLANTIS: Yes. We think that more exposure to market forces with greater flexibility to adapt their programming based on consumer demand is likely to result in higher-quality programming and a more valuable service to consumers. So, we think that prices could go down. Prices could also go up. It's not certain. But we think that consumer values will be better represented when exposed to more market forces.

804   COMMISSIONER MOLNAR: Okay. I understand what you're saying about improved programming, potentially improved programming. I'm just looking at the consumer price.

805   As you said, there is lots of evidence, a lot of evidence from the States -- I agree -- and, also, evidence put on the record -- evidence -- I mean reports and studies put on the record that says that, potentially, you may see a minority of consumers who will see their prices decrease and the majority who are more satisfied with bundling as it exists today could see a price increase.

806   You've seen that evidence?

807   MS DUPLANTIS: Yes, I have.

808   COMMISSIONER MOLNAR: And what are your thoughts on that?

809   MS DUPLANTIS: I mean my thoughts are thoughts. The Bureau believes that it's -- because all of that evidence is based on simulations and assumptions that can be changed, that is why you get these conflicting results. And the regulatory commissions in the United States are very different than here.

810   So, we still think that looking at the Quebec experience is the best predictor of what could happen in the rest of Canada, and we believe consumers should have the ability to choose the channels they want and only have to purchase the ones that they choose.

811   COMMISSIONER MOLNAR: So, let's assume, for a minute, that the research that's been put before us is accurate and a minority of consumers would go to kind of a pick-and-pay and the majority are comfortable with the larger packages that are available today and the outcome of that would be that the minority would see a price reduction, but the majority might see a price increase because the pricing of those services is no longer amortized over the full customer base, it's just those that want those services may get a higher price as a consequence.

812   Would you say that's an appropriate outcome in a competitive market?

813   MS DUPLANTIS: I think that could be an appropriate outcome in a competitive market. But the broadcasting industry is a regulated industry, so it's not exactly the most competitive, in terms of what an economist would consider a competitive market. So, I think that once you have that the regulations in place, it's harder to predict what could happen in the market, as a result.

814   COMMISSIONER MOLNAR: It is regulated under the proposals put forward in the working document you would see -- as you know, genre exclusivity would be eliminated, must-carrys would be eliminated, so there would be greater competition at the programming level and there is competition at the distribution level.

815   Are we getting close to the conditions of a competitive market?

816   MS DUPLANTIS: We're getting closer, yes. But textbook economics says that there's free entry and exit and there are all these conditions that where you have an infinite number of suppliers of a good -- that's the perfectly competitive textbook market. They never exist in the real world.

817   COMMISSIONER MOLNAR: Exactly.

818   MS DUPLANTIS: So we advocate for as much competition as possible. You know, we are always advocating for increased competition, the Bureau is, and, you know, we recognize though that there are times when full competition is not available, and so we advocate that, you know, when regulation is necessary, it's the only amount necessary, and as minimally intrusive as possible. So it's a trade-off there. That is a balancing act.

819   COMMISSIONER MOLNAR: Right.

820   I want to talk about the concept of minimally intrusive.

821   You really didn't provide a view on the two options for basic service, the one being a very, very stripped-down Canadian, all-Canadian, you know just the mandatory must-carries, and the other being, basically, a price-capped service that could or could not include discretionary servicing in it.

822   You have no view on which one of those would be more appropriate as the starting point for pick-and-pay and greater choice and flexibility?

823   MS DUPLANTIS: The Bureau has not come to a landing on which is the best or most appropriate. We do recognize, though, that --

824   COMMISSIONER MOLNAR: One would regulate price and one would not.

825   MS DUPLANTIS: Exactly, but I would say that with a price cap you do have the ability of essentially providing some additional leverage to BDUs because they cannot -- they're capped at their own price, right, so an upstream programming undertaking would have a little less bargaining power to force their way onto the basic package.

826   But we don't know what the outcome of that could be. I think it would be interesting to hear what the BDUs have to say about that.

827   COMMISSIONER MOLNAR: But there is the potential that some discretionary services under that model would still be essentially imposed on all customers.

828   MS DUPLANTIS: Correct. And that's where we caution that, you know, you do have those incentives to force your way into the basic package, and a price cap does help minimize --

829   COMMISSIONER MOLNAR: And that wouldn't cause you to think the other one is a better option?

830   MS DUPLANTIS: I think they both have pros and cons, and it really will depend on all of the different factors that play here in this consultation and where you land on all of them.

831   COMMISSIONER MOLNAR: So what, in your view, is the most significant con with the two different options?

832   Assuming we know the pros. Well, I mean, you can give pros and cons. But there are two options there and, as you said, they both have pros and cons, which caused you to not be able to decide.

833   MS DUPLANTIS: I mean I don't think we have come to a landing on what the significant cons are here today. We are concerned, obviously, about incentives upstream and programming undertakings using their bargaining power to leverage against downstream BDUs and to disadvantage them. That's always a concern of ours at the Bureau. But I don't believe we've -- we've not come to a determination on which model is the best at this point.

834   COMMISSIONER MOLNAR: Okay.

835   The working document talks about pick-and-pay and also talks about build your own packages.

836   Have you come to a landing point on whether you believe that these are both necessary or if there's one that's more preferable?

837   I mean starting again under your presumption of, you know, the minimal amount of regulation to intrude on market forces. Everything, of course, that we do that defines how services are offered reduces the capability of the distribution companies to innovate and differentiate. So if we were to offer pick-and-pay, do you believe that meets the needs of flexibility for consumers?

838   MS DUPLANTIS: The Bureau's view is that the move to increase consumer choice and flexibility is very positive and we believe that is the driving factor here. We've not, as I've said, determined whether straight à la carte versus pick-and-pay versus build your own package is the right way to go, but we do fully support the increased choice that consumers will have under these plans.

839   COMMISSIONER MOLNAR: Do you have any position on whether it's either/or or it has to be both or -- I mean if both increases flexibility most, is that where you believe where it should land or...?

840   MS DUPLANTIS: Again, we think that, you know, the increased consumer choices is best. We've not come to a landing on whether it should be one, the other, or both of them together.

841   COMMISSIONER MOLNAR: Okay.

842   I'm going to move on to the area of vertical integration.

843   You have seen the working document. You've seen what's been laid out as a basic -- basic enhancements to the existing vertical integration framework.

844   MS DUPLANTIS: Yes.

845   COMMISSIONER MOLNAR: Are you comfortable with those? Do you believe that those will provide appropriate protection to the other players in the industry?

846   MS DUPLANTIS: We do think that the additions discussed in the working document are quite necessary, and we do support those options.

847   COMMISSIONER MOLNAR: You seem to indicate here that we need to go back and look at it again. I mean what's been laid out in the working document is, essentially, a -- you know, a full framework, if you will.

848   Do you see holes? Do you see gaps? Concerns?

849   MS DUPLANTIS: We don't see holes or gaps. I think our -- those comments were part of our initial submission, and we still are of the view that, you know, as I said, you're -- you have four options on the table right now, essentially, between your consumer choice, and so our view is that just constantly keeping in mind the dynamics at play between the different proposals are important to make sure that, you know, any adverse incentives are not created as a result of the proposals put forth.

850   COMMISSIONER MOLNAR: Okay.

851   Just on vertical integration, in the submission that you made you referenced particularly penetration-based rate cards as one of the concerns that could impact, you know, affiliation agreements and, ultimately, issues related to vertical integration, and you highlighted penetration-based rate cards.

852   Do you believe that penetration-based rate cards are an appropriate rating mechanism within the broadcasting industry?

853   MS DUPLANTIS: As you heard in my comment today, we've not made any particular submission today on whether or not they're good or bad.

854   COMMISSIONER MOLNAR: No, but you did reference it within --

855   MS DUPLANTIS: Right.

856   COMMISSIONER MOLNAR: -- your initial submission.

857   MS DUPLANTIS: Penetration-based rate cards are, you know, essentially a form of quantity discounts, and they can be quite beneficial if those quantity discounts get passed on to consumers. The Bureau's concern about penetration-based rate cards is that careful consideration needs to be exhibited when vertically integrated firms who may have market power use them to disadvantage downstream rivals. So it's still -- our concerns are always surrounding firms with market power and their ability to disadvantage others, so...

858   COMMISSIONER MOLNAR: So it's not the concept, it is the application, essentially, you have to look on it at a case-by-case basis?

859   MS DUPLANTIS: Exactly.

860   COMMISSIONER MOLNAR: Okay, thanks.

861   I just have one more question on the availability of information to consumers. I just am a little confused about your reference to restricting the content of advertising or other business practices.

862   What kind of advertising are you speaking of, just a BDU's ability to advertise its products and services in the market?

863   MS DUPLANTIS: Yes. I mean, one of the things the Bureau looks at is false and misleading advertising, it's one of the things that our Fair Business Practices Branch looks at, and so we're always worried about consumers being misled, so we are -- but we recognize the balance between misleading versus just having availability of information to consumers.

864   So we recognize the tradeoffs there. You don't want to restrict people from advertising, but you do want to make sure that consumers are protected and are fully informed of what they're purchasing, so...

865   COMMISSIONER MOLNAR: Okay. I'm just not sure if you have a particular concern with what might be contained in the -- if there is a BDU code of conduct put in place.

866   MS DUPLANTIS: I don't think we have a particular --

867   COMMISSIONER MOLNAR: You don't have anything, you're just --

868   MS DUPLANTIS: We don't have a particular current --

869   COMMISSIONER MOLNAR: -- identifying that's you're --

870   MS DUPLANTIS: Exactly, we're just recognizing that, you know, advertising --

871   COMMISSIONER MOLNAR: That's your area of expertise?

872   MS DUPLANTIS: Well, no, just that advertising is important to consumers and we don't want to restrict it in any way, shape or form, but we do feel that consumers sometimes need to be protected.

873   COMMISSIONER MOLNAR: Okay. Thank you.

874   Those are my questions.

875   THE CHAIRPERSON: Thank you.

876   Monsieur vice-président.

877   COMMISSIONER PENTEFOUNTAS: Merci. Briefly, thank you.

878   Comparisons are always and contrasts are always made at one's risk and peril. You've oftentimes referenced the Quebec model. Given that, if you have the example of a Quebec model where you're picking 30- out of, you know, a 50-channel universe as opposed to picking 30- on a 500-channel universe, the collateral damage is quite different and more expensive in the latter example than the prior.

879   So how good a comparison can you make between the Quebec model and the Canadian model given that?

880   MS DUPLANTIS: Every market is unique and has differences in it, as I think you're highlighting here. We feel that, you know, the Quebec model, while, yes, it is maybe a more limited number of channels, but it's still subject to the same regulatory controls that the rest of Canada is, and so we believe that comparison is probably more appropriate than the ones to the United States, where they have a very different regulatory regime.

881   So unfortunately they're not exact and they're not perfect comparisons, and so you do have limitations on any comparison you make, but we feel that might be a better comparison than to the regulatory issues in the United States.

882   You know, it was interesting. In one of the articles that have been put on the record, the author said that, you know, there was this pick-and-pay ability in Canada, but they did not want to use that. They could not use that market or there was regulations because they were so idiosyncratic, so they couldn't use that for their own predictions in the United States for what they thought could happen to pick-and-pay.

883   So I kind of see the flip side here, which is, you know, the U.S. is so very different. I'm not certain that it's the best comparison for us as using Quebec itself.

884   COMMISSIONER PENTEFOUNTAS: The flip side of that being Quebec may not be the best comparison either.

885   MS DUPLANTIS: Well, I don't think there's -- I mean there aren't very many markets out there that actually have pick-and-pay, so there almost are no comparisons, right? So you use the ones that are best -- or closest suited, understanding that they aren't necessarily exact.

886   COMMISSIONER PENTEFOUNTAS: Are you familiar with the MTS model, which has sort of a lot of little packages or mini packages?

887   MS DUPLANTIS: I have read their submission, yes.

888   COMMISSIONER PENTEFOUNTAS: Yeah. And how would that rate in terms of comparing Canada, the U.S., and Quebec?

889   MS DUPLANTIS: I will admit that I'm not -- I've read their submission, I don't -- I'm not an expert in their models and what they offer, but, you know, to the extent that they offer increased choice, we think that's a benefit to consumers.

890   COMMISSIONER PENTEFOUNTAS: Okay. Thank you so much.

891   THE CHAIRPERSON: Commissioner Simpson.

892   COMMISSIONER SIMPSON: Good morning.

893   I have an impression -- and I'd like you to comment on this impression that I have -- that in your submission overall, you've remained culturally agnostic and looked at the pure commercial and economic arguments that this commission is struggling with.

894   For example, in the area of genre removal, genre helps protect a certain aspect of the broadcasting system and helps us uphold the spirit of the Broadcast Act, which is nation-building and local reflection. I don't see any of that kind of concern in your submission and I'm wondering if you would comment on the cultural aspect of your recommendations that we might have to consider.

895   MS DUPLANTIS: The Bureau is obviously responsible for enforcing the Competition Act, which does not necessarily have an overt cultural component to it. We are concerned about, you know, maintaining and encouraging competition in Canada. So while we recognize that the Commission has several other public policy goals that they must, yeah, take into account, such as the cultural component of it, it's not been a part of our submission because we aren't experts in that area.

896   So, unfortunately, we don't really have anything to comment there on that.

897   COMMISSIONER SIMPSON: Okay.

898   Just on the pure economics of the cultural industry, you had referenced as an example that Apple had been a major player in helping unbundle music and make it much more of à la carte option of music choice available. But when you talk to the creative industry -- and I know this is not you wheelhouse, but it's certainly ours -- we hear time and time again that the artists have found that discovery of their product is more difficult, but, more importantly, that their economics have drastically changed.

899   You see that most of the music industry, the big players are out of -- almost out of business now, and that the artists are finding that their income is about 10 per cent derived from music sales and they're having to go back on the road to make a living and deriving as much as 90 per cent off of touring an t-shirt sales.

900   So does that concern you at all as having a potential equivalent impact to the television industry?

901   MS DUPLANTIS: I think that, you know, every industry has certain dynamics involved in it that will, you know, be at play. I don't know -- I recognize the parallels that you've highlighted to the broadcasting industry, and that, you know, I know in many submission that people have made some have said that, you know, there could be more difficulty being found, if you will.

902   You know, in the economics literature there's always talk about samples and making yourselves available. You can put things on sale all the time. So there are ways to get yourself out there.

903   But in terms of, you know, what impact this will have on, you know, those channels, as always it's hard to predict. We always still prefer increased competition wherever possible, and we advocate for that.

904   COMMISSIONER SIMPSON: My last question is purely in your wheelhouse, and it's to do with the economics of one of the recommendations.

905   In terms of unbundling, there's a lot of discussion about the potential of unbundling causing individual à la carte choices to become more expensive, that bundling does have some economic value in that you may have to buy five of something to get the one you want.

906   But should over the course of this next two weeks discover that unbundling has the negative consequence of a consumer having to pay more for the one channel they do want, what would be your view as to which is better for the consumer: to pay 10 bucks for five stations to get the one they want or to pay 5 to 10 bucks for one station and not get the other four? Do you have a basic view on that?

907   MS DUPLANTIS: I think that, you know, consumer preferences are idiosyncratic, and so some consumers would prefer the ability to have, you know, the small package and choose the one channel they want and others would prefer to have a larger package and not watch the rest of the channels and have the ability to channel surf.

908   You know, I think this is the key point into why the economics literature is not definitive on whether or not it's -- you know, consumers can benefit or not, because it really is going to depend on all of the different dynamics at play here.

909   You know, bundling in and of itself is a form of price discrimination, so the broadcaster is able to extract more of that consumer value from the consumer. You know, it's a balancing act between the two: if the broadcaster makes more money, the consumer has to pay more; if the broadcaster makes less, the consumer gets to keep more of their own money. Where we land at the end of the day is difficult to predict at this point.

910   COMMISSIONER SIMPSON: Thank you.

911   THE CHAIRPERSON: Mr. Vice-Chair.

912   COMMISSIONER PENTEFOUNTAS: Given your concern for anti-competitive behaviour, what would be the appropriateness of offering additional protections to independent Cat As in a world where genre exclusivity is set aside?

913   MS DUPLANTIS: I'm sorry, could you repeat the question?

914   COMMISSIONER PENTEFOUNTAS: Well, one of the issues we raised and that you addressed was the idea of genre exclusivity --

915   MS DUPLANTIS: Yeah.

916   COMMISSIONER PENTEFOUNTAS: -- and genre protection, and eliminating those protections.

917   Would it be appropriate in a vertically integrated world that additional protections be offered to formerly category A-protected genres that are independent and that are not owned by VI entities?

918   MS DUPLANTIS: That's a very good question.

919   You know, we -- the Bureau always advocates for more competition whenever possible. I think that in this instance we have historically always advocated for the elimination of genre exclusivity because we believe that, you know, channels should be able to compete and be able to adapt their programming to consumer taste and demand.

920   I don't know whether or not additional safeguards would be appropriate at this stage. It's not something we've thought through a lot. We haven't thought about whether or not individual ones -- certain ones should be protected -- remain protected. We have typically come to the view that the elimination would be best, so that way we have the increased competition available to offer consumers better quality programming and choices.

921   COMMISSIONER PENTEFOUNTAS: I understand that concern, but you're also preoccupied by anti-competitive behaviour.

922   Would you please undertake to answer that question before the 19th -- is that the final, Mr. Chairman, in terms of date?

923   MR. CHAPLAN: Sure, we'll get back to you with an answer. The answer may be, of course, equivocal at the end of the day, depending on how we think it through, but we'll provide you with an answer.

924   COMMISSIONER PENTEFOUNTAS: Well, take your time and think about it. Thank you.

925   THE CHAIRPERSON: I think the vice-chair is asking, you know, because you've got competing competitive questions in your mind. It's fine to open up the retail market, but it may have a anti-competitive activity at the wholesale market, and I think that's what he's trying to get to. So if you can back to that for the 19th that would be excellent.

926   Thank you.

927   MR. CAPLAN: Certainly.

Undertaking

928   THE CHAIRPERSON: I don't believe we have any other questions for you. Thank you very much.

929   MS DUPLANTIS: Thank you.

930   THE CHAIRPERSON: We're going to take a lunch break till 1:30.

931   Donc, nous sommes ajournés jusqu'à 13 h 30. Merci.

--- Upon recessing at 1233

--- Upon resuming at 1330

932   LE PRÉSIDENT: À l'ordre, s'il vous plaît. Madame la Secrétaire.

933   THE SECRETARY: Thank you. We will now hear the presentation of the Ontario Ministry of Tourism, Culture and Sport. Please introduce yourself and you have ten minutes for your presentation. Thank you.

934   Please turn on your mike. Thank you.

PRESENTATION

935   MR. FINNERTY: Mr. Chairman, Commissioners and Staff. Hello everyone. Bonjour.

936   My name is Kevin Finnerty. I am the Assistant Deputy Minister of the Ministry of Tourism, Culture and Sport and I am here today on behalf of our Minister, the Honourable Michael Coteau.

937   Le Ministre Coteau m'a demandé de vous transmettre ses regrets. Malheureusement, cette audience coïncide avec la Conférence fédérale, provinciale, territoriale des ministres responsables du Tourisme et de la culture à l'Ile-du-Prince-Édouard, et de vous dire qu'il reconnaît l'importance de la présente audience pour l'avenir du Système canadien de la télévision et la prospérité culturelle et économique du pays.

938   I am pleased to introduce our presentation team to you. On my left, John Parsons, Team Lead for the Creative Cluster Policy Unit. And on my right, Deborah Smith-Webber, Senior Policy Advisor for the creative Cluster Policy Unit.

939   I would now like to begin our formal presentation.

940   On behalf of the ministry, I want to say we appreciate the opportunity to participate in this proceeding to review Canada's TV regulatory framework.

941   This review is a vital opportunity to chart a new course for the future. The outcomes will be felt across Canada's broadcasting and screen-based sectors and Ontario's Entertainment and Creative Cluster, which I will call the "Cluster" for ease of reference.

942   I would like to address the importance of TV broadcasting to Ontario's economy and the ministry's recommendations on how to ensure its long-term viability in a rapidly evolving, globalized, competitive environment.

943   I would like to clarify that the ministry is using the term "TV" in the same way we understand that CRTC uses it, as an umbrella term for both traditional and new media TV.

944   The broadcasting and screen-based industries are a key component of Ontario's Cluster, which is a significant driver of economic value and growth. The Cluster employs over 200,000 people in Ontario and generates over $12 billion in direct industry GDP.

945   The success of Ontario's Cluster is critical as we move forward into a future where our stories are increasingly being shared through new forms of media. And the cultural and economic heart that feeds a vibrant Ontario Cluster and Canadian broadcasting system is Canadian content.

946   In 2013, Cancon accounted for 50 per cent of Ontario's total film and television production volume, generating close for $1.2 billion.

947   Le contenu canadien est également important dans la mesure où il joue un rôle crucial dans le maintien de l'identité culturelle des Ontariens et des Canadiens.

948   The success of Ontario's screen-based industries and Cancon programming in particular depends on the continued health of the entire Canadian broadcasting system.

949   Rapid technological change and globalization in the TV broadcasting sector have presented their share of opportunities and challenges.

950   The ministry is looking toward a future on-demand media universe where audiovisual content is king and the type of delivery platform it is produced for, and the screen it is watched on, is immaterial.

951   At that time, the primary goal will be to optimize the overall success of Cancon programming across platforms and screens.

952   The ministry believes that in the next five years, the rapidly evolving broadcasting environment will demand that public policy-makers at all levels of government be able to properly navigate this transformation, whose characteristics and timing we cannot fully anticipate.

953   This will be necessary so that we can assist the industry in continuing to develop a skilled workforce, remain competitive and embrace new business strategies.

954   In particular, the ministry believes that proper guidance by policymakers will be essential to maintain current levels of success for Cancan and ideally, to increase its success. The ministry's suggested approach to change is therefore a balanced one that promotes broadcasting policy objectives while responding to Canadians' wants and needs.

955   Le meilleur moyen de répondre à ces souhaits et à ces besoins consiste à maximiser la valeur pour les consommateurs, c'est-à-dire en leur offrant choix et souplesse à un coût abordable.

956   The ministry suggests an approach that is based on available evidence and that builds on the success of the TV broadcasting system and Cancon to date. And the ministry suggests pursuing evolutionary reform, to address only those areas needing immediate improvement in regulatory policy.

957   To that end, the ministry has developed 29 recommendations that focus on the proper strategic revisions to the TV regulatory framework.

958   The ministry believes that the CRTC should prioritize the policy objectives set out in the Broadcasting Act, objectives which can be organized under three basic categories or baskets.

959   One: A Canadian broadcasting system, a system owned and controlled by Canadians.

960   Two: A competitive, accessible and diverse system.

961   Three: Cancon that is produced, available and accessible, including a significant amount that is independently produced.

962   This last objective, Cancon, is one of critical importance and is ultimately the overarching policy objective of the Broadcasting Act.

963   The ministry also believes that preserving the Canadian program rights market, which baskets one and two support, is crucial because a separate and distinct Canadian program rights market is the prerequisite for a healthy Canadian broadcasting system.

964   The CRTC has established a variety of regulatory interventions that work to support each of these three baskets of broadcasting policy objectives.

965   The ministry is concerned with certain of the Commission's proposed changes to key regulatory interventions across the baskets that risk unravelling the regulatory framework which has ensured the success of a TV system and Cancon to date.

966   In basket one, the ministry is concerned about changes to barriers to direct foreign entry, the preponderance rule and simultaneous substitution.

967   In basket two, the ministry is concerned about changes to genre exclusivity for Category A pay and specialty services, and to TV BDU packaging.

968   And in basket three, the ministry is concerned about changes to TV system Cancon regulatory supports and inaction on new media TV system Cancon regulatory supports.

969   Collectively, this potential regulatory change and inaction in key areas could erode the Canadian program rights market and negatively impact Canadian broadcasting industry players and the success of Cancon.

970   According to Peter Miller's recent report, Canadian Television - An Environmental Scan 2014, in a worst case scenario the CRTC's proposed changes could include the following anticipated negative economic impacts.

971   B 2020, a loss of 12,550 direct and spin-off jobs, including 4,940 direct TV production jobs and 7,610 spin-off jobs in other sectors.

972   In 2020, a loss of $740 million in GDP. This includes $297 million in direct GDP within the TV production sector and $442 million in spin-off GD; in other sectors.

973   A $338 million decrease in production financing for new, original Cancon in 2015, rising to over $570 million by 2020.

974   This potential significant job loss conflicts with the October 2013 Throne Speech, which indicated that the Government of Canada "will require channels to be unbundled, while protecting Canadian jobs".

975   Les recommandations du Ministère font en sorte que tout nouveau cadre réglementaire de ladite diffusion préserve les marchés canadiens de droits de programmation maintient ou augmente au niveau du succès du contenu canadien et maximise la souplesse des entreprises de la radiodiffusion et de distribution, des occasions offertes aux producteurs, en particulier les producteurs indépendants; la valeur des services de radiodiffusion et le choix du contenu canadien auxquels les consommateurs ont accès.

976   The ministry suggests that the CRTC enhance competitive safeguards for industry and consumers. Specifically, the CRTC should: Introduce a TV BDU-subscriber code of conduct; Consider expanding the prohibition on exclusive programming to make-for-new media programs; and ensure the establishment of an audience measurement system

977   Second, the CRTC should include new media broadcasting activities in calculating TV broadcaster Cancon financial obligations and introduce TV system Cancon promotional obligations.

978   Finally, the ministry recommends that the CRTC put thresholds in place now that would permit future Cancon financial obligations for foreign over-the-top providers, as soon as the evidence warrants.

979   These Cancon financial obligations for foreign over-the-top providers should be addressed as soon as possible in a separate proceeding.

980   Extending these obligations to new media TV when the evidence warrants would help to increase regulatory symmetry with traditional TV.

981   And let me emphasize that these future obligations would be a reciprocal contribution to the Canadian broadcasting system by foreign over-the-top providers.

982   All broadcasting undertakings that benefit, financially or otherwise, from delivering programming to Canadians should contribute, financially or otherwise, to the Canadian broadcasting system and to achieving our broadcasting policy objectives.

983   De plus, le CRTC devrait s'assurer que les intervenants de l'industrie qui bénéficient de protections prévues par la réglementation ont également des obligations réglementaires réciproques.

984   The traditional TV system in Canada is licensed and heavily regulated, while the new media television system is unlicensed and lightly regulated. In order to create a more level playing field, the ministry recommends decreasing this regulatory imbalance.

985   The ministry believes that the best way to accomplish this is to expand the regulation of new media TV, rather than by lightening the current regulation of traditional TV.

986   In our view, lightening the current regulation of traditional TV would not be advantageous. This is because the current level of traditional TV regulation is essential to maintaining a healthy Ontario Cluster and Canadian broadcasting system, and it is essential to ensure that we can achieve the three baskets of priority broadcasting policy objectives.

987   Taken together, the ministry's recommendations represent a balanced approach that promotes the objectives of the Broadcasting Act while responding to Canadians' wants and needs.

988   By striking the right balance, we will support the continued development of a strong TV broadcasting sector that champions Cancon, makes cultural contributions to the Canadian broadcasting system, and contributes to our economic prosperity.

989   Thank you again, Commissioners, for the opportunity to participate today. I am happy to answer any questions that you might have.

990   THE PRESIDENT: Thank you. Just before I pass you over to Commissioner Simpson, I just want to make sure, when you say "the ministry", are you speaking on behalf of just the ministry, the Minister or the Government of Ontario?

991   MR. FINNERTY: I am speaking on behalf of the Government of Ontario.

992   THE PRESIDENT: Thank you. Commissioner Simpson.

993   COMMISSIONER SIMPSON: Thank you very much, Mr. Finnerty.

994   In your written submission of a few weeks ago, you made a journal statement that you support the idea of a technologically agnostic content centric platform, that that's where you feel the world is going to land and where we should probably land as well.

995   What does that look like from the standpoint of who the players are because we've heard this morning that a major player like Google does not see themselves as a broadcaster. They see themselves as a centrally information technology company.

996   And yet, you have other companies here who are stakeholders in the broadcasting industry who see themselves as broadcasters. And then, you have the OTT animal in the middle, which is a little bit of both.

997   So, what does this agnostic, technologically agnostic content centric platform look like?

998   MR. FINNERTY: Well, thank you for the question. Well, we don't have a crystal ball, so -- but certainly all the factors and all the players you describe, in our view, would be part of the future broadcasting system.

999   We think that for the foreseeable future, that the traditional system and the new media system will continue to coexist. We see a continued shift of viewers from traditional system to media system, which is why we make a few recommendations in that regard of new media because we do see that the future is an on-demand one where audiovisual content is king and the platform that's delivered on is agnostic.

1000   But I found in the past my predictions on crystal balls have not come forth, but certainly it's our best prediction based on the evidence that is available to us.

1001   COMMISSIONER SIMPSON: Okay. Thank you. In your view, as purported a few weeks ago, you made -- I am paraphrasing your categoric statement -- that the broadcasting system, Canadian Broadcasting System is alive and well as far as you are concerned.

1002   But I would like to understand the foremost of what you mean by that because if it is indeed alive and well, why are we here?

1003   MR. FINNERTY: Well, we have had great success today, up to date, until now. However, it's pretty clear even since we submitted our written evidence in June, that more recent reports have come out, specifically the CRTC's report last week indicating that revenues are starting to decline in traditional system and that many prognosticators indicate that we are moving towards a future online world.

1004   So, I think it behooves us to get ready for that world now, rather than wait until the changes are upon us and that we are acting in a crisis mode.

1005   So, we've had great success today. I think that these hearings are being held in an opportune time to be able to address the fundamentals of the system, so that we can actually change the regulatory system now so we can avoid the crisis of the future.

1006   COMMISSIONER SIMPSON: Okay. Thank you. Let's put our crystal ball hats or thin hats or whatever on and because you are in a unique position where you are representing a creation industry and economy, the Ontario Cluster.

1007   Currently, the system has sort of a symbionic relationship where those that are regulated, which are functionally broadcasters and broadcaster distributors, contribute to a system that you have a counter-system too for the purpose of finding funding per content creation.

1008   Now, in this new world, five years from now, two years from now, ten years from now, is there room for a broadcaster in an online world, in an on-demand world, broadcaster that creates, takes responsibility for creating a content and curating content, fulfilling the obligations of a Broadcast Act or do you see the potential of this new world wanting to move away from regulation for the ability to get on incumbered and do more of what the customers seem to say they want?

1009   And how would that affect your business model when you are dealing with the Google, for example, instead of the Shaw?

1010   MR. FINNERTY: Well, I think that our position is that here, regardless of the platform it is delivered on, we continue to support measures that would ensure that Cancon is created, promoted and viewed by Canadians. And in fact, we, ourselves, have done a lot of policy work in what the impact of the digital world means for all of our creative industries.

1011   So, earlier today, there was a good discussion about the music industry and how it has been impacted by this type of situation. Well, part of the government's response to that was in fact to create the Ontario Music Fund and which was announced in the 2013 budget, to be able to fund some new activities, particularly in your live space and even some experiments in discover ability to be able to ensure that Canadians discover and access to music in the future.

1012   So, through our funding regimes on our granting side we have done some work to actually ship our models as well. We have had extensive interaction with the interactive digital media sector in the past year and that initiates well, which is going to a significant change.

1013   It's cheaper than ever before to create and distribute games online, conversely it's harder than ever before to discover those games. So, it's another sector that is grabbling with the discover ability challenge.

1014   And, in my view, in the future, we will need broadcasters because one of the things that has come forward in consumer research, we have seen over and over again, is that there are so many choices that it's hard to be guided anymore. And I think that there will be a world for creation in the future, especially as more and more options are offered online.

1015   COMMISSIONER SIMPSON: Uh-huh. And with that, I presume you too then support the idea of regulations in that online world to that online broadcaster that also would have them fulfil PNI and the CPEE and other requirements that would ensure success?

1016   MR. FINNERTY: Yes, we do. We make that clear in our written submission and we reinforced that again today, that because we are platform agnostic and we believe that regulatory measures have worked in the past to ensure the success of Cancon, that we believe that those measures are required in the future to ensure similar levels of success.

1017   COMMISSIONER SIMPSON: Okay.

1018   You had also said that in an evidence-based process such as this the need for regulation should be weighed against the issue of policy failure.

1019   I understand that very clearly, but how in a non-streaming on-demand world do we measure success if we start regulating new media? How do you regulate a server? I mean, you can regulate a 24-hour broadcast wheel.

1020   MR. FINNERTY: Well, in fact there are models that have been applied in other jurisdictions where regulation has taken place and they were referred to this morning. We don't have the answers in all the technical issues, but we do believe that there are answers to these dilemmas. There is in fact regulations about content, there can be regulations about availability and there is a whole array of supports that we recommend that can be put into place to ensure that Cancon continues to be made available to Canadians and that the jobs linked to those Cancon requirements continue to grow and thrive and that Canadians continue to get access to those vital stories about themselves and their futures.

1021   COMMISSIONER SIMPSON: Nice segue, because the next question is on jobs.

1022   It's very understandable that you are advocating support for a very important industry, not just by virtue of its size in Ontario, but the importance of the work it does, but do you find that when you say that in spite of some recognized consumer dissatisfaction you don't see the need for regulatory reform, are you basically saying that the creative industry and its needs and the need for nation-building through broadcasting trumps consumer needs?

1023   MR. FINNERTY: Well, in fact we do recognize the need for regulatory reform and we did propose regulatory changes across three of the regulatory baskets that I described in my presentation.

1024   So we did recommend the enhancement of competitive safeguards for consumers, both through the BDU Subscriber Code of Conduct and the establishment of an audience measurement system, and I will say that both those items are included in the CRTC's proposed scoping document, and we acknowledge that and thank you for that.

1025   We also propose the CRTC should consider expanding a prohibition on exclusive programming to made-for new media programs.

1026   The second area that we propose changes in including new media broadcast activities in calculating TV broadcaster Cancon financial obligations, as well as introducing TV system Cancon promotional obligations.

1027   Finally, in the new media world we recommend that the CRTC put thresholds in place now that would permit future Cancon financial obligations for foreign over-the-top providers as soon as the evidence warrants. We recommend that these Cancon financial obligations for foreign over-the-top providers be addressed as soon as possible in a separate proceeding.

1028   So we in fact believe we propose a balanced package which does recommend significant change to the current system and response to the developments we have seen, but also an adherence with the policy objectives set out in the Broadcasting Act.

1029   COMMISSIONER SIMPSON: Yes. I'm still struggling with the idea of -- your proposal was fulsome and in 29 recommendations coming out of it are appreciated, but I'm still struggling with the idea of how -- I see very clearly that your arguments with respect to wanting to broaden a regulation to include new media for the purposes of ensuring that these industries contribute to the spirit and the intent of the Act, but I'm still struggling with the notion of how content is going to be ensured to be seen on the other end, you know, which is -- because what's driving so much of this hearing is not the industry coming forward wanting a change to the status quo, but the consumer indicating that they want more choice. That starts to tamper with all the models that you are here to try and protect and actually increase protection of.

1030   So again, I'm grappling with the idea of how we measure success. Putting a consumer code in place protects the consumer, but is usually just more relegated to the financial relationship between the BDU and their provision of content services, but it doesn't necessarily result in that content being consumed the way we can control it now through regulation.

1031   MS SMITH-WEBBER: Hi.

1032   COMMISSIONER SIMPSON: Hi.

1033   MS SMITH-WEBBER: So I think there are two points that you are getting at, if I'm correct. One of them would be the issue of our recommendation about Cancon promotional obligations --

1034   COMMISSIONER SIMPSON: Yes.

1035   MS SMITH-WEBBER: -- which I think the ADM can speak to some more.

1036   But with respect to consumer, we do recognize in our submission that notwithstanding the fundamentals of the TV system being sound, and notwithstanding the successes that we see and that we document, that we understand the consumers are dissatisfied with certain aspects of the system and they do say that they want more choice.

1037   Our position is that the proper objective here is to maximize consumer value and that we are uncertain that some of the proposals that we have seen, both before and in the scoping document, would actually achieve that objective.

1038   COMMISSIONER SIMPSON: Thank you.

1039   I'm sorry, Mr. Finnerty, did you want to add to that?

1040   MR. FINNERTY: No, I'm fine.

1041   COMMISSIONER SIMPSON: Okay.

1042   MR. FINNERTY: I will wait for the follow-up question.

1043   COMMISSIONER SIMPSON: Okay. Yes, I was hinting at promotion as a part of my line of questioning.

1044   But you had referenced that more promotion is needed and I think we all recognize that discovery through new media tools like a social media have been not only helpful in new media content being seen, but also has been a significant contributor to conventional TV getting better discovery, but you had said, though, that in the world that you want, if money was to be dedicated through CPE sources to promotion that it should not impede the existing available fund for production.

1045   So where does that money come from? Is that from the new media guys or is it because we expand the universe of money that you are able to draw from? Where does it come from?

1046   MR. FINNERTY: Well, that's something that would have to be addressed through the evolving business models, but we certainly do not want to see promotional obligations to detract away from Cancon production, because that production is the heart of economic and creative cluster, it's the source of the jobs I described earlier, and if we detract from that to fund promotional obligations they are recommending we will have a major impact on jobs. Those jobs are important to Ontario's economy. It's a sector of the economy that's growing faster than the rest of our economy and we want to continue to see that growth. So we do advocate for increased promotional obligations.

1047   In terms of how that should look, we don't know. We have had a lot of engagement with the entire entertainment and creative cluster over the past several years. Every industry we have spoken to is grappling with the issue of dicoverability in an online digital world and no one has come up with the magic solution. There are many experiments out there being tried.

1048   You alluded to social media and there are many social media tools being used by the music industry with a mixed record of results and I think this is an area that we collectively need to do more work in.

1049   COMMISSIONER SIMPSON: Yes.

1050   If I may move on to PNI for a minute, you had referenced that investment in PNI, because of the economy of scale of Canada, it's a tough slog to get your money back, and yet we see PNI as being one of the cornerstones of what the Act is all about with respect to, you know, bringing Canadian identity and expression forward.

1051   Would you give me a sense of how important our considerations are with respect to PNI, that if we were to lighten the regulatory burden on PNI, what kind of a financial impact would that have, given that broadcasters are already having a tough enough time getting cost recovery on those expenditures?

1052   MS SMITH-WEBBER: So I think to start it's important to note that PNI is very important to Ontario, especially to its independent production sector, which specializes in the genres that are currently captured under PNI.

1053   That said, we were very happy to see the scoping document include kids content as a PNI genre and we also do acknowledge that some of the other interveners will speaking more about evidence indicating that there are some at-risk PNI genres.

1054   So all of that said, we were very happy to see that the CPE and PNI regime in a scoping document appears to still be in place. That is certainly something that we welcome.

1055   MR. FINNERTY: Okay.

1056   COMMISSIONER SIMPSON: All right.

1057   I think my last question has to do with asking you to unpack your view on elimination of genre as a potential outcome of this process.

1058   You had made many inferences to the negative impacts of removal of genre because largely genre protection protects the Category As to the extent that it does, but you were saying something in your written submission that there would be a knock-on effect of genre removal with respect to a reduction in expenditures because there would be less need for higher quality programs.

1059   Did I understand that correctly?

1060   MR. FINNERTY: No. I think our position on Cat. A specialty services is that we recommend that the existing regulatory protections and obligations for a Cat A specialty pay and TV services remain in place, at least until the expiry of current license terms. And if those protections were to be done away with, there should be a modified genre exclusivity policy for interveners that we could examine hopefully over the course of the proceedings. That's what we recommended in June.

1061   COMMISSIONER SIMPSON: Yes.

1062   MR. FINNERTY: The reasons for this recommendation is that the Cat. A specialty services have the heaviest Cancon financial obligations and, in our view, play a vital role in Ontario's entertainment and creative cluster, particular when it comes, as Deborah said earlier, to independent broadcasting. So doing away with that protection would have a major impact on the production of Canadian content with a resultant impact on jobs and, we would also argue, an impact on the availability of that content to Canadians. So for that reason we have recommended the existing protections stay in place.

1063   COMMISSIONER SIMPSON: Okay.

1064   My last question, Mr. Chair, has to do with actually a portion of the CMPA submission to the process where they had made a statement that the introduction of pick-and-pay in some form, or pick-a-pack, but let's say pick-and-pay, would have a major negative impact to independent producers because those producers don't, for the most part, have affiliation relationships with broadcasters. I was wondering if you would comment on that?

1065   MR. FINNERTY: Well, in our submission we made clear that we had concerns over any form of mandated unbundling for the following reasons. There is very limited evidence that would actually result in lower consumer prices, very little evidence that it would actually result in greater consumer choice, and a great deal of evidence indicating that it would have an impact on a production of Cancon, and of course a resulting impact on jobs and the ECC, as well as an impact on the availability of Cancon for Canadians writ large.

1066   So we didn't take a position on what a TV BDU packaging model should be, but we do have concerns about any form of mandated unbundling.

1067   COMMISSIONER SIMPSON: Would that also include any modifications to bundles? I'm sorry, I think I may not have heard you clearly. So you are not in favour of unbundling at all or --

1068   MR. FINNERTY: In our submission that we provided in June we looked at what was on the record at that time, so we have concerns about any form of mandated unbundling. However, at that time there were two models in play --

1069   COMMISSIONER SIMPSON: That's what I'm asking.

1070   MR. FINNERTY: -- there was a pure pick-and-pay model as well as the hybrid model that was proposed by the CRTC at that time.

1071   If forced to choose between those two we would have supported in principal the hybrid model that the CRTC had advocated at that time and my colleague Deborah can describe a little bit more what that means.

1072   COMMISSIONER SIMPSON: Thank you. I'm trying to understand whether there is a modified view with respect to middle ground here on bundling.

1073   MS SMITH-WEBBER: So the hybrid model that the Commission had proposed consisted of a mandated skinny basic, plus effectively pick-and-pay, plus pick-a-pack, plus pre-assembled packages. So our starting point was to question whether or not mandated unbundling is necessary, given the fact that evidence was placed on the record that it appears that Canadians have more choice than their American counterparts. That would be a starting point for us.

1074   The second thing would be that again we need to be talking about maximizing value for consumers and we have yet to see, including on the new evidence that was supplied both last week and in the course of other intervener's written submissions, evidence that indicates that maximum value would definitely be achieved and the concerns that we were speaking about with respect to the hybrid model which would be exacerbated by a pure pick-and-pay model would include negative impacts on diversity and the number of programming services and obviously in the context of pay and specialties with genre protection.

1075   So I think there are a number of concerns that we have that are with the hybrid model per se and then a number of other considerations that would come into play if the other changes were made as well.

1076   But in light of the fact that there would be probably fewer programming services, therefore less support for Cancon, therefore the slippery slope that the ADM was referring to.

1077   COMMISSIONER SIMPSON: So unless you see something better you're going to stay with the position, okay.

1078   Thank you, very much.

1079   THE CHAIRPERSON: Mr. Finnerty, I appreciate your position because I have been an Assistant Deputy Minister as well and I understand the Minister has to attend FPT meetings, those are important as well, particularly in PEI and on the 150th anniversary of the Charlottetown Conference, but I can't prevent myself from asking a question based on a statement you have put on page 9 of your presentation this morning. You say, in the second bullet there on the paper version:

"The Ministry believes..."

1080   And I think we have agreed earlier that I can put in "The Government of Ontario believes"

"... the best way to accomplish this..."

1081   That is and even playing field:

"... is to expand the regulation of new media TV, rather than by lightening the current regulation of traditional TV."

1082   To put a blunt face on it, you are inviting the CRTC to regulate Google, YouTube and Netflix, aren't you, and what advice will you be giving your Minister later on today when the potential headline is, "Government of Ontario wants to tax Netflix" or "Government of Ontario wants to regulate the Internet"?

1083   MR. FINNERTY: Well, in fact what we recommend is that new media broadcasting activities be regulated. We did not recommend that the Internet be regulated, but we are very clear in our submission, both our written submission and in today's presentation, that we believe that new media broadcasting activity should be regulated to support the principles of the Broadcasting Act and to support Ontario's very important entertainment and creative cluster.

1084   THE CHAIRPERSON: So you will agree with me, though, that the activities on Netflix, on YouTube and some other online activities is clearly broadcasting subject to the Digital Exemption Order, so by saying what you have said you are in fact asking us to regulate directly those entities.

1085   MR. FINNERTY: We are asking you to regulate the new media broadcasting activities that are carried out by foreign over-the-top providers such as Netflix.

1086   THE CHAIRPERSON: Does the Government of Ontario currently receive any tax revenues from the purpose online of audio-visual content by Ontario residents, including purchases, let's say through an SVOD or anything like iTunes or Netflix or the YouTube ad revenues we heard about earlier this morning?

1087   MR. FINNERTY: I'll ask my colleague, John Parsons, to respond to that question.

1088   MR. PARSONS: Some services are subject to HST depending on who is collecting them, others the government doesn't receive sales tax from. Of course, these are also corporate entities that have offices in Ontario as well and may be subject to forms of other taxation.

1089   THE CHAIRPERSON: Can you give a sense of how much tax revenues the Government of Ontario receives, for instance by both Canadian and foreign online companies that are providing services or downloads to Canadians in Ontario?

1090   MR. PARSONS: We don't have that information with us. We could undertake to see what we could dig out and supply in time for these proceedings.

1091   THE CHAIRPERSON: For the undertaking. So you are taking an undertaking for the 19th of September; is that correct?

1092   MR. PARSONS: Yes.

Undertaking

1093   THE CHAIRPERSON: Thank you very much.

1094   Those are our questions; thank you.

1095   Madame la Secrétaire...?

1096   LA SECRÉTAIRE : Merci.

1097   I will now ask Zachary Kornblum to come to the presentation table.

--- Pause

1098   THE SECRETARY: Mr. Kornblum, you have 10 minutes to make your presentation.

1099   Thank you.

PRESENTATION

1100   MR. KORNBLUM: Thank you.

1101   Good afternoon and thank you for having me here today. My name is Zachary Kornblum and I am here to speak with you as a young Canadian who is very interested in the future of Canadian broadcasting.

1102   I'm currently in a combined law and MBA program with a focus on media and entertainment. Over the past year I have studied Communications Law at Osgoode Hall Law School and Broadcast Management at the Schulich School of Business. It's my understanding, Mr. Chairman, that you yourself have spoken with Schulich classes in the past. I have also attended various industry events and spoken to representatives from across the broadcasting and production industries.

1103   In my submission, I made a number of points, however I have chosen to narrow my discussion here today down to just two subjects, re-evaluating the New Media Exemption Order in order to prepare the Canadian broadcasting system for the future, and extending the Vertical Integration Code in order to adapt to changes proposed in the Notice of Consultation.

1104   I would like to begin with my firm conviction that the Commission must re-evaluate the New Media Exemption Order and begin to regulate Over the Top services that are analogous to traditional broadcasting.

1105   In general, there are two prevailing views on the impact of OTT services on traditional broadcasters. There are some who look at the new services and think they will mean the end of traditional broadcasting. On the other hand, there are those who look at the data, which does not show significant reductions in consumption of traditional broadcasting, and think that OTT services merely augment the existing system, rather than threatening to replace it.

1106   I submit to the Commission that while there is not an immediate crisis there are several trends occurring that could endanger the future of Canadian broadcasting if new regulations aren't put in place.

1107   A 2013 Royal Bank Industry Analysis suggests that the tipping point will arrive between 2017 and 2019, at which time the Canadian broadcasting ecosystem will shift. The report looks at four trends that will intersect: a majority of users will have access to very high Internet speeds; Internet-enabled televisions will become common in Canadian households; OTT services will have reached 20 percent penetration; and these services will command purchasing power at least equal to that of Canadian broadcasters. At that moment OTT services will become viable substitutes for traditional BDUs and will begin to directly affect margins.

1108   We are already seeing the emergence of economically viable OTT services like Netflix, Amazon, and iTunes. Rogers and Shaw have developed their own OTT service called "Shomi", which has the additional capability of playing through users set-top boxes. These services are large commercial ventures that are analogous to VOD offerings, but are not subject to the same regulations.

1109   I am also concerned that other services may emerge playing live-to-air content. In the U.S., DirectTV is selling its NFL Sunday Ticket programming Over the Top to American consumers who cannot subscribe to their services, such as people who live in apartment buildings or are outside the range of their satellite signals.

1110   We are entering an age when new media and traditional platforms stream the same content through the same fibre networks and are played on the same television sets. BDUs and broadcasters, both domestic and foreign, should not be able to bypass regulation based on a mere semantic difference.

1111   When discussing the possibility of changing NMEO, you yourself, Mr. Chairman, were quoted saying:

"We cannot regulate the unregulatable."

1112   By this I understand you to have meant that the Internet is vast with millions and millions of people uploading and downloading content with little regard for national boundaries.

1113   While it may be impossible to regulate the Internet as a whole, if one narrows the focus the task becomes more reasonable.

1114   The CRTC should regulate online commercial video services that distribute long form content with the intention of profiting within the Canadian system. We can target services that either sell to Canadian subscribers directly, with subscription fees, or intend to profit off of Canadian consumers by selling to Canadian advertisers. If a person or corporation is participant in commercial activity in Canada and wants to continue to do so legally, it should have to adhere to the local laws.

1115   I worry that we're developing a two-tier system where domestic players who contribute the most, in terms of jobs, infrastructure, and cultural production, are having far greater burdens put on them when compared to those who contribute very little to our nation.

1116   All services, over-the-top or otherwise, who act like Canadian broadcasters ought to follow the same rules set out for Canadian broadcasters and, at the very least, adhere to CanCon requirements and have the option to devote 5% of their Canadian revenue to producing Canadian programming or give that 5% to the CMF.

1117   In 1999, when the mew media exemption order was first put forward, it was found that the Commission does indeed have the power to regulate video content over the Internet, but chose not to do so because it was felt that new media was still in its infancy and they wanted to allow it to develop.

1118   At the time, I believe it was the correct decision. If we turn our minds back to 1999, the Internet was not what it is today. We didn't have smart TVs, the Internet was painfully slow, and video streaming was still not necessarily a practicality for large offerings like we have today. Now, we have OTT services that we can watch and interface with and not be able to tell the difference between them and traditional offerings.

1119   The new media exemption order needs to be amended so that we can guarantee the health and viability of the Canadian broadcasting system, in the future.

1120   The second issue I would like to discuss with you is my belief that in order to maintain the integrity and diversity of the Canadian broadcasting system in the face of systematic changes such as moving to a pick-and-pay packaging system and eliminating genre exclusivity, the Vertical Integration Code will need to be extended to prevent activities such as anti-competitive behaviour, price-based discrimination, and showing undue preference towards American programming services and vertically-integrated programming services.

1121   BDUs are in a position of power and since many are now highly invested in the programming side, they have both the means and the motivation to act in an anti-competitive manner. Since BDUs are the ones who control the system, in a pick-and-pay environment, they will have even more power and the ability to distort natural market forces in new ways.

1122   I believe that it is the Commission's responsibility to make sure that they do not abuse this power. The Vertical Integration Code can be used to prevent BDUs from abusing their power over bundling, subscription mechanisms, and pricing.

1123   I also support the proposal recently circulated by the Commission, that vertically-integrated BDUs should be required to offer at least one independent Canadian service for every two related services offered on their network.

1124   If genre exclusivity is eliminated and foreign programming undertakings are given greater access to the Canadian market, as was proposed in the Notice of Consultation, I submit that the Vertical Integration Code should be amended to somehow treat foreign services the same as integrated services.

1125   In my submission, I discuss the benefits of the Commission's proposal to move away from the genre exclusivity system.

1126   But it is also important to remember that these provisions did serve a purpose to prevent the very real possibility that Canadian BDUs either wishing to bypass and disadvantage their local competitors or bowing to pressure from high power international integrated programming services may show undue preference towards foreign service offerings.

1127   In extending the Vertical Integration Code to foreign services, there should be some differences between non-Canadian services and vertically-integrated services.

1128   As I have discussed, BDUs should be required to offer one independent Canadian service for every two integrated services.

1129   For foreign services, however, customers should be required to receive a preponderance of Canadian stations. To read "preponderance" down to a mere offering of Canadian stations would be to the severe detriment of the Canadian broadcasting system.

1130   In amending the regulation to allow for a more dynamic broadcasting system, there must be efforts made to make sure these policies do not have the unintended consequence of allowing vertically-integrated companies to act in an anti-competitive manner by preferring their own services and American services.

1131   As a direct result of policies by this Commission and a strong subsidy system, the best Canadian content that has been made in my lifetime is being made today -- and is only getter better. From scripted dramas like "Lost Girl", "Flashpoint", and "Orphan Black", to home improvement shows like "Love It or List It" and "Property Brothers", to children's television, where our nation is consistently a world leader, Canadians are producing content that is selling well abroad.

1132   There are those who disagree and think that the role of regulators should be greatly reduced. Reading the Lemay-Yates Associates report, the policies recommended are explicitly building on the 1999 CRTC decision that found that competition and natural market forces would ensure the development of strong Canadian content.

1133   In fact, it is widely known that following that decision market forces failed and what we got was an extended period where little Canadian drama was created and where CanCon hours were filled as cheaply as possible and the term "Canadian content" was stigmatized further.

1134   It has taken time to recover, but because of the policies maintained by this Commission, we have a strong, diverse broadcasting system and a rapidly improving production sector.

1135   When the Broadcasting Act was first created, one of the goals was to create a space where Canadians would be represented to themselves. I am here today because I think that is still an important goal in these proceedings today.

1136   Thank you for giving me the opportunity to speak with you today on these important issues. I hope I have been able to contribute to this dialogue with Canadians, and I would be happy to answer of your questions.

1137   THE CHAIRPERSON: Thank you very much, Mr. Kornblum.

1138   The Vice-Chair will have some questions for you.

1139   COMMISSIONER PENTEFOUNTAS: Thank you, Mr. Kornblum. Very clear position. As was the case in your initial factum. There's very little grey there, and that makes it clear and actually quite concise in your document today.

1140   Tell me something. You're a young man.

1141   MR. KORNBLUM: Yes.

1142   COMMISSIONER PENTEFOUNTAS: In university?

1143   MR. KORNBLUM: Yes.

1144   COMMISSIONER PENTEFOUNTAS: How do people -- how do your friends consume content? What platforms do they use?

1145   MR. KORNBLUM: It's a mix. I'm at an interesting age where I think you're seeing the way people consume content shifting as people graduate from university and start having partners. I find the ones that are in law school and such tend to have very limited time and very little money and tend to use over-the-top platforms.

1146   But I'm also noticing, as many of them get older and have spouses and families and homes, that they're actually starting to move back to traditional broadcasting and starting to follow the trend, which is, as you know, Canadians, on average, watch 20 hours of television. You're very quickly going to run out of content on Netflix, at that rate.

1147   COMMISSIONER PENTEFOUNTAS: I think Canadians, on average, watch more than that on traditional platforms.

1148   So, given what you've just told us, there really isn't very much fear for the traditional broadcasting system. Wouldn't you agree?

1149   MR. KORNBLUM: As I said, there's that RBC analysis and I think we are seeing, not a fear that the existing platform as Netflix is going to be necessarily a threat to the traditional broadcasting but it's the potential that these new media offerings have that a lot of stuff as, you know, NFL Sunday Ticket is now being offered over the top, that these new services, with higher internet speeds, are actually going to have the potential to replace it, especially --

1150   COMMISSIONER PENTEFOUNTAS: So, should we regulate potential?

1151   MR. KORNBLUM: I think we should, because it becomes very hard to regulate when we are seeing a catastrophe and people are unsubscribing en masse and we are seeing the move and the mergence -- I think someone referenced a report made by the CRTC that we are starting to see this decline, and 2017 isn't far away and I think that's an optimistic view.

1152   COMMISSIONER PENTEFOUNTAS: You mentioned a tipping point. What would that tipping point be for you? What constitutes the tipping point? How much consumption should happen online amongst exempt services for there to be a tipping point?

1153   MR. KORNBLUM: I'm not sure. I think the tipping point, the fear is that once we pass a -- we could set an arbitrary line where, like, 20% penetration. So, I think the fear is once you get that 20% penetration, we're going to see a very, very rapid erosion of the traditional broadcasting. So, exactly where that tipping point is, I can't say. But that it exists is something that I believe is true.

1154   COMMISSIONER PENTEFOUNTAS: But if we're going to be worried about a tipping point, shouldn't we be able to identify what that point is, in order to regulate?

1155   MR. KORNBLUM: I think the tipping point, you'll know after it's happened, when we see people very rapidly switching over.

1156   I think it can when we also have an interesting thing happen where a lot of our traditional BDUs are actually converging with online services, you know, Rogers and Shaw have Shomi, Bell has Fibe, which is pretty much running the same systems that a lot of OTT services. More or less it runs over ITP protocol, it can be accessed around your house, through different devices. It's not the same back-end stuff but user interface-wise, it's very similar. So, I don't know. Exactly how it's going to happen is very complicated -- and, you know, I am proud that we are world leaders in that area but I don't know exactly what will happen.

1157   COMMISSIONER PENTEFOUNTAS: Given that consumption on regulated platforms hasn't really declined, thus far, and that OTT consumption has been complementary to the regulated platform, thus far, how much movement would we need from 2014 -- we are September 2014 -- to September 2017 for us to reach that tipping point?

1158   It would have to be pretty drastic, would you agree?

1159   MR. KORNBLUM: Yes and no. I think there are a variety of concerns. I think there are ways that traditional BDUs, if they want to, can spend lots of money to delay that tipping point. But I don't think that would be necessarily in the benefit of Canadians. Because it all comes down to who owns the rights and, as these BDUs get more money, they can buy more content, as we're seeing with Netflix.

1160   To say --

1161   COMMISSIONER PENTEFOUNTAS: Ergo, they have tools at their disposal. They have to keep the beast at bay, so to speak.

1162   MR. KORNBLUM: Yes, but those tools are spending more and more money that will then be passed to the consumer, in terms of increased costs.

1163   COMMISSIONER PENTEFOUNTAS: And regulating OTT services, those costs won't be passed on to the consumer?

1164   MR. KORNBLUM: It's not that it won't be. I apologize. I think I have misspoken. Can you give me a moment?

1165   COMMISSIONER PENTEFOUNTAS: Sure.

--- Pause / Pause

1166   MR. KORNBLUM: I think the cost of OTT service, to pay to have Canadian content produced is a price, in essence, we do have to pay as a nation if we want to have Canadian content. It seems to be what our history has shown us.

1167   To pay a cost for no value added, I do not think Canadians are willing to pay.

1168   So, to add this regulation to OTT service that's, in essence, requiring them to participate in our Canadian system, which is what we're asking that they spend it on -- programming is what I've asked -- and I believe the CMF has said if they participate that they could even recommend it that they could even apply for some more funding, and I think that would be a great way to have them take part in our system as we are just getting in bidding wars to pay the most for American content to hold users. Fighting the inevitable move to OTT service, I don't think, is a great strategy. Integrating these OTT services into our system, I think, is a strategy the Commission should be going after and part of that is imposing on them the same regulations that you impose on every other player.

1169   COMMISSIONER PENTEFOUNTAS: Well, thank you so much. A very clear position. Once again, thank you for coming in.

1170   MR. KORNBLUM: Thank you.

1171   THE CHAIRPERSON: I know that this would be a very particularly daunting exercise. I congratulate you for taking the time to participate. That's what we were hoping for. You should also know that you have fans on Twitter and I'm sure that we will see you again. So thank you very much.

1172   MR. KORNBLUM: Okay. Thank you so much.

1173   THE CHAIRPERSON: Thanks.

1174   Madame la Secrétaire.

1175   THE SECRETARY: I would now ask the National Film Board of Canada to come to the presentation table.

--- Pause

1176   LA SECRÉTAIRE : S'il vous plaît vous présenter et vous avez 15 minutes pour votre présentation. Merci.

PRESENTATION

1177   M. JOLI-COEUR : Bonjour. Mon nom est Claude Joli-Coeur. Je suis accompagné de Deborah Drisdell. Alors, je suis commissaire du gouvernement à la cinématographie et président de l'ONF par intérim. Deborah Drisdell est directrice générale, Accessibilité et entreprises numériques.

1178   Je tiens à remercier le Conseil de nous avoir invités à parler aujourd'hui de l'expérience de l'Office national du film en distribution numérique et j'espère que notre présentation contribuera aux importantes discussions qui se tiendront dans les prochains jours.

1179   L'ONF offre au monde un point de vue authentiquement canadien en lui présentant des oeuvres canadiennes audacieuses, à la fine pointe, qui mettent en valeur l'originalité canadienne sur les plans de la création et de la technologie.

1180   À titre de producteur et distributeur public canadien d'oeuvres audiovisuelles, l'ONF produit des documentaires d'opinion, de l'animation d'auteur et du contenu interactif. Depuis sa fondation en 1939, l'institution a remporté plus de 5000 récompenses pour ses créations, dont 12 Oscars. L'ONF est pour la population canadienne une institution précieuse qui possède une longue tradition d'excellence et qui constitue un incubateur d'innovation.

1181   Depuis sa fondation, l'ONF s'est engagé à rejoindre les Canadiens et les Canadiennes dans leur communauté par tous les moyens possibles. Au début, les projectionnistes itinérants de l'ONF se rendaient dans les communautés isolées en voiture et même en traîneau à chiens pour y diffuser des films et stimuler les débats. Grâce à l'avènement de la télévision dans les années 1950, l'ONF a été en mesure de rejoindre le grand public, mais ce faisant, il a quelque peu perdu ce lien direct qu'il entretenait avec ses auditoires.

1182   In 2008, we recognized the potential of digital technologies to reconnect with Canadians and to further engage with our audiences at home and around the world. We also foresaw the marketplace disruption that would ensue, not by the technology per se but from the evolving consumer behaviour that technology enables.

1183   We undertook an ambitious digital distribution strategy to increase accessibility, in addition to our continued efforts in traditional markets. Our strategy was based on a firm belief that given the opportunity, audiences would embrace the compelling programming offered by the Film Board. We saw this as providing an additional access point to the NFB and its collection.

1184   Our objectives at the time were threefold:

1185   - increase accessibility of NFB programming to Canadians and the world;

1186   - increase audiences; and

1187   - anchor the NFB brand in the digital space.

1188   Deborah.

1189   MS DRISDELL: I will continue.

1190   We are here today to talk about our experiences and to share a few lessons learned.

1191   Some of them that we learned was that it was important to create a unique destination for our content. As Claude mentioned, the NFB is very niche.

1192   It was also important for us to be everywhere, to have a very strong curatorial voice as well as to create a community and to manage that interest. And these are some areas that I will expand on.

1193   Our strategy comprised of two pillars: what we call Destination and Syndication. We would create a unique destination for our content at NFB.ca but we would also maximize commercial exposure on a number of our partner sites.

1194   We launched our online screening room in January 2009, streaming 750 titles in English and French. We had a few core principles that guided our project:

1195   - to be a bilingual service tailored to both linguistic markets but not necessarily a mirror site;

1196   - we were fiercely user-focused, creating a compelling viewing experience;

1197   - we were free and available worldwide, so we were restricting the geo-blocking; and

1198   - we also had a notion of non-exclusivity.

1199   As we saw consumer behaviour quickly evolving, we deployed an aggressive expansion into mobile, starting with the iPhone in October 2009, followed by Blackberry, Android, the iPad and connected television.

1200   From the beginning, the response by Canadians was overwhelming and sustained. Our viewership grew. Since our launch, we have had over 57 million views of our programming registered on NFB.ca and on our partner sites, and there's a few breakdowns of the stats there. Canadian audiences are clearly happy to have access to the richness of the NFB collection; they embraced the opportunity to watch our programming when and where they wanted. And we saw a dramatic increase in our viewership by young audiences, particularly on the iPhone.

1201   The NFB is committed to sharing stories from all regions of Canada and NFB.ca affords us opportunities for exposure for projects that may not reach audiences in the traditional way, such as "Un dimanche à 105 ans." "Dimanche" is a charming short film directed by emerging talent Daniel Léger, a product of the NFB's Tremplin Emerging Film Program. This film would normally have had limited exposure following its premiere at FICFA Festival in Moncton, but we published it on NFB.ca and it quickly went viral. Over 410,000 views of the film have been recorded to date and its exposure has been credited with the development of this young Acadian's career.

1202   The development of our infrastructure also enabled us to create mobile applications to further enhance our audience's experience and help the rediscovery of our collection by new audiences. To date, there have been over 2.4 million downloads of our various applications.

1203   In 2012-2013, we added a fully transactional capability to our site, enabling us to add content that was still in the commercial windows. You can now download or stream over 2,500 films from the NFB and view them online, on your mobile devices or on your connected television. This strategy helps us to cushion to commercial disruption in the marketplace, which was felt most particularly by niche content, such as ours. Some of those elements were:

1204   - the reduction in broadcast windows for point-of-view documentaries both in Canada and around the world;

1205   - a dramatic reduction in the distribution of physical goods in the home consumer market, which has not completely been offset yet by the rise in digital distribution;

1206   - as well as changes in the educational marketplace and the Copyright Modernization Bill.

1207   In the fiscal year ending in March 2014, over 34 percent of our home consumer revenues were derived from digital distribution, up from 4 percent only three years ago.

1208   I am going to talk a bit about our education also.

1209   The National Film Board of Canada has been a trusted source of quality Canadian educational resources for more than 70 years. When we launched NFB.ca, one of the first calls we received was from an educator and many followed suit. They said NFB.ca would be a valuable asset in the classroom, particularly for educators in official language minority communities. We licensed NFB.ca for institutional use and embarked on a partnership with educators to develop a targeted service that responded to the needs of the 21st century classroom.

1210   We combined our expertise in educational and online content to create a new kind of teaching tool for the digital age: CAMPUS, an online streaming service that gives educators instant access to a vast bank of innovative learning resources. Launched in 2012, CAMPUS is designed for students from K-12 as well as post-secondary.

1211   "We Were Children" is an example of how the NFB treats important issue-based films, particularly in the education market. Co-produced by the NFB, eOne and Eagle Vision, "We Were Children" is a challenging film about Canada's Indian Residential Schools, a docudrama based on real life events. Directed by Tim Wolochatiuk, the film presented effective and engaging learning opportunities among home consumers, institutional groups in health and social services and of course in schools and academic institutions. We knew that due to the challenging subject matter, we needed to contextualize this material carefully and with the appropriate partners and collaborators.

1212   We consulted extensively with the Truth and Reconciliation Commission and developed a close partnership with the Legacy of Hope Foundation to develop rich learning materials for group facilitators and educators. These materials were developed to support the teaching of the history of residential schools in Canada and to assist those who are directly and indirectly impacted by the legacy of residential schools to seek professional support.

1213   Available across a range of platforms, CAMPUS is a powerful teaching tool for the 21st century that turns any setting -- classrooms, homes, libraries, resource centres, workplaces and boardrooms -- into an educational hotspot. Currently, over 8.5 million Canadians have subscription access to CAMPUS: 2.5 million K-12 students through their teachers; 1.5 million post-secondary students through the universities; and 4.5 million Canadians, adults and youth alike, through their local libraries. Last year, 47 percent of our institutional revenues was the result of our digital initiatives, up from 12 percent in 2010-2011.

1214   MR. JOLI-COEUR: We have learned a few other lessons learned along the way:

1215   Consumer behaviour for media consumption is migrating away from the PC to mobile platforms and connected television.

1216   Physical distribution is being replaced by digital distribution faster than had been anticipated.

1217   Consumers are less interested in ownership than access.

1218   There is no dearth of quality content but consumers want content that is relevant to them.

1219   Challenge is discoverability.

1220   Brand recognition and tailored services will be necessary to reach audiences through the noise.

1221   The NFB has always looked to partner with the independent community and we were pleased to embark on a pilot project with the Cinema ExCentris in Montreal last fall. ExCentris was looking to expand its audience by providing a video-on-demand service to those who could not attend the cinema. The partnership proved quite fruitful and was quickly expanded to include films previously presented at the cinema. We also expanded the offer beyond the borders of Quebec, enabling regional audiences access to this catalogue of independent films. As a straight revenue-sharing model, all parties benefit from the revenue derived by the rentals.

1222   To quote the tagline of our 75th anniversary celebration, the NFB has a history of looking forward and we are pleased to announce that, in early 2015, the NFB.ca will be expanding its online presence even further. We'll be opening our platform to third party content and enabling the Canadian independent industry to benefit from the NFB's investment and expertise in digital distribution.

1223   The new NFB.ca will be a highly curated and immersive experience, offering world-class programming in documentaries, auteur animation and Canadian films. We will build on the current successes of NFB.ca, in partnership with the independent sector, to provide Canadians with access to content that we are confident they want to watch.

1224   Thank you for your time today and we are happy to answer any questions.

1225   LE PRÉSIDENT : Merci beaucoup à vous deux. Je vous confie au conseiller Dupras.

1226   CONSEILLER DUPRAS : Merci, Monsieur le Président. Bonjour, Monsieur Joli-Coeur.

1227   M. JOLI-COEUR : Bonjour.

1228   CONSEILLER DUPRAS : Madame Drisdell.

1229   MME DRISDELL : Bonjour.

1230   CONSEILLER DUPRAS : Alors, vous êtes un incubateur de nouvelles technologies. Comment voyez-vous l'avenir de la télévision? Est-ce que les nouvelles technologies ont une incidence sur... bien, je veux dire, l'expérience que vous avez jusqu'à date démontre quels changements exactement?

1231   M. JOLI-COEUR : Bien, je pense que ça a été l'histoire de l'ONF depuis 1939 de toujours être à l'avant-garde d'innovations et de nouvelles technologies et de façons de faire. Alors, je peux quand même vous dire que, quand on a lancé ONF.ca en 2009, je pense que jamais on n'aurait pu prévoir là où on est rendus aujourd'hui.

1232   On avait cette impression, on avait cette vision, mais, maintenant, d'avoir notre contenu disponible sur une multitude de plateformes, des déclinaisons qui, à chaque nouveau lancement de produit, se redéfinissent, je pense que c'est vraiment une belle illustration de comment le contenu peut devenir disponible et accessible.

1233   Près de 60 millions de visionnages de nos films sur des médiums qui sont non organisés comme la télévision l'est...

1234   CONSEILLER DUPRAS : Um-hum.

1235   M. JOLI-COEUR : ...est une illustration de certainement, de ce qui peut attendre l'ensemble de la production audiovisuelle.

1236   CONSEILLER DUPRAS : C'est ça, vous parlez d'une désorganisation du marché commercial. Est-ce que vous pouvez être un peu plus spécifique, c'est au niveau des fenêtres audiovisuelles, essentiellement?

1237   M. JOLI-COEUR : Bien, c'est que c'est surtout l'énorme potentiel que... Puis, encore une fois, on a été invités par le Conseil pour témoigner de notre expérience, alors, c'est plus dans cette perspective-là que je peux répondre à...

1238   CONSEILLER DUPRAS : Mais, dans votre expérience, par exemple, là, vos productions...

1239   M. JOLI-COEUR : Oui.

1240   CONSEILLER DUPRAS : ...sont diffusées sur les radiodiffuseurs conventionnels?

1241   M. JOLI-COEUR : Oui.

1242   CONSEILLER DUPRAS : Est-ce que vous avez vu une diminution de ce côté-là depuis l'avènement des plateformes numériques?

1243   MME DRISDELL : Non, on n'a pas vu de diminution au niveau de l'auditoire, c'est vraiment une augmentation de notre auditoire dans son ensemble que le numérique nous apporte. Nos auditoires en radiodiffusion ne se sont pas réduits. Les fenêtres cependant pour certains éléments de programs of national interest ont effectivement... il y a certains créneaux qui sont moindres, mais nos auditoires n'ont pas diminué.

1244   M. JOLI-COEUR : Mais, ce qui a été formidable, c'est que, de la façon dont le marché a évolué pour les documentaires ou les oeuvres d'animation, point de vue qui sont... pour lesquels il y a moins de créneaux, en ayant ce mode de diffusion, on a pu atteindre des auditoires qui n'auraient jamais eu accès à ces films dans la façon traditionnelle.

1245   Je prends tout simplement l'exemple, on vient de lancer la semaine dernière un film sur le 110e anniversaire du 22e Régiment, qui a été présenté à « Zone Doc » vendredi soir à Radio-Canada, repris hier après-midi. Maintenant que ces deux diffusions-là sont faites, la seule façon d'avoir accès au film pour l'avenir va de pouvoir le consulter sur notre site. Donc, les oeuvres demeurent disponibles, le contenu est accessible aux Canadiens et au reste du monde, ce qui est exactement dans notre mandat.

1246   CONSEILLER DUPRAS : Et, au niveau des fenêtres de diffusion, là, vous semblez dire que vous exploitez à la fois des films à la télévision et en même temps sur votre site...

1247   M. JOLI-COEUR : Oui.

1248   CONSEILLER DUPRAS : ...Internet. Comment ça se passe au niveau de la négociation des droits?

1249   M. JOLI-COEUR : Bien, c'est assez intéressant puis il y a un chambardement total là-dedans. Moi, je viens de, avant d'être à l'ONF, j'étais dans le secteur privé en distribution, production et, quand je travaillais chez Astral, qui faisait de la distribution à l'époque, c'était très, très clair, les fenêtres d'exploitation, on avait la salle, on avait la télévision payante, le pay per view, la vidéo, la télé qui se déclinait comme ça. Maintenant, tous les modèles sont possibles. On assiste à des cas où les permutations peuvent changer selon les cuts.

1250   CONSEILLER DUPRAS : Vous êtes en mesure de négocier des droits séparés ou si les diffuseurs vous demandent toujours automatiquement les droits pour la diffusion en ligne au même moment?

1251   MME DRISDELL : Puisqu'on est producteurs sur certains projets, on les négocie, c'est vraiment à la pièce et on a fait quelques expériences justement où on a fait un lancement en ligne en collaboration avec le diffuseur, donc un lancement en ligne pendant une fin de semaine et ça n'a pas eu un impact négatif au niveau de la radiodiffusion, mais on les négocie.

1252   Effectivement, s'il y a une prévente au niveau du radiodiffuseur, souvent, le diffuseur veut une fenêtre pour la distribution en ligne. Nous, à l'ONF, on a une présomption de non-exclusivité. Donc, on partage avec tout, mais, effectivement, parfois, il y a des négociations où le diffuseur préfère avoir les droits exclusifs et on doit attendre les fenêtres de diffusion.

1253   CONSEILLER DUPRAS : Um-hum. Bon et pour ce qui est de l'exploitation en ligne, diriez-vous que les téléspectateurs cherchent de nouveaux moyens de voir la télévision et que la mobilité, finalement, est une convenance à laquelle les télévisions devraient aujourd'hui s'ajuster pour garder leur auditoire?

1254   MME DRISDELL : On peut parler seulement de notre expérience. Il est clair que, lorsqu'on a permis à nos auditoires de voir les films lorsqu'ils le voulaient, soit en ligne ou par voie de mobile et téléconnecté, que notre augmentation d'auditoire a augmenté dramatiquement. Donc, selon nous, oui, la facilité et l'expérience consommateur de vouloir juger de quand et comment ils vont consommer nous apparaît importante. Dans notre expérience, on l'a vu, notre auditoire a été grandissant quand ils ont eu cette flexibilité-là.

1255   M. JOLI-COEUR : Oui, parce que, dès qu'on a lancé ONF.ca, qui était quelque chose où on était dépendants de notre ordinateur à la maison, mais qu'on a ouvert aux plateformes mobiles, on a vu une augmentation très importante à cet égard-là. C'est là qu'est notre évolution.

1256   MME DRISDELL : C'est ça, oui. Et c'est important de noter que c'est un catalogue qui date quand même depuis 1939. Alors, comme Claude mentionnait, des fois, il y a les fenêtres de diffusion qui sont deux ou trois diffusions, mais, nous, l'accessibilité de nos oeuvres à travers les années, les décennies, est très importante. Alors, notre auditoire est grandissant sur des oeuvres qui datent de 20, 30 ans aussi bien que d'oeuvres récentes.

1257   CONSEILLER DUPRAS : Très bien. Et vous prévoyez aussi ouvrir votre plateforme à d'autres diffuseurs - j'ai bien lu? - vous avez commencé à le faire avec...

1258   MME DRISDELL : D'autres partenaires.

1259   M. JOLI-COEUR : D'autres partenaires, oui.

1260   CONSEILLER DUPRAS : ...avec Ex-Centris. Par exemple, un groupe comme Éléphant qui est venu ici plus tôt aujourd'hui, est-ce que ce ne serait pas un partenaire tout indiqué pour...

1261   M. JOLI-COEUR : Tout à fait et on...

1262   CONSEILLER DUPRAS : ...promouvoir le cinéma canadien québécois?

1263   M. JOLI-COEUR : Complètement. Et, d'une part, on est partenaires dans Éléphant, ils ont déjà des films de l'ONF. Et, en sortant ce midi, on a parlé à Marie-Josée puis on leur a proposé : « Vous devriez avoir... »

1264   MME DRISDELL : Être chez nous.

1265   M. JOLI-COEUR : ... « venir chez nous, avoir une chaîne Éléphant sur notre site. » Mais ça nous ramène à l'importance des marques puis, ce qu'ils signalaient ce matin, c'est que l'endroit où le consommateur sait où il peut trouver du contenu. Alors, c'est sûr qu'on a une marque qui est forte à cet égard-là. Les gens qui cherchent un certain genre de contenu, en venant sur notre site, ont une meilleure chance de le trouver. Alors, là-dessus, il y a des comptabilités...

1266   CONSEILLER DUPRAS : Um-hum.

1267   M. JOLI-COEUR : ...tout à fait optimales.

1268   CONSEILLER DUPRAS : Également, là, il y a d'autres tiers, des producteurs indépendants qui pourraient y avoir accès. Quel genre de critères avez-vous pour admettre des productions sur votre plateforme?

1269   MME DRISDELL : On lancera la plateforme, un créneau de documentaires en janvier et un aussi pour le cinéma canadien et on a une grille de programmation et une équipe de programmation qui évaluent le contenu en fonction de plusieurs critères au niveau du documentaire entre autres pour voir quels sont les projets qui s'apparentent plus proches du documentaire d'auteur, effectivement, et qui seraient peut-être primés dans certains festivals. En tout cas, on a toute une gamme de critères d'évaluation pour le contenu.

1270   M. JOLI-COEUR : Dans un modèle vidéo sur demande, vidéo.

1271   MME DRISDELL : Et, ça, c'est sur vidéo, en demande.

1272   CONSEILLER DUPRAS : Je vous remercie. Je n'ai pas d'autres questions, Monsieur le Président.

1273   LE PRÉSIDENT : Merci. J'en aurai peut-être une couple. Your online content, would you describe it as television? Maybe not traditional television, but television in the larger sense?

1274   MR. JOLI-COEUR: It's a mix, it's a mix of cinema -- it goes back to the '30's -- so it's really a mix of cinema, some television. So I would say it's a...

1275   MS DRISDELL: And we have interactive content also. So we have... we talk more at film with a linear content and then interactive content. So...

1276   MR. JOLI-COEUR: But one thing all those productions at some point have been broadcasted somewhere.

1277   THE CHAIRPERSON: They're all screen based to a certain extent? They're all screen based?

1278   MR. JOLI-COEUR: Yes.

1279   MS DRISDELL: Yes.

1280   THE CHAIRPERSON: It's because some people and sometimes I struggle with this too as to what is television in --

1281   MR. JOLI-COEUR: Yes.

1282   THE CHAIRPERSON: -- 2014, right? And, in the same way we call our handheld devices phones and we never speak on them.

--- Laughter

1283   THE CHAIRPERSON: We use the word "television" perhaps as an expression of something that we have difficulty to fully grasp because it's morphing by the day. So that's why I was asking in the sense --

1284   MR. JOLI-COEUR: Right, in that sense.

1285   THE CHAIRPERSON: -- not so much where the productions were --

1286   MR. JOLI-COEUR: M'hm.

1287   THE CHAIRPERSON: -- or are currently broadcast --

1288   MR. JOLI-COEUR: M'hm. M'hm.

1289   THE CHAIRPERSON: -- but whether you see yourself as part, this on screen content as part of a broader broadcasting television system.

1290   MR. JOLI-COEUR: For sure, what we're doing is really, we qualify it as a way to broadcast our content. So, for sure, it's --

1291   THE CHAIRPERSON: A bit like YouTube says --

1292   MR. JOLI-COEUR: Exactly, yes.

1293   THE CHAIRPERSON: -- that it's a broadcasting platform.

1294   MR. JOLI-COEUR: Yes, yes.

1295   THE CHAIRPERSON: Now, monsieur Joli-Coeur, vous l'avez mentionné tout à l'heure, vous avez évidemment commencé votre carrière dans le secteur privé et puis vous avez été aux premières loges de tous ces changements, ces nouvelles initiatives à l'ONF. Je pense que vous avez mentionné même que ça dépasse, je crois, les attentes même lors du stage de planification, du succès et de tout ça. Mais, étant donné que vous venez du secteur privé puis vous avez vécu longtemps maintenant à l'ONF, est-ce que, à votre avis, les initiatives que vous avez prises, est-ce qu'elles auraient pu être avancées par le secteur privé au Canada?

1296   M. JOLI-COEUR : Je pense que le modèle de ce qu'on a développé aurait très bien pu l'être par le secteur privé. Je pense qu'on a fait preuve de leadership, de vision. On s'est souvent étonnés que l'industrie de la radiodiffusion n'ait pas développé au même rythme qu'on développait notre système de déclinaison de la diffusion, le même genre d'outil.

1297   Continuellement, on était même étonnés d'être les seuls à le faire. Alors...

1298   LE PRÉSIDENT : Oui, parce qu'on voit des plateformes, comme tout.tv développée par le radiodiffuseur public.

1299   M. JOLI-COEUR : Oui.

1300   LE PRÉSIDENT : On a vu Éléphant développé par le secteur philanthropique.

1301   M. JOLI-COEUR : Oui.

1302   LE PRÉSIDENT : On a vu vos avancements dans le monde du numérique à l'ONF, l'incubateur du système audiovisuel canadien dans une certaine mesure. Et vous ne pouvez pas comprendre ou commencer à expliquer pourquoi le secteur privé a été moins rapide à s'avancer?

1303   MME DRISDELL : Il y a peut-être un élément de la masse critique aussi de contenu qui est importante pour attirer un auditoire. Alors, ce n'est peut-être pas une réponse directe.

1304   LE PRÉSIDENT : Un catalogue, oui.

1305   MME DRISDELL : Mais on avait un catalogue, on avait un potentiel de mettre et... un devoir et un potentiel de le mettre ensemble pour... Il faudrait que plusieurs compagnies probablement au niveau indépendant se réunissent pour avoir un catalogue. Et on le voit même à l'ONF que le renouvellement du catalogue est important.

1306   LE PRÉSIDENT : Les producteurs privés ont des catalogues aussi, les...

1307   MME DRISDELL : Certains.

1308   M. JOLI-COEUR : Oui.

1309   LE PRÉSIDENT : ...les radiodiffuseurs privés ont des catalogues.

1310   M. JOLI-COEUR : Oui. Mais c'est sûr que, quand on a lancé notre expérience en 2009, l'enjeu des droits de diffusion sur Internet était d'une complexité maintenant qu'on prend pour acquis. Mais je me souviens, à l'époque, il y avait de la réticence chez les détenteurs de droits de dire : « Bien, on est d'accord à ce que nos firmes aillent sur Internet. » Quand c'étaient des films où on était coproducteurs avec des partenaires, il fallait les convaincre qu'il y aurait un potentiel. Au début, les gens ne voulaient pas. Rapidement, on s'est fait dire : « Bien, comment ça se fait que mon film n'est pas chez vous? » Mais, quand même, au début, il y avait quand même certains blocages. Mais, nonobstant ça, c'est vrai qu'on a longtemps pensé : « Comment ça se fait que d'autres ne le font pas? » Ça, c'est...

1311   LE PRÉSIDENT : O.K. Bien, je vous remercie beaucoup...

1312   M. JOLI-COEUR : Merci.

1313   LE PRÉSIDENT : ...pour les réponses à nos questions. Nous allons prendre une pause. So we adjourn 'till 3:05 for continuing the interventions. Merci.

--- Upon recessing at 1452

--- Upon resuming at 1505

1314   LE PRÉSIDENT : À l'ordre, s'il vous plaît.

1315   Madame la Secrétaire.

1316   THE SECRETARY: We will now hear the presentation of Telefilm Canada.

1317   Please introduce yourselves and you have 10 minutes to make your presentation. Thank you.

PRESENTATION

1318   MME BRABANT : Bonjour, Monsieur le Président, Commissaires, et membres du personnel du CRTC. Je suis Carolle Brabant, directrice générale de Téléfilm Canada, et je suis accompagnée aujourd'hui de Dave Forget, directeur des Relations d'affaires et de la certification. Dave a participé activement aux réformes de nos programmes, notamment à la mise à jour de nos programmes de mise en marché et de distribution.

1319   Les développements technologiques qui touchent actuellement notre système de télévision ont une incidence sur la façon dont Téléfilm remplit son mandat, qui est de favoriser le développement et de contribuer à la promotion de l'industrie audiovisuelle canadienne.

1320   À cet égard, nous aimerions aujourd'hui aborder trois sujets précis :

1321   - la croissance et la viabilité de notre industrie;

1322   - la promotion; et

1323   - les outils de mesure des auditoires.

1324   Le système de financement dont nous disposons aujourd'hui pour soutenir l'industrie audiovisuelle a été élaboré au cours de plusieurs décennies. Il repose en grande partie sur les politiques du Gouvernement du Canada et est un modèle de financement unique. C'est ce système qui a contribué à créer un secteur ayant généré 7,6 milliards de dollars en produit intérieur brut pour l'économie canadienne en 2012-2013.

1325   L'industrie audiovisuelle a maintenant atteint une maturité qui renforce la visibilité du Canada sur la scène mondiale. Il suffit de ressentir toute l'énergie qui se dégage de TIFF cette semaine pour s'en apercevoir.

1326   Prenons un exemple récent, celui du cinéaste québécois Jean-Marc Vallée. Ayant à son actif un film oscarisé, « Dallas Buyers Club », Vallée était présent à la 41e édition du Festival du film de Telluride avec « Wild », son dernier film, qui, incidemment, sera présenté ce soir à TIFF.

1327   Au printemps dernier, pas moins de trois films canadiens -- « Maps to the Stars » de David Cronenberg, « Mommy » de Xavier Dolan, et « The Captive » d'Atom Egoyan -- étaient en compétition au 67e Festival de Cannes, du jamais vu. Il s'agit du plus grand nombre de films d'un même pays en compétition à Cannes cette année.

1328   Nos cinéastes ont reçu le soutien et les encouragements de ce qui est, à mon avis, l'un des secteurs de la production indépendante les plus importants et les plus dynamiques au monde.

1329   De toute évidence, nous détenons une recette gagnante.

1330   Mais comment miser sur ce modèle efficace tout en étant attentifs à la demande des consommateurs qui veulent encore plus de choix ou, pour reprendre les mots de Michael Gubbins, comment garder toujours « les auditoires en tête »?

1331   L'écran de télévision, qui capte notre attention depuis les années 1950, peut maintenant se connecter à une multitude d'applications, de réseaux et d'appareils. Dans ce contexte, la croissance de notre industrie dépend d'un financement continu de la part du système de télédiffusion parce que nous oeuvrons essentiellement dans le domaine de la recherche et du développement. Chaque film est un produit unique. Chacun implique la découverte d'idées, de connaissances et la création d'une nouvelle propriété intellectuelle. Et au bout du compte, son succès ne peut être garanti parce qu'il dépend d'une multitude de facteurs.

1332   Financer une série télé ou un film à gros budget, en assurer l'achèvement dans les délais et le budget prévus, souvent dans des lieux de tournage différents, n'a jamais représenté un aussi gros défi. Il faut compter en moyenne un minimum de trois ans et un nombre incalculable de versions pour développer un film, et ce, avant même le début du tournage. Il faut ensuite ajouter au moins une autre année avant que le produit puisse être présenté sur un écran.

1333   Au cours des dernières années, l'un de nos objectifs était d'utiliser plus efficacement notre financement public en faisant appel à des entreprises commerciales canadiennes. Comme le Conseil le sait déjà, nous avons créé le Fonds des talents en 2012.

1334   Récemment, le président du comité consultatif du Fonds, monsieur Hartley T. Richardson, président et chef de la direction de James Richardson & Sons Limited, faisait remarquer que « le secteur privé cherchait depuis longtemps une façon directe d'appuyer le cinéma canadien. Nous voulions changer les choses en créant ce partenariat public-privé. »

1335   Jusqu'à présent, le Fonds des talents a reçu des contributions de la communauté des affaires, incluant Bell Média et Corus Entertainment, pour soutenir la production et la promotion du cinéma canadien.

1336   While our industry is punching above its weight and being celebrated on the world stage, I believe we are not doing enough to promote it. Promotion and marketing on all platforms hold the key to increasing the reach of our product at home and abroad and giving maximum exposure to our stories.

1337   Every time a Canadian film or television program is shown at the box office, broadcast on the many television platforms available or made available on digital platforms, we have incredible opportunities to promote Canadian talent not only to Canadians but to the world.

1338   Telefilm has been working with partners to spark the Canadian public's interest in Canadian film: the Canada Media Fund, CMPA, provincial agencies, distributors and many other industry players.

1339   Some examples of these partnerships include Eye on Canada, MIPCOM Country of Honour Initiatives and red carpet screening events across the country. The "Movie Night in Ottawa" series, now championed by the Honourable Shelly Glover, Minister of Canadian Heritage and Official Languages, was named by Maclean's as one of the five events that matter most to Ottawa's power brokers, and our "Off the Wall" social media content series features Canadian personalities from different regions of Canada and diverse professional fields sharing their personal memories about Canadian films.

1340   Mindful of the popularity of short films in this age of the Internet and portable devices, Telefilm, the NFB and SODEC launched The Shortest Day Short Film Celebration last year. This one-day event, involving 60 participating venues across the country, gives Canadians, particularly the young ones who connect with this format of content, free access at movie theatres, cultural centres, associations, festivals and libraries. We're currently working with our partners on the second edition.

1341   As you can see, the industry is not short on ideas or creativity when it comes to promotion. At Telefilm we believe that this works better when we work with partners.

1342   One of our other priorities in the last few years has been to conduct consumer research on Canadian's habits, preferences, and awareness of Canadian films. We have discovered that despite the fact that Canadians are avid consumers of movies on television, there is a strong lack of awareness about Canadian films. French-language films appear to fare better, in terms of awareness and image, but it is clear that the success of both would benefit from stronger marketing.

1343   Our experience to date leads us to also ask the question: Would the industry benefit from a more coordinated effort, leveraging resources and expertise? What incentives exist that could make this approach deliver results for all involved? Surely if the wine and cheese industries have seen successes, we can, too.

1344   We recognize that significant resources are required to build an infrastructure for promotion as robust as we have for production.

1345   A study by Needham Insights on "The Future of TV" notes that marketing and advertising costs for the discovery of films and television can add 40 per cent to the cost incurred to produce content.

1346   Canadian storytelling is unique and it's our job, as founders, broadcasters, distributors, exhibitors, producers, and policymakers to ensure that the most creative, innovative, diverse, and high-quality content makes its way to screens so that audiences can share in it.

1347   Notre dernier point porte sur la mesure des auditoires.

1348   Téléfilm est d'accord avec le Conseil qui estime que l'industrie canadienne de la télévision devrait avoir accès à des outils appropriés pour répondre efficacement aux changements dans l'industrie, aux besoins et aux intérêts des téléspectateurs.

1349   Il existe plusieurs façons pour les sociétés d'alimenter le succès canadien, en rejoignant les auditoires dans les salles de cinéma et sur les plateformes numériques, en rapportant des prix, en augmentant leurs ventes et en créant des partenariats ici et à l'étranger par la coproduction, entre autres.

1350   En tant qu'investisseur, l'accès à des données précises mesurant par exemple le niveau d'écoute est d'une importance capitale puisque celles-ci nous permettent de savoir si nos ressources sont utilisées efficacement.

1351   Pour les producteurs et les distributeurs, ces données pourraient les aider à accroître leurs revenus.

1352   En résumé, les consultations Parlons télé du Conseil arrive à point nommé. La télévision demeure le média grâce auquel nos histoires peuvent atteindre le plus de Canadiens possible.

1353   Notre industrie connaît beaucoup de succès alors que nos histoires trouvent un écho auprès d'un public national et international.

1354   Notre industrie possède un talent, une créativité et des compétences de calibre mondial.

1355   Oui, le financement d'émissions de télé et de films posera toujours un défi en raison de la nature extrêmement risquée de cette industrie et de la taille restreinte de notre marché.

1356   Mais nous pourrions faire plus, beaucoup plus. Je crois qu'une ovation en termes d'accessibilité et d'engagement des consommateurs est essentielle si nous voulons que le contenu canadien interpelle réellement les auditoires.

1357   Il existe plusieurs exemples qui prouvent que lorsque nous offrons aux talents un tremplin pour accroître leur visibilité, la demande est au rendez-vous.

1358   Il est capital pour notre industrie que nous fassions équipe pour promouvoir efficacement les talents de chez nous.

1359   Je vous remercie encore une fois de nous avoir invités aujourd'hui et Dave et moi serons heureux de répondre à vos questions.

1360   LE PRÉSIDENT : Merci beaucoup.

1361   Monsieur le Vice-président.

1362   CONSEILLER PENTEFOUNTAS : Merci. Merci beaucoup. Merci, Madame Brabant et Monsieur Forget.

1363   Clairement, il nous faut une infrastructure aussi solide en promotion qu'en production et que nous avons fait du progrès remarquable du point de vue production au Canada. Nous n'avons qu'à voir les succès au Canada et à travers le monde.

1364   Mais, peut-être que j'aimerais ça un petit peu plus de contenu, si vous voulez, sur le comment.

1365   Et, j'ai lu votre document de ce printemps, et je vous écoutais également aujourd'hui.

1366   Est-ce que vous avez un plan et avec... plus détaillé sur le comment?

1367   MME BRABANT : Depuis quelques années, Téléfilm s'est posé beaucoup de questions justement sur la promotion. Parce qu'on a fait le constat qu'effectivement, on avait travaillé beaucoup sur, développer le côté offre de l'industrie du film. Et on s'est posé beaucoup de questions sur comment on pouvait développer le côté de la demande. Je peux vous dire que les réponses ont pas été nécessairement évidentes.

1368   D'une part pour notre rôle à nous, Téléfilm Canada, on a revu notre mandat et on a vu qu'effectivement on était là pour développer l'industrie et en faire la promotion.

1369   Mais, comme on n'est pas un propriétaire de droits, on n'est pas un propriétaire de contenu, il y a eu quand même, on peut dire, dans les tentatives ou les expériences qu'on a faites ou les projets-pilotes qu'on a tentés, des embûches qui ont été mises sur notre... auquel on a fait face.

1370   Ce qu'on a eu, par contre, dans les trois ou quatre dernières années où on a fait des essais, c'est qu'à essayer de travailler ensemble, à essayer de voir comment, avec des partenaires comme le CMF, le CMPA.

1371   CONSEILLER PENTEFOUNTAS : M'hmm.

1372   MME BRABANT : Et le CRTC aussi, où on a travaillé ensemble pour mettre... pour réunir l'industrie ensemble sur ce sujet-là il y a deux ans maintenant, deux ans et demi.

1373   Je pense qu'ensemble, on peut y arriver à trouver des solutions.

1374   Ce qu'on pense qu'il faut, c'est qu'il y ait un modèle structuré comme on l'a en production.

1375   Actuellement, nos fonds de marketing sont destinés aux projets. Donc, par exemple, si on voulait... on parlait ce matin Éléphant qui disait par exemple, on veut être plus visible sur la scène internationale. Et pour ça, bien, on n'a pas nécessairement de ressources. On va aller dans les festivals.

1376   C'est exactement sur ce genre de structure-là auquel on pense, ça veut dire d'avoir un fonds plus structuré pour faire la promotion, non seulement des projets, mais de l'industrie et des talents dans son ensemble.

1377   CONSEILLER PENTEFOUNTAS : Mais si nous avons une tarte globale, puis c'est pas pour agrandir nécessaire tarte-là, même s'il risque d'y avoir des belles idées comme le PPP que vous avez... dont vous avez fait mention dans votre document d'aujourd'hui.

1378   Mais, nous avons une tarte globale. Est-ce qu'on doit pas nécessairement augmenter la partie promotion, quitte à ce qu'on enlève un petit peu de la partie production de cette tarte-là pour les fins de la promotion du cinéma canadien?

1379   MME BRABANT : Pour le cinéma, c'est une question qu'on s'est posée aussi.

1380   CONSEILLER PENTEFOUNTAS : Sans doute.

1381   MME BRABANT : C'est difficile, parce que je dirais qu'il y a un minimum d'activités de base dans le cinéma. C'est une des choses qui est très, très difficile et on n'est pas la seule industrie du cinéma, le seul pays qui fait face à cette contrainte-là.

1382   C'est très difficile de prévoir le succès d'un film. Et donc, il faut qu'il y ait un certain nombre de films qui soient faits pour qu'on puisse en avoir, dans ces films-là, qui aient du succès.

1383   L'autre chose aussi qui est importante, et d'ailleurs, François Girard le mentionnait ce matin dans un article du Devoir. Il disait qu'un des éléments qui avait fait, qui avait été important dans sa carrière à lui, c'est qu'on lui avait permis de faire des erreurs, qu'on lui avait permis de faire des mauvais films.

1384   Et donc, il y a un équilibre entre le montant qu'on considère que la production pour assurer que nos cinéastes puissent faire plus qu'un film, et donc, enlever l'argent à la production pour la donner à la promotion, ça risque d'avoir des impacts sur le développement de ces ressources-là. Ça, c'est clair.

1385   CONSEILLER PENTEFOUNTAS : En faisant la promotion des films canadiens, est-ce qu'on va pas, en effet grandir la tarte? C'est-à-dire que si on fait la bonne promotion d'un film, il va y avoir un plus grand auditoire.

1386   Éventuellement, à un moment donné, dans la chaîne, il va y avoir une augmentation dans les revenus et les recettes.

1387   Conséquemment, il va y avoir plus de moyennes pour en créer plus de films.

1388   MR. FORGET: That's precisely what we've seen in the last few years as a function of Telefilm's participation in individual films. Producers have done a better job of leveraging third-party financing from the marketplace, and part of that is exactly the logic that you just presented. The extent to which our directors, producers, and so on have been successful internationally and within Canada creates value, creates expectations.

1389   I think there's a notion that, when we talk about individual projects, individual projects come and go, it's the talent that's constant. When you're building talent, as Carolle was saying a second ago, you create a situation where the market then comes to that talent. The next film, and the film after that, based on success, becomes easier to finance leverages and does precisely what -- I mean that's the best-case scenario, of course, in a risky business, but you create value right across the spectrum.

1390   COMMISSIONER PENTEFOUNTAS: I think that is the point I was getting at, but...

1391   The other point is that I think that the question should be posed: Est-ce qu'on a le bon équilibre, si vous voulez, entre promotion et production et les moyens qui sont accordés à un domaine par rapport à l'autre?

1392   Dans le contexte de ce que nous vivons, la société moderne, numérotisée et autres, où la promotion est au coeur des succès, parce que tu peux en produire le meilleur des films si personne en écoute, puis s'il n'y a pas de buzz qui est créé autour, ça serait assez difficile d'aller chercher cette audience-là.

1393   Alors, dans la société moderne dans laquelle nous visons, l'importance de la promotion et de ce mot qu'on peut utiliser « marketing », est-ce qu'on doit pas être plus sensible et plus généreux, si vous voulez, dans le domaine de la promotion qu'on a été jusqu'ici?

1394   MR. FORGET: I think that's precisely our thesis: is that, on the one hand, we're reconciling the need for a critical mass of activity on the production side so we have a robust structure for supporting production. I don't think we're in the "rob Peter to pay Paul" business. I think we're saying we need more production, that will, ultimately, then feed the cycle, as you described earlier.

1395   COMMISSIONER PENTEFOUNTAS: Or promotion to feed the cycle.

1396   MS BRABANT: Yeah, exactly.

1397   MR. FORGET: Yes, that's precisely right.

1398   MS BRABANT: That's exactly what we are saying.

1399   COMMISSIONER PENTEFOUNTAS: Okay.

1400   Any more ideas on films, Canadian films, des longs métrages? Est-ce que nous avons d'autre eau à apporter à ces moulins-là, in terms of television and films, and Canadian films, and the production and promotion and exhibition of Canadian films on Canadian television --

1401   MR. FORGET: Yeah, I think it --

1402   COMMISSIONER PENTEFOUNTAS: -- because you mentioned in your original factum that it was very -- it's popular and people enjoy it when they get access to it.

1403   MR. FORGET: Yes. Well, I mean this is "Let's talk TV" and I think we are conscious of the role broadcasters play, it's where most Canadians see Canadian films for a starter and we are seeing and we've heard from a number of the intervenors and we probably will in the rest of the week, that the landscape is changing vis-à-vis the ability of content.

1404   In this case we are talking about feature films across different platforms and that as that's happening we've heard so far today about the collapse of Windows or the proximity of Windows, the collapse of the orderly marketplace, all those things are present in our thinking in consultations with industry and that, you know, our response to that is that, you know, what seems to be a more realistic approach to the marketing of publicity in the life of a film, et l'ensemble des films, so you have the two things going at the same time, it's kind of what we are going after.

1405   And I think that the broadcasters that we have spoken to are keen to get involved and I think there is an important role for them to play in moving them up in a continuum, not necessarily in availability, but in terms of the role that they could play in promoting films.

1406   And so, I think that it's an important component of our intervention, the role that broadcasters could play in the promotion of feature films.

1407   COMMISSIONER POUNTEFOUNTAS: And you also briefly raised in your intervention time PNI to long form Canadian films. Would you be in a position to sort of put a little more meat around that bone today and what the Commission can do to help?

1408   MR. FORGET: Well, I think we were reflecting some of the suggestions that came up at the Flash Conference that we hosted collectively. And we think that these -- we don't necessarily have a plan to put in front of you, but we think that these were suggestions to be mindful of in the context of the hearing.

1409   MME BRABANT: Mais, là, l'idée... une des idées qui était venue et qui a aussi été utilisée par Éléphant, par exemple, c'est le fait de... C'est clair que pour un diffuseur c'est plus facile de faire la promotion d'une série de contenus plutôt que d'un seul contenu ensemble.

1410   Donc, l'idée, par exemple, de faire des ensembles de films sous une bannière particulière, ça, ça pourrait être intéressant, mais ça pourrait permettre aussi de... parce qu'on a parlé aussi beaucoup de "curate", le contenu, c'est-à-dire de faire en sorte que les auditoires sont intéressés à aller voir le contenu qui est proposé, le contenu de longs métrages.

1411   C'est sûr que le long métrage c'est une bête à part. C'est une bête difficile à financer et dans l'environnement d'aujourd'hui c'est une bête aussi difficile à faire la promotion.

1412   Donc, on est... on a aimé les propositions qui ont été faites de faire justement des propositions d'ensemble de contenus, de penser autrement sur comment on pourrait présenter les longs métrages.

1413   CONSEILLER PENTEFOUNTAS: Et même au niveau télévisuel, les longs métrages sont en crise si j'ai bien lu votre document et d'autres. Et vous aurez peut-être... d'ici le 19 septembre si vous avez d'autres idées à mettre de l'avant sur comment le régulateur peut aider.

1414   Il y avait une question de EAM de l'inclure dans le EAM ou de l'inclure dans une sous-catégorie de EAM et si nous prenons pour acquis, mais ça risque de ne pas être le cas, que le long métrage au niveau télévisuel est en crise, est en train de traverser une période de grand défi.

1415   Alors, si c'est le cas, et vous avez quelque chose de plus substantiel à mettre de l'avant, sentez-vous à l'aise d'ici le 19 de l'apporter.

1416   MME BRABANT: Merci.

1417   LE PRÉSIDENT: Merci. Seulement une question pour vous.

1418   You have seen our working document and you have been involved in the screen base productions for quite a while, when you look at those -- that working document, is there something in that working document that, just one, that you would say that would cause -- that's a very bad idea, that's the worst idea, and something you would say that's the most important priority we should be going forward on? The two extremes.

1419   MR. FORGET: There is a number of things we wouldn't comment on.

1420   MS BRABANT: Well, we can come back to you with that.

1421   THE PRESIDENT: Okay. I appreciate that. I may be asking other people that question going forward, so you might want to start preparing your answers, but I understand that you were the first one, so you have a valid excuse.

1422   Alors, merci beaucoup.

1423   MME BRABANT: Merci.

1424   LE PRÉSIDENT: Ce sont nos questions.

1425   MME BRABANT: Merci.

1426   LE PRÉSIDENT: Madame la Secrétaire.

1427   THE SECRETARY: I would now ask Canada Media Fund to come to the presentation table.

--- Pause

1428   THE SECRETARY: Please introduce yourself and your colleagues and you have 15 minutes for your presentation.

PRESENTATION

1429   MS CREIGHTON: Good afternoon

1430   Mr. Chair and Commissioners. My name is Valerie Creighton, President and CEO of the Canadian Media Fund. And with me today are Stéphane Cardin, Vice President of Industry and Public Affairs; Sandra Collins, Vice President of Operations and CFO; and Glen Wong, member of our Board of Directors and Chair of our Governments Committee.

1431   Our Board chair, Alain Cousineau, sends his regrets.

1432   We are delighted to be part of the kick-off day for this important hearing on the future of television and canadian contents.

1433   Before we make our presentation we have a short video to show you, which highlights how Canadians are consuming content today. Would you, please, roll the clip?

1434   Somebody has got the clip? I don't know. That's a good question. I didn't bring it to the technician. Emmanuelle, do you have it?

1435   MS EMMANUELLE: No. It was given to them.

1436   MS CREIGHTON: It was given, yes, okay. So, I'll sing, I guess, while we are waiting on the clip.

1437   THE PRESIDENT: Or plan B might be that why don't you finish your presentation and we will look at your clip at the end.

1438   MS CREIGHTON: Plan B might be to keep going.

1439   THE PRESIDENT: I am sure they will have time.

1440   MS CREIGHTON: Okay. I guess you don't want me to sing.

1441   THE PRESIDENT: I didn't say that really.

1442   MS CREIGHTON: Yes.

1443   UNIDENTIFIED SPEAKER: I did.

1444   MS CREIGHTON: Okay. As you didn't see by the video, we do know Canadians are deeply engaged by digital technology and great content is central to drive viewing.

1445   Fostering, developing, financing and promoting the production of great Canadian content for all media platforms is the mandate of the CMF. So, as we all connect the dots in this hearing, we are ever mindful of this critical link between technology on the one hand and content and how it is created in Canada on the other.

1446   I would like to begin our presentation by framing it within the Government of Canada's Digital Canada 150 Strategy.

1447   As you know, Digital Canada 150 was launched earlier this year to ensure that Canada is positioned to not only embrace its digital future, but to also assume a leadership role in a global digital world. Canadian content is identified as one of the five pillars got in Canada's digital future and the CMF is a key player in this part of the strategy, and I quote from the Strategy Document:

1448   "We created the Canadian Media Fund to foster, develop, finance and promote the production of Canadian content and apps for all digital media platforms. The CMF is one of the instruments the Government of Canada has put in place to promote Canadian content online, which will enable Canadians to better celebrate our national story and what it means to be Canadian."

1449   So, ultimately, this hearing is about how we as Canadians ensure the guiding principles of the Broadcasting Act remain relevant and applicable in a digital world. And as the Commission has pointed out, critical values and principles of the Act, such as diversity and representation of all Canadian voices in the system are at the heart of this hearing. The fostering of compelling Canadian programming remains a priority issue.

1450   MR. WONG: We at the CMF were heartened by the resounding support for our role as a critical player in the system, expressed in many submissions in this process.

1451   We believe these references validate our core mission as an independent and neutral instrument for the efficient administration of funding to support Canadian stories and Canadian programming. Can we do more? Of course. And can we do better? Undoubtedly.

1452   The Board of the CMF is focused on continuing to be a catalyst for great Canadian content while balancing competing interests of all stakeholders in a rapidly evolving broadcast system.

1453   For example, in response to the objective to support programming, which attracts larger audiences, we developed funding mechanisms to reward content that achieves demonstrable success with Canadians.

1454   In response to the need to foster programming for all Canadians, we developed dedicated funding programs for official language minority communities, programming in aboriginal languages and in several other languages spoken by Canadians. Our funding program reflects the diversity of Canadians.

1455   In response to the new digital reality, we launched the convergent and experimental funding streams to ensure on the one hand that television programming extends to multi-platform experiences and, on the other hand, to drive innovation and the creation of new Canadian digital content and technologies.

1456   This new approach to funding content has sparked the interest of cultural industry stakeholders in several countries. The CMF has been invited to speak about its successful model in a number of forms in Argentina, Australia, Brazil, Denmark, France and South Korea, just to name a few.

1457   M. CARDIN: Le FMC estime que les secteurs de la production de la radiodiffusion et de la distribution sont mieux en mesure de formuler des commentaires sur les questions précises portant sur la réglementation que le CRTC a soulevée dans le cadre de la présente audience.

1458   Toutefois, comme nous le mentionnons dans notre mémoire, ce sont ces mesures réglementaires qui assurent le maintien du niveau important de financement du contenu canadien que procure le système actuel.

1459   En effet, nous considérons que le régime réglementaire a permis l'émergence de la période la plus dynamique et la plus prolifique de l'histoire de la télévision canadienne.

1460   Nous sommes aussi d'avis qu'il est fondamental de communiquer ce lien vital entre le soutien réglementaire et le financement et la vitalité d'une industrie audiovisuelle d'une valeur de plus de $5 milliards par année ayant produit des émissions indéniablement populaires.

1461   En tant que moteur d'une grande proportion de cette programmation canadienne, le FMC suit de près la présente audience car ses résultats auront des répercussions directes sur notre capacité collective à raconter nos propres histoires.

1462   MS COLLINS: The CMF would like to correct a few small points and address some of the conclusions of the May 8th report.

1463   First, the report incorrectly states that the CMF is funded in part by Telus in Canada. We would like to clarify that CMF funding comes from cable satellite and IPTD broadcasting distribution undertakings, BDUs, federal government as well as from a grouping interest.

1464   Second, the CMF does not receive the full five percent of BDU revenues directed to support Canadian programming. A portion of BDU contributions may be directed to local expression and other independent funds.

1465   Finally, the view expressed in the report that 40 years or regulation and funding support have not worked, ignores results that have clearly demonstrated otherwise. We have never witnessed such broad base successes in Canadian television and in particular, in Canadian drama as in the past ten years.

1466   For the first time, English-Canadian drama series such as Rookie Blue, Orphan Black, Murdoch Mysteries, Flashpoint and Saving Hope are consistently attracting audiences in Canada of more than one million viewers in prime time, not to mention audiences in other countries.

1467   Audience share for Canadian drama series in prime time has gone up, not down, as stated in the May 8th report.

1468   We have attached to our presentation a chart that clearly demonstrates that audience share for Canadian drama series has increased its expensive foreign viewing and in the French market, in the winter of 2014, 13 CMF funding projects attracted audiences of over a million with La Voix, Unité 9, clocking in a 2.7 and two million viewers respectively.

1469   Four years of public policy and regulatory support have made a difference. Canadians are watching high quality Canadian programs in prime time.

1470   M. CARDIN: Le FMC n'est pas seulement l'un des contributeurs les plus importants au financement du contenu canadien. Il permet également la création de tout type de contenu dont l'ampleur et la forme varient grandement. Cependant, nous sommes d'avis qu'on ne peut traiter un succès fulgurant sur YouTube comme celui qu'a connu le projet montréalais Epic Meal Time, de la même façon que le succès tout aussi remarquable d'une série dramatique télévisuelle comme Saving Hope.

1471   Une grande partie du contenu original diffusé sur YouTube est autofinancée ou, du moins, financée sans le concours du soutien public. Cette situation ne diminue ni son attrait ni sa portée. Il s'agit simplement d'un type de contenu distinct.

1472   Le coût de développement et de production de contenu en ligne et celui des séries télévisées sont complètement différents, tout comme le sont leur cycle de vie créatif et leur modèle d'affaire.

1473   Au fait, le constat a toujours été le suivant: Comme il est possible d'acquérir facilement des émissions étrangères à une fraction des coûts de production du coût des productions nationales, certaines catégories d'émissions ne seraient tout simplement pas produites sans le soutien réglementaire et l'aide au financement.

1474   Or, ces productions demeurent importantes pour l'expression de notre identité nationale.

1475   En fait, bon nombre des émissions canadiennes les plus populaires sur Netflix, notamment Orphan Black, Murdoch Mysteries et Trailer Park Boys ainsi que Les Parent, La Galère et les Invincibles ont été développées et produites grâce au système de télédiffusion canadien.

1476   If we wish to ensure that the priority programming such as drama and documentaries continues to flourish in a digital world, then the principles of the Broadcasting Act should carry forward in some form.

1477   MS COLLINS: We are delighted that the Commission has recommended adding children's programming to the definition of priority programming. Similarly, the inclusion of expenditures on original online content in Canadian programming expenditures for CPU is forward looking.

1478   We also believe that other proposals such as encouraging increased promotion of Canadian content and incentives for over-the-top services, OTTs, to participate in the system should be explored further.

1479   As we demonstrated, by designing targeted programming we could design the funds specifically for the OTTs sector of the industry. Through our ongoing dialogue with our funding partners, our comprehensive industry consultation process and our monitoring of industry trends, the CMF has demonstrated its ability to facilitate change in the television and digital media sectors.

1480   It's great news that Netflix is financing a revival of Trailer Park Boys, but this Canadian series was nurtured by a combination of support for the Nova Scotia Film Development Corporations, Nova Scotia and Federal Tax Credits, Showcase Television and the CMF over seven years.

1481   It became a hit series, but would this have occurred without Canada's funding and regulatory system? The hit and miss vagaries of the market simply cannot ensure that Canadian stories from coast to coast to coast will be made, let alone widely accessible to the public.

1482   MR. WONG: The CMF is dedicated to the creation of Canadian programming that reflects Canadian attitudes, opinions, ideas, values and artistic creativity. We recognize that the explosive growth in broadband and mobile technology we are experiencing today is not simply an extension of existing media.

1483   The technology choices available to consumers today to transform their entertainment consumption to a personalized, portable, sharable, on-demand experience, are entirely disruptive to existing media. This tsunami of content, choice in outlets makes this one of the most exciting periods for content creators and consumers worldwide.

1484   But while we are a washing content, where will our world -- where will the world find our Canadian stories in the future? If broadcast television remains a cornerstone in our strategy to deliver Canadian content, then digital media and platforms are critical to ensure consumer access to Canadian content anytime and anywhere.

1485   MS. CREIGHTON: We know that "discoverability" is the greatest challenge in a world of infinite content choice and where market forces prevail, "discoverability" will be determined by three factors: celebrity, marketing dollars and broadest appeal.

1486   We cannot expect, given the resources available, the size of our country's population and the constant wave of media self-promotion from our neighbour that Canadian stories, values and interests will all be best served by these criteria of pure market forces.

1487   Promotion has never been so important, whether it's marketing dollars for big event productions or targeted social media campaigns for programming with smaller, yet passionate niche audiences, the key is "discoverability".

1488   For the last four decades, the Canadian public has invested in Canadian content and it's apparent that they want it and appreciate access to it.

1489   So, how do we get better at making sure the content we support actually reaches the audience? How do we let viewers know where to find the shows that have been made for them by passionate and committed Canadian creators and producers? How do we encourage a pride of authorship and ownership for our stories?

1490   The CMF along with Telefilm Canada, the CMPA and over 30 other industry partners have been working on strategies to bring greater awareness to the success of our industry. The creation of the High on Canada brand is just a first step. We are also looking at how our funding programs can more effectively address "discoverability" in the new digital world.

1491   It's no longer enough to fund high quality Canadian content. We must ensure that it can be found and succeed across a variety of platforms.

1492   In closing, the CMF is committed to moving forward with new measures to ensure that high quality Canadian content succeeds in this complex new world, but we should not underestimate the magnitude of change under way and the impact of this change for all stakeholders in the Canadian system, and there are three considerations in this change.

1493   First, no one can point to a precise formula that will guarantee successful content in any market. As a country, if we want to continue to have Canadian programming that is available to and resumates with audiences at the level it does today, we will all have to take steps to ensure this happens.

1494   Secondly, viewers' appetite for content is insatiable. The CMF supports Canadian stories, voices and diversity in a rapidly expanding global digital media environment and is well-positioned to assist in connecting Canadian content with audiences wherever they are, on television and digital platforms.

1495   And finally, the CMF is an independent transparent proven funding and promotion mechanism for Canadian content with demonstrated results. We are neutral, work with all stakeholders and balance a broad range of often competing interests with the public interest at heart. Our shareholder is the public.

1496   We hope that this hearing results in a forward looking and risk taking policy framework which encourages the continued production and promotion of great Canadian content from all corners of the country.

1497   Many thanks, Mr. Chair and Commissioners, and on behalf of the Canadian programming industry, we would like to express our gratitude for your recent decision on the Tangible Benefits Policy and we would be pleased to answer any of your questions and can we have the video now? Yes? Oh! there is a yes. Would you, please, roll the clip.

--- Video presentation

1498   THE PRESIDENT: So, thank you. I think I'll have a few questions for you if that's okay.

1499   So, the first question I have, and it doesn't -- perhaps you've changed your approach, but it doesn't come out as much in your submission this morning as it did in your written submission. But there seemed to be a fear that the programming funding streams at the CMF will have been, and will continue to be, oversubscribed, and I got the impression that you thought that that was a bad thing. I would have thought in any market it's probably a good thing to have more demand than offer because it ensures quality.

1500   MS CREIGHTON: True. It wasn't intended that we would reflect a sense of fear in that, but recognition that the demand on the programs far exceeds the resources available. In terms of the future forecasting that we've attempted to do at the CMF, it's clear that, while our revenue sources, at least in terms of our traditional BDU revenue sources, have fluctuated, we don't foresee that the long-term future, the amount of money that we get from that source, is likely to hold, given the behaviour of consumers and the trends that are obvious in the marketplace.

1501   So I think the question becomes, for us: what do we do in that event? If the fund ends up being a $65-million fund instead of $365-million, what kind of choices need to be made? While it a sign that strong demand is a sign, I think, of a healthy environment, it becomes, then, a question of choice: how much, which type, and do we continue to focus on programming in the way we have traditionally or do we need to look to a different kind of model?

1502   I don't know if Sandra or Stéphane want to add anything on the revenue piece now.

1503   THE CHAIRPERSON: Well, let's come to the funding model.

1504   As I understand it, there is a government decision on the ongoing funding of the CMF, so that at least creates a stable base. I assume your fear would be that on the BDU contribution it would somehow reduce over time.

1505   I mean are you fearing that the revenues, the gross revenues, of the BDU undertakings will shrink over time?

1506   I take it that you won't see this tremendous growth we saw when satellite was launched and Canadians that hither before had not been connected to a cable company could now be connected to a BDU through satellite technology. Same thing with IPTV, which also expanded the platforms. But are you seeing the BDU pie, or gross revenues, shrink over time?

1507   MS CREIGHTON: Projecting out five years, yes. I don't think it's so much of a fear, but a recognition of a reality that might happen in the country if, in fact, consumer behaviour continues to evolve the way it's evident it has been, in terms of subscriber base, because our revenue is contingent only upon the cable revenue in the system, as you well know.

1508   So while the fluctuations have been up and down in the last couple of years, the numbers that we've looked at in a five-year rollout are certainly indicating that a decline is possible.

1509   I don't think it's a fear as much as a reality check on our part so that we can try to position ourselves in the best possible way to get ready for the future, because that revenue source is not something that's controllable on our part. We have to react to what comes in the door to support the programming. We can't do much about where the market is. That's contingent on others.

1510   THE CHAIRPERSON: And your projections are based on what? Cord-cutting?

1511   MS CREIGHTON: I'll pass that to Sandra.

1512   MS COLLINS: Our projections are partly based on changes we're seeing.

1513   If I could just back up to the bigger picture, what's also impacting us is the change in the mix of type of subscriber, and based on what -- the contribution the CMF receives per those subscribers. So, as you know, those companies that have DTH contribute a greater amount to the CMF than those that's traditional cable or IPTV.

1514   So some of it, although the subscriber numbers are going down slightly, it's very much the mix of subscriber that's we see as potentially impacting as much as anything, as people choose different means of delivery.

1515   THE CHAIRPERSON: So a loss indirectly of a DTH subscriber has a greater impact on the contribution you get indirectly than, let's say, a cable subscriber?

1516   MS COLLINS: Yes, so -- or where people are choosing to move from DTH to IPTV, say, or cable, it's a reduction for us even though they may still maintain the subscriber numbers.

1517   THE CHAIRPERSON: Okay, because cable and IPTV can direct a percentage of their local reflection --

1518   MS COLLINS: To local expression.

1519   THE CHAIRPERSON: -- local expression through the community channel or other --

1520   MS COLLINS: Correct.

1521   THE CHAIRPERSON: So that's the nature of the fear, it's not so much the reduction --

1522   MS COLLINS: Well, I'd say we still see -- I mean we follow a number -- we follow analysts' reports on various companies, and overall there's an indication that there will be further subscriber loss. So whether that comes from people cord-cutting or just people never taking up cable, whatever the --

1523   THE CHAIRPERSON: Is that loss or less growth --

1524   MS COLLINS: Right --

1525   THE CHAIRPERSON: -- because there's a difference. I mean the --

1526   MS COLLINS: Yes.

1527   THE CHAIRPERSON: -- recent numbers have suggested maybe there's been 100,000 people lost --

1528   MS COLLINS: M'hmm.

1529   THE CHAIRPERSON: -- in the BDU world, but a few years back, when there were new developments being built, I mean there was a more positive --

1530   MS COLLINS: M'hmm.

1531   THE CHAIRPERSON: -- growth of BDU subscribers even just 5, 10 years ago, right?

1532   MS COLLINS: Yeah, I'd say we've seen a small loss. But the growth we did experience, we were very lucky for quite a number of years with quite substantial growth.

1533   We did look also at the creation of new households, and compared that to versus the growth in subscribers, and there's definitely a gap there. So where new households are created, they're not necessarily taking up cable in any form.

1534   MR. WONG: Mr. Chairman, I think there might be a generational fear as well here: that young people just aren't adopting television habits like I might have. I'm, as it turns out, a pretty heavy viewer, but my daughters certainly aren't. My 21- and 24-year-olds don't think of sitting down and watching television. They won't even join us for PVR experience now. They're looking at it in a completely different way.

1535   So if we think longer term, and what the younger generation is doing now, and project that out over a much bigger per cent of the population, that's a fear.

1536   THE CHAIRPERSON: All right, understood now.

1537   And now I'm going to turn a little bit to the experimental stream, which I think perhaps didn't get as much attention as it could have as we look future-looking.

1538   So maybe for the benefit of others, you might remind us why it was created, and when, and how different it is from the convergent stream.

1539   MS CREIGHTON: Stéphane will speak to this.

1540   MR. CARDIN: Well, it was announced in 2009, and launched in 2010, April 2010, essentially to drive innovation in the creation of Canadian content and application technology. And, you know, it is very diverse, in the sense that it funds different types of content, very different types of content gains, whether they be for consoles, PCs, mobile platforms. It funds interactive web series, ebooks, portals. It does fund, as well, as I said before, apps and software development. So very diverse, and, again, with a goal to foster innovation in the system and drive innovation back to the mainstream industry.

1541   After four years of operation of the stream -- and as, you know, Val pointed out, there has been heavy oversubscription to that stream -- we feel that it has been very successful. You know, in hearings such as a standing committee, a Heritage standing committee, many interveners have pointed to the experimental stream as having made a big difference to the development of an independent Canadian gaming industry and game companies being able to actually develop and retain and monetize some IP. We've seen -- so quite a lot of success in the game sector.

1542   Regularly, every year at the Digital Emmys and other events around the world, we see Canadian trans-media projects at the forefront, winning awards internationally, gaining a lot of critical appeal. We've seen, you know, on the software and app side a lot of companies, you know, working, developing second screen apps for broadcasters here and in the U.S. to tremendous commercial success.

1543   And, you know, in closing, I'd say it's also been the opportunity for us to develop links with the investment sector, which we started doing with Canadian accelerators, first and foremost. And now we're pushing that internationally. We just announced yesterday, with the Canadian Trade Commissioners Services, a deal with Canadian technology accelerators in the U.S. and the U.K. to provide more mentorship and funding support to projects that have been funded through the experimental stream, and we're now working on some matching fund agreements with some funding partners internationally.

1544   So, you know, in many respects I think that the decision to create that program was quite forward-looking and that it's had -- it's showed some successful results in the past four years.

1545   THE CHAIRPERSON: What is the balance between the convergent stream and this stream, the experimental stream, in terms of --

1546   MR. CARDIN: The experimental stream in the current fiscal, I believe, is still at -- is at $39 million, out of a total program budget of $368 million.

1547   THE CHAIRPERSON: How's that evolving over time?

1548   MR. CARDIN: Actually, it is the program in the CMF whose budget, in a proportional basis, has increased the most since the launch of the CMF in 2010. It was originally, I believe, around $25 million, and we've grown it up to $39 million over the space of four years, while other programs have had a more moderate increase.

1549   THE CHAIRPERSON: Right. As I understand it, too, it's not an envelope, it's a competitive system.

1550   MR. CARDIN: It is a selective system, and we've devised a model where we employ a jury of experts from Canada and overseas, people with complementary expertise, but in various parts of the digital media sector. It's model that has worked very well for us to this day.

1551   THE CHAIRPERSON: And the applicants are not independent producers or broadcasters, it's a wide-open category. It can be, but it's also open to a whole variety of applicants.

1552   MR. CARDIN: Absolutely. In fact, in terms of eligible companies, the only criteria is that they have to be Canadian controlled and for-profit. Anyone can apply.

1553   THE CHAIRPERSON: Now in your presentation, you talked about the challenge of discoverability --

1554   MR. CARDIN: Yes.

1555   THE CHAIRPERSON: -- a curatorial function that will be more important in the online environment.

1556   Are you seeing applications to the experimental stream that's trying to crack that conundrum?

1557   MR. CARDIN: I would -- well, I'd point out again to some of the second screen applications that we've funded. Truth be told, that would be a majority of the overall number of projects that we've supported, but certainly a few have been in that direction.

1558   But, you know, in terms of discoverability, we're trying to crack that nut in a number of ways, even in the convergent stream, for example, by allowing a greater proportion of marketing expenses in the budgets that we fund than we have historically to allow things like social media campaigns related to television programs and their digital components.

1559   We're also, you know, doing certain studies as well. We fund studies or do our own studies at the CMF, and have done some with certain measurement firms, on social media like Cvibes and others.

1560   So we're, you know, working at it, I would say, on a number of different fronts, but I'm sure Valerie would want to add some points.

1561   MS CREIGHTON: If you're referring to: has anybody come forward through that stream with an application that would crack the nut of discoverability by way of an app or something --

1562   THE CHAIRPERSON: Or something, yes.

1563   MS CREIGHTON: -- no, we haven't seen that yet. But we would welcome it.

1564   MR. WONG: We'd fund it.

1565   MS CREIGHTON: We'd fund it immediately.

--- Laughter

1566   MS CREIGHTON: No, we'd send it to the jury, and then we'd fund it.

1567   THE CHAIRPERSON: That's what -- that's actually what I was looking for --

1568   MS CREIGHTON: Yeah.

1569   THE CHAIRPERSON: -- and why are -- you know, there is a -- it's almost a venture fund, in a sense, that is available, and I'm sort of wondering why people aren't taking --

1570   MS CREIGHTON: It would be a good place for that kind of experimentation to happen for certain.

1571   THE CHAIRPERSON: Now the CMF exists to finance compelling Canadian-made content. I think you'd agree with that.

1572   Does it really matter whether it's on traditional platforms or on new platforms?

1573   MS CREIGHTON: Well, in our opinion, we're all about the content, and, really, it's the content that we need to focus on. I think the consumer and the viewer audience will respond to good, compelling content regardless of the platform it's on.

1574   With the mandate of the CMF that came to us four years ago, you know, there was a fair bit of resistance in embracing it, and I think --

1575   THE CHAIRPERSON: You think so?

1576   MS CREIGHTON: A little -- and as we look back now, obviously, it was a very visionary approach by the federal government to require any content coming to a fund like the CMF to have more than one platform.

1577   So I think we've seen tremendous change in our sector, production and broadcast industry, to look at how and where the CMF can support their efforts in terms of responding to that market.

1578   You know, it's -- we try to remain as neutral as Switzerland in some of these comments because of the nature of who we are, but for us, if compelling Canadian content is available on any platform, anywhere, any time, to a viewing, consuming audience, we feel that's that our mandate is about.

1579   So whether it's traditional broadcast, online platforms, mobile, that's the convergence part of the CMF that makes it unique in the world. So for us it doesn't matter what the pla6tform is as long as the content is great, gets an audience, and is available to the consumer.

1580   THE CHAIRPERSON: Now you explained in your presentation today, and in your written document, some of your issues around promotion for Canadian television programs. I was wondering, though, is there promotion aspects that are part of the production budgets, in a sense, whether they're called that or not.

1581   Could you sort of give me a sense of how much of those production budgets are directly or indirectly going to promotion activities?

1582   MS CREIGHTON: There is. I mean recently we opened up our restrictions around costs for marketing and promotion to be included in the production budgets. I can't give you the numbers today unless we have them, but we'll certainly find that out.

1583   MR. CARDIN: Well, historically, technically it's been 3 per cent of the B plus C of the budget which could be allowable for marketing expenses. As I said, we're expanding the definition of what is considered "eligible marketing expenses" and allowing more in the budgets, but, again, always looking to do so in a way that is complementary and builds on the work that is done by the independent producers, the broadcasters and the distributors, rather than replacing those costs with our funding.

1584   THE CHAIRPERSON: Okay, because that's the risk: that if you start funding it, they'll pull back from doing what they normally do.

1585   Now this 3 per cent of B and C of the budget that would go, obviously, to traditionally media buys, advertising and that sort of stuff, but would it also go to a technology-type solution, an app to do a promotion, a game that's -- maybe in a children's programming, that also creates attention or buzz around the more traditional platform?

1586   MR. CARDIN: Well, given the scope of what we currently allow, I don't think it could fund, you know, entirely the development of an app, for example, but if there is an existing technology. Certainly, as I said before, it could fund promotional efforts that would not be in traditional media outlets, but, you know, online or others, or on social --

1587   MS CREIGHTON: On social media.

1588   MR. CARDIN: -- media, put more and more on social media.

1589   THE CHAIRPERSON: Would it be possible to undertake to provide the information on that amount of, let's say, for the last two fiscal years on an average, the mean --

1590   MS CREIGHTON: I think it certainly would.

1591   MR. CARDIN: Sure. It'll take some --

1592   THE CHAIRPERSON: -- for those, both on the average --

1593   MR. CARDIN: -- some handwork. I don't think it's all in the databases, but we'll do it for sure.

1594   THE CHAIRPERSON: And perhaps broken down between English and French.

1595   MS. CREIGHTON: Sure.

1596   MR. CARDIN: Okay.

1597   THE CHAIRPERSON: Thank you. I'll stop there.

Undertaking

1598   THE CHAIRPERSON: Now we know that part of the future is linked to exploiting the long tail. You mentioned, in fact, some people perhaps who are reaping where they have not sewn, in terms of some past productions.

1599   I was wondering to what extent the CMF dollars can they be used to free up rights to put older productions online.

1600   MS CREIGHTON: Well, that's a exploration that we've been undergoing for a couple years through -- really started with our work with Telefilm, and expanded to the CMPA and other groups. What we had hoped might come of that initiative would be that Telefilm and the CMF, at least combined, would develop a fund in which the many titles -- 22,000, off the top of my head -- that are still trapped in analogue would be able to become digitized.

1601   The rights issue is far more complex, and, of course, many of those titles were developed at a time when the contemplation of a digital universe did not exist. So the rights are a bit of a -- a bit of a deep hole when it comes to sorting that out.

1602   What we have done to try to take a look at that in the research, we looked at a series of titles from 1995 to 2005 for a couple of reasons to try to avoid the restoration-type issues that we heard about that Éléphant experienced. In fact, Éléphant was the model that we looked to when we first started doing this research to see what in that great success story could be duplicated for the English market.

1603   So we looked to the rights issues wholistically to see whether or not, given the complexity of freeing the rights, any kind of blanket agreements might be able to negotiate it with the current rightsholder, whoever that might be. We've been in meetings with the distribution companies in the country, as well as the unions and guilds, to explore that possibility.

1604   You know, we're not in the business of rights management or rights payments at the CMF, but I think if we can work in partnership with those who own the rights, and find a way financially to clear those rights and digitize that content, it is a wealth of back catalogue, that is paid for by the public, that's currently not available to the public.

1605   There are obstacles and resistance points in that dialogue. We haven't concluded those conversations yet, but we're making progress.

1606   THE CHAIRPERSON: It seems a shame because a lot of those projects were funded by Canadian taxpayers, either through their cable or satellite bill or through their taxes.

1607   MS CREIGHTON: Well, when you look at the list, I'd say it's more than a shame, it's an embarrassment as a country.

1608   THE CHAIRPERSON: When you look at our current regulatory system, in your view are there barriers that prevent producers and broadcasters to innovate?

1609   MS CREIGHTON: Hmm.

1610   I don't know if it's a question so much of barriers, but our system in this country was built kind of with an incentive to develop, produce, and either air or distribute that content. I think the focus in the early years was not so much on the long tail, or existence of that content in future markets, and it certainly wasn't so much focused on how to monetize that content. So I think it's a shift in thinking that we all have to come to arrive at.

1611   Certainly, when we look at, from the success most recently of the fund -- and I'll speak just to the bigger drama projects -- when a broadcaster and a producer are in sync on a project, and great promotion and marketing is put behind that content, it's obvious that it changes the numbers and that more people become aware of it and audiences respond to it.

1612   When Rookie Blue, by way of example, was first being -- coming into -- prior to it being aired, you couldn't walk downtown in Toronto without seeing a billboard or a piece of advertising about that content. We believe it affected dramatically the numbers for that show.

1613   I mean the content still has to hold the audience, but in terms of barriers through the regulatory process -- I can't think of any that come to mind, but I think the reason that this country started to develop and produce content some however many years it is now, if you go right back to feature film, 40, 50, the motives were a little bit different than they are today. I think it's taken us a while to recognize how successful Canadian content has been, is, and can continue to be with the right resources put behind it.

1614   Discoverability is also about the resources that you're willing to put into having people discover it through marketing and promotion. It's not just about, you know, finding an app to do it. It's about a clear focus and intent on a stellar piece of content that deserves to be seen by the world. I can't think of any barriers in the regulatory system. Can you? Glenn? No.

1615   I think it's just a case of changing the mind-set and realizing that Canadian content -- it's no longer the case of when I was growing up, in a small rural community, and we turned on the TV and everybody would say, "Oh, my God. That's so bad. It must be Canadian".

1616   That is not the case today.

1617   I mean our content holds its own shoulder to shoulder with content all over the world, in kids, in particular, in documentary and, now, in drama.

1618   So, I think we should be very proud of the change that's happened in the world responding to our stellar content. Our frustration is finding a way to make sure Canadians themselves can access it longer than an 18-month window on broadcast television or in three theatres across the country, if it's a feature film, can access that content on an ongoing basis and celebrate it.

1619   THE CHAIRPERSON: Can I turn, now, to the set-top box data?

1620   MS CREIGHTON: Sure.

1621   THE CHAIRPERSON: My recollection was that audience data was always a big challenge at the CMF because it's part of the envelop's -- the convergence stream is based on audience success, but some smaller broadcasters are disadvantaged in that environment.

1622   So, do you have views on the proposal that's in the working document?

1623   MS CREIGHTON: We are very supportive of it and would welcome the opportunity to be engaged if further dialogue or working group is set up around that.

1624   We've long recognized what many smaller, independent broadcasters have stated are the inequities in our system, as they view it.

1625   I'll ask Sandra to speak to that a little bit, in terms of how it's currently formed.

1626   We also did, three years ago now, begin a process of discussion as part of our consultation with the measurement specialists in the various broadcast sectors to bring them together to start to talk about the best way to measure viewing eyeballs on the digital side. But that is really a very early stage framework that's in discussion.

1627   Do you want to speak to the envelope?

1628   MS COLLINS: Sure. So, as you mentioned, half of the envelope weight is based on audience success. So, whether audiences are not measured or they're under-represented in the panels, they are at a disadvantage within our system, we do have other factors which, hopefully, they can leverage to sort of balance out that audience success.

1629   But wherever we could get more data and, also, census level date would be even better.

1630   Just to add on to what Valerie said, we have been working hard on the digital media measurement because, of course, we want to measure all of the content that we fund, which is equally a challenge, but we are now seeing results. We're not yet at the point of being able to say what's a success in some of those projects, but we are certainly beginning to measure them and continue to consult with the advisory group to go forward on that.

1631   THE CHAIRPERSON: Right. My last question is more of a curiosity.

1632   At page 7 of your presentation today, you say:

"We hope that this hearing results in a forward-looking framework, but, also a risk-taking policy."

1633   Could you unpack that for me?

1634   Where do you think we're taking a good risk?

1635   MS CREIGHTON: Who wants to start?

1636   All right. I will.

1637   I think when we thought about forward looking and risk taking -- I mean it's clear. We're all here because there has been change in the system. There's been change in the way content is made, viewed, and is accessible to the public. There's certainly demographic change that Glen referred to.

1638   I think for us the Canadian story, the Canadian sensibility, the visibility of who and what Canada is has been very successfully reflected around the world through our content.

1639   So, you could look to a system that stays the status quo, which wouldn't be particularly forward looking or risk taking, or you could look to a system that might consider elements that would take a bit of a risk, in terms of moving all of the agenda collectively forward to ensure that the content stays or is able to compete successfully in this world market with this overwhelming amount of infinite consumer choice that there is.

1640   So, that might be looking at areas like, if all players who participate in the making and benefit of content in the system are to work together, what might that look like, given the clear distinction that we have, right now, between the regulated and what is called the unregulated or over-the-top players who are increasingly becoming important, whether they're foreign or domestic, in making this content successful.

1641   It could be looking at ways that we ensure that the promotion marketing agenda reaches the public.

1642   And it could be -- I'm going to stop there, before I get myself into trouble.

1643   Glenn, do you have anything to add?

1644   MR. WONG: I think the risk taking is that there's no certain outcome to these hearings. I think, in past, people, you know, in the hallway back there while you're up there, they're talking about what's going to happen, and sometimes it comes across like it'll be a fait accompli. I think the way this process has been set up, this consultation, it's been so broad and it involved, you know, everyday -- every Canadian has the opportunity to participate in it.

1645   I think the risk is that there isn't a certain outcome, and I think there's so many factors -- I talked about my own daughters and the demographic differences. I come from a cable television background and I ran the largest video game studio in the world, and I know that from a technology standpoint there's so many other developments and changes.

1646   So, to me, the inherent risk in all of this is that it's uncharted waters for everybody and there's so many stakeholders.

1647   Our role in this is to finance, promote, and be transparent about the way that we help develop great Canadian stories and great Canadian content.

1648   So, I'd rather have our job than your job.

1649   THE CHAIRPERSON: But you would agree that the status quo is not an option?

1650   MR. WONG: Demographics. Technology. You listen to all the interests and all the various -- you know, in your next couple of weeks of hearings, you're going to hear people talk black, white, up, down, sideways.

1651   So, I think the status quo has to change somewhere, or else we're all going to fall into the tsunami of change that's around us.

1652   Canada is not alone in this. This is global, the forces that are at play here.

1653   THE CHAIRPERSON: Okay. Thank you.

1654   MS CREIGHTON: That's it?

1655   THE CHAIRPERSON: I think those are our questions.

1656   Thank you.

1657   MS CREIGHTON: Thank you very much.

1658   THE SECRETARY: I would now ask Shaw Rocket Fund to come to the presentation table.

--- Pause

1659   THE SECRETARY: Please introduce yourselves, and you have 10 minutes.

PRESENTATION

1660   MS SLAIGHT: Good afternoon, Mr. Chairman, members of the panel, Commission staff, ladies and gentlemen.

1661   My name is Annabel Slaight and I'm the Chair of the Shaw Rocket Fund.

1662   I'm joined by Agnes Augustin, President and CEO of the Shaw Rocket Fund.

1663   Thank you for giving us this opportunity to speak to you about children and the importance of made-in-Canada television and digital programming for them.

1664   As the Throne Speech from October 2013, stated:

"Families are the cornerstone of our society. Families raise our children and build our communities. As our families succeed, Canada succeeds."

1665   We agree and, therefore, we suggest that children and families should be a cornerstone of this hearing.

1666   The Shaw Rocket Fund invests in high-quality Canadian content for this segment of our population. We are here today to speak for Canadian children.

1667   Three fundamental points were laid out in our Let's Talk TV intervention letter.

1668   First, one in five people in this country is a kid.

1669   These people don't have a voice in these proceedings, despite the fact that they are the modern, diverse face of 21st century Canada.

1670   Second, when it comes to media consumption, kids rule.

1671   These digital natives roam in an environment that is unrestricted and unlimited. We must continue to provide them great Canadian content or we risk losing the future adults of this country as an audience.

1672   Third, children have to rely on communities to provide for them.

1673   We all need to ensure that they have access to high-quality Canadian media choices that will shape their lives.

1674   Canadians make exceptional children's content. We are world renowned for our quality storytelling, our creative flare, and the values that our programs represent.

1675   As has been noted by the CMF, the CMPA, and countless others, Canadian children's programming consistently out-performs competitors in the global marketplace.

1676   According to Netflix, Canadian programs for children are among the most popular content worldwide.

1677   Now, at a time when Canada is shining as a global leader in children's media, we face the challenge of a Canadian regulatory system that appears to be overlooking the importance of Canadian media for our kids.

1678   The proposed working document on future regulation provided by the Commission reinforces this concern.

1679   For instance, why does the proposed small basic not include dedicated children's content?

1680   Surely a basic offering should offer a diverse selection of programming that serves Canadian children and their families.

1681   Why does the proposed pick-and-pay model risk causing the demise of dedicated children's services, despite the fact that this was noted by many interveners?

1682   While it is proposed that the definition of programs of national interest include children's programming, why wouldn't the Commission also include a guaranteed minimum spending on programming for kids? Otherwise broadcast groups have no incentive to invest in children's programming.

1683   While eliminating daytime exhibition requirements, why were appropriate viewing times for children not preserved? This could cause a further reduction in the creation of original Canadian children's programming.

1684   These oversights appear to add insult to injury as regulatory decisions made so far have already caused decreases in the production of children's and youth programming.

1685   We ask: If not the Commission, who is looking out for kids? In a world where nearly everything we do is shaped by media, the Commission has the power to help Canadian children and families succeed or it can fail them.

1686   MS AUGUSTIN: Canadian children -- 21 percent of our population -- are male and female citizens from every culture and background. They reflect all of the diversity Canada is proud of and represent the Commission's own view of the diversity that the broadcasting system should reflect. And the great news is Canadian kids want to see Canadian programming.

1687   In a market study commissioned by the Rocket Fund for these proceedings, our survey shows that 73 percent of kids in English Canada aged 9-18 think it's extremely important to have a selection of new and fresh Canadian shows. And both English- and French-speaking children feel proud when a show they like is Canadian.

1688   While adults have had to adapt to new technologies and media platforms, children are masters of their devices. Currently, 55 percent of English-Canadian kids are viewing TV online and spending close to the same amount of hours watching shows on Netflix and YouTube as on television. It's the number two activity kids do on the Internet.

1689   However, viewing on an actual television screen is still most preferred by 75 percent of Canadian children. What is even more interesting is that kids say that parents still influence their program choices, weighing in at 33 percent in English Canada and 42 percent in French Canada. The research also demonstrates the importance of co-viewing with parents and all of this reinforces the need to consider kids and families while making changes to the broadcasting system.

1690   As the Broadcast Act itself states, programming should:

"serve the needs and interests, and reflect the circumstances and aspirations, of Canadian men, women and children."

1691   While children's programming might not be directly relevant to all consumers, kids' programming makes a crucially important contribution to the Canadian broadcasting system. Having good kids' television is good for society.

1692   The Commission states that regulatory intervention is only warranted where specific outcomes or objectives would not be achievable without it.

1693   Regulatory intervention is required for children's programming. As the CMPA states:

"...children's programming serves a niche audience, and often cannot be supported by advertising which may make it less attractive to broadcasters particularly as they fight to protect their corporate margins."

1694   Protecting children's programming under a new regulatory framework is vitally important and strengthening it is just as important and is where the Shaw Rocket Fund can contribute.

1695   We are no longer just a top-up fund, as originally conceived by the CRTC. We have evolved into an authority about children's programming and a driver of Canadian success in the kids' media industry.

1696   To date, the Rocket Fund has invested over $160 million in support of over 600 television and digital programs for kids, youth and their families. We have leveraged $2.6 billion worth of production for this important sector of Canadian television. We showcase Canadian kids' programming worldwide and we have the track record and the ability to do more for the betterment of Canadian children.

1697   In order to be more effective, we request the CRTC give the Rocket Fund the tools to help Canada's excellent creators of kids' content meet the demands of kids today:

1698   1. The Rocket Fund needs more flexibility to also invest in digital content not specifically associated with a broadcaster.

1699   2. The Rocket Fund needs an additional 5 percent from BDU contributions to expand research and further support and promote children's programming at home and abroad.

1700   3. The Rocket Fund needs to be able to compete for a greater allocation of Shaw Communications' 3-percent contribution towards Canadian programming.

1701   4. All OTTs operating in Canada must be required to contribute to original Canadian kids' programming. Supporting Canadian kids' content is the responsibility of the entire media community.

1702   MS SLAIGHT: In closing, we would like to remind the Commission of the following.

1703   Canadian children's programming is a huge success at home and abroad. It is a remarkable Canadian achievement that will be diminished without thoughtful and meaningful regulatory measures.

1704   As the Throne Speech states, families are the cornerstone of our society. Canadian screen media for kids is a vital part of family experience. Children, who are one-fifth of the population, deserve at least one-fifth of your thinking when decisions are made about the future of Canadian television. Kids in fact warrant more because they are early adopters of all things new and we can learn from them. Our children must have a special place in our broadcasting system.

1705   Thank you very much and we welcome questions.

1706   THE CHAIRPERSON: Thank you very much.

1707   I must say that I read other parts of the Throne Speech that seem to be a bit in contradiction with the parts you're quoting here, but Commissioner Simpson will probably have some other questions for you.

1708   COMMISSIONER SIMPSON: Thank you very much. Thank you very, very much for coming to the hearing.

1709   I have several lines of questioning. I'm going to start first with the issue you raised concerning PNI and your feeling that it's not just an oversight, it's a fundamental error in not looking at children's -- sorry, I'm going to talk about children's programming first -- that children's programming not be included in the basic service that is outlined in our working document.

1710   Now, my question to you is this: How does that work in your mind when, let's say, a skinny basic, a skinny Canadian basic, is comprised of television networks that are either local OTAs or Canadian networks but don't necessarily include specialty? Would not a network that would be in skinny basic, like a CTV or a Global, not have children's programming within their programming, therefore be included in the basic service?

1711   MS AUGUSTIN: In fact, the conventionals, most of them don't air original Canadian kids' content anymore. So the skinny or the basic, the small basic that was proposed, includes provincial networks, which are obviously not in every province, and the CBC, which concentrates mostly on the younger demographic at the moment.

1712   So children are, you know, between the age of 17 and younger and there's a lot of content that is relevant to them, that shapes who they are, that is available on the dedicated children's services that were not included in that package. So for the diversity of kids and the affordability for families, we felt it was critical to have more than just those offerings in the small basic.

1713   COMMISSIONER SIMPSON: Okay. If those networks are not buying children's programming or not doing children's programming, would you like to comment on why? Is it anything to do with the advertising restrictions that are placed on those networks with respect to children's directed advertising? Is that the fundamental reason why they're not running children's shows?

1714   MS AUGUSTIN: Well, there's a history as to why and things have just changed over the years. I mean even in 1997 when children's programming was removed as a priority program and even though there has been -- over the years they've been reinstated in certain ways, there really hasn't been a focus on children's content for what it is. It gets slotted in with other genres and competes for the same time and money and from an advertising revenue standpoint it just can't compete.

1715   COMMISSIONER SIMPSON: So your view is that the programming that is available through the public broadcasting portion of the system is not sufficient? I'm thinking CBC, Knowledge, TVO, et cetera.

1716   MS SLAIGHT: The challenge is that it doesn't cross the whole age spectrum. The CBC is doing what it's doing really well, which is pre-school programming, but the 9-year-olds and the 11-year-olds and the 14-year-olds are not getting a sense of what Canada has to offer from there. I mean this is the challenge with kids anyway. They're like the entire spectrum of the rest of society, they're not just one thing.

1717   I mean in the old days they used to think that kids' programming was, you know, stick a nose on something and make a loud noise and that was kids' programming. It's very sophisticated and it's very, very relevant to different segments of the audience and that's really why Canadian children's television is so good, because it recognizes that. It's very, very relevant to its audience.

1718   COMMISSIONER SIMPSON: So if we were to be convinced by your argument that the programming is essential to a basic service, what does it look like? You know, let's be a programmer for second. Is it a specialty coming over and being deemed significant enough because of its directed audience that it goes from being a specialty to a must carry or is there something else you have in mind?

1719   MS AUGUSTIN: We had quite a few different ideas in mind but we decided that we weren't programmers.

1720   COMMISSIONER SIMPSON: Yes. Well, neither are we.

1721   MS AUGUSTIN: And actually, we welcome a lot of ideas on how to achieve that. We think it's a bigger discussion because it's not just about putting in one specialty and we don't want to do the same thing and inadvertently cause an issue in another area of the broadcasting system based on just saying, you know, put in the specialties and the designated programs and that's the solution.

1722   We think that there is an opportunity in a new framework to look at ways that we can reach kids in a lot of different ways and, you know, the basic definitely is a starting point because it is what the Commission is saying would be offered to families at an affordable rate, especially in a time when affordability of content is on over-the-air.

1723   MS SLAIGHT: One of the things that is always kind of a smart thing to do when you're trying to figure out things for kids is to ask them. They have wonderful ideas about their own lives and this is an increasing role for the Rocket Fund to do more research with children.

1724   We know precious little, other than on a surface basis, of how to do things for them in terms of delivering. We know a lot about getting the content for them, but the delivery mechanism -- and this is one of the things that actually the Shaw Rocket Fund is very interested in doing and we would be very happy to continue to work with you and share any information that we are able to find.

1725   COMMISSIONER SIMPSON: Okay. Thank you.

1726   Going into the decline, the dramatic decline in production spending, you are citing 25-some-odd percent in 2013, how does capturing online and other services as you have been prescribing with regulating new media, how does doing that fix this problem of what is being spent on children's programming.

1727   MS AUGUSTIN: Are you asking if the contributions would fix the issue?

1728   COMMISSIONER SIMPSON: I'm trying to understand why there's a decline in spending and if it's related to migration to specialty and more particularly to new media of where the audience is.

1729   MS AUGUSTIN: There's quite a few reasons why there is decline, I don't think it's specifically the one.

1730   We believe, based on our research -- and the number that we have quoted in our intervention letter came from the CMPA's profile, which we monitor as everyone else's in the industry annually.

1731   We believe part of it, and from our experience as well as a dedicated funder of children's content in Canada, that the decline has come from broadcast groups that are able to access for example the CMF envelopes in a way that's different than it used to be. There is more flex as far as how the spends go.

1732   The availability of children's content on all networks that have been ever more so dedicated have been less.

1733   And even though we still make really great content for children, we have seen a decline, even at the Rocket Fund, at the amount of applications that have come in and the amount of programs that we have funded.

1734   So it's a combination of the way the broadcast system has evolved and -- because we still believe that there is a high demand obviously for children's programs.

1735   So as far as the OTT is concerned, adding that in, we do believe that it's an opportunity because kids are watching their television everywhere. They haven't left television, but they are looking at it in a lot of different ways. Our research says they still watch it on TV, but they are watching it on their phones and they're watching it on their computers as well and there is an opportunity there to expand.

1736   But we also believe it's a responsibility of what we call the media community for kids and we think that if Netflix is claiming -- which is fantastic -- that Canadian kids shows are number one worldwide for them, that's fantastic, but we have to come up with a model that sustains that and that we can continue to produce great shows for the world, and of course --

1737   MS SLAIGHT: And we tend not to like punitive things, but to discover opportunities.

1738   MS AUGUSTIN: Opportunities.

1739   COMMISSIONER SIMPSON: Yes. On to PNI now, I was ahead of myself earlier. If we were to place children's programming into the PNI category, do you think that would have a positive effect with respect to conventional television getting re-interested in producing and exhibiting children's programming?

1740   MS SLAIGHT: Hard to say without asking the broadcasters.

1741   MS AUGUSTIN: Yes.

1742   MS SLAIGHT: But the idea of a country saying that its children are an audience of special interest, it's not a very tough argument.

1743   MS AUGUSTIN: But encouraging them, which is part of the framework is to put the children's in a definition which it has loosely been in the definition. I understand that it could fall under drama, depending on what it is, but adding it in as a definition is definitely helpful. We were quite encouraged to see that in there and I think that's fantastic, however, without a minimum guaranteed spend or -- you know, by encouraging is great, it doesn't incentivize. We just felt that that's again another -- you know, it's a step, but it doesn't actually guarantee that there will be more children's programming just by including the children's in the definition.

1744   COMMISSIONER SIMPSON: So the proposal of including children's programming in PNI seems to be a self-defeating argument you just indicated.

1745   MS AUGUSTIN: Well, we hope it's not, there's just no guarantee. It might help to a certain degree and maybe it might help with perhaps some of the dedicated services to children's, but as far as the broader broadcasting system is concerned we -- the CMPA had the same thought as we did on that in their intervention letter, so we do believe generally that just wouldn't be the case based on the amount of revenue generated for children's content from a broadcaster's standpoint.

1746   COMMISSIONER SIMPSON: Do you see any restrictions or sub-categorization of what should be eligible for PNI? I'm thinking animation versus live, live versus scripted drama. Do you think that PNI should apply to everything or just parts of children's programming?

1747   MS AUGUSTIN: Well, children's programming is vast and we have fantastic programs for kids that are -- I use the word innovative because that's what kids are in how they watch their content. To be able to limit it to a specific type of content for kids in our opinion would be limiting again the opportunities of showcasing shows in a lot of different ways.

1748   So in children's because it's an audience not really a genre, we see all kinds of content from children that we at the Rocket Fund are very proud to support where it is animation, there is live action, there are documentary series, there are series that are reality-based to a certain degree and that are very educational and some that are just fun. So we see all types and would not want to limit that to a specific type.

1749   COMMISSIONER SIMPSON: So anything that is directed to an audience under a certain age group you think should qualify.

1750   MS AUGUSTIN: Yes.

1751   COMMISSIONER SIMPSON: Okay.

1752   MS SLAIGHT: Because that's really where a lot of the innovation in the system is taking place. Because good television producers are good digital media producers for kids, are led by kids, they know their audience very well and that's why they are good at it. Kids would say, "Huh, why wouldn't you?"

1753   COMMISSIONER SIMPSON: Yes. I couldn't agree with you more. Children will do what children want to do, which brings me to my next question.

1754   If children are, as you have said, very involved in the decisioning of what they watch and, as we have heard earlier from CMF, kids are migrating away from conventional television for a variety of reasons and VIs in that programming, children's programming, then in the fullness of what you are trying to do, which is still produce conventional television programming, how do you get kids attention as to what's available if you are putting stuff into conventional TV and they don't watch conventional TV?

1755   MS AUGUSTIN: Well, we actually invest in programs where the broadcaster actually is airing the kid's content and our research shows that the kids are still watching the designated channels. They are watching YTV, Teletoon, Family Channel, Treehouse. Well, actually Treehouse for the preschool. Our kids were a little older, they weren't watching Treehouse, but they are watching the designated programs. From a co-viewing standpoint we notice that they are also watching some of the special interest networks as well.

1756   So as far as discoverability, I believe is your question, as far as how -- the shows that we make in Canada, we know that Canadian kids watch them and they are able to find them. Our concern, the greater concern is that if there is not that place in the broadcasting system and in the framework, especially in a pick-and-pay environment that those designated services might not survive and if there is only certain support on the public broadcasters and then not on the conventionals, what happens to kids content in this country. That's a concern.

1757   MS SLAIGHT: I think one of the things we might need to know more about that surfaced in our research that we just did for this hearing is that kids are telling us that they are finding out about their programming face-to-face. It's conversations with their friends. It's buzz. And just how kids are finding programming is something that we need to know more about, because that was surprising to us. also what was surprising to us is that they are getting the suggestions of the content from their parents. That isn't readily an obvious thing and definitely something that we need to find out more about.

1758   COMMISSIONER SIMPSON: Just on the subject of the success that Shaw has had, both at home and abroad with children's programming, does that same theory on promotion apply in terms of how programs are marketed to other countries? Obviously there is a promotional success story in here somewhere and I'm trying to unpack it for the hearing to understand what it is that you and companies like Corus and Shaw know about how to promote children's programming that's working so well. That's what I'm trying to understand.

1759   MS AUGUSTIN: Well, there's two things that I would say. First, we have our producers of children's content that we partner with and support are really great and always a little bit short of money compared to everyone else in the system and work really hard to find ways to be successful. In fact, we are quite proud of the way the producers have not only engaged the audience, but have found ways to support the children on various platforms that support the total viewing experience.

1760   We also at the Rocket Fund provide support for that, as you saw. We invest in the digital content associated with the programs that we invest in to ensure that there is the highest probability of a great experience for children. Social media, as you know, is a big part of that as well and the digital plans that we get in from our producers tend to be very forward-thinking when it comes to kids. That would be one.

1761   The other thing that we have found that has been a success -- and we can only, from the Rocket Fund standpoint, talk about the promotion we have done and believe that it has had an impact and that has been through our work with our initiative the Shaw Rocket Prize -- in our 10th year, which we are very proud of -- and that has three very important parts to it.

1762   One is that we have an international panel and we always have industry leaders from around the world that sit on that panel and creates awareness of Canadian content. They actually get to see what was made in Canada, a good chunk of it, in one sitting and be able to assess Canadian programming and we know that a lot of them buy afterwards and they are quite aware of what we do and our great work through the Rocket Prize.

1763   The next phase is that we put it in front of Canadian kids and we let kids screen the finalists and we have -- which we have been fortunate with Shaw and Global that we can actually do a PSA and access kids across the country to be able to vote and be part of their Canadian content and interact and that has been a huge success for us.

1764   Our third is that we put it in front of a whole bunch of -- we like to put it in Ottawa and be able to create awareness about what we do. So the Rocket Prize has been one.

1765   That has just also leveraged other works where we have international roundtables with a lot of the industry leaders on what we do in Canada and how can we do better.

1766   We are working on a global writing initiative. So there are a few pieces on the industry side that the Rocket Fund does to create promotion outside of Canada, but really our producers are the ones that are out promoting and we are encouraging them and supporting them through financial assistance.

1767   COMMISSIONER SIMPSON: And that was going to be my question.

1768   There is a tolerance for a certain set aside within an envelope of money that goes into that kind of activity that you underwrite?

1769   MS AUGUSTIN: We have a digital stream, but it's associated with the program. The stream is set up -- or the investment. It is actually equity investment in digital. It's the only one in Canada actually that is related to convergent content and part of that is that we work with our producers on ways to get out to the audience and ways to monetize and also ways to be effective. So it has so far been a success, we have had quite a few shows that are able to reach kids through digital apps.

1770   We also do ongoing support with that. The reason for the money is also due to second and third seasons for kids to be able to keep the content fresh and relevant and it's something that we are very -- our board is very much about supporting the ongoing viewing experience for kids and not just the initial and that's helped.

1771   COMMISSIONER SIMPSON: Okay.

1772   MS SLAIGHT: Yes. And promotion and marketing for kids stuff is very often the creation of ancillary content that makes people say, "Wow!" I think that extends to the relationships between Canadian kids programmers, us and the international community. We get together and we think together. Nobody is going out to sort of sell things, it's much, much more let's say fun and collaborative than that.

1773   COMMISSIONER SIMPSON: Okay. Thank you. Great answers.

1774   Just cleaning up and having some discussion on your request for us to consider changing the bar on your funding levels with respect to contributions from BDUs, and more specifically with Shaw, you are asking that we consider a 5 percent to 10 percent lift from BDU contributions. Now, would that money be used exclusively for promotion or is that earmarked to general production as well as promotion?

1775   MS AUGUSTIN: Well, that wasn't for the -- that was a lift on our ability to have a bit more flexibility with the cap that we have at the Rocket Fund and the private funds. When these funds were conceived we were top-up funds and the 5 percent allowance didn't contemplate the growth of these funds and --

1776   MS SLAIGHT: It was just for administration --

1777   MS AUGUSTIN: It was just for administration.

1778   MS SLAIGHT: -- and we found huge opportunities that are way beyond administration that this additional revenue would allow us to take and I think we can move the bar further forward in ways that we have sort of shown we can do now.

1779   COMMISSIONER SIMPSON: I perhaps incorrectly bundled that portion. I'm looking at paragraph 45 of your written submission. You had said:

"Based on Rocket Fund's model, this additional promotional activity will further contribute to the sustainability of the Canadian children's production sector by increasing awareness and stimulating sales and programming."

1780   MS AUGUSTIN: Yes.

1781   COMMISSIONER SIMPSON: It sounded to me like that money was no earmarked to administration, but earmarked --

1782   MS AUGUSTIN: Exactly.

1783   COMMISSIONER SIMPSON: -- to promotion.

1784   The other question I had -- and this is where we get into fractions of fractions. I had it explained to me, but I still don't get it.

1785   Anyway, on the issue of the 5 percent contribution of BDUs and 3 percent of the 5 percent, you had said in paragraph 52 that:

"At the moment, 3 percent of the BDUs total 5 percent contribution of gross revenues to Canadian programming is split 80/20 in favour of the CMF with the balance to a CIPF of the BDU's choice."

1786   In this instance Shaw's choice is you.

1787   MS SLAIGHT: Yes.

1788   COMMISSIONER SIMPSON: Now, as I understand it, what you are asking for in paragraph 53 is to allow Shaw to determine, at its own discretion, the allocation of its 3 percent of gross revenue to you.

1789   So is that not happening already?

1790   MS AUGUSTIN: Would you like me to answer? Okay. I'll take this one.

1791   MS SLAIGHT: Yes.

1792   MS AUGUSTIN: So what we are proposing here is that currently out of the 5 percent 3 percent goes towards Canadian programming, of which it's split 80/20 to the Canada Media Fund and a private fund and we get the 20 percent of that.

1793   So what we are asking on that is that right now the BDU, or Shaw, has the ability to take all the money and put it into the Canada Media Fund or give us an option. We wanted to change that and say, "Well, let us compete for that", not saying that they have to give us all that, but wouldn't it be great if we could go back to Shaw and say, "You know, we are doing a great job for kids" and they had the ability to take that 3 percent and decide how they wanted to split that versus it being a maximum 20 percent.

1794   COMMISSIONER SIMPSON: But given your scenario, does that not -- two issues.

1795   First, does this not really open the door to self-dealing, because Shaw is vertically integrated and if their funding from their BDU is going to a fund they have created, which then goes to program producers who functionally produce programming for Shaw properties, does that not just because a circular exercise in your mind?

1796   MS AUGUSTIN: Well, the great thing is, Shaw actually doesn't have any children's -- they don't support children's programming. They actually don't.

1797   So in fact, you know, the Rocket Fund it -- one of the great things about the Rocket Fund and Shaw is that they continue to support us even though they don't have any children's networks or don't -- we don't actually support any Shaw-funded children's programs. Their support to children's is the Rocket Fund, which we find is fantastic that they continue to do that.

1798   We actually submitted to the Commission as well a list of the programs that we invested in as part of our submission in the last three years and you can see that we have a very broad range of broadcasters that we support across the country.

1799   We have always been selective in our investments and it's always the best kid's shows and the best opportunities that we have had for children and we pride ourselves on that as being independent and would continue to do that with additional funds.

1800   MS SLAIGHT: It's a very independent fund.

1801   COMMISSIONER SIMPSON: The last question I have is that you had asked us earlier to treat the whole issue of children's programming uniquely, but in this particular instance you are also asking us to treat the percentage of funding as it is derived from BDU activity also uniquely.

1802   Would you not agree that if we were to do this for you we would have to do it for everyone?

1803   MS SLAIGHT: Well, I think that Valerie earlier was talking about the need for lifting the lid a bit, using some innovation, not sort of thinking of everything as incremental, but what are the goals and thinking about what are the best solutions. So that's really all we are asking you to do.

1804   MS AUGUSTIN: We also believe, too, that what's interesting about the Shaw Rocket Fund is we support children, which is 21 percent of the population. It's not a genre of programming. We look at what we do as being unique in that we are financing content that are the future adults of our country and we believe that it's critical.

1805   We are looking for ways for sustainability and we are looking for ways to continue to be able to grow and be able to always create great shows for kids. When we see a 26 percent drop in the funding and we see envelopes that have been shifted through the CMF which is based on a formula, you know, just the way it works, we are looking for ways that we can be effective and being that we are a dedicated fund for kids we believe that we could do a lot of good with that extra money.

1806   COMMISSIONER SIMPSON: But you don't agree that it would also create a condition as an unintended consequence where Bell would prefer to contribute to Bell's own production funds or independent fund or Rogers to theirs?

1807   MS AUGUSTIN: Well, they likely would, but we assume that the Commission would have the ability to make that determination.

1808   COMMISSIONER SIMPSON: We do, but --

1809   MS SLAIGHT: And we wouldn't.

1810   MS AUGUSTIN: Exactly.

--- Laughter

1811   COMMISSIONER SIMPSON: Okay. I think those are my questions, Mr. Chair.

1812   LE PRÉSIDENT : Monsieur le Vice président...?

1813   COMMISSIONER PENTEFOUNTAS: Hi. I know it's late.

1814   Would you know what percentage of the funds find their way into Corus-related productions?

1815   MS AUGUSTIN: We actually don't have that actual number because we invest -- as you saw the list, it shows all different types. We do definitely invest in Corus productions and as they acquire Teletoon being the dedicated services we do, but we would -- if you look at the amount of content that we provided to you, we could get you that number, but it's definitely --

1816   COMMISSIONER PENTEFOUNTAS: That would be great.

1817   MS AUGUSTIN: Yes.

1818   COMMISSIONER PENTEFOUNTAS: Perhaps as a percentage.

1819   MS SLAIGHT: Yes.

1820   COMMISSIONER PENTEFOUNTAS: If you can get that to us by the 19th, that would be great.

1821   MS AUGUSTIN: Yes.

Undertaking

1822   COMMISSIONER PENTEFOUNTAS: Thank you so much.

1823   MS SLAIGHT: We can give it over a period of time.

1824   COMMISSIONER PENTEFOUNTAS: Thanks.

1825   THE CHAIRPERSON: Commissioner Molnar...?

1826   COMMISSIONER MOLNAR: Thank you.

1827   It is great to hear that children's programming is so successful today and I have been looking through this and I just wonder what it is that you are particularly concerned about. What is the biggest issue for you that you saw within the discussions that have occurred here or the working document? I mean you have laid out a number of things. It's successful today, you're concerned about tomorrow. What is your biggest concern?

1828   MS SLAIGHT: I think that it would be just because kids don't have a voice here and, you know, we are almost the only voice they have and we are not as effective a voice as they are, that they don't get forgotten while you are making other decisions.

1829   I think that's just a filter, but our kids are an important part of the broadcast system and when a decision is made this way or that way, what really would be the effect on that. We would be very happy to help if you need to run an idea up the flagpole or not.

1830   MS AUGUSTIN: It would be really sad if decisions were made and then two years from now our Canadian children's production decreased even further. So to Annabel's and our point, we would love to be able to ensure that any regulatory framework that was established had guarantees and showed the importance and the priority of kids content within the broadcasting system.

1831   COMMISSIONER MOLNAR: Fair. You know, if I look at what the regulatory framework is today, there is no mandated requirement to offer kids programming as part of basic service for example. I mean it's not there today, is there something particular that you see within the working document kind of structure where you think kids will be less well served in the future as a consequence of regulation, not as a consequence of other things. But is there something you see that we are doing that is going to harm the creation of children's programming of their ability access good Canadian programming going forward? I mean you're saying don't forget them, well, the good news is most of us are parents.

1832   MS AUGUSTIN: Okay.

1833   COMMISSIONER MOLNAR: We all talked about children in the different generations.

1834   MS AUGUSTIN: Yes. No, agreed. You know, as a parent my kids grew up watching -- we watched shows together and the importance of media and kids even is more so than ever today, so we go back to our points that we said if you are asking specifically about the proposed framework, if you want specifics we do identify making sure that there are exhibition requirements for children's content in the framework, ensuring that there is a minimum spend it kids content hopefully is still included in PNI, and that there would be minimum spends.

1835   We have a few key points that we have put in the framework that we believe the regulatory system and the new framework could ensure that children's programming would be a priority, but the reason why we are perhaps being a little bit general is we would like to be able to come up with ways that make sense for the system as well. We don't want to just say, "Include more children's content in the basic package" and think that that's the only solution or the solution.

1836   We would like to be able to ensure that in the framework that they are -- however best relevant and however the Commission feels over the overall framework, that children's content is clearly a priority and that there will be sustainability.

1837   I don't know if that answered, but that was -- we can go through the specific points.

1838   COMMISSIONER MOLNAR: No, that's fine. I'm going to take it as you see nothing specific in there except for maybe the discussion on exhibition that is a red flag for you, it's just generally the framework as it comes out at the end should consider and not --

1839   MS AUGUSTIN: Well, there were four points that we brought up in that regard and they were specifically -- I'll bring them up.

1840   COMMISSIONER MOLNAR: Are you talking about the ones where you are asking for the Rocket Fund needs more flexibility, it needs additional money just to be able to compete?

1841   MS AUGUSTIN: No, we have them.

1842   COMMISSIONER MOLNAR: I was just asking what is the most significant concern you had.

1843   MS AUGUSTIN: So what we said is, in the small basic we were wanting to see more children's content in there that had a diverse amount of programming that reflected all kids, not just the ones that were being in there.

1844   COMMISSIONER MOLNAR: And on that point, as I mentioned, basic today does not mandate children's programming be part of it.

1845   MS AUGUSTIN: Right. And we are looking at --

1846   COMMISSIONER MOLNAR: So that is not something that potentially would cause children's programming to be less accessible?

1847   MS AUGUSTIN: So this framework was set up in a way that there would be a potential of small basic service and then a pick-and-pay option. So when we looked at this and the asks that we edited was the whole framework.

1848   If we are looking specifically at basic service, based on the current regulated system, we still have discretionary services for kids and we are seeing declines and we definitely would like to see ways to mitigate that.

1849   But in the current system there are other options. What we are seeing and what we saw from the interventions from various BDUs and the research that they saw that in a pure pick-and-pay environment the probability of those discretionary kids services might not survive.

1850   So in that case when we take a look at a basic service, if they don't survive where is the guarantee that we would have that ability. So that's why we wanted to ensure that in that larger framework that there would be children's content in the basic service in the new framework.

1851   COMMISSIONER MOLNAR: Okay. Thank you. That's all.

1852   THE CHAIRPERSON: Thank you.

1853   You do understand that the proposed model out there and the preliminary view is not a pure pick-and-pay?

1854   MS AUGUSTIN: There is a few, yes.

1855   THE CHAIRPERSON: Okay. Others may think that, but there is the possibility of pick-a-pack and all the other things.

1856   MS AUGUSTIN: Yes. We understand.

1857   THE CHAIRPERSON: We are not imposing any style of choice on Canadians, they will have all kinds of choices.

1858   MS AUGUSTIN: Which is why we said, too, that depending on the framework that's established, that if there is certainty for the kids and it's front of mind and, as Annabel said, you know, one-fifth of the thinking is put towards kids in that framework and there is sustainability, then that would be what we would be looking for.

1859   THE CHAIRPERSON: Okay.

1860   MS SLAIGHT: We really are not in a position, we don't have the knowledge or the expertise to be prescriptive about this. We are hoping that as you go through these hearings that added to the expertise and knowledge you already have, you can come up with some solutions that address these things.

1861   THE CHAIRPERSON: Fair enough.

1862   Do I understand your definition of "children" -- maybe I misunderstood -- is anyone 17 and younger?

1863   MS AUGUSTIN: Children's, family and youth is what we finance, what we support.

1864   THE CHAIRPERSON: That's what you finance, but when you say we should be concerned about this particular area of children, from a policy perspective are you focussing on people 17 and under?

1865   MS AUGUSTIN: Yes.

1866   THE CHAIRPERSON: So somebody who can get a driver's licence, you think we should think about that from a policy perspective as a child?

1867   MS AUGUSTIN: We do. They are still children. They can drive, but they are still kids.

1868   THE CHAIRPERSON: In the CBC renewal we heard a lot from experts in children's programming and they were saying that really by the time they are teens or preteens they are lost, they are elsewhere, on YouTube, they are not with their parents, that we should actually focus our efforts on preschool and younger children.

1869   MS SLAIGHT: Young teens, their brains, as some of us all know, are not fully formed, they are still in a very, very formative period of their lives and that is why things from their own country that recognize that and develop programming for them is important to the future of our country. That is what we have learned from the experts and also what we have learned from kids themselves.

1870   THE CHAIRPERSON: But surely parents have a responsibility to make decisions on behalf of those young children to make subscription choices to bring appropriate programming to them.

1871   MS AUGUSTIN: There is not a lot of available -- kids in that demographic don't actually have a lot of programming directed towards them.

1872   THE CHAIRPERSON: Which kids are you talking?

1873   MS AUGUSTIN: I'm sorry, the older.

1874   THE CHAIRPERSON: Your definition of kids or preschool and younger?

1875   MS AUGUSTIN: So youth. The teens I guess is the part that you were looking for.

1876   THE CHAIRPERSON: Right.

1877   MS AUGUSTIN: One of the things that we have seen over the years is that that thinking is that they are already viewing up and so there isn't a lot of need for that, but we -- for example, Degrassi -- which I think we are at 38 years of Degrassi -- still continues to be a top rated show.

1878   MS SLAIGHT: Not 38 years, but --

1879   MS AUGUSTIN: Well, I mean from the very beginning. We have The Next Generation now.

1880   THE CHAIRPERSON: But we can be nostalgic, but the point is that many children under your definition are elsewhere.

1881   MS AUGUSTIN: We would like to ensure that they still have great content, great Canadian content.

1882   THE CHAIRPERSON: Does that have to be in the more traditional television platforms?

1883   MS AUGUSTIN: Well, we believe so, because that's what we are -- so do we believe -- as a parent I think that --

1884   THE CHAIRPERSON: I'm wondering. I would have thought your argument would have been since young near adults are under online platforms that we should also ensure, as we did maybe in the '60s and '70s on traditional television platform, that there is quality content for those young people on the new platforms. I would have thought that would have been your pitch for the teens.

1885   MS AUGUSTIN: Well, you know, the teens are on the new platforms and the younger kids are on the new platforms even with their parents.

1886   THE CHAIRPERSON: That's the point. We would be focussing there.

1887   MS AUGUSTIN: Well, we definitely would like to be focus -- I mean we are not limited to -- you know, we are looking at a solution on various ways and so from the broadcasting standpoint we think that that's where it stems and that's where we believe there is the importance.

1888   To expand onto the online, we would love to have that ability to do that as well, that was one of the requests that we had, to be able to offer to kids where they are watching their programming.

1889   THE CHAIRPERSON: Regardless of which platform?

1890   MS AUGUSTIN: Yes.

1891   THE CHAIRPERSON: Okay. So that's a bit clearer for me, thank you.

1892   MS AUGUSTIN: Okay.

1893   THE CHAIRPERSON: Thank you.

1894   I think those are out questions. Thank you very much.

1895   MS AUGUSTIN: Thank you.

1896   THE CHAIRPERSON: I think that concludes the presenters for today.

1897   We are adjourned until 9 o'clock tomorrow morning. Merci beaucoup. À demain 9 h 00.

1898   MS SLAIGHT: Thank you very much.

--- Whereupon the hearing adjourned at 1711, to resume on Tuesday, September 9, 2014 at 0900

REPORTERS
Lynda Johansson
Jean Desaulniers
Madeleine Matte
Monique Mahoney

Date modified:

2014-09-09