ARCHIVED - Transcript, Hearing November 26, 2021

Attendees and Location

Held at:

Outaouais Room
Conference Centre
140 Promenade du Portage
Gatineau, Québec

Attendees:

• Chairperson: Ian Scott
  
• Commissioner, Ontario: Monique Lafontaine
  
• Commissioner, Alberta and the Northwest Territories: Nirmala Naidoo
  
• Commissioner, Atlantic Region and Nunavut: Ellen Desmond
  
• Commissioner, British Columbia and Yukon: Claire Anderson
  
• Legal Advisors: Christina Maheux, Matthew Welch
  
• Hearing Secretary: Jade Roy
  
• Hearing Manager: Cédrick Lelièvre
  

Table of Contents

Phase III – Replies

5304 Cable Public Affairs Channel Inc./La chaîne d’affaires publiques par câble inc.

5331 Rogers/Shaw

Undertakings

5462 Undertaking

5607 Undertaking>

Transcript

Gatineau, Quebec

--- Upon commencing on Friday, November 26^th, 2021 at 11:00 a.m./ L’audience débute le vendredi 26 novembre 2021 à 11 h 00

5299 THE CHAIRPERSON: Bon matin. Good morning.

5300 Madame la secrétaire.

5301 MS. ROY: Merci beaucoup, et bon matin. Nous procèderons maintenant en phase 3. Nous entendrons donc maintenant la réplique par la chaine d'affaires publiques par cable inc.

5302 We’ll now hear the reply from Cable Public Affairs Channel.

5303 Please reintroduce yourself for the record, after which, you will have 10 minutes for your reply. Thank you.

REPLY/RÉPLIQUE

5304 MR. DEANE: Good morning, Chairperson Scott, Commissioners, and Commission staff. Thank you for the opportunity to participate in the replay phase of this proceeding.

5305 My name is Jim Deane, and I am President and CEO of Access Communications Cooperative Limited based in Regina, where I am this morning.

5306 In the room with you are Colette Watson, CPAC’s President and General Manager; and Joel Fortune, CPAC’s Corporate Secretary and legal counsel.

5307 MS. WATSON: CPAC has already filed written relies to the intervention. This written reply was accepted by the Commission in its procedural decision dated October 7^th, 2021. Our written reply forms part of the public record of this proceeding, and we believe that it addresses the issues raised by intervenor relating to CPAC. The Commission has also provided CPAC with the opportunity to file a final written reply on December 20^th.

5308 We will keep our comments here brief and limit them to points raised by the Forum for Research and Policy and Communications, which is the only intervenor that raised matters related to CPAC in the oral intervention phase.

5309 First, we appreciate FRPC’s statements regarding CPAC’s role as a broadcasting service that provides Canadians with access to parliamentary proceedings and other important public affairs coverage.

5310 Over the almost 30 years that CPAC has been on air, we have provided Canadians with unparalleled programming focused on parliament, politics, and public affairs.

5311 Over that time, we also created a digital archive in order to preserve the public record. With assets dating back to 1977, the 50,000 hours or so of programming in CPAC’s archive deliver on our promise to be the channel of record for public affairs in this country.

5312 We are bemused, though, by the FRPC’s suggestion that something requires fixing at CPAC. As we discussed with you on Tuesday, CPAC’s Board of Directors plays no role whatsoever in editorial decisions. In the almost 20 years that I’ve had the honour of leading the teams at CPAC, there have been no complaints about our editorial neutrality. CPAC’s staff of producers and broadcasting professionals have every reason to be proud of CPAC’s achievements over the last three decades.

5313 Second, CPAC noted in its comments yesterday that CPAC’s revenues between 2014 and 2020 amounted to $111M, and expenses over this same period were $99M. We just wish to point out that these figures do not include depreciation on our capital investments, or interest expenses which amounted to approximately $12.5M during this period.

5314 We would not want there to be any misunderstanding at all. All of CPAC’s revenue is spent entirely by CPAC in fulfilling its public service mandate. CPAC’s financial information is available for review by Canadians through CRTC’s Website

5315 MR. DEANE: Third, and finally, regarding CPAC’s Board structure, since 1992, CAPC has shown that it is a reliable and valued contributor to the broadcasting system.

5316 CPAC’s Board operates a high supervisory level and we’ve explained how our internal policies ensure CPAC’s editorial neutrality and the strict separation between CPAC’s Board and shareholders on one hand, and CPAC’s journalists and programming staff on the other.

5317 CPAC is Canada’s only privately owned not-for-profit, commercial-free bilingual television and content service created to preserve and promote this country’s democratic principles.

5318 The fact that BDUs pay a wholesale fee to CPAC for the carriage of the service applies to every speciality channel offered by BDUs. Why would the Board composition change for CPAC and not those other channels?

5319 We’re proud of our 30-year legacy with CPAC and look forward to many more successful years as the proud owner of this service.

5320 Thank you again for this opportunity to reply to interventions. And if there are any questions, we’d be pleased to answer them.

5321 THE CHAIRPERSON: Thank you. And thank you for your reply and your submissions. I have no questions. I’m -- you caught me off guard. It’s the briefest statement we’ve had in five days. I should just verify with counsel that they do not have any further questions either. Thank you for coming back today and providing the reply and the clarity. And we look forward to your final reply, if required, in December.

5322 MR. FORTUNE: Thank you very much.

5323 MS. WATSON: Thank you very much.

5324 MR. DEANE: Thank you very much.

5325 THE CHAIRPERSON: Madam Secretary.

5326 MS. ROY: Thank you, Mr. Chairman. We will take a five-minute break to have Rogers come in the room.

--- Upon recessing at 11:05 a.m./

--- L'audience est suspendue à 11h05

--- Upon resuming at 11:11 a.m./

--- L'audience est reprise à 11h11

5327 THE CHAIRPERSON: Bon matin. Good morning.

5328 Madame la secrétaire.

5329 MS. ROY: Merci. We’ll now hear the reply from Rogers/Shaw.

5330 Please reintroduce yourselves for the record, after which, you will have fifteen minutes for your presentation. Thank you.

REPLY/RÉPLIQUE

5331 MR. WOODHEAD: Good morning, Mr. Chair, Commissioners, and Commission staff.

5332 I am Ted Woodhead, Senior Vice President of Rogers Communications. Let me begin by introducing you to our panel for the reply phase of this hearing.

5333 To my left is Pam Dinsmore; to Pam’s left is Peter Kovacs. To my right is Susan Wheeler; and to her right is Dean Shaikh; and beside him, Paul Cowling. Behind me, from left to right, are Julie Henson and Cynthia Rathwell. Eric Bruno is joining us remotely.

5334 We are pleased to have this opportunity to reply to the key issues highlighted by intervenors in this hearing.

5335 As our panel highlighted on Monday, there is no question that this transaction is in the public interest. It embraces the transformational moment we face positioning Canada’s Broadcasting System for a strong and sustainable future.

5336 With Rogers and Shaw joining forces, Canadian consumers will enjoy more choice. There will be stronger competition against Bell and Telus and the global digital media giants, and we will expand the reach of our BDU services to many communities that have no alternatives.

5337 This transaction offers opportunities for all elements of the system to enhance the ability to thrive in the digital ecosystem.

5338 We will further contribute to the strength and diversity of the Canadian Broadcasting System through our commitments to independent programmers, our tangible benefits package, and our local and community television initiatives. This transaction is about achieving scale and enhancing competitiveness.

5339 Many parties to this proceeding would prefer to ignore the reality of the now, not to mention the future, and would like to return to an analogue era of access rights and revenue guarantees. They reject the current framework that is designed to provide consumers with choice and flexibility that was introduced in the Let’s Talk TV decisions. The safeguards they have proposed offer little that would help to sustain the future of the Canadian Broadcasting System.

5340 Given time constraints, we will address only the most important issues.

5341 MS. DINSMORE: We recognize that our transaction would have an indirect impact on independent programmers given that Corus’ services would no longer trigger the 1:1 linkage role on Shaw’s systems. We’ve proactively entered into negotiations with various independent programmers to address it.

5342 We’ve successfully negotiated renewal agreements with a number of them prior to the hearing, some of whom filed interventions in this proceeding. We tried to do the same with the IBG but found it impossible to come to terms with such a disparate group. We will instead pursue agreements with IBG member on their own.

5343 On Monday, Rogers proposed to carry a minimum of 40 independent programming services for three years. This was a significant commitment that properly balances the objectives of customer choice, diversity of voices, and distributor flexibility in a highly competitive environment. Forty (40) was intended as a minimum.

5344 Our proposal was arrived at thoughtfully, based on existing carriage, as well as current and future capacity demands. However, we heard Commissioners for views on a 50-service commitment. This would have unintended consequences.

5345 First, it would effectively change the floor to an access rate, undermining the objectives of choice and flexibility.

5346 Second, legacy and DTH are capacity constrained. A requirement to add independent services to Shaw Direct may actually force us to drop other services, reduce signal quality, or covert certain HD services to SD. That would be an unacceptable outcome.

5347 That said, we listened to independent programmers throughout the week, and offer today a compromise. Rogers will distribute 45 independent and programming services on Shaw Direct and on Rogers' and Shaw's terrestrial BDUs for three years. The only caveat is that for Shaw's terrestrial systems, this proposal is limited to its IPTV platform, as it will require the addition of six independent programming services, and Shaw's Legacy platform is at capacity.

5348 In addition, IBG has put forward an undefinable standard of no less favourable in the aggregate.

5349 No reasonable person could commit to such a vague concept. This is even more true in the current circumstances, but we have no visibility into the terms upon which Shaw is distributing these services.

5350 Rogers is in the business of creating Canadian content and delivering programming services to Canadians. That is what we do. We have a vested interest in maintaining a robust linear distribution system. It is the main source of our broadcasting revenue.

5351 Moreover, as our history has shown, we rarely drop services from our channel lineups. We distribute the content our customers want. That’s why we currently offer over five times more independent services today than we are obligated to carry.

5352 With respect to ethnic and third-language programming services, Rogers currently distributes over 150 such services on our systems. Almost 90 of those are Canadian. We offer them in full compliance with the linkage and packaging rules set out in the regulations and in the Wholesale Code.

5353 ECG's and TLN's proposals would effectively require Rogers to guarantee their revenues for the next five years. That is entirely unreasonable. Their issue is the Let's Talk TV policy. The Rogers/Shaw merger is clearly not the source of their concerns.

5354 We are offering support to ethnic and third-language services as part of our application. We are committing to help them develop apps as well as to provide set top box data reports and ad tech assistance to expand their revenues and audiences.

5355 Further, the suggestion by ECG and TLN that our proposal to assist them transition to the online world is some sort of strategy to remove their services from our linear platform is simply untrue. The commitment we are making is to help these small independent operators move to digital platforms where many of their audiences already are so that they can earn revenue from both their linear and digital offerings. ECG's Tuber is a prime example of this.

5356 Finally, ECG's suggestion that Rogers is not taking any action to combat piracy is patently false.

5357 Another issue discussed is the transfer of Shaw's satellite relay and terrestrial relay business. Some raise this as a concern, but fail to provide any credible evidence that Rogers' acquisition would result in harm. Instead, they speculated that a combined Rogers and Shaw with an increased BDU subscriber base would have a greater incentive than Shaw does today to harm independent distributors, particularly satellite-reliant BDUs.

5358 That theory is untenable. There is no evidence that Shaw has ever acted in an anti-competitive manner against any independent distributor, despite the fact that Shaw has been the leading provider of SRDU services for decades.

5359 Rogers would behave no differently than Shaw. The satellite transport business to BDUs makes it attractive to programmers to uplink their services with Shaw broadcast services, and also helps to maximize the value of the satellite network.

5360 However, to alleviate any concerns, Rogers would be willing to accept as a condition of approval the same recourse to dispute resolution as is available to BDUs with respect to over-the-air signals carried by the SRDU upon the expiry of current contracts.

5361 MS. WHEELER: The issue of negotiating with Rogers Sports and Media was also again plied as a concern. Independent distributors refuse to acknowledge the many effective safeguards that the CRTC has introduced to ensure their negotiations.

5362 RSN cannot withhold its signal from any BDU, and is required to negotiate with every BDU for carriage of its services with the backstop of CRTC dispute resolution and undue preference.

5363 This is a complete answer to their concerns.

5364 In listening to the interventions, their only real tangible issue seems to be the length of time that the dispute resolution process takes to resolve matters, which in every case involving RSN is the result of their own negotiating tactics.

5365 This is an absolutely no incentive on the part of RSN to delay renewal negotiations, as we require revenue certainty to be able to invest in our programming services.

5366 Of particular concern is the suggestion that the Commission revise its current policy to eliminate retroactive payments to programmers after the expiry of a carriage agreement. If such a rule was put in place, it would provide little or no incentive to independent BDUs to ever renew their carriage agreements for RSN services. This would create significant risk in our ability to invest in programming and keep it out of the hands of foreign giants and inside the Canadian Broadcasting System.

5367 Some intervenors called for new rules prohibiting Rogers from acquiring exclusive access to online programming and digital streaming services. None of these intervenors provided credible evidence that Rogers would have the means or that foreign streamers would have the desire to enter into such an arrangement with Rogers, post-closing.

5368 Our arrangement with Disney + was concluded before the announcement of the Shaw transaction. It does not provide Rogers with exclusive BDU distribution rights. The fact that Telus has failed to negotiate a deal with Disney + is not evidence of exclusivity.

5369 In addition, the CRTC has rules in place that prohibit exclusivity including sections 5 and 6 of the Digital Media Exemption Order. Any changes to the DMEO would have to be considered in a separate proceeding where interested parties would have the opportunity to comment on this specific issue.

5370 Some have proposed linkage and no head start rules that would apply to exempt digital platforms. Our competitors in this space are Smart TVs, game consoles, Roku, and others. They are not Canadian BDUs.

5371 Any prospect of imposing a rule that limits our ability to provide apps on our digital platforms in a timely manner to Canadian consumers would undermine competition and consumer choice. It would also give consumers a reason to leave or avoid the Canadian Broadcasting System.

5372 As we emphasized during our appearance on Monday, we want more Canadian apps for our Ignite platform, and we are committing to help independent programmers create them so that they can be accessed on both Rogers and third-party platforms.

5373 Meeting the needs of consumers is central to this transaction. Increased competition to deliver affordable access to next-generation services and our commitment to offer Connected for Success in Shaw's footprint fully address any concerns about affordability.

5374 Contrary to PIAC's misunderstanding, our IPTV migration plan is based on providing incentives to consumers to encourage them to move to the Ignite platform, and to do so seamlessly when the time is right for them. This will always be carried out in full compliance with the Television Service Provider Code and the Best Practices for BDUs, and we will offer robust supports for consumers with accessibility needs.

5375 Some intervenors suggested that Rogers should not be allowed to avail itself of the authority granted in the regulations to devote funding to CityNews in western Canada and BC.

5376 We do not agree that this money should be diverted to competing local television stations. This funding will ensure that CityNews provides a stronger and more competitive editorial voice in the west that rivals CTV and Global.

5377 These commitments are attached as Appendix A to these oral remarks, and we are willing to accept them as conditions of approval.

5378 MR. WOODHEAD: There are two issues with respect to tangible benefits that we need to address today.

5379 First, on Monday, Commission legal counsel proposed that the value of the transaction, including the consulting agreement with Rogers' former CEO, if it exists, even if there were such an agreement, the policy does not require that the purchaser's consulting contract be included within the value of the transaction.

5380 Second, in the event the Commission concludes that Shaw's terrestrial pay-per-view and video-on-demand services should be included in the value of the transaction, we will include in our undertaking on Monday, an updated benefits package that addresses a number of the concerns raised in this hearing, in particular, concerns relating to ILNF and diversity.

5381 With respect to CPAC, a separate application is not needed for approval to transfer Shaw's shares. Rogers will not exercise effective control of CPAC. The Board will continue to do so, and we have committed to nominating only one representative to the CPAC Board.

5382 Finally, Canada's two largest communications companies also appeared before you this week demanding that the Commission deny our application. They provided a series of manufactured concerns.

5383 Their real concern is our ability to be a better competitor in the markets they serve today, which will inevitably benefit consumers. For decades, these two companies have consistently advocated for the notion of scale for themselves, but have now decided that scale is a bad thing when it comes to Rogers and Shaw. You will need to weight their credibility.

5384 Bell was also a bidder for the acquisition of Shaw. One might ask oneself whether their answers would have been the same yesterday if they had been successful.

5385 Bell’s claim that the merger of Rogers and Shaw raises the same concerns as the first Bell Astral application in 2012 is patently false. Bell and Astral both operated television services in the most popular genres and held exclusive rights to many of the most-watched programs and programming services in Canada. It was that exclusivity that completed the Commission to issue its denial.

5386 Rogers is not acquiring any linear programming services from Shaw. The Commission also concluded that the VI framework that existed at the time was insufficient to address its concerns. Those factors and concerns are not present today in respect of our transaction.

5387 Since the Bell-Astral acquisition, the Commission has adopted a set of regulatory safeguards that are effective and sufficient to address any concern that might arise as a result of the combined subscriber base of our two companies.

5388 Bell and Telus’s opposition to our application is obviously grounded in self-interest, not the public interest. Bell and Telus, the most vocal opponents in this proceeding, are opposed to enhanced competition.

5389 In closing, Rogers and Shaw are excited about the future and the tangible and intangible benefits this transaction will bring for Canadian consumers, programmers, distributors, and content creators. Increased competition will drive customer choice, innovation, and investment which will benefit all Canadians, the western economy, and the entire broadcasting system.

5390 We have, in our application, in our response to RFI questions, in our written reply, and in our appearances this week demonstrated that this transaction is in the public interest. We have discharged our burden.

5391 We encourage the Commission to resist attempts by intervenors to have new regulatory obligations imposed on Rogers and Shaw post-closing that would undermine the achievement of the benefits associated with this transaction.

5392 We have demonstrated that the extensive and wide-ranging benefits of the transaction are commensurate with its size and nature. And the application represents the best possible proposal under the circumstances.

5393 Thank you, Chairman, Commissioners, and Commission staff. We welcome any further questions you might have.

5394 THE CHAIRPERSON: Thank you. Thank you very much for the comprehensive reply; well, I guess comprehensive reply to come, the summary reply, the completeness of it.

5395 Maybe I will start.

5396 THE CHAIRPERSON: And these questions perhaps will bounce around all over the place, given that you have covered a number of subjects this morning.

5397 Just starting with news, if I may.

5398 You have made reference to the specific commitments that Rogers is prepared to make with respect expenditures on CITY News and you have detailed them in Appendix A and said that you would be prepared to accept those as conditions.

5399 Can I just ask for clarity? I’m just still trying to get my head around this. There has been a lot of discussion about -- and pardon me if I don’t have the precise number in my mind -- something in the order of $13 million being moved from CORUS News and you have indicated that it’s not a net loss in any way because it will go to the expansion of CITY’s news.

5400 Can I just be clear that when we’re talking about that, that that’s an incremental expenditure?

5401 MS. WHEELER: Yes, it is.

5402 THE CHAIRPERSON: Okay.

5403 MS. WHEELER: And just to clarify, the figure of 13 million has been used as a fixed number and in fact obviously, as the Commission is well aware, it is a reflection of revenue. And based on the annual returns that are on the public record it does appear to be declining in which case that incremental expenditure will become less and less over time.

5404 THE CHAIRPERSON: Understood. And I hesitated to use the 13 million as a precise number but I wanted to be very clear for the record that this is incremental to what you are currently spending on CITY News?

5405 MS. WHEELER: Correct.

5406 THE CHAIRPERSON: Thank you.

5407 And if you really -- you probably answered it, and if I had time to look more closely at the appendix, perhaps the answer is there but I will ask it nevertheless.

5408 Can you describe perp[ahs in slightly more detail what specific tangible and incremental commitments are being made to the production of local news and how it will in fact impact CITY TV?

5409 MS. WHEELER: Certainly. The detail that we are going to provide on Monday will outline the specific figures and the number of journalists that we will be employing and et cetera. So we would prefer to outline that in detail as a part of our written undertaking, that is acceptable?

5410 THE CHAIRPERSON: That is fine. It was sort of a question that needed to b e asked and you have answered it by saying it will come in writing with no doubt fulsome detail.

5411 Another question I have, and I hesitate to even figure out exactly how to put this.

5412 And you have described it several times today about the importance of operating, if you will, in the old world and the new world simultaneously. And you have also emphasized in your remarks today, and emphasized again that you, in your view, are attempting to assist programmers, and in particular independent programmers, to equally successfully coexist in those two worlds by supporting the development of an app-based programming.

5413 So you emphasized today that that is not to say that they will disappear from the linear system. I take that statement to be correct and you can confirm, that?

5414 So my question, if it is a question, to you is, you view it as positive and yet we heard a number of times over the last week that it’s not, and that in fact it’s pushing programmers to platforms. And they don’t have much choice in the matter. And it has also been suggested that perhaps the reason that you prefer to have them there is that it is an unregulated environment as opposed to the regulated linear environment.

5415 So I guess I just put it to you. We have heard two very different views about the desirability of those apps being developed for programmers, and I just give you the opportunity to respond to that rather meandering commentary on the record.

5416 MR. WOODHEAD: Thanks. I will take a crack and then perhaps flip this over to Eric.

5417 I will give you one reason why we wouldn’t want to do that and in my view it’s a very powerful reason.

5418 The ARPU, the average revenue per user on our linear service is roughly $72 a month. We market Smart Stream for $5 a month. Digital methods of accessing pretty much anything are cheaper than traditional. Yes, they operate in a largely unregulated environment but that doesn't make up for what is in our vested interest to do which is sell that linear programming to subscribers.

5419 What we are offering is a choice. So for those parties who are suggesting that we are forcing them on to a platform, that’s just -- that’s just false.

5420 We are offering them a choice, a bridge to the future, a way to seek new audiences, new revenue streams, however small or incremental those might be. But they re new audiences and they are new revenue streams of people who have abandoned the linear system.

5421 But there are still a great number of people on the linear system. That’s our business. That’s what we do. And it’s vital to the business of any distribution undertaking.

5422 So with that -- sorry, I apologize for the long answer.

5423 But with that, I’ll pass it over to Eric if he has any further comments.

5424 MR. BRUNO: Thanks, Ted. I think you’ve covered most of it, but the point I would add is that what we’re trying to do is encourage them to make the leap to digital, because that’s where our customers are going. If you look at independent studies today, as many as 40, 45 or 50 per cent of Canadians have cut the cord. They’re not engaged with the broadcasting system today. So, if there’s going to be a future for Canadian independents, the brightest future is one that embraces the linear of today and the digital of tomorrow.

5425 So, when you look at what we’re trying to do, it’s one, provide a floor, that commitment to carrying the independent provides that Pam just walked us through as the safety net. We’re going to do that for the next three years. We’re going to ensure that the linear distribution continues to exist, but we actually expect cord cutting to continue.

5426 So, from that perspective, at the same time we’re providing the safety net, we want to make sure that we’re encouraging and assisting into that digital transition not just in terms of distribution, but in participation in things like Finch and other means of generating advertising revenue as the market in general shifts towards a more digital orientation. So, that’s the goal.

5427 Now, from an independent standpoint, it can be frightening. It’s brand new. There’s a model that worked, and it worked great in 1998, okay in 2008, but now that we’re in 2021, that model is changing pretty rapidly. So, I think some of the things that you hear are the concern for moving forward with the environment in general, but like I said, the Rogers plan is to provide that safety net, provide that bridge, and then provide the assistance into that digital future which is coming with or without Rogers and with or without the Rogers/Shaw integration.

5428 MR. KOVACS: Sorry, I just had one other thing to add. One of the powerful things of the integrated platform that we offer with SmartStream and Ignite TV is when you have these apps on, and they may have prior season content or behind the scenes content, there’s also a powerful upsell opportunity where you can point back to the linear channel that may have the current season.

5429 I mean, you’ve seen this earlier on with Netflix with Walking Dead where AMC was more than happy to make prior season content available for many viewers that missed the phenomenon at the time. I don’t know if it’s much of a phenomenon now, but people would binge on the first few seasons, but then would want to, then, subscribe to AMC to catch the current season. And so, we see it as an essential tool to be able to provide that kind of holistic 360 experience.

5430 THE CHAIRPERSON: Thank you. And just before we leave that, and I’m not putting words in your mouth. Effectively, I mean, we are concerned with supports and the future success of Canadian programming and Canadian programming services. So, without putting words in your mouth, I guess putting it bluntly, and you’re of the view that co-existing in those two environments and increasingly in the app environment is indeed an improvement or is supportive of Canadian broadcasting and the broadcasting system?

5431 MR. WOODHEAD: I believe it is. And I think it is for the reasons that Eric outlined. In effect, it’s a hedge. If 40 per cent of customers of Canadians are seeking content over here we, as a system, I think, have to address those customers where they are. There’s a whole pile that are in the linear world, there’s a whole pile that are over here, and there’s a bunch that are in the middle, and I think you have to address them all, and that’s the future.

5432 We can’t go back. It’s not that we can’t; it’s that the customers won’t go back to a world of buy through 50 channels to get the one you want. They just won’t. And the Commission had the foresight, frankly, to realize this in Let’s Talk TV in those decisions. That’s the best shot we’ve got, and we need to take it.

5433 THE CHAIRPERSON: Thank you, Mr. Woodhead. Before I leave, you may have answered this in part, Ms. Baldwin [sic], before, but there have been several concerns raised about Rogers’ ability to grant itself an exclusive or preferential access to must-have content like Sportsnet. You touched on it earlier. Just can we go back to that and say what assurances can you provide the Commission that that won’t be the case and what safeguards can you propose in that regard?

5434 MS. WHEELER: Sure. So, in terms of safeguards, we tried to point to them in our opening ---

5435 THE CHAIRPERSON: Pardon me. I don’t know why I missaid your name. Pardon me, Ms. Wheeler.

5436 MS. WHEELER: That’s fine. In terms of safeguards, we’ve identified a few of them in our opening remarks. Obviously under the regulations, we’re not allowed to withdraw our signal from any BDU, we’re also subject to a dispute resolution process, and we’re also required to file our affiliation agreements with the Commission on the public record and allowing them to identify any opportunity or any arrangement we would have made with a BDU for preferential treatment.

5437 But more fundamentally outside the regulations, there’s a financial reason why we would not do that. If you look at the annual returns for Sportsnet, you will see that our subscription revenue isn’t -- doesn’t offset our programming costs. So, in order to actually cover our programming costs and make a margin, we have to do that on the backs of advertising revenue. And advertising revenue is based on a number of people watching your channel. And so, if you restrict distribution to your service, you are not going to optimize your advertising opportunity. So, from a purely self-interested financial perspective, it would make no sense for us to restrict our distribution.

5438 MR. WOODHEAD: If I could, just on that, Eric, I believe, provided you with some commentary, some sort of macro commentary about how this market operates at a high level on Monday. And I was wondering, Eric, if you want to address that issue of exclusivity and the motivations, intentions, desires of whichever player in that space would have to do any of that.

5439 MR. BRUNO: Sure. So, one of the things that we talked about was the notion of could you get exclusivity with a foreign OTT, right? And there was the notion that was raised, well, given the market power that the combined entity will have, could you not effectively negotiate exclusive agreements with Disney+ or Peacock? I think Susan just gave you a very good reason as to why RSM wouldn’t do it, and as we’ve noted with Sportsnet NOW, they don’t. Sportsnet NOW is everywhere.

5440 But even if you go back to Disney, I think the thing that you would see from Disney is we actually started our negotiations in 2019 and concluded them before the merger was announced. And I think when you look at the notion of market power or buying power in Canada, as amazing a country as Canada is, it’s small. There are 11 million households in Canada. Comcast passes 60 million by itself.

5441 So, even if, from a Commission standpoint, you were from a regulatory framework collectively to lose your minds and allow a combination of Bell, Rogers, Shaw and Telus, from that perspective, there’s still not buying power. And the other thing to note is, collectively, even though these are giants, their goal is to drive subscribers.

5442 Now, Disney, for the record, had, I believe, market capitalization. The total value of the company is about $275 billion. When it announced on the third quarter that it missed its subscriber forecast, all of Disney’s stock fell by 4 per cent. That’s over $10 billion. So, the notion that any global giant or any foreign streaming service is going to do anything other than try to get to every possible subscriber just doesn’t carry any water. There’s no reason to do it.

5443 Like I said, Rogers doesn’t do it. Disney wouldn’t do it. And quite honestly, the fact that a company gets an application first, in my mind, actually expands competition. One of the things that our compatriots Bell and Telus may have failed to mention is that they had Netflix three years before we did. One of the reasons we launched Ignite TV is that we recognized that our old digital platform wasn’t going to cut it in an IP world.

5444 The fact that Bell and Telus could launch Netflix three years before we did, actually spurred us to invest hundreds of millions of dollars in the Ignite TV platform in conjunction with Comcast that allowed us to be this much more competitive. The fact that we now have Disney+ and that it's easy to integrate an app with us, is going to spur more competition and it's going to spur our competitors to make investments to move just as fast.

5445 And I think if you look at it from a consumer perspective, should we have told Canadians, "You know what, Rogers isn't ready. Just -- could you hold on for three years while they launch an IPTV platform?" Right? I don't think we would say that for Netflix, I don't think we would say it for Prime Video, I don't think we would say it for Disney+ or Peacock, or whatever comes next.

5446 The power that Rogers had is the power of the platform; it's not market power, and the power of that platform is technology innovation, and that technology innovation is good for Canadian consumers. And by the way, it's also good for Canadian independence. Right?

5447 If you look at where BCG launched Tuber, well, they're on Rogers, they're on Shaw, and they're on Videotron. And they went to Videotron first, and Videotron worked with them with Comcast, because it's an open platform, but they're here. Right? That's going to spur the Bell's of the world, the TELUS's of the world, the Cogeco's of the world to want to be able to launch Tuber.

5448 So when we look at it, we don't think there is any such thing as market power, it doesn't exist as it relates to the foreign OTTs, but there is platform power, and the power of the platform is that it spurs technological innovation, and that innovation is good for Canadians; it brings them the services that they want and it spurs our competitors to bring those same services, which collectively expand the Canadian Broadcasting System.

5449 THE CHAIRPERSON: Thank you. And just for the record, the Commission has no intent to entirely lose their minds.

5450 (LAUGHTER/RIRES)

5451 MR. BRUNO: That's refreshing to know.

5452 (LAUGHTER/RIRES)

5453 THE CHAIRPERSON: I have a couple of quite specific questions for Shaw, but I think before I go there, I might turn to my colleagues.

5454 But I will note for -- or for the panel generally, given that we've just received your reply, and we appreciate the number of issues that you've raised in it, I would just indicate that once we have a little bit of time to analyse that, it may, you'll be really happy to hear, generate some additional questions. So if it does, we would issue an additional request for information perhaps by the end of today or tomorrow just for any items that might come to mind as a result of your reply.

5455 MR. WOODHEAD: Very good.

5456 THE CHAIRPERSON: And with that, perhaps I'll turn to my colleagues, and then I'll come back to Shaw so they don't feel left out of our dialogue.

5457 Commissioner Naidoo, please go ahead.

5458 MS. MAHEUX: Sorry, Sir.

5459 For the record, would you undertake to respond to the reply as an undertaking for Monday?

5460 MR. WOODHEAD: Yes.

5461 MS. MAHEUX: Thank you.

5462 (UNDERTAKING / ENGAGEMENT)

5463 THE CHAIRPERSON: Thank you. Thank you, Counsel.

5464 COMMISSIONER NAIDOO: Hi. I have a question about your monthly primetime local news specials that you've put in your appendix here. Will these be targeted specifically to each market, or would it be one size fits all?

5465 MS. WHEELER: Thank you for the question. No, they will be targeted specifically to each of the markets.

5466 COMMISSIONER NAIDOO: Okay. In that case, then, so would that be 12 per city that you have listed here.

5467 MS. WHEELER: No, it'll be 12 in total, but it will be spread between Winnipeg, Edmonton, Calgary, and Vancouver.

5468 COMMISSIONER NAIDOO: Okay, and how are you making those decisions as to, like let's say, you know, do three in Calgary and, you know, three in Vancouver? Are you -- is it -- is it based on sort of the news cycle or is it based -- yeah. Go ahead and explain.

5469 MS. WHEELER: Yeah, I think it will be based on the news cycle, but I think the -- the intention is to be able to explore the local issues in a -- in a deeper way in each market. So I do expect there probably will be an even spread of those specials, but again, if circumstances arise of merit, you know, more specials or the opportunity for more specials in a certain market than another, then our editorial team will obviously want to reserve the opportunity to follow those stories.

5470 COMMISSIONER NAIDOO: And for how many years are you -- are you envisioning having these specials? Like I mean, just for one year, a three‑year cycle?

5471 MS. WHEELER: So we have -- we have agreed to accept the production of these specials as a condition of licence, and so technically we would be required to continue until that is no longer a requirement on our licence.

5472 COMMISSIONER NAIDOO: And are you also planning to put some money towards expanding your actual suppertime newscasts?

5473 MS. WHEELER: We are -- we don't -- we do have plans to expand the suppertime newscasts in terms of more stories within the newscast, but we don't have the intention to expand the number of hours at this time.

5474 COMMISSIONER NAIDOO: And what about expanding staffing in these markets and in the West, or actually, across the country? Have you -- can you just expand on what you're planning to do?

5475 MS. WHEELER: Sure. We actually are going to detail that in our undertaking on Monday, and we're still working through the details on that. So if I could, I'll reserve responding to that question until Monday as part of the undertaking. I think it would -- I would be in a better position to provide you with more clarity on it.

5476 COMMISSIONER NAIDOO: Absolutely. Thank you very much. That's all I have.

5477 THE CHAIRPERSON: Thank you.

5478 Commissioner Desmond?

5479 COMMISSIONER DESMOND: Okay, thank you.

5480 And thank you for your presentation. I just have two questions, if I could. I'm looking first at your submission at page 8, and the bottom of your submission.

5481 And I noticed that you commented that:

5482 "In listening to the intervenors, the only real or tangible issue was the length of dispute resolution." (As read)

5483 I -- I -- to my recollection, I heard several intervenors comment on the inability to get to dispute resolution because of a potential threat to drop their channel, so it was not even being able to access the dispute resolution process. So I'm wondering if you might address that?

5484 MS. WHEELER: So I'll let Pam answer that question because I think you're talking about the -- Rogers as a distributor in the context. I was speaking primarily to Rogers Sports and Media, where we are -- we generally have, you know, engaged in dispute resolution with independent distributors, unfortunately, on a number of occasions.

5485 COMMISSIONER DESMOND: That's perfect, but if we could talk about it in the context more generally, that would be very helpful.

5486 MS. WHEELER: In terms of timing, we share the concern abut the length of time dispute resolution takes, although that delay, if that's a fair characterisation of it, is largely attributed to the negotiating tactics that independent distributors, in particular, deploy when negotiating with OSM for our sports services.

5487 We heard Cogeco earlier this week suggest that lights never go down, although they routinely suggest that they should, which obviously is a bit troubling for us, given the importance of our sports services to Canadian consumers and to their ability to attract and retain customers.

5488 So if there is a delay, it's certainly because they are trying to get the best, you know, rate possible for our service, which we can't fault them for, but certainly, the manner in which they go about it will obviously protract and delay their ability to resolve the issues expeditiously.

5489 MS. DINSMORE: So let me just address the issue around channel dropping from a -- from a I guess a BDU perspective.

5490 I guess I'll say at the outset that using the threat of dropping channels is not the way or is not our usual practice in terms of negotiating with a partner with whom we're going to renew an agreement. So as we all know, four months prior to renewal, we enter into discussions to renew, and insofar as that takes place and we both intend to renew, then we have negotiations. And I will honestly say that using that threat to drop is not our practice.

5491 In the few occasions where we are not going to renew a channel, and we choose not to renew a channel, we let them know that. And as we've experienced, there is a CRTC process around that through staff-assisted mediation, which we have attended, and we go through a very, you know, rigorous process to listen to the channel that is going to be dropped or that we plan on dropping to hear their best offer back to us, and it's through that process that, at the end of the day, we either drop the channel, don't drop the channel immediately but do it at a later time, or don't drop the channel at all. And that's through the Commission.

5492 So there is an opportunity for a channel in the few instances this has happened since 2015, Let's Talk TV, there is a process around that. And I will also say that in the Let’s Talk TV decisions the Commission itself recognized that in this consumer-driven world that the Commission unleashed that there would be occasions where certain channels might not make it. And I will tell you quite honestly, the only instances where a channel has not made it is where the penetration has fallen to an extremely low threshold, and that would be the only occasion where we have made that determination.

5493 COMMISSIONER DESMOND: Okay, thank you.

5494 And then I just have one second question, if I could, Mr. Chair.

5495 THE CHAIRPERSON: Yes, pleas go ahead.

5496 COMMISSIONER DESMOND: Thank you.

5497 I just wanted to give you the opportunity to respond with respect to the Astral case. I know you do address that in your brief; I think it’s at page 13, or your opening statement at page 13.

5498 And I think you framed the case as being one of exclusivity but yesterday we heard Bell frame it as being a situation of the relationship between the programmer and the BDU and how much leverage there is for one party.

5499 So I'm just curious if you could respond to the comments of Bell in particular where they say this case is more about the bargaining power and the leverage of any on party. And why would the Commission not consider that as something -- as a guide going forward?

5500 MR. WOODHEAD: That is not the test under the Diversity of Voices. Bell has fabricated that. That is not the test.

5501 COMMISSIONER DESMOND: Okay. But I am curious to hear your comments on the issue of bargaining and whether the situation as we have before us would result in a situation where there is an imbalance, and the leverage is too much for any one party.

5502 MR. WOODHEAD: That is why -- I mean, in some of the examples -- I will come directly to the answer in a second.

5503 But in some of the examples that were thrown out earlier in the week by for example, Ms. Mawji from Telus, of Peacock, you know what the big difference with all of these American examples is? It’s all of you. It’s the regulatory regime we have in Canada is vastly different than that that exists in the United States.

5504 So to your question, Commissioner Desmond, I guess my answer is there is a robust series of safeguards that the Commission has deployed following the Bell-Astral case because of the Bell-Astral case. And it involves staff -assisted mediation. It involves final offer arbitration. It involves fair market value indicia. And you know, various conditions of licence, et cetera, et cetera, et cetera.

5505 And that is the complete answer to that issue. It also includes tied selling and we believe that that comprehensive -- I mean, it’s quite comprehensive. Well, for me, I couldn’t really imagine, and I tried. Okay, is there something else?

5506 I couldn’t think of one. It covers the entirety of the relationship between programmers and distributors.

5507 MS. WHEELER: The only thing I might add in terms of our composition right now -- there has been a lot of things said about our ability to extract unreasonable terms and conditions and carriage requirements because we are the owners of a must-carry or a must-have service. And I will only note that there are a number of BDUs in Canada that do not carry some RSM services. And so if we really did have the ability to use our must-have service, then certainly, you know, we’re not doing a very good job.

5508 COMMISSIONER DESMOND: Thank you, Mr. Chair.

5509 THE CHAIRPERSON: Thank you.

5510 Commissioner Anderson?

5511 COMMISSIONER ANDERSON: Thank you. And thank you for your submissions today.

5512 I just wanted to take a moment to correct the record from a mis-statement I made yesterday when I was having an exchange with Ms. Spring, the Executive Director of the DOC project.

5513 I had asked -- we’ll, she had raised a certified independent production fund that was aimed towards creators from the BIPOC communities. And I had suggested or asked -- I had asked her if contributions made to that fund would potentially be increased with increased representation at your senior management level or at senior leadership level.

5514 And then I realized that you in part, I believe, contributed or created the fund. And so I was wondering if I could ask you a little bit more about an independent fund for BIPOC because I understand that you had created a fund with the Black Screen Office; is that right?

5515 MR. WOODHEAD: That is correct.

5516 COMMISSIONER ANDERSON: Okay. And so are you -- and I also understand in reviewing the transcript you further committed to continuing contributions to that independent production fund; is that right?

5517 MR. WOODHEAD: Correct.

5518 COMMISSIONER ANDERSON: And so does that form part of the tangible benefits package that you have proposed? Because I understood that 16 percent of the tangible benefits would be going towards the Shaw Rocket Fund and then 16 percent would be going to Rogers Independent Fund?

5519 So I was wondering, are you proposing the contributions also for a part of the tangible benefits package or are these contributions that are made outside of the tangible benefits policy?

5520 MS. WHEELER: It is currently part of the benefits package that we are proposing.

5521 COMMISSIONER ANDERSON: Okay. Thank you very much.

5522 And then my second question also relates to diversity. And I understand that you have several initiatives relating to promoting diversity in leadership, so that’s excellent.

5523 I was wondering if those initiatives apply to journalists because you said that there will -- you were going to provide us with information relating to new journalists that would be presumably forming a part of your operations for local news?

5524 MS. WHEELER: Yes. So the diversity initiatives apply across the board to our entire employee base within Rogers Sports and Media. And in particular, we have committed as we have identified in our reply comments to an Indigenous news team which will obviously be 100 percent Indigenous journalists.

5525 And then in addition to that, the vast majority of our journalists come from diverse backgrounds but we would be more than happy to provide you with a breakdown of that if it would be useful to you.

5526 COMMISSIONER ANDERSON: Thank you. I would appreciate that. Do we require ---

5527 MR. WOODHEAD: Commissioner Anderson, if I just may?

5528 COMMISSIONER ANDERSON: Yes.

5529 MR. WOODHEAD: I think it was at page 12 of our submissions so on Monday on the issue of diversity with an updated benefits package, you will see in there some new initiatives.

5530 COMMISSIONER ANDERSON: Thank you for that clarification.

5531 THE CHAIRPERSON: I think you were looking to me perhaps. Commissioner Anderson, to know if that requires a separate undertaking. I don’t believe it does, Counsel, because it was part of the undertaking they have already provided to detail.

5532 MS. WHEELER: The only caveat I will make is that our breakdown is obviously based on self-identification and so it won’t be -- it will only be as accurate as the self-identification allows.

5533 COMMISSIONER ANDERSON: And finally, does you diversity in leadership commitments extend to senior level executive positions?

5534 MS. WHEELER: Absolutely.

5535 COMMISSIONER ANDERSON: And do you think that you as an organization are better able to achieve the policy objectives set out in the Broadcast Act with a more diverse senior executive team?

5536 MS. WHEELER: Absolutely. And that is why over the last year or so we have taken steps to diversify our senior leadership team within Rogers Sports and Media. We would be happy again to provide that to you as well. And a number of the senior leaders within our team.

5537 COMMISSIONER ANDERSON: Sure. Since you're willing, it would be ---

5538 THE CHAIRPERSON: Again, if that is part of the same undertaking, fine. If it’s a separate undertaking would you agree to provide it in the same timeframe?

5539 MR. WOODHEAD: It was included.

5540 MS. WHEELER: Yes.

5541 THE CHAIRPERSON: Thank you.

5542 COMMISSIONER ANDERSON: Those are all of my questions, and again, thank you for your submissions. And I apologize for my earlier mis-statement.

5543 THE CHAIRPERSON: Thank you, Commissioner Anderson.

5544 Commissioner Lafontaine?

5545 COMMISSIONER LAFONTAINE: Thank you very much, Mr. Chair. And good morning.

5546 I have a few follow-up questions from my colleagues’ questions and a few questions that I also wanted to ask.

5547 I’m going to start with the Certified Independent Production Fund question that my colleague, Commissioner Anderson, just asked.

5548 What I have understood is from your response, part of the benefits package monies will be directed to the Black Screen Office development production fund; is that correct? Because I don’t recall seeing that in the application. I had understood that monies were going as part of the benefits package to the Shaw Rocket Fund on the one hand, and two Rogers CIPFs on the other, the documentary fund and the cable production fund. So, was this a change to the benefits package?

5549 MR. KOVACS: It’s my understanding that there was a separate contribution made to the Black Screen Office, I think, by Rogers Group. It was $150,000 that was separate and apart from -- that was already made. That being said, as we mentioned in our opening remarks, taking into account the suggested changes to the evaluation, when we do come back with our undertaking on Monday, we will be addressing a number of concerns, and that includes diversity support mechanisms. So, I think just stay tuned, because that’s certainly one of the areas that’s of consideration.

5550 COMMISSIONER LAFONTAINE: Thank you. So, I guess it’s ---

5551 MR. WOODHEAD: I apologize, Commissioner, for this because we didn’t bring Ms. Mirsky with us today, and she is responsible for those, but we’ll sort that out for you.

5552 COMMISSIONER LAFONTAINE: Thank you. And what I would like you to sort out is, on the one hand, what the benefits package is at the current level, so the $5 million. So, based on the current value of the transaction that you have put forward, the $5 million-and-change, what the benefits package would be in that scenario and what the benefits package would be in a revised value of the transaction.

5553 MR. WOODHEAD: That’s the undertaking.

5554 COMMISSIONER LAFONTAINE: And whether the Black Screen Office initiative ---

5555 MR. WOODHEAD: Correct.

5556 COMMISSIONER LAFONTAINE: --- where it -- perfect. Thank you very much.

5557 MR. WOODHEAD: And we’ll provide that on Monday.

5558 COMMISSIONER LAFONTAINE: Exactly.

5559 MR. KOVACS: If I could just clarify a little bit more certainty. We do have an agreement with the Black Screen Office to fund the development fund of $750,000, and this fund is actually administered by the Canadian Independent Screen Fund. And so, it’s not a Canadian Independent Production Fund.

5560 COMMISSIONER LAFONTAINE: Exactly. So, yes. So, all of that would need to be clarified, and I believe I did make note to that fund when I was asking my questions on Monday, so great. Thank you. That was my first question.

5561 My next question relates to news. The Chair asked about whether the local expression monies that will be redirected from the Corus global stations to the four Rogers city stations whether they would be incremental -- whether that would be incremental spending. And my question to you is incremental to what? Is it incremental to an average of the last three years’ spend of the Rogers stations? So, perhaps it would be helpful if you could clarify to what the incrementality will apply.

5562 MS. WHEELER: So, we hadn’t thought about the baseline, and we can certainly provide our views on that. I think generally we’d be amenable to a three-year average baseline that it could be incremental to.

5563 COMMISSIONER LAFONTAINE: Thank you. My next question, I believe, was from Ms. Dinsmore in your submission this morning. You referred to 45 -- of a carriage of 45 independent broadcasting services. And in our exchange on Monday, when we were talking about the 40 proposed services, I had asked whether any of those 40 would include services that reflect the interests of Canada’s diversity communities, and I believe your response was that it would not, that there were other measures in place to ensure that that type of programming would make it to the screen.

5564 Today, you were talking about 45. I ask you the same question. Do any of these 45 include programming services that service Canada’s diversity communities?

5565 MS. DINSMORE: That’s a good question as we -- of course, as we know, 9(1)(h) services are there for that purpose, and we’re all familiar with which ones they are. I think, again, as I’ve said before, this is not intended as an access right consistent with the Diversity of Voices Policy as the Commission pointed out in the Let’s Talk TV decision when it was discussing the 1:1 rule. It was meant to be sort of protection for independent services who were large without identifying which services they would be. So, that’s essentially the spirit behind the 1:1 linkage rule. In this case, it will be effectively 1:5.

5566 I wouldn’t want to say here that in order to meet, you know, the 45 services that we would be picking and choosing between the existing services that we carry -- we carry 46 services as we know on Rogers right now, 47 at Shaw Direct and 38 in Shaw. So, the notion -- obviously, we are always looking for services that are going to appeal to our customers, but the idea that we would, in some way, shape or form, look at the services that are currently being carried and make a determination that some may not be diverse enough and need to be removed and replaced with another, that’s not the idea. But we’re highly aware that we are operating in urban communities, urban cities, as well as, you know, smaller areas, and each has its own constituency, and we will always try to serve the needs of those constituencies by carrying the services that those constituencies are interested in watching.

5567 So, you know, I think in spirit, for sure, I wouldn’t want to put a number on the number of -- within the 45, the services that represent diversity we would carry because that might mean that -- and others -- like, especially in the case of Shaw Direct with capacity constraints, we would have to make hard decisions on the searches that are there now.

5568 COMMISSIONER LAFONTAINE: Thank you for that. My next question relates to exclusivity of programming and following up on the Chair’s question. From what I understand of your response, there are -- the mechanisms that are in place do not allow Rogers -- or would not allow Rogers to exercise exclusivity or ensure that its programs are available on an exclusive basis on OTT platforms. Is that your view?

5569 MS. DINSMORE: That’s our view.

5570 COMMISSIONER LAFONTAINE: Because when I look at the Telus submission, their view is that the rules would allow a BDU to provide television programming on an exclusive basis on a digital media platform if it is tied to a BDU subscriber or a BDU service. And your view is that that’s not the correct reading of the rules?

5571 MS. DINSMORE: I mean, this is under the DMEO. The exclusivity rule is under the DMEO. So, under the DMEO, the Commission itself has said that it would not want a customer to have to subscribe to a particular mobile or internet provider in order to get a service, that that’s not allowed, and that therefore -- I guess, I mean, strictly speaking and the way I would interpret it is that where a service is offered on a direct to consumer basis. So, for example, Netflix.

5572 Netflix is offered on a direct to consumer basis. A customer can subscribed to any internet provider and access Netflix. So, under those rules, presumably, Rogers Ignite as a platform, as a BDU platform, could have an exclusive with Netflix because customers can otherwise access network on a direct to consumer basis. That is the way that rule is written as far as I understand.

5573 Should that happen, there is also the ability to file an undue preference complaint. So, that’s also available to consumers under the DM -- not to consumers, but to BDUs under the rules, and that is sort of the additional safeguard. Then, it would be up to the Commission to make that decision as to whether or not undue preference was being inflicted on a particular BDU in that scenario.

5574 But as Eric has explained, as far as the OTT apps are concerned, whether they be foreign or Canadian, I would presume they are looking to get as many subscribers as possible. So, the notion that we might find ourselves there, to me, seems slim because of the market incentives that any app has to reach as many customers as possible, and that’s been going out, I think, in Eric’s description of what happened to the Disney share, the stock, when they didn’t meet their subscriber numbers.

5575 COMMISSIONER LAFONTAINE: Right. Thank you. I believe they were also concerned about the availability of, say, the must-have programming, sports programming available on a digital media platform that is associated -- that is also associated with a BDU subscriber, but that’s not something we should be concerned about?

5576 MS. DINSMORE: No, and we currently provide access to Sportsnet NOW to every BDU subscriber in Canada who carries the service.

5577 COMMISSIONER LAFONTAINE: Okay, thank you. Nearly done, Mr. Chair.

5578 Just with regard to the app and the app development, I have understood Mr. Woodhead, that you explained why Rogers would not simply make the app that gets developed created for the -- an independent service, make it available simply on the OTT platform.

5579 You explained why, but can you also please confirm that that is not something that Rogers would do, that it is not its intention to relegate the independent services exclusively to the OTT platforms?

5580 MR. WOODHEAD: That’s not our intention.

5581 COMMISSIONER LAFONTAINE: Thank you.

5582 And then one of the benefits that you had mentioned to this transaction again is this development of these apps. You indicated earlier in the week that part of the benefit is that the independent services, once the app gets developed, they can use them elsewhere.

5583 We heard evidence yesterday from one of the intervenors that these apps will be proprietary to a Comcast platform.

5584 Can you confirm? Can you speak to that?

5585 MR. WOODHEAD: Eric, can you speak to that point?

5586 MR. BRUNO: Absolutely.

5587 So when you're developing an app, essentially, there's a part of the app that needs to be integrated with Comcast. So the same is true for android, the same is true for IOS.

5588 So what that’s called is a software development kit, and basically, whether you're android, whether you're for Apple or Telus or Bell or Rogers or Comcast, basically, you say, "Here are the rules, and here's the guidance to develop the application."

5589 So what will happen is, an application that’s developed for the Comcast platform will work on the Comcast platform because it will comply with the rules of how it works with that particular platform.

5590 But having done the work, right, having created the engine and the underlying software, there's no reason that that app couldn't be re-used.

5591 Now, there's more work. I'm not trying to say that once you do something for Comcast, it can magically appear on Amazon or IOS. There's more work that needs to be done.

5592 But fundamentally, the app that’s available on Comcast 1 is available to all of syndication. That’s every household in Shaw, Videotron, and Rogers, as well as Comcast and Cox in the south.

5593 So there is a benefit to working with Comcast, but then, some of the work that’s gone in, most of the work that’s gone in can be picked up in re-applied to other platforms. There is more work to be done, so like I said, it's not a magic cure. Once you get into Comcast, you can't just pick it up and drop. There's more work that needs to be done. But it is fungible into those other platforms.

5594 COMMISSIONER LAFONTAINE: Thank you very much.

5595 Thank you very much, Mr. Chair. Those are all of my questions.

5596 MS. DINSMORE: Yes, Ms. Commissioner, I just wanted to add one thing to my earlier conversation around the composition of the 45. I just wanted to make it clear that, you know, we're well aware that within that group, there are already diverse services.

5597 TLN counts in the count because it's English language. OUTtv counts in the count. So these are already services that are offering diversity to the -- for customers.

5598 So I just wanted to make that clear, that like, naturally and inherently within that group of 45 already today there are services that quality for the 1 to now 5 rule, earlier 1 to 1, now 1 to 5 for Rogers, and that we would look to keep that diversity in place.

5599 COMMISSIONER LAFONTAINE: Thank you very much for that. And I believe one of the undertakings that you provided earlier in the week was to provide the list of the programming services that each of the undertakings are carrying, so that will also shed some light on that. So thank you very much.

5600 Thank you, Mr. Chair.

5601 THE CHAIRPERSON: Thank you, Commissioner Lafontaine.

5602 A couple of perhaps final questions, one fairly specific, and I think this goes to Shaw.

5603 The arrangement agreement stipulates at section 212 that if between March 13^th, 2021 and the effective time Shaw declares or pays cash dividends on the company shares in excess of the company permitted dividends, then a corresponding reduction shall be made to the arrangement consideration to be paid to the company participating shareholders on a dollar-per-dollar basis.

5604 Could you please confirm whether such an excess dividend has been declared or paid?

5605 MR. SHAIKH: I would have to take that as an undertaking.

5606 THE CHAIRPERSON: Please do, then. Thank you.

5607 (UNDERTAKING / ENGAGEMENT)

5608 THE CHAIRPERSON: And last question for Shaw, particularly, this is your assets that are being proposed to be transferred. I would like to hear from you how you would justify how you would support the proposed arrangements that have been put in front of us are indeed the best possible proposal in the circumstances?

5609 MR. SHAIKH: Well, thank you for that question.

5610 Rogers was a natural partner. We share the same values, we share a rich, very similar history in terms of being founded by Ted Rogers and JR Shaw. We have the same vision for the future, and we have a very similar network. We're both cable companies, we both invested in the Comcast platform. I think you have heard a considerable amount this week about Rogers' commitment in terms of our efforts to migrate to full IP. That’s something that’s critical to our ability to compete, going forward.

5611 There's no question that Shaw, our employees, our customers, indeed, the economy of western Canada will benefit from the scale and resources that will be made available because this transaction and Rogers' clear commitment to realizing that shared vision on a going-forward basis is no other party that could have come to Shaw and proposed a transaction like this that is not just the best possible in the circumstances for Shaw, but it's the best possible for all Canadians and the Broadcasting System.

5612 MR. COWLING: Can I just -- sorry, can I proceed? I just want to make sure I'm not at -- I just ---

5613 THE CHAIRPERSON: Pardon me. I'm listening. We are listening.

5614 MR. COWLING: I might be repeating some of the comments that were made on Monday, but I just wanted to remind the Commission of Brad's words in the opening remarks where he was talking about thinking about the customer and thinking about the future. And those two things, I think, are very much at the heart of this transaction.

5615 It is a transformational moment, and when Shaw looked ahead at what was going to be required for -- not only for customers but for the broadcasting system, this transaction made the most sense.

5616 And as I think we have highlighted over the course of this appearance and Monday's appearance, this transaction is about more. It's about strengthening the Broadcasting System for the future through more competition, stronger competition, both with our principal competitors domestically, but also with global digital giants. It's about expanding competition; as we're able to expand the reach of our networks, so are we able to expand the reach of the Broadcasting System.

5617 And we couldn't do that on our own. And when you put the complimentary assets of Rogers and Shaw together, it's quite magical what can happen, and it's much more than what we can do, the sum of what we can do apart.

5618 THE CHAIRPERSON: Thank you. Thank you for the response and all of your responses to our questions today.

5619 And seeing no final questions, I will turn it back to the Hearing Secretary.

5620 MS. ROY: This concludes the hearing, Mr. Chairman.

5621 THE CHAIRPERSON: And so my final component. Avant de conclure cette audience, permettez-moi de remercier les divers intervenants qui ont participé à la présente instance, que ce soit par écrit, par leur participation en présentiel ici à Gatineau ou à distance.

5622 I would also like to thank all those who helped organize and execute the public hearing, the stenographers, the interpreters, Commission staff, and of course, my Panel colleagues. All of the work conducted by everyone is important, much valued, especially under the current circumstances.

5623 I will take this opportunity to remind Rogers that it has until November 29^th -- it still says that number in front of me -- to file its undertakings with the Commission, and I understand the Commission staff has already provided a list of the required undertakings in the course of the proceeding.

5624 For the others, for their part, intervening parties have until December 13^th to file final submissions with the Commission and both Rogers and CPAC have until December 20^th to provide us will their final replies.

5625 All parties have access to the hearing transcripts on the CRTC’s Website should there be a need to confirm or validate an extract of the proceeding.

5626 With that, this is now adjourned. Merci beaucoup et bonne fin de journée.

--- Upon adjourning at 12:26 p.m./

--- L'audience est levée à 12h26

Court Reporters

Dale Waterman

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