Transcript, Hearing 5 December 2023

Attendees and Location

Held at:

Conference Centre
Portage IV
140 Promenade du Portage
Gatineau, Quebec

Attendees:

• Chairperson: Vicky Eatrides
• Members: Alicia Barin, Vice Chairperson, Broadcasting
  Adam Scott, Vice Chairperson, Telecommunications
  Nirmala Naidoo, Commissioner, Alberta and the Northwest Territories
  Joanne T. Levy, Commissioner, Manitoba and Saskatchewan
• Legal Counsel: Valérie Dionne
  Bianka Lauzon
• Secretary: Jade Roy
• Hearing Managers: Courtney Fitzpatrick
  Marie Lyse Lavallée

Table of Contents

Presentations

8968 Unifor

9070 FRIENDS

9238 Independent Broadcast Group/Le groupe de diffuseurs indépendants

9393 Michael Geist

9495 Tubi, Inc.

9643 CBC/Radio-Canada

Undertakings

9597 Undertaking

Transcript

Gatineau, Quebec
5 December 2023
Opening of Hearing at 9:00 a.m.

Gatineau, Québec

‑‑‑ Upon commencing on Tuesday, December 5, 2023 at 9:00 a.m.

8964 THE SECRETARY: Good morning, everyone.

8965 I would just like to remind everyone that tomorrow we will start the hearing at 10:30.

8966 We will start today with the presentation of Unifor.

8967 Please introduce yourself and your colleague and you may begin.

Presentation

8968 MR. KITT: Thank you. I appreciate you hearing us today.

8969 My name is Randy Kitt and I am the Director of Media at Unifor. Beside me is my colleague Marc Hollin, our Media sector Researcher.

8970 Unifor is Canada’s largest private sector union, with more than 315,000 members and over 10,000 members in the media sector, including about 4,500 members in broadcasting.

8971 What do Netflix, Apple and Amazon have to do with the news? This is the question that we need to answer here today.

8972 In 1999 and 2009 when the CRTC decided to exempt foreign digital streamers from Canada’s tightly regulated broadcasting system, they effectively upended a decades‑old business model for Canadian broadcasters. The effects of those decisions have caused severe harm to the production of Canadian News, and especially local news.

8973 We can’t go back to 2009, but we can ensure that we address the shortfalls that the Broadcasting Act was supposed to protect.

8974 In effect, Netflix, Amazon and the other foreign streamers have been getting a free pass in Canada, allowed to broadcast in this country without contributing to the system, as Canadian broadcasters have had to. And that must end now.

8975 Local news holds power to account, strengthens democracy and builds community, and these roles have never been more important.

8976 Since 2012, private conventional TV has been a big money loser for both independent and big media companies. From 2019 to 2022, the rate of profit for conventional TV was minus 7 percent, minus 18.6 percent, minus 12.4 percent and minus 17.7 percent, respectively. Those losses are real to our members.

8977 Between 2017 and 2022, employment in the broadcasting industry decreased by almost 15 percent. This year alone Unifor has lost over 100 good‑paying television full‑time jobs, and for every union job, many more non‑union jobs were also lost.

8978 Yesterday’s announcement that the CBC will axe 600 jobs keeps adding to the pile of lost locally relevant programming for Canadians.

8979 Week in, week out, we brace ourselves for more job loss and programming cuts from Canadian broadcasters.

8980 The issue with Corus and Global News is also top of mind, and I believe it is generally agreed that the Independent Local News Fund (ILNF) is not sufficient to accommodate Global TV and needs immediate attention. The Rogers/Shaw merger decision promised to address this issue.

8981 The Policy Directive for this initiative also stresses the importance of local news, asking the Commission to “consider the importance of sustainable support by the entire Canadian broadcasting system for news and current events programming”.

8982 Therefore, Unifor recommends that the Commission establish a local news media fund attached to the Online Streaming Act, similar to the former Local Programming Improvement Fund (LPIF).

8983 Like BDUs, qualifying foreign streaming companies would be required to contribute a portion of their revenue generated in Canada to a fund that would, in turn, be distributed to qualifying news organizations in Canada. Under the current system, domestic legacy TV distributors must contribute at least 5 percent of their broadcast revenues to Canadian content creation and production.

8984 Other intervenors here would have you reduce these amounts for all and ask less of the foreign streamers to maintain the current level of funding or even lessen funding levels, which in our view is not the way to level the playing field.

8985 Unifor, on the other hand, thinks the Commission should make the whole pie bigger. Therefore, we recommend that the Commission should increase contribution levels from 5 to 7 percent. The additional 2 percent should go directly to the proposed local news media fund. Under this proposal, the ILNF could then be carefully merged with this proposed news fund.

8986 In addition, Unifor recommends that the Commission should maintain current Canadian programming expenditure (CPE) requirements and extend this obligation to online undertakings.

8987 Further, the Commission should consider requiring that a portion of this CPE money be earmarked for the production of local news and programming or the equivalent amount be directed towards the local news media fund if the online undertaking doesn’t produce any news programming.

8988 We’ve been talking all along about levelling the playing field, but that should mean added funds and obligations to better support the Canadian broadcasting system, not less from everyone to maintain a level of funding that we already know is not enough.

8989 Everyone knows that local broadcasters producing local news are in crisis, and only when we increase the pie can we then start to repair the damage that has been created over the last 15 years. We are behind and we need to catch up.

8990 Foreign streamers’ entry into the Canadian broadcasting system has created a crisis in local programming and local news. It's time for them to pay their fair share and it should be the cost of doing business in Canada.

8991 So, what do Netflix, Apple and Amazon have to do with the news? The answer is everything.

8992 Thank you.

8993 THE CHAIRPERSON: Thank you very much to Unifor for your participation in the proceeding, for being here with us this morning to kick off day 12. We hear you on the importance of local news and you've heard from us our focus on ensuring that there is support for news.

8994 I have some questions about the proposal for the new fund and so maybe we can unpack that a little bit. You've said the ILNF is not sufficient and I'm wondering, could you talk a little bit about how the proposal for the new fund, how would the new fund truly differ from the existing fund?

8995 MR. KITT: The existing ILNF? Well, I believe the ILNF is about $20 million and it's just not sufficient. If Global were to be folded into that fund, I think you'll hear from the independent stations that they will not be able to maintain the level of funding for those stations. Global is just too big.

8996 The fund we're proposing would be similar to the LPIF, which a portion of that 5 percent, the current 5 percent, was folded into that. I believe in around the time 2014 that fund was worth about $100 million. So we see that $20 million in today's dollars just isn't sufficient. We've all seen the cost of everything just rise dramatically. I can't even begin to walk you through, you know, the last week away here in Ottawa and they are like, “Oh, my goodness.”

8997 And you see that our Canadian broadcasters are doing the exact same thing. Yesterday CBC just cut 600 jobs because the cost of everything has just skyrocketed and the cost of television production has also skyrocketed. So, I would imagine that that $100 million in 2014 would have to be, you know, north of double that.

8998 THE CHAIRPERSON: Is there a way that the ILNF could be amended to meet your objectives? Because you're talking about taking the ILNF, ensuring that those people who are recipients, so those who receive support, are kept whole under this new model ‑‑

8999 MR. KITT: Correct.

9000 THE CHAIRPERSON:  ‑‑ and we would merge it with the new fund. Is there any way that the ILNF could be amended and still meet the needs that you're talking about?

9001 MR. KITT: I think so. I mean, however you decide to slice the pie, as long as the money is the money. We made that proposal. I don't think that whether you were to fold the ILNF into a news fund or that you were to keep the ILNF separate and expand it to accommodate the needs, our goal is to ensure that there's robust Canadian news in this country and that the funding is sufficient.

9002 THE CHAIRPERSON: Thank you for that.

9003 If I could ask a point of clarification. Your submissions seemed to be more focused on audiovisual and I'm just wondering what you think the needs are in terms of audio and audiovisual separately.

9004 MR. KITT: If you look at our C‑18 proposals, for instance, you'll see that generally we believe that the funding should be platform agnostic and that's been our general principle. In those proposals we talked about inclusivity, we talked about accountability and transparency, and I think the same would go for here. Inclusivity is that if you're an eligible broadcaster, you should be included in these funds.

9005 THE CHAIRPERSON: Thank you for that.

9006 We have heard intervenors over the past couple of weeks say that it's not fair that they would be asked to contribute to a fund, a news fund when they don't produce news and local content. I'm just wondering if you could respond to that.

9007 MR. KITT: Well, of course. I think that's our whole thesis here, is that the Canadian broadcasting system used to be a closed system that only Canadian broadcasters could be a part of, and those big American companies would have to license their programming to Canadian companies and that's how those Canadian companies funded local news.

9008 In 2009 when the CRTC made the decision to exempt those foreign streamers, that was the beginning of the end for broadcast television in Canada and local news in Canada, and the funding model disappeared.

9009 Just like in my statement, we say that we can't close the barn doors. We can't just say Netflix can't broadcast in Canada anymore, but they can help pay towards the Canadian system, and that includes local news, and it is the cost of business to be here in Canada.

9010 THE CHAIRPERSON: Okay, great. Thank you very much for that.

9011 I'm just going to look over at my colleagues. I think Vice‑Chair Barin or the Vice‑Chair of Broadcasting would like to jump in. Thank you.

9012 MR. KITT: Thank you.

9013 VICE‑CHAIRPERSON BARIN: Thank you very much. Welcome.

9014 What is your position in respect to the level of contribution that could be imposed on online undertakings? I know you've mentioned increasing ‑‑

9015 MR. KITT: We said 7 percent.

9016 VICE‑CHAIRPERSON BARIN:  ‑‑ with 7 percent.

9017 MR. KITT: Yes.

9018 VICE‑CHAIRPERSON BARIN: Okay. Is your position on the 7 percent consistent with regards to online video undertakings and online audio undertakings or would you make a distinction between the two?

9019 MR. KITT: No distinction.

9020 VICE‑CHAIRPERSON BARIN: Thank you.

9021 Now, we had ‑‑

9022 MR. KITT: Sorry, just to add to that. As well, I think, in the questions to this hearing there was also the question of the audio and there was also the question of unique transactions, and that was kind of surprising because when I watch or stream a show or if I buy a show online, if I just rent it, it’s the same. It’s still streaming. It’s still a way ‑‑ what if I don’t have a Netflix subscription and I just rent the four movies I watch every month and I still pay the exact same amount of money? There should be no distinction to how it comes in and what the price is or how they decide how they’re going to monetize the content. The cost of doing business in Canada should be to contribute to the Canadian system, and that includes local news. Thank you.

9023 VICE‑CHAIRPERSON BARIN: Noted. We have had discussions with many intervenors with regards to contribution to funds that aren’t directly related to news or support for audiovisual, but more specifically things like the Broadcasting Participation Fund ‑‑

9024 MR. KITT: Right.

9025 VICE‑CHAIRPERSON BARIN:  ‑‑ to fund participation in CRTC proceedings and other funds that could specifically target Indigenous programming and programming by equity‑seeking groups. So, how could the Commission, in your view, balance these other interests and priorities in an equitable way through funding?

9026 MR. KITT: Well, I think the funding that ‑‑ the five percent was divided, right, for ‑‑ a portion went to the CMF, a portion would go to the Broadcasting Participation Fund, which I think is important; funding Indigenous programming is important ‑‑ and so, that’s ‑‑ that’s why we need more money into the pie, because that five percent was already allocated. We are suggesting an extra two percent, and I think a small portion of that seven percent should absolutely flow to those areas.

9027 VICE‑CHAIRPERSON BARIN: Okay. So, you have increased the pie and taken the allocations from that.

9028 MR. KITT: Right.

9029 VICE‑CHAIRPERSON BARIN: Okay. Great, thank you.

9030 THE CHAIRPERSON: Thank you. Thank you, Vice‑Chair.

9031 Let’s go over to Commissioner Levy.

9032 COMMISSIONER LEVY: Good morning. Welcome. I am interested in how you think extra money would change the system, not simply backfill the system. For instance, what would you see as innovation in a new system? Because if we can’t turn the clock back to 2009, certainly news is being done in new and different ways. How do we make sure that there is incentive for innovation?

9033 MR. KITT: Right. I think if you step back, when we talk about new and innovative ways that we do news, and we look at the history, I’ve been in the broadcasting business a long time ‑‑ over 30 years, and so, I used to edit on three‑quarter reel tapes and I used to spin spool, I used to cut ‑‑ actually physically cut the tape and tape it back together, and now it’s much simpler. I mean, it’s all on Avid computers and you can just ‑‑ you know, my 12‑year‑old kid can edit a little thing on his phone, put it on TikTok.

9034 But, you know, news has to be people on the streets, talking to people about what’s happening, and that’s never changed because no innovation is going to solve that problem. So, you need a reporter to hold you to account, and no innovation is going to solve that. And all of the rest ‑‑ the technology ‑‑ that’s already happening. We see lots of innovations. We’re taking advantage of technology, and we’ll always do that, but you can’t ‑‑ you just can’t substitute a reporter on the street, asking you a tough question to hold you to account.

9035 COMMISSIONER LEVY: The question becomes whether that journalist needs to be centralized in one place or whether there’s an opportunity to spread out so that more local coverage is...

9036 MR. KITT: Right, and that is why we need the funding, because right now, these news outlets just can’t afford to send somebody to ‑‑ say, to Moncton or to Saskatoon, so instead we’ll just do it online or we’ll ‑‑ innovation doesn’t necessarily substitute for having somebody on the street ‑‑ feet on the street in those locations. And that’s where this money is going to help us.

9037 COMMISSIONER LEVY: And who is also subject to a code of journalistic ethics ‑‑

9038 MR. KITT: Of course, yeah.

9039 COMMISSIONER LEVY:  ‑‑ and all of the rest of it. One other question. We’ve had some intervenors say that the problems in the news field are about to be solved by new agreements that are bringing new money into the system and that this is less of an issue. How do you respond to that?

9040 MR. KITT: Yeah, no, I ‑‑ if anyone here thinks 100 million dollars from Google is just going to solve all our problems, it’s just not going to. There is ‑‑ this is a piece of a puzzle, and we have a big puzzle here, and C‑18 is a piece of the puzzle; C‑11 is a piece of the puzzle; the LJI, which is a piece of the puzzle; the labour tax credits are a piece of the puzzle. There is a patchwork of funding mechanisms and supports that are, I think, all going to come together to support local news, but as we’ve seen, you know, a hundred million dollars from Google isn’t going to solve it, and then, what if Google is not around in 10 years? Then what? We need to find a robust way and many different avenues to continue to support local news.

9041 COMMISSIONER LEVY: Thank you very much.

9042 MR. KITT: Thank you.

9043 THE CHAIRPERSON: Thank you so much.

9044 Let’s go over to Commissioner Naidoo.

9045 COMMISSIONER NAIDOO: Hi, there. Thanks for being here today.

9046 MR. KITT: Thank you.

9047 COMMISSIONER NAIDOO: You had mentioned that, when it comes to ILNF, there are ways that it can be fixed, either to fold it into another fund or to expand the funding that ILNF gets. So, I’m just wondering if you ‑‑ with the current needs of news, what do you think a sufficient amount of funding would be for ILNF or a fund like that, if 20 million isn’t enough?

9048 MR. KITT: Right. I ‑‑ I don’t have that number handy obviously, but as I pointed out, I think in 2014, the LPIF was 100 million, and without that, this is where we are. So, I think that ‑‑ I think, if I was to say off the top of my head, you know, probably north of double that amount, but ‑‑ but I would have to get back to you on those specific numbers.

9049 COMMISSIONER NAIDOO: Sure, thanks. And of course, things are changing on a daily basis. You mentioned CORUS, you mentioned CBC, and the needs to draw on funds like that may change as we move forward.

9050 I wanted to also talk a little bit about, we all know that news is the cornerstone to democracy. Is there something that you think that can be done to make news viable in the long term?

9051 MR. KITT: Yeah. You know, like I said, it’s the puzzle ‑‑ the piece of the puzzle. So, we have all those pieces that I mentioned ‑‑ the LJI, the tax credits, we have C‑18 and C‑11 ‑‑ and I think I imagine a future where all of those ‑‑ you know, at least the C‑18 and the C‑11 puzzle pieces sort of come together. Because, you know, I think maybe 10, 15, 20 years from now there will almost be no distinction between a Toronto Star and a CTV, whereas right now we clearly think of a newspaper and a television station, and those are starting to merge together.

9052 So, those two puzzle pieces might come together, but I think there will always be a place for government support. We are hoping that maybe the government will open philanthropic avenues and different ownership structures we’re looking into for news organizations. You know, I think I saw the CHEK folks in the room and, you know, it was a long time ago where the employees bought the station and I think that’s just marvelous. So, there’s lots of opportunities, and there’s lots of pieces of the puzzle, and lots of moving pieces, but here today, we’ve got to talk about the broadcasting system and putting this piece of the puzzle firmly in place and set a strong foundation.

9053 COMMISSIONER NAIDOO: So, I wanted to ask a little bit about keeping news afloat is one thing; quality of journalism is another thing. We’re seeing much more today that journalists are being asked to provide content on a number of platforms and especially when it comes to broadcast, and not just do the writing and the storytelling, but to do the shooting and to do the editing and all of that kind of stuff. And I wanted to ask if you felt that something needed to be done as far as funding goes in order to improve the quality of journalism, and maybe take some of the load off of those journalists so they can focus more on the content?

9054 MR. KITT: Right, well, and that’s exactly right back to Commissioner Levy’s point, right, is that there is no substitute for feet on the street, and those journalists are stretched thinner and thinner and thinner, asked to do more and more every day, and asked to post on social media, and then ‑‑ don’t get me started on that because the effects on their mental health and the harassment and abuse that they face takes a whole other toll.

9055 So, all that put together, you’re absolutely right, and when you ask journalists and when you ask media workers, “What is the most important thing when we go into bargaining with employers?” and they talk about employment level, and they say, “There’s not enough people in my department to do a good enough job,” but they always do. And then, we talk about the toll that it takes on them after the end of their shift. And so, I think employment levels are a super important thing for you folks to look at when we make these decisions.

9056 COMMISSIONER NAIDOO: The whole business of news has changed a lot over the decades, and you mentioned a little bit about some of the strife that journalists walk into when they’re simply just doing their jobs. And I’m just wondering about whether you think that there’s a need to contribute towards literacy ‑‑ news literacy about the importance of news, educating people about why it’s so important ‑‑ and if you think a portion of funding needs to go towards that?

9057 MR. KITT: That sounds like a great idea. I am always talking about that at work, like, you know, getting ‑‑ I remember in Grade Four, we had a media literacy component to our English classes, and it was super important. In Grade Seven or Eight, we had a whole television production and film production class, and the schools just ‑‑ they just don’t have the capacity for those types of programs anymore. Yes, I think that’s a great idea.

9058 COMMISSIONER NAIDOO: All right. That's all I have. Thank you very much.

9059 MR. KITT: Thank you.

9060 THE CHAIRPERSON: Thank you very much. So Unifor has been very clear in terms of your focus, which is to ensure that we have sustainable and ongoing funding for local news in Canada as part of this new contributions framework.

9061 Is there anything else that perhaps we haven't covered this morning? And I will turn things back over to you for any concluding remarks. Is there anything else that we didn't have a chance to cover that you would like to share with us and any other concluding thoughts?

9062 MR. KITT: Like, you know, I'll just end by saying that, you know, I just really hope ‑‑ I've been doing this for a long time. I think when I started I was secretary of my union in 2009. And somebody said, Well, this is the CRTC's going to decide whether they're going to regulate online undertakings. And I just knew I had to do something. So we got together a submission to the CRTC, and that was my first one. So I feel like I've been asking for this for a long, long time. And so I just ask you to do something, please.

9063 And second, we need to protect the Canadian broadcast system and especially local news. We need to ensure that the foreign streamers pay their fair share.

9064 And I ask you to stand firm in the face of adversity. Because we know these big corporations and these big foreign streamers can act as bullies. And we've seen that with the Heritage Minister. And we really appreciate their efforts in standing firm with Google and Facebook and making sure that they pay their fair share. And I'd ask you to do the same.

9065 And to remember that news and Canadian news is part of the fabric of our democracy.

9066 And lastly, that any measures of success when we talk about local news has to be measured in employment. And I know with your questions, your very thoughtful questions, that you've taken all that into account, and I appreciate that. Thank you.

9067 THE CHAIRPERSON: Thank you very much. Thank you to Unifor for your participation and for being here this morning.

9068 MR. KITT: Thank you.

9069 THE SECRETARY: Thank you. I will now ask FRIENDS to come to the presentation table. When you are ready, please introduce yourself, and you may begin.

Presentation

9070 MS. BOLTMAN: Good morning. My name is Marla Boltman. I am the executive director of FRIENDS. To my right is Raj Shoan, chair of FRIENDS' board of directors. To my left, Peter Miller, external counsel.

9071 FRIENDS is a non‑partisan citizens' movement that stands up for Canadian voices in Canadian media. For 40 years, we have proudly represented tens of thousands of everyday citizens from across the country who passionately believe in the importance of a culturally sovereign Canada, protected and enhanced by a media ecosystem that nurtures and promotes our distinct stories, culture, and identity.

9072 We all get to that place of passion in different ways. For me, it started at the age of 14 when I scored a job at my local video store. A short time later, my family home was used as a filming location for a TV series. I was cast in the very challenging role of “background teenage party guest.” For two straight days, I stood in awe at the amount of people, communication, equipment, and food that it took to create three minutes of content.

9073 Those experiences helped lead me to a career in Canadian media, where for more than 20 years I've worked in virtually every part of our content production ecosystem, including doing business with the American studios and streamers. I came to see how Hollywood often perceives Canada and our film and TV industry, and how important it is that we remain in the driver's seat when it comes to telling the world our own stories. And it's why almost every conversation I have with a FRIENDS' supporter inevitably comes back to the importance of these stories, how they shape our identity, and they give us a better understanding and appreciation for who we are and where we come from.

9074 That cultural heartbeat pounds inside all of us. It's why Parliament created the Act in the first place: to uphold the principles that bolster our independence and cultural sovereignty by protecting our own distinct voices and identities.

9075 Our neighbours south of the border have never and will never have to worry about preserving their cultural identity. They are the most prolific and influential producers of audiovisual content in the world, and with that comes the safety and the privilege of knowing that your stories will always be told ‑‑ and told the loudest.

9076 MR. SHOAN: That shadow looms large over the border, and it's why the modernization of the Broadcasting Act is our best chance at getting out from underneath it. If done correctly, we can bolster our local news supports to ensure we have a robust and sustainable news sector that meets the needs of all Canadians.

9077 At the same time, we can create the next golden age of Canadian television, one in which Canadian performers, producers, directors, writers, broadcasters, and distributors have a prominent place of pride and can proudly tout their work on Canadian productions; one where our independent producers will not be beholden to deep‑pocketed American companies and will be part of a system that preserves their rights and interests so they can create even more opportunities for Canadian creators to tell even more Canadian stories.

9078 That can all start right here, right now, by requiring initial base contributions from foreign online undertakings. This is indisputably the fastest way to inject much needed cash contributions into a broadcasting system that is buckling under the weight of a decade of undeniable inequity and regulatory inaction.

9079 The facts speak for themselves. According to the CRTC's own numbers, BDU CanCon contributions have declined from their high point in 2014 at $475 million to $390 million in 2022. When adjusted for inflation, these contributions have fallen from $576 million to $390 million in the same time period, an over 32 per cent reduction. Similarly troubling is the over 30 per cent real dollar reduction we have seen in conventional private broadcaster revenues since 2014, with local news bearing the impact right across the country.

9080 In 2020, the report from the Broadcasting and Telecommunications Legislative Panel was so concerned about the urgency of the situation that it recommended that the CRTC be directed to act immediately under the 1991 (pre‑Bill C‑11) Act. That was almost four years ago. Since then, we've had two bills, two elections, two filibusters, 29 days of Senate committee hearings, and finally a mandate to act.

9081 So yes, in answer to the question you have asked of stakeholders, the need is urgent.

9082 MS. BOLTMAN: Nevertheless, the Motion Picture Association, on behalf of the major Hollywood studios and streamers, remain fixated on the idea that the money they spend on foreign service location shooting in Canada, which does not materially contribute to our policy or cultural objectives, is somehow offsetting the Canadian programming crisis we are facing.

9083 Maybe you've seen the Motion Picture Association's newly released public messaging about shooting HBO's The Last of Us in Alberta, an American story set in the United States, told by American producers and American writers with American and British directors and not a single leading Canadian performer. For a show stacked with 97 per cent so‑called “Canadian Creatives,” there seem to be a lot of powerful and prominent non‑Canadians telling the story.

9084 But don't get me wrong, The Last of Us is great TV. It's great American TV that just happens to have been shot in Canada. Because our content creation industry is dominated by American media giants that seem to see Canada as a resource to be mined, rather than as a country of creative excellence with its own unique and compelling stories to tell. But Hollywood's enthusiasm for Canadian stories does seem to ignite when legislative obligations are on the horizon.

9085 Case in point: in July 2020, a month after Minister Guilbeault announced that Bill C‑10 was being drafted, Netflix proudly declared that it was turning its attention to the domestic English market with a pitch day aimed at uncovering Canadian projects across a variety of genres with the goal of hearing fresh ideas from new voices across the country. Flash forward two years to the Content Canada stage when a Netflix development executive was asked how many of the over 10,000 pitches they received from Canadians moved forward into development or production. The answer was zero. Yes: zero.

9086 Once again, with regulatory obligations looming, it is only now that we are seeing a modicum of movement from the foreign streamers to make something resembling Canadian content. Because if we don't require them to tell, to support our stories, they simply will not do so. There is no market imperative to do so when you consider the globe as one market to be served. Just like there is no market imperative for them to contribute to our crumbling news sector.

9087 Only Canadians, through the CRTC, can help ensure that these online undertakings make meaningful contributions to the Canadian broadcasting system to meet the policy objectives of the Act, objectives that were designed and must be upheld in the Canadian public interest.

9088 MR. SHOAN: Which leads us to another critical area of public interest: local news. I say “local” news because this is where the crisis is most severe and existential. Local news is where Canadians get their very first exposure to news media and the role it plays in their community. It's where trust in the media begins. Local television and radio news are the people's news, the news that gets made in the quiet spaces between national and international stories, the news that gets consumed during the brief respites carved out of a busy day of work and family life.

9089 It's local news that Canadians and our supporters tell us again and again they value most.

9090 Sadly, Canadians are seeing, hearing, and reading less of it every year. There is little doubt that Parliamentarians had this on their mind when they made the importance of news journalism explicit in section 3(1)(i) of the Act.

9091 The Commission's 2016 Local and Community TV policy established the Independent Local News Fund for smaller independent local TV stations and introduced the ability of BDUs to divert local expression dollars to support their affiliated local television stations. That funding no doubt initially prevented cuts and closures that would have otherwise taken place, but it is clearly no longer sufficient. What must emerge from these proceedings is a sustainable flow of news funding based on contributions from foreign online undertakings regardless of programming focus.

9092 That brings us to our recommendations for the initial base contribution. Foreign online undertakings should provide a five per cent contribution as soon as possible and, importantly, the existing commitments of licensed Canadian broadcasters should remain status quo.

9093 Two per cent of five per cent must go to the most urgent of urgent needs, and that is local television and radio news.

9094 Just as urgent is funding to support Indigenous programming and programming from equity‑seeking groups. One per cent of the five per cent should be directed to these initiatives.

9095 And finally, the remaining two per cent should go to the Canada Media Fund and other Canadian Independent Production Funds to fill the gap and shore up support for Canadian programming including programs of national interest.

9096 In conclusion, we believe that this initial base contribution from online undertakings is a no‑brainer and probably the easiest decision you will have to make in this three‑step process.

9097 It is untenable to accept the MPA's position that its members ‑‑ who have a significant, verging on dominant, market share of the Canadian audience ‑‑ should be exempt from contributions to the public policy objectives of the Act.

9098 There will be plenty of time to debate global business models, broadcaster demands for relief, discoverability tools, and the definition of a Canadian program. But today is not that day. We urge the Commission to get on with the show.

9099 Thank you. And we would be happy to answer any questions you may have.

9100 THE CHAIRPERSON: Thank you very much to FRIENDS for being here, for sharing your perspectives with us, for sharing your personal stories about video stores and recording at home.

9101 I will turn things over to our vice‑chair for Broadcasting, Alicia Barin, to start with the questions for the Commission. Thank you.

9102 VICE‑CHAIRPERSON BARIN: Thank you, Madam Chair.

9103 Welcome, Ms. Boltman, Mr. Shoan and Mr. Miller. Thank you for the clarity of your proposals in your oral presentation this morning. That takes care of a lot of my pointed questions.

9104 And so I think I am going to focus instead on some of the consumer‑facing issues that you addressed in your intervention. And I'm going to start with the distinction between user‑generated content and the content that you think the Commission should focus on. So you mention in your intervention regarding social media services that services that monetize user‑generated and uploaded content through advertising should be exempted, and those that provide movies and TV programs and music ‑‑ so content that is provided by other undertakings ‑‑ should not be exempted.

9105 So my question to you: is it only the programming that should dictate the distinction between social media services and programming services?

9106 MR. MILLER: Madam Vice‑Chair, maybe I can take a stab at that. As you know, the Act clearly exempts user‑generated content, in other words, content made by individual Canadians would not be classified ‑‑ and I hate to use the term ‑‑ as “professionally produced” content.

9107 The platforms themselves are subject to regulation, but you have to draw a distinction, obviously, between what part of their service offering is within the ambit of the Broadcasting Act and what isn't. And all we were suggesting is that when you look at the platforms ‑‑ and this obviously includes YouTube, but it also includes Facebook, it also includes TikTok ‑‑ you'll have to make an assessment as to what amount of the content that is being posted or otherwise provided is coming from ‑‑ again, I'll just use the term because I don't have another one ‑‑ professionally produced sources.

9108 So if it's news, if it's movies, if it's music, if it's anything that sort of falls in the category of what we would normally consider radio or television programming, it has to be included. And then there's obviously a calculus ‑‑ not a trivial one, but a doable one ‑‑ as to then how you would make the assessment as to what element or aspect of an online undertaking's ‑‑ social media online undertaking's activities fall under the ambit of the Act.

9109 VICE‑CHAIRPERSON BARIN: Okay. And in your view, should all users of user‑generated content be considered equally? So for example, should Disney and Bell and WildBrain and other media companies be considered users under the user‑generated content paradigm?

9110 MR. MILLER: No. And again, this is partly to deal with the different business models that social media entities have, because they have different business models. So you can have a post on YouTube that comes from a label or a studio or a producer, and that's clearly been placed on as a user, but it's clearly professional content, so that has to fall within the ambit of the Act.

9111 But sometimes you can have a user who is truly just an average person post a piece of content that they may not even have any rights to. But then YouTube now assigns the copyright to the true owner so that there is appropriate compensation in terms of any copyright royalties. But then again, that still is considered professional content. So I hope that helps with that.

9112 VICE‑CHAIRPERSON BARIN: Okay. Yeah, I think I got that. Okay.

9113 So in your intervention, you raise this notion of market exit and that potentially imposing contributions on online undertakings could lead to that. And Professor Michael Geist of the University of Ottawa cited an example from Denmark in his intervention. And he submitted that when establishing contribution levels, the Commission has to guard against this potential for market exit of industry players and the resulting loss of consumer choice.

9114 So in your opinion, is it the contribution rate and the level of that rate the only thing that would cause market exit? Or are there other elements that the Commission should be mindful of?

9115 MR. SHOAN: So I will address the cost itself, and perhaps one of my colleagues would like to address any other factors that might factor in to that.

9116 As a preliminary statement, to our knowledge, no streamer has ever exited a market on the basis of regulatory costs of this nature. And certainly, they've complained about it, such as what's happened in Europe and in France with respect to the Audiovisual Directive. But they haven't exited the marketplace.

9117 The second point I think we'd want to make is fears of market exit have already been factored into the legislation. Parliament was aware of the risk when they were considering the legislation, and they chose to pass C‑11 anyways. So I don't necessarily think it's something that the CRTC needs to be concerned with. Parliament was aware of that risk when they drafted and passed the legislation. So I think in that respect, it's been addressed.

9118 The third point I think we'd make is that five per cent, what we're proposing, isn't a cost of such a magnitude that it would drive streamers out of our marketplace.

9119 And the last statement is that if you look at the signs in the industry, the signs are they are not intending to leave. Most streamers are ramping up their Canadian operations. They're expanding Canadian staff. They're hiring more Canadian staff because I think it's evident they know that contributions are coming and they're preparing for Canadian content obligations that are going to fall on their shoulders.

9120 So I think that's our preliminary answer. I don't know if my colleagues have anything to add.

9121 MR. MILLER: If I can just add one other comment about the European experience, since we know the Commission has been tracking, what's interesting ‑‑ well, there's a lot of interesting things about the European experience. First, that they moved quite a while ago, 2018, when the Audiovisual Directive came in. Second, that their emphasis is almost the converse of ours. Like their primary emphasis is the 30 per cent shelf space European requirement. And expenditure requirements are secondary, optional. And some states, as you know, have put them in place. And I think reference is being to France at 5.15 per cent of a “tax.” Denmark is at 6 per cent to funds.

9122 And some online streamers have said to you, Don't go that way; those are outliers. But if you look at the full context of what's happened in Europe, those are not outliers. Those are very good indications of what we should do, because we're putting expenditure requirements first. We've left the notion of exhibition as a second phase, as element three in your three‑part regulatory plan.

9123 So if you look at it in context, and you assess contributions in total, it would be totally appropriate for the Commission, in light of that European experience, to look at a base contribution level, an initial base contribution level to funds at five per cent or higher.

9124 And given that as far as we know there hasn't been any major indications of exit from any of the streamers here that have appeared ‑‑ we haven't heard anyone say they're going to do that. Obviously, they've argued against contributions, but they haven't said they're going to exit. So our view is if you look at it in context, it's very reasonable and not a threat that you have to worry too much about.

9125 VICE‑CHAIRPERSON BARIN: Okay. Thank you.

9126 So I have one last question. I took note of the elements of your proposal for the initial contribution and its breakdown. But I'm wondering with regards to the split between English and French and the support for those markets separately through contributions, whether you have an opinion.

9127 MS. BOLTMAN: We have no opinion on this matter. We think there are other people that can sort of weigh in more on this area between French and English.

9128 VICE‑CHAIRPERSON BARIN: That was clear. Thank you very much. And I'm sending it back to the Chair.

9129 THE CHAIRPERSON: Okay, thank you very much. We will go over to our vice‑chair for Telecommunications, Adam Scott.

9130 VICE‑CHAIRPERSON SCOTT: Good morning. Just one question from me. So I took note of your proposal that the five per cent should be additive and that existing contributions from traditional players should remain flat.

9131 We've heard over the course of the hearing some other proposals. Bell is one example, proposed new money coming in, some of that being used to offset or reduce the contributions from traditional broadcasters while still being additive for Canadian producers and storytellers.

9132 Could you comment on those types of models and whether they are ‑‑ basically, is there a benefit in reducing the contributions that traditional broadcasters make, given the importance that they play in the ecosystem?

9133 MS. BOLTMAN: So first, we obviously want to state that the Commission itself determined that in this proceeding we're not meant to address the reduction of broadcaster obligations.

9134 But we can still offer some comments here, which is we're here to discuss the modernization of the Broadcasting Act ‑‑ “modernizing” meaning making it better, levelling it up.

9135 Current conventional broadcaster obligations are already tied to revenue levels, meaning reductions in broadcasters' current obligations would be exponential in their effect on actual spending. So we see that as sort of a levelling down, which is the opposite of making something better.

9136 So rather than reducing the broadcasters' existing obligations, what we'd like to see is them get more support for the most significant contributions they do make, which are in local news.

9137 We feel very strongly that the overarching goal should be the rebuilding of a robust and sustainable Canadian broadcasting system that can serve both the current and the future policy priorities, and if we look to 2014, that was sort of the peak of where the system was in terms of contributions, and we think that that's a healthy level to try and get back to. It's declined by hundreds of millions of dollars since then and it's produced a gap or gaps as has been referred to throughout the course of this hearing and we feel that initial base contributions of five percent could help close that gap because at the end of the day, what must come out of these proceedings is a significantly strengthened broadcasting system that supports Canadian interests and Canadian priorities, and that will happen by drastically increasing the contributions entering the system today.

9138 VICE‑CHAIRPERSON SCOTT: Thank you.

9139 Back to you, Chair.

9140 THE CHAIRPERSON: Thank you very much.

9141 We will go over to Commissioner Naidoo.

9142 COMMISSIONER NAIDOO: Hi there. When you say one percent should go toward funding to support Indigenous programming and programming from equity‑seeking groups, do you mean for this to be divided across audio and audio‑visual sectors and, also, would you support contributions going to an audio fund supporting Indigenous music or audio funds that support Indigenous music through their envelopes such as FACTOR or Musicaction?

9143 MR. SHOAN: So I’ll answer your second question first.

9144 We don’t have a position with respect to the creation of an audio fund, but with respect to base contributions for audio undertakings, our view is that base contributions for audio undertakings should be similar to audio‑visual undertakings, so we think five percent is justified, but we also understand the logic of matching the current four percent level of Sirius XM’s financial contributions. And of that amount, two percent should go to local news in the same way that it would for the audio‑visual undertakings.

9145 In terms of that one percent that you referenced to go to Indigenous programming or equity‑seeking groups or public participation, we leave it to the Commission to decide the specific allocation. We think the Commission is best situated to determine policy priorities requiring the greatest need and I think we feel that they can probably decide amongst that one percent where that money should go.

9146 We do have one caveat, and the caveat is, please don’t leave it to the online undertakings to decide where base contributions should go. If you do, they’ll choose to fund programming of economic benefit rather than those supporting public policy objectives. And our view is base contributions should go to the funding of programming that meets the policy objectives of the Act.

9147 Throughout the proceedings that will follow, there will be other discussions of other contributions and the full contribution framework, which obviously can go to other needs and focuses, but for the base contribution we think they should be focused on the policy objectives of the Act.

9148 COMMISSIONER NAIDOO: Thank you for that. That's all I have.

9149 Thank you.

9150 THE CHAIRPERSON: Thank you.

9151 Let's go to Commissioner Levy.

9152 COMMISSIONER LEVY: I think you might have answered at least part of my series of questions, but I’d still like to make sure that I drill down and ensure that everything’s covered.

9153 You know, you’ve recommended a contribution level of five percent. You’ve talked a little bit about how it should be divided up. You have not broken down allocations according to audio and audio‑visual services and you’re leaving it entirely to us or do you have any recommendations on what the split should be?

9154 MR. SHOAN: So I’ll go through ‑‑ I’ll summarize our recommendations again.

9155 So for audio‑visual undertakings, we’ve proposed an allocation of 2‑2‑1, so two percent to local news funds, radio, community television, local news, two percent to the CMF and Canadian independent production funds and one percent to certified funds supporting Indigenous programming, equity‑seeking groups and funds in support of public participation such as the Broadcasting Accessibility Fund or the Participation Fund.

9156 COMMISSIONER LEVY: Excuse me. So out of that one percent you would have support for the Broadcast Participation Fund and the Broadcast Accessibility Fund.

9157 MR. SHOAN: Potentially, yes. And our view is we’ll leave it to the Commission to decide, in that one percent, what the allocation should be to the various funds that fall within that category.

9158 COMMISSIONER LEVY: And finally ‑‑

9159 MR. SHOAN: Oh, can I just ‑‑

9160 COMMISSIONER LEVY: I’m sorry.

9161 MR. SHOAN: No, that’s all right. Can I ‑‑ I just want to finish up on the audio side as well.

9162 So the same five percent for audio undertakings, in our view, or four percent if the Commission wants to align it with Sirius XM’s financial contributions. Of that amount, we also feel two percent should go to local news support in a fund. And in our view, on the audio side, the remaining funding should go to CCD initiatives, including funds such as FACTOR, Musicaction or the Community Radio Fund and stakeholder support groups such as the Broadcasting Accessibility Fund or the Participation Fund.

9163 Again, fully at the Commission’s discretion about what the allocation should be with respect to the remaining two, three percent.

9164 COMMISSIONER LEVY: And Mr. Miller, I’m interested in your assessment of international approaches to the matters that we have in front of us.

9165 How do international jurisdictions handle the difference between a streamer that puts money into production, whether it is, you know, applying to shelf space or strictly investment ‑‑ it might or might not be one of those ‑‑ as opposed to acquisitions of the content of a particular jurisdiction?

9166 Is there a difference in the way those two are handled?

9167 MR. MILLER: I don't consider myself an expert in international regulation. I’ll say two things.

9168 First, Canada was always a leader in broadcast regulation in terms of what we built over decades and decades. No country did more to support its domestic broadcast sector. No country did more to support domestic programming.

9169 Europe has now, I think, in the world taken the lead in this in terms of online undertakings and they ‑‑ not to repeat myself too much, but they’ve taken two primary approaches, the shelf space approach, which, as we talked about before, we haven’t taken. On expenditures, they do split between expenditures like what we would call CPE and contributions to funds or, in the case of France, it’s called a tax. And so they do draw that distinction just as you’re looking to draw that distinction.

9170 So from what I’ve read and seen on the expenditure side, I believe it was France that had a 25 percent overall expenditure level, but I may be mistaken on that. So that mirrors what you’re talking about in your Tier 2 of contribution levels.

9171 But as I said before, the big difference is how we’re looking to treat exhibition or discoverability and how they’re treating it. For us, it’s the third tier because we’re being realistic as to what we can expect in Canada there. If we impose too high a quota for shelf space, we risk losing a lot of content that Canadians want to watch. It’s easier for Europe together to impose a 30 percent requirement than we can, so we put the emphasis on expenditure where FRIENDS agrees that it belongs.

9172 COMMISSIONER LEVY: We are being encouraged to look at tools such as incentives and outcomes, and I wonder if you’re interested or prepared to weigh in on what sorts of incentives and outcomes we should be primarily concerned with.

9173 MR. MILLER: Perhaps I can weigh in a little bit on that.

9174 One of the things FRIENDS pointed out in its intervention, and other intervenors like IBG have also made this comment, is when you look at the overall contribution levels of Canadian broadcasting undertakings, they vastly exceed the mandatory percentages of five percent BDU contributions and 0.1 percent CCD contributions. And if we look at the BDU environment in particular, we have access rules, we have priority carriage rules, we have wholesale rates, we have predominance of Canadian. Those are by far the more significant contributions of BDUs.

9175 And if you do an analysis which FRIENDS did in its initial intervention and look at the economic value of those, at the monetary value of those, you can actually translate those obligations in terms of what it means for Canadian programming because without the carriage requirements that require discretionary ‑‑ Canadian discretionary services to be carried, they wouldn’t be spending the money they’re spending on Canadian programming.

9176 So if you look at those expenditures on Canadian programming and, similarly, you look at over‑the‑air broadcasters who primarily rely on BDUs for distribution, you look at their expenditure on Canadian programming, you do that analysis, you actually come to a level that’s closer to 30 percent as the actual economic value of the contributions of a BDU.

9177 And I won’t go take you through it, but you do the same thing to radio and you look at the value of local programming, the value of Canadian music, you actually get to a similar level.

9178 So what’s interesting is if you accept that or if you were to do the analysis and say, yeah, that’s about right, that across all sectors Canadian broadcasters ‑‑ the monetary value of their contributions is about 30 percent, it does a few things for you.

9179 It means that you can worry a little less about distinctions between, you know, when is something a VBDU and when is a streamer. But back to your incentive question, you have been limited, for example, in what you can require online distributors to do. You cannot impose the same carriage requirements, but you could create incentives. You could say your financial expenditure requirement is X, but if you carry X percent of Canadian services, then your requirement is lower.

9180 So incentives could very much work in the system, especially in areas where you cannot directly impose regulations, but it may be an appropriate and reasonable outcome for an undertaking to say, yeah, no, I’ll do something I wouldn’t otherwise have to do if I get a reduction on other obligations.

9181 COMMISSIONER LEVY: Thank you very much.

9182 THE CHAIRPERSON: Thank you.

9183 Let's go to Vice‑Chair Barin.

9184 VICE‑CHAIRPERSON BARIN: Thank you.

9185 So I’d like to follow up on this discussion that, Mr. Miller, you’ve been having with Commissioner Levy.

9186 When you say you value the intangible productions such that they equal closer to a 30 percent level ‑‑ let’s just use the BDU example ‑‑ how do you value these intangible contributions?

9187 And I’m asking this because that is what the online streamers are asking of the Commission. They’re asking for flexibility to consider some of their non‑financial intangible contributions as valuable commitments to the Canadian system.

9188 So I’m wondering how you do that.

9189 MS. BOLTMAN: So I’m going to actually take this one.

9190 And what we’ve been calling this behind closed doors is regulatory credit. And the way we see this is that Canadian programming is about culture. Broadcasting Act is about supporting programming that meets our cultural policy objectives.

9191 To meet those objectives, you need to have Canadian storytellers telling Canadian stories, so you have Canadian writers, Canadian performers, Canadian directors, Canadian producers. On the other hand, foreign service production is about jobs. It’s about using Canadian resources to tell fundamentally non‑Canadian stories.

9192 Foreign service production is not remotely rooted in any cultural or policy objectives and, therefore, not deserving of any regulatory credit. Sometimes we say brownie points.

9193 As for training programs, partnerships, support for film festivals or conferences and events, things like that, those two should not give rise to any sort of regulatory credit.

9194 First of all, the conventional broadcasters have been doing this for decades without credit, without asking for credit. They do it because they have a vested interest and derive a benefit from supporting these sorts of initiatives. Second, the foreign streamer investments in these kinds of initiatives are done in such a way that best suits their business models and their public relation machines. Like foreign service production, they are not rooted in cultural or policy objectives.

9195 And finally, and maybe most importantly, these contributions from foreign streamers are peanuts. I’m willing to bet that the sum total of all the partnerships, all the supports, all the festivals, all of the training programs, all combined together from all the streamers, would barely cover the budget of a single episode of a high‑budget U.S. television series. I don’t know. I’m a betting woman, and I’m willing to take that bet.

9196 So we don’t think we should be distracted by these red herrings. We’re here to talk about initial base contributions and how these monies can be directed to actual Canadian programming policy objectives.

9197 And the one thing I would also like to add is the most important reason why they should not get any sort of regulatory credit for these things is because the issue has already been decided by Parliament in the passing of Bill C‑11. If their contributions were good enough or even close to good enough, we would not have spent the last several years doing what we have done to arrive here.

9198 VICE‑CHAIRPERSON BARIN: Thank you, Ms. Boltman.

9199 I will pass it back to the Chair.

9200 THE CHAIRPERSON: It's like musical chairs. And I will pass it back to Commissioner Levy.

9201 COMMISSIONER LEVY: Oh, what a conversation.

9202 You’ve opened one last question that I have. If the intangibles, as you say, should not be recognized in any way, shape or form, how about acquisition, acquisitions of Canadian content by the streamers? Because that’s, you know, dollar values. That’s transaction that underscores the importance they take in Canadian content.

9203 MR. MILLER: Perhaps I can disaggregate. This phase of this process is to deal with initial base contributions and FRIENDS’ submission is that in respect of that, the issue is directing money to funds as the Commission has proposed. Whatever else online undertakings might do clearly, as has been determined by the passage of the Act, as has been looked at and examined by the Commission itself, by the Broadcasting and Telecommunications Review Panel, clearly doesn’t match what broadcaster contributions are.

9204 So when I was talking about the 30 percent, I was saying so there’s some assurance for you that if you actually value what broadcasters do, it’s a very significant contribution when you do a monetary value. So if you’re looking at a five percent initial base contribution or thereabouts, you have plenty of confidence that that’s a reasonable starting point.

9205 When we go to the next phase, when we start looking at expenditure requirements, then that’s when expenditures that are being made on Canadian content obviously factor in just as they do for current broadcasters. So that’s when that secondary analysis comes in.

9206 But what FRIENDS is saying is don’t be deterred or distracted by other stuff. It’s about Canadian programming. What the broadcasting system does and what contributions of current broadcasters are is all about Canadian programming, so keep the focus on that.

9207 You know, I’ll give you a little area of flexibility. CPE expenditures ‑‑ CPEs of conventional broadcasters can include an element of promotion, right, so the Commission allows a certain percentage to go to promotion of Canadian content. So there are certain areas when you might expand the definition a little bit, but the focus is on Canadian programming.

9208 Things like training, things like funding film festivals have never counted as CPE. AT most, they’ve counted as tangible benefits and acquisitions, but those are not the scenarios that we’re talking about today.

9209 COMMISSIONER LEVY: Thank you.

9210 THE CHAIRPERSON: Thank you very much.

9211 Just before we turn it back over to you for concluding remarks, maybe I can just sneak in one last question, and it’s about urgency because you said this morning the need is urgent. You said the crisis is most severe in local news. And you’ve heard because I know you’ve been following along ‑‑ you’ve heard online undertakings tell us to take a cautious approach.

9212 You know, yesterday afternoon, just because it’s fresh in my mind, you know, we heard words like “premature” with respect to the initial base contribution. We were told to take the appropriate time.

9213 Can you react to that in terms of what is the impact of the Commission not acting quickly to put in place an initial base contribution on the Canadian broadcasting system and then what’s the ultimate impact on Canadians?

9214 MS. BOLTMAN: I think I want to start by just reviewing the statistics we went and covered in our opening remarks, which were, you know, adjusting for inflation, BDUs monies going to the CMF and CIPFs are down over 32 percent since their peak in 2014. Private broadcasters have lost over 30 percent of their revenue since 2014.

9215 So the result’s ‑‑ and I think this will answer both your questions at once ‑‑ declining revenue spent on Canadian programming. That means less Canadian stories being accessed by less Canadian audiences and less global audiences, for that matter.

9216 It means our cultural touchstones are being drowned out by a tsunami of Hollywood cultural content.

9217 We’ve 11 years and counting of losses in conventional television, so we’re now seeing waves of cuts at Corus, Bell, latest Quebecor, now possibly CBC that are directly affecting news, particularly local news.

9218 The local news deserts we’re seeing in print we’re now risking seeing in broadcast news. And we know, we know that holes left by news are being filled by rumours, by special interest groups and by misinformation. And I want to give you an example.

9219 I read a story a few weeks ago about some missing men in Smith Falls and now there was no local news coverage there, so it took a long time to put together that there was actually multiple missing men. And what was happening was because there was no local news coverage, tons of stories and rumours started circulating. There was no facts. It was just people having their own versions of the story to the point when the police started to investigate, they actually had to put a call out to the public to say, “Please do not come forward with your rumours. Please do not come forward with these myths. We need to hear from people who have actual information and actual facts”.

9220 And I think that was pretty telling about the state of local news.

9221 So we absolutely feel that initial base contributions are necessary, we feel they are urgent and we feel the time to act is now.

9222 THE CHAIRPERSON: Thank you very much for that.

9223 Anything further that you’d like to add?

9224 MS. BOLTMAN: Is this our takeaway moment?

9225 THE CHAIRPERSON: It is your takeaway moment.

9226 MS. BOLTMAN: Then I’m going to take it away, then.

9227 So we’d like to end where we began, which is by standing up for Canadian cultural sovereignty. That is not only what FRIENDS stands for, but what we believe the Act has always stood for.

9228 It’s not a dream that died with pre‑internet distribution technology. The new Act recognizes that we are incorporating foreign online undertakings into the Canadian broadcasting system.

9229 The legislative drafters of both C‑11 and C‑10 stumbled over how to acknowledge the new role of foreign online undertakings within our system and they initially omitted any reference in section 3(1)(a) to the nationality of broadcasting undertakings. But MPs from all parties in the Heritage Committee emphatically rejected that approach and they ensured that Canadian ownership and control remains a prime objective of the Act.

9230 That is why section 3(1)(a) now states the Canadian broadcasting system shall be effectively owned and controlled by Canadians, and it is recognized that it includes foreign broadcasting undertakings that provide programming to Canadians.

9231 It is a clear expression of the Canadian cultural sovereignty that must be our north star throughout these proceedings. That means your task is not to bend our Broadcasting Act to the desire or convenience of the foreign online undertakings; rather, to adapt it and evolve our system to fulfil Canada’s cultural policies.

9232 THE CHAIRPERSON: Thank you very much. Thank you to FRIENDS for being here with us this morning and answering our many questions.

9233 THE SECRETARY: We will take a break and be back at 10:25.

9234 Thank you.

‑‑‑ Upon recessing at 10:10 a.m.

‑‑‑ Upon resuming at 10:25 a.m.

9235 THE SECRETARY: Welcome back.

9236 We will now hear the presentation of Independent Broadcast Group/Le groupe de diffuseurs indépendants.

9237 Please introduce yourself and your colleagues and you may begin.

Presentation

9238 MR. FORTUNE: Thank you.

9239 Good morning, Chairperson Eatrides, Vice‑Chairs, Commissioners and staff. Thank you for the opportunity to appear before you today.

9240 We have combined the appearances of IBG, OUTtv, Stingray and Pelmorex to try to be more efficient.

9241 I am Joel Fortune, Legal Counsel for the Independent Broadcast Group. IBG, or GDI, represents 13 different Canadian broadcast groups, with collectively over 200 employees and over $700 million in enterprise revenue. Our members broadcast channels with programming in French, English, multiple Indigenous languages and 20 third languages from coast to coast to coast.

9242 Let me introduce our panel. I'm just going to go down the line and pick up Kurt as we go.

9243 Starting to my right, Marie‑Philippe Bouchard is President and CEO of TV5, a non‑profit Canadian corporation responsible for the TV5 service and Unis TV. Both are 9.1(1)(h) services. TV5 is the Canadian partner of TV5MONDE, an international French‑language public broadcaster operating in 200 countries. Before joining TV5 eight years ago, she was a senior executive with Radio‑Canada and spent almost 30 years with the public broadcaster.

9244 Brad Danks is CEO of OUTtv Network and OUTtv Media Global, the world's largest producer and aggregator of original LGBTQ+ film and television content. Headquartered in Vancouver, Brad has been instrumental in initiating OUTtv's global expansion of both its SVOD and FAST services by developing platform partnerships with Amazon, Apple, Roku, Comcast, Cox, PlutoTV, E‑Media (South Africa), TVNZ and many others.

9245 Joining us virtually is Kurt Eby, Director, Regulatory, Government & Affiliate Relations for Pelmorex, which owns and operates the 9.1(1)(h) services The Weather Network and MétéoMédia. Pelmorex also built and operates the National Alert Aggregation and Dissemination (NAAD) System, the software backbone of Canada's national public alert system, and operates some of Canada's most popular websites and apps.

9246 Back to our table here. Julie Kumaria is the Senior Vice‑President of Content Distribution and Marketing at Hollywood Suite, based in Toronto. She has spent almost her entire career in the Canadian content business, at Shaftesbury Films, Insight Sports and the World Fishing Network, Astral Media and what was then known as TMN, and for the last 11 years at Hollywood Suite.

9247 Luc Perreault is Strategic Advisor with Stingray Group, which operates Canada's only pay audio service, multiple music television services, the largest group of independent radio stations, with a large online presence around the world, reaching 400 million users globally. Luc started in the industry as the Director of Communications with Videotron and then had a long career with Pelmorex before joining Stingray in 2019.

9248 Claude Sauvé is the Vice President Content and Production for TFO, the French‑language educational television service in Ontario and Manitoba. TFO is also streaming its content on the TFO.org platform and on Idello.tfo.org, an educational platform serving the French educational system across Canada. He has worked in the industry for over 40 years.

9249 We will now start our presentation.

9250 MR. PERREAULT: Thank you, Joel.

9251 As you can see from our panel, the independent part of the broadcasting sector includes broadcasters of all kinds and different business and operating models.

9252 Mais les radiodiffuseurs indépendants ont beaucoup en commun. Nous sommes des entrepreneurs et des innovateurs tant sur le plan commercial que sur le plan social. Nos membres ont réalisé de nombreuses innovations techniques, commerciales et de radiodiffusion au Canada, y compris dans le domaine de la radiodiffusion en ligne.

9253 Les membres d’IBG se concentrent aussi sur la diversité des voix. Lorsque vous examinez les objectifs de la politique énoncés dans la Loi sur la radiodiffusion, beaucoup parlent des activités du secteur indépendant. La Loi stipule maintenant explicitement que le système de radiodiffusion doit veiller à ce que les services indépendants canadiens continuent de jouer un rôle vital dans le système.

9254 Radio is the primary discovery tool for Canadians to enjoy and discover Canadian music and provide local news and information. Stingray operates 100 radio stations from coast to coast to coast, which are listened to by 7.5 million listeners and music‑based television services in Canada and around the world.

9255 However, our local radio stations are challenged. It's been a difficult environment as our online competitors have no regulatory obligations whatsoever. And now Spotify, to give just one example, say they can't afford to make any contribution. This is not acceptable. This hearing is the first step in a longer process, we know, but it is extremely important that the process move very quickly and that foreign online services start to contribute to the broadcasting system immediately.

9256 MS. KUMARIA: We will turn now to the key questions in this phase of consultations.

9257 IBG supports an initial base contribution for online services and we prefer a threshold of $10 million in annual Canadian revenue from online activities.

9258 All Canadian broadcasters have regulatory obligations, regardless of their size, and these obligations ramp up quickly.

9259 For example, Hollywood Suite, a relatively small, young, Canadian independent broadcaster, has a minimum Canadian programming expenditure obligation of 10 percent as well as a 35 percent minimum Canadian exhibition requirement. Hollywood Suite, despite our name, is in fact one of the largest broadcast buyers of Canadian feature films in Canada.

9260 There is a significant equity issue when foreign online services take billions of dollars from Canadian subscribers, yet have no obligation to contribute, while the smallest Canadian broadcasters do.

9261 IBG’s position is that the threshold for the initial contribution should be based only on online service revenue. It should not include broadcast group revenue from licensed and exempt services.

9262 MR. EBY: What is the appropriate contribution level?

9263 In our view, the level of contribution should be in line with the level of contributions that Canadian broadcasters make. IBG detailed these in its submission.

9264 These contributions, which include the direct employment of more than 40,000 people in Canada, significantly exceed the minimum CCD for radio, CPE for television, and the direct contributions that BDUs are required to make under the BDU Regulations.

9265 We believe the Commission could easily justify the levels of contribution suggested by the Canadian Association of Broadcasters:

9266 ‑ 20 percent for online audiovisual programmers;

9267 ‑ 4 percent for online audio programmers; and

9268 ‑ 5 percent for content aggregators.

9269 This is still well below the contributions Canadian broadcasters actually make.

9270 In Pelmorex's case, for example, we operate English and French‑language specialty channels, have a 44 percent minimum Canadian programming expenditure requirement, a 90 percent minimum Canadian content requirement, and in fact we broadcast 100 percent Canadian content. We also deliver Canada's national emergency alerting service, and that is just scratching the surface.

9271 M. SAUVÉ : La contribution initiale devrait être orientée en grande partie vers des organismes de financement tiers. Nous n'avons pas défini d'allocation en pourcentage car cela dépendrait de la taille de la contribution globale. Notre perspective est de répondre aux besoins les plus pressants avec un financement approprié.

9272 Nous appuyons le financement des émissions de nouvelles, une préoccupation majeure au Canada. Cela devrait également inclure le financement des informations à la radio et sur les services de télévision facultatifs, qui sont des éléments importants du secteur indépendant et de la diversité des voix. Cela est particulièrement vrai pour les publics de langues tierces et dans les communautés linguistiques minoritaires, comme celles que nous servons à TFO.

9273 Nous appuyons l'affectation de fonds aux fonds de production existants, qui ont prouvé leur valeur dans le système de radiodiffusion. Cependant, ce financement devrait être lié à un examen structuré du FMC et des programmes de financement pour garantir qu'ils répondent aux objectifs de la politique de radiodiffusion, notamment en matière de diversité, de reflet et d'équité dans la programmation qu'ils soutiennent.

9274 Le financement devrait continuer de fournir un soutien substantiel au contenu appartenant à des Canadiens et aux Autochtones et déclenché par les radiodiffuseurs canadiens et autochtones. Dans le cas de TFO, nous utilisons le financement pour produire et soutenir le contenu éducatif et jeunesse de langue française développé par et pour les communautés en situation minoritaire, qu’il soit produit par nous ou avec le support de la production indépendante issue des francophones en milieu minoritaire.  Il est extrêmement important pour notre langue, notre identité culturelle et pour le développement de nos enfants que ceux‑ci et leurs parents aient accès à un contenu significatif et de haute qualité en français.

9275 Davantage de déclencheurs de financement pour les diffuseurs et les plateformes indépendantes peuvent rapporter d’immenses dividendes pour la participation des groupes méritant l’équité tels les communautés en situation minoritaire et les autochtones. Mais ça pourra également favoriser l’innovation et la diversité dans les contenus, notamment en encourageant des genres différents comme la programmation jeunesse, les documentaires et la télé éducative. Investir, entre autres, dans la télévision éducative offerte par TFO, TVO, Télé‑Québec et Knowledge Network est un investissement direct dans l'avenir des jeunes Canadiens.

9276 MME BOUCHARD : Enfin, le Groupe des diffuseurs indépendants soutient la création d'un fonds pour les services d'importance exceptionnelle. Ce fonds servirait de soutien à la pérennité des services clés de notre système.

9277 Le Groupe a décrit les mécanismes du fonds pour les services d’importance exceptionnelle dans son mémoire. Le concept de ce fonds découle directement des principes énoncés à l'article 11.1 de la Loi sur la radiodiffusion et à l'article 12 des Instructions au CRTC.

9278 Dans le cas de TV5 et Unis, un tel fonds est d'une importance capitale. Nous avons constaté une baisse continue des contributions des EDR, et cette baisse n'est pas compensée par les revenus de nos services en ligne. Nous sommes présents en ligne, ainsi que d'autres services, et il est donc logique que cette partie du système soutienne également ce que nous faisons.

9279 Dans notre cas, au cours de la dernière période de licence, nous avons investi plus de 100 millions de dollars en dépenses au titre des émissions canadiennes, essentiellement en production indépendante, dont 41 maisons de production issues des communautés de langue officielle en situation minoritaire.

9280 Nos chaînes linéaires TV5 et Unis TV attirent non moins de 1,2 et 1 million de téléspectateurs par semaine, respectivement, rien qu'au Québec, où cette audience est mesurée.  Près de 200 000 visiteurs uniques par mois profitent des 3000 heures de contenu francophone du Canada et du monde entier, présentées sur notre plateforme en ligne.  Il s'agit d'un contenu important et pertinent, que personne d'autre n’imaginera, ne financera, ne mettra de l’avant pour soutenir sa découverte et sa consommation.

9281 Vous avez déjà entendu un récit similaire de la part d'APTN et d'AMI‑télé dans le cadre de cette audience.  Nous avons besoin d'un soutien urgent pour poursuivre notre travail sur les plateformes numériques et celles des EDR.

9282 MR. DANKS: In closing, we have presented the gist of our submission on this phase of the consultation. But it is important to discuss the future role of Canada's independent broadcasters in the industry.

9283 In our case, OUTtv is a global leader in producing and distributing programs that reflect the lives of LGBTQ+ persons. The majority of our programming expenditures are now on original programs. Originals are far riskier and much more expensive than rentals; however, a critical mass of original content is an essential requirement to obtain platform distribution deals. Our approach is similar to WildBrain and Blue Ant, and we agree with them that this model is replicable by other broadcasters and is, in fact, an important new model around the world.

9284 This is not the only model, and the different independent services represented at this table prove there are other models. But I think a common denominator among us is that we are placing a priority on our own content and our own particular brand and programming focus. And this is happening in both the online and non‑online worlds. In fact, these worlds are blending together.

9285 The initial contribution from online services is a crucial first step in supporting the transition of our industry by supporting the production of more original Canadian and Indigenous content.

9286 Broadcasters should be recognized and supported in the funding system, as we are part of the Canadian creative process, we have the mandate to serve Canadians, and we have a direct access to the online data needed to develop programs for audience success. We also have the necessary scale to obtain distribution on the new online platforms. Together with Canadian producers, we can do this and establish a sustainable Canadian broadcasting system for all Canadians.

9287 Commissioners, we thank you for your time, and we welcome your questions.

9288 LA PRÉSIDENTE : Merci beaucoup à nos intervenants pour vos présentations ce matin. Thank you for joining us in person and virtually. We know that many of you travelled to be here, some from a long way, so thank you. We really appreciate it.

9289 I will turn things over to our Vice‑chair for Telecommunications, Adam Scott, to kick things off.

9290 VICE‑CHAIRPERSON SCOTT: Good morning. Mr. Fortune, you started by saying that we'd combine the presentations in order to be more efficient. Sometimes that goes the other way. So I'll do my best on this side of the table, if the panel can do their best on theirs.

9291 And I would like to start the conversation on the issue of thresholds, eligibility thresholds for initial contributions. So you're really clear on the revenue base threshold. But in your submission, you also spoke about other thresholds, so proxies for revenue, whether that's a subscriber number or some other proxy, recognizing that some services might have a high number of users but a low amount of revenue.

9292 Can you speak a little bit about what the policy rationale would be for a non‑revenue threshold and what it might look like specifically?

9293 MR. FORTUNE: I'll do my best. It is probably easier to talk about the first part than the second part, admittedly. So I think policy rationale is primarily about impact on broadcasting policy objectives.

9294 And there are two sides to impact. There's the what is the undertaking itself doing, how is it contributing to broadcasting policy. And if it's reached a certain mass of distribution in the country, then it's perhaps large enough to make a material contribution in its own right to broadcasting policy objectives. So that's the first side of impact.

9295 The second side of impact is what's the impact on the other players in the system. And again, if it's big enough, it's ‑‑ let's say it's a free service, supposedly free, but you know how it is, the saying about if it's free, you're the product. Undoubtedly, if it's large enough, it's having an impact on other players in the system. And we see that all the time now with content coming over the top.

9296 So that's essentially what is impact on both sides. It has to make a contribution and it has an impact on others in the system.

9297 Now, the second part of the question is how would you go about measuring it. Well, I think that path has been started a little bit with the Commission's policy on the registration. And you've started to discuss that idea about the allocation of revenues internally in some groups that have multiple functions. And part of that function is to provide a programming service, and part of that function is to sell cat food. You can tell what I use it for. And you've done that analysis. You've said, Okay, we're going to do an allocation between those two functions based on some principles.

9298 And I don't think I could say more than that, except that every business model has some assumptions that underlie it and that can be compared to other sectors in the industry. And then you have to make an evaluation. But sort of the starting point is what is the impact, is it significant enough that we care about this service.

9299 VICE‑CHAIRPERSON SCOTT: Just ballpark, do you have a number in mind, like just on subscribers? Is it a thousand, 10,000, 100,000, million?

9300 MR. FORTUNE: It would not be 10,000 per se.

9301 VICE‑CHAIRPERSON SCOTT: We've established a floor. I'll take it.

9302 Another aspect of contribution eligibility or applicability that I wanted to dig into, the submission was pretty clear that you're opposed to the group‑based approach. You think that, you know, services should be assessed individually. And because we've got so many innovators on the panel, I was hoping we could hear from the broadcasters themselves about what the impact would be of the group‑based approach, so not distinguishing between your online undertaking and your conventional, but applying the threshold across the entirety of your companies.

9303 MR. FORTUNE: So we'll pass it along. But so the question is if you had to pay a contribution, for example, which was based on your enterprise revenue as opposed to only your online service revenue.

9304 MS. BOUCHARD: Well, in the case of TV5 and UNIS, it means that some of the money that we are asking for from the funds that we've advocated for would then be built into how much we put out. Our financials are basically BDU‑generated revenue, essentially, which had been declining. But that takes us over the threshold of $10 million. So we would be then having to ‑‑ I mean, it's circular. For APTN, it's the same story. For AMI Télé, it's the same story. But we all overstep the 10 million revenue because it comes from a regulatory protection.

9305 VICE‑CHAIRPERSON SCOTT: Right. And I think as the balance shifts more and more to online, like assuming this is an ongoing trend, is there a trigger point? Like is it once half of your revenue is coming from online undertakings, is that the appropriate trigger to start assessing those revenues? Or is there a breakpoint or no?

9306 MS. BOUCHARD: Well, at this point, the online revenue is minimal compared to the broadcast business revenue. Even though we invest a lot in online and we are definitely invested in making sure that our programming is available to all generations. So I don't know what the threshold would be. It would depend on what the regulatory scheme is at that time. But again, if you're a beneficiary of some regulatory protection from online revenue or from BDU revenue, it makes no sense that then you would have to turn around and fork over that money.

9307 VICE‑CHAIRPERSON SCOTT: Okay. Yeah, I think you had a framing there that I found really interesting, because you spoke about the investments you're making in online despite the nascent nature of the revenue there. So maybe for your colleagues, if you could look at it through that framing ‑‑

9308 MR. SAUVÉ: For sure, with the ‑‑

9309 VICE‑CHAIRPERSON SCOTT:  ‑‑ would there be ‑‑ est‑ce qu'il y aurait des impacts sur vos investissements du côté en ligne?

9310 M. SAUVÉ : Bien, du côté de TFO, on évolue principalement, bien, presque exclusivement, pour les communautés en situation minoritaire. Donc, même dans un univers numérique, qu'on investit énormément dans les dernières années pour être en mesure d'aller chercher puis de rejoindre nos auditoires, on n'est pas en mesure de générer énormément de revenus.

9311 Nos revenus viennent principalement de la contribution publique faite par le gouvernement de l'Ontario et, dans certains cas, du Manitoba, et éventuellement peut‑être d'autres. Donc, nos revenus viennent de là, et ce n'est pas via l'univers numérique qu'on va être en mesure de les augmenter, parce que la capacité de payer pour le... d'aller chercher des revenus publicitaires, notamment par nos communautés qu'on dessert, est à peu près inexistante.

9312 Donc, oui, on fait plus de 10 millions, on dépasse le threshold de 10 millions en revenus par la subvention qu'on reçoit à notre fonctionnement de base, mais ça ne sera jamais un revenu vraiment d'activités commerciales.

9313 VICE‑CHAIRPERSON SCOTT: Mr. Eby, please go ahead.

9314 MR. EBY: I think, you know, for us, we ‑‑ the Weather Network, we have a bunch of digital services. None of them on their own from video revenue cross the threshold. And we just ‑‑ we think they should all be measured on their own, because we deploy these to all serve different audiences. And most of the big streamers have one service, you know, they're not combining a bunch to be captured under a new framework, especially not at the initial contribution standpoint. And many of our services are very, very small, and so you know it just speaks to fairness to be having a requirement from services that make very low revenue.

9315 And definitely, understanding this is the first phase of this process, and there will be another phase where we'll be looked at more individually, and how those digital services fit into our contribution overall is to be measured, I think, and is something we'll be happy to talk about at that time.

9316 But right now, you know, where we're trying to capture these services that have not been contributing for years and years and years, to capture the services of the companies that are making exceptional contributions at the same time and increasing our contributions just doesn't level out.

9317 VICE‑CHAIRPERSON SCOTT: Great. Thank you all for that.

9318 In paragraph 21 of the submissions ‑‑ sorry, this is a bit of a specific one, but I do want to get clarity ‑‑ the argument was made that a Canadian broadcaster with over 10 million in aggregate revenue could have a similar regulatory burden to an online streamer with 1 billion. I'm assuming that's a proportionality argument, or is that like not talking absolute terms?

9319 MR. FORTUNE: Proportionality, obviously. So and the idea there is that, to Kurt's point, and I'm just going to close what he had to say, is so you're a broadcaster. You have broadcast, you know, discretionary service. It has 10.5 million in annual revenue, and you launch tomorrow an online service. And from your very first dollar under the group‑based approach, you have to pay initial contribution of X per cent to somewhere. And that's your very first dollar as an online service compared to, you know, take a pick of the foreign streamers with $100 million or $500 million or $1 billion in revenue. That's the point. It's that proportionality. May be proportional, but it really seems disproportionate that the first dollar is, you know, subject to the requirement ‑‑ the same requirement as the hundred millionth dollar.

9320 VICE‑CHAIRPERSON SCOTT: That was clear and helpful, thank you.

9321 What I think is my last question, so I did want to dig in a little bit on the proposal for a new fund to support the 9(1)(h) ‑‑ 9.1(1)(h) services. Could you speak a little bit about what that fund would look like, the types of expenditures that would be supported by it, and whether the eligibility for the fund would be ported over directly from the existing 9.1(1)(h) framework or if there would be different criteria?

9322 MME BOUCHARD : Alors, le concept qu'on a imaginé, c'est effectivement de partir de la détermination que le Conseil a fait depuis déjà plusieurs années, et continue de faire, d'examiner l'admissibilité de services de radiodiffusion canadiens à la protection réglementaire de la distribution obligatoire, avec un tarif établi réglementé.

9323 Donc, ces services qui se qualifient, et peut‑être que le Conseil fera évoluer ces critères au fil du temps, mais pour l'instant, ça nous permet de partir d'une base solide et qui est évolutive, effectivement. Parce que des services additionnels pourraient se qualifier; d'autres pourraient perdre leur qualification au fil du temps par des choix d'entreprise qu'ils peuvent faire. Mais il y a une base solide à partir de là pour déterminer comment le système de radiodiffusion et la portion des services en ligne vient contribuer au financement de ces services‑là.

9324 C'est la portion du tarif réglementé qui vient avec la distribution obligatoire qu'on veut reproduire dans l'environnement en ligne. Ça ne règle pas la question d'accès à la distribution en ligne, ça c'est une autre question, mais ça règle au moins le problème de financement déclinant qui vient avec des tarifs fixes pendant plusieurs années. Là, on va dépasser les cinq ans des tarifs qui ont été fixés pour l'essentiel du groupe, alors que la base d'abonnement décline d'année en année de façon constante, qui rend ces services‑là... enfin, qui met la pérennité de ces services‑là en péril.

9325 Après, une fois qu'on a établi la portion de la contribution de base qui irait vers ce fonds ‑‑ et puis on a souligné quelques propositions dans notre mémoire par rapport à la proportion ou, enfin, le volume d'argent qui serait requis pour soutenir les services existants aujourd'hui ‑‑ la distribution serait vraiment purement mécanique, c'est‑à‑dire à partir d'un calcul basé sur la répartition de chaque service dans l'ensemble des tarifs à distribution obligatoire.

9326 Alors, si TV5Unis représente 15 ou 20 pour cent de la somme totale des tarifs qui sont attribués, bien, à ce moment‑là, c'est cette portion du fonds qui nous est attribuée et qui, par enchantement, se traduit par des investissements en contenu canadien, puisque chacun de nos services a des obligations très élevées en matière de dépenses en émissions canadiennes.

9327 Donc, ça amène la capacité pour les services de commander de la production originale, de continuer le travail de cultiver les auditoires autour de cette programmation originale canadienne qui porte le point de vue de communautés qui sont sous‑représentées dans le système.

9328 M. SAUVÉ : Si je peux me permettre d'ajouter. Pour les télévisions éducatives, on ne fait pas partie, évidemment, du 9(1)(h) actuel et tout ça, mais les télévisions ont quand même... ces télévisions‑là provinciales ont quand même une distribution obligatoire.

9329 Et l'élément que Marie‑Philippe parlait, qu'une fois l'aspect financier regardé, l'élément de la distribution... parce que la distribution change actuellement, le type de distribution change, et je pense que cet élément‑là de distribution obligatoire des services, soit du 9(1)(h) ou des services par exemple des télévisions éducatives provinciales, pourrait être important à regarder aussi pour que cet accès pour ces services‑là puisse rester accessible à tous les Canadiens.

9330 VICE‑PRÉSIDENT SCOTT : Merci. J'apprécie toutes vos réponses, et je vais tourner vers la présidente.

9331 LA PRÉSIDENTE : Excellent. Merci beaucoup.

9332 Alors, on va continuer avec notre vice‑présidente de la Radiodiffusion, madame Barin.

9333 VICE‑PRÉSIDENTE BARIN : Merci beaucoup, Madame la Présidente.

9334 Bonjour. Une question de clarification. Dans votre mémoire, vous avez souligné la possibilité d'exempter les services qui apportent déjà une contribution substantielle à la production canadienne ou à la réalisation de politiques clés de radiodiffusion. J'ai entendu la réponse de TFO, mais vous faites allusion à des services de nouvelles en ligne comme étant un exemple de services qui pourront être exemptés.

9335 Je voulais juste clarifier si vous avez un exemple concret ou de nous donner un exemple de service que vous suggérez pourrait être exempté.

9336 MR. FORTUNE: At this point, not in particular, not from the ‑‑ certainly not from the initial base contribution that we're speaking of and at the magnitude of revenue that we're speaking of. So I think the answer to that is no, we don't have a specific exception in mind at this point. But again, this is the initial stage of this process, so as we get ‑‑ as it becomes more interesting, there may be other policy issues that pop out that become apparent as we go along, if that's helpful.

9337 VICE‑CHAIRPERSON BARIN: Okay. So it is more of a principle that potentially if an online service is fulfilling this role of exceptional importance ‑‑

9338 MR. FORTUNE: That's correct.

9339 VICE‑CHAIRPERSON BARIN:  ‑‑ that it could be exempted from a contribution. Okay.

9340 MR. FORTUNE: Yes.

9341 VICE‑CHAIRPERSON BARIN: Very well, okay. You also spoke of the success of some of your independent services nationally and internationally. And I am wondering if you can describe the role of ‑‑ you know, we've spoken about partnerships ‑‑ the role of these partnerships and whether there are any particular barriers to independent services.

9342 MR. DANKS: That is probably one for me. The partnerships would best be described as distribution arrangements between our services and the major platforms. Really good example for us would be Apple, Amazon, and Paramount through Pluto TV. We started those services in Canada with those companies. Those are all, by the way, revenue‑share models. That's well known, you know, it's not unique to us. And the Canadian portion of those companies, the people that work in Canada, the services really help push us into first the US, then into other territories ‑‑ Australia and UK in particular. We're on Pluto in the US with, you know, Paramount service there right now. And it's important to us. So you become a partner with them in a revenue‑share basis.

9343 Something to keep in mind as well that they're getting, you know, a substantial portion, and let's call it 50–50. I won't talk about the deals; every deal is different. But generally, they start at 50–50. So to the extent that Canadian content is distributed around the world by these platforms, they're a revenue sharer, so I mean if they're contributing to a fund, they're going to get money back if they distribute you. So it's a great thing for us to be able to say, We've got lots of content coming. You can put us on, and you're going to get that money back.

9344 So that's really the nature of the partnerships. It's also why those new business models are successful from a platform perspective.

9345 But to answer the last part of your question in terms of barriers, there's sort of two things. You need a critical mass of content to get into these platforms. Let's say at least 200 hours of content that you have access to when you do your deal. You're probably going to need 20, 25 hours a month of refresh on that. Those are minimums.

9346 And you're also going to have to perform. If you don't get viewed, you don't get watched, you're going to get cut. And what's happening globally right now is that those thresholds are getting higher and higher and higher. A few years ago, things were a little easier. But the world's becoming more competitive. So to stay in those platforms, we're going to have to keep making greater investments and continue to work with those platforms. Because there could be a day when they decide, No, you're not performing well enough; we don't want you on anymore.

9347 VICE‑CHAIRPERSON BARIN: Okay, thank you.

9348 MR. FORTUNE: I think, sorry, Luc may have something to add to that, because obviously Stingray has a large global presence.

9349 MR. PERREAULT: Yeah, Stingray, as I said before has 400 million users worldwide. So we basically curate all of the content in Canada, our Montreal office. So we have specialists in various types of music for various continents, countries, and so on. And through various applications, we can deliver this experience through Smart TVs, platforms such as Roku, Xumo, et cetera.

9350 It is, for the music that we offer in these countries, it is kind of an expensive proposal, because you have to curate music for each area you serve. And also at the same time, you have to adapt the way you deliver content to a great many platforms, which requires R&D and a pretty solid CTO to be able to manage all these platforms and keep that updated.

9351 But we're very proud of what we're doing. But as Brad was saying, you know, we’re dealing with platforms, and platforms are some kind of gatekeepers because you need to negotiate access, there’s revenue share involved and so on.

9352 But in the end, it’s a way to build an international business that will grow with time as other countries are also affected by cord‑cutting, so we’re kind of an early adopter of this way of doing things. But fast channels are going quickly. And we’ll see what the jury says in a few years, but we’re pretty confident in our activities.

9353 MR. FORTUNE: Sorry. Just to put a point on the gatekeeper point, this is early days yet in the development of this market. We don’t know where it’s headed, but if history teaches us anything, it’s that platform providers will also be and are content owners and so, therefore, other providers of content such as independent broadcasters, independent service providers are going to be affected by that gatekeeping as platforms want to develop and promote their own content, so that is a perennial issue that we’re going to be dealing with.

9354 VICE‑CHAIRPERSON BARIN: Thank you. Last point noted.

9355 So I just really want to understand when the platforms are telling us that these partnerships are extremely valuable and that we should look at these partnerships or carriage deals as a contribution to the system, with ‑‑ is there anything that the platforms are doing for Canadian independent services that are carried that distinguishes their actions from what they would do for a foreign service? Like is there something that provides more value than just carriage to a Canadian subscriber that potentially wants to access some of your channels?

9356 MR. DANKS: No, I don't think it's any different than any other business partners.

9357 VICE‑CHAIRPERSON BARIN: Thank you.

9358 Back to the Chair.

9359 THE CHAIRPERSON: Okay. Thank you so much.

9360 Let’s go to Commissioner Levy.

9361 COMMISSIONER LEVY: Good morning. Some intervenors have expressed concern that it could hurt production in Canada if the Commission were to impose a contribution amount that’s too high, and I’d like to get your response on whether you think this is, in fact, a risk or not and, if so, how do we balance this concern with the need to support the policy goals in the Broadcasting Act?

9362 MR. DANKS: I don't think it's a concern at all. I’m sorry. We disagree with ‑‑ you know, we have had a production service business in Canada that really started in the eighties. It accelerated in the nineties before streaming. And they’re here because of the dollar, they’re here because of the tax credits and they’re here because we have great crews. And they’ll continue to come primarily for those three reasons.

9363 A contribution would still ‑‑ wouldn’t affect their desire to come to Canada at all. There’s no equation there. They’re still looking for great content with our great crews and our great environment.

9364 COMMISSIONER LEVY: Thank you very much.

9365 THE CHAIRPERSON: Okay. Thank you very much.

9366 Alors, peut‑être vous pouvez prendre un moment ‑‑ je ne sais pas si ça vous intéresse de prendre un moment ‑‑ chacun d'entre vous, pour partager un dernier mot.

9367 So if you ‑‑ however, you want to split that up, if you’d all like to share a concluding thought, we would welcome that.

9368 MR. DANKS: I think the most important thing is move fast. You know, this has been 14 years of the streamers coming in and gradually eroding the system. I was going to say move fast and break things, but maybe bend them.

9369 But the most important thing, I think, is to review things afterwards.

9370 You know, one of the challenges we’ve seen ‑‑ I like to say I choose to believe that some of the former Commissions would have come back two, three years and tightened some of the screws and maybe made some changes. This environment is changing so rapidly nobody can predict what we’re going to see.

9371 Give yourself a break, you know. Don’t write it in stone, write it in pencil, and let’s come back and talk about it soon enough so we can tell you what’s going on because something’s going to happen a year from now that we can’t anticipate so it’s really important we get this started so that we have something real to talk about as the marketplace goes forward. That’s our, you know, key message here today.

9372 MME BOUCHARD : Moi, je voudrais vous parler de l'importance des diffuseurs, des diffuseurs indépendants en particulier. Ce qu'on apporte au système, le fait qu'on soit des diffuseurs canadiens, c'est on cultive des auditoires; on choisit des contenus en fonction d'un positionnement dans le marché; on crée un achalandage pour ce contenu‑là; on le promeut; on le fait découvrir.

9373 Vous avez dans les nouvelles tous les jours ‑‑ ça nous brise le coeur ‑‑ des annonces de compressions un peu partout. On n'est pas à l'abri de ça, nous non plus, les groupes de diffuseurs indépendants et individuellement. La situation est très urgente, mais les mesures que vous êtes en train de mettre en place peuvent freiner cet exercice de destruction lente de notre système, de l'intégrité du rôle des diffuseurs, et c'est avec ces diffuseurs‑là collectivement et avec les producteurs de contenu qu'on crée un Star système, qu'on crée un achalandage. Donc, cet aspect‑là est absolument fondamental.

9374 M. SAUVÉ : J'aimerais peut‑être ajouter à ce que Marie‑Philippe dit.

9375 Mais les diffuseurs indépendants, on n'a pas toujours le même reach. On a probablement moins de reach que des gros joueurs verticaux intégrés, diffuseurs canadiens ou autres, mais je pense sincèrement que dans bien des cas, les contenus qu'on offre à nos auditoires ont peut‑être plus d'impact, parce qu'ils viennent les toucher directement, dans des choses qui les concernent très directement. C'est vrai dans le cas des télévisions éducatives certainement. C'est vrai sûrement dans le cas avec la programmation pour les communautés minoritaires francophones.

9376 Mais je veux aussi faire l'écho de ce que disait hier madame Collin de Télé‑Québec sur l'importance de la programmation jeunesse.

9377 Si des chaînes comme la nôtre ne font plus de programmation jeunesse ou ne rendent plus ce contenu‑là accessible, puis c'est encore plus vrai dans un marché minoritaire comme le nôtre, vous pouvez imaginer ce que ça représente de se battre pour garder cette identité culturelle en Ontario français puis dans tout le reste du Canada. C'est vraiment important que ces chaînes‑là indépendantes puissent trouver une façon de rester fortes et vivantes à l'intérieur de notre système canadien.

9378 M. PERREAULT : J'ai un petit mot sur le côté radio, mais surtout la radio rurale.

9379 Dans nos 100 quelques stations de radio, ce sont des stations qui ont été très affectées, évidemment, par la pandémie. Elles ne se sont pas toutes remises de la fermeture de nombreuses entreprises dans leurs régions, et donc, ces gens‑là n'achètent plus de publicité chez nous. La situation est assez difficile, et je pense que c'est quelque chose à regarder.

9380 Parce que quand j'étais chez Pelmorex, on avait à l'époque des stations de radio qu'on a vendues, mais chez Stingray, je retrouve un peu cet esprit‑là de gens qui ont ‑‑ l'expression en anglais, c'est localism ‑‑ la fierté d'être dans leur milieu et de le représenter. Et ce que je découvre, c'est que l'engin de découvrabilité du contenu canadien, des artistes canadiens, c'est la radio locale. Ce n'est pas les grandes plateformes numériques. C'est vraiment les gens qui font la programmation de la radio, qui font les choix de ce qu'ils mettent en ondes, qui font découvrir nos artistes.

9381 Alors, dans tout cet exercice‑là, un moment donné, il faudrait peut‑être aussi regarder l'importance de la radio locale en milieu rural et de voir comment on peut aider cette radio‑là à redevenir innovatrice et à retrouver, je dirais, le luisant qu'elle avait autrefois, avant la pandémie.

9382 THE CHAIRPERSON: Kurt Eby, I don’t know if you’d like to jump in as well. No pressure, but we just want to give you the opportunity.

9383 MR. EBY: No, I appreciate it.

9384 I just also wanted to reiterate in terms of the services of exceptional importance fund just how critical that is. These services like ours, the 9(1)(h) services, we were all licensed and have obligations to make these, you know, extremely high contributions and meet very rigorous criteria and we were licensed at, effectively, a certain revenue level and the changes in the system have just brought that down so much. At the same time, costs are going up.

9385 And you’ve heard from the BDUs, they can’t keep making these services whole or ensuring that those contributions can be made, so I think that the idea of this fund is really good, it’s really important to give us I won’t even say relief. It’s to give these services enablement, enablement to keep making these contributions because all of the money that’s going to come in is going to go right back into production.

9386 MS. KUMARIA: From Hollywood Suites’ perspective, we’re not ‑‑ we’re happy with our contributions and we’re happy with how much Canadian content we can bring to Canadians in this market. We just want to create a more equitable system with our online partners.

9387 Thank you.

9388 MR. FORTUNE: Thank you very much for your indulgence. Thank you. Appreciate it.

9389 THE CHAIRPERSON: Thank you very much for being here this morning. We really appreciate your perspectives.

9390 Thank you as well for sharing some of the very detailed examples, the numbers, you know, the 200 minimum and how that’s going up in terms of some of these commercial agreements and the hours that are required. Really appreciate you being here. Thank you.

9391 THE SECRETARY: I will now ask Michael Geist to come to the presentation table.

‑‑‑ Pause

9392 THE SECRETARY: When you are ready, you may begin.

Presentation

9393 MR. GEIST: Good morning. My name is Michael Geist. I’m a law professor at the University of Ottawa, where I hold the Canada Research Chair in Internet and E‑commerce Law. I appear in a personal capacity representing only my own views.

9394 I was very engaged during the legislative process for Bills C‑10 and later C‑11 with multiple appearances before House and Senate committees. However, this is the first time that I’ve appeared before the CRTC.

9395 What prompted me to do so?

9396 Well, I’d say that while many of my concerns such as discoverability, algorithmic regulation, minimum content requirements and modernized Cancon definitions are still to come, the interests of individual Canadians, I think, deserve far more attention. I don’t pretend to represent anyone other than myself, but in my research and work in the area I’ve developed a growing appreciation and understanding of the impact of internet regulatory policy on competition and consumer choice.

9397 These are all issues found in the Broadcasting Act’s policy objectives and in the government’s Policy Direction, yet with a handful of notable exceptions, there are relatively few witnesses over these three weeks who speak to them. Instead, respectfully, the hearing is treated by many as a cash grab to inject new funding into a myriad of policy priorities with limited discussion of the risks for consumers and competition.

9398 I’d like to highlight some of the risks and urge the Commission to prioritize public over private interests, which means putting Canadians at the centre of their communications system, as one Chair once characterized it.

9399 Despite record spending on film and television production in Canada and now new Canadian legislation that will provide broadcasters with tens of millions of dollars in support of news production, I’ve heard many witnesses battling over whose situation is the most in crisis. I don’t think there’s much doubt about who faces the biggest crisis right now. It’s Canadian consumers, facing inflation, higher interest rates and oftentimes pricey communications services.

9400 Internet streaming services are not policy ATMs that can be subject to unlimited withdrawals. There are consequences to new regulatory costs and mandated contributions, particularly if they are set at rates that are outliers when compared to global standards or require support for policies or activities that fall far outside the core of the streamer’s business activities.

9401 Those consequences raise two risks. One I’d argue is market exit. As I’m sure you’re aware, that’s precisely what I think has occurred in the context of the Online News Act, where what amounts to uneconomic regulatory payments by Meta led to exit existing ‑‑ led Meta to exit existing deals, block news links and create enormous harm for Canadians and Canadian news outlets.

9402 Last week’s announced deal with Google was clearly driven by a desire to avoid a similar outcome, yet it, too, will leave some outlets receiving less than before the introduction of Bill C‑18.

9403 In the context of internet streaming services, there have been cases of market exits elsewhere in light of regulatory costs. That include the Denmark experience, where mandated payments significantly above what most EU countries had established led to a significant reduction in domestic film and TV production.

9404 There are many services not participating in this hearing, but which provide increased choice to consumers and often serve communities that do not otherwise have domestic alternatives. Regulatory requirements or payments could lead to market exit and I think they should be avoided with a do‑no‑harm prism applied to thresholds. The $10 million threshold may work for registration and data collection, but a higher number such as 50 million to truly capture the web giants, as the government often framed it, I think is more appropriate for mandated contributions.

9405 The second risk involves increased costs that are ultimately passed onto consumers. I don’t doubt for a moment that the large streaming services are positioned to contribute, though I believe that appropriate taxation measures such as the digital services tax is a better vehicle for doing so. However, the notion of free money for various policy objectives is not free and is likely to be borne primarily by Canadian consumers.

9406 I’ve long believed that regulatory payments or contributions were largely premised on a quid pro quo that went far beyond mere market access, which I think is best addressed through fair tax policies that are applicable to all market participants. Justifying mandated broadcaster or BDU payments is often linked to regulatory policies such as mandatory carriage and simultaneous substitution that are worth hundreds of millions of dollars to the industry. But in the case of internet streaming services, these regulatory benefits don’t exist and tying companies to payments for objectives such as news that are largely disconnected from those services runs, I think, the risk of either market exit, delayed market entry for new competitors, or costs that are ultimately passed along to Canadian consumers.

9407 Finally, limiting the risk of increased consumer costs, I think, is therefore essential. I think that means falling within the one to two percent range that’s more common in Europe for those EU member states that have mandated some form of payment which I think would ideally be implemented once the full scope of the Bill C‑11 regulatory model is fully developed, not on this interim basis as currently envisioned.

9408 I believe it also means avoiding mandated funding for policies or activities that have little to do with the underlying streaming service. Indeed, cross‑industry subsidy models is precisely why it’s better to wait until a full framework is developed.

9409 Thanks for the opportunity to present and I look forward to your questions.

9410 THE CHAIRPERSON: Thank you very much, Professor Geist. It’s truly hard to believe that this is your first time appearing before the CRTC given how engaged you are in the CRTC’s work, and we’re happy to have you.

9411 I will turn things over to Commissioner Levy to start with the questioning for the Commission.

9412 COMMISSIONER LEVY: Good morning. And as this is your first time here, we will, as with all intervenors, be gentle.

9413 I’m going to start with some questions that relate to ensuring that we have certain information on the record the proceeding.

9414 So I’d like to start first with applicability.

9415 Regarding your proposed definition of social media services as “platforms that predominantly consist of third‑party user contributions”, can you elaborate on whether all users of user‑generated content should be considered equally? For instance, should Disney, Bell, Wildbrain, other media companies be considered users?

9416 MR. GEIST: I think it’s ‑‑ well, I would start by saying the challenge within that question highlights why I was vocal in expressing the view that this ought to be excluded from the legislation altogether so that we would not have to get into some of these more challenging questions and these dividing lines.

9417 I think it’s pretty clear and I think the Commission has heard from any number of commercial outlets that nevertheless operate in a space that largely is in that user content space, and so admittedly it’s a challenging divided line. It’s easy when we are talking about individuals doing so for non‑commercial purposes. We already have sought to define that in Canadian legislation, for example, in copyright law with non‑commercial user‑generated content exception that exists under copyright.

9418 In other contexts, though, it does seem to me the goal here is particularly to ensure that new digital creators as well as individuals themselves are the ones that are excluded. And I would, at a minimum, say that if you had an entity that is already scoped into your legislation by virtue of the threshold the notion that their content might be excluded because it appears on one of those platforms wouldn’t make a whole lot of sense. It seems to me that if they are caught by the legislation, they’re caught by the legislation.

9419 COMMISSIONER LEVY: Let's talk about contributions. And you’ve highlighted Denmark's six percent contribution proposal, which you believe is the primary reason for a 40 to 50 percent reduction in media production in Denmark. But we’ve had previous intervenors who’ve said that that’s not an issue at all, the level of contribution is not going to, you know, create market exit in the Canadian market due to the very established situation here with the online streamers. So in terms of Denmark and some of the others that might have seen changes in the production level, is it not just as likely that there are other factors that have weighed into the reduction in production, for instance, disagreements over rights and those sorts of issues?

9420 MR. GEIST: I think that those kinds of decisions are, of course, always going to be multi‑factorial. That’s one of the reasons why I think we’re far better off completing the C‑11 regulatory framework so that the full costs and scope of the regulatory process are understood and it’s much easier to make what are ultimately long‑term decisions. Writing stuff in pencil for companies that make decisions on decade‑long bases often doesn’t work particularly well and I think certainty’s better in that regard.

9421 I do think the data that we’ve seen with immediate responses in cutting back significantly or exiting production in that country that seemed to be directly linked to the contribution is pretty clearcut, but to me it isn’t solely about the contribution. It is about the regulatory cost, which is why I emphasized that in my opening statement.

9422 We can look to Uruguay where Spotify has now announced they are exiting the market in several weeks due to regulatory costs that are arriving out of copyright. We could look at what we just experienced now in Canada with exiting a particular aspect, not necessarily exiting the market altogether, but exiting the market in terms of a certain part of a service, in Facebook’s case, stopping distribution of news links.

9423 We’ve seen stopping of news in other jurisdictions as well as a result of some of those regulatory costs. And so I guess my view would be that of course organizations are going to respond to regulatory costs. Oftentimes that’s exactly what we want them to do. We want them to respond to regulation.

9424 We have environmental rules hoping that they are going to respond to those environment rules and to think that we could establish a whole range of rules here without any sort of consequences. We’ve great creators and good tax breaks and so the equation and the analysis will remain the same strikes me as pretty unlikely.

9425 COMMISSIONER LEVY: Well, Uruguay, Denmark they hardly compare to Canada’s situation where we’re the fourth‑largest provider of production locations and, you know, our contribution to the online streamers and their production flow is the fourth‑largest in the world, so I think we’re in a different place than Denmark and Uruguay.

9426 MR. GEIST: I suppose. But as I mentioned, here in Canada response to regulation from large platforms has occurred. I mean, it literally has occurred in the last six months in response to the Online News Act. It occurred in Spain and Germany in similar fashion on that issue with respect to regulation.

9427 And even on the production side, we have seen, especially where tax credit systems are changed in various provinces, there is a direct response to whether or not productions continues to occur. Why? Because the economic equation associated with making those decisions changes.

9428 So if production houses will make changes based on the absence or availability of tax credits, the notion that there are significant increases in the costs they’re facing strikes me as pretty likely that of course you’re going to respond in some fashion.

9429 It doesn’t mean that they’re going to exit the market; I don’t think I’m going to lose my Netflix subscription regardless of what you happen to say, or at least the availability of a Netflix subscription. But are they going to respond, either by way of higher fees or by altering the way in which they produce, or perhaps scaling back some of the production taking that into account? We’re already seeing streamers scale back production on a global basis, as the economics of that sector change. It’s not clear to me why Canada, whether fourth or whatever the number happens to be, would be immune from those considerations.

9430 COMMISSIONER LEVY: You have talked in terms of ‑‑ oh, I’ve got one more, and then I can get into my own.

9431 So, if foreign online undertakings were to become eligible for some of the existing funds to which traditional Canadian broadcasters current contribute, would you support a system where online undertakings direct basic contributions to one or several of these funds?

9432 MR. GEIST: Well, I think it seems to me, I hear the word ‘equity’ and ‘equitable’ raised frequently during these hearings, and it would seem to be only equitable that, if there is a requirement to contribute, those funds then become available to the same organizations that are making some of those contributions. I think to me, that ought to be basic table stakes. And I take a look as well at the USMCA and some of our trade obligations, and certainly raise questions about the prospect of creating mandated payments without the possibility of being able to apply in similar fashion or be eligible for some of those same resulting funds.

9433 COMMISSIONER LEVY: Eligibility in this country generally flows through producers who access the funds. I am assuming that any access would retain that venue ‑‑ that avenue for contributions?

9434 MR. GEIST: Well, we have seen a number of different types of producers in the country. And, you know, my sense, especially as Bill C‑11, which has opened the door to so many different issues, including things around definition of ‘Can con’ and the like ‑‑ it does strike me that I would hope that there will be many issues that will be put on the table as we think about a system that clearly is undergoing a pretty significant overhaul, and there is an opportunity to rethink or, you know, conduct, I think, a new evaluation on how the system functions and how it ought best to function with some of these new participants as part of the process.

9435 COMMISSIONER LEVY: You said in your presentation that competition and consumer choice should be at the centre of our considerations. However, we have an Act and we have a policy direction that makes very clear that there are very significant social policy objectives that we must try to meet. How do you propose we do that with your considerations front and centre?

9436 MR. GEIST: I see some of my considerations front and centre in those policies ‑‑ in both the policy direction and in the Broadcasting Act. My concern ‑‑ and as I mentioned, one of the reasons that I felt it necessary to come forward ‑‑ is that I feel that too often those policy objectives don’t get the kind of hearing and consideration that they ought to.

9437 COMMISSIONER LEVY: Which ones in particular?

9438 MR. GEIST: Well, there’s talk ‑‑ there’s discussion around affordability in the policy direction. There’s talk about consumer choice directly in the policy direction. And so, and there are in the Broadcasting Act objectives as well ‑‑ references to choice and access and affordability. These seem to me ‑‑ this seems to be sine qua non of what we ought to be trying to achieve. Maybe it’s a bit of a chicken and egg thing, but there is no broadcasting system without the consumer. There is no broadcasting system unless people are willing to help support it.

9439 And if we are in this era where we are moving more and more towards streaming‑based services ‑‑ I think there is a consensus that that’s the case ‑‑ ensuring that Canadians have that access both ‑‑ certainly from a consumer perspective, and have that kind of choice that allows or enables many different services previously that may not have been available, especially for many communities that may be newer to Canada, that want to have a connection and a link back home, and the access to those kinds of services becomes so essential that it seems to me that it’s absolutely critical ‑‑ and written within our Broadcasting Act policy objectives and within the policy direction that you’ve received ‑‑ to ensure that that’s a core part.

9440 Now, that doesn’t mean that the only thing you think about is consumers, but to me that’s the starting point. And then, I think there is an opportunity ‑‑ and it’s quite clear within both the Broadcasting Act policies as well as in the policy direction ‑‑ that you are to consider some of the other things more broadly within support for the sector, different communities, and the like. I think once again, one of the reasons why it would be ideal to ensure that you’ve got all the various aspects of this broadcasting policy addressed before we kind of launch ahead with something, is that many of the kinds of objectives may well be met through some of those issues that you have yet to address, but are forthcoming as part of your hearings.

9441 COMMISSIONER LEVY: But at this point, we have ‑‑ as I said, in the directive and the Act we are tasked, and tasked understandably with meeting social policy objectives for equity‑seeking groups, to try to create more fairness in the system, to address legislation such as the Accessible Canada Act, to try to ensure that Canadians have a chance to participate in our proceedings and so forth.

9442 MR. GEIST: Yes.

9443 COMMISSIONER LEVY: Those are all issues that also have to be covered in what we’re doing.

9444 MR. GEIST: Yes.

9445 COMMISSIONER LEVY: And they are urgent. The issue of news is urgent. So, there is a lot of pressure to do something at this stage of the process that will go some way to addressing some of those very obvious and understandable desires by not only the policy makers but by Canadians themselves.

9446 MR. GEIST: Of course. The Broadcasting Act objectives speak to that. I think they often speak to them within a context of delivery of programming at affordable rates, about promotion of Canadian content. There is a range of different ways to achieve some of those objectives. And so, part of it is to address things like discoverability and content‑related issues that appear on these various services, beyond just the bare contribution that we’re talking about, and doing so in a way that ensures that we do ensure that Canadians have the kind of choice and that these services remain affordable, which also, as I say, is included directly in the objectives themselves.

9447 On some of the other issues ‑‑ news, for example ‑‑ yeah, of course; news is urgent, and quite literally last week, we had an announcement of a deal with government and Google in which the Parliamentary Budget Officer suggested that 75 percent or 75 million of that is headed to broadcasters. There’s a very small portion that’s actually available to print and digital outlets. I don't know if that’s a game changer per se. I know that certainly some entities have spoken favourably about the fact that that’s the outcome that they’ve got.

9448 But it seems to me that within, I believe, the policy direction as well, it speaks to considering this within the broader context of a range of things that are taking place. And in news, we’ve got a pretty clear approach from the government that includes expansion of the Labour Journalism Tax Credit, the enactment of the Online News Act, the notion that we need Netflix to pay for news strikes me as just highly disconnected from what that service is about, and I have a hard time seeing where that connection gets made. That appears to be nothing more than, “You’re here, and this is what we want you to fund just because you happen to be here.”

9449 They’re here, tax them. If they’re here, make sure that Canadian content receives the kind of visibility that we think is essential. There’s a number of things that we can be doing and recognize the contributions and the spending they’re already making ‑‑ and this is true for any number of entities, but I guess from my perspective, there needs to be some kind of linkage between saying, “We want you to fund this particular objective because it’s an important objective,” and the kind of operations that that organization has.

9450 Otherwise, once again, I think it does open the risk that some of these organizations may say that Canada has either entry costs for services that are not already here, or Canada’s operating costs for those that are, has rendered this less economic, and it’s either Canadian consumers that ultimately foot the bill or we see a change in the way that they operate within the country itself. And those are, I think, real risks that have to be factored as well.

9451 And you’re right ‑‑ there are a lot of challenging competing objectives that you’re facing and, I mean, that’s why I assume you’re holding a three‑week hearing, to ensure that you hear from all those different perspectives.

9452 COMMISSIONER LEVY: Finally, my last question before I turn it over to my colleagues who I’m sure will have many.

9453 Competition and consumer choice are of course very important, but it’s in the Canadian context. And it strikes me that no country that cares for its cultural sovereignty is prepared to allow others to simply walk in, and eat everybody’s lunch, and walk off. So, I just leave you with the question that in this sort of blank page that we are supposed to be looking at as we redo a broadcasting system, the issue of the Canadian cultural sovereignty should also be a front and centre consideration.

9454 MR. GEIST: Well, absolutely. Our culture is an incredibly important dimension here. I’m not sure that either erecting walls as a mechanism to safeguard against some of these new entrants is the ideal way to do it. It does seem to me, if we have policy objectives, either by seeking to support some of the existing players or by way of trying to support other policy objectives that we might have, the tax system provides a pretty good mechanism for doing that. Digital services tax ‑‑ some estimates would raise billions of dollars. It’s, to me, a far more transparent and open way to ensure that there is the kind of support that you’re talking about, by making these companies pay.

9455 And so, it’s not about, you know, the notion of a free lunch. It shouldn’t be, I think, on anybody’s agenda. But nor should be the notion that this is just free cash to fund whatever we want. And to the extent to which it is cash to fund things that we want, then the more appropriate mechanism for doing much of that I think comes through the taxation system.

9456 COMMISSIONER LEVY: Thank you.

9457 THE CHAIRPERSON: Thank you very much. Let’s go over to Commissioner Naidoo.

9458 COMMISSIONER NAIDOO: Hi, there. Thanks for being here. You mentioned that France enforces investment obligations of 20 to 25 percent of net annual turnover to funding French or European productions. So, I’m wondering if you can comment on France’s approach and clarify why you think that kind of regulation wouldn’t work here in Canada?

9459 MR. GEIST: Yeah. I think you’re right. I mean, certainly when we look at what I think frankly is an outlier in comparison to most other countries within the EU ‑‑ I think my submission included charts that highlighted just how far it goes ‑‑ it clearly has been amongst the most aggressive in this regard. But I also think that it sits in a somewhat place than we do. We have been, as was noted, a significant success point for production, but we do so in part because we’re a short flight from some of the major hubs in the United States, offer some of the language opportunities, offer some of the tax credits, and of course have much of that talent there. And I think and I certainly hope that much of that will remain in place.

9460 But I do think that we find ourselves in what is a place of competition that is somewhat unlike what it looks like in France, and so that were we to move in a similar sort of way, the ability for some of those same players ‑‑ not, as I was saying earlier with Commissioner Levy ‑‑ not necessarily exit the market, but to make adjustments in what they do would likely be a very real consideration. As I say, I think we’ve seen that take place in Canada when provinces have made adjustments in some of their tax credit systems ‑‑ market response, and market undoubtedly would respond here too.

9461 COMMISSIONER NAIDOO: All right. Thank you very much.

9462 THE CHAIRPERSON: Thank you.

9463 Let’s go to Vice‑Chair Barin.

9464 VICE‑CHAIRPERSON BARIN: Thank you. So, Mr. Geist, I am trying to marry your answer to Commissioner Levy’s last question on taxation with the approach that you’re suggesting that we take to the distribution of the regulatory costs. So, the Commission’s approach ‑‑ I mean, you could argue that the traditional regulatory approach has been ‑‑ you know, there is a cost of entry. You contribute to the system.

9465 There are areas that are experiencing market failure ‑‑ whether you call them scripted drama or children’s programming or accessibility programming or Indigenous programming ‑‑ and then, that contribution to the system is allocated by the Commission through obligations, et cetera. So, I hear that what you are suggesting is that the contributions that are addressing particular areas of market failure should be aligned with areas in which the streamers are currently operating. So, for example, if they are not doing news, they shouldn’t contribute to news; if they’re unscripted drama, they should contribute to unscripted drama. So, that presupposes less of a taxation model and more of a custom‑based‑on‑your‑business‑model approach, which is a departure from how the Commission has approached these areas of market failure in the past.

9466 So, I am wondering how you address ‑‑ if you go with this approach, there will invariably remain gaps in the system. So, I’m wondering how you deal with those gaps under an approach that’s less taxation and more custom?

9467 MR. GEIST: Yeah. Yeah, thanks for that question. I would say several things in response.

9468 First off, I want to emphasize my view here is that I think we need to get a full sense of the costs, which is one reason why I have some concerns about an interim approach where many of the other costs may be left for another day.

9469 I think in terms of crises in sectors, I think we need to ensure that we are looking everywhere. Look at the success of Skyship Entertainment, for example, in the children’s space, to highlight that there are some significant success stories out there that are leveraging what takes place online right now.

9470 And then, thirdly, I would say ‑‑ and I will come to this issue of gaps in just a sec ‑‑ and thirdly, I would note that the notion that there may be some departure from some of the approaches ‑‑ it sure feels like we are definitely at the departure gate right now in terms of the way a lot of things have functioned. I mean, I think the inclusion of online undertakings, the prospect of changing some of the definitions that we have even as fundamental as what some of our ‘Can con’ definitions are tells me that we’re already in a space where there a lot of changes taking place, and I’m not sure why some particular approaches might have been sacrosanct, whereas some of many of these other ones, which many of them seem to me to be absolutely critical for many years, have been put on the table.

9471 But in terms of the gaps, I guess my ‑‑ my honest response would be that I’m not convinced that it is the CRTC’s role to fix every sector or every particular area that may be facing some challenges. And, you know, I think part of the problem ‑‑ and there is no doubt that, as I look at these last few weeks and over the next few days, there are many that do look at you for exactly that. They do look at the CRTC and they say, “I’m in crisis. Please help.” And we see that coming across the board.

9472 I must admit, it seems to me that there are some exceptionally important things that you can do that are economic, that involve cultural sovereignty, a whole range of different things, but I don’t think it’s necessarily or ought to be your role to fix every single challenge that’s out there, and in fact, I think even what I read within the policy direction is recognition of that. It speaks, for example, of the need to consider this within a broader context of things that may be taking place both domestically and internationally.

9473 And so, in the context of news, since that obviously has been raised on a number of occasions ‑‑ I can’t think of another sector in this sort of broad space where we have seen a more active and engaged federal government in particular ‑‑ and we also now see some provinces talking about getting actively engaged ‑‑ than in the news sector. That doesn’t mean they’ve managed to fix these issues, but we are as taxpayers literally throwing hundreds of millions of dollars at these issues, and now in tax credits, we’ve got legislation that the government has introduced to try to bring others into the fore. Now, there is still surely a potential role here for the CRTC ‑‑ not potential ‑‑ there is a role here for the CRTC. But is it the role of every online undertaking to help solve that particular policy objective? I would argue it’s not.

9474 VICE‑CHAIRPERSON BARIN: Thank you very much, Mr. Geist. Back to the Chair.

9475 THE CHAIRPERSON: Okay, thank you. Maybe I will just ask a couple of questions, and we’ll turn it back over to you for any concluding remarks.

9476 You talked about how businesses need certainty. The way we have set up this proceeding ‑‑ and I know that you are very familiar with that ‑‑ we are taking a phased approach ‑‑ but putting in place an initial base contribution, does that not give certainty to businesses in the short term as opposed to waiting a couple of years, doing the full review, and then deciding at that point?

9477 MR. GEIST: Well, it gives them in a very, very short term, a sense of what that contribution might be, to be sure. But I think that the timelines for many businesses ‑‑ whether potential new entrants or those that are already here ‑‑ typically run beyond that. So, might they be willing to, you know, just eat those costs and say, “Well, we’ll wait to see what some of the other costs happen to be, or some of the other regulations happen to be,” and then ultimately make the choices? You know, in other words, will they punt some of the decisions and basically say, “Okay”? Will they raise some of the immediate costs? We’re already seeing of course costs raised on all sorts of things, and so they may well simply seek to pass along some of those costs and basically test it out.

9478 You know, CRTC increased the costs; what’s the prospect that we begin to see, as we saw, for example, for a long time in satellite radio, where the consumer sees a line item that speaks to the cost? Years ago, we used to have it on the telecom side too, with system access fees and other sorts of things where the providers seek to make clear that these costs are actually costs that they feel are being imposed upon them. Do they use that interim period to say, “Okay, here’s the new Bill C‑11 cost”? Or, “The new CRTC cost that we are now facing as part of this service,” and they kind of lump that in? I mean, all of these things are possible.

9479 I just think that consistent with some of the earlier questions about sort of the broad range of policy objectives that are both in the Act and in the policy direction and what you are tasked to achieve ‑‑ this is a slice of that. And it seems to me that we are better off from both a certainty perspective, and from a competition and consumer perspective, and frankly, think from just a good policy perspective, ironing out as many of these core issues as possible. And this was always pretty readily apparent, I thought, from day one; I spent a lot of time following the hearings and appearing before members of Parliament, and it was always readily apparent that this was going to be a lengthy process.

9480 I must say, I thought you moved very, very quickly, without even having a final policy direction in place, to try to move ahead with this. But I think everybody recognized that legislation was step one, and to the extent to which you are faced with just these myriad of policy issues, it was a governmental choice to leave many of those issues to the CRTC to determine.

9481 THE CHAIRPERSON: Okay, thank you for that. And then, you have repeated a couple of mantras back to us in terms of “do no harm,” “putting Canadians at the centre of the communications system.”

9482 MR. GEIST: Yeah.

9483 THE CHAIRPERSON: If the CRTC does nothing right now, are we causing any harm?

9484 MR. GEIST: That’s an interesting question. I guess my view would be no. I think that you will ‑‑ I mean, it’s ‑‑ it’s not doing nothing. I mean, I assume there will be a decision and there will be ‑‑ so, there is some visibility of where you are headed on a number of issues, and you will then continue on with a number of the other ‑‑ other things. So, I don’t think it’s doing nothing.

9485 It’s, I guess the question is more, if you do nothing in terms of requiring an interim contribution, and to that point, no, I ‑‑ I don’t think that’s the case. I mean, yes, you have had many who come up here who are quite ‑‑ who are looking for ‑‑ who are of the view that someone is going to cut them a cheque or there is going to be some sort of funding available pretty soon, and that will be seen as a disappointment if it takes an extra six months or an extra year or whatever the timeline happens to be. It seems to me the government was a bit disappointed when there was the prospect of a delay in a digital services tax; there was revenues they were hoping to get from the platforms; it may take a little bit longer.

9486 But I think that especially in this area ‑‑ and we’ve heard from any number of witnesses who talk about this is a long game, and talk about how this is still very ‑‑ at a relatively early stage. I think we’re better off getting it right than getting it quick.

9487 THE CHAIRPERSON: Okay. Thank you for that. We will turn things back over to you for any concluding remarks.

9488 MR. GEIST: Okay. I ‑‑ I didn’t come with concluding remarks, so I will just ‑‑ I will wrap up by saying thank you both for the engaging questions, and I hope thank you for ensuring ‑‑ I know we’ll have some other people who may represent some of those consumer perspectives later, but I think there are ‑‑ I think it really is important to emphasize that there can be at times a bit of a bubble, I think, in this space. It’s ‑‑ the communications area is a really interesting world. Everyone seems to know one another, have been actively engaged in these issues for a very long time, and that prism of this is all about finding ways to make sure that system continues, sometimes without the perspective of, “Well, who are we ultimately seeking to serve at the end of the day?” at times may run the risk of being missed.

9489 And so, to me, it becomes so essential to recognize, just to reiterate that without consumers at the end of the day, without people who are there to support this system, the system simply ceases to exist in the way that we think of it.

9490 THE CHAIRPERSON: Thank you very much. Thank you ‑‑

9491 MR. GEIST: Thank you.

9492 THE CHAIRPERSON:  ‑‑ for being with us this morning and for answering all of our questions.

9493 THE SECRETARY: Thank you. We will take lunch break and be back at 12:45.

‑‑‑ Upon recessing at 11:50 a.m.

‑‑‑ Upon resuming at 12:45 p.m.

9494 THE SECRETARY: Welcome back. We will now hear the presentation of Tubi Inc., appearing remotely. Please introduce yourself and your colleague, and you may begin.

Presentation

9495 MS. FORREST: Good afternoon, Madam Chair, Commissioners, and Commission staff. Thank you for the opportunity to participate in this important hearing. My name is Carolyn Forrest, and I am Tubi's executive vice‑president and general counsel. With me is my colleague Matthew Elliott, who is Tubi's deputy general counsel.

9496 Tubi is a free, ad‑supported, video‑on‑demand, or AVOD for short, and linear channel service. Initially launched in Canada in November 2015, and relaunched in 2019, Tubi is available on mobile phones and tablets, consumer electronic devices, connected televisions, set‑top boxes, and on the web at tubitv.com. Our mission is to democratize entertainment and make premium content more accessible, more tailored, and free to viewers.

9497 It bears repeating that Tubi offers its service for free to all Canadians, providing access to a wide breadth of diverse content. Tubi is the fastest‑growing fully free TV and movie AVOD in Canada, and it serves every consumer no matter their financial status or location. Our audience is young, diverse, and incremental. We must ensure that we do not disenfranchise and limit access for this population as we work to implement Bill C‑11.

9498 Among the comments we are asking the Commission to take note of in this proceeding, Tubi submits that the Commission should recognize the unique position of small and free services like Tubi and should ensure that any new regulations do not disproportionately disadvantage free‑to‑access services in Canada and Canadians who enjoy them. A one‑size‑fits‑all approach to implementing C‑11 would unfairly disadvantage those Canadians unable or unwilling to access pay‑walled television through traditional services or streaming providers.

9499 The three points we would like to convey today are, first, smaller, free, ad‑supported services like Tubi are not well‑positioned to absorb costly new regulatory obligations such as financial contributions.

9500 Tubi's only source of revenue is advertising. From that revenue, Tubi must pay Canadian companies like Rogers Cable, Shaw, and Bell to distribute the Tubi app to consumers. We also pay a percentage of our gross revenue derived in Canada to Rogers Media, which is Tubi's exclusive ad sales partner in Canada. In fiscal year 2023, we spent another 40 per cent of our Canadian gross revenue to license premium content to exhibit solely in Canada. But the largest percentage of Tubi's revenue is paid to licensors who license content for exhibition in Canada on a revenue‑share basis. That is, we split 50‑50 the revenue generated by rev share content with the licensors that license it to Tubi. Therefore, Tubi's business model does not leave sufficient revenue to cover the increased regulatory costs which are proposed by the CRTC.

9501 On the other hand, subscription video on demand, or SVOD for short, services like Netflix are more readily able to absorb regulatory costs and apportion part of its budget for Canadian productions. SVOD services can simply raise their subscription fees to cover the increased costs. Since Tubi relaunched in Canada in 2019, Netflix's subscription costs have increased by 25 per cent, while Tubi has remained free.

9502 At the same time, we are uniquely positioned, by the sheer, unmatched size of our library, to provide consumer choice and competition ‑‑

9503 THE SECRETARY: I'm sorry, we cannot hear you. Just one minute. We're going to try to fix. Can you hear me?

9504 MS. FORREST: I hear you perfectly.

9505 THE SECRETARY: Okay, it's back. We can hear you now. You can continue.

9506 MS. FORREST: When did you stop hearing me?

9507 THE SECRETARY: About 15 seconds ago.

9508 MS. FORREST: Okay, so you heard me say that since Tubi relaunched in Canada in 2019, Netflix's subscription costs have increased by 25 per cent, while Tubi has remained free.

9509 At the same time, we are uniquely positioned, by the sheer, unmatched size of our library, to provide consumer choice and competition to the larger, expensive, dominant services. We need to direct our resources to constantly develop and promote appealing alternatives to those services, like the launch of 51 linear programming channels in Canada, which we will discuss shortly.

9510 Second, we know what kind of content our Canadian viewers want because we know what they are watching, and Canadians like Canadian content. That's why we've made a proportionately larger investment in domestic content for Canada than our current viewership level in Canada might suggest. Although Canadians make up only four per cent of Tubi's worldwide viewership, for our fiscal year '24 budget, we will spend 10 per cent of our worldwide content budget to license content for and produce content in Canada. Directing additional revenues to a third‑party fund would undermine Tubi's efforts to acquire the content that our Canadian viewers want.

9511 Third, Tubi already makes significant and valuable contributions to the Canadian video ecosystem ‑‑ including producing, acquiring, and showcasing Canadian English‑ and French‑language content ‑‑ without any regulatory requirement to do so. New costly regulatory requirements could actually make it more challenging for us to continue to offer the same diverse range of choices to Canadians. This approach would hurt Canadian creators and consumers unnecessarily.

9512 We are very proud of our vast library of premium movies and television and how well we've been received by Canadian viewers and partners. We have the largest library of premium movies and television available to be streamed by Canadians.

9513 Tubi has almost 60,000 titles available for exhibition in Canada, consisting of over 110,000 hours of programming. Over five per cent of Tubi's licensed Canadian content library are movies and series produced in Canada. Our library includes more than 500 French‑language titles, of over 1,000 hours of programming. And, we created Films et séries français, a French‑language section exclusively for our Canadian platform, in January 2021 to easily identify these titles. Tubi also has 33 titles, consisting of more than 60 hours of programming, focusing on Indigenous groups in Canada. Ten per cent of Tubi's growing library of Tubi Original titles were produced in Canada. In addition to our rev share titles from Canadian licensors, Tubi also licensed 1,385 titles from Canadian licensors in fiscal year 2023.

9514 Tubi is a platform for cultural exchange, and the diversity of our content library serves the diverse population of Canada, ranging from Bollywood, Japanese Anime, British content from the BCC, Italian‑language, Spanish‑language, LGBTQIA+, Black Entertainment, and so much more.

9515 We launched 25 linear channels which are programming feeds streaming content 24/7 as separate channels on Tubi's platforms in Canada on Amazon FireTV, Rogers, and Shaw in September, and we launched 26 additional channels in October, for a total of 51 linear channels, now available in the Tubi app on all of Tubi's platforms in Canada. Tubi can remain competitive against dominant players because its growing base of viewers in Canada, plus great distribution partners like Rogers, Shaw, and Blue Ant, and our Canadian production partners including Incendo, ReelOne, Enlighten, Neshama, Nomadic, and Arcana will allow us to continue to offer more choice to more Canadians every day at the lowest possible price point: free.

9516 Tubi agrees with the Commission's position that the new regulatory framework being established by the Commission should not be applied to smaller undertakings that do not have a material impact on the Canadian broadcasting system. The proposed contributions would be harmful to the Canadian viewing public if imposed on smaller undertakings and would only serve to burden Tubi's ability to compete as a new entrant in the marketplace.

9517 We believe strongly that the new regulatory framework should recognize the distinct position of smaller free services, not only their relative inability to absorb costly new regulatory obligations and their need to devote their smaller resource pools to developing and promoting appealing alternatives to those services, but also their unique ability to provide choice and competition to larger, more established players.

9518 Tubi has a unique and innovative business model that makes it particularly vulnerable to new regulatory requirements. Tubi's only source of revenue comes from advertising. As opposed to our subscription‑based competitors, AVOD services cannot simply raise rates and pass costs on to consumers. The success of our service is offering content that viewers want to watch, and content costs make up most of our operating expenses.

9519 At the same time, we have one of the lowest ad loads per hour in the streaming industry. That said, we simply do not want to bombard our viewers with excessive advertising and marketing messages to drive more revenue at the expense of a high‑quality viewer experience for Canadians.

9520 Changes in economic activity have an outsized impact on small ad‑supported services.

9521 First, over the past two years, the total growth of video advertising expenditures has declined. The slowing of the growth of the video advertising market will disproportionately and adversely impact AVOD services that have no other revenue stream.

9522 Second, AVOD services are also facing increased competition as SVOD services like Netflix add their own ad‑supported tiers. And unlike Tubi, Netflix charges its users to watch even its ad‑supported tier.

9523 Third, as AVOD services continue to operate during a turbulent advertising market, they must also contend with the rising costs of acquiring content, both via licensing and production. Industry estimates indicate that the cost of acquiring content has increased by over 40 per cent over the past four years. Likewise, the costs of producing original content have only increased over the past two years and, as a result of the recent strike by the Screen Actors Guild and Writers Guild, costs will only continue to increase.

9524 Fourth, AVOD and smaller services are also competing with the streaming giants to increase their number of users. Those services can outspend Tubi to market their services and acquire new users. It is more difficult for AVOD services to increase their growth, as our marketing budgets are directly related to the ad spend, which is declining.

9525 Treating AVOD services the same as SVOD services will only entrench the streaming giants further and raise prices for consumers while diminishing options.

9526 For all of these reasons, Tubi is not in a position to absorb a percentage of revenue contribution. And if the purpose of such a contribution would be to help support the Canadian broadcasting system, we are already punching above our weight in the Canadian market. We are spending proportionately more in Canada than we are in any other country, as measured by percentage of revenue and the percentage of titles in our library that are produced in Canada.

9527 Getting this regulatory scheme wrong will have unintended consequences for free streaming services, for our viewers, and for Canadian content producers. It may become too costly for Tubi to acquire and produce the content in Canada that our Canadian viewers want. Or worst case, it may become too costly for Tubi compete in the Canadian market.

9528 As an ad‑supported service, we are closely in touch with our viewers and who they are and what they want. We are better placed to work with our partners to acquire and create Canadian content to serve that demand more than any third party could be, including any Canadian production fund.

9529 For these reasons, Tubi has submitted that entities with total derived Canadian revenue of less than $100 million dollars should be exempt from the new regulatory regime. Unless entities like Tubi are able to limit their losses and cross that revenue threshold, they may be unable to continue to compete in Canada alongside the larger, dominant streaming services. That would only reduce the ability for Canadian viewers to select lower‑cost and, in our case, free alternative services that offer a large catalogue of diverse content offerings.

9530 Small AVOD services like Tubi should be exempted from the proposed regulations to give them the necessary breathing room to scale and to develop and to grow for the benefit of all Canadians. Tubi strongly encourages the Commission to adopt a new regulatory framework that fosters the development of innovative new services like Tubi and does not hinder their ability to grow and compete while they remain small providers.

9531 Thank you, Madam Chair, Commissioners, and staff, and I look forward to answering your questions.

9532 THE CHAIRPERSON: Thank you very much for your presentation. And we think this is Tubi's first time appearing before us, if I'm not mistaken. And so if that's the case, welcome.

9533 MS. FORREST: This is our first opportunity, and thank you for the warm welcome. The Commission staff has been very helpful. We really appreciate everything they've done to support us.

9534 THE CHAIRPERSON: Thank you so much. I'm very happy and not at all surprised to hear that. But thank you.

9535 I will turn things over to our vice‑chair for Telecommunications, Adam Scott.

9536 VICE‑CHAIRPERSON SCOTT: Good afternoon.

9537 MS. FORREST: Good afternoon.

9538 VICE‑CHAIRPERSON SCOTT: So in your opening remarks you'd made a number of references to Tubi being small. But as we know, Tubi is part of a larger corporate group. If our role as the Commission is to look at the overall impact on the broadcasting system, would it make sense for us to think of Tubi as one part of a larger corporate entity and measure kind of the overall impact that the corporate entity would have? Or what's the benefit of breaking it down into its component pieces?

9539 MS. FORREST: Well, the fact is Tubi is a subsidiary of a larger corporation, but we run independently. We have to balance our own books. We are accountable for our content spend. We are responsible for the content that we include on our platform. And we do not have the ability to hide behind our larger corporation.

9540 Tubi is an entity all its own. And if you see the actions of our larger company, you will note that our larger company competes with Tubi, in fact. So Tubi is its own entity. It's its own being.

9541 And Tubi, to be able to be successful, has to be able to generate the revenue that we need to be able to acquire and produce the content that's important to Canadians. And we don't rely on our parent company for that fund, for those funds. It all comes from what Tubi is able to generate on its own. So because Tubi stands on its own, Tubi should be looked at on its own.

9542 VICE‑CHAIRPERSON SCOTT: Thank you for that.

9543 My next question is on the issue of “free,” which I think was maybe the word you used the most often in your presentation. And I like ‑‑

9544 MS. FORREST: I think I did.

9545 VICE‑CHAIRPERSON SCOTT: And I like free, and it sounds like lots of Canadians like free. And I'm interested in the economics of free. Sorry, are you able to hear okay?

9546 MS. FORREST: Yes, thank you.

9547 VICE‑CHAIRPERSON SCOTT: Okay. Yeah, so and I appreciated the slides where you walked through kind of your underlying cost structure. I found that very helpful. We had Spotify in last week, and they described their margins as razor‑thin to negative. I won't ask you to kind of open your books in a public hearing, but how would you characterize the margins in the AVOD space? Are you in that ‑‑

9548 MS. FORREST: Razon‑thin. Razon‑thin to negative.

9549 VICE‑CHAIRPERSON SCOTT: Okay.

9550 MS. FORREST: And when you consider that out of each dollar, 99 per cent of our net revenue is split 50–50 with the rev‑share content partners, 99 per cent of our content library in Canada consists of rev‑share content. And we split net revenue 50–50 with the licensors who license it. And then, from what's left, we also have to give a percentage to Rogers Media, because it's our exclusive ad partner. So they keep a large percentage that I cannot disclose in this hearing. And we also have to pay the distribution carriers that carry our app as well.

9551 So when you start deducting the large cost of rev‑share content and then the cost to license premium content, paying a cash licence rather than a rev share, and the cost of producing content in Canada, you can see how each dollar is becoming smaller and smaller.

9552 And the only way that Tubi can remain competitive is to scale, so the cost per consuming viewer goes down. If you don't give us room to grow and to scale, to reach more viewers in Canada, then the costs are so high that it makes it untenable to survive against giants who are making billions when we are not making anywhere near that.

9553 VICE‑CHAIRPERSON SCOTT: Thank you for your candid answer there.

9554 So how, then, given the cost structure, and because you'd referenced kind of the punching above your weight in terms of Canadian spend, are those economically rational decisions? Are those altruistic investments? Are those sacrifices that you're making in pursuit of scale with the hope of reclaiming them later?

9555 MS. FORREST: They are sacrifices that we are making so that we can scale, so that we can provide Canadians the content that they want. And our data suggests that Canadians enjoy the content that's on our platform. So we're doing the right things; we're just smaller, and it takes time to grow.

9556 I mean, if you think about the broadcast ‑‑ terrestrial broadcast industry in Canada, people are familiar with them. They've been around for decades and decades. I wonder how many of the Commissioners knew about Tubi before we started submitting our responses to C‑11 and to your inquiries? Many of you probably had never heard of Tubi. So we're very small. And we are working to change that narrative.

9557 As you saw, one of my slides showed that 20 per cent of Canadians are watching Tubi for some amount of time. And we have this young, diverse, incremental audience that's incremental to the broadcasters and to cable companies. So people typically watch broadcast television and/or cable in addition to having a free streaming service. So we're actually growing the Canadian market rather than siphoning off viewership from other avenues.

9558 VICE‑CHAIRPERSON SCOTT: Thank you. So I'm going to continue on a theme, here, and you've discussed it considerably already, but it's maybe the most important theme, so I'm going to continue to dig deeper. What would be the practical implication in very concrete terms if the Commission were to impose an initial contribution? And maybe let's take the Netflix number, which they said is based on global norms, the two per cent. So what would you do tomorrow if you woke up and the Commission had imposed a two per cent initial contribution? What would that mean for what you can offer and provide to Canadians?

9559 MS. FORREST: We would have to examine the viability of Tubi in Canada. This is a public hearing, and we are not going to disclose revenue. But suffice it to say that, again, with content costs being our most expensive costs, and advertising being our only source of revenue, if we have to pay two per cent of revenue into a fund so that that fund can produce content, and then we have to pay to license content that is being produced by the producers who benefit from the fund, then we're paying twice.

9560 And that's the part you're not understanding, that Tubi has to have enough content to attract Canadian viewers, so we have to spend for content anyway. We have to have original titles that are produced in Canada. We have to acquire content for Indigenous populations in Canada. We have create content in Canada for Canadians just for our platform to attract viewership. If we don't have viewership, advertisers won't advertise on Tubi. So that we have to do.

9561 And then you say in addition to everything that you're spending on content for your platform, take some more money and give it to a fund so that the fund can give it to producers to produce content. And we don't have access to that content, so it's just another cost to Tubi.

9562 And given that 99 per cent of the content that we exhibit is on a rev‑share basis, we're already losing 50 per cent of our total revenue immediately on day one. And then we spend money to acquire content. And then we spend money to produce content. And then you're asking for us to pay a percentage to allow others to produce content that does not benefit Tubi, while Tubi is already doing the very thing that you want to happen by asking for the contribution to a fund. And what you're asking for is help these funds fund producers to create content for Canadians. We're doing that. We're creating content in Canada. We're creating content for Canadians.

9563 So we're already spending much more than two per cent. As I said to you, we spent 40 per cent of Tubi's gross revenue in 2023 to acquire content for Tubi through licence payments. That does not include all of the payments we made to the partners from rev‑share content.

9564 So if we’re already spending 40 percent of our gross revenue on content for Canada and Canadians, the margins are razor thin and you’re asking us to take another two percent off of our gross revenue.

9565 VICE‑CHAIRPERSON SCOTT: Thank you for that passionate answer, passionate and very clear as well.

9566 Just two more quick questions from me.

9567 Would your ability to access the funds change your views at all or does that ‑‑ is that not enough to move the needle on your position with regards to contribution?

9568 MS. FORREST: Well, the funds support producers who produce content that may or may not be the content that Tubi deems that Canadian viewers want. We have data on our platform of what people want to watch, what they’re seeking and paying into a fund that’s producing content over which we have no control means that even if they give us access, we may not want the content because we’re not the decisionmaker on the type of content or the quality of the content.

9569 We are already investing in Canadian producers and in Canadian broadcasters. I mean, Rogers Cable distributes us. Shaw distributes us. And we’ve listed many of our partners who are producing in Canada, so we are already doing the very thing that Canadians want us to do from a regulatory standpoint but you’re putting us at a disadvantage because we’re not able to compete with the Netflixes and large streaming services that can simply raise prices, subscription fees to consumers.

9570 VICE‑CHAIRPERSON SCOTT: Okay. And my last question is with regards to the $100 million threshold that you’ve proposed.

9571 It is among the higher numbers we’ve got on the record, so I was hoping to give you a chance to tell us where that number comes from. I know you’ve spoken to some extent already about the effect it has and kind of the notion of imposing less of a burden on smaller players, but is there any magic behind the 100 million?

9572 MS. FORREST: Yes, the magic is that we’ve calculated that that is how much gross revenue we need to generate to be successful and compete against Netflix and other SFODs. That’s the amount of money we need to generate from advertising to be able to scale and to become profitable in Canada by offering Canadians Canadian content and all of the other content that we offer because understand, our mission is to democratize content, so we bring the voices from around the world to Canadians.

9573 Canadians, there are French Canadians, there are English Canadians, but there are also many diverse populations within Canada and our platform has such a diverse amount of content for all of those different populations in Canada that we need to be able to be in a position to acquire content not just in Canada, but from around the world because Canadians also want to see stories that come from other parts of the world.

9574 That content is expensive, and our costs for content preclude us from being able to compete successfully until we hit that $100 million threshold. And it takes some years to get there.

9575 I said it before. The broadcast industry has been around for decades, so everyone’s familiar with it. Netflix has been around longer than Tubi has been around.

9576 Tubi is small. It’s a nascent service. It’s emerging. We’re trying innovative things like our 51 linear channels in addition to our video on demand and we need time to grow. We need time to grow and scale and develop our product and we can’t do that until we hit that threshold.

9577 I mean, maybe if the CRTC came up with a different measure, for example, net revenue instead of gross revenue, then we could talk about a much lower level because net revenue would equal profitability and profitability is something that $100 million ensures that we reach. Otherwise, Tubi would be deficit spending to support other Canadian funds, and that’s something we’d really have to take a long look at, you know, is it viable.

9578 You can only operate the way that we’re operating with such a huge investment in Canada for a certain number of years. At some point, you have to be able to scale the business.

9579 That’s what we want to do. We want the opportunity to scale so that we can compete and offer free service to Canadians.

9580 You will continue to have the Netflixes and the Apples of the world because they will continue to raise their subscription fees, even charging for people to watch the ad tier. But if you make it so costly for Tubi to operate and we shut down, then you’re taking away free‑to‑consumer option. And doesn’t the Canadian population deserve to have a free service? I mean, inflation being what it is, the economic climate being what it is, we’re the alternative that’s a benefit to Canadians because we’re free.

9581 VICE‑CHAIRPERSON SCOTT: Thank you so much. I’ve really appreciated the conversation, especially the insights into how your business model works.

9582 I will turn it back to the Chair.

9583 MS. FORREST: Thank you.

9584 THE CHAIRPERSON: Thank you so much.

9585 I know that some of our colleagues have additional questions. I will turn things over to our Vice‑Chair for Broadcasting, Alicia Barin.

9586 VICE‑CHAIRPERSON BARIN: Thank you.

9587 And welcome, Ms. Forrest and your colleague.

9588 MS. FORREST: Thank you.

9589 VICE‑CHAIRPERSON BARIN: So I’m very intrigued with this discussion on business models. We have in Canada also many business models, some of which are subscription and some of which are free. And the Canadian broadcasters have always been required to operate within a regulatory framework that does impose some regulatory costs because, in Canada, we have the CRTC, which is a public interest regulator, and our mandate is to make sure that the ultimate beneficiaries of the broadcasting activities in the country are the artists and the creators that produce the content.

9590 So I guess ‑‑

9591 MS. FORREST: And the ‑‑ I apologize. May I interrupt? And the viewing public.

9592 Not just the artists and the creators, but as a public entity you’re also concerned with the viewing public.

9593 VICE‑CHAIRPERSON BARIN: Yeah, absolutely. Like I said, we have many broadcasters in Canada who have business models that are advertising only as well.

9594 So I understand the challenges that you’re describing with the ‑‑ Tubi’s own business model, but I guess from a public interest regulator standpoint, when we are trying to achieve an outcome in a legal regime that requires us to have every broadcaster that operates in Canada to contribute to the system, it’s always ‑‑ it’s a better outcome to have a player that has a business model that is able to make that contribution to the system.

9595 And on that topic, I hear you say that you’re already making contributions to the system and I have to admit, I didn’t quite understand all of the statistics in the presentation because I think we’re probably using different metrics and percentages against different totals.

9596 So I’m wondering if, as part of this process, you would be willing to provide more clarification on the amounts that you’re currently spending and maybe staff can follow up with you so that we do have an understanding of what Tubi is contributing to the Canadian system because percentages of original budgets ‑‑ I mean, it’s just not language that we’ve traditionally used to measure the contributions of Canadian broadcasters, so if we want to do kind of an apples‑to‑apples comparison, I think we need to have some of that data in a way that allows us to do that.

9597 So I’m wondering if you’d be able to provide more clarity to staff as part of this process.

Undertaking

9598 MS. FORREST: Yes, if the staff will follow up with us, we will put together what we’re able to disclose and submit it on a confidential basis.

9599 VICE‑CHAIRPERSON BARIN: That was my only questions.

9600 I’ll pass it back to the Chair. Thank you.

9601 THE CHAIRPERSON: Thank you very much.

9602 Let’s go over to Commissioner Levy.

9603 COMMISSIONER LEVY: Good afternoon and welcome.

9604 MS. FORREST: Good afternoon. Thank you.

9605 COMMISSIONER LEVY: I just ‑‑ I’m sorry if I missed it, but I was interested in following up on the proportion of original Canadian content to acquire Canadian content that you carry. Do you have a notion of those proportions?

9606 And I appreciate that you’ve said that 10 percent of your worldwide spend is on Canadian content, and I’m just trying to get a fix on how much is acquisition and how much is original commissioning.

9607 MS. FORREST: I would have to ‑‑ I’m sorry, how much of the budget is spent on licensing versus how much is spent on producing content? Is that the question?

9608 COMMISSIONER LEVY: It is of the money that you spend in Canada on content, how much is a spend on acquiring already existing content and how much is spent on helping to produce or to commission original Canadian content?

9609 MS. FORREST: I would have to get back you, and let me explain why.

9610 Tubi commissions producers to create content, but we also acquire content that has never been exhibited anywhere and we acquire it to give it a first premier window on Tubi, and it’s ‑‑ they’re labelled and called “Tubi Originals”, and those are creators who create content and can’t sell it to anyone.

9611 So basically, we’re licensing it, but it’s a Tubi original and we may have it for a term of 10 or 20 years in addition to producing content.

9612 So there are two different ways that we are helping creators and it’s not just through direct production, but it’s also just produced content that has not yet been sold. So all of that we would have to put together as one.

9613 And then we also license content separately from that from entities that merely license content and that they have been premiered on other places. It may have been in existence for years or months.

9614 And then, in addition to that, we have the last bucket of content, which is the rev share content, which is content that exists but we don’t have to pay a premium to license it. We put it on the platform and we share our revenue from that content on a 50‑50 basis.

9615 So there are really four different buckets and it gets a little hairy trying to pull out the acquired originals from the produced content from the licensed content from the rev share and to break those down into the different types of content that we exhibit on the platform.

9616 COMMISSIONER LEVY: That's very interesting. And I had a final question to follow it up with that ‑‑ oh, I know.

9617 Do you act a sort of distributor/sales agent to take some of that content, perhaps the original that hasn’t been seen anywhere else, and do you profit from international sales of that content?

9618 MS. FORREST: Not at this time, we don't.

9619 COMMISSIONER LEVY: Thank you very much. Very interesting business model and I really appreciate your coming here to tell us about it.

9620 Thank you.

9621 MS. FORREST: Thank you.

9622 THE CHAIRPERSON: Thank you very much.

9623 I will add my thanks to Commissioner Levy and my other colleagues.

9624 We would like to turn it back over to you now to leave us with any concluding remarks.

9625 MS. FORREST: I will conclude by saying that Tubi wants to be in the Canadian market. We want to work with Canadian producers and we have been, and we will continue to do so.

9626 We also think it’s important to understand that broadcasters have been around for literally decades. Everybody knows their broadcast stations. Everyone knows what the broadcasters are offering. But Tubi is a brand‑new business that’s just getting started and the potential for us to scale is there in the Canadian market and we’re asking that you give small entities like a Spotify, like a Tubi the opportunity and the time it needs to grow.

9627 We’ve been in the Canadian market for four years versus the decades that broadcasters have established their networks for advertising.

9628 Similarly, Tubi is helping by allowing advertisers in Canada ‑‑ we’re giving them another place to advertise their wares. In addition to advertising on cable and on broadcast television, they can also advertise on Tubi.

9629 So we’re helping the market as a whole by benefiting the advertisers in Canada who get to advertise on our platform.

9630 We’re also helping Rogers and Shaw, who distribute our platform. They also get a share of revenue to carry our app and bring our app to Canadians.

9631 And so the parties that are benefiting from Tubi in Canada include advertisers, creators and certainly the viewing public and the broadcast industry, I would argue, because we’re helping them by allowing them to distribute our app and we’re allowing Rogers to be our exclusive sales agent in Canada because Rogers knows the Canadian market. So we are benefiting the Canadian market in multiple ways.

9632 If you force us to pay a percentage of our ‑‑ to funds, force us to contribute a portion of our gross revenue through to some of these production funds, you will cripple this business that is only getting started and the benefit to the Commission and its public interest mandate is that you, by taking into account that we’re an AVOD service, will ensure that Canadians have a free‑to‑consumer service that ensures that all Canadians get to watch premium content, not just those who can afford to pay subscription fees.

9633 Thank you for allowing me to present today.

9634 THE CHAIRPERSON: Thank you very much for joining us and we really do appreciate Tubi taking part in the proceedings.

9635 Thank you.

9636 MS. FORREST: Thank you.

9637 THE SECRETARY: Thank you.

9638 We will take a 10‑minute break and be back at 1:40 with CBC.

9639 Thank you.

‑‑‑ Upon recessing at 1:29 p.m.

‑‑‑ Upon resuming at 1:41 p.m.

9640 THE SECRETARY: Welcome back.

9641 We will now hear the presentation of CBC/Radio‑Canada.

9642 S'il vous plaît vous présenter. Please introduce yourself and you may begin.

Presentation

9643 MS. KIRSHENBLATT: Thank you.

9644 Good afternoon, Madam Chairperson, Vice‑Chairs, Commissioners and staff. Thank you for inviting us to appear at this important policy hearing.

9645 My name is Bev Kirshenblatt and I am Executive Director, Corporate and Regulatory Affairs, at CBC/Radio‑Canada.

9646 To my right is Barb Williams, Executive Vice‑President, CBC; to her right is Dany Meloul, Interim Executive Vice‑President, Radio‑Canada; and to Dany’s right is Jon Medline, Executive Director, Policy and International Affairs.

9647 CBC/Radio‑Canada is Canada’s national public broadcaster with a mandate from Parliament to provide Canadians with a wide range of programming that informs, enlightens and entertains.

9648 We are one of the single largest supporters of the Canadian creative community. Last year we spent over $900 million on Canadian content, including news and creating work with thousands of independent writers, directors, producers, actors, composers, musicians and filmmakers. We provide a national and international stage for the Canadian and Indigenous creative communities. Our journalists provide trusted news and verified information on important stories to Canadians about their communities, their country and the world.

9649 Looking ahead to a modernized regulatory framework, we believe that the following considerations should be top of mind:

9650 First, the Canadian marketplace cannot on its own address the programming objectives set out in the Broadcasting Act. This fact has long been recognized by the Commission. Without support, domestic production of virtually all genres of Canadian programming is not sustainable, given the size of our market.

9651 Second, the Broadcasting Act requires the Commission to oversee Canadian broadcasting using a system‑wide approach. As a result, some parts of the system obtain a contribution from other parts in order to fulfill their obligations to the system. While there is room to improve the existing funding mechanisms to better align with the expanded policy objectives in the Act, a system‑wide approach is still required. Furthermore, mandating base contributions to specified funds will ensure that the full breadth of the policy objectives in the Act can be met.

9652 Third, it is critical that contributions to the system be incremental to, and for the benefit of, the whole Canadian broadcasting system. These contributions should not be self‑serving and parties should not be permitted to offset their contributions in any way.

9653 Dany.

9654 MME MELOUL : Merci, Bev.

9655 Notre présentation d’aujourd’hui cible la première étape du processus du Conseil.

9656 Nous recommandons quatre mesures pour assurer que la population canadienne continue d’avoir accès à un large éventail de programmation canadienne, pendant que le Conseil poursuit ses consultations avec les parties intéressées et met en œuvre une approche progressive pour moderniser le système de radiodiffusion du Canada.

9657 Notre première recommandation porte sur l’urgence de la situation.

9658 Le dossier de l’instance démontre sans aucun doute que l’industrie canadienne de la radiodiffusion traditionnelle est en déclin. Les contributions des EDR sont à la baisse, et l’on peut s’attendre à ce que cette tendance s’accélère. Les radiodiffuseurs traditionnels voient leurs auditoires, leurs revenus publicitaires et leurs revenus d’abonnement diminuer. Nos modèles d'entreprise sont conçus pour servir des publics nationaux, et non mondiaux. Nous n'avons donc pas le même accès au capital, ni la capacité de tirer parti des publics mondiaux par rapport aux coûts de production, comme le font les géants du numérique. Et ceci est encore plus vrai avec les budgets pour les productions de langue française.

9659 Et CBC/Radio‑Canada n’est pas à l’abri des difficultés que vivent les radiodiffuseurs canadiens et du monde entier. Nous devons remplir un vaste mandat et couvrir un territoire étendu, avec des ressources limitées. En bref, tout le système subit d’énormes pressions qui l’empêchent de répondre aux objectifs stratégiques élargis énoncés dans la Loi telle qu’elle a été récemment modifiée, c’est‑à‑dire de favoriser davantage l’inclusion de toute la population canadienne et diffuser plus de contenus reflétant les histoires et les réalités des peuples autochtones et des groupes en quête d’équité.

9660 Madame la Présidente, vous avez dit à plusieurs occasions que le plan du Conseil est d’aller vite et loin ensemble. En effet, nous devons aller vite pour établir des contributions de base initiales. Les géants mondiaux du numérique ont chamboulé notre industrie nationale, tant du côté des nouvelles que du divertissement, et ils menacent notre capacité de répondre adéquatement aux objectifs stratégiques de la Loi sur la radiodiffusion.

9661 Nous ne pouvons tout simplement pas attendre que le cadre de contribution soit entièrement finalisé et mis en œuvre ‑‑ ce qui prendra quelques années encore ‑‑ avant de passer à l’action pour soulager le système. C’est pourquoi nous appuyons la proposition du Groupe de diffuseurs indépendants qui propose de mettre en place les contributions de base initiales des diffuseurs en ligne étrangers d’ici le 1er septembre 2024.

9662 Notre deuxième recommandation porte sur les entreprises qui devraient verser des contributions de base initiales.

9663 Nous recommandons que le Conseil exige que les entreprises en ligne étrangères soient tenues de verser des contributions de base initiales. En deux mots, les diffuseurs en ligne étrangers tirent profit du système, donc ils devraient y contribuer financièrement. Nous avons exclu tous les radiodiffuseurs traditionnels canadiens des contributions de base initiales, puisqu’ils apportent déjà d’importantes contributions au système, conformément à leurs obligations réglementaires.

9664 Notre troisième recommandation porte sur le montant des contributions de base initiales que les entreprises en ligne devraient verser.

9665 Ce que nous proposons est une mesure provisoire. Les contributions de base finales seront établies une fois que tous les autres éléments du cadre de contribution seront précisés.

9666 Ce qu’il faut surtout retenir, c’est que notre proposition est fondée sur les contributions actuelles au système par les entreprises de radiodiffusion canadiennes autorisées. En 2022, les entreprises de radiodiffusion traditionnelle ont versé 3,6 milliards de dollars en contributions directes au système. Par conséquent, nous estimons que l’approche que nous avons adoptée pour établir les contributions de base provisoires est juste et équitable, et ça nous fera un grand plaisir de vous expliquer notre méthode plus en détail si vous le souhaitez. Merci.

9667 Barb.

9668 MS. WILLIAMS: Thanks, Dany.

9669 Our fourth set of recommendations are about the funds to which contributions should be directed during the financing of an initial base.

9670 In our written submissions we proposed video and audio funds that could receive monies from these contributions. We recommend that such contributions flow to existing funds and that funds be accessed under existing rules. The reason for this is simple. Given the urgent need, our objective is to implement the initial base contribution quickly. Existing funds have a track record of success, are fully operational and can handle initial contributions for the benefit of the Canadian broadcasting system.

9671 We have grouped funds under the following categories: creation of content, support for local news and information, and other public policy objectives.

9672 On the video side we recommend that funds go to the CMF and to CIPFs, using the existing 80/20 rule. As the largest fund, the CMF is intended to ensure stable and significant funding of quality Canadian content. It remains a key tool to enable CBC/Radio‑Canada to deeply support the creation of Canadian programming.

9673 We also recommend that the Commission mandate contributions to the Indigenous Screen Office in Step 1. This approach acknowledges Indigenous content as one of the three pillars of the broadcasting system, along with English‑ and French‑language Canadian content.

9674 We also support contributions for a new Indigenous‑owned and ‑led music fund in later stages of this proceeding.

9675 During the course of the hearing, we have listened to the Commission ask parties how a modernized framework can ensure support for diverse and accessible content.

9676 We strongly support efforts to ensure that content is created by and for a range of diverse communities. We support the development of an overall framework in future steps to implement an efficient and effective funding mechanism to support the creation of content from all equity‑seeking groups. This framework should also include initiatives to support the capacity‑building of those groups.

9677 Some parties are requesting to transform the Independent Local News Fund to a “Local News Fund” that would support more recipients and support news on television and radio. Some parties have suggested that a new fund be created to support services of exceptional importance. If funds are established to support local news programming, services of exceptional importance or any other areas of programming that are deemed important to the system, these funds should also be accessible to CBC/Radio‑Canada.

9678 We also recommend that contributions be mandated to support the Broadcasting Participation Fund and the Broadcasting Accessibility Fund in Step 1.

9679 We would be pleased to provide more details about the allocation of contributions to these funds in Step 1.

9680 We are proud of our partnerships with foreign streamers. During the hearing they have focused on the benefits that they do provide to the Canadian economy, but this is not a substitute for Canadians owning and controlling the content. And to be clear, that means creative control, owning the IP and owning the exploitation of the rights. Simply put, a sustainable Canadian broadcasting system must be Canadian‑owned.

9681 Bev.

9682 MS. KIRSHENBLATT: Thanks, Barb.

9683 As one intervenor put it, this isn’t about going too fast, it’s about catching up. Establishing initial base contributions in Step 1 will help support a diversity of voices and maintain a wide variety of Canadian programming choices while the Commission consults, develops and modernizes the system. It is a crucial first step towards establishing a Contribution Framework to support a diverse, vibrant Canadian broadcasting system for years to come.

9684 Thank you for the opportunity to appear. We would be pleased to answer your questions.

9685 LA PRÉSIDENTE : Merci beaucoup pour votre présentation. I know that the Panel is very much looking forward to having a discussion with you, so I will turn things over to Commissioner Naidoo, who is going to kick things off. Thank you.

9686 COMMISSIONER NAIDOO: Hi there. Thank you so much for being here.

9687 It's only Tuesday and you've had a really busy week already. This week you announced some major cuts, including 600 jobs. I know that despite the cuts, you have said that journalism is being protected, so I wanted to find out if you can expand on what you're doing to ensure that that remains the case.

9688 MS. WILLIAMS: I'll start. Some of my colleagues here may want to add in, though.

9689 Yes, it was a difficult day yesterday and we wish that it didn't have to be that way. We have a lot of concern about supporting our employees both that will be leaving over this next year and those that will be staying.

9690 We have an obligation to try to spend the money that we do have, that we're grateful for, that we get from the government, along with the earned revenue that's substantial in our organization, we have a responsibility to spend that as wisely as we can. So at this stage, we are looking at how we best continue to support the key responsibilities of our mandate to serve all Canadians coast to coast to coast in English and in French and in many Indigenous languages.

9691 And so, the work that we're doing right now as we work to the specifics of the cut that you've mentioned is to understand how we can work differently, how we can work more efficiently, how we can make changes to process, and how we can best use our content dollars to continue to best support Canadians in that need that we have at the CBC/Radio‑Canada that's different from the mandate of anybody else.

9692 We have not figured out all the details on this, so we can't give you today the specifics, but we are looking to protect local, we are looking to protect news. We have a key investment in the kinds of shows that we have on our prime time. We have a strong and loyal audience to radio. We have a young, diverse audience that's looking for us on digital. We need to be on those platforms where that audience is. So it's complicated and it's important. So we're working on it.

9693 COMMISSIONER NAIDOO: All right. Well, you may not at this point be able to answer this next question, but any sort of fleshing out that you can do is welcome.

9694 Can you discuss any impact this will have on content by and for Indigenous communities and equity‑seeking groups as well?

9695 MS. WILLIAMS: We have made a real commitment in these last years at CBC to our equity and inclusion efforts and that has showed up in many ways. It's showed up absolutely in representation within the organization and it's very, very much showed up in the content that we put on our screens and other platforms.

9696 And indeed, as you would know, in our most recent licence renewal hearing, we have very specific obligations also as conditions of licence to ensure that the content we do supports those equity‑seeking groups and specific to the Indigenous communities.

9697 One of the commitments we have made through these cuts that we're anticipating here that I can share with you is that we have protected the North. We do content in the North that no one else does. It's a region of our country that's critical if we can really live into a mandate to support all Canadians. It's not necessarily a commercially viable market, but it is one that we are committed to and we are looking to ensure that we don't compromise any of that activity in the North through this next round of change.

9698 COMMISSIONER NAIDOO: Thank you for that.

9699 As you acknowledged in your presentation, some parties are requesting to transform the Independent Local News Fund to a new local news fund that would support more recipients. You just mentioned that should this new fund be created that it should also be accessible to CBC/Radio‑Canada.

9700 However, I'm sure you've been watching the proceedings all week. I'm sure you've heard some intervenors in the past weeks say that they believe that you have an unfair competitive advantage because of the appropriations you receive from government.

9701 So, in light of yesterday's announcement, how would you respond to that?

9702 MME MELOUL : Merci pour la question.

9703 Vous savez, notre mandat est très, très vaste, et on doit desservir des Canadiens sur un grand nombre de plateformes à travers tout le pays, d'un bout du pays à l'autre, dans deux langues officielles et plusieurs langues autochtones aussi.

9704 C'est certain que quand on parle de l'information, surtout dans des petites régions, que ça soit au Québec dans les régions ou à travers le pays, c'est souvent seulement Radio‑Canada ou, dans le cas de CBC, CBC qui est la seule station, le seul poste de radio, le seul endroit où on peut aller chercher de l'information dans notre langue. Donc, c'est absolument vital qu'on puisse continuer à faire ces activités‑là.

9705 L'information, il faut dire, c'est primordial pour les Canadiens, c'est primordial dans la Loi, et c'est primordial pour la démocratie du pays. On est tous d'accord avec ça, mais c'est aussi un exercice extrêmement coûteux, et ça n'a vraiment jamais été rentable.

9706 Donc, nous voulons continuer notre mandat et desservir les Canadiens aussi bien qu'on peut, et pour le faire, on ne voit pas pourquoi on devrait être exclu de tout fonds qui pourrait venir nous aider dans ce mandat.

9707 COMMISSIONER NAIDOO: Thank you for that.

9708 I want to stick on the news subject. Over the years you've created more centralized news hubs, for lack of a better term, in each province where your live news and weather forecasts and so on are broadcast out of. For some Canadians, though, they would prefer to have their news originating from their own cities, the cities that they live in.

9709 So, I'm wondering how these cuts will affect local news coverage across the country. I mean, for example, I had read that you've said that travel budgets are being cut. You're managing the costs of those in light of the cost‑cutting that you've got to do. So how does that kind of regional approach affect Indigenous communities?

9710 MS. WILLIAMS: I will start here, but my colleague may want to add in.

9711 You make an interesting point about the travel cuts. These are the things that get caught in a headline, right? And it's true, we have been trying to find discretionary spending savings that don't touch content, that don't touch employees in their key work. However, travel at CBC/Radio‑Canada is in two buckets, and travel that's associated with news is in its own separate bucket and actually doesn't get caught in that number that you quoted. And we see that in all of the news coverage we do, not only in the North and in being sure that Indigenous communities throughout the country, not only in the North but throughout the country, are continuing to be covered. But you will also see the continuation of the international coverage that CBC and Radio‑Canada are so well known for.

9712 We are one of the only organizations with permanent bureaus now internationally, and the international news cycle has been dramatic, to say the least. So, we will be protecting the coverage of the key stories that are important to Canadians, domestically and internationally.

9713 COMMISSIONER NAIDOO: Thank you very much for that. What level of Canadian broadcasting revenues do you think that online undertakings be making to be required to make a financial initial base contribution? And should that threshold be different for audio versus video services, in your view?

9714 MS. KIRSHENBLATT: So, we didn’t put forward a proposal with respect to that, so we don’t have a position.

9715 COMMISSIONER NAIDOO: All right. Thank you for that.

9716 The Commission recently determined an exemption threshold for registration based on the revenues of broadcasting ownership groups that also includes revenues of traditional services. So, what would be the impact if the Commission were to adopt the same broadcasting ownership group approach for the purpose of the contributions framework?

9717 MS. KIRSHENBLATT: So again, we didn’t put forward a proposal with respect to either an individual or group approach, or a revenue threshold. So, I’m not sure if any of my colleagues have anything to add?

9718 COMMISSIONER NAIDOO: Okay. I want to talk about contributions a little bit more. In your view, how should the Commission determine the appropriate level of contributions in cases where only a portion of the online service is covered by the Broadcasting Act? Do you have an opinion on that?

9719 MS. KIRSHENBLATT: So, we didn’t put forward a proposal of how to allocate those revenues, but it would seem that it would be based on the broadcasting revenues, and if those broadcasting revenues had to be further broken down between audio and video, that would be an appropriate way of looking at things.

9720 COMMISSIONER NAIDOO: Thank you. If we consider all three production markets ‑‑ the three being English, French, Indigenous ‑‑ how would you recommend that the Commission allocate contributions in an equitable manner? For example, I mean, we’ve got a pie that’s a certain size. How would you split that pie? And should a portion be allocated to OLMCs?

9721 MS. KIRSHENBLATT: So, our proposal in terms of the pie, in the initial base, is based on existing funds and existing allocations. So, on the video side, that would include in terms of mandated funds, that includes the CMF along with the 80/20 split between the CMF and CIPFs, and we’ve recommended ‑‑ I think the term that’s been used over the past few weeks is “off the top” to the ISO as well. And as well as, you know, we had further breakdowns, but that is what we’re proposing on the on‑screen side.

9722 COMMISSIONER NAIDOO: Thank you very much. CBC/Radio‑Canada proposed a contribution level at 20 percent for online programming services, a percentage that many intervenors have linked to current contributions to Canadian programming expenditures that traditional broadcasters make. However, as you know, contributions to CPE is a very specific model whereby the undertaking is making that expenditure on programming which it’s going to eventually broadcast; right? So, how is it appropriate for the online undertakings to pay at that same level into funds from which they likely cannot benefit?

9723 MS. KIRSHENBLATT: So, I’ll start, and I’m sure others will want to have a say. So, as a starting point of trying to determine what would be fair and equitable for an initial base contribution, we looked at what current licensed broadcasting undertakings are contributing. And that’s how we wound up with the 20 percent number there. We would be happy to walk you through those numbers because it’s a little bit different than what you may have seen with respect to other parties who have arrived at 20 percent differently, and other undertakings have other levels of contributions, and that’s what we believe is fair and equitable for the initial base. Would you like a ‑‑

9724 COMMISSIONER NAIDOO: Yes, I wouldn’t mind ‑‑

9725 MS. KIRSHENBLATT:  ‑‑ bit more in terms of the ‑‑

9726 COMMISSIONER NAIDOO: Yes, please.

9727 MS. KIRSHENBLATT:  ‑‑ 20 percent?

9728 COMMISSIONER NAIDOO: If you could. Yes, thank you.

9729 MS. KIRSHENBLATT: Jon?

9730 MR. MEDLINE: Sure. So, maybe I will step in here. So, unlike other parties in this proceeding ‑‑ or most other parties, we did not make projections or assumptions or try to rebalance anything. We simply looked, like Bev said, at what existing contributions are in terms of CCD ‑‑ the BDU contributions, mainly to funds but also to a community and of course, as you mentioned, the television contributions through CPE which, by the way, represent over the last six years with TV 87 percent of all contributions.

9731 When you do the math and you do it out of prior year revenues, the number is amazingly consistent. In 2017, ‘18, ‘19, ‘20, ‘21, ‘22 now ‑‑ because you released the new information a couple of months ago ‑‑ it’s 20 percent almost every year. Even through COVID it was 20 percent. In fact, the only year that it kind of changed a little bit was last year when it was up, actually, to 23 percent, because ‑‑ presumably because people were catching up from COVID obligations.

9732 So, that’s how we came up with the number. That’s what the system currently contributes, and it’s 3.6 billion dollars, of which 3 billion comes from TV.

9733 COMMISSIONER NAIDOO: Thank you very much for that explanation. Sure, go ahead.

9734 MS. WILLIAMS: I’d really appreciate an opportunity to give a minute to the other part of your question, though, of how do we understand the commitment that we’re looking for that the foreign streamers contribute in a way that they don’t necessarily take back out. And I think that’s at the crux of this whole hearing.

9735 We have a total appreciation for the role that the streamers have played in our market. They have come here with an ambition that’s different than our ambition. They have come here with an economic interest. They have come here to grow their businesses. They have come here to share their product with a population in our market. And they’ve been enormously successful, and we don’t begrudge them that success. They can be here. They belong here. We have an open market.

9736 And ‑‑ we also have a Canadian broadcasting system that has a different purpose, that exists for a different reason ‑‑ that isn’t in competition with them for a bottom‑line win/lose, but is here to exist solely to serve Canadians; to grow a creative community in Canada; to find/nurture/support new voices, people who have never had access to a system before of communication; to try to invest in a creative community that then can reach out and serve all Canadians with the stories that they deserve to hear, that they might not know they need, that really make us distinct.

9737 And in the times that we’re in, and the challenges we’re all facing in the Canadian system, we need some additional support to live into that mandate, to live into that responsibility, to live into that opportunity successfully. And so, we believe that if you’re going to come into this market, you pay to play. You ‑‑ some one of my colleagues said the other day that you’ve got to pay a bit of a cover charge to come and join this special club.

9738 We’re proud of the Canadian industry. We think it does something special and distinctive that those other companies, although they are powerful in our market, will never have the same obligation or never the same commitment or never the same deep understanding of what we’re trying to do here with a fully Canadian‑owned and ‑controlled system. And that’s why we believe that they should be here, and they should be successful, and they are. And they’re often our partners in some ways, and that’s good too. But at the bottom‑line, they are here to contribute to the system that they are benefitting from so dramatically, and that’s why we believe in this process.

9739 COMMISSIONER NAIDOO: Thank you for that very passionate answer. I really appreciate it. So, I’m just going to follow up a little bit. Are you suggesting then that online streamers need to at least match the 3.6 billion dollars that traditional broadcasters contribute?

9740 MR. MEDLINE: No. No, this should ‑‑ this will be done on a percentage basis. So, 3.6 is what TV and radio and BDUs contribute today, on an annual basis. But any math would not, at least in the foreseeable future, pump out 3.6 billion dollars for the online undertakings. On a percentage basis though, it would pump out a meaningful number, but it would not be anywhere near 3.6 billion.

9741 COMMISSIONER NAIDOO: Thank you for that.

9742 You support the preliminary model for Canadian content development allocation set out in the revised commercial radio policy for audio base allocations. And the split that you refer to includes a potential new national fund to support Indigenous artists and Canadian diversity. So, given that a new national fund to support Indigenous artists and Canadian diversity has not yet been created, do you have any suggestions to ensure that base contributions help support Indigenous artists and Canadian diversity on the audio side specifically?

9743 MS. KIRSHENBLATT: So, the short answer is, given that CBC/Radio‑Canada doesn’t contribute to CCD, we put that forward as a model, hoping to generate some discussion. And we looked at what the Commission had already done with respect to the commercial radio review and as a proposal. So, we don’t have anything specific to offer at this stage, but the point, I think, and we said it earlier, is recognizing the need to support Indigenous music and perhaps other elements on the audio side.

9744 COMMISSIONER NAIDOO: Thanks for that.

9745 Regarding audiovisual content, you proposed that a specific portion of the initial base contributions go towards the Indigenous Screen Office. The Black Screen Office has, as you know, just been certified, approved by the Commission as a Certified Independent Production Fund, while the Canadian Independent Screen Fund was certified as a CIPF in 2022. So, in light of all of that, would you review your allocation proportions to include the BSO or the CISF?

9746 MME MELOUL : Ce qu’on a proposé pour la phase initiale, c'est d'avoir autant de fonds possibles avec le Fonds des médias, qui est déjà très établi et qui a aussi des enveloppes pour ses groupes d'équité. Bien sûr, c'est la règle du 80/20, qui voudrait dire aussi que dans le 20, les contributeurs auraient le choix de choisir de placer des sommes dans ces autres fonds dont vous mentionnez aussi.

9747 Mais pour la base initiale, on est vraiment en train de dire qu'il faut agir de façon urgente avec le fonds qui est très, très bien établi, qui a un système, qui est assez facile à utiliser, que venir rapidement renflouer les besoins du marché.

9748 COMMISSIONER NAIDOO: All right. Thank you very much. Those are all my questions, but I know the panel has other questions for you as well.

9749 THE CHAIRPERSON: Thank you very much. Let’s turn to our Vice‑Chair for Broadcasting, Alicia Barin.

9750 VICE‑CHAIRPERSON BARIN: Thank you, Madam Chair. Welcome, CBC/Radio‑Canada.

9751 So, my first question is to see if maybe you can clarify some of the answers that we’ve received from some of the streamers, in particular the audio streaming services. So, they indicated to us that approximately 70 percent of their revenues go to rightsholders. And it was unclear when we asked them questions about whether it was possible to identify the portion of those rights fees that were going to Canadian rightsholders.

9752 And since you operate online audio services, I wanted to get your view on whether in fact it is possible for online services to identify how much in royalties is paid to Canadian versus rightsholders, or alternatively if there is any type of data that is included in the metadata of such services that could give us a sense of what their contribution is on the audio side to the Canadian rightsholders.

9753 MS. KIRSHENBLATT: So, I think we’ll have to get back to you in terms of whether we can break out the Canadian versus the foreign, because I know that in our annual returns there is a line for those, but it’s not broken out. So, if I can get back to you.

9754 And then, in terms of the metadata, that I don’t think we have, to break that out. We don’t. Other parties might.

9755 So, with respect to the first part of your question, I will follow up.

9756 VICE‑CHAIRPERSON BARIN: We will take an RFI on that one.

9757 MS. KIRSHENBLATT: Thank you.

9758 VICE‑CHAIRPERSON BARIN: Thank you.

9759 Ma deuxième question est en lien avec les partenariats. Vous parlez des partenariats que vous avez avec les plateformes en ligne. Dans le système traditionnel, vous avez des partenariats pour le contenu avec d'autres radiodiffuseurs traditionnels.

9760 Est‑ce que c'est le cas avec les plateformes numériques? Est‑ce que vous avez des partenariats de contenu avec eux?

9761 MME MELOUL : Je vais commencer avec le marché de langue française, parce que c'est peut‑être un petit peu plus simple de le dire. Tout simplement parlant, ce n'est pas encore le cas. Il y a très peu d'exemples qu'on peut citer de partenariats avec les géants numériques. Il y a plusieurs raisons pour ça.

9762 La première raison, bien sûr, c'est parce que les géants numériques cherchent vraiment des marchés internationaux, et le contenu français se vend un petit peu moins facilement. Donc, ce n'est pas le marché primaire quand ils viennent au Canada.

9763 Deuxièmement, je pense que, du côté de la radiodiffusion, on cherche vraiment à garder notre écosystème très riche. On veut vraiment que ça continue à être du contenu qui est très, très pertinent pour les Canadiens. Ça fait partie du succès de la production en langue française. Et donc, cette notion de faire un partenariat avec un géant numérique qui va nous dire, mais on ne peut pas faire ci, on ne peut pas faire ça, c'est des contraintes qui, pour le moment, sont un obstacle, je dirais. Alors, pour le marché de langue française, il y en a très peu.

9764 MS. WILLIAMS: And the English market is a little different. In many ways, the two markets are different, although in a lot of ways we’re the same. But in this regard, funding and financing some of the big content that’s made out of Canada ‑‑ and I’m thinking the big prime‑time TV content, if you will ‑‑ requires additional financing partners. We can’t finance that content on our own out of CBC.

9765 So, we have a lot of different partners in the content world. We partner with the BBC. We partner with the ABC in Australia. We partner with sometimes the U.S. studios. We partner with one of our shows this year, Sort Of, was partnered with HBO. And yes, we partner with the foreign streamers too sometimes. We appreciate the financial support that we sometimes need to complete the financing of our projects with our independent producing partners.

9766 And those are business deals. And sometimes they are good business deals and we do them, and sometimes they are maybe tougher business deals that don’t make as much sense to us or to the production company. Ultimately, what we’re interested in is a partnership where the independent producer can really stay in control, not only technically with copyright but stay in control of the exploitation of the rights, where there’s a meaningful money‑in, money‑out kind of arrangement. And sometimes, those can be done with the foreign streamers as they can be done with many other partners, and we don’t worry about that. If it’s a good deal, it’s a good deal.

9767 None of that is a substitute for a true Canadian system where the content is developed and then created and then controlled and then distributed by a system that is as a whole in Canada, that has a single purpose, to serve Canadians. And much of the content that we do responsibly at the CBC to serve the equity‑serving groups to serve our Indigenous communities are not the shows that those business deals per se are going to be behind, because those business deals come from partners that are here for a different reason. They’re here for an economic reason. And so, when that deal makes sense to them and makes sense to us, we’ll all do it, but we have a whole other responsibility beyond that.

9768 So, we need financing for our content that is purposeful, unique, dedicated, specific to the audience we are dedicated to serving here in Canada, and only in Canada. We’re not also trying to serve a global market, although we delight when one of our independent producers does an international sale and gets back some of their investment. So, I just think it’s important to keep these things separate. Partnership is valuable. What we do as a Canadian wholly‑owned and ‑controlled system is also valuable, in a very different way ‑‑ and needs to therefore be supported and protected, in a very different way.

9769 VICE‑CHAIRPERSON BARIN: Thank you for that.

9770 So, my next question is on your proposal to have a different base contribution for distribution versus programming undertakings. So, CBC/Radio‑Canada operate online services. How would you describe them? Are you a programmer? Or are you a BDU?

9771 MS. KIRSHENBLATT: Well, I think the first step is under our proposal, we’ve said that it wouldn’t be appropriate to include us, but your question is more as, what do we look like?

9772 VICE‑CHAIRPERSON BARIN: I am going to how you make that distinction between what is a programmer and what is a BDU, and a lot of the online streamers are doing both, as are you, and how do you distinguish when ‑‑ I mean, some of your services are free, some are behind a paywall ‑‑ how do you make that distinction for the purposes of applying a contribution level that is different?

9773 MS. KIRSHENBLATT: Well, in our case, our position is we wouldn’t make that distinction because our starting point would be, given our mandate, our financing structure, and what we do, we don’t believe ‑‑ or I think the Commission has already established a contribution framework for CBC/Radio‑Canada when they set out a licence renewal decision that included online linear conditions of service, and looked at it as a whole, and set out a number of obligations. So, that ‑‑ that’s how we see our ‑‑ and they are connected as one. The way the Commission ‑‑ the conditions of service ‑‑ they are combined.

9774 VICE‑CHAIRPERSON BARIN: Understood. I think my question was unclear. It’s how do we, as a Commission, distinguish between those activities for online platforms that are doing both programming and distribution, and how do we ‑‑ you know, when those are ‑‑ I mean, I’ll let you answer it, but...

9775 MME MELOUL : Je me demande s'il n'y a pas une distinction à faire justement avec les services canadiens et les autres, et je m'explique.

9776 Nous, par exemple, on a un mandat qui dit que nous devons rejoindre tous les Canadiens ou dans la mesure du possible tous les Canadiens. Un très grand nombre de Canadiens sont en train de quitter les plateformes linéaires, que ça soit la radio ou la télévision traditionnelle, mais ils sont encore intéressés à notre contenu.

9777 Alors, pour nous, nos plateformes numériques sont vraiment une extension de ça, et on ne s'interroge pas trop en se disant, est‑ce qu'on joue le rôle d'un EDR quand on fait ça ou est‑ce qu'on joue le rôle d'une autre entité de programmation. C'est vraiment l'extension, c'est la nouvelle façon, si on peut dire, de rejoindre les Canadiens avec le contenu. Et souvent même, à cause des moyens que nous avons, le contenu qu'on trouve sur nos plateformes numériques, c'est l'extension de ce qu'on a trouvé sur nos plateformes linéaires.

9778 Donc, vous posez une excellente question pour les services étrangers qui rentrent ici, sont‑ils des EDR, sont‑ils des services de programmation, mais pour nous, c'est vraiment une extension de nos opérations pour rejoindre les Canadiens. C'est comme ça qu'on le voit.

9779 VICE‑PRÉSIDENTE BARIN : C'est bien. Merci beaucoup.

9780 J'ai une dernière question, devil's advocate question.

9781 Nous avons eu des intervenants, surtout dans le marché francophone, qui se questionnent sur le fait que Radio‑Canada puisse avoir accès à des contributions initiales qui proviennent des plateformes numériques, parce que c'est le radiodiffuseur public et parce que vous recevez des fonds du gouvernement.

9782 Alors, pourquoi est‑ce que Radio‑Canada/CBC devraient bénéficier des contributions initiales?

9783 MME MELOUL : Je peux vous dire que hier, c'était une journée très, très difficile chez CBC/Radio‑Canada, et je pense que si on voit le diffuseur public dans cette position, dans cette posture, ça vous montre l'état des choses. On le sait, on voit que le Fonds des médias, par exemple, n'a pas assez d'argent pour soutenir toutes les demandes. Même chose pour les Fonds indépendants.

9784 Radio‑Canada fait beaucoup sans financement, par exemple, des balados. Il n'y a nulle part où on peut vraiment financer des balados. On fait ça aussi, et, bien sûr, le mandat de l'information et tout à travers le pays dans les deux langues, dans les petites régions.

9785 On ne comprend vraiment pas pourquoi on serait exclus d'une contribution initiale. On a un mandat qui est très clair, un mandat qui est souscrit dans la Loi, et donc, comme tous les autres diffuseurs, on devrait y accéder aussi.

9786 VICE‑PRÉSIDENTE BARIN : Merci beaucoup pour la réponse. Ça c'est le tour pour moi.

9787 LA PRÉSIDENTE : Merci beaucoup.

9788 Alors, on va continuer avec le vice‑président des Télécommunications, Adam Scott. Merci.

9789 VICE‑PRÉSIDENT SCOTT : Merci.

9790 So I heard you loud and clear on the notion of a cover charge for accessing the club. We've also been hearing over the last couple weeks now about the importance of flexibility, so flexibility and equity both being part of the conversation when it comes to contribution.

9791 I'd like to give you a chance to respond directly to two points of view. So one thing we've heard a lot is that not every player needs to contribute to every objective under the Act. And then maybe even more pointedly, we've heard from people saying, Look, we're not even in the news business; why do I need to be the saviour of news? We'd like to give you the opportunity to respond to those.

9792 MS. WILLIAMS: Well, I'll start, and again, others may want to join in. I think the broader question is really why are we asking them to contribute in the first place. And the reason we're asking them to contribute is because they are accessing and benefiting from a system in a country that has its own needs and obligations. And if they're going to be here and be as successful as they are with audiences and with revenue and take advantage of this market that they're in and its robustness, if they're going to take advantage of it, we expect them to contribute in return.

9793 And what we in Canada as a Canadian‑owned and ‑controlled system decide to do with that contribution is what we are all here today to decide, what the CRTC is here to guide to be sure that the priorities of the CRTC, the priorities of the cultural policy, the priorities of protecting cultural sovereignty are highlighted and taken care of.

9794 And our ask of them is not to come and specifically support this or that. Our ask of them is to support the Canadian system. And then we all will decide how that Canadian system is best supported, where are those priorities.

9795 And so I don't think it's a relevant point as to whether they are in the news business or they're not or they would choose to do this or choose to do that. They have an enormous amount of flexibility to play in this market they way they want, to position themselves, to market themselves, to offer their services, to price themselves. They have an enormous amount of flexibility to address what they're here to do, which is an economic bottom line for them.

9796 We need the flexibility, then, to take that contribution and support that we feel they are obliged to give and decide how we best use that to support the objectives that we have here, which are different from theirs.

9797 VICE‑CHAIRPERSON SCOTT: Maybe just a quick follow‑up, then ‑‑ and thank you for that answer. When you use the phrase “taking advantage” of the system, others might argue that they're meeting the needs of the marketplace. Taking advantage has almost a ‑‑ sinister is maybe overstating it ‑‑ but a negative context. Can you unpack that phrase a bit for me, please?

9798 MME MELOUL : Ce que j'aimerais dire à cet égard, c’est qu'il y a deux choses qui sont en jeu ici. Il y a peut‑être dans le système, pour des raisons économiques... Et ça c'est correct. On n'est pas en train de dire qu'ils ne peuvent pas être là, ils ne peuvent pas faire affaire au Canada. Absolument, ils peuvent être là. Absolument, ils peuvent faire affaire au Canada.

9799 Nous, on est en train de parler de la culture canadienne, de la continuité d'un système, un écosystème canadien qui a servi les Canadiens dans deux langues, dans des langues autochtones, qui parle aux citoyens à tous les jours, qui informe les citoyens à tous les jours, et c'est de ça qu'on parle aujourd'hui.

9800 Alors, quand des géants numériques viennent et disent : « D'abord, on ne veut pas faire une contribution, et si on fait une contribution, on veut décider comment on fait la contribution », bien, ça dénote déjà quelque chose, à quel point ils ne sont pas intéressés à notre système culturel, ils sont ici pour un système économique.

9801 MS. WILLIAMS: And if I could add, because your word, you know, “take advantage of,” I take your point that it has this connotation which is not what's intended.

9802 What I think we all acknowledge is that Canada is an excellent market for them to participate in. We are geographically very close. Somebody mentioned this morning, I think, I mean, it's an easy flight up into Canada. We share very similar cultural references for shared content.

9803 We have a language similarity in the English part of the market that makes coming into Canada and doing work here really easy. We have excellent crews here. We have strong capabilities in our production sector. So you know, they look around the world at all the different markets they might want to participate in, and they think, Where can we be best positioned for success? Canada is obvious.

9804 So I don't mean that they're taking advantage in a negative way, but they certainly have a huge opportunity in Canada to do a robust and very successful business, which they've proven over and over again. And that's where we think there's an obligation out of that, then, to feed back into what we're trying to do here that's important to our cultural sovereignty.

9805 VICE‑CHAIRPERSON SCOTT: Thank you. I am glad we spent a moment to unpack that. J'apprécie vos réponses.

9806 Madame la Président, ce sont mes questions.

9807 THE CHAIRPERSON: Okay. Thank you so much. We will go over to Commissioner Levy.

9808 COMMISSIONER LEVY: Good afternoon. Good to see you.

9809 I have a couple of questions. I know that you have very adeptly sidestepped questions about thresholds and initial rate contributions; however, I think it's quite clear that something's going to happen. If there should be an initial rate contribution, can you think of any expenditures by online undertakings that could be exempted from consideration in this first phase? For instance, acquisition of Canadian content as a for‑example.

9810 MS. WILLIAMS: I'm sorry, I'm not quite sure I'm understanding the question, Commissioner.

9811 COMMISSIONER LEVY: If online streamers are going to be asked for a contribution, there may be some, you know, in the give and take, there may be some expenditures that they feel go beyond the usual and are a show of support for Canadian content.

9812 MS. WILLIAMS: I have two thoughts there. One, I think it's really important to remember the reasons why they would be making the decisions that they're making to acquire or be involved in production. They're doing it because it's good for their business. And so I'm not looking for opportunities to give credit for the business decisions that make most sense for them.

9813 And then the second probably better answer, coming from the person to my left, is it's probably a discussion for step two.

9814 COMMISSIONER LEVY: Good. The last question I had is if there is new money coming into the system as a result of this first phase, what difference would it make to CBC/Radio‑Canada?

9815 MS. WILLIAMS: More money to the system ‑‑ sort of a dreamy idea. There is so much that we as a system here could be doing. But I speak only specifically to what CBC/Radio‑Canada can do.

9816 We are very limited today in the number of new shows we can do every year. We are very limited in the number of new voices we can reach out to. We are limited in the number of opportunities to just invest in both time and money with new creators to build capacity in communities that haven't had as much access to the system as we all know they should have.

9817 And so more money does all those things. More money makes more shows. More money allows for higher production values with some bigger budgets that could they be attached to those shows. more money is more development. More money is more marketing and promotion to be sure that that great content can be discovered, which I think we all acknowledge in this cluttered marketplace is an increasingly big challenge.

9818 For us at CBC/Radio‑Canada, there is never, ever an opportunity to do as many of those new stories as would like to do. And so more would make a difference. It would make a difference to the amount of content we can offer on Gem. It would make a difference to the number of repeats that are on television. It would make a difference to the number of creators that participate in their Canadian broadcasting system.

9819 COMMISSIONER LEVY: Would it make a difference to the kind of cuts that you've had to make or that you've announced?

9820 MS. WILLIAMS: Possibly. I don't know how much you were able to absorb the details of what we were able to say yesterday, but there was $40 million of cuts that, between Radio‑Canada and CBC, we are making in the independent production sector. So those aren't the jobs that are inside CBC. Those are the jobs in the independent production sector.

9821 And when I spoke with Reynolds Mastin yesterday, the head of the CMPA, we acknowledged the ripple effect of that production cut. For us, it's a cut of the licence fees that we won't be giving to those production companies, to those production companies that didn't get the green light or didn't get the pickup. The ripple effect through all the crews from the craft services to the marketing machine, the whole thing that is attached to an independent production, that all is affected. And so the impact is far greater than the 40 million that Dany and I will be taking on.

9822 More money in the system, more money through the production fund, more money could make a difference to us not having to cut that much to be able to maintain the product that we're trying to do.

9823 MME MELOUL : J'aimerais ajouter aussi que vous savez, dans le marché de langue française les jeunes francophones sont de plus en plus bilingues. Donc, ce n'est plus une protection, la langue française en tant que telle. Il faut absolument qu'on fasse le maximum pour protéger cette génération‑là qui se trouve beaucoup surtout sur les plateformes numériques.

9824 Donc, la qualité de ce qu'on fait, les programmes jeunesse doivent être encore plus étoffés. Et je vous dirais qu'il y a un enjeu de plus en plus grand dans le marché de langue française, et ça, ça prend très longtemps. Une heure de production d'une fiction est peut‑être à un tiers ce qu'on paie dans le marché de langue anglaise. Ça l'a fonctionné pendant un bon bout de temps, mais ça commence à être trop étiré.

9825 Donc, on se retrouve avec des choix douloureux d'en faire moins pour essayer de mettre un petit peu de moyens sur une deuxième production, par exemple, mais le système est en train de craquer, et il n'y a pas assez de fonds dans le système. Donc, comment vous dire poliment, ne vous inquiétez pas, s'il y a un petit peu plus d'argent, on va savoir comment l'utiliser.

9826 COMMISSIONER LEVY: I am sure that you will. Thank you very much for your participation.

9827 THE CHAIRPERSON: We're back to playing musical chairs. I'm going to turn things back over to Commissioner Naidoo.

9828 COMMISSIONER NAIDOO: Yeah, you may have heard throughout the hearing that there have been some intervenors who have come before us and said that handing out more money isn't necessarily the answer. And so I'm wondering, aside from funding, are there alternative incentives or strategies that you believe could encourage foreign streaming services to voluntarily contribute to the Canadian film and television industry?

9829 MS. KIRSHENBLATT: From what we've heard during this hearing is what the Commissioners have been talking about is the potluck problem, and that without regulated requirements, it's just difficult to meet all of the objectives or at least the priorities that the Commission has set.

9830 So it seems to us that the starting point to ensure that there is, you know, a level of support and that, you know, some areas are not underfunded or some areas are over ‑‑ not overfunded, but receive too much money in relation to some key areas. Our position is you need to start with requiring those priority areas to be met.

9831 COMMISSIONER NAIDOO: All right. Thank you for that.

9832 THE CHAIRPERSON: So I think you are very familiar with what's happening as part of this proceeding, and you know, we've said quite publicly that, you know, following the real incentive, Bill C‑11, we would be holding multiple proceedings ‑‑ at least nine is what we've said publicly, could be more than that. We've got two down, two ongoing.

9833 This hearing is to talk about the initial base contribution. You started your opening remarks talking about how urgent it is. You've quoted other intervenors who said, you know, it's not that we're moving quickly; we're behind, and we need to catch up. But you've also heard from other intervenors, including today, the CRTC being told it's premature. So you know, do your nine‑plus proceedings, make your way through the whole package, and then you'll have a better sense. Take your time, is what we've been told. And I'm paraphrasing. And we've also been told: Do no harm.

9834 What is the harm of the CRTC's inaction if we didn't put something in place now? What's the harm to Canadians?

9835 MME MELOUL : Je vous dirais tout simplement que si on n'agit pas rapidement, vous allez perdre des joueurs canadiens dans le système. C’est aussi simple que ça. Il y a des diffuseurs qui ne sont plus capables. Il y a énormément de producteurs qui trouvent ça de plus en plus difficile, et s'il n'y a pas une injection qui vient un petit peu combler ce que les EDR étaient capables de faire par le passé avec le Fonds des médias, par exemple, si on n'est pas capable de renflouer, on va perdre des joueurs en attendant.

9836 LA PRÉSIDENTE : Merci beaucoup.

9837 Alors, avec ça, on vous laisse le dernier mot. Merci.

9838 MS. WILLIAMS: We have a couple of last words, and Dany and I will share them, but I will start.

9839 To your last point, frankly, I think the CRTC needs to act now. And it needs to require foreign streamers to contribute to the initial base contribution in order to sustain the Canadian broadcasting system. And to be clear, in case I haven't been yet, a Canadian broadcasting system means a full system owned by Canadians where Canadians have creative control, own the IP and the exploitation of the rights of that content.

9840 MME MELOUL : Ce qu'on vous a proposé aujourd'hui pour les contributions initiales, c'est une méthodologie qui est juste et équitable. Elle est basée sur les contributions qu'on voit déjà dans le système avec les services de radiodiffusion canadiens titulaires d'une licence.

9841 Le CRTC, on vous encourage aussi de mandater et de maintenir le gros de ces contributions‑là dans des fonds qui sont spécifiques pendant cette phase initiale, parce qu'ils sont déjà fonctionnels, faciles d'emploi, plus faciles pour l'administration au niveau des producteurs aussi, et on vous a déjà recommandé lesquels choisir.

9842 Ces priorités prises dans leur ensemble constituent une première étape cruciale, tandis que vous continuerez votre travail pour les phases à venir. Merci.

9843 LA PRÉSIDENTE : Merci beaucoup. Thank you for ending day 12 with us. We really appreciate your presentation and you answering all of our questions. Thank you.

9844 THE SECRETARY: Thank you.

9845 This concludes today's hearing. We will be back tomorrow at 10:30. À 10 h 30 demain matin. Merci.

‑‑‑ Whereupon the hearing adjourned at 2:44 p.m., to resume on Wednesday, December 6, 2023 at 10:30 a.m.

Reporters
Benjamin Lafrance
Monique Mahoney
Lynda Johansson
Tania Mahoney
Brian Denton