Transcript, Hearing 7 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

10698 Cable Public Affairs Channel Inc.

10810 Canadian Association of Broadcasters

10957 Canadian Live Music Association

11049 Ethical Capital Partners

11138 OpenMedia & The Public Interest Advocacy Centre and the National Pensioners Federation

11252 Anthem Sports and Entertainment

11359 TELUS Communications Inc.

Transcript

Gatineau, Quebec
7 December 2023
Opening of Hearing at 8:59 a.m.

Gatineau, Québec

‑‑‑ Upon commencing on Thursday, December 7, 2023 at 8:59 a.m.

10695 THE SECRETARY: Good morning.

10696 We will now hear the presentation of Cable Public Affairs Channel.

10697 Please introduce yourself and your colleagues and you may begin.

Presentation

10698 MR. DEANE: Madam Chairperson, Vice‑Chairs and Commissioners, good morning.

10699 My name is Jim Deane and I am Chairperson of CPAC's Board of Directors. Until recently I was Chief Executive Officer of Access Communications, which is a communications co‑operative based in Regina, serving more than 235 communities in Saskatchewan.

10700 I am joined today by Christa Dickenson, CPAC's President and Chief Executive Officer, and Joel Fortune, CPAC's Corporate Secretary and legal counsel.

10701 Our presentation will focus on the topic for this hearing: whether and how online services should make an initial contribution to the broadcasting system. One important tool that we support and which we will focus on is the proposed Services of Exceptional Importance Fund.

10702 MS. DICKENSON: First, just a little information about CPAC.

10703 CPAC was launched in 1992 by Canada's cable industry to provide Canadians with access to televised coverage of proceedings of the House of Commons when CBC/Société Radio‑Canada stepped back from that role.

10704 Since then, CPAC has expanded our programming with the encouragement of Parliament, and the Commission's approval, to include televised committee coverage from both Houses, and starting in 2019, coverage of daily Senate proceedings as well. CPAC also offers in‑depth coverage of key events, processes and debates that shape public policy in Canada, along with our in‑house public affairs content.

10705 CPAC is focused on Canada's democratic and civic life and provides an uncut, unfiltered and as complete as possible account of Canadian political affairs for Canadians to access when they want it as well as when they need it.

10706 To give you a better sense of what we do, last year CPAC broadcast:

10707 ‑ close to 3,000 hours of House of Commons and Senate proceedings as well as committees;

10708 ‑ 2,000 hours of public affairs programming, including the Convoy Inquiry, the Special Chiefs Assembly and Annual General Assembly of the Assembly of First Nations;

10709 ‑ more than 1,100 hours of “headline politics” coverage, a combination of press conferences, long‑form scrums, announcements and speeches of the day;

10710 ‑ we provided another 300 hours of special event coverage, bringing provincial election debates and election night results to a national audience, along with coverage of national political party conventions, Canada Day, Remembrance Day and National Day for Truth and Reconciliation;

10711 ‑ we produced and broadcast more than 600 hours of our in‑house content, including our nightly shows Prime Time Politics and L'Essentiel as well as our weekly streeter program Outburst and long‑form interviews with public figures.

10712 Tous ces contenus sont diffusés simultanément en anglais et en français sur nos deux canaux distincts.

10713 CPAC et sa programmation atteignent directement les objectifs de la politique de radiodiffusion, en particulier l'objectif du système de radiodiffusion de « servir à sauvegarder, enrichir et renforcer la structure culturelle, politique, sociale et économique du Canada », comme l'a reconnu le Conseil chaque fois que nous nous sommes présentés devant vous pour faire renouveler nos licences.

10714 Passons maintenant à la question qui nous occupe.

10715 CPAC est favorable à l'inclusion des services en ligne dans le système de radiodiffusion et à la proposition du Conseil de les faire verser une contribution de base initiale.

10716 Nous souhaitons souligner que les radiodiffuseurs canadiens, toutes tailles confondues, ont contribué à ce système pendant des décennies de manière très substantielle.

10717 Les services en ligne de CPAC contribuent clairement aux objectifs de la politique de radiodiffusion de la même manière que nos services de télévision linéaire. Depuis 1999, toute la programmation de CPAC est diffusée en continu en ligne. Aujourd'hui, nous pouvons diffuser simultanément en ligne jusqu'à 14 événements uniques en direct.

10718 De plus, nous conservons une vaste collection d'archives vidéo en ligne de 60 000 heures qui préserve des décennies d'émissions parlementaires et d'affaires publiques remontant jusqu'à 1977, date à laquelle la télévision a été introduite pour la première fois à la Chambre.

10719 Il appartiendra au Conseil de décider de l'ampleur et des modalités de la contribution des services en ligne au système.

10720 CPAC souhaite formuler les deux observations suivantes à l'intention du Conseil :

10721 Premièrement, les radiodiffuseurs canadiens consacrent un pourcentage très élevé de leurs revenus et de leurs opérations globales à la programmation canadienne et aux Canadiens. Par exemple, l’exigence de DEC pour CPAC est de 53 pour cent, elle doit diffuser 90 pour cent d’émissions canadiennes, et au moins 25 pour cent des émissions approfondies d’affaires publiques que nous réalisons doivent être produites en français.

10722 Second, CPAC would never have been possible without the support of Canadian BDUs and the wholesale fees paid by them. The requirement to support CPAC applies to BDUs with as few 2,000 subscribers. So the contribution made by this sector to CPAC is both substantial and broadly based. These BDUs have supported CPAC in reaching Canadians on their systems and also have enabled our online operations for what is now more than two decades.

10723 Given the size of contributions made by Canadian broadcasters to support the broadcasting system, it is reasonable for the Commission to consider a direct contribution from online services and, I would underline, to implement it as soon as possible.

10724 Many parties have supported a contribution to the CMF and other funds. CPAC agrees with this approach. We do, however, wish to echo the request made by other services that benefit from a 9.1(1)(h) order for a “Services of Exceptional Importance Fund”, or SEIF.

10725 CPAC has been designated as such a service and has been singled out for distribution to Canadians through an order of the Governor in Council. CPAC is a non‑commercial service. We carry no advertisements. Virtually all of our revenue is derived from the wholesale fees paid by BDUs. CPAC and its important mandate is on the edge of sustainability under the current model.

10726 CPAC's buying power has declined by more than 25 percent in real dollar terms in just the last three years. This is due to subscriber loss in the BDU system and the fact that our current wholesale rate was set in 2018. Factoring in inflation, this sharp decline has already had an impact on our operations and type of programming that we can bring to Canadians.

10727 CPAC has adapted, has innovated and economized, but this can only go so far. It is time for the online sector to make a contribution to the broadcasting system, and this should include support for key broadcasting services that meet important public policy objectives, such as CPAC.

10728 A Services of Exceptional Importance Fund would provide additional resources to designated services to help them fulfil their mandates, including online. CPAC already offers all of our content online. That means if you have an Internet connection, you get CPAC.

10729 The SEIF could be set up quickly and also with minimal administration and modelled on other funds. We're thinking of, for instance, the ILNF. As CPAC has one of the lowest wholesale fees for a mandatory audiovisual service, we suggest that a floor level of compensation be established for smaller mandatory audiovisual services with revenues below $20 million.

10730 Nous respectons pleinement le fait que le Conseil a toute latitude pour mettre en œuvre les instructions du gouverneur en conseil et les récentes modifications à la Loi sur la radiodiffusion. Toutefois, la proposition du FSIE reflète l'article 12 de ces instructions. Cet article demande au Conseil d'exercer son pouvoir en vertu de l'article 11.1 de la Loi sur la radiodiffusion pour soutenir les services de programmation qui sont d'une importance exceptionnelle pour atteindre les objectifs de la politique de radiodiffusion. Nous pensons que CPAC est un tel service et qu'il a fait ses preuves à cet égard.

10731 MR. DEANE: In a time when misinformation and disinformation are rampant, connecting Canadians to their democracy is essential. Much of the programming CPAC airs would simply not be covered if it weren’t for CPAC. Funding from a Services of Exceptional Importance Fund would enable CPAC to continue to provide the parliamentary and public affairs programming that showcases the people and events that shape our democracy.

10732 Thank you for the opportunity to make this presentation. We would be happy to answer any questions that you may have.

10733 THE CHAIRPERSON: Thank you very much to CPAC. Thank you for kicking off day 14 with us. Very, very happy to have you here.

10734 I will turn things over to Commissioner Naidoo to start with the questioning for the Commission. Thank you.

10735 COMMISSIONER NAIDOO: Hi there. Thank you so much for being here this morning.

10736 I read your intervention and I'm wondering how should the ‑‑ as you say in your intervention ‑‑ “level of decline from the traditional system over time” be reflected in contributions made by online services?

10737 MS. DICKENSON: So, the contributions from the BDU system have sustained CPAC 9(1)(h) services for over three decades. They have really carried that burden. Right now, it's a matter of looking at the foreign platforms and seeing how they can contribute. It's absolutely important.

10738 Maybe, Jim, you can expand.

10739 MR. DEANE: Yes. I think certainly the BDUs in the last 30 years have funded CPAC. We've been happy to do so. We've also made the decision to provide it to all Canadians on our online service. So, in the interest of equity, I think it's time for others to help support that.

10740 I can tell you that CPAC is run very efficiently. I think it's rather remarkable that we're offering the type of service that we do for $15 million a year in both official languages, but that's not sustainable over the long term.

10741 COMMISSIONER NAIDOO: Thank you very much for those answers.

10742 In your presentation you propose that funding from the Services of Exceptional Importance Fund be allocated to smaller mandatory audiovisual services with revenues below $20 million. I'm wondering if you can expand a little bit more on that proposal overall and what guided you towards that $20‑million number?

10743 MS. DICKENSON: Thank you for the question, Commissioner.

10744 So when you look at a broadcaster who is operating nationally in both languages, there are absolutely real hard costs that are non‑elective. These are necessary. So we're talking simultaneous interpretation and we're talking in infrastructure technology gets updated every 10 years. So that is the real reason.

10745 And then, the $20 million, it is about the fact that it is mandatory, it's the size, and we're looking at capturing from English to French across the country.

10746 MR. FORTUNE: Commissioner Naidoo, just to clarify on the position on what CPAC is proposing. It's not to limit the fund to services that have that revenue threshold. Rather, the proposal is that the existing services of exceptional importance, excluding the CBC services ‑‑ on which we didn't comment, so those existing private services would all be eligible for the Services of Exceptional Importance Fund and that the allocation of funding would be based on wholesale fee revenue, which is a proxy for the level of the wholesale fee that these services have, but it's a little more complicated than that. Because some are only available in certain markets, you use the revenue rather than the fee, if you see what I mean.

10747 And then CPAC's proposal is that for services that are smaller in that group, on the audiovisual side ‑‑ and that would be CPAC and the AMI services in English and French and the newer Natyf TV ‑‑ would have a floor level of compensation. So it wouldn't be a straight by proportion. There would be a certain level floor to cover, as Christa said, some of the sort of fixed costs that these smaller broadcast groups have.

10748 So if that was the underlying premise of the question, we're not trying to exclude anybody, it's to provide for a base level within that fund for the smaller 9(1)(h) audiovisual services.

10749 COMMISSIONER NAIDOO: Thank you for that explanation.

10750 You and others have proposed a fund be created for services that make an exceptional contribution to the objectives of the Broadcasting Act. Would you foresee other ways to sustain your operations without the establishment of a fund to support services of exceptional importance as subscribers continue to migrate from traditional BDUs, that type of mode of distribution, to online services?

10751 MS. DICKENSON: So currently, there are very few opportunities for a 9.1(1)(h) service like CPAC and that is primarily because of our mandate of neutrality and fairness in bringing democracy to Canadians and as well conditions of licence of being commercial‑free.

10752 So in that sense as well, there's very few other opportunities for funding, for instance, for us. I think of the CMF. Their eligibility excludes public affairs. So yes, we can touch on a project basis this one exception around documentaries, but there, we're looking at tens of thousands of dollars and not millions.

10753 So really, preserving the nature of public interest programming means the SEIF. There's absolutely no question about it. And on the table right now, there are very few other opportunities to look at.

10754 COMMISSIONER NAIDOO: So if the creation of a new fund to support services of exceptional importance is put forward, how, in your view, would the Commission define the services that would qualify for “exceptional importance” that would be eligible to receive funding from such a fund? Would they consist in the services that presently benefit from mandatory carriage on the basic service under what we call the 9(1)(h) status?

10755 MS. DICKENSON: So, the simple answer is yes. The raison d'être of the 9(1)(h) service is a public interest. It was very well‑defined years ago. It's just now, where is the contribution coming from.

10756 So, in a time of misinformation, disinformation, distrust of institutions, breaking down of journalism, if I look at alone CPAC who we represent, we are more relevant than ever before. So I think the definitions as already created, they are relevant today. Thank you.

10757 MR. FORTUNE: If I may add. The reason why it's, I think, been unanimous among the group of these services is the proposal to use these services that they are now operating, they exist, they've been through Commission processes to determine their status in the system. Nobody is saying it's a closed door forever, but for now, in the spirit of urgency and getting the fund off the ground as quickly as possible and the existing need, the proposal is that we use the existing 9(1)(h) services.

10758 And as I did mention, I'm not picking on the CBC. We just didn't take a position on that. They're in a different economic category than the private 9(1)(h) services.

10759 COMMISSIONER NAIDOO: Thank you.

10760 So if the Commission put your proposal forward on this fund, what suggestions do you have for us to help ensure that the initial base contributions are equitably distributed to help fill the identified gaps in the system which we've heard about over the past weeks?

10761 MS. DICKENSON: Thank you for the question. We do believe that the decline that we're seeing impacted by the CMF Fund, that needs to be addressed and it's an opportunity to also address areas that have been overlooked for decades. We see that as three categories: news being one; equity‑deserving groups: ISO, BSO, TSO, CSIF; and then the 9(1)(h) services, so the Services of Exceptional Importance Fund.

10762 COMMISSIONER NAIDOO: All right. Well, thank you very much. Those are all my questions.

10763 I'm going to hand it back to the Chair because I know my colleagues have questions as well.

10764 THE CHAIRPERSON: Thank you so much.

10765 I will turn things over to Commissioner Levy.

10766 COMMISSIONER LEVY: Good morning and good morning, Mr. Deane in particular. I think that we've met several times in your previous role. Welcome to Ottawa in this proceeding.

10767 I noted in your remarks this morning, in your list of programming and coverage that you've offered in the past that you have offered covered of the Special Chiefs Assembly and Annual General Assembly of the Assembly of First Nations and so forth.

10768 I'm wondering whether you're looking to get new money to simply stopgap what you've lost or whether you envisage expanding the kind of coverage that you do to areas. Because, of course, Indigenous coverage is now very much a pillar of the system and I wonder what you want to do in that regard and what else you might do with a fresh injection of resources to your organization.

10769 MS. DICKENSON: Thank you for the question, Commissioner Levy.

10770 So, with fresh new money, there was part of it as a stopgap and it has continued to remain relevant. From a programming perspective, when you speak about the Indigenous coverage that we do, it is quite distinct, for instance, than what APTN does. So APTN would be looking at news clips around the AFN First Nations Assembly. We actually right now have been covering it this week from beginning all the way to the end. So if you want to find it in long form, that is the offering we do.

10771 And there are so many other examples of that. The importance, for instance, of covering the Halifax International Security Forum is another example, the Supreme Court, et cetera.

10772 Now, we also mentioned that that is found on our channel en français and in English, and all of that is then translated into our online presence and our archives. Maintaining an archive with metadata that is preserving those moments in history, we are that holder of that information. There's ways of being able to better push that out, make it even more accessible than it already is.

10773 There's accessibility. We close‑caption of course both our channels and what is put on the Web, from that perspective, but we would like to be looking at being able to do even more of that on our other streams online.

10774 I hope that answers your question.

10775 MR. DEANE: If I could just add.

10776 I look at it as kind of a sustainability question, and our infrastructure is aging. It's the reality of this particular service, and I'm sure others as well. We have a rather ambitious capital plan to bring us into the next ‑‑ the technology into the next kind of generation and that will allow us to innovate and I think maybe do some of the things that you've alluded to here and maybe expand our programming that way, particularly online and with the streaming service.

10777 COMMISSIONER LEVY: Thank you very much. That's all for me.

10778 THE CHAIRPERSON: Thank you so much. Thank you.

10779 Let's go over to Vice‑Chair Barin.

10780 VICE‑CHAIRPERSON BARIN: Thank you very much.

10781 I'm going to ask to get a bit more clarity on the philosophy for this fund.

10782 The Commission in the past has looked at 9(1)(h) services in a very particular manner because they are mandated carriage and a regulated wholesale fee. The approach of the Commission was very prescriptive, if you will. Like 9(1)(h) services presented the Commission with a business plan. Those business plans were in a sense approved and the wholesale fee was set in a sense to make the services whole against what they specifically proposed.

10783 Now, when you're proposing a fund, it moves us away from that very detailed oversight of what the proposals are in each of the 9(1)(h) services and basically says, well, just kind of figure it out. And it's hard for me to understand ‑‑ and a bit to touch on Commissioner Levy's question ‑‑ whether the ask is for the Commission to specifically approve a programming mission and mandate versus kind of a bit of a let's just set a pool of money and the services will evolve as they see fit.

10784 So I'm just struggling with why you set a specific amount, and why you wouldn't suggest that the Commission look at the specific mandates and costs and proposals of the 9(1)(h) services and fix that amount relative to what the services are looking to do.

10785 MS. DICKENSON: So I'll start, and then I'm going to defer to my colleagues on either side.

10786 The 9(1)(h) services, when it comes down to it, the programming has not changed. And what we're looking at right now is the evolution of the landscape has, and this is a phased approach. So we really see it as phase one to introduce contributions from the foreign services into the 9(1)(h) services to look at that gap, that erosion that has happened.

10787 I think everybody is looking at a future that includes cable but that also is beyond cable.

10788 I think Jim has some comments, and I think from the math perspective, that is Joel's area of expertise.

10789 MR. DEANE: Yeah, I can speak to the business plan briefly. I think historically during the licence renewal, our business plan has been put in front of the Commission in a wholesale rate that supports that. We had anticipated, I think, doing that this year, coming back with a business plan and again a wholesale rate that would support the business plan, and we haven't been able to do that. So our business plan is now at the end of its life, and it's now it's a new reality. And I think that's why we're here today and speaking to the ability to fund the organization going forward.

10790 VICE‑CHAIRPERSON BARIN: Thank you. Mr. Joel?

10791 MR. FORTUNE: I'm not the mathematical expert, but I can talk a bit about ‑‑ really I'd emphasize what Christa said, which is that this is the first phase, as even in the Commission's process, in the life of these 9(1)(h) services, this is the first step into how we ensure their sustainability in the online environment.

10792 Now, all of these 9(1)(h) services, including CPAC, have a single mandate, basically, and that's what they fulfill both in the closed broadcasting system and online as well.

10793 It's the same mandate. As far as Commission oversight goes, well, I would fully expect that when these services do come before the Commission to discuss their plans for the future and licence renewal, whenever that may happen, that the Commission will absolutely investigate their online activities, whether it's appropriate, how their resources are being used, what the level of resourcing is that's required, all the usual questions that go into, as you say, the business plan that supports these services.

10794 But the point is that right now these services started with a business plan in 2018, and it's more than a quarter of the buying power has vaporized for a number of reasons. And to get them to the point where the Commission will again wonder what the level of resourcing is for these services, we need to act. And that's what this services of exceptional importance fund is about.

10795 But there's no question that it's the same public mandate being performed online as it is in their broadcasting operations.

10796 MS. DICKENSON: And if I may expand on the point of sustainability, we really are on a razor's edge. And what I mean by that is we have had to make some really tough decisions. And that is, for instance, we've cut 150 hours of our political coverage when it comes to conventions. We've shattered our podcast. We've cut three years in a row $600,000 out of our budget. This is significant for an organization that's operating with $15 million and has a $10 million technology rebuild of the plant to do because we're facing critical equipment that is at end of life. Now, this equipment is universally the same equipment that's necessary for both our content that goes on the channels as well as online.

10797 VICE‑CHAIRPERSON BARIN: Okay, thank you very much. Appreciate the fulsome answer. Back to the Chair.

10798 THE CHAIRPERSON: Thank you so much. So we would like to leave you with the opportunity to give any sort of concluding remarks. And again, if there is anything that we didn't have a chance to cover during this discussion that you'd like to add, now would be a good time. Thank you.

10799 MS. DICKENSON: Thank you, Madam Chair. I think what we would like to end with is the sense of urgency. And I know that we're echoing some of our partners that have come before you ahead of us.

10800 Canadian‑owned public interest broadcasters' North Star is to safeguard, to enrich, and to strengthen the cultural, political, social, and economic fabric of Canada. That is our raison d'être.

10801 As the very last of the 9.1(1)(h)'s to appear in front of you, I think it behooves me to articulate plainly and boldly the urgency for this immediate need of a financial stopgap for public interest broadcasters. And it's not only due to the indisputable relevance; it's also because of the sustainability.

10802 So the SEIF must be rolled out, in our opinion, as soon as possible. Our view is that could be as soon as September 2024. And not only do I believe it, I actually know that it can be established, flowing the funds to broadcasters of exceptional importance, within a matter of months and weeks.

10803 And Madam Chair, I do see that there has been precedent. In 2020, for instance, over $170 million in COVID‑19 emergency funds was administered directly to the film and television industry. And that punctual aid was allocated in six to eight weeks to 600 recipients.

10804 So what are we talking about right now to begin with? Maybe something in the magnitude of $30 million to a dozen recipients. I don't think it takes that much to get something off the ground when we're looking at it not as a final end game but a phased approach. It means simple guidelines, forms, attestations.

10805 And another example that I'd love to point out to you is to recall the importance and how quickly put together the short‑term compensation fund was. And that had three phases. And that's my point. It started with 49,000 ‑‑ 49 million, I apologize ‑‑ of insurance coverage moved quite quickly to 100 million and then 149, and that basically production companies across Canada was able to benefit from that.

10806 Right now you have in front of you 9(1)(h) services that are pleading with you to help for our sustainability. Thank you very much, Madam Chair.

10807 THE CHAIRPERSON: Thank you very much to CPAC for being here and for sharing your perspectives with us this morning. Thank you.

10808 MME DICKENSON : Merci.

10809 THE SECRETARY: I will now ask the Canadian Association of Broadcasters to come to the presentation table. When you are ready, please introduce yourself and your colleague, and you may begin.

Presentation

10810 MR. DESJARDINS: Thank you, and good morning. Good morning, Madam Chair, Vice‑Chairs, Commissioners, CRTC staff, and gathered colleagues. My name is Kevin Desjardins. I am the president of the Canadian Association of Broadcasters. With me today is Tandy Yull; Tandy is CAB's vice‑president of Policy and Regulatory Affairs.

10811 The CAB represents the vast majority of Canadian privately‑owned and ‑controlled radio, television, and discretionary broadcasters, both independent and affiliated, including services of exceptional importance.

10812 By now, you've had the opportunity to hear from many of our members and many others through the past three weeks, and we thank you for your attention, your questions, and for the gravity with which you have approached the issues at hand.

10813 You have heard from Canadian broadcasters there is great urgency to move forward to a modernized regulatory framework that brings online players into the system. Canadian broadcasters have spent the past decade competing directly with unregulated foreign players for audiences, for subscribers, for the rights to content, and, increasingly, for advertisers.

10814 Foreign streamers have had a decade to enter the Canadian marketplace without hindrance, and have benefited greatly from their unfettered access to our country. And in recent years, their impact on essential aspects of the Canadian media business has magnified. Foreign streamers use Canadian revenues to help them play in a global media sandbox. And yes, they do produce programming here in Canada for an abundance of very good reasons that make great business sense for their companies' bottom lines, but not necessarily in support of Canadian public policy objectives. Their investments in their own business interest existed before the update to the Broadcasting Act and will continue to make sense after this process.

10815 But those foreign service productions don't create the same benefits as the contributions made by Canadian broadcasters. The entire crux of the update to the Broadcasting Act and this process and the processes to come is that what foreign players are drawing out of Canada is too far out of balance with what they return. Throughout these hearings, you have identified these as gaps: the places where those aspects of the system that Canadians consider essential cannot be sustained by market forces alone.

10816 There is no gap with a more urgent need ‑‑ nor as profound an impact ‑‑ than the support for Canadian news. When Canadians turn to broadcasters for content that reflects their lives and their communities, the news produced by journalists and many other creative contributors in their newsrooms are the most important Canadian stories they seek. Maintaining vital, independent, professional newsrooms in communities across the country is a fundamental commitment of Canada's broadcasters. In an era of misinformation, it has never been more critical that we continue to support newsrooms that reflect Canadian communities.

10817 While news programming is very resonant with Canadian audiences, as you have heard, it is also difficult to monetize. Broadcasters have lost tens of millions of dollars over the last decade on news, and without urgent support, those newsrooms will be weakened and unsustainable. These gaps cannot and will not resolve themselves. They will not wait until such a time as the foreign streamers feel inclined to contribute. The need, to underline it again, is urgent. That's why we support a modernized regulatory framework that brings online players into the system, one that ensures they make fair and equitable and commensurate contributions to support important broadcasting goals.

10818 CAB has worked with our members to build consensus behind a reasonable and practical proposal that aligns with the Commission's proposed framework and three‑step process. Our proposal in this initial process is straightforward to implement and will allow meaningful contributions to flow to the Canadian broadcasting system as expeditiously and effectively as possible.

10819 We agree that an important early step is to establish an initial base contribution to specified funds. We also support the goal of a standardized contribution framework that tailors requirements to specific undertakings or groups, and we look forward to future processes to establish and implement the customized contribution regime.

10820 We will outline our specific proposal in a minute, but first, some key principles that we believe must guide your deliberations.

10821 First is that the old regulatory quid pro quo is broken. We need to acknowledge the magnitude of the change that has occurred in the audio and video marketplace and the profound impact that has had on Canada's radio and television broadcasters. We have seen momentous changes in the ways consumers access content and massive shifts in the advertising market.

10822 When spectrum was scarce, holding a broadcasting licence was a privilege, and in return, broadcasters made significant commitments to support cultural and public policy goals. Today, we have moved into a world of abundance. There is no shortage of ways to access an almost unfathomable amount of content. And indeed, none of these foreign players were required to apply for the privilege of broadcasting in Canada nor to undertake commitments to access the Canadian market.

10823 So this has put CAB members in direct competition with unregulated global players. But, most pertinent to this hearing, those foreign players are taking billions of dollars of revenue out of the Canadian economy. In such an environment, broadcasters can no longer be the sole supporters of cultural policy goals. We need to reset the regulatory bargain and reprioritize the success of Canadian‑owned and ‑controlled broadcasters as the foundation of our domestic media marketplace.

10824 Without viable and successful domestic broadcasting businesses, we will be forced increasingly to rely on the benevolence of foreign global media giants for whom Canada is a market to exploit and not their home. To help broadcasters be viable and successful in this context, they need the flexibility to adjust quickly to changing audiences, changing technologies and to allow them to contribute to the outcomes sought by the Commission in a way that is most appropriate to their unique business models. These priorities ‑‑ viability and flexibility ‑‑ are crucial to the ongoing success of the Canadian broadcasting system.

10825 As such, we have put forward a reasonable proposal for this initial phase that we believe can be implemented quickly, and to the benefit of all Canadians.

10826 I'll ask Tandy to outline this.

10827 MS. YULL: Good morning.

10828 First, in step one, the CRTC should require large stand‑alone online undertakings to make contributions to specified Canadian funds. By “stand‑alone,” we mean online undertakings that are not affiliated with a Canadian broadcaster, and by “large,” we mean those earning more than 50 million from broadcasting activities in Canada. This would ensure that the largest streamers begin to contribute immediately.

10829 Second, we recommend that the level of contribution depend on their specific activities, as follows. Online undertakings that operate like broadcasting distribution undertakings ‑‑ virtual BDUs or aggregators ‑‑ should be subject to obligations that are similar to those applied to Canadian BDUs: we recommend five per cent. Online undertakings that operate like audiovisual programming undertakings ‑‑ like Netflix, Disney+, or Amazon Prime ‑‑ should be subject to levels of obligation that are similar to those applied to Canadian television undertakings: we recommend 20 per cent. Online audio undertakings such as Spotify or Apple Music should be subject to initial financial contributions similar to Canadian satellite radio and pay audio services: we recommend four per cent.

10830 Third, we recommend that these amounts be the overall financial contribution of stand‑alone online broadcasting undertakings and should apply now. Adjustments based on the other forms of contribution we've been hearing about at this hearing can be made in step two.

10831 Fourth, we recommend that the financial contributions of large stand‑alone online undertakings be directed to four funding buckets.

10832 We believe that no less than 30 per cent should be directed to funds that support the production of news and information programming by Canadian radio and television broadcasters.

10833 At least five per cent should be directed to funds that support equity‑deserving groups. This includes funds that support Indigenous, Black or other racialized communities, Canadians of diverse ethno‑cultural backgrounds, persons with disabilities, and the LGBTQ+ community. In the short term, we recommend that these contributions go to existing certified independent production funds that specifically support diversity objectives and Indigenous production, namely, the Canadian Independent Screen Fund and the newly certified funds, the ISO and the BSO.

10834 Five per cent should be directed to funds that support public policy objectives, including public participation in Commission proceedings, accessibility initiatives, and other public interest objectives, such as community channels and 9.1(1)(h) services of exceptional importance.

10835 The remainder should be directed to existing funds that support Canadian audiovisual programming ‑‑ the Canada Media Fund and CIPFs ‑‑ and for music, FACTOR, Musicaction, and Radio Starmaker Fund and Fonds RadioStar.

10836 Under our proposal, funding would flow to existing funds immediately. With the CMF, the Canadian Independent Screen Fund, and many CIPFs already providing support for production by Indigenous creators, mechanisms are in place to ensure that these funds can flow immediately. Moreover, the recent recognition of the ISO and BSO as CIPFs has also helped to establish a clear and immediate path for this funding.

10837 MR. DESJARDINS: The Commission has the ability now to ensure that funding from stand‑alone online undertakings supports important public policy objectives, including the production of news.

10838 At the same time, we wholeheartedly oppose the comments of the streaming platforms, who seek to delay the application of any contribution requirements. They need to make equitable and meaningful contributions now, helping to support Canada's newsrooms and creators as radio and television broadcasters have done for decades.

10839 Finally, as you look to rebalance the regulatory framework in this phase, we don't believe it is appropriate at this time to add any additional obligations to Canadian broadcasters.

10840 This concludes our remarks this morning. Thank you for your attention, and we'd be pleased to answer any questions you may have.

10841 THE CHAIRPERSON: Thank you very much to the Canadian Association of Broadcasters for your presentation this morning and also for participating in the proceeding. I know that our Panel has a lot of questions for you and we're looking forward to the discussion. I will turn things over to our vice‑chair for Broadcasting, Alicia Barin, to lead the questioning. Thank you.

10842 VICE‑CHAIRPERSON BARIN: Thank you, Madam Chair.

10843 Good morning, Mr. Desjardins and Ms. Yull. So your membership is quite varied: TV, radio, online, independents, vertically integrated, 9(1)(h)s. And I noted that you're coming to us with some consensus positions, which I appreciate. So my questioning is going to delve a little bit more to see whether you've got some consensus positions on other elements of the issues that we're dealing with in this process.

10844 And the first is going to touch on audio versus audiovisual. And I note in your recommendation that you're looking at five per cent for audiovisual, four per cent for audio. Does this, in your view, result in an equitable distribution relative to the industry in audio and audiovisual? Or if in fact one sector may be favoured over another, how would you recommend that the Commission address this inequity?

10845 MR. DESJARDINS: Thank you for the question. And you are right that we do have a broad variety of members, and that's part of what makes our work as rewarding as it is.

10846 I think one of things I would say is that across the broad swath of our membership is that what we have observed is that the challenges remain the same; whether if it is with affiliated broadcasters or independents, large, small, large markets, they're all facing I think very much similar challenges within their businesses.

10847 And some of those challenges I think were articulated well by CPAC in terms of, you know, what we're seeing is that our broadcasters are kind of caught in a bit of a vice between profound challenges to their revenues and profound challenges on the costs and expenses that they’re facing. And you know, ultimately what happens when they’re squeezed within that vice is that they have to make very hard decisions.

10848 And so some of those you hear about broadly and some of them with some of our members you might not.

10849 In terms of the equitable distribution between audio and audio‑visual, I think that there has been traditionally, I think, a sense of ‑‑ that the outcomes that are sought are sort of supported or funded within the respective areas. I think that that’s kind of the spirit that we moved forward with on that.

10850 I think that, you know, the needs is ‑‑ exists with both ‑‑ with both audio and audio‑visual broadcasters. I think that we think that there is a way forward to be able to meet some of those needs within the proposal that we’ve put forward.

10851 MS. YULL: I would just add that as we were developing our funding proposal, we were looking for equity between online undertakings and Canadian undertakings, so we built it up as opposed to ‑‑ from the bottom up rather than top down. And so looking at the contributions of audio services, our logic was that the contributions of foreign online streamers should reflect the contributions of Canadian audio services so we built it that way. Rather than looking at the two sides, we’re looking at equity within each sector.

10852 VICE‑CHAIRPERSON BARIN: Okay. Thank you for that.

10853 And what about with regards to the language split, French versus English and Indigenous?

10854 MR. DESJARDINS: In terms of a split in terms of language, I’ll say that it’s not ‑‑ it wasn’t an issue that arose in many of our discussions with our membership to this point.

10855 I don’t think that there was a concern expressed to us just in terms of any traditional splits that had existed or any redress that needed to be done to those but, as I say, it was not ‑‑ it was not a point of significant discussion likely until we reached ‑‑ until we reached these hearings, so we have not had that discussion in any substantial manner.

10856 VICE‑CHAIRPERSON BARIN: Okay. Fair enough.

10857 Okay. And now on integrated versus unintegrated, in your intervention you mentioned that we shouldn’t create an unlevel playing field where we’re looking at undertakings on the basis of ownership. And so on this issue, the stand‑alone online undertakings could argue that this is unfair given that they don’t have the ability to have the same synergies that large integrated online companies would have and also that they couldn’t benefit from, you know, a group‑based approach.

10858 So how would you respond to these arguments and would you still suggest that the Commission treat every undertaking the same?

10859 MR. DESJARDINS: So what I would say is that I do think, by their nature, that the stand‑alone online undertakings very much do have internal synergies. If you take a look at how they are established, they are not only broadcasting undertakings, but they are ‑‑ very much have the direct‑to‑consumer subscriber aspect to them. So in the way that you would conceive of vertically integrated Canadian players having both business lines, although they remain quite separate and we only represent the broadcasters and not the BDUs. But even ‑‑ so I would say that the vast majority, if not all, of the standalone online undertakings would have that internal synergy within their structure. So in terms of a point of fairness, I wouldn’t take that as a point that would be unfair to them.

10860 VICE‑CHAIRPERSON BARIN: Okay. So let me then use that point to move on to the next proposal that you have, which is to make a distinction between undertakings that act as BDUs and undertakings that act as programming undertakings.

10861 And I hear you say that most of them are doing both, but I guess my question is, why should the Commission apply the old typology into this new space when there seems to be a blurring of the lines, if you will?

10862 And we had the CBC recently and I asked them the question, “Are you a BDU, are you a programming undertaking?”, and the answer was, “Well, it's a consumer offer”.

10863 So can I get your point of view on whether ‑‑ why the Commission should maintain the same distinctions in the online space?

10864 MR. DESJARDINS: You know, I do think that one of the things that we shouldn't lose sight of is the fact that there is still a very vital and important existing broadcasting system in Canada. And I think what would be important is to ensure that we don’t take a path which is a road to abrogation for that system that exists now. It still exists. It still is present in Canadian communities across the country.

10865 The idea that, well, everything is just going to go online anyway, so let’s walk away from what is there in terms of the existing system, I think it’s important to understand what is there already and how that serves the public policy goals that are within the Act as it stands.

10866 So certainly we don’t want to say look purely in the rearview mirror. I think that, you know ‑‑ obviously, I think that there does need to be an outlook that understands the fact that there is a significant blurring between, you know, what is broadcasting and what is online service and whatnot, but that I think that ‑‑ I do think that we have to be mindful of ‑‑ we have to be mindful of the value of what still exists and to ensure that those parts of the system that still ‑‑ that exist and are still important locally in their communities are maintained and supported.

10867 So you know, I mean, ultimately, the things that we see that radio stations and television stations in local communities are doing, that’s not going to be serviced by a foreign streamer, you know, who is looking at Canada as one big broad market as opposed to the collection of communities that we are.

10868 MS. YULL: The way you phrased the question is quite interesting and I hadn’t look at it in that particular way.

10869 What we see is that Netflix, for example, is ‑‑ as a direct‑to‑consumer programming undertaking, it is more like a programming undertaking but it has a component of that direct‑to‑consumer relationship and so, in that sense, it owns a subscriber like a BDU owns a subscriber. So we would qualify Netflix as a programming undertaking our model and thus it should be subject to the 20 percent.

10870 What I found interesting and learned a lot through Amazon’s written submission and then their presentation ‑‑ so in the written submission, I was a bit surprised to see them describe Amazon Prime and Amazon Prime channels as being part of one undertaking, and so I thought, “Oh, we have to rethink our model because they distinguish between their programming side and their audio side”.

10871 But at the hearing, they described their Amazon channels as a different model. They talked about when they’re carrying channels like Stack and foreign services and ‑‑ you know, that they’re carrying these channels, it’s a rev share. So to my mind, they’re quite able to distinguish between when they’re behaving like a programmer, so Amazon Prime, when they’re behaving like a programmer and they’re offering channels ‑‑ they’re offering programming, they’re offering originals, they’re offering programming, they're the curator, and there's a ‑‑ there's moments when they’re operating more like a BDU when they’re offering other people’s channels and when they’re aggregating channels and not curating those channels. And they can distinguish those two businesses. I think the Commission can distinguish those two businesses as well.

10872 VICE‑CHAIRPERSON BARIN: Okay. Thank you, Ms. Yull.

10873 So let's take that Netflix example. And you suggest a 20 percent contribution level because it would be comparable to the 20 percent Canadian programming expenditure threshold that Canadian traditional broadcasters should eventually have, in your opinion. But this CPE model traditionally has been one where the undertakings that are making that expenditure on programming ‑‑ and it’s on programming that’s going to be broadcast or aired, but they also have access to the funds in which those ‑‑ in which they contribute.

10874 So how, in your view, is it appropriate that online undertakings that would pay the same level into funds would ‑‑ that they would not have access considering the traditional broadcasters would?

10875 MS. YULL: Our sense is that the best way to ensure that the contributions of foreign companies are used to the advantage of Canadian broadcasting policy objectives is through Canadian funds managed by Canadians. Our concern is increased through this hearing, has been increased when we hear about all the myriad of expenditures they would like to count as Canadian programming expenditures, things that we haven’t traditionally counted as expenditures in the Canadian market before.

10876 And so our thought is that the best way to manage those contributions to the ultimate benefit of the myriad broadcasting policy objectives is through Canadian funds.

10877 VICE‑CHAIRPERSON BARIN: And your view is that if online undertakings are contributing 20 percent of their revenues into Canadian funds that they should not have access to the funds.

10878 MR. DESJARDINS: Well, and in fact, by and large the contributors to the funds now don't have access to those funds. They’re funded primarily by BDU contributions.

10879 And so again, the BDUs aren’t accessing those funds. It is effectively the producers who are accessing those funds and at times incented by the broadcasters. But it’s ‑‑ broadcasters are generally not feeding into those funds. And those who are putting money into those funds currently are not drawing out of them.

10880 So we don’t see that there is any unfairness in terms of maintaining what is effectively the way that it’s been managed.

10881 MS. YULL: And they will be able to access those funds in partnership with Canadian producers to produce Canadian content.

10882 And many of the CIPFs don’t distinguish the ‑‑ who the broadcast partner is, so they’ll have access to the CIPFs and they’ll have access to the CMF as long as they’re partnered with Canadian production companies producing Canadian 10 out of 10 PNI programming.

10883 VICE‑CHAIRPERSON BARIN: Thank you for that.

10884 So my last series of questions is on your news fund, and then I’ll bump it back to my colleagues.

10885 First question. So we’ve had a lot of discussion at this hearing about news and the ability of the news model, which was at one point sustainable through advertising revenues and how that has changed.

10886 Now, when you’re proposing a news fund, we’ve had several proposals, and one of those is ‑‑ or some of them are that this fund be an interim fund. Can I get your views on whether you see this as a permanent way of sustaining the news ecosystem or whether you see this as an interim fund to kind of get us to the new news sustainability model?

10887 MR. DESJARDINS: So thank you for the question.

10888 You know, I think an important aspect of understanding how news was funded, it’s not ‑‑ it wasn’t purely against advertising revenues. There was always a cross‑subsidization that was done within the broadcasters. And so the content that was maybe driving audiences, driving advertising revenues, driving subscriptions were those things that would help to sustain news.

10889 Now, as the challenges have come in in terms of, you know, the cost of that programming being higher, the cost of producing news being higher, the revenues being more challenged and certainly challenged directly and fundamentally by the foreign players’ existence in the system now, that is what has broken some of that news model.

10890 So in terms of, you know, would we see this as an interim fund or would it be a sustaining fund, I think acknowledging the realities of the system at this point I think that we would see that as a long‑term sustaining fund. I think that you heard from several recipients of the ILNF yesterday who spoke on how they access that fund and how it’s important to them.

10891 We are administrators of the ILNF fund. We do that on behalf of the membership and it gives us a look into what the state of the industry is right now. And one of the things that we can see from that is in terms of the contributions that are currently coming from the BDUs, it’s gone from about 21 million down to about 17 million in the space of five years. So that, for us, is a really good view in terms of what is actually happening with the entirety of the industry.

10892 And so that is in part why bringing that funding back to get it to a level which is going to help those players and then understanding that, as I said before, the concerns of our independent players are oftentimes the very same concerns as our larger players as well, so there is a need for a broader news fund.

10893 I think I’ve answered ‑‑ I don’t know if there was one extra piece there.

10894 VICE‑CHAIRPERSON BARIN: I'm reading permanent versus interim, if I’m weighing your answer.

10895 MR. DESJARDINS: Yes. I would say that an ongoing sustaining news fund would be appropriate.

10896 VICE‑CHAIRPERSON BARIN: Okay. Thank you.

10897 And this is my last question. And again, if you take the news need as a global need across private broadcasters which you’re representing, but also community broadcasters and then the public broadcaster, how, in your view, do ‑‑ does the Commission allocate these funds, presuming there’s a fund, equitably? Arguably, the private broadcasters have a news focus even within your independents and your national broadcasters than a community broadcaster who are, you know, more hyper local.

10898 So how does the Commission go about allocating news funding equitably?

10899 MR. DESJARDINS: Yeah. So I think that there are two pieces to that.

10900 In terms of the public broadcasters, I think as a core principle we would say that they have Parliamentary appropriations and that those Parliamentary appropriations can be increased or whatnot depending on the need, and that is a more simple and straightforward ask for them directly to government.

10901 So in terms of their access to any sort of fund that’s generated, we wouldn’t see that as appropriate. We think that they both have an appropriation that they can refer to and they also ‑‑ they have a mandate. And you know, I think for us the challenge is always ‑‑ is seeing the public broadcasters moving off of a ‑‑ off of their ‑‑ a mandate‑driven approach and more towards a market‑driven approach where they start to compete directly with our members, which we’ve always said is inappropriate.

10902 In terms of the community broadcasters, you know, I think that we would have some sense that there could be some supports in some of the buckets that we have outlined. In terms of access to a news fund, you know, I wouldn’t make the distinction of community being hyper local and private broadcasters not being hyper local. Private broadcasters are hyper local as well. They are spread throughout the country. They’re radio, television. They’re covering those communities.

10903 So ‑‑ and part of what you heard yesterday, too, and I thought it was an interesting discussion from the news director at CHEK was talking about the training of future journalists. I think that we would see that would be part of the role for community channels, and it’s certainly something that people who are looking to get into the industry, it’s a great place for them to begin.

10904 I would just take a step back and say that we don’t necessarily see community channels as professional newsrooms. They are a place that can help people to develop the skills to help them reach a professional newsroom, but what we’re talking about in terms of what needs support right now are professional newsrooms.

10905 MS. YULL: I would just add ‑‑

10906 VICE‑CHAIRPERSON BARIN: Go ahead.

10907 MS. YULL:  ‑‑ that we had that fourth bucket, our public policy bucket. We think at least five percent of the contributions could go towards what we call the public policy bucket, which includes community channels.

10908 VICE‑CHAIRPERSON BARIN: Okay. Understood.

10909 Okay. I really do want to thank the CAB because I imagine it’s not easy to get consensus among your members and welcome to the club on our end. So thank you for your responses, and I pass it back to the Chair.

10910 THE CHAIRPERSON: Thank you, Madam Vice‑Chair. Thank you.

10911 I will turn things over to our Vice‑Chair for Telecommunications, Adam Scott.

10912 VICE‑CHAIRPERSON SCOTT: Good morning. So one of the story arcs that’s been playing out through the hearing is that there’s lots of objectives to be met, various players contributing in various ways and then a fulsome debate about what constitutes a fair contribution. So I’ve got three questions on that theme.

10913 And maybe I’ll start with, what’s the response to streamers who argue that they should get credit for the contributions that they make and the fact that it’s synergistic with their economic interest is actually a positive outcome and that should be something that we strive for, is a business outcome that actually advances public policy objectives?

10914 MR. DESJARDINS: So I don't think that we would totally dismiss that idea. I think part of the equitably, though, that we would be talking about is the idea that those have never traditionally been things that have been recognized within the system that ‑‑ and as such, you know, if they were to be recognized for foreign players, then they would need to be recognized in some way for the contributions that Canadian broadcasters, Canadian‑owned and controlled broadcasters have been making and continue to make.

10915 So you know, we do think that, you know, our Canadian owned and controlled broadcasters are businesses and the more that they are allowed to be successful businesses, the stronger the foundation of the entire Canadian broadcasting system. And so we wouldn’t argue with the idea that you should look at what helps to promote strong business models. We just would make the point that if you’re going to do things that help to enhance strong business models for foreign players that you would make sure that that is properly balanced and, you know, making sure that there is a strong business model to be had there for Canadian players.

10916 And then I think that part of the nuance there as well is recognizing about where business is flowing and synergistic within the Canadian economy versus what’s being drawn out. And again, I think that that’s a big piece. You know, it’s having successful streaming services based out of New York or L.A. or Silicon Valley is not necessarily giving back to the goals of a stronger Canadian broadcasting system.

10917 VICE‑CHAIRPERSON SCOTT: Great. A follow‑up question, then. Would you agree that the online streamers are likely to react to new financial impositions imposed on them in the same way that Canadian broadcasters respond to the financial pressures that they’re under? There seems to be a bit of a perception that there is a really fat margin that the online streamers can draw from without having any impact on their Canadian operations and the types of things they do in Canada that do provide some value.

10918 MR. DESJARDINS: Yeah. So, I think that ‑‑ I think that on that, I mean, I ‑‑ I have had a sense that part of what has been said here is, you know, “Hey, these are some nice contributions that we’re making to the Canadian system. It’d be a shame if something were to happen to them.” I’m not sure that that sort of equation is one that holds a lot of water. As I said, I think that the investments that they are making in Canada remain investments that they are making in themselves. And so, the work that’s being done here is being drawn here for a number of reasons that make excellent business sense to them. We’ve got a great dollar from their perspective. There is tax incentives. There is all of these sorts of things that are drawing people in.

10919 You know, in terms of, would they react somewhat in the same way that Canadian broadcasters would, to being regulated? As the representative of a regulated industry in Canada ‑‑ maybe one of the most regulated industries in Canada ‑‑ like, I can’t blame someone for not wanting to be pulled into the regulated industry, but by all fairness, when they are competing with us substantially, fundamentally in those areas ‑‑ in the areas of advertising and subscribers ‑‑ and challenging us for revenues, if there is a rationale for regulating us, there is a rationale for regulating them.

10920 And then, I think again it goes back to the rebalancing or recalibrating of what is the right model, and what is the right level of regulation that needs to be done to ensure that, you know, with their contributions in the system, I think that we actually can level up the system just with them being in and being counted. You know, the revenues according to some of the numbers that you have of Netflix in Canada is roughly equivalent to the revenues of the entire conventional Canadian television industry. So, we think that they can make a contribution as we have been asked to make a contribution over the years.

10921 VICE‑CHAIRPERSON SCOTT: Great. And last follow‑up from me, and you’ve segued into it nicely. Do we come out further ahead if we take ‑‑ assuming any new money is coming in, do we come out further ahead if all that new money is incremental? Or do we come out further ahead if some of that money is used to offset the contributions of the current contributors, because is there a net gain in reducing the current contribution levels versus just being all additive?

10922 MR. DESJARDINS: Yeah. So, we would not approach this from a point of view of thinking of those contributions as being all additive. I think that there does need to be some rebalancing within the system. And again, to recognize that the foreign players are coming into the Canadian market with certain advantages, certain expertise that they have, certain audiences that they can appeal to, and I think looking at the relative strengths of all of the players in the system will be important.

10923 You know, it’s this piece where they are ‑‑ and it was mentioned that within the legislation it was made clear that Canadian broadcasters are to be Canadian owned and controlled broadcasters. What that does is that does narrow down just in terms of our access to capital and in terms of the ways in which Canadian broadcasters are able to monetize their investments in the system, whereas they are gg up against foreign players who have a global pool of capital that they have used and continue to make use of, and they also have a global market that they can amortize their expenses and help to monetize their Canadian expenses across a global market. So, that I think needs to be taken into consideration.

10924 MS. YULL: If I may just add, I think the entry of these of foreign streamers into the Canadian market has fundamentally disrupted the very business models that permitted us to make the level of contributions we’ve been making over the last almost hundred years ‑‑ a hundred years in the case of radio. So, with that kind of disruption, we can’t sustain those levels of contribution. I think that’s the point, is that we need recalibration because what was underlying our ability to contribute at the levels we were previously contributing at ‑‑ okay, I’ve got way too many prepositions in that sentence ‑‑ it’s just no longer sustainable. And kept to the same level of obligation, I think we may see more cutbacks, more layoffs, possibly even more closures.

10925 VICE‑CHAIRPERSON SCOTT: Thank you. Those are my questions.

10926 THE CHAIRPERSON: Thank you. Thank you very much. Let’s go over to Commissioner Levy.

10927 COMMISSIONER LEVY: Good morning. Just a couple of questions just to tidy some things up. We have heard from supporters of the Indigenous broadcasting system that they believe that the ISO, the Indigenous Screen Office, should get an apportionment from any new monies, right off the top, and then the rest should be distributed various other ways. How do you respond to that?

10928 MS. YULL: We had recommended as a bucket, that at least five percent go to ‑‑ in the short term, the existing funds ‑‑ the BSO, the ISO, and the CIPF ‑‑ so, we absolutely support an off‑the‑top contribution to the Indigenous Screen Office. What we heard ‑‑ we’ve said no less than five percent to those three buckets. We did hear from the ISO that that might not be enough, so we leave you with that rather thorny problem. Our proposal is no less than 30 percent to news; and then a bucket for the ISO, BSO, and Canadian Independent Screen Fund; and a bucket for the public policy objectives, including the SCIF proposed by CPAC and other 9(i)(h) services and the Broadcast Participation Fund and the Broadcast Accessibility Fund.

10929 MR. DESJARDINS: And just to add to that is that we do think that the other funds will have a role to play. It’s not purely the ISO that is the one and only support for Indigenous programming, that we do think that the other funds, as they have, will continue to support Indigenous production and Indigenous programming as well or will find ways to adapt to the need that’s been outlined, as well.

10930 COMMISSIONER LEVY: Are you concerned at all that there seems to be quite a proliferation of funds, and as new ones are added, it appears none are ever eliminated, the sum total of which can be that whatever new monies come in get fractured so many different directions that in any one bucket they don’t amount to enough to have a real impact?

10931 MS. YULL: We agree with those parties that have suggested that maybe there shouldn’t be too many more funds, and I think the CIPFs have a role to play. They fill certain gaps; they fund different kinds of programming than the CMF does, so we do believe that a portion of funding should go to the CIPFs. We would agree that we don’t want an over‑proliferation of ‑‑ I’m not sure how you manage that going forward; perhaps only CIPFs that fill specific gaps is a consideration going forward. They do cover a broad array of programming now. Maybe we’re done with new CIPFs. That’s a tricky one.

10932 COMMISSIONER LEVY: And when we talk about taking monies off the top, and in response to Commissioner Scott’s question about giving the online streaming undertakings credit for contributions they already make to the system, either tangible or intangible, you have been quite clear on that. But I wanted to just hone in and get a first response to the notion that something is clear as acquisition of Canadian content, whether their acquisition of Canadian content should be a sum that would be taken off the top of the estimation of their contribution, and then whatever initial rate contribution would apply to what’s left.

10933 MR. DESJARDINS: Yeah, thanks. I think it’s a good question. I do feel as though that is more of a conversation for us in the next phase of this discussion, so ‑‑ and as the three weeks have gone along, things have been pushed into that subsequent phase, but we do, again, underline the urgency of those issues that exist right now and the need not to push back the initial funds that should be flowing into the system now, regardless of some other questions that I think that we will come back to, I think, in fairly short order.

10934 COMMISSIONER LEVY: And finally, earlier on, I think it was MPA Canada in their written submission said that ‑‑ sort of downplayed the situation that Canadian broadcasters find themselves in. They said that the Canadian system has benefitted for decades from a walled garden protection for Canadian broadcasting. Well, we know the walled garden ‑‑ that’s been kicked down, but they point to simultaneous substitution and some of those rules as advantages that the Canadian system has that nobody else in the system has. And I wonder whether you want to respond to how that benefit plays out?

10935 MR. DESJARDINS: Yeah, well Tandy’s had the opportunity to sit next to me for the past three weeks and hear my relative groaning at those sorts of things. I think that there are few things that get me more than people suggesting that the Canadian system has been closed, has ever been closed. I don’t think that it ever has been. In fact, the whole purpose of having a Broadcasting Act and a Canadian regulatory framework has been the acknowledgment of the fact that we have so much that is coming into our system.

10936 What things such as SimSub allowed ‑‑ first off, it’s about programming rights, but it’s also something that has allowed Canadian broadcasters to bring those programs that Canadians want to see and are very highly aware of ‑‑ Canadians are very highly aware of what’s available just about, you know, a hundred kilometres to the south of them, and they believe that they should have access to that, and Canadian broadcasters by and large over the years were able to help provide that to them, and then to provide benefit back to the system.

10937 So, you know, in terms of some notion of us being protected, if we ever were protected ‑‑ and I’m not sure that that is the case; otherwise, we wouldn’t have, as I say, all these instruments here ‑‑ we’re certainly not now. And again, just going to that point of we’re seeing the impact of foreign players incenting cord‑cutting, taking money out of the Canadian system. And so, the idea of us being a closed system is a myth. Certainly it is today. It probably was previously, as well.

10938 COMMISSIONER LEVY: And finally, a question about looking to the experience of the Canadian audience. With new monies that might come into the system, what advantages do you think Canadian audiences are going to see?

10939 MR. DESJARDINS: I appreciate the question and I think that, for our members, the Canadian audience can never be far from their minds. That’s their whole reason for being. And it is, I think, in part why we are so strongly making the case of supporting news. If you ask Canadians, what is the Canadian content that you seek out, the number one piece of Canadian content that Canadians are looking for is the news. So, that for us is why it’s so critical to ensure that we have some supports to not just ensure that Canadian news remains on the air, but also that we’re able to strengthen newsrooms so that they are able to stand up to, you know, this current state of misinformation and disinformation that they are facing, and it’s a really critical way that we help to sustain our democracy. So, clearly, I think, the audience has to be there.

10940 I think we also, from the other point of view, have to think about again ensuring that if there are obligations that are put onto either Canadian broadcasters or onto foreign streamers, that it is with a view towards what the Canadian audience is looking for. And I think that those regulations need to evolve to understand the various types of programming that’s made average and what is the type of programming that Canadians are looking for.

10941 MS. YULL: If I may add, I think we can’t ‑‑ neither can we under estimate the importance of the local radio and television stations in their markets. You know, we heard from CHCH yesterday about their toy mountain drive. Many of these radio stations ‑‑ particularly at this time of year ‑‑ many radio stations and TV stations in markets across the country are supporting their communities. They are members of their communities. They believe in supporting their communities. The passion with which Greg O’Brien spoke of what CHCH is doing, and what CHEK was speaking about ‑‑ that’s true in cities and towns across the country. So, I think we can’t underestimate the value of that, and the challenges they’re facing are also ‑‑ it’s the vise Kevin mentioned ‑‑ you know, the costs are rising, revenues are decreasing, and in the middle are these stations trying their very best to serve their communities, and I think we shouldn’t underestimate the value of those stations and the risks if we don’t address that vise in some way, shape, or form.

10942 COMMISSIONER LEVY: Well, I think that’s a great way to end. So, I’m all finished with my questions. Thank you very much.

10943 THE CHAIRPERSON: Thank you, and we will go to Commissioner Naidoo for the last questions. Thank you.

10944 COMMISSIONER NAIDOO: Hi. You’ve been here at the hearing all week, so I’m sure you’ve heard this. There have been proposals that a new interim fund ‑‑ the news fund ‑‑ administered by you, the CAB, should be created for the initial base contributions, and I’m wondering if you have an opinion or insight into who you think should be administering any new fund for news?

10945 MR. DESJARDINS: So, we appreciate when people come and see a role for the CAB in administering these funds. You know, our administration for the ILNF currently is under 0.7 percent. Our role is to make sure that that money gets into the hands of broadcasters to help support their operations. So, we have the knowledge and the ability to take funds in and to distribute them out quickly and effectively. And so, we would welcome that if we were asked to help administer any new or expanded funds.

10946 COMMISSIONER NAIDOO: Thank you very much.

10947 THE CHAIRPERSON: Thank you for answering all of our questions. We would like to turn things back over to you for any concluding thoughts.

10948 MR. DESJARDINS: Thank you for that. And again, we are almost there after three weeks. You know, Tandy and I have been skulking around the room, and so it’s fun to actually be at the front table after three weeks. And again, to reiterate, I appreciate the thoughtfulness of the questions that have been coming, not just to us but over this time; the work that you’ve put in; and the work of the staff in this room and in the adjacent rooms.

10949 And as well, just to note, you know, we have had a number of CAB members here before you, and we certainly appreciate our members greatly and certainly appreciate that they have had the opportunity to come in and to speak with you as well. And so, through these past three weeks, you’ve heard from those members and from the streamers and from a number of other stakeholders who have benefitted from the system.

10950 And I just want to reiterate that the foundation of a strong Canadian broadcasting system I viable and sustainable Canadian owned and controlled broadcasters. And so, the only path to get there is a fair and equitable regulatory framework that recognizes the reality of the new broadcasting system, the players within it, and that is recalibrated to ensure that they can contribute in the manner in which is most relevant to their businesses, and importantly, to their audiences. So, thank you.

10951 THE CHAIRPERSON: Thank you very much to the CAB. Thank you for being here today ‑‑ and every day, as you’ve said.

‑‑‑ Laughter

10952 THE CHAIRPERSON: We really appreciate it.

10953 THE SECRETARY: Thank you. We will now take a break and be back at 10:45.

‑‑‑ Upon recessing at 10:34 a.m.

‑‑‑ Upon resuming at 10:45 a.m.

10954 THE SECRETARY: Welcome.

10955 We will now hear the presentation of Canadian Live Music Association.

10956 Please introduce yourself and your colleagues and you may begin.

Presentation

10957 MS. BENJAMIN: Thank you so much.

10958 Good morning, Madam Chair, Commissioners and Commission staff. A shout‑out to Jade for being so awesome. My name is Erin Benjamin, I am the President and CEO of the Canadian Live Music Association.

10959 We are proud to be presenting here today representing Canada’s incredible live music industry: the venues, promoters, festivals, clubs, concert halls, theatres, arenas, and the myriad of diverse businesses whose passion for connecting artists and audiences is rivalled only by their resiliency and their commitment to growing the future of live performance from coast to coast to coast for all Canadian artists.

10960 Our members build and maintain the cultural infrastructure that facilitates touring across this country, and without them ‑‑ a near‑catastrophic reality we faced not that long ago ‑‑ artists couldn’t perform at all. They couldn’t hire other musicians, crew, agents, road managers. They couldn’t sell their merchandise off the stage. They couldn’t leverage what has become one of the most important revenue streams for artists today. And fans couldn’t reap the endless proven benefits of attending concerts, like reducing stress, improving our mental health, giving us a sense of belonging, as our entire planet struggles with loneliness and isolation.

10961 Because we’re presenting near the end of these hearings, we’ve had the benefit of listening in for a couple of weeks and we agree with colleagues who have declared this to be a once‑in‑a‑generation regulatory process, and for us that means maybe we have finally arrived at the place where live music and recorded music can be regarded as equal parts of one complex but beautiful whole.

10962 For decades the live music sector has been represented by voices who need live, but not necessarily by the businesses and the people who actually take the risk, run these businesses, work the doors and put the shows on. This process is the right moment for new collaboration and a holistic approach to policy, because artists and their fans are counting on us to get this right for so many reasons.

10963 One of them is that artists use live shows to build their fan base, to test new music, to hone their skills, and Canada’s smaller independent venues and festivals and others are often the very first stop on the journey of a brand‑new song, long before it becomes recorded music and an international chart topper on all of our favourite playlists.

10964 Live performance and recorded music are equally intrinsic and this is precisely why the federal government provided emergency funding during COVID, administered by FACTOR and Musicaction, to save and protect our independent venues, promoters, festivals and other live music businesses for our artists of today and tomorrow. That support was unprecedented not just because of COVID but because there has been an historic gap between live music businesses and government, despite the sector's importance to the whole of the artist ecosystem.

10965 We remain very thankful to the government and to FACTOR and Musicaction for recognizing just how essential live is to Canadian artists through these actions and I would like to reiterate something critically important that you heard from FACTOR’s President and CEO Meg Symsyk, that that support to live incentivized the broader industry to increase activity with equity‑seeking groups and Indigenous artists. That good work must continue.

10966 Addressing systemic challenges and barriers faced by racialized, equity‑seeking and sovereignty‑affirming artists and organizations should be the priority in any new framework. The Canadian Live Music Association and our extraordinary membership are essential partners as we work together to amplify and celebrate the diversity in Canada’s music industry, because when we create the conditions for concerts to thrive inside the new policy framework, we will finally have the kind of comprehensive environment that our artists need to succeed and compete in today’s world.

10967 Now, I would like to introduce my colleague Jon.

10968 M. WEISZ : Bonjour, Madame la Présidente, Mesdames et Monsieur les Commissaires, et personnels de la Commission.

10969 Je me présente, Jon Weisz, directeur général des Scènes de Musique Alternatives du Québec, également connue sous l'acronyme les SMAQ. Nous constituons le principal réseau de diffusion musicale au Québec, nos membres représentant chaque année plus de 75 pour cent des concerts professionnels à travers la province, englobant ainsi la quasi‑totalité des spectacles mettant en vedette des artistes québécois et canadiens. Par ailleurs, je suis membre du conseil d'administration du Canadian Live Music Association.

10970 Depuis de nombreuses années, une majorité des revenus des artistes musicaux québécois et canadiens provient de leurs tournées. Malgré l'image populaire d'arénas bondés, 99 pour cent des artistes professionnels ne sont pas célèbres, ne sont pas sous contrat avec de grandes maisons de disques, et leurs tournées ne sont pas produites par des entreprises multinationales. Cependant, leurs communautés locales les soutiennent, tout comme les opérateurs de salles de spectacles, les diffuseurs et les travailleurs culturels.

10971 Ces acteurs, bien que moins visibles que les stars internationales, constituent le socle de l'industrie musicale canadienne. Tous les artistes commencent leur carrière sur des scènes indépendantes, souvent gérées par des gens passionnés. La majorité continue à y performer tout au long de leur carrière, la célébrité n'étant pas la finalité de chaque projet.

10972 Les discussions précédentes ont mis en lumière la nécessité d'améliorer les conditions pour les personnes racisées, les Autochtones, les artistes émergents, et d'autres groupes marginalisés. Ces communautés artistiques, longtemps exclues des réseaux de diffusion officiels, ont trouvé refuge dans les lieux de diffusion indépendants. Ainsi, il est crucial de financer directement ces communautés, tout en assurant la pérennité des lieux qui les accueillent.

10973 Soutenir la diffusion indépendante revient implicitement à soutenir les communautés marginalisées. Cependant, les scènes indépendantes à travers le Canada, ainsi que les travailleurs qui les entourent et les artistes qui s'y produisent, sont actuellement en danger.

10974 Les fermetures liées à la pandémie ont accentué la fragilité déjà existante de ce milieu. Les mesures sanitaires ont modifié de manière significative le comportement du public dans les arts de la scène, rendant la vente de billets difficile, à moins d'être une superstar mondiale.

10975 Les coûts de production ont augmenté plus rapidement que le taux d'inflation général, et la pénurie de main‑d'œuvre menace la survie de nombreux lieux. La concentration dans le secteur de la musique live risque d'évincer les entreprises indépendantes qui travaillent pour 99 pour cent des artistes québécois et canadiens.

10976 Les acteurs de la musique live indépendante forment une base essentielle soutenant l'ensemble du secteur musical, y compris la musique enregistrée. Cependant, ces acteurs ont été historiquement exclus des modèles de financement culturel public, et cette base est actuellement en train de s'effondrer.

10977 Fort de près de 20 ans d'expérience à temps plein dans l'industrie musicale, je perçois, comme beaucoup de mes pairs, une catastrophe imminente sans précédent. Cependant, la bonne nouvelle est que des solutions réalistes et réalisables se présentent devant nous. Des contributions raisonnables peuvent stabiliser notre milieu, et votre engagement suscite en nous l'espoir nécessaire.

10978 Nous sollicitons une contribution de base initiale de 7,5 pour cent des entreprises de radiodiffusion sur le Web, dont 2,5 pour cent serait directement alloué à un fonds dédié à l'écosystème de diffusion musicale indépendante.

10979 Le travail que vous et nous accomplissons est historique. Nous sommes à un tournant générationnel dans l'histoire de notre secteur. Nous espérons que vous examinerez favorablement ces nouvelles résolutions et ces avancées.

10980 Je vous remercie de votre temps et reste à votre disposition pour répondre à vos questions, que ce soit en français comme en anglais. Merci.

10981 LA PRÉSIDENTE : Excellent. Merci beaucoup pour vos présentations ce matin.

10982 Thank you for starting a shout out to our Hearing Secretary Jade Roy. We agree that she is indeed so awesome. And thank you for the very passionate submissions.

10983 I will turn things over to Commissioner Levy to kick things off for the Commission.

10984 COMMISSIONER LEVY: Thank you very much for coming. You represent a very interesting part of the cultural milieu and certainly your members and your work is well appreciated by anybody who enjoys live music for sure.

10985 We understand that Canadian content development contributions are already supporting touring and showcasing activities of Canadian artists either through existing funds or the discretionary activities. Can you tell us a little bit more about how the live music sector is currently funded through various federal and provincial programs and where do you see the most significant gap currently?

10986 MS. BENJAMIN: Thank you so much for that question.

10987 So the sector is complex. There are two sides. There is the not‑for‑profit side and the commercial side.

10988 You might find not‑for‑profit entities, organizations like festivals or performing art centres accessing funding through a program at Canadian Heritage ‑‑ several programs at Canadian Heritage on the arts policy side, one in particular called the Canada Arts Presentation Fund, and that suite of programs is exclusively for organizations working in a touring context, a dissemination context for not‑for‑profit organizations.

10989 On the commercial side, however ‑‑ and this is why the emergency funding during COVID was so historic for all the reasons, is because the types of venues that we are primarily talking about today had no pre‑existing funding relationship whatsoever. So whether it be a small live music venue, an independent concert promoter or other type of space or business, no pre‑existing relationship and so operating as any small business would.

10990 And so the gap that we identified, COVID accelerated this challenge exponentially. It was a conversation our organization has been engaged in with government and others since our inception in 2014 and that is around the challenges facing live music companies and businesses and the opportunity gap actually in terms of integrating the work that our members do and recognizing the ecosystem as a whole.

10991 So the COVID funding, it took a few months for it to be very apparent what was happening, but without any revenue flowing to these types of businesses, they were in imminent ‑‑ they were being eviscerated, they were vapourizing. We have staggering numbers and we've seen some recovery depending on the level of the marketplace we're talking about certainly.

10992 But the opportunity here is to resource the venue ladder, especially the first couple of steps or the rungs. And by venue ladder, I mean small stages, be they indoors or out, where artists begin their careers.

10993 Jon alluded to the fact that the vast majority of artists begin their careers in these types of venues, and so being able to understand the needs and priorities of these types of businesses and helping them to build and maintain capacity and how that's connected to creating opportunities for artists' short, medium and long‑term growth is the opportunity.

10994 And this is exactly what the COVID funds that were administered through FACTOR and Musicaction were meant to do and ultimately did, and that was, through very particular criteria, helped to sort of retrench and maintain a relationship between the venue or the promoter and the artist to ensure there was some activity ultimately I think to make sure those companies survived.

10995 So moving forward and looking at the opportunities through this process, establishing a relationship with those companies, those independent small‑to‑medium companies who service the initial rungs of the venue ladder, ensuring that they have long‑term sustainability and capacity for artists is really what we're hoping to see. Because they're not just fundamental, they're elemental to the career development of artists.

10996 COMMISSIONER LEVY: So you're looking at ‑‑ I'm sorry, I'll let you in a minute. So just to clarify, you're looking at using the funding that was given during the pandemic as a pilot program almost for what should continue to happen going forward?

10997 MS. BENJAMIN: To a certain extent. So there is no more funding. So that ended and we've certainly ‑‑ you know, we lean in where we can in budget conversations with the federal government to identify priorities and make recommendations, as do all of our peer associations across the music industry.

10998 Currently there are no dollars for this work, but we have a framework, absolutely, and so our recommendation today is to continue to work through the Canada Music Fund, administered by Canadian Heritage directly to FACTOR and Musicaction, to build in a component for live music using established criteria and hopefully continuing to evolve that so we're not re‑creating the wheel. We're looking to sort of augment and amplify what we have today to grow it for tomorrow.

10999 COMMISSIONER LEVY: So how would the sorts of monies that you're talking about directly enhance the broadcasting system and in particular, because of where we are right now, the objectives of the Broadcasting Act?

11000 MS. BENJAMIN: So great question and one we anticipated.

11001 I think what we're here to say today is that live music is intrinsic to an artist's ability ultimately to create content and record that content and that the live performance experience is again essential to what that song ultimately becomes. And so, as part of the value chain, as part of the ecosystem, our ability to create opportunities and deliver our services to artists, and that is really connecting fans, helping to build audience development, we should be recognized in policy to ensure that we're taking a holistic view of how an artist ecosystem works and make sure that we're resourcing or equalizing and managing capacity in all of the segments that artists need to succeed, and certainly live performance.

11002 I'm not only being one of the primary, if not the primary, source of revenue today for the vast majority of touring artists but also to, as I mentioned in my remarks, to create that content. As a former touring and recording artist myself many, many hundreds of years ago, I can tell you that live performance and working those songs out in front of an audience, ultimately to record them sometimes years later, is part of the ‑‑ is an essential part of the process and for most artists, it doesn't happen any other way.

11003 COMMISSIONER LEVY: The situation in Quebec is a little bit different. You have different kinds of provincial supports and so forth. So I wonder if you would like to weigh in and address how live performance and live venues and so forth and support for them supports the artists. You know, I want us to really think in terms of putting the artists at the centre of the ecosystem. So please, Mr. Weisz.

11004 MR. WEISZ: Yes, absolutely. Thanks for that question.

11005 We're in a bit of a unique situation in Quebec. We have ‑‑ it's never enough, but as compared to other provinces and territories, we have certain funds available to us that maybe we don't in certain other parts of Canada.

11006 I would say that in Quebec the vast majority of the funding still goes to stakeholders and actors that have traditionally been funded. So the funding doesn't necessarily reflect the artist's career trajectory and which parts of the ecosystem are important on the ground level for the independent artist.

11007 It's getting better and we've been working a lot with funders in Quebec and federally to try to move things forward. I need to give credit where credit is due, because the funders and the Ministry of Culture in Quebec have come a long way, but there's still... We do have a very small envelope for independent venues, that comes from the Quebec government, of $1 million a year, which we estimate is about 25 percent of what we'd need for those venues to continue taking the kinds of programming risks they're taking on independent artists.

11008 Federally ‑‑ I know, Commissioner, you asked about Quebec, but I have a comment on the federal ecosystem, because as a member of the Canadian Live Music Association Board, I'm in contact weekly with venues across Canada and they don't have the same kind of funding that we have in Quebec, for the most part provincially.

11009 And so, overall, I'd say in Quebec we're probably slightly better off than in the rest of Canada. But the bottom line is that independent venues have little to no funding, as do independent promoters and booking agents, and they're the ones who are the closest to the artist when the artist goes on tour.

11010 COMMISSIONER LEVY: So what do you want us to do? You were talking about an initial rate contribution coming from online streamers to augment and in fact to support a myriad of very good initiatives. What would make sense for you? What is it that you want?

11011 MS. BENJAMIN: May I? Well, thank you for that excellent question.

11012 We would like to see a dedicated percentage of any future resources dedicated inside the program framework of Musicaction and FACTOR carved out for Canada's independent live music sector.

11013 COMMISSIONER LEVY: Thank you very much. That's all I have. I think some of my other colleagues have some questions. Back to the Chair.

11014 THE CHAIRPERSON: Thank you so much.

11015 I will turn things over to our Vice‑Chair for Broadcasting, Alicia Barin.

11016 VICE‑CHAIRPERSON BARIN: Thank you very much and welcome. I have two questions.

11017 The first relates to the activities of the online streamers that have appeared before us. We heard Spotify and Apple Music tell us that they're doing a lot of promotion of Canadian music and playlists and that this is an activity that is extremely helpful for the Canadian music sector. Can I ask you to comment on that, and specifically, is it really that impactful for ultimately benefiting Canadian artists in terms of being able to generate revenues?

11018 MR. WEISZ: I think there's no question that the online platforms contribute in some way to discoverability for artists, but so does the live music industry, so does local media, as we were hearing before. There's a lot of other actors that also contribute to discoverability.

11019 I think the question is to what extent do music fans really latch onto an artist universe on Spotify or on YouTube. To some extent they do, but it's really a first step into the artist's world and then fans need to generally go further in order to ‑‑ or potential fans need to go further in their journey before really creating a connection with that artist.

11020 That's one of the reasons why we think live music is so important, because most... I used to be a concert promoter and I still work with artists in various capacities in my daily life and the real superfans that make an artist's career viable are generally people who have made that connection either in person or via various different touchpoints, not just on an online platform but communicating with the artist in myriad different ways over a certain period of time.

11021 MS. BENJAMIN: I couldn't agree more, Jon.

11022 And to your question, Commissioner, I think it's essential, that work, but it's part of the puzzle.

11023 And to the discoverability piece, so many of our members at the Canadian Live Music Association have dedicated their lives to finding and promoting and helping and supporting Canadian artists. That 30‑cap room in your neighbourhood or in your town or where you live, that one live music space, that local artist, they don't have a relationship with Spotify yet. So again, when we look at the ecosystem there is a significant role for live music businesses and organizations, indoors and out, of all sizes to play in that relationship and build.

11024 And I want to talk again about the opportunity gap. We've just begun to leverage the potential of the music sector in this country, and in part because live music is struggling to recover and has not always been at every policy table, but when we look to other countries, let's look to the U.K. for example, who just announced a 5‑million ‑‑ excuse me, I wish it was 5 billion ‑‑ a 5‑million‑pound program for independent venues and festivals, recognizing this exact conversation. It's not inside a similar policy framework, but really recognizing the intrinsic relationship between the various cohorts inside the sector and knowing that there's more to be done and trying to leverage that opportunity.

11025 VICE‑CHAIRPERSON BARIN: Okay. Thank you for that answer, Ms. Benjamin and Mr. Wiesz.

11026 So if you then step back and look at the sustainability of Canadian music overall, we're hearing from the artists that they're not really generating that much revenue from the plays on online streamers. The streamers are telling us that potentially they are, so we're going to get a handle on that data.

11027 But apart from that, if you look at where the Commission's priorities should be to ensure the sustainability of Canadian music, where would you say we should place our priorities, is it on live venues and events or on the marketing of Canadian music on online platforms?

11028 MS. BENJAMIN: Well, is it an either or, because... And again, thank you for the question. I think that we have to take every opportunity we can and, you know, understand what makes a whole successful career for artists. Both of those elements are essential, in my opinion, and one of them is lesser known.

11029 Look, we fully recognize we're unusual suspects at this table and, again, here to really reinforce the... When we're talking about the sustainability of artists' careers, there's no question that live music is at the heart of that.

11030 And there will be ways to leverage the intrinsic nature of all these moving parts moving forward. And that's why we're so excited about a new policy framework, because if live music is recognized within it, we're just at the beginning of this incredible journey. There are things we don't know yet that we're going to be able to do on behalf of artists when we collaborate to the extent that we're recommending today.

11031 MR. WEISZ: And I would also say that in order for artists to be able to invest money into online marketing, because often on the major platforms marketing isn't always free, they need to be able to generate revenue. And like we said a few times now, most artists are making most of their money from live shows. And so there's the direct‑to‑fan answer that the live performance sector creates relationships with the fan directly, that I was alluding to before, but there's also the fact that it generates revenue that artists can then reinvest into further growing their fan base.

11032 VICE‑CHAIRPERSON BARIN: Thank you very much for that answer. Back to the Chair.

11033 THE CHAIRPERSON: Thank you very much. So we would like to turn things back over to you for any concluding remarks.

11034 MS. BENJAMIN: Shall I begin?

11035 MR. WEISZ: Sure.

11036 MS. BENJAMIN: Or would you like to go first?

11037 MR. WEISZ: I'll go first.

11038 MS. BENJAMIN: Okay.

11039 MR. WEISZ: Yeah, so we've been following the various different presentations that you've been hearing over the last couple weeks, and there's a lot of really important issues that deserve your consideration, clearly. Your job is not easy.

11040 We're here because we feel that live music is one of those issues. And like Erin said, we know that we're not a usual suspect at this table, but we feel we should be. And so thank you for giving us the time and your attention.

11041 MS. BENJAMIN: And I would just add my thanks as well. It's very exciting. My mum is watching. I appreciate that, Mum. Happy birthday.

11042 But I would say I'm not sure that our ‑‑ look, we can't keep doing things the way we've always been doing them. Our organization exists today out of need. And the pandemic has taught us that, you know, live music or all of the silver linings that continue to resonate with us every day are worth paying attention to. We can't go backwards. We've got to go forwards.

11043 We have, you know, a strong association, an incredible community of, again, individuals and organizations who have dedicated their lives to putting artists on stages in small cities and towns and large metropolises across this country. And I would say, in addition to the passion and commitment from our live music industry here, other colleagues and peers of ours across the music industry I think are ready to work with us. We've seen great collaboration with our friends at the Canadian Independent Music Association, Music Publishers Canada, Music Canada, our friends at ADVANCE, the new Indigenous Music Office, Women in Music Canada ‑‑ I could go on and on. We work together on a daily basis almost, certainly since COVID, to understand each other's challenges and work in the spirit of building capacity in our artists and their futures. And we're ready to work together.

11044 And while we recognize through processes like this how fundamental each aspect of an artist's career is, that certainly includes live music. So we are deeply appreciative of being able to share our thoughts and feelings with you today. Thank you again.

11045 THE CHAIRPERSON: Thank you very much. You made a few references to how you're not sort of usual suspects in front of the CRTC. We really do appreciate you engaging in the proceeding. Happy birthday to Erin Benjamin's mum, and thank you again.

11046 MS. BENJAMIN: Thank you.

11047 THE SECRETARY: Thank you.

11048 I will now ask Ethical Capital Partners to come to the presentation table. When you are ready, please introduce yourself and your colleague, and you may begin.

Presentation

11049 MR. FRIEDMAN: Okay. That's all right? Okay.

11050 Speaking of unusual suspects at this hearing... First of all, thank you very much for permitting us to address you today. My name is Solomon Friedman, and I am an Ottawa lawyer, and I'm a partner with Ethical Capital Partners, the private equity firm that acquired Aylo (formerly MindGeek) in March 2023. Aylo owns and operates some of the world's most popular adult platforms, including Pornhub.

11051 In July 2023, ECP made submissions to the CRTC under Notice of Consultation 2023‑138. I am here to expand on those submissions and answer any questions that you may have.

11052 I am joined today by law student and consultant Kate Sinclaire. Through her work in sex worker rights, Ms. Sinclaire previously appeared before the House of Commons Standing Committee on the Status of Women to testify on the Committee's study of Human Trafficking of Women, Girls and Gender Diverse People. I am pleased that she is joining me today to provide important context and information in support of our written submission.

11053 In ECP's submission, we explained that stigma, discrimination, criminalization, labour issues, access to funding, and the ability to host healthy discourse around all sexualities and gender‑related topics need to be addressed before Canada can equitably regulate online adult content.

11054 Moreover, we further explained the reality that the regulation of adult content would require a rapid expansion of the adult industry in Canada for which it is not yet socially or legally equipped. Parliament would be required to decriminalize sex work, and the government must implement policies to promote education and destigmatization and to further take steps to ensure that those involved in the adult industry are not subject to labour discrimination because of their work experience.

11055 ECP has also noted that adult content, if regulated, must be allowed the benefits of regulation. This point should be a simple one. If a type or provider of content is regulated, it should be able to access relevant funding. The same is true of adult content.

11056 This is not a unique concept. To develop the conversation about what adult film is and can be, multiple countries have provided state funding to adult film festivals and productions. The festivals give workers the opportunity to meet, connect, and discuss important issues like worker rights, industry standards, health, and more. After all, sex work is work, and treating it as any other industry will help to keep people within it safe and connected. If the adult industry is regulated and required to make contributions, it must be able to access the benefits.

11057 We have also explained that those working in the adult industry routinely experience financial discrimination. This is not simply a private sector problem; it is aided by government organizations like FINTRAC. Multiple content creators have reported losing their bank accounts and savings because of involvement in this completely legal industry. To be very clear, this is the direct equivalent of a Canadian actor in a mainstream television series or a beauty influencer having their bank account seized because of the work they do.

11058 At present, Canadian government policy actively contributes to the stigmatization of consensual adult content creation. This is blatant labour discrimination and needs to be addressed before a regulatory framework can be responsibly applied. If content creators cannot be assured that their earnings will be safe, would the Commission actually be achieving its policy direction of “supporting Canadian creators and media”?

11059 In short, ECP firmly believes that sex work is work, deserving of dignity, safety, and equal treatment before the law. However, in too many ways, legislation, regulation, and government policy are in direct contradiction to the purposes and principles of the proposed regulatory framework.

11060 I would like to cede the remainder of my time to Ms. Sinclaire. I look forward to answering any questions that you may have.

11061 MS. SINCLAIRE: Hello, my name is Kate Sinclaire. I worked as a producer and director in the adult industry in Canada for approximately 15 years and have worked in collaboration with sex worker rights groups for a decade, currently a second year law student. And I have, in short, to put it in a straightforward way, been making adult CanCon for a fair portion of my life.

11062 ECP has committed to ongoing consultation with those with lived experience in the adult industry. I appear today in my capacity as a consultant to represent the interests of producers, directors, performers, and content creators that work in Canada's adult industry despite the many hurdles that we face consistently.

11063 So I want to start with a basic statement that adult film is valid, legal, and constitutionally protected expression in Canada. We are also often referred to as a canary in the coal mine when it comes to law‑making and overreach.

11064 So I, and others in the industry, have concerns about harm flowing from the implementation of the Act. For example, from personal experience on censorship, I ask you to consider that my online‑released films run approximately 75 minutes, whereas my television contracts generally see the same films cut down to approximately 30 minutes. I want to underline that these are award‑winning films that feature diverse performers representing their lived consensual and respectful queer realities, but broadcast applies a cis‑heteronormative filter that silences their stories and actually maintains a specific status quo that the industry itself is then blamed for.

11065 Recent anti‑LGBT movements make us even more concerned about being able to represent sexualities authentically. Being those canaries, we warn that applying broadcast‑style regulation as it exists today to all online streaming media will mute realities of marginalized communities across the board. The Commission needs to be cognizant of this when dealing with an Online Streaming Act that purports to centre diversity.

11066 Sex work is not inherently unsafe industry, but law‑making around it does contribute to stigma, surveillance, financial discrimination, and even criminalization that causes direct harms to workers and people associated with the industry. Online adult film is one of the safer ways to work under the sex work umbrella, and some specifically choose it for that safety.

11067 So we are already working against many outside forces with the potential to cause harm, and we ask that the Commission not add another layer. This means that regulation of adult cannot be lopsided. If adult contributes to CRTC funding, it must be allowed to benefit from it and support new Canadian producers. Setting adult media apart as different flags it to Canadians as less‑than and has real‑world impacts on folks that work in the industry.

11068 So thank you very much, and I do look forward to answering any questions on the social realities of the adult industry in Canada.

11069 THE CHAIRPERSON: Thank you very much to ECP for your presentation this morning. I will turn things over to our vice‑chair for Telecommunications, Adam Scott, to start with the questioning. Thank you.

11070 VICE‑CHAIRPERSON SCOTT: Morning. So I'd like to start by saying that, yes, to the extent that the unusual suspects are willing to discuss matters before us, they're absolutely welcome at the table.

11071 Having said that, perhaps some of what you've raised in your submissions is more germane to what we're discussing today than other aspects. And I'll ask a number of focused questions.

11072 First, I want to make sure that I understand kind of the fundamental nature of your argument, which I think is that Canada is too prudish to ever give you access to funding, and therefore, on principle, it would be unjust to be required to pay in to such a fund, and you ought to be exempted or adult content ought to be exempted. Is that the gist of it?

11073 MR. FRIEDMAN: So I don't think it's a matter of prudishness, although that may be part of it. I think it has to do with the existing legal framework as well, that there are many threads here that can each be tugged.

11074 So I talked about, for example, criminalization. So in Canada, the buying of sexual services and a number of support activities around that are criminalized. Depending how those provisions are interpreted, they may apply to some aspects of the adult content industry. We see often uneven application of these laws which govern sex work, as Ms. Sinclaire can discuss as well, that prevent things like labour organizing or overarching institutions. So there are legal realities.

11075 There are also social realities, and I wanted to discuss that. So for example, we talked about financial discrimination. That is content creators ‑‑ we're talking about individual content creators, here, much less large organizations or platforms ‑‑ find it difficult to access financial services. I believe that there is one credit union in Canada today that will serve those who are openly working in the adult industry. That's not a major bank; that's one credit union.

11076 We also see social media discrimination that content creators who promote their work on ‑‑ and this is work that is legal and constitutionally protected in Canada ‑‑ find themselves deplatformed by major social media organizations, which means they can't advocate for their own rights online, much less promote their own work.

11077 So our overarching point is that if there is to be regulation, then the industry needs to be treated like any other legal and constitutionally formed form of expression, both in terms of legislation and in terms of policy.

11078 VICE‑CHAIRPERSON SCOTT: Thank you for that clarification.

11079 So you're not the only party to argue the point that people that can't benefit from a fund ought not pay into it. We've also heard from other parties who've made the case that often that's the entire point of a regulation is to compel somebody to do something from which they do not benefit. How would you respond to that perspective?

11080 MR. FRIEDMAN: I mean it depends on the nature of the regulation, right, so it depends on what the aims of that regulation is.

11081 You know, one of the purposes of this framework is to promote the production, the distribution, the consumption of Canadian content. So in order to do that, that requires more than simply having creators, platforms, et cetera, pay into a fund. It requires really establishing the same kind of infrastructure that I think Canada has been very successful in promoting, obviously.

11082 It's funny, as I sit here over the days, you know, online and in person listening to, you know, some complaints but some compliments of the regulatory framework, Canada has been relatively successful in doing that. It would require a rethink in order to do that on the adult side, but it is doable. And it's something that could be accomplished.

11083 Actually, I wanted to ‑‑ I think Ms. Sinclaire can give some more clarification about what that might look like and how it's been done in other jurisdictions.

11084 MS. SINCLAIRE: Yeah, specifically for access to funding, so for example, I have benefited very much as a producer and director from attending film festivals such as the Berlin Porn Film Festival and also Vienna, then also I believe we have had some in Canada that aren't state‑funded, that sort of thing. But these realities exist out there.

11085 And this is where we've been able to ‑‑ myself and other feminist and queer filmmakers have been able to meet and talk about what does ethical production look like, how do we get these ‑‑ get our voices together and mobilized in the face of all these social elements that Mr. Friedman has just outlined. How do we actually do this work and make this industry legitimate?

11086 And so this is the thing about leaving specifically sex‑work‑focused work out of regulation and saying that, oh, you have to pay in but you can't reap the benefits. That's a sign saying that we don't support you and we don't support you having these conversations. We don't support you organizing. That's the problem I think with this imbalanced regulation model is precisely that it sends the message that this isn't okay.

11087 VICE‑CHAIRPERSON SCOTT: Thank you.

11088 So we're fundamentally here because the large online streamers disrupted the regulatory bargain that supported Canada's broadcast policies for decades. Is the adult content business part of that Internet disruption of the broadcasting system? Or are these two completely parallel worlds? I suspect I'm not the only one who sees them as distinct entities. What's the intersectionality of adult content and the broadcasting ecosystem?

11089 MR. FRIEDMAN: I think that's a really great question. It's a really interesting discussion to have. One of the reasons that ECP made a submission and asked to appear and wants to be part of these discussions is, you know, understanding the nature of this industry, which is very popular and very prevalent but rarely discussed in public forums to us means that we're losing the benefits of those important conversations.

11090 So I would say as follows. There's no question that the online platforms disrupted something. They disrupted an industry. They didn't necessarily disrupt a traditional broadcasting model. What they actually disrupted is an online pay‑for‑view system as opposed to monetizing creation via free content supported by advertisers. But it is very much a different form of disruption than, for example, the streaming giants as compared to, say, you know, broadcast television or the video rental system or something like that.

11091 So certainly there has been a disruption, although this is a much younger industry in general in terms of its online presence, but it's a different disruption. And I agree with you that these are really two parallel types of disruptions.

11092 MS. SINCLAIRE: Yeah, I can jump in a little. It's am interesting notion of disruption, right, when we look at how adult has traditionally been treated in broadcast situations in the past versus what has happened in the online sphere. Like I talked about with censorship elements, there are completely different rules in the two.

11093 And so for queer and feminist media, we've really benefited from having a separated kind of structure. So when we talk about disruption, I think that there's a positive to that but that I think online space has given a lot of freedom for folks that were asking for it and weren't able to receive it.

11094 MR. FRIEDMAN: I might just add one thing to that in terms of the positive benefit. You know, when we look at the online content creator model, we see that as one that benefits from having the power, the production conditions, the circumstances in the hands of the individual creator with as few intermediaries between that creator and their audience, which obviously in the sex work context is important and one that I think has allowed this kind of work to flourish, and Ms. Sinclaire referred to it as being much safer work in the sex work sphere.

11095 VICE‑CHAIRPERSON SCOTT: Thank you. I just have two last quick questions. The first is: Is the nature of your business such that you would seek an exclusion under social media or user‑generated content provisions?

11096 MR. FRIEDMAN: So speaking here on behalf of ECP, I'm going to leave those specific types of questions to Aylo to answer. They made their own separate submission as the business. We were here because the ownership group committed to doing wide consultations, which we spent four months doing, and collecting the views of stakeholders and then presenting them to public bodies. So I'm going to defer that question to Aylo.

11097 VICE‑CHAIRPERSON SCOTT: Great, happy to have that deferred.

11098 And my last question, then, in as concrete of terms as possible, what would be the effect on your business if the Commission were to impose a five per cent contribution requirement? How would you react?

11099 MR. FRIEDMAN: Once again, that's something I think for Aylo. That's the business.

11100 What I would say is without the type of safeguards and the benefits that we're talking about, it would be completely inequitable to do that. It would not promote the aims of the Act.

11101 But however, to have a discussion about what an overarching regulatory framework for adult would look like is one ‑‑ is a discussion we very much want to have. We think it's a really important discussion to have.

11102 But to tack on adult and say, well, we're regulating online streamers. You may fit into that definition; therefore, we're going to regulate this content, when, like I think you put it very, very well, these are parallel tracks. I think that would have grave effects not only on the business but most importantly on the individual content creators who have found this really safe and open direct channel to audiences.

11103 VICE‑CHAIRPERSON SCOTT: Great. I'll leave it there. Thank you very much for a serious discussion on a topic that's sometimes difficult to talk about. Thank you.

11104 MR. FRIEDMAN: Thank you for having us.

11105 THE CHAIRPERSON: Okay, thank you very much. I will turn over to Vice‑Chair Barin.

11106 VICE‑CHAIRPERSON BARIN: Thank you. Thank you very much.

11107 So I've heard about your suggestions for changes in the system outside of the ambit of the broadcasting business. So I've been in broadcasting for a long time. I've worked with pay‑per‑view services as well. And pay‑per‑view and VOD, as you've acknowledged, have traditionally been part of the regulated broadcasting system. And with regards to the adult programming that's aired on those services, the Commission has applied programming standards; there were codes against violence. So arguably, there's regulation of some sort in that space in addition to I think the things that you're concerned about, which are, you know, potentially Canadian content quotas and contributions to the system overall.

11108 But I'm still struggling with how you distinguish the same content that is currently distributed via a traditional delivery mechanism, whether it's pay‑per‑view or VOD, and it being distributed via the Internet, and how is it different? Why should it be outside the ambit of the Broadcasting Act?

11109 MR. FRIEDMAN: So I think we're both going to have answers for you. And one of the reasons I'm so delighted to have had Ms. Sinclaire contribute to our submission and be here is it's important to hear from a different aspect of that industry who really has experience on both sides of the ‑‑ both the Internet and the broadcast side.

11110 I’ll say this about the broadcast standards and the internet standards, and I can speak about the standards in place at the companies owned by ethical capital partners. Those include strict rules against depictions of serious bodily injury, depictions of non‑consent, depictions of child sex abuse material, fictional depictions including depictions of intoxication, depictions of lack of capacity and ability to consent, et cetera. All prohibited on the online platform as well.

11111 So we take ‑‑ nobody is looking for ‑‑ I shouldn’t say nobody.

11112 Our companies are not looking for any type of lawless environment online. In fact, we think it’s important to have a conversation about the regulation of that kind of content and the standards that should be imposed. We take that very, very seriously, with the law and legality of the content as a starting point only.

11113 What I would say, however, and I think Ms. Sinclaire can expand on this, is the nature of certain broadcasting regulations excluding important voices in this type of content who have found voice online that is not available in broadcast.

11114 So I’m going to let Ms. Sinclaire add to that.

11115 MS. SINCLAIRE: Yeah. And I know in our submission we specifically addressed a case in the United Kingdom where broadcast standards were being applied to online media that was challenged and thus failed, did not go ahead because ‑‑ again, this is a colleague I’ve met at a film festival. We connected. We talked about ethical production standards. And they come from a specific community that has practices that some people would find objectionable, but this is central their queer identity, right.

11116 And from my experience producing for television, any of those same kinds of acts that I’ve depicted because what I do is very specifically documentary style. I let people tell their own stories, that sort of thing. So I’m not ‑‑ explicitly not imposing broadcast standards on folks, letting them kind of tell their true stories.

11117 So back to this UK example, there was a lot of time spent basically lawmaking around trying to impose these same hetero normative tropes onto people who have found a wonderful space to flourish and find community online. That’s why it’s so important and being so central to queer identities especially. And right now in this world of basically targeting queer speech and it’s a difficult time right now for queer communities, it’s incredibly important to not continue that into this space.

11118 And then ‑‑ so that’s on the censorship piece.

11119 Then there’s also barriers to access. Quite simply, we have commented as groups of producers, directors, performers that the barriers to access to getting your material online is incredibly low versus getting through a broadcaster, getting funding. Have done that as well, but that’s not most people’s stories.

11120 And then you have the question of even if you get through that door, you get to the hurdle of talking to people who hold the broadcast contracts, the TV contracts, that sort of thing, does your material even fit.

11121 So it’s really important to look at those structures basically and understand that, you know, online adult content has existed for decades and it’s made its whole community. It exists parallel as we were kind of discussing.

11122 So yes, it’s very important to move forward understanding that they are different and that the considerations are far‑reaching.

11123 VICE‑CHAIRPERSON BARIN: Thank you.

11124 Just one comment because ultimately the programming standards that the broadcasters in Canada are subject to are voluntary industry codes that are developed by the industry and so to the extent that there would be programming standards in that same vein, they’re not static. They are ‑‑ it’s an iterative process that we’ve certainly applied in the past.

11125 MR. FRIEDMAN: And I just say to that agreed they’re not static. The concern is, are they too slow to change and who’s the one ‑‑ you know, whose input is being sought in those changes and are they keeping pace with social realities and the sort of challenges that, you know, Ms. Sinclaire was talking about in terms of marginalized communities.

11126 I very much appreciate that.

11127 VICE‑CHAIRPERSON BARIN: And I'm glad you’re here participating.

11128 Back to the Chair.

11129 THE CHAIRPERSON: Thank you very much.

11130 We would like to turn things back over to you for any concluding thoughts.

11131 MR. FRIEDMAN: So I'll conclude as follows. When ECP made this acquisition in March of 2023, we made it along with a commitment to engage openly, transparently and publicly with stakeholders. Since that time, aside from a three and a half month consultation period where we heard from content creators, where we heard from academics, practitioners, law enforcement officials, non‑governmental organizations and advocacy groups. We have also been engaging publicly with government, meeting lawmakers, Ministerial offices to have these kinds of discussions in public.

11132 It’s fundamentally our thesis that for an industry which is legal and constitutionally protected, it cannot be that decisions which impact deeply everyone from content creators, employees, the public, broadcast partners are happening without that input, without those stakeholders at the table. So I’m very grateful that you allowed us to appear before you and we look forward to further conversations like this.

11133 It’s important that we have these conversations about an industry that is so prevalent, that is so popular but is very often not heard from in public, so we’re delighted that you’ve given us the opportunity to at least start down that path of these open conversations, so thank you.

11134 THE CHAIRPERSON: Thank you to ECP for your participation.

11135 THE SECRETARY: Thank you.

11136 I will now ask OpenMedia and the Public Interest Advocacy Centre and the National Pensioners Federation to come to presentation table.

‑‑‑ Pause

11137 THE SECRETARY: When you are ready, please introduce yourself and your colleagues and you may begin.

Presentation

11138 MR. LAWFORD: Thank you very much.

11139 Good morning, Madam Chair, Madam and Mr. Vice‑Chairs and Commissioners. My name is John Lawford. I’m the Executive Director and General Counsel at the Public Interest Advocacy Centre. With me from PIAC is counsel Yuka Sai. Also presenting to her right is Ms. Trish McAuliffe, who’s President of the National Pensioners Federation, and from OpenMedia Engagement Network on my left is Executive Director Matt Hatfield and Senior Campaigner Ramneet Bhullar.

11140 PIAC represents the interests of Canadian consumers. We advocate for consumer access, affordability, choice, quality, variety and privacy safeguards in broadcasting.

11141 The National Pensioner Federation is a national not for profit, non‑partisan and non‑sectarian organization of 350 seniors chapters, clubs, groups, organizations and individual supporters across Canada with a collective membership of over 800,000 seniors and retirees devoted entirely to the welfare and social interests of older adults.

11142 OpenMedia is a community‑driven organization that works to keep the internet open, affordable and surveillance‑free. OpenMedia operates as a civic engagement platform to educate, engage and empower internet users to advance digital rights around the world.

11143 Canadians who we represent in part are, in the context of this hearing, citizens, consumers, viewers and, increasingly, also creators in the broadcasting space.

11144 We are here with nothing to gain financially from the matters we speak to. Consumers are, however, very likely to have the most to lose financially in quantity and quality of programming, and in choice of content.

11145 We, as viewers, are willing to support the Online Streaming Act and to make it work, but all parties must compromise. In addition, the Commission should minimize change and disruption during this transition.

11146 Our approach seeks to avoid dangers on both sides. Foreign online broadcasters, if asked to pay too much, might exit the Canadian market, raise subscription prices considerably, trim service options or catalogues, increase surveillance and ad‑tech or resist the timely payments of the assessed contributions. Giving them too much “flexibility”, however, reduces ‑‑ to reduce base contributions would compromise the Commission’s ability to meet the mandate set out in the revised Broadcasting Act. On the other hand, denying any relief for traditional broadcasters and BDUs might lead them to cut broadcasting services to Canadians who rely upon them or to reduce their programming choice, quality or originality. But giving those players too much “flexibility” means uncontrolled abandonment of the system, which also must continue to serve Canadians during this delicate period of transition.

11147 Yuka.

11148 MS. SAI: Thanks, John.

11149 Our new proposed contributions mechanism aims to achieve three goals to make the transition to the new Act work. First, equalize the contributions requirements between traditional and foreign online undertakings. Provide some, but not complete, financial relief for traditional broadcasting undertakings, and increase contributions to funds overall.

11150 Without having the new definition of Canadian content nor the CPE and discoverability framework, the initial base contributions should be treated as interim. However, the initial threshold should be $50 million in Canadian revenues for audio‑visual and $25 million for audio‑only services.

11151 Currently, licensed BDUs are required to contribute 4.7 percent of their previous broadcast year's gross revenues relating to broadcasting activities in Canadian programming. Zero point three (.03) goes to the Independent Local News Fund, the ILNF. Our proposed change: a decreased base contribution requirement of 3.7 percent of revenues, plus the same 0.3 percent to the ILNF, for a total of 4 percent for both traditional BDUs and online undertakings.

11152 If you see our figures on screen on slide 1, for example, using 2022 figures, 3.7 percent of licensed BDUs' revenues would relieve them of about $115 million in total contributions in 2023 compared to 2022. If the same 3.7 percent is applied to online undertakings, using 2022 DMBUs' revenues as proxy, the funds would receive an additional 155 million, for a total of 429 million. As a result, the total funding envelope would increase by about $39 million, that is, 10 percent more.

11153 For audio undertakings, the current CCD requirement is $1,000 plus 0.5 percent of revenues in excess of $1.25 million. Our proposed change is a new formula of $1,000 plus 0.4 percent in excess of 2.5 million.

11154 For example, as seen on our second slide, a radio station with $10 million in revenues would pay 31 percent less under our CCD proposal, but with new CCD contributions from a foreign audio streamer with $10 million in revenues, there would be about $17,000 more overall between the two parties.

11155 Trish.

11156 MS. McAULIFFE: Seniors make up 6.8 million people in Canada, or nearly one in five people. Everyone ages. As we get older, our world gets smaller.

11157 One important way for seniors to avoid isolation, especially those approaching 80 and over, is traditional TV and radio. Access to local news, entertainment and regular, well‑known programming helps them combat misinformation and encourages local and global engagement.

11158 Many, especially newly minted seniors, are tech savvy and use the internet on home computers, tablets, smart TVs and other devices to access online content. But our group is committed to a just transition of the Canadian broadcasting system so that none of our members are left behind, without familiar and accessible programming.

11159 Cable and satellite TV and radio must remain high quality, familiar and available for seniors to access all of the content they need to remain connected to their communities and to the wider society.

11160 Matt.

11161 MR. HATFIELD: OpenMedia community members sent over 200,000 messages during the legislative process and they expect you to implement C‑11 in a fair and rights‑respecting manner. OpenMedia appearing here today is extraordinarily important to the many people in Canada who rarely get the opportunity to appear at a CRTC hearing themselves.

11162 We appreciate that our discussion today is centered on a relatively narrow set of initial discussions about who pays into the system and how much they should pay. But your later decisions about who can access the funds on what terms will have clear consequences for how much should be asked, and of whom.

11163 The funds drawn into the system today must be used to sponsor the growth of a flourishing, self‑sustaining online ecosystem for our culture, not taken from digital platforms to use in offline cultural production.

11164 MS. BHULLAR: Canada's future culture is being built on the internet right now for digital audiences. We need an approach to cultural production that meets young Canadians on our own terms in the formats we use.

11165 Ensuring thriving Canadian culture online will require you do no harm to our current digital creators and help all creators to succeed in digital spaces.

11166 Again and again, our community told us how much they love small Canadian creators, and many of them are creators themselves. These folk deserve your full support and must not be losers in the final system.

11167 MR. HATFIELD: OpenMedia does have a suggestion based on our members’ interests that will benefit digital producers and content consumers and signpost the way to the future.

11168 We noted the CMF’s new digital creators project and we support it in principle, but we would encourage the Commission to greatly expand the focus and funding for digital creators, increasing funding each year as base contributions come in. We propose 5 million be set aside for this purpose, and to increase funding by 5 million per year to a total of $25 million in year 5. This will incent present players to invest in and believe in digital media and encourage present and future Canadian online creators to stay and thrive in the business.

11169 MR. LAWFORD: So in conclusion, we urge the Commission to be deliberate, equitable, considerate of changes and firm in charting a better path forward.

11170 And we thank you and look forward to your questions.

11171 THE CHAIRPERSON: Thank you very much for being here. You bring a very important perspective to the proceeding, obviously representing the interests of Canadians.

11172 I’m hoping that you can help us a little bit with the balancing and prioritization.

11173 So maybe just as a starting point because you do represent some different groups, could you each maybe just take a moment to talk about how you solicit comments, how you engage with the Canadians that you represent?

11174 If you could just maybe explain, is that through surveys, do you do ‑‑ you know, is that through social media? That would be very helpful.

11175 MR. LAWFORD: I'm going to ask ‑‑ I'm going to ask Matt and OpenMedia to start and then Trish, and then I’ll finish.

11176 MR. HATFIELD: So we engage people in a very wide range of ways. We produce a lot of petitions and email campaigns that people can read, decide for themselves do I agree with this petition, I’m going to sign it if I do, or do I agree with this email, do I want to put my own message in and rewrite it. We do that.

11177 In the case of this proceeding, we actually asked our community to just tell us themselves what do they want on implementation of C‑11, and so I think we submitted about 3,800 remarks from our community, which we’ve read in full and which we hope that you will as well.

11178 And you know, people have a variety of perspectives. There’s always a range. But when we bring remarks here, we’re trying to bring the ones that the majority of our supporters seem to be backing.

11179 MS. McAULIFFE: Yes. On behalf of the National Pensioners Federation, we’ve established ourselves in Canada since 1946. We have a long history of advocacy for seniors.

11180 As a grassroots organization, we represent nearly a million members. We organize ourselves in a way of affiliate representatives from across Canada. Our leadership capacity pretty much give us our marching orders through our consultations and developments of resolutions that are presented at conventions and often communications and key themes around communications, transportation, et cetera our main pillars of our advocacy. I’ve presented here on several other means in the past.

11181 For our direct involvement, we pose questions to our leadership members that actively participate in Zoom meetings now, and that’s four times a year. So we present to them quarterly on what’s in front of us and how do we consult with our members.

11182 Our affiliates are gatekeepers to their organizations, so they then confer with their members and give us a sense of what to take direction on and how to proceed, but our resolutions come in many forms, from professional organizations, retiree organizations across Canada. And we simply act on their best interest and make sure that their voices are at the table. And that’s why I’m here today.

11183 MR. LAWFORD: And for the Public Interest Advocacy Centre, we like to, since you’re an evidence‑based tribunal, provide evidence. And in 2015 or so when we did Let’s Talk TV, we did do a survey on Canadians’ attitudes to Canadian content which we really wanted to redo but, unfortunately, this process, I’m afraid, was so rushed and the funding from BPF was so uncertain that we didn’t feel we could redo that survey in time and on budget to present to you.

11184 So I may make reference to the 2015 findings as we go, but that’s our preferred method of getting public feedback to the more sophisticated ideas that we present.

11185 THE CHAIRPERSON: Okay. Thank you. That's very helpful context.

11186 So you’ve talked about the need to balance and, you know, we have, on one end of the spectrum, a lot of danger, is the word that you used, in terms of asking the online broadcasters to pay too much because the fear there is that they may exit. At the other end of the spectrum, we have danger again, which is, in your words, the uncontrolled abandonment of the system.

11187 So I think what you’re suggesting is we try to find something in the middle, and then you’ve added the three goals. So we need to ensure we’re equalizing contribution requirements, providing some relief for traditional broadcasters and increasing the contributions to the funds overall.

11188 And I’m wondering as part of all that as we try to figure out where that all shakes out, what is the ideal outcome here for Canadians?

11189 You just talked about how you represent Canadians and what their views are. What is it after we do all the middle ground and get to all the goals ‑‑ what’s that ultimate outcome?

11190 MR. LAWFORD: I'll start and perhaps some others will add.

11191 We also try to emphasize the word “transition”. This is going to be a turbulent time and it’s going to take some time, so what we’re trying to preserve is access for people that use the traditional system and those that might be using more online approaches in the hopes that the germs of a new approach, for example, local medias fund, will be started in this hearing and be allowed to grow. So if that’s the direction that the broadcasting system goes in, Canadians can play a part, all Canadians, not just folks in the established system.

11192 So we’re really trying to frame this as there’s going to be a period where both have to exist and the obligations that people are used to, as you heard, on like CPE, for example, on the traditional broadcasting side have to be translated into the new language for the online undertakings.

11193 And so that’s a tricky process and I think there’s no one answer. It’ll be different as you go along, but as long as it’s principled, it should be all right.

11194 MR. HATFIELD: Yeah. I mean, I think we've taken some of the stated objectives of this change to the Broadcasting Act very literally. So it is about telling Canadian stories online and how do we tell stories and build culture in an increasingly digital environment.

11195 And so that’s where, you know, my colleague, Ramneet, and I have been saying it is so important that we are reaching people in the ways of speaking, the formats that work for them, and young Canadians have a particular online experience that we need to make sure we’re actually encouraging and rewarding and translating some of the maybe more traditional Canadian storytelling into things that are going to flourish and succeed and find their audience in those spaces.

11196 MS. SAI: So I would also add from the consumer perspective what we would like not to see as a result of these proceedings is for consumers to suddenly see a huge jump in their subscription fees, see a diminishing of the content that they see on their subscription services. So, overall we would like for consumers to keep enjoying the broadcasting content that they already enjoy, and perhaps Trish can also speak to that.

11197 MS. McAULIFFE: Yeah. most certainly. I could talk about this for a long, long time. We know the need for trusted, reliable, vital news in communities. We’ve heard that from the CBA. And we know that seniors rely, not only just for the information from their communities, but on a global perspective of what’s happening around them. And in my statement, I said our seniors’ worlds can get very small, and that’s why you see government implementing anti‑isolation projects. Isolation for seniors is a real key theme today in all of what we do, and trying to prevent that isolation. Cutting off local news radio is a really important piece of ensuring that you back up, when the government says, “We’re going to, you know, prevent isolation of seniors,” this means today. It’s an urgent matter, as we know that local TV and radio are at threat. That’s disconcerting to our members. I don’t think you can go anywhere perhaps where seniors gather and they’ll talk about the morning radio station. And those personalities, whether it’s radio, television, hosting, broadcasters ‑‑ they are part of their family. They trust them and they are exceptionally important in their daily lives to see what’s happening around them, in their immediate communities especially.

11198 So, I could talk about this for a long period of time, but I think you really need to know the crucial means of keeping local news and radio available to seniors, especially in our rural regions where they are suffering most greatly.

11199 THE CHAIRPERSON: Thank you for that. So, along those same lines what are the things that you are hearing Canadians consider essential? So, we’ve heard about local news; you just touched on that. We’ve certainly heard throughout the proceeding the need for content by and for equity‑deserving groups. Can you help us prioritize?

11200 MR. LAWFORD: I don’t know if it’s prioritize, but I believe the people on this panel ‑‑ and I’m going to turn it first to OpenMedia ‑‑ can tell you what they think has not been prioritized enough yet, and perhaps give a flavour of that.

11201 MR. HATFIELD: Yeah. I mean, I think it’s really interesting to read ordinary folks thinking through what’s important to them here, because I think during the legislative process at times it appeared that there is this fight between ‑‑ well, this one side values Canadian culture, and this one side doesn’t ‑‑ and that’s not what you get when you listen to our community.

11202 People place a very high value on Canadian culture, but they have other things that they want in that. They are excited about the idea of it being easier to locate it when they want it. They want to see a Canadian tab, maybe, or some easy way of getting good access. They also value a lot of the cultural content they get from the rest of the world in other systems, and they want that to be clear and untrammeled access as well.

11203 And people also ‑‑ you know, they want to make sure that they have the sort of more open access to some of the systems that the internet has introduced them to. There’s a lot of people in our community who write in and say, “I’m a creator. I’ve always struggled to access the traditional Can con system. I am worried that, if this is extended to online platforms in the wrong way, I’m actually going to face some of the barriers I faced elsewhere.” And so, people are hoping, I think, for a more open system that is very respectful of their choice.

11204 MS. McAULIFFE: I guess I could give this a shot in the sense that I’d like to see a bit of a view of the membership that we represent, and perhaps the priorities are that the status quo is important to a very aged part of our organization, those who have been exceptionally attached to the current roles that traditional television/cable provide them and are affordable.

11205 But then we have a generation of newer retirees that are in fact becoming more and more tech‑savvy, as I mentioned in my outline. So, it is about a bit of a balance in that just transition ‑‑ that’s where we speak about. It’s not that our most seniors are averse to the changing roles that technology and this plays, but it’s important that they’re not left behind. So, that’s, I think, a crucial point for me to make today, but not that they’re averse to the spending and the allocations that need to happen for us, as we age. We know that we want ease of access, and we want all of these technical means to be available to us in easier, tangible ways, and make that explanatory so that it’s the training and the expertise, and that goes along with us as we age. So, not to lose focus on ‑‑ on that.

11206 THE CHAIRPERSON: Okay, thank you. I just have one last question, and it really goes to harm, because you’ve talked a little bit about harm of the wrong decisions. You said the consumers have the most to lose. You talked about the concern around a huge jump in subscription fees.

11207 And I’m wondering about the harm of us not taking action in this proceeding. As you know, because I know you’ve been following this closely, the purpose of this proceeding is really how do we sort of stabilize the system while we’re doing the larger policy work? We’ve proposed bringing in new money quickly, through a potential initial base contribution. And we’ve heard ‑‑ and you’ve heard it from other intervenors ‑‑ “Don’t do it.” Some intervenors have expressed caution. They have said, “Do no harm.” I know that’s been used in different contexts here as well.

11208 Can you talk about the impact on Canadians of not taking action in this hearing by putting in place an initial base contribution?

11209 MS. SAI: Sure. I can give an answer to that. So, in terms of any immediate harms that may fall to consumers, we don’t believe there would be any immediate acute harm from the perspective of individual consumers specifically, but we do recognize from many of the intervenors that have come before you in this proceeding that there is a need for more support in the cultural and production sector. And of course, Canadians do want to see well‑produced Canadian content, and we are also seeing reports of the traditional broadcasting sector’s revenues declining, and that having an effect on how consumers are able to enjoy traditional media.

11210 And so, if the Commission does not do anything to support that and to reverse that in some way right now, then we might see a continuing decline of that sector. And in terms of setting initial base contributions right now, if you leave that until after other proceedings, for example in phase two relating to some of the aspects of flexibility some of the intervenors have been referring to, that might be one to two years down the line before anyone sees any funding. And so, we think it’s reasonable right now for the Commission to act and inject some new support into the system.

11211 MR. LAWFORD: I mean, if I may, I’m not sure whether to bring up this analogy, but we understand where the streamers are coming from, because it’s kind of like going to a restaurant and being asked, when you sit down, “How much would you like to pay?” and you say, “Can I see the menu?” and they say, “Well, soon. But some of the other customers that were here before ‑‑ they don’t want to pay as much as they used to. Oh, and by the way, the restaurant is going out of business and the employees are all mad.” So, you know, we get it. They’re being asked to sort of go into the void and give money, but as you saw from our position, consumers and viewers are not against stability in the system. That’s, I think, the only way to go through this transition.

11212 And we very carefully tried to come up with a position that will allow some relief to present broadcasters in order to ensure content is there in familiar forms, especially to those that rely on it ‑‑ and seniors, and then allow for new growth from new sources, and keep the contribution low enough that you won’t lose those people; they won’t walk out of the restaurant, if you will.

11213 So, we get where they’re coming from. We hear both sides. But at the end of the day, this is Canada. We’re doing this. The law has been passed. So, we’re thing to come up with a compromise position.

11214 THE CHAIRPERSON: Thank you for that. I think the restaurant analogy is timely, given that it’s the lunch hour. I will turn things over to Commissioner Naidoo. Thank you for answering my questions.

11215 COMMISSIONER NAIDOO: Thanks for being here. I have a question for OpenMedia. So, you just proposed in your submission that the Commission should direct the Canada Media Fund to expand funding for digital creators and set aside five million dollars a year. However, as you may be aware, the Commission can’t direct the Canada Media Fund to do anything; we don’t have jurisdiction over its decisions ‑‑ its funding decisions. But I want to get to the core of what you’re asking or what you’re trying to say, because are we to understand from your suggestion that you believe the current funding system doesn’t prioritize digital creators enough?

11216 MR. HATFIELD: Yes, absolutely. I mean, I think we’re trying to look at the long game and the picture of where we’re trying to get. And so, I mean, many of our community members are seniors, and for some of them, the traditional outlets are absolutely essential. And so, you know, we’re very happy to be appearing here with Trish and that side of the picture. But we’re trying to look at, like, where will we be five, ten, fifteen years down the road? And we can see that for many of our younger community members, so much of our culture is going to be produced by digital creators in conversation with each other and with their audiences, and so, not providing some level of support for both new players and for some of the traditional creators to transition to those spaces, I think, would be a huge miss ‑‑ and not setting the system up for success, certainly.

11217 MS. BHULLAR: I also just want to add, I feel like it’s an accessibility question for a lot of creators too I’ve spoken with ‑‑ creators numerous times throughout this process, and a lot of them have just struggled getting past a lot of the bureaucratic processes and are really struggling with some of the administrative stuff that comes up with these processes ‑‑ applying for funds, all of that stuff. So, there isn’t really even any support to access these funds for a lot of creators that are up‑and‑coming and really want to be able to, like, flourish. They just don’t feel supported enough.

11218 COMMISSIONER NAIDOO: All right. Thank you for those answers.

11219 THE CHAIRPERSON: Thank you very much. Let’s go over to Vice‑Chair Scott.

11220 VICE‑CHAIRPERSON SCOTT: Thank you, and thank you all. It’s great to have consumer voices here. And it’s great to have specific proposals coming forward, as well ‑‑ and those are kind of the two themes I wanted to tie together. I think it’s really interesting that it’s the consumer voice is one of the few voices that’s not directly financially implicated by this concern of too‑high a contribution. So, despite not having a kind of a financial risk at play, you’re nonetheless aware of the potential risks of that number being too high. So, I’m curious, when you developed your proposal, was the intent to find a number that’s low enough to prevent market exit ‑‑ a number that’s low enough that you think it could be absorbed without any impact, or a number that’s low enough that if it were flowed through to consumers, the impact would be minimal? And how did you calibrate the objective of your proposal, and how should that inform our own views as we calibrate our own path forward?

11221 MR. LAWFORD: Well, that’s a tough one. I’ll try to remember the question and do it justice. As Rogers said, we don’t know what the denominator is, so it’s kind of hard to say our numbers are correct. All we could do was, as we said in our principles, try to spread the pain, if you will, amongst the new players, who have been ‑‑ I mean, the Act is pretty clear that online undertakings shall contribute, and you guys are here to decide how much. It makes sense, if you view the over‑the‑tops or the online undertakings as BDU‑like, the number we’re suggesting seems reasonable.

11222 I have to say, I listened to the Canadian Association of Broadcasters kind of stealth do one to us this morning, because all their members came up and didn’t tell you it was 20 percent, but they are considering Netflix to be more of a programmer than a BDU, and we had considered in our proposal they would be considered a BDU. So, you might want to get parties’ views on which is it, because “it’s either 20 percent or five percent” is quite a delta.

11223 And we thought that getting up into the numbers like 20, 30 percent, which I’ve heard kicked around for various things in this hearing, would lead to market exit ‑‑ or lead directly to consumer price increases which would be unacceptable to many people, including seniors who have a Netflix as well as their cable and just couldn’t manage it on a fixed income.

11224 So, we were trying to avoid that situation and trying to bring the online people in, and then, as Yuka pointed out, if base contributions are treated as interim and you signaled to everybody they can be adjusted as the other elements of the system are decided, I think that would be the most fair and rational approach. It may not give, you know, monetary certainty to the companies, but at least you would have a couple of years at a base thing. My only concern would be, who is treated like a BDU, who is treated like a programmer?

11225 VICE‑CHAIRPERSON SCOTT: Yes. Maybe just a quick follow‑up then, because we did have Netflix kind of grudgingly conceded that a two‑percent ‑‑ if we are to impose something, two percent would be not unreasonable and would be based on global norms. I think the five percent has definitely served as an anchor, and your proposal sits squarely in the middle. Is that the range we should be exploring?

11226 MR. LAWFORD: Yes. I think that is the range, and the CPE question is quite complicated because what’s CPE in a catalogue that’s brought in online, right, where you don’t control the programming? But I did hear Rogers say two percent as well, which I was a little surprised by, and I think the reason is ‑‑ I shouldn’t speculate, but I think the reason is they’re going to say, “Why not make it two percent for those guys,” and then they’re going to come back to you four or six weeks later and say, “How about two percent for us,” because you gave them two percent. And that’s our concern, and we think that would be destabilizing. So, that’s why we’re asking, we said both, at about four percent right now.

11227 VICE‑CHAIRPERSON SCOTT: Okay. Thank you very much for that specificity. Those are my questions.

11228 THE CHAIRPERSON: Thank you very much. Let’s go to Commissioner Levy.

11229 COMMISSIONER LEVY: I want to ask a question about how we set Canadians up to be competitive in this new online streaming industry. There is a lot of people who have said that we should invest more in the beginning of the pipeline ‑‑ you know, setting people up for success with training in the audiovisual industry. Can you give me some thoughts on that and, you know, how we can set Canadians up for success?

11230 MR. LAWFORD: I’m going to let Matt start.

11231 MR. HATFIELD: Yeah. I mean, I think many, many digital creators in Canada now would say, “We’re already pretty competitive.” Like, there’s some pretty great creators doing very well out there. I think the question from our perspective is, how can we bring in even more than we have currently? And how can we make sure that a variety of groups that face more barriers to access any kind of expressive system have a good access there? So, our community, in their comments, they have a lot of enthusiasm for training of various sorts, for equipment startup costs, potentially for certain types of content for some level of subsidization.

11232 I think the thing that you also see though is that people want to make sure their content finds its audience ultimately. So, there’s maybe some pent‑up frustration from years of feeling, like, “Yes, I believe in Can con. Yes, I want it. I don't know if I am seeing the content that really speaks to me come from the Can con stream.” And of course there’s a wide variety of content that’s going to speak to different people, but I guess our community wouldn’t be enthusiastic about a pipeline where it just continues indefinitely and there’s never an incentive to ensure, you know, the audience is actually there, that the culture is not just being created in a vacuum but is being created for Canadians amongst Canadians. So, the desire there is to just see it’s not just numbers; it’s just, like, did a million Canadians see this? For some creators, it might be that, but did a particular, you know, local town or region ‑‑ was there a lot of enthusiasm on some metrics for the content that came out of there? Was a particular Canadian community measured in a different way actually showing signs that the audience had been found for what was produced, rather than, you know, sort of if we’re creating culture in a vacuum, are we creating culture at all? Right? This is supposed to be telling our stories to each other; it’s not just doing it for museum purposes.

11233 MR. LAWFORD: And if I can just add, Commissioner Levy, on the sort of more traditional broadcasting side, we heard Cogeco talk about the pain of running ‑‑ not the pain, but the pain they’re experiencing of running a radio outfit these days, and they were interested in training. And we noticed in the Act, under 11.1, that it says you can make specific regulations regarding training, which has never been in the Act before. So, we are actually quite hopeful that that perhaps could be a way to get some money into the traditional system for, for example, radio, that train a lot of technicians in their operations but don’t get any, as they say, credit for it ‑‑ or any money for it because the CCD goes through to the artists. So, that was intriguing to us, and perhaps you could think creatively about using training in that kind of way, to support them.

11234 MS. BHULLAR: I also just wanted to tack on really quickly ‑‑ I’m scrambling through my papers, but ‑‑ we did also do a community survey and about 42 percent of the people we surveyed did support more funding for Canadian creators. So, there is definitely an appetite within our community. I think it was about six percent that would support things like discoverability measures and stuff like that. So, people are definitely on par with more funding and more investment into training, and opportunities for content creators.

11235 COMMISSIONER LEVY: Thank you very much.

11236 THE CHAIRPERSON: Thank you very much. So, we would like to turn things back over to you for the final word. Again, and I think you’ve heard from the panel ‑‑ very interested in hearing your perspectives as you represent the interests of Canadians. If there is anything else that we haven’t discussed today that you would like to add, I know you’ve said you hear thousands of comments; if there’s anything additional that’s relevant to this proceeding, it would be great if you could share those. Thank you.

11237 MR. LAWFORD: Okay. I’ll do traffic cop here. So, Yuka is going to start for PIAC, and then Trish, and then we’ll have OpenMedia close. Thanks.

11238 MS. SAI: Thanks, John. So, very briefly, I’d just like to flag one thing that hasn’t really been addressed in detail through these proceedings yet, and that is the dimension of consumer privacy. And so, when foreign online streaming services ‑‑ they find success in Canada, they’re not only benefitting from the subscribership of Canadians and their buying power; they’re also benefitting from their consumer data. And so, that’s another dimension of value that they’re extracting from the Canadian broadcasting system, on top of direct revenues. And so, we hope that the Commission consider that as an additional consideration in terms of the incentives that online undertakings have when they operate in Canada.

11239 MS. McAULIFFE: Yeah. I think I might have taken off from the questions that Commissioner Levy had posed but, as you know, digital literacy is problematic, and I think training can provide some way forward for this transition for seniors. Perhaps we haven’t done enough for those who are in older‑aged categories, but I think there’s lots that we can do to manifest greater access and equality, cultural diversity, and training opportunities in our communities, rural in particular. I know there’s been attempts in the past but I think this is a crucial time that, when I speak about just transition, I think that really should be a part of what we’re looking at to incorporate people who have sort of been left behind all along ‑‑ those of low income and in particular persons with disabilities and low access remotely. I really would like that you would take consideration into those measures. Thank you.

11240 MR. HATFIELD: Yeah. So, you know, we’re here to speak on behalf of ordinary people in their identities as consumers, but also increasingly their identities as digital producers and creators. I think we’re entering a world in which almost everyone on some level is going to be doing some level of that. And there is a few directions we could see things go wrong if things aren’t set up in the right way, and one of them is of course if we start treating almost everyone in Canada as if they’re a giant broadcasting producer, there’s huge expression risks that can emerge from that. And so, we worry about that.

11241 We also worry about the system not being accessible to support Canadian cultural creators, even on a very small level, because so much is being done and is going to be done to revitalize our culture, to build new forms of culture in Canada, and if we’re treating that as sort of an irritant ‑‑ something that’s happening on the side when the quote, unquote “real culture” is happening over here ‑‑ I think we’re going to go very awry and we’re going to miss huge opportunities to actually support an incredible cultural production in Canada.

11242 MS. BHULLAR: I think we’re just asking you to come at this from a forward‑thinking perspective. We want this legislation to work with what the internet is today and not tethered to the media landscape from three decades ago. The internet has allowed for many Canadian content creators to finally have a level playing field, to disrupt traditional media and to find their audience without having to go past all these barriers and feeling like they’re being gate‑capped.

11243 We welcome this legislation providing more financial support for Canadian cultural curation, but Canadians do not want to fit the internet into a top‑down traditional media box. We’re not passive recipients of the internet; we’re active participants in crafting the feeds we want, following the creators we like, and using platforms like Patreon or YouTube to contribute to and earn from fellow internet users. There is no clearcut way of excluding ordinary users or their content from this conversation ‑‑ or this legislation ‑‑ because of that.

11244 MR. HATFIELD: Yeah, I and mean, I think many, many thousands of Canadians are already on some stage of a dream of starting their own podcast or channel, and it may stay a hobby; it may become a passion; it may become their career or livelihood. And I think it can be frustrating for any of us to want to draw a line and say, “Well, on this side, you’re a commercial producer and you have all these obligations, and on this side, you’re just an ordinary person.” There’s just not a clear distinction there, and it’s going to blur further over time; it’s not going to get easier. So, when there are moments of conflict there, I think we need to err towards supporting more expression and choice for those creators and not try to put heavy‑handed regulatory obligations on them.

11245 And we’re going to be just participating very actively in this proceeding, trying to make sure that that is the outcome. I think it’s going to come up much more, of course, as we discuss some of the later phases, but we did recommend sort of an interim funding system today because we think it will be important to look back on the funding targets that are set when we see how the whole system is fitting together, and eventually revise and even recommend changes up or down, based on who it seems is ultimately going to be accessing these funds on what terms.

11246 THE CHAIRPERSON: Well, thank you. We welcome your ongoing participation. Thank you, OpenMedia. Thank you, PIAC. Thank you, National Pensioners Federation. We really appreciate your engagement.

11247 MR. LAWFORD: Thank you very much.

11248 THE SECRETARY: Thank you. We will now take a lunch break, and be back at 1:15.

‑‑‑ Upon recessing at 12:25 p.m.

‑‑‑ Upon resuming at 1:15 p.m.

11249 THE SECRETARY: Welcome back.

11250 We will now hear the presentation of Anthem Sports and Entertainment.

11251 Please introduce yourself and your colleague and you may begin.

Presentation

11252 MR. ASPER: Good morning, Madam Chair, Vice‑Chairs, Commissioners and Commission staff. I know how much work you actually do to prepare the Commission for these kind of things, so thank you for that.

11253 I'm Leonard Asper, President and CEO of Anthem Sports and Entertainment, and with me is Anthony Cicione, who is the Head of our Entertainment Group.

11254 I'm going to speak a little bit first. He will come join me in the middle.

11255 Just to quickly describe who we are, we're an independent producer and distributor of content. We are a proud owner and operator of three CRTC licensed Canadian English‑language entertainment and sports‑themed discretionary television services: GameTV, Game+ and Fight Network.

11256 We are also the owner of a non‑Canadian programming service in the U.S. called AXS TV, which is distributed in Canada on Bell Fibe and Cogeco and others.

11257 In addition, we own two sports promotions: TNA Wrestling, which, as the name says, produces and distributes professional wrestling content, and Invicta Fighting Championships, which is the world’s only all‑female mixed martial arts promotion.

11258 TNA was originally based in Tennessee. We acquired it several years ago and we moved it to Canada. It produces about 200 hours a year of fresh content, of which much is produced in places like Windsor and Toronto. The roster includes Canadian wrestlers, both male and female.

11259 In both cases, Invicta and TNA Anthem staff at Fight Network, contribute to the cause and are editors, and work and create content, digital content. So it's a very integrated company. We leverage Fight Network to improve the production quality. They are distributed on the Fight Network and other Anthem channels, but they are also distributed globally on other networks and they are on global digital platforms.

11260 Both promotions air on our networks, around the world, and on global digital platforms.

11261 Here’s a small taste of what we do. Media companies, we always ‑‑ video never works, but let's see if it does.

‑‑‑ Video Presentation

11262 MR. ASPER: Many of those shows were chosen because, for example, some of the wrestlers you saw are Canadians and Cash Cab, of course, was produced on the streets of Toronto. So that's a lot of our Canadian production that you saw right there and it's produced for the world.

11263 I want to start with going back to Bill C‑10. During the initial review of then Bill C‑10, the House of Commons Standing Committee on Canadian Heritage added a subsection was added to the Online Streaming Act which specifically requires that the CRTC ensure that:

11264     “Canadian independent broadcasting undertakings continue to be able to play a vital role within (our) system.”

11265 That is now baked into the Broadcasting Act, as you know, and it's new, it's the first time it's ever been mentioned, and it is of course law.

11266 Historically, independent broadcasters, and particularly the specialty services, have received the least, if any, of the protection or subsidies that the system provides to Canadian media businesses.

11267 We agree with many others that have spoken during these hearings that the initial base contribution for streamers should be at least 5 percent of annual revenues.

11268 But most importantly, in our case, how the funds are distributed needs to be precisely defined. Anthem proposes that 25 percent of these funds be directed towards independent broadcasters through a mechanism that ensures fast and direct access.

11269 MR. CICIONE: The core business of Anthem is not supported by existing programming funds as a result of a restrictive system that has not evolved to account for changes in consumer behaviour, changes to a revised Broadcasting Act and is based on policies established as far back as the 1980s that are no longer relevant. The new provisions of the law are meant to ensure that this is finally addressed, because for the first time independent broadcasters are acknowledged as a vital part of the system.

11270 But the provisions of C‑11 will be meaningless to independent broadcasters unless there is a direct path for them to access the funds. Some have suggested that the new funds, even those intended for independent broadcasters, could be administered by the CMF/Telefilm infrastructure. We have some concerns about this.

11271 The first problem is that the vast majority of funding bodies, the largest of which is the Canadian Media Fund, allocate funds only to documentaries and dramas. Anthem primarily produces hundreds of hours annually of sports, game shows and other unscripted programming. This type of content is popular and just as culturally relevant. It is also tied to our broadcast licences and specifically required in our carriage arrangements with BDUs.

11272 However, the funding system, particularly the CMF, has created artificial winners and losers. There is a cohort of independent broadcasters like us that are left out. The winners are usually larger broadcasters that are or were mostly owned by BDUs, or by virtue of being over the air reach a much wider audience and can afford to produce more expensive dramas and documentaries. As a result, they have significant financial advantages over independents like Anthem because their content is eligible for funding.

11273 The second problem is that access to the CMF is, as you know, based on the size of a broadcaster’s envelope. The envelope concept provides a very limited opportunity for the broadcasters and we would be happy to discuss this in further detail.

11274 If the CMF were to start fresh with open access to all broadcasters, no reference to historical spending and no restrictions based on content genre, and a specific amount of funding accessible only to independent broadcasters, we could accept that, but we also acknowledge that the CRTC does not oversee that fund.

11275 MR. ASPER: With that in mind, to make things simple, we recommend that the new funds flow through a newly created Independent Broadcasters Fund. We suggest a formula be created that allocates equitable funding to independent broadcasters to produce Canadian first‑run original content which includes at least sports, game shows and unscripted content, among others. The nature of the content should not be relevant, except that it must be Canadian and available only to independent broadcasters.

11276 The consumer should not be overserved by one form of content based on what is funded. The business of content choices should be left to the broadcasters, who should have equitable access to funding.

11277 This is a crucial change for companies like ours because direct funding for independent broadcasters would ensure that:

11278 (a) we are no longer discriminated against;

11279 (b) we would be able to own more intellectual property and control content that can be monetized worldwide on any and all platforms, and that will provide new revenue streams in the face of declining subscriber and ad revenues.

11280 And it benefits others too. Secondary sports leagues and teams could gain new audiences and popularity through broadcast TV exposure, generating much needed revenues for them. It would create more jobs for the smaller end of the production industry, small producers and skilled labour: independent contractors, editors, camera operators, writers, on air talent, et cetera.

11281 Anthem would have exclusive content for our audience, increasing viewership, which will help with our ad revenues in a world of declining subscription revenues.

11282 And finally, our services will become more valuable in the eyes of the distribution platforms, which would increase our value proposition to them. It would also create more opportunity on those platforms to gain subscribers in an à‑la‑carte world and on the pick‑and‑pay part of it.

11283 Bill C‑11 will only be effective if the intentions relating to independent broadcasters are implemented properly. We have hopefully offered a way to do this in a fair and efficient manner.

11284 I would also like to add our support to other important partners in the broadcasting system, like local news providers and the independent music sector, among others. Anthem sees this process as an opportunity for the Commission to ensure that the neglected players of the existing system are treated more equitably.

11285 Commissioners, let me conclude by thanking you again for the opportunity to appear before you. I recognize the material impact that you have constantly had on our industry, most often for the better. I know that as you deliberate, you have the best interests of our industry, and Canadians broadly, in mind.

11286 I do urge you to not let the multitude of voices, though, drown out independent companies like ours. We are proud to be an essential part of the system. We're part of the concept of diversity of voices. With a regulatory framework that works for us and with us, we know that we will continue to be a vital contributor to the system and, as I say, add to the diversity of voices that speak to all Canadians.

11287 Thank you. We would be happy to answer your questions.

11288 THE CHAIRPERSON: Thank you very much to Anthem Sports and Entertainment for being here, for participating in the proceeding. We enjoyed the video played.

11289 I will turn things over to our Vice‑Chair for Telecommunications Adam Scott to kick off the questioning.

11290 VICE‑CHAIRPERSON SCOTT: Good afternoon.

11291 MR. ASPER: Hi.

11292 VICE‑CHAIRPERSON SCOTT: So, a bunch of themes. I'm torn on where I want to start, but maybe I'll start with a broad question because we actually haven't spoken very much about sports over the last three weeks, but we know for a lot of Canadians, sports viewing is actually at the core of their broadcast viewership.

11293 So, a big broad question: What's going on in terms of market dynamics with regards to sports, sports leagues, sports networks, how they're carried on TV, that as we look at redoing our framework, what do we need to keep in mind about sports specifically?

11294 MR. ASPER: Well, I guess the first thing I would say is what has changed about sports with social media and everything is sports is really drama in some ways. I mean, it just goes on all ‑‑ there used to be the games and then there was sort of a newspaper article about what the score was, and then, you know, maybe next week, Thursday, another article started to appear the day before another game.

11295 Now, after a game happens, the players are on social, the leagues, everybody is talking about it all week, and so it's become ‑‑ culturally it's become so much more popular. But the challenge for sports leagues is that very few actually get any money for their exposure if they can even get on TV. You can say all you want about the Internet and social and digital platforms, but, you know, you have to be on TV. At the very least, being on regular cable TV is a marketing platform for further digital monetization.

11296 So you kind of have to start with that broad exposure and then ‑‑ but most leagues don't get paid. They basically get what they call barter deals where the network will say, you know, “We'll put your content on for free”. A lot of stuff you see on TSN or CBC, Sportsnet, no one is getting paid, they're just splitting the advertising revenue, and often the sports leagues aren't really equipped to then sell that advertising revenue.

11297 So yeah, the NHL gets paid. You know, they pay bigger fees for the big four. But beyond that there's a whole sort of next world of sports for the Canadian Basketball League, the Professional Women's Hockey League, the CIS, all the college sports. These kind of disappear. You don't see them a lot. The CHL. And yes, they could have their own app, but they're not making money off of that either.

11298 So I think sports, you know, we would like to put those games on. Anthony, you can pipe in here. I mean there's production costs and if we had capital to produce those games for them and distribute them, you would see more sports on the second tier networks. The NHL can go to TSN or Sportsnet, but we would love to have ‑‑ we have chess. I didn't know chess would work on TV, but it does.

11299 MR. CICIONE: Yes. I think one of the concerns is that, Len's right, the live sports should belong on traditional television.

11300 I can give you a perfect example where my brother said to me, “Why isn't the men's national league game, the men's Soccer National Team game on tonight?” I said, “It is on, it's on a streamer.” Then he goes, “Well, that's not right. I'm not in the streaming world. I pay all this money for my cable and it's a national entity. Why isn't this game on?”

11301 So I think that's one of the fears that we have kind of going forward, that as the leagues continue to grow and the streamers continue to pay inordinate amounts of money, overpaying for properties, they could disappear off the face of regular cable.

11302 And that's market conditions, that's capitalism. I understand all that, but at the same time it's not in the best interest of the viewer and not in the best interest for Canadian sovereignty and that's why we're here.

11303 MR. ASPER: Well, I think there's two parts, though. One is some of the premium stuff does get on ‑‑ like that game Anthony was talking about would not get on broadcast TV. But there's also ‑‑ I mean to the extent the second tier leagues have a digital presence, they need that broadcast side to complement it. It's not the only solution for them.

11304 And there's more and more sports kind of being invented. Like Pickleball is another one that sort of didn't exist five years ago, but now it's the rage and there's a Canadian Pickleball League. Those people need exposure.

11305 MR. CICIONE: And I think that's why we're asking for the rules to change and open it up, so we could include sports as part of what we're doing and get the funding to be able to provide exposure for those leagues that are underexposed.

11306 VICE‑CHAIRPERSON SCOTT: Great. Well, there's the segue I needed to get into my next set of questions.

11307 So you really highlighted maybe two challenges in your opening remarks, one being the ineligibility of certain genres of programming and the other being the disadvantageous or the inequitable treatment of the independents compared to the integrated players.

11308 Are those severable challenges with severable solution sets or are those functions of the same broader problem, they need viewers altogether?

11309 MR. ASPER: I think to some extent they're severable. I mean the biggest challenge is the carriage, the placement on the platforms. We're typically in the lowest‑penetrated tiers. There was a time when a lot of channels, there was something called Category A and Category B, and then it was 1 and 2, and all those channels got into 5, 6, 7 million homes. Let's say there's 8 million Canadian English homes, there's 2 million French homes. So if you were in 6, 7, 8 million homes, you were either there because you were a must‑carry or you were owned by a BDU.

11310 So the independents, you know, continue to have ‑‑ live in this what I would call sort of vicious cycle. You don't get the revenues because you're in the low tier, and they say, “Well, we don't want to put you in a high tier because your programming doesn't rate.” And the answer is, “Well, it doesn't get ratings because only 10 percent of the population can get us.”

11311 So packaging, you know, we've started to voice more publicly the packaging of channels, of independent channels and carriage, like putting them somewhere is important. But, you know, having them just carried is not enough if they're in ‑‑ like I remember we were ‑‑ on one distributor we were in a package and they removed some other channels from the package and I think that package ended up with 45,000 people in it on a BDU that has two million subscribers. So that doesn't help.

11312 So being in packages that have at least 30 or 40 or 50 percent of a BDU's subscribers is really important because that would create more revenues, you know, would create more advertising revenues and likely subscription revenues, because if you're reaching a wider audience, you're getting more viewers.

11313 And I forget the first one. So the placement on systems is important, and that may be solved some other way.

11314 Sorry, what was the first one?

11315 VICE‑CHAIRPERSON SCOTT: The two things I wanted to get at are the ineligibility of certain types of ‑‑ certain genres of content from funding and then ‑‑

11316 MR. ASPER: Yes. Because that could be a completely different conversation to just ‑‑ as I say, whether it's the CMF or a... You know, the problem with the CMF is it's ‑‑ I don't want to say bureaucratic, but it's a big organization that is trying to solve a lot of ‑‑ you know, sort out, sort through a lot of applications and, you know, I think it's just better to have just a separate fund or a fund within that that's administered in a very efficient and quick way. So I think it would be solved as separately, yes.

11317 VICE‑CHAIRPERSON SCOTT: Okay. Thank you.

11318 You didn't mention it today but in your written submission you did speak about, on the applicability issue for contribution, the notion of a group‑based approach versus assessing online undertakings individually and you seemed to come down on the side that imposing a contribution requirement on an online undertaking could result in discouraging investment, discouraging innovation and investment.

11319 Could you maybe walk me through a scenario where kind of an incremental contribution would deter innovation and investment?

11320 MR. CICIONE: Yes. I think what we were trying to say there is we think they're two different entities. The linear revenue shouldn't be associated with the new digital revenue. Our thinking there is they're separate things and if you're getting taxed and contributing on a day one basis and you've put in all the investment and you're just starting out, you're already contributing before you've even started. It makes the business plan a little bit harder.

11321 VICE‑CHAIRPERSON SCOTT: Okay. I think those are my questions.

11322 One last shout‑out. You featured all those Canadian wrestlers. I just want to note the great Canadian chess talent out there as well, folks like Eric Hansen.

11323 MR. ASPER: Well, please send them our way. That would be great.

11324 MR. CICIONE: Checkmate.

11325 VICE‑CHAIRPERSON SCOTT: Thanks very much.

11326 THE CHAIRPERSON: Thank you very much. Thank you for that.

11327 Let's go over to our Vice‑Chair for Broadcasting Alicia Barin.

11328 VICE‑CHAIRPERSON BARIN: Hello. Thank you for being here.

11329 So, one question on your ask for more support for unscripted content. Traditionally, the Commission has identified programs of national interest as priority programming categories for funding because, by and large, the economics of production costs relative to the revenue that you could potentially get out of those programs was kind of a formula that didn't work.

11330 But unscripted content of the type that you've spoken to us about this afternoon, like sports and games, those programs have a different economic formula because they tend to be more commercially attractive for advertising, and they also have an international market that is potentially larger. So why should the Commission reprioritize, or why should the Commission take focus away from programs of national interest to unscripted concept when I don't think the economics are necessarily different than they have been in the past?

11331 MR. CICIONE: I can take that if you want. I think it comes down to what's popular within the framework of the system these days and what the consumers and viewers are watching. If you look at the top‑rated shows every week, the top‑rated shows are game shows, live sports, and reality programming. And those all fall within those genres. And to produce those kind of programs is very expensive. They're six‑figure‑per‑episode expenses at minimum.

11332 But the beauty of that in the long term is you're creating repeat customers who come back to your channel because you consistently provide live sports, as Len says, that tells a story all through the system. The game shows are produced a hundred at a time. It's repetitious viewers. Now you're creating steady ratings, steady revenue, and it's a better business plan.

11333 And for a channel like ours, like specifically Game TV, for example, if we could produce more original Canadian content, we could make the channel that much stronger, and then monetize that same game show in other countries and on other platforms. So to me, the economics do work.

11334 MR. ASPER: I'll just take a different take on that, which is I don't think we're saying reprioritize. I mean, we're just saying if new money is coming into the system, there should be some set aside for the people who are not receiving any funding at all and still have Canadian content restrictions, percentage spending requirements, and our revenue opportunity is much lower than any of the channels that are producing that drama. And how many do they actually produce? They produce the minimum amount and, again, they're in 8 million homes, they've got huge subscriber fees.

11335 And I was in on that side of the fence, and you know, we did ‑‑ it is true, I don't argue at all with the cultural policy of ‑‑ even if they're ‑‑ the viewership isn't as high for the Canadian dramas, for example, every once in a while there is one that hits and does well. And so we should be funding that and giving producers, larger producers in particular, a chance at getting those kind of programs and consumers of finding something Canadian that they love.

11336 And so there's no ‑‑ the point is, let's not choose. And what I'm saying is they were picking ‑‑ you know, the past was to pick only those. And we're saying there shouldn't be, you know, a choice made on the funding. And I don't think this would take away from what's being funded already. This is just saying don't give even more money to the same people.

11337 VICE‑CHAIRPERSON BARIN: Okay, understood. Thank you.

11338 THE CHAIRPERSON: Okay, thank you very much. We are going to go over to Commissioner Naidoo.

11339 COMMISSIONER NAIDOO: Yeah, you've been watching the hearings all week, and you've likely heard some foreign online players saying that if they're going to pay into funds, they want to be able to draw on those funds. And I just wanted to give you a chance to respond and let us know what your thoughts are on that.

11340 MR. ASPER: Well, we weren't prepped for that one, actually.

11341 MR. CICIONE: Yeah, I am.

11342 MR. ASPER: You are? Okay, well, you take it, and I'll see if we agree.

11343 MR. CICIONE: Listen, I think that's short‑sighted, honestly. They're in this country; they're making good revenues; they're running good business plans. They can't pick and choose as to what they want to support and what they don't want to support.

11344 We talk about cultural sovereignty here, and this is Canada. You know, if you want to play in Canada, you got to pay in Canada. That's the way that the system should work, and the system should dictate where those contributions go and what we should be spending the money on.

11345 But they can't come into this territory and take away viewers, take away money out of the system, when at the same time they're monetizing it. They're data mining. They're producing at a cheaper dollar. There are a million benefits that they're just forgetting to tell you. So I would say, you know ...

11346 MR. ASPER: Yeah, I mean they're already getting lower‑cost programming. I mean, I am a “no” as well because they're getting lower‑cost programming because of the dollar, which is perpetually, you know, I don't think that's going to change soon. They work with producers. Remember, you use a Canadian producer who gets the tax credits, and so therefore the budget is about 30 per cent lower. That's why they're producing here. So when they say they're contributing to Canada already, they're doing it because it's good business. They're getting cheaper programming that is globally ‑‑ and they're monetizing it globally.

11347 So I think this whole system was meant for Canadian companies, both industrial and like to create jobs here and industrial policy and a cultural policy to allow Canadians the access to these funds because we're disadvantaged, A, by living so close to this US market. I mean, you know, the other thing people forget is if you're sitting in Germany, you're not getting 400 US channels on TV. We're putting ‑‑ stacking English channels, you know, Canadian channels up against the most ‑‑ the largestly funded channels in the world.

11348 So I think they've got enough ways to make money. They don't need to take it out of Canada.

11349 COMMISSIONER NAIDOO: All right, thank you very much. That's all I have. Thank you.

11350 THE CHAIRPERSON: Okay, great. Thank you very much. Thank you for answering our questions. We would like to turn things back over to you for any concluding remarks.

11351 MR. ASPER: We actually don't have any, but look, I think it's just, you know, the history of the system has been to look at all the players from actors, from directors, from producers and broadcasters and the various types of broadcasters. And some have advantages, some don't. Local news providers, you know, don't have things like retrans consent like they do in the United States. So there's a whole bunch of things that are, you know, going on in this country. You know, advertising per capita as a percentage of GDP is much lower than in the United States because of this Bill.

11352 So I think you just got ideally, you know, you're having to try to manage a lot of interests. And you know, historically, some I would just say anecdotally would have had better lobbying than others, and they have done ‑‑ managed to find a way to get advantages. Like cable was subsidized to build out cable, like and then now cable is contributing a little more through the local news fund. But it's just a question of, you know, looking ‑‑ just not overlooking anybody. And we're just asking to be, you know, in the game.

11353 MR. CICIONE: Yeah, and I would echo those comments and say if there's a base contribution, and it should be ‑‑ the independent broadcasters should be supported, and we should be able to tap into genres that are currently not available.

11354 And I think, Madam Commission, you had some concern about people saying the Commission's going too fast. I think an initial contribution base is exactly the way to go. And take your time to sort out the rest of it. After that, to use a sports analogy, F1: they drive fast, but it's safe and they get to the finish line, so. That's it.

11355 MR. ASPER: That's a good one. But I guess I'll just truly end here. The Independent Broadcasting Group, the Blue Ants, the WildTVs, the Family Channel, and I don't know if Corus ‑‑ I'm not going to speak about Corus ‑‑ but us and, you know, there's a bunch of us. We innovate. We create jobs. You don't see us with 10 channels that have repeats of the same channel, the same show on six of those channels. We only have the one channel. And we do innovate. And I think we do our part of the diversity of the system. And so and we hire a lot of people. As I say, we don't have necessarily 500 people working for us, but when we produce a show like Cash Cab, a bunch of people got work. And so there is ‑‑ we are adding a lot of value to the system. And I just think we're not getting our fair share of what the others are in relative terms.

11356 So thank you very much for listening, and thank you for having this process.

11357 THE CHAIRPERSON: Thank you very much for being here. Thank you for sharing Anthem's perspectives with us.

11358 THE SECRETARY: Thank you. I will now ask TELUS Communications to come to the presentation table. When you are ready, please introduce yourself and your colleagues, and you may begin.

Presentation

11359 MS. SIMPSON: Good afternoon, Madam Chair, Vice‑Chairs, and Commissioners. I would like to start by acknowledging that we are gathered today on the traditional and unceded territory of the Anishinaabe Algonquin people, who have and continue to care for this beautiful land and watershed that sustains us.

11360 My name is Lecia Simpson, and I am the director, Broadcasting Policy and Regulatory Affairs at TELUS. With me today are, to my left, Antoine Malek, legal counsel, and to his left, Jelena Bajic, vice‑president, Consumer Strategy and Planning. To her left is Cameron Zinger, director, TELUS Local Content. To my right, Adam Lipper, senior Strategy manager, and to his right, Jordan Mador, manager, Consumer Product Marketing. And finally, to Jordan's right is Mark Holloway, vice‑president, Content, Strategy and Business Development.

11361 Over the last decade, the Canadian broadcasting system has changed dramatically. Subscribers and revenues have been shifting from the traditional system to foreign streaming services, and that trend is accelerating. Traditional broadcasting undertakings have shouldered all the regulatory burdens, both financial and non‑financial, designed to achieve the objectives of the Broadcasting Act, while foreign online undertakings have entered the Canadian market free of any regulatory obligations. This has had a profound impact on the revenues of traditional broadcasting undertakings and the funding for Canadian and Indigenous content that is supported through those revenues. This proceeding is an important first step in addressing that imbalance.

11362 MS. BAJIC: Canadians are cutting the cord in greater numbers every year. But we are still watching a lot of content. In fact, we're watching more than ever before, the only difference now is we are watching it online as well. In 2012, 83 per cent of Canadian households subscribed to BDU services. Last year, that number declined to just 59 per cent. The problem is not just the cord‑cutters; a growing number of young Canadians have never had a BDU subscription and never intend to get one. What we're seeing is a generational shift.

11363 Creating a level playing field between traditional and online undertakings is a necessary first step towards modernizing our broadcasting system, but it alone is not enough to ensure a robust, sustainable domestic market for the future. It is critical that the new regulatory framework empower Canadian companies to adapt to consumer needs and support the creation, distribution, and discoverability of Canadian and Indigenous programming. The new contribution framework must account for the fact that online undertakings have depleted the revenues of both traditional programming and distribution undertakings.

11364 MR. LIPPER: In a traditional system, there is a symbiotic relationship between programming and distribution services. Programming services need distributors to reach audiences, and distributors require access to programming services to provide Canadians with greater choice, flexibility, and affordability.

11365 Online undertakings are different. They act like programming services when they license or create their programming, but they also act like distributors when they distribute that programming directly to consumers. By competing with both programming and distribution undertakings, they have created a shortfall in revenues that has led to a decrease in funding for Canadian and Indigenous content over the past decade. Where in 2012, BDUs contributed $505 million to the creation of Canadian content, by 2022, funding had decreased to $390 million. It's only fair and equitable that the Commission look to online undertakings to replenish that lost funding and ensure there's a framework to support a balanced and sustainable Canadian broadcasting landscape.

11366 As a first step, TELUS has proposed an initial base contribution of three per cent for online undertakings that distribute their services directly to consumers. That contribution will help stabilize funding as subscribers continue to transition from the traditional system to online services.

11367 However, this alone is not sufficient. It must be met with a corresponding decrease in the contribution level imposed on traditional BDUs. While subscribership and revenues continue to decline, BDU costs have not. A five per cent contribution is no longer sustainable.

11368 MR. MADOR: While the shift to online viewership presents challenges to traditional players, it also presents opportunities. The new framework should ensure that Canadian companies are able to act on those opportunities.

11369 One area of the online TV market that has great potential, but will require the Commission's support to develop, is the virtual BDU, or vBDU for short. Virtual BDUs can provide significant benefits to Canadians, including lower prices through bundled services, simplified billing and account management, and increased discoverability of Canadian and Indigenous content. However, Canadian companies face significant challenges to be able to launch this type of service. One of those challenges is cost. The second challenge is access to content.

11370 In the next phase of this regulatory process, the Commission will need to ensure that Canadian companies have access to the content they need to create virtual BDU services. Content exclusivity in the online system will prevent the emergence of distribution options, depriving Canadians of the benefits of increased competition, innovation, and affordable offerings. However, the CRTC can and should address the cost challenge in this proceeding. This is why TELUS has proposed that Canadian vBDUs be temporarily exempt from contribution requirements, to help foster the development and growth of these nascent Canadian services in this part of the online TV market.

11371 If the Commission decides that Canadian vBDUs should not be exempt from contributions, then, at the very least, any contribution imposed on them should be calculated only on the value‑add or marginal revenues earned by the vBDU. This is essential for the creation of a viable service. If contribution is applied to a vBDU's gross revenues, any profit margin will disappear, and the service will never launch.

11372 Foreign vBDUs have established themselves in the Canadian market, and now is the time to empower Canadian companies to participate in this market too. This is an exciting time, and it should be Canadian companies who bring affordability, innovation, and choice to Canada.

11373 MR. ZINGER: Finally, TELUS wholeheartedly supports the objective of providing sustainable support to original Canadian and Indigenous content, and we can think of no better avenue to achieve these objectives but through innovative community programming. That is why we are proposing that BDUs be permitted to direct up to two per cent of their annual revenues to the creation of local programming.

11374 We can't wait to share with you some of the incredible, locally reflective, and globally compelling stories of our creators. But first, we'd like to show you just a glimpse of some of the incredible work that TELUS' community access programming Storyhive has been able to facilitate.

‑‑‑ Video presentation

11375 MS. SIMPSON: The review of the broadcasting framework is long overdue, and we encourage the Commission to adopt measures that ensure the new regulatory framework is flexible and forward‑looking, one that provides healthy competition and innovation, prioritizes the emergence of strong, Canadian‑owned and ‑controlled entities, and delivers sustainable funding for Canadian and Indigenous programming ‑‑ all of which starts with the establishment of an equitable contribution framework.

11376 Thank you for the opportunity to participate in this proceeding, and we'd be pleased to answer your questions.

11377 THE CHAIRPERSON: Thank you very much to TELUS for your participation in the proceedings. Thank you for showing us the video with the various stories. I know that the Panel is very much looking forward to the discussion, and I will turn things over to Commissioner Levy to begin the discussion. Thank you.

11378 COMMISSIONER LEVY: Good afternoon, and welcome, and congratulations on 10 years of Storyhive. I had the opportunity to judge some of the Storyhive stories in a distant ‑‑ in another life, in a previous life.

11379 Lots and lots of questions because you raise some interesting new wrinkles, if you like, in some of the things we've heard from others.

11380 Starting with your proposal of an introduction of a three per cent revenue‑based contribution for online undertakings with 200,000 subscribers, I think linking to subscribers is somewhat different. Why do you think that 200,000 is the appropriate number?

11381 MR. MALEK: Thank you for the question, Commissioner Levy.

11382 Let me start by saying why a subscriber‑based threshold we believe makes sense. And I think the best way to address that is to talk briefly about the Commission's broadcasting ownership group approach. This is one that's been proposed in the context of contribution and has been adopted in the context of the registration requirements and the conditions of service thresholds.

11383 The reason I want to talk about this first is because the two issues are related. In the context of the registration requirements and the conditions of service, the Commission acknowledged that, you know, this is resulting in an asymmetric treatment between online undertakings that are part of a ‑‑ that are operated by a traditional undertaking or as part of an ownership group and those that aren't, and that it would disproportionately impact traditional broadcasting undertakings.

11384 But the impact was considered light enough and the importance to the Commission of monitoring the transition from the traditional system to the online TV market great enough to justify using the broadcasting ownership group approach.

11385 But I think in the context of the contribution requirements threshold, it’s not the same considerations. I think if you apply a threshold based on revenues in this context, what that means is an online undertaking that would be launched by a traditional broadcasting undertaking by a Canadian company, basically, would, in almost every case, be subject to contribution requirements from the very first dollar of revenue that it earns, and that means it may not launch.

11386 And I think this is something that the Commission has long recognized in the traditional system. Small undertakings need room to grow, a bit of a runway, until they can afford to pay contributions or even comply with other regulatory requirements that come with an administrative burden.

11387 COMMISSIONER LEVY: Well, we're talking about thresholds here of 25 million or 50 million. That’s what’s been suggested. So it’s hardly as though they’re getting, you know, assessed on the very first dollar. They have to meet a threshold.

11388 MR. MALEK: Well, I think if you're looking at the revenues of the broadcasting ownership group, then that online undertaking when you count the traditional broadcasting undertakings as revenues, it will exceed the threshold. And that’s why a subscriber‑based threshold, we think, would be a way of avoiding that issue. You can have the broadcasting ownership group approach that lets you see the whole picture for the traditional system and its transitional line while giving that runway for growth.

11389 COMMISSIONER LEVY: How would you treat those entities that are free or that don’t have a subscriber equivalent?

11390 MR. MALEK: I think the Commission has already addressed that issue, actually, in the annual digital media survey. I think in the context of that survey, the Commission has described ‑‑ has defined subscribers, sorry, as including paid subscribers as well as freely accessing subscribers. So if you have a user of a free service that’s ad supported, say, that would count ‑‑ that user would count as a subscriber. And what the annual digital media survey requires online undertakings to report is the number of subscribers who are paying the full subscription price, the number who are paying at a discount, and the number who are accessing for free.

11391 So I think by defining subscribers in a way that captures those users for free ad‑supported services, you can address that issue effectively and, in fact, you already have.

11392 COMMISSIONER LEVY: You've said that online aggregators such as virtual broadcasting distribution undertakings or VBDUs should be allowed to develop to a similar extent as foreign aggregators before financial contributions are ‑‑ financial requirements are imposed.

11393 Could you tell us a little bit more about the development of these services in Canada?

11394 MS. SIMPSON: I'll start asking my friends, Adam and Jordan, perhaps, to give you a rundown of what we see in the Canadian market.

11395 COMMISSIONER LEVY: And let's make sure that we get the foundation.

11396 So give us a little primer on how VBDUs are different from the traditional BDUs, please.

11397 MR. LIPPER: Sure. Absolutely, Commissioner.

11398 We’re currently ‑‑ so in its most basic sense, a VBDU very much mirrors a BDU in that it aggregates programming services together. We’re currently seeing two different models in the market right now, ones that are more closely resembled to that traditional system where you’re seeing streaming TV channels, perhaps fast channels, all aggregated together into a linear like experience.

11399 Some examples of those would be Pluto TV or FuboTV, both operating for and operating in Canada.

11400 Another model that we’re seeing is a more on demand focused type of VBDU where they will still potentially aggregate streaming TV properties but will ‑‑ the on‑demand component is the focus. They might also resell streaming services who themselves distribute directly to consumers.

11401 So some examples of those, to help put some context, would be Apple TV or Prime Video. And in that case, Prime Video acts as an online undertaking into themselves, but with their Prime Video channels, they’re aggregating other services together to form a VBDU.

11402 And I would argue in that case that they’re the largest operating VBDU in Canada.

11403 MR. MADOR: Yeah, I'd just like to add how challenging it is for a company like TELUS to enter into the VBDU space and compete with some of these foreign online undertakings that have in some cases a decade head start on us.

11404 So TELUS has ‑‑ it’s not a VBDU, but it is a product in that space called Stream+, which is a bundle of three subscription services, Netflix, Apple TV+ and discovery+ that we resell for a discount.

11405 This is very much a way for us to enter into this market and approach the customers that Jelena had mentioned in the opening statements that are cord‑cutters and this new group called cord‑nevers. But we have challenges, structural challenges such as how do we get access to the content and how do we create a value ‑‑ create value to customers when the cost of reselling those services are much higher.

11406 TELUS as a non‑vertically integrated company has this more acutely where we don’t have the same options as some of our peers to leverage our in‑house content as the anchor point for a VBDU product. And so when we talk about this exemption, it is important for companies like TELUS to have an opportunity to compete in this market against very large and already embedded foreign online undertakings.

11407 COMMISSIONER LEVY: It sounds as though it's still a very attractive proposition. There are many who say that the sort of VBDUs are the way of the future and I want to look ahead just a little bit and get your impressions for if we have incumbent BDUs that decide to transition to the VBDU model, shouldn’t they be treated the same way as they were in the past? They’re just delivering in a different way.

11408 MS. SIMPSON: I understand that they are essentially comparable to a traditional BDU, but we have a market where ‑‑ and I’ll ask my friend, Antoine, to top up on this ‑‑ where in the traditional sense there are some things that don’t exist in the new broadcasting online realm, for example, access to programming where when a new service launches, for example, in the regulation a BDU has access to that service. So every BDU, you’ll have more than one BDU in one territory. Consumers benefit from the competition there, the packaging, the differentiation between two products of traditional BDU, where in the online market if only one incumbent BDU, for example, decides to launch that VBDU, there is no competition. They’re the only ones that have it, so everybody has to go to them and you missed those benefits.

11409 But the reason we’re saying that, at this point, we would not want to see contribution on the VBDU is that right now they don’t exist in the Canadian market. And one of those ‑‑ you know, lack of access creates a problem where there ‑‑ where you do get them, there is no margin, so there’s no viability of the service to be able to launch. And it’s great service for Canadians and we really want to do it, so in order to foster the emergency of these Canadian grown opportunities for ‑‑ you know, for our own subscribers to be able to get competitive innovation, innovative offerings that are affordable, we’d like an opportunity to start and to get into the market and then create that for Canadians.

11410 COMMISSIONER LEVY: You're saying that if we should decide to extend the initial rate contribution to VBDUs that you want it ‑‑ your suggestion is that it should be on the margins. The large online streamers would probably say, well, if you’re going to do that for them, why don’t you do it for us. And then rather than an initial rate contribution on gross revenues, we’d be talking about something else.

11411 MS. SIMPSON: So we're ‑‑ the way we're looking at it is step one mirrors the Category 1 contribution, which is generally levied on distribution, and so it’s the function of the distribution that we want to capture in the first step in our proposal.

11412 The second step you’ll look at more of a programming aspect, so where they create, they make their own programming, they should kind of mirror up with the traditional system in that respect.

11413 But from a margin perspective, it does capture where an online undertaking has already made itself available directly to consumers and then it’s essentially also allowing it to be ‑‑ itself to be resold. It’s still a distributor on this end.

11414 So the way we look at it, the margin will allow companies to make a VBDU product where it’s not just one ‑‑ it’s not just one singular online undertaking. You’ll take a number of them, put them together and give the benefit of the pricing benefits that happen with bundling, more choice, innovation and that.

11415 And I’ll ask my friends to tell you all the different things that VBDUs can provide to subscribers, but it’s actually a benefit to the underlying initial originating online undertaking as well when they go into a margin because if I’m reselling his service, I’m only going to sell on the portion I kept. He’s only going to pay on the contribution that he kept. There’s more of an incentive to allow a third party to then also put that package together with something else to sell it.

11416 COMMISSIONER LEVY: Okay.

11417 MS. SIMPSON: Did you want to speak to some of the benefits, actually, just quickly?

11418 MR. LIPPER: Yeah, absolutely.

11419 I think one of the key aspects that a VBDU can provide right now is something that’s very important to Canadians in that affordability. So when we talk about the potential to be able to bundle services together to provide a discount to Canadians, and that’s something we’re starting to see. Jordan mentioned our Stream+ products that we’re dabbling in and, anecdotally, in the U.S. we’re starting to see telcos bundle services, streaming services together to provide discounts to consumers.

11420 You really have to look at the whole model in that scenario, so because the streaming service doesn’t rely on the distributor in that case like they would in a traditional system where the programming undertaking relies on the distribution undertaking, in this scenario you’re bundling together services who themselves distribute directly to consumers, so the streaming services are ‑‑ they safeguard their earnings, essentially, and we’re left with extremely narrow margins when we resell these services.

11421 So if we look at an example to help illustrate, if you look at a $10 streaming service or a streaming service that might retail for $10 direct to consumer, if that gets bundled together, the vast majority of that $10 amount is going to be allocated towards the wholesale rate back to the streaming service as well as any discounting that is offered to the customer.

11422 What you’re left with is most likely under a dollar, so in the sense, and the VBDU still has to cover all their operational costs, their marketing costs, contribution, if any, and then still have room for profit and viability.

11423 So I think that’s one of the key reasons why we’re asking for an exemption for Canadian services, to allow them to enter the market and grow, but if the Commission deems that contribution be necessary as part of this phase, we’re asking for it to be applied on the margin specifically because in that example, if you look, it’s three percent of gross, 30 cents. Out of the sub‑dollar that we had to begin with, there’s no room for profitability at that point, whereas on the margin at three cents, it allows for viability and would empower Canadian services to enter a market that’s currently, as I mentioned, dominated by foreign services at the moment.

11424 COMMISSIONER LEVY: In your intervention, you support a small percentage of base contributions be directed to support the Broadcasting Participation Fund, but I don’t believe you specified a percentage, and I wonder if you would like to do that now.

11425 MS. SIMPSON: Commissioner Levy, thank you for the question.

11426 We didn't specify how much. We think public discourse, though, and the participation of groups like PIAC that you heard earlier representing the public are important and probably more important as, you know, we bring online into the regulatory fold.

11427 I don’t know that it’s something that you just assign a percent to. I think it might be a little more not difficult, but require a little bit more ‑‑ I’m not sure how much they need. You know, I think it’s based on a need in that one.

11428 They know what their participation has been in previous years and maybe they would give you a better ballpark of what they think is an annual amount that it would take. And also, the Broadcasting Accessibility Fund. Both of them we kind of put in that same amount.

11429 But ‑‑ and the other thing is, until we know what percentage the Commission’s going to apply as a contribution, I’m not sure exactly what amount. I’m sorry.

11430 COMMISSIONER LEVY: Just fine.

11431 You've talked a little bit about BDUs and how they should be able to allocate a higher percentage of their contributions to things such as local programming. In the context of this hearing, when we’re looking at the whole field of local programming and how to support local programming, if you had that sort of flexibility, how would you use it?

11432 MR. ZINGER: Thank you for the question, Commissioner.

11433 Obviously, we would invest that back into the community channel currently that we’ve been operating through our programs. We’ve had 10 years of experience to grow and evolve our programs.

11434 We would develop some of our training programs again. We’d be able to reach more people. Currently right now, with the number of applications we get to the community channel, about 80 percent of the people that apply we have to turn away because we just don’t have the funding for it.

11435 What we are seeing is major success from our training programs through our additions, voices. On location, we’re seeing success from those creators going on into other content creation roles, going into the media landscape, creating other content. So we want to reinvest that additional funding back into the programs that we currently have in place so that we can continue to provide training, capacity building for community members.

11436 COMMISSIONER LEVY: How else should the Commission take advantage of perhaps some new flexibility following this process to support local programming and news through funds of one kind or another?

11437 How do you feel about spending in that area?

11438 MS. SIMPSON: Thank you, Commissioner Levy.

11439 We, right now, as a BDU send 0.3 percent of our revenues each year to the Independent Local News Fund. I’m getting it confused with the old LPIF.

11440 And one of the things that the Commission allowed in its 2016 community channel review was actually that where a BDU had an affiliated or, I suppose, doesn’t have to be affiliated commercial over‑the‑air station or stations and they produced local news, they could redirect the funding that they had previously sent to the community channel onto the creation of more local news on their commercial stations.

11441 So in a way, when TELUS asks for an increase from 1.5 to 2 percent and that flexibility to send a little more of our funding to the community channels, our BDU ‑‑ you know, the other BDUs that maybe are vertically integrated and have their own news and over‑the‑air stations, they can take that and top up their own news, local news, and that just gives them a little bit more money. And we hear that they are ‑‑ you know, everybody is really struggling with their local news right now, so that’s a ‑‑ you know, that helps that.

11442 On the other hand, if you apply the local news fund ‑‑ Independent Local News Fund percentage also to the online undertakings and their contribution, you’re going to help supplement the independent voices that are also trying to make those local news.

11443 So we see it as one that helps if you want to send your money to community programming and the next creators for a company like TELUS that is, you know, so engaged in our community programming. And then for companies like, you know, maybe Rogers and Bell, we’d rather take their community programming and create more news with that.

11444 COMMISSIONER LEVY: My final question.

11445 I'm just looking at your remarks and paragraph 13, you say that there should be a decrease in the contribution level imposed on traditional BDUs and because you say a five percent contribution is no longer sustainable.

11446 And I wonder if you want to explain why, in this new ecosystem, the five percent BDUs, which is, you know ‑‑ it’s on revenue. It’s not a capped amount, certainly, but it’s not a fixed amount, either, so how has it suddenly become no longer sustainable?

11447 MS. SIMPSON: Thank you.

11448 If you look at the BDU decline, the traditional market over the years, you can see the subscribership leaving year after year, and it’s accelerating. The revenues. So you’ve got revenues where you’ve got subscribers leaving the system altogether and then you’ve got revenues decreasing where subscribers are what you might call cord shaving, which is taking out some of their programming from the traditional BDU and moving it online. But what you are seeing definitely in that is a relationship between the decrease in revenues in the traditional distribution market and the increase in revenues on the online market, and they’re quite similar so they’re inverse, showing that, you know, the revenues are moving from one place to the other.

11449 The reason it’s not sustainable, it’s not sustainable for the BDU market that now doesn’t have that kind of profitability to continue to support, but on top of it, if you want the ‑‑ in our eyes, if you want the contribution funds to stop just going down and down and down, you have to replenish what we’re losing on the traditional BDU revenue side with what is being gained on the online undertaking revenue side.

11450 So it’s just a matter of trying to allow that fund to stabilize and then grow with the growth of online undertakings because the traditional BDU system isn’t going to get bigger. I don’t think it’s going to pick up steam again.

11451 It’s ‑‑ people are moving online, and it’s happening. It’s happened for 10 years now and it’s going to continue to happen.

11452 So one side, I think it’s fairly obvious from the decrease that, you know, you can’t ask a declining market to continue to be the only place that that funding’s being made or continue even at the same level it did when it used to make a lot of money.

11453 On the other hand, we looked at some of the many other unaccounted‑for financial and non‑financial contributions that distributors are making. And I’ll give you an example, is that each year, and last year in particular, the traditional BDU market spent $175 million on affiliation agreements with services benefiting from mandatory distribution, the 9(1)(h) services. And the other day I heard you say something that was ‑‑ really stuck in my mind, Commissioner Levy, and you said if we don’t count it and we don’t measure it, it doesn’t exist. You know, it's not accounted for.

11454 And we think that should be accounted for, and that is the difference between five percent for a ‑‑ excuse me, a BDU today and three percent tomorrow.

11455 MR. MADOR: If I could just add, Lecia was 100 percent right. We are experiencing a lot of pressure on all sides.

11456 She had mentioned the willingness to pay for linear subscriptions is going down, and there are less subscribers interested. We’ve also seen some of our traditional revenue sources like pay‑per‑view and on demand decline ‑‑ revenues decline dramatically.

11457 In the CRTC’s financial summary of on‑demand services, the revenue for on‑demand rental movies and pay‑per‑view declined from 271 million in 2017 to 159 million in 2022. So that’s a 40 percent decline.

11458 In TELUS’s own products, we had launched a product called “Pick TV”, which was a budget linear TV service or product, in 2017 that we are ‑‑ we were very proud of. And we had to make the very challenging decision to turn it down because it was not profitable earlier this year, in February.

11459 So that was a great reflection of we are endeavouring to provide affordable TV options for Canadians, and it is becoming an increasingly challenging market to keep our product sustainable.

11460 COMMISSIONER LEVY: Just a last comment that you might want to address, and that is, you know, we are being tasked with ensuring that if an initial rate contribution is set, that the monies received should be incremental to the system. So, what if any flexibility do you think is in the direction and the Act to allow us to essentially backfill the traditional BDUs and so forth that are struggling at various degrees, so to speak?

11461 MS. SIMPSON: Thank you, Commissioner. And I’ll ask my friend Antoine to top up, but I think right now, it’s not just a matter of backfilling; it’s a matter of actually stopping the bleeding that we’re seeing too. So, it’s not just adding funds to something that was stable to start with. We’re trying to get funds from a group that hasn’t paid funds before, but while the funds that do exist are plummeting every year. So, I’ll also note this at step one ‑‑ the category one is not the biggest part of the contribution in general of the contribution framework. I think, if you look at, you know, any year where we’re in 3.5 billion kind of ranges of contribution to Canadian programming, the BDU portion, the category one, is somewhere ‑‑ it’s more than 10 percent less than 15 percent of that amount. So, I don’t think we have to necessarily go in with a vision that this, the first step, has to fill everything.

11462 Also, I will note that the online audiovisual revenues ‑‑ and I know there’s not a lot of years that we can see; there’s not a path like we have for the traditional system where we have 20 years of data, but ‑‑ they are increasing. Last year it was, you know, 11 percent increase in their revenues while the traditional market dropped six percent. So, you’re seeing at least a better increase on the online than you’re seeing decrease on the traditional. So, the hope is that you stop the bleeding today, and then that fund actually does grow in the future as those revenues continue to grow.

11463 MR. MALEK: Thanks, Lecia. Yeah, Lecia has covered much of what I wanted to say, but I just want to add I don’t think that incremental increase should come from just this first step, because if you look at the effect that online undertakings have had on the traditional system, they’re contributing with distributors and with programming services. And I think you’ve heard over the last few weeks from a number of broadcasters who have come in to say that, you know, the impact it’s had on them is these streaming services are raising the cost of programming for them and making it less available. Or, when they control it, which is often, especially if they are U.S.‑based, then they are just withholding that programming all together so that they can offer it exclusively on their streaming service.

11464 So, I think, you know, the equitable thing to do here is to treat ‑‑ you know, the contributions that they make should recognize that they have two functions here; they’re wearing two hats ‑‑ as distributors and as broadcasters ‑‑ and they’re having an impact and taking revenues away from both sides of the traditional system. And so, the funding for Indigenous and Canadian content that those revenues supported has gone to the online undertakings. I think that’s why it’s a combination of both step one and step two of the Commission’s process where you would find that incremental addition.

11465 COMMISSIONER LEVY: Thank you very much. I really appreciate your participation, and those are my questions. I hand it back to the Chair.

11466 THE CHAIRPERSON: Thank you for that. Thank you, Commissioner Levy. I will turn things over to our Vice‑Chair for Broadcasting, Alicia Barin.

11467 VICE‑CHAIRPERSON BARIN: Thank you, Madame Chair. Hi, TELUS. Thank you for your presentation this afternoon. I have a couple of questions, and the first goes back to the VBDU discussion. So, I just want to understand, because we’re looking at broadcasting, and understanding that we’re a converged regulator and we have telecom and so do you, so, the way you described what you’re doing as a VBDU is that you’re taking some of the online streamers like Apple TV and Netflix and Disney+, et cetera, you’re bundling them, and you’re selling them at a discount.

11468 So, if we assume that the initial base contribution is applied as a percentage of revenue to the revenues of the online streamers, how does the VBDU benefit the Canadian broadcasting system? Because ultimately, what you’re saying is, take those subscribers that would have bought these online streaming services directly and contributed a portion of their revenues ‑‑ take them out and put them in a VBDU that doesn’t contribute to the system, and ultimately, our mandate is not to benefit individual companies, but it’s to benefit the Canadian production of programming.

11469 So, can you walk me through what the rationale is for your position that VBDUs should be exempted?

11470 MS. SIMPSON: Sure. I'll start and I’ll pass this, but I think when you ‑‑ and I think my friend Jordan will speak about subscription fatigue and some of the things that a VBDU can give, but if I can just kind of talk about it more generally. There is a benefit because once you put a whole bunch of services together in packages, people are probably going to buy more of them, because they’ll buy them as a package. They’ll buy more if it’s less price. So, you will probably end up ultimately selling more, I think, to the subscriber, and otherwise it’s a whole bunch of individual online undertakings. I think that’s what you’re getting at. If it was 10 dollars each and we sold them at nine, it’s almost like you’re discounting what money would be available to then apply the contribution to.

11471 But I want to talk about Stream+ in particular because it’s maybe a less tangible ‑‑ or an intangible benefit, but it’s also a big plus for discovery of Canadian and Indigenous programming. It’s not just putting three services together. Would you talk to that, Jordan?

11472 VICE‑CHAIRPERSON BARIN: Yeah, can I stop you there just for a minute? I do see the benefit for driving ‑‑ when you’re bundling it with a mobile subscription or a broadband subscription, and I take your point that if you bundle and discount, you might get more subscribers, but what you’re saying is that those subscribers or the revenue that’s generated by those subscribers should not be subject to an initial base contribution.

11473 MS. SIMPSON: Oh, okay. We aren't suggesting that. This is great, thank you very much. Where we are selling an online service and reselling it, that is also about direct‑to‑consumer, we are actually saying they would still contribute. They should still contribute on that wholesale amount. So, you will miss the ‑‑ if you completely exempt the BDU at the outset, you would miss the delta of revenue ‑‑ the margin that was held by the reseller of a service that’s already selling itself directly to consumers, so it is really a resell type of thing, but ‑‑ and if you applied the margin, you’d get it all. You’d get the wholesale plus the ‑‑ plus whatever was retained by the reseller ‑‑ the VBDU. Yeah, we’re not taking the whole amount out of the system; just the very, very thin margin difference that’s retained.

11474 VICE‑CHAIRPERSON BARIN: Okay. I take that answer.

11475 And then my second question is that online platforms have by and large asked the Commission to consider what they are currently contributing to the system in terms of intangibles and partnerships, and I’m not sure if they’re including the kinds of partnerships that they have with TELUS, for example, but they would like us to take that when we consider establishing what the initial base contribution should be. How would you respond to this proposal that’s being put forward by the online streamers?

11476 MS. SIMPSON: Thank you. I think that’s more on the programming side, and we see that definitely is a category two and step two issue, where the Commission takes a look at ‑‑ I understand they spend a lot in production and things of that nature, and I heard them a lot over the last two weeks speak about first knowing what actually makes a program Canadian and that they need all of these things decided first. I don’t think the initial base contribution, which is based on the distribution of the service, requires that yet. I think step two ‑‑ I know that the Commission intends to have a step two consultation, probably not very long from now, and also consider the CAVCO ‑‑ I assume the CAVCO point system that makes up Canadian content, and I think it can listen to their proposals at that time and they could say, “Hey, I want some credit for this and not for that,” or however they do that. I don’t see this as part of the step one, category one contribution mechanism.

11477 VICE‑CHAIRPERSON BARIN: Great. That’s clear. Thank you very much. Back to the Chair.

11478 THE CHAIRPERSON: Okay, thank you very much. Thank you, Vice‑Chair Barin. We are going to go to Commissioner Naidoo for the last question.

11479 COMMISSIONER NAIDOO: Thank you for being here. Many intervenors have identified gaps in the system that they say need to be fixed or filled. For example, we’ve heard a lot of discussion about local news, support for public participation, programming of course by and for equity‑deserving groups, and the need for funding for new and emerging creators. So, there is only a certain ‑‑ the pie is only so big. So, I’m wondering what would be your suggestions to help ensure that initial base contributions are equitably distributed to fill in those identified gaps?

11480 MS. SIMPSON: Thank you, Commissioner Naidoo. I agree it’s maybe as much a reprioritization of some of what we have in the system. I mean, we have heard from some parties that production is doing quite well in Canada right now, so maybe it is time to focus more ‑‑ it definitely is time to focus more on some of the priorities.

11481 But I think I would pass to my friend Cameron maybe to talk about some of the things TELUS sees, but you could certainly ‑‑ one of the things I just want to say ‑‑ one of the things I will start with is that by certifying the Black Screen Office and the Indigenous Screen Office, I think you’ve done a really good thing, and I don’t think our proposal is incompatible with that, where we’ve said that there should be some of the benefits directed towards CIPFs. They’re now one; that’s fantastic. So, I think that’s a start.

11482 MR. ZINGER: Perfect. Thanks, Lecia. One of the things that we’ve learned through the community channel at TELUS is the most impact that you have, or supporting those communities, is engaging in those conversations with them, finding out what their needs are. So, for me to sit here today to tell you what I think is best for them is truly not the best approach, from my experience at the Community Channel. It’s sitting down with those underrepresented groups, giving them an opportunity to voice what their needs are and wants are, so that then you can truly build something that’s going to support them and help them get to the next level.

11483 COMMISSIONER NAIDOO: All right. Thank you very much.

11484 THE CHAIRPERSON: Okay, thank you. So, we would like to give TELUS the last word in this discussion, and as it turns out, the last word of the day. So, back to you.

11485 MS. BAJIC: I want to start by thanking you again for the opportunity to appear before you today. We’re excited for the future the online TV market offers, and we want to enter this space to meet consumers’ needs by offering them innovative and affordable new options for accessing the same great content they want to watch, while providing an additional vehicle for discoverability of TELUS community content. This differentiated and customer‑centric product innovation is something that TELUS has always been a leader in and we’re proud of. And we’ve seen this as we’ve talked through some of our leading optic TV packaging where we’ve actually bundled in subscription services and, as Jordan talked a bit about, Stream+.

11486 However, we’re not able to do any of this without a regulatory framework that supports the viability of online distribution services. An important first step is a contribution requirement that accounts for the challenging cost structure of this type of service, and that means temporarily exempting virtual BDUs from contribution requirements and ensuring contribution is only payable on their margins.

11487 But it’s just as important that you address content exclusivity in the next phase of the regulatory process. While we are eager to provide Canadians coast‑to‑coast with this appealing product, unfortunately as our domestic market is so vertically integrated, we’re just unable to do so. We’re asking for your support to ensure Canadians are not the ones penalized by this, and apply the same rules against content exclusivity online that have always applied in the traditional system. This is critical to creating a sustainable and future‑proofed Canadian broadcasting system.

11488 Finally, we are really committed to building on the incredible work we’ve been doing through our community channel to support Canadian and Indigenous content creators. At TELUS, we believe we have a responsibility to use our voice, our business, and relationships, to advance Indigenous reconciliation and connectivity across Canada, and our request that you allow BDUs to direct more funding to their community channel will enable the right incentives for even greater investment and nurture talented new creators from Indigenous and other underrepresented communities.

11489 Thank you again for the time today.

11490 THE CHAIRPERSON: Thank you very much, TELUS.

11491 THE SECRETARY: Thank you. This concludes today’s hearing and we will be back tomorrow at 9 a.m.

‑‑‑ Whereupon the hearing adjourned at 2:39 p.m., to resume on Friday, December 8, 2023 at 9:00 a.m.

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