TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
APPLICATIONS FOR TRANSFER SUBMITTED BY
CANWEST GLOBAL / CORUS / SHAW
DEMANDES DE TRANSFERT DE LA PART DE
CANWEST GLOBAL / CORUS / SHAW
HELD AT: TENUE À:
Plaza 500 Hotel Hôtel Plaza 500
Ballroom Salle de bal
500 - 12th Avenue West 500, 12e avenue ouest
British Columbia (Colombie-Britannique)
25 April 2000 Le 25 avril 2000
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Public Hearing / Audience publique
Applications for transfer submitted by
CanWest Global / Corus / Shaw
Demandes de transfert de la part de
CanWest Global / Corus / Shaw
BEFORE / DEVANT:
Françoise Bertrand Chairperson /
Chairperson of the
Commission /Présidente du Conseil
Andrée Wylie Commissioner / Conseillère
Joan Pennefather Commissioner / Conseillère
Cindy Grauer Commissioner / Conseillère
David Colville Conseiller / Commissioner
ALSO PRESENT / AUSSI PRÉSENTS:
Marguerite Vogel Secretary / Secrétaire
Karen Moore Legal Counsel /
Robert Ramsay Hearing Manager / Gérant
HELD AT: TENUE À:
Plaza 500 Hotel Hôtel Plaza 500
Ballroom Salle de bal
500 - 12th Avenue West 500, 12e avenue ouest
British Columbia (Colombie-Britannique)
25 April 2000 Le 25 avril 2000
TABLE OF CONTENTS / TABLE DES MATIÈRES
PRESENTATION BY / PRÉSENTATION PAR
CanWest Global Communications Corp. 9
Corus Entertainment 302
Vancouver, B.C. / Vancouver (C.-B.)
--- Upon commencing on Tuesday, April 25, 2000
at 0856 / L'audience commence le mardi
25 avril 2000 à 0856
1 CHAIRPERSON OF THE COMMISSION: We will
begin. Bonjour. We will start.
2 Good morning. I'm very pleased to be here
at last, shall I say. We have been waiting for this hearing for a long
3 Welcome to the Canadian Radio-Television
and Telecommunications Commission public hearing to consider an application by
three corporations -- namely, CanWest Global Communications Corporation, Corus
Entertainment Inc., and Shaw Communications Incorporated -- for the ownership of
various broadcasting undertakings of WIC, Western International Communications
4 Je suis Françoise Bertrand, Présidente du
CRTC. Je présiderai cette audience.
5 I would like now to introduce to you my
colleagues who will form the Panel with me.
6 On my right is Andrée Wylie, Vice-Chair,
Broadcasting; on her right is Cindy Grauer, Regional Commissioner of British
Columbia; on my left, David Colville, Vice-Chair, Telecommunications; and on his
left, Joan Pennefather.
7 The CRTC staff assisting us at this
hearing are: Robert Ramsay, Hearing Manager; Karen Moore, Legal Counsel; and,
Marguerite Vogel, Hearing Secretary.
8 Also present from the Broadcasting
Directorate are: Jean-Pierre Blais, Executive Director, Broadcasting; Neil
Ketchum, Director, English and French Language Radio and Television; and, Lyne
Renaud, Senior Corporate Officer.
9 Please feel free to approach them with
any procedural questions you might have.
10 As you are no doubt aware, the proposed
transactions are important and will have many consequences. Many have said,
rightly so, that if accepted they would change significantly the Canadian
broadcasting landscape. In summary, here is a quick description of the
applications that we have before us.
11 CanWest has applied to gain control of
WIC's conventional television broadcasting undertakings, WIC's interest in ROBTv
and WIC's remaining VOD asset.
12 Corus has applied to acquire control of
all of WIC's radio broadcasting undertakings. Corus has also applied to acquire
control of some of WIC's pay and specialty television undertakings, WIC's
interest in the Family Channel Inc., and control of one of WIC's video-on-demand
13 Shaw has applied to acquire control of
Cancom Canadian Satellite Communications Inc.
14 In light of the scope and complexity of
the proposed deal, and the extent of the involvement of these companies in the
Canadian broadcasting industry, this Panel would like to explore with the
parties and the intervenors the impact and the benefits that the proposed deal
might have on the broadcasting industry and on the choices available to Canadian
consumers of radio and television and also the value, the contribution and the
enhancement it represents for the companies that are applying.
15 In looking at these applications, the
Commission will also consider whether the proposed transactions will be of
benefit from a programming perspective to the markets in question, cette à dire,
the Canadian viewer, as well as to the broadcasting system as a
16 With these and other concerns in mind,
this Panel would like to address a number of issues including:
17 The level of concentration and
consolidation of ownership and whether and how this could benefit the
broadcasting system as a whole.
18 The multiple ownerships that could
result from the transactions, particularly in Vancouver, Victoria and Ontario,
and the market dominance that could result for some of the
19 The diversity of voices in the radio
sector resulting from this transaction, both overall and in specific markets
such as Calgary, Edmonton and southern Ontario.
20 And issues relating to vertical
integration as Corus is affiliated with Shaw, a distributor and a television
producer, and is involved in the pay and specialty sector. On this point I note
that the Commission specifically requests Shaw to be available during the Corus
phase of the hearing to discuss issues that are relevant to Shaw's role as a
21 Comme je l'ai déja mentionné, cette
transaction est complexe et suscite beaucoup d'intérêt. Indeed, the Commission
has received more than 1,000 interventions among which 30 of those intervenors
will appear at the hearing during the next few days. In order to provide us with
a clearer understanding of the proposed transaction and to make sure we get
through all the material and presentations in the time allotted, this hearing
will be organized as follows:
22 First, we will hear the presentation
from CanWest. The Panel will then question CanWest.
23 After the questioning of CanWest is
completed, we will then hear from and question Corus.
24 Following Corus, Shaw will then make
their presentation and be questioned in turn.
25 Once the presentation and question
sessions have been completed for all three, we will then hear the interventions
in the same order.
26 First, we will hear all interventions
regarding CanWest. CanWest will then give its reply to the
27 Following the interventions for CanWest,
we will hear the interventions regarding Corus, the Corus reply and then, in
turn, the interventions relating to Shaw and the Shaw reply.
28 After we have heard all the
presentations, we will then begin this process of considering all the
information in order to come to a decision. We expect to issue a decision on
this transaction this summer.
29 I will now ask Marguerite Vogel, Hearing
Secretary, to explain the procedures to be followed during this hearing. To all,
I wish you a very good hearing, which I'm sure will be an interesting
30 Thank you.
31 MS VOGEL: Thank you, Madam
32 Just a note that the applicants will
have a maximum of 20 minutes to make their presentation to the Commission and
that includes any video/audio presentation aids. Intervenors will have 10
minutes in which to address the Commission.
33 Now some general administration. The
public files associated with this hearing are available in the public
examination room, which is Granville B, down the hall and to your left. However,
the applications that are being addressed by the Commission in the hearing room
will not be available in the public examination room as they will be in this
room instead. But any of the other files are open for viewing by the
34 Transcripts are being taken of this
hearing. It is a verbatim transcript. Should you have any questions about
getting copies of the transcript or parts of it, please talk to our court
reporter who is sitting to my left. Thanks.
35 We will be pleased to take telephone
messages for people concerned with this hearing. Our phone number in the public
examination room is of course area code (604) 666-6136. And if you want to have
messages left, please do so. Commission staff will be pleased to post them
outside the room as they come in.
36 And I believe that completes the
37 Madam Chairperson, with your leave, we
will call the first applicant, which is CanWest Global. CanWest Global has
several applications pertaining to matters described in Public Hearing 2000-1,
Notice of Public Hearing.
38 I would ask you to start when you are
39 CHAIRPERSON OF THE COMMISSION: Before
you start -- good morning -- maybe we could ask you, because there has been many
questions and that could save a lot of time during the hearing, if we could have
an update of the situation of the transaction as we speak and then we can go
into the presentation.
40 I believe you have been informed of that
request from the Commission.
41 MR. ASPER: Madam Chair, I will ask Glenn
O'Farrell to respond to that.
42 MR. O'FARRELL: Good morning,
43 In effect, we have filed with the
Commission a narrative describing the transactions that were executed and
completed in accordance with the master agreement, and we are happy to advise
you that all transactions have been executed as contemplated by the master
44 With regards to ROBTv, WIC Television
has purchased the Cancom interest and we will be in discussion with the
Commission to have that interest placed in trust, the current trust that is
approved by the Commission, subject to a discussion as to whether or not an
amendment is necessary.
45 Lastly, CTEQ. The Board of Directors of
CTEQ assigned the company into bankruptcy on April the 11th.
46 MS MOORE: If I could just confirm that
you will be in a position to copy the appearing intervenors with the document as
47 MR. O'FARRELL: Yes.
48 PRÉSIDENTE DU CONSEIL: Alors, à
PRÉSENTATION / PRESENTATION
49 M. ASPER: Bonjour madame la présidente,
membres du Conseil, membres du personnel. Mon nom est Leonard Asper. Il me fait
plaisir du comparaître devant vous en ma capacité de président et chef de la
direction du CanWest Global Communications Corp.
50 While our new President of Global
Television Network, Kevin Shea, to my immediate right, will introduce our panel,
I want to acknowledge some very important people that are with us in the
51 By the way, if you think this took you a
long time, if you think you were waiting a long time for this, I have had two
children since this transaction started, so --
--- Laughter / Rires
52 MR. ASPER: And they are both out of
53 But first and foremost, I want to
acknowledge my father Israel Asper, the company's founder and the Executive
Chairman, who is with us today.
54 Also here is my brother, David Asper, a
Member of the Board of CanWest and a Member of the Executive Committee of the
55 Peter Viner is here, the Vice-Chairman
and former chief executive officer of CanWest, as well as Jim Sward, the Head of
our Canadian Operations for the past seven years.
56 I want to personally and publicly thank
Jim as well as Loren Mawhinney for what they did in putting Global on the map of
Canadian programming over the last seven years, because in those seven years we
won more Gemini awards and had more Gemini nominations for excellence in
Canadian programming than Global did over the past 20 years -- or the
preceding 20 years before Jim came to the helm of Global. So I want to thank him
for that, for bringing us to this point where we are ready to ascend to the
57 Finally, I would like to welcome Gerry
Noble, a Canadian who is coming home after a collective seven years in the South
Pacific looking after CanWest operations in that region. Last week Gerry was
named the new President and CEO of Global Communications, which is the company
in which all of CanWest media operations in Canada reside.
58 I wish to point out that I'm also here
on behalf of and as a representative of my family, the controlling shareholders
of CanWest, which in turn controls the licensees that are part of this
59 We come before you today with an
exciting plan. The transaction before you is one of the largest and most
significant in the history of our industry. It represents the culmination of
more than 25 years of building a company brick by brick and bringing it to the
point where it is now ready to ascend to the national stage, and to be in a
position to meet the severe threats and challenges that face our industry,
including specifically the challenges of maintaining and increasing not only the
presence but the prominence of Canadian programming and Canadian stories in our
60 This transaction began in concept more
than eight years ago and took many twists and turns -- as you all know -- took
steps backward and forward, and it sank and rose phoenix-like many times over
the years. As the final act unfolds, let me say that we have appreciated the
Commission's patience with all the parties involved as we tried to and finally
did sort out the complexities.
61 But the tragedy of this transaction is
that when it began in earnest it was a daring, leading-edge idea that was ahead
of its time. The length of time it has taken to reach this point has diminished
that and now the circumstances are completely different.
62 As a result, if we were here before you
today four years or even two years ago, the questions that the Commission would
be asking would be very different than they are today. There was no Internet to
speak of when this began, no digital cable. There was no satellite. There was
not even a third tier of specialty channels. Moreover, there was certainly no
possibility of the potential addition of 450 new Canadian specialty channels,
and not to mention the certain addition of U.S. channels to the Canadian cable
systems and satellite systems which will accompany the new Canadian
63 In addition, during the last year media
mergers, both within and outside of Canada, have now clearly become events that
affect Canadians directly. Each of the following transactions, AOL Time Warner,
CBC/Viacom, Pearson/CLT in Europe, Carlton United News in the United Kingdom,
and even "@home", the Rogers giant that includes ATT and Microsoft and their
proposed acquisition of Vidéotron, and, finally, Bell Canada's acquisition of
CTV, which will be before you for approval in the coming months -- none of these
transactions can be ignored in considering the applications before you
64 We are believers that it is possible to
make our Canadian broadcasting system stronger and in order to face the
realities of international consolidation trends approval of our application will
65 But the benefit of the long gestation
period of this application, after all of that has been said, is that the extent
to which the landscape is being redefined is now becoming clearer and, as a
result, CanWest is now able to put before you a comprehensive proposal that is
without a doubt in our minds a home run for the Canadian broadcasting
66 The conventional television industry is
becoming and will continue to be radically revolutionalized by both
globalization and technological innovation. Yet we are the foundation for
quality Canadian programming and we want to remain so. To accomplish this we
must collectively recognize, though, that the 20th century rule book for
regulating the television and broadcasting industry needs to be reformed as we
look at things through new, old, innovative and visionary eyes that see across
the 21st century. We believe this application offers you that
67 So the only questions before you are:
Should CanWest be strengthened to meet the challenges brought about by
fragmentation and the consolidated positions of our domestic competitors and the
disappearing borders with the resultant power that foreign companies can exert
in Canada without contributing to the Canadian broadcasting system? Should we be
allowed to own more television stations in Canada? Should we be allowed to
converge as others are converging around us?
68 We believe that the answer to these
questions, each and every one of them, is a definitive yes. There are six
principal reasons, Commissioners.
69 Number one, the CanWest application is
the best possible in the circumstances. Indeed it is the only one possible. No
one else stepped forward to solve the WIC situation.
70 Number two, the application is good for
all components of the industry as well as the broadcast system as a
71 Number three, we are willing to accept
safeguards to create winning conditions for everybody should the CRTC find that
72 Number four, CanWest's unblemished
record and history of good corporate and industry citizenship is such that our
commitments are credible, reliable and certain to be delivered
73 Number five, denial of all or part of
this application will be harmful to the communities served by the licensees
involved who would not benefit from CanWest's ownership and who will once again
be thrust into the uncertainties as to their ownership for yet another extended
period of time.
74 Finally, number six, Canada needs strong
media companies who can invest in Canadian programming and, in order to do so,
companies like CanWest need more platforms across which to amortize the cost of
that programming and to promote Canadian programming.
75 Therefore, let me be clear that we
support growth for all companies in our industry, not just ours, provided that
such growth does not at the same time weaken other companies who are essentially
the broadcast system. We submit that this application meets that standard in all
76 Commissioners, this transaction is good
not only for CanWest, it is good for Canadians and good for the broadcast
77 I would now like to turn the microphone
over to Kevin Shea to introduce our panel and elaborate upon my
78 MR. SHEA: Madam Chairperson, Members of
the Commission, with us today in the front row from the left are: Katie
Fullerton, from CanVideo Sales; as well as Glenn O'Farrell, our Legal Counsel;
and, Loren Mawhinney, representing the Global Television
79 In the row behind me, from the left,
are: Katherine Browne, who is our Financial Analyst for the Global Television
Network; Art Reitmeyer, representing WIC; as well as Ken MacDonald, our
Vice-President of News; and, Charlotte Bell, Regulatory Affairs, representing
the Global Television Network.
80 At the side table, representing our
panel of experts, from the left are: Doug Hoover, our Vice-President of
Programming; Jack Tomik, our Vice-President of Sales and Marketing; as well as
Jim Rusnak, who is the President of our Western Operations. Also is: Ken
Goldstein, President of Communications Management; and Craig Gibson, Senior
Vice-President and Director for KPMG. And during your questions, these are the
real experts that we may call upon.
81 This proposal is all about bringing
solutions to the Canadian Broadcasting system. First and foremost, this
transaction will bring ownership stability to the WIC stations by providing a
vision for the future and clear strategic and programming plans.
82 The strong leadership of CanWest's
management team will restore certainty for WIC employees and, more importantly,
their communities. After many years of being a relative bystander, CHCH will
re-emerge as a strong contributor to the Canadian broadcasting
83 We believe that our Canadian system can
only be strengthened and improved by financially strong players. We are making a
substantial commitment to strengthen the Canadian conventional broadcast sector,
both through the completion of the Global Television Network and by revitalizing
local stations in other markets to create strong, relevant, independent
84 Glenn O'Farrell.
85 MR. O'FARRELL: Through this application
we are seeking approval with respect to four complementary
86 Number one, completion of the Global
Television Network's national system through our acquisition of WIC's television
stations in Calgary, Edmonton and Lethbridge.
87 Number two, continuation of a strong,
viable television service in Vancouver/Victoria by bringing CHAN into the Global
television network and revitalizing CHEK-TV into a distinctively local
88 Third, revitalization of a strong,
distinctive regional voice from the Hamilton market through the acquisition of
89 And, number four, continuing to provide
CBC service in Red Deer and Kelowna.
--- Short pause / Courte pause
90 MR. SHEA: I'm sorry.
91 In our response to interventions, we
offered a series of safeguards and a code of conduct that we believed addressed
the key competitive and policy issues they raised, but these parties are here
still objecting. We indicated that if the Commission felt it was necessary we
would be prepared to discuss our offering relating to
92 Among the key safeguards are a clear
commitment on the eight hours of priority programming, a series of reports to
the CRTC on our conduct and certain commitments to the industry at large. We
submit that this application is the best available under the circumstances,
consistent with the Commission's policy related to the transactions of this
93 In fact, the benefit package proposed in
the context of this application far exceeds the Commission's policy in this
regard. We have proposed a package of clear, unequivocal and tangible benefits
valued at $84.2 million or 12.16 of the value of this transaction. In other
words, we have exceeded the benchmark set by the Commission by more than 20 per
cent. As a result, the communities in question, the broadcasting systems as a
whole, and indeed the public interest would be well served by approval of this
94 The approach that we have taken in
building our benefits proposal falls into five broad categories. Together they
are designed to address our overall strategy for building audiences to Canadian
programming and creating an incubation opportunity for new programming concepts
for local television in Hamilton and Victoria.
96 MS MAWHINNEY: Thanks,
97 The whole philosophical thrust to our
benefits package is to build more and better Canadian content and to ensure that
this content reaches more Canadian viewers. In an environment characterized by
the multiplicity of channels, content remains key. Producers continually
advocate that they need more shelf space and incremental financing sources in
order to create competitive and marketable programs. Our proposal directly
addresses this issue by creating a number of new funds and opportunities for the
creation of new Canadian content. In fact, more than one third of our benefits
package of $84 million has been set aside to create new production opportunities
for Canada's vibrant, independent production sector.
98 For some time we have heard that western
producers need dedicated production dollars. We have addressed this issue head
on with the creation of the $23 million Western Independent Production Fund that
will be available exclusively to producers west of the Ontario border. In
addition, we have set aside more than $3 million for new productions in the
areas of health, aboriginal programming, and new joint CBC
99 While the Commission's new television
policy has ensured that a significant portion of our Prime Time schedules will
be devoted to Canadian programming, we wanted to address the need for increasing
audience to Canadian programs. If we are to remain strong and relevant in the
face of fierce and increasing competition for viewership, then we must find
innovative ways of increasing viewing to our Canadian schedules. This is why we
have set aside $8 million to create a series of initiatives to do just
100 These range from dollars dedicated to
produce vignettes on successful and entrepreneurial Canadians to promotions to
help build our star system to a special $5 million fund that will be
administered by the CTF and dedicated solely to fund third-party promotion of
Canadian programs appearing on all domestic broadcasting
101 We have also set aside $1 million
to help small and medium-sized producers market their products
102 Further, we have sought to benefit the
public in our new communities in other ways.
104 MR. MacDONALD: Thank you,
105 One of the fundamental components of
our proposal is to restore local service to CHCH-TV in Hamilton and CHEK-TV in
Victoria. In the face of increased competition, and in the case of CHCH-TV
continuous ownership uncertainty and instability, these stations have all but
lost their local focus.
106 Now, throughout this process we have
had numerous discussions with residents and key decisionmakers in these
communities. The one resounding plea we have heard loud and clear in both
markets is that residents want local service restored. In short, they want to
see themselves reflected on their home town television station.
107 Through significant investments and new
local programming initiatives, CanWest has pledged to give these stations back
to these communities and provide service and leadership to viewers in both
Hamilton and Victoria. Our resolve is clear. We have made commitments of more
than $18 million in the creation of new local programming for Hamilton, Victoria
and Kelowna, in addition to more than $2 million in grants and endowments
to key local arts groups in B.C., Alberta and Hamilton.
108 We have also put forward a
$10 million plan to produce an early evening national newscast originating
from Vancouver and a weekend national public affairs program originating from
109 Now, both of these initiatives will
bring to the entire Global Television Network a comprehensive news and public
affairs component with a strong western-based editorial presence providing a
true alternative to viewers across Canada, another national
110 MS BELL: Thank you,
111 As the Commission knows, the growth of
Canadian film, television and new media industries has exploded in the last few
years. As the media sector continues to grow rapidly, we need, more than ever,
qualified young people with the necessary training and skills to meet the
demands of these new employment opportunities. This is why we have established a
series of academic chairs, research grants and scholarships in Canadian colleges
and universities, as well as a number of grants to key industry training centres
such as the NSI, the Canadian Film Centre, the Film Circuit and Media Awareness.
Together, these initiatives represent investments of more than
112 Finally, we believe that the only way
to ensure that a country retains its cultural diversity and voice is by
investing in national associations whose work is dedicated to that end. This is
why we have made a number of significant contributions of more than
$3 million to Canada's key national and regional cultural associations.
These include the prestigious Banff Television Festival, Concerned Children's
Advertisers, and Canadian Women in Communications.
113 With respect to our support for the
National Reading Service for the Blind, NBRS, they have approached us with a
request to advance the promised $500,000 in its entirety upon approval of our
application given their current severe financial situation. Today we are
prepared to make that commitment.
114 MR. REITMEYER: Good morning, Madam
Chairperson and Members of the Commission. As you are aware, I am the President
and CEO of WIC Television Limited. I have been with the WIC group for a number
of years and prior to that worked at CanWest.
115 I do not wish to dwell on the past
number of years other than to say that for the employees of WIC it has been a
period of uncertainty and insecurity. It is our view that the CanWest proposal
will change this and bring to our group of stations and management a future of
prosperity, hope and certainty.
116 The plans that have been built by
CanWest in their application call for an exciting number of initiatives that
include direct participation in network programming and real commitments to
local revitalization in Hamilton and Victoria. Our stations, our staff and our
viewers cannot afford any more uncertainty and we hope for a speedy and positive
decision emanating from our discussions this week. They are highly supportive of
this transaction and are anxious to join the CanWest team. Another term of
uncertainty would be devastating to them personally and to the communities they
117 MR. ASPER: We would like to now draw
your attention to a short video presentation.
--- Video presentation / Présentation vidéo
118 MR. ASPER: I'm certain you might have
one or two questions. We will now be prepared to answer those.
119 Thank you for your
120 CHAIRPERSON OF THE COMMISSION: Thank
you very much for the presentation.
121 I will have the pleasure of starting. I
will be asking questions concerning how the world has evolved. You said that if
it had been two years ago it would have been a very different question, so we
will see what kind of questions you would have seen fit then and that you see
more fit today.
122 Then we will talk about, more
specifically, the strategy of Global: Where do you see, in this world that is
evolving, being capable of drawing on the transactions that you are proposing
123 I will then focus my attention on the
dual ownership issue, mainly talking about the situation of course of Victoria
and Hamilton but also trying to understand how it fits with your national
124 Then I will turn to my colleagues for
help. Mrs. Wylie will be talking with you about the national scene in terms of
programming and profile, as well as the individual markets. Then Commissioner
Grauer will talk about the benefits, the intangible and the tangible
125 Our colleague, Karen Moore, the legal
counsel, will, in the case we would need to, go for an hypothesis of a
divestiture, what would be the dimensions there. She will cover that with
126 So this is the plan of the questioning.
I will start. Probably we will then break and then come back with the rest of
127 So let's start slowly with the world
that evolved so rapidly. I would like to get your understanding.
128 You know, not so long ago we were doing
the third national network. We went for the TV Policy, where we felt that the
world had changed. I often say when I do now the preparation for the new
Strategic Plan at the Commission that we didn't wait for the AOL transaction to
tell us that the world was changing. I think the third Network Hearing was a
sign of that, the TV Policy, and also of course the New Media Policy. So those
are certainly elements for you that are significant.
129 Can you tell us what you see so
dramatically different from the last two years and where do you see -- how many
groups do you see? You tend to be a preacher of bigger, better. You know, how
many bigger do you see in Canada? And can you describe, if you were take us by
the hand, what kind of world would you see in the next three years in the
broadcasting scene, of course, for Canada?
130 MR. ASPER: Well, starting with your
first question, what's different, I think you are right in saying that AOL Time
Warner wasn't -- it may be a watershed but it was preceded by several ripples
that became waves that finally became the megadeals of AOL Time Warner and CBC
and Viacom and others that I have mentioned.
131 Over the last three years media
companies have been doing several things. They have been -- number one, any
company that was in the exhibition business, the business of owning a channel or
two, has been seeking to have as many exhibition platforms as they possibly can
over the electronic medium, the television spectrum. They have also been
building other, what I would call, horizontally integrated enterprises,
enterprises that include not only television, whether it's conventional or
specialty, but radio, print, magazines, possibly outdoor
132 At the same time these companies,
particularly companies in the United States, have been -- that would be what I
would call horizontally integrating, but they have also been vertically
integrating, which is producing and owning and exploiting the rights to their
own content, and using those exhibition platforms to exploit that content and
promote the content that they own.
133 This really didn't start to accelerate
until the capacity on the distribution systems was able to accommodate
134 For years there have been some
television and radio co-ownership, particularly in the United States, but it
really hasn't gotten to the pace where it is today until the cable systems and
the distribution systems, and, in some sense, not yet, but to a small extent --
but to a much larger and growing extent, the Internet showed up. The Internet
allows an unlimited number of exhibition platforms, if that's what you went
with. That's what we call them.
135 So companies are now saying, "Gee, we
used to own 50 per cent of the market. We were one of two channels. We used to
own 33 per cent of the market. We were one of three channels. Now we are one of
70 channels." And what most companies are trying to do and have done in the past
-- the larger companies and the survivors in the last three years -- is to
reaggregate those audiences they have lost, the fragmentation, and try to group
it back and try to have some remote proximity to the kind of share they used to
136 So turning to Canada, I think there
will be about five to ten major media groups in Canada who will have all of
these components. And I haven't come to distribution yet, the pipelines, because
there are content companies in this world and there are pipeline companies.
There are people who deliver the content over some sort of infrastructure,
whether it be wireless, cable, satellite, telephony. Those companies; the second
part of convergence. There's the convergence of all the different exhibition
platforms or advertising platforms and then there's the second part of
convergence, which is the joining of those with the distribution. That's where
convergence becomes, in our view, potentially something of serious concern
because there's the issue of is the distributor controlling what goes into
137 We are not in that game yet. CanWest is
a content company. We are not a pipeline company. As there become other mergers
and alliances and joining of distribution pipeline companies with content
companies, CanWest too will have to seek strategic partners and alliances. And I
think you will see in the next few years all of the content players joining
together and joining with pipeline players, just as, you know, Bell Canada has
sought to do with CTV, just as in Europe the largest cable operator in Europe
has bought an 11-country network of stations. It's happening all over the
138 In Canada, as I say, there will
probably be five to ten major companies. There will be an underlayer of several
start-up and new and growing companies that will be fostered by these companies,
because these larger companies can't possibly do everything in-house. They can't
create this walled garden that is an island unto itself. They have to always go
outside for -- they have to outsource, whether it's facilities; they have to
outsource programming. They may have to outsource sales and marketing. So there
will be a second layer of a whole bunch of new companies or companies that exist
today that will grow with the growth of the five to ten major
139 CanWest's view is to be -- CanWest's
strategy is to be one of those five to ten companies but to also be able to draw
on the resources of those other companies that exist, that produce the content
that we are going to need for the various platforms we seek to
140 I'm not sure what your third question
was. Something in regard to three years from now, is that -- are you saying:
What does CanWest look like three years from now?
141 Well, it's very simple. We want to be
-- we focus more on what I call the horizontal integration side than the
vertical integration side for the reasons I have said earlier.
142 I think our strongest position and the
position we intend to go to is being a company that has a very large number of
exhibition outlets. When I say "exhibition outlets", I mean Global television, I
mean Prime TV, I mean medbroadcast.com, which is a health Web site that we
bought into, and hopefully, if you grant us approval for the Health Channel,
which we have partnered with Medbroadcast to apply for, that, and many other
specialty channels just like our competitors have.
143 It means being in the out-of-home,
outdoor advertising business, having closed-circuit networks in airports like
other companies in Canada already do. It means having magazines. It means maybe
starting new magazines that derive from a global program. Oprah Winfrey has a
magazine called "O" which is derived from her program. It means taking content
we own the rights to, such as FOX has done. FOX has a show called the "X-Files",
as we know. They have 30 books that derived from the show.
144 What we have got to try to do is take
that horizontally integrated company and take the content that we have within
that company and use those platforms to generate more revenue and generate more
content for that company.
145 I would also add radio to that. The
horizontally integrated media company of the future will have radio, it will
have exhibition outlets, it will have print -- and when I say "exhibition" I
also mean Internet-based exhibitions -- and it will have some sort of content
supply machine in-house, but it will not be exclusive.
146 The content that is created in-house
will be distributed over the platforms. It will be sold to other companies who
may wish to pay more or maybe have a better use for the content, but it will
always be available within the group. But there can never be a walled garden of
content that's exclusive because, as we do every year when we sit down to decide
our Canadian programming schedule and our foreign programming schedule, we find
that Laslo Barnett has the best idea this year and Forefront has the best idea
next year, and Salter Street has a good idea. So there is no monopoly on good
ideas in one shop.
147 So the purpose of the horizontal
integration is to be able to promote the content that we do exhibit and that we
do own and generate as much as we possibly can from it. And that's where I think
everybody is getting to, whether they are coming at it from different
148 Alliance Atlantis was a producer. They
sought to own exhibition outlets. They started on the ownership of content end
and they have gravitated towards their integration by coming and acquiring and
offering very well specialty channels.
149 Radio companies, you know, take Shaw,
take Corus, Corus started with radio and now it's trying to acquire specialty
150 So I think there will be a similarity
of these five to 10 companies that will be competing in the same space and we'll
be in that space we hope.
151 CHAIRPERSON OF THE COMMISSION: Tell me,
in that universe some say that broadcasters will not be necessary any more. I'm
not saying that's the Commission's view, but some have said in the Internet
world there will not be any need for broadcasters any more. What's your view and
why do you see, being a conventional broadcaster today, the necessity to
reinforce your position? Why do you see that as promising into the evolving
world you're describing?
152 MR. ASPER: Well, number one, I think
broadcasters will always be the bastion of local programming, of local
reflection in people's markets. We will be the only ones who are willing to
invest primarily because we are already there and it does not make sense for
most players to try to start and take that niche away from
153 I'm heartened by my travels in the
United States where I look at -- we look at local -- we spend a lot of time with
local broadcasters, and they're investing more money in local programming.
They're starting local offshoots. Because of the way the regulation works, they
can go to the local cable company and start a local weather network and a local
regional news network. They're taking their programming and their local
reflection plans and expanding and putting more resources into it, and with
154 I think it's ironic that national
players like CBC are pulling out of local. We see that as a very strong niche
that we can exploit and we can be a bigger player in, and we can generate more
viewership to our local programming. That's why the kind of plans that are
before you today are before you today. We see a very valuable service being
provided to the local communities as specialty channels proliferate which are
155 So we think there's a very strong role
for the Canadian broadcaster. I think the Internet is a factor, but it's a long
way away in terms of being able to provide the kind of service that a local
broadcaster provides. It will be five to seven years at best before the Internet
is even in 50 per cent of people's homes as a broadband tool.
156 And there are still 25 per cent of
Canadians who don't have multichannel television. Who provides them that
service? Local broadcasters. And there are only three -- sometimes less than
three in the case of Hamilton -- there are less than three people who provide
that service to them. We think there's a valuable service to be
157 So there's a long-term role for the
broadcaster. Whether he is called a broadcaster in five years is another thing.
It's a programming service. Internet Web sites are programming services. They're
primitive compared to what a broadcaster can provide, but the brand and the
local reflection is what we think is going to be our specialty and where we will
have our success.
158 CHAIRPERSON OF THE COMMISSION: In your
brand, what do you see as driving your brand, then, in that
159 MR. ASPER: The local content. The fact
that people can turn on and find out what is going on in their town. We have
found always that people come back to: What's going on around me? What's going
on within a kilometre of me? I mean, we have something on our Web site now that
is a weather service that Gary Maavara dug up that provides weather within half
a kilometre of your home. And that's something that has been tried in the U.S.
and has been very, very popular. The closer it is to home, the more people want
to find out about it.
160 People care more about local news than
they do about national news and certainly more than international news. Our
research, our experience has been that. That's the niche that other people are
abandoning and we find, especially based on our studies of how it's worked in
the United States, that's a niche that will remain there forever. It's human
161 CHAIRPERSON OF THE COMMISSION: So what
you see in what you seem to think is five to seven years, in that world, that
could be more programming services on the Net. When people will come for your
brand, it will be for getting the information that is close to their
162 MR. ASPER: M'hm. Yes.
163 CHAIRPERSON OF THE COMMISSION: And
whatever domain around the news area.
164 MR. ASPER: M'hm.
165 CHAIRPERSON OF THE COMMISSION: That's
how you see --
166 MR. ASPER: Not just news but news and
information and even coverage of local events, local sports, local theatrical
and entertainment events. We have found there has always been an interest in
those kinds of things and, to some extent, being there first, developing the
local brand, is a very powerful tool because we have come into markets, like New
Zealand, where we acquired a bankrupt third network that was not first in
people's minds -- number one in mind shares they call it -- and we have, for ten
years, not been able to put that station into the number one or two position in
the market. To some extent, it's been complicated by the fact that we are
competing against a government network, but the fact is it's been number three
for 30 years or 20 years and it's very hard to break into people's minds once
they have got a certain place they go for their trustworthy news and whatever
else they get.
167 So we think that we have got a golden
opportunity, particularly in the stations we are seeking to acquire, to become
that number one source of information and news in the markets where we seek to
acquire these stations. Once you have that brand, it is very difficult for other
people to dislodge you. And we think that, when we come back to why we want to
grow, it's the ability to put the resources into that kind of programming that
will be the engine of those stations.
168 MR. SHEA: If I may, Madam Chair. I
think the question was posed of broadcasters being relevant, and I think what
Mr. Asper has been trying to articulate is our strategy specific to how to
remain relevant as a brand in the years ahead. We see it as
169 One, to be the strongest in local
information so that if we are ever retransmitted on the Net as a full-up
station, that people would go there as well as cable, but to have a national
overlay of content that is very, very high in entertainment that is, in effect,
the national brand of the company, programming that people can't get anywhere
else but Global Television Network and Prime Time. That's a challenge I think
all of us broadcasters face in this country and the years ahead because, as has
been articulated time and time again, we are renters of content. We rent shows
for two or three years.
170 We are exposed in the long term with
respect to that as certain international networks become more international in
their distribution and could, in effect, replicate the kinds of programming that
we currently get from them. That's why we have undertaken the strategy with
Fireworks, because in the long term we have to be owners of our own content,
because it's the only element of our brand that we can ultimately
171 While we see that as our mainstream
strategy with respect to Global, we have specific strategies with respect to CH
and Victoria, which we will talk about later, but we have also elected other
areas of content where we see vacuums at the moment, more Net-related at the
172 With respect to medbroadcast.com,
health is the number one reason or among the number one reasons why people go to
the Web for information. We invested in a company a year ago called Lifeserve in
the United States which is also a Web-based health and lifestyle service because
we see a combined strategy of having to be relevant with tomorrow's technology,
the Net, while protecting and building our brand for Global for
173 I think one of the answers that crossed
my mind with respect to your opening question, and that is what's different
about today that may not have been there two or three years ago, one of the most
significant differences for me is that our business is no longer predictable. In
all fairness, conventional broadcasting, and to some degree specialty
broadcasting, was a very predictable business. You bought a schedule, you knew
in advance what advertisers were looking for in terms of their demographic needs
and you could build a business plan for one or two or three
174 Today you can't do that. We are sitting
here in April. We have no real sense of what the advertising market next year is
going to be like, primarily because there are now so many new technology users
in the primary business of advertising that we are seeing new niches of content
go at the same advertising pool that is the primary economic driver of our
business. And it is no longer predictable. It used to be.
175 MR. ASPER: Let me just summarize when I
said we were a content company.
176 The reason we are a content company is
because we believe no matter what the distribution mechanism it will find its
way to people's homes. If it's good content people will want it and they will
find a way to get it and distributors will want to distribute
177 When I say "content", I really mean
three streams of content: it's the news and information content, whether it's
local or national, like public affairs that concern the country as a whole; it's
drama/entertainment programming, which was the reason we acquired Fireworks --
and that's the one fear where I said earlier that that's not an exclusive
situation because that's -- one can simply not produce all of the programming
one needs in one's own shop -- and the third one is, as I have said before,
sports information, coverage of sports events. That is something that people --
people have their home teams, they want to see their home team. There are
national teams as well, but that's another area we do plan to get into in
178 But in the entertainment programming
area, it's more of a defensive strategy than an offensive strategy. I think
Kevin hit the nail on the head. It's the concern that someday the other players,
when there's unlimited channels, the suppliers of our content, the traditional
suppliers, will say, "No, CanWest, we are distributing it on our own channel. We
own the FOX channel. We own the Alliance channel. Why would we sell to
179 There will be some point in time where
the intersection occurs between the price that these players get for selling the
territorial rights to Canada and the price they can generate by putting it on
their own channels and selling their own advertising. So that's somewhat more of
a defensive strategy.
180 But those are the three streams of
content: news and information, drama/entertainment and sports. That's what we
intend to build.
181 CHAIRPERSON OF THE COMMISSION: As you
can imagine, from the Commission's responsibility point of view of the
objectives of the Broadcasting Act, that's not bad news because then it will
leave probably the best incentive for creation of Canadian
182 MR. ASPER: M'hm.
183 CHAIRPERSON OF THE COMMISSION: I would
like to know your views about serving -- you know, there has been a lot of
discussion of the larger groups, and I don't want to talk about what CBC can do
because that's not the matter at all in front of us today, but going into the
strategy you're proposing, what do you see as being, in this country, the rights
of the people who don't live in the urban centres? Even with your strategy --
you're in certain centres. What happens to the other people in other communities
184 What's your view about that? Do you
think there should be other players playing that role or do you see that
eventually Global, if granted those licences, would expand and serve all -- you
know, is it a right for every Canadian to have information closer to home, in
all parts of the country?
185 MR. ASPER: Well, I think it's -- I'm
not sure of the connotations of a right because I think Canadians should, as a
matter of principle, have as much information as they possibly can, especially
Canadian information, and dramatic programming as well -- Category 7
programming, to use your categorizations.
186 If Global could, Global would expand,
and we have tried to before, to all over Canada. There is probably a million
Canadians, half a million Canadians that even if all of this were granted we
still wouldn't cover and we would like to cover and we would like to have access
187 Now, the Internet and satellite systems
to a large extent are resolving that issue to the extent people can afford them.
But it's true that there are still a number of people who can't afford service
other than what they are getting from over-the-air, from CBC, but if there's
ever an opportunity for Global to grow and expand and reach those people, we
would seek it.
188 CHAIRPERSON OF THE COMMISSION: But
don't you think, in the universe you were drawing, that in five years, seven
years from now the over-the-air won't mean that much and that there will be
other ways for those citizens to get services?
189 MR. ASPER: I think it's going to be a
longer period of time before that happens. I think there's going to be -- in
terms of universality, of being able to see all of these services. In the
meantime, I think that people can't -- people operating Web sites today, for
example, are not spending fives or tens or twenties of millions of dollars
programming these Web sites. They're going to the financial markets, they're
raising a few million dollars and they're spending it on computers and they're
putting very limited information on their service, if that's what you can call
190 I think it's a long time before there
will be this unlimited plethora of quality, first-class choice in people's
homes. I think the conventional broadcaster, for many years to come, will have a
role to play in being the main provider for these communities.
191 MR. SHEA: Madam Chairperson, the
principal reason today that a consumer elects to take either cable or satellite
services is principally for the receipt of conventional television programs.
That hasn't changed too much, although our share of audience with respect to
where we were 10 or 15 years ago versus where we are today has declined. But we
are still the principal reason why people connect to cable.
192 The trick for us in the long term will
be to ensure that we still have a similar type of content, the more higher end
and more relevant entertainment programming, to ensure that we remain the number
one pick for consumers. I think what clearly is going to happen in the next four
to five years is that conventional broadcasters are going to have to think long
and hard about the method of their own distribution.
193 It's very costly, analog technology,
and it's clearly becoming outdated. And we have a significant investment ahead
of us with respect to the move to digital. As we all know, there isn't an
economic model yet that says the investment in digital will bring about a new
stream of revenue, because it's essentially just replicating our signals and
services today. No doubt, in the hearings ahead, when we look at the longer term
policy aspects of conventional television, I think, Madam Chairperson, that
there is going to be a demand by conventional broadcasters shifting to digital
to have the right or to have the opportunity to actually have new streams of
content in order to see some kind of revenue return.
194 But it also comes back to, when one
clearly looks at what's happening with regard to the future of conventional, and
the investments ahead of it, that unless we have very strong economic-based
companies in this country, we will not be allowed -- we will not be in a
position to afford that kind of investment for tomorrow.
195 But one thing is absolutely paramount,
and that is we also have to have access on a continuum of the higher end
content, whether we make it or buy it. Our emphasis I think will remain much the
same as it is today, and that is it's typically in news, both local and
national, because we are the best people in that position today to do that -- I
say "we" as conventional broadcasters -- and access to entertainment that people
cannot get elsewhere. And that's the challenge ahead.
196 CHAIRPERSON OF THE COMMISSION: Well, I
guess we can certainly understand that. Some time ago, we granted Global a
licence in Quebec. I don't think in our mind, you know, there's much questioning
around the Alberta station. Of course the questions arise around the dual
ownership in some markets, and it's important that we do understand what's your
view but strategy as well.
197 You know, although we can understand
that somewhat bigger is better and that you're not seeking a position for only
yourself, that you see that there is space for other important players in
Canada, yet it is really in that domain that there is a particular question. It
would be important to understand why you think that owning those two stations in
the extended market in Vancouver and the one in Hamilton versus the regional
situation in Ontario is important to make Global a stronger player? How does it
bring you to be a stronger player?
198 You know, for some time we thought,
especially after the third Network Hearing, that you're ambition and your
strategy was to become a national player. Why didn't you stop with strictly the
transaction that dealt with the Calgary station? Why do you go and make a case
for Hamilton and Victoria? Why is it important? What kind of leverage is it for
199 MR. SHEA: Madam Chairperson, this is
the question that we have rehearsed for two weeks.
--- Laughter / Rires
200 CHAIRPERSON OF THE COMMISSION: I just
thought about it. I'm glad I did.
--- Laughter / Rires
201 MR. ASPER: I lost my briefing notes,
202 CHAIRPERSON OF THE COMMISSION: It's a
good thing I rehearsed it in English too.
--- Laughter / Rires
203 MR. SHEA: And it was very well
204 I have about seven or eight people who
are now prepared to jump in on the answer to this question and, with your
permission, I think this is the way we would like to start.
205 I would like Doug Hoover and Loren
Mawhinney to address the issue of branding and ensure that we leave the
Commission with the impression that we have a distinct approach as to how to
brand Global, now that it will become a national network upon your approval of
Alberta, and a distinct approach as to how we plan to program what we call the
independents in Hamilton and Victoria. I would like to start there with their
vision of how we plan to program those.
206 Then I would like to ask Ken Goldstein
to comment on market impact, dominance, the issues that have been raised by many
of our learned intervenors with respect to what this would amount to should the
Commission, and hopefully it will, approve us.
207 Then I would like Leonard Asper to also
comment on why, from a corporate perspective, more shelf space is necessary for
our company going forward, and I'll see how we have come at the answers with
respect to those and I might supplement with some others.
208 CHAIRPERSON OF THE COMMISSION: Okay. To
be clear, I will not be questioning thoroughly all the programming matters. The
one I'm interested in is the overlapping, the 10 per cent and what will be
different. And the other elements are exactly -- you prepared for the right
209 MR. SHEA: I respect
210 MR. HOOVER: Madam Chair, when we speak
of the two services, we look at them with the benefits that each provides that
is unique from the other. When we speak of Global, we speak of a service that is
strong, national, national information, national programming, and one that
serves all of Canada with the inclusion of the Alberta stations, of
211 Global will position itself to a
younger audience than that of the independent stations. Global has tended to be
a service that's targeted more through a demographic that we characterize as 18
212 By contrast, the independent stations
will focus its audience to the older demographic, more akin of a 25 to 54
213 The independent stations will focus on
localism, local programming, local news, local information, so that there's
separation between their targets. Global will continue on its current program
strategy of being series program, appointment television, consistent. We have
tended to stay away from and will continue to stay away from miniseries or
events or theatrical movies. We have no intention to purchase theatrical movies,
where the independent stations will tend to provide miniseries,
made-for-television movies, event television.
214 Hamilton in its heyday was known as the
event television station, and so we would like to take it back to providing that
type of service.
215 In terms of the eight hours of priority
programming, they will be unique and distinct and different on both services. I
would like to have Loren Mawhinney elaborate as to how those two will be
targeted to separate and distinct audiences.
216 MS MAWHINNEY: Thanks,
217 So as Doug says, the eight hours on
CHCH and CHEK will be completely discrete and separate from the eight hours that
are on the Global Television Network. The independent stations, our programming
plans obviously aren't as solidified as they are for the Global Television
Network because we knew what we were going to be ordering from the funds for
those stations. So for the Global Television Network we have continuation of
"Bob and Margaret", we have two new sitcoms because we are trying to get to a
younger audience, the 18 to 34 audience, as Doug says.
218 Programs that are set. Across the
country we have got a sitcom set in Vancouver called "The Agency" where we have
repatriated two of our most successful Canadian writers living in Los Angeles,
David Steinberg and Frank VanKeegan, who are going to run this. We are doing 22
half hours with them. Then we are doing another half hour comedy with Salter
Street out of Halifax, a very politically incorrect, historical drama called
"Blackfly". And we have an hour long police series that's produced by Laslo
Barnett in Toronto.
219 So all those are continuing with
Global's philosophy of appointment television/series television. The only
exception to that is a signature series of documentary specials. So we just did
the "Hockey Riots" with Rocket Richard. In May, we are launching a two-hour
feature on the Reichmans, and we did another one on the holocaust called "Each
of Us has a Name". So those give us programming hits during the season when we
can't get covers because we have already launched our series. So it gives us an
opportunity to have some -- create more attention and create more publicity for
220 With the independents, we are looking
for family viewing, general family viewing, so we have a series in development
with Crescent Entertainment that is a Canadian "Northern Exposure". A small,
quirky town shot in Tofino. Something that would also work is a series called
"Cliff Hangers" -- 22 hours about troubled youths and they use "Outward Bound"
philosophy in order to help get them back into the mainstream.
221 In addition to that, we would run
movies and miniseries. So we would have event programs over there that we
wouldn't have on the Global Television Network. That would also give us an
opportunity to work with smaller producers who tend to produce long forms as
opposed to series just because it's such a heavy capital investment to make in
222 MR. SHEA: I would now like to call upon
223 MR. GOLDSTEIN: Madam Chairperson,
Leonard Asper, in his initial response to your question, talked about the need
for broadcasters to reaggregate audiences as a result of fragmentation, and to
reaggregate those audiences both within the broadcasting system and horizontally
to other media by being able to operate across a number of platforms. It is of
course partly a matter of reaggregating the audience to achieve a certain size,
and it's also a matter of being able to use those multiple platforms to
cross-promote to make the sum really greater than the simple -- or the result
simply greater than the sum of the parts.
224 So, in that context, the proposal to
retain the independent stations in Hamilton and Victoria represents a strategy
to acquire another platform within a world where a number of the players around
the world, and of course a number of the players in Canada, have also got
multiple platforms. Some have multiple platforms based on one conventional and
multiple specialty services. Others have more than one conventional and multiple
specialty services. And so in this context we see that this is a way of building
up a requisite number of platforms in order to compete successfully in this
225 We have of course looked at a number of
different market share criteria, and we can discuss those in detail if you wish,
but the resulting market share relationship from the proposal that is before you
would see CTV, as you have approved its going-forward structure, with about a 29
per cent share of revenue through its various platforms, and CanWest, if you
approve this proposal, with about a 25 per cent share of revenue across its
226 So we tend to see this as a question of
platforms and a question of how the various pieces can fit.
227 MR. ASPER: I'll try and put this also
228 It comes back to some measure of
defensive issues, because if you look at the Canadian dial today, simply the
number of channels on the Canadian dial, you have CHUM with nine, you have CTV
with six and others that are -- the licences they have that have not yet been
launched and may be launched soon.
229 You have Time Warner, an American
company, with three. More than CanWest. You have NBC, another American company,
with more channels on the dial than CanWest. What they're doing with those
channels is they are cross-promoting, cross-promoting, cross-promoting. They are
in a much stronger position to create more revenue, more viewers for their
programming, than CanWest is today. We are one channel.
230 In 85 per cent of urban Canadian homes
and 75 per cent of Canadian homes overall, nobody knows how they get their
channels. All they see is CTV, CTV, CTV, CHUM, CHUM, CHUM and then Global. And
we are now in a position where we need to survive and to prosper and to be able
to make the investments we have to make in the kind of content I was referring
to earlier. We need to have the ability to use those platforms. As I said, they
extend beyond platforms on the dial. As a corporate strategy it may mean
magazines or print or some other form of bolstering, or our integration
strategy, but on the dial where a great number of Canadians go each night when
they come home, we are at a significant disadvantage to the other
231 If you look at Hamilton in particular,
or the Toronto-Hamilton marketplace in particular, there are cable channels that
before they start their day, January 1, before their year begins, they have more
revenue from subscription revenues than Hamilton will get all year from
advertising revenues. So they have bigger programming budgets than Hamilton
232 That's the kind of world we are facing,
and that's why, you know, we think Hamilton alone, never mind other channels we
hope to acquire or start up in the future, is something that is simply a step
forward for us in catching up to our competitors.
233 CHAIRPERSON OF THE COMMISSION: (Off
microphone / sans microphone...) pursue on -- there are three elements of the
234 I will start with you, Mr. Asper. When
you talk about the multiplatform, still I hear you say that the conventional
broadcaster is there to stay. Although we have seen many specialty channels
there, and they have taken certainly an increased place in the market shares and
advertising revenues as well, we see that the revenues of the conventional
broadcasters are still much more important and significant in this country, so
although you can say it's windows, the significance of windows has to be
weighted in, and you cannot say two windows equals two windows. It depends which
windows they are. And the specialty channels, by the fact, for example, that
there is no simultaneous substitution, certainly don't have the same weight as
owning two conventional broadcasters.
235 So I can certainly understand your
argument about the necessity, and the one of Mr. Goldstein about saying
multiple platforms is important, but yet how do you figure out or take into
account not the strict number of windows, but rather the importance that
represents still today and for some years, given, you know, the future you were
drawing for the next few years, the importance of owning conventional
236 MR. ASPER: Well, I think it's worth
reiterating that while conventional broadcasters have simultaneous substitution
they do not have subscription revenues, and that is a big disadvantage. If you
look at even TSN, TSN is the number four station in the market from time to time
depending on what they're airing. They're ahead of WIC. They're ahead of the WIC
stations in some markets, particularly Hamilton in the Ontario market. So they
are not only a strong window, they are a window that starts out with probably
$100 million of revenue before they open they doors for business January 1.
Having had a close association with TSN over the past three years, having some
insight as to how their business operates, I can say that that gives them a
serious leg up in programming.
237 And the other channels, the comedy
networks, the discovery networks, the YTVs of the world are always increasing in
subscriber revenues, because as digital satellite systems come on and 500,000
new subscribers became available to them they are getting stronger. We have to
look at what they will be in three years.
238 The Comedy Network, for example, has no
restrictions on its licence. It can be Global. Why can't it own Seinfeld? It's
got subscription revenues coming in the door day one knowing exactly what it can
spend on programming. There's no reason why some of these specialty channels,
because their so general, can't be out of conventional stations.
239 And the second point I think is worth
making is that while conventional revenues are still very strong today they are
declining, period. Look at our financial statements. Look at CTV's financial
statements. What CTV's got the benefit of is they have got ramping up of
specialty channel revenues, so on an overall basis, to my knowledge, they don't
break it down, but I can tell you in our shop Global Television's revenues are
declining this year in a very weak conventional market which has been weakening
over the last several years.
240 Manitoba, Winnipeg, Regina, Saskatoon,
Halifax, they make less money collectively than Prime Television. A two-year old
specialty channel. They're being subsidized by Global. We have always taken the
view that because we do want to be a national entity and we want to ascend to
the national stage, as I said, we are willing to take those risks in those
smaller markets, but those smaller markets don't make sense to own a
conventional station in unless they have a partner, unless they have somebody
helping support them who's got enough resources to bring the local investment,
investment in local programming.
241 So you do have to look at specialties
as not what they are today but what they can be and you have to look at the --
just the graph, the line where conventional revenues are going and where
specialty revenues are going. Conventional is going down; specialty is going
242 And there may be today a point where
specialty revenues as a whole are not as great as conventional revenues, but
they are going up 30 per cent a year while conventional is going down 1 or 2 or
3 per cent a year. At some point the intersection will occur where
specialty is a much stronger force than conventional.
243 CHAIRPERSON OF THE COMMISSION: So you
want to save the world. Conventional broadcasting is going down, but you will
244 MR. ASPER: The Asper Foundation is
willing to step forward and save the world.
245 CHAIRPERSON OF THE COMMISSION: I
--- Laughter / Rires
246 MR. ASPER: You know, as I said, we are
not going to go extinct, but the conventional -- one of the things that's I
think coincidental -- or not coincidental this year is that because CTV has so
many specialty channels, and if you look at the number of promotions on NewsNet
for Ally McBeal and E.R. and their hit programming and all of -- over all of
their platforms, how they use that to promote each other, it's no coincidence
that they caught us in the ratings this year. We think that had a -- and it's no
coincidence that -- even on a much smaller basis.
247 We looked at investing in this medical
health Web site called medbroadcast.com. I think I was a minority with some
multiple votes in the management group that caused that investment to occur.
Nobody wanted to do it because they didn't want to go up against Web MD and
Doctor Koop and some of the U.S. medical Web sites who are being promoted on
CNN. Because there's a powerful force on Channel 15 in my home, which is a very
often watched channel, that's promoting American Web sites, an American health
Web site and we have to build Canadian companies that are willing to make those
investments in Canadian content. The conventional platform will always be a very
major part of our business, but it needs to be bolstered by other
248 CHAIRPERSON OF THE COMMISSION: But, Mr.
Asper, I understand what you're saying, but earlier on in our exchange you told
me that you thought that the world or Canada could hold probably five to 10
players, so there's place for variation here. Let's take the lower of that
scale, five. Don't you think that one of the important windows, not the only
one, and I certainly recognize that bouquet of specialty channels is an
interesting possibility of exploiting on the marketing side as well as
exhibition side, but the owning of conventional broadcasting stations today and
for the next -- let's be modest and just take our crystal ball of three years --
will be certainly important still, and when you kind of go for important markets
like Vancouver and Toronto, with two, don't you think that the possibility of
even having five major players in this country goes down to four and maybe
249 MR. ASPER: No. I mean, when you think
of major players, you have to think of companies like Québécor. You have to
think of companies like maybe even Powercorp, who has had some broadcasting
assets and may come back into the market. Corus. There are probably seven to ten
major companies in this market who, as I have said to you, I think should all be
allowed to grow. I don't think it will ever come -- I think four will be too
small a number.
250 There may be alliances in between
intertwining all these companies. I think, because nobody is going to be able to
just buy up everything, it's much simpler to try to strike strategic alliances,
which is what people are doing today as we speak. There are lots of
conversations going on in the industry about: How can we work together? You're
in this part of the country, we are in this part of the country; how can we work
together? You own these kinds of assets, we own these kinds of assets; how can
we do something together?
251 So I don't think it will ever get to be
that small a market.
252 And the other thing is what's the
purpose -- and one of the stated purposes is that there is supposed to be
diversity. That's something often stated. It's right in the Act.
253 There will always be diversity, even
within corporate groups, because Prime Television operates quite autonomously
from Global Television. It's got a managing director, it's got a sales force,
it's got its own team, and they program the way they want to program. They share
facilities, they share back office costs. But globaltv.com is another entity
within Global, the Global communications group, that operates on its own. It
went and hired 25 people. It's set a strategy of being a breaking news site,
consistent with our plan on being a major player in news and information, and it
does its own thing.
254 So even within these large corporate
groups, you can't look at even the Viacoms of the world or the -- you know, with
MTV and Nickelodeon, they're located in different places and they operate on
their own. So diversity, I think, will always be protected, even as corporate
groups become larger.
255 CHAIRPERSON OF THE COMMISSION: But in
order for corporate groups to develop, wouldn't you say that owning conventional
broadcasting undertakings is still an important part of the development and of
growth and of significance, not being the only way of doing it, but being one of
the keys in order to be significant?
256 MR. ASPER: Yes. Yes.
257 CHAIRPERSON OF THE COMMISSION: And the
diversity that you are saying you're proposing through the programming that was
kind of described earlier, certainly diversity can be there, but what about
competition and healthy competition and, you know, the kind of emulation that
occurs through competition?
258 MR. SHEA: Madam Chairperson, if I may.
Just a few things for the record.
259 Specialty services are entitled to
substitution. They have not been successful in taking full advantage of it. But
I think as we look forward we see more and more specialty services are
potentially going to be owned by distributors, the Shaw group, in the case of
the CTV-Bell Canada merger, ultimately ExpressVu. You can see that with the
prospect of more specialties being owned by distributors the likelihood of them
getting full substitution, which is allowed in the regulations, would happen. I
just thought I should raise that because they certainly are, from a regulatory
260 Secondly, I'm going to ask Ken
Goldstein to chime in too in a moment with respect to your last
261 We are not seeking -- and I don't mean
this to sound in any way tricky, because it is our fundamental belief with our
strategy -- we are not seeking licences in Toronto and Vancouver to
operate duplicate signals. We are attempting to get an additional licence
in Hamilton and Victoria, two very distinct markets, and our programming
strategies address real market issues, real market needs.
262 Hamilton tried, for the last ten years,
to become a Toronto station and it failed, If it failed under the leadership of
WIC, in its day an incredibly run company with incredible resources -- and Mr.
Reitmeyer behind me will explain that even under WIC they could not find a
programming strategy or have the resources from a programming perspective to
make CHCH successful, and in Victoria, they elected it to be purely a
retransmitter of Vancouver programming.
263 That's not our strategy. Our strategy
is to have distinct services in two very distinct markets, Hamilton and
Victoria, not Toronto-Vancouver. And it's a strategy that goes to the heart of
what conventional broadcasters do: provide full-up local service and an
entertainment menu that entertains and enlightens Canadians.
264 Also, it's our strategy, as a
conventional broadcaster, having two independents with your new Television
Policy which we are just going to be entering our first year, gives us an
opportunity to experiment far more in the likes and types of new Canadian
content. We need outlets to experiment. We need outlets to try to see if we
can't come up with better and more innovative programming that Canadians will
watch. That again, as a conventional broadcaster gives us that opportunity to
experiment a bit more, which we all need.
265 But I would now like to call upon Ken
Goldstein, because he, I think, with respect to one of your earlier questions
and your last question about dominance and conventional versus specialty and
where the universe is unfolding I think can be helpful in maybe showing you his
crystal ball and where things are going.
266 CHAIRPERSON OF THE COMMISSION: We may
be showing him ours too.
--- Laughter / Rires
267 MR. GOLDSTEIN: Before I get to the
crystal ball, let me deal with, I think, a very important point.
268 When we are measuring questions of
competition and the relative positions of the various groups in a marketplace,
we look at a number of criteria. Obviously, one looks at what one might call
shelf space. You have in front of you a little chart that's a bunch of stacked
little TV sets -- and it took hours to do that, I have to tell you, to get those
little names inside each television set -- but when I mention those
relationships of the percentage share of the revenue in the television market,
across specialties and across conventional, that relationship of the percentage
shares basically is the answer to the question, because if you add a
conventional service of a certain size and a certain character to the mix and
you get a result that still puts CanWest in second place in market share, albeit
closer to CTV, that's a different result than if you would have added a
different kind of conventional service.
269 So all conventional stations aren't the
same, all specialty services aren't the same and we have to look at the total
270 In this particular case, I think we
also have to view this against the backdrop of what might be the alternatives. I
think that if one were to restrict the growth of CanWest in this case by not
looking across the whole group of platforms, one would leave CTV -- a terrific
company, well run -- in a dominant position.
271 So the question here is not just kind
of an absolute question but it's a question of will we go forward with two
strong, competitive private sector players in this television business, each
with the tools granted by the Commission to compete, and from that competition
get more content and a better system, or will we arbitrarily divide it up and in
fact not get the benefit from that competition?
272 I don't think there is a question of
dominance here at all.
273 MR. ASPER: Madam Chair, just to sum up
in one sentence. If CTV or CHUM would wish to trade their position with ours,
with what we are proposing here. Done. I will sign those papers
274 CHAIRPERSON OF THE COMMISSION: Well,
they will be intervening and we will see what they say. I doubt -- but, you
know, there are two ways of looking at your application.
275 One is to say there's no other way, and
you kind of came at it with that kind of argument saying, "Unless we take it,
it's the end of the world", and you were talking about it like it's the only
strategy and Global is like the player to do it. That's one way. That's one
276 The other one is, "It's the strategy of
Global. This is what we intend to do. It will benefit the company, but it will
benefit also the broadcasting system, and this is why we want to do
277 You're kind of on the two dimensions in
terms of the approach. Very clever. I recognize that.
278 But let's stay on the only one to do
it. You know, that the world has changed so much that it's not the same
question, given that it's two years after the transactions did occur, but the
world hasn't changed to the point that we should split CHEK and CHAN and we
should even extend that kind of understanding to Hamilton. So somehow the world
changes and it doesn't change.
279 Please tell me why you feel that in
Victoria, for example, it hasn't changed although it was a strong group, I think
it was a strong group, but certainly the leadership, that was kind of in limbo
for awhile during the -- you know, until we heard about the transactions, and
the pleasure that we have to be together this morning certainly could be a
reason why in four years there is still a station there. That is a
280 You know, there are reasons. It seems
to me that there was not the possibility or full possibility to return the
situation of Ontv or of CHEK because of the situations there.
281 So tell me why you think the world,
although it has changed there, it hasn't changed, that you are to be the saviour
and unless you're there it will be -- you know, it's not clear to the reading of
the material and the application despite everything you have said, Mr.
Goldstein, and everything you have written as well.
282 MR. ASPER: I think that, first and
foremost, Hamilton CHCH needs a partner. It needs a partner who is already in
the market, in the general market because for 20 years, not 10 years, under the
ownership of Selkirk, MacLean Hunter and then finally WIC, this company has
teetered between profitability and loss, lack of service to its community.
Although it started with high and laudable objectives, which it achieved in its
very early years, over the last 20 years it has not achieved those objectives.
It has not been the contributor to the Canadian broadcast system that it could
and should have been. It's tried every type of strategy, go Ontario, go local,
but it has never had the resources and the market promotion power to be able to
283 And it goes back to what I said earlier
about our experience in international markets with TV3 in New Zealand and to
some extent Network 10 in Australia, which is when you are the number three out
of three channels in a market it is virtually impossible, without spending
obscene amounts of money, which no business person would do, to get to the next
stage. And given the goals of the Canadian broadcast system -- which are what?
-- they're diversity, they're about putting Canadian programming on our screens,
and diverse Canadian programming on our screens, not repeating what others are
doing, if Hamilton were bought by a smaller player who were (a) not required by
the Broadcast Act to do the eight hours of priority programming or by the
policy, or a player who, in other words, who was also not in the market with any
other platforms, it would not be able to compete.
284 If it were bought by a larger player, a
behemoth who came in and was ready to throw lots of money at it, it still would
not be able to compete. It's been owned by these behemoths that have multiple
platforms like MacLean Hunter with its magazines. What it needs is a partner who
is in the business, in the business of conventional television or the business
of owning other platforms that are in that market that can promote
285 Let me give you an example. They spent
almost $2 million last year, over the last 18 months, on a promotion campaign.
It did nothing for them. They didn't move in the ratings one little bit and they
have programming, U.S. programming, that is top 10 in the U.S., it's among the
best programming in the U.S., and it's not even on the map in the Canadian
rating system. Why is that? It's a non-factor in the minds of the Hamilton
market, other than the local news it does do today, and it's a non-factor in the
286 So even though it is a channel on the
dial, it needs a partner who can bring the resources to it that can put a
Canadian choice, bring a Canadian choice -- it's on the dials in the Hamilton
and the rest of Ontario market -- new programming, diverse programming that
they're not seeing right now.
287 CHAIRPERSON OF THE COMMISSION: But
you're saying in your presentation Global is, you know, a strong player in the
Canadian system, has had strong leadership. You're good business people. Why
would it work with you? You know, what will be the ingredients that will make it
work and that you would be the only one to make it work, because that's what I
hear as well?
288 MR. SHEA: Madam Chair, I think, as you
have witnessed in the cable industry, there are now two or three very strong
players as a consequence of consolidation. It was intentional I think in two
ways, intentional by the entrepreneurs to become bigger, because they needed to,
and I believe it was intentional from the regulators' perspective to ensure that
we did have, structurally, strong players in order to compete with impending and
289 Our argument is quite similar, that
over the course of the next couple of years, as the Commission hears a number of
future mergers and certain structural changes, that where we have to end up is
that there are two or three very strong,national, vital players. Opportunities
in our regulated system come two ways, by the luck of licensing -- and we
haven't had a lot of luck in terms of specialty -- or they come through
acquisition -- and we have had much more luck I guess in acquisition. But
structurally, that's the only way we can grow, and, structurally, the only
opportunities that are currently in front of us, CanWest, is the full
acquisition of WIC, because structurally it will make us stronger. And we
believe that it is in the regulators' interest and in the industry's interest to
ensure that there are two or three very strong players.
290 Lastly, I would say the reason why we
are requesting which in effect would be an exception to a policy, and that is
common ownership of stations in a market -- although you have heard that we are
arguing they're not necessarily the same market, but we will leave that aside
for the moment -- is because we believe that under the circumstances this is the
best application in front of you at the moment. We have gone, we believe, a very
long way in the types and the nature, and more importantly, the total benefits
which exceed your minimum policy.
291 We have advanced a certain number of
safeguards, because we respect the fact that this policy, while we would argue
might be somewhat outdated, but that's the subject for another hearing -- but we
have tried to come at this in a constructive way by putting the package of
elements in front of you that would seek to ensure that this exception is
292 But I will close by saying it's
currently the only opportunity that we see in front of us, and what we do see
around us is a world consolidating where CanWest is no longer going to be the
largest entity in the country, from a broadcasting perspective.
293 CHAIRPERSON OF THE COMMISSION: I
understand what you are saying as kind of building upon what Mr. Asper had said,
that although there are specificities in that market there is still the strategy
of Global and the necessity you have recognized on growing and being a stronger
player in Canada. What is not clear is what will it bring and how will you do
it? You know, why will it work? What will be the kind of big that will be useful
for your strategy and why that kind of big will help you be the kind of player
in Ontario and in B.C.?
294 If you don't like the reference of the
extended market of Toronto and Vancouver, rightly so. I understand given your
application. But, you know, still, you will have a strong presence in those two
provinces. How will it work so that it's really a leverage? I guess that always
comes back to that notion. You know, in your application and in your brief you
talk about leverage, you did talk about leverage today. It's not clear how you
will use that leverage. You will bring diversity by the kind of programming,
that's one thing, but what kind of leverage does it give you? Is it the
advertising force in the markets?
295 MR. ASPER: Well, there are a few
296 Number one, it does give us programming
leverage in the acquisition of foreign programming. When I say "leverage", I
mean it allows us to at least be on an equal footing with our major competitor.
The increases in foreign programming prices I think are well known to the
Commission and they have --
297 CHAIRPERSON OF THE COMMISSION: We don't
buy American. We buy Canadian.
298 MR. ASPER: Well, they're certainly
publicized in our financial statements.
299 This has been going on for many years,
and the greatest thing that can happen to the Canadian broadcasting system, as
well as its participants, be it CTV or CHUM or Craig or Global, is that we are
spending less money by virtue of the supply-demand dynamics in the United States
and having more money to put toward Canadian programming in
300 By simple mathematics, when there go
down to be a lesser number of buyers for foreign programming, that's good for
Canada by definition, because the prices will not increase at least as much as
they have in the past. But the leverage, again, it allows us is the promotional
leverage. The ability to take a program that we have bought the rights for,
whether it's on Hamilton or on Global, and promote it and create better
audiences for that programming.
301 I mean, one of the things we pride
ourselves upon over the past few years is that we have spent a lot of money on
promotion of Canadian programming and as a result we have typically been -- had
four out of the five top Canadian programs. In fact, one of our Canadian
programs "Bob and Margaret", frequently made it into the top 15 of all programs.
That's quite an accomplishment, and that's because we put significant promotion
resources behind it. But in going forward, in the future, as our competitors
have more and more platforms, we need to have more and more platforms to promote
302 Kevin, do you want to add to
303 MR. SHEA: One additional thought, Madam
Chairperson, is that to some degree the marketplace did decide, because it has
brought us here today. In other words, if there were other interested players in
the WIC assets, they could have outbid Shaw and ourselves if they were really
interested in advancing their own corporate plans and notions, and that hasn't
happened. It is the consequence, it is the by-product of how we have ended up
304 But I do want to echo what Leonard
said, and that is our ability to cross-promote our Canadian and foreign
schedules. I think it goes to the heart of that, in many respects, some of the
benefits that we have put forward in the area of promotion of content is
absolutely fundamental to our future. We are limited at the moment by the nature
and the type of channels that we have to do that. It's essentially Global and
Prime. So the more outlets in key markets that we have to provide very costly
cross-promotion of content is useful to our overall strategy and
305 CHAIRPERSON OF THE COMMISSION: What
about the buying -- the acquisition itself, buying a package and using different
windows; is that part of your strategy as well?
306 MR. SHEA: Madam Chair, yes it is. We
have mentioned in both our safeguards and our application that we would limit
the utilization of content to 10 per cent. These channels have to be different
in order to be successful. But take the recent example of our documentary that
we ran on Global last week. We would want to take advantage of promotion, a very
high end programming, Canadian programming, to have a rebroadcast within a week
or two for those people who didn't get a chance to see it, but it would be far
more event driven.
307 And if we were ever to do a -- ever to
use the example that I have just used with respect to a Canadian documentary, I
would want to make it very clear that that wouldn't count as part of our eight
hours that week, it would be incremental to the eight hours, because we do not
plan to duplicate our Canadian programming between stations in either Hamilton
308 CHAIRPERSON OF THE COMMISSION: So the
10 per cent would be for foreign?
309 MR. SHEA: The 10 per cent, in a large
310 CHAIRPERSON OF THE COMMISSION: The
311 MR. SHEA: -- is going to be for
Canadian programming, principally daypart, but to take advantage of the
promotion of higher end Canadian specials within a week or two of their original
broadcast on either station.
312 CHAIRPERSON OF THE COMMISSION: But were
you saying that it would be over and above the eight hours,
313 MR. SHEA: If we were to
314 CHAIRPERSON OF THE COMMISSION: -- when
it would be overlapping?
315 MR. SHEA: That's correct. If we were to
take a documentary, which is currently our only strategy, and run it on either
station that week, it would not count as part of the eight hours on that
station. It would be incremental to it.
316 CHAIRPERSON OF THE COMMISSION: But you
answered to one dimension of my question. What about the acquisition of foreign
programming where you can buy some packages and use some of the material on one
window and other material on the other window. Is that part of, you know, what
you're contemplating doing?
317 MR. SHEA: From an economic efficiency
perspective of joint buying, absolutely, yes. However, it is absolutely
essential that these stations be different to attract advertisers. If they're
purely a replay of each other, we are not adding any diversity to the market
from a consumer or advertising perspective. So programming would be bought
jointly but scheduled differently.
318 MR. ASPER: I think just to clarify,
it's no different than CFMT today in the Toronto marketplace, which is that they
say to us, "We would like to get these programs so, Global, when you're buying
for yourself buy for us too." That works to some extent no different than, you
know, the program supply agreement we had with WIC, the WIC Alberta stations. We
bought for them, for Alberta. They took some of the Global schedule. Not all of
it, but they took some of it. And so really we become the agent for some of
these stations, which would include CHCH in this and CHEK in this
319 So it's a way to ensure that instead of
five or six companies all seeking to buy various territorial rights going down
to Los Angeles and buying a bunch of programming and competing with each other,
it boils it down to CTV and its group, CHUM and its group, and CanWest and its
group. That makes for a more efficient buying market. That's really where there
is a significant benefit to CanWest just as there has been to CTV and others
buying -- like CHUM buying for Citytv and Space, things like
320 CHAIRPERSON OF THE COMMISSION: As a
viewer, that means that I will have a signal that will be what I'm used to with
Global. I will have Prime and I will have, if I am in Hamilton, another signal,
which will be Hamilton. Totally different --
321 MR. ASPER: Yes.
322 CHAIRPERSON OF THE COMMISSION:
-- with only 10 per cent overlapping between them.
323 MR. ASPER: Yes. There's no point for us
to have a repeat of Global. That would be the worst strategy we could possibly
324 CHAIRPERSON OF THE COMMISSION: Tell me,
talking about local, there's concern about -- you seem very devoted to serving
Hamilton today and certainly we can believe that, but certainly you will
recognize that there is concern as well that slowly but surely you will be
contemplating Toronto more and more, or that you will be contemplated by people
325 What's your view of that and what kind
of safeguards are you prepared to provide if the case would be that we would
consider granting that station to you?
326 MR. SHEA: Madam Chairperson, over the
last number of months, since we have had the opportunity to actually visit some
of the WIC properties -- Ken MacDonald behind me is a former Hamiltonian and
grew up working at CHCH, but a number of us had a chance to spend time in the
market, as well as others in Victoria -- let me be very clear that the message
we got from the folks in Hamilton who both work at the station and some of the
key community leaders was, "Please give us our station back", that over the
course of the last number of years it had moved its focus to Toronto. Our plan
with Hamilton is to move the focus west.
327 The entire Niagara escarpment area is
horrendously underserved in news and local programming, and there's an
opportunity with respect to advertising local revenues to service that
community. Hamilton was trying to essentially break into the Toronto market from
an advertising perspective, and it didn't work. There are far more
opportunities, real opportunities, economic and from a consumer perspective, to
shift the station to become a true Niagara escarpment
328 With respect to safeguards, we have put
together an advisory group. The advisory group has met already. We have
undertaken to ensure that the meetings of -- the minutes of their meetings would
be sent to the Commission, would be available for public scrutiny on an
annualized basis, and we think that that's a rather significant and real
safeguard because the community members are going to be monitoring the
commitment that we have made to double, in effect, local program. And the
programming will be local.
329 Certainly, what we have learned in both
the Hamilton and Victoria marketplace is that the population tends to skew a
little bit older. In the case of Hamilton, one of the benefits we have put
forward is twofold, one with McMaster and one with respect to health
programming, because we see an opportunity to reinvent daypart TV, to have a
much wider, broader focus on health and lifestyle programming using some of the
resident experts in the market to do that.
330 So our commitment is very, very real in
terms of returning those stations to a local undertaking. That's where their
future is going to be.
331 CHAIRPERSON OF THE COMMISSION: In that
perspective, what do you think the impact will be on a player like CHUM, for
332 MR. SHEA: With respect to
333 CHAIRPERSON OF THE COMMISSION: To your
334 MR. SHEA: I think the impact on CHUM
would be absolutely minimal, if at all. The station currently exists in the
market. The station has a programming strategy that is, from a news perspective,
more focused on Toronto. I'm sure if we shift the -- once we shift the focus to
Hamilton it may improve City's news opportunities. I don't think that that would
be too profound, because they do a good job at local programming, but I don't
think the impact on City would have any consequences.
335 MR. ASPER: Madam Chair, I think the
important thing to remember is we are not applying for a new licence. I think
Mr. Shea hit the nail on the head. Everybody is competing against CHCH now. I
would think CHUM would be heartened to know that CHUM is now -- that CHCH would
not be going after advertising dollars to nearly the extent they would be in the
Ontario marketplace. That is a strategy, as I said earlier, that has failed.
There just is not room for three mega-regional advertising groups, the CTV group
and then the CHUM group and Global -- sorry, a fourth. That's what CHCH was
trying to be and that's what failed.
336 What we see in Hamilton is a city of a
million two -- twice the size of Winnipeg. Almost the size of Metro Vancouver --
that is a market in its own right. And that's where we intend to
337 CHAIRPERSON OF THE COMMISSION: So you
will live solely by the local and national advertising revenues.
338 MR. ASPER: That's
339 CHAIRPERSON OF THE COMMISSION: There's
340 MR. ASPER: Yes. I don't -- yes, going
341 CHAIRPERSON OF THE COMMISSION: Why in
that perspective, then, didn't you return your retransmitter, if that's the
case? If you're going to be so devoted to that community -- which is a large
community, it's not a small one -- you know, why is it that there still remains
the possibility of you being a regional player?
342 MR. ASPER: Madam Chair -- I think,
Kevin, you can add in after -- I think that would be the very antithesis of what
the Canadian broadcasting system is all about, taking a Canadian service off the
cable systems and off the over-the-air reception. We talked earlier about
getting Canadians more services. Why in the world would we ever -- I think would
the Commission or would any consumer or viewer want to lose a Canadian service
which would be replaced by possibly an American service or some other service
that isn't providing at least some sort of local, even if it's Hamilton-based,
343 Kevin, do you want to
344 MR. SHEA: I think Leonard said it,
Madam Chairperson, and that is that we just didn't think it would be in the
interest of the broadcasting system to be advancing that we would be taking
Canadian signals away from Ontarians as a result of our shift for it to be more
of a local programming, from a news perspective, but Canadians should still have
the right to see their Prime Time.
345 I think, too, with the direction that
ExpressVu and Star Choice are going, where essentially every Canadian station is
now available on satellite, I think this Commission in the months and years
ahead is going to be seeing requests from the Canadian cable industry to have
the same appetite to add every Canadian service on the cable dial. So we think
it's in the interest of the system to have as many Canadian stations carried by
cable or satellite as we can.
346 CHAIRPERSON OF THE COMMISSION: I have a
few questions concerning the policy itself, and certainly this is not a policy
hearing, but given that your proposition, proposal really challenges the policy,
and you're saying that in your view that it should not be there any more but
you're not saying that you would like to have a change of policy or kind of
contemplating more an exception basis, but still for our understanding it might
be helpful to understand what you would see as -- if we were to consider a
different approach, what could be the proper mechanism by which we would measure
excessive domination in markets or in the country going into the
347 You know, you're saying on one hand,
"Those transactions were there. There's a need for us to become a bigger player.
It will benefit the country." Well, that's fine. But, at the same time, you're
saying that what might have been considered unduly is not today because the
situation is so different with all the other windows. What do you see as being
mechanisms that we should be considering in order to make exceptions and
eventually a new policy, if we were to go that route?
348 MR. ASPER: Number one, I want it to be
clear that today we are seeking from you an exception to the policy. We are not
treating this as a policy hearing, because -- and one of the reasons we are
seeking an exception is that: (a) we believe it's good for the broadcast system,
but (b) we say that there have been exceptions granted in similar circumstances
to our main competitors, notably CHUM and CTV, which warrant granting us a
similar exception, until the policy can be revisited, if that be the
349 But in terms of what mechanisms the
Commission should use, I think we have to come back to: What is the purpose of
the regulation of the broadcast system, and that is, you can correct me if I'm
wrong, of course, but it looks to me from reading it that it is about diversity
of choices, prime priority programming choices, but also news and information
sources. How many sources do people get their opinions from?
350 The second thing is that there is a
very significant jobs-based industrial policy, which is personified in the
Canadian certification and Canadian content requirements.
351 The third thing is there is a policy
sometimes referred to in the past as "more voices, more
352 Whatever it is, how so ever one defines
it, it is about putting more Canadian programming in more homes -- there being
more outlets, those outlets carrying more and more Canadian programming, and
better Canadian programming.
353 So it's very difficult. I have seen
regulatory systems around the world grapple with this issue, but I would step
back and look at those three factors, diversity, jobs, content, and just ask
yourself each year, as licensees come before you: How are we
354 I think if you look at the system today
you'll find that there are more jobs, there are more choices for Canadians in
terms of channels, and there is more Canadian content and better Canadian
content than there has ever been in the history of Canadian broadcasting. And I
submit that the reason that's the case is because the Commission has licensed
355 It has allowed existing players, like
our competitors CTV and CHUM, to get bigger. As they get bigger I have always
been an advocate of the philosophy that from each, according to their means,
should apply. So you should always look at the participants in the industry and
say, "You, participant, what are your means and what is your ability to
contribute based on the assets you have, based on the resources you have, based
on the things we have granted you, based on your audience share", and judge each
participant as they come before you for licence renewals or for new applications
or new -- for changes of control, and judge that applicant as to whether they
are contributing according to their means. Look at the system as a whole and
say: Are those three objectives being met? And when they aren't being met, when
things start going down, that's when I think it's time for the Commission to
356 CHAIRPERSON OF THE COMMISSION: Well, we
are here this morning to kind of have our measuring tape, I guess, and we would
like to get from you what's your view.
357 You know, if we are not -- and you're
not seeking a change in the policy but rather an exception, what would you say
is the major element other than the global strategy of becoming a stronger
player in the world that is evolving for Hamilton and for Victoria? Like, an
exception has to be different in each case. What would be your exceptional
reason for each case?
358 MR. ASPER: I'm going to ask Ken
Goldstein to also make a comment here.
359 CHAIRPERSON OF THE COMMISSION: Oh, it's
Ken who has the secret, like Caramilk.
--- Laughter / Rires
360 MR. ASPER: No. He is just jumping over
the table, so I --
361 MR. GOLDSTEIN: No, there's no secret. I
would like to pick up on the original question and then move to the subsequent
one, the question of how do we measure these things.
362 First of all, when we are talking about
an exception to a policy, we are talking about a policy that was put in place at
a time when there basically was only conventional television. So when one then
looked at certain kinds of ownership arrangements, the resulting market shares
are very large. I mean, if you go back many, many years to the CHAN-CHEK
situation, there was CHAN, CHEK and CBC. That was it.
363 We have reached the point now where
because of other conventional licensing, because of the specialty licensing,
because of the way the industry is involved, all of the thresholds are in a very
different place. So then when we approach how do we measure these thresholds, I
think there's probably three general areas to look at. One is the question of
definition and measurement, and I'll touch on that in a little bit of detail.
The other is the question of the outside interactions with the system. And,
finally, there is the umbrella under which all of this is sheltered, and that's
364 In the first case, we first have to
define the market correctly and we have to look at the whole real market as it
functions, which is of course conventional, private, public and specialties. We
have to look at audience, which is a measure of how we are doing today, we have
to look at revenue, which is a measure of how we are doing today, and we have to
look at the structural tools that the Commission has placed into the hands of
the various players in the system: the licenses, the conditions on those
licenses, the expectations on those licences. That's a picture of today and it's
also the potential for tomorrow, as we have heard, particularly around multiple
platforms and cross-promotion.
365 There's another very important set of
players that should always be in our minds when we are here, and that is, if you
will, we are buyers and sellers of the broadcasting business. We buy
programming, we sell advertising, we sell subscriptions. In the case of the
specialties, they sell subscriptions on a wholesale basis to BDUs. They have a
role too in telling you if something is out of line or if something is within a
range of thresholds that is normal and reasonable.
366 And I think at this hearing you will
not see interventions from the advertising community saying: This is somehow bad
from the buyer's point of view. I think you'll see a number of interventions
from the production community, saying, as sellers to the broadcasters: This is
367 And finally, when all of that is
functioning, the Commission has these licensees coming up for renewal, coming up
for group licensing, coming up for all kinds of reasons, and there is the checks
and balances of the regulatory system. So I think you have to look at all of
those things together, and it ultimately goes to the benefit that flows from the
system as long as those criteria are within the appropriate
368 CHAIRPERSON OF THE COMMISSION: I
understand the benefits to the system as you are describing it. I understand the
parameters we should have present in our mind. But when I turn to the situation,
the specific situation of CHCH and Victoria, what would be in your mind other
than the benefit to Global and the benefit to the broadcasting system as a
whole, given the fact that Global becomes a stronger player? What do you see as
being unique or the exception in Victoria or in Hamilton that should require a
positive answer from the Commission given the three elements we have
369 MR. ASPER: I think it's as simple as
saying that the greatest contribution to the system will come from Global as the
owner of these stations. As I said earlier, they have not succeeded under many
different owners. This owner is committing and is committing in -- and this
potential owner is saying, "Look at our track record of delivering. It's
reliable and there is no other player who is going to come forward with an
application for these two stations that can put as much into the system,
according to its means, as I said earlier, than Global.
370 And I think it's also important that
the Commission give a vote to entrepreneurialism, because we took the risk on
WIC. We spent five years of our time and resources on it. During that whole
time, we tried to talk to CTV about selling them BCTV, CHAN and CHEK and
Montreal, if they would join with us, and they didn't. We asked them in that
situation also if they would extend the transmitters of CKVU to create parity in
the B.C. marketplace between CKVU and BCTV when it was ultimately sold to them
as part of that transaction. They didn't come forward to do that transaction
371 Others said to us, "Gee, if you feel
like selling Hamilton, or something, give us a call when you spend your five
years and all your resources and time and money doing the transaction. We'll
just sit in the weeds and wait until you take all the risk and then we'll go
lobby the CRTC to force you to divest and we'll buy it."
372 That's not a very good message to send
to Canadian companies, that they will invest all their time and resources and
that by dint of regulatory action that will be to some extent forced to be a
Pyrrhic victory for them in the commercial marketplace. I think it's important
to say to Canadian companies, "We will allow you to take the risk. We will allow
you to grow. We'll allow you to own these assets. We will put safeguards on you.
We will put some parameters around you and your ownership of those
373 And these are what we have offered to
the CRTC in this -- you know, if you deem it necessary, but I think it's
important to send that message to the Canadian broadcasting
374 MR. O'FARRELL: Madam Chair, if I may
375 I think at the root of the common
ownership policy is a concern of is there excessive concentration of ownership
in a marketplace. Certainly in the case of Vancouver where you have just
licensed a station a couple of years ago and have just heard applications for
new licences, we think that perpetuating that exception would not raise a
concern relating to excessive concentration. Then, as it relates to Hamilton, we
think that the level of ownership diversity in the marketplace is such that
there would be no concern there either.
376 CHAIRPERSON OF THE COMMISSION: In terms
of diversity, then, you don't see any problem.
377 But in terms of the uniqueness of the
situation of whether the markets can sustain an independent company, I think Mr.
Asper and yourself have just answered that there would be interested parties to
take that. What you are saying is, given the entrepreneurship and the
risk-taking you have been doing, and you're contribution to the broadcasting
system, you feel that it would be appropriate to create the exception in this
case to become a stronger player and to bring more contribution.
378 Do I hear you right when I
379 MR. ASPER: Yes. I think we bring the
resources to Hamilton both by our presence in the market and our willingness to
take risks that will make Hamilton as big and as successful a contributor to the
system as it can possibly be.
380 Another example of that is we just
hired 20, 25, 30 people at globaltv.com to start into a -- start a Web site up.
How many people are doing that today without hopefully having to go to the
financial markets to raise money? We just made a decision and we did it, and we
invested and we put our money where our mouth is. When we say we are interested
in news and information, and that being a content stream, we do it. I think
that's something very tangible that we bring to these assets.
381 CHAIRPERSON OF THE COMMISSION: Before
we break for coffee, my last question is this one and I would like your reaction
to it. Hearing you and reading your application and the interventions, what is
your reaction to the statement of the whole of your application is greater than
the sum of the parts of your application? That the meaning to your strategy and
to your development and to your growth and to being a strong player, not only
today but in three, five years, and in this new world that you were describing
that the value of that transaction is much more than strictly what is at the
application level. It is very core or significant and meaningful to the future
of Global being a player of the future?
382 MR. ASPER: The bigger a company is, the
bigger the risks it will take. The bigger the risks it can take. The greater the
likelihood that it will invest in new ventures, new things, try new things,
experiment and try to find yet other sources of viewers and revenues, you know,
it's things we run into overseas, in our activities overseas. We have tried for
quite some time to enter the European and British marketplaces. We can never
quite -- and as people may know, we made an experiment, conducted an experiment
in Chile, and tried a broadcasting entity in Chile. We withdrew from Chile. We
have not been as successful as we would like in the European marketplace because
there is Time Warner willing to risk what to us is a lot of money, thirty,
fifty, $100 million trying new things. They don't work, they try something
383 In a smaller context in Canada, the
larger companies, what Global hopes to be is a company that can take the kind of
risks I talked about with a medbroadcaster, a globaltv.com, or the hopefully
dozens of specialty channels, digital specialty channels we wish to launch. It's
good for the Canadian system if there are companies of our size and bigger or
equal size that are willing to take risks on new programs, new ventures, new
opportunities for Canadian viewers to have Canadian content in their homes. I
think that's where the spin-off benefit is. It's in millions of dollars of more
investment and experimentation of things that will benefit the Canadian
384 CHAIRPERSON OF THE COMMISSION: But it
allows also the enhancement and the growth of your company.
385 MR. ASPER: Yes,
386 CHAIRPERSON OF THE COMMISSION: It's not
only about -- yes, because you're a risk-taker in that perspective, at the same
time it allows the company to become more significant when not only in this
country but also elsewhere. So my statement was that, you know, the whole
transaction is much more than every detailed transaction that is presented in
the application. It is very core to your whole strategy. And when I was saying
in the opening remarks that not only your transaction but the ones that we'll
hear later this week are kind of significant in changing the landscape of the
broadcasting system, that refers to the same notion. What do you
387 MR. ASPER: Yes. I can only, I think,
reiterate what I said earlier, which is that -- I come back to the Web site
idea, which is that, you know, we looked at the budget and we said, "Well, this
will cost $3 million this year or $5 million, and we don't know if we're
going to get any revenues on it. We may, we may not." But the larger a company
is, the more it can take those kinds of negative profit and loss projections and
say, "Okay, but we'll try it because someday down the line it is going to work."
And that goes to programming. That's where one has to make the investment in
388 Even when "Traders" started, we didn't
know if "Traders" was going to be -- you know, it would have had a negative --
it would have lost us money. It did lose us money. But by taking the risk and by
pushing it and by promoting it, we got it to a point where "Traders" ultimately
became a show that was profitable for CanWest. And that's the kind of risks that
I think is good for the system to take and it's the kind of risks that we want
to take. But the larger the company, the more risks it can take.
389 CHAIRPERSON OF THE COMMISSION: Well, I
guess before we go, just that is one of the parameters we have present in our
mind, that the value and the contribution to your company has to be commensurate
with the ones to the broadcasting system and that is definitely the kind of, you
know, question we will be pursuing over the next few days and in the analysis
after the hearing.
390 MR. ASPER: Thank you.
391 CHAIRPERSON OF THE COMMISSION: We will
take a break and come back in 10 minutes, 15 minutes.
--- Recess at 1115 / Suspension à 1115
--- Upon resuming at 1140 / Reprise à 1140
392 CHAIRPERSON OF THE COMMISSION: Alors, I
would like to give some indications I forgot to mention when we first
393 I just want to let you know that we
will be completing the hearing by Friday and we will start at eight o'clock
tomorrow and Thursday and Friday. If we need to sit longer than 6:30,
seven o'clock it will be the Thursday evening where we will be doing that.
So it might be helpful for plane reservations.
394 Madam Wylie.
395 COMMISSIONER WYLIE: Thank
396 Good morning, ladies and gentlemen. My
questions will focus on the programming aspects of your proposal, that is, they
will focus on your proposal from the perspective of what will be offered the
viewer by the various TV stations that you are seeking to purchase, and some of
them will be quite specific. I have learned a new English expression lately,
which is: the devil is in the details.
397 Then Commissioner Grauer will examine
your proposals from the perspective of the benefits offered. I understand that
there may be some overlap between them, but I want to discuss with you whether
your proposal will at least maintain or hopefully improve the programming that
is already offered by these stations that you're seeking to purchase,
particularly in the area of local programming.
398 The Chairman mentioned a while ago the
question of whether the whole can be more valuable than it's parts, but there
also is some value in looking at the various parts, and you are seeking an
exception to the policy for dual ownership in the same market, in the same
language, in two circumstances. Perhaps you will also be prepared to accept some
special or some exception to our TV policies, for example, as a quid pro quo,
for having two stations in the same market or for having a greater whole after
this, so that may be, for example, in the area of local programming or local
news even though the TV Policy has not generally proposed such conditions of
licence or commitment for all stations.
399 So that's the spirit in which I would
like to examine what is offered by the stations you are purchasing now and what
will be offered to the viewer if your proposals were approved rather than
discussing whether they should be approved or not: What if they were approved,
what would be the improvement?
400 So first I will look at CHAN, and then
CHEK and then CHCH. Then I will have some general questions that will have some
401 If I look at CHAN's licence, in the
area of local news they were expected to do 20 hours and 15 minutes a week. If
we look at their logs at the moment we find that they are doing 26.5 hours a
week of local news. Your application, if we look at the various proposals and at
the block schedules that are proposed offers or promises some twenty --
anywhere between 22.5 to 42.5 hours of original news a week.
402 The reason why I say it could be as
little as 22.5 and as much as 42.5 is the morning news program and the extent to
which -- mostly that program -- the extent to which there is a local news
component in it. So I would like to discuss with you how -- whether you have
looked at the amount of news characterized as such, or categorized as such, in
the morning news program, which is three hours, if I understand, every morning,
6:00 to 9:00, on CHAN, and it contains Category 2, information and analysis, as
well as Category 11, human interest. So obviously the 42.5 hours of local news
will be reduced to the extent that these two other categories are components of
403 So can someone tell us whether you have
tried to make a calculation of the amount of local news that is Category 1 in
404 MR. SHEA: Madam Vice-Chair Wylie, I'm
going to ask Ken MacDonald to respond to your question.
405 MR. MacDONALD: Commissioner Wylie, I'm
a little puzzled by the question in that the morning show presently on CHAN is
primarily local content and moreover the current news programming hours for CHAN
are in the neighbourhood of 40 hours at this point. Our position would be that
this station is a leader when it comes to local news, and we certainly would
support and do everything we could to maintain that reputation and that level of
local programming, which is an example for other stations.
406 COMMISSIONER WYLIE: The reason I'm
trying to determine just how much there would be is in the event,
hypothetically, that we were to request or demand or require that a certain
level of local news -- of both -- the local non-news programming is broadcast
and also that you have offered to report on how you're doing with your
commitments, how would that be calculated. So that's why I'm trying to find out.
You haven't calculated the difference between the local news and the local
407 MR. MacDONALD: Yes. I could give
408 COMMISSIONER WYLIE: Now, I understand
that if I were to be questioning WIC, maybe I would ask them the same question,
which is when you say there is this amount of local news, how much of it is
there in your morning show? But we are not questioning WIC, we are asking you
what you will do once you own the station if you were to be authorized to own
409 MR. MacDONALD: We would commit to the
same levels, and that morning show right now is all local news and we would
410 COMMISSIONER WYLIE: But it is not all
local news in the sense that there are other categories clocked in in that
411 MR. O'FARRELL: Madam Vice-Chair, maybe
I can help. We are not familiar with the logs of BCTV and the manner in
412 COMMISSIONER WYLIE: But you're familiar
with your own application.
413 MR. O'FARRELL: Yes.
414 COMMISSIONER WYLIE: I'm trying to
divide in your own --
415 MR. O'FARRELL: And we have defined that
morning show as a Category 1 news program.
416 COMMISSIONER WYLIE: But it does include
Category 2, and human interest, which would be local non-news.
417 MR. O'FARRELL: And we haven't
418 COMMISSIONER WYLIE: You don't have any
ballpark figure as well as to what is local and whether you differentiate
between B.C. news and local news?
419 MR. O'FARRELL: Perhaps what we could do
to satisfy the Commission is over the lunch break take a look at how to break
that down and immediately come back after lunch with the
420 COMMISSIONER WYLIE:
421 Now, I'm referring to the WIC station
as it exists now simply as the threshold or beginning for discussion with the
aim of seeing whether -- if your proposals were approved as filed, what would be
the result for the viewer on that broadcast undertaking? Would there be less,
would there be more? And if you offer to report and we find that that is an
important aspect, then we have to know what we are dealing with.
422 MR. SHEA: Commissioner Wylie, with
respect specifically to CHAN, it's quite different from the other two markets,
and I know we are headed there, our proposal does not call for any new
incremental local news programming in the market. And, Commissioner Wylie, it's
principally because when we reviewed the situation with respect to local
programming, we didn't quite honestly see how we could improve upon it in
Vancouver on CHAN.
423 COMMISSIONER WYLIE: No. I'm looking at
whether, as I said at the beginning, at least we will have the same amount
maintained. And if that morning program is changed, it could still be -- if you
categorize it as Category 1, it could be local programming but not local
424 MR. SHEA: Go ahead,
425 MR. MacDONALD: Commissioner Wylie, I
might be able to help.
426 You may be referring, there was a time,
up until I guess it was August of 1999 that "Canada AM" was also running in the
morning and this morning show was considerably shorter and ran prior to "Canada
AM". But what we are saying is that the local show, as it runs now in the block
schedule, we would retain that local commitment in its entirety.
427 COMMISSIONER WYLIE: Yes. Because if we
were to decide to require commitments, or even at renewal, conditions of licence
as a quid pro quo for owning two stations in the market, that would be our
exception as a quid pro quo for yours, you may be then having to do 42.5 hours
of local news when in fact that won't be the case if that three-hour programming
has other categories, because surely you wouldn't call "Canada AM" a local news
428 MR. O'FARRELL: Which is why, if you
will indulge us, Commissioner, we will do this for you over lunch and we will
clarify immediately --
429 COMMISSIONER WYLIE: Okay. And you'll
get back to us with some --
430 MR. O'FARRELL: On the breakdown of the
431 COMMISSIONER WYLIE: -- percentage
432 MR. O'FARRELL:
433 COMMISSIONER WYLIE: -- sufficient so
that we have some idea.
434 Do I understand that -- and with regard
to differentiating between B.C. and local, do you have any comments considering
the number of retransmitters, et cetera, which will become an issue if --
depending on the extent to which CHEK, for example, which is available to a
number -- to viewers, as well as CHAN, it would be interesting to know whether
there will be a more local local on CHEK and B.C. on CHAN. So do you
differentiate between what is B.C. regional/local in news and
435 MR. MacDONALD: Yes, Commissioner Wylie.
In terms of taking them in the reverse order you have mentioned them, in terms
of CHEK in Victoria, that would have a completely -- almost completely local
focus in that it would serve -- it would cover the Vancouver Island. It would be
an island station.
436 And in terms of CHAN, their programming
now, which is B.C.-oriented but which is truly local and more Vancouver in
content, with the exception of "Canada Tonight" which will be replaced, we would
retain those commitments to local news. It's a heavy local news agenda and it's
quite separate and distinct from what we propose for CHEK in
437 COMMISSIONER WYLIE: In calculating the
hours of local news, did you calculate in their the 2.5 hours which is the
global national news?
438 MR. MacDONALD: We did not. We certainly
didn't count national news as local content, but it is -- it's not included in
CHAN's programming hours per se.
439 COMMISSIONER WYLIE: So you will take
that into consideration when you look at the difference between local news and
local non-news programming, because presumably the global news is not local
440 MR. MacDONALD: No. You're quite
correct. This is a national newscast.
441 COMMISSIONER WYLIE: Now, there is a
string of course of retransmitters to CHAN and this affiliation of CHAN, as per
your application, is planned for September 2001, which will be a year from now.
Will that mean that the benefits with regard to programming will start then and
run for five years where they are in tandem with monetary or financial benefits
because of the transfer?
442 MR. SHEA: That's correct, Commissioner
Wylie. The benefits in the case of both CHAN and CHEK, the five-year clock would
start on September 1st, 2001.
443 COMMISSIONER WYLIE: Now, one of the
things of course that is of interest to us is the fact that with both CHAN and
CHEK, which are affiliated to the CTV Network, your proposal is based on the
affiliation continuing for another year, at which time your proposals would
replace the programming. What will be programmed in lieu of the national
programs or in lieu of the programs that will be done starting in 2001 while
you're still affiliated, that is, in the non-affiliated part of the -- or
non-network part of the broadcast day?
444 How do you propose to -- are you
going to switch some programming from CKVU? How are you going to program the
445 MR. SHEA: It will essentially be very
much status quo, Commissioner Wylie. In other words, there will be no noticeable
change in the line up of either CHAN or CHEK for the year ahead. There will be
no cross-promotion or any sort of identification of CKVU or
446 Our plan and intention is to work very
closely with the CTV Network throughout the course of next year so that we
organize a marketing campaign, if you will, to consumers and cable subscribers
and satellite viewers in the province of B.C., so that it's a very well
understood consumer change out on September 1st of 2001.
447 So BCTV in the interim will look
identical to the way it does today. We have recently had discussions with CTV on
the manner and type of program organization that will take place over the next
year. And to your earlier point, all the changes in local programming and
national news would start September 1st of 2001.
448 COMMISSIONER WYLIE: So despite --
without going into the intervention stage, despite the comments in the CTV
intervention that continuing the affiliation for a year was not appropriate, you
have now some assurances that you can give us that until September 2001 it will
be status quo, at least with regards to getting programming from the CTV
449 MR. SHEA: That's correct. We have an
agreement in principle with CTV that all will remain intact until September 1st,
450 COMMISSIONER WYLIE: And of course my
question is more in relation to what happens to the screen and to the viewer?
Not necessarily the exact details of -- and the arrangements you may
451 MR. SHEA: Essentially,
Commissioner Wylie, there is no change. Mr. Gardiner will continue to buy
and schedule the same type of programming that WIC has had on their stations for
the previous number of years, and the major consumer shift happens a year from
452 COMMISSIONER WYLIE: You don't seem to
have in your application any proposal for local initiatives vis-à-vis the
interior, that is, the localities or communities that are served by the
retransmitters. Is that correct?
453 MR. SHEA: That's correct. Although we
do have certain initiatives in Kelowna with regard to the CBC affiliate that's
also part of this application. But you're quite right --
454 COMMISSIONER WYLIE: I meant more the
455 MR. SHEA: You're quite right in the
case of B.C. that the predominant benefits are in the Vancouver area. There's
specific benefits which we can talk about in Victoria which are quite different
from that being proposed in Victoria. But, Commissioner Wylie, our communication
with the CFTPA and with producers in B.C. led us to the conclusion that the most
significant and I guess most required needy benefit was in the area of
supporting the development of Canadian programming, which is why a significant
percentage of the B.C. benefits flow to the production fund.
456 COMMISSIONER WYLIE: With regard to the
gathering of news to ensure that the interior is reflected or served in the
local aspect of CHAN, which I understand is quite successful, do you know how
that is done and what do you propose to do when you are the one programming
457 MR. SHEA: Commissioner Wylie, I think
Ken MacDonald has a very good sense of the level and type of coverage that
the interior of B.C. receives under its current stewardship of
458 We have also proposed and we fully
intend to do a lot more work with respect to this one benefit, but we have
proposed a series of benefits that are assigned to co-operate endeavours with
the CBC. Clearly, one of our plans over the course of the next couple of months
and years ahead is to see if we can't share more northern and remote bureaus,
not just in B.C. but certainly in B.C. and Alberta, so that we do get combined
wider coverage, and it just makes much more sense in this day and age for us to
be working together with other national networks to at least co-operate in terms
of operating-efficient operations where the reporters might be different but the
camera people and so on might be available to both reporters.
459 We do not appear before you today with
a specific plan with regard to that. It's our intention to sit down with the
CBC. There are monies ascribed in B.C. for such an undertaking, but I think
whatever the level of commitment that WIC currently applies to coverage in the
interior of B.C. will, at a minimum, be maintained, and we hope enriched as a
consequence of the work we plan to do with the CBC.
460 MR. ASPER: Commissioner Wylie, I think
it's also worth pointing out that many of the benefits we have proposed in our
application, in general and for the Vancouver area, including support of
colleges and universities in the area, educational institutions, our --
sorry -- arts institutions and our B.C. mentoring program with the Canadian Film
and Television Production Association, for example, will benefit not just
Vancouverites but people from the interior of B.C.
461 COMMISSIONER WYLIE: Mr. Asper,
Commissioner Grauer will discuss with that you.
462 What I'm trying to focus on now is that
will not necessarily certainly directly improve what's on the screen, mentoring
programs. It may indirectly or eventually. I'm trying to look at -- yes, I can
see Mr. MacDonald nodding. I nod too.
463 But I'm looking at 2001 in September,
and in 2002 in September. What will these stations look like on the screen? What
will be there? Will there be less local news, more local news, more perhaps
non-news, local programming in exact number of hours, with the possibility that
the Commission may think that an exception can have -- as a quid prop quo, an
exception on our part, maybe make sure that the same thing will be true when we
discuss CHCH, that the stations are different, that they offer, at least for the
period when -- I have heard you say local news and some local programming is
important, that that's actually what your annual report will tell us if you own
both stations. So that's the perspective from which I'm looking at it, the
direct result immediately on the screen or in the short term.
464 MR. MacDONALD: Commissioner Wylie,
taking your question directly, if I may, CHAN currently, in terms of those
interior areas you talked about, they do have freelance arrangements there now.
They do take the show on the road out there periodically. And, as Mr. Shea
indicated, we would certainly want to continue that. I do understand, though,
there is some effort too made not to take away audience from the local stations
in those areas. There is some attention paid to that as well.
465 So it's a balancing act, and certainly
those commitments that are currently being made by CHAN, we would support and
466 MR. SHEA: Commissioner Wylie, I guess
as an overview -- and it might be helpful, specific to the changes in the B.C.
market, because I think your question is fundamentally what's the consumer going
to see that's different -- with respect to CHAN, it will become a replication of
what we know of Global today. However, it will keep the current level of local
programming that CHAN currently produces, which will be significantly more than
Global Vancouver currently does, as well as there will be the inclusion of a
national newscast emanating out of Vancouver.
467 For the residents of B.C. who are
currently not served by Global, which by and large is people living in the
northern part, given we will be now transmitting on the grid throughout the
province, they will be getting a new and different Global Television Network
which they haven't seen before.
468 But the most significant change in the
market is really that of CHEK. CHEK and CHAN, by and large, today mirror each
other. CHEK will become a local station with a completely different schedule.
That we think is a significant benefit to the viewers of both the island and
Vancouver because it will finally be different. It will be different in two
ways: a completely different program schedule in Prime Time than what one sees
today; and, secondly, an enriched and improved local programming undertaking in
Victoria, because they have not been served by any dedicated local programming
initiatives for some time.
469 So that is sort of a backdrop. I think
you'll see as we go down this path that the real improvements with regard to
local happen more in Victoria, given the style and nature of content than they
do in today's CHAN. It will essentially be replicated from what it is
470 COMMISSIONER WYLIE: Yes. We can talk
about CHEK now. CHAN will just have been a wherewithal because it's more in the
guise of the quid pro quo.
471 MR. SHEA: Precisely.
472 COMMISSIONER WYLIE: Certainly, you
would be expected to do no less.
473 And where there will be changes that
maybe we will eventually want commitments about, if you were to own both
stations, it would be with CHEK where you have proposed the addition of news
bureaus, for example, in Port Alberni, Campbell River and Tofino, the addition
of a mobile microwave unit and more ENG cameras to allow you to localize CHEK,
so to speak. However, there are programs on CHEK now, and just the renaming of
them is not really an additional -- or an increment to what's there
474 Again, if we look at the licence
obligation of CHEK, it's expected to do, according to its licence, 13 hours and
20 minutes per week of original local news, and it is doing less than that,
11 hours and 44 minutes. So instead of calling them to a hearing, maybe we
will call you to a renewal and get you to do what you were supposed to
475 MR. SHEA: That's our
476 MR. ASPER: Thank God for
477 COMMISSIONER WYLIE: Your proposal is 17
hours of local non-news programming. That is mainly by increasing or expanding
the supper hour of news, which would be the "Island Report". Is that correct,
478 MR. MacDONALD: Yes. There are two
elements to the incremental hours, Commissioner Wylie. One is expanding the
supper hour to 90 minutes, as you point out, and the other is the addition of a
daily talk show, a 30-minute talk show, "Your Say". Monday to Friday, I
479 COMMISSIONER WYLIE: The "Island Final".
480 MR. MacDONALD: No. I'm sorry.
481 COMMISSIONER WYLIE: Oh, no. No. The
talk show --
482 MR. MacDONALD: The talk show is called
"Your Say". It's a 30-minute program running in the afternoons Monday to Friday,
a local information show.
483 COMMISSIONER WYLIE: Something that I
find puzzling is that -- Commissioner Grauer may correct this if I didn't
understand it properly, but I understand that there will be $3 million
allocated to CHEK alone for local endeavours, but an additional $5 million
if we were to allow you to own CHAN as well. So there would be $8 million,
then, spent on CHEK for local endeavours. What would disappear if you weren't
allowed to own CHAN and CHEK but you were allowed to on CHEK?
484 MR. SHEA: The benefits that are
ascribed to CHEK would remain intact, obviously.
485 COMMISSIONER WYLIE: But what would
happen? What is the $5 million -- what would the $5 million go to, which I
gather would be as a benefit for us approving your ownership of CHAN as well,
but would be spent on CHEK? Is that correct?
486 MR. SHEA: Commissioner Wylie, I think
in our application we indicated that should the Commission wish to alter or
change any of the benefits that we would principally reallocate those to the
promotion fund, so in the case of CHAN being approved and CHEK not being
approved, which I think was your question, the $5 million that was being
ascribed to a CHEK benefit, where would it go? In all likelihood, it would go to
one of either the Promotion Fund or we would bring forward another acceptable
benefit to the Commission.
487 COMMISSIONER WYLIE: Either you didn't
understand my question or I didn't understand your answer. But that extra $5
million, would it go to any of the local endeavours that you have proposed as a
programming benefit, not a tangible benefit?
488 MR. SHEA: And it could.
489 COMMISSIONER WYLIE: And more than
likely -- my question is: If it's only $3 million, will these hours --
suppose we were to decide to commit -- to require a commitment that the local
programming be done, would it be done even if you didn't have -- you weren't
allowed to own CHAN as well?
490 MR. SHEA: I don't think -- in all
fairness, Commissioner Wylie, it would not be to that level. Certainly the $3
million would be maintained. The incremental five is tied to a benefit should
both be approved.
491 COMMISSIONER WYLIE: But it's not clear
to me, if we were to accept that, your proposal to have 17 hours of local news
and then additional hours as well of local non-news programming, whether that
$3 million would be enough to meet this commitment.
492 MR. SHEA: No, it would not.
Commissioner Wylie, it's --
493 COMMISSIONER WYLIE: Therefore, there
would be different programming --
494 MR. SHEA: That's
495 COMMISSIONER WYLIE: -- enhancements
offered if you only owned CHEK.
496 MR. SHEA: That's
497 COMMISSIONER WYLIE: Have you some
details to give us as to how that would occur? Because if we were to decide to
ask for a commitment as to these proposals, we would have to know what do we
have, as a regulator, if you own CHEK only. And what -- if we allow you to own
CHAN and there's another $5 million -- what's the difference in what's on the
498 Commissioner Grauer can discuss the
tangible benefit aspect of it, the replacement, whatever. I'm focusing on what
is going to be broadcast.
499 MR. SHEA: I understand. And because
there are -- there's essentially two benefit allocations, one tied to the
combination if they are approved and one that's specific to CHEK. I think what
we would have to do, in fairness, Commissioner Wylie, is come back and say: If
we are only approved for CHEK, these are the principle hours of programming that
we feel would be fundamental in the market and necessary in the
500 My hunch is that it would be tied to
the evening news -- or the supper hour news would be a priority for us. And
perhaps some of the other hours that are committed to as part of the CHAN
undertaking would no longer be advanced given it was not approved. But I think
we can come back to you and tell you specifically what you would
501 COMMISSIONER WYLIE: I'm sure you
wouldn't help the next owner to program local. So that's of course -- I'm
more interested in you are the one who tied an additional $5
502 MR. SHEA: That's
503 COMMISSIONER WYLIE: -- to us approving
CHAN and I'm trying to see to what extent would it enhance CHEK as a
counterpoint to having two stations in the same market, because you are telling
us that it's good for the broadcasting system to have the two, so we would like
to be able to measure.
504 So do you think your hunch can be
transferred into numbers over lunch?
505 MR. SHEA: Absolutely.
506 MR. MacDONALD: Commissioner Wylie, if I
may be just permitted to correct an omission. When I was giving you the
incremental hours for CHEK, I negated to mention the 30-minute sports program
"Sportspage", which runs late night Monday to Friday and on the
507 COMMISSIONER WYLIE: Yes. I was looking
a news, at local news, and now we can look at the local non-news
508 And, again, I'm using as the base the
licence. And in this case, in the case of CHEK, you'll be doing fine as a base
because all it said was that the Commission noted the licensees plan to reflect
the local community. So the threshold is big.
509 However, in local non-news, CHEK is
currently, from our calculation, doing two hours, ten minutes of original, and
six hours, ten minutes of repeat programming. In that case, there would be six
hours committed by CanWest, of which 5.5 hours would be original. And that's
where you get the programs "Your Say", which you mentioned before, "Sportspage"
and -- was there another program? A talk show? "Your Say" is the talk show.
510 MR. MacDONALD: That's
511 COMMISSIONER WYLIE: How does that
relate to the $3 million and the $5 million as well if CHAN were not -- you were
not allowed to own CHAN?
--- Short pause / Courte pause
512 MR. SHEA: Commissioner Wylie, what we
did in terms of our bill to this application or planning for the application is
that we took the $8 million ascribed to Victoria to CHEK and built a plan
around that. We do not have the specific breakout of what the $3 million is
attributed to and what the $5 million is attributed to. Over lunch we will
do that and give you some indication of what -- on the "What ifs" what would
happen to the various programming commitments.
513 COMMISSIONER WYLIE: Now, if the
Commission did not approve your application to own both CHAN and CHEK, what
would be your commitment vis-à-vis CKVU?
514 MR. SHEA: I think you would hear what
the plans of CKVU are --
515 COMMISSIONER WYLIE: No. I meant in
terms of would you see, then, yourself as owning CHEK and divesting of CKVU
516 MR. ASPER: Are you suggesting we
would -- you're saying if both CHAN and CHEK were denied?
517 COMMISSIONER WYLIE: No.
518 MR. ASPER: I'm sorry.
519 COMMISSIONER WYLIE: If the Commission
allowed you to own CHEK and turn it into a more local Victoria station, would
you still -- would your proposal change with regard to your plans with CKVU,
unless you have sold it already?
520 MR. ASPER: No. We're keeping everybody
521 COMMISSIONER WYLIE: Maybe
522 MR. ASPER: No. We would be coming to
you with a -- no. We would be still saying, then, we would wish to keep
523 COMMISSIONER WYLIE: Therefore, there
would be some programming changes probably. "Sportspage", for example, is on
CKVU. How different would it be on CHEK, which is one of your commitments for
local non-news programming?
524 MR. SHEA: There would be some very
minor changes to Global -- CKVU. So in the case of "Sportspage", which becomes a
Victoria commitment, it would not be -- there would be a programming change with
respect to Global, but it would not be that significant.
525 COMMISSIONER WYLIE: Well, I'm more
interested in what would happen to CHEK. Would you have "Sportspage" on CHEK and
526 MR. SHEA: No, we would
527 COMMISSIONER WYLIE: Well, I'm more
interested in what would happen to CHEK. Would you have "Sportspage" on CHEK and
528 MR. SHEA: No, we would
529 COMMISSIONER WYLIE: Then what would be
replacing "Sportspage" as the local enhancement for CHEK?
530 MR. SHEA: CHEK may well become
the -- I think in that case, quite honestly, "Sportspage" would stay on
CKVU in Vancouver and we would have to reassign the benefit to another local
531 COMMISSIONER WYLIE: "Your Say" is a
program that would be quite easily amenable to being a Greater Vancouver Area
program. What do you intend -- how do you intend to program this so that it can
be counted as local non-news programming on CHEK?
532 MR. MacDONALD: I think, Commissioner
Wylie, that it's an interactive show, so you would certainly get calls from
people in the Vancouver market. However, the topic selection for the program on
a daily basis would be based on Victoria issues, island issues, and as such the
content would remain true to the focus and intent of the
533 COMMISSIONER WYLIE: Because if it were,
for example, the Victoria legislature, that would certainly go beyond the island
in interest. So your tool will be the topics chosen?
534 MR. MacDONALD: That will be the mandate
of the program, yes.
535 MR. ASPER: Commissioner Wylie, while we
are -- I know we're discussing programming, but I think it's relevant for
the Commission to understand why we are taking the position that the CHAN-CHEK
ownership situation be maintained. From our perspective, one of the reasons was
that the two stations are so inextricably linked from an operational point of
view that it was actually a cost of millions of dollars of separating the two,
which in our view would be a detraction from the system that led us to -- that
was one of the criteria that led us to the decision to try to maintain that
existing ownership situation.
536 COMMISSIONER WYLIE: But, Mr. Asper, you
will discuss with counsel later whether -- which is -- I don't know if that's
what I'm hearing from you, if we don't allow you to purchase both you don't want
537 MR. ASPER: No.
538 COMMISSIONER WYLIE: You don't want
539 MR. ASPER: No. It just was a highly
preferable situation, from our perspective.
540 COMMISSIONER WYLIE: Yes. Except that
I'm trying to look at hypotheses since I only have one vote as to --
--- Laughter / Rires
541 MR. ASPER: Yes. I know the feeling.
--- Laughter / Rires
542 COMMISSIONER WYLIE: -- as to the
possibility of you having both stations, having neither and only CKVU, unless
you have sold it already, and having only one station, if that's acceptable to
you, should it be the choice.
543 I'm trying now -- you should be getting
the gist of my questioning --
544 MR. SHEA: Oh, I get it. We're getting
545 COMMISSIONER WYLIE: What happens if you
don't have both and only one? What will be there on the screen? And the tangible
benefits don't answer that question necessarily because money given to a
foundation or a -- to a university is not going to change, certainly not
directly, what will be on the screen in 2001. So perhaps we can have
546 And if we do want to -- if we do decide
to allow you to own both stations and we accept your proposal to have report
cards to show us how you are meeting your commitments, we have to know what
these commitments are.
547 MR. SHEA: Commissioner Wylie, you're
right. When we built --
548 COMMISSIONER WYLIE: Of course.
--- Laughter / Rires
549 MR. SHEA: There's never a debate
550 I guess in fairness to your line of
questioning, we built the benefit model and the programming model in this
application on the assumption of the approval of both. In terms of only
approving CHEK, for example, and/or just approving CHAN, but let's stay with
just approving CHEK, obviously our commitment on the benefit side, the absolute
dollar amount would stay the same. However, in fairness to the plan, because it
becomes a completely different plan, the allocation of those dollars might end
up to be quite different.
551 What we can do is give you some
indication today. I think that's a bit of a rushed process, but I think we can
give some indication today --
552 COMMISSIONER WYLIE: Or maybe by a reply
stage, which is when counsel will ask you whether all these commitments can be
converted into conditions of licence.
553 MR. SHEA: Okay.
554 COMMISSIONER WYLIE: You obviously had
not done it that way, but you have to -- we have to look at this hypothetically
as not getting all you want/getting all you want, and what is the result for the
viewer, which is of importance to us. I understand the bigger picture as well,
but the devil is in the details when the exception is requested on the basis of
being able to differentiate the two and adding to the broadcasting system. So we
want to know what happens, then, if it's not the whole package.
555 MR. SHEA: Okay. We will undertake to
give you, by reply stage, Commissioner Wylie, an undertaking that separates how
the various benefits would be reapplied if the scenarios were to change where we
were approved for one or the other.
556 COMMISSIONER WYLIE: And as a first step
what is it you're prepared to commit to when you compare what is already
available to those viewers, because that's the performance of the stations, what
these viewers will get if Global owns the stations, one or both of
557 MR. SHEA: That's
558 COMMISSIONER WYLIE: Let's go now to
CHCH and do a similar exercise.
559 The expectation for local news is 17
hours of original programming for CHCH, and they do now, if we code the AM show
totally as news, which would be highly unlikely as we discussed earlier, 29.5
hours of local news, and presumably you would also commit to 29.5 hours of what
is called local news, but that includes "Hamilton Sunrise", a phone-in show,
regional sports, local public affairs and an hour of regional arts and
entertainment programming. So obviously there is local news and local non-news
programming to be separated out here. And also to look at the amount of local
news in "Hamilton Sunrise" which, as a morning show, probably has the same
problem as the "Hamilton Morning Show" in that when you categorize this it's not
a problem, but for discussing how much local news is there in that
560 MR. MacDONALD: Commissioner Wylie, I
can perhaps make it clearer by just breaking out the hours. We are counting, in
our estimation, the "Hamilton Morning Show", "Hamilton Sunrise" as local news
content. The program you referred to on CHCH in the morning was a service, the
Bloomberg Service, with news inserts. This will be a full-up, fully staffed news
information, weather, traffic, discussion of issues, interviews and so on. It
will be entirely news content and that's an addition of 12 and a half hours of
programming to the existing schedule there.
561 In addition, we're proposing to add
seven hours of local information programming in the form of the talk show "Talk
Back" and the regional public affairs show on the weekend "Full Circle", the
one-hour locally focused arts and entertainment program. And I want to stress
that program is an information program on local cultural events and
entertainment and related stories. I think that pretty wells rounds it out I
believe. Oh, no, the half-hour local public affairs show "Full Circle" as
562 That's all included in those seven
hours of local information programming.
563 COMMISSIONER WYLIE: Of
564 MR. MacDONALD: It would depend how you
would classify the talk show, for example. It will be dealing with news issues
clearly on a daily basis and --
565 COMMISSIONER WYLIE: But not news in the
sense of being Category 1. If you were to log it, what would you log it as, that
programming? As news?
566 MR. MacDONALD: That would be -- oh, I'm
sorry. The talk show would be Category 2.
567 COMMISSIONER WYLIE: So that's what I
mean, the difference between Category 1 and Category 2, because there's a limit
to how many hours of local news one can air on a local station, so there is
local programming that is non-news and it can easily be the type of programming
that the Commission could be worried about on CHCH not being local local but
being regional, possibly even being oriented to Toronto. It would be less
difficult to -- or more tempting to do that with those shows. What is your
568 MR. MacDONALD: I was just going to say
that the entire programming structure for CHCH is premised on a deep local focus
and on our belief quite frankly that there are enough Toronto news crews running
around covering Toronto news at this point in time and information programs
dealing with Toronto issues. We see the real opportunity here to speak to the
1.2 million viewers down in Hamilton-Niagara who we feel are somewhat
disenfranchised and underserved and are thirsting after this kind of programming
which will necessarily be locally focused in terms of its
569 MR. SHEA: Commissioner Wylie, we would
be prepared to accept a condition of licence that locks this programming in so
that it is absolutely -- all our incremental benefits programming is absolutely
targeted at the Hamilton-Niagara market. And we have absolutely no intention of
trying to creep back into Toronto because, in our opinion that's what's failed,
or to become more regionally focused because in large part a lot of us suffer
with the real understanding of what that definition means.
570 But our commitment is that all these
incremental programs and the current programming on CHCH would remain very local
in its orientation.
571 COMMISSIONER WYLIE: Now, if I look at
your Schedule 10 at pages 68, 69 and 70, where you discuss those non-news local
programs, "Sportscope", "On The Program", and there's also an arts program.
572 MR. MacDONALD: No. "On The Program" is
the art --
573 COMMISSIONER WYLIE: "On The Program" is
that -- and "Full Circle", which you mentioned earlier. They are all described
as regional. No. "Full Circle" is described as a local public affairs program,
but then later on you talk about it as:
"...we envision a program that would become a forum for local and regional
political and community leaders, their critics and the public at
574 I'm reading from page 69, the
description of "Full Circle".
575 Then "Sportscope" is described as a
program "with a heavy emphasis on regional amateur sports"; and, "On The
Program" is described as:
"A weekly review of the regional arts and entertainment
576 What is the definition of "regional" in
577 MR. MacDONALD: Commissioner Wylie, the
context that the word "regional" is used, as you read it in the application, we
were referring to Hamilton, Halton and Niagara, and I think that's what we were
trying to stress there with regional.
578 COMMISSIONER WYLIE: So I could
substitute "with a heavy emphasis on Halton" -- I'm not going to be able
579 MR. MacDONALD: Hamilton and
580 COMMISSIONER WYLIE: Hamilton-Niagara
581 MR. MacDONALD: And you're right, I
should have, when we put it together, but that's what we're referring to as
582 COMMISSIONER WYLIE: Very interesting,
because surely you knew that we would ask questions about going from regional to
local that you didn't specify those three. You see, if you had put them there I
would be able to say them today.
--- Laughter / Rires
583 MR. MacDONALD: I should have. Mea
584 COMMISSIONER WYLIE: So that's your
understanding of "regional" for these programs is that will be Halton, Niagara,
585 MR. MacDONALD:
586 COMMISSIONER WYLIE: All those "H"s. You
should have put them in there because I could have practised.
--- Laughter / Rires
587 COMMISSIONER WYLIE: That's what you
mean by "regional"?
588 MR. MacDONALD:
589 COMMISSIONER WYLIE: Now, when will
these programs be launched?
590 MR. MacDONALD: It would be our
intention, Commissioner Wylie, to -- obviously all of this programming and it's
substantial, 19.5 hours in total, would have to be phased in. It could not all
go, you know, the first of September, but it would be our intention to get most
if not all of it on the air certainly by January 1.
591 COMMISSIONER WYLIE: Of
592 MR. MacDONALD: Correct.
593 COMMISSIONER WYLIE: And if I were to
ask what about "all" as opposed to "most", when would that be?
594 MR. MacDONALD: We could get it all on
the air by then.
595 COMMISSIONER WYLIE: For Jan
596 You also propose, as a local non-news
enhancement, the local news documentaries and you say that you will do five
within four years. Do you have any plan as to exactly how this will -- will the
first one show up in year three, four?
597 MR. MacDONALD: No, we don't have a
specific plan for that now. We would anticipate, certainly in the first few
months, at the fall of this year, concentrating on getting the local programming
on the air first, but we would move very quickly in that first year to set up a
regime to see that these documentaries are produced and that that work begins
598 CHCH actually at one time had a very
rich heritage of producing documentaries and it's something that we're eager to
see done again.
599 COMMISSIONER WYLIE: When would we be
likely to see the first one?
600 MR. SHEA: In the first
601 COMMISSIONER WYLIE: And is the
intention to have those produced by independent producers?
602 MR. SHEA: Yes, it is.
603 COMMISSIONER WYLIE: How
--- Laughter / Rires
604 MR. SHEA: They won't be done by
605 COMMISSIONER WYLIE: The Chairman
mentioned earlier this morning that you're near Toronto. My understanding is
CHCH can't solicit advertising in Toronto but it can accept it unsolicited.
Correct? And Global, of course, can't sell local advertising in Toronto
606 MR. SHEA: That's
607 COMMISSIONER WYLIE: -- but CHCH can. Is
that your understanding, Mr. O'Farrell? According to the licence, CHCH can
accept unsolicited local advertising from Toronto?
608 MR. O'FARRELL: Yes, that would be the
case for CHCH.
609 COMMISSIONER WYLIE: And added to that,
the fact that you have these transmitters in a number of places in Ontario, as
far as I recall, Sault Ste Marie and then -- plus southern Ontario, but as
far up as Timmins. Is that the most northern one?
610 MR. SHEA: I believe it
611 COMMISSIONER WYLIE: Considering those
two, how will you ensure that these programs are local to Hamilton, Niagara,
Halton? How about that?
612 MR. SHEA: Commissioner Wylie, it's
incidental to the distribution. The local programming which seeks as its revenue
base local advertising may not be of significant interest to other regions of
the province, but all the other aspects of the Canadian programming on the
service will be. So we have no intention to attempt to, in effect, replicate
Global because Global and the nature of its licence is to provide more regional
coverage. It will remain true to form.
613 COMMISSIONER WYLIE: And maybe not
replicate Global regionally but it could be more
614 MR. SHEA: In terms of the local news
and local programming, I think we have already put forward, Commissioner Wylie,
that we would be prepared to accept a COL. So if that were the case we would be
615 But there is no advantage in having yet
another Toronto news station. There is a significant advantage from a consumer
perspective and a revenue perspective to have a Hamilton regional newscast,
which is Halton and Niagara. That's where we see the real future of providing
service to that region.
616 MR. ASPER: If I can just add, from our
experience. You know, where Global news has always had trouble competing against
other newscasts in Ontario that are primarily local-oriented is that it is a
regional newscast and therefore it's specific to nobody.
617 What we are trying to become is a big
fish in a defined pond in Hamilton, be a principal player in the market of
Hamilton rather than a peanut, a small player, in the larger region of Ontario,
which is already a very crowded marketplace. That's the business strategy. And I
think as Kevin said, we are committing to you that we will follow that
618 MR. SHEA: And I think our advisory
board, Commissioner Wylie, that's going to be one of their absolute key concerns
is are our commitments to local programming real, and they will report on
619 COMMISSIONER WYLIE: At the end of this
questioning I will go back to this reporting, so start thinking of when you say
"reporting, safeguards, conditions of licence to ensure that Hamilton is really
transformed into a local station", what are the specifics that one would report
on or what are the conditions of licence that one could request to ensure that
this occurs, because I'm not convinced that just because you say, "Well, WIC
tried the regional thing and it didn't work", that clever Global couldn't make
620 Given the circumstances, retransmitters
through a lot of Ontario, especially the heavily-populated Ontario, the fact
that CHCH would give you a possibility of selling local advertising in -- of
accepting local advertising in Toronto, just to say that one has tried that and
not succeeded, it also has not been a very long time because I was one of the
clever Commissioners who allowed Ontv into Ottawa and I'm still young at the
621 MR. SHEA: But, Commissioner Wylie, I
622 COMMISSIONER WYLIE: So, you know, is it
because they weren't at it long enough? The circumstances that we look at
certainly makes it very tempting to stray from the local, and that is the reason
why you're telling us that we should allow you to own both Global regionally and
623 MR. SHEA: But I think practically
speaking, Commissioner Wylie, people in Toronto are not going to turn to a
Hamilton TV station to get local news.
624 COMMISSIONER WYLIE: If it looks like
625 MR. SHEA: Well, there's already
significant competition in that market that has significant ratings, in that
market that has a history of providing a Toronto
626 COMMISSIONER WYLIE: Well, we were
talking about also "Full Circle", "Sportscope", "On The Program", "Talk Back",
which are --
627 MR. SHEA: All these
628 COMMISSIONER WYLIE: Local news is
perhaps a little easier to distinguish, but these programs can be less
629 MR. SHEA: I guess I don't know how to
be more --
630 COMMISSIONER WYLIE: -- quite
631 MR. SHEA: -- profoundly specific that
our intention is not to creep into Toronto. Our intention is to run out of
Toronto the minute we get the opportunity to run CHCH, that its future as a
local broadcaster is to serve its local market. And as, you know, Leonard
pointed out earlier, it is of a significant size, and that's its direction,
that's its future, that's its mandate. We don't see any advantage to trying to
pretend you're a Toronto station.
632 COMMISSIONER WYLIE: But obviously your
plan is to make the commercial success, the financial success as well, and I'm
trying to see how will you stick to --
633 MR. SHEA: The assumption
634 COMMISSIONER WYLIE: -- what you're
proposing compared to what you may feel works or not.
635 MR. SHEA: The assumption is that by
moving to Toronto it becomes a commercial success, and what we're saying is that
the last two years have demonstrated that that's not the case, that if you go
back 20 years ago when CHCH was a powerhouse -- by the way, we're changing the
name from Ontv, which means throughout the province, to CHCH, which means
Hamilton -- the success here is that CH was when they
636 COMMISSIONER WYLIE: Call it back the
637 MR. SHEA: -- was when they were a truly
local station. You know, that's what our plan is built around.
638 COMMISSIONER WYLIE: Although it was a
success in a very different environment.
639 MR. SHEA: It was a success in a
different environment, but it's not too similar from most local stations
operated by either CTV, ourselves or CHUM. The more successful ones are the ones
that are true to serving their local service.
640 COMMISSIONER WYLIE: If that's agreeable
to you, Madam Chairperson, we could break for lunch and discuss after lunch more
details about the programming overlap or lack thereof between Global and CHCH as
well as CHAN and CHEK if you were allowed to own both, the safeguards, et
641 And for the benefit of intervenors, it
would be helpful if you gave us at least some details of the type of questioning
we went into earlier about, so that intervenors know where you're going. We're
not expecting to the minute, of course, but in terms of what your commitments
are with regards to local news, local non-news programming and the difference if
you end up owning CHEK and not CHAN.
642 MR. SHEA: And specific to that example,
Commissioner Wylie, it's owning CHEK without CHAN, not CHAN without
643 COMMISSIONER WYLIE: Well, the benefits
are mostly CHEK, right --
644 MR. SHEA: Correct.
645 COMMISSIONER WYLIE: -- because I think
I have heard you say that CHAN will be more or less the status quo? We certainly
want no less than the status quo on CHAN.
646 MR. SHEA:
647 COMMISSIONER WYLIE: And there is the
$5 million for CHEK that is tied to the approval of CHAN.
648 MR. SHEA: Correct.
649 COMMISSIONER WYLIE: So I will pass it
on to the Chairperson.
650 Thank you.
651 CHAIRPERSON OF THE COMMISSION: We will
be back at five past two.
652 Thank you.
--- Recess at 1242 / Suspension à 1242
--- Upon resuming at 1400 / Reprise à 1400
653 LA PRÉSIDENTE: Madame Wylie, si vous
voulez poursuivre, s'il vous plaît.
654 COMMISSIONER WYLIE: Welcome
655 Apparently Mr. Shea worked all through
lunch. So does he want to start?
656 MR. SHEA: Let's hope we get good marks
657 COMMISSIONER WYLIE: I will finish my
questioning perhaps and then we can come back to what you actually did during
lunch time -- if you wish.
658 The question of the difference between
CHCH and CHEK and CHCA, Global -- I will refer to Global as the regional
global network in Ontario. There is quite a few places, discussions and
questions raised in interventions and in your reply, and again statements made
this morning in your opening remarks about the priority programming and the fact
that there will be no duplication and in your reply, and again this morning, in
the code of conduct you have as the first item:
"That the 8 hours of Canadian priority programming in prime time carried on
CHCH and CHEK will have no duplication on the Global Television Network." (As
659 Which will include, I guess, CHAN,
should you own both stations. Then in response to deficiencies, especially in
letter A, you talk about --within any week, no more than 10 per cent
program duplication. You also speak about counter-scheduling.
660 I would like to clarify what it is that
you are committing to. There is also in your supplementary brief at page 60 the
following statement and I quote:
"Between the two services we will telecast over 16 hours of prime time
Canadian content for an annual commitment of over 800 hours". (As
661 Are we speaking, first of all, of no
duplication? The 10 per cent, is that 10 per cent of the priority programming or
of the entire schedule?
662 MR. SHEA: The 10 per cent is of the
entire schedule, Commissioner Wylie, but does not include any of the 8 hours on
either station in Ontario or B.C. So the 10 per cent does not apply to the 8
663 COMMISSIONER WYLIE: Mr. Asper was still
664 So no duplication. Now, what does that
mean? No duplication on the same day, in the same week, in the entire year?
Perhaps the question should be: How many original priority programming hours are
you going to have per year? Because I can visualize shifting the programming
this way or a month later and using 8 hours on the other station at some
665 What exactly does it mean? Maybe I
didn't practice that enough, but it is not clear anywhere for me other than the
mention of the 800 hours.
666 MR. SHEA: Correct.
667 COMMISSIONER WYLIE: If that were 800
original hours then that would mean that you would have 16 hours never
duplicated, not only in the broadcast week, the broadcast day, but ever as a
668 MR. SHEA: Commissioner Wylie, this is a
key issue for two issues. One because it speaks to diversity, because obviously
if the station was owned by another group the 8 hours would be fundamentally
different. So we are well aware of the commitment -- believe me, we are
well aware of the commitment -- that we are making with respect to this
issue and I am going to try to be absolutely clear. There will be no duplication
of the 8 hours on either Global or CH or Global in Vancouver and CHEK --
669 It is our plan and strategy to ensure
there is diversity. So there will be no duplication and the 10 per cent does not
apply to the 8 hours obviously because there is no duplication.
670 The 10 per cent duplication -- and
we do have some ideas which we can share vis-à-vis what our strategy is
there -- is over a broadcast week and our plan there, Commissioner Wylie,
is two-fold. One is, the Commission is well aware, Global has had a history in
the area of kids and more recently tween programming and there may well be an
opportunity for us to schedule tween programming on Global on a Saturday and
tween programming on either of Victoria or Hamilton on Sunday.
671 Our strategies are more with day time
programming in terms of that 10 per cent duplication, and perhaps some foreign
prime time programming. But said another way, 90 per cent of the schedule would
be different every week and there is no plan to duplicate the 8
672 COMMISSIONER WYLIE: But outside of the
8 hours, there could be a second window on one station and vice
673 MR. SHEA: Commissioner Wylie, with
respect to Canadian priority programming, as we mentioned earlier in the
morning, and it pertains primarily to documentaries or specials, if there were
to be duplication because we were trying to take advantage of cross-promotion,
it would be incremental to the 8 hours that week. So if it was a documentary
that we wanted to re-run, it would count as a ninth hour that week. It would not
form in any way, shape or form part of the 8 hours.
674 COMMISSIONER WYLIE: Or maybe not in
675 MR. SHEA: Or maybe not in prime time.
You are quite right.
676 COMMISSIONER WYLIE: But the 10 per cent
non-duplication, that would be within the broadcast week?
677 MR. SHEA: That is
678 COMMISSIONER WYLIE: It wouldn't limit
you from taking some of that non-priority programming that week and putting it
on the other station a month later.
679 MR. SHEA: That is
680 COMMISSIONER WYLIE: As a second
681 MR. SHEA: You are quite right and it
may mean that some of the 8-hour priority programming might be repeated at an
alternate time on the other network to ensure that there is again taking
advantage of cross-promotion. But it will always be a different 8-hour lineup in
terms of what we count as priority programming.
682 COMMISSIONER WYLIE: But the
non-priority programming, with clever scheduling you could use
683 MR. SHEA: Precisely, but it's the
limitation of --
684 COMMISSIONER WYLIE: With the two
685 MR. SHEA: But it is a limitation of 10
686 COMMISSIONER WYLIE: At any given time,
though, your 10 per cent is during a week.
687 MR. SHEA: During a broadcast
688 COMMISSIONER WYLIE: But with clever
scheduling you could repeat that programming at some other time on the other
689 MR. SHEA: That is true.
690 COMMISSIONER WYLIE: If it's
691 MR. SHEA: If it's relevant, but we
see -- the primary opportunity we see in any kind of co-scheduling is more
with kids and tween programming.
692 COMMISSIONER WYLIE: And should we
decide to turn this into a commitment, would you have any problem if it were
instead expressed as the number of original hours of priority
693 MR. SHEA: We haven't addressed that
694 COMMISSIONER WYLIE: But that is your
intention, isn't it, to have 800 hours of priority programming a year or 16
hours a week?
695 MR. SHEA: It depends on what because
the definition of original has different applications.
696 COMMISSIONER WYLIE: Well, I am trying
to find out whether if I had blocks and I moved them around could you have 8
hours this week which is different from the 8 hours this week, but three weeks,
four hours from here, four hours over there.
697 MR. SHEA: No. It would be original and
that undertaking would be original.
698 COMMISSIONER WYLIE: Well, if it were
expressed as original, questions then wouldn't arise.
699 MR. SHEA: That's
700 COMMISSIONER WYLIE: If "original" was
defined as first rate.
701 MR. SHEA: If you are saying the
non-duplication applies to our original hours too, we would say
702 COMMISSIONER WYLIE: Well, I am simply
wanting to make clear that when you say, "We will have two stations, but one of
the big enhancement or benefit for this privilege will be that there will be 16
hours of Canadian programming which will be as different as if the stations were
owned by someone else".
703 MR. SHEA: That's
704 COMMISSIONER WYLIE: Within the TV
705 MR. SHEA: That's
706 COMMISSIONER WYLIE: Which would require
an exception to the policy, of course.
707 MR. SHEA: That's correct. One at the
708 COMMISSIONER WYLIE: So that clarifies
what is intended by that, No. 1.
709 The closest I got to it was when it
said the 800 hours. With my faithful calculator -- I don't have my
calculator today. I only bring it when it may scare the applicants. I never
thought Global would be scared even if I brought my calculator.
710 MR. SHEA: Challenged but never
711 COMMISSIONER WYLIE: In response to
CHUM -- again I don't want to get into the intervention phase, but you have
made some commitments in your reply in response to CHUM's concerns and there are
three of them: That on CHCH and CHEK you would not broadcast non-Canadian
712 MR. SHEA: That's
713 COMMISSIONER WYLIE: And non-Canadian
programs that air on other than the major networks.
714 MR. SHEA: That's
715 COMMISSIONER WYLIE: So that would be
NBC, ABC, CBS and FOX and also that you would not broadcast on CHCH and CHEK non
or foreign syndicated weekly series program.
716 MR. SHEA: That's
717 COMMISSIONER WYLIE: Now those
commitments, would you have a problem if they were transformed into a
requirement, either now or at renewal or as a condition for approving your
application as filed?
718 MR. SHEA: Commissioner Wylie, we
proposed a number of safeguards. A code of ethics in response to intervention
that we propose would be self-regulatory undertakings that we would report on if
the Commission felt and was persuaded by intervenors that these were
719 If the Commission feels persuaded to
move that these become fixed COLs, on the understanding that we are approved for
both CHCH and CHEK because it is fundamentally important to us, Commissioner
Wylie -- we have not really addressed this issue -- that many of the
programming benefits that we have advanced for the independents are on the
assumption that they are both approved because obviously we need the market
power and depth of British Columbia and Ontario to achieve the kind of
programming efficiencies in prime time that are necessary.
720 So should the Commission feel a)
persuaded that these are fundamental to the approval, and secondly, that both
CHCH and CHEK are approved, then we would accept them as COLs.
721 COMMISSIONER WYLIE: Currently, I would
imagine that CHUM's problem is CHCH. So what if you were allowed to own CHCH and
not CHEK, these commitments would not be made? You say that if we were
persuaded, you obviously thought that this was a reasonable concern on the part
of CHUM to offer some response. So what do you mean by "if both". It could be
related to one or the other. I am sure that at the moment CHUM's problem is with
the Toronto situation.
722 MR. SHEA: I think you are correct,
Commissioner Wylie, to point out that CHUM's principal concern is CHCH. But from
a national rights perspective -- and this Commission has heard, I think,
this issue many times from other sources -- is that you really need the
combination of a couple of markets, or key markets, in order for us to be in an
opportunity to order and make the kind of Canadian content we are going to need,
and we have tied the two together on the assumption that it becomes much more
relevant and potent, both from a market perspective and from the Commission's
perspective, when there are two independents linked.
723 I think we would have to revisit
ourselves that if it were just CHCH-Hamilton that would be approved in this
process, whether we could undertake from a scheduling point of view to honour
this level of commitment.
724 COMMISSIONER WYLIE: This No. 5. I am
not looking at the whole code.
725 MR. SHEA: I understand that you are
fixed on No. 5.
726 COMMISSIONER WYLIE: Some pieces that
appear to be -- well, we will hear CHUM in intervention and see if they
have any reaction.
727 MR. ASPER: Commissioner Wylie, if I
could just add to what Mr. Shea said.
728 I think these are very, very
significant offerings from our perspective. They do hamstring Global Television
and the combined Global Television to some extent, so we would be very reluctant
to -- and they are offered to protect and essentially address the concerns
of CHUM and as Kevin said, it is the national rights buying clout. CHUM has said
that they would like to be able to know that they are buying foreign movies and
the syndicated programs will still be available to them. But the safeguards we
have offered do make them available to CHUM, it does protect CHUM in that
729 I think because of the significance of
the negative impact they have to Global, we would be very reluctant if there
were not an approval of the entire package to agree to those, and we would
suggest, in the spirit of the 21st century style of regulation that there be
730 COMMISSIONER WYLIE:
731 MR. ASPER: Did I say
732 That the way this is handled is that
this Code of Conduct be referred to in a decision. If there is a complaint by
the affected party to the Commission that the Code of Conduct is not being
upheld, that that would be a matter between the Commission and the licensees
that would be addressed at that time rather than to have a condition of
733 COMMISSIONER WYLIE: Yes, but let me
specify again, I'm not looking at the entire Code, I am just referring to the
fact that you made this offer in the Code, this particular number 5, because not
everything maybe be amenable to commitments. Some may be, but this is very
specific and measurable, and so on.
734 So I was speaking to number 1
about the hours of priority programming, which I think is a very important
commitment, that we be clear on what it is as one of the benefits of -- or
at least that the two stations won't end up having only 10 hours of priority
programming as between them instead of 16, and this number 5. But we can
readdress this at the reply stage after we hear CHUM.
735 But I hear you say that it doesn't have
just a Toronto area effect --
736 MR. ASPER: Yes.
737 COMMISSIONER WYLIE: -- it has a
national effect therefore the quid pro quo from our part should be national as
738 MR. ASPER: Yes.
739 COMMISSIONER WYLIE: Number 5 for two
740 MR. ASPER: Yes.
741 COMMISSIONER WYLIE: Management. One of
the areas, of course, that one can test whether there will be diversity, despite
the dual ownership, is management.
742 I think you have, in your reply, said
that there will be different news teams in CHCH and Global and that each station
will have its own news director.
743 MR. SHEA: That's
744 COMMISSIONER WYLIE: The same thing with
CHEK and CHAN?
745 MR. SHEA: That's
746 COMMISSIONER WYLIE: Explain to me how
separate that will be.
747 MR. SHEA: Totally separate. They will
have full editorial control to manage the local newscasts, because that is
principally, if not exclusively, the business they are in, and that news
director in those markets, not too dissimilar from Global today, would report to
the station general manager.
748 COMMISSIONER WYLIE: And what about the
gathering of the news?
749 MR. SHEA: The gathering of the news in
both cases would be under the total jurisdiction of the news
750 COMMISSIONER WYLIE: But done by the
751 MR. SHEA: Done by the people at that
station, that's correct. They would have their own news teams.
752 COMMISSIONER WYLIE: So the gathering
will be done by different people as well?
753 MR. SHEA: That's
754 COMMISSIONER WYLIE: Not just the
editorial decision up the chain?
755 MR. SHEA: They will have their own
news -- separate and distinct news department.
756 COMMISSIONER WYLIE: Completely
757 Now, the rest of the programming, the
non-news programming, how different will the management be?
758 MR. SHEA: In the case of CH and CHEK,
each of those stations will have their own program manager that will be
responsible for the scheduling and the acquisition of
759 Where we will have joint acquisition
would be in the parent company up top of the foreign programming. But the
decisions for Canadian programs will be made and taken by the program manager in
each of those stations.
760 COMMISSIONER WYLIE: Will it require
some co-ordination to make sure that you don't breach that 10 per cent
761 MR. SHEA: Well, it doesn't apply to the
eight hours, because we have already determined that that's
762 COMMISSIONER WYLIE: No, but for the
rest of the programming?
763 MR. SHEA: The answer is yes, it will
take some coordination, Commissioner Wylie, between the programming management
corporately and the stations. Again, no different from the way we handle Prime
or the way I'm sure other multi-station groups organize their
764 The most important thing, Commissioner
Wylie, and this became very clear in our discussions and deliberations as we
were building our application, is that Canadian independent producers want to
ensure that they have a door to knock on in both Hamilton and
765 In fact they have gone even further and
they have said that now that Global Television Network is truly going to become
a national network, and we have -- which is apparent in our benefit
plan -- ascribed a number of funds specific to western Canada, that they
would also like to see that we have programmers in Alberta, Manitoba,
Saskatchewan and B.C. where they can go and pitch their various concepts and
ideas for our full schedule of Canadian programming.
766 That is an undertaking that we are
prepared to make, and that is that in our markets there will be programmers that
would ultimately feed into Loren Mawhinney, but people on the ground that can
actually make recommendations to Loren and Doug with respect to their ideas for
767 COMMISSIONER WYLIE: Both in your
applications and in your Code of Conduct and in the reply you mentioned your
willingness to file reports with the Commission. So at number 9 of that Code you
"CHCH and CHEK will have organized advisory boards and a report of each board
will be filed with the CRTC on an annual basis and placed on the public record."
768 And 10, you will:
"...file an annual report to us clearly outlining your progress on the above
safeguards and Codes of Conduct."
769 Now, if the line of questioning we have
been discussing ends up being important for the Commission and we want to know
exactly how different these stations are and whether you are -- as having
had the privilege of having dual stations you are in fact giving more to the
system and to the viewer than they would have otherwise have had -- I am
talking about programming enhancement here, not tangible benefits -- what
would be in those reports to make it valuable to us and to the public to measure
whether we were right as a regulator in allowing you the privilege of dual
ownership, if that was what we were to do?
770 MR. SHEA: Well, I think if we went
item-by-item and dealt with number 10 and worked back, obviously we would report
on an annualized basis about our progress on the distinctiveness of the eight
hours of content.
771 COMMISSIONER WYLIE: Both with regard to
hours -- yes, for those it would be hours.
772 I'm sorry, go ahead.
773 MR. SHEA: I think obviously we would
indicate the reality that we have separate programming and news management at
the two stations.
774 We would give a report on how we apply
the 10 per cent of duplication, because I think the Commission might be
interested in what our strategies are there.
775 We would report on the -- well,
number 4 is the commitment we are making which becomes effective September 1 and
is effective from that point forward.
776 We would obviously report on number 5
as to how we have lived up to that commitment, and perhaps invite CHUM to
777 We would give an indication of how we
have made progress on sublicensing, both foreign and domestic programming to
other broadcasters outside of Ontario and B.C.
778 We would have one report on how we and
CTV have worked together -- on the assumption they are licensed -- to
offset any operating costs on transmitter facilities.
779 We would do a very specific report
benefit-by-benefit, Madam Vice-Chair, on our progress with respect to benefits.
So we would go market as well as line-by-line on how we achieved our
780 In the case of both CH and CHEK, what
we would ask our advisory board to do on an annual basis would be to file a
report with the Commission as to how we have lived up to the programming
commitments, specific to local programming commitments, to address your earlier
question of have we stayed true to the locality of the nature of content, and
other comments that they may wish to reflect to the Commission.
781 We have had a very successful
relationship with our advisory board in Quebec. It has worked very well for us
in terms of coming up with various programming ideas, reminding us sometimes of
areas of the province that we have not served as well as we could have and it
has been a useful guideline for us. We have seen two or three new entrants onto
the advisory board over the course of three years and we find them very
782 COMMISSIONER WYLIE: And if the
Commission were to take that course -- and I think its the Friends of
Canadian Broadcasting who suggested we keep your feet to the fire -- would
you be prepared to work with the staff to decide what the report should look
like to --
783 MR. SHEA: Absolutely.
784 COMMISSIONER WYLIE: -- minimize the
work for you and for us while keeping the fire burning?
785 MR. SHEA: We would be more than
prepared to work with the staff so that the -- I think the report addressed
the type and nature of the concerns that the Commission would want to see
reported on and we have absolutely no problem with the report going
786 COMMISSIONER WYLIE: And if you were not
to meet those commitments, do we put CHCH or CHEK up for sale?
787 MR. ASPER: I think you give us a stern
warning and we won't do it again. But, no, I thought --
788 COMMISSIONER WYLIE: I didn't think I
looked that scary.
789 MR. SHEA: I think you would have every
right to call us to a hearing if we were offside with any conditions of licence
or any commitments we have made.
790 MR. ASPER: Commissioner Wylie, I'm
sorry, just I think I would just like to point out two very significant things
you will see in that report.
791 Number one is, we will show you a grid
of Hamilton's schedule today and we will show you a grid of what Hamilton's
schedule looks like under Global ownership, and it will show in highlighted
colours the increased number of priority programming hours that go on CHCH, more
792 That is only something that will happen
with Global, because no other buyer would be a large station group, in our
estimation, that would be required to put the eight hours on CHCH. So under
Global ownership the most wonderful thing about that report will be that there
will be as much Canadian programming as possible on that station as makes sense,
but will be the most that any other player could bring to that
793 The second thing I think that we want
to show you -- it's not in our safeguards, but we will show you how,
through the cross promotion of Global, that Global brought to CHCH, the ratings
of that programming has increased.
794 What we are very proud of is that the
Canadian programming on Global has gotten the highest ratings of Canadian
programming of any broadcaster in the system. That is what Hamilton needs. It
needs not only to air the programming, it needs people to watch that
795 If you like, we will even send you that
tapes of the promotion before "X Files" that says "Watch this program on CHCH."
We will show you how the ratings -- and more people are seeing the Canadian
programming, and that is an important part of that report.
796 COMMISSIONER WYLIE: If we get too
carried away we are going to have not only regional commissioners but a Global
commissioner whose only job will be to watch Global.
--- Laughter / Rires
797 MR. ASPER: Well, if they have Nielsen
meters in their homes they can watch Global.
798 COMMISSIONER WYLIE: Alberta. No new
programming benefits really offered for the Alberta stations.
799 Again, CHAN will not be launching as a
Global station before September 2001, so what will be on the Alberta stations
and on network programming? Will it be status quo like CHAN?
800 MR. SHEA: Excuse me, Commissioner
Wylie. Again, in our analysis of the Alberta stations, they are perhaps one of
the leading companies in terms of local programming. Their ratings for their
local programs do quite well.
801 The only new programming initiative in
Alberta is a national public affairs program and we would like to see that
program initiated sometime early in the first year, most likely January. But
that really is the only direct programming increment in the Alberta
802 COMMISSIONER WYLIE: Again, if I did the
same exercise as we did this morning for CHAN and CHEK, in some cases, like
Calgary, the expectation in their licence for local news is higher -- the
performance is higher. I think it's about 11 hours and 30 minutes of original
local news and it seems that if you don't get to the exercise of the breakfast
show and how much local news is there as Category 1 as opposed to other
categories -- twenty-six hours is what they are doing and I think your
commitment is 23.5.
803 Again the question would be raised
about the breakfast show as to when we remove the non-news in the breakfast show
whether we still get the expectation of 11 hours and 30 minutes. Is that a
commitment you are prepared to make, that there will be at least nothing less
than what the licence --
804 MR. SHEA: Commissioner Wylie,
805 COMMISSIONER WYLIE: -- than the licence
expects of that station. And in the case of Edmonton, expectation is 16 hours,
performance is 29 hours. Again, there is ITV News, the same question is
806 But if we were to look at these
schedules and try to break out the amount of actual news, the number of hours,
what would you think -- if the baseline was the performance, if it is
beyond the expectation rather than the expectation?
807 MR. SHEA: Commissioner Wylie, our
intention with respect to CHAN and our intention with respect to the Alberta
stations is to see the exact same level and commitment of local programming
today under Global stewardship tomorrow.
808 COMMISSIONER WYLIE: So performance, you
would be satisfied with performance as a threshold as long as it's not below,
which it appears to be in Lethbridge?
809 MR. SHEA: Which it -- and we are
aware of the situation in Lethbridge.
810 COMMISSIONER WYLIE: Yes. So Lethbridge,
rather than a suspension hearing, would have a renewal or a condition that you
abide by what they promised and didn't do?
811 MR. SHEA: Commissioner Wylie, under our
ownership we will get Lethbridge back to where it should be.
812 COMMISSIONER WYLIE: Where it is
supposed to be.
813 And in the other two cases, to where
they are --
814 MR. SHEA: Correct.
815 COMMISSIONER WYLIE: -- by examining
this issue of, you know, expectation.
816 That's why I was raising that, when
expectation is 11 hours, 30 minutes of original local news and then these
breakfast shows are categorized as other categories as well, it is very
difficult to measure whether there has actually been performance according to
the expectation in the licence.
817 MR. SHEA: Commissioner Wylie, I will
say it again that our commitment is to ensure that the level of programming and
the assurance that they are meeting their COLs will be met under our
818 Now, having said that, as this
Commission knows, we are all headed towards a group licensing undertaking a year
or so from now and I think -- and we look forward to that because I think
the opportunity is for the station groups to bring to the Commission their
overall programming strategies going forward. We will at that point have had
about a year of managing most, if not all, of the undertakings, if we are
approved for everything and, Commissioner Wylie, there may well be -- and
it is the subject for a future hearing, but we may well be coming forward with a
plan that sees a different approach to depart programming nationally that may
supplant or change or alter some current local programming mixes in each market.
But between now and that hearing we will undertake to ensure that the minimums,
the maximums are all kept.
819 COMMISSIONER WYLIE: Mr. Shea, by the
time that you come for renewal with your plans you will own these stations, if
we authorize you to have them, right?
820 MR. SHEA: That's
821 COMMISSIONER WYLIE: So the exercise
here is to see what it is you are prepared to commit to as a special case since
you are asking for an exception to the policy, so unless we get commitments
822 MR. SHEA: The
823 COMMISSIONER WYLIE: -- short of
returning the stations to --
824 MR. SHEA: The commitment is very clear
825 COMMISSIONER WYLIE: But you understand
that there is an asymmetry here --
826 MR. SHEA: Yes.
827 COMMISSIONER WYLIE: -- between the
imposition of the eight hours, these applications that are before us and then
renewals at which time --
828 MR. SHEA: That's
829 COMMISSIONER WYLIE: -- the Commission
may decide that in some cases although the TV Policy says that it's not going to
demand or require certain commitments by condition of licence or by requirement,
that there may be a need, or at least for us we may find that from a regulatory
perspective it is required here as a quid pro quo for the
830 Now, what are your comments about that
idea that since you posit localizing CHEK and CHCH as an advantage or a benefit
of -- in return for having the dual ownership that we would require local
from you rather than just let you decide the so-called signature of the
831 Is that a surprise that we would raise
that as a hypothesis?
832 MR. SHEA: It's not a surprise at all.
In fact, I think resulting from our discussion earlier today, it may well serve
the interest of the Commission, and perhaps more importantly the communities we
serve, that you actually itemize the commitments made to pure local programming.
So that is not a surprise to us at all.
833 COMMISSIONER WYLIE: In the Edmonton
case, there had been some commitments made by CITV to air programs like
Newsmakers, Alberta This Week, Native in '90s, which would be non-local --
local non-news programming, and none of these programs are certainly on the
block schedule for 1999-2000.
834 Is Global aware of that and do you plan
to perhaps provide such programs?
835 MR. SHEA: I'm going to ask
Mr. MacDonald and perhaps Mr. Reitmeyer to comment.
836 COMMISSIONER WYLIE: Which would be
enhancements beyond local news in Edmonton.
837 MR. MacDONALD: Commissioner Wylie, my
understanding is those programs were done at one point in time but they have
cycled through and been replaced by other programming and changes to the local
838 COMMISSIONER WYLIE: Is it your
intention to do the same, because there are no apparent programming increments
of a local nature on the Alberta station.
839 MR. MacDONALD: No. I think Mr. Shea
said it best, we would live up to the commitments and obligations that these
stations have and we would support and continue to support the robust local
programming schedules that they have and all that entails.
840 If I might also just clarify one point
for the record, and that is that the morning shows that are being done in both
Edmonton and Calgary, as well as the one at CHAN, are logged as Category 1 news
programs and in fact are prolonged newscasts, for lack of a better term. They
are news programs.
841 COMMISSIONER WYLIE: So you tend to
agree with me that there are some portions of these programs that are logged as
other categories, information, human interest analysis, et
842 MR. MacDONALD: But in the case of these
morning programs, they are strictly news programs.
843 COMMISSIONER WYLIE: Oh, they are
844 MR. MacDONALD: They are rolling news
programs. Yes. They are live HITS into rolling newscasts and weather, sports,
business. They are news.
845 COMMISSIONER WYLIE: Under the ITV
846 MR. MacDONALD: That's correct. The ITV
Morning Show and the Calgary Morning Show and, for that matter, the CHAN Morning
Show as well are all news programs.
847 COMMISSIONER WYLIE: We would
have -- there is three hours of Category 1 news? How long is that Morning
848 MR. MacDONALD: I'm sorry, which one?
The Edmonton one?
849 COMMISSIONER WYLIE:
850 MR. MacDONALD: Six a.m. until nine a.m.
Yes, it's three hours.
851 COMMISSIONER WYLIE: Three hours of
852 MR. MacDONALD: That's
853 COMMISSIONER WYLIE: Category
854 MR. MacDONALD: That's
855 COMMISSIONER WYLIE: Is Canada AM all
news, in your view?
856 MR. MacDONALD: Arguably not. They do a
lot of feature interviews, entertainment, that kind of thing, musical
857 COMMISSIONER WYLIE: There is no such
thing on these morning shows?
858 MR. MacDONALD: They are almost entirely
newscasts from start to finish. They are rolling news, weather, sports, business
information as opposed to any long -- as opposed to long form interviews
859 COMMISSIONER WYLIE: So it can all be
categorized as Category 1?
860 MR. MacDONALD: And that's currently how
they are being logged.
861 COMMISSIONER WYLIE: I have just a few
general questions to complete this questioning and then perhaps you can tell me
what the fruit of your labours at lunch was.
862 Our understanding, if all the
applications were approved, would be that everyone would be on the new TV Policy
as of September 1, 2000, every station?
863 MR. SHEA: That's
864 COMMISSIONER WYLIE: And the turnover to
a Global as opposed to a combination of CTV Network for CHAN and CHEK would be
the 1st of September, 2001?
865 MR. SHEA: That's correct, but the eight
hour commitment on CHAN/CHEK would start this September.
866 COMMISSIONER WYLIE: But would some of
that be provided by the Network?
867 MR. SHEA: By CTV,
868 COMMISSIONER WYLIE: Yes. So everybody
would be on eight hours, but it wouldn't be --
869 MR. SHEA: That's
870 COMMISSIONER WYLIE: -- your eight hours
871 And CHCH?
872 MR. SHEA: September 1st,
873 COMMISSIONER WYLIE: So there would be a
year before. But would it be --
874 MR. SHEA: I'm sorry. I'm sorry,
September 1st, 2000.
875 COMMISSIONER WYLIE: And that would be
your responsibility --
876 MR. SHEA: That's
877 COMMISSIONER WYLIE: -- for the eight
hours and to ramp up the other programming --
878 MR. SHEA: That's
879 COMMISSIONER WYLIE: -- in the manner
that we discussed earlier this morning.
880 Closed captioning. In all of these
stations would you adhere to the requirement to caption all the local news and
90 per cent of all programming during the broadcast day by the end of the
881 MR. SHEA: Yes, we will.
882 COMMISSIONER WYLIE: Adherence to the
industry Codes on violence, sex role portrayal and advertising to
883 MR. SHEA: Yes, we
884 COMMISSIONER WYLIE: You would abide by
those as well.
885 Now, perhaps you can clarify at least
sufficiently for intervenors to be able to address the question of what it is
you are committing to and if there isn't a total approval, especially in the
case of CHAN and CHEK.
886 MR. SHEA: Yes.
887 COMMISSIONER WYLIE: We are speaking
here of programming, not of tangible benefits, because this is a
888 MR. SHEA: That's
889 I'm going to have Mr. MacDonald address
your question, and that question being: If we were just approved for CHEK what
would be the programming benefits in that market?
890 But before Ken MacDonald starts,
Commissioner Wylie, there were some references made to certain hours of content
on CHAN and CHEK that I believe you read into the record and I think
Mr. Reitmeyer would like an opportunity to respond to some of the issues
891 MR. REITMEYER: Yes, Commissioner Wylie,
to clarify the quantity of news on both BCTV or CHAN and CHEK.
892 To go through CHAN, the AM Morning
Show, if you count in the hours six A to midnight going through the day, there
is the two hours per day in the morning five days per week. And that is hard
news. That is not interviews, that is strictly news, business information,
weather, traffic updates that run for that entire period. That is all
Category 1 news.
893 At noon seven days a week there is a
news program for one hour per day. There is an early newscast at five o'clock in
the evenings for two-and-a-half five days a week -- for two-and-a-half
894 Canada Tonight that runs from 5:30 to
6:00 five days a week for two-and-a-half hours.
895 The News Hour, which runs seven days a
week for one hour. News Hour Final seven days a week for three-and-a-half
896 The Saturday Morning News which runs
for three hours, and the Sunday Morning news for two hours, for a total of
897 There is an additional two-and-a-half
hours from 5:30 a.m. until 6:00 a.m. that runs every day as well that is part of
our morning program outside of the hours six A to 12 midnight, for a total of
40 hours per week.
898 On CHEK, the news runs for one hour
five days a week at noon for five hours; 5:00 p.m. to 6:00 p.m. seven days a
week for seven hours; and 11:00 p.m. five days a week for two-and-a-half hours.
Total news on CHEK, 14-and-a-half hours.
899 We would be happy to file that
documentation with staff.
900 COMMISSIONER WYLIE: And hopefully your
friends from Global agree with your calculation, because that may well be the
baseline for what would be expected if the aim is to have at least as much as we
used to before.
901 MR. SHEA: That's
902 MR. MacDONALD: If I may, Commissioner
Wylie, answer the question with respect to what would happen should the
Commission grant us CHEK but not CHAN. We took a long hard look at
903 The local programming proposal that we
put forward is really intermingled. The bureaus that we propose to set up are
there to really help people outside of Victoria on the Island feel a part of the
station that is in Victoria and to bring the Island closer together and to
supplement the 90 minute newscast which we proposed as well, and also to assist
in the gathering of the Island Minutes. So it all interlinks.
904 And the sports program, we felt was
important to highlight sports on the Island as well, and that's something we
identified as a need as we did our research.
905 So everything pretty much tied together
for us. So we would be reticent to chop pieces out of that.
906 So what we would propose that total
local news and non-news programming package of $8 million would be down to
$3 million. We would revisit and reallocate the benefits proposed for Victoria,
and that is the $5.25 million, and move those into -- entirely into local
907 And then we would work very hard and
roll up our sleeves very high and sharpen our pencils very sharp to find
efficiencies to make this programming work as proposed, but with reduced
908 We are reticent to say that we would
cut anything out because we think it is a comprehensive proposal, we think it is
something that will service the needs of Islanders and, again, the proposal is
crafted in such a way that the pieces really do fit together. That would be our
proposal, then, would be to approach it from that standpoint.
909 COMMISSIONER WYLIE: Thank
910 Those are all my
911 You will be happy to know that I have
now practised and if you were allowed to own CHCH I now can say, instead of
"regional" when you come for a renewal, "Hamilton, Niagara,
912 MR. ASPER: It's encouraging to see that
you have been practising.
913 COMMISSIONER WYLIE: Thank you very
914 CHAIRPERSON OF THE COMMISSION: We will
take 10 minutes and we will pursue with the benefits.
--- Recess at 1448 / Suspension à 1448
--- Upon resuming at 1502 / Reprise à 1502
915 CHAIRPERSON OF THE COMMISSION: Alors,
Commissioner Grauer, do you want to pursue with benefits,
916 COMMISSIONER GRAUER: Thank you, Madam
917 Yes, I will get to a specific
discussion of the benefits, both tangible and intangible, but first what I would
like to do is give you a context from which I am going to approach
918 I spent a long weekend going through a
lot of interventions and a lot of information and you are looking to assume
stewardship of some very important assets in western Canada. I think it will
grow your assets by about 30 per cent, if I'm correct, most of which is from
919 I don't know if you are familiar with
the Heritage Canada study that has been commissioned with respect to western
production. What I would like to do is -- I don't know if you have a copy.
The Secretary has some extra copies, but what I would like to do is go over some
920 You know, I think that it's very
important in terms of the context of what it means to you to be a national
broadcaster. I think, Mr. Asper, you said this morning that too who much is
given, much is expected and that you would assume a leadership role. So I think
that your role with respect to broadcasting licences in western Canada is an
important part of that.
921 Maybe what we could do is, you could go
over some of the -- do you have a copy of that? Do you want to get a copy
from the Secretary?
922 MR. SHEA: I believe we have a
923 COMMISSIONER GRAUER: Okay. Maybe in
fact there are some mistakes.
924 Table 1 which is -- I think it's
important to have a picture of the overall production levels in western Canada,
that while you can see that while projects are constant as a percentage of the
overall production, and hours are constant as a percentage of overall
production, that budgets have declined significantly in western Canada, in fact
almost by 50 per cent, as have CTF and Téléfilm funds, which is 50 per
925 So I guess you can conclude from this
that production is constant, but it's fairly low budget
926 I think if we then to go Table 3 and
you look at private broadcaster financing, it's pretty clear that we
have -- well, CanWest Global has gone in 1993-94 from 36 per cent --
no, sorry, west as a percentage, 36 per cent. Zero in '97-98 and 1 per cent
927 If we go to Table 4 and we look at
drama, are these correct -- I mean, correct me if I'm wrong. If there is
some mistake here I'm sure you will correct me with respect to the licence fees,
but you were zero in '97-98, zero in '98-99.
928 If we go to British Columbia, which is
where you arguably -- one of the most profitable English-language stations,
it appears as though you didn't have any broadcast licences for drama for the
past four years. Documentaries, marginally better. We went from, I think,
$10,000 in '97-98 to 0 in '98 -- I'm sorry, '96-978, zero in '97-98 to
$10,000 in '98-99.
929 Now, Alberta, interesting enough, fared
considerably better up to '96-97. It falls of the map.
930 So I raise this because there are a lot
of very nice words in all of your presentations and proposals and benefits
packages, but I'm not really comforted by your record in this market, and
particularly with the independent production community.
931 Notwithstanding your commitment to
establish a fund, I haven't heard anything about broadcast licences, and
particularly in the high budget drama category.
932 You are looking to take over ownership
of, I think, 50 per cent of the television stations in British Columbia and
50 per cent of the televisions stations in Alberta, private. So I'm not
comforted by your track record and I wonder if perhaps what you could do is
maybe tell me a little bit about your plans and whether you are prepared to make
any commitments with respect to licences in drama and priority programming, here
and in Alberta.
933 And what was the other?
934 Oh, yes. I notice that there has not
been any discussion anywhere about a development office in Vancouver or the
west. So maybe before we go any further you could help me with some of
935 MR. SHEA: Commissioner Grauer, I'm
going to make some brief comments and then I will ask Loren Mawhinney to also
936 Commission Grauer, there is no dispute
with your record of CanWest with respect to western-based productions. You have
our commitment today, and I will have Loren speak in much more detailed terms as
to what that means, but you have our commitment that approval of the
applications in front of you -- and irrespective of these applications we
know we have to improve our record of deriving more dramatic content from
937 Before I ask Loren to comment,
Commissioner Grauer, I think you are aware of this, but in an earlier life I was
once with Atlantis Communications and we tried, over a period of years --
we even established a western office at that point -- to see if we could
not derive more product, more Canadian product out of specifically
938 One of the realities of this country is
that there has been a tendency for broadcast companies, given the amount of risk
capital one puts towards a program these days, I think you are well aware that
most budgets for high-end drama are between $800,000 and $1.2 million, and it is
really only production companies that have the size and a track record that one
wants to install that type of risk money with.
939 One of the domestic realities is that
the typical 10 out of 10 content show producers -- and whether we like to
hear this or not -- tend to reside in either Toronto or Montreal. And that
is the reality. The more industrial-based producers and small documentary
companies, film companies, feature film companies tend to reside more west of
the Manitoba border.
940 And I think our entrance in a much more
profound way as a consequence of these approvals, and the kind of budgets
through the funding mechanisms that we are putting forward, hopefully we will
see as a derivative of all of that, companies that begin to take the shape and
size to be able to undertake that level of higher end
941 So there is a bit of an industrial
reality. And that is not an excuse and we are not using that as an
942 COMMISSIONER GRAUER: Please don't, we
could be here all day.
943 MR. SHEA: But I did once spend two
years in another life trying to see if we couldn't generate co-production
entities in western Canada to be able to achieve a better report card than you
just took us through.
944 COMMISSIONER GRAUER: Mr. Shea, I'm not
going to get into a discussion with you, but your other life was quite some time
ago and I think that most people would agree that the independent production
industry and community in British Columbia has matured considerably since
945 MR. SHEA: And you're quite right and I
don't want to debate that issue, other than to say that they tend to take the
form of feature film companies and documentary companies.
946 But having said that, you have our
commitment that we want to change our track record as well.
947 So I'm going to ask Loren Mawhinney to
jump into this conversation.
948 MS MAWHINNEY: Thanks,
949 First of all, I think that -- I
haven't had the benefit of analysing this as diligently as you have, but it
strikes me that this is a portion of the production activity. In other words,
this is a sample of the activity that has gone on through funded sources,
Téléfilm and CTF. It does not reflect a whole bunch of activity that takes place
950 So, for instance, Jim Rusnak's team
does, I think, about 10 independent productions a year, six of which are
docs which don't go through the fund and are therefore not reflected in this
951 So you are not looking at an entire
universe if this is all you are commenting on.
952 Secondly, I notice in -- I guess
it's Table 2 when it talks about the activity in western Canada, CanWest
actually strikes up very well as compared to every other private broadcaster.
There was over $2 million a year in funded activity right up until '97-98, and
that is because we had 52 hours of production activity occurring in Alberta
through two seasons of Destiny Ridge and then two seasons of Jake & The Kid.
I think that nobody else had that kind of activity, other than CBC through North
953 So I guess my summation is, production
is cyclical. Once shows are cancelled and then new shows take their places from
other areas of the country it shows a big whack in activity, especially through
big budget dramas which are $10 million a year of production activity for
one series. So it really sways the numbers from year to year.
954 Next year we have two western-based
series. The Agency is a 22 part half hour series with budgets in excess of
$700,000 per half hour. So this is a very rich show compared to our normal
budgets, reflected in the size of the writing department which is about twice
the size of a normal writing department, and reflected by the fact that we have
writers of the calibre that we do who are coming to work on the
955 In addition, we also have a documentary
series with David Paperney based on the book by Peter C. Newman. So it came from
a western-based individual and his writing, produced by an independent western
956 But I have to say, you know, we didn't
licence them because they resided in Vancouver, we licensed both these things
because we thought they were wonderful programs and have an opportunity, I hope,
to be both culturally interesting and commercially successful.
957 COMMISSIONER GRAUER: Are you planning
to open a development office in western Canada?
958 MS MAWHINNEY: Yes. I think we are
opening one in Vancouver, one in Edmonton and one in Calgary.
959 COMMISSIONER GRAUER: Okay. You have
talked about a half hour sitcom and then the documentary series, but is this
half an hour out of -- you are looking to have two stations in Vancouver,
so you will have 16 hours of priority programming every week in peak time,
and the same in Ontario, so are you telling me half an hour out of the
960 MS MAWHINNEY: That's half an hour of a
Global schedule --
961 COMMISSIONER GRAUER: I understand
962 MS MAWHINNEY: -- because we haven't
committed to what the actual programs will be on the independents since we did
not know whether or not this application would be successful.
963 COMMISSIONER GRAUER: You know, I know
that you have talked certainly, and we will get to it, in your proposal for the
Western Producers Fund that you don't like quotas.
964 I guess you have your half hour, but
what I'm hearing you say is that you -- well, I guess I'll ask you: Are you
prepared to make any more commitments over the term, let's say the benefits
term -- not that I think this is a benefit, but I think when you are
assuming stewardship of these premier western assets, are you prepared to make
any more commitment with respect to the high budget dramas out of western
965 MR. SHEA: Yes, we are.
966 COMMISSIONER GRAUER: Good. What would
--- Laughter / Rires
967 COMMISSIONER GRAUER: As I said to you,
Mr. Shea, it's most awkward, but I don't take a lot of comfort in your record
and so, you know, I really would like to know what that might be. If you're not
ready right now, you know, it might be something that you can come back to us,
if this is not something that you have given a lot of thought
968 MR. SHEA: Commissioner Grauer, we will
come back to you and we will come back with a definitive proposal, and this
definitive proposal will take into account both Global Television Network as
well as the independent.
969 COMMISSIONER GRAUER: And it is really
also the licensees that are important.
970 There is another context for this which
is -- I am always very mindful of not wanting to be or appear to be
parochial, not wanting to say, "Well, does the west gets its
971 But, Mr. Asper, I know your father is
in the room and I was reminded, as I was looking at some of these interventions,
of his comments at the TV policy hearing a year and a half ago and he talked
about how important it was that Global's programming should reflect Canada and
its diversity and the reality of Canada absolutely and there is nobody in this
country who feels more strongly about it than I do and it is probably the most
critical of the broadcast system for its failings, including
972 We are not good enough and we have to
get better. And yes, regional representation in terms of jobs, production and
programming relevance and yet he said, "Don't do it in the regulatory
973 What we would like to do is not a
legal regulatory ruling, but if we are not carrying out your expectations and
meeting these things, for heaven's sakes don't wait until licence renewal to
tell us about it.
974 So that is what I am doing and I think
that, as I say, the context is really more than just a quota for so many dollars
spent in either British Columbia or Alberta, but you will become, if this is
approved, the premier broadcaster in western Canada and one of the most
important broadcasters in the country and the question is: Do you feel the
responsibility of the regions of Canada with all their diversity? I mean also
Atlantic Canada and I mean Quebec as well as all parts of western Canada are
truly reflected in terms of not just news programming, but also in dramatic
975 So as long as you know where I am
coming from, we will look forward to hearing from you.
976 MR. ASPER: If I could just comment on
the philosophy underlying our benefits package and our whole approach to the
977 I think what we favour as a methodology
of getting to where we both want to get to, which is -- and I do support
the comments my father made and I think everybody in this room probably does.
It's the methodology of how you get there that merits more discussion because
what we were trying to do in the application -- and this was done in
consultation with the entire production community, most of whom -- in fact,
all of whom are supporting this application -- was to try to put western
producers in a position where they received the kind of start-up funding, the
kind of training and the marketing clout to be able to come to Global, to be
able to come to our group and even to other broadcasters with good solid quality
priority programming, over and above the documentaries that they do quite
978 What they had said was, "We need a leg
up" and that is what the whole point behind the Western Independent Producers
Fund is, not requiring broadcasters to commission "X" number of hours from
Vancouver, "X, Y" number of hours from Alberta. I think that is a false or an
inefficient methodology because it will not put the best programming on the
979 What will put the best programming on
the screens is giving the people who have the bright creative minds the
financing to get those ideas to implementation stage. And the second component
of what we are trying to do, is we have said we will open a Vancouver -- we
will ensure that there is a door to knock on in Vancouver in addition to the
door that there will be to knock on in Edmonton via direct administration of the
980 So that was the philosophy underlying
it rather than a quota for...
981 COMMISSIONER GRAUER: I appreciate that
and, you know, I share your view that the most effective way is not for us to
issue quotas because then you don't have a real commitment to what you are
982 But my question to you is: This Western
Producers Fund, producers can't access it without a broadcaster licence fee. The
licence fee comes first.
983 So my question to you is: In taking on
stewardship of these assets is whether or not you are prepared to say it's
important. And I must say that the production community, certainly in Vancouver,
is the second largest in Canada and it's producing quality, high quality
programming around the world as have many of the producers in
984 So I don't think it's a matter of them
needed training so much, and certainly you have had great support from the
production community and who wouldn't support this kind of a fund, and all of
them want to do business with you.
985 What I am saying is I am perhaps
voicing things that they are not prepared to bite the hand that feeds them.
Fortunately, you don't feed mine, believe me, and I am saying, you know: Are you
prepared as part of being a leader in the Canadian broadcasting system, and in
particular with special responsibility to western Canada, to step up the plate
and say, "We are going to do this with respect to licensees" and I know, Kevin,
Mr. Shay you said that you are going to come --
986 MR. ASPER: I think the answer is a
definite yes, and I would also suggest that in the group licensing
session -- we will yes, as part of this application, but in the group
licensing hearing we will have in a year, I think we should have a discussion
with all groups, to ensure that all groups are contributing to the diversity of
licensing across the country.
987 COMMISSIONER GRAUER: I agree and if
everyone is doing it then we don't have to issue quotas.
988 MR. ASPER: Fair point.
989 COMMISSIONER GRAUER: Okay. Now what I
would like to do is go to the benefits and I hope you will bear with me. There
was overlap with Commissioner Wylie with respect to programming and I had some
trouble myself sorting through what was where.
990 And so what I would like to do is start
with the tangible benefits and go over them community by community and perhaps
if you could help me by identifying which you consider to be a national benefit
and which are benefits directly related to the community. That would be a good
991 Vancouver. The Producers Fund. Does
that seem to be a national?
992 MS BELL: That's a
993 COMMISSIONER GRAUER: National
994 MS BELL: Yes. Well, national to the
west, sorry. You know what I am saying.
995 COMMISSIONER GRAUER: Yes, I do know
what you are saying.
996 MS BELL: It's regional.
997 COMMISSIONER GRAUER: So it really
doesn't belong to either of our categories.
998 MS BELL: It's in
999 COMMISSIONER GRAUER: In
1000 MS BELL: Yes.
1001 COMMISSIONER GRAUER: And again I think
that one of my concerns here is that -- and I don't mean to minimize the
importance to a fund like this to the independent production community, but as
you responded in your reply to the Alberta Motion Picture Industry Association
who are concerned, as are some of the others, with the fact that there isn't a
set amount identified for either B.C. or Alberta.
1002 I think you have said 100 per cent
could easily go to one place or another. So perhaps when you come back to us
with some proposals you are prepared to make with respect to license, this might
help alleviate some of that concern, if there is a commitment that you are going
to do certain activities.
1003 MS BELL: All right.
1004 COMMISSIONER GRAUER: Can you confirm
to me who the administrator of the Fund will be and what its mandate will be?
Could you elaborate on that?
1005 MS BELL: We haven't confirmed who the
administrator would be, but there would be a board that would involve five
people. There would be a chair, and then a board member from each of the
provinces, one for B.C., Alberta, Saskatchewan and Manitoba, but maybe Loren
could give you a little bit more detail about the mandate of the
1006 MS MAWHINNEY: It's an independent
board and as such producers working for CanWest would not have any preferential
treatment in going to the board. The board will set up its own guidelines, other
than it is to fund Canadian priority programming.
1007 COMMISSIONER GRAUER: Can you elaborate
on any of the application criteria, what they might be?
1008 MS MAWHINNEY: The board will look most
favourably on applications from western-based production companies with head
office based in Alberta, British Columbia, Saskatchewan or Manitoba, utilizing
the most western labour, similar to the funds that have been set up, that
already exist in Alberta when CTV took over. There are funds existing -- I
can't remember the name of them.
1009 But anyway there is preferential
treatment for producers that are located in that province utilizing mostly
Alberta labour. So we would extrapolate similar guidelines for the western
1010 COMMISSIONER GRAUER: Would there be
any restrictions regarding airplay on private or public conventional or
1011 MS MAWHINNEY: This is for private
broadcasters and educational broadcasters and specialty.
1012 COMMISSIONER GRAUER: Do you have any
thoughts on how many programs it might fund on an annual basis?
1013 MS MAWHINNEY: No, but we would assume
that the amount per project would be about 15 per cent of the budget of that
project, expended at a little over $4 million a year. So there should be a
substantial amount of projects, but I didn't want to put an arbitrary
1014 COMMISSIONER GRAUER: Will it allow for
the production -- will it fund the production of ongoing drama series or
will it be limited to one time only productions?
1015 MS MAWHINNEY: Oh no, ongoing as well
as MOWs, long forms.
1016 COMMISSIONER GRAUER: And would the
eligible recipient have to have funding from other sources like
1017 MS MAWHINNEY: Generally, if we are
only putting up 15 per cent and --
1018 COMMISSIONER GRAUER: "We"
1019 MS MAWHINNEY: The Fund -- and
therefore if they are having to raise 75 per cent or 85 per cent elsewhere,
there will be other financing sources like the CTF, but one does not preclude
1020 In other words, if they don't and they
have foreign sales, for instance, that is a good thing.
1021 COMMISSIONER GRAUER: So you wouldn't
require the others to be in first.
1022 MS MAWHINNEY: No.
1023 COMMISSIONER GRAUER: I have all your
revised benefits, the old benefits.
1024 Canadians of Excellence PSAs. Is this
a national benefit?
1025 MS MAWHINNEY: It's a national
1026 COMMISSIONER GRAUER: And what will
they look like? Will they be mini-dramas? And what I am speaking of, of course,
is what is on right now which is the Bronfman Foundation.
1027 MS BELL: That's what it's going to
look like. Maybe Loren can supplement that.
1028 MS MAWHINNEY: Yes. That is exactly
what we are contemplating, other than there might be some interviews with
business leaders, for instance, in that kind of area --
1029 COMMISSIONER GRAUER: So they will be
contemporary. Will they also highlight historical figures?
1030 MS MAWHINNEY: Yes. We are looking for
people that have made a big contribution to Canadian life.
1031 COMMISSIONER GRAUER: The Canadian
Women in Communications, I don't have any questions on. Now, on the five banner
themes, maybe what I could do -- I know we are going to end up doing a
little bit of duplication here, but with respect to the chairs and scholarship
which you have identified in different communities, they are presumably
1032 MS MAWHINNEY: Yes, they
1033 COMMISSIONER GRAUER: The communication
studies comes as a wide range of disciplines, and I am wondering if you could
give me more detail about the types of programs that would be established, that
would be really of direct benefit to the Canadian broadcasting system, including
the research aspect of the proposal.
1034 MS BELL: You are talking about the
programs in those colleges and universities?
1035 COMMISSIONER GRAUER:
1036 MS BELL: A lot of training programs
either in journalism, film studies, broadcasting programs and, as you probably
saw from our application, there is a variety of institutions that we have listed
that would be recipients of those funds.
1037 COMMISSIONER GRAUER:
1038 MS BELL: Actually, we have had
discussions with a number of those organizations, but we actually have not
decided how the funds would be divided among those different
1039 COMMISSIONER GRAUER: But with respect
to the criteria -- how you will be directing the funds to ensure that they
are benefits to the Canadian broadcasting system. I mean what are the criteria
you are using to ensure that they would -- that it's not basket weaving,
1040 MS BELL: Exactly. No, and it's either
a communications program or a journalism program, television production, those
sorts of programs.
1041 MR. ASPER: If I could just jump in.
The criteria in our minds are what is it that are the component parts of what
goes into creating content whether that be journalism for news content or
acting, writing, editing, et cetera, the things that are going to the creation
of dramatic content.
1042 One of the things Canada does a great
job in, and then exports, is creating writers and actors. What we would like to
do is try to create a program that crates more writers, more good actors and
then try to build and using our resources in Canada, broadcast resources to try
to keep those writers home.
1043 You know, an interesting point that I
think Loren made earlier, is that one of the celebrated Canadian writers, David
Steinberg, has been repatriated. He was the writer for Mad About You, a
long-time hit on U.S. television and Canadian television. Now he is writing for
Global in a program we are doing.
1044 But I think going back to the
programs, it's the actors, the writers, the editors that are the foundation of
the system. That is the kind of specific training we want to
1045 COMMISSIONER GRAUER: Two hundred and
fifty thousand dollars to local art support. Now I am in Vancouver here, and on
the benefits, I wanted to know, given that our concern is that these are
incremental to what you would ordinarily be doing, what Global Vancouver gave to
local arts organizations over the past two or three years.
1046 MR. SHEA: Commissioner Grauer, in
terms of actual cash it was in the neighbourhood of about $20 or $30,000. That
would not include a variety of editing and other production services that we
would have on an ongoing basis.
1047 So this is truly incremental and it's
targeted at community theatres, it's targeted at helping various arts groups who
we both know in every community in this country are struggling and we do not at
this juncture have -- we have not identified precisely where because I
think what we want to do is to be able to say, "We have been approved for this
process. We now have this funding", and put it where it is most
1048 COMMISSIONER GRAUER: I understand
that. I guess my question is that you are not now to the Vancouver market.
Arguably, as I said earlier, would you agree that CKBU is perhaps one of the
most profitable English-language stations in Canada?
1049 MR. SHEA: Among them.
1050 COMMISSIONER GRAUER: Among them. And
your contribution to the local arts community is in the neighbourhood of around
$10,000 or $20,000 over the past few years?
1051 MR. SHEA: That's not entirely
1052 COMMISSIONER GRAUER:
1053 MR. SHEA: Yes, but that is specific to
Vancouver arts groups. At the corporate level, our contributions in cash are in
the hundreds of thousands of dollars -- we can provide you with a
1054 COMMISSIONER GRAUER: Is that in
1055 MR. SHEA: Not specific to Vancouver,
Commissioner Grauer, but that supports national efforts that have regional
divisions and that is typically the way, I think, most of our organizations have
funded various elements.
1056 COMMISSIONER GRAUER: You know, believe
me, I know that your company is a very big supporter of the arts and certainly
you have talked about it in your presentation, you have the Foundation, but what
we are really talking about here is Vancouver benefits, and I am -- what I
am trying to do, as you know, is to look at what is incremental. You are not new
to Vancouver, so why $250,000 with respect to benefits to this, you know? How
much would you be doing as being a good corporate citizen, either through your
Foundation or any other --
1057 MR. ASPER: If I could just clarify a
few things. One is we found, since we know quite well all of the players in the
Vancouver market -- I believe the number actually in Vancouver is $35,000.
That was --
1058 COMMISSIONER GRAUER: Last
1059 MR. ASPER: Last year, and that is part
of an allocation. The CanWest Global corporate office has a charitable budget of
1 per cent of pre-tax income. that is allocated for the most part to the
corporate offices. All but about $275,000 of it is allocated to the corporate
offices that provide on a national basis. For example, and that just goes to
markets where we operate television stations. For example, we funded a chair in
journalism at the University of Regina out of that budget because the station in
Regina could never alone do that. So the allocation for Vancouver, for the B.C.
marketplace, that is based on some proportionality to its size in the Canadian
marketplace as a whole.
1060 We know for a fact that we are by far
the largest cash contributor of all the stations on the Vancouver marketplace of
any of the stations that are there. So everything we are proposing is over and
above what that budget already -- that is a constant that already
1061 So we are proposing things over and
above that, and I think it's important to note that all stations do give
millions of dollars of airtime, including ours, under the aegis of the CAB and
separately to institutions.
1062 So that is the context of CanWest's
1063 COMMISSIONER GRAUER: No, I understand
that and I am glad to know that you -- so what did you say? Around $35,000
last year in Vancouver between the station and your corporate initiatives in
Vancouver. Is that what it is?
1064 MR. ASPER: Yes.
1065 COMMISSIONER GRAUER: Thank
1066 And I do understand that you are very
generous contributors with respect to in kind to local community organizations
and telethons and I don't mean to take that away from you. But, you know, it's
really a matter of saying that as a company that has done -- any company
that does very well on the market, as a market corporate citizenship should they
be contributing cash as well to non-profit groups in the community. So it's
really a matter of saying is this incremental to an existing contribution and I
am certainly satisfied that $35,000 is. And the endowment, I guess, is part of
1067 How would set up an
1068 MR. ASPER: Which
1069 COMMISSIONER GRAUER: Sorry. The
Vancouver one million dollar arts endowment fund as opposed to the $250,000 in
local art support and then one million dollars to an arts endowment
1070 MS BELL: Yes, it is part of, I guess,
a similar initiative and we would set up the endowment for a number of different
local arts groups.
1071 COMMISSIONER GRAUER: And administer it
1072 MS BELL: Yes.
1073 COMMISSIONER GRAUER: Can you tell me a
bit about this first project production fund, elaborate a bit more on
1074 MS BELL: It's a special fund that is
being set up for first-time producers in B.C. -- a little bit similar to
what has been done at CKVU in terms of local or regional productions, small
productions -- with budgets ranging between $20,000 and $30,000
1075 COMMISSIONER GRAUER: Administered by
1076 MS BELL: That's right. And because
they are first-time producers the staff or the management of the station would
be able to give them some guidance and help in terms of getting their
1077 COMMISSIONER GRAUER: So would this be
something that you would fund and then broadcast on your stations at some point?
How would they get other funding? I mean, how would this work with respect
to -- would they then possibly go to your Western Producers Fund or is this
something quite different?
1078 MS BELL: I am going to ask Loren to
1079 MS MAWHINNEY: Thanks,
1080 What we mean by this is capitalizing
on the success that Jim Rusnak's team has had at a local level at UTV where they
are funding, in some cases, half the budget or a portion of the budget, but they
tend not to be CTF-funded projects and they are small
1081 One of the successful ones that we ran
nationally, for instance, was an hour-long documentary called Abreast in a Boat
and it was a terrific doc. So some of them are local and some of them are good
enough to actually get national exposure. So this would be a continuation on
1082 MR. ASPER: I think the great benefit
we saw out of the system, we did this as part of a Global licence
renewal -- I am not sure which one it was it was,
1083 MS MAWHINNEY: In 1992.
1084 MR. ASPER: In 1992. What we set up was
a fund for ten first-time producers and one of those -- I now forget the
name of the producer, but he created a show called Ready or Not, a pilot, a
half-hour show that was their first try ever and it became a series. It's still
on the air today and certainly was shooting originals for seven years. So about
these kinds of projects.
1085 There are a lot of good producers out
there that just need that first chance and that is why we thought this was an
1086 COMMISSIONER GRAUER: Now, the national
news initiative. I know in the reply you gave a breakdown of the
expenditures of the eight million dollars and what I am really trying to
understand here is -- you have identified a number of what would be
incremental expenditures to what is there.
1087 What I think we would like to get is,
first of all, over what period of time are these expenditures going to be made,
the eight million? I know that you have said they are incremental, but will
there be any efficiencies that you gain from merging the two operations that
would help with this?
1088 How much of this is local? How much of
this is national? Wouldn't you, now that you are going to be a national
broadcaster, be doing a national newscast in any event? How does the budget work
on this and why would this be seen to be a benefit?
1089 MR. MacDONALD: Commissioner Grauer,
taking your questions in order.
1090 In terms of the efficiencies, the
costs represented by the eight million dollars -- the ten million dollars
when you take into account national news and public affairs -- are purely
incremental in that they cover the requirements of dedicated news bureaus across
the country, a dedicated -- and I underline the word "dedicated" --
national news team, production team and an editorial in Vancouver where the
newscast will be anchored from and a small amount of capital associated as well
with the development of these bureaus and the establishment of a national news
centre in Vancouver.
1091 As for your question: Wouldn't we be
doing a national news program anyway? Not necessarily. There is a lot of people
that say that you are better off with local news these days. A lot of studies
show that local news is growing in strength and population.
1092 But I think what we are saying in this
application is that, you know, we have two national newscasts on the air right
now. Volumes have been written about the impact that national news has on the
public agenda. Some people would say it has too much of an impact on the public
agenda -- that is a debate for another day -- but it does have an
impact and both of the national newscasts that are on the air now -- and
there is only one private -- are based in Toronto. Having worked in news
for some 23-odd years, most of it in Toronto and Ottawa, I can tell you that
there is a tendency, when making editorial decisions in these important
newscasts, to filter those decisions to the prism of: How will this impact on
central Canada? And you can zoom that to me in Toronto.
1093 COMMISSIONER GRAUER: You actually
don't have to tell me that.
1094 MR. MacDONALD: Well, we have long
recognized that, we are western company, western-based company, we have long
recognized that. Really what we are proposing here is a new alternative and it
comes back to the themes of the application, that is about being an alternative,
another voice, another option, another choice.
1095 I think those are more than just words
and I think that by launching this national newscast and launching it in
Vancouver and producing it in Vancouver, I think that Canadians get a new
perspective that they didn't have before. I think that the national agenda, if
it's going to be impacted by national news, there is going to be another voice
and another perspective and we think that that is important.
1096 Neither the former WIC stations nor
Global is currently producing a national newscast. We have programs that have
national content in them, but neither the WIC organization nor Global has
sufficient infrastructure to mount a national newscast and that is why these
dollars are required to create the jobs, build the bureaus and build the
structure to produce this alternative newscast.
1097 COMMISSIONER GRAUER: I don't need to
be persuaded of the merits of a western-based national news broadcast as a real
alternative to what is existing. But it strikes me that your entire strategy for
the stations that you have applied to acquire is based on news, you know,
whether it's local news or regional news, it's very much a news
1098 So this is what brings me to the
question: If we were to deny this as a benefit, would you do a newscast anyway,
and if you were going to do it, would you do it in Vancouver, would you do it
1099 MR. SHEA: I don't have a full answer,
but I think I have three-quarters of it. We probably would not do it in
Vancouver, Commissioner Grauer, because this allocation is there to support
building that infrastructure here. Whether we continue with our strategic plan
to do a national newscast then out of Toronto, I think is a programming and
scheduling decision that we would make at that time.
1100 What we are saying is, upon approval
of this application we are making a commitment to do something that no one else
has ever done because it's been cost prohibitive and that is to do build a
national news centre out of Vancouver. So in all likelihood, we would either not
do it, Commissioner Grauer, or may end up doing it from Toronto.
1101 COMMISSIONER GRAUER: So then can you
then go over with me. What are the costs that would be incremental to doing it
Vancouver as opposed to doing it in Toronto because as I understand it, if you
don't have the infrastructure anywhere you are going to have to build an
1102 So the question is: What are the
pieces that make it more expensive to do here than there and factoring in that
you may be doing a national newscast which is going to resonate with a large
percentage of English-Canadian viewers who happen to be west of the Manitoba
border and nobody else is programming a national newscast here.
1103 MR. SHEA: I think Mr. MacDonald can
give an indication of what those costs are.
1104 MR. MacDONALD: And I just to clarify.
It's not that we have no infrastructure for this newscast. We do have some
national news gathering infrastructure in Toronto and in central Canada right
now. These costs are incremental in that we would have to hire a new production
team based in Vancouver. We would incur feed costs, transmission costs that
differ from those that we would incur in Toronto in terms of moving material
from Ottawa and from other existing Global stations, some of which is currently
done on a fixed fibre line, it would have to be satellite
1105 Also included in that envelope is some
money for a national news bureau in Calgary as well, setting up a dedicated
national news bureau in Calgary. It is more expensive to do it out of Vancouver,
but it is certainly in our estimation critical and key, if you like the
statement we are making in this application and if we think to have that western
perspective, that distinct western perspective, is worth whatever additional
monies would be involved.
1106 But there is no question, if we were
to do this out of Toronto there would be additional money involved as well. I
don't want to suggest that the entire eight million is contingent only on doing
it in Vancouver, but certainly a sizeable piece of it is.
1107 MR. ASPER: Commissioner Grauer, I
think just to sum up. The reason we decided to do a national newscast was
because we felt it was an obligation we owed as part of the privilege of having
this application approved.
1108 It is not vital to our strategy of the
news and information content stream which I discussed earlier because that is
much more locally focused, that is much more what the Hamilton and Victoria
augmentation of news programming is about and what we are doing in our local
1109 So that is why we see that as a very
separate and distinct benefit that we bring to the table. We would not otherwise
have been doing that. There no such plans in our shop to do so until this
application began to be put together.
1110 COMMISSIONER GRAUER: I am sorry. Does
the eight million dollars include the cost of setting up a news bureau in
Alberta? Did you already answer that?
1111 MR. MacDONALD: Yes, I did. Yes, there
is some cost in there, yes.
1112 COMMISSIONER GRAUER: Will there be
synergies with the proposed public affairs show in Alberta?
1113 MR. MacDONALD: There will be some, but
there will be a dedicated public affairs producer and host and researcher. But
there would be some synergies, yes.
1114 COMMISSIONER GRAUER: And the northern
news bureau -- the Yellowknife internship, it is here as a benefit for
Vancouver. I understand it is to be managed out of ITV. Why is it as a Vancouver
1115 MS BELL: Actually, the internship
could occur at any one of our stations, so there would be benefits to B.C. or to
Alberta. We felt that it was more appropriate to put it out of the ITV
1116 COMMISSIONER GRAUER: No, I understand.
What I am wondering is why is it here as a benefit for
1117 MS BELL: Why is it attached to the
1118 COMMISSIONER GRAUER: The Vancouver
1119 MS BELL: I guess when you come at
these things and the benefits for each of the markets are allocated based on the
value of the transactions, so basically we have allocated things to different
markets where it made sense and in some cases if it benefits B.C. and Alberta it
either went to one or the other.
1120 COMMISSIONER GRAUER: My last question
is: Why -- and I know we touched a bit on this this morning in your
discussion with Commissioner Wylie. It is just that I don't understand why the
five million dollar local programming initiative for CHEK would be in the CHAN
1121 MS BELL: I think that if you were
going to -- well, if you take a look again at the value of CHEK and again
the benefits are based on the evaluation of that property which is, according to
KPMG, $42 million, if you are looking at 10 per cent of that, then you are
looking at $4.2 million. You couldn't possibly allocate as much money towards
local programming benefits if you were basing your benefits package on just that
1122 So we also see that, even though they
are severable, they are very much tied together and there is a real benefit to
having both of them approved and working together and the strength of CHAN and
that is how we allocated that.
1123 COMMISSIONER GRAUER: The reason I am
asking is that when I go over these benefits and I try to get a sense of is this
a national benefit, a local benefit and looking at all of the market by market
how do they break out in terms of the benefits to the community in question
vis-à-vis national benefits. It strikes me that with Vancouver there is not much
here that is local, strictly local.
1124 MR. ASPER: Commissioner Grauer, I
think there was and is a tension in the application between the fact that while
it is in its parts an application to acquire several stations, there was a
national overlay to this whole thing and because of the way the benefits policy
is structured, one has to attach benefits to each of the markets and so there
are in each of the markets. And that is one of the reasons, by the way, why we
exceeded the 10 per cent which to my knowledge has never been done before in
broadcasting in any of these kinds of applications.
1125 But by definition, some of those
benefits that are national would have to be slotted in each of the markets and
we would be prepared certainly, if the Commission were to decide that there
should be a reallocation between certain markets, to put more into Vancouver,
1126 We just saw the real need in the
British Columbia marketplace to be in CHEK in the Victoria marketplace and that
is why there was a skew.
1127 MR. SHEA: Commissioner Grauer, if I
can also add -- and I think it forms part of your opening statement --
that in large part the assets are western-based and in large part the funding
and the benefits are to western production companies directly though the Fund
and/or through assistance through the CFTPA mentoring program and there is a
litany of varied associations that are all western-based.
1128 When you add up the benefits that are
tied to the production sector in western Canada, it's in excess of 50 per cent
and that is what we heard from the production community, "Please try to make
them western focused as opposed to nationally focused" help and assist in a
number of way with respect to the independent production community as opposed to
more local programming and markets. With due respect, Ms Grauer, they are
already very well served in local programming with the exception of
1129 COMMISSIONER GRAUER: Probably lots of
people in Vancouver would argue with you about it is well served with local
1130 Mr. Asper, to get back to your point.
It's not so much a reallocation of benefits from one community to the
other -- and as I said I don't want to be seen to be parochial and say,
"There isn't enough for this and there isn't for that and how is this
allocated". But what it does go to is your statement that overall this takes you
to being a major national player and there are a number of big national
initiatives that you want to undertake.
1131 So I am saying, should they all be
part of a written down benefit? Are there some things, that given the whole is
greater than the sum of its parts, that you might be wanting to undertake given
the -- and I don't want to use the word "intangible value" because I don't
want to use our lingo, but what is it that accrues to your company becoming
truly national that you might want to undertake -- not might want to, might
be appropriately undertaken as part of that leadership role and not necessarily
as part of a specific tangible benefit. So that was why I was asking a number of
questions about some of these.
1132 Okay. Next. There is another question
with respect in particular to, I guess, the programming initiatives. First, let
me talk about the programming initiative because I am going on to
1133 How would we measure the incremental
spending, perhaps also with the national news -- and I know you did talk
about it a bit with Commissioner Wylie this morning, but is it something that on
your annual returns there would be a separate line? I mean, how would we be able
to see that expenditures hadn't gone down in one category and be offset
somewhere else? I mean, do you have ideas for us about what would be the most
effective way to measure that?
1134 MR. SHEA: Yes, we do. I would like
Katherine Browne to respond to your question.
1135 MS BROWNE: What we propose to do at
the first reporting opportunity that we have where these assets will be part of
the CanWest group is to report on the current operations separately, as you were
referring to in an annual return, and then over and above those expenditures, we
would show you the incremental additional programming hours that had been
applied to the station and the cost associated with those hours so that they
will be completely separate and incremental.
1136 COMMISSIONER GRAUER: Thank
1137 Victoria -- I don't think I need
to go over the programming initiatives because I think you covered them this
morning and if we found a way that we can measure the incremental spending, I
don't think we need to talk about that.
1138 With respect to the aboriginal, I
think it's the Longhouse program, which I think is listed as a benefit in both
Kelowna and Victoria, if I am not mistaken. Where would this be produced?
Perhaps you can elaborate on this program.
1139 MS BELL: I guess it's mine. Actually,
I think there are a couple of initiatives in terms of aboriginal
1140 One million dollars is going to APTN
and that really is the benefit that is attached to Victoria. Longhouse, I
believe, would not necessarily be part of that initiative, although it might
involve APTN through another separate initiative.
1141 COMMISSIONER GRAUER: It's listed here
in your revised list of benefits for Victoria. It says: Aboriginal programs a
million dollars (Longhouse).
1142 MS BELL: It is my understanding that
that one million dollars is the one million dollars being given to APTN to
produce a series of aboriginal programs separately.
1143 MR. MacDONALD: If I
1144 MS BELL: Yes.
1145 MR. MacDONALD: Commissioner Grauer,
part of the confusion here is that we have also undertaken in Kelowna to produce
an aboriginal program and that also is part and parcel of some discussions we
are having with CBC which I think we have referred to in the application as
well. So there is some confusion in the benefits and I certainly appreciate your
confusion on that and I think it's the way it's expressed in
1146 COMMISSIONER GRAUER: Thank
1147 MR. MacDONALD: But there is a
programming commitment to develop a limited series -- aboriginal series and
that is one of the many items that we are discussing with the
1148 COMMISSIONER GRAUER: So there is a
million dollars here and then is it part of the same, the million two here in
Kelowna? No --
1149 MR. SHEA: Maybe I can help with some
clarity on this one.
1150 COMMISSIONER GRAUER:
1151 MR. SHEA: The million dollars in
Victoria is in effect a grant to APTN to produce programming for the APTN
Network. It may or may not have a second window on either Global or the
1152 Longhouse was used as an example of
the type of programming that APTN may produce with respect to their million
dollar funding. The decisions on programming are made by APTN. The million two
in Kelowna --
1153 COMMISSIONER GRAUER: Actually you know
what? If it's not the same thing --
1154 MR. SHEA: It's not the same
1155 COMMISSIONER GRAUER: Let's deal with
Victoria and then when we get to Kelowna we can talk about that.
1156 MR. SHEA: Thank you.
1157 COMMISSIONER GRAUER: So this is a one
time only grant, a cheque for a million dollars.
1158 MR. SHEA: It's over five
1159 COMMISSIONER GRAUER: It's over five
1160 MR. SHEA: Two hundred thousand dollars
1161 COMMISSIONER GRAUER: A year. Thank
1162 And I am assuming your endowment,
local arts support endowment for Victoria is the same as the Vancouver
1163 MR. SHEA: That's
1164 COMMISSIONER GRAUER: Kelowna. The
joint CBC project. Did you talk about this this morning? No? Thank
1165 MS BELL: We have had a number of
discussions with representatives from CBC and we certainly haven't arrived at
any conclusion about the types of programming that we would be developing, but
there are a number of ideas. There were also discussions about sharing news
gathering resources and developing documentaries, other types of programming and
perhaps even some aboriginal programming with the CBC.
1166 The other initiatives that were listed
in the letter that we attached to our response to interventions, which talked
about technical upgrades or sharing in that area, would be part of the 1.5
million which was in the bonus benefits package.
1167 COMMISSIONER GRAUER: We will get to
1168 MS BELL: Before you get there, I
1169 COMMISSIONER GRAUER: We go through
this one line at a time.
1170 MS BELL: Okay.
1171 COMMISSIONER GRAUER: When I see the
bonus package, I think it's like when I buy a lottery ticket. Will you take
whatever it is, 42 or something, for your bonus number. Anyway.
1172 How is the news gathered in Vernon
now? I know you have talked about news gathering in Vernon, given the
establishment of a news bureau?
1173 MR. MacDONALD: Essentially there is no
dedicated bureau so any coverage from down there would either be free lance or
assigned. The Vernon Bureau would really be to service the north Okanagan Valley
and provide a greater regional input to CHBC.
1174 COMMISSIONER GRAUER: In the new
programming -- and again I am not sure if you talked about this with
Commissioner Wylie -- how much, if any, would be independently
1175 MR. MacDONALD: In terms of the local
programming, that would be station produced and that is part of the incremental,
part of the 1.2 million and that is the Okanagan Now program, a half-hour
program which would replace the half-hour program currently on CHBC's
1176 COMMISSIONER GRAUER: Okay. Don't get
me into programming. I will really get lost.
1177 And so this is would be measured the
same way as we talked about with a new line on the -- Alberta. Do I have a
breakdown on the 2 million dollar benefit earmarked for the establishment for
your Alberta-based national public affairs program and the new news program in
1178 MR. MacDONALD: Yes. The 2 million for
the public affairs unit in Calgary, which would be housed together with the
national news bureau -- the new Calgary national news bureau, they would
work together -- primarily covers some operating costs for the new program
certainly in the budget, but is also for the hiring of staff for that
program -- producer, host and researchers, we talked to that before --
and that program would also incorporate some existing resources, including those
of the new national newscast, but that spending is purely incremental to operate
1179 COMMISSIONER GRAUER: To the existing
news operations that are already there.
1180 MR. MacDONALD: That's
1181 COMMISSIONER GRAUER: Now, could you
just go over with me again the International Marketing Fund and the National
Screen Institute and how they organically grew and developed?
1182 MS BELL: How the initiative changed
1183 COMMISSIONER GRAUER: Yes. And what
both components be now, where they will be administered and what the criteria
1184 MS BELL: Well, originally we had set
aside $500,000 to the NSI and a one million dollar fund for the International
Marketing Fund. Those were separate initiatives, but we hadn't really identified
anyone to administer the Marketing Fund. We had discussions with NSI, and this
is part of one of their workshops, is in fact to provide training to producers
in how to go to market and sell their productions, or market their productions.
So they would be administering the fund as a result of the fact that it does sit
within their programs, or their existing programs.
1185 So what we did is we reduced the
amount that was being allocated to NSI down to $250,000 so the whole million
dollar allocation has now been collapsed with that $250,000. Therefore, you now
1186 COMMISSIONER GRAUER: So that would be
a national benefit? This is for producers across the country,
1187 MS BELL: That is
1188 COMMISSIONER GRAUER: The Canadian Film
Centre is a national benefit.
1189 MS BELL: Except that it is going to
benefit Alberta applicants. In fact, we received a letter in February from the
Canadian Film Centre stating that they were going to establish an Alberta
CanWest fund and that the recipients would be Albertan. We could file that with
1190 COMMISSIONER GRAUER: You
1191 MS BELL: We haven't,
1192 COMMISSIONER GRAUER: Oh, you
1193 MS BELL: It was an omission. We can
file it with you.
1194 COMMISSIONER GRAUER: Why
1195 MS BELL: Because it was tied to the
Alberta benefits package.
1196 COMMISSIONER GRAUER: I see. The
national benefit, public affairs program and national news benefits, you would
say that is kind of both, right?
1197 MS BELL: Yes.
1198 COMMISSIONER GRAUER: Sorry, I am
getting away from my questions here.
1199 We have done the scholarships. I don't
have questions. The academy. Can you talk to me about Historica? How this will
serve the interest of the Canadian broadcasting system? I know you are planning
to air in the Maritimes, but that $500,000 cash donation.
1200 MS BELL: That's correct, to produce,
again, a number of vignettes and how will it help the broadcasting system, I
guess. It's a cultural learning program and actually I would ask perhaps Loren
to supplement my answer there.
1201 MR. SHEA: I can probably help a little
bit more. Historica is an organization that came to fruition about a year ago.
It received preliminary funding by a number of very committed Canadian
corporations, among them Bell Canada.
1202 Commissioner Grauer, it seeks to
become a producer of very, very high end vignettes on Canadian history and this
is core funding or base funding that they require in order to meet their
objective and we have not only committed cash -- because they are in
desperate need of cash to reach their own corporate objectives -- but
also air time in addition to that.
1203 COMMISSIONER GRAUER: So the $500,000
for Historica will go directly to producers to produce
1204 MR. SHEA: That's correct, under the
auspices of Historica.
1205 COMMISSIONER GRAUER: So you will give
$500,000 to Historica. They will commission independent producers to produce
vignettes and then you will give them air time and presumably other broadcasters
1206 MR. SHEA: That's
1207 COMMISSIONER GRAUER: Could you go over
with me the Alberta Film Commission benefits, explain that to
1208 MS MAWHINNEY: The Alberta Film
Commission will be spent prorated over the five years. It's a commission that
attracts shootings to Alberta, whether it's content or foreign content --
like the movie Unforgiven is shot in the badlands of Alberta. So it helps
publicize those kinds of locations for international and domestic
1209 COMMISSIONER GRAUER: And can you go
over the AMPIA with me?
1210 MS MAWHINNEY: AMPIA is $500,000 to be
given to them at the rate of $100,000 and what we have suggested to AMPIA's
board, but they will have jurisdiction over how they spend the money. What we
have suggested to them is that they use it for training and to send people to
international festivals as well as domestic festivals so that they understand
the marketplace reality that they may not ordinarily get to.
1211 So you could send a producer to NATPI
or to MIP or to MIPCOM just to they get a sense of what kind of programming is
being offered outside Canada and what works and how they are operating in that
context in their marketplace.
1212 COMMISSIONER GRAUER: And the Edmonton
Economic Development Office for Arts Funding?
1213 MS BELL: That's a $250,000 grant going
to that office for a number of programs that they are working with, a number of
organizations, cultural and arts organizations in Edmonton.
1214 So they would be then using those
funds towards those initiatives.
1215 COMMISSIONER GRAUER: So if I was to
look at the Alberta benefits overall, a large number of them are devoted
strictly to the Alberta market, would you say? More than Vancouver
1216 MS BELL: Strictly to -- it would
depend on how the Western Production Fund ends up being --
1217 COMMISSIONER GRAUER: And the national
1218 MS BELL: Exactly, yes.
1219 COMMISSIONER GRAUER: We are getting
1220 COMMISSIONER GRAUER: Again, this may
have been answered this morning. With respect to these wellness documentaries,
are they being done by independent producers?
1221 MS BELL: Yes, they
1222 COMMISSIONER GRAUER: And the Mohawk
College, again you would apply the same criteria in terms of ensuring that these
are very much related to --
1223 The Heritage Stabilization Program
Endowment. Again, can you detail the type of initiatives, the programs that
would benefit the Canadian broadcasting system?
1224 MS BELL: This is a new type of
initiative. Actually, I think it's the first of its kind in Ontario and it is
the public and private sort of merging for that community. Again, it would be
benefitting local arts and cultural groups in that market.
1225 MR. SHEA: Commissioner Grauer, if I
may because it's also noted in the Vancouver benefits, the million dollars for a
heritage stabilisation arts program.
1226 This is a program that has just been
initiated by the federal government to provide local art groups with essentially
two elements. One is to provide better management of the arts organizations
because so many suffer from being poorly managed and, secondly, as core funding
or base funding to invest in tomorrow's starts. There are a series of dance
organizations and theatrical organizations in Hamilton. This will be managed by
the board of directors that has been set up in Hamilton and our million dollars,
over the course of five years as an endowment, in effect, I guess, their initial
committed first form of corporate funding and it's typical of most federal
plans. They have to get "X" amount or "X" percentage from the private sector in
order for them to trigger the federal money.
1227 COMMISSIONER GRAUER: Is this something
that you would also see your corporate office or the foundation also
participating in that market?
1228 MR. SHEA: Not to this level or extent.
No, it would not be I think typical of the CanWest Foundation.
1229 COMMISSIONER GRAUER: It would be or
would not be?
1230 MR. SHEA: It would not
1231 MR. ASPER: Just to clarify. We do, of
course, support many of the arts organizations individually indirectly. This is
something that hasn't come before, but our charitable policy specifically is to
support the performing arts because many of the actors that are in the Taragon
Theatre or the Citadel Theatre in Edmonton or the Manitoba Theatre Centre, and
the writers as well, end up on the screen and that is where they get their start
and these organizations at that level are the whole core of the Canadian
1232 So we do support that to a large
degree from our budget. It's the large majority of our budget. But this is new
in the sense that a) we haven't done so in markets where we don't have
operations, and b) we may indeed top up what we are doing as part of this
application. I wouldn't preclude it.
1233 COMMISSIONER GRAUER: I think I have
one more question. Oh, no, I have the bonus package. If you could just tell me
about the film circuit, the Toronto Film Festival, elaborate on
1234 MS BELL: I think that is just a
straight cash donation towards their initiatives. Basically what they do is they
make available independent films in communities across Ontario and it is a cash
1235 COMMISSIONER GRAUER: And it's just for
the film circuit to be bringing films --
1236 MS BELL: To continue doing its work,
1237 COMMISSIONER GRAUER: Could you just
tell me a bit about the production fund of the City of Hamilton, given that this
is funds for the City of Hamilton.
1238 MS BELL: I guess, if you go back to
the benefits policy that states that your benefits should be helping the
communities where you are applying for stations and the system as a whole, and
we went into each of these communities and tried to find, I guess, areas where
we could be helpful.
1239 The City of Edmonton is going through
a lot of change at this time. They don't have the know-how or the resources in
terms of producing audiovisual materials, in terms of marketing the city, and we
thought that we could lend a hand in that area, among other initiatives that
they would want to undertake because of the changes.
1240 COMMISSIONER GRAUER: And that would be
half a million dollars.
1241 Q. That's correct.
1242 COMMISSIONER GRAUER: Would you also be
looking to do -- would there be an in-kind part of that that you might do
just as part of the station? No.
1243 The bonus package, I don't think I
need too much clarification expect the Boys and Girls Club of
1244 MS BELL: The Boys and Girls Club of
Canada is actually involved in a number of different sectors in terms of helping
young children develop and one of the fastest growing sectors of that
organization right now is actually computer literacy, you know with the
Internet, and again they are not partnered with any broadcast entity and we have
decided to take them on as an organization and do a number of things with them,
but certainly I think that these funds would go a long way towards those
initiatives in particular.
1245 COMMISSIONER GRAUER: I think that is
it for the tangible benefits. Maybe we could take a short break now. I haven't
done intangible, but --
1246 THE CHAIRPERSON OF THE COMMISSION:
Okay. So a 10-minute break.
--- Recess at 1627 / Suspension à 1627
--- Upon resuming at 1640 / Reprise à 1640
1247 CHAIRPERSON OF THE COMMISSION:
Commissioner Grauer would you pursue with the benefits, please.
1248 COMMISSIONER GRAUER: Yes. I have one
more question with respect to Hamilton and it's with respect to the $9 million
in local programming plans and I wonder if you could identify for me --
what I want to do is establish what the incremental levels of expenditures for
local programming are going to be. So if you could identify the current level of
local programming at CHCH, the programming that is to be replaced, but more
importantly the type of new programming. For example, in-house production,
third-party payments, independent producers.
1249 MR. SHEA: With respect to the dollar
incrementality because I think what you are requesting is the base line,
Commissioner. I will ask Katherine to respond to that and then Ken MacDonald, I
think, can give you a summary, an overview of the types of programs that we
1250 MS BROWNE: Just to clarify the
incrementality of the programming within CHCH, what we have done within the
productions was to take in the current level of programming and roll that
forward throughout the projection period so everything that is included within
the benefits package is in fact incremental over and above the existing program
1251 COMMISSIONER GRAUER: So there are
1252 MS BROWNE: Dollars,
1253 COMMISSIONER GRAUER: Okay. And so we
would measure it the same way we talked about earlier with respect to dollars?
Okay, so maybe then we can talk about those hours.
1254 MR. MacDONALD: Commissioner Grauer,
this is one of the easier ones to show the incrementality on simply because we
are essentially doubling the local programming hours currently on the CHCH
schedule with the addition of a morning show, a two and a half hour morning
show, the addition of a talk show and the addition of three weekend programs,
one thirty-minute public affairs program, locally focused, one sports program,
again locally focused with the Hamilton, Halton and Niagara areas that we
described earlier, and a one-hour arts and entertainment program, not to be
confused with the variety program. This is an arts and entertainment information
program focusing on everything from the Shaw Festival, the Hamilton Place shows
and theatre Aquarius and various theatre groups in Hamilton, and so on, and
because all of this programming is incremental to the existing commitment of 17
hours, there is a considerable need for additional staff.
1255 To give you one example, with the
morning program there is currently a non-locally produced morning show at CHCH.
So there is a production team that is needed to produce that programming while
maintaining commitments to the other existing newscasts at supper hour and 11,
and so on.
1256 So a fair portion of that nine million
is in ongoing staffing costs, both on the editorial side -- producers,
hosts and reporters -- but also on the production side -- crewing
and so on, an additional shift for production crewing.
1257 On top of that, there is the Halton
regional bureau which will be a fully staffed two-person bureau located in the
Halton region to file daily live and taped reports into the newscast. In
addition, in terms of the supper hour newscast, currently CHCH at 6:30 is
running a Vancouver-produced program called Canada Tonight, which is part of
CHAN's local commitment and it is being rebroadcast at 6:30 on CHCH. That
program will not be there and the entire hour from 6 to 7 now will become
locally focused. So that again will require additional resources in terms of
live capability, additional reporting staff and editors, cameras, and so
1258 So there is a considerable expense to
meet the rather robust commitment of all of a sudden adding what amounts to 19
and a half hours of incremental programming, local programming, to the CHCH
1259 COMMISSIONER GRAUER: So that's all
1260 MR. MacDONALD: That's
1261 COMMISSIONER GRAUER: I just have one
other question about the news -- it just occurred to me, actually --
the national news.
1262 The benefits you propose to do the
national news. Now, how does a national program like this work if it's produced
in Vancouver? Do the other stations buy the program? Like if it's a national
news program, is it supplied free or how does it work? How does your bookkeeping
1263 MR. SHEA: Perhaps I would asks
Katherine Browne to respond to that question.
1264 MS BROWNE: In the case of the national
news cast, most likely what we would do -- to be honest with you, I am just
thinking this through right now. The current news infrastructure that sustains
the current operations, as I stated, we have reflected in the projection, the
five-year projection going forward, so existing expenditures would remain in the
station as they are today. The national newscast being produced would most like
be allocated across the stations on the same basis that we would allocate, for
example, national program rights.
1265 COMMISSIONER GRAUER: Right. What I am
trying to get at, is if you are doing a national newscast, how much of the
ongoing costs of that are in this benefit? Do you know what I am saying? If
there are going to be revenues -- arguably I don't want to discuss the
merits of whether there are benefits to allowing some start-up costs as part of
the benefits, but if there are going to be revenues accruing through ad sales
and whatnot across the country, how is that accounted for with respect to being
a benefit or not?
1266 Am I making any sense? Do you
understand my question?
1267 MS BROWNE: Yes, I understand your
1268 With respect to revenues associated
with the national newscast, obviously the advertising revenues would accrue to
the stations as they would normally, in the same way that advertising revenues
associated with national program rights would accrue to the stations
1269 COMMISSIONER GRAUER: Thank you. I
don't have -- sorry.
1270 MR. SHEA: I was just going to add,
Commissioner Grauer, two things. There are no incremental or new revenues with
respect to this program because it will either be replacing a current news
program in that market, so it's not as though there are going to be specific
revenues attributed to this program.
1271 Secondly, the incrementality which we
will report on every year, this news benefit in Vancouver will be money spent in
Vancouver in order to develop this program, and I think Mr. MacDonald took you
through the rationale for the incrementality required to do it.
1272 COMMISSIONER GRAUER: So the
incrementality will be in Vancouver and visible in that way.
1273 MR. SHEA: That's
1274 COMMISSIONER GRAUER: Thank
1275 I don't have any more questions on the
tangible benefits. I think that what I would like to do with respect to the
intangible benefits that you have identified is take advantage of, at this
point, that we sort of have had an overall look at the tangible benefits and we
have had a number of discussions about the merits of this application with
respect to your becoming a truly national broadcaster and you identified at the
intangible benefits a number of things: Advancing implementation of a new
policy; new early national newscasts and public affairs programs; strong local
reflection in Hamilton and Victoria; distinctive programming plans; new local
identity for CHEK and CHCH, a continued CBC presence and, of course, the 8-hour
threshold duplication here.
1276 I wonder if you could just sort of
elaborate on those intangibles for me with respect to how again they further the
objectives of the new policy and the Broadcasting Act and, again, your strategy
for your national network.
1277 MR. SHEA: Commissioner Grauer, I will
start and I believe Mr. Asper may also want to comment and perhaps we will do it
in two distinct chunks -- the independent separate from Global
Television Network becoming a true national network.
1278 I think the most significant
intangible benefit with respect to CHCH and CHEK is -- and I believe it is
the emphasis we have been trying to make all day, and that is the significance
that a strong owner brings to the table in revitalizing these stations, in
creating a truly differentiated schedule for these stations. That is more
specific in terms of the island residents because the differentiation that will
bring to that particular station is far more profound than that of
1279 With regard to Global Television
Network, what is not stated here, but clearly one of the benefits of truly
becoming a national network, it's very difficult for us at Global in this day
and age to get much national coverage of our Canadian programming, of our news
anchors because we are not on the national scene. We are not in Alberta, we are
not in territories where national undertakings like to report and it's a
significant benefit, we believe, to both our company, more importantly to the
system, and perhaps more importantly to independent producers who are often
times reluctant to see their programs on Global because they don't get the
national TV guide coverage, they don't get coverage in a lot of national press
and that's significant, and a real benefit, we believe, to the talent that works
at Global Television Network and the various programs and productions that air
on Global Television Network.
1280 We also think that becoming a third
voice in national news gives another camera person, if you will, in scrums when
politicians leave their various arenas because they tend now to go directly to
CBC or CTV because they know full well that their message will be carried
nationally and I have seen it happen with our Ottawa bureau time and time again,
whether it's a major budget announcement or a major announcement from a
politician, they know full well who has a national audience and who doesn't and
that, I think, adds to diversity of choice and a voice for both our political
system, but more important the consumers of political issues. And that, again, I
would register as a key intangible benefit to the broadcasting system by having
a third, strong national player that is producing and conducting itself in a
manner in which enables us to carry a national voice. And those two we cite as
operators as key missing elements in the Global Television Network of today and
it will enhance, we believe, our news coverage rather dramatically and our
Canadian programming rather dramatically.
1281 But I would also like Mr. Asper to
comment on that.
1282 MR. ASPER: I am drawn again to the
words in the Broadcasting Act, particularly Section 3 1-D where it says:
"The Canadian broadcasting system should enrich and strengthen the cultural,
political, social and economic fabric of Canada". (As
1283 And just to dovetail on what Mr. Shea
is saying, it's not only the coverage of national news, it's the fact that there
will be a new voice in the public debate. There will be a new set of opinions.
There will be a new person there asking questions: Why is this happening? Should
it happen? And the other part of that rubric is that that voice will not be in
Toronto and that is a very key point. That voice will say -- when
interest rates go up, it affects the auto industry-based Ontario province much
differently than it affects the export-based lumber industry in British
1284 When there are trade quotas put on
softwood lumber it affects the Ontario and central Canada -- which we
think it Winnipeg, but others don't. It affects that part of the country very
differently than it does the western part of the country and it's the
combination of another questioning voice out there, another analytical voice and
a voice that is coming not from central Canada that we think is a very serious
intangible benefit to the system and to the country.
1285 COMMISSIONER GRAUER: Thank
1286 Madam Chair.
1287 CHAIRPERSON OF THE COMMISSION:
1288 Let me talk to the benefit. You know,
I was saying when we left the strategic part this morning and the dual ownership
thing that sometimes the whole is greater than the sum of the
1289 Some argue -- and you are very
well arguing -- that to the broadcasting system it's really in the public
interest to get a third national voice, especially in the new production,
especially that the source of it will be located more towards the west of the
country and that will be a counter balance.
1290 Certainly there is merit in also the
kind of branding and signature you have, certainly is value to that. But there
is also value to Global, especially thinking of the dual ownership. You know,
you are saying that will allow a third voice. Well the fact that you will have
dual ownership in British Columbia and Ontario might take away the possibility
of a fourth voice, not a fourth group.
1291 As you were saying, we could have more
groups, but when you talk about having a voice in the sense of diversity, as we
always refer to in this country and other countries, as a matter of fact, it's
always about information. So there is still in our mind that question. It will
certainly stay with us in the debriefing after the hearing and the
1292 But let me address the more specific
question of benefits and listening to you and the exchange between Commissioner
Grauer and you. You know, in this country where we say that we don't have the
same possibility as our neighbours of the south, where they have population
dollars possibilities and considering entertainment much more as a commerce than
1293 When I see the importance of the
benefits here, which is 84 million -- ce n'est pas rien, comme on dit en
français -- it's a lot of money, especially when we know how much the
funds, although there have been more funds in the last few years, still it's
always too short. There is always people at the door. You yourselves were with
the project last year. It's just that it couldn't get funded and certainly if
you intend to pursue with it, that means it was a good project.
1294 So there is a lack of production money
in this country. Some may say because not enough money has been put together by
the broadcasters, but also because of the small population we are, certainly. So
when I see in your benefits -- and certainly it does follow the general
guidelines we have been following, but don't you think that the guidelines
should be somewhat different -- and I am not talking about percentage here.
I am talking about the direction of those funds.
1295 When you look at programming and
compare them to other elements, not to say that those other elements are not
interesting, but there is the discussion we will need to have whether it's
incremental or not, but there is the direct recognition or observation of
saying: Is that all that is going to programs per se?
1296 Commissioner Grauer was referring to
every benefit in relationship with each station, whether it was sufficiently
kind of nurturing the communities there. But if you look at it as a whole, do we
take collectively, if we were to grant your application and go with the
benefits, are we collectively responsible in the sense of: Are we nurturing
enough talent communities in this country to allow for more significant content
and more significant creations and creativity?
1297 MR. ASPER: Well, I think the
short answer is -- first of all, there will always be a greater demand and
supply for funding for our productions. There are more great creative people in
this country, in any country, than there are funds to see all their ideas
through to the stage where they are on the screen.
1298 Again to go back to the philosophy of
the benefits package, it was to spread it out over as large a number of
producers to provide each of them with a component of the funding, or producers
with the component of the funding they would need, knowing that there are many
other funds across the country, both private funds, the Rogers Fund and many
like it, plus the government funds, plus the investments, the private
investments that may come with those projects as well.
1299 We wanted to, I guess, take a more of
a machine gun approach to producers, in other words providing as many producers
as possible with a chance rather than focusing it on specific programs, if you
are referring to programs that Global would provide because that is a much more
limiting approach in our view because it would benefit a fewer number of
producers and as I say we did this in quite a large degree of consultation with
the production association and the individual members of it and this is where we
1300 We are open to different philosophies
and different approaches. This is the one we selected after some
1301 Kevin, do you want to add
1302 MR. SHEA: I will start by saying,
Madam Chairperson, your question could fill a day of discussion and debate
because it probably is looking forward.
1303 One of the key questions in that is
how, with a new television policy, with the decline in funding, how are we going
to meet over the course of the next five to seven years the broad objectives of
the Act and the specific objectives of your television policy in light of the
reality that the funding is not adequate.
1304 I guess it comes back to a strategic
question that -- and perhaps this goes at the core of the way you developed
your television policy. It's targeted at essentially three large groups because
the reality is only two or three large groups can afford, given the reality of
funding in this country, producing 8 hours of high end Canadian content every
1305 I don't know if the country has room
for five, six or seven others from a funding perspective because the cost of
content is getting higher, Canadians are demanding a higher quality of content
because they have become used to it now. In the last ten years, the significant
change that we have seen in the style and type of Canadian drama, we are all
very proud of as a system.
1306 But I think it goes back to some of
the fundamental structural issues, that in the long term this Commission is
going have to think, I think very strategically, structurally about who and how
many can actually undertake the commitments to the system.
1307 CHAIRPERSON OF THE COMMISSION: That is
what we are doing, Mr. Shea. That is exactly what we are doing. This morning,
when I started, I asked: How many groups -- you know, is there space in
this country? You said between five and ten and now you are talking about hardly
three and that is the very point. That is an opportunity we have to examine
this. You know, there is a policy here, but the policy as a reality when we come
to discuss either a renewal of licence or either a transaction and if we cannot
talk about the real thing -- and for us, the objectives of the Broadcasting
Act is the programs.
1308 MR. SHEA: Precisely.
1309 CHAIRPERSON OF THE COMMISSION: To
serve the viewers.
1310 MR. SHEA: Precisely.
1311 CHAIRPERSON OF THE COMMISSION: So I am
asking about the benefits you have there, but I am taking it and I am not saying
that it is not in conformity with what was the intent of the benefit policy, but
given the -- comment dire, donc, l'ampleur --
1312 COMMISSIONER GRAUER:
1313 CHAIRPERSON OF THE COMMISSION: The
magnitude of the transaction and the amount of money, I guess it raises more
acuity into the question and shouldn't we have a "regard" if we were to consider
positively the application in a way where we do try to really make sure that
there is enhancement of the broadcasting system and where it will be. It will be
in the programs.
1314 MR. ASPER: Can I make one
clarification and then one comment?
1315 In terms of the clarification. When I
talked about five to ten groups, I didn't mean broadcast groups necessarily. I
meant media groups like a Rogers or a Shaw or a Québécor, Alliance Atlantis,
people that are in different arenas right now than Global or CTV or CHUM, for
example, but who are gradually, as you can see from their applications, trying
to come into the content area even though they come at it from the production or
distribution initial starting points.
1316 So in terms of the broadcast system,
we do believe, especially given the focus on priority programming, there is not
room -- I would never say there would be room for five to ten groups in
1317 We think that it is difficult enough
as it is with two strong national groups, or three if you include CHUM in that.
So I just want to clarify I was talking about larger media groups as a whole,
not people in the conventional broadcasting arena.
1318 The second point is, in terms of our
philosophy, my understanding of the production industry and how it works is the
most difficult part of getting a production to air is to get to the stage, to
the point where one is ready with a presentation and having spent some
speculated money on a script writer, on some talent to bring that project to a
point where it is at a broadcaster's office and there is a decision to go. That
is where many people just do not have the funds because there is nobody willing
to invest at that point so they are spending their own money or money they may
have leftover from some other endeavour.
1319 So we were trying to sprinkle as much
as we possibility could, to as many producers as we possibly could through these
funds and through things like the Start Minutes and the first projects so that
these seeds could be planted which would grow into flowers -- you know,
they would be grown, in a sense, in a chamber and they would be grown to a point
where they were a flower and they could subsist on their own and be put in the
outdoors. And that means getting to the point where the broadcaster says, "Yes,
it's a go" because once that happens, then all the machinery kicks in. The
broadcaster puts up money, the broadcaster puts up development money, the fund
application is made.
1320 CHAIRPERSON OF THE COMMISSION: But you
are a broadcaster, Mr. Asper, and you are aspiring to be even a greater one and
a bigger one in this country. So why not use your benefits policy incrementally
to be that broadcaster that will give existing producers who don't
have -- or existing talent that don't have the opportunity of the
1321 And I am pushing you because we are
trying to understand ourselves even better our own policy in a sense of because
of the magnitude of the type of transactions -- and certainly you can
appreciate that I am thinking ahead as well here -- it is quite important
that we are quite clear in terms of what we are trying to achieve as a whole in
1322 MR. ASPER: But, Commissioner, there is
not enough airtime on just the Global outlets to get the benefit of having a
great of producers out there get programs on the air, and what we were trying to
do, as I say, was put money in the hands of 30 or 40 producers, or 50 producers,
that could then come to not only Global, but Global and CTV and CHUM and the
specialty channels and --
1323 CHAIRPERSON OF THE COMMISSION: I
appreciate your generosity and that you are not self-serving in that
1324 MR. SHEA: Madam Chair.
1325 CHAIRPERSON OF THE COMMISSION: But
some of the projects are not directed immediately to programs per se and I am
not saying that it is not valuable, I am not saying that it is not helpful, but
on one hand some could say that is part of the philanthropy type of policy of
the a company, another part is certainly directed to the system as a whole, but
in a world where content will make the difference, especially yourselves talking
about the Internet world that is developing.
1326 I am just wondering why isn't every
dollar you are going to be spending not directed to immediate
1327 MR. SHEA: Madam Chairperson, if I may
because our entire approach to our benefits strategy was not easy. We are the
first applicant to go through this process with respect to the new television
policy and in order for us to get a fuller and better understanding of what
benefits were applicable and not applicable, we had a meeting with CRTC staff to
try and ensure that we really understood the direction and what became apparent
to us was -- and it is stated in your TV policy -- that any benefits
on transactions could not be applied against the 8 hours because that's a floor,
or that is a requirement, and perhaps that the benefits -- pardon me,
perhaps the policy, over the course of time the Commission may want to
1328 We are entering into our first period
of the 8-hour window of priority programming and we hope we will be entering
into markets where it's going to be 16 hours. That is already a significant
challenge. We would have loved nothing else but to ascribe the entire benefit
package to assist in the development of that full 8 hours, but your own policy
does not allow that and that is why we ended up taking the direction that we did
or we have because back to the issue of core funding, and with the reality of
what we hear, that public funding may well cease, meeting that 8-hour
requirement in the future going forward is going to be very, very difficult
without guaranteed public funding because we all know the economics don't
1329 But we would have appreciated the
opportunity for it to be part of the 8-hour commitment so that budgets could be
a million three, or a million five, to compete with what is happening now in
most markets outside of Canada. But we were stuck by your policy and that's
1330 CHAIRPERSON OF THE COMMISSION: Well do
10 hours or do drama which everybody has said, the 10 out of 10, that is the
most expensive one, certainly, that would have been incremental as much as the
kind of project around news that you are proposing where you will have news, no
doubt, and you are going with news in the package as treating it
1331 MR. SHEA: I think, Madam Chairperson,
that in all fairness I think we have to walk a little bit before we
1332 Advancing a schedule that would show
10 or 11 or 12 hours of Canadian content would mean we would lose the economic
engine on the other side and we will see better the impact of this policy over
the next year, two and three years. But I think it would have been premature. I
think it would have been potentially damaging to the system. We are already
doubling, in most cases, the number of hours in this policy and I think we have
to have a chance to see how the economics of that worked because just adding
hours without significant dollars to make the budgets of these programs work we
think is premature.
1333 CHAIRPERSON OF THE COMMISSION: Mrs.
Wylie, you had a question?
1334 COMMISSIONER WYLIE: Yes. In your
supplementary schedule, when you discuss benefits -- in think it's at page
19 -- you say that:
"If a proposed initiative is not an eligible tangible benefit as defined by
the Commission policy, the amount corresponding is as such deemed ineligible
initiative will be incrementally allocated to the POPs fund". (As
1335 You have already indicated a
willingness to reassign or reallocate some money if the Commission were not to
find it to be an eligible initiative.
1336 Could the Commission not simply find
that it's not as appropriate an initiative as it would like to see in the
circumstances of this particular case and require reallocation, and if so, if
the reallocation was to be to an initiative that would be directly and
immediately beneficial to what is seen on the screen, do you have any
suggestions as to where that would be instead of simply putting it to the POPs
1337 I am suggesting here, as Madame
Bertrand has, that we may find a benefit eligible under the policy, but the
eligible policy -- the policy about eligible benefits was hammered out when
we didn't have these huge transactions before us where people tried to allocate
$84 million and if I look, everything is a laudable attempt to put money in
laudable goals, but one can also discuss if it's appropriate when you become a
larger broadcaster because you are having a transaction of the importance of
this transaction and we will see even more perhaps appropriateness as opposed to
eligibility may become a criterion and to say if you have the privilege of
owning more and in some cases it is dual ownership, what is in it immediately
and tangibly for the screen rather than the broadcasting system. You know, the
Boys and Girls Club is fine, but is it appropriate in this
1338 Miss Mawhinney is laughing here so
maybe she has some great tricks up her sleeve.
1339 MS MAWHINNEY: No, I just know Kevin
loves the Boys and Girls Club.
1340 COMMISSIONER WYLIE: Ah, exactly!
--- Laughter / Rires
1341 MR. SHEA: They are a struggling
1342 COMMISSIONER WYLIE: I have made my
point. You may not get a promotion for a while.
1343 COMMISSIONER WYLIE: Commissioner
Wylie, I was very disheartened when one of the intervenors took a shot at the
poor little Boys and Girls Club of Canada. They are 100 years old, they are
celebrating their big anniversary in Halifax this year. They are desperate,
desperate for funding.
1344 COMMISSIONER WYLIE: Well, Global is
welcome to give them some money.
1345 MR. SHEA: The kind of funding that we
are ascribing here is directly on the screen because all $250,000 of that goes
to support the awareness and those are key elements in the broadcasting system,
and if it sounds corny, I apologize, but --
1346 COMMISSIONER WYLIE: Well, I many have
chosen the wrong example. There are, for example, endowments. They are all very
good projects, but if we were to find that they are eligible but in our view not
appropriate for the size of the transaction and instead we want to see more on
the screen, more immediately, more directly.
1347 I don't know what legal counsel
thinks, but perhaps you can, if not immediately, think of what the reallocation
would be instead to the POPs fund for a more immediate result.
1348 This morning I asked you: What will
happen to the CHEK initiative, three million and five million tied to CHAN. What
would happen if we only allowed you to buy CHEK? And it seemed very
1349 MR. SHEA: Well, it's complicated
because I think --
1350 COMMISSIONER WYLIE: Could you not
reallocate some funds that are not directly related to the screen instead and
make sure that no matter whether you have CHEK or CHAN, that screen initiative
is fulfilled without cutting corners?
1351 So I think that crystallizes what we
are thinking of when we look at what is going to be better for the CHEK station
and we have these other funds allocated. I counted five million of, you know,
very good things -- endowments, scholarships are good things, but they are
not going to produce programming.
1352 MR. SHEA: Commissioner Wylie --
and I think Mr. Asper also wants to comment -- I guess if I return back to
your policy hearing. While certain aspects of what would be an inappropriate
benchmark for benefits was discussed, I don't think there was really any kind of
dialogue or discussion as to the type and nature.
1353 COMMISSIONER WYLIE: We didn't know at
the time that we would have that result either.
1354 MR. SHEA: Precisely.
1355 COMMISSIONER WYLIE: That is why I am
talking about appropriateness in the circumstances of how things are
1356 MR. SHEA: Right.
1357 COMMISSIONER WYLIE: And we are dancing
as fast as we can. We just want you to dance along.
--- Laughter / Rires
1358 MR. SHEA: Commissioner Wylie, I'll
dance with you any time you want.
--- Laughter / Rires
1359 COMMISSIONER WYLIE: You might be
1360 MR. SHEA: There is an annual. The Boys
and Girls Club is having a ball in July in Halifax.
--- Laughter / Rires
1361 MR. SHEA: And even before this is
approved, we have already undertaken to commit some money to
1362 COMMISSIONER WYLIE: I will make a very
special request of the transcript producers to remove the Boys and Girls
1363 But you know what we are talking
1364 MR. SHEA: Commissioner Wylie, we know
what you are talking about.
1365 COMMISSIONER WYLIE: How do we go from
this to the screen?
1366 MR. SHEA: We know precisely what you
are talking about. One of your fundamental rules in the benefits is that they
have to be incremental to your ongoing expenses and we would say with absolute
certainty the proposal we put forward we can demonstrate is, but when you keep
coming back to saying perhaps all benefits should be tied to something that ends
up on a screen, we then --
1367 COMMISSIONER WYLIE: I didn't say
"all", Mr. Shea.
1368 MR. SHEA: No, no, okay, but a portion
1369 COMMISSIONER WYLIE: I said, some of it
that is not, if we were to reallocate it -- I don't want to get into a
discussion about eligibility, appropriateness considering the size of the
transaction, we are now having others that will have -- is it
1370 MR. SHEA: But I want to stay with your
hypothesis that the bulk or a good percentage, we have a different mix, more
that goes on the screen. The next question then becomes: Are you going to derive
incremental revenue from those initiatives that you are putting on the screen?
And that is where we are going to get into some very, I think, elaborate debate
as to is it truly incremental?
1371 So we only know the rules that
currently exist and we know the type and nature of benefits that have been
previously accepted in the system and I think it's probably a very fair
discussion to say: Are these appropriate? We would say that in the circumstances
that we are currently in, in the system, and where we are at with respect to
other precedents, these are appropriate. Would we like to do them differently
and put the fundamental elements of this on the screen? We would. We would more
than be pleased to do that.
1372 However, then we get into a debate of
what are the revenue implications of that and it becomes a spiral debate at that
point. And that is, I think, why the Commission itself has said, "With respect
to the 8 hours, you cannot tie any economic benefits to that". And yes, it is
fair to say we could go to 9, or 10 or 11, but I think that is a fundamental
change in direction and a real push that may be a bit beyond us at this point in
1373 COMMISSIONER WYLIE: I am sure between
now and the end of this hearing you will have thought of other things rather
than the 8 hours which would end up as immediate and direct benefits on the
screen if some of the benefit is redirected and the amount of redirection may
not be such as to produce a 10 point, but it still would at least improve what
the viewer sees.
1374 MR. ASPER: Madam Commissioner, we
tried to strike a balance. We were working in a bit of a vacuum. There are, as
you know, tens of millions of dollars going into programming. We would certainly
entertain quite happily, as Mr. Shea said, the idea of putting more into
programming and, therefore, reallocating some of the benefits in this
1375 If you are willing to give us some
time to come up with something more concrete in that respect, we would. I think
we would not be as comfortable with a specific type of programming being
required. For example, if you were to say, "Do a 9th hour of Canadian drama, 7,
8 and 9 priority programming" that would be quite restricting for
1376 So we would certainly --
precisely because of what Mr. Shea referred to, there is at least some revenue
for us in that whereas the initiatives that are non-programming are simply money
that goes out the door.
1377 That is why, to some extent, we did
stay away from it because it created that debate. But we are willing to
entertain that kind of a reappropriation and we do think it is appropriate. We
agree with you.
1378 COMMISSIONER WYLIE: And we simply want
some suggestions as to if there were some reallocation, rather than to the POPs
fund, which is what you have proposed, whether you would have some other
suggestions that would make a discussion like the one we had this morning a
little bit less difficult, where, you know, you start with what is available to
the viewer right now, what will be available to the viewer as a result of this
1379 I understand that there will be 16
hours of Canadian programming, of course that is beneficial, but there are other
areas perhaps where there could be improvement as well if we deem some not as
appropriate in the circumstances, even though eligible by the letter of a policy
which was not drafted for this size of transaction perhaps.
1380 MR. ASPER: We understand very
1381 CHAIRPERSON OF THE COMMISSION: Please
understand that if you are the first applicant to come after the TV policy was
adopted, we are the first panel too. So we are really in a kind of learning
curve trying to find the appropriate answer for the existing situation. So we
are really looking.
1382 One comment I would like to make. The
policy doesn't say that the incremental initiatives have to be without any
revenue. It doesn't say that, unless I totally misunderstood.
1383 COMMISSIONER WYLIE: We have had those
1384 MR. SHEA: In previous hearings, in
fairness, Madam Chairperson, we have witnessed questions by the Commission where
certain things have been proposed and the Commission says, "But there is
incremental revenues for you if you do that". So I think it's fair to say we are
the first to go through this.
1385 It would be very helpful to us,
though, to get a better understand, and perhaps staff may be able to enlighten
us or when we come up later, you might be able to enlighten us.
1386 Are there certain benefits that we
proposed that are quite troubling to you?
1387 CHAIRPERSON OF THE COMMISSION: No,
1388 MR. SHEA: Because for us to come up
with a plan that says this is how we would shift them hypothetically, I am sort
of struggling with how I would answer your question.
1389 CHAIRPERSON OF THE COMMISSION: No, we
are raising the question in light of the magnitude, in light of the discussion
we have had on dual ownership and the value to Global of being that third voice,
especially that in some markets you will be the third and the fourth, and that
the recognition that in this country there is still a need to support Canadian
content and Canadian talent and although those initiatives are interesting, they
are not directly all of them transferable immediately into the
1390 So that is really raising the
question -- and certainly the kinds of initiatives around promotion. That
was something that was presented by many intervenors of the TV policy hearing
that we heard many times over.
1391 So it's not to say that it's not an
interesting initiative. It's just that should there be more money than what you
are proposing here? Those are the questions we are raising. It's not a definite
answer. We are just trying to, you know, push your understanding and your own
concerns and see if you can come up with other elements there.
1392 Tu voulais dire quelque
1393 COMMISSIONNER GRAUER: No. I was just
going to say that it's not that they are troubling benefits. It's not difficult
to see when you look at these which are directly related to programming going
onto the screen and which could be seen as community initiatives for which there
is a longer line between the screen, like the Boys and Girls
1394 MR. ASPER: I was just going to
say -- I know I am not the questioner here, but I guess I would ask you,
Commissioner, is it better for -- I guess what we are grappling with is: Is
it better for the system if one producer has one more hour a week, or is it
better if 30 producers have that chance to get to the next stage? And that was
1395 CHAIRPERSON OF THE COMMISSION: That's
not the question at all. I think it has to do -- you know, some initiatives
talk about minutes. I am not saying that it's not valuable and interesting, but
minutes is minutes and it takes many minutes before you get to your hours that
really makes a difference out there. Some others are more in education and
training. They are very valuable, but are they things you would do and that, you
know, are not necessarily immediate onto the screen?
1396 Those are more the questions and it's
not about one project, one producer and how many dollars. It's much more the
kind of regrouping you can make. You know, you can make the benefits per
transaction, per region or per province or per market, or you can say, as staff
has done for us, "Well, there is the category of promotion of Canadian
television and there is the one of education and training and there is the one
of local programming and there is the one of programming".
1397 Is that the best use in terms of
optimization of dollars that will be injected in the next few years in the
Canadian broadcasting system, given all the challenges you have described in
your application and this morning, is that the best use or the optimal use of
1398 MR. ASPER: I think it's very clear
where we both are coming at it from. We were coming at it more from a producer's
point of view. You are actually coming at it more from a consumer's point of
view. You are saying, "What goes on the screen" and these are valuable
components of the system, and I agree. I am not saying one is right or wrong, I
am saying that is just how we have different approaches which, I think, have to
1399 I appreciate that you will give us
some time to give it more thought to come back to you with some kind of ideas as
to how we can be, as you say, more efficient with our dollars.
1400 CHAIRPERSON OF THE COMMISSION: Well,
you know, the responsibility at the end of the day is the public interest, but
the public interest has really a heart and it's the viewers and the citizens and
that is our concern.
1401 MR. ASPER: Of the 9?
1402 CHAIRPERSON OF THE COMMISSION:
1403 MR. ASPER: I take your
1404 CHAIRPERSON OF THE COMMISSION: We will
pursue now with the questions around divestiture that legal counsel, Karen
Moore, will do for us.
1405 MS MOORE: Thank you, Madam
1406 Just before we turn to divestiture,
just a couple of follow up questions. With respect to the annual reporting under
the code of practices, I am wondering if you would be able to commit to having
that filed along with an officer's certificate attesting to the contents of that
report and in particular attesting to the non-duplicative nature of the two
blocks of 8 hours of priority programming?
1407 MR. ASPER: Yes, we
1408 MS MOORE: Thank you.
1409 With respect to the Western
Independent Producers' Fund, there was some discussion earlier today that it is
going to be administered by a board, but you don't have the concrete details at
1410 I just want to confirm that there will
be no board members who have a relationship with Global. It's going to be
1411 MR. ASPER: Yes, that's
1412 MS MOORE: Thank you.
1413 With respect to divestiture, I just
want to note that, of course, no particular predisposition or any predisposition
should be drawn from the scenarios that I am putting to you. These are
hypothetical for the record.
1414 You have indicated in your application
that you plan to divest to CKVU within 18 months following an approval from the
Commission and I would like to know your reactions.
1415 If the Commission were to approve your
application, but were to be concerned about you controlling three stations in
these overlapping markets in the interim, would you implement an authority that
required you either to -- I will give you an a) scenario and a b)
scenario -- a) to place CKVU in trust immediately following a decision
approving it; or b), to keep CHAN and CHEK in trust pending the divestiture of
CKVU? Would you have a preference to one of those scenarios, and if that is the
1416 MR. ASPER: Our preference would be
that like a decision recently rendered by the Commission -- I trust my
facts are correct -- that neither get placed in trust. We would accept a
lesser period -- lesser than the divestiture period -- during which
the assets could all remain out of trust, but my recollection, my understanding
is that the CTV interest in NetStar, for example, is not in trust as the
ownership of TSN is not in trust.
1417 So even though they are required to
divest of one, they still have both of them, and I think there would be every
interest and wish and desire, if we were allowed to retain CHAN and CHEK, to
realize upon the proceeds of CKVU as soon as possible.
1418 So our preference would be that we
would be allowed, like CTV is being allowed with NetStar and TSN, to have of the
assets out of trust at the same time. As I say, we would accept a lesser period,
less than the 18 months. In other words, if it was not divested by a certain
period of time, it would go into trust, but I think that would be our
1419 Out of the two other ones, our
preference, I believe, would be to operate CHAN and CHEK immediately and put
CKVU in trust, if that were what we had to do.
1420 MS MOORE: So notwithstanding your
clear preference to have CHAN and CHEK released from the trust that they are in
now and to have CKVU out of trust if it were, notwithstanding that preference, a
requirement of the Commission that CKVU, for example, be placed in trust
immediately following a decision, your intention would be to implement such an
1421 MR. ASPER: I think if we were required
to do so, we would. As I say, I think it would be very onerous on us. The
ability to maximize the proceeds from the sale of CKVU, if we were approved for
CHAN and CHEK, would be hindered and impaired if it were operated in trust. That
typically is what has happened to the WIC assets. While there has been a period
of trust, the assets typically deteriorate while they are not being managed by a
committed permanent owner.
1422 So that is why we would like some
grace period to leave all of the assets out of trust while we commit and try to
sell them as quickly as possible. There is a risk of financial damage to CanWest
if that were the case.
1423 MS MOORE: And to clarify with the
scenario where CKVU would be placed in trust immediately following an authority,
it would be the trustee that would be implementing the divestiture in that
case -- just to clarify that?
1424 MR. ASPER: Yes.
1425 MS MOORE: Okay. In terms of the
preference for having CKVU in trust rather than CHAN and CHEK, why is that your
1426 MR. ASPER: Because I think if we
were -- you are saying in the event of an approval for ownership of CHAN
and CHEK. I think because we would want to start operating the business we
intend to keep as soon as possible. That is where we would want to bring CanWest
resources to bear immediately on that asset.
1427 MS MOORE: Thank you.
1428 Should divestiture of CHAN or CHEK be
required as a condition of approval, would it be your intention to implement the
authority for the remainder of the application?
1429 MR. ASPER: Sorry. Can you repeat the
1430 MS MOORE: If CHAN or CHEK were
required to be divested of as a condition of the Commission's approval of the
remainder of the application, would you intend to implement that authority?
Would you go ahead with the rest of it even if you couldn't have CHAN or
1431 MR. ASPER: Yes.
1432 MS MOORE: I have a similar question
with respect to divestiture of CHCH. If you were required to divest of CHCH,
would it be your intention to implement an authority for the remainder of the
1433 MR. ASPER: Yes.
1434 MS MOORE: With respect to CFCF in
Montreal, it is my understanding that it is currently in trust and that it is
your intention to divest of CFCF.
1435 MR. ASPER: Yes.
1436 MS MOORE: Are there any developments
in that regard at this time, any updates or you are sill exploring
1437 MR. ASPER: I am under some
confidentiality provisions, but I can say we have retained an investment banker
to sell these stations. They have provided information to interested parties and
the interested parties have expressed interest in acquiring the stations.
--- Laughter / Rires
1438 MR. ASPER: Hence the term "interested
--- Laughter / Rires
1439 MR. ASPER: And this is getting very
1440 Anyway, so the process is well
underway and there are buyers that have expressed their interest at a specified
price and they are now seeking further information.
1441 MS MOORE: I proposed divestiture
scenarios in individual markets. Obviously, another possible scenario is some
combination of those. So for example, if some combination of those individual
divestiture scenarios were combined, if divestiture of CHAN, CHCH and CFCF were
required as a condition of approval of the remainder, would it be your intention
to implement an authority for the remainder of the application?
1442 MR. ASPER: I am not sure I quite
understand what you mean by "implement an authority".
1443 MS MOORE: It's sort of would you go
ahead or would it become pointless to you to have to carry on with the other
aspects of the application that you would have received authority
1444 MR. ASPER: Yes, we
1445 MS MOORE: Thank you.
1446 Just for the record, if we could
please have a copy of the video tape presentation that was used in the context
of your 20-minute presentation that would be helpful.
1447 MR. ASPER: Yes. Can I just add one
more thing though?
1448 I think it's something that hasn't
been discussed today, but it does occur to me that if we were not approved for
all of this application, I think that one of the reasons we agreed or offered to
sell CFCF Montreal, was because of the magnitude of what we fell we were asking
for in terms of exceptions to the policy of duopoly and I think it would be well
within our scope or certainly our intention to revisit the issue if we were not
allowed a duopoly to have CHCH or the CHAN-CHEK combination to then perhaps come
to the Commission and seek to maintain CFCF. I don't rule that
1449 COMMISSIONER GRAUER: You would be the
1450 MR. ASPER: Yes, we would be the
interested party in that case.
1451 MS MOORE: Thank you. Those are my
questions, Madam Chair.
1452 CHAIRPERSON OF THE COMMISSION: Thank
you. Vice-Chair Colville has a question for you.
1453 COMMISSIONER COLVILLE: I couldn't
escape without getting on the record at least once today.
--- Laughter / Rires
1454 COMMISSIONER COLVILLE: After the
discussion that you had just previous to counsel -- this may seem like kind
of a minor point and it is relative to that discussion which I think was
important given the size of this transaction. I just want to follow up, though,
on a response, Mr. Shea, I believe you gave to Commissioner Wylie this
1455 It was in response to an issue
regarding the programming benefits, and I believe you said, "The programming
benefits assume both CH and CHEK are approved..." and then you went on to say
that the issue related to the buying of national program rights and I took it to
mean that your view was if you were going to buy national program rights, you
wanted to lay them off against both of those stations and I believe from reading
your application that you had indicated that you would lay those rights off
against other broadcasters across the country in other markets.
1456 I guess the question that came to mind
was: Given that you are going to be laying those rights off other broadcasters
across the country in any event, why is it contingent, why is this program
benefit assume both CH and CHEK are approved because of that national program
rights issue? I mean, if you just had CH you could just play those rights up
against other broadcasters, presumably someone owning CHEK in
1457 MR. SHEA: Fundamentally and
practically speaking, Commissioner Colville, I think you are correct. On the
assumption that we could get a contributing broadcaster who has an 8-hour
requirement in B.C. to order at the time of placing the order for the content,
in tandem with us. Typically that is not the way it happens. Typically, it's an
individual broadcaster who has ordered the program and it then becomes available
for sale by the producer to other markets.
1458 I think what I was trying to do was to
demonstrate that it's really us having the opportunity to make the decisions for
prime time content on CH and CHEK simultaneously that makes the dual status, if
you will, of its content much more enriched. If you are simply having to make
the decision on that 8 hours for one market and hoping that the producer can
organize the rest of the country, it becomes more difficult to assure that you
are going to have a high quality 8-hour schedule of content.
1459 Having the privilege, if you will, to
make those decisions. from a business planning perspective, simultaneously is
the way we know it can work.
1460 COMMISSIONER COLVILLE: I understand
that that would be your preference, and I am not trying to force you to make a
case for not having the two stations. It's just that you are going to have that
problem in any event in selling off those rights in the rest of the
1461 MR. SHEA: It becomes less significant.
It becomes less arduous because when you have the combination of the B.C. and
Ontario market, you in effect have 80 per cent of the licence fees and in many
cases that is all we may have because other broadcasters may already have made
their decisions on their own 8 hours and that has happened time and time again
in this country where certain shows did not get picked up in other
1462 MR. ASPER: That's what really drove
WIC to acquire Hamilton in the first place is because they didn't have a
certainty of supply for CHEK and I think it's the difference between knowing one
has a lay off to hoping one has a lay off and one knows one is in a position to
take the risk on the higher quality and higher cost program.
1463 COMMISSIONER COLVILLE: Thank
1464 COMMISSIONER WYLIE: For fear that you
leave too depressed --
--- Laughter / Rires
1465 MR. SHEA: We are a little troubled. I
will be quite honest.
1466 COMMISSIONER WYLIE: I would like to
put it into your own perspective. If I look at your Schedule 10, at page 7 where
you talk about the rapid evolution of the system, the importance of timing and
the leverage as reasons for us making an exception to the rules -- or to
the policy, rather, you talk about a window as short as three to five years to
establish brands, do some Internet, new media as well, and at the same time
fulfilling programming obligations to audiences.
1467 If the window is this short, what we
were trying to discuss was: How do you improve your leverage as a broadcaster as
quickly as possible with the benefit or the money you are prepared to put into
the system -- and that is what we mean by "more directly". If the window is
short, it's all the more important to improve yourself as a broadcaster. That's
what we mean by "on the scree" and some of the benefits are perhaps very
indirect and certainly won't yield benefits in that short a
1468 That's the spirit in which we were
1469 MR. ASPER: Well, the way to do it is
very simply getting the best programming and having the best promotion strategy
and having the largest promotion machine. That's what creates the brand and you
get the programming and then you draw the audiences to that programming and try
to keep them there. That is really in a nutshell the strategy.
1470 COMMISSIONER WYLIE: And so the
redirection of benefits that the Commission may not find appropriate to the
promotion side only now, by putting it in the POPs fund. Perhaps you will have
some imaginative ideas as to how to put some into the best programming as well.
I think Mr. Shea -- at least he is nodding.
1471 MR. ASPER: We certainly understand
1472 COMMISSIONER WYLIE: And now you are
smiling. That's what we wanted. We don't want you to leave looking so
--- Laughter / Rires
1473 COMMISSIONER WYLIE: We mean
1474 CHAIRPERSON OF THE COMMISSION: Would
you care to add anything on the record at this point in time?
1475 MR. ASPER: Yes. I think if one were to
read the transcript of today, there are nuggets in different areas of what we
have been trying to say when it comes to the core of what we are asking of you
1476 You asked it earlier today, you asked
the question and this afternoon you asked it again: Why this application is in
the best interest of the system and the Canadian public? And you really asked
why the Commission should adopt another exemption to the policy which restricts
multiple ownership of broadcast stations in a given market?
1477 I guess the answer can be summed up in
the following way: We believe that CanWest is one of only three players in the
Canadian system who can bring the resources, a commitment, the managerial
expertise, the program buying clout and the promotion power to help the stations
in Victoria and Hamilton, to make them succeed.
1478 The other two players I am referring
to when I talk about the three are CHUM and CTV and they themselves would bring,
if not more complicated, certainly the same ownership dilemmas as we do in these
markets and, as I say, probably more so. And each of them, I point out, also had
the opportunity to be here before you today, and specifically in the case of CTV
they chose not to.
1479 We twice during the whole takeover of
WIC offered CTV an opportunity, as I said before, to participate. We offered to
sell them CHAN and CHEK and CFCF as part of it, and they turned us down. Not
only did they do that, they in large part are responsible for us being here
before you today asking to maintain a CHAN-CHEK duopoly because they themselves
advised WIC that they were going to disaffiliate CHAN-CHEK and we faced the
possibility of trying to sell CHAN in particular as a non-CTV affiliate which
would have cost our company several hundred million dollars given the overall
purchase price for WIC.
1480 So coming back to the three players,
we are the ones who took the risk and, as I said, took the chance and came
before you today with these assets. Putting these stations in the hands of
anyone other than CanWest, or the two others I noted, would mean that these
stations would be plagued with a much reduced chance of success.
1481 We believe that we can contribute more
than any other player in the system can and we also believe that any other
purchaser, any other than these three, would be back before you within a very
short period of time seeking relief, seeking redress or seeking some kind of
1482 They simply could not put the
programming on the screen that is essential to success and you have to go back
to the history. Other major players have tried -- McLean-Hunter,
Selkirk and even WIC. They are all testimony to what I am
1483 The people in these communities and
the system as a whole shouldn't be forced to wait any longer. They need a
broadcaster who is relevant to them now and it's now time to approve an owner
who is willing to step up to the plate and augment the programming and what
people see on the screen.
1484 We have a track record and I ask you
to consider our efforts in the past. Quebec, Vancouver, CKVU and MITV. If you
want to see just an example of even a large player who is not part of the system
and who is not part of the markets where there are multiple stations, the Irving
family is as large a player as you can get, but they couldn't make MITV work
because they didn't bring the additional resources.
1485 We rescued Vancouver, we rescued
Quebec, CKMI and we rescued MITV and we made these stations contributors to the
system. We increased the programming that they put on the screens for Canadians
in their communities and we brought the programming from those stations to other
markets in Canada as well.
1486 So we increased local programming in
all of these stations as well as took that programming, particularly Quebec
programming, and brought it to Canada.
1487 I think very importantly a prime
example of where dual station ownership works and has saved and enhanced the
small stations is CHUM's ownership of CKVR. CHUM has done a terrific job of
CKVR, but CKVR was a CBC affiliate. Look at what it is doing today versus what
it was doing five years ago. It is an enhanced station and it's the kind of
example that we think will be borne out in a global CHCH
1488 So we are asking the Commission for
two exceptions to the policy. One is a continuation of what has been the case
for 40 years and we are asking for this at the same time as offering to put more
programming on the screen in that market, more programming than Vancouver Island
has ever had and has ever been offered.
1489 In Hamilton, we are asking for an
exception, but not one that provides an advantage to CanWest, one that merely
acknowledges that there is a disadvantage and that our two main competitors have
multiple stations in those markets, conventional stations, and they have a
significantly larger number of specialty channels than we have.
1490 CHCH needs the support and the viewers
need the quality of service that the people of Barrie or Kitchener get from
their stations, having their partners that I referred to earlier, CTV and
1491 So in short, approving this
application as we have presented it to you will create a second strong private
national system. It will also create two new stronger local stations that will
serve their viewers with better programs and this will result in the creation of
more shared opportunities, shared viewing options, both locally and regionally
and nationally for Canadians.
1492 So that is why, Commissioners, I think
when you add all of that together, this application is indeed, the whole of it
is greater than the sum of its constituent parts.
1493 Thank you.
1494 CHAIRPERSON OF THE COMMISSION: Thank
you very much. Mesdames, Messieurs, thank you and have a good night's rest
1495 We will take five minutes and we will
pursue with the presentation from Corus, then we will stop for the evening and
start the questioning tomorrow.
--- Recess at 1755 / Pause à 1755
--- Upon resuming at 1810 / Reprise à 1810
1496 CHAIRPERSON OF THE COMMISSION: We are
missing Madame Wylie. We have to wait.
1497 You want to dance? She is a great
dancer. You have heard that.
1498 Alors I would ask now Madame la
Secrétaire to introduce our next applicant.
1499 MS VOGEL: Thank you, Madam
1500 Our next applicant today, or the
application is by Corus for authority to acquire all of the issues and
outstanding shares of Purchaser Amalco Co., the amalgamated entity of WIC Radio
Ltd. and WIC Premium Television Ltd.
1501 Consequently, Corus would acquire
control of WIC's radio broadcasting undertaking, control of certain of WIC's pay
and speciality television undertakings, WIC's interest in its specialty
television undertaking and control of one of WIC's VOD
1502 I would invite the panel to proceed
whenever they are ready.
PRESENTATION / PRÉSENTATION
1503 MS SHAW: Thank you and good evening.
Madam Chair and members of the Commission.
1504 My name is Heather Shaw, Executive
Chair of Corus Entertainment. Joining me today on my immediate left is John
Cassaday, President and Chief Executive Officer of Corus. Besides John, is Paul
Robertson, President of our Television Group. Behind me from left to right are
Terry Strain, President of Corus Radio; Kathleen McNair, Vice-President of
Regulatory Affairs and Tom Peddie, Senior Vice-President and Chief Financial
Officer of our company.
1505 We are delighted to be here today to
share with you our enthusiasm at the prospect of assuming stewardship of the
radio and pay television assets of WIC, Western International
1506 Our family is proud of its western
Canadian heritage and extremely pleased that with your approval we will maintain
a strong western Canadian voice created by the Griffiths and Allard families
over the past 35 years.
1507 During the next 20 minutes, and then
through the course of your questioning, we will do our very best to give a full
view of our worthiness and the appropriateness of our request to secure your
approval. In our opening remarks, we will attempt to frame the issues that we
believe are most relevant to your deliberations.
1508 First, we will present an overview of
the environment in which we compete. Second, we will share with you our thinking
on the creation of a structurally separate media company, now known as Corus
Entertainment. Third, we will talk to you about our vision for Corus and about
our plans for the future direction of the WIC assets. And finally, we will
identify why we believe the approval of this application is in the public
1509 Many applicants that have appeared
before the Commission over the past two years have pointed to the pace of change
and the impact of competitive forces as determining factors in their requests
for your approval. We are no different although most recently the pace has been
1510 On the consolidation front, we have
seen the mergers of Disney and ABC, CBS and Viacom, and the granddaddy of all
deals, the recent Time-Warner/AOL transaction.
1511 The strategic implications of the
Time-Warner/AOL merger caused entertainment companies around the world to ask a
number of questions, including, how are positioned to compete? Do we have the
right asset base, critical mass and vision to succeed? If not, what can we do
1512 The response in Canada was swift. The
competing bids by Québécor and Rogers for Vidéotron, the proposed Rogers/Shaw
assets slot and the announced BCE purchase of CTV. With respect to technology,
new players and new devices are providing infinite choice to consumers and
infinite competition for existing players.
1513 For example, high speed Internet
access provides streamed video and audio services, delivering new entertainment
choices. Wireless technology provides Internet access anywhere, any time.
Digitalization of music permits easy downloading to small portable devices.
Personal radio recording devices such as TiVo store television programs for easy
access and enhanced digital technology provides expanded program offerings,
interactivity and increased viewer choice.
1514 So how does Corus fit into this new
environment? J.R. Shaw, who founded Shaw Communications almost 30 years ago,
concluded several years ago that an opportunity existed to create a great
Canadian broadcasting company with a focus on family
1515 The decision to create Corus was
driven by several factors. First, we believed that highly focused management
teams at the helm of separate content and distribution companies could better
respond to the opportunities available.
1516 Second, we realized that with separate
capital structures both companies could realize their full growth potential
independent of each other's ambitions.
1517 And later, as analog capacity
limitations became an industry concern, we felt that structural separation could
help address these concerns. Since our launch, just eight months ago, we have
moved swiftly in the pursuit of these goals. We have put in place a strong
management team with extensive industry experience and an independent board. We
have assembled the necessary capital resource to stimulate production,
exhibition and export of quality Canadian programming and to allow it to compete
in an increasingly global entertainment market place. To this end, we have
applied for a number of innovative Canadian content services.
1518 We appear before you today as a
separate publicly traded company with a shareholder group largely unique to
Corus, including the recent addition of Liberty Media, a strong synergistic U.S.
1519 MR. CASSADAY: Corus is a well-funded
Canadian content company that knows where it is going. We hold the belief that
Canadian programming works.
1520 Our mission is to support the creation
and exhibition of Canadian programming. We believe that Canadian stories must be
told from different perspective to reflect the country's cultural and regional
diversity and to that end we are a strong supporter of Canada's independent
1521 Our vision for the future is to become
as important and respected on the international stage in the field of kids and
music as Bombardier is today in its fields of excellence.
1522 In keeping with this vision, Corus is
dedicated to building on the accomplishments of its existing services, to create
and exhibit more Canadian programming of distinction, the kind that appeals not
only to Canadians, but to audiences worldwide. Corus views this application as
an essential step towards the realization of that vision.
1523 As we meet today in Vancouver, we are
surrounded by majestic forests. It is the tall trees that serve as the support
mechanism for the entire ecosystem creating the environment for growth and
diversity. Canada needs tall trees to safeguard and develop our national
identity and our cultural sovereignty.
1524 Tall trees will ensure that Canadian
artists and producers continue to have outlets for their expression. Corus is a
company capable of being a tall tree for the Canadian broadcasting
1525 As CRTC Commissioners, you have the
responsibility to look into the future of this rapidly consolidating global
market and make a number of very important decisions. You must ask yourselves
which Canadian companies have the ownership stability, investment resources and
the vision to lead? Then you must decide which structure will most benefit the
Canadian broadcasting system in a rapidly changing world.
1526 These decisions that you will make as
to the market structure for Canada's broadcasting future will be your
With your support, Corus will assume a leadership role in making
contributions to the Canadian broadcasting system.
1527 Now, we would like to review with you
why this transaction is in the public interest. First, approval of this
application will ensure that the WIC assets are under the stewardship of a
responsible and focused Canadian broadcasting entity, a company that supports
the creation and exhibition of world-class Canadian programming. It will resolve
the more than two-year uncertainty regarding the future of the WIC assets under
1528 Second, we will strengthen the WIC
services by bringing them under the ownership of a marketing-driven company with
the capacity to undertake new investments in an increasingly competitive
1529 Third, Corus will maintain a strong
western base with operations in Calgary and Edmonton.
1530 Fourth, there are many benefits to
Corus' increased involvement in the children's television area. While Corus will
not control Family Channel or Teletoon, we are enthusiastic about ways that we
can work together with the other shareholders to create and market more
excellent Canadian kids' programming. This can be accomplished with multiple
windows to generate maximum licence fees, strong cross-promotion and new media
1531 We believe in partnership with all the
stakeholders that we could, in fact, pursue exciting new initiatives such as an
international kids' channel showcasing the best Canadian
1532 Fifth, we now know that movie services
are the major driver in attracting new subscribers to digital. Effective
marketing of digital program packages will need to be a highly cooperative
venture among the key Canadian stakeholders.
1533 Corus will make a major contribution
to the widespread deployment of digital by creating an appealing range of themed
movie services and effectively marketing these initiatives.
1534 Corus' efforts to drive digital
penetration to higher levels will enable widespread success of new Canadian
1535 Sixth, we welcome the opportunity to
lead Canadian radio to the levels of market growth achieved in the United States
from the benefit of consolidated ownership. As the first major broadcaster to
consolidate stations in Canada's major markets, we will ensure format diversity
and distinct news voices for the radio services.
1536 We will harness technological
developments to ensure that radio listeners can benefit from improved sound
quality, particularly elevating Canada's current AM licences. We will contribute
to the advancement of announcing, reporting, production and management skills by
providing the training and mobility possible in a company of our size and with
our commitment to radio.
1537 In your notice of public hearing, you
asked us to address possible concerns about Corus' ownership of the WIC assets.
We do not believe that this transaction raises significant issues for the
following reasons, and there are four that we would like to touch upon with you
1538 First of all, Corus is a structurally
separate company with its own board of directors and with separate ownership.
Corus is not owned or controlled by a cable television company.
1539 Second, digital technology is
eliminating capacity constraints. The general interest pay television services
that we are seeking to acquire are distributed in digital format on virtually
all Shaw cable systems and there are no analog access issues with respect to
Family Channel or Teletoon.
1540 Third, competition is increasing at a
rapid rate in the broadcast distribution market. It is estimated that DTH alone
will have more than one million subscribers by the end of this year. In western
Canada ExpressVu and Star Choice deliver more subscribers to WIC's premium
services than do Shaw or Rogers.
1541 Fourth, the Commission has established
transparent access rules for the distribution of analog services, put in place
regulations and other mechanisms to prevent undue preference or discrimination.
New access rules have also been established for the digital
1542 To deny Corus the opportunity as a
developing company to assume this leadership role, the opportunity to serve as a
tall tree for Canadian broadcasting because of a fear of some future injustice
would be most unfair to Corus. To violate your trust would be unconscionable and
we as Corus management commit today that we will not ask for or be a party to
1543 Finally, as you well know, there have
been significant changes in the broadcasting environment since 1995 when the
Commission announced its convergence policy. In fact, there have been numerous
examples of your response to these changes.
1544 In the past two years alone, you have
announced new policies for the future direction of Canadian radio and television
recognizing the benefits of consolidation. You have also developed an innovative
approach to licensing of new digital services and you are one of the first
regulatory agencies to establish a framework for new media.
1545 These new policies recognize that we
are now operating in a radically different environment, one which is intensely
more competitive and in which strong Canadian programming companies are more
vital than ever to the health of the Canadian broadcasting
1546 Corus is well positioned to be a very
effective contributing force in Canadian broadcasting and this application is an
important step towards this goal.
1547 MS SHAW: Our application describes a
variety of reasons why approval would be a benefit to WIC's radio and premium
television interests and to the Canadian broadcasting system.
1548 We have proposed tangible benefits
totalling $24.5 million which are summarized in our supplementary brief. They
include, $8 million for the Canadian Independent Television and Film Production
Community to create a number of Canadian feature-length theatrical productions
intended for family audiences as well as teen-directed drama series. More than
$1.5 million for child-centred documentary projets based on stories about the
culture of Canada's aboriginal peoples and profiling Canadian children at the
beginning of the new millennium.
1549 Significant financial support for the
Canadian music industry through contributions of $6 million to the Starmaker
marketing and promotion fund, $4 million to FACTOR and $1.3 million to be
allocated to a variety of musical and cultural organizations in the cities where
the WIC radio stations are located, a $700,000 initiative to support campus
radio stations across the country. Also a $1.5 million initiative for young film
makers to develop their craft and to assist regional producers of children's
programming to gain access to world markets. One million dollars to complete the
national roll out of a media literacy program geared to children which has been
applauded from parents and educators throughout Alberta and $325,000 for a
special five-year initiative featuring Canadian children's programming at the
Banff Television Festival.
1550 MR. CASSADAY: We hope that we have
been able to convey to you this evening a sense of tremendous promise in our
application for Canadian broadcasting and the public it serves.
1551 We are thrilled by the opportunity and
need only your approval to turn opportunity into reality.
1552 That concludes our presentation and we
would be pleased to answer any questions or suspend until tomorrow morning.
Whatever you wish.
1553 CHAIRPERSON OF THE COMMISSION: Well,
with your permission, we will suspend for tonight and we will pursue tomorrow
morning at eight o'clock.
1554 It is going to be Vice-Chair Colville,
Commissioner Pennefather and Commissioner Grauer who will be questioning
1555 Thank you very much for your patience.
Have a pleasant evening and see you tomorrow.
1556 Thank you all.
--- Whereupon the hearing adjourned at 1827 to resume
on Wednesday, April 26, 2000 at 0800 / L'audience
est ajournée à 1827, pour reprendre le mercredi
26 avril 2000 à 0800