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 LICENCES TO OPERATE NEW PAY AND SPECIALTY
SERVICES FOR DIGITAL DISTRIBUTION / DEMANDES DE LICENCES
VISANT LA DISTRIBUTION NUMÉRIQUE DE NOUVEAUX SERVICES DE
TÉLÉVISION SPÉCIALISÉE ET PAYANTE
HELD AT: TENUE À:
Conference Centre Centre de Conférences
Outaouais Room Salle Outaouais
Hull, Quebec Hull (Québec)
August 14, 2000 le 14 août 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
Applications for Licences to operate New Pay and Specialty
Services for Digital Distribution / Demandes de licences
visant la distribution numérique de nouveaux services de
télévision spécialisée et payante
BEFORE / DEVANT:
Françoise Bertrand Chairperson of the
Commission / Présidente
Andrée Wylie Chairperson / Présidente
Jean-Marc Demers Commissioner / Conseiller
Ronald Williams Commissioner / Conseiller
Martha Wilson Commissioner / Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
Peter Cussons Hearing Manager
Secretary / Gérant de
l'audience et secrétaire
Alastair Stewart Legal Counsel /
Peter McCallum Legal Counsel /
HELD AT: TENUE À:
Conference Centre Centre de Conférences
Outaouais Room Salle Outaouais
Hull, Quebec Hull (Québec)
August 14, 2000 le 14 août 2000
TABLE OF CONTENTS / TABLE DES MATIÈRES
PRESENTATION BY / PRÉSENTATION PAR
Alliance Atlantis Communications Inc. 12
PRESENTATION BY / PRÉSENTATION PAR
Rogers Broadcasting Limited 157
Hull, Quebec /Hull (Québec)
--- Upon commencing on Monday, August 14, 2000
at 0900 / L'audience commence le lundi 14
août 2000 à 0900
1 THE CHAIRPERSON: Ladies and gentlemen, good
morning and welcome to this public hearing to consider applications for new
digital pay and specialty television programming undertakings.
2 This hearing will also consider applications for
new pay-per-view and video on demand service.
3 I am Andrée Wylie, Vice-Chair Broadcasting and I
will be presiding over this hearing. Joining me on the panel are to my right
Madame Françoise Bertrand, Commission Chairperson. To her right Jean-Marc
Demers, National Commissioner, to my left Ronald Williams, Commissioner for
Alberta and Northwest Territories and to his left Martha Wilson, Commissioner
4 I would also like to present the Commission's
staff who will be assisting us for this hearing. Commission counsel Alastair
Stewart and Peter McCallum, and Hearing Manager and Secretary Peter Cussons. As
well, Martine Vallée, head of the staff team for this hearing.
5 Please don't hesitate to speak to them if you
have any procedural questions.
6 This hearing is significant primarily because it
marks the new stage for Canada in its progression towards digital era, and for
the Commission in harnessing new technologies and furthering the objectives of
the Broadcasting Act, an era that will offer us more opportunities to bring the
world to our doorstep, to promote and maintain a healthy balance of programming
sources in our Canadian broadcasting system and to offer Canadian consumers more
choices in programming services, particularly more Canadian
7 Cette audience est aussi une première pour le
Conseil compte tenu du nombre important de demandes de licences reçues, plus de
450, provenant de différents secteurs de l'industrie et d'ailleurs, de joueurs
existants et de nouveaux venus. Et quel choix de services! Les nouveaux services
de télévision proposés portent sur des sujets comme la musique, le yoga, le
droit, les relations inter-personnelles, les animaux domestiques, et j'en
8 In February 1999, the Commission issued a call
for comments to determine the opinions of interested parties on various issues
related to the creation of a new licensing framework for pay and specialty
9 These included whether new licences should be
issued in the changing environment, the mode of distribution and what criteria
should be used for issuing new licences.
10 On January 13, 2000, the Commission announced a
licensing framework. it set out the guidelines it would use to issue licences
for new pay and specialty services to be distributed in digital mode only. The
Commission decided to create two categories of new services.
11 Les services de Catégorie 1 seront des services
spécialisés qui contribueront dans une grande mesure au développement, à la
diversité et à la distribution de la programmation canadienne. Ce seront les
plus attrayants dans le cadre d'une distribution à court terme.
12 Les services de Catégorie 1 ne pourront pas être
en concurrence directe les uns avec les autres ni avec les services payants ou
spécialisés existants. Tous les distributeurs canadiens utilisant la technologie
numérique devront distribuer des services de Catégorie 1 en tenant compte de la
langue du marché.
13 Et enfin, le Conseil s'attend à autoriser
environ une dizaine de services Catégorie 1 suivant la formule d'un service par
14 Le Conseil entendra 88 demandes lors d'un
processus qui sera nécessairement concurrentiel pour toutes les requérantes.
Soixante-douze de ces demandes visent des services de langue anglais, 13
demandes visent un service de langue française, et trois demandes visent des
15 De plus, tel que précisé dans l'avis d'audience
publique, pendant l'examen de ces demandes nous explorerons le rôle que les
services de langue française étrangers pourraient jouer pour augmenter la
disponibilité et la diversité de la programmation de langue française au
16 Category 2 services will not have guaranteed
distribution rights. The Commission will licence a limited number of Category 2
services on an open entry basis as long as they satisfy certain basic
17 Proposed Category 2 services may not be in
direct competition with any proposed Category 1 of existing pay or specialty
analog services, but they may be competitive with each other. The Commission has
received 361 Category 2 applications.
18 And now I would like to turn to the hearing
procedure which has been simplified to the extent possible in light of the large
volume of applications to be considered.
19 As no Category 2 applicant has been asked to
appear at this hearing, and in conformity with the spirit of our digital
framework, hearing participants must confine their comments to Category 1
20 Category 1 applications have been grouped and
will be heard by applicant or corporate group rather than by type. Each group
has been advised of the date of its appearance and of the time allowed for its
21 We expect the hearing to last approximately four
weeks. During the first part of the hearing, we will examine Category 1
applications. This will be followed by an examination of the applications for
pay-per-view and video-on-demand services.
22 Our examination of the Category 1 applications
will take place in four phases. First, the Commission will hear the 88 Category
1 applications. The proposed order for this portion of the hearing is available
on the CRTC Web site and also the hearing agenda.
23 Due to the number of applications being heard,
we will expect all parties to cooperate in keeping to the announced schedules
and to the time allowed for their appearance.
24 In the second phase, each applicant or corporate
group will be given the opportunity to make comments on the other applications.
We will hear from these applicants in the same order as in Phase
25 In the third phase, we will hear interventions
from other parties regarding these applications. We will hear general comments
first from other parties not directed to specific applications, including
comments on the issue of the distribution of non-Canadian French-language
services I referred to already.
26 Then we will hear from those with comments and
objections related to specific applications.
27 We will then hear from intervenors in support of
the applications. So as to allow as many people as possible to make their views
known, the panel may not engage in discussion with or ask questions of
supporting intervenors unless it appears to be necessary.
28 We want to emphasize however that all
interventions are of great importance to the Commission. They are transcribed
and their form part of the record.
29 In the fourth phase, the applicants will come
back in reverse order and reply to all interventions and comments. I would like
to put all applicants on notice that at that phase we might ask them since they
will have heard all other applicants to tell us to which two or three of their
applications we should give priority in licensing and why.
30 Après notre examen des demandes de la Catégorie
1, nous entendrons les requérantes qui souhaitent exploiter des services à la
carte et vidéos sur demande. Le format de cette partie de l'audience a été
modifié pour refléter la situation non-concurrentielle des six
31 Nous commencerons par une présentation de
groupes de 15 minutes données par trois des requérantes nous expliquant comment
fonctionne la technologie de vidéos sur demande. Nous entendrons ensuite les
présentations individuelles de chaque requérante.
32 Dans l'étape deux de cette partie de l'audience,
nous entendrons toutes les interventions. Dans l'étape trois, toutes les
requérantes répondront aux interventions en ordre inversé.
33 Before we move onto a few housekeeping matters,
I would like to touch on a couple of issues. First, in their submissions, a
number of parties discussed the migration of existing services from analog to
digital distribution. This hearing will not address such analog migration
issues. These will be discussed in a separate proceeding following a procedure
which was the subject of a recent public notice.
34 Secondly, parties are reminded that the analysis
of ownership and control will be completed after the oral part of the
35 Although we reserve the right to ask for
clarification regarding Canadian ownership and control issues following the oral
phase of the hearing, we do not intend to examine such issues during the oral
36 Thirdly, I would like to point out that the CCTA
has recently filed its CableLabs report. This report addresses the state of the
technology and the state of the industry without addressing any particular
application and these documents will be added to the CRTC Web site as soon as
possible if it hasn't already, but my understanding is that it is available on
37 Now, I would like to go over some housekeeping
matters with you. The proceedings will be transcribed and placed on the public
record. I ask that you turn off your cell phones and pagers when you are in the
hearing room. They are an unwelcome distraction for both applicants and
commissioners and, as you all know, especially to grandmothers.
--- Laughter / Rires
38 They are not used to cell phones. Your
cooperation in this regard would be greatly appreciated at all times. Usually it
works the first day, but it starts ringing on the third.
39 CPAC will be covering this hearing live. It
should facilitate keeping track of developments for all parties during this
40 We will sit every day, Monday to Friday,
beginning at 8:30. Every effort will be made to keep reasonable hearing
41 As I said earlier, we hope to be finished within
four weeks. If we have to modify the hearing schedule in order to meet this goal
I will keep you informed.
42 I now call upon the Secretary, Mr. Peter
Cussons, to explain the procedures to be followed.
43 MR. CUSSONS: Thank you, Madam Chair. Good
44 There are just a few points I would like to
mention before I introduce the first applicant.
45 I would like to confirm that the CRTC
examination room is next door, the Papineau Room, where anyone can view the
applications considered at the hearing, along with any related documents,
interventions and replies.
46 There is also a monitor set up so that people in
the examination room can still follow the hearing, thanks to
47 In order to ensure that the transcripts for the
hearing are accurate, before speaking you must turn on your microphone by
pushing the small button in front of you. The microphone must be turned off when
you are not speaking to avoid creating interference. The red light indicates
whether the microphone is on or off.
48 Also, while I realize that everyone wants to
make the best use of the time allotted to them, it would be appreciated by the
panel, legal counsel, and particularly our hard-working translators if people
would not speak too quickly. We don't want to miss anything.
49 The panel Chair has already mentioned the
processes that will take place in dealing with the Category 1 pay-per-view and
video-on-demand applications. All applications and appearing intervenors should
now be aware of the time that has been granted to them for their presentations
50 As we start Phase I of the competitive process
for Category 1 applications this morning, I remind the applicants that the time
allotted for their presentations is in accordance with the formula specified in
the Notice of Public Hearing, based on the number of different Category 1
applications that they have filed.
51 In keeping with past practice, the timing of
presentations will not commence until all members of an applicant's team have
been introduced. At the same time, in fairness to all parties, when the clock
starts I intend to be very conscientious in ensuring that people do not exceed
their time limit.
52 The agenda that is now available concerns the
specialty applications. A list of appearing intervenors will also follow, as
well as a separate agenda for the pay-per-view and video-on-demand applications
and related interventions.
53 One final matter: For those not aware, the
company formally known as 90721184 Quebec Inc. has changed its name to Diffusion
Quebecor Inc., or in English, Quebecor Broadcast Inc.
54 Quebecor has applied for licences for the
following services which we will consider later in the week: specifically,
Téléservice, Canal Nature, Canal F, and ARC-en-ciel, the Rainbow
55 I am now pleased to introduce the first
applicant of our hearing, Alliance Atlantis Broadcasting Incorporated, which is
proposing four services: The Independent Film and Documentary Channel, Health
Network Canada, The Book Channel, and Signature Television. I will ask Mr.
MacMillan to introduce his team and make the presentation, for which, sir, you
have 35 minutes.
PRESENTATION / PRÉSENTATION
56 MR. MacMILLAN: Good morning, Madam Chair and
Commissioners. My name is Michael MacMillan. I am the Chairman and CEO of
Alliance Atlantis Communications Inc. I am here with the Alliance Atlantis team
to present our applications for Category 1 specialty digital
57 We are very honoured to be the first applicant
to make a presentation to you at this hearing. Since we have four applications
before you, I hope you will forgive us for the number of troops we have brought
with us. We have very specific resources required for each of the applications
and we wanted to make sure that all of those resources were available to
58 Let me start by introducing our
59 From our broadcast division and to my immediate
right: Phyllis Yaffe, President; Rita Cugini, Vice-President, Business
Development; and Norm Bolen, Senior Vice-President Programming for Showcase and
60 To my immediate left: Rita Middleton, Senior
Vice-President Finance and Corporate Development, and Laura Michalchyshyn,
Vice-President Programming at Showcase.
61 Directly behind Laura: Barbara Jones,
Vice-President, On-line. Barbara has just recently joined Alliance Atlantis
Broadcasting and she brings a wealth of experience in the world of interactivity
and on-line ventures.
62 Continuing with the back row, to Barbara's
right: Kathleen Brown, Vice-President Business and Legal Affairs; Dr. Brian
Goldman, who is with us here today not only as a consultant but also as the
chair of the advisory committee of one of our applications, Health Network
63 To his right: Barbara Williams, Senior
Vice-President Programming, HGTV Canada and Life Network; Jack Rabinovitch,
Chairman, Associated Producers Inc.; and Jane Armstrong, Senior Vice-President,
Environics Research Group.
64 Moving to the side table: Peter Grant, Partner
at McCarthy Tetrault; Pat Fili-Krushel, CEO WebMD Health Network, which is our
partner in Canada's Health Network application; and Kathy Kastner, Director of
Programming and CEO of The Health Television System. Kathy began producing
health education programs for hospitalized patients and their families in 1993,
and the service is now in 47 teaching hospitals, reaching 1.2 million
65 Next to Kathy is Sydney Suissa, Vice-President
Programming, History Television; Brad Alles, Vice-President Sales; Janet
Eastwood, Senior Vice-President, Marketing, Communications and Creative
Services; Lisa Lyons, Vice-President Distribution and Affiliate Relations; and
Harvey Rogers, Vice-President Operations and Engineering.
66 That is our team.
67 Madam Chair and Commissioners, this hearing,
obviously, is a watershed. It puts Canada in the forefront in the development
and launch of new digital programming services.
68 We hope that Canadians at home will watch these
hearings on CPAC. If they do, they will get a unique window into an exciting
69 Over the next few weeks we frankly think that
Canadians will be amazed at what is in store for them, through our company and
through many others.
70 As we speak today, there are already 1.4 million
digital subscribers to multichannel television in Canada. That is about 14 per
cent of television households. By digital subscribers I mean people with an
addressable digital set-top box in their home, able to access hundreds of
71 We have already entered the digital world. But
the digital boxes out there today are still very much like the early VCRs. When
VCRs first became available in the early and mid-1980s they were high cost and
relatively few movie titles were available for rent or for sale. But once those
issues were addressed, look what happened to VCR penetration over the next few
72 Today digital set-top boxes offer quality
reception and a much better program guide, but the list of program services they
offer -- specialty, pay and pay per view -- is still largely carried
over from the analog era.
73 What is holding the digital boxes back from real
growth is quite simple. We lack a critical mass of exciting new program services
that are responsive to Canadian interest and demand and that will take digital
box penetration to a whole new level.
74 With this hearing all of that
75 There are programming services being applied for
in this hearing, including our own, that we think will drive digital box
penetration steadily upwards. If all goes well, by the end of year 7 we expect
that over half of Canadian homes will have a digital set-top
76 By adding new program services in this way and
stimulating demand, in fact, the digital set-top box has the potential to be as
ubiquitous as the VCR or the CD or the cell phone.
77 What kind of services will be attractive enough
to drive box penetration?
78 We have four new services to propose. To
introduce you to them, I will turn now to Phyllis Yaffe, the President of
Alliance Atlantis Broadcasting.
79 MS YAFFE: Thank you, Michael.
80 Good morning, Madam Chair and members of the
81 Over the last seven years I have had the
privilege of launching two of Canada's most successful and innovative specialty
services: Showcase and History Television. I also am proud to manage Life
Network, Home and Garden Television Canada, and the soon-to-be-launched Food
82 But as Michael noted, to drive the digital
future we need exciting new Canadian program services.
83 Alliance Atlantis has four to propose to you
today: an independent film and documentary channel, a channel devoted to
biography programming, a health and wellness channel, and a channel focused
entirely on the world of books.
84 Each of these channels will be distinctive,
appealing, affordable and uniquely interesting to Canadians.
85 Let me start with our proposal for The
Independent Film and Documentary Channel. This channel is near and dear to our
86 The term "independent" means everything to us.
In the film world, of course, the term "independent film" means a theatrical
film or documentary produced without the development or financing support of a
major Hollywood studio. That has been the story of the Canadian film industry,
and that has been the story of Alliance Atlantis.
87 In fact, there is no company in Canada that has
a closer involvement with the history of Canadian independent film than Alliance
Atlantis. That is why we have a special interest in this
88 This service will give you, in a phrase, the
"best films you've never seen".
89 To tell you about these films, let me introduce
Laura Michalchyshyn, our resident expert on the indie film sector in Canada and
abroad, and herself an award-winning documentary filmmaker.
90 MS MICHALCHYSHYN: Thank you,
91 Madam Chair, I program the Showcase specialty
service, including the independent films appearing every evening on the
"Showcase Revue". This is one of Showcase's most popular program strands,
showing indie films from around the world.
92 The concept of the Independent Film and
Documentary Channel is to take the Showcase Review to its logical conclusion: to
launch a new service devoted entirely to the world of indie films and
documentaries 24 hours a day.
93 There are two U.S. services with this concept:
the Sundance Channel and the Independent Film Channel. But what our service
would provide is not only the international indie films but, also, a powerful
window for Canadian films and documentaries. The schedule would start out at 50
per cent Canadian and would rise to over 60 per cent over the period of the
94 Independent filmmakers are a breed unto
themselves, yet, they all share one trait; and that is the belief and insistence
on telling stories from their own unique perspective, independent of the
Hollywood studies, which dictate both the type of films made and how they are
95 So, what will the channel look like on the air?
Here is a brief video to give you an idea.
--- Video presentation / Présentation vidéo
96 MS MICHALCHYSHYN: We know this channel will be a
97 The experience of the many film festivals across
Canada -- where unknown, off-beat films often get sell-out audiences -- tells us
that there is a real interest in the harder edge, quirky, non-mainstream kind of
film. Whether you are at the Hot Docs Festival, in Toronto, the Local Heroes
Festival, in Winnipeg, the Atlantic Film Festival, in Halifax, or the
Imagination, the Gay and Lesbian Film and Video Festival, in Montreal, there is
an intense demand for films and documentaries with a different vision. And our
experience, with the Showcase Revue, shows that this interest is not confined to
a few urban areas but is actually found throughout Canada.
98 If licensed, this service is projected to spend
over $19 million on Canadian program expenditures. That is over 35 per cent of
our projected revenue.
99 But over and above that, if this service is
licensed, Alliance Atlantis will invigorate Canada's film industry and Canadian
independent filmmakers with an unprecedented corporate
100 MR. MacMILLAN: The problems of the Canadian
feature film industry are well known; they were reviewed in the report of the
Feature Film Advisory Committee, just last year, and a new government policy is
expected to be announced shortly.
101 If our channel is licensed, this will increase
television access for feature films and documentaries -- and it will add some
licence fees. But that alone will only go part way to address the fundamental
problem; and that is, the chronic lack of funding for independent film and
102 As the single largest player in the Canadian
film industry, Alliance Atlantis has a special role to play in addressing the
problem. And we propose to make an unprecedented new commitment for the benefit
of the independent production industry. If we are licensed to operate this
service, Alliance Atlantis will spend $140 million in cash, over the licence
term, on the financing of new Canadian films and documentaries made by
non-affiliated Canadian companies.
103 Over the last number of years, we have never
expended sums of that magnitude with non-affiliated producers for Canadian
feature films. The most we have ever expended has been $5 million, in one recent
year, but typically less -- and, of course, we have no regulatory obligation to
104 So the $140 million commitment from Alliance
Atlantis -- that is, $20 million each year, for seven years -- is an incredible
new development for the independent film industry in Canada. It reflects our
view of the importance of this channel, as well as our commitment to the cause
of independent films and documentaries.
105 MS. YAFFE: Thank you, Michael.
106 I would like to turn, now, to our second
application. Called "Signature Television", it will be devoted entirely to
programming of a biographical nature. In a phrase, the service will give
Canadian viewers the greatest stories ever lived, with profiles, interviews,
documentaries and dramas about people with interesting lives.
107 This is a programming concept that will be very
popular. Survey after survey ranks a biography-type channel as among the top
three of the formats tested.
108 I will ask Norm Bolen, the Senior
Vice-President of Programming for History and Showcase, to tell you more about
what we plan for this service.
109 MR. BOLEN: Thank you, Phyllis.
110 Good morning, Madam Chair.
111 Signature Television will build on the lessons
we have learned at History Television; and a key lesson is that Canadians are
hungry for factual stories about Canadians. Our program stream entitled "The
Canadians", for example, had a cumulative viewership, on History Television, of
more than 3.4 million. "A Scattering of Seeds", our documentary series on
immigrants to Canada, had a cumulative viewership of more than 5
112 Of course, Canadians are also interested in the
stories of American celebrities as well -- but they can see those stories every
night, on U.S. services already available in Canada. So, if this service is to
succeed, it must do much more. It needs to focus on Canadian
113 For this reason, we have committed to a
Canadian content level of at least 60 per cent, right from the start of the
service, and we expect to spend over $32 million on Canadian programs in the
biography genre over the period of the licence.
114 This is also a channel that will be able to
focus on more than just the heroes and celebrities. If you take a look at one of
the most popular daily features in the Globe and Mail, "Lives Lived", it is
noteworthy that many of the lives described are not of politicians or
celebrities; they are of ordinary people who had something special in their
lives -- and that's what we intend to capture in Signature
115 The service will also tie in with the Internet.
Our Web site will be linked to genealogical organizations and Web sites across
Canada to cross-promote the channel to Canadians interested in the personal
history of their forebears.
116 Through this approach, we will create what we
call "The Canadian Family Album Project", a collection of family archives,
photos, diaries and letters which will also form the basis for selected
117 So, with that background, let me show you, in a
short video, some of what we have in mind.
--- Video presentation / Présentation vidéo
118 MS YAFFE: Thank you, Norm.
119 I would now like to tell you about our third
application: Health Network Canada.
120 This service will offer Canadian viewers a
24-hour seven-days-a-week schedule dedicated to programming that explores
health, wellness and medicine.
121 I will now turn to Barbara Williams to give you
122 Barbara is the Senior Vice-President,
Programming, for Life Network, Home and Garden Television Canada and Food
Network Canada and has been instrumental in developing the program concepts for
Health Network Canada.
123 MS. WILLIAMS: Thank you,
124 It is hard to overestimate the importance of a
health and wellness service for Canadians. Canadians are very concerned about
their health and about their healthcare system, probably never more so than
125 But to create a strong Canadian health service,
you need strong partners, both at home and abroad. With that in mind, Alliance
Atlantis has joined with WebMD International to create Health Network Canada.
WebMD International is a joint venture of Fox' Health Network and Healtheon
126 The Health Network -- formerly FitTV -- is
already on the eligible list. We represent that service in Canada and it has
almost 500,000 digital subscribers in this country. If Health Network Canada is
licensed, however, our U.S. partner has agreed to have their service dropped
from the eligible list.
127 What will Health Network Canada look like? Let
me give you a brief preview.
--- Video presentation / Présentation vidéo
128 MS WILLIAMS: Madam Chair, you can see that this
kind of service will have an extraordinary appeal for Canadians, because it
focuses on an issue that comes before everything else -- one's
129 As the video indicates, our service will be
compelling and compassionate. But in the area of medical information, it is also
crucial that we be accurate and reliable.
130 In that regard, we were delighted to receive an
intervention from the University of Toronto Faculty of Medicine, the largest
medical school in Canada, supporting our application and describing our service
as both "necessary and timely". As you will see from their letter, the Faculty
of Medicine has undertaken to co-operate with us to broadcast educational
programs created by the university.
131 We have also enlisted the support of
Dr. Brian Goldman, who will act as the service's consulting executive
producer. Dr. Goldman is probably Canada's best known broadcast journalist on
health issues, and a recognized authority in his own right on emergency medicine
and pain management.
132 DR. GOLDMAN: Thank you,
133 Good morning, Members of the
134 I have been honoured to be able to work with
the team that has organized the Health Network Canada
135 To ensure that the information on health issues
is reliable and responsive to the needs of Canadians, the service will be able
to draw not only upon my experience but also on an advisory board of
distinguished Canadians in the health field. The members of the board represent
the diversity of the medical and other health professions from coast to coast.
They include Dr. Margaret Somerville of McGill University, Dr. Robert Filler at
the Hospital for Sick Children in Toronto, Linda Turner, a clinical nursing
specialist at the Vancouver Hospital, and Kathy Kastner, who is here with us
today. All of them have agreed to lend their support to make this channel a
Canadian success story.
136 I also want to talk to you about the Internet
and this service. The Internet has caused a revolution in the availability of
medical and health information for consumers. There are thousands of
Web sites and chat lines dealing with every conceivable illness and medical
condition, but all too many of them are unreliable or
137 Health Network Canada will be in a unique
position to address this problem. One of our U.S. partners, Healtheon WebMD,
owns WebMD.com, the most widely consulted healthcare Web site in the world. Last
month alone it had over 140 million page-views from users, including over 1
million page views from Canadians, even though the site is not even promoted in
138 When Health Network Canada is licensed, a new
site will be created called "WebMD Canada" in collaboration with the service,
and it will become a vital and indispensable source of information and exchange
for Canadian health consumers.
139 MS WILLIAMS: Thanks, Dr.
140 Reflecting its focus on Canadian health issues,
Health Network Canada will be 60 per cent Canadian from its inception and that
number will rise to 70 per cent over the licence term. To achieve that goal, we
will be expending more than $38 million on Canadian programming.
141 Our original Canadian programming will include
programs like: The Canadian Health Journal, Family Matters, Medical Frontiers,
and Second Opinion.
142 Health Network Canada will also be affordable,
to ensure that the widest possible audience can subscribe. In a word, we seek to
make this service indispensable for Canadians concerned about their
143 MS YAFFE: Thanks, Barbara.
144 Finally, we come to the fourth service we have
applied for, The Book Channel, a channel for the mind and a channel devoted
entirely to the world of books.
145 This service has a special meaning to me for a
personal reason. I started my professional career as a librarian -- everyone
knows that now --
--- Laughter / Rires
146 MS YAFFE: -- and then became the Executive
Director -- maybe more importantly -- of the Association of Canadian Publishers,
which represents Canada's book publishers. For a number of years, I lived and
breathed books and book publishing in Canada.
147 So when Jack Rabinovitch approached us to
develop a book channel, of course I was hooked right from the
148 Now, a lot of people may have thought: Books?
How could you make a popular television service out of a book channel? Who would
be interested in authors and words?
149 Well, for those doubting Thomases, I recommend
they drop by the SkyDome on October 24, as part of Toronto's International
Authors Festival. There they are likely to find no less than 60,000 people
listening as J.K. Rowling gives readings from her Harry Potter
150 As Rex Murphy recently put it, the audience
"may surpass the most recent Monster Truck Rally and Wrestlemania 4
151 The fact is that Canada does have a secret love
affair with books and authors. Our authors are world renowned, but until
recently, this was rarely noticed in Canadian media.
152 Jack Rabinovitch, who recently received the
Order of Canada, deserves some of the credit for bringing our literary authors
to public attention. Seven years ago, he created the Giller Prize as a tribute
to his late wife, an annual award of $25,000 to the best Canadian work of
fiction in the English language.
153 I will now ask Jack to speak a bit about his
concept for The Book Channel.
154 MR. RABINOVITCH: Thank you,
155 When I created the Giller Prize in 1993, it was
to honour my late wife, Doris Giller. She was an extraordinary woman, a gifted
editor, a dedicated book reviewer, and a woman who devoured novels and loved the
156 Doris would have been delighted to know how the
publishing industry in Canada has been galvanized by the prize named after her.
Publicity from the Giller Prize has increases sales of Canadian hardcover books
by over a million copies.
157 Now I think it is time for a book channel, a
time to bring our authors and books to life through the medium of
158 The Book Channel will be fascinating,
distinctive and popular. In programs like Writer's Voice, Honouring Authors, A
writer's Tale, and Living by the Book, we will have author interviews,
documentaries and film adaptations of the great novels.
159 Canadian programming naturally will be the
foundation of the service starting at 55 per cent of the schedule at launch, and
rising to 65 per cent by the end of the licence term.
160 Our channel will be a platform that will
feature new kinds of writers and will attract new kinds of readers, both young
161 We will also tie the service into an
interactive Web site that will become Canada's book club.
162 This channel will not be a substitute for
books, just as a performing arts channel can never be a substitute for a live
theatrical performance. But what it can do is enhance our books and our
appreciation of the treasures that are in the written word.
163 MS YAFFE: Thank you, Jack.
164 The Book Channel will be distinctive and
interesting, but it will also be popular. It will not be limited to the literary
giants. There is a remarkable diversity in the world of books reflecting a range
of cultures, attitudes and experiences. The Book Channel will celebrate and
explore this diversity, with programs on the new young writers, the new hot
books on computers, and -- dare I suggest -- the Harlequin
165 Just as you now see the books selected by Oprah
Winfrey in her popular daytime television show featured in your local
bookstores, we hope you will see a new table with choices "Recommended by The
166 That takes us to the real question, which is:
What will the service look like?
167 Here is a brief video to give you a look.
--- Video presentation / Présentation vidéo
168 MS YAFFE: Madam Chair and Members of the
Commission, you have now been introduced to the four new services we propose:
The Independent Film and Documentary Channel, Signature Television, Health
Network Canada, and The Book Channel. These will be distinctive, affordable and
attractive services, and unapologetically Canadian.
169 But they also share something else. They all
are uniquely interesting to the people likely to be digital
170 I will ask Jane Armstrong of Environics
Research to tell you more on that point.
171 MS ARMSTRONG: Thank you,
172 Madam Chair, when Environics was first asked by
Alliance Atlantis to assess the appeal of these four services, we did far more
than carry out a standard poll. We also examined the social values database that
we have been developing at Environics since the mid-1980s, a values database
that we call the 3SC Social Values Monitor.
173 One of the findings of our 3SC Monitor is that
many Canadians today are seeking out new points of view and new, perhaps
untried, ways of navigating the complexity of the world in an effort to be
self-reliant and to maximize their enjoyment of life.
174 Each of the services proposed by Alliance
Atlantis will present programming that will offer new, often unconventional
perspectives that may challenge viewers to see the world in a new light. This is
exactly what many Canadians want.
175 But even more telling, we have concluded that
the four services proposed by Alliance Atlantis are precisely the kinds of
services that will appeal to people who are likely to adopt leading edge
technologies and who are likely to buy digital television.
176 Canadians who are open to adopting new
technologies -- which is actually more than half the population -- are
virtually defined by their inclination to question and often reject traditional
authorities and points of view, and by their need to control their destinies
through innovation and exploration. They buy new technologies to help them meet
177 The same motivations will lead these technology
adopters to have a special interest in services like a biography service, a
health service, a book channel and an independent film channel.
178 These are perfect services for the digital
179 MR. MacMILLAN: Thank you, Jane.
180 Madam Chair and Commissioners. We thought long
and hard about what kind of services would work best in a digital environment.
We know that this new environment is going to be more challenging for services
than has ever been the case before.
181 When you come to licensing services that will
survive in that environment, we think you need to ask five hard
182 The first question relates to wholesale rate.
Has the service built its business plan around a rate that is as low as possible
to enable it to be included in affordable, higher penetration digital
183 Our average wholesale rate in packages is only
30 cents, markedly lower than the rate proposed by many others.
184 The second question is how much original
Canadian programming is proposed. To succeed with digital service, we cannot
focus on simply more of the same. We need services that will show programs that
you can't see anywhere else.
185 In all of our services, we have significant
commitments for original programming in each and every year, programs that will
only be available on the new service, and there is a reason for that -- to
drive digital box penetration.
186 A third question is how will your service be
synergistic with existing services? To minimize risk, it is going to be
important to be able to build on existing infrastructure.
187 In our case, we have purposely picked services
that grow out of our existing services, services where we have unique experience
in terms of programming access, and services where cross-promotion will work
especially well. And we have taken a conservative approach to budgeting to
ensure that we achieve our financial plans.
188 The fourth question. Will your services be
integrated with interactive Web sites to increase the likelihood of success, and
did you commit funding to interactivity?
189 In our case, we have developed a unique Web
site strategy for each of our services --Canada's Book Club for the Book
Channel, the Canadian Family Album for Signature, WebMDCanada for Health Network
Canada and Indie Café.com for the Independent Film and Documentary Channel. All
of our services will be compatible with interactive television and that will be
a strong component of the digital future.
190 And fifth and finally, the most important
question. Will this service be an attractive, distinctive and popular service,
not just to the general population, but particularly to those that are digital
191 In our case, we have done the research to
demonstrate that this is true for all four of our service.
192 So we have asked the hard questions and we have
not shied away from addressing them in our applications.
193 There is a reason for that, Madam Chair and
Commissioners. We are believers in the specialty programming business and we are
in it for the long haul.
194 Coming out of this hearing, what we are seeking
is to give Canadians a group of distinctive and attractive services that will be
uniquely interesting and which will present an incredible value.
195 We think that the services that we have
proposed do exactly that. They are services that will make Canada proud and
which will truly launch our digital future.
196 That completes our presentation and we are
eager to answer your questions.
197 THE CHAIRPERSON: Good morning, Mr. MacMillan,
Ms Yaffe and your team.
198 Mr. MacMillan, you, your team and I will be the
guinea pigs for this lengthy public process since we are the first on the agenda
and since the procedure will be slightly altered from what we are all used
199 What I will do is strive in my question to
explore your application in as orderly a fashion as possible, and I know already
that you will give me answers in an orderly fashion -- or else!
--- Laughter / Rires
200 First, I will seek from you some comments on
issues of a more general nature so that you can provide us with your corporate
view on these issues without having to repeat the questions when examining each
201 Next, I will have some questions of
clarification or seeking explanation on your four individual applications, one
at a time, and I will indicate clearly to you when I move from one to the
202 You will understand, of course, the regulatory
risk for your as licensee if we do not treat each as discretely as possible, as
you provide clarification and commitments. And conversely, of course, I invite
you to correct me if I make any error in referring to your application. I am
sure you will understand that having to sort out 88 of those can easily create
203 So first I will start with where you ended
which is the criteria that you feel are necessary for the
Commission -- or that the Commission should focus on in
204 In its call for applications, the Commission
indicated certain selection criteria. Some of them were obviously Canadian
programming, both exhibition levels, amount of original production, Canadian
programming expenditures, diversity, attractiveness for demand, the use of
interactivity, and affordability and the reasonableness of the business
205 You have ended your presentation by focusing on
five of those, and I am curious to hear you about how the Commission should
weigh the importance of these criteria in each case, whether it should be in the
same fashion and whether it should give each the same importance in each genre,
and if not, why not?
206 One of the reasons I am asking you this is
although you made the general comments, if I look, for example, at exhibition
levels, they range from 50 per cent in the first year -- 60 per cent
in the first year to 55 per cent in the 7th year, to 70 per cent in the last
207 If I look at expenditure, they range in the
first year from a low of 30 per cent to a high of 51 per cent. If I look at
original production, that also has a range from 80 hours in one case to 172 in
208 So obviously in preparing your own applications
you have assigned different values to different criteria and we would like to
hear you on how this is arrived at and how the Commission should examine it in
209 MS YAFFE: Thank you, Madam Chair. I would like
to begin, and I will ask Michael to contribute when he feels it appropriate. We
have four applications before you today as Category 1s, each of them
handcrafted, each of them given a great deal of consideration in terms of how we
see those ideas being packaged, being shaped for a successful Canadian
210 We started to create these applications by
asking ourselves these hard questions that Michael ended with by really asking
ourselves some questions about the digital world, not just our own services. I
think we concluded that the first and foremost criteria for all services has to
be: Do we have an attractive concept. Do we have an idea that will make for a
successful television service. Will people really want to watch this
211 Because in the digital world, as we have heard,
packaging and marketing will all be very important, but the consumer will drive
decisions like they have never driven them before.
212 So our first and foremost consideration is: Are
we putting together an attractive looking service that Canadians have shown us,
through our experience in the television business, they would want to watch, and
of course pay for. I think that is a huge issue and I think it should be asked
in every case. For us, of course, both the research that we did through
Environics, but also our experience in the industry, gave us the four categories
that we brought forward today.
213 The balancing of that criteria is perhaps the
214 The second was: How can we make a service that
really does offer diversity to the system and adds Canadian programming at a
level that we think is significant.
215 As you stated in the opening remarks, the
Commission set guidelines for the ultimate Canadian content level but not for
the opening Canadian content level for Category 1s. From our point of view, all
four of these services could sustain, but more importantly deserve to at least
start at that 50 per cent Canadian content level. You will see us grow higher
than that, of course, across each service.
216 But we also had to take into account the third,
and maybe I think --
217 Let me go back to that. That Canadian content,
for us, comes in several different ways. Of course, there is programming we will
acquire from without the system, from the distributors and producers who exist
today, that is already on the shelf or will be made for the service. But what we
also felt was absolutely crucial in the digital world to entice people to buy
the services was to offer them programming they can't find anywhere else. It may
be self-evident, but obviously value will be judged by consumers if they feel
they are getting something they couldn't find other ways.
218 So, for us, we decided that in each
application, as you will see, we would make a commitment, which we would be
happy to accept as a condition of licence, for original hours of Canadian
programming each year, always rising throughout the term of the
219 It is one thing to suggest that you might do
some original programming. It is always nice to keep it as an asset in a bag of
tricks. But what we said was: We commit to it. Because not only do we believe in
the production of Canadian programming, we think it is a fundamental way that
Canadians will judge whether or not they want these services. So we made that a
criteria for all of our services.
220 Then we asked ourselves what else will people
be looking at. I think what they will be looking at is: I want to leap into the
future. I really want to get there, but I don't want to have to spend more money
than I have ever thought was necessary for any entertainment.
221 So we took a very hard look at how do we make
the channels affordable. That was another element that, for us, was absolutely
crucial. We tried to keep that price as low as we possibly
222 Then we said: What will the last -- the
special thing that makes these services so different and so unusual compared to
analog services. And of course it is going to be that they will be layered with
many different layers of interactive potential. Some of that can be realized
very quickly; some of that will take longer to realize. But we will commit in
each application, as we did, a significant amount of money to interactive
development, right from day one.
223 Each of our applications, I think, has over $3
million devoted to interactive kinds of programming. That is a separate
commitment, above and beyond our Canadian content commitments.
224 We looked at the world and we said: Those are
the ways consumers are going to judge us.
225 At this point we would love to have you support
us, as the Commission. We would like you to choose all four. But, at the end of
the day, even if we do get all four licences, we have to sell them to consumers.
So we have to make sure that when the circle is completed we have all of our
ducks in a row.
226 Finally, we said: The way we will sell these
services is with a significant marketing budget. So we agreed, much to our
Vice-President of Marketing's delight, that each service would have
approximately $1.5 million to launch, and continue to have that kind of robust
marketing budget, so that as the boxes roll out we continue to be able to add
227 Maybe that is a long answer, but I think it is
important to say that when you leave the beaten path of analog and walk into the
digital world, you have to have a plan. I think what we did is come to that
plan. These were our sort of -- the framework that we created these
228 We certainly believe, for instance, that a
health network, if it isn't substantially Canadian from the very beginning, is
not going to fulfil Canadians' needs for relevant information. But to balance
that, we all know that a lung or a heart or a liver will probably be information
that will be the same wherever you make television or watch television. So we
took that into account.
229 In The Independent Film and Documentary Channel
we hope we create, with our corporate commitment as well as our dollars, a new
and improved Canadian film industry that will drive more films for that channel,
230 Book to us is so absolutely from the heart and
soul of the Canadian industry -- so much of the talent we have here
just goes unexplored -- that we wanted to commit a significant level there
231 Signature -- I can't imagine a
biography-type service in this country that doesn't say: Clearly, Canadians have
to lead the way in that service. Clearly, it has to offer us opportunities to
learn about each other, because lives are what makes up a country; individuals
who tell our stories. So, for us, that was obvious.
232 I hope that hasn't been too long an
234 MR. MacMILLAN: If I may, I just wanted to add
one observation to this. I think that as digital boxes roll out, and perhaps
even with as much impact or more impact as broadband becomes, soon or
eventually, ubiquitous, and the Internet delivers an even greater selection or a
greater choice, it is going to be very hard for viewers to figure out what to
watch, what to choose from from amongst all of those offerings.
235 To us it seems that very clearly defined,
vertically themed with the channels stand the best chance to be distinctive and
to be different. And we think that our four channels have those vertical
236 But if you are going to be distinctive --
two very important ways. You need original programming. That is one of the most
important aspects to being new and distinctive and different. We can't prove
that Bruce Springsteen is still correct 10 or 15 years on with so many channels
and nothing on.
237 Likewise, an interactive component is also very
critical in making that vertically themed channel distinctive.
238 That is why those two are on the top of our
239 THE CHAIRPERSON: So, obviously, there are
variations in the criteria, depending on the genre and the availability of
programming, et cetera.
240 Your second most important criteria was that it
offered a diverse offering, and this is, of course, central to the framework for
the Category 1 application, since the Commission has said that it would license
one per genre, which, of course, leads us to focus on diversity in a very
241 But it also leads to what appears to be a bit
of a contradiction, that in many cases the point is made that the ability of the
parent company, in some cases due to the fact that they themselves already have
services they control, will help their viability, their affordability and their
ability to contribute to Canadian content.
242 I think you are one of the applicants who has
spoken, for example, of a nesting concept. If I recall, in your health
application, in your supplementary brief at page 406 -- and I don't think
you need to refer to it, but perhaps I do. I believe you spoke of nesting
programming on Showcase, and then moving it to HGTV. Correct?
243 MS YAFFE: Well, something like
244 THE CHAIRPERSON: And then the suggestion that
programming could be nested on the Life Channel and moved to your proposed
245 I think that's a fair rendition of what you
246 MS YAFFE: Yes.
247 THE CHAIRPERSON: That concept, of course, is a
bit contradictory to diversity and original programming, et cetera. So I'm
curious to hear from you, as a licensee -- you are already a licensee, and you
have some applications before us -- as to the significance that the Commission
should give to that in assessing diversity and, therefore, this famous concept
of direct or indirect competition to existing channels or to other proposals.
And I think that you have suggested, as a company, that that be measured by
reference to the question whether a significant part of the programming of the
proposed service forms part of the core mandate of an existing
248 Would that be a fair rendition?
249 MS YAFFE: Yes.
250 THE CHAIRPERSON: Do you think the Commission
should use a percentage -- many applicants -- I don't recall that you have done
that, specifically, as some others have gone through -- although you have, in
some cases -- the offering of existing channels and a percentage of programs
that you feel are competitive, et cetera.
251 So, my question has two prongs,
252 One is: How do you do it?
253 And, secondly: Should we take into
consideration the advantages of whether it's nesting or extending services or
leveraging what you already have because you are a licensee?
254 MS YAFFE: How we did it is one of the ways we
got to the nesting concept. It certainly -- nesting is not a new term, for the
digital era. It was a term that gave us -- we had some terrific experience with,
in our company, when Life Network, which is now six years old, was originally
actually conceived as a combination of services that would nest and give rise to
new services as they matured and grew. And we have seen the success of Home and
Garden Television, which was nested on Life Network, both literally and in
spirit, and we hope to see that kind of success with Food Network Canada, in
255 Health Network, we would argue, is exactly the
same kind of opportunity that Life Network gives rise to because we have always
done, and continue to do, some very successful health programming on Life
256 So it's a question for us -- you know, the
world isn't as straightforward as a simple line. So we appreciate that there is
this complex relationship. Services can give birth to other services. But what
we think they have done by nesting programming there is nurture both the kinds
of programming that we see becoming very popular on these services but also
257 For instance -- and, you know, one of the more
outstanding moments, I think, in my career, is the moment we started Showcase,
where I always describe it as: We turned on a tap that must have been turned off
for many, many years, and that was the availability of independent film from
around the world. Because the very first night Showcase went on the air, and
every night since, a very loyal growing audience has said, "These are exactly
the kinds of films I'd love to see. I've never seen them on television" -- and
you know, Laura receives love letters from across the country with people
saying, "Thank you for bringing me this opportunity to see something I couldn't
see before". And I think that is what we have done with nesting. We have
nurtured a genre which we now think has the ability to take off and fly, I
guess. And so, for us, there is that relationship. You do build an audience. You
do build your experience. And when you have that sufficient critical mass of
both those and the opportunity to come forward today, we think all of these
channels have really, in a way, been nested on our other
258 That isn't to say that we don't believe they
will add something diverse and unfulfilled to the broadcasting system. We do
believe that there will be very little significant overlap service to service as
259 For instance, Home and Garden has really taken
over the gardening part of our schedule, the design part of our schedule and
even the construction part of the schedule at Life Network, and Life Network has
gone a different way -- happily, successful for both services -- and that is
260 We don't really think there would ever be more
than about 10 per cent of our schedules that would actually duplicate themselves
service to service, at any one time. There may be opportunities to share
programming as the services grow -- and, of course, you, in your call, have
suggested that repurpose programming, shared programming, will give the services
an opportunity to survive in what might be dangerous waters as we
261 So, we see it as both a corporate advantage --
it gives us an ability to make sure the services are strong, right from the
start, balanced by a commitment for original programming, which will make new
and exciting things happen on each of these channels -- but, also, we think what
we have is sort of real-life experience that tells us we have genres that people
really want to watch.
262 We do not believe -- and we have never
suggested in any of our written material to you earlier -- that there is a
simple answer to this question when you get to make these decisions. We don't
want to be in your shoes, actually, this time.
263 THE CHAIRPERSON: You will be dragged in whether
you like it or not.
--- Laughter / Rires
264 MS YAFFE: Well, we are sort of up to our
265 THE CHAIRPERSON: I warn you my feet are much
longer than you would believe.
--- Laughter / Rires
266 MS YAFFE: It is a complicated issue, but, for
us, we try to look at it and ask ourselves, "How does one deal with this
competitive issue? How would -- is there a certain percentage? Does the world
unfold that easily?" And, no, it doesn't, not in the real-life situation of
keeping whole television channels on the air.
267 We did try to define, for instance, our issue
around the Showcase comparison to independent film, and we generalized with some
existing principles that I think you have mentioned. The one is a significant
part of its programming, programming that forms the core mandate of an existing
service; that is, that you would understand the service is representing. For us,
for instance, independent film on Showcase is about 33 per cent of its prime
time schedule -- a pretty significant amount. More importantly even than that,
it's about 50 per cent of our audience. More important than that, maybe even, is
that every time we go out to talk to the audience -- and we do it regularly, in
many different ways -- they tell us, "Oh, yes, Showcase. It's that service that
shows those great films that I could never see anywhere". For us, that's how
they describe the service; that's what it means to them. And for us, that's an
important element, in terms of saying it would be directly competitive, in our
view, for someone to take what has become a fundamental part of Showcase outside
of our group.
268 Of course, you know, we realize others might
say, "Well, that's awfully self-serving of you fellows" and, of course, I have
trouble defending it totally, but I would say --
--- Laughter / Rires
269 MS YAFFE: I'm sure everyone else will make that
point, later, in their services.
270 -- but I would say that that's the issue.
And you have asked us not to come up with services that will directly compete
and harm existing services. And for us, the way to avoid that is for us,
obviously, to be carefully controlling both services so we are building
different audiences, offering different programming, creating that diversity but
growing from what have been created, nurtured, tested strengths.
271 THE CHAIRPERSON: Although we will probably
revisit this issue when we look at the applications individually, you have given
us some cues as to how to apply your test and I want to discuss with you whether
I'm right in concluding that -- suppose we were to arrive at a percentage or a
way of calculating whether there's competitiveness or not. Am I right in
gathering from your comments, and particularly some in two other applications,
that the test, perhaps, should be applied more leniently if we are dealing with
a sub-genre or an extension of a service proposed by the licensee of the parent
272 For example, if I look at your film "A
Supplementary Brief", at page 38, by using the page on the top -- do you have
that pagination, as well? Because there's pagination at the bottom. -- that when
you are discussing which ones of the possibly, I think as many as eight
applications could be competitive, not only among themselves in the new Category
1 but with existing services -- you say that Showcase, as you indicated this
morning, does have quite a bit of independent films as well.
273 But if I read from that middle paragraph on
page 388, you say:
"...we don't consider our service to be directly competitive with any
existing ... pay or specialty services except, in part, for Showcase. However,
because the channel will be commonly owned with Showcase, and because the
channel would include a significant focus on documentaries that Showcase does
not ... we do not consider the channel to be directly competitive with
274 And in the case of Signature, again, in your
supplementary brief at page 509 you say, in the middle paragraph again:
"By having both History Television and Signature Television under common
ownership and control, it will be possible to minimize overlap and maximize
differentiation between the two
275 So I gather from that that, in your view, when
we look at what will be competitive, when we look at the list of film and
documentaries or documentary services, one of the criteria should be that if it
is going to compete with your own we shouldn't get two
276 MS YAFFE: In fact, that is what we said in both
those cases, and that's what we believe.
277 I mean, the example we would have is that the
application we did for Home and Garden exactly focused on that and suggested
that there were real inherent strengths in sharing the expertise between a
channel like Life Network that had already grown that expertise -- and
transplanting it here garden analogies go wild, but anyway -- to Home and
Garden, and that has been a very successful format. We have managed to grow both
services. Different programs exist on both. We do very well to avoid the overlap
278 I think our argument, and I'm sure others would
agree, is there is an advantage to a corporate ownership structure that allows
you to maximize the diversity but also take advantage of the strengths of the
skills you have. That's why we have the talent we have with us
279 THE CHAIRPERSON: When we have this advantage
inherent in licensing, for example, if you were to be licensed for -- which ones
did the newspaper give you already?
--- Laughter / Rires
280 THE CHAIRPERSON: Signature, I
281 MS YAFFE: Yes.
282 THE CHAIRPERSON: Poor, Mr. MacMillan.
283 THE CHAIRPERSON: When that is the case, should
we be more demanding in other areas as a balance? Should we expect more Canadian
content, more original programming?
284 MS YAFFE: I mean, I think the commitments you
would ask for were that the service really met all the tasks. I mean, I guess I
would say there is that, the issue of competitiveness, and directly competitive
from a service that exists are important.
285 You also, I think, in our view, have to meet
all the tests of high quality Canadian and original programming, all of those
kinds of things, I think they all have to be met.
286 THE CHAIRPERSON: But the tests are not that
precise in some cases.
287 MS YAFFE: Right.
288 THE CHAIRPERSON: For example, as I pointed out
earlier, the number of hours of original programming varies quite a bit in your
proposals. There is some difference in exhibition levels, although they are
already at 50 per cent, which is what we aim for, the seven tiers, so you would
say you have met the test there. But the interesting thing is there is a
variance which you earlier had tried to explain how one goes about
289 But would you be surprised if the Commission,
when there is this inherent corporate advantage, was perhaps more demanding in
the amount of original programming, the commitments to the independent sector,
et cetera, to balance the fact that you have the corporate strength of the
window of the extension, the repurposing?
290 MR. MacMILLAN: Well, I certainly think that
there shouldn't be any lightening of obligations or any expectation that one
shouldn't do at least the same that another applicant or another channel might
be presenting. Part of that comment is based on the fact that I hope that the
channels licensed and launched will each be chosen on their own separate merits,
separate from each other.
291 THE CHAIRPERSON: So is...
292 MR. MacMILLAN: Yes, but I mean as opposed to a
corporate strategy or a corporate philosophy dealing with Alliance Atlantis and
each of the other larger applicants who have applied for a number of channels
and have a number of existing channels. Our applications are terrific but, you
know, so are most of the others as well. I think that it has to be based on the
merits of the application and not a corporate solution.
293 That said, we think that if a channel is a
sister channel to an existing one, you're right, there are additional
advantages, there are more tools at the disposal of the operator -- and we think
we have done some of those things. That's, for example, part of the thinking
behind our $140 million commitment for The Independent Film Channel, for
example. That's part of the reason why we can make significant improvements as
we have on health, because of its relation, albeit a small overlap with Life
Network. But, yes, I think you're quite right.
294 THE CHAIRPERSON: So it's a balancing, in your
view, of diversity which includes this issue of competitiveness to serve the
consumer with additional attractive programming, but affordability and the
ability to produce and to exhibit Canadian content and expand on it would
obviously be improved where there is an apparent sub-genre
295 Now, another issue of general significance is
the issue of the implementation of service. As an experienced licensee you know
that usually the Commission establishes -- a time frame within which to service
has to be implemented or else an extension has to be requested, which suggests
that the Commission wants implementation within a certain time
296 The underlying reasons, of course, to support
the deployment of digital equipment and of digital technology, is to offer more
appealing and more numerous services to those who choose to purchase or rent
digital equipment. Do you think, then, that the need to prevent licensees from
occupying a genre and not implementing to actually further that objective
requires a reasonable period to implement?
297 I think all your launches in all four cases is
September 2001, but do you foresee a need for the Commission to continue this
requirement for Category 1 services?
298 MS YAFFE: Yes. You know, the industry at large
suggested that September 2001 was a good date, and we certainly think that we
could meet that date with any of the services we have before you today. We don't
believe that sort of hoarding a category and not coming to the table with a
service would be an appropriate -- would serve any benefit to the Canadian
299 So, yes, we would suggest that a
must-be-implemented period be part of every licence as Category
300 MR. MacMILLAN: I would say it's part of the
obligation of this process. You know, we are trying to drive digital penetration
and if you don't build it, for sure nobody is going to bother to come. We want
cable and DTH to get out there and install boxes and sell digital, but it's up
to us to be there with them in the front line marketing and selling and
spending. Absolutely, there should be a definite commitment, a tight time frame,
to make sure that these things are launched properly and
301 THE CHAIRPERSON: Although I have already
indicated that we wouldn't speak about Category 2 services, I will break
the rule right now, but only I can do that.
--- Laughter / Rires
302 THE CHAIRPERSON: Would you think that
considering the framework we have suggested or established -- not suggested,
established for Category 2 services, that the same need applies to insist
on an implementation schedule?
303 MR. MacMILLAN: I don't think the same need
applies. There should be, I think, much greater leeway given for the obvious
reasons: carriage is not assured, how they are packaged, or whatever ways aren't
known. So I would think that a much more flexible time frame would be
304 THE CHAIRPERSON: Yes. The reason I ask, of
course, is it's easier to understand your approach. If you tell us why it's not
necessary in Category 2, it illuminates a bit your reason for why you
should do it in Category 1.
305 Now, independent production. You are, of
course, a very large production company and in some cases you have teamed with
another Canadian producer and this raises again the approach that remains or not
appropriate to this vertical integration between programming undertaking and a
production company and you yourself speak, I think, in film and documentaries at
386 of your supplementary brief of arm's length producers and again this morning
I think in your presentation you spoke of non-affiliated Canadian companies and
made what I see as an additional or clearer commitment about the $20
306 It raises the question of how you define arm's
length, how you define a non-affiliated production company and the last time I
think I saw you -- I don't know why you are laughing Ms Yaffe -- was
in Vancouver where in the Food Network a commitment was accepted and a
requirement made that 75 per cent minimum of Canadian programs broadcast be
produced by independent production companies in which Alliance Atlantis owns
directly or indirectly less than 30 per cent equity.
307 Is that an appropriate test for arm's length or
non-affiliated in this context?
308 MS YAFFE: Yes, we believe that it continues to
be appropriate in this context as well as in the analog route.
309 THE CHAIRPERSON: What would be your response if
somebody said this wasn't good enough?
310 MS YAFFE: I guess I would like to know why. I
would find it interesting because I believe that we have spent some time
thinking about that definition, and we find it to be appropriate. We think we
can live with it there. We certainly intend to and we find it totally
appropriate in this context as well.
311 I guess we would be surprised to see that bar
raised at this time given that this is, as you will hear over and over again, a
much more challenging environment than the analog one. So to raise that bar
would seem to us to be odd at this time.
312 THE CHAIRPERSON: You mean in the digital
313 MS YAFFE: Right.
314 THE CHAIRPERSON: Can you explain why? You are
not suggesting it should be lower than 30 per cent.
315 MS YAFFE: No, I am not.
316 THE CHAIRPERSON: As a test.
317 MS YAFFE: No, I think 30 per cent is
318 THE CHAIRPERSON: And I think there has been
more demanding requirements placed in the past or offered. I don't have them at
hand now, but I don't think that that 70 per cent was the most stringent
requirement. You feel that this should be the -- that the bar should not be
higher than that test.
319 MR. MacMILLAN: I think we -- actually I am
not sure why you decided the 29.9, but the reason that we thought it was a
reasonable idea at the time was that under 30 per cent it is difficult to
exercise control. I mean, 33 per cent or more gives the company certain rights
under the Canadian Business Corporations Act which a 29.9 threshold doesn't
achieve -- 29.9 also has certain similarities in other issues that you are
dealing with at the Commission in terms of the percentage
320 It really was not so much the exact percentage,
but whether or not control was exercises, legally or practically and control
could be exercised at under 50 per cent if by contract the producer had
guaranteed rights of access to the broadcast outlet.
321 The whole issue here isn't that we ought to
care who the creator of the programs are -- we should encourage all
Canadians to create great Canadian programming -- but whether or not the
producer, in other words the seller, and the licensor or the buyer are really
connected and the seller has a privileged right of contract to make that
322 So we thought, and still believe, that 29.9
does that. It is not inconsistent with anything else within the Commission that
we are aware of and certainly it is consistent with the CBCA
323 THE CHAIRPERSON: Now, I forget exactly how it
was drafted in. Was voting equity in for that one?
324 MS BROWN: I believe it was voting
325 THE CHAIRPERSON: And you are not suggesting,
Mr. MacMillan, that there is a need for an additional test of control. You feel
that below 30 per cent would be quite unusual to exercise
326 MR. MacMILLAN: In our experience,
327 THE CHAIRPERSON: Now, in the case of your
partner, Associated Producers Inc., the test would be applied as
328 MR. MacMILLAN: No. In the case of Associated
Producers because they would be a direct shareholder in the channel, they would
fall under the same category as Alliance Atlantis. They would be subject to the
329 THE CHAIRPERSON: I am not sure I understand.
When we calculate then whether --
330 MR. MacMILLAN: They would be considered
331 THE CHAIRPERSON: Non-arm's
332 MR. MacMILLAN: From the
333 THE CHAIRPERSON: And if it had itself companies
that produce, we would look at that as well.
334 MR. MacMILLAN: Exactly.
335 THE CHAIRPERSON: Okay. So the test would be
applicable to your partner who is itself a producer.
336 MR. MacMILLAN: Exactly.
337 THE CHAIRPERSON: Okay.
338 MR. MacMILLAN: So anything produced by AP would
be as if it were an Alliance Atlantis production even though we
339 THE CHAIRPERSON: I meant or any company
affiliated to AP.
340 MR. MacMILLAN: Yes, indeed.
341 THE CHAIRPERSON: That is what I
342 MR. MacMILLAN: It's the same
343 THE CHAIRPERSON: Because otherwise you could
make it flow.
344 I will go over another section and then I will
give you a break.
345 Exhibition of -- we prefer giving breaks
to panels than to ourselves. It looks more elegant.
--- Laughter / Rires
346 Exhibition of Canadian content levels. Correct
me if I am wrong, but I believe by looking at all four of your applications that
you propose of levels of Canadian exhibition which increase by reference to the
applicant meeting certain projected penetration levels.
347 MS YAFFE: We propose as a commitment of licence
a growing percentage of Canadian exhibition, as we have outlined in the
application. We have explained in our business plan how one would describe that
level -- that growth or reflected --
348 THE CHAIRPERSON: To acquire the
349 MS YAFFE: No, but --
350 THE CHAIRPERSON: My question is quite simple.
It is: If you -- well let's take an example, let's say, of your first one
although this is a general question.
351 If you say that you will have 50 per cent
Canadian content level in both day and evening in year one in film and
documentaries, for example, 50 in year two, 50 in year three and in year four 53
per cent dependent on a certain level of subscribership having been reached and
the same principle is present, I believe, in all four of your applications in a
variety of ways. Sometimes it kicks in year four, or whatever.
352 My question is simply when that is the case
then, the 50 would continue in year four if the penetration hadn't been
353 MS YAFFE: No, I think a better way to look at
it is to look at the actual application form itself, Item 7.4 Canadian content,
and I think the way to understand our condition is to look at Item C in Item 7.4
of the application which says:
"The applicant undertakes by condition of licence to broadcast the following
minimum levels of Canadian
354 And then we have done the broadcast day between
six and midnight with actual percentages. That we would say is our condition of
licence that we are willing to accept.
355 THE CHAIRPERSON: What I am trying to have you
clarify is that if the penetration level hasn't been reached in year four then
you don't have to go to 53 per cent.
356 MS YAFFE: Yes.
357 THE CHAIRPERSON: I want you to clarify for us
whether in each case then in year four you would do what you were doing in year
358 MS YAFFE: No. We would live up to Item 7.4,
Item C which we would believe, or have always assumed and built our business
plan based on that level of Canadian content.
359 So in year one it would be the first number, in
year two it would be the second number and going through the seven years we
would live up to and transfer to the higher level of Canadian content
automatically as the calendar unfolded through this Item 7.4(c).
360 THE CHAIRPERSON: Yes. I think I have
complicated matters. All I want to know is if the penetration level doesn't kick
361 MS YAFFE: That's right.
362 THE CHAIRPERSON: -- it is the previous year,
then, that remains your commitment.
363 MS YAFFE: No.
364 MR. MacMILLAN: No. These obligations and
commitments are triggered by calendar dates, not by penetration. And they will
stand regardless of penetration.
365 THE CHAIRPERSON: You will extend
366 MR. MacMILLAN: Yes.
367 THE CHAIRPERSON: It is good that you clarified
that, because your applications -- whether I am going to find this
quickly -- as you read them, appear to say "conditional upon". They use
368 So that is not the case, then.
369 MS YAFFE: No.
370 THE CHAIRPERSON: Whatever is there is what is
going to happen.
371 MS YAFFE: Yes.
372 THE CHAIRPERSON: Here is an example, I believe,
in film and documentaries. No. In any event, that is the commitment in all four
373 MS YAFFE: Yes, all four.
374 THE CHAIRPERSON: And it is not conditional upon
375 I don't have a problem with the "conditional";
all I wanted to clarify is, if it were conditional on the penetration level, is
it the 50 per cent, if it is the previous year, that would
376 MS YAFFE: Right.
377 THE CHAIRPERSON: So, then, whatever is in that
7.4 is the commitment regardless --
378 MS YAFFE: Yes.
379 THE CHAIRPERSON: I will give you a break while
I try to find that "conditional". I may have misled you or misinformed
380 Thank you.
381 MS YAFFE: Thank you.
382 THE CHAIRPERSON: We will return in 15 minutes.
It is now 20 to 11. That makes it 5 to 11.
383 I would like to point out to people that CPAC
is doing a gavel-to-gavel televised program of this hearing, so we will be
following the timeframes we were given quite closely to make it as intelligent a
program as possible.
--- Upon recessing at 1045 / Suspension à 1045
--- Upon resuming at 1105 / Reprise à 1105
384 THE CHAIRPERSON: Mr. MacMillan, it would appear
that the word "conditional" was my own deduction, or construction, but I do want
to clarify this on the record.
385 I have before me your 7.4(c), in the first part
of your licence, and that is true throughout. Each application has a differing
one, but has commitments. However, I think I have found one in each
application -- or at least in three of them -- a comment
that resembles this in each case.
386 If you look at your film and documentary
supplementary brief at page 347, if you take the top pagination, the second-last
The Independent Film and Documentary Channel will broadcast at least 50 per
cent Canadian content in the first broadcast year, rising to 53 in the year
after 2 million subscribers have been reached, then to 55 per cent at 2.5
million subscribers, and to 60 at 3 million." (As
387 From that I deducted that you started at 50
and, conditional upon reaching certain subscribers, because those projections
can't be exact, you would or would not increase.
388 What I heard you say this morning is that
7.4(c) is it, regardless of the penetration in years 1, 2, 3, or whatever
389 MS YAFFE: Yes.
390 THE CHAIRPERSON: How do you interpret that
391 MS YAFFE: I think it was a description of how
we came to the business plan. Those were ways of describing what we thought the
universe would be like when we raised our Canadian content. And it is true that
you will see those numbers reflected in our subscriber base for those
392 So it is a description of the universe, as we
hoped it would unfold, but where we made our commitment, where we said what our
condition of licence we would accept is, is 7.4.
393 THE CHAIRPERSON: Yes. But it is of great
interest to us, of course, to see whether the commitment has an asterisk to
394 MS YAFFE: No, it --
395 THE CHAIRPERSON: -- via some other part of the
application, which I think one, in my defence, could deduct was the
396 MS YAFFE: Yes.
397 THE CHAIRPERSON: But it is not.
398 MS YAFFE: Right.
399 THE CHAIRPERSON: Canadian programming
expenditures which have ended up being, in some cases, at the deficiency level,
in some cases, earlier are a problem or a concern for a number of
applicants. Am I correct that you have made commitment levels in all of your
applications and you are willing to accept a condition of licence to that effect
under the formula usually applied by the Commission?
400 MS MIDDLETON: Yes, that's
401 THE CHAIRPERSON: Yes. Without discussing, in
this case, the particular number that is specific to an
402 Now, when you made that commitment, which is
framed often as "We will accept as a condition of licence this percentage,
calculated on the basis of revenues", et cetera -- you are familiar with
the formula -- were you also accepting that the first year commitment would
be a condition of licence, as is, which is also part of the formula? Or, were
you thinking of some other --
403 It is not clear. You say that you are willing
to accept a percentage based on the previous year's revenue, but I want you to
tell me whether it involves, as well, accepting the first year expenditures as
they are proposed.
404 MS YAFFE: I will ask Rita Middleton to respond
405 MS MIDDLETON: The calculation used included the
first year expenditures. But we appreciate that in previous experience the
calculation has excluded a commitment -- an absolute commitment -- for
the first year, and the percentage begins in the second year of
406 THE CHAIRPERSON: And without an imposition of
the exact numbers suggested for the first year, which -- and I may be
corrected -- I believe the formula involves.
407 MS YAFFE: Our understanding of the formula is
that the first year is not -- although it is the number we use -- or
could be the number we use for the calculation of the second year, it is not a
408 THE CHAIRPERSON: It is not a fixed amount, so
there is no condition of licence applicable to Canadian expenditures in the
first year, in your view.
409 MS YAFFE: Right.
410 THE CHAIRPERSON: In any event, that is what you
411 MS YAFFE: I think in this environment it makes
a great deal of sense. It has been the case in the analog world. It has always,
of course, been very difficult to start a new television service without
spending a great deal of money on Canadian content when one starts at either 50
or a higher percentage of Canadian programming. Our experience to date is that
we have overspent any percentage in the first year, just
412 THE CHAIRPERSON: Simply to be able to program
413 MS YAFFE: Right.
414 THE CHAIRPERSON: Now, you suggest in Book and
Health -- at least in the Book and the Health Network -- at least in
those two -- in response to a clarification question, an alternative way of
calculating it, for the reasons we need not go into, but that are fairly readily
understood: about the need to spend a lot in the first year, and then, when you
apply the percentage, it ends up being higher because you didn't consider those
first years. You suggest that perhaps an alternative way would be to take the
average of years 4 to 7 instead and apply them to the entire licence
415 In other words, if I understand it, you would
not take into consideration years 1, 2 and 3 in arriving at that
416 MS YAFFE: I will ask Rita to answer
417 MS MIDDLETON: Yes, that is
418 THE CHAIRPERSON: In that case, then, you would
apply that percentage to years 1, 2 and 3? Or only 2 and 3?
419 What would you do with 1, 2 and 3 after you
have established a percentage that only takes into consideration the revenues, I
guess, of 4, 5, 6 and 7?
420 MS MIDDLETON: I think, as Phyllis has
indicated, what you will notice in our business plan is that in the initial
years of licence the spending as a percentage of previous years' revenue is much
more than in the latter years.
421 THE CHAIRPERSON: Yes, I understand that, but
you are talking as an accountant or a CFO. I am talking as a regulator
422 What happens to 1, 2 and 3? Are you bound by
423 MS MIDDLETON: Yes, absolutely.
424 THE CHAIRPERSON: If the result of taking the
revenues of 4 to 7 is 40 per cent, in year 2 you would apply 40 per cent to the
revenues of the previous year.
425 MS MIDDLETON: Absolutely.
426 THE CHAIRPERSON: And what happens in year 1? Is
it the same answer as Ms Yaffe provided?
427 MS MIDDLETON: Yes.
428 THE CHAIRPERSON: You just consider that the
licensee will spend a large amount, probably more than in the following
429 MS MIDDLETON: Yes.
430 THE CHAIRPERSON: -- just by virtue of
implementing the service.
431 I guess you must have looked at all of the
competitors' applications, like I have, and hopefully are less
432 You must have noted that there are some other
433 One alternative that one could think of is what
if the calculation of the percentage by the Commission was according to the
formula but, then, you would give the flexibility by applying it to the entire
term rather than year by year. In other words, over seven years. I guess this
suggestion would be that over seven years, then, you would spend 40 per cent of
all the regulated revenues, calculated as per the formula that exists
434 MS. MIDDLETON: We accept that that would be
435 THE CHAIRPERSON: And using your suggestion of 4
to 7, do you see any reason why that's a better idea than the one I have just
436 MS MIDDLETON: No, I do not.
437 THE CHAIRPERSON: So the idea is
438 You understand, of course, that your 4 to 7
would be lower than if I calculated it according to our formula. It would just
be the application that would be flexible. I think. I'm not an
439 MS MIDDLETON: I think, in the case of health,
for example, where we have agreed to a 51 per cent condition of licence, if you
take the average over the term it is also 51 per cent. So I think your
440 THE CHAIRPERSON: But if you take 4 to 7, it's
441 MS MIDDLETON: No, it's not.
442 THE CHAIRPERSON: It's lower.
443 MS MIDDLETON: Yes.
444 THE CHAIRPERSON: Yes. But you would live with
445 MS MIDDLETON: Yes.
446 THE CHAIRPERSON: So you would live with any of
those three, even the one that the Commission has applied
447 MS MIDDLETON: Yes, we would.
448 THE CHAIRPERSON: Because you have committed --
I think I found it in all your applications -- to a certain percentage. I think
there is one application where we will clarify our number was lower than yours,
so whether we can give you a break...
--- Laughter / Rires
449 THE CHAIRPERSON: Interactivity. I'm not an
accountant and I'm not a technophile either, so I would like you to explain to
me whether other applications have the same proposal with regard to
interactivity. And the distinction I want to make is between an ordinary --
well, ordinary, or traditional; we're already talking about traditional Web
sites -- but a Web site on one's computer, as opposed to the use of the set-box
making the television itself interactive, I would like to discuss it at the
beginning, you know, at that simplistic level, and I would like to know whether
your applications all propose the same thing or whether -- for example, it
seemed to me that in The Book Channel it was more closely interactivity via the
television set. Is that the case? Or is it the same in all four?
450 And I note that your expenditures and expected
revenues are similar in each case, in the four cases, but not necessarily
451 So are you looking at a Web site or actual
interactivity via the set-top box? And in what time frame?
452 MS YAFFE: I'm sure this will be a conversation
you will have with many people over the next few weeks but, for us, it is a
fundamental point of departure analog to digital, is this opportunity to bring
more to television to truly make it a different kind of experience, and we think
it's one of the reasons consumers will go to the digital world.
453 Different set-top boxes, whether they be
satellite or cable or differently-abled boxes, will offer viewers different
abilities to interact with the behind-the-scenes content and we can only -- what
we would like to do is bring as much to each channel as possible to make it
interactive within the abilities of the systems that people use to receive that
454 Right now, if you watch "Who Wants to be a
Millionaire?", you will often notice a little icon show up on the screen that
allows you to play along at home. That already is there in an analog world, or
in a television show that's generally distributed through analog and allows
people to play along. I think that is very much the front line of what will
455 And, clearly, there are opportunities to do
that kind of programming with each of our applications.
456 What we have suggested as the use of the funds
which are generally in the same ball park for each of our services is to create
the behind-the-scenes information that would become the basis of interactive
television. And we would hope to be able to deliver them, obviously, through the
Web -- which we could do tomorrow if we wished -- but, more importantly, through
set-top boxes as they become able to handle more and more of these higher levels
457 We believe very, very strongly in this part of
458 We did not suggest that there were endless
amounts of revenue to be derived from it because we thought we would be
optimistic, but cautious, in terms of that side of the revenue
459 But, to give you a sense of what we think this
could do, I would like to ask my colleagues to jump in here because I think you
are right, it is the future and it does offer a lot more than television as we
know it today, so -- particularly outside The Book Channel.
460 Let me ask Norm Bolen to talk to you a little
bit about what we think is a unique property of Signature Family Album, and I am
going to ask Barbara Jones, who is our new on-line expert to help us explain to
you how that could come to both the Web and interactive
461 THE CHAIRPERSON: Before we proceed with that, I
notice that you say "could come in in the future". Our interest, of course, is
examining just when this will happen, if it will happen; is it an integral part
of your proposal. And I do have some questions which may be unnecessary once you
have explained. So we want to have a better feeling as to when this happens,
that could happen.
462 MS YAFFE: I think our understanding of this
world -- and I'll ask Harvey Rogers if he wants to help me here -- is that there
are some boxes, the satellite services that are delivered to Canadians today do
allow for some of this interactivity today, and that when we have it available,
we will be able to offer it through satellite, but that the set-top boxes
generally available through cable today do not have the sophisticated capacity
to offer this kind of interactivity yet.
463 Of course, we are talking about 2001 when these
services might launch and we are optimistic that a second level of digital box
would be out there that would offer this ability. But, Harvey, would you like to
464 MR. ROGERS: As Phyllis said, there are two
scenarios running parallel.
465 Scenario 1 is the roll out of boxes that are
existing today -- and let's call those Level 1 -- mostly a lean-in kind of
technology, PC-based, and it will drive you from the set-top to the Web for
466 The Level 2 is the lean-back, more the
television experience, where you have enhanced television and you will be able
to move your pictures around, put data onto the screen and watch data and
pictures at the same time.
467 The set-top boxes are not presently there. That
is the next level of roll-out. Altogether, the DTH side is a little more ahead
of the cable because they are not dependent on the cable modems for a return
path; they will be more in the activity of the lean-back enhanced television
side of things.
468 We, as a company, are very interested in being
somewhat of the pioneers in this area and will work with both the cable and the
DTH to develop programming to become very interactive on both
469 I would also like to ask Barbara to illuminate
some of the activities on the push-forward.
470 MS JONES: Well, we have seen, in studies in the
United States, that the penetration, at a household basis, is about 1 per cent
currently and on-line is made of not just what you experience on your PC at home
but also through your telephone, as well as your personal devices, and certainly
through interactive television.
471 So if you look at that whole share of on-line
experience, currently interactive television, in the form that Harvey has
described it, is only at 1 per cent currently.
472 Over the next five years, that number should
increase to about 40 per cent of penetration and 16 per cent of the total
on-line share of use.
473 So we are certainly looking closely at
474 And, for us, interactive television and,
certainly, the $12 million that is reflected in our application is about
interactive television programming; it is not any funds that have been dedicated
toward building Web sites. So, for us --
475 THE CHAIRPERSON: That is 12 million if you get
four licences, is it?
476 MS JONES: It is 12, but, actually, over $3
million per licence dedicated to creating interactive television
477 Interactive television is about viewers
participating with programming so that, as Harvey described, you are sitting
back in the comfort of your own home and moving through the menus on your
screen, very similarly to how you use your remote currently.
478 As Michael has described, we are very much
about vertically-themed communities and we see an integration occurring through
all of our media properties. If it's The Book Channel, then the book interactive
television product is going to bring authors and readers together in a way to be
able to interact on the screen and bring their works to the screen and,
certainly, be criticized via the screen as to what their works might
479 With the Health Channel, with support from our
good partners at WebMD who have spent more than a billion dollars creating their
WebMD product, we are going to be able to tap into that across all of our
on-line platforms and create some superb television programming.
480 In the film and documentary genre, we are going
to be again leveraging that incredible community that we have currently and we
have discovered through the Showcase Review, and provide, through interaction
not just video clips and interviews but a place where that community can come
together and get information on casting calls, on how to get funding, and
certainly the traditional approach is featuring what directors may have to
481 On Signature, both Norm and I are amateur
genealogists, and we are quite passionate about the opportunity to bring
Canadian stories to life via this type of interactivity. I think Norm can best
describe our family album project for us.
482 THE CHAIRPERSON: So as a company you have
investigated, with equipment manufacturers, where things are at and how quickly
this could develop, and the possibilities offered by Level 2 and have tried to
determine just how quickly this may develop.
483 MR. ROGERS: That is correct.
484 THE CHAIRPERSON: Now, what investigation have
you made with distributors and their preparedness or ability to use what I
understand to be additional bandwidth to be able to do this.
485 MR. ROGERS: We have discussed with cable
companies and DTH the ability to market our program through the set-top box. As
I said before, the basic set-top box is only allowing Web-type of activities.
Naturally, as we would launch in September of 2001, that would be the first kind
of activity that you would see on our programming. At the same time, we will be
developing interactive programming that would have triggers within the digital
MPEG datastream; and, as soon as the box had the proper middleware in place, it
was uniform between DTH and cable, our second level of programming would roll
486 The time frame? Probably within two to three
487 THE CHAIRPERSON: Two to three years. And you
don't have -- well, we will hear from the distributors, of course, in that
regard because you will have your programming service will have access rights so
there may be a discussion as to whether the distributor is prepared to also
offer the additional bandwidth and I guess ability for upstream information,
storage of information, et cetera, which I understand is an extra strain on the
distributor's bandwidth capacity.
488 MR. ROGERS: Yes, that is true. I think there is
a new world going to be developing where we will work in partnership with our
distributors on using that extra bandwidth and deriving shared
489 THE CHAIRPERSON: Sharing revenues generated by
this interactivity. Is that what you mean?
490 MR. ROGERS: Yes, that's
491 THE CHAIRPERSON: As the quid pro quo for being
able to have the additional bandwidth.
492 MR. ROGERS: Yes.
493 THE CHAIRPERSON: And this would all be at a
very embryonic stage since you say two or three years before the very equipment
is not only accepted by consumers but available to them.
494 MR. ROGERS: Yes, as we see it.
495 THE CHAIRPERSON: Do you see any additional
hardware/software, cameras, et cetera, necessary for your proposal of this type
of set box interactivity?
496 MR. ROGERS: Probably you're right, that as we
develop our programming in our studios we would be looking at virtual technology
which is able to be streamed on the Web as well as a set-top box. Additional
programming material and hardware will be also used in post production to hide
the triggers within the actual broadcast program. So, yes, there is a whole
world that is rapidly being developed, such that within the two to three years
we hope to be on the leading edge and being able to provide the program as we
would like it to be provided.
497 THE CHAIRPERSON: Some of which would be
equipment enhancement that you would be responsible for?
498 MR. ROGERS: Yes. We particularly would not be
driving the --
499 THE CHAIRPERSON: In your
500 MR. ROGERS: Yes, that's
501 THE CHAIRPERSON: You have given us in each case
revenues and costs associated with interactivity. Considering the time frame you
are talking about, what is in there at the moment?
502 MS YAFFE: There really is no revenue stream
associated with this part of our business yet. As Harvey says, the model for how
that revenue will be dealt with is still, I think, being decided in the
industry. We have identified approximately $3 million per application to
create the interactive components of the programming and we see that as a
503 It's hard for us to predict when and just how
this will all roll out, but I think what we have said, what we asked ourselves
is, you know, we know we are going to go here, we know we want to, let's make
sure we have a sufficient amount of money in the budget or in the plan to make
sure that we can do it and do it well. But we have not isolated a revenue stream
from this side of our business.
504 THE CHAIRPERSON: Do you not have, in each of
your applications, revenues and costs related to interactivity or are you saying
that's for the Web? I thought there was a revenue stream -- well, there is in
your application a line "Merchandising transaction revenue" which matches the
revenue/cost little table. I'm not sure at the moment whether this table was
created for me or it was part of your application, but I believe it
505 MS YAFFE: Yes.
506 THE CHAIRPERSON: Anyway, what is that line of
507 I'm looking at The Book Channel, for example,
"8.1 Financial operations", which is page 474, where there is a line
"Merchandising transaction revenue", $50,000, $100,000 going up. What is
508 MS YAFFE: It's related to merchandising that we
might sell as a channel, which we might have done without the development of
interactivity or without the Web. It's not tied to that.
509 THE CHAIRPERSON: And the expenses that are
attributed to interactivity, where are they in your financial
510 MS YAFFE: There is a single line for that. I
believe there's a single line in the application for that that was
511 In the "Other programming expenses, Cost of
interactive and merchandising transactional components" --
512 THE CHAIRPERSON: What are you reading
513 MS YAFFE: I'm looking at -- and this -- I think
I'm in Book, and on page 473 in your page numbers.
514 THE CHAIRPERSON: Okay.
515 MS YAFFE: So I can see where you might have
assumed the merchandising and transactional was related to cost of interactive,
but we didn't see it that way.
516 THE CHAIRPERSON: So "Cost of interactive and
merchandising transactional components" on that page?
517 MS YAFFE: Yes.
518 THE CHAIRPERSON: Six hundred.
519 Another thing that is curious is that it goes
down every two years.
520 MS YAFFE: Well, it changes every two years is I
think a better way to put it.
521 THE CHAIRPERSON: But always down, downward.
--- Laughter / Rires
522 THE CHAIRPERSON: Year 2 it's down and year 3
it's -- in all cases. Is there any explanation for that?
523 MS YAFFE: The way I would look at it is it goes
down in year 2 and up in year 3, so I would say that what we said was it's hard
for us to --
524 THE CHAIRPERSON: Oh, in 3 as well. Yes.
525 MS YAFFE: You know, it's a flowing number that
we said: We think this is what it will cost to get into this business. To
sustain it I don't know that it will be the same number.
526 Some of us would -- and Barbara Jones would say
that we may find that we want to do more and more programs, and that's not
527 THE CHAIRPERSON: You know what I mean by going
528 MS YAFFE: No, I do.
529 THE CHAIRPERSON: We have 600,000; year 2,
300,000; year 3, 500,000; and then year 4, 300,000. And that's true in every
530 MS YAFFE: Yes.
531 THE CHAIRPERSON: There must be some
sophisticated formula here.
--- Laughter / Rires
532 MS YAFFE: Yes, there is a sophisticated
533 If I may, I'm going go ask Barbara to explain
it, but I think what you do see, because I can't, but I think what you do see is
that the first year is where we put the most amount of our money so that we
leapfrog into the technology.
535 MS JONES: There are some efficiencies to be
gained as all of the industry learns more and more about interactive television.
In the same way that initial start-up costs for Web sites may be a little
frightening, they, over time, as we, are all developing more and more
sophistication in how we build these things, finding those efficiencies. I
suspect that will be the case with interactive television as
536 THE CHAIRPERSON: I think it's fair to say,
then, that you will embrace this technology as quickly as possible and see it as
an advantage, but we are likely to have Web sites for two or three years at
537 MS YAFFE: Yes.
538 THE CHAIRPERSON: If it took longer than two or
three years to establish this real interactivity, do you see that as a big
drawback on the attractiveness of your programming?
539 MS YAFFE: No, I don't think it would be
a -- I mean, I guess what we would do is supplement as much as we could
through the Web. I guess where we thought we built in the cushion was by not
including revenue from this stream. We though whether it is revenue this way or
another way won't affect our business plan.
540 I think the key question though is will it
affect the roll out of digital boxes if people don't have this ability and I
believe that in this competitive world we are going to see everybody chomping at
the bit to get the most interactivity out of the technology they deliver, so I
am hoping that that will spur everybody to get therm as soon as
541 THE CHAIRPERSON: That there is a commercial
542 MS JONES: Yes.
543 THE CHAIRPERSON: To make the most of the
544 MS JONES: Right. The key is that the
programming needs to be appealing regardless of the technology. I think what is
an important element here is that it need not be two years away. Alliance
Atlantis is already committed to two Canadian programs, both Dish It Out and
through our association with Drop the Beat. Those are programs that exist today
and have shown that there is an opportunity for interactive television
production by independent producers in this country.
545 MR. ROGERS: I would also like to point out that
given the digital roll out of television itself, the high definition and
standard definition, there is also an interactivity built into that program as
well so that we will really see three things happening: Interactivity through
the high definition, standard definition; interactivity through the set-top box
enhanced television, and interactivity through the Web.
546 THE CHAIRPERSON: Now, I have been reminded by
our legal branch that beginning January 1, 2001, we will have a new federal act
called Personal Information Protection and Electronic Documents Act which
obviously would affect private sector use of the flow of
547 So I gather that you have two or three years to
examine that Act and find what measures will be necessary to abide by
548 MR. ROGERS: Yes.
549 THE CHAIRPERSON: Close captioning. You are not
the star for the first year.
--- Laughter / Rires
550 Why is that?
551 MS YAFFE: I guess our approach to close
captioning was to take the regulatory approach we have seen before at the
Commission and suggest that we would absolutely get to 90 per cent close
captioning by the end of the licence. We would hope to overachieve on the
numbers we have suggested to you as minimums, but close captioning in this
sphere one of our choices is where to put our resources, and I guess what we
thought was original Canadian programming was our key priority although we take
close captioning very seriously and I suppose one of the things that has been
frustrating to us over the years has been that we still don't have in this
country what other countries have, and that is a library, a facility that holds
and stores the captioning that is done by all of us for all our
552 We are working through the CAB with the
National Book Reading Service to hope to create that king of a database library
where we could actually take all the captioning that all of us do, leave it in
the library and rent it, paying rights, to be able to use it again and again.
But today that doesn't exist in this country so every time, or very often, when
programmers choose programming that has been captioned we have to go back to
square one and start all over again.
553 We hope to be able to fix that over the next
little while and of course that would make our on air close captioning
dramatically higher to begin with.
554 THE CHAIRPERSON: I guess you were smart enough
to put 90 per cent in year seven, but it is 10 per cent, at least in two of the
applications I am looking at now, for three years and then ranging to 30 per
cent in year four, 45 in year five, 50 in year six. So you will have to have a
jump of 40 per cent between year six and seven.
555 MS YAFFE: We know.
556 THE CHAIRPERSON: How is that
557 MS YAFFE: Well, what is problematic is to get
to 90 per cent in any one year because --
558 THE CHAIRPERSON: What is problematic is having
to commit to it, right, in year seven.
559 MS YAFFE: No, I wouldn't say it was
problematic. The problem, I think, for everybody is if you have reached that
number very early on and you are not using those programs in year seven, then
you really have to make that gigantic leap. That is inevitable for every
service, wherever you are. So wherever you were the year before unless you show
all the same programs again, you have to take that big leap by the end of the
560 MR. ROGERS: But
that -- sorry.
561 THE CHAIRPERSON: So these are minimum
commitments, but you probably have to ramp up faster than that if you have to
make that leap between year six and seven.
562 I think I interrupted someone.
563 MR. ROGERS: Sorry, Commissioner. I just wanted
to support Phyllis in saying that we have committed ourselves to the close
captioning division. We have expanded our facilities and we also have an ability
to use outside agencies if we are not able to reach our
564 So using the three things: Our internal
services, outside services and if we can get this free exchange of close
captioning on Canadian programming working -- and we are actively
working in association with the CAB on this -- we will be able to reach our
90 per cent in the seventh year and as well the industry will be able to
accomplish that goal.
565 THE CHAIRPERSON: Video description. Will your
service be technically equipped to make it possible?
566 MR. ROGER: Yes, we will.
567 THE CHAIRPERSON: Well, this completes my
general questions. I have a few questions on each of your applications to
clarify so we will now deal with -- I certainly have not addressed them in
the same order I have them, but since I easily get confused I will impose my
--- Laughter / Rires
568 So the first one we will look at is the
independent films and documentary application and I understand that it is
independent, but I may shorten it to films and documentaries throughout. I still
read "independent" in front of it.
569 At Section 7.1(c) of Part 1 of the application,
you provide a description of your nature of service as a service entirely
devoted to films and documentaries from independent filmmakers from Canada and
around the world, and you provide a definition of independent as films neither
developed nor financed by the major Hollywood studios and this definition has
raised some questions by intervenors, although I don't want to invade the
intervention process at the moment.
570 You have proposed a new definition, I believe,
of independent, and your description of service then would be changed and it
would be the licensee shall not broadcast any feature film originally made in
the English language that was developed or financed by -- and you have
a list of companies there.
571 Is that what you would be prepared to accept as
a condition of licence as a response to the concern that the previous
definition, the one at 7.1(c) was too broad?
572 MS YAFFE: Yes, we would.
573 THE CHAIRPERSON: Now, in the definition you
have entirely devoted to, so I guess we would now see a description of service
that would still keep that, would define independently and differently, but
would still keep that concept of devoted entirely to film and
574 MS YAFFE: Yes.
575 THE CHAIRPERSON: Now, what does the word
"entirely" in the description apply to? Films and documentary only? I raise that
because you have a list of categories of the programming you will draw upon and
they include, for example, theatrical feature films aired on television,
animated television programs and films, other drama, and of course long-form
documentaries. "Entirely" would that apply?
576 MS YAFFE: I am not sure
577 THE CHAIRPERSON: Because "entirely" is not your
578 MS YAFFE: Perhaps the best way to answer
this -- and I am going to ask Laura to give us more of a sense of what that
entire schedule might include -- but I would say that it is the founding
definition of how we see the channel, why it is different from other movie
services, and I think it is fair to say that there would be no element
throughout the programming that would be about anything but our form -- our
definition -- of independent film. It might take other approaches, but
however it was put together, the elements would form a service that was entirely
about independent -- or featuring independent films, documentaries and
579 Laura could give you a sense of what those
elements that are not the films themselves might be like.
580 THE CHAIRPERSON: And of interest, of course, to
anyone who is looking at how competitive -- indirectly or directly --
the directly competitive test is, what would be the proportion of other drama,
rather than documentaries and films?
581 For example, animated television programs, et
cetera. The other parts of 7 that are categories you will draw from. What will
be the proportion of film and documentaries compared to these other
582 MS MICHALCHYSHYN: Currently, in the schedule
that we have proposed, we are looking at having, in prime time, 61 per cent of
dramatic feature films, 22 per cent of documentaries, and 17 per cent of what I
think, Commissioner, you are calling "other". This includes short films and
videos, including short documentaries or short dramatic films; information
programs about the art and business of filmmaking, be it our "Quiet on the Set"
half-hour daily show, which includes a behind-the-scenes look at festivals
around the world, producers from across the country reporting on festivals that
are going on in cities across Canada, interviews with directors, critical
reviews with directors ...
583 This is a half-hour program that we would call
an "other", but it is all about the art and business of
584 We will not be putting any of the eight
Hollywood studio pictures that we have so defined in our application, the
blockbuster Hollywood pictures, and we have also made a commitment not to
broadcast any made-for-television movies, series or mini-series in our
independent film and documentary channel.
585 THE CHAIRPERSON: If the Commission found it
necessary to impose as conditions of licence these percentages you just gave me,
would that be acceptable?
586 MS YAFFE: Yes, that would be
587 THE CHAIRPERSON: It is not true in all of your
applications -- I don't know whether it is accidental that you didn't, or
because you have some explanation why not in one and yes in the other. Is this
question of filler programming, which --
588 If we look back to the 1994 licensing of your
special and pay television services, the Commission said at page 15 that filler
programming is not included in the categories of programming prescribed in
conditions of licence setting out the nature of service for specialty licensees,
but rather the Commission considers that such filler programming would fall
under any number of existing categories and should be logged as such by new and
existing licensees alike.
589 Now everybody is forewarned to look at Public
Notice 94-59, because no one has -- or else you all have very good
explanations as to why this should not be followed.
590 I think the understanding was that filler
programming was necessary perhaps on movie channels but not on specialty.
Whatever it is you put there should be categorized under a particular
591 So what is your comment? Do you have an
explanation as to why we should move from that categorization?
592 MS YAFFE: Actually, given that explanation, I
don't see that it is particularly necessary. We could remove it.
593 It is in all four of our
594 THE CHAIRPERSON: I think it was not in one. I
595 MS YAFFE: Maybe it wasn't
596 THE CHAIRPERSON: I thought there was one
597 MS YAFFE: Yes. We were right that time is what
the answer is.
--- Laughter / Rires
598 MS YAFFE: It is really not necessary, because
we really don't see any role for programming other than the categories we have
before you that are clearly --
599 THE CHAIRPERSON: So you would be prepared to
abide by the categorization of that type of programming. Of course, interest
issues are another story, in accordance with the category it falls
600 MR. MacMILLAN: Madam Chair, may I go back to a
comment that Laura made a moment ago?
601 THE CHAIRPERSON: Yes.
602 MR. MacMILLAN: Our proposal for the independent
film and documentary channel contains no made-for-television productions: no
made-for-TV movies, no mini-series, no ongoing made-for-TV series -- drama
series. That is a very important distinction and a very important commitment not
to include that, because if it did include that it would be almost a duplication
603 THE CHAIRPERSON: So category (e), animated
television programs and films --
604 MS YAFFE: For us that really refers to the film
side of it. That has allowed us to show animated films. We have no interest in
showing animated television series.
605 THE CHAIRPERSON: But it would not include
television programs, as such.
606 If we excised that from 7(e) as a special for
you, would that be acceptable?
607 MS YAFFE: Yes.
608 THE CHAIRPERSON: I discussed with you earlier
the question of competitiveness and diversity. There are potentially eight
Category 1 applications which could be competitive with your proposal. Should
the Commission not consider as competitive the two that are devoted exclusively
609 MS YAFFE: Not in our view. We see them as
having very different approaches.
610 We do have, as Laura said, 22 per cent of the
prime time schedule as documentaries, but as we said right at the beginning, the
definition of a program that would be suitable for this channel is that it is
made by an independent producer, outside the Hollywood system, but also that it
has a very strong point of view; that it is those exceptional documentaries that
tell a story that only those documentary makers could make.
611 So, to us, they are very much out of the norm
kind of documentaries, and we see, absolutely, a role for them on an independent
film and -- obviously by the title -- documentary
612 It seems to be the case wherever independent
film channels exist around the world. It is a good mix. But we don't see it as
613 Of course, we weren't able to know whether or
not there would be documentary applications when we filed this, but we still see
that there is room for both in the system.
614 THE CHAIRPERSON: So you would have no
615 Now, if it is one that has film and
documentaries, at what level of percentage of documentary? Would your answer be
616 MS YAFFE: Yes. I think if there were a
documentary channel licensed, I think the 22 per cent or 25 per cent level that
is already in our prime time schedule seems sufficient to us.
617 Now, that excludes the very intricately woven
elements that are described many different ways, that Laura was talking about,
in terms of the behind-the-scenes programming, which we see as more
information-based rather than point-of-view documentary.
618 THE CHAIRPERSON: You will have the opportunity
to revisit that at the intervention stage, as to, considering the long
lists -- and some are independent films and documentaries, or only
documentaries -- how you see everybody surviving.
619 As we discussed earlier, you seem not to
consider that a service of this type would be a problem for Showcase, but you
did add that was because you were the owner of Showcase. Would you consider,
then, that if the Commission decided to license an independent film and
documentary proposal, but not yours, that it would be competitive with
620 MS YAFFE: Yes, and we did intervene to that
point of view for a couple of reasons.
621 First of all, as far as we can tell, the other
competitors have asked to show television drama, which, as you know, is the
heart and soul of the prime time schedule of Showcase, and we have abandoned
that category from The Independent Film and Documentary Channel
622 As well, Showcase does not show documentaries,
and this channel would. So there is a real point of differentiation. But we do
believe that the role this channel would play would be completely different if
it were carefully scheduled, carefully managed, and, as we said earlier in our
definition of "directly competitive", we see a different way of judging that
once it is within the same parent company as we do outside that.
623 Do you want to add anything?
624 MR. MacMILLAN: I think you have made the point,
Phyllis. The other applicants have got television movies, mini-series and drama
series in their schedules, and we don't. Therefore, that is an additional
overlap that we don't have.
625 THE CHAIRPERSON: In your supplementary brief at
page 399, at paragraph 2, you say that the channel will be able to run a full
complement of four independent films and documentaries, many of which may never
be otherwise available in Canada.
626 I didn't see anywhere a proportion of
programming that would be from non-North American sources.
627 MS YAFFE: I will ask Laura to answer
628 MS MICHALCHYSHYN: First of all, of course, we
have the 50 per cent Canadian programming to start, going up to 60 per cent by
the seventh year of the licence, and of the remaining other, you know,
non-Canadian programming, we feel that it's difficult -- the reality is it's
difficult to put proportions onto what kind of, you know, levels of foreign
629 But the Showcase experience, just to give you a
little anecdote, is that I see no less than 3,000 films a year that are
submitted to Showcase for, you know, potential licensing. We, on average,
licensed 300 of those films. So we are looking at a 1-in-10 ratio. And I can
attest that of those that are not licensed, no -- at least 65 per cent are
foreign language, they are subtitled or dubbed, from countries like Italy,
Spain, France, Germany, Argentina, you know, the Asian countries, China, Japan,
and the interest in an independent film channel really, truly, is to provide an
independent point of view "autre"-driven perspective. So, there would be no
doubt in my mind that a huge proportion would be of the foreign
630 Now, on the same hand, talking about American
independent filmmaking, there's a strong tradition, in the U.S., of indie films
coming from the U.S. I mean every child, whether you are from a more privileged
background or a less privileged background, picks up a video camera à la Blair
Witch Project and goes off and shoots, you know, a feature film or documentary.
So, that being said, there is a wealth of material from the U.S. that has not
had any television exploitation.
631 But there's a quality issue. And as a
programmer, you know, we realize that though there is a wealth of material from
the U.S., in many cases it's not up to broadcast standards or content standards
that we would be interested in having reflected on this independent film and
632 THE CHAIRPERSON: And, now, the $20 million on
Canadian programming, I'm looking at -- it's mentioned in a number of cases, but
I'm looking at page 362, the top pagination, of your supplementary brief, at
paragraph 9. I believe that's probably your conclusion -- yes. Nowhere, I don't
think, had I seen that it would be 140 million, over seven years, for financing
of films and documentaries made by non-affiliated Canadian companies, but you
made this commitment, this morning, in your presentation.
633 MR. MacMILLAN: Absolutely.
634 THE CHAIRPERSON: And in the manner in which we
discussed, arm's-length, non-affiliated, et cetera, the 30 per cent. So that's a
commitment. I don't think it's in your application. It usually refers to 20
million per year, for each year of the licence, on the creation of Canadian
films and documentaries that would be suitable for other channels. So we have
established that --
635 MR. MacMILLAN: That's correct. And I think we
said that in our interventions, after the application.
636 THE CHAIRPERSON: Now, this will be a separate
sum to your Canadian-content expenditures and separately audited, from what I
637 Why have you chosen to make this separate from
your Canadian-content level?
638 MR. MacMILLAN: Well, this is not licence fees.
This is above and beyond licence fees. And so, we have, typically, only
reflected in the business plan for a channel. The money that we are spending on
licence fees for the use on the channel, which is sort of consistent with 93/93
and so on, this is above and beyond that. Separate. It's going to be equity
investments and/or distribution advances to those movies.
639 THE CHAIRPERSON: Except that, presumably, it
could have been worked into your Canadian content.
640 The aim of my question is to find out: Does the
programming that will result from these expenditures also show up, for example,
on Showcase, History Television? Or is it going to be licence fees for this
particular channel only?
641 MR. MacMILLAN: No. The licence fees in the
application are for this channel's use of a variety of movies.
642 THE CHAIRPERSON: And this 20
643 MR. MacMILLAN: But this $20 million is
separate, and it is to create new movies that, once they have had a theatrical
and a home video and a DVD, I hope you first, then, on television, see them on a
Canadian pay and pay per view outlet, but not --
644 THE CHAIRPERSON: But not on your other
645 What I'm driving at is: Is it going to be used,
in part, to satisfy your Canadian content --
646 MR. MacMILLAN: No.
647 THE CHAIRPERSON: -- requirements on services
for which you are already licensed?
648 MR. MacMILLAN: Absolutely not.
649 THE CHAIRPERSON: This will be a
650 MR. MacMILLAN: Completely separate from all
licence expenditures on any or all of our channels. It's not being -- the same
dollar is not showing up as a licence fee --
651 THE CHAIRPERSON: No, but it's not impossible
that it would satisfy exhibition levels on your other services?
652 MR. MacMILLAN: That's possible.
653 THE CHAIRPERSON: As second windows. Even first
654 MR. MacMILLAN: Yes, but --
655 THE CHAIRPERSON: It's not going to be just for
this service; it could enrich or enhance your ability to meet your commitments
on your other channels.
656 MR. MacMILLAN: Which would be
657 And we think that the more great Canadian
movies that are made available for all Canadian broadcasters -- pay , specialty,
conventional -- to use. that's fantastic. If it increases the
658 THE CHAIRPERSON: But it will at least be
audited separately, so that if we look at Showcase's requirements, or History,
we will audit them and then we will have to find another $20 million a year.
659 MR. MacMILLAN: Correct.
660 THE CHAIRPERSON: Over and above, I believe, the
first year's 30 per cent?
661 MS YAFFE: Yes, and this channel, The
Independent Film and Documentary Channel, does have a commitment to licence, at
a very significant Level 6, films directly for that channel which is beyond and
in the general programming budget for the channel. Those would be distinct and
probably find, after pay, their first window on the Independent Film Channel.
But that's a different -- that's right in the general budget of the
662 THE CHAIRPERSON: Now, your particular
commitments to independent producers in this application. At page 386 of your
supplementary brief, you have a commitment for six two-hour original
feature-length films and documentaries with first window licences given to
independent producers who are at arm's length from Alliance Atlantis And at page
378, you talk about your commitment to other producers. So this $20 million is
going to be, really, an additional commitment to independent producers, the way
it's framed now; so it's quite important that the commitment made at page 9 be
your commitment that it be made by non-affiliated Canadian companies because, as
I explained, I had not seen, anywhere, this particular
663 MS YAFFE: Yes, they are different. Can
664 THE CHAIRPERSON: That completes the questions I
have for the independent films and documentaries.
665 Now, we will move on to The Health
666 At the beginning, the nature of service and,
therefore, the issue of whether it's competitive, there's a possibility of
competition, according to them, with the Women's Network, also with Life Network
-- which, again, you can explain away, so to speak -- related to the categories
of services that you have chosen.
667 Do you have further comments about the extent
to which this will be not competitive with an existing service?
668 MS YAFFE: Yes, and I will ask Barbara Williams
to take you through that. Perhaps that's the best approach.
669 MS WILLIAMS: Our experience with lifestyle
programming is long. As you know, commitment to lifestyle programming has been
ongoing with Alliance Atlantis for many years. And, in particular, our
experience has been that lifestyle programming has been done, traditionally, in
bits and pieces, on a variety of other services, but, often, quite honestly, it
kind of gets lost in a broader schedule -- and the magic of specialty, frankly,
is when you pull that programming together and put it in the context of one
dedicated service that is serving one dedicated community, that that's when the
programming starts to leap off the screen and really become valuable and
important to the viewers.
670 My experience, obviously, is most obviously
with Life Network and I have, maybe, as a programmer, a bit of an additional
explanation as to why this service wouldn't be competitive to Life -- and I
think it applies to other services that are doing limited amounts of health
programming -- and that is that health is one of the many strands of programming
that are important to Life Network viewers, and we have had the wonderful
opportunity to experiment with health-related programming at Life for many years
now and we have experimented with a broad variety of genres, whether it's
phone-in programs, documentary programs, live operations -- which we did a
fascinating experiment on Life a couple of years ago where we broadcast a life
operation -- and all of that has taught us that there's incredible demand for
health information and we are seeing that where people are turning to every
source they can imagine, in addition to television, and we know that on Life
Network, because health is only one small part of its mandate, we can never
fulfil that demand from viewers -- and other services that are doing limited
amounts of health programming are in the same position, frankly -- and so, the
opportunity to offer a 24-hour seven-day-a-week service that is dedicated
exclusively to health programming, I think, is very valuable.
671 In speaking to the program categories, if I
could add that you will see in our program category list that we have excluded
one category which is found in all of the competing health applications, and
that is, we have not asked to include any dramatic programming at all on our
health service. We have done that very consciously. We take the health genre
very, very seriously. We believe that what is most important in terms of
offering a health service to Canadians is that it be a reliable, trustworthy,
accurate source of information that they can go to for every health need they
672 One of our concerns with running dramatic
programming, frankly, is that in all of its attempts to be the exciting,
compelling and engaging drama that it is, it does often take creative licence
with the content, and we would not want to put ourselves in the position,
frankly, of having to explain that creative licence that has been taken to our
viewers to have to put movies in the context of: Don't believe this part because
they really just said that in order to make the movie a little better. We wanted
all the time to be providing accurate and reliable information, and we believe
that there are plenty of opportunities to run compelling drama films based on
medical issues on other services.
673 THE CHAIRPERSON: This application is the one, I
believe, that has the highest Canadian content beginning in year 1 -- 60
per cent. What is your level of confidence that there will be sufficient
Canadian programming of the type that you have just described to reach 60 per
cent in the first year?
674 MS WILLIAMS: Again, I could speak to our
675 I think that one of the reasons we are a very
strong applicant for this channel is that we know better than anyone what it is
to offer a 24-hour a day, seven day a week lifestyle information channel that
has a high Canadian content. We are experienced at this. We have been doing it
at Life Network very successfully, as you know, for many years.
676 So we built a plan that has very realistic,
very doable, very practical numbers in it of dollars to be spent on original
hours that will make a strong, successful program schedule. We know we can do it
because we have been doing it for a long time.
677 I am very confident that we can meet our 172
original hour commitment in the first year handily and with quality
678 THE CHAIRPERSON: Yes, I notice that it is by
far the highest number of original hours, which I gather from your presentation
are minimums for original programming.
679 MS WILLIAMS: Yes.
680 THE CHAIRPERSON: Can you tell me, however, what
will be your weekly and annual repeat levels, if you have calculated one or the
other, of Canadian programming during the first, second and third wheel; that
is, six to midnight?
681 Have you calculated the repeats that will be
required to reach 60 per cent?
682 MS MIDDLETON: Our average repeat factor in year
1 is about 9 to 10, and stays pretty stable over the entire licence
683 MS WILLIAMS: If I could just add to that, again
back to our experience, we have found that that repeat level is a valuable
repeat level for viewers of specialty television. In fact, it honestly would not
be advantageous at some point to bring that repeat level down too much lower,
because one of the reasons specialty television is so successful with viewers is
our ability to provide programming to them at a variety of times when they may
find it useful for their life and their needs.
684 THE CHAIRPERSON: Now, you had not reached
conversion yet when you wrote this application, so you have category 15. If I
asked the same question, would I get the same answer as with films and
685 MS WILLIAMS: Yes.
686 THE CHAIRPERSON: Independent production --
other than the $20 million, according to Schedule 10, I think, we can calculate
approximately 44 per cent Canadian content acquired and 44 per cent in-house
production. Does that sound right to you?
687 MS WILLIAMS: That is approximately what our
illustrative schedule would show, yes.
688 THE CHAIRPERSON: And of that budget, what is
the proportion that would be dedicated to non-affiliated producers? Have you
thought about a number?
689 MS YAFFE: We have, and we have thought about it
in a general sense, I guess. Probably this answer would --
690 There are two ways to look at our contribution
to non-affiliated producers. In the drama category, obviously, we have committed
all $20 million of the above-the-expenditures budget and several of the other
features of that channel. Obviously we are a significant producer of drama, but
we have already gone to about 50 per cent of all the original programming on The
Independent Film and Documentary Channel that will be done by unaffiliated
691 On the information side of the programming, the
programming being created for the other three applications, we also have
addressed this question. We have thought about it a great deal. We have, as
Barbara said, had an enormous track record in working with independent producers
through all of our services, and continue to do that, and we are determined to
692 In this case, I guess because of the
challenging nature of the digital world, we have been wondering how best to
reflect some of those changes in the business plan. Not to suggest that we don't
need to continue to work with independent producers, but we raise the question
of whether or not the best quality programming, wherever you get it, is what is
going to make people buy these services.
693 We are also quite aware that the relationship
between these programs and their interactive capability is going to be a driver
at some point, two years, three years from now. A lot of that is best done in a
relationship inside the broadcast company.
694 However, we would never suggest that we can or
should produce all of the programming ourselves. So we have looked at all three
of our primarily non-fiction program schedules and suggested that we could live
with a commitment of about 35 per cent of the original Canadian programming, in
whatever format, going to the non-affiliated producers, as the definition we
discussed earlier today. That might rise over the licence period as we become
more stable and the business becomes more mature, but we are willing to make
that commitment from the beginning of the licences.
695 THE CHAIRPERSON: The $20 million a year, then,
is over and above, to the benefit of independent production.
696 MS YAFFE: Right.
697 THE CHAIRPERSON: At page 445, at the bottom of
that page, of your supplementary brief -- again the top pagination --
and again this morning, I believe, in your presentation you talked about the
removal of the health network, U.S., from the eligible list if you were
licensed. It says here that there are currently 900,000 Canadian homes receiving
the U.S. health network. What would be the proportion of the subscribers that
would be receiving it on an analog basis?
698 MS YAFFE: It actually is a mistake. It should
be 500,000. I am not sure if we had the opportunity to correct
699 THE CHAIRPERSON: Is that, then, all
700 MS YAFFE: It is not all digital, but it is
primarily digital. By far the vast number of those subscribers are
701 THE CHAIRPERSON: This correction is helpful, in
that, obviously, you would be removing it from analog by changing a digital-only
service for an analog service.
702 MS YAFFE: It is available in some very small
cable systems and was launched years ago, but those are very, very
703 THE CHAIRPERSON: But they would likely be Class
704 MS YAFFE: Yes, they would.
705 THE CHAIRPERSON: -- that already we have
706 MS YAFFE: Primarily.
707 THE CHAIRPERSON: Maybe a digital network
programming service, which would be the Canadian one, could
708 MS YAFFE: Right.
709 THE CHAIRPERSON: That is helpful. So we should
strike 900,000 and change it to 500,000.
710 MS YAFFE: Yes.
711 THE CHAIRPERSON: The Book Network -- the
nature of service definition, which I think I find at
712 MS YAFFE: Is it 478 maybe?
713 THE CHAIRPERSON: This is the one. The Book
Channel. It is 491 in the deficiency response. Fifteen disappeared. That was the
day of the conversion.
714 MS YAFFE: Yes.
715 THE CHAIRPERSON: Look at 491, which is your
response to a clarification question. I think we should use those as your
categories. Part 1 of your application, 15, is gone; right?
716 MS YAFFE: Yes.
717 THE CHAIRPERSON: I believe it was there at the
719 Now, these categories include 7(a), ongoing
dramatic series; 7(g), other drama; 7(c), specials, mini-series, made-for-TV
future films -- which raises again, of course, what is going to be the use
of these categories and what does it mean for the competitiveness and the
diversity of the service.
720 Because, the way I understand it, any book can
be translated into a movie or a drama or some other type of
721 MS YAFFE: Our commitment on the drama side is
that no drama would be shown on the service that didn't derive from a book. And
you are right, almost any book could be turned into a drama, but not all are. So
we are committing to the description of the drama being derived from the printed
word, the published material, books, et cetera.
722 As for the percentage of the overall schedule,
we believe that there is -- I think there is a response to an intervention
that we could live with a criteria or commitment that limited the number of
films on the service to reflect a similar condition we live with on History
Television, and that is that there would be one film in prime time -- no
more than one film in prime time -- dramatic film.
723 We don't actually see --
724 THE CHAIRPERSON: Per...?
725 MS YAFFE: Per night. Per prime time
726 We haven't proposed that in our illustrative
schedule. We have somewhere between, I think, three or four films in the week.
But I think they are an important way of showing people how the book has come to
television, and it would seem to me to be not as useful to limit it beyond what
we have suggested.
727 THE CHAIRPERSON: With regard to family-oriented
programming -- and I believe that animation is included;
728 MS YAFFE: Yes.
729 THE CHAIRPERSON: In your 7(e), my understanding
is that you would be prepared to accept a limitation?
730 MS YAFFE: Yes. We have agreed that only 25 per
cent of the programming on the Book Channel will be programming that is designed
to appeal to children, youth, age 17, and families.
731 It is a significant part of the channel, and we
would be wrong to suggest that children should be eliminated from the target
audience of the channel. But it isn't our primary focus. We really don't see
this as another children's channel. We believe there is a daytime schedule for
adults as well as a prime time schedule for adults that is important to bring to
732 THE CHAIRPERSON: So the 25 per cent is
something you could life with as the limitation?
733 MS YAFFE: Yes.
734 THE CHAIRPERSON: And then for films, the one
you mentioned earlier?
735 MS YAFFE: Yes.
736 THE CHAIRPERSON: Independent production, in
this case, do you have a percentage of the amount of programming -- other than
the general discussion we have had on this specific channel, where all of it is
owned by producers, 75 per cent by you and 25 per cent by Associated Producers
Inc., what would be the percentage, in your program schedule, that would be
produced by non-affiliated?
737 MS YAFFE: A minimum of 35 per cent, at the
beginning of the licence.
738 THE CHAIRPERSON: And you could be committed to
that, even by a condition of licence, without a problem?
739 MS YAFFE: Without a problem.
740 THE CHAIRPERSON: The program schedule shows
five co-productions, I believe, that would be probably derived from Schedule
741 What is the source? Do you know already what
will be the source of the co-production?
742 MS YAFFE: I will give Barbara a minute to find
that and then ask her to respond.
743 Do you have a title that has
744 THE CHAIRPERSON: No. I think this has been
derived from our analysis of --
745 MS WILLIAMS: You are speaking I think
746 THE CHAIRPERSON: There are five
747 MS WILLIAMS: Some of them in Schedule 10 have
been listed as co-production with independent producers, such as Book
748 THE CHAIRPERSON: Yes. What would be the
749 MS WILLIAMS: The Canadian Independent
Production Community would be the source for those programs.
750 THE CHAIRPERSON: But no
751 MS WILLIAMS: We have not identified producers,
at this point in time, no.
752 THE CHAIRPERSON: And it could be associated
producers, affiliated producers, if it doesn't put you beyond your
753 MS WILLIAMS: That's right.
754 MS YAFFE: Yes.
755 THE CHAIRPERSON: I think this is the one where
there is quite a number -- or is it the one with Great North?
756 There is one particular application that shows
many -- the source of programming. No, that's not the one. I think it's in
757 MS YAFFE: Yes.
758 THE CHAIRPERSON: Great North and the National
Film Board -- correct? -- is often the source?
759 MR. MacMILLAN: We could address that right
760 At the time of this application, Great North
was arm's length, as defined.
761 THE CHAIRPERSON: So there may have to be some
correction in the pages of Great North?
762 MR. MacMILLAN: Yes, but when we were putting
the application together, we didn't know that we were going to purchase the
763 THE CHAIRPERSON: Right.
764 MR. MacMILLAN: Now that we have, it's obviously
related and it would qualify in a different way.
765 THE CHAIRPERSON: Yes. So we won't have to
reclarify that because it fits within your broad commitment, in that
766 So Book Network, that's it.
767 Now, the last one, Signature. It's getting
shorter. Maybe I am getting smarter or more tired.
--- Laughter / Rires
768 MS YAFFE: I can hardly wait until the end of
769 THE CHAIRPERSON: So, nature of service:
entirely devoted to programming of a biographical nature.
770 Again, we have a broad range of program
categories, which is described in Part One, I think it's page 538, at the top,
which -- we are back to Category 15 -- at 538 you have 7A, 7F, 7G and, of
course, it raises the question of how the programming of a biographical nature
will be displayed or broadcast in what proportion to retain the biographical
nature of your service?
771 MS YAFFE: All of the programming will focus on
the telling of real people's real life stories. Whether they be famous or
infamous or unknown, our view is that there would not be a program on the
service that would not tell the story of a person's life. So that's the theme
that would run through all these categories of programming.
772 THE CHAIRPERSON: So you don't have any
proportion projected as to how many films, how much drama, how much programming,
other than film or drama?
773 MR. BOLEN, SR.: This would make up a very small
proportion of the schedule. It would be, primarily,
774 THE CHAIRPERSON: What would? What's the
775 MR. BOLEN, SR.: Other than films about
individuals and drama, there would be a very small proportion of other
776 The reason we put in a category, for
instance -- am I misunderstanding the question?
777 MS YAFFE: If I can, I think that the three
categories of programming we do believe will make up a substantial amount of the
programming will be documentaries about individuals and dramatic works about
778 Other programming, for instance, comedy
sketches, might be a very small part of the programming.
779 MR. BOLEN, SR.: Yes, that's where I was going.
It's all about individual lives. Every program is about the individual life of
some person or persons' individual lives.
780 Comedy was put in, for instance, because you
might occasionally have a program -- for instance, we have a program on History,
called "History Bytes", which actually does historical sketches based on the
true lives of individuals. For instance, we did a piece on Charlemagne. Well, we
would want to exclude that, but it would be a very, very small part of the
schedule. That's not the way we are going. It is a serious service, which is
primarily documentaries and feature films about individuals.
781 THE CHAIRPERSON: In response to concerns about
competitiveness, should the Commission limit the amount or number of
782 MS YAFFE: We would accept the same condition
that we suggested or modified to fit this service that all films would tell the
story of an individual's life -- that would be the theme that all films
would have to address -- and that we would live with the condition of one film
in prime time as a maximum on the schedule.
783 THE CHAIRPERSON: Would you accept the condition
of licence that none of your documentaries be about CRTC
--- Laughter / Rires
784 MR. BOLEN, SR.: No.
785 THE CHAIRPERSON: -- and their
786 MR. BOLEN, SR.: No. Their lives are far too
interesting. We would definitely want to deal with them.
--- Laughter / Rires
787 THE CHAIRPERSON: You don't think it would make
for interesting programming? We will leave it to CPAC.
788 If I ask the same question about filler
programming, I would get the converted answer. Correct? That you would
categorize it according to categories. That's right?
789 MS YAFFE: Yes.
790 THE CHAIRPERSON: You make a commitment, I think
at page 490, that only 15 per cent of your programming would be about
791 How would you define that?
792 MR. BOLEN, SR.: These would be programs that
are about the lives of Americans. American citizens. Very simple.
--- Laughter / Rires
793 MR. BOLEN, SR.: And the reason we do that is we
think that there already are a great number of biographies about Americans
available in the marketplace.
794 For instance, the only daily biographical
program available in Canada comes from the United States. It's on the U.S.
service and largely, not exclusively, but largely deals with U.S. celebrities
and politicians. We don't think that there is much point in doing that on a
Canadian service, like Signature, where we are trying to meet the demand for
Canadian stories with a high level of Canadian content.
795 THE CHAIRPERSON: So it would be rather simple
to monitor that?
796 MR. BOLEN, SR.: Absolutely. If they are an
American citizen they are not on our channel -- I mean other than the 15 per
cent. I mean the 15 per cent, yes.
797 THE CHAIRPERSON: And it wouldn't matter what
these Americans are doing in any one year?
798 MS YAFFE: Or where they are living or what they
are associated with. We would use their country of origin.
799 THE CHAIRPERSON: Now, your Canadian programming
expenditures, we touched upon that earlier and I had forewarned you that there
was a proposal and this is it, where the calculation that we have made,
according to the formula, is 42 per cent and your commitment is
800 MS YAFFE: I am sorry. I
801 THE CHAIRPERSON: The one time I am trying to
give you a break and you are not listening.
802 MS YAFFE: Yes.
--- Laughter / Rires
803 THE CHAIRPERSON: You have committed to 45 per
cent of expenditures. However, at least you would be prepared to live with the
formula we have -- and we have discussed how it could be
804 Our calculation is 42 per cent, rather than 45.
Do you still want to hold to 45 per cent?
805 MS YAFFE: Yes, 45.
806 THE CHAIRPERSON: Believe it or not, this is
807 Now, Commissioner Wilson has a question. I
don't know if any -- Madame Bertrand has one and perhaps legal
counsel -- no.
808 Before I leave you to them, do you feel you
have had a good airing of your proposals?
809 MS YAFFE: Yes, we do.
810 THE CHAIRPERSON: And that this formula has not
811 MS YAFFE: No. I think it's efficient and I
think we have -- beginning with the general issues and going to the additional
channels is a good idea.
812 THE CHAIRPERSON: And there is nothing you feel
you want to add that --
813 MS YAFFE: I will just ask my
814 THE CHAIRPERSON: Well, not a sermon.
--- Laughter / Rires
815 THE CHAIRPERSON: Something that would ensure
that you have been treated fairly.
816 MS YAFFE: Yes, absolutely, we
817 THE CHAIRPERSON: And perhaps at the end, if we
are not too hungry, maybe you will have a chance to wrap up, but we have further
818 Commissioner Wilson, I will first ask Madam
Chair to ask her questions and then to you and then to counsel.
819 CHAIRPERSON OF THE COMMISSION: Alors, good
morning. It's me. It's my voice. It's really me. It's just a change of
--- Laughter / Rires
820 CHAIRPERSON OF THE COMMISSION: I would like a
clarification. I think it has been well covered, and probably if I would have
the transcript I would see it, but it's when we talk about diversity and the
fact that owning other analog services then you can niche and leverage the
content yet the original Canadian programming would be really only -- the first
viewing would be on the digital channels, yet at a further question Mr.
MacMillan kind of specified that it would be an advantage because then it could
help the Canadian exhibition on all channels, in a sense, that the same program,
although considered to be original programming, on only one of the licenses, it
could help the general wealth of Canadian programs of your undertakings if you
were to be licensed.
821 You have said, earlier on, that there wouldn't
be more than a 10 per cent overlap. So what's the overlap? Is it the general
exhibition? Would the 10 per cent apply as well to Canadian
822 I just want to make sure that I didn't grab
that figure out of not understanding correctly?
823 MR. MacMILLAN: I think Phyllis would like to
add, but I think that my comment was mainly focusing on the $20 million a year
of new movies. There, what I was alluding to, was that these movies would, after
they have run in the theatres and DVD and home video, appear on a variety of
Canadian broadcast outlets, pay per view, pay, conventional and specialties,
including even the film and doc and perhaps Showcase or others.
824 So I was referring to them being available to a
wide range of broadcast outlets in that comment. But I think your question is
wider than that, and I will let Phyllis address that.
825 MS YAFFE: We looked at each of the services and
we suggested that there should be a limit -- our view is there should be a limit
of shared programming, and our view is, particular, for instance, for Signature
and History Television, the overlap could be no more than 10 per cent of the
schedule; for Book and History, an appropriate 10 per cent; for Life and Health,
10 per cent.
826 For Showcase and Independent Film, we would
never program the same film on both services, so I think it would be even less
than 10 per cent. We would always be going in different directions creating two
827 There are elements of programs that might be
used in different ways. That clearly is one of those issues that you raised in
the call and that is repurpose programming. Of course that's one of the
advantages that an incumbent does -- a licensee does have. We do have a library
of programming we could repurpose, but that would be a separate
828 So we see that as a very small overlap between
any of the services.
829 CHAIRPERSON OF THE COMMISSION: And would that
be in a given year?
830 MS YAFFE: Yes.
831 CHAIRPERSON OF THE COMMISSION: Could we have a
greater overlap, like, from one year to the other, if we were to consider --
like, on a three-year basis, could we have more of the same or
832 MS YAFFE: I think we could live with it in any
833 CHAIRPERSON OF THE COMMISSION:
834 MS YAFFE: It could be appropriate for a
835 CHAIRPERSON OF THE COMMISSION: Okay. thank
836 Thank you.
837 THE CHAIRPERSON: Commissioner
838 COMMISSIONER WILSON: Thank you, Madam
839 I just want to pursue for a minute on the
notion of direct competitiveness, because I'm having a bit of a problem
understanding the notion of competitiveness when we are talking about such a
limited subscriber universe and digital.
840 I just wanted to sort of pick your brains on at
what point does a digital service become truly directly competitive with an
analog service given that it will be years before the digital subscriber
universe will be significant in any sense of the word. If that is the case, does
that give the Commission more flexibility in terms of approaching the issue of
841 I will just quote you some numbers. Some of
them are yours and some of them are CHUM's.
842 As an example, for the Independent Film and
Documentary Channel, you project your first year at 1.5 million subs and
increasing to 3.2 million over seven years; CHUM projects, in year 1, 915,000
increasing fairly slowly to 1.5 million. Theirs may be a little more
pessimistic than yours. They are quite a bit more pessimistic than
843 Given that the analog world will continue to
exist in cable, as they sort of tier digital above it, and your service,
Showcase, for example, will be available on analog and your subscribers will
continue to receive that service, and a much smaller number of subscribers will
receive any independent film or documentary channel, whether it's yours or
somebody else's, how realistic is the threat of direct competitiveness
considering that we are talking about a universe where the number of subscribers
are so low?
844 Maybe you could just begin by telling me how
many subscribers does Showcase have today in analog and digital
845 MS YAFFE: Showcase has, I think,
5.2 million subscribers at this point. It has taken us awhile to get there
but we are very delighted with it.
846 And you're right. You know, immediately out of
the gate we don't project to be anywhere near that. But, our view, and I think a
thread that runs through all of our applications here today, is we are very
optimistic about this. We have put very high Canadian content levels on the
table -- we have put very high original Canadian programming levels on the
table, and of course our commitment to the 20 million above and beyond for
independent film because we think these are going to be very viable, exciting
businesses for us, as well as programming opportunities.
847 So our view is that we will get, within this
licence term, to about 50 per cent of the households in the country having a
digital technology in their homes.
848 I think people underestimate -- there is a sort
of a truism about new technologies we have all sort of -- we may or may not
learn from, and that is we are always overly optimistic about what they will do
in the short term but not realistic about how much they will change our lives in
the long term. I guess we tried to take that long-term view and say that by the
time this licence period has run out we would have about half the homes in the
country with access to this technology.
849 So for us directly competitive is a very
serious issue. It may happen a little faster or it may happen a little slower,
but I think it's important that it be taken into account. Our approach I think
has been to say there are ways to test. They are complicated, I agree, but they
are important and they give the Commission the ability to maintain the strength
of the analogue services. I know we are not dealing with the migration issue,
but that too will come into play as time goes on.
850 So, for us, we believe that it is a significant
issue and it has to be taken very seriously here.
851 COMMISSIONER WILSON: Right from day one, or do
we have, you know, a two to three-year period where there is more
852 MS YAFFE: I guess the issue would be that once
the service is licensed and out there it will be that service. It will compete
for programming, it will compete for viewers, it will create its own brand in
the marketplace. I'm not sure how one could change that throughout a period of a
853 I guess, you know, I wouldn't have said it
awhile ago, but seven years of a licence goes by very quickly, and we have
learned that we should be thinking about the long term for these licenses and
that's why we think directly competitive is important.
854 COMMISSIONER WILSON: Mr. MacMillan, you have
nothing to add?
855 MR. MacMILLAN: It's hard to get a word in
--- Laughter / Rires
856 COMMISSIONER WILSON: I mean, I would expect you
to give that answer.
857 But I'm trying to approach this -- you know, as
I sit here and I look at 88 applications, I'm trying to define what "directly
competitive" means. Obviously, we are entering into a universe where the niche
has become smaller and more distinct as opposed to the analog world. I'm trying
to get a handle on, realistically, how direct is the threat? I mean, how many
people are actually going to be watching?
858 We have been warned over the last couple of
years not to refer to viewers as "eyeballs", but how many people are going to be
watching the services versus the analog services which have such strong
859 MR. MacMILLAN: I think that the experience here
and elsewhere is that people love choice and the reason why such a high
percentage relatively of Canadian TV viewing is spent now watching Canadian
specialty, American specialty and Canadian pay is because it offers a huge
choice that wasn't on the table five or ten years ago.
860 So I think that Canadians are going to continue
to pursue that demand for choice. I think that time will show that our
projections on the digital roll out in fact are conservative not optimistic. I
can't imagine why people wouldn't want to have a box that can deliver this range
of channels, pay per view. There are a lot of other goodies and bells and
whistles that come with this technology.
861 And we have to get it right now. You know, you
are right. The penetration in day one isn't the penetration of year two or year
three, but once you have made your decisions we will all live with them for
quite some time, and if the issue of overlap is a certain concern or a certain
size on day one it is only going to become a bigger and bigger issue every month
that goes by, every month that more and more Canadians subscribe to
862 COMMISSIONER WILSON: I guess you would be
getting better at marketing and selling your product as time goes by as well and
building your brands and establishing yourselves in the marketplace. So there is
that activity taking place on a parallel basis as well.
863 MR. MacMILLAN: Looking back five or ten years
ago it is have to imagine some of the pessimism and the nay saying that was used
to describe the previous several rounds of analog digital channels. How may
channels do we need? Who is going to watch them? It has been proven that people
want that choice. I think we are going to enjoy this digital. I know it is a new
technology, but nevertheless I think we are underestimating how popular they can
be if they are properly marketed.
864 COMMISSIONER WILSON: Thank you.
865 THE CHAIRPERSON: And I suspect,
Mr. MacMillan, that we will hear more about competitiveness of Category 1
services when we discuss the migration of analog to digital when the same
"eyeballs" -- I didn't say that -- will be watching both and the
idea of Category 1, I guess, is to try to increase diversity and protect so to
speak the genre so it is not unrelated although it is not a matter that is
before us as I said earlier this morning.
867 MR. STEWART: Thank you, Madam Chair. A couple
of questions of clarification.
868 In your opening remarks you said that I believe
the Health Network has approximately 500,000 digital subscribers and yet I note
in your reply of the 17th of July, I believe in paragraph 8 you said that there
were already close to 300,000 Canadian subscribers to the Health
869 Could you explain?
870 MS YAFFE: We have been adding them and we are I
think just over 500,000 to date -- at this moment.
871 MR. STEWART: And I believe you also mention
that there was some analog subscribers.
872 MS YAFFE: There are a small number of analogue
subscribers in Class 3, primarily cable companies.
873 MR. STEWART: Can you give us, or can you give
the Commission any idea of what proportion?
874 MS YAFFE: I could actually file at the
Commission a list of those companies and the size of our subscribers if you
875 MR. STEWART: Thank you very
876 MS LYONS: I could add to that that the digital
subscribers amount to 433 so it is very minimal.
877 MR. STEWART: Thank you.
878 With respect to the Book Channel, you may have
covered this with Chairperson Madame Wylie, but the number of hours with respect
to drama that you propose to show, can you just clarify that for the record
879 MS YAFFE: I think our commitment was that we
would accept a condition limiting us to two things: Films that were derived from
published works, and also no more than one film in prime time a
880 MR. STEWART: And that is the extent of your
commitment, is it, with respect to drama.
881 MS YAFFE: To feature films.
882 MR. STEWART: To feature films. But my question
was with respect to drama in general as a percentage of the schedule. Are you in
a position to say?
883 MS YAFFE: I am going to ask Barbara to respond
to tell you where we are in our proposal today.
884 MR. STEWART: Thank you.
885 MS WILLIAMS: On the Book Channel what we are
looking at right now is approximately 20 per cent, actually on the illustrated
schedule you will see is dedicated to drama. There were sort of two approaches
to this. One is a percentage and one is a scheduling opportunity and the reason
why we were asking from a programmer's perspective to have the ability to run
one movie a night is not for the cumulative percentage frankly that that allows
us because we wouldn't be able to take advantage of that frankly and still hit
our Cancon requirements, but rather because as a programmer you want the
flexibility to maybe some weeks run a whole week of movies that are related to
one author and be able to provide that as a block of programming to viewers and
to have that kind of flexibility as a programmer to organize your drama content
was what we were after in terms of the flexibility to run one a night although
as you will see from our schedule at this point we only see managing four films
a week on an ongoing basis in the evenings and still hit our
886 MS YAFFE: So I think as a percentage of
schedule, we were suggesting somewhere around 20-25 per cent drama would be
appropriate prime time.
887 MR. STEWART: Thank you.
888 Those are all my questions, Madam
889 THE CHAIRPERSON: Mr. MacMillan I am told that
Torontonians don't eat lunch before the sophisticated hour of one. So we will
give you five minutes to wrap up.
--- Laughter / Rires
890 Should you want it, should you want it or have
an Ottawa lunch.
891 MR. MacMILLAN: After my last comment, Phyllis
wants me to go first.
892 Thank you very much. First of all, we have
enjoyed this opportunity to present to you. It sort of fun to be the first
applicant and to see the direction of the hearing, but we have been looking
forward to this for a long time -- a very, very long
893 One of the most important reasons why we merged
Atlantis and Alliance a couple of years ago was to create a broadcast platform
that was big enough and robust enough that we would be able to launch new
channels into this new digital world.
894 So this is central to our overall corporate
strategy. We know we have the marketing skills, we have the programming
experience, we have the channel platform because of the merger, we have the
financial resources and we think that the four applications we put in front of
you really do not only meet our corporate goals, but more relevantly from your
point of view no doubt the needs of Canadian viewers.
895 As I said in our opening remarks, we think that
we have hit five very important themes and criteria. We have dealt head on with
the issue of wholesale rates which we think is very, very important, Canadian
original content, not just more of the same, synergistic applications with
existing services and yet creating diversity not just more of the same,
interactive TV and Web applications and even though all that technology is not
here today, these vertically themed clearly defined communities of interest are
going to be the types of programming that will survive when interactive is more
a reality, and finally, categories and genres that are attractive to digital box
896 So I submit that we are not shy about the
future. Our projections for digital penetration are strong, but we think this is
not the time for shrinking violets to be here applying for very important
privileges. Even tough this is digital, it is still a privilege and that is one
of the reasons why our commitments to Canadian content is so clear and so front
897 THE CHAIRPERSON: That's not a comment about the
--- Laughter / Rires
898 Because it is not the right phase for
899 We thank you for your cooperation, Mr.
MacMillan, Ms Yaffe and your team. It has been, I am sure, a long morning. I am
sure the term goes by faster, Ms Yaffe, than the hearing.
--- Laughter / Rires
900 Have a good lunch. Unless my producer
disagrees, we will be back at two o'clock. Do I hear anything from CPAC?
901 So at two o'clock we will resume.
--- Upon recessing at 1240 / Suspension à 1240
--- Upon resuming at 1405 / Reprise à 1405
902 THE CHAIRPERSON: Mr. Secretary.
903 MR. CUSSONS: Thank you, Madam
904 Our next applicant is Rogers Broadcasting
Limited, OBCI, for four new Category 1 services namely ZDTV Canada, Today's
Parent TV, the Biography Channel and the Documentary Channel.
905 there is a maximum presentation time of 35
minutes. I will ask Mr. Viner to introduce his colleagues, and I understand, Mr.
Viner, after your presentation that there will be a brief break while various
members of your party change seats.
906 Mr. Viner.
PRESENTATION / PRÉSENTATION
907 MR. VINER: Thank you, Mr.
908 Madam Chair, Members of the Commission. Before
we begin, I would like to introduce our panel.
909 I am Tony Viner, President of Rogers Media.
With me today are a diverse and dynamic group of people representing the four
Category 1 applications we have before you.
910 On my far left is Shelley Blaine Goodman,
A&E's "ambassador" to Canada. Next to Shelley is Holly Bennett, editorial
director of Today's Parent Group. To my immediate left is Alison Clayton, the
Executive Director of the Rogers Cable Network Fund, a former producer,
distributor and broadcaster and our "quaterback" on these applications. If we
are successful, Alison will be responsible for managing these
911 On my right is Joe Gillespie, the Executive
Vice-President and COO of ZDTV, the U.S. cable network and integrated Web sit
that is all about computing, technology and the Internet.
912 Next to Joe is Peter Raymont, one of Canada's
most respected filmmakers and a partner in our documentary
913 In the second row, far left, is David Paperny
an Academy Award nominated filmmaker from Vancouver, also a partner in our
documentary channel application. Next to David is Evan Solomon, the co-founder,
along with Andrew Heintzman of Shift Magazine. Next to Evan is Kevin Sullivan,
the producer of Anne of Green Gables and Road to Avonlea. Laura Nixon,
Vice-President, Finance and CFO of Rogers Media is seated to Kevin's right. Next
to Laura is Mike Lee, Vice-President and General Manager of interactive
Television Services for Rogers Cable.
914 At the far right of the second row is Jim
Nelles, Vice-President, Marketing of CFMT-TV. Finally, Chris Kelly, President of
Strategic Council Inc. will address research questions.
915 On the side panel, starting on the far left is
Ken Englehart, Vice-President Regulatory, Rogers Communications. Phil Lind,
Vice-Chair of Rogers Communications. Ken Stein, Senior Vice-President, Corporate
and Regulatory Affairs, Shaw Communications. Steve Stander, Vice-President,
Legal and Business Affairs, International and Business Development, A&E
Networks. CarolAnn Dolan, Vice-President, Documentary Programming and
Administration and Executive Producer Biography, and Andrew Cochran, President,
Cochran Entertainment Inc.
916 Madam Chair, Members of the Commission, we are
here today because we are both striving for the same thing, the successful roll
out of digital services to Canadian consumers. This has been our mutual goal for
some time. To that end, the cable industry has invested billions of dollars and
the Commission, through its decisions, has encouraged the movements towards
917 Now, however, we both realize that the
fundamental driver for digital penetration is programming. Without attractive
programming choices, digital boxes will never be anything more than a piece of
918 In putting together our applications, we first
looked at the criteria you set for new programming services.
919 We then examined our strengths. The result is
four Category 1 applications that meet and indeed surpass your criteria and
build on strengths within our company.
920 MS CLAYTON: The Documentary Channel is a
logical extension of our long established relationship with Canada's documentary
filmmakers. For over 20 years though Rogers TeleFund, Rogers Documentary Fund
and Rogers Cable Network Fund, we have been an unwavering champion of Canadian
documentaries. Rogers has earned the trust and respect of Canada's documentary
filmmaking community through our ongoing financial commitment to their
productions and our knowledge of their craft and their business in the view of
Canada's documentary filmmaking community through our ongoing financial
commitment to their productions and our knowledge of their craft and their
921 In the view of at least 160 Canadian filmmakers
who wrote letters of support there is no company in Canada better equipped than
Rogers to launch a new programming service devoted to this uniquely Canadian
forum of expression. This expertise is only enhanced by our partnering with some
of Canada's most respected filmmakers.
922 Today's Parent, Rogers parenting magazine and
Web site is a Canadian success story with 17 years experience and more than
700,000 readers each month, Rogers is extending that knowledge to Today's Parent
923 Add in the internationally renowned programming
expertise of Kevin Sullivan and Trudy Grant and we have a channel that will be
as trusted and as popular with Canadian parents as is our
924 You encouraged relationships with foreign
programming services. The Biography Canada application is based on the strong
historic relationship that Rogers and Shaw have established with A&E.
A&E is one of the most successful specialty services in North America. It
pioneered biography programming and has now launched a digital specialty service
in the United States entirely devoted to that genre.
925 ZDTV is a perfect fit with our companies and
Shaw's extensive experience in new media, the Internet and interactive
television. We have worked together through @ Home Canada, now Excite.ca, to
create some of the most innovative audio and video Canadian new media
926 ZDTV is the fastest growing cable channel in
the United States. It currently reaches over 19 million homes and is the world's
leading source of computer technology and Internet programming.
927 These partnerships with Biography and ZDTV give
us immediate access to category leading brands, proven marketing expertise and
vast established programming libraries. This instant knowledge and know-how will
allow us to hit the ground running when we launch.
928 MR. VINER: In your licensing framework policy
notice, you noted that in order to facilitate the roll out of digital services,
the new specialty services would have to be attractive to consumers. Our
research clearly shows strong consumer demand for the categories that we have
applied for, with two of our applications, the Documentary Channel and Biography
Canada making it into the top five choices for Canadians.
929 Today's Parent TV generates substantial
interest -- that is 76 per cent of those parents with young children.
Our technology in computer channel, ZDTV Canada, is of interest to nearly 690
per cent of those connected to the Internet. More than 13.5 million Canadians
have access to the Internet, a number growing every day.
930 So we see this channel as a very strong driver
for digital services. You wanted diversity. There are no channels in Canada
similar to what we are proposing. We plan to offer Canadians round the clock
documentaries, biographies day and night, programs for parents whenever their
busy schedules permit, and shows about technology, computers and the Internet 24
931 Most of the programming will never have been
seen on Canadian television as there just haven't been any venues
932 Contribution to Canadian programming is another
important requisite. Each of our applications provides a higher level of
Canadian content than that specified by the Commission and two of our
programming services, the Documentary Channel and Biography Canada, have
committed to acquiring a minimum of 95 per cent of their Canadian programming
from independent producers.
933 There is no broadcasting company in Canada
better equipped than Rogers to introduce new services which will make the most
innovative use of the digital medium.
934 Our position at the forefront of new media and
interactive television combined with the award winning Web sites of Today's
Parent, Biography.com and ZDTV.com, gives us a decided advantage in a digital
935 Our proposed services are based on reliable
business plans that combine realistic subscriber projections with affordable
rates, high enough to be assured of enough revenue to support quality Canadian
programming yet reasonable enough that consumers will be able to afford the
936 And finally Rogers has the proven ability to
fulfil our commitments to Canadian viewers and to the Canadian Broadcasting
937 We have an established track record in
specialty television. We were a founding partner in YTV, playing a significant
role in making it one of Canada's most successful specialty television services.
In fact, we were there at the beginning when the future of specialty channels
was uncertain and when no one else was willing to invest in a programming
service for children and young people.
938 We will now address each of our applications in
greater detail in the following order: Biography Canada, ZDTV Canada, Today's
Parent TV and the Documentary Channel. In the interest of time, we will present
each without interruption.
--- Video presentation / Présentation vidéo
939 MS GOODMAN: Harry is right when he says that
Biography is more popular in Canada than in the United States. We know that
Canadians love Biography. The program consistently attracts a larger share of
the viewing audience in Canada than in the U.S.
940 MS CLAYTON: Harry also makes a good point when
he says that it isn't where a person comes from that is relevant with
biographical programming, but rather what that individual has accomplished in
their life that is remarkable, noteworthy or inspirational.
941 As part of our research for Biography Canada,
Rogers and Shaw have launched a Web site at Excite.ca, asking Canadians who they
would like to see featured on Biography. We have received well over 1,700
responses from all across Canada, and the results are both enlightening and
942 As of this past weekend, the top six choices
include: a Greek folk singer, Nana Miskouri; a Canadian wrestler, Brett Hart;
Pierre Trudeau; Wayne Gretzky; Jamaica's Bob Marley; and Garth Brooks. A diverse
group, to say the least.
943 The Biography Channel builds on the very
successful Biography brand. It is for those viewers who want a more in-depth
biographical experience. This is accomplished by matching biographies with
documentaries and movies to offer multi-dimensional looks at the people who
944 For example, one programming block could be
centred around Anna Leonowens of Anna and the King fame. Anna, who in the 19th
century became governess to the children of the King of Siam, is buried in
Montreal. Our biography, "Anna Without the King", from a Quebec based filmmaker,
is a look at this controversial woman through the eyes of her
great-granddaughters who live in Canada. The companion movie would be the 1956
Yul Brynner classic "The King and I". The documentary could be "Nannies",
produced for Britain's Channel 4, a critical examination of the relationship
between employers and nannies.
945 Another example where Biography Canada could
offer viewers an in-depth look at an exceptional Canadian would be centred on
Billy Barker, a Canadian farm boy who rose from the trenches in the first world
war to become a brilliant fighter ace. From Ocean Entertainment in Halifax,
"Barker VC: Forgotten Hero" is a one-hour biography of Canada's most decorated
war hero, a man portrayed by some as a crusading knight of the sky, while
others, such as Ernest Hemingway, portrayed Barker as an angle of death in "The
Snows of Kilimanjaro", which would be our companion feature
946 Biography Canada has what it takes to be a
successful driver for digital: One, a powerful brand. This is a key
consideration when launching a new digital channel in a multi-channel universe.
Biography, supported by its monthly magazine, is one of the most popular and
recognized television brands in North America.
947 Two, quality programming: another key
consideration if digital is to be launched successfully. If Canadians don't like
what they see, they will not support the roll-out of digital. A&E's library
will make possible the quality that will attract both subscribers and
948 Three, a companion Web site: Biography.ca will
be able to piggyback on to Biography's existing award-winning Web site, which
will make it the ultimate on-line biographical resource, with 25,000 names to
949 Four, an economical cost structure: co-locating
at CFMT's state of the art facilities will make it possible for Rogers to launch
a high-quality, yet affordable programming service.
950 Five, diversity: consumers will be attracted to
digital only if it offers something that they currently don't have. Biography
Canada, with its round the clock focus on interesting, entertaining people,
certainly meets this criteria.
--- Video presentation / Présentation vidéo
951 MR. GILLESPIE: As you have heard from Tilde,
our virtual host, ZDTV is the fastest growing cable channel in the United
States. We are currently in 19 million homes and expect to be in 23 million by
the end of this year.
952 We are optimistic that this growth will
continue, given the ongoing explosion of the Web and the fact that we have new
953 ZDTV was launched three years ago by the
publishing group Ziff Davis -- thus the name ZD -- publishers of such magazines
as PCWeek and MacUser. Late last year Paul Allen, one of the two cofounding
partners of Microsoft and an early investor in the channel, increased his stake
to become the sole shareholder. Mr. Allen is very committed to the channel, and
along with plans to invest significantly in the programming and marketing we
will also be changing the name -- which will remove the ZeeD/ZedD
954 I expect that we will have an announcement in
the next few weeks, and of course this would be the name of the channel in
Canada as well.
955 MR. SOLOMON: Technology is central to every
modern society. No single issue will have as much impact on the way we live, and
nothing will separate people, cultures and countries in the future more than
technology. Every country that wants to remain culturally and economically
vibrant must understand technology.
956 From theorists like Marshal McLuhan and Harold
Innis, to companies like Northern Telecom and entrepreneurs like Terry Matthews,
Canada has been at the centre of many of the most vital developments in
technology globally. We have covered the vast geographic distance of this
country with one of the most sophisticated communications infrastructures in the
world, and we have used it to tie together a probably small and diverse
population across an impossibly large land mass. Canada has a rightful place at
the table as a country that uses and understands technology at the highest
957 Television itself will be centrally involved in
the next wave of communications as television and the Web begin to merge,
opening the door to a wide range of new programming and new content options.
Canadians need to be at the forefront of these developments, looking for the new
formats to tell these stories.
958 ZDTV Canada will personalize the subject that
is often seen as cold and faceless, dominated by machines, binary numbers and
arcane jargon. In reality, technology is about people and things that matter to
people. It is about entrepreneurs and it is about risk takers. It is about big
dreamers, big dreams and big ideas. And it is about the styles and attitudes
that are centrally interwoven into our daily lives.
959 Building on the skills of ZDTV, ZDTV Canada
will make technology interesting, useful and relevant. In doing so, we will take
away the fear of technology and replace it with the incredible promise and
excitement of technology and the need to understand it fully.
960 Canada has watched the rise of powerful
American technological clusters, such as Silicon Valley and Silicon Alley
radically redefine our economies and lure some of our best and our brightest
talent to the U.S. We need to confront and embrace the role that technology has
on our lives and turn this trend around to our own advantage.
961 For all of these reasons, it is vitally
important that Canadians have a channel that is devoted to the subject of
technology. ZDTV Canada is the best choice to make.
--- Video presentation / Présentation vidéo
962 MS BENNETT: Parents want to be part of a
community of parents. They relish opportunities to share the joys and challenges
of raising children. They want to hear about other parents' experiences and
recount their own. They want to exchange information and parenting tips. In
times past, parents found community by talking with their own parents and other
members of the family or by chatting with the neighbours over the back fence.
Today, when families are more geographically dispersed and both parents are
often working, they need to find new ways to belong to a community of
963 Today's Parent has established such a community
of Canadian parents through its widely read magazines and its much-visited Web
964 Today's Parent TV will extend that community of
parents to television.
965 MR. SULLIVAN: My wife, Trudy and I, as the
parents of three young children, have been members of Today's Parent community
since our first daughter was born nearly 12 years ago. We came home from the
hospital with a copy and a baby. So we certainly were not surprised when the
research for this television channel demonstrated such a high level of interest
amongst families with young children. I can't count the times we have thumbed
through the pages looking for specific advice or information.
966 We are really thrilled to be part of this
application for Today's Parent TV. It seems like such a logical extension to the
magazine, and we are very excited by the wide parameters of interactive
television because of our firm personal belief in electronic
967 At Sullivan Entertainment we have been
committed to creating interactive environments for all of our programming,
having seen the phenomenal success of the Web site we set up this spring for
Anne of Green Gables: The Continuing Story. We had a staggering 4.5 million hits
in one month alone. And at the request of Yahoo, we also set up a program of
968 We believe in an interactive environment for
the dissemination of knowledge. As independent producers, we applaud Rogers'
commitment to 65 per cent Canadian content by Year 5. There is currently very
little Canadian programming available to audiences, and Today's Parent TV will
be a definite stimulus.
969 We also like the proposed programming
philosophy -- which is very similar to that of the magazine. That is to say that
the channel will not position itself as an expert that comes in with the answers
but will ensure that parents themselves are heard from.
970 We know this is a strong partnership with each
member bringing their own expertise to the application: Rogers, obviously a
leader in new media and interactive television; Today's Parent Group, Canada's
leading parenting communications company; Global, one of the most experienced
broadcasters in Canada; and ourselves, independent producers with an
unparalleled track record in reaching some of the widest audiences in Canadian
TV history, with exclusively high quality Canadian programming that wins awards
at home and around the world.
971 We are confident in the venture's solid
business plan and that Today's Parent TV will be the destination of choice for
--- Video presentation / Présentation vidéo
972 MR. RAYMONT: As one of the founders of the
Canadian Independent Film Caucus, which is the industry group representing
Canadian independent filmmakers, I really found it extraordinary that these very
successful established filmmakers that you saw in the video came out in such
public support of the Rogers Documentary Channel. It's very rare, I can say from
my own experience, for independent filmmakers to publicly support any applicant
for a new channel and even rarer for them to support one applicant over another.
It's considered too risky from a business perspective for a filmmaker to put
their name on the line in this way. There are only a limited number of
broadcasters in Canada that support documentaries and we are dependent on them
to licence our work.
973 One hundred and sixty independent filmmakers
did come out this time, did come forward. They wrote passionate, personal and
very thoughtful letters to the Commission in support of the Rogers Documentary
Channel -- a clear indication of how strongly these filmmakers feel about the
need for a dedicated documentary channel -- and a strong endorsement from this
community that Rogers is the company they trust to operate this
974 I think there are four critical aspects to
Rogers' application which won the support of the independent documentary
975 Number one, their intelligent and creative
programming of independently-produced documentaries which reflect the
extraordinary range of creative filmmaking in Canada -- from coast to coast --
from a new generation of filmmakers who represent the multi-cultural reality of
976 Number two, paying decent, market-value licence
fees for our work, nurturing the production of many new documentaries across the
977 Number three, showcasing documentaries produced
in French Canada. This is the first real attempt by any Canadian broadcaster to
break down the two solitudes in this country.
978 Finally, number four, Rogers' acknowledged
experience in the convergence of television and the Internet, the future of
documentary production and distribution.
980 MR. PAPERNY: Thank you.
981 Madam Chairperson and fellow Commissioners, the
real-life stories that we documentary filmmakers tell are clearly a powerful way
for Canadians to find out about ourselves and the world we are a part of. The
Rogers Documentary Channel will not be just another channel in the already
crowded multi-channel universe. I believe that the documentary programs we
produce actually help make Canada a stronger country, a more unified country.
Hearing our own diverse stories of love, of tragedy, of courage, this is what
constitutes the soul of a nation.
982 Rogers has been there for Canadian independent
filmmakers for the past 20 years and they have especially been there for
filmmakers like myself, from the far-flung regions, where the distance from the
centres of power can be a serious handicap. Rogers knows us and we trust
983 On behalf of our many colleagues who have
voiced strong support for this channel, we urge the Commission to recognize the
commitment shown by Rogers to this vital form of Canadian expression and to
grant a Category 1 licence for The Documentary Channel.
984 MR. VINER: Madam Chair, that concludes our
985 We ask your indulgence while we reassemble our
group to respond to your questions.
--- Pause / Pause
986 MR. VINER: I think we are assembled. We would
be happy to respond to any questions you may have.
987 LA PRÉSIDENTE: Madame Bertrand, s'il vous
988 CHAIRPERSON OF THE COMMISSION: Good afternoon,
Mr. Viner --
989 MR. VINER: Good afternoon.
990 CHAIRPERSON OF THE COMMISSION: -- and all your
team, all the family and partners.
991 I will follow the path so carefully shown and
traced by Andrée, Mrs. Chair, and also the first applicant this morning and
really follow the same pattern. So I will start with the general questions and
then we will take a break and I will come back for the individual questions on
992 Let me start by telling you and refreshing your
memory, I'm sure you have taken some notes, on this morning's outline, but we
will be talking about criteria and bringing into the criteria what also should
be our consideration over competitiveness and also diversity versus synergies. I
think it's an important element of our consideration going forward to make sure
that we are strengthening the broadcasting system in Canada.
993 Then we will talk about implementation --
should there be a drop-dead kind of date -- and talk about independent
994 Then we will come to Canadian content and
Canadian programming expenditures.
995 We will conclude this part of the discussion
with the matters concerning interactivity. I will need your guidance because I'm
quite novice into those areas, so I will have to be taken by the hand to really
understand what you mean.
996 Let's start with criteria. If you were to be at
our place after four weeks of hearing and would have to weigh the different
applications but first try to make it in a framework or a more theoretical
level, what for you would be really the criteria that are the most important
997 I read in your presentation that for you, at
the end of the day, it is really to ensure the digital rollout, and for that
good programming is necessary of course, but how would you do
998 MR. VINER: Madam Chair, this has been the
subject of some discussion among us and I am going to ask Alison to respond to
the order of the criteria.
999 I would just like to note that this is perhaps
a unique time in history in that the programmers and the distributors and the
Commission together all have the same objective which is to ensure that we
accelerate as much as we possibly can the roll out of digital services. So we
have had some debate about the most -- and discussion and have reached
consensus and I am going to ask Alison to address those issues.
1000 MS CLAYTON: Thank you.
1001 We believe that the first criteria really has
to be the attractiveness of the service. We want to get boxes into homes and it
has to be attractive basically in two ways. One it must be a very attractive
genre. It must have high appeal, it has to be something that consumers say, "Oh,
yes. That's great. That sounds like an interesting channel to me". But it is
very important that it is also an attractive looking service, not just
attractive in its appeal, but this is going to be a very, very crowded universe.
There are going to be hundreds and hundreds of channels and just because these
channels are digital doesn't mean that Canadians are going to accept a lower
quality than they currently get on analog.
1002 So when we say "attractive" we mean, of
course, in terms of appeal, but also the look of the channel and this quality
has to apply to both the Canadian programming and the foreign programming. For
our second choice, we basically would like to offer up a tie if we could that it
would be between diversity and the contribution to quality Canadian
1003 Diversity obviously these are going to be
successful if there is nothing else out there, so that is going to be very
important. Does this add anything to the Canadian Broadcasting System? Will this
attract Canadians to say, "Hey, I am going to go out and get a box because I can
watch channels that I don't currently see". But again we go back to the point
that it must contribute to Canadian quality programming.
1004 So for example, our application for ZDTV
Canada it will be all new, brand new programming. There is none out there, and
we have partnered with the largest producers of this type of programming in the
world. So we will have an all new service. None of this will have been available
to Canadians before.
1005 Similarly with our Parenting Channel. There is
very little parenting programming available and so we will acquire, cause it to
be produced and this will be new to the system.
1006 In terms of the quality Canadian programming,
both the Biography Channel and Documentary Channel are going to have 95 per cent
of their Canadian programming acquired from Canada's independent filmmakers.
This is a very solid contribution to this industry.
1007 The next criteria for ranking them would be
the innovative use of the digital medium. We at Rogers believe that we are
leaders in this area and each of our applications will take full advantage of
our abilities to offer digital to our consumers. Of course, the application of
ZDTV Canada is truly an innovative use of the digital medium, but they all will
be. It is just that the technology has to work for the type of programming that
will be offered.
1008 The next point that we would consider in
ranking is very much the ability to fulfil proposed commitments. You need to
have people that obviously can deliver on their promises, but if these channels
are going to be up and running within let's say six months of the decision they
must hit the ground running. We need to have channels that can deliver quality
programming right away. They can't fill the schedule with bulk programming that
is not of high quality. This will be a true turn off to Canadian
1009 And then the last point would be affordability
and we believe that all our applications meet that criteria clearly. There must
be enough money there that good quality Canadian programming can be produced and
yet it cannot be so expensive that the consumer is turned off going with
1010 CHAIRPERSON OF THE COMMISSION: I noticed that
in your description you make no reference of contribution to Canadian
programming as such -- Canadian programs as such. You talk about quality
programming, you talk about diversity, you talk about bringing unique
experience. What about Canadian programs and the support to Canadian programs
1011 MS CLAYTON: In each of our applications we
start off with 25 per cent Canadian content in year one and grow it through the
terms so that two of the channels were at 50 per cent by year five, and with two
of the channels we hit 65 per cent by year seven.
1012 We feel that we need to have a strong channel
to begin with, and with 25 per cent Canadian content it will mean that our
percentage of gross revenues which will go to licence fees to Canadian producers
will allow us to pay very healthy substantial licence fees for the programming
and this will benefit Canadian producers in terms of what we pay
1013 MR. VINER: If I could just clarify for a
moment, Madam Chairperson?
1014 I believe that Alison did rank Canadian
programming sort of tied for number two. We said, "Production of quality
Canadian programming". So "quality" and "Canadian" in her description just in
case you thought we had left it out. We would have probably had attractiveness,
diversity and Canadian tied for first. I didn't know if you would allows to do
that. But if you will, we would like to tie those for first.
--- Laughter / Rires
1015 CHAIRPERSON OF THE COMMISSION: Thank you.
Going from there, and we will be talking about the business plan you are
proposing, kind of a model you have developed for everyone, not specifically
immediately keeping it general, but first let's keep with the criteria and
considering the balancing act, we will have again to be doing it, but this time
it will be probably more difficult given the quality of the applications and the
multitude of the applications.
1016 Can you help us through over the kind of
ranking you have done for the criteria how to look at the matter of
competitiveness with existing and upcoming channels? How do you see that?
Especially with the experience you have being in the business, and from
different points of view too, of being in specialty channels as well as in
direct tie with the consumer through the cable systems. It would be important to
us to understand how you see the competitiveness criteria.
1017 MR. VINER: Well, I was present this morning,
Madam Chairperson, when the earlier panel responded to this and I would have to
agree with them that the nesting concept is self-serving to those incumbents.
The Commission has, I think, in the past heard arguments with respect to this
concept, specifically when they licensed CTV NewsNet or News One, I think it was
at the time, over CBC NewsWorld to argue that the headline news service was more
appropriate for the system and used what I believe to have been essentially the
1018 I think a similar argument was made by CTV
again successfully on the licensing of SportsNet where TSN argued that they
would be the better owner of a regional sports service.
1019 So I think -- and you and I, Madam
Chairperson, have been at several hearings over time where people have argued
that if you were going to give a licence you ought to give it to them because
they would be most hurt if you gave it to somebody else. I don't think I have
made those arguments, but you have heard them before.
1020 So our view is that diversity of ownership in
this particular segment of the industry is crucial to its development. We
believe that none of the services -- incidentally we believe it is
clear -- that we are proposing incidentally are directly competitive and I
think that is generally shared by the other applicants and by existing
1021 So in our case, I think that it is clear. We
think that the Commission should look at these, I think, some have argued that
you should look at it on a case-by-case basis on the basis that you will know
1022 In our particular case, we think it's clear.
But we do believe that diversity of ownership is important and that for digital
rollout to occur successfully, we do need diverse programming formats but
because someone plays a sub-genre of an existing service can't disqualify it, in
1023 CHAIRPERSON OF THE COMMISSION: Okay. How would
you consider, on one hand, the diversity of ownership and the need that you are
talking about yourself when you say of the advantages of considering your
applications and the fact that synergies will be played with CFMT and, you know,
that there is an expertise there, or the Parent Magazine, or the Web sites that
exist, or the partners of A&E or independent -- how do you see that? Is
it just on a case-by-case?
1024 What would be a general kind of approach you
would have or that you would recommend to the Commission to
1025 MR. VINER: My opinion, Madam Chairperson, is
that the concentration should not occur just in one sector. I think the
Commission has previously determined that ownership or domination of a
particular genre is not necessarily in the best interests of Canadians. Now, I
know CRTC decisions aren't precedent-setting, but I think the Commission has
previously determined that, and I would agree with it.
1026 I similarly agree that synergies are good for
services that we are describing because it is going to be a challenging
environment, and what we bring in terms of synergies are not synergies in terms
of this sector but other synergies that -- the magazines, the production
capability at CFMT, I think those are areas, but we can bring fresh, new
programming ideas, and I think that is one of the things that is going to be
able to drive the digital tier, if we can have exciting new ownership and
exciting new services.
1027 CHAIRPERSON OF THE COMMISSION: Tell me, other
than the condition of licence that we can impose on licensing services and
saying, "Well, you are kind of trying to fence a type of specialty channel",
don't you think that owning already a more general kind of licence and getting
more a niche with the digital universe would help in bringing diversity to the
viewer because then you can more easily be distinct and not create overlap?
Would you have a comment about that?
1028 MR. VINER: I think that's an argument in
favour of it. But, frankly, I don't find it a compelling argument. I think that,
frankly, the business imperative of ensuring that you are as differentiated from
your competition as you can possibly be is equally compelling. So for me the
overriding consideration is the differentiation of ownership. I think an
intelligent businessperson, not that I necessarily qualify for that description,
would try to differentiate the services. So I think that that is just a business
imperative that anyone will follow.
1029 CHAIRPERSON OF THE COMMISSION: What about
access to programs? Would you see that as a challenge if you are not vertically
integrated from one type of licence to the other?
1030 MR. VINER: I would be happy to have Alison
respond to that. But, no, our view is that there is programming available and
that we can have access to it. We don't think that there is a scarcity of
1031 Alison, do you want to
1032 MS CLAYTON: Access to programming I think is
going to be more difficult in the early years because, you know, when we are
offering non-competitive channels, the reason we believe that our channels, for
example, are not directly competitive is because there is very little, if any,
type of programming out there already. So we believe that there has to be a
ramp-up period to make sure that that programming is produced.
1033 So, for example, when we partner with two
established players that already have large libraries of the type of programming
that we want to make, the signature programming on the channel, we believe that
that will allow the time for gestation of an increasing amount of Canadian
1034 So, as you will notice, our reliance on our
foreign partners' programming does go down every single year. You know, when we
go out into the market to have biographies produced, documentaries produced,
Canadian ones, the filmmakers will need some lead time to get their programs
going, and so we see this as an opportunity to start with an extremely strong
service and then build up, gradually but steadily, 5, 10 per cent every year
with the Canadian programming.
1035 ZDTV, for example, is the largest supplier of
this type of programming in the world, so that will not be a problem. The
A&E library is very extensive. While there is very little Canadian
programming available, there are programs definitely in this genre available
from the United States, Australia, Britain, overseas, so we will have access to
that while making sure that Canadian programs are produced as
1036 MR. VINER: As always, Alison has brought me
from the general to the specific. She hates to correct me, but she does it
1037 The fact of the matter is she is right, we are
bringing forward today proposals that anticipate that we will have secure
programming supply, and at the same time be able to produce the highest quality
Canadian programming. So these applications, if we can go to the specifics here,
do have secure programming supply arrangements.
1038 CHAIRPERSON OF THE COMMISSION: Thank
1039 Let's move now to implementation
1040 Everybody now is talking about the first of
September of 2001. What is your view about the necessity to impose a date by
which, if you were granted your licenses, Category 1, you would have to be
launching within a certain period? Do you see a necessity for more flexibility,
less flexibility? How do you see that?
1041 MS CLAYTON: Madam Chairperson, certainly in
our case, the September 1 date would be easily achievable. I won't go through
all the reasons again, but I just mentioned that we already have very solid
programming supply arrangements in place and I would encourage that everybody
does launch at the same time, because I think if we are going to introduce
digital rollout successfully, we want to have as attractive a package as
possible for the consumer to say, "I'll take the box, but you know what? It's
coming with 10, 13, 15 pretty good channels so it's worthwhile." I don't think
they should just, you know, come on ad hoc.
1042 CHAIRPERSON OF THE COMMISSION: But you would
see the necessity for a common launch, is what I understand.
1043 MS CLAYTON: Yes. Yes.
1044 CHAIRPERSON OF THE COMMISSION: So that it
would imply a lot of rigidity somehow on the necessity
1045 MR. VINER: Yes. An imposition of a date,
September the 1st we have indicated would be fine for us, but we think there is
not going to be huge amounts of money from marketing and so forth and it makes
sense that we do it all together and all at the same time.
1046 As Alison has already stated, I think we
should go with our best offering right out of the gate.
1047 CHAIRPERSON OF THE COMMISSION: What about
Category 2? Do you have the same view on those?
1048 MR. VINER: No, I don't have the same
1049 I think the Category 2s have to make their own
negotiations and I think necessarily are going to have to wait until the
Category 1 services are lined up and ready to go and so forth. So I don't think
it's as necessary to impose the strict implementation that's
1050 The other thing I think is that they are not
-- it's not as if they can't be competitive with one another, so the idea of
hatching a service or holding it back and protecting a territory, I don't
believe is as relevant.
1051 CHAIRPERSON OF THE COMMISSION: Thank
1052 Independent producers, you have heard the
conversation we had this morning with Alliance Atlantis, you have some
partnering with independent producers that are well-represented here today but
also support some independent producers -- some investments and some independent
producers. So what is your view in terms of when you talk about independent
producers? Who do you talk about and how do you see the affiliation rule play in
the Category 1 licences?
1053 MR. VINER: I would ask Alison to
1054 MS CLAYTON: With our documentary channel, 10
per cent of the channel is with five independent filmmakers, which is, you know,
very small, -- it's 2 per cent each. There are no special arrangements, there
are no programming deals. We invited the filmmakers to be part of the
application because they are so well recognized in their field.
1055 If Rogers Documentary Channel is going to be,
as we hope, the voice of independent production, then we want to make sure we
have access to advice, consulting, input in that arrangement, on the documentary
1056 With Today's Parent, our partnership is with
Sullivan Entertainment and there are no special requirements of program
acquisition. We would be more than glad to accept a condition of licence that
would limit any programming but, certainly at this point of time, Sullivan's
expertise is in family drama, and this is not the role of Today's Parent TV.
This is very much an entertaining but helpful channel for parents; it's very
informational, instructional. We have a tiny, tiny amount of drama and, you
know, we could, at some point, look to acquire from Sullivan, but we are looking
at such a small per cent of the schedule and, certainly, with Sullivan
Entertainment, their programs are committed to other broadcasters in the
Canadian Broadcasting System so many years down the line that it would be a very
long time before any of the Sullivan catalogue would be available to the
1057 But, as I said, we would be more than prepared
to accept a condition of licence if so suggested.
1058 MR. VINER: With respect to affiliated
production companies, though, Madam Chairperson, we have no such affiliations.
We would be happy to accept a restriction on dealing with production companies
that -- in which we hold an interest. Although there are none. So that's why I'm
so free to offer it.
--- Laughter / Rires
1059 CHAIRPERSON OF THE COMMISSION: But the world
changes rapidly and --
1060 MR. VINER: Seriously, that's a very good
point, and we understand that, and we would be happy to take a
1061 CHAIRPERSON OF THE COMMISSION: And that would
be for your partners, too, and, you know, same kind of consideration we were
talking about earlier this morning.
1062 MR. VINER: Absolutely. Yes.
1063 CHAIRPERSON OF THE COMMISSION: You feel that
it's still warranted to have that kind of preoccupation and concern in the
digital world. Beside the fact that you are not yet concerned because you don't
have any interests, do you feel that it's appropriate to keep that measure in
the going forward?
1064 MS CLAYTON: I think, certainly, in the early
years, when the numbers are so small -- and I mean there's this David and
Goliath -- that it's not nearly the same consideration because there won't be
the revenues and the licence fees available to compete with the more established
analog players. But, as you did say, the world changes and, with luck, digital
roll-out will be very successful, the numbers will be even better than we
predict and so, there could come a time when it would be more of a concern. So,
yes, it's probably a good idea.
1065 MR. VINER: We, as you know, Madam Chairperson,
are -- our applications differ in their use of independent production. ZDTV
Canada is a newsworld, constantly ever changing, and so, that's more like a news
service than it is like a production service. And those in Biography Canada and
Documentary, we are relying on independent producers and we do see the licensing
of these Category 1s as a stimulus to that industry sector.
1066 CHAIRPERSON OF THE COMMISSION: Thank
1067 Now, let's talk about your business plan and
the relationship to Canadian context, because I would like to make a correction.
I think we share the same goal of seeing the roll-out of digital but, of course,
the Broadcasting Act has many objectives to fulfil and one is really to make
sure that the broadcasting system is enhanced by choices for the consumer at
affordable prices but, also, it will be an opportunity to develop Canadian
context. So we are looking for Canadian content. We would, for example, roll out
digital, without any consideration to make sure that there is a proper space for
1068 I would like to understand. You start, in all
your projects, with Year 1, 25 per cent Canadian content; Year 2, 35; and some
ramp up quite high, others a bit lower but, you know, very in line with what was
the framework. You have alluded to why that approach, but I would like you to
make us understand clearly why you have that approach because it's a bit lower
in Year 2 and Year 1 than it is for other applicants. So, given that criteria of
Canadian content is important, we would like to know what's the quid pro
1069 MR. VINER: Absolutely, Madam Chairperson. I
will all ask Alison to go into this in some detail.
1070 I will tell you, when we were forming the
applications, there was a great temptation to just get into the bidding war,
higher and higher and higher volumes of Canadian content. Our strategy, though,
for the reasons that Alison will outline, was to try to provide higher licence
fees to take into account the kind and nature of the programming that we hope to
provide on these services and so that we would try hard to ensure that we
provided quality and were able to build our Canadian capability over
1071 Alison, can I ask you to...
1072 MS CLAYTON: First of all, in terms of
percentage of 25 per cent, that is at least 200 hours of new Canadian
programming -- now, new to the service. If you -- I know it's a general
question, but it really does differ with each of our channels.
1073 With ZDTV, for example, because it is quite
similar to the CNN of technology, we are actually looking at about 350 to 400
hours of totally brand new, never-before-seen programming, right out of the gate
in Year 1.
1074 With Today's Parent, there will be a minimum
of 200 hours of new programming. Again, it's not in the system; this will be
1075 Biography, it will be between 150 and 200
hours of new, in Year 1.
1076 And similarly with
1077 But I would like to point out that when we met
with independent producers and we talked about this -- because we have certainly
learned over the years you don't want to put together an application in
isolation and then just sort of present it as a fait accompli; and having been a
producer myself we talked about this -- and, for example, with the documentary
filmmakers, we said, now, we can go with a higher amount of Canadian content but
there's limited revenues in Year 1 -- we are predicting less than 800,000
subscribers; there's not an awful lot -- but we could pay some pretty good
healthy licence fees, but we are listening to you, "Are you looking for volume?
Are you looking for higher licence fees and we will buy fewer hours to begin
with? Or do you want us to buy in bulk but we can't pay as much?" -- and
certainly, in the letters that you saw to the Commission, we were commended and
very much the filmmakers said, we supported Rogers because these are significant
1078 Documentaries are generally an expensive type
of programming. They are not quite as expensive as drama, but they do range from
anywhere from 50,000 to 500,000 for an hour. And we need to make sure that we
don't fill the service, in Year 1 with inexpensive talk shows about
documentaries. That's not what it's all about. And we can't, with the licence
fees, acquire 200 hours of first-run documentary programming. But there are many
wonderful documentaries that are out there that we can give licence fees to, for
a second window, that will make the difference between breaking even and not
covering the cost of production with the filmmakers -- and it will just be a
short aside, but I would really like Peter Raymont to address that, because he
was very involved, in terms of talking about licence fees.
1080 MR. RAYMONT: Thanks, Alison.
1081 I talked to a lot of independent filmmakers
across the country, when Rogers was figuring out what to propose, in terms of
licence fees and percentage of Canadian content and, you know, there's so many
times when you are $8,000-$10,000 away, in adding up your various Canadian
licensing fees, from being eligible for Canadian Television Fund and Telefilm
Canada financing and you don't quite make it because you need that -- it's often
around 8,000 to 10,000 that you are missing.
1082 And so, we discussed this at length and
thought that this was, by the far, the best way to go: higher licensing fees at
the beginning and less number of hours, less volume.
1083 And when you compare it to the other
applicants, who are offering $2,000 or $3,000 per hour licensing fees in the
first year, there's no question, I mean that's one of the key reasons, frankly,
why the independent production community, 160 letters, are support
1084 CHAIRPERSON OF THE COMMISSION: Thank
1085 So I will have to reassure myself and reassure
my colleagues that it's not because you are hoping, by Year 5, that there will
be no regulation over digital.
1086 MR. VINER: Not at all. We are looking forward
1087 CHAIRPERSON OF THE COMMISSION: No, of course
--- Laughter / Rires
1088 CHAIRPERSON OF THE COMMISSION: That was one of
my nightmares during the reading I had been doing.
1089 Concerning the Canadian programming
expenditures, there has been some discussion from the public notice and that
again was discussed this morning, it will be discussed in the forthcoming weeks.
What is your view on the approach we have been taking of calculating, as of year
2, based on the revenues for the following year to be the expenses in Canadian
programming, and that another hypothesis would be to go for a licensed term
rather, which would allow more flexibility? What's your view?
1090 MS CLAYTON: Madam Chairperson, when we put
together the business models it was based on the historic manner in which the
Commission did not set a percentage of gross revenues in year 1, and then from
year 2 forward it was based on a percentage of the previous year's gross
revenues. So that is how we calculated our spending. So it is more or less with
very slight variations but more or less the same each year right through to year
1091 MR. VINER: I'm not sure that we have done the
calculation, though, based on this morning's discussion. You are asking whether
or not it would be better to average it? I'm not sure we have done that
calculation yet. But we would always opt for greater flexibility rather than
less. But it's clear that the commitments that we have made in our applications
1092 CHAIRPERSON OF THE COMMISSION: So I understand
that you would be prepared to go for more flexibility, if that was the view that
was developed through the process and eventually be the position of the
Commission, but if not the historical approach --
1093 MR. VINER: That's correct.
1094 CHAIRPERSON OF THE COMMISSION: -- is one that
you are capable of living with.
1095 MR. VINER: Absolutely.
1096 CHAIRPERSON OF THE COMMISSION: Okay. And it's
feasible in your business plan?
1097 MS CLAYTON: Yes.
1098 MR. VINER: Yes, it is.
1099 CHAIRPERSON OF THE COMMISSION:
1100 Now interactivity.
1101 First, would you, concerning the Act, you
know, that will enter into effect in January 1st, 2001, the Protection of
Electronic Documents Act, will you obey or abide by this Act and make sure that
all your undertakings, if you were to be licensed, will conform?
1102 MR. VINER: Yes. We have actually appointed
1103 CHAIRPERSON OF THE COMMISSION: Okay. So that
being aside, I'm glad that you are going to be running a legal undertaking if
you are granted a licence.
1104 Let me understand, please, what you intend to
do. I hear lots of things, I have been reading a lot of things, seen a lot of
things. I would like to understand on a general -- because I know that there are
differences, especially between ZDTV and the other ones.
1105 What is your view and what will be immediately
available to the viewer? Also, what will I see on my screen -- that one -- and
what difference will there be between my computer screen and my TV screen? What
kind of equipment will I need at home?
1106 So please...
1107 MR. VINER: Because we thought you might ask
this question and because I was incapable of answering it, we have brought with
us Mike Lee. Mike is Head of Interactive Television.
1108 I should say, for purposes of clarification, I
guess, there are two initiatives. One is interactive television, what's going to
happen on your television screen. The second is the Web initiatives that are
associated, which are a little bit different.
1109 So just with that clarification, Mike, perhaps
I could ask you to describe what's going to happen and what's going to happen on
the television set.
1110 MR. LEE: Interactive television is, at this
point, a fairly confusing space, and it's even confusing within the industry,
but the best way to look at it is sort of an evolutionary path: where we are
today, where we are within 18 to 24 months, and then sometime beyond five
1111 So in the early stages of most of the
applications, interactivity will be defined basically as a complementing Web
site. There will be a Web site that's available on a PC that you will be able to
go to and there will be probably throes from within the programming over to the
Web set and then from the Web site referrals back to what's on
1112 Within the period of the next 12 months and,
actually, within the period of over the next probably three months, you will see
the introduction of the ability to actually access that Web site over a
television. So that would be the first sort of real convergence of an
Internet-based Web sight available over a television set and that will be
through a first generation set-top box.
1113 So with a set-top box, the remote control that
our current digital choice customers already have, and the addition of a
wireless keyboard, they will be able to simply go from the television, the
on-air product, over to a channel that's dedicated to Internet access, type in
the URL that's being referred from within the program, and access that service
on the TV. They will also be able to do e-mail and access some customized
1114 Within the next 12 to 18 months you will see
the introduction of what is essentially a second generation in
1115 So in the first generation you have sort of
the Internet access and interactivity and the on-air product separated. They are
not an integrated product. In the second generation, it's actually an integrated
product. So you will be watching the television program and the interactivity
that was originally available only on the Web site or on a specialized channel
dedicated to the Internet will then be integrated into the television program
1116 So this is what everybody sort of classically
thinks of as interactive TV. I could be watching a documentary, similar to the
way people watch -- when you're watching like pop-up video and an icon comes up
that has a little bit of information, on that documentary the independent
producer could integrate interactivity into their documentary and provide more
information about that particular piece of information that was on TV at that
time. So it's synchronized to the actual program itself.
1117 The types of interactivity that can be
integrated at that point are things like more information. You could have a chat
or instant message. So you can actually talk with everybody else who is watching
the show or just your friends who happen to be watching the show. You could
integrate interactive in the form of, like, games, so if it was -- or a
demonstration of software, so if ZD Net -- sorry, ZDTV, and they were talking
about a specific software application, you could actually pull up the software
on the TV and actually try it.
1118 Also, there is the sort of common example of
being able to buy whatever is on TV, so there always is the opportunity to do a
transaction or t-commerce.
1119 In the fifth year to the seventh year, you
will probably see the introduction of streaming media into the experience,
whether that be streaming audio or streaming video. The way that will
effectively impact the nature of the programming is that you will move from what
has traditionally been limited to just simply being a linear experience -- I
start on the hour, I watch for the next half hour, and it is absolutely linear
-- to being a non-linear experience, I could potentially introduce other video
clips or audio enhancements that would take me off of that linear half/one hour
1120 So that essentially is what we are going to
see over the next probably three to five years.
1121 MR. VINER: Madam Chairperson, I don't want to
unduly prolong this, but it's an important area. We have with us Joe Gillespie
who is from ZDTV in the United States and he can tell you a little bit about how
his channel, if you would like, how it's using it.
1122 Then, perhaps very briefly, Andrew Cochrane is
a producer who is producing now some programming with interactive
1123 I will, by this instruction, ask them both to
1124 Joe, could I ask you
1125 MR. GILLESPIE: Yes. You've got it,
1126 First, I would like to say that I thought that
Mike's timeline and chronology, as it relates to the crawl, walk and run of
interactive from what today we describe as manual convergence as a two-box
solution between the personal computer and the television to the one-box
solution of the future, I think is spot on.
1127 I would say, though, and I think somebody
mentioned this in the earlier panel this morning, that we really should pay
very, very close attention to the manual convergence that is happening today,
because consumers aren't waiting for us. I think from that behaviour we can
learn a lot and prepare ourselves for what will be a fully converged
1128 At ZDTV in the US, the convergence behaviours
are pretty incredible. Right now we have about three-quarters of a million to a
million subscribers coming to our Web site every month. Of that number, 50 per
cent claim to actually be watching our television channel while surfing our Web
site at the same time.
1129 What they have done, as digital consumers,
people who are very ambitious about the use of technology from both everything
at work to lifestyle, to help improve all sorts of different facets of their
lives is that they want to interact with the programming. They want answers to
their questions. They want to be able to basically share their thoughts with
others in their community. So they really view interactivity today very much as
a chance to participate and develop a sense of community, obviously a sense of
community they have actually found elsewhere.
1130 On the channel right now we have basically
three forms of interactivity going on. We have chat, we have electronic mail --
by the way, I should say the live chat actually goes on, though, on the
1131 So, for example, we have a Call for Help show
with Leo Laporte, who is our host, who could be talking about installing the
latest version of Windows and at the bottom of our screen we would have a live
chat session going on among users about the struggles or positive experiences
they were having with it.
1132 We also have e-mail so people can e-mail Leo
and other members of our staff with questions and so forth. And then the last,
and we think a pretty revolutionary aspect to our convergence and our activities
the NetCan Network where through these golf ball-like size video cameras that
now for $199.00 U.S. you can put on top of your personal computer. We have
viewers sending video pictures and images of themselves into our studios.
Basically, they have created a virtual ZDTV studio across the United
1133 The had this to correspondence, they add this
to colleagues and their peers to help other people with their problems. We
actually use the NetCan Network also to reach out to people in the high-tech
community when there are virus problems such as Bubble Boy and Melissa that
1134 The NetCan network from a convergence stand
point, we call it a defining feature of our channel and ZDTV would not be the
experience it is today without those levels of convergence and I think one,
first and foremost, it is what digital consumers demand and secondly it just
makes for a better television experience, especially around technology and I
will end on this note. When we started the channel, everybody worried that it
was going to be two people in lab coats and it would be deadly boring and the
convergence aspect is really what has helped us make it engaging, entertaining,
informative, fun and to help our viewers really feel that they are as much a
part of this as anyone else.
1135 And the last thing -- I said the last was
my last, but this is really my last -- is that the opportunity here
when viewers see this kind of convergence going on today in this manual world, I
think it is incredibly important because what they are doing is they are helping
us understand the behaviours, as I said before, for the one-box world and I
think we can all learn a great deal from that.
1136 MR. COCHRAN: Madam Chairperson, fellow
Commissioners. Our attitude towards producing interactivity is to start with the
premise of not the technology, but how does it enhance the storage, how does it
make it a richer experience for the viewer and so with the documentary that we
are producing right now, actually fortunate to be doing it with CTV, it is a
documentary about Danny Doherty who you may know was the original member of the
Mamas and the Papas, the lead singer to the Mamas and the Papas from North end
Halifax, and this story documents his growing up in Halifax and rising to the
top of the rock and roll revolution, and reporting back on the story of what
happened from his point of view.
1137 That to us presents a number of interesting
entry points to make use of interactivity, while it is a linear story, very
much, and that is the best use of television, if you will, to this point,
traditional television to present the linear story, as Mike Lee suggests, and to
future proof the program we are embedding a series of tigers so that at given
points during the program you are able to see more biographical information
about the various people who we are talking to at the time in the program or
extra background about the places that we are visiting and
1138 As well, we have a very rich legacy Web site
to the program that you can visit after seeing the show. We are populating this
with a lot of extra material that is not available for the time constraints of
the program. For example, we have a joint venture with the Canadian Press for
broadband information, and by virtue of that we are able to present a complete
interactive timeline of the 60s during the period that Danny's story is taking
place. So at any given point during his story you can go and see what were the
news events that were happening at the time and what were some pictures around
those news events. So you can see how that was influencing the music and the
experiences of the time which he speaks to throughout the show.
1139 As well we are able to present some of the
interview material that doesn't make it into the two-hour television version. We
are able to augment on the Wed site, both in transcript form and for broadband
users in moving video, to see some of the extra clips that they
1140 We are also talking about the ability to remix
some of the music in the program to get a sense more of how work goes into music
so the ability to take some of the songs that are presented and try at home
yourself to rearrange the vocals and rearrange the music tracks, et cetera. And
also very much to create -- to provide a sense of community and it comes up
a lot when talking about the new world to be able to provide the opportunity for
users to be able to join in not only the discussion forum, but also to post some
of their own memories of the 60s and meld that with some of the material we have
on and then be able to show that to others.
1141 So again, the intent is a very rich backhand
environment that draws on the best of each of the worlds. I think that is one of
the most important things, where television does best what it does, the Web does
best what it does, interactivity does best what it does, and that is really the
promise of digital TV, is how to bring all that together and deliver it through
the home, your home television set.
1142 CHAIRPERSON OF THE COMMISSION: Well, thank
you. We will certainly have a chance to pursue that with each project, but let
me understand because nowhere did I see any costs or revenues linked to
interactivity and what is your view? Why is it, first, to haven't included it in
your business plan, and secondly, who is going to pay for it? We are hearing
that in terms of production you can use some material that is already shot so,
you know, it is not necessarily extra cost, but I suppose in some cases it will
be extra cost at the production level. It certainly is in terms of the set-top
1143 How will it be accounted for? Who is going to
pay for it?
1144 MR. VINER: Well, I think again, I would like
to separate the Web activity from the interactive component. I think I can
answer simply that the interactive component currently is paid for by the
producer and reflected in the licence fees.
1145 With respect to the Web site, I am going to
turn it over to Mike Lee, but just to remind the Commission that of the four
proposals that we have in front of you, three already have -- we don't
have to build Web sites which can be expensive. We have existing strong, robust
award-winning Web sites.
1147 MR. LEE: I think this is one of the great
strengths we bring to these applications in addition to our programming
strengths, is that we have an extensive amount of experience in the interactive
Web site and interactive side of the business.
1148 Since 1994, we have built at this point over
20 on-line businesses that survive on their own, are very successful. We employ
over 200 people actually working on those initiatives.
1149 We bring a significant amount of experience,
knowledge and understanding of what it takes to be successful on-line and we
have done that through successes and we have done that through failures and one
of the things you have to learn through this process is that you are with any of
your on-line initiatives, whether they be Internet-based or interactive-based,
competing against everybody else who is available out there on the Internet
because if you don't produce a quality product you are simply one click away
from going to another product.
1150 And so while the programming component of the
Category 1 applications are going to be must carry, the interactive Web site is
not must carry, so you have to be able to present a case, a compelling product
and a business model that allows you to support that in a way that will be
determined and classified as being world class.
1151 So in the four applications, we have not
broken out in the cost. We have roughly about $750,000 allocated for each of the
1152 CHAIRPERSON OF THE COMMISSION: How much did
1153 MR. LEE: Seven hundred and fifty thousand
dollars, and I will describe each allocation in more detail, but in each
particular case that $750,000 is deployed differently depending on the nature of
the existing assets and the relationship we have.
1154 So with Biography -- actually, I
will just describe one more thing. You should think about the cost structure of
interactivity under three different large categories. One is infrastructure,
basically the cost of getting something up in terms of the technology and all
the code and development that needs to be done.
1155 The second one is content development. So
after having built all the infrastructure to be able to deliver that product,
you now need to invest in the content to be able to create a compelling
experience for your viewers.
1156 The third one is ongoing operational costs. So
with Biography Canada, we have a business relationship with Biography and
Biography has done an exceptional job of building out
1157 The intent and the plan is to create a
biography.ca Web site which cherry picks the specific content that would be
relevant to Canadians and leverages off the existing
1158 As opposed to having to dedicate that $750,000
to trying to build something from scratch, we can take the infrastructure that
biography.com is building and continues to build and then pop and focus that
$750,000 on purely just content development. It really means that all the money
is being dedicated to adding value to Canadians who are using the
1159 In ZDTV we also have a similar type
relationship where we have a business agreement with ZDTV where they will
Canadianize and put a Canadianized front end of ZDTV.com, leveraging off what we
collectively agree upon are the most relevant pieces of infrastructure and
content for Canadians and then, again, taking the $750,000 and dedicating it
purely to content development.
1160 With Today's Parent, Today's Parent has an
outstanding Web site today. As a complement, sort of a conversion strategy for
the magazine, they have already gone out and created a separate Web site at
Today's Parent. That one actually is run as a separate P&L because we found
at Rogers that the best way to make sure that we can focus the business people
on producing a profitable online business that complements an offline business
is to separate the P&L.
1161 With Documentary Channel, we will be
leveraging off our business relationship with Rogers I Media which already has
200 people developing infrastructure. We will develop the infrastructure with
our business relationship with I Media and then develop some content associated
with documentaries and then also work with each of the independent producers to
integrate their interactivity into that product.
1162 CHAIRPERSON OF THE COMMISSION: What about the
relationship with the cable companies in some of the projects or applications
Rogers and Shaw are partners? We talk about the set-top box. Will it be Rogers
Cable and Shaw Cable responsible for the set-top box or do you see that as a
cost sharing going into interactivity? How do you see that?
1163 What you have been talking about, the Web
site, is one thing. I can see what you are explaining. In terms of the creation
of real Canadian programs that are interactive, then it's a matter of the cost
of programming. Then you have a higher licensing fee in order to respond to
1164 What is the situation with the top-box? I
understand that the real interactivity will be coming through the second
generation of said top-box. What's your responsibility there? Do you see a
responsibility from the program undertaking vis-à-vis the rollout of those
1165 MR. VINER: Madam Chairperson, I guess the
short answer is no. I think the distributors, that's their responsibility. I
have no idea how they are going to fulfil that, either through leasing the boxes
or selling them and making them generally available.
1166 I think our role is to provide superb Canadian
programming that will make Canadians want to purchase those boxes. Our costs are
in the development, as Mike has described, of our Web initiatives and, as Andrew
has described, with respect to production of interactive components in
1167 We don't see ourselves having any role with
respect to the hardware part of the equation.
1168 CHAIRPERSON OF THE COMMISSION: Presently we
know that most of the digital subscribers with DTH or MDS presently as we speak
by the 1st of September 2000, then of course the stake could be quite different.
At this point in time that's the situation.
1169 What's your perspective on the possibility for
DTH and MDS technology to enter into that second generation set-top box and what
would be the impact if there was no possibility or immediate possibility or as
soon as the cable industry for your services if they were to be licensed to kind
of really offer to the viewers their full capacity?
1170 MR. VINER: First off, if the question in part,
Madam Chairperson, relates to our desire for the widest possible distribution as
a program supplier, I will say unequivocally that we will do everything we can
to ensure that the services that we proposed and, if licensed, are widely
distributed, we would be happy to have them on DTH or cable or MDS or any
1171 With respect to the relative technical
capabilities of DTH versus cable, I can't answer the question. I don't
1172 MR. LEE: I think that you will
see -- I think the thing to take into consideration when you are
talking about how we are going to program for cables that are actually versus
potentially where DTH and MDS are is that it is -- the key point
to remember is the issue of the return path and the fact that it's always
1173 In the cable incidents, the
interactivity, we are expecting that the interactivity will probably evolve
in such a way that you assume that you always have an always on path and with
DTH and MDS you may have a delay of sorts, so you may design your interactivity
differently, understanding that you may not be able to immediately assume that
immediately in that second when that person clicks that button they are going to
get instant connection with someone who is outside of their
1174 A great example would be an online chat. If
you create an online chat in cable, you understand that you will be able to
actually talk with other people because you already have an always on
established line, but you may not want to activate that online chat because it
will create an inconvenience for your viewers because there will be a dial-out
process as the phone line activates to get back out to the
1175 So what it means is it probably will
complicate our jobs with regard to how we design the overall interactive
component of our programs.
1176 CHAIRPERSON OF THE COMMISSION: If I understand
you correctly, that would not prevent you from reaching the DTH and MMDS
subscribers. It would just complicate your life in the sense that you would have
to have a different pattern going to cable and going to DTH and
1177 MR. LEE: And you may make the decision that
you want to program to a base level of interactivity. That may be your decision.
It will depend on, from a creative perspective, whether you believe that that
two way aspect of it is integral to the overall product.
1178 CHAIRPERSON OF THE COMMISSION: Yes. I
1179 Thank you. That completes my first part of the
questioning. I would suggest, like you did, that we give the panel a coffee
1180 THE CHAIRPERSON: We will take a 15 minute
break. We should resume at five after four.
1181 Alors nous reprendrons à quatre heures
1182 ZDTV first? Yes.
--- Upon recessing at 1550 / Suspension à 1550
--- Upon resuming at 1605 / Reprise à 1605
1183 THE CHAIRPERSON: Welcome back. We will now
talk about specific applications.
1184 CHAIRPERSON OF THE COMMISSION: In the approach
to each application, of course, it's mainly where there is a need for
clarification. There are questions on all of them about the nature of the
service to make sure we understand what exactly the service is about and how to
fence it in a way. Of course, pertaining to that will be programming questions
on the expenses and Canadian content and from there we will go to interactivity
questions, more specific ones to every project.
1185 So let me first talk about the matter
concerning ZDTV. You said somehow it's like a Newsworld but strictly on the
Internet and technology. It will be news, essentially. You are not sure? I
1186 MS CLAYTON: No, no. First of all, we describe
it as a lifestyle channel for the "e" generation and because the people that
want to watch it want their information current, up-to-date, super, super
quickly and this is a very rapidly changing environment, the programs have a
very short shelf life. They have to be produced very quickly and they might
often be relevant for only a week or two. So that was the comparison to news
when I was saying it was like the CNN of technology.
1187 These are not programs that can sit around on
the shelf, especially for the consumers that are going to want this
1188 CHAIRPERSON OF THE COMMISSION: So it will be
different kinds of programs, not strictly news, but in the news updates that you
will have in order to really understand what it will be about, and again it is
to help us understand the nature of this service, so that we can fence it in a
way that we are not creating overlapping.
1189 Will it be strictly computer technology and
1190 MS CLAYTON: Yes.
1191 CHAIRPERSON OF THE COMMISSION: It will be
strictly about that, although you will be giving business advice
1192 MS CLAYTON: Absolutely. It will be looking at
the hot new Internet companies, what are the latest video games that all the
kids are talking about, who are the big thinkers, what's happening at Mitel,
what's happening at Northern Telecom. So anything to do with technology or
computers, but in the genre it could be a talk show with a big
1193 It could be an examination of the newest video
games. It could be a phone-in show, those are very popular, a call for
1194 So, it's a variety, but the subject will
always be about either computer, technology or the Internet.
1195 CHAIRPERSON OF THE COMMISSION: Okay. Will it
be the same thing about lifestyles because lifestyles can be very broad? It can
be already in genres that exist or licences that exist in the analog world.
Would you be considering lifestyle with the same focus and very limited in terms
of the focus of attention in the array of subjects and topics?
1196 MS CLAYTON: Well, for example, we have no
drama programming, so when we say lifestyle it's as a gardening channel is for
those people who are interested in gardening and this channel will be all
different program categories, but definitely not drama.
1197 When I say lifestyle, it's how do you set up
your computer. How do you e-mail. It's lifestyle for people who are interested
1198 CHAIRPERSON OF THE COMMISSION: Okay. So would
you accept, eventually, a condition of licence that would say, whether it's news
or whether it's your lifestyle program, that it would deal exclusively with
programming related to computing technology and the Internet? Would that be
acceptable in terms of what you have been developing as a
1199 MS CLAYTON: Yes, it would be.
1200 CHAIRPERSON OF THE COMMISSION: Thank
1201 Tell me, in terms of the programs that would
be general entertainment and long-form documentaries, what in your view would be
the space that it would occupy on your channel? Would there be, you say, no
drama? What about long-form documentary and what kind of proportion would it
take into your schedule?
1202 MS CLAYTON: I am going to ask Julie Osborne,
who worked very closely on the programming schedule, to answer it more directly,
but long-form documentary we don't have any even in the sample program schedule.
It was to give flexibility if there was a documentary about a subject related to
computers, technology or the Internet because it could be a logical examination
and in-depth look at something that relates to technology. So we wanted to give
ourselves that room, but it is a very, very small part of the schedule. We would
accept any limitations that would make the Commission feel more
1203 Julie, do you have anything to
1204 MS OSBORNE: Yes. Thanks
1205 There are actually five basic zones of the
schedule. They consist of news, entertainment programming, health, product
reviews -- that could be anything from games to hardware, and money --
that would be primarily text docs and following the markets, things like where
you go for the great deals on the Internet, anything like that. That's what the
entire schedule will speak to.
1206 CHAIRPERSON OF THE COMMISSION: Well, our
concern in the need for more precision is about on one hand the subcategory
2(b), the long-form documentary and Ms Clayton was answering to
1207 The other one is category 11, to which you are
alluding, which is general entertainment and human interest. What would be a
proportion and when would be an example of what you would program or have on
your schedule in that kind of category?
1208 MS OSBORNE: One of the best examples of that
type of programming is a program called "Internet Tonight". It's a kind of an
"Entertainment Tonight" for the people who are interested in digital culture. So
it would look at things that are happening on the Internet. What are the book
launches that are Internet only published. What are these concerts that are only
available on the Internet? Lots of events happen on the net only and so this
whole net culture is the subject of this program.
1209 CHAIRPERSON OF THE COMMISSION: So it would be,
again, directly focused on the immediate computer technology and Internet
1210 MS OSBORNE: Yes.
1211 CHAIRPERSON OF THE COMMISSION: Thank
1212 MS CLAYTON: I could suggest that no more of
the program schedule than 5 per cent would ever be long-form
1213 CHAIRPERSON OF THE COMMISSION: No more than 5
1214 MS CLAYTON: That's right.
1215 CHAIRPERSON OF THE COMMISSION: What about
entertainment and human interest?
1216 MS CLAYTON: That's a hard one to put down as a
program category. Just a second.
1217 MR. VINER: I was going to say, Madam
Chairperson, I think we have agreed, and I know it's difficult and I know that
you have to put fences around things.
1218 This entertainment -- generally, we would
accept any condition or restriction limiting the subject matter, but the
Internet itself is a form of entertainment and if we were to show people how to
play games or to talk about entertaining aspects of the Internet, that is
something which we believe people are intensely interested.
1219 So the documentary issue isn't crucial to the
service and neither is general entertainment. There is not a category or a
subcategory, unfortunately, for entertainment that deals with the Internet,
computers or technology. If there were, we would be happy to accept
1220 CHAIRPERSON OF THE COMMISSION: Let me ask you
a question. For example, I know that Celine Dion's show on the 31st of December
was simulcast on the net with AOL, as a matter of fact. Would you consider that
entertainment to be computer technology and Internet focused? Is that the kind
of thing you would feel would be covered?
1221 MR. VINER: Would we consider sort of
rebroadcasting that on the basis -- I mean it's a good point and not one I
had thought of. No.
1222 I think that we would report that Celine Dion
or any has launched a record on the Internet or had a performance on the
Internet that would be part of the reporting, but we wouldn't sort of somehow
use the fact that it was on the Internet to become part of our
1223 MS CLAYTON: I would think that, and I am
looking for the exact category, but I would think that would be categorized as
variety programming and we have not requested that. It wouldn't have occurred to
us that that would be general entertainment.
1224 General entertainment is people phoning in and
talking about what they like in the way of a video game. It's human interest.
It's general entertainment, but a concert is completely a separate category as
per the program categories from the Commission.
1225 CHAIRPERSON OF THE COMMISSION: Okay. So if
there was more precision brought to make sure that it is properly defined and
that exclusive nature of computer technology and Internet would be as a
condition of licence you would feel comfortable given the concept you have
1226 MS CLAYTON: Yes. I was just handed this and
something like the Celine Dion concert would be categorized as Category 9,
variety, and we have not asked for that.
1227 CHAIRPERSON OF THE COMMISSION: Thank
1228 Filler. We talked about this earlier this
morning. I have here the Public Notice that the Chair brought with her where
when we licensed in 1994. In the statement, the introductory statement, we said
that filler programming could not be an integral part of the definition of
nature of service.
1229 You have put it as a category of programming
to help define the nature of service. What's your view on this and why does it
have to be a category per se? Why can it not be with the others, being covered
by the other categories?
6911 MS CLAYTON: I think I heard you say this
morning, someone on the panel, that it seemed that many of the applicants did
the same thing. I can only think that we were all looking at the same document,
which is obviously not the right one.
6912 Certainly with the case of ZDTV, we would be
glad to take that out of our program categories. We had understood that it was
offered, that it was a possibility. Knowing sometimes it's nice to have that
flexibility to bring a program up to time, we had put it in, but it has never
been any part of our programming strategy or philosophy. We would be glad to
accept as a condition of licence that that would not be one of our program
6913 CHAIRPERSON OF THE COMMISSION: So we are all
being converted today.
6914 MS CLAYTON: Yes, and I think I can assure you
that by the time the other companies all come up, they will have been able to
make the same offer.
6915 CHAIRPERSON OF THE COMMISSION: I'm pretty sure
6916 MS CLAYTON: It just caught all of us by
6917 THE CHAIRPERSON: We shouldn't confuse the fact
that you can't have Category 15 with -- you can't have filler
programming. You can have filler programming, but whatever it is at that time
should be categorized under categories under other than just "filler" which was
designed, I believe, to help Pay-TV when it's difficult to have a continuous
6918 MS CLAYTON: Thank you for the
6919 CHAIRPERSON OF THE COMMISSION: But you
couldn't have Category 9. We have established that.
6920 MS CLAYTON: I cannot have Category
6921 CHAIRPERSON OF THE COMMISSION: Okay. Canadian
content. We have talked about it earlier in a more general approach you are
having with all your applications. What exactly is it you are committing to? I
think it's very important that we understand and how much of it, the foreign
programming, will be coming from ZDTV. What are we going to see?
6922 You have referred to it as 95 per cent will be
new type of programming. What will be new? Is it the program to Canada or the
program itself or the program with an interactive component? Again, please take
us by the hand and explain to us what you mean.
6923 MS CLAYTON: In the case of ZDTV we have made a
commitment that we will start at 25 per cent in year one Canadian content and
this grows to 50 per cent by year five. We have also committed to a minimum of
40 per cent of the previous year's gross revenues to be spent on
6924 In the case of ZDTV, basically because of the
nature of computer and technology programming, this is very, very new. The
number of people hooked up to the Internet is just growing every day. The
interest in it is growing every day. There is such a small amount available in
Canada or elsewhere other than from ZDTV that we have, you know, a great deal of
confidence in saying that this will all be new programming for the
6925 In the beginning, a good deal of it will come
from our partner. That will decrease each year. Again, because of the nature of
the programming and the fact that it's very immediate and does not have a long
shelf life, there will be more hours produced than there might be with a channel
that had more drama, for example, that can last, or animation that can last for
many, many years.
6926 What we are saying is that our commitment is
to a minimum of 25 per cent of the on-air in year one. Our analysis shows that
would be approximately between 350 and 400 hours of new Canadian programming.
The rest of it would be coming from our partner in the United States. They
produce 1,300 hours of original programming every year. We will look at,
whenever possible, encouraging them to acquire some of the Canadian programming
from us for their channel, but this is also programming that doesn't really rely
on border distinctions.
6927 The interest comes from people who are
interested in technology, in the Internet. We are thinking that it could travel
across borders very easily, but it does have a very short shelf
6928 CHAIRPERSON OF THE COMMISSION: That means that
for the first year and the second year, everything that is not Canadian will be
coming from ZDTV.
6929 MS CLAYTON: Certainly from our discussions
with ZDTV it would seem, because we have of course asked them what else is
available because we would like to be able to acquire from other sources,
especially from overseas, not just because I would like to go to the television
markets over there.
6930 At this point in time they assure me that
there really is very, very little, if any, other programming except coming from
them, but I think as we are all going to see in two years, three years, this is
going to change. There will be other players. There will be other people
producing the programming.
6931 We do have a cap on the number of hours that
we can acquire from our partner. We would very much look to find programming
from Europe, Australia, Asia as well. Those are approximately the
6932 CHAIRPERSON OF THE COMMISSION: Is the cap
different from year to year or is it --
6933 MS CLAYTON: There is a range. What does change
very much is the percentage so that it's much higher in year one. It's 75 per
cent coming from foreign source, but it drops right away until it is down at 50
per cent by year five.
6934 If I could just point out, at all times we
will be paying significantly higher licence fees for the Canadian than for the
foreign. For example, it's approximately eight times more in licence fees per
hour for Canadian than for the foreign.
6935 CHAIRPERSON OF THE COMMISSION: I understand
that it goes from 75 to 50 per cent which is the exact reverse to what you are
committing to for Canadian content.
6936 MS CLAYTON: It matches the Canadian content.
As the Canadian goes up, the foreign will definitely go down.
6937 CHAIRPERSON OF THE COMMISSION: But that
foreign part has been capped coming from ZDTV.
6938 MS CLAYTON: Yes. There is definitely a
6939 CHAIRPERSON OF THE COMMISSION: Okay. That is
not the same year to year.
6940 MS CLAYTON: I beg your pardon?
6941 CHAIRPERSON OF THE COMMISSION: The cap is
different from year to year or not?
6942 MS CLAYTON: No. The programming arrangement is
flexible. It was filed with the Commission on a confidential basis with our
application. There is a range. Let's figure out the math.
Probably -- it's a very significant range. We have the flexibility to
definitely continue to fill some of the foreign hours with programming other
than from ZDTV.
6943 CHAIRPERSON OF THE COMMISSION: Okay. Talking
about Canadian program expenditures. Okay?
6944 MS CLAYTON: I'm sorry.
6945 CHAIRPERSON OF THE COMMISSION:
6946 MR. VINER: We didn't hear the
6947 CHAIRPERSON OF THE COMMISSION: That's all
right. On Canadian program expenditures, you have committed 40 per cent of your
revenues to Canadian programs for a total of $32.5 million over the licence
6948 MS CLAYTON: Yes. That's
6949 CHAIRPERSON OF THE COMMISSION: Okay. When we
did the calculation, and I should not say "we" because competent people at the
staff level have done the calculation, they came up with a different figure.
With the historical method we used, they came up with 44 per cent of total
advertising and subscriber revenues.
6950 Given the historic approach of starting year
two, you would have to spend the equivalent of your revenues in advertising and
subscribed revenues in programming. Would you be prepared to accept a 44 per
cent commitment or do you want to keep your 40 per cent figure?
6951 MS CLAYTON: We did feel that the 40 per cent
did give us some flexibility in terms of going on a year by year basis. We do
feel that that is a good sum of money for the Canadian programming that we will
be acquiring for the channel. I think I am confident in saying that we are happy
with the 40 per cent of gross revenue.
6952 CHAIRPERSON OF THE COMMISSION: If the
Commission were to consider it a possibility of changing its approach and going
for an average over the licence period, kind of a greater flexibility, would you
then consider it a possibility of raising your commitment to 44 per cent? Or
would you still feel that the 40 per cent is the proper amount?
6953 MS CLAYTON: I am going to ask Laura Nixon to
answer that, please.
6954 MS NIXON: I think we should just clarify. It
would be helpful to me to understand and clarify it.
6955 What I understand you are saying is that if we
took the total expenditure over the seven years, divided by the total revenue
over the seven years, you would like to make that the new criteria and allow us
to be more flexible in how we would spend that?
6956 CHAIRPERSON OF THE COMMISSION: Yes. Rather
from going from one year to the other, we would establish an amount; and that
you could have some variance from one year to the other, depending on the
project. That is what seems to have been the proposal or some comments we have
received in interventions.
6957 MS NIXON: Okay.
6958 MS CLAYTON: Madam Chairperson we would be
prepared to accept that.
6959 CHAIRPERSON OF THE COMMISSION: So if we were
to go with the more flexible approach on a licensed term, the 44 per cent would
be appropriate. If we keep the historical approach, then you would like the 40
per cent, which is your original commitment, to remain.
6960 MS CLAYTON: Yes.
6961 CHAIRPERSON OF THE COMMISSION: The original
programming, what will it be? I guess it somehow jumps in the interactive part
of my question.
6962 What will be the original programming, the 25
per cent you are committing as of Year 1? What will I see that will be Canadian?
What will be done with the independent producers? What will be done in-house in
comparison? What will it be?
6963 MS CLAYTON: I am going to ask Julie Osborne,
who worked extensively on the schedule, to answer the question.
6964 MS OSBORNE: Thanks, Alison. For starters, I
think I will focus my remarks on Year 5. But if you have questions about other
years, we can certainly talk about that. That is the sample schedule that we
6965 We are looking at approximately 650 to 700
hours of Canadian in Year 5, and about 500 will be done in-house. Those hours
will be the shortest shelf life programs.
6966 Those would include programs that you will see
in the schedule like ZDTV News -- that would be our Canadian version of the
program that they do in the United States; Call For Help, which is again a
format that we would adapt for Canadian viewers -- callers calling in with any
number of questions about computers, Internet, new software, whatever; and a
program that is all about following the markets. Again, that sort of activity on
the stock market is becoming less and less available to be used as a program
that you can do other than during the day. So we would do that in-house, and
that would permit us to follow the Canadian markets.
6967 CHAIRPERSON OF THE COMMISSION: That is Year
6968 MS OSBORNE: Yes.
6969 CHAIRPERSON OF THE COMMISSION: That is a long
6970 MS CLAYTON: Julie addressed that because that
was what we filed with the application. So we thought if there had been an
analysis of Schedules 9 and 10, that would be the focus. But we would be glad to
now give you the breakdown on Year 1.
6971 CHAIRPERSON OF THE COMMISSION: It is important
that we understand, given that Year 5 is far. I am a here and now person. That
tells you my age. It is important that we understand quite rapidly what is going
to happen. It is like the interactivity. If it is something down the road, it is
important, if we are to consider licensing people, what will be available to
6972 MS CLAYTON: Julie...?
6973 MS OSBORNE: Thanks, Alison. We will be
beginning our Day 1, Year 1 with a news program. It is ZDTV Canada News. It has
less interactivity than some of the programs that are on ZDTV.
6974 Another show that we will be beginning with as
of Day 1 is Call For Help. That is the opposite end of the interactivity
spectrum, where viewers participate in the programming in any range of
6975 Another program is called ZDTV Zip File. It is
a bit of a survey program. It sort of repackages all of the highlights from the
day's programming. So if you could only get to one show a day, this will get
what's the newest game, feature story from the news that might have legs,
interesting information on new product developments. It packages them into a
half-hour, kind of a highlight show of the day. It is hosted by the virtual host
Tilde that you saw in the video that we presented in our opening
6976 CHAIRPERSON OF THE COMMISSION: But how much of
this will be in-house in comparison to what will be done with the independent
producers in the first and second year?
6977 MS CLAYTON: In the first two years it will all
be produced in-house, basically because of how quickly we have to turn it
around. This is a brand new type of programming, and as there are more producers
out there that are looking for programs to produce that would be relevant to our
channel, then we will definitely be working with them.
6978 Again, it has to be thought of as a news and
sports in terms of the immediacy. There is not a great deal of time to have
proposals and develop ideas with producers and say this would make a great show.
As the channel gets going and builds its audience, we will be looking to
producers to develop the programs that could have a slightly longer shelf life
and that we can use where we don't need to take advantage of our
6979 One of the things is that with the amount of
programming that we have to produce for this service that we can't rely on shelf
product, with the licence fees that we would be able to pay a producer they
would still have to go out and find other people who would want to contribute so
that the show could get produced.
6980 Since we have the studio -- it is very state
of the art and we have the staff -- a lot of the programming will be produced in
our studio because it can be done at a much, much less expensive price. And we
need to do volume.
6981 CHAIRPERSON OF THE COMMISSION: Talking about
what will be interactive in that first and second year -- I think we referred to
what will be available down the road, but for the first couple of years that
will be mainly the Web site. So there will be really no major difference from
what we see on analog today except that there would be direct Internet access
with the set-top box as we know it?
6982 MS CLAYTON: I would like Mike to answer that,
6983 MR. LEE: Over the course of the first two
years you will have the traditional web product still. Also, those subscribers
who want interactivity on the set-top box will be able to access that
interactivity through the set-top box on the television.
6984 I would emphasize that in the first two years
I think the ZDTV product and the ZDTV Canada product offers an exceptional
amount of interactivity as compared to probably some of the other applications,
primarily because the audience that is actually attracted to the service is
already naturally self-segmented to want to do those kinds of
6985 A great example would be that Call For Help
show. Where in a traditional talk show, an interactive talk show, you could call
in by phone, now you have the format evolving where you can actually e-mail
questions. ZDTV -- and the U.S. has taken it to a new level where people can
actually videotape themselves from their home and transmit over the Internet and
actually appear on the television show itself.
6986 So as you create this community of people
where the host is helping them and they are helping each other, it is really
truly a very strong community, and sort of exemplifies the types of interactive
opportunities that ZDTV has.
6987 CHAIRPERSON OF THE COMMISSION: What I will see
immediately is like what we see today on CPAC. Tomorrow what I will see will be
the possibility of splitting the screen? Or will it not be split screen when I
get access to the Web site on my TV set?
6988 MR. LEE: In the first generation set-top box,
the set-top box as available today, that experience is a separate channel
experience. So I will be watching ZDTV Canada on one channel, and I flip over to
another channel to go to the Web site and flip back. So I could use, like, the
6989 CHAIRPERSON OF THE COMMISSION:
6990 MR. LEE: In the second generation of the
set-top box you could go to a split screen or a quarter screen, or you could
even have the graphic come up on top of the video so you could see through the
graphic. It would be somewhat translucent.
6991 So there are a lot of different creative
approaches to it.
6992 CHAIRPERSON OF THE COMMISSION: When can I,
with my camera at home, participate in your programs? Will that be in the last
generation of the set-top box?
6993 MR. LEE: For those users which Joe referred
to, called manual convergents, where people have taken their computer and put it
in the same room as their TV -- and we know from statistics out of the
U.S., and we tend to trend slightly ahead of them with regard to technology
adoption, that it is about 50 per cent of the population of the U.S. who are on
the Internet at this point. That you could do today, day one, on Call for Help.
That will be a feature that will be available the first day that we have Call
for Help Canada.
6994 CHAIRPERSON OF THE COMMISSION: So when you are
talking about the Netcam Network, that will be immediately
6995 MR. LEE: Exactly.
6996 CHAIRPERSON OF THE COMMISSION: And the
viewers, or the subscribers, will be part of the program. Will that cost you a
lot of money to put together?
6997 Will you do like they do in the States, where
they have bought the camera, or somehow subsidized the subscribers for those
cameras in order to participate?
6998 MR. LEE: In terms of the technology reported
to actually make that happen, one of the benefits of ZDTV as a partner is that
they can bring a lot of that technology to the table.
6999 With regards to the model in terms of how we
get viewers to adopt those cameras, there is already going to be a certain
population of those people, because they are available in stores now, who have
already bought those cameras. It is not a special camera.
7000 I think that ZDTV in the U.S. has adopted some
unique marketing initiatives that we may want to consider on an ongoing basis,
and I am sure that Joe would be more than happy to speak to
7001 MR. GILLESPIE: Yes, that is
7002 When we launched the Netcam Network -- it
is actually an interesting story. We went to 3.com, which was actually the
company that created the first commercially available version, and 3.com got so
excited about the application that they actually gave us, I think, in excess of
50,000 cameras to give away free on our air. The feeling was that nothing draws
a crowd like a crowd, and let's get people out there understanding what is the
magic behind this video technology. It was just a wonderful partnership with
3.com early on, and it since has expanded. Cisco, Nortel, Phillips and Consumer
Electronics -- we have several camera manufacturers that are now looking to
make their technologies available, if you will, on a seeding basis, as a way to
get the early adopters to get the technology in their hands.
7003 If I could, I would like to add one other
point as it relates to interactivity, in terms of U.S. supply content and
Canadian supply content, a point that I think really should be made. Even on
shows such as Internet Tonight, and maybe Cyber Crime, that initially will have
to come out of the U.S. in terms of whole production, even there there is a
great opportunity -- and we hope it is taken full advantage of -- to
make them indigenous to this market. Because in order for technology and these
shows to work they have to be for Canadians and about Canadians.
7004 The interactivity element, which you can
overlay on any of the programs that we deliver from day one, makes that
7005 For example, on Internet Tonight, which I
think Alison was referring to before, the technology exists and Mike and his
people possess the understanding of how they could overlay Canadian chat
sessions, Canadian e-mail sessions, Canadian Web sites, for example, on top of
that programming. So they are barking people -- that is our term --
calling them to go to ZDTVCanada.com to basically, again, involve themselves in
their own community.
7006 So you don't have to wait, for example, until
such time as you are producing your own shows. The beauty of this convergence
and this interaction is, you can make those shows your own -- very much
your own -- from day one.
7007 CHAIRPERSON OF THE COMMISSION: Would it be
possible, though -- and this is a question I forgot when we talked about
the portion that would come from ZDTV. Would it be possible that, for example,
long form documentaries down the road -- you know, the kinds of programs
that have a longer life or that have more relevance for the larger
public -- would find themselves in the ZDTV U.S.
7008 MS CLAYTON: Do you mean that were produced in
7009 CHAIRPERSON OF THE COMMISSION:
7010 MS CLAYTON: It certainly is our hope that
there would be a reciprocal arrangement where they would look and see what we
had in Canada and say: That looks really good. I think our audience would like
7011 We certainly see that as a
7012 CHAIRPERSON OF THE COMMISSION: You have not
given any expenses or revenues around interactivity. Why is that and what can be
7013 MS CLAYTON: I am going to ask Mike Lee to
7014 MR. LEE: In the early stages of all of these
businesses what we have found is that the revenue streams, particularly the ones
dealing with interactivity, are at this point highly speculative. We still are
unclear about even the business models that are associated with some of these
7015 So we have decided, for the purposes of being
conservative, to not list those revenues as part of our model.
7016 CHAIRPERSON OF THE COMMISSION: But do you
think toward the end of the licence term you would start having revenue flow,
just by the Web site per se? Certainly, I suppose, kind of engaging in some
commercial activities through the Web site would be a
7017 MR. LEE: As we sort of take a look at the
model -- I have an inability to understand what is going on beyond 18
months. So looking out three years or five years is --
7018 CHAIRPERSON OF THE COMMISSION: Well, you
described it to me just now, saying for sure --
--- Laughter / Rires
7019 MR. LEE: That is the general path of
7020 CHAIRPERSON OF THE COMMISSION: -- in three to
six months, and then 12 to 18 months -- I will write it down.
7021 MR. LEE: The business models are changing. I
think even if you watched the business models over the last 12 months or 18
months on just the general Internet and dot.com companies, they are radically
shifting. It is very hard to determine where your revenue streams are going to
be and who your "customers" are going to be who are supplying you with those
revenue streams. It just makes it very, very difficult to project out, because
we know that everything, basically, is in motion on us.
7022 MR. VINER: Madam Chairperson, if I could add
to this, when we looked at the revenue possibilities -- I think that
StatsCan has just released a study that says something like 0.2 per cent of
Canadian retailing occurs on the Internet. So our e-commerce objectives weren't
7023 With respect to the commercial opportunities,
frankly, we thought they would be so integrated with the television
opportunities that we didn't really forecast a huge uptake in revenues that
would be Internet only. We thought that we might sell to an advertiser the
ability to be on the service and supply that advertiser with the opportunity
also to be on our net presence as well, but that we wouldn't generate a whole
lot of separate revenue, and that is the approach we took. Perhaps it was wrong,
but that is the one we took.
7024 CHAIRPERSON OF THE COMMISSION: A last question
on interactivity. Given that Rogers and Shaw are partners in that project, that
kind of interactivity you are proposing within ZDTV, would that be a kind of
interactivity that would be available for other undertakings that would be
7025 MR. LEE: The interactivity that we are
contemplating within our applications assumes that there will be infrastructure
available to us from all of the BDUs, and our expectation is that if we are able
to take advantage of it, other applications will also be able to take advantage
7026 MR. VINER: I think the point we would like to
make, Madam Chairperson, is that we have the expertise and we are willing to
take advantage of it. The question of whether or not
7027 The capability exists. Whether or not they
choose to exploit it to the same extent that we do is really going to be up to
them. It may be that because of our experience already in interactive media that
we will be ahead of the curve, and we would argue that. We think that is why you
should license us, because we will be ahead of the curve.
7028 CHAIRPERSON OF THE COMMISSION: But you
understand that it is important, given that in the criteria the interactivity is
one component, that we assess the accessibility or the availability of that
interactivity for other players, so that when we compare it is about the
expertise that exists and the capacity and the concept that has been put
together and not because of a special relationship.
7029 MR. VINER: I understand that. I think the
answer is that it will be generally available to anyone.
7030 ZDTV in the United States is carried on
satellite. Would it be appropriate perhaps to ask Joe to relate his experience
with respect to interactivity?
7031 CHAIRPERSON OF THE COMMISSION:
7032 MR. GILLESPIE: I will use, I guess, DirecTV as
the example in the U.S. They have an interactive initiative with Wink, which is
a platform that they are making available on interactive set-top boxes that they
actually started to roll out as far back as June of this year. They have
projections of having about half a million to a million boxes installed.
Actually, it is about 500,000 by the end of this year.
7033 The way they approached it with us was to
basically partner, to create a strategic partnership which together we would
talk about what kinds of programming we could develop for this, frankly, at the
very beginning a small audience, a test-based audience. The idea was to just
work together and trying to understand what kind of behaviour was working, what
type of interactive ingredients the programming was working.
7034 There is mutual interest there for two
reasons, obviously. The first is it helps us build a better programming product
in anticipation of a one-box world.
7035 The other which gets, frankly, really
complicated is the issue of transactions and how do you split the money. We are
really eager and excited to be involved in those discussions today versus three
or four years from now. So there too the cement isn't dry. We are having ongoing
dialogues on basically where the transactions are going to occur and, basically,
how we are going to share in the success.
7036 MR. VINER: Madame Chairperson, the only other
thing I would say is that for the first several years of our licence we will
rely more heavily on DTH to be the distributors of this service than we will on
cable distributors. It will be incumbent upon us to provide programming and
interactive activity. There is a business imperative to ensure that those
services aren't inconvenienced or prejudiced in some way. So, it is our
intention, as I said earlier, to provide for the broadest possible
7037 It would just make sense for us to develop
programming that our majority distributor can make use of.
7038 MR. STEIN: Just building on Tony's remark,
both Shaw and Rogers have agreed that in terms of as we roll out the new digital
technologies, which we have been doing and moving with acceleration over the
last bit of time, it's clearly in the interests of our customers to make sure
that that technology is available to all users, and that we would want to make
it a priority to whomever you licence that we would work closely with all of
them to make sure that they had full access in terms of the kind of capabilities
we have to make sure that the launch of the service was a success and it was
also related to the Internet products that we have available. So that would be
our commitment to do that.
7039 CHAIRPERSON OF THE COMMISSION: Thank
7040 I think that covers questions that I had for
ZDTV, but given that it is different panels I am looking to my colleagues and
maybe staff if they have additional -- not answers, but
7041 A SPEAKER: They might have
7042 CHAIRPERSON OF THE COMMISSION:
7043 MR. McCALLUM: I would like to come back to the
Canadian programming expenditures condition of licence that you discussed with
Madame Bertrand and just ask it in a slightly different way.
7044 If the Commission, for the purpose of
consistency between all the applications, decided that it wanted to impose a
condition of licence in the more traditional way and not the flexible way and
the calculation came up to 44 per cent and not the 40 per cent that was
discussed, would you accept the condition of licence at 44 per cent, knowing
that you had preferred to accept it at 40 per cent?
7045 MS CLAYTON: If you could just give us a
---Pause / Pause
7046 MS CLAYTON: Yes, we would
7047 MR. McCALLUM: Thank you.
7048 You were also having a discussion about the
interactivity. Do you think that distributors should be obligated to carry the
interactive components that you are preparing to distribute via the set-top
7049 MR. LEE: I believe that in the process of
enabling this interactivity there is going to be additional strain on resources
and the actual network and technology. The best approach would be to have each
of the parties co-operate in moving to a new model for interactivity in
7050 MR. McCALLUM: So you wouldn't extend it as far
as being obligated at this stage. Is that your suggestion?
7051 MR. LEE: Well, the interactive component may
not necessarily be something that all customers adopt. It will be a choice,
basically, for our subscribers. So, no. I would say no.
7052 MR. McCALLUM: Thank you.
7053 THE CHAIRPERSON: If I may, was it explained to
you how -- it's not clear to me from here whether you were sent a
clarification question, but were you ever told why there was this discrepancy in
7054 MS CLAYTON: Yes, we --
7055 THE CHAIRPERSON: You were
7056 MS CLAYTON: Yes.
7057 THE CHAIRPERSON: It's not a question of having
put not enough -- not having calculated enough revenues, so you didn't
calculate it in the traditional way?
7058 MS CLAYTON: We based all of our programming
budgets on the 40 per cent of gross revenue. The difference came about because
in the schedule that was filed with the application it was the amortized amount
which would appear to be lower, but all of our calculations were based on 40 per
cent of gross revenue, which is why we have no hesitation in accepting that as a
condition of licence. It was an accounting misunderstanding.
7059 THE CHAIRPERSON: But the 44 is now what
counsel is discussing with you?
7060 MS CLAYTON: Yes.
7061 THE CHAIRPERSON: And you understand what the
difference was and why we arrive at different calculations?
7062 MS CLAYTON: Yes, we do.
7063 THE CHAIRPERSON: That's fine.
7064 MS CLAYTON: Thank you.
7065 THE CHAIRPERSON: I just wanted to make sure
you understand how we arrived at this, which wasn't clear from the limited
amount of material I have. Thank you.
7066 MS CLAYTON: Yes.
7067 CHAIRPERSON OF THE COMMISSION: I will thank
you for the use of ZDTV.
7068 THE CHAIRPERSON: Thank you, Madame
7069 CHAIRPERSON OF THE COMMISSION: You are the
7070 THE CHAIRPERSON: Commissioner Williams has a
question now. Commissioner Williams has a question on this part.
7071 COMMISSIONER WILLIAMS: You could easily get
into trouble with two chairpersons at the same hearing.
7072 THE CHAIRPERSON: I know.
7073 COMMISSIONER WILLIAMS: Given that your
business plan is that the Canadian content will gradually displace or replace
the ZDTV USA content over a period of time, has any thought been given to in the
future as Canadian content develops that Canadian content would do a similar
thing on the ZDTV USA network? And have provisions been made for this potential
opportunity in your partnership agreements?
7074 MS CLAYTON: If I understand correctly, it is
would there be an exchange of programming from the programming produced for ZDTV
in Canada with the American channel? Certainly there are definite discussions
and I think anyone in broadcasting in Canada would say that when there are these
partnerships with Americans there is always a real -- it's like picking up
a phone and you have one programmer call the other and say, "look, I have got
this really hot program. I think it would be great for your service," and it
cuts through the producer having to knock on the door and not knowing the
7075 So there are really wonderful opportunities
there and it's not outlined in the shareholder agreement, but both networks want
to have absolutely the best programming. We will be very glad to let the
American people know about the great stuff we are looking at in
7076 MR. GILLESPIE: I would like to add to that, if
I could. One, we eagerly look forward to all of the new programming ideas that
we think will come from Canada. I would just offer that, as lovers and believers
in technology, our experience has taught us that, for example, you can take just
about any invention over the last 10 or 15 years in the category of computing.
For example, 1-2-3 from Lotus comes to mind and the engineers all think they
have understood exactly what the product is going to be used for and then it
gets in the open market and once again the user's imagination blows them away
because they are using the product in ways that even the engineers never
7077 The Lotus engineers always used to say, "We
thought it was about counting beans and then lo and behold people are counting
chickens with the product." I offer that as an analogy because we really hope
that we learn from our partners at Rogers who show us whole new ways to use this
platform that we call ZTV or ZDTV. We do not have the corner of the market of
just how big and how much more fun and exciting the platform can
7078 So, again, we eagerly look forward to working
closely with and hearing about all the many new ways they come up with to use
7079 COMMISSIONER WILLIAMS: Thank
7080 THE CHAIRPERSON: With this business of CPE,
I'm a bit confused. Of course when we ask you will you accept 44 per cent in the
traditional way you eventually say yes.
--- Laughter / Rires
7081 THE CHAIRPERSON: -- but we want this to work.
And there are a number of applicants who have put forward various proposals and
we have put another one on the table. There are others that will come up later
in the week that at least I'm aware of. There was one this morning about
calculating from years 4 to 7.
7082 The one we are talking about now, about
calculating over the whole year, assuming you believe it when you say, Mr.
Viner, that we will still be around in year 5, that would mean you arrive at
year 6 and maybe you have to spend 200 per cent on Canadian content to make it
before your renewal. So there are problems.
7083 We talk about 40 per cent, 44 per cent. That's
a fair amount. What is the problem? I gather, from reading the applications,
that it's flexibility more than amount, is it?
7084 MS CLAYTON: When we put together the business
models you come at it from many different directions, but one is basically, in
this case: What is it going to cost to produce the amount of programming that we
want and we need for this channel? So it doesn't fall out that you say, "Here is
our gross revenue. Cap it at 40 per cent and that's all we are going to spend on
Canadian." The number drops out by how much programming you have to produce for
7085 So in the business model there is a great deal
of flexibility in terms of what the actual, real percentage is in terms of the
previous year's gross revenues, but some years it's more than others, other
years it's less. So we knew that we always had to have -- we have never dropped
below 44 per cent of gross revenues in order to achieve the quality and the
amount of programming that we need for the service.
7086 THE CHAIRPERSON: I'm just suggesting another
way -- I mean, we will speak to you again and we will speak to other people
because we want it to work, and we understand it is going to be a riskier
business than we have known before to launch these.
7087 I suppose right now you have the possibility
of carrying 5 per cent, I understand of being below or carrying 5 per cent above
the following year. Correct? Would another possibility be 10 per cent instead so
that the number would still be 44 per cent but we would find that flexibility
you want. So that we don't have this small amount of revenue at the beginning
with a very large amount of programming that is factored in?
7088 Anyway, you don't have to answer now, but
there are ways of achieving the expenses in Canadian content and perhaps
recognizing, in a reasonable manner, the desire for more flexibility. Hopefully
we will hear more suggestions, because just to say, "Well, if that's what I must
do I will do 44 per cent." We want it to work.
7089 MR. VINER: Yes. We understand,
7090 I think that we will always opt for more
flexibility, but we have been down this road in a variety of ways before and no
matter how much flexibility you offered us, if you said, "You have to spend it
all by your seventh year but you didn't have to spend any of it until then", it
wouldn't make sense for us to do that.
7091 THE CHAIRPERSON: No. That one doesn't work
unless you assume that in year 6 we have all gone.
7092 MR. VINER: Yes. Exactly.
--- Laughter / Rires
7093 THE CHAIRPERSON: And nobody will be checking.
And of course other assumptions have to be made that your interest is not in
enticing -- you know, the belief is that if you have some good quality Canadian
programs you will have a better chance of keeping subscribers. So there are a
number of ways.
7094 But, in any event, we are interested in
hearing how that flexibility, which has been well argued in a number of other
applications, can be achieved while retaining a possibility for the regulator to
7095 Part of it is obviously equity because this is
a competitive process for Category 1 and I suppose we will be looking at
various criteria including Canadian content so we will want, and you will want,
to see that your competitors' promises, presumably, are --
7096 But anyway, everybody is on notice. We are
open to looking at a more flexible way of achieving the same thing in this new
7097 MR. VINER: We appreciate that very much, Madam
7098 The point I was trying to make is there is a
certain level of self-imposed discipline no matter how much flexibility that you
do offer. But I will also say that, you know, until we got to this morning we
weren't -- you know, we didn't put our minds to providing you with different
7099 THE CHAIRPERSON: You don't want to be too
disciplined either because then you won't need us.
7100 MR. VINER: A good point.
7101 THE CHAIRPERSON: Madam Bertrand, finally back
7102 It's tough not to be the real Chair.
7103 CHAIRPERSON OF THE COMMISSION: Mind you,
coming back from vacation, I prefer the role of Commissioner
7104 We will now talk about the Parent
7105 MR. VINER: I'm sorry? What's
7106 CHAIRPERSON OF THE COMMISSION:
7107 MS CLAYTON: If you will just give us a second
to pull out the appropriate paper.
7108 CHAIRPERSON OF THE COMMISSION: Okay. Would
there be another one that would be easier for you to make
7109 MR. VINER: No, not at all. Not at
7110 CHAIRPERSON OF THE COMMISSION: -- because all
my questions are ready. I can --
7111 MR. VINER: No, no.
7112 CHAIRPERSON OF THE COMMISSION: Whatever is
easier for you.
7113 MR. VINER: No. This would be just
7114 I, Madam Chairperson, would like to introduce
-- the only person I think we haven't introduced is Mitch Dent, who is the
President of the Today's Parent group. You have met Holly earlier in the
presentation. So they are our experts as it relates to this application, along
with Julie and Robin -- oh, and Kevin, I'm sorry, Kevin
7115 CHAIRPERSON OF THE COMMISSION: Okay. So I have
maybe more to the point kind of questions for the next three.
7116 First, on the Parent Channel, the nature of
service here again has to be very clear in our mind and how distinguishable it
will be in order to help us do that I'm looking for guidance from
7117 You have said in your application that the
weekend will be geared towards family viewing. What kind of proportion of user
schedule would be such programming, and would you accept a limit on it, because
it could be very similar to other things and so the diversity would not be as
well served? So what is the proportion you had in mind?
7118 MS CLAYTON: Certainly, the family programming
is a very, very small component of the channel, definitely less than 10 per
cent. The channel is for parents, first and foremost, so we would accept a
condition of licence that limited programming that was aimed at families or, if
you would like, if you would prefer to say the drama category, we would accept
that as well.
7119 CHAIRPERSON OF THE COMMISSION: But that would
be over the week. So what would happen for the weekend?
7120 MS CLAYTON: Oh, no. That includes it. That
would be over the year, the month, the week. It works out the
7121 CHAIRPERSON OF THE COMMISSION: Ten per cent at
7122 MS CLAYTON: Maximum. Absolutely maximum.
7123 CHAIRPERSON OF THE COMMISSION:
7124 Would you accept a condition of licence of
7125 MS CLAYTON: Yes, we would.
7126 CHAIRPERSON OF THE COMMISSION:
7127 Concerning your programming of interested
children, that presents the same kind of concern in terms of fencing it. How
would you see your schedule to be composed with such programming? How much of
7128 MS CLAYTON: If you want more specifics I can
turn it to Julie, but the 10 per cent that we mentioned includes the programming
for children. It includes any of the programming that is on the Sunday morning.
The draft schedule there is one movie in prime time in the whole week, and that
is geared for families.
7129 In fact, we don't have programming for
children. We have programming for families, but that 10 per cent covers
everything that is drama and is not aimed directly at parents. If you would like
more detail, I can certainly ask Julie Osborne to take us through
7130 CHAIRPERSON OF THE COMMISSION: Yes, that would
be helpful. We have drawn from your description family, children and drama
separately. You seem to be folding it into one, the three. Am I reading
correctly that it should be read as three and then those three together would
not account for more than 10 per cent of your programming
7131 MS CLAYTON: We looked at it as saying that the
programming that would be of appeal to family was limited to the weekend and
except for one movie, it's all in non-prime. That 10 per cent is for families
and drama. It's wrapped up together.
7132 CHAIRPERSON OF THE COMMISSION:
7133 MS CLAYTON: It would seem I'm not being
7134 CHAIRPERSON OF THE COMMISSION: I think it
might be my mind that is not clear in understanding either. Go over it
again, please. I'm sorry.
7135 MS CLAYTON: We would be glad to accept a
condition of licence that limited to 10 per cent programming from the Category 7
that we listed.
7136 CHAIRPERSON OF THE COMMISSION:
7137 MS CLAYTON: Including in that 10 per cent any
programming that was directed at families as opposed to parents.
7138 CHAIRPERSON OF THE COMMISSION: Okay. That
would cover the interest in children as well.
7139 MS CLAYTON: Yes, it would.
7140 CHAIRPERSON OF THE COMMISSION: Because for you
that was the same kind of programming.
7141 MS CLAYTON: Yes.
7142 CHAIRPERSON OF THE COMMISSION: Okay. I
understand. Thank you. What about the filler programming?
7143 MS CLAYTON: Okay. The same as this morning. We
would be glad to take that out of the mix.
7144 CHAIRPERSON OF THE COMMISSION: I will have to
take lessons from Chair Wylie because she has much more success in converting
people than I have had. I will have to --
7145 Program schedule. Here again there's a
difference between year two and first year compared to year five and, of course,
the schedule is based on year five. Can you explain exactly what kind of program
wheel you have in mind and what will be the differences between the first two
years and year five?
7146 MS CLAYTON: I'm going to ask Julie Osborne to
answer that question.
7147 MS OSBORNE: First, with respect to the wheel,
we had actually envisioned keeping the same sort of pattern where we could help
parents find their way on the dial by using themed evenings. It just makes it
easier that they know, for example, that Friday nights is for children with
special needs. Monday night is parentology. Thursday night is for grandparents.
It just makes it easier to turn on the tube and know you are going to find
something that's relevant to you.
7148 With respect to the amount of programming, our
Canadian commitments are higher in year five, so we would be looking to foreign
sources for more of the programming in year one.
7149 CHAIRPERSON OF THE COMMISSION: So it's the
share between Canadian and foreign that would be different and not the approach
on the wheel.
7150 MS OSBORNE: That's right.
7151 CHAIRPERSON OF THE COMMISSION: We understood
that you would have the six hour programming wheel repeated once and then
followed by a four hour wheel repeated three times.
7152 MS OSBORNE: That's right.
7153 CHAIRPERSON OF THE COMMISSION: Okay. On
Canadian content, we will go from 25 per cent to 65 per cent?
7154 MS OSBORNE: Yes.
7155 CHAIRPERSON OF THE COMMISSION: You would be
considering the possibility of being imposed at a level of Canadian
7156 MS CLAYTON: Absolutely.
7157 CHAIRPERSON OF THE COMMISSION: What about
Canadian programming expenditures? Here, contrary to the ZDTV, when we do our
calculation, we arrive at a level of 36 per cent, but you have proposed a level
of 40 per cent. Would you be prepared to maintain your 40 per cent
7158 MS CLAYTON: Absolutely.
7159 CHAIRPERSON OF THE COMMISSION: Okay. The Web
site, I understand there is a question here that I won't really need to ask
because it says "Would you be prepared to launch your Web site at the same time
as your channel if you were to be licensed?"
7160 I understand that the Web site exists already,
so it would be the other way around. You would like to be able to launch the
channel as soon as possible. I suppose that there is still adaptations really to
reflect on the Web site the reality that the channel exists and more
interactivity. Would that be ready to be launched at the same time, the 1st of
September 2001, if that kind of schedule is kept?
7161 MS CLAYTON: I see Mike nodding his head, so I
feel I can say yes.
7162 CHAIRPERSON OF THE COMMISSION: Will there be
any other interactive component than the Web site on the parent channel? What
will the interactivity be about in the parent channel?
7163 MS CLAYTON: I will have Mike go into a bit
more detail, but basically all of our applications anticipated that as different
features became available with different generations of the digital box that the
programming would reflect that, would always be geared and designed for
7164 Mike, you can address it.
7165 MR. LEE: Sure. We can take a specific example,
something like choosing a summer camp, which would be a great show that has very
natural sort of interactives, sort of capabilities where you could refer from
the show directly to the Web site or potentially interactive developments on the
TV itself where you could actually go and visit and gather more information
about the specific camps that they have discussed, talk to other people who have
sent their kids to that same camp.
7166 You can get actual referrals and real
testimony from people and ask them questions about how their children liked that
camp and also even book right there a reservation for your child for next summer
or for this summer.
7167 There's a lot of things, a lot of applications
for specifically with parenting where you are interested in talking with other
parents because that really is what makes it so compelling, that you get a
chance to find other people who have children one to two years old and recount
stories with them and get some experience or other people have gone through that
process, to be able to bring them together, share that information and make that
experience that much more richer that already started from a TV
7168 I think Mitch probably --
7169 MS CLAYTON: I think Mitch would like to add a
7170 MR. DENT: Thanks. Basically, the experience of
parenting we are finding more and more is one of searching for community. We
think there's a myriad of really exciting interactions that are possible with
the channel, both in the short term and long term.
7171 In addition to that, parents are going to be
looking for both information and connecting to other parents via the channel, so
there's lot of opportunity for dialogue with experts on the channel, but also on
interactivity that could involve other media.
7172 We already had the leading Web site in the
country. It's won a number of awards. We are finding that the vast majority of
people now are coming in to work on chats and connecting with other people. They
aren't necessarily there just to find a content, find some information on
something like sleep.
7173 When you get people that are having kids, you
know, it's a passionate issue. That's what makes this channel so special. It's
something about the heart. It's something in passion. You have got a dynamic
here where people are going through change. Sometimes they are scared. Your baby
is not sleeping, you are tired, you know there's a show coming up on
7174 We will be able to tell people on the Web and
in the magazine shows are coming, they can go on the Web, they can research a
very deep archive of activity and articles on sleep, including a book we have
got coming out this fall on sleep. They will be able to have a chat discussion
on the Web site after the program and possibly connect with the author of the
book or an expert on the subject.
7175 The whole area of community, parenting and
interactivities is really, really an exciting one.
7176 CHAIRPERSON OF THE COMMISSION: I see that
there is still a difference between what we were talking about in the previous
application and this one. It's more based and interlinked with the Internet and
the possibility of using the two than the fact, for example, of the Netcam
Network where it is really part of the programming itself. It might get there,
but if you need a grandmother, you know that we have one here that certainly
would be interested and is quite good.
7177 THE CHAIRPERSON: My methods would not be so
7178 CHAIRPERSON OF THE COMMISSION: Well, here
again we have noticed no costs as well as no revenues coming from your
7179 Do you have any comment about
7180 MR. VINER: Well, the no cost is a result again
of having the Web site up and available. I would try the same explanation. We
think it was hard to integrate to say there would be Web only revenues. We took
it that the question was narrow and meant Web only as opposed to those revenues
that would be integrated into the television service.
7181 Perhaps we should not have done that, but that
is the approach we took.
7182 CHAIRPERSON OF THE COMMISSION: I just wanted
to make sure that it was the same element.
7183 In terms of independent production, do you
have any comment in that respect, because there is the participation of an
independent producer. Are you prepared, as we were talking more generally
speaking in terms of accepting a condition of licence, to cap the possibility of
using the material and the programs of that affiliated producer?
7184 MS CLAYTON: We would accept such a condition
of licence, yes.
7185 CHAIRPERSON OF THE COMMISSION: Would there be
a commitment on your part to go with other independent producers? A lot of what
we saw in ZDTV, especially in the first two years, was to be in-house
production. What about here on The Parent Channel? What will be the proportion
in the first two years of in-house in comparison to what you will do with
outside producers? Will that change over time as you evolve?
7186 MS CLAYTON: As we see the service, we have 50
per cent of the Canadian programming being produced in-house again because of
the nature of the programming. These are phone-in shows, ask a paediatrician,
ask an expert, and these are in-studio call-ins. The other half will definitely
be coming from independent producers.
7187 We heard Kevin Sullivan say at the beginning
that there is very little parenting programming available right now in Canada. I
certainly think that licensing a parenting channel would be a direct stimulus of
that. As there were those programs, then we would be acquiring them for the
7188 CHAIRPERSON OF THE COMMISSION: Thank you. That
takes care of my questions, Madam Chair, for The Parent Channel.
7189 THE CHAIRPERSON: Counsel...?
7190 MR. McCALLUM: Just on one point. You said you
would be prepared to cap the material coming from independent production. I just
wondered at what level you had in mind.
7191 MS CLAYTON: Are we talking percentage of the
schedule, number of hours? I am not sure I understand.
7192 MR. McCALLUM: I will ask you either
7193 MR. VINER: Could I just
7194 I thought that the cap related to our
relationship with Sullivan. Is that correct?
7195 MR. McCALLUM: Yes, that's
7196 Just picking up on the point that was made a
minute ago, and also earlier this morning, that you would be willing to accept
some sort of relationship cap. I wondered at what level that would
7197 MS CLAYTON: I am sorry, if you don't mind I
need a bit of clarification.
7198 The clarification is that there would be a cap
on the amount of programming that we would acquire from an affiliated
independent producer. Is that the question?
7199 MR. McCALLUM: That's what I understand your
undertaking was earlier this afternoon. So I am rephrasing it in those terms,
7200 THE CHAIRPERSON: There are presumably two
questions here, in my understanding. One is the cap or the floor of the
production; how much production would come from non-affiliated and how much
7201 A second question is: How would you define
7202 MS CLAYTON: What we had accepted, that
Sullivan Entertainment as a third owner would be considered as an affiliated
party, so right away it puts them in the category where there would be a cap. So
now what we are discussing is either number of hours or percentage of the
Canadian programming that would be the cap from an affiliated independent
7203 MR. McCALLUM: Yes, that's the way. If you have
a problem with the first assumption, that he should be considered an independent
producer, this is the time to state it. But assuming that that assumption is
7204 MS CLAYTON: No. We accept that. We don't have
any problem with that. I am just wondering if you would prefer the cap in
percentage or hours. I would think hours would make more sense.
7205 MR. McCALLUM: If you could provide it in
7206 MS CLAYTON: May I provide it to you, or would
you like it right now?
7207 THE CHAIRPERSON: If you feel more comfortable,
there will be another opportunity to come back with these
7208 MR. McCALLUM: There is a Phase II. If you
don't have it right now, this could be an undertaking that you could fulfil at
Phase II where you appear as an intervenor against all of the other
7209 If you are more comfortable providing it at
that stage, that would be acceptable.
7210 MS CLAYTON: Yes. I had not prepared that
7211 THE CHAIRPERSON: With regard to the definition
of affiliation, I understood earlier this morning, in the general questions with
Madam Bertrand, that we asked you what you thought was an appropriate way to
define an affiliated company should you be affiliated with one between now and
Year 7 or what you think should be the case with the competitive applicants, and
7212 That is another kind of general question on
the table: In this environment, with these Category 1 services and the vertical
integration with producers, what is an appropriate way of defining -- well, one
way of looking at it is: What is an independent producer? And the other is: What
is a non arm's length or a not independent producer?
7213 We discussed that with Alliance Atlantis this
morning, and I thought you were asked the general question as to what you
thought was appropriate. We wouldn't mind hearing from you later since you had
not had time to talk about it.
7214 MS CLAYTON: May I just have five seconds to
confer with Bob Buchan?
--- Pause / Pause
7215 THE CHAIRPERSON: By later, we didn't mean in
the next five minutes. It could be the next time you are before
7216 It is open to you to discuss whether this is
not even an appropriate limitation to place on Category 1 services in a digital
7217 MS CLAYTON: No. We do understand where the
Commission is coming from.
7218 MR. McCALLUM: So are you going to provide an
answer then in Phase II? Is that the plan?
7219 MR. VINER: Perhaps I am missing something. I
think that what was proposed by Alliance Atlantis is perfectly fine for us, a
company that is affiliated, one in which we own less than 30 per cent. That is
fine for us.
7220 I mentioned earlier that we don't have any
ownership positions, but there is a good point made that we may well. So we
think that is appropriate.
7221 I would certainly accept a cap that says that
no more than 10 per cent of our programming would come from those
7222 THE CHAIRPERSON: Even then, Mr. Viner, it
is not that simple because 30 per cent is a voting equity. It is an issue that
we have discussed before in the analog environment and we are discussing
7223 MR. VINER: I agree. I think that your counsel
is wise. We will come back. It is more complicated. I didn't want to convey the
impression that this was a source of great concern or that there was some sort
of other agenda.
7224 But I do think we should think about it and
come back with a reasoned response. Thank you for your advice.
7225 THE CHAIRPERSON: Mr. Viner, I want to reassure
you that I don't have a production company to sell you.
--- Laughter / Rires
7226 CHAIRPERSON OF THE COMMISSION: The question
the way we are raising it now is also a question that we want to raise with all
the participants, with all the applicants. As you said, you may not have an
interest today but you may have tomorrow. So going into the new world, vertical
integration is not at its conclusion at this point in time. So we might see
7227 I think the question is asked to all the
7228 MR. VINER: I think it's a very good point and
I will admit because, you know, we had not considered it because we did not have
any particular plans, but, as usual, you are a step or two
7229 THE CHAIRPERSON: But you did come forward with
7230 MR. VINER: Absolutely.
7231 CHAIRPERSON OF THE COMMISSION: We have the
opportunity of having had access to all the applications and that was our
homework for the summer. So that's our advantage.
7232 MR. BUCHAN: Madame Chair, if I could just
clarify, I think Alison Clayton was quite clear that we consider that Sullivan
are the third ownership in this application would be bound by any rule that
related and that --
7233 THE CHAIRPERSON: Yes. We are asking you, Mr.
Buchan. I think, unfortunately, we are on a track now where we just want to
discuss it. Is it necessary? Is it appropriate in this environment? Is it a
limitation? Should it be considered maybe an advantage or not necessarily, but
just want to discuss the issue and then how to -- whether to limit and how
to limit. But it's an open question as to whether what we did with analog is
7234 MR. BUCHAN: I just want to put Mr. Viner's
comments in that context, that the Sullivan relationship to this application
isn't, to use a colloquial expression, a big deal to the application and we
accept the appropriateness of it and the position that Alliance Atlantis took
this morning. Thank you.
7235 MR. McCALLUM: Thank you, Madame
7236 THE CHAIRPERSON: Madame
7237 CHAIRPERSON OF THE COMMISSION: Thank
7238 I think that concludes our questions about the
Parent Channel. Thank you. We are moving to Biography, another binder.
--- Pause / Pause
7239 MS CLAYTON: You don't want to look under
7240 CHAIRPERSON OF THE COMMISSION: I will start
with nature of service here again and use in your description of your channel
that you will be primarily devoted to biography programming, meaning that you
may have other type of programming. What kind of other programs would you have
7241 MS CLAYTON: Ten per cent of the channel will
be documentaries and 20 per cent would be theatrical feature films that have
already aired on television. Those are just so that we are able to put into
better context a person's life.
7242 It is the way the channel is scheduled that
you don't just have a one hour biography about the person, but you have a
documentary about the time in which they lived or what was happening in their
country at the time. And then a film that might either be -- for example,
if the biography was about Norman Jewison, then it could be one of his films,
"Moonstruck", or it could be related in some way. But there is a common element
to the person that was featured in the biography, so we have asked for the
flexibility, but it is no more than 20 per cent of the schedule. These are
theatrical films that have already aired on television.
7243 CHAIRPERSON OF THE COMMISSION: Okay. So that
would be 7(c) and 7(d)?
7244 MS CLAYTON: Yes, that's right.
7245 CHAIRPERSON OF THE COMMISSION: It would be no
more than 20 per cent of the schedule?
7246 MS CLAYTON: Absolutely.
7247 CHAIRPERSON OF THE COMMISSION: And
documentaries 10 per cent?
7248 MS CLAYTON: Absolutely, yes.
7249 CHAIRPERSON OF THE COMMISSION: Here again, we
had -- and you would accept a condition of licence?
7250 MS CLAYTON: Yes, we would.
7251 CHAIRPERSON OF THE COMMISSION: Here again we
need some clarification on your wheel or on your schedule from year one and year
two and year five. What's, for example, the theme evening that you are
proposing? Will it be right from the start or will that occur strictly as you
come in year five?
7252 MS CLAYTON: I will have Robin Mirsky who put
together the schedule address that question.
7253 MS MIRSKY: Good afternoon.
7254 You are correct, the theme evenings will start
at the very beginning of the licence period, then overall schedule and wheel
will remain the same for the beginning to the end of the first licence
7255 The most significant change will be the number
of Canadian hours versus foreign hours. As we proceed during a licence term the
Canadian content goes up from 25 per cent in year one to 50 per cent by year
7256 CHAIRPERSON OF THE COMMISSION: And do you have
some kind of arrangement similar to ZDTV where you have most of your foreign
programming coming from A&E and that you have a cap on this as
7257 MS CLAYTON: Yes. This is one of the strengths
of our partnership with A&E is that they have a vast library of biographical
programming, and as part of our shareholders' agreement we do have a cap on the
number of hours. So while we would be able to acquire very strong programming
right from day one, which as I mentioned earlier we really do believe is
important to hit the ground running, the amount of foreign programming will go
down quite dramatically until it is no more than 50 per cent of the
7258 As well, we will be able to search out
biographies from around the world. As we found from our Web site, there is a
great deal of interest in biographies from people in England, Australia,
Jamaica, Greece. It isn't the country of origin, but we, of course, will be
going overseas to look for some of these biographies.
7259 CHAIRPERSON OF THE COMMISSION: Could we expect
if we were to licence this channel that on year one and year two the 75 per cent
would be almost all A&E origin and as we moved towards the fifth and the
seventh year that we would have in the foreign content more 50/50 per cent with
other than A&E or other than U.S.?
7260 MS CLAYTON: Yes, that would be an accurate
reflection. The amount of programming that we would get from other sources by
year five would probably be 15 to 20 per cent of the foreign
7261 CHAIRPERSON OF THE COMMISSION: On the going
7262 MS CLAYTON: Yes.
7263 CHAIRPERSON OF THE COMMISSION: As of the fifth
7264 MS CLAYTON: As of the fifth year,
7265 CHAIRPERSON OF THE COMMISSION: And before that
that would be closer to kind of the entirety coming from
7266 MS CLAYTON: Virtually all, but highly unlikely
that all of it would. For one thing, there is a cap on the number of hours, but
the library that we would have access to is biographies and some theatrical, but
in order to put together the best schedule we absolutely do not want to be
limited by only what is in the A&E catalogue.
7267 So if we are doing a Canadian biography and
there is nothing that could be possible relevance in their library that would
make for a strong theme, then we would, of course, be searching out for more
relevant programming, whether it is from the United States, but more likely from
7268 CHAIRPERSON OF THE COMMISSION: What is the
hope you have in being successful in having windows in A&E U.S. for programs
that you will be developing if you were to be granted the
7269 MS CLAYTON: It would be the same relationship
that I mentioned earlier. It is really truly wonderful. I have been a producer
and a broadcaster and I know how difficult it could be to go and knock on
somebody's door cold. So if a producer comes to us with a fabulous biography, I
mean it doesn't have to be about a Canadian or an American necessarily, just
about an interesting person.
7270 Then, definitely, our programmer would pick up
the phone and call the Biography Channel and saying to CarolAnne Dolan, "hey,
listen, there is this really good biography that has just been produced by a
Canadian on St. Patrick," which is an actual example, "and we think it's
terrific and we think that you should have it." So this is the sort of exchange.
It's not a cold call. It's a friendly programmer-to-programmer call. I think
there are great opportunities.
7271 MR. VINER: Perhaps CarolAnne might like to
7272 MS DOLAN: Yes. I would second that. In fact,
we have had this occur most recently with shows like the biography of Owen Hart,
with a Canadian program on the Cartier family. It's definitely, you know, we are
looking for quality programming wherever it comes from, and so I would just
second what Alison said.
7273 CHAIRPERSON OF THE COMMISSION: If we have a
concern over the presence of A&E through what could be that undertaking if
it was to be licensed in terms of making sure that the diversity of sources is
really brought to the viewers, do you see a possible limit put on what could
come from A&E and I suppose they would be different from the first couple of
years that you would launch up to the fifth, going into the seventh year of the
7274 MS CLAYTON: Well, as a suggestion, we could
accept as a condition of licence that there be a certain amount acquired from
the partner A&E, but then it could say that, you know, 5 to 10 per cent of
the non-Canadian portion must be the best from around the world, must be the
best international. It could say that it was non-American. We certainly would
not have a problem with that.
7275 CHAIRPERSON OF THE COMMISSION: And you would
say 5 to 10 per cent for the duration of the licence or the early period because
that seems a bit low going forward, when you come to 50 per cent Canadian and 50
per cent foreign.
7276 MS CLAYTON: If we are looking at 50 per cent
of the hours coming from foreign by year five, that truly is only between 350
and 450 hours of programming.
7277 Being a specialty channel, we are looking at
repeats of, you know, eight to twelve or maybe four play dates, but we
are -- that's not a great deal of programming to acquire when you have
got a library the size of A&E's, and they continue to produce 150 new
biographies every year.
7278 There is a huge brand recognition. There is a
huge asset in having access to this. If we are looking at 350 to 450 foreign
hours by year five and we said that 10 per cent of that was from "other", that's
still 40 hours. That's quite significant in terms of
7279 MR. VINER: Madam Chairperson, I would just
like to interject for a moment here. Returning to our original premise, which
was what we need to drive this digital penetration is the presence of excellent
services and highly popular services.
7280 I think it's important for us to say that the
fact that we have an outstanding partnership with A&E is important and that
the research has shown that Canadians love biographies and this is an important
way in which they become familiar with the service.
7281 I don't know -- Chris Kelly, who is
our research guy, head of Strategic Counsel -- I shouldn't call him
our research guy. Christ, I don't know if you want to talk about biographies,
Canadians' liking for biographies.
7282 MR. KELLY: Sure, Tony, I would be happy to do
7283 We looked at 14 different genres in our
testing that was included in our submission and biography emerges as one of the
strongest. It is in the top five of the different genres that we looked at. It
generates substantial interest from Canadians. It truly is one of the most
popular that could be licensed.
7284 As Tony points out, we are looking for popular
channels. This is going to be important for the digital rollout. Biographies
certainly fits that bill.
7285 MR. VINER: We think that these brands are
important and we think, as Alison has said, to the digital subscriber. Whether
or not we have got 800,000 subscribers or 5.2 million, as Alliance Atlantis
does, it doesn't matter to them. They are going to expect top quality, first
class programming out of these digital services.
7286 We think that the fact that we have access to
the very highest quality biographies from A&E is a huge advantage to us.
Alison described and suggested ways in which we might also do some international
recruitment or acquisitions as well as a possibility.
7287 I think it's important for me to say that we
believe this is an extremely strong brand. We think it's a huge strength for
both ourselves and for the digital tier.
7288 CHAIRPERSON OF THE COMMISSION: My question was
open, so it's for you. I'm not debating here. I was asking what you feel would
be an appropriate limit given the concept you have developed and the business
relationship you have developed as well.
7289 Given the fact that you are putting some
emphasis -- I don't know how to do it as a verb -- on the
fact that you have an expertise in multicultural programming, it seems to me we
would expect that the foreign sources would be reflective of a multicultural
point of view.
7290 Although you may have good quality, and I am
not disputing at all the quality of A&E, far from it, especially not in the
presence of the ambassador of A&E in front of me, still some figures can be
perceived or maybe the story can be told differently, whether you are French,
German or South American.
7291 I was kind of trying to get also a flavour or
a taste of what the viewer would eventually see.
7292 MR. VINER: I understand.
7293 CHAIRPERSON OF THE COMMISSION: On the original
Canadian, in Schedule 1 you refer to $14.8 million in new funding into the
Canadian independent production industry. Would this be for totally new
productions or would that be an additional amount on things that are already
7294 MS CLAYTON: I am going to turn it to Robin
Mirsky, but before I do so, I just want to say that one of the main reasons that
we have applied for Biography Canada is because there is not a great deal of
biographical programming available in Canada.
7295 There is some and certainly Biography as a
genre, whether it's in books or magazines or movies, is becoming increasingly
more popular, so we are seeing more programs available. Basically there's not a
great deal out there.
7296 So, to begin with, we would be acquiring
second windows from biographies that are already produced for other broadcasters
while at the same time prelicensing and funding new biographies that will be
made in the future.
7297 I hope I haven't stolen all of Robin's answer,
but Robin would you like to add to it?
7298 MS MIRSKY: Again, I will use year five as an
example because that's the program that is scheduled to be filed with the
7299 By year five we will acquire or cause to be
produced 150 to 400 hours of Canadian programming. Ninety-five per cent of that
will be licensed or acquired from Canadian independent producers. As far as
original Canadian goes, we plan to license 20 to 25 new biography programs
within the first two years of the licence and then that amount would remain for
each year of the licence term.
7300 There is an element in our application for new
as well as for -- new first run as well as taking a second window on
new Canadian programming.
7301 CHAIRPERSON OF THE COMMISSION: Thank you. We
were referring earlier to your research specialist or expert. Maybe you would
like to call upon him again. We see from the market study that Biography runs
one of the highest ranked among the taste and not necessarily need, but
certainly taste, yet in terms of penetration level, you have projected only 35
per cent where in terms of the ranking, it was 51 per cent. Why that
7302 MS CLAYTON: The 35 per cent is our projected
takeup of the services when they are in a package. We looked at the whole
digital universe and we certainly are hoping that there will be 10 to 12 strong,
highly attractive to consumers, channels licensed.
7303 We believe that in any package Biography would
be a very welcome addition as a digital driver, but basically our projections of
35 per cent are very much in line with virtually all of the applicants. Only a
few went higher than that. That is a new technology. We have to get the boxes
out there and we have to get Canadians to see that it is a worthwhile investment
and that there are good channels.
7304 It is not a reflection on the strength of the
channel; it is more of a realistic assessment of the rate of
7305 CHAIRPERSON OF THE COMMISSION: Thank you.
Interactivity -- what is the type of interactivity you have in mind for
that channel? It is a different Web site for sure, but what
7306 MS CLAYTON: This is a channel -- and,
again, I will throw to Mike Lee ...
7307 This type of genre really does do very well
with interactivity in that people want to know more information. So they might
like to see a biography on Norman Jewison, but then they would love to be able
to find out very quickly, as they are sitting there watching with their family:
Hey, wait a minute. Did he do "The Russians Are Coming", or did he not? What
about "Jesus Christ Superstar"? How many movies has he produced?
7308 They would like to be able to get access to
that information very quickly.
7309 So the people who are interested in Biography
programming are very interested in the possibilities with interactivity. I know
that Biography in the United States has found this, and they have a Web site
that has, basically, a library of information on 25,000 people.
7310 Mike, can you add anything to
7311 MR. LEE: Absolutely. I am going to very
briefly talk about how the Biography aspect -- the interactive
aspect -- is slightly different from the previous two applications, and
then I am going to ask CarolAnne Dolan to describe another property that they
have, which they found to be very, very successful and popular, which is
7312 A little bit more on how people use it --
when you are watching television and you get one hour to go from an account of
life to the current life or the death of an individual, you don't get a chance
to stop very often in the middle and drill down on some detail. What the Web
site really provides is an ability to aggregate all of that information that you
have already collected through the process of producing that feature and provide
more depth into the detail of that individual's life.
7313 In addition, if an individual is inclined they
may want to buy things that are associated. They may want to buy the book about
that individual's life, or watch another video.
7314 It really adds more depth from where you have
had your appetite whetted from the television show.
7315 If CarolAnne wants to talk a bit about
7316 MS DOLAN: Sure. I would be happy
7317 Also building on what Mike just said, the
existing Biography.com Web site, in addition to bringing that kind of
information, has chat rooms -- discussions -- all of which we have
found extraordinarily popular with people who view A&E and who come to the
Biography Web site.
7318 One of the features is Genealogy.com, which is
basically on our Web site as a link to Genealogy.com. A&E has an ownership
stake in this Web site, which is the leading existing Web site for research of
7319 It is really a guide to conducting research.
It shows people how to research their family histories. It links to thousands of
global resources: archives, libraries, local records, death, birth,
marriages -- those kinds of things. Specifically, it includes more than
1,200 Canadian on-line resources, genealogical records, et cetera, and it has a
very active community centre as well where people can go and share their family
histories and connect with other people who are interested in genealogical
7320 In addition, Biography.com, as a very
important component of the Web site, has a tie to Cable in the Classroom. So
there is a whole feature of teachers, materials, that go along with the Cable in
the Classroom programming, Biography being one of the key components in that
7321 MR. LEE: I would just like to add that much of
the content within the Genealogy.com environment is really user generated
because they create their own genealogical trees.
7322 The budget focused on -- this is a great
example of the real asset that the partnership brings. The focus of interactive
budgets for Biography.ca is to be focused on creation and extending the Canadian
biographies within Biography.com. So we would select the biographies within
Biography.com that are applicable to Canada, and then spend most of the
budget -- the majority of the budget -- on creating new biographies,
on-line biographies, about Canadians.
7323 CHAIRPERSON OF THE COMMISSION: So I understand
correctly that most of the interactivity will come from the Web site. When the
set-top box gives access to the Web site, that will reach more viewers. It may
not be necessarily the early adopters of technology who will be interested in
Biography, so that interactivity will certainly be meaningful to the viewers of
7324 MR. LEE: In fact, most of our research shows
that the first generation of interactive TV, where you have easy access to the
Internet on your television with a remote control, really appeals not to that
early adopter technology set; it appeals to someone who doesn't feel comfortable
with technology, and this would be an excellent product for that
7325 CHAIRPERSON OF THE COMMISSION: And that is how
you have built the approach of interactivity into that --
7326 MR. LEE: Exactly.
7327 CHAIRPERSON OF THE COMMISSION: Thank
7328 The last question for Biography -- and I
kind of jumped over it -- concerns the aspect of
7329 As you know, The History Channel has many
programs that could be similar to what you are proposing to do.
7330 What do you see as the possible overlap of
what you know right now of The History Channel and what you intend to
7331 MS CLAYTON: We are certainly very familiar
with the biographical programming on History, and similarly with CBC. We know
that there is not a great deal of it around, and those programs that are playing
right now on History would very likely in our early years find a second window
on Biography. It is not a huge amount, it is certainly not that this would be
ever enough to be considered competitive, but it would be packaged
7332 The approach on The History Channel is that
this is a historical figure or a political figure, so we are looking at them
from that point of view. Ours could be taken completely differently and they
wouldn't be packaged all as the Prime Ministers, for example. We would talk
about interesting Canadians who travelled overseas.
7333 There are so many different ways to look at a
person's life. It is not just what they did that would make them eligible to be
part of a Biography strand on The History Channel. We would repackage and we
would be able to provide very significant licence fees to the producer who would
be looking for a second window.
7334 This would be while we were also putting money
into the system for the creation of new biographies that would not come from a
historical point of view.
7335 CHAIRPERSON OF THE COMMISSION: I am not
totally clear on what you are saying. You are saying that, as you know it right
now, there would not be much of an overlap, but certainly you could provide a
second window, and that second window would be the repackaging of existing
material. You would like a -- comment on dit donc, un présentateur -- that would
come and do the links differently of the same material.
7336 MS CLAYTON: The primary focus of The History
Channel is not biographical programming. They look for programs that are
primarily historical. That does include a strand that features biographies of
7337 Our channel would have as its main theme
biographies, not that they would be historical. So if we were putting together a
theme night, we might choose only one or two of the biographies that played on
History, but we would package them in a different way. If they are talking about
a Prime Minister on The History Channel, we could do it in a theme. For example,
we could talk about around-the-world politicians. We would have Indira Ghandi.
We could have Kim Campbell. We could have Pierre Trudeau. There would be an
entire mix, but we would be coming at it from politicians who were in power for
X amount of time. We would come at it from a different way.
7338 But simply because there is a biographical
strand on The History Channel should not preclude a biography channel from
playing biographies of people who have done interesting things in a historical
7339 There is such a small amount of biographical
programming that would ever be on The History Channel that would then come to
7340 CHAIRPERSON OF THE COMMISSION: But I still
would need to understand what you see the degree of overlapping. You have
Biography but you have also related non-biographical programs, like 10 per cent
long form documentaries and 20 per cent theatrical features.
7341 What can we expect if we were to license you?
As a viewer, if I am already a subscriber of The History Channel and now
Biography is there, what would be the degree of overlapping, whether it is
presented with a different approach as special nights on the Prime Minister or
special nights on women in politics, or whatever? But still, if the program is
the same, it's the same.
7342 I am asking for the viewer: What will be the
degree? I understand that you will be marketing it differently, of course. You
have a different channel under Biography than History. But at the end of the
day, what I will be watching on the screen might be somewhat similar. What will
be the degree of overlapping, from your understanding?
7343 MS CLAYTON: I don't think I could give a
percentage. I would just have to say that it would be negligible. When I watch
The History Channel, I have to tell you that I have never actually thought of it
as being a place that I would turn to to find out more about historical figures.
That is not what its purpose is, certainly from my point of view as a
7344 I don't know. I'm sorry, I just don't know how
many biographies they play in a year. I do know it's not very many. Several of
them have been funded through Rogers Cable Network Fund and Rogers Documentary
Fund. We have a great relationship with the producers who produce these
biographies, but there are not very many. I'm sorry, I just don't know the exact
7345 I do know, having seen the financing plans for
all of these historical biographies, because they do apply to Rogers for
funding, that they really are looking for second and third windows. They need it
for their financing.
7346 There is a finite amount of government money
available through CTF and Téléfilm to have the audience on an analog channel
where the main feature is historical versus the small, much smaller audience on
the digital channel where the whole focus is the person's life, an examination
of that person's life. First of all, the producer would welcome the added
licence fee; and secondly, it would be out of window. We would never buy a
program that was still in window with another broadcaster. So it would have long
ago left its first window of The History Channel.
7347 Almost all programs of a documentary or drama
nature in Canada do need second and third windows. I think the digital universe
is ideal for that, because the licence fees will be smaller because the universe
is smaller. And yet it is still money in the producer's pocket.
7348 I don't know if I have addressed your
7349 CHAIRPERSON OF THE COMMISSION: I am not
disputing that. I am trying to understand. There is the competitiveness but
there is the diversity. Certainly I can understand the necessity and the
importance for producers and eventually for viewers in order to get quality
Canadian programs that there is a possibility of multiple sourcing of financing
which is provided by many windows. I understand that.
7350 All I was trying to understand is History, and
if we were to license Biography, how much would be overlapping.
7351 MS CLAYTON: I think if the Commission was
looking for some criteria to help in this determination, it would be to go to
the process at the beginning of June where people filed interventions against
those applications that they thought were competitive.
7352 It is noteworthy that History definitely did
not intervene against Biography.
7353 MR. VINER: If I could --
7354 CHAIRPERSON OF THE COMMISSION: We are not
limited in our questions.
7355 MR. VINER: No, absolutely.
7356 I think the overlap you would find, Madam
Chairperson, is 5 per cent. Biography will deal with entertainment figures and
sports figures, a wide variety of people in all walks of life, as opposed to
History which has a much more narrow focus.
7357 As I think Alison has said, there was sort of
a general intervention -- not that you are confined to what others have said,
but I think History would acknowledge that there is little difference, little
7358 CHAIRPERSON OF THE COMMISSION: Thank you. That
takes care of my questions for this channel.
7359 Do you have any additional questions,
7360 MR. McCALLUM: Just one.
7361 At the top of page 7 of the presentation you
made earlier today, you said:
"The program Biography consistently attracts a larger share of the viewer
audience in Canada than in the
7362 I just wondered what was the source of that
7363 MS CLAYTON: I will ask A&E to answer that
7364 Do you have it there, CarolAnne?
--- Pause / Pause
7365 MR. VINER: Our Canadian ambassador is helping
7366 MS DOLAN: I can give you some recent examples.
Oprah Winfrey, which aired in the U.S., rated 4.7; in Canada, it rated
7367 Hitman Hart aired in the U.S. at 3.2; in
Canada, it rated a 5.9.
7368 The Samuel Bronfman Biography in the U.S. did
a 2.1; in Canada, it did a 4.1.
7369 Biography of the Year in the U.S. did a 2.0;
in Canada, it did a 4.9.
7370 I could cite many more examples. This is based
on Nielsen Cable Meter Index.
7371 MR. McCALLUM: Thank you.
7372 THE CHAIRPERSON: Thank you.
7373 Madame Bertrand, you are not done
7374 CHAIRPERSON OF THE COMMISSION: No, I am not
done yet. The last one but not the least, documentaries.
7375 Do you have a different colour of binder for
7376 MS CLAYTON: You bet!
7377 CHAIRPERSON OF THE COMMISSION: That's what we
have too. We have different colours of binders per week. The blue is Week
7378 Again, to define the nature of service, what
would be the respective proportion of documentaries and other types of programs
on the proposed service?
7379 MS CLAYTON: I am sorry, I didn't hear the
7380 CHAIRPERSON OF THE COMMISSION: The respective
proportion of documentaries and other types of programs. All
7381 MS CLAYTON: Yes.
7382 CHAIRPERSON OF THE COMMISSION: 100 per
7383 MS CLAYTON: Yes.
7384 CHAIRPERSON OF THE COMMISSION: And you would
accept a condition of licence?
7385 MS CLAYTON: Yes.
7386 CHAIRPERSON OF THE COMMISSION: Again comes the
question concerning the non-affiliated producers and the independent
7387 Maybe you would like to come back with this as
well, in terms of what would be for you the right level, given that here you
have five independent producers that are shareholders with you.
7388 But there is also the question about
affiliated producers that you may not have in the present time, other than the
partners you have in that project, but that you may have down the
7389 Again, that could be a question that we keep
there for which you will come back later.
7390 MS CLAYTON: Yes, we will.
7391 CHAIRPERSON OF THE COMMISSION: Program
expenditures, here it is similar to the other two where your calculation or your
commitment is higher than the calculation of the Commission. We have calculated
on the historical basis, 35 per cent, and you have committed 40 per
7392 Are you prepared --
7393 MS CLAYTON: All of our programming budgets
were based on the 40 per cent, and we would accept 40 per cent as a condition of
7394 CHAIRPERSON OF THE COMMISSION: Thank
7395 You include infomercial in your description of
this channel, yet you have no revenues estimated.
7396 MS CLAYTON: Excuse me. We did not apply for
infomercials with the Documentary Channel.
7397 CHAIRPERSON OF THE COMMISSION: You didn't.
Well, if you haven't, you won't need any condition of licence there.
--- Laughter / Rires
7398 MS CLAYTON: No, no.
7399 CHAIRPERSON OF THE COMMISSION: I was a bit
surprised to see that as part of --
7400 MS CLAYTON: No, you see, we just didn't see it
with the Documentary Channel.
7401 CHAIRPERSON OF THE COMMISSION: That is
strange. Okay, sorry.
7402 Pardon? So where are the revenues? Qu'est-ce
que tu dis? You don't have the category, you have the revenues.
7403 THE CHAIRPERSON: You may see some differences
--- Laughter / Rires
7404 CHAIRPERSON OF THE COMMISSION: J'en ai fumé du
bon, comme on dit.
7405 In your penetration of the Documentary
Channel, you put a very high penetration rate here. By year seven you have
projected 70 per cent. Given that you will be in a package here again, I
suppose, like Biography, and when we compare to other applications of the same
nature, your projection is the highest.
7406 Why are you so optimistic
7407 MS CLAYTON: First of all, the Documentary
Channel tested the highest of any of the applications that we applied for. In
the 14 that we tested it came in number three -- and Chris can correct me
if I am wrong, but I believe it was 56 per cent of all
Canadians -- and it was very, very even and across the board. It was
not particularly a certain age group, it wasn't a particular gender, income,
education. It appealed to a very wide segment of the population, so we felt very
comfortable that this will do well.
7408 Canadians love documentaries. We are known for
our documentaries and we felt very, very comfortable with that number. Again, we
believe it will be in a package of highly attractive services, but also our
number was definitely not out of the ballpark. Our suggestion that take up would
be 70 per cent by year seven is in agreement with the majority of the applicants
who did project rates between 55 and 70 per cent.
7409 So we are very optimistic that seven years
from launch, so in 2008, with attractive services out there, we certainly think
that 70 per cent is achievable.
7410 CHAIRPERSON OF THE COMMISSION: If your
projection was to be too optimistic, what could be the impact on your
commitments. Let's say you meet only 60 per cent penetration.
7411 MS CLAYTON: Well, there wouldn't be. I mean,
we know of an application out there -- we are in year one so we are
talking next September -- the applicant is suggesting that there will be a
70 per cent take up right now and we think that is a little
7412 Everything is based on a percentage of gross
revenue so there would be a very slight -- it would mean that there were
less revenues if we had fewer subscribers, but we really do believe, especially
with the Documentary Channel -- I mean, all the research has come in that
shows that this is very, very high in terms of its appeal.
7413 Yes, I know the other applicants have got
different take-up rates, but they all do agree on the popularity of documentary.
So that is what we believe.
7414 CHAIRPERSON OF THE COMMISSION: You are the
most optimistic of all the optimists.
--- Laughter / Rires
7415 MS CLAYTON: In terms of the Documentary
7416 CHAIRPERSON OF THE COMMISSION: Yes,
7417 MS CLAYTON: I do think that is because of how
much knowledge and expertise Rogers does have in this area and our filmmakers
that we have spent so much time with, we truly genuinely believe in the ability
of documentaries to attract an audience and, therefore, consumers to the
7418 CHAIRPERSON OF THE COMMISSION: And I
understand, given that all your commitments are made in terms of percentage,
that it would not affect your Canadian content commitment, for
7419 MS CLAYTON: No, because we have committed to
40 per cent of gross revenues.
7420 CHAIRPERSON OF THE COMMISSION: And neither are
7421 Well, Madam Chair, that concludes my
questioning. Thank you very much for your collaboration and your patience with
me and maybe you would like to see if the staff has any final questions, but to
make a final comment, if I hadn't had the proper question for many answers that
you had prepared.
7422 THE CHAIRPERSON: Counsel?
7423 MR. McCALLUM: Thank you. Just to clarify. If
it is going to be 100 per cent documentaries, we note that you have in your
commitments Category 2(a) which is analysis and interpretation, Category 3,
reporting in actualities, and Category 11, general entertainment and human
7424 How do these relate to 100 per cent
7425 MS CLAYTON: The programming philosophy for the
channel is wall-to-wall documentaries 24 hours a day, the best from Canada, the
best from around the world. We did apply for additional program categories to
give flexibility if we wanted to do any programs that were discussions with
filmmakers, but if there needs to be a distinction made between documentaries
and all other types of programming and the Commission decides that that then
limits it 2(b), we would not have a problem accepting that because that is so in
line with our philosophy for the channel.
7426 When you are putting together a seven-year
business plan, you always want to have some flexibility. I mean, for example,
Rogers if the largest private sponsor of Hot Docs, the documentary festival, and
we would just love to be able to cover it and do interviews with the filmmakers,
and we think this would be exceptionally strong programming on the channel. So
we included a program category for that.
7427 But I do understand that when trying to make a
determination in terms of what is directly competitive that the Commission may
feel we would like to narrow it down. There is a lot of program categories out
there. Then it would not change our plans for the channel if it was limited to
7428 We would prefer the flexibility. We do believe
it would make a stronger service, but we know it would not affect our ability to
deliver a good service if you limited it to 2(b).
7429 MR. McCALLUM: Right. Thank you very much for
7430 Just one other further question. At page 18 of
your presentation earlier today, you mentioned the documentaries produced in
7431 I note that in your application you mention
French-language programming or the French programming at page 249 of your
application, and you also mention it at pages 62 to 64. But I wondered if you
could explain a bit more about what is meant by this French-language
programming. Is it programming in the French language? Is it programming
subtitled in English or dubbed in English?
7432 MS CLAYTON: I am going to ask Robin Mirsky to
answer that question.
7433 MS MIRSKY: As we saw in the video and in the
supplementary brief, we see this trend as an opportunity to bring
French-language documentaries to English Canada which there is really no outlets
for now. So we would primarily broadcast the subtitled version of those
7434 MR. McCALLUM: Subtitled in
7435 MS MIRSKY: Yes.
7436 MS CLAYTON: Yes, but the viewer would be
hearing the film produced in its original language.
7437 MR. McCALLUM: Thank you.
7438 THE CHAIRPERSON: Ms Clayton, when you were
asked what will be the respective proportion between documentaries and these
other categories, wouldn't it be more simple to tell us what amount of
flexibility you do want that will not go under long-form
7439 MS CLAYTON: Certainly. Just give me one
7440 Could we have flexibility on 5 per cent of the
flexibility would be anything other than Category 2(b) which is long-form
7441 THE CHAIRPERSON: I believe that is the simple
answer we were looking for, not to deny the flexibility, but to have a sense of
how much of these other categories would form part of your
7442 MS CLAYTON: Thank you. Thank you for the
7443 THE CHAIRPERSON: Madame
7444 CHAIRPERSON OF THE COMMISSION: That concludes
my questions. Thank you. And if you have a last comment or some further
consideration, this is the time.
7445 MR. VINER: Well, thank you very much, Madam
Chairperson. I would like to take just a couple of seconds and then perhaps ask
Peter Raymont to close.
7446 I think what we tried to do today is bring
forward -- as I mentioned, this is unusual in that the distributors
and the programmers and the Commission all have the same objective together to
drive the penetration of digital services in Canada and we think that we have
put together a series of proposals that are both attractive. We hope we have
addressed the Canadian quality issue to your satisfaction.
7447 We believe that we are in the forefront of
interactivity and you can rely on us to ensure that the services are ready not
only when they are launched in terms of the television service, but also the
7448 We have some outstanding partners in each of
our applications, and I just wondered if I could ask Peter Raymont as a
representative of the Canadian independent production industry to just close
7449 MR. RAYMONT: Thank you, Tony.
7450 I know we are all very tired and we have been
here a long time under hot lights, but for us independent filmmakers, I just
wanted to stress how important this Documentary Channel is to us. There are many
outlets for documentaries on Canadian television, but there is no home for
documentaries, and Canadians really invented the forum, you know. Canadians
nurtured the forum. We are known all over the world for the high quality of our
documentaries and I think it is really time that there was a home for
7451 I know it is not polite to slag your
opponents, but I think it is very telling -- and I really feel I have to
say this -- that if you look at the 160 letters of support for this channel
from the independent filmmakers across this country, many of them worked for
many years inside the CBC and inside the National Film Board and they looked
very carefully at the alternative applications and read them very carefully and
decided in their heart that this was the one to support the Rogers
7452 I think in the end, you know, it comes down to
trust and you have had many people come before you over the years and make all
sorts of promises to do all sorts of things on television and this is an
organization that the independent community trusts. They have seen what they
promised in the past and they have come through.
7453 MR. VINER: Thank you for your patience. We
appreciate very much the opportunity to speak with you about our
7454 THE CHAIRPERSON: We thank you as well for your
7455 That will end our business for today. We will
be back at 8:30 tomorrow morning.
7456 Alors nous reprendrons à 8 heures 30 demain
7457 Bonsoir à tous.
--- Whereupon the hearing adjourned at 1826 to resume
at 0830 on Tuesday, August 15, 2000 / L'audience
est ajournée à 1826 pour reprendre le mardi
15 août à 0830