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 16, 2000 le 16 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 16, 2000 le 16 août 2000
TABLE OF CONTENTS / TABLE DES MATIÈRES
PRESENTATION BY / PRÉSENTATION PAR
CHUM LIMITED 649
PRESENTATION BY / PRÉSENTATION PAR
LEVFAM Holdings Inc. 915
Hull, Quebec / Hull (Québec)
--- Upon resuming on Wednesday, August 16, 2000
at 0830 / L'audience reprend le mercredi 16 août
9215 THE CHAIRPERSON: Good morning. Welcome to day three
of our hearing.
9216 Mr. Secretary, please.
9217 MR. CUSSONS: Yes, Madam Chair.
9218 We will now hear applications by CHUM Limited for
seven new Category 1 services, specifically Fashion Television: The Channel, the
Suspense Channel, MasterMusic, IndieTV, Moods, Q! Television and Relationship
9219 With seven applications, that means that CHUM has a
maximum presentation time of 50 minutes and I will ask Mr. Fred Sherratt to
introduce his team.
9220 Mr. Sherratt.
PRESENTATION / PRÉSENTATION
9221 MR. SHERRATT: Thank you, Mr. Secretary. Good
morning, Madam Chair, Madam Chairperson, and Members of the
9222 My name is Fred Sherratt, Executive Vice-President
and Chief Operating Officer of CHUM Limited. I am pleased to introduce the
members of our team today.
9223 In the front row, on your far left, is Denise Donlon,
Vice-President and General Manager of MuchMusic and MuchMoreMusic and one of the
great drivers of Canadian music.
9224 Next is Peter Miller, vice-President Business and
Regulatory Affairs, CHUM Television. Next to Peter is Moses Znaimer, President
and Executive Producer of ChumCity. On Moses' left is Jay Switzer, Senior
Vice-President, Programming, CHUM Television and next to Jay is Marcia Martin
who is Vice-President, Production for Citytv and who has played a key role in
the development of most of the trademark shows that we export all over the world
and Marcia is also Vice-President and General Manager of Star! To marcia's left
is Irshad Manji, Producer and Presenter of QT.
9225 In the second row, to your far left, is Sarah
Crawford, Vice-President of Social Policy and Media Education for CHUM
Television. Next to her is Maria Hale, Managing Director of ChumCity
9226 To my left, Ron Waters, President of CHUM Television.
Next to Ron is Paul Gratton, Vice-President and General Manager of Space and
Station Manager of Bravo! and one of the most fervent supporters of Canadian
movies. Next to Paul is Jeanne Beker, Host and Segment Producer of Fashion
Television. Jeanne has hosted FT since its inception and, as you know, the show
is a huge success now seen in over 120 countries.
9227 At the side table, to your left, David Kirkwood,
Vice-President Marketing and Advertising Sales for CHUM Specialty. Next to David
is Allan Schwebel, Director of Affiliate Sales and Marketing for CHUM Television
and our interface with BDUs.
9228 Finally, we come to Peter Palframan, Vice-President
Finance and Administration, CHUM Television, and then Mark Lewis, Director of
Business and Legal Affairs and Legal Counsel, CHUM Television.
9229 CHUM Limited Overview.
9230 Madam Chair, Members of the Commission, we were
pioneers in Canadian specialty. CHUM has participated in every English-language
specialty round since becoming one of two original specialty licensees in
9231 Few will remember that those first specialty
services, MuchMusic and TSN, were launched into an analog scrambled universe of
about 100,000 homes, and Much had a sub rate of .90 cents.
9232 Specialty broadcasting is what we do. It's what we
have done for over 40 years, first in radio and then in television. Citytv was
Canada's first specialized TV service and it was from this background, and our
close links to music through radio, that we created Much. In the intervening
years we have fostered and developed eight other services, all carefully linked
to what we do and who we are.
9233 We anticipated early the power and impact of
specialty services. We knew that fragmentation would have a significant impact
on our terrestrial operations, and that assembling a number of niche services,
each with low audience shares, was the only effective response.
9234 As specialty revenue has risen and conventional
revenue has decreased, we have certainly benefited on the specialty side, but it
has also probably seen more dilution on the terrestrial side than anyone else.
Niche, specialty, narrowcasting, no matter you call it, it is what it is and you
only get critical mass by offering a number of services.
9235 Today, we play a unique role in the system as the
only mid-sized broadcaster whose business is dependent on both terrestrial and
specialty television. Fifty per cent of our television revenue, and a
disproportionately larger amount of our operating profit, is from the specialty
side of our operations.
9236 Thanks to your recent licensing of our Victoria
station, our terrestrial stations will soon be available to 60 per cent of
English Canadians. This will help bring CHUM's share of all English television
revenues from about 8 per cent to something approaching 9 per cent, a
lot lower than CanWest's 26 per cent and CTV's 30 per cent, but still
a more solid base for a more competitive future.
9237 The seven applications we have before you today are
our response to this new competitive reality. We designed these applications to
maximize both diversity and contribution to Canadian programming, all based on
business plans that reflect the tough reality of digital
9238 They build on our programming and operational
strengths and reflect our long standing philosophy: If you are going to be
fragmented, you must do the fragmenting given the base upon which Canadian
television is structured. CHUM has been built on being Canadian "specialty"
specialists. It's also our future.
9239 MR. WATERS: In the Public Notices for this
proceeding, you called for significant contributions to Canadian programming and
programming diversity. You also made it clear that you required reasonable
9240 Our business plans are not based on overly optimistic
market research studies, but on something we believe is far more
credible -- experience.
9241 In addition to having been in the specialty business
since day one, today we are the only broadcaster to have launched new
English-language specialty services -- Star! and Canadian Learning
Television -- into a subscriber base of 1.6 to 2 million homes, rather
than the 4 to 7 million homes of analog specialty services.
9242 We have learned a lot about the challenges and
process involved in launching and operating services with fewer subscribers.
Unlike Star! and CLT, these new digital services will not benefit from hybrid
9243 Our business plan starts with a realistic approach to
digital subscriber penetration, and from that, reasonable advertising and
subscription revenue expectations.
9244 In an environment of 20, or more likely 40 to 50 new
Canadian and foreign digital services with multiple packaging and à la carte
scenarios, we see few, if any, services attaining even a 50 per cent
digital penetration level which, bringing it back to real world experience,
suggests that only the biggest runaway successes are likely to attain by the end
of their license term, the 1.6 million household level of Star!
9245 Our experience has confirmed that such small
subscriber numbers severely restrict advertising revenue potential. Star!, a
very popular service with those viewers who can receive it, will generate less
than $500,000 in advertising revenue this year. This is despite the fact that
Star! was able to take full advantage of cross-promotion and synergies with our
9246 The simple reality is that with a myriad of
alternative choices, advertisers today have little incentive to purchase time on
national specialty services that do not hit a critical mass of three to four
million subscribers. While we can all hope that will change, CHUM projects that
with subscriber levels more in the one to two million range and with an even
greater number of digital choices, annual advertising revenues can be expected
to peak at around $1 million.
9247 At the end of the day, we believe there is a business
in digital specialty channels. But it is a business that will be much more
challenging than anything we have seen to date.
9248 MR. SWITZER: The Canadian programming commitments
made in our applications are substantial, but also realistic. They have been
designed to match the revenue expectations and genres of each of our proposed
9249 All of our applications have Canadian programming
expenditure promises in the generous 40 to 42 per cent of revenue range. We
are in a position to attain these levels as a result of synergies with our
existing services, despite the fact that our overall revenue expectations remain
relatively modest. Thus, the Commission is assured that as our revenues grow,
our contribution to Canadian programming grows as well.
9250 With one exception, which we will speak about later,
we also propose to meet the Commission's aggressive expectations of 50 per
cent Canadian content by the end of the license term, with a special commitment
of 100 per cent Canadian content in the heart of prime for many of our
services. We have a corporate track record of treating content as a business, be
it through building relationships with independent producers and distributors or
through exports of our magazine shows. And we will, as we have in the past,
treat our Canadian content levels as a floor, not a ceiling.
9251 Commitments that sound too good to be true almost
undoubtedly are. The Commission has already seen applicants in the current round
of specialty renewals seek to abandon commitments that were central to their
initial application and licensing, despite their market success. Similar, but
even quicker reversals can be expected if any digital applicants succeed in
being licensed on the basis of overly optimistic business plans and higher than
9252 MR. ZNAIMER: In the cover letter to our
Category 1 applications, we said the most pertinent question to be asked at
these proceedings was: How should the Commission adjudicate between the dozens
of applications for only 10 available privileged Category 1
9253 We suggested that the Commission should use this
perhaps last opportunity to shape the digital landscape by awarding
Category 1 licences only to potentially popular and clearly defined
alternative and socially useful services in unserved or badly undeserved genres
9254 As ownership and commercial appeal will likely be the
primary considerations in a distributors' selection of Category 2 and
foreign services, we suggested that it was up to the Commission to deploy its
powers of selection in favour of Category 1 applications that address new
communities or functions that are vital to Canada's social, emotional and
9255 We do not believe that you have any obligation to
help those who opposed the emergence of specialty television to begin with and
are now making desperate grabs for space, nor do we believe that it is time to
abandon the field to the distributors. Indeed, quite the opposite! We feel it is
absolutely necessary for the Commission to weigh in on the side of fair access
and against the undue preference affiliated applicants will get from
9256 Accordingly, we urge the Commission to give
preference to, and to license as many, completely distributor unaffiliated
Category 1 services in deserving genres as possible as this is the only
sure way of truly guaranteeing access for unaffiliated services, especially
given that there is no overriding need for the Commission to limit itself to the
9257 All of our applications propose distinctive and
important genres that have real potential for success. Equally important, each
of our applications constitutes a natural extension of our expertise that
9258 1. Maximize diversity as it is in our interest to
make new services as distinctive as possible from our existing ones; minimize
competitive impact on existing services, and hence safeguard their ability to
contribute and maximize operational synergies and hence resources for Canadian
9259 And now we would like to offer you a quick tour of
our history and methods in this field of specialty, and give you a taste of our
--- Video presentation / Présentation vidéo
9260 MR. ZNAIMER: Now that you have a little taste of the
channels, I would like to present the people who will actually manage these
services -- if we are lucky enough to get licensed -- and they will speak to
each of their individual applications.
9261 Up first is Paul Gratton, with Indie, Canada's
Independent Film Channel.
9262 MR. GRATTON: As a youngster growing up in Ottawa, no
form of artistic expression inspired me in the same way that feature films
9263 Unfortunately, I very quickly determined that the
mainstream fare being presented at the local Bijou was not nearly as interesting
as the film festival selections that I could catch, every Sunday night, on
television, on a show called "Cine-Club", on Radio-Canada. Despite the black and
white of my television set and the French subtitles that frequently slipped just
off screen, a love of quality alternative cinema was born in my heard and my
soul -- and I owe it all to television.
9264 Some 30 years and some 17,000 movies later, I now
appear before you and ask that you grant us the privilege of being able to carry
on the noble television tradition that first inspired me to devote my life to
the movies. I ask that you grant us the licence for Indie.
9265 It has been said that the major Hollywood studios are
no longer a source of originality or innovation in film. Slasher films,
effects-laden disaster movies and gross-out comedies designed to appeal to the
lowest common denominator all too often represent the most heavily promoted,
easiest to sell box office fare churned out by the majors.
9266 This is not an environment in which Canadian films
can flourish. There simply has to be a mechanism for supporting authentic
alternative filmmaking voices in this country. There has to be a home for film
artists who want to tell personal stories about real people coping with real
problems, in locations that are not all within a 10-mile radius of the Beverly
Hills Hotel, in Los Angeles.
9267 Indie will be such a channel. At least 75 per cent of
our schedule will be comprised of feature films -- and only feature films. This
includes a minimum of 200 hours of Canadian motion pictures every year,
exhibited in peak viewing periods, as well as a promise to exhibit 100 per cent
Canadian programming in the heart of prime, from eight to 10 p.m.
9268 We have proposed a 30 per cent level of Canadian
content for this movie-driven service as the only level that is realistic, given
the available supply of Canadian feature film material. Currently, about 400
films a year are released on Canadian movie screens. Fewer than 10 per cent of
these new titles are certified as Canadian motion pictures. For an independent
film channel to promise over 30 per cent Canadian content, which is a level
consistent with the paid pay television movie channels in this country, is to
set up an expectation that will result in a much higher repeat factor for
Canadian movies and an overreliance on a lot of general entertainment news
magazine shows that are already well represented on existing
9269 Indie will act as a springboard to building a
stronger Canadian independent film base with $525,000 in script and concept
development; guaranteed distribution for these films on Canadian television;
Canadian film prize support at all major Canadian film festivals; and a specific
commitment to support 10 new Canadian independent feature films over the course
of the first licence period at $280,000 per film.
9270 I cannot emphasize enough what an important
initiative this commitment to 10 new Canadian movies represents.
9271 The Canadian film industry desperately needs more
development monies to improve feature film script writing in this country, and
another source for high television licence fees for the worthiest of new
Canadian features. Taken together with the buying and the promotional power of
Citytv, Bravo!, Space and Star!, Indie, along with our applications for the
suspense and relationship movie oriented channels will crystallize the CHUM
mission to be Canada's foremost market-makers and promoters of Canadian feature
film in all of its various incarnation. It's a legacy that we would be honoured
to pass on to a new generation of informed television movie watchers and it
would allow me to do something with the notes I have taken on the 17,000 movies
I have seen since I was a kid.
9272 MR. ZNAIMER: So next up with Fashion Television: The
Channel are Marcia Martin, supervising producer, and Jeanne Beker, host of
Fashion Television: The Show.
9273 MS BEKER: Napolean Bonaparte once said: "Fashion is a
barometer of our times." To truly understand any society or culture, one need
look no further than the costume of the day.
9274 Major museums the world over exhibit, study, and,
indeed, celebrate both historic and contemporary dress. The media reflects the
public's fascination with fashion and its related art forms: photography, visual
art, architecture and design.
9275 As a personal expression, fashion mirrors social
values. As a vibrant, visible industry, it strengthens our cultural identity. By
having our creators help define who we are, we can express what's important to
us, celebrating our own traditions without relying solely on U.S. and European
9276 The clothing business in Canada generated $14 billion
in sales last year. There are currently seven Canadian magazines that feature
fashion and beauty, yet there are only a few television series in this country
and no TV channel that specializes in this genre. Clearly, it is
9277 One of Canada's fastest rising designers, Joeffer
"...a comprehensive Canadian option in this field is sorely lacking. The
opportunity this forum will provide, for the Canadian design community, would be
a priceless asset in aiding the promotion of the rich talent and diversity
9278 MS MARTIN: When we developed FT: Fashion Television
in 1985, the program spawned a whole new television genre and its presence was
felt across the globe. Now seen in over 120 different countries, FT has even
become required viewing for many design students around the world. Over 50
schools in Canada alone have requested use of FT in their classrooms.
9279 Highlighting our own people and product in a global
design context will give the Canadian fashion and design industries a
fully-dedicated promotional engine. Just as MuchMusic, Bravo! and Star! have
provided the stage and spotlight for our musicians, artists, film and television
stars, Fashion Television: The Channel will showcase our designers,
photographers, architects and visual artists.
9280 FT: The Show is the model for Fashion Television: The
Channel. Based on the show's history and popularity, we know there is an
audience for this genre. After 15 years, our archives are the largest and
richest of their kind anywhere. Building on that library, our programming will
feature magazine series, documentaries and fashion-related movies, drama and
9281 This channel not only celebrates fashion and design,
but as part of our Media Literacy Program we will examine the complexities and
provide analysis and context. "What's wrong with fashion?" delves beneath the
surface to reveal the mechanics of the myths and the grittier side of glamour.
"Mind and Body" deals with medicine, wellness and longevity, particularly as
they relate to beauty.
9282 We are intent on providing a broadcast runway worthy
of the world's stage, for all our talented designers, photographers, architects
and artists. Fashion Television: The Channel, it's more than what you
9283 MR. ZNAIMER: Thank you, Marcia.
9284 Our next offering is the Suspense Channel and here,
again, is Paul Gratton.
9285 MR. GRATTON: Suspense movies can largely be broken up
into two broad categories: the suspense thriller and the suspense mystery. The
former is designed to fill the audience with strong emotions, provide a
roller-coaster rise of adrenalin and anticipation. Steven Spielberg's "Jaws" or
Alfred Hitchcock's "The Birds" would fall into this category. TV series such as
"The Fugitive" or "The Twilight Zone" would also fall within the thriller
9286 The suspense mystery, on the other hand, creates its
tension through the suppression of information, plot twists and turns and the
revelation of the true identity of the criminal at the end of the film. Ellery
Queen or Perry Mason mysteries fall squarely within this familiar tradition, but
so would such nail-bitters as "Wait Until Dark" with Audrey Hepburn or Alfred
Hitchcock's "Rear Window". It's worth noting, however, that Suspense will
maintain CHUM's policy of no "slasher" films.
9287 Suspense's format will consist primarily of recent
and classic mystery and suspense-related television dramas, features films and
the best of mystery and suspense programming from independent Canadian
producers. Most importantly, given the importance CHUM gives to feature-length
production, we expect to finance six films over the licence term, or one film
per year at $300,000, starting in year 2. This significant financing of six new
films represents a much-needed kick-start to Canadian film in this enormously
9288 Suspense Channel will help repatriate tuning to
suspense and mystery programs from foreign signals, such as A&E, by
significantly enhancing a Canadian presence in a genre heretofore left mostly to
U.S. producers and services.
9289 Some of Canadian cinema's early successes fall
squarely within the suspense genre. Garth Drabinsky's production of "The Silent
Partner" and Bob Clark's "Murder by Decree", featuring Sherlock Holmes, are two
examples that readily spring to mind. Unlike in Quebec, the genre seems to have
fallen into disrepute in English Canada, not with audiences but with Canada's
film funding agencies. And yet any hopes for a successful new era for the
Canadian film industry will have to be founded on the three tent poles of
comedy, romance and suspense. That's what audiences flock to see. And the
triggering of quality Canadian productions within the suspense genre is the
reason our Suspense Channel is an idea whose time has come.
9290 MR. ZNAIMER: First we give you the tension, and then
we offer you relief. Here is Denise Donlon, who will take you through
9291 MS DONLON: Moods is a unique, ultra niche music
television service unlike any other existing channel, featuring New Age,
contemporary instrumental, light jazz and smooth music. A reliable oasis of
meditative calm, the channel to escape to, an environment nurtured by
tranquillity and in touch with the ambient world.
9292 Tune into "Awakening Ambience" and experience nature
in all its forms: wind, mountain, forest, birds, waves lapping against the
shore. "Experimental Environments" is a new creative opportunity for computer
visual artists and animators to craft worlds beyond our own. Moods is
beautifully edited and seemlessly synced to smooth and melodious soundtracks
crafted by composers from Canada and around the world.
9293 Having enjoyed 20 years of popularity in Canada, the
New Age genre is more viable and entrenched than ever. With international New
Age stars, this genre today embraces themes of naturally ambient and atmospheric
environments, is occasionally enriched by the human voice and is a potent
expression of cultural diversity in music. CDs from Canadian composers such as
Robert Michaels and environmental artist Dan Gibson achieve gold and
9294 There is evidence for the compelling nature and wide
appeal of a truly alternative channel. Remember the national media coverage when
a cable operator in western Canada took the metaphor of television as the
"electronic fireplace" to a literal level and temporarily introduced the "log
channel". It was an immediate success. When the channel was taken off the air,
there was a real outcry.
9295 Moods isn't the log channel, though. Moods will offer
not only exposure for established and emerging artists in this gentle genre, but
will also offer a myriad of hitherto unexplored creative and economic
opportunities for composers, filmmakers and computer animators by melding these
9296 Moods offers an exceptional new opportunity to export
Canadian music and visuals around the world as this genre transcends linguistic
and cultural boundaries.
9297 Besides the pure entertainment appeal of this
channel, there are even tangible health benefits to watching Moods. Moods is a
calming, perpetual presence that will be of great benefit to health
professionals, music therapists and patients in hospitals. Studies show that
music influences our physical and mental processes measurably by triggering
endorphins, lowering stress levels and reducing depression. It is perfect for
public places, as well as private homes.
9298 Moods will be embraced everywhere the desire for a
calm, healing atmosphere prevails. Here is a channel that will relax, refresh,
restore and renew.
9299 MR. ZNAIMER: Well, now that we're in a calmer mood,
open to positive emotions, here is Marcia with Relationship
9300 MS MARTIN: Who doesn't have a love story to
tell -- whether it is your own, one you have read, seen at the movies or
just dreamt about? It is a conversation at dinner, on the phone, on the net and
over a cup of coffee. We all have a fascination and opinion about dating, mating
9301 Romance is one of the most popular literary genres in
the world. As mass market fiction, romance generates over $1 billion in sales
annually, with one in three women reading romance. There is an appetite. We read
it; yet we don't have a channel that specializes in it.
9302 Relationship television embraces the world of romance
and relationships by featuring movies, soap operas, lifestyle, daily advice and
information programming with real life stories from viewers across Canada.
Speaker's Corner input will provide a diverse range of voices on advice and
personal experience. The channel will be distinct and different, dealing with
not just Harlequin type romance, but all types of relationships.
9303 We are movie driven and our schedule reflects our
ongoing commitment to and strength in movie programming.
9304 Relationship Television is strong on new movies and
light on repeats, showing more than 20 different movies a week. We will utilize
our powerful arsenal of movies and our corporate ability to buy and schedule the
9305 Working with independent filmmakers, we will support
and encourage the production of romantic feature films, a largely neglected
genre, one that will now have a broadcaster actively behind it.
9306 Like our applications for Suspense and Indie, we will
finance feature films each year. Starting in year 2, Relationship Television
will finance one film per year with a licence fee of $300,000 per title. These
six new titles will virtually double the current output of romance films made
today in Canada.
9307 Our unique contribution is strength in feature film
programming, but our program mix will naturally include information and advice
9308 Building on our 28 year history of women information
talk shows like the original Sweet City Woman, Help and now CityLine, we will
design programming to take advantage of that important demographic.
9309 With our experience in movie programming and our
record in successfully launching boutique channels, Relationship Television will
certainly be a popular, entertaining service, full of passion, romance and
matters of the heart.
9310 MR. ZNAIMER: Thank you again, Marcia.
9311 Now on to Denise Donlon and MasterMusic.
9312 MS DONLON: The other day I overheard a young man who
was visiting MuchMusic refer to me as the "head rock chick". I thought: If only
he knew what was on my CD player at home.
9313 I am sure there are many in this room who seek out
the classics by tuning in classical radio or by listening to their CD
collections, basking in the most magnificent and celebrated music of all time.
Classical music fans cherish their daily sources of classical music on the
radio. Imagine now a whole new perpetual source for classical music, a
television channel called MasterMusic.
9314 MasterMusic will celebrate and explore the world of
classical music and classical dance, jazz and opera. It is a tightly focused,
reliable destination channel, featuring everything from solo voices to
orchestras, from classical dance and traditional jazz to long form concerts,
specials and documentaries.
9315 We know there is a demand. There are radio stations
devoted solely to classical and jazz. Classical CDs are consistent catalogue
sellers and overall sales in Canada are growing. Season subscriptions to
symphonies, ballets and festivals are strong. Audiences for TV specials on
superstars such as Pavarotti and Yo Yo Ma are huge.
9316 Demand is certainly there, but we also know that the
support for classics in Canada could be bigger. We will become a national force
to galvanize stakeholders who care about the future of classical
9317 MasterMusic will be a partner and a catalyst for
community action by building audiences, creating scholarship and incentive
programs and supporting music education in the schools. Developmental
psychologists know that the study of music builds all areas of the brain,
enhancing not only intelligence, but self-esteem, communication skills,
technological and mathematical competency.
9318 We will offer badly needed private sector support to
organizations like the Coalition for Music Education in Canada as school music
programs are being cut.
9319 Licensing MasterMusic will preclude foreign offerings
such as the Classic Arts Showcase or BET on Jazz from taking the place of
Canadian voices on screen.
9320 MasterMusic will contribute to our social and
cultural diversity at home and provide substantial promotional opportunities for
Canadian voices abroad.
9321 MasterMusic is a historical celebration, armed with a
futures approach. It is as much about the preservation and celebration of our
classical musical heritage as it is about the promotion and cultivation of new,
soon to be classic masterworks. It is time we had a homegrown, fully dedicated
television channel that super-serves the classical audience.
9322 MR. ZNAIMER: Here with our last application is Irshad
Manji: Q! Television -- The Channel.
9323 MS MANJI: As producer and host of CHUM's gay and
lesbian programs, QueerTelevision and The Q-Files before it, I would like to
begin by letting viewers themselves explain the need for Q! Television --
"I'm a 21 year-old university student who just went home to the straightest
place on earth for the summer. Shows like QueerTelevision are a
9324 Another viewer writes:
"As a teacher, I make it my mission to enlighten those who only see one
particular path. QueerTelevision is an excellent means of educating the many men
and women who fear
9325 A third viewer phones in to say:
"I am a suburban male and I find your show balanced, informative and
spicy...The Q-Files should be an entire
9326 These quotes come from public feedback through our
Web site, which viewers visit to discuss and debate the issues raised by our
show. Because we engage viewers, we know that our programming is socially
9327 But does it have the potential to be popular?
Consider the facts: planetout.com, the world's leading Internet company for gays
and lesbians, and the exclusive webcaster of our show, receives 750,000 unique
visitors every month. In Canada alone, the gay and lesbian population is
conservatively estimated at 1.65 million.
9328 This past June, Toronto's Pride Parade attracted
800,000 people, gay and straight. Generating $45 million to $55 million during
Pride Week, this well-disposed, well-defined constituency is the classic niche
for the digital age.
9329 The question then becomes: What is queer
9330 Q! Television will reflect the full human experience
through a gay and lesbian prism. Already we are speaking with independent
producers across Canada about a campy variety show, a documentary on the
censorship battles endured by Little Sister's Bookstore in Vancouver, and Bi
Blind Date, a concept tried by QueerTelevision earlier this year to huge
9331 Our uniqueness doesn't end there. Both on TV and
on-line, CHUM's specialty is to take viewers to places ignored by other
channels: dialogues with police, parents and pastors, live event coverage, youth
advice columnists and straight talk specials that encourage candid questions
from viewers in exchange for myth-busting answers.
9332 This view from Q! presents Canada with an opportunity
to show global leadership. Having been the first in the world to regularly
schedule gay and lesbian programming on terrestrial television, having been the
first also to air a Pride parade live and now, as the only TV broadcaster to
stream its entire gay and lesbian program on the Internet, CHUM recognizes the
rewards of leadership.
9333 The Commission's own leadership in awarding Q!
Television: The Channel, a Category 1 license will provide the platform to build
on this Canadian success story. Independent testimony to that is the letter you
received from Jack Shand, a management consultant to corporate Canada:
"Without a Category 1 license cable companies may well succumb to fears of a
9334 ... fears that he witnesses first-hand in the
9335 Commissioners, the fact that a Muslim refugee from
Uganda now sits before you, proposing the planet's first digital service for
gay, lesbian, bi, trans and curious straight people, bespeaks how Canada can
celebrate differences without calcifying them.
9336 Licensing this channel to a creative team that has
pioneered its content, and proven its appeal, would be one heck of a way to
conclude our country's first year in the new millennium.
9338 MR. ZNAIMER: Well there you have them, our offerings
for the digital domain. Now Maria Hale will speak about our approach to
interactivity and Sarah Crawford will close with CHUM's approach to social
9339 MS HALE: ChumCity Interactive was the first Canadian
broadcaster to go on-line in 1994 with muchmusic.com and citytv.com. From the
very beginning, our use of new media technologies and partnering strategies was
9340 We were a founding content partner in AOL Canada in
1994 and a select content partner in Microsoft Internet Explorer Active Channel
desktop in 1997. In that same year, we conducted a global Intimate and
Interactive which connected fans in Sydney, Tokyo and New York with a live
concert and interview in Toronto.
9341 Our most recent successes include having
muchmusic.com ranked as the number one destination for Canadian teens on the
Web, by the largest ever survey of Canadian teens: Report on the Net
9342 Our viewership has hit seven million page views per
month, and we have hundreds of thousands of unique users who stay for over 15
minutes a session to engage in our regular features, contests, celebrity chats,
voting and exclusive Webcasts.
9343 We were the first Canadian broadcaster to stream an
entire channel live to the Web with the launch of pulse24.com in April of this
year. Since its launch, pulse24.com has become a real success story with well
over one million page views per month and thousands of unique users.
9344 We have collaborated with streaming, hosting and
encoding companies, Web developers and portal players. We have been able to
monetize what we do to the point that we are profitable. We will continue our
innovative use of, yet measured investment in viable technologies and build
sustainable on-line business models around each application.
9345 However, an important caution. To become too immersed
in the possibilities surrounding DigitalTV and the promise of on-line revenues
would be to lose focus on what is still essentially a television channel. The
reality is we will not be able to improve upon user experience significantly in
the near term without a proliferation of a truly integrated platform. And,
consequently, we need to be aware that our audiences may not embrace our
expanded offering as quickly or as completely as we would like.
9346 Techno-optimists with their aggressive on-line
revenue projections remain close to the technology, but not close enough to the
audience. We are a pure broadcast company and our successful on-line endeavours
remain focused as a logical extension of what we do. We maintain the position
that we are in showbiz and we continue to concentrate on delivering quality
content, formats and brands through all digital media.
9347 And although the promise of digital channels as a
seamless vehicle for increased audience relationship-building and t-commerce
remains just that, our current on-line successes can only begin to speak to what
we predict for our on-line future.
9348 MS CRAWFORD: Contributing to the diversity of the
system is one of CHUM's goals. As well as bringing programming diversity to
television and computer screens, our company has pledged to reflect
ethno-cultural diversity, both on and off the air.
9349 We are the first Canadian broadcaster to have created
a Corporate Statement of Cultural Diversity Best Practices which articulates and
codifies the successful practices developed most notably by our services Citytv
and MuchMusic. The guidelines and philosophy described in our Best Practices
Statement will be applied across all current and future -- the CRTC
willing -- CHUM Television services.
9350 You are already aware that one of our major public
service contributions is in the education arena. Our corporate commitment to
support and promote Media Education is ongoing and will be further realized and
extended at every opportunity in our new channels.
9351 We have made it our business to provide educators
with training, programming and other tools to encourage the development of a
critical and informed audience. We are happy to report that in May of this year,
CHUM Television was recognized with the first CAMEO award for making outstanding
contributions to the development of media education.
9352 You have heard today, and you have read about, our
pledge to continue to use our channels in support of social issues and
initiatives to serve the public interest. It is a key underpinning of our
television operations. Our track record speaks to the message that we bring to
you now. Our services are passionate, visible and engaged partners in the
community, whether that community is local or national. We believe that is an
important part of our unique contribution to the Canadian broadcasting system,
and with new channels, we can do even more.
9353 MR. ZNAIMER: Madame la Présidente, Madame la
Présidente du Conseil, membres du Conseil.
9354 Recently at another hearing our efforts were
characterized as "David vs. Goliath". In these proceedings we as not only David,
but also as Goldilocks.
9355 Within the space of one short year, the terrain on
which we all operate has changed radically. New business combinations have been
forged which shatter previous ideas of corporate scale.
9356 On the one hand, we have the new Canadian media
giants: CanWest Hollinger, BCE/CTV --subject to your approval, of
course -- and Really Big Cable.
9357 On the other hand, we have the siren call of the new
small player. And yet everyone agrees this digital business environment will be
the toughest yet and it is questionable, therefore, whether this is the right
time to consider such an option.
9358 So it in that context we present ourselves to you
once again as the "Goldilocks" option. That is us, that is CHUM -- not too
big, not too small, but just right for this job. And we want to do this job. We
have the strategic position, we have the people and we have the
9359 We await your questions.
9360 THE CHAIRPERSON: Good morning and thank you, Mr.
Znaimer and your colleagues.
9361 Commissioner Wilson, please.
9362 COMMISSIONER WILSON: I guess it is no surprise that I
would be asking the questions since I have this whole table to myself, full of
books and papers.
9363 Good morning to all of you. It's nice to see you here
9364 I don't imagine it will be a surprise, if you have
been watching the coverage of the hearing on CPAC the last couple of days, I am
going to start with some general questions, many of which you probably have the
answers ready for.
9365 But I was actually trying to think of an interesting
way to make the general questions -- or I should say I was trying to think
of a way to make these general questions more interesting and I was thinking
last night maybe we could just do a word association game where I would say,
"Criteria" and you would say, "Canadian content".
--- Laughter / Rires
9366 I would say, "Filler programming" and you would say,
"We don't need it" and we would just dispense with them all in a very rapid kind
of a manner and then get on to each of the individual applications.
9367 MS DONLON: We are up to that.
--- Laughter / Rires
9368 COMMISSIONER WILSON: Yes. Actually, I am sure that we
could probably dispense with them fairly quickly that way, but I am sure the
lawyers would prefer that I could through them in a little more
9369 So for the benefit of the public record, I am going
to ask you a series of general questions which will include questions that you
won't have predicted because what I have done is look at each of the
applications and pulled out of these applications proposals that you have made
that are quite similar for each one and I have pulled those into the general
question area and then we will go to the individual applications and I will ask
you some questions of clarification.
9370 I am sure I am going to be irreverent at times and
challenging, but I think hopefully by the end of the questioning period we will
have a fuller sense of what your applications are.
9371 So if we can begin with the general questions. You
will know that the first area is selection criteria and in the public notice the
Commission set out a number of criteria that it would be considered in awarding
Category 1 applications and, as you know, the Category 1 applications bring with
them a fair amount of regulatory support in terms of the must carry rules and
the packaging direction that we have given the broadcast distribution
9372 So it's, as you know, better to get a Category 1
where you know that it is going to be launched and you will have some hope of it
reaching the Canadian audiences.
9373 The criteria that we listed in our public notice
pertained to Canadian programming, exhibition levels, amount of regional
production, Canadian programming expenditures, contribution to program
diversity, attractiveness or demand for the programming genres and use of
9374 I notice, Mr. Znaimer, in your letter, your cover
letter -- and you referred to this this morning in your opening
remarks -- that you set forth four criteria of your own, and when I
was reading this letter, it sort of reminded me -- I am a big Star Trek
fan, so when I was reading the letter it reminded me of the Star Trek movie when
Captain Kirk relates the story about being a cadet at Starfleet Academy and how
they issued the challenge -- I can't remember the name of it, it's some
exotic name of the challenge -- and he beats the challenge by changing the
9375 I thought it was quite appropriate that you would
suggest different criteria from the ones that we suggested. So I just wanted to
probe you a little bit on not only what you think is the most important criteria
or in order of importance the criteria that we posed, but why you came back with
your four criteria which were: potentially popular, clearly defined, socially
useful and targeting unserved or badly undeserved genres because it is kind of
an overlay to what we are doing. I am sure that you can relate those four
criteria that you have proposed to the criteria that we have issued as part of
the public notice. But maybe you can just speak to that.
9376 MR. ZNAIMER: Yes, thank you, Commissioner
9377 We actually found the criteria suggested by the
Commission enormously helpful and see these four as we have described them as
really aspects of the six that you proposed.
9378 In our own preparations and deliberations, we had
many raging discussions in actually trying to evaluate each of the suggested
categories in the call and indeed over time we came to a kind of view in our
group as to how they might be ranked in importance, and when I get to that and
lay that out, you will see that in our opinion, the business of being
potentially popular and clearly defined alternative and socially usefully in
underserved or unserved really do then relate back to some of the categories
laid out in the call.
9379 We divided the various criteria proposed in the call
in two broad groups. We took three of them and decided that they were important,
but in a way should be taken as a given and they were the notions of
attractiveness, affordability and interactivity.
9380 COMMISSIONER WILSON: Sorry, I missed the last one
there. Attractiveness, affordability and --
9381 MR. ZNAIMER: And interactivity, and we mean they
should be taken as a given because in a way, it is what we all do in whatever
product we are creating. Whether you want to make the television station,
whether it's a conventional operation on terrestrial or one of the early analog
specialties, you want to make them professional, you want to make them
memorable, you want to make them attractive.
9382 And as to affordability again, it's what any, I
think, reasonable business does. It wants to create the very best possible
product for the very best possible price.
9383 And as to interactivity as you have seen in the tape
that we rolled, it was not this call that stimulated our interest in this
digital world, but in fact we have been there since 1994 and I think we have
been there in a particularly robust way, very effective way and it is our
opinion that all the applicants that are already in our business who come before
you will be in the Web and as the Web develops into other platforms, whether or
not it relates to this group of digital offerings.
9384 Which brings us to the second group of criteria
because we thought that they were, as opposed to important and given, the
essential ones. They were the ones that made the difference, they were the ones
that we thought would actually motivate a consumer -- and I think of
myself as a consumer -- to go out and take the trouble and put out the
extra money and order to get that precious box. And those three criteria are:
Diversity, diversity and diversity -- we think it's diversity by a
mile -- followed by contributions to Canadian production, followed
then by viability because at the end of the day you can't get anything out of
companies that don't work and confusion and failure in the digital tier would
not be a good way to build confidence of the general public.
9385 So what do we mean by diversity? We mean services
that are not already being offered either to communities or to
9386 When we think of Q! Television, we think of a
community that is barely present in the most potent medium of our day --
potentially, the most potent in history -- and we were literally the pioneer in
putting that community on the air, in the form of a television show, and we
think that it's entirely appropriate and a perfect use of this opportunity in
this medium to put such a community on the air 24 hours a day in a destination
that they can call their own.
9387 Similarly, if you look at Fashion Television, there
is a function, an important function of society, sometimes mistaken as something
rather shallow but, in fact, beneath the surface, obviously, an important
industry, an important cultural artifact and an important form of
self-expression by many people in our society.
9388 And so, it's in that sense that we think diversity
leads the three criteria which are essential in order to launch these new
9389 As to contribution to Canadian content, our thought,
again -- and it relates back to diversity -- is that what's important here is
not necessarily to make more units in genres that are already established --
some of the offers in front of you make very healthy propositions, in terms of
manufacturing more stuff, but it's stuff in fields and genres that are already
widely present. Our thought is that it's more important to put the right amount
of money behind new products, in new genres; and that's where we classify or
would put the three movie-based operations because, in our opinion, in Canada,
it is now time to turn our attention to long form, to features. There has been
10 years of very intense development that has placed a good deal of support
behind the manufacture of series and it is our proposition to you, both in our
terrestrial operation CityTV and in these three movie-driven operations, that it
is now time for long-form expression in Canada and, therefore, that is a
contribution to the system.
9390 And, finally, viability. Well, as I said, it needs to
be alive, it needs to be reliable, it needs to be robust; and that is, I think,
the quid pro quo that you expect when you accept our arguments that companies
that are already well-placed strategically have an advantage in extending their
services to some of these channels. Once you give us the licences, you know we
will be in it for the long haul and the consumer will not be faced with a
spurting series of companies and signals that go on and then go off and then
maybe come on again. And so, that, I think, in a way, closes the
9391 Maybe one last word about the concept of
9392 As we approached affordability, we thought not only
in terms of the viewer and the distributor but, also, of the system, of the
system as a whole, and what we mean by that is: The offerings that contribute
the greatest diversity, in a way, are the ones that do the least damage to
what's already there. And if you look at our business projections, you will see
that they are not at such a scale, that they would threaten the existing
businesses of the many, many existing operations that are already in
9393 COMMISSIONER WILSON: I was just waiting to see if you
were actually done.
9394 MR. ZNAIMER: I'm sorry. I should have put a
9395 COMMISSIONER WILSON: No; I'm not suggesting that you
were going on too long, but I just wanted to give you a chance to see if there
was a bit more that was coming.
9396 I guess I want to pursue the Canadian content
question because some of the intervenors against your applications have
suggested that your levels of Canadian content are generally lower than the
applications against which you are competing. And in your ranking of the
essential ingredients, or the essential criteria that we should be looking at,
you put diversity first, which is fine. But Canadian content -- which, of
course, is our raison d'être, under the Broadcasting Act -- comes second. And we
have heard, over the last couple of days, from Alliance Atlantis, and from CTV
NetStar, yesterday, that their philosophy is that really strong Canadian content
has to be present in these digital services in order to inspire people to go out
and sign up for those boxes at $10.95 or $11.95 a month. And I guess I'm just
wondering: How do we balance that if we are looking at your applications for
Category 1 licence? And it's obviously with the regulatory support that
comes with those licences, it's a privilege to have them, so what's your
argument for "Take us over them" when their offering is sometimes quite
significantly more Canadian content?
9397 I take the argument that you have made about the
genres that you are looking at, in terms of film and music, and the availability
of product in those genres, but other people who are proposing channels in
similar genres are proposing a higher level of Canadian content.
9398 MR. ZNAIMER: Yes, they are, and that's what I was
trying to get at when I said that perhaps, at this stage -- and in order to
really underline the importance of diversity in the success of the roll-out of
this new tier -- is that perhaps it's not a question of the largest amount of
dollars to existing genres, to more series, to offer more windows for the same
series that are already appearing on the networks, but interesting dollars,
sufficient dollars to generate activity in new genres. And that's why, as I
said, we put our emphasis on movies.
9399 One last word, on a general basis, and then I will
unleash my colleagues. But, as we go through this, I think perhaps two
overriding themes will emerge.
9400 One is: We are great exponents of the essential
nature of diversity in order to achieve the best possible success, both in
business terms and in social utility terms.
9401 And the second is realism -- which may not be a word
that you expect to get from the "rock'n roll gang" who are usually there pushing
the envelope and being the most radical. But we have had the most experience and
so, the other tone that will run through our presentation to you is that we are
realistic about what can be done -- and we think you should be, about what is
9403 MR. MILLER: Thanks.
9404 I think one of the fundamental differences between
the way we approach this and the way it appears some other applicants may have
approached it is twofold.
9405 I'm going to make the first, in this case, the
business plan and the business projections.
9406 We believe the projections that we put forward, in
terms of subscription revenues, in terms of interactive, in terms of advertising
revenues, are far more realistic than any other applicant's. What that means, as
a consequence, is our total revenue expectations for our services run in the
order of 50 per cent or more lower than some of our competitors in other
applications. That, obviously, is a huge difference, in terms of what one can
project, in terms of Canadian content, for example.
9407 The great equalizer, however -- and also part of your
criteria -- is Canadian programming expenditure levels. And to that extent, you
will see that our proposals for Canadian programming expenditures of 40 to 42
per cent are very competitive -- not always the highest, but certainly higher
9408 The second area that Moses alluded to is very
important; and it's the notion not only of the genre but the type of programming
within that genre.
9409 There are three competing applications for suspense
and mystery channels, for the sake of argument, but they don't all do the same
thing. We have invested considerable resource, or are proposing to invest
considerable resources, in feature film. For a given dollar, there is less
Canadian content that's produce that we believe, in the system today, that is a
vital need and that's our strength as a company and that is where we want to put
9410 So our Canadian content level may not be as high as
every other competing applicant, but, as a percentage of revenues, and with the
resources we have, we think we are very competitive.
9411 MR. ZNAIMER: And, of course, if I can add, with that
kind of approach, you, the Commission, in the public interest, has only up side.
If everybody does better than projected, the percentages keep a lock step and we
spend more money -- happily spend more money.
9412 On the other hand, if you are beguiled by someone's
promises and things don't turn out as they project, then they will be back and
they will ask for concessions and everybody will be embarrassed. Why take that
9413 COMMISSIONER WILSON: Let me ask you this because
yesterday, when we heard from CTV, Trina McQueen said that, when asked about the
profitability of their proposed services, most of which become profitable in the
sixth year out of seven years, they were taking a very long view of
profitability and that they were going to allow their patients to temper their
9414 Your services become profitable earlier, which is not
a bad thing. I'm not saying that you shouldn't be profitable in this
environment. And I am sure that you will say that is a more realistic view, but
the notion that you would take a longer view of profitability might allow you to
put more into the Canadian content side. So I am just coming at it from a
slightly different angle.
9415 MR. ZNAIMER: I am laughing a little because my sense
is even the largest companies get tired of losing money after a period of time.
I would believe that more if it came from Ms McQueen's boss -- that
9416 COMMISSIONER WILSON: One of the other ways that we
could look at the notion of the levels of Canadian content is something else
that we have explored over the last couple of days, which is that when you are a
group, you have a group of services already and the services that your proposing
-- and your chart makes this quite clear -- are nested in the genres in which
you already have services, that that allows synergies to support what you can
offer in the other channels.
9417 And one of the questions that we have been exploring
with people is whether or not we should expect more if you do have services that
are nested, that are related, where there is going to be overlap in some of the
programming and synergies in the operations, if we should be looking to
organizations like you, as opposed to an independent who comes in here and
applies for one or two channels and they have no other channels in the system.
What is your view on that?
9418 MR. ZNAIMER: A fair question, Commissioner
9419 We have actually taken those efficiencies into
account in the actual applications themselves. In part, that is why we think we
can do as much as we are going to do in this really thin atmosphere. That is an
overriding thing that all of us should be conscious of. You are talking about
desperately few subscribers. And so we have already taken in that leverage in
the construction of these applications.
9420 A subset to that answer is: depending on the kind of
success we have -- it depends which of these applications actually are returned
-- then we would see whether there might be some other configurations. But we
can't speculate about that and so the applications at this point stand each on
9421 COMMISSIONER WILSON: Okay.
9422 In terms of the implementation of the services, one
of the things that we have been exploring is the notion of whether or not there
should be a minimum amount of time by which a Category 1 service would have to
launch. And I think one of the dates that has been talked about fairly
consistently is September 1, 2001. But if you don't meet that launch date, what
do we do with your Category 1 licence, since it is such a privilege in this thin
environment, as you describe it? What is your view on whether or not the
Commission should impose a time limit and what should happen if the service
9423 I think that all of us sort of recognize that
occupying a space in digital in the early days is a part of what motivates you
to come forward with these applications, so if someone gets the licence and
doesn't occupy that space, what should our approach be? Should there be a limit
and what should our approach be?
9424 MR. MILLER: I was going to say you should punish
them, but you wouldn't have to. It would make no sense for any operator to go,
except in step with the other successful candidates. We can certainly make that
September date. We would like to make that September date. And it makes sense
that all successful applicants in the first wave go together -- in fact as many
services as can be offered to the public at one time and with one big bang, so
much the better.
9425 What ought to be borne in mind, however, is that this
is a dance in which it takes two tango. And, of course, all this assumes
collaborative effort with the distributors. And in the past it has been a
challenge to co-ordinate all of that. But we agree: it would be best if
everybody went together and September is a doable date.
9426 COMMISSIONER WILSON: And what should we do if people
don't launch their Category 1 services? Any ideas?
9427 MR. ZNAIMER: Peter, you are a regulatory
9428 MR. MILLER: I think the Commission has in the past,
when it set a date, indicated that licensees would have to come back with fairly
good rationale why they can't meet it. So if, for example, to give some margin
for slippage, the Commission set the date for December 2001, then that would
give some margin, or if the Commission could set the date for September, with an
understanding that applicants had until some time before that to file with the
Commission any reason why they can't make that date.
9429 COMMISSIONER WILSON: Let me just pursue a little bit
the comments that you made in your opening remarks because you have sort of made
a bit of a reference just now to your relationship with the distributors. And I
am going to assume that is cable because that is who has the most
9430 In your opening remarks you said, Mr. Znaimer,
that you think the Commission should give preference to and license as many
completely distributor unaffiliated Category 1 services in deserving genres as
possible and that this is the only sure way of truly guaranteeing access for
9431 I wanted to remind you of what we had set out in the
licensing framework. We talked about the convergence report from 1995, where we
established the two criteria which would have to be met in order for
distributors to hold equity in programming services, one being capacity --
sufficient capacity -- and the other being a set of clear access
9432 And when we established the Category 1 and Category 2
services in the licensing framework, we referenced that fact and established
some guidelines about how Category 1 services would be dealt with, and, based on
that, felt that it was reasonable to allow distributors to have equity in those
Category 1 services. And I am just wondering why you are not satisfied that will
9433 I guess one of the things that I am wondering about
is whether or not, in this environment, which is very different from analog, and
which is nacent, and in which the distributors have quite a large stake
financially, in terms of getting the boxes into the homes, would that not make
them more likely to...if we give them a stake in Category 1 licences, would that
not encourage them to do something that will ultimately help you, which is to
roll out digital and get it into the homes and get people on the boxes so that
your subscriber numbers increase?
9434 Keeping that in mind, what is your continuing
9435 MR. MILLER: Our continuing concern, which is born of
experience, we can assure you --
9436 COMMISSIONER WILSON: In analog, though.
9437 MR. MILLER: Yes.
9438 COMMISSIONER WILSON: That is the distinction I am
trying to make.
9439 MR. MILLER: Our continuing concern is the fact that
distributors have tremendous preference in their ability to launch Category 2
9440 It is our view, based on the rules that the
Commission is contemplating for Category 2 services, that those will largely be
9441 COMMISSIONER WILSON: Even with the five-to-one
9442 MR. MILLER: Exactly. Let me go through this for you
in a little bit of an example.
9443 Let's just presume for the sake of argument that 10
Category 2 services get launched by most distributors. Let's say that based on
the five-to-one rule on Rogers' systems there are two Rogers affiliated
services. On Shaw's systems there are two Shaw affiliated services. Immediately
it makes sense for those distributors to co-operate and to carry each other's
services. So now you have four distributor services on Rogers and four on
9444 Then you may have another operator, a Gogeco, that
also launches its affiliated services -- its own services. Maybe they all
do a deal. Now you have five cable-owned services on Rogers, Shaw and
9445 Then you have the other BDUs. You have Star Choice,
which is owned by Shaw. So those same services are there. You have ExpressVu,
which one could argue is going to be in a full competitive situation and will be
launching their own affiliated services, which may be the same, may be
9446 It is very interesting to note that ExpressVu has
expressed concerns about undue preference and not being able to launch or carry
on the same terms some of the services carried by other BDUs. So there may be
strong pressure for them to carry these services as well.
9447 So very quickly you have at least the majority of
Category 2 services being fully owned by distributors.
9448 Now we go to your 10 per cent rule, which says that
an unaffiliated service is one in which a distributor holds 10 per cent or less.
So what that quickly becomes is a condition of carriage. A distributor will say:
If you want to be carried by us, sell us 10 per cent. So you sell 10 per cent to
Rogers, you sell 10 per cent to Shaw, you sell 10 per cent to Cogeco, you sell
10 per cent to ExpressVu. Pretty soon all of those Category 2 services become
either majority distributor owned, or even those that are deemed unaffiliated by
the Commission's proposed rule are in fact also likely to be majority
distributor owned. So what you have is a field where the distributors have a
tremendous advantage in Category 2.
9449 In our view -- and we are obviously taking some
risks in even saying this -- the dynamic is not very favourable to
unaffiliated services. So, for that reason, we are suggesting that if the
Commission wants to truly give unaffiliated services a chance, give them some
priority in your Category 1 selections, because that is the only way there is a
guarantee that they will get on.
9450 COMMISSIONER WILSON: In that scenario that you are
describing, what role does attractiveness of the service and the ability of that
service to drive penetration of digital play?
9451 I am not discounting what you are saying. That could
happen, I guess. But you are talking about the introduction of a new technology
in Canadian households to deliver Canadian programming that is going to cost
billions of dollars to roll out. So would I, as Shaw, carry only the
distributor-owned services if they were not going to drive penetration of that
billions of dollars technology into the home?
9452 I guess I am asking you how much of an emphasis do
you think distributors are going to put on the fact that it is like: Oh, my pal
Shaw owns those services, so I am going to carry those services.
9453 MR. ZNAIMER: Let me give you a concrete example. At
one point -- Peter, you will have this history better than I would, but I
thought rather the whole cable industry approached the CRTC and insisted it was
vital that a channel called E! be brought in immediately from the United
9454 When a channel called Star! finally materialized, it
didn't turn out to be an essential channel, even though the functions of the two
channels are identical, and in fact we carry an enormous amount of the better
part of E!'s programming in the ambit of that channel.
9455 The difference between those two situations, Peter,
9456 MR. MILLER: The difference was timing and the fact
that the distributors felt it more in their interest to carry a U.S. service
than a Canadian one.
9457 But to come back to your other point, there are many,
many services that are potentially popular that distributors can carry. You have
had, as you well know, 450 applications. If the Commission were only to license
10 Category 1 services, there are many other genres you will not be licensing,
and we are quite convinced that many of them will be popular genres.
9458 So we are confident the distributors would be able to
launch Category 2 services that are very popular and, also, ensuring that those
services got maximum distribution across the system, then obviously that allows
them to generate higher revenues and increase the amount of content on those
9459 COMMISSIONER WILSON: Okay, thanks.
9460 I want to look now at the area of independent
production. I just want to get your views on how we should be looking at the
levels of independent production associated with these applications. I have, I
guess, three questions that I want to take you through on this, and then more
specific questions on your relationship with Sleeping Giant, sort of general
questions about your approach to independent production with respect to your
9461 Given that there are incredible challenges associated
with launching a service in the digital environment and making a go of it, do
you think the Commission should set limits on the amount of programming a
broadcaster can acquire from an affiliated producer? Should we take the same
approach in this environment that we take in the analog environment?
9462 MR. ZNAIMER: No, we don't think you should. This is
very much a different world and a tougher world and it needs its own particular
set of practices.
9463 The first thing that comes to my mind is that it is
important to note that not all channels are the same. That is a truism. But,
from the point of view of your question, looking at our roster of titles, some
channels are commissioning channels, other channels are self-produced channels.
A CityTV is largely produced internally. A MuchMusic is produced
9464 I must say, Commissioner Wilson, just as a little
aside, that the freelance market works when most of the industry is making much
of the same thing for broadcasters that do much of the same thing. But if you
are in the business of being really different, not just in a title but kind of
fundamentally so, you can't really get that out in the freelance market. If you
do, if you bring a freelancer along and teach them your way of doing things, all
they can do with that is take it out to the marketplace and sell it to your
9465 In the case of our channels that are radically
different, as City was in its day especially, and MuchMusic, we have to make
9466 Other channels, like a Bravo!, are commissioning
channels. Space is a commissioning channel.
9467 As an example, the three movie driven services that
we are proposing will be commissioning channels.
9468 The other point of distinction that I think is
important is the difference between reality-based production and fiction.
Generally speaking, we make the reality that we project, and we have become very
adept at it.
9469 When it comes to fiction, the complexity, the scale,
the size of those budgets, we have to turn to the independent production
9470 So our approach has been not to get caught in broad
sweeping regulations which can't take into account particularities, but to offer
up in the relevant applications extremely high commitments to the independent
production sector. For example, the films we are going to make in the
9471 COMMISSIONER WILSON: How would you define an
affiliated producer or an independent producer. I mean, yesterday we had a
definition of an independent producer from Trina McQueen.
9472 MR. MILLER: Actually, I like your question because I
think the two are different.
9473 In our view, an independent producer is one that is
not controlled by a broadcaster and obviously there are various tests that
control that, that can include voting equity, et cetera.
9474 An unaffiliated independent producer would in our
view be one that there is no ownership of by a broadcaster. So when we made, as
Moses referred to, commitments to the --
9475 COMMISSIONER WILSON: Sorry. Did you say an
9476 MR. MILLER: An unaffiliated independent producer
would be one where no broadcaster has any ownership interest. So just to
complete, when Moses was describing our specific targeting commitments to
independent production or our movie-based applications where Indie proposes ten
feature films and suspense and relationship each of six, when we made those
commitments, we mean those to be independent, unaffiliated producers. In other
words, those would not be feature films that would go to Sleeping Giant in our
9477 COMMISSIONER WILSON: So what is an affiliated
9478 MR. MILLER: So Sleeping Giant, in our view, to use an
example, would be an affiliated --
9479 COMMISSIONER WILSON: At 40 per cent
9480 MR. MILLER: -- independent producer, but we would
argue that it is still independent because at 40 per cent we do not exercise
control of Sleeping Giant.
9481 COMMISSIONER WILSON: I think the level that we were
talking about yesterday was 34 per cent.
9482 MR. MILLER: That is one test, but again the
Commission has in other instances used other tests of control and in our case
our 40 per cent ownership interest in Sleeping Giant is not
9483 MR. ZNAIMER: So we are distinguishing between
affiliation which begins at 1 per cent and control which can be interpreted in
many ways at 40 per cent. We do not have control of the independent producer
9484 MR. SWITZER: Commissioner Wilson, if I
9485 COMMISSIONER WILSON: So you would still consider
Sleeping Giant an independent producer so when you talk about commitments that
you are making to independent production, you could give all of your independent
production money to Sleeping Giant and that would still qualify
9486 MR. ZNAIMER: No, no, quite the contrary. We said that
we would give it to unaffiliated, only to unaffiliated. So we made the
commitment that all those big film projects that we have provided for in the
application will go to unaffiliated producers.
9487 MR. SWITZER: Commissioner Wilson, to reinforce and
directly answer your question, we would define an affiliated producer as one in
which a broadcaster has any interest.
9488 COMMISSIONER WILSON: Any level of ownership at
9489 MR. SWITZER: Even 1 per cent.
9490 COMMISSIONER WILSON: Okay.
9491 MR. MILLER: The difficulty with this question and the
reason we don't favour --
9492 COMMISSIONER WILSON: The difficult with this question
for me is that I am not a lawyer. There are lawyers on the panel, I am sure,
that understand this a lot better than I do.
9493 MR. MILLER: I should say the difficulty to the answer
to this question which puts the onus on me -- but I don't think there
is a simple definition that one should apply in every case. To give an example,
one could argue that a producer who gets most of its production from a
particular broadcaster even though there is no ownership interest whatsoever is
highly dependent and is a dependent producer.
9494 So again, we don't favour a simple kind of approach.
We think, as we have done, applicants need to come forward with their proposals
for Canadian programming, their proposals for the type of programming that is,
the level of which that is independent and what they mean by that, and then
obviously the Commission has the information it needs to make the assessments
that it needs to make on each of the individual cases that are before
9495 COMMISSIONER WILSON: So you would see us applying
again -- if we were going to cap the amount of production that you
acquired from an affiliated producer, that we would apply that on a case-by-case
basis as we do now.
9496 MR. MILLER: Absolutely.
9497 MR. ZNAIMER: Or in the alternative, on a positive
basis, in the event that you licence our film-driven applications, say that as a
condition of licence we must allocate X number of those films to the
9498 COMMISSIONER WILSON: Okay. If we wanted to set a
limit on the amount of programming that you could acquire from affiliated
producers, what level would you suggest? I am saying, if we wanted to. I am not
saying we are going to. I am just saying if we decided we were going
9499 MR. MILLER: Commissioner Wilson, we can go through
each of our applications on a case-by-case basis, go through the levels of
production which are original production versus acquired, and we could on a
case-by-case basis indicate to you what we think would be appropriate, but again
we suggest, particularly in this digital environment, that that is not the way
9500 COMMISSIONER WILSON: So what you are looking for then
is the maximum flexibility just to make the channels work.
9501 MR. MILLER: Yes.
9502 MR. ZNAIMER: Yes, but within the ambit of very
particular commitments in the places where it matters.
9503 COMMISSIONER WILSON: Okay.
9504 In the commissioned channels as opposed to the
9505 MR. ZNAIMER: Right.
9506 COMMISSIONER WILSON: Interactivity. You talked about
your on-line experience and I notice that you said that you guys were the first
ones to have Web sites in 1994. TSN has made the same claim and I know for a
fact that CPAC had a Web site in 1994. So I guess it's a contest to
9507 MR. ZNAIMER: It's a three-way tie.
9508 COMMISSIONER WILSON: -- who had the first Web site
for a Canadian broadcaster.
9509 What is your approach, your general approach to
interactivity because I notice that in most of your applications you talk about
the Web site being a full co-partner in the service and you talk about the
possibility of introducing a higher level of true TV interactivity into your
services as those capabilities come on-line through the set-top box.
9510 In yesterday's presentation, we saw that there is
already some level of interactivity with the television that you could be using
and I am just wondering, are you talking about launching individual Web sites
only for each of these services or do you have sort of a more developed plan for
how those Web sites will relate to the programming that you have on the
channels, when you will actually get into having icons on the screen that
subscribers can play with with the remote control and have some interactivity
with the channel? I am just wondering if you could expand a little bit on
9511 MR. ZNAIMER: Just before I turn it over to Maria, a
general background. Interactivity is branded to the bone of CHUMCity and people
have come from all over the world to see how you can do interactive without
digital because in the early days or digital, and even today, it can be fairly
two-dimensional and dry on that screen and seven, eight years ago, we hit on the
idea of having our windows open to the street. That's interactivity.
9512 COMMISSIONER WILSON: Phone-in shows are
9513 MR. ZNAIMER: Right and making use of the phone-in
show, and then making use of the speaker's corner box, and so on. So it's very
fundamental to our work.
9514 Specifically, I think one of the more interesting
things we have been doing for quite a few years now is consciously building
parallel and simultaneous programs which work to each universe separately. If
you are in front of a television set, it's a great show. If you are simply
looking at the on-line, it's a great show, but if you are one of these few
people, but steadily growing people, who have your computer and your television
in the same room, or perhaps on the same instrument if you have a TV card in
your computer, then you can move between these two streams and get a
particularly enriched experience. We have been doing that for a long
9515 And so, our view is: We are platform neutral and we
will go to the platform when the platform appears -- and, as you heard
yesterday, the platform is not yet clear and is not yet apparent.
9516 Despite that, we have been extremely active in this
field and, I think, quite innovative.
9517 Maria, will you add something?
9518 MS HALE: I think the best way to answer and address
that question would be to look at our history.
9519 As Moses mentioned, and as I mentioned in the
opening, we do have companion Web sites, currently, that extend our broadcast
brands, whether they are terrestrial or specialty, into the on-line
9520 In addition to that, we have programs that we
currently air that are fully integrated with the Web, again, for that unique
audience that is growing that simultaneously uses the computer screen and the
television screen to get their entertainment.
9521 Shows that currently exist are a show on MuchMusic
that runs, called "Go With the Flow". It's a two-hour program that fully
integrates elements of the Web along with live performances in our environment,
chats with the host, chats with the band. The audience can also submit JPEGs of
themselves and participate, you know, and see themselves on T.V. that way,
through that program. As well, with "Electric Circus", people at home are
e-mailing and chatting with both our dancers and our hosts and our artists that
9522 Further to that, we have, on the news side, had a
program called "City On-Line", since 1994, which, again, used the telephone, at
the early stages, but, now, it has transitioned to include the Web as an
important aspect of that talk show -- and "Pulse24.com", with its launch in
April of this year, we became the first broadcaster to stream the simultaneous
broadcast of the channel on-line and live to the Web. We receive e-mails from
people all over the world who interact with that programming, and those are sort
of expatriated Canadians who like to stay in touch with sort of what's going on
back home, and do so on very timely real-time basis.
9523 Our view of interactivity is complete audience
interaction with and in the content. We view that supplemental on-line text
content is a given. I mean this is what will definitely appear on the new
set-top box. And we will be taking things that we define as actual audience
participation, some key elements of which are chat, e-mail, voting,
game-playing, what we call visual audience participation, which is in the form
of Web cams and the submission of JPEG photographs, as well
9524 COMMISSIONER WILSON: That would take "Speaker's
Corner" to quite a different level.
9525 MS HALE: Exactly. And you will hear an example, later
on, about how we are going to be integrating "Speaker's Corner", specifically,
in one of the applications.
9526 And we also look at contextual audience
participation, where you can actually, as a viewer at home, affect the actual
outcome of a program or a broadcast segment.
9527 Another example of that would be the Tragically Hip
who, I guess, are Canadian musical icons performed live in the MuchEnvironment
in July and after we went off the air -- they performed 90 minutes live to air.
After they went off the air, they still performed for an additional 30 minutes
in the MuchEnvironment. We Web cast that performance and, now, are streaming
that -- will be streaming that on the Web, on demand, and allowing the audience
to choose what elements of that broadcast, the entire 120-minute streaming
broadcast, they would like to see in the repackaged rebroadcast of the
9528 So, in essence, we are allowing the consumers, now,
to become the producers of that rebroadcast segment -- because, again, we only
have the 90 minutes on-air time.
9529 So, all of these elements will appear in each of our
digital channels, where appropriate. And, again, our basic philosophy of the
street-front store-front, you know, getting in touch with our audience and our
communities, will be extended as effectively as we can, using the technologies
9530 COMMISSIONER WILSON: I was curious, when I looked
through your applications, that you show some revenues from on-line activities,
but there are no costs associated with any of your applications, and I'm just
wondering if you could tell me why.
9531 MR. ZNAIMER: Yes. We don't really show any essential
revenues, do we Jay?
9532 COMMISSIONER WILSON: No; they are quite -- they have
been described as extremely conservative.
9533 MR. ZNAIMER: But we have a reason for
9534 MR. SWITZER: For clarification, Commissioner Wilson,
those are listed in a merchandise line and those are our traditional merchandise
revenues: goods and services, small royalties, and so on.
9535 COMMISSIONER WILSON: So those are not
9536 MR. SWITZER: No.
9537 COMMISSIONER WILSON: -- revenues, at all; those are
from the product that you sell at your store --
9538 MR. SWITZER: And other assorted miscellaneous
9539 COMMISSIONER WILSON: Okay. So, then, essentially, you
are showing, still, no costs, no revenues, for your on-line
9540 How come there are no costs? Isn't it going to cost
you something to develop the Web sites for each of these channels
9541 MR. SWITZER: It's a two-part answer, Commissioner
9542 First of all, there's a large engine that already
exists. It's a very significant, very active production-driver Internet Web unit
that re-runs that is up and running and allows for all of these things that we
are talking about. We don't separate and separately cost because we are only
looking at very small marginal increases in individual shows and channels where
a Web component is seamlessly woven into that show's production. By far, the
vast majority of costs are already there up and running in our interactive
9543 COMMISSIONER WILSON: What about the cost of
developing the Web site itself?
9544 I mean we got a similar answer from CTV NetStar
9545 MR. SWITZER: Yes.
9546 COMMISSIONER WILSON: But they were showing, I think
it was a $400,000 expense up front for developing the actual Web site associated
with the channel, and then, on an ongoing basis, treating it, I guess, in a
similar manner to you.
9547 MR. SWITZER: As a general comment, we obviously are
going to be very active and very significant and have a large unit up and
running. Our investment to date is in the many, many millions of dollars --
probably since its launch, close to $10 million. We take Web sites as a given.
And we have never treated our interactive revenues, nor our interactive costs,
as numbers that we filed in applications.
9548 COMMISSIONER WILSON: So you don't apportion them to
each individual channel?
9549 MR. SWITZER: No.
9550 COMMISSIONER WILSON: That's sort of a
9551 MR. SWITZER: Correct.
9552 COMMISSIONER WILSON: -- activity that
9553 MR. SWITZER: And, in some small --
9554 COMMISSIONER WILSON: -- supply?
9555 MR. SWITZER: In some small cases, where production
people in shows or channels are also involved, it's kind of woven in and already
9556 COMMISSIONER WILSON: Okay. Let me ask you about the
revenue issues. Because, I guess, one of the things that I was thinking about,
in the early days, when we were looking at the whole licensing framework for
digital services, was -- and you said, in your opening remarks, "An important
cost shouldn't become too immersed in the possibilities surrounding digital T.V.
and the promise of on-line revenues would be to lose focus on what is still,
essentially, a television channel".
9557 I looked at it in a slightly different way, which was
that if this is such a challenging environment and I want to create a channel
and I want to offer as much Canadian content as I possibly can, then maybe new
business models are going to be required, and part of that model would be the
on-line revenues associated with the service and on-line revenues generated
through innovative, interactive elements that you tie in to the
9558 So, I don't actually see it as being distracted
because I think that there could be quite a direct relationship between the
money that you generate through your on-line activity and the amount of Canadian
programming you can put back into the system, as a result of finding an
alternative revenue stream in an environment that's very difficult, in terms of
the subscriber revenues and the advertising revenues which you talked about this
morning, in your opening remarks.
9559 So, I'm just wondering -- I mean I can see the wisdom
in what you are saying about not being distracted. But, somehow, I don't think
anything could distract you from television, Mr. Znaimer, so I don't think that
I'm really that worried about that.
9560 So, wouldn't this be an opportunity? Don't you see
that as an opportunity?
9561 MR. ZNAIMER: Maria, did you want to add something?
And then I will come back.
9562 MS HALE: I definitely do.
9563 This is definitely an opportunity. And I think what I
mentioned in my opening was a caution, simply because the audiences, as I said,
have not adopted the technology. For the people who have put in such aggressive
numbers, they are not looking at our current history. And I don't know how long
they have been on the Web, but I can speak to our past, and we have been there
9564 We are seeing -- you know, there's 13.5 million
Canadians that have access to the Web but only .2 per cent of revenues have come
from retailers, have come from any on-line transactions.
9565 So, for people who are looking for some miracle to
happen now -- because there are some first generation set-top boxes in some
homes and the possibility of some second generation set-top boxes being deployed
over the next what I would say is two years -- we still have to get up that
9566 So, to put in high projections for revenues now, I
think, would be over ambitious.
9567 I am very optimistic, and we are putting in,
currently, plans and strategies which we currently have in place and leveraging
those onto the new and available technologies. But to put in estimates that I
think would be a little overly ambitious, at this point, would be to misguide
yourselves, and ourselves, as far as our business plans.
9568 COMMISSIONER WILSON: I am a little confused, then,
because if Netstar has been on the Web since 1994, and they are projecting
fairly healthy revenues from that stream, who should I believe?
9569 MR. ZNAIMER: You also heard yesterday from -- was it
-- BCE. They own Sympatico. They said zero revenue. So I think our obligation
here is to give the Commission good advice and to urge you not to be beguiled by
fantasy projections against which there are commitments which will likely not
9570 So our approach has been to leave the Web business
off the sheet because we are there, we are functioning, and the programs take
advantage of this already-established unit that Jay has described. But we are
not settling the future of this channel on the appearance of miraculous
revenues, which we think will be a considerable time in
9571 MS HALE: I would also like to jump in with
9572 As I mentioned again, being the number one
destination for Canadian teens in the world -- and that means where Canadians
are going on the Web first is muchmusic.com. -- and if we are having trials and
tribulations there.... I mean, we are making some money, it is marginal at this
point. It is 7 million paid views a month, and that is increasing, but the
revenues are marginal. And they are coming and there is the light at the end of
the tunnel, so to speak, as advertisers have turned in the last, I would say,
year to accept the Web as a viable mechanism for getting their brands and their
messages out there, but we are not there yet.
9573 And I think as far as the set-top boxes go, we are
starting again and we need to be cautious about that.
9574 MR. ZNAIMER: Again, I might add that is MuchMusic,
6.4 million -- major powerful brand.
9575 COMMISSIONER WILSON: Okay, I am going to ask a really
easy question. This can probably be a one-word answer.
9576 Personal Information Protection and Electronic
Documents Act, you will abide by it?
9577 MR. MILLER: Yes, we are already.
9578 COMMISSIONER WILSON: Okay.
9579 Closed captioning. You have taken a slightly
different approach here -- once again, no surprise -- to most of the other
applicants, who seem to heed our request for 90 per cent captioned programming
by the end of the licence term. You have come back with dollar amounts in each
of the years.
9580 I am just wondering, given that the Commission is
adopting a more standard approach to English language speciality services, in
terms of requiring the 90 per cent captioning by the end of the licence term,
why do you feel that we should make an exception for you?
9581 MR. ZNAIMER: Sarah Crawford will explain our
proposition to you.
9582 MS CRAWFORD: We think that the expenditure
commitment, rather than a percentage, is the appropriate and realistic
9583 First of all, we have hundreds of thousands of
dollars in each application for closed captioning. It is a little over $2.5
million dedicated for all the applications combined.
9584 Our dollar commitments for each application are
roughly tied to hours of production. We pledge to caption all original
production, all originally commissioned Canadian programming, and we have even
insured that we have set aside money in our budgets to caption all
Canadian-acquired programming, as well.
9585 In view of the relatively sparse penetration of
digital services and the use of some older uncaptioned material in some of them,
it is really difficult to accurately project, on a percentage basis, the
programming that will be captioned over the term of the licence.
9586 So we think that the expenditure approach, rather
than the percentage is realistic. It also allows us to hit the ground running,
without having to go through a steep ramp up. We don't want to make promises we
can't keep, and we think that these dollar commitments are realistic and
9587 COMMISSIONER WILSON: Do you have any idea at all what
percentage of your schedule is going to end up being captioned? Did you try to
do a calculation?
9588 MS CRAWFORD: It is tied, as I said, to the Canadian
programming commitments we have made. So, at the very least, it will be the
Canadian content percentage. In addition, acquired programming that is from a
foreign source that arrives captioned will also exceed that
9589 The other thing that we have going for us in this
regard is that, as you know, CHUM has been a leader in the development of an
in-house captioning department. And we see that through economies of scale the
hours that we will be able to afford to caption over the licence term will
become more cost-effective.
9590 COMMISSIONER WILSON: When you say Canadian by the end
of your licence term in each of your licences, that is 50 per cent, which is 40
per cent less than --
9591 MR. ZNAIMER: Plus.
9592 COMMISSIONER WILSON: -- what we asked for. That's at
least Canadian, hearing Mr. Znaimer saying, "plus" -- "plus" other
American-acquired programming that has captioning on it, I assume.
9593 MR. SWITZER: We share your concern, Commissioner, and
it is something we have spent a lot of time on. It remains a priority for
9594 We found ourselves in a position in some of these
ultra niche channels of coming forward in a way where we may end up or might be
in a situation where we would be spending more money captioning some foreign
programming than the licence fees cost. And we said, "What are the
9595 We share the goal. That is our intent: to reach 90
per cent by the end of the licence term. We are going to hit the ground running
on these channels with at least 40 per cent to match the Canadian content
minimums and growing, for the most part.
9596 We are not troubled. We are dealing with the
trade-offs of putting hundreds of thousands of dollars into something that is
very important, and balance that against being able to do other things in
Canadian programming that we want to do.
9597 And we have taken this approach. It is not done
without thought. We are obviously open to continued discussions. This is the
proposal that we think makes the most sense. Of course, it would have been very
simple to just come and say, "Yes, of course, we'll meet your commitments." We
don't want to be in a position to come back in five or six years and try to
explain to you why hundreds of thousands of dollars are going to caption some
foreign programming that may not have the same value.
9598 That is the problem we face and why we are trying to
deal with this as constructively as we can and to confirm that we do support the
9599 COMMISSIONER WILSON: Okay.
9600 I will give you another easy question on filler
programming. You asked for filler programming in all of your...are you ready for
this question? You should have heard this question?
9601 MR. ZNAIMER: Yes, we have learned our lesson. If it
is on topic, it isn't filler.
9602 COMMISSIONER WILSON: Right. Okay, so you will
9603 MR. ZNAIMER: Yes.
9604 COMMISSIONER WILSON: -- the Category 15 request from
all your applications.
9605 MR. ZNAIMER: Yes, indeed.
9606 COMMISSIONER WILSON: Okay.
9607 Maybe we could take a break. I have some questions on
your business plan and then we will go into each individual
9608 THE CHAIRPERSON: I must say before we break that the
grandmother among us is quite grateful that the comment on page 25...or the
caution about becoming too immersed too quickly in the possibility surrounding
digital TV was made by the allegedly most hip, most technophile of our
9609 We will take a 15-minute break and we will resume,
then, at approximately quarter to eleven.
9610 Nous reprendrons dans 15 minutes.
--- Upon recessing at 1035 / Suspension à 1035
--- Upon resuming at 1050 / Reprise à 1050
9611 THE CHAIRPERSON: Welcome back to our
9612 I will ask Commissioner Wilson to pursue the
questioning. Commissioner Wilson...?
9613 COMMISSIONER WILSON: Thank you.
9614 I wonder if I could ask you one other quick question
on the topic of interactivity before I move into the questions on your business
9615 I think for the channels which you produce and which
have a higher level of that kind of programming in them that it is quite easy to
see how the interaction between the on-line applications and the channel will
take place. But for a channel like Indie TV, for example, how do you see on-line
participation working where you are showing movies? You are not using the same
kind of --
9616 I guess what we are talking about, then, is the flow
between the programs.
9617 You see, I did learn something from that seminar I
went to on television.
--- Laughter / Rires
9618 COMMISSIONER WILSON: But in between the independent
movies that you would be showing is where you would integrate those elements of
the on-line application?
9619 MR. ZNAIMER: Yes. Thank you for a very appropriate
question. Again, I think you have put your finger on something important, which
is that not every channel --
9620 COMMISSIONER WILSON: Lends itself --
9621 MR. ZNAIMER: -- lends itself, right, to the same
level and depth of interactive application.
9622 On the other hand, Indie is a very rich field for
such an endeavour.
9623 Paul, you had some ideas about how to extend into the
9624 MR. GRATTON: Yes. It is obvious that if you have a
movie driven channel, the movies are made for theatrical exposure and they will
come to you as they are. You are not going to be able to put in alternative
endings in everything.
9625 But I think the interactive component should serve
the Canadian film industry as a celebration of independent filmmaking. That can
be accomplished in a variety of ways.
9626 For example, we would see on-line streaming from our
film festival coverage -- chats with film directors. I would love, quite
frankly, to put a resource out there, which would be the notes on all of the
Canadian films I have seen, cross-referenced by director and subject matter.
--- Laughter / Rires
9627 MR. GRATTON: I know, it is --
9628 COMMISSIONER WILSON: It would be like your own TV
channel. Maybe we should change the name of it.
9629 MR. GRATTON: I think it is important, though, that we
promote current Canadian productions with on-line streaming, with interviews
while the films are being shot, while they are being presented in film
festivals, information about where they will open, the dates, the theatres, the
times. Hopefully at some point you will be able to purchase tickets to them
on-line. All of this would be extremely effective use of the interactive
9630 Every time a film would end, during the interstices,
there would be all kinds of icons that would come up and people could plug in to
learn more about Canadian film, and I think that should be the interactive focus
for that channel.
9631 MR. ZNAIMER: Paul, you had another good idea when we
had this discussion the other day, though, that the channel would also come to
represent the community of filmmakers and, therefore, our parallel and
simultaneous enhancements, I think, could also help a lot in helping to create
9632 It is a particularly intense community and they like
to be in touch with each other and pass the secrets of the trade on to each
other. I think that is another utility that would be very applicable in this
9633 COMMISSIONER WILSON: It always fascinates me when we
use the word "community" in relation to the Internet, where each individual is
sitting at their PC at home, by themselves, engaging in a virtual community. You
wonder what happened to the old fashioned kind of community where people
actually sat on their front porch and talked to each other.
9634 I am not saying that is not a good
9635 MR. ZNAIMER: It is a little like this.
9636 COMMISSIONER WILSON: But I find it interesting that
people are seeking this sense of community and they experience it in this
virtual world. It's like: Why don't you go knock on your neighbour's door and
have a conversation with them?
9637 MR. GRATTON: For filmmakers, especially those in the
regions, there is a sense of alienation from Toronto on occasion. One of the
great advantages of the Web is the instant communication.
9638 We have heard complaints about the $2,000 cup of
coffee, where someone with a script or an idea has to come to Toronto to
schmooze. In this day and age it is no longer necessary. You can put it out
there, producers can search scripts, scripts can be matched with producers.
There is an instant quality to it that essentially is ideal for Canada with its
huge geographic challenges.
9639 COMMISSIONER WILSON: That is a very good point. It
makes the Canadian community a lot more even, I think, in a lot of
9640 We have to redefine the meanings of these words as we
move into the future.
9641 I have another couple of quick questions. I am just
starting on your business plan, and then I am going to ask you the big one about
the market research issue.
9642 Script and concept development commitment: You have
this commitment in five of your applications. When you look at the financial
assumptions attached to those applications, there is a note on the second page
of each of those assumptions which talks about an intern program and I am just
wondering if you could explain to me what this is.
9643 Is it part of your Canadian programming expenditures?
Are you going to hire people to come in-house to develop these concepts? Are you
going to give the money away? How is it going to work?
9644 MR. SWITZER: Commissioner Wilson, you are very, very
sharp. You have found a word that has crossed over into many of our applications
that should not be there.
9645 COMMISSIONER WILSON: Intern?
9646 MR. SWITZER: Intern, yes.
9647 The intern plan was one of the many things that was
considered in the Fashion Television channel application.
9648 The dollars, of course, are very significant. Over
half a million in each channel. In the music channels we are committing 5 per
cent of revenues to support appropriate musical pieces. And of course that grows
to many, many hundreds of thousands of dollars a year.
9649 This is one area where we have taken a leadership
position. We think it is very important. The genres that we have chosen for
these channels are undeveloped, are greatly in need, and in script and concept
development this is the area where we can make a huge difference. All of these
funds, as described in each of the applications in great detail, will go to
support traditional high-risk script and concept development with independent
producers to support the feature films or other special projects that are
connected and appropriate to each application.
9650 COMMISSIONER WILSON: So you do them with
unaffiliated, independent --
9651 MR. SWITZER: Yes.
9652 COMMISSIONER WILSON: I was listening, Mr. Miller.
--- Laughter / Rires
9653 MR. SWITZER: Both independent and
9654 The intern reference would apply as one of many
things in the Fashion application.
9655 COMMISSIONER WILSON: So only to Fashion.
9656 MR. SWITZER: Yes.
9657 COMMISSIONER WILSON: So that is not carried
9658 MR. SWITZER: Correct.
9659 COMMISSIONER WILSON: Okay. Thanks for clarifying
9660 In terms of your subscriber penetration, you have
included French subscribers in all of your applications, and I am just wondering
what the assumptions are underlying those expected penetration rates into the
French market. Are they in Quebec? Are they outside Quebec? Are they English
subscribers in Quebec?
9661 Will you be carrying any French programming on your
services that I didn't read about?
9662 MR. MILLER: That is an important question,
9663 We did a very detailed look, if you look at our
charts, as to how we arrived at our subscriber levels.
9664 As we indicated at the outset, we started with the
forecasts that were provided by the cable operators and the DTH operators, we
took a look at them and we adjusted them in an appropriate manner, which Mr.
Schwebel can describe, if you want to get into that level of detail.
9665 Then we also felt it important to look at the fact
that, while perhaps not fundamental to the business plan, there would obviously
be reach in francophone markets and we thought it was important to factor that
in. So we have in our applications a very nominal pick-up, if you will,
subscription penetration rate in francophone markets that is based somewhat on
our experience to date, but also factored down due to this new environment,
which, as you appreciate, is a different packaging scenario.
9666 COMMISSIONER WILSON: Yes.
9667 MR. MILLER: Also, you will see that in our pricing
for francophone markets we have an average subscription rate which is lower than
the average in anglophone markets. Our logic here was that we would assume the à
la carte rate might be the same, but we would offer an incentive for packaging
by providing a low rate for the packaging of our services with other services.
That would be the little boost that we would get in terms of penetration
9668 COMMISSIONER WILSON: Okay, but you understand that we
won't be requiring French-language distributors to carry English-language
9669 MR. MILLER: Absolutely understood.
9670 COMMISSIONER WILSON: That is why I asked if you had
some French programming on these services.
9671 MR. MILLER: No. That is absolutely understood. It was
simply looking at the business plan and trying to maximize where we would see
revenue coming from, and looking at that in a realistic way.
9672 COMMISSIONER WILSON: Your business plans also include
other subscribers with your MDS subscribers. What other kinds of subscribers are
there besides cable, DTH and MDS?
9673 MR. MILLER: Again I will defer to Allan, if I am not
correct from memory, but other would be MDS and Class 3 -- non-Class 1
9674 Is that correct, Allan?
9675 COMMISSIONER WILSON: Class 3, but Class 3 is still
9676 MR. SCHWEBEL: Yes, Class 3 would still have come
under cable and the MDS is really just a catch-all for all the wireless types of
9677 COMMISSIONER WILSON: Okay. All right. Let me go to
your market research.
9678 Let me just ask you one quick question on this. You
did, if I recall, file some market research with your Learning and Skills
Television of Alberta application, did you not?
9679 MR. MILLER: That's correct.
9680 COMMISSIONER WILSON: You talked this morning in your
opening remarks about generally your approach to market research. You said:
"Our business plans are not based on overly optimistic market research
studies, but on something we believe is far more credible:
9681 And I certainly not discounting in any way your
intuition and your experience about what is going to work. I also don't agree
that all market research is overly optimistic. We have heard from some other
applicants who have presented traditional formal market research studies with
their applications in response to the criteria that we set out in the public
notice relating to attractiveness and demand for the services.
9682 Considering that you did file some with the Learning
and Skills Television of Alberta applications, the fact that you didn't file any
formal research with any of these entertainment-related applications caused me
to surmise that there must be some strategy behind this because I guess what
makes it difficult for me as an individual looking at your applications is that
market research is an acknowledged science. It has been around for a long enough
time, it's something that the Commission asks for on a regular basis in relation
to applications for new conventional television stations, for radio stations,
for specialty channels and it is very useful in terms of gagging what genres
might be attractive to people, how many people might be interested in taking the
service as part of a package.
9683 So it gives us some confidence in the assumptions
that you use on which to base your business plan, and I am just wondering if you
could, as I said, not that I am discounting your experience because I think you
are very knowledgeable operators in the marketplace, but you have to give me
some comfort in terms of while you didn't file any and why we should feel
confident in all of the assumptions that you have made which underlie your
9684 MR. MILLER: That's a very fair question. To us, first
of all, the requirement for market research is not a requirement for formally
newly commissioned public opinion research. We have always taken the view that
the Commission's request for market research is a broad request that can take
many forms. So in each of our applications we looked at it
9685 I think the real question, which is a valid question,
is why we didn't commission new original public opinion research for most of
these applications. And the reason for that is very simple. In our view, in this
environment there was very little context on which you could base that research.
We don't know how many services will be launched. There have been discussion of
the possibility of there being 40 to 50 channels, but this is the first hearing
that we have been to where what you are up against is so completely unclear in
terms of the total number of services.
9686 Secondly, there is a threshold for most subscribers
to acquire these services that is very significant at $11.00 roughly a month
box. So we looked at the utility of doing market research in that context and
felt that that weighed against the fact that the genres that we were talking
about were sometimes new and original or sometimes genres where there was a fair
amount of experience, and it made us conclude that original market research
wouldn't be that big a contribution.
9687 We have all been to hearings where people have
produced research that says 70 per cent of people are interested in this channel
priced at 90 cents or more, but again in this context, we felt that that wasn't
particularly useful. So we put our priority in the choices of our applications
and the genres in looking at it more creatively and perhaps this discussion is
best held with respect to each of our applications. But certainly when you are
dealing, for example, with Fashion or Q! Television, asking the question of a
mainstream population and something that is a concept that may be difficult for
you to define. We question --
9688 COMMISSIONER WILSON: Fashion is not a concept that is
difficult to define.
9689 MR. MILLER: It is in the television concept because,
again -- and Marcia will speak to this -- there is very little
out there. There is a lot in other media, but not on television. So how to
describe the broader concept of what we had in mind would be different. But
again, we could get into this in each of our applications, but essentially we
question the utility for this.
9690 If you looked at the LTA research, there were a
couple of questions that were relevant for our applications because that was at
a primarily exploratory stage. But generally speaking, you are correct. We felt
relying on our knowledge of the genres, available audience data to the extent
that was relevant and our experience with shows and productions was more
9691 COMMISSIONER WILSON: Well, okay, we can look at each
of the applications individually, but I will give you an example -- and
here where the relevance comes in because I am going to read you this little
paragraph from an intervention against your Moods application. You are probably
familiar with this. I don't know if you have read it but -- because for me
the lack of demand research becomes most problematic when you are talking about
micro niches of programming because for Category 1 licences, I think in my mind,
what I am looking for, is I am looking for the most popular genres of
programming that people are going to say, "I am going to pay 11 bucks for that
box because I have to have those genres of programming and I can't get that
programming in the analog world" because that is what is going to drive digital
penetration and ultimately help all of the people who are going to get licensed
through this process.
9692 So it becomes, as I said before not that I don't
respect your experience or your intuition or your instincts, all of which are
very good, but when you are talking about a micro niche like Moods, New Age
Music, what should inspire me to give you a Category 1 licence for a micro niche
like Moods programming where there is nothing to tell me, nothing formal to tell
me that people are going to go out and spend $11.00 on a digital box in order to
get that channel.
9693 And now I will read you the paragraph:
"CHUM has provided absolutely no meaningful evidence in this application to
suggest that Canadians want or need a channel devoted to self-described elevator
music. Although the introduction to this and all CHUM applications promises a
service is sure to be popular, this is supported only by the fact that one
reasonably large audience once watched a Yanni concert on Bravo! and two, there
was an outcry which caught media attention when the log channel was taken off
the air on the West Coast. In our view, these limited anecdotal facts are far
from adequate justification for a valuable and sought after Category 1 licence".
9694 So you see, they had a problem. I mean, you have to
help me out here.
9695 MR. MILLER: Okay. Well we would certainly expect
competing applicants to use their best shot. I think again, the key here is we
disagree with the premise that the vast majority that subscribe to a box, that
pay $11.95 are going to do it to get one channel.
9696 COMMISSIONER WILSON: I didn't say that.
9697 MR. MILLER: That's what the intervenor suggested,
what you read to me. So first of all --
9698 COMMISSIONER WILSON: Okay. I am using the
intervenor -- I don't want you to respond to this intervenor because you
already did. But I am using that just as an example.
9699 I want you to respond to my question, which is: If I
want to put together a package of approximately 10 Category 1 services which are
going to, as a package, inspire people to run out and pay that $11 for the box,
why would I include in that package a micro niche programming service like
9700 MR. ZNAIMER: Because that's the essential nature of
this tier. The fact that an idea pops up as most popular will, typically,
reflect the fact that it's already the most widely served and when you add to
that the lack of clarity, in the sense of what will be the offering and what
will be the price, the results are highly suspect.
9701 COMMISSIONER WILSON: You have applied for two of the
most popular genres: Suspense and Independent Film.
9702 MR. ZNAIMER: Yes.
9703 COMMISSIONER WILSON: So, you want to be there, too.
You want to be with the most popular. As well as the micro niche.
9704 MR. ZNAIMER: Yes. But, at the same time, we think
that the popularity contest is not the sole criteria and that this is the
opportunity to also insert in the mix services that are unique in their
function, unique in their community of address, and also add something to the
social dimension, because we are convinced that, in the rest of the package,
there will also be commercial properties and other forms of drivers to create
the bouquet which will induce the public to buy.
9705 I agree with Peter: No single service is going to
drive this next wave.
9706 But if this next wave develops a reputation as being
a place where you can get more drama series, just like you can get on Basic, and
that kind of thing, then I believe people won't be interested -- and I take
myself as a consumer, in this regard.
9707 COMMISSIONER WILSON: So, this is where the additional
criteria that you suggested, in your covering letter, for each of these
applications would come into play, that we would develop a package that does
have some drivers --
9708 MR. ZNAIMER: Striking -- yes. Striking originality in
it. Which will enhance the reputation of the tier, as well as the other
offerings which are sure to be made.
9709 COMMISSIONER WILSON: So, it would have the popular
ones and the ones that might have more difficulty getting launched, although
they would make an important social contribution?
9710 MR. ZNAIMER: Yes, indeed. And if I might add one
thing -- and I think it's very important -- as you get up the tiers, research
will reveal to you what the public's view is of two clearly-defined choices. You
offer this or that. They will tell you. And if you don't pay attention, you will
9711 But research does not often help when you propose
something that is radically new. That is the entrepreneurial act and that is the
intuitive act, the artistic act, and that's how history moves forward. Until you
had that first music video channel, it was, in fact, literally hard to describe.
Until people come and visit CityTV and see it for themselves, it's hard to
describe to them. And we think this tier will be best served if you have an
interesting combination of those kinds of channels as well as the
9712 COMMISSIONER WILSON: So the next time a columnist
accuses us of social engineering, you will be right there supporting us saying,
Yes, that's what I want the CRTC to do"?
9713 MR. ZNAIMER: Denise, did you want to add
9714 MS DONLON: Well, just one small point, in terms of
when a distributor is building their boutique of services, and which they are
hoping will drive the tier. We know, from past examples, that, often, they will
look for the most popular service and they will group them together, and they
may take the demographics that they hope to serve and the advertising
communities that they hope to serve and the audience they hope to serve and see
quite a bit of overlap because they are very popular channels. And,
occasionally, what they will do is they will add a micro niche channel into it,
knowing it may only serve 5 or 10 per cent of the population. But if they are
trying to increase their overall coverage, that extra 5 or 10 per cent, those
people that desperately have to have those channels, will increase their overall
penetration; and so, these micro niche services are very valuable in the whole
boutique of the offering.
9715 COMMISSIONER WILSON: Okay.
9716 MR. MILLER: Just one other detail point.
9717 I would add that, in the case of "Moods", we actually
asked two questions in the LAT study that were of relevance. We asked the
interest in a package of channels, which could include a "Moods", a "Jazz", a
"Classical" channel, which got very high ratings, and we also actually asked a
question on inspirational music, which got a significant fairly low rating. So,
in that case, we actually did see the benefit of including the
9718 COMMISSIONER WILSON: Okay. Thanks.
9719 Just a question on Canadian programming
9720 Do you think that a condition of licence requiring
minimum levels of Canadian programming expenditures is necessary for digital
9721 I mean you have made a commitment of between 40 and
42 per cent of the previous years' revenues. Do you think it's important to
enshrine that in a CLL?
9722 MR. MILLER: Absolutely. We think that's the most
important measure given.
9723 You have before you widely different revenue
expectations from different services. It's obviously difficult for you to
conclude what is correct. But, at least on a percentage of revenue basis, you
are satisfied that a significant amount will go into Canadian programming -- and
that's why we feel that that is a very important measure.
9724 COMMISSIONER WILSON: Okay. I imagine that you have
been listening to some of the discussion that we have been having about how the
percentage is calculated, over the course of the licence term, whether or not we
should use the method that we use now or if we should calculate a percentage
over all seven years or start calculating in Year 3 or 4 and calculate over the
remaining four or five years.
9725 What's your view on what method is better? Or do you
want maximum flexibility? Is that flexibility warranted, in this
9726 MR. SWITZER: Commissioner Wilson, I guess, off the
top, it would be fair to say we support the current way the Commission
calculates these things, and we have based our business plans according to the
current percentage of revenue approach, beginning in Year 2, based on previous
9727 We have listened carefully, in the last couple of
days, to other constructive ideas, including the second one you mentioned, which
was a seven-year average, and we find some advantages and some merit in that; in
particular, some increased flexibility.
9728 There may be concerns of -- operational concerns of
how to deal with life, in the seventh year, when you can't, perhaps, predict
exactly what's going to happen. But, in general, I guess it's safe to say we
have assumed and run our plans according to your current rules; we fully support
them, and we are very open to discussing any creative --
9729 COMMISSIONER WILSON: You probably have a pretty good
idea, by Year 5, where you are going to be in Year 7 if you -- I don't think
there would be that big a surprise in the seventh year.
9730 MR. MILLER: I think, actually, the surprise could be
in the advertising side. We mentioned in our opening statements some of the
challenges here and, hopefully, that's an area we can get into, but -- you may
be able to predict subscription revenue, but it may be less possible to predict
advertising revenue and, obviously, interactive revenue.
9731 MR. SWITZER: But, to reconfirm, we think the
principle is important. We think that --
9732 COMMISSIONER WILSON: The principle of
9733 MR. SWITZER: No, the principle of increasing your
Canadian program expenditures as your revenues grow. Flexibility is, of course,
nice, but that certainly shouldn't be your priority, for us.
9734 So we are open to work with any new model, I guess;
though, officially, we would support the current percentage of revenue
9735 COMMISSIONER WILSON: Okay. Thanks.
9736 Those conclude my general questions. I will just turn
it back to the Chair in case any of my colleagues or the lawyers have some
questions for you.
9737 THE CHAIRPERSON: Madame Bertrand.
9738 CHAIRPERSON OF THE COMMISSION: I am interested to
pursue one of the elements that Commissioner Wilson touched on; and that was the
reflection you made about what it will be like once we make our decisions and
the reality hits and the questions of access -- the comments you made on page 8
-- and the relationship with the BDUs.
9739 Certainly, we have given lots of thought to the
framework we have established and we have no intention of moving back from the
kind of general framework. But, certainly, through the hearing, not only are we
looking for the best channels in order to really be successful in this roll-out
but, also, any suggestions that we can pick on our way to help. A successful
roll-out is certainly what we are looking for. And for us, access is not only
about getting with the BDUs; there's also a whole question of access to content,
access to talents. And, certainly, if the BUDs were here and were allowed to
immediately respond, they would say, "Well, it's all very well to say that, in
the worst case scenario" -- like Mr. Miller was describing earlier --
"certainly, there will be no place in Category 2 for any service that is not
affiliated with the BDU".
9740 But on the other hand, you could say, "If I don't
already have some conventional channels or lots of specialty channels, I will
have no access to programs, to the distributors, to the talent."
9741 So what are the suggestions you would make, given the
concern you have, but taking into consideration the framework we have
established? What would be the suggestions that would be helpful to us in order
to help for free access on both sides of the fence so that at the end of the
day, the viewer there -- me, and all the Canadians -- will have really the best
of what a new platform can bring? Because we are all focused on one thing, it is
still the TV screen. Although it is with new technology, that is what we are
talking about. We are not talking here about electronic commerce, we are not
talking about...you know, there are all kinds of new possibilities, but, still,
we are talking about the experience of the TV set.
9742 MR. MILLER: Perhaps I can start and others may want
to fill in.
9743 Certainly, just speaking to CHUM for a moment, one of
our biggest advantages, of course, is our existing strength in specialty and
conventional and the cross-promotion we can bring to new channels. And probably
our biggest leverage, and, I would submit, our only hope of getting Category 2
licences launched, if that was the services we were trying to launch, would be
convincing BDUs that we are a vital part of the support they need to launch
9744 I would also parenthetically say that CHUM is in the
position of being in genres that are very competitive and which BDUs have
particular interests in. Local news, community channels are more and more
involved. And music is obviously a priority, of course, and movies is now a
priority, of course, given their pay per view and pay services.
9745 So we do feel vulnerable in that environment because,
as we see the rules, particularly for Category 2. And given what will ultimately
be a limited amount of shelf space, if you take, for example, a music suite,
unless the Commission wants to require it, we think we would have great
difficulty in launching our suite, if, for example, CORUS was launching a music
suite of their own, because there's a limited number of channels, if we have
each got a suite of four or five channels, how do we get on?
9746 So we are very concerned about that and we think the
Commission should be concerned about that, in terms of diversity.
9747 In terms of how to address it in the framework,
again, we are not suggesting you depart from your framework, we are just trying
to outline the risks involved and have some frank discussion with you. By
licensing as many distributor or unaffiliated services in Category 1 as
possible, that helps alleviate the concerns; by licensing more than 10 Category
1 services that would also give you some assurance of being carried.
9748 Finally, and I think this perhaps goes outside the
scope of this hearing, but in further defining the rules of equitable carriage,
obviously, that will be a key part of what we need to grapple with. And, in
particular, in respect of Category 2 services, if the Commission was prepared to
set out some criteria as to what would be considered "undue preference", perhaps
there should be a role that if a distributor carries an affiliated Category 2
service in one genre, they should be prepared to carry another one in the same
genre by an unaffiliated company.
9749 These are the kinds of rules that could be developed
and, presumably, are outside of the scope of your question, but there are things
that can be done to further define and give clarity on "undue
9750 CHAIRPERSON OF THE COMMISSION: And there goes
9751 MR. MILLER: I'm sorry.
9752 CHAIRPERSON OF THE COMMISSION: And there goes
9753 MR. MILLER: There goes diversity if you have
two...well, this is the balancing act that the Commission has,
9754 CHAIRPERSON OF THE COMMISSION: But what about the
idea that some gatekeeping or some undue preference can be played reversely. You
are talking about the one as a program undertaking facing a BDU having to
negotiate to get on and get access. But on the other way, given that you already
have assets in the broadcasting system, you have the leverage. You are
recognizing it yourself, so you have also some kind of possibility of preferring
some BDUs versus others. Isn't there the reciprocity or the reverse proposition
that is as worrying, in a sense, for us, the regulator, who has to make sure at
the end of the day that it is a free market, that there is real access, and
eventually that the viewer gets, really, the best quality possible?
9755 MR. MILLER: First of all, again, in terms of these
channels, given that the subscriber base is so thin, it is unlikely that any one
service would survive on the basis of one BDU alone. And so even to the extent
that services did engage in that practice -- and the Commission has said that
they can't -- the point is it is, we think, unrealistic to believe that services
will survive on the basis of carriage by one BDU alone, as big as that BDU may
be. And ExpressVU is the biggest, but they still only have 500,000 -- roughly --
subscribers today -- and that, in our view, may grow to a million -- but that's
not enough, really, to sustain it any reasonable level of penetration the
businesses that we are contemplating.
9756 When we speak to our corporate leverage, as you put
it, it is our strength, there's no doubt about it, but, based on our past
experience, and our experience with trying to launch two new channels, Star! and
TLC, we have discovered, unfortunately, that leverage is no match for BDUs that
are determined not to launch channels in a fair and equitable manner.
9757 So we raise this issue as a legitimate concern. We
don't want a situation where three to five years from now the Commission...or
two years from now, many not even...yeah, two years from now we are having
another post mortem and trying to deal with the problem after the fact. We are
suggesting that the Commission try and be proactive on this and, therefore, in
licensing, take it into account.
9758 CHAIRPERSON OF THE COMMISSION: I will tell you, Mr.
Miller, what I find difficult is not that you have a concern -- and I'm sure
there will be other people who will have all kinds of concerns, and the one I
was referring to from the BDU towards the program undertaking is a valid one,
too -- but my concern is there is a framework. We won't change it at this point.
We have no intention. So what we are looking for is much more ideas on how to
live within that new framework and really create the space that is necessary to
have better access.
9759 What you are talking about, when I hear you -- and I
push your argument -- is: well, a solution would be to have a bit more than 10,
but somehow you are challenging the idea that the Commission would consider in
Category 1 to grant BDU a licence.
9760 We might not, we might. We are really too early in
the process to know and we still have many hours and days of work to do, but I
think it is important to recognize that the framework is there and what we need,
in terms of collaboration, in terms of the exchange and the dialogue we want to
have over the next few weeks, is what are your concrete suggestions in order to
make sure, on both sides of the fence, that access will be happening.
9761 MR. ZNAIMER: Given that we understood that your
framework was in place and that you weren't likely to change it, we are
proposing this as a practical action that you can take: that you can license
more than 10 and they could all be non-affiliated because the Category 2's will
then take care of themselves.
9762 And you know from a public point of view, once the
smoke has cleared there is no difference to the viewer between a 1 and a 2. That
package will be right out there in front of the public and everybody will be on
a level playing field.
9763 CHAIRPERSON OF THE COMMISSION: Well, it is not the
spirit of the framework -- not at all. It wasn't. If we would have wanted to say
BDU equity is acceptable in one kind of category, we would have said so. That
doesn't mean at the end of the day we will give it. It is still open
9764 MR. ZNAIMER: I understand.
9765 CHAIRPERSON OF THE COMMISSION: -- and we are holding
the process for that. But I just wanted to clarify with you that your suggestion
is somehow a challenge to the spirit of the framework.
9766 MR. ZNAIMER: We didn't understand that.
9767 MR. MILLER: And again, we say in a statement, we say
in our interventions, that the Commission should license as many distributor or
unaffiliated services as possible. We think that's entirely consistent with the
framework and we think is vital for diversity. So we think that is a furtherance
of your framework.
9768 Now, obviously, if you take that to the other extreme
that we have said, that we have hinted at, that the Commission license no
distributor-affiliated Category 1 services, then I would accept your point. But
it is a balancing act. We recognize it and we don't envy you your position. But
we are sounding what we believe to be a reality check on this, as we are on a
number of issues that we have raised today.
9769 We are doing it, hopefully, in a responsible way, but
we do really believe that the Category 2 area is so tilted in favour of
distributor-affiliated services that the Commission should recognize that, and,
therefore, in recognizing that, maximize the number of unaffiliated services
that are licensed in Category 1.
9770 CHAIRPERSON OF THE COMMISSION: Thank you for your
views on that question.
9771 I have another question. You had a discussion with
Commissioner Wilson about diversity and the importance of diversity and how much
you put diversity ahead of your priority list in terms of criteria. In that
discussion you say: The way we count for Canadian programming is different from
other applicants. We have a percentage, so the more revenues we will get, of
course, the more money will go into it. But we have very specific commitments to
some programs that are different. Of course, that is why that kind of proceeding
is so interesting, because the personality of every player becomes
9772 But somehow it is like the underlying statement you
are making is that diversity costs more. Because somehow when you would add the
dollars and compare them on one application to the other, what you seem to
9773 And I just want to check if I have heard correctly.
It could be my English. Is it what you mean, that when there is no potential
other windows, then it costs more?
9774 I just wanted to understood what you meant by that,
that diversity would explain some of the differences in dollars.
9775 MR. MILLER: That is a very important
9776 What we have suggested is that, based on the business
plans that we have put forward, we have looked at what we feel is realistic in
terms of Canadian content levels. Our issue, and our suggestion to you, is that
if the Commission were to simply accept applicants on the basis of higher
Canadian content levels, that has two immediate effects. First of all, given
that we are dealing within a clearly defined genre, a limited amount of
inventory if you will, it means that the services will be repeating programming
far more than they would otherwise repeat Canadian programming. That does not,
in our view, add to diversity. It can add to fatigue, in terms of
9777 Secondly, if a service doesn't have a clearly defined
category, if it has, in a sense, a genre that can be somewhat open to
interpretation, the natural tendency of that service will be to go into an
already existing genre. So there will be more competition with existing services
and, again, lower diversity.
9778 In our view, the great equalizer and one of the
things that we paid a lot of attention to was the percentage of Canadian
programming expenditure, because that is the Commission's assurance that money
does get invested in Canadian programming.
9779 But we also did other things on our channels, and we
are very proud of our 100 per cent Canadian peak hour commitment in those
services, in which we felt that was a significant contribution.
9780 So we do see this as a balancing act between all of
your criteria, and we think that diversity means clearly defined genres, and by
clearing defining a genre it is much more challenging to present more Canadian
programming, and, therefore, to fill a high Canadian content level. In most
cases, but one, your 50 per cent minimum was what we felt was appropriate, and
we will talk about the obvious exception a little later.
9781 CHAIRPERSON OF THE COMMISSION: Thank you.
9782 THE CHAIRPERSON: Commissioner Wilson...?
9783 COMMISSIONER WILSON: I actually want to go back to
the distributor equity issue, because as you were talking I was sitting here
thinking about who is really going to be the most important BDU in the digital
world, and it is not going to be cable for the foreseeable future, it is going
to be DTH.
9784 So when you say: Exclude them all from Category 1,
you are talking about excluding any application that Bell might be involved in
because they own ExpressVU and...
9785 MR. MILLER: In the absolute extreme that is
9786 But, again, to look at how the digital world shakes
out, if you combine Star Choice and Shaw, the number is equal to or at least
very close to ExpressVu -- Star Choice and Shaw Cable, both Shaw companies.
Obviously, as cable rolls out digital its relative importance becomes higher and
higher, so that the three dominant players in different order today, and in
different order in the future, obviously, are Shaw, Rogers and Bell.
9787 COMMISSIONER WILSON: Okay, thanks.
9788 THE CHAIRPERSON: Counsel, please?
9789 MR. McCALLUM: Just to deal for a second with the
closed captioning and the discussion you had with Commissioner Wilson, you had
made specific dollar commitments on closed captioning in each of the
applications. I take it from your answers that if the dollar commitments were to
be imposed as conditions of licence you would have no problem with
9790 MR. MILLER: That's right.
9791 MR. McCALLUM: But the Commission had an expectation,
or, I guess, a requirement to require the captioning of 90 per cent of all
programming by the end of the licence term. It set that out in the COL, I think,
in the framework.
9792 I take it you would have a major problem with that if
that were imposed as a condition of licence in all seven
9793 MR. ZNAIMER: No, we would not walk away from these
licences on that account. We are giving the Commission our best advice about how
to go forward. We would accept as a condition of licence any final determination
9794 MR. MILLER: I might add, counsel, that this
expectation was set in the analog specialty universe, where final revenues at
the end of year 7 are fairly healthy. This new digital universe is actually
somewhat more analogous to smaller stations, and, as the Commission is aware, on
the conventional side, where a station has less than $10 million, the 90 per
cent closed captioning expectation is an expectation, not a COL. And in all but
one of our applications we don't expect to hit the $10 million level before the
end of year 7.
9795 So that is another consideration that may be relevant
for you in reviewing this matter.
9796 MR. McCALLUM: Yes. I had noted that in at least one
you did intend to hit the $10 million mark.
9797 MR. MILLER: Precisely.
9798 MR. McCALLUM: Thank you.
9799 On descriptive video, you addressed, I think,
descriptive video at section 7.6 of the application form in all seven cases, and
I think you had identical wording in each case. Will the proposed services be
technically equipped to allow for the broadcast of descriptive video?
9800 MS HALE: Yes.
9801 MR. McCALLUM: And yet you make no commitment to
descriptive video, I take it, from what you said in 7.6.
9802 MR. MILLER: That's correct. As has been discussed
previously, this is a very new issue and in the U.S. we know that there are now
requirements on the major conventional groups. We would assume that as the
Commission examines this issue it will look first to the major conventional
groups and then, perhaps on the basis of that determination, decide what is
appropriate for specialty, and then, finally, what is appropriate for these
9803 So we think it is premature to make any specific
commitments to descriptive video, but we have noticed your questioning on making
sure that we are technically compliant, and we are happy to confirm that we will
9804 MR. McCALLUM: Do you have any sense of by what year
you would be technically able to do that?
9805 MR. MILLER: As we understand the technology, these
being new digital services, the ability -- the second audio feed -- is
inherent in the digital technology. So, essentially, it would be technically
compliant from day one.
9806 MR. McCALLUM: Thank you.
9807 If the Commission were to license Category 1 services
with interactive elements via the set-top box, do you think, in your view, that
distributors should be obliged to carry those interactive elements?
9808 MR. MILLER: I think the key issue is: Are those
interactive elements integral to the programming. If they are, we think they
should be carried, and in our case particularly, given that we are not expecting
major revenues and certainly not profits from these elements.
9809 If interactivity is an important part of the
framework and the Commission wants to encourage it, then ensuring the
distributors pass through interactive elements that are integral to the
programming is vital.
9810 MR. McCALLUM: So, in your view, we should look to the
integrality of the elements in each individual case.
9811 MR. MILLER: Yes. The Commission has always looked at
the difference between ancillary data and program related data, and what we are
suggesting here is that this is clearly program related and it should be past
9812 MR. McCALLUM: Thank you, Madam Chair.
9813 THE CHAIRPERSON: Thank you.
9814 Commissioner Wilson...?
9815 COMMISSIONER WILSON: Thank you, Madam
9816 We are going to go to each of the individual
applications now. I don't think we will be done by lunchtime, but I think we can
cover off some of the questions that I have fairly expeditiously.
9817 Mr. Miller, you were just talking about defining your
genres very well. If we look at Fashion Television, which is the first
application that we are going to got through, one of the intervenors expressed a
concern that the range of programming that you were going to offer on the
service was too broad. Now you did come back, I notice in your reply --
there was some discussion in your reply, I think, of what constituted direct
competitiveness and I think the range that you suggested was 25 to 50 per cent,
but when you came back to Alliance Atlantis on the issue of overlap with Home
and Garden Television in terms of the architecture and art and photography and
design elements of the Fashion Television application, you lowered it to 15 per
cent, or you offered, I guess, 15 per cent as the cap.
9818 So just out of curiosity before I pursue on the
nature of service definition, how come you -- I mean, you start out by
saying 25 to 50 per cent overlap would be okay depending on the individual
channel and then when they came and said, "Ah, ah! You are doing too much of
what we do", you said, "Okay, 15 per cent".
9819 MR. MILLER: In our view, there is a difference
between defining the threshold as to what is directly competitive and meeting
the objective of maximizing diversity and so while the 25 to 50 per cent range,
as you said, depending on the nature of service and how broad the genre was, we
think is an appropriate way of looking at directly competitive
9820 We feel, particularly in terms of this channel, in
order to indicate very clearly that we want this channel to be distinctive and
entirely different from what is existing to enhance diversity on the system, we
were comfortable with setting ourselves a more severe restriction of 15 per
9821 COMMISSIONER WILSON: So for those intervenors who are
concerned about the overlap, Home and Garden Television, women's lifestyle
programming, that kind of programming, would you say that 15 per cent was an
appropriate level to cap those genres of programming on this particular
9822 MR. MILLER: Just so I can make sure I have the right
wording, what we did say is that we would limit the channel to no more than 15
per cent programming focusing on home and garden design. That was the specific
proposal we made.
9823 COMMISSIONER WILSON: Right, to Home and Garden
Television. But you also have women's programming and lifestyle programming in
your menu of programming proposed for this service.
9824 MS MARTIN: Peter, if I might address that?
9825 I think the comment about the schedule being broad is
true, but I think if you look at the types of programs we do they are quite
distinct from what is being offered out there.
9826 Most of the programs that you are referring to are
how to programs, there is a lot of information. I think a lot of the programs on
Women Channel and Life deal with how to decorate or how to do a lot of analysis.
The way we approach this schedule is to deal with fashion and photography and
design, et cetera, all the other related art forms, but more in a profile,
feature, report application. It's not specifically based on sitting down and
deciding how to put an outfit together.
9827 There will be some of that, but it's those kinds of
programs that could be dealt with in a 15 per cent limitation. But they are
quite different on how we approach the subject matter and it's broad because
it's underserved right now.
9828 If you look at design as being broad and fashion
being broad, it does cover visual arts and photography and architecture, but
there aren't programs like that available to the Canadian audience.
9829 So I think when we approached the application in the
channel, it was to deal with fashion and design and that does include a number
of art forms.
9830 COMMISSIONER WILSON: I think that, according to my
notes, your definition of the nature of service only addresses fashion and
9831 MS MARTIN: No, we also address, and it's in the
application, that that includes other art forms as beauty, architecture,
photography. It is stated in the application, and it's important that there is a
distinction. It is, as I said in the presentation, more than what you wear.
Fashion is certainly predominant in the schedule, but it's the other art forms
that we want to explore because they are not being explored right now on
9832 COMMISSIONER WILSON: You are right that you include
all of those in your description of the service, but not in the nature of
service which is Section 7.1. You say:
"The programming provided by Fashion Television shall be dedicated to fashion
and style drawn exclusively from the following
9833 And then you list categories.
9834 MR. MILLER: That's correct.
9835 COMMISSIONER WILSON: What I am trying to get at is
would you be prepared to include all of those other descripters in your proposed
nature of service definition.
9836 MR. MILLER: That would be appropriate.
9837 COMMISSIONER WILSON: Okay. One of the other
applicants for a fashion channel, TVA, provided a breakdown of its programming,
a sort of proportion of the schedule that each of the different types of
programming would take up and I am just wondering if you are able to estimate
what proportion of your schedule might be dedicated to the central themes of the
9838 MS MARTIN: Yes, what we have is percentages of
perhaps categories of programming also. As I mentioned, predominantly we do feel
that it would be fashion and clothing accessories types of programming in the
general interest and human interest in general entertainment magazine format,
and that would include programming in those other fields as architecture and
visual arts. But I would say predominantly it would deal with fashion and
9839 COMMISSIONER WILSON: So you are just going to say
predominantly, but not as a percentage of the schedule.
9840 MS MARTIN: Well predominantly to me says over 50 per
9841 COMMISSIONER WILSON: Over 50 per cent.
9842 MS MARTIN: Yes.
9843 MS BEKER: If I could just add to that as well.
Fashion for us is something that is always touched, and the way we perceive
fashion since we started covering it officially on Fashion Television back in
1985, it is a subject that really touches every single aspect of our lives. We
don't have never really looked at fashion in that very cut dried, nuts and bolts
way, like this is the garment, this is the way it's cut, this is the silhouette,
this is the colour.
9844 Of course, all those factors are taken into
consideration, but more importantly fashion has become for us very much a
reflection of an attitude in society and a kind of spirit and really reflects
what is going on in terms of economy and political awareness and all those sorts
of things -- social interaction -- and a lot of the programming that
we are planning to do on the Fashion Channel would most definitely be that kind
of analytical discussion of fashion sensibility, but of course it would be way
beyond mere discussion of runway trends and well into the way fashion is
affecting us in so many different aspects of our lives.
9845 COMMISSIONER WILSON: What I really want to know is
who invented pantyhose because I hate them so much.
--- Laughter / Rires
9846 MS BEKER: Pantyhose are over, haven't you
9847 COMMISSIONER WILSON: Yes, tights are in. I know the
most difficult decision I make every morning is what I am going to wear. So you
are right, fashion does affect us all.
9848 Program categories. You proposed in your application
to air a range of drama programming, including dramatic series, sitcoms and
movies. I guess in terms of movies, you would run something like Ready to
Wear -- Prêt-à-porter to use the proper phrase.
9849 MS MARTIN: That's right.
9850 COMMISSIONER WILSON: What would define a drama, a
comedy or a film as appropriate to this genre?
9851 MS MARTIN: I think it's programs that feature
characters in situations from the world of fashion and design. So movies, as you
mentioned, would be Ready to Wear, a Canadian movie called Model by Day which
deals with the models and the fashion world, and that is how we would define the
kind of programming that you would see in the comedy and drama
9852 COMMISSIONER WILSON: Okay. What proportion of your
program schedule would be allocated to dramatic programming?
9853 MS MARTIN: Well, our draw schedule right now does
have two movies. It also has comedy and drama.
9854 COMMISSIONER WILSON: Two movies a week?
9855 MS MARTIN: Yes.
9856 MR. SWITZER: In total, Commissioner Wilson, those
categories you ask, they would represent approximately 15 per cent of this draft
schedule as we have shown it.
9857 COMMISSIONER WILSON: Fifteen percent?
9858 MR. SWITZER: Yes.
9859 COMMISSIONER WILSON: And would you accept that as a
9860 MR. SWITZER: Absolutely.
9861 COMMISSIONER WILSON: Okay.
9862 You also include Category 70, Animated Television
Programs in films, but it's not included in your proposed nature of service. Was
this a mistake? Are there animated programs about the world of
9863 MS MARTIN: There might be. It does bring me to,
actually, someone in Vancouver we were talking to about doing an animated comic
strip on fashion. It hasn't been produced yet, but there could be. So to
eliminate it would perhaps eliminate some creative output for independent
9864 COMMISSIONER WILSON: Okay, so it is in -- it's in
Schedule 10, but it's not in 7.1. So you want it in 7.1 in your description of
nature of service?
9865 MR. SWITZER: It would certainly be
9866 COMMISSIONER WILSON: But that would fall under the 15
9867 MR. SWITZER: Yes, and of course, it would still, as
an overriding principle, have to deal with or be connected to fashion in the way
Marcy just described.
9868 COMMISSIONER WILSON: Okay.
9869 In Schedule 1, you said that Fashion Television would
include a lot of original programming. I'm just wondering if you could give us
an idea of what proportion of your program schedule would be devoted to original
9870 MS MARTIN: Well, we don't deal with the percentage. I
haven't done it by percentage. But what we have allocated for in the draft
schedule is over 170 hours of original program to be produced for the
9871 COMMISSIONER WILSON: Over 170 hours a
9872 MS MARTIN: Yes.
9873 COMMISSIONER WILSON: Okay. And is all of that
in-house or -- you have got $700,000 identified for independent productions. Is
that for Sleeping Giant or is that --
9874 MS MARTIN: Unaffiliated, independent
9875 MR. SWITZER: Commissioner Wilson, that $700,000, over
the course of the licence is specifically earmarked for completely unaffiliated
independent producers. And given the nature of much of the informational and
magazine type programming that this channel relies upon, a large proportion of
those hours, original hours we just mentioned will be in-house.
9876 COMMISSIONER WILSON: Okay.
9877 I have already dealt with this Home and Garden
Television and with french language.
9878 Let's look at the issue of demand research with
respect to this specific application. Let me just look at what you --
9879 Okay. You used the P & B research database and
fashion publications and spending. Do you want to talk a little bit about why
you're confident that it's a good indicator or a good barometer of the
attractiveness of the service?
9880 MS MARTIN: Certainly. I think the fact that Fashion
Television is now going into its 16th year, its longevity speaks to -- its
staying power speaks to the popularity. If it wasn't doing well, we wouldn't
still be producing it.
9881 It also is one of the driving programs in our
syndication around the world of our programming. We mentioned many times it's
seen in over 100 countries and it has been since we started syndicating it and
one of the few programs that does enjoy a life on-air in the States, first on
VH-1 and now with E.
9882 So what we're proud in doing in this show for 15
years is providing that global look at our Canadian fashion and design industry.
So we do put a lot of weight on the staying power of Fashion Television. Knowing
that it's popular and seeing what is being produced and offered out there right
now, we know it's under-served. We know that there's an appetite for this and we
feel that there would be an audience to watch this genre.
9883 But another thing that is dear to my heart, since I
launched Star a year ago, is that there is no vehicle right now for the stars of
fashion and design. I think very few people, if I mention Canadian designers,
would know who they are. If I mentioned Lida Baday or even Joeffer Caoc, who we
quoted today in the presentation, these are well known designers in the fashion
world and do very well in Canada, but very few people know who they
9884 So this is an opportunity for us to promote our stars
of the designer fashion world. That's why I think it's important, along with its
9885 MS BEKER: As the face of Fashion Television as well
for the past 15 years, for better or worse, I have been really at the receiving
end of so much of the public's comments and perceptions of the show and been
really fortunate indeed to hear how much Fashion Television has become such a
part of people's viewing habits.
9886 When I say people too, I mean, it runs the gamut. Our
viewers are not just confined to, you know, women between the ages of 18 and 49.
Really, I have teenage boys coming up to me, and for whatever reasons, they may
find the show entertaining and edifying. They have been turned on to many things
that they never quite expected to be turned on to by our show.
9887 COMMISSIONER WILSON: I don't know if that's the
phrase you want to use!
--- Laughter / Rires
9888 MS BEKER: Including the art of photography and just a
genuine appreciation for aesthetics that go beyond the human female
9889 But as well, we have got little old ladies watching
the show. Certainly, truck drivers, cabbies, doctors, lawyers, people -- It just
really, really breaks through any kind of economic and social barriers and that
has been the most gratifying thing.
9890 But the fact is that people are always saying that
they want to see more, they want more. And they want us to go beyond the five or
six minute features which we are really restricted to do within the context of
our particular half-hour series. We would like to really delve beneath the
surface to a large degree, and we have not been able to do so. I just think
people are just so hungry for it. We're saturated with imagery of the fashion
world, but very often, we don't quite understand it or even are given the kind
of tools to dissect it and really know how the scene functions.
9891 COMMISSIONER WILSON: What are the ratings for Fashion
9892 MS MARTIN: Jay, you can confirm it, but it does well.
It does three and four points and has been for 15 years. It has a loyal
9893 It's also stayed in the same time slot for City TV.
It's done very well for us.
9894 MR. SWITZER: Commissioner Wilson, in Toronto, which,
as you know, is an extremely competitive ratings market -- in fact, arguably, I
think the most competitive commercial television market in the world -- Fashion
Television, each week, totals between 200,000 and 250,000 viewers every week,
and that's just in Southern Ontario alone. There are many national programs on
national networks that would be happy with those kinds of numbers. We're very,
very pleased. It's a hugely popular show and has been for a long
9895 MR. MILLER: Nationally, as was indicated in our filed
research, it does on the order of 550,000 viewers each week.
9896 The other interesting thing about this channel which
goes to the notion of research and how it's difficult sometimes to use public
opinion research to assess something that isn't widely available, in this case,
despite the fact there are very few fashion shows on television, fashion
actually rates a respectable 15 per cent of Canadians watching it per week. So
to us, it's a low number when you compare it to movies or suspense, those
categories. Given how little there is, we think that's a very strong indication
of support for our channel, should we be successful in launching one.
9897 COMMISSIONER WILSON: I heard once -- it must be four
or five years ago -- that Fashion File was the most popular show on CBC
Newsworld, maybe four or five years ago, but not according to what you have
included in your application. But of course, those were the days when, you know,
all those see-through clothing were really in.
--- Laughter \ Rires
9898 MR. ZNAIMER: If I could get my little artistic
comment here, when we launched the show, there was no market evidence that the
show would be popular. The idea of a fashion show on television was literally
unheard of. Other than Helsa Clench's reports on CNN, there was nothing, zero.
And when we put it on, I think we had many sceptics.
9899 But because we put it on, and because we stayed with
it, and because we produced it well, it's become not only a phenomenon for us
but for all kinds of others who are now climbing on-board.
9900 COMMISSIONER WILSON: I would be curious to know how
many copies of "People Magazine" are sold when they do the Oscar gown issue. The
week after the Oscars they profile all the clothing. I guess you would be
covering that kind of thing, as well, Mr. Blackwell's worst-dressed list and
9901 MS MARTIN: Absolutely. We certainly have an appetite
for that kind of gossipy look at fashion.
9902 COMMISSIONER WILSON: People love to see other people
embarrass themselves by wearing something really awful.
9903 MR. ZNAIMER: Jay reminds me of something, and I think
it is worth mentioning, and that is it is extremely rare in television to have
the same production team for the length of time that we have been doing this
show -- and it is Marcia and it is Jeanne --
9904 MS MARTIN: And Jay, the producer of Fashion
Television, sitting in the audience.
9905 MR. ZNAIMER: Yes, that's right. So same gang raring
to go and they really know their stuff.
9906 MS BEKER: One other thing that I would also like to
add -- and, interestingly, that you do point out how these magazines that
feature the best dressed at the Oscars are just so lapped up by the public --
there hasn't yet been a format for our Canadian stars to be playfully dissed,
perhaps, or analyzed in terms of their personal style, and that's something that
we would be adamant about doing. If we can analyze the way people are dressing
up to the Oscars, let us analyze the way our own Canadian stars are dressing up
to the Gemini's or the Genie's. I think that, in turn, will build our own
Canadian star system.
9907 COMMISSIONER WILSON: Not CRTC hearings,
9908 MS BEKER: Oh, it depends how nice you are to
9909 COMMISSIONER WILSON: I just wear black all the time,
just like your boss.
9910 MS MARTIN: I would just like to add one thing,
although Jeanne won't mention it, but she is a walking billboard for Canadian
9911 MS BEKER: Oh, I know.
9912 MS MARTIN: -- so wherever she goes people often ask
her what she is wearing and it is often a Canadian designer. So when she
mentions who they are and they look at her and they say, "Well, who is that, I
have never heard of it," we want to change that.
9913 COMMISSIONER WILSON: So you think there could be some
positive spillover, in terms of promoting retail sales in fashion --
9914 MS MARTIN: Absolutely.
9915 COMMISSIONER WILSON: -- and sort of giving the
Canadian fashion industry a boost.
9916 MS MARTIN: It is not even a maybe, it is an
9917 We know from our experience with Much and Bravo! and
now slowly with Star! how important those specialty channels have been to the
industry. And so there is no reason to feel that fashion wouldn't do the same
thing to the fashion industry.
9918 COMMISSIONER WILSON: Now, you see, here is a good
on-line possibility: you can have the viewer --
9919 MS MARTIN: Oh, I have some examples when you are
9920 COMMISSIONER WILSON: -- click on Jeanne's dress
9921 MR. ZNAIMER: We are there. We are there.
9922 COMMISSIONER WILSON: -- and then they have
9923 MS MARTIN: We are there.
9924 COMMISSIONER WILSON: And then it is delivered three
9925 MS BEKER: One of the main problems and challenges
that face all Canadian designers in this country, without question, is the fact
that they have to compete with Americans and European, who are so heavily
promoted, and that is something that just requires cold, hard cash most of the
time and these people just don't have that kind of financial backing here in
Canada to help them with that.
9926 But here we have a vehicle, or, hopefully, would have
a vehicle with a fashion channel in particular, to really promote the heck out
of these designers and really turn people onto our own from coast to
9927 COMMISSIONER WILSON: I guess there is some parallel
in the promotion of American television versus the promotion of Canadian
television: there is such a huge machine out there for doing it.
9928 Now, is your prime time your 8 to 10? Is that 100 per
9929 MS MARTIN: Yes, 100 per cent Canadian.
9930 COMMISSIONER WILSON: Is that consistent right across
all the applications?
9931 MR. SWITZER: Almost all, but not all of them, no.
There are four that have this special 100 per cent promise in the hard of
9932 COMMISSIONER WILSON: And what are those?
9933 MR. SWITZER: Those are Indie, Fashion, Relationship
9934 COMMISSIONER WILSON: Okay. So I guess for the film
genres, you would be programming a two-hour movie in that time block?
9935 MR. SWITZER: To a great extent.
9936 COMMISSIONER WILSON: Okay.
9937 In terms of developing your penetration rates, you
didn't do any formal demand research, which is often used as the basis for
figuring out what your penetration rates are going to be. How did you come up
with them? Just a good guess, or...?
9938 MR. ZNAIMER: Peter Miller will start.
9939 MR. MILLER: Basically, the way we approached this is
we looked at all of our channels and tried, based on the research we had, to
give a bit of a relative ranking in terms of penetration. We started from the
firm belief that the 50 per cent was absolutely an upper bound.
9940 COMMISSIONER WILSON: That 50 per cent was
9941 MR. MILLER: Upper bound. That no service, given what
we expect to mean as a lot competition for new channels, we took it as a given
that no service would be higher than 50 per cent. Now, again, that is based on
9942 COMMISSIONER WILSON: At the end of your licence
9943 MR. MILLER: At the end, precisely.
9944 Again, as you are aware, the third tier has just
started to exceed that and each successive analog tier has performed less. In
terms of penetration, we felt, looking at this environment, the likelihood of
reaching anywhere near those levels was unlikely.
9945 COMMISSIONER WILSON: Suspense, though, you go to
9946 MR. MILLER: And that is the --
9947 COMMISSIONER WILSON: A 20 per cent jump between years
six and seven.
9948 MR. MILLER: That is because that is probably, if you
will, the category killer of all of them, in that it is the only genre that CCTA
itself reviewed a number of years ago which has yet to be launched in Canada. So
that was the big exception to the rule.
9949 Then we, based on the research, essentially tried to
determine what would be a reasonable level of penetration. And Mr. Schwebel can
talk to the packaging options we have contemplated, but essentially we are
assuming there will be a mixture of à la carte, theme packages and, to some
limited extent, a large package. But we don't believe that is the way most
people are going to get them. It is mostly going to be thematic packaging,
which, again, keeps the penetration level down.
9950 COMMISSIONER WILSON: That is contrary to what Mr.
Gourd said yesterday, though: that most of their subscribers do take the big
9951 MR. MILLER: Today that is right. But, again, if we
are talking about another 40 to 45 or 50, or however many channels, we think
this motion of most of them taking the whole package begins to be weakened and
we end up with more of a thematic or pick-a-pack approach.
9952 COMMISSIONER WILSON: Okay.
9953 Before Mr. Schwebel takes over, I just have to
mention that he signed me up for cable in 1982, in the old days when he worked
for the really big cable guys and when I was in university, before I ever got
into the communications business.
9954 These comments that you are going to make, are they
applicable to all seven applications?
9955 MR. MILLER: The general comments I have made, and
then from that, again, we made specific targets for each of the applications.
But the general comments are applicable, yes.
9956 COMMISSIONER WILSON: Okay.
9957 MR. SCHWEBEL: Just a couple additions. For the
record, Suspense goes to 55 per cent penetration in year 7. Actually, we have
maintained that consistently throughout the licence term, given the strong
demand that we expect for the service out of the gate.
9958 And just a couple of other points, we built these
penetration assumptions on our experience with Star! and CLT, particularly as it
applied to distribution on a digital basis. And when we looked at the range of
how well Star! and CLT did at those digital distributors, it went from anywhere
from 28 to a high of 62 per cent -- and that is one year after
9959 Clearly, the method of packaging had a major impact
on the ultimate penetration or take-up model level for those services. And those
distributors that were more in the customer self-select or à la carte model of
service offering were typically at that low 28 per cent range; whereas, those
distributors who offer digital services and were well-known for a top-down
selling model that maximized the take-up of the full package of services were at
the high end of the range of 62 per cent.
9960 So taking that proxy, if you will, we determined that
was a very good reference point to come up with penetration levels that are
typically in the 35 to 55 per cent range as the highest for Suspense
9961 So we have had some experience with digital
distributors and their packaging and we know that the next wave will be
distributed as part of new packages. We actually had the benefit in the last
wave of being added in some of those digital distributors to existing packages,
so we have had to back off of those high-end numbers of 62 per cent, taking into
account that, as time goes by, we believe that consumers not going to be as
predisposed to yet all the new channels that are added.
9962 As time goes on there will be an economic
consideration and people will be more discriminating about what they can afford
to add to their existing DTH or cable digital bills.
9963 COMMISSIONER WILSON: Thank you,
9964 I am going to move now to suspense. I will ask some
questions on suspense, and then I think probably around 12:30 we will take a
9965 There are not that many questions, and some of them
you have already answered, so I can eliminate them.
9966 For the nature of service, you have requested
Categories 7(b), ongoing comedy series, and 7(f), programs of comedy sketches,
improv stand-up comedy, but you have not included any of this sort of
programming in either the programming grid or in the description of programming
as part of Schedule 10. I am wondering why you included those categories and why
you feel that comedy-related categories would be appropriate for a service which
is programming mystery and suspense.
9967 MR. SWITZER: Commissioner Wilson, that is a very fair
question. It is obviously a small part of the schedule plans, and Paul Gratton,
I think, would like to add some background to understand how we got
9968 COMMISSIONER WILSON: Okay.
9969 MR. GRATTON: Basically, there is the possibility of
crossover hybrids, and it is simply in anticipation of that as much as
9970 Currently we don't really see tonnes of stuff in that
category, but I am not at all certain that we are not going to come across a
comedy series that won't have a strong suspenseful element built into it. It is
as simple as that.
9971 The programmer is trying to keep the options
9972 COMMISSIONER WILSON: I was trying to rack my brains
to see if I could think of one, and I couldn't, but I thought you might be able
to suggest how that would tie in.
9973 On the issue of competitiveness, there are a couple
of applications, of course, that are quite directly competitive: Shadow and 13th
Street. But we are also considering a couple of applications for services which
would provide justice-type programming. I am just wondering, since you are also
proposing to offer some programming that could be characterized as justice-type
programming, would you consider their applications to be competitive with
9974 MR. MILLER: No. Justice-type programming would be a
small percentage of the program schedule of suspense, so we think the two are
9975 COMMISSIONER WILSON: So you think that the
marketplace is big enough for a mystery-suspense channel and a justice-type
9976 MR. MILLER: I think that is a different question, and
I won't hazard to add whether the market can justify it. But in terms of your
definitions of directly competitive, we think, theoretically, if a justice
channel were there and licensed, then --
9977 COMMISSIONER WILSON: It would not be directly
9978 MR. MILLER: It would not be directly
9979 COMMISSIONER WILSON: But you don't think we should
9980 MR. MILLER: No, I didn't say that. I am just saying,
I think that -- I want to restrict my comments to the issue of direct
competitiveness. Others may have comments on the market. I am just limiting
myself to the issue of directly competitive.
9981 COMMISSIONER WILSON: Now I am asking you whether or
not you think the marketplace is big enough for both.
9982 MR. MILLER: I will defer to Mr. Znaimer.
9983 MR. ZNAIMER: I think so, because I think the one
channel will be, essentially, reality based and information based, and the other
one, obviously, is given more --
9984 COMMISSIONER WILSON: What is reality?
9985 MR. ZNAIMER: The Justice Channel. It is your
descriptor, but I am assuming it is kind of Law and Order and that kind of
thing: courts, cops --
9986 COMMISSIONER WILSON: It could be, you know,
court-related drama like Perry Mason or --
9987 MR. ZNAIMER: Understood. I think we could live with
9988 COMMISSIONER WILSON: Okay. On the question of
diversity -- and I think this application, in particular, is a really good
example of this, for me anyway -- there is a lot of similar programming to
this in the system. In fact, one of the things that struck me when I was looking
through your draft program schedule was that the programming that is on
here -- Matlock, Quincy, Spencer for Hire -- this is really old stuff.
This has been around for a long, long time.
9989 I am just wondering, for a suspense channel, wouldn't
you be looking for something that people haven't seen before?
9990 I am just trying to understand your
9991 Yesterday I talked with CTV about the notion of
repurposing programming, or pulling programming together that is already in the
system and putting it all in one place so that lovers of mystery and suspense
know they can go to that channel and they are always going to find a
9992 MR. SWITZER: Maybe I could begin and Paul
9993 COMMISSIONER WILSON: Because there is some really
good stuff that is on A&E, for example, and I know that you can't get the
rights to that, but there has to be some other stuff out there besides Quincy
9994 MR. SWITZER: Your example, Commissioner, of A&E,
is a particular, I think, irritant for many -- your example isn't an
irritant; the programming is an irritant.
--- Laughter / Rires
9995 MR. SWITZER: The channel that you mention is an
irritant for many Canadian broadcasters. In part, this genre will go a long way
to repatriate the huge tuning to A&E in Canada, beyond their wildest
9996 It is a multi-part answer, but I think in part you
have touched on the importance of bringing programs together in a space and in a
channel and in a destination where viewers who want to be enthralled and
involved come to it knowing what they are going to get. It is a multi-layer
program experience. There are significant new program initiatives, and we have
laid out the importance of feature film and a significant multi-million dollar
commitment to new, independently produced Canadian feature films in this genre.
That is very important.
9997 There is a significant new script and concept
development to reinforce new Canadian movies in this genre.
9998 There is a significant amount of British mystery,
which we think is important in this genre and adds to the layering of what makes
this channel great.
9999 You mentioned when you began your questioning about
your love of Star Trek, and I think and example of --
10000 COMMISSIONER WILSON: Well, Best of British Mystery
at 6:30 p.m., but at 7:00 p.m. you have all of this other --
10001 I mean, obviously, my own bias is showing because I
watch mystery programming and I am thinking: What would I like to see on this
10002 MR. SWITZER: You raise very fair questions, very
important questions. I think it is good to see exactly what we have in mind. Not
all of the applications before you have gone to this level of detail and
specificity, title by title, to show you what these fine channel creators have
in mind, and of course it is intended to be a demonstration of what we have
planned, obviously, not individual titles.
10003 Our experience with Space as a
destination -- and, in particular, to answer your question of
diversity and how does it contribute to the overall diversity and program
diversity in the system -- Space has been a huge stellar
10004 I could argue that the creative way that Marcia and
now Paul have put the channels together as a destination, a blend of new,
original programming, much of it Canadian, as well as shelf programming,
packaged in a creative way and marketed as a brand, so you know what you are
getting, by itself, as a silo of programming, adds a completely new layer of
diversity in terms of choice.
10005 Paul may want to passionately talk about what he has
in mind for individual titles or themes, but we are very proud of this channel
and think that between the new programming, the development, the new Canadian
feature films, the repatriation, to a great extent, from A&E, and in fact
making this a destination for lovers of mystery -- it adds fantastic
10006 COMMISSIONER WILSON: Mr. Gratton, before you
respond, I guess one of the point -- well maybe I will let you respond
and then I will come back to you.
10007 MR. GRATTON: Well I think Jay covered off most of
the points I would make in that area, certainly the new initiatives in the
feature film area where mysteries have been greatly under-represented in English
Canada. The British material that we plan will be largely unseen in North
America, things like Linda Laplante's Trial and Retribution and series of that
10008 As he pointed out, when you start packaging and
repackaging material in a dedicated focus genre you end up with the perception
of diversity on the part of the public. If I were to tell you, for example, that
this October on Space we will be running for the first time ever all four Star
Trek series in the order of production, you would say, "Gee, I have never seen
that before" and although it's true, all four series have been available on
other channels, it's the focus of these specialty channels
10009 COMMISSIONER WILSON: When am I ever going to get my
--- Laughter / Rires
10010 MR. GRATTON: Well, obviously not on Saturdays,
10011 MR. SWITZER: Of course, an additional layer is that
in this channel we made an additional promise of 100 per cent Canadian in the
heart of prime and although the titles may be different, they are strong titles
that we think are illustrative. What we have in mind, we think that's another
special promise to kind of reinforce how important this channel is to us and to
10012 COMMISSIONER WILSON: I guess what I am looking
at -- and I am sure that you have looked at your competitors' applications,
you looked at Shadow TV, for example, with all this nice red Canadian content
between 6 p.m. and midnight for a Category 1 licence, what tips the scales in
10013 MR. ZNAIMER: In our opinion, it's the emphasis on
movies. This is not another consumer and another place to allocate the cost of
making series which are the mainstay of convention networks.
10014 This is another piece in the puzzle of how to do
something for and with the Canadian Motion Picture Industry, the long-form
10015 COMMISSIONER WILSON: Okay, thank you.
10016 How much original Canadian programming does your
10017 MR. GRATTON: Fifty-two hours a year.
10018 COMMISSIONER WILSON: Fifty-two hours. And you show
quite a few repeats, a fairly high repeat level. What is the strategy behind
10019 MR. GRATTON: I think it's the nature of a specialty
channel to afford many opportunities to watch the programs that are
10020 COMMISSIONER WILSON: So just using different time
slots to maximise the audience.
10021 MR. GRATTON: Correct.
10022 MR. SWITZER: Commissioner Wilson, in general our
repeat factors across most of these channels are between six and eight and that
would be the same for this channel as well.
10023 COMMISSIONER WILSON: How much product exists --
how much Canadian product exists in this genre?
10024 MR. GRATTON: Well, I mean there is some amount in
terms of TV series. CTV pointed out yesterday that they have been fairly active
in the last few years and have produced some and there have certainly been shows
in the CBC catalogue over the years such as Seeing Things. There have been some
hybrid Canadian shows that have shown up in the last few years, Canadian
versions of Twilight Zone and Ray Bradbury and Alfred Hitchock and where there
is very little, unfortunately, is the English feature film side and that is why
we decided to put our resources into that particular category.
10025 COMMISSIONER WILSON: Sorry, I am having just a
little bit of trouble hearing you.
10026 MR. GRATTON: I will get a little closer
10027 COMMISSIONER WILSON: Thank you. I am far
10028 MR. GRATTON: Where there is a paucity of product is
on the Canadian feature film side. As I say, since the early days of the '70s
when there was some interest in this category of programming, it's virtually a
genre that has disappeared, not so in Quebec where we have seen films like Liste
noire et la Conciergerie and it's a genre that is regularly produced with a fair
amount of popular success in Quebec, but in English Canada you just don't see
mystery thrillers being produced for reasons that are probably rather complex in
terms of films that are financed in this country. But it is one of the things we
wish to address with this channel.
10029 COMMISSIONER WILSON: Obviously, the film that you
produce for the film-related channels that you proposed would also appear on
Citytv, so there is the synergy set you will achieve in that way as well. That
is one of the reasons that you have focused -- I know, I mean movies are
one of your strands, or there are all sorts of different words floating around,
but that is one of the genres that you really focus your attention and money
10030 MR. ZNAIMER: That's exactly right and the feature
films relate to Citytv in much the same way that those series relate to CTV and
the choice for the Commission is what needs the support at this time? What has
had the support and what is on the priority list right now?
10031 MR. SWITZER: If I might add, Commissioner. These new
films will be new films to the system. They will have theatrical release. They
will appear on pay TV, they will appear on pay per view, and so on, down through
the system and the entire system is going to benefit by these new films into the
10032 So we hope to benefit as well, but others, the
theatrical distributors, the public. New films into the system helps
10033 MR. GRATTON: There is one exception to that and it's
a plan I have to do a mystery thriller similar to something that I was involved
with at First Choice which was called Murder in Space which was a mystery
thriller that was presented without an end.
10034 COMMISSIONER WILSON: With?
10035 MR. GRATTON: No ending. You weren't told who done
it. Instead there was a contest where you went off and got additional clues, and
back int the '80s when we did it, you had to go to a gas station to get the
additional clues, but now with the Internet, you will be able to plug in, get
alternate takes in slow motion, and additional clues will be planted
10036 COMMISSIONER WILSON: The virtual gas
10037 MR. GRATTON: And then at a specific date, we would
show the entire program including the ending and it would be contest winners who
guessed the appropriate culprit. But that would be about the only one I could
think of that would not have the traditional theatrical release and go through
the orderly marketplace.
10038 COMMISSIONER WILSON: Everything old is new again.
That sounds like a good way of engaging your audience, though, for people who
10039 I do have a few more questions on this application.
Should I just proceed? I am looking to the Chair for guidance.
10040 So I will. We will finish this off.
10041 Your 42 per cent Canadian program expenditures,
would you accept that as a COL?
10042 MR. ZNAIMER: Yes.
10043 COMMISSIONER WILSON: Okay. That was fast.
10044 Your estimates for profitability for this
channel -- and I think you described it, Mr. Miller, as a killer
channel because it is the most popular genre that was identified in 1996 that
was not licensed, and you actually include that research with your
application -- given that demand, why are your projections so conservative
on this particular channel? Do you think you could have been just a little more
optimistic with this one?
10045 MR. MILLER: This is a question we would really to
get into in terms of all of the channels. This is the highest revenue generating
channel of all of our channels because it has the potential to be so popular,
but there revenues for these channels are made up of subscription and
advertising and I think the biggest difference you will find between ours and
our applicants is not only the difference because of different subscriber base
and a different penetration, a different pick up, but a difference in terms of
advertising which Mr. Kirkwood could speak to if that is of interest.
10046 COMMISSIONER WILSON: Yes, because I would like to
ask you a question about how advertisers are behaving in this
10047 MR. KIRKWOOD: We are blessed with the opportunity of
experience of selling digital on the street now for a year, both Star and CLT.
The response has been less than enthusiastic. Our projections for revenue are
based on the experience we had with those channels -- or are having. Star
this year will do just under $500,000 in revenue and the projections for the
future are modest increases over that time.
10048 COMMISSIONER WILSON: Do you think that the
advertisers are on a bit of a learning curve themselves in terms of how to deal
with digital and do you think that they might start taking a slightly different
approach, maybe a more targeted approach in terms of reaching specific
demographics that might be drawn to a niche channel, and do they need to be
educated that way? Is that why they are slow off the mark?
10049 MR. KIRKWOOD: Yes.
10050 COMMISSIONER WILSON: I mean, you would
think -- I understand the low number subscribers and are they
interested only in audience and ratings?
10051 MR. KIRKWOOD: Mostly. We are hoping that the niche
interest will counterbalance some of that, but to date they are most interested
in the audience numbers, how many people are watching and there seems to be a
critical mass of three million households before we get reliable audience data
and that would be in the experience with Space. Star has a hybrid distribution
with digital and analog households providing 1.5 million households and to date,
I guess we just recently did 26 weeks of data with Nielsen to establish, to
rationalize some average audience which is I think around 3,000 which is why we
projected -- our licence is based on that kind of audience data.
10052 The CPM estimates too are based on our experience
with Star and CLT and what the existing currency is for widely, more widely
distributed specialty channels and the sale out rate as well. Those are the
three main factors influencing the revenue projections.
10053 I was also told by the major buyer of media, in
preparation for this, how much they could see investing in digital channels, and
based on that, I would see, starting from a pool of about a million dollars over
10 Category 1 licenses, a full universal pool.
10054 COMMISSIONER WILSON: A million dollars split among
10055 MR. KIRKWOOD: Between at least 10 or at least
10056 There's also the reality that Star and CLT are
launched in a competitive environment that really involves no other digital
channels. It's possible that this would be launched in an environment of 30 to
10057 History has shown us that each tier of specialties
has caused a decline in the currency of the cost per thousand from -- and I
guess we have been around since tier 1 and watched it go from $15 to $18, to $12
to $14, to $9 to $10, to now $6 to $7. So anticipation for this next tier,
without measurement especially, would be below that mark.
10058 COMMISSIONER WILSON: Okay, that's very
10059 MR. ZNAIMER: David mentioned, in passing, a point
that I think we should underline, and that is it's not linear in the sense that
there is a minimum threshold that you have to get to before really they put you
on the list for any serious amount of money. That's the hard, tough
10060 MR. KIRKWOOD: Yes, I suppose the point could be made
that one million households does not get one-third of the revenue of a service
that is distributed to three million households. There's a curve that moves up
very rapidly when it reaches that critical mass. And typically, advertisers,
when choosing specialty channels now use a ranker. When they are face with a
universe of 25 channels, they list the top ten, often buying the top three to
four, and less purchases further down the line.
10061 And also, this prominent buyer of specialty media
told me that without the numbers, we wouldn't get the money. I don't think
there's anyone that would tell you that we would have reliable measurement by
Nielsen or BBM when they roll out the meters at anything less than three -- at
least 2.5 million households before there would be anything on a week-to-week
10062 And in answer to your other question about the -- I
could go on forever. We are looking for creative media opportunities. That's
what our clients are beginning to call these.
10063 In fact, it's mentioned in the article that this
person wrote, in Strategy, that the new digital licenses will require
advertisers to look at more opportunities like product placement and those sorts
of things to rationalize their participation in the absence of the numbers and
the value of that size of number or the existence of something they can attach
their dollars to.
10064 COMMISSIONER WILSON: Thanks very much for
10065 Attractiveness and demand. I guess it's a little
easier, considering how much people are talking about suspense to intuit that
this is going to be popular.
10066 But I'm just wondering if you could talk about how
you arrived at your penetration levels for this channel, considering that they
are -- they start off higher than Shadow TV, for example, but they don't
increase as rapidly. I'm just wondering if you could talk about how you develop
10067 Mr. Schwebel, I think this is one of your
10068 MR. SCHWEBEL: Thank you.
10069 We come out of the gate much stronger than the other
services, because we have had the experience of Star and CLT being launched on
certain digital providers, like DTH and MMDS.
10070 We know that in a digital environment, we don't have
the slow ramp-up of penetration levels as was typical in an analog trapped
10071 As you know, depending on the particular BDU, we
were typically looking at anywhere from a three to perhaps even more than a
12-month timeframe for customers that were not willing to subscribe to the
service to ultimately be trapped out.
10072 In a digital world, following a preview period, the
operator has the ability to immediately secure the signal. So we think that
following an exciting launch phase, with the right promotional planning and
joint effort by BDUs and programmers, that we can immediately secure a higher
penetration level than some of the other programming services may have
considered, largely due to their analog experience.
10073 COMMISSIONER WILSON: Okay, thanks.
10074 MR. SCHWEBEL: And we continue to -- I'm sorry, I
just want to add that we continued the 55 per cent level, because we know that
with each new subscriber coming on the digital platform, that there will be a
multiplicity of offerings and they will be offered in terms of a big tier,
offered in terms of theme packages, offered on a self-select basis and an à la
carte basis. That will vary across all the different BDUs.
10075 I think that it's reasonable to expect that a
majority will subscribe to the service, but I don't think it's reasonable to
expect levels of around 70 per cent penetration by the end of the term as others
have, particularly since we have seen that with each introduction of every new
analog tier, historically, we have gone from 85 to low 70s to high 50s. And so,
taking history into account and our experience on the digital platform with
Start and CLT, that's how we get at our numbers.
10076 MR. MILLER: I would like to add one other
10077 I think the other element -- and again, obviously,
this is an area that you'll see a lot of different views -- is that we have --
we firmly believe a realistic estimate of the digital world by the end of seven
years is about 3.4 million. Some applicants, including --
10078 COMMISSIONER WILSON: Three to four
10079 MR. MILLER: 3.4 million.
10080 COMMISSIONER WILSON: 3.4 million. Is that on the low
end of the estimates that were filed?
10081 MR. MILLER: It is. Some applicants have projected as
high as 4.9 million.
10082 COMMISSIONER WILSON: In the total
10083 MR. MILLER: In the total universe. And I think the
mid-range, you'll find, is in the 3.8, 3.9., so a little lower than some. But we
believe the close to five million projections are just completely
10084 COMMISSIONER WILSON: Why is that? Why do you think
that? I mean, having invested all this money in upgrading plant and, you know,
making everything digital-ready, why would the BDUs not do something to try and
roll that out after seven years?
10085 MR. MILLER: Well, it certainly will. We looked at it
10086 First of all, again, we looked at the penetrations
-- the projections that were filed, and the thing that we think made it
difficult for everyone, including ourselves, is that you had competing BDUs
filing separate projections. There is a natural desire to suggest you're going
to do better than the other guy. So you can't just add all those up.
10087 When we looked at it and we looked at what we felt
were reasonable forecasts, we felt we had to bring it down.
10088 Then, I think there's the litmus test. I mean, look
how long we have been talking about digital and look how long it's taken us to
get to where we are. We have heard today that we are still in the first
generation box world and there's another generation box that is coming. We
think, and the market shows, that people are buying add-ons to their television
and cable service. Right now, they are going out and getting high speed
inter-access a lot quicker than they are getting these boxes.
10089 These are not going to be easy to sell. And we
think, at the end of the day, seven years suggesting a third of Canadians, a
third of Canadian households will have digital access is a pretty reasonable
estimate. Suggesting that half is, we think, aggressive in the extreme. But
Allan can add a bit.
10090 MR. SCHWEBEL: We looked at -- when we filed the
plan, we looked at what number of digital households there were at the time. We
projected to September 2000, and interestingly enough, if you look at the
detail, we projected that we would be at 1.3 million and I think you have heard
that that's the current level. We think we have been quite reasonable in growing
from 1.3 million digital universal potential to two million in the first year of
10091 So we're in the middle of the pack in terms of
beginning of licence term, in terms of assumptions on digital penetration or
10092 Where we differ is more on the back-end. We think
that when you look at the projections that were filed in the March 7th report by
CCTA, they only went out to 2005. They didn't even go out to 2007. Even in 2005,
it had a very wide range. They said it would be anywhere from 1.3 to 2.5 million
digital cable boxes. That range, in itself, suggests that it is a highly
uncertain and variable number.
10093 So building our business case and building our
business models we felt particularly, as time went out, it was more reasonable
to go on the lower end. And given that our commitments, relative to Canadian
contribution, are percentage-based, that gives us only up-side potential that
can get reinvested back into the system. So we thought that was the more
reasonable way to go.
10094 COMMISSIONER WILSON: Okay, thanks.
10095 How did you arrive at -- and maybe you can talk sort
of generally across all of the applications, but, again, this sort of ties into
the fact that you didn't supply any traditional demand research -- how did you
come up with your wholesale fee for each of these services?
10096 MR. MILLER: I will pass it on to Peter and Allan, if
they want to add detail.
10097 We set, as an upper bound, 50 cents, and then,
again, we looked at the business plan, we looked at what we could reasonably
achieve, in terms of penetration, we looked at what we felt we need to do, in
terms of meeting our Canadian program expectations, and then we were able to
arrive at a number under 50 cents. Most of them are in the 40-cent to 50-cent
10098 The thing we should point out, as is our practice,
this is an average rate, dependent on the penetration assumptions that we have
made. If we had higher penetration, in other words if we had the penetration
levels that some of our competitors have suggested, our average rate would be
considerably lower and very similar. So this is why one of the things
10099 COMMISSIONER WILSON: Could it also be
10100 MR. MILLER: I beg your pardon?
10101 COMMISSIONER WILSON: Could it also be
10102 MR. MILLER: Could what also be higher,
10103 COMMISSIONER WILSON: The rate.
10104 MR. MILLER: No.
10105 COMMISSIONER WILSON: If your penetration is lower,
would the rate go up?
10106 MR. MILLER: That is possible, yes. And that is why
we feel it is very important to be on the reasonable side of things.
10107 Allan, Peter, anything to add to that?
10108 COMMISSIONER WILSON: Okay.
10109 What is the rate for Star!?
10110 MR. SCHWEBEL: The rate for Star! has a different
rate structure for high penetration, analog distribution, versus the lower
10111 COMMISSIONER WILSON: Okay, digital.
10112 MR. SCHWEBEL: On the digital, it is between the 50-
to 75-cent range, depending on the method of carriage on that digital
10113 COMMISSIONER WILSON: Okay.
10114 You have media literacy initiatives. Do they go all
across the seven applications? I think Ms Crawford will --
10115 MR. SCHWEBEL: Yes.
10116 COMMISSIONER WILSON: -- for social
10117 MS CRAWFORD: Wherever possible, we have extended our
media literacy commitment, and perhaps as we go through the stations, if that is
where you find it appropriate, they can be outlined. Or now, perhaps some of the
would-be general managers could speak specifically, programmatically, to what
they are committed to. But, essentially, that is a corporate commitment that
CHUM has made. We are committed to it on an ongoing basis. There are corporate
benefits that we bring to all these new channels, as well, including an existing
platform on our Web site, where we have essentially developed a clearing house
for all of our study guides that accompany all of our media education
programming right through the CHUM group, as well as links to all the pertinent
media education sites and individuals in the country.
10118 COMMISSIONER WILSON: Okay.
10119 And do you plan on initiating that program right
from day one, so when your new channel goes on the air the --
10120 MS CRAWFORD: Absolutely.
10121 COMMISSIONER WILSON: -- the program will be there,
the scanning television?
10122 MS CRAWFORD: Yes. The beauty of it is is that
because of the corporate commitment a lot of the infrastructure is there and in
place. The relationships exist through the genres with all of the people in the
country who are specialist in media education to help us roll these out on a
channel basis because, of course, we are extending the brands and the genres
from many of our shows into channels, so the infrastructure is already
10123 COMMISSIONER WILSON: Okay, that's great.
10124 I don't think that we need to go through channel by
channel and talk about how it would work. I think all of us are pretty familiar
with the work that you have done in that area, so I would presume that you would
just extend it through the different genres.
10125 MS CRAWFORD: I might add that one of the fundamental
philosophies on which our commitment is based is to increase the value of
television over all. And it certainly benefits the digital tier and all of the
new channels that will come with it if we increase the perception by the
consumer that television is of use, not only as an entertainment vehicle, but as
a social vehicle and educational vehicle, as well.
10126 COMMISSIONER WILSON: Thank you for that.
10127 MS MARTIN: If I could just add one thing?
10128 COMMISSIONER WILSON: Sure.
10129 MS MARTIN: It is a perfect program to use our
interactivity also. One of the ideas for Fashion -- I was hoping we could
mention it -- is that although we do celebrate fashion and design, we also plan
to take a critical look at it, too, and in some of the program ideas of: What's
wrong with fashion? or What is beauty? we want to engage our audience with a
guest panellist and have them interact with our audience, asking questions live
and in real time. So it is an application of interactivity that we plan to use
on Fashion right from day one.
10130 COMMISSIONER WILSON: Tied into literacy.
10131 MS MARTIN: Absolutely.
10132 COMMISSIONER WILSON: Okay.
10133 On independent production -- this is my last
question, actually, on this application -- you have said that you are going to
do 52 hours a year of original Canadian programming. The first question is: what
is the nature of that programming?
10134 MR. ZNAIMER: The heart of it is the feature films
that we were talking about.
10135 Jay, do you want to pick it up?
10136 COMMISSIONER WILSON: But there is one feature film
per year, right?
10137 MR. ZNAIMER: Right.
10138 COMMISSIONER WILSON: Under your commitment you are
doing one feature film per year.
10139 MR. SWITZER: Yes. Paul may want to expand on this. A
great proportion of those hours are informational-based programming about
10140 COMMISSIONER WILSON: Information-based?
10141 MR. SWITZER: Yes. We are obviously acquiring many
other completed Canadian films and we are commissioning these six new films over
the licence period, but on an annual basis, according to hours, it is primarily
10142 COMMISSIONER WILSON: Okay. So when you say 52 hours
of original Canadian programming, are you talking about acquired
10143 MR. SWITZER: No, primarily in-house new original
10144 COMMISSIONER WILSON: In-house.
10145 MR. SWITZER: -- that are being produced by the
channel. Yes. With, obviously, the exception of the film per year that we have
been talking about.
10146 COMMISSIONER WILSON: And, of course, you wouldn't do
that in house.
10147 Okay, so the film would be two hours and the other
50 would generally be in house?
10148 MR. SWITZER: Correct.
10149 COMMISSIONER WILSON: And it would be
informational-based, you said?
10150 MR. SWITZER: Yes. Our Schedule 10 lists, on a draft
basis, some sample titles --
10151 COMMISSIONER WILSON: Okay.
10152 MR. SWITZER: -- primarily informational- and
magazine-based about the genre and primarily in-house based, or in house
involved in association with other producers.
10153 COMMISSIONER WILSON: Affiliated
10154 MR. SWITZER: In this case, yes.
10155 COMMISSIONER WILSON: Sleeping giant.
10156 MR. SWITZER: Possibly, yes.
10157 COMMISSIONER WILSON: Okay.
10158 Those are all my questions, Madam Chair.
10159 THE CHAIRPERSON: I don't want to eternalize this,
but I do have a question.
10160 The question of distinctiveness, and its flip side,
diversity, has been raised and the Mystery Channel seems to be a good one to try
to distinguish between the various services.
10161 Were you here yesterday when, as the dean of this
hearing, I established a take-home question? No? Which was -- and considering
the ability of producers to distinguish between crime and murder, suspense and
thrillers, I thought you would give that to your accountant -- and it would be:
which of your Category 1 proposals would you not implement, together with any
other Category 1 proposal that we might license?
10162 I understand the concept of designation TV,
appointment TV and calculating how much of existing services may be or not
competitive or diverse vis-à-vis your proposal. But what is not so simply is
what of the proposals would be competitive with one another. And I think if you
gave your accountant the question, we may cut to the chase more quickly. Mr.
Miller seems confused.
10163 As between the Category 1 proposals, would you
accept a licence for your Mystery Channel if we licensed one other Mystery
Channel? Another will give us an idea of just how easy it is to categorize a
genre of service in a manner that is different from the other, which is what
people are telling us, when you are dealing with Mystery, Lifestyle,
10164 And I repeat, the question is to me quite different.
When you are looking at is it going to be competitive on an existing service,
because it is going to be designation appointment, as opposed to a portion of a
service. But when we are looking at the 88 proposals...at the last phase of the
hearing, you are supposed to come back, your accountant is supposed to come back
with an answer, because then business plans and how many subscribers you can
get, presumably will be divided if you have three slightly different channels,
one doing murder and the other one doing crime. Understand?
10165 MR. ZNAIMER: The Dawn of Reason, I think I am
beginning to understand. But you are not expecting this --
10166 THE CHAIRPERSON: Because this is going to happen
with Fashion, it is going to happen with Lifestyle. I think it would be one
index -- or do you disagree -- of whether there is a distinction between various
services is what your accountant would think would be your ability to be viable
or reach your business plan if we also license someone else who claimed that
they were not competitive.
10167 It is easy to argue that and leave it to us to cut
to the chase by ourselves in our lonely room, so we want your accountant to help
and tell us which of your services you would not launch if we also licensed
10168 MR. ZNAIMER: All right, and may I ask is this the
same idea as was mentioned --
10169 THE CHAIRPERSON: You don't have to answer, except
that when you don't come back with answers to take home exams you sometimes
--- Laughter / Rires
10170 MR. ZNAIMER: But I did want to ask, is this similar
to or the same as the idea that was advanced on the first day, that we would be
asked at the end of rebuttals to express which were --
10171 THE CHAIRPERSON: To me, if you understand me, it is
not the same. Tell us which of your two or three services you feel we should
give priority to and why, and we would expect then for you to say, "Because it
has more Canadian content, it's more diverse, it's more valuable, more
attractive", whatever, which will help us again.
10172 This is another question. Of those two or three, if
we said, "Yes, we will give you two", which one of the other two or one would
not live with?".
10173 MR. SHERRATT: Madam Chair, would this be akin to
mutually exclusive on frequencies in radio?
10174 THE CHAIRPERSON: Well, it's up to your accountant to
10175 MR. SHERRATT: I mean, you can't do one because the
other one is there.
10176 THE CHAIRPERSON: That's your view.
10177 MR. SHERRATT: No, no, I am asking you.
10178 THE CHAIRPERSON: You need not agree, you need not
want to express it that way, but what we hear again is murder and crime are not
the same, and fashion and design. It's going to be difficult, but once one
really focuses on, "Can I live with this other service if the Commission in its
wisdom licences both of them?". We might as well know right away, but it's up to
companies. You don't have to tell us what you don't want to.
10179 MR. ZNAIMER: When would be the appropriate time to
10180 THE CHAIRPERSON: Well, we thought at Phase IV
because at that time you will have heard how diverse and non-competitive all the
other services are.
--- Laughter / Rires
10181 And then make your own judgement. But it's up to
you. I am just putting you on notice that we will ask that question.
10182 MR. ZNAIMER: And we will have an answer.
10183 THE CHAIRPERSON: Because I think it may help us box
things in a little.
10184 COMMISSIONER WILSON: I will just going to use the
example: If we licence Indie and we also licence Alliance Atlantis' independent
Film and Documentary Channel would you go ahead and launch against
10185 THE CHAIRPERSON: We leave it to you to find the
10186 MR. GRATTON: Just before we close for lunch, out of
fear of failing the exam, I thought of an example of a comedy series. If someone
were to develop Inspector Clouseau into a weekly series I think that would
probably be categorized as a 7(b) and that is where we would put that
10187 COMMISSIONER WILSON: That's a wonderful
10188 THE CHAIRPERSON: The applications are available for
view and we are having a hearing where everybody is telling us where these
distinctions are drawn. So you are the business people.
10189 Counsel, did you have a question?
10190 MR. McCALLUM: Just a couple of very small points if
you don't mind.
10191 You said in this application and in the previous
application you be 100 per cent in the heart of prime, 8 to 10. I take it if
that were made a condition of licence that would be okay by you.
10192 MR. ZNAIMER: Yes, for those applications where we
made that offer.
10193 MR. McCALLUM: And the two that are yet to come, you
made the offer as well.
10194 MR. ZNAIMER: Indeed.
10195 MR. McCALLUM: In terms of the Canadian program
expenditure condition of licence, that would be okay with both this one and the
previous one as well?
10196 MR. ZNAIMER: Yes.
10197 MR. McCALLUM: In terms of this one, in terms of the
overlap with Category 7, would have any idea of the maximum amount there
might be of Category 7 -- 7(b) and 7(f), the comedies, just to be
10198 MR. ZNAIMER: Yes, we were talking about, if I am not
mistaken, 7(b) and 7(f) and we would be happy to live with 5 per cent as a
10199 MR. McCALLUM: As a condition of licence.
10200 MR. ZNAIMER: As a condition of licence.
10201 MR. McCALLUM: Thank you.
10202 And on the previous one, Fashion TV, the commitment
of $700,000 to unaffiliated independent producers, if that were made a condition
of licence that would be acceptable as well?
10203 MR. ZNAIMER: Yes.
10204 MR. McCALLUM: And also on the previous one, the
commitment of a maximum of 15 per cent to Home and Garden Design that you made
discussing with Commissioner Wilson, that would be acceptable as a condition of
licence as well?
10205 MR. ZNAIMER: Yes.
10206 MR. McCALLUM: And just on the previous one, you had
mentioned Category 10 game shows and I wondered how that fit with the
description of Fashion Television.
10207 MR. SWITZER: Yes, counsel. It's included for the
same reasons as discussed on Suspense where we wanted the flexibility to include
programs as they may evolve or develop. Of course, they would have to be
connected with the same overriding definition to fashion, style and design as
10208 MR. McCALLUM: And could there be a limit to
10209 MR. SWITZER: Yes. Just one moment.
--- Pause / Pause
10210 We would be happy to also live with 5 per cent in
terms of that specific category.
10211 MR. McCALLUM: As a condition of licence.
10212 MR. SWITZER: Yes.
10213 MR. McCALLUM: Thank you. Thank you, Madam
10214 THE CHAIRPERSON: Thank you, Counsel.
10215 We will now adjourn until 2:30. We will resume then
at 2:30 and examine the other five applications.
10216 Thank you.
10217 Nous reprendrons à 2 h 30.
--- Recess at 1305 / Suspension à 1305
--- Upon resuming at 1430 / Reprise à 1430
10218 THE CHAIRPERSON: Good afternoon.
10219 Mr. Secretary has a short announcement to make
before we resume the questioning of CHUM.
10220 MR. CUSSONS: Thank you, Madam Chair. I would just
like to announce that yesterday in fulfilment of its undertaking given to
Commission counsel on Monday, 14 August, Alliance Atlantis filed a number of
analog customers currently subscribe to the Health Network. This filing has been
added to the public file.
10221 Thank you.
10222 THE CHAIRPERSON: Commissioner Wilson.
10223 COMMISSIONER WILSON: Thank you, Madam Chair. Welcome
10224 I am going to move on now to the remaining five
applications and just to put my questioning into a bit of context, I am probably
going to move a little more rapidly though each of these because there are a lot
of elements of the applications that are fairly consistent across all of them
and I think that we have explored a number of issues like the issue of how you
have achieved your penetration rates or guessed what they would be based on what
you know, what your experience is.
10225 So I am probably not going to repeat all of those
questions for each one of the applications, but I will ask the ones that we and
the staff feel are really important in terms of getting the information on the
public record. So just so that you know that I am not trying to sort of do a
quick romp through everything.
10226 At this stage we just want to get the information
that we really need and put that on the record.
10227 So in terms of MasterMusic, I wonder if you could
describe, Ms Donlon, exactly what the service is going to look like on the
screen. Is it in any way a music video service? Is it sort of longer form
musical programming. I have looked at your schedule and you have large blocks,
great performances from 7:00 to 10:00 in the morning. I am assuming that those
would be like concerts so that would be longer form.
10228 I guess I am just trying to figure out what a viewer
would see in an average day. Will there be VJs for MasterMusic? I assume they
would have a much different approach.
10229 MS DONLON: Well, they would dress differently,
taking some notes from the Fashion Channel.
10230 No, we are not anticipating VJs on MasterMusic. What
we are looking for is a real destination channel, a perpetual flow of music from
a couple of different, yet highly related genres -- classical music,
classical jazz, classically driven dance music, in particular. We are looking
for a seamless flow throughout the day. If you look at the categories that we
listed in the application, 1(a), 2, then 8(a), (b), and (c), 85 per cent of the
programming would come from the Category 8. So we really are looking for a
destination channel, much like classical radio where you turn it on and you can
leave it on and you know that when you turn that channel in you are going to get
that kind of music in it.
10231 There is obviously opportunity in the schedule to do
long-form concerts as well as music videos. There are music video block shows.
There are longer concerts. I guess if you chopped up concerts and symphonies and
operas you wouldn't call them music videos -- well, we know from our
Bravo! Fact experience that there is about 100 Canadian classical and classical
jazz music videos out there in a shorter length, but generally classical music
movements tend to be longer.
10232 So we are not chopping it up into three-minute
bites, but a mix of long-form concerts, some documentaries and music video
10233 COMMISSIONER WILSON: So it wouldn't be as frenetic
10234 MS DONLON: Not as frenetic, no. It's a whole
different attitude there.
10235 COMMISSIONER WILSON: A whole different
10236 MS DONLON: Well, not a completely different
audience. There are people that will cross over, but those will be in the
10237 COMMISSIONER WILSON: Like you or me, for
10238 MS DONLON: You got it.
10239 COMMISSIONER WILSON: What proportion of your service
would be music videos, if there are only 100 out there?
10240 MS DONLON: Well, there is 100, I said, that were
funded by Bravo! Fact. There is actually about 400 right now in the library that
we know of, and we are looking forward to, as you will see in the Canadian
programming expense, financial there, that we are looking forward to producing a
lot. We are producing a lot more music videos as well as concerts and those
types of independent productions and in-house productions, many of which could
be turned into music videos insofar as they were once a part of a larger
10241 COMMISSIONER WILSON: What proportion of the schedule
would you say would be videos? I mean, if you look at the schedule, the draft
program schedule that you have provided? Would the show Classical Clips be
videos for example?
10242 MS DONLON: Classical Clips is videos, absolutely.
This is a draft schedule that is based on what we think and what we believe that
we could deliver from day one. As we move through the schedule -- move
through the term of the licence, the music videos would actually be increased
because they would be more available and that is part of the reason why this
licence has been applied for Category 1, to give us the penetration and the
distribution and ultimately the revenue to be able to provide more opportunities
for composers and performers to take advantage of the opportunity to make music
videos and to do concerts and productions with us.
10243 COMMISSIONER WILSON: Would you think that having a
condition of licence relating to the broadcast of music videos would be
appropriate on this service?
10244 MS DONLON: I would say no, actually, yet. And the
reason I am going to say no on that is because I am hoping that we are going to
take some experience from our knowledge of running more pop music channels and
get into some more creative partnerships with classical music composers and
classical music performers and that we would encourage, just by the nature of
our existence, and you know the old "build it and they will come", it's actually
"build it and nurture it and they will come" that we will be able to do more and
more of it over the term.
10245 So if you wanted to propose it in terms of a sliding
and increasing, I think that would be a more effective look at it.
10246 COMMISSIONER WILSON: If we felt if was necessary,
would you accept a condition of licence in terms of music videos?
10247 MS DONLON: Yes.
10248 COMMISSIONER WILSON: What would be an appropriate
10249 MS DONLON: I would probably say in the order of 30.
As a maximum you mean?
10250 COMMISSIONER WILSON: What do the lawyers say? As a
maximum? I am just looking to see what the staff has in mind. A minimum number?
Do we want this to be a video channel?
10251 MS DONLON: Yes, it's a music video channel, but
again we need to be a bit more flexible in our definition of music video. If we
assume that music videos are not three or four minute clips with, you know, a
verse, chorus, verse, chorus, as they exist in our traditional knowledge of
them, then you could have a music video that could be 30 minutes. And that is
why I am having some definition questions.
10252 COMMISSIONER WILSON: Me too. I am just looking our
counsel to see what they are --
10253 MR. McCALLUM: I think it depends on the type of
service and the focus of the service as to whether a condition of licence would
be a maximum or a minimum. So I don't know how you want to propose it, whether
it's more appropriately done as a maximum or more appropriately done as a
10254 MR. ZNAIMER: That would depend on whether you were
seeking to encourage or discourage.
10255 COMMISSIONER WILSON: Exactly.
10256 MR. ZNAIMER: We are hoping you would like to
encourage us because that is the nature of channel.
10257 COMMISSIONER WILSON: Yes, I would think a
10258 MR. McCALLUM: And if you are going to do it, you
could propose it as a sliding scale, a certain percentage at the beginning and
then moving up over time if that is the idea.
10259 Again if you are not sure on this one, we would
accept an undertaking to come back. There is a Phase II where you people appear
in the same order. If you are not sure of this at this stage, I think it would
be acceptable to the panel to come back at Phase II and answer it
10260 MS DONLON: Yes. I am happy to come back with that
and I would reiterate that the reluctance on it is that we would come back with
a definition, a broader definition, of what we would say would constitute a
music video versus our traditional understanding of that is. I am happy to do
that, as a minimum and a sliding scale.
10261 COMMISSIONER WILSON: I guess I am not 100 per cent
sure what -- I mean, if you look at the schedule, I am trying to
imagine -- I hope you will forgive me for sort of thinking out loud here as
a regulator which is sometimes hard to do -- think as a regulator, that is,
--- Laughter / Rires
10262 I think, often, conditions of licence are imposed
because you have concern that the service might morph into something else. I'm
not sure what we would be concerned it would morph into. A talk service? Talking
about music or --
10263 So I'm just throwing that out there for the staff,
really, to think about too. Because it's quite clear from the schedule, at least
to me, that it's a performance channel.
10264 MS DONLON: And we did say that 85 per cent of the
programming would be 8a), b) and c).
10265 COMMISSIONER WILSON: Eighty-five per cent of the
programming would be 8a), b) and c)?
10266 MS DONLON: As filed.
10267 MR. ZNAIMER: In other words, only 15 per cent of
anything else. That's the limitation. I think that's the limitation you're
10268 COMMISSIONER WILSON: Right. Personally, that
10269 MR. McCALLUM: In terms of that , maybe if that were
acceptable as a condition of licence, maybe, the 85 per cent coming from groups
a), b) and c), maybe that would be a satisfactory answer to the
10270 MR. ZNAIMER: Yes, we think so.
10271 MS DONLON: Yes, we would be quite happy with
10272 COMMISSIONER WILSON: That is satisfactory to me too.
10273 MR. SHERRATT: Thanks for pursuing it.
10274 COMMISSIONER WILSON: This is really related to the
same question and we may already have the answer. I will just ask counsel to
listen to me as I'm asking this, to make sure he's getting what he
10275 In your narrative description of the channel, you
propose that MasterMusic provide programming consisting primarily of classical
music and dance, jazz and opera music video or music related
10276 I'm just wondering why you would use the word
"primarily" as opposed to the word "exclusively". And again, if you think about
it in terms of, I guess, a competitiveness issue and whether it would compete
with other genres of music. You have music related programs. It's primarily. So
what other kinds of music related programs would you squeeze into that
10277 MS DONLON: Those would come from the categories 1
and 2, which would be documentary features. For example, we would do, you know,
a travelling documentary with Diana Krall, for example, through her concert
series, some news, concert calendar information about an upcoming concert or a
review of an upcoming concert, you know, music education in the schools kind of
information, that sort of thing.
10278 So I guess if the question is about the word
"primarily", if you want to change it to "predominantly", -- or you could even
say "exclusive", yes.
10279 MR. ZNAIMER: Commissioner Wilson, I think it was
simply a way of reflecting the 85-15 split. But it's all about music.
10280 COMMISSIONER WILSON: Well, the 85-15 split relates
to the type of programming but not necessarily to genre of music, as I
understand it. So are you saying that 85 per cent would be classical music and
dance, jazz and opera music video?
10281 MS DONLON: Yes, we would say exclusively in those
areas: Classical music, classical dance, jazz and opera.
10282 COMMISSIONER WILSON: Okay.
10283 MS DONLON: It's really finely focused as a
destination channel. Even the classical jazz or the classical music and the
jazz, we know that there's a very heavy overlap in terms of the lovers of those
kinds of music. We feel that we can nest them very effectively together on one
10284 COMMISSIONER WILSON: Regulators love to try and
predict what could happen, you know, in the far future. I think that's the
purpose of COLs, it's to fence you in.
10285 MS DONLON: That's why we kept our numbers really
short; one, two and eight. One could take out 15, if you want, actually.
--- Laughter / Rires
10286 COMMISSIONER WILSON: That's a very generous offer. I
think we'll take you up on that.
10287 MS DONLON: Can I swap you for a 14? We have got
--- Laughter / Rires
10288 COMMISSIONER WILSON: Would there be any overlap
between this service and MuchMore Music?
10289 MS DONLON: Not MuchMore Music. We see it more as an
extension of Bravo! than anything else.
10290 If you look at Bravo!'s overall programming, they
tend to program from about six related disciplines. And if you look at jazz and
classical music, classical dance together, it equals about 15 or 16 per cent of
their overall service. So there would be some overlap from those services. We
would be able to nest it more effectively in a more destination driven service,
and that's where you would see the overlap.
10291 Into MuchMore Music, highly minimal. The odd Diana
Krall, I think --
10292 COMMISSIONER WILSON: I was just going to say Diana
10293 MS DONLON: -- depending on the visuals of the video
and depending on how it's shopped. If it looks, you know, one way versus another
way, it will lend itself more to one channel than the other. But the crossover
between those two channels is very, very minimal.
10294 COMMISSIONER WILSON: Sorry, I think I missed this,
but what proportion of programming might overlap on Bravo! and
10295 MS DONLON: I would say about 15 per cent of Bravo!'s
10296 COMMISSIONER WILSON: Okay. If the Commission felt it
was necessary, would you accept that as a COL?
10297 MS DONLON: Yes.
10298 COMMISSIONER WILSON: Okay. Now, your nature of
service definition includes dance. As you know, there's another application for
a Category 1 service for the Dance -- I think it's called the Dance Channel by
10299 Have you taken a look at that application? I'm just
wondering how competitive you consider that to be.
10300 MS DONLON: Well again, I think it all comes back to
the idea of a finely focused destination channel. The type of dance that we are
envisioning for this channel is really classically music driven dance. It's from
the classic composers, the Tchaikovskys, the Swan Lakes, the Nutcrackers,
Sleeping Beauty, etc. You know, a lot of dance, especially modern dance, tends
to borrow musically from, you know, very modern disciplines. That's not the type
of mood and ambience that we are trying to develop on this channel. It really is
more classically, traditionally oriented.
10301 COMMISSIONER WILSON: Guess what the next question
10302 MS DONLON: I can't.
10303 COMMISSIONER WILSON: If the Commission felt it was
necessary to impose a condition of licence respecting your dance programming,
what would you propose?
10304 MS DONLON: I would say 25 per cent.
10305 COMMISSIONER WILSON: 25 per cent. Why 25 per cent?
If we licensed both services -- this relates to that question that the Chair
10306 MR. MILLER: Subject to check, I think when we looked
at it, we thought that would be the maximum that would be classically driven
jazz. And again, because our dance would be music oriented, then it would be a
different kind of dance. You wouldn't necessarily have exactly that level of
overlap between the two services.
10307 We could consider other levels, but we felt that was
a reasonable level, and again, back to your point that consistency with directly
competitive services, we felt that that threshold was a good way of looking at
it between two services you might licence together.
10308 COMMISSIONER WILSON: And yet, for Fashion, you said
15 per cent home and garden design. Was that just because it didn't
10309 MR. MILLER: It was because -- Yes, it wasn't part of
the concept for fashion in the same way, so it was easier for us to limit it.
But if that was an issue, we could look at that again.
10310 MR. ZNAIMER: On the other hand, 15 is
10311 COMMISSIONER WILSON: Fifteen would be fine. So
anything between 15 to 25?
10312 MR. ZNAIMER: Yes.
10313 THE CHAIRPERSON: No decimals!
10314 COMMISSIONER WILSON: No decimals.
--- Laughter / Rires
10315 COMMISSIONER WILSON: The Chair has
10316 Your Canadian content levels for this channel, they
are essentially the same as most of the other channels that you filed for,
10317 MS DONLON: Forty to 50 per cent.
10318 COMMISSIONER WILSON: Yes, 40 to 50, over the life of
10319 Does that have to do with availability of product as
10320 MS DONLON: Precisely.
10321 COMMISSIONER WILSON: And what's the nature of the
foreign programming that would take up the remainder of the schedule?
10322 MS DONLON: The foreign program would be drawn from a
variety of sources all over the world. BBC has a lot of offerings -- In fact,
it's really interesting, you know.
10323 When you try and put a channel together like this,
that is a 24-hour focus channel, and you actually start going through all the
countries and all the programming that is offered, from opera to ballet to jazz,
and you pull a country like Switzerland, for example, and in one year they are
offering 50 selections, hour-length concertos, operas, the whole thing, and then
you look through and you find, "Oh, well, how much Canadian is there?" and there
is very minimal that is available out there on the world stage, that is part of
the thing that we want to deal with this channel: is engage in those independent
partnerships and those in-house productions and to provide another home for
acquired Canadian programming so that we can put a foot up here out into the
world market. There is no reason that San Francisco should be offering 15
offerings a year and Canadians are offering one or two.
10324 COMMISSIONER WILSON: So you expect that you would be
sourcing that material from --
10325 MS DONLON: All over the world.
10326 COMMISSIONER WILSON: Not just from the U.S.
10327 MS DONLON: No, not just from --
10328 COMMISSIONER WILSON: -- but from all
10329 MS DONLON: Yeah.
10330 COMMISSIONER WILSON: What proportion would come from
the U.S., do you think?
10331 MS DONLON: Again, difficult to put it into an actual
percentage, but if you look at the history of classical music and the great
houses and the performance house and the orchestras actually reside with a lot
of history --
10332 COMMISSIONER WILSON: It is mostly
10333 MS DONLON: -- you are going back to Vienna and
Switzerland and Germany. So that is where an evolving and a continuing life of
classical music is. Canadians are really strong in this field, but we could be
so much stronger, given another opportunity.
10334 And, as you know, Commissioner, classical music,
classical jazz travels really well. There is no real language barriers. In fact,
opera lovers are really used to reading subtitles and understanding what is
going on in a German opera when they are watching in Norway. So this is the kind
of thing that I think has a really strong export opportunity for Canadian voices
10335 And in terms of the foreign mix, I would say it
would be from a wide number of sources all around the world, including south
Asia and places, because classical music really is at the bed of a lot of
culturally distinct music, as well.
10336 COMMISSIONER WILSON: Okay.
10337 In section 7.4 of your application form, you show
Master Music ramping up to 30 per cent Canadian music video content, but you
10-point plan and Schedule 1 both say 20 per cent.
10338 MS DONLON: Yes, that is an inconsistency, and I
would be happy to file. It is 20 per cent.
10339 COMMISSIONER WILSON: It is 20 per cent?
10340 MS DONLON: Yes.
10341 COMMISSIONER WILSON: Okay.
10342 The 40 per cent commitment to Canadian programming
expenditures, you would accept that as COL?
10343 MS DONLON: Yes.
10344 COMMISSIONER WILSON: And the commitment to
10345 MS DONLON: Yes.
10346 COMMISSIONER WILSON: You would accept that as a COL,
10347 MS DONLON: Yes.
10348 COMMISSIONER WILSON: We will skip the demand
research because I think that we have explored that in enough detail with
respect to the other applications.
10349 MS DONLON: I just will throw one thing into the
demand. We talked a little bit about in another channel earlier, but I was kind
of saving it until we got to the specific channels.
10350 COMMISSIONER WILSON: Okay.
10351 MS DONLON: In this case, what we hear from the
viewers on Bravo! in particular is they want more of it all the time. It is not
necessarily, although it is with the big stars, the Pavarottis, the Yo Yo Mas,
definitely an "Appointment" tune when you are going to go home and say, "I got
to catch that at eight o'clock." But if you take a cue from classical music
radio stations in the country, "Take Five", for example, on CBC and "Classical
'96", even in smaller markets or regional markets like southern Ontario, these
are shows that are drawing 300,000 people, listeners, as a weekly reach. And I
think that, and we believe that, and that's, again, part of the reason why a
Category 1 for this service is that it is probably the last of the known musical
genres that doesn't have a fully dedicated channel to it if you just follow the
simple formula of radio.
10352 COMMISSIONER WILSON: Did you look at tuning to
10353 MS DONLON: Yes.
10354 COMMISSIONER WILSON: And did you include that in
10355 MS DONLON: Not in there. I can you tell you what it
is. The "Take Five" reach, for example, in the afternoon with Sheila, is 208,000
in Toronto only each week; "Classical '96" weekly reach is 355,000 listeners
every week. And we know that tuning into Bravo!, as a TV show, "Classical
Chronicals" every week is 100,000 viewers. There is an audience there. They are
thirsty for more and we would love to supply it.
10356 COMMISSIONER WILSON: You were just waiting for the
hearing to tell us about that, right? That would have been good in your
application. But it is good to have it on the record, nonetheless.
10357 Okay, independent production. The commitment that
you have made through Master Music is the estimated $1.37 to BravoFact over the
life of the licence. And just explain to me who gets that money. Is
BravoFact...you set that up, right?
10358 MR. ZNAIMER: Yes. We set that up with --
10359 COMMISSIONER WILSON: And does it operate sort of at
arm's length from you or...?
10360 MR. ZNAIMER: Yes, indeed. It operates with its own
board and independent chairman.
10361 COMMISSIONER WILSON: Okay.
10362 MR. ZNAIMER: And the members of the board represent
most of the important disciplines in the so-called "high arts".
10363 COMMISSIONER WILSON: Okay. And so they would be
taking that money each year and deciding who would get it --
10364 MR. ZNAIMER: Oh, exactly.
10365 COMMISSIONER WILSON: -- and the resulting
programming would end up on the channel?
10366 MR. ZNAIMER: Yes.
10367 COMMISSIONER WILSON: Okay.
10368 MR. ZNAIMER: You know that when those videos are
made, they also are made available to the artists themselves, who have free use
of the material for promotion or any other use that they can conceive
10369 COMMISSIONER WILSON: That is great.
10370 Those are the only questions I have on this
application. I don't know if any other commissioners have questions, or
10371 MR. McCALLUM: When we calculated the Canadian
programming expenditures, we actually came up with, I think, 40.8 per cent, as
opposed to 40 per cent -- which I would round at 41 per cent -- which is just
slightly over what you had calculated. If it were 41 per cent as a condition of
licence, that would be acceptable, I take it.
10372 MR. ZNAIMER: Yes.
10373 MR. McCALLUM: And the one thing I wasn't clear of is
whether that 40...or let's say 41 per cent and the 5 per cent to BravoFact are
separate commitment, or if the one is included in the other?
10374 MR. SWITZER: The 41 per cent is inclusive of all
eligible Canadian programming expenditures, including the 5 per cent.
10375 MR. McCALLUM: So it includes the 5 per cent to
10376 MR. SWITZER: Yes. And that's the way the plan was
built and that is the way it has been expressed throughout the
10377 MR. McCALLUM: Thank you.
10378 COMMISSIONER WILSON: Okay. So we will move onto
10379 The first area of this application that I want to
deal with relates to the intervention from WIC Premium Television.
10380 Mr. Miller, I am sure you will want to be on this
file because it relates to your nature of service.
10381 WIC Premium Television in their intervention
proposed a definition that should be applied, which relates to restrictions on
the exhibition of feature film, which is what this service all about. And your
reply to that intervention was fairly definite in its view that the proposed
definition by WIC Premium Television was unreasonable and too rigid. I wonder if
you would just like to take a few minutes and talk about that.
10382 MR. GRATTON: I am not sure I accurately recall every
detail of their intervention, but I think one of the key questions that came up
was essentially the definition of an "Indie film" --
10383 COMMISSIONER WILSON: Right.
10384 MR. GRATTON: -- and I couldn't --
10385 COMMISSIONER WILSON: Let me just read to you what
they have suggested --
10386 MR. GRATTON: Okay.
10387 COMMISSIONER WILSON: -- to give you the framework.
They said that:
"...it should be released for distribution by a so-called major Hollywood
studio... (As read)
Oh, sorry, let me --
10388 MR. GRATTON: I think it is the reverse.
10389 COMMISSIONER WILSON: That is the reverse. I am
reading from yours, so let me just read from theirs.
"The licensee should offer no English-language feature film which was
released for distribution by a so-called major Hollywood studio as such term is
understood from time to time, but not by their respective Art House affiliates."
So the Art House affiliates would be allowed.
10390 MR. GRATTON: Let me explain why that does not
10391 THE CHAIRPERSON: I was just going to point out that
it may not be fair to the intervenor to have you reply at this stage.
10392 COMMISSIONER WILSON: Oh, okay.
10393 THE CHAIRPERSON: They may not be paying
10394 COMMISSIONER WILSON: Okay. I'm sorry. A little too
10395 THE CHAIRPERSON: So I think it better to leave it to
10396 COMMISSIONER WILSON: Okay.
10397 THE CHAIRPERSON: Make a note to yourself,
Commissioner Wilson, to do it at reply.
10398 COMMISSIONER WILSON: All right. So sorry.
10399 MR. GRATTON: You might want to ask me what my
definition of an "independent film" is.
--- Laughter / Rires
10400 COMMISSIONER WILSON: I think I will wait!
10401 Okay, we will move on from that topic and we will
wait till the next phase or the phase after that -- I can't remember which one
it is. I'm still pretty new at this. The Chair has this chair of the panel, both
10402 Do you consider Indie TV to be directly competitive
with the other proposals for independent film channels that we are looking at
for Category 1 licences?
10403 MR. MILLER: The other four proposals for so-called
independent channels, yes, but not competitive with the two documentary channel
10404 COMMISSIONER WILSON: Okay.
10405 You have said that 75 per cent of Indie TV's
schedule would be film. What proportion would be devoted to
10406 MR. GRATTON: We have basically broken it down in the
following fashion: 75 per cent of the schedule would be Category 7(b),
theatrical movies; 5 per cent would be the rest of Category 7; and 20 per cent
would be the remaining categories, which would include documentary.
10407 We only proposed two kinds of documentaries for this
channel. One is theatrically released feature-length documentaries, such as "One
Man's Grass", "Twist", "Toxic Steam", because we feel that is legitimate,
underserved and important part of the independent film scene, something
Canadians have been good at and it has become increasingly difficult to get
these films to market.
10408 And the second category would be the documentaries
that specifically relate to the subject-matter of the channel: profile of
filmmakers, retrospectives of film genres, etc. Those are the two kinds of
documentaries that we see on this channel.
10409 MR. MILLER: To be specific, we did indicate in reply
that we would be prepared to limit long-form documentary, Category 2(b), to less
than 10 per cent.
10410 COMMISSIONER WILSON: Okay, that is great.
10411 Actually, staff did want me to ask you the question
about your definition of "independent", but let me just check with the chair.
10412 Go for it. What is your definition of an
10413 MR. GRATTON: Obviously, the channel exists to
represent the movies that are not released by the major studios. That is the
definition of "independent film".
10414 The problem is in the details. In fact, I would not
be able to program a retrospective of Fellini films because Universal owns
Fellini's "Casanova". I would not be able to program a retrospective of François
Truffaut films because "La nuit américaine" is owned by Warner Brothers and "Une
si belle filles que moi" is with Columbia Pictures. And so to say you could
never show a major studio picture is not in the spirit of an independent film
channel. By the same token, we are all in agreement that the channel is not
about showing Steven Segal, Clint Eastwood -- major studio pictures. And so I
think in our...never mind. No reference to that. I think --
10415 COMMISSIONER WILSON: Thank you.
10416 MR. GRATTON: -- a nice control against the channel
becoming a mainstream American Hollywood channel would be the say no more than
10 per cent could come with a mainstream studio logo at the front end. That
would essentially guarantee that it couldn't transform itself into some other
kind of channel.
10417 Even "Roger and Me", the Michael Moore documentary
that defines independent documentaries and was discovered at the Toronto Film
Festival, is owned by Warner Brothers and would a legitimate film on this
channel. So to say no major studio pictures have ever play is incorrect, but to
put a very strong impediment about a large volume of studio pictures playing on
the channel, I think, is fair and reasonable. That is why we had agreed to a 10
per cent limit on films that would have a major studio logo at the front
10418 The definition proposed by the Distributors'
Association is far too legal and technical and was in anticipation of
legislation that would break up the Canadian marketplace. And no studio is going
to tell us who financed what, and everything else, which was part of that
definition. That is why I think a straight 10 per cent would guarantee the
purity of this channel.
10419 COMMISSIONER WILSON: Okay.
10420 When we issued the licensing framework, we said that
we would not license a digital service that would be directly competitive with
an existing payer specialty service. And I want to look at Showcase because
their nature of service descriptions states that:
"...it will offer an all-fiction programming service consisting of the best
of independently produced movies, drama, comedy and mini-series from Canada and
around the world." (As
I'm just wondering what your views are on the notion that your channel, or
any independent film channel, might be competitive with Showcase.
10421 MR. GRATTON: It is my view that there are thousands
and thousands and thousands of movies to choose from.
10422 COMMISSIONER WILSON: Most of which you have written
--- Laughter / Rires
10423 MR. GRATTON: All of which I have written notes
10424 About half the title that I have seen in my life
would fall in the Indie film category and I just fail to understand why there
isn't room in the marketplace for both.
10425 Remember, Showcase focuses specifically on recent
theatrical independent pictures. If you look at our program schedule, there is a
portion of that, certainly, because that is attractive, but there is also a huge
section on classics. And so there would be the history of the cinema wading
through this channel. The non-American cinema -- I mentioned a referenced to
Ciné Club -- and that is something that Showcase doesn't touch at
10426 I don't think in the specialty area that any one
channel can say that they are the only outlet for the thousands of movies that
10427 MR. MILLER: If I could add, Commissioner Wilson, I
think on this whole issue of direct competitiveness, we are sympathetic to the
concerns that a group like Alliance Atlantis raises, but I think, from our
perspective, and in applying the test that we proposed, Showcase has a
relatively broad mandate for drama, of which independent film is one component.
So their core mandate is drama, not independent film, I think that is the first
thing; and secondly, they have chosen to make independent film a large portion
of their schedule, and that is to their credit, and they indicate that it
represents something on the order of 30 per cent. But given the broad mandate,
we think that is not a sufficient overlap to preclude the emergence of a true
independent film channel.
10428 That being said, what that channel does and what
else it has is relevant, and that is why we feel our proposal, which is so
focused on independent film, and anything else that is geared to independent
film in the remaining 25 per cent, that that distinguishes us even more from
them than other applications.
10429 MR. GRATTON: I should point out that they have
applied for an independent film channel, as well. So, clearly, they feel that
there is enough product around for two channels. And I am sure no one would
suggest that only one company should be the outlet for feature films on
10430 COMMISSIONER WILSON: Part of their argument is that
if they are controlling both channels, they can ensure that direct
competitiveness won't become an issue.
10431 MR. GRATTON: They do control a fair amount of the
theatrical independent market theatrically, so they have an enormous amount of
control. Currently, Alliance Atlantis has 16 per cent of theatrical marketplace
in Canada, which makes them bigger than any single American major operating in
this country. So they have an enormous capacity to control whether they get an
Indie film channel or not. I really don't have a lot of sympathy for their
argument, I'm afraid.
10432 THE CHAIRPERSON: I will have to stop Mr. Gratton
--- Laughter / Rires
10433 THE CHAIRPERSON: That is why perhaps when everybody
answers their take-home exam, we will get a bit more clarity as to: could both
these services, for example, focus the mind?
10434 COMMISSIONER WILSON: In your application, you have
indicated that Indie TV would broadcast independent films from Canada and around
the world. I was just wondering if you could give me a breakdown of the Canadian
versus non-Canadian and how much would come from the U.S. and how much from
10435 MR. GRATTON: I estimate that this channel will need
to purchase about 500 to 600 films a year to be viable and interesting, which
sounds like a lot, but out of 17,000 movies there is a lot available. Of those,
about 50 to 60 Canadian films a year would be purchased, roughly 10 per cent of
the inventory, which, of course, would make up 30 per cent of the air time. And
that is why we chose not to go higher, in terms of Canadian content
10436 In terms of the breakdown between, say, American and
other countries, I haven't really thought it through at that level. My feeling
is that generally the foreign language portion of the schedule would probably
represent about 15 per cent, which is three times higher than it represents in
the English theatrical marketplace. But I think it is important to show
alternative films from other countries and other cultures.
10437 The remaining would probably be split 50:50 because
the American independent cinema movement is what is really driving these
channels and this renewed interest in alternative Hollywood fare. So I would be
reluctant to put a major cap on American fare in the context of an Indie film
channel, which already has a condition of licence which eliminates most of the
major studio stuff.
10438 COMMISSIONER WILSON: My next question is not if the
Commission felt it was necessary, so I am not proposed a cap, just asking out of
curiosity what the source of the programming is.
10439 MR. GRATTON: Where the programming would come
10440 COMMISSIONER WILSON: Yes, just where it would come
from: how much from the U.S., how much...but I think you have given me a good
10441 MR. GRATTON: The majority of the titles would be
purchased from independent Canadian film distributors, who represent the
Canadian rights even for foreign titles, and American titles. These are the
people we have relationships with, these are the people who supply us with most
of the films that we run on Bravo!
10442 COMMISSIONER WILSON: No, I meant country of
10443 MR. GRATTON: Country of origin. Well,
10444 COMMISSIONER WILSON: Didn't you just tell
10445 MR. GRATTON: Yes, I thought I had answered that
question as vaguely as I could.
--- Laughter / Rires
10446 COMMISSIONER WILSON: I was just saying that --
because you mentioned the word "cap" and I was not proposing one.
10447 MR. GRATTON: No, and I am not trying to be cute. The
fact of the matter is at any point in time, there is a national cinema that will
take off. Right now, for example, the world is discovering Iranian films. At
this year's Cannes Film Festival, most of the big award winners came from Asia.
Five years ago both of those countries probably wouldn't have been of great
interest to this channel.
10448 I would say today if I was programming that channel,
you would have a focus on Iranian cinema because it's winning awards everywhere
and it's some of the best films anywhere in the world much to everyone's
surprise. It would be impossible to break down the different countries because
at any point in time what is hot and what is not, and what country is producing
interesting alternative cinema varies depending on a whole bunch of conditions
which nobody can quite figure out.
10449 I really say it kind of moves around the globe
depending on where interesting films are being made at any point in
10450 COMMISSIONER WILSON: For your Canadian program
expenditures, I think it's quite clear why your exhibition levels don't meet
what was issued in the call because it's film and there just isn't the product
available. So in terms of your Canadian program expenditures, would you
accept -- I think you said 42 per cent of the previous years. Would you
accept that as a COL?
10451 MR. ZNAIMER: Yes.
10452 COMMISSIONER WILSON: What kind of programming will
you be producing yourselves for this channel?
10453 MR. GRATTON: I mean, all of the programming would be
related to the themes so it would be focused on directors, live reports from
film festivals, a very particular focus on independent films seen in general,
but more specifically the Canadian film festivals, Canadian filmmakers and
10454 COMMISSIONER WILSON: And that would all be done
10455 MR. GRATTON: Not exclusively.
10456 COMMISSIONER WILSON: Not exclusively?
10457 MR. GRATTON: I mean largely. We have an incredible
archive because of movie television which has been in production for what, ten
years, where, for example, if we were to do a current interview with a Tom
Agoyan on the set of his movie, it would be wonderful to go back and bring out
previous interviews on the same subject and actually watch him mature in age
before your eyes as a Canadian filmmaker.
10458 We have an incredible resource there that I don't
think anybody else in Canada has in the area of movies, so the natural tendency
would be to produce a fair amount of this stuff in-house. We do it as a matter
10459 COMMISSIONER WILSON: Would there be a role for
independent producers in any of the programming that goes onto the
10460 MR. GRATTON: Certainly the 10 feature films with
unaffiliated independent with huge licence fees attached.
10461 COMMISSIONER WILSON: The documentaries?
10462 MR. GRATTON: The feature length documentaries would
be in the same category.
10463 COMMISSIONER WILSON: Okay. That's it for Indie.
Moving right along.
10464 Moods. Ms Donlon, again, just talking a little bit
about what the service will look like on air. I guess the word "seamless" comes
in again. When you talk about "an oasis of calm" -- and I actually had
to smile when I read that because it's a concept that I have heard talked about
before especially in terms of television and grazing and music videos and rapid
cuts and sound bites and everything is happening so fast that sometimes it's
nice to have a place where you can go where you can just kind of go
10465 MS DONLON: Well, that is precisely what this channel
is intended to do. This channel is not difficult to describe. I think it's
difficult to test for and that is why we brought up the log channel example, not
because we were after a giggle here, but because consumers didn't know what they
were missing until it got taken away and in this case Moods is precisely focused
as relaxation, the four R words we used in the tape -- restore, renew,
relax. That is what it's about. It's not about abrasive music. It's about
putting together an oasis. It is the perfect word to describe it. It's not
necessarily vocally oriented, although there would be vocal performances on the
channel given the availability of music videos, and it's actually more focused
to the abundance of music research that is out there, available. Thick, thick
studies for decades have been going on about the effect of music on ourselves
emotionally and physically, how it can trigger endorphins. I mean the studies
are just fascinating to read. You have every music to reduce stress, reduce
anxiety, reduce depression, reduce pain when you are in the dentist's chair.
They even have studies that say it can reduce migraines. It really is designed
to be a true alternative. I mean, I would expect that if the channel was up now
and we all left this room, it might be the first thing you would turn on in your
hotel room when you got back.
10466 It has tremendous social benefits, we believe, and
as well as tremendous opportunities for really unexplored areas of creativity
for composers and filmmakers and people who are involved in the ambient and
natural world and in the new age world for sure.
10467 COMMISSIONER WILSON: Will there be VJs?
10468 MS DONLON: You may find the occasion voice over, but
there won't be VJs, there won't be VJs introducing clips. You may not know when
one clip ends and another begins except for that we will be day prodding the
show, so that when you wake up in the morning it will probably -- what we
envision for the channel is that it will be a more natural environment. In the
middle of the night or after midnight, we could get into more of the
experimental opportunities where you could use more of the surrealistic
computer-animated wonderful visuals that are coming out of a lot of the
community colleges as well as computer-animaters all over the planet, not to
mention the Canadians.
10469 So it's about a place to go when you want to
10470 COMMISSIONER WILSON: So when you say "seamless" you
really mean that it will be flowing.
10471 MS DONLON: Yes.
10472 COMMISSIONER WILSON: And you will have a part that
starts at 6:00 and goes until 9:00. How much talk? Will there be talk involved
in that lock of programming at all or will it be completely seamless?
10473 MS DONLON: There might be the very occasional
interview with maybe one of the international stars carefully placed because we
really don't want to interrupt the seamless flow. But again, the whole idea and
concept of interactivity and what we have been doing on our on-line sites really
comes into play here. If the consumer and the viewer wants to click into a
certain part of the videos and say, "Who is that and how can I buy it and how do
I get more information" about, you know, the subject of the music that they are
watching, they can easily go to the on-line site and find all that biographical
catalogue material, et cetera.
10474 COMMISSIONER WILSON: Once again, in your narrative
description, you propose that Moods would provide programming consisting
primarily of new age.
10475 MS DONLON: You are not liking that word. We can say
10476 COMMISSIONER WILSON: Okay.
10477 MS DONLON: And be happy with that.
10478 COMMISSIONER WILSON: Good. In Schedule 1 you talk
about programming on the channel that would not fall under the proposed
categories and as a specific example you mentioned documentaries and I am just
wondering if you could talk about what kinds of documentaries would appear on
the service and whether or not the categories you have actually proposed are an
accurate reflection of what you would be doing.
10479 MS DONLON: I think what is more clear in here is in
7.1 the nature of service where we actually detail the categories. We are
looking exclusive 8(a), music and dance, 8(b), music and videos, 8(c), music and
video programming, 13 PSAs.
10480 COMMISSIONER WILSON: But no
10481 MS DONLON: No documentaries.
10482 COMMISSIONER WILSON: But in Schedule 1 which is your
executive summary or supplementary brief.
10483 MS DONLON: I see that. That is an inconsistency
there. You know, as we write the channel, we become more and more understanding
of what is available and what can be put and what has a place on that channel.
It is intended as a seamless music flow.
10484 COMMISSIONER WILSON: So you wouldn't be doing
10485 MS DONLON: No.
10486 COMMISSIONER WILSON: Okay. Canadian content in this
genre. Now, maybe you can talk about what the availability of the product
10487 MS DONLON: There has not really been an opportunity
to create a lot of music videos per se and again, harkening back to earlier
discussions about what constitutes a music video in these extended forms, there
are music videos available from a number of Canadian artists already, but the
real wonder of this channel is to create a whole new opportunity.
10488 When we would be commissioning, both through
VideoFact and through independent production and in-house commissions, we would
be asking composers to come up with seamless music, music that is in sync with
the scientific research that we have talked about earlier to put together the
sonic landscapes, much as you would ask a film-maker to score a film and say,
"We envision this to be an hour in length; here is the kind of visuals, and
let's compose to those visuals".
10489 That is why I am saying in the schedule that there
is a whole new world of opportunity for creativity here.
10490 There are music videos available. Again, we would be
select in terms of what kind of music videos would be appropriate for this
channel, regardless of who the artist is. There are New Age artists out there
that can write very ambient melodic smooth music, and there is also a side of
them that would reach into their Celtic roots, and suddenly we would be having a
quite active music that would not necessarily be appropriate for this channel
10491 COMMISSIONER WILSON: Michael Jones has a cottage in
the same place that I do. Sometimes he gives concerts up there, so I am quite
familiar with some of this music.
10492 The Cancon expenditure, 40 per cent of the previous
year's advertising, you would accept that as a COL?
10493 MS DONLON: Yes.
10494 COMMISSIONER WILSON: And the 5 per cent or the
$100,000 a year or 5 per cent to VideoFact, you would accept that as a COL,
although it is part of the 40 per cent?
10495 MS DONLON: Yes.
10496 COMMISSIONER WILSON: Moving right along, Q!
Television is our next one.
10497 MS MANJI: Commissioner, before you begin to ask your
questions, may I take a stab at naming the exotic sounding character test from
Star Trek that you referred to earlier?
10498 COMMISSIONER WILSON: Yes.
10499 MS MANJI: Is it Kobiashi Maru?
10500 COMMISSIONER WILSON: Yes. I could not remember the
second word, though. I was thinking "Kobiashi", and I could not remember. I knew
it began with an "M", but...
10501 MS MANJI: Do I get brownie points for
10502 COMMISSIONER WILSON: That remains to be seen. We
have to wait and see how you answer the question.
10503 THE CHAIRPERSON: You can share a documentary licence
--- Laughter / Rires
10504 MS MANJI: Not while I am here on behalf of
10505 COMMISSIONER WILSON: I wonder if you could describe
for us the criteria that you use for determining what qualities programs are
targeting the gay or lesbian community.
10506 MS DONLON: We do have quite a firm definition for
what qualifies. We would say that they are programs that feature gay, lesbian,
bi, trans characters or situations, or programs of particular interest to that
10507 COMMISSIONER WILSON: Okay.
10508 In your Schedule 10 you have listed news
programming, which falls under Program Category 1, but there does not seem to be
any indication of how news programming would factor into your schedule. I am
just wondering if you could explain that.
10509 I think the same thing happens with the sports
program categories, 6(a) and 6(b).
10510 MS DONLON: There is a show in our schedule called
"Q! News" --
10511 COMMISSIONER WILSON: Okay. Of course.
10512 MS DONLON: Just so I can explain a little bit, it is
not necessarily a news program of just headline news, it is news and
information, that runs throughout the week.
10513 That is our flagship show of the channel.
10514 COMMISSIONER WILSON: And what about sports
10515 MR. ZNAIMER: Commissioner, I was just going to add,
it is not news in any catholic sense, it is news about that world, in the same
way that Bravo! news is about the world of the performing arts, and space news
10516 COMMISSIONER WILSON: "News in the catholic sense",
is that news for Catholics?
--- Laughter / Rires
10517 MS DONLON: And, Moses, to bring it back tot he
definition I just gave, news that has a particular perspective on the gay and
lesbian scene. For example, if we were to give an update about a particular
political campaign, we would very much do it through the prism that we just
10518 COMMISSIONER WILSON: You have also stated that you
would be drawing programming from gay oriented sporting events, but you have not
listed the sporting categories.
10519 Would you be showing those entire events on the
channel, or just clips of them, as part of Q! News? How would you be using that?
Obviously if they are clips, it's news, it's not sports, but if you are showing
the entire event, then it's sports.
10520 MR. SWITZER: Commissioner Wilson, can I just clarify
something? I am certain you are right, of course.
10521 We cannot find where we included sports or in fact
hard news in our 7(1) Nature of Service. Our Q! News program we think we
correctly logged as Category 11, because although it is informational, it is
entertainment as well, and that was the general indication from the
10522 We included various Category 7s, 2(a) and 2(b) in
terms of analysis and interpretation, but in our 7(1) we did not file Category 1
news, to the best of my knowledge, and we did not file sports. So, if we have
made a mistake, I apologize. We are having trouble --
10523 COMMISSIONER WILSON: I am just actually talking to
our staff person, who is responsible for this application, and apparently that
is the problem. It is that you have described, in your Supplementary Brief,
programming that is news or sports, but you have not included those categories,
and you should have. That's the problem.
10524 THE CHAIRPERSON: Or sometimes the derivation is from
schedules 9 and 10 -- the program schedule is 9, if I recall, and 10 is probably
less dangerous, because there is a description.
10525 Sometimes what happens is we pick up, either in
those two or in the Supplementary Brief, a description that is not found in the
category, so then we want to know, do you want to add that category, or is that
not what you intended.
10526 MR. SWITZER: Now I understand. Thank you, Madam
10527 If any words in the narrative section use the word
"news" or "sports", it is not our intent nor in the Schedule 10s did we
categorize anything as traditional hard newscast or full live sports. That is
not our intent. That is not what the channel will do.
10528 There may be elements of discussion, analysis and
interpretation and indirect coverage of some elements, but we think we have
categorized those in the other categories that we did ask for.
10529 COMMISSIONER WILSON: Okay. Thank you. I think that's
fine with us.
10530 MR. ZNAIMER: Just to clarify again, to make sure
that we are all on the same page, the gay games in Sydney, we would be
interested in this channel in covering the games, talking about the games,
featuring some of the participants in the games, but we would not be showing the
games in their entirety as a sporting event.
10531 COMMISSIONER WILSON: Okay.
10532 If the Commission felt it were necessary to tighten
your proposed nature of service in order to prevent you from becoming a general
interest service, how would you propose that we do that? Or do you think that it
is narrowly enough defined as it is?
10533 MR. MILLER: I think what we have tried to craft is a
definition, that Irshad gave you, that makes it clear that what we intend by
this channel is not merely a channel with programming of interest to gay and
lesbians, but one which is specifically targeted to them.
10534 When we looked at how we could advise her in this
regard, we did actually take a look at the nature of service definition of WTN,
by way of example. We thought that picking up the same wording there, i.e., "of
particular interest to women", which is how that service is defined, was
10535 If there are other suggestions from counsel, we
would be happy to look at it, but what we have tried to capture is the notion
that it cannot be a channel that is of interest to everyone, including gays and
lesbians. It has to be something with a particular focus and a particular
interest or featuring, as we have indicated, gay and lesbian characters or
10536 COMMISSIONER WILSON: In your draft programming
schedule, a lot of the time slots have descriptions of programming, followed by
"TBA" -- "to be announced", I guess.
10537 Is that because there is a lack of existing
programming that is appropriate for this audience, and one of the things you
will do with the channel is develop that programming genre?
10538 MS MARTIN: Yes, that is absolutely the case. One of
the reasons we felt that this was such a needed specialty service is because
this community is not being served. When you do look at putting your schedule
together, you realize that there is not a lot of programming made by the gay and
lesbians or for gay and lesbians.
10539 We are hoping that, obviously with the money that we
are putting into independent production, we are going to be stimulating that
resource of production for this channel. We have already started to talk with a
number of producers that are very anxious that a gay and lesbian channel is
launched, because they are waiting for an opportunity, that they have not had in
the past, to create and express what they want to express for
10540 MS MANJI: Commissioner, if I may add, we recognize
that in Canada there is no shortage of gay and lesbian material broadly defined,
from hi-8 videos to experimental art exhibits but, while respecting the
community roots of these projects and envisioning time spots for many of them,
we underline that much of our programming has to be of broadcast quality,
precisely because we intend to provide a service that Canadians will want to
watch and pay for, otherwise it would be counterproductive for us to be applying
for a digital specialty licence.
10541 Just to finish off the point, I have a letter, which
you too have received, from the Multimedia Director for "gay.com", which is one
of the world's two largest web portal for gays and lesbians, in which he
"I spend a great deal of time searching and evaluating gay, lesbian,
bisexual, transgender video, film, television, radio and other multimedia
content, including interactive games of interest and relevance to our site's
demographic. I can say without hesitation that there is very little quality
content of this type available in North America, and in fact next to none in
other areas of the world beyond Great Britain". (As
10542 COMMISSIONER WILSON: Okay. That is
10543 In terms of your Canadian Content exhibition
numbers, over the term of the licence for daytime, for the 18-hour-day you
showed the level increasing, but for the evening time period, it stays static,
at 40 per cent. Why is that?
10544 MR. SWITZER: This schedule was crafted in a way to
get as much content on the screen as early as possible. Rather than coming with
a lower number for prime, we decided to take what we thought was a very
aggressive and very acceptable 7-year target of 40 per cent, and come out of the
shoot with that commitment day one, and we are quite proud of that.
10545 COMMISSIONER WILSON: Your commitment to Canadian
programming expenditures of 40 per cent, starting in year 2, you would accept
that as a COL?
10546 MR. SWITZER: Yes.
10547 COMMISSIONER WILSON: Let me just go through a couple
of these questions that I don't need to ask you.
--- Pause / Pause
10548 COMMISSIONER WILSON: MS DONLON: The sort of
anecdotal evidence that you have provided of interest in Q! Television, it seems
to be drawn essentially from the Toronto area. I am wondering if you can either
correct me if that impression is wrong or talk to me about how the level of
interest in Toronto might be represented as the level of interest across the
country, and whether or not you looked at statistics as they pertain to other
parts of the country, where the service would be available.
10549 MS MANJI: Let me start by saying that in the letters
of support that you have received for our Application, those voices come from
all across Canada, from Vancouver, Winnipeg, the Prairies, small towns in
Ontario, eastern Canada, and so forth. So we believe that for those who have
written in, they represent significant voices that would be interested in
subscribing to this channel.
10550 No question, because we already do gay and lesbian
programming, we have an automatic feedback mechanism that we believe is more
transparent, more honest and more authentic than any Commission studies, and
that is the hundreds upon hundreds of e-mail messages and phone calls and
handwritten letters that we get from the public, including, by the way, the
on-line chats that we do every week based on our show, participants of which
come from all over Canada and much of the United States as well.
10551 Our belief in the value of experience also leads us
to do constant community outreach, including organizing response sessions with
market researchers and media buyers and so forth, many of whom also represent
companies and clients who come from across the country.
10552 If I may sort of finish off by saying that these
insights have very much animated our application. Just to ensure that we were
indeed on the right track with this application, on Pride Day in Toronto, to be
sure, this past June we questioned a random sample of attendees and followed up
with an on-line initiative with the general public and found an overwhelming
amount of support, both for the channel as well as for us as operators and,
above all, for the fact that people are willing to pay for a channel like
10553 I should point out that Toronto Pride Parade is
widely recognized the most multicultural and the most diverse pride parade in
the country, "diverse" meaning regionally as well, people from all over the
nation and, again, internationally.
10554 To the degree that we can do this, we have done it,
and I think we have test marketed this well.
10555 MR. MILLER: Commissioner Wilson, if I can just add
one other dimension of that.
10556 It is actually remarkably difficult to get an
estimate of the gay and lesbian population of Canada. We took what appears to
be, from what we have seen, a sort of mid range and reasonable estimate at
around 1.65 million. The significance particularly of Toronto is how, in this
market, what has been demonstrated is an interest in non-gays and lesbians in
that programming. What the Pride Day demonstrates in particular is a lot of
individuals that participate and get involved, who don't identify themselves as
gay or lesbians, but who are interested in the lifestyle and the
10557 So, why the Toronto experience I think is
particularly relevant is because it demonstrates how this market can be
developed, because it is probably being done best in Toronto than anywhere else.
Just to put a figure on the Pride Day, we understand it is generating in the
order of 45 to 55 million dollars in terms of money that goes to downtown
10558 That is why we think that that Toronto experience is
particularly relevant for us in how this channel can be developed.
10559 MS DONLON: I would just like to add one more thing,
in terms of CHUM Television's experience in this kind of programming, because
MuchMusic, for the past couple of years, have done six hours that repeats on a
show called "Much comes out", where we have a float in and participate in the
Pride Day Parade and play music videos, as well as doing interactive concerts
with artists, like k.d. lang, for example.
10560 Just to add to what Irshad was saying earlier,
e-mails and the phones and faxes that we get from coast to coast, from straight
people and the gay and lesbian population, is just they are thanking "thank you,
thank you", "thirsty for more", "appreciate taking the stand", and all of
10561 So it is a national experience that we have
experienced on a different national channel.
10562 COMMISSIONER WILSON: What has been your experience
with advertisers, in terms of your programming for the gay and lesbian
community? I am just curious. Have they embraced it?
10563 MR. ZNAIMER: It is challenging. We are at the
beginning of a journey, but I think slowly the problem will yield.
10564 MS MARTIN: I would like to add that for the past two
years Citytv has aired and broadcast live the Toronto Pride Parade and Gay, and
both these specials were sponsored -- I won't mention who, but they were both
sponsored both years.
10565 As Moses said, it is a challenge, but the
advertisers are now coming to us, asking how they can do it. They don't want to
necessarily alienate the mass market. They realize that they have to position
their advertising differently and in often cases produce something different for
that audience, but they are coming to us asking how they can do it with us. So
we are optimistic and feel that it would be very soon before the show itself has
its own sponsors.
10566 MR. ZNAIMER: David Kirkwood has something to add,
but before he does, I do want to say that first you must place the medium into
motion, and then advertisers and the agencies that work for them begin to figure
it out, and there is always a lag time until they recognize the presence of the
new medium and then begin to plan for it and so on.
10568 MR. KIRKWOOD: We are just beginning to see evidence
in the mainstream trade press of advertisers interested in ways to reach this
10569 Advertisers haven't been known to lead the way in
many of these areas, but I think over the next few years we will see a lot
10570 MS MARTIN: Just one other thing I would like to add
is, they really didn't want to come on board until they saw what we were going
to do. That is the other --
10571 There is a big question mark when you talk about gay
and lesbian programming. What is it going to be? What is it going to look like?
How are you going to deal with the subject matter?
10572 The reason they are coming to us now is that we just
launched Q! Television, although we had Q-Files on the air two years ago. They
wanted to see what we were going to do with it. Now that they have seen it, they
are now interested in taking part.
10573 It is a brave step for a lot of
10574 MS MANJI: And precisely because it takes so much
courage, I go back to what the management consultant whom I cited in my own
presentation said, Jack Shand. He pointed out that despite the fact that
QueerTelevision has a huge straight-identified audience, fears still loom large
in this country's boardrooms that a mainstream backlash will come to haunt and
hound those who are seen to be associated with that gay show. It will take time
to educate. We are committed to doing it, and, as one of my colleagues pointed
out, finally advertisers are beginning to come to us and not just to them. But
it will take more time.
10575 That is why the Commission's leadership is something
that Mr. Shand underlined.
10576 COMMISSIONER WILSON: Thank you.
10577 The $700,000 that you have allocated to the
production of new shows and documentaries, I guess it is, over seven years, how
much of that is in-house as opposed to independent production?
10578 MR. SWITZER: One hundred per cent of that will be to
independent, completely non-affiliated producers.
10579 COMMISSIONER WILSON: We are developing a lingo
around all of this.
10580 In our licensing framework we said that Category 1s
would have to be offered as a package, rather than on a stand-alone basis. You
have just talked about the challenges of the advertisers coming to the program
and the channel. Do you foresee any problems in terms of finally packaging
partners for Q! Television?
10581 MR. MILLER: We did look at this quite closely, and
it was one of the reasons why our estimates, in terms of penetration for this
channel, are the lowest of any of the applications we have filed.
10582 What we would envisage is that this channel would be
available, obviously, à la carte, in a pick-a-pack, but also we think there are
some thematic packages that could bring together lifestyle oriented channels,
perhaps a fashion channel. In other words, those that are more on the high
creative end of the scale, and that appeal to an audience that is looking for
10583 So there are some packaging opportunities, but we
recognize that this channel isn't going to be in every package, or be something
that everyone will want to subscribe to.
10584 COMMISSIONER WILSON: Okay. Speaking of
relationships, we will talk about Relationship Television, the
10585 Nature of service: Your proposed nature of service
is, again, fairly broad, particularly when you think about human relationships,
and it could permit you to air a broad range of programming like Friends or Jack
and Jill. So many programs out there are about relationships, so you could draw
those programs into your schedule and certainly they would fit the name of the
10586 I wonder if you could just comment on concerns that
it may be competitive with a whole range of other services. And what would
prevent this service from looking like a general interest service?
10587 I guess what we are doing is, we are asking for some
assurance that it is not just a general interest service where you are going to
bring in programs like Friends, Jack and Jill ...
10588 MR. MILLER: Marcia can speak to the creative
element. From a regulatory perspective, we took note of the fact that WTN, which
currently does a fair amount of this programming, classified their current
percentage on their channel in the 30 per cent range -- I don't recall the
exact, precise percentage -- which, given that they are already a fairly
broadly defined service, didn't seem to, in our mind, take up a disproportionate
amount of that channel, and, therefore, left room for another channel to emerge
that was totally devoted to this.
10589 I don't recall many other interventions or comments
to this effect suggesting that this was a category that was not well-defined or
too competitive with other services, but --
10590 COMMISSIONER WILSON: Probably us sitting in our
offices thinking "Hmm".
10591 MR. MILLER: That may be, but Marcia can speak to it
from a creative point of view.
10592 MS MARTIN: It is true, the channel is called
Relationship Television, and it will involve relationships of all kinds.
However, it is a movie driven service.
10593 If you look at the percentage of movies that we have
on the channel, we are comfortable in saying that the movies themselves will be
romance driven and be about interpersonal relationships.
10594 Because we are so movie oriented, I think you will
know what you are getting from the movies in most of our schedule.
10595 COMMISSIONER WILSON: Let me just ask you about that,
because the movies that you are showing, according to your draft program
schedule -- and maybe you could just explain how you got here. You are
showing movies at 9:00 a.m., Monday to Friday, 9:00 to 2:00 p.m. on Saturdays
and Sundays, and at 1:00 a.m. So how can you say that it is a movie driven
service when you are showing movies at times --
10596 Unless there is something particular about the
audience that you are trying to attract, why would you schedule the movies at
10597 MR. SWITZER: Let me clarify, because this is
probably a movie-heavy service. And you are quite right, we have movies weekdays
at 9:00 a.m. --
10598 COMMISSIONER WILSON: Oh, all right. One o'clock,
too. I'm sorry, you have movies there.
10599 MR. SWITZER: Yes. We have themed movies every
10600 COMMISSIONER WILSON: One o'clock, yes.
10601 MR. SWITZER: -- costume romance, romance adventure,
romance musical, and so on, at 1:00 p.m. every afternoon.
10602 We have double features late morning on weekends,
Saturday and Sunday; true stories and real romance movies late afternoon
Saturday and Sunday; additional movies in early evening twice a week. Greatest
romance films of all time. Epic romances, as well as, between 10 and 12, romance
films, late-night at 1:00 a.m.
10603 This is significantly movie driven, and we think
that for all of the reasons we have been talking about today it is an area, in
terms of Canadian independent production, where we can again add something
significant, something that isn't now in the system, and something that can make
10604 COMMISSIONER WILSON: But you have series that you
are running in the evening hours in prime time.
10605 You know, when you say to me that it is a movie
driven service -- and there are a lot of movies, you are right, but if you
say that it is a movie driven service, then why wouldn't there be some movies on
in prime time when most people are at home watching?
10606 MS MARTIN: Let me start with that.
10607 We are also very proud of the fact that from 8:00 to
10:00 p.m. we have 100 per cent --
10608 COMMISSIONER WILSON: A hundred per cent Canadian,
which you would accept as a COL.
10609 MS MARTIN: Yes, we will. And we are hoping that,
although you don't see movies there yet, you will. I mean, where we are putting
our money with independent producers is to produce romance movies, which we
don't have a lot of in Canada. So you will start to see those movies as we start
to produce them in that prime time slot.
10610 COMMISSIONER WILSON: And your 42 per cent Canadian
programming expenditure? You would accept that as a COL?
10611 MS MARTIN: Yes, we will.
10612 COMMISSIONER WILSON: Okay. As a proportion of total
broadcast expenditures, your foreign programming expenditures seem a bit higher
than the norm, and I am wondering if you could just explain that.
10613 MR. SWITZER: Certainly. I will add clarification or
explanation, if I can.
10614 In general, obviously, it is our preference to spend
as much with Canadian suppliers and, frankly, as little with American suppliers
as we possibly can.
10615 It is important for us to generally work to a rule
of thumb where our foreign acquisitions, or the amortization of our foreign
acquisitions, over the course of the licence, are less than the Canadian
amortization. And that would be the case with this channel as well.
Approximately $11.5 million over the first licence term to foreign amortization,
as compared to close to $15 million for the amortization of Canadian
acquisitions, in addition of course to an additional $5.5 million of in-house
10616 So roughly $11 million and a bit of foreign
acquisitions out of a total programming number of $31 million. Eleven out of 31,
we think, is not high at all. In fact, it is proudly on the low side.
10617 COMMISSIONER WILSON: I wonder if you could just take
me through the draft program schedule that you have here. Some of these are
obviously Canadian, but I wonder if you could just tell me what the Canadian
10618 MS MARTIN: Yes, we can. In the drama
10619 COMMISSIONER WILSON: Riverdale
10620 MS MARTIN: -- Riverdale.
10621 We have City Line, which is one of our women
information talk shows, because part of this schedule is going to have also
information and analysis along with the movies. People are going to want to talk
about their -- maybe give advice and opinions on love tips and talk about
problems they might be having. That will also be part of the flow in between our
programming. We will produce short segments made up from Speaker's Corner units
that will go across the country, finding those voices of Canada, Canadians, and
bringing back their opinions about certain romantic moments they have
10622 So the schedule will continue on that line of
information and tips.
10623 We have another show called Passages, which will be
home movies from across Canada; really first-time romantic moments. Like the
first kiss, or someone's prom, or weddings or anniversaries. That, too, can be
done with home movies and also with segments from Speaker's corner.
10624 The Relationship comedy is to be announced. It is
something that perhaps independent producers are going to come to us with some
ideas on what to do with relationships and some comedic approach to
10625 COMMISSIONER WILSON: So that could be
10626 MS MARTIN: It could be, yes.
10627 COMMISSIONER WILSON: Okay.
10628 MR. SWITZER: And in addition, of
10629 COMMISSIONER WILSON: And your Speaker's Corner and
the one Canadian movie as part of romance matinee --
10630 MS MARTIN: That's right.
10631 MR. SWITZER: And other Canadian movies that we can
acquire that have already been made form part of that movie rotation as
10632 COMMISSIONER WILSON: Okay. Those are, I believe, all
the questions that I have.
10633 I would just like to ask you if you feel -- and
actually Commissioner Williams asked this yesterday and I thought it was a good
question -- if you feel that you have had a sufficient opportunity to talk
about your services and to sum up --
10634 THE CHAIRPERSON: Counsel is not yet finished with
you. You may feel unfairly treated after --
--- Laughter / Rires
10635 THE CHAIRPERSON: Counsel...?
10636 MR. McCALLUM: Thank you.
10637 There may be just a couple of cases where in
calculating the Canadian programming expenditures we were within 1 per cent, and
by rounding the percentage it might be 1 per cent higher than what you have
committed to by condition of licence. I think it may arise in MasterMusic, Indie
and Moods. It may be 1 per cent higher. That would not be a problem if that is
the way the staff have calculated the Canadian programming
10638 MR. SWITZER: No, we would agree with your
10639 MR. McCALLUM: Thank you.
10640 In the case of Indie, in that particular one, you
agree to a type of condition of licence that no more than 10 per cent would come
from some sort of mainstream studio, and I wondered again if we could just tie
down mainstream studio. Is that meaning a Hollywood studio? Was that the
10641 MR. GRATTON: Not only is that the idea, but I have a
list for you, if I could read it into the record: Warner Brothers, 20th Century
Fox, Metro Goldwyn Mayer, Columbia, Tri Star, Dreamworks, Paramount, Touchstone,
Disney Hollywood -- which is the same company -- and Universal Pictures. Those
would be the major studios whose logos would be limited to 10 per cent of the
programming selections. Not their classics divisions that are specifically
focused on independent films, but their mainstream releases with their logos on
the front end.
10642 MR. McCALLUM: Thank you.
10643 THE CHAIRPERSON: If you will excuse me, Mr. Gratton,
are you aware of the list that was given to us by Alliance for the same
10644 MR. GRATTON: I heard reference to the list. I know
there are eight studios on it.
10645 THE CHAIRPERSON: You can't say whether it is the
10646 MR. GRATTON: I assume it is the
10647 THE CHAIRPERSON: Yes, I think so.
10648 MR. GRATTON: -- because all great minds lead to the
10649 THE CHAIRPERSON: I think there was seven, to which
he added Dreamworks.
10650 MR. GRATTON: I mentioned Dreamworks.
10651 THE CHAIRPERSON: No, but...so I think it is the
same. But anyway, you can have a look because that was what they proposed, as
well, on the public record.
10652 MR. GRATTON: I am sure we would agree on that
10653 MR. McCALLUM: In the case of Q! Television, I
believe at the beginning of the questioning by Commissioner Wilson you proposed
a definition of "gays" and "lesbians".
10654 My question is if you would accept the, I guess,
incorporation of that definition into the "nature of service" definition or
"condition of licence" as it is set out?
10655 MR. ZNAIMER: Yes.
10656 MR. McCALLUM: Yes, you would. Thank you.
10657 And finally, with respect to the $700,000 commitment
to unaffiliated independent production that was discussed a few minutes ago, if
that were imposed as a condition of licence that would also be
10658 MR. SWITZER: Yes. You are referring to the
discussion we had on fashion?
10659 MR. McCALLUM: No, I think it was
10660 MR. SWITZER: On Q!.
10661 MR. McCALLUM: It was on Q!.
10662 MR. SWITZER: Yes, we would, as well.
10663 MR. McCALLUM: Thank you, Madam Chair.
10664 THE CHAIRPERSON: Thank you.
10665 I only have one question. Ms Donlon, how do you
think the log channel would fare in an expensive survey?
10666 MS DONLON: You mean the log channel?
10667 THE CHAIRPERSON: The log channel.
10668 MS DONLON: Good. I just wanted to make sure there
was no confusion between Moods and the log channel.
10669 THE CHAIRPERSON: You don't have to answer
10670 MS DONLON: Okay.
10671 THE CHAIRPERSON: I was just curious because it seems
to have created a furore when --
10672 MS DONLON: The log is actually --
10673 THE CHAIRPERSON: I don't know how it would have
fared if one had tested it through an expensive survey.
10674 MS DONLON: Exactly. But you could get the log
channel at Home Video, if you really want it.
10675 COMMISSIONER WILSON: Actually, I know a channel that
did some log programming, went to Montebello with the eight-sided fireplace and
eight different sides of the fireplace.
10676 THE CHAIRPERSON: I know what the log channel is. My
question was how would it have fared if one had tested it in a market
10677 Mr. Znaimer, you may have a few minutes to wrap up,
if you want to answer questions that weren't asked, although I doubt that that
would be the case.
10678 MR. ZNAIMER: Thank you, Commissioners, and thank you
for the opportunity to sum up.
10679 The last little while we have gone at things in very
minute detail, so perhaps the tone became a little more sombre than we would
like to convey to you, in terms of --
10680 THE CHAIRPERSON: That is why I referred to the log
--- Laughter / Rires
10681 MR. ZNAIMER: Thank you very much! Thank you very
much. Because we would like to convey to you our enthusiasm for this work. And
perhaps there is some symmetry in finishing the way we began.
10682 There are things that are important and there are
things that are essential. The important things are good services, low prices,
smart people. We are not the only group that can offer that to you.
10683 The essential difference -- the essential difference
-- is that our offerings are targeted at that diversity, that precious
diversity, in detail, which we think will motivate the public to come to this
very new experience.
10684 And in terms of the offering and in terms of the
commitments we make to you, we hope you take away the fact that our enthusiasm
is tempered with realism born of experience, so that whatever we have told you
we will deliver will, indeed, be delivered. Thank you very much.
10685 THE CHAIRPERSON: We thank you for your patience. It
has been a long fruitful day and we will see you again, no doubt, exam in
--- Laughter / Rires
10686 THE CHAIRPERSON: We will now take a 15-minute break
and resume with LEVFAM at...well, 15 minutes from now. I can't see the clock.
--- Upon recessing at 1605 / Suspension à 1605
--- Upon resuming at 1630 / Reprise à 1630
10687 THE CHAIRPERSON: Welcome back to our
10688 Mr. Secretary, please.
10689 MR. CUSSONS: Madam Chair, we will now hear
applications by LEVFAM Holdings Incorporated for two Category 1 services:
PrideVision and Wellness Network and since they applied for two services, LEVFAM
is entitled to 25 minutes maximum presentation time and we have Mr. John Levy
and his colleagues.
10690 Mr. Levy.
PRESENTATION / PRÉSENTATION
10691 MR. LEVY: Thank you. Thank you, Madam
10692 Good afternoon, Madam Chair, members of the panel.
My name is John Levy and I am the President of LEVFAM Holdings.
10693 Our presentation today is divided into two portions.
The first addresses our Wellness Network application and the second, our
10694 I will introduce the panel for the PrideVision
application at the conclusion of the Wellness presentation and we ask in advance
for your indulgence while we reconfigure the panel slightly at that
10695 With me on the Wellness panel are Dr. Harvey
Weingarten, Provost and Vice-President, Academic, McMaster University. In
business terms, Harvey is the Chief Operating Officer of the university and he
will ensure that the Wellness Network is accessed to all of the Faculty of
Health Sciences considerable resources.
10696 Gillian Howard. Gillian is a key member of our team.
She will coordinate the ongoing liaison between McMaster and the Network in
developing programming and accessing, leading health and wellness personnel and
10697 Debra McLaughlin, Senior Associate with
PricewaterhouseCoopers and she will address the research issues that we have
10698 In addition, Rob Malcolmson on my left, Executive
Vice-President, Sarah Hughes behind me, Vice-President of LEVFAM and Tony
Keenleyside, our counsel, a partner at McCarthy Tétrault and myself are
available to answer questions that you may have about either
10699 I will now begin the Wellness Network
10700 The concept of Wellness Network is an inclusive
approach to the growing interplay between traditional and complementary
medicines delivered in a responsible evidence-based fashion. It is driven by a
research results which indicated that 84 per cent of Canadians believe that such
programming is a necessary addition to the Canadian broadcasting
10701 They have cited such factors as our aging
population, our public health care crisis, and a growing emphasis on individual
responsibility for health care and wellness. Moreover, all of our research has
led to one refrain: Programming must have a Canadian context to be relevant to
the viewers. This in turn led to our choice of a unique Canadian partner,
10702 Our partnership with McMaster will provide
programming research capability and a capacity for the delivery of professional
development for the health and wellness professionals that is
10703 This relationship assures a truly made in Canada
total look and feel to the health and wellness program.
10704 Madam Chair, I would now ask Dr.
10705 DR. WEINGARTEN: Thank you, John.
10706 Good afternoon. I really want to start by conveying
the unequivocal and enthusiastic support of McMaster University and its faculty
of Health Sciences for the Wellness application and McMaster's role on the
10707 At McMaster we believe that this is an unparalleled
opportunity to offer an informed Canadian point of view to the public on matters
of health and wellness.
10708 We see this partnership as a chance to lead when it
comes to the transmission of health and wellness information to the world
outside the walls of the university.
10709 This partnership is entirely fitting and ideally
suited for a university such as McMaster with an outstanding history in the
field of health and wellness education and the education of health care
10710 McMaster's faculty are known throughout Canada and
around the world. The Wellness Network will work with individuals who lead their
field and I am referring to such individuals as Jack Gauldie, an international
leader in the field of gene therapy; May Cohen, a Canadian pioneer in the world
of women's health; Steve Collins, one of the world's leading experts on
gastroenterology; Salim Yousuf, a cardiologist of international acclaim and
Andrea Baumann, our Association Dean of Nursing who has implemented teaching
programs for nursing in a variety of international settings.
10711 The university's leadership role in the fields of
cardiology, mental health, paediatrics, nursing, rehabilitation sciences,
kinesiology, oncology, lung disease and gastrointestinal disorders is well
10712 McMaster is also a leader in the study of the
rapidly emerging world of complementary and alternative medicines.
10713 We are also extremely excited in the possibilities
provided by the overnight professional programming concept. We will work with
the Wellness Network to develop a line-up of course that could be taken by
health care and wellness professionals.
10714 We will also work with Wellness to foster and broker
good working relationships with other organizations that wish to take advantage
of this opportunity.
10715 We see this channel as a place for all Canadian
health care and wellness organizations to offer they very best, just we at
McMaster intend to do from the very outset.
10716 MR. LEVY: Thank you, Harvey.
10717 Members of the panel, by entering into this
partnership with McMaster we have created a truly win-win situation.
10718 We have obtained access to ongoing made in Canada
expertise. This gives us additional credibility and allows us to provide more
cost-effective delivery of our own in-house productions and those of independent
producers. This also reduces the learning curve for the producers and creates a
10719 We have conservatively estimated that if we had to
seek out this expertise and acquire it, we would need to add at least $2 million
per year to our Canadian content expenditures, and even then we would not have
the ongoing in-depth level of expertise that McMaster offers to us.
10720 Our approach in developing our Web portal strategy
is consistent with that of our programming: Build our content within a Canadian
context and assure 100 per cent by co-developing our strategy and our database
with the cooperation of our partner, McMaster.
10721 We thoroughly researched these programming and
portal concepts before putting out plans to paper. Debra will explain exactly
how we did this.
10722 MS McLAUGHLIN: The research concluded that Canadians
want useable health and wellness information.
10723 In the focus groups we conducted, we found a high
level of frustration with information dominating media coverage of services and
treatments that exist beyond Canada's borders. Quote:
"I would like to see more discussion of what is available to Canada. I can
see American medical facilities on 20/20, but where do I find out about the
Canadian ones?". (As
10724 This concern is found in all the research supporting
the applications in this category. It is clear from these studies, and our own,
that a critical aspect of any service you licence must be Canadian-relevant and
10725 Extensive program testing demonstrated not only the
range of content this type of service needed to cover, but also the necessity of
having a credible Canadian partner. McMaster meets this need.
10726 MR. LEVY: The Wellness Network programming responds
directly to this demand for useable information. We have chosen an
unprecedented, non-commercial partner in McMaster University, a partner that
will play a key supporting role in much of our Canadian programming. Together,
we will create useable health and wellness programming such as Ask Wellness,
which will feature roundtable discussions on health and wellness-related topics
that are of great interest to Canada. Ask Wellness will also involve viewers
directly as they call in to participate in lively discussions with Canada's
10727 Canada Health Discussion which features long-form
documentaries, many from independent Canadian producers will be integrated with
the follow-up panel discussions from carefully selected experts.
10728 HealthWatch News, a first-run, half-hour daily news
program focusing on the latest research and health wellness-related
breakthroughs, both in Canada and abroad.
10729 In Natural Healing, we will collaborate with
McMaster on the naturopathic and homeopathic remedies, together with
investigative research into home-based remedies.
10730 And finally, Shaman's Secrets which will look at the
aboriginal health and wellness methods and how they are being used
10731 Our overnight program schedule will be 100 per cent
Canadian content and dedicated to assisting professional health and wellness
associations and organizations and their members across the country who want to
upgrade their skills or take an educational course for interest or for
10732 We have heard much in recent years about distance
education and telemedicine. The Wellness Network overnight programming is a
solid example of that in practice.
10734 MS HOWARD: The Wellness Network's programming is a
unique mix of health and wellness news and information programming, blended with
lifestyle and wellness-based entertainment programming. McMaster's programming
role will be to ensure that all of this programming is grounded in credible,
evidence-based health and wellness information. Our role will be to provide the
Wellness Network with full access, both to our own network of leading health and
wellness experts and to other leading Canadian health experts outside
10735 McMaster's involvement will also enable the Network
to explore the growing interplay between traditional and alternative medicines
in a responsible fashion. In order to ensure that this partnership works as
effectively as possible, McMaster will be dedicating two full-time positions to
this project. One position will be assigned to the overnight professional
programming portion and the other to the daytime segments.
10736 These are the people who will actually liaise with
the McMaster professionals to ensure that the commitment remains at all times,
and that the appropriate personnel are made available for the Network's
requirements. They will coordinate their activities on an ongoing basis with the
Wellness Network's Vice-President of Programming.
10737 I should add that these resources will be made
available both to the programming that the Network produces itself and also to
independently acquired productions that the Network refers to us.
10738 MR. LEVY: The key, therefore, to the Wellness
Network approach is to focus on Canadian solutions. We have partnered carefully
and in a cost-effective manner. We think that the Wellness Network brings you
the best mix of independent ownership and control coupled with truly Canadian
solutions to matters of concern to Canadian viewers.
10739 Madam Chair that concludes our presentation on
Wellness and we will now turn to PrideVision. Please give us a moment while we
just reconfigure our panel.
10740 THE CHAIRPERSON: We will. Let us know when you are
--- Pause / Pause
10741 MR. LEVY: We are ready.
10742 THE CHAIRPERSON: Go ahead, Mr. Levy.
10743 MR. LEVY: Thank you.
10744 With me today for the Pride portion are: Shane
Smith, PrideVision's Vice-President of Programming; Laura Michalchyshyn,
Vice-President, Programming, Showcase Television; Carmela Laurignano,
Vice-President of CKMW Radio and the driving force behind Rainbow Radio; Debra
McLaughlin who has previously been introduced to you and Dale Buote,
Vice-President of Operations and Programming of Rainbow Connections and who
comes to us with 25 years of experience in broadcasting, most recently as a VP
with Rogers Broadcasting.
10745 Before beginning our presentation, I would just like
to note that when referring to the gay community, we include in this community
gays, lesbians, bisexuals, transgenders and their supporters.
10746 Madam Chair, Members of the Commission. PrideVision
is a network whose time has come. Before beginning our oral presentation, we
would like to give you a brief glimpse into the heart and soul of
--- Video presentation / Présentation Vidéo
10747 THE CHAIRPERSON: Perhaps we could stop this video
and see if we can correct the sound.
--- Pause / Pause
10748 MR. LEVY: Madam Chair, I think we ran it earlier
today and there was some audio problems and I think they were trying to correct
it with the equipment, and unfortunately I think they couldn't.
10749 THE CHAIRPERSON: Would you prefer rolling the whole
of it regardless.
10750 MR. LEVY: Yes, if it's not too painful for
10751 THE CHAIRPERSON: Okay that's fine. Sorry, I was
trying to be helpful. We will continue running it, please.
10752 MR. LEVY: I think you will just get a flavour for
10753 THE CHAIRPERSON: We have no problem doing
10754 MR. LEVY: It's fine with us.
10755 THE CHAIRPERSON: You are sure?
--- Video presentation / Présentation vidéo
10756 MR. LEVY: We are grateful to the many hundreds of
individuals across Canada who took time to write in support of our application.
In fact, we were overwhelmed by the level of their support. From religious
groups to educators, corporations and other media, many of these people had also
been supporters of the Rainbow Radio request.
10757 Licensing this genre is clearly consistent within
the broadcasting policy that Parliament has established. In fact, we believe
that that policy calls for it. Prior to filing this application, we received
existing body of research, including the Rainbow Radio application and we
reviewed it in considerable detail. Then we commissioned additional studies that
have been filed with you.
10758 The importance of our research, from my perspective,
is that it all concludes that our programming will find widespread and
substantial subscriber and advertiser support on a national basis. It will
appeal to this community across Canada and not just to those who happen to live
in downtown Toronto.
10759 In addition to this extensive market research, we
offer the experience of our partners at Alliance Atlantis who have been creating
and developing programming of interest to the gay community, both in specialty
television and in feature films for many years.
10760 We extensively research the type of programming that
we would offer and we deliberately chose a format that we believed to be
inclusive and bridge it. So what does that really mean?
10761 Inclusive means that everyone is welcome at
PrideVision, be it members of the gay community or one of the one in three
Canadians who knows or who is related to a member of that community.
10762 Bridging. Bridging means that our programming will
always try to increase understanding and tolerance of the gay community rather
than isolate or stereotype. PrideVision has no intention to be in your face TV.
Frankly we think it's somewhat irresponsible and does nothing to help Canadians
understand one another better. We want to bring Canadians together with our
programming, not polarize them.
10763 PrideVision is about a distinct part of Canadian
culture that is yet to have a home in today's television spectrum. This is a
community that is diverse, established and mainstream. Our mission will be to
reflect the quiet confidence of this community, both to its members and to
Canadians at large.
10765 MS McLAUGHLIN: Research in the public domain
profiling the gay market is limited. it was not until last summer, through the
efforts of Rainbow Radio, that a solid body of public work began to take shape
that documented both the media usage habits and the consumer preferences of the
10766 The attention of the radio application focused on
the community, generated increased interest from both advertisers seeking to
reach its members, and from businesses eager to develop products to serve it.
Subsequently, several preparatory studies have been commissioned.
10767 All of this data was used to develop the initial
program schedule and then PrideVision invested in custom research to shape and
tailor the service.
10768 Focus groups were used to explore and vet the
content and sequencing of programs.
10769 The final test of this concept was a national
consumer survey, which was designed to capture the interest in the service among
both the gay and the general population and to project audiences.
10770 PrideVision was encouraged with the positive support
indicated by the national survey and PWC believes that the interest levels are
10771 MS MICHALCHYSHYN: PrideVision starts off with, and
continues with, 50 per cent Canadian content during the evening broadcast period
and a full 65 per cent throughout the broadcast day, from the outset. First-run
Canadian original programming comprises 481 hours in Year 1. No competing
application for this genre even comes close to these absolutely fundamental
10772 This programming commitment is substantial. As the
application indicates, John has committed more than $31 million to Canadian
content over the first term of the licence. Again, that is nearly double what
any other applicant in this genre is prepared to commit.
10773 It is our sense, at Alliance Atlantis, that
PrideVision will be an innovative driver in the brave new digital world. At 35
cents, it is the least expensive of the three applications. And the inclusive
bridging approach to programming will produce the highest penetration levels for
this type of genre.
10774 Showcase, itself, has considerable experience with
programming that is targeted to the gay community. We are proud of our
partnership with John and his team.
10775 Our experience has driven home to us, in spades, the
huge appetite that exists for exactly this type of programming that PrideVision
will indeed bring to Canadian viewers.
10776 Since 1995, we have offered viewers thematic Monday
nights, featuring films of interest to gay and lesbian viewers. And, for the
past three years, Showcase has also offered gay and lesbian programming during
10777 Viewership of these regular programming windows
overwhelmingly proves that PrideVision is a service whose time has
10778 MR. SMITH: I come to PrideVision after four years
with the Toronto Lesbian and Gay Film and Video Festival, the largest festival
of its kind in Canada, and one of the largest in the world. For the last two
years, I was the programmer for that festival and, in that time, I have had the
pleasure of working with various groups in the larger gay community.
10779 I bring to PrideVision relationships and ties to the
lesbian, transgendered and bisexual communities, gay parenting groups and
various gay ethnic communities, including francophone, Italian, Latino, Asian,
Portuguese, First Nations and black communities.
10780 Not only are these groups traditionally
under-represented within the mainstream media, they are also virtually ignored
within the wider gay media. The programming at PrideVision will address this
imbalance through the commissioning of original Canadian programming, both news
and entertainment, which will not only be diverse, in terms of the faces
onscreen but also in terms of the issues and stories that are presented. In
addition, documentary and movie programming will be reflective of this
10781 The lifestyle and entertainment programming in the
existing PrideVision schedule is a response to our research, bringing together
various genres, including health, fitness, cooking, current affairs, travel and
comedy that potential viewers found of interest to them.
10782 Specifically, PrideVision will broadcast the
award-winning PBS news magazine "In the Life", the cult soap opera "Brookside"
and the lesbian-produced lifestyle program "Dyke TV".
10783 It is in our original programming, however, that
PrideVision will be truly groundbreaking. In addition to commissioned programs
like our biography series, profiling prominent community members, past and
present, PrideVision will introduce a daily live newscast focusing on issues of
importance to our viewers.
10784 Working in conjunction with our programming advisory
committee, PrideVision's programming will be flexible and responsive to viewer
comments and feedback -- both through our Web site and via our regional video
booths -- expanding and developing in collaboration with our viewers.
10785 There is an abundance of North American and
international gay programming which has never been seen in Canada. PrideVision
will offer an outlet for this work, providing much needed perspective on gay
life in other countries. In addition, 65 per cent of our programming will be
Canadian and will be drawn from both the wealth of independent film and
videomakers within the country and established Canadian distributors and
10786 By committing $17.4 million to original Canadian
programming and $13.8 million to acquired Canadian programming, over the licence
term, PrideVision promises to become a leader in the support and development of
emerging and established producers within the gay community.
10787 MR. BUOTE: Rainbow Connections is a Canadian-owned
Vancouver-based Internet company targeting the gay and lesbian community and
their supporters -- a community that's very much a part of my life.
10788 We have entered into a strategic alliance with
PrideVision that will create, for the first time ever, an interactive
partnership between a Canadian gay and lesbian television network and Canada's
first gay and lesbian Web portal.
10789 Within the first quarter of 2001, we will launch a
gay and lesbian Web portal called "Rainbow Connections" -- we will be the
10790 Rainbow Connections will offer our community offer
our community information, entertainment and e-commerce, with the ability to
make charitable contributions to the Rainbow Connections Foundation, which will
then provide funding for AIDS research, breast cancer research and a 24-hour
help line for gay youth.
10791 The strategy of the Rainbow Connections Web portal
is to offer products and services that appeal to the entire spectrum of the gay
and lesbian community -- a consumer group known to be loyal affluent -- and the
same market targeted by PrideVision.
10792 There are currently numerous and profitable ways for
a gay and lesbian Web portal to work with a specialty channel like PrideVision
-- cross-promotion, sharing of specific revenue streams and event-co-branding to
name just a few. Together, we will pursue these opportunities and create a truly
interactive Web-based and television medium for Canada's gay and lesbian
10793 I spent 25 years in the broadcast industry and it's
clear to me that media convergence is the new reality and enhanced interactive
television is the next big thing. It will really make the Internet frenzy of the
last couple of years pale in comparison.
10794 We at Rainbow Connections take great pride,
personally and professionally, in this partnership: a truly Canadian gay and
lesbian programming and Web-based initiative.
10795 MR. LEVY: PrideVision will be a realistic,
non-sensationalist reflection of the gay and lesbian communities all across
Canada. We will celebrate the gay and lesbian culture as it should be celebrated
in the mainstream: openly, proudly and responsibly.
10796 Thank you for your attention and we look forward to
10797 THE CHAIRPERSON: Thank you, Mr. Levy and your
10798 Commissioner Williams, please.
10799 COMMISSIONER WILLIAMS: Good afternoon, Mr. Levy and
10800 During your opening remarks, I was impressed with
both your partnership with McMaster University on the Wellness Network
application and the estimated value of the Canadian content expenditures of two
10801 You have, of course, included that in your
10802 MR. MALCOLMSON: No, Commissioner Williams, we have
not included that number in our Canadian programming expenditures.
10803 COMMISSIONER WILLIAMS: It's just worthy of
10804 Your presentation and video on PrideVision was an
excellent introduction to this unique news service, both inclusive and bridging
for a distinct portion of Canada's culture.
10805 I'm going to begin my questions, as you have in your
presentation, on the Wellness Network application and then move on to
PrideVision so we could learn more about your channel and "gay-friendly Yahoo"
portal called "Rainbow Connections".
10806 So, I will move on, now, with questions on the
10807 First, let me thank you for your complete and
concise applications. It does make it easier for us, as a Commission, to go
through them. We have a bunch of standard corporate questions, and then some
service-specific questions, just to fill out some areas of the application that
we would like a little more elaboration on.
10808 I'm going to begin with a question that everybody
has received, so far. Out of our selection criteria, what do you think is the
most important criteria in licensing of the Category 1 service?
10809 MR. LEVY: As you are aware, we are here today
applying for two Category 1 licences and, in so doing, we reviewed the criteria
set out in the Commission's call very carefully.
10810 For a company such as ours, it's very important for
us to take a very focused approach in this process. We are not a company with
multiple licences. We have one, "Headline Sports". And we are very proud of the
fact of what we have accomplished in a very crowded and competitive world of
10811 In the applications that we have in front of you
today, one being the Wellness Network and the other addressing the gay and
lesbian community, being PrideVision, we have chosen two genres which we feel
are clearly underserved and deserving of contribution to the diverse landscape
within the Canadian broadcasting system.
10812 What I would like to do now is turn it over to Rob,
who is going to take you through precisely the criteria which we believe should
form the basis of the framework policy.
10813 MR. MALCOLMSON: Thank you, John.
10814 Commissioner Williams, we clearly agree with the
criteria set out in your call for applications. Clearly, the traditional and the
basic criteria of Canadian content level spending on Canadian programming
expenditures and original Canadian production are all critical elements, and we
believe that our applications within the particular genres stack up quite
favourably with the others.
10815 We also believe that there is an opportunity to
amplify on some of your criteria. If you will permit me, I will take you through
you some of key selection criteria for us, from a smaller broadcaster
10816 First of all, with these ten slots of limited
Category 1 real estate, clearly the new genres have to be occupied by networks
that offer truly distinctive programming formats and we think that, with the
PrideVision format and the Wellness format, we have met that
10817 Secondly, obviously the genres have to be
attractive. They must not only be new and different, but they have to be
attractive to drive the digital roll-out. They can't be spin-offs, we don't
think. They need to be something new, something original, something different,
to properly drive the digital roll-out.
10818 The next point and, in our view, one of the most
important if not the most important selection criteria, is the issue of
diversity. For us, diversity involves a number of factors.
10819 First, it must be recognized that true diversity
involves both diversity of programming, but also diversity of ownership. We are
watching the broadcasting industry consolidate, and we are sitting with one
specialty undertaking and we look at larger ownership groups and we say to
ourselves: Unless new players, with broadcasting track records, are given an
opportunity to grow and offer new and different programming perspectives, there
is a risk that diversity will be diluted. We would ask you to consider that in
10820 Diversity of ownership also provides Canada's
independent production community with greater opportunities. Again, as the
industry consolidates, our independent production community are looking for more
and more opportunities with different broadcasters, with non-affiliated
10821 The third point under Diversity is we believe that
it can be adversely affected by what we call sort of a branch plant approach to
specialty television. As formats spin off new formats from an existing base --
i.e., MuchMusic begets MuchMoreMusic, begets MusicMaster -- there is a risk that
true diversity of programming in perspective can be diluted. We think that is an
10822 The other point that we would like to elaborate on
is synergies. We have heard a whole lot about synergies in this proceeding so
far -- synergies from nesting new formats within existing multi station
ownership groups. Our view is clearly that while it is good business to achieve
synergies, synergy should not be at the expense of new and different programming
but, more importantly, synergies exist, and those synergies have to be passed on
to Canadian viewers. By that, I mean that if there are efficiencies from
nesting, then they need to be contributed back into the system in the form of
Canadian content, in the form of Canadian programming expenditures, and in the
form of lower wholesale fees.
10823 If that does not happen, in our view, the Canadian
broadcasting system is not being well served. We think you should take a look at
that in assessing these applications.
10824 The next point is affordability of the service. I
will not spend much time on it, but obviously the wholesale fee has to be
reasonable so that distributors can create affordable packages that drive the
digital roll-out. I am sure we will talk more about this. Our two services we
think are reasonably priced.
10825 Finally, I think it is important for an integrated
TV/web strategy to be put in front of you. Interactive TV through the set top
box is not here yet, but it will be. We think our job as programmers is to
create programming that is compelling and capable of migrating from the
television to the Internet in a seamless fashion when the technology
10826 Finally, it is essential that we identify revenue
opportunities offered by the Internet, and seek to achieve them aggressively. We
believe that there are opportunities in the Internet space, and we would like to
talk about them with you through web portal strategy, and that traditionally
broadcasters have not yet recognized those, and there is great untapped
potential. You will see in our business plan that we have progressively pursued
10827 Those are our amplification or additional criteria
we would ask you to take a look at in this process.
10828 COMMISSIONER WILLIAMS: In terms of an implementation
of service date or a drop-dead date, should the Commission impose a minimum
amount of time buy which a category licence must implement its
10829 MR. LEVY: I think we heard in earlier discussions,
when this question was broached with the other applicants, the date it was
approached was September 2001 for the launch of these 10 new
10830 We are absolutely committed to meet that date. We
think it is smart that we try to get all of the licences that are granted to go
forward on the same date. Coming from my history in the cable business -- I am
not sure if you are familiar, but up until a year ago, I was a cable operator --
I was involved in the launch of the last round of specialty services and
involved in all of the specialty services and Pay Television.
10831 I can tell you that as those services came on one by
one, packages were realtered, hundreds of thousands of dollars were wasted in
marketing dollars. I think we have a real opportunity here, in the formal launch
of digital in September 2001, to create a very strong new basic digital package.
I think it is not only necessary, but it is critical that all the services get
on board. Hopefully our two will be part of them and form part of the launch at
that time, so that we, as the program service providers, can work in conjunction
with the distributors, be it cable distribution or be it satellite distribution
or MMDS. I think it is very important.
10832 COMMISSIONER WILLIAMS: I agree. I was also in the
cable business for almost 20 years, and participated in many of those launches
10833 The common launch date is important to your service,
you say. Other applicants have suggested September 1, which you agree with. Is
that an achievable date by your service?
10834 MR. LEVY: Absolutely.
10835 COMMISSIONER WILLIAMS: What distribution options
have you negotiated, should your application for Category 1 be approved? Have
you met with any distributors?
10836 MR. MALCOLMSON: No, Commissioner, we have not met
with any distributors. We have no distribution arrangements. Assuming the
licensing decisions are issued in November or December, there will be ample time
to have discussions with distributors regarding the launch.
10837 COMMISSIONER WILLIAMS: Okay.
10838 I am going to spend a bit of time on independent
10839 Given the challenges inherent in the digital
environment, do you think the Commission should set limits on the amount of
programming a broadcaster may acquire from an affiliated producer?
10840 MR. MALCOLMSON: Commissioner Williams, we have
followed the discussion with interest when you were talking to those
broadcasters that have independent production affiliations. We are a little bit
of a different animal. We do not have any sort of ownership position in
independent production companies.
10841 The first observation we would make is that probably
the best way of ensuring the widest possible array of opportunities for the
independent production community is to license ownership groups that are
independent and that are willing to make appropriate commitments to the system.
We think that in that respect we offer you a new and different
10842 In terms of the response to your specific question
"Should there be limits for broadcaster-affiliated independent production
companies?", we think the answer is yes, and we think that the interest should
be limited to something in the range of 29.9 or 30 per cent, which is what we
have heard discussed.
10843 COMMISSIONER WILLIAMS: That was actually my third
question. So it would be 29 per cent. It also answers the second one. It is your
definition of "affiliated", it would be the 29.9 per cent.
10844 MR. MALCOLMSON: That is correct.
10845 COMMISSIONER WILLIAMS: Given the competitive
operating environment that the new Category 1 services will be operating in, and
the uncertainty related to digital distribution and requirements related to
minimum Canadian content levels, do you think it is appropriate for the
Commission to impose conditions of licence requiring minimum levels of annual
Canadian programming expenditures?
10846 MR. LEVY: I think the answer is if it's achievable,
yes. If you can get it, now that I'm out of the cable business, go and get it. I
think we are building our model and our business case on the basis of we pick
two genres that are underserved and have tremendous interest in the
10847 First and foremost, we are going to be relying on
creating exciting programming that we believe distributors are going to want to
carry as part of their package. However, if there is an opportunity to ensure
that, then I think that obviously the answer is yes.
10848 MR. MALCOLMSON: I thought your question was do you
think it's appropriate to impose minimum Canadian program expenditure levels. If
that was your question, the answer is yes, and our commitment is 49 per cent of
total revenues for PrideVision and 43 per cent for the Wellness
10849 COMMISSIONER WILLIAMS: Thank you. If
we -- moving into the area of interactivity, if we license the
Category 1 Service with interactive elements via the set top box, do you think
distributors should be obligated to carry those interactive
10850 MR. MALCOLMSON: We think that distributors should be
encouraged to carry those interactive components. It may be impractical or
perhaps even premature to mandate it at this point in time because I think we
have heard discussion about the functionality of the set top box and it may not
be sufficiently advanced to have a general requirement, but we think it should
10851 COMMISSIONER WILLIAMS: Okay. This next question
deals with Personal Information, Protection of Electronic Documents Act. It's a
new Act. We have asked this question several times. Do you have a position on
10852 MR. MALCOLMSON: The answer is we are familiar with
the legislation and prepared to abide by it when the time comes.
10853 COMMISSIONER WILLIAMS: What are your views on the
possibility of program suppliers and BTUs sharing the cost for set top boxes or
certain components or technologies that would facilitate
10854 MR. LEVY: If I understand your question, which is
that the distributor share in the cost of the distribution system
itself -- could you --
10855 COMMISSIONER WILLIAMS: Yes. Program suppliers and
distributors sharing in the costs of the equipment.
10856 MR. LEVY: I think that when we are putting together
our programming schedules and our costing, clearly that currently does not take
part of the business model. Traditionally the responsibility of putting together
the distribution network has been the distributor itself, including the final
terminal device being the box that goes into the home. I presume that's the last
cost that you are looking at that you were suggesting perhaps that the program
supplier shares in.
10857 I think that's something that you would have to look
at in terms of rebuilding your model because I don't think it's something that
has been probably been contemplated. It certainly hasn't been part of the mix
traditionally in the relationship between the distributor and the supplier
10858 COMMISSIONER WILLIAMS: Okay. Thank you for your
views on that.
10859 Do you have a timetable in your applications for the
developments you propose in your applications that would lead to full television
10860 MR. LEVY: I think it's dependent upon the boxes. We
looked at the CCTA surveys in the context of where the boxes are now in terms of
their -- first of all in terms of the number of boxes in the field,
where they will be.
10861 We have heard all sorts of discussion about the
capabilities of these boxes and I think the conclusion we have heard over the
last few days is that although there is some interactive television capabilities
in these boxes today, we are not there yet.
10862 We are building our model for interactive TV
basically on two platforms. I'm sure we are going to elaborate on that during
the course of the discussion. We can do that now or later at your wish, but our
approach is that we are building in both genres and attacking the provision of
Internet through a two prong approach. I would be delighted to talk about it
10863 COMMISSIONER WILLIAMS: I think now would be an
10864 MR. LEVY: Okay. Terrific. First of all, let me just
briefly talk about, and then I am going to flip it over to one of our partners
who is involved in helping us develop our portal strategy and we will get some
insight into how we are going to be developing this for that particular genre
and our other one as well.
10865 Let me just speak first to the two genres that we
have because this was part of the decision-making process in determining to go
both for health and wellness and representation of the game as being
10866 In wellness, for example, we are developing
programming where the technology will allow medical practitioners and a viewer
to interact as they never have before. One of the cornerstones of our
application in the context of the wellness application is to ensure that the
information and data that we collect is complete and accurate and that we are
able to disseminate it. It is through these vehicles that we are going to be
able to facilitate that.
10867 With respect to PrideVision, we are looking at
allowing the community itself, friends of the community and the community at
large to connect in a way that they never have before. All of our programming is
being designed to accommodate that.
10868 What I would like to do now is turn it over to Dale
who is responsible with us and is our partner at Rainbow Connections. Dale, if
you would take us through a bit of our development on our portal
10869 MR. BUOTE: Thank you, John.
10870 Commissioner Williams, if I may begin by briefly
pointing out the differences between a Web site and a Web portal because I think
10871 A Web site is basically a static, non-engaging, I
guess at best, primitively interactive series of pages similar to a book. There
will perhaps be a few single links that will allow for limited participation in
e-commerce or e-business. I guess an example of a page that would do that would
be Chapters, Chapters online.
10872 A Web portal is a fully integrated gateway to
e-commerce, e-business and communication, offering instant access to both a
national and global market. By the term fully integrated I mean that you can
shop, you can ship things, you can make payments, you can book travel, you can
seek advice, you can gather news and information. You can participate in a
wealth of other services and activities with many different businesses and it's
all done in one stop. For reference, I would refer to AOL or Yahoo!.
10873 A simple Web site doesn't have the depth to create
loyal or even steady consumers a Web portal does.
10874 What we have heard so far at these hearings
regarding interactivity has focused on the set top boxes and simplistic Web site
platforms. To date broadcasters have used fairly non-engaging, non-interactive
Web sites, as I described, a few pages with a few links, and it really hasn't
10875 In fact, there was a recent headline in the National
Post that said "Television giants flop in the Web world". Why did they flop?
Because they just didn't understand the Internet as a separate business
10876 PrideVision has developed a more comprehensive
Internet strategy by forming a partnership with Rainbow Connections. As I said,
we are a Canadian owned and operated Web portal whose business is strictly in
the Internet space.
10877 This will be a somewhat more involved process than
the simulcasting Webcasting chat room partnership that we heard about earlier
this morning from one of the other applicants -- earlier today
10878 PrideVision and Rainbow Connections will embark on a
fully Canadian, cross-promotional, revenue sharing agreement. There are three
key components to the interactivity of our partnership.
10879 First is content sharing. Second is advertising and
promotion. The third is revenue streams.
10880 Rainbow Connections is a content aggregator,
gathering news and opinion from centres large and small all over Canada. That
information can then be fed directly to PrideVision. Promotionally, Rainbow
Connections will co-brand with PrideVision, offering their viewers participation
in interactive contesting.
10881 Through the partnership with Rainbow Connections,
PrideVision will be able to offer their advertisers a unique one stop
advertising solution, television and online media. The most innovative aspect of
our strategic partnership is our approach to e-commerce and the sharing of
revenue streams. We don't intend to just sell T-shirts.
10882 We have developed a revenue-sharing model, based on
predetermined affiliate commissions on select revenue streams. There are at
least 20 different and viable revenue streams that we will share, such as the
Rainbow Connections' "Affinity" Visa card -- and we are currently in discussion
with both MNBA and Citizens' Bank for distribution -- the Rainbow Connections'
travel store and we are talking with Canada 3000 and American Express
10883 We think it is clear that Pride Vision has taken a
real innovative and proactive approach to interactivity and we feel that they
are best suited to service our community.
10884 MR. LEVY: Commissioner Williams, can I just add
something to that for a moment?
10885 The licence that I was referring to earlier, being
headline sports, was a service that started out as a content play. It was
nothing more, nothing less, than a collection of sports information that we
collated from all over the country: Canada, States, the world. And what we did
is we took that raw data and we turned it into programming. And the reason we
did that is because we couldn't do programming because we didn't have a licence.
So we had to take content and make it interesting. And we were very good at it
and we got very successful at it. And we got so good at it and got so much of a
following that we ended up being able to come to you and turn it into a real
10886 But the essence of that network really remains
exactly the same today as it was when we started: it was data, it was content.
And what we did is we got creative. We hired creative young people, who took
this collection of just bits and bites and information and turned it into a
10887 What we are talking about here, with our partners,
is that sort of creativity in turning new programming efforts to be suitable to
this converging technology.
10888 We are very excited about Information TV and being
able to do the things that we are talking about currently. And we are very
interested and excited about streaming video.
10889 In fact, just one other aside, in terms of streaming
video, with our existing network, once we got very good at it and started to
stream all these video highlights, what we did is we ended up selling that into
the States. There is a company called seasonticket.com in the States which
basically buys our content, this data, and we are streaming on a daily basis
into a U.S. portal site. So if you hit that Web site, we are going to see our
Canadian talent, our Martine Gaillard, or Steve Kouleas, or Greg Sansone --
these are all homegrown talent that are distributed.
10890 So I think that is the kind of thing we are talking
about here, is creating something that doesn't exist today. And although we have
spent a lot of time on the digital box -- and that is very important and it is a
source of revenue for us in the context of our strategies -- I think we all have
to unleash a lot of this creativity to develop the new type of programming that
five years from now we will look at and say, "Well, what we were thinking back
10891 COMMISSIONER WILLIAMS: I appreciate the presentation
on your Web portal.
10892 Have you spoken with box manufacturers, equipment
manufacturers, to see how you can integrate this? And if the interactive
components of your proposed services don't work on, say, some aspects -- maybe
they don't work on DDH or MDS -- what impact will this have on the availability
of your service to these subscribers? Have you given thought to that?
10893 MR. LEVY: I think the first answer is -- back from
my cable days again -- it is going to work in the box. It was supposed to work
when we were telling you it was supposed to work a couple of years ago, and it
wasn't working then. They have to make it work because that is the future of
10894 Whether you can force it or whether it just happens
because they understand there are other competing technologies that are going to
be able to do that and if they don't keep up with it then they are going to lose
the potential for some of this programming and potential for some of the revenue
streams, I think, from our perspective, when we build our Web portal strategy,
we are not taking any chances. We are going to have people calls on an old
twisted pair of phone lines, if that is the only technology they have to get
through to us. If they are Internet savvy, which, quite frankly, a lot of the
community in both our applications is, they will use the Internet. And if the
information technology is available in the box, then we are designing it so it
is capable of doing that.
10895 We are trying to build this thing and our
programming efforts so that it is not dependent entirely upon any one
10896 COMMISSIONER WILLIAMS: Okay.
10897 Well, that completes most of my general questions
and I will move now into service-specific questions.
10898 If none of the other commissioners have any
questions, I will turn it back to Chair Wylie.
10899 THE CHAIRPERSON: I have one questions.
10900 Mr. Malcolmson, I am not sure that I understood your
answer when you were asked about independent production.
10901 Did I understand you to say the best way is to not
have a shareholder 29.9 per cent, but I am not sure what you meant by that.
Considering that in the case of PrideVision your shareholder is the producer, at
29.9 per cent, what difference do you make between having a producer
shareholder, who may have less than 30 per cent -- here it is a partnership,
which is difficult, but let's say it is not, it is a company -- and the
licensee, having an investment of 29.9 per cent or more in a production company?
Do you not make a difference between the two? And do you not find it difficult
to not focus on the fact that a very shareholder of your company, at 29.9 per
cent, is a controlling shareholder in a production company? Am I making
10902 MR. MALCOLMSON: I think you are making sense, maybe
10903 What I was trying to convey was when you have a
choice and when you have an option between a broadcaster that is not directly
affiliated with a production company, then that is a consideration you should
take a look at. In the context of our Wellness application, we are completely
10904 The other point I made was that an appropriate level
10905 THE CHAIRPERSON: Yes. And you will recall I did not
10906 MR. MALCOLMSON: Right.
10907 THE CHAIRPERSON: -- on Wellness. You passed the test
100 per cent.
10908 MR. MALCOLMSON: Good.
10909 THE CHAIRPERSON: Here you are kind of short by 29.9
10910 I may not have made myself clear because Madam
Bertrand says she didn't understand.
--- Laughter / Rires
10911 THE CHAIRPERSON: Oh, apparently she was teasing
10912 You are not allowed to tease the chair.
--- Laughter / Rires
10913 CHAIRPERSON OF THE COMMISSION: Remind me in due
10914 THE CHAIRPERSON: Okay, so we all understand there is
a big difference, isn't there? Let us call you PrideVision Inc., of which 29.9
per cent of the voting equity is owned by the largest producer in the country,
and PrideVision Inc. itself having an interest in Alliance is a different story,
isn't it? The test, surely...to achieve your goals, the test should not be the
same, with the goal of encouraging or discouraging PrideVision Inc. from using
Atlantis Alliance, let us say -- we are talking generalities -- to do all its
independent production, it is so-called out-of-house.
10915 MR. MALCOLMSON: I think the question Commissioner
Williams asked me was: what should be the equity threshold --
10916 THE CHAIRPERSON: No, I am asking one now.
10917 MR. MALCOLMSON: And I'm trying, but perhaps not
doing a very good job of answering it.
10918 Our view of affiliated independent producers is that
the test for broadcaster ownership should be 29.9 per cent. So if an independent
production company has a broadcaster investor in it in excess of 29.9 per cent,
then your test would be tripped and whatever safeguards you see fit to create
around that should be implemented. That's what I was saying.
10919 In terms of PrideVision, you are right, Alliance
Atlantis is a 29 per cent partner. We believe that is entirely appropriate. My
answer to your question, hopefully, didn't suggest that we think that Alliance
Atlantis is an inappropriate partner as a result of its connection to the
independent production community.
10920 One thing I can tell you in the context of
PrideVision is there is not programming output deal or no agreement between
Alliance Atlantis' production arm and PrideVision, with respect to the provision
of programming. It is completely independent and --
10921 THE CHAIRPERSON: Okay. So if I understand you, then,
your view would be that at below 30 per cent of equity there would be no need to
examine the possibility of putting a cap on the amount of independent production
that you would farm out to Alliance. You could have 100 per cent of your
so-called independent production farmed out to Alliance without us showing any
10922 MR. MALCOLMSON: It is certainly not our intention to
do that. I think that 29 per cent is a good threshold for you to sort of decide
when alarm bells go off and don't go off. If it is in excess of 29 per cent, you
need to take a close look at the relationship. If it is less than 29 per cent
and the relationship isn't otherwise characterized by evidence of control by the
minority shareholder, then we think it is a fair trade-off; it is a fair
10923 THE CHAIRPERSON: And that would be your advice to us
with any other participant before us, that when we see a production house or
company as a voting shareholder in the proposed licensee, we shouldn't concern
ourselves with limitations. If you were looking at a test. I think we have been
asking that question in a general fashion.
10924 MR. MALCOLMSON: We think that 29 per cent, absent
other indications of control, is a fair threshold.
10925 THE CHAIRPERSON: Well, yes, but --
10926 So that is your view overall. Thank you.
10927 Counsel, did you have questions on the general part
of the --
10928 MR. STEWART: Just to follow-up on that question,
thank you, Madam Chair.
10929 With respect to PrideVision, will Alliance receive
any of the $14 million that you have committed to independent
10930 MR. MALCOLMSON: As I said, there is no arrangement
in place -- there is no agreement in place. That $14 million is earmarked
for the independent production community at large.
10931 MR. STEWART: So the answer is yes or no?
10932 MR. MALCOLMSON: There are no plans currently.
Alliance Atlantis may very well come forward and have product that they wish to
provide to us, and LEVFAM, as the controlling shareholder, would look at it and
decide whether or not it is appropriate for the PrideVision Network.
10933 MR. STEWART: So Alliance, potentially, could have
access to those funds.
10934 MR. MALCOLMSON: Potentially they could, but there
are no plans.
10935 MR. STEWART: Thank you.
10936 Thank you, Madam Chair.
10937 THE CHAIRPERSON: Commissioner Williams?
10938 COMMISSIONER WILLIAMS: Thank you, Madam
10939 In your application you propose a unique
public/private partnership, what we spoke about earlier with McMaster, and the
service will be targeting a professional audience. Could you define the
professional audience that you refer to?
10940 MR. MALCOLMSON: The professional audience that we
hope to target in the overnight programming includes all manner of health care
professionals, wellness professionals, associations like the Canadian Nurses'
Association, which has a diverse membership across the country, and who, at the
present time, have difficulty communicating. We see this as a perfect medium to
allow those types of sparsely populated associations to communicate with one
another through the overnight programming component.
10941 So it is medical professionals, it is health care
professionals, and we also think there are opportunities for distance learning
10942 Dr. Weingarten, I don't know whether you want to add
10943 DR. WEINGARTEN: I would simply say that there is a
tremendous demand for education -- continuing education -- from health
care professionals. And by health care professionals I mean that broadly
defined. It includes physicians, nurses, social workers -- people who are
generally involved in the delivery of health care and the promotion of
10944 It is very difficult because of the time constraints
of many of these people, and the constraints of their profession, in fact for
them to get access to these kinds of services, and a channel of this type
provides in many ways an ideal opportunity to target programming, specifically
for people interested in the promotion of health, in a way that they in fact can
10945 COMMISSIONER WILLIAMS: Thank you for
10946 Based on calculations by our staff, it would appear
that 23 per cent of the proposed programming will be of a lifestyle genre. Can
you explain how this programming will be different from what is currently
10947 MR. MALCOLMSON: I haven't calculated the exact
percentage of lifestyle programming within our schedule. There is a component of
lifestyle programming, but the other key components of our schedule, which are
entirely different, include the news and information, current affairs and
educational components. We are going to air a daily health watch newscast, for
10948 We have a show in our sample program schedule called
Canadian Health Discussion, which will include health related documentary
titles, followed by leading health experts discussing the content of the
10949 We have a cross-Canada show called Ask Wellness,
where members of the Canadian public can phone in and communicate with leading
health care experts.
10950 So we think there is a blend of news, information,
current affairs and lifestyle programming that is appropriate for this genre.
And that says nothing of the overnight component. The overnight component is
entirely distinct and different, as you have just heard.
10951 COMMISSIONER WILLIAMS: Mr. Levy, you have also
proposed quite a substantial commitment to Canadian programming. Is there enough
Canadian content available in this type of programming to enable you to meet
these commitments, especially during the early years of the licensing
10952 In your answer, could you please indicate what your
weekly and annual repeat levels for Canadian programming during the first,
second and third programming wheels would be -- the 6:00 a.m. to midnight?
If the repeat levels are considered high, how do you think this will affect the
attractiveness of your service?
10953 MR. LEVY: Let's start off with where is the
programming coming from.
10954 One of the advantages of creating a network such as
this from scratch and establishing a new relationship and forging ahead is that
in creating this relationship with our partners at McMaster we have unleashed
the capabilities of a network that spans all across the country.
10955 We are not talking about limited forms of expertise
that just come from the university itself; we are talking about the capability
on a 24 hour a day basis, which we have broken up into two segments, as you are
aware. We have discussed the overnight programming, which we can talk about
specifically, and we can talk about the programming during the day, in terms of
10956 When that source of information and content is out
there and the independent production facilities are available to us, we are very
confident that we are going to be able to produce, excluding the overnight
professional programming, the 643 hours that we have committed to, and we
are very confident that we are going to be able to do that within the first year
10957 In terms of the repeat factors that we talked about,
in our Canadian original programming our repeat factor is five times, and in the
acquired Canadian it is three times, and it is very close to that in the
non-Canadian acquired. It is approximately two and a half times, as our repeat
factor, and that is throughout the entire broadcast schedule.
10958 COMMISSIONER WILLIAMS: How do you think that repeat
factor will affect the attractiveness of your service?
10959 MR. LEVY: What is interesting is that repeat factor
is actually pretty low compared to some of the others. So it is always a balance
when you are setting up your programming schedule, and you are creating a lot of
this programming from scratch.
10960 One school of thought would be the less repeat the
better, because it is all fresh and new programming. Obviously that is
10961 The other side of the coin, though, in the specialty
world, is that you are attracting rather small audiences and you want to have
availability of this programming on an ongoing basis.
10962 And when we have compared our repeat factors to the
ones that are out there today, we think we have struck a nice
10963 MR. MALCOLMSON: If I could just add, Commissioner
Williams, that having familiar programming within a new program schedule and
within a new specialty channel can also be quite beneficial in terms of driving
10964 If, for example, you have some second window
Canadian health programming within our schedule that viewers are familiar with,
you have an opportunity to combine that and create lead-ins with your original
10965 So it is important to have that second window
programming that is already out in the marketplace that is drawing viewership in
order to attract it to your new network.
10966 COMMISSIONER WILLIAMS: Okay. I am going to move on
10967 In your application you propose using programming
from Categories 7(a), (c) and (d), which are drama, comedy and film. Would you
accept limits for these categories as a condition of licence? If so, what limits
would you recommend?
10968 MR. MALCOLMSON: Percentage limits on the amount of
dramatic programming? Is that --
10969 COMMISSIONER WILLIAMS: That's correct,
10970 MR. MALCOLMSON: First of all, our schedule certainly
isn't dominated by dramatic programming. We have some movies on Saturday and
Sunday evenings. We think there is a useful place for drama programming within
the health and wellness genre, because it enables you to program around it and
give health perspectives on the dramatic programming that you are
10971 I think we would accept limits, if the Commission
wanted to place those limits, and I think a limit in the range of 15 per cent
would be acceptable.
10972 COMMISSIONER WILLIAMS: Fifteen per cent. Thank
10973 Religion. Category 4. You have also indicated that
the service would use programming of a religious nature. You have not included
in Schedule 10 program descriptions, however, any programming from this
category. What type of programming are you contemplating, and how will it fit
within your proposed service?
10974 MR. MALCOLMSON: When we were crafting the nature of
the service condition of licence we included religious programming strictly
because of the aboriginal wellness programming that we hope to include in our
10975 There is a show in there called Shaman Secrets,
which is about wellness, but it is also about aboriginal spirituality, and we
felt that we needed that program category included in order to cover that off in
the nature of service condition of licence.
10976 COMMISSIONER WILLIAMS: Thank you.
10977 I will now move into advertising
10978 What kind of advertisers -- and include in the
definition of advertisers infomercials and broker time -- do you anticipate
obtaining during the fourth wheel of midnight to 6:00 a.m.? And what percentage
of avails sold will this represent?
10979 MR. MALCOLMSON: I am going to turn this over in a
moment to Sarah Hughes, our V-P of Finance.
10980 It is not anticipated that the evening broadcast
period -- the midnight to six period -- is going to be a significant
advertising revenue generator. It is there more, quite frankly, for the health
professionals and for the education programming. It is not a key component of
our business model.
10981 Sarah, can give you --
10982 COMMISSIONER WILLIAMS: Not sponsored by large
pharmaceutical firms or --
10983 MR. MALCOLMSON: No, and I think there
10984 COMMISSIONER WILLIAMS: -- medical supply houses, or
any of that type of advertising?
10985 MR. MALCOLMSON: No.
10986 COMMISSIONER WILLIAMS: Thank you.
10987 MS HUGHES: Thanks, Rob.
10988 We feel that we have used very, sort of,
conservative sell-out rates, in terms of our advertising, to reflect the fact
that it will be mostly in the sort of 6:00 a.m. to midnight schedule where we
would sell primarily most of our advertising.
10989 In terms of specific advertisers?
10990 Rob, do you want to talk about that?
10991 MR. MALCOLMSON: We haven't targeted any
pharmaceutical companies or sponsors for that programming. That programming is
there more as a public service educational component.
10992 COMMISSIONER WILLIAMS: Okay. Thank you.
10993 Have you obtained any commitments or agreements from
distributors -- and we may have covered this already -- to carry
interactive? You have not met with any yet, have you?
--- No audible response / Réponse inaudible
10994 COMMISSIONER WILLIAMS: That basically covers the
questions I have on the Wellness application.
10995 Chairman Wylie, perhaps some of the other
commissioners, or counsel...?
10996 THE CHAIRPERSON: Counsel...?
10997 MR. STEWART: Thank you, Madam Chair.
10998 Just for clarification, I believe that in your
application you said you would spend approximately $5.2 million on acquired
10999 Is that your commitment to the independent
11000 MR. MALCOLMSON: Our total spending is $27.3 million.
That is broken down between Canadian acquired programming and Canadian
production: $5.1 million for Canadian acquired; $22 million for Canadian
11001 Of the $22 million, we estimate that approximately
50 per cent of that will be spent on the independent production community. So
that would be in the range of $11 million.
11002 MR. STEWART: Would you be willing to accept that
commitment as a condition of licence?
11003 MR. MALCOLMSON: It's difficult to accept a hard
dollar commitment as a condition of licence. What may be more appropriate is a
percentage -- a percentage to spend on Canadian production be devoted to the
independent production community.
11004 MR. STEWART: And would that percentage be 50 per
cent, consistent with your application?
11005 MR. MALCOLMSON: Yes.
11006 MR. STEWART: Thank you.
11007 Just to clarify on the independent production front
again, the role of Alliance, I believe, Sportscope will be managing the Wellness
service. Is that correct? And, of course Alliance has a significant
participation in Sportscope. Would you care to provide any comments with respect
to the concern about -- well, not the concern but the issue of independent
11008 MR. MALCOLMSON: Sure. With respect to the Wellness
Network, it's an application by LEVFAM Holdings. Alliance Atlantis has nothing
to do, whatsoever, with the Wellness Network application; in fact, they have a
competing application in front of you.
11009 So, on the Wellness side, it's -- the controlling
shareholder is LEVAM. LEVAM also has a controlling interest in Sportscope. But
Alliance Atlantis has nothing to do either with LEVFAM or with the Wellness
11010 MR. STEWART: But Sportscope will manage the proposed
11011 MR. MALCOLMSON: No.
11012 MR. STEWART: There's no relationship,
11013 MR. MALCOLMSON: No, there is not.
11014 MR. STEWART: Thank you.
11015 Can I just clarify your statement about a
willingness to accept a condition of licence with respect to, I believe it was
15 per cent, concerning Category 7(a), (c) and (d) and drama.
11016 That's 15 per cent of what exactly?
11017 MR. MALCOLMSON: It would be 15 per cent of the
11018 MR. STEWART: Thank you.
11019 Those are all my questions, Madame Chair.
11020 THE CHAIRPERSON: Thank you.
11021 Commissioner Williams has one more question on this
application, and then we will move on to the next, if that's
11022 Do you need some time to change panels? Or are you
11023 MR. MALCOLMSON: We are all here.
11024 THE CHAIRPERSON: You are okay. Thank you.
11025 Commissioner Williams...?
11026 COMMISSIONER WILLIAMS: I neglected to spend time on
the interactivity of your site. We learned so much about your Rainbow
Connections that we didn't talk much about the Wellness Web site.
11027 Perhaps you can give us an overall description of
the Web site and how it works. And then, at the end, if you could tell us a bit
about -- at least to us, the interactive elements appear to be concentrated
mostly on the Web site, and we would be curious as to how access to the set-top
box from Web site would be made. How is that going to be facilitated?
11028 MR. MALCOLMSON: I will first speak to the Web
strategy and then John will speak to the set-top box.
11029 With respect to Wellness, our long-term strategy is
the same as it is in PrideVision; and that is, not only to develop an associated
Web site with the Wellness Network but, also, to partner with a Canadian-based
Web portal -- and we have had some discussions to that effect.
11030 In the Wellness genre, reliable on-line information
that is relevant in the Canadian context is the key factor. Two of the other
health applicants have partnered with U.S. programmers that have U.S.-based Web
portals. We think the better approach in the Canadian context is to find a
Canadian Web partner -- and, as I said, we are doing that.
11031 In terms of the relationship between the T.V.
network and the Wellness Web site, it's all about information flowing back and
forth between the television program and what's on the Web site, and we have
designed our programming schedule with programs like "Ask Wellness",
"Cross-Canada RX" and "HealthWatch News" to be able to take full advantage of
11032 So, for example, our Wellness Web site will really
have three key features. One is: Viewer feedback will be incorporated into the
television programming, directly, by communicating with our viewers through
on-line e-mail -- and that's extremely important in the health context. People
want information and the programming spawns more and more questions.
11033 Similarly, we hope to have a system whereby experts
can answer questions by e-mail on air -- and that's one of our plans for the
"Ask Wellness" show.
11034 The other thing that's important in the health genre
is advance input by viewers into what's going to be on the network next, and our
Web site will have a viewer's forum which will constantly be asking viewers what
health information they want, what topics they want to hear covered in "Ask
Wellness" or the "Cross-Canada RX" show. That's the type of interactivity we are
11035 MR. LEVY: Just to finish it off. Our comment with
respect to set-top boxes is obviously the same as I commented earlier, with
respect to the other service: We are coming into the same environment and our
impressions and attitude is the same.
11036 COMMISSIONER WILLIAMS: I said one, but it must have
been 1.5 questions.
--- Laughter / Rires
11037 COMMISSIONER WILLIAMS: Are the interactive elements
of this service going to be in place by the proposed September 2001
11038 MR. LEVY: Yes.
11039 COMMISSIONER WILLIAMS: Thank you.
11040 That concludes questions for the Wellness panel,
Chairperson Wylie. So, if they want to shift chairs...
11041 THE CHAIRPERSON: No; I think that they are ready. Is
11042 MR. LEVY: We are fine.
11043 THE CHAIRPERSON: So they can go ahead.
11044 COMMISSIONER WILLIAMS: Okay. With the PrideVision
questioning, can you describe your criteria used for determining what qualifies
programs as targeting the gay and lesbian community?
11045 MR. MALCOLMSON: The criteria we employed are --
first of all, they have to be -- to the extent that there is programming that
involves gay and lesbian characters or bisexual transgendered community members,
that would clearly qualify the programming as being of interest.
11046 But, also, you know, the gay and lesbian community
is part of our larger community, and there are people who are not within the gay
and lesbian community but who are directly connected to the gay and lesbian
community. In fact, our research showed that 36 per cent of Canadians, I
believe, reported a direct connection through a friend, a family member or
co-worker to the gay and lesbian community. So the spectrum is very wide, and
the programming has been designed to appeal to that spectrum.
11047 In terms of how we define it so that -- I think you
asked the other applicant, you know, "What's to prevent you from becoming a
general-interest television service?" We think we have looked after that, in the
nature of service condition of licence that we proposed which describes the
programming categories as being designated to meet the needs of the gay and
lesbian community and to those Canadians that are connected to the gay and
lesbian community. So we think we have done it in the nature of service
condition of licence.
11048 COMMISSIONER WILLIAMS: Okay. Thank you, Mr.
11049 How much drama and feature films do you intend to
broadcast and how much gay and lesbian programming from these categories is
11050 MR. LEVY: Let me turn it over to Sarah to give the
breakdown, and then perhaps I will turn it over to Shane to describe the content
within the programming.
11051 COMMISSIONER WILLIAMS: Very well.
11052 MS HUGHES: Thanks, John.
11053 In reviewing the content and the areas of which our
programming is allocated, we noted that, you know, a large percentage -- or not
a large percentage, but we do have an amount designated for news -- that,
certainly, is one of ours -- as well as analysis and interpretation shows, such
as "One-on-One", Q! TV. So we do have sort of a wide range across all of sort of
the categories that we listed.
11054 MR. SMITH: I will just jump in and say that, in
terms of the programming that is out there, movies and dramatic programming, as
an example, I can say in my previous job at the Gay and Lesbian Film Festival,
after watching 800 films and videos by, for, about or of interest to the gay and
lesbian community, I can tell you, unequivocally, that there is the work out
11055 By way of reference to Canadian content, this year,
at the festival, one-third of the 320 works that we screened were Canadian, and
there is a huge -- an ongoing development, an increasingly amount of gay and
lesbian feature film being made both in Canada, slowly but surely, but
definitely there's been a boon in feature filmmaking by gay and lesbian
filmmakers in the last five years. So there is plenty of work out
11056 MS HUGHES: In terms of the number of hours, in terms
of Canadian titles, we have 312 programming hours, for film.
11057 COMMISSIONER WILLIAMS: Thank you.
11058 Mr. Levy, could you comment on how PrideVision might
benefit from the synergies relating to the partners involved?
11059 MR. LEVY: In the context of partnership that -- if I
understand your question, you are talking about the synergies of the
partnerships that we have --
11060 COMMISSIONER WILLIAMS: Yes.
11061 MR. LEVY: -- currently in place with our partners
11062 Well, we are very excited about the partnership that
we have with Rainbow Connections. As I described before, it obviously enhances
our ability to come forward and take advantage of the work that they have done,
in terms of the portal strategy. But we also see it as a stronger relationship
in the context of what I was talking about in terms of the new spirit and the
new creativeness that's going to be involved in creating the content. These
people are thinking about that every day. Our people are sort of still thinking
in the context of traditional programming efforts, and what's going to be the
success in the future is when we are able to marry these two ways of creating
new ideas and creating new content and making it applicable to this converged
11063 So we have a lot of confidence in our partnership;
so much so that we are actually going to be taking a position in that company,
in terms of an equity position. So, that's -- we believe it's integral to our
11064 COMMISSIONER WILLIAMS: Thank you.
11065 I am now moving to a question with respect to the
fact that you have projected 65 per cent Cancon from year 1. Can you address the
issue of availability of programming in the gay and lesbian genre and to what
extent will you have to depend on repeats to achieve your Cancon commitment,
especially in the first few critical years of the licence?
11066 MR. MALCOLMSON: I will answer your repeat question
and then pass it on to Shane to talk about the variety of programming that is
11067 You are right, we are at 65 per cent from day 1. We
believe there is a wealth of Canadian programming within the gay and lesbian
genre. That is why we have proposed in our sample program schedule approximately
481 hours of original Canadian programming in the first year. The repeat factor
on the original programming is nine times; on the acquired Canadian programming
it is two times; and on the non-Canadian acquired it is two times.
11068 Shane may want to speak to some of the titles and
the variety of programming that is out there.
11069 MR. SMITH: In terms of ongoing series,
Canadian-produced work, there is the Rogers community cable program, 10 per cent
Q! Television, which will be an integral part of our schedule because that also
serves part of the mandate of PrideVision, which is to provide community access
to our facilities, and also to eventually, hopefully, broadcast some of the work
that is created during that community access to our facilities.
11070 In terms of feature films, there are quite a lot of
feature films out there. Laura could possibly talk to that
Canadian-content-wise. And also in terms of other programming, there is original
CBC comedy programming, featuring gay and lesbian performers; there are also
some series, some short-run series, featuring gay and lesbian sketch comedy that
is available. And, of course, with our commitment to Canadian content -- $17.4
million over the term of the licence -- we believe that we have the resources to
be able to create a lot more original Canadian programming, and that is one of
the prime tenants behind PrideVision.
11071 MS MICHALCHYSHYN: I will just quickly speak to some
of the films that are available that are either directed by gay and lesbian
directors or include themes of gay and lesbian interest or subject-matters --
their directors, including John Greyson, Patrician Rozema, Jeremy Podeswa, Tom
Fitzgerald-Leopold, to name just a few -- who are currently making/creating
feature-length films and dramas that would be absolutely available to
PrideVision and, I think, of interest to the audience.
11072 MR. MALCOLMSON: Just to amplify on a point that
Shane made, within our program schedule and within our application, we made a
substantial commitment to spending on Canadian programming. It is $31 million
cumulatively over the licence term -- $13.8 million of that is for acquired
Canadian programming; approximately $17.4 million is for Canadian production --
and if you look into our program schedule you will see a significant number of
original productions, such as a live daily gay newscast, a show called "One on
One", which is interviews with prominent members of the gay and lesbian
community, a current affairs program. So there are substantial commitments to
Canadian production within this application and that is reflected in the
11073 COMMISSIONER WILLIAMS: Thank you, Mr.
11074 When you describe your commitments to independent
producers, does this include Alliance Atlantis? And will Alliance Atlantis
provide programming to this service?
11075 MR. LEVY: I think we had a brief discussion about
11076 COMMISSIONER WILLIAMS: On the other channel,
11077 MR. LEVY: There are no arrangements in place with
Alliance Atlantis to supply us with programming -- and Laura can confirm that.
There's no output deal, there is no agreement. I think I said earlier, to the
extent that Alliance Atlantis had programming that LEVFAM, as the controlling
shareholder, thought was relevant and germane to the programming mandate of the
network, we would certainly take a look at it and pay for it in an arm's-length
11078 COMMISSIONER WILLIAMS: Thank you.
11079 Even combined with this dated secondary audience of
friends and family of gays and lesbians, and the packaging assumptions, as
stated, is it reasonable that you anticipate a penetration rate of 50 per cent
in year 1, even though your demand research indicates that 21 per cent of
respondents would watch the proposed services?
11080 MR. LEVY: The answer is, yes. And if you could bear
with me, I will take you through how we arrived at that. This is all based on
the research that we did. And in fact, the end result is that our estimates, we
believe, are conservative, in terms of the numbers that we are going to be able
11081 We are working with a Canadian population assumption
of approximately 30 million people. The research that are dependent upon is
basically stating that specifically in the gay and lesbian community 10 per cent
of the Canadian population falls within that community. So there are 3 million;
in the gay-friendly community, our research has said that over one in three --
and the precise number was actually 36 per cent of that community. So that is an
additional 10.8 million people. Combined, that is 13.8 million. Okay?
11082 That is a bit tedious, but I want to take you
11083 Our research also told us that of the gay-friendly
community, 53 per cent of those people were likely to watch a programming
schedule such as ours. That amounts to 5.7 million people. In the community
itself, it is obviously much higher. It is 88 per cent. That is 2.6 million.
When you add those together, that means there is 8.3 million Canadians likely to
watch this service.
11084 I am taking a little bit of assumption here. We have
to translate that into homes because we don't get measured by people, we get
measured by homes. We are assuming three people per home, on average. And that
would allow us to talk about a universe of 2.8 million gay and gay-friendly
11085 Digital penetration, according to CCTA -- and we
agree with that -- will be approximately 20 per cent by September of 2001. That
is 2 million households. If we take that same percentage, if we are assuming
that the digital universe inside the gay and gay-friendly homes are the same as
the digital universe in general, you take 20 per cent of the 2.8 million homes
and that amounts to 560,000 gay and gay-friendly homes on day 1, in year
11086 Our analysis and our business plan called for a
subscriber penetration of 50 per cent of the 2 million digital boxes, or 1
million subscribers in the digital universe.
11087 If you look at the end result, what we are saying is
from the empirical data that we have approximately over 50 per cent, or 560,000
homes, out of those million homes come from the community we are talking about
11088 Now, we don't think that is reasonable. We think
that is low for a couple of reasons. Number one, if that is right, then it
really is the driver of this new digital-basic tier. That is saying, basically,
almost one out of every two people buying a digital box is buying it because
they are coming out of the gay and gay-friendly community. That is something we
would like to talk about with the distributors, but it is hard to believe it is
going to be even that high in the context of: that means the rest of the
universe is coming from people interested in the other seven or eight
11089 So we think that number is conservative.
11090 The other reason that number is conservative is
because of this: even though the accepted research is that 10 per cent of the
community falls within the gay and lesbian community, there is other research
out there that says that is very conservative. There was a study done -- I think
we filed it as part of our evidence -- from the University of Toronto, Sex
Education Department, that said that number is actually closer to 25 per cent
lives within that community itself. We didn't use that number. If that were
true, then, obviously, the numbers we are presenting are very
11091 So I know it was a little tedious, but what our
evidence shows is that in this new digital world, if we, as the program
suppliers, and the cable world and the satellite guys get their act together and
put a terrific package together and are able to market this thing, we think that
we are a very strong contributor in that tier of 10 packages.
11092 We heard a lot of pessimism this morning about the
whole future of the digital world and how many boxes are going to be out there
and how are we going to sell this new Canadian digital tier. People are talking
about comparing it to the old analog tier in the last round of services. Well,
the last round of analog tiering was tier 3, and that was tier 3 on top of tier
1 and tier 2 and people were paying a lot of money for this.
11093 What we are having the ability to create here is
really a new basic offering. It is a basic digital offering. And I think it is a
very exciting opportunity for us. And I think the numbers that we are looking
at, in fact, are very conservative. I think we are going to see much higher
penetrations than what we are talking about. But these are the numbers that we
11094 MR. MALCOLMSON: If I could just get Debra McLaughlin
to speak to the research. We commissioned numerous amounts of original research
as part of this application, and Debra may wish to shed some light on that in
terms of demand from subscribers.
11095 MS McLAUGHLIN: Thanks, Rob.
11096 Yes, in fact, I did want to clear up the 21 per cent
figure that you are referring to. It does, in fact, state in the research that
there is 21 per cent interest. But as I said in the opening remarks, PWC feels
quite strongly that is underestimated.
11097 This is an extremely difficult category to research
for the simple reason that some people, members of this community, and in fact
some people outside of this community but related to this community, may be
hesitant to declare either their interest or their actual participation in the
11098 The manner in which the question was asked in this
survey would elicit members of the community who were very comfortable and very
open about their involvement with the community, we asked very directly "Are you
a member of the gay community?"
11099 I have done other research in this area and
typically only if you are trying to get to the core market would you ask the
question in that manner. There are several approaches that are less harsh and
actually enlisted a greater response.
11100 The estimates of the population, as you can see from
the study I believe, are sitting at 1 per cent. That in fact is erroneous. All
counts show this population to be between 10 and 25 per cent. We won't know in
fact the actual numbers. We will get closer to the actual numbers when StatsCan
conducts its next census, but even then there will be a natural hesitancy to
11101 The response there, the 21 per cent, therefore is of
a group -- actually it is of the entire population and within the
group it is only the core population. We believe based on our focus groups that
the high interest will come from people, members of this community, who are
actually not entirely comfortable as well. In fact, we believe the response
based on our focus groups will be higher.
11102 In addition to this, there is a propensity for
members of this community to be focused and dwell in higher population areas, in
major urban areas. This survey was done as part of a multiple format test and
for this reason was done on the complete Canadian population.
11103 If you isolated the survey into urban areas where
the population concentrations are greater, not only of members of this community
but in fact people who are "gay friendly", you would have a higher response
11104 It wasn't possible in the context of the survey to
do that, but in the terms of Rainbow Radio when it was offered to a community
that is self-deprived and underserved, the responses were in the high eighties.
So 21 per cent is the floor in terms of interest. It is not the
11105 COMMISSIONER WILLIAMS: Okay. Thank you for that.
Other television channels directed at the gay-lesbian community in other
countries have been introduced. In your experience, what has been their
experience in terms of percentage of population?
11106 MR. SMITH: In fact, to my knowledge there are no
existing services which are completely focused on programming for the gay and
lesbian community and their supporters. There are networks, channels,
particularly in the U.K., that do a significant -- present a
significant amount of programming for that community, but at this stage, with
the exception of the U.S. station, I believe I was -- yes, it was
introduced last week. It hasn't actually gone to air. There are no existing
networks out there focusing specifically on this audience and PrideVision will
be a world leader in that.
11107 In terms of the work, the programming that Channel 4
in the U.K., the specific example I am thinking of for a heavy amount of gay and
gay friendly programming, the response based on research that I have read and
contact that I have had with the people at that station has been overwhelmingly
positive for that programming and they continued to build on that.
11108 A case in point is "Queer as Folk", a series that
took the U.K. by storm when it aired there and continues to pop up at film
festivals all around the world, lesbian-gay film festivals around the world, to
sell-out houses because there is such a demand for this original programming and
"Showcase", Laura can also testify to the success that "Showcase" has had with
their themed programming for gay and lesbian audiences and also their airing of
"Queer of Folk".
11110 MS MICHALCHYSHYN: As I mentioned when we presented
earlier, Monday nights on "Showcase" have been dedicated since 1995 to
gay-lesbian theme films from around the world. In the last three years,
"Showcase" had presented a week of theme movies around gay and lesbian pride,
usually in June.
11111 We have noted a significant audience interest and
(b) an American interest from the ratings. It ranges from 20 per cent as a low
to a 60 per cent high for an overall average increase in our audiences from a
typical film or movie night on "Showcase", so we have had great success and will
continue to program such programming on the network.
11112 COMMISSIONER WILLIAMS: Okay. Now, in the
Commission's licensing framework policy for this proceeding, we stated that
Category 1s must be offered as a package rather than on a stand-alone basis. Do
you anticipate any problems finding the packaging partners for a gay and lesbian
11113 MR. MALCOLMSON: No, we don't, Commissioner Williams.
If you look at some of the genres that have been proposed in this process,
independent films, Signature, the Biography Channel, even the Health and
Wellness channel, we think that the gay and lesbian genre fits well with all of
those proposed genres. They will make a very, very attractive
11114 As John said, our research which we spent a lot of
time and money on indicates to us that the gay and lesbian genre will be a real
11115 COMMISSIONER WILLIAMS: You in fact may be the dance
partner of choice for the driver of the new digital roll-out then.
11116 MR. LEVY: We were talking just waiting for our turn
here. You know, I was looking at the schedule of the categories. You know, we
did all the research, we paid all the money. There aren't two better
distinguished genres than the two we presented here.
11117 We don't have any problem with any other licensees.
We don't overlap on anybody else. These are truly, both of them, the health and
representation within the gay and lesbian community, are truly distinctive, they
are truly diverse. We are not sitting here making this up. These are clearly
underserved communities within the Canadian society.
11118 When you ask about are we good packaging partners,
these other guys should be lucky we are here. They are all picking little pieces
out of everybody else's programming schedule. They are all begetting, one begets
another, begets another, like Rob was saying, spinning stuff off from what they
are doing. That's easy.
11119 You talk about this whole synergy discussion and
saving costs and then not even putting them back into the broadcasting system.
That's another whole argument. You know, in our case, we are not out there
throwing a whole bunch of them at the wall and saying "Geez, I hope two or three
of them stick and maybe the Commission will be good enough to give us
11120 This process was about looking into the system and
finding out which ones are out there that need to be served, what communities
are served? With Health and Wellness, quite frankly I'm surprised nobody has put
in an application prior to now. I mean that's one.
11121 With PrideVision, obviously it's our view and
hopefully the Commission is going to agree, the time has come for that type of
service to be licensed. In terms of how we differentiate ourselves on both of
them -- I'm skipping back forth here a little bit because I have got
these two kids, four kids really, but these two kids, and I think they are both
11122 COMMISSIONER WILLIAMS: It's all right. You have lots
11123 MR. LEVY: Having the cheering. You want to go? I
will wrap up fast.
11124 COMMISSIONER WILLIAMS: No, no, you have lots of
time. That's what I'm telling you.
11125 MR. LEVY: I think they both have independent wealth
within them. I know by partnering with McMaster, nobody else is going to do
that. This is a huge opportunity. When we talked about Harvey last night, what
we were talking about in terms of the evening, in terms of the day programming,
you know, if another licensee gets it, they are not going to get this
opportunity from somebody else. It's going to look a whole lot different. It's
probably going to look a lot like what you are accustomed to seeing in the
States. This thing isn't going to look like anything you have seen
11126 In terms of PrideVision, you can see what the gay
and lesbian programming looks like today. You see it on other programs. We are
talking about a complete, comprehensive, 24 hour a day channel that allows these
guys and girls and transgenders to express themselves in a way that they can't
do today and by living their day lives every day and by communicating with one
another -- anyway, I'm going to get off my horse here.
11127 I think that we would be pretty good packaging
partners for any of these other guys that are trying to put together services
and make them make sense. Ours makes sense in and of themselves.
11128 COMMISSIONER WILLIAMS: You will get another chance
to do that. You have an opportunity at the end once we are finished the
questions, so if you want to --
11129 MR. LEVY: Sorry.
11130 COMMISSIONER WILLIAMS: -- remake some of those
points -- no, there's nothing to be sorry about. You felt strongly
about it and it's good that you expressed yourself.
11131 In the Commission's licensing framework
proceeding -- I'm sorry, I have covered that one.
11132 What impact do you expect interactive subscriber
input to have on the programming development of PrideVision?
11133 MR. LEVY: Everything. That's the
11134 COMMISSIONER WILLIAMS: That's what it's all
11135 MR. LEVY: That's what it's all about. I mean, it
isn't us guessing what they want. It's them telling us what we should provide to
them and that's the whole nature of both applications, but I should say
particularly because with PrideVision where they really have no outlet for
11136 COMMISSIONER WILLIAMS: Yes. These questions are
specific to PrideVision.
11137 When do you as an applicant expect to integrate your
interactive strategy with the set box? That's again a similar answer to the last
time: when the manufacturers are ready?
11138 MR. LEVY: Yes.
11139 COMMISSIONER WILLIAMS: Let's talk a bit about your
programming advisory board. Can you describe the nature, relationship and
influence that this board will have in programming decisions and is this
expected to be a permanent fixture of PrideVision?
11140 MR. MALCOLMSON: The programming advisory committee
in the PrideVision context is critical. We expect it to be a permanent fixture
over the life of the business. We have prepared programming advisory committee
guidelines and a constitution which we would be happy to file with
11141 It will be representative of members of the
component parts of the gay and lesbian community, the gay community, the lesbian
community, bisexuals, transgendered, gay parenting groups, the widest spectrum
because we believe that it is absolutely vital for those groups to have day to
day, ongoing input into the type of programming we are putting on the air. It's
absolutely essential in this genre.
11142 COMMISSIONER WILLIAMS: If I can sum up what I have
learned in a few words and you can help me if I have missed someone.
PrideVision, it's a service focused on a currently unserved diverse portion of
Canadian culture. It will be targeted, focused, it's needed and as soon as
technology permits it will be interactive. Would that in a few words summarize
your application on PrideVision?
11143 MR. LEVY: We could have used you helping to write
11144 MR. MALCOLMSON: If I could add, we did a lot of
research on PrideVision. We took this very seriously. We did three pieces of
original research. We looked at the existing body of research which was out
there and what came back to us in terms of what this network should look like
from the gay and lesbian community was that in today's spectrum there is a total
lack of variety. There is a total lack of realistic depictions of gay men and
women living every day lives.
11145 The coverage tends to be more negative than
positive. The coverage tends to be stereotypical and what PrideVision is all
about is changing that, is being realistic, is being responsible and reflecting
that community back to itself as it exists in the mainstream. That's really what
PrideVision's programming will be about.
11146 COMMISSIONER WILLIAMS: I heard our Chair earlier
today, so I won't ask if you feel your application has been given a full and
fair hearing because I am going to turn it back over to her and she is going to
pass it on to fellow Commissioners and legal counsel, but I am sure she will ask
you that at the end of the day.
11147 Thank you very much. I have enjoyed posing the
11148 THE CHAIRPERSON: Commissioner Wilson,
11149 COMMISSIONER WILSON: Mr. Levy, I want to probe you a
little bit on your business plan and I am interested to do that because you were
a cable operator, so maybe you might have some insight into how this is going to
roll out. You kept referring a little bit earlier to the basic digital offering
and the new digital tier in the singular.
11150 I just checked our Public Notice and it said that
Category 1 services would be afforded protection in terms of packaging and
equitable treatment. It didn't say that they had to be offered in a single
package. So I am curious about what happens to your business plan if there are
three or four packages which are similarly offered to subscribers, but the
take-up rates might be different for each of those packages. What effect does
that have if it is not digital basic, as you described it earlier? How does that
affect your financial projections?
11151 MR. LEVY: When we did our modelling and we based it
on a percentage penetration that wasn't strictly dependent upon a specific
10-channel package, things are different now. There are multiple distributors
there. The direct-to-home guys have tried some pick and pay scenarios and in the
old days in the cable business we used to say they tried to trick the consumer
by saying there truly was pick and pay, but they had the same constraints that
11152 I don't think there is going to be one package. I
was really talking primarily from the cable perspective. If I were, and I hope
we will be sitting down with the distributors and talking about how to package
these things, I think that the large package and creating a solid base in the
digital tier which really doesn't exist yet. I mean, we launched digital with no
programming services, for all intents and purposes.
11153 There are a few. There's Star. We were talking about
information, interactive guides and that's how we sold it. We talked about
better quality and that's how we sold it. We didn't have a heck of a lot --
we had expanded pay per view, which you know. We had a couple more pay-TV
channels, but we didn't have a tier.
11154 We were supposed to have a tier the last
11155 COMMISSIONER WILSON: I love the guide.
11156 MR. LEVY: Yes, the guide is -- we were supposed
to have a tier, but we sort of woosed out on that and some people were able to
negotiate down onto the analog tier. So we lost that basic tier at that time,
that basic digital tier.
11157 Our model is not predicated on a big package. I
think our services, both of them, are significant enough, as I said before and I
may be being a little presumptuous, but I think we are a good partner, quite
frankly, in any of those packages.
11158 You know, whether in our lifestyle package or in a
big package, we truly think that our communities are so dedicated to our service
that we really will be drivers. Our viewers are going to buy the package, quite
frankly, wherever it's in. So, the vision that we sort of talked about, which is
a big tier, is probably the worst cast scenario because big tier means usually a
little bigger bucks to get it.
11159 Our viewers are going to buy this service. So if
it's on a smaller tier, our numbers probably go up.
11160 COMMISSIONER WILSON: Thanks.
11161 THE CHAIRPERSON: Mr. Levy and Mr. Malcolmson and
perhaps your lawyer, this business of independent production, when we ask the
question everybody gets very defensive. We are just trying to get on the record
advice as to how we handle this. Really, we have been trying to ask three
questions. One is: Does it matter in this environment -- it has mattered
before. We have imposed requirements before. Is that still valid for you, for
your competitors in our role in encouraging diversity of sources for
11162 The second question we have asked, well, the minute
you say yes you should be concerned. Then you have to say, well, are you
concerned with 1 per cent or you have put on the record 29.9 per cent. We have
had other numbers put forward, some more restrictive even.
11163 Then, the third question is once you have decided
that it's still a good idea to monitor it, then you identify what is not an
independent production company or an independent producer. Then what level of
restriction should there be on the licensee.
11164 So, on the last question, am I right that when I
look very generally at your Canadian expenditures that that $2 million is close
to half of your Canadian content expenditures yearly that would go to the
independent production sector? It's a little less as you go forward.
11165 MR. MALCOLMSON: That's correct.
11166 THE CHAIRPERSON: If I read like $4.2 million
Canadian content expenditure in year one and then it goes up higher, so it's not
always half. But, in any event, should the Commission decide that, one, we
haven't really heard you on whether you think it's a good idea. We have heard
you on what the definition should be. Should the Commission define it more
restrictively than 29.9 per cent and decide that a restriction is still a good
idea, what would you be prepared to commit to of that $2 million that would go
to an independent production company as defined if it were to exclude
11167 Would it be an amount of money? Would it be --
because I know you have told us we have no plans and we have no contract, but
for over a seven-year licence that really doesn't answer that third
11168 I am not sure I have heard you either on whether
it's still necessary to worry about it in the digital environment or whether
perhaps yesterday's sins are today's virtue in that context. I don't know if you
have anything to add and we certainly would like to have you on record should a
more restrictive definition be chosen as to what you are prepared to commit to
independent producers as defined by us.
11169 You don't really have to. You can readdress this at
the reply stage because there are other people thinking about it as
11170 MR. LEVY: It's also difficult for us because
normally the people in front of you are the people who are reaping the benefit
of that. They are in the production business and they are applying for licences.
So, you know, they are offloading some of their inventory and some of their
product and they stand to gain from an ability to move and sell basically into
11171 THE CHAIRPERSON: Except that the independent
production sector, which is a sector of the industry which is particularly or
expressly addressed in the Act, could say: Well, all you need to do is get 29.9
per cent of a big producer like Alliance and that's the only producer that is
going to benefit from this licensee's production money, Canadian content
11172 MR. LEVY: Right.
11173 THE CHAIRPERSON: That's one of our concerns. You
see, we are looking at it from a regulatory perspective as to is there a need to
do anything in order to further the objective of the Act in this
11174 We have done it before. Some has been restrictive,
some less, but perhaps you can just try to think of those three questions. We
are open to being convinced that it shouldn't matter. If it does matter, which
has been the answer of a number of applicants that it still should matter, we
will have to settle on an applicable definition across the board and then,
generally, I think licensees have said it differs in each case what our
commitment should be. And that's not a bad idea to get people to say: Well, in
my case for the following reason even if Alliance were to be considered
non-independent, this is what we are prepared to -- and you don't have to
11175 MR. LEVY: I think we are sort of bantering
percentages here back and forth and I think it's probably not appropriate. I
think we do want to think about it and come back to you with a logical
11176 THE CHAIRPERSON: I just wanted to make sure you
understood how we are coming at this in these three levels.
11177 MR. LEVY: Right. Just a last comment on it, it's
just from our thinking this whole discussion would make much more sense if we
owned 29.9 per cent of Alliance Atlantis.
11178 THE CHAIRPERSON: Well, that was the point I was
trying to make to Mr. Malcolmson before.
11179 MR. LEVY: Right. Exactly.
11180 THE CHAIRPERSON: It was that perhaps there is a
different way of looking at it. We are open to being told. There is a difference
between the two.
11181 MR. LEVY: The old saying is the shoe is on the other
foot in our particular case, so from our perspective all that's important is to
have as many outlets as possible, to have as much flexibility as possible and
not restrict our ability to deal with any independent producers.
11182 THE CHAIRPERSON: That means then from our
perspective you are keeping the freedom to spend all your $14 million on one
11183 MR. LEVY: Right. Obviously, in this particular case
that may not make sense and we will think about it and we will come back to you
with something which imminently fair.
11184 THE CHAIRPERSON: I just wanted to try to make sure
that you understood where I was coming from because everybody immediately gets
very defensive and says "we're not going to deal with that." We have 88
applications before us --
11185 MR. LEVY: We are going to think about it before we
11186 THE CHAIRPERSON: -- and a lot of incest.
11187 MR. LEVY: Careful.
11188 THE CHAIRPERSON: Counsel, do you have any
11189 MR. STEWART: No, Madame Chair, except that
Commissioner Williams will not be able to ask the question about filler
programming, the Category 15 on this occasion, given the nature of service
description that has been supplied.
11190 COMMISSIONER WILLIAMS: It's because they neglected
to fill out that square.
11191 THE CHAIRPERSON: I don't know if you have been
following the hearing, but that has been one of the more difficult questions to
11192 CHAIRPERSON OF THE COMMISSION: But everybody seems
to be converted now.
11193 THE CHAIRPERSON: Yes.
11194 MR. LEVY: That is one we had an answer
11195 THE CHAIRPERSON: I want to make sure as well that
someone has been following -- and it's relevant probably to you, has been
following the hearing and you know that there is a take-home question for the
reply stage because there is possibly a service that you would find in
competition with yours and you may not be prepared to launch if we were to
decide to give a licence to it.
11196 We thank you very much. We have kept you a bit late.
We thank you for your patience and I do hope you feel you have been given a fair
hearing. You are welcome to use a few minutes to wrap up, if you
11197 MR. LEVY: I'm certainly not going to take much time
and I do believe that we have had a fair hearing. Perhaps we should just
conclude with where I was going earlier on in my sort of dissertation because
that's really the heart and soul of what we are talking about.
11198 This is a young company. It's an independent
company. We have got a proven track record. You entrusted us once by allowing us
to grow and develop from an alphanumeric service to headline sports to something
now that is effectively competing in a very competitive marketplace.
11199 We responded to the call. We looked very, very
carefully at what was out there. We deliberately didn't take a shotgun approach
to this thing because, first of all, it wouldn't make any sense for a company
like ours to come in trying to convince you that we could handle seven or eight
licences. Regardless of that, it made sense because these are the two areas that
are absolutely underserved.
11200 We are confident that we could provide the level of
expertise in programming to live up to the commitments that we have said. So we
want to thank you very much and we look forward to seeing you in the next phases
of this hearing. Thank you for your time.
11201 THE CHAIRPERSON: Good evening to everyone and we
will resume tomorrow morning at 8:30.
11202 Nous reprendrons demain matin à 8 h 30.
--- Whereupon the hearing adjourned at 1835 to resume
at 0830 on Thursday, August 17, 2000 / L'audience
est ajournée à 1835 pour reprendre le jeudi
17 août à 0830