ARCHIVÉ -  Transcription - Hull, QC - 2000/08/23

TRANSCRIPT OF PROCEEDINGS

FOR THE CANADIAN RADIO-TELEVISION AND

TELECOMMUNICATIONS COMMISSION

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 23, 2000 le 23 août 2000

Volume 8

Transcripts

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

Contents.

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.

Transcription

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

Telecommunications Commission

Conseil de la radiodiffusion et des

télécommunications canadiennes

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

du Conseil

Andrée Wylie Chairperson / Présidente

Jean-Marc Demers Commissioner / Conseiller

Ronald Williams Commissioner / Conseiller

Martha Wilson Commissioner / Conseillère

ALSO PRESENT / AUSSI PRÉSENTS:

Secretary / Gérant de

l'audience et secrétaire

Alastair Stewart Legal Counsel /

conseiller juridique

Peter McCallum Legal Counsel /

conseiller juridique

HELD AT: TENUE À:

Conference Centre Centre de Conférences

Outaouais Room Salle Outaouais

Hull, Quebec Hull (Québec)

August 23, 2000 le 23 août 2000

Volume 8

TABLE OF CONTENTS / TABLE DES MATIÈRES

PAGE

PHASE I

PRÉSENTATION PAR / PRESENTATION PAR

CORUS ENTERTAINMENT 2301

PRÉSENTATION PAR / PRESENTATION PAR

SALTER STREET FILMS LIMITED (OBCI/SDEC) 2459

Hull, Quebec / Hull (Québec)

--- Upon resuming on Wednesday, August 23, 2000

at 0830 / L'audience reprend le mercredi

23 aôut 2000 à 0830

18130 THE CHAIRPERSON: Good morning and welcome to the eighth day of our hearing. Bonjour et bienvenue à la huitième journée de notre audience.

18131 Monsieur le Secrétaire, s'il vous plaît. Mr. Secretary, please.

18132 MR. CUSSONS: Thank you, Madam Chair.

18133 Good morning, everyone.

18134 We will now hear six applications by Corus Entertainment for new Category 1 services. This means of course that Corus will have 45 minutes to make its presentation.

18135 These six services will be known as CHROME, Booknet, Discovery Travel & Adventure, Land & Sea, Parent TV Incorporated, and The Canadian Documentary Channel.

18136 We have Mr. Cassaday and his team.

18137 Good morning, sir.

PRESENTATION / PRÉSENTATION

18138 MR. CASSADAY: Good morning.

18139 Good morning, Madam Chairperson, and Commissioners.

18140 My name is John Cassaday, President and Chief Executive Officer of Corus Entertainment.

18141 THE CHAIRPERSON: Hello.

18142 MR. CASSADAY: We would like to take a few minutes to introduce our panel before commencing with our opening remarks.

18143 Joining me today is a diverse team of experienced and dedicated individuals.

18144 From Corus, and beginning on my right, they are: Paul Robertson, who is President of Corus Television; Kathleen McNair, Vice-President, Regulatory Affairs; and, Vicki Dalziel, General Manager of Country Music Television. To my left are: Susan Ross, General Manager, Treehouse TV; and, Sheldon Teicher, Vice-President, Business Development.

18145 At the table behind, beginning on my right are: Jamie Haggarty, Vice-President, Finance; Karen Gifford, Senior Manager, Programming, YTV; John Whish, Director of Operations, YTV; Steve Rolufs, Director, Corus Interactive; Andrew Eddy, Vice-President, Affiliate Relations.

18146 Also with us is Kaan Yigit, Partner, Solutions Research Group.

18147 At the side table, representing our partners, and beginning at the near end are: Scott Hollander, Vice-President, Marketing, Discovery Networks; Rex Recka, Vice-President, Programming, Discovery Networks; Kelly Bray, Vice-President, Business Affairs, Salter Street Films; Laszlo Barna, President, Barna-Alper Productions; Sandra Macdonald, Chairperson, National Film Board of Canada; Marc Starowicz, Executive Producer Television, CBC; Jane Chalmers, Prairie Regional Director, CBC; Michael Hirsh, CEO, Nelvana; and, Valerie Hussey, President and CEO, Kids Can Press.

18148 It is indeed a pleasure to appear before you today in the company of such impressive partners, partners who share our commitment to the creation and exhibition of quality Canadian programming, partners who share our belief in Canadian programming, and partners who will work with us to bring six new, distinct and compelling Category 1 services to television viewers.

18149 CBC, Discovery Networks, The National Film Board of Canada, Nelvana, Salter Street Films, and Barna-Alper Productions -- one of Canada's leading independent documentary producers -- this is truly a blue-chip partner roster and we think indicative of the willingness of Corus to be a new collaborative and constructive force in Canadian broadcasting.

18150 We sincerely hope that by day's end you will share our enthusiasm for our digital applications. The licensing of digital channels is a fundamental turning point in our industry, an event that we have been waiting for with great anticipation for some time.

18151 We commend the Commission on the development of an appropriate framework to foster the introduction of digital programming services. Now is the right time to licence attractive Canadian digital programming services that will help drive the roll-out of digital television and foster further innovation and creativity in our industry.

18152 Digital television is a reality. There is no question that it will provide Canadian viewers with increased choice, combined with high quality sound and pictures, all of it bundled with exciting interactive applications.

18153 Digital services will ensure that Canadians see and hear Canadian voices and stories in an increasingly global and competitive marketplace -- voices and stories told from different perspectives that reflect the country's rich cultural and regional diversity.

18154 Commissioners, the digital world will provide opportunities, but also unique challenges: licensees must have the capability to invest substantial resources in Canadian programming and marketing; and then, further investments will have to be made to develop exciting new interactive content.

18155 The revenue at the outset will be quite limited and applicants must be prepared to stay the course.

18156 Corus has the experience, expertise and resources necessary to play an important role in the digital future. We are a strong Canadian company with a clear compelling vision of where we are going and how we are going to get there.

18157 MR. ROBERTSON: We are very proud of our Category 1 applications. We undertook a rigorous selection process to ensure that each application was worthy of a Category 1 licence. In particular, each concept has proven to be highly attractive based on qualitative and quantitative market research.

18158 During the process we were thrilled to find like-minded partners who shared our vision and enthusiasm for these services and who we recognized could help turn our concepts into reality.

18159 There are fundamental themes that are evident in each of the Corus applications before you: diverse program offerings, strong Canadian content, commitment to the independent production community, and collaboration through partnership.

18160 The applications before you reflect a philosophy that independent producers add diversity and creativity to our services and to the broadcasting system as a whole. As a reflection of this belief, we have: set aside envelopes for arm's-length production in all our services, we have pushed hard to enable new independent production in the first year, and we have applied safeguards to enshrine these commitments.

18161 Furthermore, every application before you surpasses the 50 per cent Canadian content requirement by year seven as laid out in the Call.

18162 Although it will take time for digital penetration to grow, we did not use this as an excuse to deliver low levels of content in the early years. We believe Category 1 services should deliver more.

18163 You will see reflected in these applications a great deal of collaboration through partnership. At Corus, we believe that collaboration with all sectors of the industry is essential to ensure that we enhance the broadcasting system in a relatively small country with scarce resources.

18164 This commitment to collaboration has led us to partner with the outstanding group of organizations that are with us today.

18165 Our applications have been enriched through debate, stimulating ideas and general good humour.

18166 We firmly believe that these services will stimulate digital television using full-featured and interactive digital technology.

18167 At Corus, we are passionate about interactivity. Our Web site content is totally interwoven into our television services.

18168 Our proposed services are particularly well suited to the digital platform and the innovative applications it affords.

18169 Over the course of the next few minutes, we will provide you with an insight into the nature, depth and breadth of each of our six offerings.

18170 They are: Booknet, Land & Sea, Parent TV, The Canadian Documentary Channel, Discovery Travel & Adventure Canada, and CHROME.

18171 To begin, Susan Ross will present Booknet, and Valerie Hussey of Kids Can Press will join her in her presentation.

18172 MS ROSS: Thank you.

18173 Madam Chairperson and Commissioners, Booknet will build on Canadians' love of books.

18174 Our vision is for a service that will appeal to Canadian families and increase exposure and promotion for Canadian books and authors.

18175 It is a specialty service dedicated to exhibiting programming based on published works, bringing the written word to life for all Canadians.

18176 We would like to share a sample of Booknet with you.

--- Video presentation / Présentation vidéo

18177 MS ROSS: Booknet will give prominence to Canadian content, with 75 per cent of our schedule devoted to Canadian programs by the end of the licence term.

18178 Over the 7 year licence term, Booknet will expend 40 per cent of revenues on Canadian programs.

18179 We will spend over $20 million on Canadian programs over this period.

18180 And we have put safeguards in place to ensure arm's length producers have a significant opportunity to contribute.

18181 We are delighted to partner with Nelvana and Kids Can Press on Booknet.

18182 Nelvana is well-respected worldwide as a creator of outstanding animation. Through its ownership of Kids Can Press and Klutz Books, Nelvana is now a major independent publisher in North America.

18183 MS HUSSEY: Thank you, Susan.

18184 Book publishing is at the heart of Booknet. For almost 30 years Kids Can Press has been a part of the dynamic growth of the Canadian publishing industry.

18185 For as many years books have been life. Whether publishing educational books or trade books for reading pleasure, I have been committed to the development of an indigenous Canadian literature.

18186 From the beginning of Kids Can, when there was a staff of one and sales of $17,000 to today when Kids Can is one of Canada's most successful publishers, I have believed that our success would be best achieved in a dynamic and growing environment. My involvement with the industry, whether participating in the development of cultural policy, teaching or lobbying, reflected that belief and has been steadfast.

18187 The Canadian publishing community is small. It is an industry that has delivered cultural and regional diversity, against all odds. Statistically, our population is too small to sustain a publishing industry. And yet, today publishing is one of Canada's most successful cultural exports.

18188 Our national literature reflects the Canadian experience in all its diversity and richness. It is through our stories that we know ourselves as a nation. And through writers like Michael Ondatjee, Carol Shields, Bonnie Burnard, Josef Skvorecky or Margaret Atwood that the world knows us.

18189 Statistics show that 70 per cent of Canadians purchased a book in the last six months. Sales of Canadian authored titles reached $700 million last year, approximately 30 per cent of all trade sales in the country. Canadian-owned publishers produced approximately 80 per cent of those Canadian authored titles.

18190 It takes Canadians to teach our children about our own history. No one else is going to publish a book on Canadian Prime Ministers or The Group of Seven, or an overview of Canada for children. We can do it, and when we do it we get it right. This is for us to do. Kids Can Press has excelled in telling Canadians the story of their own history, as well as giving birth to one of the most successful book characters of the decade -- Franklin.

18191 But nothing reaches the mass public as effectively as television. So what happens when a channel is conceived that combines the very best of our writing, in all its diversity, with the talent and vision of our television industry? We have Booknet, a channel which will:

18192 Enrich and strengthen the cultural fabric of Canada;

18193 Will give prominence to Canadian programs;

18194 Will feature Canadian authors and books across a range of children's and adult programs;

18195 Will encourage, promote and strengthen family literacy; and

18196 Will enrich the television viewer's experience through innovative, interactive Web sites.

18197 Booknet is about television for Canadians, by Canadians, about Canadians. It is about our voice as a nation, expressed in our own words.

18198 MR. ROBERTSON: Vicki Dalziel will now present Land & Sea to you along with Jane Chalmers of the Canadian Broadcasting Corporation.

18199 MS DALZIEL: Land & Sea is the voice of rural Canadians, a channel dedicated to their viewpoints and spirit. This application represents an historic opportunity to provide a vital and distinctive specialty service to a large, under-served population of Canada, 3.7 million.

18200 We would like to share with you a video example of the service we envision.

--- Video presentation / Présentation vidéo

18201 MS DALZIEL: We know firsthand that rural Canadians need and want their own channel. That is the headline from the letters of support that have poured in from every sector of our rural community.

18202 Victor Young, CEO of Fishery Products International states:

18203 Rural Canadians have told us they are hungry for television that informs, educates and entertains them from a rural perspective.

18204 MS CHALMERS: The core strength of this service is information programming, providing daily original news coverage of rural industries and issues in depth not currently found in the Canadian broadcast system. It will report on commodity markets, provide tailored weather and climate information, plus offer a platform for national discussion and debate.

18205 This programming is all about perspective and orientation.

18206 Take a few minutes to reflect on a typical national news program. You will hear reports like this:

18207 "More good news at the grocery counter. Statistics show consumers today are paying less for a loaf of bread."

18208 Or, "Get out the sun tan oil." Another glorious day that will shatter record highs."

18209 From the urban perspective that is all good news. On the farm, where rising costs and dropping grain prices are making it harder to stay in business, low bread prices are not good news, and quite often "happy-talk" weather forecasts for the city may in fact signal a devastating drought in the country.

18210 These are simplified examples of how the rural perspective, at times, is ignored or clearly misunderstood.

18211 MS DALZIEL: Our rich program schedule is possible because of the unique partnership of Corus and CBC. Land & Sea will complement CBC's extensive news infrastructure and commitment with a national service for rural Canadians. Land & Sea will include current affairs, documentaries and educational programs that will inform and enlighten. Comedy, variety, sports and drama that will entertain. All programs will emphasize rural themes and promise to embrace and respect rural values and lifestyles.

18212 We propose a strong commitment towards Canadian programming beginning at minimum of 50 per cent and increasing to 60 per cent by the end of the license term.

18213 Land & Sea will invest over $28 million in Canadian content over the license term.

18214 We will expend, at a minimum, 43 per cent of the previous broadcast year's revenues on Canadian programming.

18215 In a letter of support from Senator Sharon Carstairs, she states:

18216 We agree.

18217 If this connection is to be made, if this vision is to be realized, if rural Canadians are meant to have a home in the digital broadcast spectrum, now is their time.

18218 MR. ROBERTSON: Our third specialty service is Parent TV. Susan Ross will describe this service to you.

18219 MS ROSS: Thank you.

18220 Parent TV is devoted to providing information about parenting, child development and child care directed to parents, grandparents and caregivers.

18221 It is a natural extension of our successful children's services, YTV and Treehouse, and our commitment to Canadian children. In addition, this team has experience in producing and broadcasting programs for parents.

18222 Out of 10,000 available hours of television weekly, we found on average less that one half of 1 per cent are devoted to parenting programs. Canadian parents, and perhaps grandparents, looking for help or advice on teen self-image, homework hassles or toddler tantrums have no dedicated channel to turn to. In other words, 5.6 million Canadian parents represent a huge and under-served group.

18223 Television is the only media source that can offer the faces and voices that share the ideas and experiences of other parents. Parents need to know they are not alone.

18224 Let me show you Parent TV.

--- Video presentation / Présentation vidéo

18225 MS ROSS: Parent TV will give prominence to Canadian programs. In year one, 55 per cent of the schedule will be devoted to Canadian content, rising to 65 per cent at the end of the licence term.

18226 Over the seven year licence term, Parent TV will expend 38 per cent of revenues on Canadian programs; and, we will spend $12.9 million on original independent production. That represents 85 per cent of our total Canadian spending over the seven-year term.

18227 Parent TV has received tremendous support from educators, child psychologists, family resource centres and parent support services. In consumer research, 65 per cent of all respondents, not just parents, support the Parent TV concept.

18228 Good parenting helps children reach their full potential, but being a parent today is difficult and challenging. Parent TV is not about drama or movies. It will inform Canadian parents by providing programming of interest to them when they want it and when they need it. Busy, time-pressed parents cannot be tied to appointment viewing.

18229 Parent TV's vision, to positively affect parenting in Canada, can and will make a difference to parents and children. It will be a valuable contribution to the Canadian broadcasting system.

18230 MR. ROBERTSON: John Cassaday will now describe the Canadian Documentary Channel. John is joined by Marc Starowicz of CBC, Sandra Macdonald of the National Film Board of Canada and Laszlo Barna of Barna-Alper Productions.

18231 MR. CASSADAY: The Canadian Documentary Channel will exhibit the enormous depth and diversity of Canadian documentary programming.

18232 The documentary genre meets the obligations of the Broadcasting Act by providing a broad diversity of subject material and point of view. The genre lends itself fully to downstream interactive applications as viewers seek additional information to broaden their appreciation of an issue or join in the debate. Finally, Canadians are internationally acclaimed for our documentary programs and this genre deserves more dedicated shelf space.

18233 Here is a look at the Canadian Documentary Channel.

--- Video presentation / Présentation vidéo

18234 MR. CASSADAY: Commissioners, the Canadian Documentary Channel is the strongest of the applications in this genre.

18235 We will have a starting exhibition level of 60 per cent Canadian content rising to 66 per cent by the end of our first licence term.

18236 We will expend at least 47 per cent of revenue on Canadian programming over the licence term.

18237 We will commission 26 new hours of programming a year from arm's length independent producers, totalling close to $5 million during the initial term; and we will provide a minimum of 50 per cent of our Canadian licensing and acquisition budget to independent producers.

18238 The Canadian Documentary Channel is the result of an exciting collaboration between CBC, Corus, the NFB and four independent documentary producers who are industry leaders: Barna-Alper Productions, Ciné Nova Productions, GalaFilm and Omni Film.

18239 MR. STAROWICZ: A service dedicated to exhibiting only documentaries and primarily Canadian documentaries is long overdue and has tremendous appeal to Canadian audiences.

18240 We will provide an attractive service with deep Canadian content across a range of series:

18241 One, regional documentary strands such as Eyes Ease, which is for maritime filmmakers, Eyes West for western filmmakers, and Cinémathèque from Canada's francophone filmmakers.

18242 Two, platforms for new voices such as Northern Lights, covering First Nations and our northern communities, Reel Diversity promoting cultural diversity, Director's Debut for first films and People's Camera, a web inspired opportunity for ordinary Canadians to share their stories.

18243 Appointment viewing strands, such as the POV series, featuring opinionated and subjective one-off independent documentaries, and the NFB Showcase, from the award-winning library of the National Film Board, and the CBC Screening Room, from the highly-regarded library of the Canadian Broadcasting Corporation.

18244 What enables us to provide a much richer, deeper and more varied schedule than others is a combination of the best of independently produced documentaries with an unmatched archive of courageous, thought-provoking documentaries that exist in our public institutions, the National Film Board and the CBC.

18245 MS MACDONALD: The CBC and the NFB hold significant ownership positions in this service. This is a key advantage for our application given the unique position, and trusted reputation, that these two institutions enjoy stretching back over generations of documentary filmmakers. We appreciate the 70-plus letters of support that this application received. We would like to quote one that might put the issue of CBC and NFB participation in this channel into perspective. This is a quote from Bernard Zukerman, a name that I guess will be known to everybody:

18246 MR. BARNA: As the representative of the independent producer partners involved in this application, please understand that we know the issues that face documentary filmmakers from across the country. As part of the programming committee for the channel we will ensure the needs of independent documentary filmmakers are respected. Moreover, we will ensure that the next generation of documentary filmmakers are given a start up through our generous and unique scholarship and bursary program.

18247 We believe the Canadian Documentary Channel best serves the Canadian broadcast system, the Canadian community of documentary filmmakers and the dedicated documentary audience.

18248 MR. ROBERTSON: Discovery Travel & Adventure Canada is devoted exclusively to travel. Joining me to present this service to you are Scott Hollander and Rex Recka of Discovery Networks International.

18249 Discovery Travel & Adventure Canada will present stunning travel programming targeted to adults, satisfying their sense of exploration and need for a dedicated outlet showcasing the sights and sounds that Canada and the world around them has to offer.

18250 We believe that it will inspire both travellers and non-travellers alike to explore Canada in a different light, as they are entertained with programs such as: Best Skiing Destinations; Riding the Rails; and Cottages and Waterways.

18251 Here is a sample of Discovery Travel & Adventure Canada.

--- Video presentation / Présentation vidéo

18252 MR. ROBERTSON: Commissioners, with Discovery Travel & Adventure Canada we will deliver a programming schedule that will build throughout the licence term to 55 per cent Canadian content; and, we will expend at least 41 per cent of revenues on Canadian programming over the licence term.

18253 MR. HOLLANDER: The strength of the Discovery brand will ensure that the Discovery Travel & Adventure Canada channel receives a very high level of interest by Canadian digital subscribers.

18254 Strong brands will encourage Canadians to subscribe to digital television.

18255 According to Roper Reports Worldwide, Discovery ranked first in unaided global awareness among all measured media brands. As the world's foremost provider of real-world entertainment, Discovery services are seen in 147 countries and by over 1.2 billion people worldwide.

18256 Capitalizing on the unparalleled travel programming expertise and brand equity of Discovery, Discovery Travel & Adventure Canada will feature newly created Canadian travel programming along with the most popular travel shows from Discovery Travel & Adventure International.

18257 MR. ROBERTSON: Canada is a key travel destination. Accordingly, there is a major opportunity for Canadian produced travel programming to find a place on other Discovery Network channels around the world.

18258 Canada has extraordinary natural beauty that should be shared with Canadians and with Discovery Travel viewers in other countries. Consider: The roaring Fraser Canyon and Hell's Gate in British Columbia; Peggy's Cover, the world's most photographed lighthouse, in Nova Scotia; whale watching in Newfoundland and Labrador; the history, culture and cuisine of Quebec City; Canada's vast system of magnificent national parks.

18259 Discovery Travel & Adventure Canada is a strong Category 1 application that will provide regional reflection and exciting export opportunities for Canadian produced programs.

18260 Sheldon Teicher will now describe CHROME. Kelly Bray of Salter Street Films joins him.

18261 MR. TEICHER: CHROME will fulfil a significant gap in the current programming spectrum.

18262 The target audience of CHROME is comprised of almost six million Canadian men 18 to 49 who do not have a channel designed specifically for their interests, aspirations and lifestyles.

18263 CHROME is a service created especially for men -- in essence "A Canadian Man's Guide to Modern Living".

18264 CHROME will provide a wide variety of lifestyle, informational and entertainment-based programming. Men will turn to CHROME for programs on health and fitness, career and business, travel and adventure, fashion, sexuality, music, sports, gadgets, gear and technology.

18265 We will provide a forum for social, political and pop cultural discussion and will feature topics such as "Navigating the Pitfalls of Office Politics", "Opening an On-Line Investment Account" and "Being a Better Father" -- all content that can't be found anywhere else and presented from a unique "guys" perspective.

18266 Let us have a look.

--- Video presentation / Présentation vidéo

18267 MR. TEICHER: Throughout the licence term CHROME will make a significant contribution to Canadian programming:

18268 CHROME will achieve a minimum Canadian content level of 65 per cent by the end of the licence term -- the highest percentage of any of the proposed men's specialty services.

18269 CHROME will spend over $21 million and commit to expend 40 per cent of revenues on Canadian programming over the licence term -- again, the highest percentage of any of the proposed men's specialty services.

18270 And we will commit at least 50 per cent of Canadian drama expenditures to independent producers who are arm's length from the service.

18271 From our research, whether over the phone, on the street or in focus groups, one this was clear: Canadian men want CHROME. This has been overwhelmingly reflected in both our qualitative and quantitative research.

18272 The incredible popularity in Canada of magazines from England and the United States, such as GQ, Men's Health, Maxim and Esquire, is further evidence of our target audiences interest in this type of information. But Canadian men want, require and deserve this information from a Canadian perspective.

18273 In addition, with CHROME's target audience being early adopters of new technology and very interested in interactive content, CHROME will be a key offering in the successful roll-out of digital specialty services into the marketplace.

18274 We are delighted to partner with Salter Street Films on CHROME. Salter Street is one of Canada's leading producers of edgy, humorous, and smart programming. Salter Street has a great track record creating engaging programs with strong appeal to men aged 18 to 49 from "Made in Canada" to "Lexx", from "Michael Moore's The Awful Truth" to "This Hour Has 22 Minutes". In addition, Salter Street has extensive new media experience in developing innovative web content that will be a valuable resource to CHROME.

18275 MS BRAY: Salter Street is thrilled about the opportunity of partnering with Corus and committing our resources to what we feel is the strongest application for a men's channel.

18276 Being a recognized producer of Canadian programming for 20 years has allowed us to develop a reputation and expertise at producing niche programming in such areas as comedy, science fiction and variety. The CHROME service focuses on niche programming for a specific niche market and we are experienced producers of programming particularly appealing to this niche. Jointly with Corus and the independent production community we will create exciting, original programming for CHROME.

18277 Some potential programs include:

18278 "Search for the Holy Ale" -- a globetrotting hunt pairing the world's finest brews with eclectic homecooking.

18279 "Hot Topics" -- a Canadian version of "Politically Incorrect" which will provide a forum for debate of current issues from a man's point of view.

18280 "Guy Rules" -- a wildly humorous interactive game show where guys compete to prove their manliness.

18281 "THE HTML Files" -- a sitcom set at a Canadian Internet start-up focusing on a group of young entrepreneurs who are struggling to reach a billion dollar market cap and find time to get a date.

18282 As you can see, CHROME will present programming unlike that seen anywhere else on television. We hope that the Commission will lend its support to address the needs of this large under-served segment of Canadian society. Together with Corus we look forward to bringing this channel to Canadian men.

18283 MR. CASSADAY: As you have seen and heard from our presentation, we have a number of exciting and compelling specialty services that will fill programming voids for Canadian viewers and help drive the development of digital television.

18284 Our digital services will reflect fundamental themes of:

18285 Diverse programming offerings;

18286 Strong Canadian content;

18287 Commitment to independent production; and

18288 A collaboration through partnership.

18289 Our partnership strategy was designed to be inclusive. We have ensured a vibrant programming vision through this approach. In our view, such collaboration dramatically increases the likelihood of success for these digital services. We will be able to draw upon the expertise and creative resources of our partners to ensure that each digital offering provides the best possible programming.

18290 We intend to maximize the creativity and effectiveness of the digital medium by acting as a leader and champion for creators of interactive media, and by offering the best set of features to our audience.

18291 Corus will honour the commitments required to ensure the success of its services, even in the early stages of digital television.

18292 We are prepared to stay the course and work to ensure that digital television becomes a true success.

18293 This concludes our presentation. We would be pleased to answer any of your questions.

18294 THE CHAIRPERSON: Thank you, Mr. Cassaday, Mr. Robertson and your colleagues.

18295 Commissioner Demers.

18296 COMMISSIONER DEMERS: Good morning, Mr. Cassaday, good morning to the Corus team and to Corus partners.

18297 I will follow the same pattern as we have since the beginning and no doubt some and most of the questions will not be a surprise to your team. I will follow the pattern.

18298 As you know, the first question we ask concerns criteria. I understand from your oral presentation that you did exercise a choice in deciding which application you would bring to the attention of the Commission, so this may be interesting for us since you have already exercised some discrimination in setting up criteria for you.

18299 You will be maybe an inspiration for the Commission in discussing what its criteria should be and the accent it should give to some of these criteria it has published already in the public notice.

18300 So criteria. Which ones do Corus think the Commission should emphasize? Which ones should be first on the list when the Commission deliberates on these applications?

18301 MR. CASSADAY: Well, we will do our best to inspire the process.

18302 In terms of thinking about the process, we think that the first premise that the Commission should consider is that the development, the successful development of digital is good for everyone in the industry, so if we can use this process as a means of ensuring the success of the deployment of digital, whether it is through satellite or through cable set-top boxes, that will create opportunities for all programmers.

18303 So we feel the first important consideration is that we accept the premise that if we licence the top services, that they will have the greatest opportunity of stimulating the development of digital.

18304 The second element that we would suggest the Commission consider in their deliberations is to move to the area of genre or category. So, for example, when you go to a grocery store -- and I know its always expected that I will use my grocery analogies -- but you go to a grocery store and you are trying to decide what to have for dinner, you begin a hierarchy of choice and you decide, you know: Am I going to go carbohydrate? Am I going to go protein? If I go protein, am I going to go fish or poultry? I think the same kind of decision has to be made here.

18305 What we would encourage the Commission to do is to think about genres first. We think that the important consideration here is: What are the genres or categories that are going to be the most appealing and create a thought on the part of viewers that "I really want to get these channels and to get these channels I have to move to digital".

18306 So once that decision is made, then we go to the question of: What is the appropriate service within that genre?

18307 Now it comes back to using your criteria in the most helpful way possible. You laid out in your call a number of considerations: Cancon of at least 50 per cent, proven market demand, program diversity, affordability, the strength of a business plan and innovation in the use of digital.

18308 Clearly all of these things are important, but as in any strategic decision some things are more important than others.

18309 What we would encourage in the final decision as to which particular service that we want to select in the category is to put a heavy weighting on three areas: Cancon, market demand and program diversity. Our personal recommendation would be that it be something to the tune of 50 per cent in terms of program diversity, 25 per cent Cancon and 25 per cent market demand.

18310 The reason for that is that I think ultimately what we want to address here is that old cliché, you know: 200 channels and nothing on. If we can provide to viewers opportunities to see programs that they could not ordinarily see, then we have been successful in this process.

18311 So if you have a service that has clearly demonstrated that they are going to be showing something to Canadian viewers that they would not see otherwise, that is a winner.

18312 We think that everybody has done a pretty good job in stepping up to the plate in terms of Canadian content. I don't think anyone here was negotiating less than the level that you had asked for, so that is pretty much, I think, a par for everybody on this one.

18313 Then the research to demonstrate that they have made the commitment to go out and prove to you and to others that this is demonstrably a viable service would be the other consideration.

18314 We have discounted, to some degree, the other aspects because, quite frankly, if somebody has a faulty business plan I think you have set the environment up here that this is going to be more open-market. If you are going to fail, you are going to fail. That's up to you.

18315 In terms of affordability, we could address this issue of affordability forever. We are of the view that the big element in the equation here is going to be value. So I think licensing 10 inexpensive services would not be the way to go. I think what we want to do is we want to license 10 great services.

18316 So that would be our thought.

18317 I don't know if any of my colleagues would like to add.

18318 COMMISSIONER DEMERS: Thank you, Mr. Cassaday.

18319 Maybe my colleagues at one point will have a few more questions on that point. That would be what I would cover.

18320 Implementation of these services after they have been licensed. Should the Commission impose a minimum time by which Category 1 licensees must implement services?

18321 MR. ROBERTSON: Yes. We believe that all the services and the stakeholders in the industry have to work together to make the most powerful launch of digital as possible, and because of that we all bear responsibility to be there at the right time with the services. The date that is being suggested in the industry seems to be September 2001. Clearly, we would be ready to go at that date or in advance of that date.

18322 With respect to your specific question, if a service cannot be ready to go on that date, we think that they should have to apply to the CRTC for an extension and then the CRTC can decide at that time whether indeed that extension would be granted or denied. That would put the proper focus on making sure that everybody is ready to go when the time is right. That's going to make the difference.

18323 COMMISSIONER DEMERS: Is the understanding or the agreement with the distributor important in light of a launch?

18324 MR. ROBERTSON: With respect to the arrangements that are made with the distributors, often what happens is that there is a high level of debate and to-ing and fro-ing that happens right up until -- right before the curtain goes up, has been our historical experience. So while the idea of perhaps trying to come to grips with what arrangements have been made might be helpful prior to the launch, in practical terms, it would be a very challenging thing, I think, to try to come to grips with that much in advance of the overall launch date.

18325 I don't know if John has anything to add on that.

18326 COMMISSIONER DEMERS: So the industry, as we say, the distributors and the broadcasters, they are sufficiently experienced in that to manage to get to the point where there could be a common launch without the intervention of the Commission?

18327 MR. CASSADAY: We believe so.

18328 We are moving into an era where entitlement is being replaced with negotiation. I think there has been ample evidence that, you know, while it's not going to be easy -- it's never easy to introduce a new product, whether it's in our business or any other business. It's a challenging exercise that requires skilful negotiation. At the end of the day, we are living in a competitive environment where there is a realization amongst all distributors that there are new channel opportunities available, and the stimulus to come to a conclusion will be to remain competitive with those alternative distributors.

18329 For example, if ExpressVu comes to a quick decision as to which services they wish to launch and announces their plans to introduce 20 or 30 new digital offerings, that will be a significant stimulus for other carriers. By the same token, if in fact another carrier, whether it's Rogers, Shaw, Vidéotron, makes a similar decision, that will serve to stimulate ExpressVu.

18330 So what we have now in the marketplace is vibrant competition and that vibrant competition will stimulate resolution of these disputes. But we shouldn't expect that everyone is always going to come to quick conclusions because demands can be unreasonably made on both sides of any negotiation.

18331 COMMISSIONER DEMERS: Thank you.

18332 On the Category 2 services, where do you see them in light of a common launch of Category 1s?

18333 MR. ROBERTSON: Certainly some of the Category 2 services will be ready to go and will be part of that overall launch. But we expect the large majority of them will be waiting in the wings, hoping to find carriage and placement down the road, working on developing the business plan, perhaps developing partnerships between some of the like-minded folks that would like to launch a similar service.

18334 We think there needs to be a longer time frame available for these sort of issues to be worked out. We have discussed a time frame somewhere in the three year range, where someone would be able to hold a licence for that period of time while they look for opportunities to get those services up and running. We think that's consistent with the overall approach of a strong launch in the early going, in September 2001, if that's the date, and then several subsequent launches of new services or waves of services in the subsequent months and years.

18335 COMMISSIONER DEMERS: Thank you.

18336 Now I would like to go to the independent production you have covered statistically, at least, in your presentation and in your application, but speaking from a general point of view.

18337 I'm sure you have heard our discussion with other applicants. The Commission has stated expectations or imposed conditions of licence traditionally on producer-affiliated programming services requiring that certain amounts of programming or minimum levels of expenditures be devoted to supporting independent production. That's the tradition, I think. We all agree with that.

18338 Given the challenges of the near-term digital environment, do you think that this approach is warranted for digital services that have some involvement or affiliation with the producer?

18339 MR. ROBERTSON: We believe very strongly that diversity of programming is well served by a strong representation of independent producers in the Canadian broadcasting system as a whole. Because of that belief, we have really focused on our applications to be sure that we have a strong voice for independence and a strong envelope that's made available for them.

18340 Perhaps Kathleen McNair has more to add in terms of this point.

18341 MS McNAIR: We understand the discussion here to be focused on access by arm's-length producers to a particular service. Since "affiliate" is a term that's defined under corporate statutes, we have preferred to use the term arm's length and non-arm's length. As Paul has suggested, each of our services have been designed to provide an envelope for arm's-length producers.

18342 Maybe I'm anticipating the next question, but we do have a proposed definition for this issue. We would suggest that the following definition would be appropriate for our services: that a producer would be considered to be non-arm's length if Corus or a company controlled by Corus owned 30 per cent or more of the voting interests of the production company.

18343 We would also extend the definition of non-arm's length in respect of a particular service to any producer or production company that owned any voting interest in that service. We would say that any production company that is involved in any of our services, if they own one voting share they would be considered to be non-arm's length in the particular service.

18344 COMMISSIONER DEMERS: Thank you. In fact, you have permitted me to go along, hop along.

18345 You are in partnership of course, in different applications, with CBC and NFB, especially on The Canadian Documentary Channel. What provision would you employ to ensure that non-affiliated producers would have access to The Canadian Documentary Channel's program schedule?

18346 You have touched on arm's length, but --

18347 MS McNAIR: Actually, I believe that there are two safeguards we have proposed for The Documentary Channel, and anyone can correct me if I'm wrong.

18348 One is we have put an envelope of money together to stimulate original new Canadian documentaries. CBC, NFB and the four independent producers who are participating in the service would not have access to that envelope of funding.

18349 Additionally, we have committed that 50 per cent of expenditures would go to arm's-length documentary filmmakers.

18350 COMMISSIONER DEMERS: Thank you.

18351 No doubt you would accept a condition of licence in that sense?

18352 MS McNAIR: Yes, we would.

18353 COMMISSIONER DEMERS: Thank you.

18354 On interactivity you no doubt followed where we are at at the moment in our discussions. You have made reference to enhanced informational content in several of your applications. Could you elaborate on that?

18355 MR. ROBERTSON: We would be pleased to.

18356 First, we were very pleased to see the amount of focus that the CRTC has put on this issue throughout the hearing, because it is certainly an area that we are really excited about. We have been getting our feet wet with YTV by developing an extraordinary Web site that started about three or four years ago and now gets about 10 million hits a week. We have been able to advance the content there so that it really drives a high level of interactivity.

18357 Through that experience, we have applied that knowledge to development of these applications that are before you. What we would like to do is ask Steve Rolufs to comment on our overall approach to interactivity in the applications.

18358 ME. ROLUFS: Thank you, Paul.

18359 Just to expand on a few of the points that Paul made, first of all -- and this was outlined in our opening remarks as well -- our Corus interactive group is passionate about interactivity. This is something that we have extensive proven experience in, particularly, as Paul said, in the area of developing complementary Web sites for our services -- as he mentioned, the award-winning ytv.com site.

18360 If I may, I just want to use that site as an example to talk about where we are today with some of our efforts, and then to talk about where we see some of these further phases of enhanced content and beyond and how we are preparing for that today.

18361 We are already in the business of developing deeper, more detailed information experiences integrated with program content. For example, on the YTV site we have show pages that our kid's audience rely upon to come and get deeper information, deeper character information, story information, episode synopses and media gallery.

18362 We also have experience developing rich entertainment experiences. Earlier this summer we developed a game for Intel that was featured exclusively on their Intel web Outfitter's site for Pentium III owners and that was YTV's Super Sewer Scramble.

18363 We also are already in the business of developing hybrid content. You have heard people talk about this notion of where interactivity is integrated with webcasts or with digital video and we are in that business today as well. We have had several concert events that we have webcast, things such as our Cycoblast annual event, where we have taken streaming video to the web and made it available to our audience.

18364 We have gone a bit further than that. We have enhanced it with added content or added experience that is bundled in with the video signal and integrated with that.

18365 We are also very experienced in developing and providing mechanisms for our audience to communicate back to us and give us feedback and participate. On YTV there are continual calls to action that direct kids to participate in our programming, to vote for favourite episodes or shows to be shown, to participate in chats such as with Gerri Halliwell and it was with some of these more recent chats this summer around our Cycoblast concert that we added additional functionality with that, where rather than just give a textual chat that is a little bit boring, we added a webcam feature to that, so that the kids could actually see who they are chatting with. It really pumped up the dynamic nature of the experience.

18366 So these things all speak to Corus' passion and experience in the area of interactivity today in delivering those things.

18367 I would like to talk for a moment about some of the things we are doing to prepare for tomorrow for some of these enhanced content phases.

18368 Corus is one of the few Canadian members of ATVEF, you see that referenced throughout many of our applications. ATVEF is the Advanced Television Enhancement Forum. What it is is a cross-industry alliance of broadcasters, distributors, set-top box, consumer electronics manufacturers and computer manufacturers who have all come together to define a standard and champion the adoption of web-based technologies, common web-based technologies that are here today for implementation on an interactive TV platform.

18369 So the ATVEF specification, it allows for easy deployment across disparate manufacturers' set-top boxes and also via the web for those consumers that have these computers with television tuner cards, where they can tune into television signals as well. ATVEF allows us to deliver enhanced content on that platform as well.

18370 You may have heard, these are technical terms, you may have heard of things like HTML and Javascript and what the ATVEF specification does is defines a framework for use of those common technologies that there is expertise in today for use on a set-top box platform.

18371 At Corus, as we develop some of our web products and experiences today and as we acquire some of the tools that we need to deliver those experiences, we are always thinking in terms of compatibility with things like ATVEF. So that when we, for instance, purchase a chat technology that we want to implement on a site today, we want to make sure that that technology can be repurposed down the road and that we can deliver the same experience to our users through alternate types of media, like a set-top box.

18372 We encourage all distributors to look to standards like ATVEF that utilize common web technologies. An example of one that has is Star Choice. They have announced that in the fall of 2001 the next generation of their set-top box will include Liberate as the middle ware which is fully ATVEF compliant.

18373 So just to summarize this point, as a content creator and supplier we want to develop content once and we want to be able to easily offer it across a variety of platforms via the web.

18374 Your question was primarily around enhanced informational content. I just want to talk for a moment about how we see that rolling out. We see three distinct phases. I know it seems to be a moving target and there is a lack of clarity at times as far as how this is going to roll out, but we have really partitioned it I think into three key phases.

18375 First of all, it's the complementary Web site phase and that's what we are in today. That we continue to be important at time of launch and actually throughout the life of these services and that's where you have a two box, or in some cases a two-channel solution which I will elaborate on in a moment, where there is programming that is integrated with web contents. There are calls to action on the air that direct viewers to the web, to go deeper, to get additional information to participate. As I said, it can be a two-box experience, being the television or the set-top box and the computer.

18376 In many cases now we see that actually in the same room, or when I say two channel what I mean by that is there is a new generation of set-top boxes that are just about to roll out. I believe Rogers is one of the people offering that, that offer a limited web enabled experience on the set-top box. It is not integrated with programming. It is not in any way completely integrated with the television experience, but allows you to flip over to another channel and get a limited view of surfing the web.

18377 What we see as the next phase, and that phase is around the time of launch of some of these services or a year from now, the fall of 2001, is the enhanced television or data enhanced television phase. This is where additional content is bundled with the digital video signal as it streams down to the viewer.

18378 It loads into the memory of the set-top box and it can be executed there. This is interactive TV. I want to make the point that this is still highly interactive, much in the way that DVDs are a highly interactive media. But it's a local interaction. It's an interaction with the data that it's in the box locally.

18379 This will, of course, and you have heard many examples of how this will let viewers as they are watching programming go deeper into the programming. It gives some sort of an enhanced experience that is appropriate, either the particular segment they are watching in a show, the show in general or even the service in general.

18380 The third phase that we see is where the first two phases really come together and that's where the two way interactive capabilities of the web come together with the immediacy of the set-top box. What we call that is fully interactive two-way television.

18381 It is at this point that the set-top box offers a return path and that's the key term here, where either to the head end of the distributor or out to the web there is a return path that allows that direct interactivity. It's at this point where some of those really enhanced television experiences begin to occur, where you can chat during a program while you are watching a program. You can participate in an issues-oriented show and give your opinion on the issue and see over the hour how that opinion is integrating with others.

18382 You can play along at home with game experiences and there is also the notion of impulse e-commerce or t-commerce at that point.

18383 So from our discussions with distributors we see that third phase of fully interactive two-way television following two to four years after launch or approximately three to five years from now.

18384 Our strategy around these three different phases is to consider the possibilities of each and the challenges of each, but to be ready for each as they come on stream and when those capabilities are available.

18385 We don't want to say once those capabilities are available then we will consider it. We want to be ready when they are available.

18386 So just to summarize again, we are successful in this area today. We are making preparations tomorrow for digital TV and we are very clear on what the future of it is. Thank you.

18387 COMMISSIONER DEMERS: Thank you.

18388 It's interesting that you have had discussions with distributors on that and I imagine that what you have indicated is that they share what you are outlining as being what's coming out.

18389 MR. ROLUFS: Absolutely. I think that even though there haven't necessarily been announcements by all distributors, I think all of them share in the notion of authoring content once for distribution across all of the platforms and that's where standards where ATVEF come in. I think everyone wins and I think that enables us as the creators to really maximize the capabilities of the content.

18390 COMMISSIONER DEMERS: Thank you.

18391 So no doubt when there are licensees of Category 1 you would expect that the distributors would provide this interactivity to the subscribers?

18392 MR. ROLUFS: Yes, we would expect so. I think Paul has some thoughts on that.

18393 MR. ROBERTSON: Thanks Steve.

18394 What we have heard so far from the distributors that we have been in conversation about these topics is that they are absolutely highly enthusiastic about testing out anything that we might be able to come up with with respect to interactive content.

18395 It's never been an issue of will they carry it or won't they carry it. It has always been how soon can the programmers come up with creative interactive solutions that we can get out to our subscribers.

18396 We think that there is a lot more demand than supply right now and that the programmers have a job to do to get this content out there.

18397 COMMISSIONER DEMERS: Thank you.

18398 So at the very moment you do not have -- do you broadcast on some of your channels any programs that are already interactive in some way, in the way you describe it?

18399 MR. ROLUFS: Absolutely, they are interactive, a large amount of our YTV programming, our CMT programming. There are those calls to action where what you see happening on the screen is very integrated with the Web site at present. For instance, Hit List and YTV, kids can vote on their favourite videos and that's tallied on the site. There is always: Hey kids, tell us what you think about this particular issue or e-mail us.

18400 So things are highly interactive today. There are participatory aspects where kids send in their artwork and stories and we post those.

18401 As far as the actual latter phases of interactivity, we are not doing anything at present. I know that there is some experimentation going on on an analog platform with others, but what we are doing more is positioning ourselves and becoming educated and experimenting with an eye to the future.

18402 COMMISSIONER DEMERS: Thank you.

18403 Now, to Canadian programming expenditures.

18404 You have covered most of this in your oral presentation, but a general question on that point also is: Is a condition of licence requiring minimum levels of annual Canadian programming expenditures necessary on digital services?

18405 MR. ROBERTSON: We aren't certain that an annual requirement is necessary. We think that some of the conversation -- and we have been following with interest the conversations concerning adding more flexibility to the determination of Canadian content, but the idea that you might perhaps take the total seven year expenditure and divide by the total seven year revenue and come up with an overall level of commitment over the term is an appealing concept that we think is sensitive to the kind of flexibility we are going to need in the digital universe.

18406 Now, presumably, one could take a modified approach to that and say overall the commitments on a term of licence basis, but in any given year there is a minimum or a maximum that one could employ and we thought that plus or minus 15 per cent might be the number that might work in terms of the required flexibility.

18407 In actual terms, what is going to happen is there is going to be a great need to front-end load the spending to make sure that we kickstart the new programming at a time when the revenue is not that strong. So really what will happen is that you will get a front-end loading of spending rather than a back-end loading, which is probably what the minimum per year is meant to address.

18408 But those two things taken in combination could be a very effective approach to regulating in a digital environment.

18409 COMMISSIONER DEMERS: So you haven't given thought to the fact that there may not be a rule on that point?

18410 MR. ROBERTSON: We presumed that there would always be a commitment to spend a percentage of revenue on Canadian content. Whether there is a need to provide a rule on an annual basis, fundamentally we don't think that there is a requirement for an annual rule but there is a requirement for a rule over the term of the licence so that we know exactly what each of the services is promising.

18411 COMMISSIONER DEMERS: Thank you.

18412 Based on your applications, I have a general question that ends up in specifics here. The question goes on as follows.

18413 Would you accept the following Canadian programming expenditures as conditions of licence starting in year 2? These are based on Commission calculations, and here I will be specific on each of your applications.

18414 In my book, the first one coming is: CHROME TV, the percentage would be 40 per cent as a condition of licence -- maybe I will go through all of them and then you will comment on it; Booknet, 37 per cent; Discovery Travel & Adventure, 37 per cent; Land & Sea, 51 per cent; Parent TV, 38; The Canadian Documentary Channel, 47.

18415 MR. ROBERTSON: Just to be clear, this would be on the basis of years 2 to 7?

18416 COMMISSIONER DEMERS: Starting in year 2, yes.

18417 MR. ROBERTSON: And these amounts would be a minimum requirement by year or a total for the term?

18418 COMMISSIONER DEMERS: In my view, it would be per year.

18419 MR. ROBERTSON: Okay. I would like to ask Jamie Haggarty to respond to your question.

18420 COMMISSIONER DEMERS: Thank you.

18421 MR. HAGGARTY: Thank you, Paul.

18422 I'm just cross-checking the Commissioner's numbers to our records.

--- Pause / Pause

18423 MR. HAGGARTY: I guess, going down the checklist of the applications, generally we do agree with using an average of the seven years as a percentage of revenue. However, I do have some slight differences from the percentages the Commissioner just noted and would be happy to ensure that we are both working off of the same averaging method.

18424 In particular, we agree with the CHROME at 40 per cent. We agree with the Parent at 38 per cent, and Documentary at 47 per cent.

18425 On Book, our calculation would show an average of 40 per cent instead of the 37 per cent that I think I heard, that number. And Travel & Adventure, our calculation of the -- I guess we will call it the new method, the new method would be 41 per cent. I think the Commissioner mentioned 37 per cent.

18426 Maybe it's my calculator that's wrong.

18427 Now, Land & Sea is the last, our sixth figure that we have talked about. Our application is based on a 43 per cent commitment as a percentage of revenue, and the Commissioner has noted that the new method works out to 51 per cent. We deeply believe that the 43 per cent is a sufficient level that would be able to accommodate the service, not just from an attractive content point of view, but also to sustain the business model.

18428 THE CHAIRPERSON: Commissioner Demers, excuse me.

18429 What do you mean by the new method? The calculations that were made by the staff was using the traditional method, which is to take the revenues over the whole year and the expenditures on Canadian content and arrive at a percentage, which then applies starting from year 2. The new method would be to take the traditional method and give it more flexibility by allowing the traditional calculation to be checked or conformed with over the year with some flexibility from year to year, which can be by using a minimum or whatever.

18430 I'm not quite sure what you mean by "the new method".

18431 MR. HAGGARTY: Sure, I would be happy to clarify.

18432 Our definition of the "new method" is really just taking the total for the seven years -- as Paul mentioned -- the total seven years' expenditures divided by the total seven years' revenue. We view the traditional method as being a percentage of prior year revenue.

18433 THE CHAIRPERSON: The method is to take all seven years in both cases and then derive a revenue from it and apply it to the previous year. At the break, you can perhaps talk with Ms McNair and see whether you are too young to know about the traditional method --

--- Laughter / Rires

18434 THE CHAIRPERSON:  -- so that we know what we are talking about.

18435 Sorry, Commissioner Demers. Go ahead.

18436 MR. CASSADAY: Madam Chair, you may have to apologize to Kathleen after --

Laughter / Rires

18437 THE CHAIRPERSON: I meant young in a regulatory way.

--- Laughter / Rires

18438 COMMISSIONER DEMERS: Thank you. So we are both young here.

18439 I will move on to original Canadian programming, and here again a general question that may end up having particulars for clarification purposes.

18440 Could you give us an estimate of what proportion of your program schedules original Canadian productions represent, excluding the repeat factor?

18441 If this needs some time I can go on to the next. If you prefer, you could come back later on.

18442 MR. ROBERTSON: That is certainly information that we have available, but would take some time to develop it.

18443 Perhaps we could provide that after the break.

18444 COMMISSIONER DEMERS: Thank you.

18445 Then to demand study. How have you linked your market study to your business plans?

18446 MR. ROBERTSON: I would be pleased to answer that.

18447 We have developed an approach to research. We had qualitative research across all the services and that led to, then, a quantitative study that asked the question about: Would you be interested in subscribing?

18448 What I would like to do is ask Kaan Yigit, who represented our research, to talk about how we translated from that into our approach with distributors.

18449 I would like also Andrew Eddy to comment on our approach.

18450 MR. YIGIT: Thanks, Paul.

18451 I will just quickly review and hand it over to Andrew.

18452 The market research studies for each of the applications had measurement regarding both general interest and in the context of a price point. What that generated, in essence, is a baseline estimate for the general cable population as well as likely digital subscribers. So with that baseline information in mind, the results were handed over to, I guess, the business planning.

18453 At the end, after the business plans were -- or the assumptions were incorporated, we had a chance to review just to make sure that those baseline estimates that we provided and what has actually been used in the business plan are within general narrow range.

18454 MR. EDDY: Just to add to that, the research that Kaan mentioned measured overall acceptance for service and then specifically focused on early digital adopters. That gave us, for instance in the case of Parent, a measure of 40 per cent to 48 per cent. We did compare that to our business model and our assumptions for penetration and found, you know, a correlation there with our assumptions for Parent TV distribution growing from 38 per cent to 47 per cent over the term. That is one example.

18455 Across the board we found that the research was helpful in validating our assumptions on distribution penetration.

18456 COMMISSIONER DEMERS: Thank you.

18457 In all your applications the proposed penetration level is projected to increase from year 1 to year 7 while your proposed monthly fee is expected to decrease for the same period. What is the rationale for the decreasing subscription fee?

18458 MR. ROBERTSON: I will ask Andrew Eddy to comment, please.

18459 MR. EDDY: Digital is really about choice and we believe that distributors will offer our services in a number of ways within the same system to customers, perhaps even at the same time. The same service may be offered in a thematic package, it may be offered to customers as part of a deluxe package, and it may be offered in a pick-and-pay environment or à la carte.

18460 So our assumption really was that distribution for each service would come in all of these different ways.

18461 In developing our penetration assumptions, we looked at both the incumbent customers, those who have digital today, and we also projected for the ongoing deployment of digital what sort of penetration the service would get in each of those types of carriage.

18462 So I think the important thing is that digital is here, it's real, but it is also a product that will continue to deploy throughout the term of the license, and our penetration reflects that ongoing deployment of digital.

18463 In terms of how we presented our rate, the rate will vary depending on how the service is packaged and how it is retailed. So there will be a number of different rates depending on the type of carriage a service receives.

18464 For the purpose of stating our affordability, we presented an equivalent basic rate for each of the services. This was not to intend to imply that we expected basic carriage on digital, but really formed a comparison basis for our affordability.

18465 COMMISSIONER DEMERS: In a sense these decreases are taken into account to get the projected penetration level that you believe you will have?

18466 MR. EDDY: Again, the decrease does reflect our belief that over the term the average penetration the service will grow among digital customers.

18467 This is a factor of really two elements. One, on initial launch there is an incumbent base of customers and so an operator will have to have a strategy to convert those customers. Then, on an ongoing basis, digital will broaden in appeal and we think it will draw new subscribers to the system.

18468 COMMISSIONER DEMERS: Thank you.

18469 In some cases you have noted -- in your Schedule 1, page 28, to give the reference -- that the rate for universal digital distribution would be 17 cents per subscriber per month. On what basis would the 17 cents be applied?

18470 MR. EDDY: The 17 cents is stated as an equivalent basic rate. The assumption there would be that if a service had 100 per cent distribution among digital subscribers for a system, that would be the equivalent rate. If, for instance, it is carried as part of an optional tier, the rate would likely be tied to the penetration of that tier. Subsequently, if it's offered on an à-la-carte basis we would have a rate for that type of offering that would reflect the kinds of retail rates that might be in place by an operator and the success that that product has among customers.

18471 COMMISSIONER DEMERS: Thank you.

18472 Madam Chair, that would be the end of my general questions.

18473 THE CHAIRPERSON: Commissioner Wilson.

18474 COMMISSIONER WILSON: Mr. Cassaday, I was interested by your comments on the implementation and I just wanted to pursue a little bit on that topic.

18475 The opinion that you expressed was quite different from the opinion that we have heard in the last couple of days, which is that the Commission should be quite prescriptive in how the implementation of these services should take place, in the sense that the negotiations should have a date set for conclusion six months prior to launch and the launch date should be set.

18476 I think there were a couple of other suggestions about how we might direct the distributors to handle launching the services, including the one that Commissioner Demers mentioned, which is that Category 2s would not launch before Category 1s, that they could launch potentially simultaneously but not before. The approach that you were suggesting was more flexible.

18477 I'm just wondering if you could comment on the divergence of your opinion from the others where it has been suggested to us that we lay out a timetable.

18478 MR. CASSADAY: Thank you.

18479 We are really suggesting that as we move towards a more open market, free market régime for the licensing of new services, the previous sort of approach, which was one of entitlement, basic or tier guaranteed rate, tier rate -- you know, this is a new world that we are going into.

18480 What we believe is that the basic rules of negotiation will now take hold and the obligations for both parties to come to agreement will be no different than they are in a labour dispute or a baseball-style arbitration. Ultimately one knows that a decision has to be made in time to achieve a certain end.

18481 So, for example, if we believe that the optimal time to launch this service is September 1, 2001, there is an onus on both parties to come to some agreement on the terms under which these services will be carried. It is in both parties' best interest to do that.

18482 For a cable operator or a satellite operator to introduce a service post-September 1 is going to be awkward, possibly even impossible. For an operator to miss that window and be competitively disadvantage would be inopportune.

18483 So we think that, you know, by simply allowing market forces to take hold, put the obligation on the shoulders of both parties to come to an agreement -- after all, there is as much interest in the part of a distributor in being allowed to offer new product to their subscribers and therefore generate more revenue than there is on the part of the programmer to achieve widespread distribution for their programming.

18484 So all we are suggesting is that, you know, welcome to the real world where one negotiates whether -- you know, us individually buying an automobile or whether it is Air Canada dealing with their pilots, ultimately they both know the consequences of not being able to come to a decision.

18485 We are simply saying that we believe the industry is mature enough and that the mechanisms are in place to deal with disputes, should they arise, that we don't need to put, you know, the proverbial gun to the head of one party to make this thing come to pass because we think there is a mutuality of interest.

18486 COMMISSIONER WILSON: Some might argue that because you share common ownership with the distributor your view might be tempered by that, and I'm just wondering -- because I could imagine if, you know, you have you, on the one end of the spectrum, and services that are unaffiliated with the distributor, on the other end, saying, "Well, you could discount that point of view", because, of course, there's, you know, a commonality of interest, from a business perspective, and I'm just wondering if you could comment on that.

18487 MR. CASSADAY: I don't like to personalize things but I will, in this case.

18488 I have been in the business for 10 years and I would like to think that my reputation is one of fairness, and I think that's one of the reasons that we have such an array of partners at the table: they know that we are going to treat them fairly and they wanted to be in business with us. And while Corus has an affiliation with Shaw, through the Shaw family's ownership, my position on this would have been no different had I still been sitting here as president of my previous company. You know. I just believe in the fundamentals of fair play. I believe that our industry is moving to a more open market environment and we think that this behaviour that we are suggesting is consistent with everything that we believe in and has absolutely zero to do with the affiliation that we have with Shaw.

18489 COMMISSIONER WILSON: So it would be your view, then, that the sort of traditional regulatory approach wouldn't be appropriate in this environment.

18490 How much of that has to do with the technology itself and the fact that it's not -- the penetration level is so low, at this point?

18491 MR. CASSADAY: Clearly, everyone in a system is at different levels of development. There are going to be cable operators that will not be ready to accept any digital channels, at this time. So, clearly, every -- we are all moving out into this world with more uncertainty than certainty. We don't know what our levels of penetration will be. The cable operator doesn't know what the receptivity to the offering is going to be. All of us are moving out, you know, as an act of faith, that, ultimately, this is going to be good for the system; let's get our running shoes on and let's make it happen.

18492 I don't think there is any edge to any party here because the uncertainty rests equally on both -- on all of our shoulders.

18493 COMMISSIONER WILSON: Thank you.

18494 MR. ROBERTSON: I just might add that we really support the development of a pre-launch working group that has been proposed, I think, that the CAB and the CCTA work together with interested industry parties to work on the protocol, how it's going to be approached, and we would really support that idea and would be active participants in that sort of a mechanism.

18495 THE CHAIRPERSON: Madam Bertrand.

18496 CHAIRPERSON OF THE COMMISSION: Good morning.

18497 In following with the questions of Commissioner Demers and Wilson, I'm interested in your idea about "appeal, appeal, appeal" is like -- the attractiveness of the service we will choose should be the only element we should really be looking for and then kind of choose the right mix in order to provide the best service to the viewers. And in that perspective, you seem to think that we cannot find more than 10 genres that could be really attractive to drive packaging to the viewers.

18498 Can you expand? Because we have had other views, for example, too, and we have had ideas that we should give priority on Category 1 to the ones that, through free market, will not find its way to the distributors and, eventually, to the viewer, for example, you know, some more -- less mainstream type of services should be Category 1 because they would be the one left out. You know.

18499 What's your view? What's your experience? And, certainly -- and I repeat that we have been talking about that since last week -- we all want the roll-out of digital, but we want it with the best of what the Canadian broadcasting system can offer. We don't want it just to be digital. We want it to be digital with Canadian distinctiveness, and that's why you, even in your own applications, you have a high level of Canadian content -- and all applicants do -- it's important.

18500 So, where do you see that this attractive and that distinctiveness is in play here with the idea that we should favour, in Category 1, the one that the market will not necessarily pick up on its own?

18501 MR. CASSADAY: I will try to address your question in two ways: First of all, dealing with the question of why go with the bigger categories, or the bigger genres, as opposed to the niches; and then, secondly, you know, why 10.

18502 On the matter of why the big genres, clearly, it's a matter of judgment, and your judgment could be that, "Look, ultimately, they are going to take a travel channel. I don't have to impose a travel channel on the system because there's some terrific ones here; they are going to pick one and, who knows, maybe there will even be a rational approach and they will all pick the same one and then we will have achieved the same end and we can -- we can introduce a worthy service that might not ordinarily have such an easy time getting accepted". So we appreciate there's two ways of looking at it.

18503 Why we are arguing in favour of bigger being better here is because we start with the premise that we know, in the case of digital, based on our research, that more movies and more sports -- all of which have really been addressed and we are not really talking about here -- will help digital. The other thing is: programs that I haven't seen before. So, more unique programming.

18504 And our feeling is that if we take this opportunity to present to consumers, or viewers, across Canada viable, big genre, big category services that they can understand, whether it's because of the prominence of the brand name or just the general understanding of the category, that that will cause people to be more interested in moving from their current analog environment into a digital environment. And if we can do that, if we -- you know, at the recent WIC hearing, we used the expression that "Digital will not be a line extension; it will be the core business". If we are right and, ultimately, we are moving to an era of where digital will ubiquitous, then the quicker we can accelerate that then the better opportunity there is for all the Category 2s.

18505 If this launch of the Category 1s is successful, it will create a much more fertile environment for the smaller niche services that will be left in Category 2.

18506 So that's why, recognizing that, you know, one could argue either case why we believe bigger is better, in this instance, because of its ability to build the market.

18507 In terms of the question of why 10 and, you know, why not 15, or more -- because, you know, after all, you know, we are told that there is virtually unlimited capacity and, surely, they can find a way -- really, thinking about this, it breaks it down into, I guess, a couple of different thought patterns.

18508 One, again, from a consumer point of view, 10 seems to represent a good bite-sized chunk. It's something that they can get their minds wrapped around. Whereas, you know, if we go much further than this, you know -- perhaps, you know, history would say seven is sort of the right number, everything seems to be in sevens, but 10 is something that, I think, people can understand, and as we begin to think about the marketing and how we communicate this, we felt that that was an appropriate number.

18509 Secondly, from a distributor point of view, whether it's Star Choice, ExpressVu, Rogers or Shaw, the fact that the CRTC suggests 10 Category 1 applications in no way limits the amount of offering that they can make available to their viewers.

18510 So, if ExpressVu, having the advantage of their recently launched satellite, wants to use as a differentiating factor the offering of, you know, 50 new digital channels -- which no one else can compete with -- good for them. What a great advantage that would be, if they choose to go that route.

18511 So, by licensing 10, you are in no way limiting the ability of a distributor to take advantage of the availability of services.

18512 And then, finally, again, getting back to our theme of open market, we think that by allowing the Category 2s to get on with it promotes this whole spirit of entrepreneurship, encourages people that really say, you know, through the hearing, everybody's willing to take the chance and, you know, spend the $2 million, dip into their pockets for the first couple of years.

18513 Well, we will see, you know, how many are genuinely interested to get out there and spend the money, you know, knowing that there's, in this time, there's no guarantees, you know. You are own your own; make it or break. You have said very clearly: Don't come back to us during the licence term because we are not changing it. It's 40 per cent Cancon or 47, whatever the case may be. Go for it.

18514 So that's our thinking on that "Go big" and why we think 10 is an appropriate number.

18515 CHAIRPERSON OF THE COMMISSION: Do you think, from your 10 years in broadcasting, that the offering that will observe -- if we were to go even with nine or 10 or 12, that the offerings that will be done by distributors will be distinctive? Do you really think that we will have different ways of pleasing the viewers? And do you think we have that many specific markets that it calls for a different approach and different services?

18516 MR. CASSADAY: Andrew spends more time talking to distributors than I do, so he may want to talk this point. But, you know, clearly, you know, we are moving into an era where marketing is going to become much more important, and the way services are --

18517 CHAIRPERSON OF THE COMMISSION: Does that explain your presence in the broadcasting system?

18518 MR. CASSADAY: Well, hopefully, it maybe explains why I have survived.

18519 One of the things that we think is ultimately going to happen here is that the distributor will use the way they present tiers or pods or whatever they become known as as a differentiator. If they can find the right button to push, the right collection, combination of services that stimulates someone to buy their service, then they become the beneficiary of that.

18520 So we think we are going to see much more imagination in terms of how these services are packaged and that there is a high likelihood that there will be differentiation in what services are selected and how they are put together.

18521 If you are an operator in Vancouver or Toronto, we suspect there is going to be a much higher level of interest in ethnic services than there will in Manitoba. So, you know, just by virtue of being able to target specific demographic segments, we think that you are going to see much more diversity as a result of the way we are setting this process out than we would ordinarily have.

18522 MR. EDDY: I would echo what John said and really our expectation is that distributors will create compelling and creative offerings for customers because they are existing in a very competitive environment and they have an interest in rolling out the service.

18523 So we envision that they won't be choosing one particular launch service. They will be offering services in different ways to the customer and that customer will choose based on what best serves their needs and creates value for them.

18524 CHAIRPERSON OF THE COMMISSION: There is a difference between the way you make the offering to the consumer in terms of packaging and what's in the packaging. Do you think there will be as much difference in the packaging of those services and the way it will be presented to the consumer as there will be diversity of services chosen by the distributors?

18525 MR. EDDY: Yes. I think the experience that we have seen with direct-to-home satellite is good evidence of the kinds of creative packaging that distributors create. They do have some similarity, but on the other side have great difference in how they are presenting because they are so directly competitive.

18526 The experience has been that thematic packages have been successful. We don't expect that that may necessarily be the same approach that others take. So there will obviously be some self-selection where subscribers will create that diversity of packaging for themselves, but it won't be left strictly to the distributor. That you as a viewer will find a package that creates value for you in this environment and that will add real diversity.

18527 CHAIRPERSON OF THE COMMISSION: That's the addressability once it's offered to me, but before it's offered to me there is like a mediator that will kind of organize and make the choices. I was curious about your views there.

18528 Another question I have is Category 2. You say: Well, we should allow for launch at the same time, yet a different kind of schedule in terms of the limit on the value of the licence before they come back to the Commission for an extension and you propose three years.

18529 Talking about the dimension, you were talking about ethnic groups and the necessity to offer more diversity towards those services and the fact that we have in the framework favoured Canadian partnering with ethnic services first before we kind of expand the eligibility list. What would we do with the eligibility list if for three years that means that we wouldn't bring much more services of that very niche that are not likely to be the ones, the first ones to be picked up in offerings to the viewers?

18530 MR. CASSADAY: We believe that the status quo should prevail and that if there is a licensed Canadian service that there would not be a foreign service taken off the eligibility list. We would have a pre-emptive opportunity in that particular sector.

18531 CHAIRPERSON OF THE COMMISSION: But don't you think that then for the ethnic groups that could get a service, three years, and that's three years from the issue of the decision, that's a long time in order to wait for some service that could be of interest to them?

18532 You know, don't you think that three years for Category 2 is a long time in comparison to what we say it seems from all the voices we have heard since last Monday is the 1st of September 2001, everybody should be ready to launch if they are granted a Category 1, unless they come back to the Commission and have a very --

18533 MR. CASSADAY: We think there is a difference between being ready to launch and being able to get an agreement to have your programming distributed because there will be capacity constraints.

18534 We really debated this question and would be misleading you if we thought that three years was just irrefutably the right answer. We don't know.

18535 What we were thinking about is what's a suitable amount of time to give the Category 2 licence a fair shot at getting up if they are genuinely interested in doing it, and yet not so long that precludes someone else that actually has a real interest in doing it from going out and making it happen?

18536 We just netted out at that time, we are roughly a year from today before we get the first ones off the ground. So, therefore, it's just another two years before the remainder have to go. We all know, unfortunately, that three years does fly by.

18537 CHAIRPERSON OF THE COMMISSION: It does.

18538 I would like to hear your views on the value of partnering. Obviously, you value that dimension and you kind of have organized your applications around partnering. Could you help us in assessing the value of partnering in the assessment of the different applications we will have to do? What for you are elements that do provide stronger application depending on the partnering?

18539 I am sure you have views on that and could you share your insights with us on this?

18540 MR. CASSADAY: First and foremost, we thought about how do we provide the most diverse and compelling offering that we can, and the way to do that was to bring in partners.

18541 I think one of the things that might be interesting here is if we could just ask our partners to briefly comment on what they thought the value was in this collaboration and perhaps start with Michael at his end.

18542 MR. HIRSH: Sure. In the case of Nelvana, we are a company that is very invested in books. We live and breathe books, but we aren't a direct broadcaster. We aren't I guess the broadcaster of any other signal. We are a partner in another service which is Teletoon.

18543 And partnering with a terrific broadcaster like Corus and bringing our expertise in books and our kind of invested knowledge base in that area we think is a great combination. So we have got the passion and the specific category. We have got the strong knowledge base and the relationships with the publishing community and combined with Corus we think we can have a great service.

18544 CHAIRPERSON OF THE COMMISSION: Frankly, what I am looking for here are more criteria than kind of, you know, why you are great. You know, Corus is a great company certainly, we are convinced of that. What we need here and what I am asking for is are there beyond the criteria we have talked about elements that we should be looking for because we haven't been discussing that with all the partnering. So, I don't want to here kind of prolong the time of presentation. What I am looking for is really references by which our analysis will be helped.

18545 MR. CASSADAY: We started off with -- in terms of the hierarchy of our thinking which categories did we feel had the most relevance and the most appeal and who was the appropriate partner to reach out to in achieving the best possible outcome for the service. So, you know, it was as simple as that.

18546 We feel that in each of these applications we have the perfect complement. If you were going to launch a travel channel, can you think of anyone you would rather do it with than Discovery who offers this in hundreds of countries around the world.

18547 If you are going to launch a documentary channel, can you think of anyone you would rather do it with than the CBC and the National Film Board.

18548 So we just thought that from our point of view with our criteria of big being better as it relates to Category 1, what are the most compelling genres and what's the most desirable package to bring to bear to make those as successful as possible.

18549 CHAIRPERSON OF THE COMMISSION: My last question, sharing of revenues, talking about interactivity and the necessity to when the time comes every step or every face, as you call it, of interactivity being available and possible, what's your views on the sharing of costs? Actually, that was a question we had in terms of what we have heard from most of the applicants as what is relevant to programs should be the responsibility of the service and the programmers and the program producers and what part of the distribution system should be the responsibility of the distributor.

18550 But when interactivity comes and t-commerce is there, what's your view in terms of sharing of revenues? Do you see that as an interesting possibility? Do you have views on that?

18551 MR. ROBERTSON: As you have set up, in the early going we expect that these will basically be programming content elements that will be provided and, as such, as part of the overall programming service and will be integrated with them and enhance the overall experience that the Bureau will have. But down the road there is going to be some very interesting models created that will look to drive e-commerce opportunities.

18552 As that happens, we think there will be a lot of unique partnerships created between the distributors and the programmers to find ways to exploit the opportunity and to share in the costs and the revenues.

18553 So we would like to maintain sort of an open perspective on these sorts of issues and say that as we get closer and time unfolds that the parties will find a way to work together to work at these opportunities in the most constructive way through partnership.

18554 CHAIRPERSON OF THE COMMISSION: So in our kind of framework we put that as open to discussion and negotiation there?

18555 MR. ROBERTSON: That's correct, yes. Thank you.

18556 CHAIRPERSON OF THE COMMISSION: Thank you very much.

18557 THE CHAIRPERSON: I gather that you are in agreement with most parties who feel that the Commission should retain a methodology or a mechanism for checking conformity with commitments in expenditures on Canadian programming?

18558 MR. ROBERTSON: Yes, we are.

18559 THE CHAIRPERSON: Now, how important do you think it is that, number one, we use the numbers that are presented before us, albeit projections and that we apply a mechanism that is the same, if there is a need for one, in order to take into consideration the highly competitive nature of this hearing in light of the number of applications?

18560 MR. ROBERTSON: I think it would be constructive to have a single method of determining the Canadian content expenditures, so that we are consistently working to one approach.

18561 THE CHAIRPERSON: I will point out to you some of the difficulties with your applications and you will have an opportunity to discuss it at the break and come back to us. The traditional method that the Commission uses is not terribly complicated. It is done by taking all the subscriber revenues projected and the advertising revenue projected as part of the fraction that is used to get at a percentage, and the other number is the expenditures on Canadian content that are promised.

18562 The percentage that then results is applied beginning in year two to the actual revenues in year one, at the moment with a 5 per cent underpayment possible to be made up, or overexpenditure, rather than underpayment, overexpenditure to be applied in a forward-looking manner. That would have been the way that the personnel has calculated it.

18563 I don't have your entire application with me, but I have some portions of it and I stand to be corrected where I am wrong. And in some cases you have made a commitment in your presentation where there may not have been one in the application itself in as express a manner.

18564 Now, in three of your applications there is no discrepancy between the calculations, so that would be my understanding, CHROME, Travel and the Documentary Channel where it's the same.

18565 There are two problems, the numbers in Land & Sea and Booknet and Parent -- well, in Booknet are not the same. In the case of Parent it's okay if we take your presentation as an additional comment. So, if I look at your presentation at page 14 you say that you will expend 38 per cent of revenues on Canadian programs.

18566 However, both in that case and in the case of Booknet you say expend 40 per cent of revenues on Canadian programs, which is our number. With Parent it would be our number, whereas your initial one was 33 per cent.

18567 But are you saying that you accept the manner in which conformity would be tested or simply over the seven years, which is different from what you committed to in the others, which is not simply 38 per cent of revenues. It is 38 per cent of the revenues of the previous year after you have got the numerator -- the denominator and arrived at a percentage.

18568 So it is not clear whether you are accepting the traditional method and your commitment is the same everywhere because there is a difference between saying spending 38 per cent of revenues on Canadian programs and accepting that the percentages apply year by year to the revenues before and the flexibility would be something that would be over and above.

18569 So in the case of Land & Sea, and I don't see a -- I stand to be corrected, but I didn't find in the presentation anything that would change the fact that your percentage -- yes, it's repeated. It's a minimum of 43 per cent. Our calculation arrives at 51 per cent.

18570 In the case of Booknet, yours is 33 per cent; ours is 37.5, but some of us don't like decimals.

18571 Parent TV, it's more a question of what does the 38 mean.

18572 So I hope that's helpful. You can tell us when you come back whether these numbers, as we calculate them, are acceptable to you as applied in what I refer to as the traditional manner, with of course the Commission examining, during this process, the possibility of enlarging the 5 per cent flexibility.

18573 Do you have any questions? You can come back to us after the break.

18574 MR. ROBERTSON: Madam Chairperson, we appreciate your diligence in ensuring that these numbers clearly reflect our conditions that we are committing to and we will take time during the break to come back and ensure that we are all working with the same numbers.

18575 THE CHAIRPERSON: Yes. Where the staff calculation and yours are different, perhaps you can try to see why it is. I don't have the full applications so I'm not aware in each case whether a clarification question was sent to you to explain that you weren't arriving at the same percentages.

18576 Now, independent production as well, in some cases -- no. Let me go back.

18577 This morning you have substituted a definition of "affiliate" -- the use of "affiliate" to a definition of "non-arm's length" instead. Correct?

18578 Because you use the word "affiliate" in some of your applications, would it be fair for us, then, to substitute your definition of "non-arm's length"?

18579 MS McNAIR: Yes.

18580 THE CHAIRPERSON: Which, if I understand it, would be where Corus owns more than 30 per cent of the voting interest; and, secondly, any companies that are your partners in the application, vis-à-vis that application, is non-arm's length. Is that correct?

18581 MS McNAIR: Yes.

18582 THE CHAIRPERSON: And we could substitute that in every application.

18583 Now, there is one that raises an interesting question for me, it's the documentary one, where your commitment is to spend 50 per cent of your programming on arm's length, correct, of your programming budget?

18584 MS McNAIR: Canadian. Yes.

18585 THE CHAIRPERSON: Yes.

18586 Now, your partners -- again, we are not examining ownership or any related matter during this hearing, but am I right that their contribution will be in kind, so to speak -- they won't have an equity position providing cash?

18587 MS McNAIR: The CBC and NFB, we have entered into a program supply agreement with them under the partnership.

18588 THE CHAIRPERSON: Not Barna-Alper and Ciné Nova?

18589 MS McNAIR: No. Under the partnership agreement, and I will just ask Sheldon to comment further, we have a first look at their libraries. There's no requirement.

18590 THE CHAIRPERSON: But there is no -- my question is more general.

18591 MR. TEICHER: There is no cash contribution, if that's where you were going.

18592 THE CHAIRPERSON: Okay.

18593 So my question, then, is, that $50 million budget, if I were an arm's-length producer I may be curious to know what the size of it is. I'm wondering if the size of it is decreased by the notional value of the programming you will get from your non-cash partners.

18594 MR. TEICHER: I will try to answer this question. If I go wrong I'm sure Jamie or Karen will correct me.

18595 THE CHAIRPERSON: Do you understand what I'm driving at?

18596 MR. TEICHER: Yes.

18597 THE CHAIRPERSON: That sum, 50 per cent of which would be available, could be less or more depending on whether you would diminish it by the value of the programming supplied.

18598 MR. TEICHER: The first thing I would say is that the value of the programming that is coming to us from our partners is highly discounted, so we are getting I think an average hourly rate of $2,000 an hour for wonderful programming from the CBC and NFB. It's a huge advantage for programming the service.

18599 What I think has happened, and my colleagues will correct me, is that we have taken half the budget and ensured that's going to arm's-length producers. Included in that half of the budget will be the newly commissioned documentaries, the 26 hours a year.

18600 Then we have the CBC and NFB contribution, and the independent producers who are our partners. Should they contribute programming, it would come out of the 200 hour allocation from the CBC or the 100 hour allocation from NFB that provides us with the low-cost baseline to program the service.

18601 I'm not sure if that's fully responsive to your question.

18602 THE CHAIRPERSON: What you are saying is it is in the budget but it is at a discounted value --

18603 MR. TEICHER: Yes.

18604 THE CHAIRPERSON:  -- so that the sum that goes to arm's length is still high.

18605 MR. TEICHER: Absolutely.

18606 THE CHAIRPERSON:  -- but is not exactly 50 per cent?

18607 MR. TEICHER: It would be no less than 50 per cent.

18608 What happens is, of the $2,000 contribution per hour, $1,000 in cash would go to the CBC or NFB primarily to help with rights clearance costs, and the other $1,000 would go into kind of a running account that will enable them, ultimately, to catch up and share the full load of costs that Corus will shoulder initially for launch of the service.

18609 THE CHAIRPERSON: Thank you.

18610 Counsel.

18611 MR. STEWART: Thank you, Madam Chair.

18612 Three quick questions.

18613 Please confirm that you have taken measures to ensure that you will be in compliance with the Personal Information Protection Electronic Documents Act.

18614 MR. ROBERTSON: Yes, we will.

18615 MR. STEWART: Thank you.

18616 Please confirm also that your proposed services will be technically equipped to permit descriptive video.

18617 MR. ROBERTSON: Yes, they will.

18618 MR. STEWART: Thank you.

18619 Last but not least, filler programming, Category 15. Could you state your position for the record?

18620 MR. ROBERTSON: That we would not have filler programming in the overall program categories but distribute those shows into the other categories.

18621 MR. STEWART: Correct. Yes. Thank you.

18622 Thank you, Madam Chair.

18623 THE CHAIRPERSON: We licence a pet channel and insist that one of the animals be called Category 15.

--- Laughter / Rires

18624 THE CHAIRPERSON: It seems to be a pet peeve of ours.

18625 We will give you a break of 15 minutes. We will be back, then, with the more specific questions directed to each application in 15 minutes.

18626 Nous reprendrons dans 15 minutes.

--- Upon recessing at 1040 / Suspension à 1040

--- Upon resuming at 1105 / Reprise à 1105

18627 THE CHAIRPERSON: Welcome back to our hearing. Rebienvenue à notre audience.

18628 Before we begin, I intended to do this this morning and did not, at Phase II of the proceeding we would like applicants to give us the number of hours of original read first window Canadian programs that they are committing to, excluding repeats, in each year of each of the services, and to indicate to us where in your application we should find this or deduce it or calculate it.

18629 We will be asking questions about original programming. We have asked some consistently. By doing it at Phase II, each applicant should have a preview of the answer to that question before Phase IV.

18630 We will now proceed.

18631 Commissioner Demers.

18632 COMMISSIONER DEMERS: Thank you, Madam Chair.

18633 My first specific application that I have on my book is CHROME TV. It was not to mix you up in any way. If you agree with that, we will -- and I have only three questions in there. They concern content related to programming.

18634 The first one is of course of a general nature.

18635 Programming for men could be a very broad concept, especially if one is targeting different types or cultures of men. Please expand upon the criteria you would use to determine if a program is for men? How can you assure us that you would not become a general-interest service? This is the question.

18636 MR. TEICHER: Thank you, Commissioner.

18637 Our nature of service suggestion was for a television network geared for men 18 to 49 focused on information and entertainment programming, and our view is that it will engage men on two levels. One, the content will be content of interest to men, which women may find interesting, but they are not the audience we are targeting. In addition to the content, it is the attitude, the approach to the content which will again be from the male perspective, hopefully in a humorous and intelligent fashion.

18638 COMMISSIONER DEMERS: It is still rather general in nature. On the other hand --

18639 MR. TEICHER: Well, within particular categories, for example in the film category, we would tend to work towards adventure films, action films, films of that nature, things that perhaps might be difficult to approach on a condition of license basis, but which our audience would clearly understand and our programming would understand the audience we are trying to direct.

18640 In fact, the nature of service is very clear because when we speak to people about it, whether it is through sophisticated research or casual conversation, and describe it as a men's channel, people seem to intuitively understand, as we discuss the types of programming we are interested in, what is and isn't a fit.

18641 MR. ROBERTSON: If I just might add. In the research that we conducted we were quite surprised at how quickly the men understood exactly what we were trying to do and how quickly they embraced the overall concept.

18642 So we do understand and appreciate how it is a regulatory challenge, but there is something clear that binds this programming service together and it has an attitude, an approach. We have also set certain maximums in types of programming to help get us over the hurdle of: Is this indeed a distinct niche.

18643 But in terms of its appeal to the target group and the appeal of these magazines that the target group are enthusiastically buying and reading, we know that this is a genuine niche that we have every confidence will be specific to the programming and the service.

18644 COMMISSIONER DEMERS: Thank you.

18645 On feature films, you propose to limit feature films but not other types of drama.

18646 First, can you confirm whether you plan to schedule all the subcategories of drama, 7(a), (b) and --

18647 MR. TEICHER: Thank you, Commissioner.

18648 We were looking for the flexibility to potentially schedule all those forms of drama, although at the present time the areas that would be of strongest interest, as would be reflected in our current sample schedule, are ongoing dramatic series, some comedic series, perhaps -- feature films certainly, and those would be the primary areas of interest to us in the drama category currently.

18649 COMMISSIONER DEMERS: Okay. You have already described in a way what content, the format of drama. Anything to add as to what comedy programs or other programs, other than drama, that you would have that you would indicate why you categorize these or why you think it is in the nature of CROME TV, if you wish?

18650 MR. TEICHER: Sure. I will start and then perhaps I could ask Kelly Bray to elaborate on my answer, as Salter has a good history of developing programs that are innovative and of high interest to this demographic.

18651 I think with respect to what sort of programming we would be looking for, we would really try to develop a very strong bond with our audience, in part through the interactive applications we are thinking about, but just to generally understand what types of programming would be of interest to them and ensure that, you know, if there is a category of programming, whether it is because it is an action/adventure-type dramatic series, or because of the nature of the lead protagonist it would be of significant interest, those are the types of programs that we would schedule and that we would look to audience response for.

18652 COMMISSIONER DEMERS: Thank you.

18653 As to the amount, how much of your drama programming, apart from feature films, would you broadcast? Could you give us an idea of a quantity?

18654 MR. TEICHER: Karen will correct me if I'm wrong, but I believe our current schedule is in the neighbourhood of about 35 per cent drama.

18655 Is that correct?

18656 Yes, it is about 35 per cent drama.

18657 COMMISSIONER DEMERS: This does not include feature films?

18658 MR. TEICHER: Feature films would be additional to that.

18659 COMMISSIONER DEMERS: Thank you.

18660 Your nature of service definition includes scheduling sports programs. Would CROME schedule both professional and amateur sports?

18661 MR. TEICHER: We have asked for both categories.

18662 I think, given the nature of the digital environment, it is unlikely that we would be scheduling the type of professional sports that the other networks would be interested in. From a cost point of view it would probably be prohibitive. So we would be looking for probably the more unusual professional sports.

18663 We don't have a significant component in our schedule of sports and we were certainly prepared to accept a pretty stringent restriction on the amount of sports, but it is key to the CROME vision of what sort of a men's service we would like to bring forward, that it is a place men can go where all their favourite things can be found. So to have a men's service that doesn't have some sports or some music or some drama we think would be an incomplete service, at least with respect to the sort of vision that we would like to bring forward.

18664 COMMISSIONER DEMERS: How much would that be on your schedule?

18665 MR. TEICHER: I think we have suggested a 10 per cent limit on sports.

18666 COMMISSIONER DEMERS: Thank you.

18667 That would be the questions I have, Madam Chair, on CROME TV.

18668 THE CHAIRPERSON: Commissioner Wilson?

18669 COMMISSIONER WILSON: You probably saw me grinning through the presentation for this channel. I have been grinning through the presentations for all of the men's channels, so you will --

18670 MR. TEICHER: We will take that as a very good sign, Commissioner.

18671 Thank you.

--- Laughter / Rires

18672 COMMISSIONER WILSON: You will excuse my irreverence, but I have to say that in all three presentations for the men's channels there was a common comment that was made and that is that men are very difficult to reach. I was wondering why that is? Is it something innate or --

18673 MR. TEICHER: My wife would say it's because we're thick that we are tough to reach, but --

--- Laughter / Rires

18674 COMMISSIONER WILSON: Does that play a part in the kind of programming you will be targeting to them?

18675 MR. TEICHER: We may have to say things more than once and loudly to get it through, but I think -- you know, it's hard to say that men don't watch television or that we are not well-served in pockets throughout a variety of schedules, but men are more than just wanting to go to a sports channel.

18676 I think for many people, and men are no different, it is nice to have a place called home. What we are trying to do with CROME is create a place that is designed specifically for men, that covers all their favourites and that does it in a way that honours them and respects their point of view.

18677 We think it is, what John was saying earlier, quite a big desirable genre and could be an extremely important driver for a group of services that it goes with.

18678 COMMISSIONER WILSON: Thank you.

18679 CHAIRPERSON OF THE COMMISSION: It just occurred to me, you spoke in your general criteria that affordability would not be a question that we should really be concerned or over concerned with, that out there the first viewers or the first subscribers will be ones that will come for added value and they will be really willing to pay the price if there is really a rendez-vous that is worth it. Yet I notice here in other projects you have that you have a quite low wholesale rate.

18680 So how do you kind of reconcile your first comment about it is not that important, but yet you are aiming at a very affordable rate for the subscriber?

18681 MR. CASSADAY: We think the criteria that you laid out was the appropriate criteria. In terms of trying to be inspirational, we went to some degree of polarization to try to really focus on what we thought the true hot buttons should be for you in making your decision.

18682 So clearly price is important, but we tried to make it a broader equation, say it's about value. Something that you pay a lot of money for that you perceive to be great value is still looked at as being a good deal.

18683 So the price -- what we really were trying to imply is that the goal shouldn't be to try to find five services that we can package at a wholesale rate of 50 cents, because that is not what this is about.

18684 To use the analogy of a CD, people will pay $21 for a CD of music if there is two or three or four things on that CD they really like. The likelihood of them paying $21 for a CD that they only have one thing that they would like is pretty remote.

18685 So we are talking about value as opposed to the actual price.

18686 CHAIRPERSON OF THE COMMISSION: Especially with MP-3s.

18687 MR. CASSADAY: Right.

18688 CHAIRPERSON OF THE COMMISSION: Thank you.

18689 MR. ROBERTSON: I just might add that we were really pleased that once we made our projections on price and then were able to see the other applicants that we were really pleased that we fit comfortably within the kind of range of prices that were offered and that indeed we would represent good value. I think it's another compelling part of our application.

18690 CHAIRPERSON OF THE COMMISSION: Thank you.

18691 I'm sorry.

18692 THE CHAIRPERSON: Counsel?

18693 MR. STEWART: No questions, Madam Chair.

18694 THE CHAIRPERSON: Commissioner Demers. A big break for you.

18695 COMMISSIONER DEMERS: Thank you, Madam Chair.

18696 Booknet is now on my list and the first questions are, of course, on the nature of service and competitiveness. You have stated that not more than 55 per cent of the evening broadcast period will include programming from Category 7, drama, excluding feature film and specials. Would you please clarify which type of Category 7 programs, other than 7(d), feature films, you are actually referring to in your proposed 55 per cent limit for the evening broadcast period?

18697 MS ROSS: Certainly. Under our proposed category definition our reference to drama would include all of the Category 7 individual categories, excluding 7(e). That's right, 7(d).

18698 COMMISSIONER DEMERS: Thank you.

18699 Given that many feature films are based on literary works, how can we assume -- how can you assure us that the drama in feature film programming will be identifiably book related?

18700 MS ROSS: If you are referring to the restriction, 10 per cent still gives us I think it is approximately six hours of feature films per week. We think that we can still do a very good job of delivering a service that includes discussion, as well as dramatization of books.

18701 The other opportunity is through dramatic series or I guess other dramatic presentations in a shorter form that would be covered off. So we think we can still do a very good job of delivering the service based on books with that restriction.

18702 COMMISSIONER DEMERS: Thank you.

18703 How do you see 7(f), comedy sketches, improvisation, stand-up comedy, fitting into the book genre service?

18704 MS ROSS: I think we are just leaving the door open for creativity there, but I think that is certainly one subcategory we could probably live without.

18705 COMMISSIONER DEMERS: Thank you.

18706 How much programming does Booknet project to exhibit that would be related to family, youth, kids and animation?

18707 MS ROSS: I will start and I will ask Karen Gifford to just step in. But in terms of children's target, the way we have conceived the service, kids are certainly a very important target audience in this service.

18708 Our thinking behind that is that we have a huge opportunity here to offer up book based children's programs, especially in the animation genre where a lot of the most successful and most classic Canadian children's books are best expressed in animation.

18709 So we see both animation and children's as an integral part of the service. We hope by presenting it through the television medium to stimulate more interest in reading, stimulate some enthusiasm for books and show that they are accessible and that they can be fun.

18710 As far as our percentage of children's, currently in this proposal we are looking at 48 per cent of the schedule and animation currently sits at, and, Karen, you can correct me here, but it's about 37 per cent of the whole schedule.

18711 Karen, do you want to add anything?

18712 MS GIFFORD: No. Those are the correct numbers.

18713 COMMISSIONER DEMERS: Thank you.

18714 What kind of restrictions, if any, would Corus be prepared to accept with regard to the exhibition of these types of programming that we have discussed; family, youth, kids, animation?

18715 MS ROSS: If we look in particular at children's, as I mentioned it's an important part of the schedule. We are currently in our schedule at 48 per cent and we could accept a restriction of 40 per cent against a target audience of children, which I guess in your breakout is either zero to five or six to twelve.

18716 COMMISSIONER DEMERS: Thank you.

18717 We have discussed previously the Cancon exhibition and Cancon expenditures, but a few particular questions here and they may relate to what our Chair has put forward when we came back just a few minutes ago.

18718 Given the relative high Cancon proposed, can you explain how you will achieve your Cancon levels, especially in early years? This question is put in perspective of how many repeats and how much Canadian programming will come from Corus associates, associated services such as YTV and Treehouse.

18719 MS ROSS: Yes. I think we have a good schedule with a large percentage of Canadian content that is quite easily deliverable. I will get Karen to be specific in terms of what we have proposed in-house in terms of production.

18720 There is great opportunity here to do weekly programs, such as Book Magazine, that we could produce in-house by using our existing infrastructure.

18721 We also believe that we can work closely with the independent production community to create brand new series. one in particular that we have had a conversation with a producer on is targeted to children and it's called "Draw Me a Story". It's a very interactive preschool program that would feature a host who would draw out and create a story as he takes contributions from children in a studio audience.

18722 So we have lots of great ideas. We know that the repeat factor falls in line with most niche specialty services. We are looking at a three to four repeat over the course of the broadcast year.

18723 The overlap with our existing services, we are looking at less than 10 per cent with Treehouse in particular.

18724 Karen, do you want to give the numbers on in-house production?

18725 MS GIFFORD: Sure. In our first year of the schedule what we have planned to do is 52 hours of in-house programming and also to commission 78 hours on top of that. To break that down, 60 per cent of that first-run programming would come from non-affiliated sources and 40 per cent would be done with us directly.

18726 MR. ROBERTSON: I might add on this one that this is a very exciting aspect of the service because with respect to within this genre this is the highest level of Canadian content delivered in the early going. We believe that it's something that is very achievable through the relationships that we have with the independent producers.

18727 We have so many ideas that we can put into action quickly that we can drive an exciting new service in the early going at a high level of Cancon. We think that is one of the key benefits of this application.

18728 COMMISSIONER DEMERS: Thank you.

18729 This would be the questions I have concerning Booknet, Madam Chair.

18730 THE CHAIRPERSON: Counsel.

18731 MR. STEWART: Thank you.

18732 I don't believe you answered the question of Commissioner Demers with respect to animation, limits on animation.

18733 MS ROSS: Yes. On animation, as I mentioned, it's a good portion of our preschool programming. In looking at our schedule we could accept a restriction that would fall outside of the children's block. So what we would propose is a 20 per cent restriction between 4:00 p.m. and 10:00 p.m.

18734 MR. STEWART: Would you be prepared to accept that as a condition of licence?

18735 MS ROSS: Yes, we would.

18736 MR. STEWART: Thank you.

18737 With respect to categories within sort of the family group, other than children, would you propose any limits?

18738 MS ROSS: Such as family?

18739 MR. STEWART: Or youth, for instance, i.e. categories for children with respect to individuals that are older than the age category with respect to children.

18740 MS ROSS: I think by covering children's and animation we have probably put restrictions in place that would alleviate any concerns of any of the interventions that we have seen.

18741 Family is broadly defined. Since a good portion of our target audience is going to be adults, families come in all shapes and sizes and combinations. So I think it would be a difficult one for us to put a fine point on.

18742 MR. STEWART: Thank you.

18743 Thank you, Madam Chair.

18744 MR. HIRSH: If I could add something on behalf of the animation industry. One thing to remember is that there are very few channels that actually play animation. We all seem to think there are quite a few, but when you strip away Family Channel, Teletoon and YTV and Treehouse, there is very little animation on traditional channels in comparison.

18745 If you look at other sectors, whether it is drama or whether it is documentary, there are many more services in those categories and feature films that carry those types of programming. So the animation industry, which has really benefited from the launch of services like Teletoon, really could use additional homes for its output.

18746 THE CHAIRPERSON: I have to admit that I did not take stock of whether or not you were asked a question on Canadian programming expenditures.

18747 COMMISSIONER DEMERS: No.

18748 THE CHAIRPERSON: No, you didn't?

18749 COMMISSIONER DEMERS: No.

18750 THE CHAIRPERSON: I thought I hadn't heard any.

18751 This is the first of your specific applications where there is a discrepancy. The staff calculated 37.5 per cent in what I like to call the traditional manner and you had calculated 33 per cent and today at page 7 you say that over the licence term you will expend 40 per cent of revenues on Canadian programs.

18752 Would you be prepared to accept 38 per cent, calculated and applied in the traditional manner, with the benefit of whatever flexibility the Commission may insert into the formula?

18753 MR. ROBERTSON: I will let Jamie Haggarty respond to this one.

18754 MR. HAGGARTY: I thought you'd never ask.

18755 In the calculation, I was able to --

18756 THE CHAIRPERSON: You don't have to wait until we ask; you can just barge right on.

--- Laughter / Rires

18757 THE CHAIRPERSON: Anticipate our questions: you get bonus points.

--- Laughter / Rires

18758 MR. HAGGARTY: Thanks.

18759 I had the ability just to discuss with the staff, on the break, and we agreed and concluded that both of our calculators are working; however, the definition of what was in the 37 per cent was -- it included unregulated revenue, and I think what we are happy to offer up is not just the 38 per cent that the Commissioners offered but our percentage that we would accept as a commission of licence is the 40 per cent that was referred to in the opening comments; and that is based on what -- now, my experienced colleagues have told me what the traditional method is and we would accept a condition of 40 per cent, based on the traditional method.

18760 THE CHAIRPERSON: Not all applicants have included in the fraction that we use, the numerators and denominators, the revenue attributable to other than traditional advertising and subscription revenue. Some have not. Others have included it -- which may well be your case -- into your general revenues.

18761 Does your application allow us to take out the revenues attributable to other than traditional advertising -- broadcast advertising revenue and subscription revenue?

18762 MR. HAGGARTY: Yes, it does. And that's the reason that a percentage goes -- equates to 40 per cent.

18763 THE CHAIRPERSON: Yes. So, if we were to take that out, what would be the percentage? If we only use what we refer to as the regulated revenue, which would be this description "revenue attributable to advertising".

18764 MR. HAGGARTY: In Schedule 15 of our application, it does display the other revenue, and it totals $3 million. And if we remove the $3 million from our total revenue, the percentage of total advertising and subscription revenue expenditures on Canadian programming would be 40 per cent.

18765 THE CHAIRPERSON: Forty per cent, then, is what you are committed to on that traditional calculation. Thank you.

18766 MR. HAGGARTY: Right. I'm glad we had this talk.

18767 THE CHAIRPERSON: Thanks.

18768 And you are welcome to clarify it where there was a discrepancy. We are just attempting to -- since all the applicants tend to say "Yes, there should be a calculation and, yes, it should be the same, based on what's been brought forward", we are attempting to see whether the method is understood properly by everyone in the same way, so -- and it's nice that you have learned something you didn't know.

--- Laughter / Rires

18769 THE CHAIRPERSON: Commissioner Demers.

18770 COMMISSIONER DEMERS: Thank you, Madam Chair.

18771 I would, now, want to discuss Discovery Travel & Adventure, and I have only one short group of questions.

18772 Your nature of service definition refers to travel and travel-related programming.

18773 Could you explain what you mean by "travel-related"?

18774 MR. ROBERTSON: Yes. Everything that would be on the service would relate to travel destination or could have to do with preparing for a vacation or -- but it's all, clearly, associated with travelling.

18775 COMMISSIONER DEMERS: Thank you.

18776 And, in the case of drama, travel-related themes could be an especially broad concept.

18777 How can you assure the Commission the program would fall in an identifiable genre?

18778 MR. ROBERTSON: Well, everything that we would do in the drama category would relate, specifically, to travel-oriented subject matter, and we also would be prepared to accept a limitation on that drama programming to ensure that drama didn't become a large proportion of the total service.

18779 COMMISSIONER DEMERS: You state that your drama will be restricted to no more than 10 per cent of the broadcast year, not including repeats.

18780 How much of the schedule could be made up of drama when repeats from the wheel are taken into account?

18781 MR. ROBERTSON: I would ask Karen Gifford to respond to that.

18782 MS GIFFORD: Our schedule is set up such that the wheel would repeat two and a half times in the schedule. So it would be reflective of that.

18783 COMMISSIONER DEMERS: Okay. Then we should be able to make the calculations.

18784 That's all I have, Madam Chair, on this application.

18785 THE CHAIRPERSON: Now, to further confuse matters, the staff has just advised me that, in the question of travel, 41 per cent would be the percentage arrived at.

18786 Is that your calculation, as well?

18787 MR. HAGGARTY: Yes, we agree with that 41 per cent.

18788 THE CHAIRPERSON: So, now, you have a bonus point at our expense.

18789 Counsel.

18790 MR. STEWART: Thank you.

18791 Just to confirm, that 41 per cent is based on the previous year's revenues. That's your understanding, as well?

18792 MR. HAGGARTY: Yes, we agree with that.

18793 MR. STEWART: Thank you.

18794 Thank you, Madam Chair.

18795 THE CHAIRPERSON: Not based on the previous revenues; it's applied to the previous year's revenue.

18796 We will never get out of this if we are not careful.

--- Laughter / Rires

18797 THE CHAIRPERSON: Commissioner Demers, go ahead.

18798 COMMISSIONER DEMERS: We can't see each other so --

18799 THE CHAIRPERSON: The Chair is losing it. I was in the way. I'm sorry.

--- Laughter / Rires

18800 COMMISSIONER DEMERS: Land & Sea, a programming for rural audiences, can be a broad programming concept -- and there was reference to that in your presentation -- especially given the number of program categories you plan to broadcast.

18801 How would you define programming for rural audiences?

18802 MS DALZIEL: Well, I think I would like to begin by just saying that rural Canadians, they define themselves as individuals who live outside of the large urban centres, in smaller communities, who predominantly make their living from the land and the sea and/or through businesses that are directly associated with those that do. So that's how rural Canadians define themselves.

18803 What we did, when we were looking at our program schedule, is we took a look at that definition and we said, "We are going to provide six streams of programming", and in looking at those six streams, we identified how it would be addressed, from a rural perspective -- and maybe I could just take a moment and I will just touch base on each one of those, to clarify.

18804 For example, in the first stream of programming, we talk about the core of the service being news and information programming; and this will mean providing daily news coverage, tailored weather, commodity reports -- and, again, much is what we talked about in our opening address -- from a rural perspective, and in a much greater depth. Any of these stories.

18805 Our second stream of programming would be country connection programming; and, again, this is where we provide rural Canadians with a platform, or a meeting place, where they can discuss issues or debate areas of mutual concern -- and, again, it would be debates within rural communities.

18806 The rural documentary programming will add context and texture to the land and sea experience, but it will choose to explore the history, the events and the issues of rural Canadians -- again, people living outside urban centres, in smaller communities.

18807 And the lifestyle programming that we looked at is where we thought this is where we could touch base and talk to rural Canadians about, I call it "old-fashioned expertise" -- or maybe I should say that's what my mother calls it. But it's looking at everything from, you know, canning rhubarb to how to fix a fishing net. Again, these are all things that are of interest to a lifestyle of people living in rural Canada.

18808 And in the drama scenario, we looked at the best of Canadian world drama with an emphasis on rural themes and locations -- and/or locations. So that would be what our definition would be in that area. And it would include programs such as "North of 60", "Road to Avonlea". They are very easily identifiable from their rural locations.

18809 Finally, we had included variety and specials.

18810 For us we believe that this service wouldn't be complete if we weren't able to provide a country music component, as well as local festivals, perhaps curling bonspiels, pro rodeo and fairs, festivals and fairs from a rural perspective.

18811 That is more or less the summary of where we come from with a rural perspective to all of our programming streams.

18812 COMMISSIONER DEMERS: Thank you.

18813 Then can we look at it from the outside. How can you assure that the service would remain distinct and would not become of general interest?

18814 MS DALZIEL: We have put some provisions into our conditions of licence regarding feature films and in regards to professional sports and amateur sports. Those provisions have already been indicated.

18815 COMMISSIONER DEMERS: Nothing to add. Thank you.

18816 Could you explain if Land & Sea would benefit from synergies such as shared programs with the Corus-owned services?

18817 MS DALZIEL: Actually, this is what we are very excited about with this application. We believe that the synergies that are offered between Corus and CBC are what make this service viable. We think without this type of unique partnership this service wouldn't exist.

18818 Perhaps what I could do is I could forward this question to our partner and to Jane Chalmers to address a little more extensively.

18819 MS CHALMERS: We are talking about programming here from a perspective of a substantial group of Canadians who really have very little and in some cases nothing on the airwaves -- 3.7 million Canadians basically turning on the TV sets -- that is, if they have access to cable or satellite yet, and many of them don't still. They are watching largely urban discussion, urban debate, urban programming.

18820 We have talked to them in depth, virtually every rural organization in this country, and they speak passionately about the overwhelming need to have a voice in this country, to have a connection with this country. It's kind of a digital railway, if you would like, about what this service might mean to them.

18821 They want the ability to connect to each other, to share and to make their lives better. Then, on the broader scope, as a secondary importance, is they want and need an ability to connect with urban Canadians who they feel have very little appreciation toward their lifestyle and their challenges.

18822 CBC, I would agree totally with what Vickie says, that this is only possible because of this partnership. CBC is going to be offering its journalism, its tradition. We are very proud of our track record. We have a tremendously good relationship with Canadians in terms of trust and integrity in our journalism, as well as our stringent journalistic policies.

18823 We have a substantial news infrastructure across the country and Land & Sea will certainly be harvesting and repurposing material both from CBC sources and international sources that we have already. We will be repurposing that material from a rural perspective and talking to the experts and individuals across rural Canada to engage them in debates.

18824 We will also be augmenting that with a significant investment from this channel and brand new journalistic resources whose jobs it will be to generate new journalism from rural Canada, and certainly engage them in a variety of ways in national debates and also specific stories from specific regions.

18825 We also bring to the table our extensive rural archives, and that can't be underestimated. I think one of the wonderful things about working with CBC is that we have history and we have these archives that we are just in the process of digitizing that speak to 50 years in this country and every region of this country. What that allows us to do, from a journalistic point of view, is to provide the context and history towards any given issue that I can think of that might arise in the country.

18826 We also have, I think, a good entrusted relationship. We have shown on our main channels, and certainly through CBC radio, a commitment to rural Canada through shows like: Country Canada, which has run for over 40 years -- it's the longest running current affairs program; Land & Sea; On the East Coast; On the Road Again, of course; and, of course, CBC Radio.

18827 This programming that we are going to be doing is brand new. It's brand new because of its perspective, because it is -- a group of people are going to get to talk first and ask questions first of policymakers and of each other.

18828 Just as a closing, I want to just really emphasize a couple of things that they told us they need and want, and they don't have this now -- I mean, that's why this application is so much about service. They are crying out for this. They want information, that's the core service. They want knowledge. They are in a highly technical, competitive, global environment now, and they want, you know, any news that they can get on scientific research and technology that can give their companies an edge.

18829 They want connection, and right now they don't have that living in isolation. I'm from a farm myself and I can tell you it can be fairly lonely.

18830 So suddenly we have these technical means to be able to connect people together, from coast to coast to coast, to be able to share experiences and successes and concerns.

18831 And they want context, an appreciation for their history, an appreciation for their lifestyles and traditions, and appreciation for the challenges they face in the future.

18832 This is the kind of commitment that we are trying to bring in terms of the development and design of our information programming.

18833 COMMISSIONER DEMERS: Thank you.

18834 Thank you, Madam Chalmers.

18835 Is it one of the applications where we agree on figures?

18836 MR. ROBERTSON: No. We are going to have to clarify this one too.

18837 COMMISSIONER DEMERS: Please.

18838 MR. ROBERTSON: Thanks for asking.

18839 We will get Jamie Haggarty to set the record straight.

18840 MR. HAGGARTY: We do agree with the calculation now. Earlier, we had indicated a reluctance to go up to the higher percentage of Cancon spending, but on further review we not only agree with the new calculation but also agree with it as a condition of licence of 51 per cent.

18841 THE CHAIRPERSON: Mr. Haggarty, you are becoming an expert in a flash.

--- Laughter / Rires

18842 COMMISSIONER DEMERS: These are all the questions I have, Madam Chair.

18843 THE CHAIRPERSON: Counsel.

18844 MR. STEWART: Thank you, Madam Chair.

18845 How much CMT programming will be scheduled on Land & Sea?

18846 MS DALZIEL: We foresee a marginal amount of programming that will be shared. But we certainly hope to have some music programming that will be a part of the service. We have done several concerts and seasonal program specials that would be an ideal fit for this service and would certainly offer these programs, you know, a great potential for another new audience.

18847 MR. STEWART: Can you be a little bit more specific?

18848 MS DALZIEL: We would be more than prepared to set some sort of stipulation with regards to overlap, if that's what you are looking for.

18849 MR. STEWART: And what would you be prepared to accept?

18850 MS DALZIEL: Excuse me. I'm just so compelled by that comment that James said.

18851 We would be prepared to accept the parameters that 10 per cent of the programming on Land & Sea in any given month would not overlap CMT; and the same could be said for CBC.

18852 MR. STEWART: Thank you.

18853 Thank you, Madam Chair.

18854 THE CHAIRPERSON: Commissioner Demers.

18855 COMMISSIONER DEMERS: Thank you, Madam Chair.

18856 The next application I would like to question on is Parent TV.

18857 The first question is on the nature of service. Would you accept the following as part of your nature of service: Parent TV's programming will consist exclusively of education, discussion and information about family life and parenting issues?

18858 MS ROSS: Yes, we would.

18859 COMMISSIONER DEMERS: Thank you.

18860 Cross-promotion opportunities with YTV and Treehouse.

18861 Your application states that Parent TV would further benefit from the Treehouse and YTV relationship through ongoing cross-promotion opportunities allowing it to capitalize on parent-child viewing. Please explain the correlation amongst the services: duplication of programming, sharing of programming costs.

18862 MS ROSS: Thank you.

18863 I think with Parent TV we have a tremendous opportunity to expand on what we already know about producing and broadcasting Parent programs. We have produced I believe it's about 136 episodes over three Parent series that have aired both on YTV and one in particular on Treehouse as part of our Parent block. So within certainly the Parent block on Treehouse, we would be able to cross-promote Parent TV programming.

18864 In terms of duplication, we would see very little, less than 10 per cent duplication between the services. We think that the optimum opportunity is to take advantage of the enthusiasm, especially with the Treehouse audience that their parents in particular have for participating in their television viewing and also what they do and how they engage with Treehouse off-air, if you will.

18865 Treehouse is a very active, on-the-road live performance series and it is within that context that we are able to attract a lot of parents and grandparents and caregivers.

18866 So we see that Parent TV could benefit tremendously from those sorts of venues where we can give profile for the network as part of a new digital tier, give profile for some of the programs and the hosts. So we think that the synergies are very, very strong between the services.

18867 COMMISSIONER DEMERS: Thank you.

18868 On original production, Schedule 10 indicates that Parent TV will provide approximately 183 hours of original Canadian production. Can you confirm how much original production your service would broadcast? Here again we exclude repeats.

18869 MS ROSS: Okay. Yes, the original production is going to be an important part of this service. I think it will help make it distinctive. I believe we have existing partnerships with independent producers that will bring forward brand new ideas and brand new ways to impart really important parent information.

18870 I will ask Karen Gifford just to give you the specifics that you are looking for.

18871 MS GIFFORD: Within the first year of our schedule that we have provided here we have approximately 97.5 hours of first-run programming. Fifty-three per cent, in fact, of the Canadian programming is first-run.

18872 COMMISSIONER DEMERS: Thank you.

18873 Independent production, and the question would relate to the -- would be based on the synergies of YTV and Treehouse.

18874 Please explain how these synergies will affect Canadian independent production.

18875 MS ROSS: Well, I think that, as we have stated, the independent production component of the service is going to be extremely important in order to bring new creative methods of disseminating important information in any number of combinations and ways.

18876 But I think that what we will offer or what we have offered is a level of independent production in terms of hours.

18877 Karen, maybe you can just elaborate.

18878 MS GIFFORD: Again within our first year 46 per cent of the Canadian production that I indicated earlier is from non-affiliated partners. After our first year we intend to do our first-run independent production outside of affiliation.

18879 COMMISSIONER DEMERS: Does Parent TV use any in-house production?

18880 MS ROSS: Yes, we would do a limited amount of in-house production.

18881 I think in a service such as this there are sometimes very straightforward opportunities that exist with the infrastructure, within the existing infrastructure. So yes, we would.

18882 We have currently produced for Treehouse a program called Caring for Kids, and because it has already been produced and developed we would, for Parent TV, continue to produce it in-house and create more episodes.

18883 Karen, do you want to add anything?

18884 COMMISSIONER DEMERS: Thank you.

18885 Again here are we in agreement with the statistics, Parent TV 38 per cent from the beginning?

18886 MR. HAGGARTY: Yes, we are in agreement.

18887 COMMISSIONER DEMERS: Thank you.

18888 Thank you, Madam Chair.

18889 This would be the questions I have on Parent TV.

18890 THE CHAIRPERSON: Counsel?

18891 MR. STEWART: Thank you.

18892 Just to clarify, for year two did you -- what commitment with respect to independent production did you give, if any?

18893 MS ROSS: For year two specifically?

18894 Karen.

18895 MR. STEWART: Year two and subsequent years, because I heard you to give a percentage with respect to year one, but I just wasn't sure what you committed to, if anything, for subsequent years.

18896 MS ROSS: Yes. I will pass that to Karen, please.

--- Pause / Pause

18897 MS GIFFORD: Across the seven years of the term we are looking at $12.9 million to independent production, non-affiliated

18898 MR. STEWART: I'm sorry, I must have misunderstood.

18899 So you didn't say anything about years two and subsequent in terms of percentage of --

18900 MS GIFFORD: No. The numbers I quoted earlier were for year one of our plan.

18901 MR. STEWART: Only.

18902 MS GIFFORD: Yes.

18903 MR. STEWART: Thank you.

18904 Thank you, Madam Chair.

18905 THE CHAIRPERSON: Commissioner Demers.

18906 COMMISSIONER DEMERS: Thank you.

18907 We are at the ultimate, the last application, The Canadian Documentary Channel. The question concerns competitiveness.

18908 As you are aware, the Commission is also considering applications for independent film channel, all of which propose to include at least some documentaries in their program schedule. What percentage do you consider to be the threshold level of documentaries that an independent film channel could broadcast above which it would be directly competitive with your proposed service?

18909 MR. CASSADAY: We believe that in the television environment that we operate in today many services are indirectly competitive. The History Channel shows a number of documentaries, and yet it hasn't impacted on CBC which perhaps might previously have been the leading purveyor of documentary programming. You know, there is a Headline News channel that has not irreparably harmed NewsWorld.

18910 So we believe that the importance of the documentary channel is not in any way diminished by the fact that there may be documentaries on other services.

18911 The significance and importance of the documentary channel is that we believe that this is a genre, a category which in and of itself deserves to be heard seven days a week, 24 hours a day, that there is sufficient interest in this category itself that we can withstand competitive operators showing documentary programming.

18912 I would like to just ask my colleagues to comment, if they will, on the legitimacy of this category as it relates to a full stream documentary channel.

18913 Perhaps, Sandra, if you would, you could start off.

18914 MS MACDONALD: Certainly our presence here I think indicates how important we think it is to have a service that is devoted to the documentary as such, a service that is different from a themed service like History or Discovery and also different, of course, from news and current affairs. Because the documentary is a distinctive form, it has its own shape, it has its own rationale, and we have a lot of it in Canada, we are very good at it, and the things that we have have actually, as with animation, fewer outlets than you might imagine.

18915 Although the proliferation of specialty services in recent years has created some opportunities for Canadian programs to be made according to particular formulas and limited restricted themes, there are very few places to put the unique documentary, the documentary that doesn't fit a formula, the documentary that is very Canadian.

18916 Anyone who attempts to market documentaries in the world will tell you that the more local and distinctive the thing is, the harder it is to find an international market for. Although we do sell a great deal abroad, we see every single day that the thing that works against us in the international market is how Canadian we are, but we think that what would work for us in the Canadian market and on this channel is how Canadian we are.

18917 That is my perspective, but I think my colleagues are kind of passionate on this topic too and would hate me to hog the show.

18918 MR. STAROWICZ: Commissioners, what you see in front of you is a rainbow coalition of one of the most respected specialty channel operators, four of the finest independent production companies in the country, the senior service in cinematography in this country, the National Film Board and the Canadian Broadcasting Corporation, and I think it is a historic alliance. We are all here together to fight for the documentary forum.

18919 The documentary forum was born in this country between 1920 and 1922 as Robert Flaherty's film "Shot on Ungava Bay".

18920 John Grierson coined the word "documentary" in this country. The documentary is essential to the discourse, the civil discourse and the community discourse in this country.

18921 It's not that we are more enlightened than anybody else, but the documentary is an empowering form. The documentary camera points in dark places. The documentary camera goes to Ungava Bay. The documentary camera goes into slums. The documentary camera goes to dying fishing villages.

18922 MS MACDONALD: Dance competitions.

18923 MR. STAROWICZ: Dance competitions and comedy clubs too. I mustn't be too earnest.

18924 Nevertheless, the reason it's essential to the Canadian discourse is, and the reason it has taken root so deeply in this country is perhaps dictated by its geography, dictated by how scattered we are, but the documentary has become one of the central grammars by which we communicate with each other, one of the ways someone in Sudbury is able to tell their story, that someone in St. Jérôme is able to tell their story, the way in depth. So it's a form of empowerment.

18925 The reason it must have, in our view, its own platform and that the genre has its own integrity is that this is one of the central means by which Canadians communicate with each other, have communicated with each other and that the base of our application is that this is a predominantly Canadian service, emphasizing the exchange of the Canadian experience and Canadian stories and crossing linguistic lines.

18926 That's why we believe it is a specific channel, a specific genre and essential actually to the conduct of Canadian discourse.

18927 MR. BARNA: I just would like to add something brief. I think what this channel is about is recapturing something that we shaped, something that we got very good at, the documentary.

18928 This weekend I was amazed. I had never actually watched the program, but I was amazed at the number of covers "Survivor" got and it has got a new name, it's reality television.

18929 There is "Big Brother". I actually tried watching that a couple of times and it's rough.

18930 I think we need a forum where we can redefine community in this country. Community, as it was brought to us originally, first with the advent of up to 60 millimetre that was able to go out. I remember just sort of losing my breathe the first time I saw Leonard Cohen in his element in the NFB movies and Paul Anka.

18931 I remember the excitement when I was able to go to Beirut and travel with the CBC crews and have the reporting.

18932 I think that this channel will address partially some of those historical roots, but also help us move into the future.

18933 Perhaps at some point we can bring up the whole notion that also connected with this channel is an important notion of training a new generation of filmmakers. I have the platform and so I can say this, but the documentary forum, in addition to bringing communities together, has actually trained almost every single one of our directors, documentary or dramatic.

18934 If you think of some of the classic names, John Smith, Denis Arcand, Gilles Carle, Norma Bailey, all have gotten their start --

18935 MS MACDONALD: Sterla Gunnerson.

18936 MR. BARNA: Sterla Gunnerson. All have gotten their start in documentaries and all have gotten their passion from sharing stories with Canadians about Canadians.

18937 So I think this is what we can bring as a genre to an audience and to an audience that is hungry for something distinct and at home. That's all.

18938 MR. CASSADAY: I think you get the sense from this that we are less concerned about whether the Indie channel has 20 or 25 per cent as a maximum on documentaries than we are about the fact that this is a genre which we feel will attract an audience because everyday, every hour of every day there will be a documentary for people to watch.

18939 So we are quite comfortable with whatever decision you make in that regard.

18940 COMMISSIONER DEMERS: Thank you, Mr. Cassaday. Thank you also to your partners.

18941 On Cancon exhibition commitments, maybe we have cleared that one, but I am not sure. It's section 7.4 of your application. You indicate Cancon levels of 60 per cent, increasing to 66 by year seven. Yet, Schedule 1 of your submission states that you expect to begin at 66 Canadian content and grow to 75 by the seventh year. Can you explain the differences in these numbers?

18942 MR. CASSADAY: Yes. The higher number refers to our business plan and simply reflects the fact that as a core value our first core value is we do what we say we will do. So, our commitment, as stated in the condition of licence, is the lower number.

18943 However, it is our intention, our business plan, to perform at the higher numbers that you stated and, in fact, because we have every intention of doing so, we would be willing to commit to those business plan numbers.

18944 COMMISSIONER DEMERS: Thank you, Mr. Cassaday.

18945 My last question concerns original Canadian programming. Here again maybe we have cleared that one, but I want to make sure we have.

18946 The involvement of the CBC and NFB provide your proposed service with access to both of those organizations' vast program inventories. Can you provide the Commission with an indication of how much of this service's Canadian content would be new material and how much would be drawn from NFB archives or programs which have already been broadcast by the CBC?

18947 MR. CASSADAY: As you will note from our numbers, at least 26 hours a year will be programming actually triggered by this service. So at minimum, once every other week there will be a new documentary available to Canadians by virtue of licensing this service.

18948 Perhaps, Karen, you could help elaborate on the more detailed question.

18949 MS GIFFORD: Sure. In addition to the 26 new hours each year that we will get from independent production that is not affiliated, we are looking at acquiring from the CBC 200 hours and the NFB the 100 hours that you had indicated. From that NFB we could expect that potentially about five hours would be first run on our channel.

18950 In addition to that, we would be acquiring from the independent production sector, non-CBC, non-NFB, an additional approximately 164 hours of documentary programming.

18951 COMMISSIONER DEMERS: Thank you.

18952 Mr. Cassaday, these are the questions I had. Thank you very much to you, to your team and to all your partners. Madam Chair.

18953 THE CHAIRPERSON: Madam Bertrand.

18954 CHAIRPERSON OF THE COMMISSION: I have two questions coming back on the attractiveness. You know, travel seems to be one that many applicants have seen as being an area and demand studies seem to be kind of supporting, but there are other genre where we have a similar kind of demand. So how do we choose in the case of travel, you are there, you are one of the applicants, so it is not any more the attractiveness of travel if we were to make it like the first. How do we see what's the best combination to bring that added value?

18955 Why is it that in your applicants that there are some genre that through demand studies that we have provided by other applicants you are not there? What has made you choose not to be there in some genre that could be very in demand, but you have chosen not to be there?

18956 I am trying to see from two sides what has been your own reasoning to make your own choices to help inspire ours, and eventually help or provide real choices to the viewers because that's at the end of the day what we are all working for. It's to provide real, valuable choices to the viewers.

18957 MR. CASSADAY: I think in some respects it came down to doability. For example, let's take the computer channel. It's an area that appears to be quite fertile. Everyone is interested in learning more about computers.

18958 ZDTV has defined the category. We had significant discussions with them about partnering with us and they decided to choose other people to partner with. So if you can't out ZDTV in the computer category, let's move on to the next one. So there was an element of that in each of our decisions.

18959 What we wanted to make sure, given the time and effort that goes into preparing for a hearing such as this, is that the applications that we put forward we viewed to be competitive within the sector.

18960 Let's look at the second part of your question. Okay, so you can't be in every one. We understand why you are not in some and why you are in others because you have explained that to me.

18961 Now, how do we choose within genres and let's talk about Discovery, for example.

18962 The Commission is either going to love our application for Travel because we have a large successful global U.S. based partner in Discovery, or they are not going t like it because of that, but that's who we are. We have the company that defined this category around the world.

18963 If you were to look at their Web site, given our interest in interactivity here, you would be hard pressed to find any Web site for any area of interest that is as fertile as that particular Web site.

18964 What this application offers is the opportunity to provide a window on that element of our schedule which is Canadian to Discovery's network around the world. So people will be exposed by virtue of this partnership to programming about Canada that they would not ordinarily have been exposed to.

18965 Other applicants will say: Why on earth would we want a travel channel which is partnered by a U.S. company? So again, that's a tough call. Our view is that they defined the category and the opportunity to expose Canadian programming to their network is great. And let's face it, if we are denied, the successful applicant will be on the first plane to Discovery to try to arrange for the output that we contracted with them today.

18966 So, you know, these are the trade-offs and at the end of the day you are going to have to make a number of difficult decisions. Again, we have simply suggested that we think -- and we don't think this is a personal agenda. This is about building the distribution of digital to the benefit of the entire system, that we should start off trying to do our best job to say: Here are the ones that are going to drive digital deployment. Then, within those genres or categories that we have selected, here are the most worthy applicants because of the partnership, because of the level of content, because of our belief in the leading player to deliver what they said they would deliver.

18967 If these were all obvious, we probably wouldn't be here today.

18968 CHAIRPERSON OF THE COMMISSION: Tell me, with that -- you know, understanding your approach to it, what I read is either you had within Corus the strengths to go with, you know, as Corus because you had the proper channels and the proper expertise, or you looked out there who had the best expertise to complement yours, so that you could -- that's how I understand it.

18969 Does that mean that you see that any ramp-up type of strategy wouldn't work, that we need and some have been saying more than even in the last round of analog there is a definite pressure to make it successful from day one. Otherwise, the promises that are there, especially that we are talking at first with the small numbers of potential subscribers, that unless it is something that is really striking and that we can create some noise around, that there will be no go eventually, or that it will be a more slow go that there is no business purpose.

18970 So do you see a relationship there on the necessity of having something that is as good on the first year, for example, as the seven years?

18971 MR. CASSADAY: If you hear about a new restaurant in your neighbourhood and you go to it and you have a terrible meal and the restaurateur explains to you that he's just ramping up and, you know, if you will come back and try again, you may find yourself much better satisfied next time. I think the analogy here is the same, you know, if your neighbour is not saying to you, you know, "I just got that new digital box" or "I just subscribed to Star Choice and I just was looking at some of these new channels that I have been reading and hearing about and, you know, they are terrific", then we have got something really positive going for us.

18972 If, on the other hand, the word of mouth is that these services aren't worth, you know, the price of a newspaper, then, you know, what is the likelihood that we are going to see the kind of momentum that we would all like to see?

18973 Our only point is that if we start off strong, the other worthwhile Category 2 applications, of which we have numerous ones, will have a much better chance of being successfully received because people, having been satisfied with the first pod of digital tiers, will then experiment with the second, which will probably end up being much more thematically driven and, you know, that's sort of my thinking on this anyway.

18974 MR. ROBERTSON: Can I just add on to that one, that the other related point is that the Canadian content exposition, we believe, should be very strong, in the early going -- and we do understand that some of the applicants may say that it takes time to develop good Canadian content and there isn't an availability of existing programming.

18975 In our experience, looking across all these applications, we feel that, through an extraordinary effort and through building on the relationships and relying on the independent production community's resourcefulness and creativity, you can drive high levels of Canadian content in the early going.

18976 So we would ask you to be a little sceptical of the long-term promise that, "In Year 7, we are going to get there" and look to the licensees that are willing to step up, in the early going, from an exhibition standpoint, as being favoured.

18977 CHAIRPERSON OF THE COMMISSION: Thank you.

18978 MR. STAROWICZ: May I add something, Madam Bertrand?

18979 I believe ramp-up is code for American importation and counting on an unregulated universe.

18980 You have a business plan in front of you here by people that are not used to losing money; that is, at 60 per cent, 66 per cent Canadian content. It is doable and it is possible, without ramp-up, to come on stage dramatically, now, with a Canadian documentary channel -- and I don't understand the ramp-up argument. It does not take five years to incubate a Canadian documentary, and I would encourage, along with my colleagues, some scepticism about this phrase.

18981 Thank you.

18982 MR. HIRSH: I would like to add something, as well, Madam Bertrand.

18983 I agree totally. I think that if we look at the services that have been successful and have been good locomotives in other tiers, they are services that have come out of, you know, the box, basically, very strong, with lots of new programming, and I think that, in looking at the applicants that are in front of you, overall, I think it's critical to look at applicants who have very successful services, are great operators, know how to reach the public with services, how to market those services so that the satisfaction level is very high, and I would argue that you have great team in front of you, today, with the Corus people.

18984 THE CHAIRPERSON: Merci.

18985 Commissioner Wilson.

18986 COMMISSIONER WILSON: As a regulator, and as a member of this Panel, I'm probably not supposed to say this, but I'm a huge fan of documentaries. You know, you have sort of a seminal memories of things that happened in your youth, and I remember going to the church basement for screenings of NFB documentaries and, you know, just being so overwhelmed by the views of Canada that I got in a small Ontario town -- not so small any more but...

18987 So I'm very happy to see that many of the applications have included documentaries in their schedules, in addition to the fact that there are a number of applications for documentary channels. But I just -- for that reason, I wanted to ask a question about the nature of your arrangements with the CBC and the NFB, with respect to the documentaries that you will source.

18988 I believe you said that it would be 200 hours from the CBC and 100 hours from the NFB, each year? Or over the life of the licence?

18989 MS GIFFORD: Each year.

18990 COMMISSIONER WILSON: Each year.

18991 Do you have an exclusive arrangement for the use of the documentaries that you choose from their catalogues, or their inventories, in terms of -- as I mentioned earlier, there are other services that are planning on offering documentaries that are thematically related to the genres of their services and so, I'm just curious about what kinds of arrangements you have made with the CBC and the NFB for the documentaries that you would use on your channel.

18992 MS MACDONALD: Maybe I will answer that.

18993 First of all, I want to add a nuance to the 200 and the 100. Our partners, the four independent production companies, also have catalogues -- which the channel has no right to ask for but we can look at -- and, in the event that the catalogues from the independent companies are going to find a place on the schedule, the number of hours coming from the NFB and the CBC, in each year, would be reduced by that amount, so that the amount of shelf space, shall we say, available for non-affiliated independent producers will never go below 164 hours a year. So that's -- I just wanted to clarify that our amount can diminish, but it wouldn't increase.

18994 The second thing --

18995 COMMISSIONER WILSON: It's really the exclusivity notion --

18996 MS MACDONALD: Yes, and --

18997 COMMISSIONER WILSON:  -- that I'm more interested in.

18998 MS MACDONALD: Right. And, actually, given the nature of specialty services of all kinds, basically, the material we are offering will not be exclusive.

18999 We have 7,000 documentaries in our catalogue. Last year, alone, to broadcasters around -- in Canada and around the world, we sold, of distinct different titles, over 4,000. There is plenty of inventory. And so, the fact -- the possibility of our films being over-exposed and, therefore, needing exclusivity is simply not there.

19000 COMMISSIONER WILSON: It would not be in the interest of the services, I guess, to have the same documentary running on multiple services but --

19001 MS MACDONALD: But it's -- well, it's so unlikely to happen.

19002 And the second thing is, of course, that one of the reasons why this service has a good business plan is that what we, in the CBC, bring to it is a wealth of good, interesting programming, which is offered to the service at a very bargain-basement price, because of the volumes that's going to be taken. And what that means is that, of course, for a bargain-basement price, you don't get exclusivity. That's one thing.

19003 And the second thing is that, of course, that means that the available program funds can offer higher licences to the independents and the non-affiliated parties than they are offering to the CBC and the NFB.

19004 COMMISSIONER WILSON: And what about the CBC?

19005 MR. STAROWICZ: There is no exclusivity included in the contracts. We regard the assets of the Canadian Broadcasting Corporation to be public assets.

19006 COMMISSIONER WILSON: Thank you.

19007 THE CHAIRPERSON: Mr. Haggarty, now that you are an expert --

--- Laughter / Rires

19008 THE CHAIRPERSON:  -- can I get your comments on -- one of the difficulties that has been brought forward about this formula that, in a sense, we have somehow twisted your application into fitting within the mould, once you agreed that a mould is a good idea, considering the competitiveness of the process, Year 1 hire expenditures and Year 2 hire expenditures are the difficulty, of course, that it's not recognized because they are higher compared to the revenues, so the numerator and the denominators are a bit artificial, for the beginning years, therefore, so is the percentage. Is a 10 -- I think Mr. Robertson or Mr. Cassaday said a flexibility of 10 per cent to 15 per cent of over- and under-expenditures would be helpful.

19009 Would it be your view that it would have a bit of an effect of helping this first-year problem by allowing over-expenditure in the first year carried forward than by a lower -- a higher expenditure, rather, in the first year, and that would be recognized in the following year and would have a bit of a smoothing effect?

19010 MR. HAGGARTY: Yes, I would agree with that rationale, that it would have that advantage. And I don't think it would encourage us to over-spend, regardless, in Years 2 or 3; I think we will spend what's necessary to drive viewership. But to allow us that flexibility for carry forward would be welcome.

19011 THE CHAIRPERSON: Yes, but you are familiar with the labyrinthian regulatory process. The problem of course is we have to have some way of testing conformity with promises made, which I'm sure your company would be glad to see that that is what your competitors are held to if indeed in certain genres they are the winners and you are not.

19012 So I'm glad that you are now as old as Ms McNair.

--- Laughter / Rires

19013 MR. HAGGARTY: Actually, I looked younger before this whole process started.

--- Laughter / Rires

19014 THE CHAIRPERSON: Counsel.

19015 MR. HAGGARTY: Excuse me, Madam Chair. You invited me to interrupt earlier, so I will take you up on that offer.

19016 I wanted to clarify a percentage on the documentary application that was discussed earlier this morning. It's to clarify the reference to 50 per cent of our spending towards independents.

19017 I would just like to clarify that the 50 per cent is of our total spending on Canadian licensing and acquisition spending. Just for further clarity, that refers to the line in section 8.2 of the application under the "Acquisitions" line.

19018 THE CHAIRPERSON: Thank you very much. Keep this up, you will be a Commissioner soon.

--- Laughter / Rires

19019 THE CHAIRPERSON: Counsel.

19020 MR. STEWART: Thank you, Madam Chair.

19021 That commitment to the independent sector, would you be prepared to accept it as a condition of licence?

19022 MR. HAGGARTY: Yes, we would.

19023 MR. STEWART: Thank you.

19024 The higher Canadian exhibition percentages that you have referred to today, would you be prepared to commit to those as a condition of licence as well?

19025 MS McNAIR: Yes, we would.

19026 MR. STEWART: Thank you.

19027 Thank you, Madam Chair.

19028 THE CHAIRPERSON: Thank you.

19029 We have exhausted our questions, so we invite you, Mr. Cassaday or Mr. Robertson, or whoever but not both, to wrap up.

--- Laughter / Rires

19030 MR. CASSADAY: Thank you, Madam Chair.

19031 THE CHAIRPERSON: For the benefit of Mr. Haggarty, this is the part where you answer questions that were not asked.

--- Laughter / Rires

19032 MR. CASSADAY: The next time we promise to have Mr. Haggarty in the front row so he can play an even more important part in this.

19033 We certainly appreciate the opportunity to have appeared before you today. We hope that we were of some help in our discussion as to how we see the important roll-out of digital television, and that our views are seen only as constructive suggestions, but we believe that they can be fruitful, and hopefully you feel the same way.

19034 We attempted to come to you today with our Category 1 licences with an eye to recognizing the importance of significant genres. As we mentioned earlier, we have a number of Category 2 applications which you did not hear about today, but what we bring in these applications today is two things.

19035 First of all, diversity in terms of both voices with our partners and in terms of the programs. We believe that there will be programs that can't be seen otherwise, with the addition of these services to the roster of available licences.

19036 Each of our services, as Paul has indicated earlier, has a high level of Canadian content: documentaries, 66 per cent, committed to 70 per cent earlier; Booknet, 75 per cent; Parent, 65 per cent; CHROME, 65 per cent. So, again, I think clearly we have stepped up to the plate on that front.

19037 We think that if you think the celebration of books is a worthwhile category to be licensed, the involvement of Nelvana, the experience of YTV and Treehouse, and the experience of Valerie and Kids Can Press make that a very difficult application to deny.

19038 If you think travel is a worthwhile category to enter, the participation of the world's defining player in this genre in Discovery again make it an application hard to deny.

19039 In the case of documentaries, I think we have heard a passionate discourse from CBC, NFB and the independent sector to support the need and the viability of a seven by 24 documentary service available in Canada.

19040 Parenting. Through our involvement again with Treehouse TV, we have become aware of the demand for information about the whole difficult task of parenting.

19041 CHROME, with the addition of Salter Street and their particular point of view, we believe can be an excellent service for that hard-to-reach male that you have heard so much about.

19042 Then, finally, Land & Sea. As Jane, I think, pointed out so eloquently, we do have a lot of disenfranchised Canadians that are rural Canadians that have an opportunity to be connected within a significant and meaningful way through the service Land & Sea that we propose.

19043 So we wish you well in your deliberations.

19044 Thank you for the opportunity to present and for the opportunity to wrap up. We look forward to your decision.

19045 Thank you.

19046 THE CHAIRPERSON: We will see you again first -- twice.

19047 You will remember that there were some questions posed for which we expect an answer in Phase IV, some of which you have already given us answers, but as the process goes on you may change your mind by then.

19048 We thank you for your co-operation. I think it's been a fruitful morning. We look forward to seeing you at Phase II -- or some of you at least. Don't forget Mr. Haggarty.

--- Laughter / Rires

19049 THE CHAIRPERSON: We will resume at two o'clock. Nous reprendrons à deux heures.

--- Upon recessing at 1235 / Suspension à 1235

--- Upon resuming at 1400 / Reprise à 1400

19050 THE CHAIRPERSON: Good afternoon and welcome back to our hearing. Rebienvenue à notre audience cet après-midi.

19051 Monsieur le Secrétaire. Mr. Secretary, please.

19052 MR. CUSSONS: Thank you, Madam Chair.

19053 We will now hear applications for six new Category 1 services by Salter Street Films Limited, OBCI. This means of course that Salter Street will have 45 minutes to make its presentation.

19054 The proposed services are: Comedy for Kids; Girls TV; the Independent Film Channel of Canada; ZTV; Nature TV; and, Play TV.

19055 We have Ms Catherine Tait and her team.

19056 Ms Tait.

PRESENTATION / PRÉSENTATION

19057 MS TAIT: Good afternoon, Madam Chair, Commissioners, Mr. Secretary, Commission staff.

19058 It's a pleasure to appear here today and to present to you Salter Street Films' applications for digital specialty television services.

19059 Before proceeding with the formal presentation, let me first introduce our panel.

19060 My name is Catherine Tait. I am President and Chief Operating Officer of Salter Street Films. I joined Salter Street in 1997 and took the company public in 1998.

19061 To my right is Michael Donovan, our Chairman and CEO. Michael co-founded Salter Street with his brother Paul in 1983.

19062 To my left is Claude Galipeau, Vice-President of Corporate Planning. Claude is in charge of the digital broadcasting project and developed the business plans for all our channel concepts.

19063 To Michael's right is Deborah Carver, Vice-President of Communications. Deborah worked on the marketing plans of our channel proposals and was particularly involved in the concept development for Girls TV.

19064 Behind Deborah, going from your left to right, is Tracey Jardine, Co-ordinator of Digital Channel Applications for Salter Street Films.

19065 Next to Tracey is Gord Hendren, President of Charlton Research. Gord's company conducted polling on our channel concepts.

19066 Next to Gord is our legal and regulatory counsel, Joel Fortune, of Johnston & Buchan.

19067 Next to Joel is Sudhir Morar, General Manager of Salter New Media. Working in both our Halifax and Toronto offices, Sudhir is in charge of the development and operations of our Internet services.

19068 Sitting at the table across from us is Rob Power, our Vice-President of Salter Street Digital, Salter Effects and Electropolis Studios. Rob worked closely with our technical advisor in assessing the requirements for a broadcasting centre in Halifax.

19069 Next to Rob are Salter Street's partners for the Independent Film Channel Canada. First, Robin Cass, a partner in Triptych Media, a feature film production company based in Toronto. Robin is also Chair of the CFTPA Feature Film Committee.

19070 Next to Robin is Ed Carroll, Executive Vice-President and General Manager of Cablevision's Bravo! networks and The Independent Film Channel, the leading independent film channel in the United States. Ed is joined by Frances Berwick, Senior Vice-President, Programming at The Independent Film Channel. Ed and Frances are here to answer any questions you may have with regard to our partnership.

19071 Next to Frances is Bruce Bauman, Director of Research, M2 Universal. Bruce advised us on the marketing and ad sales projections for our channel concepts.

19072 Today we plan to present Salter Street's vision for digital broadcasting. Michael Donovan will make an introductory statement. A short video on our company will follow, and our team will then outline Salter Street Films' Category 1 applications. Michael will also make a closing comment.

19073 MR. DONOVAN: Good afternoon, Madam Chair, Commissioners.

19074 For 20 years we have been making Canadian movies and television. When we started, many people believed that Canadians couldn't produce popular entertainment television. Today, we know that's not true. Original Canadian productions play now to popular audiences in Canada and around the world, and you, the CRTC, have been critical to this achievement.

19075 I am proud that Salter Street Films has played a part in helping achieve this. Our programs which are unashamedly and identifiably Canadian, are amongst the highest rated programs in the country. We sell them in almost every country in the world. In fact, we are the only Canadian company to have three 10 out of 10-point Canadian productions playing in the United States right now.

19076 Our approach to Canadian programming has been that if it first speaks to your own experience it will speak to the world. That's why, despite the odds, we have stuck to primarily making Canadian television and movies.

19077 Our experience has shown that, no matter what, audiences always recognize the magic ingredient of "creativity". Where we have succeeded, it has been as a consequence of being sensitive to this. Where we have failed, it's because we have lost sight of this. We have learned that all the business deals in the world add up to nothing when what is being said has no meaning.

19078 It is this understanding that has truly given us our competitive edge and allowed us to survive and thrive. I am happy to report that we have received awards from around the world, including 37 Geminis in Canada, but our business has grown in each year in the past 20 years.

19079 In the last seven years alone, Salter Street's revenues have grown by over 1,000 per cent. Our library of Canadian content now represents over 1,000 half hours.

19080 In fact, our company is more profitable than it has ever been. Our balance sheet is one of the strongest in our sector in this country. We have achieved this -- in fact earned it, dollar by dollar, show by show -- this team has achieved it, through hard work, sweat, determination and ingenuity. I am proud of this, as a Canadian, as an Atlantic Canadian.

19081 Broadcasting is the next logical step in our company's corporate evolution. In this respect, we are following in the footsteps of many existing licence holders.

19082 We have been watching these proceedings with great interest. They have raised some crucial issues about the next stage of television and how our industry will meet the challenges of digital distribution.

19083 You have stated that digital means the end of scarcity of spectrum and the emergence of a new era of competition in broadcast services. This is why this hearing is historic for us, because this may be the last opportunity for new entrants to position themselves so as to be able to compete in the new environment. This represents an unprecedented opportunity for us to make our contribution to broadcasting in this country, as we have done in production in the last 20 years.

19084 I know I speak for all of us here when I say we are excited by this challenge. That is why we have been encouraged to develop and submit the Category 1 applications you have before you. We have the experienced management team. We are publicly traded, well financed, growing, and we have proposals that are exciting, well considered and ones you will hopefully find as compelling as we do.

19085 I was urged actually at this point by my fellow team members to say something funny to introduce the video and as hard as I tried, I couldn't think of anything funny because I am essentially not a funny person.

19086 So I will introduce it by saying, it's short.

--- Laughter / Rires

--- Video presentation / Présentation vidéo

19087 MS TAIT: Salter Street Films is applying for six Category 1 licences. We believe each is a unique concept and service. Each will bring choice and diversity to the Canadian broadcasting system.

19088 We approached the challenge of selecting proposals for Category 1 licences by asking ourselves the following questions: From our experience as producers, will Canadian audiences want to watch the service and does consumer research support this? Does the service warrant the privilege of carriage and will it make a significant contribution to Canadian programming? Does the service fill a gap in the system and is there evidence from other markets that the service will be successful? Does Salter Street bring particular creative strength to the service? And finally, is there a viable business here?

19089 We have developed all our services with interactive and converged television as a priority. In 1995, Salter Street Films created Salter Interactive with MT&T to explore interactive TV services, employing unused telephone bandwidth.

19090 In 1998, with MT&T as our partner, we created Salter New Media. Its mission is to create and commercialize original, branded services for the Internet. In the past two years alone, we have spent over $10 million on digital and Internet infrastructure.

19091 We have been broadly acknowledged as a leader in Canada with several Internet services launched, including Canada's first local auction site and the leading aggregator of webcast information on public companies.

19092 All of Salter Street's proposed services target younger audiences, children and young adults as a core, though not exclusive demographic. We believe that it is young Canadians who will revolutionize the medium. They are the highest users of the Internet, the early adopters of interactive television. They will be the consumers who drive the roll-out of set-top boxes.

19093 It's important to underline that we do not consider technology as a barrier to the successful launch of interactive services. Many viewers, especially younger ones, are now operating on dual platforms. Watching TV with PCs in their laps, while not the perfect converged experience, still allows for an enhanced experience.

19094 For the Web-only phase of digital television, we see building communities of interest through chat, e-mail and audience feedback, integrating Web sites with on-air program offerings, incubating new program ideas, and providing a new way to distribute content on demand, and inviting the audience to produce content through digital video.

19095 We are ready and have the existing infrastructure to bring all of these experiences to viewers now. And when the technology is ready, we can move seamlessly from a dual to a single platform.

19096 As an independent producer, Salter Street understands the importance of the arm's length relationship between distributor and producer.

19097 With industry consolidation, increasing pressure on these distinct roles has become a key issue. For this reason, we have made a transparent and clear commitment in all our channels for independent producers and for arm's length production. No less than 50 per cent of Canadian expenditures will go to non-affiliated independent producers.

19098 We will now describe each of our applications and I will start with The Independent Film Channel Canada.

19099 I believe there is a consensus in this country, and certainly among the applicants before you. The Canadian film distribution system has failed Canadian filmmakers and video artists. Canadian films continue to represent a shockingly low percentage of screen time in Canadian theatres.

19100 When is needed is a radical solution. We believe that Salter Street's proposal for Independent Film Channel Canada provides the greatest safeguard for Canadian filmmakers and audiences. First, because of the channel's commitment to Canadian content, a commitment that is unequivocal, irrespective of penetration level, a commitment of 60 per cent Canadian content at the end of the first licence term. Second, because of the channel's close ties to the independent film community. Third, because it's the only channel before you that offers a U.S. platform for Canadian filmmakers and because the IFC relationship contributes a strong recognized brand to the Category 1 package.

19101 Finally, our proposal offers a new voice to the Canadian feature film landscape, a landscape where only one Canadian company holds approximately 80 per cent of the English-language independent theatrical distribution market, a landscape where young filmmakers would benefit from more doors to knock on.

19102 I know how difficult it is to finance and distribute films, both in Canada and the United States. So does Robin Cass, our partner from Triptych Media.

19103 While at the Department of Communications here in Ottawa and at Téléfilm in Montreal in the '80s, I worked on Canada's feature film policy.

19104 I also helped young filmmakers turn their dreams into reality when I ran the Independent Feature Project in New York City for six years. There, I learned about the importance of distribution networks. I also witnessed the improvement in the independent filmmakers' scene that was made possible by cable television.

19105 Both the Sundance Channel, and the more widely distributed Independent Film Channel, have helped to finance, promote and sustain independent film in the United States. In fact, Canadian filmmakers have already profited from this added exposure.

19106 U.S. cable distribution has shown that a limited theatrical run, or not getting a theatrical distributor at all, does not have to be fatal to one's film. Cable services can and do find a filmmaker's audience.

19107 It's this solution that we want to bring to the Canadian system. IFC Canada will be Canada's first specialty programming service dedicated to independent film, the filmmaking process, and the world of independent filmmakers.

19108 IFC Canada is a collaboration between Salter Street films, Triptych Media and Cablevision's Independent Film Channel.

19109 Triptych Media has produced some of Canada's finest independent films such as Thom Fitzgerald's The Hanging Garden and John Greyson's Lilies. It is our belief that the participation of Triptych provides an invaluable link to the truly independent film community in this country -- the filmmakers that are working in the trenches.

19110 The IFC is the leading independent film channel in the United States. It currently reaches over 30 million households in that market. Salter Street has licensed the IFC brand, which will allow our filmmakers to join the international film community. Feature films, we know from experience, are not like sitcoms. They need international audiences and buyers to survive. Quite frankly, for English-language filmmakers in Canada, the U.S. market is all important.

19111 The IFC will provide our service with promotional material, market knowledge and some programming. But, most importantly, the IFC will give an American window for productions showcased on the Independent Film Channel Canada.

19112 I would like to ask Ed Carroll to say a few words on why Cablevision chose to partner with Salter Street Films.

19113 MR. CARROLL: Good afternoon. It is a pleasure to be here in Ottawa today.

19114 Cablevision and the Independent Film Channel chose to partner with Salter Street Films for a number of reasons:

19115 First, we are very, very impressed with Salter Street Films' record as an independent producer. We believe their firsthand knowledge of the challenges facing Canadian filmmakers will be key to the successful launch of the Independent Film Channel Canada.

19116 Second, we are very comforted by Salter Street's financial position and track record of growth and innovation, particularly in the area of new media.

19117 Third, we have know Catherine Tait for almost 10 years. I watched her successfully build the Independent Feature Project in the U.S. You could not find anyone who better understands the independent film community and is more respected throughout the Indie film community, not only in Canada but also in the United States and internationally. This experience and network of contacts will be invaluable in building a great new channel.

19118 MS TAIT: IFC Canada will program the finest in Canadian feature films, documentaries, shorts and experimental works. It will feature original programming on the Canadian independent film scene, and on the filmmaking process in Canada. The aim is to create a destination for film lovers and filmmakers. The service will provide a unique tool to promote Canadian talent.

19119 We will leverage the new television platform to create a digital community for Canadian creative talent. In collaboration with IFCTV.com, our channel and its Web site will provide a new Canadian and global outlet for short films and other works by Canadian filmmakers.

19120 Internet distribution of short format films is now common, pioneered by AtomFilms.com and iFilm.com. With broadband, large formats will soon be available. Canadians need to build firm footing in this broadband arena. We need to ensure that digital film distribution is not a lost and foreclosed opportunity, as theatrical distribution has become.

19121 IFCC.ca commits to be a Canadian-based portal for Canadian filmmakers. It will provide industry resources, filmmaking handbooks, electronic press kits and digital links for Canadian filmmakers and their colleagues around the world.

19122 Other support mechanisms of the channel include film student awards, mentoring programs and development funds for first-time features.

19123 We are confident that this formula will work, for our filmmakers, for Canadian cultural policy objectives but, most importantly, with audiences.

19124 I now would like to ask Deborah Carver, Vice-President of Communications at Salter Street Films, to present Girls TV.

19125 MS CARVER: Good afternoon.

19126 Most television is aimed at men or boys. It is often violent, either overtly or covertly sexual in nature. Few shows feature girls as main characters. Of those few, the protagonists often do exactly what a male hero would do, only in tighter clothing. There are virtually no talk shows, information or how-to shows designed to be of interest specifically to girls. Parents know this. As a mother of a teenage girl, I know it.

19127 More than anything, girls want to hear about themselves, to tell stories and to share experiences with their peers. They are preoccupied by the complicated issues presented by growing up female.

19128 The television universe is not serving them. Other media, such as magazines and the Internet, have acknowledged the unique set of interests of the girl demographic by creating destinations for them. In the U.S., Fox Family has launched Fox Girlz, and many other cable services are targeting this valuable demographic.

19129 But the Canadian broadcasting system provides little distinction in regards to gender-specific needs and interests of girls.

19130 In our analysis of programming available to Canadian children, less than 5 per cent was found to target girls. Girls TV will fill a clear gap. It will be the first Canadian specialty channel dedicated to the interests, entertainment and aspirations of girls aged 5 to 17.

19131 Girls TV will feature programming suitable for girls, covering everything from family, school and boys, to careers, sports, money and health.

19132 On Girls TV, Canadian girls will have an opportunity to see positive role models and not unrealistic stereotypes. They will hear solid advice and accurate information about the issues that are relevant to them. Girls TV commits to feature female protagonists and hosts in 50 per cent of its acquired programming and in 80 per cent of its original programming.

19133 In providing information, advice and entertainment, Girls TV will celebrate the accomplishments of girls and women from Canada and from around the world.

19134 Some examples of original programming proposed for the channel include:

19135 "Oracle", a talk show with young female hosts that gives girls the forum to seek advice about boys, relationships and sex.

19136 "Androgina" is a flash animation sci-fi series for TV and the Net based on the adventures of a girl who sometimes has to masquerade as a boy, and a number of other strange creatures, in her quest to find her missing brother.

19137 And "Her-oics" --the stories, true and fictional, of brave girls and women.

19138 On Girls TV, Canadian girls will be able to watch Canadian programming. The channel commits to 65 per cent Canadian content at the end of the first license term.

19139 The National Post recently report the latest survey of Internet use in the U.S. Women and girls are becoming the "defining demographic" of the Net, with Internet use among girls jumping 126 per cent in the past year.

19140 Serving the programming needs of Canadian girls before they head south is an urgent matter.

19141 Girls TV companion Web set provides many opportunities for Canadian girls to connect and communicate among themselves. As a parent knows, girls have a passion for sharing and communicating. Girls often watch TV while they are on the phone or on the computer. In fact, ICQ messaging is a big part of my daughter's nightly routine.

19142 Some of the proposed offerings on the Web site for Girls TV are:

19143 "Blast Off", a moderated discussion area where girls can spill their guts on what's bothering them.

19144 "Calliope", a place where girls can post and share their poetry.

19145 "TPB", "The Polling Booth", where girls can vote on their top 10 books, movies, music and more.

19146 As you know from the letters of intervention, the reaction of girls and women across Canada to this channel has been overwhelmingly positive. Seventy-three per cent of teen girls surveyed want the channel.

19147 Girls TV, we believe, will add balance to the current offerings in our broadcast system, and diversity to a new package of digital services.

19148 Catherine Tait will now present Comedy for Kids.

19149 MS TAIT: Comedy for Kids presents a first for Canadian, American and world television. A channel focused on live-action comedy -- one of Canada's most important natural resources -- but for children!

19150 This channel has a dual mission. First, to provide a platform for new Canadian talent. And, second, to provide an alternative in a distinct genre of comedy for young Canadian viewers.

19151 Comedy for Kids will fill a gap in the broadcast schedules for children in this country. Existing children's comedy programming is predominately animation. This service will be predominantly live action. It will offer an important alternative to cartoons.

19152 As a company that works in the area, Salter Street knows that Canadians want more good comedy programming, especially for their kids. That is why we came up with the idea of Comedy for Kids.

19153 Children are innate comedians. The ability to get a joke or make fun of a situation starts with a child's first language skills. Children are masters of improvisation and performance. A child's delight at imitating his or her parent's goofy expressions is instinctive.

19154 Salter Street Films believes strongly in providing a stage for Canadian children looking for an opportunity to enter the world of comedy. To nurture these budding talents is, as Rick Mercer said in his intervention, an "awesome responsibility".

19155 We have also grown to realize that Canadian kids not only want this channel; they need it.

19156 Existing commodity programming is predominately adult, often with inappropriate language or sexual content. Comedy for Kids will offer more choice for children and teens, and for their parents, by exposing them to a broad range of age-suitable humour.

19157 Comedy for Kids will put Canadian programming first. It commits to 65 per cent Canadian content at the end of the first licence term.

19158 The channel will feature interactive and silly home videos, zany stand-up, off-beat newscasts, and sketch comedy shows with young performers.

19159 Some of our program ideas are: "Rubberish" -- a series that celebrates physical comedy, and encourages kids to express themselves with their bodies.

19160 "In Other Words" -- a show that will add comic voice-overs from kids to newscasts, movies and home videos.

19161 "Horrible History" -- one minute interstitials featuring some of the grossest and funniest facts from history, and;

19162 "Parents Say the Dumbest Things" -- where kids show us how smart they are, and how funny we look to them.

19163 Canada has produced some of the most renowned comic performers since the advent of mass entertainment. Comedy for Kids will build on this Canadian artistic legacy, and secure it for the future.

19164 In this sense, Comedy for Kids will do for Canadian live-action comedy programming what Teletoon has done for animation.

19165 Finally, Comedy for Kids will be a unique service in North America. It will build on our domestic expertise in comedy and satire. The Hollywood Reporter's recent "Comedy Issue" reported an increasing focus of U.S. broadcasters on making comedy shows which feature younger performers.

19166 Comedy for Kids offers an important export opportunity -- a real opportunity for Canada to take leadership in a form of entertainment where we have the creative resources. As Canada's leading comedy producer, we are passionate about this opportunity.

19167 I will now ask Sudhir Morar, General Manager of Salter New Media, to present ZTV.

19168 MR. MORAR: Good afternoon.

19169 In the creation of ZTV, we asked ourselves, "How relevant is existing television to a generation of Internet users?"

19170 In Canada, specialty services exist for toddlers, kids, teens and adults in their prime. Yet there is no channel focused exclusively on the interests and aspirations of young Canadian adults -- the so-called Generation Y.

19171 Salter Street commissioned research on an alternative channel for the "Generation Y" demographic, as well as the concept of an Internet-focused television service. Our conclusion is that the two concepts intersect in a compelling fashion.

19172 This generation of television viewers are sophisticated Internet users. Sixty-five per cent of 19 to 24 year olds use the net daily. As do 74 per cent of 12 to 18 year olds -- the upcoming demographic for ZTV.

19173 The Internet has provided unparalleled choice to young Canadians. Our focus group research found that "control and the ability to choose" rank above all other considerations for 20-somethings.

19174 We believe that Salter Street Films can leverage both its expertise in traditional production and its experience in new media to develop compelling Canadian content for converged television.

19175 ZTV's look and feel will be contemporary and alternative. Critical and intelligent. Informative as well as quirky. But above all, interactive. ZTV will be converged television.

19176 ZTV will not be a specialty channel only about computers and technology. It is a lifestyle channel for the most critical, demanding and valuable of all audiences -- an audience that has grown up with technology.

19177 ZTV will present entertainment and information for Canadians aged 18 to 29, who want great TV, true convergence in Internet and television formats, interactive offerings, and a break from the conventional scheduling of the broadcasting system.

19178 ZTV will feature a range of programs designed by and for its viewers. It commits to exhibiting 60 per cent Canadian content by the end of the first licence term.

19179 Some of the original programs proposed for ZTV's first year include: "Download" -- a weekly "uncensored" current affairs show that highlights the "news behind the news". The audience's editorial input will be key to this show.

19180 "A Day in the Life of..." -- A series that puts the camera in the hands of the viewers and explores their daily lives.

19181 "Dis This" -- A show on what's hot, and what's not -- an opportunity for real-time polling of ZTV's audience.

19182 New technology has created new forms of distribution. It has also created a new lifestyle. Often I find myself at a loss when looking for up-to-date, relevant television content for me, a young Canadian, who has grown up and lives in Canada.

19183 Salter Street is ideally suited to create ATV. We have built a reputation as an innovative producer of programming that appeals to young adults. Programs such as "Lexx," "This Hour Has 22 Minutes," "Made in Canada" and "The Awful Truth". Salter Street knows and understands the youth demographic.

19184 We know we can succeed in bringing this sensibility and commercial sense to digital television. We have done it in traditional television. We are doing it on the Net. We can do it in interactive television by creating appealing content for people in my age group.

19185 Canada has one of the highest Internet adoption rates in the world. We are leaders in technology and creativity, and should be a natural place to incubate a specialty service that is geared towards young adults. We know this from discussions with American companies that several "Generation Y" channels are currently in development south of the border.

19186 ZTV is an opportunity to break new ground for Canadians at home and in the international arena. Young Canadians have spoken and are challenging us with their demand for choice. Salter Street and ZTV can meet their challenge.

19187 MS TAIT: I will ask Claude Galipeau, Vice-President of Corporate Planning at Salter Street Films, to present Play TV.

19188 M. GALIPEAU: Madame la Présidente, Conseillers. Bonjour.

19189 We believe that Salter Street should bring its creative strengths to the challenge of creating a Canadian game show network. That's why we are proposing Play TV, which will be Canada's first specialty television service dedicated to Canadians who like to play.

19190 The importance of licensing Play TV as a Category 1 channel is twofold. First, we believe there is an important opportunity to create a Canadian brand of game show programming. And second, due to the popularity of game shows, we believe Play TV will be an attractive driver in the package of Category 1 services.

19191 Studies of human behaviour show that cultures are defined in large part by humour and "play" activity. At the moment, there are few game shows on Canadian television. And the game shows that are on television are mainly American made.

19192 Canadians love watching game shows -- the ratings prove it. The resurgence of game shows on network television has breathed new life into a genre largely forgotten for the past decade. The increasing capacity to directly involve at-home viewers has transformed the format, and will continue to do so. As conventional television sets become computer assisted, a new generation of games and game shows will be created.

19193 With digital television, Canadians have an opportunity to play their own game shows -- just as they view Canadian news, Canadian dramas, Canadian sports, and check up on Canadian weather. Digital television gives us a chance to reclaim a very popular form of programming.

19194 We believe there is a tremendous opportunity here. It's why we have committed to 70 per cent Canadian content by the end of the first licence term. This commitment represents a great window for all Canadian independent producers, in both traditional media, but especially in emerging new media.

19195 Leveraging the computer literacy of Canadians, Play TV will create a new generation of Canadian games and game shows for the converged computer and television set. Play TV will present a slate of original programs that provide a distinctive Canadian flavour and reflect our game show preferences. Some of the ideas we are proposing are:

19196 "Sleuth" -- a weekly game show where contestants, at home and in studio, seek to trap the murderer in a recreated who-dunnit.

19197 "Virtual Snowboard" -- a game show aimed at younger viewers who can "virtually" snowboard in a race with other viewers, as well as with real boarders, and;

19198 "The Great Canadian Game" -- a trivia contest starring famous Canadians competing against the public.

19199 With Canadian content plus interactive offerings, Play TV will find and will have a dedicated audience.

19200 By its nature, Play TV will advance the interactive features of digital television. And for this reason, Play TV offers a unique opportunity for Canadian content programming.

19201 Because of this the result will be a new generation of Canadian converged game shows.

19202 Catherine will present Nature TV.

19203 MS TAIT: More than any other national experience, Canadians' relationship with nature informs our national identity. It is not surprising then, that Nature TV registered the strongest general interest among Canadians in all the concepts we tested. Sixty-five per cent of Canadians want the channel. Seventy per cent of parents want the channel for their children. This is significant support. So much so, that it warrants a positive licensing decision in Category 1 on the basis of consumer attractiveness alone.

19204 Nature TV has also drawn enormous support from associations across Canada, from the Sierra Club to the Canadian Nature Federation. From the Canadian Parks & Wilderness Association to Ducks Unlimited Canada.

19205 All agree. Current programming does not adequately inform or showcase nature and the important work being done to preserve it. In fact, as one intervenor observed, much of the nature programming available is of the "gee whiz' variety -- presenting animals and wildlife without reference to the fragility of their habitat.

19206 As a new service, Nature TV will significantly deepen the range and amount of wildlife and nature programming currently available to Canadians.

19207 First, the service will build an inventory of new Canadian programming focused on Canada's rich animal, plant, marine life and geography. Nature TV commits to exhibit 60 per cent Canadian content by the end of the first licence term.

19208 Second, Nature TV will bring an entirely new schedule of programs in each of the categories of interest from around the world.

19209 And third, Nature TV will create an environment to support education, participation and community building for students, professionals and enthusiasts of the natural world.

19210 In our first year, some of the original programs we are proposing include: "Grassroots", a series which looks at success stories in local preservation; "Arctic Adventure", a program dedicated to the wildlife and natural world of Canada's North; and "Natural Instinct", a program that explores the lives of natural historians, their passions and their discoveries.

19211 Nature TV will provide an important new showcase for the extraordinary work of Canada's documentarians.

19212 Natural history programming is an area of expertise in the Canadian non-fiction tradition.

19213 Central to Nature TV's mission is the development of new, original programming from the independent production sector. In fact, we are proposing, in our first broadcast year, to commission 90 per cent of original Canadian programs from independent producers.

19214 Nature TV is ideally suited to the development of digital programming innovations. Some of these include enhanced programming with on-demand information on the natural world; a digital link between environmental associations and their members, wherever they are; and a database of observations of species at risk, submitted by both professionals and nature lovers.

19215 For all these reasons, we believe that Nature TV is a very attractive digital offering. Consumers want it. And, as a part of Category 1 package, Nature TV will be an important vehicle for Canadian content and secure a Canadian focus on nature, in the digital environment.

19216 Finally, Salter Street brings the strongest commitment to independent production before you -- a very important consideration, in this genre of programming.

19217 I will turn the floor back to Michael, who will conclude our formal presentation.

19218 MR. DONOVAN: In its call for these hearings, the Commission challenged us to provide new programming services to enhance diversity and choice for viewers and to bring fresh programming ideas to help roll out digital services, to make strong commitments to Canadian program, to find international partners.

19219 You challenged us, in effect, to bring forward the most attractive Canadian-focused services for early digital distribution -- and I think we have met these challenges.

19220 All our channel concepts are new to the broadcasting system and, therefore, would add diversity to the television industry.

19221 Our applications have strong consumer support. They are attractively priced. Our business models are conservative, viable, reasonable, financing secure. Our contributions to Canadian programming, particularly original Canadian programming, are consistently high, and our spending will grow as our services become established.

19222 This demonstrates, unequivocally, I believe, our commitment to what really counts: Canadian programming.

19223 Our proposals are proactive and innovative, with respect to interactive offerings.

19224 It's not surprising, because Salter Street was one of the first -- was the first Canadian production company to embrace interactivity; and this is a crucial point for us.

19225 We believe that small, nimble players are the true innovators in new media, new technology.

19226 As a recent article in "The New York Times" reported, the U.S. networks, despite incredible resources and market leverage, are now also also-rans in the Internet space.

19227 "Big" does not always mean "better at innovation".

19228 I believe Salter Street is well-positioned to meet the challenges of digital broadcasting.

19229 You have seen the creativity, the team, our innovative spirit, solid track record in production, and we bring diversity, not only of offering but of ownership.

19230 In fact, as Atlantic Canadians, we bring unique diversity to the broadcasting system, since there are no specialty channels in the four eastern provinces.

19231 Finally, I want to convey our understanding of the difficulty of the choices you will have to make. In our hands lies the future of Canadian television in a brave new word; and this is an historic event.

19232 In effect, you are deciding who the "green lighters" of tomorrow -- that's what producers call "broadcasters" -- who they will be.

19233 This ends the formal part of our presentation and we welcome your questions.

19234 THE CHAIRPERSON: Thank you, Mr. Donovan, Miss Tait and your colleagues.

19235 Commissioner Williams, please.

19236 COMMISSIONER WILLIAMS: Good afternoon, Miss Tait, Mr. Donovan and Salter Street Films panel members.

19237 Okay, here's the plan: For the next hour and 22 minutes --

--- Laughter / Rires

19238 COMMISSIONER WILLIAMS:  -- we will focus on general and corporate questions, as they relate to your applications; we will then, most likely, enjoy a short break; and then return for more specific questioning on each of your specific Category 1 proposed services, described as "creative and competitive edge".

19239 As custodians of the Broadcast Act and, certainly, the pay and specialty digital framework, we have established the following certain degrees of freedom for ourselves, to help make the appropriate decisions within this hearing.

19240 Specifically, the Commission has indicated certain selection criteria that it will use to license Category 1 services: Canadian programming; contribution to program diversity; attractiveness or demand; and the use of interactivity.

19241 What criteria do you think are most important in licensing the Category 1 services?

19242 MS TAIT: Thank you.

19243 We have had the advantage, and disadvantage, of time to reflect upon this question and we believe that the answer lies in the privilege of carriage and genre protection that the Category 1 licences carry.

19244 Of the six criteria, we believe priority should be given to attractiveness of service; contribution to Canadian content; and, finally, diversity -- diversity of programming, diversity of service offering and diversity of ownership.

19245 Would you like me to expand?

19246 COMMISSIONER WILLIAMS: If you wish.

19247 MS TAIT: In terms of the assessment of attractiveness, we believe that the criteria of attractiveness, in fact, captures the other three, in your list of six.

19248 It captures interactivity, in the sense that in a digital universe interactivity will be essential to evaluating attractiveness.

19249 It obviously captures affordability because the consumer will be very sensitive to price.

19250 And it will attract -- and in affordability is, of course, the business plan and the viability of the service.

19251 With respect to contribution to Canadian content, we would urge, obviously, special care in this area where independent producers -- that's our core business, for the time being -- and this is the last opportunity to secure very meaningful contributions to Canadian production; and for us, Canadian production is synonymous with the contribution that the independent production community can make. So we consider this to be an extremely important component.

19252 And, finally, with respect to diversity, obviously, diversity of program offerings, that the service offerings taken as a package be a balanced package but, also, given the existing infrastructure and leverage that multiple licence holders hold, that certain sensitivity be considered, with respect to new entrants to the Canadian system.

19253 COMMISSIONER WILLIAMS: Thank you, Miss Tait.

19254 Should the Commission impose a minimum amount of time by which a Category 1 licence must implement its service?

19255 And how about a Category 2 service; should the time frame be the same as a Category 1 service?

19256 MS TAIT: As you would have noticed in our applications, we indicated that we would be ready to launch within six months of licensing, but we have heard, obviously, in the last eight days -- is it? -- that --

19257 COMMISSIONER WILLIAMS: It seems longer.

--- Laughter / Rires

19258 COMMISSIONER WILSON: Not in a bad way.

--- Laughter / Rires

19259 MS TAIT: We would, obviously, support the position of many of the other applicants, that it makes sense to launch this Category 1 package together. And if September 1, 2001, is the agreed-upon date, we would obviously support that. The benefits of marketing together are obvious.

19260 With respect to Category 2, it's a slightly different consideration because we will have to negotiate carriage and, as you know, that can be a competitive process and so there, perhaps, should be more flexibility, in terms of the time frame imposed.

19261 COMMISSIONER WILLIAMS: In the area of independent production, given the challenges of the digital environment, do you think that the Commission should require digital services to make specific commitments to independent production?

--- Laughter / Rires

19262 MS TAIT: Do I need to answer that question?

19263 COMMISSIONER WILLIAMS: It's a low, soft pitch for --

19264 THE CHAIRPERSON: It would depend on whether you get a licence or not.

--- Laughter / Rires

19265 MS TAIT: We would say, without hesitation, yes, of course.

19266 COMMISSIONER WILLIAMS: Okay. You have stated that 50 per cent of the annual Canadian original programming budget will be earmarked for arm's-length, independent productions. You have also stated that all independent productions and co-productions will be truly independent. An example: copyright will remain with the producer.

19267 Could you confirm what you mean by "arm's length" and how you believe the Commission should define "independent" and/or "unaffiliated"?

19268 MS TAIT: I think there's been, actually, some divergence on this particular question, and our position on independent production is that a non-affiliated, or arm's-length, production company should not have -- or we should not hold more than 10 per cent of voting shares in such a company.

19269 COMMISSIONER WILLIAMS: Could you please --

19270 MS TAIT: I beg your pardon. All shares. Someone just whispered to me.

19271 COMMISSIONER WILLIAMS: That's all right.

19272 Could you please confirm your commitment. Is it 50 per cent of original Canadian programs?

19273 MS TAIT: I beg your pardon. No. It would be 50 per cent of all Canadian expenditures.

19274 COMMISSIONER WILLIAMS: All.

19275 MS TAIT: And I think there is some variance in our applications, just to put that on the record, yes.

19276 COMMISSIONER WILLIAMS: In the digital environment, is a condition of licence requiring minimum levels of annual Canadian programming expenditures necessary or appropriate?

19277 MS TAIT: I think that the privilege of carriage and genre protection absolutely requires minimum commitments, yes.

19278 COMMISSIONER WILLIAMS: Several different approaches to calculating Canadian programming expenditures have been proposed. Do you have any comments on any of the suggestions that have been made during the course of this hearing?

19279 MS TAIT: I just hope we don't get into the kind of discussion that occurred this morning. Not that! Oh, no!

--- Laughter / Rires

19280 MS TAIT: I believe that we support the traditional approach at the Commission. While flexibility is always good, I don't think that we would insist upon it. We feel that the current guidelines that the Commission has are absolutely sufficient for the services that we are proposing.

19281 COMMISSIONER WILLIAMS: Thank you.

19282 You have made specific commitments to Canadian programming expenditures in each application. Could you please describe the methodology you used to arrive at the proposed levels?

19283 MS TAIT: I'm going to invite Claude Galipeau to comment on that as the master of our business plan.

19284 MR. GALIPEAU: The methodology to calculate it I think is similar to what the Commission uses. What I did was I took an average of Canadian programming expenditures, an average of the total revenues for the year, I did it each year, and then I averaged those years over seven years. That was the level I think we said that we would commit to.

19285 COMMISSIONER WILLIAMS: Okay.

19286 The Commission's formula takes the seven year total Canadian expenditures and divides it by the total seven year projected advertising and subscription revenues, and this approach comes up with slightly lower levels than you have proposed in your application.

19287 Please confirm whether you would accept the percentages as set out in your application as a condition of licence starting in year 2 specifically: Comedy for Kids, 40 per cent; Girls TV, 41 per cent; Independent Film Channel, 37 per cent; ZTV, 38 per cent; Nature TV, 40 per cent; and, Play TV, 39 per cent?

19288 MS TAIT: I believe that that corresponds to our applications. Yes, we would commit to that higher level.

19289 COMMISSIONER WILLIAMS: Okay. Thank you.

19290 I'm now going to move into the area of interactivity.

19291 If we licence a Category 1 service with interactive elements by the set-top box, do you think distributors should be obligated to carry those interactive components?

19292 MS TAIT: Yes. We would support the notion that if the programming or the services that are being provided have these features that they should be carried, yes.

19293 COMMISSIONER WILLIAMS: Thank you.

19294 All of your applications project use of the digital box to provide interactivity for viewers. What are your projections for the timing of the introduction of such interactive elements? How would delays in the implementation of set-top box interactivity impact on your programming and business plan?

19295 MS TAIT: I think I will answer the first part and I may ask Claude to answer the second part.

19296 COMMISSIONER WILLIAMS: Okay.

19297 MS TAIT: You have heard a lot from other applicants on the phased-in approach on set-top boxes and we don't have much more to add to that discussion except to say that we anticipated such a phased-in approach. I would just say that, from our point of view, the quality of the interactivity should not be underestimated when the viewer is still operating on a dual platform.

19298 We are already producing webcasting services and reaching audiences very effectively. We launched a television show with a companion Web site and we saw how you could drive audiences between those two services.

19299 So, again, it doesn't have to be a negative that you are not yet on that single platform, so we don't see it as a major barrier to providing good, interesting and exciting services just with the Web only piece of the Phase I.

19300 Having said that, obviously, there is going to be much more interesting and exciting things that you can bring to Phase III. I will just ask Claude to talk about the business plan on that.

19301 MR. GALIPEAU: We anticipated the roll-out of enriched interactive features in the business plan. It appears in the costs that are booked in section 8.2, we booked interactive spending as costs of interactive and merchandising, and there's a ramp-up over seven years. The range of spending that we have budgeted for our channels over seven years, it ranges from about slightly over $1 million to $1.5 million.

19302 COMMISSIONER WILLIAMS: Okay. So how would delays affect that, delays in the roll-out of the boxes?

19303 MR. GALIPEAU: I think if there are delays of roll-out of boxes, we will basically be spending the money on the Web and exploiting the dual platform. I think it is important to keep the community together, and on the dual platform we do believe it's possible.

19304 COMMISSIONER WILLIAMS: Ms Tait, how confident are you that the technology will permit you to fulfil your interactive plans on all distribution undertakings?

19305 MS TAIT: Again, I would stress that we don't see the technology as a barrier in this exercise. Regardless of whether or not the set-top box actually provides the converged experience, we are already operating as an Internet provider and as a webcaster, so we would see the service evolving with the extremely strong Web component.

19306 COMMISSIONER WILLIAMS: Whether it was a cable undertaking or a DTH undertaking, there would be no effect?

19307 MS TAIT: Exactly.

19308 COMMISSIONER WILLIAMS: In the case of ZTV, you have described its program concept as an alternate channel for Generation Y as well as an Internet-focused television service. Recognizing that elements of your proposed service, including the target 18 to 29 demographic, are already present on some of these services it seems that the degree to which ZTV succeeds in programming itself as an interactive television service will largely distinguish the channel from others. How dependent is this channel on interactivity?

19309 MS TAIT: I believe all of the programming on ZTV will have an interactive component. In fact, this is how we are distinguishing it from general interest broadcasting. Again, that doesn't necessarily mean that your required interactive television in Phase III is in place. So for us that means that there is a companion Web service that is present for all of the programming that is being provided on the specialty channel.

19310 Again, not to belabour the point, we do not see the technology as being an impediment to introducing the service.

19311 COMMISSIONER WILLIAMS: Thank you.

19312 Similarly, Play TV seems to be somewhat reliant on interactivity, in particular, on interactive viewer participation. How attractive would the service be in absence of interactivity, for example, if the technology does not permit you to fulfil these aspects of your proposal?

19313 MS TAIT: I hate to repeat myself, but --

19314 COMMISSIONER WILLIAMS: I guess, specifically, would subscribers need additional hardware, like remote keyboards and cameras, and other technologies?

19315 MS TAIT: No. I think the key on the game show application is that this show distinguishes itself from -- I believe you have a video game application before you in the sense that the game show format does not necessarily require the more complex keyboard or whatever you might have in front of you.

19316 Obviously, we would be doing the kind of audience participation from the launch, but again it would have to be through the Web. In fact, we consider that to be completely sufficient. The idea here is to involve a community of viewers and the Web should not be a problem in doing that.

19317 COMMISSIONER WILLIAMS: In the area of projected sales and promotional expenses, your projected sales and promotional expenses range from 6 per cent down to 4 per cent for years 3 to 7, which would be lower than the industry average of about 12 per cent. Could you provide the reasons behind this level of expenditure?

19318 MS TAIT: I'm just letting Claude gather his papers there.

19319 COMMISSIONER WILLIAMS: Yes.

--- Pause / Pause

19320 MS TAIT: Are you talking about all our services? Are we still talking about -- sorry. Are we talking about Play TV here or all the services, just to help Claude?

19321 COMMISSIONER WILLIAMS: All of your services.

19322 MS TAIT: Okay.

19323 MR. GALIPEAU: We budgeted on the basis of what we thought the dollar amount, the proper dollar amount would be. We have particularly focused on pre-launch as well as the first years of the service, so we have dedicated for each channel about $1 million for pre-launch and advertising, sales and promotion.

19324 In the budgets, you will see that they are -- in fact, the spending is front loaded. We expect, when we launch, we will be able to spend our dollars wisely but also be able to work in conjunction with the other applicants or the other licensees that are launching, as well as the distributors.

19325 I think it's going to be pretty much a shared spend and a partnership to make the packages, as they roll out, successful.

19326 COMMISSIONER WILLIAMS: Madam Chair, that concludes my list of questions in the area of administrative and corporate.

19327 THE CHAIRPERSON: Madam Bertrand.

19328 CHAIRPERSON OF THE COMMISSION: Good afternoon.

19329 I didn't think it would come that early. I have a few questions around the notion of criteria -- kind of get your ideas and help us so that after the hearing the work won't be too hard. Of course it's in comparison to the applications. It's about how do you define "attractiveness" and how will we find our way through, eventually getting the best projects into those packages so that the viewers really get the added value of interesting Canadian programs. We are all aiming at that so my questions are around there.

19330 Before I go into partnering and why you have partners in some and not in others, I would be curious -- I was looking at your list of Category 2 and Category 1, and I see that some other applicants, for example, have chosen to go with genres you have here in Category 2 for Category 1, and I suppose vice versa.

19331 Can you take us by the hand in terms of what has been your thinking and your strategy to choose which applications -- I noticed that the ones that are in Category 2 are also in -- no, the 1 are also Category 2, but some genres where other applicants have seen differently, why have you chosen not 2 and what is your thinking, because it has to do, I suppose, with the criteria also.

19332 MS TAIT: When we looked at the landscape we imagined, perhaps brazenly, the best possible outcome for our company which would be that all our channels would be licensed. When we did that, we thought: what would be the best possible package of Category 1 licences for Canadian consumers? We decided that first and foremost we wanted a balance in the package, that we needed to have, on the one hand, categories -- I shouldn't use that word any more -- genres of service that would be broad drivers for the roll-out, and when I say "broad", I mean obviously services where you have the highest consumer appeal and you are reaching a broad demographic. So for example, in that group I would put Play TV, I would put The Independent Film Channel and I would put Nature TV.

19333 At the same time, because we believe that this is a privileged package, we felt that there should be a balance and there should be services that address certain areas of -- perhaps for simplicity we will use the word "social", that had a social benefit of some sort and that also address niche demographics because a broad service doesn't necessarily reach a deep service, a deep audience.

19334 So the idea was to have a broad range of viewers interested, but then also to pull in other viewers that might says, "Gee, I don't want to take that new package. There's nothing in it for me". So in that sense we went to Girls TV, we went to ZTV because we didn't want to miss those early adopters of technology and we went to Comedy for Kids.

19335 So I guess the answer would be that obviously from our list of Category 2s we had lots of ideas -- ideas are not a problem -- but we wanted to make sure that the Category 1 package was balanced, made sense and would reach the greatest group of people. I would just add one more thought and that is that we felt that there had to be a place for everyone in the Canadian household.

19336 So again, we imagined a family and the decisions that they would be making on taking that package. So we were thinking parents, we were thinking children, we were thinking girls, and we tried to make sure there was something for everyone in the package.

19337 CHAIRPERSON OF THE COMMISSION: So I guess, if I draw from your own selection, future selection, you would define attractiveness and Canadian content and the diversity with that kind of concern that there is at the end of the day a package that is offered to the Canadian viewer -- well, the Canadian household -- that would present for every member of the family some choice. Is that how we should be kind of interpreting it?

19338 MS TAIT: Yes, and I think the key even on what we consider to be the driver, that is where we found the largest consumer appeal from the research that we did. We also felt that because this is, in our minds -- I don't want to overstate the seriousness of it, but it is an historic event in the sense that this may be the last time that we will see these levels of Canadian content commitments, and we were sensitive to that, and so while Play TV, one could say there already is a game show network available through the American service, is this really a priority program, and we say there is an opportunity to make a Canadian commitment here, to create a Canadian library of programming, and there is an opportunity for independent producers to contribute in a serious fashion to the service.

19339 So it wasn't just that it would drive the package, but that there would be also an opportunity for a Canadian contribution and that's why we have such strong commitments for Nature as well.

19340 CHAIRPERSON OF THE COMMISSION: Tell me, there has been some discussion or ideas submitted to the Commission that some of the licences we would be granting in Category 1 should be of genres that would not necessarily be mass appealing, that would be indeed niches so that the kind of audiences they are trying to reach brings diversity, but also would not necessarily get to be carried through Category 2 because the negotiations would be very "féroces" when we would get there because there is a lot of interesting projects out there.

19341 So some were saying, if you want to be more concerned with social kind of concerns or some particular groups, you should consider giving Category 1. Others say attractiveness, attractiveness, attractiveness and based on demand study.

19342 You have made a mix of the two, but more generally speaking, aren't you torn between the two in a sense? Is it possible to reconcile the two at that early age of digital roll-out?

19343 MS TAIT: Well, obviously the danger of simply restricting the package to purely niche services would be creating a package that might not, in fact, reach the broadest number of users, and ultimately we have to be cognisant of the need of getting those people, the general public, to buy the box.

19344 So I guess our response was simply to try to balance the pros and cons of both approaches, and with all respect, we would suggest that you do the same, that ultimately we will be for consumers the choice that we want to make sure that there are choices there for them and that there is something there for each of them.

19345 I would just add, and I don't want to digress if you want to go further with this.

19346 CHAIRPERSON OF THE COMMISSION: No, no, that's all right.

19347 MS TAIT: There is another consideration that perhaps dovetails a little bit in this discussion, and it may take off -- and interrupt me if I go too far -- but one of the issues for us, and we haven't heard much talk of it in the last few days, and maybe the discussion is over, but with the so-called nesting -- because I think really nesting is where you find extremely niche services, and our thought was, again coming back to your position, would those niche services survive in Category 2.

19348 Our belief or our observation was that those multiple licence holders, existing multiple licence holders today have enough market leverage -- I think they called it deep pockets -- to apply to the Category 2 arena, and probably those extremely niche services that flow out of their existing services would be able to be launched in Category 2.

19349 So I would say that really that would be a way to consider what to do with these extremely niche services. I don't know if that confuses the discussion or helps the discussion.

19350 CHAIRPERSON OF THE COMMISSION: Well, thank you. It is the kind of ideas that are challenging, but interesting and kind of enrich our own analysis and thinking.

19351 In partnering, we have been talking about this morning and for the last few days, about different criteria and there is in the applications that are put forward some applicants -- and you are one of those -- that talk about their partnering and you are doing it for your independent film channel.

19352 Where do you see the importance? How are we to assess the value of a partnership? What should be there again some kind of parameters that should guide our analysis? And why in your projects, are there only one project you felt it was value-added to have a partner, and others you didn't? So you made an analysis there, I am sure you were not short of partner possibilities. So I would like to hear you, if it's not indiscreet, to understand why you have chosen not to have partners on all your channels.

19353 MS TAIT: I guess -- I will take the first part first -- in terms of the why did we not pursue partners on those five Category 1st where we had no partner. We felt that the contribution that Salter Street Films can make as a broadcaster could be realized with the benefit of an existing player in the market.

19354 For us often the question of a partnership -- and again I say this extremely respectfully of the many applicants before you -- it seems that the partnerships really are there to define the creative in the proposals before you, or the content.

19355 Again, this is not an area where we feel that we have a problem or challenge, that ideas really are not going to be a challenge for us. Because we have carved out such a strong position for the independent production community and we have very strong ties with that community, again we didn't feel that that was going to be a problem.

19356 The exception for us was really for the independent film one, that when we looked at it we felt that -- and I think I explained this in our opening remarks, that the independent film challenge is very different.

19357 The independent film community is an international community. I know this, obviously, from having worked both here and in the United States being exposed to it -- that ultimately independent films function somewhat at a different level and independent filmmakers communicate among themselves. You know, not to say that Canadians don't speak to Canadians, but there is an international community and we, quite frankly, felt that there could be real benefit brought to this application by securing that presence with an established player.

19358 Balanced with that, too, we thought that the IFC brand would bring value to the Category 1 package as a driver for the package. So it was sort of a win-win and that made sense to us.

19359 CHAIRPERSON OF THE COMMISSION: You talk about diversity and you talk about -- you know, there are applicants who say "We have a strong history, we have had conventional channels, specialty channels, please choose us. We have what it takes to deliver." You say "Well, we are not a broadcaster yet, we want to be one, we have everything." So it's good opinions and solid values and we will have to balance the two elements.

19360 But I was wondering, in terms of diversity, in fact what you are bringing to the table is the diversity of ownership in a sense, because the diversity in terms of your programs, they are already very present on the Canadian scene, isn't it.

19361 You know, it's not as if somebody decides, I don't know, from the book industry, for example, deciding to come into play. It's a new -- it could be -- but it's a new player with no presence in the market in any form or shape. In the case of Salter it is already there in many forms and shapes and many expressions, so the diversity is more one of ownership.

19362 I just want you to elaborate about the notion of diversity, where you see it and if you see that in program creation and choices there would be an added value of having Salter being a broadcaster not only the independent producer.

19363 MS TAIT: I have to be careful not to sound negative in terms of obviously our programs are extremely widely viewed. But in any given year Salter Street Films might have 100 -- 200 ideas in terms of new programs and shelf space in the broadcasting system is, of course, limited. Shelf space for Canadian programming is also limited.

19364 So for us the desire to move from being only a production company to also a broadcasting company is, I would say, the drive to see more Canadian good, high-quality, challenging, funny, smart programming on the air. It's a little bit of an "embarras du choix" when we are looking at what we can do any year we have, again, a surplus, but the broadcasting system is the gatekeeper obviously, it's their business, we are still very much at their mercy, let's put it that way, or at the mercy of financing our shows.

19365 That would be the first statement I would make in terms of, yes, obviously Salter's programs are on the air, but we have lots more that we would like to get on the air.

19366 I think also from an evolutionary point of view, what Michael was mentioning in terms of the growth of the company, we have been producers for 20 years and we believe that as broadcasters we can really make a very distinctive contribution to the broadcasting environment. We have done it in our television shows.

19367 I think it is fair to say that we are probably the producers of some of the most unique programming in Canada and we would bring the same sensibility, presumably, to the broadcasting arena and I think that that would be a benefit to the Canadian system to have our point of view and our ideas.

19368 And the people that we work with. It's not just the group here, there is another -- you know, all the creative people that we work with and the talent that we have around our company.

19369 So as a broadcaster we would bring that to the table and I think that the English-language broadcasting system would benefit from that new point of view.

19370 I may have lost my train of thought. A final point. Thank you.

19371 Two or three years ago we decided that the Internet was in fact everything and that to survive we would have to enter into the Internet business. We made a very significant investment, we raised money in the markets in order to finance our Internet company, and we did what no other production has done, or broadcaster for that matter, we created original content for the Internet -- that is not repurposing existing programming, that is not marketing or promoting existing programming, we created new services -- because we believed that the Internet, and we continue to believe that the Internet will in fact transform our experience.

19372 It was extraordinarily empowering, as a producer, to be able to put up a show or a webcast ourselves and to experience that, to make a decision and to put it on the air, as it were, or on the wire, and we would like to have that opportunity in the broadcasting arena as well.

19373 CHAIRPERSON OF THE COMMISSION: Thank you. Merci, Madame.

19374 THE CHAIRPERSON: In this discussion we can add as well, of course, the competitiveness of services, diversity, attractiveness. Eventually they are all part of the same overall goal. There are commitments made to fence in or describe more narrowly your services one-by-one, which I'm sure Commissioner Williams will go through, but as a general philosophy what is your view of the concerns expressed by existing services to you as a new player getting into genres of programming that leave some room for duplication in documentary films, series, et cetera.

19375 MS TAIT: Well, I think there are two issues there.

19376 There is the concern that existing license holders might have where we are entering into a genre of programming where they are already a dominant player and then there is also the new application, so I will take --

19377 THE CHAIRPERSON: Yes. That was going to be my second question.

19378 But I want to see first what your view is on the concerns of others about your plans, after which I will ask you what concerns you would have about other Category 1 participant's plans.

19379 But now you know what the second part of the question is it may alter the first part of the answer.

--- Laughter / Rires

19380 MS TAIT: All these questions are sort of melding into one at this --

19381 THE CHAIRPERSON: But you are the one who raised the second question and destroyed my plot.

--- Laughter / Rires

19382 MS TAIT: Our position on the notion of competitiveness is, first and foremost, that we believe that there should not be an exclusive right of any existing licence holder to any particular genre of programming. As a --

19383 THE CHAIRPERSON: Isn't that what the Commission has said? To the extent that it is feasible, hasn't the Commission said that it will not license a service that is directly competitive with an existing one? So it has said that to a certain extent.

19384 Measuring it, of course, is not so easy, or to confine it, but to a certain extent it has said, yes, that there would be -- as a whole the genre should not be directly competitive.

19385 MS TAIT: What I meant there was a broad genre of programming. I think it is generally agreed that, for example, film is a broad genre --

19386 THE CHAIRPERSON: Oh, yes, I agree. Okay.

19387 MS TAIT:  -- and children's is a broad genre.

19388 THE CHAIRPERSON: And documentary is not a package service. Okay, I get you.

19389 MS TAIT: That's right.

19390 So my point there is that there is no evidence that diversity is served by allocating one broad genre of programming to one company, film, children's, documentary. So that would be the first point.

19391 That, in fact, diversity is served by introducing competition in the marketplace and seeing, a level of competition in the marketplace and ensuring that other players can make a contribution.

19392 I think that the question of, just to speak to documentaries, I think you have heard from Sandra Macdonald this morning that there are obviously -- the question really goes to is there inventory, is there available programming, what are the parameters we are going to draw in terms of the types of documentary programming, for example.

19393 Again, I think we could go to the specific applications and deal with that perhaps, and I am trying to avoid giving specifics because, no, I am not yet in the specific part of our --

19394 THE CHAIRPERSON: I understand you to say that film, comedy, even sports, there is no particular type of programming that should be the sold preserve of one licensee, but you agree or disagree with parameters of this hearing, which was that as a packaged service the genre should not be directly competitive with an existing service?

19395 MS TAIT: Oh yes, absolutely. So we are not applying for a women's channel, for example.

19396 THE CHAIRPERSON: And the parameters that you are proposing may or may not be sufficient to those who have a concern and, conversely, with regard to Category 1, you may have a concern with the lack of parameters imposed by others.

19397 You have been following the hearing, so you know that at the end of the process we will expect you, as we will all others, although no one has to answer any of our questions, which services that are proposed you would consider such as to render any one of your proposals feasible because it would be spreading the genre too thin.

19398 MS TAIT: I think there has already been a lively debate in some of the intervention letters and when we get to our specific applications we can respond to some of those concerns. Obviously, we will ultimately all be working together. Hopefully, we will also join the broadcasters and be part of this debate and, obviously, it is not going to be in our interest to be directly competitive.

19399 THE CHAIRPERSON: Yes, except with Mr. Williams today you talk about how you will narrow your service at the intervention stage. You can talk about other services at the reply stage.

19400 You can respond to other people's concerns, but we also want to know having heard all this, if we were to grant you any one licence, would you live with any other licence as proposed with the fencing or lack thereof that has been proposed by the applicant, which I am sure is not an easy exercise, but should help us, especially since -- would help us in how you view competitiveness in that sense.

19401 Mr. Galipeau, did I hear you say that -- well, let me say first that there is a discrepancy between your calculations of CPE and ours which varies from 0.5 to 2 per cent.

19402 I think I heard you say that you did your calculations year-by-year. My suspicion, I don't have a calculator with me, is that the distortion is created by that. Would you test that with one of the applications, or maybe the staff will if they have a calculator, and let me know?

19403 Two per cent, you may find yourself happy to have that, 2 per cent less. Yours is always a little more than ours, 2 per cent or 1 per cent. I suspect it's because we add all the revenues to get the numerator and then we add all the expenses to do the -- so maybe if somebody tests one we will find out because eventually, when we get to year five or six, no one may remember that this is how you calculated it, as opposed to how we calculate it and you may be short, and you may be happy to know that it's all right.

19404 MR. GALIPEAU: Right. Actually, I am pleased to know that and I am confident and I move forward with that comfort.

19405 I think what happens is really it's rounding errors created by the spreadsheets --

19406 THE CHAIRPERSON: By the fact that you do it one by one.

19407 MR. GALIPEAU: Yes, by the spreadsheet.

19408 THE CHAIRPERSON: Yes.

19409 MR. GALIPEAU: It's Excel and it's an American program, so it's very boastful. It automatically rounds up.

19410 THE CHAIRPERSON: So you may not be surprised when we grant you six licences there has been a slight downward of your Canadian content expenditures, as a test, not as a real expenditure?

19411 MS TAIT: I do believe, though, that I did commit earlier to the higher number.

19412 THE CHAIRPERSON: Yes. I am just warning you that year five, if you have a problem, you may have a cushion there that you are not aware of because I suspect that we will do the calculation, as we do it for everybody by taking the total, not a very important jurisprudential point, but it may come to your rescue at some time.

19413 So if you confirm with me or the staff may have a calculator because that's probably what happens, if you take one and you do it, the total, you will probably find that that's where the distortion occurs.

19414 MR. GALIPEAU: Right. I have the spreadsheets worked out actually I think.

19415 THE CHAIRPERSON: You could just tell us when you come back.

19416 We will hear from counsel.

19417 Commissioner Williams, you have another question?

19418 COMMISSIONER WILLIAMS: Speaking of risk, yes. Thank you, Madam Wylie and Chair Bertrand, for taking over some of the questions. I had developed such a tickle in my throat I thought I was going to choke, and then my eyes started watering and I couldn't read my questions. All in all, it was a very traumatic few minutes and I am glad it passed quickly.

19419 THE CHAIRPERSON: We now know that Commissioner Williams is a kid and Comedy for Kids got to him.

19420 Did you have any other questions?

19421 COMMISSIONER WILLIAMS: No.

19422 THE CHAIRPERSON: Counsel.

19423 MR. McCALLUM: There are just three small things I wanted to take up with you. The first one is you seem to have put what looks like some other criterion for judging it and it seems to run through your applications. I thought I would ask you if it is and what it means.

19424 Just taking Comedy for Kids and reading from what seems to be page 7 of the application, the supplemental brief, you said, "diversity and localism". It is the word "localism" that I want to focus on.

19425 Is localism to be considered one of the criteria for selection and, if so, what does it mean in this context? I say that because I think this runs through all six of the applications.

19426 MS TAIT: Localism is a word that we use, especially in respect to comedy. Obviously, Salter Street Films has built its company largely in the initial years through the contribution of comedians from Newfoundland, for which we are greatly appreciative, and that talent -- what we have learned in comedy, and perhaps you have noticed it on "This Hour Has 22 Minutes" is that the local experience speaks to the national experience.

19427 So, for comedy especially, it is a key concern or a defining characteristic for us. Would I call it one of the selection criteria? No. It is embedded in the notion of diversity, I would say, diversity of programming. So the local expression, I believe, would be captured by diversity of programming.

19428 MR. McCALLUM: I think you have the same notion, for example, in the independent film application. How does localism relate in that context then, for example?

19429 MS TAIT: Also to independent film I would say that the technology now with digital cameras has revolutionized the notion of filmmaking. In one of our surveys, I believe conducted for the round that was never heard --

19430 THE CHAIRPERSON: (Off microphone / Sans microphone)

19431 MS TAIT:  -- we looked at the results of what the younger, the so-called "Generation Y" audience demographic want to be when they grow up, when we look at what careers they would choose. The first career selected by young Canadians was entrepreneur.

19432 The second was filmmaker, which may strike all of us as peculiar, but in fact the notion of filmmaking as a primary choice in career is something new in our culture. From a filmmaking point of view, digital video and cameras, lower-cost cameras mean that really you can be living anywhere in Canada, in the world, and making movies. So again, localism, regional expression for us means empowering the audience to participate.

19433 Obviously, the web has utterly transformed the notion of mass media. Instead of the one to many, it's the many to one and anybody, it doesn't mater where you live, it can be in Halifax or it can be in Vancouver or Whitehorse or any city, not even city, any household that has a computer can participate. So, again, it is a key notion and concept, but I think we have captured it in diversity.

19434 MR. McCALLUM: Thank you.

19435 Dealing, for a second, with your independent production commitments, I take it if your commitments in the cases were made conditions of licence that you would be comfortable with that? In all the cases.

19436 MS. TAIT: Yes.

19437 MR. McCALLUM: Thank you.

19438 Again, I want to come back to something else. It's common to all the applications, and so, if it could be answered, I guess, at the general stage, it would be helpful, and it was in the Schedule 15, which is the assumptions behind the subscriber penetration levels. And what I didn't understand -- I'm just taking, for example, "Comedy for Kids", and I'm looking at page 263 of the application, which is Schedule 15, and on the table, it says, "Long-Term Forecasts", and then it has "Pessimistic", then it has, in bold print, "Optimistic - Assumed", and it looked to me, in this case, and in the other cases, that you were assuming the optimistic scenario of the CCTA projections and, it looked like, the optimistic scenario of Bell ExpressVu projections, et cetera, and I didn't quite understand why you would make that assumption. If I understood it correctly.

19439 MR. GALIPEAU: That's correct.

19440 Basically, what I did was looked at the information filed with the Commission by the CCTA and the DTH providers, and then I talked to people in the industry, as well as a technical consultant that we have, and I asked them, "What do you think of the CCTA projections?", and people said, "It seems all right. Rather conservative because they do not want to represent that they are rolling out too fast because there have been statements made, in the past, about quick roll-out" So, given the context that people agree that their projections were conservative, I assumed the optimistic. Although I played with them, in terms of making it go over seven years.

19441 With regards to the DTH providers, I asked, again, "What do you think of the projections?", and some people thought them highly aggressive, particularly in the later years, in the five, six, seven. So what I did was I discounted them 25 per cent and made them more conservative.

19442 MR. McCALLUM: So you only discounted the DTH but not the cable projections?

19443 MR. GALIPEAU: Correct.

19444 MR. McCALLUM: And you didn't fear that this might lead to slightly high penetration rates, as a result?

19445 MR. GALIPEAU: My general concern about penetration was to look at the aggregate numbers. So if you look at our projections, they are kind of in the similar range, between 900,000, in Year 1, and then around two million, in Year 7.

19446 Again, I benched -- I tested that by talking to people in the industry and benchmarked that. And that, as a percentage of the overall cable and satellite universe, is very, very low. It ranges from about 11 per cent penetration to 25 per cent penetration. So I figured that was quite conservative and defendable.

19447 MR. McCALLUM: So, what you did was use -- you assumed a fairly high universe but, then, a fairly low penetration rate. Is that --

19448 MR. GALIPEAU: Right. I did look at some of the -- exactly. I did look at some of the other applications, and I think I'm kind of in the middle range of assumptions on aggregate numbers, but I could be corrected on that. I looked at a number of them. Five or six different applications.

19449 MR. McCALLUM: Well, thank you very much.

19450 Thank you, Madam Chair.

19451 THE CHAIRPERSON: Thank you.

19452 We will take a break, now, and make sure Commissioner Williams is, indeed, recovered, and we will come back in 15 minutes.

19453 Somehow or other, we will ask you questions.

--- Laughter / Rires

19454 LA PRÉSIDENTE: Nous reprendrons dans 15 minutes.

--- Upon recessing at 1545 / Suspension à 1545

--- Upon resuming at 1600 / Reprise à 1600

19455 LA PRÉSIDENTE: Rebienvenue à notre audience.

19456 Commissioner Williams is fully recovered, so be prepared.

19457 COMMISSIONER WILLIAMS: Why don't we start by taking a serious look at "Comedy for Kids".

19458 My first questions are going to be in the area of nature of service.

19459 Comedy suitable to an age group of 5- to 17-year-olds can encompass a fairly broad range of programming.

19460 Could you describe the criteria you will use in determining what programming is appropriate to the service, particularly in terms of films. And how can you ensure that "Comedy for Kids" will provide a service that is distinguishable from existing specialty and pay services that serve youth and families, like YTV for example, or provide other comedy programming, such as the Comedy Network?

19461 You have emphasized that "Comedy for Kids" will focus on encouraging children from across Canada to express themselves through laughter and share their stories of growing up, in a lighthearted manner.

19462 Could you also describe how you will get children involved in contributing content for the service?

19463 MS TAIT: I believe there are three questions there, and if I lose the last one, someone will remind me.

19464 COMMISSIONER WILLIAMS: I can give a Reader's Digest version of each one of them.

19465 The first one is: Describe the criteria you will use determining what programming is appropriate to the service, particularly in terms of films.

19466 How will your service be distinguishable from other existing pay and specialty services?

19467 And how do you plan on getting children involved?

19468 MS TAIT: Okay. With respect to the criteria for programming, we would describe the programming as, obviously, primarily -- entirely focused on thematic and suitable programming for that age demographic and we would program our blocks, accordingly, you know, securing younger viewers earlier in the day and older suitable -- programs suitable for older viewers later in the wheel.

19469 With respect to distinguishing it from other services, we would be willing to accept some of the descriptions, or guidelines, for YTV, in terms of ensuring that the service is suitable for children. I think there are existing regulations there where we can obviously comply.

19470 In terms of the competitiveness with existing services, such as YTV, we have committed to entirely focusing on live action comedy, and when we did our analysis of programming of the various services that provide children's programming, we saw very a minimal amount of programming in this type -- of this nature. So, we don't believe that we are, in any way, directly competitive with existing services. However, in order to ensure that there is no confusion there, we have put a restriction, or a limitation, of 15 per cent on Category 7(e), "Animation" -- and I believe that will comfort the other services that might be concerned about us encroaching in the area of cartoon programming, which we believe is very well-served already.

19471 I'm going to go back to the first part of your question because I realize I didn't address feature films.

19472 We also put a restriction of no more than 15 per cent of the programming being from the feature film category; and, again, those films will be of a kids' nature. We will be looking for films with protagonists that are from the age demographic; again, following the kinds of guidelines that you have put forward for YTV.

19473 And the third question was: How to involve kids, I believe?

19474 COMMISSIONER WILLIAMS: Well, your application says you will encourage children from across the country to participate.

19475 So how do you plan on involving them?

19476 MS TAIT: There are two ways.

19477 We talked about the increasing interest of the U.S. broadcasters and actually seeking professional performers, in terms of comedy performers. Many of the -- in terms of our experience, many of the comic performers that we worked with, in fact, begin their performance very young. You are actually born to be a comedian. And we will be -- and we have worked with a number of them, quite young, but none at the early stages that we are talking about.

19478 So, we would be ensuring that we find these comedy performers at an earlier age and working with them and using the manner in which we find talent, which is basically going to clubs or -- obviously kids won't be performing in clubs -- but talking to agents and, specifically using the Web. There will be an opportunity for kids, again, from, really, anywhere, to submit material, whether it's digital video or anything they have written, in terms of being able to access the channels. So, obviously, the Web piece of this is going to be extremely important, in terms of finding talent. I think many homes, now, have video cameras and -- I know, from my own experience with my stepsons, that they started making animation with their toys early on and would qualify as filmmakers, at this point, at 16 years old.

19479 So that's how we would do it.

19480 COMMISSIONER WILLIAMS: Thank you.

19481 In the area of foreign programming, your Schedule 10 identifies a majority of your non-Canadian programs as American productions.

19482 Elsewhere in your application, for example, on page 11 of your supplementary brief, you state that:

19483 Can you comment further on the types of non-North American programming your service might provide and the sources from which such programming may come?

19484 MS TAIT: I might call on Tracey in a moment, who conducted a lot of the research in terms of the programming for this service. But we have again adopted the YTV model in terms of the exposure of American programming on the service, which I believe is -- 35 per cent of non-Canadian programming should be non-North American.

19485 The schedule that is submitted is for illustrative purposes only but maybe I would just ask Tracey to talk about some of the other comedy live action programming that we identified.

19486 MS JARDINE: Thanks Catherine.

19487 We did research a number of other areas outside of North America, including of course Britain, Australia, and even some Asian programming. There are some programs listed on the schedule that are from sources outside of North America. What we did find generally exists, though, that there isn't a lot of the live action programming that we really want to focus on on our channel. That lack of live action programming has been recognized worldwide in the past year or so and we expect that there will be a lot more live action comedy programming suitable for children from sources outside of North America by the time this service launches.

19488 COMMISSIONER WILLIAMS: In your application, you state that there is currently no television service dedicated to providing comedy programming to children in Canada or the United States and that your service would bring an entirely new Canadian-conceived innovative programming service to North America.

19489 Have you explored other market opportunities for exporting your product?

19490 MS TAIT: We certainly have been. In the process of preparing for this hearing, we talked to a lot of American cable broadcasters and explored the opportunities. We are always, as producers, in discussion with broadcasters, not only in the United States but worldwide -- in Britain we have relationships and also Germany and France -- so I would say that some of -- this comes from direct experience in the international markets, our belief that there is an opportunity here.

19491 Certainly there is a consensus, and we have seen this on Nickelodeon, that there is an opportunity to pool and to draw upon younger performers in what we consider the traditional forms of comedy, sitcoms or sketch comedy programs. In Canada right now, I don't believe there are these kinds of programs. We conducted research. It showed that there was very, very little live action programming available and it seems to be something that's working in other markets.

19492 COMMISSIONER WILLIAMS: Thank you, Ms Tait.

19493 That concludes my questions on the Comedy for Kids channel.

19494 THE CHAIRPERSON: Counsel.

19495 MR. McCALLUM: Just two small items.

19496 In response to one of Commissioner Williams' questions, you referred to your programming wheel. What is your programming wheel?

19497 MS TAIT: We have a six-hour wheel three times a day for an 18-hour day.

19498 MR. McCALLUM: And it starts at...?

19499 MS TAIT: I believe it starts at 6:00 a.m.

19500 MR. McCALLUM: So the younger material would be repeated, then, just after noon, I guess.

19501 MS TAIT: That's right.

19502 MR. McCALLUM: And then in the early evening hours. Is that the way it goes?

19503 MS TAIT: That's right.

19504 MR. McCALLUM: Then the programming targeted at the older demographic is repeated later in the wheel three times a day.

19505 MS TAIT: That's right.

19506 I should just add to that that obviously we are sensitive to the time differences. One of the reasons we are interested -- and I think I didn't answer one of the Commissioner's questions, it just popped into my head -- one of the reasons that we are interested in creating this service is that, as comedy producers, we are very sensitive to the issue of age-suitable humour.

19507 I think everybody knows that it's probably easier to get a joke if you go certain directions with the humour. We are committed, in creating this service, to ensuring that it is age-suitable, so there will not be inappropriate language or subject matters in any part of the wheel.

19508 MR. McCALLUM: When you refer to 6:00 a.m., which time zone are you referring to?

19509 MS TAIT: Halifax.

19510 MR. McCALLUM: So it would be an hour later than the eastern time zone.

19511 MS TAIT: That's right.

19512 MR. McCALLUM: Thank you.

19513 COMMISSIONER WILLIAMS: That would be 9:00 in the morning out west.

19514 MS TAIT: That's right.

19515 THE CHAIRPERSON: Not with hours that have 22 minutes.

--- Laughter / Rires

19516 MR. McCALLUM: You mentioned you are focusing on live comedy. Could the word "live" be inserted to the description of "service"? In your nature of service you have, just reading the words:

19517 I'm just wondering if the word "live" can be or should be inserted in that, in the definition of the service?

19518 MS TAIT: A distinction between "live" and "live action", "live" assumes that you would say real time live, so "live action", it means real bodies as opposed to animated figures, so just that one distinction.

19519 But the other thing is, we do have 15 per cent in animation, so as long as you were able to describe it in such a way that would allow us to do that that would be fine.

19520 MR. McCALLUM: Yes, I think the two --

19521 MS TAIT: Predominantly live action --

19522 MR. McCALLUM: Predominantly live action.

19523 MS TAIT:  -- would be absolutely fine, yes.

19524 MR. McCALLUM: Thank you.

19525 Thank you, Madam Chair.

19526 THE CHAIRPERSON: Thank you.

19527 Commissioner Williams.

19528 COMMISSIONER WILLIAMS: We will now move on to Girls TV.

19529 I have extensive personal experience in this demographic being the father of a 15-going-on-20-year-old daughter.

--- Laughter / Rires

19530 COMMISSIONER WILLIAMS: Yesterday I enlisted her to teach me a bit more about ICQ and PalTalk and similar technologies, and she arrives for the weekend tomorrow.

19531 Yesterday's issue of the Ottawa Citizen carried an article entitled "Teen girls stage their own Web revolution". It stated that:

19532 All this according to Jupiter Communications and Media Matrix, a couple of Internet research firms.

19533 My question is: Could you please detail your interactivity plans as they relate to Girls TV and elaborate on this dynamic trend amongst the 12 to 17-year-old female demographic?

19534 MS TAIT: I have a seven year old going on 20.

19535 I think the article in the Citizen has been confirmed in the research that we cite in our --

19536 COMMISSIONER WILLIAMS: You mentioned earlier.

19537 MS TAIT: There absolutely seems to be a revolution there.

19538 Just a comment on that.

19539 I think that anybody who has been exposed to girls understands the -- especially teenage girls, understands the struggle that they go through. What is extraordinary, what that article also pointed out, was the community that the Internet is providing girls: a private place to communicate among themselves in a way that is not embarrassing to girls, especially on certain issues.

19540 I think very specifically on what we have come up with -- and I think we have literally just skimmed the surface because once we started in on designing this particular channel the list of ideas was pages long, but I would divide it into three basic categories, the first being that we would create a community of interest of girls through chat, through e-mail, and hopefully create a network of pen pals or e-pals so girls can communicate -- Canadian girls -- can communicate with each other on a constant basis, whether it's about loving horses or sports or boys, whatever their interest is.

19541 The second would be the programming itself, that there is an opportunity, because this is a lifestyle channel primarily for girls -- the information programming, the talk shows, all of those elements -- there is an opportunity to involve the viewer and the user on the Web and participate in whatever programming has been created. So whether it's a talk show where the viewer is also participating, asking questions, getting a chance to interact with whomever, it is that we have presented on air, again, talk show hosts not necessarily being grown ups but also being girls of their peer group.

19542 Obviously, that is a very important part of the service as well.

19543 Finally, there is an opportunity to create what we believe is going to be compelling original programming with independent producers that can involve interactive components to a great extent or not but really to put girls in roles that you don't normally see on television.

19544 There are some great shows on TV. I think that Shirley Holmes or even our own Emily of New Moon are positive shows for girls but there are not a lot of them. The Web obviously allows us to do things with flash animation. Deborah mentioned one example of a show that we have thought up. But there are opportunities there to create positive role models for girls.

19545 COMMISSIONER WILLIAMS: You talk about your Web site being a vehicle for viewers or your audience to learn about each other in a safe and friendly environment. Can you please describe how you will maintain the safety of this environment?

19546 MS TAIT: Yes. One is the creative content of the service.

19547 I will ask Sudhir to address the technical part of it in terms of the Web, in terms of providing safety. This would also apply to the Comedy for Kids.

19548 Our interest --

19549 COMMISSIONER WILLIAMS: With the chat lines. I mean, like, people disguising themselves as 14-year olds.

19550 MS TAIT: That's right.

19551 As I said, on the technical side, obviously, we are very sensitive to that.

19552 But from a programming point of view also, I think the key here is that this is really for Canadian girls and the focus will be to create a community of interest for those girls.

19553 Maybe I will ask Sudhir to talk about protecting children on the Web.

19554 MR. MORAR: Our approach to safety on the Web for this demographic is actually in two parts. First, we would educate the visitors to the site through a section of the site for safe surfing. We would also encourage parental support in that arena as well where there will be consent from parents when they are on the site.

19555 From a technology perspective, what we will do is we will moderate all the chats and discussion groups and also provide some sense of filtering as well, just to make sure that inappropriate content isn't displayed at any time.

19556 COMMISSIONER WILLIAMS: An example was -- I was talking to another father earlier today actually and he was giving me his concern about a chat line and his 14-year-old daughter gets on and gives out some information. Then in a subsequent chat she then says she plays on the school's volleyball team, and another chat later she says 14 is her favourite number.

19557 So now a predator, I guess, would know sweater number 14 at such and such a school which would then identify the individual, and then the individual is identified and they can be approached at any time in any place with all that information by following various chats.

19558 That is an area I wouldn't mind to hear you talk about.

19559 MS TAIT: Obviously, this is a huge issue that you have touched upon for any parent of a child of either sex.

19560 COMMISSIONER WILLIAMS: Any age.

19561 MS TAIT: Or any age. Obviously, this is a big concern. I think the monitoring of chat rooms, especially in the area of children, is absolutely essential.

19562 One of the things we did in bargoon.com, which is our local auction site, is we were very concerned about inappropriate material being put up for auction, you know Nazi memorabilia or anything related to hate materials. We have in that particular instance launched the site and introduced, again on the technical level, a system for constant monitoring to ensure that there would be nothing that would be offensive to the policies that we had put in place.

19563 Related to that, obviously, would be the privacy issue as well, which again on our current Web sites we have a very restrictive system for ensuring that users have comfort about the kind of information that is being gathered on their use of the service.

19564 But I don't know if Sudhir has anything else to add in terms of comfort in this area. Obviously, this is a big issue. It touches on everything in terms of Web use, not just for specialty channels.

19565 MR. MORAR: We are of the opinion that what we need to do is educate the user, therefore the children in this case, by providing them with the information that they need to safely surf. So what that means to us is within our site we will have components that talk about sort of the rules and regulations, but in a way that the girls who are visiting a site will understand. So then we will make sure that they are aware of not giving away information, like you mentioned, sweater number of the school that you go to just to avoid that.

19566 But it's actually, as I said earlier, two parts: primarily education and secondly, technology. The technology will do the filtering and the education will come from the information we put up on the site.

19567 Would you like me to talk more about the privacy and trust as well?

19568 COMMISSIONER WILLIAMS: It might be a good area to cover because we haven't had a whole bunch of discussion in that area so far in the hearing.

19569 MR. MORAR: Our approach to privacy and trust is also in three parts. We start off with privacy protection where we ensure the protection of the information given to us by our users.

19570 Secondly, we have a policy around business practice disclosure where we will post what we do with the information that we collect. And third, in the event that transactions are taking place, we ensure transaction integrity, using both technology services and partners.

19571 COMMISSIONER WILLIAMS: Right.

19572 MR. MORAR: I think this approach will ensure that we embrace and exceed any of the proposed privacy legislation that is before us now.

19573 COMMISSIONER WILLIAMS: It's one question the lawyers won't have to ask you.

19574 In the area of programming, a five year old is very different from a 15 year old, let alone a 17 year old. How would you handle this programming challenge, the challenge of keeping the programming relevant and interesting to such a -- well, it's not a large number, the very different interests at various age groups?

19575 MS TAIT: That's a challenge that we look forward to having. Obviously, a five year old is very different than a 17 year old and, as I said, we are creating blocks of programming that will feature programming that's suitable for a five year old.

19576 My own daughter watches Treehouse and she watches also Teletoon. She is watching a range of programming. I think the important part of the service will be to create communities for different groups within girls. Now we are talking about little girls and big girls, but again the philosophy of the channel is to talk to all girls in a positive manner, and we believe that that thread will be throughout the programming.

19577 Obviously, the 15 year old is going to tune out if the show is aimed at a seven year old and we are obviously comfortable with that. This is a niche service and they will pick, they will find the programming that's suitable for them.

19578 COMMISSIONER WILLIAMS: Your niche within a niche.

19579 MS TAIT: Exactly, exactly.

19580 COMMISSIONER WILLIAMS: As part of your services program description, you propose to:

19581 You have talked quite a bit about that, both in your opening and in answer to some of these questions. Are there any specific programs that will reflect this stated program emphasis?

19582 MS TAIT: I would say that many of the information programs would without being preachy. This is not a channel intended to necessarily breed radical feminists. I don't want to sound too earnest either. I mean, this is going to be a fun channel. It's going to be funny, it's going to be informative, it's going to be entertaining. So the idea here is not to get up on a soapbox and tell girls what it is to be a girl.

19583 If I can relate a personal experience. I went to a girl school in England for a key period of my teenage years and returned to Ottawa for grade 12 at Lisgar and I personally saw the difference between girls competing in sports, for math, for all academics in the English experience that I had, and I came back to Ottawa and I saw girls for the first time in my life putting make-up on between classes, and watching their boyfriends playing basketball. This was an extraordinary experience and I think for all of the people involved in creating this channel, we wanted to address the issue of sex role stereotyping, and we think that WTN has done an amazing job for women, but sexual stereotyping does not begin at age 20. It begins, unfortunately, very much earlier.

19584 So our hope is not to be preachy, but at the same time to be positive and again, I think the programming, some of the ideas that we put forward, are illustrative of that.

19585 COMMISSIONER WILLIAMS: If the Commission wished to limit the sports programming that could be carried on Girls TV, which limit would you recommend? You have included in your nature of service condition of licence.

19586 MS TAIT: Yes, I am looking at my notes.

19587 COMMISSIONER WILLIAMS: Yes.

19588 MS TAIT: Obviously this isn't a sports channel and we are committed to showing no live sports, but I think we you were looking for some comfort, we would be thinking somewhere between 10 and 15 per cent. If this is not intended as a sports channel, and certainly again no live sports at all.

19589 COMMISSIONER WILLIAMS: What type of programming would you envision being on there then if not live sports?

19590 MS TAIT: Well, again, we would be looking at things, you know, for example equestrian events, looking at what girls do that want to compete, how they compete, if they are interested in getting into a sport, swimming, perhaps a show that would feature athletes and how they got into their field of athletics. Maybe an Olympic star sports, female sport star. I know Nancy Green, for my age group, was an extremely important Canadian skier. Again, if she was skiing today, we would feature her on the channel. But it's more about how do I get into the sport? What is it about, than showing competitive events.

19591 COMMISSIONER WILLIAMS: As part of your Schedule 10, you have included programs for Category 3, which is reporting in actualities, 7(f), programs of comedy sketches, improvisation, stand-up comedy, and 7(g), other drama that have not been proposed in your nature of service condition of licence.

19592 Could you please clarify your plans in this area? In Schedule 10 you include them, and in your nature of service, you don't.

--- Pause / Pause

19593 If you need a bit of time, we can go on to another --

19594 MS TAIT: Actually is the 3 that I am looking for because I have a little diagram here that describes our schedule and I am not seeing 3 at all. So I am wondering that you came up with 3.

19595 Maybe we could just look at that and come back to it.

19596 COMMISSIONER WILLIAMS: Sure. That can be worked out with the staff at the end. I have the information from them as well, so we may as well just match the information with them.

19597 MS TAIT: Okay.

19598 COMMISSIONER WILLIAMS: We are going to move into the area of competitiveness. How can you ensure us that Girls TV would provide programming that would distinguish it from existing specialty and pay services already licensed to service youth and family viewers?

19599 MS TAIT: I think the key here is the commitment with respect to protagonist. We have committed that 50 per cent of acquired programming would feature female protagonists and 80 per cent of the original programming. So you are going to see a lot of girls on this channel.

19600 We didn't want to eliminate boys because obviously girls are interested in boys.

19601 COMMISSIONER WILLIAMS: Sixteen and seventeen year olds are interested, right.

19602 MS TAIT: That's right. So there may be an opportunity to have a boy and a girl host, a talk show. But I think that that will absolutely distinguish this service on the dial.

19603 COMMISSIONER WILLIAMS: Can you describe your channel's plans with respect to scheduling of movies?

19604 MS TAIT: When we conducted our survey we found that movies are an important part of the interest of the girl demographic. This is a lifestyle channel so we wanted to allow for a broad range of programming. But again, we would be looking for movies that feature girl protagonists.

19605 We have restricted this type of programming to no more than 25 per cent of the schedule, and you will see actually in our illustrative schedule that it is quite a bit lower than this. We do not see this as being a vehicle for movies, other than movies that feature girls.

19606 COMMISSIONER WILLIAMS: Okay.

19607 On what basis would you select films or other drama programming for the service? What selection criteria would you use to pick the films that suit the genre?

19608 MS TAIT: Well, again we would be looking for the protagonists so I'm thinking -- again, from more my generation, movies with Haley Mills obviously would qualify.

19609 I think, again, themes that girls would be interested in. This would be -- there might be some National Velvet, those kinds of movies that are real classics for girl viewers and really are defining movies.

19610 There are not a lot of them and I don't think -- again, it is really not a central part of our schedule. It has a role to play, but it is not a central part.

19611 The same would apply to drama, looking for shows that are going to feature girls in any -- whether it's adventure or science fiction, again the girl protagonists.

19612 COMMISSIONER WILLIAMS: Okay. Thank you.

19613 In the area of programming diversity, you are proposing as part of Girls TV application to feature female protagonists and hosts in 50 per cent of acquired programming and 80 per cent of original programming.

19614 Why the different levels? Can you comment on that?

19615 MS TAIT: That was really our consideration of inventory. There are not -- again, as I said, part of the -- one of the ways we created this service was we did a content analysis of what is available on the airwaves right now, and there is not a lot of -- there is some good programming, but there is not a lot of it where you would see female protagonists.

19616 So that was simply to allow us a flexibility at the outset of the service and, obviously, all the original programming from the outset would have the female protagonist and as we go forward obviously you would be seeing more and more of that girl-centric programming.

19617 COMMISSIONER WILLIAMS: So you would be willing to adhere to this undertaking as a condition of license then?

19618 MS TAIT: Yes, absolutely.

19619 COMMISSIONER WILLIAMS: Now we will go into an area of non-Canadian programming.

19620 In the area of foreign programming, your Schedule 10 identifies the majority of your non-Canadian programs as American productions. Elsewhere in your application, for example on page 12 of your supplementary brief under "Acquired Programming" you offer that:

19621 Can you comment further on the types of non-North American programming your service might provide and where you would get it from?

19622 MS TAIT: We have -- and again I might ask Tracey to jump in in terms of the actual programs for acquisition.

19623 But I believe we would be -- I'm surprised that you say they are predominantly American because the same commitment that we make in our Comedy for Kids would apply here with respect to the American programming.

19624 Having said that, we would be looking for primarily English-language programming from the U.K. and Australia, though I think there is some opportunity there for foreign language as well.

19625 But maybe, Tracey, you could give some ideas on the foreign programming, non-American.

19626 MS JARDINE: Again, it was much like Comedy for Kids to find a lot of products or productions that would meet the type of criteria that we wanted to assign to it, to have either a female protagonist or dealing with subject matter that directly appeals and is intended for girls. There is not a lot of it out there.

19627 I don't like to repeat myself, but that is another gap that has been identified in the system and that again plays back to the growth of girls in media in general to, you know, such things as the Internet. We believe that there will be suitable production, and certainly our own productions that will be original to the service will focus strongly on promoting girls in that way as protagonists and provide them with the subject matter that they are looking for.

19628 Areas that we will be looking, as Catherine had said, would be mainly English-language markets.

19629 COMMISSIONER WILLIAMS: Okay.

19630 Madam Chair, that concludes my questioning on Girls TV.

19631 THE CHAIRPERSON: Counsel?

19632 MR. McCALLUM: None at this time.

19633 Thank you.

19634 THE CHAIRPERSON: Go ahead.

19635 COMMISSIONER WILLIAMS: Thank you, Madam Chair.

19636 Independent Film Channel Canada.

--- Pause / Pause

19637 COMMISSIONER WILLIAMS: In the nature of service it is noted that you have included the program Category 5(a), formal education and preschool, in your proposed nature of service.

19638 Could you clarify what role that type of programming might have on an independent film channel?

19639 MS TAIT: We are seeking in that particular category some flexibility with respect to the kind of information programming and educational programming that we might be providing to filmmakers.

19640 COMMISSIONER WILLIAMS: Okay.

19641 Definition of an independent film. In your proposed nature of service you state that:

19642 Can you provide the Commission with your definition of what constitutes an independent film?

19643 MS TAIT: There has been, obviously, some discussion on this and we have come up with a definition which will hopefully advance, so I won't go into the preamble on the grey areas. I think you are aware that there are some grey areas in the independent film sector in terms of definition.

19644 But what we would suggest is that in considering what an independent film is, or how to qualify it or how to describe it, that no more -- in terms of our service, that no more than 5 per cent of programming from Category 7(d) would be feature films that are -- and here comes the definition -- "produced, financed or distributed by one of the Hollywood major studios".

19645 So what we are doing there is, we have defined it basically as "produced, financed or distributed" but, as you have heard, it is sometimes difficult to know about the financing behind a film. So what we are saying is a very -- allow for a very small number of titles that might have a Hollywood major attached to them.

19646 So, for example, the case of Roger & Me, the Michael Moore documentary which is owned by a Hollywood major, is obviously a key film for the independent film movement. I think that captures that issue.

19647 COMMISSIONER WILLIAMS: Thank you, Ms Tait.

19648 Directly competitive. In Public Notice 2000-6 the Commission stated it would not license a digital service that would be directly competitive with an existing pay or specialty service. The nature of service description for Showcase states that it:

19649 Well, it can be argued that the licensee of Showcase by filing an independent film application themselves may have opened the door. I guess I would like to hear from your company as to why you feel you would not be competitive with Showcase Television, an existing specialty service.

19650 MS TAIT: It would seem to me, if I recollect the proceedings, that Showcase was licensed primarily as a second window for Canadian drama, and part of that obviously was feature films.

19651 In the case of the Independent Film Channel Canada, this is primarily an independent film channel, and while clearly the independent film component which we have put a limit on it of 60 per cent, that is one very important piece of the channel, but also the remaining 40 per cent is about filmmaking. These are programs that would be of a magazine nature. Again, it's lifestyle programming around the filmmaking culture for cinephiles.

19652 I think, quite frankly, when you look at the service in its entirety it doesn't have a lot to do with what Showcase is doing. Obviously, Showcase has identified film as a valuable part of their service, but I don't think the overlap is too significant.

19653 I think you heard from another applicant. There are thousands of films in the marketplace and I think we have made it very clear that we are interested in not just featuring, or not just showcasing feature films, but really miming the short film area, non-fiction, theatrical films.

19654 So we don't feel that there is any kind of significant overlap with Showcase.

19655 COMMISSIONER WILLIAMS: As you are aware, the Commission is also considering a number of applications in this proceeding to distribute primarily documentary programming. Do you consider the Independent Film Channel to be directly competitive with these proposals?

19656 MS TAIT: No, we do not.

19657 COMMISSIONER WILLIAMS: Could you please clarify for us what percentage of the Independent Film Channel's schedule would be devoted to documentary programming?

19658 MS TAIT: We gave a lot of thought to this. We have suggested a limit of 25 per cent of the schedule. I would just like to make some comments on that because I think there is -- I don't know if it's a misunderstanding, but just to clarify the role that documentaries play in the independent film movement.

19659 Most young filmmakers do not have the means to hire actors to perform in their early films. Often they will choose the documentary as the form that they would like to communicate with at the early parts of their careers.

19660 When I ran the IFP in New York, one of the vehicles was we held an annual market, a trade show for independent feature films and mostly coming from first and second time feature filmmakers. The 1,200 submissions that we received every year, a good half of them was in the documentary form. Many of those films went on to be aired on television and actually with The Independent Film Channel in the U.S.

19661 So I would say that the documentary expression is key to independent filmmaking as part of the culture, but also I would make a further distinction, that we are not talking about series documentaries here. We are talking about point of view documentaries.

19662 Just to use an example that pops into my mind, there was an extremely beautiful film made by a woman called Debra Huffman called "Memoirs of a Dutiful Daughter," which was a 90-minute film on the experience of this young woman with her mother suffering from Alzheimer's. It completely qualifies as an independent documentary in my mind, a very personal film. That is not to be confused with a documentary series on Alzheimer's.

19663 So, clearly, for us we are talking about documentaries that advance the film culture of non-fiction filmmaking.

19664 COMMISSIONER WILLIAMS: So you offered a limitation of 25 per cent. Would you accept that as a condition of licence then?

19665 MS TAIT: Yes, we would.

19666 COMMISSIONER WILLIAMS: Programming from other countries. In your application you indicate that the Independent Film Channel Canada would broadcast independent films from Canada and around the world, including the United States, Mexico, Europe, India and Japan. Do you have an approximate break down of how much of the non-Canadian programming would come from the U.S. and how much would come from the other countries?

19667 MS TAIT: We didn't focus on the percentages of the other countries, but we did focus on the percentage on American.

19668 COMMISSIONER WILLIAMS: So just if it's 70 per cent American and would it be 30 per cent from the other countries then?

19669 MS TAIT: Exactly. So what we would say is that we would suggest that no more than 50 per cent of programming from Category 7(d), the feature film category, would be from any one non-Canadian country.

19670 COMMISSIONER WILLIAMS: Let's spend a minute on your relationship with the U.S. Independent Film Channel. You have indicated that you have licensed STET, IFC brand and will benefit from the market experience, promotional material and promotional programming of the American counterpart.

19671 Could you provide more details about your relationship with The Independent Film Channel and this may be a bit redundant, but your percentage of non-Canadian programming would be supplied by them. What percentage would be supplied by The Independent Film Channel?

19672 MS TAIT: I will invite Ed Carroll to get a chance to talk about their role in this partnership, but first this is a licensing arrangement and as part of the licensing arrangement we do have a programming output contemplated in that.

19673 However, I should say that that portion would be of our schedule that would come from IFC, would be limited to no more than 10 per cent of the schedule overall.

19674 We have basically contemplated receiving from -- licensing from IFC certain original productions that are already produced for that network, but also some coverage of film festivals that again we would be able to benefit from and certain specials.

19675 We also have in the programming agreement access to a certain number of films a year, but again no more than 10 per cent of the schedule is contemplated for coming from the IFC.

19676 COMMISSIONER WILLIAMS: Thank you, Ms Tait.

19677 Madam Chair, that concludes my questioning on the Independent Film Channel.

19678 THE CHAIRPERSON: Counsel.

19679 MR. McCALLUM: This last commitment that you just made about no more than 10 per cent of the schedule coming from IFC, that could be made into a condition of licence if the Commission so desired?

19680 MS TAIT: Yes, it could.

19681 MR. McCALLUM: On that same topic, could you outline the continuing role that IFC would play and also Triptych Media?

19682 MS TAIT: First, I would just say that I will ask Ed -- because he didn't get a chance on the last question --

19683 MR. CARROLL: Is that how the partnership is going to work out?

19684 MS TAIT:  -- to describe what they bring to the table and then I will come back to Rob and Triptych.

19685 MR. CARROLL: One of the main things we think the Independent Film Channel brings to the partnership with IFC Canada is branding experience, is promotional materials and reciprocal product, but the benefits flow two ways.

19686 We believe that the partnership will help The Independent Film Channel in the U.S. to find and exhibit new Canadian talent, and finding fresh talent is critical for an independent film channel.

19687 It will also provide us with a means to contextualize the Canadian talent that we currently show. We regularly show movies by people like David Cronenberg and Atom Egoyan and Denis Arcand, but we don't normally represent these as being Canadian.

19688 We also show films that appear in the Toronto Film Festival and appear in the Montreal Film Festival, so we would envision exhibiting them on an Independent Film Channel Canada showcase in the U.S. due to the partnership.

19689 MS TAIT: Robin, do you want to say anything?

19690 MR. CASS: Sure. I am happy to jump in on this one.

19691 A couple of years ago our company made a movie called "The Hanging Garden" that was absolutely culturally specific and it was a maritime-based story. It was a very deeply felt, very personal story by that filmmaker. He was a first time feature filmmaker that we got behind because we just really liked what he had to say and what his work was all about.

19692 We premiered that movie at the Toronto Film Festival and had an enormous response. It was picked up by MGM in the U.S. after bidding wars, sold to some 20 countries around the world.

19693 Within the context of the independent feature filmmaking activity it really is increasingly essential that one is open to and had the advantage of multiplicity of partners in financing and in terms of profile and exposure internationally.

19694 It is obviously important that films that come from Canada that I think are seen in the U.S. are viewed as Canadian. People I think they gain something in the reputation internationally when people understand that they come from here and that they show the world something about life here and who we are here and represent us as a nation.

19695 So I think that the idea of context within the channel in the U.S. and the way that work would be presented is very important and extremely beneficial and useful to the future careers of Canadian filmmakers.

19696 MS TAIT: Maybe because I realized the question was coming from counsel, you might have been inquiring about the nature of the Triptych relationship from a technical point of view?

19697 MR. McCALLUM: Well, I was also going to follow up with, for example, an ownership perspective.

19698 I take it that Triptych would have a small ownership percentage in this undertaking if its licence is going forward. But, from what I understand, IFC would not. It's strictly a business and commercial relationship. Is that the way I understand it?

19699 MS TAIT: That's right.

19700 We wanted to include Triptych in the ownership of this channel because we felt that they would bring a truly independent point of view, which even, believe it or not, for us, we might be sometimes farther away from than Robin and his partners, who work every day with new first-time directors. So, that was key for us. This is a 100 per cent Canadian channel. We did not feel that it was necessary for the channel to have the equity participation from the American partner, and they were in agreement.

19701 MR. McCALLUM: Would you be intending to, for example, co-produce films with IFC, or anything like --

19702 MS TAIT: Oh, absolutely. Our agreement does contemplate co-production, not only on features but also in the production of the magazine programming. And, obviously, the more financing partners you can bring to the table, the better. And, from our point of view, the -- for example, the IFC, in the United States, has two funds available: one called "Next Wave", which is a finishing fund for filmmakers who have managed to get their film almost done but they need finishing funds for the blow-up or post-production; and they also have a fund which finances, in its entirety or in part, six to 10 feature films a year, in the five-million U.S. budget range.

19703 So, obviously, our agreement would contemplate Canadian filmmakers also being able to participate in those particular financing mechanisms -- though it does not oblige IFC, in that regard.

19704 MR. McCALLUM: Thank you.

19705 A few minutes ago, you were also asked for a definition of an "independent film" and you referred to, I think: something that was not to be produced, or financed, by the major Hollywood studios. And I asked one of the earlier applicants -- I think it was CHUM, with their Indie application -- and they gave me a list of the eight Hollywood major studios that they considered would fit within the definition of what would be the "major studios", for the purpose of a definition.

19706 I don't know if you were listening to that particular discussion, at that time, but I'm wondering if the sort of list that they had of major studios is the sort of list that you would have had for the purpose of that same definition?

19707 MS TAIT: Yes, we would.

19708 MR. McCALLUM: Thank you.

19709 Just one last question on this one -- and I suppose it would be true of the others: Would this be set up to, technically, have descriptive video?

19710 MS TAIT: All of our services would be.

19711 MR. McCALLUM: Thank you very much.

19712 THE CHAIRPERSON: Commissioner Williams.

19713 COMMISSIONER WILLIAMS: Well, now, I guess it's time to take a look at ZTV, your alternative service aimed at the "Generation Y" demographic, better known as the "cellphone-powered 20-things of the new digital economy".

19714 I guess I should note that, in this demographic, I also have personal experience through observing and participating in the life of my 25-year-old son.

19715 We have already discussed the interactivity components, so I'm going to focus my questions in the nature of service area.

19716 As part of your Schedule 10, you have included programs from Categories 2(b), the "Long-Form Documentary"; 7(e), "Animated Television Programs and Films"; 7(f), "Programs of Comedy Sketches, Improvisation and Stand-Up Comedy"; and 10, "Game Shows", that have not been included in your nature of service conditional licence, as set out in 7(1) of your application.

19717 Could you please clarify your plans, in this area?

19718 MS TAIT: This is primarily a lifestyle channel, so we, again, were, similar to Girls, looking for a broad range of programming to attract our audience.

19719 I think the inclusion of 10 in the schedule and the exclusion of it in our nature of service was an oversight.

19720 Again, we would be looking at a very small portion in the game show area, probably not exceeding 10 per cent, so it would not be a big part of the schedule. But I would say that that was an oversight on the condition of licence -- unless someone wants to correct me.

19721 COMMISSIONER WILLIAMS: Okay, I'm going to leave that question there, for now, but I think Legal with come back with 50 more enquiries, in that area.

19722 Of the program categories offered for ZTV, where will the majority of the programming fall under?

19723 MS TAIT: I think we would be seeing a balance in the dramatic and information-type of programming.

19724 From our schedule for the first year, obviously, comedy and drama series are included there and are taking up a bigger piece of the schedule, simply from an acquisition point of view in getting original programming going. But, again, this is a lifestyle channel, so we would be looking for a balance on all of those categories, in the range of, you know, 20 per cent. Something like that.

19725 COMMISSIONER WILLIAMS: Could you please describe the criteria you will use in determining what programming is appropriate to this service, particularly in terms of feature films?

19726 MS TAIT: We have made a defining commitment, in terms of the programming, that all of the programming, all the original programming, would have some interactive component, and that would be the key to distinguishing this service from more general interest programming, and I think that -- from the original point of view, that's something that we would be ready to commit to.

19727 In terms of feature films, when we conducted our survey -- first of all, it was not easy to survey this particular group. They are not generally that communicative or satisfied with many things. But we did determine that choice was the primary consideration for the demographic and so, we were worried about eliminating anything from their list of preferred programming, and they did indicate that films were of interest to them. And when we -- if you look at our schedule, we were careful not to be looking at first-window films here. What we are talking about more is cult movies, movies that are defining for the generation rather than new releases. We, hopefully, would have those in other parts of the Category 1 package. But I think that, in terms of our commitment on movies, we have suggested no more than 25 per cent and a three-year copyright on those films being exhibited.

19728 COMMISSIONER WILLIAMS: Okay. Notwithstanding your emphasis on alternative programming, the range of program categories, coupled with your target audience, could be viewed as being very broad.

19729 How can you assure the Commission that you will offer a service that is distinguishable from existing specialty services?

19730 MS TAIT: I think I answered that in the last question, but, if you want me to elaborate again, it would be that the original programming is going to be interactive but, again, also, in the actual description of programs that we have suggested, we are looking at issues, on the information programming, that are of interest to 20-year-olds. If you look at conventional broadcast core audience of 18-to-49, issues of jobs, how to be an entrepreneur, even some of the Internet ideas that we have, are really of, I would say, limited interest to the 30- or 40-year-olds. So, I think, again, we talked about the sort of forgotten generation, that 20-year-olds, in fact, have very specific concerns, in terms of being young adults, and setting off on their, you know, career paths. That would be addressed by this channel.

19731 COMMISSIONER WILLIAMS: Okay. Thank you.

19732 Madam Chair, that concludes my questioning on ZTV.

19733 THE CHAIRPERSON: Counsel.

19734 MR. McCALLUM: Just on the programming categories, I think what you did was you answered that you would be happy to look at the categories, with staff, Category 2(b), 7(e) and 7(f), as you had done with Girls TV, and perhaps come back with percentages, at Phase II, as an undertaking.

19735 If you are happy to do that as an undertaking here, then that would be acceptable.

19736 MS TAIT: I think that sounds like a good idea.

19737 MR. McCALLUM: Thank you. We will take that as an undertaking.

19738 Thank you, Madam Chair.

19739 THE CHAIRPERSON: Thank you.

19740 Commissioner Williams.

19741 COMMISSIONER WILLIAMS: Okay, let's hear about the "wild kingdom". Your Nature TV application.

19742 Would you accept the following conditional licence as part of your nature of service definition? Nature TV's programming will consist, exclusively, of entertaining and informative aspects of nature and wildlife, featuring plants, animals, marine life, geography and people who explore the natural world.

19743 MS TAIT: Yes, we would.

19744 COMMISSIONER WILLIAMS: Given that your service constitutes a genre that could cover a fairly broad range of programming, how can you assure us that your service would serve a distinguishable nature-related programming genre?

19745 MS TAIT: I believe that the condition of licence that we just agreed to would be --

19746 COMMISSIONER WILLIAMS: Would lock you into that --

19747 MS TAIT: Yes. So, having just committed to that, I would assume that that would protect it.

19748 But if you wanted to talk more about how we consider this program to be distinct from other existing services, I'm happy to do that.

19749 COMMISSIONER WILLIAMS: Yes. I think that's the approach that would be nice, if you could tell us what makes you distinct for the nature channel.

19750 MS TAIT: I think the key to Nature TV is obviously the broad categories of nature that we have described as plants, animals, marine life and geography, which in themselves all have a broad range of programming potential. When we looked at other services, and I guess Discovery is the obvious one, nature forms only one part of its mandate.

19751 When we looked at the consumer research, we felt that it was clear that there is a huge area of concern among Canadians with respect to environmental issues and protecting the -- preserving the environment and nature, so we did not feel that not only in the substance in terms of the category of programming nor in the positioning, which was the preservation and environmental concern, would we be in any way encroaching on the territory of others.

19752 COMMISSIONER WILLIAMS: Okay. Thank you.

19753 You have included movies and drama programming in your proposed description. Given that such programming could encompass a fairly broad range of dramas and movies, could you provide specific examples of the types of Category 7 programs that you would propose to air? And, what mechanisms will you put in place to assure that the movies and dramas selected for your service properly reflect your nature of service?

19754 MS TAIT: This is not a big part of our service, but there are some key movies in the nature area -- there he goes. Are you all right?

19755 COMMISSIONER WILLIAMS: No.

19756 THE CHAIRPERSON: It's the air of the south.

--- Laughter / Rires

--- Pause / Pause

19757 THE CHAIRPERSON: We will take a five-minute break or a ten-minute break, but don't go too far.

19758 MS TAIT: Okay.

19759 THE CHAIRPERSON: Mr. Williams, I mean you, don't go too far.

--- Upon recessing at 1700 / Suspension à 1700

--- Upon resuming at 1705 / Reprise à 1705

19760 THE CHAIRPERSON: Welcome back.

19761 We are going back to questioning by Commissioner Williams.

19762 COMMISSIONER WILLIAMS: Thank you.

19763 I seem to be experiencing a slight reaction to a medication that I'm taking, Amitomorphin. What it does is it dries your throat out and causes you to cough, but I can tell you when you are doing it in this type of forum it's even amplified.

19764 I'm going to go back to questioning now.

19765 My next question, again on Nature TV, is: How can you assure us that you would not be directly competitive with the Discovery Channel and that you would contribute to program diversity given your channel's array of Nature programming?

19766 MS TAIT: Do I get to answer the question when you left the room, the one about dramatic programming?

19767 COMMISSIONER WILLIAMS: Sure.

19768 MS TAIT: Okay.

--- Laughter / Rires

19769 COMMISSIONER WILLIAMS: I wasn't sure whether you answered or not.

--- Laughter / Rires

19770 MS TAIT: I know.

19771 First of all, the Category 7 would be an extremely minimal part of our schedule and all -- we were suggesting that we do not anticipate more than 10 per cent including feature films in that category of programming. But I would just say, for example, there is an important French film, Microcosme/Microcosm, which was obviously absolutely key to presenting nature, in particular insects, in a most beautiful and important way. So we would want to be able to at least include a film like that. Obviously, nature would be the centre of that kind of programming.

19772 But back to the second question on Discovery, we would say, and as I described before, that Discovery is a more broadly-based service than nature. Nature is only one part of its mandate -- science and technology, and exploration being other parts of its mandate.

19773 I should say that obviously if we were licensed we would not be showing programming, nature programming, that might appear on Discovery, because they would hold the rights to that programming.

19774 So there would be no overlap practically, but also substantively we do not consider our service to be directly competitive.

19775 COMMISSIONER WILLIAMS: Okay.

19776 Salter Street is an important producer of Canadian nature and wildlife programming to both Discovery and other channels. Under the commitments, you propose that as much as 50 per cent of Nature TV's programming could come from Salter Street. How will this affect your ability to continue to produce programming for the other channels?

19777 MS TAIT: We were surprised at that observation.

19778 We have only produced, and in fact not delivered yet, one program in the nature area, or one program at all to Discovery, and that would be a three one-hour documentary called: COD, the Biography of the Fish that Changed the History of Man. That program, as I said, constitutes three hours of programming to Discovery, so I'm a little surprised that we would be considered to have a problem supplying to other networks.

19779 But more importantly, in the area of Nature, unlike some of the other services before you, we see Nature TV as being primarily a vehicle for independent producers. We are in the documentary film business as well as comedy, variety and drama programming, and Salter Street recently acquired the library of a very important documentarian, Michael Mclear, for its own library, which we distribute worldwide now.

19780 But we do not see ourselves as non-fiction, as documentarians per se. It's not the top of our list of things that we do. So, as I said in our opening remarks, we are looking to the independent production sector here. While we made the broad-based commitment on the 50 per cent for all our services, we in fact see this being -- as I mentioned, in our first year, we are looking at 90 per cent of the original programming to be coming from the independent community, so this is an opportunity for filmmakers across the country to participate in the channel.

19781 COMMISSIONER WILLIAMS: Very good. Thank you, Ms Tait.

19782 That concludes my questions on Nature TV, Madam Chair.

19783 THE CHAIRPERSON: Counsel.

19784 MR. McCALLUM: Just following up on that last question, then, you were mentioning that Salter produces quite a number of documentaries, films, et cetera, for other channels that are currently aired. Under the commitments that you propose for not only this service but even the other services, do you see any difficulty or any effect on your ability to continue to produce programming for other channels if any one of these is licensed?

19785 MS TAIT: Not only do we not see it as a problem if any one of them is licensed or if all of them are licensed, we will be creating a separate division of Salter Street Films for the broadcasting business with an independent management. We will continue to work as independent producers for the CBC, for Global, for any broadcaster that wants to order a show from us, and we do not, in any way, see this as being conflictual with the new broadcasting business.

19786 MR. McCALLUM: Thank you on that.

19787 I just want to pick up on the point that you made at page 37 of your opening remarks where you made the commitment or the proposal in your first broadcast year to commission 90 per cent of original Canadian programming from independent producers. I don't recall that from your application. Did you make that commitment in the application as well?

19788 MS TAIT: We calculated that actually when we looked at the illustrative schedule. In fact, because we have almost no nature programming in our own library and we feel that this is an opportunity for independents, we took the illustrative schedule and then translated that into the commitment for the first year.

19789 As I said before, our broad-based commitment of the minimum 50 per cent would be the condition of licence, but we would be willing to step up on this particular issue for the Nature TV service.

19790 MR. McCALLUM: What does it go to, then, for the other years?

--- Pause / Pause

19791 MS TAIT: I'm just discussing that with our counsel.

19792 I think that what we would be suggesting here is the 90 per cent, certainly for year 1. We might develop some capacity and see that dropping down a little bit. But, again, I would say we would be happy to stay within the range of 75 per cent.

19793 MR. McCALLUM: Even those commitments could be made conditions of licence if the Commission were so disposed.

19794 MS TAIT: Yes.

19795 MR. McCALLUM: You are thinking 75 per cent for year 2 and beyond?

19796 MS TAIT: And beyond, yes.

19797 MR. McCALLUM: Thank you.

19798 Thank you, Madam Chair.

19799 THE CHAIRPERSON: Commissioner Williams.

19800 COMMISSIONER WILLIAMS: We will now move along to Play TV.

19801 You have proposed a condition of licence that would allow Play TV to broadcast 30 per cent programming other than game shows. Could you please detail your plans regarding the programs you propose to carry that are not game shows?

19802 MS TAIT: I am going to ask Claude to answer that because he is more intimately involved in the programming there.

19803 Just to say that also from our point of view this channel represents a lifestyle component in the sense that people who watch game shows tend to be avid game show participants so there might be opportunities for information programming around the game show Culture. But perhaps Claude could elaborate.

19804 MR. GALIPEAU: For some reason that is a mystery to me I have been identified as the game fanatic, but I am willing to play along.

19805 We actually do have some magazine-type shows in the schedule and they are basically around the communities built around the particular kind of game. So you would think of bridge, or scrabble. In fact, it's something you might not know, but some of the best scrabble players in the world are Canadians, and there is an extremely strong scrabble playing community in Canada. So magazine shows around those kinds of interests.

19806 We have one show, I think, called Rules and Regs which would be a magazine show that would spotlight the different games from scrabble or bridge, and we actually have, for those who are interested in the most popular games, Bridge Fanatics and we would have some of those shows.

19807 We would also possibly have -- we have also listed a few movies that would include movies that have games as their particular themes. So you might remember the Robert Redford production Quiz Show done about the scandal in the 1950s over quiz shows, the show 21 and so thinking of the possibility of playing a movie of that type.

19808 COMMISSIONER WILLIAMS: Thank you, Mr. Galipeau.

19809 Ms Tait, you indicate that Play TV proposes a conditional licence that:

19810 In your schedule, you also indicate that movies would be focused on games and game shows. Could you elaborate on your plans to broadcast feature films?

19811 MS TAIT: Just for greater clarity, we would include 15 per cent of the schedule to include all Category 7, so that includes feature films, and I think that Claude has described what we mean by feature films as having a game show or game as an absolute central character to the film.

19812 COMMISSIONER WILLIAMS: Okay. Are there many feature films available copyrighted for at least five years which have game shows as their central theme?

19813 MS TAIT: I believe Quiz Show is over five years old so, yes, there are, again, Champagne for Caesar. So they are extremely minimal. Again, we don't see this at all as the primary focus of the channel, but again if you are a game show enthusiast you might be interested in seeing a film that touches on this subject. But there is not a large inventory.

19814 COMMISSIONER WILLIAMS: Would Play TV include video games in its schedule?

19815 MS TAIT: We have a magazine show on video games. We do not see this channel as a video game channel at all. The game show experience is a group experience and in defining what a game show is, that would be part of it, that we are looking at play activity that involves many people, not one person working on a Game Boy or something like that, or some of the video game ideas that I think you have had before you.

19816 But it is part of the culture. Again, from an information point of view there might be some interest, but it is absolutely not the focus of this proposal.

19817 COMMISSIONER WILLIAMS: Thank you.

19818 The U.S. Game Show Network is on the Commission's Part II list of eligible satellite services. You indicated that Play TV would offer a greater variety of programming from Canada and around the world than the U.S. service. Aside from that, can you describe the similarities or differences between the two services? And where the U.S. service is also available, are you confident that your service will be able to successfully attract the subscribers you need to meet the goals of your business plan?

19819 MS TAIT: I might answer the last first and go backwards.

19820 COMMISSIONER WILLIAMS: Sure.

19821 MS TAIT: And perhaps Claude will have some comment on it. From our point of view, the reason why we felt Play TV should be included as a Category 1 licence was in fact related to the fact that there is already a Game Show Network from the United States available in Canada.

19822 We felt that there was a real opportunity to create a new library of Canadian programs in this format of programming that has been largely ignored despite the fact that Canadian audiences want to watch game shows. Despite the fact that Canadian audiences are watching game shows, they are just watching American game shows.

19823 So that is why we consider this channel to be a driver because we know Canadians want game shows. We also think it has some social benefit in the sense that it would allow a Canadian service and Canadian programming to be created. So for that reason we put it in Category 1.

19824 Most importantly, this service has the highest level of Canadian content of all of our services proposed because we simply don't want to create another window for American game shows and that's why we have the 70 per cent content by the end of the licence term.

19825 The idea here is to take the talents of the independent production community and we, as producers of variety and comedy, think that there is lots of opportunity here to create very, very interesting Canadian programming. So we don't see it as competitive.

19826 MR. GALIPEAU: I could add a few things about how the Game Show Network looks to me. The Game Show Network in the United States is predominantly a channel that reruns the history of game shows, of American game shows, and they also have programming about the history of American game shows.

19827 So they might have programs about the dominant game shows in the '60s or the '70s. Then they also have moved in just recently into newer original productions, and again it is uniquely American game shows produced by Americans for the American market.

19828 The programming on Play TV, we plan to be slightly different. On the one hand, we are not going to have shows that deal with the history of game shows, American game shows. We are going to try to broaden the programming to have as much international programming as possible with British game shows or Australian game shows, or even foreign-language game shows some of which can be quite enjoyable and interesting.

19829 It's an interesting point because the format, the game show format, is often taken from one territory and imported to another territory. So one of the most popular game show at the moment, Who Wants to Be a Millionaire, was a format taken from British game shows and brought to the United States.

19830 I think there is quite a good appetite in Canada for seeing foreign game shows. Perhaps we have a higher tolerance for seeing foreign cultures at play. I would venture that as a hypothesis.

19831 The other thing that is quite important about Play TV is that it will be creating original new programming with interactive features focused on the Canadian market and focused on Canadian game players.

19832 COMMISSIONER WILLIAMS: In the area of finance, what assumptions have you made about Play TV being carried in Quebec, as part of your answer, in the view that Play TV is essentially an English-language service? What if the cable or the BDUs in Quebec decided not to carry Play TV? What effect would that have on your overall plan?

19833 MS TAIT: I don't believe we included Quebec in our survey. So Claude wants to answer that.

19834 MR. GALIPEAU: I did project some French-language carriage and it's my understanding that it's not -- some carriers are not going to be excluded from BDUs, are not going to be excluded for carrying it.

19835 On the business plan, it's extremely low the numbers. I have from year one to year seven 10,000 subscribers to 60,000 subscribers. So the material effect runs from about $10,000 to $70,000 which is immaterial basically.

19836 So I don't consider nothing on the Quebec market or on the French-language market as undermining the business plan. It does rely on national carriage in that respect in both English and French-language curves.

19837 COMMISSIONER WILLIAMS: Thank you, Mr. Galipeau.

19838 I would like to thank you, Ms Tait and Mr. Donovan and Salter Street Films' panel for your answers and contribution to this process. I have enjoyed the privilege of leading the questioning on your proposed Category 1 applications.

19839 Madam Chair, I have one final lighthearted comment, if you will indulge me, to share prior to returning this applicant to your care.

19840 Let me set the scene. Eighty-eight Category 1 proposals. Millions of dollars the prize. A new digital era begins. Exciting new partnerships, the digital pay and specialty hearing. Only ten will survive. Catch the action, sense the drama daily on CPAC. Good luck to all and also remember tonight is the grand finale of the popular show Survivor.

--- Laughter / Rires

19841 CHAIRPERSON OF THE COMMISSION: It's not Canadian content, as I recall.

19842 COMMISSIONER WILLIAMS: No, but there is a significant Canadian interest though.

19843 THE CHAIRPERSON: I hate to return you to the nature of service, but I will.

19844 This is a good application to illustrate what I was saying earlier about fencing in this one, the Play TV. It is described as:

19845 And then you give us the categories that the programming will come from, and under drama there is only 7(d), theatrical feature films aired on TV. Correct?

19846 You talk about drama, but you only -- did you not just talk about 7(d)?

19847 MS TAIT: No, I believe that we had all the categories. We had Category 7 dramas.

19848 THE CHAIRPERSON: (a), (b), (c) and (d)?

19849 MS TAIT: Yes.

19850 THE CHAIRPERSON: Since 70 per cent of your programming would be game shows under Category 10 and then there would be another 30 per cent of the programming other than Category 10 that could be devoted to other, of which 15 per cent could be drama, so it could presumably be all 7(d)? These are the only boxes I have crossed out, but I will take your point that it is all of it.

19851 Nevertheless, if we leave it like this, on an 18 hour day, in a week 15 per cent would give you 18.9 hours, let's say 19 hours, which means you could have a two hour movie every night in prime time. Based on a 24 hour day, you would have possibly 25 hours of movies, which could be 12 movies per week, and unless you accept to tell us that it will only be movies about games, that could be quite a few movies and would certainly put into question the narrowness of the nature of service.

19852 And then, of course, if games include -- isn't there, for example, a James Bond movie that goes on in a casino? Would that fit?

19853 If you are Showcase or another competitor and you are trying to say "Well, what is this going to be, this programming?", there could be -- you know, we need fences, and I presume if you are an applicant you will want others to have fences as well.

19854 So would you add what you responded to that it would be only about game shows to your description of service to narrow the description?

19855 MS TAIT: Yes, we would.

19856 I think the -- here is a fence, that any programming from Category 7 would have to relate directly to the nature of service description. Would that perhaps help you narrow it down?

19857 THE CHAIRPERSON: Well, would it help you in this competitive process if that were the manner in which we addressed --

19858 MS TAIT: Yes, this is the --

19859 THE CHAIRPERSON:  -- description of services --

19860 MS TAIT: The intention here is that this is a service about play and game shows. We have no interest in showing films that are not related to that.

19861 Just with respect to your James Bond comment, we would consider the game or game show would have to be a central character, that is the central theme of the film, as an example of Quiz Show, rather than a circumstantial or setting let's say.

19862 THE CHAIRPERSON: Because, interestingly, there is more than one aim at this fencing in the genre of service. It's not just to please us. It is, yes, in that we want diversity therefore we don't want all the services to look alike, but it is also protection in a sense of trying to make the system work in our particular market by not only having diversity but allowing services to function in a feasible way by having niche services that people can identify and you can brand.

19863 MS TAIT: We are not in --

19864 THE CHAIRPERSON: So you think it is a good idea?

19865 MS TAIT: We are completely in agreement with you on this point.

19866 THE CHAIRPERSON: Oh, so that possibly you would accept this additional fence.

19867 But I thought that this illustrates the point best because there is a big difference between Play TV as a game niche with a movie and perhaps more in prime time every night.

19868 Counsel.

19869 MR. McCALLUM: Yes. To get at just about the same point, I would assume that if the word "exclusively" were added into your condition of license or your nature of service that would be acceptable to you.

19870 What you have in 7.1 on your nature of service is:

19871 Could I add the word:

19872 MS TAIT: Yes.

19873 MR. McCALLUM: Thank you.

19874 Just to clarify, do I take it from your answer with respect to the U.S. Game Show Network that unlike your relationship in the IFC case you do not have a relationship here with the U.S. Game Show Network?

19875 MS TAIT: No, we do not have a relationship.

19876 MR. McCALLUM: Do you intend to enter into a relationship in the future if this is licensed?

19877 MS TAIT: I don't think so, but possibly for programming, but it is not anticipated or contemplated in our business plan now.

19878 MR. McCALLUM: Thank you, Madam Chair.

19879 THE CHAIRPERSON: Madam Bertrand.

19880 CHAIRPERSON OF THE COMMISSION: I am sorry, the discussion you were having with the Chair just raised a concern that is more defined for me than it was when I first started thinking about all those issues.

19881 If we allow -- on the principle that all the applicants seem to have a wheel of programming and that they are repeating, you know, high repeats, either because the principle is in the digital universe or you come at different times and it's not the same kind of rendezvous. It's the genre rendezvous, but there is still a lot of people with the kind of obligations that we have to be at work during the day and prime time has still a lot of meaning to them in terms of that's still their viewing time.

19882 If we are looking for diversity in that new universe, making sure that there is really a new or an added value for the viewer and if all prime time ends up being film again, of all different kinds, but film, have we achieved something? Isn't it important -- you know, I am just asking the question at the same time as I am thinking about it, but shouldn't we fence prime time to be really related directly to the very core nature of the genre and not be taken for something else?

19883 We all understand that at the end of the day when we will conclude on competitiveness everybody will expect that will say there is a certain percentage that can overlap, but a certain percentage has to be different.

19884 But if in prime time that's the time that everybody's overlapping with everybody, have we achieved something significant for the viewers in terms of diversity?

19885 MS TAIT: I think it's a legitimate concern and again I would look at this on a case-by-case basis because for certain services this is more relevant than for other services.

19886 In the case of Play TV, for example, we would have absolutely no problem removing films from the prime-time schedule. It is not at all the intention of this particular service, clearly with independent film.

19887 But let's take maybe a more middle of the road example, like Girls TV, where there would be an interest to have one movie possibly in prime time, and because of the nature of wanting to have girls in the role of protagonist.

19888 So I think that there are certain services where this may be useful and I hate to add to the list of homework, but it may be something that you want to invite from others to comment on. We certainly would be willing to look at the prime-time issue and go back to our applications and see what we might offer up as a suggestion. I think it is a legitimate concern though.

19889 CHAIRPERSON OF THE COMMISSION: Thank you.

19890 THE CHAIRPERSON: Hopefully, by the time homework is brought in it won't say "I don't have any problem with you licensing this one of my channels and this one of their channels, as long as they accept a condition that they don't do movies in prime time." It will be a bit late in the process to do that. But it is striking in some -- you look at Play TV and you ask yourself is 15 per cent possible and movies -- yes, five years old, but you know we are entering a world where you are probably yourself going to be involved in making movies about games because that's the world we are moving in.

19891 So before the end of your licence term there may be quite a few available ones. That would be now the fencing. It would be, well, it is about game shows, but it could be one or more in prime time.

19892 MS TAIT: Are you seeking additional comment?

19893 THE CHAIRPERSON: No.

19894 MS TAIT: I guess I just add just for greater clarity that we were looking at all of Category 7. Again, it is not just feature films, the 15 per cent. As I said, the inventory is limited at this time, so there is not a lot -- but I understand the principle.

19895 THE CHAIRPERSON: But telling us A, B, C and D and at my choice 15 per cent can be 15 per cent and there is no way I can say you are not abiding by what you said. Your competitors are looking at this and saying, "Well, what's this service going to look like?" That's the only way we can address this is to try to see not what is it going to look like, what could it look like is the way it has to be addressed, considering the requirements and the promises made, what could it be, after it gets going I suppose, to what it would like to be.

19896 MS TAIT: Here's a suggestion. As I said, I think you need to look at case by case, but certainly on the Play TV we would be willing to accept a restriction on prime time because it is absolutely not the intention of this service. I hope that it's very clear that the idea here is that when people are surfing the dial, then they are seeing movies on every other channel, that they will see a game show on this channel.

19897 THE CHAIRPERSON: I believe the point that Madam Bertrand was making is that a number of TV viewers may well view TV mostly in prime time.

19898 Therefore, presumably it wouldn't help very much I suppose because it would be difficult to brand your service if you did that, but we have to look at it from the perspective of probably commercial imperatives will also help in keeping people to try to brand their service.

19899 We will then give you the last word, Ms Tait or Mr. Donovan, to wrap up a rather fruitful afternoon, a bit hard on Commissioner Williams.

19900 MS TAIT: Thank you.

19901 On behalf of the Salter Street Films team, both here, but also in Halifax and Toronto because I am sure they are viewing this, thank you for the opportunity for participating in these hearings. It has really been very, very edifying.

19902 If I had to choose one word from these hearings and many have been uttered, I would choose the word "diversity" as the most important one.

19903 Basically, for diversity of programming we have advocated a continued role for the independent production sector and strong, clear commitments to the sector and to Canadian content.

19904 For diversity of service offerings we have advocated a case-by-case approach in the interest of a strong Category 1 package.

19905 In the case of diversity of ownership, we have advocated the role that new entrants can play.

19906 I hope that you come away from this with a solution because I believe you are facing a very considerable challenge and we believe in a balanced approach, but we also think there is an opportunity to open up the Canadian broadcasting system in the interest of diversity.

19907 We have suggested, I hope respectfully, that you consider new entrants as a priority for Category 1 licences because realistically it is the last time we can make a contribution to the system as broadcasters.

19908 We have suggested that you invite the established multiple licence holders to apply their market position and their deep pockets to the arena of Category 2.

19909 So, thank you, and I think Michael would also like to say a few words.

19910 MR. DONOVAN: I would also like to express my thanks. It has been a long and educational process for all of us and I am sure for you. We empathize with your decisions and the difficulty of the choices given the changing technological environment.

19911 I would like to respond to Commissioner Williams' last screenplay outline and in Hollywood for most scripts there is usually a happy ending. In fact, I read in the paper this morning that the betting money is on the virtuous participant in that game of "Survivor". In fact, surviving may be the operative word for this particular set of hearings I think for you, as well as for the participants.

19912 Also, survival is one of the critical things for our company given the issues of consolidation.

19913 To take up on what Madam Bertrand said earlier, this is the question that is before us. There are expanding numbers of channels, plus shrinking numbers of players. The range of choices for producers is becoming more limited and we feel the best way that we can continue to make our contribution to Canadian programming is through these offerings.

19914 I think that they will also expand the opportunities for Canadian viewers in terms of range of programming possibilities. I think expanding the number of doors helps to achieve that and I think that we will make great channels.

19915 So I thank you and I wish you well in your deliberations.

19916 THE CHAIRPERSON: Thank you, Mr. Donovan.

19917 You may find out that being a broadcaster is not always easy.

19918 We will now give the evening off to Commissioner Williams. He can recover.

19919 We thank you for your co-operation and we will see you in the next phase, or some of you at least. Have a good evening.

19920 We will now adjourn until tomorrow morning at 8:30.

19921 Nous reprendrons à 8 h 30.

--- Whereupon the hearing adjourned at 1755, to resume

on Thursday, August 24, 2000 at 0830 / L'audience

est adjournée à 1755, pour reprendre le jeudi 24

août à 0830