TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
APPLICATIONS FOR LICENCES TO OPERATE NEW PAY AND SPECIALTY
SERVICES FOR DIGITAL DISTRIBUTION / DEMANDES DE LICENCES
VISANT LA DISTRIBUTION NUMÉRIQUE DE NOUVEAUX SERVICES DE
TÉLÉVISION SPÉCIALISÉE ET PAYANTE
HELD AT: TENUE À:
Conference Centre Centre de Conférences
Outaouais Room Salle Outaouais
Hull, Quebec Hull (Québec)
August 24, 2000 le 24 août 2000
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
Applications for Licences to operate New Pay and Specialty
Services for Digital Distribution / Demandes de licences
visant la distribution numérique de nouveaux services de
télévision spécialisée et payante
BEFORE / DEVANT:
Françoise Bertrand Chairperson of the
Commission / Présidente
Andrée Wylie Chairperson / Présidente
Jean-Marc Demers Commissioner / Conseiller
Ronald Williams Commissioner / Conseiller
Martha Wilson Commissioner / Conseillère
ALSO PRESENT / AUSSI PRÉSENTS:
Peter Cussons Hearing Manager and
Secretary / Gérant de
l'audience et secrétaire
Alastair Stewart Legal Counsel /
Peter McCallum Legal Counsel /
HELD AT: TENUE À:
Conference Centre Centre de Conférences
Outaouais Room Salle Outaouais
Hull, Quebec Hull (Québec)
August 24, 2000 le 24 août 2000
TABLE OF CONTENTS / TABLE DES MATIÈRES
PRÉSENTATION PAR / PRESENTATION PAR
LEARNING AND SKILLS TELEVISION OF ALBERTA LIMITED 2614
PRÉSENTATION PAR / PRESENTATION PAR
CRAIG BROADCAST SYSTEMS INC. (OBCI/SDEC) 2804
Hull, Quebec / Hull (Québec)
--- Upon resuming on Thursday, August 24, 2000
at 0830 / L'audience reprend le jeudi
24 aôut 2000 à 0830
19222 THE CHAIRPERSON: Good morning and welcome to the ninth day of our
19223 Bonjour et bienvenue à la neuvième journée de notre audience.
19224 Monsieur le Secrétaire, s'il vous plaît.
19225 Mr. Secretary, please.
19226 MR. CUSSONS: Thank you, Madam Chair.
19227 Next on our agenda, we have six applications, for new Category 1
services, by Learning and Skills Television of Alberta Limited. This means that
the applicant will have 45 minutes for their presentation.
19228 The six proposed services are:
19229 Book Television - The Channel; Travel Access - The Destination Station;
The Law & Order Channel; Computer Access - The Technology Channel; Careers
TV - The Jobs and Management Channel; and DocsTV.
19230 Mr. Ron Keast and his colleagues.
19231 Good morning, sir.
PRESENTATION / PRÉSENTATION
19232 DR. KEAST: Good morning, Madam Chair, Madam Chairperson, Commissioners
19233 My name is Ron Keast. I am President and CEO of Learning and Skills
Television of Alberta. I am very pleased to be here, with my colleagues, to
present the six new digital service applications that we have proposed for your
19234 Before we begin our presentation, I would like to introduce my
19235 To my far left, and your right, is Tasha Larson, Producer and Host of
Careers TV and Help!TV.
19236 To my left is Moses Znaimer, Chairman and Executive Producer.
19237 On my right is Peter Palframan, Director of Finance and Operations.
19238 Next to Peter is Jill Bonenfant, Director of Programming.
19239 In the second row, on your right, is Ross Mayot, Vice-President,
19240 Next to Ross is Daniel Richler, Host and Producer our Book strand.
19241 Next is Steve Dotto, Host of the nationally syndicated "Dotto's Data
Café" and our production consultant in Computer Access.
19242 Next to Steve is Peter Flemington, Head of Programming and Development
for Vision TV, our partner in Docs TV.
19243 And, finally, Paul de Silva, the newly-appointed Director of
Programming at Vision.
19244 At our side table are Paul and Sheryl Shard, Hosts and Producers of
"Exploring Under Sail", and Mark Lewis, who acts as our general counsel.
19245 Learning and Skills Television of Alberta owns and operates Access -
The Education Station, Alberta's official provincial educational television
service, and Canadian Learning Television, Canada's only national English adult
educational specialty service.
19246 Both Access and CLT are based in, and operate from, our Edmonton
broadcast and production centre, which is fully equipped for the new digital
production and distribution environment.
19247 Various members of our team have worked at TVO, helped to launch Vision
TV and, now, are gathered, here, at Access and CLT.
19248 We have learned what it takes to make relevant and learning-based
television that's attractive to viewers. As individuals, educational specialty
television is what we have been doing for over 20 years, and it is what our
business will be for the future. It's television that teaches.
19249 With our rescue of Access, in September, 1995, we returned educational
television to its roots in actual instruction. The majority of Access'
programming -- well over 60 per cent -- supports formal education and
multi-media courses of study available at a distance.
19250 Over the last five years, the new Access has significantly improved its
reach and ratings, and audience appreciation has grown throughout the province.
A viewer survey conducted, this past June, in Alberta, by TeleResearch Inc.,
shows that 90 per cent of viewers find Access programming to be not only
educational but also entertaining and informative.
19251 We launched CLT, in September 1999, into a difficult environment that
required a dogged and resourceful approach to negotiations with BDUs. The hybrid
analog/digital scheme that resulted limits Canadian Learning Television's
current distribution to 2.3 million households, in Canada: 1.3 million and
1 million digital -- almost all of which is DTH.
19252 This hard-won experience of the real-world environment that the new
digital services will face will be a real advantage in knowing what it takes to
launch and operate digital services.
19253 Both Access and CLT provide attractive and popular programming, but
their programs are also socially, culturally and educationally relevant and
important -- and this is a key distinction in the six new services that we
are proposing and the reason we believe they merit Category 1 designation.
19254 Another key distinction is our dedication to interactivity, which is
integral to education. And in our approach to interactivity, we make the best
use of available technology.
19255 These applications, and our planned program expenditures, reflect our
expertise as educational broadcasters.
19256 An information society -- which is what the digitized world is
becoming -- presupposes a learning society -- and this is our special
area of expertise. It's the methods behind these applications.
19257 Now, just as a final overview comment, I would like to acknowledge our
relationship with our majority owner, CHUM Limited.
19258 While we operate quite independently, CHUM's specialty television
experience and support is very important. Specifically, we benefit from Moses'
creative experience and drive, from the stability that derives from CHUM's size
and from powerful cross-promotion and joint marketing of new services across all
existing CHUM platforms -- radio, as well as television.
19259 MS BONENFANT: When we developed our original application for CLT, and
since operating Access, we anticipated expanding certain program strands, or
blocks, to create a comprehensive suite of learning-oriented services and so,
today, our applications complement and are a natural extension of the
television-based, multi-media learning strategies that we have successfully
established. They evolve directly and logically from specific strands we are
currently offering as part of the CLT schedule -- to which reaction has
19260 They have the benefit of being piloted and proven as programs, series
and blocks and are, therefore, grounded solidly in which we have been doing for
some time, and will continue to do.
19261 Based on our experience and success with these blocks, our own and
other research done over the last two or three years, interaction and feedback
from viewers and the specific market research we undertook for this call, we are
confident that there is demand for these services and that they will, in fact,
be excellent digital drivers. And that's because they are all services that, in
different ways, are not only entertaining and attractive -- as all good
channels must be -- but are also relevant and useful to people's lives and
will benefit from the learning paradigm that is inherent in everything we
19262 MR. MAYOT: We commissioned specific market research for this hearing,
by TeleResearch Inc., which demonstrates a favourable interest for all of the
services we are proposing. Between 27 per cent and 51 per cent of those
surveyed expressed interest in our genres, with another 15 per cent
19263 These positive results corroborate the market research we commissioned
for our two previous applications for a computer channel, in 1996 and again in
1997, and for our travel channel application, in 1997. The CCTA's research, for
the 1996 hearing, ranked a computer channel second only to a history channel, in
English Canada. In fact, all of the research consistently shows education rates
in the top five genres.
19264 In addition to these formal research findings -- and as evidenced
by the positive interventions on file -- our proposed services have
received enthusiastic support from a wide range of professionals expressing
strong support for the positive impact our proposed services will have on their
industries and on society.
19265 We are pleased to note that Canada's largest cultural advocacy
association, The Canadian Conference of the Arts, has recommended three of our
proposed new services -- Book Television, Careers TV and Computer
Access -- for inclusion in the 10 Category 1 applications it recommends for
19266 MR. ZNAIMER: Many people have speculated on the eventual withering away
of the CRTC -- including a recent chairman of the CRTC -- and who
could blame you if you, too, harboured such thoughts as you contemplate two more
weeks picking your way through the conflicting applications and views, knowing
that it's impossible to make everyone happy, let alone hold faith with your own
19267 But imagine what would happen if you were not here! Then we would have
the American system. A handful of BDUs -- no, make that two, maybe three
BDUs would control between them almost each and every specialty channel and
there would be no consideration of the public interest because the services
wouldn't be licensed.
19268 So, we say, "Don't go. Your work is not yet finished."
19269 Because while digital is the new television frontier, it may also be
the end of an era. Some have suggested that this hearing is the last, or at
least one of the last, opportunities the Commission will have to reinforce an
orderly relationship between program undertakings and distribution undertakings
and to put its own imprint on the shape of the digital future.
19270 It stands to reason that for Canadians to be motivated, to take the
extra trouble and spend the extra money to buy more television, the new digital
screen will have to offer something dramatically different.
19271 Luckily, this hearing has, in our opinion, already produced an
interesting array of proposals that demonstrate considerable diversity.
19272 Given their quality, and given their quantity, we urge the Commission
to license as many Category 1 services that satisfy you that they are focused,
attractive and socially useful.
19273 Our own assessment suggests that there are about 22 distinctive,
non-competitive, English-language genres that could be licensed to
non-BDU-affiliated applicants for Category 1.
19274 We say "non-affiliated" because we believe that even with the current
access rules in place, ownership and commerciality will drive the selection of
Category 2s and foreign imports. In other words, they will largely take care of
19275 Now, when CHUM made a similar point, the other day, the Commission
asked if our modest proposal for an all-non-BUD-affiliated tier of Category 1
licences might not be seen to be challenging the Commission's framework.
19276 We say, not at all! Quite the contrary. We take that framework to be
well thought through and therefore we assume that its consequences are intended.
So we are simply pointing out that if the structure leaves clear advantages with
one side in Category 2, surely they will be taken.
19277 If the consequences that were discussed are not intended, then certain
loopholes will have to be plugged. But, if they are meant to be taken up, then
Category 1 is the only place where ideas the Commission deems important and
useful can be assured access, which is to say existence. Otherwise, to quote the
Vice-Chair from an earlier decision:
"The Commission will have licensed programming services whose implementation
depends on distribution by other licensees, without any reasonable evidence as
to whether, when and in what circumstances, they will in fact be
19278 Commissioners, with this cluster of lively learning-oriented
applications, we are arguing that there is still a place, there should still be
a place for idealism and the public interest in this process. Learning deserves
more shelf space and we say to you, if not here, where? And if not now, when?
And if not you, who?
19279 Ladies and gentlemen of the Commission, it is our view and we hope we
convince you to share it, that if you are offered quality Canadian services that
are "potentially popular, clearly defined, alternative and socially useful in
unserved or badly underserved genres or fields", by well-financed, realistically
budgeted, tightly run Canadian groups, well, that's an offer the public interest
should not refuse.
19280 MR. PALFRAMAN: Our business plans are based on our experience, market
research and a realistic approach to the new environment. It is very easy to get
caught up in the enthusiasm of new propositions and forget that even at the end
of the full seven year license term of these new services it is unlikely that
they will achieve even 50 per cent of the subscribers that has been the norm in
the analog world.
19281 The CCTA's intervention to this hearing states that it will be some
time yet before cable's subscriber base will migrate to digital, noting that
even at the optimistic level only about 30 per cent of cable subscribers will
have digital service by 2005. That's a far cry from the confident projections by
the cable industry in 1993 and again in 1996 at the last license hearing.
19282 One of the things that made the launch of CLT possible, despite the
difficult circumstances, was the synergy and operational efficiency that comes
from having the plant, facilities and staff already in place for Access. Going
forward we believe this leveraging of existing resources will be crucial to the
successful launch of digital services. We have carefully upgraded our plant over
the last five years so that we are now capable of launching and operating all
the services for which we have submitted applications.
19283 The business plans for each of our applications are realistic and
achievable, and the Canadian programming commitments we have made in our
applications are significant. In all our applications we will broadcast at least
50 per cent Canadian content well before the seventh year. Our programming
expenditure commitments are in the range of 39 per cent to 41 per cent of
previous year's revenues starting in the second year.
19284 We already make a major contribution to the independent production
community and will continue to do so with these proposed new channels. It is our
policy, backed by six years of practice, to work closely with independent
producers, especially in western Canada. LTA has been a key partner in over
200 hours of original Canadian production with over 25 different
19285 And with additional services, we will be able to extend the already
significant contribution that we make, through our partnerships with the
universities, colleges and other institutions with whom we work extensively in
the delivery of distance learning opportunities.
19286 Finally, an integral part of our business is interactivity and the use
of current technology. Our Web sites support and enhance our television services
and are the gateway to interactive learning resources. We already have more than
200 courses available online, ranging from an MBA to Creative Writing to
the History of Dreaming.
19287 In addition, our Web sites link to hundreds of other courses on our
partners' sites. For over a year, we have been in the e-commerce business, with
an online store offering a range of educational and learning products. Along
with some very forward thinking partners such as Athabasca University,
University of Waterloo and Alberta Learning, we have been active since 1995 in
seeking ways to take advantage of the new multi-media technologies.
19288 DR. KEAST: With that overview, Madame Chair, we would now like to give
you a tape tour of what we are doing, as well as a taste of the new services we
propose, which are today "nested" within the CLT program schedule.
--- Video presentation / Présentation vidéo
19289 DR. KEAST: Now I would like to ask other members of the team to present
each of the specific applications.
19290 First up is Book Television -- The Channel, which will be
described by Daniel Richler.
19291 MR. RICHLER: Good morning, Commissioners.
19292 Ten years ago TVOntario asked me to develop a book show, so I attended
a taping of Bernard Pivot's legendary program, Apostrophes, In Paris. After, I
asked him, "Can anyone make a show like this?" He said, "Mais oui, bien sûr."
Then he sipped his sherry and frowned. "D'autre part, les Belges l'ont essayé,
et ils sont tellement ennuyeux. Et les Anglais sont si prétentieux, quoi. Puis
les Italiens sont toujours en train de s'engueuler. Non, toute réflexion faite,
ce n'est pas possible."
19293 Well, you know, we created Imprint regardless, and I'm pleased to see
it is still on the air today and part of the other book channel applications as
19294 What, then, makes a successful Canadian book show?
19295 My experience has taught me that the secret lies in respect for our
jostling cultural diversity and all forms of the creative word: screen and
playwriting, journalism, librettos, popular lyrics and hip-hop rhyme, academia,
slam poetry, Web sites and hypertext, fantasy, romance, `zines, spoken word and,
19296 Of course our channel will be charged with a love of Canadian
literature in the formal sense, but for it to attract a larger audience it must
reflect the myriad ways people of all ages and cultures use words. This is just
one of the respects in which I passionately believe our application stands out
from the others. I think it is worth noting that Monsieur Pivot has, in recent
years, moved from Apostrophes to Bouillon de Culture.
19297 As our application describes in detail, Book Television -- The
Channel will develop, over several years, shows on critics and criticism,
kidlit, reading festivals and erotica, support for new writers with the WordFACT
Foundation and more.
19298 You might say this is just ink on paper. Yet, as I speak, Canadian
Learning Television already boasts a weekly four-hour book strand. This summer
alone we have produced an International Adult Literacy Conference, a
TooMuchForMuch episode in which young people discussed drug reportage in print,
and coverage of the mind expanding TEDCity Conference, which CLT also
19299 We are launching such live television events as Ziggy's Celebrity Book
Club -- on which Margaret Atwood is appearing to discuss her new novel. I
would like to take this opportunity of being on television to recommend it to
19300 If you watch CLT right now you can see the nascent book strand we call
The Word, original interviews and other material gathered as literary news: the
Cowboy Poetry Gathering in Maple Creek, Saskatchewan; a Canadian response to
Stephen King's on-line auto-publishing stunt. These interstitials have been
designed to come together as a weekly half hour feature we call Word News
19301 In addition, as part of the CHUM group, we can work with the teams
responsible for shows like BookTelevision -- which, flatteringly, the other
book applications also cite as part of their plan -- and Rock'n'roll and
reading, which we first developed with Frontier College.
19302 We can adapt book items made by MuchMoreMusic, Space, Access, and
CityTV which, with CLT, is about to become the Official Channel of the
Harbourfront International Reading Services.
19303 We have the growing library of BravoFACT literary videos and
co-produced series such as The Originals. And, thanks to Bravo!, the Giller
Prize is being televised this fall for the third year with class and
19304 Commissioners, have you ever been to somebody's home and noticed no
books on the shelves, perhaps a few paperbacks leftover from high school? This
to me is a sad and disorienting sight, the same I sometimes feel about
television today. A mature nation should have a channel to celebrate and
challenge its own literature. We are seeking a licence to air a book channel
with imagination and electricity: a channel for everyone, philosophers, punks
and poets, each in their own voice and in their own time.
19305 Thank you.
19306 DR. KEAST: Next up with CareersTV -- The Jobs and Management
Channel is Tasha Larson.
19307 MS LARSON: Thank you, Dr. Keast.
19308 The most compelling argument for a channel that is devoted to careers
and entrepreneurship is very simply the fact that many Canadians feel nervous
about their own futures: Will my job survive? What are the successful businesses
of the future? With the pace of change in a globally competitive economy we need
to feel we can take advantage of these changes instead of feeling
19309 The good news is that there are answers, of which we are a part, to
help Canadians create resilient careers and businesses. Our purpose is to widen
awareness of this information and of the available resources.
19310 LTA has the only track record in Canada of providing regular prime
time, entertaining career information with programs such as Learning & Jobs
News, L&J Interactive, Help!TV and, this year, Careers TV.
19311 We are committed to and experienced in a dialogue with Canadians about
their careers. We are already connected already to a network of resources to
deliver a truly interactive channel.
19312 Interactivity has always been at the heart of what we do. Interactivity
is not just about available technology, it is also about the commitment a
broadcaster has to provide depth of information as well as responding to viewer
questions and requests. Our productions are always connected to further
information on our Web site or by toll free phone.
19313 I was proud to receive a letter of support for CareersTV from Arthur
Kent, the well-known journalist and documentary producer and an often harsh
critic of today's media.
19314 I quote from his letter:
"LTA has provided not only highly useful information, but has also CROSSED
THE INTERACTIVE FRONTIER by connecting viewers with the resources they need to
seize the initiative for themselves."
19315 What Mr. Kent is referring to is the fact that any viewer question
sparked by our programming is answered through our interactive Web site or our
network of career and business experts.
19316 As you can see from our letters of support, we know there is a large
community of career development professionals and viewers across the country
eagerly watching our efforts to broaden Canadians' access to career information
19317 Just three examples of our supporters are The Canada Career Consortium,
The Canada Career Information Partnership -- which represents all
provincial, federal and territorial jurisdictions -- and the National
Life-Work Centre, which is recognized as one of the leading developers
internationally of job-related information for youth.
19318 And Canada's best-known private sector "career guru" Barbara Moses
recognizes us as the undisputed leaders in the field of televised career
19319 Careers TV - The Channel will allow us to provide even more. The shows
identified in our program schedule fit in clearly with the high levels of
interest we have already found among our viewers. We will also be expanding our
own production by creating a new daily live show, Career Connection, that will
provide new information on the labour market, management and for entrepreneurs,
and it will also serve as a sort of hotline for people seeking more
19320 For myself, as a producer of the current programming provided by LTA
related to careers, I can tell you that the greatest satisfaction in providing
this service is the thanks that we receive daily from our viewers. The majority
of these viewers are seeking even more of what we do, and this channel, if
approved, will allow us the avenue to give them what they want.
19321 DR. KEAST: Our next offering is Computer Access - The Technology
Channel, which will be described by Peter Palframan and Steve Dotto.
19322 MR. PALFRAMAN: We were the first to recognize the demand and need for a
computer-based technology channel with our original application for Computer
Access in 1996 -- the first ever application in this genre. Perhaps we were
ahead of our time, but now a specialty channel fully dedicated to computers and
digital technologies is essential, and we firmly believe that we are the best
group to launch and operate the right kind of computer channel.
19323 Technology, computers and the Internet now touch almost every aspect of
our lives. While e-mail was the domain of academics and computer techies a few
years ago, it's now ubiquitous -- people are as likely to receive an e-mail
from their grandchildren as from a business colleague.
19324 As fast as the technology changes, there is one constant however:
everyone needs help with how to use it. To be effective and meet consumer needs,
a computer channel must be informative, instructional and learning focused; and
that's what we do.
19325 This proposed channel is a natural outgrowth of our computer-related
programming block on CLT. In fact, we were the first to bring the best of ZDTV's
programming to Canadian viewers where CLT launched almost one year ago, and
those programs can still be seen on CLT.
19326 Over the last five years we have supported the computer-based
programming right here in Canada by independent producers like Steve Dotto from
Primetime/Galileo, How To Productions and Omni Film & Video. We also carry
programming from C/Net and we are currently negotiating a programming output
arrangement with .tv, the British equivalent of ZDTV that is already distributed
as a digital service as part of Sky Broadcasting.
19327 MR. DOTTO: As a television producer, I was fortunate to appreciate
early on the kind of impact the P.C. was going to have and devoted my work and
efforts to the production of entertaining, useful and informative television
programs about computers and technology.
19328 Contrary to what you may have heard, television programming on high
tech is alive and well in Canada. I am proud to produce 65 hours of unique
Canadian technology content each year which plays to a national audience. In
fact, next week we begin our ninth season of Dotto's Data Café.
19329 Computer Access programming will appeal to a broad audience; it will
not just be focused on the "propeller heads". With over 50 per cent of Canadian
households now with computers, it is obvious that computers are no longer just
19330 The Computer Access schedule will contain two distinctive and
complementary programming strands:
19331 First, there will be a core of "how to" programming, presented in a
warm, friendly, entertaining manner, covering hardware, software, communications
and the practical applications we use today, as well as the exciting products we
will rely on tomorrow. This will be the information that viewers need, the
information that they can use.
19332 Secondly, we will cover current, late-breaking and topical information
related to computing, digital technologies and communications. We will analyze,
review and contextualize events to give viewers a comprehensive understanding of
our wired society.
19333 Tied into everything we do will be the Internet and interactivity. At
the core and weaving through all the programming that we do will be the Web.
19334 I can assure you that technology viewers in Canada expect and will
utilize high levels of interactivity. Computer Access will, itself, be on the
leading edge of convergence technology. It will include simulcasting on the
Internet, streaming video on the Web site, and a feature of the daily live show
will be a full video interactivity with viewers, probably even live programs
originating from home or "boutique" studios.
19335 DR. KEAST: And now here is Jill Bonenfant to introduce The Law &
19336 MS BONENFANT: Canada is consistently rated as the most desirable
country in the world to live in, and one of the main reasons is the fact that it
is probably the safest country in the world. In large measure, we can thank
Canada's founding father for making "Peace, Order and Good Government" a
cornerstone of Confederation.
19337 Many thousands of Canadians are involved fulltime or as volunteers in
creating and maintaining the safe and secure society that we all take for
granted. This channel will tell their stories.
19338 We are proposing an educational and entertaining service that will
cover every facet of law and order in Canada. In spite of Canada's enviable
status, the reality is that crimes, fires, medical emergencies and natural
disasters are part of everyday life in the community.
19339 The multiple programming formats of reality TV, live and interactive
talk shows, drama and documentaries will make for fascinating television. Our
flagship in-house production, Law and Order Help!, will be a daily live and
interactive show that will follow nightly themes, from legal, medical and social
issues, to police and security and emergency concerns. It will include the
latest tips on everything from burglar-proofing your home to surviving a car
breakdown on a deserted highway.
19340 Hero of the Week will be a profile of an individual who went above and
beyond in helping in an emergency situation. There will also be short and
informative programs profiling individuals in all law and order professions and
related activities. For the first time, Canadian television viewers will have
the opportunity to learn about, and get a better understanding of, just what it
takes to maintain the orderly society we have.
19341 Many of these programs will be connected to, or drawn from, formal
courses of study at educational institutions.
19342 Canadians are justifiably proud of the safe and secure society we live
in. The Law & Order Channel will help them better understand and appreciate
what goes into keeping it that way.
19343 DR. KEAST: A natural follow-up to maintaining good order is our DocsTV
application which will be presented by Ross Mayot, Peter Flemington and Paul de
19344 MR. MAYOT: Documentary programming has always been a staple of
educational television in Canada and certainly a core programming ingredient for
Access and CLT. It has also been an essential programming genre for our partner
in this project, Vision TV, whose contribution to the creation and broadcast of
Canadian independent production over the last dozen years has been
19345 Our collective experience, the world-renowned documentary film
tradition in Canada, and the viewer appetite for documentary programming leads
us to the overwhelming conclusion that there should be a dedicated documentary
channel in the new digital universe.
19346 We have the expertise to launch and operate one that will be the very
best in its commitment to the genre as a discrete category, not blended with
other kinds of production, and in its support for new and young filmmaking
talent through our DocsFACT initiative.
19347 MR. FLEMINGTON: Good morning, Madam Chair and Commissioners.
19348 We at Vision TV are delighted to be associated in this application with
our colleagues at Canadian learning television. Ron Keast and Peter Palframan
were among my partners in the founding of Vision and, collectively, we know
something about starting from scratch with very limited resources and building
services which bring something new, different and valuable to system.
19349 You have heard a number of documentary channel applications, and I
don't envy you the task of sorting out their relative merits. What I can tell
you about this application is that we bring to the table a strong sense of
public service, a passion for the genre, and untold years of collective
experience, both as independent producers and as commissioning editors and
nurturers of documentary film.
19350 The Alberta base of DocsTV is a natural for us. Vision has fulltime
folks working on behalf of local and regional filmmakers in the west, in the
east, and in the centre. We know the filmmakers; we know the business.
19351 At any given time, we have up to 150 different projects on the go:
in development, in production, in post, in rough cut, in fine cut, in
19352 MR. de SILVA: With the partners in this application you have the
broadcasters who put the "D" in diversity in the Canadian system. And I am not
talking here simply about a variety of program formats or even an
under-represented content area. I am talking about the reflection -- on-air
and off -- of Canada's rich multicultural character, of its many "voices",
opinions and passions, often edgy and against the grain.
19353 We debated the merits of bringing selective independent producers in on
this partnership. We decided in the end that it would not be useful, either to
us or to them, and would be fraught with potential conflicts of interest.
19354 It was certainly not a matter of indifference. Some of our best friends
are filmmakers. We felt that for every one we would choose a dozen or more would
be left out in the cold.
19355 It is apparent that this application is independent producer friendly.
We know it and the filmmakers know it, and they have told us as much. We will
operate on merit, maximizing opportunity and access, and nurturing the bright,
young storytellers who are struggling for a leg up in this interactive age.
19356 We appreciate the clarity of your criteria, we agree with their
importance, and we will revel in the challenge of bringing them to air.
19357 DR. KEAST: And finally, Ross Mayot and Paul Shard to present Travel
Access - The Destination Station.
19358 MR. MAYOT: Travel Access will feature entertaining and informative
programs about travel and recreation opportunities, destinations and costs. The
service and accompanying Web site will inform and assist Canadians in selecting
just the right holiday. In particular, they will feature travel by Canadians
inside Canada and travel destinations that offer learning opportunities as well
19359 All of the programs will be complemented and augmented by the
travelaccess.ca Web site. It will provide a full range of information on
opportunities, destinations, processes and costs. It will also facilitate
booking on-line. It will connect to other travel and destination sites and will
be an invaluable research resource for Canadian travellers.
19360 Canadian co-productions and acquisitions will include series on
adventure travel, wine-making in British Columbia, Canadian historic sites and
other vacation marvels.
19361 Our daily live and interactive program, TravelHelp!, as well as our
interstitial or program "flow" will cover all aspects of travel, including where
to stay, safety tips, around the world weather, foreign exchange, time share
opportunities and job opportunities within the travel and hospitality
industries, as well as the educational programs that are available to prepare
people for their jobs.
19362 The travel industry is huge now and is expected to become even bigger
as Canada's seven million baby boomers edge into retirement. And the face of
travel has changed dramatically in the last few years.
19363 Alison Hermansen, the travel services director with the Canadian
Automobile Association, in an interview done for this application, told us that
today's traveller is more demanding and is doing more research. They don't want
to just sit on a beach for a week. Increasingly they are looking for added
value, including learning opportunities about the culture and history of the
place and the people where they are vacationing.
19364 MR. SHARD: Ten years ago, when Sheryl and I first began documenting our
sailing adventures on a voyage to 24 countries, the demand was for beautiful
scenes and escapism. This has changed progressively over the years as more and
more people have expressed interest in learning how to make exciting voyages of
19365 Instead of escapism, people want information, and this is shown in the
demand for TV programming, instructional videos and the seminars we are asked to
give across the country.
19366 The nature of learning holidays is unlimited. They can be as simple and
informal as a self-planned tour of geographical, cultural or historic sites in
the area where one is vacationing. They can involve specifically planned
complete holidays that focus on history, culture, art, architecture, museums,
eco-tourism, adventure tourism, wine tasting and cooking. And they can involve
quite structured formal courses of study offered by institutions in all parts of
19367 With its wide range of programming covering all aspects of travel, with
its special emphasis on travel and learning, especially within Canada, and with
its dynamic and interactive Web site, Travel Access will be a popular and
valuable new Canadian digital service.
19368 DR. KEAST: Madam Chair, Madam Chairperson and Commissioners, I hope
this overview of who we are, what we have achieved and what we are proposing
demonstrates that we are ready, willing and able to make a major contribution to
the new digital era of broadcasting in Canada. The six new Category 1 digital
services that we have been cultivating with CLT are ready to take flight. All
the expertise, support and enthusiasm is in place for us to launch these
attractive and exciting services.
19369 Thank you for your attention. We look forward to your questions.
19370 THE CHAIRPERSON: Thank you and good morning, Dr. Keast, Mr. Znaimer and
19371 Madam Bertrand...?
19372 CHAIRPERSON OF THE COMMISSION: Good morning. I will have the pleasure
of understanding better your applications. Given my background in educational
broadcasting, I am definitely interested in understanding the links and the
kinds of synergies you are proposing to draw from those projects, but also in
terms of our responsibility at the Commission, in terms of diversity, and also
the public interest. As you pointed out, it is quite important that we
understand how much diversity we would get in those applications, if they were
to be licensed.
19373 Before I start, I would like to make a correction. Sitting on the beach
might be very useful, especially when you have lots of reading to do;
unfortunately not necessarily books, but in preparation for a hearing that will
last four weeks. That was what I was doing before I came to the hearing, reading
on the beach. So if some of my sheets have a bit of sand on them, you will
19374 As you well know now -- especially you, Mr. Znaimer, having been
with us on a few occasions already since we started -- I think it is
important that we offer you the possibility of situating those elements within
the educational dimension of the broadcasting system. Maybe there are nuances
that you want to bring. Although I don't want to prolong that aspect. If it is
really the same, we will just go back to our notes and to the transcripts, and
we will just take the time for really understanding better each application.
19375 I will then go to questions on understanding the overlapping between
Access, CLT and the projects you have, not only quantitatively but also
qualitatively, and then I will go to more specific questions about original
content in relation to independent producers understanding interactivity for
each of the projects.
19376 That will be the road we will follow this morning. We will talk about
the difference between Apostrophes to Bouillon de Culture parce que je ne crois
pas qu'il y a une grande différence personnellement si ce n'est, l'attrait du
titre qui promet une plus grande invitation mais on parle encore de livre dans
19377 M. RICHLER: Je respecte votre avis madame.
19378 CHAIRPERSON OF THE COMMISSION: Okay. Let's start with the general
question, the first one: the criteria. I was looking back -- and I didn't
have those notes. I had left them here, and when I was reviewing my notes early
this morning I would have liked to have really in mind the criteria you had and
the order you had established, Mr. Znaimer, in the context, more generally, of
the other applications you have presented. But here I think it has a particular
characteristic which is linked to the educational portion of your
19379 Could you please take us to how you see the criteria being prioritized,
but in link with the difficult relationship between attractiveness and public
interest, or attractiveness and education?
19380 DR. KEAST: Yes, I will. Thank you, Madam Chairperson.
19381 First of all, as Moses said last week -- and we are certainly in
tune with what was discussed last week -- we take likewise as a given that
the service must be attractive. Obviously there must be a demand for it and the
service must be attractive. Otherwise we are all out of business. It must be
affordable. So attractiveness and affordability.
19382 The third item in that sort of given area was the importance of the
19383 I would like to say a note about that because we are educational
broadcasters. The basis of education is interactivity. That is what the teacher
does in the classroom all the time. The basis of the Socratic method of teaching
is interactivity. That is what we have done since we started in educational
broadcasting when we took over Access some five years ago, and we use whatever
technology is available.
19384 When we started it was mainly the telephone and letters. But we were on
the air throughout the schedule to encourage people to interact with us: to
call, to find out more, to get more information. Because at the base of many of
the programs, the majority as a matter of fact, that we do on Access, and the
majority are at least 50/50 currently on CLT, is the formal courses of study
that connect, usually at a distance, with many of the programs.
19385 We are interacting. We are marketing. We are promoting interactivity,
constantly, in both services.
19386 The interactive component is really important for us as educators.
Whatever the technology turns out to be in the future, we will be using it, and
using it effectively to meet the learning goals that we have set for
19387 The other one is, I think, diversity. It is clearly important,
particularly as it relates to social and cultural and educational importance.
Obviously that is our major concern as educational broadcasters, and so it is of
prime concern to us here.
19388 Contributions of Canadian programming in this new digital
universe -- what is going to, I think, highlight these services, will be
the innovative, new Canadian programs that we can present on them. That is very
19389 Also, there is the ability to fulfil the proposed commitments. We have
a track record of meeting the goals and the conditions that have been set for us
with Access and with CLT, and we are able to do that in whatever services we are
fortunate enough to have.
19390 CHAIRPERSON OF THE COMMISSION: So the major difference you would see in
terms of the order, given the kind of applications you are putting forward, is
the interactivity component, which was very important last week in the
configuration Mr. Znaimer presented. But here, given the angle that is taken for
all of the projects and the expertise, it is even more so.
19391 Generally speaking -- I will go back there again -- depending
on the project -- and I am not a nerd in the computer business. I use
e-mail. I can do that. And I know that the mouse is not a pet for the pet
channel, and it is not a télécommande non plus. So I have really progressed, but
I don't have a really great understanding or great experience. But from my
understanding, generally speaking, there are only some of your channels'
proposals that are really going all the way -- the kind of possibilities or
the potential of the second and third generation of what will be web TV. It
seems that some of your channels rely more on a more traditional -- if we
can say that. It is hard to say that about the Internet, that it is a tradition,
being that young, but, still, much more of a relationship with the viewer that
is based through a Web site or a porthole or the Internet.
19392 I would like to know -- when you are saying interactivity, in the
case of those applications, it is really at the forefront of our thinking, given
that, depending on the channels, the interactivity is not totally, fully
deployed. What is your perspective on that and why is it so?
19393 MR. ZNAIMER: I think that's exactly right. People in the business, of
late, have come to talk about lean-in and lean-back channels -- and that's
just a fancy way of saying entertainment, when you are feeling in a more passive
mood, it's the end of a long day, you know, plop down on a couch, have a
relaxation, have the thing wash over you and if something occurs, on an impulse
basis, that may cause you to interact, fine. Lean-in channels are where the
interactivity is buried in the heart of the proposition. It's so much more
central to a computer service than to one that offers gossip about stars, let's
say, so much more central to an educational mission where, as Dr. Keast said,
it's buried in the nature of teaching than it is to other channels that are
putting their emphasis rather more on leisure. And it's because of this, I
think, we have a different take on the idea of attractiveness.
19394 The idea of attractiveness has to do with getting people to vote for
digital, and I think the -- well, the flaw in the suggestion that the
popular will drive the tier is that the popular is frequently a reflection of
what's known, but, generally, appeals to more passive people. I think the niches
that we are discussing here have low popularity relative to sports or mystery
movies or series, but high motivation -- in fact, intense
motivation -- and we think that a surprise driver, the driver that no one
expects, will come precisely from these niche media with a learning component
that appeals to, albeit, a small number of people who are intensely motivated
and they will put up the extra money and they will turn to a medium, in the case
of education, that they have considered to be an enemy for all these years.
19395 So, I think an educational cluster, tucked into a larger offering,
would actually be a powerful driver and will be a driver for people who probably
aren't big users of TV or may, in fact, be shielding -- shielding, actively
shielding -- their kids and their students from TV because, until recently,
they thought television was the enemy.
19396 CHAIRPERSON OF THE COMMISSION: Couldn't we say that it would be like
the second class, or the second phase of subscribers to digital; that the first
one might be the early adopters but not necessarily the one that is necessarily
turned on by technology or computer sciences but more turned on by showing off,
you know, the kind of "le snobisme" of having digital because it's the newest
thing to have in television and that that kind of viewer would be one that is
more traditional and more passive, and if we were to take that assumption as
being reality, then should we, at the Commission, choose among services that are
more the bridge between the analog, more conventional, passive way of watching
TV and helping the bridge to be done to, eventually, a much more
19397 MR. ZNAIMER: Well, our view on that question is that "le snobisme", the
commercial stuff, the self-interested stuff, will take care of itself. Those who
want to get it, for that reason, will get it.
19398 The extra push, the unexpected push, will come from these intense
communities of highly-motivated people who finally say, "Ah, at last. Something
I have never had before", not more stuff in existing genres but, really, new
stuff in genres that don't exist. Queer Television. Unprecedented. That kind of
thing. Educational Bouquet. Unprecedented. That kind of thing. And if -- I
feel like I'm on dangerous ground, but if you can open to the possibility that
10 is not a magic number, then you could have both. Why be "either or" when you
can be both.
19399 MR. RICHLER: May I jump in, please.
19400 My understanding of the growing popularity of the Internet has not so
much to do with the corporate behemoths and extravagant multi-media experiences
moving in but with early opportunities for people to seek information to set up
their own Web sites devoted to particular and idiosyncratic interests. Some
people say sex is also the "killer app." but I certainly remember the
19401 MR. ZNAIMER: It always is.
--- Laughter / Rires
19402 CHAIRPERSON OF THE COMMISSION: In all the platforms.
--- Laughter / Rires
19403 MR. RICHLER: In every one.
19404 But I do remember the first time I went on-line, I was seeking
information from the Toronto Library system. I was astounded to find that I did
not have to go to the library, I could look it up on my computer screen. This
was an amazing thing. And look where were are now.
19405 We have to be realistic and somewhat modest about what we mean when we
talk about interactivity. And, anyway, there are two kinds. There is the
relatively passive kind, where you click on an icon and up pops some hypertext.
But my experience has told me that people actually like to converse; they like
to participate; they like to see greater depth in the areas in which they are
19406 Last year, I spent quite a bit of time working with salon.com, which is
probably the world's most celebrated daily Web-based news magazine. You would
think that they would have every opportunity to explore all aspects of
complicated interactivity. They have tried radio. They have tried broadband and
DSL streaming. But daily, on a daily basis, what really counts for them is their
chat room they call "Table Talk", and that is what we are already doing, in the
programs and the strands that we are exercising presently. I think it's the
opportunity to talk back to the otherwise, you know, impermeable medium of
television that would attract people to this kind of service.
19407 MR. DOTTO: Actually, if I can jump in, as well.
19408 CHAIRPERSON OF THE COMMISSION: Sure.
--- Laughter / Rires
19409 MR. DOTTO: Well, the subject of interactivity is core and it's actually
crucial to comprehend exactly -- I don't look at interactivity,
necessarily, as a technology but as an attitude.
19410 With our programming, we celebrate interactivity in computers on a
regular basis. But, still, it's the simple forms, e-mail, and even our 1-800
numbers, when we have callers calling in on a live television program, that
really drives the passion of the viewers. And it's the fact that because we are
interactive and response, the attitude on our side is we respond, we don't just
try and give them something to do to occupy their mind and to make them feel
like they are involved but we actually allow them to become involved in the
process of our television programs, which gives them a sense of ownership and a
feeling of power within it, and I think that's the most compelling argument for
interactivity. It's the attitude of the television producers and the stations
themselves to actually respond to the viewers' interests.
19411 At that point, there, once technology advances and we have better
technologies available than the static chat rooms where we are just dealing with
text, then we will embrace it. But only when the viewers are able to participate
as equal partners.
19412 MS LARSON: I'm sorry. I have to leap in, too, just --
--- Laughter / Rires
19413 MS LARSON: I think that the Internet has shown us that the digital
world is seen as a place where there are a lot of options and where people can
now find the information that's tailored to their own needs -- and that's
exactly what we already, do through our productions. But I see the digital world
as one where we are able to do that in an even greater depth -- and I think
that that's what Canadians are expecting.
19414 CHAIRPERSON OF THE COMMISSION: Thank you.
19415 I see that you have, Dr. Keast, a very interactive team with you.
--- Laughter / Rires
19416 CHAIRPERSON OF THE COMMISSION: The launching date and the approach to
launch and, you know, the -- what's your view? Is it --
19417 DR. KEAST: Well, we would be certainly prepared to launch on September
1, I think this was -- September, 2001, is the date that I have been
hearing. Certainly, I think it's very important that --
19418 CHAIRPERSON OF THE COMMISSION: Not this coming September --
--- Laughter / Rires
19419 DR. KEAST: No, no. A year from now.
19420 But I think it is important that as large a number of channels get
launched at the same time.
19421 So we would think that September 1 would be an ideal time to
19422 CHAIRPERSON OF THE COMMISSION: And do you see the same -- what's
your views on Category 2s?
19423 DR. KEAST: Well, I think if we get as many of Category 2s, as well,
launched at the same date, the more the better, I think.
19424 I think it's important, however, in the mix of that, to make sure that
the Category 1s have their launch agreements with the distributors before the
Category 2s come to the table. But other than that, I think it's great if we can
get as many as possible at the same time.
19425 CHAIRPERSON OF THE COMMISSION: In terms of the licence not being valid
beyond a certain point -- when we talk about age, we say beyond
"40 years old". That means that at least I am kind of not valid any more.
But what would you say would be the age limit of a licence, if not acted upon in
the Category 1 and Category 2?
19426 Category 1, you are saying that if it's not ready the 1st of September
2001 when everybody launches, then it should be at least questioned by the
Commission. It would have to come back to the Commission.
19427 DR. KEAST: I think it would be reasonable to come back to the
Commission, but I think it should be dealt with on a case-by-case basis because
the reason for not launching may not be the problem of the program supplier. It
may be a distributor problem. I think that is quite reasonable, to come back to
19428 CHAIRPERSON OF THE COMMISSION: Or a negotiation problem?
19429 DR. KEAST: Or a negotiation problem, a whole lot of --
19430 CHAIRPERSON OF THE COMMISSION: And it's like a good divorce,
19431 DR. KEAST: Absolutely. That's right, exactly.
19432 MR. ZNAIMER: That's particularly pressing in Category 2 because there
is no guarantee of access and as that ticking clock gets closer to midnight the
content provider's position continues to erode and erode and erode.
19433 It would make perfect sense for a hard-nosed negotiator on the other
side of the table to drag it out.
19434 CHAIRPERSON OF THE COMMISSION: So for Category 2 what would you see as
being a reasonable limit, considering it could be a case-by-case after that.
19435 MR. ZNAIMER: Well, again, I think case-by-case will probably tell the
tale, but in a way not putting a limit on it and having that genre then occupied
would be a stimulus for BDUs to get to the table.
19436 Equally, I am sure, BDU could sit here and argue: Well, what do you do
with a recalcitrant program provider, which is why it comes back to
19437 It's hard to imagine that you will actually have people who acquire
licences sit on them and don't enter into negotiations with good faith and are
just squatting in the hope that they might flip it out without ever putting it
on the air. That, obviously, wouldn't pass when it comes before your review. So
I don't know about that ticking clock.
19438 CHAIRPERSON OF THE COMMISSION: Some have proposed three years for the
Category 2, kind of leaving some space. It could be less, of course, depending
on what we get on the public record and the kind of analysis, but it seems to us
that it's a valid question certainly. I can certainly understand that on the one
hand you have to negotiate with the BDUs and getting on and that's not a
guarantee. That's the way the framework has been thought through.
19439 On the other hand, I could imagine getting a Category 2, holding onto
it and not being in a situation financially or, you know, the team you have not
wanting to spread out your team. And while you are not launching, the viewer
might be deprived, you know, from a genre that could be maybe niche, but very
interesting to them. I could think of an ethnic kind of genre where it could be
very smaller communities of viewers, but it could be very important in terms of
what it means to them for their communities, but also in terms of even pushing
19440 MR. ZNAIMER: So, as I say, most groups that come before you do it
because they have a desire to get going. I am just improvising here, but maybe,
say, in the course of a three-year licence, at the end of every year any service
which is not yet on air would have to file with the Commission a short
explanation as to why not and where things stand.
19441 That at least would get some kind of narrative going. Of course, from
the content provider's point of view we are always concerned about stonewalling
on the other side.
19442 I think it's really fascinating to see and the Category 1 applications
by BDUs seem to suggest that they too are worried, that when they sit on our
side of the table and have to negotiate with the other BDU, they may not get the
kind of results they want and so they turn to you and seek the protection of a
Category 1 licence.
19443 CHAIRPERSON OF THE COMMISSION: I guess it reveals too that the digital
universe is not yet shaped and formed and there is a lot of uncertainty. So it
takes a lot of faith and passion, I suppose, in order to look at that universe.
But one thing we all know is it's going to be there and we want it to be
Canadian and to be reflective of the best of what the broadcasting system in
Canada has been able to achieve, so that's why we are here.
19444 Can I get your views on independent production, what's an affiliated
independent production because it will be discussing case-by-case and there is
some need for clarity there. But as a general principle, what's your view on
what is affiliated and then what's your view on should we impose a percentage or
universal or a case-by-case there again.
19445 MR. ZNAIMER: Our view is that an affiliated independent as producer is
where the broadcaster has control. An unaffiliated or non-affiliated is where
they do not have control.
19446 So a broadcaster could have up to 49 per cent and it would still
be unaffiliated. I am sure my colleague, Peter, would say 49.9 per cent, but I
think it's 49. That would be our overall definition I would think.
19447 CHAIRPERSON OF THE COMMISSION: Forty-nine per cent of your production
will be --
19448 MR. ZNAIMER: No, no. What I was saying is that the
19449 CHAIRPERSON OF THE COMMISSION: Oh, of affiliated.
19450 MR. ZNAIMER: -- of affiliated or non-affiliated. So a
19451 CHAIRPERSON OF THE COMMISSION: What happens there on the Green Giant,
does it become --
19452 MR. ZNAIMER: The Sleeping Giant.
19453 CHAIRPERSON OF THE COMMISSION: Yes.
--- Laugher / Rires
19454 DR. KEAST: The Sleeping Giant would be non-affiliated.
19455 CHAIRPERSON OF THE COMMISSION: Not affiliated?
19456 DR. KEAST: That's right.
19457 CHAIRPERSON OF THE COMMISSION: With that definition?
19458 DR. KEAST: Not with that definition, exactly.
19459 THE CHAIRPERSON: Just give him back his colour.
19460 CHAIRPERSON OF THE COMMISSION: I kind of harmonize everything, not only
my glasses, but the independent production companies as well. I'm sorry about
19461 Alors, le 49 pour cent. Would you see the necessity to go by genre and
case-by-case on each licence that we would be granting, or would you see that
percentage, kind of a minimum should be imposed on everybody in terms of the
necessity to really keep the relationship or the interactivity with that sector
of the broadcasting system?
19462 DR. KEAST: I think it's very important for having as many
non-affiliated, independent producers involved in the process as possible.
Whatever that percentage is, I think that's the key and we would certainly
19463 CHAIRPERSON OF THE COMMISSION: Wouldn't many say that 49 per cent to
define affiliated or non-affiliated is very high, and that in fact it captures
too much and that actually the work or the programs that can be given to
affiliated or in-house type of production would be too high a level?
19464 DR. KEAST: I think that's as I recall the general sort of Telefilm
definition and it makes it quite simple. You don't have control unless you have
over 50 per cent and whether it's 35 or 49 I don't think that makes a huge
difference, but it's quite reasonable to have a 49 per cent and still maintain
that the independent producer is non-affiliated with the broadcaster.
19465 CHAIRPERSON OF THE COMMISSION: You have heard through, I don't know how
many days now we have been sitting, that there are views to the point that there
are very divergent opinions on this. Some say not at all, others say it should
be around 10, 15, others 30 per cent. Having heard that do you still
maintain -- would you say that it is particular to the digital environment,
that it's a necessity in order to be able to make a business case? What's your
19466 DR. KEAST: I think that's important as well, but even without the
digital environment I still think that the -- yes, with the digital
environment it is equally, it is very important and we are going to have to
marshal all the resources we possibly can in this very fine air we are going to
be breathing in the next little while.
19467 But, nonetheless, we take the view that the 49 per cent is reasonable
to maintain that arm's length distance, as it would be if it were 39 per cent. I
don't think it matters a whole lot.
19468 MR. ZNAIMER: I would like to add that if it were approached on the
basis of common sense, in fact, practically how does it happen? The stuff that
binds a channel, that creates its identity on the air, the information material
about the universe that that channel is addressing, that high-volume stuff,
especially in the thin business environment of digital will typically, will
necessarily come from the operators I think.
19469 It's hard to imagine how an independent producer could even survive,
make any kind of living off the kind of budgets that are involved where you are
doing lots of stuff for very low prices, especially if it is done
19470 So where does one turn to the independent production sector? It's when
you have a larger scale project. It's when you want to do fiction, when you want
to do a feature documentary, when you have quite an isolated sort of series that
is not part and parcel of the daily drive of the channel.
19471 So in another application with another group we took the view that we
would name the slots, we would name the large scale projects and devote those on
an undertaking basis to the independent production community.
19472 Then, of course, there is the further nuance that not every channel is
the same. Some are, in their nature, commissioning channels, others are more, in
their nature, self-produced channels.
19473 So that is just to add a little more nuance, and I think the Doctor is
trying to cut through all that stuff and lay out a rather more simple rule based
on a telephone concept.
19474 CHAIRPERSON OF THE COMMISSION: But with that thinking,
Mr. Znaimer, isn't there a risk that the independent producer's community,
who have been very key to developing the analog world that we have and that we
want the same rich kind of diversity, and even richer because we are bringing
new players -- and to the computer people who are not in the analog world,
they will be part of our world in the digital the broadcasting system.
19475 Wouldn't you say that saying because of low budget we cannot
really -- well, independent producers could not really make a living or
there wouldn't be a business case for them.
19476 But saying that, and leaving them for the more traditional form of
drama and documentaries, aren't we saying, in a way -- or aren't you
saying, because I'm not saying it, you are saying it, I'm kind of just
repeating -- isn't it somewhat disadvantageous for the independent
producers because they will not be brought in the digital universe the same way
as talent will be and programmers will be?
19477 MR. ZNAIMER: Well, I don't think so, because there still will be lots
of featured programs to go around. That's where I see the independent community
making its contribution and working in program elements that have large enough
budgets so that they themselves can make a reasonable living.
19478 But our approach is, you know, a live and let live approach. So
ultimately, as the Doctor says, you want to find a reasonable formula that is
based on percentages as opposed to our suggestion of specific time slots and
particular projects, that's okay.
19479 CHAIRPERSON OF THE COMMISSION: You would be open to --
19480 MR. ZNAIMER: Yes, yes.
19481 CHAIRPERSON OF THE COMMISSION: Original Canadian programming.
19482 We will be discussing that in clarification of every application and we
will certainly take a break between the general discussion before we go to the
specific, so you may wish -- if you are not prepared -- to identify
for us what is original Canadian programs and which ones will be done in-house
or with affiliated types of independent producers and which ones will be kind of
given to non-affiliated, or at arm's length it was called yesterday. So that
would be helpful.
19483 But maybe you want to make a general statement on that, Dr. Keast?
19484 DR. KEAST: Perhaps just a general statement, yes.
19485 In general for the -- the DocsTV channel is somewhat separate, we
can speak to that separately.
19486 But, in general, the other channels our approach has been that no more
than 50 per cent of the dollars dedicated to Canadian programming would be
spent on programs done in-house and at least 50 per cent would be done with
unaffiliated independent producers.
19487 That is the general rule that we have established, because many of the
programs -- and we have a facility in Edmonton and, like Help!TV, a live,
daily interactive program. It's really the news kind of programs. These sorts of
things you really can't do with an independent producer, you have to do it
in-house. That is the general approach we have taken.
19488 With DocsTV it is slightly different. So we have said there that a
maximum of 25 per cent would be done either in-house by ourselves or our
partner Vision. That allows commentary and promotional material, et cetera,
about documentary filmmaking. And 75 per cent would be done by
non-affiliated independent producers.
19489 CHAIRPERSON OF THE COMMISSION: What is difficult here, I suppose, is
also when you are talking about the 50 per cent in the other type of
applications, that includes the possibility -- in that 50 per cent
given outside, that would include the Sleeping --
19490 DR. KEAST: Sleeping Giant?
19491 CHAIRPERSON OF THE COMMISSION: See if I have it right now, Sleeping
19492 DR. KEAST: Yes, it would. Yes.
19493 CHAIRPERSON OF THE COMMISSION: If we were to choose a lower level of
what is allowed, like if we were to choose 25 per cent, would it change
dramatically the figure --
19494 DR. KEAST: No, I think that --
19495 CHAIRPERSON OF THE COMMISSION: -- and would you be still
considering the possibility of a condition of license of the level of
50 per cent except in the documentary channel?
19496 DR. KEAST: No. I think that if the non-affiliated part were to be split
in some way to make sure that we didn't give it all to Sleeping Giant --
that is not our intent of course -- but that would be fine. I think that
would work. If that is a concern -- but I don't think it should be a
19497 I think that our record, certainly in Alberta, while we view
Sleeping -- and I might just make a comment about Sleeping Giant, because
the reason we have used Sleeping Giant as an independent producer is because Jim
Hanley, who runs Sleeping Giant, was general manager of programming at TVO
before I was and he understands the business that we are in, he understands
educational production and not all independent producers do. We are gradually
educating some more to get a feeling for that. But he understands how you can
take a formal course of study and use it as a research base and develop exciting
television, entertaining television from that and have it directly
19498 So the context is the course. Jim knows that.
19499 So The Psychology of Death and Dying, which was a beautiful series that
he did with the University of Guelph and Athabasca University a couple of years
ago -- as a matter of fact, just to give a little picture of this and the
advantage of working with an independent producer as well as one who happens to
know the business we are in, but basically Jim, because he is an independent, we
in Alberta put in about 15 per cent of that budget.
19500 Jim got Telefilm, the Cable Production Fund, he sold it to Hanenberg in
the United States -- the first time I think there has been a sale from
Canada to Hanenberg -- and raised significant dollars to make an
outstanding documentary series.
19501 So that is why we have been using -- and I would like to be able
to continue to use, on occasion, Sleeping Giant, but that experience is being
now developed in other independent producers. So they know the business that we
19502 As you can appreciate, Madam Chairperson, we don't -- well, we do
accept proposals of course all the time, but we have things, we have educational
objectives that we want to meet and we want to do it with independents, but
independents don't understand the business we are in.
19503 CHAIRPERSON OF THE COMMISSION: I understand. But I suppose the more we
will go into the digital world, and if you are to say interactivity and more
kind of targeting type of services is certainly one of the genre that would be
harmonious with the digital world, I guess it should appeal to the viewer but
also take by the hand the independent production community as a whole in order
to kind of all together go into that world.
19504 That is the concern I guess. What has been the richness of the analog
world in the broadcasting system has been like the complementarity of all the
players and the partnering that has occurred. Certainly we have, at the
Commission, a concern to make sure that in this new world, you know, the
diversity of all the different visage will help the success of the --
19505 DR. KEAST: Yes, yes.
19506 Well, I think that you can be assured that our objective is to work
with independent producers. It has been our objective since we took over Access
and CLT. Basically we do the studio programs, the in-house programs. Everything
else we do with independents, and that has been our approach from the day we
started with Access and last year with CLT, and that would continue to be our
19507 CHAIRPERSON OF THE COMMISSION: But I understand -- and we will go
back to each project, but that even if you have a definition that is quite high,
if it was to be a lower threshold you would still maintain the kind of
commitment you have there?
19508 DR. KEAST: Absolutely. Absolutely.
19509 MR. ZNAIMER: I thought I heard the Doctor saying 50 would be in-house,
50 would be out --
19510 CHAIRPERSON OF THE COMMISSION: Yes.
19511 MR. ZNAIMER: -- and of that half again could be guaranteed to
19512 DR. KEAST: Absolutely.
19513 CHAIRPERSON OF THE COMMISSION: Yes.
19514 DR. KEAST: Absolutely. And, as a matter of fact -- yes,
absolutely. That would be perfectly acceptable.
19515 MS LARSON: I would just like to add something because I don't like to
see this picture painted of the digital world being one that will eventually
squeeze out independent producers at all. Quite the opposite.
19516 For example, with Careers TV would be generated a whole new opportunity
for the development of career-related television.
19517 As I have said, and as you have seen in the letters of support, there
is a very keen interest across the country in making that kind of information
available to everybody and from organizations that are really keen to work with
television producers and to put that information out and to make it multi-use
19518 I think that all of our channels create an opportunity for more
television production, which is good for the independent community.
19519 MR. RICHLER: I want to say something very briefly, if you don't
19520 The technology that we are using at digital television now also is far
more affordable to the individual. Digital cameras cost a fraction of what beta
did in the past.
19521 The last program I produced and hosted was on CBC Newsworld, called Big
Life, an alternative culture magazine show. Every single week we use material
from independents, video post cards we called them.
19522 If we want to be true to the creative notion, to the ideals that we are
holding up for our channels, we simply have to plumb the depths of the
19523 If I wanted, for example, to produce a series on the immigrant
experience here in Canada, it is easy for me to say: "Well, let's go talk to
Dany Laferrière, let's go talk to Neil Bissondath or M.G. Vassanji". But I am of
a certain generation. I have to make the call to people who are living freshly
in this country, who are using this new equipment in their homes.
19524 So it is also a new definition of what constitutes independent. There
is not an enormous amount of money going around necessarily, but the involvement
is essential for us to be true to our mandates.
19525 CHAIRPERSON OF THE COMMISSION: Thank you.
19526 Canadian expenditures: what is your point of view in terms of what
should be our approach in terms of flexibility? Should we in this world still
maintain a demand or a condition of licence on Canadian programming
19527 DR. KEAST: Yes, absolutely. We believe that very strongly.
19528 CHAIRPERSON OF THE COMMISSION: What is your view in terms of should we
maintain the more traditional approach, although we could have a bit of
flexibility, as the Chair has been explaining over the past days?
19529 What is your view?
19530 DR. KEAST: We favour the traditional approach. But if you wanted to
build in some flexibility, that is fine for us.
19531 CHAIRPERSON OF THE COMMISSION: You would be prepared to go from the
second year on a percentage of the revenue?
19532 DR. KEAST: Yes.
19533 CHAIRPERSON OF THE COMMISSION: And we will go, project by project, to
read exactly what it means.
19534 DR. KEAST: Yes.
19535 CHAIRPERSON OF THE COMMISSION: I would like to come back. I do not wish
this morning to go back to your idea in Category 1 of excluding the BDUs. We
talked about it the other day, and you have made your point here; the framework
has been established.
19536 There is one thing I would like to pursue, and that is your idea that
the responsibility -- and thank you for still seeing a role for the
Commission. We feel better.
19537 You are invoking the public interest. Certainly there would not be a
Broadcasting Act and there would not be institutions, Telefilm, the CRTC, and
the CBC, if there was not that concern in Canada about the public interest.
19538 Public interest in the broadcasting system and one of the elements of
that public interest that we have in the new world is to make sure that
eventually the digital world will not be strictly one of the early adopters;
that it will be at a reasonable price, that it will really bring about real
choice, but that it will be with real space with good quality of Canadian
19539 Generally speaking when we look at your applications, given the
expertise you have -- and you refer yourself in your presentation to the
fact that you have great expertise by CHUM, City, all the other specialty
channels you own, Access, CLT -- when we measure in a way of percentage
what your applications promise in terms of Canadian content and with the other
promises, they are not in the low range. But they are not the highest range
19540 So you are not going 75 per cent of Canadian content or 85 per cent of
Canadian content. You are meeting what we have put in the framework, which is 50
per cent. But some, as you well know, have promised more.
19541 Given your expertise, should we not have expected more? That is the
19542 Secondly, when we know that in the analog world an average budget for a
specialty channel -- I am saying an average one -- is let's say
$25 million, and that we are talking about significantly less budget for
the digital applications -- and there your projections are quite in the
range of all the other ones -- how will we be able to really deliver
19543 DR. KEAST: I wish our budget was $25 million -- CLT's, I
mean -- because isn't.
19544 What we tried to do is be as practical as we can. We will be delivering
a high percentage of Canadian content, as much as we think we can afford, and as
viable for the business in the short term.
19545 Also, I think what is important is the percentage that we are putting
into Canadian programming. That will make the difference.
19546 As I say, our budget -- and Peter Palframan can speak to this.
19547 Our projections were as realistic as we can make them, because we are
out there trying to get carriage and trying to sell advertising for CLT, and it
is a tough road when you are not into three or four million households.
19548 I guess the short answer to your question is that our budgets are
practical, and we think that the level of Canadian content is practical for the
kind of service it is going to be.
19549 Also, I think if you look at our repeat factors, you will find that
they are reasonably average -- that is, four to six repeats -- rather
than ten to twelve. What will happen is that Canadian programming will just get
19550 I think in many cases with these services they will not be a first
window service; they might be a second window service or so. You don't want the
same programs to be there all the time.
19551 So for all those reasons, for practicality, for a reasonably balanced
and attractive service without a gazillion repeats, I think those are the main
reasons why we did what we did.
19552 Moses, do you want to comment?
19553 MR. ZNAIMER: No, I think you have covered it.
19554 MR. FLEMINGTON: Madam Bertrand, could I speak to the question of the 50
per cent or whatever.
19555 I think we knew, when we were drawing up the application for DocsTV,
that you would conceivably respond favourably to higher numbers. So your
question comes as no surprise.
19556 Ron Keast has indicated that, in a sense, this is a numbers game. We
believe that our repeat factor is quite low. And we believe, as he says, that
what is important is the percentage commitment to the Canadian sector.
19557 If we promise more Canadian, perhaps our repeat factor could have
19558 I think, also, I should point out that our vision for the channel
includes a strong international component. Canadians are, after all, players
internationally: our membership in the G8, presidency of the Security Council,
the Pearson legacy, and so on. We are an immigrant people. We are a
multicultural society. We feel that the foreign portion of our schedule will
comprise a significant part of the attractiveness of our schedule, which I think
is important to you and to the success of the digital roll-out.
19559 Also, I think the foreign content will account for much of the new
programming that we will bring to the system, significantly adding to the
diversity of the content available.
19560 Furthermore, it is our feeling that those seeking reality or factual
programming are almost, by definition, interested in the world.
19561 It is not that we don't have the desire or the passion to promote
Canadian programming. Obviously, we do. This is in our history. This is in our
genes. But there are reasons for specific channels having those different
levels, and I think it is important that we keep those in mind as we go on.
19562 CHAIRPERSON OF THE COMMISSION: I suppose when we go back project by
project we will be able to identify clearly what is the original programming,
and the one that is Canadian, and where it is produced; but also in the foreign
ones, which ones are U.S. and non-U.S., because it brings that element of
19563 Before I forget, my last question will be about the survey you ran. But
before that, I forgot something.
19564 You made a proposal about Category 1 should be excluding BDUs in terms
of licence granting.
19565 But some other applicants have said that in order to really bring
diversity -- whether we consider that it is the last chance or not, because
life is long and it is difficult to say that this is the last round of licences.
I came to the Commission in 1996 and when I announced -- I think it was 13
then, or 17 -- licences, it was supposed to be the last round. And
certainly, with the four weeks we embarked on last week, definitely, that was
not the last round. So who knows.
19566 But there is certainly a point of view and a valid opinion out there
that we will have to consider, like all the others, about the fact that it is
important to bring diversity through new players -- not new players
necessarily, because they have been there, like independent producers, but
programmers -- and that Category 1 should be capped, or décerné, or granted
to the new player as a programmer, as a broadcaster, and that Category 2 should
be the category where existing players that have already platforms and already
some negotiation power with the BDUs, and the BDUs themselves, could be in a
position, or a stronger position to establish themselves at the Category 2
19567 Would you have any comment about that?
19568 MR. ZNAIMER: I was smiling because the powers of existing content
providers in their negotiations with BDUs are, nonetheless, still very limited.
I mean, we have all of our deals in place. They are long-term. So our leverage
in Category 2 is not that strong.
19569 Not to belabour the point, we think Category 2 will take care of
itself. Any genre that is left over will be immediately provided by the people
who have that leverage in Category 2, which is why we focused our attention on 1
and think you should license lots.
19570 We are here, frankly, as everyone else is, to get as many of these
things launched as possible, and we think that the best way for us to get more
is for everybody to get more.
19571 CHAIRPERSON OF THE COMMISSION: The last question in the general arena
is on market research. In your survey you have excluded the Quebec market
because you are proposing anglophone markets. But when you talk about your
business plan and what you seek as penetration and the number of subscribers,
then we see coming some francophone subscribers. So I was wondering, what are
your assumptions, given that you cannot draw them from your survey, given that
you have excluded francophone --
19572 DR. KEAST: I will ask Peter Palframan to respond to that.
19573 MR. PALFRAMAN: Thanks, Ron.
19574 Madam Chairperson, you have obviously looked at the business plans. The
number of subscribers that we expect from the French market is very limited. The
reason we included them is because we believe that the kinds of services we are
offering will have some attraction to some operators in the Quebec market and
that will give them an opportunity to put them in a package.
19575 So we didn't want to exclude it, but obviously it is a very limited
opportunity and there is limited potential.
19576 In terms of the rates for those subscribers, the rate that we used is
essentially an average rate. We discounted it. We discounted what our package
price would be in the English markets. And then we also knew that there might be
some instances where it might be carried on an à la carte basis. But, in terms
of the rate, we have averaged the rate.
19577 But, as I say, it is very limited, and we didn't want to exclude it
completely because we want to have that opportunity to offer it to some of those
French market distributors.
19578 CHAIRPERSON OF THE COMMISSION: I see that you have still an expectation
of starting with a 5 per cent penetration in francophone, going as high as 12.5,
one might say, especially when we look at "Survivor" having reached only 3 per
cent of the francophone households. Maybe it is a blessing more than a curse,
but who knows. It is definitely one element that has not really --
19579 I can see your reasoning, yet there isn't a strong basis for that. Our
concern, when we talk about each application, is how solid your commitments are,
despite the fact that you would be able to reach that level of penetration. That
is really our concern here.
19580 MR. PALFRAMAN: Right, and certainly if we look at it
application-by-application I am sure we can look at how important it is.
19581 CHAIRPERSON OF THE COMMISSION: In your projections, in most of them,
you say "from MMDS and other distribution modes". What do you mean by
19582 MR. PALFRAMAN: The "other" would just be any other wireless.
Essentially it is MDS, but in the event that there are any other small wireless
distributors, that is just a net to capture those.
19583 CHAIRPERSON OF THE COMMISSION: Okay.
19584 In interactivity -- there again we will talk element-by-element,
but one concern -- it is not a concern, it is a question, in terms of the
learning process we are all going through -- is the understanding between
the costs, the ones that are really part of the creation of the content, which
are added costs, because it is interactive, and yet the relationship we can draw
to the revenues, and which ones should be part of the revenue calculation for
Canadian programming expenditures and which ones should be left out because they
don't belong to the broadcasting system.
19585 DR. KEAST: Yes. Peter Palframan will speak to this, but currently, for
example, within our career television, it is totally interactive --
Help!TV -- and that is built within the budgets of those programs.
19586 In certain of these applications, I think, Peter built in some
specifics, but in general they were captured within the budgets of the
19588 MR. PALFRAMAN: Yes, Madam Chairperson. Obviously we would look at it
application-by-application, but just as a general comment, when we were looking
at interactivity, what we built into each application were some basic costs for
Web and on-line development, and those are within our general and administrative
19589 So those costs are built in as a discrete expense. But for the most
part, we expect that the costs for interactivity will be captured within the
production budgets, whether they are done in-house or whether they are done
within the independent production community.
19590 So it will be an integral component of that.
19591 I guess the other general aspect is that we do have a fairly
significant capability in-house already. We have full-time staff that works on
our various interactive components, whether they are production related or
whether they are Web related. So we have that already in place. It is an engine,
if you like, that we can draw on, that will help to produce efficiencies for
those activities within each application.
19592 We also have access -- and we don't use it extensively because we
do operate independently, but we do also have access to the City interactive
group, which operates out of the CHUM-City building.
19593 Just in general comment, that would be, I guess, the approach we
19594 One other thing is that, obviously in terms of revenues, we think it is
premature to be looking too aggressively at revenues from on-line or interactive
activities or businesses. I think we certainly agree with the CCTA in that
19595 We looked at each of ours and tried to project which ones we might have
more on-line revenue from because of the nature of the service. So you will see
that reflected. There are different levels of revenues.
19596 But, again, they are realistic. I think for anybody to be projecting
really significant interactive revenues or business plans that are dependent on
interactive revenues is risky, given what we know today. I think it is going to
be a good business, but just with what we have seen, I guess, in the last year,
in terms of some of the .com companies that are now struggling and the lower
percentages of Canadians adopting e-commerce, that would concern me, if that was
a part of my business plan anyway.
19597 CHAIRPERSON OF THE COMMISSION: And you would know. You are the CFO
19598 MR. PALFRAMAN: Yes, that's right.
19599 CHAIRPERSON OF THE COMMISSION: You are the person the Chair will want
to talk with in terms of making sure that the commitment is really the one that
can be feasible.
19600 To understand better at the general level the percentage of cost, as
you see it, in terms of interactivity -- and I am not talking about,
necessarily -- well, yes, maybe --
19601 You say that one ingredient, or one element, is in the administration
cost and the other one is included in the program cost. If we were to do a
program that doesn't have that component, how less a budget would you need, or
how much profit would you have -- or a sooner profit would you have on your
19602 MR. PALFRAMAN: I think it's premature to even be able to project that,
at this stage, given what we know today. I guess in the programs, in the
productions, that we do, now, it's -- and Tasha might want to comment on
it; she works and lives with her budget every day -- but I would guess that
the interactive elements that are specific to the production today are probably
10 to 15 per cent. That would just be an off-the-top sense of working with the
19603 But I can see, in two or three years' time, as the technology advances,
I can see it being 50 per cent. And, in some cases -- and Steve Dotto
may want to speak to this -- it could be as much as 100 per cent, because
all of the people working on it will be a truly interactive production, so it
will be a fully-interactive production. But I think we are at least two years
19604 And, certainly, you have heard other more technical experts, in the
last week and a half. Certainly the people that work for us and monitor this and
work with this, on a regular basis, certainly have the same view, that what's
important is to use the technology we have today and maximize our use out of
that and be looking and working with industry groups that are developing the new
19605 I was at a StarChoice presentation, a couple of weeks ago, where
Liberate were there demonstrating their new Middleware software that will
be -- that the next generation of set-top boxes will use to promote
interactivity and better than we even get from Web TV today.
19606 I'm sorry. It's a long answer to your question, but I -- and it's
because we don't really know.
19607 What we do know, today, is that it can be 10 to 15 per cent of the
budget. I can see, in two or three years, or four years, it being 50 per
19608 MS LARSON: I would say about 20 per cent of the work that we do on the
production of Careers Help! and Help!TV goes to some form of
interactivity -- and I say at least 20 per cent -- but there's also a
layer of what is, essentially, volunteer help and partnerships that help with
our interactivity, and that's what we can do, today, given the budget that we
have. It doesn't mean that we are even going as far as we want, and I agree
that, ultimately, it will be 100 per cent. So, you know, it's something that
just becomes part of the way that you do a production.
19609 CHAIRPERSON OF THE COMMISSION: Thank you.
19610 That concludes my general questions, Madam Chair.
19611 THE CHAIRPERSON: Counsel...?
19612 MR. STEWART: Thank you, Madam Chair.
19613 I believe you gave a commitment that 50 per cent of the independent
production money would go to what could be defined as true arm's-length
19614 Can you confirm that commitment. And if so, can you confirm that you
would accept it as a COL. And also define what you would propose as a true
arm's-length independent producer.
19615 DR. KEAST: Yes. We said that, in all of the program proposals, other
than DocsTV, maximum 50 per cent in-house, 50 per cent to unaffiliated
independent producers, and we said, of that 50 per cent, we would agree that at
least half of that went to whatever of your definition is of "real
arm's-length". We have said it's 49 per cent, but if yours is nothing, we would
adhere to that, for half of that, yes.
19616 MR. STEWART: You would accept that as a COL?
19617 DR. KEAST: Yes.
19618 MR. STEWART: Thank you.
19619 You refer, in your oral remarks and in your applications, to
interstitials. But, with respect, for instance, to the Law & Order and
Computer Access nature of service definitions, you don't include the Category 12
19620 Can you explain?
19621 DR. KEAST: Yes, because we probably shouldn't have used that term. In
fact, everything that we do in the breaks we call "program flow" -- it's
content-specific -- relates directly to the objectives. It's programming.
It's brief programs. We do this, now, all the time, with our Careers. With
Learning and Jobs News, we have L&J flow throughout our program schedule. So
it's not interstitial material, in the classic sense; it's actual program
19622 MR. STEWART: Thank you.
19623 And I believe that with respect to Book Television, Law & Order and
DocsTV, you didn't include, in your nature of service definition, infomercials,
the Category 14, although you do refer to it in your revenue projections.
19624 Can you explain that?
19625 DR. KEAST: I believe that's an oversight.
19626 Would you like to speak to that, Peter?
19627 MR. PALFRAMAN: Yes. Counsel, that's simply an oversight and, given that
you have raised the question, it's something that we should include, and that
category should be included as part of the definition of service.
19628 MR. STEWART: Thank you.
19629 This question has been put --
19630 THE CHAIRPERSON: Counsel, we are now looking at the general questions,
not individual -- each individual application.
19631 MR. STEWART: Thank you, Madam Chair.
19632 I just thought it might be appropriate just to clear up those
19633 My next questions will be very much general in their --
19634 THE CHAIRPERSON: Yes, because if they are not applicable to all the
applications, it may -- we may get confusing commitments made, not
necessarily applicable to all of them.
19636 MR. STEWART: Thank you, Madam Chair.
19637 My next questions will be very general, and they have been put to other
19638 Could you please confirm that you will be taking measures to conform to
the Personal Information Protection on Electronics Documents Act?
19639 DR. KEAST: Yes, we do.
19640 MR. STEWART: Thank you.
19641 And could you please confirm that your proposed services would be
technically equipped to permit descriptive video?
19642 DR. KEAST: Yes, they will.
19643 MR. STEWART: Thank you.
19644 Thank you, Madam Chair. Those are all my questions.
19645 THE CHAIRPERSON: You recognize that the "Green Giant" is applicable to
all your applications.
19646 What is your investment in the Sleeping Giant?
19647 MR. ZNAIMER: Forty per cent. And that investment was only made in the
19648 THE CHAIRPERSON: That's all equity, not just voting interest?
19649 MR. PALFRAMAN: And that's a CHUM Limited investment, Madam Chair.
19650 THE CHAIRPERSON: And 40 per cent is of the entire equity?
19651 MR. ZNAIMER: Yes.
19652 MR. PALFRAMAN: Yes.
19653 THE CHAIRPERSON: Thank you.
19654 Thanks, Counsel.
19655 We will now give you a break, for 15 minutes, and we will be back,
then, with the individual applications.
19656 Thank you.
--- Recess at 1025 / Suspension à 1025
--- Upon resuming at 1045 / Reprise à 1045
19657 THE CHAIRPERSON: Welcome back.
19658 Commissioner -- no. Madame Bertrand, s'il vous plaît.
19659 CHAIRPERSON OF THE COMMISSION: I get to vote, too.
19660 DR. KEAST: Madam Chairperson, I wonder if, before we begin this
section, can we just clarify a point that was raised in the first part before
the break. Could we do that?
19661 CHAIRPERSON OF THE COMMISSION: Absolument.
19662 MR. ZNAIMER: Yes, Madame Bertrand, colleagues pointed out that, in your
second-to-last question, there were two parts to it. I answered the second part
but forget to get back to the first part. And if I understood it correctly, you
said, why wouldn't the Commission use the opportunity of Category 1s to license
a whole bunch of new players --
19663 CHAIRPERSON OF THE COMMISSION: Yes.
19664 MR. ZNAIMER: -- and that the established companies could take
care of themselves in Category 2. And I answered that our powers in Category 2
were not so strong but I forgot to address the first part of your question. And
the answer why not just the small players, what's the advantage, in this digital
life, of going with people like us, not too big but not too small, is, first,
precisely that these are not $20-million businesses. They are not even
$10-million businesses. Ron made the point they are $5- and $6-million
businesses and they need every bit of leverage they can get if there's a
corporate operation that's got a great interactive division going, that's less
cost and no big start-up burden on the individual programs. Promotion, sales
experience, every one of these nuances, are vitally important, and a new player
simply does not dispose of these things.
19665 And, also, getting back to your point about why not just operate in
Category 2 and what to do about operators who don't bring forth services, the
thing about Category 2s that I forgot, obviously, is that genres are not
protected, in that class; so if we, notionally, are sitting on a licence and we
don't bring it forth, somebody else will. So there is a form of self-regulation
19666 And I hope that, with this answer, we have put our answer to the first
part of your question clearly on the record.
19667 DR. KEAST: Just one further point.
19668 I think I can't see how it would have been possible for us to launch
CLT if we hadn't been operating Access.
19669 The facilities, the talent, the people, the experience, as well, of
course, as CHUM's support, but with Access, we were able to bring CLT in and
launch it into a very difficult environment, and it will be fine, thank you very
much. And that's the kind of facility and potential that we have for these new
19670 MR. PALFRAMAN: Madam Chairperson, I think that it's important to
appreciate -- just to follow on Ron's point -- that Canadian Learning
Television is, today, a $6- or $7-million business, and that's what these
digital applications are affecting, those same kinds of revenues. That flows
through to everything, in terms of Canadian independent producers. We know how
to work with them, with those kinds of budgets. So we live this world every day,
19671 CHAIRPERSON OF THE COMMISSION: How much of overlapping programming is
there, as we speak, between Access and CLT?
19672 DR. KEAST: I think -- we didn't do a calculation of that --
it's probably in the neighbourhood of 20 per cent, perhaps.
19673 CHAIRPERSON OF THE COMMISSION: Twenty?
19674 DR. KEAST: About 20 to 25 per cent. Something like that. I think it's
about 20-25 per cent.
19675 But what's important is that, in these new services coming out of the
nesting in CLT, there will be no more than 15 per cent.
19676 So, in other words, Book Television, Books programming on CLT, would
never be more than 15 per cent of the CLT program schedule.
19677 Computers, which is a block on CLT, would never be more. It's about 10
per cent now I think, would never be more than 15. So that's another important
element I think.
19678 CHAIRPERSON OF THE COMMISSION: And that's a general rule you apply to
all your applications?
19679 DR. KEAST: That's right, except for documentaries. Documentaries are a
little exception because they pop up all over the place.
19680 CHAIRPERSON OF THE COMMISSION: All right. So we will talk about it. But
the general rule for all the other five is no more than 15?
19681 DR. KEAST: No more than 15 per cent would it ever be on CLT.
19682 CHAIRPERSON OF THE COMMISSION: All right. What about Access?
19683 DR. KEAST: Actually, very little of this is on Access at all. We don't
have books on Access. I am not even sure we have any computers on Access. Jill,
do we? No, we don't.
19684 CHAIRPERSON OF THE COMMISSION: But you might. Wouldn't you develop?
19685 DR. KEAST: It could be. Yes, it could be.
19686 CHAIRPERSON OF THE COMMISSION: Wouldn't that be helpful to us to know,
the same way, you see, and it's true that Access is not a national broadcasting
undertaking yet. Life is long and who knows, so that it be important at least
for the viewers who have presently access to Access and CLT and eventually to
other applications of yours how much will be --
19687 DR. KEAST: Yes, it's a very good point and I think that if something
were to be developed and nested on Access it would be the same per cent. It
would be no more 15 per cent on Access, whatever the subject matter, it wouldn't
take up any more than 15 per cent of the space on Access if it were on a
19688 CHAIRPERSON OF THE COMMISSION: All right. So between Access and CLT you
keep the 25 per cent, no more than 25 per cent?
19689 DR. KEAST: I can't remember exactly what that is, but I think it's in
that neighbourhood somewhere. But it's really between -- CLT is the nesting
for these services, not Access.
19690 CHAIRPERSON OF THE COMMISSION: All right.
19691 DR. KEAST: It could be at some point that we might play something on
Access, but it's really CLT that's nesting these services.
19692 CHAIRPERSON OF THE COMMISSION: All right. So for CLT and those
applications there wouldn't be more than 15 per cent, except for the documentary
19693 DR. KEAST: That's right.
19694 CHAIRPERSON OF THE COMMISSION: And that would prevail for Access,
whatever kind of projects you might develop.
19695 DR. KEAST: Yes, whatever is nested on Access, sure.
19696 CHAIRPERSON OF THE COMMISSION: Thank you.
19697 THE CHAIRPERSON: On this subject do you see a relationship between how
limiting or restrictive our definition of independent producer should be and the
advantages to be taken from nesting; in the sense that if one company nests and
then expands into services, different genres, but it's still the same company,
and also does most of the programming in-house or with perhaps only one producer
to whom it is affiliated, then you may get much of the same thing or the same
approach. It has a dampening effect on diversity, doesn't it?
19698 In other words, is there a relationship between taking advantage of
synergies and of the cost effectiveness of doing things by nesting and by having
a number of licences and also not giving too many diverse producers the
opportunity to add programming?
19699 DR. KEAST: I think that's possible, but it is certainly not in any of
our plans. As a matter of fact, I think the nesting helped --
19700 THE CHAIRPERSON: But sometimes people don't plan things, but the way
they make their plans affect their planning.
19701 DR. KEAST: I would say that in fact the nesting encourages independent
producers because in most of these case the digital channels are not going to be
first window channels for these. So we are all going to have to co-operate as
best we can to provide -- which we do now, to provide various windows for
independent producers, so they can collect dollars from a variety of
19702 I would make the case very strongly that the nesting potential because
nesting, by the way, keep in mind is only 15 per cent. It's not a large part of
the schedule. It just starts, it really just proves it's a pilot, basically, for
the new service.
19703 So the variety of programming that would be in the new service would
swamp the small focus that we would have on the nest on CLT. But I think it is a
promoter of independent production, rather than the opposite.
19704 MR. PALFRAMAN: Madam Chair, I think the point has been made earlier
also that when you move the programming to a dedicated channel it also makes it
the place that people can go to get all of the programming of their particular
type, as opposed to having it all within the home channel.
19705 So we would just confirm that that certainly would be a good idea.
19706 THE CHAIRPERSON: I understand Destination TV is supposed to have
19707 I was more speaking to the potential sameness of approach if there
isn't a broader mix of producers brought into the picture when you start
fragmenting or splitting genres into more and more niche programming, but if the
same approach is applied there is eventually a danger of eroding diversity.
19708 You have heard us through the week, for example, look at various plans
of people who plan to brand their programming as a niche service, but when you
look at their actual plans it's not the same as what we are talking about now,
but it is another issue and diversity at peak hours you may end up having the
same type of programming on every screen.
19709 DR. KEAST: We agree that that would be a danger. It's not something
that we would have in our proposals, but we agree it --
19710 THE CHAIRPERSON: Our hope, of course, is that commercial imperatives
will keep the fire of diversity burning.
19711 DR. KEAST: Yes.
19712 THE CHAIRPERSON: Madame Bertrand, thank you.
19713 CHAIRPERSON OF THE COMMISSION: Merci. Alors, we will start with the
books. Tout Seigneur, Tout Honneur! Alors, since Gutenberg is the father of all
media we will start there.
19714 It is first questions concerning the nature of service and that nature
is kind of further defined by the categories you have chosen. You have included
Category 7 and, if I am not mistaken, except for comedy you have all Category
19715 DR. KEAST: Yes. We have (a), (c), (d), (e) and (g).
19716 CHAIRPERSON OF THE COMMISSION: You are talking about 14 hours a week,
but what would be really the weekly number of hours you propose to allocate
towards drama programs per se?
19717 DR. KEAST: I will ask Jill Bonenfant to answer that.
19718 MS BONENFANT: That would be 35 per cent of the schedule.
19719 CHAIRPERSON OF THE COMMISSION: Thirty-five per cent of the
19720 MS BONENFANT: Yes.
19721 CHAIRPERSON OF THE COMMISSION: How much would it be in prime time, the
TV policy as defined.
19722 MS BONENFANT: I'm sorry, I didn't calculate that. Can I get back to you
in just one second?
19723 CHAIRPERSON OF THE COMMISSION: Okay. Sure.
19724 And the question, of course, because Madame Chair has alluded to that
just now and we had a discussion on the use of drama at prime time hours doesn't
really, even if it is really related to the "propos" of you genre still. What is
transparent to the viewer is drama and it's not as much diversity as we could
19725 DR. KEAST: Yes.
19726 CHAIRPERSON OF THE COMMISSION: So the question is around there. Maybe
it's absolutely crucial, but we are kind of investigating if there wouldn't be a
possibility to make sure that the average viewer will still be watching
television or interacting with television at prime-time hours will have really a
diversity offered to him or her, rather than only during the daytime where he
might be caught in the hearing or watching CPAC and not necessarily have a
possibility of interacting on the questions asked.
19727 DR. KEAST: Certainly, Madame Chairperson, the drama is important to us
because it's literature-based drama always, but we have no means a
preponderance -- Jill, do you have those --
19728 MS BONENFANT: Yes. It's 30 per cent in prime time.
19729 CHAIRPERSON OF THE COMMISSION: Thirty per cent in prime time. That's
quite high in a sense. I see that it's mainly from seven to nine o'clock.
19730 DR. KEAST: That's Mountain Time.
19731 CHAIRPERSON OF THE COMMISSION: Yes.
19732 Would you be prepared to accept a condition of licence on that
19733 DR. KEAST: Absolutely.
19734 CHAIRPERSON OF THE COMMISSION: Because that is really where we define
it seems because we can use lots of words, but at the end of the day it's what
the viewer will be able to access.
19735 DR. KEAST: Yes, quite.
19736 CHAIRPERSON OF THE COMMISSION: And so it has to be -- what about
family, youth, kids and animation programming? What are the number of hours you
are planning there?
19737 DR. KEAST: Jill.
19738 MS BONENFANT: Basically, under preschool it's 13 per cent.
19739 CHAIRPERSON OF THE COMMISSION: Preschool?
19740 MS BONENFANT: Yes.
19741 CHAIRPERSON OF THE COMMISSION: Yes. But that is the problem, you see,
preschool is not really something we have as a category yet. We might evolve,
but in the present terms of what we define as categories --
19742 MS BONENFANT: Right.
19743 CHAIRPERSON OF THE COMMISSION: So if you would refer to the existing,
what would be animated television? Formal education and preschool would be how
19744 MS BONENFANT: Yes.
19745 CHAIRPERSON OF THE COMMISSION: So it would be 13 per cent of
19746 MS BONENFANT: Yes.
19747 CHAIRPERSON OF THE COMMISSION: What other percentage would be dedicated
to children and animation? You have 7(e).
19748 MS BONENFANT: 7(e), and that would be 5 per cent.
19749 CHAIRPERSON OF THE COMMISSION: That would be 5 per cent?
19750 MS BONENFANT: Yes.
19751 CHAIRPERSON OF THE COMMISSION: You would accept a condition of
19752 DR. KEAST: Yes.
19753 CHAIRPERSON OF THE COMMISSION: -- that would kind of reflect that
19754 DR. KEAST: Yes.
19755 CHAIRPERSON OF THE COMMISSION: In those categories it is to be
book-related do you say?
19756 DR. KEAST: Yes, absolutely.
19757 CHAIRPERSON OF THE COMMISSION: What does it mean?
19758 DR. KEAST: Well, for example, my favourite is Wishbone. It is a
wonderful animated program of -- well, it isn't animated actually, it's a
little dog and the dog gets caught up in classic stories. It is a wonderful
introducer to young people -- not preschoolers but young people -- to
read those stories.
19759 So this would be -- the basis of everything here is to encourage
reading, to encourage reading in families, to encourage reading by young
children. So all of these animated programs would be based on printed works.
19760 As I say, the major objective -- one of the major objectives of
this whole service is to promote reading and reading together.
19761 CHAIRPERSON OF THE COMMISSION: When I look at titles you have, you
know, you have Harlequin Romance. You know, you seem to have like themes per
night, in a sense, and that means that it would be always driven by the book
19762 DR. KEAST: All of the --
19763 CHAIRPERSON OF THE COMMISSION: First the story in a book and then
eventually a series or a film?
19764 DR. KEAST: All would be based on books. All the drama, all the kids
programming for the various levels are all based on printed, published
19765 CHAIRPERSON OF THE COMMISSION: How will we identify as viewers --
what would be the difference of seeing, for example, Harlequin Romance on Book
Channel than watching it on City? What would be for the viewer --
19766 DR. KEAST: I think maybe I will ask Daniel speak a bit to this.
19767 MR. RICHLER: It has a great deal to do with context. We intend to wrap
around whenever possible, not to mention use our Internet capabilities to
provide background and conversation.
19768 I think particularly with kids we shouldn't ever, I think, look down on
animation or comic books as being less than literature. They are the training
potty of reading in some regards. You cannot have a lengthy sit-down discussion
about Babar with four year olds watching, but you can certainly do your best to
drive them places.
19769 I have been discussing this kind of thing with nickeleye.com, which is
a Toronto-based children's Web site of some considerable imagination and energy.
They were very interested in working with us to produce short-form videos that
might be streamed on their site but which would give us a very strong link to
people who understand how to discuss the context with young people of
young -- what you might call literature or pre-literature. But I think the
context and conversation is everything.
19770 We were also discussing recently with Raincoast Books in Vancouver the
possibility of some Harry Potter readathons. Now, as we know, this has exploded,
it was mentioned the other day, the Sky Dome, 60,000 people are anticipated to
19771 But I am much more interested in a kind of a kid's play-by-play. We
would love to see, whether it's that book or another, a series of readings with
a kid's commentary as we go so that it becomes an interactive and a live
19772 We are very good a live programming. We have the facilities to do it
and a great deal of experience and I think that it is delicious to see kids
actually doing the reading, not to have a formal and somewhat paternalistic
format where adults are always reading to passive children. So that our attitude
is one of dynamism and context.
19773 CHAIRPERSON OF THE COMMISSION: I understand what you are saying and it
refers to the kind of concerns we have raised over the days, which is how do we
assure that? Because the intent might be that, but if we issue a licence and it
is feature film book-related, then it is pretty vague.
19774 What you are giving as an explanation now pushes it a bit further, but
you have started when you have said -- what were the words? I would need
the transcript. I think you say when appropriate or when we can, whenever we
19775 Well, the context is certainly added value, which would make you
different than the City showing or viewing experience, yet there is nowhere here
where we kind of specify that that would allow a real commitment to that
19776 DR. KEAST: Madam Bertrand, if I could just add something here. The
context is everything as to an educational broadcaster, as you know. We build
context that leads all the way to formal courses of study, in not everything we
do but in as much as we can possible do. We are pushing that envelope all the
time. This comes out of this educational experience.
19777 So the context to us is vitally important. As Daniel said, there
is -- sometimes you just don't have the facilities to build complicated
context, but there always should be somewhere to go for further learning, and
that is the principle underlying this book application.
19778 CHAIRPERSON OF THE COMMISSION: But that will not always be available on
television. It will be first on the Web site --
19779 DR. KEAST: It will be on the Web.
19780 CHAIRPERSON OF THE COMMISSION: -- or reference there.
19781 Would there be the possibility of pushing your definition of nature of
service and saying "We will be identifiably book-related and always
19782 DR. KEAST: Absolutely.
19783 CHAIRPERSON OF THE COMMISSION: -- so that it gives --
otherwise, what is the difference between a Harlequin movie on Book Television
and a Harlequin movie on any other --
19784 DR. KEAST: Quite. Absolutely. Yes.
19785 CHAIRPERSON OF THE COMMISSION: It goes for the family and youth and
kids and animation, and at the end of the day you are really kind of making a
case for the importance of diversity.
19786 So it is very important that we get that notion of what is the
contribution you really make to that diversity by the offering you have here.
The intent is very good, it starts there, but it has to be illustrated by some
action I suppose.
19787 MR. ZNAIMER: We would happily accept that precision of language.
19788 CHAIRPERSON OF THE COMMISSION: You meant to add something,
19789 DR. KEAST: Only that I hope we can get Daniel to go into some of the
programs that would show up here that would be specific to this channel as well,
why -- how this channel allows us to deal with the various book audiences,
if you will, in a way that they are not being dealt with now.
19790 But that may be a subsequent question.
19791 CHAIRPERSON OF THE COMMISSION: Well, that will be -- I have about
three general questions about the book channel. As you certainly have learned
through the process up to now, we don't go through the whole presentation of
each channel. We go for clarity questions --
19792 DR. KEAST: Yes.
19793 CHAIRPERSON OF THE COMMISSION: -- otherwise we would be here four
months rather than four weeks and instead of being the 1st of September, 2001 it
might be 2002. So we are trying very hard to meet what seems to be a target that
everybody has kind of agreed upon.
19794 So if you have to add something on the precision on the nature of
service, it would be a good time to do it, because I am not coming back to
19795 I will be then talking about original program, the percentages and what
goes to independent producers and what has been the Green to the Sleeping Giant,
and maybe will become a Friendly Giant, who knows.
19796 DR. KEAST: I think your reference to book context is absolutely
19797 CHAIRPERSON OF THE COMMISSION: Okay.
19798 DR. KEAST: That would be key to this proposed service and that would be
basic to everything we do.
19799 CHAIRPERSON OF THE COMMISSION: Well, it is your own proposal because I
picked it up on the explanation you gave in terms of explaining what you meant
19800 DR. KEAST: Yes. Right.
19801 MR. RICHLER: Well, my feeling is that if we air a series based on the
Narnia Chronicles -- that particular example is cited in our
application -- it wouldn't necessarily follow that there should be some
19802 I think children who are old enough to read that series are old enough
to participate in a discussion about C.S. Lewis and what he meant to say, what
kind of metaphors were at work.
19803 Perhaps we wouldn't use the word "metaphors", perhaps we would. I don't
think that we take a particularly condescending approach to children.
19804 Our experience -- well, CHUM's experience with MuchMusic has shown
that a great many young people are drawn to the electricity of rock videos and
from the earliest days when I was first involved with that organization in the
1980s I wanted to find what educational opportunities might be found.
19805 At that time we connected with Frontier College which, as you know, is
committed to teaching people to read. We found that rock and roll, which is
ordinarily thought of as the grease pan of culture, was actually a fantastic
spark plug for kids of all ages to take an interest in politics, in literature,
19806 Chuck D of Public Enemy, the rap group in America, has referred to hip
hop as the CNN of black America. Everybody knows that this is an educational
tool. It is an unorthodox one. But in my experience in speaking to teachers'
conferences over the years, I have found that they are increasingly concerned
about how such connections, informed connections, might be made.
19807 Many teachers in the classroom are quite clueless about who is in the
Top Ten these days. Fortunately, I still take an interest in it. I am certainly
very interested in making imaginative connections between the kind of unruly
entertainment that children enjoy and the information that lies behind it.
19808 CHAIRPERSON OF THE COMMISSION: How much of that connection will be on
19809 If I look at your schedule, would WordFACT or Writer's Profile, for
example, that comes right after your drama block, be about drama that will be
viewed earlier on? Is there a link that will be made there?
19810 How will it work? Will it work only if I go on the Web site, or will it
be referred to in programs you have scheduled here?
19811 MR. RICHLER: Sorry, could you possibly ask the question again.
19812 CHAIRPERSON OF THE COMMISSION: We are talking about the book related
19813 MR. RICHLER: Yes.
19814 CHAIRPERSON OF THE COMMISSION: And my question is --
19815 MR. RICHLER: Are we speaking still about children? I am sorry.
19816 CHAIRPERSON OF THE COMMISSION: Whether children or drama.
19817 My question is: Will it be available in that context strictly if I am
going on the Web site, or will it be included in programs that you have already
blocked in your schedule?
19818 MR. RICHLER: Yes.
19819 CHAIRPERSON OF THE COMMISSION: Will it be on screen?
19820 MR. ZNAIMER: In a word, yes.
19821 MR. RICHLER: Yes; in a word, yes.
19822 It is so evident. A feedback loop is quickly established. Any program
of ours that you see already refers to the e-mail and to the interaction. Not
every program, of course, is aired live; live to tape, perhaps. But it is
important, then, to use e-mail as a tool.
19823 We recently conducted an interview with the editor of Tribe magazine,
which is devoted to the rave culture -- I am interested in how young people
read magazines -- and this editor explained to me that the bulk of their
editorial material comes from e-mails.
19824 It is a chance for children -- unfortunately, yes, there are
children at all-night raves these days. But it is a chance for them to feel
empowered, and that kind of feedback loop is essential to the programs.
19825 MR. LEWIS: If I could clarify: 7.1(c) in our application has a
definition of service. Perhaps by moving a word or two forward, that may be
19826 The definition says:
"Book Television will be a national English language specialty television
programming service that will feature English language programs, magazine talk
shows, dramas, documentaries." (As read)
19827 And I was going to add the words: "that are exclusively based upon
printed and published works".
19828 That may be the clearer definition and then continue on with the rest
of the definition.
19829 MR. ZNAIMER: I was going to offer this added thought that yes, we would
make as much use of co-ordinated additional programs, follow-on programs, and so
19830 One of the things we favoured over the years is added text on screen.
It is now known as pop-up video, but we have called it dense television for 20
years. We are great believers in it.
19831 As the program is running, subject to getting agreement on whoever owns
that property, we would also pop up information that contextualizes the material
to the identity of the channel all through the piece.
19832 CHAIRPERSON OF THE COMMISSION: Thank you. That helps in our
understanding of what you mean by Book Channel.
19833 Contribution to independent producers: I believe counsel has a couple
on that in follow-up to my own questioning. So unless you have something to add
to what was said, unless there was something different about The Book Channel, I
will not take time to go over that again.
19834 In Other Revenue, in Section 8.1, you project almost a million dollars
in other revenues. What do you mean by other revenues?
19835 You are aware that the Commission will not be doing any donation to any
of the specialty channels. We thought that it had to be some business.
19836 Do you know what I am talking about?
19837 It starts with $52,000. It is in total. It goes from $52,000 and it
ramps up, and the last year, the seventh year, is $250,000.
19838 MR. PALFRAMAN: Yes, Madam Chair. There are two components to that. One
is merchandising revenue, which is a relatively small component; and the other
is online revenue, that we think we will get from online advertising on our Web
site and perhaps some transactional revenue.
19839 Particularly on The Book Channel it was one area where we did project
some transactional revenue, because we think this channel lends itself to online
19840 As I said in the general comments, it is a little hard to project today
what those revenues might be. But I think it is quite realistic. From the
perspective of the business plan, I was quite happy to project some
transactional revenues. There will obviously be book sales, CD sales.
19841 I think chapters.ca is probably one of the best e-commerce sites that
we have in Canada. That gives an indication. Obviously we have the amazon.com
example as well.
19842 So those are the two components that are shown in Other Revenue.
19843 I can give you the specific breakdown.
19844 CHAIRPERSON OF THE COMMISSION: Yes. If you could, please, that would
help in our learning process.
19845 MR. PALFRAMAN: Sure.
--- Pause / Pause
19846 MR. PALFRAMAN: I can give you those exact totals. By year?
19847 CHAIRPERSON OF THE COMMISSION: Well, general. It is a ramping-up?
19848 Well, by year if you have it. That would be even better.
19849 MR. PALFRAMAN: Sure. For example, the product or retail sales would go
from $2,000 in the first year, and that runs at $2,000 all the way through to
19850 The online transactions is a net figure. So in the first year it is
$4,900, growing to $48,500 in the seventh year.
19851 I can give you the full detail.
19852 But that is a net amount. So the gross amount reflects gross sales, and
then we take off the cost of sales because it is primarily books and CDs, and
that sort of thing.
19853 So that would be a net amount of $4,900 growing to $48,500 in Year
19854 CHAIRPERSON OF THE COMMISSION: In total, your net net.
19855 MR. PALFRAMAN: Net. So the total for Other Revenue for Year 7 should be
19856 CHAIRPERSON OF THE COMMISSION: Okay, I understand.
19857 MR. PALFRAMAN: And the $48,500 from online, and $2,000 from
merchandising and retail sales.
19858 CHAIRPERSON OF THE COMMISSION: Okay. I was going from the
19859 I understand that once you get the revenues and the -- okay.
19860 Of course, it is part of the uncertainty, and you hope for better
19861 MR. PALFRAMAN: Well, we do. Like I say, I think to be looking for
significantly more revenues does not make sense.
19862 Certainly our experience to date -- and we have been in this
business certainly at Access and CLT for over a year and within City Interactive
probably for two or three years.
19863 Our experience is that it is very tough to get the revenues from online
and interactive. It is reasonable to expect that there will be some, but to
project anything aggressive I think would be risky in terms of these business
19864 CHAIRPERSON OF THE COMMISSION: When you do your calculation for
Canadian expenditures, do you take into account those other revenues?
19865 MR. PALFRAMAN: No. We exclude them. At this point we take the
view -- and I think it is consistent with the Commission's policy --
that those are unregulated revenues. So we exclude those from our
19866 CHAIRPERSON OF THE COMMISSION: Certainly the expert here at the table
is our Chair. But I will try.
19867 In terms of the percentage you have committed to Canadian expenditures,
you have committed 40 per cent.
19868 MR. PALFRAMAN: That is correct.
19869 CHAIRPERSON OF THE COMMISSION: The calculation, based on the average of
the seven years, is 38.
19870 Would you prefer 38 or 40? And would you accept a condition of licence
that would bind you to the expenditure?
19871 DR. KEAST: We would certainly accept a condition of licence. And I
think it was 40 that we had in the --
19872 MR. PALFRAMAN: Yes, starting in the second year.
19873 DR. KEAST: Starting in the second year.
19874 CHAIRPERSON OF THE COMMISSION: Okay. So you would accept the 40 per
19875 DR. KEAST: Yes.
19876 CHAIRPERSON OF THE COMMISSION: Thank you. Oh, yes, the original content
on Book Television. Can you make the different proportions of what is original
content, what is Canadian, what is foreign? And in the foreign, what is U.S. and
19877 DR. KEAST: In the program schedule, of course, it is 40 per cent
Canadian content that we are promising in this at launch.
19878 CHAIRPERSON OF THE COMMISSION: Yes, but there is the repeat factor.
19879 DR. KEAST: Yes, it is 40 per cent at launch.
19880 I think I will ask Jill to speak to this, but I believe that in this
channel our repeat factor is between 4 and 6, consistent with most of the
19881 Jill, is that --
19882 MS BONENFANT: Yes, that's correct.
19883 CHAIRPERSON OF THE COMMISSION: Okay. And the 60 per cent, that would be
19884 DR. KEAST: That would be foreign?
19885 CHAIRPERSON OF THE COMMISSION: The 60 per cent, that would
19886 You have 40 per cent Canadian content.
19887 DR. KEAST: Yes.
19888 CHAIRPERSON OF THE COMMISSION: That doesn't mean original.
19889 DR. KEAST: No.
19890 CHAIRPERSON OF THE COMMISSION: Okay. I am talking original here. In the
40 per cent Canadian content --
19891 DR. KEAST: Yes.
19892 CHAIRPERSON OF THE COMMISSION: -- how much is original?
19893 DR. KEAST: We are looking at, for that first year -- and we just
really have it here for the first year. We have Book News. We have our WordFACT,
which is really part of the "flow" material on the service, and our Reader's
Corner, which is kind of like Speaker's Corner. The WordFACT won't be shot
in-house, but Book News is something we would likely do in-house, as the
Reader's Corner, of course, we would do ourselves as well. And there are a
couple of others.
19894 That comes to something -- it depends on how much WordFACT we get.
That is a little uncertain at the moment. But it could be in the neighbourhood
of -- oh, probably 145 hours there, and then another 35 to 40 hours of
19895 So that would be the original programming in that first year.
19896 CHAIRPERSON OF THE COMMISSION: We will be asking all of the applicants
to clarify their facts about original Canadian programming, so maybe that will
give you more time to kind of prepare that and it will be less --
fastidieux for now, but also for people who might be watching or listening. So
maybe we can kind of throw out the question and say that it is important that we
get that information. But I will leave it, because --
19897 THE CHAIRPERSON: Yes. The question was asked and will be put on the Web
site, if it hasn't already been, which is to provide the number of hours of
original, first window, Canadian programs, excluding repeats, each of your
services would provide each year, and indicate where in your application your
response is substantiated.
19898 CHAIRPERSON OF THE COMMISSION: And I add to that question the foreign
original programming, because you referred to it earlier on, explaining the
necessity to give an international flavour, and that is a way of meeting
diversity needs. In the foreign content, what would be the percentage between
U.S. and non-U.S.?
19899 DR. KEAST: Yes, we can provide that.
19900 Jill, would you look at that, please?
19901 MS BONENFANT: Thirty per cent non-U.S. and 30 per cent U.S.
19902 CHAIRPERSON OF THE COMMISSION: Okay, and 40 per cent Canadian
19903 MS BONENFANT: Right.
19904 CHAIRPERSON OF THE COMMISSION: Thank you. That takes care of the
questions I had on the book channel. I can pursue on every project and then turn
the attention to you, and to you, counsel.
19905 MR. PALFRAMAN: Madam Chairperson, just before you go to the next one, I
just wanted to clarify, because I think I did a terrific job of answering your
question on merchandising and transaction revenue and completely ignored other
revenue, which was really your question.
19906 CHAIRPERSON OF THE COMMISSION: Yes.
19907 MR. PALFRAMAN: The other revenue, which starts at $52,000 in year 1,
going to $249,600 in year 7, is revenue related to sponsored programming. It is
an area that we have --
--- Fire alarm / Alerte d'incendie
19908 CHAIRPERSON OF THE COMMISSION: I hope we are not burning!
19909 The books!
--- Laughter / Rires
19910 MR. PALFRAMAN: Actually, maybe it would be a good idea if we did.
19911 CHAIRPERSON OF THE COMMISSION: We would need that famous door of the
19912 MR. PALFRAMAN: That revenue is for sponsored programming, and we may
explore it a little later. Given the nature of the CLT service and the Access
service, there are commercial interests or institutions that will find this kind
of programming, particularly because of the contextualization -- that it is
appropriate to be involved with the program, rather than just buying 30-second
19913 So that is something that we have put in as a separate item and
specifically identified as sponsored programming. I just wanted to come back to
that to make sure I had answered that question.
19914 CHAIRPERSON OF THE COMMISSION: Thank you. I thought that what you were
saying was that it was other revenue and that, eventually, with the costs you
had, the profit was really small. But I see that we were not on the same
19915 MR. PALFRAMAN: Right.
19916 CHAIRPERSON OF THE COMMISSION: Or on the same page.
19917 MR. PALFRAMAN: Yes, that's right. I just wanted to clarify that.
19918 CHAIRPERSON OF THE COMMISSION: Okay. Je comprends, merci.
19919 But that would be counted in your program expenditures.
19920 MR. PALFRAMAN: Yes, it would. Absolutely.
19921 CHAIRPERSON OF THE COMMISSION: Okay. Some do fall, then, in the
advertising revenues, but you have separated it. Okay, thank you.
19922 That takes care of the book channel for my line of questioning. We will
move now to travel. That is really moving.
19923 There was, in the reading of your proposal, the need to define better
what it means and what really you are seeking, especially when we think about
comparing demands and what you see as being possibly your service, and
eventually it could become competitive. You talk about travel, but you talk
about in one package providing all of the elements of geography, history,
science, travel and adventure.
19924 What is the nature? Will it be travel, the pretext, and eventually a
history class, a geography class, a science class?
19925 It is difficult to know exactly what the composition for the viewer
will be. Can you help us?
19926 DR. KEAST: There are two elements. One, again to reflect our objective
as educational broadcasters, we are focusing this particular application on
learning travel, informal and formal. That is, as we understand it, a very fast
growing part of the travel business. People are electing -- as my wife and
I did this past spring when we spent a week in Florence, informally lining up
what we wanted to see -- museums, art galleries, et cetera, in
Florence -- rather than electing to go to the south of France and veg out
for five days.
19927 I mean, either one is just great. I am not suggesting one over the
other at all. But the approach for this particular application was on those
elements -- those learning travel elements. And they can be, as I said,
quite informal. If you are going to vacation in X place, in that area there are
Y and Z and other places that you might want to take advantage of.
19928 To point those things out to travellers, to provide information about
what is available in certain areas -- and also, what more structured travel
opportunities there are. So you can have a good vacation, enjoy yourself, and in
fact learn something at the same time. That was the major element, I think, of
19929 MR. ZNAIMER: I want to echo that and harken back to another age when
someone could not be considered educated unless they went on the grand tour. We
are approaching this channel from the point of view of education -- sorry,
travel is broadening. That is the core concept.
19930 CHAIRPERSON OF THE COMMISSION: If you were granted the documentary
channel, in your mind, how much overlap would there be between the documentary
channel and the travel channel?
19931 DR. KEAST: I would think, just off the top of my head, very little. I
can't recall that there were very many travel-type documentaries in our
documentary application. But there would be documentary-type travel programs on
the travel channel.
19932 But I don't think, from a subject standpoint, there would be very much
overlap at all.
19933 CHAIRPERSON OF THE COMMISSION: So, you see that as -- I am asking
the question as a means to understanding even further your previous response, in
terms of getting a feel or a flavour for it. That means that the angle is very
19934 DR. KEAST: It is, indeed. That's what we are doing here.
19935 Most of the things -- certainly the things that we will be doing
in-house, in this particular channel, are live, interactive programs, to give
people travel information. So it's a help -- it's a travel help for
example, travel facts, short, specific flow material that would go through the
schedule that would relate to helpful facts for business travellers, for safety
issues, but it's a factual-based kind of thing.
19936 So, the acquired programs, the co-productions that we would do with
independent producers, such as our colleagues that are at the table here, would
be the kinds of educationally-oriented travel that they are known for.
19937 So, that's the general thrust.
19938 And, also, the other part of our proposal is to try to reflect the
opportunities in Canada, because there's an increasing interest in people to
travel across the country and see what's available in Canada, not just the
mountains -- which are great, too -- but what cultural opportunities
there are and historic sites and things of that nature, in the country.
19939 CHAIRPERSON OF THE COMMISSION: How much of what you are proposing here,
opening up to all those ancillary-type of questions that are related to travel,
will be accessible through the Net, in comparison to the TV set itself?
19940 DR. KEAST. Well, again --
19941 CHAIRPERSON OF THE COMMISSION: Through the set-top box, of course.
19942 DR. KEAST: Well, again, the context here is important because, if we
are visiting Florence, we will only be able to touch on the element that would
be available to see in a half-hour program, for example. But we should have the
Web site information about specific information of where to stay, what to see,
what the costs are, all that detail that would be available on the Web that you
couldn't possibly cover in a television program.
19943 What we might want to do, in some of them, is, in fact, put them on
screen information. So when we are, you know, travelling into the Ufizzi, in
Florence, some information about if you get there the day before, at four
o'clock, you can book a special tour, rather than standing in line for four
hours. That kind of thing. That could be on the screen -- and it probably
would be -- but it could be, but certainly would be available on the
accompanying supportive Web site.
19944 CHAIRPERSON OF THE COMMISSION: And when you talk about creating an
understanding of economics, is it the economics of the country or the region you
are visiting? Or is it the economics of travelling?
19945 DR. KEAST: Well, it could be both, actually, what the foreign exchange
rates might be, but it could certainly be more information about the particular
country. Any particular -- yes, I think --
19946 MS LARSON: Well, actually, Ron, if I can just jump in --
19947 DR. KEAST: Yes.
19948 MS LARSON: -- because, as Help!TV, the strand that I produce, is
part of CLT, which is nesting all of this -- and we have done several live
shows on travel, in particular; people have been really interested in working
abroad -- but there is always much, much more information available than we
are able to get out.
19949 I would foresee, for example, on a travel help show, that the focus of
some of what we produce, in terms of tape, may be very well-directed towards
educational opportunities in an area. I mean that would just be what would turn
us on. If we were to choose a location and we went there, we would be looking at
it from an education -- which we think is an extremely interesting
area -- but also around that, around any tape inserts, is the whole live
show, the whole interactive element which would allow you to do things like, you
know, find out, "Well, gee, you know, if I want to go there, for my location,
how much is it going to cost me? Which airlines have the best deals?". They may
want to know, yes, exchange rates, best hotels.
19950 But we always find, too, what people are primarily interested
in -- and which Daniel has referred to before -- is an interactive
chat element. People always want to talk to someone who's been there. They want
to find out from personal first-hand experience and don't want to just be told
by their travel agent, "Oh, yes, that's a swell place to go".
19951 So there are all these interactive elements around it which can just
answer really simple travel questions. But I think what we would be driving
towards, in terms of which stories are worth telling on that show, I think we
would probably be more turned on by learning something from our destination.
19952 DR. KEAST: Madam Chairperson, could I ask our travel experts, Paul and
Sheryl, just to say a word on this?
19953 MS SHARD: Yes. Thanks.
19954 I just wanted to add something that -- with travel, half the fun
is getting there. People love to plan. Our special niche is sailing and water
sports and people who are enthusiastic in that are rabid; they want to know
everything about sailing or about a sailing destination or "What's it like? How
should I equip my boat? How can I charter a boat?" Hikers are the same. Whatever
type of travel you are interested in, people just seem to be very
19955 So we are quite excited about this channel because it would give those
special interests the information that they are seeking, plus the depth, through
the interactivity, through Web sites, being able to phone people, the possible
links that are available.
19956 We have a site for our, "Exploring Under Sail". People can track us on
our adventures. They can e-mail us on site. We have references to various
destinations and so on. And we see, in the future, with the development of
digital television, that, you know, there may be possibilities, while a program
is running, to push buttons on the screen to get information right away on those
particular types of questions and information that people just really hunger
for. So I think it will meet quite a need.
19957 CHAIRPERSON OF THE COMMISSION: Still, in order to go back to the
19958 I know you talk about service fully dedicated to travel and
travel-related programming. But given that you refer, immediately after, in your
definition, to elements of geography, history and science so that it would not
be a repeat of CLT or Access, could we say exclusively to travel --
19959 DR. KEAST: Absolutely.
19960 CHAIRPERSON OF THE COMMISSION: -- and that would --
19961 DR. KEAST: Yes.
19962 CHAIRPERSON OF THE COMMISSION: -- kind of, you know, be more
precise, in terms of what I hear you say is the concept that is --
19963 DR. KEAST: Yes.
19964 CHAIRPERSON OF THE COMMISSION: -- really always creating the
relationship? It's always related --
19965 DR. KEAST: Absolutely.
19966 CHAIRPERSON OF THE COMMISSION: -- it's never --
19967 DR. KEAST: Yes.
19968 CHAIRPERSON OF THE COMMISSION: Thank you.
19969 Canadian expenditures. We have the same -- we arrive at the same
percentage; which is 40 per cent.
19970 Would you accept a condition of licence?
19971 DR. KEAST: Yes.
19972 CHAIRPERSON OF THE COMMISSION: And you have talked about a total
expenditure in excess of 16 million on which you include 600,000 on script and
19973 Is that a particular commitment, you know, kind of specific commitment,
independent of the general commitment you have made on Canadian
19974 DR. KEAST: That's part of the 40 per cent.
19975 CHAIRPERSON OF THE COMMISSION: It is part of the 40 per cent?
19976 DR. KEAST: Yes.
19977 CHAIRPERSON OF THE COMMISSION: But it specific?
19978 DR. KEAST: Specific, yes.
19979 CHAIRPERSON OF THE COMMISSION: And that would be reserved to
19980 DR. KEAST: That's right.
19981 CHAIRPERSON OF THE COMMISSION: The affiliated or the
--- Laughter / Rires
19982 CHAIRPERSON OF THE COMMISSION: The "Friendly Giant" or --
--- Laughter / Rires
19983 DR. KEAST: Probably in terms of the percentage that -- I don't
think we sort of made that percentage because, when we did this, we weren't
thinking about affiliated or unaffiliated. But, basically, we would hope to be
able to put that in the development of material that would be -- that would
turn out to be excellent programs. But I would think most of it would go into
19984 CHAIRPERSON OF THE COMMISSION: And what do call "most"? What's a figure
to describe "most"?
19985 DR. KEAST: I would say all of it.
19986 CHAIRPERSON OF THE COMMISSION: Pardon me?
19987 DR. KEAST: I would say all of it would go into --
19988 CHAIRPERSON OF THE COMMISSION: Oh, that's most.
--- Laughter / Rires
19989 CHAIRPERSON OF THE COMMISSION: Easy to understand. Okay.
19990 That's all for me, on the travel channel.
19991 The Law & Order Channel. That was a bit more complicated.
--- Laughter / Rires
19992 CHAIRPERSON OF THE COMMISSION: Frankly, for a more general question
here, it wasn't clear -- and maybe it's meant to be the two -- whether
it would be more entertainment or more indicative -- educational. And I
know it can be both. I know entertainment exists. But, you know, exactly what
kind of proposition is it to the viewer? I wasn't very clear --
19993 DR. KEAST: Well, I think it's -- you know. As you know, we
believe, really passionately, and have proven, with CLT and Access, that you can
have a very entertaining commercially-viable television series that's
19994 We buy programs. We have to entertain people, otherwise we are talking
to ourselves. This particular channel has a whole range of popular entertaining
programming, but the context is -- and certain specific programs, the daily
program and "Law and Order Help!", the flow material, the individual
documentaries or magazine programs that we might do are there to help people
understand the truths, the reality of law and order in Canada versus other parts
of the world.
19995 What is it to be a Canadian? What does peace, order and good government
mean? Does it have a different meaning to different Canadians? What about the
new Canadians? Does it have a different meaning to them? This kind of
exploration we would be able to place in an entertaining context.
19996 I mean, that was basically a hundred years ago it seems when we first
introduce "Saturday Night at the Movies" at TVOntario. I remember it was
Bergman's films and the theme was a search for God.
19997 If we had just put a program up to search for God we would have had
nine people watching it, but with the film and the discussion we had a
significant number of people watching it. This is the hope for this channel, as
it is for all the channels, as a matter of fact, that because it's a popular,
attractive, program service, the context will involve quite a number of
19998 The other programs that wrap around these popular programs will bring
people back to a discussion of those issues, those educational issues that we
have set for ourselves for this particular channel.
19999 CHAIRPERSON OF THE COMMISSION: In order to convey that message and that
intention, of course the categories you choose and the proportion in which you
will use each of them is significant. So could we kind of go back to those
because there is, for example, some discrepancy in terms of, and it might be my
reading or understanding, when there is some discrepancy in terms of what you
define as your nature of service and what we find in Schedule 10 in terms of
20000 So, the categories you choose and the program description there is some
discrepancy. For example, Category 5(b), which you say will be the -- which
is formal education and preschool which will be your in-house productions. We
didn't find them at first in your categories that you had listed. So we want to
make sure that what you have listed is there.
20001 Secondly, what will be the proportion on some of them, especially like
the education type of programming, especially in drama because, of course, drama
is there again. So how much of the two will we see so that we get a better
flavour of it.
20002 DR. KEAST: Yes, we can and perhaps Jill could give us some of those
percentages for drama.
20003 CHAIRPERSON OF THE COMMISSION: But can we first go to -- you have
2(a), 2(b), 3, 7(a). Am I going too fast now?
20004 DR. KEAST: No.
20005 CHAIRPERSON OF THE COMMISSION: 7(d), 7(g), 11 and 13 and I heard you
answer to counsel that we would add 14 now.
20006 DR. KEAST: Yes.
20007 CHAIRPERSON OF THE COMMISSION: Infomercials would be there.
20008 MR. PALFRAMAN: But 5(b) was included in our application as well when I
20009 CHAIRPERSON OF THE COMMISSION: It was. So it's my --
20010 MR. PALFRAMAN: It's on page 12, our page 12 of the --
20011 CHAIRPERSON OF THE COMMISSION: And 5(a)?
20012 MR. PALFRAMAN: Not 5(a); 5(b).
20013 CHAIRPERSON OF THE COMMISSION: I'm sorry, but 5(a), you are proposing
some programs when you are in Schedule 10. So do you intend to use 5(a) at all?
Have you forgotten about using it?
20014 DR. KEAST: It's a good question. I think, quite frankly, it would be
better to include it because it is possible for many of these programs --
we are doing one right now, for example, "The New Detectives", for example, that
connects to a formal course of study in policing and security at Grant MacEwan
College. So I think that's a good point and I think we should add 5(a), if
20015 CHAIRPERSON OF THE COMMISSION: And how much -- you know, if we
were to take the two extremes, being the 5 and the 7, 5 being of course more
educational and 7 being more the entertainment type of programs, what would be,
generally speaking, in a schedule put forward by Law & Order the proportion
20016 DR. KEAST: Jill, could you just give us a fix on particularly the drama
in the schedule?
20017 THE CHAIRPERSON: If I can help, before we leave, I think in your
description you have mixed 5(a) and 5(b). You have called it formal education
and preschool when that is taking part of 5(a) and introducing it into 5(b), so
perhaps you can clarify that as well. It means that the category is a creation
because you called it formal education and preschool.
20018 CHAIRPERSON OF THE COMMISSION: It's 5(c). It's a new one. We will
review the Canadian content annually. We have just done that.
20019 THE CHAIRPERSON: I am not sure, but I believe that's what has happened
which has created confusion.
20020 MR. PALFRAMAN: Is that in the Schedule 9 or 10, Madame Chair, that you
are looking at?
20021 CHAIRPERSON OF THE COMMISSION: Ten.
20022 MR. PALFRAMAN: Schedule 10. Just to clarify because in the actual
nature of service.
20023 THE CHAIRPERSON: Part 7(1), but one of you can look and see, 7(1) is
where you give the category. Somewhere or other I think there has been a mixture
between 5(a) and 5(b) which results in confusion.
20024 MR. PALFRAMAN: Okay. Because in the 7(1)(c) all we have listed is 5(b),
20025 CHAIRPERSON OF THE COMMISSION: But when you describe your program in
Schedule 10 you talk about --
20026 DR. KEAST: Yes, we do.
20027 THE CHAIRPERSON: It's in Schedule 10, yes, the confusion is introduced
I think. I don't have that with me.
20028 CHAIRPERSON OF THE COMMISSION: But what you are saying now is you would
add 5(a) and 5(b).
20029 DR. KEAST: I would like to add 5(a), yes.
20030 CHAIRPERSON OF THE COMMISSION: To have both.
20031 DR. KEAST: Yes.
20032 CHAIRPERSON OF THE COMMISSION: And what I am asking in order to get
really a sense of what you mean is what would be the proportion of each in an
average schedule of The Law & Order Channel, so that how much will be
entertainment or more entertainment as we see on other channels and what will be
20033 DR. KEAST: I will get Jill to talk about the percentage of drama
especially, but I would hope, as we do not to the same extent necessarily, but
which we do now, we bring in what programming might fit in category analysis
interpretation or documentary or indeed drama and comedy and connect that to a
formal course of study.
20034 So it's all entertaining, but it also is the context is the formal
course of study. But I think what we can do is -- and how much of that we
would do in the terms of this licence I am not sure at this point in time, but
it would be our intent to do, to build the context for as much as possible.
20035 Whether it's formal context or an informal context that would be the
objective to do that.
20036 But, Jill, maybe just say something about the drama, if you would,
20037 MS BONENFANT: Currently, the drama is 25 per cent of the
schedule -- actually, 24 per cent of the overall schedule, 25 per cent in
20038 CHAIRPERSON OF THE COMMISSION: And what you would call 5(a) and 5(b)
now would be how much of the schedule?
20039 MS BONENFANT: Thirteen per cent of the schedule that would formally fit
under those definitions.
20040 CHAIRPERSON OF THE COMMISSION: And how much of that would be in prime
20041 MS BONENFANT: None of that is in prime time currently. No, I am sorry,
that would be, I didn't calculate that, 24 per cent in prime time.
20042 CHAIRPERSON OF THE COMMISSION: Twenty-four per cent.
20043 MS BONENFANT: Yes.
20044 CHAIRPERSON OF THE COMMISSION: That would be mostly in prime time in
formal education, the 5(b)?
20045 MS BONENFANT: Yes.
20046 CHAIRPERSON OF THE COMMISSION: Could you give me examples on your
schedule, on Schedule 9, of what it is that you call 5(b) please?
20047 MS BONENFANT: That refers specifically to the Law and Order Help!, the
live daily show, the daily program.
20048 CHAIRPERSON OF THE COMMISSION: Okay.
20049 MS BONENFANT: 6:00 to 7:00 and repeated and 11:00.
20050 CHAIRPERSON OF THE COMMISSION: How do you categorize what's between
8:00 and 11:00?
20051 MS BONENFANT: The majority of those -- well, 50 per cent of those
would be drama and 50 per cent documentary.
20052 CHAIRPERSON OF THE COMMISSION: Okay.
20053 So when we talk about the 24 per cent in prime time of drama there
would be moments mainly here?
20054 MS BONENFANT: Yes.
20055 CHAIRPERSON OF THE COMMISSION: Thank you.
20056 Looking at the applications we have in front of us what do you consider
to be competitive? I know that the Chair has had a question, but there have been
different angles by which projects have been proposed. What do you see mainly as
being your signature and where do you see that you could live with another
applicant without feeling that there will be too much overlapping for buying
rights, but also overlapping for the viewer?
20057 DR. KEAST: I think the only one that looked to us at all potentially
competitive was the Justice Channel I think it was. Although their focus is much
narrower, but nonetheless they deal with courts and this kind of thing which we
would certainly deal with here. I can't see any of the other applications as
being especially competitive.
20058 CHAIRPERSON OF THE COMMISSION: So what is more around mystery and
suspense is not --
20059 DR. KEAST: I don't think so.
20060 CHAIRPERSON OF THE COMMISSION: -- for you a genre where you
20061 DR. KEAST: I don't think so, no.
20062 CHAIRPERSON OF THE COMMISSION: -- although that there may be
20063 DR. KEAST: There might. There might be.
20064 CHAIRPERSON OF THE COMMISSION: -- yet you don't see --
20065 DR. KEAST: No.
20066 CHAIRPERSON OF THE COMMISSION: And you feel that in terms of the
diversity criteria you have been talking about that it would not -- comment
dire donc -- harm that --
20067 DR. KEAST: No, I don't think so.
20068 CHAIRPERSON OF THE COMMISSION: -- pursuit?
20069 DR. KEAST: I think it would be quite complementary.
20070 In this service again what we are bringing in is programs from all
around the world, so it isn't American police and security all the time, it is
Australian and British. So there is a whole range of police -- and it's
police and security. It's not just police shows, but rescue and all of that kind
of thing, but it's an international flavour to this channel.
20071 CHAIRPERSON OF THE COMMISSION: Talking of which, in your programming
you have committed 40 per cent of Canadian programming expenditures. Would
you be open to accept a condition of license of that level?
20072 DR. KEAST: Yes.
20073 CHAIRPERSON OF THE COMMISSION: In original programming, we will come
back to that, but in the foreign programming, how much is U.S. and how much is
foreign -- well, non-U.S.?
20074 DR. KEAST: Yes.
20076 CHAIRPERSON OF THE COMMISSION: Let's just say "foreign", truly
20077 MS BONENFANT: Based on the draft schedule that was submitted, the
percentages are 45 per cent non-Canadian -- 45 Canadian, 35 foreign
and about 20 U.S. -- 20 per cent U.S. Forty-five per cent
20078 CHAIRPERSON OF THE COMMISSION: I have 40 per cent.
20079 MS BONENFANT: Well, that's -- yes. That is the minimum for the
first year, but in the actual draft schedule that was submitted --
20080 DR. KEAST: I think if we go to the 40 per cent it is the division
between American and non-American.
20081 MS BONENFANT: Right. Right, 40 per cent --
20082 DR. KEAST: I think that should be clarified.
20083 MS BONENFANT: It would be 40/20.
20084 CHAIRPERSON OF THE COMMISSION: Forty/twenty?
20085 DR. KEAST: Forty non-American, 20 American.
20086 CHAIRPERSON OF THE COMMISSION: Okay.
--- Pause / Pause
20087 CHAIRPERSON OF THE COMMISSION: You talk about $5 million for
Canadian independent production to stimulate the creation of programs there.
That is a firm commitment?
20088 DR. KEAST: Yes.
20089 CHAIRPERSON OF THE COMMISSION: How much of this would be commitments to
original Canadian programming? That would all be original first window on Law
20090 DR. KEAST: I don't think we have looked at that. I'm not sure in any of
these applications how much -- I know our own in-house programming and the
live programs would all be first window, but in terms of the independent
production I think we would have to work that in terms of what other windows the
independent producer might have. But I don't think we have done that calculation
to see what that might be.
20091 CHAIRPERSON OF THE COMMISSION: Okay. But the $5 million is a firm
20092 DR. KEAST: That's right.
20093 CHAIRPERSON OF THE COMMISSION: -- for original Canadian
20094 DR. KEAST: Yes. Yes.
20095 CHAIRPERSON OF THE COMMISSION: Okay. Well, that might be helpful if you
would provide us with what you -- because our understanding was that it
would be to commission to independent producers, so it would be important to
understand what is your intent and your commitment.
20096 MR. PALFRAMAN: Madam Chairperson, I think just to add, particularly I
guess as a general comment, for these digital services it is important in terms
of independent production that what we are allocating to that is absolute and
there is no question about it.
20097 But it may not result in first window on these channels because we see
that this kind of funding will be additional funding that might be used to
leverage -- for independent producers to leverage first window funding that
gets the production completed. So if that meant that on these channels it would
be second or third window, that would be totally fine.
20098 But the point is that it is new money going into the independent
production community that primarily will be for programming that will have its
best home on these channels, in the case of Law & Order on Law & Order,
but that it is important new money going into the independent production
20099 CHAIRPERSON OF THE COMMISSION: Alors, it is money for -- what is
clear is the commitment to $5 million for the independent production
sector, not clear whether it is original but you will clarify the number of
original following the request, and how much of that $5 million to
independent producers will be affiliated and non-affiliated?
20100 DR. KEAST: I think that would reflect the 50/50 that we identified.
20101 CHAIRPERSON OF THE COMMISSION: Okay. That would be your
20102 DR. KEAST: Yes.
20103 CHAIRPERSON OF THE COMMISSION: -- but you would be prepared to
live with the definition we will come up with.
20104 DR. KEAST: Yes. Yes, of course.
20105 CHAIRPERSON OF THE COMMISSION: Thank you.
20106 Et qu'est ce que j'avais? Oh, yes, on-line order.
20107 You put a lot of emphasis in terms of your distinctiveness being a
Canadian way of approaching it and kind of reflecting peace, order and good
government. Yet when we look at Canadian content it is 35 per cent going to
a level of 50 per cent minimum, but that is the commitment you are
20108 Isn't there a kind of contradiction there if, on one hand, what is
really your trademark in the proposal you are putting forward is to talk about
the specificity of being Canadian and what makes us so unique, and yet the
presence of a lot of foreign content.
20109 DR. KEAST: I think the issues around peace, order and good government
and life, liberty and the pursuit of happiness will be really focused on our own
programming that we do ourselves or that we get by independent producers within
this context. I mean, there isn't a lot of it.
20110 I think the reality is that we wanted to make sure that it was an
attractive service that would provide a context for this kind of discussion.
Certainly that will be our focus in terms of everything we do that is live and
interactive. The Law & Order, Help, for example, and the
interstitial -- I shouldn't say that, I'm sorry.
20111 The flow material, the program-related flow material that we will be
running through the schedule, and it will be that that we will bringing out that
distinctiveness and those distinctions throughout the entire program day.
20112 MS LARSON: Ron, if I can just add something.
20113 I think there is a thirst for these kinds of programs but since we are
subversively trying to educate Canadians I think again it is the context.
20114 For example, the strand of the Help programs. There are all kinds of
issues to discuss and they would, by necessity, be specifically issues that are
relevant to Canadians, so issues of personal security, issues of privacy, jobs
in the law and order field in Canada. Various issues, aboriginals in the system,
injustices done to me that can be discussed on-air.
20115 And then there is the programming, the flow that Ron talks about that
surrounds the material so you are no longer just looking at -- sort of
vicariously looking at some crime that has been committed in the United States,
but you are putting it in a completely different context. I think that that is
important because people are watching these shows and I think that it is really
important that we bring it back to our own reality in Canada, which is
specifically different than what exists elsewhere.
20116 DR. KEAST: As an example, I might just draw your attention to a bit
from the tape that we showed. We had an RCMP officer commenting on the business
of the movie Jagged Edge and putting that in context vis-à-vis Canada. So what
you see there is simply not realistic in the Canadian context. Well, it isn't
even realistic for policing, let alone in the Canadian context, but it is that
sort of thing that we would do also on this channel.
20117 CHAIRPERSON OF THE COMMISSION: Somehow it is similar to the kind of
discussion we were having with the Book Channel. It's a lot about context and
20118 DR. KEAST: Yes. And even when it looks like it's foreign it really is
Canadian because what we are doing is we are drawing the distinctiveness from
what is foreign to what in fact the reality is in the Canadian context.
20119 CHAIRPERSON OF THE COMMISSION: We could certainly start a large
discussion here, but I won't.
20120 Okay, let me see.
20121 On your financial projections there was some question, but it is
throughout that the market research you have done is giving some indications but
cannot really give the full depth of your projects, neither, really, what
eventually will be the offering and the vagueness somehow of what will be the
20122 There is not really a solid base to say tomorrow we are totally
guaranteed with a success formula, or no, we forget about it -- maybe you
have forgotten about a few. But in the ones you are putting forward there is not
a real guarantee; there is vagueness because the sampling is quite small,
considering the whole country.
20123 Your projections are pretty high. How do you account for it and what is
the value of your commitments? Are they solid?
20124 When we talk about dollars of expenses in Canadian programs, that total
is $17 million. Do you make a firm commitment to that in total, or is it
depending on whether you will meet your projections?
20125 DR. KEAST: The key is the 40 per cent. Nobody knows in this
environment. We have been very conservative, because we are living with that
every day. But we have tried to be realistic.
20126 So the real key is the 40 per cent. Whatever the total amounts, we
could have projected twice the penetration and twice the advertising,
et cetera, and we would have had a lot larger totals. But the reality is we
20127 So we are realistic in our projections. We know what we have been going
through this past year. We know what kinds of revenues we have. And that was the
base of our projections for all these new channels.
20128 CHAIRPERSON OF THE COMMISSION: When we were talking about $5 million
earlier, is that subject to variation depending on the revenues? Or is it a firm
20129 MR. PALFRAMAN: Madam Chairperson, I was going to come back to that if
it didn't come up in a further question.
20130 I was going to clarify with you that in all of our discussions that we
have had so far we have been looking at that as a percentage of previous years'
revenues. Now we are looking at the $5 million.
20131 I am not sure why we would vary in this particular case. I guess I
would suggest that we would propose going with the 40 per cent on previous
years' revenues as our commitment.
20132 I think in the environment that we will be launching into, that would
be a reasonable approach to take. So I am not sure that we would see a need to
vary it for this particular channel.
20133 I can close there and then answer your question.
20134 CHAIRPERSON OF THE COMMISSION: I am not negotiating here. I am just
asking what you mean and to understand, because we will be kind of assessing
20135 MR. PALFRAMAN: Right.
20136 CHAIRPERSON OF THE COMMISSION: You certainly have heard all kinds of
propositions that have been put forward.
20137 MR. PALFRAMAN: Sure.
20138 CHAIRPERSON OF THE COMMISSION: I am just trying to define what is
yours. That is all. So I don't want to mean something that you don't.
20139 MR. PALFRAMAN: I think, for clarification, that is what we would be
looking at as our commitment; and as a CRL, it would be the 40 per cent of
previous years' revenues.
20140 If that came to be $5 million, that would be fine; and if it came to be
$10 million, if this was enormously successfully, then that would be fine
20141 CHAIRPERSON OF THE COMMISSION: You see, one of the questions we are
pursuing in the understanding of the application is: What is original
programming and what is repeats?
20142 When we talk about 40 per cent of Canadian programming expenditures, if
only 5 per cent goes for original programming and the rest is all repeats, then
it does not have the same impact in the system in terms of diversity.
20143 So it is very important and relates again to the question. It is
important that we get your commitment.
20144 So if you say our commitment is 40 per cent, we take it as you
propose it. And you are prepared to take a condition of licence in terms of a
20145 What we would ask you then is to tell us in round two what the
commitments are, specific and factual, on original programming so that we will
be able to include that in our analysis after the hearing. That is what we are
trying to understand.
20146 DR. KEAST: Yes.
20147 THE CHAIRPERSON: The way I understand it, if the $5 million is not firm
and it moves with whether or not the 40 per cent generates sufficient funds,
then I suppose what happens is that your Canadian content has more repeats and
less original programming.
20148 Isn't that correct?
20149 DR. KEAST: That is right.
20150 THE CHAIRPERSON: So, unless we have a feeling for both, it is difficult
20151 That is why we added for Phase II this request to tell us how many
original programming hours annually, excluding repeats.
20152 Do you have a problem with the suggestion I am making; that if the $5
million moves with the 40 per cent, which moves with the revenues, it is not
necessarily $5 million any more and it has consequences?
20153 DR. KEAST: No. We fully understand. And it can move up as well as down
of course. That is the other point.
20154 CHAIRPERSON OF THE COMMISSION: Before we leave Law & Order --
mind you, we will still be in the mind of Law & Order -- your PBIT in
the financial projects you have provided us, we have a little curiosity. It
might be minor, but we saw that you have a little dip in years five and six and
you rise again in year seven.
20155 We were just wondering if there was something in investments that you
were making or an amortization -- was there something in terms of the
programs that was related to that fluctuation?
20156 MR. PALFRAMAN: Yes, there is, Madam Chairperson. In fact, what that
represents -- and particularly in this channel -- in an effort to
ensure that during the course of the seven-year licence we did as much as
possible to Canadianize it, in year five there is a significant bump-up in our
Canadian original production. It would be primarily in-house, but that is where
the bump-up is.
20157 Assuming that these projections unfold the way we have them, we expect
that around that time is when we will make an additional investment in what we
will be doing for specific Canadian production.
20158 CHAIRPERSON OF THE COMMISSION: It is when you go to the level of 50 per
cent Canadian content --
20159 MR. PALFRAMAN: Yes, that's right.
20160 CHAIRPERSON OF THE COMMISSION: -- that it creates additional
20161 MR. PALFRAMAN: That's correct.
20162 CHAIRPERSON OF THE COMMISSION: It is not totally reflected in the
Cancon expenditure that you have projected. It is not quite clear. You certainly
recognize that yourself.
20163 MR. PALFRAMAN: Yes.
20164 CHAIRPERSON OF THE COMMISSION: You cannot get a really clear reading on
where it is. If you go from the Canadian content expenditure from one year to
the other, there is a gradation that seems to be not exponential like the PBIT
seems to be.
20165 MR. PALFRAMAN: Yes, that is correct.
20166 It is not a steady line through the seven-year licence period because
of that commitment that we have made in these projections.
20167 CHAIRPERSON OF THE COMMISSION: All I am saying is that in the Cancon
expenditures, which is your explanation, we don't really see that there
is -- you go from 35 to 50, and we would expect the same kind of
relationship year by year.
20168 It all of a sudden occurs in five and six, and healthy finance comes
back in year seven.
20169 MR. PALFRAMAN: Yes. The increase in our Cancon -- I guess part of
the reason is that we are looking at more in-house production or co-production
as opposed to acquisitions as we move through the seven years of the licence
period. So there will not necessarily be a specific relationship between the
expenditures on an annual basis and when the Cancon moves up, on a percentage
basis of the schedule.
20170 CHAIRPERSON OF THE COMMISSION: In fact, what I read myself is when you
reach year seven you are not raising either the content any more or the
expenditures, yet you will have more revenues, hoping for better penetration. So
your profit line is more interesting.
20171 MR. PALFRAMAN: Yes, it is.
20172 CHAIRPERSON OF THE COMMISSION: That is the way -- and there is a
kind of continuing progression you have from year one to year six. I would say
that it is only in year seven that you seem to be established.
20173 MR. PALFRAMAN: Yes.
20174 DR. KEAST: I think what that will allow us, hopefully, is better
budgeted programs too by the time we get to that. This is going to be a very
20175 I think our hope is that if we can be as successful as these
projections, or better, we will be able to put significantly more money into the
programs that we do originally.
20176 CHAIRPERSON OF THE COMMISSION: Okay. That covers my questions.
Certainly there might be more questions from my colleagues or counsel,
20177 Computer access: Here again there was a kind of broad approach to it.
We might recognize an educational imprint, but in terms of understanding the
nature of the service and the necessity to everybody -- the Commission, but
also everybody that is involved in the proceeding in the public -- what
does it mean exactly? Here you talk about a service fully dedicated to computers
and technology -- and computer technology -- yet we have in your
description of programs, programs that deal with science and technology. It
might be the context again, but it seems to be a bit at distance.
20178 Is it a very targeted type of channel that we are talking about? It
seemed to be when I was hearing this morning the presentation again and reading
your application. Would you accept to fence it a bit more, so that it is more
targeted, at least to our understanding?
20179 DR. KEAST: Yes, if that seemed to be a problem.
20180 We wanted to make sure we included programs about technology --
about the development of technology, the development of the computer -- in
order to put the current issues that we will be dealing with and the current
programs on this schedule in some kind of context. I think that the
technology-related programming would be to that end in the schedule.
20181 Peter, did you want to say something? Or Jill?
20182 MR. PALFRAMAN: I think that Jill could give you a better idea, but I
think the key thing in this channel is that it is a truly instructional channel.
It will include, obviously, news and information about new products and
developments in technology, but the key is that it has to be an instructional
20183 There is no question in our minds, based on our research and
everything -- all the feedback that we get -- that people do need help
with how to use their computers, how to use their PDAs, how to use e-mail, how
to use voice mail. So this is the perfect example of something that shouldn't
just be a news channel. People don't need to know more news about the products;
they need that as part of this channel. That is what we will offer, just as part
of this channel.
20184 But the key is that it is instructional, that it will help people learn
how to use the equipment. It is the kind of thing that Steve Dotto does. He has
built his business doing that. And we have many, many stories of people who I
know will benefit from this kind of channel.
20185 But, in terms of specifics, Jill might be able to give you some
20186 DR. KEAST: And perhaps Steve. Steve might want to say a word here,
because I think we would be happy with a more focused definition, if you are
concerned about that. Because this is very much an educational channel, and the
Net means that it is also going to be a wonderfully attractive and fun channel.
That is what Steve does.
20187 Steve, do you want to say a word about this?
20188 MR. DOTTO: Sure. When you deal with technology, especially in an
educational focus, you aren't dealing with static media or static content any
more. It is not mathematics, where we can create a program teaching you about
how to do something and then it is still going to be the same. Numbers don't
change over the years.
20189 Any educational focus on technology has to deal with the changing and
the dynamic technologies that we are dealing with today.
20190 For example, it is purely educational to deal with viruses as they come
up, because people need to learn how to deal with them. That is not something
that we can plan for in the schedule in advance; it is something we have to deal
with when it happens. Or to deal with new problems that parents are going to
face with sticky Web sites that lead their children to pornography and they
can't get out.
20191 All of these sorts of things we have to deal with in an educational
focus to allow people to feel comfortable using their computers.
20192 Consequently, we do have to mix in a good amount of very current
news-type information, which is the basis of what we are doing with Technology,
so that people can actually apply technology to their day-to-day lives.
20193 A couple of the kinds of focuses that we would really be remiss if we
did not mention them to you include seniors and computing and socially how we
can deal with the growing technology gap which is currently occurring.
20194 My partner and I have done extensive research and we are actually well
on the way to launching a new program specifically designed for seniors and
computing, because we feel that there is a real change that we face with an
20195 CHAIRPERSON OF THE COMMISSION: You are not looking at me when you say
20196 MR. DOTTO: No.
--- Laughter / Rires
20197 CHAIRPERSON OF THE COMMISSION: Good.
20198 MR. DOTTO: I apologize. It was your earlier comments that you were
somewhat technically challenged occasionally that caused it. It had nothing to
do with longevity on this planet.
20199 However, there is a growing concern that we are creating a technology
gulf between seniors, between people who have established themselves in their
lives, and the youth who are moving up. So we see a profound need to bring
seniors -- to allow them to be comfortable, especially as we are aging. We
are lasting longer. Unfortunately, we are lasting longer, but our bodies don't
seem to be holding up all that well in our latter years. Technology and the
Internet can really be a wonderful social factor and really comfort people as
they go on.
20200 We have iterative stories galore of grandparents who watch our show who
have learned how to e-mail. And they aren't communicating with their kids. They
couldn't care less about their kids. They care about their grandkids. Their
grandkids are communicating with them, because kids don't think anything of
firing off a quick e-mail to grandma and granddad. I never wrote letters to my
grandparents unless I was absolutely forced to, but my kids send e-mail back and
forth all the time with them. That is allowing them to be really a part of each
other's lives, and those are the sorts of things we really have to illustrate
within our programming.
20201 CHAIRPERSON OF THE COMMISSION: Can we go back? And I understand and
thank you for that passion. It is helpful for a soon-to-be-senior, I suppose, to
20202 If we were to try to define more precisely --
20203 You say fully dedicated to computers and technology. If we were to say
exclusively dedicated to computers and computer technology, so that it would be
all about computers, so that we don't --
20204 DR. KEAST: Absolutely. Yes.
20205 CHAIRPERSON OF THE COMMISSION: And the instructional dimension.
20206 When you do your categories, in determining which ones you need, you
have a more restricted number of them than what you use in Schedule 10
categories to talk about your programs.
20207 For example, you have programs in your schedule that are computer
games -- that are games -- and yet, when we look at your Schedule 7,
you don't have game shows and animated shows, which you have in your Schedule
20208 Can you tell us why the discrepancy? Will you keep the programs that
you have in the schedule? Or should we add categories that you had
20209 MS BONENFANT: Yes. Categories 7(e) and 10 were both missing.
20210 CHAIRPERSON OF THE COMMISSION: Excuse me?
20211 MS BONENFANT: Both Categories 7(e) and 10 were missing. They should
have been part of 7(1)(c).
20212 CHAIRPERSON OF THE COMMISSION: But with the additions, if you were to
accept a condition of licence, that kind of fence with computer and computer
technology related exclusively, I suppose, the games would have to be
20213 DR. KEAST: Absolutely. Yes.
20214 CHAIRPERSON OF THE COMMISSION: Okay.
20215 In terms of overlapping, we have talked about the overlapping on a
general scale. For this particular channel, is it the same percentage, the 15
20216 DR. KEAST: Yes, for CLT. I don't even think there is 15 per cent of
computer programming on CLT currently, but there would never be more than
20217 CHAIRPERSON OF THE COMMISSION: No more than that?
20218 DR. KEAST: No.
20219 CHAIRPERSON OF THE COMMISSION: And with Access the same thing?
20220 DR. KEAST: Yes. Well, there is no computer programming on Access, but
at the same time --
20221 CHAIRPERSON OF THE COMMISSION: Life being what it is ...
20222 DR. KEAST: Yes, exactly.
20223 CHAIRPERSON OF THE COMMISSION: We have seen moments when we are in a
hearing like that and --
20224 DR. KEAST: That is a very good point, because the ministry might in
fact demand some computer programming as part of their times. Absolutely.
20225 CHAIRPERSON OF THE COMMISSION: Canadian programming expenditures. Our
calculation in yours comes to 39 per cent. Would you be prepared to accept a
condition of licence?
20226 There again, are we talking about the same percentage to be dedicated
to independently produced programs?
20227 DR. KEAST: Yes.
20228 CHAIRPERSON OF THE COMMISSION: Script and concept here -- and it's
true of most of your applications -- it's not always clear in the script
20229 Is it script and concept about the on stream, more conventional
type of content? Or is it the portion to be developed in order to make it a
truly interactive program?
20230 DR. KEAST: I think, in this particular application, that's where we
would see a lot of this, for sure, because this is going to be an
extraordinarily interesting interactive service.
20231 Peter, did you want to say something descriptive on concept development
that reflects it?
20232 MR. PALFRAMAN: No, I don't.
20233 CHAIRPERSON OF THE COMMISSION: It's interesting, especially in light of
the sponsoring comment you made for an earlier application, this morning, that
here, in the finance section of your application, we don't see any revenue at
"Other" because computer and computer-related programs, you would expect, you
know, kind of sponsors interested in reaching a particular clientele and maybe,
also, some transactional type of revenues.
20234 Why didn't you see that -- you know, and I understand that there
is no miracle expected there. Every applicant has been talking about the great
risk involved, in a new era. But I'm curious, because you have incorporated that
in some applications and in others, you haven't, and this one, in particular,
from the limited knowledge I have about that business, I would have expected if
one place to find it it would be here.
20235 MR. PALFRAMAN: Madam Chairperson, we didn't -- you are absolutely
right, that is an area that might lend itself to that. There are a number of
reasons why we didn't include it as a revenue line item.
20236 The first is because we allocated more, or we projected more revenue
from on-line and Web interactivity of on-line interactive revenues, in this
particular application, and so, we think that's where there will be more
20237 But the real -- the key reason is that we expect most of what we
would show as sponsorship revenues would actually go into productions, and
it's -- certainly Steve Dotto, I know, his experience is important, in
terms of generating production and building his production budgets, is to use as
much as possible of sponsorship revenues.
20238 So that's the primary reason we -- to the extent that we can
introduce sponsors and the large computer companies and the large technology
companies to participate in the programs and the production will be more
important than the sponsorship revenues that we might generate on an income
20239 MR. DOTTO: In the style of independent production that we have been
doing with our programming, or about 90 per cent of the hard cash that's gone
into the actual production, has come from the industry itself, not from licences
or underwriting from any broadcasters.
20240 CHAIRPERSON OF THE COMMISSION: So that would be really where you
20241 MR. DOTTO: If they were getting sponsors -- a sponsorless station
would be harder for me to be able to give us money to produce the shows.
--- Laughter / Rires
20242 CHAIRPERSON OF THE COMMISSION: It would be more difficult, also, to
take an arm's-length type of editorial approach to the industry, as well.
20243 MR. DOTTO: Considerably less balance, yes.
20244 CHAIRPERSON OF THE COMMISSION: Yes. Yes.
20245 There, again, in the Computer Access, it's really the test of the
demand survey, although helpful, it's never perfect either. We were talking,
earlier in the week, or last week, with you, Mr. Znaimer, saying you don't
have any demand survey. Here, we have one, but it's never like the real test, of
course, and there is some discrepancy between what we have seen as what seems to
be the demand level, yet some vagueness into what exactly the respondent has
understood and what price he would be prepared, or she would be prepared, to pay
and yet, your penetration estimates. but I understand that what you are prepared
to accept never ties an amount, per se. It's always a proportion of
20246 MR. ZNAIMER: That's right.
20247 CHAIRPERSON OF THE COMMISSION: So your commitments are not
20248 What might be challenged, though, is the value of the proposition, at
the end of the day, because if your estimates, or your projections, would be too
optimistic, that means that if we were to grant you a licence, at the end of the
day, what we would see on the screen, although it's already challenging the
projections you are having, and from your own admission, although you say that
you are not in the range of the average $25 million, yet, that would be even
more challenging. We could be in a situation where the revenues would not be
there and there's no reassurance for the Commission looking at it of what could
be the program proposition to the viewer.
20249 MR. PALFRAMAN: Madam Chairperson, obviously, when you are looking at
revenue projections and business projections, you take all different elements
into account. The research is an important part of that.
20250 I think the research that we have done now, the research that we have
done over the last three years, has always been very strong and very positive
for this type of channel, a computer-type channel. So that's one element.
20251 There, obviously, are a lot of other elements that go into it. And my
sense is that what we have projected and the business plans we have put in are
realistic and they are based on our experience.
20252 Obviously, we have done a review of other applicants and what
projections other applicants have done. I think that ours, generally, fall
within what I would call more realistic ranges. I don't think they are
optimistic, at all. I think that we, based on our review of DTH and CCTA
projections for roll-out of digital, we have discounted those, to some degree,
based on our own experience. We have taken a starting point where we know the
exact number. We have done our own projections over five to seven years; we have
come close to what they project. So that, I think, is very realistic and very
20253 The penetration rates that we have projected are based on our
experience with CLT. As you know, CLT has rolled out into what we call a hybrid
environment. We have some analog and we have some digital. We are only one of
only two services. Discounting the fact that DTH is, of course, digital. But we
are the only two services that have -- Star and CLT are the only two
services that rolled out into their kind of -- actually, ROB have,
too -- into their kind of environment.
20254 So, all of those factors went into our projections, and I think that
they have resulted in what you can look at as very realistic projections. Our
penetration rates are what we have experienced with Star and CLT, so that they
have a base of experience. And the rates, the actual financial rates, the whole
rate that we have projected, again, is reasonable, in the context of our
20255 CHAIRPERSON OF THE COMMISSION: Well, let me be challenging -- and
I have been in educational broadcasting business.
20256 Many surveys I have seen, there's a lot of desirability about
educational program. But when comes the real thing, which is, "Do I watch it?",
not necessarily -- the viewer is not necessarily meeting -- I don't
know if it's -- its desire or ours, but I don't know. But that means that
when you are looking for the kind of penetration you are proposing, we
could -- and let's talk about the next one, which is Careers. Careers, in
the demand survey, rates about around 10 per cent demand and yet, you are
proposing a penetration, by the first year, of 39 per cent and, eventually, the
Year 7 going as high as 48.
20257 So would that be fair to think that what you are counting on here is
the surrounding, the context of other -- of other channels that would kind
of be part of a package and that, all together, would create the possibility of
reaching that kind of penetration?
20258 DR. KEAST: I think there are two items here. One is education is always
high demand -- which is going to be a great driver for the new digital
tier, because people want educational programming. Whether they watch specific
programs or not, depends on the nature of the program, and the style, and the
pizazz and the professionalism in the program, and that you can only guarantee
by the people who are making the programs. So I take that point, absolutely.
20259 But in terms of driving the tier, I think educational programming will
help people who would not necessarily run out and buy a box for
160 channels if they are not satisfied with the 50 they are getting now,
just for more entertainment channels. An educational component will be really
important to do that.
20260 Peter, could you...
20261 MR. PALFRAMAN: It's interesting and I think it's absolutely a valid
point but, you know, we, internally, had some quite heated discussions about it
because there were some who wanted to put out penetration rates even higher
because it is such -- education is seen to be such a desirable area and I
think that it will bring views -- I think Moses alluded to it
earlier -- I think it will bring people to buy these packages that might
have ignored it because it just has more of the same. It's just more
entertainment. It's just more couch-potato viewing. And I think these will be
entertaining and will be attractive, but they will have their added value, and I
think that is an important element.
20262 And as I say, based on our experience with CLT, I think the penetration
rates are reasonable.
20263 But it does also speak to packaging, Madam Chairperson. I won't
discount that. We don't know yet quite how services will be packaged, but I
think that in the digital environment, there will be packaging and so, there
will be some overflow, based on that.
20264 MR. ZNAIMER: I hope I'm not getting into turf where I'm not qualified,
but the relatively small percentage which came up in the general research can
correspond to the relatively higher percentage of penetration within the --
within the population that does take digital services. So --
20265 CHAIRPERSON OF THE COMMISSION: What's under-represented in a general
population survey could be over-represented or could be --
20266 MR. ZNAIMER: Yes.
20267 CHAIRPERSON OF THE COMMISSION: -- more important --
20268 MR. ZNAIMER: Yes.
20269 CHAIRPERSON OF THE COMMISSION: -- and it will be the early
adopters is what --
20270 MR. ZNAIMER: Yes.
20271 CHAIRPERSON OF THE COMMISSION: -- you are saying?
20272 MR. ZNAIMER: And in education there is another factor, which is the
Encyclopedia Britannica factor. Every home wants to have it. It doesn't mean
that they are going to necessarily look at it every day, but they do want to
have it so that when they need it they could turn to it.
20273 CHAIRPERSON OF THE COMMISSION: It's important because if Mr. Richler
comes into their house and sees that they have books and its effect.
20274 MS LARSON: I would just like to add something about the desirability of
this kind of information, this kind of channel, because again from our
experience on TV and we have several times done programs related to computers,
whether it's getting on the Internet, what kind of computer do I buy because
that information and, in fact, we have two regular computer experts on our phone
bank that get a lot of questions, everything from the most basic, simple stuff,
right through to the much more complex, high-end things.
20275 In fact, believe it or not, on these calls when we do discuss these
topics, many times we will get more calls on that than we will on our sex show
20276 MR. ZNAIMER: Computers are the dirty little secret.
20277 CHAIRPERSON OF THE COMMISSION: Talking about Careers TV, we have two
concerns here. The first one was addressed and maybe there is something more to
say here. It's about the overlap with CLT. Are we talking the same percentage
20278 DR. KEAST: The same percentage.
20279 CHAIRPERSON OF THE COMMISSION: The proposed -- 41 per cent is the
staff calculation, as well as your calculation. Would you be prepared to commit
by condition of licence that 41 per cent?
20280 DR. KEAST: Yes.
20281 CHAIRPERSON OF THE COMMISSION: I don't have really other questions,
other than that seems to be really a good example of what could be fully
20282 I see revenues for the Careers TV channel, yet the costs are not there,
so I would take the 15 per cent range we were talking about included in the
20283 MR. PALFRAMAN: Interactive components, yes, that's right, Madame
20284 CHAIRPERSON OF THE COMMISSION: You wanted to --
20285 MR. PALFRAMAN: Yes, that's right, but the expenses for them would be
included in the programs, yes.
20286 CHAIRPERSON OF THE COMMISSION: And in the revenues I have "Other" and
that refers to other. That is a different other than the revenues linked to
interactivities. So would that be sponsoring here again?
20287 MR. PALFRAMAN: Yes, that's correct.
20288 CHAIRPERSON OF THE COMMISSION: That would be.
20289 What about revenues similar to classified ads?
20290 MR. PALFRAMAN: I think there is opportunity for that on this channel
and that's included under our merchandising or transactional revenue, so that
there is a total in the first year of $7,000 under that line. Two thousand
dollars is product sales and $5,000 of that is from link referrals, which is the
same thing essentially as linking to classified job boards. That grows to, well,
the total for year seven.
20291 CHAIRPERSON OF THE COMMISSION: Thank you.
20292 And for the Documentary Channel -- do you mean to say something?
Do you feel frustrated?
20293 MS LARSON: Trust me, I could go on forever.
20294 CHAIRPERSON OF THE COMMISSION: You will have soon a program to talk
about. You will be on air.
20295 I apologize, otherwise I could be on each channel and that would be the
same for all applicants. As I say, it's not four weeks, it's four months and I
have already abused your time because we have been for four hours at it.
20296 So, documentary. The nature of service of course is documentaries. Will
it be exclusively documentaries?
20297 DR. KEAST: Exclusively documentaries.
20298 CHAIRPERSON OF THE COMMISSION: Would you accept a condition of
20299 DR. KEAST: Yes, we would.
20300 CHAIRPERSON OF THE COMMISSION: Given that there are other applications,
of course that doesn't mean that any other existing broadcasting or future
broadcaster could not have documentaries, but what do you see other projects
that we have, not talking about the existing broadcasters, but what would you
see that -- because you know that there are applications that talk about
films and documentaries. What would you see as being a threshold that would be
acceptable to you of a portion that could be documentaries on those projects,
yet allowing the feasibility of your own application?
20301 DR. KEAST: I don't know that we have actually put a fix on that.
--- Pause / Pause
20302 DR. KEAST: Yes, 15 per cent is a bit small because even on CLT we use a
lot of documentaries. I don't know the percentage.
20303 Would you have an idea, Jill, in terms of CLT schedule what the
percentage of documentaries, generally, might be on the schedule? Would it be 50
20304 MS BONENFANT: It's probably more than that. It depends. Strictly under
the documentary category I would say probably more than that, probably closer to
35 or 40 per cent. That includes telecourses. They wouldn't necessarily all fit
under the documentary classification on CLT.
20305 DR. KEAST: But in terms of competing applications or different services
I don't know what it might be.
20306 CHAIRPERSON OF THE COMMISSION: I don't want to force upon you, but
maybe you can --
20307 DR. KEAST: We'll get back to you.
20308 CHAIRPERSON OF THE COMMISSION: -- give it some thought and that
would be helpful in our analysis.
20309 DR. KEAST: Yes.
20310 CHAIRPERSON OF THE COMMISSION: Because you know there are other
applicants that have a more, not exclusive documentary, but have an important
part of documentaries.
20311 DR. KEAST: Yes.
20312 MR. ZNAIMER: We have one of those applications, but, interestingly
enough, the approach taken by that applicant was to limit itself in the nature
of the documentaries that they would run. It relates to the Independent Film
application and Mr. Gratton in that application explained that the
documentaries that might appear on that channel would either be uniquely
documentaries that had played in a cinema or that were about the business of
filmmaking, otherwise there would be no other documentaries on that particular
channel. So I think these things regulate themselves.
20313 CHAIRPERSON OF THE COMMISSION: I was more referring to the ones where
there is more an approach of independent films and documentaries. I don't wish
to kind of name them, but I am sure you have looked at them yourself and you
will be able to tell us where you feel it is competitive and what should be, if
ever we would decide to licence on one hand a documentary and on another hand an
independent film channel what should be the insurance or the guarantee of
diversity for the viewer.
20314 DR. KEAST: Right. We will draw that line for you.
20315 CHAIRPERSON OF THE COMMISSION: Thank you.
20316 Canadian program expenditures. It is certainly important in all the
applications, but here again and you have committed 40 per cent. Would you
accept a condition of licence?
20317 DR. KEAST: Yes, we would.
20318 CHAIRPERSON OF THE COMMISSION: You are talking about -- I forget
what it is here. I have a blank. Let me go back so that I am not saying stupid
20319 You are talking about allocation to DocsFACT program.
20320 DR. KEAST: Yes.
20321 CHAIRPERSON OF THE COMMISSION: Is it included in your 40 per cent or is
it over and above?
20322 DR. KEAST: It's included in the 40 per cent.
20323 CHAIRPERSON OF THE COMMISSION: It's in the 40 per cent?
20324 DR. KEAST: Yes.
20325 CHAIRPERSON OF THE COMMISSION: And I suppose here again the same kind
of proportion to independent producers. I am not repeating the question over and
20326 DR. KEAST: This is a little different than the others, in that we are
suggesting here it would only be 25 per cent to any affiliated. It would be 75
per cent, the total arm's length, no interest independent producers.
20327 CHAIRPERSON OF THE COMMISSION: Where the others, I didn't repeat the
question every time, but the others it was the same proportion.
20328 DR. KEAST: Yes. This is the exception.
20329 CHAIRPERSON OF THE COMMISSION: That's the only exception?
20330 DR. KEAST: Yes.
20331 CHAIRPERSON OF THE COMMISSION: Thank you.
20332 In the non-U.S. program what would be the proportion?
20333 DR. KEAST: Jill, would you speak to that, non-U.S. programming on the
20334 MS BONENFANT: Thirty per cent.
20335 DR. KEAST: I think one element --
20336 CHAIRPERSON OF THE COMMISSION: So 30 per cent of the 50 per
20337 MS BONENFANT: Right.
20338 DR. KEAST: Maybe I could ask Peter Flemington to make a note because I
think one of the really striking, unique aspects of this, besides the support,
the DocsFACTS and young independent filmmakers, is the whole international
context for the acquired programming. Peter, could you say a word for that?
20339 MR. FLEMINGTON: I think I made some comment earlier this morning when
we got to the business of the 50 per cent and I indicated how important I
thought it was, and when we put down our vision for the channel that the
international portion was very important for the reasons which I stipulated.
20340 Vision, over the years, over the dozen years we have been to air, has
made a lot of contacts internationally. We have a lot of wonderful sources, not
only of acquisition, but increasingly for international co-production
20341 Certainly I look forward in bringing a lot of the films that I see at
MIP-TV and MIP-DOC and other places from Norway and increasingly from eastern
Europe, from Asia, from Australia where I was last November digging out some
film sources, incredibly rich, wonderful programming now seen nowhere on the
20342 Certainly that 30 per cent that Jill talked about is going to be
extremely rich and will be programming which has not been seen previously in the
system and will enrich the system to that extent.
20343 DR. KEAST: If I might, just a point of clarification on that
30 per cent.
20344 MS BONENFANT: Yes, Madam. It's 50 per cent Canadian, 20 per
cent American and 30 per cent foreign.
20345 DR. KEAST: So it's 30 per cent of the 100 per cent.
20346 CHAIRPERSON OF THE COMMISSION: Ah oui, notre 30 pour cent du 50.
20347 DR. KEAST: Yes.
20348 CHAIRPERSON OF THE COMMISSION: Yes. I'm sorry, it's me who
20349 DR. KEAST: Okay.
20350 CHAIRPERSON OF THE COMMISSION: I had a last question. Where is it? I
have lost it.
20351 Interactivity. I was a bit surprised to see revenues there. I didn't
20352 I'm just seeking a comment here. Is it that you have kind of taken an
approach that every channel per position is an opportunity? I was just a bit
surprised to see --
20353 MR. PALFRAMAN: Yes, that's right. In this channel it is very limited
on-line revenue, but one of the things is that in all of the channels, as you
have heard us describe, there will be elements of interactivity, some greater
20354 In this particular channel, we think that the nature of the service
will be one that will prompt people to want to use our on-line chat rooms and
that will make it an attractive site that I think will be attractive to on-line
20355 So we built in a certain amount of on-line advertising revenue or
Web-related revenue, but it is limited in this case. As we have seen in some of
the others, there is more significant revenue from that.
20356 CHAIRPERSON OF THE COMMISSION: Yes. I was seeing like in Book or
Computer or even in Careers --
20357 MR. PALFRAMAN: It's a greater revenue.
20358 CHAIRPERSON OF THE COMMISSION: But documentaries --
20359 MR. PALFRAMAN: It's very minimal. Depending on how those evolve there
may be more, but I think it was reasonable to reflect some revenues in terms of
a realistic business plan.
20360 CHAIRPERSON OF THE COMMISSION: Okay.
20361 Well, you meant to add something, Dr. Keast? No?
20362 You were kind of just keen to answer another question. Well, I'm a bit
out of questions so I would turn you to les bons soins de Madame la
20363 THE CHAIRPERSON: Counsel?
20364 MR. STEWART: Thank you, Madam Chair.
20365 First of all, just a clarification, that with respect to the conditions
of license on Canadian programming expenditures, just to clarify that they are
applied to the previous years' expenditures?
20366 DR. KEAST: Yes.
20367 MR. STEWART: Could you just, for the benefit of the Commission, go down
the list program-by-program giving us the percentages?
20368 MR. PALFRAMAN: I will work through in the order that you went through.
Book was 40 per cent; Travel was 40 per cent -- what was next?
Computers -- Law & Order, 40 per cent; Computer, 39 per cent,
Careers 41 per cent; and DocsTV 40 per cent.
20369 MR. STEWART: Thank you very much.
20370 DR. KEAST: That is percentage of the previous years' revenues.
20371 MR. STEWART: Yes.
20372 DR. KEAST: Yes.
20373 MR. STEWART: Yes. Thank you for that clarification.
20374 This is a general question that applies to all of your applications,
but basically you put forward Canadian programming expenditures of, say,
17 -- maybe over the term of the license $18 million, and then
approximately $5 million to the independent sector.
20375 Is the rest in-house programming expenditure? Just very generally
speaking. I'm basing myself on seeing these figures in the highlights of your
20376 DR. KEAST: Just give us a second here.
--- Pause / Pause
20377 MR. PALFRAMAN: Yes. If I look at it in total -- for example I'm
just looking at Docs here because that is the one we were on, we have a total
Canadian programming of $15 million roughly. About $6.5 million of
that is for license fees, $9.5 million is for production, and that would
probably be split 50/50 between in-house and independent co-production.
20378 DR. KEAST: Probably 25/75.
20379 MR. PALFRAMAN: Well, in Docs -- yes, that's right.
20380 DR. KEAST: In that particular one 25/75, but in the others probably
20381 MR. STEWART: Okay. Thank you.
20382 My last question is with respect to your cable subscriber projections.
You list "MMDS/Other". Can you explain what the "Other" refers to?
20383 MR. PALFRAMAN: Sure. It is really just a catchall for any other
wireless distributors. Right now it is really MMDS, but in the event that there
may be other wireless distributors that we wouldn't just describe as MDS, that
is just to capture that.
20384 MR. STEWART: Thank you.
20385 Thank you, Madam Chair.
20386 THE CHAIRPERSON: It's not that you know something we don't
--- Laughter / Rires
20387 THE CHAIRPERSON: -- about who is distributing.
20388 Thank you very much.
20389 You have last word now, either Dr. Keast or
Mr. Znaimer --
20390 DR. KEAST: Thank you.
20391 THE CHAIRPERSON: -- whoever has energy left.
--- Laughter / Rires
20392 DR. KEAST: Madam Chair, Madam Chairperson and Commissioners, you have,
throughout the hearing, been concerned with the popularity of potential services
and have asked for evidence of market demand. Well, you know, there is really
plenty of evidence for the demand for education, especially life-long learning
and skills development. The demand is everywhere.
20393 Modern families are indeed learning families. This is the learning
society. National expenditures on education are second only to health.
20394 On the face of it, I know some might say that educational and
attractive don't go together. Well, this is simply not the case, as witnessed
the joy in the fact of a learner that we see of all ages.
20395 And we have proved it. We have proved it over the past five years with
Access and the last year with CLT, and indeed years ago with TVOntario and
VisionTV, that in fact they do go together and they do go together
20396 The fact that they do, and that we know how to make them do it, means
that a cluster or a bouquet of learning-oriented services, in our opinion, will
be an unexpected -- to some, not to us -- but a real driver for the
development of digital TV.
20397 Many people simply won't be interested, in our opinion, in investing in
digital box to get more of the same kind of programming that they are getting
now. For many of them, the educational component will make the difference.
20398 So thank you for your attention. The minds of Canada await your
20399 Thank you.
--- Laughter / Rires
20400 THE CHAIRPERSON: Thank you.
20401 You have been good survivors, especially Mr. Znaimer who has been
here before, but maybe you develop a capacity to withstand these sessions with
20402 Thank you very much. It has been a fruitful morning and we will see you
again at Phase II and Phase IV.
20403 Thank you. Have a good lunch.
20404 Nous reprendrons à deux heure et demi.
20405 We will be back at 2:30.
--- Upon recessing at 1255 / Suspension à 1255
--- Upon resuming at 1430 / Reprise à 1430
20406 THE CHAIRPERSON: Good afternoon and welcome back to our hearing.
Bonjour et bienvenue à tous à notre après-midi de l'audience.
20407 Monsieur le secrétaire; Mr. Secretary, please.
20408 MR. CUSSONS: Thank you, Madam Chair.
20409 We will now hear three applications for new Category 1 services by
Craig Broadcast Systems Incorporated, OBCI.
20410 A maximum presentation time of 30 minutes has been granted. The
services will be known as Connect, Festival and The MET.
20411 We have Mr. Drew Craig and his team.
20412 Mr. Craig...?
PRESENTATION / PRÉSENTATION
20413 MR. CRAIG: Thank you very much.
20414 Good afternoon, Madam Chairperson, Commissioners, ladies and
20415 My name is Drew Craig and I am the President of Craig Broadcast
Systems. Over the next few minutes I would like to tell you who we are, why our
three Category 1 specialty television channels are an integral part of our
growth strategy and how Craig is uniquely qualified to make these channels
20416 But before we start our presentation, let me introduce our panel.
20417 On my right is Sandi McDonald. Sandi is Executive Vice-President of
Corporate Development for the Craig group of companies. Sandi led the team that
developed these applications, and she has been the driving force in the
establishment of Craig's New Media division.
20418 To Sandi's right is Wayne Sterloff. Wayne is the President of A-Channel
Entertainment Inc. He oversees the creative development of original independent
production for Craig and manages domestic sales, as well as international
program distribution. Wayne has almost 35 years of experience with CTV, BC Film
and Telefilm Canada.
20419 Beside Wayne is André Link, the Chief Executive Officer of Lions Gate
Films, our partner in the Festival Channel.
20420 To my left is Jennifer Strain, Vice-President Corporate and Regulatory
Affairs for the Craig group of companies.
20421 Beside Jennifer is John Donnelly, President of Smooth Productions, a
company based in Vancouver that produces concerts and special events across
Canada, the Executive Producer of The MET and a rock'n roll musician in his own
20422 In the row behind me, from your left to right, is Joanne Levy,
Executive Director of the A-Channel drama fund and a television producer. Last
year Joanne received a Gemini Award for her part in commissioning the
documentary "Hitman Hart: wrestling with shadows".
20423 Beside Joanne is Jeff Sackman, President of Lions Gate Films.
20424 Beside Jeff is Al Thorgeirson, Manager of station operations for all
the Craig television stations.
20425 Beside Al is Linda Noto, CFO of Craig Broadcast Systems.
20426 Beside Linda is Cam Cowie, our General Sales Manager, who is
responsible for the sales and marketing of all the Craig television
20427 Beside Cam is Debra McLaughlin, Vice-President and Director of Research
for Craig Airtime Sales.
20428 At the side table from your right to left is Jim Haskins, start-up
specialist and Manager of our Edmonton station; Paul East, Vice-President
Engineering for Craig Wireless; Glenn Suart, Principal, PwC, who developed our
subscriber forecast which has now been endorsed by the CCTA; Elan Gillespie, a
consultant from PwC; and Andrew Forsyth, a radio and music consultant from Bohn
20429 Let me now turn to our presentation.
20430 We are here today with a set of applications that draw on our unique
20431 As you know, Craig has been in the broadcast business since my
grandfather bought CKX radio from the Manitoba Telephone System in 1948. We
operate radio and television stations in western Canada and have licences to
distribute digital wireless television and Internet services in Manitoba,
California, New Zealand and, most recently, in British Columbia.
20432 We are here today with three solid proposals to launch exciting new
services that will build on our core strengths and add real diversity to the
system while meeting your objectives for Canadian programming.
20433 These services are Festival, an independent film channel; Connect, the
Canadian teen channel; and The MET, a rock music video channel.
20434 Before describing them in more detail, we would like to tell you a
little bit about how we approached these applications, particularly in the
context of the selection criteria that you laid out in the call for
20435 First, our research demonstrates that all of our proposed services will
be distinctive and attractive and will help drive the digital tier, with popular
programming that is not on the system today.
20436 Second, our proposed services are all extremely affordable, with
wholesale rates in the 30-cent range for Festival and Connect, and 19 cents for
20437 Third, we have committed to significant Canadian content exhibition
requirements. All of our proposed services start with a minimum of 50 per
cent Canadian content. Connect gets up to 60 per cent by Year 7 and The MET
will launch with 60 per cent on day one.
20438 Fourth, we have based our applications on business plans that are
reasonable and achievable.
20439 We will come back to these points later in our presentation. But first,
let's look at our three applications in more detail.
20440 To talk about Festival, here is Wayne Sterloff.
20441 MR. STERLOFF: Thanks, Drew.
20442 Every year hundreds of thousands of Canadians seize the opportunity to
see new, eclectic and innovative films at one or more of the 55 film festivals
offered across the country. They are part of a growing, discriminating,
international community of film lovers.
20443 Festival will satisfy this community and attract more members to it
with television that re-creates the freshness and excitement of the Festival
experience. We will create a new window for innovative movies, documentaries and
short films from Canada and around the world, including the U.S., Europe, India
20444 Partnering with us in this venture is Lions Gate Films, a world-class
film developer, producer and distributor.
20445 With films like "Affliction", "Gods and Monsters", and the Canadian
film "Red Violin" -- all of which won Academy Awards -- the Lions Gate
brand is synonymous with some of the very best in Canadian and U.S. independent
20446 Festival will benefit from Lions Gate's extensive experience in the
independent film business, and the "cinemanow.com" portal will be the prototype
for Festival's launch of a fully operational, online platform that supports
independent Canadian film writers, directors and producers.
20448 MR. LINK: Canadian films deserve more screen exposure. Canadians should
be given more opportunities to see feature films that now only those privileged
to attend the Montreal, Toronto and Vancouver film festivals enjoy. The Festival
application will remedy this inequity.
20449 Lions Gate Films has 40 years of experience in the independent film
arena as a distributor and producer. Je suis particulièrement heureux que 10
pour cent des long métrages qui vont être sur ce service vont être des films de
20450 MS LEVY: Festival builds on our parent company's successful experience
with the A-Channel drama fund. Most of the 13 films triggered in the three-year
life of the fund have been created by regional filmmakers. They add great
programming diversity to the Canadian broadcast system.
20451 The Craig commitment to quality, independent film has resulted in
nominations and awards, including Genies, Geminis, Hot Docs and Rockies.
20452 Films we have supported have been invited to premier at festivals from
Palm Springs to Calcutta.
20453 Over the seven-year licence term, Festival will spend close to $25
million on Canadian films, documentaries and shorts; $5 million of this will be
earmarked for our Festival Priority Program fund. The fund will not operate as
an interim financier. It will give independent producers the all-important
licence fees they require to trigger funding from other sources. This money will
be truly incremental to the system and, leveraged with other sources, will
result in approximately $50 million invested in new Canadian production.
20454 Within the fund regional "envelopes" will ensure accessibility to
producers from across the country.
20455 MR. STERLOFF: Festival will also commit to the promotion of Canadian
film products by contributing up to $2.5 million in airtime to promote Canadian
films by matching the amount of the advertising budget for such films.
20456 We will also promote Canadian film festivals through our interstitial
programming which will air approximately 300 times per week.
20457 Madam Chair, Festival will not be just another movie channel. It will
be a meeting place for festival film lovers from across the country to
experience the great wealth of innovative material that is simply not available
to them today on existing services.
20458 Canadian filmmakers will benefit from a new outlet, a source of revenue
for their product and from the Craig commitment to stimulate new production from
all regions of the country.
20459 Festival is the kind attractive, unique concept that will give
consumers a reason to order the digital box.
20460 Now I would like to give you a brief preview.
--- Video presentation / Présentation vidéo
20461 MR. STERLOFF: I would like to turn now to Sandi McDonald, who will talk
about our Connect application.
20462 MS McDONALD: Thanks, Wayne.
20463 It is my pleasure to describe Connect, the Canadian teen channel. As
you can see, I am not a teenager. But I do have teenagers at home. And you don't
need to be a parent or a teen or a grandparent, Madam Chair, to recognize what
BBM data and the newspapers have been telling us for months.
20464 Canadian teens are flocking to the Internet and they are watching less
television. Interactive digital TV is the perfect medium to reach teens, and
Connect will be their channel. It will fuse traditional broadcasting with the
power of the Internet to create a teen-powered, interactive service that
reflects the aspirations, interests and concerns of Generation Y: Canadian youth
between the ages of 12 and 24.
20465 Who are these people? Let me ask our market researcher, Debra
McLaughlin, to tell you.
20466 MS McLAUGHLIN: They come from different ethnic backgrounds and family
structures than the generation before them. One in three is not Caucasian. One
in four lives in a single-parent household. Three in four have mothers who work
outside the home. They describe themselves as cynical, critical, practical,
individualistic and technologically savvy. This is the first generation to grow
up on-line. They watch TV while chatting on the Web. Not surprisingly, teens
have been identified as having strong influences on household purchase decisions
and are known to literally drive the purchases of new technologies in the
20467 MS McDONALD: Perhaps the most important criterion for licensing a
digital specialty channel, for you as a regulator and for us as a business, is
the attractiveness of the service. When we considered which genres to apply for
we looked for gaps in the marketplace that we could fill with our particular
strengths. Connect was a perfect fit.
20468 Teens are not getting the kind of television experience they want and
we know how to bring them back. We did both qualitative and quantitative
research and got an overwhelming response. More than 90 per cent of our target
market wants Connect. And advertisers believe that the service will succeed.
Combining content and the Internet will give them access to their most elusive
20469 A-Channel has direct experience in targeting a youth demographic.
Research shows that the only services showing growth in teen tuning are U.S.
services, mainly Fox and TBS. In our focus groups across Canada these two
services were most frequently listed as best meeting the needs of teens. The
sole exception was in groups which had access to the A-Channel service.
A-Channel is the only terrestrial Canadian service that outranks Fox and TBS as
a teen preferred service.
20470 We will build on our A-Channel brand, which is youthful, edgy and very
independent, to market Connect to teenagers. For example, our concept for
composite blocks of programming for teens, integrating programming with hosted
segments, received overwhelming support in the demand research.
20471 Teens told us that they want new, fresh material. We will run programs
not previously aired, like "Truly Weird" from the U.K., "Free TV", a Canadian
series, and "Ocean Girl" and "Thunder Stone", two series from Australia. These
are high quality, international programs that meet the key criteria of being
both fresh and relevant to our target market.
20472 Successful Web sites have used chat groups, loyalty programs, contests,
promotions and clubs to encourage a sense of belonging and ownership. That sense
of belonging or safe haven will be the defining characteristic of our channel.
In addition to offering innovative and entertaining program blocks targeted
specifically to them, Connect will, in its original hosted daily programs like
i-Connect, help teens deal with the many issues that face them.
20473 For example, our Connect Ed strand will help teens plan their next
steps. We will have career days, with programs about work and the kinds of jobs
that are out there. At the same time, our Web site will invite teens to send in
questions to our career counsellors. The site will also provide current
information from colleges and universities, and in some cases will take you on a
virtual campus tour.
20474 The key to understanding the programming concept for Connect lies in
the various levels of connectivity and involvement. We plan to create a
community of interest among Canadian youth and their global friends. Programs
will be acquired and commissioned that have a unique appeal to this
20476 MS LEVY: Our Connect Priority Program Fund will develop and produce new
Canadian youth programming. $5 million of the fund will be used to pre-license
new independently produced programs, and $800,000 will be available as seed
money for new screenplays, multimedia projects and advanced skills training
related to digital broadcasting.
20477 MS McDONALD: And now let's connect.
--- Video presentation / Présentation vidéo
20478 MS McDONALD: We are convinced that there is a huge opportunity to bring
teens back to Canadian television with a service that is programmed for them and
with them, rather than at them.
20479 Now I will turn it over to John Donnelly to talk about The MET.
20480 MR. DONNELLY: Thank you, Sandi.
20481 The MET is Canadian Music and Entertainment Television, a new national
music video channel devoted to rock music.
20482 The simplest explanation of how The MET will complement the broadcast
system is to look at the charts published each week by Canada's national radio
industry trade magazine, The Record. There are four national charts to serve the
Canadian radio, record and music industries: CHR, pop adult, rock radio and
country. But only three of these are properly reflected in the playlists of the
established Canadian music video services. MuchMusic focuses primarily on the
CHR chart -- contemporary hit radio. MuchMoreMusic was licensed to serve an
older demographic with the pop adult chart, which includes AC -- adult
contemporary. Country Music Canada focuses on the country chart. That leaves one
chart largely unrepresented, namely, the rock radio chart.
20483 Therefore, the MET's music mix and playlists will be developed in a
format which can be compared to rock radio. Our concept is to deliver a distinct
new national service which focuses exclusively on rock and all its many
sub-genres: classic rock, hard rock, metal, punk, alternative, emerging and even
multi-lingual rock videos. All of these genres will be incorporated into our
regular music mix.
20484 In virtually every city in Canada rock radio stations comfortably
co-exist alongside CHR stations and AC stations. Given the growth of the
industry and continued fragmentation of music, no one service can cover all the
bases and program the majority of music on the rock charts.
20485 This is not just our view of the situation. Key members of the music
industry, including presidents of the major labels, independent labels, artist
managers, distributors and Canadian artists themselves wrote in to support this
20486 Let me quote from a letter from Deane Cameron, President of EMI and
Virgin Music Canada:
"Rock radio has not changed its musical standard and is still supporting rock
artists, however, the TV airwaves are currently geared toward the vibrant POP
market. This has left a large market that is seriously under-served on a visual
20487 From Ian Mackay, at Sony Music Canada:
"Currently, rock music is a genre that is very under-represented on
television. A new service, particularly one which provides for a high percentage
of Canadian content, would be strongly supported by Sony Music."
20488 You will also see strong support for our application from Canada's
largest new independent record company, The SONG Corporation, from the biggest
concert promoter in the country, House of Blues Concerts Canada, and from over
150 other members of the Canadian music industry.
20489 They all recognize that there is a real void in the market, and that
void is rock.
20490 If awarded this new licence we will give to the Canadian people a new
music video service dedicated to rock that is fresh, accessible to artists
across the country and puts Canadian talent first. Sixty per cent of all the
music videos we play will be Canadian content. As well, 60 per cent of our
programming schedule will be Canadian.
20491 Madam Chair, this sets a new benchmark for support of new Canadian
music talent, and yes, it is achievable. There is a huge pent-up inventory of
music videos that are not receiving airplay.
20492 Now to some of our other program concepts ...
20493 "Break-Out" will be hosted by our MET personalities. We are calling
them Canada's newest MPs! It will incorporate music videos with other areas of
20494 "Oh Canada" will be a new national anthem for Canadian rock artists and
fans, featuring 100 per cent Canadian artists daily.
20495 "Building the Scene" will be a unique daily program focusing on
20496 To cover current affairs we contacted the biggest player in the
business, Bruce Allen, Canada's foremost rock manager. He agreed to move his
weekly talk radio show onto our new network for a program to be called "For the
Record With Bruce Allen".
20497 Other highlights include regional-based programming, a live, in-concert
program called "Live from the MET", music news, The MET Rock 10, rock
documentaries and more.
20498 The bottom line is there are literally thousands of good Canadian rock
artists and videos and the majority are not being played. The MET will have no
trouble programming a strong rock genre playlist, which is distinct from
existing services. Where today there is only one choice available for rock
musicians to get all important video airplay which can make or break their
careers, The MET will offer a new window for both emerging artists and
20499 Our research established that The MET's rock genre will find a
substantial audience. Music fans follow their favourite artists great distances
to catch shows and they spend substantial percentages of their monthly income on
music and music-related purchases. They will subscribe to a new digital tier if
they know that there is a new channel that "rocks". The MET will be a leader in
the new tier and it will help drive subs for the entire digital roll-out.
20500 There are also major benefits to the Canadian independent production
sector that will be derived from the licensing of The MET.
20502 MS LEVY: Apart from our 60 per cent Cancon video commitment, we will
also contribute $3 million over the licence term to a three-tiered Priority
Program Fund. The MET Video Fund will stimulate new Canadian music video
production; The MET Live Fund will support the production of live concerts for
television; and The MET Documentary Fund will provide national licence fees for
Canadian rock documentaries.
20503 MR. DONNELLY: Now we would like to give you a brief "rock'n roll recap"
of our application.
20504 Madame Chair, Commissioners, the performer you are about to see is one
of Canada's premier rock artists, but, unfortunately, he's also one of our
best-kept secrets. The MET can change that! From Regina, this is Jack
--- Video presentation / Présentation vidéo
20505 MR. DONNELLY: Madame Chair, our slogan says it all, The MET Rocks!
20506 MR. CRAIG: Thanks, J.D. He wanted to turn it up louder. I wouldn't let
20507 So there you have our three concepts: Festival for indie film lovers,
Connect for teenagers, and The MET, for rock fans. These are distinctive,
attractive and affordable services which will provide diversity to the system,
and a high level of Canadian content.
20508 But what does the Craig organization bring to the table?
20509 We think we have a unique contribution to make. And we have unique
strengths to draw on.
20510 The first and most significant is that we know how to successfully
launch new niche services; how to move from a starting point with no customers,
no audience and no brand to profitable services that contribute to local
communities and to the broadcasting system.
20511 Customer by customer we built conventional television services that now
reach 20 per cent of English-speaking Canada. We pioneered the digital MDS
business in Canada with SkyCable, the first distributor to introduce digital
set-top boxes. We are good at building businesses, wooing customers with
superior products and services and creating brand recognition. That's our
20512 We have come a long way from the small family business to the
diversified broadcasting company that we are today. I believe one of our core
strengths is the group of people that you see here today, each of whom brings
unique industry knowledge and skills.
20513 We have the existing infrastructure and assets upon which to build a
new stable of specialty services. All of our plants are state-of-the-art digital
studio facilities. We are technically capable now of launching new digital
20514 We also have strong relationships with the artistic, production and
distribution communities across North America, and we have experience selling
programs throughout Canada to our broadcast colleagues.
20515 We have award-winning in-house programming and production expertise
that is second to none.
20516 We have a national marketing and sales force already in place. Craig
Airtime Sales has offices in Toronto, Montreal, Vancouver, Calgary and Winnipeg.
We are ready to start selling the new services tomorrow.
20517 We are also moving aggressively into new media, with over $1 million
already spent in setting up a new division called Craig New Media. It's in
charge of our interactive strategy to offer more online services and e-business
initiatives for the Craig group of companies. Its mandate is to focus our
strengths as a media company, work with partners who are experts in Internet
technology and bring the benefits back to the broadcast system.
20518 Finally, our independent ownership will add diversity to the broadcast
system. Our proposed services will create opportunities and open doors for
creative talent from all regions of the country.
20519 The digital era we are about to embark upon will not be for the faint
of heart. We know from direct experience.
20520 Madame Chair, no player regardless of size, has a lock on big ideas or
how to make them work. I think that the ability to bring a new perspective, a
fresh look, a different brand is going to be critically important if these new
services are to be successful.
20521 We are up to the challenge.
20522 That concludes our presentation. We would be more than pleased to
answer any questions that you might have.
20523 THE CHAIRPERSON: Thank you. Welcome Mr. Craig and your colleagues.
20524 MR. CRAIG: Thank you very much.
20525 THE CHAIRPERSON: I hope you had a good trip east. At least we have some
20526 Commissioner Wilson, please.
20527 COMMISSIONER WILSON: We may have sunshine, but we don't get to see it
locked in this room with no windows.
20528 I probably would have enjoyed having the volume turned up on that
video. There's nothing like television to give you an idea of what television is
going to look like. So I am always happy to see video presentations that are
part of the presentations that you make to us here.
20529 You know the drill, I am sure, from watching. We will be going through
some general questions and picking your brains on various sort of broad issues.
Then we will be going into each of the applications and, basically, clarifying
areas we are not clear on. So, we won't be doing exhaustive questioning on the
programming concepts and that kind of thing. It will just be to clear up certain
aspects of your applications that need to be on the public record.
20530 You said in your opening remarks, Mr. Craig, and welcome to all of
you, it's nice to have you here, you said that you had a unique perspective to
offer and as I was preparing for this I thought that myself because you are a
distributor and you operate conventional television and radio. Specialty is the
only area that you are not in.
20531 I guess even though you have outlined in your opening remarks your
approach to the criteria, I was wondering if you might take a few more minutes
to expand on what you think is most important, especially because you have been
doing so much experimentation in the digital area, what you think is going to be
the most important thing in terms of driving the roll-out of digital and trying
to balance that against of course what regulators love the most, which is
20532 We heard yesterday from Corus, from John Cassaday, that he thought we
should choose genres overall, the ones that we felt would be the most popular,
and then into that, into those genres, you know, pick the applications that best
met our criterion. In my mind there is really no contradiction between that
approach and the approach that we put out in our Public Notice, but I would be
interested to hear your views.
20533 MR. CRAIG: Certainly. Well, we have had lots of lively debate on this
issue and especially this over the last week and a half, as we have heard other
applicants answer this question. But I think, as you pointed out, we do have a
bit of a different perspective because we are also on the distribution side of
20534 So we have tried to sort of balance it I think from both perspectives.
Essentially, we have boiled down the criteria really to three main points.
20535 Firstly, we believe that the most important criteria is simply the
20536 THE CHAIRPERSON: Mr. Craig, perhaps if you pushed your mic --
20537 THE CHAIRPERSON: Push it away from you because we get --
20538 MR. CRAIG: I'm sorry.
20539 THE CHAIRPERSON: I never thought I would give advice to a
--- Laugher / Rires
20540 MR. CRAIG: Everybody needs a good producer.
20541 THE CHAIRPERSON: That's right.
20542 MR. CRAIG: I will maybe start again in terms of how we set out the
20543 I think, first and foremost, we all agree in our company that the
attractiveness of the program concept is the most important thing to the digital
20544 The key question here is coming up with programming that isn't
available now. What programming is going to be available in this new digital
tier that isn't available now?
20545 In that area, we think that the Commission should be looking for new
programming, should be looking for original programming and an innovative
concept, with significant Canadian programming commitments.
20546 We include Canadian programming in Cancon, under this heading, because
we think that, in the digital universe, the Canadian content is really what's
going to make these services different and stand out from the vast array of
choices the consumer is going to have coming from elsewhere.
20547 So plans to stimulate the creation and to showcase Canadian content
should be weighed heavily, we believe, in your decisions and, also, we believe
the presence of the interactive components that enhance the TV
experience -- and, of course, from our BDU side, this is important. We
have -- everybody in our universe of customers, on the SkyCable side of our
company, has a digital box and as we get into second-and third-generation
boxes -- and we can tell you more about that in the future -- we think
that, you know, interactivity really enhances the viewing experience and we
believe that's very, very important.
20548 And we also believe that interactivity is also a great leveller, in
terms of breaking down barriers on this tier, in terms of regional input.
Somebody from a rural part of Canada could have access to one of these digital
channels, using interactivity.
20549 So we think -- in terms of what it contributes, I think it creates
a tremendous amount of diversity in a country that's certainly as big as
20550 The second heading that we have come up with, that we have looked at,
is "Affordability", and we believe that you should give weight to services that
make affordable and attractive packaging partners, and we also believe that you
should be looking at, in this digital tier, looking at services that have
wholesale rates in the lower end of the range to make the package attractive.
Because, after all that's what we are doing here, we are selling television to
the consumer, and they have to pay for it, with their hard-earned money.
20551 The third point that we think the Commission should be looking at is a
new voice, in the specialty realm. And somebody asked me the other day whether
or not the Commission should be considering somebody that isn't from outside the
business, totally outside the broadcasting business. We have infrastructure, but
I think that that's the way the broadcast system was built, in the past, and I
think this is a great opportunity for the Commission to bring some new blood
into this business.
20552 COMMISSIONER WILSON: I believe Catherine Tait described that as
diversity but diversity of ownership instead of genre and content.
20553 MR. CRAIG: Right. You know, and I think there's a balance there.
20554 But I think that this digital -- this new digital universe needs a
variety of players, each should bring something different to the table,
so -- and have their own particular strengths and creativity to bring
customers to this digital box and get them to buy the digital box.
20555 So, really, we boiled it all down to sort of three key components:
Number 1 is attractiveness to digital subscribers; Number 2 is affordability and
packaging; and Number 3 is diversity of ownership, with the wherewithal and a
sound business plan.
20556 COMMISSIONER WILSON: Thanks, Mr. Craig.
20557 On the issue of implementation, we have been having some interesting
discussions about what approach the Commission should take to how these services
will launch and whether or not we should be involved; and if we are involved, to
20558 There have been some suggestions that we should set the launch date,
and perhaps even prescribe a date by which negotiations would be concluded
between the distributors and the programming services, and some suggestions,
even, about how big the packages might be.
20559 I'm just wondering if you have any views on this, since you wear those
two hats of distributor and programmer. What's your view of about whether or not
we should be involved or how much we should be involved, if we have to be?
20560 MR. CRAIG: Well, we agree with the concept. We think that a hard launch
date, where there's a collective launch, makes a lot sense, from both sides of
our company. So we think that's reasonable and wise, in terms of trying to get
this digital tier off the ground.
20561 There was a suggestion, I think, by somebody, that there was --
you know, set the negotiation date and then, six months later, launch. I think
that's a little onerous. I think that -- you know, I think that window
could be shortened, you know, to, say, three months. But I think sort of setting
a date --
20562 COMMISSIONER WILSON: Three months after the conclusion of
20563 MR. CRAIG: Yes.
20564 So we think that's fair and reasonable.
20565 And we also think, from the BDU side, that that gives the BDU, and the
programmers, an opportunity to get together, form their marketing plans and
launch this digital tier, collectively. So we think that's, conceptually, a good
20566 COMMISSIONER WILSON: Do you think we should say that? As the
Commission. Or prescribe it?
20567 MR. CRAIG: If you feel that -- I guess you are going to have to
get a sense of how the other industry players want to launch this tier, and I
guess if you think that you are not going to get the level of co-operation that
you need and can't be assured that you are not going to get the level of
co-operation that you need, then you are going to have to --
20568 COMMISSIONER WILSON: I think it's more whether or not you feel you are
going to get the co-operation that you need that would suggest to us that we
might want to step in.
20569 MR. CRAIG: We think it's a good idea.
20570 COMMISSIONER WILSON: Okay. What's your view about whether or not
Category 2 services should be able to launch before Category 1s? Or should they
be limited to launching simultaneously, or afterwards?
20571 MR. CRAIG: I think they should launch after.
20572 COMMISSIONER WILSON: Why after? I mean there's been some discussion
about, you know, if you are going to pay $11 or $12 to have the digital box, in
the cable universe, then you should have as large a package as possible of
services that you can go to the marketplace with so that you can excite people
about the possibility of what they can receive.
20573 MR. CRAIG: I'm not sure the large package matters.
20574 COMMISSIONER WILSON: I'm not talking about a large package; I'm talking
about a large number of services that can be used in different configurations,
whatever configurations the distributors figure out are the best for selling the
20575 If there are only 10 services, would you pay $12 for 10 services? And
pay for those services on top of the cost of the box? I don't know. Those are
the questions that I'm asking myself.
20576 I'm wondering why you are saying they should launch afterwards.
20577 MR. CRAIG: Well, I think that, you know, with the commitments that the
applicants are putting forward, I think they should have a chance to get off the
ground and I think, with a package of 10 services -- and Sandi may
want to comment on this, from the distribution side -- but I would think,
with a package of 10 services that are new and fresh, I would think that would
be a good starting point to get the whole digital tier off the ground. In other
words, I think that would be enough.
20578 COMMISSIONER WILSON: Okay. And do you think that we should impose a
minimum amount of time by which a Category 1 licensee has to implement their
20579 MR. CRAIG: Yes.
20580 COMMISSIONER WILSON: And what would that time period be?
20581 MR. CRAIG: Well, I would think that, you know, if a launch date is set,
I would think a reasonable amount of time after that to get launched, if
everybody else is able to make a deal and launch, I would think it should be 12
20582 COMMISSIONER WILSON: So, within 12 months -- like 12 months
from the date to the decision is issued?
20583 MR. CRAIG: I would say 12 months from the date that everybody else
launches. In other words, if you set September 1 as the launch date and you have
launched 12 months later --
20584 COMMISSIONER WILSON: I guess, you know, what I wonder about is, if you
have got this valuable piece of property and your licence that brings with it
all sorts of regulatory privileges and support, how long do we want to allow
people to occupy that space before we say, you know, "Come back and talk to us
about why you are not launching, or give it back".
20585 MR. CRAIG: Yes, I mean, typically, what the Commission has done is
said, you know, when the Commission issues a licence and sets a reasonable time
to get on the air, if you haven't met that deadline then you have to ask
permission to get more time, and if the Commission deems it necessary, you are
back at a hearing, right away.
20586 So, you know, I think if there's -- you know, from our company's
perspective, we would launch and commit to launch on the firm launch date.
20587 COMMISSIONER WILSON: September 1, 2001, if that were --
20588 MR. CRAIG: Correct.
20589 COMMISSIONER WILSON: -- the date that everyone agreed upon?
20590 Would you allow more flexibility for the Category 2 services? In terms
of a time frame within which they had to launch.
20591 MR. CRAIG: I think our sense is that there should be more flexibility
given because we are asking the distribution side of the business to give up
more of their bandwidth and it could be tricky for some of them. So I think
there should be more flexibility given if you do have a Category 2 licence to
have a longer period of time in which to negotiate some sort of reasonable
20592 COMMISSIONER WILSON: Okay. We have been having a lot of discussions
also about the area of independent production. I guess the big question is: In
the digital environment, given the challenges inherent in that environment, do
we still need to impose limits? Do we need to take the same approach in that
environment that we take in the analog environment where we limit the amount of
programming that you can purchase from an affiliated producer. Do we need to do
that in the digital environment do you think?
20593 MR. CRAIG: I think so, because I think what you are talking about is a
new opportunity with new money that is technically incremental to the system. I
think it opens up a lot of great opportunities for independent producers.
Certainly the approach that we have taken is that there is money specifically
earmarked in our applications for, in some cases, in-house production --
some channels don't have a lot of in-house production in our case -- but we
have been very specific about what we are prepared to do for the independent
20594 COMMISSIONER WILSON: Actually, you have an independent producer who is
involved in one of your applications so that would give you some perspective on
20595 MS STRAIN: Commissioner Wilson, if I could just add something to
20596 COMMISSIONER WILSON: Absolutely.
20597 MS STRAIN: I guess it gets back to this idea of diversity. The industry
is certainly consolidating and producers are becoming broadcasters and vice
versa, so I think the principle is that we want to continue to make sure that
independent producers have access to funds that are available to them.
20598 So yes, we do think it is important that you set certain
20599 COMMISSIONER WILSON: How do you define "independent producer"? What is
20600 MS STRAIN: I thought that question --
20601 COMMISSIONER WILSON: I'm sure you are all ready for it.
20602 MS STRAIN: Our definition of an independent production company would be
one in which Craig or its affiliates own less than 30 per cent of the
voting equity of that company. I think that is -- my understanding is that
is consistent with your decision in the Food Network and with what some other
parties have said here in these proceedings.
20603 COMMISSIONER WILSON: Okay. I guess it was CHUM who added another layer
to this by talking about affiliated and non-affiliated producers, and actually I
believe it was Corus and Salter Street yesterday both talked in terms of any
independent producer who was at arm's length from the company because there is a
legal definition of "affiliate", a corporate legal definition of
20604 MS STRAIN: Well, for instance, Craig right now obviously doesn't have
any interests in any production companies, but, you know, were we to own, say,
10 per cent of an interest in a company, then certainly that company would
be an affiliate, but we would still consider it to be an independent
20605 COMMISSIONER WILSON: What about --
20606 MS STRAIN: We would consider it to be arm's length, if you want to look
at it from that perspective.
20607 COMMISSIONER WILSON: What about Lions Gate?
20608 MS STRAIN: Lions Gate has --
20609 COMMISSIONER WILSON: In terms of Festival, since they would have an
equity interest --
20610 MS STRAIN: Right.
20611 COMMISSIONER WILSON: -- in the channel. Would you consider them
affiliated or non-affiliated or arm's length?
20612 MS STRAIN: For the purposes of our access to our Priority Program Fund,
they would have no access to that.
20613 COMMISSIONER WILSON: They would have no access.
20614 MS STRAIN: No access.
20615 COMMISSIONER WILSON: Okay.
20616 I would like to talk now about some issues related to interactivity,
again, Mr. Craig, drawing on your experience as a BDU, and then talk about
sort of your general approach to interactivity across all of the applications,
just so that we can sort of put that context on the record for discussions about
each of the individual applications that you have put before us.
20617 If we license a Category 1 service that has interactive elements that
are to be delivered by the set-top box, should distributors be obligated to
carry those interactive components? Are they integral to the service?
20618 MR. CRAIG: Yes, they are integral. I think that -- we have been
doing a lot of thinking about this. There has been a lot of discussion about
should it be carried.
20619 I guess the approach that we have taken to interactivity is that it is
a very efficient use of the bandwidth for the interactive component of the
services. So, in other words, it is a very low volume of bandwidth and data
travelling back and forth that is required for the interactivity.
20620 Part of it, I will maybe ask --
20621 COMMISSIONER WILSON: Did you say a low volume of bandwidth?
20622 MR. CRAIG: Yes. I am going to ask Paul East, who is our technical guy,
to give you an idea about the approach that we have taken with
20623 COMMISSIONER WILSON: Before you start, Mr. East --
20624 MR. CRAIG: Yes?
20625 COMMISSIONER WILSON: -- if I can just say that when we are
talking about exchanging between the programmer and the viewer textual
information then you are talking about one level of bandwidth
20626 MR. CRAIG: Right.
20627 COMMISSIONER WILSON: -- but if you are talking about simultaneous
view programming or choosing camera angles or any kind of interactivity at that
level, then you are talking about another level of bandwidth requirement. So I
would like you to sort of talk about those two stages.
20628 MR. CRAIG: Yes.
20629 COMMISSIONER WILSON: There is a fairly simple level and then there is a
more advanced level.
20630 MR. CRAIG: That's right.
20631 I guess the issue is, when you go to the advanced level you are using
up bandwidth to do that.
20632 COMMISSIONER WILSON: Could you use up a whole other channel worth of
20633 MR. CRAIG: Yes, technically you could, if you want a full return
20634 COMMISSIONER WILSON: You could.
20635 MR. CRAIG: We don't think that that is (a) what the consumer wants, and
(b) the most efficient way to deal with interactivity.
20636 There are more efficient ways to do it using IP protocol, and I will
maybe just let Paul give you a sense of how we have approached this on SkyCable
as an example.
20637 COMMISSIONER WILSON: Okay.
20638 MR. EAST: As you know this Commission licensed SkyCable Pacific just
last month and since then we have been working quite hard on specing out that
system. As a company building from scratch a digital BDU system we definitely
have found some interesting technology up there.
20639 Just last week we met with representatives of ASC Technology, a
mid-sized American-Taiwanese supplier of set-top boxes, and they showed us the
specs for a new box which included DVB decoding, a TiVo client with a 10
gigabyte hard drive, a docsys cable modem, a Java virtual machine and a
Java-coded Web browser and e-mail client, all of this for under $400 per box in
quantity. There are other manufacturers offering similar packages such as the
Motorola GI 5000 Plus and the Scientific Atlantis 6000 model set-top
20640 So when we look at this type of technology we can make a few
conclusions, and I think the inclusion of a cable modem in a set-top box greatly
simplifies the return path for data, as Drew was saying. That is, our
interactive TV shows and advertising can make use of Internet technologies by
virtue of the built-in high-speed modem to offer seamless feedback from the
20641 For example, when a set-top is tuned to one of our specialty channels
it is told where to find the interactive content server on the Internet. Then,
using the built-in Java virtual machine, the set-top loads our interactive
20642 I would point out that this happens through the Internet connection and
not the MPEG broadcast stream. That is why it is our position that, you know, to
a large degree interactive TV can be relatively light in terms of additional
bandwidth. That is what we are looking at from both --
20643 COMMISSIONER WILSON: Do you have to have a separate hook-up in order
for the cable modem in that box to work? I mean, I have a cable modem at home
for my computer and I also have cable for my television and I pay separately for
both of them.
20644 MR. EAST: Well, what we are seeing from set-top box suppliers is the
integration of that docsys cable modem in the set-top box. It is a logical thing
to add into the set-top box because it enables this interactivity and it would
also save costs from the BDU standpoint integrating the two products together
and is the opportunity to sell Internet service as well.
20645 COMMISSIONER WILSON: Is it your understanding that that is the box that
the cable industry is going to roll out here?
20646 Who is making that box?
20647 MR. EAST: Boxes such as that, the one I was just describing was from
ASC, but both Motorola General Instruments and Scientific Atlanta also have
boxes designed with RF -- well, they often label them an Ethernet
connection integration into the box for interactivity.
20648 COMMISSIONER WILSON: Okay.
20649 MR. EAST: So I think it is definitely the way -- it is the logical
way to go for both the BDU and for the program supplier.
20650 COMMISSIONER WILSON: So, Mr. Craig, your argument would be when
you said that it is the most efficient way of providing interactivity and the
most efficient use of bandwidth. Is that --
20651 MR. CRAIG: I think, you know, as Paul has mentioned, the new generation
bandwidths have two things going for them -- or the new generation set-top
boxes have two things going for them.
20652 They have storage, high-density storage, built into the box. So it is a
TiVo-like device built into the box, so they can actually store material and
video in the box; plus they have a built-in modem.
20653 On SkyCable, for instance, you would have the ability to build and use
that modem and use IP telephony to trigger all sorts of interactivity through
the remote control on the set-top box.
20654 COMMISSIONER WILSON: How do you manage your return path for SkyCable
20655 MR. EAST: In the case of say SkyCable Pacific, the licence -- the
return path technically is 2156 to 2160 megaHerz. There are four megaHerz set
aside by Industry Canada for the MDS licence in the region.
20656 At the customer premise there is a transceiver installed with the
antenna that actually transmits wireless data back to our headend. That system
is operating right now in Manitoba, and that is the system that SkyCable will be
building in B.C.
20657 With that said, we have not finished the RFP process.
20658 MR. CRAIG: Commissioner Wilson, could I ask Sandi McDonald to add
something to this, please.
20659 COMMISSIONER WILSON: Sure.
20660 MS McDONALD: Thanks, Drew. A couple of things.
20661 When we talk about our BDU strategy, I would like to go back for a
moment to one of your first questions, which was: Should BDUs be required to
carry and when should you launch?
20662 We were sort of hoping that everything would launch by 2001, but not
too much before; just in time for us to have our SkyCable Pacific operation up
20663 COMMISSIONER WILSON: Are you suggesting that we should take that into
20664 MS McDONALD: I am suggesting that we certainly should.
20665 With respect to our approach on both sides of the house to
interactivity, I guess we have made it quite clear that we are concerned on the
distribution side about the issues of bandwidth hungry applications.
20666 Initially on our channels that we are proposing we do have a focus on a
two-screen experience, moving over the next number of years to the set-top
20667 So, in a way, the interactivity element -- right now we say it
contributes to diversity, but in another way it is such a diversification in
terms of the platforms. We have a television; we have a set-top box; we have a
computer. In many of our applications we have Web cams, and so on.
20668 Along the continuum, the goal is to move from a diversification of
these peripherals to a unification around the television set and that set-top
box. We know that will take time.
20669 That is the continuum and the goal.
20670 COMMISSIONER WILSON: And that underlies your interactivity
20671 MS McDONALD: That is the strategy. Perhaps I could tell you a little
bit more about --
20672 COMMISSIONER WILSON: Initially, it would be -- actually, I do want
to talk a bit more, but there are a couple of technical things that I would like
to talk about first before we talk about how you anticipate your interactive
elements rolling out in the services that you are proposing. If you don't mind,
I just want to get past this.
20673 You are probably wishing I was on the panel for the MDS licence in B.C.
so that I would know all of this stuff and I didn't have to be asking it. But
you will indulge me, I hope.
20674 You have talked about how you manage the return path in your MDS
distribution undertakings. Do you have any concerns about the ability of either
cable or DTH operators to make your interactive elements available to
subscribers? Or is it, in fact, easier?
20675 For cable, it certainly could be. But what about DTH?
20676 MS McDONALD: We don't have a concern on the DTH side.
20677 COMMISSIONER WILSON: Okay. When do you expect the full or true TV
interactivity through the set-top box to become available?
20678 MS McDONALD: Perhaps I will answer that in a technical way. I am going
to ask both Paul and Elan Gillespie from PricewaterhouseCoopers to help us out
with that, to give you a profile of how they think the world will unfold on the
20679 Paul, maybe you could start.
20680 MR. EAST: Sure. I think perhaps, Commissioner Wilson, it is apparent
that the current generation of set-tops does not allow the type of immediate
interactivity we have been describing, although I feel that the content may be
so compelling and the pressure from freshly build third generation systems such
as SkyCable Pacific will be great enough to push the larger BDUs to move quickly
towards full interactivity.
20681 Regardless, as Sandi has mentioned, the same Internet server that
provides our set-top box interactive application will also provide a similar
interactivity, via Web site, for use on a traditional PC platform.
20682 Going through the transcripts from the proceedings, I think a gentleman
from Rogers described perhaps a full interactivity, their second generation of
interactivity in 12 to 18 months; and a gentleman from Bell mentioned --
they mentioned several steps, but they also mentioned the desire to launch a new
satellite, MIMIC II, which would give them a bidirectional interactive
20683 While I don't purport to speak for other companies, we actually do feel
quite strongly that bidirectional communications is going to be a cornerstone in
a BDU system.
20684 COMMISSIONER WILSON: Do you agree with the 12-to-18-month time frame
that they have suggested?
20685 MR. EAST: Well, I would have to think that they had a reason for saying
that, I would hope.
20686 COMMISSIONER WILSON: We will have to find out which reason it was,
20687 MS McDONALD: Perhaps Elan can give us some --
20688 MR. EAST: I was just going to point out that we will have ours
operational within 12 months.
20689 MS McDONALD: We will be up and running within 12 to 18 months.
20690 COMMISSIONER WILSON: The reason I am asking is because -- it is
fine for you to answer me as a BDU and say you will be up in 12 to 18 months.
But as a programmer, those issues would be really important because the
interactivity forms an important part of the concepts of the applications that
you have put before us.
20691 I am really more interested in your view of how quickly you are going
to be able to offer your viewers to your channels the interactivity that you
envision as part of the application.
20692 MR. CRAIG: I will start with that, and Sandi may want to jump in.
20693 I think that initially, on day one, we have interactivity using the
20694 COMMISSIONER WILSON: Right.
20695 MR. CRAIG: So on day one you have embedded content, but you are using
Web technology to get it to the consumers. Sandi referred to it as the
20696 COMMISSIONER WILSON: Right, the dual platform.
20697 MR. CRAIG: The dual platform. That is going to happen on day one.
20698 COMMISSIONER WILSON: How soon before the single platform do you
anticipate it is going to be?
20699 MR. CRAIG: As Paul mentioned, the box is ready today. For instance, any
new boxes that we buy for our BDU will be the latest generation.
20700 So technically, as soon as they deliver that box we can put it in the
field and it's there.
20701 Even on our older generation boxes, it would not make sense for us to
go backwards in terms of technology.
20702 COMMISSIONER WILSON: Right. As a programming service, though, hopefully
you are going to be launched on more than just SkyCable.
20703 MR. CRAIG: Absolutely. Hopefully, we will. We will need a few more
20704 COMMISSIONER WILSON: We are going to talk about that.
20705 MR. CRAIG: Yes. I guess we have to believe Rogers when they say 12 to
18 months. As Paul indicated, it is not a technology problem. They just need to
buy the boxes and put them in homes.
20706 I guess, from our perspective, we believe that time frame seems
20707 COMMISSIONER WILSON: Ms McDonald, did you want to talk about your
strategy, the interactivity strategy across all of the channels.
20708 MS McDONALD: I would love to.
20709 COMMISSIONER WILSON: Not from a technical standpoint but more
20710 MS McDONALD: From a business point of view, interactivity --
evidently we have been discussing it in terms of its role as a key driver for
the digital tier, which we have just discussed and agreed upon.
20711 As Drew mentioned earlier, it is also a great equalizer in terms of
breaking down those barriers of Access, of regional diversity, cultural, and
what contribution to diversity.
20712 It is also a key driver for our business plan, given both sides of our
various houses. Our business strategy is to be online through the Internet and
interactive through the set-top box.
20713 I probably should have mentioned that actually we have a three-screen
experience going on for the first couple of years, and we think probably that
will be a couple of years. We have the Internet; we have these Web cams; and
then we have the set-top box.
20714 As I mentioned earlier, we have indeed spent $1 million on developing
our Internet strategy so far, and we are incubating the Web sites that we will
be developing for each of the channels, and developing interactive content
in-house as well.
20715 Our Web sites will launch before our channels. We would be prepared to
launch those in advance.
20716 One final comment with respect to the channels and the development of
interactive programming: our priority program funds set aside about $1.3 million
for new media content development, in terms of program concepts and script
development and so on.
20717 In a moment I am going to ask Glenn to take you through some of the
specific interactive concepts for each of the channels. But just before I do
that, I want to touch for a moment on Craig New Media.
20718 We structured Craig New Media as a separate operating company to
basically be a service provider, to operate as a consulting service team to each
of our units. Craig New Media is an accelerator for our business model of
interactivity. It will be the incubator and provider of interactive services
across the Craig group of families.
20719 At this time I will ask Glenn to take us through some of the great
interactive plans that we have developed jointly for these channels.
20720 MR. SUART: Thanks, Sandi.
20721 We have been helping for the last year -- PricewaterhouseCoopers
has been helping Craig New Media. We focused mostly on the Internet for the
short term, because it is here and now and we can react to it. We can generate
returns. And we have more viewers, in a sense, than we will have on interactive
TV for a long period of time.
20722 What we did in developing these applications was put in a fairly
detailed strategy, which we submitted as part of the applications to sort of
give you a sense of what we are trying to do.
20723 We want to be more than "brochure-ware". We didn't want to just come
here and say: Hey, we have this great Festival channel. Here are the TV listings
of what we are having tonight. That is just not where we wanted to be.
20724 Drew's challenge to us basically was: Let's try to make e-business
fundamental to the channel, but yet standalone by itself. For example, if you
are not a subscriber to Festival or The MET or Connect, and you don't even have
a digital set-top box, you could get access to the services that we are going to
provide from the channel on the Internet. You could participate in the
community. Theoretically, if you participate in the community and have access to
some of the services, you might then want to get the digital set-top box and
subscribe to the services.
20725 What we did was, we tried to develop some interesting strategies. I
won't go through exactly all of the elements, but, for example, for Festival, we
talked about virtual film festivals. I think you have heard something along that
line already from other applicants. We want to see on the Internet that you can
go to see films. You can actually see the festivals themselves.
20726 We also wanted to give the actual participants, or the viewers, a
chance to possibly create their own shorts and films. We wanted to give them the
tools on-line to be able to do that and to help package them.
20727 Of course, if you are going to do that, you might want to offer
educational and credit courses through colleges, et cetera.
20728 There are all sorts of possibilities like that.
20729 When you go over to The MET, it is very similar. You could have live
music festivals. You could have pay-per-view performances from bars in Halifax
or Yukon or wherever.
20730 You could also --
20731 COMMISSIONER WILSON: And those would be streaming on the site.
20732 MR. SUART: You could do streaming on site, yes, for pay per view.
20733 And then you would work it into all sorts of other applications. You
could download videos; of course, clearing all the rights. You could
20734 COMMISSIONER WILSON: I was just going to say, what about the
20735 MR. SUART: That is a big issue of course. But in a couple of years that
might be resolved, by the time we actually do it in a big way.
20736 COMMISSIONER WILSON: Because why would you bother having it on pay per
view if you can get it free on the Web?
20737 MR. SUART: Very possibly. I don't know. It depends on the specific
20738 The other thing is, you can give, again, tools for the musicians to
create their own videos. You could have amateur videos which would then get
streamed on the site. You could share them with your friends on that particular
site. Hey, the best ones, we could perhaps use them on the channel.
20739 For Connect, we also talked about taking the best of what we just
talked about for Festival and the music channel, adding Net cams and putting
them everywhere. So, again, you could have people participating through the
Internet on our channel.
20740 But those are just services aimed at consumers. The other side of this
whole equation is trade exchanges, actually the business side of the film
industry and the music industry. Right from the beginning that is where the
potential really is for the Internet, and that is creating a community for the
professionals to actually interact and do things.
20741 If you are going to have, for example, a movie production, you could,
as a producer, rent the hall, have the cast and crew, do all the accounting,
book the travel -- do everything all in one location. If you are on The MET
Web site, as a bar owner you could preview bands right across the country,
choose the one that you want to have come to your bar, and then book it all
20742 So there are those kinds of possibilities.
20743 You could do the virtual pitching. You know, the $2,000 cup of
coffee -- the famous one. You wouldn't have to do that in some cases.
20744 That is a trade exchange. That is a very difficult thing to do and we
are trying to do it now.
20745 I guess, in a sense, the Internet strategy is both, to be to consumers
and also to be to the business side, and that is what we are going to try to
20746 COMMISSIONER WILSON: Thanks for that elaboration on how the sites are
going to work.
20747 I want to ask you about how you have structured Craig New Media,
because there is a part in the application form where we have asked you to
identify costs and revenues associated with your sites. They are not regulated
revenues, of course, but we did ask to see costs and revenues. So you have set
up this separate company and everything is going to flow through that. But you
did talk about reinvesting some money in your programming services, and I wonder
if you could just explain that to me a little bit.
20748 MR. CRAIG: First of all, I will maybe start on the revenue sharing
concept that we put forward in the applications, and then I will let Sandi talk
about the structure of Craig New Media and how it is going to work.
20749 I think we need to clarify what was in the application and tell you
what our thinking was.
20750 Our thinking, simply, was that if we used the BDU's bandwidth to create
revenue for the channel, then the BDU should get paid. In other words, if we use
their bits and bytes to sell a product, they should get something, because we
are using their valuable and precious bandwidth to do that. The
20751 COMMISSIONER WILSON: So you are in favour of revenue sharing.
20752 MR. CRAIG: Yes, we are.
20753 The concept that we put forward -- and we should clarify it,
because in the application it says Web and interactive revenues. It is not Web
and interactive. What we mean in the concept that we put on the table is that we
are prepared to give back to the BDUs 20 per cent of the revenue that we
generate through interactivity using their expensive set-top box, their
expensive cable network -- or wireless network -- and their expensive
bandwidth. So we believe that there needs to be a spirit of co-operation between
the two parties, and we are prepared to give up --
20754 COMMISSIONER WILSON: And I imagine you have heard that Mr. O'Farrell
from Global suggested that there be some kind of process where issues like this
were sorted out prior to the launch of the services, so that there was some kind
of framework in place to deal with the notion of whether or not the BDU should
be compensated for the additional bandwidth that is required to deliver the
interactive elements and how that might work.
20755 MR. CRAIG: Yes. I mean --
20756 COMMISSIONER WILSON: Are you in favour of that kind of process?
20757 MR. CRAIG: Yes, we are. As we have talked about, there is a whole bunch
of different ways to achieve interactivity. Some are, as Sandi calls them,
bandwidth-hungry applications, and some are more efficient.
20758 So I think that we recognize that the bandwidth issue is -- it is
a scarce commodity. It is a valuable commodity. If we are generating new
revenues through our channel that are incremental to our business plan by using
their pipe, they should be compensated.
20759 COMMISSIONER WILSON: Is that why you separated them out from the
20760 MR. CRAIG: That's correct.
20761 COMMISSIONER WILSON: I think that answers my question.
20762 I am going to give you two quick and easy questions. They are one-word
20763 Personal Information Protection and Electronic Documents Act: Yes?
20764 MS STRAIN: Yes.
20765 COMMISSIONER WILSON: Filler programming?
20766 MS STRAIN: Yes. No.
20767 COMMISSIONER WILSON: Yes what?
20768 MS STRAIN: Yes, we would be delighted to remove it from our
20769 COMMISSIONER WILSON: Yes; you will be delighted to remove it from your
20770 I want to look at Canadian programming expenditures.
20771 Do you believe that, in the digital environment, it is necessary to
have a condition of licence regulating minimum levels of Canadian programming
20772 MR. CRAIG: Yes.
20773 COMMISSIONER WILSON: That's another one-word answer. We are moving
right along here.
20774 Several different approaches to calculating Canadian programming
expenditures have been floated during the course of this hearing, on the basis
that in this environment where, I think we heard this morning's applicants
describe it as having very thin air, that you would need as much flexibility as
possible to be able to fulfil the commitments that you have made, so a number of
different ideas have been floated.
20775 Our current formula takes seven-year total Canadian expenditures and
divides it by the total seven-year projected advertising and subscription
revenues, and some people have suggested that -- actually, I don't think
20776 I have to consult my lawyer. I have to consult my expert. On Canadian
programming expenditures. I'm so sorry. I'm confused. We had poor Mr. Haggarty,
from Corus, yesterday, talking about the traditional method and the new method,
and the Chair had to have a little discussion with him about how to calculate
it, his Canadian programming expenditures.
20777 Anyway, there's the traditional method. Which I'm sure you all know
about. And then there are these other flexible methods where it might be 10 per
cent over, or under, per year, or you would average it over the entire licence
term, or you would apply the commitment and we would hold you to it from Years 3
20778 I'm just wondering, if you have been listening to these discussions,
what's your view? What kind of flexibility do you think you need? What would be
the best way to achieve that?
20779 MS STRAIN: Commissioner Wilson, I think we understand -- I think
we understand the existing method, which is that one is required to meet the
percentage commitment on an annual basis.
20780 COMMISSIONER WILSON: That's right. On an annual basis.
20781 MS STRAIN: And we have structured our applications, and the commitments
percentages that we have made in each of our applications, we are prepared to
live with that on an annual basis.
20782 But, of course, I think, as everybody has said at this hearing, were
you to determine that some flexibility is a good thing, we agree with you. I
don't know what more I can say to that. We are prepared to stand by what we have
said in the applications --
20783 COMMISSIONER WILSON: Right.
20784 MS STRAIN: -- meet it on an annual basis but, actually, the more
I think --
20785 COMMISSIONER WILSON: Would gratefully accept any flexibility we
20786 MS STRAIN: Absolutely. Yes.
20787 COMMISSIONER WILSON: Okay. Now, I want to just -- just to get this
out of the way, in terms of your Canadian programming expenditure
20788 For each of your services, you proposed -- well, I'm not sure I
actually saw an actual proposal in The Met.
20789 Okay, for Connect and Festival, you proposed 40 per cent of the
previous year's revenues. And the staff calculation was 43 per cent.
20790 Now, had you heard that through the deficiency process? I don't think
so. I don't think I remember reading that --
20791 MS STRAIN: Commissioner Wilson, we didn't get any deficiency
correspondence, on that issue.
20792 COMMISSIONER WILSON: You didn't --
20793 MS STRAIN: No.
20794 COMMISSIONER WILSON: -- receive any? Okay. So I'm asking you
20795 You proposed 40 and we calculated 43. Would you accept 43, as a
20796 MS STRAIN: If you could just give me a minute -- or maybe I will
ask Al Thorgeirson --
20797 THE CHAIRPERSON: Do you know -- how did you arrive at 40 per cent?
Let me tell you the simple way in which we do. We take all your regulated
revenue for the seven years in your predictions; we add them up, and that gives
us a numerator; we then take all your predicted Canadian content numbers in your
projections, and that gives us a denominator; that gives us, then, a percentage
which is applied, beginning in Year 2, to the revenue achieved in Year 1. So, do
you -- I'm not sure why there is a discrepancy. It depends what you --
in some cases, the discrepancy was created by the fact that non-regulated
revenue was also added in, into the revenue line, but I don't see -- I
don't have your entire application. So, is that the case? Or did you only
take -- by "regulated revenue", we mean advertising revenue and
subscription revenue. And sometimes a discrepancy is caused by the addition. It
can also be caused if you average year by year and then take an average of the
20798 There's a discrepancy of a couple of points, percentage points, so
perhaps -- as we have discussed before, unless you convince us otherwise,
there are -- and you are free to speak to this, of course. There is an
advantage, obviously, in the name of equity, to use the same formula for
everybody, and then if flexibility is indeed offered, one need not use it; one
has it if one needs it or wants to use it. So it's just a question of knowing
how you arrived at the calculation and why the discrepancy. I'm not sure how it
occurred, but it appears to be about the same number of percentages in each
20799 MR. CRAIG: Madam Chair, if I could ask Linda Noto, Chief Financial
Officer, to tell you how she arrived at her calculations, and maybe that will
help us out here.
20800 MS NOTO: Hi.
20801 THE CHAIRPERSON: Hi.
20802 MS NOTO: For each year, we took the total programming expenses and we
20803 COMMISSIONER WILSON: For Canadian?
20804 MS NOTO: For Canadian, yes.
20805 We removed the American, which will get us to the Canadian, and we
removed the SOCAN number, and that gave us the percentage that we showed in our
Schedule 11, under each year. So, for each year, that calculation was done,
dividing by our total revenue for that year --
20806 THE CHAIRPERSON: Yes, that's probably what happened, then.
20807 MS NOTO: -- and at the end of the Year 7, we gave an average
20808 THE CHAIRPERSON: It distorts --
20809 MS NOTO: -- the seven years.
20810 THE CHAIRPERSON: It distorts by about two percentage points.
20811 So, anyway, you can speak to Commissioner Wilson about whether you,
like Mr. Haggarty, are prepared to adopt the traditional method.
20812 MS NOTO: Yes; we are very welcome to --
20813 THE CHAIRPERSON: Because I think that's just about what it does: it
distorts by about 2 per cent.
20814 MS NOTO: Yes, we are.
20815 COMMISSIONER WILSON: I told you she was our expert on Canadian
programming expenditures. She even knows the percentage within which it
20816 Okay. So you will -- you want to stick with the 40 per cent using
the calculation that Madam Wylie has talked about?
20817 MR. CRAIG: Yes.
20818 THE CHAIRPERSON: I would not be sticking to the 40 per cent. It would
be accepting the two percentage points upward -- and we do have the numbers
here as to what the difference is. Either Commissioner Wilson or staff can
correct me, but in Connect it's a 3 per cent difference.
20819 COMMISSIONER WILSON: Yes; in Connect it's 3 per cent, in Festival it's
3 per cent, and in The Met there is no difference.
20820 THE CHAIRPERSON: It's point nine, I think.
20821 MS NOTO: We will commit to the 43 per cent on --
20822 THE CHAIRPERSON: Yes. And we don't usually -- we are not that good
at calculating, so we don't usually use decimals. We round it up.
20823 COMMISSIONER WILSON: You round it up or do you round it
20824 THE CHAIRPERSON: So it calculates 40 -- 40 or 41.
20825 COMMISSIONER WILSON: If we round it up, it becomes 41. All right.
20826 Let's talk a little bit about independent production. And Ms Noto,
maybe you are the person I can sort of go through these figures with and if you
don't have some of them, then you can come back to us. You don't have to madly
calculate right away; we can hear back from you. I believe there's some
take-home questions for different phases of the hearing and you can come back to
us during those phases.
20827 But I just want to verify some of the figures that I read in each of
the applications, just so that I understand what your commitments are.
20828 You made a comment, Ms Levy, I believe, with respect to the $800,000
script and concept development amount, and I wanted to try and understand
whether or not that's included in the $5 million priority programming
20829 So for Connect we have calculated $29.5 million Canadian programming
20830 MS LEVY: Yes, that's correct.
20831 COMMISSIONER WILSON: Is that correct?
20832 And $16.8 million of that goes to independent production for
acquisition of new Canadian programming?
20833 MS LEVY: I think Wayne Sterloff has the calculations on exactly how
much of that is for acquisition, cash acquisition.
20834 COMMISSIONER WILSON: I think I took this from your highlights section
and then again deeper into the supplementary brief you repeated this
20835 MS LEVY: Yes, that's correct, $16.8 million is for the acquisition
of Canadian content from independent producers.
20836 COMMISSIONER WILSON: Okay.
20837 MR. STERLOFF: That doesn't include, however, the licence fees coming
from the priority programming funds.
20838 COMMISSIONER WILSON: I haven't got there yet.
20839 MR. STERLOFF: Sorry.
20840 COMMISSIONER WILSON: That $5 million for the priority program fund on
top of that $16.8?
20841 MS LEVY: That's correct.
20842 COMMISSIONER WILSON: Now, is the $800,000 included in the $5
20843 MS LEVY: No. It's additional
20844 COMMISSIONER WILSON: It's additional?
20845 MS LEVY: Yes.
20846 COMMISSIONER WILSON: How will the script and concept development fund
work? Who gets that money and who administers it?
20847 MS LEVY: There will be someone hired as per usual, in the way that we
have designed some of these funds before. There will be someone who will
administer the fund and will be consulting widely with the industry and the
group of producers and others who are anxious to supply product in this area and
will be coming up with a process that works both for them and for us.
20848 You can appreciate that in each of these areas we are dealing with
people with slightly different takes on production. They may be -- for
instance, with The MET this is often an excellent place for new filmmakers to
really cut their teeth. So when we come to script and concept development there,
there may be perhaps a little bit more hand holding involved, a little bit more
assistance involved there to get them to where they need to be.
20849 COMMISSIONER WILSON: Okay. For Connect what's the number of original
hours of programming?
20850 MS LEVY: Wayne.
20851 MR. STERLOFF: Connect original first run is 567 hours per annum.
20852 COMMISSIONER WILSON: In year one?
20853 MR. STERLOFF: Yes.
20854 COMMISSIONER WILSON: Do you know what per cent of your Canadian
programming expenditures goes to original programming? If you don't, that's
okay. I am curious. We were hearing some big figures yesterday, 99 per cent to
original programming, so I was just curious to know if you knew what percentage
of your Canadian programming expenditures went to original programming.
20855 MR. STERLOFF: I would have to break that out and report it back to you
separately. We certainly, of course, took a look at the break-out between
independent and in-house, but we didn't -- at least in front of me today I
don't have a break-out of the next level.
20856 COMMISSIONER WILSON: For Festival, I just want to go through the
numbers again, $25 million for total Canadian programming expenditures.
20857 MS LEVY: That's correct.
20858 COMMISSIONER WILSON: $14 million to the acquisition of independent
productions, Canadian productions?
20859 MS LEVY: That's correct.
20860 COMMISSIONER WILSON: $5 million for a priority programming fund, and
that $5 million would go to independent producers?
20861 MS LEVY: Exactly.
20862 COMMISSIONER WILSON: The $5.1 million, other Canadian production,
including talent fees to artists working on in-house production. Is that
in-house or independent?
20863 MS LEVY: It's a combination of the two and Wayne has some better
information on that.
20864 MR. STERLOFF: We are talking about Festival specifically at this
20865 COMMISSIONER WILSON: Yes.
20866 MR. STERLOFF: By and large that figure reflects the cost required to
produce all of the interstitial programming that relates to the promotion of
film festivals and new Canadian releases, for example.
20867 As you may recall from the application, Festival has committed to
promote all of the film festivals across Canada. The way we intend to do that is
by using in-house resources and freelance contracts, obviously, from across the
country to assemble those programs and run them daily.
20868 COMMISSIONER WILSON: Do you have any idea what proportion of that $5.1
million would be going to unaffiliated parties or independent parties?
20869 MR. STERLOFF: No, I don't have an exact figure with me, but when we
looked at the total cost to produce those, one advantage we have, of course, is
that we have digital production facilities available to us and Festival will not
be charged any cost. This is a part of the relationship between the conventional
stations that we currently run and the new service.
20870 COMMISSIONER WILSON: The $700,000 script and concept development, the
notation with respect to this was that Festival will commit a portion of its
development fund to independent producers working on leading edge interactive
films. I am just wondering what proportion?
20871 MS LEVY: That's going to be a matter of what the interest is and how it
grows over time. We can look at the world as it is now, but in seven years we
may find that there is either less or more. So rather than boxing ourselves in
with really fixed percentages, we would like to make it an open kind of
20872 One of the advantages that we have is on the production side of
licensing some of this material and what we are finding is that people who want
to produce material in the digital sphere are having a very hard time without
broadcast licences in acquiring other funds.
20873 So we have the advantage I think of offering them assistance in both
20874 COMMISSIONER WILSON: Okay. And that $700,000 would be administered
similarly to the $800,000 for Connect?
20875 MS LEVY: That's right. The advantage that we have is that when we have
designed other funds we have heard from the community that, for instance, in
some cases they would like to have us consider creators at the concept stage
coming to us directly even before they have producers and so forth on board. We
are prepared to look at the whole gamut of what really works and how this money
can really be used to the very best advantage to really create some really
20876 COMMISSIONER WILSON: Okay. Number of original hours, I guess year one,
20877 MR. STERLOFF: Just 70 hours.
20878 COMMISSIONER WILSON: Seventy?
20879 MR. STERLOFF: Seventy hours.
20880 COMMISSIONER WILSON: Do you actually have the figures for over the life
of the licence, how many original hours you are projecting to do each year? I am
not asking you to tell me what they are right now, but do you have those?
20881 MR. STERLOFF: I don't, but we can certainly get them for you.
20882 COMMISSIONER WILSON: Okay.
20883 MR. CRAIG: Commissioner Wilson, can we just ask a question for
clarification on the 70 hours number that Wayne just gave you. Is that on
20884 COMMISSIONER WILSON: Well, no. It should be your total number of
original, first-run hours on the channel.
20885 MR. CRAIG: Okay.
20886 THE CHAIRPERSON: As in radio, the question that we have asked everyone
which I wrote down to ask it in the same way, which would be: Provide the number
of hours of original first window Canadian programs, excluding repeats, each of
your Category 1 services will provide each year and indicate where in your
application your response is substantiated.
20887 MR. CRAIG: We would be happy to provide that.
20888 THE CHAIRPERSON: We don't want great big surprises.
20889 MR. CRAIG: Right.
20890 THE CHAIRPERSON: So we were requesting applicants to bring the response
to this in Phase II, so you will have time. Maybe it's something that is not
done yet in each of your applications.
20891 MR. CRAIG: Thank you.
20892 COMMISSIONER WILSON: So did that help, that question that the Chair
explained to you, clarify it?
20893 MR. CRAIG: Yes. Thank you very much.
20894 COMMISSIONER WILSON: And is it still 70 or do you want to --
20895 MR. CRAIG: I think we will provide that information at Phase II for all
of the applications. We can do it on an annual basis for the seven years for the
20896 COMMISSIONER WILSON: That is fine.
20897 MR. CRAIG: Thank you very much.
20898 COMMISSIONER WILSON: For The MET, $19.6 million total Canadian
20899 MS LEVY: Yes.
20900 COMMISSIONER WILSON: And $1.26 million to the creation of Canadian
20901 MS LEVY: That's correct.
20902 COMMISSIONER WILSON: $660,000 to the production of live concerts?
20903 MS LEVY: That's right.
20904 COMMISSIONER WILSON: The production of live concerts, would that
be -- the $1.26 million, is that to independent producers?
20905 MS LEVY: Yes, it is.
20906 COMMISSIONER WILSON: All of it?
20907 MS LEVY: Absolutely.
20908 COMMISSIONER WILSON: Okay. And the $660,000?
20909 MS LEVY: Yes.
20910 COMMISSIONER WILSON: Okay. And the $600,000 on the documentaries?
20911 MS LEVY: Yes.
20912 COMMISSIONER WILSON: That's independent as well?
20913 MS LEVY: Very.
20914 COMMISSIONER WILSON: The $280,000 script and concept development?
20915 MS LEVY: Yes. That is script and content development and again a
portion for multimedia development.
20916 COMMISSIONER WILSON: Okay. And again you are not committing yourself to
any percentages to independent producers because you would like the
20917 MS LEVY: Yes, thank you.
20918 COMMISSIONER WILSON: Okay.
20919 Then the rest of your Canadian programming expenditures, if you add up
these three elements for independent production they come to about
$2.5 million over seven years. So then the rest of your Canadian program
expenditures would be for programming already in existence or in-house?
20920 MS LEVY: Wayne?
20921 MR. THORGEIRSON: Commissioner Wilson, if you will, a good portion of
that would be taken up with license fees that would be paid to the Audio Visual
Licensing Association for the use of the videos.
20922 COMMISSIONER WILSON: Okay.
20923 MR. THORGEIRSON: The rest, the balance would be for in-house
production, original production.
20924 COMMISSIONER WILSON: Do you know what that split would be?
20925 MR. THORGEIRSON: The AVLA license fees would come to approximately 44.8
to $5 million over the course of the licence term.
20926 COMMISSIONER WILSON: Okay. Thank you.
20927 For described video, you will have the technical capability to provide
described video in your services?
20928 MR. CRAIG: Yes.
20929 COMMISSIONER WILSON: In your applications you say that you:
"...are committed to working with the National Broadcast Reading Service and
others to seek the development of industry-wide solutions to the concerns of
blind or vision-restricted Canadians." (As read)
20930 I'm just wondering, have you actually had discussions with the NBRS
20931 MR. THORGEIRSON: No we have not at this time. In discussing this
earlier, it probably is going to take the form of an industry-wide type of
20932 Paul East could perhaps just talk briefly about our facilities in
particular and the box which will continue to be the problem in terms of
20933 MR. EAST: Our existing facilities, being entirely digital, are already
equipped to handle not only stereo but surround sound in a number of additional
audio tracks, so it is certainly not a problem at our production facilities.
20934 In terms of BDUs, I suspect the only question really is the simple
question: Where does the third track of audio get played from in the case of
stereo program audio and then the descriptive audio. So there is a solution
there somewhere, it just needs to be standardized.
20935 COMMISSIONER WILSON: Okay.
20936 I want to turn now to the viability of your business plans. I'm glad to
see that you have some of your consultants here with you.
20937 Before we start I just want to clarify something. On your seating plan
under Debra McLaughlin's name you had "Strategic Inc.", which is the name of the
company that did some of your research for you, but then in your opening remarks
you introduced her as the VP and Director of Research for Craig Airtime
20938 Are Strategic Inc. and Craig Airtime Sales the same company?
20939 MR. CRAIG: No.
20940 COMMISSIONER WILSON: Oh, so was that a mistake?
20941 MS McLAUGHLIN: I think I could best explain that, Commissioner.
20942 COMMISSIONER WILSON: Was that a mistake?
20943 MS McLAUGHLIN: Well, no, and you will see me here again later maybe
with a different title.
20944 In fact, I am one of those multitasking individuals. I own Strategic
Inc., I am Vice-President of Craig Airtime Sales, Director of Research. So I
hope that clears it up.
20945 COMMISSIONER WILSON: I just wanted to sort of clarify what the
relationship was because I was confused.
20946 MS McLAUGHLIN: You're not alone.
20947 COMMISSIONER WILSON: Okay. Just so I can figure out who is doing the
research and who is providing the information.
20948 Anyway, we will go through this.
20949 I have to tell you that I did a fair amount of sort of comparison work
between your applications and other applications we have received that are
either directly competitive or similar in genre, and your business plans in many
ways were by far the most optimistic business plans that I looked at.
20950 My first question was: Does he know something I don't about what is
going to happen in the digital world?
20951 I started going through. I mean, your wholesale rates are generally
lower; you have some of the most optimistic penetration levels, although there
are a couple of other applicants who are sort of in the same ballpark; and you
have the highest advertising revenue projections by a wide margin for Connect
and The MET. While the advertising revenue projections for Festival are more in
line with some of the other popular genres, they are the highest of all of the
independent film channels -- applications that have been filed.
20952 So when I started looking at all of these ways in which your
projections were kind of out of line with the other applicants and more
optimistic, I guess the whole issue of whether or not the business plans are
viable, how sensitive they are to fluctuations in any of those numbers came to
my mind. So I wanted to spend a few minutes just looking at that.
20953 I guess when I read through -- I will give you an example. When I
read through the analysis of the advertising potential for Connect TV I didn't
find it particularly compelling in terms of supporting the level of advertising
revenues that you are projecting for this service -- which are huge,
$33 million over the course of the license term. They have to be the
highest. They are actually double most of the others. I mean, some people are
projecting only $2.5 million over the life of the license, and some of
these are -- like independent Indie TV, which is a CHUM application,
$2.5 million in advertising; the Canadian Documentary Channel,
$2.3 million over the life of the license. They have higher subscriber
revenues but the advertising is much lower.
20954 Then when I looked through this report I didn't see any sort of
assumptions about what had been told to the media buyers when you talked to
them. Did they understand what a limited universe this is?
20955 Why are they suddenly -- I take the point that they can't find the
properties that they want to advertise on in the system that exists now, but
with such a small subscriber potential for the foreseeable future in digital,
why are they going to flock to connect in the huge numbers that you are
projecting compared to everybody else?
20956 MR. CRAIG: Well, maybe I can start by telling you how we went about
building the business plan.
20957 You know, as we said in our oral presentation, we have had a lot of
experience doing start-ups over the years and we have done a lot of --
20958 COMMISSIONER WILSON: Actually, I underlined that and put a little
Post-it note beside it, because I take your point and I know your reputation as
a broadcaster, but you didn't face the same technological barrier that you face
here, which is getting people to buy the box first, $12 just for the box
20959 MR. CRAIG: M'hm.
20960 COMMISSIONER WILSON: So to me that is different than -- and I'm
sorry for interrupting you --
20961 MR. CRAIG: That's fine.
20962 COMMISSIONER WILSON: -- but it's different than conventional
20963 MR. CRAIG: I understand.
20964 COMMISSIONER WILSON: -- or radio where everybody -- you
know, TV is ubiquitous and the radios are ubiquitous so people don't have to go
out and invest that $12 a month.
20965 MR. SUART: Madam Commissioner, if I could just interrupt for a
20966 In terms of the $12 a box, that only really applies, I think, to the
20967 COMMISSIONER WILSON: It doesn't?
20968 MR. SUART: It apples to the cable industry only in the sense that the
DTH services and the MDS services --
20969 COMMISSIONER WILSON: Yes, I know that.
20970 MR. SUART: -- they are basically just add-ons and I think cable
only represents a fraction of the digital universe in the first couple of
20971 COMMISSIONER WILSON: Yes, I do understand that.
20972 MR. CRAIG: I guess my next point is that I think what we should do is
walk you through how we arrived at the numbers.
20973 COMMISSIONER WILSON: Okay.
20974 MR. CRAIG: I think we will ask Glenn to come back and talk about the
set-top universe and how he arrived at his numbers.
20975 COMMISSIONER WILSON: Yes, I have some questions about that as well.
20976 MR. CRAIG: Sure. The first thing I think we need to do is talk about
how we arrived at the demand.
20977 I would ask Debra to start off and then ask Cam Cowie to get involved
in terms of how we arrived at the revenue projections.
20978 COMMISSIONER WILSON: Okay.
20979 MS McLAUGHLIN: First of all, I would like to start with your summary of
the report in that it was not a compelling argument. We have to put this in
context for you in terms of what is happening in the buying community and
particularly at this period of time.
20980 When the CRTC calls for these types of licence hearings, there are
probably about ten of me out not only asking these questions, but there are
people following me in looking for endorsements from advertisers and
particularly buying shops.
20981 It has become a bit problematic, because once the endorsement is given,
then there is association with their clients; and if for some reason the client
is not happy with that association, or they feel it obligates them to actual
financial expenditures in the future, they get uncomfortable.
20982 So the agencies by and large are hesitant to be very enthusiastic.
20983 There is a concern about success advertising revenue potential for the
digital tier. But that is not the case in this particular instance.
20984 If it seems that the report is muted, it is because, as a researcher, I
have to report directly what they say. They were presented the digital
environment; they are fully aware of it. As I say, I am not the only one in
there talking to them about it. They are aware that there is a limited
20985 COMMISSIONER WILSON: I didn't mean to denigrate your work when I said
that I didn't find it a compelling argument for the level of advertising that
you were projecting.
20986 I didn't mean the quality was not good; I just meant that I could not
make that leap.
20987 MS McLAUGHLIN: I understand that. I am not either to sell to you or to
the agencies or the advertisers that I am speaking with, this concept. I am to
present it in the most neutral manner.
20988 I think you are seeing research language as opposed to sales language
20989 In actual fact, this market is an untapped market. It has been
identified in the U.S. as being one of the key influential markets that remains
out there to get into.
20990 It is estimated that $150 billion is spent by teens. But what is most
important to understand is that they are credited with influencing $500 billion
worth of expenditures within the household.
20991 So advertisers that don't get in and get to this market are really
missing a very important part of that decision-making process in any household.
Nike, Tommy Hilfiger, Disney, the list goes on in terms of who is now shifting
their advertising younger and in fact developing different streams of
advertising. They are not abandoning some of their traditional forms.
20992 Volkswagen is now trying to catch some of that teen because in less
than five years they will be either drivers or purchasing their first car. So it
has become incredibly important.
20993 In putting together those advertising estimates, I advised that a more
optimistic view than what would be found in the report was necessary, because it
is something that is being developed now.
20994 StarCom, which is one of the largest advertising agencies in Canada, is
in their third tier of investigating across Canada, amongst 12-to-17-year-olds,
their actual involvement in purchase decisions. What they are discovering, as we
speak, will form the basis of their advertising plans going forward.
20995 At the time we conducted these surveys, I think you would find a lot of
advertisers just waking up to that or their agencies just getting involved in
how to develop that market.
20996 As a result, what we are looking at is what we know to be true, what we
found from the U.S. experience, and extrapolating it to what will eventually
happen in Canada in the not very distant future.
20997 COMMISSIONER WILSON: Tell me, then: What you need to do is fill in the
gap for me between what you have just said about this being the largest untapped
market and $33 million in advertising revenues over seven years.
20998 How do you get there?
20999 MR. COWIE: Maybe it would be helpful if we took you through how we
arrived at the numbers. And before we do the boring nuts and bolts, let me take
you back ten years we have been in the kid business.
21000 At the particular time we started in the kids' business, we launched
the first Kids' Club in Canada, and so on. It used to be that most of the money
spent on children was spent in the conventional television arena. That has
pretty much gone completely to the specialty market.
21001 What has happened is that, as that has moved, the teen component has
been left out. What we find with the advertisers is that they very much want to
buy teens. Pizza Pockets wants access to teens; The Gap wants access to teens.
But the only place they can find them in conventional is on traditional stations
that tend to skew younger, like the A-Channel stations.
21002 So we are still in touch with the teen market.
21003 The problem is that when they are buying a program that is an 18-to-34
skew and selling at an 18-to-34 audience at cost of thousands, and so on, the
teen market is very expensive. So it is not being attributed to television. They
are going to other areas.
21004 One of our largest teen clients we have been instrumental in --
and it is something that John Donnelly has worked on -- is the DV8
Festival. We were able to broker a teen product with a teen venue.
21005 They put incredible amounts of money not only into the festival but
into television support. So there was an opportunity to actually build teen
revenue that was not being spent. It was tooled for the children's market, and
it was inefficient and too expensive to put it into the young adult market.
21006 So we truly believe that there is a great deal of pent-up revenue that
would be available specifically for a teen genre. That is one of the reasons why
we concentrated on that particular genre for an application.
21007 To give you an idea of how we did it -- because when you get to
the bottom component of it, it does not look so large. We also read the
applications of the other and were pretty convinced that this would not be a
one-word answer here: revenue projections are higher, yes. We thought there
would be some explanation required.
21008 I think we were one of the few that actually did -- what we did is
we took -- and I am going to use Connect as an example.
21009 We took the digital universe projection from PricewaterhouseCoopers,
and we in fact downgraded the projection 10 per cent. We looked at the research
that Debra did, and we took a look at 90 per cent acceptance, and so
21010 I have teenagers. I understand that not all teenagers get what all
teenagers want, so we --
21011 COMMISSIONER WILSON: What do you mean you downgraded it by 10 per
21012 MR. COWIE: The PWC penetration rate was 60 per cent. We used in our
revenue calculations for Connect 54 per cent. We took into it a consideration of
a bumper for households with teens.
21013 COMMISSIONER WILSON: Well, 54 per cent to start.
21014 MR. COWIE: Correct. What I am saying is that we took the consultant
number and we backed it down. Then I think we are one of the few that tried to
then put a demographic picture of the digital universe.
21015 So we took the Canadian averages and applied them to the households or
the digital households. And then using some BBM and some StatsCan numbers, we
made a projection of how many teens, how many young adults 18-to-24 would be
available for this service.
21016 So what we are trying to do is like we do in conventional: You have to
understand how many people are available as the base line of how many people you
think you will be able to have in a quarter-hour audience.
21017 So we did that, and it is basically just shy of 400,000 potential
21018 From there, what we did is we took a look at a quarter-hour average.
Again we looked at the focus research from Pollara, and so on. The Connect
averages -- we are talking about 720 teen to young adults as a quarter-hour
average. That is the low. Seven hundred and twenty across the country nationally
out of a potential base of 400,000 teens.
21019 The high end of that was 2,380 teens to young adults, again against the
base of 400,000. That is two-tenths of 1 per cent to six-tenths of 1 per cent,
not even coming close to calculating even a full percentage rating point.
21020 When you do it that way, all of a sudden it looks pretty small. We are
talking to 720 people.
21021 That is how we then produced the revenue projection. We took a look at
that 720, a cost per thousand related to that 720, a sell-out factor related to
that -- I think for Connect we used 55 per cent sell-out. And I should
mention that when we used the 55 per cent we took a look at a 15-hour day for
the development of revenue projections, not the full 24-hour day. We wanted to
really take a look at where the potential revenue was. We assumed that for
Connect that would be between 9:00 a.m. and 12:00 a.m., so a 15-hour window.
21022 When you put all those numbers together it comes to -- I think it
was $1.8 million in the first year. But we are talking about 720 people at a
time. We believe that we can reach those 720 people. We also believe that there
is advertising support to go after it.
21023 We heard a lot of the other broadcasters saying: Until you hit the
three million plateau, and it's not linear, it's this and it's that. The bottom
line is, we have been dealing in niche marketing right from the very beginning.
We have always had to be more creative and more aggressive than the traditional
pre-post and simulcast broadcaster. We are used to this type of approach.
21024 We believe the number is a reasonable number. I hope you can see that,
when we start to look at 720 teens at a time, it is not an unreasonable thing to
say with a Connect application.
21025 There were some figures thrown around about the new digital that were
already in excess of half a million dollars in revenue in the first year, yet
most of their applications were under 200,000 for the first year
21026 What is right and what is wrong? Are they optimistic? Yes, they
probably are. Are they achievable? We believe they are and we would love the
opportunity to go and get those dollars.
21027 COMMISSIONER WILSON: The only other service that I looked at that was
in that range was women's sports. Everybody talks about how sports and movies
are the two big drivers, so --
21028 MR. CRAIG: Commissioner Wilson, that is --
21029 COMMISSIONER WILSON: Not the teens. I am not saying that the teens
aren't an attractive demographic and that advertisers aren't just dying to get
at them, but --
21030 MR. CRAIG: When we built these business plans we obviously went through
some methodology to come up with these numbers. We didn't pull them out of the
sky. As Cam said, it is a very thorough analysis that we have done. And we think
we have some experience. We own a national rep shop. We have offices across
Canada. We are in the face of every advertising agency in Canada virtually every
day. When you look at the revenue per subscriber and you look at a comparable
analog service, and you look at the revenue they generate per sub -- and we
looked at YTV. At the end of the day, when you view the numbers and you take a
look at YTV, YTV today is doing $4.79 in revenue per subscriber -- from
advertising revenue. Connect doesn't cross that line after year 7. So we don't
think that the advertising revenue --
21031 You aggregate it and say it is $33 million. The first year revenue
is $1.8 million. To us, it doesn't seem unreasonable. We believe that we have
taken a very sound approach. As Cam and Debra have both alluded to, this is a
very elusive demo to try to target. We are taking the best of two technologies.
We are taking the interactive technology and television and blending them
together. We think it is an advertiser's dream to target that demo.
21032 Do we think they are achievable? Absolutely.
21033 And maybe we do know something that the other applicants don't
21034 COMMISSIONER WILSON: That is entirely possible, Mr. Craig.
21035 MR. CRAIG: It's entirely possible.
21036 COMMISSIONER WILSON: Thank you for the explanation. It sometimes helps
to talk it through. Sometimes you don't get the same feel for the kind of
process that you went through when you just read the application.
21037 But I do want to probe a little further on the PricewaterhouseCoopers'
take-up rates, because when I read through that there were a number of different
assumptions that you presented in order to come up with the target penetration
rates that have been used.
21038 Again, I am using the Connect application as the example.
21039 You say in your report that if the service is added to existing theme
packages it could achieve penetration levels of 75 per cent to 85 per cent,
based on estimated penetration of the average theme packages currently offered
by DTH or MDS. How did you estimate the average take-up rates of those
21040 MR. SUART: We did it in a couple of ways. First, we had access to a
BDU, obviously, and we knew what their penetration levels were for their
packages -- the ones in Manitoba. This was a Craig SkyCable system and we
knew what their penetration was and their packages.
21041 We also, through a variety of other methods, found out, looking at the
subscriber levels of other services, what the penetration levels were estimated
at on the DTH services.
21042 COMMISSIONER WILSON: I am having a little trouble hearing you, Mr.
21043 MR. SUART: Basically, just to summarize, we had access to the SkyCable
MDS numbers. We knew how that worked and how they packaged, and their
penetration levels were in that range.
21044 COMMISSIONER WILSON: For the theme packages.
21045 MR. SUART: For the theme packages, that's correct.
21046 COMMISSIONER WILSON: And for the large packages, in the range of 50 per
21047 MR. SUART: No. Actually, the large package, the overall launching
package -- the 50 per cent level comes from the initial level that was the
package of analog services that was launched last year; the big 17-channel
package; the MeTV style package. They achieved 50 per cent penetration on analog
to the entire universe within the first year.
21048 The reason we used 50 per cent here as the lower end was to say: This
is the digital universe. These are people who have set-top boxes. They want to
buy extra services.
21049 If you are going to add all of these new digital services at this time,
in one big package, you might be able to achieve, certainly, at least
50 per cent penetration, if a BDU offered it in this way, because you are
talking to people who want to buy television services.
21050 So that is how we set the lower bound of 50 per cent.
21051 COMMISSIONER WILSON: Were you here when Mr. Gourd from BCE appeared
during the Travel TV --
21052 MR. SUART: I was not.
21053 COMMISSIONER WILSON: He said that over 70 per cent of their subscribers
take one of the two large packages, and that the small theme packages in fact
don't sell as well. I mean, they have those options there.
21054 MR. SUART: That's right. But, in total, a service that is part of the
large package still gets that 70 per cent. The other 30 per cent who don't buy
that package buy the theme package.
21055 If you are a music channel, for example -- and I am guessing
here -- on DTH right now, you might get 70 per cent from that big package,
and then you might be purchased by 5 per cent on the theme packs, so your total
is about 75 per cent in that case. That would be the calculation.
21056 COMMISSIONER WILSON: So for DTH you would be assuming that The MET, for
example, would get added to the theme package that included MuchMusic and
21057 MR. SUART: Each BDU will do something differently, but, yes, that is
very possible. So if it gets added to that package, because it would be an
easier way for DTH to do it, it would suddenly get 75 per cent penetration.
21058 COMMISSIONER WILSON: In the genres of channels for which you have filed
applications, the only other applicant who has suggested penetration levels
equivalent to yours is Alliance Atlantis for the Independent Film and
Documentary Channel. In fact, the penetration levels are identical to the ones
that you have suggested: 60 per cent in the first year and 66 per cent by
year 7. But most of the rest of them, they may ultimately end up around 60 per
cent, but they start much lower.
21059 I guess I am just wondering why you wouldn't be a little more
conservative for the initial part of the licence.
21060 MR. CRAIG: Glenn, can I just interject here?
21061 I think we talk about penetration levels and I guess -- in
percentages -- and that's, I guess, dependent on the number of the boxes in
the universe that you start with.
21062 So maybe, Glenn, you might elaborate on, you know, a percentage of
what, in terms of how many digital subscribers are we going to have in the first
year, as an example.
21063 COMMISSIONER WILSON: That's fine. I mean I have got those numbers here
in front of me and, yes, we are talking percentages, but -- because I think
that the percentages are the only way you can compare, you know, number for
number, with the other services. I think, using the percentage number gives us
21064 MR. CRAIG: Well, it depends on what assumption you start with, in terms
of where you see how big is the digital universe. And I think that the numbers
that we are starting with are low, in comparison to what other applicants have
told you, or they are comparable.
21065 I mean, you know, we are using a percentage here, but in terms
of -- and Glenn may want to elaborate on this -- but in terms
21066 COMMISSIONER WILSON: The raw number of the universe.
21067 MR. CRAIG: -- the raw number, Day One, what's that?
21068 COMMISSIONER WILSON: Yes.
21069 MR. SUART: Yes, in terms of the universe, that, of course, was the big
question, right at the beginning, and we spent a lot of time, over the last two
or three years, trying to develop this. We did these numbers last year,
actually, for the CAB, originally, for the framework here, and we started off by
talking to the BDUs and trying to get a sense of what these numbers were going
to be. But I think our -- the way we ended up with the projects were quite
reasonable, again. We took what the CCTA gave us, earlier this year, and the DTH
services, made some analysis and it came up with a range of about 1.7 to
3 million which, I think, is quite good, and I think the CCTA has sort of
21070 Other services, I think, had some higher digital household penetrations
by Year 7.
21071 So, if, let's say, for example, they were, for the sake of argument,
five million -- I don't know any numbers -- but if they had five
million and they had a penetration level of 60 per cent, at that point, that's
three million subs. That's, you know, equivalent to -- or more than what we
are projecting, I think, in Connect.
21072 So, bottom line is, I think, our overall digital universe projections
are reasonable and, I think, are fine. And then we have used a reasonable amount
of a take-up penetration based on a logical argument about how these different
BDUs will take the services.
21073 MR. CRAIG: Commissioner Wilson, we have got some hard numbers here that
we can give you that sort of put our assumption hard number first-year start-up
versus some of the other applicants, and that might be helpful.
21074 COMMISSIONER WILSON: Okay.
21075 MS STRAIN: Commissioner Wilson, I tried to do, probably, a similar
exercise that you have been doing over the last several months.
21076 COMMISSIONER WILSON: You should be a commissioner.
21077 MS STRAIN: I don't think I would be up to that challenge.
21078 THE CHAIRPERSON: Very good answer.
--- Laughter / Rires
21079 MS STRAIN: I hope so.
21080 On Cinefest, for example, I looked at the total numbers of -- I
mean after you take your universe and then you take a percentage -- and
what they were projecting was they would have 595,000 subscribers in Year 1,
rising to 1.9 million in Year 7. Alliance Atlantis started out at about 1.5
million, going up to 3.3. And, in our application, we started out at about 1
million subscribers, going up to 1.9. So, I think we are right in the ball park.
It depends on what universe you start out with, you know. We may have started
out with a lower universe but a higher penetration rate.
21081 COMMISSIONER WILSON: Right. Okay. That's helpful.
21082 That concludes the general questions that I have.
21083 Madam Chair, do you want to go to Counsel? Or do you have a question
21084 THE CHAIRPERSON: I have the understanding perhaps we were -- since
there's only three applications -- we were touching them all, but I do have
a question on Connect.
21085 COMMISSIONER WILSON: Oh, I haven't finished all my questions. I'm just
going to -- I'm sorry. I just finished the general questions.
21086 THE CHAIRPERSON: Okay. Yes, I have a couple of things I wanted to take
up with Miss Noto, so that you are not too worried until you get to your
calculator, about the difference between -- oh, you have one. I should have
brought mine. I usually do, just to intimidate a bit.
--- Laughter / Rires
21087 THE CHAIRPERSON: But I thought that parties appearing before us these
two weeks were just too sophisticated to be intimidated by us, so I left it at
21088 I only do that with people who appear before us for the first time, who
have no experience.
--- Laughter / Rires
21089 THE CHAIRPERSON: You probably have done the same calculation, but I
took the first-year revenues of Connect and of Festival and the difference
between -- suppose you were to achieve those revenues, in the first
year -- the difference between 40 per cent and 43 per cent expenditures is
only about $130,000. So, perhaps you will confirm that. I wouldn't want to look
as though we are pressing you to comply at, you know, great costs. It's just
administrative and, I guess, regulatory equity of using the same method across
21090 MS NOTO: Well, I get 130,000 at the 3 per cent variance --
21091 THE CHAIRPERSON: Yes. For Connect.
21092 MS NOTO: -- so I'm in the same ball park.
21093 THE CHAIRPERSON: No, the Festival, yes.
21094 MS NOTO: I'm at Connect, right now.
21095 THE CHAIRPERSON: Yes; and for Festival, my calculation gives me about
21096 The other thing I wanted to clarify is, when you were asked the
question about how to define an "independent producer", I understood you to say
it was the 30 per cent equity position.
21097 MS NOTO: You are not asking me that any more, are you?
21098 THE CHAIRPERSON: No; whoever wants to respond.
21099 The response was about 30 per cent equity position.
21100 In the case of Festival, it wasn't clear to me whether that meant that
Lions Gate escaped the arm's length and became non-arm's length because it has
only a below-20-per-cent equity position, in the channel itself, in the service
itself, or whether you would see an actual investor in the licence service
differently from production company, which is completely unrelated to the
service itself below that level. Now, for example, if you had 29.9 per cent in
Atlantis Alliance, I guess you would be happy with that?
--- Laughter / Rires
21101 MR. CRAIG: Sounds okay.
21102 THE CHAIRPERSON: In your calculation, that would be arm's length.
Should we say Lions Gate in the same manner, in light of the fact that it is an
actual investor in Festival?
21103 MR. CRAIG: Well, I think we view them -- I think they are two
21104 I mean one is define an "independent producer", and I think we have
done that; so we are saying anything north of 30 per cent is -- you know,
they are not independent any more.
21105 In terms of the Lions Gate involvement in Festival, that's, I think, a
whole different animal, if you will, and we have put in place
21106 THE CHAIRPERSON: With regard to the fund, I understood.
21107 MR. CRAIG: With regard to the fund.
21108 THE CHAIRPERSON: What about the rest of the investment in Canadian
programming? I understood your position that it would not have access to the
fund. But could you expend the money intended for independent producers for
acquisitions and licensing, et cetera, with Lions Gate only, all the rest of
21109 MR. LINK: Madam Chair, we do believe that, while we are suppliers to
Festival, we are not going to be exceeding a number that would be very
reasonable. There are 11 independent companies. Our library being as large it
is -- it's not one of the largest in the country -- so I do not
believe that we will occupy any position that would be in any way stifling
competition or denying presence to others. But we would be able to, probably,
live with some kind of an upward number if you so choose to --
21110 THE CHAIRPERSON: An upward number -- a number specific to Lions
Gate. Because your library may increase if Mr. Craig gets three licences.
--- Laughter / Rires
21111 MR. LINK: Well, it's still very expensive to produce feature films, you
21112 So I would say that we certainly would be below the 20 per cent of
Canadian, but it's just --
21113 THE CHAIRPERSON: Of the sums that are expended unrelated to the fund,
but more to the imposition of product.
21114 MR. LINK: And as we said, we don't aspire to any production
21115 THE CHAIRPERSON: Which is a different sum.
21116 MR. LINK: Yes.
21117 MR. CRAIG: We have talked about this amongst ourselves as partners and
recognize that you may want a limit.
21118 THE CHAIRPERSON: And so this would be a limit that both of you could
21119 MR. CRAIG: Yes. We have discussed it and we are prepared to accept that
20 per cent number.
21120 THE CHAIRPERSON: I have a question for later on when Commissioner
Wilson I believe has questions on specific applications, so I have another
question I wanted to ask you.
21121 I also want to know whether you are still feeling comfortable or
whether you need a break? We are willing to continue to the end, but I certainly
want you to have the opportunity if you need a break.
21122 MR. CRAIG: Our preference is to keep going.
21123 THE CHAIRPERSON: Madame Bertrand.
21124 CHAIRPERSON OF THE COMMISSION: Just to pursue on Commissioner Wilson's
questioning. You know, there has been a lot of discussion in terms of the
synergies that applicants can bring to the table versus the synergies maybe, but
kind of the place for newcomers.
21125 You are in a very unique position or -- well, no, not unique
because there are others, but being a BDU and a conventional broadcaster you
don't have specialty channels in the analog world looking for digital licences,
yet you have already invested in the Internet business.
21126 Can you tell us, in your view if you were to sit at our place after the
public hearing, how you would see the benefit of the synergies versus --
and to serve the diversity, the necessity, as Commissioner Wilson was saying, of
the diversity of ownership and the diversity of programming?
21127 Can you expand from one, I know that she's touched upon it, but I think
it will be certainly core to our discussion. Certainly the other criteria are
there, but somehow the landscape is there as well. So I would like to hear your
views and why you feel?
21128 MR. CRAIG: Sure. We would be happy to share our views with you on this.
Obviously, we have a different view than some.
21129 I think, as I alluded to before, I think this is a great opportunity to
get some new players into this game. You know, as long as that applicant has the
wherewithal to make the service actually happen and, you know, as the old saying
goes, execution is everything. In other words, if you can package it up and you
feel comfortable, the applicant can deliver on their promises and on their
plans, I think that this represents an opportunity to get some new players into
the game, so that the door doesn't close.
21130 There are a lot of first-time applicants that are here in front of the
Commission looking for new services. I think that diversity of ownership does
bring diversity to the screen. I firmly believe that. It's just not another
outlet out of a server on a bundle of services that they already own and have
packaged and they are successful marketing.
21131 I think because it's a relatively small tier initially and it is
breaking new ground, it's maybe for a different type of company. It's maybe for
a type of company that is willing to be very entrepreneurial and work through
all these challenges and hurdles that they are going to have to get through.
21132 So I think this represents another pioneering level for some of these
new players to get into the game.
21133 CHAIRPERSON OF THE COMMISSION: It's helpful. Thank you.
21134 I have been obsessed with the idea of overlapping. I have been asking
21135 If you were to be granted the three licences do you see an amount of
programming that would be overlapping with your existing stations and do you see
a limit to it, or even with your MMDS licence to SkyCable is there content that
you would use there?
21136 What would be the synergies between your forms of expression on
21137 MR. CRAIG: I think that there is an opportunity and I think one of the
examples that we have used is our Internet strategy, where we have different
companies with different needs.
21138 What we have opted to do is start Craig New Media to satisfy all of
those different companies. So that's been our strategy there and I think while
there are sort of operational synergies in our group of companies, we have been
very careful to design these services that are complimentary to our existing
service, but there is very little overlap in terms of programming that we would
share, but they are complementary to our overall company focus.
21139 CHAIRPERSON OF THE COMMISSION: So it's more kind of at a corporate
level in terms of strategy than really what will interface precisely with the
viewer or the consumer?
21140 MR. CRAIG: Right. I think that keeping the services as distinct as you
can should be -- is one of the most important criteria in this process.
21141 I think that operationally and corporate it makes sense to bundle more
services and have another platform to operate on, but we have designed these
services to be very distinct and stand on their own as services.
21142 CHAIRPERSON OF THE COMMISSION: I will leave those kind of
specifications to the discussion with Commissioner Wilson. I don't want to get
into that next round. Thank you. That's helpful.
21143 THE CHAIRPERSON: Counsel.
21144 MR. McCALLUM: Not at this time. Thank you.
21145 THE CHAIRPERSON: Commissioner Wilson.
21146 COMMISSIONER WILSON: Thank you.
21147 I want to turn now to Connect. As I explained before, I probably won't
have that many questions on each of the individual applications, just questions
that we need in order to clarify for the record some of the aspects of your
21148 This is a service that is defined by the target audience and you have
described that as -- you have described the service as a channel devoted
almost exclusively to the interests of teens. Your demand, research and focus
groups and everything else focused on teens and households with teens and this
large under-served market.
21149 But your target audience goes up to age 24 and I am just wondering if
you can sort of explain why you don't have a slightly narrower since the teen
audience seems to be what you are really aiming for and based on what we saw in
the video I am just wondering why it goes to 24?
21150 MR. CRAIG: I will pass this to Debra for a comment. I would also like
Cam to comment on this as well.
21151 MS McLAUGHLIN: There is actually two parts to the demand study that we
have included. The original -- or the demand study specifically on Connect
was targeted to a primary demographic of 12 to 17. Our secondary demographic is
18 to 24.
21152 The second study that I referred to was actually commissioned to test
another idea which we obviously didn't bring forward in this environment.
21153 But one of the things we were able to cull from that study was the
similarities and interests between these groups. They have similar interests in
program formats. They have similar experiences in terms of using and watching
television. They have similar life experiences.
21154 As you can appreciate, the difference between a 17-year old and an
18-year old can be marginal in some cases and can be wide. But in terms of
programming this service we recognize that people weren't suddenly going to
spend five years with the service and switch it off and that many of the habits
that they had, including tuning habits, would continue on to their university
21155 MR. COWIE: From an advertising perspective there is also some overlap.
Obviously, the highest concentration of the estimates that we used were the 12
to 17, but there are a number of products, Nike, Pizza Pockets, to name a few,
Nintendo, that there's almost a blur between the primary and secondary
21156 As Debra mentioned, I mean this is an intuitive thing. Six year olds
want to be more like 10 year olds, 10 years olds want to be more like
14 year olds and 14 -- I don't know where it ends, but I think its
around 30 we stop wanting to be like the older people and more like the younger
21157 COMMISSIONER WILSON: The older people? I think you might want to
--- Laughter / Rires
21158 MR. COWIE: I don't know if there is --
21159 UNIDENTIFIED SPEAKER: Wiser people.
21160 MR. COWIE: The wiser people. Thank you.
21161 COMMISSIONER WILSON: That is a fine distinction.
21162 MR. COWIE: That is what we found in both targeting programming and
targeting promotionally and targeting from an advertising perspective.
21163 MR. CRAIG: Commissioner Wilson, if I could just add one more point to
21164 I think that, as we indicated in the research too, the highest ranking
U.S. services were TBS and Fox, and obviously Fox is an 18 to 34 target demo.
That is how the advertisers buy them. But that is what the teens want to watch.
They tend to -- because they are on the lower end of that demo, that is
what teens aspire to be and so you sort of catch them by default.
21165 So I think that to bridge that, the whole teen gamut, you need to skew
on the older side of that demo.
21166 COMMISSIONER WILSON: I wondered if it was that -- you know, when I
was 18 I moved out of home. I have nieces who are 25 who are still living at
home. I mean, the experience is very different these days than it used to be.
When I was growing up you left home at 18.
21167 That is not the way it is now. So I wondered if there was some of that,
sort of you are looking at the demographic in a slightly different way than we
21168 But I'm sure you can appreciate what I'm driving at here when I'm
talking about the nature of the service, and that is what we have been talking
to all of the applicants about and that is in terms of fencing in your service
as opposed to what is already in in terms of defining what is directly
competitive in the system.
21169 So that is really the direction of my questions.
21170 I'm sure that from an advertising perspective the 18 to 24 demographic
is a very appealing demographic and lots of money can be made there, but from a
regulator's perspective it is how much overlap is there between your service and
other services in the system that might offer similar programming and how do you
21171 You have these two age groups, 12 to 17 and 18 to 24, and you
can talk about how the younger ones aspire to be like the older ones but you are
programming to two very different groups. Still at 25 years old my niece is
not going to watch the same thing that a 12 year old is going to watch or a
14 year old is going to watch necessarily. So how do you program to those
two demographics on the same channel?
21172 MR. CRAIG: Well, I think in a number of ways.
21173 Wayne may want to talk about this in terms of, first of all, the local
shows that we have designed and how we approach that.
21174 Wayne, would you like to elaborate on that?
21175 MR. STERLOFF: The actual program schedule for Connect is made up of a
number of components that pretty accurately reflect the findings of the focus
groups that were conducted.
21176 When we looked at the so-called flagship program, the originating
programming, these are highly interactive shows, they are hosted shows and they
benefit from a fairly significant number of Web cams that we will be
distributing free of charge across the system. I guess what we are discovering
is that there is no strict limitation on the age group of those young people who
are interested in that kind of interactive communication.
21177 I think also in the focus groups it was revealed that the subjects of
interest for discussion in those particular types of programs was also broadly
agreed amongst the focus group the kinds of things that they would like to talk
about and get into with the host and with each other.
21178 COMMISSIONER WILSON: So when you developed your blocks did you decide
that certain blocks would be for the older demographic and certain blocks would
be for the younger demographic?
21179 MR. STERLOFF: Yes. I mean, to some degree we did, although that
blurring did exist.
21180 But certainly when you look at the layout of our schedule, for example,
we have a section called Retro Lounge which is a hosted strand of programs that
you and I may have seen before -- I may have seen three or four
times -- but it is new to the focus group. When we talked about these
shows -- and just to run through a couple: Fantastic Voyage: The Series;
Room 222, I mean there are a number of shows that --
21181 COMMISSIONER WILSON: Welcome Back Cotter.
21182 MR. STERLOFF: You know, there are a lot of great shows and on the
Canadian side too, strangely enough. You know, there are titles that we are
terribly familiar with, but for some of the younger people, Degrassi for
example, Northwood, a vast number of episodes that they have never seen but it
is of interest to them.
21183 So what we are doing is creating these strands of programming that are
21184 MR. CRAIG: I think, Commissioner Wilson, we have tried to daypart the
programming as much as we can, taking into consideration the time zone
limitations that we do have with the service.
21185 For instance, one of the cornerstone local shows "I Connect",
which is the talk show Web component, and as we have described in the
application I think that is a terrific forum to talk about some harder edged
teen issues when required. We tried to move that sort of into as late a time
period as we can in the schedule without making it inaccessible.
21186 So we have been very sensitive, I think, to recognizing that they are
two very distinct groups. As we have described in the application and in the
research, there is a primary target and a secondary target.
21187 COMMISSIONER WILSON: Let me tell you about the kind of sensitivity that
regulator's like. They like percentages and limits, conditions of license. Those
are the kinds of sensitivities that we are looking for --
21188 MR. CRAIG: We understand.
21189 COMMISSIONER WILSON: I'm sorry?
21190 MR. CRAIG: We understand.
21191 COMMISSIONER WILSON: So considering the fact that your programming
comes from every programming category that there is, I guess what we are looking
for -- I will give you an example, YTV, for example, has to dedicate a
minimum of 30 per cent of the programming to children under the age of 5;
48 per cent to children and youth from 6 to 17; and 22 per cent to
families as target audience.
21192 Did you look at those kinds of limits with respect to fencing in your
21193 MR. CRAIG: I think if that was a concern we would certainly take a look
at it. What we would like to do is have an opportunity to go back and discuss it
21194 COMMISSIONER WILSON: And come back to us.
21195 MR. CRAIG: And recognizing that you want to try to build some fences,
as you said, we would be happy to try to come back to you with something.
21196 COMMISSIONER WILSON: Okay. I think that would be useful, because I
think we would want to talk to you about --
21197 Another thing that you might do is look at the categories. For example,
YTV can use all the categories, but they have limits on Categories 1, 2, 6,
7 and 8. WTN takes 90 per cent of its programming from 2, 5(b), 7, 8(a), 9
and 11. So even though they can use all the categories, they have, out of that,
defined a way to satisfy the system and the regulators that they are not
directly competitive. So I think it might be a worthwhile exercise for you to
21198 MS STRAIN: Commissioner Wilson, we have actually already done that
exercise in response -- some we took the initiative ourselves in the
application to limit sports programming I believe, and then in response to
interventions we have limited movie product, we have limited animated
programming in response to a concern from Teletoon. So we are quite happy to
perform that exercise if we have some ideas as to which categories might be of
21199 THE CHAIRPERSON: If I may interrupt. It is a bit difficult to get into
a very detailed way of redefining your service, but if I go back to more what I
like to call the kitchen look at things, or a very practical look at it, when
Ms McLaughlin says "Well, there is not much difference between 17 and 18
and 24 and 25", or something to that effect, then if there is a service there,
let's say MuchMusic, who says "I am already there. That genre is covered", all
the categories can be -- yes, there are fences, but if there is a movie
that is definitely not appealing to a 15 year old, or terribly relevant to
a 15 year old -- although it would be difficult to say it is relevant,
but it is relevant to a 24 or 25 year old and then you go up to 30, then how do
you call it a teen service?
21200 So have you looked at the possibility of teens, I suppose at 19,
instead keeping the age narrower, along with the other fences which you have put
in, which is a lot more simple -- this is off the top of my head.
21201 But if it is a movie that is directed to marital difficulties, or
whatever, one could say it is not really for the teens.
21202 The problem is looking at the genre and alleviating the concerns; that
the way it is framed permits it, if it is so wanted, without any regulatory
fencing, to overlap too much into the other.
21203 Have you thought, rather than the complicated matter of putting more
fences related to categories, of perhaps taking Ms McLaughlin's comment that the
difference between 17 and 18 and 19 might not be that great, and that that is
still a fence that prevents you from going to 30.
21204 MR. CRAIG: Right. So that I understand you --
21205 THE CHAIRPERSON: It is a possibility, because we cannot rewrite the
whole nature of service now.
21206 MR. CRAIG: I understand.
21207 THE CHAIRPERSON: What I can ask you is: Do you want to have, as you
describe it, a teen service?
21208 MR. CRAIG: Yes.
21209 THE CHAIRPERSON: And then the question is: Is there a teen service
already there? Or do you have a competitor with a teen service?
21210 If no, then it is a good pitch. But if someone can say: Well, at 30 you
have long stopped being a teen, how are you going to fence in this program when
you get going?
21211 I am just asking you what your reflection is about giving that level of
comfort of your intention to have it predominantly a teen service by pitching to
a demographic that is understood by the market.
21212 MR. CRAIG: Right. In other words, focusing more on a target audience as
opposed to the secondary --
21213 THE CHAIRPERSON: Well, my question to you is: Is that reflective of
what it is you want to put on the market?
21214 MR. CRAIG: That is really the spirit and the nature of the service. In
essence, it is a teen channel. Although, if they happen to cross over, as Debra
said, you cannot --
21215 THE CHAIRPERSON: What would be the measure? The difficulty with Ms
McLaughlin's comment is that it is never-ending on the top end. With the limit
lower, you can go above it without actually doing something entirely different
than a teen program.
21216 Anyway, that is just one way of looking at it.
21217 MS McDONALD: Maybe while my colleagues are thinking about limits, I am
going to throw in one conceptual element to the older demo group.
21218 Part of the conceptualization of the channel was to serve the core
group of 12-to-17-year-olds. As you have noticed, we have a very innovative
approach to involvement, which includes a council of advisors. Through that runs
a theme of mentorship, and that is the role of the 18-to-24-year-olds. They help
program the service. They provide direction. They grow up through that advisory
council, and they stay around to help mentor those coming behind them and who
aspire to be like them.
21219 They have a little more sense of the world in terms of responsibility
and probably take a meaningful role in the council and the business of the
21220 That does not help you with your numbers but --
21221 THE CHAIRPERSON: I am looking at your definition of service:
"All programs exhibited by the licensee shall be targeted to audience's
age..." (As read)
21222 And you give an age group. It does not say -- well, all programs.
But it certainly says they should be targeted to, which include even parental
21223 At least it shows that what you want is a teen service. Anyway, that is
one way of looking at it.
21224 MR. COWIE: Madam Chair, if I could: I guess the older component is a
by-product of the primary target. We use that in calculating the revenue
21225 But without question this is a teen service with a teen genre, aimed at
a teen market. In developing revenue projections, there are some crossover
moneys. But that type of thing happens all the time in terms of those who like a
program will watch the program.
21226 However, the focus is clearly teen.
21227 MS McLAUGHLIN: Perhaps I might explain why we ended up with 12-to-24
and perhaps clarify one of my remarks.
21228 Nowhere do we discover that 12 and 24 have the same viewing
habits. But when you are doing any kind of research, you are literally tied to
the manner in which StatsCan collects their data. I could not possibly give you
population estimates, nor draw a sample for 19 to 20.
21229 So when you are going into that whole area of developing a universe,
you have to look at it and say: Will I overlap into the next age group? Yes. So
what do I have to take? I have to take the entire age group, which is in this
case 18 to 24, for my estimates.
21230 It was always recognized in the research that the interest amongst the
18-to-24-year-old group would be somewhat less than that of the teens, given the
focus, given the topics we discovered in the focus groups that people would be
interested in. We knew that it would certainly tail off. Where exactly, because
we cannot research in that detail, I don't know.
21231 Certainly it was not our intention to give you the idea that we
perceived the 12 and the 24 market to be the same.
21232 MR. CRAIG: Madam Chair, if I may, for simplicity: This is a teen
service that we are applying for. If we limited it to teens -- in other
words, 12-to-19-year-olds -- and said that is where we are headed, we would
be happy to live with that as a definition of the service.
21233 COMMISSIONER WILSON: Thank you, Mr. Craig.
21234 Just one more quick question, which has to do with your programming
categories. I would like to confirm that you will look at some of these
percentages of your programming schedule.
21235 As far as you are concerned, limiting the target demographic to
12-to-19 would solve this problem?
21236 MR. CRAIG: Yes.
21237 COMMISSIONER WILSON: Okay. We will wait and see what the lawyers think
about that -- our lawyers, that is.
21238 In Schedule 10 of your application -- you propose to draw
programming from all of the categories, but in Schedule 10 of your application,
where you list some of the programming that is going to run on the service, it
is drawn from some of the categories but not all of them.
21239 Is that just illustrative of what is going to be on the service? It is
not hard and fast?
21240 MR. CRAIG: That is correct.
21241 COMMISSIONER WILSON: Those are all the questions that I have on
Connect -- except that I would like to say that the $120,000 that you are
going to spend to put those Web cams out there is a very neat idea in terms of
getting kids involved in the channel.
21242 MR. STERLOFF: Yes. That is one a day, every day of the week, for three
years. We are going to start it, if we are so lucky to win a licence, three
months prior to launch so that we can get everybody involved on the Web site,
which will be up and running 90 days prior to launch as well.
21243 COMMISSIONER WILSON: That programming will appear on the channel, as
well. It will be part of the schedule.
21244 MR. STERLOFF: Very much so.
21245 COMMISSIONER WILSON: I have a few questions on your Festival
21246 The first has to do with your definition of independent films.
21247 I don't think you set it out specifically in your application what you
consider to be an independent film, but there was an exchange of opinions and
views on this issue, I believe, during the deficiency stage.
21248 Now, Astral Television Network defines independent films as:
"...theatrical feature films and made for TV feature films that were not
included in the top 100 films of Variety Magazine's annual list of top grossing
films in the United States and Canada." (As read)
21249 Of course, they got that brilliant idea from us -- the top 100
21250 In their intervention they express some concern about the fact that the
lack of a definition of an independent film would allow your new service to
cherry pick popular titles from the schedules of Astral's existing movie
services. So I am just wondering if you can give us your definition and thereby
alleviate any concern we might have.
21251 MR. CRAIG: Commissioner Wilson, this does seem to be a hot topic.
21252 COMMISSIONER WILSON: Yes.
21253 MR. CRAIG: I am very fortunate to have both people from within our
company who, I think, understand this issue, plus we have Mr. Link and
Mr. Sackman, who are the experts on independent film in Canada.
21254 I would like to ask Jennifer to give you our definition, and I would
like to get Andre and Jeff involved in this as well.
21255 MS STRAIN: Commissioner Wilson, there was in the intervention phase
some correspondence between us and the pay services, as I am sure you are aware,
and in our response to WIC Premium Television, as it then was, in particular, we
agreed with -- they had set out three criteria, and we agreed with the
first one, which was that we would agree that an independent film is an
English-language feature film that was not originally released for theatrical
distribution by one of the eight major Hollywood studios. I think there was an
agreed upon list that everybody understands.
21256 COMMISSIONER WILSON: I think there are eight that CHUM gave us, and
Salter Street agreed with those.
21257 MS STRAIN: Yes. Whatever the list was that WIC had put in its letter,
that was what we had understood, excluding their art house affiliates.
21258 WIC as well as Astral had made the comment that they wanted us to abide
by the top 100 restriction, and we took the view that that really isn't the best
way to define what the essence of an independent film is. Not only that, but
certainly there are not really that many independent films that make it into the
top 100 anyway. But if they do, for instance, the Blair Witch project, well,
sure, we might like the opportunity to see that, which we probably wouldn't get
anyway until after it had aired on the pay services.
21259 But I might at this point ask -- I just wanted to tell you some of
the background as to how we arrived at that definition, but I would maybe ask
either Jeff Sackman or Mr. Link to step in here.
21260 MR. SACKMAN: Blair Witch, which Jennifer mentioned, is the
quintessential independent film, and it obviously made the top 100. So that
definition doesn't work for us.
21261 Likewise, studio films that bomb miserably also don't make the top 100,
and they shouldn't qualify as an independent film. I don't think that anybody is
going to see the Avengers on the Festival channel.
21262 We like the definition that says if it is released by the eight
Hollywood majors, it is not an independent film, and just leave it at that.
There are always going to be one or two -- no matter what definition you
come up with, there will always be one or two in any given year --
21263 COMMISSIONER WILSON: That cross over.
21264 MR. SACKMAN: -- that are just going to cross over. And this way we
in the industry understand what it means. We know an independent film when we
see one, and we know what is not. Almost without exception, if it is released by
a studio, it's not. There are some exceptions that we came up with in talking
about this matter yesterday, and you just have to say: Okay, those films won't
be played. It won't really matter in a practical way. But to deny true,
successful independent films doesn't make any sense.
21265 COMMISSIONER WILSON: Thank you for that, Mr. Sackman.
21266 MS STRAIN: Commissioner Wilson, if I could just add one more thing
21267 COMMISSIONER WILSON: Yes.
21268 MS STRAIN: We also think that is relatively easy for you to police and
for us to understand. In some of the other definitions that have been produced,
like "produced" and "developed" and "financed" --
21269 COMMISSIONER WILSON: "Financed", it would be very hard to tell
21270 MS STRAIN: It would be very hard, not only for you but for us.
21271 COMMISSIONER WILSON: Yes. Probably harder for us. You are in the
21272 In terms of being directly competitive with existing specialty
services, the nature of service description for Showcase states that it will
offer an all-fiction programming service consisting of the best of independently
produced movies, drama, comedy and mini-series from Canada and around the world.
Do you consider your application directly competitive with Showcase?
21273 You have probably been watching the responses of other people for
independent film channels.
21274 MS STRAIN: Yes, we have.
21275 No, we don't consider ourselves to be directly competitive with
21276 Showcase's core mandate is television drama and series.
21277 COMMISSIONER WILSON: Second window --
21278 MS STRAIN: Yes.
21279 COMMISSIONER WILSON: -- drama, I think it has been described as
by two of the other independent film applicants.
21280 MS STRAIN: Yes. They don't air any non-fiction programming like
documentaries, as we would on our independent film channel.
21281 In particular, I noted that Mr. MacMillan, in his presentation to
you -- as I recall, he stated that the reason Showcase was really concerned
about the Indie film applicants was that they had included television
series -- I can't remember the category offhand, but that category of
programming under 7 in their applications. I was surprised to hear that because
we didn't put that in our application. We don't have any television drama or
series of any type. It is strictly feature films and, in some cases, Canadian
21282 COMMISSIONER WILSON: And you think that would be sufficient in terms of
ensuring that there is no competition.
21283 I mean, Showcase does show some independent films --
21284 MS STRAIN: Yes, they do.
21285 COMMISSIONER WILSON: -- as part of their Revue.
21286 MS STRAIN: Yes, they do. But we don't think -- I mean, that is not
their core mandate.
21287 MR. LINK: If I may, I would like to interject here.
21288 I have appeared several times in front of the Commission in another
capacity when I deplored that there were not enough Canadian films shown by the
conventional broadcasters. It is very hard for me here today to be at the same
table, but it is because of this recognition that we are trying to do something
which is good for Canadians and good for the Canadian film industry.
21289 I don't think that there are ever enough shown. I believe -- and
what attracted us to this project was really that we are going to have thousands
of films that are right now on the shelves and not seen, that people have
devoted time, energy and money --
21290 COMMISSIONER WILSON: Which have passion.
21291 MR. LINK: You mention passion. I must tell you, passion, yes. And they
have no way of seeing them. I think that this is an extraordinary way of giving
access to the Canadian public, coast to coast, to recognize that there are good
Canadian films, maybe with talent that is lesser known. As they say in French,
l'appétit vient en mangeant.
21292 We have to explore more the Canadian feature films for the Canadian
public. I feel very strongly about that. Thank you.
21293 COMMISSIONER WILSON: Thank you, Mr. Link.
21294 MR. STERLOFF: I wonder if I could just add that in preparing the
schedule we contacted CAVCO just to see what the output of Canadian feature
films alone was in recent years. Let's see. In 1996-97 they reported that they
certified 101 Canadian feature films that year. In 1997-98, the last complete
year, there were 105 new films.
21295 We are not intending to build a service that is focused on the block
busters. We don't require that these films have theatrical release prior to
being licensed. So what you are going to find on the service are the films that
are not seen theatrically, in many cases, and may not be attractive certainly to
pay per view, or even to pay television. These are not necessarily the Canadian
films that you would see at 8:00 p.m. on your conventional services, including
21296 So the kinds of feature films that are going to be included in the
mix -- it's quite eclectic.
21297 Of course, the other component that is extremely important to
us -- as keen patrons of film festivals, one of the important parts of the
program is always the short film, the experimental film, and now, of course, the
digital Web-based film. All of these will find a home on the service. I am not
sure that there is any service in Canada today, anywhere in the world perhaps,
where you are going to find that kind of blend of programming. It is a new
window for a lot of brand new material.
21298 COMMISSIONER WILSON: Mr. Craig, is it your opinion that an independent
film channel that included a portion of documentaries and a documentary channel
could co-exist as non-competitive in this environment?
21299 MR. CRAIG: Yes.
21300 COMMISSIONER WILSON: Thank you.
21301 Would you impose limitations on the amount of dramatic independent
films aired by a documentary service, just as you have offered a limit in terms
of the amount of documentary programming you would carry?
21302 MR. CRAIG: That would seem appropriate.
21303 COMMISSIONER WILSON: Any suggestions?
21304 MR. CRAIG: I hadn't really thought about that, in terms of percentage
terms. But, you know, possibly use the same ratio. If we are going to limit
ourselves to --
21305 COMMISSIONER WILSON: Twenty-five per cent documentary, as I read
21306 MR. CRAIG: Twenty-five per cent. Maybe use the same ratio.
21307 I mean, it's a concept. I am not saying it is the right number,
21308 COMMISSIONER WILSON: You term --
21309 I'm sorry.
21310 MR. CRAIG: Certainly there needs to be limitations.
21311 COMMISSIONER WILSON: Okay.
21312 In terms of the sources of your non-Canadian programs, you have said
that you are going to be broadcasting independent films from Canada and around
the world, including Australia, China, Europe, India and the U.S. I am wondering
of the foreign programming how much is U.S. and how much is other?
21313 MR. CRAIG: It's 20 per cent of the foreign.
21314 COMMISSIONER WILSON: Twenty per cent?
21315 MR. CRAIG: Yes.
21316 COMMISSIONER WILSON: In terms of advertising, in your application form
you said that you would accept the standard condition of licence limiting
advertising to 12 minutes per hour, but in your supplementary brief you said
that you were only planning to run eight minutes of paid commercial time per
21317 MR. CRAIG: What we have tried to do is build a service that is for the
film buff and for the film lover.
21318 COMMISSIONER WILSON: So, respectful of the content?
21319 MR. CRAIG: Respectful of the content. We have said: Listen, we have got
enough inventory, so let's cut down on the number of commercial interruptions
that we have on the service and build a real pure program service.
21320 COMMISSIONER WILSON: My final question on this application has to do
with your Canadian content levels because most of the other independent film
channels, with the exception of one -- the applications I should
say -- propose levels in the range that you have proposed, and that one
proposes a level of about 33 per cent by year seven, based on the argument that
there is a possible product in this genre and that it's just not possible to
achieve the 50 per cent minimum by the end of the licence term that the
Commission has asked for. Obviously, you don't agree that that's the case?
21321 MR. CRAIG: We don't buy that argument. Wayne and Mr. Link and Jeff may
want to add to this.
21322 MR. STERLOFF: Commissioner Wilson, a couple of my previous lives had me
working at Telefilm Canada and 10 years at the head of B.C. Film. I for one am
very much aware of the inventory of Canadian feature films that are not making
it to the screen.
21323 In my capacity with Craig, we receive cassettes every day, demo tapes
of films that are not being purchased, not being licensed in the existing
system. As far as I can tell, there is plenty of inventory. I have no problem in
meeting our target.
21324 MR. LINK: I have no fear that the 50 per cent can be achieved. I
do believe that the variety of programming that is available in the new media is
going to probably even be better eventually.
21325 MR. SACKMAN: And again, whoever was saying 33 per cent, they may be
imposing limits upon themselves, that they are only theatrically released films
or who knows what, but in terms of the overall available product it shouldn't be
a problem at all.
21326 COMMISSIONER WILSON: Commissioner Williams has a choking problem.
21327 MR. STERLOFF: Commissioner Wilson, not to beat this into the ground,
but I was just looking at some of our figures and our Canadian content which is
50 per cent, you may be interested to know that 72 per cent of the cash going to
licences is being made available to acquire that product. So that's another way
we think we are going to inspire a higher level of production.
21328 COMMISSIONER WILSON: All right.
21329 I want to turn now to The MET and, obviously, the nature of service and
the fence building idea is one that we want to explore with reference to this
service. So if I can just take you through a few of these questions, maybe you
can help me out here.
21330 Seventy per cent of your broadcast week will be music and videos, and
you are proposing a 60 per cent Cancon level day and evening and that
60 per cent also applies to your video level. Is that correct?
21331 MR. CRAIG: Yes.
21332 COMMISSIONER WILSON: Because you are aware, I am sure, that typically
music video services have a lower level of requirement for music videos.
21333 MR. CRAIG: Yes, we do.
21334 COMMISSIONER WILSON: And I noticed in your opening remarks you talked
about the thousands of artists and videos available that were not getting
airplay on services that are already in the system, but that's not what we are
hearing. Again, we are hearing that there is a lack of product in the video
21335 MR. CRAIG: Well, I would like to ask John Donnelly to start off and
Andrew Forsyth is here from Bohn & Associates.
21336 COMMISSIONER WILSON: I will tell you part of what was kind of bothering
me was that the $1.26 million that you had set aside over the life of the
licence to produce new music videos. It's only 2.5 per cent of your
regulated revenues, whereas the other music services that are already licensed,
MuchMusic spent 7 per cent, MuchMoreMusic spends 5 per cent.
21337 I will lay out for you what is going through my mind and then you can
come back at me and say, yes, we have product; yes, we can do 60 per cent and
here's how we are going to do it.
21338 So, you are only going to spend $1.26 million, which is less than
the other services. You are promising a high level of Canadian content in the
music video broadcast themselves and you are going to play in a much smaller
niche, so presumably the supply would be narrower because you are just doing
rock. You are not doing pop and CHR and the other things, so how do you pull
this off? How do you give us 60 per cent --
21339 MR. CRAIG: Mr. Donnelly.
21340 COMMISSIONER WILSON: -- and only spend $1.26 million over seven
years on producing Canadian videos, and are these good videos?
21341 MR. DONNELLY: Definitely.
21342 So I guess to start I just want to introduce a little bit of my own
personal experience, in that I spent 15 years as a performer touring Canada from
coast-to-coast and from Whitehorse to Windsor.
21343 I have also spent 15 years on the business side of music producing
concerts and festivals and in particular a large festival which takes place in
Vancouver each year, called New Music West, which really focuses on emerging and
developing talent, attracts over a thousand applications from artists each
21344 So I know that there is an incredible volume or number of Canadian
artists that are out there, that the industry has really grown exponentially
over the last many years and I also know that there is an incredible library of
Canadian video product.
21345 If you go back really to the history of music videos, MTV I guess
really sort of invented the genre 20-some years ago of rock video as an art form
and that genre has really grown over the past 20 years. So with the AVLA,
which is the Audio Visual Licensing Association here in Canada, they currently
have 22,260 Canadian copyright owned videos registered with the AVLA.
21346 So there is a real volume of artists, of contemporary music videos that
are sitting on shelves here in Canada.
21347 COMMISSIONER WILSON: How many of those are you playing a year?
21348 MR. DONNELLY: How many of those would we play in a year?
21349 COMMISSIONER WILSON: Yes.
21350 MR. DONNELLY: We do have some information. We did a break down. Over
the course of a year about 960 different songs. So we have categorized our
service with a variety of different genres.
21351 We looked at what we would program in terms of international hits
versus Canadian emerging artists, current Canadian programming, secondary
Canadian programming. Then we tried to project what the rotations would be, et
cetera. I will ask Andrew Forsyth from Bohn & Associates to jump in with me
a little bit here.
21352 But what we have come up with is that 960 songs on an average year is
what would be programmed on our service.
21353 Andrew, do you want to just jump in a little bit?
21354 MR. FORSYTH: Just to break that out a little further, I think to go
back to Commissioner Wilson's question of the library material -- in other
words, the material that already exists that has been shelved and is not being
viewed. It would be approximately 500 selections used on a per annual basis.
21355 The balance of those, so approximately 400 videos, would be new each
year, and of that approximately 200 would be Canadian.
21356 COMMISSIONER WILSON: Two hundred would be...?
21357 MR. FORSYTH: Canadian.
21358 COMMISSIONER WILSON: And of those 22,000 that are registered, how many
of those are in the rock genre?
21359 MR. DONNELLY: That's a tough question, in that --
21360 COMMISSIONER WILSON: Do they categorize them?
21361 MR. DONNELLY: They aren't categorized by genre at the AVLA, but we do
know that really there is four basic genres. Now, as music has been sort of
evolved and is being charted here in Canada, there are four basic genres.
21362 Although, when it really started 10 years ago or even 20 years ago
it was almost all rock. So music has been fragmented, really in particular over
the last 10 years, but even in the most conservative estimates, if you look at
that library you would know that there would be a minimum of 6,000 of these
videos would be in the rock category and it's probably in reality closer to
10,000. Many of which are classic rock, hard rock, punk, metal, et cetera, so we
know there is a real library of Canadian copyright on videos there.
21363 COMMISSIONER WILSON: With that as a backdrop let's talk about how
directly competitive you would be with MuchMusic, for example. These are the
numbers that we will look at, according to your break down of the 500 hours
between March 10 and March 30 that you analyzed from MuchMusic; Canadian modern
rock, foreign modern rock, rock, metal and classic rock accounted for about 23
per cent of their schedule. But they say that they do 43 per cent rock.
21364 And you say that only 17 per cent of MuchMusic's audience is 18 to 24
and they say 50 per cent of their audience is 12 to 24. So what do we do?
21365 MR. DONNELLY: If we could talk, first, I guess about the music and
really the evolution of music. We do know that when MTV started with music video
and MuchMusic followed in 1984 and really since then they have been the only
game in town, but over the last 10 years this genre fragmentation has really
increased. It's the real thing. So we have these different charts and under each
different chart, for example dance music, there is even increased fragmentation,
in that there is hip hop and industrial and various kinds of sub-genres.
21366 So anyway, what has happened is as music has evolved, and in particular
with the emergence of urban music, you know MuchMusic has evolved with it to
program urban. In the last five years we have this real explosion of pop music.
Again, they have been there with artists such as Britney Spears and the Back
Street Boys programming pop. So it has really created this void that we call
21367 So we decided, well, let's take a look at that and see if we can
quantify this. So we went in in developing the application because we know from
our experience in dealing with musicians and know how hard it is for
contemporary rock artists and emerging rock artists to get airplay, we know the
frustration of these groups in trying to get records played and know that
because Much is playing so much CHR and so much urban that it has really limited
the amount of playlist that they can dedicated to Canadian artists and emerging
21368 So what we did is --
21369 COMMISSIONER WILSON: Has MuchMusic, the proportion of the different
kinds of music that they play, that's obviously changed. It has evolved over the
year as different genres of music have become more popular?
21370 MR. DONNELLY: Yes.
21371 MR. CRAIG: Commissioner Wilson, if I might, yes it has, we believe. I
would like to ask Andrew to just give you some hard numbers. We can also get
Debra to give you some BBM data on the tuning for Much, just to give you an
example of where the audience is.
21372 MR. DONNELLY: And even before Andrew jumps in, I do want to point out
that what we did is we did this log in March of the 500 hours and then
categorized the songs with which we then presented these statistics in our
21373 What we have done in follow-up is we asked and contracted Bohn &
Associates and Andrew Forsyth's company to again even review our numbers and see
where they came up with as an independent result. So we will let Andrew speak to
that as well.
21374 MR. FORSYTH: We reviewed the music logs and broke the music out by
music segments, identifying each selection to a particular genre and under one
heading, general heading of CHR or contemporary hit radio or top 40, as it is
also known, we put these elements together. We had Canadian pop music, pop,
urban and rock crossover. Rock crossover being material that had originally
started on the rock charts, but it gained acceptance at top 40, so it had moved
over to that side.
21375 When we totalled that material up we discovered that the CHR segment
was 61 per cent of what MuchMusic played.
21376 We took the rock segments and under the rock segments we had Canadian
rock, modern rock, mainstream rock, metal and classic rock. Those components
added up and came out to 24 per cent, which was close to John's figure of 23 per
cent that he had put in the application.
21377 THE CHAIRPERSON: Mr. Forsyth, I hate to interrupt, but there is a limit
to how you can use this part of the process to actually reply to why the
two -- MuchMusic's intervention that you will be competitive. So perhaps
you should make sure that when you appear at Phase IV you at least summarize
21378 The reason for this, as your counsel will understand, is in the first
part of the hearing MuchMusic may not be listening. Maybe they are and maybe
they are not because this is really a reply.
21379 MR. FORSYTH: I always understood that CityTV was everywhere.
21380 THE CHAIRPERSON: I know, but we have to keep the process within certain
limits without being too jurisprudential about it, but you can reverse the
situation sometimes and it could be you. So make sure that this reply to their
comment is included in Phase IV.
21381 MR. FORSYTH: Certainly.
21382 THE CHAIRPERSON: Rather than get into it to any greater detail at this
21383 MR. FORSYTH: I think the general direction then as an overall comment
would be that MuchMusic -- if the question is how would this service, how
would The MET differentiate itself from and not duplicate the service on Much, I
will go back in history just a little bit and go back perhaps a little further
than John had gone and just talk very generally about contemporary hit radio,
21384 As some of us might remember, only some of us, in the early sixties if
you turned on CHUM-AM in Toronto or CKGM in Montreal or CFRA here in Ottawa, you
would hear the Beatles. The next song that you would hear would be Perry Como.
The next song you would hear would be Steppenwolf. There was that mix of music
on top 40.
21385 We went out a few years and the people who were into the Beatles and
perhaps Steppenwolf discovered that those artists also had albums and those
albums were pretty good and there were songs that radio wasn't playing. There
was a home for those, eventually, on of course the unused or under-used FM dial
and we ended up with album radio.
21386 Well, in a sense it has kind of turned itself around, but that's where
video is at now, music video is at. That is, while rock really was the original
content of music videos, music video as such has become much more like CHR, and
that is that it takes from the best of those services around it, or from the
best of the charts around it. So CHR draws from rock. It will even draw from
country, if we look at the success that people like Faith Hill and, of course,
Shania Twain have had over the last few years. And, of course, it draws from the
pop and the dance and the urban charts.
21387 That is sort of the conundrum that Much is in right now. It is playing
something from everybody and it is doing a very good job of that.
21388 What The MET proposes to do is concentrate on rock and, therefore,
expand the amount of rock that will be available to a viewer on the service.
21389 MS McLAUGHLIN: Just so I can put it in context of the analysis that was
used to determine the profile of The MET against MuchMusic, we looked at the BBM
survey and I ran it again today just in case there had been any change this
spring, but based on a 62,680 sample, which is probably the most robust of any
survey you are going to find, when we look at it, 49.9 per cent of
21390 THE CHAIRPERSON: Ms McLaughlin, the same comment. You keep this for the
Phase IV stage where you are responding to MuchMusic.
21391 You work with Mr. Bohn, Pat Bohn?
21392 MR. FORSYTH: That's correct.
21393 THE CHAIRPERSON: You caught on. The idea is you want to tell us how
different The MET is at this stage and not go into the nitty gritty of how you
arrive at that with regard to the intervenor because it's not the phase at which
21394 MR. CRAIG: Madame Chair, we respect the process and we would respect
your comment I think.
21395 THE CHAIRPERSON: And it has nothing to do with the hour. It's just the
process and I think you understand.
21396 MR. CRAIG: I think Ms McLaughlin was simply responding to I think what
was one of the questions. We understand.
21397 THE CHAIRPERSON: We certainly want to hear how different The MET will
be from existing services, but not get into exactly how you arrive at it at this
stage, but we welcome these comments at Phase IV when, presumably, the
intervenor will be listening to see whether you say anything to counter his
21398 COMMISSIONER WILLIAMS: Madam Chair, these people have been answering
questions without benefit of water for more than an hour and I would like to
offer them the rest of my jug.
--- Laughter / Rires
21399 MR. CRAIG: Thank you.
21400 COMMISSIONER WILSON: I'm sorry about that.
21401 MR. DONNELLY: If I might carry on with the question --
21402 COMMISSIONER WILSON: Let me ask you some sort of specific
regulator-type questions about limits and conditions of licence, and we will
kind of get at it like that. You will have an opportunity a little later on in
the process to talk more about defining your niche programming. I will just
finish up with these and Phase IV will look after any other comments
21403 I probably shouldn't have opened that Pandora's box, but there you go.
It is hard not to ask.
21404 If the Commission wished to set conditions on the types of music that
you were permitted to air, and if we considered using the levels and types of
artists and music that you have indicated in Schedule 1, which is 60 per cent
rock radio, 20 per cent breaking new artists, 15 per cent songs not currently
played on radio, and 5 per cent CHR, what definitions or music charts could be
used to ensure adherence to those conditions? How would you define, for example,
breaking new artists?
21405 When you came up with those breakdowns, how did you do that? On what
did you base that?
21406 MR. DONNELLY: We were looking at what is available, and we wanted to
set a new benchmark for Canadian talent -- for the support of Canadian
talent -- and the belief is so strong that we can deliver a wonderful
service with the highest quality by programming emerging Canadian artists at the
same level as we would program international hit artists, or relatively the same
21407 I think I will let Andrew speak to that, on how we would deliver a
music mix that, I guess, delivers that component. Is that what you are looking
21408 COMMISSIONER WILSON: I am asking you, if this is your breakdown --
60 per cent rock radio, 20 per cent breaking new artists --
21409 MR. DONNELLY: Yes.
21410 COMMISSIONER WILSON: Who makes those determinations? Is there some
common way of figuring that out in the industry? Is there a book that you look
in that says: This is rock radio and this is a breaking new artist?
21411 I am being facetious, of course, but I am trying to figure out, if we
are going to set those limits, if we are going to hold you to the limits you
have offered, then how do we --
21412 It is like defining an independent film.
21413 MR. DONNELLY: Right. I think if we look at the national industry trade
magazine, which is The Record magazine, I believe that The Record magazine has
been recognized by the Commission in reviewing other analyses of music. So if it
is an emerging artist, then it is an artist that has not had a song charted in a
national industry trade magazine, or not released by a major label.
21414 COMMISSIONER WILSON: That's a good answer. And they would all be
21415 MR. DONNELLY: And they would all be rock, yes.
21416 COMMISSIONER WILSON: You stated that The MET would not air movies or
animated programming, but your nature of service definition does include the
categories for those types of programming: 7(c) and 7(e). In the mounds of paper
that you filed with us -- and I say that with a compliment, because you did
file a lot of material and that is very much appreciated -- you described
programs not covered by the categories that you are proposing in section 7.1. So
I am just wondering if you could confirm for us what categories you propose to
include in your nature of service.
21417 MS STRAIN: Commissioner Wilson, I believe -- there have been so
many phases to this process now that I forget, but I guess it was in the
deficiency process that we had agreed to delete feature films and the category
relating to animated programming from Category 7 --
21418 COMMISSIONER WILSON: You agreed to delete those?
21419 MS STRAIN: Yes. So that amended our original application. Or clarified
21420 COMMISSIONER WILSON: Okay. So you would still want --
21421 If I can just read through these. Do you have your nature of service,
section 7.1, of the application form?
21422 THE CHAIRPERSON: It obviously has to be supplemented by the response to
the clarification question.
21423 MS STRAIN: That's right.
21424 COMMISSIONER WILSON: Right. So you would do 2(a) --
21425 MS STRAIN: Yes.
21426 COMMISSIONER WILSON: -- 7(a), 7(b), 7(d), 8(a), (b) and
21427 MS STRAIN: That's correct.
21428 COMMISSIONER WILSON: -- 11, 12, 13 and 14.
21429 MS STRAIN: Did you say 9?
21430 COMMISSIONER WILSON: Oh, 9. You're right, I'm sorry. Nine.
21431 MS STRAIN: Yes.
21432 COMMISSIONER WILSON: And not 15.
21433 MS STRAIN: It was my bright idea to put 15 in there to begin with.
21434 COMMISSIONER WILSON: Many others had the same bright idea.
21435 The foreign-acquired drama, comedy and animation programming that you
would propose to include on the service, as outlined in Schedule 10, can you
describe that? What kind of drama, comedy --
21436 The animation you have taken out, so --
21437 MR. DONNELLY: We will look to anything that really is rock
entertainment based. So we will look for things like, you know, histories of
music, or discographies. If there are international-based programs that could be
drama-based programs but about a rock band, that is the type of thing we want
21438 I mean, our real intent for The MET is to produce a station that is 100
per cent dedicated to rock music. So we want people to know that when they tune
in to The MET they are going to find great rock and roll. They are going to find
information about it that they may not get anywhere else. You know, there is
going to be consistency there.
21439 We do want to have some other variety programming, like our program
with Bruce Allen as a current affairs issues show, but even that program --
the idea there is to focus on music, to talk about current issues in music or
have guests on the program that are music related.
21440 So we left the door open --
21441 COMMISSIONER WILSON: For flexibility.
21442 MR. DONNELLY: -- to have other things for flexibility, but really
the intent of our service -- if you look at year 1, the way we intend to
roll out is with almost a 90 per cent base of music-based programming.
21443 COMMISSIONER WILSON: And the comedy?
21444 I was sitting here thinking: Okay, rock comedy. I was thinking about
the Monkeys. But the Monkeys were pop; right?
21445 MR. DONNELLY: The categories there, I think, leave the door open
21446 COMMISSIONER WILSON: And they are too retro.
21447 MR. DONNELLY: Yes. The categories there are to leave the door open for
opportunities that may come up, but the focus is to come out as a music-based
21448 COMMISSIONER WILSON: Okay. I think you also mentioned somewhere
something about music-based game shows, but you did not include Category 10.
21449 MS STRAIN: Could we? I think that was an error.
21450 COMMISSIONER WILSON: Okay. Yes, you could say that was an error
and you would like to include it.
21451 MS STRAIN: That was an error.
21452 COMMISSIONER WILSON: We can always say no.
--- Laughter / Rires
21453 MS STRAIN: True enough.
21454 I'm sorry, Commissioner Wilson. I found my deficiency response on
Category 7 sub-categories, and what we had agreed to include were sub-categories
(a), (b), (c) and (e).
21455 COMMISSIONER WILSON: So (a), (d) --
21456 MS STRAIN: They are (a), (b), (c) and (e), excluding the other
categories. So excluding (d), (f) and (g).
21457 COMMISSIONER WILSON: All right.
21458 MS STRAIN: So that does include some animated television
21459 COMMISSIONER WILSON: Did you say that you would not be airing movies or
21460 MS STRAIN: We will not be airing movies, but we did contemplate in the
deficiency process that we might be airing animated television programming.
21461 I got that mixed up when we first --
21462 COMMISSIONER WILSON: So you do want 7(c)?
21463 I'm confused. Sorry.
21464 MR. STERLOFF: Is the feature film Category 7(d) or --
21465 COMMISSIONER WILSON: Yes. The theatrical feature films aired on TV is
21466 MR. STERLOFF: Yes. So we will omit 7(d).
21467 MS STRAIN: Under Category 7, we included (a), (b), (c) and (e) as
categories we wanted to include.
21468 COMMISSIONER WILSON: Okay. If we felt it was necessary, would you
accept a condition of licence that limited the amount of Category 2 and Category
7 programming permitted on The MET, as has been the case with MuchMusic?
21469 MR. CRAIG: Yes.
21470 COMMISSIONER WILSON: And would you recommend any specific COLs with
respect to the limitations on 2 and 7?
--- Pause / Pause
21471 COMMISSIONER WILSON: Do you want to come back to us?
21472 MR. CRAIG: Yes, we would like to come back on that one, please.
21473 COMMISSIONER WILSON: Okay. I have just one more question -- well,
two more questions, actually.
21474 You are playing 70 per cent of your broadcast week is music videos, but
would you accept a condition of licence that required that Canadian music videos
be evenly distributed throughout the broadcast week in a reasonable manner?
21475 MR. CRAIG: Yes.
21476 COMMISSIONER WILSON: And the same for the broadcast day?
21477 MR. CRAIG: Yes.
21478 COMMISSIONER WILSON: With respect to your priority program funding
proposal -- and actually, this relates to all three applications --
would you be willing to commit to those as fixed dollar amounts as conditions of
licence, if we were so inclined?
21479 MR. CRAIG: Yes.
21480 COMMISSIONER WILSON: Just one other question out of curiosity.
21481 When you did your demand research and you described the service, the
question that you used to describe that service starts with:
"The CRTC is considering applications for new television channels. One of the
applicants being considered is proposing a music video channel." (As read)
21482 You did not include the word "rock" in there. I am wondering why not
and if you think it would have any effect on the results if you had.
21483 MS McLAUGHLIN: I think I have been nominated to answer that.
21484 COMMISSIONER WILSON: Probably.
21485 MS McLAUGHLIN: The survey that you have before you actually had several
demand measures, and that was the specific question.
21486 You are right. It did describe a service that is not an exact mirror of
what ended up in the application. It has been modified.
21487 But it has been modified in relationship and in consideration of the
results of the survey.
21488 On the previous page -- I am sure you are not looking at it, but I
am -- we actually tested all of the interest levels in the various music
genres. When we went through it, we found that the rock category, where you
correlate the three variations that we looked at -- classic rock, modern
rock and alternative rock -- indicated that there was 84 per cent of the
Canadian population that listened to it in some form or another, moderately or
21489 We felt that that was a very strong indication of the interest in the
21490 The only format that scored higher was adult contemporary, and that was
21491 So that was an indication. I would suspect that if we had put rock in
there, we would have found that we had a higher interest level. The description
in and of itself is relatively vague; and as people are limited to what they
know, they may have comparatives to existing services or put their own music
interpretation in terms of what the play list would be.
21492 COMMISSIONER WILSON: Ms McLaughlin, could I just ask you one more very
quick question -- well, I guess how quick it is will depend on what your
answer is. But I will ask it quickly.
21493 Your demand research appeared to demonstrate that the greatest appeal
of this service would be to an age group of 25-to-44, which would be the age
group into which I would fall. All of those songs that that guy was playing on
that video were songs that I recognized from my youth.
21494 You are targeting to an 18-to-49-year-old audience concentrated to
21495 MS McLAUGHLIN: I am not sure that I really understand the question.
21496 COMMISSIONER WILSON: If you are concentrating your target audience to
18-to-24, and according to your research the highest level of appeal is
25-to-44, which is the next bracket up --
21497 MS McLAUGHLIN: The bracket that you are talking about also represents
the largest proportion of the population in Canada. So when you are talking
about the per cent composition of the audience, you tend to see clustering in
21498 The way that we presented this data within the context of this study,
we have also shown you within those age groups the propensity to watch this
channel. The greatest response of definitely watch it came from 18-to-24. That
was 27 per cent. That was a higher percentage of that age group than any
21499 You can see as you go through the age groups that as they age, it
declines in terms of "absolutely must watch this service".
21500 In distribution in terms of how the population is laid out, yes, that
would be how the bulk of our audience would distribute. But we recognize that
this particular genre has a real focus and a core following in the 18-to-24.
21501 Maybe John could comment.
21502 COMMISSIONER WILSON: Everything old is new again.
21503 MR. CRAIG: Commissioner Wilson, as we went through the process and put
these applications together, you start with some research and you fine-tune it
and you develop a service.
21504 I think one of the most telling aspects about the demand for the
service was indicated in the level of support that we got in the intervention
phase. We had over 150 letters filed from people that are on the record at the
Commission. We also had the support of virtually every record company president
21505 Also, John did another bit of research in the field.
21506 COMMISSIONER WILSON: Because they would know what rock is.
21507 MR. DONNELLY: In my business as a concert promoter and producer of
special events, I produced, first off, an event in Calgary just this summer, on
July 29th and 30th, with a predominantly Canadian rock band lineup. We drew
64,000 people to the streets of downtown Calgary.
21508 While I was there, I said: "I have this incredible golden opportunity
to speak to people about The MET." So we set up our MET booth at the festival
and had a chance to speak to kids and had them come up and we said: "Would you
give us a letter of support? Would you sign a card and let the CRTC know that
you guys want to see more rock?"
21509 Really, there is a real frustration with this demographic of the
18-to-24 core, but older than that. They don't want to sit down have to sit
through Britney Spears and B44 or The Mix to get to some rock music. They want
to rock. They enjoy music. Music is a real driving force in their lives.
21510 And it was not just that festival. I actually did a series of them this
21511 We attended about six different festivals, and we received over 5,000
signed letters and cards of support. Some of them, where we gave out postcards
as promotional material, they mailed them back to us. So they put the stamp on
it and sent it back to us.
21512 We have over 5,000 really interested in our service.
21513 In particular, to just speak about the fencing issue and how we are
going to complement the system, I think really the simplest way to explain it is
the fact that with the evolution of music, we have four charts. Yet, with only
three music services, it means that the broadcast system is not complete; that
there is a whole area of rock -- and when you look at some of the play
lists, you will see upcoming Canadian rock bands that are getting four plays in
one week from the incumbent.
21514 They may say: "Yes, we are playing these rock artists. We played 30 of
the songs on this week's Top 75 rock." But when you look at how deep they
played -- you know, Wide Mouth Mason got four and Limb Lifter got two.
21515 I believe we can complement the broadcast system by creating this niche
and by sitting under the banner of rock radio and allowing MuchMusic to really
serve the hit audience that they are going with and allowing MuchMoreMusic to
serve the pop adult audience. CMT, of course, is safe in country.
21516 I believe we can find a nice fit and serve the broadcast system well,
and then do a great job to promote Canadian artists. If we have an opportunity
to receive this licence, we can do wonderful things for not just the broadcast
system but the music industry and many, many artists.
21517 COMMISSIONER WILSON: Thank you, Mr. Donnelly.
21518 Those are my questions, Madam Chair.
21519 THE CHAIRPERSON: Counsel?
21520 MR. McCALLUM: None at this time, Madam.
21521 THE CHAIRPERSON: Well, I must say, if I had known we would be so long I
would have insisted on giving you a break.
--- Laughter / Rires
21522 THE CHAIRPERSON: But at least you can be assured you would survive on
any survivor show.
--- Laughter / Rires
21523 THE CHAIRPERSON: I also want you to know that the transcript won't show
how tired you are.
21524 We certainly have had a thorough look at your applications. It has been
nice to see you for the first time in this particular context and we will see
you again at Phase II and at Phase IV where we fully expect to see
Ms McLaughlin and Mr. Forsyth. He may be accompanied by his Pat Bohn
by now to make sure he gets the answers at the right time and the right
21525 We now give you, Mr. Craig, the last word, if you can find the
21526 MR. CRAIG: Thank you very much.
21527 I appreciate your patience through this process.
21528 I think that we have three very distinct, three very different
applications before you in this process and I think that what we have tried to
do is complement our core competencies and, at the same time, add some diversity
to the broadcast system.
21529 I believe firmly that our company can also make all this happen. As I
said earlier, I think execution is everything in this process. I think we have a
track record of proving that we can do the things that we say that we are going
21530 We also have a great partner as well in our Festival application in
Lions Gate and I think they bring something very unique to the table in terms of
their bent towards independent film and I think it is a very special
21531 We are ready right now. Our plants are ready. We can launch
immediately. We also, as we mentioned earlier, have the production commissioning
expertise. Over the last three years we have had a tremendous track record
there. Our in-house production facilities and capabilities are second to
21532 I also, as we talked about earlier -- Commissioner Wilson,
indicated in her opening remarks that Craig is a little unique in the sense that
we have BDU experience and we have broadcaster experience and I think I would be
remiss if I didn't sort of tell you where we are as a company and where we are
21533 My father was one of the people who had a vision to take the company
into the digital world with SkyCable, had the vision to take the broadcast
company into the digital world as well and sort of set the course for where we
21534 I think that this is the first time that you have had an opportunity to
see our entire team and I am very proud of the team that we have here. I think
they are a very talented and bright group of people that are among the best
broadcast executives in the country.
21535 So we are up for this challenge. We are ready to go. If you are kind
enough to grant us a licence, we can deliver.
21536 Thank you very much.
21537 THE CHAIRPERSON: You have to say smart enough.
21538 MR. CRAIG: We are also smart enough.
--- Laughter / Rires
21539 COMMISSIONER WILLIAMS: If we were smart enough maybe is what she
--- Laughter / Rires
21540 THE CHAIRPERSON: Yes. We don't do kindness. We try to be smart, but
kind we are not. We keep people for hours.
--- Laughter / Rires
21541 THE CHAIRPERSON: Again, we thank you for your co-operation and your
patience and we are a little bit apologetic about not having taken a break. At
least I asked.
21542 Have a good evening and we will see you again in other phases of the
21543 Have a good trip back home.
21544 MR. CRAIG: Thank you very much.
--- Whereupon the hearing adjourned at 1816, to resume
on Friday August 25, 2000 at 0830 / L'audience
est adjournée à 1816, pour reprendre le vendredi
25 août 2000 à 0830