ARCHIVÉ -  Transcript / Transcription - Calgary, Alberta - 2002-04-10

 

 

 

 

 

 

TRANSCRIPT OF PROCEEDINGS

FOR THE CANADIAN RADIO‑TELEVISION AND

TELECOMMUNICATIONS COMMISSION

 

 

 

 

TRANSCRIPTION DES AUDIENCES DU

CONSEIL DE LA RADIODIFFUSION

ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

 

 

 

SUBJECT / SUJET:

 

 

MULTIPLE BROADCASTING APPLICATIONS - APPLICATIONS TO RENEW FOUR LOCAL TELEVISION STATIONS OWNED BY CRAIG BROADCAST SYSTEMS INC. AND CRAIG BROADCASTING ALBERTA INC. (CRAIG) MULTIPLES DEMANDES EN RADIODIFFUSION - DEMANDES DE RENOUVELLEMENT DE QUATRE STATIONS DE TÉLÉVISION LOCALES APPARTENANT À CRAIG BROADCAST SYSTEMS INC. ET CRAIG BROADCASTING ALBERTA INC. (CRAIG)

 

 

HELD AT:                                                                                TENUE À:

 

The Metropolitan Centre                                                            The Metropolitan Centre

333 Fourth Avenue South West                                                 333, quatrième avenue sud-ouest

Calgary, Alberta                                                                       Calgary (Alberta)

                                                                                              

 

 

10 April 2002                                                                            Le 10 avril 2002

 

 

 

                              Volume 1

 

 

 

 

Transcripts

 

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

bilingual as to their covers, the listing of the CRTC members

and staff attending the public hearings, and the Table of

Contents.

 

However, the aforementioned publication is the recorded

verbatim transcript and, as such, is taped and transcribed in

either of the official languages, depending on the language

spoken by the participant at the public hearing.

 

 

 

 

Transcription

 

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

bilingues en ce qui a trait à la page couverture, la liste des

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

 

Toutefois, la publication susmentionnée est un compte rendu

textuel des délibérations et, en tant que tel, est enregistrée

et transcrite dans l'une ou l'autre des deux langues

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

Canadian Radio‑television and

Telecommunications Commission

 

Conseil de la radiodiffusion et des

télécommunications canadiennes

 

 

Transcript / Transcription

 

 

 

BEFORE / DEVANT:

 Charles Dalfen                                                              Chairman / Président

 Andrée Wylie                                                                            Vice-Chairperson /  Vice-Présidente

Barbara Cram                                                                           Regional Commissioner for Manitoba and                                                                                                Saskatchewan / Conseillère régionale pour le                                           Manitoba et la Saskatchewan

 

Ronald Williams                                                                       Regional Commissioner for  Alberta and the                                             Northwest Territories/ Conseiller régionale pour                                           l'Alberta et les territoires Nord-ouest

 

David McKendry                                                                                               Commissioner / Conseiller

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Peter Foster                                                                             Hearing Manager / Gérant de

                                                                                               l'audience

Marguerite Vogel                                                                      Hearing Secretary / Secrétaire de l'audience

                                                                                               Secretary / secrétaire

 

Leanne Bennett                                                                        Legal Counsels /

Alastair Stewart                                                                                                conseillers juridiques

 

 

HELD AT:                            TENUE À:

 

The Metropolitan Centre                                                             The Metropolitan Centre

333 Fourth Avenue South West                                                 333,  quatrième avenue sud-ouest

Calgary, Alberta                                                                        Calgary (Alberta)

                                         

 

 

10 April 2002                       Le 10 avril 2002

 

Volume 1

TABLE OF CONTENTS / TABLE DES MATIÈRES

 

                                                                                            PARA NO.

 

PHASE I

 

 

APPLICATION BY / APPLICATION PAR

 

by Craig Broadcast Alberta Inc. (CKAL-TV)                                           29

par Craig Broadcast Alberta Inc. (CKAL-TV)

 

by Craig Broadcast Alberta Inc. (CKEM-TV)                                          29

par Craig Broadcast Alberta Inc. (CKEM-TV)

 

by Craig Broadcast Systems Inc. (CKX-TV)                                        729

par Craig Broadcast Systems Inc. (CKX-TV)

 

by Craig Broadcast Systems Inc. (CHMI-TV)                                       729

par Craig Broadcast Systems Inc. (CHMI-TV)

 

 

PHASE II

 

INTERVENTION BY / INTERVENTION PAR

 

Debra DeWaal                                                                                1231

 

 

 

 

                 Calgary, Alberta /

                 Calgary ( Alberta)

--- Upon commencing on Wednesday, April 10, 2002 at        0930 / L'audience débute mercredi, le 10 avril 2002 à 0930

 

1                              THE CHAIRPERSON:  Good morning, ladies and gentlemen, bonjour mesdames et monsieurs.  Welcome to this public hearing to consider television licence renewal applications submitted by Craig Broadcast Alberta Inc. and Craig Broadcast Systems Inc.

 

2                              My name is Charles Dalfen, Chair of the CRTC, and I will preside over this hearing.  Joining me on the panel are my colleagues, Andrée Wylie, to my right, Vice-Chair, Broadcasting; Barbara Cram, to my far left, Regional Commissioner for Manitoba and Saskatchewan; Ronald Williams, next to me, Regional Commissioner for Alberta and the Northwest Territories; and to Andrée's right, Commissioner David McKendry.

 

3                              The team from the Commission assisting us at this hearing includes Coordinator Peter Foster, Legal Counsel, Alastair Stewart and Leanne Bennett, and Hearing Secretary Marguerite Vogel.  They are available to try and answer any questions you may have about this hearing.

 

4                              When the Commission issued its television policy in 1999, it announced that the licences of conventional stations owned or controlled by ownership groups would be renewed at the same time.  Today's hearing will give us the opportunity to consider the Craig renewals in light of this policy and, of course, under the provisions of the Broadcasting Act, which sets out the Commission's mandate.

 

5                              The television policy calls for the Commission to consider a number of elements when renewing licences.  For example, we will examine Craig's corporate strategy, how each station will implement this strategy and the contribution that all facets of Craig's operations make to the Canadian broadcasting system.

 

6                              In light of the recent decision of Monday, that granted Craig a new conventional television station in Toronto, the Commission will want to consider how this new station, in the country's largest market, will impact on Craig as a group and on the renewal commitments for Craig's existing conventional television stations.

 

7                              The renewal of the licences for Craig's other broadcasting services will not be examined in this hearing.  Nevertheless, in line with the television policy, we will examine the contributions of all aspects of Craig's operations to the broadcasting system.

 

8                              In addition, we will explore whether the priority programs in the broadcast schedules of the Craig stations reflect an appropriate commitment to high quality Canadian programming. 

 

9                              Under the Commission's television policy, conventional television licensees are also expected to show how they intend to meet the needs of their regional and local audiences.  Since the conventional stations we are examining today operate in two provinces, Alberta and Manitoba, the panel will examine how their programming reflects their region of operation and how they intend to provide programs produced by independent producers working in those areas.  We will also review plans for newscasts or other local programming that the licensee intends to broadcast.

 

10                          A further important matter we intend to examine is Craig's specific commitments to initiatives with respect to the reflection and on-screen portrayal of aboriginal peoples and of racial and cultural minorities living in the communities served by the stations.  The panel will also explore the licensee's progress in responding to the needs of the visually impaired.

 

11                          The duration of the hearing will be approximately one and a half days.  I would ask that cellular phones and beepers be turned off when you are in the hearing room as they are unwelcome distractions for participants and Commission members.  We would appreciate your cooperation in this regard at all times during the hearing.

 

12                          Before we being the hearing, I would ask Hearing Secretary Marguerite Vogel to describe the procedure.  Marguerite?

 

13                          THE SECRETARY: Thank you Mr. Chairman.  The applications on today's agenda will be heard in three phases.  Phase I is the presentation by the applicant to the Commission.  Twenty minutes is usually allocated for this presentation, however, today items 1 through 4 will be heard together and the applicant will be allocated 40 minutes for its presentation.  Questions from the Commission will follow the applicant's presentation.

 

14                          Phase II is where the appearing interveners make their presentations to the Commission.  Ten minutes is allocated for each.  Again, there may be questions from the Commission following each intervener's presentation.

 

15                          Phase III provides an opportunity for the applicant to make comments or reply to the interventions that have been filed with respect to their applications.  Ten minutes is allocated for this reply.  And again, questions may follow.

 

16                          Some general information.  The public files associated with the items at this hearing are available for viewing in the Capitol Boardroom, which is right across from the door of this hearing room.  CRTC staff in that room will be pleased to assist you.  But please be aware that while an application is being heard, the public files associated with it will be in this room and not available for viewing.  

 

17                          There is a verbatim transcript of this hearing being taken by court reporters from Total Reporting Service, who are located at the table to my left.  If you have any questions about how to obtain all or parts of this transcript, please approach Total Reporting Service for information. 

 

18                          Also, there are translation receivers available from ISTS at the back of this room.  Finally, if you want to have messages taken, we would be happy to post them outside of the Isis room and the phone number in the public examination room is 266-2167.  If you have any further questions, please do not hesitate to contact us.  We'll be more than pleased to assist you when we can. 

 

19                          Now, Mr. Chairman, with your leave, I will call items 1 through 4.

 

20                          THE CHAIRPERSON:  Thank you.  Over to you.

 

21                          MR. CRAIG:  Good morning, Chairman Dalfen.

 

22                          THE SECRETARY:  Excuse me.  I'm sorry to interrupt so early, but I have to read the items into the record.

 

23                          THE CHAIRPERSON:  Thank you.  I'm still a little rusty.

 

24                          THE SECRETARY:  Item 1 is an application by Craig Broadcasting Alberta Inc. to renew the licence of television station CKAL-TV Calgary and its transmitter CKAL-TV-1 in Lethbridge.

 

25                          Item 2 is an application by Craig Broadcast Alberta Ltd. - I'm sorry - Craig Broadcast Alberta Inc. to renew the licence of television station CKEM-TV Edmonton and its transmitter CKEM-TV-1 in Red Deer.

 

26                          Item 3:  Application by Craig Broadcast Systems Inc. to renew the licence of television station CKX-TV Brandon and its transmitters CKX-TV-1 Foxwarren, CKX-TV-2 Melita and CKX-TV-3 McCreary.

 

27                          Item 4:  Application by Craig Broadcast Systems Inc. to renew the licence of television station CHMI-TV Portage La Prairie.

 

28                          Please proceed when you are ready.

 

29                          MR. CRAIG:  Good morning Chairman Dalfen and Commissioners.  Welcome to Calgary. 

 

30                          My name is Drew Craig and I am the President and CEO of Craig Broadcast Systems Inc. and Craig Broadcast Alberta Inc.  It is my great pleasure to introduce you to the other members of our panel.  In the front row, on my left, is Joanne Levy, Executive Director of the A-Channel Production Fund.  On my right, Jennifer Strain, Vice-President, Corporate and Regulatory Affairs for Craig.  Beside Jennifer, Al Thorgeirson, General Manager for A-Channel Calgary and Manager of Station Operations for Craig.  Beside Al, Linda Noto, Craig's CFO.

 

31                          At the table behind me from your right to left is Debra McLaughlin, Vice-President, Research, Airtime Television Sales; Jim Haskins, General Manager of A-Channel Edmonton and Vice-President, News Programming for the Craig stations. Beside Jim is Chris Duncan, Director of News and Entertainment Programming for A-Channel Edmonton; Barry Close, Promotions Manager for A-Channel Edmonton. And beside Barry, Dixie Baum, Promotions Manager for A-Channel Calgary.

 

32                          At the side table, from your right to left is Alan Cruise, General Manager for CKX-TV Brandon. Beside Alan is Cam Cowie, General Manager for A-Channel Manitoba and Vice-President, Revenue Management for the Craig system; Shauna Palendat, Promotions Manager for A-Channel Manitoba; Darcy Modin, Director of News and Entertainment Programming, A-Channel Manitoba; Lisa Meeches, Executive Producer and host of our Aboriginal Program, "The Sharing Circle"; and Paul East, our Technical Consultant.

 

33                          We are delighted to welcome you to Calgary and eager to talk to you about what we have accomplished out here in the West and how we see things unfolding over the next seven years.

 

34                          As the Commission knows, we have been in the business of conventional television for 50 years.  It is our core business.  You rendered a decision two days ago that has profound implications for our company.  We have not quite had time to grasp them all yet, but suffice to say, we are very thrilled and positive about the future and looking forward to the challenge of bringing new, local and multicultural programming to the GTA.  I am on record as stating of how proud I am of what our team has built.  Today gives me the opportunity to fully showcase why.

 

35                          As you know from our application and having had us before you in other processes, our strategy is to be intensely local.  It starts with having a location in each market that is very visible, accessible and interactive and it carries through to developing programming that reflects not just our cities, but the diverse communities and neighbourhoods within and around our cities.

 

36                          I would like to offer a few specific examples of how we stand out. CKX Television, a CBC affiliate, is the only local television station in the Brandon market and has been operated by our family since 1955.  It airs 17 and a half hours of news each week, plus other locally relevant programming.  This is a significant, almost unheard of, level of service from a local television station in a market of this size.

 

37                          A-Channel Manitoba, with studios in Winnipeg and Portage la Prairie, is the only broadcaster in the province that broadcasts stories from around the entire province, not just Winnipeg, every single day.  We provide a vital service to rural Manitobans and we do significant amounts of weekly local programming.

 

38                          Our A-Channel stations in Edmonton and Calgary have been on the air for less than five years and we have already established ourselves as the community-minded, intensely local station.  We have more cameras and more reporters than our competitors.  As a result, we are more likely to cover breaking news and the most likely to cover a community event.  Our daily morning show, "The Big Breakfast," a combination of news and human interest programming has injected new life and energy into the downtown core of each city and onto viewer's television screens.  Our coverage of the arts and culture in Calgary and Edmonton is unsurpassed.

 

39                          In the area of licensing independent production, we are the only door to knock on in Western Canada.  We meet and work with Alberta and Manitoba producers in their own backyards.  And we have made a significant contribution in the area of licensing feature films, as Joanne will detail to you a little later on.

 

40                          We were the first conventional broadcaster to give a permanent home on mainstream television to Canada's first aboriginal news magazine program, "The Sharing Circle" and we are happy to report that this program is now in its tenth season and still going strong on each of our four stations.  We are delighted that the show will soon include the stories of Ontario's First Nations People and be widely available in Toronto.

 

41                          Our programming is very reflective of the diversities of our city.  Coverage is not limited to entertainment segments in newscasts and to occasional stories about particular festivals and multicultural events.  Rather, the stories of our diverse communities are woven through all of our programming and showcased in a variety of formats, week in and week out, all year long.

 

42                          Our expenditures on Canadian programming exceed our licence requirements and national and provincial averages by a wide margin, based on the CRTC's most recent statistical and financial summaries.

 

43                          In summary, our track record and our history in conventional television are unique.  It speaks volumes about the sincerity of this company's commitment to the broadcasting system, its regulatory obligations and to the communities we serve.

 

44                          I would now like to turn to our individual station managers to give you a sense of what is happening in their respective markets.  I will start with Alan Cruise from Brandon.

 

45                          MR. CRUISE:  Thank you, Drew.  As Drew said, the Craig's have operated CKX Brandon since its inception in 1955.  At that time, Brandon became the first market of its size to have its own local television station.  Today, CKX offers 23 and a half hours of local programming to the community.

 

46                          Brandon is the hub of a larger geographic region with a population of about 110,000.  CKX links these communities together from the U.S. and Saskatchewan borders to Riding Mountain National Park in the north and Portage la Prairie in the east.  Brandon has earned the nickname of the Host City by successfully holding many events:  the first ever Olympic Curling trials, the World Youth Baseball Championships, and the Canadian Figure Skating Championships.  Beyond these special events, Brandon is home to one of the province's largest broadcast technology programs at Assiniboine Community College and the world-renowned Brandon University School of Music.

 

47                          It is hard for us to impart to you what it means to this community to have its own television station.  CKX is integral to Brandon's ability to host events like the ones I just mentioned and to foster unique partnerships that make our city and area a great place to live and do business.  It is not an exaggeration to say that there is not a group, business, charity or individual in Brandon that has not been touched by CKX.

 

48                          Our regular daily programming includes a simulcast of "The Big Breakfast," live from A-Channel Manitoba with Brandon news inserts, the CKX Noon Show and CKX "News @ Six", the suppertime flagship of CKX Television.

 

49                          We have televised many political debates covering civic, provincial and federal elections, as well as the Mayor's annual State of the City address.  We provide coverage of every level of sports, from high school to University to our own Major Junior Hockey League team, the Brandon Wheat Kings.

 

50                          And then there is the "Manitoba Farm Report", a co-production of CKX and CHMI that has been on the air for nearly 50 years.  We will continue to air this provincially-based agricultural program as it evolved to provide our viewers with insight into the world of agriculture which is still Manitoba's principle industry.

 

51                          We have won numerous awards and profiled and raised money for many charitable groups.  CKX is simply an integral part of the Brandon community.

 

52                          Right now CKX faces two major challenges.  The first is the impact of DTH penetration.  Today, 20 percent of CBC programming in Brandon goes to distant signals delivered by DTH and it's growing.

 

53                          The second challenge is the status of our CBC affiliation.  The affiliation payments we receive from the CBC represent about 25 percent of station revenues and are vital to our ability to continue to provide extensive local programming in Brandon.  The CBC has recently indicated to us, and other affiliates, that their intent is to reduce our affiliation fees to zero while increasing the amount of network programming we would be required to take.  While we continue to be hopeful that a mutually beneficial solution can be reached with CBC, as we sit here today, the future of our relationship is very much in doubt.

 

54                          Indeed, the future of CBC affiliated stations across the country is very much in doubt.  And it within that context that we have made an absolute minimum commitment of six hours per week of local programming.

 

55                          Cam?

 

56                          MR. COWIE:  Thank you, Alan. 

 

57                          In 1999, MTN, as CHMI was known for 13 years, was re-branded and re-launched as A-Channel Manitoba, with an enhanced commitment to serve Portage la Prairie, Winnipeg and Southern Manitoba.  A key part of this re-branding was replacing our existing Winnipeg facility with a brand new, fully digital facility at the Forks.

 

58                          The new location gave use the opportunity to expand our news coverage, both in Winnipeg and outside the perimeter highway, and to introduce Manitoba to itself, five mornings a week on "The Big Breakfast."  Jim will be commenting in more detail on "The Big Breakfast" a little later, as it is a significant program in the schedules of all of our television stations and a vital contributor in the area of non-news local programming.

 

59                          Currently, we broadcast 17 and a half hours of first-run local news as well as 12 hours of non-news local reflection.  The latter includes "The Big Breakfast," "Best of the Big Breakfast," "Wired Actives," "The Sharing Circle" and "The Manitoba Farm Report."

 

60                          For the last 6,000 years, the Forks has been the official meeting place of Manitoba as First Nations people gathered from across the North American plains.  Today, it welcomes over 5 million visitors a year and plays an important role in our local strategy to be visible, accessible and interactive with all Manitobans. 

 

61                          Our new digital facility acts as the hub of A-Channel Manitoba's news operations, linking live cameras, bureaus and news crews throughout Manitoba.  This has allowed us to go live from any corner of the province, breaking more local news stories that effect Manitobans, both in and outside the perimeter highway.

 

62                          From Steinbach to Dauphin, to Churchill to Gimli, our news department has broken exclusive stories from across the province and covers rural events, activities and issues every day in its regular programming.  This ongoing provincial perspective is truly unique.  We think this is vitally important and is exactly what the Broadcasting Act prescribes when it speaks of reflecting diverse regions of Canada.

 

63                          As the Manitoba Provincial Minister of Aboriginal and Northern Affairs, Eric Robinson said in his submission on our behalf, "This coverage has been a great benefit to all Manitobans in educating about the realities of life in northern and remote communities."

 

64                          A sincere commitment to regional reflection requires a concerted and consistent effort to look beyond the urban centre of Winnipeg to the communities and neighbourhoods across southern Manitoba.  At A-Channel, we make that effort every day.  Our dedication to all areas of the province have been rewarded.  We are Manitoba's local television station of choice.  Al?

 

65                          MR. THORGEIRSON:  Thanks, Cam.  Each of our stations in Calgary and Edmonton has a distinct approach to local programming, which is necessary given the differences between the two cities.  But the stations do share a few things in common, such as the largest new gathering team in each city - our cameras really are everywhere; a commitment to be the most local and most reflective of their communities; and a commitment to cover local arts and culture.

 

66                          We have been on the air less than five years in Edmonton and Calgary but we have already made an indelible mark on each city.  We currently broadcast in excess of 22 hours of local news per week in each city.  In addition, we air 14 and a half hours of local, non-news programming. Audiences for our local programs are growing and the quality of our news coverage is second to none.

 

67                          For example, during our very first year on air, Calgary received top honours for "News @ Six," recognized by Canpro as the country's Best Newscast in a Large Market.  Both A-Channel Calgary and A-Channel Edmonton have recently been announced as finalists in the category of Best Local Newscast for the upcoming Alberta Motion Picture Industry Association Awards for their "News @ Six" programs which aired September 11^th.  In addition, one of our Edmonton reporters is a finalist in the Best Reporter category for a story she did entitled, "Understanding Islam" and one of Edmonton's anchors is a finalist in the Best Anchor category.  Last year, our Edmonton newscast received the AMPIA award as being the best in the province.

 

68                          Our efforts and accomplishments have been recognized not only locally, by also regionally and nationally.  Twice, we have received the top award from the Radio Television News Directors Association for Best News Coverage in the Prairie Provinces.  Other major awards include a Gold Ribbon award for Best News Coverage from the Canadian Association of Broadcasters and a special CAB award for a very unique, hard hitting, anti-drinking and driving campaign.

 

69                          All of this is to say that in a short time period, we have had a tremendous impact on these communities and we take our news obligations very seriously.

 

70                          In addition to our news, we offer a daily program dedicated to showcasing the arts, culture and entertainment scene in Calgary and Edmonton.  From local bands to art exhibits, theatre and locally produced films, our program "Wired" is the only local show of its kind in the market.

 

71                          And then, of course, there is "The Big Breakfast."

 

72                          MR. HASKINS:  Our specialty is local programming.  Perhaps the best example of this is "The Big Breakfast."  It really is the signature show for each of our three A-Channel stations.  It is a wonderful vehicle for showcasing and celebrating the cultural diversity of each city.

 

73                          "The Big Breakfast" airs Monday to Friday on all of our stations.  In each market where the show originates, the program is locally produced and is unique to the market.  For example, the show in Edmonton has a different flow and format than the show in Calgary, and while the Alberta shows may have an urban feel, the Winnipeg program often celebrates rural events and broadcasts live from a southern Manitoba location each day.

 

74                          Our hosts have quickly become the most recognizable and most popular broadcasters in each city, and they are in constant demand as public speakers.  As well, their fundraising work on behalf of local charities is unsurpassed.

 

75                          Every day, in each city, we feature a large number of guests and topics: from charitable groups to community and multicultural groups; from health professionals to local performers; from international celebrities to local stars just waiting to be discovered.

 

76                          Some days we cover as many as 15 different subjects in one program.  We champion local causes, we investigate local issues, and have done so much to promote local talent that we have been named the Television Station of the Year twice by the Alberta Recording Industry Association and have been nominated for the Industry Prairie Music Award for Media Outlet of the Year at A-Channel Manitoba two years in a row.

 

77                          We work very, very hard to provide unmatched service to non-profit organizations that simply cannot get this kind of exposure on any other media outlet.  Dixie?

 

78                          MS. BAUM:  To define a station as local requires demonstrating an involvement in all areas and at all levels of the community.  We are the champions of the local chapters of national charities.  But more important to us, we are the first call for small, local only fundraising and neighbourhood projects.

 

79                          We are the cheerleaders for city-wide amateur sports and we are the talent scouts shining a light on and raising awareness of home-grown artists.  Our interests are broad, our efforts genuine, and our success rate, high.  We have raised millions of dollars for local interests, developed legions of fans for sporting teams, served as a launch pad for new talent and incorporated the communities' needs into the scope of our endeavours.  Community service is not simply one of our interests, it is a guiding principal.

 

80                          (VIDEO PRESENTATION)

 

81                          MS. LEVY:  I am Joanne Levy, the head of the A-Channel Production Fund.  I would like to begin by saying how very proud I am of the commitment we made and significant achievements in providing viewers with quality Canadian long form drama and documentaries in this past four and a half years.

 

82                          As the demonstration you have seen mentioned, we have licensed 15 completed movies, such as "The War Bride", which received seven Genie nominations and won two Genie awards just this last January.   

 

83                          As of October the first, 2001, the A-Channel Drama Fund has been re-named the A-Channel Production Fund to reflect the Fund's expansion into development and support for all forms of Canadian Priority Programming beyond long form drama.  Since that time, we've licensed one documentary series and two feature documentaries that have already been completed and been on the air on our stations.

 

84                          We provide an increasingly rare opportunity for filmmakers, especially those in our home provinces, to tell their stories, perfect their craft, and very importantly, to reach an audience.  Toronto One will now guarantee our producers a window in Ontario.  It's very, very important to them.

 

85                          We provide diversity to both viewers and the entire Canadian cultural system.  Productions we licence are seen around the country in movie theatres, on pay television and on the services of other Canadian broadcasters, both conventional and specialty. 

 

86                          We have received more than 500 project proposals and we've been in contact with more than 350 filmmakers as a result of our commitment to spend $14 million in Alberta on Canadian priority programming.

 

87                          The fact that we've spent almost half of our commitment is a testament to the entrepreneurial skills of independent producers in Alberta and their inter-provincial and, in fact, international co-production partners.

 

88                          Only about half of our projects received support from the Licence Fee Program of the Canadian Television Fund and only one of our movies has received Telefilm equity.

 

89                          However, we are proud to do distinctly Canadian programming with the assistance of the funding agencies.  For example, "The War Bride", which I mentioned earlier, is a Canada/UK co-production with a budget of $7 million, very high in Canadian terms.  All of that money was raised entirely outside of the Fund.

 

90                          That's my beacon of hope since mid- March.  I found out that all three of the movie projects that we'd sent into the Fund had been turned down.  Last year, the drama envelope at the CTF was under subscribed.  This year, it's over subscribed.  What was considered the maximum licence fee from the broadcaster last year has become the minimum and it bears absolutely no relationship to the budget of a project or its cultural objectives.

 

91                          All of this aside, we are confident Alberta independent producers will rise to the challenge of bringing us the projects that will create many more hours of Canadian priority programming with the balance of this Fund and with our new commitment to independent production.

 

92                          As we promised in our Renewal Application, we will air eight hours per week of priority programming in prime time.  At least one hour will be local or regional reflection.  We have also committed to make fresh expenditure commitments after the existing Production Fund commitment is retired in 2004.  This takes two forms.  First, we committed $200,000 per year to development of new programs and this will be used to support independent scripts and pilot programs.  Second, we will, beginning in year 2005 and for the ensuing five years of the new licence term, commit to spend an additional $10 million with Alberta and Manitoba producers as their co-production partners.  This $10 million expenditure will be in the form of licence fees and/or equity investments.  No more that 10 percent of this amount will be used to offset the costs of administration and as a resource for producers.  The licences offered may buy either national or regional rights depending on the project. 

 

93                          We believe this is a substantial commitment to the independent production community and a flexible plan that allows for maximum innovation in the creation of Canadian programming for a regional broadcaster.

 

94                          MR. CRAIG:  Thank you, Joanne.  One of the programs of which we are particularly proud is "The Sharing Circle", Canada's longest running and most watched aboriginal news magazine.  In partnership with the program's executive producer, Lisa Meeches, Craig first gave this show a broadcast window on CHMI-TV and CKX-TV ten years ago.  And it then found a home on our Alberta stations when we were licensed here.  Each newsroom in Winnipeg, Calgary and Edmonton retains an aboriginal reporter whose job is not only to report on issues affecting the aboriginal community in each city but also feed the stories for "The Sharing Circle".

 

95                          I'd like to ask Lisa Meeches to elaborate on this program.

 

96                          MS. MEECHES:  Thank you. "The Sharing Circle" was the model used in the application used by the Aboriginal Peoples' Television Network as a program made for, and by, aboriginal people that had attracted audiences from a wide range of cultures.  Its continued audience growth and its positive reception by audience was the first demonstrable proof that a broader Canadian population was interested in a show of this kind.  It remains today one of the true success stories of the Canadian broadcasting system.

 

97                          As the show enters its 11^th season, the original mandate and commitment to spirituality remains its foundation.  However, the show has outgrown its news magazine format and is expanding into a 26 part half-hour documentary series, providing more in-depth examinations of its stories and issues.  Testimonials, stories of courage, love, respect, humility, wisdom, honesty and truth are shared with our viewers.  Through these stories, people continue to discover peaceful solutions to conflicts within their own lives.

 

98                          Adding to the spiritual strength is the universal appeal of the subject matter.  Some of the topics identified for production this season include self-government, health, treaties, sacred places, language preservation, oral history and the art of storytelling, sports and entertainment.  These are transcendent stories of history and social significance. By expanding on these issues, we will continue to enhance and strengthen the education legacy of "The Sharing Circle" that began a decade ago.

 

99                          MR. CRAIG:  Thank you, Lisa.  I would like to talk now about our local programming commitments for the next licence term.  I would like to be clear that we have no plans to cut back on local programming.

 

100                       What we have said is that some local programs are more expensive to produce than others and we may find ourselves wanting to have the flexibility to devote more resources to fewer hours in order to effectively deliver an audience.

 

101                       In addition, seven years is a long time.  Not unlike our other broadcast colleagues, we face similar competitive challenges, many of which are more acute for Craig, that may impact our ability to maintain the number of hours of local programming that we are currently doing.  For example, consolidation and convergence impacts us at every level, every day, from acquiring programming to acquiring advertising space in local papers to getting our local stations carried on DTH.

 

102                       Three of our four signals are not up on DTH.  In the Calgary and Winnipeg markets, we are the only local broadcasters who are not being carried.  We already mentioned the impact of satellite penetration in Brandon.  We are working with the CAB to resolve this problem, but carriage of distant signals on DTH continues to significantly impact our program rights, ratings and revenues.

 

103                       We also mentioned the status of our CBC Affiliation in Brandon, which we are very concerned about.

 

104                       The threat of a new conventional licence in Alberta and Manitoba is a problem for another process and day, but is apparent from CHUM's recently gazetted group licence renewal that it has now set its sights on expanding into Alberta.

 

105                       What we have said in our application is that we intend to carry on with what we are doing, and under no circumstances will we do less than the minimum number of hours that we have outlined.  These minimum numbers are on par with what our larger competitors are obligated to do and we think that they are reasonable.

 

106                       I would also like to make some brief comments about our role in the broadcasting system.  Other broadcasters have said that local reflection is not the business to be in.  We fundamentally disagree.

 

107                       Without distinct local programming and the community connection that develops from being intensely local, we are nothing more than aggregators of acquired programs.  A CanWest or a CTV, with the buying clout to secure Top 20 programming for its network schedule simply has different priorities.  We are not in that position and so we've had to be different.

 

108                       This local corporate strategy not only makes good business sense for us, but it works for our viewers and it fulfils some very important objectives of the Broadcasting Act.

 

109                       When we look at the markets we serve, and in fact, all Canadian markets, we can easily see the hole is in the local programming, locally produced and reflective programming.  Is there a consumer appetite for this product?  Of course there is.  In almost all of the applications we have presented to you in the past five years, ranging from Victoria to Toronto, the continuing theme is the desire of Canadians to see themselves and hear their stories and share their values.  But these stories and images are as many and varied as the Canadian landscape.

 

110                       Each region, each market, and in fact, each neighbourhood is distinct.  In recognizing this, we have found our market, our programming strategy and our business case.  In each of our markets, and this will extend to Toronto, we are neither limited in our focus, nor driven by the need to export one size fits all programming across a system.

 

111                       What does it mean for revenues?  It is not at first glance immediately financially rewarding.  Canadian programs in English Canada do not enjoy the high awareness or audience shares of that of foreign acquired programs.

 

112                       But, we are well positioned to make this investment in local.  As a privately owned company, we are not driven solely by quarterly financial results.  And don't get me wrong - we like to make money as well.  But, we have the freedom to explore and develop this programming strategy.  We fill the void our competitors left when they made the reasonable decision to pursue other national programming strategies.  We believe this is the opportunity and the role that mid-size broadcasters are uniquely positioned to fulfil.

 

113                       I'd like to sum up today with the following.  Despite the fact that Craig's reach of English Canada is far below the 70 percent threshold, we have made unequivocal commitments to broadcast a minimum of eight hours of priority programming on each of our four stations over the next licence term.  One hour of that will be local or regional reflection in keeping with our belief that this type of programming is important and needed in the system.

 

114                       We have committed to absolute minimum numbers of hours of local reflection programming and will strive to do much, much more.

 

115                       We have committed $10 million to independent production for the benefit of Western-based producers, plus another $1 million in development funding. 

 

116                       At a time when independent producers are seeing their opportunities to tell regional stories dissipate because of consolidation, we look forward to giving them the funding and exhibition times to add new energy to conventional Canadian television.

 

117                       Relevant, culturally diverse local programming will continue to be our focus, our strength and our primary contribution to the broadcasting system.

 

118                       We thank you for your time, Commissioners and Staff.  We are now happy to answer any questions you may have.

 

119                       THE CHAIRPERSON:  Thank you very much, Mr. Craig, and ladies and gentleman, for a very helpful presentation.  I'll begin the questioning.  We have divided the questions up among the members of the panel roughly so that I will be asking you questions on group strategy, some financial questions and perceived synergies.  Vice-Chair Wylie will be addressing group programming issues.  Commissioner McKendry will be addressing group social and cultural issues, access to your systems for the hearing impaired and visually impaired.  Commissioners Williams and Cram will be dealing with the Alberta and Manitoba stations, respectively.  But that isn't to say that these are watertight compartments, and what I welcome as a Chair is interventions by my fellow Commissioners as follow-up to questions and that gives you a certain coherence in the questioning as well.  Of course, Counsel will follow up the questions as is usual.

 

120                       So let me begin with a few questions about overall corporate strategy and I want to begin by reminding you, of course, that you sold your remaining radio programming undertakings recently and have launched a few digital specialties and have licences for a number more and have added, of course, a conventional television licence in the largest market in the country.  Congratulations by the way on persuading the majority of the panel that heard you that you were the deserving licensee for the area.

 

121                       MR. CRAIG:  Thank you very much.

 

122                       THE CHAIRPERSON:  So with the change in make-up of the properties in the group's portfolio, how would you summarize your overall corporate strategy?

 

123                       MR. CRAIG:  Well, effectively, what we've been working towards over the last few years is to really divide the company into two parts.  And as the Commission is also aware, we're also in another part of the business as well, in the wireless delivery business.  We have MDS licences in Manitoba, in B.C. and we also have other wireless interests in other parts of North America and in New Zealand as well. 

 

124                       So really, what we've been working towards in terms of our corporate strategy is really developing two very distinct strategies; one on the wireless front and one on the media front.  Over the course of the last year or so, we've been working towards a corporate re-organization that would take the wireless company and separate it from Craig Broadcast Systems.  It was, as you may be aware, integrated with Craig Broadcast Systems and, of course, owned by our family.

 

125                       So really, what we've done is separate the company into two parts.  My brother, Boyd, is heading up the wireless division and we will completely separate that from Craig Broadcast Systems.  It has its own needs and its own requirements and is a totally separate business, so we're going to set that on its own course.  And we, under another banner, are putting all the media assets together.  We, as you're aware, have different partners in different outlets on the media side, so we're putting them in one bundle. 

 

126                       So we're very much focussed on two areas, two very distinct areas: one on the wireless side and one on the media side.  We are very much focussed in terms of our corporate strategy, of course, in terms of, on the broadcast side, on two areas: one on specialty television and one on conventional television.  So that's really what we've been working very hard on and that's where you'll see the companies going in the future and how they'll be set up.

 

127                       THE CHAIRPERSON:  So I take it radio is not any longer considered part of your business plan?

 

128                       MR. CRAIG:  We had the very difficult decision to leave the radio business.  You know, CKX Radio was our legacy asset.  But we just found that we felt there were more opportunities, more new opportunities in specialty television and conventional television, so we reluctantly parted with the radio to pursue the two strategies that I just talked about.

 

129                       THE CHAIRPERSON:  Can you give us an idea of how the revenues that you generated from the sales of the radio assets are going to be used to bolster other elements of your media strategy?

 

130                       MR. CRAIG:  Effectively, what we've done is we've taken all of the proceeds to strengthen the balance sheet of the two companies.  So, basically, all of the proceeds have gone right back into the organization and those proceeds are being use to provide us with an opportunity to grow both sides of our business.

 

131                       THE CHAIRPERSON:  Okay.  So perhaps help me out a bit here.  You say you've separated the businesses.  From what point of view?  I assume that they're still under the same ownership structure, or are they not?

 

132                       MR. CRAIG:  Well, basically what we're doing is the companies will be two distinct companies.  There will be Craig Media Co. on one side and Craig Wireless International on the other side.  They will be complete and distinct separate entities.

 

133                       THE CHAIRPERSON:  Right.  And the shareholdings of those will be what?

 

134                       MR. CRAIG:  The shareholdings of those will be both owned and controlled by the Craig family.

 

135                       THE CHAIRPERSON:  All right.  And did you just say that the proceeds of the radio sales were going to bolster both? 

 

136                       MR. CRAIG:  Some of the proceeds went to the wireless side and some of the proceeds went to the broadcast side.

 

137                       THE CHAIRPERSON:  Can you give me a rough allocation?

 

138                       MR. CRAIG:  Approximately half.

 

139                       THE CHAIRPERSON:  Approximately half of the proceeds, of the net proceeds --

 

140                       MR. CRAIG:  About 50 percent.  Fifty percent of the net proceeds went into the media side and about 50 percent into the wireless side.

 

141                       THE CHAIRPERSON:  All right.  And going forward, you see these two arms as operating increasingly separately?

 

142                       MR. CRAIG:  Completely separately.

 

143                       THE CHAIRPERSON:  Completely separately?

 

144                       MR. CRAIG:  Completely separately.

 

145                       THE CHAIRPERSON:  So, for example, if you were to decide that your strategy was no longer to be in conventional television, as a hypothesis, and you wanted to go in some other direction, would the proceeds of a sale of those assets go to both sides or would they remain in the media company?

 

146                       MR. CRAIG:  They would remain in the media company.  They're two separate companies at that point.

 

147                       THE CHAIRPERSON:  I see. So you've now drawn a line in the sand, as it were?

 

148                       MR. CRAIG:  We've absolutely drawn the line.  I mean, it was very complicated and integrated before.  I mean, if you look at the ERG chart that's on your website, it's pretty complicated,  so we've tried to simplify that whole process.

 

149                       THE CHAIRPERSON:  Actually, I thought it was one of the more simpler ones on our website. 

 

150                       MR. CRAIG:  Glad you thought so.

 

151                       THE CHAIRPERSON:  Okay, thank you.  I have that pretty clearly.  Now, I want to, even though I know that you've said that you're separating MDS out into the other company and are not -- and your own responsibility will be on the media side, would it be fair to say that MDS in Manitoba has been a challenge to the company?

 

152                       MR. CRAIG:  No question about it.  I mean, you know, we got in that business in the very early days.  We were the first licensee in the country.  The telecom sector has taken a beating as you know - you read about it in the paper every day - and the fact that we're still standing, I think, is amazing.  And certainly, the investment community looks at it as a huge success story.  You know, Boyd is very passionate about that business.  We still believe very strongly in that business.  It has changed somewhat in terms of its ability to deliver service to rural Manitobans and to other people in the city of Winnipeg. And it has really gone a long way from being, quite simply, in its inception it was an analogue one-way service that was, you know, probably launched too late in the game because DTH came in and really impacted our ability to grow our subscriber base, just providing video. 

 

153                       But what we're able to do now is provide a two-way link between our facility and the consumer that provides digital TV, plus high-speed Internet delivery.  And what's around the corner is -- and it was always limited, of course, by line of sight, and that was always its main limitation.  And what we see on the horizon and the product that we're going to roll out in B.C., will actually be a non-line of sight product, and what we will employ in B.C. will be the first deployment anywhere in North America of what is called 3G wireless product.  It's effectively a wireless, a mobile wireless product that's capable of delivering television and high-speed Internet on a non- line of sight basis. 

 

154                       So, as long as we can hang in there, you know, the consumer demand based on new products that are going to be introduced and new technology that's not a pipe dream, it's a reality, it's stuff that you can buy off the shelf, is going to make a huge impact to that business.

 

155                       THE CHAIRPERSON:  So are you going to be offering mobile services in Manitoba as well?

 

156                       MR. CRAIG:  We will eventually be there as well.  Right now we're delivering a high-speed Internet product, but it's a fixed wireless high-speed Internet and the quality is amazing.  And it's, you know, we've got, you know, I don't know the numbers, but the numbers are growing fairly rapidly now that this product has actually been introduced.  Paul East, our technical consultant, is intimately involved in this.  He's here if you want to talk to him more about this.

 

157                       THE CHAIRPERSON:  Right.  Well, I think it would be an interesting discussion, but I think it will take us a bit off track for the moment.

 

158                       MR. CRAIG:  Right.

 

159                       THE CHAIRPERSON:  But it is interesting to hear those plans and you are certainly responding to the question.

 

160                       MR. CRAIG:  I guess the long and short of it, it was a drain for us on our resources.  You know, we've put, I'm going to say in the order of magnitude in terms of what we've put into the wireless business, in terms of our family's commitment, we've put probably $35 million into that.

 

161                       THE CHAIRPERSON:  What was that number again?

 

162                       MR. CRAIG:  $35 million is what we've invested to date in the MDS side of the business.  So basically, we've cleaned up the balance sheet.  The wireless side is completely debt free and we're ready to move on.

 

163                       THE CHAIRPERSON:  Where's the debt in the corporate structure now?

 

164                       MR. CRAIG:  In terms of the wireless?

 

165                       THE CHAIRPERSON:  No, in terms of the overall --

 

166                       MR. CRAIG:  In terms of corporate --

 

167                       THE CHAIRPERSON:  If the wireless is debt free --

 

168                       MR. CRAIG:  The wireless is pretty much debt free.  In terms of what we have for debt on conventional, we have a $20 million dollar facility in Alberta and we have a seven-and-a-half-million dollar facility for the specialty.

 

169                       THE CHAIRPERSON:  Right.  But where did the debt go for the wireless?   Where does it repose in your balance sheets right now?  Am I understanding you correctly that you're saying you have a debt-free balance sheet on the wireless side?

 

170                       MR. CRAIG:  Pretty much.

 

171                       THE CHAIRPERSON:  Well, what do you do about that?

 

172                       MR. CRAIG:  The radio proceeds were used to pay that debt down.

 

173                       THE CHAIRPERSON:  I see.  Were they sufficient to pay it all?

 

174                       MR. CRAIG:  Just about, yes.  And remember that we did have a capital infusion from SaskTel as well.

 

175                       THE CHAIRPERSON:  Right.

 

176                       MR. CRAIG:  So the combination of their equity investment and our -- the radio proceeds, we've basically set wireless on its own now on a debt- free basis.

 

177                       THE CHAIRPERSON:  I don't want to stray into areas that are confidential, and you'll stop me if I do, but I'm trying to reconcile what you just said with a 50/50 allocation of the proceeds as among wireless and media.

 

178                       MR. CRAIG:  Yes.  And then we did use some of the radio proceeds as well to pay down some debt on the conventional side.

 

179                       THE CHAIRPERSON:  All right.  Well, perhaps you could file those answers with the Commission, and if they should be covered by confidentiality, that's fine, but I don't want to ask you questions that should remain confidential.

 

180                       MR. CRAIG:  No, that's fine.

 

181                       THE CHAIRPERSON:  And so you can perhaps address the issue of how the proceeds were allocated and your answers regarding the debt, wiping out the debt on the wireless side as regards the past.  Going forward - I feel more comfortable here because there's no facts in the future - going forward --

 

182                       MR. CRAIG:  Well, I think the important thing in what we've done is we now have a very robust structure.  We no longer have to feed the wireless side.  The wireless has its own balance sheet, its own capital, and we've set the course for it and its now on its own.

 

183                       THE CHAIRPERSON:  And I understand the wireless side to mean both licensed broadcasting undertakings such as MDS, as well as possibly licensed telecom undertakings, possibly unlicensed undertakings of both kinds?

 

184                       MR. CRAIG:  That's right.

 

185                       THE CHAIRPERSON:  On the telecom side, essentially?

 

186                       MR. CRAIG:  That's right.

 

187                       THE CHAIRPERSON:  Or the wireless side.

 

188                       MR. CRAIG:  We've also made some international investments as well, too.

 

189                       THE CHAIRPERSON:  Right.  Can you give us assurances that there will be no cross-subsidization from the media side to the wireless side?

 

190                       MR. CRAIG:  There can't be.  They are two different companies.

 

191                       THE CHAIRPERSON:  They're two different companies, but having practiced law for a while and knowing how creditors like to see the world, I mean, the Craig family is likely to be involved and the controlling interest is likely to be involved and lenders like to have assurances that various assets are pledged, so I'm asking you the question in the context of a lender not necessarily to draw the same separations as you might want them to draw.

 

192                       MR. CRAIG:  Well, I think that's -- you know, our commitment is to divide the two companies into two very distinct parts, and that's why we've done it, because when you're raising capital for the telecom side and the wireless side it's a different set of investors, it has different capital requirements and it's a whole different business, and that's really why we separated.  We don't want to, as a family, cross- subsidize it, so that's exactly why we've gone that route.

 

193                       THE CHAIRPERSON:  Right.  Would you say that the future in MDS as regards, say, wireless cable as it used to be called, is there a future for that at, what is it, the equivalent of 60 analogue channels maximum?  I believe that used to be the limit. Is that still --

 

194                       MR. CRAIG:  No.  I mean, it has all sorts of opportunities in terms of delivering not only television, but data as well.

 

195                       THE CHAIRPERSON:  Right.  But on the television distribution side, do you see it as a long- run competitor to cable and DTH?

 

196                       MR. CRAIG:  Yes.  I still think it has application in terms of providing some video and some data in some combination.  You know, Paul East could maybe talk more about what the potential is, but with digital compression and digital TV, for instance, on our Hawaii system we're delivering -- Paul, what's the number?  I think it's 130, 140 channels.

 

197                       MR. EAST:  Including digital audio, it's a 145.

 

198                       THE CHAIRPERSON:  I didn't hear that.

 

199                       MR. EAST: 145.  Different frequency structure in the United States than Canada, but the technology is advancing at a rapid pace.  Perhaps in that field it's easier, and in fact you have to think of data and TV as both being data.  The video is compressed.  The video is treated as digital data and, in fact, in British Columbia, as Drew has mentioned, with the portable system it will really merge TV as data.  On the same system, both delivered via IP protocol, it will push them right together, more so than we are in conventional or digital specialty channels right now.  And that's got to be the future for wireless, for MDS type companies.

 

200                       THE CHAIRPERSON:  Right.  But would it not be the case that cable systems and DTH systems will still have whatever capacity they have more than what MDS has and can do the same thing?

 

201                       MR. EAST:  Quite true.  And that's why I say for MDS it's not -- if you just play the game of counting bits versus ExpressVu or Rogers Digital, it's not a winning proposition, however, wireless has real strengths versus the fixed satellite dish, the hard line cable into the home, especially in this B.C. system.  That strength is really played on with the portable wireless device that still delivers TV via IP instead of the traditional satellite path or hard line cable path.

 

202                       So, that, I think is the future at Craig Wireless is merging -- TV data, Internet data; same thing.

 

203                       THE CHAIRPERSON:  Right.  If I could just pursue that for a moment.  In your B.C. systems and in California, are you, in effect, subdividing your MDS spectrum as between these different uses, for example, mobile and fixed?

 

204                       MR. EAST:  Quite true in Manitoba right now.  You could actually point to a frequency and say that's an Internet channel, that's a television channel.  The vast majority of the frequencies are used for television. 

 

205                       We're a strong believer that this is the future for MDS, this is how those companies will become profitable; merge those.  You can't really just point to a frequency or a site and say, "That's a TV site."  All sites propagate data.  TV, Internet is data.  That's really pulling together that concept in a very tangible example for British Columbia. It's going to be excellent quality video with stereo audio and high-speed Internet access pulled together on the same device, viewed on the same device.

 

206                       So that's -- in fact, in the conventional TV, I mean, we talk about this all the time with DTV, over the air DTV in the work we've submitted to the Commission.  We have to do that in conventional TV.  We have to start thinking of video and audio as data.  It is critical -- when you bring out interactive technology - we've been talking about it for years, but it is coming - as it moves to standards based platforms, that is going to be a real strength for creative people.  Once us engineers get that figured out and it works, well, the creative people are going to take that and they're going to run with it, and there's going to be exciting uses of interactivity in TV shows and advertising, and we're going to need to be able to support that.

 

207                       THE CHAIRPERSON:  Just to kind of close off this loop, in your B.C. system, are your 3G mobile services going to be using the same portion of spectrum as you used to deliver the line of sight services to the home?

 

208                       MR. EAST:  Absolutely correct.  It will be in the spectrum licensed by the CRTC.

 

209                       THE CHAIRPERSON:  But will the mobile users be on the same frequencies as the fixed users, or will you be subdividing that spectrum?  And I'm trying to visualize how you could use both simultaneously.

 

210                       MR. EAST:  The system that will be on the air for July 6th will be strictly portable.  We don't use the term "mobile" because it's not a cellular telephone, it's a portable, wireless modem.  Those frequencies will be on the air for July 6.  There will be no fixed line of sight.

 

211                       THE CHAIRPERSON:  I see.

 

212                       MR. EAST:  In terms of the technology we use in Manitoba, is it -- I guess perhaps I'm suggesting is a little splitting hairs now.  They've really merged.  I mean, the frequencies are the  frequencies licensed by the CRTC and those we use to deliver the product.  It adds a portable nature to those frequencies.

 

213                       THE CHAIRPERSON:  So those will be all portable in British Columbia is what you're saying?  Used entirely for service that you're calling portable?

 

214                       MR. EAST:  That's the beauty of the non-line of sight.  I mean, maybe just to back up for one moment on this.  With the fixed wireless, the challenge there was the cost to install.  Fixed wireless has to be professionally installed.  The installation costs, the capital upfront to acquire a customer was huge, over $1,000 per customer.  The non-line of sight technology, buy the modem at Radio Shack, hook it up to your computer, permission it on the website with your credit card and it's done.  So it's a whole new way to acquire customers at a cheaper cost.  Combined with that is the portable nature of it.  It could work in your office and then you take it home and it works as well.

 

215                       THE CHAIRPERSON:  Right, okay.  But it's not a mobile substitute is what you're saying?

 

216                       MR. EAST:  Correct.

 

217                       THE CHAIRPERSON:  Okay.  And in California is this what you're planning as well, or do you have a system in operation there?

 

218                       MR. EAST:  The system in California is being rebuilt.  The system in Hawaii is a fixed wireless TV system very similar to Manitoba, but just simply much larger.

 

219                       THE CHAIRPERSON:  Thank you.  Turning to another -- did you want to add something?  I interrupted you, Mr. Craig.  You may have --

 

220                       MR. CRAIG:  I was just going to add that once you unplug everything and you have this portable device, it really changes the business dramatically.  As Paul mentioned, one of the advantages now is the product itself provision.  There's no truck roles, there's no huge infrastructure that you need to go and hook a customer up.  You can go to Wal-Mart and buy this device for 200 bucks, plug it in and away you go. 

 

221                       So once you start doing that, then I think really we've got a great business.

 

222                       THE CHAIRPERSON:  I guess the interesting thing is that you see that as a substitute for ordinary couch potato cable service?

 

223                       MR. CRAIG:  That's right.

 

224                       THE CHAIRPERSON:  Do you have grounds for that confidence in experiments elsewhere around North America?

 

225                       MR. CRAIG:  It's brand new.  Paul has been one of the first people to see the technology actually in action.  The manufacturer actually has a system in place in the U.S., and I haven't seen it personally, but Paul has and my brother has, and it's a phenomenal product.

 

226                       THE CHAIRPERSON:  Good luck, Paul.  How do you - turning to another subject, Mr. Craig - how do you see the possible rollout of your remaining Category 2 digital process?

 

227                       MR. CRAIG:  Well, we're very excited about what has happened in digital and, you know, the take-up has been beyond what we thought.  The universe has grown beyond what we thought and, you know, we're ready to launch.  We have a facility five minutes from here that's ready to launch up to 10 channels.  We want to launch more channels.  And it's really, our impediment is getting carriage agreements in place.  But we're ready to go.

 

228                       We've got another one, actually, that is ready to go and we're going to be rolling it out at the cable convention this weekend.  The channel is called Stampede: Spirit of the West, and it's a Western genre channel.  There was one launched.  We were vying to launch one as well and we have a licence from you for that, and we have a partnership with the Calgary Stampede and we have a program supply arrangement.  So we're ready to go.  All we need is the green light from one or two major BDUs and away we go.

 

229                       THE CHAIRPERSON:  Thank you.  You're launching a lot of ventures at this point, are you not?  I mean, you have huge demands on your resources at this point.

 

230                       MR. CRAIG:  Yes, we are.  But I think the way that we've also managed the company in terms of its structure and it's infrastructure and its facilities and its management to get ready for this.  This is something that we've been getting ready for a long, long time.  It isn't something that's come upon us.  It's all come together really at one time, but it's all been part of the vision.  It's all been part of the strategy. 

 

231                       So we have, as I say it, we've got a facility that is ready for more channels.  Every time we add an incremental channel, as an example on this Western channel, the capital cost is a fraction of what it cost us to do the other three.  Then what happens is the cost base of those other three comes down.  So there's cost savings.  The more channels you launch, the more efficiencies there are. 

 

232                       It's a strategy that we set up from the very beginning to say, look, you can't make this work on two or three channels, you need a larger magnitude, and so we're ready to go to launch more channels.

 

233                       THE CHAIRPERSON:  So you're saying that initial take-up has exceeded your expectations?

 

234                       MR. CRAIG:  We were pleasantly surprised when the first numbers came out on the digital side in terms of what the take-up was.  We think with the preview period that our channels had, which wasn't very long, the take-up has been right on where we thought it was going to be.

 

235                       THE CHAIRPERSON:  Okay.  Let me ask you about the additional synergies that the Toronto station will afford you and how these might affect the financial projections of your current stations.

 

236                       MR. CRAIG:  Well, the beauty is, for us, from the corporate perspective, is that we've been on the air for five years here.  This market has been very healthy over those five years, you know, albeit there was a downturn for all of us when September 11^th hit and it's -- you know, we're starting to see our way out of that, but we did see a trough occur, but we're confident that things are going to come back.

 

237                       So in terms of the timing for us to launch a new station, it's actually a pretty good time.  We've got all of our stations doing pretty well.  We made a significant capital investment in Manitoba years ago that I think we're starting to realize on now, and when you take a look at the revenue projections and the financial plan for Toronto and you lay it on top of our renewal, we've got lots of cash flow to sustain the start-up and do what we need to do throughout the next licence term on our existing stations, plus deliver in Toronto.

 

238                       THE CHAIRPERSON:  Thank you.  I assume that the synergies and commitments that were associated with, should you have been successful in Toronto, were not incorporated in the projections for this hearing; is that correct?

 

239                       MR. CRAIG:  That's correct.

 

240                       THE CHAIRPERSON:  Right.  Now, you did make a commitment to spend an additional $10 million with Western Canadian producers, emphasizing Alberta and Manitoba, in the event that you did receive the licence.

 

241                       MR. CRAIG:  That's right.

 

242                       THE CHAIRPERSON:  I think you committed to licence fees and/or equity investments?

 

243                       MR. CRAIG:  That's right.

 

244                       THE CHAIRPERSON:  A number of questions that arise from that are, first of all, do you suspect that that commitment will be fulfilled within the licence term now being requested?

 

245                       MR. CRAIG:  Yes, we do.  Sorry.

 

246                       MS. STRAIN:  I'm sorry, Mr. Chairman, did you mean this current licence term or the ensuing one?

 

247                       THE CHAIRPERSON:  Well, the ensuing licence term.

 

248                       MS. STRAIN:  The reason I'm asking is because we still have some commitments that we're retiring in our current licence term, but certainly the $10 million will be fulfilled over the next licence term.

 

249                       THE CHAIRPERSON:  Of the stations currently being renewed?

 

250                       MS. STRAIN:  Yes.

 

251                       THE CHAIRPERSON:  Is that correct?  But I assume those commitments that are still, if you like, on the books, and are still not completely discharged are in the financial projections that you filed with this hearing?

 

252                       MR. CRAIG:  Yes.

 

253                       THE CHAIRPERSON:  But the $10 million of new commitment are not.  And have you prepared financials that do incorporate them as revised projections that you might want to provide us with?

 

254                       MR. THORGEIRSON:  Chairman Dalfen, no we have not, but we see those additional dollars coming from three areas: a portion of the acquired area; some additional cost savings and synergies that may be realised as a result of Monday's decision; and some of it will come out of the bottom line.  But at the end of the day, with Toronto on the air and these four stations, we're confident that all of those commitments can be met.  We'll still show positive cash flow throughout the licence term on a consolidated basis.

 

255                       THE CHAIRPERSON:  Right.  I guess what we would want is for you to identify that $10 million of expenditures on a line of some sort in your annual returns.  You have no problem with that?

 

256                       MR. THORGEIRSON:  Certainly.

 

257                       THE CHAIRPERSON:  And do you have a problem with that $10 million commitment being attached as a condition of licence to these renewals?

 

258                       MR. CRAIG:  No.

 

259                       THE CHAIRPERSON:  Okay.  And I guess what we would expect, and you can correct me if you think that that expectation won't be realized, that we would see that additional $10 million and not a subtraction from other expenditures that we might have considered to be of value as well, on programming for example, so that these -- your projected programming expenditures, as we find them in the projections for this hearing, would have a plus 10 attached to them over the period and not -- you wouldn't be removing from one pocket to put in the other, so to speak.  Is that correct?

 

260                       MR. CRAIG:  Yes.

 

261                       THE CHAIRPERSON:  Do you want to caucus?

 

262                       MR. THORGEIRSON:  Chairman Dalfen, I'm just thinking that it might be easier for all of us if we simply filed a revised consolidated financial for these four stations with the Commission.

 

263                       THE CHAIRPERSON:  I think that to the extent that that commitment is there, that would be fine.  The problem that I don't want to get into is because we're holding the hearing now, we don't want a billiard ball effect on two, three, five, six other numbers to change, and so I think we can take your evidence as the projections plus $10 million net additional expenditures across the licence period, and then, by all means, file revised, updated, if you like, projections to confirm that.  If that understanding is satisfactory, then I think we're all right on that.

 

264                       Now, the commitment was in the form of licence fees and/or equity investments.  Have you decided on how you are going to discharge that in terms of the allocation between those two?

 

265                       MR. CRAIG:  I would defer to Joanne on that.

 

266                       MS. LEVY:  Much is going to depend on individual projects, so there's no notion of assigning a proportion to licensees and a proportion to equity.  It will go forward on an as-project basis.

 

267                       THE CHAIRPERSON:  Thank you.  Now, your supplementary brief explains the importance of having a station in Toronto with respect to the ability to have more control over the acquisition of foreign programming.  I wonder whether you can tell us a bit more about your program rights strategy in light of the fact that you now have been licensed for Toronto.  For example, does access to that market shift your emphasis away from being a buyer of regional rights from other major players to a purchaser of national rights and potentially a sublicenser of original rights?  I wonder whether you could answer that.

 

268                       MR. CRAIG:  As we indicated in Toronto, the Toronto licence gives us the ability to control our destiny in terms of programs that we really want for our system.  We anticipate that we will still be buying regional rights in many cases, in Manitoba and Alberta.  Broadcasters have programs that they own national rights on that they don't have a home for them in our markets. 

 

269                       So we really see, effectively, a bit of a hybrid situation taking place, where in certain programs we're licensing national rights, in certain other instances we're buying local rights.  You know, Global has already indicated to us that they want to continue to do business, you know, as an example.  And frankly, so do we.

 

270                       THE CHAIRPERSON:  Right.  I understand that.  And I guess there is a -- how would you address the concern that you have no doubt dealt with and heard in light of the decision on Monday, that another national rights programming buyer, Hollywood Studios, are licking their chops?  Is this good for the Canadian broadcasting system?

 

271                       MR. CRAIG:  I mean, I guess my reaction to that is there's a couple of points to it.  First of all, as we indicated in our oral presentation today, we're not in the business of being competitive with Global and CTV.  We're not ever going to go down to Hollywood and be able to outbid CTV for "West Wing" or outbid Global for "Friends". We don't need that to do what we do.  So, they're, you know, they're the guys that are really driving up the program pricing at the high end.  Every year there's three or four shows that everybody wants and everybody piles more cash on top because they want to come back and say that they've got eight of the top ten programs, or six of the top ten programs.  So that's really where the war is fought.

 

272                         There's a whole other level of programming that's out there that's available, that delivers the audience yields that we need to deliver to our audience that are available to us at the program rates that we think we can buy them at, that we know we can buy them at.  So we don't buy the argument that we're going to be the guys that drive up the program prices in Canada.

 

273                       THE CHAIRPERSON:  Okay.  And I guess -- I appreciate it's (a) new, and (b) not all that easy a puzzle to solve, but I'm sure you don't want to be yet another up bidder for rights, but I'm trying to -- you will have to serve Toronto and southern Ontario, which, you know, has, as does the rest of the country, a certain kind of level of quality appetite for programming and it's hard to see how you won't impact that bidding process, you know, in terms of upping the ante.  Perhaps you can help me link them?

 

274                       MR. CRAIG:  I mean, it is sort of a hard thing to get your head around, but there are shows out there, there are new shows.  When you take chances in programming, you find programs that stick to the wall that work.  You have to mine those opportunities and find them.  There are a lot of great examples that you can look to.  I mean, CTV put the "Sopranos" on the air as an example.  No one ever thought that would work.  It was an HBO show that had no exposure in Canada, it was a complete risk and it worked.  Those are the opportunities that we're going to have to find and that's the challenge that we're going to have upon us to find those opportunities to put them on the air.

 

275                       I guess all that being said, we firmly believe that there's an oversupply of programming to serve the needs of the broadcasters in Canada.  We can only put -- 40 percent of our schedule can be foreign, only 50 percent can be foreign in prime time.  There's more and more product being produced for the U.S. market that is of a high quality.  More and more networks are getting into original programming. 

 

276                       The highest -- the show in North America right now that's got the most buzz is a little program called "The Osbournes".  It's been the highest rated show in MTV's history.  It's a little show that was cheap to produce that no one wanted.  They put it on the air.  It's a huge success.  Those are the types of programs that we're going to have to go out and find and buy them and put them on the air.

 

277                       So, you know, this isn't going to be easy, but we've been around for a while.  We're confident that we can find those programs to put in our schedules to generate the audience yields that we need.  And they're modest.  We don't need a "West Wing", we don't need a "Friends" to do the numbers that we need to do in our applications.

 

278                       THE CHAIRPERSON:  Commissioner Wylie has a follow-up question?

 

279                       COMMISSIONER WYLIE:  Good morning, Mr. Craig, and your colleagues.  I would like to clarify something because it will also come up in the questions I have on programming and programming strategy, and likely will come up in the Alberta questioning by one of my colleagues.

 

280                       Your licence term, you would agree with me, as set out by Decision 96-731, the expiry was August 2003; is that not correct?

 

281                       MR. CRAIG:  Yes.

 

282                       COMMISSIONER WYLIE:  So when the Commission imposed as a condition of licence, the expenditure of slightly over $14 million in a fund, in an Alberta fund for Alberta producers, would we not conclude that this sum had to be spent by the end of August 2003, because there certainly was no question at the time, maybe in your mind, but not certainly addressed to us, that the Toronto station would become a piece of the strategy?  Would you agree that the condition of licence as expressed over the licence term was to have that sum expended by 2003?  The reason I am asking is we see through the application, and again mentioned this morning, that you have until 2004 to spend that amount, and as a result the $10 million -- as a result of the licence in Toronto kicks in in 05, I have a bit of a problem with that, so perhaps it will give you the opportunity to talk about it amongst yourselves.  But those numbers don't quite work.

 

283                       I know that we are calling you and you are cooperating in having a group renewal, but the condition of licence remains what it was in a highly competitive process.  There seems to be a gap there that from August 2003 to 2004 you are expecting to spend some other money that you were supposed to spend before 2003.

 

284                       MS. STRAIN:  Commissioner Wylie, I think the disconnect between the two years is that when we were licensed in Alberta, in our minds the original commitment was always to be expended over a seven-year term, and we filed a grid at the time that expensed the monies out over seven years and have, in fact, been operating on that assumption.

 

285                       Having said that, you know, we've got lots of plans in the works and hope to be able to retire that whole thing -- will retire that whole thing by 2004.  If it's a particular issue for the Commission, if it's something you stringently require us to fulfil by the end of 2003, we will.  But it wasn't that we were ignoring the condition of licence, I think it was at the time of filing we had always assumed it was a seven-year, it had been filed on the basis of a seven-year commitment and the licence term was six years.  That's where the issue was.

 

286                       And having said that too, Joanne may just want to add that, you know, it's not for lack of trying that we haven't spent all of the money yet.  We've had a whole lot of projects that we've had some difficulty getting through the Funds and other things and she may want to just expand on that.

 

287                       COMMISSIONER WYLIE:  Ms. Strain, the decision of the Commission was dated November 1996.  I suspect that you knew, and everybody knew, you would likely go on air in 1998, September 1998, a year.  Do you recall?  Because the licence term for the Commission is whatever the decision says.  Now, I don't have the transcript of that process at the time, but I suspect that you would have said, "We'll get on air 12 months from when we get a licence."  Well, there is a gap unless you can come back and explain.

 

288                       MS. STRAIN:  Commissioner Wylie, I understand exactly what you're getting at and we will caucus, and if it's appropriate we'll just come back to you on that one.

 

289                       THE CHAIRPERSON:  Thank you.  A number of my other colleagues have follow-up questions in this area which we will address right after the break.  I would ask that the break be kept to 15 minutes and we will resume at 11:20.

 

--- Upon recessing at 1105 / Suspension à 1105

 

--- Upon resuming at 1125 / Reprise à 1125

 

290                       THE CHAIRPERSON:  We will continue the questioning now with Commissioner McKendry.

 

291                       COMMISSIONER McKENDRY:  Thank you Mr. Chair.  Good morning. I just wanted to make sure I understood what was said about the 3G wireless in British Columbia and how it would work, which I took to be a portable as opposed to mobile and relying on a modem that you would buy in a retail store, such as Radio Shack or Wal-Mart, I think you mentioned.  Where is the modem attached to, a computer, in one's home?

 

292                       MR. CRAIG:  I'll let the technical guy tell you how it works.

 

293                       MR. EAST:  The modem would attach directly to a computer.

 

294                       COMMISSIONER McKENDRY:  So if one wanted to watch television using this service, one would watch television on one's computer?

 

295                       MR. EAST:  Correct.

 

296                       COMMISSIONER McKENDRY:  Now, would the same modem provide the high-speed Internet service?  I think you said it would.

 

297                       MR. EAST:  It would.

 

298                       COMMISSIONER McKENDRY:  So streamed video from the Internet, it would be seamless between streamed video from the Internet and the regular broadcast signals that BDUs normally demonstrate or distribute?

 

299                       MR. EAST:  Yes.  I mean, it's not so much streaming video on the Internet.  This would be a conditional access system restricted undertaking with correct rights, accounting for, subscriber counts and everything like that as per BDU.

 

300                       COMMISSIONER McKENDRY:  But if I'm sitting at home at my computer and I decide I want to watch some video, my choice would be presumably one of the broadcast services that we typically associate with the BDU or streamed video that was available on the Internet and it would be a seamless sort of thing for me as a user in terms of where I went with that modem?

 

301                       MR. EAST:  Yes.  I think I could maybe just take a moment to step you through the concept.  Perhaps you'd go to the website, the website for Craig Wireless customers.  It is a protected system.  I feel that's important.  It's not one of those dot com ideas about streaming, you know, product out over the Internet.  That's not it.  You'd go to the website, maybe you'd click on the channel you want to watch, on an icon for that channel.  It would open a window on your computer and that channel would be there, 30 frames per second with stereo audio.  Meanwhile, you could also be browsing the Internet, you could be working on a Word document, I mean, whatever else you want.  That's the niche: linking the television experience with the computer experience.

 

302                       And I just might point out, it is a similar -- this is involving technology field, sometimes it's called TVIP.  Craig Wireless, we think of ourselves as certainly being an innovator in that field.  We're not totally alone.  Alliant, the telecom company in Atlantic Canada is pursuing a similar but different strategy with their technology from Nortel Networks.

 

303                       COMMISSIONER McKENDRY:  So, the niche that you're targeting is the consumer that wants to integrate TV viewing with his or her use of the computer, and presumably that consumer would have traditional cable service or DTH also in their home, which would be connected to their television set?

 

304                       MR. EAST:  I think, yes.  Of course, I'm not the marketing guy but that is the idea.  It is a product -- we're looking to differentiate the system.  It is a unique product, of a portable nature, with its integration of wireless Internet and TV that a consumer would add to their list of technology items they buy,  not necessarily cancel out one service for another.

 

305                       COMMISSIONER McKENDRY:  Could the modem be attached to a personal video recorder that was connected to a television set?

 

306                       MR. EAST:  It is possible to have the modem display the TV on the computer, to have the modem go through a PVR or a VHS deck to.  It is possible to have the modem and computer display the video on a TV or to go through the traditional TV appliances like a VHS deck or a PVR.  That would be with a computer that has a TV outlet, which is actually not an uncommon thing in modern computers.

 

307                       COMMISSIONER McKENDRY:  Thanks for that. I just have one other question that struck me from your video presentation.  I think you said you'd shown 2,300 bands on your services and I was amazed that there were 2,300 bands available.  Is that since the beginning of time when you were in broadcasting?

 

308                       MR. CRAIG:  No.

 

309                       COMMISSIONER McKENDRY:  Are there really that many bands available?

 

310                       MR. CRAIG:  That's in the last four years.

 

311                       COMMISSIONER McKENDRY:  That's amazing that there would be so many bands.  How do you identify these bands and sort them out?

 

312                       MR. CRAIG:  Well, I'll let Jim and Chris tell you, but we actually have people that are bookers and that's all they do.

 

313                       MR. HASKINS:  Actually, it would be even higher than that.  The 2,300 is conservative and they range from international recording artists right to somebody who has launched their first CD.  I know that our "The Big Breakfast" show in Edmonton is being credited for launching the career of at least one Edmonton singer/songwriter that went on to perform at the Lilith Fair Festival about a year and a half ago.

 

314                       We have full-time staff in all of our markets whose sole responsibility is to find these acts.  Some come to us.  We get lots of CDs in the mail now since it's so easy to make your own recording, and we sift through those and make an assessment on whether they're ready for prime time or not.  But it's not a tough job and we've found that, we've only been on the air for four and a half years in Alberta but we're turning away acts rather than having to scour for them.

 

315                       MR. CRAIG:  What amazes me is that they'll get up at five in the morning to come to the station to be on.  Most of them don't go to bed.

 

316                       MR. DUNCAN:  If I could interrupt, these are performance acts, so it's not just rock and roll bands.  It's theatre groups; it's poets; it's folk singers; it's, you know, quartets.  So it runs the whole spectrum.

 

317                       COMMISSIONER McKENDRY:  Thanks.  I'm sorry to get back to the 3G, but I did have one question that I noticed in my notes that I forgot to ask.  You don't have any plans then to transmit the service to PDAs or to cell phones and to have your video signals available using 3G on portable devices, or mobile devices, I guess is a better word?

 

318                       MR. EAST:  I think that when we examined the niche for this product, we actually do look at things like RIM Blackberry pager, and a Palm 7 type wireless, which is only available in the U.S.  But the product compares very favourable against those because instead of having stripped down email and web- browsing, the idea is that you hook it to your notebook computer and you have your full web-browsing, e-mail client software available. 

 

319                       Ultimately, this is -- so I hope that kind of answers your question.  It's not something that -- it's not the same technology as a wireless pager.  It's totally different technology.  However, it is a standards-based technology.  The standard is referred to as UMTS 2000, and hopefully - we're very confident that this is going to happen - systems like this will be licensed around North America.  It's entirely possible that you could take a modem, just like you take your cell phone from San Francisco to Vancouver, you could take your modem and have full Internet connectivity just paying on a rate per minute or a rate per megabyte and connection back to your corporate HQ.  It's a real together technology.

 

320                       COMMISSIONER McKENDRY:  Thanks.  Thanks Mr. Chairman.

 

321                       THE CHAIRPERSON:  Thank you.  Commissioner Williams?

 

322                       COMMISSIONER WILLIAMS:  Good morning.  With "The Sharing Circle" moving away from news, how does Craig envision aboriginal stories being broadcast in terms of news events?  Like say, for example, next week in Edmonton a prominent businessman, Herb Belcourts donating $5 million to help fund scholarships for aboriginal people to pursue post secondary education.  So where would that type of story be carried?  Would that be a "The Big Breakfast" or a news or a feature on "The Sharing Circle" or what?

 

323                       MR. CRAIG:  I'll ask Lisa to elaborate more on where she sees the show going and, as we mentioned, we're moving from more of a news magazine to a long form documentary to provide more in-depth opportunities.  That doesn't change our commitment to have aboriginal reporters in our newsroom who also would be working on long form pieces that would be part of the show.  So that doesn't change.  I think that those pieces, those reporters would be feeding that material back into our own news shows, which they do now.  That's something we do as a matter of course.  We have the beauty of having Lisa overseeing it and having those pieces fold into "The Sharing Circle" but they also appear as part of our regular programming everyday. It's not something we just put on the air once a week.  Maybe I'll ask Lisa just to elaborate on that.

 

324                       MS. MEECHES:  Yes.  I guess the answer to that would be all of the above.  What happens is one of "The Sharing Circle" reporters don't specifically just report to "The Sharing Circle".  They are actually used in different capacities and weaved throughout the entire system and in each of their markets. 

 

325                       For example, Adrian Wolfeg who is from the Blackfoot Nation and Calgary, which is territory of the Blackfoot people in this Confederation, actually, he works sometimes as a researcher for some of the other stories, sometimes in sales and marketing, and depending on his knowledge of the sensitivities of the people in this region, he acts in different areas of the company.  So my job is to make sure that the entire staff in all of the regions and all of the Craig Networks are well-prepared to deal and handle and work to the best of our ability as a group, sharing tradition and culture with all parts of the audience, as well as the teams that are out there.

 

326                       To date, "The Sharing Circle" has produced over 800 five-minute features just on "The Sharing Circle" alone.  Those five-minute features are then turned into one-and-a-half to two-minute stories on our different shows, whether it be "The Big Breakfast", whether it be "Wired", or whether it be in marketing or what have you.

 

327                       So it actually works to the benefit of both the audience, to the non-Native audience, to the Craig staff and then of course it also provides, I guess, a huge relationship with the news people and especially in that department where aboriginal people have always felt that they've never been treated fairly, which is one of the reasons why we focussed it in that department because, you know, we need to have that understanding that we are not just what has been stereotyped by, say, media or society.  So it actually works well and it's very, very effective.

 

328                       COMMISSIONER WILLIAMS:  Thank you. That was my question.

 

329                       THE CHAIRPERSON:  Commissioner Cram?

 

330                       COMMISSIONER CRAM:  Thank you, Mr. Chair.  As you were talking in your introduction and then latterly in your discussion with Commissioner Wylie, I now see why over the next commitment you want the commitment to be $10 million in licence fees and/or equity.  Because, do I have it right if -- and you talked previously, Ms. Levy in the introduction about the CTF not giving any additional fees for some productions this year, so if these productions then can't obtain the necessary funding, then your commitment about the licence fee goes, and so you're left with a fair bit of uncertainty in terms of expending that money.  Is that how it goes?

 

331                       MS. LEVY:  It can be.  Taking the risk on some of the bigger budget items to go to the Canadian Television Fund has become a big risk.  It's a big gamble because you never know from one year to the next what the call will be on a particular envelope,  in this case it's the drama envelope.  This year, most of the money went to the CBC and CTV.  They had 23 projects from the CBC, 11 from CTV.  That scooped most of the cash. 

 

332                       So it put a lot of pressure on to - instead of having a licence fee commitment, ours grouped with other licenser, it made it very difficult to get some projects through.  And even one of the projects that had 59 out of 59 points and as much licence fee as they could possibly want, that one got side-tracked because somebody decided that the presence of Adidas running shoes on one of the characters made it non-Canadian enough. 

 

333                       So we have some challenges.  However, our producers, I'm sure, will be coming back to us with some other means of financing.  They are right here so I'm hoping that they're listening.  I'm looking forward to what creative deal-making they can do to ensure that those projects will go ahead.

 

334                       COMMISSIONER CRAM:  So I'm trying to get this.  In terms of you, who have a COL that says you have to expend so much by way of licence fees over a period of time, the only way to ensure that you are fully compliant would essentially be to promise licence fees for more than your commitment in order to ensure that some of these licence fees are, in fact, expended because the producers can't get the full production costs.

 

335                       MS. LEVY:  I've always tried to be fairly -- we've always tried to be fairly -- well, we've always tried to be fair to the producers and to the system.  We have never expected that all of our projects would go through the Canadian Television Fund and, in fact, if that was the case, we only would have done seven movies instead of 15, so we know that there are other ways of doing things, but it's --

 

336                       MR. CRAIG:  I mean, there is uncertainty.  For instance, just to elaborate on what Joanne said.  We put three projects in front of the Fund this year and we got zero.  You know, one of these projects, we gave a commitment to last year and it went through, but the producer couldn't get their funding through and it didn't make it.  It didn't make the cut this year.  So we don't have certainty when we step up and put our licence fee on the table that these projects are going to go ahead.

 

337                       MS. LEVY:  For instance, the project that Drew is alluding to is one by -- it's a first feature by an aboriginal writer with an aboriginal protagonist.  Its budget is half of one of the other movies that we put through, so the licence fee has pulled back somewhat.  As a result, it was considered that it didn't have enough licence fees to make the cut.  But last year, it went through the system with a licence fee that was even smaller.  So, from one year to the next there isn't that much certainty.

 

338                       COMMISSIONER CRAM:  What I wanted to do, because what I'm concerned about is the drafting of COLs and if we're putting people in a position of what I would call almost a defensive impossibility. Say you're in the last year of a COL that says you have to expend a certain amount of money by way of licence fees and you have found the projects that you want and you're at your total number, but they can't get the total necessary production costs elsewhere, are you then put in a position where you can't comply with your COL because the producers are not getting other subsidiary funding elsewhere?  Is that what happens?

 

339                       MS. LEVY:  It can, but we take our responsibilities and our commitments and our conditions of licence extremely seriously and we intend to comply.

 

340                       COMMISSIONER CRAM:  Thank you.  Thank you Mr. Chair.

 

341                       MR. CRAIG:  Just one point of clarification I think is probably appropriate to put on the record right now is that we, in our expenditures through the drama fund, we have not included the CTF money, the top-up fees.  And although we're behind somewhat in terms of getting this money spent because of the difficulty that we've talked about, if you include those CTF top-ups, we've spend about $9 million of the fund.  We have not included those in our numbers that we supplied to Commission. So I just wanted to put that on the record.

 

342                       MS. LEVY:  The other issue is that as a result of moving the drama fund into a production fund it gives us a lot more scope and gives many more producers the opportunity to come to us with the kinds of projects that we can use, and that we can use more quickly.  One of the things about doing long form drama is that when you're working with a producer as closely as we do, you have to be sensitive to some of their needs; their needs for time for, say, a theatrical release and then a pay TV window and so forth before it comes to our conventional window. 

 

343                       What the new production fund will allow us to do is, as I mentioned earlier, from October until now we were able to put money into a documentary series and two feature documentaries that have already been to air.  So that opening up, I think, will allow us far more latitude to licence and support a greater number of programs that can come to our screens more quickly.

 

344                       COMMISSIONER CRAM:  Thank you.  Thank you, Mr. Chair.

 

345                       THE CHAIRPERSON:  Thank you.  Commissioner Wylie?

 

346                       COMMISSIONER WYLIE:  Thank you Mr. Chairman.  As the Chairman mentioned earlier, I will discuss with you for your group of stations two areas:  the priority programming and the local and regional reflection strategy.  This will include the programming implications of the Toronto station very recently licensed to Craig as it affects its strategy for the group and, as was mentioned earlier, other members will have more specific questions on your performance and your plan with respect to the Alberta stations and the Manitoba station. 

 

347                       Now, perhaps before we start talking about priority programming we can get more illumination as to what all this fund is.  If I look at your conditions of licence, it is both in the initial decision and in the decision that allows you to change the categories to fit with the TV policy as -- I'm going to read it from the decision and I quote:

 

"It is a condition of each licence that the licensee, over the course of the licence term, contribute a minimum of $14,070,000 to a fund in support of independent program production in Alberta, and to ensure that $11,835,000 of this amount is directed to independent Alberta producers for the production of priority programming as defined in Public Notice CRTC 1999-97."

 

348                       When I look at your financials, would I find the amounts expended by the fund in line 17 where you break out the money spent on programs to be telecast and other programming expenses, I'm going to be assuming that someone has, altogether you have the application with you, so where is the fund, if one were to check on performance and projections, et cetera, where is the money going to the fund?

 

349                       MR. THORGEIRSON:  Commissioner Wylie, I believe in the form section of the application, it's actually in the Canadian acquired number.

 

350                       COMMISSIONER WYLIE:  Well, I'm looking at your financials as filed, both consolidated and per station, and in particular at the CKAL-TV it would be page 11.

 

351                       MR. THORGEIRSON:  Oh, sorry, it is line 17, yes, other programs.

 

352                       COMMISSIONER WYLIE:  Now, is it your view that this fund was to be expressed in a particular way, or was it simply an amount of money that you could show the Commission at the end of your licence term had been put in a fund and made available to independent producers?

 

353                       MR. THORGEIRSON:  The original intent, when the application was filed --

 

354                       COMMISSIONER WYLIE:  Well, I'm reading from the decision.  How do you understand that?

 

355                       MR. THORGEIRSON:  No, I understand where you're going.

 

356                       COMMISSIONER WYLIE:  To put $14 million in a fund for producers.

 

357                       MR. THORGEIRSON:  What we contemplated was the $14 million would be spent over a seven-year licence term.  What's in this renewal application is what we thought would be the last two years.

 

358                       COMMISSIONER WYLIE:  Well, I'm not addressing right now the timing.

 

359                       MR. THORGEIRSON:  But the amounts that are in the application --

 

360                       COMMISSIONER WYLIE:  Another Commissioner will deal with that.  The amounts is what I want to know, where they are.

 

361                       MR. THORGEIRSON:  It's on line 17.  And we filed a report annually with the returns.

 

362                       COMMISSIONER WYLIE:  Well, there is already a bit of a discrepancy between the numbers of your annual returns and what you say was expended in the application, which I understand is $4 million and some.  I couldn't find quickly where you speak to that.  The last time you filed with us was 2001.

 

363                       MR. THORGEIRSON:  Right.

 

364                       COMMISSIONER WYLIE:  Your projections start at 2003, so the confidential numbers, which I will not disclose, but I do have, show the last three years of the licence term as '01, '02 and '03 and then your projections begin at '03, so the '03 figure in line 17 is identical, correct?  If I look at your annual returns, or even the sum that you claim in your application, which was $4 million and some, and I add to that to '01, '02, '03 even if I were to add 2004, do I get $14 million?

 

365                       MR. CRAIG:  Commissioner Wylie, I think you'll get $11.8.

 

366                       MR. THORGEIRSON:  Yes, it should be $11.8.

 

367                       COMMISSIONER WYLIE:  To the end of 2004?

 

368                       MR. THORGEIRSON:  $11,835,000.

 

369                       COMMISSIONER WYLIE:  So even with that additional year we would not get $14 million in the fund?

 

370                       MR. THORGEIRSON:  No.  The additional -- what makes up the rest of the $14 million is the Script and Concept development dollars and the administration.

 

371                       COMMISSIONER WYLIE:  Okay, I'll leave Commissioner Williams to go into that further, but the fund, Ms. Levy, was not for licence fees, it was a fund?

 

372                       MS. LEVY:  Yes.

 

373                       COMMISSIONER WYLIE:  And it wasn't particularized.  It is particularized in Toronto.  And it was to be expended for that purpose, and even with 2004 we would all agree that there is a non-performance in that sense.

 

374                       MS. LEVY: Commissioner Wylie, I'm sure I understand.

 

375                       COMMISSIONER WYLIE:  Well, in the sense that even to '04, your line 17, even when I take your numbers which are confidential at line 17 for the last three years, the ones where we have already, because your annual return for 2001 have been filed, 2002, 2003, then your projections start repeating the same amount for 2003, which is public, which is $1.5 million.  And all of that adds to $11 million, not $14.

 

376                       MS. LEVY:  And that was in our original licensing application it was very clear that that $11 million that was going to independent producers and the difference between the 11 and the 14 was Script and Concept, which is accounted for elsewhere, and administration, which was, as far as we know, was accepted because that's how we filed our original application.  So there is no --

 

377                       COMMISSIONER WYLIE:  And so, Ms. Strain, all together, by 2004, you are saying you will have met your commitment of $14 million?

 

378                       MS. STRAIN:  By 2004, actually we had caucused in response to your earlier question before the break, and what we said was - and you are quite right, when we think about our licence term, we thought of it starting in September '97, but you're right, the licence was issued earlier than that - and we would be prepared to say that we will have committed that money, that $11.8 million by the end of 2003.  We will have committed it.  That doesn't necessarily mean that it will be money that a cheque's been written and out the door and that's because of the vagaries of licensing independent production, but we will have signed committed agreements for those funds and they will be committed by the end of 2003, by the end of the licence term.

 

379                       COMMISSIONER WYLIE:  It raises the question as well of why the effect of Toronto is to start putting additional money in 2005, if we don't agree with the 2004 because otherwise --

 

380                       MS. STRAIN:  We'd start the Toronto commitment -- sorry the $10 million commitment would start in the ensuing years so it would be --

 

381                       COMMISSIONER WYLIE:  Because if we held you to the end of 2003, there would be nothing in 2004.

 

382                       MS. STRAIN:  Right, so we would start that in 2004.

 

383                       COMMISSIONER WYLIE:  You are now doing seven hours of priority programming between 6:00 and midnight and you had committed to five hours of priority programming, the definition of which includes airing between 7:00 and 11:00, but eight hours if you had a licence in Toronto.  To what extent will these eight hours be the same on all -- well CBC, the CKX is a little more difficult, but on your Alberta station on CHMI and on Toronto?

 

384                       MS. STRAIN:  Commissioner Wylie, as we said in Toronto -- and I assume you're talking about across our whole system, then, not just our four stations?

 

385                       COMMISSIONER WYLIE:  No.  You now have licence in Toronto as well.

 

386                       MS. STRAIN:  Right.

 

387                       COMMISSIONER WYLIE:  And that was brought into your application and the decision is out, so your commitments, depending on Toronto are the commitments we are going to discuss because you do have a Toronto licence.

 

388                       MS. STRAIN:  Yes.  What we had anticipated in the Toronto application, as you may recall, five hours of priority programming in the case of Toronto was locally reflective programming that would be of interest primarily to Torontonians and wouldn't travel well to Western Canada.  So we would anticipate that five hours would be distinct on Toronto, on our Toronto outlet, and that as many as three hours might be shared as between Toronto and our Manitoba and Alberta stations.  And we've also said that one hour of the priority programming in Western Canada on our Alberta and Manitoba stations would be local or regional reflections.  So that, again, is programming that would be distinct and likely would not travel to Toronto.

 

389                       There would certainly be some sharing, some programs that would be the same in our schedule across Toronto and the West, but there would be those distinctions that I've just outlined.

 

390                       COMMISSIONER WYLIE:  That brings up the question both in your application and now and this morning in your presentation, you use the term that one of the hours of the eight hours will be local or regional reflection.  How are you using the term, because as you know, definition of regional programming in the TV policy is in relation to where it's produced?  So you are adding a component that is not necessarily there, the hope is always of course that if it's made somewhere else, than 150 kilometres from the big centres, then it's more likely to be regional. 

 

391                       But what definition are you using?  I suspect that you could easily make programs here in Alberta that would fit the definition of regional programming in Toronto.  How do you perceive all this?  Is it regional in the sense of, you say reflection everywhere, rather than the technical definition of principle photography, 150 kilometres from Toronto, Montreal or Vancouver, because obviously if you use the definition of priority programming, programming produced here would be regional to Toronto.  What do you mean by adding local or regional reflection?

 

392                       MS. STRAIN:  Commissioner Wylie, I think we use the word "regional" not in the technical sense of the Commission's TV policy, but more in terms of programming that would address issues of particular interest to our region in the West or to our locale in Calgary or Winnipeg.

 

393                       COMMISSIONER WYLIE:  If I understand you five hours in Toronto will be local to that area, then it won't be possible to air it?  That's how you perceive your Toronto licence --

 

394                       MS. STRAIN:  That's how we perceive it.

 

395                       COMMISSIONER WYLIE:  -- would make that programming unlikely of interest?  And would it be for you a test that if you can air it in Alberta or Manitoba, you haven't met your condition of licence in Toronto?

 

396                       MS. STRAIN:  I'm sorry?

 

397                       COMMISSIONER WYLIE:  I don't have the decision with me, but tell me again what it is you have committed to in Toronto in terms of five hours of local programming.

 

398                       MR. CRAIG:  The highlight was "The Toronto Show", which is a very Toronto-centric variety program that would run 10:00 to 11:00.

 

399                       COMMISSIONER WYLIE:  Okay.  That would definitively not be of interest in Alberta.

 

400                       MR. CRAIG:  That show would, in all likelihood, not travel outside the region. 

 

401                       COMMISSIONER WYLIE:  Thank you. Somehow or other I left my copy of the decision on the dining room table at home.  I hope my husband enjoys it.

 

402                       Okay.  So then this priority programming commitment is going to be a big commitment. In your Manitoba and Alberta stations, you could easily have identical programming, could you, but for that hour?

 

403                       MR. CRAIG:  That's the way we contemplate it, that one of those hours would go beyond your definition of "regional" and go to our definition of "regional reflection".

 

404                       COMMISSIONER WYLIE:  How many kilometres between Winnipeg and Edmonton?

 

405                       MR. CRAIG:  More than 150.

 

406                       COMMISSIONER WYLIE:  Yes.  So the same thing applies there that you would not have a problem with us taking up the regional programming and adding that component to it, that it's not the definition of our normal priority programming, you're adding another component to it, which is especially of interest to that area alone?

 

407                       MR. CRAIG:  We're adding a new nuance to priority.  And we're saying we want the option to do one of two things.  We want to have either the ability to put a local show on.  Let's say we develop a local variety program that we think might have application in Manitoba, Calgary and Edmonton.  We want the flexibility to adapt that show specific to those local markets, or if it was hosted by somebody from Western Canada who would have appeal in all of the markets, we'd want the ability to run that show across our whole system, but only in the West.

 

408                       COMMISSIONER WYLIE:  But would that satisfy then the definition that the twist you're adding of local reflection to our definition of regional priority programming, the fact that you can show it in Winnipeg as well as in Alberta?  Do I understand that this may be possible?

 

409                       MS. STRAIN:  Yes, that's what we're saying.

 

410                       MR. CRAIG:  That's right.

 

411                       COMMISSIONER WYLIE:  That would be a regional reflection.

 

412                       MS. STRAIN:  It might be.

 

413                       COMMISSIONER WYLIE:  And it would lose -- it would no longer fit that commitment if you showed it in Toronto, and vice versa, because although the mayor of Toronto would be quite prepared to extend the Greater Toronto Area to Winnipeg, but I'm not sure we are.

 

414                       MR. CRAIG:  That's right.  Well, you know, maybe you develop a regional show that becomes something that people in Toronto want to see.  So I hate to be limited if we developed a show that could find an audience in Toronto and we had to sell it to another broadcaster to get it on the air in that market.

 

415                       COMMISSIONER WYLIE:  Mr. Craig, or your colleagues, when we draft a condition of licence about your eight hours of priority programming, do you want to maintain that there will be one hour that will be local or regional reflection in your Western licences?  Do you want to maintain that addition, or do you want to simply hold yourself to regional programming?

 

416                       MR. CRAIG:  So the question is do we want one hour that is local or regional in the conditions?

 

417                       COMMISSIONER WYLIE:  Well, local or regional reflection.  These debates are difficult.

 

418                       MR. CRAIG:  Sure.

 

419                       COMMISSIONER WYLIE:  Of course, there is an assumption that if something is produced 150 kilometres from the big centres, it's likely to be produced in a manner that will be reflective, not necessarily, as you said, it may indeed be not reflective enough to the specific region, that is, it's appealing to Toronto, so you have added a component that is more restrictive than what we have and I want to know whether you mean it.

 

420                       MR. CRAIG:  We've added?

 

421                       COMMISSIONER WYLIE:  By adding everywhere one hour of local or regional reflection, which is not in our definition of priority programming.  Anyway, you think about it.  You can come back to us.

 

422                       MR. CRAIG:  Sure.

 

423                       COMMISSIONER WYLIE:  Of course, it's fine with me and I'm sure Commissioner Cram will be delighted if it's local reflection, but it is more restrictive --

 

424                       MR. CRAIG:  No, we understand.

 

425                       COMMISSIONER WYLIE:  -- when one tests at the end whether it's worked.  And, of course, the test will be, well, if it's local reflection in Toronto, local reflection in Edmonton, can they be the same? 

 

426                       There is no money shown in CKEM for regionally produced programming, but there is in CKAL. Is that because - that would be at line 9 in your financial - is that because they'll be the same all the time?

 

427                       See, if I look at your projections for CKEM, line 9 is where there's regionally produced programming, which is I expect where one would find --  in CKAL's financials there are amounts for regionally produced priority programs in line 9 and there is not in CKEM.

 

428                       MR. THORGEIRSON:  I think, Commissioner Wylie, the contemplation there was that if it were to be a regionally produced program it would be emanating from the Calgary studio, so we decided to expense it in the Calgary side of the financial.

 

429                       COMMISSIONER WYLIE:  Can I conclude from that --

 

430                       MR. THORGEIRSON:  If the program were to be done out of Edmonton, it would be expensed there.

 

431                       COMMISSIONER WYLIE:  The regional programming will be, in your definition of "regional", will be able to fulfil that hour in both markets, in Edmonton and in Calgary?

 

432                       MR. THORGEIRSON:  Yes.

 

433                       COMMISSIONER WYLIE:  And to what extent will the eight hours in Alberta, on the two stations in Alberta, be identical, and to what extent is there an allocation in your financials as to the costs of producing priority programming?

 

434                       MR. CRAIG:  I think why we made the distinction for the one hour was to make sure that, you know, there could be some differences in the priority, in prime time, on each of the outlets.  We wanted that flexibility.  But I would think that there could be a good possibility that a lot of the rest of it, the seven hours, would be the same between Winnipeg and Brandon and in Alberta.

 

435                       COMMISSIONER WYLIE:  So that not only for the regional hour but for all the priority programming, to know what amounts will be spent in Alberta, I just add the two?

 

436                       MR. CRAIG:  Yes.

 

437                       COMMISSIONER WYLIE:  And then that would be the amount that is in the consolidation? 

 

438                       Now, we discussed earlier the fact that these financials were prepared before you knew you would be a Toronto licensee, but at the time of the projections you were producing seven hours of priority programming, albeit not having to schedule it between 7:00 and 11:00 and you were prepared to commit as a group to five hours of priority programming, that is, between 7:00 and 11:00; is that the basis on which these projections have been prepared, the five hours, or does it make any difference considering you were already producing seven?

 

439                       MR. THORGEIRSON:  No, it doesn't make any difference.

 

440                       COMMISSIONER WYLIE:  Doesn't make any difference?

 

441                       MR. THORGEIRSON:  No.

 

442                       COMMISSIONER WYLIE:  So your projections would not be changed if you were to re-do them knowing that you have a Toronto licence, is what you are saying, for priority programming?

 

443                       MR. THORGEIRSON:  Yes.  But, Commissioner Wylie, I think maybe you need to have an explanation of producing priority programs versus acquiring priority programs and maybe Drew could speak to that.  I'm not sure that all of the priority programs are --

 

444                       COMMISSIONER WYLIE:  No.  But financially, Craig has to pay for them.

 

445                       MR. THORGEIRSON:  Yes, one way or another.

 

446                       COMMISSIONER WYLIE:  Either to have them produced or to acquire them.  Your financials, you say, would not be different?

 

447                       MR. THORGEIRSON:  Correct.

 

448                       COMMISSIONER WYLIE:  Although you are now going to produce eight hours of programming that you will be able to schedule, or that you will have to schedule between 7:00 and 11:00.

 

449                       On page 36 of your supplementary brief, you talk about your vision for the future so including a broad range of programming genres that are currently unrepresented in the broadcasting system.  If I look at your schedule, how would I come to the conclusion that the type or range of priority programming that you are broadcasting is different from what one sees on other stations?

 

450                       MR. CRAIG:  Speaking in terms of priority or the overall programming?

 

451                       COMMISSIONER WYLIE:  No, priority programming.

 

452                       MR. CRAIG:  Priority programming.

 

453                       COMMISSIONER WYLIE:  I don't know if you -- your statement there was general that your vision for the future is to include a broad range of programming genres, currently unrepresented.

 

454                       MR. CRAIG:  I think that we were -- let me give you an example.

 

455                       COMMISSIONER WYLIE:  And I'm addressing at the moment priority programming, not local.

 

456                       MR. CRAIG:  Sure.  Joanne will probably want to speak to this, and this is why we made the change in the program fund to include all priority programs, as per your definition, to give us broader flexibility but, you know, we will have this fall, in the schedule in Alberta, a prime time variety show.  Never been done in this province, ever.  And we will have it in there.

 

457                       We will also have a new strand of long form documentaries from Lisa's stream and Joanne has other projects that we're working on.  We think that we can contribute in different ways.  Our competitors have focussed primarily on the area of drama, almost exclusively.  So that's why we went back to you and asked for greater flexibility in changing the fund to that priority fund.  I'll maybe ask Joanne to talk about some of the things she's working on.

 

458                       MS. LEVY:  I have a number of producers who are coming to me with projects that include interactivity, that include different kinds of subject matter, that could be comedy shows, that are based in sort of traditions that we have in Alberta, which is the home of TheatreSports and things like that.  It is seen elsewhere but we originated it. 

 

459                       So, there will be, through the development process and the licensing process, I think you'll see, not only an attempt to create some different types of programming, but even within the recognized genres there will be some rather unique programming strands.

 

460                       MS. STRAIN:  Just one more quick thing, Commissioner Wylie.  One of the areas even within the broad genre of drama that we have really focussed on over the last licence term is feature film,  I think, to a much larger degree perhaps than some of the other licensors of that product.  Is that fair to say?

 

461                       MS. STRAIN:  Yes, of the 15 movies that we've completed, eight are theatrical features and that's a big commitment and quite a unique commitment, and that was what the original drama fund was founded on.  At the time that it was devised, long form drama, particularly feature film on Canadian television was very much an underserved category.  We took on that challenge and I think we went a long way towards meeting it.

 

462                       COMMISSIONER WYLIE:  You have not provided, that I know of, any indication of how your priority programming would break down in terms of repeats, original and programming that has already been broadcast but is first on the conventional station.  You discussed with the Chair this morning the question of sub-licensing, so that would be, of course, as well, sub-licensing, I think the discussion was more about foreign programming, but I notice in a response to a deficiency question, question 8, albeit talking about visually described programming, that you state that you currently sub-licence priority programs from the large station groups and, Mr. Thorgeirson -- am I doing it correctly? 

 

463                       MR. THORGEIRSON:  Close enough.

 

464                       COMMISSIONER WYLIE:  Pardon me?

 

465                       MR. THORGEIRSON:  It's close enough.

 

466                       COMMISSIONER WYLIE:  It's close enough.

 

467                       MR. THORGEIRSON:  Thorgeirson, that's very good, thanks.

 

468                       COMMISSIONER WYLIE:  That you currently sub-licence a priority program.  Are you in the position to break down for us the amount of priority programming that will be original, repeat and already broadcast?  Or if not, could you be by reply time or later on?

 

469                       MR. CRAIG:  We can do that.  The difficulty, as you indicated, is the fact that we're not going to control all this priority programming in terms of -- in other words, we're not CTV where we can commission eight hours across our whole system.

 

470                       COMMISSIONER WYLIE:  No.  But when you prepare your projections, do you not have some view as to the possible ratio that you are expecting, and I wouldn't ask you to adhere to a condition of licence in that regard, or at least we wouldn't, I don't think, but it's good to know what you're looking at in terms of repeats and -- or maybe my other colleagues will.

 

471                       MR. CRAIG:  Maybe what we can do is go back and look at what it is now and tell you that.

 

472                       COMMISSIONER WYLIE:  Give us some view as how it will break down for the stations we are looking at today, to the extent that you can.

 

473                       MR. CRAIG:  Okay.

 

474                       COMMISSIONER WYLIE:  Now, if I look at your application at page 19 in, I guess that would be the addendum, you make the statement that your "approach to the presentation of Canadian dramatic and other priority programming is to schedule it at a time when it is most likely to garner audiences. We typically schedule such programs evenly throughout the week, Monday to Friday, as well as during the weekend, in peak viewing times." 

 

475                       You are aware of the Commission expressing some concern at the renewal of CTV and Global and, of course, it's been made a bit of fuss before the Parliamentary Committee about scheduling. I'm wondering whether your schedules in the coming term will look like the ones you've filed where for the Alberta stations three of the seven hours are during the week only and they are at 10:00.  There is nothing Monday to Friday before 10:00 of priority programs.  Same thing for CKAL.  CKX is a bit more difficult because it's an affiliate.  And in the case of CHMI there is nothing.  There is no priority programming; am I correct, except on the weekend?

 

476                       MR. CRAIG:  The priority programming in Winnipeg, Monday to Friday, would be Canadian movies.  So even though some of those movies are identified as foreign, a lot of the Canadian movies that we run, would run Monday to Friday.

 

477                       COMMISSIONER WYLIE:  In the slot where I see A-Channel Prime Ticket Movie?

 

478                       MR. CRAIG:  That's correct.

 

479                       COMMISSIONER WYLIE:  At 8:00?

 

480                       MR. CRAIG:  That's correct.

 

481                       COMMISSIONER WYLIE:  You are aware, are you, of the focus that is now being put by the CBC before the Parliamentary Committee, as you follow that, and also by French Canadian Broadcasting.  There was a discussion which was referred to in the decision of licensing of renewing CKV, I believe, that we completely agree with your statement at page 19 that that type of programming should be scheduled.  The intent or philosophy underlying the policy was to have it scheduled when it's more likely that there are audiences.  But I will allow you to respond to my suggestion that Saturday night is not the greatest time to get audiences.

 

482                       MR. COWIE:  Drew, if I could?  We took a look at that, and I guess what you have to do is look at the environment.  The HUT levels from Thursday night are definitely higher than they are on Saturdays,  but the competitive level of the programming is also considerably higher.  So if you take a look at the three priority programs, for example, on Calgary, they run at 10:00, which is peak time, against programs like "Everyone loves Raymond" and so on.  They deliver quite poorly.  Programs of similar ilk or similar quality that we run on Saturday do two to three to four times the audience delivery. 

 

483                       So how do you define exposure?  Is it defined as Monday is a better place to expose a show, or is exposure defined as audience garnered?  If it's defined as audience garnered, then clearly Saturday and Sunday for some of those priority programs work considerably better.

 

484                       You have to take all of it into consideration.  Monday is not necessarily better to expose a show if it's up against "The Sopranos" or "Everybody loves Raymond" as it is maybe scheduled against "Hockey Night in Canada" on Saturday.  So if you look at the delivery, the delivery of our priority programs on the weekend deliver considerably more audience than they do during the week.

 

485                       COMMISSIONER WYLIE:  It's Mr. Cowie?  Yes?  Would you agree, though, that if one produces or plans programming to be placed on Saturday night, that if you were a Commissioner you would perhaps think that maybe, if that's the intention, you're not going to put as much money or energy into it than if you were planning to air it on Tuesday night or Thursday night, as you mentioned?  That's another side of the coin. 

 

486                       Broadcasters say, well how do you know?  But the idea of the TV policy, I guess, was to have that programming not to demand expenditures as we did before, but to say the programming will be aired when a lot of people are watching so that broadcasters, our licensees, won't be commercially inept enough to put not very appealing programming in those hours.  But if one puts them on Saturday night, I suppose, the formula or the assumption could be altered.

 

487                       MR. COWIE:  I think if you took those programs and you reversed them, and took the Saturday ones and placed them on the Monday and the Wednesday and the Thursday, what you're going to find is that the ones that move from the week to the weekend are now going to achieve better numbers, the ones that were achieving better numbers on the weekend.

 

488                       I mean, we're taking five programs that are probably of similar budget, similar ilk and so on, and suggesting that there is potentially more audience for programs.  I know that - I can't remember what hearing it was - but, Commissioner Wylie, you were excited to go home and didn't want anybody to talk about "Survivor", and if the priority program was up against "Survivor" then it may not get the type of exposure it would get on Saturday night, and I think that's what we're trying to say.

 

489                       COMMISSIONER WYLIE:  Perhaps we're both exaggerating.

 

490                       MR. COWIE:  Maybe a little.

 

491                       COMMISSIONER WYLIE:  What is the middle ground here?

 

492                       MR. CRAIG:  You know, Commissioner Wylie, there's another factor also that I think needs to be considered, and if you look at the schedule in Winnipeg, it's the area where we don't do -- sorry.

 

493                       COMMISSIONER WYLIE:  Go ahead, Mr. Craig.

 

494                       MR. CRAIG:  Where, admittedly, we don't do all that well in terms of what we schedule, and that's because of a couple of factors.

 

495                       One is we're simulcasting against eastern time zones so we've got from 7:00 to 10:00 to maximize our simulcast, and with the exception of Canadian movies, we're not running any priority programming in those areas. 

 

496                       But the one thing to consider is that we do have a ten o'clock newscast for one hour, and we're using that ten o'clock slot to garner audience for that show.  You know, you only have so much shelf space in the schedule and we think the best use of that slot in the Winnipeg market is to run a local show, where we have more opportunity to garner audience share than we would scheduling some of the priority programs that we're able to buy in that time slot.

 

497                       COMMISSIONER WYLIE:  Mr. Cruise or Mr. Craig, Mr. Cowie -- excuse me, and Mr. Craig, while you're here and we're discussing this, of course there are people who have suggested in the past and are suggesting this now, that the Commission should get into looking at the audiences that you garner as a measure.  Isn't that what you're suggesting?

 

498                       MR. COWIE:  No.  What I'm suggesting is that that's something that we have to look at, and we honestly believe that there are better opportunities in some cases for priority on the weekend where the competitive aspect is not as strong as it is during the week. 

 

499                       I think that's the point I'm trying to make.  I don't think you want to start reading BBMs, it's not much fun.

 

500                       COMMISSIONER WYLIE:  So you're saying, like CTV said when I raised this, this is our business, not yours.

 

501                       MR. COWIE: I can't believe CTV would say that to you because I certainly never would.

 

502                       COMMISSIONER WYLIE:  You would not.  That's what you're going to have to get used to in Toronto; tough and rude.

 

503                       MR. CRAIG:  Commissioner Wylie, you know, we want the programs that we buy, and particularly the Canadian programs that we buy, and we commission and we purchase to deliver as much audience as we can.  And you've got to fish where the fish are.  If there's no opportunity to crack into a time block in prime time where there's three shows garnering 70 percent share or 80 percent share, it can be futile.  You know, we've seen other broadcasters say, well I'm airing this show on Thursday night.  Yes, but against "Friends", and whatever, so sure it's nice to say --

 

504                       COMMISSIONER WYLIE:  You're learning quickly all these lessons?

 

505                       MR. CRAIG:  We are, from others.

 

506                       COMMISSIONER WYLIE:  You mustn't listen to too many or read too many transcripts of Global.

 

507                       MR. CRAIG:  That's all we do.  That's all we have time to do.

 

508                       COMMISSIONER WYLIE:  You are aware, of course, that the Commission in radio imposed a certain amount of its Canadian content in Category 2 music - I don't think you've sold your radio station so long ago that you don't remember - and said no, you can't have it all on the weekend and at night when no one listens -- not as many people listen to radio because it's a drive time.  And so it's the same concern, really, that has been expressed, as I mentioned before.

 

509                       I have a few more questions on independent production and then the local.  The Chair has questions for you on this area so I'll --

 

510                       THE CHAIRPERSON:  I just have a follow-up, Mr. Craig, and it's kind of a bookmark, more systemic issue.  The dialogue we've just had, many of us who have been around many years have heard many times, fish where the fish are and all that, and the notion of futility and so forth.  The problem we face is that the fish are watching weekdays in prime time, and we, as Canadians, are not tackling that market.  We are, in a sense, relegating ourselves to the fringes by that kind of logic.  We don't feel capable of taking them on in the mid-week and it's a malaise in the system that we face, not just from you, for sure, but everybody in the system.  As long as that attitude remains in force, we are going to be where we are because the logic is impeccable.  Once you get there and you go where there are fewer viewers, less competition and you're likely to get greater numbers for the lower cost Canadian productions. 

 

511                       Somehow, I'm hoping that in the next while we can work our way out of that, and the extent to which regulation can assist in that process is something I'm trying to figure out as I go, but I'd like us to get out of that cycle so that we begin to get the confidence and that will grow with the deliverability to fish in the big pond and to compete for those big audiences that are there in the mid-week  where even a smaller share, obviously, amounts to a larger number of viewers.  But as long as the conclusion keeps being -- we keep getting into the circle we're in, I think we're going to be eternally at the fringe. 

 

512                       I'm hoping that the industry, working with us, can work our way towards solving it.  I mean, one way we can do it is by simply requiring scheduling in those times and saying, do it.  I mean, somehow solve the problem that way.  Or by raising expenditure levels again as an issue and spend money on it or attract viewers.  We don't want to do it in that kind of way.  We don't want to do it in a way that is either unhelpful or ignores economic realities, but at the same time, I think that what I'm hearing and have been hearing for a long time is really a counsel of acquiescence in a situation that is somewhat second-rate and I'd like us to move to first-rate.

 

513                       So I put those, as I say, as a bookmark here because that is going to be a theme that I certainly personally want to follow, and I would enlist the support of yourselves, who are far more expert than I am in the industry, in trying to get there.

 

514                       COMMISSIONER WYLIE: I believe we will be adjourning shortly, but I would like to ask you before --

 

515                       THE CHAIRPERSON:  Excuse me.  You have a comment?

 

516                       MR. CRAIG:  Just to follow-up and I won't take too long.  I think every market is different and every market has its own nuances.  Winnipeg has different problems in terms of scheduling than Alberta has, because we're simulcasting against the Eastern time zones and there's a very narrow window where we, frankly, have to make our money.  But, you know, I think it will be really interesting when we launch in Toronto with "The Toronto Show", ten o'clock every night.  That's a bold move.  I believe when you look at the competition on the dial, with the size of that market and the magnitude of that show and the amount of dollars going into it, it will be interesting to see what we can do.  I'm convinced that that show can find an audience by, as you say, stepping up and making that commitment.

 

517                       THE CHAIRPERSON:  Thank you.  Commissioner Wylie?

 

518                       COMMISSIONER WYLIE:  Before we adjourn, may I ask you, when you come back, to walk us through using your financial statements as filed, because I've been told that Toronto doesn't affect that, how we arrive at having met your condition of licence by 2003 or 2004 in accordance with what you've filed, to walk us, to show us -- you what your annual returns were.  They were lower for the production fund than what you have in your application.  So your annual returns, and to the extent that you can - you don't have to disclose the numbers for historical figures since they're confidential - but to show us at what line one adds up to that amount.  I believe we will adjourn now.

 

519                       THE CHAIRPERSON:  We will adjourn and resume at 2:00 p.m. sharp.  Thank you.

 

--- Upon recessing at 1231 / Suspension à 1231

 

--- Upon resuming at 1400 / Reprise à 1400

 

                  THE SECRETARY:  Vice-Chair Wylie.

 

520                       COMMISSIONER WYLIE:  Welcome back.  Is someone ready to walk us through how we add up to $14 million, including the development money, tell us where it is?   You are, of course, free to tell us what line, what year, without providing details of where you're entitled to confidentiality. 

 

521                       MS. NOTO:  That's me, and I ran over so give me a minute to catch my breath here.

 

522                       COMMISSIONER WYLIE:  Just start when you're ready.

 

523                       MS. NOTO:  Okay.  Do you want me to start to say -- do you want me to start to say what's in the seven-year budget?

 

524                       COMMISSIONER WYLIE:  I think that the discussion we had, the problem, or the discussion -- the desire for clarification should be clear by now.  You had a condition of licence that $14 million would be spent, or put in a fund for the production with Alberta producers of drama, entertainment I believe, and variety programming was the condition of licence and the term of the licence ended in 2003.  We have discussed this morning that your expectation and fashion in which you have presented your projection as also using 2004, but in either case, how can we test that $14 million has been expended?

 

525                       MS. NOTO:  Okay.  Well, I'll work backwards because, first of all, I'll tell you what's in the renewal for 2003 and 2004 and what lines they're on so that you have what's in front of you.  Line 16 --

 

526                       COMMISSIONER WYLIE:  Should I use the CKAL or one of the Alberta stations? 

 

527                       MS. NOTO:  Yes, either.  Either one.

 

528                       COMMISSIONER WYLIE:  Okay. 

 

529                       MS. NOTO:  On line 17 you will see I've combined them, so between the two you would see $3 million for year 2004 for drama fund.  On line 16, you would see $170,000 for development, and in our programming expenses, which won't be as easy to define the line, but in the programming expenses is $253,000.  That's our admin portion. 

 

530                       In 2003, you will see between the two, CKEM and CKAL, you will see $3 million in the drama fund line; you will see $170,000 in line 16, which is script and development; and in programming expenses you will find the admin fees of $243,500.

 

531                       Now, from there we need to go back to the 2001 annual return, which you would have numbers that we have filed that would give our total that we've done year-to-date, and then the balance would be in our budgeted numbers for 2002, which is our existing year. 

 

532                       COMMISSIONER WYLIE:  And your expectations are that the returns for 2002 would be sufficient to get you there?

 

533                       MS. NOTO:  If they aren't, it is because the commitments don't equal the expenses.  So there's always that possibility and we've struggled with that through, that what we commit to and what we can expense will fall over, but we could be assured that whatever didn't show up in 2002 gets added to 2003, and in this case we'll just stop at 2003.  But the total of those lines would equal the $14,070,000. 

 

534                       Now, your 2002 that we filed was an estimate and because we committed and not expensed, there's about $1.4 to $1.6 million that would have to change in that budget.

 

535                       COMMISSIONER WYLIE:  In the projection for 2003, which is Year 1 of your projection, you say line 17 is how many million?

 

536                       MS. NOTO:  There will be one and a half million for each station.

 

537                       COMMISSIONER WYLIE:  Yes.

 

538                       MS. NOTO:  Line 16 will have $85,000 per station, and then the Admin Fund -- or the Admin Expenses for that fund are in our Programming Expenses, in our general programming expenses.  So therefore --

 

539                       COMMISSIONER WYLIE:  And where do I find the development?  You mentioned this morning that --

 

540                       MS. NOTO:  It's that $85 --

 

541                       COMMISSIONER WYLIE:  So then the balance is administration, what you call the expenses?

 

542                       MS. NOTO:  Yes, $243,000. 

 

543                       COMMISSIONER WYLIE:  If we stay on these lines, would it be fair to say then that with Toronto -- without Toronto I see 05-06-07-08-09 having nothing in 17, in line 17?

 

544                       MS. NOTO:  Yes, that's correct.

 

545                       COMMISSIONER WYLIE:  And $85,000 continuing in line 16, Script and Concept Development?

 

546                       MS. NOTO:  That's right.

 

547                       COMMISSIONER WYLIE:  So with Toronto I would add $200,000 a year in line 16?

 

548                       MS. NOTO:  For all four stations though, $85 would be the stations' portion?

 

549                       COMMISSIONER WYLIE:  In the consolidated one there?

 

550                       MS. NOTO:  Right, consolidated.

 

551                       COMMISSIONER WYLIE:  And then in line 17 in the consolidated, I would add $2 million?

 

552                       MS. NOTO:  Correct.

 

553                       COMMISSIONER WYLIE:  Well, you will hear interveners of course saying that but for Toronto, there would be nothing to independent producers despite the 96 --

 

554                       MS. NOTO:  Well, obviously --

 

555                       COMMISSIONER WYLIE:  Yes, I take your point that you're going to have to produce programming.  Yes.  But that's what you'll hear in intervention and you'll have a chance to reply again as to why this is acceptable in the circumstances of the licensing in 1996, which was a competitive process. 

 

556                       That, at least, puts on the record how you arrive at it and will allow us to then see what the administrative expenses are.  We still will have to sort out whether adding 2004 is correct or true to the licensing process when it says "under the licence of this term" to test compliance -- presumably on testing compliance by 2003.

 

557                       MS. STRAIN:  Commissioner Wylie, by 2003 we will have committed --

 

558                       COMMISSIONER WYLIE:  Oh, the calculations you have given me get you there?

 

559                       MS. STRAIN:  Yes, we will have committed that entire amount.

 

560                       COMMISSIONER WYLIE:  And if 2002 doesn't pan out the way you think it will, 2003 will spend more of that?

 

561                       MR. THORGEIRSON:  Correct.  It will be that much higher.

 

562                       COMMISSIONER WYLIE:  Okay.  I apologize, I made a mistake --

 

563                       MR. THORGEIRSON:  Commissioner Wylie, every year we have -- since A-Channel went on the air we've budgeted $2 million.  What actually gets expensed, what we can only expense in any given fiscal year for the auditing process is what actually goes out the door and that changes, fluctuates.  Sometimes it could be more, it could be less.  It depends on which projects, you know, what the deals are.

 

564                       COMMISSIONER WYLIE:  You'll hear interveners about how they get to it from their perspective.  In the Toronto commitment of $10 million, you say it will be $10 million to independent producers with emphasis on Alberta and Manitoba producers.  What is intended by emphasis?  This is the $15 million -- this is the $10 million added to the $15 million committed in Toronto for licence fees and equity with emphasis on Alberta and Manitoba.

 

565                       MS. LEVY:  In fact, in today's presentation I had made it clear that it is for Alberta and Manitoba producers and their co-production partners.  I think it has always been contemplated that we work with the people that we live with, but they often have co-production partners in other provinces and, indeed, in other countries, but the funds and the spending is driven by the relationships that we have with our Alberta, and now Manitoba producers. 

 

566                       COMMISSIONER WYLIE:  Could I conclude from that that none of this money will be expended on projects that does not include an Alberta or Manitoba producer?

 

567                       MS. LEVY:  That is correct.

 

568                       COMMISSIONER WYLIE:  Now, you have emphasized in this application and in Toronto that Toronto is a very important market to you, et cetera, and I think that if one makes a rough calculation of the revenues expected under -- if one consolidates your predictions, including the Toronto station, that it will generate about a third of your revenues.  Would that be fair?  Approximately?

 

569                       MR. THORGEIRSON:  Approximately.

 

570                       COMMISSIONER WYLIE:  How will this affect your approach to production -- the desire, of course to have attractive programming for Toronto viewers?  How may it affect the participation of Manitoba-Alberta producers emphasis -- you say as long as there is a connection. 

 

571                       MR. THORGEIRSON:  Sure.

 

572                       COMMISSIONER WYLIE:  Is there not a danger that the programming will be produced to generate funds in Toronto, and therefore have appeal there and be less Alberta or Manitoba driven? 

 

573                       MR. CRAIG:  Commissioner Wylie, I'd like to start on this and then I defer to Joanne, but we produce programming right now.  Everything that gets produced through the production fund has wide audience appeal.  The concept was to provide licences, national licences to get projects done with the notion that those projects would be sold to other broadcasters.  In every single case we have made a sale to an Ontario broadcaster. 

 

574                       It has taken us some time, but we have sold that programming to them, so they think it's -- they think it's good enough to air nationally.  So I think that what we're talking about here is maintaining that direction to produce only the very best, and I think the projects that we produce in Alberta definitely have appeal in other regions of Canada and in most cases, around the world.

 

575                       COMMISSIONER WYLIE:  Mr. Craig or Ms. Levy, would you be prepared to accept a requirement or a condition of licence that this money only be expended when an Alberta or Manitoba producer is involved?

 

576                       MR. CRAIG:  Are you talking about the $10 million?

 

577                       COMMISSIONER WYLIE:  Mm-hmm.

 

578                       MR. CRAIG:  Yes. 

 

579                       COMMISSIONER WYLIE:  So you would be prepared to --

 

580                       MR. CRAIG:  That's the intent.

 

581                       COMMISSIONER WYLIE:  -- be bound by that.

 

582                       MS. LEVY:  And we have lots of experience with that.  That's how the fund has primarily been driven so far and it has been very successful.  Our Alberta producers, and I know many in Manitoba who I'm looking forward to working with, have lots of experience with some very, very high end production and they can compete with the best in the country.  There's no particular brain trust in any one particular area, and I think the cross-fertilization can produce some really marvellous results.

 

583                       COMMISSIONER WYLIE:  Yes.  I was asking the question because when you take $10 million and you decide what emphasis you will put to spending it -- my husband and I have very different views of what emphasis means.

 

584                       MS. LEVY:  But at the end of the day the household runs.

 

585                       COMMISSIONER WYLIE:  But predominantly an emphasis are sometimes difficult.  So you would be prepared to commit to that by a condition of licence that there would be an involvement especially with --

 

586                       MR. CRAIG:  Yes.  We have no problem with that at all.

 

587                       COMMISSIONER WYLIE:  Have you thought of an allocation as between Alberta or Manitoba? 

 

588                       MR. CRAIG:  I think we want the flexibility to look at this on a project-by-project basis.

 

589                       MS. LEVY:  And, in fact, there could be co-production between two -- between Alberta and Manitoba, so trying to split it up might be counter-productive.

 

590                       COMMISSIONER WYLIE:  Is there a Ms. Levy in Manitoba for Craig Systems?

 

591                       MR. CRAIG:  No, there is not.

 

592                       COMMISSIONER WYLIE:  Would there be one?

 

593                       MR. CRAIG:  If the --

 

594                       COMMISSIONER WYLIE:  You know what I mean? 

 

595                       MR. CRAIG:  I know exactly --

 

596                       COMMISSIONER WYLIE:  I think Ms. Levy is the one who manages --

 

597                       MR. CRAIG:  -- where you're heading.

 

598                       COMMISSIONER WYLIE:  -- this effort and obviously very successfully, and is well recognized by the independent producers in that regard.

 

599                       MR. CRAIG:  Not that we want to spread Joanne too thin, but I think that her duties could extend into Manitoba so that the producers in Manitoba could have access to Joanne.

 

600                       COMMISSIONER WYLIE:  Because whereas the fund before was in Alberta --

 

601                       MR. CRAIG:  That's right.

 

602                       COMMISSIONER WYLIE:  -- promised in 1996, now it's an overall -- for all the stations, so if I were a Manitoban, I'd say where's my piece of it?

 

603                       MS. LEVY:  I'm going to get to know WestJet extremely well.

 

604                       COMMISSIONER WYLIE:  Good.  I only have one more question on project programming and it's about drama credits.  Although you are not -- at least 70 percent for each group, you are committing to the eight hours of priority programming between 7:00 and 11:00.  As you know, we have maintained a 150 percent credit for 10-10 drama and 125 percent for 6-9.  However, you probably understand, or are aware that for the large groups the credits do not have the effect of diminishing the 50 percent requirement in peak time, and I'm wondering what you are proposing in this case.  It had the effect of reducing the eight hours but not the 50 percent.  Do you have a view on what would be the right thing for the Commission to do? 

 

605                       In case you don't mention it, the Commission has spoken about this in the case of CHUM in a recent decision.

 

606                       MS. STRAIN:  Commissioner Wylie, we will get back to you on that.  We're aware of what some of those license conditions are --

 

607                       COMMISSIONER WYLIE:  You realize the difference that if you --

 

608                       MS. STRAIN:  Yes.  Yes.

 

609                       COMMISSIONER WYLIE: -- had drama either 10 or 10-6-9 -- so that for the smaller stations there may be a case that one would want to make about how it should be treated.  So you'll get back to us perhaps to reply --

 

610                       MS. STRAIN:  Yes.

 

611                       COMMISSIONER WYLIE:  -- whenever you have the opportunity.  You'll be speaking to my colleague.

 

612                       MS. STRAIN:  Thanks.

 

613                       COMMISSIONER WYLIE:  I'll now look at local programming.  There is no doubt that you both, in a number of places this morning in your presentation, as well as in your application, you define yourself as a local reflection station.  If I read from the supplementary brief at page 36, you say, and I quote: "We have established our niche as being in the area of local reflection," and there are a number of statements to that effect in this morning's presentation.  At page 7 you say, "Our speciality is local programming."  Also, I'm sure you're not going to disagree with this, at page 2, that you have established yourselves as "the community-minded, intensely local station," et cetera.

 

614                       So if I look at the decision licensing renewal in Alberta, you had conditions of licence that required 17 hours of first-run news or first playing news and 14 and a half hours weekly in categories other than news, for a total of 31 and a half hours.  And in the Appendix 6A to your supplementary brief, I believe, in any event the one that talks about your conditions of licence, you have stated that you have met or exceeded the news but have been short on other reflection.  Instead of 14 and a half hours, you had nine and a half hours on CKM for the first four years of the licence and eight hours on CKAL for the first four years.  Correct, today? 

 

615                       Now, currently, in your licence application, at page 2 of the supplementary brief you say that you're currently actually doing in the current year, I would expect that that was when you filed, in 2001, correct?

 

616                       MR. THORGEIRSON:  That's correct, yes.

 

617                       COMMISSIONER WYLIE:  That you had 22 hours of first-run news and 13 hours of other programming.  It's slightly higher today in your presentation, which would reflect what you're expecting to reach in 2002; correct?

 

618                       MR. THORGEIERSON:  Yes.  We -

 

619                       COMMISSIONER WYLIE:  You say 22 hours of local news, but instead of 13 hours, 14 and a half hours of local non-news programming?

 

620                       MR. THORGEIRSON:  Correct. 

 

621                       COMMISSIONER WYLIE:  Now, can I ask you what this other 14 and a half hours consists of and what the percentage of repeat is for the two Alberta stations, whether you take the 13 hours in 2001 or the 14 hours and a half in 2002?

 

622                       MR. THORGEIRSON:  Commissioner Wylie, currently the 22 hours and 22 minutes of first-run news is five hours of news at "Breakfast".

 

623                       COMMISSIONER WYLIE:  Yes, I did ask for repeat, so the first one would not --

 

624                       MR. THORGEIRSON:  The other general entertainment, human interest categories include another five hours of ""The Big Breakfast"" so an hour of that program per day is news content -- news, weather, traffic, that sort of thing, and interviews, and then another hour of that program is comprised of variety entertainment; bands, that sort of thing.

 

625                       COMMISSIONER WYLIE:  So this would go to make up the 13 hours or the 14 and a half hours?

 

626                       MR. THORGEIRSON:  Correct.  So that's five hours, "Best of "The Big Breakfast"," which is recast in the afternoon with some fresh on-camera segments, et cetera, makes up six hours per week.

 

627                       COMMISSIONER WYLIE:  Five plus one, not five plus six.   

 

628                       MR. THORGEIRSON:  Five plus -- there's one play on Saturday as well.  And then "Wired", which is our nightly entertainment show, is two and a half hours per week, which gives you 11 hours and 15 minutes per week of non-news.  And then "The Sharing Circle" which --

 

629                       COMMISSIONER WYLIE:  My question was particularly of which, it's difficult to  -- do you have a figure as to what the repeats are?

 

630                       MR. THORGEIRSON:  On --

 

631                       COMMISSIONER WYLIE:  How much of ""The Big Breakfast"", et cetera is --

 

632                       MR. THORGEIRSON:  The one hour on Saturday is a repeat of the Friday afternoon show.

 

633                       COMMISSIONER WYLIE:  Okay.  And "Wired" is always one play?

 

634                       MR. THORGEIRSON:  "Wired" is original every night.

 

635                       COMMISSIONER WYLIE:  It's Monday to Friday?

 

636                       MR. THORGEIRSON:  Correct, at 11:30 p.m.

 

637                       COMMISSIONER WYLIE:  At 11:30.  Now --

 

638                       MR. THORGEIRSON:  And then the "The Sharing Circle" makes up another one hour; half-hour of original and half-hour of repeat.

 

639                       COMMISSIONER WYLIE:  Okay.  Now, at CKX, which I realize is different because it's an affiliate, the renewal decision had an expectation of 16 hours and 45 minutes of first playing news, and your condition of licence filing indicates that it was largely met and currently that you're doing 25 hours of local reflection, of which 17.5 hours is first-run news.  And that includes the portion -- that includes the re-broadcasting of CHMI's news?

 

640                       MR. THORGEIRSON:  With CKX, what we did previously was we took the CHMI late news and played it the next morning on CKX, so it was original to that market, plus CKX contributes daily to the CHMI news programs.  What we do now is we run
the ""The Big Breakfast"" through on both CHMI and CKX and CKX personnel do live inserts on that show, and in addition, have constant crawls along the bottom of that program with local school bus information, weather conditions, highway conditions and that sort of thing, news headlines, et cetera.

 

641                       COMMISSIONER WYLIE:  And in that case, of the non -- so it's not quite the same everywhere, and in your supplementary brief at page 24, you say in 2001, I assume, 25 hours of local reflection of which 13 hours is first-run local news.  Is that correct?

 

642                       MR. THORGEIRSON:  That would be -- at that time, that was correct.

 

643                       COMMISSIONER WYLIE:  2001.

 

644                       MR. THORGEIRSON:  That was five hours of "News @ Noon," five hours of "News @ 6", plus news updates that were being done at that time.  "Manitoba Farm Report" would fall into that as other information and "The Sharing Circle".

 

645                       COMMISSIONER WYLIE:  And so currently you would have how many hours of non-news local reflection?

 

646                       MR. THORGEIRSON:  The calculation which we just did last night was five hours, which was the five hours of the "The Big Breakfast", that would be considered non-news, "Great Big Saturday", which is kids' stuff, there's one minute of original and --

 

647                       COMMISSIONER WYLIE:  Yes, those are interstitials --

 

648                       MR. THORGEIRSON:  Yes, et cetera.  So it's the five hours of "The Big Breakfast" and one hour of "Manitoba Farm Report".

 

649                       COMMISSIONER WYLIE:  So "The Big Breakfast" at CHMI is re-broadcast or only the news portion?

 

650                       MR. THORGEIRSON:  I beg your pardon?

 

651                       COMMISSIONER WYLIE:  Is all of CHMI's "The Big Breakfast" also on CKX?

 

652                       MR. THORGEIRSON:  Yes.

 

653                       COMMISSIONER WYLIE:  All of it, not just the news component?

 

654                       MR. THORGEIRSON:  That's correct.  The way --

 

655                       COMMISSIONER WYLIE:  It's a re-broadcast of that program?

 

656                       MR. THORGEIRSON:  It's a simulcast as opposed to a re-broadcast.  It's at the same time.

 

657                       COMMISSIONER WYLIE:  The same time, okay.  At the same hour, same day?

 

658                       MR. THORGEIRSON:  Yes. 

 

659                       COMMISSIONER WYLIE:  Especially if it's news, obviously.  And CHMI then, the decision expected 15 hours and 4 minutes - that was calculated by someone even more difficult than me - first-run news, and again it's largely met.  And currently -- that was 2001, you did 30 hours of local reflection with 17 hours of first-run news.  And now the numbers are slightly different for 2002?

 

660                       MR. THORGEIRSON:  Yes.  This year it's a total of 29 hours 36 minutes per week of local reflection.

 

661                       COMMISSIONER WYLIE:  And the proportion of first-run news is about the same?

 

662                       MR. THORGEIRSON:  Seventeen and a half hours a week of first-run news.

 

663                       COMMISSIONER WYLIE:  Yes.  And at CHMI again, it's mostly ""The Big Breakfast""?

 

664                       MR. THORGEIRSON:  ""The Big Breakfast"", "Best of "The Big Breakfast"" and "Wired".

 

665                       COMMISSIONER WYLIE:  And "Wired" is on CHMI?

 

666                       MR. THORGEIRSON:  At CHMI, "Wired" is considered a portion of the ten o'clock news program.  It's about, I think, Darcy, eight or nine minutes?

 

667                       MS. MODIN:  It's eight to 10 minutes.

 

668                       MR. THORGEIRSON:  Ten minutes of that show, plus there are "Wired actives, updates that come up throughout the evening.

 

669                       COMMISSIONER WYLIE:  Is "Wired" the type of program that could be transformed into entertainment, magazine priority?

 

670                       MR. THORGEIRSON:  It's -- it could be.  It's really a combination of entertainment, magazine and variety right now.

 

671                       COMMISSIONER WYLIE:  Now, the strategy or the promise for the future.  For your Alberta stations at your supplement -- well, first of all, you say you have no intention of reducing it and you repeated that this morning, at 12, "We have no plans to cut back on local programming."  But we have been talking about conditions of licence and expectations and I noticed with great interest in the response to your deficiency question where you said that for you, an expectation is as binding as a condition of licence, albeit you were talking about closed captioning at the time or descriptive programming. But nevertheless, you say you have no intention of reducing, however, your commitment in the application remains the same today.

 

672                         At page 42 of your supplementary brief there's 16 hours of local reflection.  How much of that will be first-run news, which means that you can at any time during your licence term reduce it by half, which is what happened in the first four years of your licence for the non-news programming.  Sometimes it was almost close to half, where you were supposed to do 14 and a half hours in the day.  How much of that 16 hours, if it were reduced to that, would be news? 

 

673                       MS. STRAIN:  Commissioner Wylie, we didn't actually -- we didn't distinguish between the news and non-news when we put the 16 hours in.  It was meant to be total local reflection.  So what you're asking me now what that would be, and I will come back to you unless you want us to do that now, but --

 

674                       COMMISSIONER WYLIE:  Yes, because apparently you're doing -- well, currently I didn't have your presentation, so of course I'm talking about your 2001 numbers, which are not dramatically different.  You are doing 22 hours of first-run news, so if your commitment is 16 hours, it could be all news and you would be --

 

675                       MS. STRAIN:  It probably wouldn't be but --

 

676                       COMMISSIONER WYLIE:  -- meeting your commitment. 

 

677                       MS. STRAIN:  It probably wouldn't be, but we can certainly put some more thought into that and come back to you with that, but the intention was that it would be total local reflection.

 

678                       COMMISSIONER WYLIE:  You see, the Alberta stations, you made some commitments as to what type of station you would have and why you should, in a competitive process, be licensed, so I think it's fair for interveners, and perhaps for us, to question how much you should veer from that, especially when you have in numerous places in your application and this morning in your presentation, considered yourself as having chosen local as a niche. 

 

679                       Now, would you agree that this 16 hours would represent a reduction in local reflection, including news, from what you're currently broadcasting of something like 54 percent - I made these calculations based on 2001 - and 49 percent less than you promised in 1996.  In the case of CKX, it would represent six hours of local reflection - and again it's not broken down - would represent a 76 percent reduction from what you're currently doing and a 60 percent reduction from what you committed at renewal.  In CHMI, it would represent a 67 percent reduction from what you're doing now and a third less than what you committed at licence renewal.  The only explanation for that is that you're going to do quality instead of quantity, and we have no more details than that.  As you just say now, you haven't broken it down in local news and local reflection. 

 

680                       What I'd like you to do is to connect what appears to me to be disconnected, when you talk about being a local broadcaster and we see the possibility of this amount -- of this level of reduction, especially where you were licensed in a competitive process. 

 

681                       MS. STRAIN:  Commissioner Wylie, I'll try and take a run at this.  We have no plans to cut back on our local programming, and I know that in the recent CTV and Global licence decisions that news commitments were set out in the decisions as notations in their licence and I'm prepared --

 

682                       COMMISSIONER WYLIE:  I'll say right away, Ms. Strain, that the Commission looks at what it requires depending on the circumstances.

 

683                       MS. STRAIN:  No.

 

684                       COMMISSIONER WYLIE:  You could take stations that are licensed to Global where there are requirements for local because the circumstances differed from their other stations.  So that's not going to get you very far.

 

685                       MS. STRAIN:  No.  I was just going to say that if you wanted to note in our licence decisions, the amount of news and non-news that we're currently doing, we're happy to live with that.  That's what I was getting at.  That was the first point.

 

686                       What we wanted to do in our application -- and first of all bear in mind that this application was filed in November when Toronto was nothing but a glimmer in our eye and not something that we were counting on in any way, shape or form.  We were approaching this next seven years having four stations, two of which were in markets that are not profitable at the moment, CBC problems with Brandon affiliate -- the problems with CBC affiliation in Brandon, DTH, satellite penetration.  What we wanted to do, because we think it's incumbent on us to try and help you to understand some of the things that are impacting us in our business, so we put those in as absolute minimum commitments that we would live with as conditions of licence, if you were to require that, although I don't think -- I know there are circumstances where you have required conditions of licence.  But what we wanted to say was that under no circumstances, despite all those competitive challenges, would we ever do less than that.  In fact, those numbers are on par with what our competitors have in their licenses.  But today, I can tell you that we have no plans to cut back.

 

687                       Now, the other issue too, the quality versus quantity issue is one that we brought up in Toronto and we still believe that maybe that's an approach that broadcasters need to look at a little bit more.  Sometimes just producing tonnage may not be the best way to go.  Maybe you want to focus a lot of resources in a particular show like we plan to do in Toronto with the Toronto show that we talked about.

 

688                       We have CHUM talking about perhaps coming into this market and that may have a drastic impact on where we re-focus our programming energy.  So I just wanted to outline that, that we're not proposing reductions in our news or our local programming.

 

689                       COMMISSIONER WYLIE:  I have to go by your presentation, by your application, and in your supplementary brief you summarize - I think it's at page 42 - what your commitments are.  I'm mindful of the fact that in a competitive process in 1996, you said 14 and a half hours of non-news, local reflection, and for four years one station did 9.5 instead and the other eight hours.  That was not an expectation, it was a condition of licence, so --

 

690                       MS. STRAIN:  I think it was an expectation.

 

691                       COMMISSIONER WYLIE:  It was a condition of licence.  Well, in case I'm wrong, I'll have a look -- yes, I would hate to mislead.  Just a moment.  I have the application.  I'm reading from the decision now, from the CKEM and CKAL, "It is a condition of licence," -- "expectation".  You're right.  My apologies.  I'm just going back to your deficiency --

 

692                       MS. STRAIN:  Commissioner Wylie, I mean, we --

 

693                       COMMISSIONER WYLIE:  -- that I was reading from the other day that in relation to closed captioning, you say, "We consider an expectation and a condition of licence to be equally binding and will be prepared to abide by the condition were the Commission to require it with respect to closed captioning."  Now, may I ask whether that point of view or perspective is only for closed captioning?  I referred to it earlier. 

 

694                       MS. STRAIN:  No, of course it isn't.

 

695                       COMMISSIONER WYLIE:  I believed you to the extent that I then imported it back into the decision.  So what is it now?  Are you prepared to remain with what you had, and like many other licensees, say, "Well, seven years is a long time."  Do you want a short-term licence?

 

696                       MR. CRAIG:  Commissioner Wylie, if I might.  We've been talking about quality versus quantity, and I should just give you a little bit of context on the shortfall.  We are up-front, we told you that we didn't do it, and basically what happened was, when we came in here and we had our application and we hired the experts to manage this programming and produce these programmings and to garner audience for us the way they saw fit, they said, "You know what?  We think you should make a bigger investment in Canadian programming," and we did. 

 

697                       In fact, if you look at our track record in Alberta over the last four years I think we spent somewhere in the magnitude of $25 million more than we anticipated in the competitive process.  That's why our programs are garnering audience, that's why our programs are winning awards.  So we would hate to get trapped in an old-style volume model.  We know what your concerns are in relation to local reflection.  I think we've considerably stepped up in terms of saying we're going to put priority programming on the air that has local reflection in it.  I think that's a major step up.  And I think that we're prepared to caucus and think about this, about what we're prepared to commit to as an expectation or condition, or whatever you want to impose, to ensure that each station has outside-of-news programming - a significant amount, and a significant and serious commitment to non-news local reflection.

 

698                       COMMISSIONER WYLIE:  Your financial projections were prepared without regard to whether it would be this amount of local programming or a lesser amount.  Because when I looked at your financials and I calculated, for example, 4-01-02-03 and 05 the percentage of expenditures for each category of what appeared to me to be local programming, and they're the same; it's linear.  And similarly, as a percentage of all the expenditures on the programs that are telecast, it's also linear - more or less linear.

 

699                       MR. CRAIG:  Yes.

 

700                       COMMISSIONER WYLIE:  So if you were to reduce it by that amount - presumably the same amount of money would be expended - what would replace the holes in the schedules, and how much better would it show up on the screen that you've spent more money on these areas?  It's largely news and information programming.  What do you mean when you say tonnage and quality?  You'd have holes in your schedules for which you would have to spend money to fill with some type of programming.  You'd have to pay for it somehow or other.  And also how would the programs differ that they would be more quality?  If we were to accept - and the interveners, there's many, as you know have made a different point - if we were to accept a reduction, and it's not clear to me that, for example, we'll have a chance to do that later, but that interveners knew that possibly there would be a 50 percent and even higher reduction in local when their intervention is because you are the local station?

 

701                       MR. THORGEIRSON:  Commissioner Wylie, if I might -- the budget that you have in the renewals are based on the current program schedule and what it costs us to produce all of the hours that we're currently producing, and that remains constant throughout.

 

702                       The reason we came in with a number that we thought was reasonable was if you look at CTV's renewal, their commitment for all of their largest market stations is to provide 15 and a half hours of local reflection programming.  In the context of the system, when we look at that, we think that's the commitment that we should have as well.  In fact, our commitment is a half-hour higher than theirs.  We need to have some flexibility in the event that there are more changes over the next five years, much like the ones that have occurred over the first five years of our licence term.  So we're just asking for some flexibility. 

 

703                       We have no intent to cut back on any of the original programming that we do right now, and that's the way these budgets have been presented to you.

 

704                       COMMISSIONER WYLIE:  So what is the bottom line as to what your commitments are on local?

 

705                       MS. STRAIN:  If you were to put a notation in our licences you could put in the current levels of news that we are doing now.  And what we wanted to say to you today, the reason that we outlined these absolute minimums was that in the event something happened in Brandon, that the Commission wouldn't be caught totally offside, so we were trying to educate you about some of the concerns we have.

 

706                       We were also looking at the TV policy that talks about sort of moving away from quantitative commitments.  So what we're telling you is our program schedules as we have filed them, that is today, sitting here today, that's the level of news and non-news that we expect to continue.  But we certainly -- if you're going to talk conditions of licence, then that obviously has a different legal connotation.  We do  approach everything we do, viewing an expectation and a condition in a similar fashion.  We do.  But we do know that at the end of the day a condition is immutable and not changeable and that the consequences of trying to change it are severe.

 

707                       COMMISSIONER WYLIE:  In a number of sections in your application you state, or discuss, or probably -- the fact that consolidation has encouraged management of these large groups to effect operational efficiencies that have reduced resources at the local station level.  That's not the flexibility you're after, is it?

 

708                       MR. THORGEIRSON:  No, that's not it at all.  In fact --

 

709                       COMMISSIONER WYLIE:  And, Mr. Thorgeirson, if you look at some of the Global stations, they have requirements because of different situations.  And so what we're referring to is the 1996 competitive process, and also that you, yourself, are selling yourself to us, and to interveners, and rightly so, as a niche local programmer, so it's difficult to connect the two both procedurally because of the circumstances under which you were licensed and because of what you want to sell yourself as. 

 

710                       Another aspect of local programming is diversity, and in your supplementary brief at page 36, you talk about, and I quote, "Our brand of local programming goes far beyond simply reporting the news," but when we look at the local programming that you produce, it's not that different from what we usually see.  Can you expand on how your particular brand of local programming, mainly "The Big Breakfast", I guess, goes beyond simply reporting the news, be they entertainment news or real news as we know it, as a term of our --

 

711                       MR. COWIE:  Commissioner Wylie, I'll start with that and then probably Jim Haskins will want to add something.

 

712                       We look at the local aspect as more than just the local programs.  We try and weave it throughout the day parts, whether it be how we do our promotional extension of what we do, programs like the  "The Big Breakfast".  It's not the same as what happens in the other markets.  In the Manitoba market, "The Big Breakfast" is the only long form opportunity for groups, communities, entertainers to be on.  So it's not more of the same.  It is different.  And it's different in the Alberta markets.  We really believe that in creating the BRANT and creating the difference between this station to this station to this station, they have gone with their program strategies, we have gone with our program strategy, but it goes beyond that. 

 

713                       I mean, we take location into consideration as part of the marketing strategy.  We take promotion into consideration as part of the marketing strategy.  We take how we interact with viewers and people that come through the door.  I mean, I'm the rookie GM on the panel, but the most amazing thing that I see on an ongoing basis is when we get back to somebody, they're shocked.  They're absolutely shocked that a television station would take the time to answer their question, to invite them in, to talk about their event, to give them an opportunity.  So when we say that our localism is entwined in the fabric, we mean it, and I'm sure our promotions people will take you through.  I mean, even the reflection of how we do our station ID's - and we have some examples of that - are considerably different than what's done.  These are untraditional non-program program ID's that reflect what's going on in our communities.

 

714                       Jim, if you want to maybe take it from there.

 

715                       MR. HASKINS:  Thanks, Cam.  Commissioner Wylie, we feel that our stations are really like local specialty channels in each of the markets that we serve.  Our mandate - and we take it very seriously - is to reflect the communities in a deeper way than any other broadcaster.  We devote more resources, more energy into providing community reflection than anybody else in the markets that we serve.  We feel that in order to maintain and build a loyal audience base we really have to provide the strongest local reflection on each station and in each market, and that's through our news programming, our non-news programming and through the way that we promote our station.

 

716                       In our news programming area, we have more reporters, more camera crews and provide more local content than any of our competitors.  But really, it's in our non-news programming that I think that we set ourselves apart.  This is an area where we really concentrate on being local.  So whether it's a local community group discussing issues, different cultures celebrating their uniqueness through music or dance, political issues being debated, a local singer getting her first television exposure on "The Big Breakfast",  we cover it all on the "The Big Breakfast" for two hours every weekday morning.  Local arts and culture, that's an area that we explore and we spotlight nightly for a half-hour on our "Wired" program.  And really, our commitment to local is woven through all of our programming and really, virtually everything that we do.

 

717                       I'd like to ask a couple of our news directors in the Edmonton and Winnipeg markets to explain in a little depth what makes our programs like  "The Big Breakfast" truly unique so that we are standing out in a very cluttered TV environment.  I'll start with Chris Duncan, our News Director in Edmonton.

 

718                       MR. DUNCAN:  Well, I guess I'll begin by talking about "The Big Breakfast", which really we feel has given the community a greater voice, and we think the show has made a big difference, particularly in terms of filling a void that I think was created in the last couple of -- well, five-ten years when some of the more traditional broadcasters abandoned the community affairs programs that gave special interest groups and organizations an opportunity to get their message out to the public. 

 

719                       We're very proud of the fact that we're able to offer that voice five days a week, and we've allowed literally thousands of organizations an opportunity to come on our show and make their pitch, whether it's the arts or small businesses or special interest groups.

 

720                       I'll give you some examples. "The Big Breakfast" has been instrumental in helping raise tens of thousands of dollars in our community for various medical causes like "Cops for Cancer".  Mark Schultz and Steven Antle have, on a couple of occasions, shaved their heads to promote that cause and help on a daily basis, just by virtue of the fact that they're appearing on TV with their bald heads, promote that cause.  And that's a terrific indication of their sense of commitment to the community and to these causes.

 

721                       The Alberta Foundation for Diabetes Research, we've raised -- help raise tens of thousands of dollars for that group, and the CNIB.  The list goes on and on.  Mark and Steve got behind the Salvation Army's efforts to raise funds.  Sally and the Doughboys is a very well-known cause in Edmonton.  Mark, Steve and a local announcer from one of the radio stations and a columnist from a local paper participated in, not one, but two marathons, over the past -- I think it was over a three-year period.  They raised over $200,000 by getting corporate sponsors on-board and soliciting funds from the public. 

 

722                       At Christmas time, the "The Big Breakfast" gets behind the Bissell Centre, which is an organization that helps needy families in our community.  We've watched literally tons of food and clothing come into our studio and pile up and then they cart it away and distribute it to the needy at Christmas time.  That's the sort of tangible evidence that we are, in fact, in touch with our community and we're partaking in the efforts and the causes of these special interest groups. 

 

723                       Volunteers.  We recognize volunteers on the "The Big Breakfast" on a regular basis by inviting the audience to nominate people who are unsung heroes, and we bring them in and we talk to them about what they do on a regular basis and then we give them a plaque recognizing their efforts and we feed them breakfast.  We get local restaurants, fine dining establishments, to feed them breakfast, just to say thanks and just to recognize their efforts.

 

724                       In the area of arts, with "The Big Breakfast" and with "Wired", we offer the most comprehensive coverage of entertainment in the city.  We're second to none.  We have three full-time entertainment reporters.  Nobody can make that claim in our coverage area.  Edmonton, of course, has a very vibrant entertainment scene, and we promote it, and we hear time and again from organizations like the French Festival, which is the largest festival of its kind in the world, and the Folk Festival, and the Works, and the Street Performers' Festival, The Citadel, the Art Gallery, the Alberta Ballet, Edmonton Symphony, all of these organizations, we promote what they do and we support them and we cover them.  And we don't just cover the big festival, but with our program "Wired" and with the "The Big Breakfast", it's a daily mandate that we're committed to.

 

725                       COMMISSIONER WYLIE:  You're convincing me anyway.  We should make sure "The Big Breakfast" continues, or some other program.  Now, why is "The Sharing Circle" not identified as a local program?

 

726                       MR. CRAIG:  It is.

 

727                       COMMISSIONER WYLIE:  It is?  It just doesn't have the "L" in the schedule.

 

728                       MR. THORGEIRSON:  Yes, it's identified as local in Calgary, Edmonton and Winnipeg, but not in Brandon.

 

729                       COMMISSIONER WYLIE:  Oh, because on your schedule I don't see the "L" anywhere beside the "The Sharing Circle".  It made me curious.

 

730                       MR. THORGEIRSON:  It used to be strictly a local program.  Now, it's a co-production with an independent producer.

 

731                       COMMISSIONER WYLIE:  With regard to local programming - I don't know if you've had time to notice this level of detail - but local is defined for the purpose of your condition of licence as, and I quote, "Local programming means station production or programming produced by," in this case, Toronto-based, independent producers, "that reflects the particular needs and interests of Toronto residents."  Would that be, if you had either a condition of licence or an expectation holding you to a level of local programming, a definition that would give you more breadth?  Because now we tend to, although it's not written in stone, to think it's produced by the station, and I was wondering if that was why the "The Sharing Circle" was not identified as local on the schedule?

 

732                       MR. THORGEIRSON:  If I might start that, the "The Sharing Circle" used to be identified as a local program.  Lisa Meeches was employed by Craig Broadcast Systems.  She worked there when it originated.  She started with us at CKX-TV in Brandon and then she worked for us at CHMI.  When we got Alberta, Lisa started her production company and we got into a slightly different arrangement.  What we do is we only take credit for 10 minutes of that show in each of Calgary, Edmonton and Winnipeg as being local original. 

 

733                       COMMISSIONER WYLIE:  Is that because it would not fit within the definition that is in your Toronto licence that I just read, that only 10 minutes would be "of reflecting the particular needs and interests of Toronto", "of" in this case, Alberta or Winnipeg residents, or is it because it's not produced in-house?

 

734                       MR. CRAIG:  I think it's a big of a hybrid because with that show, as Al explained, it used to be an in-house production.  Now we have a very unique relationship with Lisa where it's her show.  We provide a licence fee for the show.  We also provide and employ local people that are our people, and stuff that's produced out of our newsroom gets inserted into the show.

 

735                       COMMISSIONER WYLIE:  Perhaps you could also come back to us with whether if there were expectation or conditions of licence, or with regard to local programming this would be a definition that you  would endorse or accept for your Western station?

 

736                       MR. THORGEIRSON:  Yes.  I mean, I've been listening to the discussion, and I agree with you,  there is a disconnect between what we're saying in terms of we want to be local, and then we're saying but the condition of licence should be less.  So there is a disconnect there, and I understand your concern because you want to make sure that we continue to do what I think we do well, and that's do local programming.  So if we could, if we could come back to you with something that we could, a definition --

 

737                       COMMISSIONER WYLIE:  Well, address whether that Toronto definition is more in line with --

 

738                       MR. THORGEIRSON:  Yes.  Why don't we try and come back to you with something.

 

739                       COMMISSIONER WYLIE:  -- the approach, because it does define it, which it hasn't before, and I think has often been seen as if it's produced by us then it's local; if not, it may not be. 

 

740                       You had talked about subsidization in your application at pages 38, I think - 37-38.  There is a suggestion that you're subsidizing Manitoba in  speaking, I believe, one of the benefits of Toronto would be that you would be able to continue this subsidization.  If you were to re-do your financials now, knowing that you have Toronto, would you be more comfortable with the commitments you make -- if you were to re-do your application with regard to local in Western Canada? 

 

741                       You also speak in one part of your application of the various synergies between your stations, and they include in the programming area. Plus, of course, now you'll have synergies in all the other areas that are more obvious like promotion, administration, legal, regulatory, et cetera.  Would one reason for holding you to your local commitments made in 1996 be that you now will have a larger base in line with you, yourself, saying that you process it as between Alberta and Manitoba?  Would that be a reasonable underlying justification for saying you can continue to do as much as you did before? 

 

742                       MS. STRAIN:  Certainly, Toronto breeds new life into what we can do and continue to do in Western Canada.  I think we've already said that we've committed to filing consolidated financial statements, and we do expect there to be synergies in program acquisition and all the things that you mentioned, Commissioner Wylie. 

 

743                       I guess I just want to get on the record here that with the exception of the other local programming in Alberta that we were under on, we have, I think, filed an application in which we have met, or exceeded, every other expectation and condition in Manitoba and Alberta, and in some cases by a wide margin. 

 

744                       So when we talk about -- I guess I'm trying to understand conditions and expectations, and what you're looking for from us in terms of a firm commitment.  We are going to go back and talk about other local programming and giving you a firm commitment on that, but in terms of tying us to conditions of licence on specific hours of local programming across all of our markets, I'm trying to understand the parity with some of the other broadcasters, is all I'm trying to understand.

 

745                       COMMISSIONER WYLIE:  Well, the emphasis I suppose would be more the Alberta stations, because it would be a reason, just like there was a reason for our demanding by a condition of licence local programming from Global in certain markets.  Now, you can, of course, discuss freely whether the fact that that's what you -- that's the basis for your licence in 1996, and you tell us that's still your goal, why that is not reasonable.  You may also want to speak to us about whether there's a level of reduction below which the Commission should not accept on the grounds of wanting flexibility, et cetera.  Because the reduction, when you look at it, is quite large, especially since you filed -- you have increased local in Alberta not decreased, so that the gap between 1996 and what you're actually doing now, and obviously able to do in Alberta at a minimum and do well financially.

 

746                       MR. CRAIG:  Commissioner Wylie, if I can just step in here.  We're not trying to skirt any local programming commitments.  All we said in the renewal was there should be a rock bottom level, and this was written before we had Toronto --

 

747                       COMMISSIONER WYLIE:  I'm suggesting it's below ground now. 

 

748                       MR. CRAIG:  Toronto does give us comfort, and all we're really asking for now is flexibility so that we can perhaps move away from the high volume that we're at and take some of our dollars and put them into higher quality shows.  That's all we're asking for.  And I would suggest that we should think about what that level might be and get back to you.

 

749                       COMMISSIONER WYLIE:  Yes.  Those are my questions, and I thank you very much for your cooperation.  Mr. Chairman.

 

750                       THE CHAIRMAN:  Thank you very much, Commissioner Wylie.  Commissioner McKendry.

 

751                       COMMISSIONER McKENDRY:  I had the question that relates to page 12 of your oral comments this morning.  I'm looking at the second-last bullet at the bottom where you say, "Consolidation and convergence impacts us at every level every day, from acquiring programming to acquiring advertising space in local papers to getting our local stations carried on DTH." 

 

752                       I'm interested in the acquiring advertising space in local papers.  Why can't you get advertising space in local papers? 

 

753                       MR. THORGEIRSON:  It's not necessarily a function of whether you can get the space, it's whether or not you want to buy that space.  The major --

 

754                       COMMISSIONER McKENDRY:  Why don't you want to buy that space?

 

755                       MR. THORGEIRSON:  Well, I mean the local paper in this market and in the Edmonton market is both owned by our largest competitor.  And on the specialty side, as an example, our channels are not listed in those local papers.  Everyone else is, but we are not.  We're referred to in those papers as a local TV station as opposed to A-Channel. 

 

756                       COMMISSIONER McKENDRY:  The reference to "A" means the A-Channel?

 

757                       MR. THORGEIRSON:  Somehow I don't think so.

 

758                       COMMISSIONER McKENDRY:  So it isn't the case that you couldn't buy space in these papers?  You could buy space in these papers if you wanted to buy space in these papers; is that correct?

 

759                       MR. CRAIG:  That's right.  I guess the point being that it seems to be the domain of our competitor, and as Al indicated, we find it frustrating that we can't even get our channel listings from our digital channels in any of the CanWest papers, but they certainly have their own listings in there and they say, "Well, sorry, we're out of room."  That's the only explanation that we've had. 

 

760                       COMMISSIONER McKENDRY:  So your position is you don't want to give them your business under the circumstances?

 

761                       COMMISSIONER McKENDRY:  Yes.  And in terms of the material content, in terms of how they treat their own services versus how they treat ours, it's - you know, I don't think we've had a pick of the night in the Calgary Herald since CanWest bought that paper.

 

762                       Last weekend, the whole column on Friday night was all about the 10-hour bonanza marathon that was on prime.  That was the only thing worth watching according to their critic in the Calgary Herald.  So it's just something we don't have access to. 

 

763                       MR. HASKINS:  Commissioner McKendry, if I could just add one thing.  We have had occasions where we have tried to buy advertising space in one of the papers that is owned by a competitor, and the prime space that we wanted was already spoken for by a company associated with that competitor.

 

764                       And just to touch on something that Drew just mentioned, we have seen a distinct change in the editorial slant and the amount of coverage that our competitors are getting in the paper since CanWest did take over a couple of the papers.  To give you an example, when two years ago a simple picture would have been of a politician in some kind of a scrum situation, now the picture will be expanded to include a picture of a local reporter who happens to be working for that same parent company and they'll get a caption like it was the only reporter on the scene.  And that gets tough to compete with, too. 

 

765                       COMMISSIONER McKENDRY:  From the point of view of your business, how serious a problem is this? 

 

766                       MR. CRAIG:  I think it's more sort of a nagging problem that we have in terms of getting access to -- it's an irritation, really, that we have in terms of getting, we think, treated fairly by their editorial staff and getting fair treatment in terms of buying space.  For instance, September 11th, there was a picture in the paper -- when the events of September 11th unfolded, we put some television sets outside our facility over here on 7th Avenue and there was 50 or 60 people crowded around - obviously our station - and the caption read "People gather around a local television station in downtown Calgary."  It's that sort of level of irritation that kind of -- tends to bother us.

 

767                       MR. THORGEIRSON:  And the picture was cropped such that you couldn't see our sign, which is 20 feet high on the front of the building. 

 

768                       COMMISSIONER McKENDRY:  And just in terms of listings, the listings are -- or the lack of listings with respect to your speciality services --

 

769                       MR. CRAIG:  It's our digital specialty --

 

770                       COMMISSIONER McKENDRY:  -- station you're considering here.

 

771                       MR. CRAIG:  Yes.  It's our digital speciality channels.  None of our digital specialty channels have appeared, in terms of listings, since we launched. 

 

772                       COMMISSIONER McKENDRY:  Mr. Chair, those are my questions with respect to the area that Madam Wylie was questioning about.

 

773                       THE CHAIRMAN:  Perhaps you could proceed to your next area. 

 

774                       COMMISSIONER McKENDRY:  Thank you.  I'm going to talk to you about the areas of the Broadcasting Act that says the system should reflect the multicultural and multiracial nature of Canadian society and the special place of aboriginal people within our society, and the section that says the programming accessible by disabled persons should be provided within the Canadian broadcasting system as resources become available for the purpose.

 

775                       I wanted to start off by finding out how you gather information about the multicultural and multiracial nature of the cities that you operate in.  How do you identify what groups are in these communities and so on?

 

776                       MR. CRAIG:  First of all, before I start, I should go on record as saying that we very much believe in cultural diversity.  It's something we do.  It's something we strongly believe in, and it's something that we have, I think, a vested interest in as a broadcaster.  Reflecting our community is good for building audiences.  We've instituted a number of initiatives and programs, and I'll let Al talk about those specifically. 

 

777                       COMMISSIONER McKENDRY:  Just before you start, at this stage, rather than the programs, I'm more interested at this point, and I want to come to the programs and how you gain insight into the ethnic origin of the people that are in the cities that you serve so that you can get some handle on what the nature of the kinds of services you should be providing.

 

778                       MR. THORGEIRSON:  Commissioner McKendry, there's a number of ways that we do that.  One is through research.  Last year we conducted a number of focus groups in each of our markets, but really it all starts with who you hire and how you do your hiring for your staff.  I mean, if you want to know how diverse we are, all you need to do is watch an A-Channel station.

 

779                       We are considered the most diverse culturally in each of our markets that we serve, so much so that another connection we have in this particular market is that we have representatives on the Canada Immigration Commission, Calgary Network Community Committee, which is made up of people from the Multicultural Centre, the University, the City, a number of different areas, and that group meets quarterly and talks about immigration issues, the new Canadians who are coming to this market, what the make-up of the market is, what the make-up of Calgary is.  Recently, we were asked to participate in Diversity Calgary, which is another group that's holding its first planning session at the end of May, and it was spawned from a cultural diversity task force that was set up within the City of Calgary. 

 

780                       Each of our managers and general managers and staff employees in each of our markets, we encourage all of them to be involved in community groups, to be connected to the multicultural communities.  In addition, we do a number of other things.  I don't want to get into programs, I guess, at this point, but basically the nuts and bolts start with who you hire. 

 

781                       COMMISSIONER McKENDRY:  I guess somebody might say -- or perhaps it's a naïve question but how do you know who to hire?  What do you -- when you look out at the community and try ensure that you are hiring people representative of the community, how do you know who you're hiring in fact is representative?

 

782                       MR. THORGEIRSON:  That goes back to the research, and maybe I could get Debra McLaughlin just to talk a bit about when we do focus groups, how those focus groups are made up.

 

783                       MS. McLAUGHLIN:  On behalf of Craig Broadcast Systems, we did some focus groups in all of their markets last year and we used the standard process of randomly selecting the participants.  As a result of that, you had a fairly good distribution of the population.  We had representation from all of the key groups essentially showing up. 

 

784                       Fortunately, we didn't even have to design it that way.  It often works out that way, and within the course of examining what they required in terms of news and information programming, some of their needs came out.  There was a general expression of satisfaction overall with all of the A-Channels in these markets in terms of how they represent themselves, the communities, and how the information that is expressed about their community is presented back to the general market.

 

785                       So in terms of a measure of how well it's doing, it would suggest that the hiring, the decisions that have been made putting the people in place who connect into the community have been successful thus far. 

 

786                       COMMISSIONER McKENDRY:  Thanks.  On page 5 of the -- it's actually Appendix 7.2 of the Addendum, and on page 5 it says: "Craig has completed a plan of action to ensure designated group of employees are representative of the community they serve." 

 

787                       When I go over to the next page, down near the bottom, it says:  "Craig will continue to assess the current representation of designated group members through semi-annual analysis and establish goals to ensure designated group representation reflects the community."  So you have a plan and you assess how well you're doing semi-annually.

 

788                       With respect to the semi-annual analysis and the reference to establishing goals, how do you set the goals? 

 

789                       MR. THORGEIRSON:  I'm going to pass this to Linda Noto.  This particular plan that is in the renewal came from our Employment Equity Plan of Action, which was done for Manitoba last year and was filed with the Human Rights Commission in September.  Linda Noto is in charge of the Employment Equity aspect, which is the beginnings of, and the diversity plan becomes the offshoot of that. 

 

790                       MS. NOTO:  Well, for Manitoba, in our Craig Broadcast Systems Inc., we, first of all, you have to run the number-crunching, you have to look at who you have and establish what representation you have in your employment compared to the availability in your market.  If you don't start there, you don't know where you're lacking or where else you can expand.  So we did that. 

 

791                       From there, we developed the Employment Equity Plan.  We did things like getting an Employment Equity Committee involved, and that represents management, and employees, and people from the designated groups to assist us in going forward and making a very intense plan on not only how to start the process and how to make a posting for the bulletin board, but to go extremely further than that; something that is kept up all the time.  There's feedback coming from the committee. 

 

792                       We haven't gotten into it much, but our communities are so strongly linked to our stations that we have that communication and that representation.  I call it communication because these people are with us in our "The Big Breakfast" and in a lot of our newscasts all the time.  So the feedback comes from there as well.  But once we've established where we are, we set the goals as ways of improving.  And it doesn't matter how good you are at something, for example, our representation numbers for visible minority are very great for our on-air.  They're also very good for our overall staff. 

 

793                       Having said that, that does more than just provide an on-air vision.  It provides that reflective workforce and people working together and being equals and seeing each other the same.  We take that Employment Equity Committee, we take what they have to say and we take it to the staff.  We educate them on proper hiring practices to make sure there's no discrimination.  It just kind of goes on and on, and it takes us so that we're bound to look at it all the time.  But I think, having said that, what we do on a daily basis so complements that in our relations with the community, being so local and so involved. 

 

794                       COMMISSIONER McKENDRY:  You referred to the links to the community and that they're very strong.

 

795                       MS. NOTO:  Sorry?

 

796                       COMMISSIONER McKENDRY:  You referred to the links to the community and you said they're very strong between your stations and the community.  What are the links? 

 

797                       MS. NOTO:  Well, I'll turn this to Jim and he can take it to his news directors and to his "The Big Breakfast" and promotions because they're the ones that have that contact. 

 

798                       MR. HASKINS:  Thanks, Linda.  Once again, just to echo what Al had said earlier and I'm talking specifically about the programming area, it really does start with who we hire and we deal with the research that Debra talked about.  We're very conscious of the necessity to truly reflect the communities that we serve in order for us to be a successful local station.  We have to do that. 

 

799                       I take great pride in what we've accomplished in Alberta, in particular in the last four and a half years as far as cultural diversity within our work place and multiculturalism coverage. 

 

800                       I would like to ask our news directors now to comment on this aspect and how it affects their day-to-day jobs.  We'll start with Darcy Modin in Winnipeg.

 

801                       MS. MODIN:  In Manitoba, specifically, we do outreach and that means that on a weekly basis through the "The Big Breakfast" and the newscast, we contact different cultural organizations that we've created relationships with and check up on them and find out how we're doing with our response in the community, and a lot of times, what more can be done. 

 

802                       It's through the "The Big Breakfast", through long form, as well as continuous updates with them, that we find out how we are dealing specifically with different groups in the community.

 

803                       Another thing that has been very beneficial to us is our relationship with the "The Sharing Circle".  In Manitoba alone, with such a large First Nations community, our station actually gets access to certain aboriginal events that others don't, because we've built such a strong relationship with that community.  Lisa Meeches, as well, may want to talk about what she has done to help us become comfortable and promote that community as well.

 

804                       MS. MEECHES:  Thanks, Darcy.  One of the initiatives that we've taken on, and myself as an independent, providing this type of information for Craig, are sessions on "anything you've wanted to know about aboriginal people and were afraid to ask" in all of the Craig newsrooms.  That has become so important to us in our strategies and how we hire aboriginal people.  As we know, aboriginal peoples are Canada's number one natural resource still yet untapped, and for that, we need to keep in mind that with the recent findings of the Canada West Foundation, what they're telling us to this day is that aboriginal people are the most researched and still the most misunderstood. 

 

805                       One of the scenarios, for example, in dealing with some of these numbers happened when we were looking at 2007, I believe, Drew, and what we found out was that by 2007 every fourth person you see in the workforce will be aboriginal.  Taking those numbers into consideration, we felt the need that we would have to adjust the aboriginal on-air and behind the scenes people. 

 

806                       MR. HASKINS:  Chris Duncan is our News Director in Edmonton and Chris has some examples of how connected we are to the community in this area and how it has affected the Edmonton newsroom.

 

807                       MR. DUNCAN:  I have no compunction in saying that we're light years ahead of our competition in this area.  We have had visible minorities on the air from the get-go - not one, not two, but three or four over any given time.  We've really benefited as a newsroom from having multicultural groups represented in our workforce, both in front of the camera and behind the camera because it truly is a link to those communities. 

 

808                       In the area of hard news, when we had some gang violence in the Sikh community, our South Asian reporter, Min Dhariwal led the way in the coverage.  He was the only reporter who was allowed into the family of a victim's home to get exclusive interviews.  Then when he came out of the home, he ended up translating for some of the local reporters who were on the scene.

 

809                       I'd like to pick up on something that Lisa was saying earlier when she was describing the relationship between the "The Sharing Circle" and our aboriginal reporter in the newsroom.  They are a tremendous resource, and not only do they go out and cover stories that involve the aboriginal community but they go out and just cover day-to-day stories.  They're also general assignment reporters and that's important to note.  They don't just go to the Hobbema Reserve, they go out and they do a story on the hot real estate market, that type of thing.  But they do bring to light some really important issues.  A recent example of that was when Marie Burke uncovered the fact that there was an alarming increase in suicides among Native teenage girls on the Hobbema Reserve.  Nobody else reported that story but us.  There's a tangible benefit to having representation from the multicultural community on your staff.  We gain.  We are ahead of the competition in that regard.

 

810                       There is a flow that happens because we were talking about the "The Big Breakfast" and how the various organizations and communities go first to the "The Big Breakfast", because they know that they can get their message out.  Just to name a few - and it's not just an event that's happening - it might be a group, a dance group, that type of thing, and they will come on the show and, of course, then that highlights the culture: The Afro-Caribbean Dance Ensemble, Shilo Baptist Church, National Black Coalition - Edmonton Chapter, Chinese Christian Community, Chinese Community Foundation, the Canadian Native Friendship Centre, Metis Nation of Alberta.  All of those groups regularly appear on the "The Big Breakfast".  So they come on, we meet them, we get to know them, and sure, they may talk about whatever event is coming up this weekend but we make a connection.  We say, "Well, what else is going on in your community?  Here's our card and will you call us if there's anything happening?"  Those are contacts that are invaluable to a newsroom, and we make use of it.

 

811                       MS. McLAUGHLIN:  Excuse me, if I could just add something to that and it has to do with the research and the findings.  One of the questions that was asked earlier was, what distinguishes this approach as being local.  And it is this very representation in all of the communities, because when we did the research we were told that a lot of the broadcasters did a very good job representing the city.  The A-Channels did a good job of getting into the neighbourhoods, and if they needed to know what was happening down the street or around the corner in a particular group and a particular organization, this would be the first place they would go.  It's because of these connections that there is a distinction in their local programming. 

 

812                       COMMISSIONER McKENDRY:  Thanks very much.  I wanted to ask you a question about a table on page 25 of the addendum with respect to on-air presence.  I don't know whether or not you want to turn to the table, but it shows on-air personnel year-to-year comparison.  In particular, I wanted to ask you a question about Manitoba and the year 2000. 

 

813                       What the table shows is that in Manitoba for the year 2000, the number of aboriginal persons and persons with disabilities had declined from previous years to nil.  I'm wondering if that's still the situation, and if it is, what is the explanation for the decline if that's still the situation?

 

814                       MS. NOTO:  Well, it is one area in Manitoba that we are very challenged, certainly not by our effort.  It's certainly not by our visual presence with the "The Sharing Circle" staff, but we are in a city that also is the city for the aboriginal channel  --

 

815                       MR. THORGEIRSON:  Aboriginal People's Television Network is based in Winnipeg and operates out of Winnipeg, so we're challenged in attracting Aboriginal employees to our facilities because the Aboriginal People's Television Network is where they aspire to be. 

 

816                       MS. NOTO:  So the people coming out of the broadcasting school, though we try really hard to have them come to the A-Channel building, we don't necessarily succeed.

 

817                       COMMISSIONER McKENDRY:  What about the persons with disabilities?

 

818                       MR. CHAIRMAN:  Commissioner, I think Ms. Meeches had something in reply.

 

819                       MS. MEECHES:  Yes, I just wanted to make mention on something.  A lot of our former reporters for "The Sharing Circle" are now holding key positions at the APTN, so I would like to take credit for training them. 

 

820                       COMMISSIONER McKENDRY:  So in a sense it would be a positive development, what's happened in Winnipeg.

 

821                       MS. MEECHES:  They do go through our doors, they just don't stay long.

 

822                       MR. CRAIG:  Yes, that's right.  I mean, we have played a role, as Lisa said.  I mean, there's probably more aboriginal people working in television in Winnipeg than any other place in Canada.

 

823                       COMMISSIONER McKENDRY:  What about the persons with disabilities?  One, is that situation still the same, and if so, why has there been a decline there?

 

824                       MS. NOTO:  It's not so much a decline is it changes from year to year in reality, when we look at the numbers and it's probably the one area in our Employment Equity Plan that we put the most -- not the most effort, but an extra effort to understand why the numbers are low and to see what we can do to improve it. 

 

825                       One of the things we did was educate the staff as to what that definition was.  There was a lot -- we've been doing employment equity in Manitoba for the 10 years that I've been there and a lot of it was misunderstanding or lack of education for people in understanding why that form that they got when they got hired was so important.  So we have reassessed, we've re-self-identified, got everybody to fill out the forms so that they give a true reflection, and we should see some -- from what I've heard from people, some more positive results.  They didn't realize, they just said no, no, no and turned it in like they did their benefits and everything else.  They didn't understand the importance of it, so a lot of that was education.

 

826                       That's a trend right through.  I read the annual report from Employment Equity, and their report came out recently with the 2000 numbers and you find the same thing in general in areas that -- employment, though they may be able to get employment started, long-term employment doesn't seem to be easily attained in the disabled area.  So it's an area we know that changes from year to year.  It's not for any specific reason, but it kind of flows with the challenges all the way across.

 

827                       MS. MODIN:  Commissioner McKendry, if I can just add to the aboriginal issue.  We may have a challenge attracting experienced aboriginal broadcasters, but at A-Channel at all the stations we truly believe in grow-your-own-talent and we actively seek out and employ people of different minority persuasions that may not be on the air, but we look at them to the future and we do training with them in-house.  So at this point they may be writers, or PA's, or camera people, and in the future they could be on the air and that is something that we do.

 

828                       COMMISSIONER McKENDRY:  Would that comment also apply to persons with disabilities?  Would there be people with disabilities behind the camera as well that potentially could move up to in front of the camera?

 

829                       MS. NOTO:  Well, I can take that report I was talking about and I can compare my total staff in Manitoba and my total staff in Alberta, and for disabled the national rate is 1.7 percent.  In Manitoba, we have 3.6 percent and in Alberta we have 3.5 percent, so total representation of our staff exceeds that national number. 

 

830                       On air, it's more of -- we haven't been able to convince them to be on air. 

 

831                       COMMISSIONER McKENDRY:  But I take it that it's something that you're aware of and you would like to develop opportunities in this area.  Is that a fair assessment of what you've told us?

 

832                       MS. NOTO:  Yes, you bet.  That's why we have the committee and the communication back and forth.  No one is perfect in every area, and when you find where you're weak, you do what you can to strengthen that.

 

833                       MR. COWIE:  If I could just add. We've just gone through this in Manitoba, and because it's a confidential scenario the only way we find out about it, if it's missing -- we know that there's people on our staff that either didn't fill out the form or are reluctant to put some type of handicap on, and it only comes to light if the question is brought up.  So I've just gone through the process with Linda and one of the staff members who wasn't sure that didn't fill in the form, but really should have filled in the form and now has since filled in the form.  But there's a number of those things.  I think there's a reluctance to say, you know, to either put it in or to check off the box.  Because it's a confidential scenario, we can't go to each one of them and say, are you this, this, this, and so that's a difficulty from the administration point of view.

 

834                       COMMISSIONER McKENDRY:  I'd like to now ask you a couple of questions that relate to Appendix 7.2, which is the specified initiatives to improve on-air representation.  I'm looking at the first page of the appendix.  The second full paragraph, you discuss Craig's commitment to diversity and so on. Then you say, "All employees, contractors, advertisers and suppliers are encouraged and expected to adhere to this commitment."  With respect to the advertisers, how do you do that? 

 

835                       MR. COWIE:  I'm not sure I understand the question.

 

836                       COMMISSIONER McKENDRY:  As I read this, it says advertisers are expected to adhere to the same commitment that Craig has to diversity.

 

837                       MR. COWIE:  Oh, okay.

 

838                       COMMISSIONER McKENDRY:  And my question is how do you make sure that the advertisers are doing that? 

 

839                       MR. COWIE:  We do it in two ways.  The first way is on the national and regional side, is we make sure the commercials are going through the telecaster system, which is our self-governing body.  They are responsible to make sure that these things are taken into consideration.  When we do our own, if we're producing local, we're trying to reflect the diversity of the community, examples of how we do our on-air promotions, we're also making sure that our own promotion promoting the station reflects the diversity of the market. 

 

840                       COMMISSIONER McKENDRY:  Have you had a situation where an advertiser wasn't doing what you thought they should do in this area? 

 

841                       MR. COWIE:  Well, you only see them once a year at the television bureau conference and telecaster brings the reel of all the commercials that were not given telecaster numbers.  That's about the only time we get to see the --

 

842                       MR. CRAIG:  But the bottom line is if they don't adhere to your policy, you always have the option of not running the creative, and that has happened from time to time. 

 

843                       COMMISSIONER McKENDRY:  At the bottom of the same page of Craig there's a statement that "Craig is committed to ensure this programming reflects a balanced presentation of different points of view and cultures."  I had a question about whether or not you monitored this, and perhaps its answered, and I just want to clarify this, perhaps its answered on the next page because in the last bulletin near the middle of the page, it says "Ensure that all employees, contractors, advertisers and suppliers are aware of the commitment to cultural diversity in the expectation that Craig will monitor programming and advertising to apply this commitment consistently." 

 

844                       The question is, or I want to confirm that you are monitoring the programming to ensure that it reflects your commitment, I take it?

 

845                       MR. CRAIG:  Yes, we are.

 

846                       COMMISSIONER McKENDRY:  And what guidelines are you using?  Just tell me a little bit how you monitor the programming, the guidelines that you're using in the monitoring program. 

 

847                       MR. COWIE:  I can touch on the paid-for side and then maybe someone else can talk about the acquired.  Any of the paid-for, whether it be short form or long form, with or without Canadian C-number, infomercial solicitation is, before those go to air, they're reviewed by our program department to make sure.  So any submissions that we put out to advertisers or potential paid program would reflect that in the information of the quote.  It says, "Subject to availability and program content approval by our program department." 

 

848                       MR. THORGEIRSON:  Generally, every program that comes into each station is reviewed by, in Calgary in particular, the VTR staff, the edit staff, and as the programs come in, unless they're a live program that is going live to air, anything that they may notice is brought to the attention of the programming department and it's reviewed and decisions are made in that regard.

 

849                       COMMISSIONER McKENDRY:  You're monitoring, and I presume the monitoring is taking place in an organized fashion.  Would Craig have, or would Craig be willing to submit to the Commission a corporate cultural diversity plan?

 

850                       MR. CRAIG:  Yes, we would.

 

851                       MR. THORGEIRSON:  Yes.  Stereo.

 

852                       COMMISSIONER McKENDRY:  It's a good thing you both said yes. 

 

853                       MR. THORGEIRSON:  You might get two.

 

854                       COMMISSIONER McKENDRY:  And would you be prepared to submit that within three months to the Commission?

 

855                       MR. CRAIG:  Yes.

 

856                       COMMISSIONER McKENDRY:  Thanks very much.  I wanted to ask you a little bit about -- well, just on the corporate diversity plan, is there a senior executive that's responsible?  Is there one single person that's responsible at a senior level for the plan? 

 

857                       MR. CRAIG:  Ultimately, I'm responsible for the plan.

 

858                       COMMISSIONER McKENDRY:  The other thing I wanted to ask you about in this area was the CAB industry community task force.  I've taken a look at the CAB February 15th report to the Commission that was called "Representation of Cultural Diversity in Television: Creation of an Industry Community Task Force".  Are you familiar with that report? 

 

859                       MS. STRAIN:  Yes.  I sit on the task force and we're familiar with this process.

 

860                       COMMISSIONER McKENDRY:  That was really a question I had -- I looked in Appendix A to the report and I take it that it's being -- this report is being developed or supervised by the CAB Joint Societal Issues Committee and the list here, Craig isn't a member of that committee and that was the question I had for you.  Why not?

 

861                       MS. STRAIN:  That's news to me, so I'll check into that.  I'm on the television board -- so I may, I can't even recall how many ways I get this information.

 

862                       COMMISSIONER McKENDRY:  Yes.  It says here you're a member of Craig, and you in particular are a member of the television board, but I took it that reading this that the work is being supervised by the Joint Societal Issues Committee and Craig is not a member of that?

 

863                       MS. STRAIN:  That may be, but I've certainly been part of the calls and on the e-mails and that --

 

864                       COMMISSIONER McKENDRY:  Maybe your competitor's printing company produced that.

 

865                       MS. STRAIN:  I hadn't thought of that. 

 

866                       COMMISSIONER McKENDRY:  In any event, I suppose the heart of my question was Craig is -- is Craig willing to participate fully in this exercise and are you prepared to commit financial resources as part of this exercise?

 

867                       MR. CRAIG:  Yes.  Jennifer actually is involved, and yes, we are prepared to commit financial resources. 

 

868                       COMMISSIONER McKENDRY:  I was going to move on after this to describe video, Mr. Chair, so perhaps we could take the break.

 

869                       THE CHAIRMAN:  This might be a good time for a break.  We'll resume at four o'clock sharp.  Thanks.

 

--- Upon recessing at 1545 / Suspension à 1545

 

--- Upon resuming at 1600 / Reprise à 1600

 

870                        THE CHAIRPERSON:  Order, please, Alors, s'il vous plait.  Commissioner McKendry?

 

871                       COMMISSIONER McKENDRY:  Thank you, Mr. Chair.  I now have some questions about described video.  I just wanted to make sure that I understood what would need to be done to upgrade your facilities to be able to offer that.  On your response to the question of January 16th letter to the Commission, question 7 that dealt with descriptive video, you say, "We have determined that the costs of upgrading our facilities in Alberta would be manageable given that our plants there are relatively new and are all digital."  And then on page 17 of the addendum, it says the CKAL and CKEM studio facilities are capable of storing and playing to air the descriptive video service programming.

 

872                       I guess I took it from the first quote that there wouldn't be much cost and then I'm just wondering, with the second sentence I've read, is there a cost, because I guess it doesn't include the transmitter and antenna and so on.  So could you just clarify for me the Alberta situation with respect to what the costs would be?

 

873                       MS. STRAIN:  Yes, Commissioner McKendry, I'll start and then I'll have Paul East talk about the costs, the technical costs.  Just to update you, we did file a response to an intervention from NBRS and I don't know if you have that.

 

874                       COMMISSIONER McKENDRY:  Yes, I do.  And those are --

 

875                       MS. STRAIN:  Oh, you do.  Okay, and that was March 27th.

 

876                       COMMISSIONER McKENDRY:  Yes, if those are the numbers, that's fine.  We don't need to go any further with it.

 

877                       MS. STRAIN:  Those were the clarification.  Okay.  So now I'll ask Paul to just walk you through the numbers and any upgrades.

 

878                       MR. EAST:  We can certainly go through those numbers. 

 

879                       COMMISSIONER McKENDRY:  Actually, I don't think it's necessary.  I just wanted to confirm what, in fact, were the numbers, and I did read the response to the NBRS, and if that's the situation because I think you added some numbers in that response that weren't here.  That's fine. 

 

880                       Now, going back again to the response to question 7 in the January 16th letter, you say that you have had discussions with NBRS with respect to the cost of actually doing descriptive video and you understand the cost to be approximately $2,400 per program hour.  Have you had discussions with any other suppliers of descriptive video services?

 

881                       MR. THORGEIRSON:  No, we have not.

 

882                       COMMISSIONER McKENDRY:  Why not?

 

883                       MR. THORGEIRSON:  Frankly, we weren't aware of any others. 

 

884                       COMMISSIONER McKENDRY:  Well, certainly there's at least one in the United States and I understand there's another one here in Canada as well.  At least that's my understanding.

 

885                       MR. THORGEIRSON:  Yes, I believe that the other one in Canada, we haven't yet made contact with.  We just learned of that other one.  In fact, I believe it was in a call with Mr. Trimbe.

 

886                       COMMISSIONER McKENDRY:  And I think there has been, it's my understanding, a PBS station that has specialized in descriptive video in the United States for quite some time now that provides those services as well?

 

887                       MR. THORGEIRSON:  We weren't aware of that. 

 

888                       COMMISSIONER McKENDRY:  So given that you've only made one inquiry with respect to what it would cost, would you agree that it's possible it could cost less?

 

889                       MR. THORGEIRSON:  Yes. 

 

890                       MR. CRAIG:  From what NBRS has told us, they say the cost is dropping.  In discussions we've had with them, they're saying that's what the cost is today.  They expect the cost to go down in the course of time. 

 

891                       COMMISSIONER McKENDRY:  Will you be exploring with other potential suppliers to ensure that you are getting -- I guess what started my question, if you have a budget available for descriptive video, it may be through a competitive process you could get more done for the same amount.  Do you intend to examine that possibility?

 

892                       MR. CRAIG:  Yes. 

 

893                       COMMISSIONER McKENDRY:  Again, with respect to question 8, again with descriptive video, in the same letter you say that you currently sub-licence priority programs from the large station groups.  Will you pass through any descriptive video -- I guess the first step is you have to upgrade your facilities.  Once you've upgraded your facilities, will you pass through any descriptive video that you receive?

 

894                       MR. CRAIG:  Yes, we would. 

 

895                       COMMISSIONER McKENDRY:  Would that include descriptive video for programs in the United States as well, American programming?

 

896                       MR. CRAIG:  Yes.

 

897                       COMMISSIONER McKENDRY:  And are you aware that effective April 1st, the Federal Communications Commission has introduced regulations with respect to imposing, by regulation requirements, for descriptive video on American broadcasters?

 

898                       MR. CRAIG:  Yes. 

 

899                       COMMISSIONER McKENDRY:  Will you have to pay more for program rights because descriptive video is available, or is that something that will not affect the price of program rights?

 

900                       MR. CRAIG:  It's uncertain at this point.  It's new legislation, new regulation in the U.S. and we're not actually sure what the implication will be in terms of cost.  Typically, if it follows the line of closed captioning, there won't be an incremental cost.  Most of the programs that we buy from foreign suppliers come to us captioned, because it's one of the deliverable items that we require.  So if it follows the same pattern, it's likely that those programs will come to us with described video. 

 

901                       COMMISSIONER McKENDRY:  Now that I have the document, the American station I was referring to, it's the media access group at WGBH who do provide descriptive video services and they're doing all the descriptive video for FOX, for example, in the United States, so that was the American source that I had in mind when --

 

902                       MR. CRAIG:  We appreciate that.  We will certainly --

 

903                       COMMISSIONER McKENDRY:  -- I asked that question.

 

904                       MR. CRAIG:  We'll definitely explore that.

 

905                       COMMISSIONER McKENDRY:  In terms of broadcasting the descriptive video service to viewers in their homes, the technical upgrade that you have to make is what, to allow you to use the SAP channel on television sets, is that what has to be done?

 

906                       MR. CRAIG:  Maybe I'll ask Paul to --

 

907                       MR. EAST:  Certainly one of the key upgrades is to implement a SAP modulator on your transmitter site and that's one of the costs for sure.  The other requirement is to be able to store three channels of audio.  Most programming, of course, is left and right, two channels of audio.  A lot of our studio equipment has the ability to store three channels of audio, but there are some upgrade costs, especially in Manitoba, associated with that third channel of audio.  So those are the basic challenges, to store and play back in synchronise with the video, the third channel of audio, which is the VVS audio and then broadcast it.

 

908                       Of course, that doesn't actually mean that it's on the BDU's either.  They have to upgrade as well and they have some challenges there.  We did talk with Shaw ExpressView to BDU's and Shaw ball-parked the price say around $5,000 to upgrade their modulator.  So it doesn't sound overly restrictive at all there.  ExpressView has equipment to do this, and not to speak for them, but their cost is going to be in using BIT rates for that third channel of audio, more so than the money. 

 

909                       I think the other thing that has to be -- may be considered is the upgrade to future DTV as well, since there's no SAP channel in DTV, but handling audio as visual audio is, of course, what DTV is all about.  We've tried to incorporate that in our plans. 

 

910                       In Toronto, one, as the Commission knows, we committed to going to DTV in the year three of the Toronto licence, pending the DTV approval process from the CRTC.  That's built in there.  It's in there for DTV.

 

911                       COMMISSIONER McKENDRY:  Now that you've mentioned Toronto, I wonder if you could comment for us on the appropriateness, given that you now have a licence in Toronto, of the Commission imposing the same descriptive or described video obligation on your stations that it imposed on CTV and Global?

 

912                       MS. STRAIN:  Commissioner McKendry, we have in the Toronto decision, as you've probably seen it, a commitment with respect to described video, and as with respect to programs that we produce out of our program fund that we will be creating in Toronto, so that all programs produced out of that fund will be described. 

 

913                       In addition to that, what we have said, and we have a letter that you may not have seen but I think that NBRS will be tabling in their appearance before you later today or tomorrow.  We've agreed with NBRS that on our Manitoba stations that beginning in year two of the new licence term - and that takes into account that next year we're going to have to upgrade our system in Manitoba, to talk about  -- as Paul outlined - beginning in year two that we would do a minimum of two hours a week of described priority programming, 50 percent of which is first run on the Craig stations, and in year four, a minimum of four hours a week of described priority programming. And NBRS has indicated that they're quite happy with that commitment.

 

914                       COMMISSIONER McKENDRY:  So that's the Manitoba stations?

 

915                       MS. STRAIN:  Manitoba and Alberta.

 

916                       COMMISSIONER McKENDRY:  Manitoba and Alberta.  And with respect to CTV and Global, you're going to have to refresh me.  How does that compare?

 

917                       MS. STRAIN:  I'll just check that myself.  I have the decision right here.  I'll just check here.  It's a long decision. 

 

The licensee shall broadcast in years three and four of the licence term, an average of three hours per week of described Canadian priority programs and shall broadcast in year five and for the remainder, an average of four hours.

 

918                       So it's a little different than CTV's, but we get up to four hours, as do they.

 

919                       COMMISSIONER McKENDRY:  This is in paragraph 74, I think.  Are you looking at the --

 

920                       MS. STRAIN:  I'm looking actually at page 7 of -- sorry, paragraph 7 of Appendix 2 of the decision.

 

921                       COMMISSIONER McKENDRY:  Oh, I see, okay.  "An average of two hours a week" -- I'm reading at paragraph 74 of the CTV's decision, "an average of two hours per week of described video programming during the first two years of the licence term."  All the CTV stations are required to provide three hours per week in year three and four hours per week in year five.  So you're saying with respect to Manitoba and Alberta, just what you and the National Broadcast Rating Service have been talking about, you're going to provide two hours --

 

922                       MS. STRAIN:  Two hours beginning in year two.

 

923                       COMMISSIONER McKENDRY:  Beginning in year two.

 

924                       MS. STRAIN:  Ramping up to four years in year four.

 

925                       COMMISSIONER McKENDRY:  Okay.  So the difference would be they're going to go to three hours per week in the transition step.

 

926                       MS. STRAIN:  Yes. 

 

927                       COMMISSIONER McKENDRY:  Would you be prepared to do that?

 

928                       MS. STRAIN:  I think what we've put on the table, the two hours and the four hours is what we've talked about and assessed and I think it's reasonable. 

 

929                       COMMISSIONER McKENDRY:  Can you confirm for us that your described video programming would air on all the stations, the hours that you described or caused to be described yourself, would air on all of your stations? 

 

930                       MR. CRAIG:  We may have a problem on the CBC affiliate because -- for scheduling reasons, if we don't have room to air that program, because of network commitments.  You know, we would certainly be passing through all of the CBC reserve programs that have described video, there's no question about that.

 

931                       COMMISSIONER McKENDRY:  In terms of the hours that you just discussed, the two hours increasing to four hours, would you be prepared to accept that commitment as a condition of licence on your stations?

 

932                       MS. STRAIN:  Yes. 

 

933                       COMMISSIONER McKENDRY:  Another thing that I wondered about described video, and perhaps you've had some time to examine this, with closed captioning it seems to be relatively common to have sponsorship of closed captioning.  Are there opportunities to have sponsorship for described video?

 

934                       MR. CRAIG:  I'll let Cam answer that.  I don't think that we anticipate there is any opportunity, but I'd ask Cam to elaborate on that.

 

935                       MR. COWIE:  No, we haven't projected any potential sponsorship or revenue for described video.

 

936                       COMMISSIONER McKENDRY:  Given that you're examining whether or not you'll be able to obtain described video in a competitive situation, would that be something you'd be examining as well, as a revenue opportunity?

 

937                       MR. COWIE:  Well, I think we would look at it, but I'm not sure how it would play out yet, so it would be too early to answer.

 

938                       COMMISSIONER McKENDRY:  Those are all the questions I have, Mr. Chair.  Thanks very much.

 

939                       THE CHAIRPERSON:  Thank you very much.  I'm going to ask counsel now to ask whatever questions they have on the group portion of the hearing and then we'll proceed to the individual stations.

 

940                       LEGAL COUNSEL, STEWART:  Merci, Monsieur President.  Good afternoon, panel. 

 

941                       Can I take you back to this morning and with respect to your undertaking to file the allocation of proceeds from the sale of the radio stations that you referred to, would you be able to file that -- make that filing prior to the reply tomorrow?

 

942                       MR. CRAIG:  We will attempt to do that, yes.  

 

943                       LEGAL COUNSEL, STEWART:  I'll take that as a yes.  Thank you.  Just for the record, when will your MDS undertaking in B.C. be operational?

 

944                       MR. CRAIG:  I'm not the guy to ask.  We can certainly get that information to you.  I'd have to confer with my brother, actually, to see exactly where they're at before we make a firm commitment on the record. 

 

945                       LEGAL COUNSEL, STEWART:  If you could do that overnight, that would be appreciated.  Thank you. 

 

946                       I'd like you to file revised financial projections that incorporate the $10 million fund that you've -- or the amount of $10 million that you have allocated to production so that the commissioners can get a better sense of what the financial projections consist of, and if that could be done again, before the reply stage, that would be appreciated. 

 

947                       MS. STRAIN:  Yes.

 

948                       LEGAL COUNSEL, STEWART:  Thank you.  Now, with respect to the $10 million commitment, can you just clarify for the record that that money would start to be spent in 2004 as distinct from what you said in your application, in 2005?  I think that's what you said on the record. 

 

949                       MS. STRAIN:  Yes.  It would certainly begin -- 2005 was a typo in the application, so it would begin no later than 2004.

 

950                       LEGAL COUNSEL, STEWART:  Thank you.  So that would -- 2004, if reflected as a condition of licence --

 

951                       MS. STRAIN:  Yes.

 

952                       LEGAL COUNSEL, STEWART:  -- would be acceptable to you?

 

953                       MS. STRAIN:  Yes.

 

954                       LEGAL COUNSEL, STEWART:  Thank you.  If I can raise the issue of the $14 million, and the panel was helpful in providing Madam Wylie with a walk through of how that money was to be spent, but I think it would be very helpful for the commissioners to have that reduced to writing, and if that could be done, submitted and filed for the Commission prior to the reply stage that would be very helpful for the commissioners. 

 

955                       MS. STRAIN:  We'll do that.

 

956                       LEGAL COUNSEL, STEWART:  Thank you.  Can you just very briefly describe what steps you take with respect to audio description as distinct from described video?

 

957                       MR. THORGEIRSON:  As a matter of course and daily practice, all of the integral graphic information that's presented on all of our local programs is described verbally, in other words, temperatures, time, that sort of thing?

 

958                       LEGAL COUNSEL, STEWART:  So all the essential information, is that what I --

 

959                       MR. THORGEIRSON:  Correct.

 

960                       LEGAL COUNSEL, STEWART:  -- take you to say?  Thank you.  And just for the record, with respect to DVS, as I understand it, you'll double your commitment since you filed your reply and this was based also following along discussions with NBRS?  Can you please confirm that?

 

961                       MS. STRAIN:  Yes, that's correct.

 

962                       LEGAL COUNSEL, STEWART:  Thank you.  Those are all my questions, Mr. Chairman.  Thank you.

 

963                       THE CHAIRPERSON:  Thank you.  Commissioner Williams?

 

964                       COMMISSIONER WILLIAMS:  Good afternoon.  The questions that I'm going to be dealing with this afternoon, we'll walk through the Alberta stations and just try and flush out the record that hasn't been covered earlier. 

 

965                       I guess the key issues that I'll be exploring is how has the programming orientation of the Alberta stations evolved since 1997, the shortfall of local non-news versus -- or against expectation, and we'll talk a bit about the reduction in aboriginal multicultural programming. 

 

966                       So I'll begin with the Calgary station and in this next series of questions we'll try and understand your financial projections. 

 

967                       Could you please explain the reasons why you are projecting a one-time drop in local ad revenues for CKAL-TV between 2001-2002?

 

968                       MR. THORGEIRSON:  These projections were put together post-September 11th.  We were having a very good year through the first eleven days of September.  In fact, we were 15 percent over last year.  Now we're scrambling to hit last year.  That's the main reason, we had been working on these, but we totally revised everything after those events.  When September 11th hit, we went just about three days without running a commercial because we were running wall-to-wall coverage both locally and through CNN.

 

969                       In addition, the advertising market at that time was spiralling, but it has now started to come back and we're optimistic about the future for sure. 

 

970                       COMMISSIONER WILLIAMS:  Could you also explain the cause for the large increase in syndication and production revenues in 2001? 

 

971                       MR. CRAIG:  We established, about a year ago, a division called A-Channel Entertainment, and basically what that division does is sub-licence some of the shows that we buy national rights on.  And so that is where we have garnered the revenue.  We had shows, we had properties that we owned and we have our own in-house distribution arm that has sold those programs to other broadcasters, so all of a sudden we're starting to recoup some dollars from some of the sales of some of those programs.

 

972                       COMMISSIONER WILLIAMS:  Other revenues are projected to increase substantially in 2002.  A note indicates that these are contra revenues. Could you please specify what the increase relates to?

 

973                       MR. THORGEIRSON:  The contra revenues are generally seen to be contra advertising that we would do with other radio stations that are within the market.

 

974                       COMMISSIONER WILLIAMS:  Your detailed programming expense projections reveal that CKAL will introduce entertainment magazine and regionally produced programs in the near term.  Is this indicative of a change in programming strategy or orientation?

 

975                       MR. THORGEIRSON:  No, it's not a change in strategy. 

 

976                       COMMISSIONER WILLIAMS:  The BBM fall surveys indicate that CKAL's tuning share has been declining since 1999 with the market drop in 2001.  Can you explain this trend, and in particular, the most recent decline?

 

977                       MR. CRAIG:  I'd like to start that with Mr. Cowie, who is the VP, Revenue Management, and I'd also like to get Debra McLaughlin involved too, who can maybe talk to you about how satellite penetration and distant Canadian signals is affecting our business.

 

978                       MR. COWIE:  And it is kind of a combination answer.  I mean, what's happened in our decline are some of our acquired programs have started to move backwards, so they've run the shelf life.  They start -- they've increased, they plateau, they start to decline.  We've made some program changes in terms of moving away from a movie-orientated format and added some diversity.  We think that's going to bring those numbers back.  But we should add before I turn it over to Debra in terms of how the market is, is what has continued to increased for us, for the most part, are our local programs, the programs that we control, that we produced, that can't be taken off our schedule by competition.  So that's where the tuning decline has been, is predominately in the acquired form. 

 

979                       MS. McLAUGHLIN:  A portion of that decline beyond programs by tuning is directly related to the fact that the A-Channel in Calgary is not on satellite, it's not distributed in the market and the satellite penetration has grown from 7 to 13 percent in that market in the course of the time that you were talking about the decline.  This results in an inaccessibility to a considerable portion of the market, and what is of particular concern is the people who tend to take satellite are heavier tuning, so it reflects in share, which is of course, a calculation of hours tuned. 

 

980                       We looked at the losses for CKAL on a prime time basis and we found the range of loss to some of our key programs was in the area of 13 to 69 percent.  Those are huge losses on a rating delivery level.  And without the DTH carriage, there's no possibility of competing even if the program is offered at a different time.  People simply do not even know that the program is carried by that station.

 

981                       MR. CRAIG:  If I could, Commissioner Williams, there's sort of two components to it.  One is the fact that we're not up on satellite in Calgary which is we're not on either service.  We're the only local station that isn't. 

 

982                       COMMISSIONER WILLIAMS:  And can you, in this reply, can you also kind of explain why?  Why are you not up there?

 

983                       MR. CRAIG:  Okay, let me -- I'd love to.  I'd love to talk about that. 

 

984                       COMMISSIONER WILLIAMS:  I figured as much.    

 

985                       MR. CRAIG:  And the second component to it is that the programs that we do own can be watched five times on different services starting in Newfoundland as they work west before we air the show.  So that's why there has been declines, as Debra said, to the extent that we've seen them.  And it's a serious, serious problem. 

 

986                       I'll just give you a little bit of history in terms of how we got our first signal up on satellite and sort of take you up to present day, and Al may want to jump in because he's very active on the DTH committee at the CAB and we've had lots of discussions on this. 

 

987                       But effectively, when we launched A-Channel in '97, one of the program components that we had was Oiler Hockey.  We didn't contemplate having Oiler Hockey.  The incumbent station dropped Oiler Hockey.  The club came to us and said, "Can you help us out?"  It was perfect timing.  We were going on the air in September and they had -- their hockey contract had come to an end and the incumbent broadcaster didn't want to renew it, so we picked up 30 Oiler games, and that was very exciting to both satellite operators.  The fact that A-Channel at that time had a combination of movies, local programs and hockey, they saw that as being very attractive, so they said, "Look, we'd like to put one of your services up."  They chose that service primarily because of the sports component and we have been unable to get our signals up in the other markets, primarily based on the fact that the operators say to us, "It's the same programming," and we say, and our argument is, "Well, so is CTV."  The CTV affiliate in Calgary and Edmonton run the same programs.  The only differentiated factor is their local news.  Arguably, our local stations have more diversity than the CTV or the Global stations but we've been unable to convince to date, any of the satellite operators from putting any more signals up, and it is having a profound impact on the stations that don't have satellite carriage.  Al may elaborate.

 

988                       MR. THORGEIRSON:  Yes.  As you know, there's a process going on right now between the CAB and the DTH operators in terms of negotiating carriage for smaller market stations, et cetera, et cetera.  The frustration for us is that in the meantime, all of our competitors around us in Winnipeg and Calgary are up, and have been up, for a number of years.  So we're fighting that battle.

 

989                       We could go around that process potentially and talk to the distributors but at this point, you know, we're committed to the CAB process and we want to see that thing work properly.  So what we've been told is just exactly what Drew said a few minutes ago, that we don't have enough diversity.  Our program schedules are too similar, which up until this year, the Manitoba schedule was much different than the Alberta schedule because the programs that we had acquired for those provinces were different, in addition to all of the local shows which are different for every market.

 

990                       COMMISSIONER WILLIAMS:  Do you think that you will have the same situation in your Toronto station?

 

991                       MR. THORGEIRSON:  We don't know, to be quite honest with you.

 

992                       COMMISSIONER WILLIAMS:  You didn't approach them or enter into negotiations?

 

993                       MR. THORGEIRSON:  Well, we have broached the subject with them hypothetically.  This is, you know, prior to us getting the licence.  But we don't have any firm commitment from either operator to put any more Craig signals up at this point in time.

 

994                       THE CHAIRPERSON:  I just have a follow-up.  I'm hearing you say that in Winnipeg and in Calgary, all your local -- the CBC, CTV and Global affiliates are on the satellite and you're not; is that correct?

 

995                       MR. THORGEIRSON:  That's correct.

 

996                       THE CHAIRPERSON:  Are any Craig stations on the satellite?

 

997                       MR. THORGEIRSON:  Just CKEM Edmonton.

 

998                       THE CHAIRPERSON:  Just Edmonton.  And the answer you -- without going into the small market issue that is now being negotiated, the answer you get is simply the services are too alike?

 

999                       MR. THORGEIRSON:  That was the answer from the programming people.  The answer this year is capacity, they're capacity issues.  If the DTH operators are in some fashion, forced to put up a lot of smaller market stations, that's going to chew up more capacity while some of us are still trying to launch yet more Category 2 channels, et cetera.  So, I mean, it's very --

 

1000                   MR. CRAIG:  Our view is that there certainly should be a one-carry-all-carry rule.  In other words, no local station should be handicapped as we're all trying to encourage the role of digital to get satellite penetration numbers up.  Nobody should be penalized in their local market by not having access to those viewers.  I mean, effectively, what we've seen is our market shrink by 13 percent in Calgary. 

 

1001                   THE CHAIRPERSON:  I notice CTV's market share appears to also have declined from -- we have just over 18 in '99 to 13 in 2001 and they're up on the satellite.  Not to say that that may not be a factor, but there's a pretty heavy decline there, too. 

 

1002                   MR. THORGEIRSON:  Chairman Dalfen, I'd like to actually have Debra McLaughlin speak to that, because the fall book, as we all know after the events of September 11th, did have a profound impact on the viewing that was taking place.  Maybe, Debra, you could just go into that a bit.

 

1003                   MS. McLAUGHLIN:  It is typical to look at three years to develop a trend, but I think essentially for this viewing period, the fall viewing period in 2001, you have to discard that book.  If you look at all entertainment-based station groups, stations in the market, all tuning is down.  Where you see the growth is in tuning to news services, particularly U.S. news services, and there's a real loss of hours tuned to purely entertainment-based groups.  It's across Canada, it's evident in the total group analysis and it's evident in each of the individual markets.

 

1004                   For purposes of going forward, for all of the stations we work with beyond just Craig Broadcast Systems, our company is asking advertisers to discard the fall book for purposes of estimates and we're not meeting much resistance. 

 

1005                   THE CHAIRPERSON:  And yet CICT Global has stayed level, and in fact increased slightly in that book. 

 

1006                   MS. McLAUGHLIN:  Yes, there are -- you are going to find anomalies.  I mean, everybody didn't stop tuning and certainly there has been some shift in share in a lot of markets, and that is a program-based decision.  If you're running an event television program like "Survivor" in the fall, that is still going to garner the share and is going to bring you up.  If you're running regular programming, that is of less interest.  As most viewers know, and I'm sure you're aware, you can pick up some of those top dramas later on in the season.  It's going to be repeated.  Those event programs, however, are not.  That was part of the foundation and was programming strategy in the fall.

 

1007                   MR. THORGEIRSON:  And further to that, Debra, correct me if I'm wrong, but I believe CITC was the only station out of among 12, between Calgary, Edmonton and Winnipeg that showed any increase.

 

1008                   MS. McLAUGHLIN:  I memorize a lot, Al, but I really don't want to go on the record saying that's a certainty, but he's probably right. 

 

1009                   THE CHAIRPERSON:  For a moment I thought your pitch to advertisers to ignore the fall 2000 book reminded me of the old lawyers' adage: when you're weak on the law, argue the facts; when you're weak on the facts, argue the law.  But not to make light of the point because I take it that the impact of September 11th is having a real distorting effect on the entire season.  Sorry, Commissioner Williams.

 

1010                   COMMISSIONER WILLIAMS:  No problem at all.  I'm going to move into the area of aboriginal and multicultural local programming now.  How have your A-Channel stations evolved since their inception with respect to the program schedules you originally envisioned?

 

1011                   MR. CRAIG:  I think we had some discussion earlier in terms of what's happened when we employed the people to create the programs, the people to come in and make these shows and get the audience, people do tend to put their own spin on things and change things a lot. 

 

1012                   I think in terms of the commitment to local news programming and news and information programming, we certainly -- if you look at the original budget compared to what we actually ended up spending, there was a considerable increase in expenditure in that area.  Basically in all local program areas the expenditure levels were up considerably. 

 

1013                   Essentially, we did everything we said we were going to do.  We did indicate there was a shortfall in the non-news programming area, but in terms of the expenditures in Calgary over the licensed term -- maybe I could just ask Linda to give you the COL number that we projected and let you know where we ended up. 

 

1014                   MS. NOTO:  I took the picture from signing on air, which was September '97, through to the end of 2002 so that we have the picture to the end of the new licence term or the term we were looking at prior to the renewal. 

 

1015                   For Calgary and Edmonton combined, our COL, our commitment, was $51 million for those two cities.  What we actually did in those five years was $76 million.  Now, that's an additional expenditure of $25 million and that represents our expenditure to be at 46 -- in excess of 46 percent of our revenues.

 

1016                   There's certainly some additional expenditures there for the Canadian programming that we did. 

 

1017                   MR. CRAIG:  There's certainly, when you look back in the program schedule that we designed, and when you look at certain programs, certain title that we put in the program schedule outside of news programming, people came in and said, "Look, we think we've got a better idea," and one of the ideas as an example, in the original application was a show called "Interactive", "Alberta Interactive", visioned to be a show that hooked up Calgary and Edmonton.  People could have discussion on regional issues.  People who we hired that maybe knew better, came in and said, "That's not going to work.  We're better off putting more money into a show that we can talk about local issues." 

 

1018                   So that's really how it evolved.  It was really the people that came into the station that created these programs, that put their stamp on it that really took it from being a pile of paper into being a real television station. 

 

1019                   COMMISSIONER WILLIAMS:  Thank you.  If the programming orientation of the A-Channels have changed in any sense I guess, what sorts of challenges and factors have led to those changes?  Like the one I guess you've just described, the reason for --

 

1020                   MR. CRAIG:  Yes.  And maybe, Jim, if you want to, feel free, but it's a competitive marketplace.  Every day there's a new competitive factor.  People are changing things around.  We've seen the introduction of a myriad of new channels in terms of specialty channels the year we launched, another 45 digital speciality channels.  So there's all sorts of competitive factors out there that very much make finding an audience a moving target.  So we have to react to those changes.  We have to change our programming to reflect it.  And I'll give you a small example of what you have to do to turn on a dime, and Jim may want to talk about this, but when September 11th happened, we were very much a local station, very much at a local orientation and all of a sudden I think peoples' viewpoint changed.  Well, we changed on a dime, too. 

 

1021                   As someone mentioned in the oral presentation, both of our newscasts in Calgary and Edmonton were nominated as finalists by the Alberta Motion Picture Industries Association for our coverage on that day.  I think that indicates to me how we can change on -- how we can move on a dime as independent operators.  We've given the local newsrooms complete autonomy to do that.  And all of a sudden, peoples' focus changed.  They didn't necessarily care what was going on down the street, they wanted to know what was going on in other parts of the world.  So we quickly, within a couple of days, first of all, went wall-to-wall with news coverage for three days, changed the slogan of our news positioning statement to say we're the station that brings your world home, and focused on that aspect, because that's what viewers were telling us that they wanted to see. 

 

1022                   So I think that's the ability that we have as a local station, to make those changes, and we've given our managers and the people that we empower to produce our programs the autonomy to do that.  Jim, you may want to -- sure, go ahead.

 

1023                   MS. STRAIN:  I just wanted to say that, sort of looking at it on a macro level arc, none of our strategies or our philosophy has changed at all.  Some of the ways in which we implemented things, or some of the ways in which we sought to get there changed, but when we came into this market in '96 -- and '96, I was not a "we" I was a "wic" but when we came into this market in '96, we promised alternative newscasts and we did those. 

 

1024                   Drew talked about "Interactive".  We tried doing some of that and, in fact, some of that was embodied in our newscasts.  We ended up expanding news, actually, considerably.  We're doing about 22 hours now.  We've always done more news than we thought we would do.  We did say we'd pay particular attention to arts and culture and community, and we've done exactly that and we continue to do that.  We said we'd do an aboriginal show.  We're still doing that.  So I just wanted to say that we -- Jim will get into some of the specifics if you're interested in those, but certainly our strategy, our focus, our philosophy has been consistent throughout.

 

1025                   COMMISSIONER WILLIAMS:  Well, Jim, you can either speak now, or some of my questions will bring it out through the course of going through them. It's up to you.

 

1026                   MR. HASKINS:  Probably I'll speak both times then, if you let me.  I'd just like to finish up and come on the back of what was just said that we're very -- our philosophy has never changed, but we have been quick to adapt to changing circumstances in our market, and "expansion" is the one word that I think really describes what we have done. 

 

1027                   Some of the initiatives that we made that were different on "The Big Breakfast", quickly it was obvious to us that they were being accepted in the communities that we serve.  We expanded those, we expanded the news element there, we expanded the number of hours that we were doing that.  We re-allocated some of our resources for our six o'clock newscast because we found that in those markets, commuter traffic being what it was, six o'clock was really the time that we would have access to news viewers.  So instead of going a half-hour at six, we expanded to an hour at six and re-allocated some of our resources to that program and we've had success.  We're growing the audience there as well, so our philosophy hasn't changed but we have been quick to adapt. 

 

1028                   COMMISSIONER WILLIAMS:  Okay.  If, as I go through this list of questions, some of them may seem repetitive and some of them actually might even be repetitive, so I can understand if your answers don't change a whole bunch from what you said earlier today, but I do have to go through them because I don't want to miss one.  I do want to have a full and complete record. 

 

1029                   This is the first time we've considered CKAL-TV and CKEM-TV licenses for renewal since both the stations were licensed in 1996.  At the time you made certain commitments to the Commission which were reflected both as conditions of licence and as expectations.  In looking at your past track record, we see that the conditions of licence have been met during your licence term.  We note that you have fallen short of the Commission's expectations for local, non-news programming as follows. 

 

1030                   In Calgary, the expectation was to provide 14 hours and 30 minutes per week of local programming other than news but you only broadcast an average of eight hours per week.  And in Edmonton, it was also 14 hours and 30 minutes, but you only broadcast an average of nine and a half hours per week.

 

1031                   Could you please comment on the shortfalls in both these stations in the years prior to the curve broadcast year, and were your reductions a response to a legitimate reflection of a shift in community needs or interests, for example? 

 

1032                   MR. THORGEIRSON:  There were a couple of things.  We actually -- we ended up doing, through the first four years I think it was, 22 hours a week of news as opposed to the 17 that was our condition of licence.  Drew mentioned the Alberta Interactive program that evolved into something different and part of the shortfall was there.

 

1033                   The other program that didn't come to fruition was a show called "Kid Fit" which was to be a half-hour weekly kids program, and I'm going to ask Cam Cowie to explain what happened with the kids programming. 

 

1034                   COMMISSIONER WILLIAMS:  And maybe at the same time, in the same answer you could provide what happened to "Spectrum". 

 

1035                   MR. THORGEIRSON:  "Spectrum" was to be a three-hour separate distinct supportive access block each Sunday between 9:00 and noon. 

 

1036                   MR. CRAIG:  Cam can just give you a brief explanation about "Kids" and --

 

1037                   COMMISSIONER WILLIAMS:  And then you'll --

 

1038                   MR. CRAIG:  And then we'll talk more about Spectrum.

 

1039                   MR. COWIE:  What happened with the kids market is as we went through application and came on with the program schedule, the kids market has virtually disappeared, or had virtually started to disappear at that time for conventional television, going predominately to the specialty channels. 

 

1040                   We started the "MTN Kids Club" in Winnipeg, and at one time was doing 12 percent of the available children's audience on a Saturday morning.  It could do as high as 20 percent of the children's audience on an afternoon show like "Full House".  In '97, if it had gone from 12 percent to 2, from 20 percent to none.  There was no money, there was no audience and there was no demand, and basically it went predominately to specialty.  Right now, you would be hard-pressed to find a conventional television station and it's a number of factors.  Drew might want to talk about the programming side, but what happened is the specialties have captured the program, they've captured it in the long duration windows, so you have no access to it. 

 

1041                   You have no access to the foreign, you have no access to the Canadian, and basically that's what happened, is the kids' audience has disappeared.  The revenue and the advertisers associated with it disappeared, and the promotional opportunities where you could talk to children and really interact with them and get in touch with them disappeared as well.  And now all of a sudden, it was a YTV colouring contest that ran the gamut of the entire country and therein went the kids' business.

 

1042                   MR. CRAIG:  I think, as Cam indicated, we used to have a big commitment to kids programming and when you can't buy programs to get audience, you can't be in the business.  And it's one of those genres that is so dominant in specialty that what started to happen was that they started to lock up exclusive program rights.  We used to be able to buy the top kids programs, both Canadian and foreign, not exclusive to YTV.  And as they got more aggressive in their acquisition policies and once they got more outlets to spread the cost out, they started to buy exclusive rights.  So we basically got shut out of the kids' business as a conventional broadcaster.

 

1043                   The other difficulty for us, of course, was the fact that we were in regions without access to larger markets to be able to put together a national buy.  It was hard for Hasbro, for example, just to buy Calgary or Edmonton or Winnipeg.  So, unfortunately, we sort of got forced out of the kids business. 

 

1044                   I'd like to talk about Spectrum for a minute.  First of all, I'd like to note that Spectrum was not part of the 14 hours of non-news local programming.  It was incremental.  It was an access block.  When we signed on the air, we hired somebody to go around and talk to various community groups about the access concept.  Basically we gave them a block of time.  If they had programs that were available, they were able to use our airways to put them on the air.  Basically, we had no takers.  There weren't any groups out there that had programs that they wanted to put on the air.

 

1045                   What we did do was go to CFMT Channel 47 and picked up a couple of shows, so we have a block on Sunday morning and we run the Chinese business hour directed to the Chinese community and "Swedolad" which is a program directed at the Ukrainian community.  So we still have an arrangement with CFMT to barter those shows, but we essentially didn't have any takers in the community that wanted to take us up on our offer to use our airways to put their programs on the air. 

 

1046                   COMMISSIONER WILLIAMS:  Why would the local non-news program on both stations be fluctuating in unison?  Are the conditions that similar with respect to local interest? 

 

1047                   MR. CRAIG:  It had a lot to do with the hockey arrangement we had in Edmonton and some other local initiatives that they had going on up there, and we were experimenting as well with some different things over the initial term.  So it really, I think what throws it out is hockey and also a weekly hockey wrap-up show that was produced out of Edmonton. 

 

1048                   COMMISSIONER WILLIAMS:  We see that you've increased the local non-news levels in both Calgary and Edmonton to 15 hours per week in the current year 2002.  Why the marked increase in local non-news programming in the current broadcasting year?  What changed? 

 

1049                   MR. CRAIG:  We saw some opportunities and we needed to find some programming to fill some time periods, so we -- one of the shows that we were trying out that the audiences seemed to give us good reaction from is "The Best of Big Breakfast" which is we basically take the best of the two hour -- two and a half-hour show and condense it to 48 minutes of TV with new hosted segments.  So it gives those people that come on the show more exposure.  So that was one of the concepts and that was really the main difference.

 

1050                   COMMISSIONER WILLIAMS:  Do you have any comment on the possibility of a conditional licence being imposed requiring you to broadcast 14 hours and 30 minutes per week of local non-news programming on each of the Alberta stations?

 

1051                   MR. CRAIG:  As we discussed before, we understand the concept of the Commission wanting us to -- wanting to define that, and I think what we'd like to do is come back in reply and put something on the table.  We still have the same concerns relating to volume.

 

1052                   COMMISSIONER WILLIAMS:  In your current application, you're seeking the flexibility that the TV policy provides with respect to your provisional local programming, yet in your previous licence term, you did not meet your commitments on the local non-news programming. 

 

1053                   So for the new term, what would appropriate levels of local programming, other than news, be per week?  Do you want to come back in reply with that as well?

 

1054                   MR. CRAIG:  I think we'll come back in reply with what's appropriate for each station.

 

1055                   COMMISSIONER WILLIAMS:  Okay.  In your original application in 1996, you indicated in your proposed programming policy that A-Channel leads the market with a commitment to produce local production in both Calgary and Edmonton, designed exclusively for that market.  Can you confirm that since 1996 your local programming for each of the Calgary and Edmonton markets have been distinct from each other?

 

1056                   MR. CRAIG:  Absolutely.  "The Big Breakfast", by example, is completely different.  The program that gets produced here is completely different from what gets produced in Edmonton.

 

1057                   COMMISSIONER WILLIAMS:  Okay.  Do you plan to continue to provide distinct local programming for each station throughout the new licence term?

 

1058                   MR. CRAIG:  Yes, we do.

 

1059                   COMMISSIONER WILLIAMS:  Are there any common regional programming between Edmonton and Calgary stations? 

 

1060                   MR. THORGEIRSON:  Right now, the  "The Sharing Circle" is common and "Wired", right now is common in Alberta.  It's hosted up in Edmonton and we have two reporters in Calgary who contribute to that nightly. 

 

1061                   COMMISSIONER WILLIAMS:  Let's talk a minute about that "Sharing Circle".  In your opening remarks you stated:

 

Each region, each market and in fact each neighbourhood is distinct.  In recognizing this we have found our market, our programming strategy and our business case.  In each of our markets, and this will extend to Toronto, we are neither limited in our focus nor driven by the need to export "one size fits all" programming across a system.

 

1062                   Given the diversity of aboriginal groups, just like the diversity of Canadians across this country and their interest in the different markets, the markets are remarkably different.  Edmonton is not the GTA, nor I would expect is Brandon or Winnipeg.  Will "The Sharing Circle" produce market specific programming or will Craig provide other windows?  How do you plan to deal with the diversity of the audience?  Does the programming become so generic that one size does fit all?

 

1063                   MR. CRAIG:  I think everything we do, we pretty much do market specific.  In the case of "The Sharing Circle", I think Lisa is looking forward to the opportunity to build it, to share the stories between the GTA and the Western markets, so I'll just let her give you her point of view on that. 

 

1064                   MS. MEECHES:  The show is built on a  strong spiritual base.  We focus on a lot of, I guess the commonalities with tribes.  We have made a commitment to giving 25 percent of Ontario First Nations an opportunity to share in the show's progress, and based on friendships in the aboriginal communities.

 

1065                   COMMISSIONER WILLIAMS:  So with all this new area you have to cover, is the time slot still adequate, I guess is the essence to my question.  I guess what I'm hearing is we'll just add a little water to the soup.

 

1066                   MR. CRAIG:  I hear what you're saying and, again, I have to defer to Lisa, and maybe it's more meat to the soup as Joanne just said.  I think it does afford us new opportunities to bring more stories to the screen, and I know in my own experience, that people that live in Toronto don't know much about the aboriginal community.  And I think this is a tremendous opportunity to give them that sense of the importance of what's going on out there.  So I look at the opportunity to take a show like "The Sharing Circle" and transport it into the GTA to be very unique, and also to have those stories told back here is, I think, important in that case.

 

1067                   I think our model is based on the fact that not many shows can be exported even outside their local market, but that is the one show that I think is --

 

1068                   COMMISSIONER WILLIAMS:  I think you have 26 episodes and there's --

 

1069                   MS. MEECHES:  Twenty-six repeats. We've produced over 275 shows today in the last 10 years, over 800 five-minute features. 

 

1070                   COMMISSIONER WILLIAMS:  Okay, it was just a thought.  I see you covering a lot more ground with the same window basically, so something must have to fall off the table. 

 

1071                   MR. CRAIG:  Your point is well taken, and I think that's something we'd have to watch.  If we started getting a reaction from people in Western Canada that they weren't getting access to the show because there were too many pieces from Toronto in it, then we would have to reassess the situation and maybe produce two separate shows.

 

1072                   MS. MEECHES:  Or negotiate a one-hour in prime time. 

 

1073                   COMMISSIONER WILLIAMS:  There you go.  We'll leave that for another meeting.  Do you have a comment on the possibility of a condition of licence being imposed requiring that the local programming provided on each of the Alberta stations is distinct from each other? 

 

1074                   MS. STRAIN:  Commissioner Williams, I guess I'm not sure I understand that -- I understand the question, I guess I'm not understanding where it's coming from.  If we use the definition -- for example, Commissioner Wylie, I think used the definition that was in the Toronto decision of a local program that reflects the needs of the Toronto area.  I don't have it right in front of me, but yes, that concept, sure, we believe in that.  That's a new definition, I think, but in terms of the concept, we wouldn't have a problem with that concept.  I mean if we're committing to a specific level of local programming, it is local.  That means it is, by definition, distinct because it's unique to a particular market.

 

1075                   COMMISSIONER WILLIAMS:  Yes, I think the nature of the question is essentially to preserve our right if we wish to impose a conditional licence.

 

1076                   MS. STRAIN:  We have no problem with the concept. 

 

1077                   COMMISSIONER WILLIAMS:  Four more and we're there.  In Appendix 6A of the Calgary and Edmonton renewal applications, you state that Craig Broadcast Alberta has committed $4,096,000 of a total  - it's these reconciliation questions again - of the $11,835,000 licence fees in support of projects with independent producers.  According to the annual returns filed with the Commission which contain a separate item on the production fund, only $3,184,746 had been expended on the fund up to and including 2001.

 

1078                   Can you give us a quick explanation of the discrepancy?

 

1079                   MR. CRAIG:  Yes, Commissioner Williams, I think what we indicated to counsel was that we were going to file a written submission outlining what actually has been spent and what will be spent, so we will have that for a reply. 

 

1080                   COMMISSIONER WILLIAMS:  Great.  Thank you.  And you will also deal with the production fund at that time as well, the questions regarding the production fund?

 

1081                   MR. CRAIG:  Yes. 

 

1082                   COMMISSIONER WILLIAMS:  And you'll talk about how you'll live up to your conditions regarding all those expenditures?

 

1083                   MR. CRAIG:  Absolutely, yes.

 

1084                   COMMISSIONER WILLIAMS:  That's good.  I look forward to receiving that.  I have no further questions, Mr. Chair.

 

1085                   THE CHAIRPERSON:  Thank you very much.  Commissioner Cram?

 

1086                   COMMISSIONER CRAM:  Thank you, Mr. Chair.  I'm going to be talking about Manitoba, so I hope Mr. Cruise and Mr. Cowie you're ready.  I wanted to start with CKX, and in your introductory remarks you talked about the affiliation agreement and where it's sort of at.  When does the affiliation agreement actually expire for CKX?

 

1087                   MR. CRAIG:  In August, the end of August.

 

1088                   COMMISSIONER CRAM:  Of this year, 2002?

 

1089                   MR. CRAIG:  That's right.

 

1090                   COMMISSIONER CRAM:  And I, in passing, note what happened in Swift Current on the CBC affiliated station, it no longer is there.  Anyway, what are the possibilities or what possibilities do you see in relation to that affiliation?

 

1091                   MR. CRAIG:  Well, we've received a letter from the CBC and we gave you some of the bullet points in the oral presentation.  Effectively, it's the same letter that all of the CBC affiliates got, and the letter effectively says they want a brander station as CBC, they want to take away your local branding.  They want you to carry all of the CBC schedule and over the course of time reduce your payment to zero.  And we haven't countered yet with the CBC. 

 

1092                   We did approach them last year with a proposed solution in Manitoba, and one of the concepts was that they put a separate set of transmitters into the Brandon market, and we both share the cost of those new transmitters.  The CBC signal would remain on the original CKX transmitters, as it has been for 47 years, and our request was they pay half the capital cost.

 

1093                   We, in return for that, invited them to bring their local newscast out into Brandon on their stick.  We would bring the A-Channel signal from Winnipeg into Brandon, move our local programming on to the new transmitters.  Anyway, we requested about a 25 percent increase in payment.  They wanted to lock down a long-term deal.  And that deal was flatly rejected by the CBC, and then the next firm proposal we had was this one.  So I think that what's at stake here is local programming.  I mean, we're lucky because we do have, you know, maybe some other options because we own programming in the Province of Manitoba and we have a presence in Portage and in Winnipeg and may be able to move that signal further west, but I think what's at stake is the end of a relationship between the private operators in the markets like Brandon and Swift Current and Dawson Creek and the really, really tough markets in Canada that no one wanted, and the CBC certainly didn't want, and now they want to turn the tap off.  I think what's at stake is local programming and having a local station in those markets.  I think it's a shame to see Swift Current go black. 

 

1094                   I don't think, frankly, we have any leverage with the CBC.  I think they've made up their mind that they don't want us around and I don't think it's a negotiation.  I think it's something that's just the way it is.

 

1095                   COMMISSIONER CRAM:  Sharing my unilateral decision. 

 

1096                   MR. CRAIG:  That's right.  So what's the future for Brandon?  I mean, we haven't sort of flushed that out yet, but as I say, we do have another programming option, but as we indicated, the CBC network revenues amount to 25 percent of our total gross revenues.  So without that, it means Brandon loses another half a million bucks a year that's got to be subsidized through our system.

 

1097                   COMMISSIONER CRAM:  So then I looked at your projections and looked at the historical and then I looked at the projected revenues, and the thing I noticed is from '98 to 2001, the historical, total revenue was going down and your projections are going up.  Now, can you explain that to me?

 

1098                   MR. THORGEIRSON:  We have a great manager at CKX-TV. 

 

1099                   COMMISSIONER CRAM:  Ah, Mr. Cruise.

 

1100                   MR. THORGEIRSON:  The reason we -- the increases that are in the renewal financials are just CPR or CPI type increases, very minute, two and a half to three percent across the board.

 

1101                   COMMISSIONER CRAM:  So there's no intrinsic optimism in this that is inexplicable?

 

1102                   MR. THORGEIRSON:  No, there isn't.  In fact we're down again over last year at this point but, you know, there's a lot of other factors that, as we mentioned earlier, are playing into this market this year. 

 

1103                   COMMISSIONER CRAM:  There was also, I guess what I'd call a reverse -- we had network revenues from historical to projected going to zilch, to nothing, and syndication increasing by almost the same amount as network was reduced.  Was there a reason for that, or can you explain that to me?  I'm sorry, it's 2002 to 3, where there's a reversal in those numbers where network revenues go to down from $364,000 and syndication goes from $32 to $396.  Can you explain that?

 

1104                   MR. CRAIG:  I'll just have to take a moment to find that file.  Are you looking, Commissioner Cram, at 2001 and 2?

 

1105                   COMMISSIONER CRAM:  I'm looking at 2002 and 3. 

 

1106                   MR. CRAIG:  With CKX what we filed was 2001 and 2002 as one document and then we filed 2003 through 9 as the renewed term.  Is that --

 

1107                   COMMISSIONER CRAM:  Say that again?

 

1108                   MR. CRAIG:  Okay.  What we filed for CKX was the remainder of the existing licence term, which was the actual from '01, the projection for '02 and then the seven-year projection from '03 through '09.  So the number that was in the 2001 for the network payment was the actual.  The projection for 2002 was what the network payment was at the time that we did these budgets.  That number is going to be much higher this year because it was an Olympic year, and at that time we didn't know what the CBC's contribution to  CKX was going to be. 

 

1109                   COMMISSIONER CRAM:  And then your expenses in your projected budget is, they're all down, all categories are down from a historical.  Is Mr. Cruise losing his job, or what's -- can you tell me why this is, and how it's going to be happening?

 

1110                   MR. CRAIG:  Alan, I think I'll start that because at the time that we did restructuring at CKX, Alan was actually looking after our radio side and was sort of in transition.  In the fall of 2000, we brought in a new Parker Vision Production System is what it was called and we eliminated approximately 15 positions at CKX, most of whom were technical staff who worked on the shows that we were producing.

 

1111                   Now, we're able to produce the same quantity of news with better quality graphics and video, et cetera, with three people.  So that's why those expenses -- it was a restructuring that we felt compelled to do so that we could try to get the place back on track. 

 

1112                   COMMISSIONER CRAM:  And can you explain now to me, and maybe -- well, can you explain if I were living in Brandon what I would see on Big Breakfast and where the Brandon news comes in and where the tracking, or whatever that is, the thing on the bottom that says it's going to rain, snow or hail today, if you can sort of explain what I would see on the screen in "The Big Breakfast"?

 

1113                   MR. CRUISE:  Sure.  Continually the crawl is on throughout the whole program, and as Darcy mentioned earlier, part of the problem in Manitoba is the weather, is the link of the highway to Winnipeg,  as you know.  You're the only commissioner that has ever come to Brandon, you know how difficult it is.

 

1114                   COMMISSIONER CRAM:  I did it in the summer.

 

1115                   MR. CRUISE:  Very wise.  But it's a key link and we cover such a huge geographic area as well.  I mean, it's a big thing for us to let people know what schools are closed, what highways are open.  So that's going all the time.  We're also -- it's not unusual for someone from our area to go into Winnipeg and be on "The Big Breakfast" or for "The Big Breakfast" to come out and actually do a hit from Brandon.  I mean, they were out, if you want Darcy can elaborate on that, to cover the Royal Manitoba Winter Fair.  It's been on for 95 years.  It's the biggest indoor event in Western Canada, period, and so they are out covering those events.  And as we mentioned in our opening oral presentation, Brandon is the host city to the country and just this past year we've had the Scott Tournament of Hearts only finished a month and a half ago. 

 

1116                   So we have that flow back and forth with Winnipeg all the time, and as much as its great that we're feeding stories into Winnipeg for their news so that Winnipeg can see what's going on in Brandon, 55 percent of the province is in Winnipeg and it's important to our people to know what's going on there, but not know what's going on there from the CBC or the CTV's point of view because they're just in Winnipeg all the time.  Our people at A-Channel give us a view that the rural people can understand, and it's not just what's happening in Winnipeg; it's what's happening in Winkler or Morden and we can't get that from the other stations. 

 

1117                   COMMISSIONER CRAM:  Mr. Cruise, when you talk about the news, Brandon news being put in, when is it put in and how much in the schedule?  Like, do you stop like CTV does and sort of bring in their local news on the half-hour or the hour or something like that?

 

1118                   MR. CRUISE:  Not currently.  We're experimenting on how to do that -- I shouldn't say for sure with Cam beside me, but I suspect what we'll have to do is to take out some commercial time because the style of "The Big Breakfast", often the host is going back and forth with the news person so we simply couldn't cover off their news.  More likely we would, while they're breaking for commercials, perhaps do a two-minute newsbreak if it was appropriate.

 

1119                   COMMISSIONER CRAM:  And in your introduction when you were talking originally, when everybody was talking, there was discussion about going out to a specific location with "The Big Breakfast", a specific location in Manitoba, and the implication I read from it is that it happened every day.  Am I wrong or --

 

1120                   MR. Cowie:  I'll start and then maybe Darcy can do -- how the show works is we have two facets.  We've got a studio facet and we also have a remote facet, so every day the remote host is out somewhere in the community.  They may be -- we may take the whole show to Brandon or the remote host may be at Portage for the Festival of Lights, they may be in Winkler, they may be in Steinbach, they may be next door at a car dealership.  So there is a component of the program that's always live and always outside the studio and with our live track we can go virtually anywhere.

 

1121                   MS. MODIN:  I think the important thing to add about that is that we are the only broadcaster in Manitoba that does regular long form live broadcast from outside of the perimeter highway.  So we've gone to the Royal Manitoba Winter Fair and we were there for two days, broadcast with our remote host, shearing sheep, feeding the baby pigs, teaching people about the fair that's 95 years old that many people in Winnipeg had never ever gone to check it out. And after we did that, that year was one of the best attended years that they had, and a lot of viewers told us that "I never knew we had this gem in our province and thank you very much, because now I know." 

 

1122                   We've been to Morden, Winkler, we've been to Lily Festivals in Morden, we were at the Corn and Apple Festival.  They gave us a three-foot wide piece of pie and we did a remote there.  And it's really important for the rural community specifically because, like I said, no one else is doing that kind of programming.  If there is a big drug bust or a murder in rural Manitoba, some other stations might go out and do a live hit of that, but we're also doing the good news stories and the long form stories and we're really hearing back from our viewers in Winnipeg and the rural area that they like it and no one else is doing it.

 

1123                   COMMISSIONER CRAM:  And there is the conundrum if you're trying to be local for Brandon, can you be local for Portage La Prairie and local for Winnipeg, and the converse, if you're trying to be local for Winnipeg, can you be local for Brandon and Portage La Prairie?  Can you give me an idea of how you can do that?  It sounds like you're being schizophrenic, but I mean how can you do that kind of -- attract to all of the viewers?

 

1124                   MS. MODIN:  Yes.  I think the important thing to note here is that we're not a Winnipeg broadcaster.  We're a Manitoba broadcaster.  When a big news story hits, we cover it through Manitoba.  For example, with our recent issues with the nurses' strike -- or sorry, not nurses' strike, the labour issues and the walkout and the threat of a strike and the shortage of nurses, where other broadcasters just focused on hospitals and the effect it would have in Winnipeg.  We did that.  But we also did the hospital in Portage, Treherne, we went out to Emerson and Brandon, and that is the way that we do our newscasts.  If there is a big issue, we look at it and the way that it affects Manitobans and not specifically a specific region, or we will be specific with a specific region but also give equal time to other regions and how that story impacts them. 

 

1125                   COMMISSIONER CRAM:  Now, moving on to -- I know there was some discussion with the Vice-Chair that you treat expectations the same as if they were COL's.  Now I'm down to noting of commitment and commitments, and in CKX there was a commitment for, I believe its $45,000 to, I think it's for program development.  If the SAS calculations -- numbers evade me.  I don't -- well, my calculations are always wrong. If the SAS calculations are correct, you haven't -- you're not near to meeting that on the way, and so can you maybe just --

 

1126                   MR. THORGEIRSON:  Yes, there was a commitment and all of those dollars will be spent by the end of this current licence term as committed to in the licence.

 

1127                   COMMISSIONER CRAM:  So they'll all be lumped into the last year that -- is that what will have to happen?

 

1128                   MR. CRAIG:  Yes.  There's certain projects that we've been working on for a long time that, you know, frankly we've given them the commitment, they haven't cashed the cheque yet.  One is a project we're working on for a mini series, the Guess Who story actually.  We've been trying to get that done for three years, so they have a development commitment but it's not included in our totals.

 

1129                   Then there's another project that we're working on, it's a music and variety series, and it's the same situation.  They have $10,000 of our development money, but we haven't -- the project hasn't gone into development yet, so we haven't put it in our totals.

 

1130                   COMMISSIONER CRAM:  I was talking about CKX, but you're also in the same position in the Winnipeg station also --

 

1131                   MR. THORGEIRSON:  Correct.

 

1132                   COMMISSIONER CRAM:  So does the same answer apply in this same concept?

 

1133                   MR. THORGEIRSON:  I think it's -- it's a larger number for CHMI but it, too, will be spent by August 31st of this year.

 

1134                   COMMISSIONER CRAM:  And it's a bunch of cheques that haven't been cashed yet, or commitments, of course that haven't been expensed out?

 

1135                   MR. THORGEIRSON:  Yes.

 

1136                   COMMISSIONER CRAM:  Okay.  Moving to CHMI, there was a couple of years ago, I think, your application for a Dauphin transmitter, and I know there has been an extension on it and I've also read what you said in the DTH file with the Commission, and you say in your reply on the DTH proceeding that unless something can happen in terms of the DTH fragmentation, if I can call it, or loss of share and loss of revenue, that you will not be able to see yourself clear to putting that transmitter up in Dauphin.

 

1137                   Have events in the last three days maybe changed your position on that and will you be able to have that transmitter in Dauphin?

 

1138                   MR. CRAIG:  We're certainly looking at that.  We still, as we indicated in the discussion on DTH, it's still up in the air in terms of where we're going to get to.  What's happened over the course of us making application to put that transmitter on the air and today is that the satellite penetration in that particular market has gone crazy.

 

1139                   COMMISSIONER CRAM:  In Dauphin, you mean?

 

1140                   MR. CRAIG:  Yes, I'll just let Debra just tell you what numbers we've pulled together.

 

1141                   MS. McLAUGHLIN:  In speaking with BBM, that is not a separately measured TV market, as you know, and Dauphin is part of a larger area.  So when they measure the satellite penetration in there, they have to take the whole piece of geography that Dauphin is assigned to.  But it currently sits at 61 percent, which is a growth from 5 percent, so a lot of the people in that area have satellite. 

 

1142                   Again, I have to emphasize, it's not Dauphin only, it's the entire area that Dauphin is a part of for purposes of measurement and that's a STATS Canada definition that they used to project the population. 

 

1143                   COMMISSIONER CRAM:  Sixty-one?

 

1144                   MS. McLAUGHLIN:  Yes, we will get the runs for you and file it, if you would like that.

 

1145                   MR. CRAIG:  Commissioner Cram, I would suggest that probably that capital would be better used in another area, based on what these findings indicate. 

 

1146                   MR. THORGEIRSON:  If I could add to that, too, we also took a look a little while ago at the cable companies in Dauphin and Swan River and each of them have about a 90 percent penetration of their universe, so between cable and satellite, they're pretty much covered.  All you need to do is get the signal.

 

1147                   COMMISSIONER CRAM:  So, really, you're coming down to the 10 percent minus the percent of those who have DTH who you would attract with that extra transmitter.  I hear you. 

 

1148                   Now we get to -- oh, yes, I think you've already spoken about the closed captioning on CKX, have you, Mr. Craig, what commitments and what commitments you could make on CKX with Commissioner McKendry, did you?

 

1149                   MR. THORGEIRSON:  We hadn't previously, but we did some new calculations and currently about 84 percent of the program schedule is closed captioned at CKX.  If you add to that, the closed captioning of the scripted portions of our local programs at CKX, that's "News @ Noon" and "News @ 6" which currently just the scripted portions are, then you get up to about 88 percent.

 

1150                   The difficulty we have in Brandon is that the only way to really effectively close caption 100 percent of a news program is to do it in real time, and the cost ranges from $130 to $150 an hour, so we think that would be about $72,000 a year roughly.

 

1151                   COMMISSIONER CRAM:  The same question about CHMI in terms of your projections and revenue projections, again that's just being raised for CPI, the increases are just CPI?

 

1152                   MR. THORGEIRSON:  Correct.

 

1153                   COMMISSIONER CRAM:  And I guess, when I think about that, even raising it by any sort of inflationary amount, it almost sounds like you think the DTH penetration won't increase in Winnipeg or that you'll be put on DTH because --

 

1154                   MR. THORGEIRSON:  We're hoping that we will be on DTH, which could in fact give a much brighter financial picture.  But overall, CHMI today is about two and a half million dollars annually less in revenue than it was in '95-96 when the last licence term started.  That's the difficulty that we have.  In the meantime, we've increased our expenditures on our local programs and redeveloped facilities in an effort to re-attract audience.

 

1155                   COMMISSIONER CRAM:  I see your projections, but if you are not -- if CHMI doesn't end up on DTH, are these projections --

 

1156                   MR. THORGEIRSON:  These are our best guess and they're reasonable.

 

1157                   COMMISSIONER CRAM:  And this is based also on the existence of TMG in Winnipeg or --

 

1158                   MR. THORGEIRSON:  Yes, I would let -- Cam should be speaking to that.

 

1159                   MR. COWIE:  When we do the bottom up analysis we look at two things: the competitive aspect to the marketplace, and also what the delivery has been.  Al mentioned the two and a half million dollars of decrease.  Part of that is because of competitive nature, part of that has to do with having a movie schedule in '95-96, and what's happened to the movie market with DTH and with TBS and so on.  There has been a lot of competition in the long form area.

 

1160                   So both of those factors, you know, audience delivery and the competitive nature of the marketplace.  We're not sure what's going to happen with car television, as we affectionately refer to it, but you know, you would think that eventually they're not going to want each other in their boardrooms now that CKY has been purchased by CTV, so we're unsure on how that will affect.  We would like it to come apart.  It gives them a very distinct competitive advantage.  It's a very usable micro-example of what's happening on a macro basis with convergence, and if you control the shelf space so where you used to be able to -- if CKY was strong with 35-plus adults and Global was stronger with 18 to 34 adults, now when they go out they're strong with the whole gamut and it makes it more difficult.

 

1161                   It's also, if you own 65 percent of the inventory or the eyeballs of the rating points, it makes it very difficult to buy around them.  I mean, when there's three players, any particular player can be bought around.  When one of the players has that much control of the inventory, it's virtually impossible for an advertiser to buy around them.  So it's a good marketing strategy if you can get it.

 

1162                   COMMISSIONER CRAM:  Yes.  I only had really one other question and it was back to the Dauphin issue.  My mother came from Dauphin, so I want you to know that.  But if, indeed, you're not going to -- or the numbers may lead you to reconsider having a transmitter in Dauphin, what does that do to the locations you cover in "The Big Breakfast", because -- and maybe I misapprehend it, but it would appear to me now from the examples you've given that the locations that you cover are the locations covered sort of by your transmitters, you know, where your advertisers are.  So then what you're missing is the locations you don't cover with your transmitters which is, of course, Swan River, Dauphin and north. 

 

1163                   Do I have that right in terms of what you presently do?

 

1164                   MR. COWIE:  Well, if we were to have that person, we'd have to change the job title to the really remote host.  I mean, that much geography in a one day to be on at five o'clock in the morning, would be a little tough.  So I think, you know -- I guess one of the defining factors of why we moved to "The Big Breakfast" and why "The Big Breakfast" is working, a lot of that came with the re-configuring of Winnipeg and putting the digital location in the market.  I mean you've been to Manitoba, so you understand that if we had to take all of the guests that come to "The Big Breakfast", and it might be a dozen groups or 15 groups a day, and take them remote and make them all drive to Portage or make them all drive to Steinbach or all drive to Morden or Winkler, it would be very difficult to fill that show on a day-to-day basis. 

 

1165                   So the component of the remote host gives us an opportunity to get into those areas.  But more importantly, it also gives those areas an opportunity to get onto the program, where somebody in Winkler might have a difficult time getting to Portage La Prairie for 6:30 in the morning or may have nothing else to do during the day there.  It's much easier to bring them into that central location. 

 

1166                   COMMISSIONER CRAM:  Thank you.

 

1167                   MS. MODIN:  That's something -- and it's also important to note that we have had Dauphin people appearing on "The Big Breakfast" show.  They found it important enough to drive into Winnipeg, and one of them was a singer and the other one was an artist, I believe, and they do support the show as well.

 

1168                   COMMISSIONER CRAM:  Because it does have the largest Ukrainian festival in Canada.

 

1169                   MR. CRAIG:  Commissioner Cram, I think one of the benefits for us of getting up on DTH with those kind of penetration numbers in Dauphin would mean that it would provide incentive for us to get out there.  As Darcy indicated, we have had people from the region on the show, so it really makes our regional and rural focus much more potent if the people can see us. 

 

1170                   COMMISSIONER CRAM:  Thank you very much, panel.  I understand that we're going to have to return to Alberta at the insistence of Commissioner Williams again.  Thank you.

 

1171                   THE CHAIRPERSON:  Thank you.  I'm now going to call on Commissioner Williams, who has a number of questions remaining on your station in Edmonton.

 

1172                   COMMISSIONER WILLIAMS:  I wasn't aware that we had left Alberta.  The Edmonton section is going to be very brief simply because I've covered a lot of the issues in the Calgary section and there will be no programming questions, given our discussion of the common programming and licence elements during the review of the Calgary portion. 

 

1173                   So without further ado -- and I recognize from the questions that some of the answers will most likely be the same as well, but I will run through them because it is a different licence.

 

1174                   The CKEM-TV's tuning shares have been declining since 1999 with a marked drop for 2001.  Is that the same answers; Calgary and the Canadian specialties and the U.S. specialties gaining in share?

 

1175                   MR. THORGEIRSON:  All conventional TV's have been down, so.

 

1176                   COMMISSIONER WILLIAMS:  Could you please explain the assumptions you incorporated in your projection of a one-time drop in local ad revenues between 2001-2002?  Is that September 11th again?

 

1177                   MR. CRAIG:  The same answer as Calgary.

 

1178                   COMMISSIONER WILLIAMS:  Okay.  Your projections for 2002 reveal that expenditures for sports programs have decreased to zero.  Did the station drop or lose the rights for a sporting event?

 

1179                   MR. CRAIG:  We lost the Edmonton Oilers' contract. 

 

1180                   COMMISSIONER WILLIAMS:  There is also a significant increase in administrative expenses projected for 2002.  Can you explain the cause of this increase?

 

1181                   MR. THORGEIRSON:  We had to give that money to Jim, I guess.  I'd like to thank you for that. Did you say 2002?

 

1182                   COMMISSIONER WILLIAMS:  Yes, there's a significant increase in administrative expenses projected for 2002.  Can you explain the cause of this increase?

 

1183                   MR. CRAIG:  One moment, please.

 

1184                   COMMISSIONER WILLIAMS:  You can get back to us at reply, if that's more convenient.

 

1185                   MR. CRAIG:  Yes, we will do that.  We'll take that opportunity, Commissioner Williams.

 

1186                   COMMISSIONER WILLIAMS:  Please explain the cause for the large increase in syndication and production revenues?  Again, the same answer as Calgary?

 

1187                   MR. CRAIG:  Same answer.

 

1188                   COMMISSIONER WILLIAMS:  Three, I just want to explore your relationship on "The Sharing Circle".  Ms. Meeches is a contractor?

 

1189                   MR. CRAIG:  She's actually an independent producer. 

 

1190                   COMMISSIONER WILLIAMS:  Okay.  So other than producing the program, does she work with your other aboriginal staff?

 

1191                   MR. CRAIG:  Yes, she does.

 

1192                   COMMISSIONER WILLIAMS:  And I think you answered this earlier, the employees work within the larger -- they're integrated within the company, it's not a separate unit? 

 

1193                   MR. CRAIG:  Sorry?

 

1194                   COMMISSIONER WILLIAMS:  The aboriginal employees are integrated within the company, they don't operate as a separate unit?

 

1195                   MR. CRAIG:  Absolutely.  Absolutely.

 

1196                   COMMISSIONER WILLIAMS:  Okay.  That's good.  Well, I know I'm encouraged by your company's approach to cultural diversity.  I believe you're definitely on the right track and, in fact, probably setting the pace for your competitors, and I would like to wish you continued success as you enter Canada's most diverse marketplace with your new Toronto licence. 

 

1197                   MR. CRAIG:  Thank you very much.

 

1198                   COMMISSIONER WILLIAMS:  Maybe with the right focus and "The Big Breakfast", they won't eat your lunch. 

 

1199                   MR. CRAIG:  Thank you.

 

1200                   COMMISSIONER WILLIAMS:  Thank you, Mr. Chair.

 

1201                   THE CHAIRPERSON:  On that gastronomic note and noting that suppertime is coming up close, I'll call on counsel.

 

1202                   LEGAL COUNSEL, STEWART:  Merci, Monsieur Le President, I just have one or two questions on the Alberta stations and my colleague will have several questions on the Manitoba stations.  Just one.  It's getting late.

 

1203                   Just for the record, if you could confirm that you would accept as a condition of licence the eight-hour priority program commitment as a condition of licence?

 

1204                   MS. STRAIN:  Yes.

 

1205                   LEGAL COUNSEL, STEWART:  Thank you.  I was just struck as to the difference in profitability as between CKEM and CKAL for the period 1998 to 2000.  Can you just explain that, please?

 

1206                   MR. THORGEIRSON:  Part of it was related to additional expense incurred for the production of Oiler Hockey, and Cam could maybe explain to you the difference on the revenue side.

 

1207                   MR. COWIE:  Calgary was faster out of the gate on audience growth and it was also probably the second hottest market in the country at that time, so the sell-out factor exceeded that from Edmonton.  It's also influenced or indicated by the percentage of national and local.  The percentage of local is higher in Edmonton market than it is in the Calgary market, and that's an access to inventory scenario.  I mean, Calgary was selling out faster.  It had more momentum behind it.  That's the basic reason.

 

1208                   LEGAL COUNSEL, STEWART:  Thank you.  Very briefly, what has happened to the "Spectrum" program, and by that I think it was in your application  that led to their decision in '96.  I think you had a program called "Spectrum" on Sunday morning between 9:00 and 12:00 that was proposed? 

 

1209                   MR. CRAIG:  I think we had a discussion on that earlier in the proceeding and covered it off. 

 

1210                   LEGAL COUNSEL, STEWART:  Oh, okay,  sorry.  The Commissioners are nodding in agreement.  I apologize.  I hand it over to my colleague.

 

1211                   LEGAL COUNSEL, BENNETT:  Thanks.  I just have one clarification and follow-up with respect to the closed captioning issue.  Just in the context of your response in deficiency that to close captioned, unscripted portions of news for CKX would be prohibitively expensive, you mentioned earlier that you currently caption 88 percent of programming; is that correct?

 

1212                   MR. THORGEIRSON:  When you include the scripted portions which are currently captioned, it's about -- it's 88 percent of the schedule.

 

1213                   LEGAL COUNSEL, BENNETT:  So does that mean that for your news programming, the unscripted portions would be about 12 percent?  Is it directly --

 

1214                   MR. THORGEIRSON:  You'd have to break it down by minute throughout the show, the unscripted portions being the ad libs between two hosts, being video stories, the actual clips within those video stories, news stories.  And as I said to Commissioner Cram, the whole issue is the only way to really effectively caption an entire news program is through real time captioning, and the cost of that is about $150 an hour so that would be about, a little over $70,000 a year.  So at CKX, it's not a question of how much you want to make, it's how much more do you want to lose, I guess.

 

1215                   LEGAL COUNSEL, BENNETT:  So what you're saying then it's not possible in terms of figuring out what captioning is within the realm of possibility, it's not possible to break down the news between scripted and unscripted?

 

1216                   MR. THORGEIRSON:  We could do that for you and file it, but it would vary, given the program and given the news of the day.  There are certain stories that air in the six o'clock news and in the news at noon on CKX that come to us from the CBC.  Those would traditionally be captioned, but not everything that comes in is captioned.

 

1217                   LEGAL COUNSEL, BENNETT:  I guess what we'd be looking for is an average -- on average, what proportion is unscripted.  I guess where we're coming from is in considering possibly a less onerous condition of licence than the one that was put to you in deficiencies, we're wondering if you could comment on the possibility of condition of licence that took into account the unscripted portions.  For example, a requirement to caption 90 percent of CKX's programming including, for example, 90 percent of news.

 

1218                   MS. STAIN:  We could certainly accept a condition of licence that 100 percent of the scripted portions of our newscasts would be captioned.

 

1219                   LEGAL COUNSEL, BENNETT:  Okay.  Thank you. 

 

1220                   LEGAL COUNSEL, STEWART:  Those are all our questions, Mr. Chairman.  Merci. 

 

1221                   THE CHAIRPERSON:  Thank you.  And those are the panel's questions.  I've told the secretary that I believe there's an individual intervener from out of town who can't be here tomorrow that I've indicated we would accommodate.  So we would ordinarily end now, but we will take that one intervention at this point.  Madam secretary?

 

1222                   THE SECRETARY:  Thank you, Mr. Chairman.  We'll move on to Phase II. 

 

1223                   THE CHAIRPERSON:  That's fine.  Counsel?

 

1224                   LEGAL COUNSEL, STEWART:  Sorry, just a suggestion.  Perhaps should we have a break of five minutes in order to allow the panel to leave the witness table and then to allow Madam -- the intervener to appear.

 

1225                   THE CHAIRPERSON:  Do I hear three minutes?  We'll pause briefly and invite the panel to step down.  Would you call the other intervener, please?

 

1226                   THE SECRETARY:  Yes, I'd like to invite Ms. DeWaal to come forward for her intervention, please, when the decks are cleared.

 

--- Upon recessing at 1747 / Suspension à 1747

 

--- Upon resuming at 1750 / Reprise à 1750

 

1227                   THE CHAIRPERSON:  Madam Secretary?

 

1228                   THE SECRETARY:  Thank you, Mr. Chairman.  By the way, Ms. DeWaal's intervention number is 003, for your reference.  And Ms. DeWaal, would you go ahead when you're ready, please.

 

1229                   MS. DeWAAL:  My dog has a tendency to urinate when he's really nervous.  I'm hoping not to repeat that performance today.  I'm just kidding.  I'm not that nervous. 

 

1230                   COMMISSIONER WILLIAMS:  You'd be the first. 

 

1231                   MS. DeWAAL:  I will be very brief.  I just wanted to come today and, by the way, thank you very much for the invitation, to speak to my experiences with Calgary A-Channel. 

 

1232                   Again, my name is Deb DeWaal, and I'll have to give you a little bit of background about where I came from so you understand how it has impacted me and why I feel I do about the A-Channel.  I was a police officer in the City of Calgary for 10 years and I left the police service and now own a business in town, a small company, and we offer personal safety training.  We are on the crime prevention end. 

 

1233                   As you can imagine, being a police officer when I think of media, or at least in my past life when I thought of media, I had certain paradigms that existed because of the nature of the work that I did.  When I made the transition from being a police officer into a business owner, I realized that I really needed to utilize the media in order to enhance my business and to get the word out about what I was doing.

 

1234                   I was pleasantly surprised, and continue to be pleased with the way -- the professionalism that I've experienced with the A-Channel, not just when I'm speaking with them but the approachability of them, I find them unique in that respect when compared to the other media places in Calgary.

 

1235                   My experiences with them in particular have been mainly appearances on "The Big Breakfast", as well as when there has been a violent crime in the community, be it a sexual assault or a paedophile activity, et cetera, they have often come to me as a specialist in crime prevention. 

 

1236                   The benefits that I have found from that are two-fold.  What I've seen them do with the stories and how they - I'm trying to pick up the terminology today - I guess that would be hard news that they're covering, the way that they do it has been very, very well done because it's such a sensitive thing when you're talking about violent crime, specifically against children, and the way they have handled it has been extremely professional.  They have been very respectful, not only to the victims, the victims' families, but to the community as a whole and I found that very refreshing.  They're not just reporting what the crimes have been and whatnot, but they also take another step and they talk about how can we educate the community to prevent this type of thing from going on again.  And that's where my application has been, I guess.

 

1237                   They are sensitive in nature.  We had an experience in Calgary recently, a loss of a police officer whose a partner with my husband and one of the A-Channel people who I had a relationship with contacted me for information, essentially, and I told them due to the nature of my position that I felt it would be inappropriate.  They were so respectful, and again, coming from my past life experiences, I was thrilled at the way it is.  They really do build relationships within the community, and I'm speaking as a business owner and a citizen of Calgary that the relationship seemed to be more important than the task, and I appreciate that. 

 

1238                   I also speak from the perspective of being a business owner.  They have allowed me the opportunities, more so than any other, to actually talk about what I do, and to give information whether it's practical advice to the community about how to prevent violent crime from happening to them and their families all the way through to my events, the things that I'm planning and the programs that I'm running, et cetera. They even went so far one time to -- there was a murder of a child and they were really doing a lot to cover prevention.  They approached me and we actually set up a full program that they came out and did and allowed the community to see what people can do because they were demanding answers:  What can we do to protect our children?  I thought that was quite exceptional that they took -- because there's a lot of logistics involved in doing that so I very much respected that.

 

1239                   And to speak to their courage, they actually allowed me to be attacked by their "Big Breakfast" host, Dave Kelly, and they allowed me to punch him out.  That only happened once and likely will never happen again, but I don't know any others that would actually do that, so that was a lot of fun.

 

1240                   So just in conclusion, I just wanted to say that my experiences have been exceptional.  I have been pleasantly pleased coming from a background where I was always leery, and they truly do care about their community.  That is my perception.  And they truly care about the citizens as well as the small businesses in Calgary.  Thank you.

 

1241                   THE CHAIRPERSON:  Thank you.  I'll turn the microphone over to Commissioner Williams, provided you don't punch him out.

 

1242                   MS. DeWAAL:  I'll try and stay seated.

 

1243                   COMMISSIONER WILLIAMS:  My colleagues have been warning me to be careful with my questioning with you, given your treatment of the A-Channel.

 

1244                   MS. DeWAAL:  We made the hits of the week though, so that was pretty impressive. 

 

1245                   COMMISSIONER WILLIAMS:  I've read your intervention and I've heard you make your presentation and I don't have any questions.  I don't require further information.  I thank you for your intervention.

 

1246                   MS. DeWAAL:  Thank you.

 

1247                   THE CHAIRPERSON:  Thank you very much.  We'll adjourn now and resume at 9:30 a.m. tomorrow morning.

 

--- Whereupon the hearing adjourned at 1756, to resume on Thursday, April 11, 2002, at 0930 / L'audience est ajournèe a 1756, pour reprendre le Jeudi 11 Avril 2002 à 0930