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TRANSCRIPT OF PROCEEDINGS
FOR THE CANADIAN RADIO-TELEVISION AND
TRANSCRIPTION DES AUDIENCES DU
CONSEIL DE LA RADIODIFFUSION
ET DES TÉLÉCOMMUNICATIONS CANADIENNES
SUBJECT / SUJET:
VARIOUS APPLICATIONS FOR BROADCASTING LICENCES
TO CARRY ON A TELEVISION PROGRAMMING UNDERTAKING
TO SERVE ALL OR ANY ONE OF EDMONTON, CALGARY,
AND RED DEER, ALBERTA /
PLUSIEURS DEMANDES DE LICENCE DE RADIODIFFUSION
VISANT L'EXPLOITATION D'UNE ENTREPRISE DE
PROGRAMMATION DE TÉLÉVISION POUR DESSERVIR LES OU
L'UNE OU L'AUTRE DES VILLES D'EDMONTON, DE CALGARY
ET DE RED DEER (ALBERTA)
HELD AT: TENUE À:
Shaw Conference Centre Shaw Conference Centre
Salon 8 Salon 8
9797 Jasper Avenue 9797, avenue Jasper
Edmonton, Alberta Edmonton (Alberta)
June 17, 2003 Le 17 juin 2003
In order to meet the requirements of the Official Languages
Act, transcripts of proceedings before the Commission will be
bilingual as to their covers, the listing of the CRTC members
and staff attending the public hearings, and the Table of
However, the aforementioned publication is the recorded
verbatim transcript and, as such, is taped and transcribed in
either of the official languages, depending on the language
spoken by the participant at the public hearing.
Afin de rencontrer les exigences de la Loi sur les langues
officielles, les procès-verbaux pour le Conseil seront
bilingues en ce qui a trait à la page couverture, la liste des
membres et du personnel du CRTC participant à l'audience
publique ainsi que la table des matières.
Toutefois, la publication susmentionnée est un compte rendu
textuel des délibérations et, en tant que tel, est enregistrée
et transcrite dans l'une ou l'autre des deux langues
officielles, compte tenu de la langue utilisée par le
participant à l'audience publique.
Canadian Radio-television and
Conseil de la radiodiffusion et des
Transcript / Transcription
VARIOUS BROADCASTING APPLICATIONS /
PLUSIEURS DEMANDES EN RADIODIFFUSION
BEFORE / DEVANT:
Charles Dalfen Chairperson / Président
Andrée Wylie Commissioner / Conseillère
Ronald Williams Commissioner / Conseiller
Andrew Cardozo Commissioner / Conseiller
Stuart Langford Commissioner / Conseiller
ALSO PRESENT / AUSSI PRÉSENTS:
Peter McCallum Legal Counsel /
Mike Amodeo Hearing Coordinator /
Coordonnateur de l'audience
Pierre LeBel Secretary / Secrétaire
HELD AT: TENUE À:
Shaw Conference Centre Shaw Conference Centre
Salon 8 Salon 8
9797 Jasper Avenue 9797, avenue Jasper
Edmonton, Alberta Edmonton (Alberta)
June 17, 2003 Le 17 juin 2003
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE / PARA
INTERVENTION BY / INTERVENTION PAR:
CHUM Limited 359 / 2077
Global Communications Limited 376 / 2167
INTERVENTION BY / INTERVENTION PAR:
CTV Inc. 408 / 2354
Mid West Television Ltd. 475 / 2705
Craig Media Inc. 497 / 2817
Canadian Film and Television Production 569 / 3217
Richard Patterson 593 / 3323
Association of the Canadian Advertisers 600 / 3360
Ava Karvonen 607 / 3392
Tonya Roberts 612 / 3411
Edmonton Japanese Community Association 623 / 3449
Martin Ignasiak 627 / 3465
Rosemarie and Darren Jordan 634 / 3486
Afzal Hamid 638 / 3497
Alberta Motion Picture Industries Association 649 / 3555
Merv Phillips 656 / 3598
Paul Moulton 665 / 3635
Chris Orsten 669 / 3651
Pumphouse Theatres Society 673 / 3670
TABLE OF CONTENTS / TABLE DES MATIÈRES
PAGE / PARA
PHASE III (continued)
INTERVENTION BY / INTERVENTION PAR
Central Alberta Crimestoppers 685 / 3687
Red Deer City RCMP 687 / 3700
Central Alberta Women's Emergency Shelter Society 690 / 3716
REPLY BY / RÉPLIQUE PAR
Global Communications Limited 698 / 3764
CHUM Limited 726 / 3917
Edmonton, Alberta / Edmonton (Alberta)
--- Upon resuming on Tuesday, June 17, 2003 at 0930 /
L'audience reprend le mardi 17 juin 2003 à 0930
2066 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît. Good morning, everyone.
2067 Mr. Secretary.
2068 MR. LEBEL: Thank you, Mr. Chairman.
2069 Just a couple of preliminary matters. Just to indicate for the record that CHUM Limited has filed with the Commission the definition of "cross-cultural programming" as requested by the Commission yesterday. CHUM has also filed a copy of the Calgary projected revenues that will be placed on the public file.
2070 We have now reached Phase II --
2071 THE CHAIRPERSON: Excuse me, Mr. Secretary. I hate to say this, but CHUM in your second exhibit you have violated the small print prohibition.
--- Laughter / Rires
2072 THE CHAIRPERSON: We will do our best with this one, but hopefully people will have a little bit of compassion and file a larger script. I think you could have actually fitted that on a page. Thank you.
2073 Mr. Secretary.
2074 MR. LEBEL: Thank you, Mr. Chairman.
2075 I will now ask CHUM Limited to intervene at this time. You have ten minutes to intervene.
2076 MR. LEBEL: Mr. Switzer, your microphone is not on.
2077 MR. SWITZER: Thank you, Mr. Secretary.
2078 Mr. Chairman, Madam Vice-Chair, Members of the Commission. For the record, my name is Jay Switzer, President and CEO of CHUM Limited. I would just like to briefly reintroduce the panel members.
2079 To your far right, Sarah Crawford, Vice-President, Public Affairs; David Caporicci, Director, Sales Administration; David Kirkwood, Executive Vice-President, Sales and Marketing; Peter Miller, Vice-President, Planning and Regulatory Affairs, Radio and Television.
2080 Mr. Chairman and Members of the Commission, I will keep my comments brief this morning.
2081 First, let me state that CHUM takes no position with respect to the proposal to disaffiliate CKRD-TV from the CBC.
2082 While we have concerns that this will be another plank in Global's development of a second national network, it is up to the Commission to determine what is in the best interest of the viewers of central Alberta.
2083 However, should you approve such a move, we would most strongly object to the addition of rebroadcasting stations in Calgary and Edmonton for three reasons.
2084 First, unlike other broadcasters that have applied for licences in major markets, Global has committed little in the way of new programming initiatives: only 2.5 hours of new regional programming.
2085 Second, the addition of rebroadcasters in Calgary and Edmonton will give Global an unprecedented level of dominance in the Province of Alberta and have significant impact on the Alberta television marketplace.
2086 Third, it will be a major leap in Global's development of a second national network which would not only be a major policy leap, but would also have a detrimental effect on all other English-language broadcasters.
2087 While Global has argued that without these rebroadcasters the residents of Calgary and Edmonton will be denied new programs, it should be noted that what is really at issue here is not new service for the people of Edmonton and Calgary, but and expansion of full CBC service and the continuation of local service to the people of Red Deer and central Alberta.
2088 CKRD is currently carried in both Edmonton and Calgary at the option of cable operators. We would not want the disaffiliation of this channel from the CBC to crystallize its carriage in these markets, and certainly not have it guaranteed priority carriage in Edmonton and Calgary.
2089 In addition to providing little in the way of new commissioned programming, Global's application, if approved as filed, would result in Global becoming an even more dominant media player in Alberta. While Global has argued that rebroadcasters in Edmonton and Calgary would have limited impact, CHUM disagrees.
2090 Global has clearly understated the revenues a CH station would achieve in Calgary and Edmonton. Given CH's strong programming slate and its 4.8 share as an out-of-market stations in Toronto from Hamilton, it is inconceivable that an even less locally oriented schedule would achieve only a 1.7 per cent share as an out-of-market station in the far less competitive markets of Calgary and Edmonton.
2091 As Global does not traditionally pursue local retail revenues, even if DTH carriage is not assumed, rebroadcast transmitters in Edmonton and Calgary would give CKRD CH revenues comparable to those in our projections.
2092 Global's existing over-the-air television stations in Edmonton and Calgary control approximately 45 per cent of television advertising revenues in the Corridor.
2093 Global, through its parent company, also operates the major daily newspaper in Edmonton and Calgary.
2094 If the Commission authorizes the addition of rebroadcasters in Calgary and Edmonton, Global would have two commercial over-the-air television stations in each market. This would not only represent a deviation from the Commission's policy of one conventional station per market, but it would further solidify Global's hold on the majority of media advertising in the Province of Alberta.
2095 While Global's argument is that CKRD cannot survive without these rebroadcasters, we note that CanWest is not the only large broadcaster with stations that have marginal profits.
2096 Moreover, maintaining CKRD was one of the commitments made by CanWest as part of the approvals in the WIC transaction.
2097 We have another major concern should the Commission choose to approve the disaffiliation of CKRD based on CanWest's confirmation yesterday that their plan is to create an Alberta version of their CH stations in Victoria and Hamilton.
2098 We are not opposed to the CBC disaffiliation part of their application, in the same way we were not opposed to CanWest's acquisition of the WIC Victoria and Hamilton stations. A main reason for our comfort during the WIC transaction hearing was the pledge CanWest provided other broadcasters with their voluntary acceptance of certain program telecast restrictions pertaining to not telecasting first-run programs from the mininets, WB, UPN, and so on, and the voluntary commitment to not telecast feature films.
2099 These promises were restated in the body, and I believe the appendix of the WIC decision, and we believe a similar condition is appropriate in this case, given CanWest's desire to mirror the prime time schedule of other CH stations.
2100 Our concerns about potential for program dominance and undue influence, given CanWest's dominant position, are still a major concern and we would expect the Commission to apply these same restrictions should disaffiliation be granted.
2101 Mr. Chairman, Madam Vice-Chair, Commissioners, we submit that the nominal benefits of approval of these applications to extend Global's second network into Calgary and Edmonton do not outweigh the impacts in Alberta and on the Canadian broadcasting system.
2102 That concludes our remarks and we would be happy to answer questions.
2103 THE CHAIRPERSON: Thank you.
2104 Commissioner Langford.
2105 COMMISSIONER LANGFORD: Thank you very much. I have a few questions. These aren't new concepts you are dealing with, but it has come at us in a kind of new package form. So forgive me if I am struggling a little here to get aligned. That was a lot of information in ten minutes. Well done, on one side, but from having to react to it, it is taking me a second or two.
2106 Let me begin with your statement that Global has understated its revenues. That, of course, was put to them very, very diligently by the Vice-Chair yesterday and again by the Chair a little later. I don't have the advantage of yesterday's transcript, but I believe their counterpoint to that statement was that they don't have anything like full coverage in these rebroad areas.
2107 They don't have the advantage of DTH and I think their numbers were something in the 40s, under 50 anyway, per cent coverage in some of these areas like Edmonton and Calgary and that, therefore, it really was apples and oranges, that you were in there with a full package, full coverage, full local stations, as you have said they aren't -- so obviously you can't argue with that point at least -- that you are offering a much different package and that, therefore, they are constrained and that they are being realistic in saying that they will obviously have much lower revenues than you.
2108 How do you respond to that?
2109 MR. SWITZER: Commissioner Langford, our answer would be in two parts. Clearly, they are proposing an attractive schedule and we believe their revenues are understated for many reasons, but to deal with the coverage and transmitter issue.
2110 The fallacy, if that's an appropriate word, in that argument, to us certainly, is that very little of their actual tuning takes place over the air. Twenty-five, or perhaps 30 years ago, coverage made a big difference. In other major markets that I am aware of, in Toronto for example, the actual tuning to the Citytv signal, the actual amount of total tuning that happens over the air is only 1 or 2 per cent; 98 per cent is via cable or satellite. I don't know the exact Edmonton number, but I would certainly suspect it's under 5 per cent.
2111 So the argument that the coverage doesn't give them a competitive signal, given the high penetration of cable, just doesn't ring true to us.
2112 The second argument would be that we believe because this would be the only CH signal in the market -- we are assuming for the moment it's just the disaffiliation and it's just out of Red Deer -- we believe they will have a very desirable signal for cable because cable will want to remain competitive with satellite.
2113 Satellite has a CH signal from Victoria, a CH signal from Hamilton. If cable were to ever take the Red Deer signal off, there would be no CH signal on cable in Alberta and cable wouldn't have a competitive program offering.
2114 For those two reasons, if just -- we are not talking about differences of order of magnitude where revenue estimates are always estimates and one might suggest they are plus 5 or plus 10 per cent. We are talking about a doubling or tripling of order of magnitude here, given the experience when you compare -- they spend a lot of time talking about discount from the home market. That doesn't pass our smell test.
2115 What passes the smell test is Hamilton into Toronto as a distant signal or an out-of-market signal, 4.8 per cent into a hyper competitive market, and they are trying to suggest Red Deer into Edmonton or Calgary, much less competitive, only 1.7 per cent.
2116 We have some trouble with that.
2117 COMMISSIONER LANGFORD: You can't know how they market, but you are in the same business. Will they try to package ads in some way so that you get a piece of Hamilton, you get a piece of Edmonton, you get a piece of Victoria?
2118 MR. SWITZER: They are certainly able, smart and aggressive competitors. They have the ability with lots of inventory and, as was discussed yesterday, they have the ability in newspapers. Mr. Tomik downplayed the value of some of those ads that run everyday in their newspapers and we hope to read back the transcripts of what Mr. Tomik said to the sales reps on the newspaper side. Next time we are trying to buy time, we should have such a problem.
2119 They have lots of ability to take advantage of their properties here. We are not complaining about that. That's an advantage they have and we live with it.
2120 COMMISSIONER LANGFORD: I am not trying to inspire you to complaint. I am trying to draw on your experience as to how if you had the package that you say they will have, how you might sell that, how you might increase your revenues using those pieces, or perhaps others.
2121 MR. SWITZER: Mr. Kirkwood may want to add to this. They have so many tools in their toolkit, part is just sheer market size. If their existing market share -- we believe it to be 45 per cent, the Vice-Chair suggested 50, they suggested 40, before the addition of this disaffiliation plus the power of newspaper in the market, that dominance, that ability, that top 10 market control, top 10 programming, where not only are they buying Alberta first, but they are buying CanWest first for the programs is a very formidable competitive force.
2122 MR. KIRKWOOD: I could add one thing, that there would no doubt be local packaging. They are not in a position -- at least, they don't sell themselves as a network, but local Red Deer and Calgary regional packaging would be an obvious thing to do. That would increase their dominance in the market place that way.
2123 COMMISSIONER LANGFORD: We do have rules about not selling local advertising if you are not presenting local programming, and they have agreed to abide by that with some small exceptions for these people they are trying to help along which seems almost like a kind of civic charity more than anything else.
2124 Is that not enough of a penalty, or do you feel that just doesn't counteract what they are going to do on the national side?
2125 MR. SWITZER: We would like to give our good friends at CanWest the benefit of the doubt, and we don't wish to open up a 20-year history and discussion of what is local and what isn't. There is truly not as much single-store local around. There is still potential for them for multi-store outlets and what we might consider local business, and they might legitimately consider regional business.
2126 There is still great potential for them there.
2127 MR. KIRKWOOD: They would, for instance, I am sure, package CH with Global in Toronto and they would do that here on a national level and that really is the bulk of the business, as we all know. In fact, it's getting very clouded the difference between national and local and I think TVB in their TSS reports now may dump the whole local notion and just do national spots.
2128 Further to that, I think an explanation for some of the difference in revenue, they described one of the reasons was that they would not be taking local advertising in Edmonton and Calgary. I assume that to mean retailers that are Edmonton- exclusive or Calgary-exclusive, but the people in the television advertising game would most likely have an outlet in Edmonton and one in Calgary, and the amount of business that would be local-local is probably less than 5 per cent.
2129 So it is not like you could take the 25 per cent we are describing as local off their tab.
2130 COMMISSIONER LANGFORD: So you don't take the specific local Chev dealership, but you can take ads from Chevrolet or you can take ads from --
2131 MR. KIRKWOOD: The Chev Dealer Association, something like the Brick, or any of these advertisers into market.
2132 COMMISSIONER LANGFORD: One final question just based on some of the comments you made today. This is, as I say, a bit of a potpourri because I am trying to pick up on some of the statements you made.
2133 The statement you made -- and we are always happy to have help with our police work so we are happy to have you make these sorts of statements, of course, but you reminded everyone of the CKRD commitment made during the WIC takeover transaction and in a sense a deal is a deal and they have to stick with it. But how long do they have to stick with it, assuming they have come to use in good faith and that they have a problem and this station is a problem and they are looking for a solution and the CBC is looking for a solution. In good faith they are saying, "Here is a solution."
2134 You don't happen to like this particular solution, but if we say no to this, how long, in your mind, are they stuck with this commitment they have made following the WIC transaction?
2135 MR. SWITZER: We were comforted by CanWest's confirmation yesterday, as we heard it, that they planned to continue service throughout the licence term, I believe the upcoming licence term, regardless of your decision, and that certainly gave us great comfort.
2136 When we had originally read the material, it read in much more of a threatening tone in terms of sustainability and viability. Clearly, things can't be forever. We were comforted by their commitment to a full licence term regardless.
2137 COMMISSIONER LANGFORD: Because you have said yourselves, particularly during the last licence renewal, that you liked the different elements of your own extended portfolio to carry your own freight and you reminded us that conventional has been a burden to you for some years in some areas, and you have been carrying it to a tune of, I think, 46 million over the last few years, but you would like to shake that burden off.
2138 You came to us looking for various concessions which we don't have to review here, and your argument was, "Look, we need some flexibility. We need to somehow get all of these different elements of our portfolio on their own feet and paying their own way."
2139 How fine do we dice this? Do we slice it just between specialties and conventionals, this type of philosophy of yours that you adhered to at the hearing in Gatineau, that you espoused, or do we take it right down to each station? Is it ultimately that each station has to pay its own way, and then do we have to dice it down and say, "Well, the local programming on each station has to...". I mean, how far do we extend this philosophy of pay your own way?
2140 MR. SWITZER: I think as a principle, it's healthy for the system. I think the healthier each unit is, the better if can serve its viewers. But clearly there has to be balance, and I think the creation of the group licensing process and the ability for the Commission to talk to the large and medium-sized players at one time about larger issues provides balance for health of each operator, health of the system, fair and equitable contributions given size and other issues, while not taking away from your ability and our obligation on a station-by-station basis to make sure that everything is balanced.
2141 I think ultimately it has to be both and that is one of your responsibilities to make sure that you feel comfortable with that balance, we would suggest.
2142 COMMISSIONER LANGFORD: We are happy with our responsibility, but I was wondering how far you saw this kind of approach to self-sufficiency going. Do you see it going down to the station level in your own groups, for example?
2143 MR. SWITZER: We have some sympathy, or quite a bit of sympathy, with CanWest and other operators who are trying to deal with small market problems and it applies to radio as well.
2144 In general, and as a matter of philosophy, without taking away from the obligations of larger players, given their ability and health and ability to contribute, the narrower the focus on analysis is, both in terms of obligations and viability, that that is ultimately a healthy thing so that those stations can best serve local viewers.
2145 COMMISSIONER LANGFORD: Thank you very much.
2146 I don't know if some of my colleagues have questions. Those are mine, Mr. Chair.
2147 THE CHAIRPERSON: Thank you very much.
2148 Mr. Secretary.
2149 MR. LEBEL: Thank you, Mr. Chairman.
2150 I will now ask Global Communications Limited to intervene at this point.
2151 THE CHAIRPERSON: Before you begin, ladies and gentlemen, have you filed that document that you were going to get in first thing this morning?
2152 MS BELL: I was about to say that. That was my first comment.
2153 THE CHAIRPERSON: Go ahead.
2154 MS BELL: Yes, we did.
2155 THE CHAIRPERSON: Have you got it, Mr. Secretary?
2156 MR. McCALLUM: Yes. I will have a couple of questions on the document in due course, Mr. Chair.
2157 THE CHAIRPERSON: Could we have some copies, please?
2158 MS BELL: Pardon me, I didn't hear that.
2159 LE PRÉSIDENT: Est-ce qu'on peut avoir des copies?
2160 MS BELL: We did not have 15 copies. I apologize.
2161 THE CHAIRPERSON: Do we have the facilities in the room there, Mr. Secretary?
2162 MR. LEBEL: We only have one copy, Mr. Chair, and we have some problems with the document. Confidentiality was requested for some of the document, or the information that was filed, and it is being reviewed now. It should be discussed by counsel after the question period.
2163 MR. McCALLUM: One of the questions I was going to ask the applicant was whether they would provide abridged copies of certain pages for the public record where they have requested confidentiality, Mr. Chair.
2164 MS BELL: Yes, we would.
2165 THE CHAIRPERSON: We will have to examine it. There is no use in discussing it at this point.
2166 In any case, you are in intervention now, so go ahead.
2167 MS BELL: Thank you.
2168 Chairman Dalfen, Commissioners. We filed an extensive written intervention concerning the CHUM proposals and at this time we have nothing to add. We are here in case you have any questions and we are prepared to answer.
2169 THE CHAIRPERSON: Thank you.
2170 Commissioner Cardozo.
2171 COMMISSIONER CARDOZO: Thank you, Mr. Chair.
2172 Just a few general questions then about what you had to say in the written intervention.
2173 On the face of it what you are saying is that the Alberta market is not that strong, but that the market can take "us Global", but can't take "them CHUM". One might say if you look at the approaches that each application has put forward, it would be in your interest to put forward figures that are more conservative because you are making the case that the market can take a full-blown new player, and you have these other benefits you are offering in terms of the disaffiliation of CBC, and so forth, but that with CHUM, one could say that their figures may be more robust because they are making the case that the market is more robust and can take a new player like them.
2174 So let me ask you if you think that's a fair or unfair characterization, and also whether you have any comments on CHUM's financial projections.
2175 MS BELL: I will ask Mr. Tomik to answer that question.
2176 MR. TOMIK: I'm glad you asked that question, Mr. Cardozo.
2177 Obviously, there is going to be a difference of opinion. That's part of the process. But really I think it comes down to some pretty fundamental issues, and the first one would be, as Mr. Langford stated yesterday, we are talking about the economic issues in this province. It's a province that is coming off three years of drought in the agricultural industry. The mad cow disease issue in Canada last week was reported as a $1 billion hit to the industry. About 75 per cent of that industry is in Alberta.
2178 If you look towards -- and he mentioned it yesterday -- the SARS issue and how that affects tourism right across the country -- and it truly does -- that's another economic issue.
2179 In terms of the oilpatch, there is really two things at play here. First of all, with the settling of the war in Iraq, which is good news, that's going to drop some demand in pricing for oil. The second one, which wasn't mentioned but is important is the Kyoto Accord which is going to affect investment in the oilpatch in Alberta.
2180 So those are all notional things. I think CHUM has put forward a notion of increases of about 3.3 per cent going forward making some sense, and I believe in our application we are saying it's closer to about 2 or 2.4 per cent. So although there is a big percentage difference, we are looking at a much more conservative base.
2181 I think the real proof in the pudding is looking at the television revenues over the last number of years and how they have grown in this market. If you look at the last five years' growth in this market -- not just for private broadcasters, not just for private conventional broadcasters, but total television because that's a market -- five years ago the total television investment in Alberta was about $266 million. As of August 31st of last year, it's $299 million. So it has grown at an average annual rate of about 3 per cent in total.
2182 If you look at where the growth has come from -- and this is really the important key difference -- you will see that network, which is really specialty television, and network sales has grown at an average annualized rate of 8 per cent.
2183 If you look at the growth of local conventional in the Alberta market over the last five years, the growth rate has been about 1.5 per cent. So it's a very minimal growth rate looking backwards.
2184 There was also some mention about what a great year television is having and they quoted up-to-date figures to March. In fact, I agree with them. It is about 7 per cent. It looked good for the first half and then the war in Iraq hit. I can tell you from our experience that the third quarter over the spring, April, May and June, is nowhere near approaching a 7 per cent increase.
2185 In terms of an economic cycle for television -- and we do cycle -- Alberta had a good year last year. It is going to have a good year this year, but not as good as last year. When you can put two or three years back to back of increases together, over the long period of time that I have been in this business, that's good news. It's time for a little bit of a cycle down after two or three years.
2186 I think finally they predicated a lot of their look at the market at a thing called "lift", the ability to provide lift to a market, that there is pent-up demand for a new television station in these markets.
2187 You know what? There was a time in this industry that that pent-up demand existed and it was a time when nothing changed. It was a time when there wasn't a plethora of new licences, whether they were conventional or specialty or digital, and the inventories of television audiences remained the same and the advertisers have a pent-up demand. They couldn't place their money.
2188 Well, the situation continues to change in television. There is a plethora of spots available. But what has happened is the audiences haven't increased. The average tuning to television in Alberta is the lowest in the country at about 21 hours a week and all that has happened is this 21 hours of viewing is getting chopped into smaller pieces.
2189 If there was a lift available because of pent-up demand, it would have shown five years ago after the Craigs turned up with a brand new television service in Alberta, in Edmonton and Calgary. With an average annualized growth of 1.5 per cent it proves there is no pent-up demand.
2190 If you look at local revenues --
2191 THE CHAIRPERSON: Excuse me. I don't mean to interrupt, Mr. Tomik, but if you look at your HYPN study they state that there was a lift -- this is page 10 -- in Calgary and Edmonton of national TV revenues when Craig stations entered the markets in 1998.
2192 MR. TOMIK: Yes, it did, but that lift though was no different than the lift that occurred in the rest of Canada. There was no significant difference caused by this pent-up demand in the Alberta market.
2193 So if I look at the local revenues in Alberta as reported by TVB in --
2194 THE CHAIRPERSON: That's still from there was no lift.
2195 MR. TOMIK: In the first year there was, sir.
2196 THE CHAIRPERSON: But I thought you just said there wasn't.
2197 MR. TOMIK: Over the five years, there wasn't.
2198 THE CHAIRPERSON: Well, I am just reading what HYPN said, looking at 1998 there was.
2199 MR. TOMIK: For that one year.
2200 THE CHAIRPERSON: You didn't qualify your earlier statement.
2201 MR. TOMIK: I'm sorry. I'm still referring to the five years --
2202 THE CHAIRPERSON: I just wanted to know whether you agreed with the HYPN study.
2203 MR. TOMIK: Yes, I do. There was a one-year lift.
2204 If I look at Alberta local revenues in 1998, they were $76.4 million. If I look at Alberta local revenues as of August 31, 2002, $77.3 million. No change. The national spot went from $125 million in 1998 to $137 million last year. That is about a 2 per cent lift.
2205 So is the market healthy, as healthy as is demonstrated by CHUM? I think not. Has the lift of a new television station in this market caused more advertising when Craigs came on? I think not. I think the situation for Canadian television has changed dramatically from the old pent-up demand days.
2206 So that is what I have to say on that.
2207 COMMISSIONER CARDOZO: What about your comments on their projections, their revenue projections? Do you think those are fair?
2208 MR. TOMIK: You know what? I think they are reasonable and they are reasonable because when you are putting forth the notion of a new licence in any market there is certainly some room for error. I don't have a great issue with their numbers. I do have some issue, as stated in the application, about where those revenues are coming from and I think that is the important point.
2209 COMMISSIONER CARDOZO: On the matter of pent-up demand, one of the things we keep hearing from -- I might get the name of the association wrong, but the Canadian Association of Advertisers -- is that there is pent-up demand and their message to us is "License more" and their message to us is also "Don't increase the 12-minute limit because then you get into an advertising clutter, but the pent-up demand and the only thing they can think of is license more.
2210 MR. TOMIK: True statement. I think that sort of opinion is swaying because through all of the licensing that has occurred in Vancouver over the past few years, through all of the licensing of the new digitals and specialties, what has happened is at the end of the day we are not generating new television audiences from all of these new services. We are cutting them up.
2211 At the end of the day, it's not about buying 30-second commercials. It's about the availability of the total audience and they are just being chopped into smaller pieces. So does an advertiser win by more licensing? In the long run, my answer is they do not.
2212 COMMISSIONER CARDOZO: On the matter of the current challenges facing the Canadian economy, namely SARS and mad cow, what is your advice on how much we should be taking that into consideration? If you look at the CHUM's projections, they are not taking it into consideration, and I could suggest that we are licensing for the long term, the very, very long term because when somebody has a licence it's out there forever. So we may not be looking at a crisis that hits at a certain point.
2213 The Commission will have the luxury of wrapping this up over the next couple of months so we will have a bit of a better sense as to what happens with these two issues, both SARS and mad cow, or sort of coming to a point where we will know whether they are going to carry on or not, or at least we will know where they are heading.
2214 To what extent should we be looking at those issues as really serious issues? When you think of a station that is not going to be up for another year or two and have a seven-year licence?
2215 MR. TOMIK: I wish I could give you some guidance on that. We have been talking in CanWest about this new advertising category called diseases --
--- Laughter / Rires
2216 MR. TOMIK: Because, unfortunately, these kinds of issues are causing us to get some revenue and it's like the toothpaste category. Now we have the disease category.
2217 I have never, in my experience, seen anything like the last two years -- things like 9/11, the Iraq war, mad cow, SARS. There just seems to be a consistent number of these issues over the past couple of years. I can't tell you how tomorrow will be, but it just seems like there is a consistency of out-the-box things happening that nobody can plan for, that seem to be occurring on a regular basis. I hope they all go away, but it doesn't seem to be that way and I can't tell you what the next one is either.
2218 COMMISSIONER CARDOZO: In terms of the projections that you and CHUM have put forward -- and I am trying to keep the discussion more on them because that is the intervention of your comments on their application -- if you take year one in both cases where you are predicting an advertising revenue of $7.4 million and they are predicting $17 million.
2219 What if your figures were a bit conservative and theirs were a bit robust and yours were, in fact, more like $10 million and theirs were more like $14 million? The difference then wouldn't be that great. So if we were to pick one or the other as opposed to both, the effect in the market may not be that great.
2220 MR. TOMIK: I think it's important to note that for the incumbent broadcasters -- and you will hear from others today -- the less effect, the better is part one.
2221 But I would like to just take you through a little bit of an exercise based on CHUM's $17 million in comparison to ours, to try and help you through the process of why ours is lower.
2222 There are really four things, and I could think of 44, but there are four that have significant impact.
2223 Firstly, if you took their $17 million in total and took away their $4.25 million for local revenue in Edmonton and Calgary, which we are not touching, secondly you deducted about 25 per cent of their revenues for DTH coverage, which we do not have -- and there is a significant audience in Alberta; we proved that I think -- that is another $4.2 million. If you took out about $600,000 in revenue potential for RD because of the 11.5 hours of programming for ethnic and aboriginal that we won't have access to, that would be about another 600.
2224 The real key issue is about the local news. RD local news for Red Deer is not going to have a lot of appeal in Edmonton and Calgary. The CHUM news will. And even taking 5 per cent of their revenues out, or about $850,000 for the success of their news in Edmonton and Calgary, you would bring their revenues from 17 in those four moves down to about $7.2 million that quickly.
2225 I think they have an estimate of revenues for the market that is likely about right, considering there will be home stations in Edmonton and Calgary. As I said, I don't really dispute their revenues. We have a different platform we are putting forward. What I do dispute is the sources of those revenues.
2226 COMMISSIONER CARDOZO: Lastly, a somewhat conceptual question, but still related to figures. By being part of this hearing and this proceeding, you are weakening the case you are making right now at this stage of the intervention, I think, in that had you not been putting forward an application at this hearing, you would simply be able to say that this market cannot take a new player. But what you have done is to say it can take a new player. You have raised the bar from status quo to $7.4 million and they are at $17 million.
2227 Did you consider that when you were putting this forward, and should we look at that as part of this?
2228 MR. TOMIK: You know what? You have to understand clearly that this is not $7.4 million of new revenues coming out of Edmonton and Calgary. Today, the base revenue of CKRD Television is 4.5. So the additional that we are taking out of Edmonton and Calgary total is $3.8 million, 1.9 per market. So the comparison figure for new entries one against the other is $3.8 million impact from the RD approval and $17 million from the CHUM approval. So that is the difference because the 4.5 for RD already exists for the RD stations.
2229 COMMISSIONER CARDOZO: And I do have one question on your application in relation to theirs. If we were to license both, I take it your projections would still be about the same?
2230 MR. TOMIK: No. Our projections would drop if you licensed both.
2231 COMMISSIONER CARDOZO: Is that something we have talked about? I have missed that if we --
2232 MR. TOMIK: Yes, we talked about that yesterday, but I can go through it again.
2233 COMMISSIONER CARDOZO: No, that's fine. We have it on the record. My apologies.
2234 Thank you very much. Those are my questions.
2235 MR. TOMIK: Thank you.
2236 COMMISSIONER CARDOZO: Thank you, Mr. Chairman.
2237 THE CHAIRPERSON: I have a few questions, Mr. Tomik and ladies and gentlemen.
2238 First of all, you heard the CHUM testimony on their revised projections justifying a 6.0 per cent increase in the Corridor market for this year on the basis of TVB results that were showing advertising up to 7.8. Do I take it that you dispute that number?
2239 MR. TOMIK: I do. I think it's going to be lower than the 6 per cent.
2240 THE CHAIRPERSON: What do you think it's going to be?
2241 MR. TOMIK: Based on our experience, and we know what the third quarter ended at, and the summer, I think it's going to be closer to 5 per cent.
2242 THE CHAIRPERSON: Based on?
2243 MR. TOMIK: Based on how we know our revenues across the country are looking for the balance of this year.
2244 THE CHAIRPERSON: What about the Alberta revenues?
2245 MR. TOMIK: Alberta is pretty equitable to the rest of the country at this point this year for us.
2246 THE CHAIRPERSON: What do you make of the TVB numbers that show that it's up 7.8?
2247 MR. TOMIK: I believe they are accurate. If I look at the CanWest/Global Television CH numbers for the first six months of this year, we would be in that ballpark. What I am saying is we had a great fall, a great winter. When the Iraq war hit, it just dropped. So we had a good front end to the year, a good first six months. The last six months don't look near the growth of --
2248 THE CHAIRPERSON: You are saying that the TVB 7.8 per cent you accept.
2249 MR. TOMIK: I accept that.
2250 THE CHAIRPERSON: But you are basing your lower estimate on what has happened since that six months.
2251 MR. TOMIK: That's correct.
2252 THE CHAIRPERSON: Just to be accurate. CHUM will have a chance to reply to that when they come forward.
2253 Is the person from HYPN here who did the research?
2254 MR. TOMIK: I'm sorry, they are not here, no. I am slightly familiar though, if you choose.
2255 THE CHAIRPERSON: Well, I wanted to ask whoever did the report, I don't know, if you can help me, that's fine, but usually we like to get this information directly from the source, but we will give it a shot, Mr. Tomik.
2256 This is the same page that I referred to earlier, page 10. I am trying to draw from the numbers on that page how they conclude that the impact is likely to be greater than 50 per cent in existing stations, of the CHUM stations if licences were granted to them, based on the evidence or the graph they put forward on that page.
2257 Perhaps you can guide me to how a number closer to 75 per cent falls out of that information. It's public to know, for example, that the 1998 revenues of total Alberta were $16 million higher than they had been in 1997 for the Alberta market. The Craig numbers are confidential, but knowing those numbers I am trying to read this table in a way that makes the case for a number closer to 75 per cent impact and I can't draw it. So maybe you can help take me through it.
2258 MR. TOMIK: Mr. Chairman, I am not quite comfortable in explaining this, but I can give you notionally the difference between their 50 per cent and our 75 per cent. It really is about the fact that stations do not produce lift anymore in the markets. It's the pent-up demand argument that I put forward before.
2259 If you take a look at what happened over the five-year period to Alberta --
2260 THE CHAIRPERSON: No, I heard that testimony, Mr. Tomik. I am not trying to stop you from answering, but I really would like an explanation of this or it doesn't help me.
2261 MR. TOMIK: I don't feel comfortable doing that.
2262 THE CHAIRPERSON: I would frankly have to discount the evidence because you don't have anybody here to answer to it.
2263 Thank you.
2264 MR. TOMIK: If that has to be discounted, I think my discussion of the pent-up demand would suffice.
2265 THE CHAIRPERSON: Thank you.
2266 Commissioner Langford.
2267 COMMISSIONER LANGFORD: Just one question.
2268 I think Commissioner Cardozo characterized correctly, but I will take just another stab at it in this last question to ensure I know what your answer is.
2269 It seems clear to me that you are advising us not to license CHUM. Is that a safe starting point?
2270 MR. TOMIK: That would certainly be our preference.
2271 COMMISSIONER LANGFORD: All right.
2272 It seems clear to me that one of the major reasons you are doing that, setting aside your own aspirations in the world, but one of the major reasons that you have elucidated this morning is that the economy is not as predictably strong as they would have us believe. The revenues are not anywhere near as guaranteed as they would have us believe, and that the fall out on the existing players may be more -- the balance may be offset, but if the revenues aren't there then the damage is something that we have to look at.
2273 So the question I have for you -- and I know it's a difficult one, but we have dealt in hypotheticals in these rooms before -- assuming that we do not accept the proposition you have put to us, the full package isn't acceptable to us and so that we deny your application -- you can smile, Charlotte, it's okay. It's just a hypothetical question.
--- Laughter / Rires
2274 COMMISSIONER LANGFORD: Hypothetically speaking, assuming that for whatever reason we do not accept the application, the proposition you have put to us, that leaves us to decide on the CHUM application. In consideration of the economy that you have described and the forecast and the prospects that you have described this morning, where would you suggest that the sort of balance of equity should come down? On the side of protecting the existing players in a market that you are describing as not overly strong, or on the side of adding some diversity to the market and taking the chance that some of these economic problems that, by your own admission nobody can forecast exactly won't work out and then everything will be robust? Which way should we go?
2275 MR. TOMIK: I think you know certainly the Commission always has an opportunity to call for licences at another date. I personally have been here and refused licences in Alberta twice before, before we acquired the WIC applications. I think the economic state as proven right now, and the precarious notion over the next couple of years that we know today, says to go ahead and license RD the way we have asked for, of course, and you can always come back another day if some of these notions in 24 months that CHUM has put forward state that these things happen in the market.
2276 COMMISSIONER LANGFORD: I want you to just take that one aspect out of the equation for a moment and just assume that your proposition is not before, if that will keep Charlotte a little farther from something drastic.
2277 So assuming that your proposition isn't before us today and all the work you have done researching this market, your experience in the market, the sort of elements that you put on the table this morning in a narrative form. Where is the balance of equity? Should we protect what is here and get it through this tough period, or at least this uncertain period, or should we say, "Gosh, these viewers who answered CHUM's survey they want more and in the end that's how we serve in this country and that would be the best way to serve them".
2278 MR. TOMIK: Looking at the impact on our Global stations in Calgary and Edmonton, and the revenue impact there of $3 million in Calgary and about $2.5 million, by our estimates, in Edmonton, should you do what you wish with CHUM, I would say that you should deny, you should review in 24 months. Let's see how it shakes out.
2279 COMMISSIONER LANGFORD: Thank you very much.
2280 That is my question, Mr. Chairman.
2281 THE CHAIRPERSON: Counsel.
2282 MR. McCALLUM: Thank you.
2283 In asking for an abridgement of the documents that you filed this morning, it would be appreciated if you can leave on the public file on each document things that are public. For example, I am looking at Schedule 1. There is a column of population figures. Presumably that could be public and when you abridge things you would abridge the columns for which you are specifically claiming confidentiality.
2284 MS BELL: We will do that.
2285 MR. McCALLUM: Thank you.
2286 If I could also ask a question or two. Just in the hypothetical situation that the Commission were to approve the disaffiliation and the donation of the transmitters to the CBC, but were to deny the Edmonton and Calgary rebroadcasters, in that hypothetical situation the costs that I see to Global would be the cost of a replacement transmitter of about $391,000 and the loss of CBC network payments of $450,000.
2287 Do you see any other direct costs to Global in that situation?
2288 MS BELL: Revenue losses.
2289 MR. TOMIK: The indirect cost of going ahead with this for RD only would be those costs as well as drops in revenue because we are giving up the Coronation transmitter which is about 12 per cent of the present audience. So revenues would drop. That would be part one.
2290 Part two would be the fact that we are moving Red Deer onto a new transmitter and people would have to find it and there would be some amount of revenue drop, at least initially until people got used to that.
2291 Part three would be that CBC is now fully competitive with a full schedule in the central Alberta market and would gain revenue from that too. So there would be not so much cost issues, but there certainly would be revenue impacts.
2292 MR. McCALLUM: And how long would that sort of transition period last in your view?
2293 MR. TOMIK: The loss of the Coronation transmitter and the 12 per cent of that audience would be forever. That would be a drop. I think it would take about two years for the new channel positioning to come back to levels as they are today.
2294 The competitive factor of CBC being able to sell network and regional in those audiences would be another forever.
2295 MR. McCALLUM: Thank you.
2296 In terms of the benefits of that hypothetical scenario -- and I will tell you what I think they are and you can tell me if you agree or not -- you would get a receipt, a charitable receipt for $1 to $1.2 million. That is based on your answer yesterday. I am getting that from Clause 4 of the agreement between CBC and Global that was dated the 31st of March and signed by Mr. Bonar of Global and filed as a deficiency response in the CBC application. That's a non-appearing item on the agenda.
2297 So one of the benefits I see is the charitable receipt.
2298 MR. CAMILLERI: I think what we said yesterday -- that was a proposition, I think, that you suggested.
2299 MR. CAMILLERI: That is not something we have looked at in terms of a tax benefit, and certainly this wasn't looked at as a tax planning exercise.
2300 MR. McCALLUM: However, it is one of the benefits, as I see it.
2301 A second one is the full control of the CKRD-TV schedule, including peak hours of six days weekly. That would be another benefit of the hypothetical scenario, and I guess associated with that is the ability to sell the full schedule.
2302 Are you with me so far?
2303 MS BELL: In Red Deer.
2304 MR. McCALLUM: Yes.
2305 MS BELL: Only.
2306 MR. McCALLUM: You would have the ability to sell CH programming line up in peak hours and this would be, I would assume, more attractive to Shaw Cable than the duplicate CBC programming that it is currently showing in Edmonton and Calgary.
2307 MS BELL: With due respect, there is some Global and CH programming on CKRD presently as it is distributed by Shaw on channel 52. It would be more attractive, you are correct in stating that. I don't know how much more attractive to the cable company that makes it.
2308 MR. McCALLUM: Right. And the hypothetical scenario would also be more attractive to DTH operators because with the disaffiliation scenario you would be making an Alberta signal available that would have access to the whole satellite footprint.
2309 MS BELL: That would be theoretically nice. Interestingly we have a very attractive station in Montreal that has very attractive global programming and that is not carried by either satellite distributor.
2310 I don't see that the disaffiliation of a small market station that serves 67,000 people is going to be a really hot deal for any of the DTH operators even though we wish it would be.
2311 MR. McCALLUM: But in comparison to the status quo it would allow an Alberta signal to be viewed by presumably all of Alberta's viewers, including those in Calgary and Edmonton, as well, of course, as those in Red Deer.
2312 So in comparison to the status quo, presumably it would be a benefit.
2313 MS BELL: It would be a benefit, although I believe that there is a Calgary station -- the Craig Calgary station is not up in Alberta by either of the DTH operators and there are other small market stations that are also not up that are based in Alberta.
2314 I don't know how much of a benefit that is.
2315 MR. McCALLUM: If you were able to replace all the CBC programming on CKRD Red Deer with the CH schedule, and you have a full promotional campaign for CKRD-TV in Edmonton and Calgary and you took let's say "Will & Grace" as an example, then I would imagine that viewers could see TV promotions on CITV Edmonton and CICT Calgary telling them that "Will & Grace" would be found on the RD 50 or the Red Deer channel at such and such a time.
2316 They would likely see ads for the program in the entertainment sections of the Journal and the Herald with a similar message, and they may also see other things that you could use in a campaign to promote that program, maybe billboards or busboards or radio, to promote your programming.
2317 So with all these things that Global would have at its disposal, could they not build ratings in these cities enough to have a measurable effect on national revenues?
2318 MS BELL: I guess the first point -- and I will ask Jack Tomik to address the second part of your question, but I think the first point is you are making the big assumption that the cable companies are going to continue to carry it or that DTH would be carrying this signal.
2320 MR. TOMIK: I think we have to understand clearly -- and I will give you a bit of a description of the relationship with some of the newspapers in the markets that we have them. Those people are charged with running a good business, like the television people are, and there is not an ever-ending supply of promotion space available in the newspapers for the television stations.
2321 If you look at the Calgary Herald or the Edmonton Journal over the last two years since we have owned them, and actually go through and see how many pages or how much space was given to Global in Edmonton or Global in Calgary, it's not a lot. It's more than other broadcasters, granted, but it's not a lot.
--- Laughter / Rires
2322 MR. TOMIK: Did you enjoy that, folks?
--- Laughter / Rires
2323 MR. TOMIK: Truly, take a look.
2324 MR. McCALLUM: Isn't it true that Global is heavily promoted in the Ottawa Citizen in Ottawa?
2325 MR. TOMIK: There are some promotion for Kevin Newman's Global National in the Ottawa Citizen like all of our papers. The beneficiary of the newspapers has been not so much "Will & Grace" or "Friends". It has been about our local programming, our local news, especially Global National with Kevin Newman.
2326 MR. CAMILLERI: I think the other point we want to make, not to revisit the discussion yesterday and rehash that, but that is one of the benefits that we have been able to derive in terms of preserving and growing our news, a diverse voice with Global National. We have been able to bring a new national voice onto the stage because that is one of the benefits we discussed yesterday in terms of cross-promotion.
2327 To close the point, on one hand it's hard to be criticized, on the point I think you are making in cross-promotion, but then on the other hand, when you talk about the benefits from it, it feels like we are being criticized on both sides of the equation.
2328 So it's either it's good or it's bad, but we are getting it on both sides.
2329 MR. McCALLUM: Would you agree though that in the hypothetical scenario that we have put forward, you would promote your programs as extensively and as reasonably as you can to ensure that as high a listener audience would listen to those programs, using some of the tools or maybe all of the tools that I have mentioned, and maybe some others that I haven't thought of.
2330 MR. HOOVER: I would like to just comment about the notion of cross-promotion between stations of the U.S. programming, and just make sure everybody is aware that we consider that commercial inventory.
2331 If we are promoting a newscast with Canadian content that is promotional, but if we were to promote on a Global station a program that is airing on CH that is American content, we would have to characterize that as commercial time on the Global station.
2332 MR. McCALLUM: And the rest of it is a "yes", effectively.
2333 MS BELL: I'm sorry, I didn't catch the last part of what you said.
2334 MR. McCALLUM: The rest of it is a "yes" to my suggestion that Global would use all available means to promote its programming.
2335 MR. TOMIK: We would, in proportion to the revenue potential that we see for this endeavour.
2336 MR. McCALLUM: Thank you, Mr. Chairman.
2337 THE CHAIRPERSON: Thank you.
2338 Commissioner Wylie.
2339 COMMISSIONER WYLIE: Ms Bell, I fail to understand why the cable operator in Edmonton and Calgary carries the current CKRD and wouldn't carry a CHCH/CKRD, considering that Edmontonians and Calgarians get the full CBC service anyway.
2340 Why would it not be considered an appealing proposition as a distant signal which, as counsel has suggested, you can then promote more heavily if you want to, and you would certainly have more appealing programming on there to make it appealing.
2341 Why would a cable operator not be interested if, even in these days of capacity constraints, they are carrying CKRD as is as a CBC affiliate? Have you actually talked to the cable operator about their intentions if you disaffiliated and brought in the CH schedule in Red Deer?
2342 MS BELL: No, we have not because it's not part of our plan. We wouldn't be able to get simulcast unless we were a --
2343 COMMISSIONER WYLIE: I understand, it wouldn't be quite as good, but what you are suggesting is that they wouldn't carry it. I thought I heard you say that the chances of them carrying it as a distant signal were not high and I am wondering why that would be.
2344 MS BELL: I'm sorry. Just to be clear, I believe what I am saying is that the chances that were are going to get carriage on DTH are not necessarily high. The chances that the cable companies would continue to carry the signal as a distant signal, they might do it for a period of time and then two years down the road they could remove it. It's again at their option.
2345 COMMISSIONER WYLIE: I suppose you could then reapply for a transmitter which is what Mr. Tomik suggested. We could wait and see what happens and come back in two years.
--- Laughter / Rires
2346 MS BELL: That's your decision.
2347 COMMISSIONER WYLIE: Thank you.
2348 THE CHAIRPERSON: Thank you very much.
2349 Monsieur le secrétaire?
2350 MR. LEBEL: Thank you, Mr. Chairman.
2351 We have now reached Phase III of these two applications in which interventions by other parties will be presented.
2352 The first appearing intervention will be presented by CTV Incorporated. For the record, I would like to indicate that intervenors No. 2, Directors Guild of Canada and No. 27, Aboriginal People Television Network have elected not to appear. These two interventions will remain on the record as non-appearing interventions.
2353 Mr. Brace, you have 20 minutes to present your intervention.
2354 MR. BRACE: Thank you.
2355 Mr. Chairman, Members of the Commission. My name is Rick Brace and I am the President of CTV.
2356 Before we start our presentation I would like to introduce you to the members of our panel here with me today.
2357 To my right are Ivan Fecan, the President and CEO of Bell Globemedia and CEO of CTV; Fred Filthaut, Senior Vice-President West, CFRN-TV; and Pat MDougall, Vice-President and General Manager of CFCN-TV.
2358 To my left is Elaine Ali, Senior Vice-President, CTV Station Group. Seated behind me, from my left, are Stephen Armstrong of Armstrong Consulting; Karen Tse, Director of Finance, CTV; Brian McCluskey, Vice-President, Revenue Management, CTV; Rick Lewchuk, Senior Vice-President, Program, Planing and Promotion, CTV; and Rob Malcolmson and Kathy Robinson of Goodmans, our legal counsel.
2359 It is generally accepted that the three largest Canadian markets in Canadian television are Ontario, British Columbia and Alberta, in that order. For CTV, however, B.C. is a developing market with our station still establishing itself and where CanWest is dominant. Alberta is CTV's number two market and that is why it is so vitally important for us to come before you today so that you can understand the impact of licensing two new stations in this market and the effect that it would have on CTV.
2360 We believe the CHUM and Global applications should be denied for two reasons. First, licensing of a new entrant in Calgary and Edmonton will adversely affect existing licensees, and in so doing diminish the quality and value of programming available to viewers.
2361 Second, these applications raise important policy questions which should be addressed on a system-wide basis before any new licences are issued.
2362 Let me deal with the policy issue first.
2363 Licensing either CHUM or Global at this time will result in a major structural change in the competitive landscape. The successful applicant will effectively have two multi-station groups, as defined by the Commission in its Television Policy.
2364 Rather than implementing this structural change in a local market licensing context, we believe that a policy proceeding should be held in order to consider:
1) the impact of such duplicate ownership on the Canadian broadcasting system; and
2) the incremental contributions that should be required in exchange for such competitive advantages.
2365 Ivan is going to talk about why we feel such a proceeding is critical, and then we will move on to explain more specifically why we oppose the CHUM and Global applications.
2366 MR. FECAN: Good morning.
2367 The policy against ownership of more than one over-the-air stations in a market has been around for almost 25 years. It came originally from concerns about concentration of ownership, or, expressed differently, diversity of voices, and the possibility of anti-competitive behaviour. These concerns are still valid today.
2368 We acknowledge that over the years exceptions to the two-station policy have been granted for what seemed by perfectly good reasons.
2369 But when we step back and look at the big picture, we now have two station groups out of three, CHUM and Global -- each owning two stations in Ontario and Vancouver, the biggest revenue markets in Canada.
2370 You know, when two out of three have exceptions, the policy seems pretty thin. If you add Alberta, each of these two companies will have two national systems, or two multi-station ownership groups with a potential reach of 70 per cent as defined by the Television Policy.
2371 But the significance goes beyond this because these top markets draw a disproportionate share of conventional television revenues in English Canada. If CHUM gets Alberta, it will have two stations in markets which account for 79 per cent of conventional television advertising revenues. In Global's case, this translate to 88 per cent because, of course, they have two stations in Montreal as well.
2372 Some say that it's improper to count ACCESS. But with their choice of fine educational programs like the Arnold Schwarzenegger festival running this Saturday in prime time, with the movie "True Lies" -- it must be a media literacy course -- I don't think you can completely ignore ACCESS either when you count potential reach.
2373 When you think of it, this is really quite extraordinary. A few years ago we were talking about dual station ownership in a market. In this proceeding, we are talking about two companies each owning two stations in most of the country.
2374 That's why this is potentially a transforming moment, a tipping point if you will, for CHUM, for Global, for the broadcasting system and, of course, for CTV in terms of the challenges we will face to maintaining our profitability and to defend ourselves from the potential of anti-competitive behaviour by these applicants.
2375 We suggest that the issue in front of you at this hearing is more about the profitability of CHUM and Global rather than about local service. For either CHUM or Global who buy national rights for their U.S. programming, adding another market allows them to increase their revenues for these, their most lucrative programs without increasing their costs.
2376 Having a second station group increases the advantage and that means instant additional profitability.
2377 You know, it seems curious and telling that unlike Vancouver and Toronto application calls where new entrants came forward, no one except these two companies applied here.
2378 If we only look at this in the context of a licensing application for the Alberta market, I submit we have missed the point. We are also losing a remarkable and irretrievable opportunity. We are at a critical juncture with respect to priority programming, in particular Canadian drama. Now is the moment to ask whether imposing greater obligations as a quid pro quo might be part of the solution to Canadian drama. Now is the moment to ask what's in it for Canada.
2379 That is why this is also a tipping point for the Commission. If the Commission grants either of these applications, the horse will have left the barn, and we urge the Commission to seize the moment before it's too late.
2380 MR. BRACE: Let me turn now to the impact on CTV of approving either of these applications.
2381 CTV is the only major station group without dual conventional ownership in major markets. Thus, we are already at a competitive disadvantage. If either the CHUM or Global applications are approved, this disadvantage will be severely exacerbated.
2382 Ownership of two stations in a market gives that owner significant advantages including:
Increased ability to simulcast
Increased ability to counter program
Increased scheduling and purchasing power
Increased ability for cross-promotion selling opportunities
Increased cross-station promotional opportunities
And finally, increased profitability because they are spreading their costs across a wider audience base.
2383 Of course, CTV, like CHUM, also owns a stable of specialty services across the country, but the advantages of owning two conventional stations in a market are very different and flow from being able to program two stations in the same market, with the same kind of programming, with the same advertising base.
2384 Specialities, with few exceptions, are single-genre services with no ability to sell local or regional advertising.
2385 Approval of either of these applications will also mean that CHUM or Global can amortize their national expenses across a bigger revenue base, or they can choose to spend their newfound gains on U.S. programming because they will had additional market power in L.A.
2386 But what will licensing either of these applicants do for priority programming in Canadian drama? The funding system is under severe and unprecedented strain. The crisis in Canadian drama has been the subject of three reports commissioned by the CRTC, and was most recently identified as an issue by the Standing Committee on Canadian Heritage.
2387 We believe the Commission should stop and consider whether two-station groups should mean a greater commitment to priority programming and, in particular, Canadian drama.
2388 Our view is that licensing either applicant will allow to reap more revenues and increase their profitability, without putting commensurate advantages back into the system. It's a great deal for them. It's not such a great deal for the Canadian broadcasting system.
2389 I would like now to turn to Elaine Ali.
2390 MS ALI: Thank you, Rick.
2391 As part of our written intervention, we commissioned Armstrong Consulting to prepare a study for CTV. I am going to refer to it as I emphasize the harm that we believe would be caused to the market and to viewers by licensing either CHUM or Global in this instance.
2392 Private television has seen a significant reduction in profitability over the last several years right across Canada. In every proceeding of this type, applicants claim that they will not have an undue impact on the market and intervenors contest that assertion. In this case, however, everybody agrees that the growth rate will be modest, in the range of 2 to 3 per cent.
2393 All of the studies submitted in this proceeding agree that Alberta, and Calgary and Edmonton in particular, have experienced stronger growth than the country as a whole. However, it's important to understand that there is a difference between the health of the overall economy and that of the television market.
2394 Fragmentation of the TV viewing pie limits the ability of conventional television to benefit from economic growth in the future.
2395 The Armstrong Study projects that profitability for private television broadcasters in the Calgary and Edmonton markets will increase only moderately between now and 2001, and that assumes that no new entrants are licensed.
2396 It's instructive to look at the impact that Craig's A-Channel stations in Edmonton and Calgary had on these markets when they were launched in 1997.
2397 Far from attracting more viewers, the licensing of the Craig's stations fragmented audiences further, and the share of local conventional television stations continued to fail. Profitability in these markets, which exceeded the English private television average in 1997, fell below the industry average with the introduction of the Craig stations and still further below in 1999, 2000 and 2001.
2398 Despite cross-cutting by CTV stations, profitability has still not recovered to pre-1997 levels and the compound annual growth rate of our revenues has fallen significantly.
2399 In addition, Canadian program expenditures increased by only a little over $3 million the year the Craig stations were introduced, substantially less than the $10.7 million that they had projected. In total, the percentage of revenues spent on Canadian programming actually decreased from 1997 to 2002.
2400 On the other hand, foreign programming costs in the combine markets doubled over the period, increasing at a much higher average annual rate of growth than did foreign programming costs for English private television as a whole.
2401 I am going to turn to Fred Filthaut and Pat McDougall for a just a moment and ask them to tell you how the last few years have affected their stations in Calgary and Edmonton.
2402 MR. FILTHAUT: Thank, Elaine.
2403 We have had to make some serious cuts at CFRN Edmonton to cope with what has become an increasingly fragmented and challenging market since 1997. We took a hard look at how we could streamline our costs and find efficiencies.
2404 We made the difficult decision to cut 50 full-time people, a third of our staff, and we have reduced discretionary costs wherever we can. Revenue declined by $4.5 million from 1997 to 1998, and our 2002 revenue figures are the same as they were ten years earlier. With only 98 employees left, three quarters of those are dedicated to local programming.
2405 I genuinely believe that we have cut everything we can at this point without affecting the quality and diversity of our programming.
2406 We frankly don't see the incremental benefits of licensing either CHUM or Global when the market has not yet absorbed the impact of the Craig stations.
2407 MS McDOUGALL: We have had a similar experience at CFCN. Even though all of the Alberta operations were centralized to Calgary, we have still had to cut 26 full-time jobs. Like Fred, our revenues between 1997 and 2002 went down.
2408 If you add Edmonton and Calgary together, the combined drop in revenues is $13.6 million, or a decline of 19 per cent.
2409 If our revenues continue to decline, that will have a serious impact on CFCN's ability to produce local programming. I am really concerned about the impact of any new stations in the Alberta market.
2410 Calgary and Edmonton have more stations per capita than any other major markets in which new stations have recently been licensed. For example, in Calgary there is one television station per 331,000 people. The current local stations in Calgary produce over 85 hours of local news and programming every week. We believe the population of Alberta is very well served already.
2411 MS ALI: So if we look at the impact of the Craig stations on the markets in Calgary and Edmonton, we can see that CTV's revenues dropped, profitability dropped, and local tuning dropped. There was clearly a destabilizing effect on existing licensees.
2412 We believe this is but a precursor of the effect that either a new CHUM or Global station would have on these markets if licensed.
2413 Let's look now at the specific impact that these applicants would have on the markets.
2414 The Armstrong Study shows that the introduction of either the CHUM or Global stations will cut the profitability of the existing private television stations in Calgary, Lethbridge, Edmonton and Red Deer in half, to 7 per cent in 2005 with no real recovery over the licence term. A 7 per cent margin is an unacceptable return for private broadcasters, and the inevitable result will be cost-cutting by existing licensees. This will diminish the quality of on-screen product to the detriment of the viewers.
2415 CHUM has underestimated its impact on the market by assuming a stimulative effect, but there is no evidence that such an effect is likely. There was no simulative effect in Alberta when the Craig stations were launched, and there was exactly the opposite effect when CHUM launched its new station in the Vancouver-Victoria market -- revenue per rating and airtime revenues decreased.
2416 Furthermore, in Global's case there will be a net reduction in total Canadian programming expenditures. This is because the incumbents will reduce their expenditures on Canadian programming as the revenues decline.
2417 CHUM many argue that it won't have duplicated coverage because ACCESS is an educational service, but ACCESS is available across Alberta and functions as a de facto commercial service in prime time, from which a conventional station earns three quarters of its revenues.
2418 It was also just granted an amendment to its licence to increase the amount of advertising on its service by over 50 per cent.
2419 Global seems to assume that it can take a back-door approach to the issue of duplicate coverage by positioning CKRD as a rebroadcaster in Calgary and Edmonton, but unless disaffiliation of its Red Deer station means that the coverage of that station is restricted to Red Deer, we do not see the distinction.
2420 According to the Armstrong Study, Global has seriously underestimated the revenues that it will derive from the CH programming schedule in the Calgary and Edmonton markets by over $99 million over the period 2004 to 2010.
2421 I should pause to say that we are sympathetic to CBC's wish to disaffiliate. CTV facilitated CBC's wish to own its own stations when we transferred our northern Ontario and Saskatchewan CBC affiliates to them in 2002, but unfortunately we are forced to oppose it here because of how Global has packaged this application.
2422 Whether CHUM or Global is licensed, the results will be the same: the new entrant can offset their costs and increase their profitability across the two station groups while the incumbents struggle to restore profitability by making cuts.
2423 I the case of CTV, this is likely to involve additional cost reductions at CFRN and CFCN which, unlike previous cuts, will, of necessity, affect the quality and diversity of local programming.
2424 MR. BRACE: Commissioners, given the significant advantages that will accompany the ownership of two station groups, we would expect to see a commensurate increase in contributions to the system, otherwise the main beneficiary is the bottom line of CHUM or Global.
2425 The Commission has denied applications for good reasons in the past, for example when the Commission deemed that the Alberta market could not support new entrants in 1994. We believe you should deny these applications as well.
2426 We have come to you with two requests. First, to hold a full public policy proceeding to clarify the common ownership rules and address the regulatory obligations that should accompany the privilege of duplicated coverage when exceptions to the policy are made.
2427 Second, to deny both the CHUM and Global applications and delay any future calls for applications until after such time as a policy proceeding has been completed.
2428 We believe that now is the tipping point. Such a public proceeding must be held at this crucial moment before the opportunity is lost and before decisions are made that permanently change the nature of the Canadian broadcasting landscape.
2429 We appreciate the opportunity to appear before you today and are happy to answer any questions that you may have. If you direct your questions to me, I can direct them to the appropriate member of our team.
2430 Thank you.
2431 THE CHAIRPERSON: Thank you.
2432 Commissioner Langford.
2433 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.
2434 I want to start by saying that you have filed a very, very complete intervention and recapitulated it today in your comments and you have the Armstrong Study attached to that. Then CHUM has filed a very complete and thorough reply.
2435 So what I am not proposing to do this morning is to take every point that CHUM makes and say, "What about that?" because we will be here for three weeks.
2436 I think we are quite capable of sitting down with that type of information. So that I don't want you to think in a sense that I am just kissing off all of your work, I think it would probably be more productive if I just kind of dealt with some of the generalities with you, if you agree, and even if you don't agree, that's what we are going to do.
--- Laughter / Rires
2437 COMMISSIONER LANGFORD: It's so nice to be up here and not down there.
--- Laughter / Rires
2438 COMMISSIONER LANGFORD: I think I want to start with some figures, but in a very general sense.
2439 You have said today how hard you were hurt by the Craig licensing some five years ago, and how recovery has still not come about, full recovery. You made that point, of course, in spades in your written intervention, complete with tables and analysis by the Armstrong Study.
2440 There seems to be no doubt that your stations were hit harder for some reason than others. Roughly speaking, it seems that Craig has been able to attract about 18 per cent of the revenues in this market, 14 from your stations, 2 from the CBC and 2 from Global.
2441 So leaving CBC aside for a moment, why is it, do you feel, that Craig hit your stations so much harder than the Global stations?
2442 MR. BRACE: I am going to turn to Brian McCluskey in a moment to just respond on the relative effect and also the impact of what happened in the marketplace, but just out of the gate, it's true, we were impacted far more severely. It could be a question of the audience performance during that period of the Global stations over the CTV stations, but let me turn to Brian for a more accurate and in-depth approach to the question.
2443 COMMISSIONER LANGFORD: Sorry, can you explain what you mean by "audience performance"?
2444 MR. BRACE: Just in terms of the advertising that is being sold, how are the relative stations performing in the marketplace? How do we perform from a sales --
2445 COMMISSIONER LANGFORD: The station performance rather than the audience.
2446 MR. BRACE: The station performance, sorry.
2447 COMMISSIONER LANGFORD: I just wonder if somehow your viewers had let you down somewhere along the line.
--- Laughter / Rires
2448 MR. BRACE: The viewers never let us down, Commissioner Langford.
2449 MR. McCLUSKEY: I think the easiest way to respond to this is back at the time that the Craig station did launch, our stations were at a serious disadvantage with respect to Global's in terms of top 10 programming, or top 20 programming, and that is a huge driver for rate premiums and share gains.
2450 Because of that, because advertisers need that within their schedule, Global was still a must-go station. We had some top 20, not the volume at that stage in time, and hence the net effect was they bought Global, they paid the premium, then they had to go somewhere to get inventory cheaply and that was Craig. So we were offset on two levels: we both had to lower efficiencies because Craig was on the market, and we also realized lower levels of sale.
2451 COMMISSIONER LANGFORD: So Global had better shows than you.
2452 MR. McCLUSKEY: At that point in time, yes,
2453 COMMISSIONER LANGFORD: And Craig had better prices, but you haven't recovered yet. So you are just not having good luck at finding good shows?
2454 MR. BRACE: Actually, in point of fact, we have recovered to a certain extent and I think that we tried to make that clear. If we didn't we apologize. Out of the gate there was a significant hit for us in terms of audiences, or in terms of revenue and in terms of performance.
2455 What we have seen is that we have managed to recover some of that to the extent now where in terms of revenue we are roughly $5 million below the 1997 level. The point there is that we have still, even based on a schedule that now contains eight of the top 10 programs in prime time, we have still not been able to climb back to where we were in 1997. So there still is a residual effect, although we have improved both our advertising, from where we started in 1997, and certainly our PBIT from where we were in 1997.
2456 COMMISSIONER LANGFORD: Now comes the dicey bit because I don't want to be insulting, but I want to put a question to you that I just want you to take as academic and not offensive, but what if you are just not doing a good job? I don't mean that, I really honestly don't, but it is possible that you just haven't picked the right shows, you don't market as well as the other guys, you are not as nimble, you are not as quick and all that jargon that we all pretend to hate but we all use day and night.
2457 Why should a wannabe entrant pay for that? Why should CHUM or -- well, Global is not a new entrant so let's just deal with CHUM. Why should a brand new entrant to this market be penalized because possibly you are just not doing a good enough job? Craig has come in and they are making out like bandits. I mean they are doing well for new people. They are selling. They may have the right mix. Global has held on to all but 2 per cent of their market, their revenue share.
2458 Essentially, is your message to us, again not to be offensive but to be clear, look, we are not really very good at this yet so protect us for a while longer?
2459 MR. BRACE: I would suggest, Commissioner Langford, that we are very good at what we do. We had the original impact. But I think what is important here is to recognize just how important this market is for us.
2460 You talk about promotion, you talk about what is core to our business. That's acquiring good programs. We have been able to achieve that. We have already the eight of the top 10 in our schedule this year and we have grown an audience. Hopefully, we will be able to continue along that road. We are actively selling in this market.
2461 Understanding that this market for us is the second most important market in the country I think it would be remiss of us not to pay the appropriate attention, you know, to what is happening in the area so that we were impacted to a huge extent out of the gate. We have managed to climb back but we are still not there, and I don't think it is for a lack of trying or, and no offence taken by the way, for a lack of kind of putting the appropriate effort or maybe the right effort in achieving the goals we set.
2462 COMMISSIONER LANGFORD: Some of us are A students and some of us are B students and some of us get those gentlemen fees, and that is just the way it is. We may try hard, but there we are. As I haven't shown my teenage kids my old report cards, I am not going to put them on the record today, but I know the feeling, shall I say, of not winning those gold medals. I do know that feeling.
2463 So the question I have to you is you say to us today, "this is our second most important market". I mean, that is kind of almost -- that is a pretty dramatic statement. That is a do or die type of statement.
2464 We had some discussions earlier with the CHUM people and with the Global people about just how we as regulators should regard your portfolio, if I can call it this. Should we say, look, you are a pretty profitable company, you are making lots of money, 500 and something million dollars in revenues across the country, and the fact that you are not doing so well in each and every piece of your portfolio, if I can put it that way, well, too bad, you are doing well in your specialties, you are doing well in some areas, you are making lots of money and the viewers want to see some new TV and we are going to bring some people in and, you know, just carry freight, govern yourself accordingly, get more nimble?
2465 Or should we say, no, the proper way to break this down is market by market, not only break it down between the specialities carrying their freight, and I think you have heard some of this discussion earlier this morning, if you were here yesterday you heard it, not only breaking it down between conventional and specialty, but also saying, no, each one of these groups has to be doing reasonably well in each market area before we will bring in new players?
2466 How do you suggest we look at your portfolio?
2467 MR. BRACE: I am going to ask Ivan maybe to say a few words on this, but maybe I could start just by saying that as business people we obviously encourage top performance in all of the markets so we are going to focus on market by market performance. That is only natural.
2468 In understanding the portfolio perspective, in other words, a big organization with specialty, with individual stations in various markets covering this country, you know, should we be looking more at who we can support and who we can kind of carry along in times of need and in times of trouble? To a great extent we kind of do that already. We have markets like Saskatchewan which are more difficult to operate in. We have markets like the Maritimes which are more difficult to operate in.
2469 But when it comes to a primary market, one like Alberta which, you know, we have said now several times is our number two market, the expectation there is that you can't kind of carry that along and hope that it someday hits the market, can't continue to underachieve. That presents a red flag for us.
2470 Ivan, maybe if you would like to add to that.
2471 MR. FECAN: I think our perspective is that -- I mean as a company let me answer to you first from our point of view before I suggest some of the things you might look at. From our point of view we look at our overall profitability. We do better than CHUM. We don't do as well as Global. We are somewhere in the middle of the pack.
2472 We look at specialty and conventional differently for one reason -- well, for several reasons. One, there is different revenue streams applicable to each: specialty can't take local and can't take regional advertising with some very small exceptions. Two, we have partners on most of our large specialty channels, we don't own 100 per cent of it. So we kind of look at that and we say that's one group.
2473 The conventional group, we have one national system and some stations do better than others, but when you are looking at your top one or two or three revenue producing areas and then you understand that you are also accepting less than optimal performance in the maritimes or in Saskatchewan or in northern Ontario, you sort of try and balance that in some way.
2474 That is kind of how we approach it and why there is a lot of checks and balances there. But essentially, we kind of look at birds of a feather and say that those should be looked at uniquely and then accumulated to get your big picture view.
2475 I would have to say that obviously if there is a specific issue in some station or some network. That is a short-term issue of start-up, difficulty in the market for some particular short-term reason. Then everybody pulls together and we just kind of get them through the rough patch.
2476 But it is different if it is a permanent change to the effectiveness of profitability of a station. That forces you to look at it in a very grown up way in a much more tougher way because then it is not just, you know, get me through the rough patch, it is, gee, you know, this is your number two market and it's going to be hit badly for, you know, a really long time. That is how we make that distinction.
2477 For the short-term stuff we band together, we get through it. For the long-term stuff, you have to do some soul-searching.
2478 COMMISSIONER LANGFORD: Look at it from the other side though. If there is something of a long-term problem in this market it may, partially because of the introduction of the Craig and partially because of your own unfortunate program picks early on that you are now trying to correct and, you know, you are downsizing, you are trying to react but you are still not out of the woods yet. So what we are looking at is a situation, and I am trying to look at it from another perspective, from perhaps Mr. Miller's perspective, we are looking at a situation where here is a company that has got a lot of experience in this market, has a lot of depth to its pockets to bring parts of its family through the bad patches, and they are saying this market just can't support another player right, there just isn't money in it for now and we will all have to pay. Why then does CHUM want to get in?
2479 I mean their experience too and essentially what you are saying to me is our experience and our financial returns and everything we know, and our best goodwill in answering these questions objectively is this isn't a good place right now. We are hoping it will get better but right now it is not great for us. Why would they want to come? It is going to cost them money to come too. They have to make investments. Why would they want to come to this place that is not so good?
2480 MR. FECAN: The single biggest driver of conventional television revenues is the revenues for U.S. simulcast programming. These typically, and certainly in the case of CanWest and CHUM are bought on a national basis, in other words, you buy the whole country, so you own the country but you don't have all revenues coming from all parts of the country.
2481 When you say, okay, so if they get a station here there will be some local expenditure, I think you very succinctly pointed out in terms of drama that it ends up with probably two 13 episode series over the course of seven years, they are going to add some infrastructure, some equipment, the transmitter, but pretty well after that their costs -- they have already paid for the programming, so it is just additional revenue coming in for them in the case of both of these applicants.
2482 If you buy our thesis that on top of that they have multiple station ownership groups, they have an extraordinary ability to buy programming at volume discount prices and buy more of it than we can possibly afford. I think as Mr. Hoover said in the National Post this weekend, if you have a big net you catch more fish. They have a very big net and CHUM will have a very big net and they will be able to catch more fish and it will make it even harder for us to maintain a ratings performance because they will simply be able to buy more programs of which some will hit.
2483 I think both you and I know that if we could actually predict what would work and what wouldn't work we would be very wealthy people indeed.
2484 COMMISSIONER LANGFORD: I'm working on a good series called "Enemies" and we can talk later.
--- Laughter / Rires
2485 MR. FECAN: I noted that yesterday.
2486 COMMISSIONER LANGFORD: I think the Spanish have proven that the net not only has to be big but it has to be very fine meshed I think.
2487 MR. FECAN: So part of why they are here is to make more money and that is why we think this issue is more than just about serving this particular community in Calgary and Edmonton.
2488 COMMISSIONER LANGFORD: You must be familiar with CHUM's programming and what they are going to be putting into this market. Leaving aside the new drama, the benefits, commitments and some local news obviously, some new local and regional things, what are they going to be offering with this simulcast opportunity? What are they going to be offering to viewers in Calgary and Edmonton they can't see now on cable and satellite?
2489 MR. FECAN: I think they would be the best ones to answer that question, but I would have a hard time thinking of something that they would be offering that isn't already in the market to some degree.
2490 COMMISSIONER LANGFORD: So if there is nothing new -- and you wouldn't be the first person to suggest that by the way -- if there is nothing new where are the ad revenue opportunities, I mean such dramatic ads --
2491 MR. FECAN: Because they get the simulcast for those ads and there is Canadian advertising dollars going to it, and their costs don't go up one penny in terms of their national buys.
2492 COMMISSIONER LANGFORD: And that is enough to take the risk of the expenditures of coming into this market?
2493 MR. FECAN: Commissioner Langford, it is a windfall for them.
2494 COMMISSIONER LANGFORD: But not for you.
2495 MR. FECAN: We are already here.
2496 COMMISSIONER LANGFORD: Who gets hurt most this time around if CHUM gets in? Is it going to be you again or Craig most, in your view, matching up what the offerings are?
2497 MR. FECAN: We believe it will be the Craigs that are hurt the most this time around.
2498 COMMISSIONER LANGFORD: This time. Do you have any idea in your own mind what that pain level will be?
2499 MR. BRACE: I don't have an exact number. Perhaps I could Steve Armstrong if he has got a little bit of research on that. We may or may not, but, Steve? No. Okay. No, we really don't --
2500 COMMISSIONER LANGFORD: No. I don't remember seeing it.
2501 MR. FECAN: I think you are going to see the Craigs any minute now and --
2502 COMMISSIONER LANGFORD: It is always nice to have the advantage of other experienced players here, you know, who may be feeling a little less tension and stress at the whole concept.
2503 I wanted to move, Ms Ali, to a statement that you made on page 15 of your opening statement, and I won't be much longer, but moving to the Global side of these two applications you said at the very top:
"But unless disaffiliation of its Red Deer station means that the coverage of that station is restricted to Red Deer, we do not see the distinction."
2504 The distinction you drew earlier.
2505 Can that be done? Knowing what we now know about the carriage of the present Red Deer station and assuming that all the cable companies in the province don't turn against them, is that realistic?
2506 MR. BRACE: I'm not quite certain if it is realistic, but it's the only realistic approach that we see in protecting us from what we would be facing. You are right, I mean it is a hypothetical situation.
2507 Ivan, would you like to comment?
2508 MR. FECAN: I think somebody this morning asked one of the applicants is there another way to protect the CBC in the market, and it is sort of similar territory that you are treading in now. It is instructive maybe to look at what we did in northern Ontario and Saskatchewan. We basically gave them or sold our equipment to them and they picked up rebroadcasting licenses for those territories, so there was no new additional entrant.
2509 It would seem to me, particularly based on some of the questioning Vice-Chair Wylie did yesterday that they could theoretically, now this is me going where I shouldn't go because I am suggesting what they might do with their business --
2510 COMMISSIONER LANGFORD: It is what we like best actually.
2511 MR. FECAN: -- but they could theoretically sell Red Deer to the CBC and add additional local Red Deer news programming on CITV-1, which already has some original local programming in that market. That would cause the least damage to the incumbents and would clear the way for the CBC assuming the CBC was able to pay whatever price CanWest had in mind for their equipment and their station.
2512 But there is another way to do this. This isn't the only way to do this and I feel a little bit like they are wrapping themselves in the CBC national flag and say, in order to help them give me a second station group, thank you very much.
2513 COMMISSIONER LANGFORD: We try not to deal with motivation here. It's an endless, dark alleyway to walk down.
2514 I would ask you though if this, something like what you just described, were to occur and so that we have a brand new Global Red Deer station, revamped, juiced up a bit with some new programming as you suggest, a little more new local, it of course would be carried into Calgary and Edmonton, what would that do to your shares?
2515 MR. FECAN: CITV-1 is not carried in Calgary or Edmonton. It is an Edmonton station that has additional local content only in Red Deer.
2516 COMMISSIONER LANGFORD: No. But I'm talking about the brand new Red Deer that would emerge --
2517 MR. FECAN: The CBC station? If the CBC bought that station we wouldn't have a difficulty with --
2518 COMMISSIONER LANGFORD: I see. You are suggesting winding it down completely and having only the rebroad in Red Deer, not having a brand new --
2519 MR. FECAN: And having the CBC take over CKRD.
2520 COMMISSIONER LANGFORD: Okay. So they would no longer have two facilities in the Red Deer area, they would have just one.
2521 MR. FECAN: All of the local programming that currently runs on CKRD could well run on CITV-1.
2522 COMMISSIONER LANGFORD: Okay. What about something in between those two where they continue to have two stations in Red Deer? I know if Ms Bell were here she would argue that one of them is not a station, but as I have been saying to other people, it looks like a duck and it quacks like a duck and it waddles like a duck it's a rebroad.
--- Laughter / Rires
2523 COMMISSIONER LANGFORD: But still, assuming they keep the rebroad but somehow work out a deal where they can get a whole brand new Red Deer station and CBC has the old one, what would a brand new Red Deer station carry I assume on cable in Edmonton and Calgary? What kind of impact would that have on your?
2524 MR. FECAN: Unless I'm confused, that is pretty well what they are applying for.
2525 COMMISSIONER LANGFORD: No, because we wouldn't have the rebroad. It would just be carried perhaps on cable as a distant signal.
2526 MR. FECAN: It would still, as I understand it, have the entire CH schedule available in Calgary and Edmonton. And by the way, just in the last year or two, the cross-promotion and the additional programming strength that CanWest has been able to bring to CH has pumped its audience up at least 10 per cent. So we see that small "c" conversion strategy of theirs working.
2527 COMMISSIONER LANGFORD: I just want to be clear though. So that even if Global were to propose no rebroad but a brand new Red Deer station, you would oppose that?
2528 MR. FECAN: The issue for us is if it is seen in Edmonton and Calgary and that would be our reason to oppose.
2529 COMMISSIONER LANGFORD: One would assume it would be. I mean, an assumption.
2530 MR. BRACE: And especially carrying that schedule. You know, we have seen the impacts of what has happened in Hamilton going into Toronto.
2531 COMMISSIONER LANGFORD: Ms Bell is quite right, the cable companies could refuse, but it doesn't seem likely.
2532 MR. FECAN: I truly can't imagine why they would refuse all of those programs that would be so attractively packaged.
2533 COMMISSIONER LANGFORD: I don't think I am going to go into the whole notion of the twin sticks, as we call them. You have made yourself quite clear on that. You would suggest a policy review of that, and we have heard you.
2534 I would ask you though one specific question only, one final specific question. There have been over the years some hardship reasons for allowing twin stations, twin sticks, as they are called. Would you suggest that the Red Deer financial situation would qualify as a hardship?
2535 MR. BRACE: I guess in our view it could potentially look like that, but I think that is why we are calling for a policy proceeding because it is a question of balance. What is going to be the impact of granting Global what they are asking for, giving them the advantage in this market that we believe it will give them and the impact it is going to have on the existing stations against what is going to be gained.
2536 I think that is why it is a much bigger issue. We believe that what is happening here is more of something that is national in scope. It is not something that just directly affects this market in and of itself and that is our issue. That is why it is a bigger picture story in our estimation.
2537 MR. FECAN: Number one, as Mr. Switzer so ably pointed out this morning, they have already made the deal to keep the station going and they reaffirmed that yesterday.
2538 Number two, the primary reason for their difficulty is the CBC is cutting their affiliation payments down.
2539 COMMISSIONER LANGFORD: So it doesn't meet the hardship test at this point, in your view?
2540 MR. FECAN: Not for a wonderful and well-funded company such as CanWest, I think.
2541 COMMISSIONER LANGFORD: Sorry? Could you say that again? I just didn't hear you.
2542 MR. FECAN: Not for a wonderful and well-funded such as CanWest.
2543 COMMISSIONER LANGFORD: Thank you very much. Those are my questions, Mr. Chair.
2544 THE CHAIRPERSON: Thank you. We will have further questions after the break.
2545 Nous reprendrons dans 15 minutes, 15 minutes.
--- Upon recessing at 1122 / Suspension à 1122
--- Upon resuming at 1140 / Reprise à 1140
2546 THE CHAIRPERSON: Order please.
2547 Commissioner Wylie.
2548 COMMISSIONER WYLIE: Thank you, Mr. Chairman.
2549 I must say at the beginning that I do understand the need to consider the risk inherent in overlicensing, but I am certainly relieved to see that you agree that in this balancing exercise of whether to grant you licences in a market, the Commission should weigh whether the advantages put back into the system are commensurate. You have alluded to that at page 8 of your presentation as well as at page 16, and also in your written interventions.
2550 I gather from your comments this morning and certainly from your written intervention at paragraph 70 that you are not of the view that the benefits put forward by CHUM in particular in this case were commensurate. There is a suggestion at paragraph 70 that CHUM 10-point plan involved double-counting.
2551 Some of you at least were here while CHUM was before us. Have you a different view of whether the 10-point plan involves double-counting after their appearance?
2552 MR. BRACE: We appreciated the views that Mr. Switzer brought forward and in point of fact it did clarify for us, to a great extent, some of those concerns when we had the breakdown of the 20 hours yesterday and how it all rolled out.
2553 But I think that, you know, there still was the concern that came out of that as to where the programming was coming from and how much of it was going to be absolutely unique to the market as opposed to shared by either the Vancouver and Calgary -- sorry, Alberta markets or, you know, conversely the Toronto kind of CKBR Barrie/Alberta market.
2554 So there still wasn't, you know, for us a complete distinction there. However, I think that we are a little further down the road in understanding that perhaps the double-counting wasn't quite the case.
2555 COMMISSIONER WYLIE: Interestingly, you mentioned that the advantages may actually be felt in other markets as well, and surely that has to be weighed. Would you agree that there are two levels of weighing? One is what it will bring to the market concern and the other is what it may bring to the Canadian broadcasting system as well, especially with the concentration that the Commission has allowed in the past 10 years, 15 years.
2556 MR. BRACE: Absolutely. I think that, you know, our concern, and Ivan used the word "windfall", is what we are seeing here is the opportunity to exploit national rights in increasingly greater markets to the benefit of the bottom line for no incremental cost. I mean that adds up to greater profit. When you look at that in the situation that we are facing, and we put forward the hypothesis that what we are seeing is really two station groups for both Global and for CHUM in this market, each of them would in fact have two stations groups across the country in the most preferential market across the country, so nationally they are going to be incredibly strong. The ability to exploit that is huge.
2557 If we ever did, and we are not suggesting for a moment that we go down that road, in fact we do emphasize what we believe to be a need for the public policy hearing, but if we ever did go down that road we certainly believe that in the case of Global, you know, a couple of incremental hours a week and in the case of CHUM, even what they are proposing, especially even by virtue of what has happened between Hamilton and Toronto where I believe there were 36 hours, I believe it was 36 hours -- Hamilton, 36 hours, which was by far in a way greater than what we are seeing here. So I mean this is a real opportunity for the CHUM and Global operations. We are not quite sure at the end of the day what it will really mean, you know, in terms of benefiting the Canadian broadcasting system.
2558 One other point is that I find it interesting that when I look at how CH is performing in the Toronto market with a 4.8 share, and I look at how ACCESS is performing out here with I believe a 1.7 share, why couldn't we see an opportunity here to incorporate a lot of the initiatives that CHUM has put forward that benefit the system, that give -- I believe inclusive was one of the words used, inclusive, that provides more aboriginal programming, and so on and so forth?
2559 Instead we see a program schedule on ACCESS that kind of mirrors the CHUM philosophy of movies, but would there be an opportunity if they were to deliver some of the programming that they are talking about in the new proposal and schedule that on ACCESS to actually improve the ratings of ACCESS without in fact opening another station? Maybe that opportunity already exists to benefit the broadcasting system and at the end of the day also benefits CHUM with greater ratings on ACCESS.
2560 COMMISSIONER WYLIE: So that speaks to whether the benefit for their bottom line is so high -- it speaks to weighing how commensurate the advantages to the system are. But you have no -- well, I ask you, do you have a problem with the fact that the benefits here could also be seen by the viewer in their other markets?
2561 MR. BRACE: I'm going to pass along to Elaine to just comment on that.
2562 COMMISSIONER WYLIE: And that that is an advantage to the broadcasting --
2563 MR. BRACE: Elaine keeps a close eye on our stations across the country and certainly she can comment on this far more effectively and perhaps even Fred and Pat. We will just see how the answer flows when they --
2564 COMMISSIONER WYLIE: This is a prelude to -- this is a mini-policy hearing. I don't really want to know -- I'm just asking whether in your view the Commission should weigh both the advantages to the Alberta viewer by the licensing of new stations and should also weigh the advantages of perhaps putting more Canadian programming in the system that will also be seen in other stations of the company licence --
2565 MR. BRACE: And the simple answer is yes.
2566 COMMISSIONER WYLIE: -- as a result and then of course weigh whether the risk of overlicensing is too high or there is just not enough put back in the system to give the advantage.
2567 MR. BRACE: We believe that that is appropriate. The simple answer is that the macro approach, looking at the benefit versus what the impact is, is appropriate.
2568 COMMISSIONER WYLIE: And that is what you would want to discuss in a policy hearing?
2569 MR. BRACE: That's correct.
2570 COMMISSIONER WYLIE: I'm also a little bit puzzled by the approach of -- you speak of inefficient benefits to the Canadian broadcasting system. We understand that, I understand that, I think.
2571 It is also approached by the Armstrong study and picked up, beginning at paragraph 37, from the point of view of programming expenditures. If one looks at it through the other end of the telescope, what is in it for the viewer, which is supposed to be what we are looking at, is it not possible that even if there were reduced expenditures in the market concern that the added expenditure from the greater strength, if the benefits are commensurate, will actually be of benefit to the viewer in the balancing act, because the viewer may see more Canadian drama, more Canadian programming, here and in other stations belonging to the same company? And then in the end the benefit of programming expenditures may well be in the overall package greater even if there is reduced Canadian expenditures in the market.
2572 Isn't that what the idea --
2573 MR. BRACE: I'm not sure now.
--- Laughter / Rires
2574 MR. BRACE: I thought I had it there.
2575 THE CHAIRPERSON: Mr. Brace, the key is when she turns off her light.
--- Laughter / Rires
2576 THE CHAIRPERSON: Even then the question is going.
2577 COMMISSIONER WYLIE: Or comes.
2578 Is that not what the idea was of looking at the last policy hearing, which had as one of its conclusions to look at licensing of large station groups together? Wasn't it the idea was to see not only what they do in each market but what each market would eventually benefit from the greater strength and the bigger companies?
2579 MR. BRACE: You are asking us to comment --
2580 COMMISSIONER WYLIE: Because if you look at Canadian programming expenditures they eventually translate into programming for the viewer.
2581 MR. FECAN: I think we can accept that it could be more, but I think we would also suggest that it could be less, and that's -- you know, we are not saying it could only be less, maybe it's more, but that's what you need to determine.
2582 In terms of the policy, certainly there is a policy in terms of how many -- you know, of one company having a station group. I think the policy doesn't really exist for one company having two national station groups, and that's where the opportunity is, in our view, to take incremental additional benefits for the system without at all revising the existing television policy because it is silent on the matter.
2583 COMMISSIONER WYLIE: But in the case of CHUM we would have first to agree with you that the CHUM proposals because of ACCESS fall within the policy, and then if we agreed with you we could, according to the policy, find that there is room for an exception, and that is where we talk about the balancing act of course.
2584 MR. FECAN: Rounding is a funny thing. You can round something that is not whole down to zero or you can round it up to one or you can figure out what the appropriate percentage of contribution is. But in any event, I think our submission to you is that you can't count it as zero because, to borrow Mr. Langford's line, it does walk like a duck and quack like a duck.
2585 COMMISSIONER WYLIE: That was a rebroadcaster not CHUM.
2586 MR. FECAN: I'm borrowing.
2587 COMMISSIONER WYLIE: If it were six drama productions would your view be different as to the value of the CHUM proposal?
2588 MR. FECAN: I think that is what that kind of hearing really needs to address, what the incremental price ought to be. I think what we are seeing is that given all of the focus on drama from all quarters, from the producers, from the writers, from the reports that you as a Commission have done from Parliamentarians, it seems that $12.5 million, which translates potentially to two 13-episode series, that really doesn't seem like much of a prize for Canada.
2589 COMMISSIONER WYLIE: Yes, that one portion of the 10-point plan. That is the questioning of balancing.
2590 But you would agree that we are now, have been in the last 15 years, in a consolidation that says, and I think if I peruse transcripts I could probably see some quotes from you saying, that bigger is better, wouldn't I?
2591 MR. FECAN: Yes. Absolutely. I don't disagree with that. It is just what does Canada get for it?
2592 COMMISSIONER WYLIE: It is a weighing of the value.
2593 Besides dismissing the two drama productions, do you have any other comments to make about whether the 10-point plan is -- and Mr. Brace says he feels a little bit better than he felt paragraph 70 -- any more comments about the weight of what has been offered?
2594 MR. FECAN: I want to, Vice-Chair Wylie, make sure that there is no misunderstanding. I don't dismiss the two. Any is better than none. I'm just saying that I think they can do better.
2595 And now I will pass to Mr. Brace, my colleague, who will comment on the 10-point plan.
2596 COMMISSIONER WYLIE: So the weight is not fat enough?
2597 MR. BRACE: And actually we did take -- I am going to ask Rick Lewchuk to comment. Rick, as you know, spends all of his time looking at program schedules, particularly at CTV, but certainly elsewhere as well as a competitive monitor, but he has analyzed just what CHUM has put forward here and I think can really kind of point by point maybe give us a bit of a forensic look at what the proposal says it is going to do.
2599 MR. LEWCHUK: The main point that we looked at was the benefit of four hours of drama programming added to the Alberta market. In the discussions yesterday Mr. Switzer said two of these hours would be made up of movies that already exist and would be moved into the market. When you look at the schedules that they have on both CITY and NewNet in other parts of the country. They can simply move existing drama programming that already exists in the country into their schedule in Alberta.
2600 They can, for example, go off of the new VI schedule which is showing "Earth: Final Conflict" twice in prime time this coming year and count that as the other two hours of drama and that is the end of the story. That is the four hours of drama that Alberta could benefit from their proposal.
2601 COMMISSIONER WYLIE: So we should have this policy hearing so that you know what it is you have to meet if you buy CanWest? Thank you.
2602 MR. FECAN: That's not likely to happen.
2603 THE CHAIRPERSON: Thank you, Commissioner Wylie. Commissioner Williams?
2604 COMMISSIONER WILLIAMS: Good morning, gentlemen and Ms Ali.
2605 Based on TV policy and on economic concerns you are suggesting that we deny CHUM and Global's twin stick applications, not approve the disaffiliation application, impose a moratorium on new Edmonton licences I guess until a broader policy proceeding has taken place and perhaps until we get a better handle on the economic trending.
2606 How long a moratorium -- or I guess what may be quicker, how quickly should we go into a policy proceeding and what are your views on that? Like, is that something -- if that was the decision that we took, should that be something that would be on our work plan for next year or the year after? I leave it to you to answer.
2607 MR. BRACE: We would propose a two year moratorium.
2608 You know, if we look at kind of the historical performance, because really it is fine to estimate the future and we have heard different numbers in terms of revenue projections and performance in the province going forward, but certainly what has history told us? History has told us that we are still kind of rising in terms of being where we were in 1997.
2609 We, you know, in our estimation, kind of hit in and around a 14 per cent PBIT as of 2003 and it kind of rises very slowly from that going forward, but at least we are getting more into the realm of something that is stable. So if we use that as an opportunity to see how we perform based on future market trending and also take the time to review the impact on the market, you know, and use the two years to do that, we think we will be in a far better position to understand what the impact will be, what the opportunity will be, and at the end of the day how viewers will benefit, you know, in the Canadian broadcasting system.
2610 MR. FECAN: I think the policy hearing that we are suggesting you consider should be done sooner rather than later because there is a drama crisis and this is an opportunity to find new funding for that. Clearly, both CanWest and CHUM have a desire to get to that second station group level and so the sooner they or any other applicant knows what the price is, the sooner they can determine whether that is worth their while.
2611 In terms of the CBC disaffiliation, we have suggested just this morning, in our discussion with you the Commission, another way of going about it that doesn't cause the kind of harm that the Global application causes and we see no reason to wait on that one if the parties were interested in going forward immediately on that kind of basis.
2612 COMMISSIONER WILLIAMS: Thank you. I have no further questions.
2613 THE CHAIRPERSON: Thank you. Commissioner Cardozo?
2614 COMMISSIONER CARDOZO: Thank you, Mr. Chair.
2615 Just a couple of quick questions I wanted to get clarification on.
2616 You talked about a combined drop in revenues between '97 and '02 of $13.6 million. I am wondering what your thoughts are on the CHUM projections for their revenues. They are predicting $17 million in year one, going up to 38.6 in year seven. Do you think that is realistic in this market?
2617 MR. BRACE: I am going to turn to Steve. I think that Steve has done a lot of work on this and I think it is appropriate that he answer. But we have looked at CHUM's numbers and certainly in terms of whole numbers we believe that we are both kind of in the ballpark, so we are not really debating to a great extent, although they seem to be a little more inflated in terms of what is available in the market than we do, but it is not horrendously different.
2618 They also, in 2004, had a bit of a spike which kind of gets them up to a higher platform but then settles down after that.
2619 But in terms of their take from the market, I'm going to turn to Steve just to talk about the estimates and how we arrived at those.
2621 MR. ARMSTRONG: I have in front of me their estimates which range from $198.3 million in 2003 to $262 million in 2011. My comparable numbers are $195 million in 2003 and $248 million in 2011.
2622 The way I calculate that, we have a slightly lower compound annual growth rate than CHUM has projected. I have us at 3.1 per cent and the latest numbers from CHUM have 3.6 per cent. It is not clear to me from the document that they provided yesterday whether that includes their assumption of a stimulative effect from the entry of a new station and, as I said in my study, it is my view that such a stimulative effect would be unlikely.
2623 COMMISSIONER CARDOZO: Okay. If I can understand your point right about the entry of CHUM versus Global, in an earlier question, I think it was with Commissioner Langford, you said that licensing CHUM would likely affect Craig more than it would affect you I suppose because of the similar kind of programming demographic there.
2624 In terms of who would affect CTV more in this market, would it be the Global application or the CHUM application?
2625 MR. BRACE: We believe that by virtue of the size and the impact that Global would have a greater impact on us.
2626 COMMISSIONER CARDOZO: Thank you. Those are my questions.
2627 Thank you, Mr. Chair.
2628 THE CHAIRPERSON: Thank you.
2629 Mr. Armstrong, I wonder whether I could ask you to turn to page 17 of your stats. It is a similar question to the one I put to the Global representatives, and that is to have you derive the 91 per cent impact that you calculate would be the effect on existing stations of the new entrants if CHUM were licensed.
2630 MR. ARMSTRONG: Certainly.
2631 THE CHAIRPERSON: Could you take me through it because again I'm not sure -- what I do know, as I said before, was that the market in 1997 and 1998 increased by $16 million. I appreciate the point that you are drawing from your Vancouver/Victoria experience of CHUM, and I appreciate the fact that you are saying that after 1998 the increase was only about 2 per cent per annum, but that was 2 per cent per annum on a higher base that had occurred between 1997 and 1998.
2632 So I am wondering why you say that there wasn't a lift and a stimulative effect on the market, (a); and (b), why you think the impact on existing stations would be not 90 per cent, not 95 per cent but 91 per cent.
2633 MR. ARMSTRONG: The 91 per cent is based on the current share the private television stations have of conventional television revenues in the market. So if it is assumed that all of the revenues of the entrants come from the existing station, then 91 per cent would come from existing services, so that is my 91 per cent.
2634 So then the issue is --
2635 THE CHAIRPERSON: Oh, I see. If I could just understand it. You are saying that that is the current share --
2636 MR. ARMSTRONG: That's correct.
2637 THE CHAIRPERSON: -- of private stations and therefore that's -- and the rest is the CBC?
2638 MR. ARMSTRONG: That is correct.
2639 THE CHAIRPERSON: So the CBC carries commercial.
2640 MR. ARMSTRONG: Yes.
2641 THE CHAIRPERSON: You are saying 100 per cent would be on existing stations of which 91 per cent will be on private.
2642 MR. ARMSTRONG: That's correct.
2643 THE CHAIRPERSON: Now I understand how the 91 was derived. Now, why?
2644 MR. ARMSTRONG: I looked at two factors to try and figure out what would happen in the market. First, I looked at Alberta in the year of entry, which was the '98 financial data, and clearly there was a jump. If you just looked at that number you would conclude there was a stimulative effect. But then I looked at markets across the country, this is the CRTC data and TVB data, and that same jump occurred everywhere, not everywhere but clearly what is happening across the country in markets where there were no stations, in markets where there were new stations.
2645 So it looks like what was happening --
2646 THE CHAIRPERSON: Could you give me some examples of the major -- let's take the major markets and tell me what happened in those markets. Let's just take Vancouver, Toronto and Montreal in addition to Calgary and Edmonton and tell me what the percentage growths were. I don't have those numbers so I'm going to rely on you to give me those.
2647 MR. ARMSTRONG: Sure. Major markets, yes.
2648 MR. ARMSTRONG: At Tab 11, I have, in my book not yours, sorry, in Calgary --
2649 THE CHAIRPERSON: No. Ms Robinson didn't distribute her notes to us unfortunately.
--- Laughter / Rires
2650 MR. ARMSTRONG: In Toronto in 1997 there was a 9.3 per cent increase. In 1998 that was 1.5 per cent. In Vancouver in 1997 there was a 12.9 per cent increase and an 8.2 per cent increase in 1998. In Montreal we saw a 12.7 per cent increase in 1997 and about a 1 per cent in 1998.
2651 THE CHAIRPERSON: If you could just confine yourself to the 1998 minus 1997 period and tell me what the -- what do you calculate as the Alberta, whatever it is, 16 over -- I had the numbers before -- 16 over --
2652 What was the 1997 total dollars? Are we doing a total market or are we just doing total private?
2653 MR. ARMSTRONG: Those numbers were TVB numbers and those were total market.
2654 THE CHAIRPERSON: Okay. So total market numbers, what do you have as those numbers?
2655 MR. ARMSTRONG: For the combined markets I have -- I have them separately there, I have them together here -- in 1997, local plus national was $157.8 million; in 1998 it was $172.9 million, that is a 9.6 per cent increase.
2656 I don't have the CRTC comparable private revenue numbers by major market. I do have what was in my study where I filed -- we filed -- I looked at --
2657 THE CHAIRPERSON: I guess we are just trying to test the hypothesis that if we found that -- I think 8 per cent is the Alberta number for the 1998 total over the 1997 total. If we were to find that in the other major markets we have percentage increases of that kind your point would be stronger. If the percentage increases were not, I suppose the point would be weaker.
2658 I am just trying to test that particular point.
2659 MR. ARMSTRONG: Yes. I will go to page 7 where we have -- and there is the figure eight data that I filed, so 97-98 for Atlantic Canada was a 5.4 per cent, Quebec was 5.4, Ontario was 9.7, Manitoba was 2 per cent, Saskatchewan was 11.9 per cent, Alberta was 9.9. Now, those are provincial. Those are by province.
2660 THE CHAIRPERSON: 9.9 you have. Right.
2661 MR. ARMSTRONG: By province.
2662 THE CHAIRPERSON: And B.C., do you have that?
2663 MR. ARMSTRONG: It was 14.5 per cent.
2664 THE CHAIRPERSON: So your point then is that when you look across the board where Craig stations didn't enter you basically had equivalent kinds of increases so how can one conclude that there was a lift effect.
2665 MR. ARMSTRONG: That's correct.
2666 THE CHAIRPERSON: Okay. I take that point.
2667 You mentioned something else and it slipped my mind but I may come back to it, to one of your numbers.
2668 Let me ask, Mr. Fecan or Mr. Brace, I take your point about the system reach of the applicants were these licensed, but I'm wondering whether in regard to ACCESS whether the fact that ACCESS accounts for, I don't know, 1 per cent of revenues in Alberta, whether you have any qualms about putting forward the two station policy applying to ACCESS.
2669 I appreciate that their minutes have increase very recently as a result of the last decision, but when you look at the revenues and the nature -- and I take your point and your humour about the schedule, but I'm still wondering whether that really can be seen as amounting to the kind of commercial station that was at the source of a two station policy.
2670 MR. BRACE: In our estimation certainly, you know, CHUM has the ability to program that station and they have the ability to program in what we would consider to be a fairly conventional manner. If we walk kind of through the -- you know, what is ACCESS? I mean it is a station that relies on airtime revenue, which is similar to all other conventional broadcasters. Yes, it does have an educational element, but that educational element for the most part is off prime and so it is restricted. Even at that, some of that educational programming is actually subsidized by the government, so there is revenue associated with some of that.
2671 We talked about the prime time schedule, so I won't go through that again in terms of what they carry, but it does walk like a duck and quack like a duck and so it's like a rebroad, we believe. It is also a conventional station.
2672 They have improved their ability to sell in terms of moving from 501 minutes to now 756 based on the licence renewal, which provides a greater impact, so they are out there. That is important because what we are talking about is the ability to sell in prime time so that understanding that 75 per cent of the revenue really comes from the prime time schedule, it really does give them a lift and puts them in a position that is, you know, for all intents and purposes conventional in nature.
2673 Based on that kind of criteria, it is hard to differentiate -- it is very subtle, in our estimation, the differentiation between what you would call a conventional station and what would ACCESS is licensed to be.
2675 THE CHAIRPERSON: Why do you think that they have only garnered 1 per cent of the revenues in the market?
2676 MR. BRACE: I can't answer that, other than based on the audience share and the way they are programming. You know, I wouldn't speculate how they --
2677 THE CHAIRPERSON: Perhaps Commissioner Langford might have a suggestion.
2678 MR. BRACE: Commissioner Langford may have some.
2679 MR. FECAN: But the other thing of course is they do have -- just to add one point -- they do have the ability to simulcast some of these programs. I think past performance isn't necessarily an indicator of how the new team that Jay Switzer is building will manage to maybe improve that performance, and certainly if they get a second station in the market they will be able to do all kinds of promotion and move stuff back and forth and do all of the normal kinds of things that CanWest has been doing with their twin stations across the country.
2680 So, you know, when you look at the 70 per cent test, the 70 per cent test certainly does deal with audience reach, but I think audience reach was also proxy in that test for revenue reach. Then when you on top of that say, well, these markets have a disproportionate amount of revenue attached to them because they are big, hot markets, I would be perfectly prepared to say, well, maybe ACCESS isn't 100 per cent, maybe it's 75 per cent where most of their commercial inventory is.
2681 Whatever it is, it's more than zero, and part of then the calculation that you would need to do is figure out what portion of a whole is it, apply that and then figure out whether in fact that does then cross the 70 per cent threshold.
2682 I would also take the opportunity to point out that in CanWest's case it is really clear if they get Red Deer they would cross the threshold twice.
2683 THE CHAIRPERSON: Right. Thank you.
2684 I remembered the question for Mr. Armstrong, and that was I guess, based on the earlier answer you gave me as to the derivation of the 91 per cent you were assuming 100 per cent impact on existing stations, and I guess you have seen the CHUM presentation of how they thought the impact would be distributed and you discount to zero the impact on the other sources of revenue.
2685 MR. ARMSTRONG: I guess if you just look at what happened in Alberta with -- the first year with the structural change in the television market and thereafter the rate of growth is approximately the rate of inflation. So if you assume that a new television station is attracting dollars away from other media, you would expect that there would be some kind of growth beyond inflation over the subsequent years, and there was no evidence of that, there was just inflation.
2686 THE CHAIRPERSON: Right. But on the higher base, however it got there, did it occur in '98?
2687 MR. ARMSTRONG: On the higher base, but that, as we talked about earlier, higher base was occurring across the country, so for me it's hard to conclude that the new station attracted that higher base because of the new station whereas in other markets where there were no stations the growth was occurring as well.
2688 THE CHAIRPERSON: Wouldn't you have to though measure it against the growth in other media that are listed on that list, specialties, billboards, I don't know, I haven't got the list before me right now, in order to compare?
2689 MR. ARMSTRONG: I agree.
2690 THE CHAIRPERSON: I mean, let's say billboards were growing below inflation. Would you not infer that maybe some of the television revenues were being drawn from there? I find it hard to take the suggestion that there was no, subject to further evidence, that there was no draw or impact on any other of the media listing --
2691 MR. ARMSTRONG: That's why I looked at Vancouver frankly because in Vancouver a new television station came in, a CHUM station came in, rating points did increase, but we saw that there was no increase in market revenues. So if there were more rating points to sell and there were willing buyers, maybe even at a lower price, we would have anticipated some kind of movement and none did occur.
2692 THE CHAIRPERSON: Looking at that particular market.
2693 MR. ARMSTRONG: That's correct.
2694 THE CHAIRPERSON: Right. I have the list now here and I'm referring it. This is from Appendix B of their application. They only have 8 per cent for specialty and 2 per cent for radio, so for those purposes I guess, based on the kind of growth level analysis we are doing it would be hard to draw any inferences on those, wouldn't it? But not currently broadcasting new revenues and not currently broadcasting, increased spending, I guess there you would compare other media, wouldn't you, to see what their rate of growth was in the period relative to inflation, if you like?
2695 MR. ARMSTRONG: I think I could be wrong but I thought I heard them say that they included in that category repatriated revenues. That's why I was interested in --
2696 THE CHAIRPERSON: I thought the answer was that they weren't included there, but maybe we will ask them to clarify in reply. To look at not currently broadcasting and increased spending, that implies other media of course and you haven't done that analysis and compared those.
2697 MR. ARMSTRONG: No, I have not.
2698 THE CHAIRPERSON: Okay. Those are all my questions. Counsel?
2699 Thank you very much.
2700 MR. FECAN: Thank you.
2701 MR. BRACE: Thank you for the opportunity.
2702 THE CHAIRPERSON: Mr. Secretary.
2703 MR. LEBEL: Thank you, Mr. Chairman.
2704 The next appearing intervention will be presented by Mid West Television Limited, Mr. Ken Ruptash.
2705 MR. RUPTASH: Good morning, Chair Dalfen, Commissioners and Commission staff.
2706 My name is Ken Ruptash and I'm the Vice-President and co-owner of Mid West Television. I own two televisions stations in Lloydminster, CITL TV and CKSA TV.
2707 I have asked to appear before you today to discuss the very real concerns I have with the proposals by two broadcasters already established in the Alberta market to provide a second level of service to Calgary and Edmonton.
2708 It has been suggested by CHUM in their response to our intervention that we really should not be addressing our concerns about systemic issues in this forum. I believe their exact words were:
"CHUM respectfully submits that these issues go far beyond the purview of this proceeding."
2709 I cannot imagine a more pertinent hearing in which to discuss the nature of our concerns and the full implications that flow from the decisions facing the Commission.
2710 It is our contention that this very approach of ignoring implications beyond the immediate market is what has led to some of the problems facing the system as a whole and facing regional broadcasters in particular.
2711 Like any economic sector, the Canadian broadcasting system is not a series of mutually exclusive markets and licences. Licensing in one market does affect the revenue flow to other parts of the system.
2712 Let's aside DTH and increased competition from distant signals for a moment and let's just discuss the impact of concentration of ownership.
2713 As the number of signals has increased in Canada, the cost per point, that is, the cost for reaching 1 per cent of the population has gone up substantially almost across the board. There is an exception: the cost per point in the smaller markets are flat and have declined. Why? Agencies will tell you that by the time they get to our markets, that is the smaller markets, the increased costs in the major markets have made them reallocate their budgets.
2714 The total advertising budget remains constant but the residual that remains for smaller markets is declining. Each year we seem to get less money than the year before and our rates are going backwards. If we want any more money from national accounts we have to provide flat unit rates or reduce our cost per point.
2715 From a purely economic perspective that makes no sense. The market of Lloydminster is as healthy as either Calgary or Edmonton. Our projected retail sales growth to 2008 is 13.9 per cent ahead of Edmonton at 11.6 per cent and only slightly behind Calgary at 15.3 per cent. Our growth in income is also projected to be ahead of Edmonton. We are anticipating a growth to 2008 of 13.6 per cent compared to Edmonton's 10.9 per cent. Lloydminster is part of the rich, robust economy of Alberta that the applicants are celebrating. I recognize that our population is not as large and so differentials should exist.
2716 But from all perspectives we are a market that should attract advertisers. We are being told by the agencies, we need to buy you, we want to buy you but the rate increases in the major markets mean we had to cut costs somewhere. Lloydminster is way down on the list of priority markets and as a result is one of the first to suffer.
2717 We contend that the concentration of ownership, particularly in the major markets and throughout the system, has removed any real competition and therefore the traditional balance usually operating in a competitive economy is gone. Rates can go up fairly quickly and unchecked. The reality of any economy is that the market revenues cannot indefinitely expand. And so it is the weaker parts of the system that get hurt by this fight for the share at the top. It is the regional operators like Mid West Television that lose as the very real budget limitations of advertisers forces our cuts.
2718 At some point, you will hear from the Association of Canadian Advertisers that there is a crying need for more inventory in Edmonton and Calgary. Their very real claim is that advertisers are paying huge rate increases each year and the solution of course is more inventory, which of course means more licenses. But I have read some of the interventions that have been filed by advertisers and I have to emphasize that the word most commonly used in expressing interest and new sources of inventory is "affordable". Given that both of the applicants already serve these markets, have the leverage of existing schedules, many other assets, relationships with advertisers and firsthand knowledge of the market, there is little possibility that the inflationary trend created by too little competition will be remedied by making these two applicants bigger. More inventory does not literally translate to more affordable rates if the number of true competitors in the market has not changed.
2719 In anticipation that new inventory will in and of itself slow the predatory pricing that plagues the system today, also suggests that the devaluation of inventory that has been created by increased signals and is increasing the impact each year will occur in these markets. This is not possible.
2720 Although the effects of fragmentation are certainly more pronounced in the smaller markets, the larger markets are not immune to such factors. What I believe the advertisers and in fact the industry needs is a pause for second thought on where the system is going as a whole. Dismissing the impact of DTH and distant signals because the issue impacts all broadcasters ignores the very real fact that all broadcasters are not impacted equally. If you have broadcast real estate in major markets or analogue specialty you simply cannot argue reasonably that you are equally impacted.
2721 As a business person, I understand that these applications are driven by: increased competition in core markets; fragmentation; and need to meet investor expectations.
2722 But I respectfully submit that resolving the problems, and trust me I wish I had their problems, for two of the strongest broadcasters in the system only intensifies the problem for others. If the Commission seeks to further strengthen two already healthy, profitable broadcasters, they do so at the peril of others weaker in the system.
2723 Essentially, our read of both applicants' proposals can be boiled down to the following:
2724 CanWest has a less profitable small market station and should therefore be allowed unfettered entry into what are arguably, for the moment, two of the top demand markets in the country. These essentially new major market signals however should still be viewed as a Red Deer station because of some local news obligations. The revenues accrued through sales in these markets will offset any shortfall the Red Deer market creates to the bottom line at CanWest.
2725 In the case of CHUM's proposal, they are asking for entry into these two markets on the basis of consumer demand, commercial inventory shortfalls and all this despite recently being given permission by the Commission to sell even more inventory on its already "must carry" ACCESS service and to own duplicate signals in the Vancouver market.
2726 Neither of these applicants offer diversity to the system. The category of programs they propose to offer is abundant on signals they already own in the markets on distant signals and on other local broadcasters in these markets. The news perspective they purport to offer is also not lacking. Both of these applicants have direct voices into the market. There is no consumer demand beside some isolated patches in specific interest groups that if filled by a niche service would not make a business case. In short, there is ample justification for denying these applications just on the basis that they don't offer much for the viewers of Alberta.
2727 The real benefits these applicants hope to gain are further advantages of concentration of ownership. Control over rates, control over inventory, control over programming sources. As I have indicated earlier, these decisions in major markets cannot be made in isolation. There is a very real and very detrimental trickle down effect.
2728 DTH has eroded our tuning base. The impact of carriage of distant signals on small markets across the country is very pronounced. As the viable option of satellite permeates the larger markets like Calgary and Edmonton and subscriptions rise, both of these applicants are well positioned to negotiate carriage on DTH. The additional competition that our signals will face from additional local Alberta signals cannot be underestimated.
2729 As a broadcast outlet, we need time to recapture our audience and restore faith of advertisers in our ability to deliver the market of Lloydminster. These applications are a significant threat to this goal and CHUM's dismissive response to our intervention is short-sighted and self-serving.
2730 No one anticipated that DTH would create the imbalance and have the real downside it has had. Therefore, before we as an industry and a country continue down this slippery slope, we respectfully submit that the Commission conduct a thorough review of the structure of the Canadian broadcast system. Everyone, from the small regional broadcaster to the large national system to the consumer, deserves to understand what the long-term goals and visions really are.
2731 Thank you, Chair Dalfen, Commissioners and Commission staff for giving this small regional broadcaster a voice in these proceedings.
2732 THE CHAIRPERSON: Thank you.
2733 Commissioner Williams?
2734 COMMISSIONER WILLIAMS: A large voice in a small proceeding from a medium sized broadcaster.
2735 I guess I have a question. It gives you an opportunity to make another -- emphasize one of your points a bit more. In your opinion, how important are smaller and regional broadcasters to the Canadian broadcasting system?
2736 MR. RUPTASH: They are ultimately important to the local reflection of the community that they serve. If you take a look at my marketplace in Lloydminster, you know, privately owned two television stations, there is very little markets that you can compare ours to. We don't have a microwave truck, my weather person is not a meteorologist so we cover the local school board, we are there for the charity auctions and we are the voice of the community. They are extremely important to the system.
2737 COMMISSIONER WILLIAMS: When you present the news on your station, is your news primarily of a regional and local nature, and in the event there is a national story that you are covering, do you cover it from I guess a local and regional perspective? Give me some examples on how you would handle, say, a story like the SARS issue effecting eastern and perhaps all of Canada.
2738 MR. RUPTASH: On a story like the SARS issue, we will look for a local angle, see if there is a medical person that can comment on the situation as it reflects locally, if you are looking at the mad cow disease. I mean we will take some regional and national feeds off of some of the sources that we have, but the local reflection is always first and makes up the driving force of all of our news on television.
2739 COMMISSIONER WILLIAMS: In your news, what percentage of your news program would be local and regional as opposed to carrying larger national stories or international?
2740 MR. RUPTASH: Thirty-five per cent would be national. The rest would be local and regional.
2741 COMMISSIONER WILLIAMS: This is primarily local and regional then. Would that be a fair statement?
2742 MR. RUPTASH: Yes. That's right.
2743 COMMISSIONER WILLIAMS: Earlier in the proceeding, and I'm sure you have been here, various proposals have been discussed and scenarios. I will put forward a hypothetical one now that I did recently.
2744 If we were to deny CHUM's and Global's applications, both of Global's applications, and proposed a moratorium to pursue this broader policy initiative that you are suggesting, how quickly should we proceed with that and how long a moratorium until there was any new licensing, and any other comments you may wish to add on that topic?
2745 MR. RUPTASH: I would wait until I have recaptured my 38 per cent of lost revenue over the last five years.
2746 COMMISSIONER WILLIAMS: Okay. That might work for you but it might not work for everyone else.
2747 MR. RUPTASH: I think that there has to be an equation that takes a look at all the broadcasters in the system that are suffering and let them recapture, and take a look at what the final outcome of DTH is going to be, the distant signals issue. I mean I was hoping that the DTH decision would have been out this week because that is absolutely paramount for small regional broadcasters for their future, but I think we have to sit back and just see exactly where this is all going because it is not there yet.
2748 COMMISSIONER WILLIAMS: Could you tell me a bit more on how new competition in the Edmonton market would primarily affect your Lloydminster station?
2749 MR. RUPTASH: Very simply, when a new entrant comes into the Alberta market it attracts national dollars. It does not increase the national budget. These are "must buy" markets in Edmonton and Calgary and in Red Deer, so when there are cuts the trickle down effect comes to stations like Lloydminster, like Medicine Hat. You know, we are supposed to buy you, we are supposed to be in your marketplace, but there is only so much to go around. So, you know, on the food chain we are pretty low.
2750 COMMISSIONER WILLIAMS: So as the water hole gets smaller there is not as much to go around.
2751 MR. RUPTASH: I'm sorry?
2752 COMMISSIONER WILLIAMS: As the watering hole gets smaller there's not as much to go around basically is what you are saying.
2753 MR. RUPTASH: Absolutely. Just because there is new entrants in the market doesn't mean that there is more advertising dollars. It doesn't work that way.
2754 COMMISSIONER WILLIAMS: You make a point in your written intervention:
"If the solution is in fact to allow smaller signals access into the larger markets should this not be examined for all regional players and not just at the behest of one player and their least profitable market?" (As read)
2755 You talk about a much broader resolution to the problem rather than just dealing with individual problems. Can you elaborate a bit on that please?
2756 MR. RUPTASH: I don't understand your question.
2757 COMMISSIONER WILLIAMS: You say rather than just solving CKRD's problem perhaps we should have a broader policy review and look at all the challenges affecting all of the stations.
2758 MR. RUPTASH: I guess the number one issue that I was referring to in that comment was the DTH issue, the issue of distant signals in the marketplace delivered by DTH. It was quite comical to me when you asked the question about the technical problems that I believe CHUM had or Global had because they were both looking for the same channel, they both applied for the same channel. In the old days we filed a technical brief which gave us a B contour which was a line in the sand that said we serve that marketplace.
2759 That doesn't exist any more in DTH. You know, I have four rebroadcasters around Lloydminster that have quite a large line in the sand, but they are duplicated by 16 distant signals. I am a partner with the CBC through affiliation and the CTV through supplementary affiliation and they come into those marketplaces and duplicate my signal. Some partnership. That's what I'm dealing with.
2760 I mean on cable it's a little bit different. You get the simulcast and you get some protection. But when you are looking at broadcasters who are filing technical briefs for a channel to get into a marketplace, they don't care about the off-air reception. They want to be on cable and they want to be on DTH.
2761 In my marketplace, 59 per cent of my marketplace is received by satellite, 39 per cent is received by cable. I could buy those who don't have cable and don't have a dish, turn off my transmitters, save $100,000 in power, not pollute the air and roll some of that money into Canadian programming. Doesn't that make more sense than the way it's working right now?
2762 COMMISSIONER WILLIAMS: I think I will continue asking the questions.
--- Laughter / Rires
2763 COMMISSIONER WILLIAMS: You are carried on satellite now. Right? You are carried with ExpressVu but you are not carried with Star Choice.
2764 MR. RUPTASH: No, that's incorrect. That's incorrect.
2765 COMMISSIONER WILLIAMS: That's incorrect information?
2766 MR. RUPTASH: Yes.
2767 COMMISSIONER WILLIAMS: Okay.
2768 MR. RUPTASH: We have been on Bell ExpressVu since October 10th of 2002 and we were placed -- and that is in all of my markets inside my B contour, which is reflected in the DTH compensation package that the Commission has reviewed.
2769 On Star Choice, I was placed on their system about eight weeks ago on a limited pattern 30 kilometres outside the market of Lloydminster, and I still don't understand why.
2770 COMMISSIONER WILLIAMS: What is the breakdown between -- or do you know the breakdown between the DTH penetration as opposed -- like, how many ExpressVu and how many Star Choice? What is that percentage? You know the difference between satellite and DTH. Do you have a rough approximation of --
2771 MR. RUPTASH: Subscribers to both services?
2772 COMMISSIONER WILLIAMS: Right.
2773 MR. RUPTASH: It is fairly equal in my marketplace.
2774 COMMISSIONER WILLIAMS: So about half each.
2775 MR. RUPTASH: Yes. That's correct.
2776 COMMISSIONER WILLIAMS: Okay. Now that you are on satellite, that probably solves some of your problems in the longer term, how is it affecting you in the shorter term?
2777 MR. RUPTASH: It's going to take quit a while to repatriate those viewers who have been enjoying the spectrum of Bell ExpressVu and Star Choice without having to use the choice. I think it will take a number of years. We still haven't solved the issue of simulcast, about programming that I buy rights to in my marketplace that is brought in from distant signals, about time shifting, where you can watch the most popular show that I purchase in prime time on 16 other services two hours before or two hours after. It's going to take a long time.
2778 COMMISSIONER WILLIAMS: How does half your marketplace or more than half your marketplace live without the local news, sports and weather that your station provides?
2779 MR. RUPTASH: I'm sorry?
2780 COMMISSIONER WILLIAMS: How does your marketplace, a large portion of your marketplace, deal with not having your local news, sports and weather programming? That must be something they are interested in.
2781 MR. RUPTASH: When we were first put on Bell ExpressVu in October of 2002, the retailers in the marketplace had a level of expectation of what it would do for subscriptions, what it would do for a conversion from Star Choice to Bell ExpressVu. The numbers went through the roof. They were very impressed with what happened when the local stations were put on Bell ExpressVu.
2782 As soon as reception wasn't there for a particular subscriber in my marketplace we received the call, forward that to Bell ExpressVu, they took care of the subscriber. It has been a very positive move for the advertising community in my marketplace, the perception for the advertiser, and the viewer is the big winner. Local news is the most important component of any broadcaster's schedule.
2783 COMMISSIONER WILLIAMS: So in your knowledge of your local marketplace, as you meet your friends and neighbours and customers on the streets in the community, what is your view? Do a lot of the DTH viewers tune into your station on DTH?
2784 MR. RUPTASH: Absolutely. I mean, being on Bell ExpressVu for the first rating period in October increased our tuning factor by some 22 per cent. We have not been on Star Choice in the whole broadcast region to this point, so we don't have accurate numbers to reflect that success story.
2785 But it's still a matter of repatriation. It's still a matter of them coming back to where they were before, enjoying the local stations.
2786 COMMISSIONER WILLIAMS: So do you see the potential to grow your business beyond your traditional contours?
2787 MR. RUPTASH: I sure hope so.
2788 COMMISSIONER WILLIAMS: Okay. Thank you very much. I have no further questions at this time. I may come up with others a little later in the process. Thank you.
2789 THE CHAIRPERSON: Thank you.
2790 Commissioner Wylie.
2791 COMMISSIONER WYLIE: Can you give us more details about what this means, that you are carried by Star Choice on a very restrictive pattern? You mentioned 30 kilometres.
2792 MR. RUPTASH: For some reason, when we were put up on the Bell ExpressVu system and you -- the technical way that they access your television set is through the set-top box. It is sensitive by postal code. So if you fall in my B contour, that postal code falls in that B contour, they simply turn it on by satellite and it receives my two television stations. So every place inside my B contour, and that is just about in 100 mile radius of Lloydminster, those subscribers receive local television.
2793 When it came to Star Choice, for some unknown reason, and I have been lobbying very hard because I sit on the DTH committee as well, they decided that they would initially put us on in a limited pattern and I believe it is 30, 40 kilometres. I don't understand why because we get many calls every week from Star Choice subscribers saying, when are you going to be on, thinking that we have some magic switch behind my credenza that I throw on and from time to get more viewers.
2794 I believe that the only reason I can understand Star Choice installing and putting me out in the same areas as Bell ExpressVu is they are waiting for the decision on DTH that is pending I believe in the next 10 days. Maybe that might change their opinion. But if I was in the marketplace and there is a demand for the local service, why wouldn't you put us on in all those markets?
2795 COMMISSIONER WYLIE: So now what happens is now you are on a contour that is smaller than your big contour.
2796 MR. RUPTASH: Much smaller.
2797 COMMISSIONER WYLIE: Starting from the middle of Lloydminster?
2798 MR. RUPTASH: Absolutely. It would be about 30 kilometres outside of Lloydminster, period. I have rebroadcasters up in Bonneville and St. Paul and Cold Lake, 100 miles away, up in northern Saskatchewan in Meadowlake, and we're not on the Star Choice service there, but we are with Bell ExpressVu.
2799 COMMISSIONER WYLIE: And you did say initially?
2800 MR. RUPTASH: Pardon?
2801 COMMISSIONER WYLIE: You did say initially, they told you initially --
2802 MR. RUPTASH: That is correct.
2803 COMMISSIONER WYLIE: Thank you.
2804 THE CHAIRPERSON: Counsel.
2805 MR. McCALLUM: Just a brief question. Has there been any approach or discussions with CBC about the possible disaffiliation of one of your stations in Lloydminster?
2806 MR. RUPTASH: I also sit on the CBC-TV NAC committee, which is a liaison between all affiliates in Canada and the corporation. There are very few of us left now. There have been proposals tabled as recently as two weeks ago as to the vision of the CBC. They want wall-to-wall CBC programming on all the affiliates. And as far as network payments, affiliate payments, they are talking about flat or reduced payments for the next pending deal.
2807 They have brought the topic up to me a couple of times and it's part of some of our business plan.
2808 MR. McCALLUM: So you would welcome this affiliation, I would take it?
2809 MR. RUPTASH: I guess I would welcome any option, pending a DTH decision that does not assist the local regional broadcaster. My options won't be many. We don't have business plans, we have escape routes.
2810 MR. McCALLUM: Thank you, Mr. Chair.
2811 THE CHAIRPERSON: On that note, we will escape for lunch and we will resume at 2:15. Nous reprendrons à 14 h 15.
--- Upon recessing at 1250 / Suspension à 1250
--- Upon resuming at 1420 / Reprise à 1420
2812 THE CHAIRPERSON: Order, please.
2813 Mr. Secretary.
2814 MR. LEBEL: Thank you, Mr. Chairman.
2815 The next appearing intervention will be presented by Craig Media Incorporated and Mr. Drew Craig will introduce his colleagues.
2816 You have 20 minutes to make your presentation.
2817 MR. CRAIG: Thank you.
2818 Chairman, Dalfen, Vice-Chair Wylie, Commissioners, ladies and gentlemen. For the record, my name is Drew Craig, President and CEO of Craig Media.
2819 Before getting to our intervention, I will introduce our team. There are some faces that may be familiar to and there are some new faces, as well.
2820 In the front row, from your left to right, is Jim Haskins, Vice-President, Television Alberta; Jennifer Strain, Vice-President, Corporate and Regulatory Affairs Craig Media; Andy Pernal, CFO, Craig Media; Debra McLaughlin, independent consultant and author of the Strategic Inc. Report; and Cam Cowie, Vice-President, Television Manitoba.
2821 Behind me, from your left to right, is Joanne Levy, manager and Independent Production for Alberta. New to the team is Michael Taylor, Vice-President, Programming Craig Media; Al Thorgeirson, Chief Operating Officer; and also new to the team, Val Meyer, Vice-President, Sales for Craig Media and Rob Scarth, a consultant who's assisting us with some of our CBC issues.
2822 Craig Media appreciates the opportunity to present its views on CHUM's applications for new stations in Calgary and Edmonton and Global's application to disaffiliate CKRD from the CBC and its proposal to launch it into the Calgary and Edmonton Markets as CH. We will address the CHUM application first and the Global application second.
2823 This is a very significant hearing for the Canadian Broadcasting System and our company. It is significant for the system because it represents the potential launch of two new de facto national television systems, CHUM realizing its strategy of a national rollout and Global its strategy of a dual national system through CH.
2824 We think approval of either of these applications would shortchange the system and the Canadian public. It will provide huge advantages to both CanWest and CHUM and result in a major realignment of the Canadian broadcasting system. Frankly, we don't see what the rush is. Neither CHUM nor CanWest will be disadvantaged financially if these applications are denied. Moreover, we might all benefit by carefully considering some of the major structural and policy issues that these applications raise.
2825 This includes issues such as DTH fragmentation, multiple licence ownership, cross-media ownership, cultural diversity and the funding crisis in Canadian drama, the fate of small-market television and the responsibilities of small, mid-sized and majority players. They are all interrelated. They have a direct bearing on this hearing and are critical to the future development of the system. None of these issues can be resolved in approving these applications.
2826 This hearing is also significant for us because approval of either one of these applications will have a significant impact on Craig Media.
2827 Let's be clear about why we are opposing these applications. The Toronto and Alberta markets are not remotely comparable. Our impact on the incumbents in Toronto is dwarfed by the impact their proposals would have on us in Alberta. We are not saying that Alberta can never sustain new television services. We are saying that these are the wrong applications and this is the wrong time.
2828 Our concerns with the CHUM applications are as follows: one, the impact on Craig would be devastating; two, the service proposed is simply more of the same. It's not complementary; and three, the benefits proposed do not outweigh the negative consequences.
2829 We are, by far, the smallest mid-size player in the system, but we have large, multi-station group obligations. To put this into perspective, Craig's revenue on a consolidated basis last year, which includes our conventional television stations in Manitoba and our digital specialty services, were $51 million. The Alberta operations are subsidizing our digital services and the start-up of Toronto One and supporting our operations in Winnipeg and Brandon. In contrast, CHUM has total revenues of $480 million.
2830 In addition to its significant size, CHUM has other major advantages, including: a commercially-oriented schedule dominated by blockbuster movies already available throughout Alberta on Access; the ability to cross-promote new stations on its analog specialty services; DTH carriage for Citytv, Toronto and Citytv, Vancouver; the ability to leverage inventory across all of its TV assets to maximize national advertising revenues to the detriment of smaller players; the ability to efficiently amortize program costs over two national grids.
2831 In the area of program buying, CHUM enjoys one of its biggest advantages over Craig, given our limited audience reach of 42 per cent of the country, which includes Toronto. CHUM's direct assault on our stations means that not only will we have to replace the programming we current acquire from CHUM, but we will be pushed into a bidding war for national rights to network programming. The possibility of competing with CHUM "fiercely and effectively", as they put it, becomes more remote when we look at the potential revenue impact CHUM would have if licensed in Alberta.
2832 MR. PERNAL: We looked at the revenue impacts in two different ways. First, we hired the independent research firm, Strategic Inc, to do a market impact analysis which determined that over a seven-year period CHUM's proposals would result in a $150 million revenue loss for Craig. This was based on its assessment that the CHUM proposal is directly competitive and duplicative of A-Channel.
2833 If we look at CHUM's own assessment of its impact on Craig in the Alberta market, we would lose $36 million over the seven years, which, in fact, equates to more than half of Craig's projected Alberta operating income in that period.
2834 Therefore, under CHUM's own assessment, which we think significantly understates the impact, Craig will be faced with the difficult task of making drastic reductions to its services and jeopardizing the commitments we made only a year ago at our licence renewal hearing.
2835 Whichever way you look at it, CHUM's gain comes at our expense.
2836 MR. HASKINS: We were, frankly, shocked at how little effort CHUM made to differentiate its application from what is already being offered by the incumbents. CHUM has proposed a program format that is virtually identical to the A-Channel format: very local; targets 18-34, emphasizes movies in prime time; offers 6 and 11 p.m. newscasts; and offers non-news, aboriginal and multi/cross-cultural content.
These are the very hallmarks of A-Channel.
2837 Rather than a carefully considered proposal based on the needs of the market, diversity for viewers and benefits for the broadcasting system, CHUM has, instead, put forth an application that seems to assume its entitlement to be licensed in Alberta as quid pro quo for the Commission licensing Craig in Toronto.
2838 CHUM suggests that there is no multicultural or aboriginal programming in Alberta. The A-Channel fall schedule includes 14 hours per week of cross-cultural and aboriginal programming. We are working in cooperation with Channel M in Vancouver, with OMNI and ATN in Toronto, and with independent producers to bring new original programming to Alberta, including a cross-cultural, prime-time drama series called "Lord Have Mercy". In addition to those 14 hours, "The Big Breakfast", our two-hour live morning program that is unique to each city, showcases the cultural diversity of our cities virtually each and every day.
2839 CHUM claims it will do 14 hours of non-news programming in the heart of prime; however, its program schedule shows only 4.5 hours. In prime time, Monday to Friday, they have a 6 p.m. newscast, four U.S. movies per week and a newscast at 11 p.m. Well, so do we.
2840 This doesn't look like diversity to us. This looks like a program schedule that's only going to split our audience.
2841 To quote Mr. Miller, from CHUM's licence renewal proceeding in May of 2002 in referring to the impact of Toronto One on CHUM, and I quote:
"Because what we are going to face now is two new entrants who are not competing with CTV and Global for programming, they are not competing with CTV and Global for advertisers, they are competing with us, because we have similar programming, similar advertising sales ability. So that is why the revenue will come from us."
2842 MR. COWIE: This is the crux of what we are saying. Despite their assertion that half of its revenues will be new to the market and that the incumbents will be equally impacted, CHUM's revenue will come primarily from us. Revenue growth is only possible where one or both of two circumstances occur: where there is a real potential for development of a new market or there's a potential for audience growth.
2843 There has not been a service licence in recent years that has grown the audience to conventional television. Tuning to conventional television has been in decline for the last 10 years and it is unreasonable to assume that a schedule that mirrors existing programming will reverse this trend in two well-served markets.
2844 With the introduction of A-Channel in 1997, the market revenues grew because we were able to repatriate U.S. dollars. U.S. border stations in 1997 had sales teams in Alberta. Today, they do not. There is nothing left to repatriate.
2845 A-Channel also tapped into demand for efficient inventory in the 18-34 demographic. This demographic was neither the core audience of the incumbent broadcasters, nor an efficient buy for advertisers wishing to reach this group.
2846 Local sales in Alberta were underdeveloped in 1997. They are not any more. Local advertising represents 33 per cent of TV ad revenues in Edmonton and 31.8 in Calgary. That's much higher than the national average of 21.7 and considerably higher than the average in Toronto, at 7.6.
2847 Mr. Switzer said yesterday that CHUM could repatriate audience with 12 hours of simulcast programming that is only available on U.S. signals. The problem is, unlike Toronto, there's $25 million of available money to be repatriated from U.S. border stations, there are no dollars attached to this audience.
2848 Further, the proposes schedules CHUM has filed with its application include absolutely no simulcast programming.
2849 MS LEVY: These applications are key to CHUM forging a new national television system, with coverage in Ontario, B.C. and, they hope, Alberta.
2850 The offer $12.5 million for broadcast licences in Alberta, a market that will take their national reach from 68 to 80 per cent of English Canada, with duplicate signals in the three largest markets. Contrast this to our first licence term commitment of $12 million to independent producers and our total reach of only 20 per cent of English Canada.
2851 CHUM's system benefits are also inadequate. For the privilege of owning a national system and seeking an exemption from the dual-station prohibition, they offer an additional two hours of priority programming in Toronto, something they should be doing anyway, and two new drama series, which they could be doing anyway.
2852 MR. CRAIG: In conclusion, approval of CHUM's application could now foreclose the opportunity to licence a true alternative and complementary model, which would ultimately better serve Albertans.
2853 Second, we continue to contribute a significant amount of money to CHUM's bottom line to the programming we buy from them. No financial harm will come to CHUM for denying these applications.
2854 Finally, Craig's well-being may be the least of CHUM's concerns, but, we respectfully submit, that it has to be a major concern of this hearing. The Commission has on many occasions reiterated that strong, healthy broadcasters can contribute most effectively to achieving the objectives of the Broadcasting Act. The result of licensing CHUM is no incremental benefit for audiences and a windfall for CHUM, at the direct expense of Craig.
2855 We would now like to talk about the global application for CKRD. This application is what we would term "a wolf in sheep's clothing".
2856 CanWest is suggesting that this application is about saving local television service in Red Deer. It isn't. It is really about whether CanWest can use CKRD to fulfil its strategy of making CH a new de facto second national network and a new Alberta superstation.
2857 If successful, this would fulfil two important strategic goals for CanWest: it can lay off part of the cost of the national rights programming that it acquires for CH; and it will greatly strengthen their bargaining clout with advertisers at the expense of smaller players like Craig Media. Considering that they already have unprecedented advantages in both of these areas, this application is simply about them wanting more.
2858 At the last CBC affiliates meeting in May, CBC and CKRD made it clear that they are already treating this affiliation as fait accompli. Further, we told Global that we are interested in doing business with them in Alberta, but this year they offered us less programming and of lesser quality. Clearly, they are holding their best back in anticipation of your approval of this application.
2859 MS STRAIN: Approval of this application would provide CanWest with two TV outlets in Calgary and two in Edmonton, in addition to its ownership of the local dailies in each market.
2860 The prohibition against common ownership of more than one television station in a market is intended to preserve editorial diversity and fair competition. We believe that approval of this application would not only further erode editorial diversity in these markets, it would provide CanWest with huge competitive advantages over other broadcasters beyond what they already enjoy.
2861 While one could take the position that previous exceptions to the common ownership policy were warranted for one reason or another, we cannot conceive of any basis upon which such a claim could be made in this case. Indeed, the harm to the incumbents, the increased concentration of ownership and voices, the huge competitive advantage in program acquisition and advertising clout lead to the inescapable conclusion that this is exactly the scenario the policy was designed to guard against. It must, in our view, be vigorously upheld.
2862 If the Commission approves CKRD's disaffiliation from CBC, we believe that the CRTC should impose a condition of licence on the Edmonton and Calgary cable operators, revoking their authorization to carry CKRD as a distant signal, based on the detrimental impact carriage of that signal would have on those markets.
2863 Whether CKRD is in Edmonton and Calgary on channel 5 through retransmitters or as a distant signal on channel 50 or 52, their access to the market and their ability to cross-promote is virtually the same, and so, too, is the impact.
2864 The benefits proposed by CanWest are that CKRD will be able to continue to provide local service. We don't think that's a benefit, particularly given that CanWest promised to maintain local service to Red Deer as one of the benefits of the WIC transaction just three years ago. If CanWest can't support is small-market stations, who in the country can? In Brandon, our CBC affiliate, CKX, does more local programming that CKRD, with just over half the revenue and in a market considerably smaller.
2865 MR. PERNAL: The impact study we commissioned concluded that the new CKRD will have a substantial adverse impact on the Calgary and Edmonton markets.
2866 The combined power of owning two stations in the market, in Calgary and Edmonton, will put CanWest in the top ranking in combined audience share in those markets. We conservatively projected CKRD's market share based on how CH actually performs in Toronto and Vancouver. Based on that, A-Channel would lose slightly less than half of its anticipated revenues as a result of the combined programming and advertising power of dual CanWest signals in Calgary and Edmonton -- a $140 million revenue loss for A-Channel over the next seven years.
2867 We also did a bottom-up revenue analysis that show that Global would realize about $170 million in revenue over seven years, above what they currently take out of the market.
2868 MR. CRAIG: These applications are wholly deficient. We respectfully submit that the CRTC should deny the CHUM applications, it should deny CanWest's Edmonton and Calgary transmitters and permit CKRD to disaffiliate only if its distant signal carriage status is revoked.
2869 In less than six years, we have built a service in Alberta that is an alternative, inclusive and intensely local. We are committed to this province. We are committed to local reflection and we are succeeding. If the Commission approves these applications all that good work will be undone.
2870 We also think that time is right for the CRTC to initiate a major policy proceeding that can effectively deal with the issues these applications raise. Specifically: dual station ownership and cross-media ownership; the crisis in Canadian drama; the future of small-market television; the impact of DTH fragmentation on local television; the appropriate contribution of small, mid-size and major broadcast groups.
2871 If we had a major policy proceeding that could address these vital structural issues, broadcast groups would all be in a better position to put forward plans for the future. Craig has plans for the future. We want to grow to be a national player. We have to grow if we are going to be competitive. A new TV policy proceeding could resolve some of these issues. With a new road map in place, we would all be able to put forward exciting and innovative plans in the context of a policy framework that is in the best interests of the system.
2872 We thank the Commission and Commission staff for its attention and we are happy to answer any questions that you may have.
2873 THE CHAIRPERSON: Thank you.
2874 Commissioner Williams.
2875 COMMISSIONER WILLIAMS: Good afternoon, Mr. Craig and panel members.
2876 MR. CRAIG: Good afternoon.
2877 COMMISSIONER WILLIAMS: You talked about becoming a national player, a national broadcast player. Is there a future for smaller, mid-sized regional broadcasters in the Canadian system?
2878 MR. CRAIG: We think there is. Certainly, we do. The Commission has recognized that mid-sized players do play a special role in the system. We are one of those mid-sized players and we believe strongly that we make a huge contribution to the communities that we serve.
2879 We started our company in small-market television in Brandon. The station continues to be an integral part of that community. And we have taken that philosophy and applied it across the various markets that we serve, but it's really the foundation of what we are all about.
2880 COMMISSIONER WILLIAMS: Is your Brandon station similar in size and marketplace, in general terms, to the Red Deer station?
2881 MR. CRAIG: Actually, the Brandon market is considerably smaller than the Red Deer market. The extended market of Brandon is about 128,000, according to BBM; the Red Deer market, by comparison, would be 246,000 viewers, according to BBM. So it is what we would term, in small-market terms, a very robust local market.
2882 One of the indicators, of course, is the cost per rating point in Brandon versus what it might be in CKRD. Cost per rating point in Brandon is approximately $24; the cost per rating point in Red Deer is $45. So it's a market that is almost twice the size of Brandon.
2883 COMMISSIONER WILLIAMS: We have been told in the last few days many of the challenges and difficulties that CKRD in the regular marketplace is experiencing and will experience in the future if they are not granted their application to disaffiliate.
2884 Are you affiliated with CBC in Brandon?
2885 MR. CRAIG: Yes, we are.
2886 COMMISSIONER WILLIAMS: And what is your experience, as it compares to what was described to us about the Red Deer situation?
2887 MR. CRAIG: Well, we face many of the same challenges, but there are more ways to sustain local service in a small market than extending into a large market. I have to wonder why you would need to extend Red Deer into both Calgary and Edmonton to sustain 9.5 hours a week of programming. Our station in Brandon produces more local programming, it's done on half the revenue and it's profitable.
2888 COMMISSIONER WILLIAMS: Okay. You talk about --
2889 MR. CRAIG: So I think there are more creative ways to ensure that the Red Deer local service continues on. We, ourselves, broadcast into Red Deer. A-Channel Edmonton has a rebroadcast transmitter in Edmonton and we do very well in Edmonton. In fact, our audience share in Edmonton, our share of tuning, is actually greater than CKRD's.
2890 COMMISSIONER WILLIAMS: That's in Edmonton or in Red Deer?
2891 MR. CRAIG: In Red Deer.
2892 One of the ways in which we have been able to maintain our level of services in Brandon is to form a joint venture with CTV. It's been a long-standing deal that we have had with CTV, where we actually purchase the right to sell local advertising on the CTV signal in the Brandon market and that helps us sustain the level of local service that Brandon outputs every years.
2893 I would think that one of the concepts that we have -- we have heard the arguments relating to Red Deer and the need to sustain local service. We think that is a very real and viable alternative to extending the Red Deer signal into both Edmonton and Calgary. We would be prepared to offer up the A-Channel Red Deer transmitter and give, under some sort of commercial arrangement with Global, access to our local commercial avails, provided that they are not allowed on the cable system in Calgary or Edmonton.
2894 Effectively, if they go down the route that most of the CBC affiliates are going down, where CBC is interested in owning their own transmitters in a market -- so assume that you deny their application and Global and CTV have to come to terms -- I would think that one of the alternatives would be for the CBC to put its own transmitters in the Red Deer market, which they are talking to other CBC affiliates about, Global could keep its transmitters, keep its CITV transmitter and, under a commercial arrangement with Craig, sell time on A-Channel Red Deer, which already has proven numbers and is a viable service.
2895 Effectively, they could be selling local time on three channels in Red Deer. And I would think, based on the revenue that they are doing now, and you heard them say that the cable carriage, there's virtually no delivery right now in Calgary and Edmonton -- it's a 0.3 rating and 0.2 is what they, I believe, put on the record, so they have said it's almost irrelevant -- if they had three channels in which to sell on in their home market, which is a robust market, they could do very well. I would think that they could more than make up the difference in losing their CBC affiliate payment by having access to our avails, based on our experience in Brandon.
2896 COMMISSIONER WILLIAMS: In terms of programming similarities between your existing service and the proposal put forward by CHUM, you state that they are very similar -- or, in fact, maybe just describe again how closely aligned the two services are.
2897 MR. CRAIG: I will maybe ask Michael Taylor, our Vice-President of programming, to elaborate.
2898 MR. TAYLOR: Thank you.
2899 The schedule that has been proposed includes several hours of similar programming throughout the day, and I will walk with you through that now.
2900 In the morning, they are proposing two half-hour daytime multicultural strips. We are currently offering that in our fall schedule. They are also talking about two one-hour acquired U.S. television series, and, if it mirrors their other stations, they will likely be talk shows. And as you will see, in our fall schedule we have two one-hour talk shows in the morning.
2901 In the afternoon, we have two one-hour U.S.-acquired strips, as do they. At six o'clock, they have a one-hour news telecast. We do, too.
2902 In prime time, we are currently running movies most nights of the week. We have "Monday Night Football" for half of the season and that will turn into a movie night, as well. Their schedule proposes six nights of movies throughout the week.
2903 We have a half-hour news telecast at 11 o'clock and they have a half-hour news telecast at 11 o'clock.
2904 On the weekend, they are proposing six hours of multicultural programming. We currently have 8.5 hours of multicultural programming. In prime time, they are talking about a movie Saturday night and Sunday night. Our schedule has a movie Saturday night and Sunday night. At 11 o'clock Saturday and Sunday night, they are talking about local news. We have local news at 11 o'clock Saturday and Sunday night.
2905 COMMISSIONER WILLIAMS: Sounds similar and head-to-head. Would that be your impression, Jim?
2906 MR. HASKINS: Yes, Commissioner. I think that the schedule are very, very similar. There are right now four very strong local players in the Edmonton and Calgary markets, when it comes to local programming, newscasts in particular. CBC is a player. They have many news reporters out there, they are selling local and they have a strong tradition. So we feel that it's a very, very competitive market.
2907 Where we separate ourselves from the other three is that our target demo is certainly 18-34. We are attempting to attract what has traditionally not been a strong news viewer, going for the younger people, trying to grow our audience over time, and it has been working.
2908 It's a grind, for sure. That's a really tough demo, as CHUM stated yesterday, very fickle and sometimes they aren't watching at six o'clock. It has taken us almost six years to establish ourselves in the market with a very strong news component, truly reflective of our communities and what CHUM is proposing is certainly going straight at what we are already doing.
2909 COMMISSIONER WILLIAMS: In terms of programming, Canadian programming and local programming and regional programming and aboriginal programming and some of the other programming initiatives that competitors have mentioned, can you tell us a bit about what your current offering is: what you track is, some of the challenges and opportunities you found. Maybe just spend a couple of minutes helping us through that part of it.
2910 MR. CRAIG: I would be happy to. I would like to ask Joanne Levy to talk about the A-Channel Production Fund and let you know about some of the initiatives that she has put together.
2911 MS LEVY: Thank you.
2912 I would like to set the record straight. I heard something said yesterday about "no Alberta-produced drama in prime time in the last few months". That's certainly not the case. Since September of last year, nine of the A-Channel Production Fund movies, which are all Alberta-produced, have been on our stations. I note that CTV has carried two television movies produced by Alberta producers, as well.
2913 So there hasn't been the black hole that you might have thought. In fact, of our movies, eight of them have been sold into the Ontario market: four to CHUM and four to CanWest.
2914 I'm proud and pleased to say that I will be filing with the Commission the list of productions that will fulfil the commitment to the full spending that we promised in our first A-Channel Production Fund licence period. We have now made the appropriate agreements to complete that first fund and with our $12 million we have managed to encourage production worth over $110 million, much of that with Alberta producers. So we have had quite a run of it, but I think we have had quite an impact. We have done more than, I think, our fair share and more than many expected of us.
2915 And we just in the last little while launched a special initiative to try to reach emerging writers and producers, particularly in the immigrant community. Our refuge proposal is meant to put at least five projects into development, with the view to licensing at least one one-hour program that will be drawn from these new voices and new storytellers.
2917 MR. TAYLOR: Yes, I would like to address your question about our multicultural program. You asked about what the challenges have been and what we have been doing in the past and what we are doing in the future. We have three returning series this fall. We have a one-hour Ukrainian series, a one-hour Cantonese series and those we are partnering with Rogers and OMNI, in Toronto.
2918 We have 42 one-hours of original programming of each of those series that will be delivered over the upcoming broadcast season. We have an aboriginal series that is coming back in its twelfth season. Its the longest running aboriginal series on television and it originally started at our CKX station in Brandon, Manitoba, as an in-house production and has since moved into the independent production community. But that will be coming back for an additional season, 26 original half-hour episodes.
2919 We have two half-hour series that we have obtained from Channel M in Vancouver, 65 half-hours of each. We have a news series called "Asian Horizons", which we have partnered with the Asian Television Network in Toronto. They are going to be producing 156 original one-hour episodes for the upcoming season. And I think Joanne also mentioned our prime time dramatic series, "Lord Have Mercy", which is produced in cooperation with Vision and APTN. We have 13 half hours of that, as well.
2920 MS LEVY: So through the A-Channel Production Fund, we have managed to spur the production of 153 hours of brand new original Canadian production. Seventy hours of that is drama and the rest is documentary, music and variety series and one awards show, the Alberta Film and Television Awards, which we broadcast this year.
2921 COMMISSIONER WILLIAMS: What are the challenges, in your view, going forward, to funding Canadian drama, particularly local and regional drama?
2922 MS LEVY: In the case of drama, the difficulty is, in many cases, the lack of money. Going into next year, we know that there will be less money in the Canadian Television Fund because there was a borrow-forward this year. It's not at all clear how that's going to be resolved. There's no certainty there will be additional funds. Quite frankly, even if there were, with the oversubscription this year, and last year for that matter, the challenge is always source of funding for the 10-out-of-10 Canadian drama.
2923 We have been able to do quite a lot with producers who have the ability out of Alberta to make international and interprovincial coproduction partnerships and presell into international markets, but even that becomes very difficult because some of those markets have fallen through.
2924 Going forward, my plan has been to try to encourage those producers who can try to find those international coproductions. They are very rare, they are very hard, but we have commitments that we take very seriously, so we try to meet that.
2925 There has been talk of broadcaster envelopes. I think that would be marvellous, but it's far from a done deal. I don't think that the Canadian Television Fund will ever be able to support all of our commitments, so I make my plans with a combination of sources in mind.
2926 COMMISSIONER WILLIAMS: Okay. Thank you.
2927 Does CHUM already have access to Alberta?
2928 MR. CRAIG: Absolutely.
2929 COMMISSIONER WILLIAMS: Okay. How did it affect your business, in terms of similarity in programming, competition for advertising dollar and, I guess, just affect on the ability of your company to achieve its goals?
2930 MR. CRAIG: There's a couple of areas. One is obviously Access. They have the ability to get into the local market here on Access. We have watched that station change into a more commercial entity. So from an audience point of view, we suspect that they have their licence renewal, they have been allowed to sell more advertising on Access, they have been given a clear mandate, in terms of what they can run and what they can't run, so they have pretty clear instructions from the Commission, in terms of what they can do, and, in our view, it can be very, very commercial on a go-forward basis.
2931 They are running blockbuster movies on Access. They are running U.S. syndication strips on Access. We have every reason to believe, that with the mandate they have from the Commission, they will continue to do that, and they will probably continue to do that on a more aggressive basis.
2932 Can you make money when you run an Arnold Schwarzenegger movie festival in prime time on basic cable, on a preferred position, battle position in both Calgary and Edmonton -- and rural markets have great VHF off-air coverage? Of course, you can. If you can't make money and have an impact, then there's something wrong.
2933 Access has already had an impact from a program acquisition point of view, but we suspect that it will become more of an issue on a go-forward basis with the new instructions they have from the Commission.
2934 COMMISSIONER WILLIAMS: Okay. In CHUM's application, they propose a benefit package. Is that benefit package that CHUM proposes adequate for amending our rules somewhat, I guess in permitting two stations per market and granting a licence, such as they request?
2935 MR. CRAIG: I think what we are talking about here, our concern is both on a micro level and a macro level. It's sort of a double whammy for us with the CHUM application. We look at what they put forward. You heard the similarities in the program schedule. We have heard it described as Citytv, we have heard it described as "the best CHUM has".
2936 In the application, it's a movie format. Yesterday, it was described as something more than that. They have all this U.S. network series they own that they want to put on. And from our point of view, we look at the positioning of their local news right up against ours. We look at the CHUM application as a full frontal attack on our stations. They want what we have.
2937 The difficulty we are having sitting here this time is that, typically, at a hearing we are talking about complementary service. This is a direct threat in particular to us because it's so similar.
2938 COMMISSIONER WILLIAMS: How similar is your programming to CHUM in the Toronto marketplace, your proposed programming?
2939 MR. CRAIG: It's very different. First of all, I think we would like to set the record straight, in terms of where we ended up in terms of our foreign programming. We said at the hearing, the Toronto hearing, that we would provide a complementary service. That is what we have done.
2940 We were an additional group at the L.A. screenings this year. We didn't end up buying anything at the L.A. screenings. We didn't buy one network show. We went down to see what was available, if there were opportunities for the Toronto market only or if there were regional rights we could buy or national rights we could buy that we could afford, probably programs that might be left over, might be a little riskier to pick up, we might have taken that opportunity. We didn't buy a shell.
2941 So despite what you heard yesterday, that we were, I think the terminology was, "chasing networks", we didn't. We have a complementary schedule in Toronto. It's not competitive, from an acquisition point of view, with CHUM or CTV or Global. We stayed out of their way and we put together a very attractive, efficient, advertiser-friendly program schedule without getting in anybody's way.
2942 So it's a totally different approach than what CHUM has done in this market. We don't have a commitment to large amounts of local news programming. It's scheduled at alternative times in Toronto. Our local program commitments are non-news: talk shows, local variety in prime time. It's a complementary alternative model.
2943 COMMISSIONER WILLIAMS: Staying in Toronto for a couple more minutes, the markets are different. In your presentation, you have said the entrants of CHUM to your marketplace would be devastating. You put a $150-million figure on it.
2944 What do you estimate your effect to CHUM would be in the Toronto marketplace?
2945 MR. CRAIG: Our first year revenue expectation in Toronto is slightly over $30 million and that's exactly what we filed in the application. Our view is that we will achieve that in the first year of operation in Toronto.
2946 It's very hard to peg CHUM's revenues on Citytv because they don't disclose to us what their revenues are. We only can go by what information we can pull together. We pull information together from a variety of sources, mainly from financial analysts, who talk to us all the time. The financial community pegs Citytv's revenues anywhere from $105 million to $125 million. We suspect somewhere in that range is where they are at.
2947 We are $30 million. They are $100-plus million. We think the impact, based on what the analyst community -- and Andy may want to weigh in on this -- is somewhere in the order of magnitude, in terms of their IBITDA, because they obviously have the vested interest in telling the street it's licensed, it's here, we are preparing for it, it's not that big a deal. So the analyst community sort of pegs the impact on Toronto One, on Citytv, at a couple million bucks, maybe a little more.
2948 COMMISSIONER WILLIAMS: So a couple of million and you -- sorry, go ahead.
2949 MR. PERNAL: Maybe just to add a little bit more to that.
2950 A recent national bank financial analyst report pegged the loss at $3 million to $4 million. So if you look at that in the context of CHUM's perhaps $110 million of revenue, out of City, in Toronto, it's a pretty minimal impact. If you compare that to what CHUM has said would be the impact on Craig -- and we believe it would be a lot more significant, but if you accepted their number for a minute -- and it's $36 million over a licence term and you stack that up against our operating income over that same licence term filed with the Commission at the licence renewal, it's 54 per cent.
2951 So the magnitude of the difference is phenomenal. It's night and day. It's very different.
2952 COMMISSIONER WILLIAMS: Let's say CHUM was licensed and you experienced either their projections or your projections for the negative effect on your company, how would that affect your operation in other parts of Canada?
2953 MR. CRAIG: We would obviously have to make some tough choices.
2954 COMMISSIONER WILLIAMS: So would it be fair to say that your Alberta stations provide the majority of your operating income?
2955 MR. CRAIG: Certainly the lion's share of our operating income comes from Calgary and Edmonton.
2956 COMMISSIONER WILLIAMS: You talk about the Global impact being as much as $140 million, if the Global applications were approved as presented. If Global and CHUM were approved, are we to take it that the impact would be the total of both of those or would it be a slightly smaller combination, being that each would get a piece of the market? What would be your estimates on that?
2957 MR. CRAIG: I will let Debra McLaughlin speak to this.
2958 MS McLAUGHLIN: Yes, we calculated the impact that would occur if both of these stations were licensed or both proposals for two stations, by CHUM and one for CKRD, in both Calgary and Edmonton, and it's not the sum of the two impacts. They were analyzed separately, obviously, because they will be considered separately. But when you add them together, it will cause a redistribution throughout the entire market and Craig will drop from approximately 24 per cent to about 8 per cent of the share of the revenue pie for the Alberta market.
2959 COMMISSIONER WILLIAMS: Okay. Thank you.
2960 There has been talk earlier today, and you have mentioned as well in your remarks, of a policy proceeding, a broader policy proceeding, to look at many of the various issues that surround a decision of the Alberta marketplace. How soon do you think a process like this should take place and should there be a moratorium on licensing until the time? I guess that would be the question.
2961 MR. CRAIG: Commissioner Williams, I'm going to let Ms Strain answer this.
2962 MS STRAIN: Commissioner Williams, we were sitting here and thinking it's kind of ironic that this hearing has occurred at the same time as the McQueen drama report has been released, the House committee on Canadian heritage, the Fornier Report, recent developments in the U.S. on FCC regulation, the CBC telling affiliates that their time is up, essentially. We think probably the time is exactly right for holding a review of some of these issues and we think probably the sooner the better.
2963 In terms of a moratorium, we hadn't thought through that. We had heard about it this morning. Certainly, we would be willing to participate in that process and put our plans on hold. We do have plans. As Drew said, we have to expand our reach, but certainly we think there are important structural issues that need to be resolved and we would certainly be prepared to participate in that process and hold off maybe making some of those filings that we think we need to make while that is pending.
2964 MR. CRAIG: Just to follow up, I think that we would concur that sooner rather than later would be our preference.
2965 COMMISSIONER WILLIAMS: Okay. Thank you very much, Mr. Craig and panellists.
2966 That's all my questions for now, Mr. Chair.
2967 THE CHAIRPERSON: Commissioner Cardozo.
2968 COMMISSIONER CARDOZO: A couple of questions first on the multicultural programming that you have, I believe it's on the weekend, the six hours -- or is it 8.5? I just want to get your thoughts on the discussion we had with CHUM and Global, in terms of how you would define "multicultural programming", if it's distinct from the way we define "ethnic programming".
2969 MR. CRAIG: I will maybe ask Jennifer to give you some thought on that because we have a specific condition in Toronto.
2970 MS STRAIN: Yes, we relooked at the ethnic policy and the definition of "ethnic programming", which I understand includes cross-cultural programming that is targeted to distinct groups. In our view, the programming that we have in our schedule, in Alberta, falls under that definition.
2971 COMMISSIONER CARDOZO: Okay. So the 8.5 hours, is that in third languages?
2972 MR. CRAIG: It's all in English, except for the -- oh, I'm sorry, there's two hours.
2973 Why don't I just let Michael answer this. He has all the numbers.
2974 COMMISSIONER CARDOZO: You have Ukrainian and Cantonese in there, too, right?
2975 MR. TAYLOR: That's correct. Those are the two one-hours that are in third language.
2976 COMMISSIONER CARDOZO: So those are part of what you would call the multicultural block of programming?
2977 MR. TAYLOR: Yes.
2978 COMMISSIONER CARDOZO: And the other programming, how would you define the remaining 6.5 hours? What make it cross-cultural?
2979 MR. TAYLOR: Okay, I can give you an example of a series. It's called "Asian Horizons". This is an English-language series that is going to be produced for us by the Asian Television Network. It is going to be made up of a number of different programming areas, four original one-hour episodes per week, 39 weeks of original programs, 13 weeks of repeats during the course of the broadcast season. It will be, obviously, 100 per cent Canadian content. It will be a magazine format show, include celebrity interviews, multicultural movie previews, it will feature interviews with visiting celebrities geared mostly at the South East Asian community.
2980 COMMISSIONER CARDOZO: Okay. So it is, essentially, an English-language ethnic program.
2981 MR. TAYLOR: This is English language. We only have the two one-hours that are not in English.
2982 COMMISSIONER CARDOZO: Okay. One of the issues that you talked about and that CHUM talked about, inclusiveness, and I guess in that is the presence of on-air personalities, on-air hosts and journalists and so forth, do you have figures at your fingertips on your employment equity -- not so much employment equity, but your on-air portrayal of visible minorities and aboriginal people?
2983 MR. CRAIG: Mr. Thorgeirson, I believe, has those figures.
2984 MR. THORGEIRSON: Commissioner Cardozo, with respect to on-air representation for the aboriginal community, we are currently at 7.9 per cent in Alberta, compared to an availability of 2.9 per cent; visible minorities, 15.8 per cent, compared to an availability of 5.8 per cent and women --
2985 COMMISSIONER CARDOZO: And the number --
2986 MR. THORGEIRSON: -- 50 per cent.
2987 COMMISSIONER CARDOZO: Go ahead.
2988 MR. THORGEIRSON: And women 50 per cent, compared to an availability of 15.8 per cent.
2989 COMMISSIONER CARDOZO: Okay. And in terms of numbers of people for visible minorities and aboriginal, how many?
2990 MR. TAYLOR: I can't give you the exact number, with respect to --
2991 COMMISSIONER CARDOZO: It would be about two or three probably that would constitute 7.9.
2992 MR. TAYLOR: We have a lot of on-air talent. Maybe Jim could give us a better idea.
2993 MR. HASKINS: I can give you an idea, Commissioner, but I don't have an exact number at my fingertips. I would say on-air, off the top of my head, 10 in Calgary and Edmonton.
2994 COMMISSIONER CARDOZO: Who are?
2995 MR. HASKINS: Reporters, anchors --
2996 COMMISSIONER CARDOZO: No, in terms of employment equity groups, who would be -- they are from minority and aboriginal?
2997 MR. HASKINS: Yes.
2998 COMMISSIONER CARDOZO: Okay. Thank you.
2999 One of the things that Mr. Switzer said yesterday was that CHUM and Craig had worked together fairly closely when you started and that you were a lot like them. I'm paraphrasing him and I may be getting it a touch wrong, but, essentially, you were a lot like them then, you have since evolved into something different from what they would, I suppose, have done but, certainly in terms of different from what they want to implement.
3000 What you are telling us today is: no, no, exactly what they have is what -- you present now exactly what they want to be presenting.
3001 MR. CRAIG: The schedules that Michael walked you through are our current schedules.
3002 COMMISSIONER CARDOZO: One of the things they said about CHUM is it's hip and edgy and that sort of stuff, and inclusive and young. Are those all appropriate for A-Channel, as well?
3003 MR. CRAIG: Yes.
3004 COMMISSIONER CARDOZO: You are just as hip as they are.
3005 MR. CRAIG: Just a hip.
--- Laughter / Rires
3006 COMMISSIONER CARDOZO: And edgy?
3007 MR. TAYLOR: If I could just take one more minute and tell you a little bit more about what we have in our schedule that is specifically CHUM, in fact one-quarter of our prime time schedule is made up of CHUM programs, and that can be broken down into five different categories.
3008 They have a one-hour priority drama that we have acquired from them for this province that we will be running in prime time. We have several U.S. network series they have acquired that we have bought from them for this province, including "The Bachelor", "The Bachelorette", "Everwood", "Seventh Heaven", "Star Trek Enterprise". We have acquired a number of first-run U.S. theatrical movies that we will be running in this province. We would have liked to have had more, but we have to share them with Access. In fact, we will be competing with Access, specifically, title by title, as we go to select the movies that will go into our package and go into Access's package.
3009 As far as their original local productions, we have acquired four of their series. They produce a series called "Star TV", another series called "Movie TV", another series called "Fashion TV" and another half-hour weekly series called "Media TV". We have acquired all of those series for our stations in Alberta.
3010 Additionally, we have two half-hour off-network U.S. strips that we have acquired from them, "Friends" and "Seinfeld", and those run on our stations here in Alberta. So if CHUM comes to this province fully one-quarter of our prime time schedule will no longer be available to us.
3011 MR. CRAIG: Commissioner Cardozo, maybe, if I might, just on sort of market positioning -- and I think we alluded to the fact that when we came here six years ago -- there was this huge gap to be filled. Alberta has a young demo. We saw a huge opportunity to target that young demo, 18-34, and we continue to do that today. We are the young-skewing urban, hip stations in each of Calgary and Edmonton.
3012 COMMISSIONER CARDOZO: So the niche that CHUM says they want to fill, you are saying isn't there, that you are already occupying it?
3013 MR. CRAIG: It's not unique.
3014 COMMISSIONER CARDOZO: But it's not a gap, is what you are saying?
3015 MR. CRAIG: No.
3016 COMMISSIONER CARDOZO: Okay. Thank you.
3017 Thank you, Mr. Chair.
3018 THE CHAIRPERSON: Vice-Chair Wylie?
3019 COMMISSIONER WYLIE: Were you here when CHUM mentioned how much programming they were providing you at the moment, the percentage of your schedule?
3020 MR. CRAIG: Yes.
3021 COMMISSIONER WYLIE: I'm a little reluctant to repeat the number because I may be wrong, but do you have any problem with it?
3022 MR. CRAIG: I think it was 6 per cent and what we are saying, what Michael walked Commissioner Cardozo through, was actually prime time. So in terms of prime time, we have the same amount of CHUM programming, roughly, this year that we had last year.
3023 COMMISSIONER WYLIE: So the 6 per cent is not incorrect?
3024 MR. CRAIG: The 6 per cent is overall.
3025 COMMISSIONER WYLIE: Yes. That's not a figure that you have a problem with?
3026 MR. CRAIG: I haven't confirmed the 6 per cent.
3027 COMMISSIONER WYLIE: But it didn't sound like something you wanted --
3028 MR. CRAIG: It sounded a little low.
3029 COMMISSIONER WYLIE: -- to respond to.
3030 What is the percentage, then, between 6 and 12 or 7 and 11?
3031 MR. CRAIG: I think it's about 22 per cent.
3032 COMMISSIONER WYLIE: Twenty-two per cent.
3033 MR. TAYLOR: It's approximately one-quarter of our schedule in prime time.
3034 COMMISSIONER WYLIE: You mean 6 to 12 or 7 to 11?
3035 MR. TAYLOR: When I say one-quarter, I'm talking about in prime time, from 8 to 11 p.m.
3036 COMMISSIONER WYLIE: Eight to eleven.
3037 MR. TAYLOR: Sorry, yes, of the programs that we have acquired that run in our prime time schedule between 8 and 11 o'clock at night.
3038 COMMISSIONER WYLIE: Eight to eleven.
3039 MR. TAYLOR: Yes, one-quarter of our schedule is made up of programs that we have acquired from CHUM for this market.
3040 COMMISSIONER WYLIE: Did you also hear them say 50 per cent at one time?
3041 MR. TAYLOR: They did mentioned that at one time they thought that the acquisitions that we were making from them represented 50 per cent of our schedule.
3042 COMMISSIONER WYLIE: Do you have a problem with that?
3043 MR. TAYLOR: No. The major change that has happened is that our daytime schedule is now made up of programs that we have bought for Toronto and for this market, and so we are running those here and those are not programs that we are buying from CHUM. The programs that we are buying from CHUM now, we are running in prime time.
3044 MR. CRAIG: Commissioner Wylie, I think one other relevant factor is what we actually pay them in dollars, as a percentage of what they were proposing to spend in Alberta.
3045 COMMISSIONER WYLIE: Yes, but I guess what my question now is more similarity. There seems to be a very long list --
3046 MR. CRAIG: Yes, I think one of the --
3047 COMMISSIONER WYLIE: -- and the ducks were of the same feather.
3048 MR. CRAIG: Yes. And I think one of the areas that you land on there is the fact that we run a lot of movies and we acquire those from a number of sources. So a movie is a movie. In this market, you can't discount the fact that Access runs movies. So you already have two movie formats in this market.
3049 COMMISSIONER WYLIE: And the rights to these movies, are some of them acquired from CHUM?
3050 MR. CRAIG: Yes. they are.
3051 COMMISSIONER WYLIE: And is that what goes into the 8 to 11, 22 per cent?
3052 MR. CRAIG: Yes.
3053 MR. TAYLOR: Approximately three hours a week.
3054 COMMISSIONER WYLIE: So your view that a movie is a movie is a movie, how do you connect that with similarity?
3055 MR. CRAIG: In terms of scheduling the movie in the same --
3056 COMMISSIONER WYLIE: Right. But the same programming, I thought the list was more skewed to other than movies that would be typically CHUM hip programming. Well, we are discussing whether the schedules are the same, and, therefore, we are not going to add anything to the viewer.
3057 I would like to look at it from the viewer's perspective. We have been through all this balancing and weighing, etc., as to what are the benefits and what is the size of the risk to the system. My question is more your statement that there's not much point, everything they do is there already, so the viewer won't get any more. If you discount movies that you purchase from them, what is the percentage down, then, from 8 to 11 of the programming you get from CHUM?
3058 MR. CRAIG: Movies represent three hours.
3059 COMMISSIONER WYLIE: The 8 to 11 is three hours.
3060 MR. CRAIG: Per week.
3061 COMMISSIONER WYLIE: Oh, per week.
3062 MR. CRAIG: Yes, per week.
3063 COMMISSIONER WYLIE: So three hours, Monday to Friday, you are talking about, when you --
3064 MR. CRAIG: Monday to Sunday.
3065 COMMISSIONER WYLIE: What is the 22 per cent?
3066 MR. CRAIG: Michael, would you mind...?
3067 COMMISSIONER WYLIE: Three hours time.
3068 MR. CRAIG: We will go through a list.
3069 MR. TAYLOR: Okay.
3070 COMMISSIONER WYLIE: I'm trying to get to how much programming you get from CHUM now other than movies.
3071 MR. TAYLOR: Okay.
3072 COMMISSIONER WYLIE: We are trying to figure out who is right, that they are going to bring something new to the viewer and that there won't be anything new brought to the viewer and disadvantages or risks due to over licensing. So 8 to 11, how much programming, other than movies, is identical to what CHUM provides at the moment or that you purchase from CHUM?
3073 MR. TAYLOR: Okay. For example, on our Wednesday night line-up, "1-800-Missing", "Star Trek Enterprise" and "The Bachelor", our entire prime time line-up, is made up of programs that we have acquired from CHUM. That's one example. Between 6:30 and 11, we run "Movie TV", "Star TV"; 11:30 on Saturday and Sunday night, we are running "Fashion TV" and "Media TV". Those are all programs that we have acquired directly from CHUM. We run "Friends" at 7:30 Monday through Friday. That was acquired from CHUM, in addition to movies.
3074 COMMISSIONER WYLIE: Thank you.
3075 MR. TAYLOR: Sorry, "Friends" is a series that is not acquired from CHUM. That was an error on my behalf.
3076 COMMISSIONER WYLIE: Somebody will have to buy Commissioner Langford's new programming!
--- Laughter / Rires
3077 THE CHAIRPERSON: I'm looking at page 8 or your oral presentation, Mr. Craig, where you say that even the CHUM calculated impact was $36 million -- I note they had a range of $24 million to $36 million, depending on the assumptions here -- but that would still represent, you are saying, 54 per cent of your cumulative seven-year operating income line, as projected at the license renewal hearings. Did I hear you correct?
3078 MR. CRAIG: That's correct. I will maybe ask Andy --
3079 THE CHAIRPERSON: I don't have those projections, but do you happen to have them with you?
3080 MR. CRAIG: Based on what we filed with you at our licence renewal hearing.
3081 THE CHAIRPERSON: Right. So $36 million represents 54 per cent of that amount.
3082 MR. CRAIG: That's correct.
3083 THE CHAIRPERSON: Total -- that's the operating income line?
3084 MR. CRAIG: That's correct.
3085 THE CHAIRPERSON: Okay. And so your point is that's substantial, even if you take $36 million, in CHUM's assessment.
3086 Now, I don't know whether you want to leave it at that or you want to help me understand by commenting on Appendix 8 of their reply what that $24-million to $36-million range shouldn't stand, so I'm giving you the opportunity to comment on their critique or your $150-million analysis.
3087 MR. PERNAL: I can start the discussion, Mr. Chairman.
3088 I guess in terms of CHUM's appendix to their response to our intervention, they had looked at the impact to the incumbent stations in two different ways: one, they had taken the view that 50 per cent of their revenue would come from new sources and 50 per cent would come from the incumbents and they said, on one hand, it would be shared equally, on the other hand, proportionately, the way it is based today.
3089 We strongly disagree -- and I think it has been pointed out by other intervenors, as well -- that revenue, first of all, will be 50 per cent from the incumbents. We believe it will be a lot higher. So in our $36-million number, I guess --
3090 THE CHAIRPERSON: Could you interrupt you?
3091 MR. PERNAL: Sure.
3092 THE CHAIRPERSON: What do you believe the figure is, if it's not 50?
3093 MR. PERNAL: Well, we believe it $150 million and I would like Debra McLaughlin to speak to the study that was done on that basis.
3094 THE CHAIRPERSON: Right, but I'm asking what impact you think that would have on the local stations. You said 50 per cent, and we have discussed it with a number of applications. What number do you think will be taken from existing stations in the market, what percentage of their revenues?
3095 MR. CRAIG: I'm going to get Cam to give you our view on that.
3096 THE CHAIRPERSON: And why you think that number.
3097 MR. COWIE: Because I'm going to try to do it in words because we have all seen enough numbers.
3098 THE CHAIRPERSON: I can see a few more.
3099 MR. COWIE: Okay, I will throw in a few numbers.
3100 The assumptions that they make, first of all, we think that they have underestimated the revenue potential, based on doing a bottom-up of their schedule. So that's the first thing: we think the base amount that they will take from the market is higher than they suggest.
3101 The second component --
3102 THE CHAIRPERSON: I'm going to interrupt you whenever you don't substantiate your point. So what would you show me that would provide an analysis of the revenue in the market that would be superior to theirs?
3103 MR. COWIE: What we would do is do the bottom-up exactly the same way they would do it. So we would look at the individual program --
3104 THE CHAIRPERSON: They filed a revised bottom-up. Did you see that?
3105 MR. COWIE: No.
3106 THE CHAIRPERSON: Was it circulated to parties and intervenors, the same print document that we filed, I believe it was the first thing this morning?
3107 MR. CRAIG: We haven't had the benefit of seeing that.
3108 THE CHAIRPERSON: Okay. Well, this lays it all out for you. I guess you haven't had it, so you can't comment on it.
3109 MR. COWIE: Let me leave that one as it is and look at the assumptions that they believe that because of -- so half the revenue is going to come from new sources. We think that's unrealistic because there is no repatriation available from border stations, that the majority of that money will come from money that's already being spent in the marketplace. We find it difficult to believe that there is a great deal of additional funds available to come in. Based on 3.31, I think, they said their percentage growth of the total market would be it doesn't equate to the 50 per cent.
3110 But I think the biggest thing that we are looking at is because of the similarity, not only in terms of program schedules, but the way the stations are sold, the way the stations are bought from agencies, the way that the genres work, the target demographics and so on. They will compete more directly with the Craig stations than they will with CTV and Global. So that is the biggest part of the scenarios. We think there will be a disproportionate amount of revenue share that will come from the Craig station, not an equal share between us and Global and CTV.
3111 THE CHAIRPERSON: Could I ask you to turn to the appendix, to their reply, page V? They put forward a calculation of the actual effect that they see on Craig Media and they give two alternatives. Would you care to comment on which of those alternatives you think is better or if you don't think either of them is acceptable, and if not, why not?
3112 MR. COWIE: Well, in number one, I would suggest that the sharing on equal basis, that's what I would object to. It's a lot like you want to come into the marketplace and compete direct with CTV and Global. They don't compete direct with CTV and Global in any of the markets that they are in. As reach extenders, neither one of us, our top 10 or top 20 program in our schedule and so on. So it's more likely a more unequal distribution. That would be the main --
3113 THE CHAIRPERSON: What would be your suggested distribution if you had to gauge the impact on the market as among the broadcasters?
3114 MR. PERNAL: Based on what Cam was saying, if you assume that not 50 per cent of the revenue would come from the incumbents, but 90 per cent, which we believe to be a much more realistic assumption based on what Mr. Cowie has said and what other intervenors have said, and if you then apply what Mr. Cowie said, in terms of most of that is going to come from us because it's mostly a direct impact upon us, if you assume 50 per cent would come from us of that 90 per cent, the overall impact ends up being $88 million, if you go through calculations, in a similar format to what CHUM has done in the appendix.
3115 THE CHAIRPERSON: Right. Now, I understand that. And we heard how CTV derived their 90 per cent, we didn't hear how Global derived its 75 per cent. Do you have anything to add to what Cam just said about how you get from 50 to 90? He said there was no repatriation to be had.
3116 MR. PERNAL: I would like to ask Debra McLaughlin to speak to that particular question.
3117 MR. McLAUGHLIN: In order for revenues to grow as mentioned in our oral, two things have go be possible: the market has to grow, and, in terms of tuning, or there has to be new markets to be developed. And so when the estimates were put together, in terms of impact, we looked at the probability of either of these two occurring.
3118 When Craig entered the market in 1997, the proportion of local sales was substantially less than it was now. I don't have the figure at my hands, but they have grown in both of those markets to being the highest ranking in Canada. So they were able to develop the market.
3119 How did they do that? Well, they were able to go after, as mentioned again in the oral, the fact that there were retail sales that were going south of the border -- well, retail sales that had to be developed and there were sales going south of border. Craig had the advantage at the time of having the rep shop that was selling for the two existing, active U.S. services come on board and simply shift those dollars over to them.
3120 Then, the other thing is the possibility of actually --
3121 THE CHAIRPERSON: So that portrait says no more pots to dig into.
3122 MR. McLAUGHLIN: Well, we are saying there's no more U.S. pots to grow into. The fact that they developed the 18-34-year-old market is also critical because when they came in that market wasn't well served.
3123 If you look at the distribution of tuning, if you index it against the demographics, you will see that not much has changed for the two market leaders. The bulk of the population is 18-49, 25-54. That is where anyone would logically go to develop revenues. You heard CHUM itself say yesterday that most of the revenues are 18-49. So Craig came in and what they did is they went after that smaller demographic. So the 90 per cent figure that Mr. Pernal was talking about actually relates to some of the analysis that we did int he market of Vancouver, for example.
3124 We noticed whenever there was the launch of the new CHUM property that 92 per cent of the audience to the growth in that market -- actually, I have to stop. It was 92 per cent of the growth to the new CTV licence in 1997 actually came from the incumbent. Whenever City relaunched in Vancouver, the lion's share of their audience came from cable, which was directly competitive at the time.
3125 THE CHAIRPERSON: Right. You don't have substantiation for those numbers.
3126 MR. McLAUGHLIN: I absolutely do. I can file them with you.
3127 THE CHAIRPERSON: Well, it would be useful, perhaps, if you could.
3128 I'm noting, though, on your point about local -- and I take the point that the market grew -- I notice, without wanting to divulge confidentiality, of course, but your local to national sales, the ratios, 1:5, 1:6?
3129 MR. COWIE: I can answer that one. Again, every time I sit in front of the Commission, we answer the same question the same way and other broadcasters answer it a different way. It's how you code the revenue, in terms of --
3130 THE CHAIRPERSON: Well, again, I had to say this to someone else, we had to take the filings as we find them and as we go along we try and iron out the kinks that every broadcaster has. But those are what your actuals show as filed with us.
3131 Now, what I'm seeing in the CHUM projections, if you look at them -- and they are public -- is that the ratio is more in the 3:1 area rather than 5:1 and 6:1 national to local. So that says to me they feel there's a lot more local to be had in this market, more pots to dig in, so to speak, than your testimony would suggest.
3132 MR. McLAUGHLIN: Well, to that I would address the issue that was brought up yesterday of the repatriation of money, as they described it, from newspapers. That has long been the goal of every broadcaster in the country, from radio to television. But the reality is twofold: one, the revenue to newspapers, in terms of advertising, is declining. Why? Because everybody, everybody, is going after that market.
3133 Tomorrow, and for the remainder of this week, and probably next week, you are going to hear from a bunch of radio advertisers -- or applicants who are going to say, "That's where we are going". It's a very aggressively attacked area.
3134 Secondly, there has always been a presumption that money just moves between media, as if all media is equal. But if you consider the suggestion that in the car category that is an underdeveloped area in this province, think about the different role the media plays. Part of the reason there is so much money going into newspapers from the car category is the heavy level of detail that's required to pass on to consumers so they can assess where they are going to go. That does not translate into television.
3135 When I looked at those categories after yesterday -- and, again, I will be glad to provide you with this information -- I noticed the automotive category was not underdeveloped in this market for television. It tends to be a brand sell. It's not driving traffic into the dealers. It's talking about the value of the brand, as opposed to actually giving details on pricing and price points and specials that are up.
3136 So it's a noble ambition, it's an ambition that everybody is pursuing, but what we have to really consider here is how realistic is that.
3137 THE CHAIRPERSON: Thank you.
3138 So getting back to this appendix on page 5, then, you are basically saying that on point two -- and perhaps this is something -- I'm sorry, I'm forgetting your name. This is the same syndrome as reading large print, I'm afraid.
3139 Mr. Pernal, sorry, the second point you would disagree with because you say that the 50 per cent of project revenues should be 90?
3140 MR. PERNAL: That's correct.
3141 THE CHAIRPERSON: Should be 90 and that your share of that should be 50?
3142 MR. PERNAL: That's correct. That's the assumption we have used.
3143 THE CHAIRPERSON: And again, give me the basis -- I understand how you sort of worked towards the 90 qualitatively and basically zapped a number against it. Is that a fair way of putting it?
3144 MR. PERNAL: We essentially tried to use the same mechanics that CHUM used, just for illustrative purposes, and I guess where we vary are the key assumptions. We took the revenue number that CHUM had put forth in their application, we applied the different assumptions of 90 per cent from incumbents, and then 50 per cent of that 90 coming from us, and you get a much larger number, in the $90-million range.
3145 THE CHAIRPERSON: Because of the comparable programming, you just said --
3146 MR. PERNAL: That's correct.
3147 THE CHAIRPERSON: -- well, 350 is about right?
3148 MR. PERNAL: That's correct.
3149 THE CHAIRPERSON: And then multiplying those two figures, you came up with a number, did you say, of 88?
3150 MR. PERNAL: Eight-eight million, that's correct.
3151 THE CHAIRPERSON: Okay. So that's on the record, so I'm sure that the applicant will have a comment on reply.
3152 Those are my questions. Thank you very much.
3153 Commissioner Williams.
3154 COMMISSIONER WILLIAMS: Thank you, Mr. Chairman.
3155 Just a couple more questions, I guess, on the state-of-the-market type question.
3156 On your filed material, you talk about some economic forecast for the Edmonton-Calgary markets looking forward. Could you tell us just very briefly, I guess just summarize your view of the economic future of this marketplace and then compare that to your recent revenue growth trend and profitability. CTV mentioned, and Global, I guess, in the last six months there has been a bit of a downturn. Respondents have experienced the same things. So the state of the economy, the most recent past, and I guess an economic forecast looking forward.
3157 MR. CRAIG: I will ask Ms McLaughlin to give you her view on Alberta.
3158 MR. McLAUGHLIN: Despite being characterized, I guess, in reply, by CHUM as being pessimistic, I would describe our forecast as being rather optimistic. And to put it in context, I will tell you how we got that number or how we arrived at our view that we are optimistic.
3159 First of all, we looked at the historical trends. Edmonton, in the past, in 1998 to 2002, had a 1.7 per cent national growth and had a 0.1 per cent local growth -- these are CRTC figures -- Calgary had a 4.4 per cent local and a 1.9 per cent national; Vancouver, another market that had experienced a new entrant -- and we have been talking an awful lot in these proceedings about lists -- had a negative of 6.1 in local growth and 1.6 national. We looked at the national average, it was 1.6. We looked at conventional local, it was down 5.95. We looked at national, it was only up 0.37.
3160 That was the overview, the revenues that have been filed with the Commission. Then we looked at the traditional indicators: GDP, retail sales, and, as we noticed earlier in these hearings, you have heard that GDP is robust and retail sales are great, so what we did is we looked at the relationship between GDP and retail sales in this market. This all went into our calculation. In 2000, we had a GDP growth of 3.7, retail sales of 6.6 and an only 1.6 growth in sales.
3161 We can go through a series of these figures, but the point to all of this is those figures are only indicators that we looked at. We have been doing this for long enough that we can go back and look at some of the forecasts we made in other markets, in Vancouver, in Edmonton, in Calgary in years past and we can say, "Okay, where did we go wrong? How close were we?", and it led us to believe that these are terrific indicators. But they are not the whole story and we had to look and say, "Well, what is happening?".
3162 Well, the reality is a lot has changed from 1998 to 2002. Shares of satellite, for example, in Edmonton have gone from four to 39 -- or sorry, 29, to actually one-third of the market. So while you can use all of those other figures as an indicator and a direction, they don't absolutely tell the whole story.
3163 We talked to advertisers. The advertisers told us that while they are hopeful for television, they are somewhat discouraged by the number of signals, the fragmentation and, in essence, the return on their investment. It's costing them more to buy less audience and so they are looking for alternatives.
3164 When we put all of that together, we said, what would be reasonable? Well, certainly, because of the health of this economy, we want to come above the inflation rate, we certainly want to come above the national trends.
3165 So the Bank of Canada has said they intend to keep the inflation rate at 2 per cent. What would be reasonable to go in here? Well, we are not horribly optimistic about the potential for revenue development in the conventional category and we note that, in the second year of operation, in 1998, I believe it was, it was then that the retail sales took a huge jump, which we think is reflective of the fact that the age handles had actually developed.
3166 So where do we go from this? We increased it by 0.2. We took it right across on an average. In actual fact, we are not that far different in optimism because our national sales are projected at 2.7 across the entire time and our local is 1. Again, we got to this differential because when you look at the volatility in local sales, the inconsistency, you have to be fairly conservative. We are pretty bullish on the 2.7, I think, given the recent trend.
3167 COMMISSIONER WILLIAMS: Do you have unsold advertising inventory? If someone were to come in and want to buy a bunch of advertising inventory for you, would they have a problem filling their order?
3168 MR. COWIE: Like most of the broadcasters in this marketplace, we have times when we are sold out and time where we have inventory available. So in demand, we would move closer to sell-out factor and in non-demand we would have inventory available.
3169 COMMISSIONER WILLIAMS: Are you sold out fairly frequently in prime time?
3170 MR. COWIE: In demand periods, we would be frequently sold out. So for 13 weeks of the year, yes.
3171 COMMISSIONER WILLIAMS: So you don't feel that market's ready to accept a new entrant without undue harm to yourself, and probably some of the other incumbents. How soon or when do you think the marketplace would be ready?
3172 MR. CRAIG: Commissioner Williams, I don't think that's what we are saying. We are saying it's the type of applicant and the type --
3173 COMMISSIONER WILLIAMS: Okay, the marketplace is ready, but maybe with a different programming approach.
3174 MR. CRAIG: I think that what we are saying is that the applications that you have before you don't work.
3175 COMMISSIONER WILLIAMS: And so have a public process --
3176 MR. CRAIG: I think that against --
3177 COMMISSIONER WILLIAMS: -- and start new rule book?
3178 MR. CRAIG: Against the backdrop of all of these issues, that every time we took a look at these applications we ran into these policy issues, in terms of cross-ownership and concentration, etc., these applications, in our view, should be denied. We think there may be other alternatives that are more compelling for viewers, that are more complementary and would work in this market.
3179 We are not going to sit here and tell you that this market can't sustain another service forever.
3180 COMMISSIONER WILLIAMS: Okay. Thank you very much.
3181 I have no further questions, Mr. Chairman.
3182 THE CHAIRPERSON: Commissioner Wylie.
3183 COMMISSIONER WYLIE: Ms McLaughlin, it has been, probably not procedurally, the best way to proceed, but you won't be back here. I'm interested by your comment about advertising, and, of course, Mr. Cowie's about the fact that you are often sold out in the hours that are of interest.
3184 Have you seen the position taken by the Association of Canadian Advertisers?
3185 MR. McLAUGHLIN: Yes, I have. In fact, Mr. Reaume and I debated this somewhat in the restaurant.
3186 COMMISSIONER WYLIE: So I assume you are not in agreement.
3187 MR. McLAUGHLIN: No. And I pointed out to him that some of his members, like Mike Welling, from Unilever, are absolutely not in agreement. As he said, the position of the association is one thing, the position of specific advertisers are another.
3188 COMMISSIONER WYLIE: They do say, though, that they represent 200 companies. I would assume this is on the public record. If members of the association had a problem, we would, I suppose, know about it. You have no other comment, other than you know of one who doesn't agree with the association's positions?
3189 MR. McLAUGHLIN: Well, no, in the impact study that we conducted, we did do some comparison of the value or the actual revenue spent in television vis-à-vis television. We were directed to make this analysis at a conference that was held by the Television Bureau of Canada in February of this year. Mike Welling was one of the guest speakers and his message to the broadcasters in Canada was that they had to improve the value statement to the advertisers.
3190 This included better research, there was a range of recommendations, but there also was simply an improvement, in terms of the audiences they were delivering because the efficiencies were no longer there. The fragmentation was too great, the ratings were dropping. And we looked at this, we looked at what they were spending, and it turned out what they were saying was exactly true.
3191 We also looked globally. We found that it's an international position. It's in Europe. It's around the world, frankly, that people are concerned about this.
3192 I don't want to debate whether Mr. Reaume speaks for his association, because I know that he does, but what I'm suggesting is the view is not consistent, and particularly at the level where the person speaking is entrusted with developing the brand.
3193 COMMISSIONER WYLIE: Mr. Cowie, I'm not sure I got exactly when it is that you have no inventory.
3194 MR. COWIE: First of all, I don't think I said we have no inventory. You asked if we were sold out --
3195 COMMISSIONER WYLIE: Well, that sometimes you are sold out, right?
3196 MR. COWIE: Yes, sometimes we are sold out.
3197 COMMISSIONER WYLIE: And that would be what period?
3198 MR. COWIE: That would be fall demand, and it would be --
3199 COMMISSIONER WYLIE: But it would be what block during the day?
3200 MR. COWIE: Prime.
3201 COMMISSIONER WYLIE: Prime. And how often are you sold out in prime? What's the percentage of days that you are sold out in prime?
3202 MR. COWIE: We would have pressure on our inventory for --
3203 COMMISSIONER WYLIE: During the week, I think.
3204 MR. COWIE: Yes -- 13 weeks. And it would be across prime time. You may not get exactly what you want.
3205 MR. CRAIG: Madam Vice-Chair, if I might just add one bit of context to that, I think every station, including Brandon, would be sold out in peak demand.
3206 COMMISSIONER WYLIE: Yes, that's Mr. Reaume's point, no doubt.
3207 MR. CRAIG: Yes.
3208 THE CHAIRPERSON: Thank you very much. That was very helpful.
3209 MR. CRAIG: Thank you.
3210 THE CHAIRPERSON: Mr. Secretary.
3211 MR. LEBEL: Thank you, Mr. Chairman.
3212 The next appearing intervention will be presented by the Canadian Film and Television Production Association.
3213 THE CHAIRPERSON: Order, please. A l'ordre, s'il vous plaît.
3214 Mr. Secretary.
3215 MR. LEBEL: Thank you, Mr. Chairman.
3216 Madam McDonald, you have 10 minutes to make your presentation.
3217 MS McDONALD: Thank you very much, Mr. Chairman and members of the Commission.
3218 My name is Elizabeth McDonald and I'm the President and CEO of the Canadian Film and Television Production Association. With me this afternoon is Julia Keatley, past-chair of the CFTPA. Julia is the executive producer of Keatley Films, the producer of the Canadian drama series "Cold Squad". She is also one of CFTPA's two television producer representatives on the board of directors of the Canadian Television Fund.
3219 The CFTPA represents over 400 companies that finance, produce, distribute and market films, television programs and multimedia products in English. Our members are present in every region of Canada from coast to coast to coast. In an ever-consolidating media world, it is the voices of independent creators who provide diversity to the Canadian broadcasting system.
3220 Our members create programs, they obtain the rights from authors with stories to tell. They employ writers to prepare screen plays, hire the directors, the actors and craftspeople to make the stories into programs and conduct all the business dealings to finance the provision of these stories to Canadian and foreign audiences. As such, we have a vital interest in the program practices and commitments of our major customers -- Canada's pay and specialty broadcasters -- particularly in cases when a broadcaster is applying for new television services.
3221 From our written submission, it's clear that CFTPA supports CHUM's application to extend its service to Alberta. A strong presence in Alberta will provide CHUM with a comparable economic and audience base to that of Craig and, to a lesser extent, of CanWest and CTV. While these parties will inevitably argue that the introduction of a new player in the Alberta market will cause them financial harm, it is really only the Commission that is in a position to determine whether the Alberta market can comfortably sustain a new entrant.
3222 Since the introduction of CHUM's first over-the-air television station back in the early seventies, this applicant has deliberately chosen to present itself as an alternative to the mainstream Canadian and U.S. conventional networks. Its style is vibrant, extremely local and reflective of the cultural diversity of each community it serves. While CHUM now owns and operates conventional TV stations in Canada's largest metropolitan centres: Toronto, Vancouver and Ottawa -- as well as some of its small urban communities, including London, Barrie and Windsor, it has managed to maintain its integrity as an alternative broadcast choice.
3223 With its emphasis on movies, long-form drama and drama series, as well as documentaries, CHUM is a strong supporter of Canadian independent film and television producers, including first-time filmmakers. We are pleased to note that its current prime time schedules are not determined on the basis of simultaneous substitution opportunities; however, Mr. Switzer has stated CHUM's intention to simulcast 12 hours per week. As this creates real problems for the scheduling of original Canadian programming, that does give us pause.
3225 MS KEATLEY: Thank you, Elizabeth.
3226 THE CFTPA is pleased to support these applications by CHUM. Their proposed Alberta TV stations will build upon CHUM's patented style, that combines extremely local news and information programming, primarily produced in house, with a strong commitment to drama and documentary programming, in partnership with the independent production community.
3227 CHUM's "Alberta Indie Initiative" promises $15 million over seven years in licence fees and development funding for Alberta independent producers and writers to create original priority programming that will appeal to viewers within the province and nationally. This is almost double what CHUM committed to acquire CKVU-TV Vancouver from CanWest Global just two years ago.
3228 In formulating this proposals, CHUM has consulted extensively with the production community and listened to our needs. By far, the largest portion of the promised funds, approximately 85 per cent, will be allocated for licence fees; $300,000 has been set aside each year for script and concept development and half-a-million dollars will be made available for bridge financing of CHUM-supported projects.
3229 What this means to us is that this broadcaster knows and understands our business needs and has developed various means of support at all stages in the development and realization of productions.
3230 As we said in our written submission, and I quote:
"This initiative will be of immediate and continuing value to the production community in this province, particularly for small- and medium-sized companies. CHUM's offer to advanced development in investment in the form of a "non-recourse" loan, to be paid back on commencement of principle photograph and bridge financing, recognize the cash flow challenges faced by producers."
End of quote.
3231 In total, CHUM has proposed more than $81 million in Canadian program expenditures over seven years, representing just under 38 per cent of projected revenues. CHUM has also made a firm financial an exhibition commitment to drama programming. As a producer of drama, I'm a firm believe that this genre of programming is a key element of Canadian cultural expression. While many programming categories are important vehicles for telling our stories, it is drama that enables the creator to tell a story in a creative and entertaining way. And CHUM's drama commitment is broad. It encompasses Canadian feature films, made-for-television movies, as well as drama series.
3232 CHUM has promised that at least four of the eight hours of priority programming on the Alberta station, that will also air on Citytv in both Toronto and Vancouver will be drama programming. And in keeping with its goal of reflecting the community, CHUM intends that the Alberta drama initiative will "trigger a minimum of 2 one-hour culturally-diverse drama series". These commitments to Canadian drama are stronger than those that have been made to you by any other English-language private Canadian broadcaster.
3233 Consistent with past interventions regarding conventional television stations, CFTPA's support of these applications is contingent upon CHUM's willingness to commit that at least 75 per cent of the priority programming broadcast each week on the new Alberta station will be retained from non-affiliated independent producers.
3234 We have recommended that CHUM file annual reports with the CRTC on its commissioning and acquisition of original productions, including information related to the licence fee paid to related parties and unaffiliated producers.
3235 Above and beyond the eight hours per week of priority programming, the CFTPA considers that conventional and specialty broadcasters should not be entitled to self-produce more than 25 per cent of original Canadian productions. We trust that you will discuss this with CHUM and seek a commitment in this regard. This is extremely important to us. For producers to become successful, we must be able to fully exploit the copyright we hold in our productions. Absent of this, we are really the only line producers and cannot build the kinds of businesses able to invest and create new programming.
3236 There can be an unfair imbalance in the broadcaster/producer relationship where the broadcaster, as in the case of CHUM, owns a number of different outlets and several windows, both conventional and specialty television services. To address this, we have embarked on terms of trade discussions with CHUM. We are pleased to advise you that our discussions with CHUM have been positive and productive in keeping with this broadcaster's firm commitment to the Canadian independent production community.
3238 MS McDONALD: You have heard a lot in recent days about the importance of the CTF as a source of production financing. As producers, we obviously recognize this. It's important. However, as the CFTPA's 2002 research pointed out, CTF supported productions represent just 14 per cent of all production in Canada. And CHUM's Alberta stations propose to combine in-house, acquired and commissioned programming, some of which will seek CTF support.
3239 As Jay Switzer said last week at Banff, if we are to succeed in making programs that will attract Canadian audiences, it is essential that we recognize the economic realities of this industry and build partnerships across sectors. This means investing and promoting and scheduling Canadian productions at times when viewers are available. This means a strong commitment to Canadian programming in prime time.
3240 I would be remiss of us not to mention that in this application CHUM has pledged to contribute to the CFTPA's National Mentorship Program targeted specifically at emerging aboriginal and ethnic producers. We believe that this program really speaks to the future of television production in Canada and we are grateful that CHUM has recognized this as well.
3241 It should be noted as well, for the record, that CHUM's enthusiasm for this program and our interns is their own, in keeping with their desire to invest in Canadian films and television programs.
3242 Mr. Chairman, members of the Commission, almost two weeks ago, I appeared before you in what you thought would be my last appearance. You spoke very kindly at that time and I would like to thank you at this moment and make some reflective comments. First, as a woman in this industry, I would like to note for the record that it is thanks to the CRTC's role in addressing issues of gender portrayal that over the past eight or ten years the role of women as panel participants, both as applicants and as intervenors, has changed significantly.
3243 We are no longer merely "faces" in the back row to give you the impression of gender balance. We now speak from positions of trust and authority, and we are acknowledged for having made real contributions to Canada's broadcasting system.
3244 Over the past few week we have heard from all sides about the difficulties facing our industry. The CRTC will have a real challenge to bring these disparate voices together. We have no doubt that you have the knowledge and skill to sift through the raucous din, to listen to reasonable positions and to find the right answers.
3245 On behalf of Sandra Macdonald, my predecessor at the CFTPA, and myself, I would like to thank the Commission for its recognition of the essential place of the creative community within the Canadian broadcasting system. Although independent producers are not "licensees", they create much of the programming that broadcasters air in fulfilment of their regulatory obligations. Our membership proud of their accomplishments and pleased at the support you have extended to them and I thank you.
3246 Thank you for your attention today. We would be pleased to answer any questions you may have.
3247 THE CHAIRPERSON: Thank you very much for those remarks, both professional and personal. I won't repeat how much we are going to miss you after you leave.
3248 MS McDONALD: I think I probably spent a little too much time on planes, I'm sorry, the last little while.
3249 THE CHAIRPERSON: Commissioner Cardozo.
3250 COMMISSIONER CARDOZO: Thank you, Mr. Chair.
3251 Ms McDonald, at that hearing a couple of weeks ago, the chairman said that we will miss you. Obviously, you took this to heart and came back in two weeks!
--- Laughter / Rires
3252 MS McDONALD: And I have been back and forth across Canada several times since then.
3253 COMMISSIONER CARDOZO: Well, we are happy to have you back out here and hopefully that you will be a trend, if we keep saying we will miss you, you will keep coming back.
3254 I have three quick questions and the only reason they are quick is because, according to our estimations, you were going to be appearing at 11 o'clock about five hours ago and, through no fault of yours, we have all talked and asked many more questions than I think the planners planned. So we are well behind schedule and there's very little chance that we will finish in the next 24 hours if we keep going straight. I'm kidding about that part.
--- Laughter / Rires
3255 COMMISSIONER CARDOZO: On the matter of a 75 per cent -- if I can just take you to page 6 of our oral remarks -- as I understand it, CHUM has made that commitment, that 75 per cent would be independent? Or is there a nuance here, in terms of the --
3256 MS McDONALD: No, we understand that they have made that commitment. We just want to make sure that it's clear on the record.
3257 COMMISSIONER CARDOZO: We don't miss it.
3258 MS McDONALD: We don't want it missed, no. It's very important to us.
3259 COMMISSIONER CARDOZO: That's why we need you. We will miss you if you don't come to these hearings.
3260 On the matter of cross-cultural programming, you mentioned the internship. Are there other broadcasters you are aware of to date who are specifically focusing in cross-cultural aboriginal programming, the production of that type of programming?
3261 MS McDONALD: Actually, the CanWest Internship Program allocates a minimum of one of the interns in their B.C. program with us, the aboriginal.
3262 COMMISSIONER CARDOZO: Okay. And in terms of production of programs, with regards to programs that are produced by Canadian producers, are there other broadcasters or are there broadcasters who focus on ensuring that there's programming in English or French that is cross-cultural or aboriginal?
3263 MS McDONALD: APTN, CBC, CTV has some programming, yes.
3264 COMMISSIONER CARDOZO: Okay.
3265 MS KEATLEY: I will just answer that. Individual broadcasters, too, have made very specific commitments and, obviously, there's a $2 million fund set aside within the Canadian Television Fund that specifically funds aboriginal programming. So it's a specific envelope. It doesn't curtail them from applying to the general envelope, as well.
3266 COMMISSIONER CARDOZO: Okay. Lastly, it's a larger question, if you have listened to the last few interventions by broadcasters -- Global, who has an application, and two others who don't have applications before us -- there is a message that they are giving us, which is don't over-license. If you over-license, it's going to put a burden on the existing players and would undermine what they can contribute what they can contribute to the Canadian system, meaning it can undermine Canadian production.
3267 Does the CFTPA monitor the issue of over-licensing and do you think this would be a situation of over-licensing?
3268 MS McDONALD: We do monitor the issue rather carefully. I would say that the approach that we have taken is broadcaster by broadcaster. We look for the opportunity, obviously, for national licensing of maximum licensing eyeballs for particularly drama programming, but also for documentary and other priority programming.
3269 In this case, this particular broadcaster has always made its commitments, generally exceeded. There is relationship of trust between CHUM and independent producers when they have made these commitments, so in this case it was carefully debated by a broadcast relations committee. We are conscious of that. We do see the impact sometimes on the digital networks of small licence fees and the difficulty of financing; however, it was our opinion that this particular broadcaster has always made its commitment and, in fact, has been an exceptional partner to independent producers.
3270 COMMISSIONER CARDOZO: No, I understand that part, in terms of this particular broadcaster, but are you concerned about the effects on other broadcasters, that they may not be able to maintain their Canadian production commitment?
3271 MS McDONALD: I'm trying to remember how many years I have been coming to hearing. It seems to be an argument that always takes place about every time that there's new licensees coming in and the existing licensees always say it's going to impede their ability to do Canadian programming and yet those licensees come back at other times. So I guess we do monitor it, but it's really hard to -- I haven't seen anybody hand -- well, actually, last week Chorus handed back a licence and that was at the digital level. I guess for us what is most important for independent producers is creating those channels that have access to larger audiences.
3272 MS KEATLEY: I think that one of the key things that we often look at is, essentially, strengthening the national system, and that's not to say we are not supportive of the various local programmers. I think we have a lot of empathy for the man who appeared for -- I'm trying to remember the name -- Mid West Television. It's an extraordinarily difficult struggle, I think, for the small regionals. I'm not sure we buy the same arguments for other players who are perhaps at a closer level.
3273 I think that Elizabeth is absolutely right, we do take this into strong consideration, but, representing independent producers, look at what are the kinds of commitments they are putting on the table in addition that will benefit the overall system.
3274 COMMISSIONER CARDOZO: Okay. Thank you very much.
3275 Thank you, Mr. Chair.
3276 MS McDONALD: Mr. Chairman, I know that Commissioner Williams asked a question about our Mentorship Program earlier and I just wonder if he would like the answer to that question.
3277 COMMISSIONER WILLIAMS: I was hoping you would bring that up. Please, proceed.
3278 MS McDONALD: The total commitment is $385,000 and that's $55,000 over seven years. This will place three aboriginal or visible minority interns with Alberta producers and four hands-on practical training in the film and television industry.
3279 And the $55,000 breaks down this way: 20 per cent, or $11,000, is for administration; $44,000 is then divided between three interns and each gets $14,666 per intern, plus 10 per cent salary top-up by the production company, for a total of $16,132 salary for 30 weeks. This does not include, often, the producer finding a place for them to stay and it's not unknown that the intern actually stays with the producer.
3280 COMMISSIONER WILLIAMS: Sounds like the financing formula for a production pilot.
3281 MS McDONALD: And just the admin costs cover the application forms, screen applications and including extensive private training on safety. They attend our annual conference, they attend a summer Institute of Film and Television. We are audited to death on this program and we would be happy to submit any information on any of the programs so that the Commission is comfortable. It is very important for these young producers.
3282 COMMISSIONER WILLIAMS: It's a great answer. Thank you.
3283 THE CHAIRPERSON: Commissioner Langford.
3284 COMMISSIONER LANGFORD: Thank you. I will try to be brief.
3285 It's understandable to me, knowing the members of your association, who you are speaking for, that you would be excited by CHUM's commitment to spend something in the neighbourhood of $15 million in a production development, bringing projects to market.
3286 Some years ago, six or seven years ago, the Craig Company applied for two licences in Alberta and made considerable promises at that point. Did you support them at that time?
3287 MS McDONALD: Yes, we did, and we came back to their renewal hearing in Calgary with some concerns --
3288 COMMISSIONER LANGFORD: Right.
3289 MS McDONALD: -- which I understand have now been met subsequent to that renewal hearing.
3290 COMMISSIONER LANGFORD: But you supported them, right --
3291 MS McDONALD: Yes, we did.
3292 COMMISSIONER LANGFORD: -- and that would be understandable, in my opinion.
3293 MS McDONALD: Yes.
3294 COMMISSIONER LANGFORD: It seems obvious.
3295 My question, then, is: how do you balance your obvious interest in more for your members and for the people you represent, against the possibility that in obtaining this extra benefit package you may put in jeopardy one of the other players that you have supported and one of the other benefit packages you have supported?
3296 Now, I know you have said, generally, that this is a musical chairs sort of operation -- people intervene against, people apply for -- but we have had some pretty specific, apocalyptic forecasts made here, and not just by Craig, but by CTV, as well. CTV indicated that even they felt Craig would be the big loser, the new player would be the big loser.
3297 So is it worth it? Have you come down on the right side of this? I can understand why you would be excited by another $15 million, but in the long term have you come down on the right side of this balancing act?
3298 MS McDONALD: We take this very seriously. It's not just a question of having our hand out and "Give us the money". We look at each broadcaster. We come back at renewals and we talk about people's performance from our point of view. That's why we were at the Craig renewal a year ago and expressed some concern.
3299 We also have to look at the applicant, as you do, and I cannot underline for you how important this particular broadcaster is to a specific kind of producer, particularly long-form drama and feature film. To lose the opportunity to build those stories, it becomes a balancing act, I agree with you, but at a certain point some of the growth broadcasters are pursuing has nothing to do with television and some of the economic problems that they are suffering from overall has to do with other business decisions. So I think part of it is we try to look at it by clearing out those and, say, looking at the television side of it, looking at what they can do as a broadcaster. That's the part that we are referring to.
3300 So I think it was our belief, and it was a difficult one this time, Commissioner, because we see all the competition in the marketplace, but we also see the extraordinary opportunity that is presented by this particular broadcaster and what it has done in the communities across the country. We don't come to their renewal hearings expressing concerns. We might talk about looking forward and things we can do. It has been a building relationship and that has been the relationship here, and, generally, with other Canadian broadcasters.
3301 COMMISSIONER LANGFORD: Well, you have expressed some concerns today. I think it was balanced and we are appreciative to have your comments on both sides, but it seems to me that it's one thing to talk about broadly based corporations that may, perhaps because they are branching into newspapers, pizza parlours, who knows what, bring financial ruin upon themselves. I can understand that point. Obviously, you can't mother them all, you can't husband them all, nurture them all.
3302 But at the same time, it seems to me that with this particular broadcaster we don't seem to have that situation. We seem to have a corporation that's narrowly focused on conventional broadcasting, with a tiny bit of digital, but I don't think anyone in this room thinks that's going to put boots on the baby for a while.
3303 I guess what you are telling me is that balanced against the opportunity or weighed against the opportunity of obtaining another $15 million for your members, the risk of losing a conventional broadcaster pales in comparison.
3304 MS McDONALD: It's more than $15 million and it makes independent producers really sound -- the only word I can think of is not polite, so I won't use it.
3305 We do look at the system. The broadcasting system makes a big difference to us and having the vehicles of expression from across the country in a national voice makes a difference to us. And it is difficult. If it is difficult for us, with the minimal resources that we have and the resources that you have at hand -- and I have been appearing at these hearings or sitting in the back row, as a woman who didn't speak until into the nineties. This happens all the time.
3306 You have the resources to look at it. What we are telling you is from the production community's point of view. This is a good applicant, they keep their commitments and it would be remiss of us not to support them and not to come forward and tell you that this is a good broadcaster, this is a broadcaster that makes its commitment, this is a broadcaster that reaches into the community, does feature films, does long-form drama, and does it well and comes out to young producers and aggressively pursues this about doing terms of trade. They meet all of those commitments.
3307 I understand what you are saying, but, from our point of view, it's not just about money, it's about contributions, it's about the system, it's about a kind of programming.
3308 COMMISSIONER LANGFORD: Well, I'm sorry that I had to somehow provoke you to thinking of uncomplimentary words -- it seems to be something that has happened to me before at this hearing -- but I must say what I was trying to get at was whether you had factored in the risk equation and I'm still not sure that you have, quite frankly.
3309 MS KEATLEY: I think that when we look at the overall system -- I mean, we can sit here and we can talk about all the reports that have just out. There are a whole bunch of risks we have to face in the system. People have talked about the crisis in drama, what does that mean. Is it all the fault of the television policy in 1999? And many people would like to say that. No, it isn't. It's a factor of many different things: international markets and how you brand your programming.
3310 One of the reasons we did come out in support of this is one of the clear things that CHUM has always done: branded themselves as a broadcaster. You, in fact, talk about the fact that they aren't branching out into various newspapers, etc. They have actually carved out a specific niche. I'm a producer based in Vancouver. CHUM was very involved in the independent feature world there long before they had stations there. They have been an extraordinarily good partner with the independent production community, regardless of the kind of benefits that were essentially put on the table, and that is truly what we have to look at.
3311 Whether various companies are going to fail or not, I think that's your responsibility, actually, as the people who grant the licences, in terms of looking at the overall system.
3312 COMMISSIONER LANGFORD: We take it seriously. I hope you, in recalling this conversation, will recollect that I haven't for one second questioned one iota of our assessment of CHUM and what it contributes. What I have asked is whether, in coming to your conclusion, you have weighed the risk factors on the other side?
3313 MS McDONALD: I believe we have because we do look at the broadcasters and their performance. We talk about it very seriously and we look at the numbers that we have available.
3314 The other thing is when you talk about risk. The risk in the independent production sector far outweighs that. It is really about people's homes. So I think the people who consider it not only do it from a feeling of risk very close to the heart, because my members are small- and medium-sized companies who have just gone through a maze of unexpected financing issues and have dealt with.
3315 So when we speak about risk, the people who assess it are members of the CFTPA and members of our Broadcast Relations Committee. They know what risk means. They also know when you venture into the marketplace what can happen to you if you asses the risk inaccurately -- not "you", the Commission, but whether various corporate interests assess it inaccurately.
3316 So we do take it into consideration, but we also look at the system and we try to think what will be the best contribution to the system overall. Because when all is said and done, it will not be about associations, it will not be about companies. The broadcasting system will be about the programming that we deliver to our children and to other Canadians.
3317 COMMISSIONER LANGFORD: And we have to have some people to deliver those programs.
3318 Those are my questions. Thank you, Mr. Chairman.
3319 THE CHAIRPERSON: Thank you. Thank you very much.
3320 Mr. Secretary.
3321 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.
3322 The next appearing intervenor will be Mr. Richard Patterson.
3323 MR. PATTERSON: Thank you, Mr. Chairman, co-chairman and commissionaires.
3324 My name is Richard Patterson. I am an independent businessman in the City of Calgary and I am here today to support the applications of CHUM for a new television station in Alberta.
3325 First of all, I should tell you a bit about my background. While I am originally from the Maritimes, I moved to Alberta 30 years ago and have considered it home ever since. I have founded and run businesses in Calgary, ranging from a restaurant nightclub to a small high-tech company that uses the latest satellite technology to track and recover stolen assets. I taught dance for many years in Calgary and even created a new dance called sneaker dancing. Although it was fun and exciting, I could not compete with other new dances, such as break dancing and hip hop, that were broadcast on MTV and other music stations.
3326 I could not get this off the ground as a business, however, my heart was still in dancing. I started a not-for-profit organization called "Save the Dancer", that helped to bring dancers from different dance disciplines together to support each other and create venues for them to perform. In my restaurant nightclub we featured numerous dancers from the Calgary area ranging from tap to ballroom and flamenco to belly dancing.
3327 So why do I think we need a new station in Alberta? I read in the paper not long ago that the Calgary-Edmonton Corridor could soon have more people than the Lower Mainland, B.C., and I think that's going to happen over the next 10 years. With my business dealings, I travelled east on many occasions. When in Toronto I can see almost a dozen local channels on television. Here in Calgary, we only have four, including the CBC.
3328 Now, I'm not complaining about the stations we have here. I think they do a fine job. What I am saying is I believe we deserve more choice. Each of the current television stations not only dedicates a small effort to community coverage, but not a concerted effort. Frankly, I think they need some competition.
3329 Yes, they do try and cover the local arts and culture scene. As an example, a station in Calgary that covers the local scene had their coverage on at 11:30 p.m. Mr. Chairman, maybe it's just that I'm not as young as I used to be, but having this show on at 11:30 p.m. really doesn't work for me. If I'm watching this at that time of night, it just tells me what I missed earlier that evening.
3330 As a viewer, I would say that local programming here in Alberta is not where I think it should. There is a hole in local programming.
3331 When I started up by high-tech business, I kept seeing stories on television about competing firms from Ottawa and Montreal, but found it difficult to get the local stations to come down to see what we were doing -- and we were doing it better. They seems to focus primarily on big business and professional sports.
3332 I think the focus of local stations has shifted. Most of the so-called local programming is news that has a local announcer reading intros to stories from other parts of Canada or some place else in the world.
3333 Now, I'm not saying that national or international news is not important, but it would be nice to get a local perspective on what is going on around us.
3334 There is local programming early in the morning in at least a couple of local stations, but most people are like me: working during the day and watch television during the evening. Almost all of the programs in prime time seem to be American and the ones that are Canadian seem to come out of the east.
3335 I think that CHUM coming to Alberta will create some healthy competition to cover all our communities have to offer.
3336 I mentioned turning on the television when I go to Toronto. I have always been a little jealous that they have Citytv. They actually seem passionate about their city. Now, I understand there is a Citytv in Vancouver, and while I haven't seen it yet, I hear it's just as passionate about Vancouver as Citytv is about Toronto. And that's the kind of passion I believe CHUM will bring to Alberta.
3337 I mentioned earlier the organization I founded in Calgary, "Save the Dancer". Getting time on local television programs was difficult because of their limited number and times available. I regret not having the opportunity to pursue my sneaker dancing, but, as we all know, one has to eat.
3338 I believe the format of CHUM could have helped me get my dancing to the masses and let the people decide if it was their dance of choice, but at least given me a chance.
3339 I have read the proposals from CHUM. They not only said they will cover the local arts scene, but they will do it at a time when people like me are awake and at a time when people might make the decision to go out and catch a local act.
3340 Something else that excites me about the proposals: they have said that at least once a week they will broadcast live from a local club. Well, when I had my restaurant nightclub in Calgary, I would have rejoiced for that kind of publicity. How better can you show off a city but by actually going out and showing people what's going on?
3341 And another thing that could happen, with all this coverage of local acts, some of the best will end up on MuchMusic or Bravo! Eastern Canada doesn't have an exclusive lock on talent.
3342 Here in Alberta, we have produced k.d. Lang, Nickelback, Jane Arden, Yvonne Penny, Ian Tyson, Paul Brant, Angela Chang, who incidentally was the first Canadian to ever win the Montreal International Competition. I have seen what they have done with MuchMusic and Bravo!, it's pretty good stuff, and I believe that they will bring the same intensity and innovation to local television screens in Alberta. A lot of people would welcome this.
3343 I just found out this weekend that next Monday evening Citytv will be broadcasting the first HD TV concert in Canada, "Our Lady Peace, Live in Alberta". This concert was recorded in Calgary. Of course, I don't have high-definition TV or Citytv, so I won't be watching it.
3344 Mr. Chairman, one of the slogans I kept hearing on my trips to Toronto was, "Citytv is everywhere". Well, I'm here today to tell you that it's not. It's not here in Alberta. It would be a welcome addition and, frankly, I think we deserve it.
3345 I want to thank you for the opportunity to express myself here today. If you have any questions, I would be more than happy to answer them.
3346 THE CHAIRPERSON: Commissioner Langford.
3347 COMMISSIONER LANGFORD: Well, thank you very much.
3348 I must say if you think being on at 11:30 p.m. is tough, you should see when CPAC puts our proceedings on -- four in the morning.
--- Laughter / Rires
3349 COMMISSIONER LANGFORD: And I was interested you referred to us as "commissionaires", because it's only the commissionaire in our building who ever sees us and he tells us we look pretty good, actually, pretty exciting.
--- Laughter / Rires
3350 COMMISSIONER LANGFORD: Listen, I don't have any questions. We break up these assignments, but your intervention has been absolutely crystal clear and I thank you very much for coming out.
3351 My colleagues may have questions, but you have been so lucidly clear and we get the message.
3352 Thank you.
3353 MR. PATTERSON: Thank you.
3354 THE CHAIRPERSON: Mr. Secretary.
3355 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.
3356 The next two appearing intervenors will appear as a panel. It's the Métis Nation of Alberta and the Yellowhead Tribal College.
3357 I'm advised that these two intervenors had to leave, Mr. Chairman. So their intervention will remain on the public record as not appearing.
3358 COMMISSIONER LANGFORD: They might have died of old age, Mr. Secretary!
3359 COMMISSIONER LANGFORD: We will now hear from the Association of the Canadian Advertisers.
3360 MR. REAUME: Good afternoon.
3361 Mr. Chairman, Madam Vice-Chair, commissioners, Mr. Secretary, Commission staff and counsel, we very much appreciate the opportunity to appear before you today to elaborate on our written intervention in support of the CHUM applications.
3362 For the record, my name is Robert Reaume, Vice-President, Media and Research of the Association of Canadian Advertisers. Our organization, you may know, has been advocating for advertisers in Canada since 1914 and currently represents a very broad crossection of over 200 major companies and divisions who advertise their products and services in Canada and account for over $350 billion in annual sales.
3363 Our member companies come from many industry sectors, including manufacturing, retail, packaged goods, financial services, communications and many more.
3364 As you have heard us say before, television advertising is very important to advertisers. After years of using this medium to promote our products and services, advertisers feel that we have made a substantial investment in television. We have also pointed out many times before that advertising is the primary resource that sustains the Canadian broadcasting system.
3365 In all its forms, advertising is estimated to have contributed $10.3 billion last year to the Canadian economy. Of this total amount, approximately $2.5 billion was invested in television advertising.
3366 Advertisers welcome the opportunity to participate at this hearing and look forward to the prospect of new, truly local conventional television stations in the markets of Calgary and Edmonton. We believe there is a genuine need in these markets that will both stimulate new economic activity and provide a much needed new local choice.
3367 It is our belief that more inventory in these markets will not only provide relief from the current tight supply of advertising inventory, but entice more advertisers and more advertising revenue into the market.
3368 For many advertisers, conventional broadcasting continues to be the workhorse of brand building despite increasingly reduced dealing shares. Advertisers have embraced and supported the many and varied specialty channels that the Commission has licensed.
3369 Specialty broadcasters share both viewing and advertising revenues have increased dramatically over the past several years, but conventional television continues to be the dominant force in the Canadian broadcasting system. And although welcome and successful, the growth of specialty channels has done little to relieve the acute pressure on conventional station inventory. Most specialty channels are national in scope or regional in a few cases and their entrance into the marketplace has not really added to local market inventory.
3370 Consequently, local retail advertisers, national advertisers with limited market lists or advertisers who are simply seeking to improve their market cost efficiencies often find it difficult to obtain any affordable local TV commercial time in many markets, and this is particularly true for Calgary and Edmonton.
3371 Western Canadian markets in general, but Calgary and Edmonton in particular, have presented advertisers with considerably above-average cost increases over the last several years due to severe inventory pressures related largely to the booming economy in Alberta. Get more than two advertisers in a room these days and the conversation, more often than not, gets around to two topics: Calgary and Edmonton.
3372 We believe that these markets cannot only support new conventional TV stations at this time, but very much lead them. Calgary and Edmonton have become A-list markets for advertisers. They are hot and they are bought nowadays with the same urgency as Toronto. They are considered to be among the top demand markets in the country.
3373 Most importantly, licensing these particular new outlets in these markets, will contribute towards ensuring that necessary and healthy competition is preserved in the Canadian broadcasting system. We all complain about fragmentation and declining audience shares and smaller and smaller ratings, but for advertisers this means so much more. For advertisers it means that each year we must pay more, but we get less. It is an economic model that does not encourage growth and over the long run is not sustainable.
3374 This hearing also represents an opportunity to take a positive step forward toward addressing the issue of clutter on television in Canada by offering Canadian viewers more stations with less commercials, not just more commercials on the stations we have.
3375 Just yesterday, for instance, in this market of Edmonton, the one-hour show, "As the World Turns", ran with 21 minutes of commercial time. The hour show, "General Hospital", ran with 22.5 minutes of commercials. What better proof of the need for more stations in this market as when the incumbent stations routinely run programming at almost twice the allowable commercial time.
3376 In conclusion, it is our belief that new outlets in these markets will attract a significant audience and sustain it. New alternatives for local and national advertisers are much needed. TV is a great marketing tool for advertisers, but we want to ensure that it remains so. This means ensuring not only a nourishing system for Canadian content and culture, but a powerful marketing system, as well, for commerce that remains competitive, uncluttered, effective and efficient. New local stations in these two markets will be most welcomed by advertisers and we will support them financially.
3377 We wish the Commission well in your deliberations and should you have any questions, I would be happy to attempt to respond.
3378 THE CHAIRPERSON: Thank you, Mr. Reaume.
3379 Commissioner Williams.
3380 COMMISSIONER WILLIAMS: Thank you, Mr. Reaume.
3381 Your intervention is in support of CHUM's application for a new station in this marketplace. Does your industry association also support the Global application?
3382 MR. REAUME: We have not filed an intervention in support of the Global application for probably three reasons. We had to, we felt, make a choice. We thought the market needed more inventory. We didn't think it needed that much more inventory.
3383 Global already operates a full schedule and does not represent a new competitor. Competition in the market is very important for us. Also, Global's application is for a super regional station. It would be a purchase that would give advertisers Edmonton, Calgary and Red Deer all at the same time.
3384 In a way -- I don't mean this in a legal sense -- but in a way that's kind of tide selling. You can't get Edmonton unless you take Calgary with it or you can't get Calgary unless you take Edmonton with it.
3385 There are more options for advertisers and we feel the need is for market-by-market options and that's why we chose to support the CHUM applications.
3386 COMMISSIONER WILLIAMS: Okay. I have no further questions.
3387 Thank you.
3388 THE CHAIRPERSON: Thank you very much, Mr. Reaume.
3389 Mr. Secretary.
3390 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.
3391 The next appearing intervention will be presented by Ava Karvonen.
3392 MS KARVONEN: Good afternoon.
3393 Thanks for taking the time to spend a long day here with us today. I will begin with a little bit of my background. I formed my own production company about six years ago and I have been a partner in a joint venture aboriginal company for about 10 years. I have been producing for about the last 10 years and a member of the production community for about 20. My father is a natural history documentary filmmaker -- a few extra year in there as child labour, but I won't add those in.
3394 I'm producer member of the CFTPA and AMPIA WIFT, which is Women in Film and Television Alberta. I'm formerly on the board of AMPIA, as well as WIFT. I currently sit on the National Board of DOC, which is Documentary Organization of Canada, formerly called the CIFC.
3395 I have worked in the industry from everything from catering to do locations, publicist, in drama, sound recording and the past 10 years have focused more on producing. I'm producing television, new media, focusing on documentary and kids and CHUM's probably one of the reasons I'm still in business in Alberta. They have pretty much supported -- they have supported every project I have produced and they have pre-licensed several new ones that I have that are ready to go.
3396 I produced a four-part aboriginal kids animated live action series and a one-hour documentary on Métis fiddlers. The Métis fiddlers project ran on Bravo!. I have a couple of new projects that are going right now. One's an interactive kids' 13-part science and nature series. That's with Access and the new project is based on a book called, "The ABC Guide to Film Terms". It's going to be running, hopefully, the next year, if I pull together and cobble together all my financing in this complicated financing days of the CTS and many financing cutbacks.
3397 I think it was about eight months ago that Diane Boehme, who's in charge of independent production with the CHUM group, came and met with the AMPIA Broadcast Committee and the AMPIA Board. I have been on the AMPIA Broadcasting Funding Committees for about 10 years and I have been active for about 10 years looking at applications with the AMPIA committees.
3398 I think it was the first time that broadcasters met with us prior to submitting and application. She had asked us -- well, mentioned to us that they were going to submit an application, hadn't been submitted yet, they were looking to put two new stations in Alberta and asked what our community needed at this time with funding. So she listened to us and, I think, took back to CHUM and CHUM responded positively to many things that we had asked for.
3399 Before I get to there, I just wanted to note that as a regional producer the $1,000 cup of coffee is real. It probably costs even more. And most broadcasters and decision-making process is based in eastern Canada, out of Toronto. To us, as an industry, and to myself, as an independent producer, it's very important to have people come and meet with us in this community here. Once, again, it's great you are here in Edmonton to meet with us instead of myself. I probably couldn't afford to go to Toronto to meet with you.
3400 So some of the concerns that CHUM's going to address -- and I have noted in the application that they are going to have an independent development office here in Alberta, and as a regional producer that's quite key -- they have indicated they are going to play a bigger role in independent production, through licensing and development; they are going to license regional stories through the proposed new station, so licences that originated with Alberta producers.
3401 I think the local arts and cultural coverage is quite key and CHUM is known for its commitment to culture. I'm also a former board member of the Edmonton Arts Council, so this is good news. And bridge financing, boy, that bridge financing will come in handy for the small producer who is putting their house on the line at the bank and with the funds to wait for those tax credits and other drawdowns to come in, waiting to hear for that CAVCO certification. Before broadcasters will release your final payment, it sometimes takes two years.
3402 So I just want to note that the CHUM group has kept me in business, and probably also my father's company, because all the projects I produced before going independent, truly independent on my own, had also been supported by licences from there. To me, it has been really key.
3403 The CGF dollars have been cut back. Not all my projects are able to get both the CTF, LFP and EIP. Some of the projects haven't had either. One thing Telefilm has been looking at is audience reach. To me, having CHUM here and being stronger in Alberta will help me meet those audience numbers that Telefilms requiring to trigger financing. To me, having the speciality channels is great, but to have a stronger conventional broadcaster I think is also key to our industry.
3404 So thank you for the opportunity to speak.
3405 THE CHAIRPERSON: We haven't any questions, but thank you for your intervention.
3406 MS KARVONEN: Thank you.
3407 THE CHAIRPERSON: Mr. Secretary.
3408 COMMISSIONER LANGFORD: Thank you, Mr. Chairman.
3409 The next appearing intervenors will appear as a panel and it will be Tonya Roberts; the Edmonton Japanese Community Association, Mr. Mike Murakami; Rosemarie and Darren Jordan, Martin Ignasiak and Afzal Hamid.
3410 THE CHAIRPERSON: Whenever you are ready and whatever order you choose, but, please, state your name at the beginning of your presentation so we make sure that we follow you.
3411 MS ROBERTS: My name is Tonya Roberts and I would like to say, good afternoon, Mr. Chairperson, members of the committee, esteemed colleagues, honoured guests.
3412 I have invited my esteemed colleague, Teresa Woo-Paw, from the Ethno-Cultural Council, to share my presentation this afternoon on behalf of the community.
3413 First and foremost, I thank you for your time and consideration regarding the application. In forging ahead with plans for tomorrow, we must be conscious of the seeds we plant today. Vision is held in the potential of that seed. Delivery, materialization and feedback response are dependent on the content of that vision. Television has demonstrated its fear of power and influence as a reflection of society, a commentary, a standard of measure and an informal mode of suggestion. As such, both the vision and the technology employed to disperse it are united as partners.
3414 Believe for a moment the affairs of national and international milestones, abandon, if you will, the ever-present internal clock, calender and to-do list and in this moment I ask you: how will our tomorrow look if you have a hand in painting it? Will it be a world of achievement and elevation or a world of stagnation and redundancy? Is this a place of false expectations appearing real or like a vision embodied projecting our true selves and dispelling the darkness of insecurity?
3415 Ladies and gentlemen, I believe the brush and the canvas are here before us today and Calgary residents make up the pallet with a spectrum of vibrancy to offer. The more of the pallet we choose to employ, the larger our canvass and greater clarity becomes the vision.
3416 I'm a native of Calgary, an emerging businesswoman and a returning UC alumni. My community background includes membership with the African Film and Presentation Society, past-chairwoman of the African-Caribbean United Foundation of Alberta, past-secretary of the GCCA, volunteer for CareFest, 1988 Winter Olympic volunteer performer and a delegate at the United Nations' Pilgrimage for Youth. As such, I have witnessed the growth and the development of Calgary and exercise my option to participate in it, both of which I plan to continue.
3417 Calgary has emerged a prosperous city, expanding international market share and local participation by communication technologies. The following factors bearing relevance today were outlined in "Calgary Economic Outlook: 2002 to 2007", and I quote:
"The aging babyboomers beyond 55 are expected to impose a drag on the economy's potential growth rate as they begin to withdraw from the labour force and are replaced by relatively smaller numbers of succeeding cohorts".
3418 In 2001, information, culture and recreational services were the growth leaders in economic activity contributing to a quarter of the labour market. In 1999, 72,000 people migrated to Calgary, and of that 49 per cent were between the ages of 22 to 34.
3419 Now, while Calgary is currently, and predictably, economically stable, it's anticipated growth and development are partially contingent upon the migration of young people and our ability to retain their expertise, promote their services and market their abilities.
3420 In an article entitled, "Dismantling Systemic Barriers", dated July 2001, the 2000 Task Force on Racial and Cultural Diversity cited the following:
"Calgary is seen as a vibrant diverse prosperous city with unlimited horizons and prospects for the future." (As read)
3421 Diversity is a valuable asset to Calgary, however Calgary is still not the best place to live for a number of Calgarians due to experienced systemic racism and discrimination. Although we have made many strides in this area, there is still much work to be done.
3422 The application before the hearing committee addresses the absence of diversity representation and with implementation, accountability and community governance providing a vehicle to rectify the situation at hand, thereby spearheading initiatives of advancement, entrepreneurship and a collective cooperation for tomorrow.
3423 In May of 2003, CIDA presented the agenda for the Canada Fund for Africa, a $500-million project. This month Calgary will host the CSR for the Africa Conference. Sponsors of this conference include, but are not limited to, the Department of Foreign Affairs and International Trade, the Government of Alberta, SNC-Lavalin, CIDA Inc. and the World Bank Institute. The policies and practices discussed within this public framework will have a long-lasting impact on the social, political and economic factors of Calgarians, both on a micro and a macro level.
3424 I have highlighted these two conferences as examples of local events that hold significant ramifications in shaping the future as contributors and recipients yet receive very little media coverage.
3425 It is in the interest of Calgary youth to learn about and understand the role Calgary plays on an international stage. In order to effectively disseminate information, all areas of population demographics must be included so that available tools of resolution are made apparent.
3426 In the "Canadian Journal of Communications", Lorna Roth, an associate professor at Concordia, discusses the national policy in relation to Canadian television and broadcasting policies and practices. She cites the Charter of Rights and Freedoms, the Multicultural Act of 1988, the Official Languages Act, the Citizenship Act, the Canadian Human Rights Act, as well as two international agreements, being the International Convention on the Elimination of All Forms of Racial Discrimination and the International Covenant on Civil and Political Rights as established framework for inclusiveness. However, she states that the ongoing colour balancing process emphasizes the point that despite Canada's Multiculturalism Act, it's 1991 Broadcasting Act and currently ethnic broadcasting policies, the media continues to draw colour lines between white ethnic people and others racially and culturally different from them.
3427 To conclude, existing media targeting the age groups of 18-34, of which I fall, does not address the cross-cultural experience. As a Canadian of African, Guyanese, Métis, Irish and Italian descent, it is rare to view programming reflective of an integrative experience. In the last 10 years I have witnessed an unspoken exodus of young talent towards the east and State-side in search of an environment more appreciative and inclusive of the backgrounds they represent.
3428 I would now like to turn the floor over the Teresa.
3429 MS WOO-PAW: Good afternoon, Mr. Chairman, members of the Commission and ladies and gentlemen.
3430 I'm Teresa Woo-Paw, chair of the Ethno-Cultural Council of Calgary, a member of the Diversity Calgary Leadership Council and current chair of the Asian Heritage Month in Calgary, as well as a founder of the Calgary Chinese Community Service Association.
3431 I'm very pleased to have the opportunity to co-present with Tonya our support for CHUM TV's application to you this afternoon.
3432 The Ethno-Cultural Council of Calgary, with memberships from major organizations from Calgary's Chinese, African, Filipino, South Asian, South American communities, as well individual members, strongly endorses CHUM TV's application for licence to operate in the Calgary area.
3433 It is the council's key objective to promote the interests and meaningful participation of members of minority communities in all aspects of Canadian life and to provide a forum for Calgary's minority communities to discuss and address issues and concerns that impact the community.
3434 Calgary has been emerging as one of Canada's most dynamic urban centres, with its ever-increasing cultural diversity and economic vibrancy. We believe there is a real need and it is time for our community to have a television station, a media that lifts, includes, integrates and reflects the cultural and racial diversity of the people they serve.
3435 This is the year 2003 and more than 30 years since the endorsement of the multiculturalism policy. We want to see diversity as mainstream. To expect diversity integrated into the facets of institutions that is in connection with a significant portion of the population. We can't expect to have the voices, views, experiences, fears, hopes and expectations of diverse populations be included and reflected on a daily basis through the institutions, programs and services, as well as throughout the organizations' structure and functions.
3436 In order to have programs that are authentically inclusive of cultural and racial diversity, it must be congruent with and be driven by a set of organizational beliefs and practices embrace diversity.
3437 We believe CHUM TV's corporate values of inclusion, reflection, quality, relevance, accessibility, understanding and respect, the best practices used as a reference by the Canadian Association of Broadcasters to draw up the industry guidelines on cultural diversity will not only give Calgary's growing minority communities the much needed assurance and hope for the mainstreaming of diversity in television, it will also serve as a prime model for inclusive organizations. CHUM will help raise the bar for the broadcasting industry in Calgary, as well as for the city, a city that's taking strides to respond to its growing diversity.
3438 Another major asset, CHUM TV, would bring to Calgary extensive local programming. All Calgarians would benefit from a media operation that has roots in the locale where they broadcast. They will enhance their relevancy and the depth of the programs.
3439 "Diversity", the proposed weekly host show on current affairs and popular culture, from a multicultural and aboriginal perspective, this will offer the opportunity to provide a forum for Calgary's minority communities to discuss and address issues and concerns that impact the community. We want a forum to talk about stereotyping in media, in general, in the schools, in books, in racial profiling. We want to participate in discussions on economic and political issues in Canada, but often times we are only approached to talk about cultural and multicultural issues.
3440 When the 2003 Asian Heritage Month Committee organized the first Asian concert to support the Calgary Philharmonic Orchestra, that was in bankruptcy for the past six months, all the media was interested in was covering a poster and the day and time of the event. Not one media in Calgary asked us why are we doing this, why are 20 Asian community groups in Calgary coming together to do this for the Calgary Philharmonic Orchestra. What is the potential significance behind this event? Not one person asked.
3441 We would love to talk about it. And these types of programs would also be an exciting venue to include the voices and views of the youth population and to offer programs that reflect them and the interests that relevant to them. We must have broadcast systems which include and reflect our diverse and more cosmopolitan young people, the new mainstream. And we want our leaders to recognize that they have a role to play, to nurture culturally integrated Canadians in the future.
3442 MR. LEBEL: Excuse me, Ma'am, if you are appearing with Madam Roberts, your time has expired. Please, conclude.
3443 MS WOO-PAW: So I can continue?
3444 MR. LEBEL: Wrap up.
3445 MS WOO-PAW: Okay. I will just jump to the conclusion.
3446 The Ethno-Cultural Council of Calgary urges your approval for CHUM TV's application in Calgary because we recognize the CRTC's commitment in meeting the needs of evolving communities and people and we strongly believe CHUM presence shall add a much desired and needed cultural vitality to Calgary. We say that they have the CPR. "C" is "content". The content is diverse, inclusive and relevant; "P" is "process".
3447 They have the organizational principles and practices which embrace diversity and inclusion and honest relations. CHUM TV has established its record as the community's first choice for event promotions. They are proactive stance and demonstrated commitment to diversity inclusion shall contribute positively to our city's race relations, which, in turn, will contribute to positively to the overall quality of life for all Calgarians.
3448 Thank you very much for your indulgence. Thank you.
3449 MR. MURAKAMI: I'm Mike Murakami. I'm representing the Edmonton Japanese Community Association. My colleague is Dave Trautman, who will speak specifically about media-related issues.
3450 My background is the second obvious minority as the chair of a committee of the Edmonton Chamber of Commerce. I'm involved with three companies and I'm also a member of NAARR, Northern Alberta Alliance of Race Relations and the Edmonton Interfaith Centre for Education and Action.
3451 My particular interest in supporting CHUM's application is its background in Ontario and nationally, in terms of addressing racial diversity in Canada.
3452 I'm also a member of the NAJC Human Rights Committee. NAJC is the National Japanese Canadian Association and they were instrumental in founding the Canadian Race Relations Foundation. A number of years back, I think it was in 1998, the Race Relations Foundation initiated a media campaign to address racial discrimination in Canada. Because of budgets, their main focus was in central Canada and the maritime provinces.
3453 One of the major partners in this was MuchMusic and the importance of that, to me, and to most ethnic communities here, is that they are addressing the need to approach and engage the younger community. In terms of the make-up of MuchMusic and their demographics and the way they engage people, it was the ideal vehicle to do that.
3454 The Edmonton Japanese community is probably the smallest ethnic community in Edmonton. We only have about 230 families here. It was founded about 56 years ago here. But in terms of the kind of emphasis and the attention we get from local media and collaborating with other ethnic groups, we find there's quite a deficiency in the attention we get.
3455 Just as an example, my son went to junior high here. It was Grandview Junior High. It's one of the top academic schools in Edmonton. Probably about 87 per cent, this is minorities, the top academic high school has a higher percentage of visible minorities. These are the future leaders of Alberta. These are the future entrepreneurs who are going to make a difference. And I find it very, very difficult to find media here currently who are addressing that reality. The new diversity is what is going to be shaping the future of Canada.
3456 I think there's a need to create opportunities for these people to speak about the communities. And also because Alberta, as everybody knows, and because of the business plans of most of the media companies are saying that we want to grow in this economy that has the fastest growing rate of economic growth in Alberta, but what comes with the economic growth are the people who are going to service that. So, for instance, in Fort McMurray, there's a huge influx of new immigrants and not all coming from the maritime provinces.
3457 In fact, when I spoke to the local service person there, she said that there is a much higher number coming from Southeast Asia and the Middle East. They don't have infrastructures there, the media doesn't understand them and, to a similar extent, it's occurring in Edmonton and in Calgary.
3458 The Mennonite Centre for settlement here has major problems, in terms of getting their message across to the general public regarding hiring of new immigrants and many of their problems. So in that respect having CHUM come to Alberta is important.
3459 One of the things in my research in terms of what CHUM has done to help address the area of media literacy was I think in London, Ontario they generated a media literacy program in a library. That's exceedingly important for ethnic groups as a resource because being able to understand how to address media and not be a victim of media is exceedingly important.
3460 If CHUM can duplicate what it did in London and other areas in terms of media literacy, I think it would be a very, very big plus for the ethnic community.
3461 Thank you very much. I will pass it on to Dave.
3462 MR. TRAUTMAN: In the interest of time, I won't go on for a long time, but I am here with Mike in support of the CHUM application. We feel they have demonstrated in the past in other regions a healthy respect for what the community wants and I wanted to address just one question which was going back and forth between all the corporate entities intervening here today which was essentially the economics of scarcity in that there is this limited pool of water and a whole lot of water buffalos are all feeding from it.
3463 I think, in my experience, this is overcome through innovation and creativity and that CHUM as a corporation have demonstrated this in the past and have grown markets in which they have been in. I don't have any facts and figures to support that, except from what I have seen on the number of times CHUM has the closing credit on programs that I found interesting.
3464 I also find it interesting that we have been asked all to appear as a collective of ethnic groups rather than as individuals. So I will just quit there.
3465 MR. IGNISIAK: Good afternoon, Chairman Dalfen, Vice-Chair, Commissioners and Commission staff.
3466 My name is Martin Ignisiak and I am here in support of CHUM's application. Before I say any more about myself though, I would like to thank you for the opportunity to speak.
3467 I work in the regulatory field in Alberta and I think that public consultations is something that every regulatory body ought to engage in. It is what makes it possible for you to ensure that the decisions you make in respect of broadcasting fulfil the criterion in Section 3 of the Broadcasting Act, and one of those criteria that I will touch on a little later is that our broadcasting system reflect a multicultural and multiracial nature of Canadian society. But I am glad that you are engaging this public consultation since it is the public, in my view, that is most affected by the decisions you make.
3468 As way of background, I will start off by saying my parents escaped from communist Poland in 1968 and came to Canada, and there will be some relevance to that a little later. They came here and not surprisingly because their backgrounds were in organic chemistry and ended up in Alberta because of our significant oil and coal deposits.
3469 I myself am a lawyer, born and raised in Edmonton. I was called to the Bar in 1999 and, as I said, I practice regulatory law and environmental law with Fraser Milner Casgrain.
3470 I am somewhat involved in the community. I am currently the Chair of Edmonton's Police Commission. I am a Director of the Canadian Association for Civilian Oversight of Law Enforcement and I am Vice-President of the Polish Heritage Society. The Polish Heritage Society is a registered charity which is working with partners to establish an assisted living and long-term care facility for seniors and the intent is that that facility will operate in the Polish language, and given the religious make-up of the Polish community, in accordance with Roman-Catholic principles. That's just a bit of background about myself.
3471 Now why do I support CHUM Limited's application? I am going to touch on two aspects of that. One is specific to their application, namely some of the programming they have indicated they are going to offer, and two more from a broad public policy concern that I have.
3472 In respect to their programming that they have indicated they are going to offer, currently the local programming in Edmonton, in my view, is somewhat scarce. Other than local news programs, and even those are largely national in nature, the local programming really consists of mainly U.S. programming.
3473 I have reviewed CHUM's application. There is a few things that stand out. "Slick Business" is a production that they intend on putting together about the oil industry, which is one I work in and one which really drives this province.
3474 Oil is Alberta's main industry. It has a significant impact on our economic wellbeing here and I would submit on Canada's as well. The fact is today there is no show in Edmonton that I am aware of that analyzes this industry and the constant changes that it is going through.
3475 I think that what my first impression was upon seeing the production "Slick Business" in the application was that this is a broadcaster who has really given some serious thought about the market they are going into.
3476 The second is "Capital Report". I believe as a member of the public that the more media scrutiny we have on any government the better the government we receive tends to be. Media has an important role in covering our political institutions and our elected officials. I can tell you, as Chair of the Edmonton Police Commission, the more media we see at a given meeting the more on our toes we appear to be to make sure we make the right decisions. So I do like to focus on, namely, "Capital Report" that CHUM has brought forward to put more focus on our provincial legislature and our city. I don't think we get a whole lot of that at the present time.
3477 Finally, the one thing that really struck me about the application was the emphasis on English programming on multicultural and cross-cultural programming, so with an English language. That is important to me because, as I indicated, I work with the Polish Heritage Society and one of the reasons I chose the Polish Heritage Society as opposed to some of the other Polish groups is because the Polish Heritage Society has its meetings in English, and if they were in Polish I wouldn't be much use to the Polish Heritage Society because unfortunately I haven't kept up on my skills in Polish and I suspect I'm like many other young Edmontonians, Albertans or Canadians whose parents come from another country, namely, that we are proud of our heritage, we want to celebrate, but we can't necessarily do that in the language our parents came here with.
3478 So I think it is important that CHUM recognizes that multicultural programming can be done in the English language. I can tell you there is a Polish program already in Edmonton but it's in Polish and I can't understand it, so I do look forward to another broadcaster doing something in English on that and I don't think it's being done right now in Edmonton.
3479 Now something not directly related to the application but something that concerns me is the media concentration that currently exists in Edmonton and I suspect it exists in the rest of the country right now as well. This is a concern for those of us who believe that media should reflect a wide range of views consistent with Canadian attitudes, opinions, ideas and values. I don't think that's happening right now in Edmonton and it needs to be addressed.
3480 It strikes me that only one local paper has reported on these hearings that are happening today. I find that somewhat shocking, given that you are here to determine the future of broadcasting in Edmonton, and I appreciate also Calgary and other areas in Alberta. In any event, the only paper to report on this hearing is owned by one of the applicants that is appearing before you as part of these hearings. The story that the paper ran yesterday focused on Craig's opposition to CHUM and actually made no mention of any concern that interveners had with the corporate owner of the paper's application. Had I not been here earlier when Craig was giving its evidence, I would not have known that they have any concern with the other application, with one of the other applications you are considering.
3481 I think that is a very simple and relevant way to make the point the media concentration is here, it's an issue. I find it striking that against that backdrop the other issue that I have really observed here at these hearings is that of increased competition, and that is being brought forward by a number of interveners as a basis for opposing CHUM's application.
3482 No doubt the Commission will hear or has already heard from various experts as to whether Edmonton can support another broadcaster. I'm not one of those experts, I don't pretend to be, but I urge the Commission to choose if at all possible, keeping in mind their responsibility for Canadian content, increased competition in the marketplace. Not only will advertisers benefit, as Mr. Reaume pointed out, but the public, in my view, will also benefit through increased competition because increased competition, in my view, is one of the more effective and immediate ways to address media concentration.
3483 This is in Alberta and we are in Alberta today and I'm an Albertan. Albertans like to pride themselves that our success as a province economically is largely based on our entrepreneurial spirit. I will be first to admit that the fact that there is oil in these parts has been somewhat of a help, but my point is this. As a consumer of broadcasting, as a person who lives here and works here and who depends largely on broadcasting to get the information I rely on, I say the more choices you can offer me the better. More choice means I will get a wider range of views whether they be relevant to politics, business or art.
3484 So again, I would encourage you to go toward increased competition and more views for us the viewing public.
3485 I thank you for the opportunity again to be here. If you have any questions I will stick around to answer them.
3486 MS JORDAN: Thank you for the opportunity to express my views.
3487 My name is Rosemarie Jordan. I am an investment advisor with Canaccord Capital, which is Canada's largest, independent, full-service investment firm. We are headquartered out west in Vancouver.
3488 I am here today to support CHUM's application for TV stations in Alberta. I am not going to throw facts and figures and proof around. I'm mainly here just to speak as an individual on a personal level, as well as a professional level in the business community.
3489 I was born and raised in Edmonton, obviously a visible minority both based on the colour of my skin and my gender, and I have seen Edmonton grow in a significant degree in terms of the different types of cultures that have emerged here.
3490 When I first went to school I was probably one of maybe five minorities, visible minorities, in the schools. I walk into my niece and nephew's schools these days and it's significantly different. There is a lot of different types of people.
3491 When I think about where I get my sources of information, for the most part it does come from television as well as the Internet. These days, having time to read a magazine or a newspaper, the time is just not there. I don't believe really that the amount of information and the type of information that I receive from our programs, both locally, nationally and in the U.S. really reflect what is happening here in Edmonton, Alberta for visible minorities. We just don't see people that are like as on TV.
3492 I think a lot of people, when you do look to TV for entertainment or for information, you do want to see people that are like you, that are basically representative of really what is actually here.
3493 On a professional level, the other thing that struck me about having CHUM come to Edmonton is basically just the potential for them to explore Edmonton's business community. There is a real lack of information out there on some of the local business happenings. To be honest, I get a lot more information about American companies than I ever do about companies here in my own city. When I look at how we can grow economically, basically having people become aware of what businesses are here is going to be a great help because with the company I'm in part of our business is corporate finance and what we do is raise money for corporations. In order to raise money for these corporations people have to have heard about them. If they have heard about them and they like what they heard, they are going to put their money in. If they have never heard of them, they are going to buy a U.S. company, you know, or something based out east.
3494 So I think there is a real gap there as well in terms of focus on television about Edmonton's business community.
3495 My husband, Darren Jordan, was wanting to also say a few words. He did have to leave earlier, but he has left me with some points that he wanted to make, if that's okay for me to read those out.
"Growing up there was little or no programming that represented visible minorities on television or in the media. The only black people I saw on TV were from American situations. They portrayed an image of life in the black community in a very narrow and very American way. Such programming rarely provided opportunities to showcase positive and realistic focuses in our communities, ex. role models, history, events, that sort of thing.
Working with youths over the last 15 years, I have seen that a lack of programming that accurately reflects the cultural diversity of our city has had a profound effect on our kids. They don't see themselves on the screen. They see prefabricated Americanized versions of what they are supposed to be. This is why we see so many youths, black, aboriginal, etc., trying to identify with and emulate a stereotypical American lifestyle.
I am pleased CHUM is up to the challenge. They have the experience. Personally, I would be happy with even a reasonable representation of visible minorities on TV. If CHUM can offer what the other stations have failed to do then I am in full support."
3496 Thank you.
3497 MR. HAMID: Mr. Chairman, Madam Co-Chair, Commissioners, Mr. Secretary and Members of the Committee. I am here in support of CHUM's applications for TV stations in Alberta.
3498 I don't want to brag, but I suddenly want to intervene. My name is Afzal Hamid. They call me Al in Canada.
3499 I have lived in Calgary for 30 years and I am a founding member of Ragamala Music Society of Calgary. I am an ex-premed lecturer, an electronics engineer, an ex-businessman in the field of electronics, a sitar player, a keyboardist, a singer, a music teacher teaching sitar, keyboard, harmonium and singing.
3500 I was trained by Cable 10 North Calgary in various aspects of TV program production, for example, lighting, directing, programming, editing, camera work, audio recording, and dubbing.
3501 I hosted and produced a multicultural TV program called "Jankar TV" in the seventies with Al Sayag(ph) as my program director.
3502 I am a very experienced DJ with CJSW University of Calgary Campus Community Radio Station and Fairchild Radio.
3503 There are no multicultural shows on Channel 17, 78 or the Vision channel at the moment. All shows are compartmentalized into little Ukraine, India, Hungary, Poland, Pakistan, the Punjab, et cetera.
3504 Moreover, there is a general tendency by the present programmers to borrow DVDs from video stores and splice together songs without the hosts even showing their faces, let alone introducing the songs and the artists involved.
3505 I do community radio programs, one on CJSW and one on Fairchild Radio. The input I get from the community is that the present hosts who are hosting South Asian programs on ACCESS TV and other channels are far from satisfactory and not knowledgeable enough and not well versed in the language.
3506 Over the years I have seen that on television stations programs have been presented by different communities, but I have not, not even in a single instance in Calgary in my 30 years, seen a program which actually addresses the problem of multiculturalism. There is a difference between an ethnic program and a multicultural program.
3507 An ethnic program is in the language of the ethnicity of the host. A multicultural program is a program presented on one platform by different communities coming together under one umbrella. This is what is needed.
3508 Instead of dividing the different communities and letting them do their own thing or their own stuff. This is called multiculturalism according to the cultural mosaic of Canada. However, I don't agree with that system in the sense that it does not bring the various cultures together on one platform. This is extremely important and this is where CHUM TV comes in.
3509 CHUM TV has several programs which are just going to be wonderful, like "Diversity", "Outdoor Alberta", "Slick Business", "Vintage Alberta", "Calgary Tonight", "Live Eye", "CityPulse" and a host of other programs.
3510 CHUM TV is at the cutting edge of multicultural programs. I have had people here, delegations from Global TV and A-Channel talking about we are already doing multicultural shows and that we are going to bring "Asian Horizons". For Christ's sake, "Asian Horizons" is produced in Ontario. It is not produced in Alberta. It has Ontario content. It is conducted in the mainstream Canadian system and it is presented in English, totally in English, whereas the songs are in Hindi. How do you reconcile that?
3511 So what I would like to say is that when you bring in artists from other provinces into Alberta, you are doing a disservice to the local artists. What is needed is programs devoted totally to local artists, like singers, writers, musicians, instrumentalists, novelists, broadcasters, movie makers, et cetera, under one umbrella. CHUM TV wants to do that. I feel very strongly that CHUM TV is going to bring not only competition, it is going to give a run for your money to the other stations as well and is going to be unique in the programming it is going to present. There is a need, a very strong need, for a TV station in Alberta which caters to all that.
3512 Thank you for your time and I am willing to answer any questions you would have about my presentation.
3513 THE CHAIRPERSON: Thank you.
3514 Commissioner Cardozo?
3515 COMMISSIONER CARDOZO: I just have one question. My big challenge is who do I pose it to? Maybe a couple of you can try answering it.
3516 This is the situation. What we have is an application by CHUM saying they are going to be -- a lot of what they are doing, not everything of what they are doing, but some or a lot of what they are going to do is going to be reflecting diversity. There is going to be cross-cultural and multicultural programming, and some of it may be ethnic programming, they are not quite sure, in third languages, but they will be bringing this new form of programming to the market if they are licensed.
3517 We heard this morning from Craig who said, hey, we do this already. This is what we have been about and this is what we do. What CHUM is proposing is exactly what we do.
3518 The question I want to ask you as viewers from Calgary and Edmonton is, is it that you already have some of this cross-cultural programming and it's good and you want more of it, or do you not agree with the Craig view that they already do this and you want, at least some of it, what CHUM is going to offer?
3519 Do you understand? The situation for us or at least what was put to us by Craig is it is just going to be licensing more of the same. My question to you is, is more of the same what you want, and that is a perfectly desirable thing and that is not a bad thing to licence either, or is it going to be something new?
3520 Maybe I can just ask you all to comment. It looks like everybody would like to, but just starting from here, and if you could keep it brief only because we have got other people to hear as well.
3521 MS JORDAN: Absolutely. I would say that they really truly aren't offering that. What I would like to see is just more of a mainstream reflection of Edmonton's local community. That can range to everything from entertainment on. Usually, the sort of cultural or ethnic programs that we see are purely educational, which is great, that's fine, we definitely need that, but I would also like to see us reflected just in mainstream entertainment, in drama, that sort of thing. Quite simply, none of the stations right now in Edmonton right now are doing that.
3522 COMMISSIONER CARDOZO: Okay.
3523 MS ROBERTS: As far as the current A-Channel provisions, I don't feel that their employment practices accurately reflect their policies of multiculturalism equality. I feel that when they first began their programs that it was pretty obvious that that is what their mandate was but at this point in time they have skewed away from it and have more of an eastern flavour to it.
3524 So, no, I'm not looking for more of what we already have. In fact, I'm looking for something a little -- quite a bit different in terms of the programming and what's being offered. I wouldn't call it necessarily mainstream because that terminology has a tendency to infer some kind of watered down version into a eurocentric system, so that is not exactly what I'm saying either, but more being able to see visible minorities or those with disabilities performing and behaving in the same manner to which they do every day.
3525 MR. HAMID: I don't think Craig is on the same wavelength as CHUM TV. I have been 30 years in Calgary. If Craig TV wants multicultural programming, how come they never approached me to play the sitar or even present a program or even interview me? So I don't buy that.
3526 The same thing with A channel. They are saying they are going multicultural. They are going multicultural after CHUM TV applied. They said, we are going to get "Asian Horizons" produced in Ontario now; that is in our future plans. It is not there now, so that means they are not addressing the multiculturalism problem at the moment. That is something they have circumvented to kind of -- to prove to you that they are presenting multicultural programs, but they are not.
3527 They are presenting 13 hours of First Nations programs, very commendable, and they also have on-air personalities from other ethnic groups, but their turnover of on-air personalities is very heavy. You know, you see a face for one year and it's gone.
3528 You saw the panel here. I didn't see ethnic represented, the ethnic community represented on the panel. So it's one thing to say one thing and another to do it in practice.
3529 COMMISSIONER CARDOZO: Thank you.
3530 Ms Woo-Paw?
3531 MS WOO-PAW: I would just like to say that I believe between 60 to 80 cultural groups in Calgary submitted support letters to CHUM's application. We are looking for something better. We are not looking for more of the same. We are looking for something that is local and we are looking for an opportunity where we could truly have a voice and have input.
3532 COMMISSIONER CARDOZO: Thank you.
3533 MR. MURAKAMI: 9/11 changed everything I think in the media and it changed everything in the economy as well. My sense is that existing local programmers started to react to the issues around 9/11 of course after 9/11. Northern Alberta Alliance of Race Relations was inundated by requests from the media at that time. The Edmonton Interfaith Centre for Education and Action was inundated with the same sort of things about religion diversity.
3534 I can only look at track records of these media companies and do my assessment of what their focus is in terms of addressing diversity.
3535 CHUM, through its various programs, out east before, way before 9/11 have been addressing that in ways that aren't necessarily economically profitable but it addressed the needs of the communities that they work with.
3536 That's all.
3537 COMMISSIONER CARDOZO: Thank you.
3538 MR. TRAUTMAN: When I began looking at the CHUM application I felt that perhaps all I was going to see is an exploitation of the cultural option. When I read a lot of the crossover sections in their survey and reports, I started to worry that it was simply going to be recycling clips from other shows that we have already seen and then put an ethnic host in front of it and speak.
3539 From what I have learned since that time, that is not their intention, and they are going to be working much harder not to do that, to include the ethnic message, not necessarily the ethnic face.
3540 I kind of endorse what the Canadian Film and Television Producers Association said here, that this is another window, and the more windows that get opened the more we are going to see each other.
3541 COMMISSIONER CARDOZO: Thank you.
3542 MR. IGNASIAK: I watch -- my TV viewing is restricted hardly to prime time and quite frankly I'm just not aware of any multicultural programming that goes on at that time.
3543 COMMISSIONER CARDOZO: Okay. Thank you very much for those comments.
3544 THE CHAIRPERSON: Thank you very much, ladies and gentleman.
3545 Ms Roberts, did I hear you use the word "overstand"?
3546 MS ROBERTS: Yes.
3547 THE CHAIRPERSON: I thought that was an interesting word. Did you mean if you understand a thing really well you overstand it?
3548 MS ROBERTS: Basically, yes.
3549 THE CHAIRPERSON: Okay. Thank you. Thank you all.
3550 Mr. Secretary.
3551 COMMISSIONER LANGFORD: That sort of leaves me out of everything. I don't think there is anything I understand that well, but anyway...
3552 MR. LEBEL: The next appearing intervention will be presented by Mr. Alan Brooks on behalf of the Alberta Motion Picture Industries Association.
3553 MR. LEBEL: Mr. Brooks, you have 10 minutes to make your presentation.
3554 MR. BROOKS: Thank you very much.
3555 MR. BROOKS: Good afternoon. Thank you for your patience.
3556 Mr. Chairman, Madam Vice-Chair, Commissioners. Thank you very much for the opportunity to speak with you today.
3557 My name is Alan Brooks. I am the Executive Director of the Alberta Motion Picture Industries Association, also known as AMPIA.
3558 With me today is Mr. Nic Wry. Nic is past President of AMPIA and currently the chairperson of our broadcast committee. Our President, Connie Edwards, wanted to be here today but is unable to join us because she is in production on a project in Medicine Hat. She sends her warmest regards.
3559 Next year AMPIA will celebrate its thirtieth anniversary in Alberta. We proudly represent independent producers and members in all aspects of the film and television industry in Alberta.
3560 Our members play an important role in Alberta's diverse economy. As you may know, AMPIA has a total of 275 member companies, representing more than 3,000 industry professionals throughout Alberta.
3561 Currently, Alberta's independent producers are facing a number of significant fiscal challenges. With the exception of A-Channel, the broadcasters in Alberta no longer have development personnel on staff in our province, and there is a serious lack of meaningful development dollars available, dollars that are needed not only to develop programming but to develop our future creative talent.
3562 With this in mind, along with the other benefits proposed, we are here today in support of CHUM's applications for two new English language television stations in Alberta.
3563 AMPIA supports CHUM's promise of the establishment of a development officer in Alberta and their commitment to spend a minimum of $300,000 per year for script and concept development over the seven year licence period.
3564 MR. WRY: AMPIA also supports CHUM's commitment to spend $1.8 million per year -- as a matter of fact they said close to but we assume that they will be very close to -- or $12.5 million over the course of the seven year licence term on national licence fees for Alberta independent producers, regardless of the availability of public funds such as CTF funding. And given this year's CTF and the likely look of next year's CTF, that is going to be very important.
3565 AMPIA is also pleased with CHUM's plan to create a $500,000 bridge financing fund, understanding that it be a revolving fund; as dollars are paid back they would be re-invested with other producers creating maximum benefit to the Alberta community. This commitment came as a result of AMPIA meeting with the executives of CHUM prior to their filing their Alberta applications, and we would like to publicly thank them for listening to our needs in advance, which is unusual.
3566 MR. BROOKS: As their application indicates, the awarding of these new Alberta licenses will enable CHUM to heighten their commitment to serial drama in the form of two new full budget drama series during the licence term. It therefore seems reasonable to AMPIA that at least one of these series originate in Alberta with an Alberta independent producer and it be separate from CHUM's $15 million Alberta independent initiative.
3567 Our province is blessed with many high quality, independent, dramatic producers including Burns Films, producer of the award-winning feature "Waydowntown", Alberta Filmworks, who recently produced the highly acclaimed CTV movie "Agent of Influence", Imagination Productions, who last year produced the highly rated "100 Days in the Jungle" for CTV, and the co-producers of the Family Channel drama series, "Mentors", Anaid Productions and Minds Eye productions, to name only a few.
3568 We feel very strongly that CHUM would easily find experienced producers, writers, directors and talent as well as crew in Alberta to deliver world-class programming.
3569 To be clear, our support of these applications is based upon our understanding, or I guess overstanding, that CHUM's commitment to spend a minimum of $15 million over the licence term will be 100 per cent expended with Alberta's independent production community.
3570 MR. WRY: To summarize, should these CHUM applications be approved, AMPIA would like to propose that the following be made conditions of licence:
3571 A minimum expenditure of $300,000 per year for script and concept development for Alberta writers and producers. The writers often bring up that there are opportunities where writers would like to develop a work prior to them being involved with producers.
3572 A minimum expenditure of $1.8 million per year on national licence fees of Alberta productions, regardless of the availability of public finds.
3573 The establishment of a $500,000 bridge financing revolving fund.
3574 A commitment to two new, full budget, one hour, culturally diverse, drama series, one of which would be produced by an Alberta producer in Alberta separate to the $15 million independent initiative.
3575 And that they file annual reports on the promises of their independent initiative.
3576 The one other thing that we would like to propose that is not in our written submission is that the benefits commence on the issuing of the decision or as soon as practical thereafter, and there are a couple of other quick ones.
3577 I just wanted to relate that I worked for ITV in Edmonton and when I first arrived on cable we had CBS and PBS. iTV intervened with the Commission and said, if NBC were allowed in Edmonton on cable that iTV was doomed, that their future would be economically ruined by NBC appearing on cable, so I think some of those things tend to move around.
3578 The only other thing, Commissioner Langford, is I would like to talk to you about your series when we are done because I think "Enemies" has great potential.
--- Laughter / Rires
3579 MR. BROOKS: We believe our members and Alberta's viewing public will benefit from the promises outlined in the CHUM applications.
3580 Thank you for giving us this opportunity to talk with you today.
3581 THE CHAIRPERSON: Thank you.
3582 Commissioner Langford?
3583 COMMISSIONER LANGFORD: I have already got a conflict of interest here. I am going to let Commissioner Williams take this.
--- Laughter / Rires
3584 THE CHAIRPERSON: Commissioner Williams?
3585 COMMISSIONER WILLIAMS: Thank you, Mr. Chair.
3586 Good afternoon, gentlemen. On page 7 of your presentation at the top, you said:
"To be clear, our support of these applications is based upon our understanding ... [of] that CHUM's commitment..."
3587 And it goes on. I am sure you are familiar with the paragraph.
3588 Has CHUM agreed or committed to this with you?
3589 MR. BROOKS: Yes. We have a verbal commitment from Jay Switzer that it would be 100 per cent spent with Alberta producers.
3590 COMMISSIONER WILLIAMS: Okay. Thank you very much.
3591 THE CHAIRPERSON: Thank you very much, gentlemen.
3592 At the risk of not having a rebellion here I am going to call a break now for 15 minutes and we will resume promptly in 15 minutes with the next intervention.
--- Upon recessing at 1755 / Suspension à 1755
--- Upon resuming at 1812 / Reprise à 1812
3593 THE CHAIRPERSON: Order please.
3594 Mr. Secretary.
3595 MR. LEBEL: Thank you, Mr. Chairman.
3596 The next appearing intervener is Mr. Merv Phillips.
3597 Mr. Phillips, you have 10 minutes to make your presentation.
3598 MR. PHILLIPS: Mr. Chairman, Madam Vice-Chairman and members of the CRTC, it is a pleasure to have the opportunity to appear before the Commission in support of the CHUM television application.
3599 The last time I had the pleasure of appearing before the Commission was in 1987 and you were running late then too.
--- Laughter / Rires
3600 MR. PHILLIPS: Just to give you a little bit of background, my name is Merv Phillips and I'm a resident, a long time resident of central Alberta. I have been there for 30 years.
3601 In 1988, I retired as Vice-President and general manager of Monarch Broadcasting after 38 years in the broadcasting business.
3602 In that position I was responsible for the day to day operations of the four radio stations and the two television stations owned by Monarch in Alberta at that time.
3603 My main claim to fame by the way, you should know this, is that I hired Ron MacLean and then talked him into going from being a weatherman to the sports department, and you all know the rest of the story.
--- Laughter / Rires
3604 MR. PHILLIPS: My wife is also a career broadcaster and we have four children, three sons and a daughter, and I am proud to tell you that my three sons are all involved in the broadcasting or the entertainment business. So you can imagine how the conversation goes in our house around the dinner table.
3605 Following retirement, my wife and I opened one of the first Betacam post-production facilities outside of Edmonton and Calgary in the city of Red Deer and we continue to operate that business with the emphasis shifting over the years, and we now concentrate on multimedia production. At one time a large portion of our revenue came from the production of television commercials for the local retail market.
3606 While living in Red Deer, I have been actively involved in the community, a past director, past President of the chamber, director and past chair of the Visitor and Convention Bureau, a director and founding chair of Bid Red Deer, that is a community-based organization to assist local groups in their efforts to attract major events to our city, and a director and founding chair of the Red Deer Regional Airport Authority.
3607 Last year the CHUM organization came to Red Deer to talk with local people about their plans to bring the CHUM brand of television to our province. I have always felt that the central region, situated between the two major cities, is sadly underserved when it comes to television, so I was very interested and excited about their concept.
3608 I took the opportunity to make the point that if CHUM Television wanted to bring service to central Alberta it would have to involve more than just a rebroadcast transmitter, giving us more of the same from the major centres. It would require a presence in our community and a commitment to include news, coverage and programming devoted specifically to central Alberta.
3609 You know when you live in a community that is located between two large centres it is often very difficult to make your voice heard.
3610 I was delighted to see the CHUM Television Alberta commitment in their application to locate a permanent store front studio in Red Deer along with a mobile facility with the capability of originating live programming from our community.
3611 Let's take a moment to look at the history of television in central Alberta. CKRD-TV has been around since the sixties and has always been an affiliate of the CBC.
3612 In the early seventies, CKRD-TV cooperated with CFRN Television to introduce CTV's service into the region. The licence gave a local station a sizeable cash subsidy that carried on for several years. It also gave them access to all of the retail availabilities on the rebroadcast transmitter. This arrangement went on for several years with adjustments and today's CKRD-TV still has access to a limited number of avails on CFRN Television in Red Deer.
3613 CFRN-TV has a limited commitment to local news in Red Deer and employs one camera person in our city. They insert a daily five minute news capsule in their regular newscast as a split feed that is seen on the Red Deer facility.
3614 In the eighties, iTV introduced their service into central Alberta and had a very close relationship with CKRD, making it possible for local advertisers to access the signal. They eventually purchased the station from Monarch Broadcasting.
3615 Things stayed fairly static then until 1997, when A channel was introduced into our market. This satellite transmitter rebroadcast the Edmonton signal, as you are aware, but it appears that they have very little news presence in central Alberta and in our city.
3616 So as you can see, things have been fairly static, as I said, over the 25 years with CKRD-TV controlling complete access to television advertising in the central corridor. I think it is time for change, therefore I support the application currently before the Commission by CHUM Television.
3617 Your approval of the application to let CKRD disaffiliate from the CBC will mean that central Albertans that do not have cable or satellite service will have access to the full CBC service for the first time. However, when this change takes place there is an unfortunate side-effect that has not received very much attention.
3618 Since channel 10 will be turned over to the CBC, Global's signal will be relocated to channel 2, the power reduced from 180,000 watts to 15,930 watts with a directional transmitter aimed to the north. This will likely mean that the signal will only be available to those in the city of Red Deer and perhaps some people on the northern fringe. Any person living in the rural area to the south without access to cable will be denied this service that we have enjoyed for many years. It is a very popular service too.
3619 Again, we gain full CBC service while at the same time some rural Albertans will lose access to the Global service. I'm not sure that is progress.
3620 Another unfortunate side-effect could result from the Global applications. With the addition of transmitters in Calgary and Edmonton, the focus of the station could shift away from central Alberta and begin to cater to the large regional audiences in the two major centres. While we do want to be included on the stations in those two cities, we do not want to lose the local focus of our local television station.
3621 Becoming a regional station rather than a truly local Red Deer station could also have the effect of raising the advertising rates on the more popular programming which would be sold on a regional basis. This could seriously restrict the ability of the local retail operators to access affordable and effective local television.
3622 When you review the history and the changes that are proposed in the applications presently before the Commission, I am sure that you will agree that the people of Alberta should have access to CHUM Television. I welcome their pledge to become a real presence in our community and their commitment to broadcast live events, news and information from the central region of the province. Along with this consistent inclusive coverage, CHUM Television will produce a weekly program devoted to happenings in the central region.
3623 When I reviewed the CHUM Television 10-point plan, it is exciting to note that we will receive 14 hours per week of local or regionally produced programming focusing on such things as business entertainment, youth, the cultural scene, agriculture and recreation.
3624 The Canada drama scene should be very excited about CHUM Televisions commitment and I know that local producers, although that's a small group, are very interested in the CHUM Television pledge to invest $2.1 million over the licence period in script and concept development.
3625 As a local business person, I am disappointed that CHUM Television has made the commitment that they will not actively solicit advertising in the central region. I believe that local retail advertisers in this strong economic corridor should have the opportunity to target this audience at reasonable rates. However, this pledge should allay the fears of CKRD-TV that CHUM will take advertising revenue out of that market.
3626 When you live in the rural area as I do, there are other problems that the majority do not consider. We subscribe to Star Choice and we appreciate the selection of signals that are available to us. However, there are two notable exceptions. We cannot view CKRD-TV on the service or the local CTV transmitter, so in order to watch local news we must have a separate conventional antenna system and switch over to the off-air signal. I think this policy should be reviewed and priorities established and I understand that there is a process currently under way considering this issue and I would encourage you to ensure that DTH carries all local stations.
3627 In closing, I would like to remind the Commission that the Edmonton-Red Deer-Calgary corridor has the strongest economic growth of any area in North America. We deserve the same level of service as other major economic regions in our country and I'm sure that you probably noticed this insert in the National Post that was distributed right across Canada in the third week in June talking about Red Deer and central Alberta being smack in the middle of the Edmonton-Calgary corridor, one of the continents richest and fastest growing regions.
3628 There was a recent survey done by the TD Bank that illustrated that the central corridor is second only in the international scene to Luxembourg, and I want you to know that we are busy trying to figure out how Luxembourg got ahead of us.
--- Laughter / Rires
3629 MR. PHILLIPS: We know that in the past many applicants have made promises to acquire licences and then reneged on these commitments. If you check the CHUM record you will find that they keep the promises they make. Therefore, I would urge the CRTC to approve the application by CHUM Television to introduce this new service in Alberta.
3630 Thank you very much.
3631 THE CHAIRPERSON: Thank you very much, Mr. Phillips. No questions.
3632 Mr. Secretary.
3633 MR. LEBEL: Thank you, Mr. Chairman.
3634 The next panel of interveners will comprise Mr. Paul Moulton, Mario Allende Jr., Chris Orsten and the Pumphouse Theatres Society. Mr. Scott McTavish could no longer be with us this afternoon so his statement will be read on the record by Ms Priti Obhrai-Martin.
3635 MR. MOULTON: Mr. Chairman and Madam Vice-Chair, Commissioners, Mr. Secretary and staff, let me be the first intervener to wish you a good evening and to tell you the good news is that we are in the middle of Alberta in the middle of summer and it will be light until about 11:00, and if that doesn't do it will be light again about 4:00 a.m.
--- Laughter / Rires
3636 MR. MOULTON: My name is Paul Moulton. I live in St. Albert, which is a suburban community to the northwest of Edmonton, and I have worked for the last 30 years in the arts and entertainment business, for the last 12 years primarily working in the presentation of live performances in soft-seat venues and to some extent festivals.
3637 I have to admit a bias upfront, and that is that I love television. In fact, if you asked my wife she might tell you that I love television a little too much. But I do have a dream for the live arts business, and that is that one evening I'm going to turn on CHUM Edmonton and they are going to say, coming up at six o'clock information about live performances that you can go and see this evening that will be far better than anything you could see on any TV channel, so get up off the couch and go see a show. I can dream.
3638 Currently, I'm the Director of Cultural Services with the City of St. Albert and I'm responsible for a 500 seat performance venue there, the Arden Theatre, and for various visual and performing arts programs that have operated for the past 19 years. I'm also the Festival Director for the Northern Alberta International Children's festival, which just completed its twenty-second year and a few weeks ago our most successful festival to date. So I am responsible for departments that operate programs, live arts programs, and that sell over 40,000 tickets a year into this marketplace.
3639 We need of course access to well-developed professional touring artists. Television very much helps us to develop those artists. We also need access to a well-educated and developed audience, a tolerant audience and an appreciative audience, an audience supportive of many cultures. Television helps us develop that audience.
3640 We of course need supportive and committed outlets in both print and broadcast.
3641 What we are up against in my business is a highly competitive market. Edmonton is a home to many fine festivals and many fine performance venues.
3642 We are also in a market where media outlets need to sell to compete. Consequently, they focus a great deal of their time and effort on mass entertainment, we know all about Hollywood, we know all about America, we just don't know a lot about the community we live in.
3643 Our outlets are looking for a distinctive image and I am delighted to support the CHUM application because in my mind it is simply that, a very distinctive look at our marketplace. We know they are a quality broadcaster. When I said I like to watch a lot of television I also do a lot of channel surfing. In my business I need to know what is going on in the local community all across this country, and it is very easy for me to find out what is going on in Vancouver and Toronto. I can watch City Television. It is important to me that this company has a very strong commitment to the local community.
3644 We need lots of coverage of local live entertainment. This is one significant factor that I think can differentiate this television station. We know that all of the media are available to help promote our events, especially our festivals, but we also know in the live entertainment business that television is by far the strongest and greatest penetrator of the market in terms of getting the message out. People need to see our artists and events to appreciate them.
3645 In fact, in some respects the live arts are one of the farms. We generate talent that ultimately ends up in film and in television and we need those people to be seen.
3646 Currently in this market TV is really not covering to the same degree that print and radio are. This year's festival, a very successful one, as I mentioned, we had terrific print coverage. We had four radio stations broadcasting live from the side of the festival and we had some sporadic coverage by some television cameras.
3647 Cable television of course did their part, as they are mandated, but we really do have a hole in this market that I believe CHUM can fill.
3648 Someone came to our market about six years ago, a broadcaster, and they said, we are intensely local, and I said, hallelujah. And we have another broadcaster that wants to come to this market and they are intensely, intensely local, and I say hallelujah again.
3649 My message is simple: TV helps to promote the live arts. CHUM is one of the good guys. CHUM will be very good for my business.
3650 Thank you.
3651 MR. ORSTEN: Mr. Chairman, Madam Vice-Chairman, members of the Commission, Mr. Secretary, members of the committee.
3652 My name is Chris Orsten. I own and operate Spitfire Entertainment, which is a small, more of a mobile disc-jockey entertainment company in the Calgary area. We not only specialize in weddings and anniversaries, birthday parties and corporate parties, I also do club DJ services as well as trivia game shows and karaoke all through the Calgary area. My target audience is between 18 to 35 years old.
3653 This has become an extremely high competitive area in recent years and has made it more difficult to promote due to non-existent media promotion. Because of this problem Spitfire, plus the venues that I work with, is solely relying on word of mouth advertising.
3654 I firmly believe that CHUM TV in Calgary will not only help out small local entertainment companies like mine, but also the venues that we work with. Currently, none of the current local media wanted to help out and promote the cities nightlife, culture, entertainment, unless it is something major like the Calgary Stampede or a big name concert that is heading out the Saddledome.
3655 Calgary's more established popular nightclubs, theatres and even including the Calgary Philharmonic Orchestra cannot get any type of advertising and promotion in the current media. Currently, for example, a group of bars in Calgary is trying to start a comedy festival called FunnyFest and if it wasn't for the fact of me walking around downtown and people pestering me with their little pamphlets about it I wouldn't have known about it.
3656 As well, there is also the nightclubs like the Night Gallery who specialize in having the up and coming bands perform in their bar and they rely wholly on posters up on the billboards all through downtown and no other media covering it whatsoever.
3657 The reason these events are not as successful is not because us as the entertainment company don't try to promote them enough, it is just that none of the mass media to get the word out is willing to help so the population doesn't know much about it.
3658 As well, the diversity of the population today does not have an outlet for their own cultural events. Nothing in Calgary wants to promote any events aimed at say, for example, the native, Chinese, eastern Indian or ethnic communities. Events like the Asian Heritage Month and Thai Cultural Showcase go virtually unnoticed. It shows that the current media doesn't care about the cultural diversity of the city. These cultures are just as important to the growth of the city and they deserve a chance to profit.
3659 Getting this type of information across the airwaves throughout the city is helpful to targeting clients for not only my business but all businesses. The different groups can keep their long-term cultures thriving in the city plus the business owners in the area can cater more to the social atmospheres of the minority groups by knowing that these events are taking place, finding out more about their customs as well as their major cultural celebrations.
3660 As well, this can really help the businesses who promote these events by drawing more of a crowd towards them, therefore making more money, and in turn creating more jobs and improving the local economy.
3661 Last year while I was vacationing in Ottawa, I was watching a station called the New RO, which is another CHUM-owned network. I noticed how much promotion that the station did for all entertainments, even free entertainment going around Ottawa.
3662 At around 7:00 p.m. there was a show on. I really can't remember the name of it. It told you literally nothing but what was going on in town that night as well as the next few nights. It wasn't just big concerts, it was what was going on in the nightclubs, what was going on in the streets, anything that was going on, any multicultural gatherings, they were all listed. At that time I was sitting there wishing that anywhere in Alberta had an outlet like this. It helped show choices of what there was to do in the city plus helped put more money back into the small businesses and the communities that held the events.
3663 I believe both Calgary and Edmonton, their vitality needs a promotional outlet for the arts in cultural diversity. Currently, both cities are the fastest growing cities in North America and need a better and stronger voice for the community.
3664 Thank you very much.
3665 COMMISSIONER LANGFORD: Just one question. Have you tried to pitch this kind of an idea, the sort of thing you saw at the New RO, to any of the broadcasters in the city where you live?
3666 MR. ORSTEN: When I was going through -- with myself and another company, we were trying to do a joint venture and we were trying to pitch it with A-Channel, which I believe is Craig, and they turned it down because they said they had something similar to it, but they are running it at 11:30 at night and out of Edmonton, which does absolutely no good for the Calgary public. Like, they list -- they will do Calgary for about five minutes, everything else is out of Edmonton.
3667 COMMISSIONER LANGFORD: Thank you very much.
3668 THE CHAIRPERSON: Go ahead.
3669 MS OBHRAI-MARTIN: Thank you.
3670 MS OBHRAI-MARTIN: My name is Priti Obhrai-Martin, and I am speaking on behalf of Scott McTavish from Pumphouse Theatres. Scott expresses his thanks to you for allowing him to have the opportunity to have his opinions heard.
3671 So I'm going to do my best impression on trying to imitate Scott's big, deep voice:
"Good afternoon, [Mr. Chair, Madam Vice-Chair and Commissioners]. On behalf of the Board of Directors, Staff, 24 client organisations, and approximately 66,000 annual patrons of the Pumphouse Theatres, I'd like to thank you for the opportunity to address the Hearing Committee today in support of the application by CHUM Limited for a licence to operate CHUMTV Calgary thereby increasing the local broadcast services to the Calgary community.
Registered both municipally and provincially as a Historic Resource, our facility was originally constructed as Calgary's Water Pumping Station No. 2 in 1913 and subsequently fell into dereliction during the fifties. Through the efforts of individuals within the Calgary community the society was formed in 1972 to restore and preserve the site, transforming the location into two live performance venues serving the local community by providing accessible venues to local performing arts organisations. This local community focus carries through today in our business philosophies and corporate partnerships and it is this Community focus and involvement, embodied by our organisation, which brings me here today in support of the CHUM TV application before you.
Before relocating to Calgary from Toronto in the mid nineties, I experienced first hand the quality, commitment and longevity of CHUM's involvement and diverse community focus within the areas they serve. It is my belief that the addition of another local broadcaster would have very little negative effect on the existing stations. Conversely, the positive social and economic impact on the local community would be considerable by way of injecting greater local coverage and programming as well as production dollars into the Calgary and area market.
As the head of a performing arts organisation, obviously my experiences and perspectives are naturally slanted toward the sector; however, it has been said that the arts are a reflection of the society in which they live. Using that as a benchmark, then Calgary is a growing, economically, culturally and ethnically diverse community, and there is to date a real indication that the growth will continue into the future.
To reinforce that statement I'd like to share some quick statistics about Calgary as published in the `The Calgary Advantage' (Edition One 2002):"
3672 Which by the way is right here if somebody wants.
"- As of 2000 Calgary's population was listed at 1,048,000.
- Within a 1-hour radius of Calgary are 11 rural communities (Airdrie, Cochrane, Okotoks & High River to name a few) relying on Calgary for local TV programming, news and current events.
- More than three-quarters of Calgary's recent population increase is through migration -- the largest percentage of that increase is 30% of international migration.
- Calgary is made up of 29 distinct ethnic categories and is one of Alberta's most ethnically diverse communities..."
3673 Statistics Canada 1996 Census of Canada Special Tabulations is where he got that quote.
"- Calgary is the national leader in employment growth, has the lowest unemployment rate among all major cities in Canada, and it's `Real' economy grew by over 25% in the last decade (equal to Toronto, greater than both Ottawa and Vancouver).
- Tourism, Arts and Entertainment in the Calgary Region is a leader in the Pacific Northwest. In 2000, 141.1 million was spent in Alberta with the Calgary Region taking 70% of that total -- the sector employs over 21,000 people and has grown 3.6% above the North American average of 3.2% in the past decade.
In fact there are few cities in Canada where you would find a stampede, Caribbean festival, philharmonic orchestra, folk festival, ballet company, Ukrainian dancers, Asian heritage festival, and a gay pride parade, (to name a few) all within the same community.
With such diversity it is hard to believe that the existing stations can, given the amount of broadcast time allocated to local events and current affairs programming, adequately serve the broad/ divers needs and growing requirements of the local community. And in fact at the moment in Calgary, there exists intense competition just within the arts community alone to obtain coverage due to the extensive number of events and the limited amount of airtime available to showcase them.
While I am aware print media is outside the scope of this issue, it is my personal belief that the following example also illustrates quite effectively the current environment and growing needs of the Calgary and surrounding area broadcast market. On any given day approx. 95% of Arts & Entertainment news in Calgary's major daily paper is syndicated (wire news with national or international content [from] Hollywood). Local stories (including cultural or ethnic based events) tend to be far and few between or buried in a once weekly section. Of the few stories that are local and receiving coverage in the daily or main sections, they are chosen based on event profile and/or professional status of the participants. While the percentages are much lower and status is less of an issue for the existing broadcast stations, there is currently only one local broadcaster effectively attempting to fill the demand locally within the community. In recent years that demand has grown considerably.
In summary, Calgary and the surrounding areas are --"
"All day I've heard how
(1) We're going to lose more money by percentage than they are when we move into their market.
(2) They're identical to us in Calgary but we're different from them in Toronto.
What has not been said is -- Does the public want this.
What it boils down to is this
(1) Does Calgary need this additional service -- [I believe] yes.
(2) Can the Calgary economy support a new local station -- yes.
(3) Will the Calgary market [anytime] grow -- yes.
In summary, Calgary and the surrounding areas are a community of diversity. It is diversity of age, location, talent, industry, culture and ethnicity. Each year it experiences a greater influx of people from all walks of life and culture. As a young, engaging and vibrant urban community, Calgary and area also deserves the diversity of choice for its local programming. In awarding a broadcast licence for CHUMTV Calgary, the CRTC ensures that Calgary's diversity is represented and celebrated not only to the constituents that make up Calgary and the surrounding communities, but also to the millions of visitors received annually to experience all that the area has to offer. There is much talent, energy and entertainment to showcase located in and around Calgary. The successful implementation of a CHUMTV licence will ensure that those voices are seen and heard.
My thanks to the Chair and committee members for allowing me to appear before you today in support of the CHUMTV application for a Calgary station.
3675 Scott McTavish.
3676 And just for the record I have existing -- he has copies of his speech, so I don't know if you need a copy or not.
3677 THE CHAIRPERSON: I think you can give those to the secretary. Usually they are handed out in advance, but that's okay at this point. We have heard you and we will have the transcript, so that is not a problem.
3678 Thank you very much for appearing here before us.
3679 Mr. Secretary.
3680 MR. LEBEL: Thank you, Mr. Chairman.
3681 Not seeing Mr. Mario Allende, his intervention will remain on the record as a non-appearing intervention. And I am also informed that Mr. Murray Jurak cannot be with us so his intervention will remain on the record as non-appearing.
3682 So we will now hear from Mr. Alan McMillin.
3683 MR. LEBEL: Not seeing Mr. McMillin, that intervention will also remain on the record as non-appearing.
3684 We will now hear from the Red Deer College, Mr. Ron Woodward and Michael Donlevy.
3685 MR. LEBEL: That intervention will also remain on the record as non-appearing.
3686 We will now hear from the Central Alberta Crimestoppers, Mr. Barry Cunningham.
3687 MR. CUNNINGHAM: Good evening, Mr. Chairman, Madam Vice-Chair, Commissioners, Mr. Secretary and staff.
3688 I'm here on behalf of Crimestoppers, not to speak on the application but in support of CKRD-TV and their corporate sponsorship.
3689 You may not know -- I will give you a little bit of a history on Crimestoppers. It was formed in the early seventies in New Mexico. It migrated to Calgary in the early eighties and eventually into central Alberta in 83-84. We have a very large territory. It's all of central Alberta and from border to border.
3690 Crimestoppers is awareness to the public as they are aware that someone knows information on a crime other than the criminal. So how do you get that to the public? So we relied on the media.
3691 We were very fortunate in that CKRD-TV came forward and they have devoted in excess of $100,000 in airtime per year for the last 18 years. That is a considerable amount of money and it certainly made us very popular and very successful in central Alberta.
3692 We have been extremely fortunate over the years to partner with them. They never argue or cut back on enactments for us. They are very good sponsors as far as helping us to raise funds. We are a complete non-profit, registered charity. We get no government funding whatsoever. Everything is donated from the public side.
3693 RDTV has no problem in helping us out in this regard and they have stepped forward numerous times to bring it into the public's eye. They are very good that way. They seem to have a lot of clout in the business community and certainly comes around to help us very much, and we would like to acknowledge and thank them for their efforts.
3694 A lot of the staff, management have served on the board of Crimestoppers and they have done an admirable job over the years. Without them we would have been in trouble, wouldn't have been as successful as we are.
3695 That's about all I have to say. If you have got any questions I would welcome them.
3696 THE CHAIRPERSON: Thank you very much.
3697 Mr. Secretary.
3698 MR. LEBEL: Thank you, Mr. Chairman.
3699 We will now hear from the Red Deer City RCMP, Ralph Cervi.
3700 MR. CERVI: Good evening and thank you for this opportunity to speak with you.
3701 Mr. Chairman, Madam Vice-Chair and Members of the CRTC, I am here to lend my support to CKRD and their application.
3702 I'm a member of the RCMP and have been for 21 years, and I would like to thank you for letting me speak before I go to pension, which is in about four years, but anyways it's been a long day.
--- Laughter / Rires
3703 THE CHAIRPERSON: Do they have a comedy troupe at the RCMP?
--- Laughter / Rires
3704 MR. CERVI: Historically, RDTV has been there for the RCMP, not in just the city of Red Deer but in central Alberta. When we talk about central Alberta, we are talking B.C. border to Saskatchewan border, north of Red Deer for approximately 50 to 75 kilometres and south of Red Deer, so they are covering a huge area for us.
3705 They have been extremely helpful in not only solving crime, because when we have had situations where we have had to get information out immediately to the public all it has been is a quick phone call, we have had a news crew there and the information has gotten out.
3706 But they have also been there to help promote crime prevention programs, and that is ultimately the RCMP's goal is to prevent the crime before it actually happens.
3707 They have helped us with Crimestoppers, Citizens on Patrol programs, you name it, talking to the detachments in the area, they have been there to support them. And the detachment members in approximately eight detachments in the area have nothing but praise for CKRD.
3708 They have also helped with fundraising in partnership with the RCMP, the women's shelter, for homeless people, and also in raising money for the Slain Peace Officers Fund.
3709 When asked to come up here there was no hesitation for me because in seven years of working in Red Deer I found that this was the only TV station that has gone to the trouble of working with the police. I have been posted in numerous other areas in the province and we have received virtually no assistance from larger TV stations, so it's nice to see a local TV station caring about the people in their area. And even with an expansion I have no concern at all that they are going to continue to promote our programs and local information in and around central Alberta. They have been very, very professional to deal with and I ask you to seriously consider their application.
3710 From a public point of view, I'm not a director, I'm not a producer, I'm not an actor. I don't have a business where I'm trying to make some money, and that's what I have heard all day today. I'm here to tell you that this corporation cares about the people in their area. They are willing to put the money out, not just make money for people, and again it is very much appreciated from our end.
3711 So in conclusion, I am here to support them and if you have any questions I would be more than happy to answer them.
3712 THE CHAIRPERSON: Thank you very much.
3713 Mr. Secretary.
3714 MR. LEBEL: Thank you, Mr. Chairman.
3715 Our last appearing interventions will be presented by Moriah Boyd from the Central Alberta Women's Emergency Shelter Society.
3716 MS BOYD: Good evening, Mr. Chairman, Madam Vice-Chairman, Secretary, Members of the Commission.
3717 I would like to take this opportunity just to thank you for letting me appear before you in support of the Global Communications and CKRD application.
3718 I listened to the presentations over the afternoon and I have been absolutely amazed that with the exception of CKRD there has not been one of the television stations that are making applications that have addressed any kind of social issue. Along with rapid growth and certainly the corridor between Calgary, Edmonton and Red Deer being very fast growing and very economically viable come social issues, and those social issues have not been addressed by certainly the other two applications, certainly CHUM.
3719 My name is Moriah Boyd and I have been a resident of central Alberta for -- actually, since 1969. I have also been chief executive office of the Battered Women's Shelter in Red Deer since 1984.
3720 Prior to becoming involved with CKRD I was very familiar with their ability to fund raise as a small TV station because of the work that they had done with the Ron MacLean Foundation, the Festival of Trees and the Lanny McDonald Golf Classic for Kids to mention a few.
3721 As Executive Director of the Women's Shelter, we were in desperate need of funds both for programming and to keep the doors open, and I contacted Mr. McBeth in 1992 to see if him, the TV station and some of the staff would be prepared to assist the shelter to raise funds for battered women and children so they could have safe refuge. Much to my surprise Mr. McBeth and CKRD climbed aboard and I don't think they realized at the time that that was going to be the beginning of a very long-term partnership. The partnership has been viable over 10 years and it is as strong today as it was when we first initiated it.
3722 In 1993, CKRD came on board to support the women's shelter and the battered women and the children that we see with an annual parade of playhouses. Now, they were responsible for contacting local builders, having playhouses built and they were raffled off. The shelter was the sole recipient of all of those funds. The following year they did the same thing with the Parade of Playhouses, but they also sponsored the first annual Celebrity Waiter Dinner. Those two events have been happening for nine years now and we have been the sole recipient of over $500,000 that CKRD has raised on behalf of the battered women and children in the central region, and today that is one of the "must attend" social events in Red Deer.
3723 Their slogan states, "We are stopping the violence", and their commitment towards this goal has been unparalleled. This TV station, its general manager and employees have provided their viewing audience with education and awareness of domestic violence that is unprecedented. In fact, they have done videos, public education and awareness at prime time at no cost to us.
3724 In fact, they have got a couple of employees who are very good at cattle pinning, if anybody knows what cattle pinning is at a rodeo event. They won their event and I was the fortunate recipient of their moneys and we donated that -- we designated it actually to the teen room because we felt that two TV employees who get on horses and charge around a corral and try and get cattle into a small pin that the teens should probably benefit from that kind of event.
3725 Their employees have also donated time to the shelter in that they have come and read stories to the children, they do maintenance work, they have been available to sell raffle tickets on weekends at the mall, and certainly they have been available to do stories for us on short notice.
3726 They have been absolutely amazing in providing substantial revenue for the women's shelter in the past 10 years, and their commitment to stopping the violence really hit the forefront when they took a leadership role in a $1.6 million capital campaign. Our turnaways were so high that we didn't have the beds. CKRD took a leadership role and in January of 2002 we opened a new expanded and renovated shelter from 24 to 36 beds.
3727 This TV station also sponsors a golf tournament along with the RCMP city detachment. We get half of those funds, and as was mentioned, the Slain Officers Fund is also going to be recipients of that.
3728 This past year the Celebrity Waiter Dinner raised $115,000 for a one night event that was sponsored again by CKRD and Earl's Restaurant. Half of this money is being used to provide three treatment programs for men who batter their partners. The other half of the money is going into general operating revenue for the shelter.
3729 I think it is really apparent that this TV station has made a commitment in addressing community and social issues that are relevant to the viewing audience, and once again we can't have rapid growth in a very high economy and not have social issues that come with that.
3730 I am part of their viewing audience. I have been in Red Deer for a very long time. CKRD is a member of our community and as such I feel some ownership with that station. There general manager has been a long term Red Deer resident. Their employees, they work, live, play and raise their children in Red Deer. They have been around for 10 years and I will continue to rely on their ability to support us as we struggle to provide safe refuge for victims of domestic violence.
3731 In the 10 years that CKRD has been providing us with support, we have housed 3,000 women and 3,250 children.
3732 As a resident of Red Deer, I look forward to diversified viewing certainly with a strong regional and local focus which CKRD is certainly known for.
3733 I would just like to close by saying if CKRD has the privilege of being successful with these hearings, the station will be more than ever beneficial, not only to the shelter but certainly to other non-profit agencies with their increased staff, their increased programming and domestic violence. The message that it is unacceptable will get further afield than just central Alberta, it will hit the corridor.
3734 RDTV takes its responsibility very seriously and I see this approach as a further opportunity for all of the charities to benefit from what CKRD is best known for, which is their compassion, their expertise in fundraising and being able to pull the community together to actually deal with some of the relevant social issues that we are facing today.
3735 That is all I have to say, unless you have further questions or any questions to ask.
3736 THE CHAIRPERSON: Thank you.
3737 Commissioner Cardozo.
3738 COMMISSIONER CARDOZO: Thank you very much for coming. I just had a couple of questions, if you don't mind.
3739 I just wanted to ask, do you have any other corporate sponsors for the Battered Women's Shelter?
3740 MS BOYD: No, not corporate sponsors.
3741 COMMISSIONER CARDOZO: So this is the corporate sponsor.
3742 MS BOYD: This is the corporate sponsor for the women's shelter.
3743 COMMISSIONER CARDOZO: And it has been a sponsor as well as a fundraiser for you?
3744 MS BOYD: Yes.
3745 COMMISSIONER CARDOZO: You said the relationship has gone back 10 years since they started to work with your shelter.
3746 MS BOYD: Yes. I contacted Ray in 1992.
3747 COMMISSIONER CARDOZO: Okay. You may be aware that the station would have changed hands about two or three years ago when --
3748 MS BOYD: Yes.
3749 COMMISSIONER CARDOZO: -- Global took it over from WIC. I take it there was no change in their commitment during that time.
3750 MS BOYD: There was absolutely no change and in fact it has increased over the years. I'm quite amazed.
3751 COMMISSIONER CARDOZO: Okay.
3752 What they are applying for is for a rebroadcast of that service into Edmonton and Calgary. Do you sense that they would take that message or that approach beyond the borders of Red Deer and do similar sorts of things beyond the city?
3753 MS BOYD: I would certainly hope so. Domestic violence is not an issue that is just centralized in the Red Deer area. The message needs to get out there and CKRD has got the expertise and can assume a leadership role on how to be a corporate sponsor for those kinds of issues.
3754 COMMISSIONER CARDOZO: Yes. It's an amazing partnership for your centre. Are you aware of any others who have been as lucky as you to select those kinds of --
3755 MS BOYD: No, and I am a member at a provincial organization and our shelter is the only shelter that has got this kind of massive corporate sponsorship behind it.
3756 COMMISSIONER CARDOZO: Thank you very much. Those are my questions.
3757 THE CHAIRPERSON: Thank you very much.
3758 MS BOYD: Thank you.
3759 Mr. Secretary.
3760 MR. LEBEL: Thank you, Mr. Chairman.
3761 We have now reached Phase IV in which applicants are provided with an opportunity to reply to all the interventions that were submitted. So I will ask Global Communications Limited to respond at this time.
3762 THE CHAIRPERSON: Whenever you are ready.
3763 MS BELL: Thank you.
REPLY / RÉPLIQUE
3764 MS BELL: Chairman Dalfen, Madam Vice-Chair, Commissioners, good evening.
3765 For the record my name is Charlotte Bell. I am Vice-President of Regulatory Affairs for Global Television Network. With me: to my immediate right is Rick Camilleri, COO of CanWest Global; to his right is Loren Mawhinney, Vice-President Canadian programming; and to my left is Jack Tomik, President of CanWest Media sales.
3766 In the back row: to my left is Doug Hoover, Senior Vice-President of Programming and Promotions; Greg Treffry, Director of Development; David Rathan, Director of Research, CanWest Media Sales; Kathy Gardner, Vice-President of Research; Don Gaudet, Director of Programming; and Chris McGinley, our General Manager in Alberta.
3767 At the outset we would like to acknowledge the more than 1,300 letters that were filed in support of this proposal. A great majority of these letters were filed by individuals and community groups representing a wide array of interests, including those of ethnic and aboriginal people residing in Red Deer and central Alberta. This is support from the communities we serve. This is our audience and this is the public interest that we are here to serve first and foremost.
3768 Our application to disaffiliate CKRD from the CBC is not, as our competitors suggest, tantamount to licensing of a new station. Rather, this application seeks to amend the license of an existing station at the request of the CBC and in order that it may provide its full service to the residents of Red Deer and central Alberta.
3769 Further, these parties are suggesting that approval of this application constitutes an exception to the Commission's general prohibition against licensing two stations in the same language in the same market. As we have stated before, we do not consider this an application for a new station.
3770 In our view, this proposal can no more be characterized as an application for a new station in Calgary and Edmonton than CBC's request to amend its Edmonton licence and add transmitters in Coronation and Red Deer where it will derive additional revenues from the market without providing additional programming enhancements to its schedule. It will be present in those markets but it will not be local to those markets.
3771 A local station provides local programming, which entitles it to derive local revenues. This is not what we have proposed.
3772 Second, a local station's presence in a market goes far beyond its local programming. It necessitates ongoing and day to day interaction within the community at the station management and staff level. You have heard from a number of interveners supporting our proposal that our community involvement, our fundraising activities, and our presence in the market is key to their support of our station. This is what makes a station local and this is not what we would be bringing to Calgary and Edmonton by adding two transmitters. And this is the fundamental difference between our proposal and that of the CHUM group, and this is in large part what explains the difference between our revenue projections.
3773 These interveners further suggest that we are reneging on our commitments we made three years ago when we acquired the Red Deer station from WIC. They are alleging that this proposal is tantamount to our walking away from our commitment to support small market stations. This is simply not true.
3774 This application came as the result of a request initiated by the CBC for disaffiliation, not from Global.
3775 Further, CBC's intentions to terminate its affiliation agreements across Canada is no secret to anyone in this room, including the intervenors, as Mr. Ruptash noted this morning. To some extent, Decision 87-140 put everyone on notice some 16 years ago that this day was coming. As we stated in yesterday's question and answer period, this proposal is entirely consistent with the Commission's stated goal when it renewed the licenses of CBC in 1987 that:
"the CBC should pursue, as a long-term objective, the extension of full CBC network service to all communities through the eventual replacement of all of its affiliated stations."
3776 Commissioners, first and foremost, this is why we are here.
3777 While each market circumstance is different, the Commission has considered and approved similar proposals in the past, namely in Ottawa and Barrie. In its intervention against this proposal, CTV suggests that the Commission originally denied CHUM's first proposal to disaffiliate its Barrie station in 1989 due to concerns about the financial impact it would have on the Toronto market, and that those same concerns apply in this case.
3778 In reviewing that decision it is quite clear that the Commission's main concern was based on the program orientation proposed by CHUM for the station and that it resembled a specialty network with niche appeal designed to provide an alternative to Toronto viewers rather than local service in Barrie. Given its narrow programming focus, the Commission stated in its decision that it considered that CKVR could not operate as an independent station serving the Barrie area without compromising its local orientation.
3779 Again, this is not what we have proposed. In fact, this proposal is designed to ensure continued strong local presence in the Red Deer market. CKRD is a local Red Deer station and will remain as such as a non-affiliate of the CBC.
3780 While we have proposed programming enhancements of two and a half hours per week of regional programming, they will be produced out of our Red Deer station with a strong central Alberta focus. We are strongly committed to these initiatives, though given the nature and focus of these programs they would not draw large audiences from Edmonton or Calgary.
3781 While we do not wish to amend our proposal, should the Commission consider that thee regional programs would compromise the local orientation of the Red Deer station, we would be prepared to ensure that these programs would be produced locally in Red Deer without any participation from our Calgary and Edmonton stations, and that their focus would be local to Red Deer and Centra Alberta.
3782 Further, the allegation from our competitors that we are reneging on our commitment to support small market stations is not true. What is being suggested is the notion that a major broadcaster in Canada, Global, should continue to subsidize CKRD as a non-affiliate even though the station would show increased losses year after year and in the long term. To quantify this impact for the record, if CKRD were to disaffiliate from the CBC without priority carriage in Calgary and Edmonton, the station would lose approximately $24 million by the end of the licence term in addition to the $6.3 million loss it is carrying forward from the past two and a half years, amounting to losses of more than $30 million.
3783 This does not take into account the potential impact of other structural and economic changes that might occur over this period. These losses would be added to the other nine television stations that are also showing losses that Global currently subsidizes in other small and medium markets across this country.
3784 Commissioners, while we have a strong presence within the broadcasting system, we are providing local service in a number of unprofitable markets in addition to rescuing and subsidizing ethnic television in Montreal, which you may recall was put up for auction when it went bankrupt and no other broadcaster came forward to save the service. Unlike most of our competitors, we have never attempted to seek relief or reductions from our programming commitments in the face of increased fragmentation and competition. We continue to meet and exceed our commitments in all markets.
3785 Our competitors have also come before you alleging that our proposal does not provide sufficient benefits to the system to warrant approval. This is in large part due to the fact that they belief that we can somehow derive much higher revenues from transmitters in Calgary and Edmonton than we have projected. We have already discussed our projections at length and have provided detailed accounts as to why these proposals are in no way comparable to the proposals filed by CHUM for new local stations with local community presence in these markets. In fact, we would remind you that the revenues projected in our application are only partially incremental. We believe that the benefits that we have put forward, including subsidizing the CBC's provision of full service in central Alberta, the maintenance of local service in a market that could otherwise not afford it, and the provision of regional aboriginal and ethnic programming are more than sufficient benefits in the context of the modest amounts of incremental revenues that this provides us with.
3786 In terms of our commitments, we do believe that they are commensurate with the nature of the proposal before you.
3788 MS MAWHINNEY: Commissioners, just to recap, as part of this proposal CKRD will provide eight distinct and different hours of programming, Canadian prime time programming, per week than those on our Global stations. This is a significant undertaking.
3789 As part of that commitment we will further commit to commission one MOW per year out of Alberta for the remainder of the licence term.
3790 Furthermore, in our application we put forward a number of initiatives to reflect the interests of Alberta's visible minorities and aboriginal people. As part of this commitment we said, in our supplementary brief, that we would use our documentary stream, which includes many completed and planned projects that reflect the cultural diversity of Canada, and include these as part of our prime time line-up in addition to our priority programming on the station. We intend to broadcast six of these documentaries per year during prime time on the station.
3791 Commissioners, in further response to the allegations that we are not providing enough benefits in relation to approval of this proposal, you will recall that only three years ago, as part of the approval of our WIC transaction, we provided more than $22 million tied to the acquisition of the stations in Alberta to be spent over five years. These include the creation of a $5 million program promotions fund, as well as the establishment of the CanWest Western Independent Production Fund, which so far has provided more than $3.6 million to Alberta producers, the great majority of which was used to fund productions aired by our competitors, including CHUM and CTV.
3792 In fact, during this period, 8.1 per cent of these funds were accessed by CTV services and CBC projects represent 31 per cent of this spending so far.
3793 Unlike CTV, who claims that we are not doing enough, our benefit dollars on priority programming is third party, independent and not directly supporting our own schedules. Unlike CTV, we are providing two separate streams of eight hours of priority programming, most of which consists of spending that does not add pressure on the CTF.
3794 MR. CAMILLERI: In closing, first and foremost I wish to thank the Commission on behalf of our team for its patience and thoroughness throughout this entire proceeding. I don't envy you and I must say I am somewhat amazed by this process, perhaps if only because I am new to it.
3795 Going back to what Commissioner Langford was saying yesterday, I noticed that during the first part of the day you have heard successfully from our competitors that the sky isn't falling, it's Armageddon.
3796 I began my comments yesterday by telling you about the environment that local television finds itself in today, not because broadcasting is a terrible business to be in but to put into context the world within which we operate. I think it is fair to say that the Commission appreciates the necessity to create strong national players who are capable of competing on a world media stage in order to preserve a strong Canadian voice on Canadian airwaves. By all comparisons in this country, none of us are big.
3797 Then I compared CanWest to BCE, and I must admit and confess that I am somewhat perplexed as to why CTV, a parent of Canada's largest media conglomerate by far sees our application to disaffiliate a station in Red Deer and preserve local service as a way to turn Global into a dominant force that will destroy the CTV service in Alberta.
3798 I then turn to Craig, granted this is a smaller player in the industry but who less than two years ago appeared before you and said they were ready to enter into the national game. There was an abundance of U.S. programming available to them, they stated, and they had the resources and know-how to compete in this increasingly fragmented marketplace.
3799 In this proceeding however they have put forward the most incredible doom and gloom scenario possible whereby if you believe their projections they simply do not have a business if you licence one more thing.
3800 I can appreciate that the Commission is in the unenviable position of balancing the interests of the broadcasting system, the cultural industries and, most importantly, that of the Canadian public. As a broadcaster and as a publicly traded company, we too have to balance many interests including first and foremost those of our viewers and of course those of our regulator and indeed our shareholders.
3801 We have specifically designed this proposal to meet the objectives of each of our stakeholders and we remain firmly convinced that this application serves our public and business interests without causing damage to the marketplace.
3802 CTV has suggested that we hold another public hearing to discuss the issue of common ownership. My understanding is that the Commission determined in the new content policy that it would continue to deal with these matters on a case by case basis. We believe that our proposal meets your test.
3803 Finally, interveners and the Commission have focused on issues of market concentration and cross-media ownership during our question period yesterday. I wish to clarify the record on one important point. Our broadcast assets do not subsidize our newspapers nor have they ever been used for that purpose. If I gave you the impression that this was not the case, I most sincerely apologize.
3804 Aside from this, there has been much discussion of CanWest cross-media marketing clout and we would like to remind the Commission that we are not alone. CTV is a small division of a very large company, BCE. When we think of CTV we only think of the main network, but what we have to think about today in comparison are its sister media companies which if you apply the same theory of marketing dominance to BCE as you wish to apply to us please keep in mind the following media brands in this country: the Globe and Mail, Canada's number one national newspaper; ROB Television; TSN, Canada's number one specialty channel; Discovery, one of Canada's first analog specialty channels; CTV Newsnet, Canada's second national news specialty; The Comedy Network; Sympatico.ca; TalkTV; and finally, Bell ExpressVu.
3805 A significant set of marketing assets that are much more complementary in terms of audience demographics than daily newspapers are to our assets.
3806 If you look to CHUM, we think only of CITY-TV. However, think of the newnet system of sister stations, think of the significant national presence in radio, think of MuchMusic, MuchMoreMusic, Bravo!, Space, StarTV, Canadian Learning Television, Access Alberta, MusicPlus, Musimax, Fashion Television, Book Television and more, again a significant cross-marketing opportunity that is perfectly demographically matched.
3807 There has been much discussion at this hearing of our assets and indeed we would accept that as fair. We do however wish to point out that we are not alone on the Canadian media highway with more than one wheel on our car.
3808 In closing, we would like to clearly state for the record that we will live up to our commitment at the group licensing hearing for the full term of the Red Deer licence. Let that be clear please.
3809 We believe that the Commission has all the information and regulatory tools needed to make this decision. We trust in your judgment in making the right decision.
3810 Thank you for your time and attention and we will answer any remaining questions that you may have.
3811 THE CHAIRPERSON: Commissioner Cardozo.
3812 COMMISSIONER CARDOZO: Just two clarifications if I can. One was, on the matter of cross-culture programming we had asked you to file a definition of that.
3813 MS BELL: Would it be all right if I read it in the record?
3814 COMMISSIONER CARDOZO: Right now? Sure.
3815 MS BELL: It's very close actually to the definition that was under the ethnic policy except it would include more than one -- it would be directed at "one or more culturally or racially distinct groups other than aboriginal groups", and our interpretation is that this programming would be primarily directed at those groups but it could be of interest to non-ethnic groups at the same time.
3816 COMMISSIONER CARDOZO: So that would be a definition of "cross-cultural".
3817 Is there anything in terms of the content or the production of it?
3818 MS BELL: That would be part of that definition?
3819 COMMISSIONER CARDOZO: that would identify it as cross-cultural?
3820 MS BELL: Not in terms of how we have defined the program that we were going to produce. I don't think I would place any more --
3821 COMMISSIONER CARDOZO: Okay. And on the matter of ethnic programming, in discussion with counsel yesterday -- I'm losing track of time, it just seems like one long warp that we have been in -- you agree to a certain number of hours and languages and so forth but you said that some of it would be produced by CJNT in Montreal or OMNI or others. Could you give us a sense of -- could part of the condition of licence indicate how much would be Alberta produced ethnic programming?
3822 MS BELL: I believe we said, and perhaps I --
3823 COMMISSIONER CARDOZO: You said around half?
3824 MS BELL: Exactly. I believe that we had said that.
3825 COMMISSIONER CARDOZO: My question is could that be part of COL?
3826 MS BELL: Yes, we would accept that.
3827 COMMISSIONER CARDOZO: Okay. Because, you know, if that's one of the major benefits you are offering you would want it to be clear that Alberta producers would be --
3828 MS BELL: That's correct.
3829 COMMISSIONER CARDOZO: -- part of that.
3830 Thank you. Those are my questions, Mr. Chair.
3831 THE CHAIRPERSON: I just have a few questions to follow up with.
3832 First of all, in your oral presentation a number of us picked up -- in Ms Mawhinney's part of the presentation, a commitment that -- page 6, the fourth and fifth line, what does it mean to say:
"As part of that commitment we will further commit to commission one MOW per year out of Alberta for the remainder of the license term"?
3833 We haven't heard this before. Is this new?
3834 MS BELL: I think it's a clarification. As part of our plans going forward for the CH systems of stations we have acquired or commissioned or caused to be commissioned MOWs. We haven't specifically stated prior to now that we would make sure that one of those MOWs annually will come out of Alberta.
3835 THE CHAIRPERSON: As part of the eight distinct and different hours per week of priority. I see what you are saying. You are clarifying, call it new, call it drilling down on that commitment that as far as -- okay.
3836 Mr. Tomik, the one part of your homework you didn't do last night was to translate ratings into audience share. The reason I ask that is, as you know, the saga was you filed Schedule 13 with -- sorry, 5, marketing information with share figures and then in the responses to deficiencies you went back and forth with staff on ratings and your ratings were what you used to derive your revenues.
3837 Yesterday you undertook to break that down what you have done but you haven't related it back to share, so could you do that for me now?
3838 We have a figure of 4.6 hanging on your application.
3839 MR. TOMIK: I have got it and I think I can make it really simple for you.
3840 THE CHAIRPERSON: Okay.
3841 MR. TOMIK: Our rating point estimates of about 0.2 in the markets translates into a share of total television viewing of about 1.7 per cent in both Calgary and Edmonton. If you look at only the home stations in that market, either one, Edmonton or Calgary, that 1.7 becomes about 4.6 of the home stations, the stations that are originating in either Edmonton or Calgary.
3842 THE CHAIRPERSON: Okay. I am going to have to -- complete Red Deer for me. What is the 0.3 share in Red Deer, that rating in Red Deer, translate to?
3843 MR. TOMIK: In terms of share?
3844 THE CHAIRPERSON: Yes.
3845 MR. TOMIK: Really Red Deer -- CKRD is the only home station in the Red Deer market that transmits from their through a television station, so no matter what rating Red Deer gets it would be 100 per cent share of the Red Deer market. It's the only transmitter there or the only television station.
3846 THE CHAIRPERSON: Okay. So when you filled out that form for all persons aged two plus, weekly viewing hours, where did you clarify that that was for -- what do you call them -- home stations?
3847 MR. TOMIK: The home station.
3848 THE CHAIRPERSON: Right.
3849 MR. TOMIK: The local station, the stations that originate from the specific market. So in the case of Edmonton, for instance, you would have four stations originating here. That would be the CBC affiliate, CTV, the Global station and the A-Channel station here.
3850 The 4.6 share that we referred to for Red Deer would be a share amongst those four originating television stations there of their viewing. That does not equate to the total television viewing. That is where the 1.7 per cent share of all viewing to all channels comes in.
3851 THE CHAIRPERSON: Right. I guess I am going to have to think more about and perhaps educate myself more about what is the appropriate way to fill out this form. Are you suggesting this is the industry practice in filling out the form that the figures provided in 5.2 relate only to the Canadian stations in the market?
3852 MR. TOMIK: In most cases that is exactly what is filed, so if you have any single station market, whether it be Red Deer or Lloydminster, in Lloydminster you have two signals, but a single station market, its share of home market stations would be 100 per cent because it's the only one.
3853 THE CHAIRPERSON: Right. Okay. I am going to have to do some homework, but basically that was what your -- I am trying to just clarify what you are saying here. What you are saying here is really that you are going to get a 1.7 share.
3854 MR. TOMIK: Of all viewing, but in Edmonton and Calgary, of the originating stations there, we would be about 4.6 per cent of the originating stations for either market, yes.
3855 THE CHAIRPERSON: 4.6 of the originating stations in the market and 1.7 of all the stations that would be there.
3856 MR. TOMIK: That's correct. And the calculation for all stations would be all of the stations that are viewed in that market including Arts & Entertainment and TSN and YTV, everything that is viewable in that market.
3857 THE CHAIRPERSON: Right. When you heard the discussions going on among the other applicants regarding, for example, CH's share in Hamilton and so forth, the figure was 12 per cent that you mentioned, Mr. Tomik. What does that refer to?
3858 MR. TOMIK: That would refer to the percentage of CH Hamilton of all the stations that exist in that one market, which is Toronto-Hamilton. So that would include Citytv, that would include Global, all of the other stations that originate in the Toronto-Hamilton market.
3859 THE CHAIRPERSON: Right. So if it is a single market, why is it 12 in Hamilton and four point --
3860 MR. TOMIK: For the calculation purposes of that, that was considering only the Hamilton central market area, so we were trying to reference of the stations in that total market. CH in its own market has the 12.6 share.
3861 THE CHAIRPERSON: I see. Okay.
3862 So again, we are talking central market versus extended market?
3863 MR. TOMIK: In the case of that reference to CH, yes, if you looked at the central market performance of CH in Hamilton as opposed to central market Toronto.
3864 THE CHAIRPERSON: So I think we have to -- the lesson is you have to be -- one has to be extremely specific in asking the right questions so that you don't miss getting the right answer, right, because if you use words like "share" it can mean about how many different things, Mr. Rathan; four, six? Central, extended; what other categories would there be? Remind me.
3865 MR. RATHAN: According to the BBM there is central markets and there is central measurement areas. Just like Hamilton, there is extended markets, like the Toronto extended market also includes Hamilton, and then there are some markets that are so small they are just counties, they are made up of half a county or part of a county.
3866 THE CHAIRPERSON: But within that you are also drawing a cross-cutting distinction between originating stations and stations that are received in that market, all of which adds to may state of confusion.
3867 I may need to get more clarification as we go forward and trying to get my head around this, but --
3868 MR. TOMIK: We would be happy to give you the clarification.
3869 THE CHAIRPERSON: Yes.
3870 MR. TOMIK: As a matter of fact, not only do the shares come into play in audiences but also in revenues. You know, one of the great issues through the many hearings that a lot of us have been at is everybody is using a different base and it is something that should be looked at because --
3871 THE CHAIRPERSON: Right. And I don't want to rehearse the arguments as to why that is too low or too high here, because I am not even sure we are all speaking about the same basis and that is the concern that I have. But I will just leave that with you for the moment.
3872 Commissioner Wylie.
3873 COMMISSIONER WYLIE: Considering the context in which we were looking at this, 1.7 per cent in Calgary and Edmonton of all viewing of CKRD, give me a comparable share when we talk about the presence or the share of CHCH Hamilton in Toronto.
3874 MR. TOMIK: That would be the comparison between the 1.7 of all viewing and --
3875 COMMISSIONER WYLIE: 4.8, I think.
3876 MR. TOMIK: -- CH in Hamilton. It's 4.8.
3877 COMMISSIONER WYLIE: That's helpful to me. So 1.7 is comparable to the performance of CHCH outside of its market in the greater market if one wanted to make that comparison. And in Calgary -- okay, and CHCH Hamilton is 12.5 per cent in its own market.
3878 MR. TOMIK: That's correct.
3879 COMMISSIONER WYLIE: Because if I recall, the context was is that a good comparison or a good projection of the ability of CHCH to perform as a CKRD into Edmonton and Calgary.
3880 MR. TOMIK: You have got it.
3881 THE CHAIRPERSON: Counsel.
3882 MR. McCALLUM: Just a couple of clarifications.
3883 At page 6 of your reply comments, the same paragraph where the Chair asked for a clarification of what Ms Mawhinney said, the same paragraph, right at the end of the paragraph where it states, "We intend to broadcast six of these documentaries per year during prime time on the station", is that something that is mentioned in the application?
3884 MS BELL: No, it is not.
3885 MR. McCALLUM: Is that a clarification of an existing commitment?
3886 MS BELL: It's a clarification of the existing eight hours of priority, yes.
3887 MR. McCALLUM: So it's a refinement but something that's new.
3888 MS BELL: Correct.
3889 MR. McCALLUM: Thank you.
3890 Referring to the material that you produced I guess earlier today, and looking at the projections for CITV-TV-1 Red Deer and the notes to the summary --
3891 MS BELL: Yes?
3892 MR. McCALLUM: -- and noting what you said, that the projections for CITV represent an allocation which I think lines up with what you said in response to questions yesterday, just putting that against the annual returns that were filed for CITV-TV-1, they show I guess a value, I won't mention the number, of staff for CITV-TV-1. I assume the staff is the staff to produce the two and a half hours of local programming?
3893 MS BELL: I will ask Chris McGinley to answer that question.
3894 MS McGINLEY: And a pro-ration of the staff involved in getting that signal to air and maintenance of the transmitter.
3895 MR. McCALLUM: Are those kind of like Red Deer CKRD staff that are just kind of assigned to CITV to produce the programming for CITV?
3896 MS McGINLEY: Correct. It's an FTE. It's a full time equivalent, which means it's a combination of those individuals involved in producing the two and a half hours of programming and individuals involved in getting that signal to air.
3897 MR. McCALLUM: So this is a combination of people located in Red Deer and perhaps some located also in Edmonton?
3898 MS McGINLEY: And a small portion in Calgary.
3899 MR. McCALLUM: So the base of operation for that is CKRD for the actual studio time and then an allocation for the rest of the time. Is that it?
3900 MS McGINLEY: Correct.
3901 MR. McCALLUM: And the programming is produced in Red Deer.
3902 MS McGINLEY: Correct.
3903 MR. McCALLUM: And vis-à-vis the revenue, it again shows a value for local time sales and national time sales. And relating that also to the projections that you have filed, if I heard you right yesterday this is like 12 -- it's an allocation of 12 per cent of all of CITV's revenues, and that is how you calculated the projections for CITV-TV-1 Red Deer. Is that a correct understanding?
3904 MS McGINLEY: That is correct.
3905 MR. McCALLUM: Thank you.
3906 Thank you, Mr. Chair.
3907 THE CHAIRPERSON: Commissioner Cardozo.
3908 COMMISSIONER CARDOZO: Sorry. One more quick "yes" or "no" answer/question.
3909 On page 4 where you talk about the focus on Red Deer, you are responding to some of the concerns that the Red Deer programming would reflect Edmonton and Calgary, the last part of that main paragraph, "we would be prepared to ensure", et cetera, et cetera, would you be willing to accept that as a condition of licence?
3910 MS BELL: Yes.
3911 COMMISSIONER CARDOZO: Okay. Thank you.
3912 THE CHAIRPERSON: Thank you very much.
3913 Mr. Secretary.
3914 MR. LABEL: Thank you, Mr. Chairman.
3915 I will now ask CHUM Limited to respond to interventions at this time.
3916 THE CHAIRPERSON: Whenever you are ready.
REPLY / RÉPLIQUE
3917 MR. SWITZER: Thank you, Mr. Chair.
3918 Mr. Chair, Madam Vice-Chair, Members of the Commission. Before I begin, we would very much like to thank all of those as well who intervened for us in support of our applications, more than 1,000 Albertans, in writing, and those who appeared today in front of you.
3919 If you allow me just a couple of seconds to give a special thank you to two intervenors who had asked to attend and who were not able to stay. I know their interventions remain on the record. They are representatives of the aboriginal community, Mr. Murray Jurak on behalf of Dreamspeakers Aboriginal Film Festival and GlobalVision Films Festival, and Trevor Gladue on behalf of the Métis Nation of Alberta. We thank them very much for their encouraging support.
3920 For the record, my name is Jay Switzer, President and CEO of CHUM Limited and if it's appropriate I will quickly introduce the panel here again.
3921 On my left, Sarah Crawford, Marcia Martin, Peter Miller, Stephen Tapp. Behind me, Tanya Cappo, Priti Obhrai, Richard Gray, Prem Gill, David Caporicci and David Kirkwood. On the side table, I don't want to get it wrong here, Peter Palframan, Hans Jansen, David Balcon and Rick Davies.
3922 We would now like to comment on two general categories of issues raised by the incumbent intervenors during the proceeding.
3923 One, that economic harm would outweigh any benefits to viewers and the system, and two, the allegation that our services would not be distinct and different.
3924 As to the economic issues. The incumbents have contented that approval of our applications would have an undue economic impact on their respective stations and companies. Both Global and CTV have argued that new stations would have a serious impact on their existing operations in Alberta.
3925 The reality is the net effect of the proposed stations would amount to somewhere around 1 per cent of these companies' current revenues, hardly a serious impact, which leaves the contention of Craig that it will lose $150 million should these applications be approved.
3926 In their appearance this afternoon, suddenly these numbers became $88 million. We note that Craig was still able to secure $145 million in new capital just three months ago. It is inconceivable that Craig could have raised this capital without investors being convinced of their ongoing viability in the event of the licensing of new stations in Alberta.
3927 Craig has expressed concern about the enormous threat posed by the possibility of CHUM taking back programs that licenses to A-Channel. We must respond to this and to questions raised about program difference between our proposal and existing service in Alberta with A-Channel.
3928 We spoke yesterday when asked about programs not seen in the market and listed programs available that were not seen on existing Canadian stations in Alberta and we have filed a table with you this evening.
3929 These are programs as examples that we could draw upon and it was never intended as a list of programs in their entirety that would air. Citytv Vancouver and Toronto have a small amount of important simulcast programming, approximately three or four hours per week.
3930 We specifically designed our Alberta proposals to be complementary to service in the province on CTV, CanWest and Craig.
3931 When A-Channel launched, they had six or seven films in prime each week, but in recent years, they have moved their schedule away from movies and more towards a traditional series and sitcom format with some movies.
3932 When we prepared our application, we had two or three years of practical relevant evidence and the ability to look at A-Channel schedules to help guide our initial construction of a schedule that could be complementary.
3933 In the past two years, as A-Channel moved away from a movie format, they have telecast U.S. networks simulcast sitcoms and series such as "Yes, Dear", "King of Queens", "JAG", "Providence", "Dateline", "24", "60 Minutes", none of which were licensed from CHUM.
3934 We also note their move into U.S. network football and baseball and basketball and world series, much of which, we understand, will play in Alberta. We have no sports on our Citytv stations.
3935 Perhaps more importantly, we have been put on notice by Craig Broadcasting in several meetings since the Toronto licensing decision, of their intent to license much less from us in the future, and that after one transition year, a likelihood that they will not require programming from us in the future after the 2003-2004 season.
3936 We worked constructively with them this year to provide them with our best available programming and they did select some programming for this fall.
3937 Just recently, after the filing of our applications here in Alberta, they have changed their mind and have now told us they might have some future need for some of our programming.
3938 We find it ironic that their 2003 schedule takes a complete 180 degree turn and returns to movies after a three-year evolution into more series.
3939 To respond to questions raised about overlap in Toronto earlier today, we find it interesting that the launched schedule for Toronto One this coming fall has six movies in prime time, five per week and then a sixth after football ends while their application schedule had no movies in prime time. They suggested today their Toronto One schedule was different to service in the market. Citytv has movies every night of the week in prime time, and has had so for more than 20 years.
3940 Even in daytime, Craig has conveniently skipped a few issues. Their application for Toronto showed diversity of children's programming each morning, Monday to Friday, and talked about their experience and history with kids' programming in Alberta. However, we notice in their Toronto One launch schedule, instead of children's programming weekday mornings we see a new competitive morning show, two hours each morning directly competitive with our long-standing morning show.
3941 Craig has conveniently skipped over major areas of difference. We have committed to four hours of local non-news programming in the heart of prime in our Alberta applications. A-Channel has no non-news programming in the heart of prime, and by that I mean 7:00 to 11:00.
3942 We have several multicultural, cross-cultural and aboriginal programs in the heart of prime. A-Channel has none in the heart of prime. We have committed to a minimum of four of our eight hours of priority in the heart of prime to be drama. A-Channel does not have this commitment and could fill their priority needs with additional non-drama programming.
3943 In short, we specifically constructed our proposal to be complementary to existing services and we refined, improved, and shaped our proposal in response to research, feedback and broad-based community consultation.
3944 Next, we believe that our revenue projections are reasonable. We also believe that our estimates for market growth are reasonable. Bay Consulting has estimated market growth at an annual average rate of 3.3 per cent. CTV forecasts estimate a compound annual growth rate of 3.1 per cent and this is without the impact of the proven stimulative effect of adding a station in the market.
3945 Alberta has the most robust and thriving economy in the country. Growth projections are bright for the foreseeable future. The higher margin of station profitability that the province historically enjoyed has now returned. Yesterday CanWest pointed out the fact that tuning to Alberta conventional stations has declined by 27 per cent since 1996. What they failed to point out is that revenues to conventional stations in the province during the same time period increased by 26 per cent, approximately $40 million.
3946 We believe that our estimates regarding the proportion of revenues from existing broadcasters is reasonable and we have filed this evening with you a breakdown of our 50 per cent model.
3947 With revenue of $22 million in our second year of operation, our impact on incumbents will be $11 million at most. This results in an effect on Craig of $2.5 to $3.8 million in the second year of operation. But even this overstates the impact. Given the close to 6 per cent revenue growth the market will experience in both 2003 and 2004, the incumbents still share no less than $195 million in revenue calculated from the $212 minus our $17 million, well above the 2002 revenues of $187 million, and almost as high as 2003 revenues of $198 million.
3948 As to multi-station ownership, as we confirmed with you during Phase I, ACCESS is not a conventional television station. It is the provincial educational authority. ACCESS is a unique public/private partnership that has ensured the future of educational television in this province. ACCESS operates under different rules than a conventional television station and while it has some commercial revenue, it has no appreciable impact on advertising sales. In this market, its revenues comprise just 1 per cent of the total revenue in the province.
3949 Clearly the granting of these applications would not give CHUM any competitive advantage.
3950 We respectfully suggest that approval of these applications fall within the Commission's policy, a policy which, despite what you heard today, continues to serve Canadians well.
3951 A number of intervenors, CTV in particular, have drawn parallels with other licensing scenarios, including your most recent Toronto decision. By every measure except one, current PBIT margins, the conditions in Alberta that support licensing today are as strong or stronger than those prevailing in Toronto and the Commission granted new licences there.
3952 We could look at share of market revenue. The Commission noted that the combined total revenues for the Toronto-Hamilton market was estimated at $530 million in 2001. Out of this, the two licences granted projected second-year revenues of $51 million, or 9.6 per cent of this total, and seven-year revenues of $85 million, or 14.2 per cent of the market.
3953 CHUM's revenue projections for the second year of operation stand at $22 million, or 9.9 per cent of the total market served, and growth of $38.6 million, or 14.7 per cent of the market served.
3954 We can look at GDP growth rates. At the time of the Toronto hearing, the Conference Board of Canada was predicting that real GDP growth for Toronto would increase from 1.2 per cent in '02 to 4.3 per cent in '03, with an average of 3.5 per cent for the succeeding three years.
3955 The Conference Board has predicted real GDP growth for Alberta at 5.5 per cent this year and 4.9 next year. The outlook for the next three years for Calgary and Edmonton combined will be 3.6 per cent.
3956 There are other economic indicators. The Commission stated in Toronto, and I quote, that:
"Recent population growth rates in the area have been among the highest in Canada."
3957 The Calgary-Edmonton corridor has enjoyed the highest growth rate in the country. The Commission cited the fact that personal income per capita for the Toronto CMA is about 16 per cent higher than the Canadian average. The average income for Alberta is 12 per cent higher than the national average, while Calgary is 26 per cent higher.
3958 Retail sales in Toronto were projected to grow at an average annual rate of 4.5 per cent. Retail sales in Calgary and Edmonton combined are projected to grow an average annual of 5.2 per cent through '07.
3959 We can look at system reach. In Toronto, the Commission cited:
"The fact that existing licensees are major broadcasters makes them well positioned to compete."
I hope I quote accurately.
3960 Two of the three incumbents in Alberta are the largest broadcasters in the country. The third will be launching in Toronto in a matter of months.
3961 National programming costs. Unlike in Toronto given that CHUM already has national rights to programming to be aired in Alberta, there will be no upward pressure on U.S. program costs with the licensing of new CHUM stations here.
3962 As to diversity and choice, the case for more TV choice and diversity in Alberta is far more compelling than in Toronto.
3963 In respect of PBIT margin, it is obvious that the losses incurred by a new entrant in the first couple of years will drag the market average down. This can be seen in the decrease of PBIT margins in this market from 19.1 per cent in 1997 to 9.6 per cent in 1998, the year Craig launched.
3964 Since then the market has been influenced by the consolidation and ownership of CTV, the purchase of WIC by CanWest, but by 2002 the average market PBIT margin had returned to 11.2 per cent, 2 per cent higher than the national average. This has also been noted by CTV.
3965 CTV's own projections suggest PBIT margins will climb to 14.2 per cent in '04 prior to the launch of our stations and never goes low as the 6.7 per cent recorded in 1999. But CTV's projections assume only 4.2 per cent and 2.9 per cent growth in '03 and '04. Our projections of 6 per cent growth this year and 5.8 in '04, combined with more reasonable growth and expenses, yield a projected PBIT margin closer to 16 per cent in 2004 prior to launch, much closer to the levels noted by CTV in previous licensing rounds.
3966 Approval of these applications will allow us to regain and improve the ability to amortize programming costs in Alberta. Far from overreaching, the proposed new stations in Alberta will help ensure ongoing viability and secure a solid base for our company to continue to make significant contributions to the broadcasting system.
3967 In conclusion, the applications we have put before you make significant commitments to local and regional programming, the reflection of Edmonton and Calgary's increasing cultural diversity, Alberta independent production and priority programming, particularly drama, commensurate with local needs, and CHUM's emergence as a large station group.
3968 Almost all of the reasons cited by the incumbent intervenors to deny these applications are issues that have always affected the Canadian broadcasting industry, from fragmentation of audiences through shifting viewer patterns, to insufficient funding. None of these issues are unique to Alberta, and while they may be real, our system continues to grow and develop despite them.
3969 The incumbents in the province are successful and seasoned broadcasters with a proven capacity to face competition head on. Their arguments are protectionist, their purpose to preserve the status quo. They suggest that licensing in Alberta should not happen at this time. The economy of the province is booming. The citizens of the province want and deserve more choice. The producers in the province are solidly behind these applications and we respectfully suggest that there will never be a better time to introduce new responsive, reflective service than now.
3970 That concludes our comments, Mr. Chair. Of course, we would be happy to answer questions.
3971 THE CHAIRPERSON: Thank you.
3972 COMMISSIONER WYLIE: Mr. Switzer, I think you have some people here from ACCESS. The question of simulcast by ACCESS was raised in the argument that licensing CHUM would indeed require an exception from the one market in one language.
3973 Does ACCESS actually simulcast and, if so, how much?
3974 MR. SWITZER: My understanding is it has the right to simulcast. I don't believe it has used it, or used it in anything other than an incidental way.
3975 COMMISSIONER WYLIE: What does "incidental" mean?
3976 MR. PALFRAMAN: Madam Vice-Chair, ACCESS has simulcast a limited number of programs. I don't have the exact numbers, but I can get back to you with that.
3977 COMMISSIONER WYLIE: Do you have anything closer to a ballpark figure than "limited"?
3978 MR. PALFRAMAN: Maybe at most an hour, maybe two out of the month.
3979 MR. SWITZER: It's certainly not per week. We are talking on the order of one hour per month.
3980 COMMISSIONER WYLIE: One to two hours per month. If that answer is incorrect, you can correct it.
3981 MR. PALFRAMAN: That's right.
3982 COMMISSIONER WYLIE: Thank you.
3983 THE CHAIRPERSON: A few things I would like you to comment on that were raised by intervenors. I have three or four.
3984 One was the suggestion by one of the intervenors that the 6 per cent figure was overstated for the growth in 2002 for the current year because although the first six month figures from TVB were accepted, that experience since that six-month period has been tailing downward and, therefore, a figure of 5 should be used rather than 6.
3985 Do you have any comment on that?
3986 MR. SWITZER: I will begin and Mr. Kirkwood can add details.
3987 The actual factual current information that we have, I believe, is for the first seven months and it's closer to 7 per cent.
3989 MR. KIRKWOOD: Everyone's experience is different. Our conventional channels are still pacing, as they did in the first half or the second half. Also the word on the street is that CanWest and CTV are asking for double-digits rate increases this fall. So whatever they consider is affecting now will have passed by then.
3990 THE CHAIRPERSON: And you yourselves aren't experiencing anything that would cause you to come off that figure.
3991 MR. KIRKWOOD: Not on the conventional front.
3992 THE CHAIRPERSON: But the 7.8 figure you gave me was for the first six months, as I recall.
3993 MR. KIRKWOOD: It's up until the end of March. I believe March is the seventh month, but --
3994 THE CHAIRPERSON: So it was seven months, and that was 7.8. Since that time, what would you say you are running at?
3995 MR. KIRKWOOD: Our own increases over the last year may not be the same -- they may actually be a little better.
3996 THE CHAIRPERSON: They may be a little better, but the industry figures -- the last you have is end of March for industry-wide.
3997 MR. KIRKWOOD: And our casing for our own stations seems to be continuing --
3998 THE CHAIRPERSON: The other thing, CTV at page 10 of their oral presentation, they were making the point about Canadian programming expenditures as a result of Craig's entry into the market here and said that although Craig had projected $10.7 million, in fact the market only increased by about $3 million, in the market the year that Craig stations were introduced.
3999 Do you have any comment on that? They said the percentage of revenues spent on Canadian programming actually decreased in 1997 and 2002.
4000 MR. SWITZER: Mr. Chair, we are just trying to make sure that there is no condition of licence on their licence that involves any percentages because we can't understand, given their ongoing commitments and productions, why that percentage would go down. They are clearly, based on everything we have heard today and yesterday, committed to ongoing production and we didn't understand -- and perhaps it is just a case of confusion -- that CTV reference.
4001 THE CHAIRPERSON: Right. It's a good question. I don't know whether this refers to the market as a whole or not, but I suspect it's Craig because it's dollars they had projected. That's what I took it at on first glance the way you did.
4002 So you have no particular comment on that or on the general point about declining Canadian program expenditures as a result of new stations in the market.
4003 MR. SWITZER: That's a great opportunity. I will try to keep my comments brief.
4004 We tend to, as we go through our budgeting process, lay down the groundwork, and we are doing that now for next year, for all our in-house programs first, then our commissioned programs from independent Canadian producers across the country, across all of our channels, and then finally fill in the gaps with U.S. acquisitions.
4005 We are challenged as prices climb on the U.S. side, and there have been some suggestions that that will, as the model rolls out, put more pressure on what many other broadcasters consider to deal with "what's left". We don't work that way and regardless of the flex in the foreign or acquired part of our business, we continue to grow and build both our in-house news and non-news, commissioned, drama, feature films.
4006 If we are making commitments here today, and other broadcasters clearly have commitments to this market, we just have to believe they have to figure out a way to make it work.
4007 THE CHAIRPERSON: Turning to the intervention of Craig, I don't know whether you heard them say that based on your revised figures in your reply which you filed, that if they lost $36 million over the seven years that would be more than half of their operating income for the seven-year period and that, obviously, is from their point of view a very serious impact.
4008 Do you have any comment on that?
4009 MR. MILLER: We made that comment as a rebuttal specifically to their $150 million point and we made it, as you know, in the context of pointing out that the gains from the licensing of Toronto One would counteract any impact this way.
4010 We also indicated, however, today that that kind of model is a bit awkward because it assumes, of coursed, no one does anything and the market doesn't change. What we noticed today in our statement is that when you actually look at the projections, given the growth over the next two years, in effect the incumbents won't lose any revenue from what they currently have in 2002 and will almost not lose any revenue from what they will achieve in 2003.
4011 So these kinds of impacts, while they give some indication and can add up to large numbers, they are, at the end of the day, perhaps not the best indication of what will in fact happen in the market because even, as CTV alludes, incumbents wouldn't sustain these kinds of losses. There would be changes and growth that would compensate.
4012 THE CHAIRPERSON: I'm not sure I follow your point. I thought that you used the term -- I am reading from your page VI of the appendix to your reply where you say that the loss to Craig over the seven-year period would be $24 to $36 million. What did you mean by a "loss" then --
4013 MR. MILLER: What we are suggesting is if you want this kind of analysis of trying to project year by year what the loss would be, that is what it would be, 24 to 36.
4014 THE CHAIRPERSON: Right.
4015 MR. MILLER: What we were suggesting in our opening statement though, and what even CTV suggested, is that at the end of the day that is not a realistic look at what happens because what happens is they are adjustments to the operation of the incumbents. If their revenue does not grow as much as they would have expected, they obviously ensure that their expenses don't grow as much and so --
4016 THE CHAIRPERSON: I see. You are saying they can take countermeasures in the face of that.
4017 MR. MILLER: Exactly.
4018 THE CHAIRPERSON: Right, but on the raw analysis of figures they could otherwise have anticipated superimposing this, you are essentially saying they would lose 24 to 36, to which they would have to react in the way you are suggesting.
4019 MR. MILLER: Yes. If there was absolutely no --
4020 THE CHAIRPERSON: I understand that dynamic, yes. So those are the magnitudes, and I take you comment there.
4021 Finally, you mentioned -- I wrote down your phrase, Mr. Switzer: "Proven stimulative effect" and, of course, we have had many people here before us who suggest that there ain't no such proof. That is a general point.
4022 In particular, I would appreciate it if you could have somebody take me through this very interesting exhibit you filed on how you, I guess, justify your 50 per cent figure for impact on existing broadcasters in the market.
4023 MR. SWITZER: Of course, Mr. Chair.
4024 Mr. Miller will begin.
4025 MR. MILLER: First of all, this chart is just one measure and it was produced in response to the suggestion that there is no evidence of an increase or a stimulation in Alberta, and in particular it was the CTV evidence.
4026 What we have done here is we have taken the corridor growth projections that were experienced from 1997 to 2002 and then compared that growth with the national average from the rest of Canada and demonstrated that when you compare what the rest of Canada performed to what the stations in the corridor there is a difference which varies over the years, but if one was to take an average of that, it demonstrates that the excess, if you will, in Alberta growth over the rest of Canada accounts for roughly 50 per cent of Craig's revenue.
4027 THE CHAIRPERSON: Right. So what you are saying is that there is a rest of Canada line, and because Calgary and Edmonton grew faster than that, the difference between the revenue growth in Calgary and Edmonton, subtract it from where it would have been if it had just followed the trajectory of Canada increase, is the excess in the market.
4028 But I guess to do that, wouldn't you have to look at other markets as well and you might find --
4029 MR. MILLER: This was just one particular measure that specifically we developed in response to that suggestion you heard today that there was no proof of a stimulative effect.
4030 THE CHAIRPERSON: Right.
4031 MR. MILLER: Obviously this analysis you can only take so far, but what it does, we submit, is suggest that there is some evidence of a stimulative effect.
4032 The other thing that Mr. Kirkwood could allude to, because there has been some discussion of Vancouver, again we think the evidence of what happened in Vancouver demonstrates also a clear simulative effect based on the numbers that we are now seeing in terms of revenue growth there in Vancouver.
4033 THE CHAIRPERSON: Like so many of these, if you did other comparables and took other markets where there had not been a new licensee, you might well have found that there would be a "stimulative effect" of simply a buoyancy on the market for whatever reason and you haven't done that.
4034 So you have taken the Canada average line and measured against that.
4035 MR. MILLER: We have taken the rest of Canada to show that there is some evidence of some stimulative --
4036 THE CHAIRPERSON: The rest of Canada. So, in other words, all of Canada less Calgary and Edmonton.
4037 MR. MILLER: Precisely.
4038 THE CHAIRPERSON: I think I have that. Those are my questions.
4039 Commissioner Cardozo.
4040 MR. MILLER: Could I have Mr. Kirkwood --
4041 THE CHAIRPERSON: Sorry.
4042 MR. KIRKWOOD: It has been raised a number of times and I think first that the stimulative effect may not happen every time a new station is launched into a market, but if there are certain preconditions there, I think it's more likely and the preconditions, we believe, are there for Calgary because we have spoken, and others have too, of limited avails, of very rapidly raising rates and people drifting away from television advertising.
4043 That was very much the case in Vancouver. In fact, Bruce Grondin, the President of Media Edge Agency, has described it as the "Vancouver effect", where out there they told advertisers, CMDC told broadcasters, "If you don't do something about your rates, we are going to find alternatives". We launched in that year -- there were other market conditions. We spoke of a 5 per cent GDP growth the year before we went in. Unfortunately, we launched in a zero year.
4044 But what people haven't raised is the fact that in this year it has gone up 15 per cent, again with that seven months to date number. Fifteen per cent takes them up $33 million, which is higher than it has ever been before. As I said I think before, we can't take all the credit for that, but I believe that there is evidence of some kind of stimulative effect if that was able to happen with more stations in the market. We have more advertisers back on the plan.
4045 THE CHAIRPERSON: Thank you.
4046 Commissioner Cardozo.
4047 COMMISSIONER CARDOZO: Thank you, Mr. Chair.
4048 A couple of issues. The matter of movies on the ACCESS channel, some of the comments or the suggestions were a bit troubling because they do take you well beyond the educational authority focus. The Arnold Schwarzenegger Film Festival is mentioned this weekend which makes me so glad I am here this weekend.
--- Laughter / Rires
4049 COMMISSIONER CARDOZO: I watched last night in an attempt to get local flavour on television ACCESS Television and saw a sort of slouchy older Hollywood movie -- not very old, but not an educational authority type of movie. So you do the educational authority stuff and then some more.
4050 Could you give me a sense of the type of movies you do run and how they would be different from movies you would run on Citytv if you were licensed?
4051 MR. SWITZER: Of course, Commissioner.
4052 It's hard for me to do justice because this is Ron Keith's life. This is what he lives. He is the President of ACCESS and I think he is here in the room.
4053 COMMISSIONER CARDOZO: I understand that, but the point for us is --
4054 MR. SWITZER: Perhaps I can explain it. Every program ACCESS runs is in an educational context -- every drama, every movie. Every movie that runs is run in a connected way to a curriculum programming, to an institution that is using that movie as part of a degree granting experience.
4055 I am probably not using the right words, but there is a complete 100 per cent connection between every movie that runs in terms of its context, the set up, the introduction by university professors, the discussions at the break, the way the films are promoted and discussed afterwards.
4056 These are not just films slapped on air. These are part of an ongoing education program with institutions in Alberta connected to film studies and literature and all kinds of other wonderful things. Students are getting credit to universities, Athabasca and others, as part of various programs. Every single film that runs is connected to an institution program.
4057 COMMISSIONER CARDOZO: Including the Schwarzenegger movies?
4058 MR. SWITZER: Yes, absolutely.
4059 MR. PALFRAMAN: Commissioner Cardozo, perhaps I could just add to that as well because this is a really important point and it's a point that provincial educational broadcasters have been making for probably 25 or 30 years.
4060 The fact is that those movies are all connected to formal courses of studies. It might be the film studies at the University of Alberta. It might be the studies of the history of popular culture at Athabasca University. Those movies are all part of the required reading, if you like, and are listed in the curriculum for each of these courses. They very much are linked and part of the formal course of study.
4061 Most of those movies are actually selected by the professors that run those programs. They generally are done in conjunction with the programming people at ACCESS.
4062 We provide them with lists of movies and many times they will have the movies already in their mind. The Schwarzenegger movie is probably a pretty good example. If you are studying movies, or if you are doing film studies, or if you are studying the history of popular culture, those movies are part of that study. You are not going to be able to do film studies or understand the history of popular culture without studying those movies.
4063 As Jay indicated, it's very clear in terms of the production and, in fact, it's probably one of the reasons why some viewers don't watch those movies on ACCESS because there is an educational component to it. So obviously --
4064 COMMISSIONER CARDOZO: But every movie could meet that criteria. Every single movie could meet that criteria.
4065 MR. PALFRAMAN: Absolutely.
4066 MR. SWITZER: TVOntario in Ontario has been running movies like that.
4067 MR. PALFRAMAN: "Saturday Night at the Movies" was the pioneer.
4068 MR. SWITZER: Twenty-five years. There are study guides, there are materials, there are connections to programs of media literacy. There is cross-supported programs like "Scanning the Movies" that are connected to the contents of those movies. It's quite an extraordinary program. We don't believe that educational broadcasting has to be boring. It's reaching students in Alberta and terrific programming.
4069 COMMISSIONER CARDOZO: So Mr. Fecan's wish came true then that he helped the Schwarzenegger movies as part of an educational course.
4070 On editorial voice, do you have editorial voice on ACCESS in the context of there being two -- if you were licensed in each city you would have an editorial voice with the news programs and --
4071 MR. SWITZER: It has not been an issue, Commissioner, because there is no news, no traditional news, I believe, still Category 1A on ACCESS.
4072 COMMISSIONER CARDOZO: And current affairs?
4073 MR. SWITZER: No.
4074 COMMISSIONER CARDOZO: Okay.
4075 The other matter I just wanted to quibble over a couple of things on the definition that you filed on cross-cultural programming.
4076 The definition deals with four issues. The first is target audience, and I accept here that you have developed it from the type E, ethnic programming definition. But my sense of it is it wouldn't be focused on any one group. It would be, for the most part, for the general population.
4077 MS CRAWFORD: That's right. We did use that as a base, and we specifically designed it to reach that certain cohort that we were speaking about earlier that is cross-cultural and not focused towards one specific community.
4078 COMMISSIONER CARDOZO: Okay. The subject matter is then specifically designated to reflect, et cetera.
4079 The third issue raised in the third sentence is the genre or the format, programs to be educational, informational and entertainment based. It's the last point I just want your thoughts on where you talked about -- I would say you have four indices here starting with the word "written" which is written, produced, presented or introduced, the third, and feature people from cultural, diverse and/or aboriginal communities.
4080 The way that sort of reads is it could be just one of those and it would meet the criteria. Shouldn't it be more than just one of those four things?
4081 MS CRAWFORD: It is more and I am going to let my colleague, Marcie, who is in charge of our production talk about them, and Prem, based on personal experience might want to add, but the notion behind this was that it would be inherently unique to the local markets because by definition it would have local people covering the local scene --
4082 COMMISSIONER CARDOZO: I want to be more specific than notions because we really at this point just tying down, if you were licensed what would we put in the decision.
4083 MS CRAWFORD: Yes.
4084 MS MARTIN: Maybe I can give you some examples of shows that we have in the schedule that would help define that.
4085 COMMISSIONER CARDOZO: I want to stop you there because I just wonder if you could just tell me, of those four indices, would you say at least two of those indices?
4086 MS MARTIN: Yes. It could be even more. I mean we are going to be putting people in those positions from Alberta, and that will be made up of a diverse mix of people. So it could be more than that.
4087 COMMISSIONER CARDOZO: So my question just specifically, those last four indices, it would have to be more than one of those indices.
4088 MS MARTIN: Yes.
4089 MS CRAWFORD: We are definitely looking at two or three, or probably all of them and that's definitely the way the current model of the programming works now.
4090 COMMISSIONER CARDOZO: You had a couple of and/or's there and I thought that we had read that if it was just one of those things then it would --
4091 MS CRAWFORD: It maybe needs a clarification in the way we --
4092 COMMISSIONER CARDOZO: The point, as the Vice-Chair raised yesterday, is if so much of your stuff is culturally diverse, how is this going -- what bar is going to be higher than all the rest of the stuff or more specific than the rest of the stuff.
4093 MS CRAWFORD: Yes.
4094 COMMISSIONER CARDOZO: That answers my question. Thank you.
4095 Sorry to cut you off, Ms Gill, unless there was anything you wanted to add?
4096 Thank you.
4097 MR. PALFRAMAN: Commission Cardozo, I wonder if I could raise the issue of movies on ACCESS. I just want to correct one other issue that was put on the record that is actually not correct. That is that in prime time on ACCESS more than 25 per cent of the time is allocated to programming from Alberta Learning which is the Ministry of Education in Alberta.
4098 In that time, as you know, no advertising can be sold. So the characterization that all of prime time is a hot property on ACCESS, in fact, is not quite the case.
4099 COMMISSIONER CARDOZO: Mr. Palframan, what I am trying to understand is how you simulcast the professor?
4100 MR. PALFRAMAN: Well, we have some very good professors.
--- Laughter / Rires
4101 MR. PALFRAMAN: And we are working on that. That must be a transfer of content the other way.
4102 THE CHAIRPERSON: Thank you very much.
4104 MR. McCALLUM: Just one aspect. I wondered if you would respond to -- I think it was what Mr. Fecan said earlier today in his intervention. He said, referring to CHUM and referring to ACCESS, and referring also to the recent renewal decision of ACCESS where they were given the ability to sell additional commercial minutes, and Mr. Fecan said that perhaps a 70 per cent test, the 70 per cent audience test, may well have been crossed by CHUM as a result of that.
4105 Could you comment on that?
4106 MR. SWITZER: Counsel, could you repeat the 70 per cent question? I just want to make sure we have it accurate here.
4107 MR. McCALLUM: The 70 per cent test for being considered a large station group, and Mr. Fecan suggested that CHUM may well have crossed that threshold as a result of the recent renewal of ACCESS and the granting of the ability to sell additional commercial minutes.
4108 MR. SWITZER: I understand now.
4109 Go ahead, Peter.
4110 MR. MILLER: Certainly, as an educational broadcaster ACCESS does not fit within the policy of the Commission in terms of multi-station ownership and, therefore, cannot be counted towards a 70 per cent level.
4111 I think, while we are on the subject, it's also worth noting there is a certain analogy, I suppose, between ACCESS and ethnic broadcasting where the Commission has recognized that ethnic broadcasters need commercial time and revenues to cross-subsidize their ethnic programming.
4112 In none of the decisions that we have seen the Commission consider, either in the licensing of two ethnic stations in Toronto or the "multiple licence ownership" of CJNT and Global Québec, did the issue of dual station ownership ever arise.
4113 So what we face here, of course, with ACCESS is a unique situation because ACCESS is the only private educational broadcaster. But basically it's clearly not part of the policy, and moreover approval of our applications would actually further the policy objectives of diversity and increased editorial voices.
4114 MR. McCALLUM: Thank you, Mr. Chair.
4115 THE CHAIRPERSON: Commissioner Wylie.
4116 COMMISSIONER WYLIE: Mr. Miller, the examples you gave don't fit the one language in the same market when you talk about ethnic broadcasters.
4117 MR. MILLER: They don't fit the one language in the same market --
4118 COMMISSIONER WYLIE: Which is crucial, isn't it? It's core to the policy.
4119 MR. MILLER: I accept that, yes.
4120 THE CHAIRPERSON: Thank you very much. I will turn it over to the secretary who will now guide us through the shoals of existing the hearing.
4121 MR. LEBEL: Thank you, Mr. Chairman.
4122 There are three non-appearing applications on the agenda of this public hearing. Interventions were received on those applications. The Commission will consider these interventions along with the application and decisions will be rendered at a later date.
4123 This completes the agenda of this public hearing, Mr. Chairman.
4124 Thank you.
4125 THE CHAIRPERSON: Thank you very kindly.
4126 Goodnight, everyone.
--- Whereupon the hearing concluded at 2025 /
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