ARCHIVÉ -  Transcription

 

 

 

 

 

 

              TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

 

 

 

 

             TRANSCRIPTION DES AUDIENCES AVANT

                CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

                          SUBJECT:

 

 

 

VARIOUS BROADCAST APPLICATIONS /

PLUSIEURS DEMANDES EN RADIODIFFUSION

 

 

 

 

 

 

 

 

 

 

 

 

HELD AT:                              TENUE À:

 

Embassy Suites Hotel                  Embassy Suites Hotel

Rooms A/B/C                           Salons A/B/C

6700 Fallsview Boulevard              6700, boulevard Fallsview

Niagara Falls, Ontario                Niagara Falls (Ontario)

 

 

June 6, 2005                          Le 6 juin 2005

 

 

 

 

 

Transcripts

 

In order to meet the requirements of the Official Languages

Act, transcripts of proceedings before the Commission will be

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

and staff attending the public hearings, and the Table of

Contents.

 

However, the aforementioned publication is the recorded

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

either of the official languages, depending on the language

spoken by the participant at the public hearing.

 

 

 

 

Transcription

 

Afin de rencontrer les exigences de la Loi sur les langues

officielles, les procès‑verbaux pour le Conseil seront

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

membres et du personnel du CRTC participant à l'audience

publique ainsi que la table des matières.

 

Toutefois, la publication susmentionnée est un compte rendu

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

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

officielles, compte tenu de la langue utilisée par le

participant à l'audience publique.

               Canadian Radio‑television and

               Telecommunications Commission

 

            Conseil de la radiodiffusion et des

               télécommunications canadiennes

 

 

                 Transcript / Transcription

 

 

                             

              VARIOUS BROADCAST APPLICATIONS /

            PLUSIEURS DEMANDES EN RADIODIFFUSION

                             

 

 

 

 

BEFORE / DEVANT:

 

Charles Dalfen                    Chairperson / Président

Barbara Cram                      Commissioner / Conseillère

Richard French                    Commissioner / Conseillier

Rita Cugini                       Commissioner / Conseillère

Stuart Langford                   Commissioner / Conseillier

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Chantal Boulet                    Secretary / Secrétaire

 

James Murdock                     Legal Counsel /

                                  Conseiller juridique

 

Steve Parker                      Hearing Manager /

                                  Gérant de l'audience

 

Pierre Lebel

 

 

HELD AT:                          TENUE À:

 

Embassy Suites Hotel              Embassy Suites Hotel

Rooms A/B/C                       Salons A/B/C

6700 Fallsview Boulevard          6700, boulevard Fallsview

Niagara Falls, Ontario            Niagara Falls (Ontario)

 

 

June 6, 2005                      Le 6 juin 2005

 

           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

PHASE I

 

 

PRESENTATION BY / PRÉSENTATION PAR:

 

 

TVN Niagara Inc.                                    5 /   22

 

 

 

PHASE II

 

 

INTERVENTION BY / INTERVENTION PAR:

 

 

Robert Tanos                                      130 /  606

Welland/Pelham Chamber of Commerce                141 /  682

LOADD Studios                                     145 /  706

Jack Miller                                       156 /  766

BrockTV                                           162 /  794

Richard Sasse                                     169 /  827

Québecor Média Inc.                               175 /  857

Seven Seeds Indigenous Productions &              199 /  993

  Communications

Rogers Media                                      220 / 1112

City of St. Catherines                            245 / 1273

Jaqueline Angi-Dobos                              251 / 1303

Binational Tourism Alliance                       255 / 1323

Niagara Economic and Tourism Corporation          259 / 1345

Brian E. Purdy                                    264 / 1374

CHUM Limited                                      273 / 1434

CTV Television Inc.                               304 / 1618

Lionel M. Baum                                    329 / 1782

CanWest Mediaworks                                337 / 1834

 

 

 

PHASE III

 

 

REPLY BY / RÉPLIQUE PAR:

 

 

TVN Niagara Inc.                                  355 / 1954

 

     Niagara Falls, Ontario / Niagara Falls (Ontario)

‑‑‑ Upon commencing on Monday, June 6, 2005, at 0935 /

    L'audience débute le lundi 6 juin 2005 à 0935

1                THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.

2                I trust there's seating for everyone around the room.  If you can be seated that would be appreciated.  Thank you.

3                Good morning, ladies and gentlemen.  Bonjour, mesdames et messieurs.

4                Bienvenue à cette audience publique.  Welcome to this public hearing.

5                My name is Charles Dalfen and I'm Chairman of the CRTC.  I will be presiding over this hearing along with my colleagues.  To my immediate right is Richard French, Vice Chair, Telecommunications, and to his right, Barbara Cram, Regional Commissioner for Manitoba and Saskatchewan.  To my immediate left is Rita Cugini, Regional Commissioner for Ontario, and to her left, Stuart Langford, National Commissioner.

6                The Commission team assisting us includes Hearing Manager, Steve Parker, Senior Broadcasting Analyst and legal counsel, James Murdoch, as well as Chantal Boulet, hearings secretary.  Please speak to Madam Boulet if you have any questions with regard to hearing procedures.

7                At this hearing we will first study an application from TVN Niagara Inc. to operate a conventional English language television station in St. Catharines, Ontario.  The station would operate on channel 22C and the applicant proposes programming designed to serve St. Catharines and Niagara regions.

8                We will then review five applications for a new English language FM radio station for Woodstock and Tillsonburg market, including an application to convert CKOT Tillsonburg radio station from AM to FM.

9                We will also hear an application to change the frequency and authorize contours of the CJFH FM Woodstock radio station.  All of  these applications will be competing for the use of 104.7 frequency.

10               The panel will study the proposals to operate a new FM station in light of the cultural, social and economic objectives defined in the Broadcasting Act and the regulations flowing from it.  The panel will base its decisions on several criteria, including the state of competition and the diversity of editorial voices in the market as well as the quality of the applications.

11               It will also look at the ability of the market to support new radio stations, the financial resources of each applicant, and proposed initiatives for the development of Canadian talent.

12               The Applicants will be heard in the following order.  Burns Communications Inc., Standard Radio Inc. CHUM Limited, Newcap Inc., Sound and Faith Broadcasting and Tillsonburg Broadcasting Company Limited.

13               The hearing should take three to four days.  We will begin each day at no later than nine‑thirty and finish up no earlier likely than six p.m.  We will inform you of any changes in the schedule as they occur.

14               When you are in the hearing room we will ask you to please turn or your cell phones and pagers as they are an unwelcome distraction for participants and Commissioners.  We would appreciate your cooperation in this regard throughout the hearing.

15               I will now invite the secretary, Madam Boulet, to explain the procedures we will be following.

16               SECRETARY:  Thank you, Mr. Chairman.  Before we begin, I would like to go over a few housekeeping matters.  First, I would like to indicate that the Commission's examination room is located in Salon E, which is located down the hall from the hearing room.  Public files of the applications being considered at this hearing can be examined there.  The telephone number, as indicated on the agenda, is 905‑357‑4078.

17               Secondly, there is a verbatim transcript of this hearing being taken by the court reporter at the table to my left in the centre.  If you have any questions on how to obtain all or part of this transcript please approach the court reporter during a break for information.

18               As you mentioned, Mr. Chairman, we will first hear the application from TVN Niagara Inc,  and we will proceed as follows.  First, the applicant will be granted twenty minutes to make his presentation.  Questions from the Commission will follow the presentation.

19               In phase two other parties will appear in the order set out in the agenda to present their appearing intervention.  Again, questions from the Commission may follow.  Phase 3 provides an opportunity for the applicant to reply to all the interventions submitted on their application.  Ten minutes are allowed for this reply, and, again, questions the Commission may follow.

20               And now, Mr. Chairman, we will proceed with Item 1 on the agenda, which is an application by TVN Niagara Inc. for a license to operate an English language television programming undertaking in St. Catharines.  The new station would operate on channel 22C with an average effective radiated power of 401,000 watts.

21               Appearing for the Applicant is Mr. Wendell Wilks, who will introduce his colleagues.  You will have twenty minutes to make your presentation.  Mr. Wilks.

PRESENTATION / PRÉSENTATION

22               MR. WILKS:  Thank you.  Mr. Chairman, there are some people who are a part of our application who we'll take a brief moment to introduce them.  There are people who should normally be in St. John's, Newfoundland at a national mayor's conference, but they've deemed that this hearing is of significant importance to them and they've graced us with their presence.

23               I'd like to meet them.  First of all, I'd like you to meet His Worship, the mayor of St. Catharines, Tim Rigby.  I would like to introduce you to the Mayor of the Town of Pelham, Ron Leavens and the Mayor of Welland, Damian Goulbourne.

24               If they would all stand and I do want to recognize that the City of Niagara Falls, which is our host, Mayor Salci, would be here, but he is recuperating from a quadruple bypass ‑‑ successfully we might add, but you are going to experience his presence vicariously in a moment or two.

25               I did want to introduce you though to the City of Niagara Falls representative, Jim Diodati, who is an alderman here.  The Township of West Lincoln is represented by Bill Young, the Chief Administrative Officer.  The City of Port Colborne by Dan Aquilina, Manager of Strategic Projects; the town of Wainfleet, councillor Barbara Henderson.  If they would all stand please.

26               The Town of Fort Erie, councillor Tom Lewis.  The town of Niagara‑on‑the‑Lake, councillor Art Viola; the City of Thorold, Councillor Michael Sharon, and Paul Grenier is also here as a alderman from the City of Welland.  And we have Alan Teichroeb, who is here from Niagara Economic Development.

27               Just ‑‑ those people are the people that we spent many, many months and years, in fact, consulting with and they're important to us.  They're an integral part of our application.  Now we'd like you to meet our board of directors who are here and we'll ask them to stand and I'll quickly introduce them.

28               Charles Juravinski is our chair.  If you had the unfortunate family incidence of cancer, the chances are that you would be treated at the Margaret and Charles Juravinski Cancer Centre in this community.  Terry O'Malley, vice chair from St. Catharines.  Paul Herriott from St. Catharines; Doug Fraser, who is from Port Colborne, and this is Doug's birthday.  I know he didn't want me to say that but happy birthday, Doug.

29               Ann Mantini is part of a trio of sisters who are famous in this area.  If they had a concert a thousand people would show up in a heartbeat.  Ann Mantini.  The Honourable Robert P. Caplan, QC.  Anna Laurie Yeager of St. Catharines.  Kimberly Thomas, who is a lawyer from Ohsweken, who represents the Six Nations of Grand River is on our  board.  Her colleague, Chief David General, the great artist, who is the chief of the Six Nations is on our bored and could not attend.  Is he here?  Is he not?  Okay.  I had heard earlier that he was unable to attend this morning.  Michael Katz from Niagara Falls, and finally, George Thompson from St. Catharines.

30               Mr. Chair, at this point, if I can draw your attention to the applicant I'll just simply introduce to you the people who are here.  We'll  start down at the far end in front of you here.

31               William Dermody  is our legal counsel, served for a time with the CBC in Ottawa.  Then our second person is Mr. Douglas Newell, a distinguished person who is a veteran in the advertising business in Canada.  Edgar Cowan, who started appearing in front of this Commission in the early 70's.  Then ‑‑ and he's a program expert and our senior consultant and, in fact, he's agreed to work with us another three years, so that's really senior.

32               Dave Storey, our chief engineer, 25 years from CHCH Hamilton.  Kevin Snook, who is a manager of the Niagara Growth Fund, who are shareholders of the company, but he is ‑‑ a long list of degrees, a long time president ‑‑ or check that, vice president of Deloitte and Touche.

33               Then I'd like you to meet Al Lutchin, he's a 15 year veteran of the broadcast business, radio and television.  I'd like you to meet Mr. Dan Shakhhmundes, who is our computer scientist in our team.  Tracey Wilks is behind me and Tracey is my son.  We've worked together closely for the last twenty years, although he's been on the planet close by my side for 44 years.

34               Frank Thibault is on my immediate left.  Frank is a 22 year broadcast veteran, having served at CH and CTS and in Red Deer, Alberta, where I first met him.  Joan Mitzi Fry, on my right has the unenviable task of being the female representative.  She is our production manager.  She has worked with CFMT Television, with City Television, and she ‑‑ if you went to a Blue Jays baseball game and you saw the infield videos of the Blue Jays games, Joan was the officer in charge of Rogers Stadium, Sky Dome.

35               And then I come to my last panelist, who is David Buckhalter.  David is vice president of Media Alternatives, that is our ‑‑ he is our Senior National Sales Representative.

36               That, then, is our introduction.  Now, we'd like to commence our actual presentation and, Commissioners, this TVN application is about connectivity, human connectivity.  It's about Niagarans connecting with each other and about  Niagarans interconnecting with their neighbours in the Golden Horseshoe after 55 years of television isolation.

37               There are 144 English language TV stations operating in 44 different markets in Canada.  We're market number 12 and it has never had a television voice of its own and that's why we're here today.

38               The people you will be seeing and hearing on what we're about to show you, many of whom are here today, are not interveners.  They are and have been since the beginning an integral part of our written application.  On their behalf we wish to thank you and your colleagues for coming to Niagara to hear our plans to provide these, our people, with their very first professional television station.

‑‑‑ Video presentation / Présentation vidéo

‑‑‑ Applause / Applaudissements

39               MR. WILKS:  Mr. Chairman, this is a unique application.  Commissioner Cram comes from my home province of Saskatchewan, where her home City of Regina, which is considerably smaller than Niagara,  has three local TV stations.  Here we are 55 years later, as was so eloquently stated by Jack Miller, a half century after the television stations like Peterborough and Kingston and Hamilton went on the air.

40               Now, this peninsula has 420,000 residents, but every day we get another 40,000 visitors and they're all asking for the first station.  There are 29 markets in Canada that are smaller than the Niagara region that already have their own services, in some cases several.

41               The TVN written application is a plan submitted to you for your consideration to bring this, the 12th largest market in the country with exports larger that Newfoundland and/or New Brunswick.  We'd like to now be added to the lexicon of broadcast and become the station that serves this underserved Niagara.

42               The Broadcast Act ‑‑ again, I almost hate to say it because Jack Miller said it so well, that the ‑‑ we know what the purpose of the system is.  It says in the Act the purpose is to relate the diverse regions of Canada one to the other.  And it's one to the other that gets to be the point that I'm sure we'll spend a lot of time discussing today.  For TVN that's meant connecting, first, Niagarans to each other and ultimately connecting us to our neighbours throughout the Golden Horseshoe.

43               Of course, our Charter of Rights and Freedoms that expresses the right of all Canadians to a free press and free other media gives us the courage to enter the forbidden land of the TV giants that we're entering here.  The framework of CRTC policies also encouraged us to seek this opportunity to serve our Niagara audiences.  It's the inspiration we got from reading the speeches of CRTC Charles Dalfen over the past few years where you encouraged new voices to enter the system and specifically asked for new expressions from other places besides the dominant voices of Toronto and Montreal.  Hence we developed this blueprint which we submitted to you.

44               So this is an application that's very different from most we've ever witnessed.  Most public hearings are dominated at attendance by insiders, broadcasters, consultants, industry players, who have a special interest in the CRTC hearings.  Now, this audience here today is local and obviously pretty vocal.  They're here in person to demonstrate this difference that we're talking about.

45               So what's so different?  We interviewed 1200 Niagarans and this is probably the most comprehensive independently gathered and monitored market survey ever submitted to the CRTC.  We have also studied over 20 thousand businesses in Niagara.  We wanted to know two things.  One, would the people of Niagara watch us and, two, would the Niagara businesses support the station in advertising?

46               The results?  Well, we've submitted them to you, 94 per cent of the people surveyed in Niagara said they would watch TVN regularly, and over 1800 businesses told us they'd definitely advertise on TVN.  Even if that's only 40 per cent true, we would still exceed our budget predictions.  But TVN is heartened by the local estimated ad spending currently in Niagara of over 16o million dollars a year.

47               Now, 124 out of a 125 ‑‑ you may want to know what happened to that one person ‑‑ the 124 locally elected officials in Niagara said they supported our plans.  We went public over three years ago and released our blueprint to the community first and they reacted with enthusiasm that you've seen  and support.

48               Long before filing with you for our final approval and in an effort to be open and transparent and accurate, we also released our plans to the industry and to our would be competitors.  That's never done in Canada.  We set a daunting task for ourselves.  In Ontario in 2004, your records show that all Canadian commercial TV stations in Ontario spend 195 million dollars on Canadian programming in the year 2004, but regrettably, those same stations spent 325 million dollars on mainly USA programming.  TVN set out to reverse that horrible reality TV saga and we present to you here today a model that's 70 per cent Canadian and 30 per cent foreign with regard to spending, a ratio not achieved by any other Ontario licensee.

49               That gives TVN, over a seven year license period, 37 million dollars to deliver 36 and a half hours per week of full Niagara local HDTV digital programming on two transmitters.  TVN will spend only 15 million dollars on foreign programming.

50               Commissioners, we're not rookie broadcasters.  We are a collection of veteran broadcasters and program producers.  We've created thousands of hours of Canadian programs and we have very successfully started new TV stations elsewhere in Canada.

51               We at TVN wish to thank the hundreds of citizens who so enthusiastically supported the concept of bringing to Niagara its only TV connection to the TV universe.  Mr. Chairman, thank you for the opportunity to tell our story and now our team is indeed very ready to respond to your questions.

‑‑‑ Applause / Applaudissements

52               THE CHAIRPERSON:  Thank you very much, Mr. Wilks, ladies and gentlemen.  I'm going to ask you a series of questions related to the question of the market and your service area, the absorbability of your station in the greater market and the regional market and then questions about your potential viability in light of some of the assumptions you've made with regard to the programming you're going to carry, the viewing and so forth.

53               I'll begin by asking you about your programming and your demographics.  You say in a letter to the Commission in the January 21st, 2004, letter that your classic movie strategy is critical to your revenue generation and therefore to your ability to support local programming throughout the schedule.

54               And your demographic, I take it, is an older demographic, baby boomers between the age ages of 47 and 53, a segment that you label older Freedom 55 mid‑retirement shoulder group, people between the ages of 54 and 69.  You state that this is an affluent audience, spends more than any previous generation and is the most educated senior generation.  So I guess the initial question in your classic movie strategy is have you had discussions with owners of the broadcast rights to some of the movies that you intend to broadcast and did you discuss the costs of acquiring those rights?  Mr. Chairman, we've had extensive dialogue with what are known in our industry as the program suppliers.  The classic movies of all time, the ones that are called classics, there's approximately 25,000 in that category, and these are movies of distinction.

55               These are movies that have reached a status in our society of a history and have had acceptability at their time of their initial release and are still being redistributed in this era in the new DVD formats and they're all enhanced digitally.

56               Now, all great movie studios in America, of course, the 20th Century Foxes, the Disneys, the Columbia Pictures, Paramount Pictures, Warner Brothers, all have extensive libraries.  In fact, when you ask them you literally get books of libraries, and not even close to the majority of those movies are under contract exclusively to any broadcaster in Canada.

57               We were encouraged particularly by several visits that we had to Atlanta, Georgia to deal with the people who controlled the Turner classic movies at ‑‑ owned by Time Warner.  Our friend, Ted Turner, actually pioneered this classic movie format.  In fact, in America, cable television was built on these classic movies.

58               So the answer to your question clearly and succinctly, every major distributor has indicated to us that the movies are available, and  the prices that we have identified in our budgeting is in line with current pricing for this type of product.

59               A classic movie, in our definition, means that the movie is at least seven years of age.  Someone saw a movie on there which is a Stephen Spielberg picture of a year or two ago, but we're applying for a seven year license, therefore, the ones ‑‑ the current classics will ‑‑ seven years from now would be eligible for play on our station.  That's, in our definition, what a classic movie is.

60               The other difference with us in the presentation of the classic movies, Mr. Chairman, is that we're going to use hosts to introduce the classic movies and to set the context because there is a generation of viewers that we would argue that are under forty that will look at these movies and will appreciate them.

61               Classic movies, they're not ‑‑ some people, even in the Commission's language, call them oldies.  We don't actually see movies as oldies.  We always see movies only as good movies and bad movies.  In fact, they are a reflector of a time and they're timeless, in fact.

62               The format has been successfully used in the United States on a number of television stations for many, many years and we would become the first classic movie television station in this country, where, by the way, we have a strong acceptance of movie by viewers.  It's always listed as the number one choice of every viewer that's ever asked in a public opinion poll.  Movies always come out number one.

63               THE CHAIRPERSON:  Can I take that as a yes?

‑‑‑ Laughter / Rires

64               MR. WILKS:  That is not a definite maybe.

65               THE CHAIRPERSON:  Okay.  Thank you, Mr. Wilks.  I'm looking at your program schedule which you've filed with us and I see that you're offering 21 hours of movies a week in prime time plus another, what, 20 during the afternoon and another 20 hours in the afternoon, a another nine to five. Another eight hours on Sundays, plus late night movies.

66               Now, your budget, your entire foreign ‑‑ I take it these are foreign movies?

67               MR. WILKS:  Yes.

68               THE CHAIRPERSON:  Your foreign movie budget, foreign programming budget is two million dollars a year.

69               MR. WILKS:  That's correct.

70               THE CHAIRPERSON:  I haven't done the division, but that adds up to a lot of hours.

71               MR. WILKS:  Yes.

72               THE CHAIRPERSON:  Divided into two million, that's a rather low number per movie, isn't it?

73               MR. WILKS:  Well, let me just explain what the average movie purchase consists of.  An average movie rental on a non‑exclusive basis ‑‑ this doesn't preclude them running, for instance, a movie that we would contract on a specialty channel or pay T.V. channel.  We're not, of course, a specialty channel.  We're an over‑the‑air prebroadcast service.

74               The point there is, we're estimating, sir, that the amount of $5,000 per movie is actually a number that we've tried on specifically with the producers.  We have some requirements for that and that is that it has to be digitally enhanced for us and wherever possible formatted in the HDTV format.  So that number has been tested and we believe it's accurate.

75               We also buy movies for multiple runs, so basically each title is contracted between three and five runs, over usually a three to five year period.  So that it's amortized.  We take, of course, the largest amount of $5,000, approximately 2,000 in the first run and then it declines for each successive run.

76               That's low cost programming, sir, and the point really is is that the audience that it delivers makes it a very profitable part of our program schedule, which allows us to spend more money on Canadian programming.

77               THE CHAIRPERSON:  What's your math on the per hour cost that you see?

78               MR. WILKS:  It works out on an average with that ‑‑ it works out to $770 per hour.  Now, a movie is a two hour minimum, sometimes a little longer.

79               THE CHAIRPERSON:  Right  So basically $1500 per movie?

80               MR. WILKS:  Per play, yes.

81               THE CHAIRPERSON:  Per play amortized.  Now, when you look at the revenue side of the ledger, I don't know whether you've calculated to build up your revenue figures, and we'll get to that in a moment.  I don't know whether you've based it on the prime time movies in your schedule or not or whether your classic movie strategy is across the full day.  I do know that elsewhere you mentioned that you needed to achieve 0.5 of a prime time rating point in order to make your schedule work.

82               How do you relate your ‑‑ given it's your strategy, how do you relates the movies that you've scheduled to the revenues that you expect to generate from them?

83               MR. WILKS:  I think I'm going to ask my colleague, my chief number cruncher who worked with us in developing this plan, Frank Thibault, to rationalize that question, sir.

84               MR. THIBAULT:  Thank you, Mr. Wilks.  In the prime time, the majority of the revenue is going to come from national sales for the movies and that would be, as far as overall revenue for the station, about 65 per cent.

85               THE CHAIRPERSON:  So you expect ‑‑ is that just your national revenue number?

86               MR. THIBAULT:  No, that would be all the revenue in prime time.

87               THE CHAIRPERSON:  I understand that.  The 65 per cent, are you just taking your projections and saying that you have, what, projected for the first year 6471 national and 5389 local?  What does the 65 per cent represent?

88               MR. THIBAULT:  If you take a look at the revenue that we're looking at generating, I'm assuming you're defining prime time between six and twelve or between seven and eleven?

89               THE CHAIRPERSON:  I was defining it here as seven to eleven.

90               MR. THIBAULT:  As seven to eleven.

91               THE CHAIRPERSON:  And that's when your movies are being shown.

92               MR. THIBAULT:  Right.  Okay.

93               THE CHAIRPERSON:  Or seven to ten most nights.

94               MR. THIBAULT:  Yes.  What I'm getting at there is the 65 per cent represents the revenue between 7 to 11 Monday to Sunday and about 65 per cent of our overall revenue is going to come from that period.

95               THE CHAIRPERSON:  Right.  And that will be basically all national?

96               MR. THIBAULT:  Well, between seven and eleven we have movies and we've also got our local news from ten to eleven.

97               THE CHAIRPERSON:  Right.

98               MR. THIBAULT:  And that's going to increase the amount of local revenue because the local news is mostly local retail.

99               I guess what I was getting at with the 65 per cent was that 65 per cent of our revenue overall is going to come from seven to eleven.

100              THE CHAIRPERSON:  Right.  And what percentage of that would be the movies?

101              MR. BUCKHALTER:  If I might add, I believe that's about 70 per cent, Frank.

102              MR. THIBAULT:  That would sound right, yes.  70 per cent.

103              THE CHAIRPERSON:  70 per cent of the ‑‑

104              MR. THIBAULT:  The 65 from the movies.

105              THE CHAIRPERSON:  Okay.  So that's approximately 45 per cent of your revenues.

106              MR. THIBAULT:  Yes.

107              THE CHAIRPERSON:  That, you expect, will drive your success?

108              MR. THIBAULT:  Well, one could look at that's what will drive our success or it will be our local programming which will drive our success because the difference is not that great, but when you factor in the revenue we're going to get from our six to seven news, we're not really going any one particular way where any one thing has to be the thing that does it.  As long as we do well in both areas of our local programming and in the movies, then we meet our revenue targets.

109              THE CHAIRPERSON:  Okay.  Well, that ‑‑ I don't mean to make you sound contradictory, but the way I read your strategy, and I can quote it in the January 21st letter.  You say.

                      "Our classic, timeless masterpiece movie programming strategy must have enough income potential to support TVN Niagara's comprehensive commitment to local and regional programming, plus its stated responsibility to develop, produce or co‑produce Canadian priority programming."

110              I took that to mean that one was effectively going to subsidize the other.

111              MR. THIBAULT:  I see what you're getting at.  Yes, that's correct.  The revenue from the movies is far greater than the cost of the movies, so the additional revenue will be used to subsidize the other time periods.

112              THE CHAIRPERSON:  Right.  And the revenue from the local and the Canadian will be the reverse and will require the subsidy.

113              MR. THIBAULT:  That's correct.

114              THE CHAIRPERSON:  That's how I understood that strategy, so I was trying to probe how you thought you could achieve those revenues and where in your schedule you thought they would be derived.  What I'm hearing you say is that the movies, basically the 21 hours of movies in prime time during the course of the week is really going to generate 45 per cent of your revenues.  Is that a correct statement?

115              MR. THIBAULT:  That would be correct, yes.

116              THE CHAIRPERSON:  Okay.

117              MR. WILKS:  Mr. Chairman, just to clarify that to a small degree, the newscasts will have a far greater central area of our coverage area rating than the small number that we're projecting for the overall region with the classic movies.

118              We expect to take in a very large ‑‑ into the seven o'clock time period when the first movie starts in prime time from our major newscast, the evening newscast.  So that ‑‑ our experience with that is that any television station that has a majority of audience in local news becomes always the most viewed television station in the market overall.

119              We'll have a much higher central area viewing than we will in our overall reach.

120              THE CHAIRPERSON:  Okay.  And ‑‑

121              MR. WILKS:  We're really using news and public affairs to build our relationship with the viewer and the community.  It's foundational.  Everything else is built from that.

122              In fact, we do expect actually a small decline in some cases on the movies from our local news period.  This is because the experience that we have had in similar markets where the spot in the local newscast on a CBC affiliated station frequently gets more cash per unit than a spot adjacent or inside an NHL hockey game.  That has to do with the incredible importance of local news.

123              THE CHAIRPERSON:  Right.  And to generate that prime time revenue, peak time revenue of roughly 45 per cent of your entire revenue base, you, I think said elsewhere ‑‑ I can give you the quote if you need it ‑‑ you needed to attract .5, half of one prime time rating point to achieve these revenues, is that correct?

124              MR. THIBAULT:  Yes, that's correct.

125              THE CHAIRPERSON:  I know comparisons are not always apt, they can even be invidious at times, but when we look at the rating points of, say, CKXT, which offered movies in the prime time schedule and had a far higher programming budget than you're projecting, we got in the demographic that you're looking at and basically throughout its demographics, if you take adults 25 to 54, roughly a .5 or half a rating point.  And I guess my question is is there enough resources allocated to the movies in order to do the job of achieving that half of a prime time rating point in order to drive the revenue?

126              MR. BUCKHALTER:  The analysis that we first conducted showed that of the past three full periods that the range of movie performance amongst all conventional stations ranged from a low of .7 to a high of a 2.9 on adults 25‑54 over the past three or four periods.

127              The movie rating of a .5 is actually 37 per cent below the projected ratings delivery that we did in our initial analysis of a .8 and 30 per cent below that of the lowest movie performance over the past three or four periods.

128              THE CHAIRPERSON:  I guess I'm ‑‑ what I'm reading is BBM 2003, 2004 metered data for the '04 broadcast year roughly, which shows the number for CKXT with a predominance of movies in the schedule at .5.   I don't see the .8 to full rating point numbers.

129              MR. BUCKHALTER:  Mr. Commissioner, as you're aware, there are two measurement systems currently being used for the Toronto market.  There's Neilson people meter system in addition  in addition to BBM people meter system.

130              As the market evolves and as, I believe, the current Neilson BBM merger is before the Competition Board and if, as anticipated, that, in fact, goes forth, Neilson will continue to do metered measurement in the major markets and BBM will do diary measurements in all the markets they measure currently.  So the data for that.  Initially the .8 that we suggested and the .5 was based on Neilson people meter.

131              MR. THIBAULT:  There's something else I'd like to point out in regard to the cost of the movies as far as the audiences are going to generate.  In television it's not really any different than it is in the theatrical world as far as movies that are released in the theatre.

132              Simply because a movie has a big budget doesn't mean that people are going to go and see it.  In fact, it often happens that it's the opposite.  Big budget movies quite often will fail and it will be a small budget movie that will generate a huge amount of revenue.  It's not the cost of the movie that's the important thing, it's what the movie's about, it's the content.

133              That's what's different between what our program strategy is and what CKXTV was.  What they were doing to a certain extent was almost, but not quite, directly competing for the same types of movies as City TV.  And that gave them higher costs and they were almost basically splitting the audience.

134              We're going after an entirely different demographic and, therefore, because not ‑‑ the particular movies that we're looking at purchasing aren't in the high demand by over‑the‑air broadcasters, the prices are low.  It's the old supply, demand situation.  We're sort of hitting a niche in the marketplace that's allowing us to exploit lower cost material to gain ratings.

135              The ratings projections are realistic because we're not splitting the market again with that same younger 18 to 34 or 18 to 49 viewer.  We're going after a slightly older demographic and there isn't that same direct competition for them.

136              MR. BUCKHALTER:  In other words, the adult 25‑54 movie delivery for a station like CKXT was incidental to the actual intended audience, which was, as Mr. Thibault suggested, directed towards adults 18 to 34 and 18 to 49 primarily, as do most of the movies on all competitive stations in the marketplace, including Citytv, for example.  Whereas TVN would be primarily appealing to that adult 25‑54  rating point.

137              THE CHAIRPERSON:  First of all, on that point, how does that reconcile with your target audience as being 47 plus?

138              MR. BUCKHALTER:  The 25‑54 would be the currency, if you will, that advertisers would purchase for a specific demographic.  Whereas, the sub demographic group that Mr. Wilks has referred to within the application, in fact, is a byproduct of that older 25‑54 demographic.  But it's a currency that media buyers would be talking of that we're  identifying that .5 rating delivery.

139              MR. THIBAULT:  When ‑‑ in the ratings there's some very simple standard categories that are always reported; 18 to 49, 25 to 54, 55 plus.  However, in the last few years, especially with the metered system in Toronto, you can create your own special age group and define it using the software.  And this is something that both broadcasters and advertisers have access to, but it's not something that's used commonly as statistics that's reported and it's not the kind of thing you'd read about in a newspaper or see in a magazine article because it doesn't fit the standard mold.

140              But what it allows our sales team to do is do a presentation based on, okay, this is where we're at with adults 45 to 65 or 35 to 52.  We can create anything we want and we can compare that between how we're doing versus how the audiences for other shows on other channels are at the same time period.

141              So by using that software we can take advantage of the situation and create a package for advertisers that matches the demographic that we're selling to.

142              MR. BUCKHALTER:  I'd like to add as well that ‑‑

143              MR. COWAN:  Mr. Chairman, there's also some little miracle that's happened over the last ten years.  And it is what's happened to the baby boom bubble as it's moved up through 50 and probably the leading edge is maybe 57 now; 56, 57.    Some of the material that's been developed and  researched is that people in that age group ‑‑ there's a number of us that are in it, actually don't see themselves as age ‑‑ in terms of age, they see themselves as a life stage.

144              The interesting thing in the life stage phenomenon is that in the early part of the 50's people see themselves act, buy, do things about ten years younger than their actual age.  That's how they react to things.  Now, as that bubble starts growing up into the 65, 67 years, that ten years starts to contract a little bit.

145              So what you are having ‑‑ if you're saying, oh, gosh, we have a 49 to whatever age group, hold on for a second.  That's an age group, that's not a life stage.  That's not the way people see themselves.  They see themselves in that group quite a bit younger.

146              So in terms of attracting an audience, you're probably looking at the age group that we've talked about in there, but the shoulders on that age group are the way people actually act.

147              MR. BUCKHALTER:  Mr. Commissioner, I'd like to add as well that you've referred to the .5 that CQXT produced.  The key is TVN is starting the movies at seven p.m. one hour prior to all the other competitor's movies.  So Citytv, Toronto, CKXT  begin their movies at eight o'clock.  TVN starting their movies one hour earlier, prior to everybody obviously using all the other conventional broadcasters airing their major US network programs that begin at eight p.m., so we're getting a headstart on that in addition to being able to stay away from the competitive movies.

148              MR. WILKS:  We also are in a region where there is little driving time between work and home, so the commuters at this side of the lake do not have to face some of the misery on the north side of the lake where that luxury is seldom experienced by most families.  Our people are home much earlier.

149              And we are, by the way, the largest consumers of television in Canada, according to A.C. Neilson.  We're the most aged market in Canada.  We have more seniors per capita in St. Catharines than Victoria does.  So that's to put it in some kind of perspective.

150              And it's the growing demographic, meaning that 25 per cent of this ‑‑ our total population will be in a category that we're seeking and every other television station is aiming precisely at the 18 to 39, and that's a shrinking demographic.

151              You can't read a newspaper without having some kind of reference to something nostalgic that came out the seventies, sixties, eighties, the decades before.  It's big business.  And the wealthiest in the nation.  Those people over 55 control 83 per cent of the nation's wealth.  So not only do they have all the money, they haven't got long to spend it and they are spending it.

‑‑‑ Laughter / Rires

152              THE CHAIRPERSON:  Don't be a pessimist, Mr. Wilks.

‑‑‑ Laughter / Rires

153              THE CHAIRPERSON:  I guess I'm just trying to understand the orientation to the 47 plus demographic and the need in order to make the .5 rating point work and attract the national revenues of attracting the 25 to 54 demographic.  So I'm trying to reconcile those two in terms of I understand the business proposition of the 25 to 54, but I'm still having a little trouble reconciling it to your orientation.

154              What I'm taking from our discussion, correct me if I'm wrong, is that in the prime time driving part of your schedule you really are going to try to show movies that attract the 25 to 54 demographic, not the 47 plus demographic, and you're going to try to sell it on that basis.  In fact, your reports, Media Alternatives and so on, support that approach.

155              So it's just an effort of, I guess, asking whether that is a correct perception or not and if it isn't you'll tell me why.  And then if it is a correct perception, how are you going to cater towards that demographic in the movie part of your schedule, the higher age demographic?

156              MR. WILKS:  It's fair to say that we do not intend to market ourselves to the marketplace as a station for senior citizens.  That is not our intention.  We're a place that will run entertainment that has timeless quality.

157              Now, the jury is out as to whether the younger person under 39 is interested in those classic movies.  In fact, I think we're households that do participate and watch and like classic movies.  In facts, there are generations of young people now that know more about the history of motion pictures than some people in my age group.  I do believe there's been a cross‑over.

158              Of course, in the 18 to 39 area, not only is it a declining population base, but they're watching television differently and a lot less of it.  And I think eventually we'll learn how to get them back in the sense that they're really going to be watching television on their computers and the merger between our computers and our television sets is now taking place extremely rapidly and that is our future and I think we'll get them back at that time.

159              The real point is that there's no way for us to really know what we're going to do with the under 39, but we're just simply demonstrating to the Commission that we can hit our modest revenue targets really just with the generations that we've talked about, with the aging boomers and those persons over 55 now, and that ballooning age category which is demonstrably underserved in Canada by Canadian television.

160              THE CHAIRPERSON:  Okay.  I think I have your answer.  You have a great deal of broadcasting experience in your team, and I guess I'm wondering whether you could point to another example of a commercial over‑the‑air station that has succeeded with its primary revenue driver being movies that are seven years old or more.

161              MR. WILKS:  I did mention WTDS, which is the Turner broadcast system in Atlanta, Georgia.  Remember in America when they introduced cable television, in Canada, we introduced cable really because that was the only way you could get NBC, ABC, CBS, the big American Stations.  That's what drove the cable penetration in this country.

162              In the United States they already got NBC, ABC, CBS, so how do you sell a cable subscription?  They never reached our levels of penetration in the United States, but what they did grow it on was really the super stations, WTBS, the Turner broadcast, which he parlayed his success, the money that he made off his movie station, into a thing called CNN, which is now 25 years old.

163              But WGR in Chicago ‑‑ WGN, check that, in Chicago is a classic movie television station.  It's been running movies now for 58 years successfully.  Classic movies, nothing else except classic movies.

164              WPIX in New York City, KHJ in Los Angeles, our American super stations that they call them that run and have lived forever on classic movies.  And now there are actually two more in  California recently that have been added to lexicon of over‑the‑air commercial television stations.  They've become so popular in America, in fact, that they're extremely profitable corporations.

165              Canada, we've never had to do it before because the way that we were aligned there was enough foreign programming that we would simulcast from NBC, ABC, CBS and Fox.  But we saw that as an entirely risky process, meaning in order to get the simulcast rights we'd be competing against these giant corporations, all billion dollar corporations, that inhabit 93 per cent of the ownership base of commercial television in Canada now.

166              We certainly can't compete against them in buying power.  We also thought it was a faulty strategy in the sense that you were spending most of your money on Americans instead of Canadians It just didn't work out for us.

167              This was an area that had a proven history.  Nobody was using it in this country, the classic movie format.  We did research it extensively.  I can tell you that the best research material that we got was from the Turner Broadcast Company and their classic movie channel.  However, there are other pay TV systems that have been doing it successfully as well.  Very successfully.

168              THE CHAIRPERSON:  So you don't have a Canadian example.  You're citing the Turner stations.  Now, WTBS, as I understand it, is a super station and was, I suppose, driven as much by carrying the Atlanta Braves bring as it was by ‑‑ carrying Atlanta basketball and so forth as it was by movies, was it not?

169              MR. WILKS:  Yes, it is now, but the empire was built, as Mr. Turner himself says so eloquently, I built my empire on old movies and ‑‑ but that's how he generated his income.  Of course now he's become ‑‑ has 17 channels in the organization.

170              THE CHAIRPERSON:  The classic movie channel, as I understand it, does not attract advertising so it's, in effect, a subscription‑based service.

171              MR. WILKS:  That's correct.  The others do.  We do have a history, actually, in  Canada with movies.  Strangely enough, it's with a television station that's well‑known to us here.  CHCH for years ‑‑ Movies 11 was the staple of programming on CHCH.  I venture to say that those were the best years of CHCH's life.

172              They had a classic programmer by the name of Sam Hepshire, who was a genius at programming older movies at lesser cost that generated enormous ratings.  In fact, CHCH, the little station down the highway from the big boys in Toronto really got attention.  But they were seduced eventually into competing for the ‑‑ especially when Global Television started in 1975, they were seduced into going for prime time simulcast, and the reason that they did that is they wanted to keep it away from Global Television.

173              I happened to be around in that era and happened to be right in the centre of that.  And the CH at that time abandoned the movie format, and from my point of view, history shows that they have  not been stable ever since.  They've opted for the model that says we're going to spend 50, $75,000 an hour for American programming.

174              To me, if I want to gambling I'll go to Casino Niagara or Fallsview Casino.  I don't think that has strengthened the Canadian Broadcast System, the amount of money they've been spending on foreign programming.

175              We just ‑‑ for us it was unthinkable that we would enter that area.  We had two kinds of programs we could look at.  One was the off‑network syndicated classic television reruns.  I like that genre.  They include Carol Burnett and Lucille Ball and Jackie Gleason and Red Skelton and the list is endless of the classics that are available to us.  Those have been successful as well, however those, we believe, have had much more exposure than the 25,000 classic movies libraries and, in fact, we have a belief now for a whole new generation that most people have not even seen those movies at all of the younger generation.

176              We think there's enormous value in them there hills and that goldmine, and that's the one we've chosen to mine.

177              MR. NEWELL:  May I make a comment on that, Chairman Dalfen?  I believe that our revenue model which you're questioning ‑‑ probing on wasn't specifically arrived at by ‑‑ on a program by program basis.

178              The numbers that we submitted to you were based upon a survey.  That survey asked people whether they would watch, how much they would watch.  When describing the station, the specific of movies was used.  We took our results from the information that we collected and that information supports the ratings data that we supplied, the ratings data drove the ‑‑ based upon market information drove the revenue data.

179              So we've tried to give the Commission audience information based on fact, not on conjecture.  We've asked people whether they would watch, they said they would.  We've asked advertisers whether they would support us.  We've described again how we were going to get our audience and what kinds of programs we were going to have.  They said they would.  And I believe that we have demonstrated that we can deliver an audience and can deliver the revenue numbers conservatively that we have filed.

180              THE CHAIRPERSON:  Thank you.  I was ‑‑ I take that point, Mr. Newell.  I was trying really to understand the classic movie strategy as a driver, the half of a prime time rating point notion and how important that was to your schedule.  How that was reached in the demographic that you were dealing with.

181              I'll now move to the other methodology, so to speak, or the methodology that you used.  I appreciate you used two to arrive at your revenue figure.  One, a survey of local businesses, and the other the audience projections based on  your survey and then converting that into cost per thousand and so forth.

182              Maybe we can turn to that now.  As I understand the Tri‑Media Marketing and Publicity ‑‑ do you have a representative here from that company, Mr. Wilks?

183              MR. WILKS:  No, but we consider in this instance Mr. Newell is, in fact, a neutral expert and he actually set out all of the standards and I ‑‑ none of us at the TVN team participated at all in the process at all.

184              The framework was established by Mr. Newell and he set out the basic criteria and then I'll let him explain how the ‑‑ what methodology as you require it that was used to actually do this survey.

185              THE CHAIRPERSON:  I'll certainly allow Mr. Newell to do that.  I guess in looking at their study, and if there isn't anyone here I hesitate to delve too deeply into it.  My understanding of it is it's based on net cost per rating point per thirty second spot averages across the province, and the ‑‑ it's almost arithmetical in terms of how you derive both the cost per rating point and the CPM based on Ontario averages and factoring Niagara, Hamilton's populations into those averages and just deriving a number that comes out to 5407 as a cost per rating point at a CPM of 946.  Is that correct?

186              MR. NEWELL:  That is correct.  However, those data were not plucked out of the air.  They are actual market data which a company that I used to be partner in provided to Tri‑Media for them to make those calculations.

187              THE CHAIRPERSON:  Could you elaborate?

188              MR. NEWELL:  Harrison, Young, Pesonen and Newell was a media buyer from 1979 to 2002.  I headed up the television buying portion of that.  And so when it came to the time to do the mathematical calculations that you're referring to, I supplied Tri‑Media because they were not ‑‑ they did not have the breadth of the television data that H.Y.P.N. did have.  I supplied them with our cost per rating point data and our cost per thousand data, and then they took the data and did the calculations.

189              THE CHAIRPERSON:  Right.  And I see that and ‑‑ but they then just plugged those numbers in that you gave them and effectively came up with averages.

190              MR. NEWELL:  That is correct.

191              THE CHAIRPERSON:  So do you want to elaborate, and perhaps we can focus on ‑‑ again, again, let me preface this question by saying that in trying to understand, you know, you're a Niagara station, but you're clearly going to be drawing revenues in the Toronto extended market if you're successful.

192              You've given us in section 53 of the application the weekly hours of 2 plus that you expected to generate, weekly hours of tuning and then your share.  The numbers are set out in the application at section 5.3, which, of course, is a focus on Niagara.  And you don't provide in your application revenues that ‑‑ weekly hours and share in the Toronto EM.

193              Can you explain why you don't do that and how reliable the Niagara figures alone are for assessing your projections?

194              MR. NEWELL:  Thank you.  The first part of the question is we based the projection for audience on the Tri‑Media study, which was a study of the twelve towns and cities, the twelve counties or groups that constitute the region of Niagara.

195              We ‑‑  we're applying for a Niagara license.  We're not applying for a Toronto license, and so we wanted to focus on what we consider to be our core market.  We didn't study Hamilton, we didn't study Burlington, we didn't study Toronto.  We only studied the twelve counties.

196              When we studied the 12 counties and asked them the questions we asked, we found that there was sufficient support to justify the audience and the revenue numbers that prior to our getting involved in this that management of TVN had come up with on their own.

197              We then studied businesses and they came up with another ‑‑

198              THE CHAIRPERSON:  Excuse me.  Mr. Newell.  Sorry to interrupt you, but are you saying that your study was done to validate what management had done?

199              MR. NEWELL:  No, it was not.  The study was done to find out ‑‑ at the time that we did the study I was ‑‑ myself and my partners were considering becoming shareholders and basically the study was done to see if ‑‑

200              THE CHAIRPERSON:  Focuses the mind, right?

201              MR. NEWELL:  The focus was to find out whether this was a viable project.  That's why I was interested in doing it.  And so I don't want to give the impression that the study was done with any other purpose than finding out whether or not people in Niagara would ‑‑ first of all, whether they considered themselves to be a market because, frankly, we didn't consider them to be a market, we considered them to be part of Toronto.

202              For forty some odd years if someone had said to me, you know, would you buy a Niagara television station, I would have said, no, I've already got enough rating points in Niagara by buying Toronto and Hamilton.  It's only when we did the study and we found out that there was, in fact, a separate definite market that was different than Toronto and different than Hamilton and that they would support the station that I started to get excited.  Part of that time I was pretty sceptical.

203              THE CHAIRPERSON:  The Niagara area shares that you put forward in your application, you then simply used as ‑‑ to drive your revenues by multiplying the cost per rating point that was driving the Tri‑Media study based on the averages?

204              MR. NEWELL:  That is actually, Chairman Dalfen, one of four ways that we arrived at the revenue.  One was driven by audience, one was driven by advertisers, one was numbers that were given to us by management and the fourth way was the Media Alternatives, we asked them to guess what the numbers would be.

205              And from four different sources basically you could throw a blanket over the revenue numbers that everybody came up with independently and from different ways.

206              THE CHAIRPERSON:  So if you multiply those numbers out, you will get the cost per rating point times the share number, you'll get your revenue number as a global matter?

207              MR. NEWELL:  That's correct.  If you follow the study based upon the number of people who said they would watch and how often that they would watch it, we arrived at an average quarter hour audience and we multiplied that times the number of hour a day times number of commercials per hour times the cost per rating point, and came out with a number of, I believe ‑‑ depending upon which scenario ‑‑ because we did a 40 per cent, 60 per cent, 80 per cent, a hundred per cent capture, sell‑out, et cetera, we arrived at a number that would be between 8 and 17 million dollars.

208              THE CHAIRPERSON:  Right.

209              MR. BUCKHALTER:  From a national perspective, agencies who purchase media on behalf of their clients do not analyze the specific shares of individual stations in order to come up with an assessment as to where they would be placing their monies on behalf of their clients.

210              They're doing so based on programs, based on rating delivery, not on share of hours tuned.

211              THE CHAIRPERSON:  That was going to be my next question.  So you achieved the global revenue picture that way and then you subdivided that down between national and local based on the considerations related to your program in your local market, is that correct?

212              In other words, the number you gave me of between eight and 17,000,000 ‑‑ I thought it was 10 and 17,000,000 in your application ‑‑

213              MR. NEWELL:  I think the ten is sixty per cent and the eight is 40 per cent, but, yes, sir, you're right.

214              THE CHAIRPERSON:  Those gave you the global revenues for the station overall.

215              MR. NEWELL:  Correct.

216              THE CHAIRPERSON:  And then what would you have done, and Mr. Buckhalter anticipated, but what would you have then done to break them down?  You, for example, have a ratio of national to local  of what, roughly 55 to 45?

217              MR. NEWELL:  Correct.

218              THE CHAIRPERSON:  Which is, of course, far different from most broadcasters.

219              MR. NEWELL:  Correct.

220              THE CHAIRPERSON:  So how did you, in other words, validate that global figure of revenue that your four methods produced and suggested was within that range?  How did you then divide it up between the national and the local?

221              MR. NEWELL:  I'm sorry, Frank Thibault and myself on the 11th hour and 59th minute before our filing sat down and answered that question.  And we obviously estimated it, but just after ‑‑ I'll let you go, but my thinking, our thinking, my personal thinking on it and then we had to collaborate obviously, but my personal thinking on it was that the Tri‑Media audience study said we'd do eleven and that was just based upon the twelve markets.

222              The businesses said we'd do ten to thirteen, I think the number was, and that was just based upon the Niagara business people who said they definitely would advertise on the station.  So that was another kind of number that I had ‑‑ or we had in our head.

223              We asked the national people what they thought they would do and they said, well, you know, by and large nobody's going to watch ‑‑ nobody's going to want to buy the news from Toronto, nobody's going to want to buy the local programming from Toronto, they're just going to want to do the movies, and we think we can do, on your famous .5 rating, we think we can do this kind of advertising revenue.

224              So we said, well, we're going to do eleven million dollars.  Most of it should be national because most of the money that's spent in Canada is national advertising money.  It's four or five times as much as local, but we do have a hell of a lot of support here in St. Catharines, Niagara, in the Niagara region.  We think we might be able to do it by ourselves alone, so why don't we say 55, 45.

225              THE CHAIRPERSON:  Hence the science of it.

226              MR. NEWELL:  Hence the science of it.

227              MR. THIBAULT:  You mentioned that our ratio is off from what a lot of people do.  Most of my background comes from working in Red Deer, which was a market that was really dependent on local retail.  And our ratio was 70 per cent retail and 30 per cent national for a lot of years.  It changed slightly when the station started to market itself more into Edmonton and Calgary, and so we increased on the national revenue, but the local revenue was the mainstay of the station.  That's what kept the boat afloat, so to speak.

228              In this particular case, one of the things ‑‑ and Doug briefly alluded to it, but what the strategy here is from a sales standpoint and from an audience standpoint is that we have two distinct types of programming and two distinct revenue sources.

229              The movies are designed to generate an audience and revenue from the Toronto area and ‑‑ Toronto, Hamilton.  The local programming is designed to generate audience and revenue from the Niagara region, and that is what makes it different when you us compare us to CKVR Barrie or you compare us to a Peterborough or any other station and we start looking at percentages.  Because what is controlling our percentage is the number of hours of programming in each of the two different categories and where that programming is placed.

230              And that's why we've got a ten p.m. newscast as opposed to a eleven p.m. newscast, to generate the local revenue that's required you have to get be able to get the audience.  You're going get a much larger audience at ten o'clock for a local newscast than you are at eleven o'clock just because there's far more people available watching television at that time period so you've got a much better chance of getting them to watch you.

231              When we went through the analysis, this was what really drove the percentage ending up where it is.

232              The other thing is, I worked on the management side of the equation that Doug was talking about when the numbers were first presented and I'm relatively conservative by nature.  That's why our numbers are lower than what's in the Tri‑Media survey.  I like to look at it from the standpoint of, well, okay, I've got some experience in certain market.  I've looked at what people do, what they don't do, what they'll watch, what they won't watch.

233              There's a big difference between a survey that says people will do something and what they actually do.  Classic example is everybody says they watch PBS.  PBS can tell you, no, they're not.  They wish they were, but they're not.

234              So I tried to get a little more realistic.  Let's make sure that what we're saying is what is really achievable, not pie in the sky.  We don't want to be launching a station with a bunch of local programming and then six months later have to turn around and start cancelling because we don't have the ratings that we projected and therefore we're not getting the revenue that we projected.

235              The numbers that are here are, from my standpoint, very achievable and that was why, I guess, they're a bit lower than what Tri‑Media has got because they were basing their numbers off of a consumer survey and a business survey which might be just a bit higher than reality.

236              MR. WILKS:  Mr. Chairman, the actual numbers are really astonishing.  The Tri‑Media survey said that we would do between eleven and 17 million dollars in retail advertising in our first year.  Our projection is 5.6 million.  We've obviously discounted the information because we really wanted to make sure that we could do it and not gamble and that was the best way to do it.

237              When we look at retail, retail advertising is not a factor in the Golden Horseshoe.  Television retail advertising is not a factor.  I can simply point out to you that the retail advertising on the prairies in Canada is equal to all of the retail advertising in the entire Province of Ontario.  In fact, the only places in Ontario where there are significant retail are in the markets like Kingston, Ontario, where I manage the television station.  Peterborough, Sudbury, North Bay, Timmins, Pembroke, Ottawa, London, Wingham, Sault Ste. Marie.  Those are the stations that generate the retail, but in the Golden Horseshoe retail is just not a factor.

238              It is to a small degree with some specialty channels such as Omni, who does retail to their distinct ethnic audiences very effectively, but in the great Toronto area and our area there is no retail business and the reason is quite simple.  They sell out to national advertisers.

239              We don't predict to have that luxury, so we intend to be local.  When we looked at local, we discovered the most astonishing thing in Niagara, and that is that 76 cents of every dollar that's spent here in tourism, which is 25 per cent of our economy, is coming from foreigners.  Only 24 per cent of the economy is coming from visitations from Canadians.

240              Even though we're Canada's number one known tourist destination, their participation has been noted.  And in a time of international tension, this is a matter of grave concern for Niagara.  And what we found when we did the survey is we found this pent up need to reach our neighbours so that they, the five million of them on the north side of the lake, could come down here and just simply bring their money, but not ‑‑ we don't want to urbanize this side of the lake like they did on the north side of the lake.  We don't want to bring that influence from them, but they've been selling us as a people to their audiences for fifty years and they haven't been giving us a payback.

241              Now we're simply looking to fulfil the part of the Broadcast Act which says, "Relate the diverse regions one to the other."  So that's what rationalized our thinking.

242              THE CHAIRPERSON:  I guess when I read your material, the inference I drew, and you'll correct me if I'm wrong, was that you need to raise as much as you can locally and you're counting on the optimism that we saw on the video and in your support from advertisers locally to do that because you have a problem with national revenues.

243              We talked about the movie strategy and we ‑‑ your own report from Media Alternatives has statements in it like, you know, it will be a difficult task to change the thinking of most agencies about placing ads in Niagara stations because they can get it through Toronto, Hamilton.  They don't like to buy TVN for Niagara alone.

244              Your consultant says that national advertisers will demand attractive rates and so on.  So there is a problem and, in effect, you see yourselves making it up by beating the bushes in the local region and making as much revenue out there as you can.  Is that an unfair characterization?

245              MR. WILKS:  It is.  And with great respect, it actually comes from really a fundamental practical experience.

246              I had the pleasure of leading the second independent television station in Canada on air, ITV Edmonton.  We started with the great classic movie "Hello Dolly" and that television station quickly in a three station market became number one.  We had the same problem as an independent station.  National advertisers don't know anything about you.  They're going to wait and see.

247              So what did we do as a result of that?  Well, we made a kind of history which, in fact, I don't mind telling you that we're replicating here.  Here's what we did. We sold out retail for the first four months.  National advertisers could not buy the television station because we sold out to retail.

248              In fact, in that process we discovered ‑‑ we took, for instance, a little corporation locally which was a discount furniture operation called The Brick, convinced them to go on television, and now they're one of the largest retailers in the nation.  And he credits it all, Bill Comrie credits his entire success to starting on local television.

249              In fact, retail is a big factor in many parts of the country.  Where Commissioner Cram is from in Saskatchewan, Yorkton, Prince Albert, Saskatoon, Regina, retail is big business.  In fact, as I said to you, it's a big in the prairies as it is in all of Ontario, which, of course dwarfs the prairies in population.

250              It's just a factor here.  Here in Toronto when the new television station signed on, if they had actually groomed a retail face in the first instance they may not have had the struggles that they had.  That's just ‑‑ it's easy to look at things in hindsight.

251              I'm simply saying we've been through this experience.  We found that developing retail is the safest insurance that you can buy that you're going achieve your objectives, because we do think that national will lag.

252              MR. NEWELL:  I'd also like to add that some of the money that is coming from national, even though it won't be bought for Niagara by itself, is actually Niagara money in the sense that all the franchisees like McDonald's and Harvey's, Swiss Chalet, Montana, et cetera, et cetera, they have to make a contribution based upon their sales two and a half per cent and two per cent, whatever it is, and those monies they would rather them be attracting people locally than people that are going to have to drive 50 or 60 miles.

253              So we will get some money from McDonald's and those kinds of ‑‑ because of franchisees.  We'll also get probably GM, Ford, Honda dealer association monies and that will lessen the load on local.  But I agree that we are going to take a very aggressive local advertising strategy.

254              THE CHAIRPERSON:  In terms of national spot, Mr. Newell, just to comments, a number of the interveners have raised the issue that the national spots market is weak currently.  Is that your perception?  If so, how does that affect, again, your national revenue picture?

255              MR. NEWELL:  I'm apparently not supposed to say this, but I'm retired and so as of 2002 I would totally disagree with ‑‑

256              THE CHAIRPERSON:  As of 2002?

257              MR. NEWELL:  2002.  I would totally disagree.  David, however, has provided me with some information that certainly shows that the market is not that way and maybe he could answer that question as well.

258              MR. BUCKHALTER:  I certainly think that it's important to keep it within the context.  That is the Toronto, Hamilton national spot sales are nearing $600,000,000, which is a 60 per cent increase since the year 2000.

259              TVN is looking for 6.4 million dollars within that universe.  In terms of the weakness, we came to it from a different perspective.  Not one based on a short term economic blip that perhaps some of the interveners were experiencing, but a comprehensive, longer term picture as to the financial viability of the market over the past five years.

260              We looked some of the issues pertaining to ‑‑ we looked at, for example, the unemployment rate.  Statistics Canada came out ‑‑ have come out with 352 monthly reports that suggest that out of those 352, over a 29 year period only three times has the national unemployment rate been lower than in current years.  That was 6.7 per cent as opposed to 6.8 per cent.

261              The BMO's, Nesbitt, Burns chief economist has suggested that Canada will lead the G7 countries in economic growth in '06.

262              The Conference Board of Canada has suggested that the Metropolitan Toronto census area will lead the country in economic growth throughout '06.  So we've used some of the interveners' suggestion that there is a weakness to the market certainly as a short term proposition.

263              THE CHAIRPERSON:  Thank you.

264              MR. SNOOK:  If I can just add to that, Chairman Dalfen, the recent study that was completed for the Ontario government called the Greater Golden Horseshoe forecast, the Ontario government is going through a major study on primarily how to deal with the growth here in the Greater Golden Horseshoe.

265              Just to read briefly from that.  It says. "The new forecast called for a large quantum increase by 2031."  Seems like a long way away, but it's only about 25 years, and, the Greater Golden Horseshoe population, which of course includes Toronto, Hamilton and Niagara, is actually going to grow by almost four million people.  There's going to be over 1.6 million new housing units start and over 1.7 million new jobs.

266              They clearly point that the Golden Horseshoe is continuing to be the power engine for Canada.  So to suggest that there's a slowness happening in the Golden Horseshoe is actually the complete opposite.

267              MR. BUCKHALTER:  The Ontario television market over the past five years, according to the CRTC figures in terms of national spot sales have increased by 23 per cent.  During the same period, the Canadian average is 12.5 per cent.

268              The Ontario profit before interest and tax over the past two years at close to 16.7 per cent is 31 per cent above the Canadian average during the same period.  According to CanWest Global's own intervention, they point to pretax profit analysis and over the past year they point to the Toronto Hamilton market having an 18.5 per cent higher profit or pretax profit than the Canadian average of 6.4 to 5.4.

269              So I think that within the context of the market and in addition to looking at total Canadian television revenues, which over the past four years, from 2000 to 2004, have increased nationally by 1.1 billion dollars.  This is a healthy market, one which is thriving, that is increasing its revenue base by 225 million dollars annually.  This is a new Canadian kid on the block looking for a very, very, very small percentage of that.

270              THE CHAIRPERSON:  Thank you.  If I can turn to your Appendix 5B, which is the impact of your revenues on ‑‑ or the sources, if you like, of the revenues and the impact on existing media, where you would draw those revenues, and it's a year 2 analysis, as you probably know.  You gave us shares when you simply use those numbers and divide them into the 13 million.  In the second year you get a series of numbers.

271              There's three areas I'd like to explore with you there.  The first is you project about 5 million of the 13, 38 per cent of your revenues for the second year to come from existing conventional television.  Could you elaborate on how you came to that number?

272              MR. NEWELL:  I'll take that, Chairman Dalfen.  Again, it was 11:59 prior to the filing.  Take you back there, but however, we relied very ‑‑ again, very heavily on the data that we had collected from Tri‑Media.

273              What we found was that about ‑‑ of the people who said that they would definitely advertise, almost half of them said they would increase their budgets.  They were very few of them, I think only 16 per cent, that were using television already.  The amount of share of advertising that they said that they would put on the station of the $44,000 that they spent in a year, about 26 per cent would be allocated on average to the new station.

274              So we took all of that data and said if we're going to do the 13 million dollars that you used ‑‑ actually, I thought it was eleven million.

275              THE CHAIRPERSON:  This was just a second year analysis.

276              MR. NEWELL:  Yes, I'm not going to argue with you on any issue at all.  I'm just going on my memory.

277              THE CHAIRPERSON:  Any time you think I'm wrong please let me know.

278              MR. NEWELL:  Not at all, sir.  Not at all.  In response to the question, we thought that of the 13 million dollars or eleven million dollars, whatever it was, about half of it was going to come from existing television and so what percentage of that would be from conventional ‑‑ because there are no conventional stations in Niagara.  What part of it would be coming from Buffalo what part of it would be coming from Toronto or from Hamilton or from network or whatever.  We just divided ‑‑ we said there's 2.1 billion dollars being spent in conventional television, there's another 730 million dollars being spent on specialty, pay, digital, whatever.  Of all of that, we're looking for a total of eleven million dollars.  Five million of it is going to come from existing television.  The split will probably be 35‑16, 38‑16, but it might be 48‑6.  As I said, we put some numbers there.

279              THE CHAIRPERSON:  Thank you for your candour.  You mentioned Buffalo in there though, and I guess I was wondering about ‑‑ Buffalo isn't mentioned.  I guess you include those as existing off‑air conventional stations in this particular analysis?

280              MR. NEWELL:  We would include the ‑‑ I've been to quite a few hearings where the famous Buffalo repatriation story has risen its head and its 40 million dollars a year, it's 20 million dollars a year.  The last time I checked somebody told me it was 16.  It's rapidly being repatriated, I suppose.

281              At any rate, the Buffalo money would be in the 54 per cent that we've included as existing ‑‑ when I say existing, I mean A and B as 54 per cent.

282              THE CHAIRPERSON:  When you say A and B you mean existing ‑‑

283              MR. NEWELL:  Existing off‑air television and existing specialty.  So I'm saying that's where we roughly ‑‑ we would get half of the monies that were we're projecting.  What the split is we made up.

284              MR. BUCKHALTER:  Referring to the Buffalo component, in that number ‑‑ I mean in 1998 the CAB suggested that that number was 18 million dollars.  In Craig Media's application hearing in 2001 in December, they suggested 24 million dollars was going across the border.

285              Our notion is that the 14 to 16 million dollars is currently going across the border, a portion of which we would expect to repatriate in terms of bringing back to Ontario, in terms of people watching Ontario as well as being able to contribute some of that money back into Canadian production.

286              THE CHAIRPERSON:  Okay.  And radio, is that the same?  You estimated about eleven per cent coming from existing radio.  What's your thinking on why radio advertisers would shift to  your station?  Is this your heavy focus on retail?

287              MR. LUTCHIN:  Chairman Dalfen, actually based on our ‑‑ not only our quantitative study through Tri‑Media, but our qualitative study, that both myself and Mr. Wilks spent talking to hundreds of business across Niagara.  Being responsible for the sales team, I don't see us actually selling against radio at all.  In fact ‑‑ so that number I would say that we filed with you is actually high.

288              Niagara has a disproportional number of newspaper and print operations here.  There's ‑‑ for want of a better way to describe it, there's almost a newspaper on every corner here in Niagara.

289              I did a little bit of a study that I'd like to share with you and other members of the Commission.  Putting the Niagara market in the context of Southwestern Ontario; for example, in London the population CMA base there is relatively close to Niagara.  Their total advertising spending in London, Ontario is 181 million dollars.

290              In Kitchener, the Kitchener‑Waterloo market is about 186 million dollars.  Again, population base just a little higher than Niagara.

291              If you come down to us here in Niagara, we're currently ‑‑ have a retail spend of over 5 billion dollars a year and growing, and our total advertising spend is 162 million.

292              I've talked to many of the radio station broadcasters and, in fact, have a very close friend in this audience right now ‑‑ at least I think he's here.  He told me he's going to be here.  Who is actually an owner.  He's actually looking forward to having TVN on the air as a radio station colleague because he believes that we will raise the overall awareness and profile of Niagara, not only with local Niagara advertisers and consumers, but also across on the north side of the lake.  So radio station are actually, we believe, hoping TVN gets on the air.

293              From a sales team perspective, without disclosing all of my strategy, we'd be pleased to do that, but certainly out of that 162 million dollars, at least 60 per cent of that here in Niagara is being spent on print.  At least 80 to a  hundred million dollars of that.

294              So for TVN to be successful, if you took a look at both our local and national time sales, out of that 162 million, if you took everything, we would only have to get seven per cent to be viable.

295              If you just took us on a local sales perspective, we would only need 3.5 per cent of that 162 million dollars.  Spending here in Niagara and, in particular, on television is much lighter than in other parts of not only Southwestern Ontario, but throughout Canada.

296              Mr. Newell had referred to our Tri‑Media study that talked about the advertisers that we sampled said they would spent about 26 per cent of their budget reallocated would be spent on TVN.  It just so happens, and I actually didn't realize this until last night when I was poring through my notes, but that 26 per cent spending they are telling us they would spend on TVN, correlates directly to the Television Bureau's total advertising spending of 26 per cent on television sales in Canada.

297              What it's telling me, and it's confirming again through at least another four or five different strategies, that what we're hearing in our studies is tracking exactly where it should be.

298              THE CHAIRPERSON:  I guess you weren't at 11:59 meeting, were you.

‑‑‑ Laughter / Rires

299              MR. LUTCHIN:  I think I missed that one.

300              MR. NEWELL:  Chairman Dalfen, however in answer to your question, we did use the information from the Tri‑Media study which did say that they ‑‑ of the advertisers who would definitely advertise on the TVN station, almost half of them said that they would spend less on radio and that was ‑‑ even though it was minimal amount that was quoted, that's where that number came from.

301              THE CHAIRPERSON:  Thank you very much, Mr. Newell.  Mr. Wilks, gentleman, lady, thank you very much.  That was very helpful.

302              We'll now break for fifteen minutes.  Nous reprendrons dans 15 minutes.

‑‑‑ Upon recessing at 1115 / Suspension à 1115

‑‑‑ Upon resuming at 1137 / Reprise à 1137

303              THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.

304              THE CHAIRPERSON:  We will now continue the questioning.  Vice Chair French.

305              COMMISSIONER FRENCH:  Thank you, Mr. Chairman.  Mr. Wilks, I'm just going to pursue some technical aspects of your application, which I think we can deal with reasonably rapidly and concisely.

306              I'll try to ask my questions in as straightforward a way as possible and perhaps we can maximize the time available to talk about what's actually on the screen, as we've been able to do so far to a certain degree.

307              With respect to your plans for moving to digital, can you tell us what your current plans are and what the key considerations would be.  In your ‑‑ in the material that's currently before us there are three or four different dates given and I'm sure that you'd like to clarify that in our minds please.

308              MR. WILKS:  I would indeed.  TVN.  Niagara intends to be ‑‑ at the beginning of its existence to be a one hundred per cent digital HDTV service.

309              COMMISSIONER FRENCH:  Sorry, Mr. Wilks.  Is everybody all right here?  Is somebody hurt?  Once again we see that technology is much less perfect than the human beings who created it.

310              I'm going to let you start again please.  The question was what are your plans to convert to digital and what were the considerations or factors going into your decision?

311              MR. WILKS:  As I did say and I will repeat, TVN Niagara commences its life as a full digital, high definition television service and a hundred per cent of our programming that we run that's Canadian will be high definition television.  Also with the ‑‑ with the movie, we're also high definition television with the movie format.

312              Let me explain what has changed with us.  For a time some of my shareholders and colleagues were distressed with the process of going through an application.  It's taking too long.  Well, in fact, let us confess today that the delay has helped TVN enormously.  And I'm going to ask my engineer, Dave Storey, to explain why the passage of time has changed our circumstance.  Dave.

313              MR. STOREY:  Monsieur Vice Chair, when we first did our budget in 2003, we were looking to be a hybrid analog digital station, but as time has progressed and technology has improved, it didn't make sense to design a plant that was anything other than high definition.  And with the recent visit to NAB this year, showed that even the news reporter cameras could be cost effectively purchased for a reasonable amount.

314              So our plan is to have an ‑‑ internally a high definition station and down convert to our analog transmitter.  In doing so, it allows us also to ‑‑ with the aspect of Channel 22 and high again antenna to reduce the power of our transmitter from 40 kilowatt to 20 kilowatt, allowing more or less of a half price cut in the price of the transmitter, allowing sufficient budget to purchase transmitter and ancillary gear to be able to transmit license pending to be simultaneously analog and digital high definition right out the gate.

315              MR. WILKS:  To put it into perspective, cameras which were near a hundred thousand dollars to purchase, high definition cameras of that same quality are now being marketed because of the introduction of that technology mainly in the United States, they're selling in the range of $18,000 per camera.  So that allowed us to do several things, which is to increase the number of cameras that we have.

316              But more importantly, with transmission, you today are considering our application for an analog service.  We have been working with Industry Canada to ascertain the availability of our companion digital HDTV channel and Industry Canada has cleared channel 48 for our use, subject to your approval, of course.

317              We will be going through that process the moment the decision is made, and assuming it is positive, we would file the application for the digital transmitter and would simultaneously broadcast on both HD digital and on our analog transmitter, to be the first television that's all digital in the country.  All digital, all HDTV.

318              COMMISSIONER FRENCH:  Sorry, Mr. Wilks, when exactly ‑‑ I know you can't be absolutely precise, the future is uncertain, but what are your intentions with the timing of that filing?

319              MR. WILKS:  Assuming the Commission would deal with the application for the secondary transmitter, which is the digital service, we would expect that by the spring of 2006 or the summer of 2006, latest, that both analog and digital would be signing on simultaneously.

320              COMMISSIONER FRENCH:  Can I just be completely clear about the movies you want to acquire.  Will they all be digitally formatted?

321              MR. WILKS:  Yes, all of the moves ‑‑ it's a requirement.  We've been dealing with the majors now, and in America where the transition has been much more quick into digital HD television, the transition of the great libraries has been the major industrial activity in America.

322              We're finding in the international marketplace that the films of Europe and the United Kingdom are going through the same transition.  They're all being put into a standard 1,000 ADI digital high definition format.  They're all formatted in letterbox size.

323              COMMISSIONER FRENCH:  So when you say it's a requirement, it's your requirement?

324              MR. WILKS:  It's our requirement. We're not going to buy any ‑‑ I shouldn't really say that.  If there was a significant movie in an historical package that obviously you should not preclude some of the great works of art from history because they're not in the right technical format.

325              COMMISSIONER FRENCH:  Understood.  And in terms of even news gathering equipment and remote operations will all be digital because the price points are declining rapidly?

326              MR. WILKS:  Yes, that is correct.  I'm going to let Dave answer the question, but I want to mention one small thing.

327              We have been doing some experiments where we moved a signal from this ‑‑ just out in the street a block away to Brock University, a full wireless signal from here to Brock University of broadcast quality without any microwave, without any satellites, which is some exciting new technology that we intend on using, working with Canadian corporations, I might add, in developing that technology.  David.

328              MR. STOREY:  To answer your original question, vice chair, yes our news gathering gear, equipment will be high definition and we will be doing some file conversion factors to service our analog service as well.  So the image will be originated in high definition and down converted.

329              COMMISSIONER FRENCH:  Thank you.  You've been working with your consulting engineer about a possible allotment for digital.  Will it be possible to duplicate your analog coverage, and, if not, will there be ‑‑ will an issue arise with cable carriage?

330              MR. WILKS:  No.  In fact, it achieves the same objective.  From the tower site that we've been working on, we understand from our engineer that the HD transmitter ‑‑ Gordon Elder, our consulting engineer, advises us that we will reach the same pattern.

331              COMMISSIONER FRENCH:  So the extent that you have priority status, you'll retain your priority status?

332              MR. WILKS:  That's correct.

333              MR. STOREY:  The intent is the patent with using Channel 48, which is what Industry Canada has pointed to us, the preliminary investigation shows that we can achieve the same sort of pattern as we would from our analog.

334              COMMISSIONER FRENCH:  Thank you very much.  I don't have anything further.

335              THE CHAIRPERSON:  Thank you.  Commissioner Cugini.

336              COMMISSIONER CUGINI:  Good morning, Mr. Wilks and colleagues.  My questioning this morning will focus primarily on Canadian content and the commitments you have made in your application both to local programming and your priority programming.

337              So my first question for you today is could you confirm for us that the 34.5 hours to which you referred in a letter dated January 26th in response to staff questions are indeed original hours, as you say, produced by ‑‑ which are Niagara originated programming, produced either by the station or Canadian independent producer resources?  I just want confirmation that they are, indeed, original.

338              MR. WILKS:  Yes, ma'am, they are.

339              COMMISSIONER CUGINI:  And you would commit to that as a condition of license?

340              THE WITNESS:  Yes, we would.

341              COMMISSIONER CUGINI:  I checked your description of Canadian programs in block schedule, and it appears that all but Six Nations Report are station produced.  I do take note that you do say in your letter either/or, but are there any other programmes that would be made up of those 34.5 hours that would be produced by independent producers other than Six Nations Report.

342              MR. WILKS:  Yes, they are now ‑‑ an order, for instance, for Six Nations to deliver the programming they had to go through a technological upgrade as well.

343              That is why we've appropriated $80,000 in an initial grant to them, not a loan, but a grant, in order that they can equip their operation to deliver us the HDTV programming.

344              But, remember, what we've said in the application is that, particularly with reflection of our aboriginal population, that they are also contributing on a daily basis to all of our programming.  They're not precluded, but that particular half hour they are also delivering us shorter item ‑‑ regular items for news and public affairs programming on a regular basis.

345              But the only other issue that we're facing at the present time is the reality that the independent industry in Niagara has not yet made the transition to HDTV.  They're still NTSC analog by and large in the production sector.  So that actually sent us back to the drawing boards to ensure that they had the tools to deliver the program to us, programming to us.

346              So the way that we approached it was that we built a technical complement, increased the size of our production capacity with studios and equipment and mobile units, but we did it with the assumption that independent contracted Niagara producers will, in fact, deliver the programming; that they will act as the writer, producer, directors of the programming, but we're making, in effect, in the language of our business the below the line facilities contribution to them until they get the transition made themselves where they develop their own HDTV capacity, HDTV digital capacity.

347              So the answer is in the news and public affairs programming, the hard news, the newscasts, per se, are all developed by the 90 persons that we employ, the full‑time staff.

348              But beyond that when it comes to long form documentaries, when it comes to the delivery of some priority programming, which includes drama and light entertainment, pretty much all of that is delivered by independent Niagara producers.  And we have not talked to any other producers outside of Niagara and we, of course, found an amazing community of professionals that live here and have never had this opportunity.

349              COMMISSIONER CUGINI:  That leads so well into my next question.  So you do confirm that, in fact, the 34.5 hours will be reflective of the Niagara region.

350              MR. WILKS:  Entirely.

351              COMMISSIONER CUGINI:  Could we further define locally reflective as programs that are station productions or programming that reflects the particulars needs and interests of Niagara region residents produced by Niagara region independent producers and would you accept that as a condition of license?

352              MR. WILKS:  We would.

353              COMMISSIONER CUGINI:  Thank you.  Again continuing with the 34.5 hours, you're planning on airing some 24.5 hours of repeats in your schedule on top of the 34.5?

354              MR. WILKS:  I wouldn't express it like that.  I think what we're saying to you and what we've said steadfastly throughout the application is we accept as a condition of license to do a minimum of 34.5 hours of Canadian programming.

355              COMMISSIONER CUGINI:  Original.

356              MR. WILKS:  Original.  But we intend to do more than that.  The reason we intend to do more than that is that we find that the syndicated materials that are available in the acquired Canadian program category are ‑‑ in effect, we do not believe that it serves the interests of other Niagarans or the Canadian television industry to continue to take programs that have had significant airplay on a number of outlets in Canada, so we've ‑‑ we did say this in the application.  We've determined that acquire ‑‑ we would be better off to repeat our best Canadian programming that we produce in Niagara than we would be to acquire the low priced syndicated material that's already been exhibited over and over and over again ad nauseam in order to get most Canadian stations that magic 60 per cent number.

357              So our real goal is to have all of our Canadian programming to be Niagara originated.  That is our goal.  We think that we can achieve it.  We're already working on specific programs to achieve that, and I'll be glad to answer ‑‑ if you were interested.

358              I won't answer my own question, but the point is if you were interested we would be glad to enlarge on that idea.

359              COMMISSIONER CUGINI:  You mentioned earlier the 19.5 ‑‑ your news and public affairs programming, but I want to focus a little on your news programming which, from your schedule, is about 19 and a half hours per week.

360              MR. WILKS:  Correct.

361              COMMISSIONER CUGINI:  Your application does detail ‑‑ I think it was in response to staff questions, detail what is currently available on CH or lack thereof, depending on your point of view.

362              MR. WILKS:  Yes.

363              COMMISSIONER CUGINI:  Could you tell me, in your news and sports programming, in particular, what will be different from what TVN will be offering when comparing it to what is currently offered in the market in term local reflection.

364              MR. WILKS:  Well, the ‑‑ I hate to do it almost, except that I'm forced to say that CH's portrayal of Niagara is really handled by one reporter that lives in New York State.  That's the ‑‑ that's what we have now.  That's how we cover this vast region.

365              And we have suggested that our news contingent, with technical personnel added to the actual hard news staff, that 25 professionals will certainly deliver ‑‑ I think the better question would be what are they missing.  And the answer is everything.

366              They're ‑‑ they are experts, and we give them the leadership and actually we'll give them the title of being the leaders of covering the Karla Homolka, Paul Bernardo saga and the bodies bag disaster stories of Niagara.  We think that they're the king and we're going to let them keep that territory, because that's not what Niagara is about. And that's what, regrettably, is what has been portrayed.

367              The fact is, we've got some enormous issues in Niagara to deal with.  We need to connect to each other.  I want to simply point out that there is no practical way today for all Niagarans every day to connect.  Meaning there's no medium of communication.  Newspapers reached a small portion of under 40 per cent of our population.

368              So how do we get our information?  Radio has abandoned largely the news and public affairs except one radio station, and I don't believe they would be insulted if I said that their coverage is not comprehensive about Niagara.

369              We've got some major issue that take place in Niagara that just do not get discussed in any media.  At our election time we have attended at voting polls as low as ten per cent of the people participating because they just don't know who the candidates are.

370              We've got more elected officials in Niagara at the local and regional level than any other municipality in Ontario, in fact, double the number of any other municipality.  We have a regional election, which we'll have in November 2006.  We'll be running 600 candidates for 125 local positions.

371              CH in November 2003, the time of the last election, their total coverage for the entire month, including the results night when city collections were announced throughout the province, was 14 minutes for the entire month.

372              You can't get a perspective on these issues.  We've got dilemmas.  The dilemmas are good on the one hand.  You have this per capita spending that's higher than Toronto or Hamilton.  Our household income spending is higher, our retail spending is higher.  In gross dollars we actually sell more retail than Hamilton does as a particular region.

373              So we've got the revenues, but our huge issues deal more with social issues, transportation issues, definitely cultural issues, and economic issues in the sense that with the changes that have taken place in our economy over the past fifteen years, basically we find that Niagarans haven't got any idea who we really are.  They don't even know about themselves.

374              They think, for instance, that the agriculture business in Niagara ‑‑ that must be the wine business.  Niagarans themselves are shocked to find out that grape growing is 13 per cent of our agricultural economy.  42 per cent of our economy and agriculture is with cut flowers.  Hog producing and chicken growing, poultry raising are larger industries.

375              Most people in Niagara don't even know who is our biggest payroll.  We have 80,000 people directly involved in education in Niagara, directly.  It's by far our biggest payroll.

376              So all of these changing demographics ‑‑ and we've got big problems.  We've got health issues that are really catastrophic potentially really.  Not to exaggerate.  Higher cancer rate than anywhere else.  We don't know whether it's from hydrocarbons and the Queen Elizabeth Way that some engineer years ago decided to put right beside our most populated centres and our best fertile lands.

377              We've been trying desperately to get a highway built up on the top of our escarpment to avoid this kind of mess that we have that is spoiling this incredible pristine environment here.  And we're not connect with the political ‑‑ 12 political regions of Niagara sometimes get tribal and parochial to an extent that they're not unified on anything.  But that comes not because they're not interested in working together.  They're not communicating.

378              I hate to say the cliche from the movie, but "What we have here is a failure to communicate."  So that for us, what are we doing different than CHCH?  Everything.  Everything.

‑‑‑ Applause / Applaudissments

379              THE CHAIRPERSON:  You're not running for one of those 125 offices, are you?

‑‑‑ Laughter / Applaudissements

380              COMMISSIONER CUGINI:  Given your conviction in responding to that question, I'm sure you won't have a doubt with this one, but would you agree to a condition of license requiring 19.5 hours of news programs per week?

381              MR. WILKS:  As a minimum we would accept that and intend to increase that minimum.

382              COMMISSIONER CUGINI:  Thank you. You did mention the aboriginal presence on your station through Six Nations Report, and you also include in your application the program "Village Square."

383              MR. WILKS:  Yes.

384              COMMISSIONER CUGINI:  As reflecting the presence of cultural aboriginal minorities in the Niagara region and that these two programs would result in 52 original 30 episodes per year.  Would you accept a condition of license requiring at least 26 original hours per year of programming primarily dedicated to reflecting the presence of cultural and racial minorities and aboriginal people in the Niagara region?

385              MR. WILKS:  Yes.

386              COMMISSIONER CUGINI:  Thank you.  I also note that these two programs are scheduled in prime time.

387              MR. WILKS:  Yes.

388              COMMISSIONER CUGINI:  Would you further accept a condition of license requiring that they be aired between six and ten p.m.?

389              MR. WILKS:  Yes, ma'am.

390              COMMISSIONER CUGINI:  Thank you.  In continuing with the block program schedule, in addition to the 26 hours in prime time comprised of "Six Nations Report" and "Village Square", you've included titles such as "Wines of Niagara", "Garden City" and "The Buck Stops Here."

391              To me, that totals a hundred hours of locally reflected ‑‑ as we've described earlier,  programming again in prime time.

392              MR. WILKS:  Yes.

393              COMMISSIONER CUGINI:  Would you except a conditions of license requiring .

394              MR. WILKS:  Yes, we would.

395              MR. GOODWIN:  Okay.  I'm going to turn to priority programming for just a moment.  You list "Tiny Talent Time", "Talent Caravan", two "Minds' Eye" telethons per year, first film right one entertainment specials and four long form documentaries each year?

396              MR. WILKS:  Yes.

397              MR. GOODWIN:  Is that the total composition of your priority programs?

398              MR. WILKS:  The answer is ‑‑ I like short answers, as you see.

399              COMMISSIONER CUGINI:  And it's getting warm in here.

400              MR. WILKS:  No, it is not comprehensive.  When you asked us to file a block program schedule, it's a schedule for seven years which, of course, is ‑‑ every television station changes the program schedule every week.  So we'd  need to file 365 to reflect what we really intend to do.

401              We're dealing with a number of situations that are emerging very quickly.  For instance, just next door to us is the new thing in Niagara.  It's a 1400 seat theatre.  Believe it or not, performing arts centre other than the wonderful Shaw have been in short supply, and thanks to Brock University we've been able to have some semblance in our larger city, St. Catharines, but with this 1400 seat theatre we found in dealing ‑‑ it can be made available to Television Niagara for five days per week.  And we've been asked to develop programming should we be licensed to use that room to do programming, which we would like to export worldwide. That is all priority programming.

402              The genre happens to be variety television, a place where we've had considerable experience and we've had considerable success in moving variety television programming around the world, but that venue is absolutely perfect for showcasing our talent.

403              For instance, in July I'm working with a local group called The Mantini Sisters to tape a high definition video and concert in that particular room.

404              But the fact is that we intend to be, in essence, in the music sector and that genre, the television station that is the nostalgia music television station, nostalgic performers.  These are the great acts from the sixties, seventies, eighties, nineties.  >From our past, both international and domestic, but will be all Canadian content, meaning the strictest definition of how one measures Canadian content.

405              We've been ‑‑ even then have generated a position by sharing the box office with the people who want the traffic, that own that theatre, that will contribute approximately another two million dollars to our above the  line ability to pay acts.  Really, we're doing it in a partnership with acts.

406              We've been dealing with the major acts ‑‑ now, these are household names, people you would know about instantly.  They would partner with us in the sense that once you're recorded on HDTV you have a record that is both a video record which now there's an international market for the HDTV video disk.  There's a market for international CD's because most of these artists may have had hundreds of best sellers in their past, what happens now is the new world of the record business, they no longer have recording contracts.  So we're partnering with them in the release of CD's as well.  We think it will be an interesting industrial strategy.

407              Then just to finish off the idea, we're in constant motion and have been even now, and have acquired product even now specifically.  We had ‑‑ Simon Bradbury is one of the permanent ensemble cast members of Shaw Festival who did a brilliant ‑‑ wrote and performed in and starred in a brilliant play on the trials of Charles Chaplin.  That's Charles Chaplin, the film star of "The Little Tramp."  It's a brilliant piece.

408              It's currently ‑‑ only just weeks ago moved into the United States, into Pittsburgh, and is getting rave reviews in the United States.  But we've acquired the rights to videotape on HD television that work.

409              Similarly, another Canadian friend of ours, a man by the name of Eddie Carroll, has written and stars in and is getting international rave reviews on the life story of Jack Benny.  We've acquired the rights for that particular program to be recorded.

410              Even as we're sitting here, we recorded a history series ‑‑ we've already completed the first part of the history series in HDTV, featuring a war of 1812 which, again, is all priority programming, shot on location with multiple cameras and it's already in the can.  And we've undertaken to deliver that.

411              I guess what's really interesting with us is once we're made real ‑‑ what I mean by that is that once you've determined that we have a life, and we should not be stillborn, as someone suggested, then in fact once that take place we will be in position of being able to generate co‑productions.

412              We've had extensive meetings with PBS in the United States where I have a current series that I've produced running on PBS on a weekly basis.  They're in discussion and ready to go, particularly on HDTV product.  They actually met extensively with us to share the War of 1812.  We almost had the War of 2004, though, in those meetings in the sense that each of us see that War of 1812 somewhat differently I discovered, which I don't know how that could be.

413              So some co‑productions will work and some will not, but we believe that eventually we will be working with specialty channels and pay TV channels in sharing a process.  In some instances, we'll take second and third window.

414              To put it succinctly ‑‑ ha, is he kidding, he doesn't know what the words means ‑‑ succinct, but the point really is that you're looking at our minimum base and what we've reflected there  because it was affordable with the monies we had available in priority programming, but our ambitions, what we actually believe, is we believe that the people in the Golden Horseshoe that we compete against are very vulnerable.

415              We believe, in fact, we can, in fact, take a very significant audience by producing high quality programming.  If we do a Walter Ostanek, a local musician who has been nominated 17 times for a Grammy, if we do a barn dance at Hernder's Estate Winery with him, I'll make a prediction when we come up for a license renewal that that would be our most popular show.

416              We just think that there are a lot of people in Southern Ontario, the Golden Horseshoe, who are ready for this kind of programming.  We intend to make our mark, just as we have done in the past, with producing programs that Canadians will watch, and not just Niagarans.

417              COMMISSIONER CUGINI:  Do you anticipate that this programming would air in your first year of operation?

418              MR. WILKS:  I'm going to be surrounded by people with suspenders and green eye shades who are going to ensure that we do it in a orderly basis.  In essence, you develop them carefully and contractually in a very safe way, but then you seek out those relationships that you add other dollars to your dollars.

419              We qualify for acts as to the television funds, just like the other big broadcasters across the lake, who last week took out 28 million dollars of taxpayers' money for their productions.  We are eligible for those kinds of allocations as well.  Canada is constantly evolving in the world of tax‑motivated reasons to produce in our various provinces, and Ontario is no exception.

420              We've got all kinds of tax‑motivated benefits that we can add to our production process and, of course, there's always rumours going around which we always like.  Things like tax shelters which have produced thousands of hours in the past.  We're looking continually for new methods to generate the amount of money so that we can produce programs Canadians will watch.

421              For TVN our belief is that the future is in the Canadian programming.  The future ‑‑ where the vulnerability is in the Canadian marketplace with ‑‑ with only two out of 25 of the top 25 shows being produced now by our Canadians producers on our big networks, that we just think they're missing the mark and we think little Niagara might surprise a few people.

422              COMMISSIONER CUGINI:  In your applications you did commit to spending $500,000 per year on priority programming.

423              MR. WILKS:  We did.  In addition, Commissioner, we also allocated another 500,000 which was for syndicated ‑‑ Canadian syndication, which we're suggesting that will be applied to the priority programming budget as well.

424              COMMISSIONER CUGINI:  I'm sorry, could you repeat that for me?

425              MR. WILKS:  Yes.  There's a category that we have which in letters exchanged with the Commission, you asked about half hours that were blocked on the strip, mainly on Saturday, you'll see it's a category called Canadian Acquired.  That budget is a half million dollars a year.

426              What we're suggesting ‑‑ and you'll also see between nine and eleven each morning Canadian Acquired.  We're suggesting to you, just as we've said earlier, that that programming, we believe, is better to repeat our Canadian programming that we produce in Niagara rather than spend that money or to invest it in priority programming which we ‑‑ we're saying that's in addition to the money that we've identified.

427              We will not be doing buying off‑network or old syndicated material.  "Tales of the Riverbank" and "Tugboat Annie" TVN will never show.

428              COMMISSIONER CUGINI:  So are you now going to spend a million dollars on priority programming?

429              MR. WILKS:  That's correct.

430              COMMISSIONER CUGINI:  And you would accept that as condition of licensing?

431              MR. WILKS:  We would.

432              COMMISSIONER CUGINI:  Thank you.  Now, would you accept that as a conditions of license beginning in the first year?  I do note that you ‑‑ in your list of priority programs, you said that some would begin in the second year of operation.  "Tiny Talent Time," I think was one and "Talent Caravan" would begin in the second year.

433              MR. WILKS:  Yes, that's correct.  That is what we predicted.  Am I right?

434              MR. THIBAULT:  Yes.

435              COMMISSIONER CUGINI:  So would the condition of license apply in your first year of operation?  That is, the one million dollars on priority programming?

436              MR. WILKS:  The answer is yes, it will, in the sense that we're not going to use the Canadian acquired budget in that fashion.

437              We'd prefer to repeat the programming that we own and control and we've created with our independent producers rather than take that money for another rerun of an old cooking show that's been around for 20 years and still being flogged on the circuit.

438              We're just saying we've determined internally that we're going to abandon that process.  We believe that the money is more needed in the priority programming, and that, for us, is where the opportunity is.

439              COMMISSIONER CUGINI:  In terms of the Canadian acquisitions, then, what will your schedule look like?  You did go into some detail as describing what your Canadian acquired programming would be, but now given this commitment, I'm wondering if you've changed your plans with regard to Canadian acquired.

440              MR. WILKS:  Yes.  For instance, with the kind of programming that we're doing such as the Niagara Newspaper and the "Six Nations Report", we've got "Six Nations Report" running in a position that puts it a half hour before "Hockey Night in Canada."  We didn't want to do them the disfavour of having them run against the juggernaut, if there is an NHL in our lives, but we're optimists, as you know.

441              The point really is that we have not scheduled many of those programs for repeats, including "Village Square," those kinds of programs.  You may have heard our ambition after talking to the Welland francophone community.  They've identified a particular need of a program that disappeared that had great value and it was a preschool French instruction program in the style of "Chez Helene."

442              Well, TV Niagara has ‑‑ has a capacity to produce programming in a very unique way in that we're using a number of robotic cameras which are relatively inexpensive, and that kind of a format is where there's not a lot of ‑‑ I don't need six cameras to do it.

443              You need a very good teacher.  If you recall that particular program, there's some people who have never heard of "Chez Helene", but it's where French language was introduced to many Canadian children before they went to primary school.

444              So we see a need there and we've agreed to work with it.  Really, it's all below the line in the sense that we've already got the below the line facility there, so what does it cost us to hire an instructor and work with an instructor and fill a studios full of kids.

445              The answer is it's not expensive production and there's a demand for it and a need for it.  We've got a large ‑‑ it's one of ‑‑ Ontario's only three bilingual ‑‑ cities, rather, is Welland and it's important that they find expression.  They've told us that's what they want.  It's inexpensive to do.  We can add the tonnage without any difficulty.

446              If I read through the whole list of things that are in development, it would take the balance of your day and I won't bore you with it, but I'd be glad to file with you the extensive research and dialogue that we've had with independent producers in that category.

447              It addresses a ‑‑ I'll just very  simply deal with this.  This addresses an issue that came up, in essence, at other hearings where low budget Canadian production was not adequately, in my opinion, defined by some applicants in the past.  But low budget television has changed the face of Canada and us in our television experiences, we've lived through this.  We've lived producing a local documentary that focuses on the ambulance services and sees that ‑‑ improvements in the instance that I'm talking about.

448              We exhibited it to Canadian Association of Broadcasters and it resulted ‑‑ these exhibits resulted in the industry in Canada actually creating a thing called CanPro, and actually were the foundations for a thing where I was at the genesis of it like the Banff International Television Festival.

449              Those events took place at a time ‑‑ it was a different time.  CanPro died because consolidation took place.  Where we used to have hundreds of owners and participants competing against each other, we now have a half dozen.  We don't have any of the these national program competitions anymore.  But when we did have them, it was enormously prestigious for us Canadian broadcasters to bring our programs in competition with broadcasters anymore.  We don't do that any more.

450              All we have with the consolidation  is local newscasts.  It's whose local newscasts against ‑‑ you know, they're not doing the programming they once did.

451              I'm not saying it's wrong.  I'm saying that has disappeared.  It kind of makes us an old fashioned television station in that regard.  I'm sorry for the long‑winded answer.  I really will stop.

‑‑‑ Laughter / Applaudissements

452              COMMISSIONER CUGINI:  Thank you.  Those are all my questions.

453              THE CHAIRPERSON:  Thank you.  Commissioner Cram.

454              COMMISSIONER CRAM:  Thank you.  I'm a frustrated mathematician sometimes.  I just need to find out the basis of what is going on.

455              Mr. Newell, you said that you provided Tri‑Media with the cost per rating point and ‑‑ in order to get to the average and figure out your numbers.

456              MR. NEWELL:  When I said I did, I didn't really mean I.  I meant the company that my parters and I were running.

457              COMMISSIONER CRAM:  Okay.  And what were they, just for the year that you retired or for five years before or an average of five years?

458              MR. NEWELL:  They were the current data from the 2003, which I think is when the study was done.

459              COMMISSIONER CRAM:  So they were data for fall 2003 or spring?

460              MR. NEWELL:  I believe the study was done in the summer and early fall, so they would have been the spring of 2003 purchasing.  We probably were doing some fall stuff as well at that point in time, so that might have included some fall, but the data was, let's say, the most current data we had.

461              COMMISSIONER CRAM:  And that has been three per cented up to when?  Because it says based on ‑‑

462              MR. NEWELL:  Seven years.

463              COMMISSIONER CRAM:  Okay.

464              MR. NEWELL:  Is that correct, Frank?

465              COMMISSIONER CRAM:  I may be taking advantage unfairly.  This is at page 126 of the study.  It talks about based on historical data the standard three per cent increase per year.

466              MR. NEWELL:  I knew you were going to do this to me.  I have to now find page 126.

467              COMMISSIONER CRAM:  Mr. French says it's right after 125.

‑‑‑ Laughter / Rires

468              MR. NEWELL:  Thank you.  That was very helpful.

469              MR. WILKS:  Mr. Chairman, if it's in order it may not be.  But we answered incorrectly an earlier morning question in arithmetic.  Mea culpa, Frank wants to set the record straight, if it's okay with you.

470              MR. THIBAULT:  I made the mistake of doing a calculation in my head, which was a bad place for it to be done.  You had asked earlier the total revenue from seven to eleven p.m. that we would get as a percentage of our overall revenue.  The correct answer is 55 per cent.

471              Then you had asked from seven to eleven the movies, what portion of that would be  generated from the movies, and the answer to that is 83 per cent.  I apologize for the error.

472              THE CHAIRPERSON:  Does combining those two figures still work out to about 45?

473              MR. THIBAULT:  Sorry, 40 ‑‑

474              THE CHAIRPERSON:  Multiplying those two figures together.

475              MR. THIBAULT:  I see what you're saying.  Yes, it does.

476              THE CHAIRPERSON:  So we get the same.  Thank you.

477              COMMISSIONER CRAM:  So Mr. Newell, do you have that ‑‑

478              MR. NEWELL:  Commissioner Cram, I'm trying to find the 1.  Do you know where the 1 is?  What you're asking about is the footnote, correct?

479              COMMISSIONER CRAM:  Yes.

480              MR. NEWELL:  And it's a source PHD, which is what HYPN became.  God knows what reason.  This is based on historical data with standard three per cent increases per year.  That's source and it's footnoted 1.  I'm trying to find ‑‑

481              THE CHAIRPERSON:  It's at the top, Mr. Newell.  You see in black that background?  Net cost.

482              MR. NEWELL:  Okay.  The net cost per rating point.

483              COMMISSIONER CRAM:  Maybe you can just let us know.  I mean I realize ‑‑

484              MR. NEWELL:  Certainly.  That's a very good suggestion.  I'm not sure why the footnote reads three per cent a year because this doesn't ‑‑ the net cost for rating point doesn't refer to any more years than the current year.

485              Perhaps we used it when we did the projections, the seven year projections, but I would like to confirm that.

486              MR. THIBAULT:  I believe the three per cent refers to the rate of inflation, which is what we had used throughout the course of the application.  That would ‑‑ I believe that would be what is going on there.

487              COMMISSIONER CRAM:  Okay.  I then wanted to talk about the response rate, because you said, Mr. Newell, that you relied heavily on the data from Tri‑Media.  And one of the interveners talked about the data from businesses and I thought I may as well put it on the table so we can deal with it cleanly.

488              I believe it's Mr. Baum.  And he referred to ‑‑ I believe at paragraphs 19 to 26, and I'll paraphrase, that the survey of local businesses apparently consists of lists ‑‑ sending out essentially surveys to about three ‑‑ well over 3,000 ‑‑ about 3,300 businesses.  It's at paragraph 22, with a response rate of 5.21 per cent.  That's at page 23, with about 40 out of those 120 giving you a ‑‑ giving disqualification or replied that they didn't advertise.

489              So it appears that the sample really ends up being about 120 out of 3,000 to whom the forms were sent.  Would you agree with that?

490              MR. NEWELL:  On page 227 of the Tri‑Media study we describe the methodology that was used and specifically on page 227 is the sampling.  I would agree with what you have said.  We do state in the study that it's not projectable because it's not a ‑‑ I can't think of the word, but it's not a random sample.

491              It is not ‑‑ when they talk about the sampling error in the study, they basically say there isn't a way to predict what the error would be.  Because of the way that the study was done it is not a projectable sample.  However, having said that, most of the data that we collected was based upon the 1100, whatever it was, consumers that we talked to.  So our audience information and our revenue information was ‑‑ really relied on that part of the information.

492              The second part of the study, which is the business study, we couldn't randomly sample the businesses.  We had to have a sample that, first of all, was only in the area that we wanted.  We had to have a sample that had control of their advertising and then did advertise.

493              So to create a universe out of that restricted a definition was virtually impossible.  What we did do was we sent out e‑mails to a specified list that was controlled.  We sent out faxes.  We re‑emailed them, re‑faxed them.  We set a timetable upon which it was done, and we did get 120 responses that we were able to rely on.

494              And we did rely on these responses to answer some of your questions like where was the money going from ‑‑ coming from, how do you spend your money, how much money do you spend, would you advertise on the station and whatever.  We're not presenting this as defacto scientific research.  It is a ‑‑ more, I would put it, in the category of a focus group, a very large focus group of 120 advertisers who took the time to complete a 16 page questionnaire.

495              Does that ‑‑ it's a long ‑‑ but it was a complex question.

496              COMMISSIONER CRAM:  I hear you.  So 2003, let's say July or so, these people were ‑‑ these surveys were sent out, or sometime in 2003.

497              MR. NEWELL:  Correct.

498              COMMISSIONER CRAM:  You decided you'd invest in TVN.  Do you think these numbers would change at all as a consequence of two things.  One, the entry into the Toronto market of Toronto 1 and Omni, and I'll get to the second after you finish with the first part of the question.  Would you still invest and do you think your number are still ‑‑ Tri‑Media's numbers...

499              MR. NEWELL:  The answer is I would still invest and I am still investing.  The second part of the question is are we, TVN, concerned about our audience in revenue numbers as a result of the additional licensing of conventional television stations in the Toronto market.

500              I believe ‑‑ we believe that Toronto was ‑‑ benefitted in spite of the sale of Toronto 1.  We think that Toronto benefitted, Toronto conventional television benefitted from the licensing of Omni and of an additional conventional television station.

501              It could be have been Torstar, it could have been Craig; whatever, Toronto benefitted from putting that extra station on.  The conventional revenues increased after they went on in spite of the fact that CHUM and Global and CTV all cried that it was a depression and the revenues were going to be horribly damaged ‑‑ their revenues would be horribly damaged by these licensing decisions.

502              In my 41 years of being in this business and dealing with the CRTC and their regulatory issues, I am a strong believer that  competition is good for Canada, it's good for conventional broadcasting.  I have appeared many times before the Commission asking for more licenses.

503              I think the fact that you licensed a couple of hundred digital channels did marvelous things for Canadians broadcasting.  It was a huge success and I think conventional television can benefit from more licensing of conventional television stations.  So, yes, I would be an investor, and I think it's good for TV Niagara, good for the Toronto stations, good for Hamilton, and it's good for Canada.

504              COMMISSIONER CRAM:  And, secondly, after this study what happened, if I understand it, was that one of the major conventional television groups in Canada increased their rates.  Meaning that if people wanted to advertise on their stations, the media buying, the amount available for the other stations was, if I understand it correctly, substantially less.  That the pie, even though it got bigger, the reallocation was a major reallocation to one or two large stations and far less to the others.

505              Would that impact your numbers at all?

506              MR. NEWELL:  It's our belief that television stations don't set the market; that the market sets the market.  You can ask for high rates or low rates or ‑‑ but it will be the buyers and the availability and the audience that will dictate your revenue success and your sell‑out success.

507              Given a competent sales force locally and nationally, we strongly believe we can do our numbers in spite of the consolidation.  I don't think ‑‑ I should stay we don't think it was necessarily a good thing that CanWest bought WIC and we ‑‑ you know, WIC was a great company and it became a play ‑‑ more of a financial nature than a broadcasting desire.

508              But more independent voices, more competition, we think, is good and we're glad to ‑‑ we're happy to compete in that environment.

509              MR. BUCKHALTER:  I think it's important that add as well that TVN's financial impact is very much of a ripple, not a wave.  That is to say that between today's date, the possible awarding of the license to TVN, and the station's sign‑on, the average growth in the national market revenues in Toronto and Hamilton on average in the past five years alone would have grown by two and a half times that of TVN's international budget in year one.  In fact, more than 33 per cent more than the overall budget.

510              So from that perspective I think that we have to look at things from the perspective of if, in fact, those who would intervene would suggest that if a station coming into a marketplace taking a one per cent share of the market would negatively impact their business, I don't know of any other business that, if in fact, their share went up by one per cent or one per cent down, the entire market would be thrown into a state of flux.

511              COMMISSIONER CRAM:  My only last question, Mr. Wilks, is it has been asserted that the second USA, the unanimous shareholders' agreement filed has not been completely executed and, of course, I can't say whether or not the document on the confidential file has been executed, I can only ask that if the fully executed copy of that second USA has not been filed, could you file it within a date certain?

512              MR. WILKS:  Yes, we have some additional filing to do and it is ready to be submitted.  We will submit it.

513              COMMISSIONER CRAM:  Okay.  That's all.  Thank you.

514              THE CHAIRPERSON:  Thank you.  Commissioner Langford.

515              COMMISSIONER LANGFORD:  Thank you, Mr. Chairman.  My question, which may lead to one or two others depending on how you answer it, is very general.  It arises out of some of the discussions you had with the Chairman earlier today and I know how warm it is in the room and I apologize to be going over this ground again, but we've come here to make sure we understand your application and at the risk of killing the audience from heat prostration, I'm going to ask a few more questions.

516              I think ‑‑ what I'm really trying to look at is the road ahead.  Sort of the transition from year one, from launch to year seven, and particularly in terms of revenues.  I think I heard you say, Mr. Wilks, today that one of your ‑‑ one of your major strategies and a strategy you would have commended to Toronto 1 had they asked you, would be to emphasize retail sales, as you called it, for the first while and then move gradually, I guess, to garnering more revenues from national advertising.

517              Is that a correct statement in light of what you said this morning?

518              MR. WILKS:  It is, and it takes into consideration, Commissioner, that at the outset we're not predicting a full sell rate.  We're using only a small portion of our inventory.  It isn't a case of eventually lessening the access for retail, it really is, as the station matures, you're going to get to a point of carrying more volume of advertising.

519              So that's where the equality comes.  But at the beginning, I do believe that at the beginning, the first four to six months, my own experience is that retail was the only one that was safe.  So we intend to do the same thing.

520              In fact, we're using ‑‑ we have fifteen people involved in that department, including a department that doesn't exist anymore, the ability to produce high quality, low cost effective television commercials.  The creative department is incredibly important to this process.

521              COMMISSIONER LANGFORD:  I thank you for that.  What I'm trying to, then, understand is the road ahead.  How this beginning with retail, which sounds reasonable, moving to more national would work.

522              I guess what I'm trying to really ‑‑ I think what it comes down to is that I'm trying to understand the relationships between retail and national ad revenues and between Niagara and Toronto audiences and how one affects the other and what your plans are to draw on these two pools going forward over the first five or seven years.  Is that too big a question?

523              MR. WILKS:  No, it's not at all.  I'm going to ask my colleagues to address this because we internally had to deal with definitions, what's retail and what's national.  For instance, there are a number of advertisers in Niagara that currently advertise on television.

524              Well, in our calculations we do not call that ‑‑ they're not retail accounts, am I right?  Perhaps my colleagues could pick up.

525              MR. NEWELL:  That's correct, Wendell.

526              MR. WILKS:  That means when we talk about retail, we're really talking about the advertisers in Niagara that are not currently advertising.  Many of our advertisers in Niagara are using advertising agencies, even if the agency involved is a national account.

527              We also have the phenomena where in this country and throughout North America for that matter, of franchisers, franchisees; Canadian Tire, Kentucky Fried Chicken, McDonald's, the franchisees.  And you've got them spread territorially.  In some of those instances it's call co‑op advertising, meaning that headquarters will appropriate and pick up as much as half of the budget that they've allocated in the region, and the other half is contributed by the members, the people who operate franchises throughout this particular region.

528              That's an ever growing business and it's one where the relationship ‑‑ it's up to us to get the franchisees into a position to start dealing with us, and it's huge, huge money.  I mean it's very big.  So that ‑‑ it's definitions really that's part of the issue.

529              COMMISSIONER LANGFORD:  Is that where the money that you're going to call national is going to come from?  It's not going to be somebody looking at your numbers in Toronto and saying, hey, this is an national buy now.  This is worth looking at.

530              I'm trying to figure out, the people that you're going to go and see to sell ads to ‑‑ well, I understand retail.  Was it Mr. Al Slattery's Chev dealer or whatever it was, or Ford ‑‑ anyway, there was a man there selling automobiles and pretty clear where he sits on the spectrum.

531              MR. WILKS:  Yes.

532              COMMISSIONER LANGFORD:  Then when we move over to Ford itself or General Motors itself, or Molson's, will they always say, well, we've already got Niagara because they're getting it through the Toronto stations or will there be a time when they'll actually buy separately from you?

533              MR. BUCKHALTER:  Well, national advertisers, they don't buy generally speaking Barrie for Barrie.  They purchase Toronto and count the spill points in other minor markets.  So that we would be approaching agencies who purchase on behalf of their clients to get a portion of their dollars and try to ‑‑ try to support the notion that there now will be a bias directed towards the Niagara region that has currently been underserved.  So we're to reach buyers ‑‑ Toronto west buyers.

534              In terms of getting them, if I'm to understand your question, to purchase Niagara for Niagara, we don't see that as being a long term viable plan.  There may be individual instances where that may occur, but by and large we'll be speaking to the advertiser who wants to reach the Toronto Hamilton extended market on a national basis and competing against the current conventional players in the market.

535              COMMISSIONER LANGFORD:  Okay.  Let me just reduce this to words of one syllable.  Right now the advertisers who want to get Toronto could buy Toronto, Hamilton, Barrie, loosely speaking, and get Toronto.  You're saying if you want to get Toronto, sometime in the future we want you to buy us, is that right, and we'll deliver Toronto to you.

536              MR. BUCKHALTER:  Correct.

537              COMMISSIONER LANGFORD:  Now ‑‑

538              MR. WILKS:  That's two syllables.

539              COMMISSIONER LANGFORD:  It's a great plan, but I just ‑‑ I'm having trouble, and I'm not in your business, understanding why it would be attractive to these people.  Your programming is so Niagara, how many Toronto viewers are you going to be able to deliver?

540              If I'm living in Toronto and I turn on my television and I'm getting the voice of Niagara, it may have some charm and it may even have some interest to me, but if I want the news or something local, of course I'm going to have to find another channel because you're not going to be giving it to me.

541              So what have you got in your arsenal of programming, and I'm not in any way criticizing the programming you've talking about today, not in any way.  It goes back to Ernie Bushnell and the birth of television, and I think it's wonderful stuff.  But strictly on appealing to these green eye shades and suspender folks that Mr. Wilks was talking about, why would somebody trying to buy Toronto drive up the QEW and buy it from you when they can get it right there?

542              MR. BUCKHALTER:  The majority of TVN's schedule will not be of appeal to a Toronto based advertiser.  The majority of the monies we anticipate being directed to TVN on a national basis will go to specific areas on the schedule, the majority of which will be the movies and some of the Thursday evening programming as well.

543              COMMISSIONER LANGFORD:  So it's the movie strategy.

544              MR. BUCKHALTER:  Correct.

545              COMMISSIONER LANGFORD:  I have a question about the movies as well.  I'm sorry to sound negative, but I just have to understand this.  Why will people watch your movies, which I assume will have ads in them because that's what you're trying to sell, when they can get the same movie on pay per view or at the local video store or perhaps even occasionally on TV Ontario or public TV with no ads in it?  What will be the attraction there to watch those films when they're so readily available right now in so many ways?

546              MR. BUCKHALTER:  One, I suppose, could make the same case for movies airing on Citytv, on CHUM or Toronto 1.  In terms of going back to Mr. Wilks' point about Canadians in surveys suggesting that movies are the number one choice for viewing.  So the classical movie format, in addition to starting at a time where there was less competition for the US simulcast programs at 8 p.m., more along the lines of looking at some Canadian syndicated programs, the E‑talk dailies, some of the game shows that traditionally appear at seven o'clock, we feel will be the reason the movies succeed in part.

547              MR. WILKS:  If you ‑‑ I'm sorry, Mr. Langford.

548              COMMISSIONER LANGFORD:  No, go ahead.

549              MR. WILKS:  You really don't get it until you ‑‑

550              COMMISSIONER LANGFORD:  People say that to me all the time.

‑‑‑ Laughter / Rires

551              MR. WILKS:  I just mean if you take a classic film, a "Godfather," "Gone with the Wind," a "Bullitt".  Even a spaghetti western from Clint Eastwood, we're just suggesting to you in the interstitials in all of these programs, the program inserts, are totally Niagaran in that scenes from Niagara are the interstitials that show up on every commercial break.

552              It is a matter of presentation, frankly.  First of all, TV Ontario ‑‑ Elwy Yost never had the budget to show anything except scratchy old 16 millimeter prints.  We're not in that.  We're not going to run those kinds of property.  We just ‑‑ it has served a purpose, but that's not what we do.

553              One thing I wanted to really emphasize with regard to the classical movies is the way that they're presented.  We're a television station, and you can make this a condition of license, that will not slice out large sections of a motion picture.  When we run a motion picture, you're going to see the way that it was produced and you're going to deliver it.  Because ‑‑ that's extremely important because I'm not hemmed in by having to joint the network at the bottom of the hour or at the top of the hour.

554              There's been so much hacking and cutting of great classic films, even new releases, people who have seen them on television say, well, that wasn't the same as the one I saw in the movie theatre.  Regrettably, that is the truth.  They're hacked to death.

555              Now, the second part is that we've also affected the enjoyment index factor of movies  for viewers.  We have done things that are really abhorrent.  One of the things we do is we squeeze the titles over into one small section of the screen and we blare a constant flow of promos for everything that's coming up.

556              You can't even for a second absorb, in effect, the climax of a motion picture, those last scenes that really leave you in a position where the credits were time for you to readjust your make‑up, not me, but I mean really it's the process of how you exhibit these films.  When you think that they've been butchered on commercial television.

557              The other thing that we're  experimenting with just as a final ‑‑ we will be experimenting with in consultation with the reps now  is to have a limited commercial introduction and a limited number of interruptions, which is a factor that we've been looking at.

558              We think there is merit in that and we believe there is a market for that kind of advertiser that's looking for that less cluttered environment.  We just think there's a premium possible to be paid for that kind of participation.

559              COMMISSIONER LANGFORD:  Yes, there would have to be a premium, wouldn't there, because fewer interruptions mean fewer dollars.

560              MR. WILKS:  Correct.

561              COMMISSIONER LANGFORD:  I guess what I'm having a little trouble with is that your product, if I want to watch whatever the list of movies you just gave, if I want to watch "Harvey" or whatever, I can buy "Harvey", I can rent "Harvey", I can get "Harvey" on pay per view.  That's a great film.

562              But if I want to watch a sports game, a tennis match, the latest scene of the crime episode, whatever, I got to watch it tonight because if I don't get it tonight I might miss it, it's on tonight.  I suppose I could tape it, but there's more urgency to get the French ‑‑ the final of the French Opening when it's being played.  That's when you want to watch it.

563              I don't feel the same sense of urgency about your product because if I miss "Harvey" on your station tonight, I can rent it tomorrow if I really feel like watching "Harvey" for old time's sake.  I just wonder when you've got that kind of ‑‑ a sort of paradigm, I hate those words, but anyway, when you've got that sort of a model whether you won't be the loser, not because you're not putting out a great product, but because you're the one they can walk around and get to last.  Whereas the people who are showing the sports, the people showing the sitcoms, the appointment viewing type of programming, are the ones the advertiser will go to and they're right there in Toronto.

564              MR. WILKS:  It's always possible that you're entirely right.  That's why program schedules, when it comes to the foreign programming, that strategy gets to be really key.

565              You did say a couple of things that are really not quite right in the sense that you talked about local news ‑‑

566              COMMISSIONER LANGFORD:  It's a preoccupation.

567              MR. WILKS:  When you talk about news, you said that we're all local news.  The fact is we're subscribing to CNN's international service and NBC's international service just to supplement the news.  We've had extensive meetings with CBC to buy the CBC syndicated news service.  Now, that is available at their affiliated television stations.

568              What we have now is we've got the capacity to give something missing and that's the close‑up.  On a regional basis it's easy for us to have a stringer relationship with Queen's Park and in Ottawa at the Parliament, to have our own stringer there dealing with Niagara's reflections.

569              But our hole that we have was the national footprint, and we felt that we taxpayers in Niagara are supporting the CBC as much as Prince Albert or Yorkton or Kingston, Ontario, and why  can't we subscribe to your syndicated newscast?

570              In fact, I offered Mr. Stursberg at CBC to promote his service for CBC Newsworld as part of the trade‑off besides just simply giving them money, that, in essence, drive viewers to them.

571              I'm not pretending that we're the comprehensive, national voice of Canada, but it's important that we get all of those perspectives.  That's how we do that.  So we're a lot more than a local television station or newscast.  We do offer a comprehensive world look.

572              The other thing is we made a headline newspaper in Buffalo, New York.  Of course, nobody here subscribes to that newspaper.  I mean front page banner headline, where the local NHL hockey club, the Buffalo Sabres, announced they were negotiating with TV Niagara to run a number of games on our television station.  That raised other questions as to regard to territorial rights to teams like the Toronto Maple Leafs, but we find ourselves here in Niagara, we've got 6,000 people in Niagara that are regular attendees to Buffalo Sabres.  That's our team.

573              Part of it has supportability and access so we can get a ticket for under a hundred bucks, so that's part of it.  Even then they're suffering in the sense that only 60 per cent of their seats are filled and the demand and the appetite for hockey is definitely a Canadian thing.

574              We have avenue worked with Empire Sports, which is a division of Adelphia Cable in the United States, their pay vision, which is the only place you can see Buffalo Sabres on a regular time except if they're playing the Ottawa Senators or the Toronto Maple Leafs, to talk about sharing a feed with them, bringing in our own Canadian commentator.

575              95 per cent of the players on the team ‑‑ that was last year.  It's a little more ‑‑ they've got more Europeans this year, but a large number of the players on the team are Canadian on the Buffalo Sabres.

576              So if that happens we have not projected any income or revenue from that, but would we do it, we would.  And, strangely enough, although we would attract a lot of attention and a lot of viewers we will not ever make much money doing that, in the sense that the whole idea is to make slightly more than you spend on that kind of process.  Would we do that?  The answer is, we would, we surely would do that.

577              Mr. Bettman and other people get involved in that decision.  It's not just a case of Mr. Golisano, who owns the club and us making the deal, there are other players who will have an interest in those kinds of things.

578              But TVN will be more than just a movie television station, but I think you truly underestimate the power of classics.  I really think you do.  And we're not ‑‑ we've got 15 a week in our daytime schedule.  You're not going to go 15 times to pick up your movies.  This is free to the viewers of Southern Ontario.  You don't have to pay anything for it.

579              COMMISSIONER LANGFORD:  Thank you, Mr. Wilks.  I just want you to know that I'm not motivated by underestimating your energy or ability.  I'm motivated by wanting any service we license to succeed.

580              MR. WILKS:  Sure.

581              COMMISSIONER LANGFORD:  And we ‑‑ the worst thing we can do for this enthusiastic crowd is to tantalize them and then license something that we're unclear of.  In my mind, I was unclear on your strategy and I'm far clearer on it now and I appreciate your answers.

582              MR. NEWELL:  If you're clear I won't add, but ‑‑

583              COMMISSIONER LANGFORD:  It's your chance to snatch from the jaws of victory ‑‑ no, go ahead.

‑‑‑ Laughter / Rires

584              MR. NEWELL:  I suspect that could be a strategy as well.  I think much of what you've said, most of what you've said about the movie and your attitude towards it would be representative of just about everybody in this room.  But we're only trying to get a half a rating point and so if 99.5 believe, like you do, which they probably do, we only want the other .5 to tune in.

585              I think that's an important thing to ‑‑ to ‑‑ I just ‑‑ I realize I just made a mathematical error because I'm talking share and you're talking ratings, but anyways, the number is a very, very small number that we are trying to get.  One point.

586              The second point is that we didn't do any research into the Toronto market, but our national rep did take a look at movies and I believe the information that we got back from his study, which I note Chairman Dalfen took some exception to, but I believe the number that we're trying to get is the lowest number that any movie on a conventional television station currently gets in Toronto.  Point number 2.

587              Then thirdly, whether ‑‑ I share your confusion with national dollars and retail dollars.  As a purchaser of television, I didn't care what the definition was, I just cared what the price was and who my advertiser was.  And I think the station likewise is not going to stop collecting national dollars because the national segment is all filled up or stop collecting retail dollars because the retail sector is all filled up.

588              What we have studied is the people in Niagara and based upon that, we think we can do the eleven million dollars.  We've asked another party to look at the data for us and they think they can do six and a half million dollars.  I don't care whether it's six and a half.  If it's six and a half plus eleven, good for us, but if we can do the eleven we can make our business plan.  I think that's the most important thing that we're concerned about.  Thank you.

589              COMMISSIONER LANGFORD:  Thank you very much.  Those points are very, very helpful to me and I have no further questions.  I do want to say, though, that when you say that I'm part of the people who wouldn't watch movies, I was simply asking my questions from an academic point of view.  There's never been a program on television that I would watch in preference to "Harvey".

‑‑‑ Laughter / Rires

‑‑‑ Applause / Applaudissements

590              MR. WILKS:  Commissioner, as you know then, Harvey's here.

591              COMMISSIONER LANGFORD:  Harvey's with us all.

592              THE CHAIRPERSON:  Thank you.  Counsel?

593              MR. MURDOCH:  Thank you.  I have two brief follow‑up questions to clarify some of your statements regarding your priority programming commitments.  The first is that I understand you've committed to spend one million dollars per year on priority programming commencing in your first year of operations.

594              Would you agree to a condition of license which requires you to report, along with your annual return, a list of priority programming projects you funded in each year?

595              MR. WILKS:  Yes.

596              MR. MURDOCH:  Then my second question is would you be willing to accept a condition of license requiring the airing of at least 55 original hours of priority programming per year beginning in the second year of the license term that would have their first window on TVN?

597              MR. WILKS:  Yes.

598              MR. MURDOCH:  Thank you.  I have no further questions, Mr. Chairman.

599              THE CHAIRPERSON:  Thank you, counsel.  Mr. Wilks and your team, those are our questions at this phase.  Thank you very much.  It's been very helpful.

600              We'll break now for lunch and resume at 2:15. Nous reprendrons à 14 h 15

‑‑‑ Upon recessing at 1256 / Suspension à 1256

‑‑‑ Upon resuming at 1420 / Reprise à 1420

601              THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.

602              Madame le secrétaire, would you call the next item, please.

603              THE SECRETARY:  Thank you, Mr. Chairman.

604              I would now invite the first five appearing intervenors to come up at the front,  and they are V.I.P. Productions, Welland‑Pelham Chamber of Commerce, LOADD Studios, Carrie Aiello and Robert Tanos, and I would like to ask you if you could each introduce yourself before you speak and, also, you have 10 minutes for your presentation each.

605              Thank you.

INTERVENTION

606              MR. TANOS:  Hello.  Is there a starting light, or just start?

607              THE CHAIRPERSON:  Go ahead.

608              MR. TANOS:  Good afternoon, Commissioners, Mr. Chairman.

609              My name is Robert Tanos and it's my pleasure to be here today to speak to you in regards to TVN's application for their broadcasting licence to operate a television station in the Niagara Region.

610              First of all, I'm in total support one hundred per cent of this venture.  There's not a shred of doubt in my mind that this area needs to have its own television station.

611              In fact, as a young man, very young man, I wondered why we didn't have one years ago.

612              You've heard the testimonials from the TVN supporters on their video presentation, we've heard many, many reasons today why this area needs a TV station.

613              I'd like to say to you that I think everybody in the room got a sense of what we call the big picture.

614              We heard numbers, 400,000 people plus, we heard from every mayor almost in every part of the region, we heard from ecumenic divisions, corporate divisions, big scope, we're talking about the entire Niagara Parks Commission, Netcorp, this is what I call a big picture.

615              But I'd like to take this moment to try to turn the page around ‑‑ turn the page over and ask the Commission to look at a much smaller picture.

616              The smaller picture is me, one person, one man speaking to you today from my heart, okay.

617              I was born in Niagara Falls in 1955 and this is where I was raised and this is where I went to school.

618              When I was young all my aunts and uncles and my parents and everybody around me asked me the same question I think every person was asked when they were young.

619              What do you want to be when you grow up?

620              Well, I went to school and they ran relay races one day on track and field.  I came home, I said, Mom, Dad, I'm not going to be an athlete, I came in last.

621              They did geography tests.  Ma, I guess I'm not going to be very good at drawing atlases or something like that because I didn't do very well in geography.

622              And then one day my art teacher said ‑‑ in grade 3, she had everybody draw a picture of a dog ‑‑ this is a grade 3 classroom ‑‑ and she asked everybody to draw a picture of a dog and when she took all the pictures and put them up around the room, I blurted out in my little youth ignorance, I thought you said we had to draw a picture of a dog?

623              And she said, I did.  I said, well, they don't all look like dogs.  She goes, well, Robert, not everybody's as good of an artist as you are.

624              Well, I ran home from school that day:  Mom, Dad, I know what I'm going to be when I grow up, I'm an artist.

625              And that's how it all started, very young for me.

626              I quickly noticed that not only was I an artist, I was the best artist in the class, I was the best artist in the school.

627              So, as a young person trying to identify with yourself what you are and what you do, this was very much an eye opener experience for me.

628              And then I went to another school and the same thing applied, I ended up being the best artist in the school, posters for the committee council ‑‑ student council on the walls and whatnot.

629              Then I went to high school and in grade 9 everything changed for me because now I'm dealing with a much stricter competition level and when I went into the art room for the first day of school, I noticed these fabulous sketches up on the wall behind the art teacher's desk ad I said, wow, are you ever good.  He said, oh, they're not mine.  I looked at him.  He said, they're a student's.

630              I knew right then and there I was in competition.  These sketches were fabulous, one step up on me.  And then I looked at the name in the corner of the sketches and it said, Jim Cameron, James Cameron we all know him, the writer/director, Titanic fame, the most expensive movie in history.  That was his success.  That was the same Jim Cameron, James Cameron.

631              I quickly met him in school and for two years while he was on the art committee doing set and designs for a school play, I was right there beside him.

632              And one day he had to leave and he had painted this big huge column of stones and he said, here's the paints, could you paint the other one on the other side to match it.

633              So, I did my best job.  He came back, looked at it and we stood there in the gym looking at the stage and he said, looks good, didn't touch it and at that moment I stood beside James Cameron toe‑to‑toe and I felt like an artist.

634              Well, in the next year school started in September there was no James Cameron in our hallways and when I asked I found out his family moved the family to Hollywood, and in three seconds I knew that man was going to be successful, because you can't be that good, be plopped in Hollywood at the age of 17 and not do good for yourself.

635              Myself I continued to live in the Niagara Region.  I went home from school that day and asked my Dad if he could get a transfer and move the family to California.  That just wasn't going to happen.

636              I went to theatre college in Niagara College Theatre Centre in Welland.  I went there again for economic reasons.  I couldn't afford to go far.  I came from a humble home and to drive back and forth to Welland was reasonable.

637              I studied theatre arts and I ended graduating the top 10 in my class with a diploma in set design and lighting design.

638              This allowed me after graduation to feel confident as a young individual to go out and look for work, but ladies and gentlemen of the CRTC Commission, there were no jobs for me in this area at that time.

639              So, I did what everybody in this area does when you're young and aspiring in the entertainment business, I moved, I had to move out, and when I ended up living in ‑‑ I'm going to try to speed it up now ‑‑ I went to Alberta and worked for Universal Film Productions, I went to Toronto and worked for CBC.

640              In Toronto I also had an opportunity for work for a company that made television productions where I ended up directing and editing and composing the music for my first television movie called "Fly With The Hawk" in the mid‑80s. It went on to be my executive producer's best seller at the MIP Festival in France that year.

641              The event I found in Toronto was great but it did not open doors for the next movie.  In fact, because I made it under what we call a non‑union situation with a small, low‑budget company it was very difficult to move up into the ranks of the union people.

642              But I continued to look for work and I ended up living in Florida working for a production company.

643              I've been all through Canada in different cities and different places, but all along I keep coming back to Niagara because this is where my family is, this is where I was raised ‑‑ and I don't know if they are back in the room yet ‑‑ they're here.  I'd like them to stand up for a minute, please.

644              This is my mother and my father.  They're here today to support me.

‑‑‑ Applause / Applaudissements

645              MR. TANOS:  Thank you.  Thank you, Mom, Dad.

646              My father only said one thing to us.  He's a very simple man, very simple father, he's got one thing in their heads:  Son, I worked in a factory my whole life, he said, I'd like you to do one thing, just amount to be something better than I did, so that's why I tried.

647              I just kept trying, and I'm still trying.

648              Then something happened that changed my life for ever, my daughter was born and, of course, we wanted to raise her ‑‑ my wife and I wanted to raise her in Niagara where our family was and where my wife's parents were and her family.

649              So, I was here ‑‑ I had a choice, change the career or be Mr. Mom.  I chose Dad to be Mr. Mom and I raised my daughter.  She's 15 now and I can tell you, the last 15 years has not been easy, not been easy to find work here in my field at all.

650              I've driven taxis, I've installed carpentry work, I've done anything, worked in a paint store.

651              And I always had a dream of writing and directing my second movie for television.  My problem was, I didn't have a nickel.

652              So, I bought a cheap camera and I did for the equivalent of what we all know as "The Blair Witch Project", I did a home‑made monster movie, I got lucky with it, it got me some notoriety and I went on and that became my second movie made for television.

653              But it was ‑‑ James Cameron made the most expensive move in history, I made the cheapest movie in history, but it was played professionally and that's what counted.

654              And in a way one could say, give me $300‑million and I could make the best movie in the world too, you just hire the best people to do it.  But I give Jim a little bit more credit than that because I knew what a talented artist he was in the beginning.

655              It took me eight years part time to get that monster movie finished, between my responsibilities to my daughter and my family and part‑time work in trying to get this movie done.

656              That's a long time to chisel off a man's career for one movie.

657              And then I remember the night I started a new job laying drywall.  If you have ever laid it, 12 foot long sheets, 5/8th inch thick holding it up over your head all day, it's very heavy, hard work and I just started this new career, and I went home after my first day's work and I want you to imagine how hard it was for me to watch James Cameron receive his Oscar.

658              And I wondered, why doesn't this station have ‑‑ or this area have opportunity?  Why is there not production companies in Niagara?  Niagara is the most beautiful area in Canada to live, or so I believe.

659              I was also told by my father, son you can move around anywhere you want to go, you'll find one of the most beautiful places to live in this country is in Niagara Falls.

660              And I guess his father knew that when he came over from Hungary in 1926.

661              When my father found opportunity in the factory he did well for himself.  I'm still to this day looking for opportunity in Niagara.

662              'm not complaining about my past, I'd like to make that clear, I accept life deals its cards as it is, I'm the type that makes the best out of what I have.  That's why I made a movie with no money and managed to get it professionally on television.

663              THE SECRETARY:  Excuse me, Mr. Tanos.

664              MR. TANOS:  Yes.

665              THE SECRETARY:  Your 10 minutes has expired.

666              MR. TANOS:  Oh, really, already.

667              Oh, my goodness.  What do I do now then?

668              Well, okay.  I had a trailer to play.  Can I ask for an extension formally since there's only three of us here and two didn't show.

669              As a matter of fact, one of my associates, A.J. Heafy is on the docket and he had to leave early to go back to work.

670              THE CHAIRPERSON:  Why don't you play the tape.

671              MR. TANOS:  Okay, thank you.

672              I'm going to play the tape that was ‑‑ the reason why you are going to watch this tape is I met up with Wendell Wilks two years ago, he saw my work, TVN people liked what I did, they put an HD camera in my hand, the tape and what you're going to watch now is a trailer for an HD pilot movie that has been made with no budget outside of what I could put in out of my pocket.

673              Just hit play, please.

674              And this is a pilot movie, we hope to go into series for a one‑hour drama every week on TVN, which they have already promised me that one hour if they get their licence.

675              And the tape is rolling.

676              Lower the house lights maybe.  Very good, and thank you.

‑‑‑ Video presentation / Présentation vidéo

‑‑‑ Applause / Applaudissements

677              MR. TANOS: Thank you very much everybody.

678              Thank you to the CRTC Commission.

679              Just one more quick second.  I would like the people involved in Producer's Studio that are behind me to stand up now if you're still in the room, the people that were involved ‑‑ these two young actors are fabulous, they need an opportunity more than I do.

‑‑‑ Applause / Applaudissements

680              MR. TANOS:  And in the name of opportunity, I ask that you give Producer's Studio a chance to do this and this all comes through the licence through CRTC to TVN Niagara.

681              Thank you very much.

INTERVENTION

682              MS FABIANO:  Well, that's a tough act to follow.

683              Good afternoon, Members of the Commission.  I am Dolores Fabiano.

684              I have been the Executive Director of the Welland/Pelham Chamber of Commerce and I'm currently the Chair of the regional Chambers of Commerce which is made up of the 10 Chambers of Commerce representing the 12 municipalities that make up our beautiful Niagara.

685              At this time I would like to introduce the other Chamber representatives who are with us this afternoon.

686              Dave Derry representing the St. Catharines Chamber of Commerce, Carolyn Benz  from the Niagara Falls, Canada Chamber of Commerce and Amy Bald from the Thorold Chamber of Commerce.

687              Jointly the Chamber movement represents over 3,500 businesses locally.  Clearly we are the voice of business, clearly we understand the needs of our members and I am here today to use our voice to express those needs.

688              Niagara is a distinct geographic area with a population of over 4100,000.  We are read for our own broadcast station, we are ready for TVN Niagara.

689              Since the inception of TV over 50 years ago, the only local programming the residents of Niagara have had is from Toronto or from Buffalo, New York.

690              The story of the unique aspects of living in the Niagara Region with its excellent mix of agriculture, industry and tourism has never had a chance to be told until now.

691              TVN would be able to get that message to Toronto and Buffalo and other areas around the Golden Horseshoe.  Our local culture issues and community could finally be reflected and projected to these markets.

692              Did you know, for example,that Thorold is the home of the only twin flight locks in the world?

693              Did you know that Pelham is home of the comfort maple tree, the oldest maple tree in Canada?

694              Did you know that West Lincoln is one of the largest producers of poultry in Canada?

695              Did you know that Niagara‑On‑The‑Lake is Canada's prettiest town?

696              Did you know that the Welland Canal is one of the world's greatest engineering marvels?

697              Did you know that because of our extensive fruit orchards, vineyards and vegetable gardens, our area has been given the title of garden of Canada?

698              I could go on and on.  These are just a few of our stories, stories that we believe should be communicated beyond Niagara but told by Niagara.

699              TVN would be a welcome addition to the mix of media in this area.  Particularly appealing from a Chamber of Commerce perspective would be the new way local businesses could advertise their products and services to potential customers throughout the peninsula and the rest of the local Golden Horseshoe.

700              Local programming would be a prerequisite to viewers watching advertisements, and I'm pleased to note that TVN's promise of performance includes producing 34.5 hours of Niagara programming every week.

701              I am pleased that the majority of shareholders are from Niagara and I commend their entrepreneurial spirit.

702              I personally have found their vision and philosophies to be particularly refreshing.  Their genuine concern to serve the 12 municipalities that make up our wonderful Niagara is apparent.

703              At this time I urge the CRTC to grant a licence to TVN Niagara Inc.  It is time for a TV station in Niagara.

704              TVN meets our needs. I anticipate the Commission will see the merit of their application and I look forward to a positive outcome from this hearing.

705              Thank you.

‑‑‑ Applause / Applaudissements

INTERVENTION

706              MR. LUPISH:  Good afternoon everyone.  I would like to thank everyone for coming and taking time out of their day, and thank you to the CRTC for having this meeting in Niagara Falls.

707              My name is Jason Lupish.  I'm here to speak in support of TVN.

708              I know there are a lot people here with big names and big positions to speak on the subject.  The reason I'm here is to make sure that the common man gets a voice in this subject.

709              In most people's eyes I am the everyday Joe that you are broadcasting to, that you are trying to entertain.  Truth be told, it's people like me that this country was founded by and for, and as the everyday Joe with many people just like me in support, I'm here to tell you what I want.  I want a television station in Niagara.

710              I was born and raised in St. Catharines, I have no intention to leave.  This is a great place to live and I hope to raise a family here one day.  However, I want to have a career as a filmmaker, and with circumstances as they are, I will not be able to do that.  I will have to go to a market such as Toronto or Vancouver, or Los Angeles for that matter, like so many other people from Niagara have done.

711              Growing up like many other families, my family couldn't afford to go on vacations.  The world that I was exposed to was through a television set.  I was exposed to people of Toronto and Buffalo mostly, as well as Barrie, Hamilton and even Erie.  I knew what was happening in Western New York more than I knew what was happening down my street.

712              The Niagara Region is a vast, sprawling, beautiful area that no one outside of this area knows about.  The only outlet to let people know of events happening in our town, in our own backyards is by way of the newspaper, which is a day to a day and a half late, depending on where you live.

713              This medium of communication has been around since the 1800s, and probably sooner, and is very limited in the amount of content you can put in it on a day‑to‑day basis, and it's all we have.  Take this in for a second.  The only form of mass communication we have is a medium that has been used since the 1800s, possibly earlier.

714              I, along with many others, think it's time we caught up with the rest of the world.  I couldn't tell you what was happening in Welland or Fort Erie, or even Thorold for that matter, but I could tell you what Toronto plans to do to beat the heat, or if their subway workers are on strike or what Western New York is going to do in case of a teachers' strike.

715              These are just some of the many reasons why the Niagara Region needs a television station.

716              The brain drain is something of an epidemic in the Niagara Region, but let me tell you, it's not just doctors that we need.

717              There are two post‑secondary institutions in the Niagara Region that offer film programs.  Niagara College is even getting a new film wing, or so I've been told, to their school named after James Cameron.

718              Niagara College is a leader in training their students in the television medium, but once they get out, where do they go?  If they wish to work in their field they just spent three years studying they can't stay here because there is nothing here for them, they must go to a market that can offer them employment.  I urge you to stop running off our artists.

719              Give TVN a licence so that so many of us can stay here in the Niagara Region.  Without TVN we are losing some of our most creative people every year.

720              I know there are some people out there who oppose TVN getting a licence and these people seem to be other television companies.

721              My apologies for only reading one of them, but I imagine that they are all pretty much the same and when it comes down to it, there's only one real reason why these other TV companies would oppose TVN, money.

722              It's sugar coated to sound like it's more than that, but the basic fact of the matter is money.  I'll try my best to go over the arguments and debunk them as I go along.

723              They say that with TVN's business model, it will not succeed and fail.  In all honesty, why would competition oppose something that they honestly think will fail.

724              I know that personally I would like to see myself come out on top and see my competition fail, that would just leave me and the entire market.

725              This argument is ridiculous.  Obviously these people haven't met the people of Niagara; we're not quitters and we don't fail. And if it does fail, why would they care?  It's no skin off their nose, they will still have their station in the morning.  TVN will not fail and it is fear that is bringing on this opposition and fear that spurred this ridiculous argument.

726              They say that TVN will not generate enough money for state‑of‑the‑art equipment and great production values that people have come to expect from television.

727              No offence, but this attitude is the reason why Canadian television sucks.

‑‑‑ Applause / Applaudissements

728              COMMISSIONER LANGFORD:  We want you to speak your mind here today.  Don't hold back.

‑‑‑ Laughter / Rires

729              MR. LUPISH:  First of all, TVN will have high‑quality equipment.  Secondly, instead of worrying about glitz and glam, why don't you worry about the content.  People watch television for the content and could care less what kind of camera or lighting set‑up you have.

730              I've seen many of the shows that these rival television networks are currently airing and instead of spending your money on state‑of‑the‑art equipment, you should hire writers and consultants so you can show things that people actually want to see.

731              I know about TVN's plan and they are going air things that people are actually going to watch and be interested about.  They have not forgotten who they are broadcasting to.  They are worried about the content and not the other superficial stuff.

732              NYPD Blue, Mash, Cheers and Seinfield didn't stay on the air for so many years because the shows looked good, it was the content that delivered those week in and week out, no other reason.  That is why people stayed with these shows for so long and that is why people will stay with these shows is because of the content.

733              Another argument that has been brought up is that TVN will not be a No. 1 broadcaster right out of the gates.  Why would it? Fox didn't just roll out one day and become a big player, they had nothing for years and finally got something with Married With Children.  It wasn't until the Simpsons came along and then picking up some major sporting events that they became a force.

734              To use this argument that TVN shouldn't get a licence is absurd.  TVN will is a station that will be the people of Niagara and the people surrounding Niagara.  I think satisfying these people is an easily reachable, realistic goal.  The goal is local is local television, not NBC, ABC or Global.

735              It's not a national broadcast company.  This argument that they won't be a No. 1 broadcaster right away is ludicrous because it is saying that they won't be something that they're not trying to be.  It's like saying that I can't buy a house because I won't be a basketball player.

736              The argument that Global CHCH is already covering the Niagara Region is preposterous.  The bottom line is that they don't.  If that was the case, how come they don't have someone in the morning show in the Niagara?  They don't, they're all in Hamilton.  I don't blame them, Hamilton is far away, it's a half hour from St. Catharines, 45 minutes from Niagara Falls and close to an hour from Fort Erie.  I couldn't even tell you how far away from Port Colborne  or Welland they are.

737              How can someone that far away cover our local events?  They can't.

738              Also Hamilton is a pretty big city and, of course, preference is going to be given to their own city.  There's talk of the CRTC Board mandating them to cover the Region more.  Why?  They obviously don't want to and they obviously can't.  There's no sense in making people do something they don't want to do because if it's done, it will not be done right.

739              I'm from the background that if the job isn't getting done, do it yourself, and that's what TVN will do.

740              And now we start to get into the real reason ‑‑ do I still have enough time?

741              THE SECRETARY:  Yes.

742              MR. LUPISH:  Are we good?

743              Okay, thank you.

744              Now, we start to get into the real reason why this television station is being opposed.  They say that the market can't handle another television station going to air.

745              What this means is that less advertising dollars will line their pockets and this is what it all comes down to, money, the market can't handle it.  If for no other reason, then it has to.

746              It's not like TVN will get their licence and the market will just up and go away, this argument consists of other TV stations not getting enough money, once you have money you don't want to share it.

747              Anyone who comes up here and says that they will lose money if TVN gets a licence is a liar.  They are afraid they will get less money.  To lose money means you will go in debt; they will not go in debt, they will just not get as much money.  What this opposition comes down to is competition; they are afraid that TVN will succeed and they will get less money, bottom line.

748              That is why these other television companies are opposing this, they are afraid of competition.  A lack of competition breeds mediocrity.

749              I am tired of seeing my airwaves plagued with mediocre standards.  Let TVN have its licence and let's raise the bar.  Let there be competition and let the standards of Canadian television rise to the occasion.

750              I'm a firm believer that TVN should get a licence because only good can come from it.  Jobs will be created, we will be able to keep our local artists, we will give our artists and the people of Niagara a much bigger forum to express their work and who they are.  We will have a better sense of community.

751              Like I mentioned before, Niagara is a big, sprawling place to live, however, we really have no way of getting one place to another.  TVN will help bridge that gap.  Rather than just be aware of a few things going on in our city, we will know things that are going on in our neighbouring cities as well.  I couldn't tell you how to get to Port Colborne, let alone what's going on in that city.  TVN will bring all of our cities together through knowledge of one another.

752              And then I have got a lot more but I just wanted to say, before my time is up, I also own a small production company in St. Catharines, and I actually have a DVD here to show of a recent project that we're actually still working on, and we have produced two feature films in the last two years ‑‑ this is our second one ‑‑ and both, the first one the budget was under $8,000 and this one here, the budget is $5 literally.

753              And I just wanted to say, if you guys ‑‑ I'm assuming you all have the Internet.  Go and check out our website.  It's www.loaddstudios.com, that's two "D"s, just so you can check out the kind of stuff that we are producing here in Niagara.  I think it's on par with everything else that's being produced in Canada, and I just ‑‑ I don't know.  I think that's pretty much it.

754              We have a lot of local volunteers, like people who are volunteering their time, money, everything and I think there's just a huge market for it here, especially in terms of independent producers like Mr. Tanos over here as well.

755              And I know there's a lot more as well.  J. J. Booth owns Electric Dreams Productions and I know they have a lot of stuff on go as well.

756              So, I think that's it.

‑‑‑ Applause / Applaudissements

757              THE CHAIRPERSON:  Thank you very much.

758              Your positions and performances were very clear.  Thanks.

759              Madam Secretary.

760              THE SECRETARY:  Thank you, Mr. Chair.

761              THE CHAIRPERSON:  We have no questions for you.  Thank you.

762              THE SECRETARY:  I would like to call the next five appearing interventions as a panel and they are, Gerry Augustine, Jack, Miller, Liv Uhrig, Brock TV and Richard Sasse.

763              If you'd like to come up to the front, please.

764              You each have 10 minutes to present your intervention and could you please introduce yourself before you speak.

765              Thank you.

INTERVENTION

766              MR. MILLER:  Hello, Mr. Chairman.  I'm Jack Miller and you know that.  It's very nice to see you again.  It has been a long time.  The last time we spoke I think we both had hairs all over the tops of our heads, but then that far back so did Wendell.

767              Between myself up on the screen and all the other people at microphones, you have already heard today quite of bit what I had intended to talk to you about.

768              I will drop out some random thoughts of mine that have not come up yet.  One of them just occurred to me this morning.  We're talking here about a television station that would rely for its entertainment attractiveness on classic movies, and a lot of people wonder, will classic movies work?

769              What we mean by classic movies is old movies, and I have not mentioned or I have not heard anybody else mention one possible attraction in old movies, the language is clean.

770              Imagine a new television commercial station going on the air and never having to use that little placard:  Viewer discretion is advised.  Wouldn't that be something.  I don't know if it would happen, but it would be nice.

771              Now, we have had a lot of talk this morning about people in this area not seeing themselves on television, so, if you finally licence ‑‑ or if you licence an application for a station that has finally come before you, we would have to start from ground zero in achieving the benefits that come from seeing yourself on television.  I don't quite agree with that.  I think we would have to start from ground minus zero.

772              Because when television started here in 1948, WBEN‑TV in Buffalo, the people here in Niagara especially could see it with crystal clarity right away, it was right next door, just across the river.  The people in Hamilton, for the most part, could not see it, most of them lived below the Niagara Escarpment and that blocked the signal ‑‑ you know, the Niagara Escarpment, that's what Hamilton likes to call the Hamilton Mountain.  It's 350 feet high, but it's good enough for a mountain for Hamilton.

773              The people in Toronto could not see it very well either because at the beginning the signal was pretty weak and Toronto was farther away and it didn't produce very good pictures to everybody here.  We came under its spell immediately and we've been under it ever since.

774              You see, this was a brand new American communications medium and we quickly saw that it shared one characteristic with every other American communications media through history, and that was it had in all of its programming an  underlying message, a subliminal message which was, the United States of America is the greatest country in the world to call home and if you call some other country home you're living an inferior lifestyle you poor sap.

775              Well, also realized pretty soon that television was probably the best brain washing machine ever invented and Ottawa spotted this and understood the threat to our self‑image here, so before long it saw to it that there was a station in Toronto and we could see that very clearly here in Niagara as well.

776              Between growing up here and then moving back here with my late wife after I retired, I've lived in Niagara about 30 years, I think I know the place pretty well, I live here now.

777              We had a station in Toronto.  Well, it had least waved the Canadian flag, but before long it was taking up the local cheerleading and it also had the subliminal message ‑‑ maybe not quite as strong, but it was there ‑‑ and it was, Toronto is the greatest place in the world to live and if you're living anywhere else you're living an inferior lifestyle you poor sap.

778              And then Hamilton got a station and then stations started coming from all over the place.

779              And really since we had this message that life would be wonderful for you us if we lived in any of these other places and no balancing message that life is wonderful for us because we live here, that sort of seduced us.

780              I think the people here are not at ground zero ‑‑ as I was saying earlier ‑‑ in terms of what television can do for your self‑image, I think we have to start working up to ground zero once we get our own television, and I hope we get it pretty soon and it had been 57 years getting us to this point; if you say no, Lord knows if we'll ever see it again, because by the time another application would come along global warming might have wiped out the human race.

781              Mr. Chairman, as I said, these subliminal messages may boast the self‑image of people and their cities but they put down the self‑image of people elsewhere.  I believe they mean to do that.

782              When I came back here after I retired I made a long study ‑‑ I was in the newspaper business, as you know and it was sort of habit forming ‑‑ I started studying the place and I got to know it very well, even better than I had known it when I grew up here and I came to the conclusion, first of all, that this is a marvellous place to live, it is just gorgeous, but you heard of that today.  We have all these marvellous features.

783              Somebody mentioned the Welland Canal.  They didn't mention that it has made it possible for 175 years for cargo ships from all over the globe to come right into middle of the continent to carry their cargoes from anywhere and to take our things back out again to sell over the world.

784              Before the Welland Canal came along, ships couldn't come up much beyond Niagara Falls.  Would you want to if you were a sailor?

785              It's a change.  Things here in Niagara have changed the way, not just Niagara lives, but the way the continent lives.  This is a beautiful place, we have gorgeous scenery, we have a lovely climate ‑‑ please don't count that last winter ‑‑ and we have lovely people and lots of features, industries, tourist spots.  But you know all about that, you've heard that many times.

786              But we have never seen this on TV and we go on seeing on TV these messages, subliminal messages boosting other places as the place to live.

787              And, Mr. Chairman, you don't have much basis for feeling good about yourself unless you can know yourself and you can't know yourself unless you can see yourself, and you can't see yourself unless you have a mirror, and we found out long ago that television is the greatest of all the mirrors.

788              It will let you see yourself head on like a regular mirror, or let you see the back of your head which a regular mirror cannot do.  It will let you see all your other angles, it will let you see your surroundings.

789              If you can see all that and it looks good to you, then you have a chance at starting to feel better about yourself, but since I have been back here I have come to the conclusion that, while everybody here in the hall today is here obviously because they're an enthusiast of this place and think it's great, I feel an awful lot of people in the Niagara Region ‑‑ I'm afraid it's the majority in my view ‑‑ don't feel as good about this place as this place deserves to have them feel.

790              So, if we get a new television station, maybe we can start towards that.

791              I'm sure you will say yes to this, I can't think of any reason why you would say no.

792              All we need is that yes from you.  After 57 years, please do it now, because it's time.  It is time.

‑‑‑ Applause / Applaudissements

793              THE CHAIRPERSON:  Thank you.

INTERVENTION

794              MR. FERRATO:  Good afternoon, Commissioners, Mr. Chairman.

795              As a student of Brock University as well as a student trying to tap into the media industry, I would like to thank you for inviting me to come here and present my case.

796              Allow me to introduce myself.  My name is Justin Ferrato.  I go to Brock University, I'm studying business communications, so throughout my program I've learned a lot about the TV industry, how exactly media and culture entwine within each other and how a reflection of culture is based upon what we see on TV.

797              I've learned over the years actually, you guys have been talking about a lot of films and we have been talking about classic films and such.  Throughout my courses I have learned to take an appreciation for a lot of the older classic films and one of these actually watches one of these things would actually get a little more background into ‑‑ a little bit more understanding about the older films, including Harvey, I think I have to see that one.

798              But the reason I'm here is obviously to support TVN.  The support of TVN has created distinct opportunities for Brock University.  As Brock University continues to grow and expand its subculture as a small component of the social fabric of Niagara, TVN will created an opportunity to accurately represent, reflect and assist our subculture in comprehensive and educational ways.

799              Before I mention exactly how I'm involved in this, I'll just go over exactly what Brock University, what Brock University means to the Region of Niagara.

800              Brock University is a growing community in the Niagara Region.  It has a population of almost 16,000 students and is continuing expand.  Our motto is that we are a comprehensive university, we are trying to expand in all possible ways and we are trying to look for new areas that we can tap into.

801              As Brock has continued to grow, even within the last five years, we have become part of this community.  we have created our own subcommunity within the community.  We have began to bridge that gap between the difference between the local St. Catharines and Niagara Region and the Brock University community.  We have finally amalgamated into one community and that is the Niagara Region.

802              As Brock's community of students has grown over the years, we have become an important aspect of the Niagara community.

803              The students at Brock have a desire set of skills, interests and hobbies that creates such a unique community and once again, as I mentioned, we are only one part of the social fabric of Niagara.

804              There is such a diverse atmosphere within this Region and we represent only a single part of that.  Within our part we represent obviously the student demographic.  Along with that we have our own skills, we have our own talents.  We are learning as we go along, and I believe that we need a media, a television channel to kind of reflect exactly what we're going through and exactly to reflect the Niagara Region that we are from.

805              So, why I'm here is at Brock University my co‑founder and I decided that we also, along with TVN, wanted to start a television production unit.  We are developing a closed‑circuit unit where we will be doing a 15‑minute serial before every class to basically just go over everything, all the issues, all the presentations that's going on in Brock University.

806              Now, this is exactly what we want to do is to reflect the student culture, we want to reflect exactly what the community is, what traits are involved within that, we want to reflect completely that demographic.

807              As me and my co‑founder began to start up this project we began to try and look around the Niagara Region for other areas ‑‑ possible areas that maybe we could get support or sponsors of some sort.

808              At an advertising lecture actually at Brock University I met with Mr. Wilks and we sat down a couple of days later just to discuss the possibilities of us starting a media kind of television show within Brock because I know he was trying to create something within the Niagara Region.

809              Since then, I think he saw a lot of opportunity within me and my co‑founder because as a result he's agreed to assist us and sponsor us in giving us studio equipment and cameras, also expertise and valuable knowledge of his experience within the Brock University so that we can actually begin to start producing and filming Brock University coverage.

810              This hopefully will be starting within the next year or so under the development and assistance.  Mr. Wilks has been a great help to us as he's assisted us and will continue to assist us and helping us to create and produce content for Brock University, also the Niagara Region, also the community.

811              So, Brock TV is in the developing stage of creating a production unit within Brock University that best represents the social norms and idealogies  of our students.

812              Our main objective is to create a unifying voice within the student population that will accurately reflect the population on the whole.

813              What I've learned in my classes is that the media ‑‑ the key role to the media is to reflect the culture that it is within.

814              Niagara is such a diverse community  with so many different traits, so many different demographics when you look at it that it's very hard to just kind of stereotype it or place it into one separate area because it's more complex than that.  There are so many cultures and subcultures within the Niagara Region and I believe that TVN will help assist and accurately reflect all the different diversity and such changes within the Region, including Brock University.

815              Creating a media in which students in university can be unified gives Brock TV a large responsibility in the Brock community.

816              As sponsors ‑‑ as TVN has agreed to sponsor us, we have taken that responsibility and we've actually looked at him for his knowledge because we are aware that within ‑‑ that TVN is aware of the responsibility that they have in the community and exactly what roles and duties they should maintain and reflect as part of that culture and we have decided ‑‑ we are attempting to shape that into our own kind of mini subculture kind of thing at Brock University.

817              The advantages of TVN to the Brock University are thus:

818              No. 1:  TVN has agreed to supply Brock University with production equipment and expertise enabling us to more accurately and professionally create a local identity and strengthen our voice as a media outlet from Brock.

819              No. 2:  TVN has shown interest for the students at Brock who are headed in the direction of television production and filmmaking by sponsoring our production, giving the students at Brock University the experience for gaining entry into the media industry, the communication pop culture and the film society and, actually, the whole department that I'm a part of has so much skill and knowledgeable students, we have created a pop culture society where students can get together and anybody interested in the media industry, anybody who wants to become a part of it is where we can meet.

820              Hopefully with the expansion of Brock TV, these such students will be able to take what they have learned in stool and apply it into their daily lives and hopefully, within that, since they are already in the Niagara Region, they can hopefully just expand into the Niagara Region since we're already here.

821              Hopefully that will give us enough experience to be well equipped getting into the media industry because I know how competitive it can be.

822              No. 3:  By supporting Brock TV in its beginning stages, TVN has provided its loyalty and integrity to the Niagara Region as well as Brock University.

823              By sponsoring us, it has completely shown us how honest and full of integrity the TVN channel will be to the community because we know that it is trying to basically show the culture and community of all of Niagara and including all the subcultures within it.

824              Brock TV is only one identity present in the social fabric of the Niagara Region.  While Brock TV aims at fulfilling the requirements of the student community by accurately representing our own culture, we are merely one identity that makes up the Niagara Region.

825              Amongst the many identities within the Niagara Region, TVN fulfils the role of creating a media outlet in which the Region of Niagara and its diverse communal identities are unified.

826              Thank you.

‑‑‑ Applause / Applaudissements

INTERVENTION

827              MR. SASSE:  I guess I should start off by introducing myself.

828              I am Richard Sasse.  I'm an independent producer and I graduated from Niagara College's BRTF Program back in 2000.

829              I want to start by thanking the CRTC for allowing me to make this presentation.  It is rare that someone of my stature is afforded the opportunity to speak on what might be a significant milestone in the history of the Niagara Region.

830              Why such a monumental turning point?  Well, as you know, events that occurred in the Niagara Region helped shape the future of our nation.

831              As a young man growing up and attending school here, I came to appreciate the historical significance of our area and the impact it had on Canadian history.

832              For example, the fact that Niagara‑on‑the‑Lake was the first civic government for Upper Canada or that the War of 1812 marked a turning point in the maturity of our country.

833              There is much more here than one realizes.  We live in a society where our agricultural roots are proudly intermeshed within our increasingly sophisticated and cosmopolitan urban population where much of our Nation's goods and services are transported across our border and through one of the world's greatest man‑made waterways, the Welland Canal, where millions of tourists flock each year to witness the majesty of Niagara Falls and visit quaint towns and villages.

834              And while, in 2005, events of our past are not as top of mind for some people.  Much of what happened here has shaped our very culture.  Being Canadian is something we all take pride in and we do this by acknowledging our heritage and valuing the community we belong to.

835              However, in today's age of global information there is something lacking that re‑enforces our own identity.  How can an area that played such an instrumental role in the development of our great Nation be without its own identity.

836              Personally, I believe that the local media help shape how a community perceives and presents itself, not only to its residents but also to neighbouring communities.  Having access to news programming only from outside sources, is not acceptable to Niagara residents.

837              Hearing about a fire Tonawanda, New York or a nightclub stabbing in Toronto, this has very little relevance to the residents of Niagara.

838              And while Niagara is given news coverage, it's always a limited scope.  Is this the way we want our neighbouring communities to perceive us?  I would hope not.

839              Niagara has so many positive attributes that need to be celebrated.  Whether it's the Niagara Wine Festival in St. Catharines, the Marshall Heritage Festival in Wainfleet, the Festival of Lights in Niagara Falls or Canal Days in Port Colborne.

840              Currently the Niagara Region has no major influence within the Southern Ontario broadcast to promote our community events, to acknowledge the contribution of our citizens or to provide a local, up‑to‑date news and information.

841              If granted the licence, Television Niagara will fill the proverbial void that our that our citizens have lacked for decades.  It will not only give Niagara a voice in the geographic that is overwhelmed by mediums that are foreign, but it will boost and maintain a sense of uniqueness, a sense of community.

842              This medium will benefit not only the local residents and business community but also the surrounding area, and for someone like myself it means cultivating an industry that is important to me.

843              Like many of my fellow colleagues working within a television industry in this country,  we are forced to venture away and seek opportunities elsewhere within the country.  This is something that many of us have been forced to do.

844              Once Television Niagara is fully operational, it will give many of us the opportunity to finally return home, and to me, the Niagara Region is more than just a place of residence, it's a sense of community, the feeling of feeling of belonging, it's home.

845              I do consider myself to be a proud Niagara resident.  I was born and raised in the area.  There is something that continues to draw me to this area that I can't quite put into words.  Part of it, it's the location, but I know it's much more than that, it's the people and the atmosphere.  Like so many individuals impassioned about our craft we are forced to move to larger urban centres and, quite often, are overwhelmed by the magnitude of our surroundings,

846              Here in Niagara there is a sense of belonging, a unique feeling that our people, our industries and our cultures all contribute to what we value about being Canadian and which also differentiates us from our neighbours in the Greater Toronto Area and Western New York.

847              Television Niagara will give the people of the Niagara Region their own voice and help promote our own identity, and for people like myself and many of my fellow colleagues, it gives us hope that we may be given the opportunity to return and help give back to a community that has given so much.

848              Thank you.

‑‑‑ Applause / Applaudissements

849              MR. MILLER:  Mr. Chairman.  Mr. Chairman, could I say one more thing.  I don't think I used up my whole 10 minutes.

850              I do not own a production company large or small, Wendell Wilks has never promised me a program, I do not stand to make a penny out of this no matter which way you go with your decision.

851              I came here today to speak on behalf of the viewers, the individual television viewers in the Niagara area who are so badly done by   in this medium.

852              After all, it is the interests of the audience, of the viewer that, in my view, should always get first priority in matters like this.

‑‑‑ Applause / Applaudissements

853              THE CHAIRPERSON:  Thank you very much, gentlemen.

854              Madam Secretary.

855              THE SECRETARY:  I would leak to call the next appearing intervention.  That is Quebecor Media Inc., if they'd like to come to the front.

856              We ask that you each introduce yourself before you speak and you have 10 minutes for your presentation.

INTERVENTION

857              MR. BELLEROSE:  Serge Bellerose.

858              MR. NELLES:  Jim Nelles.

859              MR. BELLEROSE:  Good afternoon, Mr. Chair, Members of the Commission, ladies and gentlemen.

860              For the record I am Serge Bellerose, Sr. Vice‑President Specialty Channels and Business Development, TVA Group.

861              With me today Jim Nelles, Vice‑President and General Manager of Toronto 1.

862              We represent the last conventional broadcast licence in the Toronto market granted in 2002, in operation since September, 2003 under the name Toronto 1, and under TVA's ownership since December, 2004.

863              It is our belief that licensing a new conventional station in the Niagara market, one that will come into the Toronto and Hamilton markets, and one that has projected it will generate half of its advertising revenues from these markets, will be detrimental to us achieving our business plan objectives.

864              Toronto 1 is losing money, the station needs to be re‑positioned in the market in order to make it profitable on a short term, and long term basis.  We need more time to realize our objectives, to establish a strong position in a very competitive market.  It is our belief that this is not the right time to be licensing another competitive player in the market.

865              A mere four months after its existence, previous owner Craig Media, decided to sell Toronto 1 because of greater than expected losses.  In its first year of operation the station registered a net loss of approximately $21‑million, the station could not invest in planning, the schedule that was developed did not meeting expectations and, subsequently, the projected revenues were not realized.  With current market conditions, this year won't be very successful either.

866              Under TVA's ownership and with the support of our minority shareholder, Sun Media, Toronto 1 will improve.  Our purchase of Toronto 1 was the right decision for us.  We believe in our team and their ability to re‑position this channel to make it more relevant to the Greater Toronto Area viewers.

867              We are dedicated to producing and acquiring more compelling programming, building a schedule that will engage and connect with our viewers.  We are confident we will see our ratings and revenue increase, achieving better results year after year because we believe in our ability to serve the Greater Toronto market well.

868              But, it will take time to realize our objectives.  Our strategy will indeed succeed only if the Commission does not grant a licence to TVN.

869              The approval of another conventional station covering the Greater Toronto Area, like TVN intends to do, will make it even harder for Toronto 1 to become profitable on the short term, even on a long term basis as projected in our business plan.

870              Moreover, out of all the existing stations in the market the more impacted player will be Toronto 1 ‑‑ like TVN a stand‑alone station.  TVN is planning to generate income from the same national revenues which will affect our station's ability to grow.  They have project $6.5‑million in the first year and almost $10‑million at the end of the licence term.

871              The results of such an impact are not realistic ‑‑ if licensed, two stand‑alone stations will be taking money from the same pot.  The Commission will have to deal with not only Toronto 1's fragile financial situation, but potentially with TVN's as well since the national add revenue projections of the applicant are far too ambitious in a market where those revenues are limited.

872              Given these facts, the Commission must not allow a new entrant into an already crowded marketplace.  The impact on our business, on our ability to grow audience and revenue would be enormous.

873              Jim.

874              MR. NELLES:  This so‑called local station is not really that local when it has a radiated power of a million watts and overlaps on practically all existing station contours in the Greater Toronto Area.

875              We believe it is indeed a disguised strategy for entering the Toronto market because, from a national advertising perspective, they would already be in the Toronto/Hamilton market as both Nielsen and BBM include St. Catharines and Niagara as part of the Toronto/Hamilton market areas.

876              TVN is counting greatly on the Toronto/Hamilton market in order to achieve its revenue goals.  The applicant is pretending that even with the addition of Toronto 1, there remains more than enough money in the market to support a small new entrant called TVN and is intending to score a .5 point in the same market.

877              Since its launch in 2003, Toronto 1 is still having challenges meeting prime time estimates.  While we have an aggressive plan in place, our goal would be dangerously compromised if TVN enters the Toronto market and takes away a .5 prime rating point.

878              The most report from TVB, which includes the first calendar quarter of 2005, indicates that Toronto ad spending by spot is down 8.7 per cent.  Network ad spending for Toronto, which includes specialty, is up 2.42 per cent.

879              When combined, overall ad spending in television in Toronto is down 4.85 per cent for the first three months of this calendar year.  Indeed, the most recent 12 month rolling year‑to‑date figures for the Toronto market indicate a decline of 1.07 per cent for spot advertisers.

880              The reality is that with regard to national advertising revenues, specialty services in particular continue to draw on larger shares of ad spending by national advertisers and leave fewer dollars for the existing conventional stations.

881              Indeed, specialty services often receive anywhere from 25 to 40 per cent of the television ad expenditures by many large national advertising agencies on behalf of their clients.

The net effect is to reduce the demand for local time by national advertisers with respect to Toronto or other major markets.

882              So TVN's reference to "more than enough money in the market to support a small new entrant" does not appear to reflect the actual market situation.

883              Toronto 1 has the plan in place to realize our objectives, but we need time to realize that success.  Our strategy will indeed succeed only if the Commission does not grant a licence to TVN.

884              Serge.

885              MR. BELLEROSE:  Mr. Chair, Members of the Commission, initially I didn't intend to comment on the application itself, its relevance or the accuracy of the financial assumptions prepared by the applicant, but given what has been said this morning, for the benefit of the Commission I would like to bring some additional comments.

886              As we've heard this morning, a large part of TVN's plan depends on movies and the  Commission is familiar where that Toronto/ one offers two movies per night in its current schedule, which is part of its strategy right now since last spring.

887              We do know what Craig Media paid in terms of licence fee for those movies and we intend to offer one movie per night next fall, so we have almost completed our negotiations with distributors with regards to next season.

888              And I can say that based on Craig's experience and our current experience, it would cost TVN almost double to acquire those movies, meaning $4‑million instead of two which is in the business plan.

889              On the other hand, TVN's assumption of getting .5 rating point in prime time appears quite optimistic, since we are doing .6 since September and experiencing more recently .4 because of the inclusion of more Canadian titles.

890              But even at .5, based on the current rate in the market, TVN would unlikely achieve its objectives in terms of national ad revenues.

891              Jim.

892              MR. NELLES:  Revenue targets are aggressive for TVN.  If Monday to Sunday, 7 to 11 represents 6.5‑million or 55 per cent of the total annual revenue, TVN must sell out a hundred per cent of the 7 to 11 inventory at about $186 a 30‑second spot for 52 weeks a year.

893              A reasonable unit rate based on Toronto/Hamilton CPRs, which include Niagara,

for stations such as TVN is considerably less, and that assumes sufficient demand for the inventory which, based on TVB data, is questionable.

894              Finally, a note on the buying cycle in Ontario.  Must buys and network programming come first, followed by regional television stations and, finally, local national spot is purchased for Toronto/Hamilton, if there still remains a requirement for additional media weight.  Any threat at this point in the buying cycle is a threat to the development of Toronto 1.

895              MR. BELLEROSE:  So, what could be the end result?  Could be a new entrant struggling with financial problem like T1 did at the beginning because of unrealistic assumptions and Toronto 1 being hurt by the arrival of this new entrant.

896              For these reasons Toronto 1 urges the Commission do deny TVN's application.

897              We thank the Commission for this opportunity to provide our point of view on such an important issue and we would be pleased to answer any question you have at this time.

898              THE CHAIRPERSON:  Thank you very much, Mr. Bellerose and Mr. Nelles.

899              I was actually going to ask you ‑‑ there are basically two parts to your intervention, one is the state of the market as a whole and its ability to absorb any station and, secondly, their own financial projections.

900              You had said in your opening address that you found them far too ambitious, and I was going to ask you to elaborate ‑‑ which you then did on your own before the closing ‑‑ but since I'm not sure the applicant had an opportunity to capture all of your points, the 4‑million rather than two I caught, the difficulty reaching the .5 rating point, the $186 a spot fully sold out and the  cascading of buying for the advertising I got, but during the break, if you could with the applicant share those points precisely so that they have an opportunity to respond to them, because I don't think that they have seen that particular material from you just yet.

901              MR. BELLEROSE:  No, we would be pleased to do so, Mr. Chair.

902              THE CHAIRPERSON:  Thank you.  And at that point they can address it and we can take any follow‑up questions.

903              On the other point which is ‑‑ and I think that your position to me at least is clear on their build‑up of their revenue projections ‑

on the total market point though, I guess they filed a chart which we discussed this morning in their Appendix 5B which divided up the impact of the second year revenues among the different media and came to a figure of roughly $5‑million impact on existing off‑air conventional stations, so while I understand the point about all the national revenues which are 6.5‑million and perhaps in the second year ‑‑ what are they ‑‑ 7.1 for the impact on ‑‑ this is on conventional stations is estimated at $5‑million; do you have a comment on that?

904              MR. NELLES:  I think I would pretty much agree with their impact figures there, however, I would say that there probably is a significant impact on radio, would be my observation.

905              I have had the experience over the years to sell radio in this part of the world as well as elsewhere in Canada, and I would say that radio stations in Niagara could be somewhat vulnerable, particularly if unit rates in a very competitive environment decline further.

906              THE CHAIRPERSON:  Right.  Do you have an estimate ‑‑ I guess we have in our published financial station ‑‑ back to television in this question ‑‑ total market some 700 and ‑‑ what is it, $723‑million and so forth for the Toronto extended market, the nine stations in that market.

907              MR. NELLES:  Just comment.

908              Yes, the figure is, according to television bureau on a year‑to‑date basis is some 686‑million I think in total.

909              If you use Stats Can's numbers they tend to be a little bit higher because I believe Statistics Canada attributes all money to a given licence from its point of origin.

910              The television bureau numbers attempt to apportion the moneys to the markets that they would be apportioned to as a media buyer.

911              I would add an additional comment, and that is, that very often the Toronto market for local stations ‑‑ those working in national spot as well as local ‑‑ would be attributed to over $600‑million, and I think that was echoed earlier this morning, but as often comes up at these hearings, just as a reminder, that a good component of that 686‑million is some 260‑million or so which is attributed to network and specialty.  It's very real money, it's very definitely apportioned to Toronto/Hamilton, but those are ad sales revenues that we, as local broadcasters, never get a sniff at, they are a function of the ratings that are purchased and apportioned to CTV and to the other major networks, so we would not see those numbers.

912              THE CHAIRPERSON:  I'm sorry, I'm not getting your point on that.  Could you ‑‑

913              MR. NELLES:  Of the 686‑million...

914              THE CHAIRPERSON:  Just to back up a little because, I mean the one difference as I discern it is that in the TVB numbers there appear to be eight reporting units versus the nine reporting units in the CRTC summaries and I thought that one reason for the discrepancy was perhaps the exclusion of, say, Barrie from the TVB numbers.  I don't know whether or not that is accurate.

915              You are attributing it ‑‑ and I had not heard that before ‑‑ to, if you like, an adjustment for spill, so to speak.

916              MR. NELLES:  That's correct.

917              THE CHAIRPERSON:  Right.  And one thing that I did note, and it is in the CTV intervention where some certain TVB figures are quoted and the number of reporting units is indeed one less, so I think we will have to ‑‑ perhaps you can shed some light on it, or I will ask CTV to.

918              For example, in Figure 5 of the CTV intervention attachment, the Armstrong Consulting study, the number of units reporting for 'O4 is eight and to add further confusion, of course, the number is not 686, the number is 698.

919              So, I mean, we are in the ballpark, but whether you want to call it a $700‑million market or not, my question I suppose is, how big a chunk of that is $5‑million?

920              MR. NELLES:  Well, right now that is a market ‑‑ it continues to be a market in decline from a national spot standpoint and from a local standpoint, so whereas a number of years ago some of us might have argued that a small portion of the growth of the market could be attributed to a new applicant and would support their endeavours.  Currently in the conventional sphere I'm not sure that's the case, in fact, I suspect it's not.

921              As has been echoed earlier today, there are changing patterns in media buying, there are changing patterns in viewership to television and other devices and I think we're probably prudent at this juncture to take that into account, if that's helpful.

922              Certainly, whereas once, not so many years ago, a hundred per cent of the dollars in the Toronto/Hamilton market would have been to conventional stations, a hundred per cent of the viewing would have been to conventional stations, as well as some spill‑over clearly from Buffalo and other areas, that's no longer the case and the  conventional stations in Toronto are roughly speaking battling for approximately 40 per cent of the viewership in the Toronto/Hamilton market.

923              The rest, another 40 per cent goes off to specialty and cable networks with probably another 20 per cent ‑‑ and I would be advised by some others ‑‑ would be a result of border stations, that sort of thing.

924              So, we are in a very changing market, as I know the Commission is well aware.

925              THE CHAIRPERSON:  Okay, I have that point.

926              I guess my original question just now was I was not sure what your point was about specialties.  I understand that the specialities attract national revenues and you made the point in there that by the Commission confining them to national revenues, in some ways, it makes that problem even worse.

927              I But I was not sure how that factored into the analysis either of TVB or of CRTC/Stats Can of the total market.

928              Were you making a point in that connection?

929              MR. NELLES:  Well, Mr. Chair, I think the only point I would make there is that specialty services, because of their strength and their growth over the last number of years have made a great impact into the requirements ‑‑ the rating point requirements for national advertisers and, therefore, if a given advertiser would have bought a hundred per cent of their rating requirements from Toronto stations, they now would buy less.

930              THE CHAIRPERSON:  No, I take that point.  Perhaps I was confused.

931              Thank you very much.

932              Commission Langford.

933              COMMISSIONER LANGFORD:  Sorry to hold you here so long, but I have a question about the kind of general tenor, your apocalyptic sort of tone that I'm hearing here today ‑‑ and it may be warranted ‑‑ but I need some explanation if it is.

934              And what I don't understand is why I get the feeling, reading your submission and hearing you again today that you have concluded ‑‑ you don't say it precisely but it seems to be an underlying message ‑‑ that any damage done to the market by the entrance of this very small player will be done to you, and you alone, almost exclusively you.

935              So, on page 3 you say:

                      "Our strategy will indeed succeed only if the Commission does not grant a licence to TVN."

936              And then in case we didn't get it you say it again on page 6:

                      "Our strategy will indeed succeed only if the Commission does not grant a licence to TVN."

937              You say on page 4:

                      "Two stand‑alone stations will be taking money from the same pot."

938              Your pot, I gather, rather than the big pot of 400‑million or 600‑million or maybe 700‑million.

939              And it's sense that you are on the precipice.  And we know your situation well, I mean, I'm not in any way trying to understate your situation, it's just the confusion I have is why there seems to be this message that you and you alone are subject to a detrimental impact if this station is licensed.

940              Why wouldn't it be spread out over the whole six or $700‑million market.  Why would the impact be only on you?

941              MR. BELLEROSE:  Jim, you can jump in.

942              But, in large part, because I think that the two major players that would be most affected would probably be Toronto 1 and OMNI 2.

943              Toronto 1 why?  Because it's a brand new player and we ‑‑ Toronto 1 and TVN would both be two stand‑alone stations looking for the same source of national ad dollars because we do not have access to international network dollars, so we are looking for the spots dollars.  Is that correct, Jim?

944              So, it means that if we get $10‑million of national ad revenues and that TVN's getting five or $6‑million of national ad sales, maybe we might see our budget reduced by one or $2‑million because we will probably be the one that will be most affected because we're a new entrant too.

945              COMMISSIONER LANGFORD:  I'm not sure I see that, quite frankly, if we can debate this for just a few minutes more.

946              But if they were coming in with the same station as you, with the same Toronto news, with the same Toronto focus, then perhaps I could see it.

947              In other words, if they were Citytv romping in and saying, give us a licence, this is what we're going to do, we're going to set up Queen Street, we're going to appeal to Torontonians and we're going to run the kind of movie, you know, young and mobile and Torontonians like.

948              But here we have something that's, in a sense, very, very similar to a specialty network or a specialty station.  They've got a very, very narrow niche, they're doing the golden oldies movie style.

949              And, you know, we have some experience with that in radio in a way where in radio, if you have an adult contemporary format, you're not too worried about a country format; if you have hard rock format, you're not too worried about Christian radio.

950              And I wonder really whether you aren't being a little overly concerned because, in a sense, the kind of advertisers that will be trying to buy some 30‑second spots to appeal to this older demographic, watching Harvey night after night, would be the same advertisers that are trying to appeal to your demographic, because you've told us here this afternoon you're not getting more into movies you're cutting back by 50 per cent next year.

951              So, do you really feel that you're going to be chasing the same dollars?  Isn't there room for both of you?

952              MR. NELLES:  Well, I would echo some of the points we made in terms of ‑‑ earlier about Toronto 1's position currently and as we look forward to growth and we're having fun, we're certainly trying to build a station that ran into some tough times a while back, we'll come out of that.

953              Certainly from a media buyer's standpoint ‑‑ we reference back to the national advertisers ‑‑ they see us and potentially TVN Niagara is very much in the same box.

954              When national sales from TV Niagara goes out to present their avails to media buyers in Toronto/Hamilton and elsewhere, they will very much compare our cost per points with their cost per points with OMNI 1 and OMNI 2 and perhaps Barrie's cost per points and perhaps as was echoed this morning, media buyers will be trying to exact lower cost per points from us in order to offset the very high cost per points demanded by must buy programs on the networks and so on.

955              So, despite the fact that there are significant nuances between some of the programs we might choose to carry and Harvey, there are also some very real commonalities that would be seen on the part of the media planner or a media buyer as they go about to execute their market.

956              COMMISSIONER LANGFORD:  Thanks very much and we'll hear from the folks from OMNI and it will be interesting to see how their programming dovetails with Harvey.  It's getting to be quite a nice undercurrent, that theme.

957              Thank you very much.

958              THE CHAIRPERSON:  Thank you.

959              Vice‑Chair French.

960              COMMISSIONER FRENCH:  Excuse me, gents, I'm not quite finished.

961              I wonder if I could pursue the question of acquisition of movie programming with you.

962              If I understand correctly, you've told us that, in your view, the TVN strategy will cost them twice what they are forecasting.

963              MR. BELLEROSE:  Exactly, based on what we are currently experiencing.

964              COMMISSIONER FRENCH:  What if I ‑‑ harkening back to what I understood them to have said ‑‑ suggested to you that they are, in fact, one tier below you in terms of acquisition strategy; that is to say, that you are interested in newer movies, that you're interested in movies that might appeal to a somewhat younger demographic.

965              I don't want to put words in their mouth, but I understood them to be saying there are 25,000 titles out there of seven years or more, in their mind they dub them all classics ‑‑ though I'm not sure that would coincide with my view of a classic ‑‑ but, in any event, it amounts to a pool of potential programming that they are asking us to accept would be available on exceedingly reasonable terms.

966              Would the difference between their estimate of their cost and your estimate of their cost be accounted for by the fact that the pool from which they are fishing is older and less current than the one in which you and your predecessor owners have been fishing?

967              MR. BELLEROSE:  First, our target demo for our movies is not 18‑34, it's 25‑54, so it's quite the same demo.

968              Secondly, we cannot afford any recent titles.  We cannot and we do not do that.  Our titles that we're acquiring are mostly old classical successes such as TVN is looking for, so we will compete for the same titles.

969              And based on that, so we believe that we've got accurate figures because we negotiate with distributors, so we can say, hey, we're dealing with ‑‑ and we've got some leverage because we go into the market and negotiate with Universal and all those folks, we also negotiate for TV in Quebec for our specialty assets.  Even by doing so we do know that costs will be almost double, and TVN probably has not the same leverage in dealing with those distributors.  So, I don't think their numbers are realistic.

970              COMMISSIONER FRENCH:  Could you tell me what percentage of your current programming, say, last 12 months' programming was more than seven years; I mean, it doesn't have to be the last decimal point.

971              MR. BELLEROSE:  No, I wouldn't be able to do so, but most of them are seven years and more.

972              COMMISSIONER FRENCH:  So, you said the majority were seven years and more?

973              MR. BELLEROSE:  Oh yeah.  Oh yeah.

974              COMMISSIONER FRENCH:  Sorry, Mr. Nelles, you have something to add?

975              MR. NELLES:  Yeah, I was just going to add that what we try to do is to find the best movies we could find based on what we were prepared to pay and that meant, perhaps as Serge has echoed, that those were non‑exclusive titles, we've tried to have some fun in how we package them up and create theme weeks and theme nights and so on, but they are certainly not at the level, for instance, that our colleagues City would have, where they often have simulcast movies ‑‑ not every night, but often ‑‑ so we're certainly not dealing with recent movies.

976              MR. BELLEROSE:  And you need to cope with a certain reality.  You're going to get some very good titles, and the country part you're going to have to accept you have some B titles on your list for this price.

977              And, in addition to that, you might benefit from the fact that you will deal for other programs for which you're going to pay more and because you're doing so you could get access to the movies at the lower price, but the lower price is almost double what TVN has budgeted.

978              COMMISSIONER FRENCH:  No. 1 then, just to summarize, so we're completely clear, you're buying from the same reservoir as they are?

979              MR. BELLEROSE:  Exactly, because these are non‑exclusive rights.

980              COMMISSIONER FRENCH:  No. 2, you're paying, notwithstanding the fact that you're also buying for a certain part of the Quebec market, twice as much as they are estimating they're going to pay?

981              MR. BELLEROSE:  Exactly.

982              COMMISSIONER FRENCH:  And they will not have that additional leverage because they'll be buying only for themselves?

983              MR. BELLEROSE:  You are correct.

984              COMMISSIONER FRENCH:  Do you have a rough cost per hour figure for your movie programming?

985              MR. BELLEROSE:  It's in the range of 2,500 to 3,000.

986              COMMISSIONER FRENCH:  Thank you very much.

987              THE CHAIRPERSON:  Okay.  Well, thank you very much, gentlemen.  Those are our questions.

988              Madam Secretary.

989              THE SECRETARY:  Thank you, Mr. Chairman.

990              We will now invite the next five appearing interventions to come as a panel and that will be A. J. Heafy, Seven Seeds Indigenous Productions & Communications, Natasha Shakhmundes, Nicolette Coote and Jim Diodati.

991              Would you please come to the front.

992              I would ask that each intervenor introduce themselves before you speak, and you have 10 minutes for your presentation.

INTERVENTION

993              MR. ALLAN MILLER:

‑‑‑ Native language spoken

994              And I'm really nervous.

995              COMMISSIONER FRENCH:  We were pretty nervous there too.

‑‑‑ Laughter / Rires

996              MR. ALLAN MILLER:  I greet you today in the spirit of peace.  My name is Tieienhawe, I'm Mohawk of the Wolf Clan of the original people of the Six Nations and representing Seven Seeds Indigenous Productions & Communications, which is a group of Six Nations based grass roots companies who have joined to promote and preserve Aboriginal language, culture and perspective through the use of technology.

997              The Seven Seeds telecommunications consortium brings broadcast programming, the World Wide Web, Internet, cable, satellite, fibre optics and communications technology to a partnership which will see TVN reaching a world audience of Indigenous peoples.

998              The Six Nations reserve community alone offers the largest population of First Nations in Canada, with members residing locally from Toronto to south of the Niagara River.

999              The Six Nations community has many historical ties with Canada.  This is reflected within the cultural interchange between the peoples of Europe and the Americas.

1000             Each learned from the other, borrowing artifacts and ideas.  The result of such extensive communication across cultural lines

has produced in contemporary North America a composite culture that is rich in diversity, and of a type unique in the world.

1001             By the 20th century, almost half the world's domesticated crops were those cultivated by the Native peoples.  If an analogy were to be made between those historic times and today these interchanges have grown from food to technology.

1002             The Two Row Wampum belt, with two parallel lines on a field of white, defines the relationship of the two cultures.

1003             Historically the Haudenaushaunee were nations of people who practised very sophisticated, yet simple, diplomatic principles in their dealings with other nations.

1004             When representatives of certain European nations were first encountered, it was found that these people were unaware of the principles, and had the potential for disrupting the peaceful ways of the Haudenaushaunee.

1005             Because our cultures and lifeways were so different, it was essential that a relationship be established based on mutual respect.

1006             The Haudenaushaunee proposed a treaty of peace, respectful and peaceful co‑existence, known as the Kaswentha, or the Two Row Wampum belt.

1007             The belt was made with two parallel rows of purple wampum on a bed of white beads.  The white symbolized the purity of the agreement.  The two separate rows of purple beads were made to symbolize and encompass the spirits of both Haudenaushaunee and the Europeans.

1008             Between the two rows of purple beads, three rows of white beads were placed.  These stood for the friendship, peace and respect between the two nations.

1009             It is said that the two rows of purple beads further symbolize two nations in separate vessels travelling parallel down river. The vessels symbolize the culture, laws, traditions, customs and other lifeways of each nation.

1010             It is said that each nation shall stay in their own vessel and travel the river side by side.  Further, it is said that neither nation will try to steer the vessel of the other, or interfere or impede the travel of the other.

1011             The Two Row Wampum is a treaty of respect, dignity and integrity and it stresses the importance of non‑interference of one nation in the business of the other, unless invited.

1012             In the spirit of mutual respect and dignity and within this sense of cooperation, TVN has extended the invitation and Seven Seeds has accepted to come together and be truly representative of the Native community in Canada's most populated geographic region.

1013             For the first time in Canada's history, through this modern Commercial Alliance Treaty, Seven Seeds and TVN will fulfil their mandate to offer broadcast access to the Native community and information to the general public in a strong, authentic voice of the Haudenaushaunee.

1014             There is proven fact that Aboriginal content and representation has not reached sufficient levels in Canada's broadcast industry.

1015             From reports such as The Royal Commission on Aboriginal Peoples, the recent Task Force on Cultural Diversity on television which prompted the CRTC Public Notice 2005‑24 to call for changes in the way Canadian broadcasters have performed as in "At the Crossroads" report commissioned by Telefilm Canada in 2004.

1016             The Strategic Alliance of Broadcasters on Aboriginal Reflection which was created by Indian and Northern Affair's Aboriginal Workplace initiative to enhance the participation of First Nations people in the broadcast industry.

1017             All point to systemic barriers which result in an unacceptable lack of Aboriginals in the Canadian broadcast industry, barriers which begin with preventing Aboriginal participation in education, access, learning styles and support.

1018             Education must develop Aboriginal children and youth linguistically and culturally to assume the responsibilities of their nations.  First Nations graduates must be grounded in a strong positive Aboriginal identity.

1019             Consistent with Aboriginal traditions, education must develop the whole person, intellectually, spiritually, emotionally and physically.

1020             Seven Seeds undertook research to determine the need for First Nations Digital Video Broadcast training and education.  Several key papers and initiatives came to light which proved a direct link from training, education at all grade levels, industry internships and a culturally sensitive environment to post secondary graduates and First Nation employee retention in the media industry.

1021             TVN has been an encouraging agent for assisting with these educational issues by offering co‑op placements and mentoring for the students and graduates of the Digital Video program offered by Seven Seeds in affiliation with (ICMI) Indigenous Culture & Media Innovations and Niagara College.

1022             In supporting Seven Seeds in training First Nations people, TVN assists in addressing the unique learning styles of Native students that have prevented the participation of Natives in the industry.  This provides an access point that allows for cultural support and encouragement.

1023             Seven Seeds in affiliation with ICMI  provides youth mentoring programs to encourage youth to complete secondary studies and consider further educational goals in the broadcast industry.

1024             In supporting Seven Seeds and training First Nations people, TVN assists in addressing barriers faced by Native youth who are at risk and Native women who quite possibly face even more barriers economically, educationally and professionally.

1025             In supporting the training, mentoring and production of First Nations programming, TVN is helping to create economical development which will begin in the Six Nations of the Grand River Territory.  This means jobs and careers and professions for many community members and builds representation of First Nations role models for our youth to follow.

1026             In supporting the training of First Nations people, TVN will partner with Seven Seeds in facilitating a network of training initiatives in various First Nations urban and reserve communities.

1027             In directly supporting Seven Seeds in the building of the Six Nations broadcast industry, TVN will create access for Southern and Eastern Independent Native producers and help build a network And help build a network of First Nations suppliers for computers, audio/video equipment and all accessories.

1028             In 2001 Seven Seeds projected plans to construct a production facility on the Six Nations reserve.  In 2003 construction commenced and it is expected that the facility will be in operation in the fall of 2005 with half of the facility devoted to a sound stage for television program development.

1029             In affiliation with TVN, the Haudenaushaunee perspective will be given the opportunity to reach a large segment of mainstream Canadian society.

1030             The presentation of Native issues pertinent to Canadian citizens that reside within these territories, that are the homelands of the Haudenaushaunee in Southern Ontario, will foster social understanding and cultural tolerance for a peaceful co‑existence.  TVN will be an impacting contributor to a level of communication that has never been established between the Haudenaushaunee and our Canadian allies.

1031             The sound stage, through partnership with First Nations Cable, will possess the capacity to transmit direct fibre optic links to a live feed on Six Nations.  Jeff Thomas, a partner in Seven Seeds, provides the necessary capacities to accomplish these technologies.

1032             Gary Joseph, a partner in Seven Seeds, and Six Nations Internet, will connect the sound stage to a vibrant communications system and link with education centers, high schools and public education systems in Ontario.

1033             The sound stage facility will provide a news desk for reporting regional news coverage for the Six Nations and surrounding areas.  A news team, comprised of Native technicians and reporters, will be established with full‑time positions.

1034             Through our partnerships and technological resources, Seven Seeds brings the world of Indigenous peoples to TVN and the Niagara Peninsula.

1035             TVN will serve to provide Seven Seeds with professional mentoring in the development of key positions to produce quality programming that satisfies industry standards.

1036             Through this mentoring process and production capacity enhancement TVN assists Seven Seeds in promoting the Six Nations reserve economy, as well as urban Native centres throughout Southern Ontario.  This will directly result with employment opportunities for Aboriginal people in the Canadian broadcast industry.

1037             Seven Seeds in actively developing an initiative involving TVN Niagara will see the historic establishment of a regional news desk based at Seven Seeds and First Nations Territory.

1038             TVN has also committed weekly broadcast programs produced by Seven Seeds which will reflect a positive contribution to Canadian broadcasting while engaging viewers in an Aboriginal perspective.

1039             Seven Seeds is currently committed to the promotion of Aboriginal languages and culture through dedicated programming on Eaglevision community channel 8, First Nations Cable.

1040             In partnership with TVN, our children, our community and Canadian society will experience the Haudenaushaunee language in segments within the weekly Native programming.

1041             TVN, with the inclusion of Seven Seeds as a contributing entity to the proposed broadcast content, will have an impacting effect beyond the provision of the Native content.

1042             TVN Television Niagara will have many positive effects for the Aboriginal community of Six Nations and for other Native centres and communities as Seven Seeds promotes Native involvement in the broadcast media industry.

1043             Up until now, the Haudenaushaunee voice has been almost absent in mainstream broadcasting.  For the first time, the TVN and Seven Seeds partnership will create vibrant links which are needed to keep the two rows moving forward together for the next generation.

1044             I thank you for allowing me this time to express my support of granting a broadcast licence to TVN.

1045             The far‑reaching positive effects on Native education and training, economy and employment, youth and women, Natives in broadcast and Native perspective are major advancements for the Native community and Canadian broadcasting.

‑‑‑ Applause / Applaudissements

1046             MR. DIODATI:  Thank you very much.

1047             My name is Jim Diodati.  I wear two hats today, one as a municipal politician, I'm an alderman on the City of Niagara Falls City Council and, as a local businessman, this year marks my 20th year in business for myself, and I'll give you my two perspectives.

1048             I'll try not to be too loquacious.  I know this morning some of the panel did tend to get excited and loquacious.  I can just put that to enthusiasm, a strong belief and passion and I know when you are passionate about something you get quite excited and I know I've been known to get excited and verbal diarrhea once in a while myself, so I'll try not to.

1049             I should note that I originally wrote a letter of support to the CRTC for TVN long before I ever met any of its proponents or were acquainted with any of the shareholders just for the fact I felt it was something long overdue.

It's a question I always wondered.

1050             I went away to university and I came back.  It just seems most markets this size ‑‑ and often smaller ‑‑ do have TV stations.

1051             I wondered why growing up, I'd go up to the cottage and I'd hear their local TV station.  I just didn't understand why we didn't have one.

1052             And once this came forward, I can tell you, I was quite excited and passionate as well and I wanted to help them in any way that I could.

1053             I wanted to do my research to make sure this seemed that it was what I thought it was, and I'm not going to pretend to be a radio/television person, I'm businessperson, marketing and sales and that's my expertise and that's the vantage point that I'm going to give you.

1054             The first thing I wanted to comment on was the fact of category, and I hear the word market share.  For me in my business it's called category and I'm in the bakery distribution business, I sell ‑‑ I'm in the sweet goods category.  As my wife would say, 'from your lips to your hips', that's the kind of stuff that I sell.

1055             And my perspective is that when I would bring a new product into the market, the local product that had been here for quite some time was always defensive and protective of its territory, as I would expect that it would be.

1056             In my experience, if you bring the right product to market, what you do in a sense, the net effect is that you expand the category.  Of course it's going to take something away from the competition, but the net effect is that you expand the category.  That's been my experience.

1057             In terms of hurting or killing anybody, as far as I'm concerned the pie is very big.  I think there's a lot for everybody.

1058             And, of course, some people like to hold onto their piece.  And the way I look at it, you know, you can have the biggest building in town by building it, or you can have it by tearing everybody else's down.  I like to be productive and constructive.

1059             I think there's room for everybody.  I think in some case the competition, they need to cut the cloth to fit the suit.

1060             I think maybe they're going to have to be not expending money as much as they have perhaps, and competition in my mind is very healthy, I know this Panel ‑‑ this Commission deals with it on a regular basis.  I know you deal with monopolies on both sides of the fence.

1061             And as far as I'm concerned, competition has always been good for everybody.  In the end the consumer wins.  A calm sea is never made for a skilled sailor ‑‑ it will just make everybody better, it will just raise the bar in the industry.

1062             The first thing I ask when somebody asks me they need something, or they want something, I have to determine, I prioritize: is it a need, or is it a want?

1063             In this case I think it's pretty clear this is a need ‑‑ of course it's a want ‑‑ but it's clearly a need, it's something that's been long overdue.

1064             Niagara is very unique in many ways, as you've seen.  First of all, it's unique that you're here today, the CRTC, first time ever to have a hearing here and I feel quite honoured.  I read about it in the paper and I actually get to stand before it and say my bit and I do appreciate you being here, it does mean a lot to all of us here, just the fact that you are here acknowledges our existence.

1065             We hope it will go a step farther.

‑‑‑ Applause / Applaudissements

1066             MR. DIODATI:  Niagara is unique for many reasons. First of all, we have a lot of visitors here.  We have over 14‑million people and the numbers are shown ‑‑ they're projected to go much, much higher than that, 14‑million people here.

1067             We're a border town, we have many  border cities in the Niagara Region.  Our neighbours to the south, you know, one of the super powers, they're our major trading partner and this is where they start, they go through Niagara before they go anywhere.

1068             In terms of being famous, we're known as the world's most famous address, we're known as one of the natural wonders of the world.

1069             We're also unique in that we're known as the world's most famous address with one of the natural wonders of the world without a TV station.

1070             We're unique in many ways, and we're hoping that we're going to be less unique very soon.

‑‑‑ Laughter / Applaudissements

1071             MR. DIODATI:  The way we see it, it's about time that we get to tell the story ourselves, it's always been a third party telling our story, it never seems to be us telling our story.

1072             As far as our story, we've got colleges, universities, wineries, world‑class attractions ‑‑ you've heard, I'm not going to repeat everything ‑‑ but we do have a great story.  Unfortunately we've been all eyes and ears, we haven't had a voice, we haven't had an opportunity to verbalize who we are and what we are and I don't think what we're asking for is outrageous.  That's what we're asking for, is a voice.

1073             If you look around you'll see Niagara is going through an urban revolution, there's a renaissance economically, things are changing in so many ways.

1074             One thing that I was really impressed with TVN's application is their commitment and their determination to market both sides of the border.  In Niagara quite often we call the river the ditch, both sides of the ditch, and it's a real exciting thing to see.

1075             We have been influenced all these years by our American cousins and now we're going to have an opportunity, (a) to correct misinformation and set back straight and I'll give you a classic example.

1076             The frustration, the misconception of any Americans that the bridge is backed up.  Fact of the matter, if you have a look at it you'll see, it's not backed up.

1077             Or the misconception that Americans will need passports to get back into the U.S.A., it's a fallacy.  But misconceptions are all about, we don't have a way to stop these fallacies and portray the facts.

1078             In terms of misperceptions and misconception, you know, living here in Niagara Falls we got all of them.  You know, which way would I go to see an igloo, and what time do you collapse the Falls ‑‑ collapse the Skylon Tower and at what time do they turn off the Falls.

1079             We'd always have fun with the tourists, you know, well, I'm going to turn it off now if you want to give me a hand, it's a big wheel, it will take two of us and some WD40.

1080             But the fact is we can joke all we want, there is a major misconception and Niagara is one of the areas they talk about.  We would like to address some of these things by putting out fact.

1081             In terms of bridges, right now we have four international bridges from the Niagara Peninsula to the U.S.A.  TVN is suggesting a fifth, only this one will being digital and it will be electronic and it will help us in a great many ways.  Right now we don't speak as one voice for Niagara and we'd like to.

1082             Recently, all the mayors of Niagara, the 12 municipalities and they got in a car and they drove to Toyota and they said:  Hey, listen, we're Niagara, you know, you maybe never heard of us but we're a big booming community and we would love to have you operate in our municipality and we want to work more as a region, we don't want to work as these dissected parts, these detached body parts, we want to work as one and we believe that TVN will help us to achieve this goal.

1083             I'm just wrapping up, in case you're wondering, am I loquacious like the rest?  I'm wrapping up here.

1084             Communication is the key to a good relationship, we all know that.  When a relationship breaks down, generally the root of it is communication, generally it's because it's one sided, generally it's often because you're not listening to me.  Well, you know, you don't hear me.

1085             Well, you don't hear us because we haven't said anything.  We haven't had an opportunity to say anything, and we want that opportunity.

1086             In regard to the timing of this, we believe it's long overdue.  If you want to look at political, economic, social, you want quantitative, qualitative, whatever way you want to look at it, there is a need.

1087             Yes, there is a want, yes there is a desire, yes we've got people that are all worrying about the sky falling and how worrisome it's going to be if TVN gets a licence, God forbid, it's going to bring everybody down the vortex, and I understand and I expect to hear those kind of arguments from the other side of the fence, but let's remember, all those people that got a licence, they had to put up with same debate and I'm sure they appreciate where we're coming from.

1088             And just to close up, I'd like to just finish off by just saying, yes, we're known as the best keep secret that is Niagara and for a change it's about us, for a change it's about us and, yes, I hope we lead off with our movies with the movie Harvey.  I hope that's going to be our big movie.

1089             Thank you very much.

‑‑‑ Applause / Applaudissements

1090             COMMISSIONER:  There really isn't any other choice.  If you want to succeed, there can't be any other choice.

1091             THE CHAIRPERSON:  Thank you.

1092             Commissioner Cram.

1093             COMMISSIONER  CRAM:  Thank you.

1094             Is it Mr. Howie, did you say your name was, sir?

1095             MR. ALLAN MILLER:  My name is Miller, Allan Miller.

1096             COMMISSIONER CRAM:  Miller.  Sorry.

1097             Tieienhawe is my Mohawk name, yeah.

1098             COMMISSIONER CRAM:  Okay.  You were talking about First Nations Cable and a program on that.  Is that on the community channel with Cogeco?

1099             MR. ALLAN MILLER:  It's not on Cogeco, no, we just broadcast within the reserve community, Eaglevision community channel 8 that is with First Nations.  Seven Seeds provides programming for that program channel.

1100             COMMISSIONER CRAM:  Okay.  And so it's on cable locally?

1101             MR. ALLAN MILLER:  Yes, First Nations Cable, yes.

1102             COMMISSIONER CRAM:  And how ‑‑ is it the entirety of the programming or is it just one hour, two hours a week or...

1103             MR. ALLAN MILLER:  We strive to do three to four hours weekly.  It's rotated, the week is rotated.

1104             COMMISSIONER CRAM:  You rotate it?

1105             MR. ALLAN MILLER:  Yes.

1106             COMMISSIONER  CRAM:  Okay.  Thank you.

1107             THE CHAIRPERSON:  Thank you very much, gentlemen.

1108             Madam Secretary.

1109             THE SECRETARY:  Thank you, Mr. Chairman.

1110             I would like to call the next appearing intervention, that is Rogers Media.

1111             If you could please identify yourself before you speak, gentlemen, and you have 10 minutes for your presentation.

INTERVENTION

1112             MR. MERSON:  Good afternoon, Mr. Chair, Mr. Vice‑Chair, fellow Commissioners and Commission staff.

1113             My name is Rael Merson,

I'm the President of Rogers Broadcasting Limited.

1114             With me today is Alain Strati, Vice‑President, Business and Regulatory Affairs of Rogers Media.

1115             We're here to oppose the application filed by TV Niagara on the basis of two specific grounds.

1116             Firstly, we believe the Toronto/Hamilton market cannot sustain a new entrant at this time.  Secondly, we believe that the business model as presented by TV Niagara is flawed and cannot be successfully executed.

1117             This application is as much about the Toronto/Hamilton television network as it is about local service in the St. Catharines and Niagara Region.

1118             With overlapping signals and advertising bases, TV Niagara will be forced by distributors to buy programming rights for the extended Toronto/Hamilton market and will, therefore, have to look to the same extended market to recover its costs.

1119             We have already seen how the Buffalo and Hamilton stations are forced to sell into Toronto to sustain their businesses and it is virtually certain that TV Niagara would similarly have to do so.

1120             But the Toronto/Hamilton market is already heavily licensed television market in Canada with the recent licensing of OMNI 2 and Toronto 1 in 2002, there are now 10 Canadian television stations in that market.

1121             It is also the most competitive market in Canada.  There are already four independent stations, OMNI 1, OMNI 2, Crossroads and Toronto 1 who compete for the acquisition of regional programming rights in this market.

1122             Moreover, given the proximity to the U.S. border, a number of U.S. network affiliates from Buffalo are also available to viewers and compete with Canadian stations for audience share and advertising dollars.

1123             Fragmentation from specialty services has eroded the traditional advertiser base.  Over‑the‑air television has experienced real declines in revenues and profitability over the last few years.

1124             Audience share to conventional stations has dropped by 28 per cent, from 61 per cent in 1993 to 44 per cent in 2004.  Reported results for the 2003 to 2004 broadcast year, the first full year in which the full impact of the two new licensees was felt in the Toronto/Hamilton market, shows a decline in revenue of $12‑million or 1.7 per cent.

1125             The latest television bureau statistics suggest this weakness will continue.   In the current broadcast year, spot revenues are down by 2.3 per cent on a year‑to‑date basis.

While revenues have stalled, expenses have continued to grow, impacting the profitability levels of broadcasters.

1126             Profit before interest and taxes declined significantly from 23.3 per cent in 2003 to 14.7 per cent in 2004.  In hard numbers, profit before interest and taxes declined by $63‑million or approximately 38 per cent.

1127             Clearly the market is having difficulty absorbing the impact of the two new licences.

1128             In order to offset the effects of fragmentation, the reaction of existing broadcasters has been to align themselves with networks with multiple outlets.  However, we have seen the impact on independent stations such as Toronto 1 and now TB who have lacked the ability to reach the scale necessary to survive in the industry.

1129             Our experience with OMNI 2 is also revealing.  OMNI 2 was licensed to broadcast the diversity of ethnic programming available to the Toronto/Hamilton market.  In so doing, we made a number of commitments to broaden the scope of our service to viewers.  We effectively doubled the number of hours of ethnic programming and local programming produced by our stations.

1130             The two stations now produce five different weekday newscasts serving communities  in five different languages.

1131             We established a tangible benefits package totalling $48‑million over the licence term to be used largely to assist independent production projects and industry initiatives.

1132             Of note, we launched a third language documentary fund becoming the only source of funding available in Canada for the financing of documentaries produced in the third language.

1133             Our financial results demonstrate just how fragile the market actually is.  Revenues for OMNI 1 have actually declined by approximately 17 per cent from the 2000‑2001 broadcast year to the last year which was 2004.

1134             In fact, total revenues from both stations in 2004 were only about 13 per cent higher than the revenues for OMNI 1 alone in 2001.

1135             Moreover, operating profit from the combined stations in 2004 is just over 50 per cent of what profits were for a single station in 2001.  That is a decline by 50 per cent.

1136             Given the general revenue and PBIT decline in the Toronto/Hamilton, the financial difficulties experienced at Toronto 1 and the reduction in profitability of the OMNI stations, we believe that it's clear that the market has not yet absorbed the impact of the two new stations licensed in 2002 and cannot sustain the licensing of another station.

1137             As is always the case with the review of an application, we overlaid our knowledge of the industry and the market on the business plan proposed by TV Niagara.

1138             There approach is unconventional in that it seeks to de‑emphasize a reliance on required programming and, instead, depends disproportionately on local revenues.

1139             With respect, we submit that this is a business model that has never been sustained.

1140             The local St. Catharines/Niagara market has access to a plethora high‑ quality television stations originating from the surrounding cities of Toronto, Hamilton and Buffalo and local viewers will demand and expect similar high quality programming from TV Niagara.

1141             This will ultimately force TV Niagara to compete for quality programming with other Toronto/Hamilton broadcasters in order to build up its audiences.

1142             In comparison to OMNI, the average acquired programming budget proposed by TV Niagara is less than 20 per cent of the average acquired expenditures on each OMNI station, even taking into consideration the limited prime time schedule available the OMNI stations.

1143             Secondly, we believe TV Niagara has over estimated the potential for a model which relies so heavily on local advertising revenue. Television has tended to draw more on national revenue rather than local revenue because of two reasons.

1144             Firstly, the cost of producing an acceptable television commercial tends to be out of the reach of local advertisers; and secondly, the minimum investment required to execute a successful television advertising campaign also tends to be out of the reach of most local businesses.

1145             TV Niagara has projected 45 per cent local revenue.  Our experience at the OMNI stations ‑‑ stations which are as intensely local as television tends to get ‑‑ has shown that less than 20 per cent of revenue will, in fact, come from local advertisers.

1146             In conclusion, there are two primary reasons why the Commission should deny the application proposed by TV Niagara.

1147             Firstly, the Toronto/Hamilton market has not yet absorbed the impact of the most recent licensees, both of whom have made significant commitments to expand the programming diversity available to local television viewers and to strengthen the development of the Canadian broadcasting system.

1148             Secondly, the business model proposed by TV Niagara does not reflect the realities of competing in a market like Toronto/Hamilton.

1149             The evidence suggests that TV Niagara will face significant challenges in executing their business plan and surviving in a very competitive market.

1150             For all of these reasons, we respectfully submit that the application filed by TV Niagara for a new local television station should be declined.

1151             We thank the Commission for the opportunity to make our views known on this important issue.  We would be pleased to answer any questions that you may have.

1152             THE CHAIRPERSON:  Thank you.

1153             Vice‑Chair French.

1154             COMMISSIONER FRENCH:  This morning Mr. Wilks affirmed that the local market is, in some sense, overlooked as a possible pillar of support for the kind of station that he proposes to us.

1155             You said, in effect, it's never worked; he said, in effect, it worked very well in Red Deer.

1156             Let's suppose Red Deer had Calgary, Edmonton and the usual U.S. stations, isn't it conceivable that a local market like the Niagara area which, as we've been repeatedly told, has been overlooked, or has the feeling at least on the part of some of its potential advertisers that it's been overlooked, isn't it possible there's more potential there than a Toronto station would ever be aware of, not through bad faith or ignorance, but simply because the pricing that the Toronto station would be forced to present to the local advertiser in Niagara would be out of the ballpark of that advertiser?

1157             MR. MERSON:  It's a tough question, you know, and to me the question really is what is the chicken and what is the egg?

1158             And I don't know what the starting point is but I think the starting point is that you have to put a credible schedule on the air and if you have to put a credible schedule on the air, you have to compete for programming that will draw an audience, that will build an attractive market for your advertisers to market to.

1159             It suggests to us, and our experience is that it's going to cost more money than is being presented in this application to put in place an attractive schedule.

1160             Then the question is, does the market exist to be able to support the schedule that is being put in place?  And in our experience, again, there isn't ‑‑ you would have to sell the advertising at too low a spot rate to be able to sustain the type of schedule that you would have to put in place to be attractive in a marketplace like Toronto.

1161             I don't know Red Deer in particular and I would ask ‑‑ if I was there, I would ask Mr. Wilks what the situation is in the marketplace currently?  Are the independent stations in the marketplace?  What is the level of competition from U.S. broadcasters?  What is the level of overlap in Red Deer from Edmonton or Calgary?  And I don't know the answer.

1162             But this is a very difficult marketplace, you know, not only do we have all the networks coming in, we have all the  U.S. networks, the Canadian networks and some very successful and determined local broadcasters in the marketplace.

1163             So, I'm not sure, I don't know if the markets are duplicates or comparable.  They might be.

1164             I would be interested in what the evidence is in Red Deer now, whether there are currently any independents still existing in Red Deer.

1165             And then you're in this position where you have to ‑‑ this is such a competitive marketplace, you have to put a credible schedule in place.

1166             As you heard from the Toronto 1 people, movies, classic movies has been done.  You know, it's been done to limited degrees by Toronto 1, it's been done by limited degrees by pay services, by video‑on‑demand.

1167             I'm not completely ‑‑ I can't remember, I thought I heard this morning that the average anticipated rating that the station was projecting in the Toronto/Hamilton marketplace was a half a point.  I'm not sure that's deliverable based on programming that is largely already duplicated in any one of a number of different areas, including the pay services and video‑on‑demand, a number of other places.

1168             COMMISSIONER FRENCH:  Mr. Merson, can you tell me, with respect to the barriers to advertising represented by the initial production cost of a 30‑second spot, what would be the least expensive production cost for 30‑second spot on OMNI 2?

1169             MR. MERSON:  Least expensive?

1170             COMMISSIONER FRENCH:  Yes.  Let's assume that the Niagara Falls viewer does not expect to see ‑‑

1171             MR. MERSON:  A General Motors spot?

1172             COMMISSIONER FRENCH:  Exactly.

1173             MR. MERSON:  $10,000 would be my guess.

1174             COMMISSIONER FRENCH:  What would the cost be for, you know, 10 executions of that $10,000 ad?

1175             MR. MERSON:  Depending at what rate.

1176             COMMISSIONER FRENCH:  Yes.  Well, just give me some ballpark figures ‑‑ I'm trying to get an idea of what Mr. Spaulding, the car dealer...

1177             COMMISSIONER LANGFORD:  Slattery.

1178             COMMISSIONER FRENCH:  What Mr. Slattery is looking at in terms of cost to get into Toronto through a relatively inexpensive access.

1179             MR. MERSON:  I have to ‑‑ no, I really don't know.  I mean, I could do the calculation easily.  I know I would be wrong.  Can we give it to you?

1180             COMMISSIONER FRENCH:  That's fair enough.  That's fine.  It's not that crucial.

1181             MR. MERSON:  Okay.

1182             COMMISSIONER FRENCH:  I don't know if there's anything else.

1183             THE CHAIRPERSON:  Commission Langford.

1184             COMMISSIONER LANGFORD:  You may have heard me questioning the folks from Quebecor and I want to try a kind of similar line on you, so you should be ready.

1185             On page 8 of your submission you say:

                      "With respect, we submit that this is a business model that has never been sustained."

1186             And with respect, equally ‑‑ I wonder why we always say that and I wonder whether we ever really mean it ‑‑ but anyway, with respect, couldn't the same thing have been said about the first OMNI experiment, never been tried before, won't work.

1187             In fact, I would be willing to bet a nickel that if I were to go and dig the transcripts out of our basement at the CRTC I'd find someone who said that.

1188             And I certainly know, and they'll be here later on the program, a well‑known Toronto broadcaster who said similar things when you went for OMNI 2 not that long ago, and you pulled it off.

1189             You were before us in Vancouver looking to try something different with religious broadcasters and some people there didn't think it was a good idea, you thought it was.

1190             And I just wonder whether you can really make that kind of a statement.  Put the question simpler.  I mean, people try different things, they come at it with a new approach and sometimes it works.

1191             So, do you really think that's a fair statement in light of your own history.

1192             MR. MERSON:  Again, I'm not sure where to start.

1193             COMMISSIONER FRENCH:  Start wherever you like.

1194             MR. MERSON:  You know, if you look at the history of CFMT and OMNI, it did go through one round of bankruptcy.

1195             So, the question you ask yourself, and you look at the history of NOW television in Vancouver it also effectively has gone through one round of bankruptcy.  And, you know, Warren Buffet's firm rule is to be a second owner of any business that he gets into because it does tend to go through a little bit of upheaval.

1196             So, I don't think you're hearing from us not ever, and I don't think you will ever hear from us not ever, and if I in any way in this material suggested not ever, I have misrepresented our feelings.

1197             Not now I think is what we're saying.  I think we're saying the marketplace is fragile, I think you can see that in the decline in revenues.

1198             It is ‑‑ you know, it's difficult and, you know, most of us would consider ourselves, you know, at least free marketers if not mixed economy people, and so the notion of a new entry, you know, a basic fundament of how it is we believe a market should exist and we believe nothing different in this case at all.

1199             We take on enormous obligations in OMNI 2 and Toronto 1 has taken on enormous obligations in the development of Toronto 1.  It is very difficult to sort of intervene in a marketplace, ask the players to take on some material obligations and then substantially change the marketplace in a very short period of time.

1200             So, we really are not saying not ever, we're simply saying not now.

1201             COMMISSIONER LANGFORD:  You use the word substantially, but I put to you the same question that I put to the representatives of Quebecor earlier, why would the impact be necessarily on you rather than spread across six or seven, 400‑million, depending on how you count it.  There's a lot of money there, I don't dispute your figures that the money hasn't grown the way you wish it had, but there is still a considerable pot of money.

1202             Why you, when their focus seems to be on such a different niche and such a different demographic, why would OMNI be hurt?

1203             MR. MERSON:  I don't think we did said us in particular, you know, our presentation has merely been a sort of a commentary on the marketplace in general and broadcasting by its nature has a perishable resource and the impact of adding inventory into a marketplace that deals in perishable resources that effectively has a marginal cost of zero at that point.

1204             Once you have the station up on the air, you're ready to go with the inventory, every last minute sold is a minute wasted for ever.

1205             So, your marginal cost is particularly low.  So, the impact that a new entrant has in a marketplace with a perishable inventory that has a very low marginal cost can be very dramatic.  And I think you've seen that.  If you look at the average revenue per station in the local market, you would agree that there are two impacts at work, one is an incremental supply that tends naturally to drive down the average price ‑‑ the average yield on a particular dollar of air time, but the second is simply a function of the fact that the commodity has zero marginal cost, that there's a tendency or a proclivity or propensity to take every last dollar because if you don't take it somebody else gets it and it's lost for ever.

1206             So, it is a fragile marketplace.  It isn't a marketplace where commodities that have hard cost and the question is when you sell them over time, these are lost for ever if you don't sell them.

1207             So, again, we're not claiming this will have a disproportionate impact on OMNI, I don't believe it will, in fact I do believe we're positioned a little differently, but I do think it will have a general dampening effect on the yields in the marketplace, that's all.

1208             COMMISSIONER LANGFORD:  And it isn't possible that some of the people ‑‑ it's such a strange marketplace in a way, Toronto, a few players are doing extremely well and others year after year don't seem to be doing that well at all.

1209             You are new, so I don't count you in, but the ones, we can go back, some of the statistics from the Hamilton station, the Barrie station, they just don't seem to be able to reach the levels of some of their colleague stations.

1210             Is it just that they're not as good at it?  I mean, I don't want to be nasty but, you know, if McDonalds can't sell hamburgers, do we keep Burger King out for ever?

1211             It's hard to find an analogy.  But how long do we say:  Well, gee, shut the door to newcomers because the existing players aren't

doing as well as they'd like.

1212             MR. MERSON:  You know, we debate the same issues, we debate the same issues internally all the time.

1213             You know, the question you're asking is, you know, why is this such a lopsided marketplace?

1214             And the theory that I've heard and believe is that, you know, television is a hit‑driven medium, it's a mass medium and, so, therefore, what appeals to one segment of the population appeals to the population as a whole and that even though you can branch off and settle niches, there's a tendency to drive hits because, you know, similar people tend to like similar things and the population is ultimately reasonably homogenous and tends to sort of gravitate towards the middle.

1215             So, we, unlike Citytv and Global and City have built our business around niches and we cut our costs ‑‑ cut our cloth to suit and we built our businesses that way.

1216             So, it's my uneducated explanation for why there tends to be perpetual imbalance in the marketplace.

1217             So, I don't know what the answer is.  The second part of the question I think was, well what is an appropriate time?

1218             I think at the very least you would like to see increasing average revenues per station in the marketplace, or you'd have to have a sense of balance returned to the marketplace, or you'd have to have a sense that yields in the marketplace had bottomed and were beginning to trend back up again.

1219             Not a scientific calculation, but readily available in the marketplace.

1220             COMMISSIONER LANGFORD:  Thank you very much.  Those are my questions, Mr. Chair.

1221             THE CHAIRPERSON:  Thank you very much.

1222             Commissioner Cram.

1223             COMMISSIONER CRAM:  Thank you.

1224             I think sort of running underneath everything here, and probably at every hearing, is the old concept of you pay for what you get, and in other words the cost of the programming would bear some direct relationship with the idea of the share that you would receive.

1225             Now, but you with your model and the OMNI's have been able to find sort of, if I can call it, a booster strategy and that's this shoulder programming which is somewhat similar to what TVN is proposing in that they're talking about starting their movies at seven o'clock instead of at eight o'clock when all the big boomers come in and that's essentially, you have your ethnic programming, your third language programming, don't you, starting at eight or something like that?

1226             MR. MERSON:  Exactly.

1227             COMMISSIONER CRAM:  So, is there some way based on this kind of strategy, the shoulder programming strategy, can you estimate that it gives you a boost of a certain share having it in shoulder times or it gives you an unquantifiable advantage?

1228             MR. MERSON:  You know, the dynamics of shoulder programming really are what we call counter programming, they're not really a boost.

1229             In fact, if you look at the average cost per rating point in prime time, for no explicable reason it actually exceeds the cost per rating point for shoulder periods and during the day, which is counter intuitive, because essentially you're buying the same number of viables, you're buying a thousand people who watch a particular show or a percentage of the audience and, yet, the cost per rating in prime time exceeds the cost of ratings in the shoulder period and the completely off‑prime periods, and I guess it's just a function of demand, you know, for those periods and the demand, you know, tends that way..

1230             The reason that we ended up in shoulder was simply as a counter to existing program and, in fairness, our realization was that the audiences that we most seeked to serve, which were the ethnic audiences, were most available in prime time, they were the ones who were most disenfranchised in prime time.

1231             They might stumble their way through local news, but ultimately they were most disenfranchised in prime time, we should program to them in those time blocks.

1232             So, you know, it hasn't worked as a booster, it's worked as an alternate strategy.

1233             And, to be frank, if you look at ‑‑  you know, we second guess, but when we launched OMNI 2 we went with exactly the same strategy which was to program into those shoulder and off‑peak time periods.

1234             And you might well argue that we've cannibalized ourselves, because we haven't seen ‑‑ we've got two stations on the air currently and our revenue from two stations is 15, one five per cent more than it was from one station alone.

1235             So, we do think we have done some damage to ourselves.  Our problem is we lack a credible alterative, we haven't come up with one, so we've stuck with the strategy.

1236             COMMISSIONER CRAM:  And can you give me some numbers.

1237             On page 8 of your speech today you say,

                      "TV Niagara..."

1238             So, you're talking about ‑‑ that's that bottom paragraph:

                      "The average  acquired programming budget..."

1239             So, is that the whole seven years divided by seven‑‑

1240             MR. MERSON:  That is correct.

1241             COMMISSIONER CRAM:  ‑‑of the projected ‑‑ okay.

                      "...is less than 20 per cent of the average acquired expenditures on the OMNI stations."

1242             So, that's your average over the last seven years or something like that?

1243             MR. MERSON:  Currently and over the last three years.

1244             What we essentially did was took ‑‑ we added together the acquired programming budgets for the two stations‑‑

1245             COMMISSIONER CRAM:  Okay.

1246             MR. MERSON:  ‑‑and divided them by two, because what tends to happen is the one year the one's up, the other one's up, so we thought the most comparable would be ‑‑ and those are the published numbers.

1247             COMMISSIONER CRAM:  Yes.  And have you done a per hour calculation on average though?

1248             MR. MERSON:  We have not, sorry.

1249             COMMISSIONER CRAM:  Okay.

1250             MR. MERSON:  We would be happy to do it, but have not done it.

1251             COMMISSIONER CRAM:  Well, we know the number of acquired programming hours by TVN.  What is your limited prime time schedule hours?

1252             MR. MERSON:  What is the average cost?

1253             COMMISSIONER  CRAM:  Well, just tell us the hours ‑‑ the number of hours.

1254             MR. MERSON:  We don't program to prime time at all because we only program between 6:00 and 8:00 and 10:00 to 12:00, so we skip that entire middle block, the 8:00 to 10:00 block completely.

1255             COMMISSIONER CRAM:  And if we were using 7:00 to 11:00 it would be one hour?

1256             MR. MERSON:  Just one hour.

1257             COMMISSIONER CRAM:  Okay.

1258             MR. MERSON:  Oh, sorry, it would be two hours, 10 o'clock as well, 10:00 to 11:00 too.

1259             COMMISSIONER CRAM:  Okay, thank you.

1260             Thank you, Mr. Chair.

1261             THE CHAIRPERSON:  Mr. Merson, on the subject of cannibalizing, it occurred to me as well when I read your page 7 of your presentation today and that, in effect, you have done that, you made a corporate decision to apply for the OMNI 2 licence and were granted it and, in effect, the impact is on yourself and I wonder, given your ethnic and third language orientation whether in fact that is your ongoing problem and not the advent of a Niagara‑based station that, in fact, caters to movies and the Niagara local programming.

1262             So, I am hard pressed to see the impact of that station on you.  I drew the same conclusion you did about cannibalization.

1263             MR. MERSON:  I wouldn't disagree particularly.  I mean, again, I don't think ‑‑ I don't think it isn't directly competitive to us, but I do think it will have a dampening effect on rates in the marketplace as a whole, simply because a lot of perishable inventory will come onto the marketplace.

1264             You know, we simply have not come up with an alternative to shoulder programming.  It is the dilemma that TVN and Toronto 1 have faced which is, at what point do you step up to the thousand dollar window.  I mean, can you build a business around a $100 window as opposed to stepping up to the thousand.  It is an entirely different business.

1265             And, to be frank, as you look to the over‑the‑air business in the future and you see the extent of the cannibalization or fragmentation at least from specialties and from pay services and from video‑on‑demand and from pay‑per‑view, you question whether movies ultimately were the smartest long‑term strategy for conventional over‑the‑air stations, that it might be something that is more current and ultimately more perishable.

1266             THE CHAIRPERSON:  Thank you very much.  Very informative presentation.

1267             We will break now and resume in 15 minutes.  Nous reprendrons dans 15 minutes.

‑‑‑ Upon recessing at 1635 / Suspension à 1635

‑‑‑ Upon resuming at 1650 / Reprise à 1650

1268             THE CHAIRPERSON:  Order, please.  À l'ordre, s'il vous plaît.

1269             Madam Secretary, would you be kind enough to call the next item, please.

1270             THE SECRETARY:  Thank you, Mr. Chairman.

1271             We will now call the next five appearing intervenors as a panel and they are Jennifer Turner on behalf of Dell Rollo President of Binational Tourism Alliance, Jacqueline Angi‑Dobos, Brian E. Purdy, Brock Dickinson of the City of St. Catharines and appearing on behalf of the City of St. Catharines is Mayor Timothy Rigby and the Niagara Economic and Tourism Corporation.

1272             If you would please introduce yourself before speaking and you have 10 minutes each for your presentation.

INTERVENTION

1273             MAYOR RIGBY:  Thank you.  The panelists have allowed me to go first.

1274             I'm Tim Rigby, I'm the Mayor of the City of St. Catharines and this was written good morning.

‑‑‑ Laughter / Rires

1275             MAYOR RIGBY:  But I'm very pleased to be able to continue to be here, and I am appearing today in response to an invitation to appear before the hearing addressed to Mr. Brock Dickinson ‑‑ he would be our Harvey ‑‑ our Director of Economic Development and Tourism.  Unfortunately, Mr. Dickinson is in Winnipeg today and unable to attend.

1276             However, I hope that you will interpret my speaking in his place as an indication of how strongly the City of St. Catharines feels in supporting the application before you today.

1277             TVN Niagara Incorporated represents a significant opportunity for the City of St. Catharines and the broader Region of Niagara.

1278             The approval of a licence for TVN obviously represents a positive development for our City and for our community.  It means jobs for our citizens, it offers an outlet for our artists and creators, it represents new and innovative avenues for information sharing within the community.

1279             Much of this, however, is peripheral to CRTC's central concerns and I will address my comments to more immediate and fundamental implications of a new broadcast presence based in Niagara.

1280             For too long St. Catharines and Niagara have been marginalized and ignored by the larger media world and by the television media in particular.

1281             St. Catharines/Niagara is one of Canada's key census areas, CMAs, marking it as one of the larger communities in the country, however, the absence of any television broadcast licensee has had significant negative impacts on our community.

1282             It has an impact on our community's internal communications and information‑sharing capabilities and on the Region's external profile and reputation.

1283             This unfortunate situation has created significant additional challenges and obstacles both to local businesses and to the dissemination of information within our communities.

1284             The limited Niagara coverage provided sporadically by television broadcast players from distant communities such as Toronto, Hamilton and Buffalo is often erroneous and has helped to create negative external perceptions of the Niagara Region and its 12 municipal communities.

1285             The presence of TVN Niagara in our community provide a valuable opportunity for Niagara to tell its own story and to develop communications infrastructure that would benefit and validate our business community and social fabric immensely.

1286             By far the biggest challenge for us, however, has been simply sharing our stories and our news.

1287             For example, in the past five years our economic development and tourism department has held about a dozen media events a year.  Aside from local cable access coverage, no television station has attended these events, not even Hamilton CHCH‑TV which claims a significant presence in our community.

1288             Occasionally a camera crew will show up to tell the country about sensational crimes and dark deeds, get many of the facts about our community wrong and then head home.

1289             We have a whole range of stories to tell, stories that no one ever hears and many of them are good, positive stories about a good, positive community.  Perhaps not every story we wish to tell is deserving of coverage, but some are.

1290             When our City was named the Japanese tourism destination of the year, CH did not cover it.  When one of our brownfield redevelopment initiatives was named the best in the world by an imminent panel of American developers, CTV did not cover it, and last month when we signed a multi‑million dollar trade deal with Finland, CBC did not cover it.

1291             Now, CH, CTV, CBC, those are all fine television stations but they are not Niagara television stations.  Although some of them may say they are, they are not interested in telling our stories.

1292             And if I may deviate from my written statement which was done prior to this weekend, I have a couple of examples for you.

1293             The Countess of Wessex was in St. Catharines and became the Colonel and Chief of our Lincoln and Welland regiment, a long storied regiment who served our country well and, in fact, could have claimed to have sent the Americans home in the War of 1812.

1294             The Canadian secondary school rowing championships was going on in St. Catharines.  Young people from across our country and America were competing, some 3,300 young people.  To my knowledge, not one of those stations was there, either at the Countess of Wessex opportunity or the Canadian championships.

1295             And I just heard Rogers do a presentation and they're a wonderful organization and I don't mean to pick on them specifically, but they made their report and referred to Toronto/Hamilton market.  We're not Hamilton and we're not Toronto, we are Niagara and if there is one thing that annoys Niagarans, it's when they're put in that market.  And it's hard‑‑

‑‑‑ Applause / Applaudissements

1296             MAYOR RIGBY:  And it's hard.  The  CRTC process is about whether or not the people of Niagara deserve a voice of their own on the television dial.

1297             Well, as Tim Rigby I'm only one voice out of the hundreds of thousands that live in this region and deserve to be heard, but as Mayor of St. Catharines, largest city in the region, I have the privilege of being a voice for many people.  Today it's my pleasure and my obligation to use that voice to tell you that Niagara needs this television licence, Niagara needs TVN, Niagara needs a voice.  Please help us find that voice.

1298             I urge you to support TVN and the  Niagara community by approving this application.

1299             Thank you very much for listening.

‑‑‑ Applause / Applaudissements

1300             THE CHAIRPERSON:  Have you agreed on the No. 2 banner?

1301             MAYOR RIGBY: I'm sorry?

1302             THE CHAIRPERSON:  Please proceed.  If we have questions, we will ask them at the end.

INTERVENTION

1303             MS ANGI‑DOBOS:  Hi, my name is Jacqueline Angi‑Dobos.  I'm a teacher and recently have become the activities co‑ordinator for the international students at Brock University.

1304             I have had the privilege of being overseas for a number of years as well, living in Spain and also in Budapest, Hungary.  I'm originally from England and I have also travelled many places.

1305             And when I was living in Budapest and Spain, it was part of my duties in the school to try and urge students to find colleges and universities to go in North America.

1306             The biggest of course market for that was in the United States but, of course, being from St. Catharines I always tried to bring people to St. Catharines.

1307             It was always a shame, I thought, that we had nothing to represent us with television, there was no media coverage.  Showing people things on the Internet you could see the static pictures of the Garden City with lots of flowers, you would see Niagara Falls flowing over with Niagara Falls websites, but there was never a TV coverage from Niagara, from the Niagara Region.

1308             And I gave you a paper with some of the quotes which I think is kind of funny I'm using the Niagara Economic Development Corporation when they're going to be actually speaking, so I'm very sorry about that.

1309             But some of the quotes are:

                      "Tourism is a multi‑billion dollar industry in Niagara ‑‑ one of our primary engines of economic growth...Our potential is unlimited..."

                          "Tourism has emerged as a driving force of Niagara's economic renaissance."

1310             It says:

                      "This industry generates over 57‑billion to the Canadian economy."

                      "As the number 1 tourist destination in Ontario, the Niagara Region received 50% of all travellers entering the province."

1311             It's a:

                      "Globally recognized brand name location..."

1312             Center of the Golden Horseshoe.

                      "70% of North America's population within 10 hours' drive."

1313             And so on.  It's just unbelievable how amazing this Region is.  And we have so many things happening here.

1314             I have recently acquired a full‑time position as the activities coordinator with the international students at Brock University and it's a full‑time position to find the activities that are happening in the Niagara Region to take the students to.  Yet you watch the news and nothing is happening.

1315             I watched the Barrie television station last night, the news channel, and we saw a little street festival going on in Barrie, and what about our great Folk Arts Festival and our great Wine Festival and Parade and all of the activities that are happening here, will we have coverage of the Strawberry Festival, will we have coverage of other festivals are happening?

1316             I mean, even the Scottish dancing that's happening on Tuesday nights.  I think that's great, let's get it out there, let's

let people know about it, bring people into the Region.

1317             So, I'm not looking at it from an economic point of view, I'm looking at it from tourists and students, international students.

1318             We have people who travel around the world to try and bring students to Brock University and I know also of people from Niagara College who travel around the world bringing people here and I know that international students are money and so that's bringing money into the Region and that's promoting this Region by bringing people here.

1319             If we had a voice in the Niagara Region, a voice that we could show ‑‑ because the simultaneous telecast on the Internet I think is amazing, what a great idea.

1320             You want to know about St. Catharines, Niagara Falls, Niagara Region, let's turn on the Internet and take a look and see what's happening here instead of only hearing about Toronto and Buffalo and places like that.

1321             We need a voice here and not  just for advertising but also for our international students, for our international people coming in and to promote our Region in the world, in the whole world.

1322             And that's basically what I have to say.

‑‑‑ Applause / Applaudissements

INTERVENTION

1323             MS TURNER:  Good afternoon.  My name is Jennifer Turner and it's my pleasure to be here today as a member of the Binational Tourism Alliance and to speak to TVN's application to establish a new television station in Niagara.

1324             The Binational Tourism Alliance is an incorporated international non‑profit tourism infrastructure development organization.

1325             We work with tourism partners from Southern Ontario and Western New York State to build this cross‑border Region into an internationally recognized premier tourism destination.

1326             The organization is made up of a broad cross‑section of tourism enterprises, as well as representatives from municipal, provincial, federal, community and State governments.

1327             The Board of Directors is 50 per cent Canadian and 50 per cent American.

1328             BTA has been described as the organization that wires the tourism industry together, much the way that an electrician wires together a building.

1329             Our primary role is that of advocacy and lobbying in the best interest of our tourism partners.

1330             In the 50 plus years since the inception of television, Niagara has not had its own voice.  Historically the Niagara Region's tourism interests have been poorly represented by the existing television media which is based in the large metropolitan areas outside of Niagara.

1331             For example, in the aftermath of SARS, 911, Mad Cow, et cetera, Niagara's economic hardships were all but ignored in the media while the focus was generally on the larger centres.

1332             Historically, media in those centres are truly not interested in our current affairs unless they're spectacular or sensational, they're really not interested in our day‑to‑day events.

1333             Niagara is a unique tourism area, very dissimilar from Hamilton and Toronto, with a unique message to deliver.

1334             Buffalo, Hamilton or Toronto do not have in common with us our microclimate, our wine industry, agritourism, culture and history and our very diverse geography.

1335             The Niagara Region economy is dependent on tourism and will remain so as the industry continues to flourish and grow in the future.  We are well aware of the impact that tourism has on the economy of Niagara.

1336             A television station based here will give us the ability to get our message out to areas beyond Niagara, support the future growth of the industry and the impact the growth will have on our economy.

1337             An example of the lack of television infrastructure in Niagara was very evident at the recent official launch of the Binational Tourism Alliance at the Pierce Arrow Museum in Buffalo, New York.  The only media present at that launch was American, although more Canadian media were invited than American.  It's not because it was a Canadian organization holding a function in New York State, it was because it is traditionally difficult for us to get TV media from large metropolitan centres outside of Niagara to attend our events here, again, unless they are spectacular or sensational.

1338             It holds true for local as well as Binational events.  We will shortly hold a similar reception in Niagara‑on‑the‑Lake and undoubtedly will experience the same response from the media.

1339             I have to reiterate Mr. Diodati's earlier statements that he made about the misconceptions of bridge back‑ups, passport issues.

1340             TVN's services are essential to support the Binational Tourism Alliance and achieving our missions and goals to clear up those misconceptions and to get correct and current information out there to the public.

1341             TVN's commitment to support the goals and strategies of the Binational Tourism Alliance and its members is essential to the future health of the tourism industry in our Niagara Peninsula.

1342             We, as tourism professionals, are excited about a television station in Niagara and for Niagara that will give us the ability to highlight local events and attractions, news and public affairs from a Niagara perspective and to get that,message out to the entire Golden Horseshoe.

1343             TVN's proposal to establish a Niagara television station as a cohesive communications vehicle for us is an essential part of the tourism infrastructure we need to raise awareness of the diversity of Niagara and to support the tourism industry's growth and prosperity.

1344             Thank you for your time and the opportunity to make our position known.

‑‑‑ Applause / Applaudissements

INTERVENTION

1345             MR. GEDGE:  Thank you very much.

1346             Merci, monsieur le président, mesdames et messieurs.

1347             My name is Patrick Gedge, I'm Chief Executive Officer of the Niagara Economic Development Corporation and would like to thank you for the opportunity to speak with you today at this public hearing in support of the TVN Niagara application.

1348             C'est notre plaisir d'assister aujourd'hui et évidemment nous sommes très fiers de notre région et nos opportunités dans l'avenir.

1349             By way of background, the Niagara Economic Development Corporation is a not‑for‑profit corporation with a mandate to advance the economic prosperity of the Niagara Community.  The Corporation focuses on promoting new investment visitation to further its development agenda for Niagara.  The Corporation and its programs are funded by the Regional Municipality of Niagara, together with other public and private sector partners.

1350             The Corporation's Board of Directors is comprised of representations from Niagara's industrial, tourism, educational and government sectors including the Mayor of St. Catharines.

1351             Our team includes experienced economic development professionals that work closely with clients and partners regionally, nationally and internationally.

1352             So, I'd like to speak briefly to four key issues in support of the TVN Niagara application.

1353             First of all is background.  Working in partnership with Regional Council and others, the Corporation has just completed development of a Niagara‑based that economic growth strategy entitled, Navigating Our Future, Niagara's Growth Strategy 2005‑2010.

1354             The development of this strategy involved consultations and input from over 200 public and private sector stakeholders ranging from individuals to organizations and was unanimously approved by Regional Council on April 28th, 2005.

1355             The most important message that arose from all of the consultations and became the No. 1 priority in the strategy was for Niagara to build a stronger collective voice in order for the Region to develop a more cohesive voice on issues that will significantly affect its future.

1356             Building a stronger collective voice begins with building stronger regional communication infrastructure that supports the entire Niagara community.

1357             Whether it's business news, community updates, public sector updates or advertising, the fact that TVN will connect all Niagarans daily can only be very positive for our economy.  And by having TVN as a cohesive vehicle in Niagara, there will be a greater opportunity to bring Niagara together on common issues and opportunities that, in the past, have not been fully recognized.

1358             Secondly, the TVN Niagara proposal will have a positive and incremental impact on our economy.  For example, the establishment of TVN Niagara will be headquartered in Niagara, it will involve new investments by shareholders from Niagara, invest in 40 hours of local programming, create 90 full time, 60 part time new professional and technical jobs and establish a 26‑person news team.

1359             All of the above, together with new investment and leveraging of other existing infrastructure will help Niagara establish itself as a modern, technically savvy regional community with state‑of‑the‑art telecommunications infrastructure and related programming.

1360             Part of the establishment of your own television station in an area is the creation of new investment but there's also a very important coming‑of‑age statement being made both to the community itself as well as to the outside world, and for an organization such as ourselves which seeks to attract new business to an area, that perceptual statement is extremely important to our future.

1361             The Niagara Economic Development Corporation believes that the establishment of TVN Niagara will also have a positive impact on the development of Niagara's hospitality and tourism industry as has already been so eloquently stated.

1362             Niagara's tourism industry is continuing to expand and develop a range of tourism attractions that contribute to Niagara's global ranking as a top tourism destination.

1363             One of the major challenges being faced by the tourism industry in Niagara is the lack of consumer knowledge about the vast range of quality product that exists throughout the entire region.

1364             Consequently, Niagara is too often seen as simply a day trip destination which leads to lower average spending and occupancy levels.

1365             TVN Niagara through its news, current events and features coverage will be able to offer enhanced and up to date information to the tourist who is in Niagara, as well as those in near markets planning to visit.

1366             Consequently, coverage of regional attractions and events will help Niagara achieve its tourism objective of having tourists stay in the Region longer and generate more revenue for business.

1367             Fourthly, and finally, a flourishing economy depends upon both new companies locating in a region as well as the growth and retention of many existing successful companies.

1368             The establishment of TVN Niagara will enhance the ability of Niagara's business community to communicate regionally on a more regular basis and learn from each other in terms of products and services within the Region.

1369             There are approximately 20,863 businesses within the Niagara Region without access to regional television infrastructure through which to communicate with each other and the Niagara consumer market.

1370             The establishment of TVN Niagara represents a very opportunity for business‑to‑business and business‑to‑consumer communications that will boost the local economy.

1371             In summary, we fully support the application by TVN Niagara to establish a new regional television network in Niagara.  It's our belief that the station will operate as a major communication vehicle for both residents and visitors to Niagara through increased coverage and reporting of news stories and current events from across the Region.

1372             TVN Niagara will provide another platform for the Region to achieve greater cohesiveness and a level of prosperity needed and warranted by its population.

1373             Thank you very much.  Merci beaucoup.

‑‑‑ Applause / Applaudissements

INTERVENTION

1374             MR. PURDY:  Good afternoon, Mr. Chairman and Commissioners.

1375             My name is Brian Purdy and I'm an independent producer.  My company, Broadcast Productions was founded in 1966.

1376             Allowing me first to indulge you with a bit of broadcasting history.

1377             My father Ray Purdy was a Canadian broadcasting pioneer beginning his career at CFRB in Toronto in 1934.

1378             He hired Bob Hall of Let's Make a Deal fame from Winnipeg to join him as a co‑host on his life radio game shows in 1937.

1379             He directed shows with Lorne Greene that programmed at CBC radio.

1380             During the war he was commissioned to produce and direct the Canadian Army shows overseas, discovering the Wayne and Shuster team.

1381             After the war, he discovered the birth of television at CBS in New York, taking the first television camera up the Empire State Building and up the Statue of Liberty for a live weekly program entitled Around The Town hosted by Mike Wallace.

1382             He also produced a weekly interview show featuring celebrities at the famous Stork Club.

1383             He was asked to start Scottish television in Glasgow by Roy Thompson in 1955.

1384             In 1958, Ray was hired to package the application for the first private television station in Canada which became CFTO in Toronto in 1960.

1385             He was the first program director and went on to produce daily programs for the CTV network for 10 years and became known as Mr. Telethon across Canada for over two decades.

1386             My father made the transition from radio to television and I have followed in his footsteps, growing with television programming and technology from the days of black and white broadcasts, to directing the first colour studio at CFTO in Canada, and was the first director to use the new Cromarty background inventions for the use in CTV variety programs.

1387             I was present during the Board of Broadcast Governors hearings for the CFTO application in 1959, attended the CRTC hearings for the cable licensing and made an oral presentations to the CRTC on behalf of Global's prime TV application in 1996 which, much to my disappointment sadly missed its promises concerning seniors programming.

1388             I'm an independent producer, the President of Broadcast Productions and have been in the broadcast, advertising and production business in Canada for 49 years.

1389             I started at the CBC in 1956 in the days of live television, joining CFTO in 1960, moving my way up to senior producer of variety programming for the CTV network, was employed by two national advertising agencies as senior producer for eight years, and stepped out on my own to produce commercials, television programs and corporate communications.

1390             I produced the first videotape animation in Canada in 1963 and negotiated the first barter program deal with the CBC network in 1971.

1391             I am an inductee in the Quarter Century Club of the Canadian Association of Broadcasters and hope to be inducted into the Half Century Club next year.

1392             The first time a father and son have matched a 50‑year career in broadcasting in Canada.

1393             I have received 17 national and international creative awards, including a coveted Gemini award for best technical achievement.

1394             I was course director of the radio and television production course for the Institute of Canadian Advertising for two years.

1395             Through a unique mix of new information of issues‑based programming along with classical entertainment programs from the past, TVN will enhance the diversity of high‑quality, relevant programming in the Niagara area, as well as recognizing the fastest growing segment of Canada's population, adults 50 years of age and older, a segment of our population under value and largely ignored by Canadian broadcasters.

1396             The current population of mature viewers is 15 to 23 per cent and it seems that the seniors population in our ask St. Catharines area has now surpassed the seniors  population in Victoria, B.C.

1397             I will be working as a supervising producer for TVN and am currently in discussion with TVN to develop and produce several new titles.  I'd like to give you a few examples.

1398             Twilight Trekkers, real stories about real people living out and experiencing real adventure with tour groups such as Elder Treks and Elder Hostile Canada, seniors with an intrepid spirit and a good pair of walking shoes will enjoy a fascinating through China to the Tibetan plateau.  The video camera will be there to record their adventures.

1399             Stress Point.  Stress Point embodies drama, pathos, comedy and titillation while conveying practical information of interest to a mature audience.

1400             Based on a successful CTV series, People in Conflict, actual real life experiences are presented as cases and a qualified lawyer gives advice on a course of action.

1401             On Site.  Based on the successful television series, You Are There, this weekly drama takes place live on site at historic locations in the Niagara Region where a battle or historic event is about to take place.  The host is on site interviewing legendary characters from our past.

1402             I recognize TVN will be a regional TV studio without access to the big budgets usually associated with television programming, but I'm experienced with making programs with trim budgets, combining other financial resources so that creative shows can be made.

1403             I have been attracted to this original application by TVN because of its amazing potential to serve the Niagara community and also realize that this corner of Ontario will finally have a custom service on its television dial.

1404             I moved to the Niagara area in Grimsby seven years ago and can see first hand this lack of an in‑depth service.  I have known Wendell Wilks for three decades as a creative producer and inventive businessman and believe his vision of TV Niagara to be a new and exciting contribution to Canadian broadcasting.

1405             I have mentioned a few firsts that I have been associated with, and now there is an opportunity for this group at TVN to bring this first‑rate program service to Niagara viewers and allow me to bring some more program firsts to the Niagara Region as well as to Canadian broadcasting.

1406             Here I am again and cast my vote as an independent producer for the TVN proposal.

1407             I hope that you will agree by granting TVN a licence to serve this deserving audience.

1408             Thank you for your time.

‑‑‑ Applause / Applaudissements

1409             THE CHAIRPERSON:  Thank you all for that wide and diverse range of intervention.  We do have a few questions.

1410             Commissioner Cram.

1411             COMMISSIONER CRAM:  Thank you, Mr. Chair.

1412             I heard a couple of you talking about getting day‑to‑day coverage of your day‑to‑day events and I believe Ms Angi‑Dobos, she talked about the Tuesday night Scottish dancing.

1413             I guess I want to know what does the community channel do here?  Would they have coverage of the Scottish dancing, the festivals that you talked about and I think you talked about go‑cart festival also.

1414             Would they have that kind of coverage?

1415             MS ANGI‑DOBOS:  The local channel, the Cogeco channel 10, their coverage is very limited and they show the same coverage over and over again.

1416             I know that I have tried to watch it and I find it very difficult to watch it.  I mean, because my job is to find events.  I sit there and watch the world go by with all the events and sometimes we have some coverage of this local area.

1417             But would they cover that?  It's possible.  They don't do as much coverage now as they used to.  It's more of a listing of events in my opinion, however, I suppose you need to ask them to be more exact.

1418             COMMISSIONER CRAM:  Okay.  And then Mr. Gedge, you talked about how people just adjacent to the Niagara area don't know enough about Niagara and if they knew more, they'd spend more time here.

1419             That really sounds to me like if I were an advertiser and wanted people to spend more time here, I would be more prone to advertise on a Hamilton station or a Toronto station rather than a station centred here whose target market is the Niagara people.

1420             Wouldn't you want to get people outside the market?

1421             MR. GEDGE:  Frankly, it's a combination of the two in the sense that a lot of what comes to, particularly the Niagara Falls marketplace, of course, is a global icon, is bringing people in from across the world.

1422             But, frankly, the near‑in markets and the regional markets are becoming more and more important because that's sort of your bread and butter of the tourism industry.

1423             And the difficulty is, is that the narrow spectrum of knowledge of the region is that the perception is, we can come down and do Niagara Falls for a couple of hours and go home, or we can come down for a play and go home, or we can come down and do a couple of wineries and go home.

1424             That obviously doesn't generate the type of revenue the tourism industry needs into the future and to attract new people.

1425             I think particularly the GTA and the near‑in U.S. markets will continue to increase in terms of importance because, as I say, they will be the bread and butter.

1426             The marketplace will determine where they put the advertising dollars and they can do the mix and match as they seem most cost effective, but I think there's a real difference in terms of having the ability to at least have the option to buy within your own market that spills elsewhere, as opposed to always having to buy elsewhere to spill into your own market.

1427             COMMISSIONER  CRAM:  Thank you.

1428             Thank you, Mr. Chair.

1429             THE CHAIRPERSON:  Thank you very much.

1430             Madam Secretary.

1431             THE SECRETARY:  We will now call the next appearing intervenor and that is CHUM Limited.

1432             If you could please identify yourself before you speak and you have 10 minutes to make your presentation.

1433             Thank you.

INTERVENTION

1434             MR. SWITZER:  Thank you.

1435             Good afternoon Mr. Chair, Mr. Vice‑Chair, Members of the Commission.

1436             For the record, my name is J. Switzer and I'm President and CEO of CHUM Limited.

1437             Before we begin our presentation I'd like to take a moment to introduce colleagues with me here today.

1438             To my left Peter Palframan, Senior Vice‑President, Operations for CHUM Television.  To Peter's left, Roma Khanna, Senior Vice‑President, Content for CHUM Television.  And to my right, Peter Miller, Vice‑President of Planning & Regulatory Affairs at CHUM.

1439             We are very pleased to be here with you today to expand on the written intervention we filed with the Commission on May 12, 2005 regarding TVN's proposal to establish a new English language television station in St. Catharines.

1440             Our presentation is broken down into three parts:

1441             First, an examination of the ability of the Toronto extended market to absorb another over‑the‑air television station.

1442             Secondly, the impact that a new entrant would have on CHUM's stations in the Toronto extended market.

1443             And, third, a discussion of the resources necessary to fund the start‑up and ongoing operations of a major market conventional television station.

1444             As we noted in our written intervention and has been noted by a number of the other intervenors that have appeared before you today, conventional television is an increasingly challenged business.

1445             As the Commission is aware, tuning to conventional television across the country is down, especially in English Canada, operating costs are on the rise and many over‑the‑air stations are struggling.

1446             This trend is no more evident than in the Toronto extended market, already home to nine over‑the‑air stations.

1447             Twelve years ago over 60 per cent of tuning in the Toronto market was to over‑the‑air stations.  By 2004, this number had dropped to 44 per cent, a decline of over 28 per cent.

1448             Moreover, revenues for the market have been relatively flat and PBIT has dropped from 23.5 per cent to 14.8 per cent.

1449             These average numbers also hide the fact that the larger stations, such as CFTO‑TV and Global have healthy profits, one might say, while other stations in the market, including CTS, Toronto 1, OMNI 1, OMNI 2, CH and CHUM's The New VR are clearly struggling financially.

1450             While TVN has applied for a station that will serve the Niagara Region, the revenue projections for the station are premised on significant tuning from viewers in the larger centres of Toronto and Hamilton.

1451             The Commission last considered applications for new Toronto television stations in late 2001, with two new stations being licensed in the spring of 2002; one of these stations launched in 2002 while the other went to air in 2003.

1452             Both stations continue to struggle financially and the one is on its second owner.

1453             The introduction of these stations continues to impact a number of the incumbents as the market struggles to absorb the new entrants.  This is clear from an examination of what has happened to the spot advertising market in Toronto over the last few years.

1454             Advertising is sold in two general ways.  One way is a network sell, which only networks such as CTV, CBC and national specialty services can avail themselves of, and the other is through the selective or spot sales market.

1455             And while we tend to look at the market in terms of total advertising spend, the reality is that almost all conventional television stations rely on the spot market.

1456             For ease of reference, we have provided a chart that tracks spot and network advertising in Toronto over the last number of years based on TVB/TSS data which prorates regional dollars on the basis of hours tuned.  And if I might add, it in some ways parallels and echoes data that has been discussed earlier today.

1457             As you can see from this document, while network advertising is booming given the success of CTV and the specialty sector, the spot advertising market is in decline.  Projection for the 2004‑2005 broadcast year show the spot market trailing over two per cent behind last year's pace and 0.4 per cent behind how the market performed in 2003‑2004.

1458             The licensing of new stations did not stimulate the market, it just affected a redistribution of revenues.

1459             For example, Toronto 1 posted revenues of approximately $16‑million in 2003‑2004 but the market only grew by just over $8‑million.  Approving TVN's application at a time when the market is not growing at all can only result in direct revenue declines for incumbent stations.

1460             CHUM operates conventional television stations in large and small markets across the country.  Perhaps a bit of history.

1461             In 1997 we swapped a number of assets with Baton at the time.  We sold them our Halifax television station and the Atlantic satellite network, enabling CTV to emerge as a true national player and, in return, we acquired conventional television stations in the London and Ottawa Region.

1462             We have made significant investments in those stations to enhance and improve their local presence.  Our accumulated losses and capital investment in those stations, as well as our Barrie station ‑‑ The New VR ‑‑ totals $64‑million.  Today our conventional television stations continue to have unacceptably low PBIT margins.  During the last broadcast year as a group, CHUM's new net stations across Ontario ‑‑ and they are soon to be re‑branded as A‑Channels ‑‑ had a negative PBIT margin of 13.8 per cent, a loss compounded by the loss of OMNI 2 and Toronto 1.  With their launch, we saw revenues across our Ontario stations decline by $5‑million.

1463             Investing in stations and in their development phase makes sense when there's a reasonable prospect of profitability.  Unfortunately, current market conditions and the addition of new entrants have made that prospect evaporate.

1464             These challenges have forced us to take significant cost‑cutting measures over the last 18 months.  Should the Commission approve TVN's application, we are deeply concerned that it would make it even more difficult to run our stations successfully and continue to meet our obligations.

1465             TVN states in its application it has just over $19.5‑million to fund its start‑up and ongoing operations.  Recent history has shown us, however, that this is unlikely to be sufficient to fund the start‑up and ongoing operations of a stand‑alone, major market conventional television station.

1466             Craig Media's experience with Toronto 1 has been well documented.  Within months of the station's launch in September, 2003 Craig was in financial difficulty, notwithstanding the fact it has four established stations in Western Canada to help fund Toronto 1's losses.

1467             And, as the Commission is well aware, at the time of its divestiture, Craig's accumulated losses and investment in Toronto 1 was in the order of $60‑million.

1468             More recently, Trinity television, now called or operated as NOW TV was forced to sell it's fledgling Fraser Valley Vancouver religious station because of similar financial pressures.

1469             Operating a conventional television station is expensive and attracting viewers takes time and, more importantly, money.  While TVN's revenue numbers are modest, its programming plans are ambitious and, in our opinion, it has grossly under estimated operating costs.

1470             34.5 hours of original local news and programming per week combined with broadcasting from different locations across the Niagara Region is not an easy undertaking.  Making this undertaking more difficulty is TVN's costing and rating objectives for their proposed classic movie strategy.

1471             Based on our extensive experience in buying and programming movies, we know the cost of movies is increasing in this marketplace and achieving, in our opinion, even .5 a rating point requires investment of at least $15,000 per title.

1472             While it is certainly possible to acquire section tier older movies at around $5,000 per title, the ratings such titles would achieve would be significantly lower, in our opinion, than half a rating point and high‑definition versions would further increase the cost.

1473             If this application is approved, TVN will be under incredible financial pressure from the moment it launches.  As a stand‑alone station with finite resources, it is quite conceivable that TVN would be forced to seek, in our opinion, additional financing with less than favourable terms to help keep it going.

1474             In any event, financial pressure would likely lead the station, again in our opinion, to orient its programming more to Toronto audiences as opposed to the Niagara audiences it would have been licensed to serve.

1475             Conventional television is a tough business anywhere, but especially in the highly competitive Toronto market.  To succeed you need a clear plan and deep pockets, and based on the record of this proceeding, we believe TVN has neither.

1476             In conclusion, CHUM submits that this application should be denied for the following three reasons:

1477             First, the Toronto market has yet to absorb the two stations the Commission licensed in 2003.

1478             Secondly, the approval of this application would have a negative impact on CHUM and other incumbents.

1479             And, finally, we believe TVN does not have sufficient resources to fund the start‑up and ongoing operations of the proposed station.

1480             We'd like to thank the Commission for the opportunity to present these comments and, course, we welcome any questions.

1481             THE CHAIRPERSON:  Thank you.

1482             Commissioner Langford.

1483             COMMISSIONER LANGFORD:  Thank you, Mr. Chair.

1484             Good afternoon, folks.  we meet again.

1485             I want to start with a specific, if I could, and then we will move to some of the general questions.

1486             On page 5 of your presentation today, at least the version you gave us.

1487             You talk about achieving even half a rating point ‑‑ we're talking about the cost of films now, classic films ‑‑ it's about four or five lines from the bottom of the second last paragraph  where you say:

                      "In this marketplace, achieving even half a rating point requires an investment of at least $15,000 per title."

1488             I think we ‑‑ we've heard a number of numbers on that this afternoon, but it's a little bit like whether you're buying your ham by the ham or by the gram or by the ounce or by the box or by the can, and it's hard for me to see exactly what the price is, so maybe you could help us with this question of fact.

1489             What I thought I heard from the folks from TVN, from the applicants was about 770 bucks an hour going to two hours, say, roughly 1,500 bucks, so a tenth of what you've got.

1490             What I thought I heard from Quebecor was double that, around $3,000 for a Teeth title, still a fifth of what you've got.

1491             And now you're at 15.  I think we all kind of are dealing here with a rough definition of a classic film is something over seven years old that everybody likes ‑‑ or Harvey ‑‑ take your pick.

1492             Can you help me with these numbers because I'm having some difficulty.

1493             MR. SWITZER:  Commissioner Langford, I'd be happy to and it's a pleasure to discuss this with you, it's a personal area of some history for me.

1494             To be clear when we say $15,000 per title, we're talking about the per negative cost or the per title for the film.  For that, as was discussed earlier today, you would get multiple runs, perhaps four runs over four or five years, which might suggest a per telecast cost for two hours in the call it $4,000 range, perhaps $3,500 range.

1495             To be more specific, you might broadly group films on television, theatrical films on television into three categories.

1496             Recent first run Hollywood films that are perhaps three or four years old that are coming off of pay TV.  Those films can, in Toronto licence terms, cost ‑‑ pick a number ‑‑ 50 to $70,000 for multiple runs per film.

1497             There are films are six, seven, eight or nine years old, films that ‑‑ or 10 years old, films that perhaps make up films typical of what you might see on Toronto 1 ‑‑ and certainly I would agree with the discussion earlier today ‑‑ more than half their films are more than seven years old.

1498             Those in Toronto pricing would be in the 12 to $20,000 per film price point.  We discussed it today at $15,000 per film.  Think of it as $3,500 per telecast or 17 or $1,800 per hour.  Hard to be precise, so I'm trying to give you orders of magnitude.

1499             And while, yes, there are perhaps 10 or 15,000 films out in distribution, clearly the price for the licence fee declines as the best films are gone.

1500             In Toronto, Citytv has under licence about 17 or 1,800 films.  Our programmers would argue that the 17 or 1,800 best films, they range from three to four years old, up to 15 or 20 years old.

1501             Toronto 1, I don't know how many films they have under licence ‑‑ I'm guessing ‑‑ perhaps they have five or 600 films under licence, and they range from seven or eight years told perhaps to 10 or 12 years old.

1502             So, our point isn't that one couldn't licence films for five or $6,000 per  film, but that you would end up with films that are much further down the pecking order and excellence doesn't have to do with age.

1503             The films that we have under licence, the films Toronto 1 has under licence everybody wants the best films. Once you get the best 2,000 films out of circulation, you're left with interesting films but that have a much lower rating potential, and that was the reference to our point today.

1504             COMMISSIONER LANGFORD:  So, if we go back to TVN's strategy ‑‑ and we can talk later about whether it's a winning strategy in terms of finances ‑‑ but just in terms of their strategy, they're talking about thousands of films in the bank, in the libraries, down in the States, they've been down, they've met with the folks.

1505             They're looking at trying to pick up films for a very specific audience ‑‑ call it a nostalgia format, we're talking about a much older demographic than, say, CHUM and Citytv, obviously ‑‑ we're talking about a demographic that will be appealed to in the type of local programming they're putting out as well.

1506             And you heard them talking about almost taking a kind of radio approach to advertising for the first four or five months, in the sense of relying on local and retail and in filling those minutes.

1507             The type of films ‑‑ I guess the general question is:  Are there films that you could pick up for the type of money they're talking about?

1508             You may not want them, but are there films out there that you could get for 770 bucks an hour?

1509             MR. SWITZER:  There are clearly films.  Broadcasters can licence four or $5,000 per negative or roughly seven or $800 per telecast hour.

1510             We're suggesting that the films that Toronto 1 is licensing at more than double that that are only to generate a .3 or a .4 that was discussed today, make it difficult to believe that they would generate the required .5.

1511             They'd be fine films, they just would not ‑‑ and I'm sure the .1 or .15 or .2 perhaps that they might generate would please some viewers, but in the eyes of an advertiser ‑‑ as was mentioned by a previous intervenor ‑‑ you are presenting media buys, and although you're intent might be different, when you're on a media plan, Toronto 1 is selling a better film for a .4 rating and TVN might be selling a .1 or .2, it all gets in front of a buyer and the national buying ‑‑ sorry, the national selective, the national spot is still the largest of their advertising.  It's an equalizer.

1512             COMMISSIONER LANGFORD:  Now, we're into No. 2 and I'm not trying to, in any way, you know, upbraid you here or anything, but I want to be really clear in these numbers and I think you have helped us immensely here.

1513             There are files out there, if we can just get that question clear.

1514             MR. SWITZER:  Absolutely.

1515             COMMISSIONER LANGFORD:  At the rate that they said they were going to buy?

1516             MR. SWITZER:  Absolutely.  There are films they can buy.  Our assertion is they will do ‑‑ pick a number ‑‑ a .1 not a .5.

1517             COMMISSIONER LANGFORD:  Okay.

1518             MR. SWITZER:  But, yes, there are studios that will sell films that some people will watch but...

1519             COMMISSIONER LANGFORD:  So, let's take their strategy.

1520             MR. SWITZER:  Yes, sir.

1521             COMMISSIONER LANGFORD:  And let's just assume they stick with it.

1522             So, they buy these films at 770 bucks an hour ‑‑ I'm using their number because I want to use their number, it's the number they used ‑‑ they think they'll appeal to the Niagara Region where there is an older demographic, where  there a lot of people that would like to watch Harvey, a lot ‑‑ they might watch It's A Wonderful World at Christmas, say ‑‑ but every other time they're going to be watching ‑‑ A Wonderful Life, thank you.  See everybody watches that kind of movie.

1523             All right.  So, they go out and they do it.  Now, you've just said they're not going to get a .5 for that, they might get a .1.

1524             So, what's your worry?  They're certainly not going to knock you out of the ring with a .1.  They might do themselves damage, but what's your problem with that strategy at CHUM?

1525             MR. SWITZER:  Commissioner Langford, two or three‑fold.

1526             I think because ‑‑ and I respect ‑

it's a difficult thing for us to discuss.  These are obviously friends of ours and, yet we're worried what happens to individuals, what happens to a management team, what happens to shareholders at the first sign of financial trouble is ‑‑ I won't use the word unpredictable ‑‑ perhaps I'll use the word destabilizing, it is not, I don't think, constructive to the market, to the viewers in Niagara, to existing players in Hamilton and Toronto, when you have a new applicant that has trouble meeting its business plan and we've seen across the country what can happen, and we believe the gap here is so dramatic between expectations, reality, revenues and costs that it will destabilize many stakeholders.

1527             COMMISSIONER LANGFORD:  But will it destabilize you and others if you, CTV ‑‑

1528             MR. SWITZER:  If they have properly claimed that the Toronto is a major source ‑‑ sorry, the extended Toronto market is a major source of revenue for them and you have a player underselling the market because they have to because they don't have the deep pockets, you heard an earlier discussion today talking about vanishing inventory, it's time sensitive.

1529             You have seen yourself across the country what can happen where you have an under financed situation with a launch that has not gone well, it can take years to recover, not that the pricing pressure in the market, the cost per point that drops, the cost per spot that drops, it's absolutely a challenge.

1530             COMMISSIONER LANGFORD:  Who gets hurt?  I mean everybody gets hurt a little, but we heard today that Quebecor thinks they're going to get particularly hurt by this.

1531             I guess I'm interested in, if I could get your views in the sense of who gets hurt.  There is that unanswerable question for us or that puzzle about why Toronto is so out of balance, why some are doing so well and some don't appear to be doing as well as they might.

1532             Let's leave out OMNI for a minute, it's a very, very niche thing and go to the Hamilton station, the Barrie station, who gets hurt?

1533             MR. SWITZER:  Commissioner Langford, I think the best ‑‑ the most detailed analysis that we've seen in all of the work perhaps is described in the CTS intervention ‑‑ although we can't speak to is methodology ‑‑ they filed a chart and a table quite detailed with some explanation as to why effectively CTV is untouched at the top and when I say weakest, I don't mean from a quality of operation ‑‑ earlier today you talked about just do things better ‑‑ we're talking about revenues, and why the weakest players, Toronto 1, OMNI 2, CTS,

perhaps our Barrie station, when I say weakest I don't mean weakest in terms of quality of product, I mean weakest in terms of market strength will be hurt the most.  And we think the table that CTS

filed, perhaps plus or minus a little bit, is accurate.

1534             COMMISSIONER LANGFORD:  If I can correct or apologize, if I said it improperly.

1535             I certainly didn't mean to leave anyone with the impression that you're doing a crummy job, go to a better job, you folks aren't doing ‑‑ but I did ask the question, could that be an interpretation?

1536             I mean, I did put it purposely in a questioning voice.  Is it possible in that Toronto market, because the returns are so unbalanced, is it possible that simply some players are not doing a good job and if that's a possible scenario, how long do they hold back new entrants?

1537             MR. SWITZER:  Commissioner Langford, you are privy to all the numbers, clearly we don't.

1538             It's very clear there is one strong operator that has a very high ability to monetize rating strength, that being CTV, and effectively everyone else is in a much lesser position, all other seven or eight competitors.  That happens to be the dynamic that's in place for this business cycle in the Toronto extended market right now with significantly depressed profit margins except for one player.

1539             COMMISSIONER LANGFORD:  They made quite a point and provided us with a very interesting graph, for which I'm grateful, on the sort of market ad sales trends and difference between what you call spot market and network sales.

1540             How far are you from being able to fit into the network ‑‑ sort of the network buyer?  You're not in the east but you're almost ‑‑ you're everywhere else; aren't you?

1541             How far are you away ‑‑ am I misunderstanding this ‑‑ how far are you aware of being able to market yourself in a different way other than spots?

1542             MR. SWITZER:  We are not anywhere near and not in the foreseeable future in the same way that CanWest, although they operate across the country and are significantly larger than we are by orders of magnitude, for the most part also  do not operate in the national network business.  They're larger than we are, but they still operate in the national spot or national selective pool, if you will, as do we.  They're larger in it, we're smaller in it.  Only CTV, CBC and national specialty broadcasters participate in true network national business.

1543             COMMISSIONER LANGFORD:  I mean, why is that?  I mean, in a sense, there's no magic in the word network; is there, if you're in the business of selling time?

1544             MR. SWITZER:  It's the way ‑‑ it's market driven, it's the way clients choose to spend their money and how they apportion their budgets.

1545             Obviously every player in every one of these sectors want more, but you can't tell your advertisers how they are going to do their business, any more than you tell your viewers what to watch.  You want to serve them the best you can.

1546             COMMISSIONER LANGFORD:  And you can't convince them that you can offer similar windows of access to consumers, though you're not technically a network?

1547             MR. SWITZER:  CanWest has not been able to do that in the last 10 years.  I think we're still literally decades behind them.

1548             COMMISSIONER LANGFORD:  Really.  It's interesting.

1549             So, you are locked into this spot situation?

1550             MR. SWITZER:  Yes, sir.  And it's, as you can see, and has been discussed in some detail today, relatively flat.

1551             COMMISSIONER LANGFORD:  Well, I don't know what to make of your things in term of trying to formulate more questions.

1552             Quite frankly, I find what you say is clear.  I was interested in the film cost and I was interested in this breakdown between spot and network.

1553             I mean, there's not much point in me probing this.  I suppose ‑‑ I mean, just the sort of general question that I asked some of the larger intervenors, in the sense that isn't this a little more almost like a specialty type of operation they've put together?

1554             Granted they'll sell into your conventional market, but is it possible that because they're so niche and so different from, in the sense of demographic choice, in the sense of location, in the sense of local and regional feel, that though they'll take $6‑million out of a $600‑million market, they really just won't have any impact on you folks.

1555             MR. SWITZER:  Well, I have to answer that question, Commissioner, by saying the spot market is closer to 400 and that 6‑million in terms of profitability of seven or eight of those stations, it's obviously a large factor.

1556             I think, to be direct, we have great respect and sympathy for their intentions here in Niagara, no question at all.

1557             I think it was their declaration of requiring basic carriage in Toronto, their declaration that Toronto revenues had to be a big part of this construction.

1558             There are models across the country, creative television models in small markets that don't require revenue that are doing unusual and different things, I mean, small and medium sized markets right across the country.

1559             I don't think we would have any problem whatsoever with this application if it was a creative, special application that uniquely served Niagara and Region.

1560             COMMISSIONER LANGFORD:  What do you say to the folks in this room and the folks that you've read and intervenors and heard, I mean, they're looking at Toronto and they're looking at you with two services in Toronto and CTV with two services in Toronto and Global with two services and Rogers with two services, and they just want one and...

‑‑‑ Applause / Applaudissements

1561             COMMISSIONER LANGFORD:  And Rogers says later, and you say no, and others say no

‑ maybe you say later too ‑‑ but, I mean, it is difficult.

1562             I suppose the question is, why don't you reach out to these people yourselves?  Why don't you have a bureau here?  Why over all these years ‑‑ I mean, I'm sorry to get my violin out, but you've heard my violin before and you know what it sounds like, and I know it irritates you,  I don't play it much better than Jack Benny, but unfortunately, I'm paid to play it and you unfortunately are licensed to listen to it, so my heart goes out to you, I must tell you.

‑‑‑ Laughter / Rires

1563             COMMISSIONER LANGFORD:  But the fact of the matter is, to my knowledge, nobody has offered these people a window in, nobody.

1564             MR. SWITZER:  Commissioner ‑‑

1565             COMMISSIONER LANGFORD:  I mean, the Hamilton station says they do, but from what we're hearing today ‑‑ and we'll check the records on it ‑‑ it's a pretty thin gruel, and you heard the Mayor of St. Catharines here today say some spectacular events are happening, or if they care, they care more about what's happening elsewhere.

1566             So, how do we deal with this just from a kind of humanistic point of view where Toronto is doubled up on every major carrier and these folks have got nothing and Toronto's not using any of its fire power to get out here and help them and bring their message across?

1567             MR. SWITZER:  Commissioner Langford, I guess the Commission can only deal with what's presented before it.

1568             We operate many television stations in smaller markets.  I think we have the record of operating a television station in the smallest market that has its own daily newscast, the Community of Wingham, and we're proud to do that.  We operate in Windsor, we operate in Pembroke.  We have a new station in Brandon.

1569             There are other models and other ways of serving markets with innovative, competitive, smart, intelligent television.

1570             All we can say is this model demands a Toronto and we think that a model that would best serve Niagara might not necessarily do that.

1571             COMMISSIONER LANGFORD:  But this was a competitive process and none of you folks put in a bid.

‑‑‑ Applause / Applaudissements

1572             COMMISSIONER LANGFORD:  If you had an idea, why didn't you put it on the table, because you've really given us a tough job here, you know.

1573             We're listening to you and you're making good points and you're supplying good data, empirical data, but you don't come back in with an alternative and you're supposed to be the pros.

1574             Did it occur to you to put in a competitive bid?

1575             MR. SWITZER:  We would have welcomed calls for help or association ‑‑ I won't use the word affiliation, that's not appropriate ‑‑ as we are across the country.

1576             There are some very small markets in Western Canada with the CBC right now that are looking to disaffiliate and are looking for ways to serve their very small markets and have come to us, perhaps other broadcasters for help and support.  We didn't receive any request from this group.

1577             COMMISSIONER LANGFORD:  Should we conclude then that if the brain trusts of CHUM and CTV and Global and Quebecor and all the rest of the crowd couldn't come up with an alternative strategy to serve the 440,000 people in this area, that the only strategy that will work is the one we have on the table because they need to take a little bit out of Toronto, just as Toronto has taken a little bit out of them?

1578             Are we to conclude that because nobody came up with an alternative is it logical for us to conclude that there isn't an  alternative?

1579             MR. SWITZER:  With respect, I think that's a mildly unfair allegation.  We have not said ‑‑

1580             COMMISSIONER LANGFORD:  It's not an allegation, it's a question.

1581             MR. SWITZER:  We've not said never, we've been on the other end many times of this discussion where the Commission has said there's value, there's a service, there's a need, but the business cycle is down, the economic cycle is down, profits are down, existing incumbents have just made new commitments.

1582             We've seen it happen in Ottawa several times, we saw it happen in Alberta, we saw it happen in Victoria, we saw it happen in other places.

1583             We too share a pro‑choice, more services, serve Canadians, make the system stronger.

1584             We're saying, look at the metrics that we're looking at now, look at the most challenged television business case.  It isn't like it must have been in the 70s or 80s, where margins were in the 40 and 50 per cent.

1585             You're looking at probably half a dozen stations that are losing money in the market and you're saying we want you to continue to do everything you're doing and we're just going to ‑‑ I'm playing devil's advocate ‑‑ and we're going to perhaps overlook your own challenges.

1586             COMMISSIONER LANGFORD:  We appreciate your coming out and letting us pick your brains.

1587             Those are my questions.

1588             Thank you, Mr. Chairman.

1589             THE CHAIRPERSON:  Thank you.

1590             Commissioner Cram.

1591             COMMISSIONER CRAM:  Thank you.

1592             I'm on the same page as I believe my

colleague started with, but further up the paragraph, page 5, I'm sorry, Mr. Switzer.

1593             And you're talking about TVN having grossly underestimated operating cost for 34.5 hours of original news and information programming per week.

1594             Now, I'm assuming you were here this morning, or Mr. Miller was, and there was a greater description in the terms that there was going to be independent programming and there was going to be ‑‑ but there is 90 staff that are going to be doing the news and public affairs.

1595             Given the descriptions you've heard, what would be ‑‑ when you say it's going to be underestimated, what would be your estimate of the cost?

1596             MR. SWITZER:  Sorry, I'll let Mr. Palframan look at the numbers, but one of the most specific areas was the suggestion that this could all be done with HD programming and that the costs of HD have come down sufficiently to allow an operation to launch in a fully HD format.

1597             We simply don't believe that.  We've certainly seen the costs come down, but the costs have not come down nearly enough to have a professional, fully HD studio, master control, et cetera, et cetera.

1598             We have looked at it in terms of some our new bills and we have yet to hit a price point that we can afford in much larger operations.

1599             So, that is a very specific example and Peter may have some other observations.

1600             MR. PALFRAMAN:  Yes, Commissioner

Cram.

1601             You know, as Jay was saying, we operate stations right across the country in providing a lot of this kind of local programming, and I guess the best example would be a London or Barrie station, and our experience is that to operate the kind of news operation that you need to, the costs would be getting close to what they're reflecting as total programming costs.

1602             So, we would see that, based on our experience, spending that kind of ‑‑ having that kind of expenditure for the news operation alone.

1603             COMMISSIONER CRAM:  For news and public information, excluding the independent programming they described this morning.

1604             MR. PALFRAMAN:  That's correct.

1605             COMMISSIONER CRAM:  And excluding the acquiring a foreign program?

1606             MR. PALFRAMAN:  That's correct.

1607             MR. SWITZER:  Commissioner Cram, the order of magnitude would be between two and three times, or that theirs are perhaps a third, a half to a third of what we would think it would be, even with an efficient lean approach to the fixed costs of that operation.

1608             COMMISSIONER CRAM:  Because I think they're saying it's four million five hundred for that and you say it should be two to three times that cost?

1609             MR. MILLER:  Yes, it would be, and particularly if it's going to be in done in high‑definition which I think was the indication from the applicant this morning.

1610             COMMISSIONER CRAM:  Okay, thank you.

1611             Thank you, Mr. Chair.

1612             THE CHAIRPERSON:  Thank you very

much.

1613             Madame la secrétaire.

1614             THE SECRETARY:  Thank you, Mr. Chairman.

1615             The next appearing intervention is CTV Television Inc.

1616             Please introduce yourself before speaking and you have 10 minutes for your presentation.

1617             Thank you.

INTERVENTION

1618             MS ALI:  Thank you, Mr. Chairman, Members of the Commission, I'll introduce the panel.

1619             My name is Elaine Ali, and I'm the Senior Vice‑President, CTV Stations Group.  In that capacity I'm directly responsible for the operations of all of the CTV stations across the country.

1620             Before we start our presentation, I'd like to introduce you to the members of our panel here with me today.

1621             On my left is Clare Brown, Vice‑President Finance, CTV Inc., next to Clare is Nikki Oberdieck, CTV's Director, Regulatory Affairs and Policy Strategy.  Seated to my right is Stephen Armstrong of Armstrong Consulting, and in back row is Rob Malcolmson, a partner at Goodmans, our legal counsel.

1622             We are here today to oppose TV Niagara's application for three reasons.

1623             First and foremost, we don't believe the business model TVN proposes is sustainable.

1624             Second, profitability levels in the Toronto/Hamilton market don't justify a few entrant at this time.

1625             And, third, TVN has not adequately established that there is a need for another television station to serve the Niagara Region, in addition to Global's Hamilton station.

1626             Television is a great business, but it's not an easy business.  As you know, the survival of any television station depends on advertising revenue.  And achieving ad revenue targets is directly related to the quality of the station's program schedule.

1627             In Canada, because of the size of the market, conventional television in particular has developed an economic model whereby ad revenues earned from high‑quality simulcast U.S. programming helps subsidize high‑quality Canadian programming.

1628             In fact, in CTV's case, much of its advertising revenue is derived from U.S. simulcast programming.  This is a proven model for success, and it relies on a simple concept: provide good programming, particularly in prime time, and people will watch it.

1629             TV Niagara has come to you with an application for a new conventional station to serve the St. Catharines and Niagara Region, and they've proposed a different model: one that relies on no U.S. simulcast programming, in favour of large amounts of low‑cost foreign and Canadian programming.

1630             CTV does not believe this model is sustainable.  In fact, TVN's model is very similar to the one proposed by TorStar for "Hometown Television".  That application was rejected by a majority of Commissioners as being unrealistic and undeliverable.

1631             TVN plans to invest $7‑million in programming in year 1 and generate $12‑million in revenue.  We note that TorStar's investment in programming for its Toronto/Hamilton stations was $20‑million and that was rejected by the Commission as insufficient to generate the $15‑million in revenue TorStar was projecting.

1632             Similarly, under the Craigs, Toronto 1 entered the market forecasting a one rating point based on a programming budget that was three times higher than TVN's.  Based on this forecast, Toronto 1 was able to generate revenue of $14‑million.  Yet, according to Quebecor, Toronto 1 has only been able to achieve a 0.3 rating point.

1633             Given these realities, it defies logic to believe that TVN will be able to generate a 0.5 rating point in Toronto on a program budget that is three times lower than Toronto 1's, particularly considering that Toronto 1 is a local Toronto station, whereas TVN's local focus is on St.Catharines/Niagara.

1634             Clare will now take you through some of the numbers in more detail.

1635             MS BROWN:  Thanks, Elaine.

1636             TVN proposes to spend an average of $5.3‑million per year on Canadian programming.  In contrast, each of the existing private conventional stations in Toronto spent an average of $18.6‑million on Canadian programming in 2004 alone.  That's over three times as much.

1637             The discrepancy in foreign programming spend is even greater.  TVN says that it plans to spend an average of $2.2‑million per year on foreign programming.

1638             According to the CRTC data, the existing private conventional stations in Toronto spent an average of $33‑million per year in foreign programming in 2004.  That's 15 times greater than what TVN plans to spend.

1639             Now, we are not saying that companies can't experiment with a tried and true economic model.  But what we are saying is that the kind of financial commitments that TVN is prepared to make to Canadian and U.S. programming are so low that we really doubt its ability to create and acquire quality programming.

1640             Quality programming is key because, as we noted earlier, it's programming that drives advertising revenues.  In this case, TVN is projecting that fully 40 per cent of its year two ad revenues will come from the existing Toronto stations; namely, CFTO, Global, CHCH and City.  TVN projects another 16 per cent will come from specialty networks.

1641             Given the quality of programming that TVN will be able to produce on such a small program expenditure budget, CTV just doesn't see how these projections can be achieved when faced with competition from the top‑rated programming of the Toronto stations.

1642             TVN's assumption that it can pull 16 per cent of its revenues from specialty networks is equally flawed, in our view.  Even putting the question of quality aside, a speciality media buy is a national buy, not a Toronto/Hamilton buy.  One is simply not a substitute for the other.

1643             Elaine.

1644             MS ALI:  TVN has made it clear that it wants to be a distinctly local station, geared to serving the Niagara Region.  But, it has plainly admitted that without coverage in Toronto, and without drawing 40 per cent of its revenues from Toronto, it won't survive.

1645             CTV is concerned that, while well‑intended, the reality of gaining and keeping Toronto advertisers will inevitably affect TVN's local focus.

1646             We fail to see how TVN can expect to draw revenues from the Toronto market when its programming focus will be so closely on the Niagara Region.

1647             At the end of the day, TVN will either turn into a de facto Toronto station with limited local content, or it will be a local Niagara station operating on the basis of a business case that is not sustainable.  Either way, we believe TVN will quickly be back in front of you seeking relief in order to create a viable business.

1648             We've already seen what happened with Toronto 1.  Even with a Toronto programming focus and a programming budget three times greater that of TVN's, Toronto 1 has not been able to compete and is achieving just a 0.3 rating point in prime time.  TVN's Niagara programming focus and $7‑million budget will simply not allow it to deliver the quality of schedule it requires to compete in Toronto.

1649             CTV asked Stephen Armstrong to examine the potential for entry in the Toronto/Hamilton market.  I'm asking to ask  him to briefly review his finds.

1650             Stephen.

1651             MR. ARMSTRONG:  Thanks, Elaine.

1652             I examined the potential for entry based on three principal factors: trends in economic growth, in television advertising revenues and in profitability.  These factors were highlighted by the Commission for example, in the Public Notice accompanying the Toronto television licensing decisions in 2002.

1653             In that Public Notice, the Commission concluded that there would be strong economic growth in Toronto/Hamilton.  A number of indicators, however, now point to weakening economic performance.

1654             When the Commission last considered applications for new television stations in Toronto/Hamilton, local and national revenues for private television stations in this market were growing strongly, with a CAGR, compound annual growth, rate of 6.6 per cent from 1996 to 2000.  The compound rate of growth from 2000‑2004 has now fallen to 3.9 per cent.  In 2004, airtime revenues actually decreased by almost 2 per cent and TVB year‑to‑date results for 2005 show a decrease of 2.3 per cent.

1655             In 2000, when the applications for OMNI 2 and Toronto 1 were filed, the profitability of the private television stations serving Toronto/Hamilton was 23.5 per cent.

1656             In 2004, after both of these stations had been launched, profitability feel to 14.7 per cent ‑‑ well below the market average of 21.4 per cent at which the Commission has in the past been prepared to grant new licences for local television stations.

1657             Conditions in the Toronto/Hamilton market appear to be quite different from those that prevailed when the Commission last considered applications for new local television stations.  Based on current trends in economic growth, conventional television advertising revenues and profitability, there does not appear to be the potential for increased entry at this time.

1658             Elaine.

1659             MS ALI:  Thank you, Stephen.

1660             We do not believe this is the time to licence a new station that would be dependent on the Toronto/Hamilton advertising market for its viability.

1661             In summary, CTV believes that the Commission should deny TVN's proposal.  TVN's business plan is unrealistic and unsustainable, in particular, given the nature of the competition it will face.

1662             Moreover, its reliance on advertising revenues from the Toronto/Hamilton market will bring market profitability levels down even further, profitability levels that are already below those at which the Commission has traditionally been prepared to issue new licences.

1663             And, finally, CTV fails to see that there is a strong, sustainable demand for more local programming on the part of Niagara residents in addition to the service provided by CHCH.

1664             We appreciate the opportunity to appear before you today and are happy to answer any questions you may have.

1665             Thank you.

1666             THE CHAIRPERSON:  Thank you.

1667             Commissioner Cugini.

1668             COMMISSIONER CUGINI:  Good evening.

1669             I just would like to ask you to just elaborate on a couple of points you made in your oral presentation.

1670             And, firstly, I would like you to talk about why you perceive there is not a demand for this service in the Niagara Region.

1671             I think you were here this morning, you saw the presentation on video, you saw the dignitaries of the Region express not only a desire for this kind of service, but also express their reasons for why they believe such a service is necessary, and you certainly heard the reaction of people in the room when you made this statement.

1672             So, if you could just elaborate for me on why you don't think TVN convinced you that there is a demand?

1673             MS ALI:  Well, we certainly heard some very compelling stories today and certainly opened our eyes to many things, but what we were referring to at the time, and in reading TVN's application and, in particular, Global/CH intervention, and certainly any assessment of Global's commitment to local reflection is subjective at best, and CTV will offer no comments in this regard.

1674             However, if the Commission agrees with TVN that the citizens of Niagara the solution is not to issue a new licence but rather, perhaps, to look at Global/CH service to determine whether the programming needs of the Niagara Region that CH is licensed to serve are being met.

1675             In that regard, we do note Global's comment that they have exceeded local programming commitments and are spending on news alone some $10‑million per year.

1676             And furthermore, in TVN's consumer demand research with respect to, I believe it's called Satisfaction With Television Coverage of Local Niagara Region News, Special Events and Weather, the findings suggest that the residents of Niagara/St. Catharines Region are, in fact, reasonably satisfied.

1677             So, those are the suggestions that we had.

1678             I'm going to ask Steve Armstrong just to take us through some of the responses to the questions that TVN asked.

1679             MR. ARMSTRONG:  These numbers are just from the consumer research that was filed, the Tri‑Media Marketing and Publicity Group,

they are from page 95 of the report entitled:  Needs Assessment for a Local TV Station in the Niagara Region, Audience and Advertiser Market Study.

1680             The responses are to questions 21(a), (b) and (c).

1681             The questions were:

1682             How satisfied or dissatisfied are you with the coverage of Niagara news, Niagara events, Niagara weather by existing TV stations?

1683             73 per cent said that they were satisfied with the coverage of weather, that's 7 out of 10 ‑‑ local weather; 56 per cent, 6 out of 10, said they were satisfied with local news, and respondents were evenly split on coverage of special events, 47.4 per cent said they were satisfied and 50 per cent said they were not satisfied.

1684             COMMISSIONER CUGINI:  We have your response on record.  Thank you.

1685             The other avenue I wanted to question you about, again, from your oral presentation where you talk about the economic model for Canadian television.

1686             Is that, of course, simultaneous substitution of U.S. programming helps drive conventional television and cross‑subsidizing the production of Canadian content.

1687             But that isn't the case for all conventional, there are varying levels of simultaneous substitution that conventional television stations do, in fact, avail themselves of and, yet, they are able to meet their Canadian content commitments.

1688             Again, based on the TVN model, can you elaborate on why you don't think, given their local production, given the budgets that TVN has presented for their local programming that the absence necessarily of simultaneous substitution means that they won't be able to meet their business plan?

1689             I mean, CTV, of course, you know you saw that you simultaneously substitute huge American hits and, as a result, produce high‑quality Canadian shows like Canadian Idol, like your drama series.  That's not in TVN's plans today.

1690             So, why at the start can't, in your opinion, TVN sustain their business model in the absence of simultaneous substitution?

1691             MS ALI:  Well, there's a number of elements, simultaneous substitution being one.

1692             The economic model we referred to, there's different versions of the economic model and different levels of substitution.

1693             Of course, as you've noted, CTV simulcasts a fair amount of programming and produces very high‑quality Canadian programming that is supported by that simulcast programming.

1694             And CTV, for example, generates much of its revenue from simulcast programming.

1695             So, that is one model.  But if you look at the program budget, regardless whether it's got simulcast opportunities or not, it's the business plan that really has some issues, the entire business plan and, simply put, the program expenditure proposed by the applicant simply cannot deliver the revenues it is projecting.

1696             Let's just talk about some of the areas of the program budget and who the competition is that they are looking to get a CPR of .5 from in prime time and a revenue source of some $12‑million.

1697             So, we look at Toronto and Hamilton, obviously, from which TVN is counting on 40 per cent of its revenue.

1698             Toronto 1, as we noted, spent three times team what TVN proposes to generate roughly the same revenue and to generate a .3 rating point.

1699             Existing Toronto stations spent 55‑million, that's eight times TVN's proposed budget.

1700             TorStar's application for Toronto/Hamilton was denied in 2003 for exactly this reason, insufficient  financial commitments to programming and their programming budget was three times TVN's.

1701             TVN's schedule contemplates no simulcast but that's one area.  When you compare the TVN budget ‑‑ programming budget, and I'm going to ask Clare to go a little deeper into the programming budget in terms of the news, in terms of the foreign programming, et cetera and versus the competition, it simply cannot generate, as we have heard from many today with more experience in that type of programming in terms of movie programming, it simply cannot generate a .5.

1702             So, we're here to talk about the sustainability of the budget and sustainability of the business plan based on a program budget that needs to compete with program budget three times, five times, eight times as much.

1703             Clare.

1704             MS BROWN:  Just to get into some of the specific numbers, as Elaine noted, TVN is planning to spend $7‑million in its first year and  of that 7‑million they have allocated approximately $2.4‑million to their news coverage.

1705             While we don't have a specific news budget figure for Toronto 1, we do note that CH in their intervention notes that they are spending an average of $10‑million a year.

1706             And we know based on our own experience running smaller market local news that it would be very difficult to deliver the news commitment that TVN is proposing based on a budget of $2.4‑million.

1707             In terms of the foreign spend, as noted, they are not claiming to simulcast, and so it's perhaps not a direct comparable.

1708             However, the total budget, again, at $7‑million is only a third of what Toronto 1 spent in 2004 and they were not able to achieve their rating points, as they noted in the Quebecor intervention they only achieved a .3, and the TorStar application, again, only ‑‑ they proposed a budget of $21‑million, again, three times that.

1709             So, it's not so much the composition of the budget, it's the total magnitude of the budget that we believe is in question.

1710             MS ALI:  There's two other pieces of information I think would be you useful.

1711             Just one correction, CTV actually only has one station in Toronto, but we do have a station in Kitchener, Ottawa and then certainly in Northern Ontario.

1712             And I just want to use Kitchener as an example, and I won't give actual numbers because  those are obviously confidential, but the fact is that Kitchener with a population or CMA that is just slightly larger than Niagara/St. Catharines, in fact, is spending on news alone ‑‑ and that's 15.5 hours of news, not 34.5 hours, 15.5 hours ‑‑ is spending on news alone almost twice TVN's budget or almost their whole programming budget.

1713             So, we do need to focus in, not just on where they're going get their .5, but how they are going to serve the residents of Niagara versus, you know, other avenues or options.

1714             And also back to that simulcasting just a bit, they are looking to repatriate dollars from U.S. border stations and if there aren't any

simulcast programming, we're not quite sure how they can repatriate the viewers from those programs and, therefore, the dollars associated with them.

1715             So, that may be a bit of a revenue issue as well.

1716             COMMISSIONER CUGINI:  Thank you.

1717             Your position is clear to me.

1718             Those are all my questions.

1719             THE CHAIRPERSON:  Thank you.

1720             Commissioner Cram.

1721             COMMISSIONER CRAM:  I wanted to talk to you about, not necessarily Mr. Switzer, but his discussion about the spot market.

1722             And I heard you, Ms Browne, say that TVN won't have any access to the network advertising market, I think it's called, and what is happening to your network advertising access; do you continue to have access to the network advertising the same or on an increasing level these days?

1723             MS BROWN:  Yes, certainly we do and we're not here contesting that TVN would have any impact on our access to that market.

1724             COMMISSIONER CRAM:  I have heard tell that advertisers are now looking to purchase only the four top instead of going for a network buy.

1725             Is that true or not true?

1726             MS ALI:  Certainly there's an order to the buy and network is normally first and then they will go to the four top markets, which we know are Toronto/Hamilton, Vancouver and the Alberta stations, and then after that they go to the more medium sized and smaller markets, and what we have seen is that the medium and smaller sized markets have run out of ‑‑ they are not being put on the buy any more.

1727             So, the impact on the small markets and the medium sized markets who cannot access that national budget, after the network has been purchased and after the four large markets have been purchased, then many of the smaller markets are being simply dropped off the buy.

1728             And I guess that's what we've been talking about in terms of the state of conventional broadcasting generally, with the fragmentation, the time shifting opportunities, the increase in specialities, the increase in digital networks, et cetera, and each takes a piece of the pie and we're not here to whine today but just to describe the order of events.

1729             And so the Saskatoons and the Reginas, and even the Halifaxes right now are, in fact, not being accommodated in some of the national buys, where they were last year.

1730             I was at a WAB, a Western Association of Broadcasters this past weekend and one of the panelists who is a senior agency person said, for example, you know, McDonalds their spot buy purchase ‑‑ or television budget was somewhere in the range of 80 per cent, of their whole advertising budget on television was 80 per cent.0, and she says that we'll be seeing it down to lower than 50 per cent.

1731             And so, again, the spot buys of the smaller and medium sized markets are the ones that are affected obviously by that kind of fragmentation.

1732             COMMISSIONER CRAM:  So, what happens then to the pressure on spot buying in the Toronto market?  Is there more pressure on the spot buying in the Toronto market because advertisers are now looking more to the four top markets to spot buy?

1733             What I'm wondering about, is there more pressure on the spot market in Toronto, not only from CTV who also has access to network, but then also from the new entrants, from OMNI and Toronto 1, that's what I'm trying to get at.

1734             Is there more competition and can we see in the future that there would be more competition for the spot market in Toronto, both from you big guys who get a lot of money and the new entrants who are coming in?

1735             MS ALI:  I think it might be useful to talk about some of the trends and what's happening in the Toronto/Hamilton market versus the other markets.

1736             MR. ARMSTRONG:  What we know that has happened in Toronto from the CRTC data is that the spot market, local plus national, was growing at about 6.6 per cent over the five years 96‑2000, it's now down to 3.9 per cent and that growth rate has occurred even though there was a big jump in 2003, an adjustment, plus there was a change in the accounting practices that make those numbers hard to compare.

1737             But if we look at ‑‑ I can talk about ‑‑ and, of course, in the Commission's data, the most recent data the spot market is actually down by almost 2 per cent in the 2004 data and the TVB data are showing a downward trend as well.  So, it looks like the curb is down in the Toronto/Hamilton market in terms of the spot market.

1738             Toronto, in comparison to other major markets, based on CRTC data, has the lowest rate of growth in the spot market.

1739             I'll just run through the numbers. Toronto, the spot market, local plus national had a ‑‑

1740             THE CHAIRPERSON:  Excuse me, Mr. Armstrong, where are you taking those from?

1741             MR. ARMSTRONG:  These are the market summaries, the aggregate financial data that Commission staff provide by major market.

1742             THE CHAIRPERSON:  Okay.  Are they part of the financials that you're looking at for conventional television?  I'm just wondering whether we have the documentation to follow along with you.

1743             MR. ARMSTRONG:  I won't speak to it if it's ‑‑

1744             THE CHAIRPERSON:  Well, no, it is not a matter of speaking to us, it is just a matter of us being as clear as possible where you are deriving it from.

1745             MR. ARMSTRONG:  Sure.  The Toronto numbers I'm going to site are in my study, that's the 3.9 per cent compound annual rate of growth for private television stations in the Toronto/Hamilton market over the period 2000‑2004.

1746             With your permission, I'd like to site comparable data, Commission data for three other markets, Vancouver, Victoria, Calgary and Edmonton.

1747             Those numbers are, for Vancouver/Victoria 7.2 per cent compound annual rate of growth, Edmonton/Red Deer is 6 per cent, Calgary/Lethbridge is 6.6 per cent.

1748             So, what we can see is the rate of growth in local and national revenues in Toronto is currently below us of all the major markets based on CRTC.

1749             THE CHAIRPERSON:  What are you using to derive the spot market calculation from in the CRTC data?

1750             MR. ARMSTRONG:  I'm adding together local and national revenues.

1751             THE CHAIRPERSON:  I see.  So, the totals of those and why do you call those the spot revenues?

1752             MR. ARMSTRONG:  Well, that's I guess TVB language.  TVB identifies local ads as local spots and national ads as national spots and combines to call it spot revenue.

1753             THE CHAIRPERSON:  Right, but it isn't a separate category, I thought from your presentation ‑‑ excuse me, Commissioner Cram, just for this segue ‑‑ I thought your point was that the national sales were essentially the sales that were not accessible to many others than the specialties and the major broadcasters, I thought you were contrasting that with the spot in terms of ‑‑ it's just a matter of how the CRTC books this, that is all that we are talking about.

1754             MR. ARMSTRONG:  To be clear, I'm adding together your local and national to come together with a combined local plus national.

1755             THE CHAIRPERSON:  Right.  So, what you are suggesting really is that our national time sales combined ‑‑ I guess what I am suggesting is that they combine both those national selective, if you like, sales and the national network or buy across the country buys as well.

1756             Say if they're conventional ‑‑ let me ask you the question because I may be confused by what you are saying here.

1757             Where you say that ‑‑ where is it ‑‑ you say that only the specialties and the ‑‑

1758             COMMISSIONER CRAM:  Page 4.

1759             THE CHAIRPERSON:  Is it page 4?

1760             COMMISSIONER CRAM:  Just above.

1761             THE CHAIRPERSON:  Right, page 4.

1762             Specialty buy is not a national buy, that's clear.

1763             MR. ARMSTRONG:  That's correct.

1764             THE CHAIRPERSON:  Right, but I thought that you had said elsewhere ‑‑ I hope it wasn't another intervenor this hour in the day that was saying that, effectively ‑‑ maybe perhaps it was CHUM and you may not want to comment on it.

1765             But the point that I was taking that the selective ‑‑ I think it was CHUM ‑‑ the selective market is left after the national buys across that are available to the specialties and to major broadcasters like CTV and Global.

1766             MR. ARMSTRONG:  Yes, correct.

1767             THE CHAIRPERSON:  Okay.  So, when you say ‑‑ and they use selective and spot interchangeably.

1768             Now, you are not using it in that same way, I take it, and you are referring to the CRTC ‑‑

1769             MR. ARMSTRONG:  I'm referring to those revenues that are derived from advertising sales in a particular market as opposed to a network buy.

1770             THE CHAIRPERSON:  Okay.  So, really ‑‑ and the re‑allocation you spoke of of the CTV revenues plays into that because it is allocated now by market as opposed to a separate ‑‑

1771             MR. ARMSTRONG:  That's correct.

1772             THE CHAIRPERSON:  So, when you look at Toronto, you are just simply adding local time sales and national time sales to get the spot market?

1773             MR. ARMSTRONG:  That's correct.

1774             THE CHAIRPERSON:  I think we can leave it at that, consider all the rest of it an irrelevant segue.

1775             I think I understand what you're saying.

1776             COMMISSIONER CRAM:  and I think you can leave what I was saying because I think I had misinterpreted.

1777             Thank you.

1778             THE CHAIRPERSON:  On that happy note, thank you very much.

1779             Madam Secretary.

1780             THE SECRETARY:  We will now hear the next intervening intervenor is Mr. Lionel Baum.

1781             Mr. Baum, you have 10 minutes to make your presentation.

INTERVENTION

1782             MR. BAUM:  Chairman Dalfen, Members of the Commission, good evening.

1783             I appear before you today to comment upon aspects of the TVN Niagara application.

1784             At the outset I want to state that I enthusiastically support the principles of the Broadcasting Act, an Act which promotes Canadian programming first, ensures Canadian ownership of the broadcasting system and strives to foster diversity in providing programming for people of every age, interest and taste.  I also believe that it is important to have local reflection of our communities.

1785             As a chartered accountant and consultant to small and medium sized Canadian businesses, I'm keenly aware of the globalization of the economies of many nations including Canada.  Increasingly, people are able to access information and entertainment via new technologies which know no boundaries or regulation.

1786             Globalization has resulted in yet another level of competition for the Canadian Broadcasting System, sometimes that competition is unregulated, unwarranted or unwelcome.

1787             Globalization has also impacted all of our institutions, including chartered banks and other lending institutions that provide financing to broadcasters.

1788             These institutions increasingly are becoming more conservative in their lending policies, imposing more stringent covenants on borrowers and taking on less and less risk,

as all public corporations are subject to greater levels of scrutiny.

1789             As a regulator, you have an additional obligation and that is to ensure that those that are licensed to operate broadcasting undertakings and utilize public frequencies honour their commitments to the public.

1790             You are also aware that larger broadcast groups are sometimes under funded when their business plans do not mature in the manner envisioned in their application.

1791             The result, as we saw only last year, can have a significant impact on not only the shareholders of the licence undertaking, but the professional staff who produce programs and appear in front of the cameras.

1792             In your assessment today of the TVN Niagara application and hearing your questioning earlier today, I understand that you want to ensure that the business plan is sound and that the significant commitments that the investors propose to undertake are on honoured.

1793             I understand that you have read my written brief, so I will confine my discussion to a few of the key points in the time allotted.

1794             Foremost, if you decide to licence this application, in my view, you should ensure that TVN Niagara is a strong player in what is possibly the most competitive media market in North America.

1795             I have addressed a number of issues in my brief pertaining to the lack of a controlling shareholder within the company.

1796             I understand that it is unusual for a majority investor in a broadcast application to take a minority role just prior to gazetting.

1797             You should satisfy yourselves that the proposed ownership arrangements that result in no one shareholder exercising control over the TV station will withstand any financial circumstances where investors are required to contribute more funds in order to sustain the operation of the station.

1798             Recent history has suggested that very few start‑up broadcasting operations reach their financial projections early in the term of the licence.  Under the terms of the shareholders' agreement, will the station be able to carry on business in the event that the financial projections are not met, or is the proposed ownership structure prone to deadlock and shareholder dilution or takeover by a larger broadcast group?

1799             I have provided comments concerning distribution of the television service.  The applicants's business plan is clearly founded on distribution within the Greater Toronto Area.

1800             I know from past practices that this Commission is not adverse to making decisions that support Canadian broadcasters, even when unregulated U.S. services are displaced.

1801             Again, I urge the Commission to ensure that TV Niagara, if licensed, has the ability to compete in this market.

1802             Any licensing decision or lack of direction to cable distributors that would allow TV Niagara to be treated as a second class service would not be in the interests of the licensee or of the viewers and, to my mind, would not be in the public interest.

1803             While I'm not technically inclined, I believe that several hundred thousand people in the Toronto area have purchased digital cable, wireless and digital satellite services.  Those subscribers have adequate opportunity to access any U.S. TV channel that may be displaced as a result of TV Niagara's distribution on a lower channel.

1804             I have suggested that TVN be distributed below channel 29 and preferably on channel 16, 17 or 18 in Toronto, channels occupied by U.S. services.

1805             Subscribers can any U.S. channel that is displaced by way of digital channels or on higher analog channel allocations.

1806             I also understand that at the present time a significant percentage of the programming on any of the U.S. conventional TV channels that might be displaced, can be found in simulcast on Canadian licensed channels.

1807             I believe that under your policies and the requirements of the Broadcasting Act and the broadcasting distribution regulations, Canadian channels have a priority of carriage as compared to U.S. channels.

1808             I would, therefore, advocate that in licensing TV Niagara you ensure that it has equal opportunity at the outset to compete and draw viewers to its service throughout Southern Ontario.

1809             Finally, I have provided observations in my written brief concerning the research data and repatriation of revenues from other media.

1810             In my consulting practice I've learned a number of things.  The first is that in a competitive global economy you must have a product or service that is first class and it must be a service that is desirable to consumers.

1811             I have expressed concerns in the written brief regarding some anomalies about the TV market in this region and the fact that national digital specialty television channels are able to sell to what are essentially local and regional advertisers.

1812             This is a rate and ratings driven industry.

1813             In a period of increasing fragmentation of conventional over‑the‑air broadcasting services, specialty services are very competitive.  As I have noted in my brief, it is not uncommon to see ads for various and events for this Region on specialty channels.

1814             TVN Niagara's business plan is highly reliant on local advertising and repatriating advertising from specialty services.

1815             You, of course, have the actual financial statistics for OMNI 2 and Toronto 1, stations that launched within the past few years.

1816             You also have the ability to compare their financial performance to the projections contained within their applications.

1817             You also have the financial performance data for all the other over‑the‑air stations in the Region.

1818             I leave it to you to determine whether the TVN advertising revenue estimates can be fulfilled with a movie‑based programming schedule in an era where there is a proliferation of specialty channels, pay‑per‑view and video‑on‑demand services that offer movies.

1819             In conclusion, TVN Niagara provides for a locally owned television service.  Local ownership of television from Cape Breton to Victoria has given way to large corporate ownership by companies that have no significant stake in the local communities.

1820             There are many things about the TVN application that, in my view, are commendable, particularly its commitment to local reflection.

1821             I urge you in your deliberations to ensure that, if licensed, the licensee has every opportunity to fulfil its commitments to the communities that it proposes to serve.

1822             Thank you for allowing me to appear.  I'm available to answer any questions.

‑‑‑ Applause / Applaudissements

1823             THE CHAIRPERSON:  Thank you, Mr. Baum.

1824             I don't have any questions.

1825             We have no questions for you.

1826             MR. BAUM:  Thank you.

1827             THE CHAIRPERSON:  Madam secretary.

1828             THE SECRETARY:  Thank you, Mr. Chairman.

1829             The last appearing intervention is Global Television Network Inc.

1830             You have 10 minutes for your presentation.

1831             THE CHAIRPERSON:  Just before you begin, it is late in the day and we are winding down.

1832             I would ask you to curtail your reactions.  I appreciate the enthusiasm, but if you could just remember that we are trying to conduct an orderly and decorous proceeding which you have been very helpful in achieving up to now, that we continue to do that through the end.

1833             Thank you.

INTERVENTION

1834             MS BELL:  Thank you, Mr. Chairman.

1835             Good evening, Chairman Dalfen, Vice‑Chairman French, Commissioners and Commission Staff.

1836             For the record, my name is Charlotte Bell and I am Vice‑President of Regulatory Affairs for CanWest Mediaworks.

1837             With me today, starting at my immediate left, is Patrick O'Hara, Vice‑President of our Eastern Operations and General Manager of CH Television in Hamilton.  Next to him is Sue Galloway, CH Hamilton's Business Affairs Manager.

1838             In the row behind me is Deborah Walker, Managing Producer for CH news.  Next to her is David Rathan, Research Manager ‑‑ Television, as well as Jeff Thrasher, our CH Sales Manager.

1839             I'm also pleased to introduce to you, Ron Foxcroft, Chairperson of the CH Hamilton Advisory Board, seated to my immediate right.

1840             Mr. Foxcroft has been invaluable to us as Chairperson of our community advisory committee for the past five years and is a very active and distinguished member of both the Hamilton and Niagara communities.

1841             First and foremost, we would like to thank the Commission for the opportunity to appear before you here today to address our concerns regarding this application.

1842             After listening to this morning's session, it is clear to us that the proposal is fraught with contradictions and inadequacies.

1843             Let us consider some facts.  The applicant claims that it can provide a quality, local television service with a programming budget of just under $7‑million per year.  It can't be done.

1844             We were struck this morning by the applicant's blatant attempt to undermine the credibility of CH Television and, in particular, our news coverage.  Incidentally, our news budget alone represents 1.5 times what the applicant plans to spend on all of its programming, including foreign acquisitions.

1845             The applicant claims that the Conference Board projections for the Toronto market are positive for the foreseeable future, but they failed to mention the more sombre outlook for the Niagara Region.  In fact, the most recent Conference Board metropolitan outlook reported that the St. Catharines/Niagara economy did extremely poorly in 2004 because manufacturing sector, which is vital in this area, took a downward turn because of a weak American dollar.

1846             The applicant also stated that Toronto spot sales numbers were positive according to TVB reports.  In fact, the Toronto market has experienced a 2.4 per cent drop in spot sales year‑to‑date according to the latest TVB report.

1847             Commissioners, we are not here to dispute the fact that Niagara residents would like to see more local programming, however, we do not believe that this proposal is viable or that it merits licensing.

1848             But let's pretend that the business plan actually makes sense and the station would be capable of drawing the revenues that they're projecting for the market, then the licensing of this proposal would inevitably impact the capacity of CH to continue to provide the same level of high‑quality local programming area to the area, and it would also undermine the already precarious economic health of the extended Toronto television marketplace where the applicant plans to draw the majority of its revenues from.

1849             There's no doubt that the overall economic context of the conventional television industry in Canada, in Ontario and in Southern Ontario is under strain.  The Commission's own monitoring report for 2004 indicates a continue drop in share of tuning to private English language conventional television.

1850             Indeed, since 1993 overall share of tuning to private conventional TV in Canada has declined by 20 per cent.  This decline has been felt even more strongly in the Toronto extended market where share of viewing to English language television declined 28 per cent during that period.  In Hamilton alone, the drop is 24 per cent.

1851             When we turn to the economics for those markets, we continue to see a decline in all key indicators, despite the fact that a new entrant, Toronto 1, came into the market only two years ago.

1852             In fact, of particular concern to us is the fact that following the launch of Toronto 1, revenues in the Toronto/Hamilton market actually fell while expenses rose to reflect the entry of a new station.

1853             In 2004, CH experienced a decline of over 25 per cent of its revenues, while its programming expenses continued to rise.  Over a five‑year period our operating income went from a modest profit to a very significant loss.

1854             MR. O'HARA:  Commissioners, this proposal is simply inadequate to meet the applicant's boldly ambitious claims that it can provide a quality local service to this region with the budgets it proposes to allocate.

1855             The applicant has proposed to telecast 34.5 hours of news and public affairs programming per week from four studios within the Region.  They say they can do all this, and reflect the Region better than we do by spending a fraction of what we are spending on news ‑‑ to be precise, CH's weekly conditions of licence for news and local programming is 36.5 hours ‑‑ and we spend almost four times what the applicant proposes to spend to do the same amount of programming ‑‑ and we do this from our Hamilton Centre and two regional bureaus, not four.

1856             Their overall programming costs for Canadian programming also represent a mere fraction of what others are spending, both nationally, as well as in Ontario.  In fact, according to the applicant's own estimate of original hours, the average cost per hour would amount to about $1,900.

1857             As General Manager of CH, I can tell you that we can neither produce nor acquire any type of Canadian programming for that amount of money, aside from perhaps infomercials and paid religious programming.

1858             The applicant's business plan proposes a Canadian programming budget of $35‑million over seven years, which represents what we and others spend over a two‑year period.  This begs the question ‑‑ if the Commission licensed this proposal, what level of quality will this community be getting?

1859             In terms of diversity, we also note that the applicant's non‑news programming plans to offer lifestyle programs and classic movies duplicating what is already widely available on other conventional and specialty services.  These estimated program costs for foreign acquisitions are about one‑third of what it actually costs to provide this type of programming.

1860             The proposed service would not only further fragment viewing and revenues of existing stations, but it would, rather, deny the quality of diversity in the marketplace.  How does this serve the public interest?

1861             Since CanWest took over CH in 2000, we have worked diligently to establish a regional service that focuses on the needs and interests of the communities we serve.

1862             We have steadily attracted an increasing amount of our revenues from local advertisers in Hamilton and Niagara over the past five years, growing from five per cent of revenues to approximately 12 per cent.  This is a direct result of our commitment to reflect those communities.

1863             We have yet to fully absorb the impact of the two most recent entrants in the marketplace in the past two years.  A new entrant would fragment advertising revenues in an already declining market.  And, if financially strapped, will inevitably try to unload a surplus of unsold commercial inventory by slashing prices.

1864             CH sales, as well as radio revenues, would be diluted.  This would represent a step back for CH and a threat to the momentum we have worked hard to build.  The damage caused is just not worth the risk.

1865             MR. FOXCROFT:  Commissioners, five years ago, I was asked to Chair the Community Advisory Committee for CH in order to work closely with the station management to take the station from a Toronto focused service to a true local/regional station that would serve the interests of the communities of Hamilton, Halton and Niagara.

1866             CH has gone from providing 17 hours per week of Toronto‑centric news programming employing 50 people, to more than 39 hours of weekly news and other local programming targeting the Hamilton, Halton and Niagara Regions and employing 75 people to do the job.  I think you would agree that this represents a significant shift in focus.

1867             As you know from our annual reports to the Commission, one of the top priorities of the Advisory Committee for the past few years has been to ensure that the station increases its presence in the Niagara Region.

1868             The applicant has argued that the market needs a new local station because the market receives little or no local television service.

1869             That is simply not true.  How else would CH's news programming rank No. 1 with Niagara audiences, and why else would a third of CH's news audience come from the Niagara Region?

1870             Commissioners, this market cannot be compared to any other market in the country ‑‑ it is a part of a larger community and the people who reside here consider themselves as part of that larger community.

1871             While my residence happens to be in Burlington, my office is in Hamilton and my company services the Niagara Region.  That is a simple reality for many folks who reside here, and CH reflects that reality.

1872             While Hamilton is an important economic driver for this Region, CH has worked hard to ensure that while a large portion of the stories covered are Hamilton‑specific, at least 30 per cent of all news stories are relevant to the wider region which includes Halton and Niagara.

1873             Having said this, a further 10 to 15 per cent of stories covered are specific to the Niagara Region.  Recent examples of stories include:

1874             ‑ Significant coverage of the Royal visit to St. Catharines this past weekend;

1875             ‑ Coverage of the Welland annual rose festival yesterday; and

1876             ‑ Regular and significant coverage of the wine, fruit growers and tourism industries.

1877             ‑ The station is also currently working with the organizers of the Niagara Wine Festival in preparation for this month's event, providing promotional support, on‑air live remotes and special features during regular newscasts and the morning show;

1878             ‑ CH is also co‑sponsoring the Niagara Smooth Jazz Festival next weekend.

1879             And, for local sports fans:

1880             ‑ The station recently covered the Grimsby PeachKings hockey team's attempt to win the junior C provincial championship.

1881             ‑ In terms of election coverage, CH broadcast a one‑hour prime‑time report in November, 2003 highlighting the results for the entire region.  The station also profiled a number of the candidates in all areas of the region and provided in‑depth reports on key mayoralty races in Niagara Falls, St. Catharines and Grimsby.

1882             Commissioners, despite the negative picture the applicant has tried to paint concerning the quality of CH's news reporting in this region, I can tell you that when a story emerges in Niagara, the station does not send one reporter ‑‑ the story gets the full resources of the entire CH newsroom which includes 75 people.

1883             The applicant's claims are patently false.

1884             MS BELL:  Commissioners, we thank you for your attention and we are prepared to answer any of your questions.

1885             THE CHAIRPERSON:  Thank you.

1886             Commissioner Cram.

1887             COMMISSIONER CRAM:  Thank you.

1888             Welcome.  I guess I wanted to talk about some of the assertions that were made this morning, the alleged 14 minutes on municipal elections, that is ‑‑ your rebuttal is on page 10 of your brief there.

1889             MS BELL:  It was also alleged that we didn't cover the St. Catharines Royal visit, which we covered for the last two days.

1890             COMMISSIONER CRAM:  Yes, mm‑hmm.  And then there was the issue of ‑‑ and I want to look at this map right here.  Within this region that's outlined on the map, how many reporters are actually in‑situ in the region?

1891             MS BELL:  Deborah.

1892             MS WALKER:  We have Niagara news crew located at Niagara College's Glendale Campus in St. Catharines.  It's staffed by one reporter and one cameraman.  However, on any given day, if there is more than one important story to be told in Niagara, we have as many as eight general assignment reporters stationed in Hamilton and they can and will be dispatched to Niagara, if the news of the day warrants.

1893             COMMISSIONER CRAM:  And I want to be clear, I don't care where this person lives, so, I mean, it doesn't matter to me.

1894             MS WALKER:  She's covered Niagara for us for 20 years.

1895             COMMISSIONER CRAM:  And then I wanted to get into apples and oranges ‑‑ and I think I may confuse us all, given the time of day.

1896             TVN says that it will agree to a COL of 34.5 hours original Niagara produced local programming, some of which is news and others of which are the ‑‑ you saw the list they had about wine, 26 programs of wine and other ones going through the list, and so, if I understand it correctly, there would be less news than the full 34.5 hours.

1897             Is that your understanding of the application?

1898             MS BELL:  At this point probably, that there is less news as part of that 34 hours, yes.

1899             COMMISSIONER CRAM:  Yes.  And so, based on what I read in that list of ‑‑ it's about wine and then there's some other ones ‑‑ say, I took it to 20 hours of news and four studios and 90 people, what would you have in terms of a budget then?

1900             Because I compare it to you with 36.5 hours and 75 people and two studios.

1901             Can you give me an estimate of what you think the cost for that news portion, news/public affairs?

1902             MS BELL:  It's a difficult question to answer because we're doing 75 people and 36.5 hours, they're saying 90 people and 20 hours.

1903             I mean, I don't think saying two‑thirds of their locally produced programming is fair because of the disconnect with the number of people needed to staff it.

1904             So, I guess my comment is, I don't think we can translate that.  We can do the math on that budget.  We've tried to.

1905             COMMISSIONER CRAM:  Okay.  Oh, you've tried.

1906             MS BELL:  Yeah.

1907             COMMISSIONER CRAM:  Okay.  So, if let's say 36 hours is what you're doing, and that is news alone; is it, news or is there general interest programming in that?

1908             MR. O'HARA:  29.5 hours strictly news and the rest is reflection.

1909             COMMISSIONER CRAM:  Okay.  And for your 29.5 hours your budget is then back to this four times the cost, TVN's cost or you're including the six hours of some general interest programming?

1910             MR. O'HARA:  Including the reflection.

1911             COMMISSIONER CRAM:  Okay.  And where did you get the $1,900 for the cost per hour of Canadian programming; is that all of this 34.5 hours divided by the total budget?

1912             MS BELL:  That's the total Canadian spending, which includes acquisitions also.

1913             COMMISSIONER CRAM:  Yes, or the repeats.

1914             MS BELL:  That's correct.

1915             COMMISSIONER CRAM:  But it won't really change because the priority programming money just went from the acquired to the...

1916             MS BELL:  That's right.  So, the overall amount doesn't change.  So, on average, it amounts to about $1,900 per hour.

1917             COMMISSIONER CRAM:  Okay.  And, based on your experience, in let's say the Hamilton market, what kind of programming could you produce ‑‑ or acquire, I guess, for that amount of money?

1918             Now, don't forget, they are ones like the Tiny Tot programming and the Chez Hélene and the ones like that.  Would they be able to come in under that amount?

1919             MS BELL:  We know what we spend and it doesn't even come close to that.

1920             I think as we said, in our view, we can't acquire or produce anything, except an infomercial for that amount of money, or perhaps some religious programming.  There's nothing that comes close to that.

1921             COMMISSIONER CRAM:  What about a concert, that young singer and her two sisters and just sort of having one ‑‑

1922             MS BELL:  Can you get a crew out for $1,900?

1923             COMMISSIONER CRAM:  So, your question to your colleagues, Ms Bell, was: can you get a crew out for $1,900 an hour.

1924             MR. O'HARA:  Just the pre‑production planning phase of this attempt to get the technical facilities as well as the on‑board creative to plan the production, to show up, do the production well, to go into post‑production ‑‑ I don't want to bore you with all the details of the formula of putting together good quality programming.

1925             For $1,900 you may show up with one cameraman, possibly two, you may edit hopefully have shot ‑‑ if you've missed anything you can't go back ‑‑ you will edit the program, you will get it on tape.  Will it sound good?  Maybe, maybe not.  You don't have the facilities, nor the infrastructure, nor the know‑how to basically get the product to a higher level.

1926             At $1,900 the meter stops and you're left with what you got.

1927             COMMISSIONER CRAM:  And that's an average cost that I got from you.

1928             So, would there have been any of the programming that you've heard in terms of this application that you would consider would cost less?

1929             MS BELL:  Not to our knowledge.  I should say ‑‑ and I don't mean to sound rude ‑‑ but I can't do a video, like the videos we present to you at hearings for that kind of money.  In fact, they cost several times more than $2,000 an hour ‑‑ $2,000.

1930             So, if you compare us in those terms, you're looking at a very small amount of money for an hour program.

 

1931             COMMISSIONER CRAM:  Thank you, Mr. Chair.  I don't believe I have any other questions.

1932             THE CHAIRPERSON:  Commissioner Langford.

1933             COMMISSIONER LANGFORD:  Just a very tiny question for the record only.

1934             Ms Bell, on page 3 when you were reading the first real paragraph, you said:

                      "In fact, the Toronto market has experienced a 2.4 per cent drop in spot sales...",

1935             But you've written 12.4, which is correct?

1936             MS BELL:  It was a typo.

1937             COMMISSIONER LANGFORD:  So, it's 2.4?

1938             MS BELL:  Yes, it was a typo I had realized after we had printed it.  Sorry about that.

1939             COMMISSIONER LANGFORD:  No, that's fine.  As long as we've got it on the record, thank you.

1940             THE CHAIRPERSON:  Thank you. Those are our questions.

1941             And, Mr. Wilks, I'm going to give you the option.

1942             We're going to break now, it's 7:15.  We can break briefly and you can come back with your reply, or you can come back at nine o'clock in the morning for your reply, so it's up to you.

1943             MR. Wilks:  Mr. Chair, we would prefer to finish this evening.

1944             THE CHAIRPERSON:  Okay.

1945             MR. Wilks:  I just hope all the Commissioners have the stamina.

1946             THE CHAIRPERSON:  We will persevere.

‑‑‑ Laughter / Rires

1947             THE CHAIRPERSON:  Thank you.

1948             We'll break now for ‑‑ will 10 minutes do it for you?

1949             We'll break now for 10 minutes and resume with final reply.

‑‑‑ Upon recessing at 1915 / Suspension à 1915

‑‑‑ Upon resuming at 1925 / Reprise à 1925

1950             THE CHAIRPERSON:  Madame la secrétaire.

1951             THE SECRETARY:  Thank you, Mr. Chairman.

1952             For the record, the intervenors who did not appear today and were listed on the agenda as appearing intervenors will remain on the public file as non‑appearing interventions.

1953             Mr. Wilks, you have 10 minutes for your reply.

REPLY / RÉPLIQUE

1954             MR. WILKS:  I will refrain from re‑introducing my team in the hope that after this arduous day your memory bank still serves you with as to who we are.

1955             I just want to relieve you that I doubt that all of us will actually speak to you, but just in case, the team has been brought forward.

1956             Behind me is rather an interesting array that's taken directly out of our application.   We really put them in the application because we actually anticipated that what would happen in the interventions from the broadcast giants would take place.

1957             We're not going to draw particular emphasis, they're your charts, they're on your websites, they really define who are these intervenors.

1958             What, to us, was fascinating was that the intervenors weren't Citytv, they weren't OMNI, they weren't CH, in essence, they were the corporate people who filed all of the written applications and then today some of the station people finally made it onto the roster.

1959             But the applications really came from these giant corporations.  Each one of these corporations is well over a billion‑dollar corporation.  Just to combine payments on their interest rates on their debt each year these five ‑‑ big five here, is $50‑million, $50‑million just to pay the interest on the debts that they've accumulated.

1960             They want us to look, the people who are in the corporate head offices, want us just to look on a little microscopic look at Toronto, they don't want us to look at the whole picture.

1961             But you need to look at the whole picture because you will see that organizations like CHUM not only has the two television stations that bombard us in this market, they've got 25 speciality channels.  And they claim we're going to cause fragmentation.

1962             If you look at these specialty channels from BCE, CHUM, Quebecor, CanWest and, of course, Rogers, you'll see that the biggest contributors to the national problem of fragmentation ‑‑ which they define as a problem ‑‑ is that they've got it all.

1963             They've got the specialties, they've got the pay, they've got the television stations, they've got the networks, they've got over 95 per cent of commercial television in the country.

1964             And what they're really suggesting to you is, is that there isn't room for a voice like us representing an underserved ‑‑ demonstrably underserved part of Niagara.

1965             Now, they've said so many things that in 10 minutes we're going to have a little difficulty, but what we'd like to talk about is, is that the one thing that we did notice that they all had in common is, is that none of them actually expressed any concern at all about our people, the under‑represented people that have expressed themselves so, I would say, passionately today ‑‑ and they included our team, of course ‑‑ but the people, the people that we represent have spoken to you and I don't believe that those people are exaggerating.

1966             But there are some exaggerations.  For instance, I'm going to start where we ended off.  I'm going to show you a little piece of video for this following reason.

1967             In the CanWest Global application, they suggest that there are two program advisors at CH, two, two nominees from Niagara and they say that those two nominees say that they're doing a wonderful job.

1968             The two nominees are Roberta Jamieson and Dan Patterson.  Now, Dr. Patterson is the President of Niagara College, and Roberta Jamieson is the former Chief of the Six Nations of Grand River.

1969             We'd like to have you look at a little piece of video.

‑‑‑ Video presentation / Présentation vidéo

1970             MR. WILKS:  These people, Mr. Chairman, are not liars and we're not liars.

1971             They've told us, CH, that they have a storefront in that College.  The storefront is a room in the basement that is not attended by any personnel on a full‑time basis, it's fundamentally a storage space.

1972             If you went to the reception desk at Niagara College and you ask, could you tell me where CHCH is?  We did it last week, and no one knew, no one knew.  In fact, it's a room in the basement.  It's a place where they store some gear.  That's the Niagara storefront that represents us from CH.

1973             And I did, by the way, not want to get personal about Laura Sabourin, we like Laura Sabourin.  The fact is, she lives in the Unites States of America.  There's nothing wrong with that, but that is not what we consider to be the kind of representation for somebody to be able to understand the essence of the community.

1974             We think you have to be in a community all the time, to live in it, to understand it, and we don't think that that's good enough, but we do not question her reporting qualities, by the way.  That is definitely not personal.

1975             Now, to some prepared comments that we have made.

1976             This application is undertaking to reach the Golden Horseshoe and, of course, we're on the dark side of the Horseshoe, so who do we get ‑‑ we've seen who the intervenors are and our short rebuttal is aimed at the interventions from these five sprawling, media conglomerates of the commercial television infrastructure in Canada who, together, control this huge percentage of assets and their multi‑million dollars in profits.

1977             These same people, these five people just last week received from the taxpayers of Canada through our funds for programming $28‑million in grants.

1978             That would look after us for four years at TVN Niagara.  And they call everything that comes into the marketplace, they call it  Toronto/Hamilton but it really isn't Toronto/Hamilton, it's Toronto/Hamilton and Niagara, but we're the forgotten people.

1979             They sell us, they sell us to their advertisers, they've been doing that for 50 years, they've been taking the money but they haven't been holding the mirror up to us.

1980             All we're suggesting now, they've got 118 of those channels coming in at us, 118 specialty channels, 118 over‑the‑air broadcast channels, pay channels coming into this marketplace.

1981             All we're asking for is one voice to answer back.  And it's your rules, not ours.  You said that the purpose of the system is to relate the diverse regions, one to the other, and that we need to have more voices other than the dominant voices from Toronto and Montreal.

1982             We believe you mean what you said.

1983             Now, we've been challenged just dramatically here today on some points that we need to address.  One of them is, for instance, one of the companies suggested that we could not produce retail commercials for under $10,000.

1984             Well, I can actually understand why they're having difficulties, if that really is their attitude.  That means they clearly don't understand retail.

1985             Most retail advertising is done, in fact, without any costs to the advertiser, it's put in packages and in most television stations the commercial revenue is subsidized by the television and it's a loss leader.  Now, it's big business.

1986             Let me just tell you how big it is.  At the television station in Edmonton, which I founded, the business was $5‑million a year in production, it was the largest revenue of commercial production, of any production house in the country.  Now, that's not reported to you at the CRTC, because that revenue is not part of the revenue that they pay their licence fees on, the revenue that they get from commercial production.

1987             But I can tell you the truth, only this, I've got people at this table ‑‑ and I want Joan to address this ‑‑ she worked at Multi‑Lingual television, she worked at Citytv, she knows what the real cost of producing commercials was.  And, also, Joan Mitzi Fry also knows the cost to programming and she was one of the producers that has worked laboriously in that system, learned her trade at those television stations.  What's the real story?

1988             MS FRY:  Mr. Chairman, I basically learned my skills at Multi‑Lingual before it morphed and became CFMT and also at Citytv, and basically the costs were minimal, probably one‑tenth of what our learned colleague had said earlier.  We could produce commercials for under a thousand dollars.  We learned to be very efficient with the teams that we had on hand and with our talented staff, and a lot of times it's multi‑tasking, it's efficiency use of time.

1989             In our case, we're going to be able to produce our six and 10 o'clock news using the same crew and the same staff to keep things efficient and below the line.

1990             MR. WILKS:  And it was also suggested that the equipment, the high‑definition equipment we're using is inadequate.

1991             Well, ladies and gentlemen of the Commission, I just wish to inform you that we'd be glad to provide you with the written evidence.  These are not estimates as to what the equipment will cost, we are basing our file with you with actual quotes, these are not estimates, they are quotes.

1992             And the quotes, by the way, are good enough for ESPN in New York, which has just been serviced with the complete Quantel System that we're using.

1993             The entire British Broadcasting Corporation, BBC in London, has just been re‑fitted with the Quantel System that we're using as a server base and our editing base in this corporation.

1994             The cameras are the top flight cameras in the world that everybody will be using.  I'd like to know any point where there's any inferiority in technology, in fact, I think what the case is, the real case is, is that these giants have now got to make the transition into HDTV and they haven't done it yet, they don't know where they're going.

1995             In fact, we ran into their ‑‑ at the NAB even, CanWest Global had 22 engineers at the NAB convention in Las Vegas because they're just gearing up.

1996             THE SECRETARY:  Mr. Wilks, your time has expired.

1997             MR. WILKS:  Ladies and gentlemen, the point really is, is that we do think that in this system there should be room for regional and local expression.

1998             You've talked about it consistently, about the need for more local programming in the country.  The CBC tried to get the Parliament of Canada to appropriate an extra $80‑million in the last budget ‑‑ which they didn't get ‑‑ to increase local programming.

1999             Local programming has been a mantra.  You've been repeating it.  We're responding to that call, and we represent a group of people that have eloquently expressed themselves that they're ready and we're ready.

2000             We're professionals, we're not amateurs at this business.  I can just simply say, I became an honourary citizen of Hamilton ‑‑ they may want the key back after today ‑‑ for programming that I produced at CH Television.  In fact, in 50 years, the staff themselves said in the 50th anniversary presentations, that the programming that we produced with them was the best programming that they ever produced of all programs.

2001             So, ladies and gentlemen of the Commission, we know what we're doing and we're not amateurs and the prices on programmings and the misinformation and the contradictory evidence that's been presented today, this team is prepared to dash almost every one of those arguments, but we're prepared to leave it in your august hands.

2002             THE CHAIRPERSON:  Thank you, Mr. Wilks.

2003             I am going to ask you to comment on specific points that were made today, which will perhaps help you to address them, I know you haven't had a great amount of time, just to get your comments for the record.

2004             I could start in any number of ways, but the one number that ‑‑ let me back up a little.

2005             When you say you can use HD equipment ‑‑ an HD fully equipped system, and CHUM says, well, we looked at that for our smaller markets and we could not find a way of doing that in a viable kind of way.  Those are kind of qualitative statements, we don't have many numbers.

2006             Your answer is, basically, I hear you saying, well, we can and we're going to do it.  And we are left with, they say they can't, you say you can and, so, we are not that much farther ahead.

2007             I mean, do you have any further comment on that?

2008             MR. WILKS:  Well, only that if we were guessing then, in fact, there may be some merit in those kind of comments, but we're not guessing.

2009             We went to all of the major manufacturers in the world really in this technology base, we spent over two years researching the subject and we really made our decision based on quotes, not on imaginary airy‑fairy numbers, these are real and they're actual.

2010             They're going to all have to make this transition.  I think maybe one of their fears is, is that oh my, this little television station in Niagara is going to be on the air as a full HDTV service before we've even made the transition with our stations.  I can see that would be a bit perplexing for them.

2011             MR. THIBAULT:  If I may add, one of the things that they mentioned was that they found it not viable at this time.  One of the reasons they wouldn't find it viable is, is from a capital sense they already have a tremendous amount of equipment on the books with a dollar value to it.  Now, they're talking about having to replace all of that equipment and having, basically, two sets of equipment on the books, where only being able to use one set of equipment.

2012             That is the problem for their viability.  However, we're starting from a point where we don't have anything to begin with at all and, so, therefore, it works just perfectly fine for us.

2013             THE CHAIRPERSON:  Okay.  And we have not gone through the exercise, I suppose we could ask you file your quotes but, in effect ‑‑ and if you would like to do that, we can do it and we will let the intervenors see those quotes and give us a reply as to whether you can, in effect, mount a station that is going to be fully digital based on the economics that you have.

2014             I don't know how many of those quotes are confidential, but I think it would only be helpful if, in fact, others could have a look at it and assess it.

2015             MR. WILKS:  They're extraordinarily detailed and they're ‑‑

2016             THE CHAIRPERSON:  Are they confidential, or are they...

2017             MR. WILKS:  I would have to ask the corporations whether they are or not, but I doubt it.  I think that these are industry standards and I think that they would like the whole industry to know how good the pricing is.

2018             THE CHAIRPERSON:  Well, why don't I leave it with you as ‑‑ Mr. Storey, did you want to add something?

2019             MR. STOREY:  Yeah.  I'd just like to add that the concept that we've come up with with this high‑definition plant is we designed the plant in a manner totally different from conventional television, how they used to build them.  We built this on a digital infrastructure that is using server‑based technology.

2020             THE CHAIRPERSON:  That is using what technology?

2021             MR. STOREY:  Server‑based technology.

2022             THE CHAIRPERSON:  Server‑based.

2023             MR. STOREY:  Technology that is ‑‑ we would have three news edit suites, two high‑end edit suites and each reporter would have access to the low resolution version of any of the clips on the server.

2024             So, it negates having screening areas or anything, because the desk top is your screening area, so we're saving funds in many different areas.

2025             And because we're building the plant as a high‑definition plant from the beginning, we have basically one box that down converts that signal, grades that signal ‑‑ if you want to put it that way ‑‑ to NTSC.

2026             Our transition to high‑definition is there.

2027             THE CHAIRPERSON:  Right.  Well, if you want to put forward documentation to support the economics and the viability of that proposition and submit it to us, as I say, we will circulate it to intervenors for their comments and consider it at that point.

2028             A second point ‑‑ a related point is the resources, you have, I think it's $19.5‑million of capital placed.  Well, there is a lot of doubt being cast on your ability to start up and operate at that level.

2029             My question here is, what do you do if, in fact, you run out of money?  What happens at that point, despite your best wishes?

2030             MR. WILKS:  Our senior financial consultant, who is also a shareholder, is here with us.  Kevin Snook has an M.Ba. from Columbia and he knows what he's talking about.  He's examined this question closely as it relates to our unanimous shareholders' agreement and the options for further financing.

2031             Kevin.

2032             MR. SNOOK:  I think the ‑‑

2033             THE CHAIRPERSON:  Just before you answer.  You have a lot of, let's call them small investors in your group.

2034             MR. SNOOK:  Yes.

2035             THE CHAIRPERSON:  And nothing small investors hate to hear more than the words 'capital call', and I don't know the extent to which they have committed to you beyond that 19.5.

2036             MR. SNOOK:  Well, why don't I ‑‑ if I could, why don't I just run through that briefly for you.

2037             I'm I believe the mysterious green eye shade person that's been referred to a couple of times.

2038             At the present time we expect that TVN will be financed with approximately $8.9‑million in equity from shareholders, of which about 1.2‑million has been contributed to date.

2039             We would expect to have 5.6‑million in capital lease financing and an operating line with a commercial bank of approximately $5‑million.  So, I think that makes up the approximately $19‑million you were referring to.

2040             And we've recently just confirmed the availability of the lease and bank financing that was in the original application.

2041             So, I think the question that you're asking is: if there's unexpected losses or capital equipment cost overruns, or something like that, how would we deal with that.

2042             The first point I think is that we believe that we have adequate liquidity from the existing capital sources that we have.  At the core of that is what's, frankly, an extraordinary group of shareholders, all of whom

are individuals of substantial means, or corporations which are owned by such individuals or major institutional investors, and the majority of those are from Niagara.

2043             First, the company's financial projections indicate that the company will not actually draw on its $5‑million line of credit.  So, that line of credit provides an initial cushion in the first year in the amount of approximately a million dollars and then, as revenues and accounts receivables grow, the availability under that line ‑‑ but, without going into the details ‑‑ you can see from the projections that we don't actually draw any capital on that line of credit.

2044             Secondly, as Mr. Wilks pointed out, TVN is governed by a shareholders' agreement which is typical of many private companies with multiple shareholders, as I'm sure you're aware.

2045             The shareholders' agreement provides that there is ‑‑ the Board of Directors has the ability automatically to draw an additional 20 per cent of the equity investment.  So, in other words, 20 per cent of the $9‑million can be automatically drawn down from the shareholders, and the shareholders have already committed to that.

2046             So, that provides an additional $2‑million cushion in terms of equity.

2047             Thirdly, the shareholders' agreement provides ‑‑ again, these are typical provisions ‑‑ but that would direct the Board of Directors to initially, if the company required more financing, to seek bank financing, but in the event that either the Board felt that wasn't prudent or such financing was not available, that the shareholders' agreement provides that the Board has the ability to raise additional equity capital that would require two‑thirds approval of the shareholders and, also, the existing shareholders would have the right of first refusal, but the company has the ability to go out and to raise additional equity capital either from its existing shareholders or from new shareholders.

2048             THE CHAIRPERSON:  It has the ability, but you are saying that, in addition to the 19.5, you are saying you have an additional commitment from the shareholders to a further 2‑million?

2049             MR. SNOOK:  Yes, exactly.

2050             THE CHAIRPERSON:  And is there anything more that is committed?

2051             MR. SNOOK:  In terms of what's in the shareholders ‑‑ in terms of what's committed under the shareholders' agreement, no, but there is ‑‑ the shareholders' agreement contemplates that the company may require more equity capital and it makes provision for a mechanism either for the existing shareholders to put that in, or else to go out and get additional equity capital outside.

2052             I might also ‑‑ maybe I could give you an example that might help in this, and that's, if the ‑‑ because we've been talking about capital cost, the cost of capital equipment.

2053             If it were ‑‑ if the budgets ‑‑ the capital equipment budgets that have been put together, if there was a cost overrun on that, in other words, equipment costs another million dollars more than is in the existing budget, the lease proposal that we have, the existing lease proposal that we have ‑‑ and we can certainly can other leasing proposals ‑‑ is based on the budget that was submitted to them and it provides that the company would contribute 20 per cent of the capital ‑‑ of the cost of the capital equipment in equity and the additional 80 per cent would be financed on a lease basis.

2054             So, we have no reason to believe if there was an additional million dollars of capital equipment, that we wouldn't be able to add to the existing lease proposal that we have, because the lease proposal was generated in response to a specific budget that we gave them.

2055             THE CHAIRPERSON:  Right.  I hear what you are saying.  I guess the Commission is coming off two recent experiences of trusting new licensees with new concepts, one in Vancouver and Winnipeg with Trinity and finding that the Winnipeg station never even got launched, and the Vancouver station essentially didn't succeed ‑‑ it was a religious concept in that case ‑‑ and there is a second owner now that has taken that over.

2056             The same with Toronto 1 which found itself very quickly ‑‑ and it had bank letters and so on ‑‑ and it found itself going way over the mark, having to go to lenders who exacted fairly onerous terms and, at the end of the day, couldn't make it either.

2057             So, you appreciate our concern in a marketplace where the closest incumbent, CH is, as they said, facing serious financial difficulties on its own.

2058             And, so, from the point of the view of the likelihood of the success of this venture, you can understand our concerns.

2059             MR. SNOOK:  Yes, I think your concerns are well taken, given some of the recent experiences in the marketplace.

2060             But, you know, you've heard from some of the investors in this, the basis for their investment in the business, and it's quite a detailed understanding of the marketplace.

2061             I can only speak for the fund of which I'm the investment manager, but we would certainly be prepared to look at making an additional investment in the business and we have factored in the additional 20 per cent, you know, potential equity call that there would be.

2062             THE CHAIRPERSON:  Okay.  I would like you, while we are on this CHCH point, to also comment on a number of points that they raised in their remarks, Mr. Wilks.

2063             One was the average cost per hour of $1,900 ‑‑ this is page 6 of their statement ‑‑ and this was the General Manager of Patrick O'Hara saying that he:

                      "...could neither produce nor acquire any type of Canadian programming for that amount of money, aside from perhaps Infomercials and paid religious programming.

                          The applicant's business plan proposes a Canadian programming budget of $35‑million over seven years, which represent what we and others spend over a two‑year period."

2064             Do you have any comment on those comments?

2065             MR. WILKS:  Not without being mean, and it's late in the day and it's not proper for me to really comment on what they are doing.

2066             But the fact is, is that when Global bought CH, the first thing they did is 85 people got their walking papers.

2067             My engineers, one of them, he built their 10‑camera digital mobile unit and then when CanWest Global took the corporation they no longer have that 10‑camera digital mobile unit at the company.  They basically shot at their studios and their newsroom.  They have a newsroom.

2068             They moved master control to Toronto.  There's no accountants at CHCH.  The master control for the station in Hamilton is in Toronto.  They tell us that, of course, they're now on declining fortunes, but this is all sophistry, in the sense that, it's like watch the ball and I'll do some little tricks for you here.

2069             What it really is, is they'll take a program like 24, which was a Fox program with Kiefer Sutherland the Canadian who was honoured on our Walk of Fame in Toronto, they started the first year of that program, it ran on CH and it went through the roof and the ratings and, of course, that was just a good farm team kind of exercise, it then moves over to the big network, over to Global Television.  So, in essence, artificially you had a real winner and you transferred it to over to one of your other assets which reaches far more people.

2070             And they also give us this impression, Mr. Chairman, that CH is just this little station that serves Hamilton, Halton and Niagara.  I mean, let's really deal with it, it's a provincial television station.  It was called ONtv because they were licensed with a number of re‑broadcasting television statistics.

2071             And, you know, you know the phenomena, but the people and the public don't, they don't know that there's a CH in Red Deer now, that there's a CH in Victoria, that there's a CH in Montreal.  I mean, it's a national brand that they're selling right now.

2072             You know, it just isn't me that says this.  All you really need to do is to look at their multi‑media holdings of CanWest Global of which CH is one ‑‑

2073             THE CHAIRPERSON:  Excuse me, I don't want to interrupt you in full flight, Mr. Wilks, but my questions were about the $35‑million program budget.

2074             MR. WILKS:  But $1,900.  I just say this to you, tomorrow morning when you wake up, do yourself a favour, turn on Channel 11 and the Morning Show and watch their morning show and you tell me where they spend $1.95, let alone $1,900.

2075             You just have to look at it to say, where are they spending that money?  I don't know what they're doing and I have not taken the time to examine it because I don't have their internal numbers, except I know what I seen on the screen.

2076             In fact, CTS in their comments about us said we're paying our employees too much.  In fact, their big complaint was, we're going to affect the marketplace because we're paying our 90 employees above the industry scales.  The next group of people come up here and tell you that we don't have enough money for the people that we're  hiring.

2077             But, they're all professionals.  So, it's just a question of, I don't know how they would ever arrive at that kind of summation.  I guess they forget ‑‑ Ed is saying, below the line ‑‑ and it is ‑‑ the definitions about where they're spending the money, below the line is all technology driven, it's all the people at the technical level that provide all of the services of production.

2078             The other budget is above the line.  This is where the money is actually expended, on the outside talent that you bring into the equation.

2079             We're suggesting that the programs that we produce, they're programs like with Michael Coren, which is the program that we put together, for instance, it's a daily show and basically the only person you're paying is the producer who's also the host and he has one or two researchers and the rest of the cost is technology, below the line.

2080             And that kind of programming has been a staple, even on CH for many, many years, that kind of production.  They're changed now, under Mr. O'Hara's tutelage apparently, but it's certainly not obvious where they're spending it.

2081             THE CHAIRPERSON:  So, your answer to the comments of other broadcasters who say that your Canadian programming budget is far too low, and the case again I quote it for the third time: 35‑million over seven years, which is what they spend in two years; your comment is, so, that's what they spend and we're going to spend a lot less and that's it?

2082             MR. WILKS:  Pretty much so.  I think they're trying to characterize us a Toronto television station and we, clearly, are not intending to be a Toronto television station.

2083             That's the fundamental error that they're making.

2084             We're a Niagara television station that has some programming that will of interest to our neighbours in the Golden Horseshoe.  It's not big and it never was intended to be big.  We had to cut the cloth to fit.

2085             By the way, we have three times the equity that Toronto 1 has ‑‑ had when they were licensed.  Three times.

2086             THE CHAIRPERSON:  The comment by CHUM, you may feel you have already commented on it, but there point is that unless ‑‑ and I guess this is a similar number to the one Quebecor put on the table ‑‑ Toronto 1 was, that unless you spend $3,500 per telecast you're going to get the kind of programming that is never going to drive the half a rating point that you require in prime time.

2087             Do you have any further comment to make on that?

2088             MR. WILKS:  My colleague David, you did some research just a few minutes ago, went on the web to find out some facts about Toronto 1 and their movies.

2089             MR. BUCKHALTER:  Well, it's interesting ‑‑ I just wanted to comment on their characterization of their movies is having an adult 25‑54 skew as per TVN's movie objectives for audience.

2090             And a quick view of the next 10 days on their schedule shows some movies that certainly seem to dispel that, in that some of the offerings are:  "Streets of Fire", "Necessary Roughness", "Passenger 57", "Hot Shots", "Hot Shots:  Part Deux", "Twister", "Robocop", "The Art of War", "Rudy", "Mrs. Doubtfire", those are 10 examples of movies that I would suggest that definitely do not have an adult 25‑54 skew, a rather 18‑34, 18‑49 skew.

2091             THE CHAIRPERSON:  Okay.  What about their point about ‑‑ this is CHUM's point ‑‑ but if you spend the amounts that you are talking about that you are, effectively, not going to achieve the ratings and to achieve the ratings you have to spend $3,500 per telecast not $1,500?

2092             MR. BUCKHALTER:  I guess in terms of the analysis of the marketplace and the ratings that have been generated over the past three‑year period for the movie genre, and as per our study that the ratings, the differential went from a low .7 to a high of 2.9, again, are movies that weren't necessarily directed towards the adult 25‑54 skew.

2093             I think that the rating objective of a .5 is extremely conservative given the past ‑‑ most recent history of the past three years, in addition to the fact that the movies, in terms of where they're competing, we're not competing against anyone else's offerings because the movies are pre‑release, if you were, in terms of not going up against that heavy competition, time block at 8:00 p.m.

2094             So, it's a matter of ‑‑ it's a subjective matter in terms of ‑‑

2095             THE CHAIRPERSON:  I have your answer.

2096             MR. WILKS:  I would add, just simply, Mr. Chairman, that we met with the distributors.  We looked at their massive libraries, and I mean they're massive, they're bigger than phone books, and they have that great collection ‑‑ vaults full of them ‑‑ and we set out to identify within that group, the movies that we identified, 750 titles that we submitted to the Commission in different categories, 50 in each category of the great movies and we ‑‑ they told us ‑‑ and these were all of the majors, there was no single exception, and then there's a critical relationship which we intend to have with one major United States supplier which is Time Warner which is the Turner classic library, which is probably the most prominent library of that type of library in the entire world.

2097             And we're absolutely confident that the relationship not only delivers us the movie for the prices that we've said, it also delivers with it the showcase packages which include the pre‑packaged promotion announcements that you allow to tell your viewers about the upcoming movies, the interstitial kind of support that you get along with the movies, the kind of advertising support that you can use to put it into the marketplace.

2098             We didn't do this on the basis of not going in, having talks with them and get very detailed.

2099             Now, I think what the problem with these people with the big corporations is, is that they actually ‑‑ I think, maybe it may be a generational thing, but they don't really understand why the Caine Mutiny, the original version might have some cache with an audience.

2100             They don't really understand how the great movies of Alfred Hitchcock, because I don't think they may have experienced them themselves, I think there may be a generational gap here and that's why they, I think, honestly don't understand why people would like those great classic movies.

2101             But we say that there is an audience, but it's an audience that none of them have been serving, so why would they know about what that audience likes.

2102             THE CHAIRPERSON:  So, do I take it from what you have just said that you have had discussions with Time Warner and other distributors‑‑

2103             MR. WILKS:  Yes.

2104             THE CHAIRPERSON:  ‑‑on the titles that you presented to us and that, on those titles, you can get those for $1,500 a telecast; is that what you are saying?

2105             MR. WILKS:  What we said ‑‑ just to refresh your memory ‑‑ we said that our average price would be $5,000 per title and then we amortize it with three to five runs.

2106             Every distributor tries to sell you the minimum amount of runs in the shortest period of time, we try to get the longest period of time to play it off and with the maximum number of runs.

2107             THE CHAIRPERSON:  So, those are the $5,000 titles and you have confirmed that you can get those for those prices?

2108             MR. WILKS:  We have.

2109             THE CHAIRPERSON:  But what is your confidence level other than what you have just said, your belief that people undervalue classics and they are an undiscovered forum that will be much more popular than people think, generation gap and so on.

2110             What is your evidence for thinking that those $5,000 titles, contrary to, say, the assertions of CHUM and others, will generate the half a rating point that you need?

2111             Perhaps you could summarize that for me.

2112             MR. WILKS:  Go ahead.

2113             MR. COWAN:  Well, certainly as part of the research package that we've put out there on a number of levels we asked them.  You know, we just asked the people in our research if they would respond to that kind of programming.  And a lot of them did, most of them ‑‑ enough of them did to say, okay, we think we have a skew here, no one else is doing it, if they have to get it they have to go to a Block Buster or they have to go pay television somewhere, they have to go to maybe a speciality that maybe they're paying for ‑‑ one way or another ‑‑ on conventional television.

2114             They were getting it from TVO for a while, once a week, and ‑‑ but we're going to give it to them every day.

2115             THE CHAIRPERSON:  Okay.  Well, I think that is ‑‑ oh, there is one further one, and I know Commissioner Langford has two questions ‑‑ and that was in the CTS intervention, the chart was drawn to our attention, again today by, I think it was CHUM, as to the impact of your revenues from national spot sales, I take it, from Toronto.

2116             Do you have a copy of that chart?

2117             MR. WILKS:  I recall it.

2118             THE CHAIRPERSON:  Well, it's basically that CTV and CBC would not be impacted, that Global and CHUM would be impacted at one level.

2119             Do you have it there?

2120             MR. WILKS:  Mm‑hmm, yes.

2121             THE CHAIRPERSON:  Do you have any comments on that analysis as to the impact of ‑‑ this is based on your first year national revenues?

2122             MR. WILKS:  No, only that my dear friends at CTS exaggerate their own importance in a marketplace.  This is a religious television station.

2123             However, one could argue that "Happy Days", that my friend Gary Marshall produces, if he knew that he was producing a religious program he would be a bit shocked.  But the fact is, is that the Little House on the Prairies and the Waltons, if you look at CTS' schedule from 1:30 in the afternoon until 8:30 at night, Monday through Friday, their schedule is 71 per cent syndicated off‑network, United States programming, and it's called religious programming.

2124             Actually, we don't mind the fact that they use that programming so that they can produce ‑‑ take the products, if they make any, and invest them in representing the great religions of the world, no more than we object to OMNI doing the same to increase ethnic expression in Canada.

2125             What we really ‑‑ all we really are talking about is we object ‑‑ is about giving them expression we're denied.  That kind of a trade‑off is really not acceptable.

2126             But the point on these ‑‑ these numbers are very arbitrary, that each guy would get $647,000 off his station.  I just don't think that that can be proven.

2127             I don't think on CTS' case that it will even be a fraction of that and there's no way to know.  We know that if we got a half‑rating point we could get the $6‑million in national ad sales out of the Toronto marketplace, but there's no way for us to know where it's going.

2128             We've got a $4‑billion pie in all the specialty channels and all the over‑the‑air television stations and networks and we're looking for $6‑million.  They want us to look at just the $700‑million in Toronto.

2129             What we're just simply saying is, is that they have the entire country, from coast‑to‑coast‑to‑coast and they want us to narrow in on just looking at a little microcosm of who they are, but we know who's micro, it's us, in the land of the giants.

2130             THE CHAIRPERSON:  You're familiar with CRTC's procedures over the years and a conventional station is licensed for a given market, as you know.

2131             MR. WILKS:  Yes.

2132             THE CHAIRPERSON:  It's not the deep resources of the players, although resources are always helpful, and it's not ‑‑ in the national context, it's an effort to look at the conditions in the market that we look at.

2133             MR. BUCKHALTER:  I think the conditions in the market, three of the intervenors mentioned that now isn't the right now, and a colleague of mine over there as we were listening said to me, why?  Why isn't it the right time?

2134             I quote:  Toronto/Hamilton is the richest, most affluent market in the country.  If it can't be done here, where can it be done?

2135             And if not now, then when?

2136             Even after the licence of both OMNI 2 as well as Toronto 1 in terms of their introduction to the marketplace in Ontario, if you look at the past two years, from 2002‑2004 in national time sales, the numbers are up by 21 per cent after the introduction of the stations.

2137             If you relay that back to the Toronto/Hamilton market, the market is up by 16 per cent, or $83.5‑million according to CRTC figures, after the introduction of those stations.

2138             Going back to CanWest's intervention where they talk about the pre‑tax profits ‑‑ I may sound repetitive, but at the risk of sounding repetitive ‑‑ where they claimed that the Toronto/Hamilton market is the most profitable in terms of pre‑tax in comparison with the Canadian average over the past two years.

2139             THE CHAIRPERSON:  Thank you.

2140             Commissioner Langford.

2141             COMMISSIONER LANGFORD:  Thank you, Mr. Chairman.

2142             I have really just two questions and I'm afraid I've forgotten your name, sir, you were talking about the numbers.

2143             MR. SNOOK:  Kevin Snook.

2144             COMMISSIONER LANGFORD:  Kevin...?

2145             MR. SNOOK:  Snook.  Sorry, my name plaque has disappeared.  Kevin Snook.

2146             COMMISSIONER LANGFORD:  Thank you.

2147             It's to you I'd like to direct these but, of course, it's your application and certainly anyone can jump in and answer them, and if I've misdirected them to the wrong member of your team, that's fine, just as a long as someone gets a shot at answering them.

2148             I think I was jotting notes very quickly as you went along and I think what you said ‑‑ and I'm talking in round numbers here ‑‑ is that the capital invested so far is around 1.2‑million by the shareholders.

2149             MR. SNOOK:  Yes, that's right.

2150             COMMISSIONER LANGFORD:  And then they've committed to a further 8‑million, and that you're looking at lease financing of 5‑million and an operating line of 5‑million to bring us to, more or less, the magic 19‑million.

2151             Have I got that about right?

2152             MR. SNOOK:  Yes, it's about right.  The lease financing is 5.6.

2153             COMMISSIONER LANGFORD:  Okay.  Now, then you said, I think you said that you were hoping not to have to use the operating line of 5‑million in the first year.  Is that correct?

2154             MR. SNOOK:  No, what I said was that the financial projections that have been developed that, you know, are backed by all of the other discussion around rating points and revenue and that kind of thing, indicate that the company through the seven‑year licence period would not actually draw on the line of credit, and, so, what that means, in fact, is that the company would actually have a positive cash balance through that period.

2155             COMMISSIONER LANGFORD:  Well, I'm trying to put this together late in the day, so bear with me.

2156             But is then your hope or your plan to really start this station up, this service up on 14‑million, is that really the hope?  If you're not going to touch the operating line, if that's the hope, is your real plan to commit $14‑million; you've got the other five there if you need it, but have you actually planned to try to do it for 14?

2157             MR. SNOOK:  Yeah, I might ask Frank to confirm those numbers, but that's the financial plan that we're working on.

2158             MR. THIBAULT:  That's the way the numbers work out, yes.

2159             COMMISSIONER LANGFORD:  Right, okay.  Thank you, I just wanted to be clear on that.  I mean, I know you've filed charts upon charts, but we're late in the day and people say things and I just ‑‑ you know, tomorrow will be too late to check it.

2160             So, my second question refers to the further commitment you indicated in the shareholders' agreement to put up another 20 per cent, if required.  What would that be 20 per cent of?

2161             MR. SNOOK:  It's 20 per cent of  what, if I can call it, the original equity contribution of the business, again, it's in the charts that we have filed with you, but that's approximately 8.9 million.

2162             COMMISSIONER LANGFORD:  So, around nine, we're calling it around nine.

2163             MR. SNOOK:  Yeah.

2164             COMMISSIONER LANGFORD:  Well, it doesn't include then the full 19 that's available, in a sense.

2165             MR. SNOOK:  No.

2166             COMMISSIONER LANGFORD:  Some from financing some from line?

2167             MR. SNOOK:  Yes, I'm sorry, I probably did a bad job of that.

2168             COMMISSIONER LANGFORD:  No, you didn't necessarily at all, I just wanted to make sure I understood it correctly.

2169             MR. SNOOK:  What I had tried to lay out was the company's capital structure sort of going from the bottom up, rather than the top down perhaps, but the original equity contribution committed to by the shareholders is $9‑million.

2170             COMMISSIONER LANGFORD:  Right.

2171             MR. SNOOK:  There is the potential of an additional automatic draw, in other words, it doesn't require shareholder approval, the Board of Directors just needs to determine that the company needs additional capital of an additional 20 per cent, in round numbers, say, $2‑million.

2172             COMMISSIONER LANGFORD:  Right.

2173             MR. SNOOK:  And then on top of that there is a lease ‑‑ capital lease facility that I described before that is currently 5.6 that I was thinking came through before.  If the cost of the capital equipment were larger than that, I'm fully confident that we could get a larger capital lease package.

2174             COMMISSIONER LANGFORD:  And what order does the financing come in?  Obviously the 9‑million committed up front is first, then do you have to use up the operating line of 5.6 before you go after the further 20 per cent, or is it the other order ‑‑ the other way?

2175             MR. SNOOK:  No, the $5‑million operating line is intended as what one would call a working capital facility.

2176             So, in other words, it would finance receivables, it would be available to finance short‑term operating losses in the business and, so, that's just ‑‑ it's a line of credit that the company would have the ability to draw on as long as it has the accounts receivable as security for it.

2177             So, in other words, you couldn't be able to draw on the line of credit until the business was actually operating and had generated accounts receivable to provide security for the line of credit.

2178             COMMISSIONER LANGFORD:  So, the 20 per cent would definitely would have to come in before that was used, the further 20 per cent if more equipment was needed?

2179             MR. SNOOK:  Well, I think if more equipment was needed our first approach would simply be to go to the lessor who would provide the financing for the capital equipment and say, we're buying more equipment and we would contribute ‑‑ and this, again, I hope this doesn't confuse anybody because it's the same number ‑‑ but the term sheet, the proposal that we have from the leasing company for every, say, million dollars of capital equipment‑‑

2180             COMMISSIONER LANGFORD:  Mm‑hmm.

2181             MR. SNOOK:  ‑‑they would provide 800,000 of that and they would expect the company, as an equity contribution to the lease to put in $200,000 of that, in other words, 20 per cent.

2182             So, the example that I gave before ‑‑

2183             COMMISSIONER LANGFORD:  So, that's how you would use up the extra 20 per cent in those top‑up payments against the lease?

2184             MR. SNOOK:  That could be one possible use of it, yes.

2185             COMMISSIONER LANGFORD:  Okay.  Everybody clear on that, other than me?

‑‑‑ Laughter / Rires

2186             COMMISSIONER LANGFORD:  It's just not clear to me when you make the call for the further 20 per cent, that's the thing ‑‑

2187             MR. SNOOK:  Let me try to be absolutely crystal clear about it.

2188             The additional 20 per cent call is, the Board of Directors of TVN Niagara can call that capital from shareholders at any time at their discretion after the company receives CRTC approval, licence approval.

2189             And so, they ‑‑ if they wake up one morning ‑‑ just to be silly about it ‑‑ and decide that they want to have another $2‑million in the bank account, they can call that and the company's subscription agreement legally binds and commits the investors to put up that money.

2190             COMMISSIONER LANGFORD:  So, there's no order to it at all, when they want to call, they call?

2191             MR. SNOOK:  No.  What may have confused it before is I was just getting into a little bit of the legal documentation of the shareholders' agreement.

2192             But, as I said before, this is what I deal in most days when I'm not at CRTC hearings...

2193             COMMISSIONER LANGFORD:  Better you than me.  No, I think your answer is clear and I don't want to work anybody just for the sheer joy of doing it.

2194             Thank you very much, Mr. Chairman.

‑‑‑ Laughter / Rires

2195             THE CHAIRPERSON:  Commissioner Cram.

2196             COMMISSIONER CRAM:  Thank you.

2197             Mr. Wilks, the $1,900 per hour number, it was raised by Global ‑‑ CanWest in their initial submission.

2198             Based on the pure mathematics of it, do you or do you not agree with that number, based on your projections?

2199             MR. WILKS:  The $1,900 an hour.  I think that's right.

2200             COMMISSIONER CRAM:  That's right?

2201             MR. WILKS:  Yes.

2202             COMMISSIONER CRAM:  And, so, if I've got it correct that's an average and you've got 20 hours of news.  Surely with 90 people your cost for your news per hour is going to be far higher than $1,900?

2203             MR. WILKS:  Well, Frank was the architect of the math.

2204             COMMISSIONER CRAM:  So, what is your average cost per hour for news?

2205             MR. THIBAULT:  If you could just give me a minute to work that out, I'll get it to you in just a second.

2206             COMMISSIONER CRAM:  And I would like an audience share that you expect from that.

2207             MR. THIBAULT:  Okay.

2208             COMMISSIONER CRAM:  And I guess I also wanted all of your non‑news programming, Niagara Now, Six Nations Report, Village Square, The Buck Stops Here, Niagara Newsmaker, Niagara Today, Wines of Niagara, Garden City, Niagara College and Brock University, and I would like a breakdown of your costs per hour on each one of those and the audience share you project to get.

2209             And if you could give it to us, I guess, within a week.

2210             MR. WILKS:  No, we can certainly ‑‑ we'd have it for you tomorrow before you leave, for sure.

2211             COMMISSIONER CRAM:  Just take a week.  Because I guess I'm having a difficult time conceiving how it can be an average of 1,900 an hour.

2212             Now, I understand ‑‑ I definitely understand that on the non‑news local programming, Mr. Wilks, for example, with the Six Nations Report they will be using your equipment.  Have I got that right?

2213             MR. WILKS:  Well, no, not entirely, in the sense that Seven Seeds mentioned that they're building a major operation in Oshwegan right on the ‑‑

2214             COMMISSIONER CRAM:  Right, but until then.

2215             MR. WILKS:  Until then, but ‑‑ well, I mean, all of their equipment ‑‑ but, no, I'm providing them the cash to get that equipment.  It's a grant of $80,000 to get their basic equipment that delivers the programming.

2216             We also gave them, in that particular instance, the revenue from the program, in the sense that they wanted the rights to be able to work with their Aboriginal relationships to have sponsors sponsor their particular program.  We agreed that they would keep the commercial revenue for that particular program.

2217             So, it's certainly not going to make us any income, but it was a fundamental responsibility that's reflected in the CRTC policy and, of course, they're essential citizens of Niagara.

2218             COMMISSIONER CRAM:  So, can I expect that the cost of some of these local programs then is going to be zero?

2219             MR. WILKS:  Sure.

2220             COMMISSIONER CRAM:  Because the Six Nations Report, they want to get on air and they want access to the airwaves?

2221             MR. WILKS:  Sure.

2222             COMMISSIONER CRAM:  And some of these would be similar?

2223             MR. WILKS:  And, indeed, some of them may be more than 1,900 as a balance.  Some of them may be way down there, some could be 4,000, some could be 500.

2224             COMMISSIONER CRAM:  Okay, thank you.  If we could have that.

2225             MR. WILKS:  We'll give you a complete summary.

2226             COMMISSIONER CRAM:  Within a week.  And the share ‑‑ your share projection what you expect, because again we're talking about the Toronto EM‑‑

2227             MR. WILKS:  Yes.

2228             COMMISSIONER CRAM:  ‑‑and what you're expecting to get by way of an audience for those.

2229             MR. WILKS:  Right.  Well, no, you're talking about the total ratings, including our central market area?

2230             COMMISSIONER CRAM:  Yes.

2231             MR. WILKS:  Yeah.

2232             COMMISSIONER CRAM:  The Toronto EM because you're in the Toronto EM.

2233             MR. WILKS:  Of course.

2234             COMMISSIONER CRAM:  Yes, mm‑hmm.

2235             MR. WILKS:  No, Niagara doesn't exist in the world of television.

2236             COMMISSIONER CRAM:  Thank you.

2237             MR. SNOOK:  Sorry, Commissioner Cram, if I can just add one thing, because people talked about a lot of different numbers.

2238             The 90 people that you're talking about is the total station complement; right, Wendell?

2239             MR. WILKS:  Right.

2240             MR. SNOOK:  That's not the news department.  The news department and the people who generate the programming are a subset of that, and I think that's what Frank is working on at the moment.

2241             MR. WILKS:  Just that there's so many factors to consider.

2242             For instance, we're using robotic cameras.

2243             COMMISSIONER CRAM:  I just heard this morning, you said to Commissioner Cugini that the news and public affairs would be created by the 90 staff.

2244             MR. WILKS:  Yes.

2245             COMMISSIONER CRAM:  And that's what was my absolutely perfect notes, so that's where I was taking that from.

2246             MR. WILKS:  But I did ‑‑ just to clarify that point.  I did think I did say this morning ‑‑ that's been a long time ago this morning ‑‑ but I did say the news contingent is seven full‑time professionals that work in the news department plus the technical staff, for a total contingent that really do nothing except but news, pretty much, are ‑‑ there's 25 persons involved in that group of the 90.

2247             MR. THIBAULT:  I've got that answer worked out on the cost per hour for news.

2248             The figures we filed with the application in section 4.2 have a budget of $2,444,000 for the news department.  We're producing 1,014 hours of news over the course of the year, which works out to $2,410 per hour.

2249             And the other question as far as the share goes, we anticipate the share is going to be somewhere around 16 per cent for the news.

2250             COMMISSIONER CRAM:  Thank you.

2251             MR. WILKS:  We still will file the more comprehensive analysis, program‑by‑program and give you the ‑‑ thus, we have to work on a central market area and then the extended market area analysis.

2252             We recognize that because Niagara doesn't exist technically, from a technical perspective what you're looking for, but for us the thing ‑‑ the strength of the company will clearly be the core programming that brings us a loyal audience in the central area that we serve where we're located.

2253             MR. NEWELL:  Wendell, can I also just clarify one thing.

2254             MR. WILKS:  Yes, please.

2255             MR. NEWELL:  The rating information that you're requesting from us, we're basing it on the Niagara Region, the 12 counties, not on Toronto.  We're not talking about a 16th share in Toronto, we're talking about in the Niagara, 12 counties; correct?

2256             COMMISSIONER CRAM:  And that's why I was asking for the EM, for the Toronto EM, but give us the Niagara ones also.  I don't care.  That's fine.

2257             MR. NEWELL:  Okay.  Well then, the response we gave was for Niagara, not for the EM.

2258             COMMISSIONER CRAM:  That's fine.

2259             MR. NEWELL:  Okay.

2260             THE CHAIRPERSON:  Thank you.

2261             Counsel.

2262             MR. MURDOCK:  Thank you, Mr. Chairman.

2263             Mr. Wilks, I just have one question, just a point of clarification.

2264             Your commitment on the record is for 34.5 hours of local original programming and 25  hours of repeated local.

2265             MR. WILKS:  That's correct.

2266             MR. MURDOCK:  As you know, you are required to broadcast 76 hours of Canadian programming per week, yet your local original and repeated local add to 59.5 hours.

2267             Could you please elaborate on where the remaining 16.5 hours are going to come from, how are you going to fill that in?

2268             MR. WILKS:  Yes.  What we said is, is that the category which has been defined in the block program schedule as Canadian acquired programming would, in fact, not be Canadian acquired programming, it would be programming that we've created from our Niagara resource base and would be made up of repeat programming that we have produced or new production from we've produced from that ‑‑ taking the half million dollar budget that was supplied to create the new programming in some instances.

2269             Some of that is priority programming.  We have a million dollars to the priority programming, but repeat programming was the fundamental programming, repeat programming and programming that we're producing.

2270             We just said that we wouldn't ‑‑ we would lessen the acquired program category, but we will be 60 per cent overall Canadian in overall broadcast schedule from 6:00 a.m. to midnight, and 50 per cent Canadian from, minimum, from 6:00 p.m. and midnight.

2271             MR. MURDOCK:  So then, just to follow up to that, please.  How much will be additional new programming in that 16.5 hours?

2272             MR. WILKS:  In year one, we're not anticipating that there will be any new programming in that programming, it's the 34.5 hours, but we're taking selected repeats throughout the day of the 34.5 hours.

2273             MR. MURDOCK:  Thank you.

2274             I have no further questions, Mr. Chairman.

2275             THE CHAIRPERSON:  Thank you.

2276             Well, it has been a long day.  You have put forth your best efforts and I thank you for it.   Your team has been responsive and informative and all I can say at this stage is thank you and good luck.

2277             MR. WILKS:  Thank you.

2278             Only one comment we would make.  The Commission goes out of its way to suggest that the people participating in our process, to quote:

                      "And we, in our decisions, should have a clear sense that our Commission has given them a fair hearing and that the submission is comprehensible."

2279             We're delighted that you've given us such a fair hearing on really an important day.

2280             This is D‑Day, the invasion of Normandy.

2281             Sixty‑one years ago today my father with the Winnipeg Rifles landed on that beach in Normandy, 61 years ago today, and the closing for us would be simply this:  193 years ago, within just a few days, there was a battle that took place just down the road in Stoney Creek.  When you go back ‑‑ if you're driving back to the Toronto Airport just think about this, it is worth thinking about, the battle took place there where there were 750 troops who were joined by 650 Mohawks from the great Iroquois Nation that repelled the invading 3,000 Americans and more blood was shed in those battles than has been shed so far in the invasion of Iraq by the United States of the American invading forces.

2282             That took place here.  And, interestingly enough, had they succeeded in getting past Stoney Creek, the next place, 193 years ago, that they would have had to confront was the 350 troops at Muddy York which is, of course, now Toronto.

2283             It's a bit of an irony for us that here we are, 193 years later, and these people ‑‑ I remember Sally Fields when she got her Oscar, she said, they like me.

2284             With us, it's: they obviously don't like us in Toronto and it's really hard to understand.  I think it's really because they don't know us, I think it's really time that they did.

2285             It would be terrible to say to the Six Nations of Grand River and our people that 193 years later that blood that we shed was in vain and we probably supported the wrong side.

2286             We want to be included, we want to be included and we're very pleased with the fair hearing that you've given us and we thank you for the love of our hearts.

2287             THE CHAIRPERSON:  Thank you.

‑‑‑ Applause / Applaudissements

2288             THE CHAIRPERSON:  We'll resume tomorrow morning at 9:30.  Nous reprendrons demain matin à 9 h 30

‑‑‑ Whereupon the hearing adjourned at 2035, to resume

    on Tuesday, June 7, 2005 at 0930 / L'audience est

    ajournée à 2035, pour reprendre le mardi 7 juin

    2005 à 0930