ARCHIVÉ -  Transcription

 

 

 

 

 

 

 

              TRANSCRIPT OF PROCEEDINGS BEFORE

             THE CANADIAN RADIO‑TELEVISION AND

               TELECOMMUNICATIONS COMMISSION

 

 

 

 

             TRANSCRIPTION DES AUDIENCES DEVANT

              LE CONSEIL DE LA RADIODIFFUSION

           ET DES TÉLÉCOMMUNICATIONS CANADIENNES

 

 

                       SUBJECT/SUJET:

 

 

 

THE BROADCASTING APPLICATION BY ROGERS MEDIA INC.,

ON BEHALF OF 1708487 ONTARIO INC., 1738700 ONTARIO INC.

 AND CHUM TELEVISION VANCOUVER INC. /

LA DEMANDE EN RADIODIFFUSION PRÉSENTÉE PAR ROGERS MEDIA INC.,

AU NOM DE 1708487 ONTARIO INC., 1738700 ONTARIO INC.

ET CHUM TELEVISION VANCOUVER INC.

 

 

 

 

 

 

 

 

 

 

 

HELD AT:                              TENUE À:

 

Conference Centre                     Centre de conférences

Outaouais Room                        Salle Outaouais

Portage IV                            Portage IV

140 Promenade du Portage              140, promenade du Portage

Gatineau, Quebec                      Gatineau (Québec)

 

August 29, 2007                       Le 29 août 2007

 

 

 

 

 

 

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

 

 

THE BROADCASTING APPLICATION BY ROGERS MEDIA INC.,

ON BEHALF OF 1708487 ONTARIO INC., 1738700 ONTARIO INC.

AND CHUM TELEVISION VANCOUVER INC. /

LA DEMANDE EN RADIODIFFUSION PRÉSENTÉE PAR ROGERS MEDIA INC.,

AU NOM DE 1708487 ONTARIO INC., 1738700 ONTARIO INC.

ET CHUM TELEVISION VANCOUVER INC.

 

 

BEFORE / DEVANT:

 

Konrad von Finckenstein           Chairperson / Président

Rita Cugini                       Commissioner / Conseillère

Helen del Val                     Commissioner / Conseillère

Elizabeth Duncan                  Commissioner / Conseillère

Stuart Langford                   Commissioner / Conseiller

 

 

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Jade Roy                          Secretary / Secrétaire

Stephen Millington                Legal Counsel /

                                  Conseiller juridique

 

 

 

 

 

 

HELD AT:                          TENUE À:

 

Conference Centre                 Centre de conférences

Outaouais Room                    Salle Outaouais

Portage IV                        Portage IV

140 Promenade du Portage          140, promenade du Portage

Gatineau, Quebec                  Gatineau (Québec)

 

August 29, 2007                   Le 29 août 2007

 

- iv -

 

           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

 

                                                 PAGE / PARA

 

PHASE I

 

 

PRESENTATION BY / PRÉSENTATION PAR:

 

Rogers Media Inc.                                   3 /   25

 

 

 

PHASE II

 

 

INTERVENTION BY / INTERVENTION PAR:

 

Canadian Ethnocultural Council                    156 /  972

 

Multicultural History Society of Ontario          164 / 1013

 

Brightlight Pictures Inc.                         174 / 1075

 

David Brady Productions                           181 / 1110

 

Stephen Hawkins                                   196 / 1171

 

Communications, Energy and Paperworkers           208 / 1244

  Union of Canada

 

Canadian Association of Film Distributors         219 / 1309

  and Exporters

 

 

 

                 Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon commencing on Wednesday August 29, 2007

    at 0930 / L'audience débute le mercredi

    29 août 2007 à 0930

LISTNUM 1 \l 11                THE CHAIRPERSON:  Good morning, everybody.

LISTNUM 1 \l 12                Would you please take your seats?

LISTNUM 1 \l 13                This is a follow‑up to the hearing that we had on Citytv.  The panel is the same in that it is made up of commissioners, starting from right to left, Langford, del Val, von Finckenstein, Cugini and Duncan.

LISTNUM 1 \l 14                The Commission today is assisted by Lyne Renaud as hearing officer, Stephen Millington as legal counsel and Jade Roy as hearing secretary.

LISTNUM 1 \l 15                We are obviously going to examine the acquisition by Rogers of the Citytv network.

LISTNUM 1 \l 16                Madame Jade Roy, I believe you have some introductory remarks to make.

LISTNUM 1 \l 17                THE SECRETARY:  Thank you, Mr. Chair.

LISTNUM 1 \l 18                Nous aimerions souligner quelques points d'ordre pratique qui contribueront au bon déroulement de cette audience publique.

LISTNUM 1 \l 19                Firstly, simultaneous interpretation service is available during the hearing.  Receivers are available from the commissionaire outside the hearing room.

LISTNUM 1 \l 110               The English interpretation is on channel seven, and French is on channel eight.

LISTNUM 1 \l 111               When you are in the hearing room, we would ask you to please turn off your cell phones, beepers and blackberries, as they are an unwelcome distraction and they cause interference on the internal communication systems used by our translators.

LISTNUM 1 \l 112               We would appreciate your cooperation in this regard throughout the hearing.

LISTNUM 1 \l 113               Pendant toute la durée de l'audience, vous pourrez consulter les documents qui font partie du dossier public pour cette audience dans la salle d'examen, qui se trouve dans la salle Papineau, située à l'extérieur de la salle d'audience, à votre droite.

LISTNUM 1 \l 114               For the record, the Commission sent a letter to Rogers asking them to be prepared to provide comments at today's proceeding on the Canadian Television Fund Task Report dated June 29, 2007, and Rogers submitted yesterday the purchase agreement between CTVGlobeMedia and Rogers Broadcasting Limited.

LISTNUM 1 \l 115               Stephen?

LISTNUM 1 \l 116               MR. MILLINGTON:  When that document was submitted, there was a claim for confidentiality.  I understand that is no longer required and I would just like to get confirmation on the record that, that is the case.

LISTNUM 1 \l 117               MR. STRATI:  That is correct.

LISTNUM 1 \l 118               MR. MILLINGTON:  Thank you.

LISTNUM 1 \l 119               THE SECRETARY:  This letter, and the document, has been placed on the public file, and copies are available in the examination room.

LISTNUM 1 \l 120               And now, Mr. Chairman, we will proceed with the application filed by Rogers Media.

LISTNUM 1 \l 121               Appearing for the applicant is Tony Viner, who will introduce his colleagues.

LISTNUM 1 \l 122               You will then have 20 minutes to make your presentation.

LISTNUM 1 \l 123               Thank you.

LISTNUM 1 \l 124               THE CHAIRPERSON:  Mister Viner, welcome.

PRESENTATION / PRÉSENTATION

LISTNUM 1 \l 125               MR. VINER:  Thank you, Sir.

LISTNUM 1 \l 126               Mr. Chair and members of the Commission, I am Tony Viner, President of Rogers Media.

LISTNUM 1 \l 127               It is a pleasure to be here this morning to present our application for the acquisition of the Citytv stations in Toronto, Winnipeg, Calgary, Edmonton and Vancouver.

LISTNUM 1 \l 128               Before we begin our presentation, I would like to first briefly introduce our panel.

LISTNUM 1 \l 129               To my immediate left is Rael Merson, President of Rogers Broadcasting.  Rael and I will share the responsibility of leading the presentation, and responding to your questions.

LISTNUM 1 \l 130               To my right are Leslie Sole and Diane Boehme, available for programming and Canadian production issues at both City and OMNI stations.

LISTNUM 1 \l 131               To Rael's left is Alain Strati, our regulatory counsel.

LISTNUM 1 \l 132               Next to him is Madeline Ziniak, available for further insight about OMNI and cultural diversity, and then, Renato Zane and Stephen Hurlbut, responsible for news at ONMI and City, respectively.

LISTNUM 1 \l 133               In the row directly behind me, starting from my far left, is Malcolm Dunlop, programming, sales and audience research, as well as Melanie Farrell and Andrea Gagliardi, who can provide insight about marketing, public relations and community outreach.

LISTNUM 1 \l 134               Finally, we have Al Thorgierson and Brad Phillips, general managers for the Citytv stations in Western Canada.

LISTNUM 1 \l 135               Also in the audience is Mr. John McKellar, the trustee of the City stations.

LISTNUM 1 \l 136               Other members of the City and OMNI management teams are also here in the front row of the audience, available to answer questions, if required.

LISTNUM 1 \l 137               Rael ?

LISTNUM 1 \l 138               MR. MERSON:  Good morning.

LISTNUM 1 \l 139               Our presentation this morning will consist of three parts.

LISTNUM 1 \l 140               I will briefly outline the rationale for our acquisition of the Citytv stations, and our vision for their future.

LISTNUM 1 \l 141               Leslie will then describe our overall programming strategy for these stations.

LISTNUM 1 \l 142               And Tony will conclude by addressing the regulatory and policy issues identified in the Notice of Public Hearing.

LISTNUM 1 \l 143               So why are we interested in Citytv, in an environment that has seen over‑the‑air television lose market share, and face real declines in profitability, one in which IPTV is looming, commercial skipping is a reality and the threat of disintermediation is very real, as studios begin selling their content directly to consumers, bypassing the broadcast system in its entirety?

LISTNUM 1 \l 144               We made the decision to first buy the A channels, and then Citytv, because of our fundamental belief that only free over‑the‑air television can draw the mass audiences that are necessary to support the production of the highest quality programming.

LISTNUM 1 \l 145               We recognize that over‑the‑air television will have to take on increasing risk in order to continue to add value, and to protect its position in the value chain that brings content to audiences.  We believe that will take scale and investment, from large, committed Canadian players, to ensure that the system is not bypassed in its entirety.

LISTNUM 1 \l 146               Rogers is exactly that kind of long‑term investor.  We have achieved success with other broadcast properties that needed commitment, ingenuity and patience.

LISTNUM 1 \l 147               CFMT, 680 News and the Shopping Channel are all examples of that philosophy.

LISTNUM 1 \l 148               And there is a natural fit between City and OMNI, and between City and Rogers.

LISTNUM 1 \l 149               City reflects the multicultural reality of our urban centres, while OMNI reflects the ethnocultural identity of new and existing ethnic communities in Canada.

LISTNUM 1 \l 150               City has produced new innovative programs that laid the foundation for the launch of a number of successful specialty services.

LISTNUM 1 \l 151               Rogers' very DNA is innovation, whether it be ethnic programming, FM radio, cable distribution, wireless communications or the marketing of those services.

LISTNUM 1 \l 152               The business of Citytv is, however, under threat.  Faced with audience fragmentation and tough competition from other broadcasters, City has seen its revenue and profitability decline over the last couple of years, to the point where the stations are now losing money.

LISTNUM 1 \l 153               In this broadcast year, City is projecting operating losses of almost three million dollars, and preliminary budgets for 2008 are for higher operating losses.

LISTNUM 1 \l 154               We recognize that we need a new strategy for Citytv, one that will build upon its legacy and history.

LISTNUM 1 \l 155               Our plan is as follows:

LISTNUM 1 \l 156               First and foremost, for City to reaffirm its local, urban and diverse identity, and to re‑focus its operations on the development of that brand and core mandate.

LISTNUM 1 \l 157               Secondly, City must sort out its conflicted priorities.  The stations must move away from specialty‑driven initiatives in programming genres like science‑fiction, and establish a more consistent programming approach, one that is more reflective of a re‑focused brand and a vision for Citytv.

LISTNUM 1 \l 158               And finally, City must be able to access the resources and expertise necessary to make a long‑term investment in television, helping it to become a significant, new player in the production of high‑quality programming, and re‑establishing its financial viability and future profitability.

LISTNUM 1 \l 159               I will now hand over to Leslie to expand on additional elements of our programming strategy, starting with local programming.

LISTNUM 1 \l 160               Leslie?

LISTNUM 1 \l 161               MR. SOLE:  We believe that our local programming strategy currently being pursued by the City stations is fundamentally sound.

LISTNUM 1 \l 162               It is delivering benefits for local audiences and, over the longer term, should help them attract larger audiences, and shore up their financial position.

LISTNUM 1 \l 163               Throughout its long history in Toronto, City has been a pioneer in local reflection and local content, including such iconic shows and programming concepts as The NewMusic, CityLimits and Speaker's Corner, just to name a few.

LISTNUM 1 \l 164               We expect this proud tradition to continue.

LISTNUM 1 \l 165               The City stations in Western Canada recently expanded Breakfast Television, and introduced new local programs, such as YourCity, to enhance community reflection, and provide greater scope for local context and discussion.

LISTNUM 1 \l 166               We support their efforts to build a stronger and deeper relationship with viewers through distinctive local programming.

LISTNUM 1 \l 167               But City has to re‑think its approach to Canadian priority programming.

LISTNUM 1 \l 168               In the past, synergies with CHUM and the specialty services influenced the the programming direction for the entire group.

LISTNUM 1 \l 169               That may have helped to control costs, but it also narrowed the scope of priority programming projects that could have been considered specifically for the City stations.

LISTNUM 1 \l 170               Under our ownership, programming synergies with specialties will be significantly reduced but, at the same time, City will be better able to make programming decisions that are more consistent with its vision and the brand.

LISTNUM 1 \l 171               The benefits from both this application and the Craig Media acquisition will provide a unique opportunity to kick‑start this change of focus and direction.

LISTNUM 1 \l 172               They are an important component in the future development of Canadian priority programming on these stations.

LISTNUM 1 \l 173               And no strategy is complete without acquired American programming.

LISTNUM 1 \l 174               Here too, the loss of synergies with the CHUM specialties will provide us with new opportunities.

LISTNUM 1 \l 175               The City stations will have much greater freedom to acquire US programming that is supportive of their local, urban and diverse market positioning.

LISTNUM 1 \l 176               We think that it will make for a more compelling and consistent program schedule ‑ one that will help the stations generate more interest from viewers, more revenues from advertisers and ultimately more financial stability.

LISTNUM 1 \l 177               However, it will continue to be difficult to compete for the acquisition of the famous Top 20 simulcasts.

LISTNUM 1 \l 178               CTV and CanWest have significantly greater scale and significantly greater distribution, and City will have to carefully pick its spots, making strategic and opportunistic program buys that incrementally build audiences and revenues over the long term.

LISTNUM 1 \l 179               And we can't forget new media.  There are few companies in Canada better able to help City and these stations than Rogers.

LISTNUM 1 \l 180               New media is a key strategic focus of ours, and we are investing in new projects and services, and experimenting with alternative distribution platforms and new media content on a daily basis.

LISTNUM 1 \l 181               To establish and maintain a powerful connection to local communities, the City stations must have a strong presence in Video on Demand, wireless, the Internet.  City must continue to innovate itself and respond to new challenges of broadband and the new multi‑platform environment.

LISTNUM 1 \l 182               Reflection of cultural diversity has always been important at Rogers, beginning with our cable community channels in the 1970s, followed by our investment in CFMT in the 1980s, and it has certainly also been an important part of the City philosophy.

LISTNUM 1 \l 183               Under our ownership, the City and OMNI stations will be able to share their respective experiences, their expertise, and strengthen their approaches and contributions to cultural diversity.

LISTNUM 1 \l 184               We believe our programming strategy includes all of the fundamental elements required to rebuild and revitalize the Citytv stations, and that Rogers has the resources, the expertise and the long‑term perspective necessary to successfully undertake this challenge in the future.

LISTNUM 1 \l 185               Tony?

LISTNUM 1 \l 186               MR. VINER:  I will address the three policy and regulatory issues identified by the Commission in the Notice of Public Hearing:  First, common ownership; two, programming diversity; and three, the benefits test.

LISTNUM 1 \l 187               The Commission's policy generally permits the ownership of no more than one station, in one language, in a given market.

LISTNUM 1 \l 188               And in our submission, the common ownership of City and OMNI fits squarely within that policy.

LISTNUM 1 \l 189               These stations do operate in different languages.  They have different audiences and mandates for their programming, and reflect the needs and demands of different communities.

LISTNUM 1 \l 190               The City stations are licensed as English‑language stations, competing directly with other English‑language stations like CTV, Global and the CBC.

LISTNUM 1 \l 191               On the other hand, the OMNI stations are specifically licensed as ethnic stations, devoting the majority of their schedule to programs produced in third languages.

LISTNUM 1 \l 192               With language as a distinction, the Commission's policy assures that audiences are offered a diversity of programming options from local broadcasters, and it is a distinction that has been consistently applied in a number of decisions:

LISTNUM 1 \l 193               In 2002, the Commission approved our application for a second ethnic television station in Toronto, because the stations committed to each offering programs in different languages.

LISTNUM 1 \l 194               In 2000, the Commission approved the acquisition by CanWest of CJNT‑TV, an ethnic station in Montreal, even though that purchase would essentially provide CanWest with a second station in that market.

LISTNUM 1 \l 195               In 1985, the Commission approved an application by TQS for a new French‑language television station in Montreal, even though TQS was owned by CFCF Inc., also the owner of an English‑language television station in that market.

LISTNUM 1 \l 196               We certainly recognize that ethnic stations also have the authority to carry American programming.

LISTNUM 1 \l 197               But that authority is no different than what is provided to other broadcasters.

LISTNUM 1 \l 198               It is simply a reality of the Canadian model for television, a model that uses American programming to generate the revenues needed to meet Canadian content and service obligations.

LISTNUM 1 \l 199               For an ethnic station, that authority has become a part of the Commission's Ethnic Broadcasting Policy.  It has provided the financial foundation from which to launch, and sustain, free over‑the‑air stations in markets across Canada.

LISTNUM 1 \l 1100              But that authority is also restricted.

LISTNUM 1 \l 1101              By condition of licence, ethnic stations are requires to primarily serve ethnic audiences during the peak prime time period of 8 to 10 p.m.

LISTNUM 1 \l 1102              That restriction ensures a prime time focus for ethnic programming at OMNI.  Ethnic audiences are assured they will have access to OMNI newscasts and programs during peak viewing periods.

LISTNUM 1 \l 1103              It also ensures that OMNI has a limited ability to generate significant audiences and revenues from American programming, minimizing its impact on other stations.

LISTNUM 1 \l 1104              We believe approval of our application will have no material impact on competition for advertising revenues.

LISTNUM 1 \l 1105              In fact, our application has been overwhelmingly endorsed and supported by advertisers and agencies.

LISTNUM 1 \l 1106              That is because a stronger, more viable Citytv will provide advertisers with another option for television advertising.

LISTNUM 1 \l 1107              The second issue is programming diversity and, in particular, editorial independence.

LISTNUM 1 \l 1108              Media properties such as OMNI, 680 News and Maclean's all pursue independent editorial policies, with separate news line‑ups that reflect their different positions in the market, and their different target audiences.

LISTNUM 1 \l 1109              Under our ownership, the City stations will continue to pursue their own editorial direction, contributing to diversity through an intensely urban and community‑reflective perspective, and by offering distinctive local points of view.

LISTNUM 1 \l 1110              The editorial and news presentations differences between the OMNI and City stations will be sharp and clear, just as they are now.

LISTNUM 1 \l 1111              Let me quickly show you an example from earlier this month.

‑‑‑ Présentation video / Video presentation

LISTNUM 1 \l 1112              MR. VINER:  The third issue relates to the acceptability and incrementality of our proposed benefits.

LISTNUM 1 \l 1113              Based on the requirements established in the Television Policy, we proposed benefits equal to ten per cent of the total purchase price.

LISTNUM 1 \l 1114              Although we had initially set that amount as 37.5 million dollars in our application, we have since revised it to approximately 39.5 million, to reflect adjustments made as a result of the value of the real estate we are also proposing to acquire in this transaction.

LISTNUM 1 \l 1115              In our submission, these benefits are unequivocal and incremental.  They will build on baseline spending at City, and generate high‑quality priority programming through significant involvement with independent producers.

LISTNUM 1 \l 1116              Our benefit proposals were very well received by interveners, including the major associations representing Canadian creative talent, producers and distributors.

LISTNUM 1 \l 1117              These interveners made a number of suggestions for modifications, many of which we have incorporated as revisions to our initial commitments.

LISTNUM 1 \l 1118              As they relate to Canadian production, 100 percent of our benefits will now go to priority programming with a minimum of 85 percent dedicated to independent production and 65 percent specifically to drama.

LISTNUM 1 \l 1119              Together with the remaining benefits from the Craig Media acquisition, these benefits will establish an important new source of funding totalling more than $50 million in incremental expenditures for the production of high‑quality Canadian programming.

LISTNUM 1 \l 1120              Rael.

LISTNUM 1 \l 1121              MR. MERSON:  Mr. Chair, members of the Commission, we believe that the approval of this application is in the public interest and represents the best possible proposal under the circumstances.

LISTNUM 1 \l 1122              Rogers is the logical buyer of Citytv stations.  We have the skills and resources necessary to ensure the continued strong presence of the distinctive and diverse voice of the City stations in their local markets.

LISTNUM 1 \l 1123              We have made significant commitments to provide substantial new support for Canadian priority programming and independent production.

LISTNUM 1 \l 1124              Our application complies with established Commission policy on common ownership and will preserve editorial independence and program diversity.

LISTNUM 1 \l 1125              A plan for the future of the Citytv stations is not without challenge but we believe that we have an effective plan, one that with your approval we look forward to implementing.

LISTNUM 1 \l 1126              Thank you for your time and attention this morning.  We await any questions you might have.

LISTNUM 1 \l 1127              THE CHAIRPERSON:  Thank you very much and thank you for filing those documents and on time, it is very much appreciated, it makes our life easier.

LISTNUM 1 \l 1128              We are going to question you in five areas:  ownership, program diversity, local programming, valuation and tangible benefits.  We will proceed with that.

LISTNUM 1 \l 1129              On ownership you say in your application that you are going to get rid of the two religious stations that you have by the end of the year and I would like you to tell me what is going to happen if that isn't the case at the end of the year.

LISTNUM 1 \l 1130              To be specific, I want to avoid that you come back to me here at the end of the year and say we have tried our best, we can't find a buyer and let us keep them.

LISTNUM 1 \l 1131              MR. VINER:  Mr. Chairman, we unequivocally will not do that.  We are close to finalizing a transaction to sell the religious stations, although close isn't there.

LISTNUM 1 \l 1132              We have proposed in our application to take up to 12 months to try to sell those religious stations and if we are unsuccessful to put them under some form of vendor trusteeship or separate management in a way that would satisfy the Commission that they would be operated independently.

LISTNUM 1 \l 1133              THE CHAIRPERSON:  I would like you to go a bit further than some form of separate management or trusteeship.  Can you commit that you will put it under trusteeship at the end of 12 months and that that trustee will have full authority to sell it by auction?

LISTNUM 1 \l 1134              MR. VINER:  Absolutely.

LISTNUM 1 \l 1135              THE CHAIRPERSON:  Okay.

LISTNUM 1 \l 1136              Secondly, on multiculturalism, you have a 60 and 40 language split in the OMNI stations and you know our Ethnic Broadcasting Policy says that in specific cases we can set different minima and maxima.

LISTNUM 1 \l 1137              Given you are now entering into the television network business, you are going to have five stations, et cetera, is this the proper time to revisit the 60‑40 split?

LISTNUM 1 \l 1138              MR. VINER:  No, we don't think so.

LISTNUM 1 \l 1139              If I could just take a moment, Mr. Chairman, to give a bit of history.

LISTNUM 1 \l 1140              You know, when we bought CFMT in 1985 it was 100 percent ethnic programming and it was bankrupt, and the Commission at that time decided to afford us the same opportunity or ethnic stations the same opportunity to schedule up to 40 percent U.S. programming in order to subsidize the ethnic programming that was available over the air.  They made that decision because they didn't want to lose the ethnic programming.

LISTNUM 1 \l 1141              That provision is exactly the same, exactly the same as every other Canadian over‑the‑air television station except we have, as I referred to in the in chief, restrictions on scheduling U.S. programming between 8:00 and 10:00.

LISTNUM 1 \l 1142              When we bought that station, we invested heavily in the ethnic schedule.  Those of us who were around at the time know that we completely retrofitted the plant, we introduced tougher journalistic and production standards, and we also invested in a successful U.S. programming schedule, and slowly we nurtured that back to profitability.

LISTNUM 1 \l 1143              But there is no question that we need that subsidy perhaps more than other Canadian television stations because we have smaller audiences and a broad service mandate.  We have restrictions on the scheduling of that programming and we are unable to sort of, as other stations are, cross‑promote all of our programming.

LISTNUM 1 \l 1144              So I would say that we absolutely would continue to need the subsidy that is provided by that U.S. programming.

LISTNUM 1 \l 1145              THE CHAIRPERSON:  Yes, but the U.S. programming that you are buying for that, you can now also show it on City, so you have got a greater outlet for it.  So while before you paid for it dearly undoubtedly to show it only on OMNI, you have another window now in which to show it and try to recoup your costs.

LISTNUM 1 \l 1146              MR. VINER:  Well, I will make a couple of comments.

LISTNUM 1 \l 1147              The first is that that is really not the way programs are bought and sold, U.S. programs.  Generally, they are bought and sold on a national basis.  So unless we have the ability to show programs nationally, we still have that issue of just buying for a single market, for CFMT.

LISTNUM 1 \l 1148              The other thing I would point out, Mr. Chairman, is that we have undertaken a commitment that no more than 10 percent of the programming will be shown on City and OMNI.

LISTNUM 1 \l 1149              So I think there is plenty of assurance that the programming won't be the same.

LISTNUM 1 \l 1150              And again, the scheduling, the prime time restriction certainly ‑‑ there isn't one on Citytv and there is one on OMNI.

LISTNUM 1 \l 1151              THE CHAIRPERSON:  Okay.

LISTNUM 1 \l 1152              In terms of separate editorial newsrooms, and you just showed us that clip, et cetera, you know there is a statement of principles and practices at the CRTC.  I assume you are willing to commit to that with regard to OMNI and City?

LISTNUM 1 \l 1153              MR. VINER:  Yes, sir.

LISTNUM 1 \l 1154              THE CHAIRPERSON:  Okay.

LISTNUM 1 \l 1155              And then thirdly, City was really part of CHUM, and City and the station, I understand, have met with the founder and with the creative partners.  There was a real great integration between the specialty channels and City.

LISTNUM 1 \l 1156              They were in the same location and they used, if I understand it, the network to try out an idea.  If it worked, they spun it off into a specialty channel and they would produce it and the production would be shown both on the specialty and on City as appropriate, et cetera.

LISTNUM 1 \l 1157              Now all of that is ending here but you are still on the same premises.  I believe that you told me prior to filing the application that you intended to physically relocate but you also have to disentangle the people, you have to decide who is at City, who is at CHUM.

LISTNUM 1 \l 1158              How is this coming along?  How long is it going to take?  Basically, how long is City going to be part of Citytv and when is it going to stand on its own independent feet?

LISTNUM 1 \l 1159              MR. VINER:  Well, I will ask Rael to comment but the transition services agreement allows for up to three years.  I have a boss who would like to allow it up to three weeks ‑‑

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1160              MR. VINER:  ‑‑ and it will probably be somewhere in between.

LISTNUM 1 \l 1161              But Rael has been spearheading those discussions and I would ask him to comment.

LISTNUM 1 \l 1162              MR. MERSON:  It hasn't been easy, I guess, is the short answer.

LISTNUM 1 \l 1163              One of the things we had thought about at the time of the acquisition was really just the difficulty in disentangling the businesses.

LISTNUM 1 \l 1164              You know, every once in a while you look at a business and you look at it with the potential that you might somehow be able to find synergies in the business when you integrate them with your own operations.

LISTNUM 1 \l 1165              These businesses have been absolutely built into the CHUM infrastructure and every synergy that could have been extracted was sort of extracted.

LISTNUM 1 \l 1166              They had a central backroom operation.  As you described, they sort of moved the programming around between the specialties and the channels.  So it has been a challenge.

LISTNUM 1 \l 1167              As of last week, we and the trustee and CTV agreed on a separation of employees and they have all been notified to that effect already.  So that part of it has been done.

LISTNUM 1 \l 1168              The physical relocation, as Tony described, is something ‑‑ the whip has been cracked on us to sort of get it done as soon as possible.

LISTNUM 1 \l 1169              I think Stephen and Peter, who are in the audience, will tell you the City employees would like to get out.  They feel like they are in alien territory and would like to move out at this point as quickly as they can and we are committed to doing that.

LISTNUM 1 \l 1170              What is the bad news about the level of integration?  The bad news about the level of integration is it is going to be very difficult for us to replicate the synergies that they managed to effect.

LISTNUM 1 \l 1171              The good news is that we think we will be able to give City a focus and a direction to their programming strategy that has gone a little awry in the last couple of years, that had these conflicted priorities in the sense that they had to develop programs that might work on the SciFi Channel, it might work on one of the Digis, and might therefore also run on Citytv.

LISTNUM 1 \l 1172              So when you look at their programming schedule now, it is difficult to identify sort of a core theme or a core structure and one of the things we think we will be able to do by separating them out is refocus on sort of a core brand and a core identity.

LISTNUM 1 \l 1173              So I think the synergies are going to be difficult to replicate but I think we will be able to give them sort of a focus and a direction that they have been lacking over the last couple of years.

LISTNUM 1 \l 1174              THE CHAIRPERSON:  So you have separated the employees.  The physical separation will take place when?

LISTNUM 1 \l 1175              MR. MERSON:  Not until closing, obviously.  We just ‑‑

LISTNUM 1 \l 1176              THE CHAIRPERSON:  I assume you get our approval before you close, yes.

LISTNUM 1 \l 1177              MR. MERSON:  Yes, at closing.  I mean what we have told them essentially is you are going to go with the City operations wherever they end up and the remainder will remain with CTV.  This is something CTV did last week.

LISTNUM 1 \l 1178              THE CHAIRPERSON:  All right.  And then they are sort of using each other's facilities?

LISTNUM 1 \l 1179              MR. MERSON:  Yes.

LISTNUM 1 \l 1180              THE CHAIRPERSON:  So give me a time frame of what time ‑‑ you say you have an agreement for three years.  Obviously, Mr. Rogers would wish to have it done in three weeks, you said.

LISTNUM 1 \l 1181              What is the likely reasonable point at which time we can say the divorce is complete, you now have City here and you have CTV there?

LISTNUM 1 \l 1182              MR. MERSON:  Eighteen months would be the answer.  We have a plan.  We have an idea of what it is we would like to do.  As always with these things that require multiple things to happen at the same time, we think 18 months is the shortest amount of time and probably a reasonable period that we will have it done by.

LISTNUM 1 \l 1183              MR. VINER:  But that is a touch timetable.  I heard the sharp intake of breath from our engineering folks.  We have to find a place, we have to build it out, order the equipment, figure out who is going to move where.

LISTNUM 1 \l 1184              I am on Rael's side and I think 18 months will be aggressive but I think we can do it.

LISTNUM 1 \l 1185              THE CHAIRPERSON:  Okay.

LISTNUM 1 \l 1186              Any questions from my fellow commissioners on the ownership issues?

LISTNUM 1 \l 1187              Rita?

LISTNUM 1 \l 1188              COMMISSIONER CUGINI:  No.

LISTNUM 1 \l 1189              THE CHAIRPERSON:  No?

LISTNUM 1 \l 1190              Then let us go on to issue number 2, which is program diversity.

LISTNUM 1 \l 1191              I think, Rita, you take the lead on that.

LISTNUM 1 \l 1192              COMMISSIONER CUGINI:  Thank you, Mr. Chairman.

LISTNUM 1 \l 1193              I think our Chairman has provided rather successfully an overture to this hearing and then allowing us to drill down a little further into some of the issues that he talked to you about.

LISTNUM 1 \l 1194              So I am going to start with foreign programming and its scheduling and selection because when I look at the program schedules that you have included in your application, I see that currently there is very little overlap in terms of titles on both the OMNI station and the Citytv stations.

LISTNUM 1 \l 1195              OMNI seems to rely more on syndicated programming while the City stations make more use of first‑run U.S. programming with some of it being simulcast.

LISTNUM 1 \l 1196              So I am just wondering, going forward, is this the model upon which you will continue to program both the OMNI and City stations?

LISTNUM 1 \l 1197              MR. MERSON:  Yes is the short answer.  As Tony mentioned, OMNI has no ability to program into primetime and you can only afford to compete for the best first‑run programming if you can afford to exhibit it in primetime.  If you can't afford to exhibit it in primetime, there is no potential for recovery and there is no possibility of competing in the first place.

LISTNUM 1 \l 1198              OMNI is restricted to the shoulder period.  Its restriction inhibits its potential audience and therefore limits what it can reasonably hope to achieve with its primetime programming.

LISTNUM 1 \l 1199              So I can't see a framework that would allow either station to do much differently.  It is the way the market works.  If you can't possibly draw the audiences necessary to sustain the programming you can't compete for it in the first place and, you know, it has that sort of cycle and you are boxed into certain areas.  So I believe there is no potential change.

LISTNUM 1 \l 1200              Let me ask Leslie if he wants to add anything.

LISTNUM 1 \l 1201              MR. SOLE:  Commissioner Cugini, I think that if you are asking the question are these strategies going to stay the same, the answer is yes.

LISTNUM 1 \l 1202              When OMNI makes a commitment to a U.S. programming it is for years, it is reruns and it has to work over a number of years, as Rael said, in off‑prime periods.  City's major investments are in day to day or week to week programming that, pardon the inside baseball or the jargon, it is perishable.  We are going to have to together, if this is approved, come up with a strategy that makes more events happen and that City's going to be more current and more directed towards what I would call week to week TV, where OMNI is more of an ongoing, dependable, consistent, well‑known and, and I am not afraid to say it, repeat channel.

LISTNUM 1 \l 1203              COMMISSIONER CUGINI:  And make more events happen is applicable to the foreign programming, and how will you choose what are the events that will make things happen for City?

LISTNUM 1 \l 1204              MR. SOLE:  I think I have overstated it.  I am basically talking about ‑‑

LISTNUM 1 \l 1205              COMMISSIONER CUGINI:  They are your words.

LISTNUM 1 \l 1206              MR. SOLE:  I appreciate that.  I think I am talking about week to week U.S. currently‑released television programs.  How will we make that work?  We think there's a number of strategies.  There's a great deal of programming, as I said in the in‑chief, above and beyond the top 20.

LISTNUM 1 \l 1207              There are new ways to look at this.  These are five major cities in this country, they are deserving of local and priority programming that suits their markets.  At the same time, I think there is an alternative way to program foreign and U.S. programming and it doesn't necessarily have to come from the foreign networks, there is many sources in these days.

LISTNUM 1 \l 1208              COMMISSIONER CUGINI:  Because, currently, Toronto is the only market in which there exists a city and an OMNI station ‑‑ we know of two more where that will happen, Calgary and Edmonton ‑‑ is it safe to assume that the Toronto model will be the template going forward as you roll out into both Calgary and Edmonton?

LISTNUM 1 \l 1209              MR. SOLE:  Absolutely.

LISTNUM 1 \l 1210              COMMISSIONER CUGINI:  Okay, just so I have a visual framework.

LISTNUM 1 \l 1211              In your oral presentation you said that the City stations will have much greater freedom to acquire U.S. programming that is supportive of their local urban and diverse market positioning.  So you started to talk a little bit about it in my previous question, but how will you determine the criteria?  What foreign programming will go on the OMNI stations and what foreign programming will go on the City stations?

LISTNUM 1 \l 1212              MR. MERSON:  We really don't see much difference in the nature of the programming that currently runs on both stations.  As Leslie mentioned, we do think, you know, what will remain on the OMNI ‑‑ OMNI is fundamentally a station that is horizontally programmed in the sense that we program the same shows every single night at the same time.

LISTNUM 1 \l 1213              Because when you speak to an audience and you try to build a habit in them you have got a couple of choices.  One of the choices is to say, look, come to us every night, we are going to have something new and exciting and here is what you can expect to find.  But if you don't have that, because your schedule is a broad service mandate and you have multiple languages and multiple different pockets on the schedule, what you need to try to do with the English schedule is build predictable habits in the English schedule and that is what we have tried to do.

LISTNUM 1 \l 1214              So we have built English programming with the same program that is programmed every night at the same time, and I can't see another strategy that would work.  It would be very difficult to explain to a viewer why it was between 6:00 and 8:00 at night or between 6:00 and 7:00 at night they should come to you in a time where it is not planned viewing.  So you need to build that habit.  So somehow I believe the OMNI habits will remain the same, will program horizontally across the given week.

LISTNUM 1 \l 1215              City is different, City is a first‑run station, so it has an ability to acquire good U.S. programming, to speak to the consumers in a way that sort of like CTV or Global might in that sense come to us with the best new programming out there.  Where City is handicapped relative to CTV and Global is in the scale of distribution.  Global and CTV have national distribution, they are always going to be able to aspire to be the first at the table when programming becomes available for sale.

LISTNUM 1 \l 1216              And we, to some degree, are going to have to pick our spots and define a strategy for City that is consistent with its brand, that is explicable to the audience that it seeks to serve and ultimately is profitable.  You know, one of the things we do believe that handicapped City over the last couple of years was the sort of toe‑in‑the‑water philosophy with acquired U.S. programming.

LISTNUM 1 \l 1217              It is one of these businesses that isn't a game for sissies anymore.  You know, either you go in and you make a commitment to building a first‑run schedule that hangs together, that speaks to the audience in a way that they can understand or you are better off doing something completely different and building a low‑cost schedule that delivers you margins, that doesn't compete for first‑run programming.

LISTNUM 1 \l 1218              I can't tell you at this point, and I don't think Leslie can either, exactly what we might do and where we would end up.  But we understand the parameters, we understand there is no point being half pregnant, either we do it or we don't do it.  We know it has to tie into a brand.  We are sort of relieved from the constraints that City had in the sense that they were trying to share programming among all the various family members.  We will have a single‑minded focus on the City stations and we will come up with an acquired strategy that fits for City and fits within the marketplace itself.

LISTNUM 1 \l 1219              COMMISSIONER CUGINI:  Are the demographics different for these two station groups or is your target demographic different for these two station groups?

LISTNUM 1 \l 1220              MR. MERSON:  Well, fundamentally the bulk of OMNI's primetime programming, as you know, is in language, so it is a completely and utterly different audience.

LISTNUM 1 \l 1221              COMMISSIONER CUGINI:  But just for the foreign programming segment.

LISTNUM 1 \l 1222              MR. MERSON:  For the foreign programming, not too different.  You know, there is a sense that we all have that City has appealed to a more youthful demographic than some of the other television stations and the evidence doesn't suggest that.  The evidence suggests they are a station that sort of programs to 18 to 49‑year‑old people and they have been successful doing that.  And you look at OMNI's demographics in its shoulder periods and you find a very similar demographic.

LISTNUM 1 \l 1223              But I think when you look at the population as a whole those are the people watching television in those time periods and you naturally gravitate towards them.

LISTNUM 1 \l 1224              Leslie, I don't know if you want to add anything?

LISTNUM 1 \l 1225              MR. SOLE:  Commissioner Cugini, I think that with the evolution of hundreds of channels that narrow demographic over‑the‑air television may have been from another era.  What Rael is alluding to is that when you are completely and entirely supported by advertisers your demographic automatically broadens.

LISTNUM 1 \l 1226              The reason that OMNI and City and CTV and Global have very similar demographics and the reason that the advertising trades on demographics like 25 to 54, 18 to 34.  I think in a channel like City you want a range of programs that appeal to those different sectors.  It is very competitive, but at the same time there also is an opportunity to reach a broader audience from an urban point of view, from a diverse point of view and from a local point of view.

LISTNUM 1 \l 1227              COMMISSIONER CUGINI:  Thank you for that.

LISTNUM 1 \l 1228              THE CHAIRPERSON:  Can I just interject?

LISTNUM 1 \l 1229              COMMISSIONER CUGINI:  Please.

LISTNUM 1 \l 1230              THE CHAIRPERSON:  When we had the CTV hearing we heard for two days about the edginess of City and people tried to define it, etc. and it seems there was a whole gamut of witnesses who all thought how that edginess was what made City different and what sold City and it had to be recreated and they thought CTV would be the best person.  We happened to be disagreed.

LISTNUM 1 \l 1231              But are you trying to pursue the recreation of that edginess that you..?  You were here and you heard about it that time?

LISTNUM 1 \l 1232              MR. MERSON:  We were well advised. No, you know, we thought long and hard about what City was as an identity and we batted it around, not only amongst ourselves, but with all the City people, and ultimately the definition we have come up with for City is localness, urban reflection and a reflection of the diverseness of the population that it serves.  You know, edginess might refer to the style of photography or how the presentation is.

LISTNUM 1 \l 1233              But ultimately, for us, it is a question of the audience that we seek to target and the audience we seek to target is localness.  Because we really fundamentally believe there will be two elements to successful television operation in the 21st century; the one will be its local connection to its audiences and the other will be the quality of the first‑run programming it is able to commission and acquire.  Because those are the only things that will differentiate it from what might otherwise be available in the 500‑channel universe or in the IPTV world.

LISTNUM 1 \l 1234              So localness was the first element we wanted to hang onto.  Urbaneness, we do believe the City stations, the name says it, the way they have been built is they only operate in major urban centres, and the focus should be urban and on urban communities.  And diversity is a hallmark of what City has done and one, given our backgrounds, we are completely comfortable with and would seek to endorse.

LISTNUM 1 \l 1235              So edginess has never been part of our vocabulary to us, it is a question of the target audiences and who we seek to serve and how it is we will design the operation around those kinds of principles.

LISTNUM 1 \l 1236              THE CHAIRPERSON:  Thank you.  Back to you, Rita.

LISTNUM 1 \l 1237              COMMISSIONER CUGINI:  Thank you.  Mr. Sole, earlier you said that there are many sources for foreign programming.  Are the specialty services that Rogers currently operates one of those sources?

LISTNUM 1 \l 1238              MR. SOLE:  Yes, they are, but they represent a very narrow opportunity at this point. We are in the sports business, we have Rogers Sportsnet in four regions of the country, we have a technology channel that is naturally aimed at younger people that understand it, gaming and the internet and things like that, and we have a factual channel called the Biography Channel.

LISTNUM 1 \l 1239              There will, from time to time, be synergies that relate to our over‑the‑air channels and those speciality channels.  It doesn't represent anywhere the magnitude that the CHUM group had with music and science fiction, their cultural arts channel and more than one music channel and so on.  But I think when I said specialty and cable channels I meant around the world.  I think there is an opportunity in acquiring programming that isn't necessarily from NBC, CBS, FOX or ‑‑ I don't know, which one I miss ‑‑

LISTNUM 1 \l 1240              MR. VINER:  ABC.

LISTNUM 1 \l 1241              MR. SOLE:  ‑‑ ABC.  Thank you, Tony.  But there is a plethora of interesting suitable programming that we think we will investigate and maybe take some risks and change City's nature in primetime in the acquired area.

LISTNUM 1 \l 1242              COMMISSIONER CUGINI:  And so the inclusion possibly of programming from the specialty services, that would be included in the 10 per cent overlap limitation that you have offered?

LISTNUM 1 \l 1243              MR. SOLE:  Our offering was related to our over‑the‑air channels.  No more than 10 per cent ‑‑

LISTNUM 1 \l 1244              COMMISSIONER CUGINI:  Between the over‑the‑air channels?

LISTNUM 1 \l 1245              MR. SOLE:  ‑‑ duplication between CityTV over‑the‑air and OMNI over‑the‑air.

LISTNUM 1 \l 1246              COMMISSIONER CUGINI:  Right.  So there is no limit on how much programming from your specialty channels could be on the CityTV channels?

LISTNUM 1 \l 1247              MR. VINER:  No, I never thought about it, and if you gave me sometime I would think about it.  But I am sure I could say yes and someone will correct me, but there is really relatively little ‑‑

LISTNUM 1 \l 1248              COMMISSIONER CUGINI:  Yes to what percentage?

LISTNUM 1 \l 1249              MR. VINER:  Ten per cent, just keeping the 10 per cent.

LISTNUM 1 \l 1250              COMMISSIONER CUGINI:  Ten per cent.

LISTNUM 1 \l 1251              MR. VINER:  Can I just..?  I will do the math at the break.

LISTNUM 1 \l 1252              THE CHAIRPERSON:  Why don't you reflect on that and then at the end some of you can revisit that point?

LISTNUM 1 \l 1253              MR. VINER:  Always accuse me of just saying yes, so I will wait.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1254              THE CHAIRPERSON:  I want an affirmative yes, not a tentative yes.

LISTNUM 1 \l 1255              MR. VINER:  Yes, sir.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1256              COMMISSIONER CUGINI:  As stated in your application, one of your long‑term objectives is to amortize programming production and acquisition costs over the widest possible audience base.  We will get to production in a minute.  But what do you include in the term "widest possible audience base" that would allow you, in fact, to amortize your acquisition costs?

LISTNUM 1 \l 1257              MR. MERSON:  I am quickly thinking about exactly what it related to.  But I think it was just a restatement of the basic economics.  There is this concept of a virtual cycle where you need to have ‑‑ it is sort of a restatement of our belief in how free over‑the‑air television works and what its role will be in the 500‑channel universe.  You need to aspire to the largest possible audience to allow you to commission the best possible programming to allow you to deliver the ratings that deliver the revenue that gives you the audience.

LISTNUM 1 \l 1258              You know what I mean?  It is this cycle that you need to get into.  And if you can't in advance believe that you can aspire to the largest possible audience, it reduces the pool within which you swim and so I think it was just a reflection of that notion.

LISTNUM 1 \l 1259              COMMISSIONER CUGINI:  So it doesn't include your role as an integrated Canadian media company in a broadband multi‑screen environment?  I guess that is really my question. Is that what you meant by widest possible audience base?

LISTNUM 1 \l 1260              MR. MERSON:  I am not sure if we specifically meant at that time.  But clearly, you know, as a concept we are committed to an evolving television universe.  You know, we know that the universe will evolve from a single screen to multiple screens.  You know, you hear discussion about three screens, the television the broadband and perhaps wireless and the recreation of the programming that you do for each one of the environments in the other environment and it is something that we absolutely believe we will need to have access to, as will every other Canadian broadcaster.

LISTNUM 1 \l 1261              Because our competitors in the U.S. will be doing it and, to some degree, this is a business that requires you to exploit the rights that you have over the largest possible number of platforms.  And, you know, we spoke a little bit about how the world might look in the future.

LISTNUM 1 \l 1262              And what we tried to convey in the in‑chief really was the notion that simply buying programming and exhibiting it on television in a world in which people skip commercials, the studios can go direct to the consumers, isn't going to be enough.  You are going to have to sort of get involved and take on risk at a much higher level to ensure that you protect your position in whatever way those rights get exploited.

LISTNUM 1 \l 1263              If it might be by product placement within a program, you know, you are going to have to get involved at a much earlier stage in the development of a concept to ensure that you have the rights to place that product within a show and that you have the rights to exploit the exhibition of that program on the multiple different media.

LISTNUM 1 \l 1264              So, absolutely, we believe multimedia and we believe multiple screens are going to be a key feature of how this business evolves in the future.

LISTNUM 1 \l 1265              If the question is:  do we have a privileged position because of our sister companies, we think we are sensitive to it.  We think we are probably more sensitive to it than anybody else because they are so focused on how their businesses will evolve.  But I don't think there's any privileged access.  You know, it's the Internet we are talking about, largely coming to consumers through multiple media, and it is the most open system ever devised by man.

LISTNUM 1 \l 1266              COMMISSIONER CUGINI:  Well, thank you.  That's a rather complete answer and we will move on to the area of priority programming.

LISTNUM 1 \l 1267              So we will start with an easy one.  You say in your application you are prepared to commit to increase the weekly commitment of priority programming from seven to eight hours for Citytv Toronto.  Will you accept this as a condition of license?

LISTNUM 1 \l 1268              MR. VINER:  Yes.

LISTNUM 1 \l 1269              COMMISSIONER CUGINI:  That's when you get to say the affirmative "yes", right?  Okay.

LISTNUM 1 \l 1270              In your application, you use phrases such as "television trailblazer", "source for innovation" and "distinct" when describing Citytv.  Given that you have now made a commitment that 100 per cent of the funding from the Allan Waters Canadian Content Initiative will go to priority programming and that 85 per cent of that will go to independent producers, how will you work with these independent producers to ensure that your vision for these stations will translate into shows that Canadians will want to watch?

LISTNUM 1 \l 1271              MR. MERSON:  We have sort of a long history, particularly from the OMNI 2 Fund, of how it is we have managed ‑‑ the process we have gone through of distributing benefit funds to independent producers through the OMNI 2 Fund.

LISTNUM 1 \l 1272              Madeleine can perhaps speak to that, but we are also very fortunate to have Diane Boehme here, who is City's resident expert on production and the commissioning of funds.  So if you don't mind, if I could ask Diane to speak quickly about sort of City and its process, and if you have any further questions on OMNI and its process Madeleine will be happy to answer those.

LISTNUM 1 \l 1273              MS BOEHME:  Thank you, Rael.  I am happy to answer the question.

LISTNUM 1 \l 1274              One of the good things that comes with this application is a renewed commitment to development support for Canadian production.  It's a very substantial one and it's one of those things that will help us find and identify those producers who have the ideas that dovetail with our local, urban and diverse plans.

LISTNUM 1 \l 1275              I think it takes time to develop those projects, it takes time to develop those concepts, but to really look at, through a dramatic narrative form, something that is about the essences of the cities where these Citytvs will inhabit, and that, typically, hasn't been done, whether it's drama or comedy.

LISTNUM 1 \l 1276              I think to find the right kinds of stories, the right sorts of narratives and to find ways to reach people in different platforms it's going to be a challenge, but I think we have the resources to do it.

LISTNUM 1 \l 1277              You know, it's been 23 years in the business for me now, and 12 years doing this kind of work, and there is an absolute hunger for the independent production community to take up these sorts of challenges.  I think there's going to be a number of people that are going to want to be inventive with us about that.

LISTNUM 1 \l 1278              As far as our process goes, it's really an open door.  We don't have a formal funding system.  We don't have a system where there's deadlines to meet.  There's a lot of application forms.  It really sits very informally, where we sit down and chat with the producer about their idea.

LISTNUM 1 \l 1279              That's the first thing:  do we think it fits, do we think it's a diamond in the rough that can require a little bit of honing and be a little bit more suited to what we have in mind, and then we work with them to do that, through the development phase, obviously, and then once we hit production, obviously ensuring that the casting reflects local, urban and diverse, that our storytelling reflects local, urban and diverse and that the budget is going to be something our audience is going to find attractive when it hits their screens.

LISTNUM 1 \l 1280              COMMISSIONER CUGINI:  How does that compare or complement the process that OMNI has with its independent producers currently?

LISTNUM 1 \l 1281              MS ZINIAK:  I think as far as OMNI is concerned, we are very proud to be able to have a benefit fund such as this where we are actually introducing new producers to the industry, not only a chance for new producers, but also new content.

LISTNUM 1 \l 1282              I think certainly if you take a look at the Task Force on Diversity, this completes the push.

LISTNUM 1 \l 1283              Finally, we have an opportunity to really platform the story of Canada, the story of Canadians, and, really, sharing diversity with the rest of the country.

LISTNUM 1 \l 1284              As you all know, this is the first‑ever fund in Canada that is third language, that actually accesses that kind of expertise and content to Canadians.  So I think we have seen that we have given new opportunities to new producers.  I think that this is something that is very Canadian.

LISTNUM 1 \l 1285              Also, we have had the opportunity, not only in the area of diversity, but also to partner in the aboriginal realm.

LISTNUM 1 \l 1286              So we have been able to really push forward, clearly, the history of Canada in third language, and also taking a look at what it really means to be Canadian.

LISTNUM 1 \l 1287              So we find, and I think our independent producers find, that this is also an opportunity to work with an alternative broadcaster, but one that perhaps has been longer in the so‑called mainstream.  As you know, I always have a difficulty with the word "mainstream", but we know what we mean.

LISTNUM 1 \l 1288              So I think we are both alternative, we both unleash opportunities to new and also sometimes those independent producers who have expertise.

LISTNUM 1 \l 1289              THE CHAIRPERSON:  In this case, whether it's City or whether it's OMNI, what happens to the rights, especially to the rights for other platforms, such as new media, et cetera?  When you work with independent producers who usually get ‑‑ I mean, is there a standard form with which you deal with the rights:  who has the rights to television, who has the rights to wireless, new media or whatever?

LISTNUM 1 \l 1290              I mean, nowadays, as we all know, this is becoming more and more an issue, so I would like to know what is the practice of Rogers in this regard.

LISTNUM 1 \l 1291              MR. STRATI:  It's a very good question and insight into why one of the funds that we are proposing has a 10 per cent allocation for new media rights.

LISTNUM 1 \l 1292              There's a good example.  There's a sort of significant documentary series on the Canadian Charter that was produced in eight different languages.  At the time there was no new‑media component or new media budget, if you will, that came from it after that.  The producer then said, "You know, I really want to have a web site platform, additional content, additional..." and she went to the Bell New Media Fund and got funding for that and used that.

LISTNUM 1 \l 1293              So, certainly for us, we want to have the ability, first, to be able to fund that, and also to have the capacity to, if there are other platforms and other opportunities in new media, for example, that the funding has the capacity to provide for it, for that kind of content, whether it's an extension or a new content.

LISTNUM 1 \l 1294              THE CHAIRPERSON:  Well, that didn't exactly answer my question, which is:  what's the standard formula?  When you hire an independent producer to produce something or you work with him, who winds up with the rights, both television rights and the new media rights, and whatever rights ‑‑

LISTNUM 1 \l 1295              MR. SOLE:  Mr. Chair, we end up with a licence fee.  The copyright and the perpetuity rights belong to the independent producer right from the very beginning right to the very end.

LISTNUM 1 \l 1296              COMMISSIONER CUGINI:  This is great because sometimes your interjections allow me to cross off questions and sometimes they provide a great segue into the next.

LISTNUM 1 \l 1297              MR. VINER:  Mr. Chairman, did we answer your question, though?  Did we answer it?

LISTNUM 1 \l 1298              THE CHAIRPERSON:  Yes, thank you.

LISTNUM 1 \l 1299              I mean, as you all know, CTF is very much on my mind these days, and so are producer rights, et cetera, and so I wanted to know what the practice is for a large outfit like yours when you work with producers, and I think you answered it, thank you.

LISTNUM 1 \l 1300              COMMISSIONER LANGFORD:  And trust me, the day you don't answer his questions, you will know.

‑‑‑ Laughter/ Rires

LISTNUM 1 \l 1301              COMMISSIONER LANGFORD:  We are giving him Rookie of the Year.  He doesn't know yet.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1302              COMMISSIONER CUGINI:  Further to that, with more opportunity to work with independent producers, some have argued, comes more responsibility in the form of advocating that this company now enter into a Terms of Trade Agreement with the CFTPA.

LISTNUM 1 \l 1303              I was wondering if you had an opportunity to reflect upon that and give us your progress, opinion or recommendations to that suggestion.

LISTNUM 1 \l 1304              MR. STRATI:  In terms of progress, we are new to it.  Certainly, we were here when Citytv discussed it.  It's sort of an industry initiative where different broadcasters are talking with different associations going forward on terms of trade, and certainly we would participate in that as we move forward.

LISTNUM 1 \l 1305              So certainly we are committed to working with the associations to develop, as other broadcasters are.

LISTNUM 1 \l 1306              MR. MERSON:  But this is a very fluid marketplace.  You know, every deal is a little bit different.  We have been markedly unsuccessful in acquiring video‑on‑demand rights on certain occasions and sort of third‑screen rights, and things like that.  So the marketplace is going to have to find its own level.

LISTNUM 1 \l 1307              You know, ultimately, philosophically, is there a value attached to new media rights?  Yes, there is.  You know, will we respect that value attached to the media rights?  Absolutely.

LISTNUM 1 \l 1308              We do believe, over time, things will find a level.  You know, ultimately, what the shows generate is what you can afford to pay for them, and we will find that level.  But, absolutely, we believe there's a value to the right, and it's a value we will pay for.

LISTNUM 1 \l 1309              COMMISSIONER CUGINI:  On to your commitment to comply with conditions of license for both Vancouver and Toronto to exhibit 100 hours of Canadian long‑form features on those two City stations, you have made a request to increase the number of documentaries from a maximum of 10 to 20.

LISTNUM 1 \l 1310              Movies always seem to be at the top of any viewer survey as being the most popular genre of programming, so what is your rationale for requesting this increase in documentaries?

LISTNUM 1 \l 1311              MR. MERSON:  We think Canada produces great documentaries.  You know, we think there's a demand for high quality documentaries.

LISTNUM 1 \l 1312              Perhaps I will ask Diane just to expand on the notion, but as we looked through the availability of new, good Canadian feature films and the supply of documentaries, it occurred to us that there might be a little bit of a rebalancing required between feature films and documentaries.  The fact is good documentaries are being produced.  We know there's an appetite for them out there.

LISTNUM 1 \l 1313              Again, it's a request for the opportunity to move up to 20 per cent, if the supply actually exists and if the demand actually exists.  So it was largely the rationale behind the request.

LISTNUM 1 \l 1314              I would ask Diane just to add in more colour, if she could.

LISTNUM 1 \l 1315              MS BOEHME:  Sure.  Thank you very much, Rael.

LISTNUM 1 \l 1316              I think one of the things that we believe is not just documentaries, but the value and the interest that the audience holds for theatrically released documentaries, as well, and they fit within the same two‑hour slot.  It's a little bit of a bigger examination table for whatever the subject of the documentary is and we have had a great deal of success on the Citytv side with long‑form documentary material.

LISTNUM 1 \l 1317              Everything from Go Further, Ron Mann's Grass, Metal:  A Headbanger's History, recently, Manufacturing Dissent, the theatrically released about Michael Moore and how he makes documentaries, have demonstrated to us a very clear interest on the audience part for more of these.

LISTNUM 1 \l 1318              So we are committed to seeing if we can, obviously, expand the theatrical audience by providing a free television window for them.

LISTNUM 1 \l 1319              COMMISSIONER CUGINI:  So if we were to allow this amendment, would these 10 hours be 10 hours of new programming to the system or would they be comprised of documentaries that are currently on OMNI or currently on any of the Rogers specialty channels?

LISTNUM 1 \l 1320              MR. SOLE:  I didn't write all those down.

LISTNUM 1 \l 1321              Let's go backwards.  OMNI doesn't generally deal in a two‑hour theatrical format.  Would they be new to the system?  Only if we are involved in the development through other processes could we guarantee that they would be new to the system.

LISTNUM 1 \l 1322              One of the points I would make, from an operating point of view, is the low level of impact that five documentaries would make in a broadcast year, because it would be less than one very two months, in terms of our overall commitment.

LISTNUM 1 \l 1323              I think, Commissioner Cugini, that they are going to come from every single source that Canadian documentaries come from.  Rogers has been involved with documentaries for years.  We would be supportive of the NFB.

LISTNUM 1 \l 1324              There are some great young documentary producers, and, quite frankly, we can see a blur happening.  We can see a popularization of ‑‑ I'm not going to say any particular ‑‑ Super Size Me, you know, Sicko.

LISTNUM 1 \l 1325              We think that's a growing, interesting, engaging, factual point‑of‑view format that suits Canadian feature filmmakers.

LISTNUM 1 \l 1326              COMMISSIONER CUGINI:  Excuse me, one of the concerns raised by intervenors is that if we allow this amendment, there will be an impact on the financing of Canadian feature films.

LISTNUM 1 \l 1327              I'm wondering, again, if you have had an opportunity to assess those interventions, and whether or not you agree that this would, in fact, have an impact on the Canadian feature film business.

LISTNUM 1 \l 1328              MR. MERSON:  I am going to ask Diane again to speak from her experience, but we obviously don't.  We think, as Leslie mentioned, I mean, this would amount to the exhibition of five more documentaries during the course of a year.  It isn't that significant of a commitment.

LISTNUM 1 \l 1329              COMMISSIONER CUGINI:  Right, but their ‑‑ sorry to interrupt, but their point is that means five fewer Canadian feature films will be ‑‑

LISTNUM 1 \l 1330              MR. MERSON:  Absolutely.

LISTNUM 1 \l 1331              THE CHAIRPERSON:  Yes.

LISTNUM 1 \l 1332              MR. MERSON:  So, again, this is all a question for us of sort of supply and demand and just a rebalancing of what the priorities are, and Diane can speak a little bit more knowledge to the situation, itself.

LISTNUM 1 \l 1333              MS BOEHME:  Sure.

LISTNUM 1 \l 1334              No, we don't think it's going to have that much of an impact.  The exhibition doesn't have the same thing to do as the financing.

LISTNUM 1 \l 1335              Obviously, you are financing, in the case of feature films, many years in advance of your window, particularly when you have got a theatrical window, you have a small DVD window, in most cases there's a Canadian pay television window that's usually 18 months.  So the theatrical feature film activity that we've typically done usually is three, six to 48 months out of our exhibition period.

LISTNUM 1 \l 1336              Documentaries shouldn't impact on that and with the benefit package that we have here, our plan is that we're really probably going to as much as double our support for Canadian feature films within the benefit package that we have.

LISTNUM 1 \l 1337              So, I don't think it will change the financing of Canadian feature films, that's certainly not our intent.  It's really just a matter of exhibition as opposed to financing, if that helps you.

LISTNUM 1 \l 1338              COMMISSIONER CUGINI:  Okay.  Thank you.  And within the priority programming, you have ‑‑ you've said in your application you're prepared to accept the condition of licence that will require that the eight hours of priority programming to be broadcast on average each week by the City stations be distinct from English language priority programming broadcast on OMNI stations each week, correct.

LISTNUM 1 \l 1339              Safe to assume you mean this on a perm market basis?

LISTNUM 1 \l 1340              MR. VINER:  That's correct.

LISTNUM 1 \l 1341              COMMISSIONER CUGINI:  Do you have intentions to show in Edmonton and Calgary, for example, priority programming that has been previously aired on OMNI?  In Toronto, I can think of a couple of titles that would be appropriate?  Metropia comes to mind.

LISTNUM 1 \l 1342              MR. VINER:  As you know, we don't have an obligation to do priority programming on OMNI, but certain of ‑‑

LISTNUM 1 \l 1343              COMMISSIONER CUGINI:  But, by definition, sure Metropia fits.

LISTNUM 1 \l 1344              MR. VINER:  Absolutely.  Absolutely.  Rail or Leslie?

LISTNUM 1 \l 1345              MR. MERSON:  I'll ask Leslie too to speak to it.  On the odd occasion, yes.  You know, as we think through in this table of programming that only has, Metropia would be the only sort of feature produced, first run produced program that might fit the bill, a few of the documentaries that we have might fit the bill as well.

LISTNUM 1 \l 1346              But again, and these are fundamentally different businesses that focus on different audiences, the notion that you could run Canada people's history on Citytv in its prime schedule, that in effect prime schedule is a bit of a stretch.

LISTNUM 1 \l 1347              So, we don't think there is much opportunity for it at all, but we would like to have a flexibility if the opportunity arises.

LISTNUM 1 \l 1348              COMMISSIONER CUGINI:  Anything to add?

LISTNUM 1 \l 1349              MR SOLE:  I don't want to just add things for the sake of adding them, but everything that's running on in Ontario is new to all of Western Canada and opportunities being what they might be, we will have choices on where they might be exhibited in Alberta, for example, if this process is approved.

LISTNUM 1 \l 1350              We think the more people that see the type of documentaries that Madeline described, the better this system is served.

LISTNUM 1 \l 1351              We think that the more Canadians that see the products that Canadians make, the better the system is served.

LISTNUM 1 \l 1352              And that's what where we were talking about maximising our opportunity to put Canadian content on multiple platforms, markets, formats and so on.

LISTNUM 1 \l 1353              COMMISSIONER CUGINI:  Thank you.  My final line of questioning is in regards to third language programming.

LISTNUM 1 \l 1354              Is all of the third language programming that is currently on City bordered?

LISTNUM 1 \l 1355              Mr. MERSON:  We believe so.

LISTNUM 1 \l 1356              COMMISSIONER CUGINI:  I believe that in your application you've said you'd accept a condition of licence that would see no overlap of third language that's currently on City with the third language programming that is on the ‑‑

LISTNUM 1 \l 1357              MR. VINER:  Yes.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1358              COMMISSIONER CUGINI:  You have to have a role here, Mr. Viner.

LISTNUM 1 \l 1359              Those are all my questions, Mr. Chairman.  Thank you.

LISTNUM 1 \l 1360              THE CHAIRPERSON:  Thank you.  I would like to come back to your opening statement, Mr. Viner, where you say that, you know, the fundamental beliefs that only free over‑the‑air television can draw the mass audiences that are necessary to support the production of the highest quality program.

LISTNUM 1 \l 1361              And Mr. Merson, when he was talking about the future City, reiterated certainly.  He said two factors: localness and the ability to produce quality programming.

LISTNUM 1 \l 1362              Can you give me the rationale for this because it, at first blush, given the success on some specialty channels which have attracted huge audiences as in supposition that you can only produce quality program fairly and over‑the‑air television , it doesn't seem to be there?

LISTNUM 1 \l 1363              MR. MERSON:  I'm happy to take it since I sort of said it.

LISTNUM 1 \l 1364              You know, there is always quite a little bit of crystal ball and a gaze of the future and, you know, there is a model that has been developed for specialty television over the last 20 years where specialty TV services, you know, gained widespread distribution because there were parts of packages that people might have wanted to pay for.

LISTNUM 1 \l 1365              But if you look at the world of the future and the ability of sort of consume as to pick and pay, you might result ‑‑ you know, the specialty world might sort of have it all differently.

LISTNUM 1 \l 1366              You might find a specialty world and you're going to have a review of the specialty regulations coming up soon, but you might find a specialty world where people picked and paid on an individual basis and they might pay a little bit more, but they get the right to pick what's individual.

LISTNUM 1 \l 1367              But as we look at the world of the future, it's hard to believe that the specialty channels have not maximized their distribution, that their actual number of subscribers that they have over the next 20 years might very well decline, as people choose more to pick and pay.

LISTNUM 1 \l 1368              Now, the revenues might stay the same because they probably will be able to charge those devoted followers of the channels more, but ultimately we believe that the model will be fewer subscribers per channel for the specialties, but probably the same revenue as they charge a little bit more to those devoted subscribers.

LISTNUM 1 \l 1369              So, we expect their distribution over the years will probably shrink a little bit, whereas we think free over‑the‑air will always be the ‑‑ you pick with us mass medium.

LISTNUM 1 \l 1370              MR. VINER:  If I could just add, Mr. Chairman.  The facts are now that although the share of specialty channels themselves has actually grown and outstripped over‑the‑air in many cases.  Actual specialty services themselves, taken individually, none have the audience of a CTV or Global or City.

LISTNUM 1 \l 1371              In the individual markets, there is nobody that does as well as those stations.  So, I just point that out.

LISTNUM 1 \l 1372              THE CHAIRPERSON:  Okay.  Thank you.

LISTNUM 1 \l 1373              On programming, Stuart, any questions?  Helen?  Elizabeth?

LISTNUM 1 \l 1374              Okay then, let's go onto the next thing, local programming and synergies and maybe Stuart you have taken the lead.

LISTNUM 1 \l 1375              COMMISSIONER LANGFORD:  See?  Having said I have no questions on programming, I am now going to ask questions on programming.  That's what we do when we regulate.

LISTNUM 1 \l 1376              I want to start with Mr. Sole's opening statement this morning on page 5 where he said ‑‑ page 5 of your Opening Statement :

                      "We believe the local programming strategy currently being pursued by the City station is fundamentally sound."

LISTNUM 1 \l 1377              So, business as usual it seemed to me.

LISTNUM 1 \l 1378              And then, if edginess was the mantra of the Citytv folks trying to maintain control of City, the City stations, localness seems to be today's mantra from Rogers.  So, of course, we want to turn our attention to this if this is fundamentally sound and if it's business as usual.

LISTNUM 1 \l 1379              But, it's incredibly important, more important than edginess, which sometime ago we were told was absolutely the most important thing in the world and at that time I was looking forward to the return of the Baby Blue movie, but apparently that's not to be.

LISTNUM 1 \l 1380              I then want to go in this bit of an introduction, to paragraph 58 of your Supplementary Brief, because I'm trying to figure out what this localness will mean.  And in paragraph 58, you say:

                      "Each City station provides a wide range of local news and information programming.+

LISTNUM 1 \l 1381              And it's there that I begin to detect the possibility of a disconnect because, in my review of the hundreds of interventions, I found many from people who would disagree with that statement, who believe that in the last year City has abandoned true local news in all of its stations and all of the cities, except Toronto.

LISTNUM 1 \l 1382              And I would like you to respond to that and I would like us to try to examine it.

LISTNUM 1 \l 1383              And I suppose the first place to start may be for you to help me by looking at some of the schedules you provided, the multi‑coloured schedules, and telling me in cities other than Toronto, you can pick one as typical if you like, or look at all of them, where do I find the local news that 30 or so interveners say is gone from their cities?

LISTNUM 1 \l 1384              Is that a fair question?

LISTNUM 1 \l 1385              MR. MERSON:  Thank you, Commissioner Langford.  I'm going to ask ‑‑ fortunately I have Brad Phillips here who is the Station Manager in Vancouver.  He is somewhere, right there.  But I thought just by way of introduction I would just address the issue, you know.

LISTNUM 1 \l 1386              To me, the first question is localness and how is it you reflect your local communities and what is it you stand for and we sort of love what the City stations are doing.  I mean, they have innovated their ‑‑ they have responded to the marketplace realities wherever they had to, the shows have changed over time.

LISTNUM 1 \l 1387              They have managed to evolve themselves and really coved out a significant local niche in each one of the markets in which they are in.

LISTNUM 1 \l 1388              There is something about the way they look and they feel and they speak to their audience  that really says they're in touch with their band and they're in touch with the markets in which they're in.

And it's that connection that we seek to maintain.

LISTNUM 1 \l 1389              And as we look at the stations and you compare them to competitors, it's tough to argue that they haven't probably been more successful in building that local connection with their various communities.  It's something to be frank.  We have aspired to, over the years you know, to own broadcast properties and have found it difficult to replicate.

LISTNUM 1 \l 1390              The second part of the question about news is what is news in a modern world and I recall sort of a interaction we had at a hearing in Kitchener.  We're on Kitchener radio, and there was a discussion on sort of what news sounds like on radio in a HipHop station and it sounds completely different to what it does on a conventional radio station.

LISTNUM 1 \l 1391              And so too news in television has evolved from the straight hard goods into something that might be a little bit more softer on the one case or a little magazine, more magazine like in the other case, but ultimately it's an attempt to reflect local communities and what's going on in those local communities to the communities themselves.

LISTNUM 1 \l 1392              So, with that as a quick introduction, I'm going to ask Brad just to speak to Vancouver in particular and take you through the program schedule in Vancouver.

LISTNUM 1 \l 1393              MR. PHILLIPS:  Thank you Rael.  I guess I would start my comment to the question by saying that we do do news.  We do not do a news show at six p.m. in Vancouver, but we do do news.

LISTNUM 1 \l 1394              We do a four hour morning show breakfast television, the back bone of that show is news.  We have news anchors, we have reporters. Every important story that is on the cover of that morning paper is on our morning show.

LISTNUM 1 \l 1395              We have live trucks reporting from news events that are happening or where a news is about to happen that day and we like to think that if it's happening in our city or if it's happened in the last 24 hours, we have it covered on our morning show.

LISTNUM 1 \l 1396              I suppose I should take the time to just comment on the fact that why we have moved away from six p.m. as the place where we do it, and we've ran news at that time for a long time, for many years, and tried very hard to find an audience there.

LISTNUM 1 \l 1397              In the end, we faced the reality that we weren't attracting an audience, that the market was, and we believe is well‑served at six o'clock by the other stations and we made a decision, business decision that we thought was well fought out, well researched and we said, you know, morning is a growth area.

LISTNUM 1 \l 1398              It is widely accepted as a place where morning news is growing and where audiences are growing and that's a place where we should go and that's where we should put our flag ship shell.  And so, we moved our efforts into that area and we're proud of the show that we have on the air.

LISTNUM 1 \l 1399              COMMISSIONER LANGFORD:  Let's dig a little deeper if you don't mind.

LISTNUM 1 \l 1400              Why is the situation so different in Toronto?  Why can you obviously offer a diverse voice, a third voice if I can call it that, in Toronto, to Toronto people at 6h00, obviously make some kind of a go of it, make a financial case of it, but not in Vancouver and not in Calgary?

LISTNUM 1 \l 1401              Why is that?  Why does the breakfast television go from 6h00 to 8h30 in Toronto, but from 6h00 to 9h30 in Vancouver is perhaps another way to ask the question?

LISTNUM 1 \l 1402              I mean, people driving to work, unless they have incredible powers of concentration, simply will have a little trouble catching some of the news in the morning but probably would be home in the bower of their family to enjoy it over dinner or while they are preparing dinner.

LISTNUM 1 \l 1403              I am trying to find here why you would ‑‑ I don't want to use the word "abandon," I think that is a loaded word, but why you would make a decision to say, well, we are going to move away from I think what is arguably in the public interest, to give people a diverse choice of sources of news in Vancouver and other places but not in Toronto.

LISTNUM 1 \l 1404              Why isn't the same business model working?

LISTNUM 1 \l 1405              MR. MERSON:  You know, the beauty of the City stations is that they are not a network.  As you look across their schedule, there is no consistency throughout the schedule and it is a decision made by the previous management to sort of try to not cookie‑cutter the stations to get them to be as reflective and as responsive to the local markets as possible.

LISTNUM 1 \l 1406              So it isn't CTV that has a Canada AM that runs across the country of a national news show that runs across the country.  It is these designed to be local businesses that are managed locally that make decisions based on the realities of the local marketplace.

LISTNUM 1 \l 1407              As Brad said, they, at 6:00 at night, beat their heads against a wall with no success at developing an audience at 6:00 at night.

LISTNUM 1 \l 1408              Why didn't that work in Vancouver but work in Toronto?

LISTNUM 1 \l 1409              Toronto has 25 years of heritage and as the market developed and as the city grew it was able to sort of carve a niche for itself and build a news program at 6:00 at night.

LISTNUM 1 \l 1410              In Vancouver it has been much more difficult.  It has been difficult to do.  It has been a ‑‑ and the response to it has been logical, which is to say, look, the market at 6:00 is closed up, nobody is doing local Breakfast Television and nobody is doing local morning television.  It makes perfect sense to go back in and refocus our efforts on the mornings that no one else is serving.

LISTNUM 1 \l 1411              So for better or for worse, what you don't get by having individual markets is synergy and efficiency.  What you do get is local responsiveness.

LISTNUM 1 \l 1412              COMMISSIONER LANGFORD:  Okay.  So just tell me then how much news we are getting.  We don't have an hour of news.  You folks are obviously committed to news.  You chose news to show us here in your one clip, your one visual display today.

LISTNUM 1 \l 1413              Perhaps ‑‑ is it Brad?  I have forgotten the last name, sorry.

LISTNUM 1 \l 1414              MR. PHILLIPS:  Brad Phillips.

LISTNUM 1 \l 1415              COMMISSIONER LANGFORD:  Phillips.

LISTNUM 1 \l 1416              Mr. Phillips, perhaps we could go back to you and give me some idea of how much news is to be found in the Breakfast Television show in Vancouver ‑‑ sorry, the Chairman has something he wants to ‑‑

LISTNUM 1 \l 1417              THE CHAIRPERSON:  Just before you do that, your answer just now was all focused on City previous management, et cetera.  You are taking over.  You say our focus is localness and quality production.

LISTNUM 1 \l 1418              Are you going to change this?  I mean you said that they didn't have a cookie‑cutter approach, they didn't run it as a network.  Are you going to run it as a network?  Are you going to try to have a uniform program and how are you going to bring out your greater emphasis on news?

LISTNUM 1 \l 1419              MR. MERSON:  It is really a good question and I apologize for sort of mentioning prior management.  We think they have made an appropriate ‑‑ found an appropriate balance in the level of central coordination versus local responsiveness in what it is they have done.

LISTNUM 1 \l 1420              We do think one of the bits of magic of City is the fact that it is not a cookie‑cutter approach, that it has been adapted to each one of the local markets, and we would not change that at all.

LISTNUM 1 \l 1421              If you look at their current structure, there is the sort of loose‑tight philosophy that they have where they acquire the American programs centrally and they try to find the right spots for them in each of the markets but their local programming is fundamentally run by local management and is responsive to whatever the local needs are.

LISTNUM 1 \l 1422              So no, we would not change that at all.

LISTNUM 1 \l 1423              THE CHAIRPERSON:  (Off microphone)

LISTNUM 1 \l 1424              COMMISSIONER LANGFORD:  No problem.  No problem.  Apparently, we are a team up here.  I like it.  Bat it around, it gives me time to think.

LISTNUM 1 \l 1425              So we were going to take a look, Mr. Phillips, at the sort of content, and I don't expect you to come down to seconds here or even minutes but just sort of a sense of how big the news hunk is of this ‑‑ what is it ‑‑ about three‑hour window that you have got here in the morning.

LISTNUM 1 \l 1426              MR. PHILLIPS:  Right.  It is a four hour show.  It runs from 6:00 a.m. to 10:00 a.m.

LISTNUM 1 \l 1427              COMMISSIONER LANGFORD:  Right.

LISTNUM 1 \l 1428              MR. PHILLIPS:  And throughout those four hours we have news coverage.

LISTNUM 1 \l 1429              I will just give you a small example of last week on one of our shows on ‑‑ I think it was Thursday morning.

LISTNUM 1 \l 1430              We had a news item that Vancouver was voted the most livable city in the world and we had our reporter live at Granville Island talking to people about their reaction to that.

LISTNUM 1 \l 1431              The seawall around Stanley Park was supposed to reopen.  It wasn't open.  We had visuals of that and coverage of that.

LISTNUM 1 \l 1432              THE CHAIRPERSON:  Mr. Phillips, my colleague can't understand you.  Can you either speak up or put your mouth closer to the microphone?

LISTNUM 1 \l 1433              MR. PHILLIPS:  Certainly.

LISTNUM 1 \l 1434              Shall I repeat that or was that

LISTNUM 1 \l 1435              COMMISSIONER LANGFORD:  I just didn't get what Vancouver was the most what in the world, wonderful city or horrible city?

LISTNUM 1 \l 1436              MR. PHILLIPS:  Sorry.

LISTNUM 1 \l 1437              COMMISSIONER LANGFORD:  I just didn't hear the word.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1438              COMMISSIONER LANGFORD:  I mean with the garbage strike it is a fair question, isn't it?

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1439              MR. PHILLIPS:  I wasn't inspired by the Mayor to bring that particular story forward but that was just an example of a story that we had that was a news item that day and we were down talking to people about their reaction to that.

LISTNUM 1 \l 1440              So we are live on location every morning for breaking news activities.

LISTNUM 1 \l 1441              Out of our four hours, two and a half hours of that is news coverage.

LISTNUM 1 \l 1442              The remainder of the show is a variety of things:  performances by local artists, contests, all kinds of things that we think will be appealing to people as they wake up.

‑‑‑ Pause

LISTNUM 1 \l 1443              MR. PHILLIPS:  And Rael is reminding me that we run City News International at 6:30 at night.

LISTNUM 1 \l 1444              COMMISSIONER LANGFORD:  Okay.

LISTNUM 1 \l 1445              Let me then go to paragraph ‑‑ to try to understand what this means and I don't think I will be much longer ‑‑ paragraph, I think it is 30 ‑‑ let me have a look.

‑‑‑ Pause

LISTNUM 1 \l 1446              COMMISSIONER LANGFORD:  Excuse me, I have just ‑‑ I have lost it.

LISTNUM 1 \l 1447              Yes, paragraph 32, sorry, of your supplementary brief, the second bullet or the second point where you talk about your long‑term objectives.

LISTNUM 1 \l 1448              One of them is :

                      "...to deepen and enhance service to local communities..."  (As read)

LISTNUM 1 \l 1449              If you had stopped there, I think I would have had no problem with it.

                      "...through broader interregional perspectives."  (As read)

LISTNUM 1 \l 1450              For some reason that sounds like a contradiction in terms to me because isn't interregional suspiciously like national?

LISTNUM 1 \l 1451              So I just don't think I understand that.  Can you tell me how that approach works?  How do you broaden what you are calling today local by going into something that is interregional?

LISTNUM 1 \l 1452              MR. SOLE:  Commissioner Langford, it is historic.  I think when you look at Citytv you will see rebroadcasters in Ottawa and in London.  We do not intentionally ignore those interregional stories when they co‑relate or when they reflect on a broader expression.

LISTNUM 1 \l 1453              And the same thing is true with the former Craig stations with Lethbridge and Red Deer.

LISTNUM 1 \l 1454              COMMISSIONER LANGFORD:  So it is context, is that what you are saying?

LISTNUM 1 \l 1455              MR. SOLE:  It is acknowledging something beyond the metropolitan area of these cities and connectivity to them.

LISTNUM 1 \l 1456              COMMISSIONER LANGFORD:  Even in Toronto that happens?

LISTNUM 1 \l 1457              MR. SOLE:  Well, there is Ottawa and London coverage from the Woodstock transmitter.  There is coverage of ‑‑ I don't like this distinction ‑‑ between 416 and 905, between east and west, the Golden Horseshoe, Cottage Country ‑‑

LISTNUM 1 \l 1458              COMMISSIONER LANGFORD:  So it is regional at that level?

LISTNUM 1 \l 1459              MR. SOLE:  Yes.

LISTNUM 1 \l 1460              COMMISSIONER LANGFORD:  We are not talking about Ontario and ‑‑

LISTNUM 1 \l 1461              MR. SOLE:  No.

LISTNUM 1 \l 1462              COMMISSIONER LANGFORD:  ‑‑ the western provinces or something.

LISTNUM 1 \l 1463              MR. SOLE:  It is contiguous.

LISTNUM 1 \l 1464              COMMISSIONER LANGFORD:  Ah! Okay.

LISTNUM 1 \l 1465              THE CHAIRPERSON:  Intraregional.

LISTNUM 1 \l 1466              COMMISSIONER LANGFORD:  Intraregional as opposed to interregional.

LISTNUM 1 \l 1467              We both had the same Latin teacher 40 years ago but he did better at it than I did actually.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1468              COMMISSIONER LANGFORD:  Moving right along, I was struck, when I watched the television show that you gave us here this morning, by the pictures because I couldn't decipher the words.  I didn't understand some of them but I am going to have a chat later with commissioners Cugini and del Val.

LISTNUM 1 \l 1469              And I realized ‑‑ even I realized that there were common links between this coverage.  There seemed to be something going on at City Hall and a lot of people in their own ways were interested in it.

LISTNUM 1 \l 1470              I wondered to myself whether I could borrow some of the kind of overlap questioning that Commissioner Cugini was talking about on a national level, if I can call it that, on a big priority programming level and bring that down to the local level and I wondered whether there might not be a lot more room for programming synergies there.

LISTNUM 1 \l 1471              You might have to dub some of the language but have you given that any thought?

LISTNUM 1 \l 1472              MR. MERSON:  We have given it a lot of thought and we are really fortunate to have Stephen Hurlbut who is in charge of City news here today and Renato Zane who is in charge of OMNI's news here today.

LISTNUM 1 \l 1473              The thing about City is every aspect of the business was as synergized as it possibly could get.  I mean there was sort of a multiplicity of uses of a particular piece of footage or programming and it is a level of synergy that is just not attainable to us.

LISTNUM 1 \l 1474              As we look at the news operations you could see ‑‑ and we wanted to demonstrate by that clip just how completely and utterly different the news as it is presented on the stations is.

LISTNUM 1 \l 1475              Firstly, they are in different languages.  Secondly, the editorial voice is completely different, they are speaking to different communities with different concerns.  And thirdly, the way it is commissioned and the way you send people out to do these kinds of things is so completely different.

LISTNUM 1 \l 1476              Within our own operations we have a number of news operations.  We have 680 News in radio and we have OMNI in television and we have Maclean's as a magazine.

LISTNUM 1 \l 1477              If you looked at the level to which there is any sort of cross‑utilization of product or commissioning of footage or stories from those businesses, you would argue that we had failed miserably if there was any attempt.

LISTNUM 1 \l 1478              They are utterly different.  They speak to different audiences.  It would be catastrophic if we were to try to change or dilute their focus because it is a very competitive world out there and the audience sees right through it.

LISTNUM 1 \l 1479              I want just to hand off to Stephen first to talk a little bit about City and its focus.

LISTNUM 1 \l 1480              Over to you.

LISTNUM 1 \l 1481              MR. HURLBUT:  Thanks, Rael.

LISTNUM 1 \l 1482              Mr. Commissioner, City sees itself as the unconventional conventional station but, by and large, we play in the mainstream and for 25 years every night at 6:00 we will watch CTV, CBC, Global, NCH and Citytv at the same time.  We do not monitor OMNI.  We don't even consider them to be on the same competitive landscape.

LISTNUM 1 \l 1483              We can't service our news programs like Breakfast Television in the style, in the unique style and locally focused ‑‑ I don't want to use the word "edginess" but the manner in which ‑‑

LISTNUM 1 \l 1484              COMMISSIONER LANGFORD:  Don't say edginess.

LISTNUM 1 \l 1485              MR. HURLBUT:  I won't.

LISTNUM 1 \l 1486              COMMISSIONER LANGFORD:  For God's sake, don't say edginess.

LISTNUM 1 \l 1487              MR. HURLBUT:  We can't focus our cameras and talk to our reporters if indeed we have to do this in collusion with other operations.  We can't do that with the people we compete with, let alone someone whose programs are distinctly narrowcast towards heritage third languages.

LISTNUM 1 \l 1488              For us to effectively fill Breakfast Television and our newscasts, we need completely separate management, news directors, assignment editors, producers, cameramen, reporters.

LISTNUM 1 \l 1489              There are rare special opportunities where we may be able to share rent or a debate, an instance like that where we may go in as a consortium.

LISTNUM 1 \l 1490              Currently, I am negotiating with CTV and Global for the upcoming provincial debate on behalf of the A Channels and City.  Should this go through, that would ‑‑ Rogers would take that place.

LISTNUM 1 \l 1491              COMMISSIONER LANGFORD:  If I can swing from you ‑‑ and I am very grateful for what has been going on for 25 years.  I am really grateful I don't have to watch four screens at once at night.  Sometimes I find one almost more than I can bear.

LISTNUM 1 \l 1492              MR. HURLBUT:  I know the feeling.

LISTNUM 1 \l 1493              COMMISSIONER LANGFORD:  I want to swing now back to the kind of notion of that was then and this is now.

LISTNUM 1 \l 1494              I take your point, Mr. Merson, that the synergies at the same level aren't there but surely there must be some synergies.  I mean surely a corporate entity like Rogers is not going to just simply create a whole standalone station in a city like Toronto or Vancouver where it has obvious connections with other stations.

LISTNUM 1 \l 1495              Where are the synergies?  Are they with your community channel?  Will we see Mr. Goldhawk's show on Citytv now?  I mean are there any synergies here at all?

LISTNUM 1 \l 1496              MR. MERSON:  We have thought about ‑‑ and I do want to give Renato just a chance to talk about OMNI.  He would ‑‑ and I don't mean to steal the words from his mouth but he would tell you that he produces four different newscasts nightly ‑‑ five different newscasts, I apologize, and every one of them is different.

LISTNUM 1 \l 1497              But when you look at the synergies that have been achieved in that regard, what you see is synergy in terms of back office.  So you don't need five wires from CNN for your footage for international news, you need one contract with CP News.  You can locate everybody in one set of premises.

LISTNUM 1 \l 1498              But essentially, once you pass the back office, there are no synergies.  There were no synergies at the OMNI level between the five different newscasts and there will be no synergies beyond that level with the Citytv stations as well.

LISTNUM 1 \l 1499              They have separate editors, they have separate directors, the stories are commissioned separately, the reportage goes out by and large separately depending what the local focus is and what the local events are, and the footage is assembled and produced completely and utterly separately.

LISTNUM 1 \l 1500              As Stephen said, there is going to be the odd occasion, the provincial elections coming up.  The provincial government doesn't want to accredit thousands of different news bureaus.  They organize their activities together and I think you will see some of that.

LISTNUM 1 \l 1501              Will there be footage that might be developed in one environment that might be used in another environment?  It is absolutely possible.

LISTNUM 1 \l 1502              The question for us really is:  Will you have any ability to commission those stories on a daily basis in such a way that you coordinate your activities?

LISTNUM 1 \l 1503              And the answer to that is:  Absolutely none, there are none, there have not been any in the past and there will not be any in the future.

LISTNUM 1 \l 1504              I didn't mean to steal your thunder, Renato, if you wanted to add anything.

LISTNUM 1 \l 1505              MR. ZANE:  Thank you, Rael.

LISTNUM 1 \l 1506              Yes, on the editorial side, absolutely, synergies are very difficult even within one plant like OMNI where we produce five different newscasts in five different languages.

LISTNUM 1 \l 1507              News gathering, technically, is expensive and that is the area where, as Rael says, synergies are possible.

LISTNUM 1 \l 1508              Video and sound is really raw material.  Where the contextualization happens is on the editorial side.  So with respect to video and sound it makes sense for us.

LISTNUM 1 \l 1509              Currently, City and OMNI both subscribe to CNN feeds for international news, for example.  Stephen mentioned fiber lines, satellite feeds.  In that area, of course, there are synergies but where the difference is going to be very distinct is on the editorial side.

LISTNUM 1 \l 1510              To give you one example, the Toronto International Film Festival is coming up in Toronto.  OMNI has five newscasts and we produce a number of weekend programming in various languages that are not prime ethnic, as we call them, and for the Toronto International Film Festival, we have 12 people accredited representing 10 different editorial voices within OMNI alone.

LISTNUM 1 \l 1511              So the synergy, of course, is in the gathering of certain common video but every one of those reporters is going after a specific angle that is specific to their community.  We don't think that is going to change substantially when City becomes the sixth news operation, for example, in the context of Rogers Media.

LISTNUM 1 \l 1512              MR. VINER:  If I could just add, Commissioner Langford, you know, at the root of it we are in the audience‑building business, that is what we are about, and so all of our newspeople are concerned about building the biggest audience they possibly can.

LISTNUM 1 \l 1513              So to the extent that we homogenize or dilute that effort, we will be working against those goals.  I just wanted to add that.

LISTNUM 1 \l 1514              That clip showed you, I think, that although we were covering the same story, we clearly did it with different crews, we clearly did it with different reporters and we talked to different people.  So the synergies in our news coverage are virtually nonexistent.

LISTNUM 1 \l 1515              THE CHAIRPERSON:  Stuart, I don't want to cut you off because this is a very important subject but I am also interested in the health of the audience and the panel, so we are going to have a 15 minute health break now.  Thank you.

LISTNUM 1 \l 1516              COMMISSIONER LANGFORD:  Thank you.

‑‑‑ Upon recessing at 1104 / Suspension à 1104

‑‑‑ Upon resuming at 1124 / Reprise à 1124

LISTNUM 1 \l 1517              THE CHAIRPERSON:  Okay, would you please take your seats.  We want to resume.

LISTNUM 1 \l 1518              Stuart, I believe you are on local news, continue please.

LISTNUM 1 \l 1519              COMMISSIONER LANGFORD:  Thank you very much.

LISTNUM 1 \l 1520              I think we are almost ‑‑

LISTNUM 1 \l 1521              THE CHAIRPERSON:  Can we cut the music please?  Madam Roy, can you turn off the music please?

LISTNUM 1 \l 1522              COMMISSIONER LANGFORD:  Do you mind going over the music?  Oh, it is gone, all right.  I didn't even notice it, sort of getting ready for Christmas shopping or something.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1523              Of course, when you have three daughters music is a sort of constant companion if you use the word broadly, music I mean.

LISTNUM 1 \l 1524              I think I have covered this.  I did mention the one specific question, which I think might have gotten lost in the shuffle, and that is with regard to your community channel, which is your other voice, particularly in Toronto.  And you have, for example, the show I mentioned was Goldhawk, which is a very popular show as I understand and very professional show, and would it be possible that you might run that on City in some format?

LISTNUM 1 \l 1525              MR. MERSON:  You know, the first words out of my mouth are always never say never, but I can't see the opportunity.  We currently don't run any programming from the community channel on OMNI and I can't see why that would be any different with City.

LISTNUM 1 \l 1526              COMMISSIONER LANGFORD:  Right.

LISTNUM 1 \l 1527              MR. MERSON:  My instinct is always just to say never say never and I know, you know, you expect us to say give us flexibility, so ‑‑

LISTNUM 1 \l 1528              COMMISSIONER LANGFORD:  But it is not something you have even discussed?

LISTNUM 1 \l 1529              MR. MERSON:  No.

LISTNUM 1 \l 1530              COMMISSIONER LANGFORD:  That kind of, to use that horrible word, synergy, which we seem to be locked onto now, you haven't discussed that kind of possibility?

LISTNUM 1 \l 1531              MR. MERSON:  It hasn't come up.  We have never done it at OMNI and I can't see how we would do it on City and ‑‑ but my instinct is to say never say never.

LISTNUM 1 \l 1532              COMMISSIONER LANGFORD:  Okay.  Moving then into the pure notion of synergies ‑‑ and I will be so glad when this line of questioning is over and I think I really only have one.  I have listened to you this morning talking about kind of sharing a CP subscription or a line to CNN or whatever, a bit of camera pooling on major political events, that type of thing.  I have also heard you this morning talking about, you know, the tightness of even 18 months to divide what has been City and to take your piece away with you.

LISTNUM 1 \l 1533              As you plan that and construct facilities for City, is there no thought given at all then or what thought perhaps is the better way of putting it, is how you can literally make some economics, some savings out of putting together some of your plants?  You have got everything from the Shopping Channel and the community channel right through to OMNI and now City.

LISTNUM 1 \l 1534              Are you actually going to out and build a brand new stand‑alone plant for this city or..?  And there is no trick to this question, we don't regulate where you situation or what you build or whatever, but it kind of fascinates me that there aren't ‑‑ I know you will never have the synergies, as you said, that MuchMusic and City and everything had.  But what is out there, what is available?  What is the plan in that kind of sense?

LISTNUM 1 \l 1535              MR. MERSON:  We do see some real ability to build some scale.  You know, where is it you are looking for scale?  You are looking for scale in the back office.  Obviously, you want a single traffic department, you want a single accounting department, you want a single human resources department, you want benefit plans to be standardized, those types of things.  So there, you know, generally we will be able to exert some synergies.

LISTNUM 1 \l 1536              We see sales synergies so, you know, when you look at television operations there are two distinct types of sales; there is a local sale, which makes up about 20 per cent of total sales and there is national sales that makes up around 80 per cent of the sales.  The local sales forces are like local production, they have to hit the ground, you need salespeople who are single‑minded and they focus on the operation and they will, by their nature, be local.

LISTNUM 1 \l 1537              The national sales efforts really can be combined.  City had combined them and everyone of the other major broadcasters has combined them into single operations, so we too will be able to combine our national sales efforts for certainly OMNI, City, the specialty channels that we have, possibly Sportsnet, I don't know because it is so different, but there is some room there to build it.

LISTNUM 1 \l 1538              And where that helps you is just in the sense that the agencies are prepared to consider you, they think of you when they think of making a sale.  If they have to think about 20 different places they have to go to to get their sales sort of completed, they tend to discount it. So the notion that you are there, you are ready for consideration is important.  So national sales efforts will be significant.

LISTNUM 1 \l 1539              Programming and conventional programming, you know, local programming I think we have gone to pains to explain there isn't much potential for synergy.  The other two areas of programming; the one is the area that City did such a good job in, which is shared Canadian programming, requires a little bit of thought.  You know, I think we have gone to pains to say we think they went too far.  Their programming strategy in City laterally became as much driven by the ability or the need to amortize the cost of their programming over multiple sources and we think that has probably gone too far.

LISTNUM 1 \l 1540              But simply in the context of me able to sort of commission that programming and ensure that the best producers of this programming come to you, you will be considered, your heft is important.  The final element of programming, as we discussed, is the acquired schedule and the ability to acquire the best non‑Canadian programming and there heft again does help.  As we say, it isn't a perfect match, because the one does prime time and the other doesn't do primetime.  But having said all that stuff, heft does help.

LISTNUM 1 \l 1541              MR. VINER:  If the question though, Commissioner Langford, also included just plain facilities ‑‑

LISTNUM 1 \l 1542              COMMISSIONER LANGFORD: Bricks and mortar.

LISTNUM 1 \l 1543              MR. VINER:  Yeah, brick and mortar.  You know, OMNI has about 80,000 square feet and it is hard to determine how much of the City operation is actually CityTV, but let us say 60.  We think co‑location would be beneficial.  The problem I have got is it will cost us $50 million and I am not going to rent a place that I put $50 million worth of equipment into.  So we will have to find a place, if we can, and it is by no means certain that we can, that could accommodate the co‑location of the facilities.

LISTNUM 1 \l 1544              The only synergies, as small as they are, that would exist are on the over‑the‑air stations.  There is no real other synergies.  And those, as we have said, are small enough.  So we would like to own a property, we believe that being storefront is important to City and we need to sort of be in the city.

LISTNUM 1 \l 1545              Is it possible that we could do all of the things that Rael said sort of in an office setting, the back office, and combine those and then have different technical facilities?  Yes, that is possible.  Would you like them together?  Yes, we would like them together.

LISTNUM 1 \l 1546              COMMISSIONER LANGFORD:  And so under that scenario you would be moving both operations then, you would be looking for a brand new plant that would house both?

LISTNUM 1 \l 1547              MR. VINER:  Yes.  I think it would be very difficult to move the City operation into the OMNI location.  I just don't think we have enough room.

LISTNUM 1 \l 1548              COMMISSION LANGFORD:  So you would move them together or in staged moves or however?

LISTNUM 1 \l 1549              MR. VINER:  Over time, if we could.  I would like to emphasize it is by no means certain that we could do that.

LISTNUM 1 \l 1550              COMMISSIONER LANGFORD:  And then why wouldn't you have common facilities in the sense of edit booths, for example, or common direction from one news assignment editor or assignment editors working as teams?  Why wouldn't that work?

LISTNUM 1 \l 1551              MR. VINER:  For the reason that I tried to explain before.  We are in the audience building business to the extent that, you know, sending out a common team dilutes what your programming strategy, new strategy is, it makes no sense.

LISTNUM 1 \l 1552              COMMISSIONER LANGFORD:  No, I am not talking about sending out a common team in the sense of journalists, but what about the person who does the sending, the assignment editor?  Can you work with a common assignment editor or is that just too much for one person?

LISTNUM 1 \l 1553              MR. VINER:  With greatest respect, it doesn't make any sense because each of the communities ‑‑

LISTNUM 1 \l 1554              COMMISSIONER LANGFORD:  A lot of what I say doesn't make any sense.

‑‑‑ Laughter / Rires

LISTNUM 1 \l 1555              MR. VINER:  No, but it doesn't make any sense for us I am trying to say.  The communities that we serve have different priorities, so the stories are going to be different that we cover and so having a common assignment editor doesn't make any sense.  I am talking as if I am skilled in news, Renato or Stephen should respond to this.

LISTNUM 1 \l 1556              COMMISSIONER LANGFORD:  So there really is no need for us to have any concerns about kind of a lack of diversity of voices here in anyway, a lack of originality, a lack of freedom, in the sense we don't have to setup any kind of artificial walls, you guys are going to set them up yourselves is what you are saying?

LISTNUM 1 \l 1557              MR. VINER:  Because they are there ‑‑

LISTNUM 1 \l 1558              COMMISSIONER LANGFORD:  I don't think we were predisposed to do that.  I don't want to cause alarm, but that has happened before in the sense of, you know, separations between different news voices.

LISTNUM 1 \l 1559              MR. VINER:  Sure.

LISTNUM 1 \l 1560              COMMISSIONER LANGFORD:  But what you are telling me today is, in your opinion, that wouldn't be necessary because it is done ‑‑

LISTNUM 1 \l 1561              MR. VINER:  Wouldn't be necessary and we have an economic imperative to ensure that it doesn't.

LISTNUM 1 \l 1562              COMMISSIONER LANGFORD:  On the other hand, if we asked you to do it it wouldn't be much of a hardship I guess because you are doing it anyway?

LISTNUM 1 \l 1563              MR. VINER:  Yes.  Look, it would be interesting to see how you could do that.  But certainly, you know, we would be happy to agree to sort of maintaining independent news organizations, so that wouldn't bother us.

LISTNUM 1 \l 1564              COMMISSIONER LANGFORD:  All right. Thank you, those are my questions, Mr. Chair.

LISTNUM 1 \l 1565              THE CHAIRPERSON:  Okay.  Any other questions from any of the other commissioners?

LISTNUM 1 \l 1566              Okay, then let us go onto the next area, which is valuation and I believe, Elizabeth, you are taking the lead?

LISTNUM 1 \l 1567              COMMISSIONER DUNCAN:  Yes.  We don't have many questions on the valuation, because everything has been very thorough and straightforward.

LISTNUM 1 \l 1568              As you know, that for the purpose of valuing the benefits or determining the benefits the Commission adds the purchase price paid plus adjustments.  And in this case we have already added and you have agreed to add the Vancouver and Calgary properties.  In addition to that, the Commission adds future amounts to be paid on leases and other commitments.  And you advised us that you are not able to provide a pro forma balance sheet.  However, we still need to determine a number for the purpose of determining the tangible benefits.

LISTNUM 1 \l 1569              So we are just wondering, in regards to your letter of August 28, item 2(a), if we could have a list of all the CHUM leases and other commitments being assumed by Rogers.  And so for that what we would need, for example, would be perhaps the remaining term and the amount left to be paid and a brief description of the item leased or just a general description.

LISTNUM 1 \l 1570              MR. MERSON:  We would be happy to do that.  I know you are aware of this distinction being capital and operating leases and which ones really apply.  So we struggled a little bit with whether this was every single lease that we might possibly have, including a photocopier lease where, you know, ownership never passes of the asset or whether it was stuff that was sort of more long‑term in nature, where there was some dispute about whether the lease itself should be capitalized.

LISTNUM 1 \l 1571              So we struggled a little bit with was it every single lease?

LISTNUM 1 \l 1572              COMMISSIONER DUNCAN:  Well, I think it would be useful if you put every lease and if you just put the brief description the, if staff ‑‑ and even if you want to segment it so that you have things that you consider to be more current in one section.  But the intent is that any liabilities that you are assuming adds onto the transaction cost.  So if there are future payments to be made for those liabilities they get added on.  This isn't unique for this instance here, of course, this is ‑‑

LISTNUM 1 \l 1573              MR. MERSON:  No and, you know, we heard the discussion in the other hearing as well, and it was a difficult one for us.  You know, we know generally accepted accounting principles and I know, Commissioner, you are completely aware of this, you know, requires you to capitalize leases where all of the risks and benefits of ownership actually pass to you in essence irrespective of what the paper actually says and those are the ones that are capitalized.

LISTNUM 1 \l 1574              The other operating leases which are, in the ordinary course of business, are in respect of ‑‑ so the liabilities don't actually exist at the point in time of the transaction, they only crystallize after the transaction is done and after the service is used whether, you know, if it is a lease on a property.  So it is difficult to attribute that liability to a point in time.  So we have had some difficulty with the concept.

LISTNUM 1 \l 1575              COMMISSIONER DUNCAN:  The liabilities actually are ones that you are assuming because you are assuming the leases, so they are liabilities.  And in the way it is applied, the Commission calculates the value of the transaction for this purpose as being this or ‑‑

LISTNUM 1 \l 1576              MR. MERSON:  We would be happy to supply the leases.

LISTNUM 1 \l 1577              COMMISSIONER DUNCAN:  I appreciate that, thank you.

LISTNUM 1 \l 1578              And then further along on that same line with regards to the properties to be leased in the transitional agreement.  And I noted your comments about those, but if you could provide us with a schedule detailing the amount that would be allocated, to the best of your ability.  So you have a big pool of money, I guess, that you are going to spend on this, if you could give us a list of the properties according to the transition schedule and the amounts that you'd attribute to it we would appreciate that as well.

LISTNUM 1 \l 1579              MR. MERSON:  We are happy to do it.

LISTNUM 1 \l 1580              COMMISSIONER DUNCAN:  Okay, thank you.  I am just wondering too, just on that point, you mentioned that the pro forma balance sheet that we asked for, as I mentioned, is not going to be available until closing.  Would you mind at closing then submitting that so we will have a ‑‑

LISTNUM 1 \l 1581              MR. MERSON:  Absolutely.

LISTNUM 1 \l 1582              COMMISSIONER DUNCAN:  ‑‑ copy of that?  Thank you.  And with regards to the allocation of tangible benefits that might result as a result of these adjustments, do you have a preference as to how those are allocated?

LISTNUM 1 \l 1583              MR. MERSON:  I have to admit we haven't discussed it.  Could we think about it quickly and get back to you?

LISTNUM 1 \l 1584              COMMISSIONER DUNCAN:  Yes, I am sure that is fine.

LISTNUM 1 \l 1585              THE CHAIRPERSON:  Can I come back to this issue of capital leases?  I don't quite understand your difficulties.  As you mentioned, it is a generally accepted accounting principle.  Obviously, accounts have to apply that and they have to use their wisdom and their experience.  You have outside auditors, surely you can take your leases, put them into lists and have your outside auditor certify that according to generally accepted accounting principles, these are considered capital and these are considered current.

LISTNUM 1 \l 1586              I don't see why the operational problem here is making the distinction?

LISTNUM 1 \l 1587              MR. MERSON:  No, there is none, we are happy to do it.

LISTNUM 1 \l 1588              THE CHAIRPERSON:  Any other questions from anybody?

LISTNUM 1 \l 1589              COMMISSIONER DUNCAN:  I actually have more questions.

LISTNUM 1 \l 1590              THE CHAIRPERSON:  Oh sorry, I thought that you were finished.

LISTNUM 1 \l 1591              COMMISSIONER DUNCAN:  That is okay.

LISTNUM 1 \l 1592              So you are going to advise us on how you are going to want any adjustments, if there is any and adjustments of the tangible benefits.

LISTNUM 1 \l 1593              Referring to your answer to 3(b) on that letter where you deal with the allocation of benefits with respect to the Vancouver and Calgary properties.  I just want to make sure that I understand here.  It appears that you are referring now to a fourth fund, if you like, one that you call the documentary program development. Is it a separate fund or is it actually part of the Allan Waters or..?

LISTNUM 1 \l 1594              MR. STRATI:  Currently, there is money for production and there is also money for development in the Allan Waters initiative.  This would be an extra element, if you will, that would be an extra ‑‑ a specific million dollars would be towards documentary development and any additional money remaining from that would go back into the 32.5 or the production side of the Allan Waters content initiative.

LISTNUM 1 \l 1595              COMMISSIONER DUNCAN:  What is the amount of the current documentary portion?

LISTNUM 1 \l 1596              MR. STRATI:  Well, there is a development envelope overall, but there is no documentary envelope so in fact it is creating, if you will ‑‑

LISTNUM 1 \l 1597              COMMISSIONER DUNCAN:  Okay.

LISTNUM 1 \l 1598              MR. STRATI:  ‑‑ a separate development envelope for documentary.

LISTNUM 1 \l 1599              COMMISSIONER DUNCAN:  Okay, thank you.  So then I understand that.  So then in the second paragraph in that answer can you just clarify how you are proposing to allocate any adjustment that might arise as a result of the difference between the final value of the Calgary property and your preliminary estimate?  I am just not quite sure if you want it all to go to the Allan Waters or if you want it to be separated.

LISTNUM 1 \l 1600              MR. STRATI:  Commissioner Duncan, just like we did with the development fund phase at a million, any remainder amounts, including any fluctuation between the initial estimate of the Calgary property and additional benefits payable on that would also go towards the production initiative.

LISTNUM 1 \l 1601              COMMISSIONER DUNCAN:  Okay, that answers it for me.  Thank you very much.

LISTNUM 1 \l 1602              That is it, Mr. Chairman.

LISTNUM 1 \l 1603              THE CHAIRPERSON:  Okay.  I see a shaking of heads, so I guess there are no more questions on valuation.

LISTNUM 1 \l 1604              Then let us go to the tangible benefits package.  And, Helen, you taking the lead?

LISTNUM 1 \l 1605              COMMISSIONER del VAL:  Yes, thank you.

LISTNUM 1 \l 1606              I know that we have a letter issued to you regarding the CTF and our Chairman will address that question at the end of my questioning.

LISTNUM 1 \l 1607              I note that your benefits package right now you propose a self‑administration and short‑term funding package.  Just focusing on self‑administration right now, can you ‑‑ I know you choose self‑administration for your own purposes ‑‑ but can you just address the issue of how in your view do you think the self‑administration of benefit funds have benefited the Canadian broadcasting system as a whole in a way that third‑party administration of such funds would not have?

LISTNUM 1 \l 1608              MR. MERSON:  Thank you, Commissioner del Val.  I will answer and then ask Diane to add anything she might want to add.

LISTNUM 1 \l 1609              We think there is a fabulous precedent of self‑administered funds producing the highest quality Canadian priority programming that serves Canadian audiences, and Corner Gas is evidence of it.  It is an established method of doing business that really has worked well and has been successful.

LISTNUM 1 \l 1610              There are a couple of other issues for us.  There are all the elements of sort of we know our markets, you know, we know what it is we need to develop for our audiences.  I feel like I am saying "we" too many times, because your question really is how does it work for the system, why is it in the best interest for the system?  We are responsive to our markets, we know what it is that they are looking for, we have the ability to try to sort through numbers of possible applicants to deliver what it is that they need.

LISTNUM 1 \l 1611              And as you look at sort of Canadian broadcasters' ability to actually produce the highest quality Canadian programming outside of these benefit funds, and particularly in a situation like City, you find it is a little limited.

LISTNUM 1 \l 1612              City, for example, is a business that is losing money currently, it is spending roughly a little less than $4 million a year on priority programming, and in the absence of this funding likely would limit the amount of money that it spent on benefits to the $4 million, to what it is that is currently done.  It is just lacks within the financial framework within which it works, it lacks resources and the ability necessary to do more with priority programming.

LISTNUM 1 \l 1613              COMMISSIONER del VAL:  I am sorry to interrupt, but why self‑administration?  I understand the success stories that you point to, but why was self‑administration of the benefits fund an element of that success?  Why couldn't a third party administrator achieve the same level of success?

LISTNUM 1 \l 1614              MR. MERSON:  I am going to ask Diane just to ‑‑ and perhaps I will finish up as well ‑‑ give her experiences and how it has worked with City to date.

LISTNUM 1 \l 1615              MS BOEHME:  Thank you very much.  I think one of the key things that self‑administered funds brings to the table is flexibility and certainly in terms of timing.  Flexibility, when it comes to broadcast ‑‑ an idea comes to you when an idea comes to you and very often it is tied to performer availability, it is tied to camera availability, technical availability.  You have the ability to put a show into production, schedule it the way you are supposed to schedule it and plan your production schedule that way.

LISTNUM 1 \l 1616              For instance, there was an example of a show that we did a few years ago on the Citytv side of things called "American Whisky Bar".  It was something that came to us and we decided we were going to make into event programming.  We did it in partnerships with an independent producer.  It was in fact live television.  We went live‑to‑air with it.

LISTNUM 1 \l 1617              It was something that because it was live, because it was time sensitive it would not have met a funding criteria.  We would have had to wait to have had it done.  The director, who was Bruce Mcdonald, was a very busy feature film director at that time and a funding system that was third‑party administered by its very nature tends to be very highly structured and doesn't allow things that get funded outside of that.

LISTNUM 1 \l 1618              It became a very important program and it was a big event for us at the time and obviously those sorts of flexibilities are something that in a highly structured fund we cannot guarantee how much money is going to come back to us to meet those needs.

LISTNUM 1 \l 1619              COMMISSIONER del VAL:  You don't see sort of any structure of third‑party administration being able to overcome that problem?

LISTNUM 1 \l 1620              MS BOEHME:  No, I don't.  I think a third‑party fund has to be to the benefit of all of the people who are the participants in it, and inevitably "all of the people" means some of the people get excluded when you don't want to fit within those little paradigms.

LISTNUM 1 \l 1621              COMMISSIONER del VAL:  Thank you.

LISTNUM 1 \l 1622              Then focusing on the issue of long‑term versus short‑term funds and a finite fund as what you have proposed.  I think since 2000 there have been injections of quite large amounts of finite funds.

LISTNUM 1 \l 1623              So why did you choose a short‑term fund?

LISTNUM 1 \l 1624              MR. MERSON:  When we looked, the two elements of the benefit fund, the one of the Craig benefits that remain unspent and the other element is the Alan Waters production fund.

LISTNUM 1 \l 1625              As relates to Craig benefits, I must admit, you know, we have been educated to this process ‑‑ because this isn't a business we are currently in ‑‑ by Diane and by her colleagues at City.  But, as she explained to me, the benefits ‑‑ this isn't like walking out and buying something.  It takes time to hear applicants, commission the stories, get the programs into production and actually spend the money.  The bulk of the money gets spent when the production actually happens.

LISTNUM 1 \l 1626              So the Craig benefits to date, which is a seven‑year benefit program, three years have gone by, really not much has been spent about them.  We inherit that obligation.  We will spend the remaining benefits over the course of the next four years.

LISTNUM 1 \l 1627              And Diane can speak to you about the program she has in place that will spend that money.

LISTNUM 1 \l 1628              So it is important to recognize it takes a bit of time to commission these stories.

LISTNUM 1 \l 1629              The second element of it is, we do believe City's will need the funding, to be frank.  City does not have much of a CTF envelope.  It really has almost zero of a CTF envelope.  Diane can tell you a little bit more about the history.

LISTNUM 1 \l 1630              So we do need, in order to reinvigorate the priority programming and produce some good‑quality priority programming, we will spend the funds over a short period of time and want to spend them over a short period of time.

LISTNUM 1 \l 1631              If I can just elaborate on the CTF a little bit, it is an irony of City that even though it does this much priority programming it has almost no CTF envelope, and the reason it has almost no CTF envelope is because the bulk of the original production was done within the specialties.  So the specialties have significant CTF envelopes and City itself has none.

LISTNUM 1 \l 1632              So we need to spend this money over a fairly short period of time to ensure that City does have the highest quality priority programming available in the service.

LISTNUM 1 \l 1633              Diane, sorry, if you wanted to add any more.

LISTNUM 1 \l 1634              MS BOEHME:  Thank you.  Yes.

LISTNUM 1 \l 1635              I think obviously to be able to spend the money when you don't have the resources available to you of the Canadian television fund to the same degree means that you need to take time to develop international partnerships, partnerships with other broadcasters within this territory and in other territories, you need to be very nimble on your feet to think about other ways of priority spending like performing arts or variety programming which can generate audiences depending on the kind of programming that you use.

LISTNUM 1 \l 1636              I think the opportunity to spend the money where we can find programs that become commercially viable, that are market‑driven and that establish a base for us in the future, and relationships in the future where you are not necessarily dependent on subsidy money, I think is very important for us.

LISTNUM 1 \l 1637              COMMISSIONER del VAL:  I understand from Citytv's perspective why you would choose the short‑term funding, also in terms of what your station needs.

LISTNUM 1 \l 1638              Then, Ms Boehme, could you address the issue of in terms of the Canadian broadcasting system as a whole and what its needs are, what are your views on the necessity of having a mix of both long‑term funds and short‑term funds?

LISTNUM 1 \l 1639              MS BOEHME:  I think it is obviously very important to have both.  You need a lot of money off the top to be able to seed the future and that is very often what the short‑term funds are best at.  That is very often what script and concept and development funds for both documentary and scripted programming are good at is developing things for the future and developing relationships where you could help support a producer to build things that will become market realities.  Market realities take time because you get to know your audience over time.

LISTNUM 1 \l 1640              The thing about television that everybody forgets when you are talking about the nuts and the bolts and the wires is it's organic and it grows as you get to know people.

LISTNUM 1 \l 1641              The Citytv's have suffered a little bit from a lack of focus over the last few years and as we get to know the audiences and as we get to know what works ‑‑ I mean there is no such thing as a slam dunk.  If there was, every American show that the Americans ‑‑ who have far more resources available to them than we do ‑‑ would obviously be a hit and would perpetuate itself, but you need to find out what works.

LISTNUM 1 \l 1642              Times change, audiences change, and the things that people want, you need to be able to make investments in the near term in order to provide for those that are in the long‑term that will perpetuate themselves.

LISTNUM 1 \l 1643              I don't know if that helps answer your question or not.

LISTNUM 1 \l 1644              COMMISSIONER del VAL:  Yes, I think.

LISTNUM 1 \l 1645              MS BOEHME:  Okay.

LISTNUM 1 \l 1646              COMMISSIONER del VAL:  I will leave the question of CTF aside as our Chair will deal with that issue, but let's not think about the CTF.

LISTNUM 1 \l 1647              What would it do to your benefits package if we said:  Okay, why don't you allocate a portion to a long‑term fund?

LISTNUM 1 \l 1648              I'm not talking about CTF.  What would the effect of that be on your package right now, sort of if you split into one your self administered short‑term and then another longer‑term fun?

LISTNUM 1 \l 1649              MR. MERSON:  So like a foundation of some sort.  Right?

LISTNUM 1 \l 1650              COMMISSIONER del VAL:  Yes.

LISTNUM 1 \l 1651              MR. MERSON:  A long‑term fund.

LISTNUM 1 \l 1652              THE CHAIRPERSON:  Let me add to that.

LISTNUM 1 \l 1653              When I came and visited Rogers on my stakeholder visits long before this transaction was on, I had a great deal of discussion about the wonderful fund that Rogers ran itself ‑‑ and I believe Mr. Lind is administering it and it's about 18 years in existence and it is a model for other funds, et cetera.

LISTNUM 1 \l 1654              How come this model has not found its way into this submission?

LISTNUM 1 \l 1655              MR. MERSON:  The reason is, firstly and foremostly, the precedents established that Canadian broadcasters have used self‑administered benefit funds to really build good, high‑quality programming over the last number of years, so they have done it and they have done it well.

LISTNUM 1 \l 1656              The magnitude of the funding is also a little bit different as we look at sort of what it is you can actually buy with ‑‑ effectively $50 million, because there is $35 million effectively from this fund and $15 million roughly from the ‑‑ I know I will have my numbers wrong ‑‑ from the Craig benefits and you spend it over a seven‑year period of time.

LISTNUM 1 \l 1657              It doesn't give you a ton of latitude and it gives the ability to do perhaps one significant dramatic program, a couple of cheaper programs maybe focus on another initiative of some sort that he might have, but it isn't like it is a foundation that can sort of spit out enough money on an annual basis that might fund the development of a number of significant programs.

LISTNUM 1 \l 1658              You are absolutely correct, you know, this would fund some of our priority spending over the next seven years.  At the end of the seven years we are going to have to scramble.  Hopefully the business will have turned around at that point and we will be able to afford to step in and do the kinds of quality programming that our audience by then will have become accustomed to, but in the absence of it there probably isn't enough money.  I mean, this isn't enough money to make a foundation out of.  A number of Canadian broadcasters have done this well over the last few years and it has worked very well for them.

LISTNUM 1 \l 1659              If the question ‑‑

LISTNUM 1 \l 1660              THE CHAIRPERSON:  That hasn't answered my question.

LISTNUM 1 \l 1661              MR. MERSON:  In answer to the question ‑‑

LISTNUM 1 \l 1662              THE CHAIRPERSON:  I mean, Mr. Rogers personally recommended to me the model of the funds and said that is what others should be doing, et cetera.  Here you have the opportunity to do it and you are not doing it yourself.  So I'm trying to understand what is the distinction between this transaction in the model that your owner himself suggested to me was the right way of doing business.

LISTNUM 1 \l 1663              MR. MERSON:  I think the objectives were different at the outset and I assume it's the Telefund in large part that we are talking about.

LISTNUM 1 \l 1664              The Telefund ‑‑ and Robin Mersky is here and she actually administers the Telefund ‑‑ somewhere in the audience ‑‑ and she can speak to sort of the genesis of the Telefund and what it was designed to do, but it has ongoing, stable annual funding that comes as a result of something ‑‑ I can't remember what it was that the cable companies got that they wanted to.  So it was an allocation of a benefit that accrued to the cable companies that has gone to fund the Telefund.

LISTNUM 1 \l 1665              I'm out of my depth a little bit over here.  So it has ‑‑

‑‑‑ Off microphone / Sans microphone

LISTNUM 1 \l 1666              MR. STRATI:  Commissioner, it is just annual ‑‑ the Rogers funds are part of the annual payments that are made.  Some go into CTF and certainly some go to the Rogers fund.

LISTNUM 1 \l 1667              So the funding mechanism in terms of the contributions for the Rogers funds is the same as it is for the CTF.  So payments are going to CTF and some are going to the Rogers funds.

LISTNUM 1 \l 1668              So when Ray was talking about the annual element to it, is there is an injection every year by the BDUs into it.

LISTNUM 1 \l 1669              THE CHAIRPERSON:  But I understood there was also the investment and a refunding element to it, that the fund in effect made equity investment and generated funds which came back to it or something.

LISTNUM 1 \l 1670              Maybe you can explain it in detail.

LISTNUM 1 \l 1671              MS MERSKY:  Basically the structure of the Rogers Documentary Fund and the Cable Network Fund are competitive processes where independent producers apply, with broadcast licences from either specialty channels or national broadcast commitments, and it is a competitive process where we make equity investments or grants.

LISTNUM 1 \l 1672              There is a fundamental difference between what we are proposing in a self‑directed fund and what I do.  I will go over the differences if you want, but you know ‑‑

LISTNUM 1 \l 1673              COMMISSIONER del VAL:  Yes.

LISTNUM 1 \l 1674              THE CHAIRPERSON:  Please elaborate

LISTNUM 1 \l 1675              MS BOEHME:  I think maybe if there is something I can offer, one of the good things about those funds from a production point of view is it tends to be one of the last pieces that you need in order to make your production happen.  And there are a number of other doors that you need to knock on before you apply to that fund and it tends to complete the production's financing.

LISTNUM 1 \l 1676              Whereas what we are proposing here means it's one‑stop shopping, you don't necessarily need to complete your financing.  It is much easier to get a green light and it is much easier for you to know from a broadcast perspective how to plan your schedule because you know what shows you are going to be able to have available to you.

LISTNUM 1 \l 1677              MS MERSKY:  Basically what this model will do is allow us to green‑light projects, fund projects, not be reliant on the deadlines of others, the competitive process.

LISTNUM 1 \l 1678              Basically I think what we have talked about is, without the synergies from the specialties from the CHUM group we are kind of at a loss and we are starting from scratch and we need that flexibility and a benefits package as put forward to create a competitive, attractive, priority programming plan.

LISTNUM 1 \l 1679              THE CHAIRPERSON:  Thank you.

LISTNUM 1 \l 1680              COMMISSIONER del VAL:  You might want to reply, come back and think a little ‑‑ give it a bit more thought on why sort of the self‑administered short‑term fund model is also the best for the Canadian broadcasting system as a whole.

LISTNUM 1 \l 1681              Just now down to a little bit more detail.  I know you have also described it a bit more in your reply in your August 28th replying.

LISTNUM 1 \l 1682              First, the simplest, script and concept development.

LISTNUM 1 \l 1683              Now, is that $2 million or $2.5 million?

LISTNUM 1 \l 1684              MR. STRATI:  Its $2 million.

LISTNUM 1 \l 1685              COMMISSIONER del VAL:  $2 million, okay.

LISTNUM 1 \l 1686              MR. STRATI:  That's correct.  I know it was out.  I know I said $2.5 million.

LISTNUM 1 \l 1687              COMMISSIONER del VAL:  Great.  Okay.

LISTNUM 1 \l 1688              Then for the Alan Waters Fund.  So now that is going to be increased because of the adjustment to the valuation.

LISTNUM 1 \l 1689              Now, I know that Commissioner Duncan also addressed the documentary, allocation to the documentary program, so can I confirm then, it is the increase from the adjustment of valuation goes to the Alan Waters content initiative and $1 million of that initiative is earmarked for documentary and then 65 percent of the Alan Waters content initiative goes to Canadian drama?

LISTNUM 1 \l 1690              Is that correct?

LISTNUM 1 \l 1691              MR. STRATI:  It's correct.

LISTNUM 1 \l 1692              COMMISSIONER del VAL:  Okay.  I will come back to this.

LISTNUM 1 \l 1693              Then, now, for the Alan Waters Canadian content initiative and script and concept development, 100 percent of the funds that go into those two initiatives are earmarked for priority programming.

LISTNUM 1 \l 1694              MR. STRATI:  That's correct.

LISTNUM 1 \l 1695              COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 1696              Then 85 percent of your entire benefits package is for independent production?

LISTNUM 1 \l 1697              MR. STRATI:  Correct.

LISTNUM 1 \l 1698              COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 1699              Going back to the Alan Waters initiative where you have 65 percent for drama and $1 million for documentary, are there any other specific allocations to other genres of priority programs?

LISTNUM 1 \l 1700              MR. STRATI:  No, there are not.

LISTNUM 1 \l 1701              COMMISSIONER del VAL:  All right.

LISTNUM 1 \l 1702              For this fund, is it also over seven years?

LISTNUM 1 \l 1703              MR. STRATI:  Yes.

LISTNUM 1 \l 1704              COMMISSIONER del VAL:  It is.  All right.

LISTNUM 1 \l 1705              You have also indicated, I think in your supplementary brief, that 10 percent of the Alan Waters initiative will need to new media initiatives as add‑ons or as stand‑alone projects.