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:

 

 

 

            DIVERSITY OF VOICES PROCEEDING /

            AUDIENCE SUR LA DIVERSITÉ DES VOIX

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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)

 

September 20, 2007                    Le 20 septembre 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

 

 

DIVERSITY OF VOICES PROCEEDING /

AUDIENCE SUR LA DIVERSITÉ DES VOIX

 

 

 

 

 

BEFORE / DEVANT:

 

Konrad von Finckenstein           Chairperson / Président

Michel Arpin                      Commissioner / Conseiller

Rita Cugini                       Commissioner / Conseillère

Andrée Noël                       Commissioner / Conseillère

Ronald Williams                   Commissioner / Conseiller

Stuart Langford                   Commissioner / Conseiller

Michel Morin                      Commissioner / Conseiller

 

 

ALSO PRESENT / AUSSI PRÉSENTS:

 

Chantal Boulet                    Secretary / Secrétaire

Nick Ketchum                      Hearing Manager /

                                  Gérant de l'audience

Shari Fisher                      Legal Counsel /

Bernard Montigny                  Conseillers juridiques

 

 

 

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)

 

September 20, 2007                Le 20 septembre 2007

 

- iv -

 

           TABLE DES MATIÈRES / TABLE OF CONTENTS

 

                                                 PAGE / PARA

 

INTERVENTION BY / INTERVENTION PAR:

 

Rogers Communications Inc.                       902 / 5066

 

Corus Entertainment Inc.                         948 / 5312

 

Writers Guild of Canada                          986 / 5529

 

Directors Guild of Canada                       1011 / 5644

 

Association québécoise de l'industrie

du disque, du spectacle et de la vidéo (ADISQ),

Association des producteurs de films et

de télévision du Québec (APFTQ),

Association des réalisateurs et réalisatrices

du Québec (ARRQ),

Société des auteurs de radio, télévision

et cinéma et l'Union des artistes (SARTEC)      1040 / 5804

 

Alliance of Canadian Cinema Television and

Radio Artists (ACTRA)                           1069 / 5987

 

Skywords                                        1096 / 6154

 

Norflicks Productions Ltd.                      1104 / 6209

 

Canadian Independent Record

Production Association (CIRPA)                  1140 / 6393

 

Centre for Research‑Action on

Race Relations, (CRARR),

New Canada Institute,

Catholic Immigration Centre                     1167 / 6514

 

 

 

 

                 Gatineau, Quebec / Gatineau (Québec)

‑‑‑ Upon resuming on Thursday, September 20, 2007

    at 0830 / L'audience reprend le jeudi

    20 septembre 2007 à 0830

5059             THE CHAIRPERSON:  Good morning.  I see some familiar faces.

5060             Madam Roy, would you like to introduce our first guest?

5061             THE SECRETARY:  Thank you, Mr. Chairman.

5062             We will now hear from Rogers Communications Inc.

5063             Appearing for Rogers is Mr. Phil Lind.

5064             Please introduce your colleagues.  You will then have ten minutes for your presentation.

5065             Thank you, Mr. Lind.

INTERVENTION

5066             MR. LIND:  My name is Phil Lind, and I am Vice Chairman of Rogers Communications Inc.

5067             With me today are members of the diversified Rogers media companies.

5068             On my left is Robert Buchan of Fasken Martineau DuMoulin, lifelong counsel to Rogers.

5069             On my right is Ken Engelhart, Vice President of Regulatory for RCI, who will be the quarterback for our presentation today.

5070             Pamela Dinsmore is Vice President of Regulatory for Rogers Cable.

5071             Dave Purdy is Vice President of Television for Rogers Cable.

5072             Alain Strati is Vice President of Regulatory Affairs for Rogers Media.

5073             Dave Watt is beside him.  He is Vice President of Regulatory Economics for RCI.

5074             And Robin Mirsky is our expert on funds ‑‑ the various funds at Rogers.

5075             Mr. Chairman, you will have noted from Rogers' written submission that we are not calling for a major overhaul of the Commission's current ownership regulations and policies.

5076             As we stressed in our written submission to you, and as you heard repeatedly on Monday and Tuesday, there is no shortage of readily accessible voices and choices in the Canadian broadcasting system.

5077             As the Commission knows, there was considerable ownership consolidation in the cable industry in the 1990s.  That ownership consolidation and the clustering of cable systems into regional systems was not only approved by the Commission, it was encouraged by the federal government on convergence and competition.

5078             That consolidation made possible the upgrading and digitization of cable systems over the past decade.  This has, in turn, allowed us to provide access to a wide range of diverse news, information and editorial opinions on matters of public concern that are available here today on our systems.

5079             We believe there is a healthy number of different ownership groups in the Canadian commercial media industry today.  These groups include CTVglobemedia, CanWest MediaWorks, Quebecor Média, Rogers, Astral, Corus, Torstar, Newcap and Cogeco.

5080             Therefore, in respect of the first issue on which the Commission's Notice to Appear asked us to focus, that of plurality of commercial editorial voices, we can say that Rogers does not believe there is a systemic problem today, nor do we believe there is one on the horizon.

5081             With regard to the second issue, that of diversity of programming choices, Canadian consumers enjoy a much broader and more diverse choice of programming options today than they ever have.

5082             By way of example, when Rogers acquired Maclean Hunter in 1994, our then state‑of‑the‑art Toronto cable system distributed video programming to subscribers on 53 analog channels.

5083             At that time the 100‑channel universe was only a glint in the cable marketer's eye.  Today Rogers offers over 450 different digital and analog channels.

5084             Digital has allowed cable BDUs to respond to consumer demand for greater choice and diversity of programming services, including third language services.  This has helped us respond to strong competitive challenges from Bell ExpressVu, Star Choice and Telco TV, from the grey and black markets, and, more recently, from new media platforms, particularly the internet.

5085             Therefore, on the second issue of diversity of programming, we do not believe there is a systemic problem; exactly the opposite.

5086             The third issue is that of safeguards for journalistic content in cross‑media situations.  I would note that, in respect of broadcasting properties owned by Rogers, there is a physical and linguistic separation and distinctiveness between our radio stations and our OMNI TV stations.

5087             In addition, under the Rogers' proposed ownership, the Citytv stations will continue to pursue their own editorial direction.

5088             We have reviewed the CBSC Journalistic Independence Code and we support it.  The safeguards reflected in that code, which build on those already in existence at CTV and CanWest, will assist in ensuring a diversity of commercial editorial voices in both local and national markets in Canada.

5089             Mr. Chairman, I would now like to comment on the proposal made on Monday morning by our friends at the CBC for new rules and regulations to deal with common ownership of certain classes of broadcasting undertakings.

5090             In general, we believe that the imposition of fixed regulations or rules of this kind, in a rapidly changing technical, business and consumer environment, may create more uncertainty, not less.

5091             The internet and other new platforms, new business models, and commercial and customer relations reactions to them could soon render those rules obsolete.

5092             In a dynamic business environment such as ours, where a company like Google, which did not even exist six years ago, and which now has a greater market and is worth more money than Viacom, which is a media powerhouse and has been in existence for over half a century, I think it is pretty dangerous to have too many fixed rules.

5093             Having said that, let's look at the CBC proposal.

5094             The first ownership rule proposed by the CBC was that no single‑owner entity or ownership group should own a radio station, a TV station and a daily newspaper serving in the same market.

5095             We do not believe that such a hard‑and‑fast rule is necessary.  Such a rule would not, of course, affect Rogers directly, since we are not engaged in the daily newspaper publishing business.

5096             However, from our own analysis of the Australian rules on common ownership, we have come to appreciate that such rules give rise to significant issues of interpretation.

5097             For example, when does a national newspaper count as a local newspaper in an existing market?

5098             What level of tuning or advertising share should a radio station enjoy before it is counted?

5099             How does the regulator take account of specialty channels and of third language radio and TV stations?

5100             Should an all‑news radio station be counted the same as a music station?

5101             The second proposal made by the CBC is that no single entity should be allowed to control more than 33 percent of pay and specialty services.  We would not favour adopting such new ownership rules, although, again, it would not have much bearing on Rogers, since we own only three specialty services.

5102             In this regard, we listened closely to the views expressed by Astral Media.  We agree with them that the Commission already has, through the licensing process and through the power to approve or deny transfers of licence, all the authority that it requires to deal with an excess of market power of any one ownership group.

5103             The third rule suggested by the CBC was no common ownership by one entity of more than two BDUs serving in a single market.

5104             We think the proposal is fine in principle, but, again, we do not believe that the Commission need introduce a new rule or regulation to that effect.  As noted, the Commission has the authority, through the licensing process, to implement such a policy.

5105             Mr. Chairman, in regards to the issue of predictability, we listened very closely to your exchange with the representatives of Bell Video Group.  They suggested that the Commission might develop and publish ownership policy guidelines along the lines of the Merger and Acquisition Guidelines of the Competition Bureau.

5106             Such guidelines would not be carved in stone.  They would still allow the Commission to make a decision in the public interest.

5107             Such guidelines would be designed, though, to build a greater degree of predictability into the broadcasting regulatory environment.

5108             We believe that there is some merit to this proposal.  We believe, however, that the development of any such proposed guidelines should not occur before the Commission's determination following the hearing next January.

5109             Mr. Chairman, the final issue on which the Commission has solicited our comments today is that of disclosure of financial information by ownership groups of radio and conventional TV stations.

5110             Rogers is opposed to such disclosure.  We agree with the reasoning regarding disclosure that was set out in your August 1998 circular.  The disclosure of the profitability of specialty services assists the parties in the process of wholesale rate negotiations for those services.

5111             We do not believe that the same rationale applies for over‑the‑air TV stations or radio.

5112             Mr. Chairman, we look forward to any questions that you might have.  Thank you.

5113             THE CHAIRPERSON:  Thank you very much.

5114             I am not surprised by your response.  It is very much in line with other major media players.

5115             I am also glad that you paid close attention to our hearing.  You have actually anticipated some of the questions that I was going to pose to you.

5116             Let's take a step back.  Why are we having this hearing?

5117             There is great concern in this country about the concentration of media.  Three major mega deals were announced.  We called this hearing, thinking that it would be unfair of us to implement rules or to stop those deals, because they were done on the expectation of present rules.  Our concern is to make sure that the Canadian system reflects the objectives of the Broadcasting Act, not to interfere with private business where it is in accordance with those objectives.

5118             However, as we go forward, the degree of concentration worries some people.  It is time to have a review of it and lay down some rules.

5119             What happens if there will be further mergers?

5120             Your own submission says that we have large groups ‑‑ CTV, CanWest, Quebecor, Rogers, Astral, Corus, Torstar, Newcap and Cogeco.  What if some of these big ones want to merge?

5121             A member of your own firm yesterday speculated that he might be interested in buying Shaw.  I assume it was only speculation, a musing, or whatever, but, be that as it may, others, I am sure, are musing too.

5122             These are issues, and if such a merger ‑‑ whatever ‑‑ of two entities or three comes up tomorrow, if we do not adopt some rules, some approach, some guidelines, some framework for analysis, you are going to say:  It is unfair for you to stop it just because there is too much media concentration.  You never told us what the threshold was, how far we can go, what we can do and what we can't do.

5123             That is the purpose of these hearings.

5124             So help me.  If you do not like the CBC proposal, what do you suggest we do?

5125             And when it comes to Bell, you say that you like the approach, but don't do this until such time as we have had the BDU hearings.

5126             We have made it quite clear that we will not entertain any major deal ‑‑ and you have been the first victim of this ‑‑ until the new rules are in place.  If we wait until the BDU hearings, you, in effect, will not have a new framework, a new approach, until mid‑2008.

5127             That also will cost in terms of business planning and progress.

5128             If you were in my shoes, what would you do?

5129             MR. ENGELHART:  Thank you, Mr. Chairman.

5130             You are right that there was a comment in the media about Rogers and Shaw, but I think that Mr. Rogers, in a subsequent statement ‑‑

5131             MR. LIND:  There was another comment.

5132             MR. ENGELHART:  Exactly.  I think he put paid to that suggestion.

5133             You are absolutely right that there is concern about media consolidation, but, at the same time, there is a lot of concern in our industry, and generally, about the impact of new media on traditional media.

5134             Is the internet going to threaten conventional television?

5135             Does the iPod render radio obsolete?

5136             All of this kind of speculation and concern and anxiety pervades every hearing you have.

5137             Our concern is, if we establish some rigid rules in an environment where the impact of the new media is uncertain, you might end up with some rules that are obsolete very quickly.

5138             Regulatory certainty in an environment of changing technology can really end up being counterproductive.

5139             To give you a small example, we used to have a very certain rule which said that cable companies couldn't own analog specialty services.  You had certainty, but the rule just stopped making sense, because satellite companies were as big as many BDUs, or bigger than many BDUs, and Bell ExpressVu was part of a corporate group that owned many analog specialty services.

5140             So we had a crystal clear rule that said we couldn't buy analog specialty channels, but the rule just didn't make sense, and we had to have a major policy hearing to change the rule, and then we were allowed to buy Sportsnet.

5141             There is an example where regulatory certainty actually created more business risk and more problems for us.

5142             That is why we think that guidelines are the way to go.  We think the Bell proposal has some merit.

5143             You are absolutely right, we need some sort of indication to the industry of what is going to be allowed and what isn't.  But you are quite correct that we think the January hearing will have a big impact.

5144             For example, right now we have genre protection and we have access rules.  I think that creates market power in a large group of specialty services.  They have ‑‑ whatever ‑‑ the history genre, the comedy genre ‑‑ whatever it is, they have it.

5145             If they put together too many powerful brands, too many powerful specialty channels, I think that gives them market power, and, by having market power, it might well mean that one wants to pick a number, as the CBC has done, and put that number in the guidelines.

5146             On the other hand, if you get rid of the genre protection rules, if you get rid of the access rules, so that new entrants can form these specialty services, I think that diminishes a lot of their market power.  Maybe now we don't need a number.

5147             Those are the reasons why we think it would be better to wait until January to start to craft these guidelines.

5148             THE CHAIRPERSON:  I appreciate that and, of course, that is the easy way, for us to do that.  But, at the same time, you and others keep telling us that this is a very dynamic industry, that your biggest threat is the internet, and you don't know when it's coming, et cetera.  Therefore, there is also a cost to delay.  In effect, we are saying, fine, we will take your comments, we will do the BDU review, and then, as a result, we will do a joint decision; in effect, what changes there will be for the BDU, and then, on top of that, what will be the new rules in terms of media concentration.

5149             That, effectively, puts a brake on all deals until that happens, and there will be a certain cost for that, as well.

5150             We are trying to balance things.  We are trying to give you the maximum ability to react to a dynamic market, but, at the same time, making sure that you don't come forward with something, a fait accompli, which will be very difficult to undo.

5151             Or, you or others will scream about a lack of procedural fairness:  We never knew there was such a barrier.

5152             MR. ENGELHART:  I think it might put a bit of a damper on mega mergers, but for most transactions, I wouldn't see them stopping while this process took place.

5153             If there was something that changed the ground rules, you might say:  Look, we need those guidelines first.

5154             MR. LIND:  I think that a huge merger, such as CanWest and CTV, would be intolerable without guidelines, but smaller mergers should be allowed to exist, just like they exist today.

5155             THE CHAIRPERSON:  Let's go to the Bell proposal.  Intellectually, it is very appealing, and as a former Commissioner of Competition, I am very familiar with the MEGs and how they work and their strengths and benefits.  They are flexible, too, and yet they give you some predictability and an ability to forecast whether a merger will be approved or not, or what are some of the ‑‑

5156             But MEGs are based on the SNIP test, as you know ‑‑ Significant Non‑temporary Increase in Pricing Power ‑‑ i.e., no raise of 5 percent over two years.  A purchaser should not be able to maintain an increase of 5 percent over two years.

5157             That is, roughly, the rule of thumb that people apply.

5158             What would be the equivalent of a SNIP test here?  That is what I am struggling with.

5159             What do we measure?

5160             Are you talking about market reach, or audience share?

5161             The MEGs only make sense because, in the background, you have the SNIP test, and that is what you apply.

5162             Hypothetical monopolist is the other expression used for it, et cetera.

5163             What would one do here?

5164             I asked Bell that, and they said, "We will reflect on it," and I have the feeling that you may give me the same answer, but I think it is crucial to any such approach that we have the equivalent of a SNIP test.

5165             MR. ENGELHART:  I think what has emerged this week from this proceeding is that, although diversity is an issue, plurality is sort of where the rubber is hitting the road, particularly on the national scale.  We have such a broad diversity that, even with a mega merger, I am not sure that diversity would be threatened.

5166             So, really, it is plurality.  And we will have to invent an acronym for a Significant Non‑transitory Decrease in Plurality ‑‑

‑‑‑ Laughter / Rires

5167             MR. ENGELHART:  ‑‑ and figure out what that would look like.

5168             But that is the idea, if this was going to lead to a permanent structural diminution in the number of voices in an environment where you are already at, sort of, too low a level of voices.

5169             Now, you heard a lot of people saying to you today that, with internet and blogs and new media, there are still lots of voices, but I think that's the idea.

5170             THE CHAIRPERSON:  I agree with you that plurality is the issue.

5171             The way we have defined plurality is the number of professional editorial voices in a given market, whether national or local.  Obviously, some markets may be offside already, and they will be grandfathered.  But the question is where the threshold is, or where the danger line is, where we would have to look at either not allowing or providing a remedy.

5172             I would very much encourage you to put your creative hat on and help us with this.

5173             I think the Bell proposal clearly put in context how one could approach it, but the key item is missing, and we would welcome any ideas that you might have.

5174             Moving onto news scheduling ‑‑ and I heard your position that, in effect, on separate newsrooms the code is okay, and that you have full confidence in the Standards Council, et cetera.

5175             Yesterday we heard from various organizations, particularly from Quebec, who all felt that, no, the code does not go far enough, that you have to go the extra step and insist on separate news gathering.

5176             By single news gathering, even if you have separate editorial rooms, you are, in effect, homogenizing news at the outset, and therefore it will stay homogenized, even if you distribute it.

5177             You heard the submissions, but I think that was the thrust of them.

5178             I would be interested in your view on that, and also your view on the comment made by my colleague Commissioner Noël:  Is there a difference between the French market and the English market, and should one have different rules for the two.

5179             MR. ENGELHART:  It seemed to us that a lot of the comments yesterday were really worried about what many in the media industry hoped would happen with media convergence.

5180             A lot of owners felt that, by combining print and broadcast, they would achieve synergies.

5181             I think what is happening is that everyone has been disappointed.  There really aren't any synergies.

5182             Certainly, at Rogers, we don't have any.  What the folks at Maclean's do, what the folks at 680 News do, what the folks at OMNI do ‑‑ we are desperate to try and get some synergies going there, and there just aren't any.  They all have their separate news gathering and editorial policies.

5183             Even within OMNI we can't get much synergy.  Sometimes we can send a crew out that can take pictures for both, but, surprisingly, not very often.

5184             I believe, if you drilled down into what is going on at Global, for example, I think the message that they would give you is that there has been less synergy than they ever dreamed.

5185             I am not sure that this concern about a single news voice is a realistic one.

5186             Now, that having been said, I am not as familiar with the Quebec situation, so I probably can't speak authoritatively about that.

5187             THE CHAIRPERSON:  All right.  Lastly, financial disclosure.  I am somewhat surprised by your answer.

5188             Several intervenors have submitted that it's fundamentally unfair that we do not have financial disclosure for networks on an aggregate basis, the same way we do for specialty services, and that they really are at a disadvantage in coming to us, et cetera, without seeing that information.

5189             Now, obviously, nobody wants to hurt you financially, but you are a publicly traded company, so some of the information is available anyway.

5190             Why could we not do this kind of disclosure, putting everybody on a level playing field and eliminating this procedural disadvantage?

5191             Frankly, I don't quite follow, so maybe you could explain your position.

5192             MR. ENGELHART:  Specialty services are entitled to mediation before the Commission in the event that you cannot agree on the rate.

5193             Inevitably, during those negotiations, or during those mediations, the issue comes up where the specialty service says, "If I don't get 30 cents," or whatever, "I am not going to be able to meet my obligations under my Conditions of Licence," and their profitability immediately becomes relevant.

5194             You say, "Well, you are earning 57 percent PBIT.  I think, with a few cents less, you will be doing just fine."

5195             If there is a mediation before the Commission, it would always be disclosed.  That profitability would always be disclosed prior to that mediation being concluded.

5196             So it is better for the Commission to put the number out now, or put the number out on a regular basis, to give the parties that information to assist them in their negotiations, so they don't have to go to mediation.

5197             But there is no reason for anyone to know the profitability of an individual television station, or even a television station ownership group.  There is no practical reason, and I don't think there is any public policy reason.

5198             When we had the Over‑the‑Air Television Hearings, there was industry‑wide PBIT, and that gave everyone the ability to discuss the profitability of the industry as a whole.

5199             When you are dealing with public policy issues, you don't really want to say, "This group is doing well, and this group is doing poorly," because that might be due to better managerial decisions.

5200             Public policy issues focus around:  How well is the industry doing.  How well is the market doing.

5201             And the disclosure that you have currently works for that.

5202             I agree with you that there is perhaps no overwhelming commercial reason why the number could not be disclosed, but we don't think there is any practical or public policy reason for disclosure.

5203             THE CHAIRPERSON:  Let me give you one.

5204             We are not talking about station‑by‑station, first of all, we are talking about group.

5205             The industry one may show that the industry is suffering or not, but there is no way for people to know whether these numbers are skewed by somebody being very profitable or somebody having a great loss, while the others are all average.

5206             If you break it down by group, then at least you can see to what extent it is common, or whether the numbers are being skewed by one outlier at either end.

5207             Secondly, it also would show you which combination of groups works and which doesn't work.

5208             And to what extent, for instance, the same synergies, which you tell me are not there, et cetera ‑‑ do they actually have them available.

5209             The groups that do not have the ability to have the synergies, because they don't have holdings in various things, how are they doing compared to the ones who concentrate solely on broadcasting?

5210             I think these are all pieces of information that would be very relevant to the public discourse.  It should not, in any way, hurt you, but it would allow us to get much more targeted and pointed interventions, and it would allow the intervenors to speak from a level of knowledge which they don't have at the present time.

5211             MR. ENGELHART:  I am sure that everyone would like to know what their neighbour's house is worth, but, really, if you are dealing with a public policy issue on real estate, it is the average price or the median price of real estate in that neighbourhood that matters.

5212             You might be right that there might be a hearing one day where you need it by ownership group, and if that hearing was taking place, then the Commission could release that information.

5213             But in terms of a regular, ongoing release of information, I think that the competitors and others would find the information fascinating, but I don't really think it would be solving many public policy or practical problems in the same way that the ongoing release of the speciality information does.

5214             THE CHAIRPERSON:  But take fee for carriage, we made it quite clear that the evidence wasn't there.  But the issue is going to come back and, you know, we will have to next time around bite the bullet and say yes or no.  To do that would be much, I think, the discord will be improved and our decision better to the extent that people would have that information and go places rather than on the industry basis.

5215             MR. ENGELHART:  We used to have a sort of a similar issue, and to some extent we still do, when a TV station or radio station wants a new licence in a given market.  And the test now really looks at the viability of the entire market.  But the test used to look at the viability of the existing incumbents.  And the existing incumbents would come up and say, well with me, I am not making any money on my radio station and if this new guy gets a licence I am going to go under and it will be terrible.  It was a very kind of a protectionist set of arguments.

5216             I don't think that is the issue.  If a given radio station is going to go under when a new radio station is licensed, that is the marketplace working.  The issue, if there is one, is whether the market as a whole is viable, whether the market is saturated.  So I think market‑based metrics are more relevant to the public policy issues than the individual company metrics.

5217             THE CHAIRPERSON:  Well, I don't want to beat this to death, Mr. Engelhart.  Just finally, if we did impose it upon you could you live with it or not?

5218             MR. ENGELHART:  If there was a legitimate ‑‑

5219             THE CHAIRPERSON:  And you have no choice, I know that, but I meant as a businessman.

5220             MR. ENGELHART:  I don't think the sky would come crashing down if this information was released.  But if you did it I would urge you to do it when a particular hearing was called on a particular issue and not an ongoing release of that information, as you do for specialty channels.

5221             THE CHAIRPERSON:  Okay.  Thank you very much.

5222             Stuart, I believe you had a question.

5223             COMMISSIONER LANGFORD:  Thank you, Mr. Chairman.  Good morning, folks.

5224             I have just got a few picky questions, you have done the global overview.  But there is a few things that I want to go back to on your original written submission that I would just like to explore with you.

5225             You say that you would like to get rid of the 5 to 1 rule, which basically says you are going to carry five un‑owned specialty services for every one of your own.  Not exactly a hardship for you folks if you only own four, but still it does set a rule and other companies have bigger holdings and it becomes more of an issue there.

5226             The problem with getting rid of it, of course, is that if people ‑‑ at least this is how I see it ‑‑ if people feel aggrieved they have to come to us.  And about the only remedy they can explore is the undue preference, undue discrimination.  And you say that yourself on page 28 of your original submission. 

5227             Now, the problem with that, and I explored this with the Shaw Group, is that it takes time, just the rules of natural justice and process take time.  You know, they get to make their complaint, you get to make a reply, they get to make a reply to your reply, then somebody has an interim motion because they don't understand something, time drags on.  Meanwhile, the weaker party really is in danger of being victimized and just going away. 

5228             So would you support as a kind of quid pro quo for getting rid of the 5 to 1 rule and relying on the undue preference more general rules?  Would you support a greater range of remedies in the hands of the Commission?  So that if BDUs really were trying to quash some other services, hopes and reasonable aspirations we have more remedies than to just say stop doing that.

5229             MR. ENGELHART:  With your indulgence, Commissioner, I would like to put your comments a bit into context.  So just first on the numbers, the rule that you referred to actually applies to Category 2 services.  We currently carry zero of our own Category 2 services.  We have got a couple of licences, but we have never launched one.  And we carry virtually every Category 2 service that is available to us; English‑language, ethnic, all of them, we have 70 Category 2 services.

5230             Now, we also have a VOD service, which I believe is technically classified as a Category 2 service, so we have a five for one match, we still have 65 leftover, so we are in good shape.

5231             So the reason why we advocated removing the rule, and I am going to ask my colleague, Mr. Purdy, to give you a quick snapshot of the business environment that he operates in, but we think that contrary to some of the messages you heard cable operators have to carry these services because it makes business sense.  We think we do, we carry them all because we are in a struggle with satellite providers. 

5232             So the context that this message has been given to you on, which is the big bad BDUs for whatever purposes are trying to keep people out, we don't think it realistically describes what is going on in the marketplace.  Our perception is that we are desperately trying to get content to enhance our platform and we are sometimes frustrated by our inability to do so.

5233             COMMISSIONER LANGFORD:  You may not rob banks, Mr. Engelhart, but we have rules against robbing banks in this country.  And so I guess what I am asking you is would you have any problem with setting up some new remedies, at least exploring perhaps a finding power, which we have to get legislated permission for anyway, but expedited hearings, different process for it, different burden of proof, where would the burden of proof be, what would it be?  Would you have any problem with exploring that as a kind of quid pro quo though it doesn't touch your situation right now pragmatically at all?

5234             MR. ENGELHART:  Not at all.  In fact, I am familiar with the expedited proceedings in the telecom side.  So far, we have a perfect record on them.  So we would be happy to have the expedited hearings here as well and we think they work really well.  Finding power, I don't think it is necessary, but we wouldn't object to it.  So absolutely, if you want to put some more teeth into the dispute resolution side of things I don't see a problem with that.

5235             COMMISSIONER LANGFORD:  Thank you. Moving onto the notion of getting rid of the benefits.  It is easier to see from your perspective than it is, of course, from the broadcasters' perspective because you folks are putting 5 per cent into the fund yearly, 5 per cent of your gross revenue.  So it is not hard to understand why you feel you are already pulling your weight.

5236             At the same time, if we get rid of the benefits for you we get rid of the benefits for everybody.  So now we have got to say what is going to become of independent production.  And, you know, on page 32 of your brief you are singing the praises of independent producers, so you obviously like them, you rely on them, you think they do good work.  But do we want to cut the tap off? 

5237             One of the associations told us if there were no benefits between 2000 and 2006 it would have meant a loss of over $400 million in production funds for them.  So what do we do?  We can't believe in independent production, we can't require independent production and then starve them.  So do you have some sort of a solution of how to replace the benefits?

5238             MR. ENGELHART:  As your question notes, you know, cable companies and BDUs will continue paying their 5 per cent, so the question is whether the benefits, when transactions take place, should continue or not.  And, as we say in our brief, philosophically since the benefits were a move for BDUs when they became in a more competitive environment we think the same thing should apply to TV now that they are in a more competitive environment.

5239             As you said the other day, one of the problems with the benefits is it creates a feast or famine situation.  If there is no big transactions then there is no benefits even under the current rule.  So the current rule is sort of very dependent on people buying and selling things to generate those benefits. 

5240             I think, generally speaking, and it is something we are all wrestling with and I certainly don't have any magic silver bullet, but generally speaking the Canadian system and priority programming has got to be more self‑sustaining and have a more stable model and become less dependent on benefits and subsidies and taxes.  Now, exactly what the answer is to that we don't know, but I am not sure it makes perfect sense to carry on relying on benefits as the solution.

5241             COMMISSIONER LANGFORD:  I can agree philosophically with a lot of what you are saying.  The problem, of course, is that it is difficult to make that leap of faith.  We will get rid of your $400 million but something will replace it somehow along the line.  That is pretty hard for the folks who have had the $400 million.

5242             Now, there may be no more mega deals and $400 million will be something we will all look back at as sort of an aberration in history, but there may be more mega deals as well. So I think I would ask you to give that more thought if you don't mind.  We have until I think it is about October 5 for reply.  I am not directing you to do it, I don't have that kind of authority and I wouldn't exercise it even if I did.  But if you could give it some thought, I know the producers are going to give it some thought, I am hoping some of the broadcasters will as well, and get back to us with some ideas. 

5243             Because it just seems just turn the tap off and say trust in God is perhaps not quite enough for these people.  You can't eat philosophy.

5244             The last question I have for you is an old one, one you have faced before.  But we have heard again the tales of woe with regard to access and carriage.  Now, I know that in theory that is the January hearing.  But also, you have to admit that it makes a certain sense in this process.  If you can't get your signal out to people you can't get a variety of voices.  So there is an element here that is worth looking at.

5245             Now, you guys are carrying everything, you are the good guys, fine.  But what they say is you are not paying for what you are getting.  You have got huge power and you are essentially stealing our service from us, you are paying us pennies when you should be paying a reasonable rate.  How can we make this more transparent?  I have been here for almost nine years now and I have heard this story, you have heard this story, we always hear this story.  No one will give us the numbers, but they all say, believe me, it is awful out there.  We go in, we are small players, we have no bargaining power. 

5246             Not all of them, of course, CTV is not singing that tune, but the standalone folks, the people with a couple of Category 2s or a Category 1 and a Category 2 are saying, we just can't stand‑up to these people and we need some help.  What do you say to these people?

5247             MR. ENGELHART:  I think you have been getting a skewed message, and I am going to ask Mr. Purdy to respond.  We just don't see it that way.  We are out there trying to get as much content as we can for all of our platforms; for cable, for wireless, for internet, and we are finding it more and more difficult.  We have a VOD platform where we are desperate for the Canadian producers to give us content and we are not getting it. 

5248             So I am going to ask David to respond.

5249             MR. PURDY:  Thank you, Mr. Commissioner.

5250             I guess I will provide a little bit of context.  Right now Rogers faces, we feel, enormous competition.  We battle with both Star Choice and ExpressVu in our marketplace, but also with the over‑the‑top technologies, you know, the BitTorrents, the eDonkeys, the Kazaas of the world as well as, you know, Telco TV in the form of Videocell at IPTV. 

5251             So we are constantly on the lookout for new channels that will allow us to differentiate ourselves against the competition and to retain younger people in the system. 

5252             The notion that we are underpaying or not trying to fund properly our broadcast partners I think is archaic and I don't believe it is widely held.  I mean, I think there is one or two very vocal people that come up here regularly and use this opportunity. 

5253             But, quite frankly, I think most of our broadcast and programming partners feel that while our negotiating is aggressive it is certainly not unfair.  And Rogers is always looking to differentiate itself with better and stronger content, not just to beat off the satellite competition, but really to try and retain young people within the broadcasting system and that is, I think, our critical battle.

5254             When you look at a specialty channel they really have a couple of different ways that they can get leverage with their BDU partners; one, is that they can produce great programming; and two, they can aggressively market that.  I think some of the people who have spoken this week have failed on one of those two counts.

5255             When we look at our programming partners that have done very well it is largely because they have got strong sources of content and they aggressively market it.  Those programming partners are the ones that have flourished and do end up getting carriage on our competitors as well as ourselves.

5256             COMMISSIONER LANGFORD:  Carriage doesn't seem to be the complaint, it is cost, the price, what they are getting.

5257             I mean we have heard narratives ‑‑ we don't have any evidence on this, hard, empirical evidence; you have got the evidence ‑‑ that people are getting two cents from you and you are charging $2.00 for their service.

5258             MR. PURDY:  Right.

5259             COMMISSIONER LANGFORD:  I mean is that story possible?

5260             MR. PURDY:  No.  Thank you, Commissioner, for giving me a chance to speak to this.

5261             Typically, our margins in the analog world are far better than our margins in the specialty channel world.  So the notion that we are getting a significantly greater margin by underpaying for digital specialty channels is just not backed up by the facts.  The most profitable part of our business is the analog part.  So that would be one indication.

5262             COMMISSIONER LANGFORD:  Is there some way to make this more transparent so this complaint will go away?  It has just been hanging around so long.  It is the old if there's smoke, is there fire problem that we have.

5263             MR. PURDY:  We could bring it before the Commission, I imagine it will come up in the BDU hearings, but really, it is about market forces and those specialty channels that have strong and compelling content, great brands and aggressively market those brands end up extracting a higher wholesale fee from the cable companies and satellite companies.

5264             COMMISSIONER LANGFORD:  Yes.  It is the chicken and egg though, isn't it, I mean you need some money to do some marketing.

5265             Anyway, I have beat it to death for today but it seems to me to be an underlying diversity of voices issue.  It is not maybe the biggest one in the world, it is not like one company buying all of the other companies, but for a small player it is a big issue, I think, and for consumers who want to see a signal, it is an issue because if you are not getting enough money to keep the business going and to market it, the consumer loses in the end as well.

5266             MR. PURDY:  I might want to point one other point out there, which is that when we are looking at the overall supplier situation it is in our best interest to have a diversity of suppliers.  So the least attractive scenario to me is that I am dealing with one or two suppliers for all of my specialty channels.

5267             So it is actually in Rogers' interest and we try very hard to make sure that we have a diversity of suppliers out there.  So we are actually incented by our own self‑interest to make sure that we have lots of strong broadcast ownership groups in the marketplace.

5268             COMMISSIONER LANGFORD:  Well maybe they should form a union.

5269             MR. LIND:  I think one of the key variables here is the popularity of the channel.  I mean that has got to play in this thing too.  I mean you can have an idea, it may be desperately unpopular, but it is an idea that has to be heard.  Well yeah, but, you know, not ‑‑ they don't have the same sort of compelling reasons for marketing and ‑‑

5270             COMMISSIONER LANGFORD:  Yes, it is like selling that asparagus‑flavoured ice cream, it is a tough one.

‑‑‑ Laughter / Rires

5271             COMMISSIONER LANGFORD:  Thank you, folks, those are my questions.

5272             THE CHAIRPERSON:  I think some of the issues we will revisit in January when we are dealing with BDUs.

5273             Michel, you had another question?

5274             CONSEILLER MORIN :  Oui.

5275             Bonjour.  J'aimerais vous parler de la diversité, non pas au niveau national, mais au niveau local.  Il y a des sources qui comptent plus, et c'est peut‑être la radio, la télévision, les journaux, principalement.  J'ai beau avoir mon MP3, quand je veux m'informer localement, j'écoute la radio, et, en fait, je l'écoute de plus en plus parce que la radio me suit maintenant tous les jours.

5276             Il y a une règle qu'on pourrait peut‑être établir, qui n'est pas actuellement... qui ne fait pas partie des règles du CRTC.  On a des règles pour la radio, le nombre de postes de radio.  On a la règle qui veut que, dans un seul marché, il n'y ait pas plus d'un poste de télévision qui soit propriété... même là‑dessus, il y a eu une exception.  Bon.

5277             Mais est‑ce que les Canadiens ne mériteraient pas, dans les marchés principaux justement, où il y a possibilité d'avoir un poste de radio, un poste de télévision et un journal, qu'on interdise toute transaction qui ferait en sorte que dans un marché de 100 000 habitants... 80 pour cent des Canadiens habitent dans des villes de plus de 100 000 habitants.

5278             Pourquoi, à votre avis, les Canadiens ne mériteraient pas, au niveau de l'accès, pourquoi ils ne mériteraient pas que sur les trois médias les plus importants qui comptent encore, qui génèrent de la nouvelle, pourquoi on ne dirait pas, bien, quand un propriétaire a en sa possession soit un journal, soit un poste de télévision dans un seul marché, il ne peut pas acquérir... avoir la possibilité d'acquérir un journal, et vice versa, si un propriétaire a un journal et un poste de radio dans un marché, il ne peut pas acquérir un poste de télévision?

5279             Pourquoi les Canadiens ne mériteraient pas cette diversité qui leur assure quand même une certaine sécurité, disons, au niveau démocratique?

5280             MR. ENGELHART:  Alain?

‑‑‑ Rires / Laughter

5281             M. STRATI : Merci, Monsieur Morin.  C'est, bien sûr, une question très importante, une question à laquelle beaucoup d'intervenants et beaucoup de présentations ont parlé durant cette semaine.

5282             Je pense que si on regarde les trois différentes sortes de médias, nous, dans notre expérience, nous avons... vraiment, il y a un développement dans différentes sortes de médias.

5283             Par exemple, si on regarde la radio, nous, certainement, on a fait un grand investissement dans la radio et dans les nouvelles dans la radio.  Nous avons, certainement, plusieurs stations, et le nombre de stations à notre service a grandi durant le temps.

5284             Donc, si on parle... il y a beaucoup de changements dans les trois différents médias qu'on a parlé : radio, télévision et journaux.

5285             Alors, si on regarde d'ici trois, cinq, 10 ans, je pense que les médias, surtout quand on parle de l'internet, du nouveau média, je regarde, par exemple, le * New York Times + maintenant sur l'internet.  C'est maintenant... il n'y a aucune suscription qui est nécessaire.  C'est complètement seulement avec les annonces qu'on peut regarder sur l'internet.

5286             Donc, il y a plusieurs nouvelles voies, et surtout quand on parle, je pense, des journaux, que ça soit les journaux qui sont maintenant gratuits et disparaissent dans le marché, que ça soit l'internet, nouvelle média, on regarde vraiment un développement dans les nouvelles locales et aussi nationales et régionales, où il y a vraiment maintenant beaucoup plus de différentes sources d'information.

5287             Donc, pour nous, on essaie de développer des sources locales de nouvelles qui sont attirantes et qui gardent la population aux médias traditionnels, les médias qui sont réalimentés, mais on voit surtout dans le côté des nouvelles, il y a des changements énormes, il y a différentes sources.

5288             Alors, je comprends très bien votre question, mais de notre côté, il y a un grand changement où le numéro devient de deux à trois, et c'est vraiment... les sources s'agrandissent de jour en jour.

5289             CONSEILLER MORIN:  Mais au niveau local, j'ai un Palm Pilot avec le programme AvantGo.  J'ai toutes les informations nécessaires.  J'ai Bloomberg, j'ai le * New York Times +, j'ai le * Washington Post +, j'ai * Le Monde +, j'ai BBC, j'ai CBC.  Ils sont tous dans mon Palm Pilot.

5290             Mais au niveau local, je n'ai rien.  J'ai le site de Radio‑Canada, j'ai Canada.com, mais les nouvelles locales dans un marché, soit à Kitchener ou à Sherbrooke, je dois compter soit sur la radio, grosso modo, pas sur l'internet.  Il n'y a pas de scoop sur l'internet.  Je dois compter sur la radio ou sur la télévision, puis le journal local.

5291             Et si on parle ici de diversité, puis on n'a pas une règle pour assurer qu'au niveau local ‑‑ je répète ‑‑ au niveau local, il n'y a pas cette diversité, qu'est‑ce qui reste?  Est‑ce que les Canadiens peuvent vraiment dire tous les marchés locaux, c'est l'amalgame des trois médias, il n'y a pas de problème?

5292             M. STRATI : Je ne dirais pas qu'il n'y a pas de problème, mais je pense que les sources s'agrandissent si on parle de Toronto.  Moi, j'habite à Toronto.  Il y a toronto.com, il y a redToronto.  Il y a différentes sources qui se développent et qui deviennent importantes de jour en jour.  Il y a Eye Weekly.  Il y a d'autres sources différentes qui sont dans le marché.

5293             Je comprends qu'on se concentre sur ces trois sources là, mais de jour en jour, surtout les différents groupes démographiques, les sources d'information locales sont très différentes si on parle de différents groupes démographiques.  Alors, les jeunes, pour eux, leur journal n'a pas l'importance qu'il avait avant.

5294             Moi, je reçois le * Globe and Mail +.  Il y a Stephen Brunt qui est un écrivain pour les sports.  Je le regarde.  Moi, je reçois le * Globe and Mail +.  Chaque jour, je le lis.  Je ne lis pas, d'habitude, son article, mais je le vois sur Bob McGowan, qui est un autre programme qui est sur * Le Fan +.

5295             Alors, il y a des différentes sources et différentes opportunités, mais certainement, il y a un agrandissement, et je pense que...  Je trouve que c'est important, mais moi, je vois les sources s'agrandir de jour en jour au lieu de rétrécir.

5296             THE CHAIRPERSON:  With all due respect, that is not an answer to the question.

5297             I mean the question is quite precise and quite straightforward.  In local markets, the source of local news is radio, journalism or TV and that one owner owns all three basically deprives the people in local markets of local news.

5298             That is what Commissioner Morin puts forward and I think nothing I have heard from you refutes that.  Therefore, the CBC rule that is saying in one market you should not own all three, I think, is a very logical proposition if you want to ensure that people in local markets have access to local news.

5299             The objection that you make on the definition of what is a local newspaper, what is local radio, et cetera, that is like every rule, you know, you have got to have an interpretation, you have got to draw the line somewhere, et cetera.

5300             But I have not heard anything from Rogers saying exactly to this question by Commissioner Morin why one should permit one owner in a local market to own all three sources of local news.

5301             MR. WATT:  If I could just interject and go back to the discussion that you had with Mr. Engelhart.

5302             I know that we undertook by October 5th to try and put some flesh on the guidelines that might be used.  When that discussion was taking place we were frantically trying to consider what guideline we might put forward here today and we sort of deferred to October 5th but certainly one of the guidelines that I think might be put forward is exactly this particular issue.

5303             In smaller communities, communities where there isn't a plurality of voices, this could well be a guideline that you want to put in place, that if there is only one owner of the radio and television and the newspaper in that location, that then would be a guideline that people before the fact would think that is not a market where I can go in and purchase and accumulate these types of properties.

5304             But having said that I think it doesn't directly address the problem of where to get local news from the newspaper but we do have to bear in mind that, I think, it still is an open question as to ‑‑

5305             THE CHAIRPERSON:  You would prefer it to be done by way of guidelines rather than rigid rules but the effect would be the same?

5306             MR. WATT:  I think so because it may be the case that newspapers are a very dicey proposition in the future.  They are facing lots of competition from other sources and it may be that the only way you can have a newspaper in a smaller location is to have it benefit from the economics of being in a group with the radio or television station and then maybe you have to look at issues of separate newsrooms.  But again, in a small location it just may not be economic but you would consider all those factors.

5307             THE CHAIRPERSON:  Basically a failing from exception or something like that.  Okay.

5308             Thank you very much.  If there are no other questions, I thank you very much for your intervention.

5309             Madame Roy, who is next?

5310             THE SECRETARY:  I would now invite Corus Entertainment Inc. to come to the presentation table.

‑‑‑ Pause

5311             THE SECRETARY:  Appearing for Corus is Mr. John Cassaday.  Please introduce your colleagues and you will then have 10 minutes to make your presentation.

INTERVENTION

5312             MR. CASSADAY:  Good morning, Mr. Chairman, members of the Commission, ladies and gentlemen.

5313             My name is John Cassaday.  I am the President and CEO of Corus Entertainment.

5314             With me today are Sylvie Courtemanche, Vice‑President, Government Relations, and Gary Maavara, General Counsel.

5315             We appreciate the opportunity to appear before you today.  You have our written submission where we made specific policy proposals.  We would be happy to answer any questions the Commission might have concerning these suggestions to improve the system.

5316             Corus also requested that the Commission adopt a broad policy approach which perhaps you could think of as the Big Five.

5317             First of all, allow Canadians to experiment.

5318             Second, embrace the merits of fostering a Canadian‑owned industry that can be globally competitive.

5319             Third, increase the probability of success by encouraging the creation of larger and stronger enterprises.

5320             Fourth, develop a Canadian industrial strategy that supports the creation of high quality Canadian content from all Canadian producers, including producers that are affiliated to Canadian broadcasters.

5321             And, fifth, recognize that success in private broadcasting is what will lead to a stronger system in the digital world, not the current system of progressive fees, conditions and tariffs.

5322             It is our view that diversity will be enhanced if the Commission develops a policy framework that embraces these Big Five ideas.

5323             The fact is that Canadian broadcasters are the engines of diversity in our system.

5324             Through the course of this process, the issue of diversity has often drifted into other matters such as the mandate of the CBC, program funding, carriage, access and other matters and most of these will be covered in upcoming processes.

5325             But this underscores our view that diversity is not a discrete issue; it is tied to all the factors that challenge our potential for success in meeting the goals of the Broadcasting Act.

5326             We believe that by embracing the Big Five the Commission will facilitate the achievement of these goals and, thus, also preserve diversity.

5327             The Commission has posed specific questions for this public hearing and we will, therefore, concentrate our oral remarks in responding to these.

5328             First of all, plurality of voices.  This question relates to preserving a plurality of commercial editorial voices in a community.

5329             We submit that any analysis must take into account the variety of public broadcasting services that operate in each community.  Their contribution is relevant as they obviously add diversity, but they also compete for audiences, programming and sponsors with private broadcasters.

5330             In this regard we agree with the CBC's position that they do add diversity to the marketplace of ideas and opinions.

5331             It is also important for the Commission to formally recognize that there is a vast array of the media industry over which it has no jurisdiction or impact.  Part of this is digital interactive media.

5332             However, we should also not forget that a large proportion of the unregulated realm is foreign broadcast services that compete with us.  This number grows each day as the Commission adds new foreign services to the eligible list.

5333             And please keep in mind the estimated 1‑million households that use pirate satellite receivers.  These pirates operate with impunity in our country and the Commission should encourage the Government of Canada to take more active steps to control this crime.

5334             Few things are more threatening to the Canadian broadcasting system than this illegal intrusion that diverts an estimated $1‑billion each year from the Canadian system.  The environment is increasingly competitive as the Commission is well aware.

5335             Another impact of digital interactive media is that news rooms are under dramatic more scrutiny than was ever the case in the past.  Every fact or opinion immediately faces the examination facilitated by the Internet.  The Commission is well aware of the myriad examples of where erroneous news reports or facetious opinions have been challenged by the online community.

5336             Our news rooms must remain credible to our listeners to remain valid sources in a very competitive news and information market.

5337             This is the strictest test that we must meet each day, the test of the market.

5338             In addition to the rigors of the market, a broad range of measures already exist that govern content and diversity.  The Broadcasting Act, regulations, CRTC policies, licence conditions, expectations, the Elections Act across Canada, the CBSC process, rules about access to funding, mechanisms and even other statutes such as the Criminal Code have provisions that impact upon the diversity, balance and fairness of the programs which we broadcast.

5339             So, what else can the Commission do to foster diversity?

5340             An important element of editorial diversity in each market in Canada is the AM radio news talk station.  News talk is one of the best means by which Canadians can access the Canadian broadcasting system.  Each and every day across our 16 news talk stations, Canadians are given the opportunity to air their concerns and opinions using their own voices which augments the work done by our journalists.

5341             This crucial means of information and access is being threatened by the abandonment of the AM frequency by listeners, especially young people.  This problem is exacerbated by the technical interference caused by the massive urban development in most cities, and in recent weeks we have discovered that the introduction of the IBOC AM services in the United States will result in nighttime interference with our stations in major centres close to the border, such as Winnipeg and Vancouver.

5342             As the Commission is aware, the CBC has recognized this problem and is leaving the AM band.

5343             Corus has had some success in transferring our signals in the east, but less so with major stations in the west, such as CJOB in Winnipeg.

5344             News talk radio is important to editorial diversity and we believe we can win back young listeners.

5345             Corus is dedicated to expanding our news talk services and, for example, we have made application to launch a new service in Kelowna.  Our consumer research also indicates that young people will listen to information radio if we do it in the right manner on FM.

5346             The Commission must make the preservation of the heritage news talk stations a priority or the diversity of editorial voices will be greatly diminished in local markets.

5347             This is an active step that the Commission can take to immediately preserve this foundation service and the hundreds of editorial opinions distributed each day.

5348             The solution lies in what we call nesting the AM signal in low power FM frequencies.  We have identified FM frequencies in each market that are not being used and which can fill the gaps in our coverage, especially downtown where most people live, work and play.

5349             You can also amend the radio regulations by allowing an FM format to evolve to news talk without a cumbersome regulatory process.  We just can't afford to wait an uncertain 18 months to see if the Commission will allow a format change.

5350             The second question is about diversity of programming choice.  The Commission's licensing of new Canadian services and the entry of more foreign services has fostered a system which is probably unparalleled anywhere in the world.  Adoption of our Big Five ideas will build on this success.

5351             For example, you can allow us to experiment in digital radio so we can develop the value added elements that will entice Canadians to purchase  the new digital receiver dishes.

5352             You can also allow us to grow so we can continue to take the risks that any venture into new platforms will entail.

5353             Let me give the Commission an example of why we need to grow.

5354             We recently faced a program acquisition circumstance where the foreign rights owner demanded a considerable sum for the digital platform rights in addition to the fees for the traditional rights.  Our financial analysis indicated that this amount was not recoverable in the short term.  We also realized that we could not afford to lose the traditional programs if we didn't step up to secure these digital rights, so we needed to take on that risk.

5355             It is our view that that type of challenge will increase and all Canadian broadcasters will face the challenge of new media investment in order to protect their existing revenue streams.  We need to grow to cover these risks.

5356             Similarly, and as recommended by the Dunbar/Leblanc Report, it would be in the public interest to adopt a system that allows for vertical integration in fostering the independent production sector.  Our production studio meets the challenge of the Broadcasting Act by creating and distributing great Canadian drama.  Corus should be permitted to use this content without restriction while, at the same time, accessing independent works.

5357             The challenges of the production sector are well known to the Commission, however, the solution to getting more high quality Canadian programming is not by restraining the activity of some players in the system, it is not a zero sum gain; it will actually grow larger if you allow some producers to grow.  We need to adopt an industrial strategy to meet our cultural goals.

5358             A theme throughout the week has been the need for a test and here we agree with our colleagues that no test really exists anywhere in the world that is appropriate to our circumstance.

5359             The Commission already places limits where scarce spectrum is involved for both radio and TV and we believe that in the area of discretionary pay and specialty services, the method to ensure diversity is a two‑fold approach.  The first is by opening genres to domestic competition and, second, is to ensure that new entrants can access the distribution system.  If you adopt this approach, you will ensure diversity across the regulated system.

5360             Now onto financial disclosure.

5361             The Commission has also requested our point of view regarding the publication of financial results of private over‑the‑air broadcasters.  We are not sure in what form this would take place, however, we submit that this is both unnecessary to your ability to regulate and harmful to our ability to compete.  We also feel this way about the current practice of releasing the specific financial figures for discretionary services.

5362             If the Commission proceeds with this, then it should be done only on an aggregated basis and the other regulated segments should also have their information published on the same basis at the same time.  Specialty and pay service information should only be published on an aggregated basis as well.

5363             By way of summary, we urge you to adopt or at least consider our Big Five ideas.  Large enterprises are needed to take on the enormous risks that venturing into the digital interactive media requires.  Our competition is increasingly the world and you can help us prepare for that.

5364             And we need the Commission to recognize that in this new world, it is success that will facilitate the achievement of cultural goals.

5365             One immediate step that the Commission can take to preserve diversity is to protect the heritage of news talk stations across Canada by allowing them to utilize FM frequencies to improve reception by the listening public.

5366             We thank you for your attention and we look forward to your questions.

5367             THE CHAIRPERSON:  Thank you very much.

5368             I believe you were in the room during my exchange with Rogers just now.

5369             MR. CASSADAY:  Yes, we were.

5370             THE CHAIRPERSON:  And you remember how I said at the outset what really is in terms of plurality  what our issue is that, you know, increasing media concentration raises great worry for a lot of people and before we see the next wave, we should have some clear rules in place.

5371             Now, what forms the rules take, et cetera, and what should be in them is the purpose of this hearing.

5372             Now, I see your Big Five but, you don't specifically address this issue.  Do you have any views on this, on the CBC rules, on the Bell proposal, on what Rogers was saying, basically, that's just premature, should be done in the context of a BDU review on specialty or whatever.

5373             I would be interested in your views.

5374             MR. CASSADAY:  Well, we certainly agree that it's important to debate the issue, as you suggest.  Many people are asking questions, whether there is too much concentration and I guess our point is, we do believe there is considerable diversity and you should remind the Canadian people that they should take some comfort in that.

5375             Secondly, we make the point that we believe that while diversity is important that even more important is the fact that we need large Canadian companies in order to compete on a global basis.

5376             And I guess if I was to make some suggestions, I would just remind the Commission that there are specific tests in place where spectrum is scarce and I think it's more than appropriate, in those instances, that there be specific rules, but in areas like pay and specialty where spectrum is not an issue, we believe that there should be a more open environment.

5377             And I think the largest determinant, if I was a Commissioner of the CRTC, was to ensure that Canadians feel that they are well served relative to their friends in the United States.

5378             So, I think the most important thing that we can do as an industry is ensure that when Canadians look at the available services in Canada they feel that they are getting at least as good a system as is available in the United States.  And I think we're in a position right now where we can safely make that comment.

5379             THE CHAIRPERSON:  Yes.  I don't dispute that, but we are looking forward, we want to make sure we preserve and go forward.

5380             But what the concern seems to be  specifically towards local markets and ensuring that in local markets there is local news available from more than one source, and one of the proposals, CBC says just do what the Australians did using the Herfindahl‑Hirshman Index rule across the board saying, in any local market or national too, but we know ‑‑ I don't think we have to ‑‑ it is an issue at the national, nobody may be the owner of all three major source of commercial editorial news; i.e., radio, TV and newspapers.

5381             How do you feel about that?

5382             MR. CASSADAY:  Generally I agree with that and I think Ms Commissioner Morin made a very strong impassioned argument in favour of that.

5383             I guess the only thing that I would say is that I think we have to be reasonably flexible.  I spent a number of years of my life as a member of the Board of Canadian Airlines and I believed passionately that we needed two national airlines in this country.

5384             THE CHAIRPERSON:  Right.

5385             MR. CASSADAY:  And yet everything that we tried to do to ensure that happened failed and ultimately we ended up with one national carrier.

5386             And I think that in a town like Kitchener that was referenced earlier, it would be as a first priority important that one owner does not own the newspaper station ‑‑ the newspaper, rather, the radio station and the TV station.

5387             But I think if the only alternative is that there wasn't a newspaper or wasn't a television station or wasn't a radio station, that there would be some flexibility there.  But, generally speaking, perhaps two out of three would be the maximum that should be allowed.

5388             THE CHAIRPERSON:  Okay, thank you.

5389             Rita, you have some questions.

5390             COMMISSIONER CUGINI:  Thank you.

5391             Good morning, and as is the pattern, the Chairman very diligently takes care of the 30,000 feet questions and leaves the detail up to us.

5392             So, I'd like to go to your proposal with regard to being able to own more than two FM stations in one market.

5393             If we were to allow that, what does that do to diversity of voices in the market and what does that do to the opportunity for new entrants in any given market?

5394             MR. CASSADAY:  Well, I think you'd certainly still use the rules that we have in place now as to the total number of stations that one can own in a market based on its size.

5395             So, in this particular case we would not be proposing that we be allowed to own more than four stations in a market like Calgary, but that we would have the flexibility to operate the two FMs and at least a low power FM to house a news talk station because of the importance of making sure that stations like CKNW, CJOB and CHED are made available on a more accessible basis to people in cities and the downtown area in particular.

5396             MR. MAAVARA:  I think the other thing that's happening from a technological standpoint, Commissioner Cugini, is that we're discovering that this spectrum that's available is a little broader than we  thought.  That's as a result of the development of better receiver devices as a lot of the old radials get out of homes and you're aware of where radio stations that have launched recently have actually gone out and given people new receivers so they can receive frequencies that are closer together.

5397             We're very quickly developing a lot more spectrum by starting to explore things such as second adjacencies and also the tightening of distribution patters so that you can have contiguous stations that weren't considered in the past.

5398             And, as Mr. Cassaday said, one of the things that we're looking at with respect to our nesting is small power which solves the immediate problem of the downtown but doesn't create the overlap problems that a larger signal would have.

5399             COMMISSIONER CUGINI:  But that addresses your nesting proposal and I get that, but you do say that if an owner has no existing AM licences, then they should be permitted to own three FM licences in markets larger than eight stations.

5400             MR. MAAVARA:  That's correct.

5401             COMMISSIONER CUGINI:  That is in your written submissions.

5402             MR. MAAVARA:  Yes.

5403             COMMISSIONER CUGINI:  So, same question:  If we were to ‑‑ first of all, would you do that ‑‑ would you want that to occur even in markets where there is only one FM frequency available?

5404             MR. CASSADAY:  Well, we would propose that that rule be governed by the market size rules that govern now, so we would really be looking at that rule applying only in the markets that have eight stations or more.

5405             And our view is, to echo what I said earlier, is really that we feel there are more frequencies available, even in the Toronto market, for example, where you're probably aware there's quite a discussion going on right now with respect to the launch of one service.

5406             But we know that, in fact, there are more services that are looking at the spectrum across ‑‑ really across the swath from Oshawa to St. Catharines and if we look at the whole spectrum slightly differently from what we've done traditionally in the past, we think there's going to be more spectrum there and a change of this rule, which in our immediate perspective is we need to protect our news talk position, in fact, we are also going to have more diversity in the system because we think there will be more licensing.

5407             And we're seeing that, I mean even with this Kelowna call that's come up recently ‑‑ I'm not sure of the exact number, but I think there are 10 or 11 new applicants.  So, people are starting to see that, yes, there are more frequencies and, yes, there is more opportunity in even a small market like Kelowna.

5408             COMMISSIONER CUGINI:  Okay.  You also suggest that radio operators should not be permitted to change their formats within the first licence term to preserve diversity.

5409             We're always told that broadcasters need maximum flexibility to adapt their formats to the needs and tastes of their listeners.  So, how does your objective further ‑‑ or how does your suggestion further this objective?

5410             MR. MAAVARA:  Well ‑‑ sorry, go ahead.

5411             MR. CASSADAY:  I was going to say, I think on the service it may look that we're contradicting ourselves, but what we're saying here simply is, in the  case of a public hearing where there's a competitive situation for a new service and an individual applicant receives it on the basis of offering a diverse choice, it seems only appropriate that they should be committed to stay with that until they've gotten through the first licence term, then we couldn't care less what they do.

5412             But if the only reason they got it is because they were going to offer a Hungarian folk dance service and then they decided to turn it into a classic rock station the next week or flip it two months later, we think that's inappropriate and unfair to the other participants in that public process.

5413             COMMISSIONER CUGINI:  By the same token, as has been suggested by other participants in this proceeding, would you support a policy that prohibits the sale of a radio station within the first licence term?

5414             MR. CASSADAY:  Yes.

5415             COMMISSIONER CUGINI:  You would.  Okay.

5416             Do you think that these policies, if they were adopted, again an effort to increase diversity, should they apply equally to multi‑station ownership groups as well as to independents?

5417             MR. CASSADAY:  I don't see any reason why there should be a difference.

5418             Gary or Sylvie, I don't know whether you have a different point of view on that.

5419             MR. MAAVARA:  I'm just not sure what you mean by that in terms of, how would the impact be different?

5420             COMMISSIONER CUGINI:  Well, I guess I'm asking you that question.  In other words, should we  allow for independent broadcasters to sell sooner than ‑‑

5421             MR. MAAVARA:  Oh.

5422             COMMISSIONER CUGINI:  ‑‑ than the first licence term?

5423             MR. MAAVARA:  No.

5424             COMMISSIONER CUGINI:  Or, you know, should we say to multi‑station groups now, you know what, you guys are tough enough, ride it out

5425             MR. MAAVARA:  Well, I think that's really a fundamental issue of the system going forward and the short answer to your question is:  No, we don't think there should be a distinction.

5426             The challenge that we all face is ‑‑ and this really goes to the heart of diversity ‑‑ if you're coming forward and saying I am going to provide more diversity to the market and then, in fact, it turns out that you don't have the financial wherewithal to pull that off, we're saying basically, turn the licence back and let somebody else try.

5427             And there shouldn't be a distinction.

5428             COMMISSIONER CUGINI:  So, you would prefer opening up a competitive process rather than ‑‑

5429             MR. MAAVARA:  Yes.

5430             COMMISSIONER CUGINI:  ‑‑ the independents engaging in some kind of negotiation with someone who could bail them out, essentially?

5431             MR. MAAVARA:  Because what's happened is, is that of course people have started as independents, and there's plenty of instances in the recent history where the independent has very quickly realized that they're not able to make it and it gets slipped to a larger owner or somebody who's more capable, and we feel that that's not in the public interest; starting with diversity grounds but, clearly, as you can imagine, there are others as well.

5432             COMMISSIONER CUGINI:  Thank you.

5433             Onto specialty services, in which of course you are a major player in Canada.  You're not a fan of capping the ownership of diversity ‑‑ of discretionary services?  I'm getting my terms confused, I'm sorry.

5434             MR. CASSADAY:  No, no, we're not.  Specialty is a broad category, the important thing to look at is the segmentation.

5435             You could be a big player in kids as we are, but a relatively modest player in terms of total revenue in specialty which we also are because of the significant revenue that's generated by the big sports stations.

5436             So, we believe that the Commission should be encouraged to be quite open minded about the ownership of specialty from a corporate point of view.  We think that it would be great to have diversity across a lot of genres but, quite frankly, I don't think it matters that there are diverse choices of recipe channels or gardening channels.

5437             I think in the case of news, we have to be perhaps more sensitive, another perhaps layer of rules that would go into that to ensure that there is a proper diversity of choice there, but I think, more broadly speaking, we should be looking to create large enterprises that can invest in programming and can invest in the digital realm as we talked about and ensure that we're offering services that when our friends and neighbours go to the United States they don't come back and say, gosh darn it, why can't I have channels like they have down there?

5438             Because if more Canadians start to say that, we've got bigger problems than the one we're talking about today, we've got a fundamental issue with whether or not the Canadian system is adequately serving the citizens of the country.  And I think right now it is, but it's going to require us to continue to invest going forward.

5439             COMMISSIONER CUGINI:  Now, you're certainly not advocating that we bring HBO into Canada?

5440             MR. CASSADAY:  That we bring what?

5441             COMMISSIONER CUGINI:  HBO into Canada?

5442             MR. CASSADAY:  No, but what we're saying is that if someone wants to compete, a Canadian service wants to compete with YTV, if we can't defend our position after 10 years, shame on us.

5443             But if Nickelodeon comes into Canada without commensurate Canadian obligations and takes the programming that we have developed over time, that's a, you know, a four point gain, that would be very, very injurious to us.

5444             But from a Canadian point of view, we solidly support the interests of perhaps the Commission and others that say let's open it up, genre exclusivity has got this industry up and going and now it's time to allow for fulsome competition in this area.

5445             COMMISSIONER CUGINI:  I know, Mr. Cassaday, that you in particular said publicly that you believe that the wave of consolidation is over for a while, anyway, but as you know, in this business, never say never.

5446             If two years from now, three years from now one company owned 70 per cent of discretionary services and it wasn't Corus, you'd be okay with that?

5447             MR. CASSADAY:  When I joined this industry in 1990 that was pretty much the case.  I think what we're seeing right now is a repatriation of eyeballs, if you'll excuse a crass term, and we're seeing the system kind of evolve back to where it was where you've got a few strong players, and I fundamentally believe that that's what's required.  I hope that we are one of those strong players.

5448             I think it's far from over as to how this industry is going to evolve, but I do think we're going to see a period of digestion where the two big players come to grips with what they have and demonstrate their ability to operate effectively and, if they can't, I think there will be another round, and I've suggested publicly that I think that will take a couple of years to play itself out.

5449             So, I'm anticipating that there will be what I call tuck‑ins for the next little while, but the big deals are probably 24 to 36 months away and I would say that there will be more of those.

5450             And, again, I guess that makes this kind of hearing more than appropriate at this particular point in time.

5451             COMMISSIONER CUGINI:  And just so I have your position clear, in light of what you have just said, is it your contention that the rules as they exist today take ‑‑ and as you heard Astral say yesterday or the day before, that we already have all the tools to deal with that kind of possible wave of consolidation that might happen in two or three years, that we don't need any brand new rules?

5452             MR. CASSADAY:  Yeah, we believe that's the case.  We believe that as it relates to areas of scarce spectrum that there are clear rules.  As it relates to areas where spectrum is not an issue, the open playing field that we have now is good and it should get even more open.

5453             The only issue that we have is access, and we have some views on that too, but fundamentally we believe that the view expressed by Dave Purdy just a few moments ago is the operative one and, that is, that it is the enlightened self‑interest of BDUs to ensure that they have lots of choice.

5454             So, I saw in the food industry that I came out of prior to 1990 the emergence of private label brands to offset strong national brands, and many of these private label brands are now equal in perceptual value to the consumer to that which was held by the national brand previously.

5455             So, I think we'll see the market evolve in many different ways to ensure that there is access and that there are alternatives, and I think even if one player ended up owning 70 per cent of the licensed services, you would see another form of content evolve to ensure that there was a balance in the system to ensure that pricing was appropriately managed.

5456             COMMISSIONER CUGINI:  I just want ‑‑ my last line of questioning, and it's your first of the Big Five, I want to understand why you think that either regulatory intervention or regulatory removal of any barriers is one of the elements to allow Canadians to experiment?  In other words, do you need our regulatory intervention to experiment and/or do you need us to remove barriers to allow you to experiment and in what fields do you want to experiment?

5457             MR. CASSADAY:  Well, I'll give you one example, it will be a brief one, but we've used it before.

5458             John Hayes, the President of our radio station on a panel, I think at Banff a couple of years ago, said that there should be no Canadian content regulations on digital.  And a number of Members of Commission Staff said, you didn't really mean like no levels of Canadian content?  And he said, yeah, no levels of Canadian content.

5459             Right now no one wants digital radio because there's no real reason.  If the only benefit is a slight increase in quality, why go out and buy a receiver when the average Canadian probably has 10 receivers in their home today.  We have to offer them something different.

5460             Over time, as digital evolves and there is a market for it and there are receivers in place, then we can begin to institute the homogeneity that is required to ensure a strong Canadian system which we fully endorse.

5461             All we are saying is that if we are going to create a new market, that we need to be able to do whatever we want and be experimental and right now, that would be ‑‑ well, that's not doable in this environment.

5462             COMMISSIONER CUGINI:  And that's the only one?

5463             MR. CASSADAY:  So, all we're doing is sima casting services and quite frankly, the consumer is saying, well, I don't really care enough about that to go out and buy a new receiver.  So, we don't have a business in digital today.

5464             COMMISSIONER CUGINI:  And is that the only area?

5465             MR. CASSADAY:  Well, I'm sure there are others that are ‑‑ Gary, I just used that one as a ‑‑

5466             MR. MAAVARA:  Well, actually, Commissioner, we have recently sent an application to the Commission which isn't public yet and I think Sylvie will probably yell at me at least in the hall later if I were to talk about it.

5467             COMMISSIONER CUGINI:  Then you probably shouldn't.

5468             MR. MAAVARA:  That is completely described and we think it's extremely innovative and dynamic and hope you'll love it.

5469             COMMISSIONER CUGINI:  Okay.  Thank you.  Thank you very much, Mr. Chairman.

5470             THE CHAIRMAN:  Michel?

5471             COMMISSIONER ARPIN:  Thank you, Mr. Chairman.  Mr. Cassaday, good morning.  To pick up on the line of questions that Commissioner Cugini was discussing with you regarding radio.

5472             First, regarding Kelowna, you mentioned there might be nine to eleven applications, but there are not nine or eleven frequencies available for that market.

5473             And so, the whole issue of spectrum is still a big one as I think, Mr. Maavara, you've alluded briefly to the Toronto situation where currently there is an outcry regarding a potential second adjacent broadcaster who has been denied the use of that frequency by the current rules of procedures.

5474             So, the spectrum, there is not that much spectrum available for new entrants.

5475             MR. MAAVARA:  Well, that's true and we have been looking at this subject a fair bit over the last year.

5476             The interesting thing about spectrum and my non technical perspective is that every time we send the DEMLN folks out to look for a frequency, they always seem to find one.

5477             COMMISSIONER ARPIN:  That's the experience the Commission has as well.

5478             MR. MAAVARA:  They are not always.

‑‑‑ Laughter / Rires

5479             COMMISSIONER ARPIN:  We are not particularly with that firm, they are quite creative.

5480             MR. MAAVARA:  Well, they're very good and very creative, but there just seems ‑‑ and I am not sure exactly, perhaps Sylvia would know how many frequencies we're talking about in Kelowna.

5481             But as we look across the country whereas three, four, five years ago, it was considered that in most markets, basically the door was closed, we are now finding that if we start regauging things and moving com to where pat is around and here in Ottawa, for example, there is a number of things going on to change the pattern so that we can approve service across the system, we are finding that new frequencies are coming available.

5482             I raised the subject of second adjacency, obviously CORUS is a big radio player as it got some trepidation with the notion of opening that up, but the fact of the matter is and going to Mr. Cassaday's point about comparing ourselves to the American markets, virtually every market in the United states has considerably more radio service because they've opened up to second adjacency and I understand that we have some technical reasons why we have the system that we do.

5483             But all of which is to say there is more there and our view is that to the extent that we solve that what we consider to be an absolutely number one priority issue, which is saving news talk radio in Canada in terms of editorial diversity, in terms of local service.

5484             You know, CJOB in Winnipeg is the place where people go to if there is a flood or if the mosquitoes are being sprayed that night by chemicals, whatever, it's the place we go to and CKAC in Montreal, CJRC here in Gatineau.

5485             We need to find a way to preserve that and I'll mention a couple of other stations that we don't own like CJOD and CFRB, just to be balanced.

5486             COMMISSIONER ARPIN:  Obviously.  Well, I think it's a good question that needs to be looked at, but there surely will be other forum to deal with that.  It's not only a matter of diversity of voice here.  It's also a matter of making use of ‑‑ making an efficient use of spectrum.

5487             To come back to your example in the U.S., there is much more less powerful FM radio stations in the U.S. than there are here in Canada than there are in some markets in the U.S.  There are numerous situations where the FM station doesn't cover the full market.  It only covers a part of the market, so there is ‑‑

5488             It's a slightly different situation and use of the spectrum in a very different manner than we do use in this country.

5489             So, it's surely a matter for further consideration.

5490             In your written submission, you have said and you discussed the matter with Ms Cugini that new licensees should keep their format for the first term of their licence.

5491             There have been other interveners who have said that all the format should be frozen in a given market at the time there is a call for application, so that the applicants who have done their market studies based on a situation, they arrive at the hearing where the void that has been identified, but an applicant has been filled in the meantime by one of the incumbents.

5492             Do you have any views on that proposal?

5493             MR. CASSADAY:  They are comparing notes here.  My view is that you can't do that and let's say, for example, a incumbent is in the midst of considering a change in format from country to rock and then there is a call for new applications, is that person going to be put on ice for several years?  I don't think so.

5494             I think what we're trying to do here is in a competitive process where an applicant is successful in acquiring a licence because they have offered a diverse programming choice, that they should be committed to do it.  I don't think that the incumbents should be restricted to any lack of mobility, so we can ‑‑

5495             MS COURTEMANCHE:  Well, I was just going to say it's exactly the situation we're facing in Kelowna.

5496             We responded to the call by offering a news talk format because at the time that we applied, that format had been vacated by a particular radio group which I won't name.  So, we thought, here we go, we've got a format that we can fill.

5497             Well, guess what?  Last week, another radio group, an incumbent decided to fill that format.

5498             Now, we are still going to the hearing because we're convinced that we are going to do a product that's different and that's going to, you know, very well serve the community.  So, we hope that the Commission will see favourably on that.

5499             But, yes, we are facing that situation right now and we accept that the incumbent could do that and could do that in the future.

5500             COMMISSIONER ARPIN:  Now, in your oral presentation this morning, at top of page 8, you're talking about an experiment in the digital world, radio world.  And you are saying that you can develop value added elements that will entice Canadian super interest.

5501             Are you talking about using the L band here or is it other digital services that you have in mind?

5502             MR. MAAVARA:  Well, as you are aware, Commissioner Arpin, the question of whether it's going to be L band or something else is still somewhat up in the air.  IBACUS had taken further steps in the U.S., we're watching that carefully.  Our engineers are literally out.

5503             Jack Hepner who is our lead engineer sends me e‑mails quite often in the middle of night, he is out somewhere in a farmer's field listening across the board or with his device, to see how the Iboxing is working.  So, we're closely looking at that.

5504             If we could find a way to make the DAB, the traditional conversation we've had in Canada to find a way to make that work, then we would certainly explore that as well.

5505             COMMISSIONER ARPIN:  Okay.  Thank you very much, Mr. Chair.

5506             THE CHAIRMAN:  Michel?

5507             COMMISSAIRE MORIN:  Oui.  On est ici sur un forum, enfin une audience sur la diversité.

5508             Au Canada, on a vu au cours des dernières années que la radio commerciale fait de mieux en mieux et il y a beaucoup plus de licences aussi qui ont été émises.

5509             On a la radio commerciale, on a la radio communautaire aussi et j'aimerais vous demander ce que vous pensez de l'idée que vous puissiez contribuer ‑‑ c'est une proposition de l'Association des radiodiffuseurs en radio communautaire au Québec ‑‑ que vous puissiez contribuer un demi pour cent non pas de vos profits, mais de vos revenus à la création d'un fonds pour faciliter la télévision... pas la télévision, pardon, la radio communautaire.  C'est une proposition qui est devant nous.

5510             Alors. j'aimerais vous demander, enfin, qu'est‑ce que vous pensez de cette proposition et est‑ce que, vraiment, vous avez été approché par eux aussi en ce qui concerne la mise sur pied de ce fonds‑là?

5511             Mme COURTEMANCHE:  Conseiller monsieur Morin, non on n'a pas... premièrement en réponse à la question : est‑ce qu'on a été approché par le groupe de la radio communautaire, la réponse est non.

5512             Je pense que de commencer à imposer une taxe supplémentaire justement pour s'assurer que cette voix en particulier soit sauvegardée, je pense qu'on ne serait pas d'accord.

5513             Mais je pense que l'alternative, c'est d'avoir justement ce regroupement‑là, de faire une proposition concrète au niveau de quelle sorte de financement est‑ce qui serait recherché et pour quelles fins on les utiliserait.

5514             Et on a, vous savez, différents moyens, soit le développement du contenu canadien ou même au niveau des bénéfices tangibles, si le Conseil voyait que ça serait utile d'utiliser une portion de ces argents‑là justement pour les migrer vers ces groupes‑là, ça serait...

5515             Et avec une indication claire de votre part, je pense que ça serait une meilleure façon de traiter avec la problématique que de tout simplement utiliser un chiffre comme ça et pour lequel on n'a pas nécessairement justifié le chiffre sur une base économique et de la façon... on n'a pas justifié clairement pour quelle initiative ces argents‑là seraient utilisés.

5516             Ça fait que je pense qu'il y a d'autres alternatives dans le système qui nous permettraient d'adresser si, en effet, il y a un manque à gagner et puis comment est‑ce qu'on pourrait le cibler.

5517             Vous savez, dans vos propositions ou votre politique sur le contenu du développement canadien, vous avez des règles très précises.

5518             Auparavant, on parlait du développement de talents canadiens et c'était beaucoup plus flou.  Je vous dirais qu'il y avait des argents qui allaient pour l'appui des arts de la scène ou d'autres choses, qu'il y avait des objectifs, c'est clair que c'est culturel, mais que ces initiatives‑là ne finissaient pas avec un développement d'un contenu qui serait, lui, entendu à la radio.

5519             Ça fait que vous avez ciblé, vous avez dit, non.  Ces argents‑là, on veut vraiment que ça soit utilisé pour le développement du contenu à la radio.  Ça fait que si vous pensez que ce serait... aussi il y aurait soit subventionner, je ne sais pas, des émissions qui seraient, eux autres, livrées par la radio communautaire ou d'autres choses.

5520             Je pense qu'il y a moyen de se parler puis d'engager la discussion, mais juste de dire c'est 0.5 de vos revenus, on n'a pas justifié ça d'une façon économique, j'ai de la difficulté avec ça.

5521             Je pense qu'on devrait regarder un projet très concret et regarder selon les argents qui existent comment est‑ce qu'on pourrait financer des propositions qui seraient acceptables.

5522             Et je voudrais savoir que le Conseil a regardé à la proposition de la radio communautaire et a dit : oui, on a regardé ça, on trouve que ça a du bon sens, ça réalise les objectifs de la Loi sur la radiodiffusion et maintenant regardons comment est‑ce que, à l'intérieur des argents qui sont déjà disponibles, on pourrait financer ces initiatives‑là.

5523             Je pense que ce serait une façon plus pondérée et réfléchie de faire l'exercice.

5524             THE CHAIRMAN:  Okay.  Thank you very much for your intervention.  We will take a 15 minute break now.

‑‑‑ Recessed at 1014 / Suspension à 1014

‑‑‑ Resumed at 1033 / Reprise à 1033

5525             THE CHAIRPERSON:  Madam Boulet.

5526             THE SECRETARY:  Thank you, Mr. Chairman.

5527             We will now proceed with the presentation of the Writers Guild of Canada.  Ms Maureen Parker will introduce her panel, after which you will have 10 minutes for your presentation.

5528             Ms Parker.

INTERVENTION

5529             MS PARKER:  Thank you.  Good morning, Mr. Chairman, members of the panel and Commission staff. 

5530             My name is Maureen Parker and I am the Executive Director of the Writers Guild of Canada.  To my left is Rebecca Schechter, President of the Writers Guild and to my right is our Policy Consultant, Robert Armstrong of Communications Media Inc.

5531             The Writers Guild of Canada is a national association representing more than 1,800 English‑language professional screenwriters who are Canada's voice in entertainment programming.  We believe that a strengthened CRTC policy on ownership concentration is absolutely necessary.  The growing market power of certain broadcasting owners should not negatively affect the fulfilment of the Commission's objectives as set out in section 3 of the Broadcasting Act.

5532             Ultimately, the Commission must ensure that there is a wide diversity of broadcast programs available to the Canadian public.  One of the Broadcasting Act's overwriting policy objectives is to ensure the availability of Canadian content for Canadians.  Without appropriate safeguards media consolidation can potentially reduce the Canadian content available as new media conglomerates seek to realize cost efficiencies by broadcasting the same programs across a multitude of stations and networks.

5533             Up to now CRTC decisions have attempted to deal with this phenomenon without clear guidelines on some issues.  The present hearing is an excellent opportunity to establish general rules that will improve predictability regarding the Commission's decisions relating to the diversity of voices. 

5534             The WGC has formulated a simple basic rule with four criteria that could be applied in all situations involving ownership concentration with a view to ensuring a wide diversity of programming.  A diversity of programming choices will ensure that the various broadcast services are not simply bland copies of one another.  And most importantly, it will ensure that the Canadian broadcasting system reflects and serves Canada's very communities.

5535             The WGC is seeking safeguards and guidelines that will protect diversity without unduly hampering a healthy marketplace.  We believe that programming diversity can be preserved if the CRTC applies the following four criteria.

5536             First, each application should have a net positive effect on the use of Canadian creative resources in the creation and presentation of original programming in the broadcasting system, with particular attention to Canadian drama.  Any transfer of ownership should be evaluated by the Commission in light of its overall contribution to this policy objective drawn from the Broadcasting Act. 

5537             Each ownership transfer would then increase or at least maintain the total volume of original Canadian programming including drama across the broadcasting system.  While broadcast ownership groups understandably seeks to realize savings by spreading costs over a larger station group, these savings must not be generated at the expense of the overall volume of original Canadian programming.

5538             Second, each application should have incremental tangible benefits based on a program expenditure requirement for Canadian priority programming.  The Commission's existing policy requires that tangible benefits should be incremental to the broadcasting system and not simply a transfer of resources from one undertaking to another. 

5539             By providing a standard of measurement the introduction of program expenditure requirements for the over‑the‑air television services would help to ensure that tangible benefits related to the ownership transfers are truly incremental.

5540             Third, each application should have separate and autonomous program acquisitions, program scheduling and program management in the two entities, as well as separate licence fee negotiations and contracts.  This will help to establish separate and autonomous program schedules, distinctive branding and provide Canadian viewers with clear programming alternatives.

5541             Fourth, each application should have an applicant who has the financial capacity and business plan necessary to ensure the economic viability of the new entity to be required.  Licensees who cannot sustain their operations impose a costly burden on creators, producers, the CRTC, and the entire broadcasting system.

5542             Rebecca.

5543             MS SCHECHTER:  Thank you, Maureen.

5544             In addition, we would like to address some of the specific issues raised by the Commission its notice of public hearing.  The CRTC should retain its existing policy of allowing no more than one over‑the‑air television station in one language in a given market and should only make an exception where particular circumstances warrant.  The Commission's so‑called twin sticks policy is one of the basic tools that protects programming diversity at a local level.

5545             The Commission's policy of allowing no more than one television owner in one language in a given market should also be applied in a more general way to the ownership transfer of speciality and pay television services.  As the digital universe unfolds, industrial concentration and economic competition issues will directly affect discretionary services as well. 

5546             However, the CBC's proposal on this issue is unacceptable.  Instead, there should be a general policy preventing ownership of multiple specialty and pay services in the same genre.

5547             BDUs should also be subject to safeguards with respect to common ownership.  These safeguards should include a requirement to operate independent, legally distinct companies.  Considering the growing extent of cross‑media ownership and vertical integration in Canada, the equitable access of programming services to BDUs is a continuing concern.  Not only are safeguards necessary, including the Commission's rule that requires a BDU to offer five related services for each affiliated Category 2 service offered, but BDUs should be subject to structural safeguards as well.

5548             Safeguards are also necessary to ensure a strong Canadian independent production sector in regard to the vertical integration of television production companies and television programming licensees.

5549             Recent CRTC decisions require television licensees to acquire no less than 75 per cent of their original first‑run Canadian content from independent producers.  This rule should be applied generally in regard to the production and broadcast of priority programs.

5550             The CRTC's benefits policy was designed to ensure that any transfer of ownership, subject to certain qualifications, is accompanied by benefits for the Canadian broadcasting system as well as for Canadian listeners and viewers.  The benefits policy was not designed specifically to address the diversity of voices issue.  That being said, it can be used as a tool to support diversity. 

5551             In event that a particular transfer of a television ownership poses a potential risk to the diversity of voices in the system and the Commission determines that the transfer is appropriate nevertheless, the benefits policy can serve to compensate, in part, for the increased risk to diversity by increasing the value of the benefits package above 10 per cent.  The WGC supports the continued application of this policy.

5552             In a separate document sent to the Commission last week the WGC responded to the Commission's call for comments on the potential public disclosure of selected financial information from over‑the‑air broadcasters.  The WGC considers that, at a minimum, such disclosure should include that portion of the annual returns and financial statements of each individual over‑the‑air broadcaster down to and including profits before interest and taxes.  This is consistent with the CRTC's current treatment of specialty and pay licensees. 

5553             Complete public disclosure is fundamental to the public hearing process so that interveners, including the WGC, can effectively analyze and comment upon proposed ownership transfers, their impact on the diversity of voices in the Canadian broadcasting system and other regulatory issues.

5554             Maureen.

5555             MS PARKER:  Mr. Chairman, several major players have told you that there is no need to re‑examine the Commission's current policies concerning the diversity of voices.  As with most of the interveners in this proceeding, we do not share this opinion.  This view belongs almost exclusively to media companies that own important parts of our broadcasting system and have a vested interest in the status quo.

5556             The WGC is in favour of adopting a few simple regulatory rules with regard to the diversity of voices issues.  However, any simple new rule should cover issues the Commission has not yet addressed explicitly.  The new rules should be supplemental to the Commission's existing regulatory framework, including the case by case approach, and should not be used to replace the existing framework.  The case by case approach is essential to allow interveners to provide input on vital decisions of public interest.

5557             Any new rules must be carefully formulated to have a meaningful impact on the diversity of voices issue.  The large media groups want an end to regulation and want the CRTC to adopt general rules that are ad hoc and so lenient as to be in effect nonbinding.  In the absence of existing policies and a case by case approach, such rules would result in the rubber‑stamping of virtually all applications for ownership transfer.

5558             On the other hand, if the Commission decisions related to ownership transfers were made up using the existing framework and the case by case approach while applying the WGC's four criteria and the other suggestions in our written submission we are confident that Canadians would be able to enjoy a wide variety of programming regardless of the ownership structure of the Canadian broadcasting system.

5559             We thank you for your time and we would be pleased to answer any questions you may have.

5560             THE CHAIRPERSON:  Thank you very much.

5561             You have been hearing the submissions over the last two and a half years, and I gather you don't accept the arguments from most media companies that this is a very dynamic industry, it faces huge competition, especially from new media, and therefore there is a necessity for certain financial size and clout in order to survive.  And only if they have that size and clout can they produce the necessary Canadian content and the further the objectives of the Broadcasting Act.

5562             What you suggest here is a whole series of additional rules over and above the existing ones.  How do you explain this very great divergence between your views and that of traditional media companies?

5563             MS PARKER:  Well, first of all, I want to say that we are not anti‑consolidation, that is not our position.  We do believe that there are certain synergies that are brought about by larger organizations. 

5564             However, we do think there has to be a series of checks and balances in a system and you currently have some of those in place in your existing framework, but we think they have to be supplemented with a few things.  And I think that that is increasingly obvious, because there isn't enough diversity on our TV screens and that is a problem that needs to be addressed.

5565             Now, I know that this is a go‑forward hearing, but looking at what is currently happening we can see right now a decrease in the available original Canadian content on these broadcasting stations, so I think that this has to be addressed.

5566             THE CHAIRPERSON:  Okay.  Your suggestion separate and autonomous program acquisition, program scheduling, program management in the two entities as well as separate licence fee negotiations and contracts.  Translate that into an actual case where you have a merger why does merger make sense?  Because of synergies and cost savings, those are the two main issues.

5567             It seems to me that you have cut out a huge amount of cost savings by insisting as a separate.  What would be the incentive for merger if we adopted this rule?

5568             MS PARKER:  Well, I think that there are a number of other synergies.  What we are trying to prevent and trying to ensure is that there is that there is some balance in the system. You know, those particular criteria, those pieces of the puzzle, program management, program acquisition, separate scheduling, we will ensure that there will be some original Canadian programs on our broadcasters, on our networks.  Without that what you are going to see are increasing numbers of repeats.  We already have repeats in our system.

5569             But I can give you an example of an actual program if that would help.  We currently had a program produced out in Vancouver by some Canadian writers, directors, performers, producers and it has appeared on the CTV Network, it has appeared on The Comedy Channel, and now it is on the A‑Channel.  And this is one program being endlessly repeated, so that means a couple of things.  But basically, where there was an opportunity for some original programming, that opportunity has disappeared.

5570             THE CHAIRPERSON:  Is this the only way to achieve that goal?  That is a rather drastic remedy.  If repeat is the issue that you are worried about, insisting on separate licence fee negotiations, that is the only way to get there?  Are there not less intrusive, less drastic means to get there?

5571             MS PARKER:  You know, I was listening to the CFTPA yesterday from our hotel room, and I think that one of the things that is happening with respect to licence fee negotiations is the blanket licence fee.  There has been a change in the way the system is operating.  And the blanket licence system basically means that a broadcaster is acquiring all the rights in a program for a seven‑year period. 

5572             Previously, what happened in our system is that there were successive windows, that you would tie up the rights for two years, maybe three years, then you would sell it to perhaps one of the specialty channels and there would be another bundle of rights.

5573             So what is happening is that without checks and balances in the system it is swinging too far one way.  I mean, there is no possible way that we can have original programming and that there is balance in the system if one broadcaster who holds all of the negotiating power is able to command an unlimited licence for all types of uses over every platform.

5574             THE CHAIRPERSON:  Okay, thank you.

5575             Rita, I believe you have some questions.

5576             COMMISSIONER CUGINI:  Thank you.  I am just going to follow‑up on that one point, which is your third recommendation.

5577             Let us take even two OTA services within the same ownership group actually competing with each other for programming as opposed to being complimentary and providing that kind of variety across their television services. 

5578             In other words, you know, if Global is going to be negotiating separately for a program than E Channel, as it is now called, what advantages does that accrue to the broadcaster and to the viewer?  Because instead of scheduling with each other, they are going to be scheduling against each other and I just don't see what the advantages are to that.

5579             MS PARKER:  Well, I understand your point on that one.  I suppose the way we are looking at it is that it is separate scheduling but, of course, with informed information as to what your partner is doing with respect to that.  It is separate, but it is not ignorant of what is happening in the rest of the system.

5580             Is there anything I would add to that in terms of scheduling?

5581             MS SCHECHTER:  I think that what we are getting at here is to keep alive as many of what you might think of as commissioning editors, which are sort of our network development executives, as possible.  So that what happens when you get a merger between CTV and CHUM is we lose one of the places we can go to pitch our ideas and have one fewer potential access to getting our voice heard on the media. 

5582             And we think that, when the stations merge, we want to preserve as much as possible the diversity of development executives or commissioning editors, which is what they are to us, so that we can have more than two or three of ‑‑ you know, the number of people who select what gets on air shrinks and shrinks and shrinks. We feel there should be a protection against that.

5583             COMMISSIONER CUGINI:  And we have heard the argument before, that as consolidation increases it means that there are fewer doors on which producers can knock.  But to steal a term from another issue, why isn't it advantageous for the producer to do one‑stop shopping where it goes to one entity and can negotiate over‑the‑air rights, specialty rights, internet rights, do it in one‑stop pitching as opposed to shopping?  Why isn't that advantageous to the producer?

5584             MS SCHECHTER:  Recently, I know someone who is working in Los Angeles with a project, trying to get it pitched, and the agent has brought it to about 15 different entities, studios, what they call pods, etc. There is a huge field there of people who could potentially compete over one idea.  And so, you know, the one‑stop shopping, it may be advantageous when you are doing a contract, but ultimately, you know, I would say the more potential commissioners you have of your ideas the greater your bargaining power.

5585             MS PARKER:  And also what it would mean, Rita, is that it would mean a yes or a no.  So if there was only one gatekeeper and you had worked for years on developing a series or a pilot, it is a yes or a no, and where do you go then?  You know, we need to have some alternatives in the system.

5586             COMMISSIONER CUGINI:  Okay, thank you.  Your first recommendation, that it have a net positive effect on the use of Canadian creative resources, how would we measure this?  Would we measure this on a market by market basis, the incrementality, or do we measure it on a national basis?

5587             MS PARKER:  I think there are a couple of things that we would look at.  We would look at the volume of production, the we would look at the number of people working, those would be just two ideas off the top of my head.  We could look at that in greater detail.  We do think everything has to be incremental. 

5588             We have been struggling over the last couple of years, as you know, in terms of a decrease in production, particularly for Canadian drama, even with the benefits package in place.  So we believe that we need some sort of starting standard of measurement from which then we can compare and that is why we consistently bring up the need for expenditure requirements.

5589             COMMISSIONER CUGINI:  And this would be applied to both over‑the‑air and speciality?

5590             MS PARKER:  Well, specialty already has program expenditure requirements, so it would really just be over‑the‑air.

5591             COMMISSIONER CUGINI:  Okay.  One question I had on the last sentence on page 5 of your oral presentation. 

"Should be a general policy preventing ownership of multiple specialty and pay services in the same genre." (As Read)

5592             If I understand this correctly, what you are saying is Corus, for example, who was just up, they have specialized and children's programming on the specialty side.  Should we fix a percentage of how many children's services Corus is allowed to own and, by the same token, should we fix a percentage of how many drama channels somebody else should own?  Is that what your recommendation is boiling down to?

5593             MS PARKER:  Well, that is what we are getting at.  And the reason behind that and, you know, we will look at giving you something more specific if at all possible, but what we are pointing out is a problem.  And the problem is that if one media entity owns specialties or pays of the same genre, then there is really no competition.  Again, it becomes an issue of original versus repeats and we see that as a real problem in the system.

5594             COMMISSIONER CUGINI:  Ms Parker, I think you may have anticipated what I am going to say next, because such a recommendation has the potential to have an incredible number of layers to it.  Let us take children's programming, for example.  Is it children's programming that is preschool to age five?  Is it is children's programming that is then six to 12?  Is it animation?  Is it live‑action children's programming?  Is it drama?  Is it educational programming?  How are you going to define that?  And for each program category, you have the same number of layers. 

5595             Maybe you might want to take this under advisement and perhaps, in response by October 5, come up with a measurement tool for us in order to evaluate this recommendation.

5596             MS PARKER:  And I am certainly not an expert in any of this, but aren't there currently programming categories?  Couldn't we group according to those?

5597             COMMISSIONER CUGINI:  There are program categories, but if that is what your recommendation is then we will look at it in that way.

5598             MS PARKER:  Okay.  We will look at getting something to you.

5599             COMMISSIONER CUGINI:  And then perhaps you could come up and maybe you have a suggestion for a percentage as to what that cap should be?  You have heard others, the CBC in particular, gives us a number of 33 per cent of specialty services overall, Pelmorex said that perhaps we could look at the U.S. model, and they came up with a 39 per cent cap.  It is a bit of a wavy line but, you know, they drew a line. 

5600             Your recommendation is obviously preferable to capping in absolute numbers the number of specialty services an entity can own?  In other words, if we were to say to Corus you can't own more than 33 per cent of specialty services going forward, period, is that ‑‑

5601             MS PARKER:  Sorry, and your question is do we prefer our way?

5602             COMMISSIONER CUGINI:  Yes.

5603             MS PARKER:  Yes.  Yes, we do, because we do believe that that is not going to provide us with enough diversity in the system.  Currently, there are 418 licensed services, 33 per cent gives anyone a very very large share.  And if they are all in the same genre, we don't see how that is going to encourage diversity.

5604             COMMISSIONER CUGINI:  Okay.  But the point is that 33 per cent wouldn't all necessary be in the same genre.

5605             MS PARKER:  But I think that is what we are trying to workout.  You know, we have listened to the CBC's position this week and, you know, I don't know that it is fully fleshed out, I think there a lot of questions.  It is certainly an idea, but we do see some holes in it and that is why we are just presenting a little alternative.

5606             COMMISSIONER CUGINI:  As a follow‑up to that, if we were to implement a cap on simply the number of services that any one entity can own, why do you not think it is in the best interest of that entity to provide as much diversity within that percentage in order to garner the largest possible audience?  If they were to report their audience numbers on a cumulative level across those speciality services, why would it not be in their best interest to provide as much diversity in terms of plurality of content?

5607             MS PARKER:  Well, you know, I would like to believe that it would be in their best interest, but unfortunately I don't think that experience has shown us that and I would just use CSI as an example. 

5608             And I am just simply saying that a program like that would pop up on every possible channel at all times of the day.  And I think when there are costs involved and savings to be had that there will be a loss in terms of diversity and, therefore, I think there has to be some regulatory protection to ensure that that doesn't occur, because I don't think it will happen on its own.

5609             COMMISSIONER CUGINI:  So are you therefore advocating that we should perhaps also implement some kind of limit on programming overlap ‑‑

5610             MS PARKER:  Yes.

5611             COMMISSIONER CUGINI:  ‑‑ amongst speciality services?

5612             MS PARKER:  Don't we already have that in place in terms of genre, exclusivity?

5613             COMMISSIONER CUGINI:  Well, we will discuss that later.

5614             MS PARKER:  Yes, I believe that is coming up ‑‑

5615             COMMISSIONER CUGINI:  Yes, that is coming up.

5616             MS PARKER:  ‑‑ in January.

5617             COMMISSIONER CUGINI:  You talk about BDU safeguards and common ownership.  And I just want to clarify, in your written submission:

                      "Since the Commission does not seem to have a general policy concerning common ownership of BDUs, BDUs should be subject to safeguards with respect to common ownership, such as those relating to structural separation set out in Decision CRTC‑1999‑169, that are described as follows in the Broadcasting Decision 2002‑84." (As Read)

5618             You are aware that 2002‑84 essentially replaces 1999‑169?

5619             MS PARKER:  I think Robert should answer this one.

5620             MR. ARMSTRONG:  Yes, Commissioner Cugini, we are aware.  Our feeling was that the descending opinion that was written by Commissioner Noël in that decision was very convincing.

5621             COMMISSIONER CUGINI:  But this isn't the forum in which we would address reverting back to a previous decision.

5622             MR. ARMSTRONG:  Well, we are not suggesting, we simply point to that descending opinion and, in fact, the previous decision as an example of structural separation, the kind of separation that could take place.  We are not suggesting that you rollback that specific decision, but rather that the elements that were set out in the 1999 decision provide a basis for a policy that could provide some form of structural separation.

5623             COMMISSIONER CUGINI:  Then why do you not believe that the safeguards in 2002‑84 are not sufficient?

5624             MR. ARMSTRONG:  All I can say is we were very convinced by the descending opinion and that you should reread the descending opinion and you will see that the arguments are all there.

5625             COMMISSIONER CUGINI:  Okay, thank you.  Just one more point of clarification, Ms Schechter, in the section that you read this morning on page 6.  Recent CRTC decisions require television licensees to acquire no less than 75 per cent of their original first‑run Canadian and that this rule should be applied generally in regard to the production and broadcast of priority programs.

5626             Are you saying we should have two rules, plus 75 per cent of priority programming?

5627             MS SCHECHTER:  I don't think so.  I think what we are saying is that that rule was applied in specific decisions and we would like it if it became a general policy ‑‑

5628             COMMISSIONER CUGINI:  Okay.

5629             MS SCHECHTER:  ‑‑ so not on a case by case.

5630             COMMISSIONER CUGINI:  That is why it is good to clarify.

5631             Top of page 7, again, of your oral presentation, in the event that a particular transfer of television ownership poses a potential risk to the diversity of voices in the system, you are suggesting that perhaps the benefits package could be above the 10 per cent.  Critics of this proposal may say that you are advocating that broadcasters or BDUs, whoever might be involved in a transaction, are buying their way into the system to get around the rules and it will do nothing to promote diversity in the system.

5632             MS PARKER:  Well, I think that each case is specific and has to be examined along those lines.  There may be cases if the market is relatively small and the acquired entity is facing financial difficulty.  I think these are the things that the Commission has to look at.  I certainly know that we have come across this ourselves and we felt, in a recent case, that there were a couple of decisions that enabled us to support two stations in one market, and one of those had no programming overlap.

5633             So I don't think that you can look at it just in isolation, it is not a money issue solely.  We are, as you know, of course most concerned about original programming, original Canadian programming and we felt that that was a benefit that would outweigh the other risks.

5634             COMMISSIONER CUGINI:  So if we were to rewrite that sentence we would add; "on a case by case basis with appropriate safeguards?"

5635             MS PARKER:  Yes.

5636             COMMISSIONER CUGINI:  Okay.

5637             MS PARKER:  Thank you.

5638             COMMISSIONER CUGINI:  Thank you, Mr. Chairman, those are my questions.

5639             THE CHAIRPERSON:  Okay.  Are there any other questions?

5640             Thank you very much for your presentation.  Madam Boulet, who is next?

5641             THE SECRETARY:  Merci Monsieur le Président.

5642             I would now invite the Directors Guild of Canada to come forward.

‑‑‑ Pause

5643             THE SECRETARY:  Mr. Alan Goluboff, sorry if I don't pronounce it properly, will be introducing his panel, after which you will have 10 minutes for your presentation.  Please go ahead.

INTERVENTION

5644             MR. GOLUBOFF:  Thank you.  Good morning, Mr. Chair, members of the Commission and staff. 

5645             My name is Alan Goluboff and I am President of the Directors Guild of Canada.  With me today is Tim Southam, a leading Canadian director and a member of the Directors Guild.  Tim has won many awards for his work and his shows have garnered exceptional ratings on Canadian television networks.

5646             Our colleague Monique Lafontaine was planning to be here, but has taken ill and sends her regrets to all.  That said, Tim and I are very pleased to be here today to provide you with our comments.

5647             In your opening remarks on Monday you indicated there were three areas of interest for you in this hearing.  We are here today to speak to you about the second one, namely the diversity of programming choices.  Within that framework we will focus our attention on the decline in the amount of original scripted Canadian drama on our airwaves and the ongoing diminishment of that key voice if measures are not taken to stem the decline.

5648             MR. SOUTHAM:  As a relative newcomer to your hearings, I was surprised to find that the word voice had not been defined in a proceeding about diversity of voices, and I am told that it does not appear in the Broadcasting Act either, so I offer you the perspective of a Canadian director.

5649             Drama is a voice, a diversity of dramatic productions is a diversity of voices, Canadian drama is a particular voice.  High‑end Canadian drama is a particularly powerful voice that reflects Canadians to themselves.  A reduction or elimination in the quality or quantity of Canadian dramatic productions equates to a reduction in the number of voices in our system.

5650             At the last CTV licence renewal hearings Trina McQueen noted that:

                      "Most of the viewing to television is in the dramatic genre, that is what people love to see on television.  In general, folks love a good story, they love an imaginary story and that is what they want from television." (As Read)

5651             Year after year we have evidence of strong viewer demand for Canadian drama, yet Canadian broadcasters are reluctant to commission Canadian drama.  Why is that? 

5652             When I put myself in the shoes of a broadcaster I realized right away that the core issue is not demand, but cost.  With an hour‑long TV magazine costing about $25,000 and the licence fee for an hour of Canadian drama costing more like $150,000 would I as a national broadcaster voluntarily spend 600 per cent more on a drama than I am spending on a magazine show to achieve even a 20 per cent hike in ratings?  Business logic says, no.  From a Canadian broadcaster's perspective the economies of airing an American drama are also much more favourable.

5653             We believe that regulations should only be imposed when necessary, and that is to correct a market anomaly.  We also believe that this is such a situation.  One regulation which would go a long way to preserving a major Canadian voice is one that imposes a minimum broadcaster expenditure on Canadian drama across both specialty and conventional television licences.

5654             Lest we be accused of micromanagement, we feel that it is crucial to emphasize that the word drama captures a multitude of programming options.  Not only is drama as diverse as the stories it tells and the themes and cultures it explores, but the term also captures a wide range of discreet products, including one‑hour and half‑hour dramatic series, one‑hour and half‑hour comedy series, television movies, dramatic miniseries, feature films and internet programs.  All these products can be deployed according to the best judgment of the broadcasters.

5655             By its very nature drama also moves with the times, constantly updating itself to reflect the prevailing strands of our complex society.  We are not arguing for a set of products on the verge of obsolescence.  We are arguing for a Canadian version of the most popular entertainment format of all time increasingly absent from Canadian airwaves simply for reasons of economies of scale.

5656             Ours is a community of talent on the verge of disappearing even though our primary product, drama, is at an all time high in popularity worldwide.  We are asking that the same managed approach, which has secured a broadcast sector in our small country against all market logic, also address anomalies which are leading to the disappearance of a major collection of voices in our country despite clearly demonstrated viewer demand.

5657             MR. GOLUBOFF:  Now, that the incentive plan for Canadian drama is essentially dead, as noted in the Dunbar/Leblanc report, we think the Commission can safely conclude that you just cannot overcome the economic disincentives to the production of Canadian drama with incentives, they do not work.  We need the Commission to state simply and clearly that broadcasters have an obligation both to fund and to air a certain amount of this targeted type of programming.

5658             We understand that it has taken so long to get to this point that conventional broadcasters will now plead poverty.  In the last round of licence renewals you will recall that they argued that incentives were the way to go and that the Commission just needed to trust them.  The results of the last seven years speak for themselves. 

5659             We think the answer lies in the part of the Dunbar/Leblanc report which recommends harmonizing across different types of television. We plan to bring a proposal to the Commission on October 9 when we file in the first round of comments relating to the BDU, specialty, pay hearing.

5660             While details are still being finalized, we can tell you that we are looking at expanding the notion of a station group to embrace a company's other holdings and not only its conventional stations.  But the critical concept is that more money, and we mean new money, is required in fewer targeted areas. 

5661             The Canadian drama sector is in deep trouble.  It needs the Commission to utilize its full toolkit of regulatory measures, it needs exhibition and expenditure conditions, it needs benefits packages that are truly incremental, it needs a CTF dedicated to 10‑point drama and only to 10‑point drama, and it should certainly include public disclosure of broadcasters expenditures on Canadian programming, especially Category 7 programming as occurred at the last round of licence renewals in 2001.

5662             The DGC will be making more fulsome submissions on this subject on October 5. While we realize that you will be dealing more specifically with this issue in forthcoming hearings, there are several points of intersession with this diversity of voices proceedings given its emphasis on ownership. 

5663             First, transfer benefits on ownership changes have been all that kept the drama creation industry alive in Canada over the last licence term while broadcasters were reducing dramatically their year over year spending on it.

5664             Second, in theory, consolidation should actually help in the creation of more drama as it allows the creation of larger Canadian broadcasting entities.  In theory, with larger and more diverse platforms these larger broadcasters should be more capable of both exhibiting and financing Canadian drama.  Regrettably, unless required as a condition of consolidation, it has been proven that this will not happen and eventually the transfer benefit monies run out.

5665             To be clear, DGC is not opposed to consolidation.  For purposes of financing Canadian drama it is preferable to have larger pools of capital even if it results in fewer doors to knock on for that elusive green light.  But consolidation has to come with the requirement to fund and exhibit more Canadian drama.

5666             In summary, this is a hearing about diversity of voices.  We urge the Commission not to lose sight of Canadian drama as a voice.  While that voice is growing weaker and fainter every year, it is still capable of being resurrected if there is a willingness on your part to believe in the sector.  Otherwise, Canadian audiences will lose this voice and the talented Canadian crafts people capable of making these productions will move on and seed the last remaining shelf space in this genre of programming to their American counterparts.

5667             We thank you for your attention and, of course, we will be pleased to answer questions.

5668             THE CHAIRPERSON:  Thank you very much for your presentation.

5669             You say on page 3, "we believe that regulation should only be imposed where necessary, that is to correct a market anomaly."  This is sort of slightly different from the normal phraseology which says that you should regulate where there is a market failure (i.e. where the market does not produce the most competitive result).

5670             I assume you chose this expression on purpose.  What do you consider a market anomaly?

5671             MR. GOLUBOFF:  We did choose the wording specifically and Tim can certainly comment on it.

5672             MR. SOUTHAM:  Well, I suppose what we are saying as directors and as a guild is that we note that while demand is demonstrable the supply isn't there and we are scratching our heads wondering why.  We are trying to put ourselves in the positions of the suppliers, the broadcasters in answering that question.

5673             I think the word market failure, given the performance of the broadcasters in drama over the last seven years, is perfectly acceptable.  Anomaly is a polite way of putting it, given that we are not the people making those decisions.

5674             But what we note is that, despite ongoing demand and a clear response through ratings and surveys, every time a Canadian drama is made, or at least on a sufficiently high percentage, that, nonetheless, supply continues to dwindle and we consider that to be at least an anomaly, if not a failure.

5675             THE CHAIRPERSON:  You are making some very categoric statements saying there is Canadian demand and if ever produced it is demonstrated.

5676             Do you have some studies or some background material to support this?

5677             I mean, I don't know whether they are right or wrong, it is just that categorically it is as you stated it's as a given, that is why I am asking the question.

5678             MR. SOUTHAM:  We will provide the titles of the shows that BDM indicates are garnering numbers.  You've heard the titles of the shows over the years in any case.

5679             THE CHAIRPERSON:  Yes.

5680             MR. SOUTHAM:  I can also provide plenty of anecdotal evidence and the numbers that I've been told.

5681             We'd like to say that demand is demonstrable because to constantly say that Canadians ought to have drama is kind of a bothersome point of view, and we believe the demand is demonstrated through the ratings and also through all other fora;  for instance, chat rooms, blogs, the amount of activity that is generated around certain shows, particularly programs which are topical or news related, dramas which relate to real‑life events.

5682             I'll point simply to CTV's extremely successful series of television movies torn from the headlines where ratings have been consistently high.

5683             But we'd be happy to tabulate those and send those forward.

5684             THE CHAIRPERSON:  The second point you see is you raise the whole issue of funding and benefits and the issue raised several times by my colleague, Commissioner Langford, that benefits are sort of feast or famine, you know.  If there's a mega deal there, a huge deal and if there is no deal there are no benefits, et cetera, and it is very tough for you as an industry to live on the uncertainty of funding, et cetera.

5685             On the assumption, if we do not have mega deals coming in the next two years or something like that, at some point in time we have to think of another source of funding other than...

5686             Do you have any suggestion, ideas on that?

5687             MR. GOLUBOFF:  Well, certainly it's something we have harped on in this room for the past 10 years, and that's expenditure rules, and there needs to be money and commitment imposed by ‑‑ you know, a commitment by the broadcasters to spend money, a percentage of their revenue on Canadian    drama.

5688             The benefit transfer moneys, which have been hugely, you know, beneficial to our industry and we know we can't rely on it because, as you say, there may not be any more huge acquisitions and, therefore, future transfer payments.  It's not a way to run an industry and it's not a way to sustain it, there has to be sustainable, ongoing funding and commitment from the broadcasters.

5689             The broadcasters, in our view, have never shown any commitment, though they continue to say, you know, see what we can do.  We don't believe that there's a business model that suggests that they should spend money on Canadian drama and that's why we feel that there's a need for the Commission to act.

5690             I hate to, you know, to go back 10 years, but you've heard it from us many times in a variety of forums here and in Banff, et cetera.  There needs to be regulation that commits broadcasters to spend a certain percentage of ongoing money devoted to high priority programming; i.e., drama.

5691             THE CHAIRPERSON:  Percentage of the total expenditure or percentage in comparison to American spending on American productions?

5692             MR. GOLUBOFF:  No, I don't think that we in any way want to suggest that we should be spending what Americans spend on their programming, I mean ‑‑

5693             THE CHAIRPERSON:  No, no, no, what the Canadian broadcaster spends on American production.  I mean, are you trying to establish relativity or are you trying to establish an absolute portion of expenditure?

5694             MR. GOLUBOFF:  I think we're talking about an absolute percentage of gross revenue, not ‑‑ I mean, you can't compare to a CBS that might spend, you know, have a licensing fee of 70 per cent of a production.  I mean, we know that our broadcasters are not in that position to do that.

5695             THE CHAIRPERSON:  No, let me state it again differently.

5696             Are you saying absolute amount?  I thought you were driving at saying, you know, for every dollar you spend on American programming, you should spend a dollar on Canadian or you should spend 80‑cents on Canadian or $1.10, or whatever it happens to be.

5697             You are not thinking of relativity along those lines?

5698             MR. GOLUBOFF:  No, we're not ‑‑ and if, Tim, you want to come in ‑‑ no, that's not what we're suggesting, no.

5699             MR. SOUTHAM:  No, the persistent request has been a percentage of gross revenue and the reason for that, again, is to try to stay out of the management side of things so that if revenue were to go up the Canadian drama share would go up.

5700             So, the number has been seven per cent of gross revenue.  It provides what we believe to be fair flexibility and also a fair request for a cultural good or for even a good that maybe in high demand but too expensive to produce willingly.

5701             THE CHAIRPERSON:  Okay, thank you.

5702             Ron, do you have some questions?   

5703             COMMISSIONER WILLIAMS:  I do.  Thank you, Mr. Chair.

5704             Good morning, Mr. Goluboff, Mr. Southam.

5705             On the first day of this hearing the CAB in their presentation said diversity is alive and well in Canada, consolidation does not negatively affect diversity, international models are not appropriate and that the CRTC should confirm and revalidate our current approach to diversity and that no new rules were necessary.

5706             What is the single largest challenge to the creation of high end drama production as envisioned by your group?

5707             MR. GOLUBOFF:  Money, a commitment of appropriate resources to producing competitive programming in this country and until there is a commitment from the broadcasters, which we don't believe there ever will be because it doesn't make economic sense for them, as Tim pointed out, to spend money when they can buy or produce very inexpensive programming and fill the requirements.

5708             So, unless this Commission is willing to regulate the broadcasters to spend a certain percentage of their gross revenue on quality programming, competitive programming, because we're not talking ‑‑ you know, Canadians want competitive programming, Canadians are not interested in watching second‑rate programming and, therefore, they will tune into a program that is on the air, the bulk of which is foreign programming, primarily American programming.

5709             Canadian programming to be on the air has to be competitive.  To be competitive, you've got to spend money.  And in this country, as in most countries outside of the United States and India, you know, there is regulation to help and to nurture indigenous programming, to produce programming at a level that the public are willing to tune into in big numbers.

5710             And there have been ‑‑ and Tim mentions, and there have been successes and there are corporate players in this country that are committed to producing quality programming ‑‑ there's certainly producers in this country that have a great desire, along with the creative community, to produce quality programming and we know that we are capable of doing that.

5711             That said, unless the broadcasters are ‑‑ unless the Commission commits the broadcasters to putting appropriate amounts of revenue resources to this kind of programming, it's...

5712             You know, there can be a hundred broadcasters out there or there can be one mega broadcaster out there.  So, this is a hearing about consolidation.

5713             I mean, certainly I think I would like to see many broadcasters in this country, but the world is changing and, therefore, you know, the number of broadcasters is being reduced for all kinds of business reasons, I'm told.

5714             But if that large ‑‑ if there was only one or three large broadcasters left in this country but they were pouring appropriate amounts of revenue money into the production of programming, there would be a diversity of voices, there would be a quality and a quantity of programming available to Canadians and that is a diversity of voice, in our view.

5715             So, it's not just the consolidation, they still have to produce     programming, they have to be committed to producing programming and there's been no indication, as long as I've been sitting here for eight years, of a commitment from the broadcasters to produce quality programming on an ongoing basis.

5716             COMMISSIONER WILLIAMS:  Thank you for  that.

5717             In your written presentation you took us through the English over‑the‑air expenditures on drama and a decline, I guess, I think you went as far back as 1998 where 73‑million was being spent or 5.1 per cent.

5718             MR. GOLUBOFF:  Mm‑hmm.

5719             COMMISSIONER WILLIAMS:  And then later it dropped to 4 per cent or 62‑million that following year, and then most recently in 2006 down to 40‑million or 2.3 per cent and that would be even including a 20‑million or 50 per cent of that figure including ‑‑

5720             MR. GOLUBOFF:  Benefit.

5721             COMMISSIONER WILLIAMS:  ‑‑ CTV transfer benefit.

5722             MR. GOLUBOFF:  Mm‑hmm.

5723             COMMISSIONER WILLIAMS:  In the face of declining over‑the‑air expenditures on drama, how have your members continued to survive?  Has the specialty channel sector been able to pick up some or all of the shortfall?

5724             MR. GOLUBOFF:  No, not in the least.  My membership is working more and more and more for less because the programming that is being produced on the specialty side, though some of it is certainly notable and commendable, it is produced at a lower cost and, therefore, the squeeze on, you know, to those of us that participate in that end of production.

5725             So, people, you know, are working more for less, I mean, and that may be the way of the future.  It's certainly not something that, you know, we're obviously going to encourage, we want to encourage greater expenditures.  I mean, that decline in that simple ‑‑ you know, those few numbers that you presented, I mean, it doesn't bode well for an industry that Canadians I think take, you know, pride in and certainly those of us, the 55,000 of us in the unionized sector of our industry take great pride in.

5726             So, this is not a small industry, we all know that.  Just in our world of dramatic production, primarily dramatic production is what we're talking about, though we certainly represent many other types of production.

5727             It's ‑‑ I mean, it hasn't been easy, that's all.  I mean, you know, but it hasn't been easy in a lot of industries in this country.  I'm not ‑‑ you know, we're not here to cry the blues about making less money.  Certainly when we work we ‑‑ you know, we're compensated well comparatively to the rest of the, you know, Canadians.

5728             So, I'm not ‑‑ we're not here to complain about that in any way.

5729             COMMISSIONER WILLIAMS:  In your written presentation as well you stated, since the consolidation horse is out of the barn in many cases, what is important is the contribution to the system to be made by each one of the consolidated entities.

5730             Can you tell us, do you see this as a one‑time contribution at the time of consolidation, or is it the percentage ongoing opportunity you put before us?

5731             MR. GOLUBOFF:  You know, there's many questions we can answer and there are many questions I hesitate to answer, you know, because both Tim and I are directors ‑‑ and, Tim, you can certainly comment if you wish and unfortunately, as I said, Monique, can't be here ‑‑ so there's some more detailed questions I would rather not respond to, but go ahead, Tim, if you feel...

5732             MR. SOUTHAM:  It's our view that over the last seven years without the benefits there would have been virtually no work, and so we will never mount an argument against the benefits, the transfer benefits.

5733             Intellectually they're less appealing than an ongoing mandated commitment to a percentage expenditure off gross revenues, but intellectually is one thing and the realities facing us is another.

5734             What the two approaches have in common is they're both mandated.  There's not a hint of voluntary expenditure ‑‑ meaningful voluntary expenditure in either scenario.

5735             COMMISSIONER WILLIAMS:  Okay.  The Directors' Guild has stated that the Commission should consider increasing the current five per cent Canadian programming requirement on BDUs to six per cent and that some of these funds should be used for new media programming initiatives.

5736             This is ‑‑ I guess, from five to six is almost ‑‑ or, yeah, almost a 20 per cent increase.  Do you think that's a fair increase?

5737             MR. GOLUBOFF:  Again, I think what we're suggesting is that any ‑‑ we should not be deflecting revenue, we should not be taking revenue from one type of production to another.

5738             The new media concerns which everyone ‑‑ you know, it comes up with everybody that sits here, the concerns about new media and I think ‑‑ we're saying that there should be new money, not divert money from existing types of production.

5739             So, no, I don't think that it's unfair.  If new media is as large a concern as certainly the broadcasters suggest that it is and is going to become, then resources, again, have to be devoted to that type of production and it shouldn't be taken away from the ongoing types of production that have existed to date.

5740             I mean, still Canadians are tuning into conventional broadcasting in numbers, I mean, I don't know where it is, but conventional broadcast viewership has not declined, it has remained fairly flat I think for a number of years; people in this country are still watching television.

5741             So, whatever ‑‑ where all this concern is about new media I think is yet to be proven, in our view, but it should be new money devoted to areas of new media whatever those forms of new media might be.

5742             COMMISSIONER WILLIAMS:  You stated earlier that to rely on the market or even the good faith and intentions of broadcasters would not be sufficient because history has demonstrated time and time again that there wouldn't be adequate support for Canadian drama.

5743             Could you elaborate a bit on that, please?

5744             MR. SOUTHAM:  Everyone in the Director's Guild, particularly directors who work with production executives, and indeed their own managers, I find that they have enormous good will with regard to what we do and what they are undertaking as commissioning producers.

5745             It is our belief therefore that what they are facing on a quarterly basis is a scenario where it is uneconomic for them and therefore counter‑intuitive given their training and their mandate to take expensive projects to their boards over and over and over again.

5746             We believe that what we are engaged in is in fact a little bit too expensive for our little country.

5747             However we feel that it is a public good and we also feel that there is demonstrated demand. In other words, a viewer watching the show will like it a lot and in large numbers but is unaware of what it costs everyone in the system to make it.

5748             So the question then is:  Do we want it or do we not?  Do we want drama, Canadian drama, or not?

5749             And what we are saying is:  The business picture of the economic scenario for drama is not great.

5750             In other words, in our small economy, it is slightly outsized.  It is too expensive.

5751             How do we then take a look ‑ how do we then induce it?

5752             We are not saying that the broadcasters can't afford to do it.  We are saying that there are ‑ their inclination will not be automatically to do it given cheaper alternatives.

5753             We believe that they can afford to make it and, if mandated to do so, will do a good job, and have done so ‑ you know, generally have done so, particularly in the last decade.

5754             As directors, we feel involved with a good and competitive product, when it is made.

5755             COMMISSIONER WILLIAMS:  If this product is as good and competitive than higher quality products, dramatic production, could it not attract higher advertising rates and increased revenues, perhaps?

5756             What is in the experience of some of these dramatic productions in terms of earning power for those, assuming that ‑

5757             MR. SOUTHAM:  Our instinct is that, given the cost of making drama, any marginal increase in ratings to those shows still don't provide enough of an incentive to engage in making the shows.

5758             And therefore when magazines became sufficiently popular and when the cost of acquiring U.S. programming became less expensive than producing a fully fledged Canadian drama, the natural tendency of the commissioning broadcasters was to favour both of those types of programming if they were allowed to by the rules, which post‑1999 they were.

5759             COMMISSIONER WILLIAMS:  OK.  Thank you, Mr. Chair.  That concludes the line of questioning.

5760             THE CHAIRPERSON:  Thank you.

5761             Stuart, you have one more question?

5762             COMMISSIONER LANGFORD:  Yeah.  Just one really small question.  It is more curiosity than anything, but I think it does go to your problem.  I hope it does.

5763             If you produce a product that doesn't make it on the big conventional screen, so, you know, if Corner Gas fails rather than succeeds, is there a market for it with other services or is it just dead?

5764             MR. GOLUBOFF:  I would say that there is a market on the other services because the other services have smaller overhead and smaller viewership and still have a demand for product.

5765             So, no.  I don't think we would believe that a program is dead.  I mean, lots of shows are not hits but continue to have a certain amount of life left in them through the system.

5766             COMMISSIONER LANGFORD:  So, in a way, these new big, consolidated companies should be more courageous because it is not all in one roll of the dice.

5767             If they can't put it on, if it just doesn't quite make it, audience perception, on their conventional service, because most of them now have specialties, they have got another place to recover their costs.

5768             MR. GOLUBOFF:  Well, to recover some of their costs, certainly.

5769             Still, the numbers suggest that Canadians are watching and tuning in, you know, to the conventional broadcasters.

5770             But certain numbers are on the rise, as I understand it, on the specialty side.

5771             So, yeah.  I mean, the bottom line is the I, you know, certainly believe that there is life after CTV or CanWest Global, you know.

5772             MR. SOUTHAM:  As you know, in the U.S., there are actually working models very much to that effect where cable outlets will scoop up failed shows and put them on air to good effect for themselves.

5773             Of course, they are purchasing them at bargain basement prices.

5774             And the question really is:  What investment would trigger that show?

5775             And the investment has to be a scenario where the network feels it is going to make money on its channel.

5776             So, you know, it is a fire sale.

5777             COMMISSIONER LANGFORD:  But because our networks now have quite strong stables of specialties, they in a more comfortable position than the Americans in sense.  They have got a second window.

5778             MR. SOUTHAM:  I don't know.

5779             I do think however ‑ what we face all the time is there is a threshold under which shows suddenly don't look competitive to a Canadian viewer.

5780             We all know that.

5781             We know what the lighting looks like, the acting.  Everything gets not good enough.

5782             And so, our main concern, and unfortunately sometimes it means there is a trade‑off on the diversity ‑ on the diversity equation is:  What does it take?  How much money do we need to become competitive?

5783             And we do believe it is money.

5784             I think that we have sufficiently trained cadre of professionals now that, given the resources and given a good idea, the show will look and feel and smell competitive to a Canadian viewer.

5785             It is when things drop below that threshold that we start looking wrinky dinky then.

5786             And therefore, for us, as directors, the Directors' Guild of Canada, we are very, very focused on that threshold.

5787             And I don't think the specialty channels are necessarily equipped either in the first instance or even as an after‑market to necessarily consistently generate that level of quality in the higher cap shows.

5788             COMMISSIONER LANGFORD:  OK.  Thanks.  Thanks very much.

5789             THE CHAIRPERSON:  Michel?

5790             COMMISSIONER MORIN:  Yes.  You are saying that, except India and the United States, most of the countries have some rules to protect their national productions.

5791             I would like to ask you:  Could you give us some more examples of those rules that are stronger in other countries than the one you are proposing?

5792             MR. GOLUBOFF:  I am certainly not going to give that today because I don't have it in front of me, nor am I going to suggest that I am wise enough to speak to it.

5793             But I can certainly make sure that those views that will back up and support what I have just said will be passed on to you or presented to you at subsequent hearings.

5794             And there is a multitude, I know, coming up, and I am not sure which one is which.

5795             But certainly we can get that information to you.

5796             THE CHAIRPERSON:  Okay.

5797             Thank you very much.  Those are all of our questions.  Thank you for your appearance.

5798             MR. GOLUBOFF:  Thank you.

5799             THE CHAIRPERSON:  Madame Boulet, who is next?

5800             LA SECRÉTAIRE : Merci, Monsieur le Président.

5801             J'inviterais maintenant le groupe d'intervenants suivant à se présenter : l'Association québécoise de l'industrie du disque, du spectacle et de la vidéo, l'Association des producteurs de films et de télévision du Québec, l'Association des réalisateurs et réalisatrices du Québec, la Société des auteurs de radio, télévision et cinéma et l'Union des artistes.

‑‑‑ Pause

5802             LA SECRÉTAIRE : J'inviterais maintenant madame Anne‑Marie Des Roches à nous présenter les représentants des associations, après quoi vous aurez dix minutes pour votre présentation.

5803             Madame Des Roches ?

INTERVENTION

5804             MME DES ROCHES : Merci.

5805             Monsieur le Président, Monsieur le Vice président, Mesdames et Messieurs les commissaires, bonjour et merci de nous accueillir.

5806             Cinq associations, représentant une grande partie des artistes et artisans de la production télévisuelle au Québec, ont décidé de présenter un mémoire conjoint sur cet enjeu fondamental de la diversité des voix dans l'application de la Loi sur la radiodiffusion.

5807             Il s'agit de : l'ADISQ dont les porte‑parole ne peuvent être présents aujourd'hui en raison d'une rencontre internationale sur la diversité culturelle; l'APFTQ, l'Association des producteurs de films et de télévision du Québec, représentée par sa directrice générale adjointe Brigitte Doucet; l'Association des réalisateurs et réalisatrices du Québec, l'ARRQ, représentée par sa directrice générale Lise Lachapelle, à l'extrême droite ‑ pas d'extrême droite; la Société des auteurs de radio, télévision et cinéma, la SARTEC, représentée par son président Marc Grégoire, à ma gauche; et moi‑même, Anne‑Marie Des Roches, de l'Union des artistes, directrice des affaires publiques.

5808             Nous sommes accompagnés de Pierre Trudel, professeur titulaire au Centre de recherche en droit public de la Faculté de droit de l'Université de Montréal et rédacteur de notre mémoire, qui se joindra à nous pour répondre à certaines de ces questions.

5809             Comment faire en sorte que le système canadien de radiodiffusion reflète la pluralité de la population et conserve aux auditoires un véritable accès à une diversité de voix ?

5810             En assurant d'abord les équilibres entre les détenteurs des pouvoirs de créer, produire, programmer, diffuser et distribuer des contenus.

5811             En radiodiffusion, le maintien de ces équilibres est mis au défi par la tendance à la constitution d'* entreprises regroupées + exerçant le contrôle effectif sur un ensemble de médias.

5812             Une tendance que le CRTC remet peu en question en autorisant la plupart du temps les transactions qui augmentent le niveau de concentration et de propriété multiple et en ne prescrivant que quelques mesures pour pallier les dérives trop manifestes.

5813             Pourtant, le contexte exige la mise en place de mécanismes appropriés pour assurer effectivement la diversité des voix.

5814             Il nous apparaît impérieux de limiter le rythme d'accroissement de la concentration et d'encadrer les pratiques.

5815             Plus le Conseil permet la concentration de la propriété, plus il doit en contrepartie, mettre en place les balises garantissant une réelle diversité des voix.

5816             Sinon, il ne joue pas le rôle que lui confère la Loi sur la radiodiffusion.

5817             Brigitte ?

5818             MME DOUCET : Les principes relatifs à la diversité des voix découlent de la politique canadienne.

5819             Et plusieurs règlements et politiques du CRTC ont été conçus à cet effet.

5820             Ainsi, c'est parce qu'elles sont contrôlées ici que les entreprises de radiodiffusion sont en mesure de contribuer efficacement à la promotion de notre culture.

5821             L'exigence de la diversité des voix est conséquente avec la Convention sur la protection et la promotion de la diversité des expressions culturelles, dont le Canada s'est fait un ardent promoteur.

5822             Et le CRTC ne peut d'ailleurs faire abstraction des principes qui y sont consignés.

5823             Mais la multiplication des canaux de diffusion rendue possible par la numérisation garantirait‑elle désormais le niveau recherché de diversité et rendrait‑elle la réglementation moins nécessaire ?  Certainement pas.

5824             La tendance chez les entreprises regroupées ne va pas naturellement vers une plus grande diversité des contenus ou des points de vue.

5825             Sans réglementation appropriée, elles pourraient intégrer leurs fonctions de production et de diffusion et réduire les possibilités d'accès aux plateformes de diffusion pour l'ensemble des créateurs et producteurs de contenus.

5826             Sans réglementation, rien ne garantit que la multiplication des canaux de diffusion sera accompagnée d'une multiplication du contenu national et de sa présence sur l'Internet ou les autres médias comme les téléphones portables.

5827             D'ailleurs le peu d'exigences du CRTC à l'endroit des services numériques de catégories 2 et 3 et son refus de réglementer l'Internet n'aident en rien à garantir la présence de contenus canadiens sur les nouvelles plateformes.

5828             Dans un monde de plus en plus globalisé, le caractère national du système de radiodiffusion doit être maintenu et le contrôle des entreprises de diffusion et de distribution doit demeurer entre des mains canadiennes.

5829             Il s'agit de maintenir une prise sur ce secteur‑clé de l'économie et de notre identité et cela doit s'appliquer à toutes les composantes de l'industrie. 

5830             Pour certains, les émissions peuvent désormais être produites et acheminées par une variété de voies et circuler dans des environnements de moins en moins susceptibles d'un contrôle au niveau de la diffusion et de plus en plus régis par les choix que fait l'individu.

5831             Ce qui rendrait désormais impossible d'appliquer une réglementation fondée sur des objectifs culturels comme ceux énoncés dans la Loi sur la radiodiffusion.

5832             Pourtant, les évolutions technologiques ne font pas disparaître les défis à l'origine des encadrements actuels.  Il faut un cadre de réglementation novateur apte à refléter le nouveau contexte de la radiodiffusion.

5833             Devant l'effacement des frontières entre les médias et singulièrement entre un média réglementé comme la télévision analogique et non‑réglementé comme l'Internet, il faut un cadre réglementaire qui tienne compte des stratégies prévisibles des entreprises.

5834             Il faut assurer que les exigences découlant de la politique de radiodiffusion soient équitablement respectées dans l'une et l'autre des plateformes de diffusion.

5835             C'est un mythe de croire que l'Internet et les nouvelles plateformes ne peuvent être encadrées.

5836             Ouvrons ici une parenthèse : nous apprécions que le Conseil ait récemment initié un processus d'analyse des nouveaux médias qui permettra sans doute de réviser l'exemption de réglementation pour l'Internet.

5837             Nous souhaiterions que ce processus soit le plus transparent possible et qu'il suscite la participation de toutes les parties concernées, notamment le secteur de la musique qui n'est pas représenté au groupe de travail alors qu'il a été le premier touché par le développement des nouveaux médias. Fermons la parenthèse.

5838             M. GRÉGOIRE : Nous croyons que la politique de soutien à la production des contenus doit graduellement s'étendre à l'ensemble des plateformes significatives tel Internet.

5839             Tout comme les politiques sur la propriété des entreprises doivent s'adapter aux nouveaux environnements et qu'un marché des droits spécifique au Canada doit être maintenu.

5840             L'Internet devient désormais une composante du système de radiodiffusion.

5841             La réglementation devrait encadrer les pratiques des groupes majeurs en conséquence.

5842             Concentration horizontale, intégration verticale et convergence économique, d'une part ;  interrelations croissantes et complémentarité entre les secteurs de la télécommunication, de la publication, de la radiodiffusion et de l'Internet, d'autre part.

5843             Les mêmes joueurs économiques peuvent être actifs dans tous ces secteurs et la réglementation doit les encadrer globalement puisque c'est là que se posent les défis de la politique de radiodiffusion et celui de la diversité.

5844             De plus en plus, les productions sont élaborées pour un ensemble de lieux de diffusion et cela doit se refléter dans les obligations des entreprises à contribuer à la production nationale.

5845             Notre système de radiodiffusion a besoin de ressources additionnelles.

5846             Il faut rechercher ces fonds là où sont consommés les contenus audio et vidéo.

5847             Il faut que les nouveaux lieux de diffusion contribuent au financement de la production canadienne.

5848             Pour une entreprise intégrée ou propriétaire de multiples plateformes, la réglementation doit reposer sur une analyse de la performance de l'entreprise sur l'ensemble desdites plateformes.

5849             La concentration de la propriété fait qu'un très petit nombre de décideurs sont en position de régir l'accès aux lieux de diffusion des contenus.

5850             Au‑delà des questions relatives à l'information et à l'indépendance journalistique, c'est désormais l'ensemble de la programmation qui suppose des choix éditoriaux qui, effectués dans le contexte d'un groupe dominant, peuvent avoir des conséquences majeures sur la diversité.

5851             La réglementation doit garantir que les choix éditoriaux sont effectués uniquement sur la base de critères professionnels et ne permettent pas de préférence indue ou d'exclusion systématique.

5852             Plus grande est la concentration, plus il importe de réglementer de façon à promouvoir des facteurs d'équilibre capables de garantir une diversité effective des vues.

5853             Lorsqu'on parle de diversité des voix, il faut également entendre diversité régionale.

5854             Or, les politiques des dernières années ont permis à quelques grands groupes de concentrer leur production dans les grands centres.

5855             Il y a de moins en moins de diversité, par exemple, entre les programmations des stations de Montréal et celles des autres régions possédées par une même entreprise.

5856             La concentration des entreprises compromet la diversité des lieux de création.

5857             Y a‑t‑il encore de la place pour des productions différentes, plus marginales, quand on voit que même les séries jeunesse ou les documentaires trouvent difficilement preneur chez les diffuseurs privés ?

5858             Sans réglementation, est‑il réaliste d'espérer qu'une entreprise regroupée ouvrira ses multiples plateformes à une diversité de contenu ?

5859             Nous en doutons.

5860             Plus on accepte de concentrer la propriété et les pouvoirs de décider, plus il faut garantir que les décisions seront prises suivant des critères et une éthique d'équilibre conformes à la Loi sur la radiodiffusion.

5861             Par conséquent, il faut imposer des exigences de transparence et obliger les entreprises à rendre compte périodiquement de leurs pratiques.

5862             En ce sens, nous appuyons fortement la divulgation des informations financières par groupes de propriété pour les services de radio et de télévision en direct et nous suggérons de faire la même chose pour les entreprises regroupées.

5863             MME LACHAPELLE : Comment mettre en valeur ‑ pardon.

5864             Comment mettre en ouvre un ensemble de principes visant à garantir une réelle diversité des voix au sein du système de radiodiffusion ?

5865             La réglementation développée par le CRTC sur la propriété contribue à mettre en oeuvre plusieurs principes de la Loi.

5866             Mais la concentration de la propriété a atteint des niveaux tels que des mesures d'encadrement sont nécessaires pour garantir que les choix des groupes sont cohérents avec les exigences de la politique de radiodiffusion.

5867             Les entreprises regroupées jouent un rôle majeur dans la plupart des secteurs de la radiodiffusion et leurs stratégies sont fonction d'une variété de plateformes.

5868             Pourtant, la réglementation ignore les réalités de la convergence. Elle porte peu attention aux pratiques des groupes consolidés et s'applique de façon sectorielle aux entités qui détiennent les licences : cadre de réglementation pour la télévision en direct, pour les services spécialisés, pour les entreprises de distribution, pour la radio, et cetera.

5869             Devant les tendances à la concentration et la convergence croissante des multiples environnements de diffusion, il importe de faire évoluer la réglementation.

5870             Actuellement, la réglementation sectorielle permet aux entreprises regroupées de jouer sur plusieurs tableaux.

5871             Elle leur permet d'invoquer le caractère déficitaire d'une entreprise, mais donne en même temps la possibilité de pratiquer des inter‑financements laissant craindre que les bénéfices tirés des activités réglementées puissent être crédités aux secteurs non réglementés.

5872             Pour prévenir l'avènement d'un système de radiodiffusion à deux vitesses : l'une réglementée et l'autre non tenue de respecter les objectifs de la politique canadienne de radiodiffusion, il faut assurer une supervision adéquate des entreprises regroupées.

5873             C'est pourquoi il importe d'encadrer le petit nombre  d'entreprises regroupées et d'assurer le développement du système canadien de radiodiffusion en les réglementant au moyen de licences de réseaux.

5874             L'objet de la réglementation du Conseil serait les pratiques et politiques que ces entreprises développent et appliquent à l'égard de l'ensemble de leurs activités ayant un rapport avec les objectifs de la Loi.

5875             Le Conseil serait ainsi en mesure d'examiner leurs plans de développement et encadrer leurs pratiques pour assurer le respect du principe et de ‑ du principe de la diversité des voix.

5876             Par cet encadrement, le Conseil pourrait s'assurer que les avantages résultant des niveaux accrus de concentration bénéficient au système de radiodiffusion.

5877             Il disposerait d'un mécanisme réglementaire lui permettant d'observer réellement l'évolution des entreprises regroupées et des leviers propres à les amener à orienter leur développement selon les principes de la Loi, plutôt qu'en fonction des seuls impératifs de rendement des actionnaires.

5878             MME DES ROCHES : Le maintien d'une véritable diversité des voix dans notre système de radiodiffusion commande une attitude rigoureuse à l'égard de la concentration. Et si la tendance demeure, il faut ajuster l'approche réglementaire afin de refléter les situations engendrées par le phénomène.

5879             Avec la convergence des univers médiatiques, il y a des interrelations croissantes entre les secteurs de la télécommunication, de la publication, de la radiodiffusion et de l'Internet.

5880             La réglementation du CRTC doit encadrer ces ensembles globaux puisque c'est à ce niveau que se posent les grands défis de la politique canadienne de radiodiffusion et singulièrement, le défi de la diversité.

5881             Pour relever ce défi, il faut, entre autres, garantir le contrôle canadien effectif sur les entreprises de radiodiffusion; assurer notre capacité de production et de diffusion de contenus reflétant les traits de notre culture; faire que les avantages découlant des regroupements soient réinvestis dans l'accroissement de la programmation nationale; s'assurer que les décisions et pratiques des groupes respectent les exigences de la diversité des voix.

5882             Il faut également que la réglementation favorise l'application des principes de la politique de radiodiffusion au niveau où se prennent effectivement les décisions d'affaires.

5883             C'est pourquoi le Conseil doit suivre plus efficacement les évolutions des entreprises regroupées en disposant d'une vue d'ensemble suffisamment large de leurs activités, et donc en les encadrant au moyen de licences de réseau.

5884             Nous sommes ouverts aux questions.

5885             LE PRÉSIDENT :  Merci.

5886             Ce sont des recommandations assez braves. Vous réalisez que nous n'avons pas le mandat statutaire pour faire beaucoup des choses que vous suggérez.

5887             Et j'espère que vous ferez la même présentation au Parlement parce que, je suis d'accord avec vous, la convergence, c'est un problème et on doit avoir une approche uniforme avec toutes les plateformes, et cetera.

5888             Il y a des plateformes que nous ne régulons pas. Il y a des plateformes où on a choisi de ne pas faire de réglementation. Il y a les autres où n'a pas l'autorité.

5889             MME DES ROCHES : Oui.

5890             Je pense qu'on s'entend là‑dessus. J'ai entendu les commentaires hier sur la presse, notamment.

5891             LE PRÉSIDENT :  Oui.

5892             MME DES ROCHES : Cela étant dit, l'Internet, il y a un mandat. Vous avez fait le choix ‑

5893             LE PRÉSIDENT : Oui.

5894             MME DES ROCHES : ‑ tout le monde peut changer d'idée ‑ à un moment donné de réglementer davantage.

5895             Cette décision‑là a été prise quand même il y a près de dix ans.

5896             Et depuis ce temps, les nouvelles technologies ont pris un essor considérable.

5897             Pour le reste de votre question, je vous ‑ je passerais la parole à Pierre Trudel, qui a conçu un peu ce concept‑là de licence réseau et qui connaît bien aussi les balises, les choses qu'on peut ou ne peut pas faire avec la Loi de la radiodiffusion.

5898             Pierre ?

5899             M. TRUDEL : Alors, il est vrai que la Loi sur la radiodiffusion n'a pas une application universelle, mais elle s'applique quand même à un ensemble extrêmement vaste, c'est‑à‑dire les entreprises de radiodiffusion.

5900             Les entreprises de radiodiffusion, c'est toutes les entreprises qui contribuent à acheminer les émissions vers le public.

5901             Et, la notion d'émission, bien, c'est à peu près ‑ à peu près tout, finalement, ce qui bouge. La notion d'émission est très large en vertu de la Loi.

5902             Par conséquent, le Conseil, en vertu de la Loi sur la radiodiffusion, à mon humble avis, dispose d'une marge de manouvre considérable pour appliquer les principes de la Loi sur la radiodiffusion à un vaste ensemble d'entreprises qui, de façon différente, il est vrai, mais de façon quand même de plus convergente dans beaucoup de cas, contribuent à acheminer les émissions par les nouveaux canaux que les nouvelles technologies rendent désormais disponibles.

5903             Et la Loi a été conçue, à mon sens, de façon beaucoup plus neutre, justement pour anticiper ces possibles développements techniques et pour permettre d'assurer l'application des principes de la Loi sur la radiodiffusion indépendamment des plateformes techniques dans lesquelles ces émissions pourront un jour être proposées aux Canadiens.

5904             LE PRÉSIDENT :  Je comprends bien que, ce que vous suggérez, c'est vraiment une philosophie à adopter pour nous.

5905             L'application de cette philosophie, si ne nous l'acceptons pas, sera un peu difficile dans les diverses parties du marché des télécommunications et de radiodiffusion parce qu'il y a des choses que nous pouvons réglementer et il y en a d'autres que nous ne pouvons pas réglementer.

5906             Mais vous dites aussi :

5907             *Il nous apparaît impérieux de limiter le rythme d'accroissement de la concentration et d'encadrer les pratiques. +

5908             LE PRÉSIDENT : Ce matin, nous avons ici entendu monsieur. de Corus.

5909             MME DES ROCHES : Cassiday.

5910             LE PRÉSIDENT : Monsieur Cassiday nous dit que la prochaine vague de concentration va venir dans 24 à 36 mois, que, pour le moment, on a une pause.

5911             Mais il prévoit qu'on va avoir une deuxième vague de concentration.

5912             Qu'est‑ce que nous pouvons faire pour limiter le rythme d'accroissement de la concentration, comme vous le suggérez ?

5913             Est‑ce que vous suggérez que nous déclarions un arrêt à la concentration ou que ‑ je ne suis pas exactement clair.

5914             Qu'est‑ce qu'est l'application pratique de votre suggestion ?

5915             MME DES ROCHES : Bon. On ne l'a pas faite en fonction des prochaines vagues qui s'en viennent, qu'on attendait d'ailleurs ‑ qu'on attend, par ailleurs.

5916             Là‑dessus, c'est clair que, bon, vous avez mentionné plus tôt cette semaine des balises qui pourraient être mises en place pour voir avec la nouvelle concentration quelles sont les parts de marché, le nombre de propriétés qu'on peut avoir dans le même marché.

5917             On n'a pas étudié ça vraiment, mais la façon dont on voit que ça pourrait fonctionner, c'est qu'il faudrait que le gouvernement ait une politique claire en termes de concentration des entreprises.

5918             Ensuite, que le Bureau de la concurrence puisse filtrer. Le Bureau de la concurrence, lui, a le mandat, justement, de regarder la part des journaux, la part des radios, des placardages publicitaires, et cetera.

5919             Donc, il y aurait un premier ‑ un premier filtre, si vous voulez, de balises là‑dedans. Et ensuite, le CRTC regarderait les conditions de licence imposées aux entreprise de radiodiffusion et de télécommunications qui sont en place pour pouvoir promouvoir l'émergence de contenu canadien et s'assurer qu'il y a une diversité des voix.

5920             Alors, pour se préparer à la prochaine vague, il faut vraiment que ça parte du haut et que là où vous ne pouvez agir ‑ sur les journaux, par exemple ‑ le Bureau de la concurrence peut le faire. Il y a une politique claire.

5921             Et ensuite, quand le Conseil examine l'ensemble de ‑ je ne sais pas, moi, je dis Quebecor parce que, les journaux, ils vont être impliqués là‑dedans.

5922             Le CRTC tiendra quand même compte des propriétés des quotidiens et des hebdomadaires de TVA, de Quebecor. Il ne les réglementera pas, mais il devra en tenir compte, de voir que c'est un enjeu, c'est un facteur économique, c'est un intrant, dans cette affaire‑là.

5923             C'est un peu comme ça qu'on le voyait.

5924             LE PRÉSIDENT : Madame Noël

5925             CONSEILLERE NOEL:  J'ai peu de questions.

5926             J'essaie de comprendre comment on en est arrivé à cette notion de réseau. Réseau d'un paquet de choses différentes, si j'ai bien compris. C'est presque de la salade de fruits.

5927             J'ai été voir la référence à l'Avis public 1986‑355 du 22 décembre 1986, mais ce n'est pas une décision, ça. C'est un appel aux observations dans notre jargon nouveau. On appelait ça un appel aux observations.

5928             C'est des questions qui son posées à l'industrie.

5929             Est‑ce que vous avez regardé ‑ avant de nous parler de cet Avis public, qui est une série de questions posées à l'industrie, est‑ce que vous avez les réponses qui ont été apportées et la décision qui en a résulté ?

5930             Parce que vous semblez fonder votre le pouvoir que le CRTC aurait de créer des réseaux d'amalgames de toutes sortes de catégories d'entreprises sur cet Avis public.

5931             M. TRUDEL : Oui. En fait, outre cette référence à un Avis public, le CRTC, dans sa décision du 17 octobre 1980, a également exploré la notion de réseau.

5932             Il avait, entre autres, à l'époque, mentionné que la définition du terme réseau en vertu de la loi, la même définition, a été maintenue dans la Loi de 1991.

5933             Le Conseil, dans la décision que je mentionne ici, la décision CRTC 80‑704 du 17 octobre 1980.

5934             Alors, à cette époque, le Conseil disait que la Loi prévoit une définition plus large du terme `réseau' que celle de la simple acceptation courante du terme, de sorte que celui‑ci ne désigne pas seulement les dispositions relatives à la programmation où il y a délégation du contrôle, mais aussi d'autres arrangements relatifs à la distribution de la programmation.

5935             Le Conseil souscrit à ce point de vue, compte tenu de l'emploi du terme `comprend', à l'article 2 de la Loi, qui signifie que `réseau' ne se limite pas à la description qui suit.

5936             En outre, cette conclusion repose sur la directive comprise dans l'alinéa 3 (j) de la Loi voulant que la réglementation et la surveillance du système de la radiodiffusion canadienne soit souple et s'adapte aux changements qu'il était impossible de prévoir au moment de l'adoption de la Loi dans les années 1960.

5937             Le Conseil estime que l'on doit considérer que son mandat de surveiller et de réglementer le système de la radiodiffusion canadienne englobe la distribution d'émissions mettant en cause les entreprises de radiodiffusion et les initiateurs de programmations, ce qui donnerait les mêmes résultats que ceux obtenus par les réseaux traditionnels qui détiennent une licence et sont soumis aux règlements du Conseil.

5938             CONSEILLERE NOEL : Mais ‑

5939             M. TRUDEL : Et, si on avait le temps, il y avait d'autres décisions où le Conseil revient toujours ‑

5940             CONSEILLERE NOEL :  Mais elles sont antérieures à ce questionnement‑là.

5941             Alors, après le questionnement de 1986‑355, est‑ce que le Conseil est arrivé à des conclusions qui permettraient d'étendre la notion de `réseau' à un ensemble aussi large que celui que vous proposez ?

5942             M. TRUDEL : C'est que la notion de `réseau', ce n'est pas le Conseil qui l'étend. C'est la Loi qui prévoit une notion large.

5943             Le Conseil ne fait que constater que la Loi donne à la notion de `réseau' une conception très large, qui essentiellement revient à dire que le Conseil a le droit, et même l'obligation, de surveiller et de réglementer toutes les entreprises, quelques soient leurs organisations, quelque soit leur fonctionnement, qui contribuent à la diffusion ‑ directement ou indirectement à la diffusion d'un programmation, d'un ensemble d'émissions au public canadien.

5944             Alors, cette interprétation, le Conseil en a pris acte dans les décisions que j'ai mentionnées, et la Loi n'a pas changé depuis. Et, donc, il n'y a aucune raison de penser que cette interprétation n'a plus raison d'être.

5945             Au contraire, elle a probablement davantage raison d'être dans le contexte d'évolution et de diversification que connaît actuellement le système canadien de radiodiffusion.

5946             CONSEILLERE NOEL :  Dans le contexte où on essaie de simplifier la réglementation et de la rendre facilement prévisible, pouvez‑vous me montrer, me démontrer, comment fonctionnerait votre projet de réseau ?

5947             Disons, par exemple, ‑ prenons un exemple hypothétique, mais très concret ‑ que nos amis de Quebecor Média décident de s'intéresser à l'achat d'une station de radio.

5948             Est‑ce qu'il faudrait, par exemple, que le Conseil examine tout ce que fait Quebecor Média, Quebecor World, notamment au niveau de l'Internet, du portail Canoë, de la câblodistribution, de la téléphonie (parce que ça se promène sur le même réseau), de ce que TVA peut offrir au niveau de la télévision conventionnelle, des publications de magazines, des éditeurs de livres (ils ont également des compagnies qui éditent des livres, de la télévision spécialisée (ils ont des canaux spécialisés), des journaux ?

5949             Je veux dire :  Qu'est‑ce qu'il faudrait qu'on fasse si, tout d'un coup, ils décident de racheter CKAC, par exemple ?

5950             MME DES ROCHES : Je vais commencer et puis Pierre Trudel terminera.

5951             En fait, philosophiquement, la manière qu'on est parti dans l'élaboration de ce projet‑là, philosophiquement, on le regardait un peu comme a eu lieu les renouvellements de Radio‑Canada. OK ? En 1999.

5952             Le renouvellement de Radio‑Canada. On a regardé CBC Radio, Radio 1, Radio 2, Radio‑Canada, la télévision française, RDI.

5953             On les a tous regardés ensemble.

5954             Alors, on commence par ça. Ça, ça entraîne ‑

5955             CONSEILLERE NOEL : Oui, mais vous êtes dans un autre secteur d'activité.

5956             Là, on touche à peu près tout ce qui se fait sur la planète.

5957             MME DES ROCHES : Mais, ça, ça fait partie du contexte dans lequel la licence ‑ il va avoir une licence réseau pour les entreprises de radiodiffusion là‑dedans.

5958             Mais, dans l'examen de l'ensemble des activités de Quebecor, par exemple, c'est sûr qu'il va falloir qu'on regarde un peu ‑ on ne peut pas faire semblant qu'ils n'ont pas les journaux et puis qu'ils n'ont pas les magazines.

5959             Sur le plan juridique, cela est. Philosophiquement, c'est de le regarder ensemble, OK, et de faire ‑

5960             CONSEILLERE NOEL : Mais vous êtes d'accord que, quand on est face à une demande, on le regarde. On regarde l'ensemble.

5961             Mais comment voulez‑vous encadre ça dans des règles ?

5962             MME DES ROCHES : Je passe la parole à Pierre Trudel.

5963             M. TRUDEL : En fait, la façon de s'y prendre, c'est : d'abord, d'identifier les activités des entreprises regroupées qui concernent les objectifs de la Loi sur la radiodiffusion; interroger l'entreprise regroupée sur ses stratégies, ses approches, à l'égard de sa contribution à l'accomplissement des objectifs de la Loi sur la radiodiffusion; indiquer comment l'entreprise s'y prend et comment elle entend continuer de s'y prendre pour accomplir ou contribuer à accomplir ces objectifs‑là; le cas échéant, s'assurer que cette entreprise regroupée est pourvue des balises et des encadrements appropriés.

5964             Par exemple, s'agissant, par exemple, de l'étanchéité des salles de rédaction, un des problèmes qui a souvent été signalé, pour prendre simplement celui‑là, c'est la très grande difficulté d'appliquer cette règle parce qu'on ne parvient ‑ en fin de compte, l'entreprise ‑ il peut y avoir une entreprise non directement réglementée par le Conseil qui est impliquée.

5965             Par exemple, entre le Journal de Montréal et un réseau de télévision appartenant à la même société, il devient difficile d'imposer des exigences imposées par le Conseil à une entreprise de presse.

5966             Cela dit, rien n'interdit de s'assurer, pour le Conseil, que l'entreprise regroupée qui possède à la fois le journal et l'entreprise de télévision fasse en sorte que l'étanchéité soit effectivement respectée.

5967             L'entreprise regroupée, en tant que holding, dispose généralement des leviers et des possibilités pour assurer qu'on applique efficacement une règle que le Conseil a jugé à‑propos d'appliquer, pour prendre cet exemple.

5968             Alors, voilà des exemples de possibilités.

5969             Essentiellement, les entreprises regroupées de facto sont impliquées et viennent régulièrement devant ce Conseil pour le renouvellement des licences des entreprises qu'elles possèdent.

5970             Elles ne viennent pas de façon directe, mais elles y viennent de façon indirecte.

5971             Essentiellement, ce qu'il s'agit de faire, c'est que, périodiquement, ces entreprises viennent dire devant le Conseil de quelle façon elles entendent accomplir leur mission en fonction des objectifs de la Loi sur la radiodiffusion.

5972             Autrement dit, comment entendent‑elles utiliser le pouvoir considérable qu'on leur a attribué en détenant la propriété d'un ensemble assez vaste d'entreprises dont un grand nombre sont régies par la Loi sur la radiodiffusion ?

5973             Comment ces entreprises entendent‑elles orienter leurs activités et leurs stratégies de façon à être plus efficacement contributrices à l'accomplissement des objectifs de la Loi ?

5974             CONSEILLERE NOEL : Je n'ai pas d'autres questions.

5975             LE PRÉSIDENT : Merci beaucoup pour votre intervention.

5976             Je crois que nous sommes exactement à terme.

5977             Je vous remercie pour votre présentation.

5978             Madame Boulet, when do we get back here?

5979             LA SECRÉTAIRE : We will come back at 1:15 p.m.

5980             LE PRÉSIDENT : Thank you.

5981             LA SECRÉTAIRE :  Thank you.

‑‑‑ Recessed at 1208 / Suspension à 1208

‑‑‑ Resumed at 1320 / Reprise à 1320

5982             THE CHAIRPERSON:  Here we go again.  It seems to me that it was only two weeks ago that you were in the same seat.

‑‑‑ Laughter / Rires

5983             THE CHAIRPERSON:  Madam Boulet?

5984             THE SECRETARY:  Thank you, Mr. Chairman.

5985             Mr. Richard Hardacre will introduce the panel on behalf of ACTRA.

5986             You will have ten minutes for your presentation, Mr. Hardacre.

INTERVENTION

5987             MR. HARDACRE:  Thank you, Madam Boulet.

5988             Thank you and good afternoon, Mr. Chairman and Commissioners.  It is a pleasure to see you again, some of you for the first time.

5989             My name is Richard Hardacre.  I was a professionally trained working actor.  I trained at the national theatre school, l'École nationale de théâtre, in Montreal, and I was very happy at the time to receive a bursary to cover my tuition from the arts councils of Quebec, Ontario and Canada.  So I have a great debt that I owe to my country culturally.  It established my career.

5990             I want to say to start with that I feel a great obligation to that debt, to our country's culture.  I have thus chosen to pursue my career in Canada.

5991             I am the elected National President of ACTRA, the union representing the interests of performers in film, television, sound recordings, radio and new media, other than in the French language.

5992             Kim Hume, on my left, is ACTRA's Director of Public Policy.  I expect you will see a great deal of Ms Hume in the coming weeks and years.

5993             We are joined, as well, by Gary Neil, ACTRA's Policy Advisor.

5994             Members of ACTRA are English‑speaking artists, whose performances entertain, educate and inform Canadians and global audiences throughout the world, through the most powerful media that currently exist, and we are always pleased to have this chance to speak with you about the concerns of our 21,000 members of ACTRA, who live and work in every corner of this country.

5995             Personally, I am quite pleased to see the Commission again.  Thank you.

5996             As we consider the issues in the Commission's Public Notice on Diversity of Voices, we need, first of all, to state that we fully support all efforts to ensure that there is a diversity of editorial content in Canadian media.

5997             ACTRA also fully supports policies that ensure that Canada's minority communities ‑‑ First Nations, women and people with disabilities ‑‑ are properly reflected in the broadcasting system as owners, managers, key creative personnel, and certainly in on‑air programming.

5998             But, for ACTRA, the central issue at stake in these hearings is the following:  How do we ensure that media concentration contributes to bringing more Canadian programming choices and increasing the supply of high‑quality Canadian fiction programming?

5999             Mr. Chairman, indeed, it has only been two or three weeks since I last spoke to the Commission in this room about the precipitous decline in the level of production of English Canadian television drama, programs and series that has occurred since the television policy decisions made in 1999.

6000             Ever since then ACTRA has urged the Commission to reintroduce expenditure requirements and other rules to ensure that broadcasters help develop, sufficiently promote, and appropriately schedule Canadian dramatic programming.

6001             We were, therefore, honestly, quite heartened last week to receive the Review of the Regulatory Framework for Broadcasting Services in Canada, a study commissioned by the CRTC and written by Messrs. Dunbar and Leblanc.

6002             We have some questions about the bulk of that report, and we will withhold comment until we have had a chance to fully digest it, and to consider its recommendations in light of the Commission's Public Notice concerning broadcasting distribution undertakings and discretionary programming services.  However, we will, if we may, comment on the section of the report which addresses Canadian content, because of its relevance to this Diversity of Voices process.

6003             Dunbar and Leblanc state:

                      "We do not disagree with the conclusion that market forces alone are unlikely to achieve the policy objectives set forth in the Broadcasting Act."

6004             They also note:

                      "The available information also strongly suggests that the existing regulatory incentives and obligations with respect to English‑language Canadian drama are not effective."

6005             Recommendation 6.1 in the report is this:

                      "We believe it is imperative to develop more targeted and effective measures to incent the exhibition of Canadian content during peak viewing periods where market forces will not achieve this goal.  Consideration should be given to targeting peak programming obligations to a narrow class of programs, such as drama, which are not adequately supported by the marketplace, and imposing targeted exhibition obligations which require television services to broadcast a minimum number of hours of these types of Canadian programs between 7 and 11 p.m., during each six‑month period over the course of a licensee's broadcast year, to ensure that they will be exhibited during months when Canadians are watching significant amounts of television."  (As read)

6006             Mr. Chairman, other than noting our slight disquiet that the authors have creatively adapted the noun "incentive" into a verb ‑‑ "incent" ‑‑ ACTRA agrees wholeheartedly with this recommendation.

6007             When they discuss programming expenditure requirements, Dunbar and Leblanc also point out that, due to the application of the Commission's benefits policy, there is no consistency in the application of expenditure requirements to licensees, and that is what brings us to today's hearing.

6008             In our written submission, ACTRA urges the CRTC to establish a new standard for all future tangible benefits packages, which are required to be paid, as we all know, when licences are transferred from one owner to another.

6009             Point 1 on this is that the appropriate percentage of tangible benefits must be calculated on the full value of the transaction, with no discounting for debt acquired, no discounting for assets to be divested, and no discounting for inherited benefits obligations.

6010             And, Point 2:  a minimum of two‑thirds of total benefits should be allocated to a 10‑point Canadian drama programming priority, programming produced independently of the broadcaster.

6011             Our argument about Point 1 is based on the market, since all of these factors are taken into account by the buyer and seller when they make their deal.

6012             The benefits should be based on the full value of the regulated assets, since this is fixed and public.

6013             And I understand that the CRTC is already very close to agreeing with us on this first point.  We ask you now, in light of your own report, to consider joining us in the second recommendation.

6014             Please allow me to briefly address why we insist on 10‑point drama.  We do this for three reasons.

6015             Number one, we maintain that Canadian actors are among the best in the world.  We produce very fine actors in this country.  That is widely acknowledged.

6016             For example, in the early days of the Stratford Festival, in the fifties and sixties, we used to import British performers by the dozens to play the leads.  We no longer do that, and, still, our festival maintains its position as one of the world's finest Shakespearean festivals.

6017             In television, when we are given a chance ‑‑ and some recent examples are Corner Gas, Slings and Arrows, Degrassi The Next Generation and Trailer Park Boys ‑‑ we consistently demonstrate that Canadian actors are superb at what we do, and we can carry the lead in successful series.

6018             This, I point out, is the case in spite of somewhat bizarre protests of a certain cable baron that the highly successful Trailer Park Boys should not perhaps be receiving any support in the industry, in spite of the fact that it is broadcast and making tons of money on one of the cables that comes from this very gentleman.

6019             But I diverge.  I'm sorry.

6020             I will be in Los Angeles next week.  We have an event in L.A. next Tuesday, Mr. Chairman.  We will be hosting a reception for some of the finest actors in Hollywood.  They are ACTRA members, Canadians all, many of whom would love a chance to return home to do good quality work.

6021             Our colleagues who are writers and directors are also among the best in the world.

6022             Again, why 10‑point drama?  Television doesn't need stars; television makes them.

6023             In a July article in the industry magazine "Playback", entitled "Fewer Cancon Points Won't Equal More Eyeballs", industry journalist Mark Dillon points out this fact ‑‑ and he uses top U.S. shows as examples.  He could have looked to the U.K. or other countries for other examples.

"Good television is made when a good story is well told."

6024             Further on our point of 10‑point drama, we believe that Canadian tax dollars should not be used to hire second‑rate foreign actors.

6025             On average, English‑language Canadian broadcasters put up only 18.4 percent of the costs of a television production.  Independent producers, therefore, must rely on public funds and other support programs, including tax credits, the CTF, provincial funds and other sources, to mount and develop these productions.

6026             It is unconscionable to permit scarce public funds to be used to hire second‑rate actors from another country, but that's all Canadian producers would be able to afford, given that the average production budget of a Canadian drama show is only a fraction, less than a tenth of its American counterpart.

6027             I need to reiterate, Mr. Chairman and Commissioners, that the benefits packages alone, we don't believe, will reverse the decline in television drama, since they are time limited and modest when compared to the scope of the problem.

6028             The Commission, we feel, still needs to reintroduce overall spending and scheduling requirements for all broadcasters, and some of these things have now been recommended to you by the Dunbar and Leblanc report.

6029             We obviously don't have time in this brief opening statement to review all of the recommendations we have put forward in our reply to the Public Notice, but let me state, please, that we urge the Commission to continue to regulate ownership in the public interest, as required by the Broadcasting Act.

6030             While we need financially strong broadcasting groups to maximize resources for Canadian content, we must ensure that there is real competition in every part of the broadcast system.

6031             While strong distribution companies are necessary so we can continue to invest in the technologies required to communicate across this vast nation, we also need choices for consumers.

6032             Of all the ownership matters the Commission is considering, perhaps the greatest concerns we have are around vertical integration.  The integration of distributors and broadcasters raises issues of access for programmers and for viewers, and the integration of broadcasters and producers raises issues of preferential treatment.

6033             In our view, strong rules for vertically integrated entities, including preventing them from developing in the first place, if that is necessary, are essential as we move rapidly into the era in which our home theatres and computers will be fully integrated.

6034             This concludes my opening remarks.  I thank you, Mr. Chairman and Commissioners, and we would be delighted to respond to any of your comments or questions.

6035             THE CHAIRPERSON:  Thank you very much for your presentation.

6036             First of all, with respect to your disquiet about the word "incent", while you were speaking I was looking online, and the Oxford Dictionary carries it as a verb now.

‑‑‑ Laughter / Rires

6037             THE CHAIRPERSON:  I guess you and I belong to the generation when it was still a noun.  It is now a verb.

6038             MR. HARDACRE:  Thank you.  I must get a new Oxford Dictionary.

‑‑‑ Laughter / Rires

6039             THE CHAIRPERSON:  All kidding aside, I read your submission with great interest.

6040             You were here, or, if not, you heard online the proposal by the CBC and the three rules they suggest.  It is simple and straightforward in their view that nobody should own three outlets in the same market ‑‑ radio, television and newspaper; no single owner should have more than 33 percent of specialty services; and thirdly, in no market should one person own more than two BDUs.

6041             What do you think of those suggestions?

6042             MR. HARDACRE:  I, actually, would like to ask Gary to respond.  He observed the hearings with the CBC.

6043             MR. NEIL:  Thank you, Mr. Chairman, and thank you, Richard.

6044             We have, in fact, stated at some point that we support the first recommendation of the CBC that there should be no more than two out of three from the three principal media.

6045             We also take the position with respect to No. 3 that we do not see any reason that there should be a further concentration of BDUs.

6046             The one in the middle is the one that is perhaps most interesting.  We have, of course, taken the position in our written brief that we favour appropriate limits on the ownership of specialty and digital services, but we really wonder where this particular figure has come from.  Where is the empirical evidence to show that it is an appropriate figure?

6047             Even in the hearings here, Mr. Stursberg admitted that, in some senses, they had pulled the figure from the air, that it could have been 25 percent, it could have been 40 percent.

6048             The limit, as far as we can tell, needs to be framed in a way that will ensure diversity and will ensure that we have the appropriate resources for programming content.

6049             If you look at the 33.3 percent figure perhaps in another way, you will see where some of the concerns might arise.

6050             Let's say that there were, principally, three owners of specialty and digital services, and they were CTV, CanWest Global, and Rogers, with a vitalized Citytv as its base in conventional television.  That is a substantially different formulation than if those three owners were Corus, Astral, and a third unknown player in the system.

6051             So, somehow, you have to factor in cross‑media ownership questions, as well.

6052             Finally, a last comment, if I could, particularly with the Category 2 licences being open ‑‑ and many of those not being launched ‑‑ if you simply pick a number or a percentage figure of that kind, it may be distorted, because it may represent a significantly larger percentage of the overall market than the number of services would otherwise suggest.

6053             THE CHAIRPERSON:  I assume that he was talking about launched services.

6054             As you say, if we count unlaunched services, the figure becomes meaningless.

6055             At the back of his mind must have been the fact that if you limit it to 33 percent, even in the worst case scenario you would have three alternatives.

6056             MR. NEIL:  As I said, we favour limits.  Absolutely, we favour limits, we just wonder where is the research to support this as the appropriate limit, rather than perhaps other limits that could be suggested.

6057             THE CHAIRPERSON:  This touches on the whole issue, as you mentioned, of vertical integration.

6058             Mr. Hardacre, this afternoon you said in your concluding paragraph:

                      "In our view, strong rules for vertically integrated entities, including preventing them from developing in the first place, if that is necessary, are essential as we move rapidly..."

6059             Can you clarify that?  Are you suggesting that we develop some, or that we have rules that apply to companies as they are, and prevent further vertical integration?

6060             Obviously, we have some vertical integration right now.

6061             MR. HARDACRE:  Our concern is in how vertical integration is implemented.

6062             If it is going to be vertical integration in which a broadcaster is actually producing product that they produce, we are concerned about a lack of competition.  We are concerned that one would expect a higher quality and a greater amount of dramatic programming, for instance, if independent producers had windows available to them with that broadcaster.

6063             Just for a very detailed example, that particular kind of vertical integration, where a broadcaster is actually the only producer on that particular network, would be quite alarming to us.  So that kind of rule, in the first place, is something we are referring to, as well.

6064             The current integration that exists in broadcasters, as we see them, we do not have any instance at present of anything that is operating detrimentally in that same manner.  We simply ‑‑

6065             Everything that we envision for the future of Canadian broadcasting involves a stronger system and a stronger culture, if we can get more dramatic programming on the air.

6066             THE CHAIRPERSON:  Okay.  But you make the link ‑‑ automatic link ‑‑ between drama and independent production.

6067             MR. HARDACRE:  Yes.

6068             THE CHAIRPERSON:  Is that a necessary link?

6069             Couldn't you have plenty of Canadian drama on TV without independent production?

6070             If it was the policy of CTV or Rogers, et cetera, to produce drama in‑house, would your goals not be met?

6071             MR. HARDACRE:  Perhaps.

6072             Gary will respond, as well, but a good example to back up what you just asked me is that, certainly, during the days when CBC produced in‑house drama, a lot of it was very good quality, but that is not the world we live in today.

6073             I wonder if Mr. Neil could respond, as well.

6074             MR. NEIL:  I want to add with respect to the general question about vertical integration that, in the brief, we said that we favour the 5‑to‑1 rule with respect to carriage, and that deals partly with vertical integration; and secondly, the existing rules which require that a certain percentage of production be obtained from independent producers, arm's length producers.

6075             With respect to this issue, obviously, for us, the priority is more resources for drama.

6076             In the current environment, in which private broadcasters are paying licence fees that are really abysmally low, we don't see how that is going to change rapidly, so that suddenly they are starting to pay 80 percent or 90 percent of the production budgets, or 100 percent, and involving themselves in distribution and profits down the road.

6077             That is part of our problem with all of this.  That 18.4 percent is so low that to imagine that, suddenly, they are going to turn it into in‑house production seems to us to be not realistic in the short term.

6078             THE CHAIRPERSON:  Yes, but I just was trying to clarify what your priority is, and your priority is Canadian drama, not independent production.

6079             MR. HARDACRE:  Yes.

6080             THE CHAIRPERSON:  You think that the only way to get there is by independent production.

6081             MR. HARDACRE:  Yes.  It's the best way to get there, yes.

6082             THE CHAIRPERSON:  Given the current state of the market.

6083             MR. HARDACRE:  We believe so, yes.

6084             THE CHAIRPERSON:  The 10‑point drama that you mentioned today and that you mentioned when you appeared before us on the Rogers' transaction, have you ever costed this out, what this actually means?

6085             If we said, "Fine, here is your obligation to produce, as a Condition of Licence, so much drama, and it has to be 10‑point drama ‑‑ "

6086             I know what 10‑point drama means; I am not so sure that I have a real good fix on what it means financially, what the difference would be.

6087             MR. HARDACRE:  It is actually a very simple thing to cost out.  Ten‑point drama, in most cases, as opposed to 8‑point, means that there would be a writer, or a director, or a lead actor involved in the production, being a Canadian.

6088             THE CHAIRPERSON:  Yes.

6089             MR. HARDACRE:  That is certainly not going to be any more expensive than having a foreign person either directing, writing or playing the lead.  The cost of it is not going to increase.

6090             At no time have we said that all of the benefits package should be spent on 10‑point drama.  We just want what is spent on drama to be 10‑point drama.

6091             THE CHAIRPERSON:  Why does it have to be mandated, then, if it is not more expensive?

6092             MR. HARDACRE:  There is an unfortunate sense among some broadcasters in this country that they actually need to bring in a foreign star for a production, even if it is a low‑budget production.  And there may not be a foreign star available.  Even if it is a foreign name, there is an unfortunate sense that that is the case.

6093             THE CHAIRPERSON:  Is that with a view to possibly selling it in the American market?

6094             MR. HARDACRE:  I'm sorry?

6095             THE CHAIRPERSON:  Is that with a view to possibly selling the product in a foreign market, as well as in Canada?

6096             MR. HARDACRE:  It could be, yes.

6097             MR. NEIL:  The independent producers would argue that, in fact, they would require the flexibility in order to be able to finance the production.  That is their argument.

6098             It could be about selling it into the American market.  It could be about selling it into supplemental markets, selling it into markets elsewhere in the world.

6099             What we would argue is, with the necessary rules and regulations and requirements for drama ‑‑ Canadian drama ‑‑ in fact the resources would be there to enable them to do that, and we think that those productions, if well made, could also attract foreign audiences.

6100             A good example of that is Slings and Arrows, which probably had a greater success financially outside Canada than it had within Canada, and it's a 10‑point drama.

6101             THE CHAIRPERSON:  Would I get the same answer from Rogers if they were here, that production, whether it's 10‑point or 8‑point, would cost the same?

6102             Is there some empirical proof of this or is this just a conviction of yours?

6103             MR. HARDACRE:  Well, it is a conviction of mine but I have some experience as to what performers get paid, not only my own level of pay but I know that a foreign performer does not work for Canadian dollars in this country.  They get paid U.S. dollars, which, of course, now today may be the same thing.

6104             I don't know what answer you would get from Rogers.  I think what Mr. Neil points out is that some broadcasters would maintain they got a better chance for distribution in the United States.

6105             But I can point out myself programs, not just "Slings & Arrows" but even further back, programs such as a very popular series "Due South," which I was happy to work on for a bit, that it actually had a broadcast window in the United States for years after it was off the air in this country and it was entirely ‑‑ it was 10‑point.

6106             So there is certain evidence of the fact that a 10‑point drama can succeed.

6107             THE CHAIRPERSON:  What do you mean in your submission when you say:

                      "Canadian tax dollars should not be used to hire second‑rate foreign actors." (As read)

6108             It seems to imply that second‑rate foreign actors are cheaper than second‑rate Canadian actors, which is sort of in contradiction to what you just said.

6109             MR. HARDACRE:  Well, no, I don't think so.  I understand you but we maintain that with a certain amount of budget that you are ‑‑ Canadian actors don't necessarily ‑‑ we don't count ourselves as being cheaper.  Of course not.

6110             But when a production goes to cast outside of Canada, if it is able to do so, and cast a star or a lead, shall we say, not even a star, you are not necessarily going to get who you want with a small budget, in the United States to bring into Canada.

6111             I mean there are costs involved in bringing that person up, in housing and putting that person on a Screen Actors Guild contract, which is significantly higher than an ACTRA base rate contract.

6112             So it does cost more.  Therefore, you are going to get somebody who most likely would be a second‑tier paid performer in Hollywood.

6113             THE CHAIRPERSON:  And all of that being driven by the feeling of Canadian producers that you need a foreign name?

6114             MR. HARDACRE:  I think so.

6115             THE CHAIRPERSON:  Okay.

6116             Now, you say this:

                      "The Commission still needs to reintroduce overall spending and scheduling requirements."

                      (As read)

6117             What exactly do you have in mind by that?

6118             MR. HARDACRE:  We have been maintaining for a while, Mr. Chair, that ‑‑ we have done a great deal of study into this.  We think that, along with the other guilds that work in the creative guilds in our industry, that a minimum amount of expenditure from gross advertising revenue should be mandated.

6119             THE CHAIRPERSON:  That is the 7 percent?

6120             MR. HARDACRE:  Seven percent of gross advertising revenue and a minimum number of hours per week in primetime.  Primetime hours are 20 hours a week and we are maintaining that a minimum hourly count of two hours is something that we should be looking at.

6121             THE CHAIRPERSON:  And lastly, the whole issue of benefits.  You have been following this proceeding, I am sure, and we have raised the question several times.  It sort of seems to be a feast or famine idea depending on whether there is a big ‑‑

6122             MR. HARDACRE:  Yes.

6123             THE CHAIRPERSON:  ‑‑ merger or not, et cetera, and you heard this morning a suggestion that we may have a 24‑36 month window before we see another wave of mergers.

6124             I have no idea.  That was Mr. Cassaday's prediction.  But be that as it may, if they do dry up, et cetera, for you this is going to have very drastic consequences.

6125             Do you have any idea what should replace this sort of off‑and‑on stream of money that goes into Canadian production by way of benefits?

6126             MR. HARDACRE:  Sure.  Thank you.

6127             One example of a production that has benefited from the benefits has been a fine show called "Corner Gas" on CTV.  They certainly achieved great results from the amount of money that CTVglobemedia had to invest in Canadian programming.

6128             Other programs will succeed if they have a similar commitment to development, to promoting the show, to keeping it in a valuable niche in the schedule.  These, we maintain, can be done with simply a commitment of advertising revenue.

6129             The bonanza that occurs to one or two producers or production companies when the benefits package has to be spent, and it is only spent on one or two productions, that is fabulous.  It employs people.  It creates a popular program that gets an audience that is now loyal.

6130             But the base amount of production can be maintained if advertising revenue is committed to it.  There is no doubt about that it could be done.

6131             THE CHAIRPERSON:  You have heard lots of people from the industry suggest the time for benefits has come and gone and we should get rid of them.  Do you see those as tradeoffs?  Fine, you are willing to live in a world without benefits as long as you have the commitment of 7 percent?

6132             MR. HARDACRE:  Well, I don't wish to personally sound greedy or make it ‑‑

6133             THE CHAIRPERSON:  I am not dealing with you here, I am talking conceptually.

6134             MR. HARDACRE:  Yes.  Yes, I understand, thank you.

6135             I don't ‑‑ that would be a dangerous tradeoff.  As you have just remarked, sir, there will be a time ‑‑ there will be periods where there are no benefits packages whatsoever, as you say.  So if we are reliant ‑‑ and we could be reliant perhaps completely on advertising revenue.

6136             Well, right now, we are not reliant on advertising revenue.  We are not getting the commitment from it.

6137             I think that over the long term if advertising revenue were committed to ‑‑ a healthy percentage, say, 7 percent of advertising revenue were committed to production, for development of production, there could be many shows in the pipe that could be ready to be produced after a couple of years if something currently on the air loses its audience.

6138             I know I am hedging around this a little bit.  I wonder, do you have something to say, Gary?

6139             THE CHAIRPERSON:  Skating is the word that comes to mind.

‑‑‑ Laughter / Rires

6140             MR. NEIL:  But part of the reason for that is that some of the key elements of ensuring that we have a production capacity are not just the 7 percent of advertising revenues and the money available through benefits, you have all of the other panoply of programs and measures and so on.

6141             THE CHAIRPERSON:  Right.

6142             MR. NEIL:  So you have to factor those ‑‑ we have to factor those in.  I understand you can't because you are not dealing with those in terms of regulation.

6143             But certainly from our perspective all of those form a package.  And so benefits if they were removed but we had very strong government support for the important funding programs along with the 7 percent of advertising revenues, that could probably create a good solid base on which you could ensure an industry.

6144             THE CHAIRPERSON:  Thank you.

6145             Are there any other questions?

6146             Thank you very much.  We appreciate your appearance.

6147             MR. HARDACRE:  Thank you for the thorough questioning.

6148             MR. NEIL:  Thank you very much.

6149             THE CHAIRPERSON:  Madame Boulet, who is next?

6150             LA SECRÉTAIRE : Merci, Monsieur le Président.

6151             I would now invite the following two intervenors to come forward to the presentation table:  Skywords and Norflicks Productions Ltd.

‑‑‑ Pause

6152             THE SECRETARY:  I would ask Mr. Ed Torres of Skywords to introduce his panel, after which you will have 10 minutes and then we will proceed with the presentation of Norflicks.

6153             Please go ahead.

INTERVENTION

6154             MR. ED TORRES:  Good afternoon, Mr. Chair, members of the Commission and Commission staff.

6155             My name is Ed Torres.  I am the President of Skywords and I would like to begin by thanking the Commission for inviting us to make this presentation.

6156             I would like to take a moment to introduce our panel.

6157             Next to me is Lisa Morales.  She is the Program Director for Toronto Operations and Southern Ontario markets.

6158             Beside Lisa is Todd Bernard.  He is our Vice‑President and General Manager of Ottawa and Eastern Canada Operations.

6159             Frank Torres is my brother and he is the Chief Operating Officer of the company.

6160             And Aubrey Clarke is our Business Development Manager and handles special projects for Skywords.

6161             We are here today to provide a perspective on the Canadian radio broadcast system through the eyes of a close industry partner and to provide comments on how the Commission can best work towards meeting the objectives of section 3 of the Broadcasting Act primarily through the following three areas that we have identified.

6162             Firstly, we recommend that the Commission should continue the active licensing of new radio stations to mainstream measurable operators in major markets, medium markets and small markets with an emphasis on independent operators that don't have affiliations with large broadcasters.

6163             Secondly, we recommend that the Commission promote the use of outsourced Canadian news, spoken word and other programming created by independent Canadian producers and ensure that these producers comply with section 3 of the Broadcasting Act.

6164             Thirdly, the Commission should take an active approach to technical barriers that block potential licensees from entrance into major markets.

6165             I would like to ask Lisa Morales to provide a brief history of Skywords and to speak to question 2 that the Commission raises in the Notice to Appear at this hearing.

6166             MS MORALES:  Thank you, Ed.

6167             Skywords is a Canadian company founded by brothers Edward and Francisco Torres in 1991.

6168             Skywords began providing outsourced traffic reports from aircraft to one radio station in 1992 and today provides traffic business, weather, snowmobile trail reports and other services.

6169             Skywords reports can be heard on over 150 frequencies in the Canadian spectrum.

6170             As a stakeholder, Skywords believes in actively contributing to the Canadian broadcast system through membership in the CAB, the Ontario Independent Radio Group, the BBM, the Canadian Music Week, the Broadcast Executive Society and Canadian Women in Communications.

6171             Skywords provides employment for approximately 50 people in five offices across the country.  We believe that we are one of the leading producers of Canadian content for radio.  We provide over 20,000 reports weekly in various forms for radio stations across the country.

6172             Although we can be heard over 150 frequencies currently, only 7 percent of our affiliate stations are owned by the six major commercial broadcast companies in Canada.

6173             Ninety‑three percent of our affiliates are independent operators or small and medium size broadcast companies.

6174             The major broadcast companies, by and large, like to internalize their reporting functions.

6175             Because of the concentration of ownership in major markets by the major broadcast organizations, our distinct independent news and information voice is largely unavailable as an option to the public on mainstream formats.

6176             We believe that diversity of voice can be achieved through the licence process by actively licensing new operators into mainstream formats.

6177             We also believe that the little remaining FM spectrum best serves the public when it is licensed to mainstream operators.

6178             I would like to ask Todd to provide some historical perspective on diversity of voices and firsthand experience on the plurality of voices for question 1.

6179             MR. BERNARD:  Good afternoon.

6180             In 1994 I was an airborne traffic reporter in Ottawa with Skywords.  Ottawa was a growing city with some serious traffic problems and we provided an airborne service that covered both sides of the river.  Our service was unique to Ottawa and transformed the way that traffic was reported on local radio.

6181             We also provided airborne surveillance of news stories including political rallies and the devastating ice storm.  Skywords aircraft were the first to provide an aerial perspective on the scope of the damage.

6182             In the late 90s, as a result of consolidation, many of the independent operators in the market with whom we had signed our original agreements were bought out as the large broadcast chains began to emerge.  In some cases, our agreements were cancelled in the transfer of ownership almost automatically.

6183             In Ottawa, four of our affiliate stations cancelled their agreements when they were purchased by a single chain operator, making it no longer economically viable to fly the aircraft.  We were forced to provide a ground‑based service to our remaining affiliates and lay off employees.

6184             During the same time, Skywords provided airborne coverage in Montreal in both official languages.  Operating from studios in St‑Hubert, Skywords employed 12 local reporters.

6185             Again, as a result of station ownership changes, our agreements were terminated and Montreal operations were discontinued, and, unfortunately, all 12 employees were released.

6186             Our Vancouver operations suffered a similar fate.  Airborne operations were suspended, employees released and a skeleton operation remained to service a couple of independent operators.

6187             The net result for the radio listener in the Ottawa, Montreal and Vancouver markets was a reduction in the level of service from radio stations and a reduction in the diversity of voices in these markets.

6188             Over the same time period, weekly tuning to radio has decreased from 20.5 hours weekly to its current level of 18.1 hours.

6189             The loss of airborne surveillance is just a single example of how radio stations cut costs and rationalize services to create business efficiencies.

6190             The continued homogenization of radio contracts, brands, personalities, news stories and formats is good for profits but, unfortunately, it is bad for the listening audience.

6191             That is why we address this issue as point number 1 in this presentation.

6192             MR. FRANK TORRES:  Thank you, Todd.

6193             We have talked about using the licence‑issuing process as a preferred method to ensure diversity of voices in the broadcast system but the licensing process is expensive, complex, daunting and by its very nature favours incumbent radio operators.

6194             But there is another barrier to diversity.  Perhaps the single largest obstacle to entry for a new applicant is the scarcity of spectrum in the major markets as currently managed.

6195             The Commission needs to dialogue with Industry Canada toward relaxing second adjacency rules.  The Broadcast Monitoring Report indicates that since 2003, 233 over‑the‑air radio stations were approved.  Only a handful of those were licensed to serve Canada's major markets in mainstream formats.

6196             Another obstacle to entry into the major markets is the contour pattern of many C1 licences.

6197             In Toronto there are 12 C1 stations whose unimpeded interference‑free signal extends well outside the Toronto CMA into smaller markets like Hamilton, Niagara, Barrie, Oshawa, Peterborough, to name some.

6198             This was originally a great idea that brought new music choices to people in rural populations but now it functions as a barrier.  Local stations in smaller markets could better serve local populations than do high‑powered stations that beam in from the city.

6199             MR. ED TORRES:  We recommend the Commission review how contour pattern negatively affect diversity of voices and whether existing C1 contours should be altered in the licence renewal process to serve only the areas a station is licensed for.

6200             We recommend the Commission consider and examine the negative effects on diversity of voices that result from aggregation of advertising revenue and market share in particular markets and the adverse effect that has on independents in those markets.

6201             We recommend the Commission examine the ownership structures of independent broadcasters, also during the licence application process.

6202             In closing, we reemphasize that we believe that the independent operators are currently the safety valve for diversity of voice and editorial content in the Canadian broadcast system.  They are the entrepreneurs that take risks into diverse formats and presentations.

6203             In many of the major markets, there is only a handful of independent operators that can be heard.  In some major markets, there is no independent voice on mainstream radio.

6204             The Commission should continue to actively license the independents and encourage the participation of new voices in the spectrum now in light of the continuing favourable economic condition of Canadian radio.

6205             Thank you.  We welcome your questions.

6206             THE SECRETARY:  Thank you.

6207             We will now proceed with the presentation of Norflicks Productions.

6208             I would ask Mr. Richard Nielsen to introduce his colleagues and then you can proceed with your 10‑minute presentation.  Thank you.

INTERVENTION

6209             MR. NIELSEN:  I am Richard Nielsen, President and founder of Norflicks.

6210             I have some eye issues, so a statement which I wrote will be read by Kerri Neraasen, who is a valued colleague and producer with the company.

6211             MS NERAASEN:  Thank you.

6212             Norflicks in its 21 years of existence has produced or co‑produced 276 programs for Canadian television release.  Of these, 223 were produced for two broadcast entities, CHUMCity and Alliance Atlantis, that are about to be purchased by CTV and Global, who in the same period have purchased nothing from Norflicks.

6213             One can't help but wonder if in approving these takeovers this Commission was aware of the effect that decision could have on independent producers.

6214             We do not believe that Commission members fully appreciate the impact of their decisions on those of us who assume creative responsibility for the programs Canadians see.

6215             We do, however, welcome this opportunity to address the issue of meaningful diversity.

6216             The following statement concerning diversity was issued in a CRTC Public Notice in June of 2006:

                      "Diversity refers to the inclusion of groups that have traditionally been underrepresented in broadcasting:  ethnocultural minorities, Aboriginal peoples and persons with disabilities."

                      (As read)

6217             And the statement continues.  I quote:

                      "To ensure that all broadcasters contribute to a system that accurately reflects Canada's multicultural and multiracial nature and recognizes equal rights, the CRTC has taken a multifaceted approach regarding the presence and portrayal of the above‑noted groups on the air and their participation in the industry." (As read)

6218             This kind of diversity, which has been enshrined as part of Canadian broadcast policy, reiterated recently by the Commission's Chairman, who in turn was echoing the statements of previous chairmen, is a good policy.  We support it but it is not a policy that addresses the issue of diversity.  It is, in fact, affirmative action.

6219             Broadcasting in all its facets is the most effective instrument we have for the creation and dissemination of our common culture.  It has become democracy in action.  Therefore, diversity in broadcasting must not begin and end with employment equity or better ethnic balances reflected on air or with themes that humanize our treatment of the disadvantaged.

6220             Diversity in broadcasting is the guardian of liberty, a ticket enabling all to join or at least be represented in the great debate that freedom a democratic society seeks to provide.  Indeed, nothing day by day better reflects a nation's culture or its cultural aspirations than what it broadcasts.

6221             Democracy is not a matter of group rights but of individual rights, as our Charter makes clear, and it goes beyond the right to speak.

6222             Communication in broadcasting is a cultivated skill, an art, a calling, as well as an invitation to democratic participation.

6223             This kind of diversity, which I would describe as fostering and accommodating individual creativity, has been largely ignored, not to say thrashed by this Commission since its inception.

6224             Diversity was not served by concentrating almost all decision‑making for English television in Toronto.

6225             Diversity was not served by awarding licences for specialty channels mainly to established broadcasters and cable operators.

6226             Diversity was not served by permitting those who received licences from areas outside of Toronto to move to that city once their licence was approved.

6227             Diversity is not served by approving mergers and takeovers that reduce the number of broadcasters Canadians have at their disposal nationwide from six to four.

6228             Diversity is not served by a system of subsidies that centralizes the commissioning process so that the same programming and creative values prevail everywhere.

6229             Diversity is not served by taking control of subsidies away from producers who are many and giving it to broadcasters who are few.

6230             Diversity was not served by building a wall between the French and English broadcast communities.

6231             Diversity is not served by making the work of creative artists subject to the whims of bureaucrats employed by private or public corporations or funding agencies.

6232             Diversity means that people with something to say or show and the talent to express it are not controlled but encouraged.

6233             It means that our most talented artists and performers are not forced to go abroad in search of more congenial and supportive surroundings.

6234             Diversity is not served by regulations and rules so numerous and so complex that they force producers to employ professional help simply to fill out the required forms.

6235             Diversity is not served by importing everything the U.S. makes, some of it at as little as 2 percent of its production cost, then compensating for that decision with complex subsidies and regulations.

6236             Diversity means supporting wherever possible new initiatives and new players at the management and corporate level.

6237             It is misleading that a 2006 statistical review issued by this Commission was entitled "Building on Success."  Success by what measure, one wonders.

6238             No developed country attracts as low a percentage of its home audience to the entertainment and drama programs it produces.

6239             No developed country offers its audience so few domestically produced dramas compared to those it imports.

6240             No developed country sells as few of its domestically commissioned and produced shows to foreign markets.

6241             Diversity is an issue primarily because artistic talent, the only indispensable ingredient in successful programming, is little valued throughout the system.

6242             Talent is always in short supply and for that reason the entertainment professions if left on their own rarely discriminate on grounds of race, ethnicity, gender or sexual orientation.

6243             It follows that diversity in our business only has to be nurtured when it has become an end in itself, supplanting the search for talent as it has in Canadian broadcasting.

6244             This has been allowed to happen because 95 percent of the time Canadians watching drama or variety are watching imported American programs which are, of course, talent‑driven.

6245             No one, including this Commission, has indicated the least concern about the diversity or lack of diversity in U.S. programming imported into Canada.

6246             Canadian entertainment programming exists because it is a condition of licence, not because our private broadcasters want to program it or produce it.  It was not always thus.

6247             I left the CBC in 1972 and after 11 years, and with Pat Ferns, founded the first Canadian production company devoted exclusively to television, Nielsen‑Ferns International.

6248             Later, I was Chairman of Primedia Productions and for the last 20 years have been President of Norflicks Productions Ltd.

6249             The most profitable and perhaps productive period of this long run was the first four years, from 1972 to 1976, when there were no subsidies, no tax credit, no Telefilm, no CTF, no tax shelter and no pass‑through payments from cable subscribers.

6250             In the first four years of Nielsen‑Ferns International and its associated Montreal company InterVideo, we produced almost 100 hours of programs in both French and English.  Included in this was the only Canadian drama series ever produced in both official languages, "The Newcomers," "Les Arrivants."

6251             During this period, we co‑produced series and programs with the BBC, Time‑Life Films, RKO and the New York Times, and with France, Japan and Germany, and attracted sponsors such as Noranda, Imperial Oil and General Motors, each of whom paid a significant percentage of the programs' costs.

6252             The Canadian audiences for our programs compared very favourably with U.S. imported shows in similar genres.

6253             The first two series we did for the CBC cost $3.5 million, a lot of money in those days, but the CBC paid us in total $120,000 or less than 3 percent of the cost of the programs.

6254             The remainder was paid for by the BBC, Time‑Life Films, Noranda and Imperial Oil, all of whom were more respectful of our independence than today's agency bureaucrats and broadcasters.

6255             How was all this possible?  Because Canadian filmmakers and TV producers were then respected worldwide.  I walked straight out of the CBC and sold my first series to Time‑Life Films and the BBC, not because they knew me, they didn't, but because they knew and respect Canadian television.

6256             The present sad state of Canadian television is a sharp contrast to its spectacular beginnings.

6257             In the 1950s and 60s, management of the CBC believed that television production should be in the hands of those who made the programs, in other words, the talent, producers working with writers, directors, performers and crew, each respecting the other's vital contribution.

6258             I have watched and occasionally protested as the diversity implicit in the arts, which is inseparable from the primacy of individual talent rather than corporate or managerial oversight and control, has been consistently eroded and undermined by public policy.

6259             Money is not the problem.  The total amount of subsidies to Canadian broadcasters varies but it exceeds $2 billion annually, slightly more than half of it going to private broadcasters and cable companies, all of them very profitable private corporations.

6260             It is not the purpose of this submission to follow the money but we would be remiss if we did not note that if one does the math and adds up all the money available to Canadian production and compares that figure with the money actually spent on Canadian programming, a huge discrepancy emerges.

6261             The villains in all this are a centralized government bureaucracy, a concentrated and centralized commercial broadcasting structure that owes its solvency to U.S. programming, and a regulatory agency that has been inattentive to the effect its decisions have had at the program level.

6262             In closing, we would like to point out one last depressing result of the system we have devised, which is that American programs in the minds of our broadcasters have set a style and a standard we should emulate, by which they mean copy, never mind that copies are never as good as the original, never mind that Canada is a very different society from the United States.

6263             "Canadian Idol," a clone of a U.S. show, is number one among Canadian‑produced programs and most of what we are urged to produce are like it, pale, underbudgeted imitations of U.S. shows.

6264             Diversity has no meaning if it lacks authenticity, if rather than reflecting life it reflects only other TV shows, in particular foreign ones.

6265             The most distinctive aspect of Canada is its marriage of two cultures, French and English, but where can the work of French‑Canadian performers, writers and directors be seen on English‑Canadian television?  Nowhere.

6266             For almost two and a half centuries, Canadian politics has been about keeping the French in and the Americans out.  Our broadcasters and sadly, our government policies and regulatory bodies such as this one have reversed this process, keeping the French out and the Americans in.

6267             The result is that we English speaking Canadians cannot find ourselves on Canadian television.  It's embarrassing, but it's more than that.

6268             Culture defines a society and the diversity we have lost sight of, despite our determination to recognize the diversities that coexist within Canada is Canadian diversity, Canadian identity.  They creep to us by our past, our geography and our uniquely Canadian experience.

6269             That diversity very present and leading a national renaissance at the CBC in the 1950s and 1960s is now almost totally absent from our TV screens.

6270             Despite this pessimistic appraisal of where we are, the situation is not hopeless.  This Commission must lead the way in rationalizing the present system.  The emphasis on distribution must be replaced by an emphasis on production.

6271             The commissioning process at the CBC must be regionalized.  Above all, we must devise a system that is talent driven.  We must stop subsidizing commercial broadcasters.  We should get the CBC out of advertising entirely and out of sports.

6272             We should make our 24‑hour news channels into cooperatives, marrying the resources of commercial and public broadcasters.  And we should try to find a way to place sensible limits on the amount of American programming imported.

6273             We are not talking about roll‑backs, but a relatively painless reduction in the number of specialty channels.

6274             Finally, the Commission must restrict ownership concentration in trying to cultivate diversity and ownership.

6275             Thank you.

6276             THE CHAIRMAN:  Thank you very much.  First of all, Skywords, I've listened to your presentation carefully and the example that you give of Ottawa and the service you had from the sky which disappeared because of amalgamation.  I must say I am sensitive it's a very painful experience for you, but I am not so sure how this means a diversity of voices.  Couldn't this be equally interpreted that, in effect you had a product which the market didn't want?

6277             I mean the new amalgamated owner chose not to buy it because and they may have been perfectly wrong, but in their view, as the increased ownership viewership audience let's say would get from providing helicopter based traffic service didn't warrant the costs and they had a perfectly rational decision.  I don't know whether that necessarily means there is a lack of diversity of voices.

6278             MR. TORRES:  The example of Ottawa and we chose that because, you know, it's close to home and the reason that we chose it, it talks directly to what I think this hearing is about, which is diversity of voices.

6279             When we arrived in Ottawa, there was ‑‑ and we just cited an example by there was Ralco, MacLean‑Hunter, there was three independent radio operators whose signals got into the market.  On top of that there was CHUM and when consolidation occurred, those voices, you know, in the example of Rogers who swallowed up three independents and took three independent newsrooms and merged them into one, I mean I think that speaks directly to why we're here, which is the diversity of voice.

6280             And again, I want to be careful because we do a lot of business with the major broadcasters and we are not here today ‑‑ we are just giving you our experience.

6281             THE CHAIRMAN:  Sure.

6282             MR. TORRES:  And we want to illustrate that.  It was a pretty valuable service.

6283             When we arrived in the Capital, a traffic report was generally Queen's Way, Queen's Way volume is moderate, boom! here is your sponsor, ten seconds, generally the sponsor tag was longer than the actual report.  So, we made serious investments.

6284             I mean, it's not inexpensive to fly an airplane.  It's very specialized service.  You need to a lot of training because a traffic report from the air is much different from a traffic report from the ground.

6285             So, we made substantial investments and, yes, we believe we had a product that was great.  The final analysis is that with the major broadcast chains, product does not come before profit.  It's the other way around.

6286             THE CHAIRMAN:  I appreciate that there is no such service in Ottawa right now.

6287             MR. TORRES:  That's correct, yes.  And again, I mean, when you analyze and what we have done is we have taken a very analytical approach to what in radio is basically the entry level position for  your most junior persons.  You stick them in there and you shove them in the traffic position.  There is generally very minimal amount of training, but we've taken it and we've devised a training manual and the airplane is certainly a tool that we use and it's a very effective tool.

6288             For example, when we arrived, there was no way to find out on the five and the fifty in Gatineau, there is absolutely no way, it was a mess over there.  The traffic is very heavy and Todd, I don't know if you want to speak to this because you did the flying.  But we arrived all of sudden, we are giving alternate routes, we are providing bridges that weren't congested.  So, it was a valued service and we heard that in the feedback that we got.

6289             THE CHAIRMAN:  I am not questioning the value of service.  Actually, trust me, I would have let you to be there so that I can take alternate routes and find out.  The point is that it seems to me your product and the pricing of it was not what the market was willing to pay.

6290             MR. TORRES:  I mean it's market forces and we are not here to say that, you know, we expect the Commission to regulate what the major players do.  We are just here to give your our experience and how it affected us and on a going forward basis, we want to make sure that there are independents in the marketplace because it's the independents that take a look at our service from a product perspectives as opposed to a profit perspective.

6291             THE CHAIRMAN:  Well, put another way, that the independents were the innovators.

6292             MR. TORRES:  It's the independents that really saved our business after consolidation.

6293             THE CHAIRMAN:  Now, as far as Norflicks is concerned, this is a fairly serious indictment you've presented us with.  But then, I looked at the end in trying to figure out what you exactly want us to do.  And you say one thing, that the emphasis should be ‑‑ distribution must be replaced by an emphasis on production.

6294             Exactly, give me a concrete example of what you would, assuming I say, yes, you are right, let's do it, what should we do?

6295             MR. NIELSEN:  Well, first, you should study the British system which when it created its independent television entities.

6296             There were production entities, they didn't own a network, they broadcast for certain periods of time into a network.  In other words, they were held responsible and their licences were renewed on the basis of the success of the programs they did.

6297             Now, I am not saying that we should emulate that, but that's an example of putting the emphasis on production.

6298             I think the CBC needs to be drastically reorganized.  I think we should put news with Newsworld, I think we should, as I say, give it to subsidies rather than private networks, but then, it should be held responsible.  It should have commissioning attitudes across the country that should be regionalized and these commissioning attitudes should be held responsible for the success of the programs they commission.

6299             In other words, really Canadian production not in the areas of news and so on, but specifically in the area of drama and entertainment is disgraceful.

6300             And many of the people who I've known throughout my life because I have been in the business a long time who have left and gone to the States haven't gone for money; they have gone for a more supportive environment and there are very very so few jobs, so little serious drama, so little important drama and I should amend my words.  I think comedy is a serious business.

6301             In other words, I'm talking about the aim for real acceptance.  There is almost no opportunity for that here and it's always discussed as though it's totally a function of money.

6302             On the question of my union that said ten out of ten, we should be trying to create an environment in this country that attracts talent from outside, that wants to come in here and work.  He said: only second rate talent from there would come here.  He is right because we are second rate.  I'm sick and tired of it.

6303             THE CHAIRMAN:  Michel, you have been at CBC most of your life, I am sure you have some questions.

6304             COMMISSAIRE MORIN:  Oui.  À propos de Skywords, vous avez fait une démonstration enfin des problèmes que vous pouvez rencontrer, mais j'aimerais d'abord vous poser la question : est‑ce que, au départ, vous voyez un avenir pour votre entreprise dans les conditions actuelles et est‑ce que cet avenir‑là, selon vous, est positif?

6305             Deuxièmement, est‑ce que vous reconnaissez aux diffuseurs le droit de se donner eux aussi des services?

6306             Et, finalement, globalement, est‑ce que le public canadien, compte tenu des services que vous offrez, est‑ce que le public canadien actuellement est mieux servi qu'il ne l'était disons il y a quelques années, il y a cinq ans, disons?

6307             M. TORRES:  Merci pour votre question.

 

6308             Is the public better served?  Well, we were a diverse voice that offered aircraft surveillance 11 years ago in four of the media markets including Montreal.  So, if we look at just from purely that perspective.

6309             In Montreal, we provided a counterpoint to CJAD, which was the only airborne operation at the time.  So, that's one less voice.  In Ottawa, we were the only voice and Ottawa was considered a small market or a smallish market at the time, but we still provided service.

6310             So, if we go across and we look at Vancouver where when we arrived in Vancouver again, the city with horrendous traffic problems, there was no airborne traffic reports.  So, we were the only voice and we were snuffed out.

6311             So, to the last part of your question, that's our personal experience.  Can a company like ours survive and, yes, we've thrived.  You know, eleven years ago, I didn't have five people to bring to a panel and we were many fewer employees.

6312             We did in part, as a result of the Commission's licensing of new applicants and so we want really to ensure that that continues and it continues at an accelerated process.

6313             And we also want to ensure that the licences that are granted are on mainstream and measured formats because for us, I mean we make our living selling advertising and our Vancouver affiliates right now consist of largely religious and ethnic broadcasters and we can't sell a national advertiser on that.  So, we need measured independence that rank on the BBM in mainstream formats.

6314             And so, I asked my base managers to give me a run‑down of the independent English operators in the major markets, there is none in Vancouver.  There is no independent mainstream operators in Edmonton, there is zero in Winnipeg, there is zero in Montreal, English language.  There is one in Calgary.  At the beginning of this hearing there was three in Toronto, now there is two and in Halifax there is one.

6315             So, as long as the Commission continues to licence mainstream measurable operators, we think the independents will keep our company.

6316             We have also started new revenue initiatives.  We were the first company to provide traffic reports to PCS phones.  We were the first company in Canada, and this is proprietary software that we developed and if you go to toronto.com, who is one of our affiliates, you can pull down a real time traffic report on the internet, on demand, 24‑7, and that's ‑‑ we are quite proud of that.

6317             So, we think the positive, we think the future is quite positive.

6318             And with regard to the ‑‑ as the question related to the service and our future on a larger scale, diversity has helped us and allowed us to expand the nature of what we do to service markets that you would never consider an independent like that, like us, could service.

6319             So, we can give traffic reports in general to an Ontario population 700, but they thrive with our snowmobile reports and they receive information that is quite valued to that market.

6320             COMMISSAIRE MORIN:  Vous dites dans votre mémoire que le plus gros obstacle à la diversité c'est finalement de trouver les bandes nécessaires, le spectre nécessaire.

6321             Comment ailleurs, à travers le monde, est‑ce que vous avez des exemples où on s'est assuré que les indépendants auraient en quelque sorte droit au chapitre, qu'ils auraient accès au fameux spectre dont vous avez besoin pour offrir vos services?

6322             Est‑ce qu'il y a une façon, un pourcentage?  Comment, techniquement, on peut arriver à faire en sorte que vous ayez tout le spectre nécessaire?

6323             MR. TORRES:  I think that's a brilliant suggestion, you know, and we don't have to look at other jurisdictions, I don't believe, to come up with regulation that's at and works.  Again, we are believers in the competitive process and we are believers in market forces.

6324             So, it may not be a regulation that's required, but as I've heard other presenters over the course of the last three days, we may need some guidelines and we may need something that would guide the Commission in not only assessing an independent, not only deciding whether an independent was worthy, but assessing the independent, there may be a point system that could be developed.

6325             COMMISSAIRE MORIN:  Je voudrais poser une question aux gens de Norflicks.  Un autre obstacle, semble‑t‑il, c'est que la diversité est mal servie.  C'est que la diversité semble mal servie dans page 3, quatrième paragraphe, par l'état actuel des règlements qui sont si nombreux et si complexes que, finalement, vous devez recourir à des services extérieurs pour simplement remplir les formulaires nécessaires.

6326             Est‑ce que vous pourriez nous parler davantage de ça?

6327             MS NERAASEN:  First, I'm going to do my best translation for Dick.

6328             THE CHAIRMAN:  We have simultaneous translation, madame.  If you want to put on a headphone, my colleague can repeat the question.

6329             MR. NIELSEN:  This one ‑‑

6330             THE CHAIRMAN:  Well, let's get you a new one.  I mean, somewhat here, madame Boulet, would you get him one.

‑‑‑ Pause

6331             MR. NIELSEN:  The question of filling out forms that we have, it's not just the forms themselves, but it is the great number of them.  When we have to go to the CTF and we have to get verification for our C numbers, all of these require interpretations.  If we then move into the area of co‑production and so on and so forth, and then the nuances of tax shelter, most companies who might be hiring an additional creative person make the decision to hire someone who becomes a specialist in those areas.  And that specialty that, in effect, draws resources away from it.

6332             But so much of the information is in fact unnecessary, totally bureaucratic in that it serves no direct purpose.

6333             I am at the moment in an impossible situation where I have done a co‑venture with Czechoslovakia and I discovered that the way we had set it up, there was one category in post‑production where I was slightly underneath the amount of money I should have, the consequence being that if the ruling holds and I don't get my certified number, it's a minor financial disaster for me.  It's a major embarrassment for our relationship with another country.

6334             And all over a regulation which, because I was switching production managers, we didn't ‑‑ we made a mistake.

6335             The preoccupation we have with the sheer apparatus of being a producer, to give you an example.  We do a production, we get 20 per cent from the broadcaster, 15 per cent from the cable fund, 20 per cent from our tax credits which we have to wait of a year or two years to get, and then we get on average if we get investment from Telefilm, we get 26 per cent.  But add those figures up and I head up to 81 per cent of what you need.

6336             Then, you have to mortgage the house, find a co‑producer abroad.  It is an exercise that really, and to find a particular kind of production that will meet all the criteria that you have thrown at you, means that this is why it is pertinent to this discussion, it reduces the whole thing to a sort of formula.

6337             You do what you have done before because that formula worked and at the cost of diversity, precisely at that.  You wince when you see something that has real originality and wonder how am I going to make that one.

6338             COMMISSIONER MORIN:  But at the end you are taking advantage of those programs?

6339             MR. NIELSEN:  Oh! you have to, otherwise you couldn't make anything because, you know, unless I get a C number, a Canadian broadcaster will give me the price he gives for American product, which is less than five per cent of its production cost.  Why should he give me more?

6340             The only reason that a broadcaster buys anything from me is that he has a Canadian quote that he has to meet and he will have to pay me less than if he did it himself.

6341             COMMISSAIRE MORIN:  Vous dites un peu plus bas qu'il n'y a aucun pays dans le monde, en page 3 avant‑dernier paragraphe, vous dites qu'il n'y a aucun pays à travers le monde qui a finalement autant d'importations des États‑Unis que le Canada.

6342             Est‑ce que vous pensez que, étant donné que les États‑Unis sont dix fois plus grands que nous, que malgré tous les règlements et toutes les politiques, ce sera toujours une donne, un fait très important qui fera qu'on sera peut‑être toujours, malgré les règles, le pays qui importera le plus des États‑Unis, comparativement à d'autres dans le monde, disons.

6343             Est‑ce qu'il n'y a pas une donnée continentale dans tout ça là?

6344             MR. NIELSEN:  The continental reality we should be taking into account, Commissioner, is that we should be trying to sell into the United States, not just buy.

6345             I can do a co‑production with Egypt under a treaty which says that if I only have three or four points of Canadian that it's regarded a Canadian production.  The Egyptians are counted as Canadian to facilitate my co‑production, but I can't do it with the United States because we import so much to the benefit of the broadcasters that we deny the producers the right to employ Americans or to indeed indulge in co‑production with American producers.

6346             It could be totally Canadian production, but we can't involve ourselves in co‑productions with them without jeopardizing our Canadian content.

6347             I feel that Canadian culture is very major part of North America.  Our natural market is there.  We have great advantages for selling abroad to produce programs in French and in English, English which is the primary television market in the world by far and the French which is no worse than third is a huge advantage for us, an advantage we do nothing with.

6348             And indeed, we have rules and regulations that make it the one country in the case of the United States, the one country that we can't do that sort of business with.

6349             COMMISSIONER ARPIN:  A question to Skywords.  I heard the way ‑‑ you are doing barter with the broadcasters, I understand?

6350             MR. TORRES:  Yes, by an large, yes.

6351             COMMISSIONER ARPIN:  By and large.

6352             MR. TORRES:  Correct.

6353             COMMISSIONER ARPIN:  So, you are selling the advertising.  And even doing barter, you were terminated by most of the broadcasters, major broadcasters after they had integrated the new outlets that they have bought.

6354             That was your point?

6355             MR. TORRES:  Yes.  And what occurred was, I mean in some cases as part of the transaction, our agreement was cancelled just in due diligence.

6356             In some other cases, once the major chain started to assemble their regional vice presidents and they started to centralize their sales activities, that's when they looked at the barter and I guess that's correct.

6357             COMMISSIONER ARPIN:  Because you were selling to the same advertiser than their rep. house was selling?

6358             MR. TORRES:  Yes.  What happened was that ‑‑ I mean, our product is very different because we aggregate all of our radio stations.  So, you know, we would aggregate the question, we would aggregate the ethnic, we would aggregate out of market stations and then we would sell it.

6359             But we have to ‑‑ there is one thing we have to understand, I mean we make our living on ten seconds of airtime and that's it, not 30, so...  And generally when we get a guy from a national sponsor, what happens is that the sponsorship puts out an RFP, they say : here is our target demo, it's females, 25 to 34.

6360             We can't make that demo because we are aggregating all of these different radio stations in the market, so we go back to the advertiser and we say: when you complete your buy and you make your points in the market, we'll take what's left over with  your savings, O.K.

6361             But the very nature of the problem then is that you hear the Scott Towels, 30 second creative and then, you hear the tag with a left over portion which is a ten second portion that we've got to buy on the left over.

6362             Then the local rep. says that's my account the national rep has ‑‑ oh! these guys, they're eating our lunch.

6363             So, it's a very different product and as much as we have tried to, you know, make that point with the major broadcasters, I mean it's a lot easier just not to deal with the problem and, you know, control the inventory.

6364             COMMISSIONER ARPIN:  Thank you, Mr. Torres.  Thank you, Mr. Chair.

6365             THE CHAIRMAN:  Ron?

6366             COMMISSIONER WILLIAMS:  Thank  you, Mr. Chairman.  Two questions; the first one for Skywords.

6367             This morning when I took a taxi to this hearing, the radio station my taxi was providing traffic updates and bridge reports and ‑‑ how are these stations getting this information now in that they are no longer employing someone like you?

6368             MR. TORRES:  I don't know what station you were listening to.  Hopefully it was a jewel.

6369             COMMISSIONER WILLIAMS:  Yes.  I don't know.

6370             MR. TORRES:  I can't speak to every radio station, but I'll go back to previous comments.  Generally, it's an entry level position.  But in a market the size of Ottawa, I would be ‑‑ and I know anecdotal and I know first hand in some cases ‑‑ it's not a dedicated position.

6371             So, what you do is you take a newsroom employee and you say, after you're finished writing your newscast, you do the traffic report.  In the cases of some news talk stations, the on‑air announcer, the person that is asking the question of the interviewer, he is actually tasked with reading the traffic report.  So it gets slit over to his desk, so he goes from being the interview expert talking about Afghanistan to, here is a slow‑down on the Cartier Bridge.

6372             So, they do it by whatever means they can.  Generally they don't hire a dedicated person to just to traffic reports, unless there is an economy of scale if you own five signals in the market or four signals in the market, then the workload becomes such that you have to by default hire one person to do it.

6373             COMMISSIONER WILLIAMS:  Where do they get the basic information?  Do they use surveillance cameras or eye witness reports or ‑‑

6374             MR. TORRES:  Yes.  I mean the information is out there and it's readily available so they will use whatever tools are at hand.  Right.

6375             The difference that we offer is we've got more tools.  Mostly, what they are doing is determining which radio stations we service and listen to their report and copying them.

6376             COMMISSIONER WILLIAMS:  Thank you.  Now, I have a question for Mr. Nielsen of Norflicks.

6377             In your presentation this morning or this afternoon, you said the present state of Canadian television is in sharp contrast to its spectacular beginnings and suggested the billing in all this are a centralized government bureaucracy, a concentrated and centralized commercial broadcasting structure that owes its solvency to U.S. programming and a regulatory agency that has been inattentive to the effect its decisions have had at the programming level.

6378             Can you provide some description or examples of how you can come to that conclusion and make that statement?

6379             MR. NIELSEN:  Well, since the 1970s we have been moving our subsidies away from public broadcasting and into private broadcasting. That is a very fateful decision.  It has, in effect, greatly reduced the effectiveness of the CBC without substantially increasing the private broadcasters' contribution to Canadian programming.

6380             The mergers that have taken place between newspapers and, at one stage in my existence, the Torstar bought my company, this was in 1976, after the golden period that I mentioned in my piece.  For the next four years, five years, no Canadian broadcaster bought a single program from us so long as we were owned by Torstar.  Torstar had bought the company because it wanted to acquire Western Broadcasting. It was denied its licence with Western Broadcasting and it then decided to get out of the business and we went our own way.

6381             The effect of public policy, with regard to importing every kind of American show, when specialty channels came in they were used to fuel all the channels we see.  Very few of those channels would have been profitable or possible had it not been for the importation of American programming at a minute fraction of its cost.  To compensate for that we had to setup the whole system of subsidies that we all live with.

6382             And everybody who has done that, and I accept that there are reasons why we did that, but we do not assess the results.  My main quarrel with this Commission is not what it has done, but the fact that it has not truly assessed what is happening.

6383             I sat here today and heard people talk about how good Canadian programming was and how successful it was, and that is just nonsense and every Canadian knows it.  In areas where we are state of the art, like sport and so on, we have nothing to apologize for.  But in the creative areas, works of the imagination ‑‑ I mean, we praise CTV for putting on its, one of their programs, Torn from the Headlines.

6384             But what that is saying is that we will bring you an MOW about an event you all know about, but we won't bring you a work of the Canadian imagination.  Which of course, in my view, and anyone who lives in the business knows it, gives you much more possibility of dealing with the human condition and the current condition.  So that what I do see, I see that a whole series of policies have fundamentally altered what was a very very promising beginning for Canadian television.

6385             And it was promising chiefly because the CBC had out‑performed expectations.  I mean, it is not common knowledge that it was a Canadian from the CBC who created the talk show format or that the Judy Garland Show was Norman Jewison's creation or that the Johnny Cash Show was Stan Jacobson's creation or that Canadian writers created Laugh‑In.

6386             I mean, there was a continental relationship.  I remember Don Hewitt of 60 Minutes, when that show was created, coming to Toronto to discuss it with those of us who were doing similar shows.  And that impetus, which was spectacular, has petered out and it has petered out as more and more policy, more and more benefits have been laid on us.  And so, yes, that is how I justify that paragraph.

6387             THE CHAIRPERSON:  Thank you very much.  I think we are running out of time, unfortunately, we have a packed schedule.  So thank you for your contribution.

6388             MR. NIELSEN:  Thank you.

6389             THE CHAIRPERSON:  Madam Boulet, who is next?

6390             THE SECRETARY:  Thank you, Mr. Chairman.

6391             I would now invite the Canadian Independent Record Production Association to come forward.

‑‑‑ Pause

6392             THE SECRETARY:  Mr. Duncan McKie will be introducing his colleague, after which you will have 10 minutes for your presentation.  Please go ahead.

INTERVENTION

6393             MR. McKIE:  Good afternoon, Mr. Chair, Vice‑Chair, commissioners.

6394             My name is Duncan McKie and I am the new President and CEO of CIRPA and with me today is Bernie Finkelstein.  As many of you no doubt know, Bernie is one of Canada's best known and most successful independent record producers and is a member of the board of CIRPA.  Bernie is President and Founder of True North Records, Canada's oldest independent label.  True North Artists include Bruce Cockburn, Murray McLaughlan, Carole Pope and Rough Trade, Lynn Myles, the Golden Dogs and Canada's news Indie sensation, Hunter Valentine.

6395             Bernie.

6396             MR. FINKELSTEIN:  CIRPA and its membership owe a great deal to the Canadian broadcast system.  Over the years the financial and other benefits that have flowed to Canadian music production companies and their artists have allowed them to grow, to develop and to make Canadian music available broadly to the Canadian public, a long‑stated cultural goal.

6397             This is has been possible because, simply put, the Canadian airwaves are a public resource owned by the Canadian people and managed under the Broadcasting Act on their behalf by the Commission.  The broadcast and BDU licences and their terms, conditions and obligations emanate from the licensing process and are a result of this reality.  It is from this premise that a unique system of benefits has been developed that makes it possible to affordably create Canadian content to fill the Canadian broadcast spectrum in both television and terrestrial radio.

6398             The restricted competitive environment in which they, that is the broadcasters, operate gives a considerable commercial benefit to broadcast licences, a benefit that is not available to the public at large.

6399             This production comes with the defined requirements to properly serve Canadians and to uphold the tenets of the Broadcasting Act.

6400             THE CHAIRPERSON:  Push the microphone slightly away from you.

6401             MR. FINKELSTEIN:  Sorry.  You would think I would know better after all these years.

‑‑‑ Laughter / Rires

6402             MR. McKIE:  He is not a singer.

6403             MR. FINKELSTEIN:  We are used to better microphones I guess.  I am sorry.

6404             MR. McKIE:  I would like to summarize a few of the key points of our written submission if I may.

6405             Firstly, Canadian record producers benefit from a substantial pool of funds contributed by governments, radio broadcasters and others.  This support has created one of the most diverse and deepest collections of music in the world.  In any given year the English record industry produces over 2,000 new albums, over 25,000 tracks.

6406             In an increasingly competitive and complex environment who receives funding and how much they receive from transfers of ownership, new licensing and the like must be reviewed to verify if established contribution levels and general policy objectives are still appropriate.  Since 1998 when these amounts and relative percentages were established by the Commission to support Starmaker and FACTOR a lot has changed.  Now, Canadians must compete internationally, marketing their musical products in various forms and formats around the world.  This reality requires an approach much different from the pre‑Napster world of 1998.

6407             Secondly, to this end, we are moving ahead with a study this fall to determine how our members would prioritize program spending of any additional and current funding with FACTOR. These programs will benefit from that strategic input certainly.  Having said that, we would also like to put on the record that these financial supports to content creators once committed are, in our view, public, not private funds and are intended to serve the public interest.

6408             Other support to production companies, which include strict obligations to exhibit Canadian content, are necessary elements that follow from this public funding.  These two elements, support for production on the one hand for distribution on the other, have worked together to support our goal of allowing Canadians to hear their culture.

6409             Thirdly, substantial diversity in both musical genres and musical selections and a catalogue funded in part by public funds makes little sense if the same diversity of voices in music is not available through the Canadian broadcasting system and particularly the radio system.

6410             Canadians are substantially less likely to hear the music for which they have paid or which has been funded through rents for space in the broadcasting spectrum if it does not get played on radio.  Today, Canadian music is played on radio, but it is older, limited to certain acts, and does not include new and emerging artists in sufficiently large numbers to impress an audience.  The latter, the new and emerging acts, are advised to go elsewhere to get their music heard.

6411             Finally, in our view, the continuing lack of the promised diversity of both musical genres and musical selections on radio has been exacerbated as a result of the consolidation of ownership.

6412             Turning in more detail to Canadian content and new artists, CIRPA stated in the review of radio process in a point that is just as appropriate to this hearing, increasing the minimum level of Canadian content broadcast in primetime to at least 40 per cent remains an appropriate goal for most Canadian commercial radio stations, especially given their financial success.  In addition, we have suggested in written submissions that a proportion of CanCon, at whatever level it is, be reserved for playing records owned by Canadian companies.

6413             Numerous research studies submitted to the CRTC by CIRPA and others support the contention that too much radio play goes to old established middle‑of‑the‑road acts and the newer, innovative and highly creative young Canadian artists get little, if any.  Therefore, it is also the predominant view of the music industry, both major label and independent, that a percentage of primetime airplay must be reserved for new and emerging Canadian acts, however defined.

6414             One question is, is this possible without risking commercial harm to the broadcast system?  We should note that in recent hearings some potential licensees targeting niche markets are already, and without regulation, committing to 40 per cent Canadian content and making further commitments to playing new acts.  Despite this, some broadcasters still think that playing Canadian music is risky business.  It has even been suggested that current CanCon requirements be dropped to 30 per cent.  Under those circumstances acts will never occupy primetime play lists in the critical numbers needed to break through

6415             We agree with CRIA and others that developing definitions of new acts and minimum airplay requirements that satisfy as much as possible the interests of all involved require both time and effort.  However, as we said in our written filing, CIRPA's prepared to take the time needed, hopefully within the next 12 months, and to work with all parties involved, including the Commission staff in a spirit of cooperation to reach an appropriate definition that is acceptable and to design a monitoring system that functions effectively and easily for all.

6416             We have had many discussions with our colleagues at CRIA, ADISQ and the CMPA as well as the Commission on this topic and now look forward to the Commission's preliminary research findings on this matter when they are released, hopefully this fall.

6417             We have also made the Commission staff aware that a solution could integrate the existing Canadian music industry database to maintain a record of new acts and incorporate a monitoring system using it in combination with tracking Canadian content.  CIRPA's database management and research staff would assist with work on a design to make this possible.

6418             However, whatever the outcome, should there be requirements or policy related to the issue we feel that ongoing monitoring has to be a component, otherwise we are left with occasional reviews, sometimes infrequently as once every nine years with the incumbent results.

6419             It is heartening to read some of the other submissions on these matters and find that some broadcasters are substantially in agreement with CIRPA on major issues.  In their submission, Evanov Broadcasting notes, that accompanying the change in ownership rules in 1998 was a decision not to regulate formats and that this attempt at letting "market forces dictate what type of music is played in the market has not been effective in ensuring a variety of listening options for consumers nor in providing diversity of news and information."

6420             They further state that "this does not affirm the success of radio broadcasters in assessing the market and developing consumer‑driven products."  The soaring profits do, however, speak to the ability provided under these regulations to better manage the operational part of the business.  That is, common ownership provides the opportunity to control costs, cross‑sell and combo‑sell and manage revenues.  Nowhere does this speak to enhanced consumer value as a result of increased ownership.

6421             Evanov also discusses in a cogent fashion the lack of differentiated services as well as the disincentive to differentiate its services and the way that market incumbents adjust their formats to try to pre‑empt competition from new licensees that may be licensed in the market. It gives recent examples of this phenomenon in Edmonton and Kelowna.

6422             In the control of a demographic section it notes that having an advertiser in a position where they must buy your station because you dominate and audience share in a demographic is the ultimate goal from a revenue generating perspective.  And that "with the opportunity for increasing market share in the most lucrative demographics and reducing costs of operators by creating synergies it is surprising that any niche services exist."

6423             And further, "by virtue of having to compete with clearly dominant players in the market, independents have carved out new markets and new opportunities."

6424             They also comment on the fact that most stations in a market, presumably chain‑owned, sound similar, a point that is also raised by Harvard Broadcasting.  And it is something that is clearly a major concern to CIRPA, particularly given the often cited broadcaster statements regarding the increased diversity that would result as a benefit of allowing consolidation during the 1997‑1998 hearings and review.

6425             Interestingly, the same imbalance and ownership concentration issues plus differences between big and small, albeit in different circumstances, is noted both by Pelmorex and MTS Allstream's submissions.  In particular, the difficulties both have in negotiating with or competing with major conglomerates that have been and continue to be established under the auspices of Commission policy and the day to day market realities that can flow from these decisions.

6426             MR. FINKELSTEIN:  To conclude, surely we all understand that the pursuit of commercial success in the Canadian media cannot be undertaken at the expense of cultural goals.  What have the last 30 years been about if not that?  In our view, the broadcasting system in Canada has been carefully managed to create a base of support for Canadian art and artists.  In music, the results of this are a flourishing music production business where from day to day new critical successes are achieved and, for some, commercial success.

6427             But for the most part, our members who produce and manage musical acts can no longer rely on radio as a partner in making those artists even modestly successful.  As our research studies and those of other interveners have shown, major market radio stations are programmed similarly and with respect to Canadian content, burn older acts, leaving little room for new artists.

6428             The research also shows that this alienates a potential new audience of younger listeners who will listen to radio that plays new music.  How long can this go on?  How much older will the key demographic get?  How long can you depend on old products and even older consumers to support your business?

6429             It is hard to say, but in our view and in that of music producers and artists across Canada, the creative inclusion of new Canadian music in radio play is the key to a successful future for radio, not the prelude to a dismal failure.

6430             Thank you very much for the opportunity to speak with you and we welcome any questions.

6431             THE CHAIRPERSON:  Thank you.

6432             Following up on that concluding sentence of yours, what is the answer?  How do we do this?

6433             MR. FINKELSTEIN:  Well, it is interesting, because in my experience, and I listen to a lot of radio, nobody seems to want to bother to play to young audiences.  And I think the reason must be because radio is so successful just doing what it is doing, why experiment, I mean why bother to take the cash cow and turn it upside down?

6434             So I think what we need to do, and I think it is unfortunate to some degree, but I think what we need to do is to regulate part of the system, part of the Canadian content to play new and emerging artists.  And I know that the Commission is working on that definition now, as we all are.  I think that that is going to have to be an answer because I think there are so few broadcasters that are bothering.  And what we seem to have now is a very homogeneous broadcast system.

6435             Certainly, the Canadian radio broadcast system has less options and less opportunities than the American one does.

6436             THE CHAIRPERSON:  Doesn't the young audience get older and their taste changes?

6437             MR. FINKELSTEIN:  Absolutely, and there is nothing wrong with that whatsoever.  And I, in fact, manage several older acts and benefit from the fact that they get played.  But, you know, we have to consider the future for Canadian talent and there just seems to be no incentive for people to want to play new recording artists.

6438             You know, we hear a lot of talk about how iPods are threatening the broadcast system or the internet is threatening the broadcast system.  But the profits that we see being made in the broadcast system seem to say something entirely different.  And I think that the reason that young people turn to iPods, the reason they turn to the internet is because they are not getting those kinds of options that they would like from the broadcast system.  It is just not there in my opinion, humble as it may be.

6439             THE CHAIRPERSON:  That is one possibility.  There is another school of thought who thinks that people want music on demand, they want what they want at the time they want it, not on a regular program.

6440             MR. FINKELSTEIN:  Yes, but I think that, you know, as one who makes a living from making music, that the public would like to have all of the options.  I don't think that we live in a world where one replaces the other.

6441             MR. McKIE:  Could I add to that?  There was a time when radio served as an important filter for audiences to determine what in fact was good, what was interesting, you know, and broadcast the history of the act to the audience that made them feel, I think, that they at least understood something about, you know, the history of the music that that act might perform in.

6442             So, you know, that whole tastemaker function of radio, which was once so prominent in the business, has been long forgotten except for certain niches and genres, like jazz and I refer now to the jazz FM station in Toronto, which has a lot of depth in its presentation and tries to link the audience with the artists, with the artists' history and so on and so forth.

6443             We have got a lot of research that suggests that the younger demographic, despite the fact that they have music available to them via the internet and other means, would still like to see that same music presented on the radio.  And I think presented creatively so they can understand, you know, a little more about who these acts are, where they come from, what their success has been in the past and so on and so forth and not simply consume, so it becomes more of a relationship than strictly just consumption.

6444             THE CHAIRPERSON:  Michel, you are the expert.

6445             COMMISSIONER ARPIN:  Thank you very much, Mr. Chairman.  Good afternoon, Mr. Finkelstein and Mr. McKie.

6446             My first round of questions is following up with questions that the Chairman had with you regarding the various demographic.  As you know, we hearing at all public hearings that we are holding regarding granting new licences that the advertisers are looking at the 25‑54 market and if you want to get sufficient revenues, then you have to cater to that specific demographic.

6447             We also know that the Canadian population is aging somehow and even yourself, Mr. McKie ‑‑

6448             MR. McKIE:  I am?

‑‑‑ Laughter / Rires

6449             COMMISSIONER ARPIN:  No, no, everyone of us.

6450             MR. McKIE:  I thought you wouldn't notice.

6451             COMMISSIONER ARPIN:  Everyone of us, if I may.  You mentioned the jazz format in Toronto, well you have to admit is not a teenager‑driven format.

6452             MR. McKIE:  No.

6453             COMMISSIONER ARPIN:  So taking into consideration the very fact that the Canadian population is aging, that the push by the broadcasters is to convince the advertisers and their agencies to move the demographic target from 25‑54 towards more or less 35‑64 ‑‑

6454             MR. McKIE:  Right.

6455             COMMISSIONER ARPIN:  ‑‑ how do you see the system developing in order to go and get the more younger generations?

6456             MR. McKIE:  Let me say, we are not just talking about younger audiences.  I think that that is a bit of a misconstrued ‑‑ and maybe we are, in part, responsible for creating that problem.

6457             But have you heard of an artist named Sophie Milman, a new jazz artist who has just come on the scene in Toronto?  She is produced by one of our member companies, Linus Entertainment.  She is a jazz artist.  In those 2,000 discs you can imagine that that extends all the way from cyberpunk to classical, and we have artists in every genre, in every format that you can possibly imagine.  So everyone of them is having problems with getting access to the system, not just the younger ones.

6458             Now, having said that, I think that some of the broadcasters, some of which we mentioned in our presentation, have looked at what has been happening in mainstream radio and said, well maybe there is an opportunity here to develop a niche that services a younger demographic without the risk since there is less competition.

6459             Now, how many of those radio stations can we licence in the near term?  Probably very few, because as we have also heard today in the major market there is no spectrum available, so how many more independent licences can you ‑‑

6460             COMMISSIONER ARPIN:  But even that taken into consideration, as you know, the Commission doesn't regulate formats.  And we have seen new entrants aiming at the more younger generation then, after a couple of years, moving more towards the centre because they were not making any money or they were operating in a loss position.

6461             MR. McKIE:  Well, certainly, I don't know about that, but I was reading the Dunbar report where it is actually recommended that you don't even licence based on formats anymore and that part of the licensing process be ‑‑

6462             COMMISSIONER ARPIN:  But, effectively, we are not regulating the formats.

6463             MR. McKIE:  And, you know what, if you asked me my opinion I would say I think you should.  And I think that is an error and, you know, we have said that in our presentation, that not sustaining format commitments in markets creates problems.

6464             I think, you know, one of the things that has always been not amusing, but I think extraordinary about our system, is nobody ever fails virtually.  And I guess the question is if people start down the road commercially with certain commitments and can't make that work, maybe they should give that licence up to another operator who has a better idea.

6465             I mean, I don't know what the answer is if people can't succeed in mining a younger demographic.  But there certainly seems to be enough people out there that are willing to give it a try and I guess maybe our job is to provide them with an opportunity to do that.  And I commend people like Evanov who seem to be doing that.

6466             Did you want to add something?

6467             MR. FINKELSTEIN:  Only that I think that we need to have more radio stations.  I think when we have more radio stations in every market ‑‑ for instance, we travel a lot in the U.S. with our acts and I live in Toronto and Toronto has far less radio than say Boston and I think Boston is one‑quarter of the size.

6468             So where you have more radio stations you will have more choice, because finally everybody will not want to gravitate towards the middle.  What we have now is a situation where, frankly, everybody just gravitates towards the middle because that is where the money is.  And you are quite right, I agree with you, that the advertisers have told the owners that that is where the majority of the money is.

6469             But I don't think that that is the reason that we are all here, including the Commission.  I mean, I don't think that we are here to continue the fact that this is the most commercial part of the broadcast system so everybody should be encouraged to be there.  And one way to encourage more choice is to have more stations, because finally everybody will go well we can't all play the same records.

6470             COMMISSIONER ARPIN:  I am sure that you followed the press over the last week or so regarding the Caribbean radio stations in Toronto whom the Commission granted a licence who were unable to find spectrum.  So how do you think we could fix the problem of spectrum allocation?

6471             MR. McKIE:  Well, that is why we are music production and not in engineering, because we don't know the answer to that question.

‑‑‑ Laughter / Rires

6472             MR. McKIE:  I don't know that you can.  And if you can't, I think you have to regulate current players to make, as part of their commitment to their CanCon, a component that includes new acts.  It doesn't mean young acts, just new acts, people who haven't charted, people who haven't sold 100,000 copies.  I imagine that this same kind of debate ensued when people first discussed CanCon in general, you know, how would that affect from a commercial perspective the health of the system?  And then when people talked about increasing CanCon, how would that affect the health of the system?

6473             Now, we are saying, okay we are 30 years into it, we have got a huge catalogue of Canadian content, but we are burning the hell out of Bryan Adams, so let us not do that anymore, let us try to reinvigorate the system.  And remember, we are not only talking about the radio system here, we are talking about the health of the music industry as well, because the two in Canada work hand in glove and they always have.

6474             I mean, Canada wouldn't have a healthy music system if it wasn't for the contributions that came from the broadcast system, not as healthy as it is today anyway, and it is in marginal good health.

6475             That contribution of direct listenership to Canadian artists may not be as important in the future as developing audiences for those artists for live performances and other means of making their living which are likely to keep the business alive.  Let me tell you, the internet is not going to that is for sure nor will royalties from radio play.

6476             COMMISSIONER ARPIN:  I am curious to know, if nobody was playing the back catalogue of the producer what will be the impact of not playing the back catalogue on the producer?

6477             MR. FINKELSTEIN: Well, I think it would be very detrimental.  And I don't think that we are here to advocate that we somehow sacrifice ‑‑

6478             COMMISSIONER ARPIN:  I think what you are looking at is some kind of a mix of back catalogue ‑‑

6479             MR. FINKELSTEIN:  Exactly.

6480             COMMISSIONER ARPIN:  ‑‑ and emerging artist.

6481             MR. FINKELSTEIN:  Exactly.

6482             COMMISSIONER ARPIN:  But, in that regard, I think the Commission did last spring when it issued the new radio policy and, as you mentioned, everybody is diligently working on trying to come up with an acceptable definition to what emerging talent and new acts means so that it will be included into the regulations and policies.

6483             MR. FINKELSTEIN:  Yes.  Well, you know, I think it is important that we have the mix and, again, nobody wants to advocate that you sacrifice your past to have some kind of future.

6484             I understand that the spectrum problem is difficult in Toronto, but there are many other places where we could have more radio.

6485             COMMISSIONER ARPIN:  Most major markets in the country, it is true in Montreal, it is true in Vancouver, it will be coming true in Calgary even ‑‑ because we just granted a few more licences in that market.  So just for you to know, I think Canada has had a different allocation spectrum policy than in the U.S.

6486             That is why in Toronto you have 12 C1 stations covering almost all of southern Ontario.  In Boston you may have one C1 and all the others are of a lower power, so to the extent that ‑‑ yes, it is true, they have more stations but with less coverage.

6487             MR. FINKELSTEIN:  For instance, in the U.S. there is whole formats that barely exist in Canada, things like triple A radio.  And one has to think that, you know, this is a case of the lack of diversity that we have now in the system.

6488             COMMISSIONER ARPIN:  Throughout this process on diversity of voice ‑‑ now, you are coming here saying music is of the utmost importance for you.  We heard today numerous other interveners, mind you they were on the television side, it is the diversity of voices drama and we have heard over the last couple of days that diversity of voice gets measured by news and public affairs.

6489             If the Commission has to prioritize what is the most key issues of diversity of voice, in your view, which shall we put first?

6490             MR. FINKELSTEIN:  Music of course, I mean there can be little or no doubt.

6491             MR. McKIE:  But I want to answer that, because I have been to many of these hearings and I give the people who distribute television productions a fairly rigorous examination with respect to exhibition of those productions, whether you are getting your money's worth and the public is getting their money's worth from those productions which they fund.  Largely, and somebody said today, $2 billion, I suspect that is right.

6492             I imagine the subsidy in music is much less, as you probably know, Mr. Arpin.  It is probably, you know, $50 million, $60 million, whatever.  Are they getting their money's worth?  I mean, I think you can ask the same questions fairly of the radio broadcasters and, you know, we calculated in the CHUM‑CTV hearing that in the stations we examined in the major markets that 3.8 per cent of the total volume of spins in those stations was dedicated to new acts, 3.8 per cent.

6493             Now, if you didn't have a commensurate amount of airtime for the TV product in which we were invested, would you sit here and say, oh what is the problem?  Obviously, we can't leave it up to the distributors to decide, if you don't insist that they exhibit these materials they are, it seems, not going to do it.

6494             So I think, you know, our issue is not that music should be a priority, but that it has been ignored and that the relationship between music production and music exhibition has been ignored and we need to focus attention on that or what will suffer ultimately will be the artists and that will be the great loss for Canada is its artists, its musical artists.  And they are suffering now and they are becoming increasingly marginalized and I think that that is our concern.

6495             COMMISSIONER ARPIN:  In your written submission you are dealing a lot about benefits and contribution towards FACTOR and need to increase the financing of FACTOR.  But specifically regarding tangible benefits, we also heard that over the course of this week that tangible benefits is something of the past and the commission shall consider putting an end to those. What are the views of CIRPA on that matter and what kind of an impact will it have on sound recording and production?

6496             MR. FINKELSTEIN:  Well, you know, I could not and neither could CIRPA agree with that point of view that benefits are a thing of the past.  You know, when I started in the middle 1960s we could count on one hand the number of Canadian artists that the Canadian public actually knew, in other words stars.  And half of those, if there can be half of five, lived outside of Canada.  Today, you know, if you would give us another hour or two we could start listening, all of the artists that all of us know from all of the genres.

6497             So we have had a tremendously successful period from the inception of Canadian content in 1971 I think and then later, with the SRDP program giving us FACTOR, later MAP and MAC et cetera.  So it has been a tremendous success, it remains a tremendous success, it is growing.  Why would any business, if we want to call us all in the business of culture, want it to stop?  I can't understand the logic behind that.

6498             Now, what would be the effect?  I think the effect would be disastrous to many.  If you are asking me would I survive, I probably would, but then I am almost ready to go, as you pointed out we are all getting older.  But I am afraid for some of the younger companies.  But I can't understand how that could even be, frankly, a point that could be even discussed.  Because it is so successful, why would somebody want to say let us stop what has already been successful?  What we ought to do is do more of it.

6499             After all, if we can go from five stars to 200 stars by doing this amount, why not double it and go to 500 stars or 1,000?  It is so great for Canada, it is a wonderful thing.

6500             Mr. McKIE:  Sorry, could I also make the point that unlike film and television, music does have another business model.  I mean, we don't depend on the radio stations to buy our product, we depend on the public to buy our product, attend our concerts and the foreign publics to buy our products and attend our concerts.

6501             Now, what is really ironic today is that our leading companies are having more success overseas than they are in Canada because of other issues related to the sale of music.  The fact that we are not getting on radio doesn't help matters very much, but the benefits we receive allow us to export product much more successfully I think than our colleagues in film for whatever reasons.  I am not even going to go into that.

6502             I think our ROI on that matter is exceptional and we reinvest those revenues into the Canadian product.  It is those supports we get that allow us to make those kinds of foreign missions and develop export markets for Canadian cultural product, reinvest those in the domestic product and repopulate radio in other outlets.

6503             So I think there is a model emerging for Canadian music that the broadcasting system plays an important role in supporting.  And if we don't get through this transitional period from analogue to the new world, whatever that looks like ‑‑ well, we would need those supports in order to get there and I think that that would be our point.

6504             COMMISSIONER ARPIN:  Thank you very much.  Thank you, Mr. Chairman.

6505             MR. McKIE:  Thank you very much.

6506             THE CHAIRPERSON:  Thank you very much, those are our questions for you.

6507             Madam Boulet, I suggest we take a 10‑minute break.

‑‑‑ Recessed at 1526 / Suspension à 1526

‑‑‑ Resumed at 1535 / Reprise à 1535

6508             THE CHAIRPERSON:  Madam Boulet?

6509             THE SECRETARY:  Thank you, Mr. Chairman.

6510             Before we proceed, we have been informed that the Pacific Foundation for Diversity will not be attending the hearing.

6511             I will now call on the Centre for Research‑Action on Race Relations to come forward, as well as the New Canada Institute, and the Catholic Immigration Centre.

6512             We will start with Mr. Andrew Cardozo, for the New Canada Institute.

INTERVENTION

6513             THE CHAIRPERSON:  Good afternoon.  How does it feel to be on the other side?

‑‑‑ Laughter / Rires

6514             MR. CARDOZO:  It is very nice, Mr. Chair, because I get to say my piece and then go home and forget about it.

‑‑‑ Laughter / Rires

6515             THE CHAIRPERSON:  Please, go ahead.

6516             MR. CARDOZO:  Thank you.  Good afternoon, Mr. Chair and Commissioners.  It is a pleasure to be here before you this afternoon, at a hearing that is most timely for now and for the long term.

6517             I want to address two issues:  my recommendation to consider a new class of licence for small and micro broadcasters; and second, the issue of ownership participation of minority groups in the Canadian broadcasting system.

6518             The consolidation that has taken place in recent years, and continues to take place, presents various benefits.  Most notably, it builds strong Canadian broadcast companies, which can then do strong Canadian programming and provide a better return on investments to shareholders, whether privately or publicly held.

6519             But over‑concentration, which is perhaps better referred to as concentration, can have disadvantages for the good functioning of a free and democratic society.

6520             I have thought for some time that preference should be given to small companies and new entrants who present attractive and viable proposals.  The only criticism of such an approach has been that such broadcasters may well get sold or bought up by the big players, thus negating the original objective of bringing new players into the system.

6521             So, after some analysis, I have suggested that there should be perhaps a new class of licence for small and micro broadcasters that cannot be sold, period, and these would be commercial or community‑based.

6522             If the owners cannot make a go of it, or if they want to sell after a while, they would simply return the licence to the Commission, which would then hold a new process to determine the new owner.

6523             The cost of the operation, or the sale price of the operation, would be limited to the capital costs and would not include other what I might call artificial values attributable to non‑capital costs, such as longevity, popularity, profitability or scarcity.

6524             Are there people out there who would be interested in such licences?  My view is, absolutely, yes.

6525             My second proposal is with regard to ownership by racial minorities, and I want to stress that this is not related to the first proposal I just made.  These are two separate issues.

6526             The visible minority population and the racial minority population of the Greater Toronto Area, for example, is 50 percent, and higher in some areas, such as Markham and Richmond Hill.

6527             The ownership of the English and French‑language television networks based in the GTA is zero percent visible minority, yet most of these minorities watch a considerable degree of English‑language broadcasting in that city.

6528             By the year 2017, Canada's 150th anniversary, which is just a decade away, it is projected that the visible minority population will top 20, perhaps 23 percent across Canada.  I would venture to guess that if present trends continue, the racial minority ownership in mainstream television will remain zero.

6529             I would say to you, simply, that this is not good for harmony in society.  Even some of the ethnic services in Canada are not minority owned any longer, and the increase in minority ownership that has taken place is happening at what I might call the margins in the Category 2 field.  There, again, they are at the mercy of distributors, which are totally not minority owned, and which are the gatekeepers.

6530             The growth of third language foreign services also means that minorities, especially new arrivals, would gravitate toward the non‑Canadian services.  I am always astounded that some ‑‑ not all, but some of the mainstream broadcasters don't seem to realize or be concerned about the loss of viewers in that area.

6531             We need a broadcasting system, I would suggest, that pulls us together, that is the electronic marketplace of our society, where Canadians come together and share the same experiences.

6532             But it is not good enough that minorities are always the outsiders looking in, left to be entertained in the way that the majority of society feels would be good enough for them.

6533             Even where mainstream services portray diversity, and do a good job of doing so, they are still the gatekeepers who decide which stories get covered, by who, and in what way.

6534             The Commission can address this deficit by asking for proposals that address diversity themes in the official languages.  You can also indicate that you will give preference to licensing proposals that have significant ownership by racial minorities, as this does further the objectives of section 3.1(d)(iii) of the Broadcasting Act.

6535             Lastly, may I just make a suggestion with regard to hearings; that is, to hear people by telephone or conference call, and to inform people of such ahead of time.

6536             I believe that you would hear from more than perhaps what I would call the "same olds/same olds" like myself at hearings if you were to allow people to intervene via telephone or conference call.

6537             Thank you very much, and I welcome your questions.

6538             THE CHAIRPERSON:  Thank you very much.

6539             Madam Boulet, do we question now?

6540             THE SECRETARY:  I would suggest that, yes.  I understand that the other intervenors are not in the room.

6541             THE CHAIRPERSON:  Mr. Cardozo, what is the link between minority ownership and minority broadcasting?

6542             We have broadcasters, such as OMNI, who produce in ‑‑ I don't know how many various languages.  Obviously, you feel that they do not address the needs of the minority groups.  Why is that?

6543             I would have thought that the whole production and the management of those stations would be done by the various minority groups that they target, and it would be done in such a way as to appeal to them to meet their needs.

6544             You obviously feel that that is not enough, that we need minority ownership.

6545             What is the link here that I am missing?

6546             MR. CARDOZO:  It is a matter of, as I mentioned, a sense of who gets to tell the story, and who gets to decide who gets to tell the story.

6547             Whether broadcasters that have strong views get to be on the air or not is still ‑‑

6548             What you have in a multilingual service that is not owned by the people who are on the air is that the owners get to decide who gets on the air.

6549             Maybe I could ask you to look at it a different way.

6550             Imagine if we had our bilingual services in English and French ‑‑ imagine that they were all owned by anglophones, and they were really good broadcasters, and really good managers, and brought in good francophone producers and good francophone news producers.  Would we find that acceptable?  I think we would not, and we should not.

6551             THE CHAIRPERSON:  I would have thought that the question was the product.

6552             Let's take Tamil broadcasts on OMNI.  Presumably, Mr. Rogers doesn't speak Tamil, so the whole of Tamil broadcasting is decided by a Tamil speaker hired by Mr. Broadcaster, and the whole staff is Tamil, and either they produce it in a way that appeals to the Tamil minority in Toronto or it doesn't.

6553             The fact that it is owned by Mr. Rogers, I would have thought, makes very little difference.  The question is:  Do I get on the broadcast what I want?  Do I see the faces that I can identify with?  Do they express views and opinions that relate to me and that help me?

6554             MR. CARDOZO:  I guess that you and I would have to differ on that.  The point I am making is, it is still the owner, whether it is Mr. Rogers or anybody else, who is deciding which Tamil broadcaster gets to tell the story and which doesn't.

6555             THE CHAIRPERSON:  All right.  We are talking as much, I gather, about content as we are about perception.  I understand the perception issue clearly.  There is no question about it.  But I would have thought that the broadcasting decisions would have to be made, in my example, with the people who speak Tamil, and who come from the Tamil community.

6556             Otherwise, I don't know on what basis you would make the decision.

6557             MR. CARDOZO:  I will give you another example ‑‑ and I am careful not to personalize it, and I am not in a position to give you the names of people, but there have been cases in ethnic broadcasting over the years, in various cases, where, for example, a producer may get to a certain level of expertise and may decide at one point that they might want to have a Category 2 station of their own.

6558             If they do that, they become persona non grata in the station from where they came, and if they don't, then, get a Category 2 licence, which is owned by the same people who own OMNI.1, it makes it a little difficult sometimes for them to be able to stand up and be strong.

6559             THE CHAIRPERSON:  Okay.  That situation I understand.

6560             Stuart, do you have any questions?

`                COMMISSIONER LANGFORD:  Thank you, Mr. Chairman.

6561             Welcome back.

6562             I have some concerns, as well.  I understand where you are coming from, obviously, and I have huge sympathy for what you are trying to achieve, but I have some problems with both of your recommendations.

6563             With regard to the one you have just been speaking about with the Chair, which would be giving preference, to use your words, to groups that have significant minority ownership, and making that ‑‑ as you say in Recommendation 1 in your written submission, "that racial diversity of potential owners be taken into consideration when awarding licences."

6564             Have you run that by a lawyer, by any chance?

6565             Does your institute run to having legal advice?

6566             MR. CARDOZO:  No, I haven't.  I don't think that would be ‑‑ you might try that with your lawyers, too.  My sense is that it wouldn't be against the law.

6567             I think one has to think about the situation that currently exists, and will likely continue, and then you have to say:  If you want to change it, what means are there that you can.

6568             So you test out various ideas, and this is an idea that I am putting forward.

`                COMMISSIONER LANGFORD:  I think you would have significant Charter of Rights problems.

6569             If we were to make that ‑‑ "we" as a government body ‑‑ and we are certainly bound by the Charter provisions ‑‑ if we were to make race one of the determining factors on whether you obtained a licence, I think we would find ourselves in violation of the Charter.

6570             MR. CARDOZO:  I think you wouldn't, with respect.

6571             Section 15.1 of the Charter of Rights says that the government has to operate in a way that does not discriminate against people based on race, national or ethnic origin, colour or religion.

`                COMMISSIONER LANGFORD:  Exactly.

6572             MR. CARDOZO:  And section 15.2 specifically says that it can take corrective measures or affirmative action measures to correct disparities where they are.

6573             It was on that basis that the federal government adopted the Employment Equity Act, which has, as one of the four designated groups, visible minorities.

6574             So there is the precedent of that, and I would suggest that section 15.2 of the Charter clearly gives bodies the authority to do what I have suggested.

`                COMMISSIONER LANGFORD:  Good luck with that.  I think that it might give Parliament the authority to make corrective legislative changes, but, by the time it trickles down to delegates such as us, who are administering legislation given to us by Parliament, and undertaking a parliamentary mandate, I don't think we would have anything near the authority to make that sort of basis for awarding licences.

6575             We can disagree on it, but I see that as a very, very large problem area.  Obviously, neither one of us is going to solve that problem today, but I think it is something that you might want to look at.

6576             As I say, I understand what you are trying to do, and that may be a worthy object, but I am very uneasy with that as a method of doing it.

6577             With regard to your second one, the sort of DV class of licence, as you call it ‑‑ Diversity of Voices class of licence ‑‑ there is something second rate about it that bothers me.  I can't quite get my head around it, but, essentially, it is a second class licence.

6578             It seems to me that what you are saying is ‑‑ to some minority group:  You can have a licence, but because you are part of a minority, you can't turn that licence into your pension.  You can't make your life's work pay off for you.  Your sweat equity is of no value.

6579             But if your name happens to be Ted Rogers, who goes for a commercial licence, or Jim Shaw, or somebody else, you are okay.  You get the better kind of licence.

6580             I think we would have a hard time selling that concept to people.  I think that people would rightfully say:  No.  We are ready.  We came to this country so many years ago.  We are ready to go.  We have established our businesses.  We have made some money, and now we want to invest in broadcasting, and we want to invest in the same level of licence as everyone else.

6581             I just don't believe that, outside of perhaps some sort of community associations or something that owned it in some cooperative way ‑‑ I don't believe that people would think that was fair.

6582             MR. CARDOZO:  Thank you, Commissioner.

6583             Just to finish up on the first point that we talked about, I would say to you that section 15.2 of the Charter, combined with section 3.1(d)(iii) of the Broadcasting Act, in my view ‑‑ a non‑legal person as I am ‑‑ gives you some view to start thinking in that general direction.

6584             On the second point, I agree with you, if the DV class were to be for minorities.

6585             I want to highlight again ‑‑ and perhaps I wasn't clear on that.  These two recommendations are separate recommendations.

6586             In terms of the DV class, it is, yes, certainly a second class of licence, and a second class type of licence, but I believe that there are people of all backgrounds in the country who would be willing to play on those terms.

6587             It could be commercial or it could be non‑commercial, a community‑oriented licence, but one that they wouldn't be able to sell at a great price.

6588             The point I am trying to get at ‑‑ and I recognize that this isn't a perfect suggestion, but what I am trying to get at is, how can we bring into the system ‑‑ we in society ‑‑ to have a diverse set of owners in our broadcasting system in the country, so that it all doesn't end up in the hands of a few people?

6589             I have no problems with big companies becoming bigger, but how do you ensure that there is some diversity in the system?

6590             What I am trying to think of is a class of licence that would ensure that at all times, no matter how much consolidation you have taking place, there would still be smaller players who would remain small.

`                COMMISSIONER LANGFORD:  Though I know you don't find it acceptable by what you said here today, I don't see the problem, personally, if that is what you are trying to achieve, in new entrants starting small ‑‑ and I mean new entrants of any type ‑‑ with a Category 2.

6591             We had a number of Category 2 representatives here yesterday who spoke about some of their frustrations, but also some of their successes.

6592             Race didn't seem to be an issue to any of them, or gender.  Carriage and access was more of an issue to most of them, and just trying to make a business case.

6593             We have low‑power radio.  We have low‑power television.  We have community radio.  We have campus radio.  That is a good place to start, if you are a student.

6594             There seem to be entry level places.

6595             We have a long history of people starting small groups, and either growing them or selling them and getting off, sometimes, into some other type of broadcasting.  The Rawlco Group, for example, had interests in Toronto and other areas.  They sold them off, and then, for goodness sake, started again.  They are getting back into it again out west.

6596             There are people starting at a small level.

6597             Certainly, I am not trying to establish what we are doing now as the perfect answer, but it seems to me that there are other answers that would, at least, give people the opportunity to realize the sweat equity they are putting into a venture; whereas this one kind of deprives them of that.

6598             MR. CARDOZO:  It does, but what it does, I would suggest to you ‑‑

6599             The problem, as it has been put to me, suggests that what the Commission should do is really try hard to licence small players, but they can all end up in the hands of big players anyhow, and then you don't have any small players left, so you end up with less diversity.

6600             What I am suggesting is that, in the entire system, there be one class of licence that would be for small players, who would stay small, and perhaps could be sold to other smaller players, but you would establish what a small player would be, such as under four licences or something like that.

6601             But, again, I want to stress that it doesn't have anything to do with race or gender or anything like that.

`                COMMISSIONER LANGFORD:  Thank you very much.  Those are my questions.  I think my colleagues may have some.

6602             COMMISSIONER CUGINI:  Thank you, Mr. Chairman.

6603             Hello, Mr. Cardozo.

6604             I just want to go back to the conversation that the Chair started with you:  He who owns gets to decide what gets on the air.

6605             Could you take me through that concept a little bit more?

6606             If someone wants to serve ten different language groups, does that mean there should be ten owners?

6607             Is that your proposal?

6608             MR. CARDOZO:  No.

6609             COMMISSIONER CUGINI:  Didn't Dania Nutzi(ph) decide what got on CFMT when he owned it?  And doesn't Frank Alvarez decide what gets on his radio station now?

6610             So how is it different?

6611             MR. CARDOZO:  I think the difference is that, with Frank Alvarez, you begin to have a diversity of ethnicity in ownership in the broadcasting system.

6612             I am saying that, overall, it is my view ‑‑ and I think it is one of those things where ‑‑ I don't want to give up on this argument, but you either feel it ‑‑ you either believe it or you don't think it is important.  And it is perfectly legitimate both ways.

6613             I happen to believe that it is really important that the broadcasting system, because of the power it has in our society, be owned by a diversity of peoples.

6614             Just as I said earlier, if the entire broadcasting system was owned, for example, only by anglophones, who did a really good job in the French‑language system, or the other way around, would we have a problem with that?  I think that people would.

6615             COMMISSIONER CUGINI:  I think we can all believe in and share the goal.  Where I have a problem with it is saying that, just because Frank Alvarez is the owner, it is a better or worse service than the one owned by Ted Rogers.

6616             That's where I have difficulty in fully embracing the concept.

6617             MR. CARDOZO:  Do you mind if I ask you, would you have a problem if the entire broadcasting system was owned by one language group in the country?

6618             COMMISSIONER CUGINI:  As a regulator now, of course, I would hope that we could continue to foster a broadcasting industry that embraces everyone in the country.

6619             MR. CARDOZO:  Yes.  That is what I am getting at.

6620             I don't have a problem that Sun TV is owned by a francophone.  That isn't a problem.  But if one linguistic group owned the entire broadcasting system, or if one linguistic group, by a series of historical events, which is the jurisprudence of this Commission, ended up not having any ownership in the broadcasting system, I think we would be concerned about that.

6621             COMMISSIONER CUGINI:  I want to follow up on the discussion that Commissioner Langford had with you, perhaps not on such a legal level.

6622             What would qualify as a racial minority?

6623             For example, my nephew's last name happens to be Cugini, but his mother's name is Susan Campbell.  Does he qualify to be awarded one of these special classes of licences?

6624             MR. CARDOZO:  I think, as a federal agency, you would be well within the rules to apply the same approach that the Employment Equity Act does in terms of the definitions of racial minority.

6625             If you want to go that route, I think that Parliament has already outlined how that could be done.

6626             COMMISSIONER CUGINI:  Thank you.

6627             Thank you, Mr. Chairman.

6628             THE CHAIRPERSON:  Thank you very much, Mr. Cardozo.  I think those are our questions.

6629             MR. CARDOZO:  Thank you, Mr. Chair.

6630             THE CHAIRPERSON:  Madam Boulet, who is next?

6631             THE SECRETARY:  Thank you, Mr. Chairman.

6632             This concludes the agenda for today, so I would suggest that we adjourn and come back tomorrow morning at 8:30.

6633             THE CHAIRPERSON:  Thank you.

‑‑‑ Whereupon the hearing adjourned at 1600,

    to resume on Friday, September 21, 2007 at 0830 /

    L'audience est ajournée à 1600, pour reprendre

    le vendredi 21 septembre 2007 à 0830

 

                      REPORTERS

 

 

______________________       ______________________

Johanne Morin                   Monique Mahoney

 

 

______________________       ______________________

Sue Villeneuve                   Madeleine Matte

 

 

______________________       ______________________

Jennifer Cheslock              Beverley Dillabough