ARCHIVÉ - Transcription, Audience du 3 février 2011

Volume 3, 3 février 2011

TRANSCRIPTION DES AUDIENCES DEVANT LE CONSEIL DE LA RADIODIFFUSION ET DES TÉLÉCOMMUNICATIONS CANADIENNES

SUJET:

Afin d'étudier la demande par BCE Inc., au nom de CTV globemedia Inc. et de ses filiales de radiodiffusion autorisées, décrite dans l'Avis de consultation de radiodiffusion CRTC 2010-926, 2010-926-1, 2010-926-2 et 2010-926-3

TENUE À:

Salon Outaouais

Centre des conférences

140, Promenade du Portage

Gatineau (Québec)

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.

Conseil de la radiodiffusion et des télécommunications canadiennes

Transcription

Afin d'étudier les demandes décrites dans l'Avis de consultation de radiodiffusion CRTC 2010-138

DEVANT:

Konrad von Finckenstein   Président

Leonard Katz   Conseiller

Elizabeth Duncan   Conseillère

Rita Cugini   Conseillère

Louise Poirier   Conseillère

Stephen Simpson   Conseiller

AUSSI PRÉSENTS:

Lynda Roy   Secretaire

Stephen Millington   Conseiller juridique

Joshua Dougherty

Rachel Marleau   Coordonnatrice de l'audience et gestionnaire, Analyse corporative et propriété

TENUE À:

Salon Outaouais

Centre des conférences

140, Promenade du Portage

Gatineau (Québec)

le 3 février 2011

- iv -

   PAGE / PARA

PHASE II

PRÉSENTATION PAR:

Quebecor Media Inc.    489 / 2823

Rogers Communications Inc.    526 / 2997

Independent Broadcasters Group    551 / 3155

Writers Guild of Canada    567 / 3235

Directors Guild of Canada    577 / 3286

Alliance of Canadian Cinema, Television and Radio Artists (ACTRA)    585 / 3324

On Screen Manitoba    605 / 3429

Alberta Motion Picture Industries Association (AMPIA)    612 / 3457

Communications, Energy and Paperworkers Union of Canada (CEP)    626 / 3541

Dr. Gregory Taylor    640 / 3625

Steven James May    656 / 3701

Canadian Broadcast Museum Foundation    665 / 3751

Remarques de Fermeture - Commission   677 / 3827

- v -

ENGAGEMENTS

   PAGE / PARA

Engagement   623 / 3518

Engagement   625 / 3527

   Gatineau (Québec)

--- L'audience reprend le jeudi 3 février 2011 à 08 h 32

2817   LE PRÉSIDENT : Bonjour.

2818   Commençons, Madame la Secrétaire.

2819   LA SECRÉTAIRE : Merci, Monsieur le Président.

2820   Bienvenue à tous.

2821   Alors, nous débuterons ce matin avec la présentation de Quebecor Media Inc. Monsieur Pierre Karl Péladeau comparaît pour Quebecor Media Inc.

2822   Monsieur Péladeau, s'il vous plaît, présentez votre panel aux fins du dossier et vous disposerez ensuite de 10 minutes pour faire votre présentation orale.

PRÉSENTATION

2823   M. PÉLADEAU : Merci beaucoup.

2824   Monsieur le Président, Madame et Messieurs et Mesdames les conseillers, je m'appelle Pierre Karl Péladeau, je suis le chef de la direction de Quebecor et de Quebecor Media.

2825   Alors, permettez-moi, comme m'a invité Madame la Secrétaire, de vous présenter mes collègues qui m'accompagnent ce matin. Il s'agit :

2826   - à ma droite, de maître Jean Serge Sasseville, vice-président, Affaires corporatives et institutionnelles de Quebecor Media; et

2827   - de madame Peggy Tabet, à ma droite, qui est directrice, Affaires réglementaires, Radiodiffusion de Quebecor Media.

2828   Je remercie le Conseil de nous offrir l'opportunité de nous faire entendre au sujet de cette transaction qui, nous le savons tous, aura un impact majeur sur l'industrie de la radiodiffusion au Canada.

2829   En acquérant CTVglobemedia, BCE s'inscrit, ou plutôt se réinscrit, dans la mouvance aujourd'hui inévitable de l'intégration verticale par laquelle les producteurs et diffuseurs de contenu s'unissent avec ceux qui assurent sa distribution.

2830   Chez Quebecor Media, c'est là une situation que nous connaissons très bien, pareille union étant à l'origine de la création de notre entreprise, il y a maintenant plus de 10 ans, lorsque nous avons acquis Vidéotron et TVA.

2831   La transaction sous étude s'inscrit dans cette logique, comme celles récentes de NBC Universal avec Comcast ainsi qu'au Canada entre Shaw et Canwest.

2832   Ce modèle, nous l'avons vécu et éprouvé, de telle sorte que nous pouvons nous considérer aujourd'hui reconnus comme les leaders en matière de convergence au Canada.

2833   Si l'intégration verticale peut certainement être une bonne chose, tant pour les diffuseurs de contenu que pour les consommateurs et les citoyens, il n'en demeure pas moins que chaque transaction a ses particularités et doit donc être étudiée dans ses moindres détails avant qu'on puisse conclure de son impact réel sur le paysage de la radiodiffusion au Canada.

2834   Comme nous aurons l'occasion de discuter plus amplement des tenants et aboutissants de l'intégration verticale en juin prochain lorsque le CRTC tiendra des audiences à ce sujet, nos commentaires donc se limiteront aujourd'hui à deux aspects précis de la transaction sous étude, soit les avantages tangibles proposés par BCE et le partage des droits de diffusion d'événements sportifs.

2835   Les avantages tangibles proposés par BCE se doivent d'être à la hauteur de l'impact et de l'importance de cette transaction sur le paysage canadien de la radiodiffusion.

2836   Or, il convient de rappeler que CTVglobemedia est un véritable géant de cette industrie, avec des actifs évalués à une somme alléguée de l'ordre de 2,9 milliards de dollars, qui comprennent, entre autres, 28 stations de télévision conventionnelle, 29 chaînes spécialisées et 34 stations de radio.

2837   Il s'agit donc d'une transaction complexe à laquelle on doit accorder une attention minutieuse pour en comprendre la véritable ampleur.

2838   Malheureusement, la première problématique à ce sujet est le manque d'accès aux données et aux hypothèses qui ont permis à BCE de déterminer la répartition et la valeur des actifs de radiodiffusion de CTVglobemedia aux fins du calcul des avantages tangibles exigibles.

2839   Afin de palier à cette difficulté, nous demandons au Conseil de commander une étude indépendante à des experts qualifiés afin de clarifier les méthodologies utilisées et de réviser, au besoin, la répartition des actifs de radiodiffusion, tel qu'il l'a fait lors de l'acquisition de TVA par Quebecor Media en 2001.

2840   Une telle initiative nous semble non seulement appropriée, mais essentielle afin d'assurer que cette transaction soit équitablement traitée par rapport aux autres changements de propriétés survenus dans ce secteur.

2841   La deuxième problématique découle du fait que BCE estime que les avantages tangibles versés lors de son acquisition des actifs de CTVglobemedia en 2000 devraient l'exempter d'en verser cette fois-ci.

2842   Or, BCE s'est départie de ces actifs en 2005, engendrant par le fait même des profits. Il s'agit donc bien de deux acquisitions distinctes, et l'absence de lien entre les deux opérations nous semble plus qu'évidente. Toute prétention contraire de la part de BCE n'est qu'une tentative de se soustraire à ses obligations réglementaires.

2843   De plus, Quebecor Media est d'avis que l'acceptation d'une telle exemption par le Conseil aurait pour effet de créer un précédent dangereux qui pourrait inciter d'autres radiodiffuseurs à racheter des entités dont ils avaient décidé de se départir dans le simple but de profiter d'une dérogation à la politique d'avantages tangibles. Ce faisant, c'est donc toute cette politique qui serait mise en péril.

2844   Par conséquent, le Conseil devrait, sans équivoque, refuser la proposition d'allègement des avantages tangibles de BCE et continuer d'appliquer ses politiques en la matière.

2845   Dans l'éventualité où le Conseil rejette ses arguments et exige le paiement d'avantages tangibles, ce que nous souhaitons ardemment, BCE prétend être en droit de bénéficier d'une exemption lui permettant de verser des avantages tangibles représentant 5 pour cent de la valeur des actifs de télévision conventionnelle de CTVglobemedia, plutôt que les 10 pour cent habituellement exigés par le Conseil.

2846   BCE tente de justifier le caractère exceptionnel de cette réduction en rappelant qu'une telle approche a été adoptée par le Conseil lors de l'acquisition de Canwest par Shaw.

2847   Or, la spécificité de cette acquisition ne trouve nullement écho dans la présente. L'exception accordée par le Conseil tenait compte du fait qu'il s'agissait d'une opération de sauvetage de certains actifs menacés, protégés par la Loi sur les arrangements avec les créanciers des compagnies.

2848   Le simple prétexte évoqué par BCE qu'un secteur ne semble pas suffisamment rentable au moment de son acquisition ne justifie aucunement pour autant une réduction de la moitié des avantages tangibles exigibles.

2849   Nous sommes donc d'avis que les 10 pour cent applicables aux actifs de télévision devraient être imputés de manière identique aux actifs relatifs à la télévision conventionnelle et aux services spécialisés, sans que BCE puisse bénéficier d'une réduction de ces actifs.

2850   Cela nous apparaît d'autant plus justifié que CTV serait éligible à recevoir une redevance de plusieurs dizaines de millions de dollars pour la valeur de son signal, advenant une décision favorable de la Cour d'appel fédérale sur cette question.

2851   La quatrième et dernière problématique en matière d'avantages tangibles concerne l'aberrante tentative par BCE de financer des dépenses d'opérations courantes par l'entremise des avantages tangibles découlant de cette transaction.

2852   Nous faisons ici référence à la volonté de BCE d'inclure à titre d'avantages tangibles la distribution des stations de télévision locales éligibles au FAPL, la production et la conversion de contenu en format HD, et le maintien de la programmation locale dans les marchés de télévision locaux.

2853   Le plus aberrant et le plus choquant est cette demande de détourner un montant de 84 millions des bénéfices tangibles à l'amélioration du réseau de distribution de Bell Télé pour le remplacement des terminaux MPEG-2 par des terminaux MPEG-4. Si vous acceptiez cette demande, vous procureriez à Bell Télé un avantage concurrentiel contre ses concurrents puisque ceux-ci sont dans l'obligation commerciale d'en déployer auprès de leurs clients.

2854   Donc, de telles propositions contreviennent à l'esprit de la politique du Conseil en matière d'avantages tangibles, car ces actions doivent en tout état de cause être effectuées, que la transaction soit approuvée ou non, alors que les avantages tangibles sont supposés représenter des initiatives qui vont au-delà des obligations actuelles de la titulaire.

2855   D'autre part, il nous semble important d'attirer l'attention du Conseil sur les intentions potentielles de BCE concernant le partage des droits de diffusion des événements sportifs prisés par les téléspectateurs québécois.

2856   Je souhaite d'ailleurs, à cet effet, citer la réponse de George Cope, le président et chef de la direction de BCE, à la question suivante lors de la conférence téléphonique du 10 septembre 2010 suivant l'annonce de l'acquisition de CTV par BCE.

2857   Voici la question posée par un analyste :

"You will have control of 100% of TSN and yet Videotron has the same feed than Bell Mobility. What's the advantage you get with this transaction over Videotron in terms of owning this asset? Is it a cost issue? What can you do that they cannot do? Do you have to offer it to your competitors?"

2858   Et la réponse fut :

"We don't have to offer it to our competitors, no. We don't have to offer anything to our competitors, in the mobile or the sports genre, in the news genre or on any of the technologies. It's a business decision that we have to make to optimize the value of Bell. It doesn't mean that it is in the greatest interest of CTV to have it everywhere, and Bell. It also means that we will make these decisions as we go forward. It's important for people to understand that mobile is deregulated and we have access to the best media assets in Canada, and specifically our ownership of Montreal Canadiens. Hopefully what you do now is to go forward thinking of these developments. Our ownership now in RDS is thinking of those developments and the world will probably over time unfold recognizing the leverage that we've got through that ownership today."

2859   Alors, le caractère alarmant de ces propos s'amplifie lorsqu'on prend conscience que BCE détient des intérêts dans un club sportif professionnel, est le premier opérateur de télécommunications au Canada, et deviendra propriétaire -- évidemment, sous réserve de l'approbation du Conseil -- du premier radiodiffuseur canadien, CTVglobemedia.

2860   Malgré le fait que monsieur Cope semble avoir nuancé sa position devant vous lors de sa comparution, il n'en demeure pas moins que nos inquiétudes sont tout à fait légitimes.

2861   Nous ne contestons pas la réciprocité prônée par Bell dans la mesure où celle-ci est appliquée de manière juste et équitable, sans abuser de sa position dominante à titre de premier radiodiffuseur canadien.

2862   Notre crainte trouve d'ailleurs écho dans la déclaration suivante attribuée à monsieur Cope par le quotidien La Presse dans son édition du 11 septembre 2010, et je cite :

" Avec cette propriété (celle des Canadiens de Montréal), et celle prochaine de la chaîne RDS, nous obtiendrons un levier de développement (au Québec) que nous entendons faire fructifier le plus possible à notre avantage ".

2863   Cela soulève en effet de graves inquiétudes concernant les éventuelles préférences indues que BCE pourrait s'octroyer à la suite de cette acquisition, en avantageant ses propres services au détriment de ceux des compétiteurs.

2864   Rappelons que Bell refuse toujours de distribuer la chaîne pour enfants Yoopa, un service spécialisé de langue française, produite et distribuée par TVA.

2865   Considérant la part de marché significative de Bell dans le marché francophone, c'est là un obstacle majeur à la viabilité de toute nouvelle chaîne.

2866   Par ailleurs, les pratiques de préférence indue et d'exclusivité sur le contenu ont très récemment fait l'objet d'une décision du Conseil, à la suite de plaintes déposées par Bell et TELUS au sujet du contenu de TVA sur la VSD.

2867   Ainsi, sous réserve de nos droits d'appel, il nous apparaît important de souligner que le raisonnement à l'origine de la prise de décision du Conseil concernant la VSD doit être appliqué de manière cohérente et conséquente dans le contexte de la présente transaction, notamment en ce qui concerne les exclusivités sur les droits de diffusion de certains contenus.

2868   Cette décision, ainsi que les arguments qu'elle sous-tend, devraient être applicables à BCE et à CTV, au même titre que les autres joueurs de l'industrie.

2869   Ainsi, lorsqu'il est question de droits de diffusion d'événements sportifs, aucun autre sport que le hockey ne suscite pour l'instant un attachement aussi intense et inconditionnel de la part des Québécois. Il s'agit d'un contenu unique qui ne peut être reproduit et qui demeure l'élément fondamental et l'assise obligée de toute chaîne de sports.

2870   Cela est bien différent des dramatiques, des émissions de jeux et de concours ou des téléréalités qui, même si elles sont populaires, se comptent par centaines dans le paysage télévisuel canadien et peuvent être modifiées ou créées de toutes pièces par des ressources ici et ailleurs.

2871   Pendant ce temps, à Toronto, une ville qui compte également des équipes de baseball et de basket-ball professionnelles, quatre titulaires de licence (CBC, TSN, SportsNet et Maple Leafs Network) se partagent la diffusion des matchs des Maple Leafs.

2872   Par conséquent, en préservant le statu quo, BCE détiendra un monopole sur les droits de diffusion d'événements sportifs dans le marché francophone qui n'existe nulle part ailleurs au Canada.

2873   Il apparaît évident que le fait qu'un seul joueur puisse profiter de façon absolue de la diffusion d'événements sportifs nationaux au détriment des autres joueurs ouvrant dans le même domaine va à l'encontre du développement économique des entreprises canadiennes et, par le fait même, des objectifs de la politique canadienne de radiodiffusion.

2874   Alors, c'est pourquoi nous proposons au Conseil d'adopter, sans porter préjudice aux ayants droit, une approche selon laquelle les droits de diffusion des événements sportifs seraient répartis en lots de diffusion que pourraient acquérir les diffuseurs intéressés sur le marché, évitant ainsi l'acquisition de droits exclusifs. Cette solution présente l'avantage de préserver l'équité et la saine concurrence, deux valeurs fondamentales du système canadien de radiodiffusion.

2875   Rappelons que Quebecor Media a toujours prôné et continue de prôner la libre concurrence et la déréglementation là où les forces du marché le permettent. Or, les problématiques liées aux droits de diffusion des événements sportifs nationaux entravent la saine concurrence et la viabilité des services de sports émergents. Ces problématiques, aggravées par la présente transaction, justifient notre proposition au Conseil d'intervenir.

2876   Alors, en conclusion, Messieurs, Dames les Conseilleurs, Monsieur le Président, Quebecor est d'avis que le Conseil devrait refuser l'allègement des avantages tangibles de BCE et continuer d'appliquer ses politiques en la matière.

2877   Nous estimons que les avantages tangibles proposés par BCE sont irrecevables et que le Conseil devrait intervenir pour s'assurer que les avantages proposés s'inscrivent absolument au-delà des obligations actuelles de la titulaire et ne puissent en aucun cas servir à financer des coûts d'opération.

2878   Le Conseil doit prendre l'ensemble des mesures et précautions qu'il juge utiles afin d'éviter toute injustice à l'égard de joueurs ayant participé à des transferts de propriété dans le passé ou souhaitant le faire à l'avenir.

2879   Enfin, Quebecor Media est d'avis que le Conseil devrait se pencher sur le partage des droits de diffusion des événements sportifs, afin d'éviter qu'une seule entité puisse profiter d'un monopole injustifiable au vu des valeurs du système canadien de radiodiffusion.

2880   La transparence et l'équité des obligations et des opportunités sont la clé de la concurrence en radiodiffusion et c'est sur ces valeurs que le Conseil devrait, à notre avis, continuer de miser dans l'évaluation de cette transaction.

2881   Je vous remercie de votre attention, et nous sommes, évidemment, prêts à répondre à vos questions.

2882   LE PRÉSIDENT : Merci pour votre présentation.

2883   A la page 6 de votre présentation d'aujourd'hui, au premier paragraphe, vous faites référence à la décision que nous avons faite récemment vis-à-vis TVA, TELUS, et caetera, et vous dites :

" ...il nous apparaît important de souligner que le raisonnement à l'origine de la prise de décision du Conseil concernant la VSD doit être appliqué de manière cohérente et conséquente dans le contexte de la présente transaction, notamment en ce qui concerne les exclusivités sur les droits de diffusion de certains contenus. "

2884   Avez-vous des doutes que ça va être appliqué?

2885   Les règles sont bien claires. La préférence indue s'applique ici au moyen des sans-fil, au moyen des mobiles, et caetera. L'onus renversé s'applique aussi. Les mêmes règles que nous avons appliquées dans ce cas contre TVA s'appliquent à Bell et à RDS et à CTV. Je ne comprends pas votre remarque ici.

2886   M. PÉLADEAU : Monsieur le Président, je pense que, en ce qui nous concerne, il était important de préciser.

2887   Sachant, par ailleurs, qu'il y a des notions en cette matière qui ne sont pas toujours simples à définir, nous avons parlé de préférence, nous avons parlé de préférence indue, nous avons parlé d'exclusivité.

2888   Nous savons que, éventuellement, il y aura des questions relatives aux conditions de licence à l'égard de certaines licences émises par le Conseil. Par ailleurs, l'exclusivité, le cas échéant, peut demeurer également au sein de chaînes de télévision.

2889   Donc, nous savons depuis de nombreuses années, évidemment, que le paysage audiovisuel... pas simplement celui immédiatement réglementé par le Conseil, c'est-à-dire le conventionnel, mais nous pouvons parler des nouvelles plateformes de distribution, et la gestion et la réglementation, le cas échéant, de ces différentes plateformes n'étant pas toujours simples, et Dieu sait si nous savons aujourd'hui quelles vont être les prochaines plateformes de distribution qui vont naître dans six, dans 12, dans 18 ou dans 24 mois.

2890   Il nous apparaissait essentiel, en ce qui nous concerne, de préciser notre réflexion en essayant de faire en sorte qu'elle soit bien écrite dans notre proposition.

2891   LE PRÉSIDENT : Je comprends votre crainte si on regarde les citations de monsieur Cope que vous avez dans votre présentation. Mais, selon moi, les règles sont très claires. Les règles sont neutres du point de vue technologique et s'appliquent à toutes les plateformes si on parle de contenu, d'exclusivité.

2892   Pour cette raison, nous avons fait ce changement, il y a un an et quelque chose. On va avoir... il semble qu'on va avoir un cas dans les relations entre vous et Bell sur le sujet du hockey, selon ce que je vois ici.

2893   M. PÉLADEAU : Bien, je pense qu'il serait important aussi de considérer l'élargissement, parce que nous avons tenté de préciser. Il s'agit de l'unicité et de l'incapacité de reproduire des contenus qui sont ceux liés aux sports professionnels au Canada.

2894   Il y en a juste une ligue de hockey au Canada. Il y a juste une ligue de football au Canada. Il y a juste une équipe, qui s'appelle les Alouettes... Est-ce que les Roughriders de la Saskatchewan existent encore? Je pense que oui. Ils ont même été à la coupe Grey Cup, les Alouettes.

2895   Donc, ces éléments-là sont bien spécifiques, et d'aucune façon, on ne peut les reproduire. Et, à cet égard, le fait d'en détenir les droits exclusifs nous apparaît problématique pour justement la diversité que souhaite le Conseil en matière de diffusion pour les Canadiens dans les systèmes de radiodiffusion.

2896   LE PRÉSIDENT : Comme vous savez, la FCC dans la décision de NBC-Comcast a réfléchi beaucoup sur ça, et ils ont créé la notion des "non-replicable rights," something that cannot be replicated. C'est exactement... Je crois que c'est l'exemple premier de ce type de droits qu'on ne peut pas répliquer.

2897   Pour cette raison, est-ce qu'il y a besoin de règles spéciales pour ça? Je crois que tout ça va être un thème dans notre discussion en juin sur l'intégration verticale.

2898   M. PÉLADEAU : Je pense également, Monsieur le Président, si vous permettez, dans cette matière, nous pourrions même conclure qu'il s'agit ici vraiment d'un cas exceptionnel de droits détenus exclusivement par un diffuseur.

2899   Parce que vous le soulignez, aux États-Unis, les matchs de la NFL, je pense qu'ils sont la quintessence, je dirais, du sport aux États-Unis. Ils sont distribués entre plusieurs diffuseurs.

2900   Et depuis de nombreuses années déjà aussi, la même chose s'est produite auprès des Européens. Pensons aux Britanniques avec les matchs de soccer, ou ce qu'ils appellent le football. Ils ont également aussi été distribués entre plusieurs diffuseurs, faisant en sorte que chacun des citoyens puisse bénéficier d'alternatives, et je pense que c'est pour le bénéfice autant de la collectivité également que pour le système de radiodiffusion.

2901   LE PRÉSIDENT : Autrement dit, vous êtes contre la proposition de Bell vis-à-vis les MPEG-4, et franchement, je ne comprends pas, parce que si Bell est en train de convertir tous ses appareils de MPEG-2 à MPEG-4, est-ce que ça ne donnera pas un avantage au système de radiodiffusion en entier?

2902   Évidemment, c'est un avantage pour Bell, mais c'est aussi un avantage pour le système entier parce qu'on a maintenant la capacité de diffuser plus de stations, et toutes les stations locales vont être sur les satellites.

2903   M. PÉLADEAU : Vous avez raison de l'indiquer, Monsieur le Président, mais je pense qu'il s'agit de préciser.

2904   De toute façon, tous les distributeurs ont cette obligation -- qui n'est pas nécessairement réglementaire, mais j'ai tenu à le préciser -- de nature commerciale d'actualiser, comme on dit en bon français, d'upgrader nos réseaux afin de faire en sorte, un, d'une part, de pouvoir distribuer le plus de chaînes possibles pour faire face justement à cet environnement concurrentiel.

2905   Il n'y a pas de doute que dans le marché, les distributeurs vantent les mérites de la robustesse, mais aussi et surtout des choix qui sont offerts aux consommateurs, en indiquant qu'ils distribuent 150, 180, 200 chaînes. Ce n'est pas toujours vrai, parce que des fois ils vont distribuer quatre fois la même chaîne à cause des fuseaux horaires. Mais ceci étant, c'est un élément d'avantage concurrentiel.

2906   Alors, tous les distributeurs, Vidéotron le premier, sont assujettis à cette obligation commerciale qui leur est faite de procurer le meilleur réseau de distribution.

2907   Donc, autant pour les chaînes, mais aussi et surtout, de plus en plus... et on peut facilement anticiper dans les prochaines années que la consommation va là aussi augmenter.

2908   Je sais qu'on a un débat en ce qui concerne l'Internet, mais ça va être la même chose en ce qui concerne la télévision, et particulièrement depuis quelques années, avec la distribution des chaînes HD.

2909   Vous avez certainement entendu parler au Consumer Show de Las Vegas cette année de cette nouvelle technologie 3D. On peut penser que le 3D va, elle aussi, s'intégrée à l'intérieur de notre paysage et va demander donc de la capacité additionnelle, et cette capacité additionnelle va résider dans les terminaux MPEG-4, comme vous le savez, qui est une technologie de compression.

2910   Alors, selon nous, le fait de... Si cette transaction CTVglobemedia ne devait pas se produire, je suis personnellement convaincu que Bell, et d'ailleurs, ils ont toujours suivi ou pris le leadership en matière d'implantation de technologie, va devoir déployer des terminaux MPEG-4 pour augmenter la capacité afin de faire en sorte que son produit soit aussi bon, sinon meilleur -- mais en ce qui nous concerne, on pense qu'il sera toujours à la traîne -- mais aussi bon que les cablôdistributeurs.

2911   Alors, il m'apparaît tout à fait inapproprié de faire passer une dépense semblable dans le cadre d'une transaction, et surtout dans le cadre d'un paiement en ce qui concerne les avantages tangibles à la suite d'un transfert de licence, pour une acquisition aussi importante que CTVglobemedia.

2912   LE PRÉSIDENT : Merci.

2913   Louise, tu as des questions?

2914   CONSEILLERE POIRIER : Oui. Bonjour, Messieurs et Madame.

2915   Puisqu'on est dans les avantages tangibles, on va juste poursuivre dans ça, parce que vous avez clairement exprimé votre point de vue concernant le 84 millions.

2916   En supposant que vous étiez Shaw, un compétiteur direct qui possède un satellite, qui a investi 300 millions de dollars pour un nouveau satellite, et qui voit son compétiteur pouvoir profiter d'avantages tangibles pour investir de l'argent dans des infrastructures ou dans de l'équipement comme ça, quelle serait votre réaction en tant qu'homme d'affaires?

2917   M. PÉLADEAU : Écoutez, je serais complètement outré, ce que je suis également, par ailleurs, parce que Bell est également notre concurrent comme distributeur à Vidéotron, une fois de plus, et nous avons investi et nous continuerons à investir des centaines de millions de dollars dans le cours normal de nos opérations pour pouvoir permettre à nos clients de bénéficier de toutes les technologies que, justement, les experts et les scientifiques ont procurées aux citoyens.

2918   Donc, il s'agirait d'un avantage concurrentiel octroyé par le biais d'avantages tangibles, par le biais de l'assujettissement à la réglementation, et tout à fait inapproprié dans les circonstances.

2919   Donc, je le suis autant pour Shaw que je le suis pour l'ensemble des distributeurs au Canada.

2920   CONSEILLERE POIRIER : J'aimerais que vous regardiez le tableau comparatif des avantages tangibles entre Shaw et Bell, surtout pour que vous me donniez votre point de vue sur la nouvelle proposition qui a été faite par Bell, c'est-à-dire la colonne qui est à l'extrême droite du tableau.

2921   Comme vous voyez, il y a eu des changements, et dans votre document, vous étiez contre l'ensemble des propositions faites, sauf une qui a été retirée, c'est-à-dire celle de la distribution par satellite lors de la transition au numérique dans des marchés non obligatoires.

2922   Alors, j'aimerais savoir comment vous réagissez par rapport au 68 millions, s'il y a quelque chose de particulier, qui est pour le "on-screen programming."

2923   Vous avez clairement indiqué votre point de vue par rapport au 84 millions, mais j'aimerais aussi avoir votre point de vue sur les autres, parce que vous étiez contre tous, sauf la radio, pour laquelle vous disiez, oui, ça va pour nous.

2924   M. PÉLADEAU : Avec plaisir, Madame la Conseillère.

2925   Écoutez, effectivement, le premier bloc en ce qui concerne la programmation et le multiplateforme, il nous apparaît tout à fait approprié, et je pense même que c'est la définition des bénéfices tangibles, comme on dit également aussi en bon français, over and above les conditions de licence, que la nature même du bénéfice tangible doit être consacrée à l'amélioration du système de radiodiffusion canadien, et il n'y a pas de meilleur endroit que la programmation pour faire en sorte que ce bénéfice soit partagé à l'ensemble des participants, et particulièrement ceux qui produisent du contenu de nature canadienne.

2926   Donc, un peu à l'image, même je dirais comme à l'image de toutes les transactions en cette matière, et je pense particulièrement à celle qui nous concerne, en 2001, au sujet de Vidéotron et TVA, mais c'est des sommes supplémentaires qui ont été investies en programmation canadienne, et ça m'apparaît là être la mission fondamentale des bénéfices tangibles.

2927   Pour les autres éléments, certains d'entre eux, c'est simple, on ne les a pas du tout compris. Quand on parle de "platform for digital distribution," what does that mean? Il aurait fallu, évidemment, avoir des précisions, mais on croit comprendre que déjà, à l'heure actuelle, cet élément-là a été soustrait.

2928   CONSEILLERE POIRIER : Allons au HD, la conversion au HD.

2929   M. PÉLADEAU : La conversion au HD, ça m'apparaît, également aussi, équivalente à tout le soutien en ce qui concerne la modification ou le changement des terminaux à MPEG-4. C'est une obligation qui est faite de façon commerciale à des distributeurs de procurer un produit qui va être aussi bon ou sinon équivalant à celui de son concurrent.

2930   Dieu sait si le marché canadien a bénéficié de la concurrence, et certainement de la sage décision du Conseil, il y a de ça plusieurs années, d'ouvrir le marché de la distribution du BDU, donc de la distribution de vidéo, à plusieurs joueurs, et ce sont les Canadiens qui en ont bénéficié. Ils ont bénéficié de cette volonté d'améliorer constamment le service et le produit. C'est ce qui s'est produit.

2931   Donc, maintenant, on demanderait d'utiliser, une fois de plus, des bénéfices tangibles pour améliorer ce service-là. Le HD, c'est une obligation. Si vous n'en faites pas, bien, malheureusement, vous allez perdre des clients, et il n'y a pas un distributeur qui veut perdre des clients.

2932   Alors, est-ce qu'on souhaiterait ne pas devoir procurer autant de chaînes HD?

2933   Probablement, parce que ça coûte tellement cher investir pour pouvoir augmenter notre bande passante que si on pouvait le faire sur une période peut-être plus lente, bien, ça nous aiderait.

2934   Mais qu'est-ce qui stimule, c'est justement le fait que ça soit le concurrent ou la concurrence qui implique des conséquences obligatoires à l'égard des autres partenaires dans l'industrie.

2935   Alors, en ce qui concerne le HD et la conversion, ça m'apparaît tout à fait requis dans un environnement concurrentiel, et d'aucune façon nous devrions utiliser les bénéfices tangibles pour financer une dépense d'opération dans le cours normal des affaires d'un distributeur dans un marché concurrentiel.

2936   CONSEILLERE POIRIER : Et le dernier, "sustained local programming in E! Channel markets"?

2937   M. PÉLADEAU : Peut-être Peggy, qui est peut-être plus familière avec cet élément-là, pourrait faire un commentaire.

2938   MME TALBET : Le commentaire qu'on voulait faire ici, c'est qu'il fallait que ça s'inscrive, en fait, au-delà des obligations et non dans les obligations courantes de la titulaire.

2939   On se rappelle que, en 2010, ils ont essayé d'avoir un allègement pour le 'A' Channel en supprimant tout ce qui est émission prioritaire. Donc, nous, notre intervention à cet effet, c'est de dire, écoutez, il faudrait juste pas que ça soit une façon déguisée de se départir de leurs obligations puis de passer ça sur des avantages tangibles dans ce cas-là.

2940   CONSEILLERE POIRIER : Parfait.

2941   Dans votre document que vous avez déposé, de même que dans la soumission de ce matin, vous revenez sur la valeur de la transaction, et vous nous demandez, à la limite, d'avoir une étude indépendante.

2942   Cependant, dans votre projet de documents que vous nous aviez soumis auparavant, vous étiez prêts à accepter les chiffres soumis par le CRTC, chose que nous avons fait mardi.

2943   Vous avez un document qui s'appelle "Pièce 1" et j'aimerais que vous alliez à la page 3, en bas.

2944   Vous avez là le chiffre de 2 466 millions de dollars, qui est le chiffre avancé au moment du dépôt du mémoire de BCE mardi. Est-ce que ça changera? C'est encore possible.

2945   Et vous avez juste à côté, en bas, le chiffre proposé par le CRTC, qui est 2 671 millions, et qui s'est fait, selon les pratiques habituelles, de la même façon que nous avons procédé pour Shaw, parce qu'il n'y a pas eu d'étude indépendante pour Shaw non plus, mais il y a eu un calcul fait par le CRTC.

2946   Alors, quel est votre degré d'approbation de cette valeur-là que nous avons revue à la hausse?

2947   M. PÉLADEAU : Madame la Conseillère, ce que j'aurais comme commentaire à cet égard... parce qu'il serait difficile de comparer avec Shaw. Le Conseil l'a indiqué, il s'agissait d'une situation bien particulière.

2948   Nous savons fort bien que Global et les chaînes spécialisées étaient assujetties donc à la Loi de protection sur la faillite ou, en tout cas, avec les créanciers, avec les arrangements des créanciers dans cette fameuse... comme on dit en bon français, ça aussi, le CCAA.

2949   Alors, est-ce que la valeur de la transaction ou le pourcentage que vous aviez à retenir en ce qui concerne les avantages tangibles...

2950   On a une situation qui est tellement inhabituelle que peu importe, je dirais, le montant de la transaction qui allait être retenu, dans le fond, c'était l'aspect inhabituel ou exceptionnel qui devait primer sur la valorisation ou la valeur à mettre sur cette transaction.

2951   Ici, il s'agit purement et simplement d'une transaction dans le cours normal des affaires, et il faut prendre les outils nécessaires, ceux qui ont toujours été utilisés dans le passé, pour déterminer la valeur de la transaction. D'ailleurs, les règlements, je pense, du Conseil à cet égard sont assez clairs. On définit ce que c'est que la valeur d'une transaction.

2952   Nous n'avons pas eu accès aux hypothèses qui ont été retenues, et ça nous apparaît impossible de pouvoir avoir un jugement définitif en cette matière, et c'est la raison pour laquelle nous vous avons suggéré de nommer un expert indépendant qui va être en mesure, lui, de pouvoir faire cet exercice, qui est un exercice complexe, j'en conviens, mais qui devrait être un exercice incontournable.

2953   CONSEILLERE POIRIER : Hier, on a eu une présentation faite par monsieur Hennessy de TELUS qui allait jusqu'à demander un moratoire sur l'exclusivité, et il nous a demandé de vous demander votre point de vue là-dessus, d'accepter la transaction à condition qu'il y ait un moratoire sur l'exclusivité.

2954   Alors, je lui transmets votre question, et je pense qu'il va être très heureux que je le fasse.

--- Rires

2955   M. PÉLADEAU : Ça me fait plaisir de savoir que monsieur Hennessy passe ses messages par le biais du Conseil, mais il n'a qu'à prendre le téléphone. D'ailleurs, il l'a déjà pris à quelques reprises, et nous avons eu des discussions avec TELUS.

2956   Le président a fait référence à la décision récente en cette matière. Je pense qu'il est utile de donner peut-être un nouvel éclairage à tout ce qui s'est produit un petit peu avant que le Conseil soit appelé à prendre cette décision-là.

2957   Je tiens à dire que jamais TVA ou Vidéotron, mais particulièrement TVA parce que c'est cette entreprise qui détient les droits de diffusion, a refusé de procurer le contenu diffusé sur TVA à d'autres distributeurs, et particulièrement en ce qui concerne la VSD.

2958   Il faut savoir que Bell a demandé d'avoir accès à la programmation, mais il s'agissait ici d'un nouveau produit. C'est Bell Télé ou Bell Fibe qui était en démarrage. Alors, je pense, et c'est tout à fait légitime que TVA refuse de procurer de la programmation à un produit qui est en test. TVA est quand même une marque de commerce très forte qui doit également se protéger.

2959   Je ne veux pas rentrer trop dans les détails, mais d'aucune façon nous avons refusé, et au fur et à mesure que la discussion a eu lieu, on n'a jamais eu d'offre formelle, de la part ni de Bell et de TELUS, mais on a vu que ces gens-là voulaient déposer une plainte au CRTC pour éventuellement connaître les modalités.

2960   LE PRÉSIDENT : Je crois que c'est mieux qu'on arrête ici.

2961   M. PÉLADEAU : D'accord, Monsieur le Président.

2962   CONSEILLERE POIRIER : Oui.

2963   LE PRÉSIDENT : Ça peut venir devant nous dans le futur.

2964   M. PÉLADEAU : Oui.

2965   CONSEILLERE POIRIER : Oui.

2966   M. PÉLADEAU : Mais en ce qui concerne donc spécifiquement la question, Madame Poirier, je tiens à vous dire que oui, sur la problématique de l'exclusivité, sur la préférence, sur la préférence indue, ce ne sont pas des choses simples, ce ne sont pas des concepts simples.

2967   Encore une fois, je tiens à le répéter, dans un univers en éclatement technologique permanent, est-ce que nous devrions prendre le temps de bien cerner ces problématiques-là? Je pense que ce serait une très sage décision, et soyez assurés que Quebecor Media participera à cet exercice si vous souhaitez le faire.

2968   CONSEILLERE POIRIER : O.K. Donc, prendre le temps avant de prendre une position de ce côté-là, si je vous comprends bien.

2969   Monsieur Cope nous a dit que c'est souvent le fournisseur de contenu qui exige l'exclusivité. Est-ce que c'est la même chose chez vous?

2970   M. PÉLADEAU : Il y a des producteurs, et puis, évidemment, vous pouvez facilement le comprendre, qui sont très attentifs à leur contenu puisque ça constitue, évidemment, je dirais probablement la plus importante partie de leurs actifs, et donc, en conséquence, ils vont assujettir l'exploitation par le biais des licences donc de l'exploitation de ce contenu à des conditions, dont certaines vont être reliées à l'exclusivité. Alors, ce ne sont pas là, encore une fois, des choses simples.

2971   Est-ce que l'obtention de la diffusion par le biais d'une licence sur plusieurs plateformes sont des éléments de négociation avec les producteurs dans le cours normal des affaires? Certainement.

2972   Est-ce que cette possibilité de pouvoir diffuser sur plusieurs plateformes rend le contenu plus onéreux? Donc, l'exercice de droit de diffusion sur plusieurs plateformes est monnayé ou monnayable. Certainement, également.

2973   Donc, il y a des dispositions économiques et financières qui rentrent en considération qui devraient aussi faire l'objet donc d'une réflexion, le cas échéant, dans l'exercice que vous seriez appelés à mener.

2974   CONSEILLERE POIRIER : Donc, c'est oui, il arrive qu'il y ait des exclusivités que les fournisseurs exigent; c'est bien ça?

2975   M. PÉLADEAU : Tout à fait.

2976   CONSEILLERE POIRIER : C'est ce que je comprends.

2977   Monsieur Cope a défendu un point de vue, le point de vue qu'il n'accepterait pas, lui, comme CEO d'une grosse entreprise comme ça, de se faire imposer des règles que ses compétiteurs n'ont pas.

2978   Parce qu'il y a de petits distributeurs -- et je pense, entre autres, à de plus petits distributeurs comme Cogeco, comme MTS Allstream -- qui disent que, pour eux, le rapport de force entre eux et de très grosses compagnies qui sont intégrées verticalement, comme Shaw, comme les Vidéotron, comme les Rogers, et comme le sera BCE si la transaction est approuvée, qu'ils ne se retrouvent pas dans une même situation pour négocier cette accessibilité aux contenus là et qu'on devrait peut-être mettre des règles pour les plus petits distributeurs dans le cadre de cette transaction-ci.

2979   Qu'est-ce que vous en pensez? Est-ce qu'on devrait protéger davantage les distributeurs qui, eux, ne sont pas intégrés dans toute leur entreprise?

2980   M. PÉLADEAU : Écoutez, j'ai indiqué dans notre présentation élaborée que nous sommes et nous resterons toujours des partisans de la déréglementation.

2981   Est-ce que le fait de ne pas avoir autant d'envergure que d'autres joueurs à l'intérieur du paysage canadien pourrait procurer un désavantage?

2982   En ce qui me concerne, sous réserve, évidemment, des éléments que j'ai fait valoir pour les événements sportifs, il nous apparaît que toute programmation devrait et pourrait être disponible, et donc, en conséquence, on souhaite et on persiste à souhaiter que l'on doit réglementer lorsque c'est nécessaire et déréglementer là aussi lorsqu'on le peut.

2983   Et à cet égard, si on devait protéger les petits distributeurs, quels vont être les critères de ce que constitue un petit distributeur? Est-ce que ça va être en bas de 100 000 abonnées? Est-ce que ça va être dans une province ou dans plusieurs provinces?

2984   Ça va être un exercice qui va être probablement problématique et qui va ajouter encore davantage à la réglementation plutôt que de soulager les Canadiens à cet égard.

2985   CONSEILLERE POIRIER : Je vous remercie. On abordera sûrement la question des lots que vous proposez lors d'une prochaine audience. Alors, merci beaucoup à toute l'équipe.

2986   M. PÉLADEAU : Merci beaucoup, Messieurs, Dames.

2987   LE PRÉSIDENT : Merci, Monsieur Péladeau. Ce sont nos questions. C'est tout.

2988   M. PÉLADEAU : Merci.

2989   LE PRÉSIDENT : Merci.

2990   LA SECRÉTAIRE : Merci, Monsieur le Président.

2991   I would now invite Rogers Communications to come forward to the presentation table, please.

--- Pause

2992   THE CHAIRPERSON: We will take a five-minute break.

--- Suspension à 0919

--- Reprise à 0930

2993   THE SECRETARY: Order, please. À l'ordre, s'il vous plaît.

2994   Mr. Chairman, I would now invite Rogers Communications Inc. to make their presentation.

2995   Appearing for Rogers is Mr. Ken Engelhart.

2996   Please introduce your colleagues for the record, after which you will have 10 minutes for your presentation.

PRÉSENTATION

2997   MR. ENGELHART: Thank you.

2998   Mr. Chairman, Members of the Commission, I am Ken Engelhart and I am pleased to introduce the Rogers panel to you.

2999   Seated to my left are: Phil Lind and, to Phil's left, our outside counsel from Fasken Martineau, Robert Buchan.

3000   Seated to my right: Pam Dinsmore and David Watt.

3001   We are pleased to be here this morning to address two of the four issues set out in your directions on this proceeding, vertical integration and one small aspect of BCE's proposed tangible benefits package.

3002   As indicated in our written intervention, Rogers conditionally supports BCE's application.

3003   If this application is approved, the over-the-air television stations of the three largest commercial television networks in Canada -- CTV, TVA and Global Television -- as well as Rogers' Citytv and OMNI stations, will all be owned and controlled by large, well-financed public companies, all of which also own and control Canada's largest cable and satellite distributors.

3004   These companies do not require any subsidies from Canadian consumers. Most certainly, BCE does not.

3005   That is why Rogers' support for this application is conditional. We believe this application should only be approved if, as a condition, BCE is not permitted to take advantage of any future value for signal regime.

3006   If the Commission approves this transaction, the case for a value for signal regime in Canada will be gone. Let me explain why:

3007   First, vertical integration will ensure the financial viability of CTV. With BCE behind them, the CTV and 'A' Channel television networks will no longer need, if they ever did, the additional revenue they would obtain from a value for signal regime.

3008   Second, once BCE owns and controls both these companies, should a value for signal regime be introduced, any CTV station would be in a position to favour Bell TV and discriminate against its competitors in value-for-signal pricing negotiations. This potential for anti-competitive behaviour was recently recognized and addressed by the FCC in its decision approving the Comcast/NBC-Universal transaction.

3009   Third, Canadian consumers will have to pay the costs of value-for-signal and, with vertical integration, will end up subsidizing the costs of BCE's acquisition of CTV.

3010   Phil...?

3011   MR. LIND: BCE is, by a considerable margin, Canada's largest communications company and CTV is Canada's largest media company. BCE's own valuation shows that CTV and the 'A' Channels have a positive value and will contribute free cash to BCE in the short term.

3012   If approved, this transaction will secure CTV's financial future and any pre-merger rationale for value-for-signal will just disappear.

3013   If a value-for-signal regime is introduced and the BCE-owned CTV stations participate, Bell will have every incentive to enrich itself and weaken competitive BDUs. By pushing other distributors to the wall on pricing and imposing blackouts, BCE would win twice, first, through higher value for signal payments; and second, by weakening competitive cable companies, and positioning the BCE-owned distributors, Bell TV and Bell FIBE, to poach their subscribers.

3014   In fact, should value-for-signal go ahead in combination with the BCE/CTV merger, we can well expect to see CTV ads exhorting subscribers of cable companies like Rogers and Cogeco and others to switch to Bell TV or to Bell FIBE if they still want access to their favourite shows.

3015   This is a very real possibility; it happens in the U.S. today.

3016   The recent FCC decision on the Comcast/NBCU transaction fully supports our concern regarding this potential for anti-competitive behaviour on behalf of BCE. This week, the Canadian Competition Bureau highlighted the same issue by announcing that it would take a wait and see position on the BCE/CTV file.

3017   In the Comcast/NBCU decision, the FCC recognized that once large distributors own large broadcasters, free market negotiations simply will not work. The FCC decided to replace negotiations between Comcast's competitors and NBCU with baseball arbitration. Once a distributor opts for arbitration, NBCU cannot withhold its signal. In this way, the FCC hopes to avoid the harm that Comcast could otherwise inflict on its distributor rivals through its ownership of NBCU.

3018   This FCC decision was the result of only one major distributor buying only one major OTA broadcaster. In Canada, every major OTA broadcaster will be owned by a distributor. The message is inescapable, it would be bad public policy and practically impossible to implement a market-based value-for-signal regime in Canada.

3019   As we have stated in past proceedings, and as the CRTC recognized in its report to the Minister of Canadian Heritage last March, the result of a value-for-signal regime will be higher rates for consumers. Speaking metaphorically, it will almost certainly leave consumers with higher blood pressure as well.

3020   Recent events in the U.S. confirm this fact. The retransmission consent regime appears to have been stretched to the breaking point. There is considerable evidence that U.S. OTA network broadcasters are now demanding upwards of $1.00 per month per subscriber per signal.

3021   This has resulted in very public and very bitter disputes, programming signal blackouts, rising programming costs for both BDUs and consumers, considerable subscriber frustration, and heightened concern on the part of key legislators. In fact, the situation has deteriorated to the point where the FCC has decided to issue, early in 2011, a "Notice of Proposed Rule Making" to get input as to how the system might be changed.

3022   BCE does not need a further subsidy from Canadian consumers to help pay for its acquisition of CTV. Nor does the Canadian broadcasting system need or deserve the pain and disruption that a value-for-signal subsidy regime will inevitably cause.

3023   Pam...?

3024   MS DINSMORE: Mr. Chairman, let's take stock of how much circumstances have changed in the past year.

3025   In February 2010, Global Television, with its parent company Canwest, was in creditor protection. Financial analysts were searching for "thin green shoots" of recovery in the broadcasting advertising industry.

3026   Twelve months later, the landscape looks dramatically different. Global is operating profitably under the ownership and control of Shaw Communications, And Shaw's President, Peter Bissonette, publicly stated before the House Committee of Canadian Heritage in December 2010 that Shaw continues to oppose A value-for-signal regime.

3027   TD Newcrest just published its highly-regarded industry financial forecast under the title "2011 Outlook for Canadian Media - Out of the Abyss and Back with a Vengeance". Why the bullish title? Because advertising revenues in Canada's over-the-air television sector rose by 7.5 percent in broadcasting year 2009/2010.

3028   In September 2010, BCE decided to reacquire ownership and control of CTV.

3029   What a difference a year makes! If there ever was a need for a value-for-signal regime in Canada, that time is past. With consolidation of ownership and strengthening advertising markets, the environment in Canada's broadcasting industry has changed fundamentally and prospects for the future are bright indeed. It is now time to give first priority to system stability and the interests of Canadian consumers and viewers.

3030   Turning to BCE's proposed investment in an MPEG-4 conversion initiative, Rogers supports this benefit, which would increase Bell TV's system capacity, and allow it to distribute the signals of more local over-the-air television stations sooner than would otherwise be the case.

3031   As noted in our intervention, Rogers' support for this particular benefit is contingent on Bell TV's carriage, within one year of the decision approving this application, of the signals of all standard definition over-the-air television stations that offer more than five hours of local programming per week. This would, of course, include all of the Rogers-owned Citytv and OMNI stations.

3032   Thank you Mr. Chairman and Commissioners. That concludes our remarks. We would be pleased to respond to any questions you may have.

3033   THE CHAIRPERSON: Thank you for your submission.

3034   As you say, what a difference a year makes. For a moment there I thought we were a year back, all the value-for-signal arguments I have heard many times before. I take your point that things have changed.

3035   Mr. Lind, you point out that FCC, when addressing this issue, decided we don't have EBFS, we don't know what the court will decide, all of this is totally hypothetical, but just to understand your thinking, you mentioned that they are concerned about the NBC/Comcast and they introduced baseball-type arbitration.

3036   Why wouldn't the baseball arbitration, just hypothetically speaking, not work in Canada? Why couldn't we adopt the same rule?

3037   MR. ENGELHART: I think in the U.S. you have a bunch of other players will do negotiations and so the baseball arbitration would try to pick the rates that are otherwise being negotiated in the market. In Canada, since all the broadcasters are owned by distributors, you would have baseball arbitration for all the broadcasters and that wouldn't really be free market negotiations.

3038   THE CHAIRPERSON: I don't understand this at all.

3039   You are negotiating with, let's say Bell. You have City so you know what you paid for City. You have negotiated with Shaw, so you know what you paid for Canwest. So you will have two reference points in order to make your offer for baseball arbitration. So I don't see why the fact that the broadcasters are vertically owned by distributors doesn't mean that you can't have baseball-type arbitration.

3040   MR. ENGELHART: But you would have it for all broadcasters, because they are all owned by distributors, so there wouldn't be any free market negotiations to set the rate, there would only be arbitrators setting the rate.

3041   THE CHAIRPERSON: You only do arbitrate if you can't cut a deal.

3042   MR. ENGELHART: Right.

3043   THE CHAIRPERSON: I would have thought that it would be very difficult between the four of you to cut deals as to the value of the broadcast signals.

3044   MR. ENGELHART: Well...

3045   THE CHAIRPERSON: You are all experts at this, you all own and you all distribute.

3046   MR. ENGELHART: It's not a market-based system though, it's essentially an arbitrated system because there is no external market-based reference point.

3047   THE CHAIRPERSON: Anyway, all this is hypothetical, I get your warning. You are saying if this is approved there is no need for VFS. Let's find out first of all what the court has to say and then we will go from there.

3048   Steve, you have some questions?

3049   COMMISSIONER SIMPSON: I do, indeed. Thank you very much.

3050   Good morning. I would like to go back to start with the MPEG-4 position that you have taken.

3051   We are undertaking a review of DTH policy now, as you know, but it has always been the position of the DTH licensees that they have maintained that distribution of all television stations on a local-to-local basis is, in their view, still not a technically feasible and achievable goal. My level of technical understanding with respect to the game changing that MPEG-4 makes to that position I don't fully understand.

3052   I'm wondering if you could enlighten me as to why you think that your position is feasible given what Bell is about to do, hopefully, with MPEG-4.

3053   Do you think that your position on OMNI and the ST stations that you would like to see carried on the bird is achievable, knowing what you know?

3054   MR. ENGELHART: Yes. I think in the Chair's questioning of Bell it came out that there will be extra channels, so those extra channels could carry our stations.

3055   COMMISSIONER SIMPSON: Okay.

3056   It seems the view of most broadcasters that it would be good broadcast policy to see more local on the birds as a whole because distribution of local content is important, and I'm glad that you support that in your submission.

3057   I would like to now move into the area of exclusivity, reciprocity and the whole issue of content which is keeping me awake at night and I would like to ask these questions through the lens of an organization that has in the past negotiated with other broadcasters and BDUs on a cross-platform basis, and also as a net purchaser of content from both Canadian and U.S. markets and overseas markets, and try and get a better understanding of what you are experiencing in the present day regime of how content is purchased and what kinds of rights negotiations are going on.

3058   So I am going to focus on the content producer rather than the rights holder right now, which would be a Bell, and I would like to understand from you what you are seeing when you sit down with a content producer, be it in Toronto, Montreal, Vancouver or Hollywood.

3059   Are you finding that their mindset is to see the widest possible distribution of their content, or that they have a better business case in asking for exclusivities?

3060   MR. LIND: The content producer primarily is focused on maximizing the revenue for his product. So if the content producer figures that exclusivity will yield him more, then he will go that way.

3061   If the content producer figures that it won't, that he can offer it to two or three and they can bid more than one exclusive, then that's the way he will go.

3062   COMMISSIONER SIMPSON: That makes obvious sense from a commercial standpoint, but from a distribution standpoint what we are seeing is --

3063   I will back up. Twenty years ago a content producer would sell to a network, and that content producer would presuppose that the distribution of that network was something that was one step beyond their negotiation, but once they were satisfied that they were getting sufficient eyeball exposure for their product, it was really the network's responsibility to negotiate and get carriage deals.

3064   Today -- what I am getting concerned about is the role of the broadcaster versus the distributor in this whole relationship, because we are seeing now, with BDUs acquiring broadcasters -- I am wondering if it's for the purpose of getting one step closer, as a distributor, to the source of content, even if it means having to buy the broadcaster to do so.

3065   MR. LIND: Yes, it probably does.

3066   COMMISSIONER SIMPSON: So following through on that, do you, as a broadcaster, not as a BDU, have concern that vertical integration is going to further imperil down the road the role of the broadcaster or strengthen it?

3067   MR. LIND: Okay, now you are asking me as a broadcaster. I want maximum eyeballs. As a broadcaster, I want maximum eyeballs.

3068   As a distributor, maybe not, but as a broadcaster, yes, maximum eyeballs.

3069   COMMISSIONER SIMPSON: As a broadcaster, when you are negotiating with a content producer, do you find that they like -- because they are also trying to get maximum exposure for their product, multiplatform delivery of their product, through game offerings and other content that relates to their core product -- are you finding that there is a trend toward selling you the bundle because now you are a vertically integrated client, or are they still trying to break apart the bundle to extract value?

3070   MR. LIND: There is no single answer to that question.

3071   COMMISSIONER SIMPSON: I was afraid of that.

3072   MR. LIND: As Mr. Péladeau said in the last round here, it is a very complicated issue, and people are all over the place on it.

3073   If you asked me a specific, if you asked me about the NFL or the NHL, I could give you the answer, as far as I know, but, just generally, there is no answer.

3074   COMMISSIONER SIMPSON: There is no rule of thumb.

3075   As a BDU now -- Mr. Cope said on Tuesday, under questioning from the Chair, that he was having difficulty divining the difference between exclusivity and undue preference. I think we are all struggling with that, because there may be the intent to try to offer as much product as is available, but you are not always able to do so, and there may be some down-the-road issues that we all have to deal with in that regard.

3076   Bell indicates that they are going to be open for business, but that they are looking for reciprocity. What do you think that means, based on what you know from previous experiences and what you know now?

3077   MR. LIND: I will ask Ken to fill this answer in, but I would say that, generally speaking -- and we are all going to be subject to the June hearing checking off -- if a program is distributed linearly, in other words, a linear program broadcast, it probably should not be exclusive.

3078   But other programs that aren't broadcast should be exclusive. In other words, out-takes and pre-shows and things like that.

3079   This is where we would differ, for example, from TELUS yesterday.

3080   COMMISSIONER SIMPSON: You are making the assumption -- well, you are not making the assumption, but you are drawing reference to a bundle of content surrounding one product that is controlled by BCE, that you should have the rights of access to all the product within that bundle.

3081   Is that what you are saying?

3082   They shouldn't break it apart.

3083   MR. ENGELHART: As Phil said, we are still wrestling with it a bit, but our initial thinking is that if something appeared on linear television, there would be a rule, a Commission-imposed rule, saying: Thou shalt make this available to all distributors on other platforms.

3084   As the exchange between the Chair and Mr. Cope brought out, that rule would, in effect, be imposed on content producers who are not under the Commission's jurisdiction, but you would be saying to them: Look, if you want to sell on linear television in Canada, one of the conditions is that linear television content must be made available, in some way, shape or form, to all distributors, for online or mobile or other platforms.

3085   MR. LIND: Just a second. I must say that we have been on both sides of that issue, so we consider that this is probably the place to land.

3086   THE CHAIRPERSON: Before we go any further, this is really a subject for June. I realize that this is fascinating, but we are not going to make a decision on it, so let's proceed with things more relevant to this transaction.

3087   COMMISSIONER SIMPSON: Okay.

3088   Back to the health of broadcasting and whether the benefits of vertical integration cast a positive or a negative shadow on the broadcasting industry, I would like to talk about radio. I keep bringing radio up because it seems to get buried in these discussions.

3089   I asked the question the other day of Bell as to whether there was a trend in the consolidation of newsrooms between radio and television, which may or may not --

3090   I, personally, think that I am seeing evidence of it with vertical integration and consolidation.

3091   Is this something that you are contemplating with your assets?

3092   MR. LIND: I think that Bell said no, it's not, and I don't think it is the case with us, either.

3093   COMMISSIONER SIMPSON: It is happening on the sports side, though, where radio with pictures is a popular format with some sports shows, because they have the ability to --

3094   I am seeing this in the States, and I am wondering, again, if this is going to create obstacles for radio, in terms of its ability to ride the wave of --

3095   MR. LIND: No, we broadcast on television certain radio shows, but we don't consolidate our newsrooms or anything like that. I think there is still some separation there.

3096   COMMISSIONER SIMPSON: My last question has to do with the 'A' Channel. You had, in your written submissions, expressed concern about Barrie -- I believe it's CKBR -- going to regional station status. Given the health of local television two years ago, this seems like it may be a management decision to be able to restore some financial health to a television station, but other than a regulatory principle, is there a business principle that you have concerns with this?

3097   MR. ENGELHART: I believe that Bell withdrew the particular aspect of the 'A' Channel support that we were objecting to on Tuesday. Our objection, before they withdrew it, was really that we thought it was an ordinary course expenditure and not extraordinary.

3098   COMMISSIONER SIMPSON: Yes, they did. I was asking the question from the standpoint of looking at vertical integration and how, for example, with Global -- you see in British Columbia, effectively, a super station out of Vancouver, which, of course, is a legacy situation.   

3099   But I am, again, wondering, in the course of questioning on the health of broadcasting, whether regional stations are going to become part of the de rigueur of vertical integration because they are easier to manage and more profitable.

3100   MR. ENGELHART: I think that, generally speaking, broadcasters want more distribution, so being a super station is a good thing if you are a broadcaster.

3101   To the extent that being owned by distributors improves their financial health, it may slow down that drive for broader distribution, but no matter who owns you, a broadcaster wants broader distribution.

3102   COMMISSIONER SIMPSON: Thank you very much. Those are my questions.

3103   THE CHAIRPERSON: Len, do you have a question?

3104   COMMISSIONER KATZ: Thank you.

3105   Good morning. I have one question. You have taken a position on the MPEG-4 proposal by Bell, and I know that Mr. Lee, if he were here, would have the answer off the top of his head.

3106   Mr. Cope said yesterday that it's basically an all-or-nothing proposition, if I can paraphrase him, because you have to convert everybody off MPEG-2 in order to get the capacity.

3107   Do you know, roughly, how much additional capacity is realized when someone moves from MPEG-2 to MPEG-4?

3108   How many channels are freed up? Is it double, is it half, is it 30 percent?

3109   MR. ENGELHART: I have heard it's a doubling.

3110   COMMISSIONER KATZ: It's a doubling.

3111   MR. ENGELHART: Yes.

3112   COMMISSIONER KATZ: Okay. Thank you.

3113   THE CHAIRPERSON: Louise, a last question?

3114   COMMISSIONER POIRIER: It is related to the same question. You are the only BDU that comes in front of us and supports the use of the tangible benefits for the support of local TV through satellite carriage -- MPEG-4. Why? What is the advantage for the Canadian broadcasting system, in your viewpoint, because you are the only one with that perspective.

3115   MR. ENGELHART: I think this is a bit of an example of vertical integration, because it is really our broadcasting arm that wants carriage on those satellites.

3116   We came to the Commission's DTH proceeding and we said: Look, Bell is going to go to MPEG-4, and they should just do it.

3117   And Bell said at the hearing: No, we don't have plans to go to MPEG-4, we are not going to do it.

3118   So when we saw this benefit in this proceeding, we thought: Good. This is a way that our OMNI and City stations can get carriage.

3119   And if, indeed, Bell wasn't going to do it anyway, then it seemed like a good idea to us.

3120   COMMISSIONER POIRIER: You heard Mr. Péladeau, who said that it is a competitive advantage as a BDU owner, so you don't share his viewpoint.

3121   MR. ENGELHART: It sort of depends on when they were going to do it anyway. If they were going to do it anyway in one year, then I sort of agree with Mr. Péladeau. But the distinct impression I got from Bell at the DTH hearing was that they had no plans in the near term to do this.

3122   So if they are going to do it in five or six or seven years, then, yes, I think it's a big benefit to the broadcasting system to do it now.

3123   MS DINSMORE: If I could add to that, I just want to make the point that our support is conditional. I know you understand that, that it's not --

3124   COMMISSIONER POIRIER: Oh, for sure, I do.

3125   MS DINSMORE: -- it's not just the LPIF-eligible, it's all stations that have --

3126   COMMISSIONER POIRIER: And they have to carry your stations.

3127   MS DINSMORE: Our stations and the others.

3128   COMMISSIONER POIRIER: And the others, but --

3129   MS DINSMORE: And within a reasonable timeline.

3130   COMMISSIONER POIRIER: Okay. The $84 million -- and maybe I am going in the same direction as Mr. Katz did -- that is a lot of money from the tangible benefits. Wouldn't Bell get extra capacity -- can you get us some information about this -- so they would be able to carry more than the LPIF stations?

3131   What do you think about this?

3132   MS DINSMORE: It is very probable that they will have extra capacity, but, as you understand, our proposal would require them to have extra capacity in any event.

3133   So, as we look at it, we say: Okay, it's an all-or-nothing proposition. And the analogy would be around building a house. So house builder might say, I'm prepared to build you a house, but in that house I am going to have a spare room, but it is the only house I am going to build. So we look at that and say, well, we are happy to be in the spare room. In fact, that is where we are going to end up. But if we are going to have a house or no house at all, let's have a house with a spare room.

3134   That is what is being proposed here and that is why we support it. We like the spare room.

3135   COMMISSIONER POIRIER: Okay.

3136   My last intervention, Mr. Chair, then if there is extra capacity, as the Chair asked, shouldn't the amount of money be lower?

3137   MS DINSMORE: I don't think with respect to what we are asking for because, in our view, the benefits should cover all stations that have five hours or more. There is going to be additional stations. There is probably going to be --

3138   THE CHAIRPERSON: Don't you mean seven hours, not five?

3139   MS DINSMORE: Excuse me?

3140   THE CHAIRPERSON: Are you establishing the rules here? Local content is seven hours, not five.

3141   MS DINSMORE: I think the base is five.

3142   THE CHAIRPERSON: It is five for French, seven for English.

3143   MS DINSMORE: Five French --

3144   THE CHAIRPERSON: So I presume you mean seven.

3145   MS DINSMORE: I think I mean five, but seven --

3146   THE CHAIRPERSON: Okay, but whatever number we established, let's put it that way.

3147   MS DINSMORE: Whatever number we establish.

3148   THE CHAIRPERSON: Yes, okay.

3149   Thank you very much. Those are our questions.

3150   We are a bit behind schedule so let's go on without break.

3151   Madame la secrétaire.

--- Pause

3152   THE SECRETARY: So we are ready to proceed now, Mr. Chairman.

3153   We will now hear the intervention of Independent Broadcast Group. Appearing for the Independent Broadcast Group is Ms Martha Fusca.

3154   Please introduce your colleagues for the record, after which you will have 10 minutes for your presentation.

PRÉSENTATION

3155   MS FUSCA: Thank you very much.

3156   Good morning, Mr. Chairman and Commissioners. We are pleased to be here today representing the Independent Broadcast Group. I am Martha Fusca, President and CEO of Stornoway Communications. I am joined by Monique Lafontaine, Vice-President, Regulatory Affairs at ZoomerMedia Television Division, and by Joel Fortune, IBG's legal counsel.

3157   IBG is an association that represents the interests of independent television broadcasters with interest in over-the-air television and speciality broadcasting. Our member companies are also increasingly active in new and emerging forms of digital media. We have attached to this presentation a list of our member companies and the services they operate.

3158   IBG supports BCE's application to acquire control of BCE Inc. BCE itself has noted what it calls the acceleration trend toward corporate integration in Canada in the communications sector. This application is therefore a logical response by BCE to that trend.

3159   We understand the business motivation behind this acquisition. By exercising direct control over some powerful broadcasting services, BCE will be in a better position to exploit the content of those services on its own platforms. This transaction will also result in another large integrated company that can compete against the existing large consolidated companies like Rogers, Shaw and Quebecor.

3160   However, neither the broadcasting system nor the future of Canadian innovation and economic growth in the global digital economy will be well served by the creation of a market dominated solely by a few large consolidated media companies. We wish to speak to you today about this trend and its implications for independent broadcasters.

3161   The phrase regulatory symmetry has been used in this hearing. It is, however, helpful to note that while some policies should be applied to all players regardless of their size, other policies, if applied equally, affect smaller and larger players or start-ups and incumbents in different ways.

3162   Recognizing the difference and anticipating it, it is an essential part of good policy and raises the odds of success. In this hearing, the argument has been made that a market-based one-size-fits-all rule is adequate. This doesn't account for the economic profile of our industry which still includes, thankfully, stakeholders of all sizes.

3163   If we just step back from the communications sector for a moment and look at Canada's larger economy, in 2009 in the entire economy, fully 99.7 per cent of all employer businesses were small and medium-sized enterprises or SMEs and they employed 54 per cent of all employees.

3164   In the past decade governments at all levels have recognized the key role and importance of SMEs to Canada's economic health and prosperity. In the communications sector recent mergers in the areas of broadcasting telecommunications are pushing our industry in the other direction. A few companies earn the bulk of communications business revenue.

3165   There are some policy reasons that would favour a degree of increased consolidation, however one of the risks of a strategy that supports only consolidation is that it may stifle growth and innovation by the kinds of small and medium-sized enterprises that are so clearly important to Canada's economic future.

3166   Just as important, in the communications sector small independent broadcasters represent programming, editorial and ownership diversity. These broadcasters have been licensed precisely because they offer programming and reflect Canadians in their point of view in a way that is not otherwise present in the broadcasting system.

3167   Therefore, how the CRTC responds to this new reality of profound concentration of ownership in the broadcasting system, as represented in part by this application, will be of fundamental importance to how our digital economy develops and whether Canadian diversity is properly represented in that economy.

3168   MS LAFONTAINE: The implications of consolidation have not yet been fully examined by the Commission, and current rules that the CRTC has in place are not adequate to deal with the new and unprecedented levels of consolidation and vertical integration in our industry.

3169   We know that the CRTC reviewed the regulatory framework for distribution undertakings in 2008. But today's environment in which the largest broadcasting companies are owned by Canada's largest distributors were not fully contemplated in 2008.

3170   In dependent broadcasters are not alone in pointing out that this application and the Shaw-Canwest transaction are game changers. Smaller independent cable companies such as those represented by the CCSA and TELUS Communications and MTS, larger companies that are now dependant on their direct competitors for broadcasting content, have also brought issues forward.

3171   This is why we welcome the CRTC's upcoming policy review relating to vertical integration. Over the past few years the CRTC has looked at a number of different policy areas in a focused manner, including streamlined distribution rules for BDUs; policy hearings for the large over-the-air broadcasters; a new media hearing; hearings into community broadcasting; and a group licensing policy hearing for the largest broadcast groups.

3172   The vertical integration hearing will allow the CRTC to do the same thing with industry consolidation and vertical integration, the particular situation of smaller independent broadcasters and the composition of the regulated basic service. Rules are needed to safeguard against the potential stifling effects of consolidation on independent broadcasters.

3173   As a result of this transaction, BCE will be acquiring numerous broadcast services. The risk to independent broadcasters is that the company may seek ways to give advantages to these services in a way that is harmful to other services, especially independent services.

3174   For the most part, the specific distribution and access safeguards that, until now, have prevented large integrated companies from entirely dominating the broadcasting system will be removed on September 1st of this year.

3175   Seemingly small changes by large BDUs can have an immediate and harmful impact on independent broadcast services. For example, moving a program service from a relatively high penetration tier to a lower penetration tier will immediately place the independent programming service in jeopardy. For a small independent broadcaster this kind of change threatens the entire business.

3176   This kind of change is completely foreseeable, especially when a company acquires a whole stable of its own news services. BDUs already make channel and packaging changes on a regular basis, either to make room for the BDUs' own services or, just as likely, for the services of large BDUs that have much more negotiating power than the independent broadcaster.

3177   The time period between now and when the rules come into effect will be an especially vulnerable time for independent broadcasters. We therefore ask the CRTC to explore with BCE specific safeguards that BCE will put in place to protect against these kinds of actions and to ensure that the already fragile position of independent broadcasters is not threatened by this transaction.

3178   To address these concerns we suggest that BCE should not be permitted, without the consent of the programming services involved, to change the carriage terms on which independent programming services are distributed until the CRTC has ruled on appropriate regulatory safeguards to address vertical integration.

3179   IBG has also reviewed suggestions of other interveners in this proceeding and supports mechanisms to address the negative implications of vertical integration for non-integrated players. We support, therefore, specific rules being applied to BCE, and to all other vertically integrated companies for that matter, when the occasion permits.

3180   For now, the rules that are especially relevant to independent broadcasters include: one, a requirement to file affiliation agreements with the CRTC to provide an information base for the CRTC's benefit; two, explicit protections to prevent sharing of information between the BDU and broadcasting services of vertically integrated business; and three, if the MPEG-4 benefit is approved by the CRTC, then it would be appropriate for the CRTC to ensure that all local stations are carried by Bell TV, not just LPIF-eligible stations and particularly those stations that are required by the Commission to transition to digital by August 31, 2011.

3181   MS FUSCA: Thank you for allowing us to appear today, and we would be pleased to answer any questions you may have.

3182   THE CHAIRPERSON: Thank you.

3183   On page 10, that last recommendation, "All local stations are carried by Bell TV, not just LPIF-eligible stations." Explain the rationale for me.

3184   The reason why we want LPIF-eligible stations obviously is because they are of local content, seven or five hours local content. Why would we do that for stations that don't have local content?

3185   MS LAFONTAINE: There are stations that do provide local content that don't reach that threshold. For instance, our local television station, CIIT, Zoomer Television's OTA station in Winnipeg, CIIT, does 2.5 hours of local programming per week, does not have access to LPIF and has to transition to digital.

3186   So we have to make the investment. We provide an important service. We do provide local programming but we don't -- we wouldn't have access to -- we don't have access to LPIF and we wouldn't have distribution rights.

3187   There seems to be some disparities in that type of regulatory regime.

3188   THE CHAIRPERSON: No. The way you phrased it here it will also include all rebroadcasters, wouldn't it?

3189   MS LAFONTAINE: Our main concern is that OTA stations that are providing a local service in a local community have access to carriage rights, or that are distributed by this MPEG service.

3190   THE CHAIRPERSON: How many are we talking about? How many people fall into this category, do you know?

3191   MS LAFONTAINE: I don't have the list offhand but I can provide it to you.

3192   THE CHAIRPERSON: Maybe you should. Thank you.

3193   Steve, you have some questions I believe?

3194   COMMISSIONER SIMPSON: Yes, thank you very much.

3195   In your opening statement you had said that in this hearing the argument has been made that a "one-size fits all" rule is adequate. Will you unpack what that means to you in terms of one-size fits all and why it has negative consequences?

3196   I don't quite understand your use of that term.

3197   MS FUSCA: I think that when you take the various sectors of the industry; for example, the requirements from the large vertically-integrated distributors, when you look at the needs and call for safeguards from the non-integrated distributors and then, of course, you have our sector, the independent broadcasting sector, we simply want to point out that when you are formulating your regulations and your thinking you have to keep in mind that each -- there needs to be a balance so each of these sectors can actually move forward and play a significant role within the entire system.

3198   COMMISSIONER SIMPSON: Thank you.

3199   One of the factors that has been problematic for independent broadcasters that I have witnessed, that seems to be ongoing and perhaps escalating, not strictly because of the outcomes of this hearing but because of a move to digital and other circumstances, is that there has been a lot -- as you have indicated, a lot of shuffling of positions in the digital space of BDU.

3200   Have you been -- this may be a rhetorical question but have you been relatively satisfied with the level of sensitivity and notification and justification you get from BDUs with respect for their need to move channels, independent channels around?

3201   MS FUSCA: Well, I believe that we do get some sensitivity. I can only really speak for Stornoway in this instance and perhaps Monique can add to it.

3202   While I believe that at Stornoway we actually do on occasion when we are dealing with the various BDUs -- and they are all different. I wouldn't want to lump them all into one pot either. There are some that are obviously more sensitive to, you know, our marketing concerns, our packaging concerns -- but in general I'm afraid not. We are already seeing the shift to package changing and the way that certain services are offered.

3203   You know, I personally believe that the -- my experience has been, all right, that the independent broadcasters are getting the short end of the stick.

3204   MS LAFONTAINE: I can't speak to the issue of the channel displacement thus far, but as a regulatory council our concern is with the change of rules and what can come with the relaxation; the potential is.

3205   COMMISSIONER SIMPSON: From your industry experience are you seeing any kind of proposals from BDUs with respect to what the line ups are going to look like post-September with respect to digital conversion and this giving you any kind of a sense of what that landscape is going to look like?

3206   MS FUSCA: We have had some indication. I think that the thinking at this point is that there are going to be many more services that are provided on an a la carte basis and strictly on an a la carte basis.

3207   I think it's going to be incredibly problematic when you are not a vertically-integrated company to survive on, you know a la carte, particularly when the same BDUs own so much of the media whether you are talking radio, magazines and will market the heck out of their services and certainly won't take the time to market ours.

3208   COMMISSIONER SIMPSON: This may be a question that goes to your organization at Zoomer but it's directed to both of you.

3209   Obviously, to leverage products that you develop multiplatform distribution is the key. I had asked this question earlier of Rogers, but for organizations that you represent that do have multiple distribution or multiplatform distribution, is this -- is having a more consolidated customer base going to give you an opportunity to cut more comprehensive distribution arrangements, knowing that you are talking to a BDU that happens to be an internet provider and happens to be, you know, a mobile provider and so on?

3210   Is it going to be -- is it going to be a net benefit to have fewer, bigger, better clients or distributor partners or is this going to become more problematic?

3211   MS FUSCA: I wish I could say yes, but the answer is actually no. Having said that, I think it's actually quite important.

3212   I mean, I will only again speak for Stornoway. I'm delighted that BCE has, you know, decided to acquire CTV. And in my view, I think it's saving a company. You know we have heard about Global and Shaw. I actually think that they are saving CTV from a pretty dire future and I think it's a really good marriage.

3213   In terms of where we fit in, the answer is no because they are going to be even busier with what they have acquired. In their position I would be doing the same thing.

3214   So this why, as all of us have said, we very much look forward to the vertical integration hearing where we would be making specific proposals about why and how, you know, it's important to have the independent broadcasters around for the sake of the overall system and the economy actually.

3215   MS LAFONTAINE: I would just add that our concern at the end of the day is having access and being able to negotiate that access. And when the players become bigger and stronger and more leveraged and they have more bargaining power than, you know, we could ever imagine, then that's where the issues arise for us.

3216   COMMISSIONER SIMPSON: Thank you.

3217   My last question is with respect to your three points on the rules that you feel need to be applied. I'm looking specifically at affiliation agreements.

3218   I thought I heard Bell indicate in response to a question the other day that they would file affiliation agreements but they would not be for public consumption because of the potential of imposing upon their business plans.

3219   If that is correct, how do you see this rule being applied?

3220   MS LAFONTAINE: So that I'm sure that I understand the question, how it would be applied once these documents are filed with the Commission on a confidential basis?

3221   COMMISSIONER SIMPSON: That is correct.

3222   MS LAFONTAINE: Then it would be in the hands of the Commission. We would have to rely on the regulator to monitor and to ensure that there isn't undue preferences that were taking place.

3223   Joel would like to add to that.

3224   MR. FORTUNE: Yes, Commissioner. The way we see the purpose of the rule is it imposes discipline on the company that has to file the affiliation agreements because it knows that they will be subject to scrutiny by the Commission. So if things start to go awry it will become immediately apparent.

3225   That means it forces them to be aware that there will be somebody there looking over their shoulder.

3226   COMMISSIONER SIMPSON: Thank you.

3227   Those are my questions.

3228   THE CHAIRPERSON: Thank you. I think those are all our questions.

3229   As I said, if you have the number of the independent stations involved I would appreciate you send it to us. Thank you.

3230   We will take a 10-minute break.

--- Suspension à 1024

--- Reprise à 1044

3231   THE SECRETARY: We are ready to proceed, Mr. Chairman.

3232   Our next panel is composed of the Writers Guild of Canada, Directors Guild of Canada and the Alliance of Canadian Cinema, Television and Radio Artists, ACTRA.

3233   We will hear each presentation, which will then be followed by questions by the Commission.

3234   I would now invite the Writers Guild of Canada to introduce yourselves for the record, after which you will have 10 minutes for your presentation.

PRÉSENTATION

3235   MS PARKER: Good morning. My name is Maureen Parker and I am the Executive Director of the Writers Guild of Canada, a national association representing over 2,000 professional English-language screenwriters.

3236   To my right is Kelly Lynne Ashton, Director of Policy of the Writers Guild. Also with us, at the end of the table, is Joel Fortune, Regulatory Counsel and author of the Joint Report filed by ACTRA, DGC, CMPA and the WGC.

3237   The WGC is supportive of BCE's acquisition of CTV, subject to the appropriate application of the CRTC's benefits policy and an allocation of BCE's benefits package consistent with that policy.

3238   While we represent the interests of Canadian screenwriters, we also serve as an important balance in the system by advocating for Canadian programming. Our comments today reflect those responsibilities.

3239   We were pleased to hear Tuesday that BCE is no longer taking the position that it does not have to pay benefits on this transaction. However, BCE is still attempting to minimize their payment of benefits through their valuation of the assets and their proposal that the conventional broadcasting assets should be entitled to a discounted calculation of benefits.

3240   We support the Commission's review of BCE's valuation as it addresses several issues that we raised in the Joint Report. We look forward to receiving the Commission's final calculation of the valuation after its questions, such as those relating to the valuation of synergies, have been addressed.

3241   For the purposes of today's discussion we are working with the valuation of $2.67 billion put forward by the Commission on Tuesday, which would result in a benefits package of $236.4 million.

3242   BCE has argued that it should be able to discount benefits paid based on conventional assets, as Shaw was recently allowed to do, because to do otherwise would give Shaw a competitive advantage.

3243   However, as the Commission pointed out, the decision to approve a discounted rate of 5 percent on Canwest's conventional assets was because their assets were under CCAA protection at the time and because Shaw needed assistance to bring these assets back to financial health. On the other hand, none of CTV broadcasting assets are in financial difficulty.

3244   All broadcasters incurred losses during the 2009 global recession, but CTV's recovery may have been slowed by its 2010 expenditures on the Winter Olympics. Nonetheless, we read in CTV's Group Licence Renewal Application that it is projecting a financial recovery of all of its broadcast assets, including a positive PBIT for the next few years.

3245   The circumstances are clearly not comparable and BCE should not receive a discounted rate.

3246   BCE is also arguing that they do not need to follow the Commission's past practice by allocating the bulk of its benefits package, or 85 percent to 90 percent of the television benefits, to on-screen programming because apparently there is plenty of money in the system. BCE says that the upcoming expenditure requirement on Programs of National Interest under the Group Licence Renewal, will be a source of funding.

3247   Yes it will, but that hearing has yet to determine how much money broadcasters will have to spend, and if it will indeed mean more money to the system.

3248   As well, the PNI CPE is about ensuring broadcasters make an appropriate contribution to Canadian programming, while the purpose of the Tangible Benefits Policy is to create incremental spending.

3249   BCE also refers to other benefits packages such as the Shaw-Canwest, the Rogers-City and their own unspent benefits from the 2000 transaction to support their claim that there is plenty of money in the system for programming. Again, these benefits are all supposed to create incremental programming so that Canadian audiences benefit when broadcasting assets change hands.

3250   Let's remember that broadcasters contribute on average only 30 percent of the budget of television programs.

3251   Valerie Creighton, President of the CMF, recently stated that it has 50 percent more demand than it can fund.

3252   As the CMF contributes only about 15 percent of production budgets, producers struggle to finance the balance of that budget. The shortfall is covered by independent funds, distribution advances and tax credits, which were intended to capitalize their companies rather than finance production.

3253   So there really isn't enough money in the system.

3254   In the past, the Commission has supported 80 percent to 90 percent of the benefits being spent on programming which resulted in more shows being produced and broadcast. We need funding to create and produce high quality Canadian programming that will compete with U.S. shows for Canadian audiences.

3255   Kelly Lynne..."

3256   MS ASHTON: BCE is now proposing $68.2 million for On-screen Programming. This is only 31.4 percent of the television benefits.

3257   We recommend that allocations for inappropriate infrastructure programs, and any additional funds from a review of the valuation, be reallocated so that at least 85 percent of the television benefits, or $184.45 million, is dedicated to on-screen programming. This would mean reallocating HD conversion, 'A' Channels and the additional funds from the Commission's review of the valuation, to on-screen programming.

3258   We also suggest reallocating or reducing the allocation to the MPEG-4 conversion, should the Commission find it to be an acceptable allocation, to make up the difference.

3259   BCE has committed to spending $53.2 million of the On-screen Programming package on Programs of National Interest and associated digital media content. BCE has declined to allocate funds between PNI and digital media.

3260   While we understand the rationale for flexibility to take into consideration changes in the marketplace, we suggest that there be a minimum allocation to PNI. Television is still the most popular form of entertainment programming and requires the most support. We would suggest that at a minimum 75 percent of the $53.2 million be allocated to PNI programming.

3261   Another detail of the allocation to On-screen Programming is the provision that at least 50 percent of the PNI be available to be spent on 8-point production. 8-point production does not fully support a domestic talent pool as it means the ability to engage non-Canadian screenwriters or stars or directors. A Canadian talent pool is essential to our ability to tell our own stories. We recommend that On-screen Programming be therefore limited to 10-point productions.

3262   As we have in the last two CTV benefits packages, the WGC would like to work with BCE and CTV to create a specific development program for Canadian drama. Development of Canadian programs and specifically drama, is seriously underfunded. Funded development is essential to improving the ratio of success for Canadian programs. As CTV says in its 2008 Benefits Report, "Flashpoint", which came out of the Writer Only Development Program":

"...shows the great value of allowing a writer to develop their creative vision over time so that compelling stories can be told to Canadians."

3263   Many other movies of the week and series pilots were also developed and produced under this program.

3264   We recommend that $7 million from the On-screen Programming funds be allocated to drama development. This would be comparable to the allocation to the Writer Only Program under the BCE-CTV benefits package.

3265   As mentioned, BCE's allocations to infrastructure are inappropriate and self-serving. They do not benefit the Canadian broadcasting system as a whole and they are not costs that would not otherwise occur but for the benefits package. For example, the allocation of $24.5 million to the conversion of local stations to HD production facilities is aimed at improving smaller CTV production facilities. There is no benefit to the broadcasting system as a whole.

3266   As BCE admitted during this hearing, this allocation will not fund any incremental programming but will merely "enhance the viewing experience".

3267   As well, funding this conversion from the benefits package would give BCE a competitive advantage over small market stations that do not have access to a benefits package.

3268   We understand the Commission's perspective that the MPEG-4 conversion allocation would be public benefits, but we also feel that such an expenditure would be a cost of doing business. Allowing BCE to access benefits funding to subsidize the cost of this conversion would provide BCE with a competitive advantage over those distributors without access to a benefits package.

3269   As we mentioned, we recommend that the necessary funds are reallocated to On-screen Programming in order to meet the ratio identified by past practice and if the Commission deems MPEG-4 conversion to be an acceptable expenditure, the balance could subsidize BCE's costs.

3270   Finally, while we support local television and have no problem with benefits funding that will support additional hours of local programming in markets currently not being served, the allocation of $25 million aimed at subsidizing the 'A' channels is inappropriate.

3271   As Commissioner Cugini pointed out, $10 million has been allocated to fund a digital transition that is already in the works and another $10 million has been allocated to maintain existing programming.

3272   These are clearly not incremental costs that would not otherwise be undertaken without the benefits. The $5 million for master control seems to be a clear infrastructure cost. It is inappropriate to propose to use benefits money to stave off losses, particularly when Group Licence Renewal will likely result in synergies that should benefit the 'A' channels.

3273   MS PARKER: In summary, we urge the Commission to apply its benefits policy to this transaction in a manner consistent both with the policy and with past precedent in order to ensure transparency and consistency. This is essential to the integrity of the system and to ensure that Canadians benefit from this transaction.

3274   The Commission's tangible benefits policy should apply to this transaction at the rate of 10 percent for all television assets and 6 percent for radio, based on a valuation of the assets as the Commission shall determine.

3275   The tangible benefits should be:

3276   - 10 percent of the value of the transaction for all TV assets;

3277   - should be paid in equal instalments over the 7-year term;

3278   - it should be incremental and based on clearly identified allocations;

3279   - no expenditures which are the cost of doing business should be permitted;

3280   - 85 percent allocation to on-screen expenditures.

3281   Finally, we would ask the Commission to provide us with an opportunity to comment on any revised benefits packages that BCE may submit at the end of this hearing in response to the Commission's questions and concerns.

3282   Thank you for your time.

3283   THE SECRETARY: Thank you very much for your presentation.

3284   We will now hear the Directors Guild of Canada.

3285   Please introduce yourselves for the record, after which you have 10 minutes.

PRÉSENTATION

3286   MR. ANTHONY: Mr. Chairman, Vice-Chairs, Commissioners and Staff, My name is Brian Anthony and I am the National Executive Director and CEO of the Directors Guild of Canada.

3287   With me today is Peter Murphy, to my left, DGC's National Research & Policy Manager. We recognize the pressures on your schedule today and have therefore pared down our comments, setting aside issues that have had an adequate airing in the past few days.

3288   Our appearance today is therefore related only to television tangible benefits.

3289   During the written intervention process we participated in the preparation of a Joint Report with other intervenors. We also submitted our own intervention relating to other matters contained in the Application. We heard the exchanges between the Commission and BCE on the issue of the value of the transaction on the first day of the hearing. We do not claim to be experts in this area and we trust the Commission will thoroughly examine and determine a proper valuation for the purposes of determining the size of the benefits package.

3290   We are pleased, although a little disappointed, that it took until the first day of the hearing, that BCE has committed to a package of tangible benefits. Previous ownership of CTV by BCE is, in our view, irrelevant to the current proceeding before the Commission. The BCE application is for the acquisition of control of CTV, and thus triggers the Commission's tangible benefits policy. At issue then is the size and make-up of that benefits package in this case.

3291   We do not share BCE's view that the television benefits should be quantified at anything less than 10 percent of the full value of the television assets in this transaction. The Commission policy is clear on this point and we do not believe that BCE has provided any arguments that would justify a deviation from it.

3292   As Commissioner Katz pointed out on the first day of the hearing, an exception to the Commission's policy was made in the Shaw decision not because the broadcasting assets in question were under performing assets, but because they were under CCAA protection.

3293   Indeed, the fact that a number of profitable specialty channels were included in the discounted assets is clear evidence that it was CCAA protection that triggered the discount and not the stations' financial position.

3294   That is clearly not the case here. None of the broadcasting assets being acquired in this proceeding are in CCAA and thus there is no compelling reason for a discount on the Commission's policy requiring 10 percent in benefits on the value of the television assets in this transaction.

3295   We also do not believe that the mainstream news and sports services, the Cat. C services, should be excluded from the valuation for the purposes of determining the benefits package. There is no reason to distinguish these services from Category B services on which benefits are payable. In fact, these Category C services have benefitted for years from their priority carriage rules and are now only open to competition due to their entrenched market presence and financial success.

3296   Peter...?

3297   MR. MURPHY: Thank you.

3298   With respect to the benefits package, we are pleased that BCE revised their original proposal to increase the amount going to on-screen programming. That being said, the revised proposal still does not conform to the standards the Commission has come to expect regarding the types of initiatives benefits monies should be directed to.

3299   Over time, the Commission's benefits policy has been refined through various pronouncements in policy statements and in specific transfer decisions. The result is that common standards have emerged which the Commission uses to gauge the appropriateness of benefits proposals.

3300   For example, a quick look at a number of recent benefits decisions shows the Commission expects a rather significant percentage of funds to go to the support of on-screen programming. When CTV acquired the CHUM specialty services it allocated 85 percent to programming initiatives. Canwest allocated 90 percent to on-screen programming when it acquired the Alliance Atlantis broadcasting assets. And more recently, in ZoomerMedia's acquisition of VisionTV, the Commission insisted that 85 percent of benefits funds go to programming.

3301   Even in the most recent Shaw-Canwest transaction, which BCE has argued should set a precedent for the Commission's treatment with regards to the allocation of benefits in this transaction, 79 percent of benefits funds were allocated to on-screen programming.

3302   BCE is a long way from this standard. Using the Commission's revised preliminary value of the television benefits of $217.1 million, the $68.2 million allocated to on-screen programming and multiplatform content represents only 31 percent of television benefits funds.

3303   Even if the Commission were to require BCE to allocate the entire $60 million difference between the Commission's valuation and BCE's, plus the $10 million that BCE has stated would go to sustain local programming under the 'A' station initiative, the funds earmarked for programming would still represent only 43 percent of the total television benefits. This is clearly not in keeping with past Commission practice and standards.

3304   BCE has stated that it has designed its benefits package to address the most pressing policy challenges facing the Canadian broadcasting system. This approach, however, ignores the longstanding standards that the Commission has adopted for these packages over the years. These standards give the industry a sense of predictability, one of the guiding principles of this Commission. If the common standards are ignored, predictability is lost.

3305   In our view, a number of the proposed benefits initiatives are inappropriate and not in keeping with longstanding practice and standards.

3306   With respect to the $84 million that BCE is proposing to support local television stations through satellite carriage, we agree with the concerns raised by Shaw in its intervention, as well as the Commission during its questioning of BCE on the first day of this hearing.

3307   As Shaw has correctly noted, "The use of benefits moneys, as proposed, would likely permit Bell to enjoy significant overage of capacity than that required to carry the remaining LPIF stations, which overage could be used for commercial ends, such as the delivery of more HD services."

3308   While we understand the policy objective of distributing local content to all Canadians -- and we note that the Commission recently held a hearing dealing with this subject -- we cannot support the use of public benefits moneys to give BCE a competitive advantage over its distribution competitors.

3309   With respect to enhanced local news production in HD, in response to a question from Commissioner Cugini, BCE stated that the $24.5 million allocated to this initiative would all be spent on equipment upgrades, rather than HD programming.

3310   We submit that technical upgrades for the conversion to HD programming are simply a cost of doing business and are an inappropriate use of benefits moneys.

3311   All broadcasters are having to make the capital expenditures necessary to upgrade to HD programming, and allowing benefits moneys to be used in this respect provides CTV with an advantage over its competitors.

3312   We also question whether or not accelerating a process which CTV will have to do at some point to remain competitive provides a benefit to the broadcasting system as a whole, or simply to CTV.

3313   These funds would better serve the entire broadcasting system through the support of Canadian programming, rather than technical upgrades for one broadcaster.

3314   MR. ANTHONY: The proposed $25 million to support the digital transition and HD infrastructure, as well as to fund the continued provision of local programming on the 'A' Channel stations, is a wholly inappropriate use of benefits moneys. The A stations are all in markets in which the conversion to digital is mandatory, and BCE has stated that the programming to be supported through this initiative would not be incremental.

3315   Essentially, then, BCE is asking the Commission to use benefits moneys to fulfil their regulatory obligations. This would surely be a significant distortion of the Commission's benefits policy.

3316   Nowhere does the policy provide for the use of benefits funds to offset the losses of broadcasting services.

3317   It would set a very dangerous precedent, indeed, to allow a purchaser to use benefits to prop up the bottom lines of the assets they are acquiring.

3318   Further, we note that four out of the five A stations were eligible for LPIF funding. Providing a further subsidy to these services would not only be contrary to the benefits policy, but also patently unfair to A competitors.

3319   The DGC believes that this initiative should be rejected by the Commission and the funds reallocated to on-screen programming, for programs of national interest.

3320   That concludes our oral remarks, Mr. Chairman, and what really is my swan song this time. We would be pleased to respond to any questions you may have.

3321   THE SECRETARY: Thank you for your presentation.

3322   THE CHAIRPERSON: You don't have to give that promise; you are most welcome here.

--- Rires

3323   THE SECRETARY: I would now invite ACTRA to present their intervention. Please introduce yourselves for the record, after which you will have ten minutes for your presentation.

PRÉSENTATION

3324   MS DEER: Thank you.

3325   Good morning. My name is Joanne Deer, and I am ACTRA's Director of Public Policy and Communications. With me here today is our consultant, Gary Neil.

3326   ACTRA brings to this hearing the concerns of 21,000 professional performers who work in film, television, sound recordings, radio and digital media. We are also speaking on behalf of the 17,000 members of the Canadian Federation of Musicians, the foremost organization of professional Canadian musicians.

3327   Our comments today on the proposed transaction will focus on the tangible public benefits for television, and our concerns with the size and speed of vertical integration in our broadcasting system.

3328   On balance, ACTRA supports this application, but only if there is a fair return to the broadcasting system and to Canadians in the form of tangible benefits, as required by the Commission's benefits policy.

3329   We must remember that in this proceeding we are talking about Canada's largest telecommunications company acquiring control of our leading private broadcaster. With the acquisition of CTVglobemedia, BCE will become Canada's largest vertically integrated communications and broadcasting company. It is our view that such a privileged position should not be granted lightly.

3330   Our position is this: The amount of benefits must be 10 percent of the full value of the transaction of all television assets, and 6 percent of all radio benefits. Nothing less is acceptable or appropriate.

3331   Eighty-five percent of the television benefits must be directed to on-screen programming, and 75 percent of that to programs of national interest, that are 10-point Canadian productions acquired from independent producers.

3332   We would also like you to require that BCE take steps to ensure that their distribution undertakings treat all programming services equally and do not give preferential treatment to those owned by BCE.

3333   Like others, we were relieved on Tuesday to hear BCE finally abandon its ludicrous position that they should not have to pay 1 cent in public benefits in this transaction. That said, BCE is still offering too little to the Canadian public in exchange for the privilege of acquiring these valuable broadcasting assets.

3334   The reality is simple: BCE did not have control over CTVglobemedia in August 2010. In September 2010, they reached an agreement to gain control.

3335   And the Commission's policy is clear: Tangible benefits are payable when someone gains control of a broadcaster. End of story.

3336   While we are happy that BCE has finally accepted this reality, we are still not satisfied with their continued attempts to get a discount, nor are we satisfied with how they are proposing to allocate benefits.

3337   First, as we said, the amount of benefits must be 10 percent on the full value of the transaction of television assets, and 6 percent of the radio assets. Nothing less is acceptable or appropriate.

3338   We acknowledge that the Commission can use discretion in the application of its benefits policy. You did so last fall in your approval of the Shaw/Canwest deal, but this deal is very different. None of the circumstances that the Commission was sympathetic to, namely, the financial vulnerability of certain Canwest assets, exists here.

3339   On the contrary, in this case we have a robust telecommunications conglomerate solidifying its position as a vertically integrated communications behemoth by adding the country's most successful private broadcaster.

3340   A discount of any kind is neither warranted nor appropriate.

3341   An acceptable package for ACTRA and CFM would follow the Commission's traditional tangible benefits package and breakdown -- 85 percent of the benefits going to on-screen initiatives, with 75 percent directed to the creation of original-scripted, Category 7 drama and comedy by independent producers. BCE's proposal falls short of this.

3342   In BCE's new proposed package of $220.8 million, they are offering $68.2 million for on-screen programming and multiplatform content, and out of that they are only committing to put $53.2 million into PNI and new media content.

3343   Even with my rudimentary math skills, I can tell that that's a lot less than 75 percent.

3344   Instead of accepting BCE's offer, we hope the Commission will use this opportunity to ensure that the additional resources are allocated to real at-risk programming -- drama and scripted comedy -- and that the programs created from these resources are available in the broadcasting system where most Canadians continue to watch television, on conventional.

3345   No less than a full 75 percent of the benefits package should be directed specifically to programs of national interest.

3346   We might also suggest that you require that the programs created from these benefits moneys be broadcast at least once on the CTV conventional network, so they can reach the broadest public audience.

3347   With 75 percent of the benefits going to on-screen PNI initiatives, we would accept that the remaining benefits moneys be allocated to enhancing new morning newscasts or to new media content.

3348   I do want to say that we were reassured to see BCE offer specific parameters of the type of new media content that it is proposing to create with public benefits. We believe that this particular type of rich interactive content associated with programs of national interest will only enhance the exposure and experience of the programs that it will be supporting.

3349   The Commission must reject the other pieces of BCE's proposed television benefits -- supporting local TV stations through satellite carriage, enhanced local news production in HD, and sustaining local 'A' Channel programming. These may sound like lofty goals, but in reality they seem to boil down to relieving Bell Satellite of its capacity limitations, and helping BCE meet its regulatory requirements for HD conversion.

3350   BCE is pitching these proposed benefits as addressing public policy challenges. We think it is more accurate to cast them as corporate objectives. BCE has so far failed to convince us that these are nothing but self-serving corporate investments that wouldn't otherwise be realized.

3351   We would also argue that allowing BCE to write off its public benefits to invest in itself would give it a completely unfair and inappropriate advantage over its competitors.

3352   Broadcasting licences are a privilege, not a right. Broadcasters are required to give back to the system in exchange for the right to use their licences for private profit. Benefits that primarily serve BCE's bottom line are not the purpose of the benefits policy.

3353   I just want to say a few final words on vertical integration.

3354   This is the second time in less than six months that we have come before you to comment on a massive corporate takeover that is radically reshaping Canada's media landscape. We acknowledge that there are potential benefits in building robust, vertically integrated companies. It should help conventional broadcasters deal with audience fragmentation, and it should enable them to more easily respond to the digital challenges and find ways to distribute Canadian content on multiple platforms.

3355   But we also see potential risks if safeguards are not put in place. There will be fewer doors for independent producers, and there is the risk of undue preference in distribution and the risk of fewer choices for Canadians.

3356   It is clear from recent events that the public is increasingly concerned about competition, and, in particular, the amount of control that large ISPs have. This seems to be only compounded when these ISPs are also BDUs and broadcasters and content creators.

3357   The time has come to impose some of the safeguards that exist for conventional distribution to the online world, and we look forward to participating in the Commission's hearings on vertical integration later this spring.

3358   However, that process may not allow you to take some of the specific steps that we believe are needed in the situation of BCE/CTV/GM.

3359   We would urge you to use this transaction to impose some safeguards to ensure consumer choice, that all broadcasting undertakings have equivalent treatment from the distribution systems owned and controlled by BCE, and that exclusive content deals are prohibited.

3360   We have heard BCE offer several assurances in these areas. All that we ask is that the Commission put some of these in writing.

3361   We must protect an open, accessible broadcasting system, where Canadians have access to a wide range of content, from a variety of sources, at a fair and reasonable cost.

3362   As Canada's largest vertically integrated media company, after this transaction, BCE can well afford to play by the rules and give a fair return to the Canadian public in exchange for the privilege of acquiring these valuable broadcasting licences. And what is fair, according to the CRTC's own rules, is a tangible television benefits package of 10 percent of the full value of the transaction under which BCE acquires control of CTVglobemedia.

3363   Thank you.

3364   THE CHAIRPERSON: Thank you very much for your submissions.

3365   First of all, I want to clarify that when we did our valuation, we came to the conclusion that the total benefits would be $236 million, of which $217 million would be television and $19 million would be radio. That is $15 million more than what BCE has.

3366   If I understood you correctly, you all support our valuation and say that we should go with that number.

3367   MS PARKER: Yes, we do support your valuation, but I believe that you have raised some other concerns that BCE has not yet addressed, so --

3368   THE CHAIRPERSON: Yes, absolutely. I just wasn't quite clear on the valuation, whether you basically are in agreement with us or not.   

3369   MS PARKER: Yes.

3370   Joel?

3371   MR. FORTUNE: There was just one small issue about the Edmonton radio station that was 50 percent owned by CTV, and recently sold, and that amount was backed out of the valuation. The full $22 million was backed out, but BCE's interest was only 50 percent, so --

3372   THE CHAIRPERSON: So it should be $11 million.

3373   MR. FORTUNE: Exactly.

3374   THE CHAIRPERSON: Yes, I think that my colleague picked that up, and we will see what Bell will propose tomorrow.

3375   Secondly, as you have heard from the questioning of the panel, we are in total agreement with you that these benefits should not be self-serving. They should benefit the system and they should be incremental, and not something that Bell would do in any event.

3376   So we have a lot of sympathy with your positions which you all take with regard to the enhanced local news production in HD, $24 million, and to sustain local programming on A Channels.

3377   On the MPEG-2 to MPEG-4, I am not quite sure why some of you feel it is totally offside others feel it is partially offside, et cetera. I mean, I have asked everybody this question, so I will ask it to you. It seems to me will the system not benefit if Bell does this and all OTA stations are now -- that have local content will be on the air?

3378   And as Mr. Cope explained very flamboyantly, it is all or nothing, you can't just change some top-boxes and not others, the whole system runs on MPEG-4. So I asked him, shouldn't there be an apportionment, and I didn't get a clear answer.

3379   But I don't see on how you can say this is not a benefit to the system, we should knock out the whole $84 million.

3380   MR. MURPHY: We could speak to that a bit.

3381   I think we do see the carriage of local stations as a benefit to the system. Obviously, that would be better for the revenues for the entire system, be better for everybody. I think what our concern is, obviously $84 million is a large chunk, it is 40 per cent of the entire package. And we share the concerns that I think the Commission brought up on the first day about the overage.

3382   And as far as I understood, there seemed to be some attempt to try and sort of quantify how much would it cost to get to the LPIF stations and then how much or sort of what is the percentage of overage. And therefore, I guess you could come to some formula that would determine which amount the benefits could be used.

3383   I think, you know, that is a good possible way to go. I think another possible way would be to say that these are almost social benefits and perhaps 15 per cent of the package could be set aside for that initiative and maybe Bell can pick up the rest on that as well.

3384   THE CHAIRPERSON: Yes?

3385   MR. NEIL: ACTRA's perspective is somewhat similar to that. I would add that this seems to us to be a capital expenditure and, historically, in the past the Commission has not accepted capital expenditures.

3386   And from ACTRA's side we can see, obviously some benefit, but we want to maximize the benefit that goes to on-screen programming and keep that at its historic levels and, therefore, this would have to be reduced in order to accommodate it.

3387   MS PARKER: Just to throw in our two cents, yes, we do see that it is definitely of benefit. But it is getting the numbers back to the on-screen, and we don't see how you are going to do that unless there is some give on that issue in terms of the amount.

3388   THE CHAIRPERSON: Okay. Then while I have you, Ms Parker, you insisted on a 10 point rather than 8 point. Have you ever approved 8 point or is this new that Bell puts it on the table or..? I thought benefits are usually 10 -- but you are more familiar with benefit packets than me.

3389   MS PARKER: It is not new, the issue of 8 point. The CMF requires 10-point production. Our position of course, as guilds and unions that represent actors, writers and directors, is that we would all like to work on indigenous production. It allows the producers more flexibility in terms of financing if they have an 8 point, in that they can perhaps use an American lead on a series or an American show runner or an American director.

3390   So we would like to see public money benefit all of the craftsmen and the artists that contribute to Canadian programming.

3391   THE CHAIRPERSON: But is that necessarily in the best interest of the system? I mean, if you have a foreign star or a foreign director, et cetera, obviously it enhances your foreign sales. And it would also benefit the other 8 points who participated in the creation of the product. And sort of I can see why the producers would want to go to 8 rather than -- or why BCE would want to in order to make the product more appealing to the foreign market and thereby getting greater return which, by the way, would benefit all the creators too.

3392   MS PARKER: You know, I guess it is a question of using public benefits money. You know, we are part of the system as well and I don't necessarily agree that it would bring in higher sales or make a more successful product.

3393   CTV's most successful show, other than some of their foreign buys, is Flashpoint, and that is a 10-point production. Shaw-Canwest is doing very well with Rookie Blue, 10-point.

3394   So absolutely there is, you know, always a desire for flexibility in our system, but is there a need? Those are two different issues. This is public money and we do believe that it should go to strengthening the talent pools for all of the artists working in the system.

3395   MR. MURPHY: Just a brief comment.

3396   I am not sure if we have seen any sort of quantifiable evidence that an 8-point production would maybe do better than a 10-point production on --

3397   THE CHAIRPERSON: I mean, you are in the business, not me. I would have thought that has to be the driving force in order to be able to have better foreign sales. If I am wrong, please correct me. I mean, I can't imagine why else -- obviously it gives you greater flexibility, but flexibility just for the flexibility, I doubt that this is what is driving it. It must have been, I would have thought, a view to foreign markets here.

3398   MS PARKER: Can I just add that during the CMF hearings that we were all participating in a couple of years ago this was an issue and there was no evidence presented that 8-point production was more successful in terms of audience and ratings. So again, I just point to the example of Flashpoint.

3399   THE CHAIRPERSON: Now, you mention CMF. We are in the age of convergence and obviously platforms are moving and products are shown more and more on new platforms, et cetera. The CMF has a new media component which is vastly over-subscribed. So therefore, I was so surprised that you were so adamant that 75 per cent should to go PNI rather than give BCE some.

3400   Because given the movement of platforms, et cetera, you know, as long as your members produce, whether it is for one or the other, surely that is what -- and the more they can adapt to the new platforms the better. I know right now most of it is still produced for television and then reformatted for new platforms, but that is not going to last forever. And we are talking here about a seven-year package.

3401   MS PARKER: Yes. We are comfortable with that proposal, in that we do think it is still the main driver and the need is there. All of the funds are oversubscribed, not just the experimental. And we have seen a drastic decline in the amount of money going into drama; in 2000 there was $62 million from CTV conventional, it is down to 23.

3402   And we do know that we have group licensing coming up, but we have been doing the analysis and, you know, with the new framework we are not sure that it will result in anything more than status quo.

3403   So we are concerned, we think that programs of national interest are the main driver of the system. Absolutely, we want to grow digital, and we look forward to doing that in the future. But we think this would be the best use of the benefits at this time.

3404   THE CHAIRPERSON: And your colleagues on the panel share this view?

3405   MS DEER: Yes, absolutely, we would agree with that. I mean, the programs of national interest are the driver of the system and we want to maximize the audiences for that.

3406   You know, we think that digital media and distribution over digital media is absolutely important and, you know, anything beyond the 75 per cent, you know, we would be more than happy to see some of that allocated towards, you know, creating new digital content, specifically the sort of content that BCE specifies in their proposal.

3407   As long as it is, you know, rich content that is going to enhance the experience of the programs of national interest, we do think that would be of benefit.

3408   THE CHAIRPERSON: Yes, it's the seven years that bothers me, you know. I would have thought maybe you would want to have a sliding -- taking into account what we see as the change in the industry, which is clearly happening, but nobody knows at what speed, et cetera. But whether to lock it into that formula for seven years, whether some added flexibility isn't required.

3409   MS PARKER: If you do propose a phase reduction, if you start perhaps with the 75 per cent and phase it out, I guess our concern is too when, you know, the new media exemption will be lifted and we will be able to look at this as business across the board. So there are a lot of things at play.

3410   THE CHAIRPERSON: Yes. We are all groping, that is why I am not asking you very specific questions because I don't know the answer myself. I just wanted to have the benefit of your experience.

3411   Rita, you had some questions?

3412   COMMISSIONER CUGINI: Now, just a couple, and only because I did also ask the CMPA yesterday. But ACTRA, you are the only ones who addressed the issue of programming should have its first window on conventional.

3413   And I was wondering if the Directors Guild and the Writers Guild had a position on that. Because we do know that Bell, in their initiative, said that the programming would be on conventional and specialty. But ACTRA, you specified that the first window should be on conventional.

3414   MR. MURPHY: I mean, I think we would like the programming to be on conventional. I mean, we represent creators who want their works to be seen by the largest amount of people possible, and that is where you get it is on conventional television. So I think we would like it to be there.

3415   But we realize I think business decisions will dictate where they feel is the best place to spend the money. I also think that the businesses would probably push them to put it on conventional as well, they want to recoup as much as possible.

3416   COMMISSIONER CUGINI: Ms Deer?

3417   MS DEER: They are buying both conventional and specialty and we think that, particularly in the era of group licence renewal, they should have that flexibility. So we have no problem with that.

3418   COMMISSIONER CUGINI: Okay. I think that was the only follow-up question I had.

3419   THE CHAIRPERSON: I am sorry, I forgot one question I wanted to ask you. Do you see a link between benefits money and exclusivity? As you know, we have heard a lot from the other competitors of Bell about exclusivity and their fear, et cetera.

3420   And the question that I would pose, should one establish a condition that benefits money cannot be used for programs which will be exclusive or something like that or are those two totally separate issues?

3421   MS DEER: I think our short answer would be yes. There should be a specification that there can be no exclusivity on programming created with public benefits money.

3422   MS PARKER: Yes, we share that position.

3423   THE CHAIRPERSON: Okay, thank you very much. I appreciate your presentation and also the shortness. As you know, there are a few other things that we have to deal with today. Thank you.

3424   MR. NEIL: Good luck with those.

--- Rires

3425   THE SECRETARY: I would now invite On Screen Manitoba and AMPIA to come forward to the presentation table please.

--- Pause

3426   THE SECRETARY: I think we are ready. I would like to introduce On Screen Manitoba and Alberta Motion Pictures Industries Association, AMPIA, who will be appearing as a panel.

3427   We will hear each presentation, which will then be followed by questions by the Commissioners.

3428   We will start with On Screen Manitoba. Appearing for On Screen Manitoba is Ms Nicole Mapiation. You may proceed with your 10-minute presentation.

PRÉSENTATION

3429   MME MAPIATION : Merci.

3430   Bonjour, Monsieur le Président, membres du Conseil et employés. Je m'appelle Nicole Matiation. Je suis la directrice générale de On Screen Manitoba et je présente aujourd'hui avec mon collègue monsieur Bill Evans, qui est le directeur général du Alberta Motion Pictures Industry Association. On vous remercie de nous écouter.

3431   On Screen Manitoba is an innovative membership-driven association that leads, builds and represents the Manitoba screen-based media industry.

3432   On Screen Manitoba's membership represents a cross-section of individuals and industry organizations such as production companies, creators, labour groups, distributors, broadcasters, suppliers and exhibitors totalling more than 1,500 individuals.

3433   Our members, the creators, crews and suppliers of Canadian independent screen-based media in Manitoba play a vital role in the fulfillment of one of the Broadcast Act's core mandates, that is to ensure the Canadian broadcasting spectrum is used to provide a diversity of voices to the Canadian people.

3434   We believe this includes ensuring access to broadcast schedules for a wide variety of independent producers including Aboriginal, Francophone, Anglophone and multicultural producers from all regions in Canada.

3435   In their application BCE recognized the important role that tangible benefits from past changes of ownership have played in supporting the development and production of independently-produced Canadian content.

3436   We agree wholeheartedly with this assertion. So we are pleased to acknowledge BCE has indicated in their revised tangible benefits proposal, presented earlier this week, that they will commit 100 percent of the contribution to onscreen and new media programming by independent producers, and that they have increased that contribution amount.

3437   We are also encouraged to hear that CTV's leadership feel that they are nearing the completion of terms of trade discussions with the Canadian Media Production Association. We agree with my colleague's assertion that he will be presenting later this morning that it's imperative that these negotiations continue and reach a rapid conclusion.

3438   So we do also support the position of the Canadian Media Production Association, in particular that the quantum of the tangible benefits must represent 10 percent of the total value of the CTV television assets. We encourage the CRTC to continue to be diligent in assessing the real value of these assets and that they should include all of BCE's television-related assets.

3439   And we believe that a minimum of 85 percent of the total tangible benefits must be allocated to the creation of Canadian programming.

3440   The resources allocated to the creation of independent Canadian programming must be administered by a third party and not be limited to projects that are ultimately broadcast on CTV uniquely or its other television properties.

3441   Avec son peuple aussi diversifié que sa géographie, le Canada a reconnu depuis longue date le rôle essentiel que les systèmes de communications et leur contenu jouent en engendrant un sens d'appartenance et de connexion chez ses citoyens. La politique des communications au Canada ainsi que ses pratiques sont basées sur des principes qui garantissent aux Canadiens l'accès à du contenu qui reflète les intérêts du Nord, du milieu rural et des centres urbains, ainsi que les réalités culturelles des communautés autochtones, francophones, anglophones et multiculturelles. La consolidation et l'intégration verticale des propriétés de télédiffusion et de communications représentent un vrai défi aux principes de l'accès et de la diversité.

3442   We were pleased to hear in the presentation earlier this week that BCE intends to expand local television news in several western locations including Winnipeg. This type of initiative supports principles of access and diversity of voices but we note that regional producers also play a key role in bringing diverse voices to programs of national interest and ultimately to new media.

3443   In Manitoba the impact of consolidation has been acute. The shift from locally-owned to consolidated, mostly Toronto-based mega corporations has wiped out the regionally headquartered broadcasters that were originally founded in Manitoba as family-owned businesses, including the A Channel, (the Craig family), CKY and WTN (the Moffats) and Canwest Global Communications with the Aspers.

3444   The distribution of tangible benefits to regional producers administered by a third party will help to address this growing disconnect between regional producers and this increased concentration in central Canada.

3445   Broadcast decision-makers currently have no obligation to travel to regions to seek opportunity to form relationships and develop content projects with regional producers.

3446   In the past, regional broadcast offices have acted as a conduit to national decision makers. We would like to acknowledge the success of the CTV Western Development Office that was established in Winnipeg in 2001 as part of the benefits package created when CTV purchased CKY Winnipeg.

3447   The creation of this office and appointment of a development manager had a direct impact on Manitoba's independent production sector. 11 million in production leveraged from CTV's investment of 600,000 from the Manitoba Script and Development Fund and 1.6 million from the local regional programming initiative, called Manitoba Moments.

3448   As a result of these two initiatives 56 shows were licensed from over 30 Manitoba production companies. Nationally licensed Manitoba-made shows included ELIJAH, Hockey Brawl, As Seen on TV!, The K-Tel Story, There's Something Out There and Music Rising.

3449   It is important to note that prior to 2001 few Manitoba productions had aired nationally on CTV. Unfortunately, this office has been closed but it's a demonstration of the impact that tangible benefits can have on a local production industry.

3450   The current application by BCE and the upcoming CTV license renewal affords a new opportunity to build on the success of this initiative.

3451   We will be putting forward a case that a condition of license for CTV should be the establishment of regional development offices or some such mechanism to facilitate opportunity for regional producers to interact directly with decision-makers and that CTV demonstrate a true commitment to supporting diversity and access to regional content in all areas of production -- or programming, rather.

3452   We note that in an often-referred-to recent study, Canadians consume the largest amount of digital video in the world. Bell's strategy to use their multiple communications platforms to engage Canadians across four screens intersects with the vision of Manitoba's production community to share their best content with audiences across Canada and beyond.

3453   In conclusion, we ask the Commission to keep in mind how consolidation and vertical integration ownership limits opportunity for regional producers to build partnerships and projects with broadcast decision-makers in central Canada. This in turn threatens the sustainability of smaller production markets, potentially reducing the diversity of programming available to Canadians, and ultimately weakening the broadcast and communications systems in Canada.

3454   Merci encore de cette opportunité de partager notre position.

3455   LA SECRÉTAIRE : Merci beaucoup.

3456   Mr. Evans, you may now proceed.

PRÉSENTATION

3457   MR. EVANS: Thank you.

3458   Hello. My name is Bill Evans, and I am the Executive Director of the Alberta Motion Pictures Industry Association. Thank you very much for the opportunity to appear and provide comments on this application.

3459   As with On Screen Manitoba, AMPIA plays an important role in this sector of the economy, representing screen content professionals, disseminating information, marketing and promoting indigenous production on behalf of our membership.

3460   Presently, AMPIA has a total of 200 member companies, representing a cross section of more than 2,500 industry professionals, including producers, directors, performers, writers, craftspeople, distributors, suppliers, exhibitors and even broadcasters (including CTV).

3461   AMPIA represents the interests of individuals and companies involved in all aspects of screen based content industry by supporting the creation of an environment in which Alberta producers can create, develop and produce content that reflects Alberta to Albertans, to the rest of Canada and the world.

3462   First, let me state that we support our colleagues at CMPA, DOC and On Screen Manitoba in their submissions in support of a ruling that will require BCE to contribute benefits to independent producers. I believe the valuation placed on this is $138 million for independent production, which is crucial to our membership.

3463   We support the CMPA's recommendation that at least 75 percent of priority programming be produced by independent producers, but we would take this one step further in recommending that the Commission ensure this acquisition requirement includes the need to engage independent producers from all regions of Canada.

3464   It is our position that the use of independent producers from all the far reaches of this country will best ensure that this transaction is consistent with the objectives of the Broadcasting Act to reflect all aspects of Canadian life.

3465   Further to this point I would just like to quote from the Canadian Broadcast Act, clause 3 which states:

"The programming provided by the Canadian broadcasting system should:
(i) be varied and comprehensive, providing a balance of information, enlightenment and entertainment for men, women and children of all ages, interests and tastes,
(ii) [that it] be drawn from local, regional, national and international sources,
(iii) [that it] include educational and community programs,
(iv) [that it] provide a reasonable opportunity for the public to be exposed to the expression of differing views on matters of public concern, and;
(v) [it should] include a significant contribution from the Canadian independent production sector;" (As read)

3466   It is our position that national broadcasters without independent regional producers (in this case those based in Alberta) do not have the same perspective (nor storytelling abilities) as those professionals whose livelihoods are based on producing quality programming for television and other screens for all Canadian homes.

3467   Canadians in the Maritimes have a different perspective and tell different stories than Canadians in Alberta, or the West Coast, or Canadians in our Northern Territories. The Broadcasting Act refers to reflecting Canadians from across this country -- the public at large -- each of whom need to see themselves reflected on their screens at home. A homogenous diet of American or centrally-developed Canadian programming does not fulfill the needs of the Canadian public, nor does it contribute to the fostering of a shared Canadian identity.

3468   Further, it is AMPIA's position that regional development offices and significant regional development funds and licenses be required as a condition of license for this transaction. These offices should be more than drop off points but, rather, should become an integral part of BCE's business plan to secure the best programming possible.

3469   It is now more important than ever, that national broadcasters have regional executives and regional offices who work hard to bring quality programming from the regions to the national arena. This approach would enhance the BCE brand as well as strengthen the fabric of Canadian television. As my colleague mentioned, many great programs have come to life under past BCE benefits and many more could be created in the future.

3470   We further recommend that BCE be required to provide detailed and regular reports on its benefits package expenditures as a condition of its license which was tentatively contemplated in paragraph 34 of CRTC Decision 2000-747.

3471   AMPIA respectfully requests the CRTC ensure the benefits expenditure report be made available on its website one month following the filing of the annual return.

3472   AMPIA also emphatically supports the terms of trade initiative proposed by the CMPA and recommends that adherence to fully negotiated and signed terms of trade with the CMPA be made a condition of license and/or approval of this transaction. Without terms of trade, independent producers, particularly those based in the regions, have no leverage to negotiate equitable program license terms in the face of such vast market power held by BCE and the other large Canadian broadcast/media corporate groups.

3473   AMPIA appreciates the opportunity to comment on the application. Thank you.

3474   THE CHAIRPERSON: Thank you.

3475   Mr. Evans, what are you referring to when you say in the second-last paragraph, CRTC's decision 2000-747 which was tentatively contemplated? What exactly did --

3476   MR. EVANS: I believe what I am referring to it was suggested as a condition -- it was suggested in that decision that BCE provide details regularly but it was not made as a -- it was not a condition of licence.

3477   THE CHAIRPERSON: So an expectation. I see.

3478   Okay. So if I understand, in a nutshell, both of you obviously feel that regional production and participation is vital to your industry and one way to enforce it is put in a reporting requirement on Bell each year, that in its benefits they clearly point out how much was spent in each region?

3479   MR. EVANS: That would be ideal, yes.

3480   THE CHAIRPERSON: Yeah, okay. Thank you.

3481   Rita, you have some questions?

3482   COMMISSIONER CUGINI: Yes, just a couple.

3483   I'm not going to ask you questions about your position on the benefits and what the quantum of that should be, because it's common, as you say. So I just want to focus on where some of the differences are between your presentations and those of others.

3484   I'm going to start with On Screen Manitoba. You say:

"The resources allocated to the creation of independent Canadian programming must be administered by a third party..."

3485   So you do not want to see a resurgence of a self-administered fund as was initially approved in the 2000 transaction between BCE and CTV?

3486   MS MAPIATION: It would seem -- sorry -- it seems to us that --

3487   COMMISSIONER CUGINI: Mr. Evans, you need to turn off yours.

3488   MR. EVANS: Oh, sorry. Thank you.

3489   COMMISSIONER CUGINI: Excellent.

3490   MS MAPIATION: Okay. It seems to us that the most equitable way for ensuring that there is consideration of regional producers across Canada is to work through a third party agency for that. But we are open to further discussion.

3491   Our concern is to ensure that there is an equitable system for distribution that is transparent and takes into account the interests of Canadians right across the country.

3492   COMMISSIONER CUGINI: Yeah. I know obviously that you would like to see a regional -- well, no, it's not obvious to me and I was going to ask you that.

3493   While there was a regional office, do you want to see a regional office reopened or do you want to see a portion of that fund earmarked for regional production, or both?

3494   MS MAPIATION: Our priority is to have the funds earmarked for regional production but, in order for us to take -- for our members to take forward their ideas, it would be extremely helpful and far more conducive to the process if there was some sort of mechanism in place which would allow for regional producers to be in direct contact with decision-makers within the CTV structure.

3495   COMMISSIONER CUGINI: Mr. Evans, you also make the point that regional development offices and regional development funds and licenses should be required.

3496   Do you have a preference if it's not possible to do both, whether it should be offices or funds?

3497   MR. EVANS: Well, I would echo my colleague's preference that we think that the funds should be allocated for regional production.

3498   However, I would just like to point out that the value of having a regional representative, or at least the opportunity for programming executives to meet in the region with local producers is extremely valuable and, you know, we have some concern now that the development office in Vancouver is sort of facing an uncertain future. It's difficult as it is to get to Toronto to meet with development executives, at least with Vancouver we had a little bit of an opportunity.

3499   So to reiterate, yes, we would -- the priority is the funds for the programming, but the value of having regional representation is also very high, in our estimation.

3500   COMMISSIONER CUGINI: Now, we know that the largest market for Canadian production occurs at Banff each year and it's in your region.

3501   MR. EVANS: Yes.

3502   COMMISSIONER CUGINI: That's not sufficient?

3503   MR. EVANS: No. That is an important part of the puzzle, as you say, but often at Banff people are so overwhelmed with meetings that it becomes almost useless in a way, unless you are really, really tenacious, which of course a lot of our independent producers are, but usually a deal that is started at Banff only to be followed up by a trip to Toronto to secure a development deal or a production deal.

3504   We would like to see, if not a reopening of a regional office, at least that the office that exists in Vancouver be mandated to stay open and also we would look at perhaps something else such as looking at the way the CMF does their consultations, where they come out twice a year at least to meet with regional producers in all regions.

3505   COMMISSIONER CUGINI: So some kind of arrangement like that would also be acceptable?

3506   MR. EVANS: Yes.

3507   MS MAPIATION: I would echo what my colleague has said.

3508   Really there is great value in meeting at festivals and conferences and my producers do that, but there isn't the opportunity for follow-up and that's where the real work happens. You might catch somebody's interest, but to be able to actually negotiate a deal, actually bring an idea forward you need opportunity for frequent meeting. The programming decision-makers need an opportunity to get a sense of the value of what a region can offer and that required in-community visits and more frequent visits.

3509   COMMISSIONER CUGINI: I want to thank you very much for taking the time to travel to Gatineau to speak with us and those are all my questions.

3510   Thank you.

3511   THE CHAIRPERSON: Louise...?

3512   CONSEILLERE POIRIER : Bonjour, Madame, Monsieur.

3513   Je voulais vous dire que je trouve très intéressant que vous revendiquiez qu'il y ait plus de productions en région. Vous me sensibilisez au fait que plus il y a de consolidation, on se retrouve peut-être avec moins de productions faites en région.

3514   Et, d'ailleurs, ce serait peut-être intéressant pour vous, lors de l'audience du mois de juin, d'arriver avec des chiffres précis qui pourraient confirmer cette situation pour qu'on sache si elle est vraie ou non.

3515   Parce que vous savez qu'on demande de plus en plus à Radio-Canada, qui est un radiodiffuseur public, d'essayer de refléter les régions sur ses ondes. Alors, comment voulez-vous qu'on convainque une chaîne consolidée nationale, qui est là pour faire des profits, de le faire, alors que c'est difficile pour Radio-Canada?

3516   J'aimerais donc, d'abord, une première réaction à cette suggestion que je vous fais et à cette demande que j'approuve de dire oui, plus de productions en région, mais comment faire en sorte que quelqu'un qui n'est pas là pour de la radiodiffusion publique le fasse? Quels sont les arguments convaincants?

3517   MME MAPIATION : Je vais commencer.

3518   Donc, d'abord, on sera très content de ramener ces informations, à les organiser pour le mois de juin, tel que demandé.

ENGAGEMENT

3519   Ensuite, évidemment, ce n'est pas un problème facile à résoudre, mais c'est essentiel, et je crois que le système de communications au Canada, c'est là dans la politique qu'on doit faire tous les moyens possibles d'encourager cette diversité au niveau de la programmation.

3520   Je crois que, réellement, il y a une différence entre un producteur qui vit toute sa vie en région et un producteur qui vit toute sa vie dans un grand centre. Mon expérience à Winnipeg est très différente que l'expérience de quelqu'un qui habite à Toronto ou Montréal, et c'est l'importance d'apporter ça toujours.

3521   Les mécanismes pour assurer que ça arrive, je crois que ça commence ici dans ces auditions et dans les décisions...

3522   CONSEILLERE POIRIER : En allouant une partie des fonds pour de la production régionale.

3523   MME MAPIATION : C'est ça.

3524   CONSEILLERE POIRIER : Et vous, Monsieur Evans?

3525   MR. EVANS: I one percent agree with my colleague. I think that it is fundamental to this process.

3526   COMMISSIONER POIRIER: One tiny information I need, does the Canadian fund dedicate money to regional production, independent production -- regional production is my question. Is there a percentage of the Canadian fund that is located to regional production?

3527   MR. EVANS: Not to my knowledge, but I will look into that and I can provide a response in writing, if you would like.

3528   COMMISSIONER POIRIER: Okay.

ENGAGEMENT

3529   MS MAPIATION: It's my understanding that there are discussions around that issue at this time, but I don't have actual percentages.

3530   COMMISSIONER POIRIER: Okay. I would love to have it, please. Thank you.

3531   THE CHAIRPERSON: Okay. Thank you very much for your presentation. Those were all our questions.

3532   Madame la Secrétaire, I think we have time for one more intervenor before lunch.

3533   THE SECRETARY: Yes. There has been a small change, Mr. Chairman, to the schedule. We will now proceed with CEP, which will be followed immediately after by items 28, 29 and 32 on the agenda.

3534   THE CHAIRPERSON: Okay.

3535   THE SECRETARY: I would now invite CEP to come forward to the presentation table.

--- Pause

3536   THE CHAIRPERSON: Mr. Murdoch, Ms Auer, we meet again.

3537   MR. MURDOCH: Good morning.

3538   THE CHAIRPERSON: Good morning.

3539   Go ahead.

3540   THE SECRETARY: Please go ahead.

PRÉSENTATION

3541   MR. MURDOCH: Okay, thank you. Thank you, Madam Secretary.

3542   For the record, my name is Peter Murdoch, and I am CEP's Vice-President of Media. With me is Monica Auer, CEP's legal counsel in this matter.

3543   CEP is Canada's largest communications union. Twenty thousand of our members work in radio, TV, cable and newspapers across Canada, over 1,500 at CTV alone. Another 20,000 of our members work at BCE.

3544   As CEP said in its written intervention, the last two years have been extremely difficult for Canada's broadcasting system and for the men and women who work at local stations. CEP is proud of our members' contribution in local television.

3545   We begin with comparisons between CTV and Canwest. Our union is very familiar with the situation of Canwest. I assure you that CTV is not Canwest. It is true that between 2008 and 2009 employment at CTV dropped by almost 6 percent, and that CTV reduced spending on local news and Canadian programming. It is also true that our members have heard persistent rumours about the future of some CTV stations, especially the 'A' channels.

3546   But as the Chair pointed out on Tuesday, CTV does not face bankruptcy. Parenthetically, CEP would also like to note that Canwest's financial problems were not triggered by its television stations' performance, but by excessive debt.

3547   Neither CTV nor BCE has presented evidence proving that its programming services consistently lose money. If you have such evidence, CEP has been unable to review, clarify or challenge it and for that reason alone, you cannot rely on it.

3548   What is very clear to everyone is that BCE would like to minimize the cost of buying CTV. That is BCE's job; it is not, however, yours.

3549   Your role is to maximize this application's benefits to Canadians of this acquisition. Having BCE as an owner could give CTV important financial backing to strengthen Canadian programming, including local content. You must set the terms of BCE's purchase of CTV to make this happen.

3550   We are troubled, however, that Canadians had to wait from December 10th, when you made BCE's application public, to February 2nd, for BCE to translate vague promises into specific undertakings. The CRTC's deficiency process should have obtained these answers on Canadians' behalf, but did not.

3551   In our view, it is your role to require broadcasters to translate vague ideas into enforceable commitments, before your hearings begin, not after. This role is vital because only the CRTC can hold these companies to account.

3552   Companies like BCE and Shaw routinely rebuff intervenors' reasonable attempts to understand their applications. For the record, when BCE replied to intervenors it did not answer one of the 20 questions put by CEP.

3553   Ignoring intervenors transforms the application process at best into a choreographed regulatory dance in which applicants pretend to "respond' to Canadians" concerns. At worst, ignoring intervenors' legitimate questions stymies the intervention process and makes the hearing process inefficient.

3554   In our view, this ball is in your court: your process should serve Canadians' interests.

3555   As for BCE's plans, Commissioners, CEP is pleased that on Tuesday BCE explained that its commitment to "enhance" CTV's local newscasts, means that over two years it will dedicate $12 million to 110 hours of "incremental local morning news and programming content".

3556   We welcome the company's decision to add new local news program hours in Winnipeg, Regina, Saskatoon, Edmonton, Calgary, Vancouver and Edmonton, and to hire 80 new employees.

3557   As CTV has reduced its staff by 343 jobs since 2008, BCE's decision to begin hiring is a very positive one that will benefit local communities across Canada.

3558   We have heard others argue here today argue that the benefits being paid by BCE for national interest on-screen content should increase from $53 million to $140 million, and that a substantial part of the benefits for local TV should not be viewed as a tangible benefit. They claim these are the costs of doing business.

3559   For almost every local TV station, Mr. Chairman, local news is the station's only business. Local service is why these stations are permitted to sell local ads.

3560   Our preference is that tangible benefits such as BCE's be used to restore the health of our broadcasting system. That health clearly, and without question, includes local news. We don't want to be put in a position where this is kind of Sophie's Choice.

3561   If BCE decides to shift capital expenditures into on-screen content, it must ensure that every local community it serves, receives the local programs and local news these communities need and want. Currently, however, BCE is offering this benefit for just two years. Does this mean that BCE will begin laying off these staff in September 2013?

3562   Commissioners, every decision the CRTC issues becomes a precedent on which other applicants rely. A two-year tangible benefit will create jobs, but it will inevitably lead to the one-year tangible benefit, and perhaps then to the six-month benefit.

3563   Moreover, Mr. Chairman, our members have not forgotten that every major ownership transaction in broadcasting for the last 20 years has been financed in part by lay-offs, often from local TV stations.

3564   Our union is also concerned about BCE's treatment of the 'A' channels. On Tuesday, BCE acknowledged the "significant overwhelming support" from the communities served by the 'A' channel TV stations, but did not make any commitment to the stations or the communities over the long run.

3565   What is the point of vertical integration and such highly concentrated ownership of Canada's broadcasting stations, if these extremely large, powerful and profitable owners can abandon service to local communities?

3566   TV stations exist as a public service, as well as business units. The CRTC must require BCE to explain its precise plans for the 'A' channel stations and ensure that these stations continue on-air.

3567   Finally, we want to address concentration of ownership. CEP has opposed and continues to oppose the level of concentrated ownership in Canada's broadcast media that now exists, because concentrated control of the news on which Canadians rely weakens democracy.

3568   CEP does not support the use of industry-drafted codes to ensure information diversity. They are virtually unenforceable, promote the sharing of news across commonly owned programming services, and have not increased the level of quality of diversity in broadcast news and information.

3569   When large corporations, with many business interests, control broadcasting content, relying on a post facto complaints-based regime to ensure diversity will not work either.

3570   CEP asks you to consider that the time has come to establish a mechanism to assess news and information diversity empirically, so that Canadians will have a better sense of the impact of excessive media concentration in Canada.

3571   Finally, Mr. Chairman, on Tuesday you set out concerns about content exclusivity. We share your concerns. Media ownership itself has become very exclusive. Regulating the exercise of that exclusivity in consumers' interest lies entirely within your jurisdiction and authority.

3572   Even if consumers are not protesting en masse in this room over soaring communications costs, the CRTC should, nevertheless, protect their interests and ensure that Canadians have maximum access to Canadian programming.

3573   To conclude, Mr. Chairman, we acknowledge that both BCE and CTV have been leaders in Canada's communications industry, but as the number of owners shrinks, the CRTC's role is increasingly important -- important to Parliament, Canadians, consumers and employees.

3574   Once the Titans in our industry, traditional broadcasters are now owned by distributors whose ability to restrict consumer choice has never been higher.

3575   As the only federal agency authorized to supervise and regulate Canadian broadcasters, you play a critical role. We, therefore, ask that you set each programming commitment made by CEP as a measurable condition of your approval of this transaction. Canadians must count on your active control of a high-stakes market, dominated by too few players, to serve and protect their interests.

3576   Thank you very much. I would be happy to answer any questions.

3577   THE CHAIRPERSON: Thank you.

3578   I think you are the only one so far who has raised the whole issue of diversity of voices. In paragraph 24 you say something about the time has come to establish a mechanism to assess news and information diversity empirically, so that Canadians have a better sense of the impact of excessive media concentration.

3579   MR. MURDOCH: Yes.

3580   THE CHAIRPERSON: I understand the thought. Is it more than a thought? Do you have a suggestion? Do you have a proposal? Are we going to see you in June coming forward with something on this point?

3581   MR. MURDOCH: We would be happy to do that. I mentioned this to the Heritage Committee, the same proposal. We would be happy to come with a proposal to set up some arm's length --

3582   I don't know whether you are familiar with the Pew Institute in the United States, but something that will monitor this without directing news flow, without suggesting -- without the influence of government, et cetera, but something that monitors our news flow, to see what the impact of concentrated ownership is.

3583   There are some benefits to it, I suspect, but there are also some grave concerns about it.

3584   THE CHAIRPERSON: As you appreciate, of course, we only have one piece of the pie. There are all sorts of sources of news which do not fall under the jurisdiction of the CRTC.

3585   MR. MURDOCH: You are right about that, and many of our members work for those other institutions.

3586   I am hoping that we might get some institutional involvement on both sides, by the way.

3587   THE CHAIRPERSON: Okay. Thank you.

3588   Elizabeth, I believe you have some questions.

3589   COMMISSIONER DUNCAN: Actually, I reviewed your submission, and I think a lot of the matters have been addressed, so I just have a couple of questions on the issues you raised this morning, and perhaps it's just for clarification.

3590   In paragraph 17 you refer to BCE offering a benefit for just two years. This is with respect to on-screen content, that every local community it serves receives the local programs and the local news that these communities need and want.

3591   Could you expand on that for me? I am just not following that.

3592   MR. MURDOCH: Paragraph 17: Must ensure that if BCE decides to shift capital expenditures into on-screen content, it must --

3593   COMMISSIONER DUNCAN: Yes.

3594   MR. MURDOCH: We heard this morning that there were some concerns raised that some of the benefits were capital expenses, "the cost of doing business" I think was the phrase.

3595   Our concern is, if that is the view of the Commission, that money still should, nonetheless, be put toward local programming and local news.

3596   I want to emphasize that you are all aware that two years ago we were here before you, as were a lot of others, including the broadcasters, about a crisis in local news, and we saw stations go black. With your good work, we came up with the LPIF and we tried to do something about it.

3597   That crisis hasn't abated. There are still grave concerns about local news and trying to finance it and find ways to support it, and there is still the desire of Canadians to support their local news stations.

3598   We want to ensure that that happens. Particularly, we don't want to see the 'A' Channels touched, which are also an integral part of the communities.

3599   COMMISSIONER DUNCAN: Thank you for that. I understand what you are saying, but what I was referring to was your mention of BCE offering this benefit for just two years. That's what I didn't understand.

3600   MS AUER: Thank you for the question, Commissioner Duncan.

3601   It was my reading on Tuesday, when BCE circulated its new document, that it had stipulated that the local news benefit would last for two years. I had thought that was what they had committed to, and we value that commitment, we welcome the commitment, our concern is the duration.

3602   COMMISSIONER DUNCAN: Okay. Thank you. I can check that.

3603   The other question I had was with respect to paragraph 20 -- and, again, that's the A stations, so that's probably the same thing.

3604   It is your understanding that that commitment is only a short-term commitment, as well?

3605   MR. MURDOCH: Yes, we would like to see something more concrete, something in the way of a long-term commitment.

3606   Our concern is this -- and you have much more knowledge about economics than I do, but we saw the broadcasters, at one point, with growth margins going like this, and then they started to flatten out.

3607   We saw cable companies with growth margins like this, which are now starting to flatten out.

3608   With the new owners -- the cable companies, the distributors -- at some point there is going to be a desire to keep those profit margins going at the rates they have now. Our concern is that if there are not real commitments on the part of ensuring that these stations stay open, they might turn to those stations to reduce costs and try to keep those profit margins where they are.

3609   We are looking for long-term commitments, absolutely.

3610   MS AUER: If I might add, Commissioner, again we reviewed the transcript after Tuesday, and I wasn't seeing a clear statement to the effect that the stations will, of course, remain open for the duration, that "we have applied to renew them for the full licence term".

3611   What I read in the transcript was that every business unit really has to stand on its own two feet, and "we are going to make business decisions".

3612   Granted, but, of course, this agency has the authority to address that.

3613   THE CHAIRPERSON: Thank you very much. I appreciate that clarification.

3614   That's all, Mr. Chairman.

3615   THE CHAIRPERSON: Okay. Thank you very much. We will undoubtedly see you at the licence renewals.

3616   MR. MURDOCH: Yes.

3617   I would like to add that I don't like the idea of a Sophie's Choice local news. We represent people in both drama and that, so I am trying to avoid that. Both parts of this industry should be supported.

3618   Anyway, thank you for your time, and good luck this afternoon.

3619   THE CHAIRPERSON: Thank you.

3620   I think we have one more intervenor, Madam Secretary.

3621   THE SECRETARY: Thank you, Mr. Chair.

3622   Our next intervenor is Dr. Gregory Taylor.

3623   I would invite you to come forward to the presentation table.

--- Pause

3624   THE SECRETARY: Dr. Taylor, you may now proceed with your presentation.

PRÉSENTATION

3625   DR. TAYLOR: Good afternoon, Mr. Chair and Commissioners. Thank you for the opportunity to speak today.

3626   My name is Dr. Gregory Taylor, and I have spent most of the last three years studying and writing about digital television. I am currently a post-doctoral fellow at Ryerson University, in the Broadband Research Project.

3627   In the past year I have written a book entitled, "Shut-off: The Canadian Digital Television Transition", which is currently under review with the press, and my Ph.D. dissertation at McGill University was entitled, "Canadian Broadcasting Regulation and the Digital Television Transition".

3628   I have published on this topic, and last spring I addressed the Upper Canada Law Society conference "New Developments in Communication Law and Policy" on the topic of the future of over-the-air television.

3629   It is on the topic of over-the-air television that I wish to speak today. As Canada's largest private broadcaster, the approach to OTA taken by CTV has great implications for the success of the overall transition. Despite BCE's assertion that their proposed benefits package will assist in making that conversion "a smooth one", it does very little to ensure that OTA continues to make a significant contribution to the Canadian broadcasting system.

3630   Yes, they have announced that they will upgrade the transmitters on the A stations, but they have used this before. Earlier this year, in a letter to the CRTC, CTV Vice-President Kevin Goldstein wrote: "At this time we have budgeted to convert all transmitters in mandatory markets for both our CTV and A stations."

3631   The letter adds: "This will be influenced by the outcome of the fee for carriage hearings."

3632   So the transition of all OTA transmitters, in my view, should not be open to negotiation.

3633   Among the conclusions of my research is that digital television in Canada, in particular the OTA sector, currently finds itself on very shaky footing because it remained an industry-guided affair for far too long. By the time the CRTC took some degree of control by establishing the shut-off date in 2007, Canada's transition was already well behind schedule.

3634   I am not alone in making this observation. Industry insiders like Michael Mckeown and journalists like Greg O'Brien have been making the same point for years.

3635   The August 31st, 2011 deadline is fast approaching, and I am convinced that many Canadians are ill-prepared. I currently teach a third year communications course at Concordia University in Montreal, and the overwhelming majority of my students, who are mostly communications majors, had no idea that digital transition was scheduled for this year, nor did they realize that digital over-the-air was even an option.

3636   The proposed regulations for the digital transition do not go far enough to ensure that Canadians will be well informed of the transition and how it will affect them.

3637   I request that the CRTC use a portion of the benefits package from the Bell purchase of CTV to support the establishment of a body to oversee a national awareness campaign for the digital television transition. This is not a proposal to be considered at an undisclosed future date, the time for establishing this organization is now.

3638   I know that the Commission has made efforts to move this process forward and has recommended that the government coordinate and fund a national consumer awareness program. However, the government, as it has done throughout the digital television transition, has taken no initiative.

3639   The body I request would be what Digital U.K. refers to as a single-purpose organization. Such a campaign would be mounted immediately, under the leadership of the CRTC, with additional representation from public, private and community broadcasters, Heritage Canada, consumer groups and other industry stakeholders.

3640   This proposal for the Bell tangible benefits contribution would enable the Commission to undertake directly the work of convening and financing the campaign implemented by this group.

3641   The CRTC has an obligation to make sure that the broadcasting system runs properly, and it would be entirely within its mandate to establish such an organization.

3642   At the very least, Canada must provide a detailed website -- the current site is inexcusably weak -- and a call centre for citizens with questions. It is my view that this would be an ideal summer position for students interested in communications studies.

3643   There also need to be PSA's, to be aired by all broadcasters, to provide an overview of the transition and suggestions on where to find further information. It is inappropriate to leave it solely to broadcasters to communicate the changes to the OTA sector, given that increasingly their corporate parents have an interest in shifting over-the-air viewers to BDU subscriptions.

3644   I am sympathetic to the position of the CRTC since the 2006 Order in Council requesting market forces to determine most decisions. The CRTC has already made concessions to ease the transition for the broadcasting industry. The original insistence of an all-HD transition was changed in 2008 and, most importantly, in 2009-406 the CRTC changed the switch to digital from a nation-wide shutoff, as in the U.S., to only requiring specific urban centres.

3645   In the recent Shaw purchase of Global earlier this year a new precedent was set requiring Shaw to complete the transition to digital broadcasting outside mandatory markets within five years.

3646   I believe the digital television transition in Canada has backpedalled enough. I request the CRTC to maintain the usual 10 per cent of public benefits package in this transfer of ownership. And I urge the CRTC to refuse to accept upgrades to Bell's private services as public benefits.

3647   In the 1999 Building on Success, A Policy Framework for Canadian Television, the Commission wrote:

"The Commission recognizes the cost of the digital transition will be significant for broadcasters, cable and, to a lesser extent, program producers. The consensus among participants was that the cost of digital conversion is a cost of doing business." (As Read)

3648   This was reiterated in the 2006 regulatory framework for the licence and distribution of high definition, pay and speciality services which states:

"In the Commission's view, the cost of the transition to HD is a cost of doing business for both distributors and programmers." (As Read)

3649   In its proposed benefits package Bell states:

"Increased HD conversion and exhibition capacity would not be possible in the near future without dedicated benefits funding, given the extensive capital upgrade that broadcasters are obligated to make to ensure digital transition." (As Read)

3650   Again, I ask the Commission to hold to its original statement that this is a cost of being a broadcaster in the 21st Century.

3651   I realize there will be some questions, and two in particular, about this proposal. There are two overarching questions, one concerning the amount I am requesting, and the other concerning the audience for OTA broadcasting.

3652   First, I will concede I am uncertain if the $10 million I am requesting will be sufficient to mount an effective campaign. However, I am quite certain that there is enough money in the 10 per cent benefits package to run a campaign that the industry has long resisted. I invite you and others in the room today to look at the efforts in the United States, the United Kingdom, France and Australia and draw your own conclusions on the state of our transition.

3653   I am not asking for the $1.5 billion the United States set aside for coupons for set-top boxes, nor am I asking for the 227 million Euros requested by the French Prime Minister for the transition in France.

3654   I do not have expertise in public funding awareness campaign and I would welcome a financial reassessment of this proposal by the Commission. I propose we cover PSA announcements, a call help centre, and a clear and helpful website. This seems to me to be the bare minimum to run a public outreach campaign at this significant moment in Canadian communication.

3655   The second question I anticipate concerns the audience for OTA and the off-quoted number that more than 90 per cent of Canadians receive television via a BDU. I find it ironic that of all television delivery systems the beleaguered OTA sector in Canada potentially stands to benefit most from the transition to digital in terms of quality of product.

3656   The accuracy of the 90 per cent number has been repeatedly called into question and has been demonstrated to fluctuate by region and city. Whatever the number, it should not be required that Canadians purchase BDU services in order to access the medium of television. The newly converged Canadian broadcasting market will not support OTA without encouragement from the regulator.

3657   Since the completion of the American digital transition 2009 the Los Angeles Times and the New York Times have each run stories about the resurgence of over-the-air in their respective markets. It maybe too early to ring the death knell of the OTA sector.

3658   In the end, if the OTA numbers are truly low to be financial viable and broadcasters demand concessions for use of public air space, perhaps the CRTC should consider ending OTA altogether and asking broadcasters to surrender the 6 megahertz of frequency that they have been allotted so that it may be auctioned. I suspect broadcasters will not embrace this idea. My point being 6 megahertz of spectrum is a significant public trust.

3659   In conclusion, I would like to express my support for the Chair when he said in a 2008 speech in Cambridge:

"I would like the make the CRTC's position very clear. Over-the-air transmission has always been the cornerstone of our broadcasting system, we expect that OTA will move to digital and will continue to play that key role. It is here to stay." (As Read)

3660   Among the benefits proposed for the Shaw purchase of Global I would like to commend the Commission on encouraging multiplexing in the context of the transition of its transmitters outside mandatory markets. This is a position I have advocated for years. I believe the same must be asked of Bell.

3661   I would also like to add my voice in support of the CACTUS proposal as well as the PIAC submission for the creation of a fund to support public participation and policy hearings. It is important to have a range of voices to truly gauge the scope of public opinion. Citizens should not be financially penalized for participating in a public forum.

3662   I thank you very much for your time today and look forward to your questions.

3663   THE CHAIRPERSON: Thank you.

3664   You are obviously very well conversed with our DTH policy. I am surprised, therefore, that you say on the second-last page, "Whatever the number, it should not required that Canadians purchase BDU services in order to access the medium of television."

3665   You surely are aware of our Shaw decision where we set $18 million aside so that every Canadian who finds himself without OTA as a result of digital transition gets a free transmitter, free installation, free set-top box and will receive the signal that he received over-the-air before via television at no cost to him?

3666   DR. TAYLOR: Yes, I realized that recent decision in the Shaw decision, and I do think that it was a wise decision on the part of the Commission.

3667   But I do have some reservations about the access to satellite as opposed to over-the-air. Some people have expressed concern that the access to the satellite signal is really a way to entice people into the broader services of the satellite provider.

3668   THE CHAIRPERSON: Obviously it will be used for their purposes.

3669   DR. TAYLOR: Yes

3670   THE CHAIRPERSON: But, I mean, it is up to you to decide whether you want to just receive the OTA signal for free or whether you want to become a Shaw customer.

3671   DR. TAYLOR: Yes. And sorry that I am not clear on -- so will the Shaw program then be offered across Canada?

3672   THE CHAIRPERSON: Absolutely. That is the whole idea. Our estimation is, and you quite rightly point out, the numbers fluctuate, so we think it is roughly 35,000 and that amount of money should be more than ample to give every person a free set-top box, free installation, free dish and access to the OTA signal which he or she may be using.

3673   DR. TAYLOR: That is outside the mandated markets. And so that would also be assuming that all the mandated markets will complete the transition this coming summer?

3674   THE CHAIRPERSON: We shall see.

3675   DR. TAYLOR: Yes.

3676   THE CHAIRPERSON: Every indication is there that...

3677   Okay, Len, I believe you have some questions for Dr. Taylor?

3678   COMMISSIONER KATZ: Just one I think, and probably a little quieter.

3679   Dr. Taylor, to do some follow-up work, you talk about the need for communications, PSAs and the like --

3680   DR. TAYLOR: Yes.

3681   COMMISSIONER KATZ: -- with regard to digital transition. I refer you to a document that the CRTC issued on December 9, 2010, it is a notice of consultation regarding regulations for the digital television transition. And in there we talk about regulations being enacted very shortly. In fact, the comment period for this ended in January, so you will see comments from the broadcasters as well.

3682   DR. TAYLOR: Yes.

3683   COMMISSIONER KATZ: In there there are obligations upon them with regard to PSA, with regard to notification as well. It is fairly comprehensive, it requires them to actually issue PSAs during primetime a certain per cent of them, during news periods as well. So I think an awful lot of the issues you have identified are maybe perhaps too slow in your mind in terms of prioritizing these things and getting them out faster.

3684   But they are there, they are currently in process. The comment period ended on January the 11th I see here, and we will be putting out a decision relatively shortly in order to enact those regulations as well.

3685   DR. TAYLOR: I do realize that there was a call made and I have submitted some ideas for that as well. But I do still think that the idea of having a common oversight body for this transition is still lacking in Canada. And I think that we are going to have a bit of a piecemeal approach as we head into what should be the final six months before the transition in the mandatory markets. I still believe that we do not have the necessary oversight and certainly not when compared to other countries who have gone through a similar process.

3686   COMMISSIONER KATZ: Okay. Well, to the extent you may have made those comments, they are in a different forum. So if you are looking to have money set aside for this purpose coming out of these benefits, you are going to have to find a way of getting them into the record here for the Commission to evaluate and analyze, and presumably for BCE to contemplate as well somehow because they are not in your remarks here at all.

3687   DR. TAYLOR: Okay.

3688   COMMISSIONER KATZ: Those are my comments, Mr. Chairman.

3689   THE CHAIRPERSON: I am surprised by your passion about this issue. I understand you work on it and you have written this doctorate dissertation, et cetera. But most Canadians won't even notice digital transition, they receive their signal over cable or satellite. So we are talking about 6 per cent who are now OTA customers and who presumably, if they live in mandatory areas, will have to buy themselves a converter box.

3690   But do you really think it is such a big deal?

3691   DR. TAYLOR: Yes, I do, in the sense that, again, and I have used one of your speeches before, I do think that this is the truly public side of the broadcasting system. And I do believe that it ensures that nobody is left out and that this is a truly open to all Canadian system. I believe that to allow this to weaken further really will move more people toward a BDU who might not otherwise wish to go that direction.

3692   I also think that an effective over-the-air sector provides competition within the marketplace as a delivery model. I do think that to have -- and I reference two stories out of the United States since their conversion. One of them referred to over-the-air in the United States as the new basic cable, and that there is some real possibilities here to offer a very good product to all Canadians, advertising supported.

3693   And I do believe that this still matters and I think that we will see after the transition as to whether or not people choose to go this direction. Early indications in other jurisdictions, in other nations, are that some people will make the move to over-the-air because the quality of the over-the-air signal is excellent. And I think there is some real opportunity here to further the diversity of how our television is delivered.

3694   THE CHAIRPERSON: Okay. And so basically the future, those users will be using OTA signals and whatever else they want to get from the web, from Netflix or whatever I presume?

3695   DR. TAYLOR: That is a possibility, yes. And it is a trend that has begun in some other areas. There is concern about what they are calling cord cutting. So this is something that we are seeing in other areas right now.

3696   THE CHAIRPERSON: Okay, well, we shall see. I think it is going to be fascinating to see the developments. Thank you for your presentation.

3697   We will take a one-hour break now and we will resume at 1:30, thank you.

--- Suspension à 1229

--- Reprise à 1336

3698   THE SECRETARY: Order, please. A l'ordre, s'il vous plaît.

3699   So Mr. Chairman, we will now proceed with Item 21 on the agenda and it's Mr. Stephen James May.

3700   Mr. May, when you are ready you may proceed with your presentation.

PRÉSENTATION

3701   MR. MAY: Hello, Chairman, Vice-Chairman, Commissioners. Good afternoon.

3702   Thank you for granting me the opportunity to speak to you today with regards to the benefits package proposed by Bell for the BCE/CTV transaction.

3703   The last time I was here in Gatineau in December 2009 at the CRTC's value for signal Hearing, I described myself as an analog over-the-air television viewer residing in the Greater Toronto Area of Ontario. This has not changed. I also anticipated at that time that I would be well served in terms of signals at least, as a resident of the GTA, by the transition to digital television.

3704   I'm pleased to report back to you that as of August of 2010, a full year before the analog television shut off in mandatory markets, I have been successfully receiving 10 digital OTA television channels in my Toronto apartment which is more than plenty for me.

3705   However, I'm less than pleased to report back to you that I had to drive two and a half hours east of Toronto to Napanee, Ontario in August to actually find a converter box, priced at $80 plus tax, that would allow me to view digital television signals on one of my four CRT analogue television sets.

3706   As of today, with less than 7 months remaining until Canada's digital television transition, not much has changed in terms of access to converter boxes or to access to information regarding the transition overall.

3707   When I walked into the big box electronics stores located at Yonge and Dundas in downtown Toronto just two days ago, I couldn't find any digital-to-analogue converter boxes or any antennae that are ideally suited to picking up digital over-the-air television signals. I had little trouble, however, finding information related to how to sign up for digital television packages offered by Rogers HD Cable and Bell TV, though these options are not free to air.

3708   While I understand that broadcasters are to commence airing their own public service announcements related to the digital television transition starting next month, I'm here today to call for the creation -- similar to my colleagues who have appeared before -- earlier in this hearing -- for a national, arms-length digital television transition education campaign in order to best serve television-viewing Canadians. I'm proposing that such a national campaign be funded through the BCE/CTV benefits to the tune of $10 million.

3709   Now, last August, when I was in Napanee -- home of course to pop sensation Avril Lavigne -- I had the opportunity to interview an over-the-air television viewer named Ed McCaig from Roblin, Ontario which is located about 45 minutes north of Avril's hometown.

3710   I would now like to play for you a short interview that I recorded as part of my graduate studies research at Ryerson University. It's rare that we actually get to hear from Canadian citizens about their over-the-air television viewing. So I'm thankful that Mr. McCaig gave his time to speak with me.

3711   For those listening to this hearing online, you can watch the video at youtube.com/manifestationtv and clicking the "ed2010" thumbnail image.

3712   I would like to thank the CRTC AV and IT staff for helping me setup my video.

3713   If you look at the monitor we will get going. It's a three-minute video.

--- Présentation vidéo

3714   MR. MAY: Mr. McCaig emailed me after reading an article that his local newspaper, the Napanee Beaver, ran about my research related to digital television. He was actually hoping that I would be able to help answer his questions about the digital transition.

3715   As Ed pointed out in the video, there has been very little information available to Canadians about this transition. Since time is ticking on this and, from what I have heard, the Government of Canada does not want to delay the transition in mandatory markets beyond August 31st a comprehensive national transition education program is needed as soon as possible.

3716   Here are some of the items that I feel, quickly, that -- I will quickly go through some items that I think such a national campaign -- arms-length national campaign would feature:

3717   So I think the program should -- such a program should clearly advise which areas of the country will be going to digital and which ones will be remain analogue, and for how long.

3718   I know that those of us in this room know, and that the information is available somewhere on the CRTC website, but the information is not currently readily available to Canadians in my opinion.

3719   Two, the program should advise where Canadians can buy digital to analogue converter boxes. Simply saying, as Canadian Heritage's website does, that they can be bought at local retailers is not helpful. In most cases, they are not available in retail outlets and I'm not entirely confident that there will be a sudden surge in the coming month. Canadians need to know where they can get them easily without have to travel across their province to find one.

3720   Thirdly, with regards to the Canadian Heritage's Digital Television Transition website I mentioned, I think it is in need of some serious sprucing up or perhaps replacing. It's great that we have it but it's time to enrich the content.

3721   For example, it would be great if there was a feature where a Canadians could pump in their postal code and know exactly what is happening on their street in terms of the digital television transition.

3722   Also, if it could have some social media features on such a site such as Facebook and Twitter so that Canadians could share and disseminate information about the transition. Of course as a video guy, I would like to see some video up there, maybe how to hook up your converter box and that kind of thing.

3723   If the Commission is looking for examples of how other countries have created digital transition websites, the Australian DTV transition website, which some of you may have seen, it is quite excellent.

3724   To move along, I think definitely a national call centre and a toll-free number that Canadians can call for information about the digital transition -- this is probably one of the more important ones and I'm fairly certain my Nan would phone it if she couldn't get a hold of me.

3725   Fifth: The creation of a national DTV transition road show of sorts to community centres and public libraries where Canadians could learn more about the transition.

3726   And, lastly, national, arms-length, PSAs to be aired across the country, in addition to the ones produced by broadcasters individually. These PSAs of course need to be closed-captioned, be in described video and versioned in languages appropriate to the area that it is being aired.

3727   To wrap up, transitioning to digital television does not and should not necessarily mean moving to a fee-based, usage-based subscription model for viewers. All Canadians need to be made aware of this through a national digital television transition education program and given the opportunity to respond, similar in the way that I am right now if they feel they are going to be left out by the transition.

3728   So I implore you to make funding of such a national arms-length education program part of the BCE/CTV benefits package.

3729   Thank you.

3730   THE CHAIRPERSON: Thank you for your presentation.

3731   With regard to the website of Heritage that is inadequate, I think lots of people are of that view. You can look at the Australian website for instance which is excellent, et cetera. It will encourage you to write the Minister of Industry -- of Heritage with your observations. I mean I have no control over this but it could be much better along the lines that you suggest.

3732   Len, you have some questions?

3733   COMMISSIONER KATZ: Just a quick one as well.

3734   As I mentioned earlier, we do have a consultation out that you have referred to as well and there are people that have created some unique ideas and some interesting ideas, some of which are along the same lines that you have as well.

3735   I'm quite sure that the folks at BCE are listening to this going on right now as well and will take into consideration your proposal and the fact that they have got some money that they have to distribute for benefits as well.

3736   So I thank you.

3737   COMMISSIONER POIRIER: Mr. Chair, just one comment.

3738   Really well-done job. I do appreciate your comment and I hope that someone is going to listen to you at Heritage Canada to upgrade their site and to maybe go in the direction you are giving us today.

3739   Thank you very much, really well done.

3740   THE CHAIRPERSON: Okay. As far as the set-top box is concerned I can assure you, you can count on the market. If there is demand, you know, The Source and Best Buy and all of those will stock up with them. I mean they will be available. It's just a question of shipping them from the U.S.

3741   MR. MAY: Yes, I -- oh, sorry, sir.

3742   THE CHAIRPERSON: Yes?

3743   MR. MAY: I hope they are listening too, because every time I -- I know this isn't your problem but every time I go in they say, "Oh, we don't have any in stock". That was six months and they still don't have them in stock. So I'm --

3744   THE CHAIRPERSON: You can get some by the truckload on the web so I really find it strange.

3745   But it's good that you raised the issue. Hopefully they are listening. Thank you very much for coming.

3746   O.K., Madame la Secrétaire, la prochaine, s'il vous plaît.

3747   THE SECRETARY: Thank you, Mr. Chairman.

3748   I will now invite the Canadian Broadcast Museum Foundation to come forward.

--- Pause

3749   THE SECRETARY: So when you are ready I would ask that you please introduce yourselves for the record. You may proceed. You have 10 minutes for your presentation.

3750   Thank you.

PRÉSENTATION

3751   MS WILKINSON: Mr. Chairman, Members of the Commission, my name is Kealy Wilkinson. I'm the Executive Director of the Canadian Broadcast Museum Foundation.

3752   With me today is Duff Roman. He is the Director of the Foundation and a member of its executive committee.

3753   We had hoped today that Taylor would be joining us, another member of the board, but unfortunately there was a death in his family and he wants me to express his regrets that he is unable to attend.

3754   In contemporary Canada, radio and television programs form the electronic record of events; the social, scientific, political, technical, economic and ethical changes that taken together document the evolution of our collective and individual evolution.

3755   That said, as newspaper readership declines, electronic communication (radio, television and the internet) have become essentials of citizenship in this country.

3756   CTV with its stable of radio stations, OTA and specialty television channels, has emerged as Canada's most popular private broadcaster. It is enormously important to audiences in English-speaking Canada. Witness the fact that, despite the plethora of new and conventional news sources, CTV's late night National newscast still regularly attracts well over a million viewers nightly.

3757   The continued vitality of CTV's broadcast undertakings is important to this country and the economic stability that Bell's ownership will bring in this new multi-screened environment is very welcome.

3758   The Commission has heard varied opinions about the nature and proposed ownership change and the quantum of benefits that should be attached to it.

3759   The Foundation's board has concluded that it is not equipped to speak with authority on this matter beyond registering profound appreciation for the contributions that public benefits have made to both Canadian programming and to non-programming initiatives like training and education, and even the CBMF's own work.

3760   On the issue of vertical integration, however, we do have some disquiet. In the first decade of the Foundation's existence, we have watched the number of major owners in Canada's broadcast community shrink. As was noted earlier today, gone are Alliance/Atlantis, Standard Broadcasting, the Craig Group and Canwest Global; not to mention Telemedia, Radiomutuel and Power Broadcasting, MacLean-Hunter, Selkirk and Moffat Radio and CHUM and City have different ownership as well.

3761   Most of the individual stations continue to operate, of course, but there are fewer and fewer owners of radio, television, BDUs and even consumer magazines.

3762   Now, our interest is history and, broadcast history in particular. So a quick look back:

3763   In its early days, the Commission was very concerned about what used to be termed "concentration of ownership" and its potential impact on the diversity of voices in Canadian broadcasting.

3764   In Decision 70-157, for instance, the CRTC denied Bushnell Communications Ltd. permission to acquire a number of cable systems in B.C., Alberta and Ontario on the grounds that such a purchase "would create excessive concentration of ownership in the communications media."

3765   And there have been a number of other such decisions as well in those days. In 1972 the concern was still evident in Decision 72-316 where the Commission recorded that:

"While the Canadian broadcasting system will of necessity contain a certain number of large units, there must be maintained within it a degree of diversity of ownership sufficient to enable the objectives of the Broadcasting Act, particularly those set out in section 3{d), to be achieved." (As read)

3766   And of course, that was the 1968 Act.

3767   And here we are some 40 years later, in a strongly vertically-integrated communications environment, examining a proposal for our largest telco to acquire our largest private broadcaster.

3768   It's clear that we have been overtaken by events and I suspect that unscrambling this omelette may not, in fact, be either practical or possible.

3769   You have called a public hearing on this subject for June and perhaps it would be useful to use that occasion to explore innovative ways in which the diversity of voices and representation in our tightly-integrated electronic communications media can be maintained, perhaps including some regulatory initiatives.

3770   MR. ROMAN: As the Commission is aware; Canada is the only developed country that has failed to create a coherent mechanism to collect and preserve its radio and television heritage. That challenge was handed to the CBMF to resolve and, after a decade, our distributed National Broadcast Collection for Canada has been accepted as a practical and cost-effective solution.

3771   The CBMF's own collection has grown to more than 30,000 items and is now the largest in the country, with hundreds of additional artefacts appearing every month. In the last year alone, we acquired the CHUM Collection, the CAB Collection, the Radio Marketing Bureau Collection and Terry Bush's remarkable catalogue of radio and TV commercials.

3772   We now face the task of creating the national inventory that, once posted on the web, will be universally accessible to Canadians. This is a legacy to which all Canadians have contributed, directly or indirectly and we believe it constitutes a public trust.

3773   CTV moved to help address this gap in our cultural history in 2001 with provision of key resources and the Foundation was able to recruit multiple broadcast partners: Canwest, the CBC/Radio-Canada, Alliance Atlantis, Standard Broadcasting, CHUM, Rogers and Corus all participated at various times.

3774   Of course, industry consolidation has taken its toll as the number of players have been reduced at the same time as takeovers have led to massive house-cleanings in which a great deal of historic material has often been lost.

3775   Bell's acquisition of control of CTV is the latest of these reconfigurations. As noted in our intervention, we look forward to the opportunities this new ownership structure will provide to further enhance the programming that CTV's OTA, specialty channels and radio stations provide to Canadian audiences.

3776   MS WILKINSON: But it's not all about going forward. In acquiring CTV, Bell is also buying a tradition of excellence and a legacy of information, entertainment and service and a treasure trove of history that Canadians have enjoyed and contributed to in the past.

3777   Bell has provided a detailed description of how it proposes to distribute tangible benefits including allocating resources to future programming.

3778   We submit, however, that it is also important to look backward. The benefits are not only about what will go on the air in the next few years but should also consider preservation of what has gone on the air in the last 80 years or more.

3779   As it marks the 50th anniversary of its television operations, CTV itself is occasionally peering into a rear-view mirror to pay tribute to its past, something that is only possible because key program elements were safeguarded.

3780   With the acquisition of CTV, Bell is itself becoming a broadcaster and one of this country's largest.

3781   The Department of Canadian Heritage has now signalled its willingness to partner with the Foundation and the industry to create a made-in-Canada solution to preservation of our broadcast heritage because we are the only organization in this country that is actively doing this. Even Library and Archives Canada is now referring donors of AV material to the Foundation.

3782   So that this important work can continue, we have asked that Bell consider making an annual grant to the Foundation, as CTV itself has done since 2001. And we are looking forward to practical ways to solidify our relationship with all of Canada's broadcasters.

3783   MR. ROMAN: It may be trite to drag out the old saw, "an idea whose time has come" but that was exactly the time and place at which the needs of the Canadian music industry and those of Canadian radio broadcasters came together in 1982.

3784   The founding of FACTOR, the Foundation to Assist Canadian Talent on Recordings was the result of discussions between the Canadian Independent Record Production Association, the Canadian Music Publishers Association and by three major Canadian broadcasting companies; CHUM Limited, Moffat Communications Limited, and Rogers Radio Broadcasting Limited.

3785   These private sector companies and organizations banded together to address a pressing need to provide access to funding in support of the production of quality Canadian content sound recordings, that could compete with international product in the retail marketplace.

3786   It would also help ensure a more reliable supply of such recordings required by radio stations to realize the promise of the Canadian content regulations inaugurated some 12 years earlier.

3787   Initial funding was collectively pledged by the three founding radio companies who bundled their promise of performance licensing commitments required by the CRTC for the development of Canadian musical talent. The budget that first year was all of $200,000.

3788   Since 1970 when the first Cancon music regulations for radio were introduced, broadcasters have recognized the importance of reinforcing our identity as Canadians through funding, promoting and programming the recordings of our hometown musical artists.

3789   Whatever success FACTOR enjoys today has evolved from a modest, collaborative commitment of voluntary organizations and individuals to a firm place as a unique, effective and transparent instrument of cultural policy supported by public and private funding resources under the oversight of the Department of Canadian Heritage and framed by CRTC regulatory policy.

3790   CBMF believes that there is relevance in the FACTOR model that brings together public and private resources in a noble, collaborative undertaking, in this case the preservation of Canada's history as captured by its electronic media.

3791   MS WILKINSON: We must begin now to think about ensuring that Canada's National Broadcast Collection continues to be assembled, preserved and securely funded.

3792   This will guarantee that it can be properly preserved and its contents made available online and in exhibits for celebration by all Canadians.

3793   We are looking forward to working with the Commission, Canada's broadcasters and the Department of Canadian Heritage to create a formula that will allow this essential work to continue and we encourage Bell, soon to be Canada's largest private broadcaster, to play its part.

3794   Thank you for this opportunity to speak with you and for your attention.

3795   THE CHAIRPERSON: Thank you very much for your presentation.

3796   It's interesting, I think you are the first one who doesn't mention a number. Do you have a number in mind?

3797   MS WILKINSON: Yes, we do indeed, sir. We have suggested to them that they consider $150,000 a year.

3798   THE CHAIRPERSON: For the seven years?

3799   MS WILKINSON: For the seven years.

3800   THE CHAIRPERSON: Okay. Thank you.

3801   Elizabeth, you had some questions?

3802   COMMISSIONER DUNCAN: Actually, I thought your presentation was very thorough and I don't have any questions.

3803   I was going to ask the Chair's question, how much money you were looking for or were you just looking for us to encourage them to support you when the time came. So you do have an amount.

3804   MS WILKINSON: Yes. We thought that since CTV itself had very kindly contributed $100,000 a year for a number of years now that stepping it up by 50 percent would be a reasonable ask.

3805   COMMISSIONER DUNCAN: For seven years?

3806   MS WILKINSON: Yes.

3807   COMMISSIONER DUNCAN: Okay. Thank you very much.

3808   I have no other questions, Mr. Chair.

3809   THE CHAIRPERSON: Rita...?

3810   COMMISSIONER CUGINI: Thank you.

3811   You talked about the CTV legacy in terms of its programming. Does CTV currently contribute programming to the Foundation for preservation?

3812   MS WILKINSON: They contribute resources. We have indeed some programming acquisitions, but most of that has come through the production companies who have provided independently produced material.

3813   CTV itself is working very hard on digitizing and preserving its own news inventory.

3814   COMMISSIONER CUGINI: Are you looking for more inventory as well from CTV along with the 150 --

3815   MS WILKINSON: We will salvage whatever Canadian inventory we can find that is not being properly addressed and safeguarded by other people, yes.

3816   COMMISSIONER CUGINI: Thank you very much.

3817   THE CHAIRPERSON: Okay. Thank you very much, those are our questions.

3818   Is there somebody from Bell here? Would you come to the table, please?

--- Pause

3819   MR. GOLDSTEIN: If I knew I was appearing I would have worn a tie.

3820   THE CHAIRPERSON: It's okay.

--- Rires

3821   THE CHAIRPERSON: I promised that I would give you sort of a summary of the issues I wanted you to address.

3822   Do you need something to write?

3823   MR. GOLDSTEIN: Yes.

3824   THE CHAIRPERSON: The whole room is running. A pen, too.

3825   Would you like a coffee as well, Mr. Goldstein?

3826   MR. GOLDSTEIN: You are very accommodating today, Mr. Chair.

--- Rires

REMARQUES DE FERMETURE - COMMISSION

3827   THE CHAIRPERSON: There are 11 points that I have, in no particular order, which we would like you to address.

3828   First of all, in terms of valuation, I think obviously platforms are a big issue and so we would like to see a projection of CTV revenues for the next five years broken down between program sales to traditional platforms and program sales to new media platforms.

3829   Obviously that is your best estimate, but just so we have an idea of how you see the revenue from program sales will be in the future.

3830   Second, the issue of moratorium came up and exclusivity and a moratorium on exclusivity until the conclusion of vertical integration hearing.

3831   I would like to hear your view on that.

3832   Third, Certainly, please clarify your position on affiliation agreements between CTV and Bell, both in terms of existing ones and to future ones.

3833   Are you prepared to submit them to the Commission in confidence?

3834   Fourth, I had a discussion with Mr. Cope on the definition of "exclusivity" and what is "exclusivity" and what is "undue preference" and I would like to see your definition of "exclusivity" so we know how you are going to approach things.

3835   Fifth, would you set out your position on set-top boxes. I obviously caught you by surprise, you didn't know what the FCC provision is on set-top boxes and you were going to give me a position on that.

3836   Also, during the discussions today the idea came up on the set-top boxes, if you go MPEG-4 will they have a passthrough for OTA or not?

3837   Sixth, explain to us and give us the details of your MPEG-4 conversion. First of all, the cost, how it is broken down; the timing, when it will take place; how many stations will you be able to carry in terms of OTAs -- how many new stations will you be able to carry and how many will be used to carry OTAs that are presently not being carried?

3838   Seventh, the benefit package. We went through it in great detail, I would like to see a detailed benefit package showing the amounts that you are going to pay, the timetable in annual increments for seven years; the regional distribution.

3839   And also deal with the issues that came up, namely there was the issue of your valuation is $15 million short of ours.

3840   Second, there was a lot of doubt, as you heard from the Commission, regarding the $25 million regarding enhanced local news production and the $25 million to sustain 'A' channels. If you redirect them we would like a breakdown of what you do there.

3841   There is also the whole issue of the unspent millions, I think the $9.9 million from previous benefits. Somebody before us made a suggestion that they should be spent on accessibility. I will leave it with you whether that is what you want to do or tell us what you will do with those unspent millions from previous benefits.

3842   Your position on terms of trade and your position on independent channels. There is nothing in your whole submission, either before us or filed, that deals with independent channels. You heard the concerns of the independent channels today so we would like to hear your position.

3843   So the idea is that you come back tomorrow morning and address those points and obviously they will become part of the record.

3844   We then will give parties next week to comment only on what you put forward and then we will proceed with our decision-making process.

3845   Is that clear, Mr. Goldstein?

3846   MR. GOLDSTEIN: Very clear.

3847   THE CHAIRPERSON: Thank you.

3848   Then on top of that there are a bunch of undertakings that you gave or other people gave and I'm going to ask counsel to read those out.

3849   Counsel...

3850   MR. MILLINGTON: Thank you, Mr. Chairman.

3851   I will read the undertaking and I will give you the reference in the transcript to the line item where it is, in case it's not perfectly clear.

3852   The first one is: Please provide the value attributed to Dome when it was purchased by CTV. That is at line 454.

3853   The second one is: Please provide the closing dates for the travel and escape service and confirmation of the closing date for CHNB-FM and CHST-FM. That can be found at line 479.

3854   Provide confirmation of the lease values included in the PWC valuation. That can be found at lines 643 and 659.

3855   Confirmation to be provided on the assumed debt value in the PWC valuation. That can be found at line 646.

3856   Hang on a second, I have to scroll down here a little bit.

3857   Provide replies to the panel's comments on your proposed benefits initiatives and their compliance with existing Commission benefits policy. This includes specific comments and questions made with respect to the money to be spent on local news production, the conversion of 'A' channel transmitters to digital and the need for additional freesat benefit money. That can be found at line 769.

3858   Please provide a more detailed plan for the outstanding benefits arising from the 2000 transaction. That was at line 855.

3859   There are a number of questions arising about the MPEG-4 initiative.

3860   First, will you require additional capacity on Nimiq 4. Line 1041.

3861   Will there be any new stations placed on Nimiq 4. Line 1050.

3862   Will the initiative require any migration of services from one satellite to another? Line 1053.

3863   Will new dishes be required for any existing customers? Line 2057.

3864   In addition, would you please file the response to FreeHD's costing that BCE previously filed as part of the DTH hearing. That was at line 1075.

3865   We are almost at the end here. We have one more.

3866   Please confirm whether or not any of the programs that are developed by the local news programming benefits proposal will be broadcast on CTV Newsnet. I don't have the reference for that one.

3867   THE CHAIRPERSON: Mr. Goldstein, I forgot, if you are going to redirect benefits we made a list of all the people who have asked for benefits and the amount, et cetera, and I will ask the Secretary to give you a copy of it so it maybe will assist you in your redirection.

3868   Thank you. That's all for us.

3869   I just want to take this opportunity thank the translators for excellent work as usual, and my staff for preparing us for this very difficult transaction.

3870   Unfortunately I have to rush off so as far as I'm concerned the hearing is over.

3871   Are there any closing remarks, Madam Secretary?

3872   For today -- for today.

--- Rires

3873   THE SECRETARY: For today, we are concluding Phase II and we are adjourning.

3874   We will reconvene tomorrow at 9:00 a.m.

--- L'audience est ajournée à 14 h 10, pour reprendre le vendredi 4 février 2011 à 09 h 00

STÉNOGRAPHES

Johanne Morin

Jean Desaulniers

Monique Mahoney

Sue Villeneuve

Karen Paré

Jennifer Cheslock

Date de modification :

2011-02-03